WPP chief executive Martin Sorrell faces increasing acrimony as he squares up to investors resisting his proposed remuneration package.
The hostile ground-swell grew this week as members of the influential Association of British Insurers apparently lent their weight to the opposition. Dissident investors claim they now account for at least 20 per cent of shareholders and say others are still discussing their voting intentions.
Sources close to WPP hotly dispute the 20 per cent figure and point out that only Robert Fleming and Hermes – making up about 9.5 per cent of voting shares – have declared their hostility.
Confusingly, the ABI has meanwhile affirmed that WPP proposals reflect its own guidelines on long-term remuneration. Members of ABI known to be WPP shareholders are Provident Mutual, Scottish Amicable and Standard Life. More than 50 per cent of votes are required to block the proposals.
Dissident investors say they will resist Sorrell’s pay deal, worth up to 25m over five years, even if it is passed at next Monday’s extraordinary meeting.
John Emly, a Fleming board director, whose investment management arm holds about eight per cent of WPP, says Sorrell’s efforts to compare his package with that of top executives in Omnicom and the Interpublic Group in the US (see table) are irrelevant, because WPP is a UK company.
The sticking point in the pay package is a proposed capital investment plan. “It is related to the general performance of shares, not the company,” says Emly.
The maximum incentive payout could be about 14m if shares reach 304p, but Sorrell has to keep them for five years. On Monday, WPP shares closed at 122p. Sources say the shares have already been bought at 115p and set aside for executive incentives. They say the real cost of the capital investment plan is between 2m and 3m. Sorrell will be required to inject capital of 2.2m into the group if the proposals are passed.
The package also includes Sorrell’s basic salary of 720,000, an annual pension, two bonus schemes and share options. Two WPP executives are paid more than Sorrell: Charlotte Beers, and Burt Manning, chairman and chief executives of Ogilvy & Mather Worldwide and J Walter Thompson Worldwide respectively. Their salaries are believed to be about $1m (637,000) apiece, but pensions and incentives bring the package up to as much as $2.5m (1.6m) a year.