WPP's Sorrell In Talks To Reduce His £13 Million Pay Package
The board of thee world’s largest advertising agency has been in talks with the group’s largest shareholders over a planned reduction to Sorrell’s pay, reports The Sunday Times .
Phil Lader, the WPP chairman, has held several rounds of talks with the top shareholders in the company but so far he has offered only a modest reduction to Sorrell’s controversial pay arrangements, sources said.
The Sunday Times reports that the proposed cuts are not nearly deep enough to allay concerns over excessive executive rewards at the ad giant, according to leading WPP investor.
Several of the investors have warned that they are prepared to push for Sir Martin’s departure if they do not get their way.
Sir Martin earned £13m last year, as his base salary jumped by nearly a third £1.3m. He also received £459,000 of benefits and just over £5m under WPP’s short-term bonus schemes, pushing his 2011 pay up by nearly 60pc to £6.77m. Contributions to Sir Martin’s pension jumped 46pc to £585,000.
On top of this, Sir Martin received a windfall of almost £5.6m-worth of shares under the company’s long-term bonus scheme, the Leadership Equity Acquisitions Plan.
The WPP board was accused of being "either incompetent or arrogant" and Sir Martin admitted that WPP "misjudged the mood of shareholders" when 60pc of investors voted against his £13m pay package in June.
A second pay revolt could jeopardise Sorrell’s future at WPP, which the 68-year-old has transformed over the past three decades from a wire basket maker to the world’s biggest ad company.
“If there’s another rebellion this summer, it would be a clear signal that shareholders are looking at life beyond Sorrell,” one large investor told The Sunday Times.
Mr Lader, a former deputy chief of staff to Bill Clinton, the former American president, is said to have just weeks to design a final pay package that is acceptable to both shareholders and Sir Martin.
The media giant, which operates in 107 countries, will release its annual report in May.
By contrast, Sorrell’s supporters argue that he is the most effective and hardest working executive in the ad industry, but that his pay has failed to keep pace with WPP’s more generous American rivals. Before last year, Sorrell had not enjoyed a pay rise for a decade, they said.
Despite the anger over the chief executive’s pay, fewer than 2pc of investors voted against his re-election to the board last year.
