WPP shareholders express discontent over chief executive's pay package
Shareholders have dealt a bloody nose to WPP over the advertising giant's £48 million pay package for chief executive Sir Martin Sorrell.
More than 21% of investors opposed or abstained when asked to vote on the remuneration report at the firm's annual general meeting (AGM) on Wednesday.
While the vote was not binding, the level of discontent will be embarrassing for the FTSE 100 firm, which cut Sir Martin's total pay to £48.1 million for last year, from £70.4 million for 2015.
However, the level of protest over WPP's new remuneration policy, which will hand executives lower long term incentive awards, was at a more modest 10%.
The results ensured WPP faced a shareholder backlash for the second year in a row after more than a third of investors refused t o back Sir Martin's pay deal at the 2016 AGM .
It comes as the company also gave a trading update on Wednesday for the first four months of this year, with reported revenues rising 16% to £4.8 billion thanks to a boost from the Brexit-hit pound.
Stripping out acquisitions and the impact of sterling's slump, like-for-like revenue stepped up by 0.7% in contrast to last year and ahead of the 0.2% growth seen in the first quarter.
Chairman Roberto Quarta said: "The pattern of revenue and net sales growth in the first four months of 2017 is generally the same as the first quarter of the year, with the one month of April showing stronger revenue growth, particularly in the United Kingdom and Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe, with Western Continental Europe weaker and marginally softer net sales growth."
The drop in Sir Martin's pay packet for 2016 reflected the falling value of his long term share incentive plan, known as LEAP, which eased back from £62.8 million to just over £41 million.
The WPP founder's short-term bonuses also headed south, dropping from £4.3 million to around £3 million, but he still remains the highest paid chief executive in the FTSE 100.
Focusing on the long-term succession plan for Sir Martin, Standard Life Investments, which manages 19 million shares in WPP, urged the board to take action.
Deborah Gilshan, Standard Life Investments governance and strategy director, said: "As a long-term shareowner in WPP, we acknowledge the success that Sir Martin Sorrell and all of the team at the company, past and present, have achieved and the ensuing benefits of that success to our clients.
"Critical to that success continuing is an orderly management succession, especially for the role of CEO. This remains the key governance risk to our long-term investment in WPP.
"As another annual meeting passes, the time to address succession for the CEO shortens and the necessity to do so becomes more pressing.
"Unusually, the CEO's service contract may be terminated by either the company or Sir Martin without any notice. Given this, we suggest that the board consider what lead time would be required to ensure an orderly succession and discuss this with Sir Martin.
"We would like the board to come to an agreement with him that, other things being equal, he will provide sufficient warning to meet this timeframe."
Royal London Asset Management (RLAM), which holds more than six million shares in WPP worth £106 million, was among the investors that voted against the remuneration report and the new executive pay policy
Ashley Hamilton Claxton or RLAM said: "Executive pay at WPP continues to look excessive.
"Whilst we acknowledge that the reduction in the total long term bonuses and incentives available to executives under the new remuneration policy is a step in the right direction, the sheer scale of these remains exceptionally high, at over nine times the salary for the CEO.
"As with previous years, we have voted against WPP's remuneration report and also against this year's new remuneration policy."