Advertising company WPP will reveal this week that its chief executive, Sir Martin Sorrell, has been handed shares worth £60m in a move that will take the total earnings of the high-profile FTSE 100 boss to more than £150m in five years.
Sorrell’s pay deal for 2015 is likely to reach close to £70m once his salary and annual bonuses are added to the long-term bonus scheme which will be announced this week.
His pay – a past flashpoint with investors – is being revealed at the start of the AGM season for the UK’s stock market-listed companies when themes such as generous pay rises, over-stretched directors and boardroom succession planning are expected to become major talking points.
In 2015, Sorrell’s £1.1m salary will be bolstered by the release of shares from a long-term bonus scheme which dates back to 2011. That scheme will be phased out next year following a shareholder rebellion in 2012, when nearly 60% investors voted against the deal.
The company confirmed this week it would announce that from 2011 to 2015 WPP had outperformed its peers and the FTSE 100. This appears to indicate that around 3.5m shares – each worth more than £15 – will be released to him, along with shares to cover forgone dividends which could push the bonus up to £60m.
Sorrell was paid £43m in 2014 and information contained in the annual report for that year would indicate his pay deal for 2015 will push his total earnings since 2010 to more than £150m. His biggest payday until now was in 2004 when he received £53m.
Sorrell’s total pay deal comes as investors prepare for the annual general meeting season when investors have already put companies on notice about the topics likely to prompt rebellions this year.
A leading shareholder advisory service, ISS, has already put companies on notice that it is looking at the topic of directors who carry out a large number of roles. “ISS may recommend against ‘overboarded’ directors,” the advisory service said.
Andrew Ninian, director of corporate governance at the Investment Association, said: “The overall theme of board effectiveness isn’t going away. Investors will be looking at annual reports to see how their governance is working.”
However, he added: “Predominantly, the [main issue] will be about pay.”
AGMs are the one time when small private investors and major investors with multimillion-pound stakes are able to air concerns about how companies are run. They get to vote on a number of issues such as the emuneration report and the election of directors to the board.
The high street banks have already published their annual reports for 2015 and will be facing scrutiny from investors about whether bonus pools to staff reflect the dividend payments to shareholders.
Other issues include succession planning. For instance, Schroders has attracted interest for its succession planning, after promoting Michael Dobson to chairman after 14 years as chief executive. Corporate governance codes require an explanation for such a move as it could stifle the ability of the new CEO to run the company.
This article was written by Jill Treanor and Sean Farrell, for theguardian.com on Sunday 13th March 2016 15.58 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010