Sir Martin Sorrell defends £63m pay package ahead of AGM

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Sir Martin Sorrell, the chief executive and founder of advertising giant WPP, has launched a passionate defence of his controversial £63m bonus deal in the wake of last week’s explosive start to the annual general meeting season.

Speaking after shareholders voted against pay deals at BP and Smith & Nephew on Thursday – and as boardrooms are on high alert for a potential revival of the 2012 “shareholder spring” when scores of investors rebelled over executive pay – Sorrell told the Press Association: “Most of my wealth, if not all of it, is and has been for the last 31 years tied up in the success of WPP. So if WPP does well, I do well, and others in the company do well. If we do badly, we suffer.”

The comments came as Centrica, the owner of British Gas, holds its annual general meeting on Monday, after suffering a significant pay protest last year. Big City investors are also scrutinising the pay deals at a wide-range of FTSE 100 companies including mining company Anglo American and building products group CRH, as well as WPP.

Andrew Tyrie, the Conservative MP who chairs the Treasury select committee, told the Financial Times that shareholders now faced a “defining moment” in curbing excessive pay.

In March, the advertising firm revealed that Sorrell collected what is believed to be the second-largest package granted to a FTSE 100 chief executive, behind only the £92m in shares and cash paid to Bart Becht while he was chief executive of Reckitt Benckiser in 2009.

The £63m figure is likely to eventually hit £70m, when WPP publishes its annual report later this month, which will include Sorrell’s salary and other payments on top of the shares.

Sorrell said his share award – which is topped up by a £1.15m salary – was “voted through by shareholders by considerable majorities”.

“The fact is, those plans were put in place, they were voted on, they were approved. The only reason the plans have resulted in what they’ve resulted in is because the company has done well,” he said.

“Over the past four or five years, the company’s market cap has grown by about £10bn. So if it’s our [sic] nostra culpa for having a successful company ... I make no apologies for that. The better the results, the better the people do.”

Although WPP shares have more than doubled in the past four years the shareholder lobby group Pirc described the award as “excessive”.

Sorrell’s package dates back to a scheme that the company called its “leadership equity acquisition plan” (LEAP), which was introduced in 2009. In 2012, investors revolted against WPP’s remuneration report.

The company ended the LEAP scheme in 2013 and Sorrell accepted cuts to his pay and potential bonus payout. However, WPP continues to honour potential payouts under the LEAP plan, which has a further year to run.

Asked if he feared another rebellion at this year’s AGM in June, Sorrell said: “We have shareholder votes every year. It is what it is. Shareholders will decide. It’s very democratic. We’re always engaged with shareholders with anything and everything.”

The AGM season has started with several rebellions against pay. On Thursday, almost 60% of BP shareholders rejected the oil giant’s remuneration report, which awarded boss Bob Dudley £14m. Just hours later, more than 50% of investors voted against pay deals at the medical equipment group Smith & Nephew.

The boards of other firms such including AstraZeneca and Reckitt Benckiser, where the pay of the chief executive, Rakesh Kapoor, almost doubled to £23m last year, could face potential rebellions over pay at their AGMs.

HSBC will become the first major bank to hold its annual meeting this year. On Friday it is expected to face questions about executive pay and succession planning – the chairman, Douglas Flint, is to step down next year – and its links to Mossack Fonseca, the law firm at the centre of the Panama Papers.

Powered by article was written by Simon Goodley, for The Guardian on Monday 18th April 2016 00.01 Europe/London © Guardian News and Media Limited 2010


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