WPP chief executive Martin Sorrell faces a shareholder revolt over his £43 million pay award for 2014 after two investor groups criticised the package which makes him the best paid boss on the FTSE 100.
Glass Lewis and Institutional Shareholder Services (ISS), which advise investors that own about a quarter of the equities on the UK stock market, have both raised concerns about the 40 per cent rise that Mr Sorrell received for 2014.
The worries of the proxy advisers heighten the chance of another fight over pay between the chief executive and shareholders when WPP, one of world’s leading advertising groups, holds its annual conference on June 9th.
Shareholders have protested against Mr Sorrell’s pay on a regular basis in the past few years. After 60 per cent of shares voted against a pay award in 2012, the company replaced his long-term incentive scheme with a less generous package in 2013.
Wholly excessive
This year Glass Lewis has recommended that shareholders vote against Mr Sorrell’s remuneration, saying it considers the award “wholly excessive” because it “far exceeds the compensation given to chief executives at similar firms”.
One top 20 investor in WPP said: “Pay levels remain excessive. Sir Martin is a very talented and hardworking chief executive, who has made the company what it is, but £43 million is a vast amount.”
ISS did not go so far as to recommend a No vote, but it said “the overall quantum of Sir Martin Sorrell’s pay remains exceptionally high”. The proxy service said it supported the pay award because the remuneration scheme was performance-related and much of the increase was attributable to share price appreciation.
“The company’s performance record is strong, with 2014 another record year by virtually any metric, including revenue, profitability, net sales margins, earnings per share and share price.”
Mr Sorrell’s pay is more than double that of the second most highly paid FTSE 100 chief executive, Royal Dutch Shell’s Ben van Beurden, who received nearly £20 million in fixed and variable pay in 2014.
Mr Sorrell also earned more than eight times the £5.04 million average pay for a FTSE 100 boss, according to the High Pay Centre.
His latest pay rise takes his earnings over the past 11 years to about £187 million. However, WPP said his pay reflected the company’s strong financial performance.
When the rise was announced in March, WPP chairman Philip Lader said it was down to "exceptional corporate performance over five years". – (Copyright The Financial Times Limited 2015)
