WPP Group Chief Executive Martin Sorrell has taken a slight cut in his annual salary and benefits, after 60% of shareholders rejected his $20 million pay package at last year's annual general meeting.
After consultations with disgruntled shareholders, WPP Group said in its annual report that the compensation committee had "sought to balance the broad range of views expressed by shareowners with the needs of the business," but admitted that the new arrangements "will not meet every shareowner's individual preferences or views on what's best for the company."
There has also been an overhaul of the compensation committee -- chair Jeffrey Rosen is stepping down from the role after nine years, but will remain a director of the company. (A replacement has been identified but cannot be disclosed until client conflict has been cleared.) Esther Dyson and Philip Lader will also leave the compensation committee in December 2013. In another sign that WPP Group is bowing to investor pressure, it has recruited four new non-executive directors.
In an attempt to win over shareholders who rejected the 2011 pay package, Mr. Sorrell's base salary was $2.02 million in 2012, down 0.5% from 2011, with benefits of $554,000 (down 23.6%) and short term incentives down 38.5% to $4.8 million. Whether it will be enough to avoid another rebellion will not be known until the next annual group meeting, scheduled to take place in London on June 12.
For 2013, further reductions to the package have been implemented. Base salary has been reduced to $1.8 million and the pension contribution has gone down from 45% of base salary and fees to 40%. Overall, the impact of the changes is a reduction in the CEO's target pay to levels similar to that received from 2007 to 2010.
But the leader of the world's largest communications group still won a significant pay rise overall, taking home $28 million in 2012, thanks mostly to a long-term incentive plan worth $18 million. That program has been replaced by a less generous alternative.
The WPP annual report commented on the talks it has had with shareholders who think Mr. Sorrell's pay is out of line with other CEOs. It said: "While share owners recognized the increased scale and complexity of WPP since the previous compensation changes in 2007, the global nature of the group and the exceptional performance and leadership of the CEO, share owners nonetheless advised the company that they believed the CEO's 2011 remuneration package was too high relative to the U.K. market. Informed by extensive consultation with many of our major share owners, significant reductions have therefore been made for the CEO's remuneration package."
Last week WPP Group, which owns agencies including Grey, Ogilvy & Mather, Young & Rubicam, and Mindshare, reported a 6% rise in first quarter revenues. This week Grey won Procter & Gamble's global Gillette account, ending an 80-year relationship with BBDO, owned by rival group Omnicom.