A movement against high executive compensation dubbed "shareholder spring" is sweeping the U.K. a month before WPP Group seeks a large raise for Chief Executive Martin Sorrell at the company's annual general meeting on June 13.
In the WPP annual report published last week, WPP scaled down the proposed increase in Mr. Sorrell's base salary from 50% to 30%, to $2 million. The company is expected to meet with shareholders in the coming weeks before the annual meeting, although it's unclear whether the company's argument that Mr. Sorrell's current base salary of $1.6 million hasn't gone up since 2007 will pacify them.
As an infographic in WPP's annual report illustrates, only 10% of Mr. Sorrell's compensation comes from "salary and fees" while 85% is described as "variable," derived from a cash bonus (12%), a share bonus (12%) and a long-term incentive plan called LEAP (61%). (The remaining 5% goes to his pension).
In a letter from Jeffrey Rosen, chairman of the compensation committee, published in WPP's annual report as part of a seven-page section on executive compensation, Mr. Rosen said that after last year's annual general meeting "we recognized that a number of our share owners had issues with some aspects of the group's executive compensation arrangements. ...The committee recognizes that the subject of executive compensation is particularly contentious in the current political and governance environment."
A WPP spokesman told the U.K.'s Guardian: "WPP always holds meetings with shareholders following the publication of the annual report and has always encouraged shareholder communication."
As part of the U.K. shareholder spring revolt, three companies have seen shareholders reject their remuneration reports this year, including a car dealership called Pendragon just this morning. Another showdown may happen tomorrow at the annual meeting of energy company Centrica. Three chief executives have quit recently under shareholder pressure. In the media world, Sly Bailey's departure from poorly-performing newspaper group Trinity Mirror was announced after her $2.7 million pay-as well as her performance as chief executive-were criticized at last week's annual meeting.
No one believes Mr. Sorrell's job is in jeopardy, especially after his company posted 5.5% revenue growth in the first quarter of 2012, but shareholders of U.K. companies are clearly trying to send a message.