WPP CEO Martin Sorrell was directly challenged by shareholders about succession planning and his controversial $100 million compensation package at the communications group's annual general meeting in London today.
During the meeting, a number of shareholders – some individuals and some representing larger stakeholders or pressure groups – stood up to ask the WPP board of directors to defend its policies.
Representatives from asset manager Standard Life Investments (which holds 17 million WPP shares), responsible investment charity ShareAction, and the Railways Pension Scheme were among those who voiced their concerns over what they considered Mr. Sorrell's excessive pay and inadequate plans for his succession.
WPP Chairman Roberto Quarta answered the questions about succession. He said, "Succession planning is an ongoing focus ... there is continuous and constant assessment of candidates internally and externally ... there is no set time frame for WPP succession, but we will have a seamless transition, whether it's planned or unplanned."
Later in the meeting, after repeated questioning – including references to Mr. Sorrell's age (he's 71), non-executive director John Hood reminded the assembled shareholders, "There is no retirement age in this country and so please don't raise that in any way as a norm."
Mr. Sorrell is thought by people close to him to be planning to carry on as WPP CEO for quite some time – after all, Rupert Murdoch is still chairman and CEO of both News Corporation and 21st Century Fox, at the age of 85. In contrast, Mr. Sorrell's 74-year-old rival Maurice Levy, chairman-CEO of Publicis Groupe, has set a May 2017 date for his retirement.
Mr. Hood, who is also chairman of the WPP compensation committee, fielded questions about Mr. Sorrell's pay package, which was approved by just 66% of shareholders this year, down from 78% last year.
He said, "89% of remuneration last year related to a legacy plan that has one further payout to make, which is next year… The new plan ... involves a drop in [Mr. Sorrell's] base remuneration, his pension payments… and a drop in his short term incentive plans and a significant restriction of his long term incentive program. In 2018 the level of Sir Martin's payment will drop in order of magnitude to the very, very low double figures, barring exceptional circumstances."
One anonymous shareholder took the board's side. He said, "I'm very disappointed after such a fantastic, inspiring performance over many years that we have to be bothered with these pathetic questions about remuneration ... One wonders what the chief executive does with all that money but I'm sure he enjoys it. Every penny is earned."
Mr. Sorrell, who had remained silent throughout, felt compelled to respond to this comment. He said, "Lest anybody be under any misapprehension, all the amount after tax is retained in the company. The only major asset that I have is in WPP shares and I think that's often forgotten."
Mr. Sorrell was also asked about the issue of media transparency, which is in the spotlight this week due to the Association of National Advertisers' report into the issue.
The WPP CEO referred shareholders to a GroupM statement on the ANA's K2 report, and added, "It was called an independent study. It is no way independent ... It does not include any input from any of the six holding companies. It referred to one interview with one of the six holding companies and certainly did not involve the holding companies in any way whatsoever ... So it's not an independent study. I would refer you to the question of rebates and there's unfortunate language that's been used in the PR promotion of the report prior to its issuance and subsequently – emotional and intemperate language. GroupM's position is totally clear on the U.S. rebates and the fact that there aren't any."
Oddly, the stage where Mr. Sorrell and other company execs sat at the meeting, held at London's Shaw Theatre, was decked out in a Cuban theme, perhaps inspired by WPP's interest in Cuba. (WPP even appointed a lead last year for Cuba, Y&R Spain exec Miguel Barroso, who is based in Havana.) Instead of a lectern, speakers stood by an oil barrel painted in the red, white and blue of the Cuban flag. At today's meeting, one shareholder jokingly asked if WPP could fly them all to Cuba for next year's annual meeting.
Presentations were made by the global CEOs of WPP's four main creative agency networks: Tamara Ingram at JWT, John Siefert (with chairman Miles Young) at Ogilvy, David Sable at Y&R, and Jim Heekin (also chairman) at Grey.