Sorrell's $30M Pay Cut Calms Investors but One-Fifth Still Revolt

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WPP AGM 2017
WPP AGM 2017

At today's annual meeting, more than 20% of WPP shareholders were opposed to CEO Martin Sorrell's $62.2 million pay package, even though it had been cut from $91.1 million the previous year. They were much angrier at him five years ago, when 60% of shareholders were against Sorrell's perennially high pay at the 2012 meeting.

This year, the $30 million pay cut did have an impact. A total of 21.3% of shareholders either voted against Sorrell's pay or abstained this year, compared to 33% last year. That's the lowest level of protest against Sorrell's pay in more than five years. After the 2012 shareholders' revolt, 26% of shareholders voted against or abstained on the pay package issue, followed by 30% in 2014 and 22% in 2015. ,.

Richard Greening, speaking on behalf of the Local Authority Pension Fund Forum, which owns more than 1% of WPP shares, fueled the annual shareholders' revolt by describing Sorrell's pay as "excessive" and asked whether it was about retention or succession planning.

WPP Chairman Roberto Quarta replied, "It's not about retention. Sir Martin Sorrell has built this business from nothing. He is totally committed to the business. I don't think pay is what keeps Martin here at WPP. He's been here for 30 years and hopefully we will keep him here for many more years."

The world's largest communications group held its annual shareholder meeting at the Shaw Theatre in London's Kings Cross area this afternoon, where the stage design was inspired by Western European street scenes. Cobbled paving, shuttered windows and ornate street lamps were intended to reflect U.K.-based WPP's solidarity with Europe, in defiance of last summer's Brexit vote that determined the U.K. will no longer be part of the European Union.

"Britain voted, not WPP," Quarta explained.

In his introduction, Quarta sought to head off inevitable questions about Sorrell's successor. He talked about the group's ongoing "future leaders" program, which he said maintains an internal pool of candidates "alongside a constantly refined list of external candidates."

Deborah Gilshan, governance and stewardship director at Standard Life Investments, pointed out that Sorrell's contract can be terminated by the company or the CEO himself without any notice. She said, "We suggest that the board consider what lead time would be required to ensure an orderly succession."

In response, Quarta said only, "We share your views relative to a proper process … we take succession planning very, very seriously … [and] we have a very robust process to ensure, depending on the circumstances – whether they be accidental or as a result of planning – continuity and success of the business going forward."

Sorrell also spoke at the meeting, outlining the company's priorities and challenges for the year ahead. He also introduced three speakers who run WPP businesses: Satish Korde, CEO of Global Team Blue, which heads the Ford Motor Co. global account for WPP; Ranjana Singh, chairwoman for WPP Indonesia & Vietnam; and Mike Hudnall, global CEO of WPP Health & Wellness.

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