(Adds comment from WPP)
By Simon Jessop
LONDON, June 2 (Reuters) - Investors should revolt at advertising group WPP’s annual shareholders’ meeting over pay, bonuses, board make-up and choice of auditor, leading European investor-voting advisory group PIRC said on Tuesday.
On the remuneration report, which refers to previous payouts, Pensions and Investment Research Consultants (PIRC) said Chief Executive Martin Sorrell’s total pay for last year of nearly 43 million pounds ($66 million) was excessive.
The figure is 37 times his base salary and the ratio of his pay to that of the average employee was also not appropriate at 179 to one.
“There are concerns over the excessiveness of this payment as the CEO’s total remuneration over the last five-year period is not commensurate with the Company’s financial performance over the same period,” PIRC said in a statement.
A WPP spokesman said in response that “over 90 percent of Sir Martin Sorrell’s remuneration in 2014 was performance-based, the vast majority of which was from the five-year LEAP (incentive) scheme and 19 million pounds wholly attributable to share price appreciation and dividends”.
He added: “WPP achieved total shareholder return of 171.5 percent in the five-year period, compared with the FTSE 100’s 21.3 percent rise over the same period.”
On bonuses, PIRC said a potential payout to executives of 400 percent of their base salary, as well as a payout of up to 100 percent of base for others in the form of options was “excessive”.
The ability to access the payout after just three years was also not sufficiently long term, there was no evidence that all executive options would be subject to performance conditions, and there were no clawback rules in place.
PIRC recommended an “oppose” vote on reappointing Deloitte as firm auditors, citing high fees and the fact that Deloitte had been auditor at WPP for more than 10 years.
“There are concerns that failure to regularly rotate the audit firm can potentially compromise the independence of the auditor, particularly in the light of such high non-audit fee payments,” PIRC said.
On board make-up, PIRC said it did not support the appointment of Roberto Quarta as board chairman, as he is also chairman of the board at Smith & Nephew, which “raises concerns about his external time commitments”.
“It is considered the Chairman of a FTSE 100 company should be expected to commit a substantial proportion of his time to the role,” PIRC said.
WPP holds its AGM on June 9.
$1 = 0.6524 pounds Additional reporting by Kate Holton; Editing by David Holmes and David Evans