LONDON (Reuters) - Martin Sorrell, boss of the world’s biggest advertising group WPP (WPP.L), saw off another shareholder revolt over his 43 million pound ($65.7 million) pay package at the company’s annual meeting on Tuesday.
Sorrell, who built up WPP from nothing in 1986 into one of Britain’s best known companies with 179,000 employees in 111 countries, has clashed repeatedly with investors over his pay in the past few years.
But the number of investors objecting has decreased over time. On Tuesday, 22 percent of investors at the meeting refused to back his pay deal, down from nearly 60 percent of shareholders who rejected his pay in 2012 and 30 percent last year.
Investors have been split on the issue. Some say that while the figure is excessive, they accept that Sorrell has made WPP a global leader.
“There is no doubt that Martin Sorrell is a successful CEO who has created value for shareholders, but sometimes investors need to ask themselves ‘when is enough, enough?’” Ashley Hamilton Claxton, corporate governance manager at shareholder Royal London Asset Management, said.
“In our view, 43 million pounds is more than enough.”
WPP, which has GroupM and Ogilvy & Mather and JWT in its stable, has defended Sorrell’s pay award for 2014, saying more than 90 percent was linked to the company’s performance.
Addressing the issue of performance head on at the annual meeting in central London, Sorrell, whose package made him the highest paid FTSE 100 boss last year, said any shareholder who invested 1,000 pounds 20 years ago would now have a holding worth 15,831 pounds today.
One private investor told the meeting that Sorrell was “worth every penny” and any who objected could simply sell their shares, a view that won applause from other shareholders.
But another investor, Albert Goodey, said after the meeting the payment was “objectionable.”
“I understand he’s built the company, but it sets a terrible example in the marketplace,” he said. “You have to pay good salaries to get the right people, but executive pay has got out of bounds.”
Several shareholder advisory groups such as PIRC (Pensions & Investment Research Consultants) had advised shareholders to vote against the remuneration package.
When Sorrell’s 43 million pound pay was initially disclosed in the company’s annual report in April, High Pay Centre deputy director Luke Hildyard said at the time that although Sorrell was a successful CEO, he was paid over 1,000 times as much as his average employee.
WPP Chairman Philip Lader said Sorrell’s pay was “certainly a large quantum”, but it was tied to a long-term plan that was supported by 83 percent of shareholders five years ago.
The amount was the equivalent to one third of one percent of the increase in value to shareholders over this period, he said.
Sorrell’s dominance at WPP, termed “Sorrellcentricity” by Lader, was an issue in terms of succession planning for Standard Life Investments, which manages some 22 million shares in the company.
“For now, we support the board’s position that Sir Martin is the right person to lead the company,” Standard Life Investments’ head of governance Guy Jubb said. “But we believe the board, including Sir Martin, has a responsibility to demonstrate with conviction how it is managing both the art and the science that is needed to confront the ‘succession elephant.’”
Lader, who was presiding over his final annual meeting, said the board had discussed the issue at length, but naming a list of candidates could damage co-operation between the group’s companies, and also the capabilities required to do the job could be different when the handover comes.
Sorrell, 70, shows no signs of slowing down, and he is three years younger than his rival at Publicis, Maurice Levy, who plans to stay in his job until May 2017.
Editing by Kate Holton and Jane Merriman