‘Shareholder Spring’ revolt set to engulf WPP chief executive

A number of advisory groups and leading shareholders at the advertising group say they will vote against the proposed increase for the chief executive because it is out of sync with the returns made to investors. Mr Sorrell, who founded WPP in 1985 and has grown it by encouraging companies to place their advertising with his firm, is now facing one of his biggest challenges to persuade shareholders to focus on his performance and not the wider pay issue.

Mr Sorrell has argued that he deserves his £6.8m pay for turning WPP into the world’s leading advertising group with more than 160,000 employees across 108 countries.

The backlash against executive pay, he says, stems from an earlier controversy over the level of pay awarded to bankers who have been blamed for the financial crisis. And his salary should be compared to the pay of his rivals in the United States and elsewhere, rather than British ad groups which are much smaller.

Nevertheless, a sizeable chunk of WPP shareholders look set to make the company the latest battleground in Britain’s so-called ‘Shareholder Spring’ that has seen investors disgruntled by flatlining or falling share prices vent their anger by voting against executive pay deals.

“We’re not nervous about giving people serious amounts of money, we’re just very concerned that it has to be aligned to the owners of the business.

“We’ll vote against it because it’s not aligned with us,” said one top 20 WPP shareholder.

Another British shareholder agreed he had no objection to high pay if investors also benefit. “There are too many complex systems of reward which mean management is able to pay themselves for relative performance designed by themselves and their consultants but the only thing that matters to our customers, the pensioners and savers, is whether or not they are doing better,” the second shareholder said.

“We have absolutely nothing against management becoming filthy rich as long as shareholders do equally well.”

Shareholder advisory service Pirc has recommended members vote against WPP’s remuneration package citing concerns about its “excessiveness” while the Association of British Insurers has highlighted its concerns by allocating it a ‘red top’.

WPP said Mr Sorrell’s pay is performance related and reflects the fact the group has positioned itself well in recent years, growing rapidly in emerging markets and through digital marketing while the mature markets of the US and Europe struggled.