Sorrell's WPP Pay Package Under Fire

• Comment (1)
• Recommend (4)
• Tweet
• 

Is Sir Martin Sorrell worth the big raise he received in 2011? The influential shareholder advisory firm ISS says the WPP CEO’s 60% pay hike was unjustified in a report it issued this week. The report puts the issue of executive compensation front and center at WPP’s upcoming annual meeting in June.

In the report, ISS recommended that shareholders vote against the WPP executive pay package, citing the 30% increase in Sorrell’s salary and a more than doubling of the value of his annual bonus opportunity. Sorrell’s total compensation last year jumped 60% to about $11 million.

The ISS report stated that the firm “considers that companies should show restraint over pay increases in the current economic climate and that any increases in total remuneration for executives should not be out of line with general increases in the company.”

The firm also stated that increases benchmarked against key competitors should be “discouraged.” It cited a “lack of transparency in the company’s remuneration report." “We expect a detailed and compelling explanation for any increases,” the report concluded.

WPP countered that it was “disappointed that ISS in the UK has chosen to view the remuneration report domestically with no regard to the global market in which WPP competes,” including competitive holding company giants such as the Omnicom Group, and the Interpublic Group of Companies.

WPP noted that ISS recommended approval of the executive compensation packages at both companies, with Omnicom CEO John Wren receiving a 43% pay hike last year to $15.4 million, while IPG CEO Michael Roth received a 27% increase to almost $13 million. ISS criticized WPP for not having a formal requirement that the CEO hold shares in the company. WPP said the firm did not criticize Omnicom or IPG for a lack of similar requirements.

WPP further stated: “The Compensation Committee is satisfied that the compensation arrangements for the CEO are aligned with shareholders’ interests, being 86% performance-related with no reward for failure, no contract, and being globally competitive, reflecting WPP’s position as the global leader in its sector. .. Sorrell’s interests are further aligned with shareholders, as he continues to hold some 18 million WPP shares, a holding built up over the last 26 years.”

Executive pay has come under intense scrutiny in both Europe and the U.S. as worries about the economy continue.

Earlier this month, Aviva CEO Andrew Moss resigned after a majority of shareholders rejected his pay package, although the vote was advisory, as is the upcoming WPP vote. In France, executive pay became a political issue when Publicis Groupe revealed that CEO Maurice Levy received a $21.6 million lump sum in deferred pay accrued over nearly a decade of service. Both of the leading candidates in France’s presidential election criticized the payment.

In the U.S., the percentage of shares voted against Omnicom’s executive pay package was not insignificant: about 21%. Last year, over 40% of WPP shareholders voted to reject Sorrell’s 2010 pay package. Now with ISS weighing in, the Financial Times predicts that the vote against the pay package at the firm’s upcoming annual meeting could exceed 50%. 

• Comment (1)
• Recommend (4)
• Tweet
• 

1 comment on "Sorrell's WPP Pay Package Under Fire".

1. Khalid Low from Reindeer Company
   

   commented on: May 31, 2012 at 11:58 a.m.
   Public traded company are set up to make money for their top guys. The only difference between a public traded corporation in the Western world and a dictator is that a dictator is above the law and no one can do a damn thing about his looting & plundering ways. A typical CEO will get the huge bonus and massive salary because his cronies (board of directors) will push for it and vote for it. These are yes men like the ones found in dictators circle of friends. These bonuses and salaries come from investors so the CEO and his cronies could give two cents (pardon the pun) what anyone thinks. And even if they get fired, there will always be another job with a bigger corporation or that treasury job waiting for him/her. All we get to do is whine but nothing changes, nothing!

Leave a Comment