Call it the New WPP. That will be the name of the new WPP parent company if a plan revealed today for relocating back to the UK from Ireland goes into effect. In a release detailing the move, the company also noted that management continues to negotiate with shareholders over CEO Sir Martin Sorrell’s pay package, which became a sore spot for some investors last year.
The company also gave a brief and preliminary update on October business results.
If all goes according to plan -- including approval by shareholders and courts -- WPP will issue a new series of stock that will replace the current issue (of equal value). It would begin trading on the London Stock Exchange on Jan. 2. Current shares would be cancelled effective Dec. 31.
The company moved its headquarters to Dublin in 2008 in the wake of the passage of tax laws in the UK that would have imposed huge new taxes on the company, largely because of the amount of business it does internationally. But UK tax policies were recently changed, effective in 2013, favoring UK companies that do a lot of business overseas.
The reincorporation plan must be approved by shareholders at two separate meetings to be convened next month, including a meeting set up by a UK court in Jersey, where New WPP will be incorporated and 75% of outstanding shares have to be voted in favor of the move.
Then, at a separate general meeting of WPP shareholders, two-thirds of the outstanding shares also have to be voted in
favor of the move. Both meetings are scheduled for Dec. 11 in Dublin. The Jersey court then has to approve the plan at a hearing set for Dec. 18.
As for compensation, the company said it “continues to be engaged in discussion with share owners regarding compensation matters at WPP, both in relation to [Sorrell, who earned nearly $11 million in 2011] and executive remuneration policy generally.”
Inflated CEO packages have become a big shareholder issue over the last few years, and the shareholders of most of the big Adland holding companies have
weighed in with concerns. But WPP shareholders were the first agency holding company where investors rejected management's remuneration package in a vote at June's general meeting. Nearly 60% of votes
were cast against it. The vote was non-binding, but forced management to rethink the policy and come to an understanding with investors about future pay for senior executives.
The holding company also noted that organic revenue growth in October, based on a preliminary accounting, was up roughly in line with the 1.9% achieved in the third quarter. It also said that October performance was “better than September,” a particularly rough month.
WPP was the second holding company this week to provide a glimpse of October business activity. Earlier, Publicis Groupe reported its organic revenue growth climbed 7% in October versus 2% for the third quarter, which included a decline for September. It is unusual for public companies to provide updates more frequently than quarter to quarter. But with the unexpectedly weak results that both companies displayed in Q3, they appear to want to show investors that things aren’t getting worse.