While press reports speculated for months that WPP shareholders would “revolt” over CEO Martin Sorrell’s pay package — a princely $66 million in 2014 — the real revolt came at the MDC Partners’ annual meeting last week, where barely half (53%) of the votes cast supported the company’s executive compensation plan.
That’s a sharp drop from last year, when 68% of votes supported the MDC executive compensation plan. In 2014, CEO Miles Nadal earned $16.8 million in total compensation, according to the company — although he also sold nearly 40% of his stake in the Toronto-based firm for more than $80 million.
This year’s so-called “say on pay” vote could have been influenced by the company’s disclosure in April of an ongoing SEC investigation looking into the company’s accounting practices and trading activity. As a result of that ongoing investigation, Nadal agreed to pay back to the company $8.6 million in expenses that were deemed inappropriate.
The company said Tuesday that the high level of disapproval that was communicated by shareholders via the “say on pay” vote was “clearly unsatisfactory” -- it made a similar statement about the prior year’s vote -- and announced further changes in corporate governance and compensation policies.
The firm said it would add two to four independent directors to the board and that executive recruiter Spencer Stuart has been hired to conduct a search for them. Also, only one management director will remain on the board — Nadal. Others including Stephen Pustil and Lori Senecal will resign. Senecal will continue to serve as global CEO of Crispin Porter + Bogusky as well as the president and CEO of the MDC Partner Network. Pustil will continue in his role as vice chairman of MDC Partners and as a member of the Executive Leadership Team.
Two other independent board members — Clare Copeland and Michael Kirby — will retire from the Company's Board of Directors on or before the expiration of their current one-year terms in June 2016.In response to the shareholder vote, MDC said it plans to “implement several new objective financial performance metrics for incentives payable to the CEO and all executive officers, and will retain compensation consultant Mercer to help implement best practice compensation programs aligned with enhancing shareholder value.” MDC said the new metrics would be disclosed in the future.