-- Nearly 60% of investors vote against pay report
-- Anger centered on CEO Martin Sorrell's nearly GBP6.8M pay
deal
-- Protest votes lodged against chairman, remuneration committee
chairman
-- Company promises to take shareholder vote "seriously"
DUBLIN--Nearly 60% of investors in advertising giant WPP PLC
(WPP.LN) voted against the company's pay report at an investor
meeting Wednesday, lodging another protest vote against high
executive pay.
WPP said Wednesday 59.5% of investors in the company voted
against the company's remuneration report at the company's annual
meeting, based on the results of proxy votes read out at the
meeting.
Investors had been angered in the run-up to the meeting in
particular by a nearly GBP6.8 million pay package awarded during
2011 to the company's long-standing Chief Executive, Martin
Sorrell.
Alongside the protest vote against the remuneration report
itself, investors also marked their discontent with a nearly 12%
vote against the re-election of WPP's Chairman, Philip Lader, and a
nearly 22% vote against the re-election of the chairman of the
remuneration committee, Jeffrey Rosen
Despite the anger over the size of his pay, Sorrell -- who
founded WPP almost 30 years ago -- was given a vote of confidence
in his leadership, with less than 2% of investors voting to reject
his re-election.
Investor votes on executive pay are not binding in the U.K.,
although the government is consulting on plans to give shareholders
a greater say in pay policies.
Mr. Sorrell was awarded GBP6.77 million in total annual
remuneration in 2011, up 60% from the GBP4.23 million he received
the prior year. The WPP boss made GBP12.96 million last year, when
including compensation he earned over previous years but received
in 2011.
The stand-off between WPP, the world's largest advertising
company by revenue, and its shareholders, comes amid a broader wave
of investor angst over executive pay in the U.K. that has claimed
the jobs of three FTSE chief executives in the past six weeks.
Andrew Moss, the Chief Executive of insurer Aviva PLC, (AV.LN)
David Brennan, the Chief Executive of AstraZeneca PLC (AZN.LN) and
Sly Bailey, the Chief Executive of Trinity Mirror PLC (TNI.LN) all
quit amid investor fury over their remuneration.
U.K. shareholder bodies including the Association of British
Insurers, which represents roughly 17% of FTSE companies, and
Institutional Shareholder Services, or ISS, an international
shareholder advisory firm, raised concerns about WPP's remuneration
report ahead of Wednesday's investor meeting, citing issues around
the wide jump in Mr. Sorrell's pay, his bonus awards and
pension-related pay.
Speaking after the results of the proxy votes were read out,
Chairman Mr. Lader struck a note of contrition, telling reporters
WPP's board would "take the vote seriously, promptly consulting
with many shareholders.. and will move forward in the best
interests of the company and its shareholders."
Mr. Lader declined to be more specific on what the company
planned to do and over what period, but defended Mr. Sorrell, who,
he pointed out, has given "three decades of 24/7 commitment to this
company."
Mr. Sorrell has responded robustly to criticism of his pay. Last
week in an op-ed published last week in the U.K.'s Financial Times,
he denied deserving a "bloody nose" for behaving as an owner
instead of a highly-paid manager. "If that is so, mea culpa,"
Sorrell wrote. "I thought that was the object of the exercise, to
behave like an owner and entrepreneur and not a bureaucrat."
Speaking at the investor meeting Wednesday, Sorrell said he was
"disappointed" by the result, but noted: "the shareholders have
spoken."
In particular he criticized ISS, saying he believes WPP's pay
policies should be benchmarked with peer advertising groups in
France and the U.S., not just other British or FTSE companies.
"In the case of WPP, we did take into consideration
international comparators," Georgina Marshall, European Head of
Research at ISS, said in a statement. "However, our vote
recommendation against the remuneration report was not based on
benchmarking comparators but on the large pay increase of 60 per
cent."
Dublin-based WPP's competitors include Publicis Groupe SA
(PUB.FR), owner of agency Saatchi & Saatchi, and Omnicom Group
Inc. (OMC), the parent company of agencies such as TBWA and
Japanese advertising group Dentsu (4324.TO)
Maurice Levy, Chairman and Chief Executive of Publicis, received
EUR3.6 million in total gross compensation in 2011, up from
EUR900,000 the previous year. But Mr. Levy's pay caused controversy
in France when Publicis announced earlier this year that he would
receive EUR 16.2 million in delayed bonuses in the coming months,
rewards tied to his work from 2003 to 2011. A French government
spokeswoman called the sum "disproportionate" at a time when
executives should be showing moderation.
John D. Wren, Omnicom's president and chief executive,
meanwhile, received USD15.42 million in total compensation in 2011,
a 43% jump from the prior year, according to company filings.
Sorrell's career is more closely tied to his company than that
of most other FTSE CEOs because he is WPP's founder. He purchased a
shell company called Wire & Plastic Products in 1985 and
transformed it into a beachhead in the global advertising
market.
WPP, which is headquartered in Ireland although it trades on the
blue chip U.K. FTSE 100 index, owns iconic advertising firms
including JWT and Young & Rubicam, alongside media planning
agencies Mindshare and Mediacom.
The company posted a 43% hike in net profit for 2011 to GBP834
million, on revenue up 7.4% to GBP10.2 billion and has flagged
expectations of a strong performance for 2012, driven by
advertising around major events such as the London-based Olympic
Games and the U.S. presidential election.
Many investors, however, are in no mood to accept another large
pay hike for Sorrell amid the current climate, and particularly
after last year, when around 40% of the company's shareholders
rejected the remuneration report, citing Sorrell's pay and that of
his digital chief, Mark Read.
Write to Jessica Hodgson at jessica.hodgson@dowjones.com