Majority of WPP shareholders reject CEO pay

published 13 June 2012

WPP shareholders have rejected Chief Executive Sir Martin Sorrell's pay at the media conglomerate's annual general meeting (AGM) on Wednesday, with three-fifths of voters protesting against the remuneration report.

The director has become the latest in a string of bosses to suffer a significant protest vote over pay packets in what is known as the "Shareholder Spring".

The company's Chairman, Philip Lader, said: "We take the remuneration report vote seriously. We'll consult with many share owners and we'll then move forward in the best interest of our share owners and our business."

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He added that the proposed remuneration, which would include a 60% rise in Sorrell's earnings to £6.8m, had been decided using the company's "best judgement".

Despite the majority voting against the remuneration package, WPP is under no obligation to revise the terms.

Sorrell, who founded the company, is widely credited with transforming the company into the world's largest advertising group, both in terms of revenue and market capitalisation.

The 30% leap in Sorrell's salary stands in sharp contrast with the average rise in basic salaries of just 2.5% last year of those working in the rank and file of FTSE 100 companies, and is even a sumptuous increase by the standards of fast-rising executive pay. According to a survey by Manifest, the proxy voting agency, the average remuneration for FTSE 100 chief executive officers jumped 10% to £3.7m.

At the AGM WPP also reported a 7.0% increase in reported revenues to £3.2bn in the first four months of the year, while like-for-like (LFL) revenues rose 4.0%. During this period both profits and operating margin were above budget and ahead of last year, the firm said.

In the AGM statement the company said: "The pattern of revenue growth in 2012 is generally similar to both the first quarter of 2012 and full year 2011, with continuing improvement across all sectors and geographies, but at lower levels of overall LFL growth.

"Advertising and media investment management and branding & identity, healthcare and specialist communications (including direct, digital and interactive), as in 2011, were the strongest services sectors, with consumer insight revenues more stable, as in the first quarter.

"The pattern seen in 2011, with slower growth in the mature markets of the US and Western Continental Europe, has mostly continued, with the faster growing markets of Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe continuing to be the strongest, as seen in the first quarter."

WPP added that the preliminary result for May indicate a similar pattern to the first four months.

In the UK the firm saw constant currency growth of 4.2% experience a slight fall back in April, with the greatest impact on the group's consumer insight and branding and identity businesses, partly offset by strong growth in the group's media investment management and specialist communications businesses.

In Europe, LFL revenues grew 2.0%, with Germany, Italy and Switzerland well above the average while Spain, Portugal and France continue to be affected by the European economic situation.

In North America the company saw LFL growth of 1.7%, while Latin America saw the strong growth with LFL revenues up 14%.

The share price fell 2.34% to 750p by 14:56.