The price of Sir Martin Sorrell’s £6.8m

 

There is a lot of talk about a great wave of shareholder activism against excessive executive pay, a so-called Shareholder Spring - and there has been a 100% increase in the number of rejections by investors of FTSE 100 companies' remuneration policies, from just one decisive rebellion, in some years, to a grand total of two this year.

That said, the 60% vote against the remuneration report of WPP, the media giant, is significant.

It is in effect a vote against the 60% rise to £6.8m in the total rewards of WPP's chief executive and founder, Sir Martin Sorrell. Which is powerfully symbolic, since Sir Martin is far and away the most prominent British business leader to suffer the humiliation of having his pay rejected.

In theory, WPP can ignore the vote. It isn't binding. But I understand that the company's chairman, Philip Lader, and the head of the remuneration commtitee, Jeffrey Rosen, will meet shareholders to find a new package that would be acceptable to them.

In a way though, this vote is about more than pay. It is about shareholders' confidence in the board.

Investors have signalled they wish Sir Martin to stay, by voting 98% in favour of his re-election - but only 78% voted for Mr Rosen and 88% for Mr Lader.

Normally, in these embarrassing circumstances, someone senior would resign from the board, to bring about a structural improvement in the relationship with the owners.

If the resignation is not to be Sir Martin - and most shareholders will be thinking "bathwater" and "babies" at the possibility of him quitting - then presumably it will have to be one or both of the individuals who set his pay, Mr Rosen and Mr Lader.

 
Robert Peston, economics editor Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    0

    Comment number 66.

    WPP - a world leader in marketing communications.
    Vote against the 60% rise to £6.8m in total rewards to executive/founder, Sir Martin Sorrell. Chairman, Philip Lader, & Head of the remuneration committee, Jeffrey Rosen, will meet shareholders. But the critical part will be the result, n'est ce pas?

  • rate this
    +1

    Comment number 65.

    There was talk about shareholder activism against excessive exec pay, There has been a 100% increase in number of rejections by investors of FTSE 100 companies' remuneration policies - from just 1 rebellion to grand total of 2 this year. It squeezes my mind to ask: "How's this working for you?"

  • rate this
    0

    Comment number 64.

    "The market" for executive pay is broken and not working to protect shareholders and the wider economy.
    Greedy executives/managers fail to recognise or ignore that all our pay is linked. High directors/managers rewards are paid for by low pay on the shop floor, limited pension provision, poor service and short term business management. They risk far more than a shareholder revolt!

  • rate this
    -1

    Comment number 63.

    MrMax@56
    "not public money"

    Wrong in important sense: money is 'public'

    Mr Sorrell asks for £6.8m more of command, over us, grateful or not, the public

    In Equal Democracy, 10 footballers might wish 'to show gratitude' to goal-scorer

    Perhaps harmless, if amount small, or 'cup runneth over' (no long-term excess, no significant inheritance)

    But, ways better than giving away 'cash for politics'!

  • rate this
    -1

    Comment number 62.

    KURGAN@59
    "these people"

    Outside agreed Equal Democracy (equal shares of what we choose to distribute) nothing beyond question, not just in amounts but in 'moral justification'

    NHS pensions, 'sold' as if 'under contract', decades of 'loyalty' and 'restraint', terms then trashed 'under changed circumstances'

    Accept deals ignoring justice & democracy, expect 'injustice' in trashed world

 

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