Reject Sorrell’s £70m pay, Pirc tells WPP shareholders
An influential shareholder group has called on investors to reject the £70m pay packet of WPP chief executive Sir Martin Sorrell.
Shareholders have been advised to oppose the pay of the highest paid boss of any FTSE firm, which was dubbed "excessive", by the investor advisory body Pirc.
WPP, which owns advertising agency JWT and Ogilvy & Mather, is due to hold its annual shareholder meeting a week from today on 8 June.
Read more: Revenue jumps at Martin Sorrell's WPP
Pirc said on Wednesday that Sorrell's variable pay was 58 times his £1.2m salary, far exceeding Pirc's advised ratio of 200 per cent of base salary, while the pay ratio compared to the average employee was "highly excessive at 196:1".
It notes that Sorrell's pay over the last five years rose 56 per cent and while the company has performed well, it is out of line with total shareholder returns (TSR) which rose 28.8 per cent on average over the same time. The report said the pay award based on one metric – TSR – was "not appropriate".
"The shares already held should provide him with substantial alignment with shareholders and incentive to perform. The issue for the company is not his retention, it is his succession and replacement," said Pirc, echoing previous concerns raised about succession planning for the 71-year-old's departure.
The group also called on shareholders to oppose the re-election of Roberto Quarta as chairman of the group and the re-appointment of Deloitte as auditor after more than 10 years, indicating that the latter should be regularly rotated.
Read more: Martin Sorrell's £70m: The defence (and not just from Sorrell and WPP)
As chair of Smith & Nephew in addition to WPP, it concluded that Quarta "cannot effectively represent two corporate cultures" while raising further concerns over his position on the remuneration committee.
The call from Pirc follows a similar call by ShareSoc for shareholders to reject the pay.
Sorrell landed the backing of another influential investor group in March, however. Institutional Shareholder Services (ISS) said the multimillion pound pay out is related to performance, with the company noting it had "outperformed its global peers".
Sorrell has previously defended his pay, saying he made "no apologies" for building a successful company.