WPP to slash Sorrell's maximum pay in move to appease investors

(c) Sky News 2017: <a href="http://news.sky.com/story/wpp-to-slash-sorrells-maximum-pay-in-move-to-appease-investors-10853428">WPP to slash Sorrell's maximum pay in move to appease investors</a>
 

Sir Martin Sorrell, the best-paid boss in the FT‎SE-100, is to see his maximum pay slashed by a bigger-than-expected sum as the company he built into a global powerhouse tries to avert a fresh row with investors.

Sky News has learnt that WPP Group, the marketing services giant, will disclose in its annual report on Friday that Sir Martin's potential payments under a long-term share plan will be slashed from up to 9.74 times his £1.1m base salary to six times.

The proposal, along with other modifications, would mean ‎that Sir Martin's maximum pay package will fall from more than £19m under plans outlined last year to just over £13m - or almost £15m including dividend equivalents.

A leading City investor briefed on the details of the pay plan said that ‎WPP (Frankfurt: A1J2BZ - news) had gone further than expected in addressing shareholders' concerns about boardroom pay.

Sir Martin‎ has frequently been a lightning rod for investor disquiet over executive pay, with a share incentive scheme paying out more than £62m to him in 2015 alone.

His overall package last year of about £70m was the second-largest ever handed to the boss of a UK public company.

The latest annual report is expected to show that he received a total of just under £50m for 2016 - the final year under which an earlier incentive scheme, which had received the overwhelming backing of WPP's shareholders in 2009, will pay out.

At last year's AGM, roughly one third of shareholders refused to back the remuneration report of the company which owns the J Walter Thompson and Ogilvy & Mather advertising networks.

This year's annual meeting will ‎include a binding vote on WPP's pay policy over the next three years.

It comes amid intensifying pressure on boardroom bosses to demonstrate restraint, with executive pay likely to feature during the course of the General Election campaign.

Theresa May has said she wants to clamp down on corporate excess and - if re-elected - is expected to oversee the publication of a white paper covering various aspects of boardroom behaviour later in the year.

MPs (BSE: MPSLTD.BO - news) on the Business, Energy and Industrial Strategy select committee published a report earlier this month in which they called for long-term incentive awards to be abolished, and labelled existing structures of executive pay as in need of urgent reform.

Companies including Thomas Cook (Frankfurt: A0MR3W - news) , Drax Group (Frankfurt: D9F2.F - news) and Crest Nicholson (Frankfurt: A1KCZN - news) have already seen bruising investor revolts this year.

Sir Martin, one of Britain's most prominent business leaders, has overseen WPP's rise to become a global leader in its industry.

The company now has a market value of more than £22bn.

WPP said on Thursday that first-quarter revenues had risen by 17% to £3.6bn, although much of this increase was due to the weakness of sterling.

One WPP shareholder said that WPP's decision to cut the maximum incentive potential for Sir Martin should be viewed in the context of its US-based peers, Omnicom and Interpublic Group, which can award their bosses salary multiples of 26 and 18 respectively.

"It's not always palatable for investors to acknowledge this, but there is an international competitiveness issue here," the investor said.

"I would be surprised if WPP had not done enough to appease the vast majority of the shareholder base."

WPP declined to comment ahead of the publication of its ‎annual report.

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