WPP shareholders acquiesce in Sorrell pay row

PUBLISHED : Thursday, 13 June, 2013, 12:15pm
UPDATED : Thursday, 13 June, 2013, 12:15pm

The majority of investors in the world’s biggest advertising agency, WPP, have backed a 17.6 million pound (HK$213.9 million) pay package for Chief Executive Martin Sorrell which had drawn fire from critics of lavish boardroom pay.

Some 81 per cent of shareholders voted for the last year executive pay packages, while 19 per cent were against. A figure for abstentions was not immediately available.

Sorrell’s total remuneration was almost double the 11.94 million pounds he received on an equivalent basis in 2011 when 60 per cent of WPP shareholders rejected the company’s remuneration plan.

This year has not seen a repeat of the “shareholder spring” of last year that saw pay packages and executives alike jettisoned at London shareholder meetings.

The structure of Sorrell’s pay had been adjusted to decrease the fixed element, but the long term incentive award, based on the group’s performance against its peers over five years, was 3.5 times higher than the previous year.

Shareholders also voted 83 per cent in favour of changes to how the long term incentive awards were calculated, to take into account return on equity and earnings per share. It means that from this year Sorrell can earn a maximum of 9.7 times his 1.15 million pound salary in long term awards.

Shares in WPP were up 0.64 per cent at the market close.

In a trading update issued before the meeting the firm said its organic revenue growth picked up in April, led by branding activities and digital communications.

The British company said revenue rose 2.3 per cent on a like-for-like basis in the first four months of the year, an improvement on the 2.1 per cent growth seen in the first quarter.

The numbers are adjusted for the impact of acquisitions and currency fluctuations.

Asia-Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe were the strongest performing regions, the company said on Wednesday.

The United States and Western Europe continued the trend of slower growth established last year, it said, although Britain was an exception, with strong growth.

Operating profit was above budget and well ahead of last year, it added.

Analysts at Citi said the numbers implied that organic revenue grew 2.9 per cent in April, but fell back to trend in May, with 2.3 per cent growth.

They said the trading update in general, and in particular the outlook for growth and margins, was supportive of the company’s share price, but ultimately did not substantially change the investment case.

“The improvement in April is welcome, but the implication is that some of this has evaporated in May,” they said.