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Investor revolts over remuneration hold no fear for WPP’s combative head, who believes he’s worth a pay rise and will take to the media to say so
Sir Martin Sorrell, the chief executive of advertising group WPP, is – to his credit – rarely one to duck a debate over executive pay. Most other listed-company executives who find themselves in the midst of a remuneration controversy attempt to absent themselves from the debate, perhaps believing – doubtless after taking extensive public relations advice – that they can disappear from view like a grinning Cheshire cat. Not so Sorrell.
Facing near-certain defeat in a vote over his pay arrangements at next week’s annual shareholder meeting, the WPP boss has taken to the pages of the FT to remind the swelling ranks of investor ingrates that 27 years ago it was he who had the vision to set up WPP, building it up from one room, with two people and a market value of just £1m. Today the business employs 160,000 people in 108 countries and has a value of £10bn.
He finds objections to his pay “deeply disturbing”, even “wounding”. He rails: “WPP is not a public utility.” The role of the well-paid boss at WPP, he says, is “to behave like an owner and entrepreneur and not a bureaucrat”. There is raw hurt and anger in his words. Not yet King Lear raging at pernicious daughters, but perhaps – in the buttoned-up language of the corporate world – veering in that direction.
Last year some 42% of WPP shareholder votes were cast against the group’s remuneration report – a clear signal of investor disquiet, which shareholder groups feel has, since then, gone almost entirely unheeded. All the significant governance watchdogs – the Association of British Insurers, Pirc, ISS and Manifest – have delivered swingeing criticisms of Sorrell’s pay. Meanwhile, not a single institutional investor has spoken up in his defence.
All the signs are that WPP will have to stomach defeat at next week’s AGM and then find a way to move on. The event will break two records, becoming the third remuneration vote defeat for a FTSE 100 company in a single year and the sixth in a single year across the wider market.
But what perhaps marks out the WPP spat is Sorrell’s particular line of defence. Pirc notes that only once in his FT commentary does he refer to shareholders and the alignment of their interests with those of the firm’s executive leadership. His emphasis, instead, is on top executives as owner-entrepreneurs.
In truth, however, having built the business through a string of acquisitions into a global empire, Sorrell can no longer plausibly cast himself entrepreneur in any recognisable definition of the word. An entrepreneur, moreover, is not the kind of leader that a company of the scale and maturity of WPP needs at the helm. To argue otherwise, surely, would be a triumph of public relations beyond even the wit of Sorrell’s smartest lieutenants.