WPP shareholders vote against Sir Martin Sorrell's pay deal

WPP shareholders have voted against the board's executive pay report by a majority of 59.5 per cent.

The remuneration deals included a £6.8 million deal for chief executive Sir Martin Sorrell.

The vote is non-binding so it will be down to the board's discretion whether they go ahead with the pay deals or amend them in line with shareholder sentiment.

The vote comes after a number of institutional bodies advised shareholders to vote against the deal. Pensions Investment Research Consultants (Pirc) described the pay deals as "excessive."

Other major shareholders such as  Scottish Widows, Standard Life and Co-operative Asset Management also voted against the deal. Shareholders believe that the company did not listen to last year's warning when 42 per cent of votes went against the board, despite WPP's chairman Philip Lader telling the audience at the annual meeting that the company took the remuneration report vote "very seriously".

Pendragon, Trinity Mirror, Aviva, AstraZeneca and Inmarsat have all had large numbers of shareholders voting against generous pay deals for top executives at companies that have not been posting successful financial results.

Aviva’s Andrew Moss was forced to leave his role as chief executive after losing the remuneration vote despite turning down a pay rise just days before Aviva’s annual meeting.

However, ahead of the annual meeting Sir Martin has been vociferous in declaring that the 56 per cent pay rise he received in 2011 should be seen as a reward for success, not failure. WPP reported profits of £1 billion for the first time in 2011.

In an interview with the Financial Times last week, Sir Martin said that if the UK wanted successful private firms it has to pay competitively.

He said: "The compensation debate in the UK now seems to have shifted from undeserving bankers paid for failure and from payment for performance to what is fair pay."

However, institutional investors could vote against the pay deal at today’s annual meeting because they feel the pay increase is not warranted by the dividend payments paid out by WPP.

Institutional shareholder groups such as Pensions Investment Research Consultants (Pirc) and the Association of British Insurers (ABI) have been instrumental in advising investors to vote against firms recommendations on pay in some instances.

In the case of WPP both Pirc and the ABI have advised shareholders to vote against the remuneration report, not because they do not think Sir Martin is doing a good job, but just because they believe it is excessive.

A report released this week revealed that the average pay for FTSE 100 bosses in 2011 went up by 10 per cent, compared to staff pay increases of just above one per cent.

Sir Martin Sorrell was the second highest paid chief executive behind Barclays boss Bob Diamond.

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