WPP poised for shareholder revolt over Sir Martin Sorrell’s shock exit
An advisory firm has slammed the lack of transparency around Sir Martin’s departure.
WPP is facing the prospect of a shareholder revolt at its annual general meeting (AGM) over how it handled the departure of long-standing chief executive Sir Martin Sorrell.
Sir Martin exited WPP, the company he founded over 30 years ago, following allegations of personal misconduct.
WPP carried out an inquiry into allegations that Sir Martin misused company funds, but the details of the investigation were never revealed.
Glass Lewis has severe reservations about supporting the remuneration report at this time
Advisory firm Glass Lewis said that without knowing the details of the investigation, shareholders were unable to determine whether Sir Martin was a “good leaver”.
Glass Lewis said it had “severe reservations” about WPP’s pay plans, given the lack of transparency.
Sir Martin is in line to receive £14 million from WPP, having received £48.1 million the year before. He will also hoover up nearly £20 million in payouts from WPP over the next five years as part of an exit deal with the firm.
“Glass Lewis has severe reservations about supporting the remuneration report at this time,” the advisory firm said.
“As noted above, given the lack of transparency surrounding the resignation of Sir Martin Sorrell and his “good-leaver” status, we are unable to recommend that shareholders support this proposal at this time.”
Investors have also been advised to vote against the re-election of chairman Roberto Quarta for failing to adequately prepare for Sir Martin’s replacement.
“We harbour concerns as to the transparency and efficacy of the succession process, for which we believe the chair of the nomination committee, Mr Quarta, bears responsibility,” Glass Lewis said.
“Despite previous assurances, we believe the nomination committee has failed to adequately prepare for the replacement of Sir Martin.”
Mr Quarta has been made executive chairman, while Mark Read, chief executive of WPP’s Wunderman business, and Andrew Scott, European chief operating officer, have been made joint operating chiefs.
It could be the second year running that WPP’s investors hit out at the company at its AGM. Last year, more than a fifth of shareholder protested against WPP’s remuneration policy.
A WPP spokesman said: “The board followed the due process on receipt of the personal misconduct allegation by appointing counsel to conduct an independent investigation.
“Sir Martin resigned on conclusion of the investigation and he is therefore entitled to his proportion of the LTIP up until his retirement date of 14 April 2018 under the terms of his contract of employment drawn up in 2008.
“Succession as planned in the event of a sudden requirement has been implemented with the appointment of the two joint COOs, pending selection of the successor CEO from both external and internal candidates.”