WPP Shareholders Express Anger Over Sorrell's Exit Package
(Bloomberg) -- WPP Plc faced the wrath of its shareholders over the retirement package awarded to ousted founder Martin Sorrell and the board’s handling of his dramatic exit.
While all resolutions passed at the advertising giant’s annual meeting on Wednesday, according to proxies submitted ahead of time, about 30 percent voted against the remuneration report. Executive Chairman Roberto Quarta was re-elected with about 83 percent of proxy votes in favor.
Quarta has come under fire following the resignation of Sorrell, the former chief executive officer who built a global advertising empire from the shell of a wire shopping basket maker. WPP has faced calls to release the details of the investigation into personal misconduct and misuse of company assets that led to Sorrell’s departure in April. Multiple reports this week said WPP probed allegations that Sorrell used company money to pay for a prostitute, which he denies.
Several proxy advisory firms recommended voting against the pay report and Quarta’s re-election, citing concerns over the lack of disclosure about Sorrell’s departure. Still, with the influential Institutional Shareholder Services recommending in favor of all resolutions, they were expected to pass.
“I think this money should go to the shareholders who have lost money,” said one private investor present at the meeting who was rankled by Sorrell’s payout. Quarta responded that he was simply following the terms and conditions of Sorrell’s contract.
Sorrell, 73, is in line to receive as many as 1.65 million shares of WPP paid out over the next five years in a retirement package, though the company’s weak share performance means he probably won’t be paid in full. The shares are worth about 20 million pounds ($27 million) based on WPP’s current stock price.
“I believe that the board has acted appropriately throughout this process,” Quarta said in a speech at the meeting. “The board were fully informed throughout the investigation.”
Neither Sorrell nor the company have publicly discussed details of the departure, citing a confidentiality agreement that Quarta reiterated in his speech. WPP has maintained that the funds in question weren’t material and Sorrell has denied any wrongdoing. Sorrell, who owns about 2 percent of WPP shares, wasn’t present at the meeting.
Shareholders did receive some positive news on Wednesday with WPP reporting a slight improvement in sales in the first four months. WPP said like-for-like revenue less pass-through costs rose marginally as strong April growth in Western Continental Europe, Latin America and Central and Eastern Europe offset a decline in North America. That was better than a first-quarter decline of 0.1 percent.
WPP shares traded 0.8 percent lower at 3:22 p.m. in London. The stock was down 25 percent over the past year before Wednesday’s trading as major clients like Procter & Gamble Co. have cut marketing spending and investors fret about the rising influence of Facebook Inc. and Alphabet Inc.’s Google. WPP also faces challenges from consultants such as Deloitte LLP and Accenture Plc, which are increasingly competing for digital marketing projects.
Quarta told shareholders that WPP’s client relationships are as strong as ever and that the search for a new CEO “is well advanced and moving ahead rapidly” with the company benchmarking internal candidates against an external list with the help of search consultants.
“What are some of the strategies going forward? Because Martin was so key to this, so crucial to it, and he’s no longer here,” one shareholder asked. Co-chief operating officer Mark Read replied that he thinks WPP should focus on clients, invest in data and technology, and simplify the group structure, but added “we need to find a new beating heart for the group.”
Analysts have speculated that WPP, a sprawling network of more than 400 agencies, could be broken up. A top priority for interim co-chief operating officers Read and Andrew Scott is to retain major clients like Ford Motor Co., while the company searches for a new CEO.
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