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Sorrell haunts WPP as shareholders rebel over farewell package

Reuters  |  LONDON 

By Kate Holton

LONDON (Reuters) - Angry shareholders rebelled on Wednesday at an annual meeting dominated by differences over the departure of the firm's former

The most famous executive in the world quit the marketing giant he built from scratch in April following an allegation of personal misconduct, prompting concerns among some investors over the handling of his departure.

This was reflected in voting at the AGM, where nearly 30 percent of shareholders opposed its executive pay proposal. This included share awards to which could be worth 20 million pounds, although they are expected to be well below that due to WPP's recent underperformance.

Almost 17 percent of investors also declined to back the re-election of its Roberto Quarta, under whose watch, left with the share awards and without a non-compete clause. The 73-year-old almost immediately set up a new venture.

The departure of one of Britain's best known rekindled arguments that have long dogged meetings - that it paid him too much and did not prepare for his succession.

Sorrell earned around 200 million pounds ($268 million) in the last five years alone. In 2016, a third of WPP's investors refused to back his 70 million pound pay package.

Described by one as the "elephant in the room", Sorrell dominated the debate with investors asking why he had left, why the company had not prepared for his departure and why he had been allowed to keep his share awards.

"What will the strategy be because Martin was so key to this, and he's no longer here?" another asked, while a third questioned why the had not launched the meeting with a tribute to WPP's founder.

Quarta told reporters after the hour-long meeting that he had acknowledged Sorrell on his departure and "didn't think it was necessary" to do so again.

"No one man is the company," he added.

The nature of the complaint against Sorrell has not been disclosed. He has denied any wrongdoing and the said there was nothing more he could say on the matter.

"I know that questions remain, but there is simply nothing further we can legally disclose," Quarta told investors.

Quarta defended the company's response to the allegation, saying it was robust from a governance and legal perspective.

While he accepted criticism over future share awards, he noted that these pre-dated the current board and said no one had expected Sorrell to leave so quickly and that his priority after joining in 2015 had been to renegotiate Sorrell's pay before seeking to tie him in to a more typical contract.

"It was a timing issue," he said.

NEW HEART

Whoever takes over WPP faces an uphill task after the group and its more than 200,000 staff started losing ground to rivals.

It delivered its worst annual sales performance since the financial crisis in 2017 after being squeezed by tech giants and Google, consultants and the big spending groups like and which are cutting costs.

Quarta told reporters there was no link between the group's faltering performance and the sudden departure of Sorrell, and said the hunt for a new was well advanced.

A leading candidate to take over the top job is Mark Read, a former and digital boss who has been appointed joint chief operating

Alongside fellow operating Andrew Scott, he has embarked on a review on the group and is likely to at least dispose of minority tech stakes in a bid to lower debt.

"I think the can succeed without him (Sorrell)," Read, a more than his former boss, said, while praising the role Sorrell had played.

"People inside the company have every confidence that we can do that. We need to find a new beating heart for the group."

TRADING IMPROVES

WPP is the world's largest group, competing with rivals Omnicom, and to serve clients such as Ford, and through agencies including JWT, and

In a trading update, it said its key measurement of four-month net sales was marginally up, an improvement on the 0.1 percent fall in net sales in the first quarter.

Liberum analysts said the improvement should give investors confidence that WPP can meet its guidance for flat sales and margins this year. Shares in WPP were down 0.8 percent.

"We've got work to do but I don't see why we can't return the to growth," Read said. "Last year we underperformed our rivals, it is clear we need to do better."

($1 = 0.7451 pounds)

(Reporting by Kate Holton, additional reporting by Sarah Young; Editing by Mark Potter/Keith Weir/Alexander Smith)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, June 13 2018. 23:09 IST
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