Fall of founder Sorrell to dominate WPP investor meeting

Fall of founder Sorrell to dominate WPP investor meeting

FILE PHOTO: Sir Martin Sorrell, Chairman and Chief Executive Officer of advertising company WPP, attends a conference at the Cannes Lions Festival in Cannes, France, June 23, 2017.
REUTERS/Eric Gaillard/File Photo
LONDON: Investor anger over the departure of WPP boss Martin Sorrell will burst into the open on Wednesday when shareholders tackle management over its handling of a boardroom battle that has gripped the British corporate scene.The most famous advertising executive in the world, Sorrell quit the marketing giant he built from scratch following an allegation of personal misconduct in April.
The 73-year-old was allowed to leave with share awards worth millions of pounds and without a non-compete clause, reigniting arguments that have dogged previous annual meetings - that WPP paid Sorrell too much and did not prepare for his departure.Neither Sorrell nor the company have revealed the nature of the complaint, but Sorrell - who has already launched a new venture - has denied any wrongdoing.WPP is the world's largest ad group, employing more than 200,000 staff in agencies including JWT, Ogilvy and Finsbury to serve clients such as Ford, Vodafone and P&G. Sorrell has sought to reassure WPP investors that his new venture will not compete directly with WPP.Shareholders and advisory groups, angered by the lack of information, have said they will either vote against the company's remuneration report, against the re-election of its chairman Roberto Quarta or both.
WPP is readying for a sizeable rebellion against the remuneration package, with company insiders expecting investors holding up to 30 percent of the stock to vote against it.David Herro, Chief Investment Officer of international equity at WPP's biggest fund investor Harris Associates, told Reuters he backed the re-election of the board, and two other top 20 shareholders said they had backed the chairman.Many of the shareholder advisory groups disagreed."Glass Lewis has severe reservations about supporting the remuneration report at this time," the advisory group said, adding it advised investors to vote against Quarta's re-election.
SEVERE RESERVATIONSWPP's incentive plans have led to opposition in the past, with Sorrell earning around 200 million pounds (US$268 million) in the last five years alone. A third of WPP's investors refused to back his 70 million pound pay package in 2016.Sorrell's last award scheme could potentially pay out 20 million pounds, but it is expected to come in well below that due to the recent underperformance of the group.On top of questions about Sorrell, investors are likely to want to know more about the group's strategy after it delivered its worst annual sales performance in 2017 since the financial crisis.In April, it showed that first-quarter trading was not as bad as feared, with organic net sales down only 0.1 percent, and it will update the market on trading later on Wednesday.The group has been hit by the might of Google and Facebook in online advertising, the advance of consultants like Accenture in the sector and by pressures on big ad spenders such as P&G and Unilever which have all hit the bottom line.Quarta has said the two chief operating officers running the company, Mark Read and Andrew Scott, are reviewing the strategy, sparking speculation that the group could sell assets such as its market research arm.WPP owns more than 400 separate agencies offering public relations, creative work, data analytics, media buying and market research. Sorrell was seen as the godfather of the modern advertising industry and the major holding companies that dominate it.His departure has led to speculation that WPP could even be broken up but the three executives running the business have said that does not make sense.Goldman Sachs said on Wednesday it saw significant upside from a break up scenario and a great deal of uncertainty about the outcome of the review plus operational risks facing the broader sector."We believe a break up would be difficult given the complexity and size of the organization and the resulting dis-synergies, at a time when clients take more integrated services from fewer agencies," it said.(Reporting by Kate Holton; Editing by Mark Potter/Keith Weir)
Source: Reuters
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