WPP Plc shareholders displayed their discontent over the retirement package awarded to ousted founder Martin Sorrell and the board’s handling of his dramatic exit at the advertising giant’s annual meeting.
While all resolutions passed, according to proxies submitted ahead of the meeting, 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, who built a global advertising empire from the shell of a wire shopping basket maker. The WPP board 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, allegations 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. 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 Wednesday’s 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 rose as much as 3.5 percent in London and pared those gains to trade 1.1 percent higher at 1:19 p.m. 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.
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 Mark Read and Andrew Scott is to retain major clients like Ford Motor Co., while the company searches for a new CEO.