Pension fund advisors ask members to reject WPP pay report

6th Jun 2016 11:55

(ShareCast News) - The Local Authority Pension Fund Forum (LAPFF) has advised its 70 member funds to vote against advertising agency WPP's remuneration report, which is being put to shareholders on Wednesday.WPP offered "excessive payments" to chief executive officer Sir Martin Sorrell, the LAPFF said. These have been consistently increasing, hitting a record high of £70.4m this year. The shareholder advisory group pointed out that Sorrell's variable pay represents more than 58 times his £1.5m salary, which is the highest of the sector peer group and in the top 10 highest CEO salaries of the FTSE 100.Also, it noted that the ratio between his pay and the average employee's pay is very high, at 196:1.The body's chairman, Kieran Quinn, said: "Most shareholders will, in the main, accept what they consider a reasonable level of pay for performance. However, with WPP, we consider there are several aspects of the payment which do not reflect this, and we are advising our member funds to oppose the remuneration report on this basis."For its part, Glass Lewis, another shareholder advisory group, has also recommended that shareholders reject the remuneration report. It said it was concerned that the level of pay being awarded on an ongoing basis "represents an inappropriate cost to the company and shareholders".Advisory firm PIRC last week asked WPP shareholders to reject Sorrell's pay, but the Institutional Shareholder Services recommended they accept it.Concerns were also raised about the ability and the will of the Remuneration Committee to perform its role properly, as the LAPFF pointed out Sorrell's pay has risen by 56% a year over the past five years. This is twice the year-on-year average increase in WPP's total shareholder return over the same period.Excessive pay for FTSE 100 CEOs has been a recurring theme of late, with shareholder advisory group ShareSoc saying in May that salaries were too high and should be cut by more than half. The report came a month after shareholders rejected oil giant BP's remuneration report, which included a pay package of nearly £14m for chief exec Bob Dudley.