WPP Pay Rebel Changes Tack Ahead Of AGM

One of the most trenchant City critics of pay at WPP Group is to change tack by voting in favour of remuneration policies at this week's annual meeting of the world’s biggest marketing services provider.

Sky News understands from fund management sources that Scottish Widows Investment Partnership (SWIP), which holds a stake of more than 2% in WPP (LSE: WPP.L - news) , has decided to support last year’s directors’ pay report as well as a binding vote on future policy.

The decision is a surprise since SWIP, which is now owned by Aberdeen Asset Management (Other OTC: ABDNF - news) , has voted against resolutions on pay at previous WPP AGMs.

Wednesday's shareholder meeting, which will be held at the Shard, the City skyscraper, is expected to see well over 70% of investors supporting the WPP board once abstentions are taken into account.

Excluding abstentions, the vote in favour is likely to be above 80%, slightly ahead of last year's figure.

City sources said that other notable supporters of the pay resolutions were likely to include Blackrock (NYSE: BLK - news) and Legal & General Investment Management, while Standard Life Investments, another leading institution, was expected to oppose the board.

Some investors have expressed reservations about the earnings of Sir Martin Sorrell, WPP's chief executive, who received total remuneration worth nearly £30m last year.

That figure represented a hefty increase on the previous year’s £17.5m package, although some leading shareholder proxy groups have recommended voting in favour because more than 90% of Sir Martin's remuneration is performance-related.

The near-£30m deal included £22.7m awarded under a long-term share scheme which was handed to him after a surge in the company's share price.

WPP had a successful 2013, benefiting from the turbulence caused by the ultimately-aborted merger talks of its two principal rivals, Omnicom Group (NYSE: OMC - news) of the US and France's Publicis Groupe (Other OTC: PGPEF - news) .

Last weekend, WPP, which owns agency networks such as JWT, Ogilvy & Mather and Young & Rubicam, won prestigious awards for being the most creative and effective marketing services holding company at the Cannes Advertising Festival.

The WPP boss has been a staunch defender of his pay, frequently pointing to the risks he took to fund its growth during precarious phases of the company's expansion.

One ally of Sir Martin's pointed out that during the five-year period covered by the £22.7m share payout, there was a £12.35bn uplift in returns to WPP's wider shareholder base.

Reforms to WPP pay policies saw investor support for the company’s remuneration report rebound to 80% last year from a meagre 40% in 2012.

Vince Cable, the Business Secretary, has forced an overhaul of the way companies report executive pay, and handed shareholders a binding vote on future compensation policies.

Votes on the previous year's pay deals, which have seen bloody noses given to boards at Barclays (LSE: BARC.L - news) and Pearson (Xetra: PES.DE - news) this year, remain non-binding.

A WPP spokesman said previously: "The vast majority of Sir Martin Sorrell's pay relates to the five-year LEAP scheme already disclosed and designed to link long-term shareholder value creation with executive rewards as prescribed in Vince Cable's recent communication with companies."

The spokesman declined to comment on shareholders' voting decisions ahead of Wednesday's AGM.