£70m Sorrell Pay Deal Gains ISS Backing

A £70m pay deal for Sir Martin Sorrell, the chief executive of WPP Group, is on course to avoid a major shareholder revolt after receiving the support of one of the world's top voting advisory firms.

Sky News has learnt that Institutional Shareholder Services (ISS (LSE: 0QRS.L - news) ), which represents approximately 20% of UK stock market investors, has recommended approving WPP (LSE: WPP.L - news) 's remuneration report at next month's annual meeting.

ISS's backing is significant because of the weight its views carry with institutional investors.

Sir Martin's pay deal for 2015, which included £62.8m in shares awarded under a scheme approved by the marketing services group's investors in 2009, is the second-largest ever-awarded to the boss of a UK public company.

It (Other OTC: ITGL - news) is also the biggest recorded since the introduction in 2013 of a framework providing a single figure for executive pay.

This year's annual meeting season has seen revolts at companies including BP, which awarded its chief executive a big overall pay rise despite recording a loss amid a slump in the oil price.

Foxtons, the estate agent, Shire (Xetra: S7E.DE - news) , the drugs-maker, and Weir, the engineering group, have also seen huge opposition to their boardroom pay practices.

The chief executives of those companies received pay packages - some of which were opposed by ISS - representing a fraction of the one awarded to Sir Martin, whose company owns advertising agencies including JWT and Ogilvy & Mather.

ISS's decision to support WPP's remuneration report "is not without concerns for shareholders", according to a copy of the agency's recommendations which has been seen by Sky News.

"The bulk of the CEO's 2015 pay is largely driven by his participation in [a] plan which shareholders approved by a comfortable margin...and in part reflects the company's run of extended strong performance," it said.

"These qualifiers notwithstanding, the sheer size of the number is such that some will not be comfortable supporting the remuneration report as a matter of principle."

ISS's recommendation in support of WPP contrasts with that of PIRC, which is urging investors to oppose the pay report on the basis that Sir Martin's pay is "excessive".

One source close to the company said there were no grounds to use discretion to reduce the long-term share award given the strength of the company's performance and returns to shareholders.

The long-term scheme which gave rise to the £62.8m award closed in 2012 and is being replaced from next year.

The Investment Association's IVIS service has issued an "amber-top" ahead of WPP's AGM, which means shareholders should evaluate their voting decisions.

At last year's AGM, 20% of WPP investors opposed its pay report, with this year's vote also advisory rather than binding.

This year's meeting will come just weeks after the company's chairman made WPP's most explicit comments to date about succession planning for Sir Martin, who has run the business since taking the helm exactly 30 years ago.

Roberto Quarta, the industrialist who became chairman of WPP last year, referred in the annual report to a process to identify both internal and external candidates who might eventually succeed the WPP chief.

Under WPP's new executive pay scheme, which will kick in in 2018, the maximum potential payout to Sir Martin will be reduced to roughly £20m each year.

WPP declined to comment on the recommendations of the voting advisors (Other OTC: UBGXF - news) .