WPP’s chairman attempted to distance himself and the board from the company’s former chief executive Sir Martin Sorrell as shareholders staged a rebellion against "obscene" levels of executive pay and demanded clarity on the future direction of the advertising giant at the company’s annual general meeting in London today.
Almost a third of WPP shareholders rebelled against departed boss Sir Martin Sorrell's huge remuneration package amid claims that he was accused of misusing company funds to pay for a sex worker – allegations which he strenuously denies.
But investors attending the AGM at London's Southbank Centre also questioned whether WPP could survive without its charismatic boss, who founded the company 33 years ago and built it into a multi-billion pound empire, and asked what the new strategy would look like.
Roberto Quarta, chairman of WPP, insisted the company had the full support of major clients and top investors and was already starting to implement its new strategy. He suggested client relationships were not dependent on a single leader.
He did, however, admit that some clients wanted WPP, a sprawling advertiser made up of some 400 smaller companies, to change.
“Our clients say the world is changing and they would like us to change with them,” he said. “It is important for the board to listen more to clients and listen to staff.”
In reference to the whistleblowing that led to Sir Martin’s resignation, Mr Quarta said staff should feel like they can raise concerns “and have them acted upon”, and were treated with respect.
“We take this seriously and will ask the new management team to review these policies,” he said.
Meanwhile, shareholders voiced their frustration at WPP’s share price, which has fallen by roughly a third over the past 18 months, its massive debt pile and the £20m pay-out Sir Martin will be entitled to after leaving the company.
They also demanded details on the internal investigation into Sir Martin’s conduct, which led to his resignation.
Mr Quarta said Sir Martin had been treated like any other employee and, while he understood why some shareholders wanted disclosure on the details of the investigation, the board had taken legal advice and his hands were tied.
On Sir Martin’s remuneration, Mr Quarta said: “His employment contract was set in 2008 and predated the current board. It does not allow the long-term incentive plan to be cancelled unless gross misconduct could be satisfied, which it was not.
“I hear what you are saying but can’t say any more.”
There was a moment of laughter when Mark Read, co-chief operating officer of WPP, appeared to have disappeared from the AGM altogether.
It came after one shareholder had asked why, just a few weeks into a strategy of ‘horizontality’, WPP was jettisoning this phrase. “What has gone wrong and what will replace it?” the investor asked.
Mr Read’s name was called several times, until finally he emerged from behind a blue screen to answer the question, resulting in giggles from the audience.
He said: “The business can succeed without Sir Martin. We need to find a new beating heart for the group. Make it more client-centric, continue to invest in data and tech, simplify the way we work as we had got too complex.”
He added that WPP would build a better culture where “men and women want to come to work” and employees were treated with respect. It would ditch its silo mentality and "creativity" was WPP’s secret weapon.
The £5.18bn debt pile would be slashed by selling off WPP’s minority stakes in other companies, together worth billions of pounds.
Some shareholders said Sir Martin’s remuneration deal was too generous, and wanted assurances that the pay of a future boss would not reach “catastrophic levels”.
They shouted “too high” and “obscene”, when Mr Quarta revealed that, under the new remuneration policy, the cap on any long or short-term bonuses was eight times base pay.
Other shareholders defended Sir Martin’s payoff and paid tribute to the man.
“I was disappointed you didn’t start with a speech commending Sorrell for his work over many decades,” said one. “It is unfortunate he stepped down over highly immaterial issues. I hope he has a good retirement.”
It came as WPP reported that currency fluctuations had resulted in a a 3.4pc decline in sales in the first four months of the new financial year to £4.82bn. Underlying like-for-like sales, which exclude foreign exchange movements and other variable costs, increased marginally.