WPP's Martin Sorrell says shareholder revolt shows 'improving trend' for executive pay

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Top shareholders in WPP have attacked the company's failure to put in place a proper succession plan for the chief executive, mounting a fresh rebellion over pay and governance at the FTSE 100 advertising group.

The company, which had said it would cut Sorrell's pay to no more than 19 million pounds ($24.6 million), from 48 million pounds past year, saw about 92 percent of votes cast for the resolution to approve the compensation policy at the general meeting on Wednesday.

However, the level of protest over WPP's new remuneration policy, which will hand executives lower long term incentive awards, was at a more modest 10%.

WPP, the world's largest advertising group, reported a slight increase in like-for-like net sales growth in the first four months of 2017, saying there was growth in all regions and businesses except North America and data investment management.

Stripping out acquisitions and the impact of sterling's slump, like-for-like revenue stepped up by 0.7% in contrast to a year ago and ahead of the 0.2% growth seen in the first quarter.

The vote against Sorrell's pay was much smaller than last year's 34%, with WPP having moved to significantly tighten the chief executive's pay package based on the controversial Leap bonus scheme.

Focusing on the long-term succession plan for Sir Martin, Standard Life Investments, which manages 19 million shares in WPP, urged the board to take action. This remains the key governance risk to our long-term investment in WPP.

"As another annual meeting passes, the time to address succession for the CEO shortens and the necessity to do so becomes more pressing".

Gilshan added: "Unusually, the CEO's service contract may be terminated by either the company or Sir Martin without any notice".

Ashley Hamilton Claxton, corporate governance manager at RLAM, says: "Together with other investors, including Standard Life, we have pressed the chairman into making real progress with succession planning".

"Given this, we suggest the board consider what lead time would be required to ensure an orderly succession and discuss this with Sir Martin".

That riled a lot of shareholders at last year's meeting as votes representing roughly one-third of company shares were cast against the pay policy.