WPP shareholders warned over Sorrell's next bonus
LONDON - WPP is facing potential shareholder opposition to a bonus scheme which could see chief executive Sir Martin Sorrell earn £60m over the next five years.
WPP shareholders were warned by the Association of British Insurers (ABI) to carefully examine the new remuneration scheme, known as the Leadership Equity Acquisition Plan III, ahead of the annual investors meeting in Dublin on June 2.
The scheme would allow Sorrell, who earned £3.1m last year, to invest up to $20m (£12.5m) over the next five years.
If WPP outperforms against a group of nine companies over the period, Sorrell would be entitled to five times his investment, or $95m (£60m) in bonuses.
It is the third incentive plan in the past decade at WPP and a more generous replacement than the last scheme which began in 2004 and started to pay out this year. Twenty other senior executives at WPP participated in the scheme.
In a statement, a WPP spokesperson said: "Unlike most schemes, WPP executives have to make an investment and take a financial risk, just like any other shareholder.
"If management ever achieve the headline five-times match, shareholders will have their investment outperform the peer group every year for 10 years."
Another UK shareholders advisory group, the Pension Investment and Research Consultancy, has opposed the plan outright.
A precedent for restraint on executive pay was set last week at Royal Dutch Shell after more than half of shareholders rejected the company's latest remuneration report. With the onset of the recession, increased shareholder scrutiny also caused the veto of similar schemes at RBS and Provident Financial.
However, some investors in WPP believe its incentive plan can be pushed ahead, by leaning on its American investors, who own 38% of the company.
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