WPP chairman Roberto Quarta had a message for the holding company’s shareholders at its annual group meeting this morning in London: We understand that you’re upset, but there’s nothing we can do.
The subject at hand was recently departed CEO Martin Sorrell—both the circumstances surrounding his departure and the matter of his just-announced “good leaver” exit package, which will amount to more than $26 million over the next five years.
During the hourlong meeting, several shareholders voiced their opposition to both Sorrell’s pay and what one man called the “obscene remuneration that this company has given [to executives] in the past.”
Specifically, they objected to the news that the maximum bonus for Sorrell’s successor will be eight times his or her base salary. When director John Hood announced that number, one attendee at the standing room-only event shouted, “Too much!”
“I know that questions remain, but there is really and simply nothing further we can legally disclose,” Quarta said in opening the meeting, referencing recent reports that the board he leads had investigated Sorrell for allegedly spending company funds on a prostitute. “I appreciate that some will find this unsatisfactory, but I believe the group has acted appropriately throughout this process.”
He did, however, directly address this week’s Financial Times report in which a source described as a former WPP executive called Sorrell’s treatment of his own executive assistants “brutal and inhuman.”
That story “raised some additional issues, including Sir Martin’s behavior toward employees,” Quarta said, noting that the group cannot comment on specifics.
“At WPP, everyone is entitled to be treated with respect,” he added, echoing a memo sent to all staff yesterday by the company’s co-COO, Mark Read. “While we did not foresee the nature of the CEO’s departure, we were ready for it.”
Many shareholders disagreed.
While Quarta retained his position, 15.5 percent of investors voted against his re-election, with a significant number abstaining altogether. He received more negative votes than any other board member, though the largest objection from shareholders concerned the aforementioned pay packages that had reached “catastrophic levels” in recent years, according to one attendee.
“Many congratulations to you for trying to address the elephant in the room,” another investor told Quarta during the meeting’s question and answer session. But this individual remained sharply critical of claims that Sorrell’s new venture S4 Capital will not compete directly with WPP, asking whether the very establishment of that entity could amount to “gross misconduct.”
In response, Quarta quoted Sorrell describing S4 as “a peanut that would not want to compete against a $20 billion global company like WPP” and re-emphasized pre-existing confidentiality agreements: “obviously, Martin would not want to jeopardize the conditions of that.”
As shareholders continued to bring up the former CEO’s exit package and question Quarta’s effectiveness as chairman, the latter responded, “I hear what you’re saying.”
Read then sought to reassure attendees, stating that he had spoken to all of the network’s 20 largest clients in the eight weeks since Sorrell left and that none had expressed a desire to change their relationships with WPP. “They’re not distracted by a lot of what we’ve read in the press,” he told them.
Read also said the holding company would officially retire the popular Sorrell buzzword “horizontality,” which was often used to describe a cross-agency approach to managing accounts. In a moment of understatement, he added, “This is a slight transition phase, and the sooner we move through it, the better.”
On the financial front, WPP’s reported revenue for the first four months of 2018 was down 3.4 percent, with its average net debt increasing by approximately $480 million.