Sir Martin Sorrell may be in the persuasion business, but the boss of WPPhas signally failed to persuade his own shareholders to pay him £6.8m for his efforts last year. At yesterday’s annual meeting, they rejected the advertising group’s remuneration report, and with it his hefty pay package.
This is embarrassing for Sir Martin, who has mounted a vocal public defence of his remuneration. The burden of his argument – that his pay was modest compared with that handed out by WPP’s global rivals – was roundly rejected. Investors were right to do so.
The outcome reflects a welcome new focus on absolute, rather than relative, pay levels. In the past, investors have been too willing to go along with the idea of executive remuneration as some sort of race in which you must always keep up with the leaders. This has contributed to spiralling boardroom pay inflation, which risks undermining the reputation of capitalism and feeding the politics of envy.