The chief executive of global advertising giant WPP narrowly escaped a vote against his hefty pay package today as the became the latest company to be targeted by corporate governance activists.
Mr Martin Sorrell's three-year cash-and-stock deal, currently worth up to £65 million according to some estimates, was approved by a mere 54 per cent of shareholders at WPP's annual meeting.
Corporate governance "best practice" guidelines call for contracts of no more than one year for top executives, since multi-year contracts often include payouts even after dismissal. Shareholders of pharmaceutical firm GlaxoSmithKline voted down an executive pay scheme last month that would have rewarded the company's CEO if he lost his job.
Mr Sorrell built WPP from a shopping-cart manufacturer called Wire & Plastic Products he used as an acquisition vehicle into the world's third-largest advertising and communications company.
Mr Sorrell has defended his pay package by noting that he invested millions of his own money in the company when it was teetering financially, and has argued that a one-size-fits-all compensation scheme would be a poor fit for WPP.
WPP is in the process of acquiring its smaller UK peer Cordiant. Cordiant executives have been harshly criticized for a bonus scheme that would reward them for selling the firm in a deal that would result in shareholders getting a mere pittance.
Mr Sorrell's pay package will be examined by the board's compensation committee in August.