Next month’s WPP AGM looks set to be a lively affair with chairman (currently executive chairman following the defenstration of CEO and founder Sir Martin Sorrell) Roberto Quarta (below) set to face criticism for, among other things, turfing his CEO and not telling us why (Sorrell’s departure followed a board investigation into “personal misconduct” but its conclusions have not been made public), failing to organise a succession plan and having too many jobs (he’s also chairman of under pressure FTSE100 medical equipment maker Smith & Nephew).
Shareholder advisory group Glass Lewis is leading the charge, advising investors to vote against his re-election at June’s AGM.
Glass Lewis and, no doubt, other shareholders are upset that Sorrell has been allowed to resign, classifying him as a “good leaver” and therefore entitled to keep up to £20m in future share payouts, even though the board chose to investigate him for the above alleged misdemeanour which it also said involved a sum of money although not one “material” to the company, whatever that means. Quarta has already reacted testily to questions on the subject in a recent WPP earnings call. Sorrell has vigorously denied any wrongdoing.
Sooner or later WPP will have to shed further light on the matter as shareholders are entitled to know what the long-serving CEO was supposed to have been up to and whether it was sufficient reason to trigger a chain of events that led to his departure. Glass Lewis says: “Absent further information regarding Sir Martin’s retirement, we believe shareholders are unable to determine the extent to which he should be treated as a ‘good leaver.’”
Sorrell has already harvested over £200m in mostly share-related bonuses over the past five years and shareholders might think that such largesse is sufficient for anyone, especially as WPP is struggling with a tumbling share price (although it has recovered somewhat recently), £5bn of debt and no growth.
WPP says: “Recommending a vote against Roberto Quarta is against the interests of investors at such an important time when the business needs stability until such time as a new chief executive is appointed The investors have shown support for WPP by the share price rising by 18 per cent since Sir Martin Sorrell’s retirement.”
Which doesn’t sound terribly good news for acting COOs Mark Read and Andrew Scott. They’ve done a pretty good job since Sorrell left but it looks as though some shareholders at least will be baying for more changes at the top, whether or not Quarta survives.