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WPP Boss Sir Martin Sorrell Faces Backlash Over £6.8m Pay Deal

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WPP boss Sir Martin Sorrell is to face a backlash over the £6.8 million pay deal he has defended as a reward for "performance, not failure".

The bumper pay package, which marks a 60% rise on the previous year, is likely to be voted against by a substantial number of shareholders, concerned the reward is out of sync with the return on their investments.

Shareholder advisory groups, including the Association of British Insurers (ABI) and Pensions Investment Research Consultants (Pirc), have urged members not to back the advertising group's "excessive" remuneration report.

wpp sir martin sorrell

Sir Martin Sorrell will face a backlash over his £6.8 million pay deal

Sir Martin, who founded WPP in 1985, has defended the deal as reflective of his performance, after the group reported bottom-line profits of £1 billion for the first time in 2011.

A significant vote against the pay package, which is made up of £1.3 million salary, £2 million annual bonus, £3 million deferred shares and other benefits, would not be binding and would not force WPP to reset its pay policy for 2011.

The meeting in Dublin follows months of shareholder ire over executive pay with the likes of Aviva, Trinity Mirror, Barclays, William Hill, Xstrata and Premier Foods all facing significant votes against their pay reports.

And a report by proxy voting agency Manifest and remuneration consultancy MM&K revealed rewards for blue-chip bosses rose 12% to an average of £4.8 million last year.

Urging members to vote against WPP's pay report, Pirc said "concerns lie in excessiveness and the balance between reward and incentive".

On top of the annual remuneration, Pirc expressed concerns over the group's long term incentive plans, which saw Sir Martin receive nearly £6 million in shares last year, although these were awarded in 2006 and were closely-tied to performance targets.

In addition, ABI has issued a "red top" warning over the WPP pay report, its highest level of disapproval.

Writing in the Financial Times last week, Sir Martin issued a robust defence of his pay, warning that if Britain wanted high achievers in the private sector, it needed to pay competitively.

He told the paper: "The compensation debate in the UK now seems to have shifted from undeserving bankers paid for failure and from payment for performance to what is fair pay."

However, chairman Philip Lader, a former White House deputy chief of staff, took a more conciliatory approach and said all pay deals were open to further "deliberations".

Other casualties of the so-called shareholder spring have included Andrew Moss, who quit as chief executive of Aviva, and Sly Bailey, who will leave her post as boss of Trinity Mirror.

Business Secretary Vince Cable is currently drawing up plans to give greater power to shareholders but is understood to be considering watering down proposals for a binding annual vote in favour of a poll every three years.

It had been feared that a binding annual vote would make investors less inclined to protest in case they destabilised management teams and would add to bureaucracy.