WPP's decision to allow founder Martin Sorrell to leave without losing his future share awards met with opposition on Tuesday as Hermes EOS advised its shareholder clients to oppose the advertising giant's remuneration report.
"Given the lack of confirmed information about the reasons for the former CEO's departure, we do not believe we can assess whether his termination package is appropriate," Hermes EOS' Pauline Lecoursonnois said in a statement.
WPP, the world's biggest advertising agency, agreed Sorrell could leave with his share scheme intact in April after an allegation of personal misconduct. The former CEO has denied any wrongdoing.
Pay Scheme
While Sorrell had built the company from nothing to dominate the industry over 30 years, investors had rebelled in the past over the size of his pay scheme which made him, at times, the highest paid boss in Britain.
Hermes, which advises pension schemes and other institutional investors on how to vote at corporate meetings, said it backed all other agenda items at WPP's annual general meeting on Wednesday.
It also supported the re-election of chairman Roberto Quarta, who, it said, had overseen an improvement in the board's effectiveness since taking over in 2015. Some investors have expressed concern about the handling of Sorrell's exit.
Asking For Clarity
Hermes said given the structural challenges facing the industry, the board needed to make the right CEO appointment and ensure all strategic options for the company were considered.
"We will be asking the chair for clarity on the key criteria the new CEO needs to meet, whether a formal review of the strategic options and of the portfolio has already commenced, how much can be done before the appointment of a new CEO and how the board is involved," Lecoursonnois said.
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