One of the advertising world's most important figures could be mightily embarrassed by his shareholders today.
Sir Martin Sorrell who describes starting his business back in the eighties as a couple of blokes working hard in a basement with water running down the walls is likely to be defeated in a vote over his own generous pay packet which, including long term bonuses, runs to 6 million pounds this year.
With several big shareholder advisors recommending the deal is rejected it looks likely his deal will be kicked out. It wouldn't be the first time WPP has experienced discontent over his pay, more than 42 per cent voted against it last year too.
It would be intriguing if this happens because Sorrell has been one of the very few senior business figures to defend his pay, and robustly so. Whether you recoil in horror at the level of it, or think it's a tribute to someone who built a business from scratch who employs hundreds of thousands of people, it is surely to his credit that at least he has been willing to stand up for what he believes in. Earlier this year he was the only chief executive in the FTSE 100 who was willing to allow me to film specially for a documentary on pay 'Because We're Worth It' that we made for ITV1. But speaking out may not save him from losing the vote today.
Right now these kinds of votes are not binding - embarrassing but they don't force companies to do anything. And the government is at the moment agonising over what to do on this. Vince Cable had said, on many occasions, that he wanted binding votes every year where firms would have to make a humiliating statement to the market if they lost their shareholder votes.
But big investors and City funds have convinced him this is not practical and he has backed down. What now looks set to be in the new legislation, expected by the end of this month, is the promise of a binding vote with any legal power behind it only every three years.
The caveat government sources give to justify this climbdown is that if there were 'material change' either in the firm's fortunes or the level of pay, a binding vote could be triggered. The problem with that is right now, officials at the Department for Business can't explain what that might actually be. Would firms decide? Would shareholders have to vote to have a vote? It is not remotely clear. Until it is it's hard to assess the strength of the government's determination to write a new sense of shareholder activism into the law.
P.S. Government sources tell me that any new rules would not bind firms like WPP by law anyway. They are one of a group of companies who are listed on the FTSE 100 but incorporated somewhere else. At the moment they choose to follow the UK standards and conventions and have advisory votes. But the government does not believe they could be compelled to have legally binding votes, whether every year or every 3 years, when the law changes.
The new rules will be part of the Companies Act which only applies to firms based in the UK according to officials. The shareholder advisers @manifestproxy, have suggested to me this morning that WPP might follow the new rules anyway as they promised to keep to UK standards when they moved to Dublin some years ago. Right now when the government still can't quite decide how often they'll have to have votes, the whole area is still unclear.