WPP bosses were given a bloody nose by shareholders today over their decision to hand Sir Martin Sorrell a £19million pay-off after he quit over a prostitute scandal.
The multi-millionaire founder of Britain’s biggest advertising empire left in April amid claims he put a £300 visit to a Mayfair brothel on expenses.
He was also accused of bullying staff and ‘blurring’ the line between corporate and personal expenditure for himself and his wife.
But despite the string of salacious allegations and his sudden departure, WPP have agreed to pay Sir Martin, who is worth £456million, £19million in shares over the next few years.
Chairman Roberto Quarta told investors today that an internal investigation, which has been kept secret, did not find Sir Martin had been guilty of gross misconduct so was entitled to the gigantic pay-off.
In an extraordinary revolt at its AGM almost 30 per cent of WPP shareholders failed to back its executive pay proposal as they expressed their fury over the handling of Sorrell’s departure.
WPP bosses were given a bloody nose by shareholders today over the handling of Sir Martin Sorrell’s departure after a prostitute scandal involving a Mayfair brothel (right)
Almost a third of shareholders showed their anger by voting against Sir Martin’s pay-off
Almost 20 per cent voted against the re-election of Mr Quarta as chairman
And almost 20 per cent voted against the re-election of Mr Quarta as chairman amid claims he had handed the scandal badly and anger he is in charge at WPP and also at medical equipment giant Smith & Nephew.
Multi-millionaire advertising mogul Sir Martin (pictured with his wife Cristiana), 73, the former head of advertising giant WPP, allegedly spent £300 in the flat
One private shareholder has asked WPP’s board about their decision to continue paying out Sir Martin’s long-term incentive plan (LTIP) on the basis that he did not leave due to ‘gross misconduct’.
However, the shareholder cited reports suggesting Sir Martin has ‘plans to set up in competition’ with WPP which he claims ‘surely must constitute as gross misconduct’.
‘On that point, shouldn’t we pull the LTIP?’
But chairman Roberto Quarta cited recent comments from Sir Martin, which characterise his new company as ‘a peanut that wouldn’t want to compete against a £20 billion global company like WPP’.
He added that management at WPP have confidentiality agreements that clearly Sir Martin would not want to ‘jeopardise’.
Multi-millionaire advertising mogul Sir Martin, 73, the former head of advertising giant WPP, allegedly spent £300 in a Mayfair brothel and then claimed it on expenses – an allegation he strenuously denies.
Two of his employees having a drink in Shepherd Market, a piazza full of upmarket bars and restaurants, are said to have spotted him going into 50A on June 6 last year.
It led to an investigation by WPP, which Sir Martin founded, into alleged ‘personal misconduct’ and possible misuse of company funds, and ultimately resulted in his resignation as chief executive in April. He has consistently denied all the allegations.
Staff at WPP have now been told they ‘deserve to be treated with respect’ following Sir Martin’s departure.
In a veiled attack on Sir Martin, who was ousted over allegations he used £300 company cash at a brothel in Mayfair, the current boss of WPP Mark Read said the giant firm needed to be a place where staff feel ‘safe and supported’.
Sir Martin, was alleged to have a fiery temper who would sometimes unleash a tirade of verbal abuse on employees.
It is claimed by former staff he was ‘brutal and inhuman in how he dealt with assistants’, and had a reputation for being difficult.
Yesterday, Mr Read, who was appointed chief operating office of WPP following Sir Martin’s exit from the firm, sent a memo to staff.
In it he said: ‘When I come to work I expect to be treated with respect by my colleagues, and every one of you reading this has the right to expect the same.
50A Shepherd Market (pictured) houses a brothel and two WPP employees told the company they believed their boss went inside
The flat – which welcomes visitors with a lurid pink sign inside the front door announcing ‘beautiful model’ – is one of the smaller Mayfair properties owned by the family trust of Earl Howe
‘Although we can’t comment on specific allegations, I feel we should remind ourselves of and reinforce the kind of values we want and need to have within every part of our business: values of fairness, tolerance, kindness and – again – respect.
‘It should hardly need saying that all WPP working environments must be places where people feel safe and supported.’
The firm also announced a review of conduct rules relating to staff in a bid to make improvements.
Rumours about the private life of Sir Martin have been rife in the City since he quit as chief executive of WPP in April 33 years after he founded it
It followed a probe in to misconduct in which it was revealed an internal investigation had discovered a small sum of company cash had been mis-used.
The 72-year-old was handed a £20m exit deal and was not made to sign a non-compete agreement, something that has angered shareholders who say they have not been given enough information to decide if he is a ‘good leaver’.
This week, an investigation by the Financial Times claimed Sir Martin’s dismissal had followed a whistleblower allegation that he had visited a brothel in Mayfair.
This morning WPP will come under pressure to publish the exact details of the investigation in to Sir Martin, which had been led by top law firm WilmerHale.
It is expected that as many as one in five shareholders could call for it to be published, and that chairman Roberto Quarta, who led the probe in to the chief executive could also face claims to be axed.
Investment firm Hermes plans to vote against Mr Quarta. It said: ‘Given the lack of confirmed information about the reasons for the former chief executive’s departure, we do not believe we can assess whether his termination package is appropriate.’
WPP insists it cannot reveal more because of privacy laws. Sorrell has declined to comment after signing a gagging agreement. It has bene hoping to rally support from big names ahead of the vote.
WPP’s biggest shareholder, Harris Associates, has backed him however and so has Institutional Shareholder Services, the world’s biggest advisor.
Before the allegations of Sir Martin’s indiscretions arose, he had announced the launch of a new business, S4 Capital.
This is understood to have have infuriated the WPP board.
City sources last night said the firm was prepared to launch a legal attack on Sir Martin if he tried to poach staff or use information gained from WPP to launch takeovers of rivals. It could potentially cost the tycoon as much of £20m if he was deemed to have breached his leacing contract.
WPP would not comment. A spokesman for Sir Martin said he ‘strenusously denies’ the allegations.