The Shareholders Are Revolting! (I hope)

Another day, another (non-binding) shareholder revolt.

According to Julia Werdigier's article in today's New York Times, 59% of advertising giant WPP Group shareholders rejected chief Martin Sorrell's $10.5 million pay package.

After the vote, WPP chairman Philip Lader said that the vote would be taken seriously, but added, "Our board exercised its best judgment in the context of the company’s record year, international competitors and the executives’ performance."

As I've written before (re Citigroup shareholders' objections to chief executive officer Vikram Pandit's pay package), to consider a vote "seriously" is not the same as to abide by it.

Werdigier noted that "Mr. Sorrell’s total pay, including base salary and bonus, rose 60 percent in 2011 from £4.2 million in 2010, according to the WPP annual report. WPP’s share price fell 15 percent last year."

Since the shareholder votes are non-binding, it could be argued that they are simply an exercise in futility. But it could also be argued -- and this is what I will choose to believe for now -- that they are a harbinger of things to come.

In my inbox today, I found a new "Talkback" from CSR Wire, with an interview with Laura Berry, executive director of ICCR (Interfaith Council on Corporate Relations; organization website here).

ICCR has 40 years' experience in "corporate engagement". Sometimes it's been successful, sometimes it's been frustrated (and, no doubt, frustrating).

Berry thinks that things are beginning to move: "...Change has really started to accelerate in the last couple of years, but I think this year is really a watershed year. We're seeing an inflexion point for so much of our work. The shareholders are learning that they can demonstrate their outrage and the attention they are paying to value creation—and the lack thereof—through their votes on nonbinding shareholder proposals."

"Value creation" is what it's supposed to be all about. And that means for the whole company, not just the top brass.