The Local Authority Pension Fund Forum (LAPFF) is advising its members to oppose WPP's remuneration report and long-term incentive plan because of concerns about the scale of executive reward.

In a statement, the forum welcomes WPP's efforts to improve its pay practices, however it said that the "quantum of payments made to executives, and potentially payable in future, is considered excessive".

Forum chairman counsellor Kieran Quinn said: "We recognise that WPP has sought to change its remuneration policy, following a shareholder rejection of the policy in 2012. However the scale of reward available, and paid in the past year, remains very substantial."

The LAPFF noted that according to WPP's accounts, the total pay has declined by 34% over 2011 and Sir Martin Sorrell's total remuneration in 2012 was £17.6m, including an annual salary of £1.3m, £11m from a five-year incentive plan, benefits dividends worth £1.3m and pension contribution of £586,000.

Sir Martin's maximum annual bonus opportunity was 435% of his base salary in 2012, with 50% of the award deferred for two years and subject to clawback provisions. The proposed new long-term incentive plan provides for long-term awards of up to 9.74 times salary in the case of the CEO.

"This is considered exceptionally high for the UK market place," said the LAPFF in a statement.

In the organisation's 'Expectations for Executive Pay' document, the LAPFF states that it expects that companies should assess the quantum total awards of pay packages in determining what would be considered 'reasonable' by shareholders and other stakeholders.

It said that all elements of remuneration should be taken into account so that the actual amount granted is considered as a whole.

First published 07.06.2013

monique_simpson@wilmington.co.uk