WPP investors revolt over Sorrell scandal

WPP shareholders have challenged the firm's board of directors amid anger over the way it handled the departure of founder Sir Martin Sorrell.

Almost a third of shareholders did not back the company's pay and bonus scheme and almost 17% did not support the re-election of chairman Roberto Quarta.

Sir Martin resigned in April from the world's biggest advertising agency amid claims of misconduct - which he denies.

The result of an internal probe into the allegations has not been disclosed.

Over 30 years Sir Martin, 73, transformed WPP from a small maker of wire baskets into a business which was worth £20bn at one stage and which still employs 200,000 staff worldwide in agencies such as JWT and Ogilvy.

Last weekend it was reported that WPP's investigation looked into alleged use of company money to pay a sex worker, but WPP says it cannot comment for legal reasons. There were also reports of alleged bullying behaviour.

Sir Martin, once Britain's highest paid FTSE 100 chief executive, is due to receive up to £19m over the next five years under his WPP contract.

But some shareholders said they could not support the payout without knowing more about the misconduct claims. A tally of proxy votes showed that 29.5% were cast against WPP's remuneration report, which details his bumper package.

The shareholder votes were announced at the company's annual meeting, in London where Mr Quarta defended the advertising giant's role in the exit of Sir Martin.

Mr Quarta faced criticism that he did not adequately prepare for Sir Martin's departure, but told the annual shareholders' meeting that the "board acted appropriately throughout".

One shareholder asked Mr Quarta why, in his speech, he had not thanked Sir Martin for his service to the company. Mr Quarta did not reply, but moved on to another question.

Another asked about the future direction, given that Sir Martin was "so key" and "so crucial" to the company.

Mr Quarta said everyone had contributed to building "an amazing business" and that WPP "would succeed without him".

He batted away questions about the exact nature of the misconduct claims, saying "there is simply nothing further we can legally disclose".

An internal inquiry looked into allegations against Sir Martin made by a whistleblower, but the report has not been published because WPP said doing so would breach data protection rules.

Mr Quarta told the AGM: "The process that the Board followed in response to the allegation against Sir Martin was robust both from a governance and legal perspective.

"Although we have confirmed that the matter was financially wholly immaterial to WPP, we understand why some would like the company to disclose or confirm further details of the allegation.

"However, right from the outset, the board has acted in accordance with unequivocal legal advice that data protection law prohibits us from doing so."

A report in the Financial Times earlier this week raised issues about Sir Martin's treatment of employees.

Mr Quarta said: "While we are not able to comment on individual cases or specific allegations, I want to make it clear that at WPP - as in any other workplace - everyone is entitled to be treated with respect.

"As we said in response to the FT's report, everyone at WPP should feel able to raise concerns and to have them listened to and acted upon as appropriate."

After the meeting, Mr Quarta told the BBC that there was no "bad blood" between him and Sir Martin. "Absolutely not", he said. "It's been a challenging period for us and for Sir Martin. But from my perspective there is no bad blood."

He hadn't referred to Sir Martin's contribution in building WPP during his speech "because there will be time to do that in the future... the recognition will come this year." However, he acknowledged that Sir Martin had done "a remarkable job in building the business over 30 years".

Mr Quarta also rejected suggestions that the lack of shareholder support was a personal rebuke.

"I normally get 90%-plus in favour of re-election, so something in the 80s is a disappointment. But that's OK, these have been challenging times."

Meanwhile, WPP executive Mark Read, tipped to take over as chief executive, said he did not recognise some of the claims about Sir Martin's behaviour detailed in the Financial Times.

Mr Read, who worked with the former chief executive for 15 years, said: "I think Martin is a hard-working, hard-driving chief executive. I do not recognise the bullying nature."

Last month Sir Martin announced he was setting up a new advertising agency, S4 Capital.