Troubled times at WPP after remuneration vote As the results of the vote on board pay became known - with 59.5pc of those shareholders who voted coming out against the remuneration report - the board knew it had a major issue on its hands. For a company whose raison d"être is marketing and communication, it was telling that the leadership had badly misjudged the mood among shareholders and had become the fifth FTSE 100 constituent this year to see a "no" vote on its board pay packages. While the intricacies of Sir Martin's pay have been the subject of much debate for the past three weeks, the very make-up of WPP's board is thought to be one of the other key reasons why it is thought the sizeable "no" vote occurred in the first place. The 16-man board comprises three executive directors - Sir Martin, and his finance and strategy directors - and 13 non-executives, led by Lader. Of the 13, based on their appointment letters, seven are based in the US, four in the UK, one in China and one in Japan. But the four who appear to be based in the UK, only two - Filtrona chief executive Colin Day and financier Paul Spencer - are actually based here permanently. WPP point to the international nature of the company's revenues - with only 10pc of revenue in the 2011 financial year coming from the UK - as the reason why the board is so geographically dispersed. But the fact that WPP's board members are not majority-based in the country of its primary stock market listing means they appeared to be less aware of the growing political sensitivities around executive pay in the UK that began long before the current "shareholder spring." On the compensation committee, the American bias is even more stark. Of the five members, only one, Day, is not based in the US. As one top-15 shareholder said: "It's all very well having an international board, if they are not alive to the issues the company faces, no wonder things like this [the "no" vote] happen." But there are other factors at work within the board dynamic that could also have meant a lack of challenge to the perceived wisdom when it came to setting pay and lack of sensitivity to changing outside events. Tenure is one of them. The longest-serving board director is John Quelch, a British academic now based in Shanghai, who has been on the board for 24 years. A former US investment banker, Bud Morten, has been on the board for 21 years. Mr Lader has been on the board for 11 years. Corporate governance standards suggest a director is no longer deemed to be "independent" after nine years. Of WPP's 13 non-executive directors, four fall into this category, while another four are less than a year away from serving three three-year terms. Although it is not known if Sir Martin and Lader are close beyond the minimum 12 days the chairman's contract says he must work in return for a fee of £425,000 a year - quite substantial compared with Lloyds Banking Group chairman Sir Win Bischoff who receives £700,000 for working four-days a week - the pair do connect outside business. Lader is a director of the Atlantic Council, the US-centric think tank, on which Sir Martin sits on the international advisory board. The one-time White House deputy chief of staff is also a senior adviser to Morgan Stanley, one of WPP's banking advisers. Both Lader and Rosen, who also chairs WPP's compensation committee and is its senior independent director, are members of the Council on Foreign Relations. As the birthday bash in New York revealed, Sir Martin and Rosen are both friends of Schwarzman. What is clear is that all three operate in the same circles. When it comes to pay, although it is Sir Martin facing all the negative headlines, it is the board and the remuneration committee that sets pay, and that process was led by Lader and Rosen. According to those close to the company, the pair decided not to consult shareholders on Sir Martin's package following heavy consultation in the prior financial year that led to media leaks and a row about Sir Martin's remuneration before it had even been decided. One senior source within the company this weekend admitted: "I think that was the basic mistake. It would have been much, much better if they'd continued the consultation process. The level of resentment towards the pair was in part reflected in the voting, with 11.8pc voting against Mr Lader's re-election, and 21.8pc voting against Rosen. In contrast, Sir Martin was voted against by less than 2pc of shareholders. As Lader and Rosen begin to consult with investors on the next steps - likely to include a possible redrawing of Sir Martin's pay package along with a potential re-pitch for WPP's executive pay consultants, Towers Watson - it is clear that the problems that led to the "no" vote in the first place are not necessarily easily resolved. Insiders with awareness of the proxy votes indicate that institutional voters fell largely into two camps. One, those who chose to back the remuneration report, believed to include BlackRock, Capital and T Rowe Price. The other, who voted against, included Standard Life, Scottish Widows and Hermes. Among those who chose to vote against, the reasons were mixed. Standard Life is believed to have signalled it did not have a problem with Sir Martin's pay rise, but it did object to his pension increase. A second blue-chip investor said Sir Martin should only be paid if the share price increases, while another pushed for return on equity to be included in the hurdles required for him to jump to receive his long-term performance awards. On top of those opinions comes the divergence between the fund managers who buy and manage stakes in the company, and their corporate governance departments, which lead voting at annual meetings. At a number of major fund managers there is said to have been a distinct difference of opinion on how to vote on pay at the WPP meeting, with the corporate governance department winning on most occasions. One senior source indicated that the continued political pressure on executive pay - which will this week see Vince Cable unveil a new series of rules on the subject - has in no small part triggered the "Shareholder Spring." Why has all this happened? The reason in part is because the Government, both under Brown and under the Coalition, has said to institutions to act on executive compensation. It is a political issue," said the source. If they're not careful, they're worried the Government will put their own pay under the microscope, which they don't want. What happens next will be the subject of much debate in coming weeks as Lader and Rosen undertake the difficult task of appeasing shareholders while at the same time not aggravating Sir Martin, who owns a 1.4pc stake in the business worth £134m. At close of the markets on Friday, WPP was worth £9.5bn.