The row about Sir Martin's contract has been brewing since last summer and it boiled over at the WPP AGM last year when a large number of shareholders either abstained or voted against renewing his controversial contact.
Under his current three-year deal he is entitled to a £3m pay-off should he leave. WPP has in the past staunchly defended the pay-off under his three-year renewable contract because of Sir Martin's personal investment in WPP.
According to a report in the Sunday Telegraph a new contract could see Sir Martin agree to a US-style "at will" contract where senior executives can be axed or leave of their own free will without any notice period or golden handshake.
However, more likely is a one- or possibly even two-year contract that meets current good corporate governance guidelines laid down by the Higgs Report.
Last year the Association of British Insurers said it had "very serious concerns" about Sir Martin's contract. His official salary, before bonuses, is £839,000, down by £10,000 on last year. The company contributed £336,000 in pension payments for him, down by £3,000 on 2001.
In addition, he is also a member of a lucrative capital investment plan that could see him pick up around £21m worth of shares in September on the back of a £7m investment in 1999.
News of the new contract follows an upbeat message from Sir Martin as WPP reported its full-year results for 2003 with pre-tax profits up 70% to £350m.
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