PERSPECTIVE: Investors are right to be circumspect, but Sir Sorrell is worth it.(a discussion of WPP's group CEO Sir Martin Sorrell's compensation is examined)

Those of us who live on the other side of the flap often wonder why fat cats require so many inducements to get them out of bed each day - vast salaries, bonuses, incentive schemes, share options, pension plans, golden hellos, golden goodbyes, arrangements for having their fur stroked by counsellors when it all gets too much and so on.

The person who is in the news for his desire to curl up on a million-pound cushion is WPP's group chief executive, Sir Martin Sorrell. Fresh from his triumph in the takeover battle for Cordiant, WPP saw nearly half of its shareholders withhold their approval from its remuneration report this week, principally over Sorrell's three-year contract. The heat's on because investors are determined that anything other than a one-year contract is excessive. Sorrell, however, sees it as a benefit to the company, securing his services for such a length of time. What's it all about? And who's right?

This is corporate governance in action, evidence that companies are accountable to those who have a vested interest in their performance, especially shareholders.

Under new rules, shareholders in Britain get to vote each year on their company's executive pay plans. The issue has been controversial since the 80s, made so by the wave of takeovers in the UK and the US from that time on and by the trend for executives to pay themselves huge amounts that often had little correlation with performance. In the US, the example of Enron leaps to mind. In Britain, Cordiant.