$500m in bonuses may not be much by the standards of Goldman Sachs or Barclays Capital (whose bonus pools run into billions) but WPP’s Sir Martin Sorrell has moved to get his retaliation in first as the marcoms giant prepares to reward its staff for a ‘record-breaking’ year. The bonus pool presumably includes the company’s esteemed founder and CEO (Sorrell) too.
Writing in yesterday’s Sunday Telegraph Sorrell says:
Over the last few weeks I have been reflecting on how well WPP did in 2011. We had a record year (we’re in a close period, so I can’t be precise), but if we fulfil analysts’ forecasts we’ll be better positioned in all respects than before the Lehman and associated disasters.
Our 150,000 plus people (including associates) in 109 countries have performed outstandingly in 2011, a year when the second half was particularly challenging. As a result, we will pay out approximately $500m (£316m) or about 20pc of our pre-bonus operating profits in performance-based incentives paid this year and in the future, in cash and shares. This is in line with the private equity model we established in the early 1990s, so as to be industry and generally competitive.
However, given current events and concerns, particularly in the UK and continental Western Europe, it seems that we will have to be apologetic about our performance and maybe even embarrassed about our success (notwithstanding the fact that we have had our ups and downs over the last 26 years).
The situation is exacerbated by the fact that business does not have a strong, united, global voice, with a defined agenda. Often chairmen and/or CEOs are advised not to speak out to avoid retribution.
In the present economic climate, we have total sympathy with those people and families who have suffered historically high levels of unemployment, particularly the young unemployed whose career prospects and income may suffer permanent damage.
We also sympathise with those who are concerned with inequality and unfairness – even the Occupy movement which has had an impact across the globe, from Wall Street to Davos to London.
However, these inequalities can best be addressed through the tax system and social efforts, be it direct charitable contributions or, more importantly, through corporations who are all, with very few exceptions, putting corporate social responsibility and sustainability at the heart of their corporate strategies and objectives.
The only way out of the economic predicament we are in, particularly for Western Europe is growth and jobs. What Britain, for example, needs, if I can be immodest for a second, is more WPPs, not fewer – companies that are global leaders and successes.
This is interesting stuff and no mistake, and cunningly crafted (“If I can be immodest for a second…). So it’s an ad for WPP as well as a contribution to the bonus debate.
It’s also clever of Sorrell to point out that marcoms companies pay out bonuses too; for the past decade or so they have found it more and more difficult to recruit the very top graduates who have viewed the swag available in the City of London and on Wall Street as more attractive than advertising and marketing.