Here we go again: the annual bun fight over WPP boss Sir Martin Sorrell’s pay – he’s the best paid CEO of a public company in the UK, taking home over £42m last year in pay and share awards – but changes are afoot at the marcoms giant.
This summer a new chairman, Roberto Quarta (left) from private equity, takes over and, while he may come to the same conclusions over WPP’s governance as the current chairman and board, he will almost certainly be more open about what it’s doing and why it takes the decisions it does. Including, presumably, on pay.
Outgoing long-time chairman Phil Lader has entered the lists on this subject, acknowledging, in a letter to shareholders, that WPP is a “Sorrellcentric” company (a coinage worthy of the man himself) but denying that Sorrell runs it as a “personal fiefdom.”
Lader writes: “This chief executive, at heart and in practice, acts as an owner-entreupreneur, within the governance requirements of public ownership. Without excess, there is merit to this approach. He does not manage WPP as a personal fiefdom. This mythology is as much the product of journalists’ repetition of ‘Sir Martin Sorrell’s WPP’ as his own energy and influence.”
On Sorrell’s celebrated (notorious if you happen to work for him) micro-management and the ultimate succession, Lader says: “Notwithstanding Martin’s high profile and incessant emails…WPP is, I can attest, far more than one individual It is more than a dozen group and functional heads who run all WPP businesses day to day, with far more authority than occasional observers suggest. As I have said, ultimately confronting the ‘succession elephant’ will be part science, part art.”
And he also points out that, over the period of Sorrell’s current five-year share award scheme, shareholders who have taken up all their rights would have received £12.8bn, so what’s not to like?
Sorrell (left) founded WPP 30 years ago, taking a listed company called Wire & Plastic Products and turning it into the giant it is today by acquiring, first, a gaggle of design companies in the UK and then two huge US agencies, J. Walter Thompson and Ogilvy & Mather. Neither could quite believe what was happening to them at the hands of this British upstart (JWT had failed to notice a Japanese freehold in its accounts worth £90m – Sorrell spotted it, of course) and his sackful of borrowed money.
The aforementioned sack is the reason behind the ongoing controversy over Sorrell’s pay and management. He’s an entrepreneur and he runs the company as if he still owns it, as Lader almost admits. He does own a very valuable personal stake, worth nearer £200m to £100m these days, but a tiny percentage. Unlike his pal Rupert Murdoch he doesn’t have the benefit of a two-tier voting structure where his shares count for more than anyone else’s.
So is he, as they say in the L’Oreal ads (from bitter French rival Publicis) worth it?
He’s paid far too much but is probably worth it anyway – for now.
New chairman Quarta’s job is to set SMS genuinely ambitious targets if he still wants to receive all this dosh and insist that a structure be established that would move smoothly into place should Sorrell be hit by the proverbial number 9 bus.
At the moment, in such an eventuality, finance chief Paul Richardson or former digital boss Mark Read (now running Wunderman) would probably step up. But few people see them as likely long-term successors (they may think otherwise of course).
Sorrell’s eventual successor will probably come from outside WPP. Andrew Robertson, the highly successful boss of Omnicom’s BBDO, and a Brit, is being mentioned increasingly in some quarters. But if Robertson were to jump ship he’d want to know when he’d take over as CEO and Sorrell would resist that.
Will there be a deputy CEO (or COO) of WPP in a couple of years time?
There might be.