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Does WPP’s Sir Martin Sorrell deserve a 50 per cent pay rise to £1.5m?

Strange to say, he probably does when you consider that his basic pay (£1m) hasn’t risen since 2007 and WPP, the company he founded and runs, has ridden out the volatile past few years pretty capably.

WPP’s board level remuneration committee wants to increase CEO Sir Martin Sorrell’s base pay to £1.5m, a move which has angered some shareholders, about timing more than anything. By the standards of global big business cheeses Sorrell is quite lowly paid although he has been very generously rewarded in terms of bonuses (which are based on base pay), picking up £50m in 2007.

There’s never really a right time to put up a CEO’s pay of course but this move by Sorrell has been on the cards since it was announced that digital boss Mark Read’s pay was increasing to £825,000.

Read, conceivably, could be poached by a competitor which is hardly likely in Sorrell’s case. But CEOs are rather like footballers these days, they don’t need the money but they don’t like the thought of someone else earning more than they are.

Some shareholders might be thinking that WPP, for all its scale (it’s now the biggest marcoms company in the world with about three times as many employees as any of the others) hasn’t exactly delivered a stunning share price performance over the last ten years or so. But then neither have many global giants. Microsoft’s share price performance has been much worse but that hasn’t affected CEO Steve Ballmer’s humungous earnings.

The trouble with WPP is that it’s so big and in so many nooks and crannies of the global marcoms business that it’s become a sort of investment trust for the ad business (and PR and research and branding etc etc). As such it tends to mirror the global business cycle which, in the West at least, has proved unable to take a step forward since the dotcom crash of 2000.

Sorrell would argue that WPP’s heavy investments in the BRICs (Brazil, Russia,China and India) and his favoured ‘next 11’ (emerging markets like Malaysia and Vietnam) plus its collection of digital goodies will enable it to break out of this Western depression.

He’ll probably get his pay rise come what may. And at 66 he may be preparing the ground for the next big bonus that will see him comfortably into retirement.

But don’t bet on it.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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