On the face of it, yes, if WPP delivers £1.4bn profits (as expected) when it announces its 2011 results on Thursday. In 2010 WPP made £851m so the pocket tycoon must have been doing something right.
Sir Martin Sorrell’s basic pay is expected to rise from £1m (where it has languished for a decade) to £1.5m and his total package to well in excess of last year’s £4.6m. Plus there will no doubt be further humungous share awards.
Last year about 40 per cent of shareholders objected to strategy boss Mark Read’s pay rise to over £800,000, a warning shot across Sorrell’s bows. But it’s hard to argue with this year’s performance from the company.
One of the key things about WPP is that there is absolutely no heir apparent to 67-year old Sorrell. Big quoted company bosses are careful to ensure a fair amount of fog in these matters (Maurice Levy of Publicis Groupe is a master of the art) but there are usually one or two people around who are obvious candidates.
That is absolutely not the case at WPP. Read is hardly looks a CEO-in-waiting and neither does his predecessor as ‘brainbox on the board’ Eric Salama, now running the company’s Kantar research business. None of the leaders of WPP’s various agency networks are obvious successors either unlike number two marcoms company Omnicom where BBDO’s Andrew Robertson looks the likeliest candidate to succeed John Wren one day.
Sorrell has already announced that WPP is planning a £300m bonus pool for its staff (his award will doubtless come from a separate pot) and, by so doing, entered the banker-bashing bonus controversy in characteristically rumbustious style. He also recently headed a delegation of UK business leaders to Downing Street to remonstrate with PM David Cameron over his ‘anti-business’ rhetoric (Cameron has since changed his tune).
So Sorrell is not only unchallenged at WPP but is a person of considerable stature (no more jokes please) on the UK and world business stage. But should this alone command big rewards?
Not if the company doesn’t perform but the company clearly is performing. And Sorrell can claim, with some justification, that he himself is also bringing in the business. In the last few months in the UK two big advertisers, Vodafone and News Corporation, have both awarded their accounts to WPP. Vodafone eventually found itself at RKCR/Y&R while embattled News Corp is using a WPP team. Both these deals have Sorrell stamped all over them.
Sorrell has always wagered that, if WPP can become clearly the biggest marcoms outfit (and it now clearly is), then the world’s top marketers would beat a path to its door. Which some of them seem to be doing.
He still has challenges of course. In its last annual results the performance of Salama’s Kantar research unit was poor and this is where WPP made its biggest investment of recent years, the £1.1bn acquisition of research giant TNS Sofres in 2008. Since then Sorrell has eschewed really big deals.
To show that his strategy is working on all fronts (and that TNS was a wise buy) he needs some better results from Kantar to announce on Thursday and, judging by the anticipated headline profit, he may well have them. If he does, shareholders may well say, take the money Martin.