WPP chief executive Sir Martin Sorrell has taken his war of words with rebellious shareholders over a 30% pay increase to the pages of the Financial Times.
The crux of his robust defence is twofold. First, he is being rewarded for success not, like the managers of many British companies, failure. WPP reported pre-tax profits up almost a fifth last year to £1bn on revenues that increased 7 per cent to £10bn. Its shares have risen 10 per cent so far this year against the FTSE 100’s 5 per cent decline. He adds that over the same period he has added 1500 UK jobs to the payroll.
Second, the criticism of him behaving ‘like an owner’ is misconceived. He is like an owner: ‘The most wounding comment, made anonymously, is that I deserve a “bloody nose” because I have been behaving as an owner, rather than as a “highly paid manager”. If that is so, mea culpa. I thought that was the object of the exercise, to behave like an owner and entrepreneur and not a bureaucrat, who loads up with “heads I win, tails you lose” options by just being there.’
Sorrell reserves his most vitriolic criticism for chief “rabble-rouser” ISS, a consultancy that advises about 20 per cent of WPP’s shareholders, and which has come out strongly against last year’s £6.8m pay deal:
‘For inexplicable reasons, ISS and other shareholder advisory bodies compare our US-based competition with companies such as Time Warner, Viacom and CBS, and do not include WPP. They compare us only with UK companies, although less than 10 per cent of our revenues and profits originate in the UK and all WPP’s big competitors, including those with pay schemes that are very generous by comparison, are excluded from these analyses.’
And finally, he rounds on the UK compensation debate itself, for descending into the politics of envy:
‘The compensation debate in the UK now seems to have shifted, from undeserving bankers paid for failure and from payment for performance, to what is fair pay. WPP is not a public utility. If Britain wants world champions in the private sector, we have to pay competitively, as ISS and other proxy services inconsistently accept for our direct competitors, particularly those based in the US, but not over here. If the government or institutions believe pay is excessive, tax it. Do not fiddle with the market mechanism. WPP is not a failure, it is a success.’
Ouch! Whether Sorrell’s stinging attack on rebellious shareholders will have the desired effect remains to be seen. Stay tuned for the outcome of next week’s showdown Annual General Meeting…