This one is becoming a hardy perennial – according to the Sunday Times WPP investors are (once again) revolting over CEO Sir Martin Sorrell’s pay package.
Last year SMS trousered about £13m in salary (£1.3m), bonus and shares (about £5.6m), leading to opposition from a majority of shareholders. WPP chairman Phil Lader, a former US diplomat, has since being doing the rounds of shareholders, trying to work out a deal satisfactory to both the shareholders and SMS.
Crucially though only two per cent of WPP shareholders voted against Sorrell’s re-election to the board, suggesting they don’t actually want to see the back of him.
The trouble with these disputes (which shouldn’t really require that much resolution) is that pride becomes involved.
As we’ve remarked before, this one is rather like everyday life in the UK’s football Premiership. Players are paid unconscionable amounts of money (although loads of them go bankrupt after retiring it seems) but are quick to throw their toys out of the pram when someone else gets paid more.
And that’s the case with Sorrell. Omnicom’s John Wren, for example, gets more than he does. Other US CEOs, like Apple’s Tim Cook, get many time more than he does although they don’t seem to do that much – or that much successfully.
Sorrell’s argument is that he works in an international business (WPP is the biggest marcoms company in the world) not a UK one, even though the company has just moved its domicile back to the UK (Guernsey actually, but that’s another story).
It’s certainly true that WPP carries out about 95 per cent of its business outside the UK. It’s also true that WPP is performing relatively well (although no better than its closest peers, Omnicom and Publicis Groupe). The share price has started to move in the right direction though, after years in the doldrums.
Might Sorrell and his shareholders fall out – terminally?
It’s not impossible. SMS is 68 and there’s no obvious (or even less than obvious) successor in view. A compromise of some sort will probably be reached. This could mean WPP agreeing to a succession plan that would see the exit of Sorrell in, say, three to five years in return for him keeping most of his salary, options and benefits (the latter includes nearly half a million in expenses for cover travel for him and the wife, among other things of course).
Or he might stomp out in a huff. That’s not impossible either.