It’s time to play that annual game of ‘is Martin worth the money?’ as WPP CEO Sir Martin Sorrell prepares to trouser cash and share awards totalling more than than £60m for 2014, bringing his pay over the last five years to around £150m.
Most of this accrues under the company’s controversial ‘Leap’ scheme under which shares are doled out in relation to various performance targets. Leap is being retired next year following protests from shareholders but Sorrell (below), assuming he’s still there and the company continues to hit its targets, will see his earnings rocket to over £200m by then. This year he stands to receives £8.5m in share dividends alone.
The company will argue that WPP share price has doubled from 789p to £15.63p in the period, far outperforming similar-sized companies in London and most of its marcoms peers around the world. Dissenters will argue that the share targets are clearly too soft and £60m, or whatever the final figure is, is just too much.
Assuming nothing untoward happens in the next few months, Sorrell will no doubt keep his rewards and his job. There are a few clouds on the horizon however – or “grey swans” as Sorrell would doubtless call them. One is the group’s performance in a slowing world economy. Another is the US Association of National Advertisers investigation into allegedly undisclosed rebates from media owners. A third, and likely the most problematic, is the lawsuit against newly-appointed JWT CEO Gustavo Martinez’ alleged racist and sexist comments and behaviour.
On the latter WPP has released a memo to senior execs saying its lawyers have been investigating the allegations since February 25 and “so far” have found nothing. “So far” is hardly a ringing endorsement of Martinez. Martinez, who succeeds Bob Jeffrey, would have been a Sorrell appointment and, if the allegations are found to have substance, his judgement would be called into question. In many such circumstances the executive in question would be suspended, pending a legal judgement. WPP seems to have chosen not to do that. The full case against Martinez is here.
Share awards may be given but they may also be taken away if circumstances are deemed to have changed.
In what’s turning out to be an enveloping nightmare for JWT, Campaign reports that the managing director of JWT AdVenture in Korea, Junghwan Kim, has been arrested for allegedly bribing clients with what’s described as a $826,000 “slush fund.”