WPP boss (and founder) Sir Martin Sorrell’s pay this year is to be £48m (down from £70m in total last year) and under new rules will not be more than £15m next. He also collects another fortune from WPP dividends as he’s the largest individual shareholder.
It’s pretty obvious why WPP has done this: new chairman Roberto Quarta and the board are fed up with trying to justify such huge amounts and reckon £15m will appease shareholders (and Theresa May possibly) while keeping Sorrell on board. They keep saying they’ve a succession plan (Sorrell is 72) but this seems to be confined to reviewing internal candidates. When Sorrell does finally step down external candidates, probably with a background in finance, will be high on the list as WPP is a £20bn company. As much like an investment trust as an agency group these days as its fortunes, more or less, mirror that of the marketing communications industry worldwide.
If they summoned the headhunters now though Sorrell would most likely be miffed as a countdown would inevitably begin.
In the past Sorrell has justified his huge pay (he’s had over £200m from WPP in the past few years) on the grounds of its performance and his all-encompassing role and status as founder. But the performance is stuttering now as the global economy resolutely refuses to perform and big clients tighten the screws on agency costs. In the past when WPP has complained about this (mostly in private) advertisers have able to point to Sorrell’s pay and WPP’s ever-expanding margins as evidence of agency riches.
£15m would put Sorrell on a par with some other highly FTSE100 CEOs, like BP’s Bob Dudley. So it’s a reasonable compromise by the WPP board. Whether Sorrell agrees is a moot point. It puts him some way behind Omnicom’s John Wren who gets $23m and that won’t go down well. He’s bound to be asked about it at the June AGM by some brave soul. Given his past views on the topic that’s one question he’s probably not looking forward to answering.