Sorrell’s WPP bonus falls to “just” £10m – but will he mollify his critics by waiving it?

Martin Sorrell’s position as the best-paid FTSE 100 CEO could be under threat now that his 2017 bonus has been cut by 75 per cent to “just” £10 million.

The WPP CEO has always been unapologetic about his fat cat earnings, even in the face of continued shareholder revolt.

Sorrell’s argument is that most of his wealth is tied up in WPP shares, so he financially wins or loses by his own performance.

That performance in 2017 showed the worst growth since 2009, with the stock down 30 per cent across the year. Sorrell described the year as “not pretty” but still gets a £10m bonus to help make up for his loss (we don’t find out about the full package until April).

Other WPP shareholders who’ve seen their stock go down might question whether Sorrell deserves a bonus at all. Sorrell could choose to waive the £10 million, but that’s not really his style. Shareholders and critics would welcome such a move though. Bonuses are supposed to reflect performance after all.

WPP has conceded to shareholder pressure about fat cat salaries in recent years with changes in Sorrell’s pay package calculations, which probably account for some of the 75 per cent bonus drop, but not all of it. Last year Sorrell’s £48 million package was a third down on 2015, but was still rejected as too generous by a fifth of shareholders.

The truth is that the world’s biggest advertising tanker has struggled to turn around in the face of disruptive technologies, new demands on transparency in media, zero budgeting, and outright budget cuts from some of its biggest clients like Procter and Gamble and Unilever.

The outlook isn’t helped by a series of major account reviews that are threatening WPP’s hold on some of its biggest clients and will inevitably drive income down, even if WPP holds on to them. JWT and Mediacom are threatened by a global Shell review, HSBC is reviewing media globally and mega client Ford is ominously looking at how it does business.

Sorrell has been making efforts to reshape WPP, which mostly consist of merging big agency brands. Maxus and MEC became Wavemaker (all still under the GroupM media umbrella); PR firms Burson Marsteller and Cohn & Wolfe became Burson Cohn & Wolfe; Kantar Consulting now houses the research businesses; and Superunion houses the design brands.

So far he has stopped short of merging any of the big ad agency brands – Ogilvy, JWT, Grey, Y&R – but WPP’s “horizontality” mission is blurring these behind the scenes.

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