Shareholder advisors on the war path over pay at Sorrell’s new S4 Capital

We thought Sir Martin Sorrell’s pay was yesterday’s news as he’s now ensconced at “better, faster, cheaper” S4 Capital. At WPP he controversially earned buckets including £72m in 2016.

But now two shareholder advisors, Glass Lewis and ISS, are urging shareholders to vote against his potential rewards at S4’s AGM this month. His annual pay is £230,000 (he picked up £140,000 last year) and under his new deal he could earn up to 15 per cent of the company’s increased market capitalisation over a five-year period.

Glass Lewis says S4 is using “complex vesting conditions,” putting no individual limits on rewards and allowing too much dilution of investors’ existing shares.

S4 says the pay structure is “consistent with the UK corporate governance provision of promoting long-term shareholdings by executive directors, aligned with long-term shareholders interests. It is performance driven and designed to incentivise management to create value for all shareholders.”

Here we go again, it seems.

Sorrell’s views on his remuneration are well known (he thinks he’s worth every penny.). The particular problem is that, as a big shareholder in S4 as he was in WPP, he benefits from the dividends the company pays as well as the increase in its share price. So why does he need another generous dollop on top of this and his salary?

It’s distracting for the company and also likely to play badly with current and prospective clients. Arguably one reason for the savage client clampdown on agency fees in recent years was Sorrell’s vast earnings at WPP (about £200m in all.) Some clients are bound to feel they’re over-paying if the boss can take home so much loot. Neither do some client CEOs take kindly to the boss of their agency earning many times what they do. It may not be entirely logical (if the agency is doing a good job, so what?) but emotions count.

PS You and Mr Jones’s David Jones tells us his company got there first with “better, faster, cheaper” – which we’re happy to accept.

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