WPP's Sorrell Set for Windfall as Pay Nears $100 Millionby
Sorrell remains highest-paid CEO in Britain by a long shot
Controversial incentive plan at WPP expires this year
WPP Plc’s Martin Sorrell, head of the world’s largest advertising company, has raked in more than 120 million pounds ($172 million) in the past six years in annual pay -- but his biggest windfall is yet to come.
Already Britain’s highest-paid chief executive officer, Sorrell will get almost 70 million pounds in bonus and salary for 2015, according to a person familiar with the matter. Most of the total sum, set to be announced this week, consists of a controversial incentive plan which triggered protests from some shareholders and public interest groups monitoring executive compensation. Called LEAP, the Leadership Equity Acquisitions Plan is based on share investments and WPP’s performance over five-year targets.
“You have to wonder how it’s possible to generate a figure like this,” said Stefan Stern, director of the U.K.’s High Pay Centre, an independent think tank in London. “This takes him out of sight of the rest of workforce and I hope it isn’t a benchmark.”
The pay package reveals the limitations in shareholders’ arsenal to curb executive pay. Investors in 2012 voted against Sorrell’s pay package and the next year passed a new incentive plan that limits the number of shares eligible for long-term compensation programs. But they were powerless to undo LEAP, because the long-term stock and option plan was already in place. It will wind down this year.
|2015||about 70 million|
* in pounds
WPP, whose agencies include Ogilvy & Mather and Young & Rubicam, says the high amounts paid to Sorrell and other company executives reflects the superior returns generated for investors.
“Later this week WPP will confirm the LEAP allocation for the 15 executive participants who invested at the start of the performance period in 2011,” the company said in an e-mailed response to questions. “It will reflect another very significant outperformance by WPP of both its comparator group and the FTSE 100.”
Sorrell referred questions on his compensation to a spokesman for WPP.
Shares of the company have more than doubled in the past five years, while the FTSE 100 index has gained less than 10 percent. The stock was up 0.5 percent to 1,572 pence as of 4 p.m. in London, valuing WPP at 20.4 billion pounds.
With 2016 the last year LEAP is in operation, the final payout under the program will be in one year’s time. The new plan, the Executive Performance Share Plan, caps Sorrell’s total annual compensation at 19.3 million pounds, based on his current base salary. The first payout under the new program will be announced in March 2018.
Other high earners in Britain this year -- though none come close to the projected payout Sorrell will earn -- include Berkeley Group’s Tony Pidgley at 23 million pounds and BP Plc CEO Bob Dudley at 19.6 million and Sky Plc’s Jeremy Darroch at 16.8 million, according to the High Pay Centre.
The Evening Standard earlier on Monday reported Sorrell will get an estimated 70 million pounds.