Two years ago, many WPP shareholders were dismayed with the company’s executive compensation package, calling it excessive compared to most UK companies. CEO Martin Sorrell argued that his pay is more fairly compared to American competitors, like Omnicom Group, but made some concessions, taking a salary cut and accepting some newly imposed limits on incentive pay and pension contributions.
Shareholders, a majority of whom refused to approve WPP’s executive pay package two years ago, overwhelmingly supported last year’s program.
But the concessions didn’t prevent Sorrell from receiving a whopping 70% pay hike last year, making him the highest-compensated CEO among Adland’s major holding companies. His total remuneration was over 29.8 million British Pounds, or about $50.4 million at today’s exchange rate.
There’s renewed speculation in the UK press that the big payday may rekindle shareholder cries of disapproval. A story in today’s Times of London quoted one shareholder as saying that Sorrell’s pay package is “completely off the scale.”
Most of Sorrell’s compensation for the year came in the form of long-term incentives totaling nearly 22.7 million British Pounds, or about $38.3 million at today’s rate of exchange. When that portion of his package became public last month, a company rep responded: “The award is evidence of superior rewards for executive management in return for superior performance for share owners.”
In February, the company reported record revenues and profits for 2013. Total shareholder return showed a “considerable increase,” per the company and the company’s share price was up 55% for the year. However, it missed its profit margin goal for the year, which it attributed largely to unexpected currency fluctuations. At the time, Sorrell told analysts the long-term margin outlook remained unchanged for the company, but that it would take the company somewhat longer to get there.
In addition to the pay concessions that Sorrell has made, the company’s 2013 Annual Report notes the implementation of a new recruitment policy that dictates lower incentive pay opportunities for Sorrell’s successor “while seeking to retain the flexibility required to recruit talent of the level necessary to run such a complex global group.”
Among his holding company competitors, no CEO came close to matching Sorrell’s compensation for 2013. MDC Partners CEO Miles Nadal received a total of $20.7 million last year, more than double what he received in 2012.