WPP Chief Reveals Headcount Reductions Coupled With Plan To Boost Shareholder Dividends

by Joe Mandese @mp_joemandese, June 12, 2013

Editor's Note: This story was updated from an original version that incorrectly attributed WPP's earnings remarks to CEO Sir Martin Sorrell.

Using the term “perverse” to describe his final -- and perhaps most poignant -- point in a WPP earnings statement released early this morning, Non-Executive Chairman Philip Lader used the backdrop of the protracted global economic downturn to give thanks to it.

“While finding lengthy periods of economic downturn deeply painful, also have cause to be grateful to them,” he wrote at the end of a report indicating that while conditions remain challenging and uncertain, WPP nonetheless is on track to pace with 2012’s record year of growth for the world’s largest advertising company.

“Despite substantial evidence to the contrary, in the minds of many in business and government, spending on marketing communications remains an almost discretionary activity: to be undertaken when times are good but able to be cut -- and cut without penalty -- when times turn tough,” Lader wrote, adding, however: “But there is now a vast and growing body of evidence that spending on the building and maintenance of brands is as crucial and as valuable to a company’s long-term health as spending on the purchase and maintenance of capital equipment.”

That said, the WPP report reveals that WPP has seen a net decrease in what is arguably its most important capital -- its human capital.

“Our operating companies are still hiring cautiously,” he revealed, adding, “with headcount at the end of April lower than the beginning of the year on a like-for-like basis.”

WPP did not disclose how much its headcount has shrunk, but Lader implied the organization’s staffing is corresponding with demand from its clients for its marketing services. And while that has increased “slightly” recently, he also noted that the current “tough times have been ruthlessly putting” their belief in long-term marketing investments “to the test.”

However smaller the 165,000-odd WPP organization is following that test, Lader thanked the organization for its performance in 2012 and for continuing to “weather some extremely stormy conditions.”

“They have made a massive difference to the lives of many millions of others,” he concluded. “We are not the only group of people to be greatly in their debt.”

Speaking of which, WPP also disclosed plans to increase the dividend it pays to its shareholders by as much as 50% despite the aforementioned stormy conditions and headcount reductions.

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