WPP CEO Martin Sorrell just received another big payday — £36 million ($53 million at today’s exchange rate) worth of WPP shares that were issued to him earlier this month as part of the company’s long-term executive compensation plan known as “LEAP.” The company said Sorrell has sold nearly half the bonus the cover the tax liability that the stock distribution triggered.
Sorrell received the stock distribution earlier this month as a bonus payment for steering the company to certain performance benchmarks over a number of years.
The plan is controversial among some UK institutional investors who believe that it enables Sorrell to receive an outsized paycheck compared to most UK CEOs. The plan has been dubbed “notorious” in the UK press, and Sorrell’s pay has been a hot-button for investors for several years.
Three years ago, shareholders rejected Sorrell’s pay package in an advisory vote at the company’s annual meeting. Two years ago, after much discussion with shareholders, Sorrell agreed to a cut in salary and reduced opportunities in the company’s long- and short-term incentive plans, and the company’s executive compensation package was approved.
And last year after some fairly loud grumbling from certain investors, shareholders approved Sorrell’s princely $50 million pay package for 2013, which represented a whopping 70% hike over the previous year. Sorrell was the highest paid Adland holding company CEO in 2013.
But the company has consistently argued that Sorrell’s pay is competitive and not out of line with WPP’s “peer set” of companies, including other Adland holding companies as well as big media companies that WPP is constantly grappling with, among other firms.
In a statement Monday, WPP Chairman Philip Lader defended the payout, declaring that “this senior management incentive compensation plan requires substantial personal, long-term investment by the participants, exceptional corporate performance over five years and was approved by an 83% supporting vote of the share owners. The awards were determined by the arithmetic application of this 2009 plan and are aligned with the £12.8 billion share owner value creation over this period derived from share price appreciation, dividends and share buy-backs.”
The LEAP plan covers 17 top WPP executives including CFO Paul Richardson. All participants had to commit shares in 2010 to qualify for participation.