Commentary

Sorrell On GBP70m? Shouldn't WPP Be Succession Planning, Not Retaining?

It's obscene. There really is no getting away from it. Paying Sir Martin Sorrell a little over GBP70m put him at well over two hundred times the average staff member's wage, when the accepted standard for listed companies is that top executives should never earn twenty times what the average person below them takes home. 

That's for starters. The truly puzzling part is why WPP feels it necessary to take his pay to such meteoric heights. In fact, the pay packet is going to be so big that one shareholder advisory group is suggesting it's the largest ever pay deal to be put to shareholders since executive pay awards were awarded as a single figure, rather than one for salary and another for businesses and pension payments.

So we have the largest UK pay deal, which tramples over any good guidance on what a fair pay deal resembles. You could argue that this doesn't matter, as Sorrell is the guy most responsible for building up WPP, and he deserves every penny he gets. There's an argument there -- and it's one for shareholders to decide. Word on the street is that last year's figure of 30% opposing his pay deal will increase, but not by enough to stop it going through.

The truly puzzling part in all this is Sorrell already earns a fortune and has an estimated GBP750m worth of WPP shares to his name. Top executive pay is a business arrangement designed to ensure that a business gets the best talent it can and that those people are incentivised to do a good job. So, Sorrell already has 750m reasons to be focussed, doesn't he? Seems very odd to think a guy that heavily invested in a business doing well is believed to then also need GBP70m a year to keep him on board and happy.

So here's the point. Isn't the issue with WPP one of replacing Sir Martin Sorrell? Just as replacing Maurice Levy from next spring has been top of Publicis' agenda? At 71, Sorrell is only a couple of years younger and likely to be considering retirement at some point in the near future. 

Why give a guy already seriously invested in a company such a huge pay packet? Why put that effort into retaining someone who's surely only a a couple of years away from leaving?

It's just a nonsensical decision, isn't it?

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