Sorrell defends controversial pounds 31m WPP incentive scheme

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The Independent Online
MARTIN SORRELL, chief executive of WPP, the advertising and marketing services group, yesterday defended a five-year pounds 31m incentive plan, but he added: "It's clearly risky."

Under the plan, subject to shareholder approval, Mr Sorrell will stump up pounds 6.1m in cash and WPP shares. If the group's total return to shareholders, as measured by dividends and share price performance, is among the top two in a 15-company peer group over five years, Mr Sorrell would be awarded the bonus.

Fourteen other top WPP executives will together invest pounds 6.1m under the same conditions for a potential pounds 31m collective payout in 2004.

"Most people cash in and reload," said Mr Sorrell, referring to the US practice where executives cash in share options and receive new ones. "I have not chosen to do that. Effectively I'm keeping 8 million shares."

He defended the incentives as promoting entrepreneurial risk taking, rewarding performance and putting WPP in a better position to retain staff vis-a-vis its biggest competitors, Interpublic Group and Omnicom, both of the US.

WPP reported a 20 per cent rise in interim pre-tax profits to pounds 112.6m as turnover grew 13 per cent to pounds 1.02bn on a 16 per cent rise in gross billings to pounds 4.45bn.

The ad business used rising profit margins to boost earnings, even though sales growth trailed business areas such as public relations, consultancy and specialist communications.

Analysts expect WPP to continue growing, with advertising being boosted by the millennium, the US presidential election and the Olympic Games.

WPP's shares closed up 2p at 591p.

Investment, page 17