Sorrell stands to gain pounds 17m if WPP ad agency booms

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The Independent Online
BY JAMES BETHELL

Martin Sorrell, chief executive of WPP, is set to boost his fortune by up to pounds 17m if he meets share price and efficiency targets set by the board of the global advertising agency.

Details in WPP's annual report, published yesterday, show that the 50- year-old advertising executive could earn up to pounds 10m from a complicated "phantom share" scheme that is related to an investment by Mr Sorrell of pounds 2.2m in the company's shares.

In addition to the share scheme, he will receive over five years pounds 3.5m in salary, pounds 1.5m in pension payments and up to pounds 2m in annual bonus and performance-related pay.

The proposals follow the collapse of the company's share price from a high of 933p in November 1987 to a low of 26p in September 1992 when the banks accepted shares in place of debt.

Since then, the share price has trebled and, after the company sold many of its peripheral businesses, debt has been reduced.

Mr Sorrell's remuneration package replaces a five-year rolling contract that did not prevent him working for companies outside Britain and which became unacceptable after the Cadbury Report recommendations. Its generous terms, which offer substantially more than the pounds 6m Maurice Saatchi asked from his former employers, Saatchi & Saatchi, look likely to be approved by shareholders at an extraordinary meeting on 25 June.

"They [shareholders] are impressed that he is ploughing his own money into the company," said an analyst from one institutional shareholder. "If he trebles their money, they will not begrudge him a big payout."

Anne Simpson of Pensions and Investment Research Consultants said she welcomed the principle of directors staking their own money in a company. She also applauded WPP for giving shareholders a chance to voice their opinion. But she remained sceptical of schemes that singled out individual executives for special treatment. "Companies rarely survive or fall on the strength of one person."

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