Sir Martin Sorrell has said he's worth every penny of the multi-million pound remuneration package that will be confirmed when WPP, the marketing and advertising company he founded in 1985, releases its annual report in the summer.
Sir Martin scooped a share award of £63 million in March and could see that total rise to £70 million for the year ending April. His salary is worth £1.15 million and he may get a cash bonus on top that will be disclosed in the report.
That makes him the best paid CEO out of the biggest 100 British companies in the FTSE 100, taking home more than £150 million from WPP since 2010, at a time when executive pay has come under close scrutiny.
Sir Martin has defended his pay, saying that the risks he has taken growing WPP over 31 years mean he is entitled to profit from its success.
“WPP capitalised at £1 million [at its start in 1985],” Sir Martin said at the Advertising Week Europe event in London on Monday.
“Today it is capitalised at £21 billion. I’m not a Johnny come lately who picked a company up and turned it round [for a big pay day]. If it was one five-year plan and we buggered off, fine [to criticise my pay]. Over those 31 years … I have taken a significant degree of risk. [WPP] is where my wealth is. It is long effort over a long period of time.”
In an interview post on CNBC, Sir Martin explained that he was a 40-year-old executive at Saatchi in 1985 when he invested £250,000 in Wire and Plastic Products, a vehicle to deliver his vision of a huge advertising company.
"But I continue to hold in the company, so every time the company does well, I benefit," he added. "And, of course, a large number of other people – because I'm not the only one involved in these plans – and every time we do badly, we all suffer. So it's geared to the success of the company. It's pay for performance", he said.
Sir Martin's bonus is calculated using a controversial long-term bonus scheme called Leap or the leadership acquisition plan. Shareholders revolted against the scheme at the annual WPP meeting in 2012, when 60 per cent of investors voted against it.
As a result a new, less generous scheme will be used to calculate Sir Martin's bonus from 2018. In the meantime he will receive the maximum possible under the Leap scheme given that WPP's share price has risen by 98 per cent over the past five years, compared to 5.8 per cent for the FTSE100 as a whole.
Executive pay is under close scrutiny after BP shareholders voted 60 per cent against a £14 million pay deal for BP chief executive Bob Dudley.
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