Sir Martin Sorrell has collected one of the biggest pay cheques in British corporate history after WPP, the advertising group, paid out almost £63m to its founder and chief executive.
Sorrell has collected a share award of £62.78m, cashing in £30.2m immediately to meet the “consequential tax liabilities”.
The award to Sorrell is thought to be the second-largest granted to a FTSE 100 chief executive, behind only the £92m in shares and cash paid to Bart Becht while he was chief executive of Reckitt Benckiser in 2009.
Sorrell’s total pay package for the year could eventually hit £70m. He earns a £1.15m salary and will collect a cash bonus worth millions of pounds, although WPP is yet to disclose the exact figure.
The latest payout means Sorrell has received more than £150m from the company since 2010 – making him the highest-paid FTSE 100 chief executive.
The award is likely to spark new criticism of executive pay in Britain and a potential backlash from WPP shareholders.
The £62.78m payout has been made through a controversial long-term bonus scheme known as Leap – the leadership acquisition plan. This calculates a bonus for executives on the basis of WPP’s performance over the past five years.
Shareholders revolted against the scheme at WPP’s annual meeting in 2012 with almost 60% of investors opposing the pay deals for directors. This led to WPP replacing Leap with a less generous scheme called the executive performance share plan, which will come into force from 2018 and cap Sorrell’s pay at less than £20m, based on his existing salary.
He has received the maximum amount possible under the Leap scheme. The payout represents five free shares for every one he pledged five years ago towards the scheme. WPP said that its share price had risen by 98% over the past five years, compared with 5.8% for the FTSE 100 as a whole, growing its market value by £10.3bn. The company has also paid out dividends of £1.93bn during the period.
Sorrell, 71, founded WPP in 1985 when he borrowed £250,000 to buy a stake in shopping basket maker Wire & Plastic Products, which was then a £1m comapny. A former finance director of Saatchi & Saatchi, Sorrell turned WPP into the world’s biggest marketing and advertising group and an acquisitions machine. It now combines ad agencies such as JWT and Ogilvy & Mather with public relations companies including Finsbury and Hill & Knowlton.
Sorrell has never been slow to defend his pay deals from a company with which he is synonymous. In 2012, in an attempt to head off the row over his pay, he wrote a personal defence in the Financial Times to assert he was worth the money. A decade ago, he had also argued that what he did was “truly entrepreneurial”.
The total size of Sorrell’s pay deal for the year will be revealed next month when the annual report is published. His total is likely to be pushed towards £70m when his salary, short-term bonus and other benefits are included.
