WPP chief in line for big pay cut

WPP’s Martin Sorrell, CEO of the world’s largest advertising company, is facing a huge cut in his pay package.

WPP’s Martin Sorrell, CEO of the world’s largest advertising company, is facing a huge cut in his pay package following investor criticism and a dismal year, according to a person with knowledge of the matter.

The 73-year-old CEO will receive a long-term bonus of less than £15m, compared with £41.6m in 2017, said the person, who asked not to be identified as the figures are confidential.

WPP has lost almost a third of its market value over the past 12 months, with advertising industry headwinds taking a smaller toll on Publicis Groupe and Omnicom Group.

Major clients such as Unilever and Procter & Gamble have been cutting marketing costs under pressure from activist investors, while companies disrupted by new technologies have been shaving their advertising budgets.

WPP’s shares declined 8.2% on March 1 when the company reported its worst annual performance since the financial crisis and gave a bleak outlook for 2018. The shares on Wednesday touched their lowest since 2014 and traded little changed at £11.57 at 12.44pm in London.

Sorrell’s total pay package, which will not be revealed until April with the publication of the annual report, will also include pension payments, benefits, his salary and a short-term bonus. These are unlikely to tally more than £20m, compared with 2017’s £48m, the person said.

The pay cut is mostly due to the phasing out of the company’s notoriously generous long-term incentive plan, the Leadership Equity Acquisition Plan, which rewarded Sorrell handsomely.

This is the first year of a new, less lucrative long-term incentive programme, the Executive Performance Share Plan.

Richard Oldworth, a spokesman for London-based WPP, said he did not yet know the full details of Sorrell’s compensation but acknowledged the total would be less.

“The new scheme provides a much lower opportunity than the previous scheme,” he said.

“Since it covers a five-year period, the weakness of the share price in 2017 will adversely affect the outcome.”

In 2017, more than 20% of investors voted against WPP’s compensation, resulting in it being listed in a new public register set up by the Investment Association.