Failure at the Forum
Sorrell says ‘Davos bubble’ got it wrong as he takes £22m pay cut at WPP
SIR Martin Sorrell, the boss of advertising giant WPP, took a £22m pay cut last year despite the business he founded posting big increases in fees, revenues and profits.
Details of his remuneration were revealed in the £55bn-a-year company’s annual report, in which Sir Martin warned about the dangers of short-termism and global uncertainty. He also admitted that “residents of the Davos bubble (of which I am one) misjudged the public mood”.
Sir Martin’s total pay and bonuses fell to £48.1m for 2016 from £70.4m the previous year. The drop was down to a smaller share incentives award, which fell from £62.7m last time to £41.6m. His base salary remained at £1.15m.
He remains the FTSE 100’s best paid boss, and the controversial incentive scheme that boosts his total pay means his combined remuneration over the past five years has exceeded £200m.
At last year’s annual meeting, a third of WPP shareholders rejected the company’s remuneration report, and a less generous scheme was put in place.
In his chief executive’s letter, Sir Martin warned that “boards and investors have become ultra-conservative, and companies have been reluctant to invest” since the financial crisis, resulting in “consolidation on a massive scale, widespread stockpiling of cash and a boom in share buy-backs”.
He added: “What all this tells us is that companies lack the will or confidence to invest in their own growth and development, and prefer instead the seemingly risk-free approach of returning funds to shareholders or retaining ever-larger cash balances.”
Dodging risk means companies are “piling up far greater dangers for the future” by failing to invest for the future, according to Sir Martin.
He also took a swipe at City pundits and the financial media, saying they “obsess over the minutiae of quarterly results as if they were the key to a company’s entire future, rather than a snapshot of its fortunes over a mere three months”.
Sir Martin admitted he – along with the global elite who attended the World Economic Forum at Davos – was caught out by the wave of populism that resulted in the vote for Brexit and election of Donald Trump.
“Not for the first time, residents of the Davos bubble had misjudged the public mood, failing at the previous meeting to predict the result of either the US election or the Brexit vote.”
The US president continues to “tap that well of public discontent” with policies of controlling immigration, job creation and job repatriation, according to the advertising boss.
However, he warned that despite Mr Trump making a “bogeyman out of globalisation, there are other perhaps more fundamental, threats to employment”, such as robots replacing human workers.