WPP's Sorrell Wants $95 Million Pay Package; Sparks Protest at "Unnecessarily Complex" Scheme

WPP chief Martin Sorrell is asking shareholders to give him a new pay package that could be worth up to $95 million, according to the Times of London.

The massive compensation deal has already drawn the anger of the Association of British Insurers, which issued a warning to investors on the matter. Sorrell’s previous multi-year package was worth $69 million (about 44 million).

Part of ABI’s complaint about Sorrell’s package is that it is too complicated. As the Times noted:

Sir Martin Sorrell’s proposed package of up to $95million is eye-catching for all the wrong reasons.

… Institutional investors are cross that, after consultation on the bonus scheme, their criticisms were ignored. The scheme is super-generous, unnecessarily complex and allows WPP executives to qualify for huge bonuses without putting any fresh skin in the game.

How complicated is it? Read it for yourself here. Note that it takes seven pages of single-spaced type to explain, which is followed by another five pages of appendices and notes to help you understand it better (if, like me, you couldn’t understand a word of the first seven pages). Here’s a typical sentence from the compensation plan:

The number of WPP Shares in respect of which awards that are to be satisfied by the issue of WPP Shares or the transfer of treasury shares may be granted under LEAP III on any day when added to the aggregate of:
(a) the number of WPP Shares or treasury shares which immediately prior to that day have been or are to be issued or (in the case of treasury shares) transferred to satisfy outstanding awards under LEAP III; and
(b) the number of WPP Shares or treasury shares which immediately prior to that day have been or are to be issued or (in the case of treasury shares) transferred to satisfy options or awards granted or made under any other employees’ share scheme of the Company in the ten years immediately before that day;
shall not exceed 10% of the issued ordinary share capital of the Company for the time being.

And yes, that is technically a single sentence.

The alleged purpose of the scheme is to align Sorrell and 20 top WPP execs’ compensation with shareholder performance. Over the last few months, WPP shares have declined from 45.62 to 35.50, Q1 revenues were down and Sorrell is predicting a further contraction this year.

• See previous coverage of WPP:
• WPP’s Sorrell Dusts Off Latest Wacky Recovery Metaphor: “An Italic L, Flipping Up”
• Sorrell Prepares to Leave WPP Amid 7,000 Layoffs
• WPP Q1: Debt Doubles; “It’s All Lehman Brothers’ Fault”
• WPP Accuses Spot Runner of $54 Million Scam; Was Sorrell Asleep at the Wheel?
• The Enfatico Fiasco: Isn’t This All Dell’s Fault?
• WPP’s Sorrell Calls Publicis’ Levy “Callous” in Remarks on Recession
• Sorrell’s Interest in Branded Content Is Explained by WPP’s Finances
• WPP’s Layoffs Plan Explained — Wall Street Doesn’t Believe Sorrell’s Rosy View of the Future
• WPP Q4: Lower Profits Increase Likelihood of More Layoffs