Tuesday, 1 December 2015

WPP £43M Sorrell pay and houses and hotels

Some strange points from Martin Sorrell of WPP’s £43M pay package yesterday: • Claiming £50k because he was using his houses in NY etc rather than staying in a hotel for WPP meetings? Is he serious? He has a house in a town where there’s a WPP meeting and he uses that to stay in? And then issues an invoice his shareholders for the notional cost as if he was using a hotel? Presumably a rate based on The Four Seasons rather than a Travellodge too! • Justifying the salary on the basis he created and built WPP? Eh? Without downplaying his Master of the Universe scenario too much WPP was hardly built the way say Ogilvy founded and built O&M from scratch. Sorrell bought existing companies with bank loans. It’s a holding company of existing businesses. They happen to be advertising and PR and design firms but could be any widget manufacturer. Hence WPP originally being a supermarket trolley company. To paraphrase the Gates and Buffett scenarios, Gates built Microsoft into a computer company while Buffett invested in already existing companies. The financial yield may be similar but the effort is qualitatively and quantitavley different and not really comparable at all unless say with venture capital or finance firms. Indeed as a business owner I wonder if Ogilvy or Gates would have considered staying at their own house and rebilling it to their company? Will Martin be having a cup of tea in his kitchen and rebilling the cost of a cup of tea in the Ritz? Paying himself the hotel doorman’s salary because he opened his own front door? Bizarre. And on top of a £43M pay package. As a shareholder I would be rather miffed. And after the Great Crash of 2008 it makes companies seem focused on greed. With over 50 FTSE CEO’s earning over £1M perhaps there is a need for a maximum salary of say £500k or £1M and a cap on bonuses/benefits and certainly bonuses linked to share price for what are very well paid managers of huge and existing companies? Sincerely yours, Tim www.sincerityagency.co.uk PS: • Good news that a soda/sugar tax is on the cards to be introduced and banning fast food ads before the 9pm watershed. Why not? More room then for advertisers of healthier foods as well as other industries. And certainly the smoking ban on television has had no effect on the advertising industries – and the sooner the UK follows Eire and Australia to plain cigarette packs the better.

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