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.

Loss of Frank Budgen and Pat Fallon in a week

Sad to hear of death of two of the greats.

Multicultural future

Interesting article on multicultural marketing in USA: 53% believe their spend against Hispanic and other audiences will increase: http://www.drewsmarketingminute.com/2015/09/how-are-your-multicultural-marketing-strategies.html Relevant in UK too with not one of 43 police forces achieving their ethnic representation targets. More Sincerity Needed. www.sincerityagency.com

VW and CSR

If ever proof was needed of the importance of CSR then the Volkswagen dodgy emissions is that. 30% wiped off the share price in two days, the CEO resigns and $7BN set aside for the fines. And no news as yet on whether all 11M vehicles will need to be recalled. Or lawsuits for allowing increased pollution. And all this from one of the world's biggest carmakers and most reputable brands.

Letter to Luke and Sunday Times on CSR

Dear Luke I wanted to write to you having read your CSR article in the Sunday Times. I enjoyed your previous articles of the last few months on the advertising industry and the role of big business etc. But your CSR article is way off beam in terms of its relevance to a modern economy. Sure a company director’s duty is to maximise profit as you say – but surely not in the 21st century at the expense of incurring costs to the environment , staff and customer loyalty and ultimately being legislated out of business? And although generating vast wealth for humanity, the failure of capitalism so far is producing that wealth at the expense of the environment. And optimise profits? For spurious takeover deals? Or salting away in tax havens? Or funding the excesses of government waste? Instead, why not maximise profits with CSR for the benefit of the long-term growth of the business? Directors of slave industry and sugar companies were no doubt keen to maximise profit for their businesses for as long as possible before the consumer and government backlash. The Living Wage to their employees then amounted to little more than being lucky to be alive and enslaved. Thankfully business has moved on since then in many parts of the world. Although the day before your article BBCTV highlighted the tea plantations of major brands such as Liptons, PG Tips, Typhoo etc with their workers living in hovels and defecating around the tea bushes for lack of the –legally required – houses and toilets. CSR in this instance would mean something more palatable in your teacup. While CocaCola in the Sunday Times the same day as your article, took 2 pages of advertising to highlight its moves towards sugar-free drinks across all its brands. Just as in years gone by, it did actually remove cocaine from Coca-Cola amidst customer and government – and competitor - pressure. Rather CSR spurs a forward-thinking brand and company like CocaCola to be more innovative and creative and market-focused. And in your restaurant brands I’m sure there are CSR discussions about the distribution and costs of tips amongst staff, along with concerns over food waste or recycling cooking oil or sustainable farming. In all the above instances not to undertake such CSR activity could maximise profit – but only in the short term. And why would you think CSR or HR are dependent organisms of a business any more than say Venture Capital firms or the staff canteen or the finance dept? The cost in share price and customer and trade loyalty are noticeable – hence the numerous research studies that demonstrate that – I won’t bore you with them here but happy to provide more info if you need it eg TOMS One For One shoes with 45M pairs of shoes sold and donated. Is CSR perfect? Of course not – certainly it would be wasteful to simply pay lip service to values or courses of action – as the tea companies as above will no doubt see over the next few months. CSR doesn’t detract from profits, except perhaps in the short-term sometimes, but rather it is a catalyst to maximising the value and meaning of a brand - which is the longterm view of a business if done well. I look forward to your next Sunday Times article as always. Kindest regards Tim PS I'd forgot to add that a Living Wage isn't really CSR as such more just governance of business along with say fire extinguishers in offices etc. And if CSR is so terrible then why are Trotskyist radicals like Accenture or Bloomberg's New York recommending minimum wage improvements or junk food taxes etc?

CSR and Sunday Times

Disappointing Luke Johnson of Pizza Express writing in the Sunday Times doesn't rate CSR in business - must write a rebuttal.

Milan Expo and UK Creative Industries

Good to see UK Pavilion at Milan Expo featuring UK Creative Industries heavily.