WPP, the world’s biggest advertising company, said it had awarded Sorrell more than 2.3m WPP shares worth £36.04m under its Leap incentive plan. The Leap payment is likely to take Sorrell’s total pay for last year to more than £40m, including his salary and short-term bonus.
Sorrell’s pay is likely to trigger unrest among some big investors and a protest vote at the company’s annual meeting in June. WPP gave in to pressure in 2013 and scrapped Leap but the size of continued payouts under the plan has disturbed some shareholders.
The WPP’s chairman, Philip Lader, said: “This senior management incentive compensation plan required substantial personal, long-term investment by the participants, exceptional corporate performance over five years, and was approved by an 83% supporting vote of share owners.”
Sorrell put 416,666 of his own WPP shares into the Leap scheme in 2010 and was given the chance to receive up to five times as many shares this year depending on WPP’s financial performance. He has received the maximum number of shares, which have more than doubled in price to £15.49 from £7.25.
Lader said the payout reflected a £12.8bn increase in shareholder value from the rising share price, dividends and the company buying back shares.
WPP said it had strongly outperformed 12 comparator companies for shareholder returns in the past five years. In that time, WPP’s market value more than doubled to £17.8bn from £7.7bn while the FTSE 100 index rose 21%.
The payout for last year will take Sorrell’s earnings from WPP over the last five years to more than £100m. It is his biggest payday since 2005 when he was paid £50m. Last year, he was paid a total of £30m.
The Leap scheme was introduced in 2009 despite a sizeable shareholder protest. In 2012, investors revolted against WPP’s remuneration report during the so-called shareholder spring of revolts at annual meetings.
The company ended the scheme in 2013 and Sorrell accepted cuts to his pay and potential bonus payout. But WPP continues to honour potential payouts under the Leap plan, which has two years to run.
Sorrell’s earnings are by far the biggest of the total £79m payout to 17 WPP executives under the Leap plan.
This article was written by Sean Farrell, for theguardian.com on Monday 16th March 2015 08.53 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010