WPP will benefit from more non-executive CEOs on board

“At the heart of the matter is a question about the effectiveness of the WPP board in handling how much the chief executive is paid and what plans are in place for succession”
By: Fintellect Publishing Ltd
 
 
Marketing barons' pay 2012
Marketing barons' pay 2012
MORETON IN MARSH, U.K. - May 4, 2013 - PRLog -- The appointment of two former chief executives as additional non-executive directors of WPP should help to bring  greater clout to decisions and actions relating to both WPP’s future leadership and the current chief executive’s rewards, according to the marketing industry’s financial commentator Bob Willott.

Writing in Marketing Services Financial Intelligence (www.fintellect.com) following the disclosure of the £17.6 million ($27.8m) remuneration paid to WPP’s chief executive Sir Martin Sorrell last year, Willott poses this question about the existing group of non-executive directors on the WPP board: “How many have enough experience at the top of major companies to exercise real clout over decisions and actions relating to both WPP’s future leadership and the current chief executive’s rewards?”

“Harvard professors there may be, former ambassadors too.  Investment bankers are present by the handful.  And there are several entrepreneurs.  But chief executives are few and far between.  There’s Colin Day who now runs plastics supplier Filtrona and was once finance director at Aegis Group.  And there’s Sol Trujillo from Orange and US West.”

“So it’s good to learn that, among four incoming non-executive directors who will replace retiring members, there will be two more former chief executives – Roger Agnelli and Jacques Aigrain.”

Willott compliments Sir Martin Sorrell on having built the biggest marketing group in the world:  “In doing so he has demonstrated considerable skill and commitment.  He has battled through bad times as well as bathed in the glory of good times. He is 68 years old and has been employed by WPP for 27 years.   Last year his company made a profit for its shareholders of almost £823 million.”

What is striking about Sir Martin’s reward package of £17.6 million in 2012 is that it was 47.6% more than he received in the previous year.   It was also 88% more than John Wren received for running Omnicom and 188% more than Michael Roth received for running Interpublic.

Inevitably comparisons can be invidious.  For example, pension arrangements are different in the US.  And Sorrell's reward may not look much more than the amount earned by Publicis Groupe’s Maurice Lévy, but in the Frenchman’s case the variable component related to nine years’ performance and the company said that the total package averaged €6.6 million - $8.6 million - per annum over the last three years.

“Be that as it may, who but the most churlish observer would deny that the chief executive of the biggest and most profitable marketing group in the world should also be the best paid?” Willott observes. “The debate should not be about that, but about how much that pay should be and about what happens when the incumbent is no longer able to maintain his unquestionably outstanding performance. The better the incumbent, the harder the act is to follow.

“The average age of the current WPP board is 60 and compares well with Omnicom’s average age of 70 or even Interpublic’s average age of 64.  What is not yet evident is that enough of that relatively youthful vigour is being coupled with relevant big company management experience and directed at decisions that are necessary to maintain public and investor confidence..”

ENDS
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Source:Fintellect Publishing Ltd
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Tags:Wpp, Sir Martin Sorrell, Fintellect
Industry:Marketing, Financial
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Page Updated Last on: May 06, 2013
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