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Sorrell set to make £20m from WPP shares | Sorrell set to make £20m from WPP shares |
(about 9 hours later) | |
Sir Martin Sorrell could make almost £20m from WPP shares over the next five years despite stepping down as chief executive of the world's biggest advertising group on Saturday. | Sir Martin Sorrell could make almost £20m from WPP shares over the next five years despite stepping down as chief executive of the world's biggest advertising group on Saturday. |
Although Sir Martin gets no payoff or pension under his contract terms, he is entitled to share bonus awards. | |
The maximum number of shares Sir Martin may be awarded if WPP meets certain targets is 1.65 million. | The maximum number of shares Sir Martin may be awarded if WPP meets certain targets is 1.65 million. |
They are worth about £19m. WPP's shares opened down about 4%. | |
Sir Martin and his family own about 2% of the company - a stake worth about £300m. | |
After peaking at almost £19 in February 2017, WPP shares have since fallen sharply and closed on Friday at £11.88, valuing it at £15bn. | After peaking at almost £19 in February 2017, WPP shares have since fallen sharply and closed on Friday at £11.88, valuing it at £15bn. |
Some analysts believe WPP, which comprises about 400 separate businesses, including Ogilvy & Mather, Kantar Group, Hogarth Worldwide and Young & Rubicam, could be broken up. | |
Alex deGroote, at Cenkos Securities, said divisions such as Kantar, a market research business, could be sold and be worth as much as £3.5bn. | |
Marc Mendoza, founder of 360 Degree Media, told BBC Radio 4's Today programme a sell-off was inevitable. | |
"When you're that strong a personality leader within that field and you command such loyalty - a little bit of fear with it as well - you're impossible to replace with one individual, so the parts must be sold off now to create value for shareholders." | |
In March WPP reported its weakest annual results since the financial crisis, with Sir Martin describing 2017 as "not a pretty year" for the company even though pre-tax profits were just over £2bn. | In March WPP reported its weakest annual results since the financial crisis, with Sir Martin describing 2017 as "not a pretty year" for the company even though pre-tax profits were just over £2bn. |
Meanwhile, the Financial Times reported that the 73-year-old is free to start a rival company because he never had a non-compete agreement, according to WPP insiders. | Meanwhile, the Financial Times reported that the 73-year-old is free to start a rival company because he never had a non-compete agreement, according to WPP insiders. |
Sir Martin departed following claims of personal misconduct. WPP had also hired a law firm to investigate claims of financial impropriety against him, but the company said that probe had concluded. | Sir Martin departed following claims of personal misconduct. WPP had also hired a law firm to investigate claims of financial impropriety against him, but the company said that probe had concluded. |
Brian Wieser, a senior analyst at Pivotal, told Today that it is unlikely that we will find out exactly why Sir Martin was being investigated. | |
"A lot of people will want to know what it was, just because a lot of people do know Sir Martin, but at a pragmatic business level, it's more about who's going to succeed him, what's the shape of the company," he said. | |
Mr Wieser said that the advertising industry as a whole had been hit hard by "package-based marketers" seeking to "cut costs aggressively". | |
He said: "WPP's been hit harder than most - they had some unusually large account losses. AT&T was one, Volkswagen was another. But there is nothing that far away from the overall industry average that was affecting WPP at the time." |