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| WPP's Sorrell takes £150,000 pay cut after receiving nearly £18m last year | WPP's Sorrell takes £150,000 pay cut after receiving nearly £18m last year |
| (35 minutes later) | |
| Sir Martin Sorrell has accepted a £150,000 pay cut and a 20% reduction in his potential bonus payout in a bid to head off another WPP shareholder revolt, as it emerged he received total remuneration of almost £18m last year. | Sir Martin Sorrell has accepted a £150,000 pay cut and a 20% reduction in his potential bonus payout in a bid to head off another WPP shareholder revolt, as it emerged he received total remuneration of almost £18m last year. |
| Sorrell, chief executive of WPP, world's largest marketing services group, has been under pressure to curb his annual payouts after investors handed him a humiliating defeat at last year's annual general meeting, voting to reject the company's remuneration report. | Sorrell, chief executive of WPP, world's largest marketing services group, has been under pressure to curb his annual payouts after investors handed him a humiliating defeat at last year's annual general meeting, voting to reject the company's remuneration report. |
| As well as a sweeping overhaul of Sorrell's remuneration, WPP is to make wide-ranging changes to its board, replacing the chair of its remuneration committee and appointing four new non-executive directors in a bid to inject new blood and appease shareholders who accuse the company of complacency. | As well as a sweeping overhaul of Sorrell's remuneration, WPP is to make wide-ranging changes to its board, replacing the chair of its remuneration committee and appointing four new non-executive directors in a bid to inject new blood and appease shareholders who accuse the company of complacency. |
| The new non-executive board members are: Jacques Aigrain, chairman of the markets clearing house LCH Clearnet; Hugo Shong, a Chinese venture capitalist; Roger Agnelli, a former chief executive of Vale and Bradespar; and Sally Susman, a senior executive at Pfizer. | |
| WPP's 2012 annual report, published on Tuesday, reveals that Sorrell received total remuneration of £17.6m last year, a 47.6% year-on-year increase over the £11.9m he earned in 2011. However, it laid down sweeping changes to how much he can earn in the future. | WPP's 2012 annual report, published on Tuesday, reveals that Sorrell received total remuneration of £17.6m last year, a 47.6% year-on-year increase over the £11.9m he earned in 2011. However, it laid down sweeping changes to how much he can earn in the future. |
| Sorrell received a base salary of £1.3m and a cash-and-shares bonus of almost £3.1m last year – 268% of his base pay – with the surge in total remuneration fuelled by an £11.4m award of WPP shares as part of the company's controversial long-term incentive programme, the Leadership Equity Acquisition Plan. | Sorrell received a base salary of £1.3m and a cash-and-shares bonus of almost £3.1m last year – 268% of his base pay – with the surge in total remuneration fuelled by an £11.4m award of WPP shares as part of the company's controversial long-term incentive programme, the Leadership Equity Acquisition Plan. |
| In 2011 Sorrell received significantly less, £3.2m, from the scheme, which is awarded separately from his annual bonus. The remainder of Sorrell's 2012 pay is made up of benefits, dividend equivalents and pension. | In 2011 Sorrell received significantly less, £3.2m, from the scheme, which is awarded separately from his annual bonus. The remainder of Sorrell's 2012 pay is made up of benefits, dividend equivalents and pension. |
| The main cash-and-bonus element of Sorrell's total remuneration – excluding his Leap award and pension payment - fell 30% year on year. | The main cash-and-bonus element of Sorrell's total remuneration – excluding his Leap award and pension payment - fell 30% year on year. |
| Sorrell has accepted a £150,000 pay cut, taking his salary to £1.15m, which will impact his potential bonus payouts and also share awards under a new long-term scheme that will replace the controversial Leap programme. | Sorrell has accepted a £150,000 pay cut, taking his salary to £1.15m, which will impact his potential bonus payouts and also share awards under a new long-term scheme that will replace the controversial Leap programme. |
| If he hits his performance targets, under his new remuneration deal Sorrell's bonus will drop from 250% of salary to 217.5% – a 22% fall proportionally. | If he hits his performance targets, under his new remuneration deal Sorrell's bonus will drop from 250% of salary to 217.5% – a 22% fall proportionally. |
| Hitting the top performance goals will see his maximum potential bonus payout, which is highly unlikely to be achieved, drop from 500% of salary to 435% of salary. This represents a 23% reduction. | Hitting the top performance goals will see his maximum potential bonus payout, which is highly unlikely to be achieved, drop from 500% of salary to 435% of salary. This represents a 23% reduction. |
| From this year his annual pension payment will drop from 45% of salary to 40% of salary. | From this year his annual pension payment will drop from 45% of salary to 40% of salary. |
| Jeffrey Rosen, the chair of WPP's remuneration committee, said that taking just Sorrell's salary and bonus there has been a 20% year-on-year fall. | Jeffrey Rosen, the chair of WPP's remuneration committee, said that taking just Sorrell's salary and bonus there has been a 20% year-on-year fall. |
| WPP's remuneration committee has been in discussions with irate investors for nearly a year since the rebellion at the 2012 AGM. | WPP's remuneration committee has been in discussions with irate investors for nearly a year since the rebellion at the 2012 AGM. |
| Shareholders will vote on Sorrell's pay, and the proposed overhaul, at WPP's 2013 AGM in London on 12 June. | Shareholders will vote on Sorrell's pay, and the proposed overhaul, at WPP's 2013 AGM in London on 12 June. |
| Arguably the biggest overhaul that investors will scrutinise is the replacement of the Leap scheme, which delivers on five-year performance targets. | Arguably the biggest overhaul that investors will scrutinise is the replacement of the Leap scheme, which delivers on five-year performance targets. |
| The existing scheme had a five-times-match facility linked to Sorrell's salary and bonus, which effectively meant he was able to invest between £3m and £4m in WPP shares and receive a 500% return five years later. | The existing scheme had a five-times-match facility linked to Sorrell's salary and bonus, which effectively meant he was able to invest between £3m and £4m in WPP shares and receive a 500% return five years later. |
| Leap was also based on the metric of total shareholder return, made up of share price appreciation and dividends. | Leap was also based on the metric of total shareholder return, made up of share price appreciation and dividends. |
| The new long-term incentive scheme will be based on a multiple of 9.74 times Sorrell's salary, potentially £11.1m based on his 2013 salary, and have more stringent "yardsticks" to appease investors. | The new long-term incentive scheme will be based on a multiple of 9.74 times Sorrell's salary, potentially £11.1m based on his 2013 salary, and have more stringent "yardsticks" to appease investors. |
| As well as total shareholder return, under the new scheme replacing Leap, WPP will have to hit a total of three targets, including earnings per share and return on equity, that will affect the size of the return Sorrell will get after five years. | As well as total shareholder return, under the new scheme replacing Leap, WPP will have to hit a total of three targets, including earnings per share and return on equity, that will affect the size of the return Sorrell will get after five years. |
| If he hits minimum threshold targets he will receive 20% of that £11.1m after five years, and up to 100% if all the more stretching yardsticks are all fulfilled. | If he hits minimum threshold targets he will receive 20% of that £11.1m after five years, and up to 100% if all the more stretching yardsticks are all fulfilled. |
| The company said that Rosen was stepping down from the remuneration committee to comply with corporate governance guidelines following nine years on the board. He will remain a non-executive director. | The company said that Rosen was stepping down from the remuneration committee to comply with corporate governance guidelines following nine years on the board. He will remain a non-executive director. |
| WPP is understood to be close to finding a replacement, who will not be from the company's existing board. | WPP is understood to be close to finding a replacement, who will not be from the company's existing board. |
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