This is one of the reasons why the row over the hefty remuneration of Sir Martin Sorrell, the chief executive of WPP, drags on. On Tuesday, it emerged that Sorrell had taken a £150,000 "haircut" and a 20 per cent reduction in his potential bonus payout in a bid to head off another shareholder revolt. For most of us, such a cut would be devastating, but for a man who was paid almost £18 million last year, it’s more a case of injured pride than a move towards the breadline.
The huge discrepancies in pay between some bosses and their workers is a destabilising force in the UK. As the First Minister of Scotland, Alex Salmond, pointed out earlier this week, Britain has the fourth-most-unequal society in the OECD. The most recent Sunday Times Rich List shows the gap continuing to widen.
But when one focuses on individual executives, it becomes clear that some deserve their eye-watering salaries more than others. Most galling are the cases of senior managers walking away with massive payments without improving an organisation’s performance. Often, in the case of bankers, they did precisely the opposite.
Sorrell is in a different camp. Since creating WPP 22 years ago, he has built a marketing services group employing 165,000 talented individuals and worth £10 billion. The vast majority of Sorrell’s £200 million personal wealth is tied up in WPP stock. When I interviewed him on stage for a Nabs charity event last week, it became clear that this is a man who barely sleeps. He is fully briefed on every detail, senior executive and piece of business. In short, it’s his company.
Sorrell would have played a role in Grey winning Gillette. However, the strength of Sorrell to WPP is also an Achilles' heel
And just this week, his revived network Grey stole the highly lucrative Gillette ad account away from BBDO after 47 years (see page 8). Make no mistake, Sorrell would have played a role in this.
However, the strength of Sorrell to WPP is also an Achilles’ heel. When asked about his likely retirement or successor, he can be dismissive. Hence, I would argue the uncertain future for WPP’s huge workforce post-Sorrell is a bigger corporate governance issue than the great man’s pay.
That said, WPP’s latest report does show that the company is starting to think much more carefully about what would happen should Sorrell fall under a bus. The one certainty is that any successor would be a very different, but still highly paid, beast.