Read, 51, will be paid an annual salary of £975,000, with an annual bonus of up to 250% of salary (at least 40% of which must be deferred into shares for two years).
The former Wunderman global chief executive will also receive a performance related bonus (LTIP award) of 350% of salary, with performance measured over a five-year period, and a cash allowance of 20% of salary.
Sorrell had attracted notoriety beyond the ad industry for being the highest-paid chief executive in the FTSE 100. Last year he was rewarded £13.9m, but in previous years was paid £48.1m (2016) and £70.4m (2015).
WPP chairman Roberta Quarta said the company’s board carried out a "rigorous selection process" of internal and external candidates to replace Sorrell, who quit abruptly in April following allegations of misconduct, which he has always denied.
Since Sorrell’s exit, Quarta appointed Read and Andrew Scott as interim leaders under the title joint chief operating officers.
Scott, who was previously chief operating officer of WPP Europe, will continue in the role of chief operating officer of WPP on a permanent basis.
Market reacts with optimism
This morning’s announcement to the stock market is WPP’s first confirmation since last Thursday, when sources familiar with the company confirmed Read had got the top job.
The company’s share price did not move significantly in the hour following the announcement, reflecting that the news was widely expected.
Ian Whittaker, the media analyst at Liberum, described Read’s appointment as a "positive".
"He comes with the advantages of having run one of the major units [Wunderman] and of knowing WPP extensively as well as being known to the markets in his previous role as deputy chief executive.
"Moreover, in the past several months during his tenure as joint chief operating officer, the group has won a number of major contracts, including two major recent wins at Mars and Mondelez and taken steps to reduce the net debt level by selling off minority stakes in several businesses."
Read: 'Embrace change for successful future'
Quarta said of Read: "That [selection] process, alongside Mark’s wise and effective stewardship of the business in the last few months, left us with no doubt that he is the right leader for this company."
"Recognised for his leadership throughout the industry, he has an intimate understanding of the business, he enjoys very strong internal support, and he has earned the respect and endorsement of our clients with his constant focus on their needs," Quarta added. "He has played a central role in many of WPP’s most successful investments and initiatives, and he has deep experience at board and operational level."
Meanwhile, Read pointed to the advertising industry’s current period of "structural change", but insisted it was not experiencing "structural decline".
"If we embrace that change we can look ahead to an exciting and successful future," Read added. "Our mission now is to release the full potential that exists within the company for the benefit of our clients, to accelerate our transformation and simplify our offering, and to position WPP for stronger growth. To achieve that we need to foster a culture that attracts the best and brightest: inclusive, respectful, collaborative, diverse."