The link between compensation and business objectives
All executive compensation at WPP is governed by three guiding principles:
- the need to be competitive;
- being performance-driven; and
- alignment to share owner interests.
WPP competes on the basis of its intellectual capital. This intellectual capital is created entirely by its people, and the committee endeavours to strike the right balance of fairness for both employees and share owners. For this reason, compensation plans are designed to be competitive, performance-driven and aligned to share owner interests.
The committee regularly reviews fixed and variable compensation against appropriate benchmarks.
The chart below shows the proportion of total remuneration which is variable (due to the linkage to performance) compared to fixed remuneration.
Split between fixed and variable compensation %
WPP is committed to aligning executive performance and reward with share owner interests. From a compensation perspective, this is encouraged in a number of ways:
- TSR is the sole performance target for both Renewed LEAP and LEAP III (to be proposed to share owners);
- share ownership is encouraged for the WPP Leaders (approximately the top 200 executives), all of whom have ownership goals of 40,000 ordinary shares;
- all employees are given a share focus through the use of the Worldwide Ownership Plan; and
- almost 50% of the compensation package of executive directors is paid in the form of shares (the value of ESA and expected value of Renewed LEAP).