Section image

Twin Jackpots

Cherries
oil on canvas
22 x 20 in
1981

Penny Machines
oil on canvas
23¾ x 29¾ in
1961

Stack of Books
oil on canvas
30 x 24 in
n.d.

Seven Suckers
oil on canvas
19 x 23 in
1970

Twin Jackpots
oil on canvas
30 x 46 in
1962

Ties
oil on canvas
20 x 26 in
1980

Cake Slices
oil on canvas
20 x 16 in
n.d.

Compensation Committee report on behalf of the Board

Dear share owner

Economic pressures on WPP and on marketing services companies in general did not abate during 2009 and are reflected in reduced levels of compensation throughout the Group. These circumstances reinforced the importance of the committee’s work to ensure that compensation policies strike a fair balance between peoples’ compensation and long-term share owner interests and enable the Company to attract, retain, and motivate the best talent in the business.

2009 highlights

The committee’s work during 2009 included:

  • a review of the total compensation packages of the Group’s most senior executives relative to marketplace benchmarks to ensure competitiveness;
  • the approval of all stock plan awards (including grants under LEAP III, Performance Share Awards (PSAs), Executive Share Awards (ESAs) and the Leaders and Partners programs);
  • the approval of all incentive payments, payable in cash or in shares, for senior executives throughout the Group and setting appropriate targets for the Group chief executive and other executive directors;
  • finalising the design of LEAP III after consultation with share owners, and securing approval of the plan at the General Meeting in June 2009; and
  • consideration of the potential inclusion of clawback provisions in the Company’s share incentive plans.

What changed in 2009?

Details of all elements of compensation and any changes made to them are found in the following pages. To summarise, the key decisions and changes to compensation during the year were as follows:

  • proposals for LEAP III were approved by share owners at the General Meeting in June 2009. LEAP III is similar to the previous LEAP plans but includes (i) weighting of the peer group based on market capitalisation and (ii) a feature under which participants may be invited to purchase investment options as well as investment shares (at the discretion of the Compensation Committee);
  • the first awards under LEAP III were granted during the year. Given the general economic conditions, the committee limited the value of the 2009 award to the Group chief executive to 80% of the maximum possible in future years;
  • salary increases throughout the Group were given only in exceptional circumstances and no increases were approved for the chairman, the Group chief executive or other executive directors. The fees of non-executive directors also remained unchanged; and
  • bonuses in respect of 2009 performance were down for the Group as a whole and for executive directors. In comparison to 2008 (when bonus awards were lower than in 2007), bonus awards were down 52.5% for the chief executive, 31.4% for the Group finance director, and 31.8% for the Group strategy director. A larger percentage than usual of reduced executive bonuses was awarded in shares with a vesting period of three years rather than two years, based on the committee’s view that this reflected a better alignment with long-term share owner interests following a challenging year.

As always, I would like to thank my fellow committee members, Philip Lader and Esther Dyson, and also Bud Morten, the former chairman of the committee, for their continued support. The committee’s thanks also go to Marie Capes (the Company Secretary), Mark Linaugh (the chief talent officer) and Adrian Jackson (the director of compensation and benefits).

Chairman of the Compensation Committee

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