Directors remuneration and other statutory information
With the exception of the section entitled Non-regulatory and non-audited information on executive directors’ compensation, the following tables and information are either required by statute or recommended by best practice guidelines. All information in this part other than the section entitled Non-regulatory and non-audited information on executive directors’ compensation has been audited.
Policy on directors’ service contracts, notice
periods, termination payments and external
The Company’s policy is that contracts should be on a rolling basis and will not include either a fixed term or liquidated damages provisions. Sir Martin Sorrell’s service contract may be terminated by the Company or by Sir Martin without, in either case, notice needing to be given – a so-called ‘contract at will’. This means that the Company may terminate Sir Martin’s service contract without the need to pay compensation for any notice period.
|Effective from||Notice period|
|Sir Martin Sorrell||19 Nov 2008||‘At will’|
|Paul Richardson||19 Nov 2008||12 months|
|Mark Read||19 Nov 2008||6 months|
Executive directors are permitted to serve as non-executives on the boards of other organisations. If the Company is a share owner in that organisation, non-executive fees for these roles are waived. However, if the Company is not a share owner in that organisation, any non-executive fees can be retained by the office holder.
The value of salary and fees, benefits, pension contributions and annual incentives paid both in cash (under the STIP) and shares (ESAs) for the year ending 31 December 2011 are set out in the table below. The table also shows comparative numbers for 2010. In the case of the STIP and ESAs, the figures shown are the value of the awards in respect of the year in question (although they were received in the following year). Benefits include such items as healthcare, life assurance, spouse travel and allowances for cars and housing. Both Sir Martin Sorrell and Paul Richardson currently receive part of their remuneration in pounds sterling and part in US dollars. Any US dollar amounts received in 2011 have been converted into sterling at an exchange rate of $1.6032 to £1 ($1.5461 for 2010).
|Salary and fees||Other benefits||Short-term incentives||Total annual remuneration||Pension contributions|
|Annual cash bonus (STIP)||Deferred share bonus (ESA)|
|2011 £000||2010 £000||2011 £000||2010 £000||2011 £000||2010 £000||2011 £000||2010 £000||2011 £000||2010 £000||2011 £000||2010 £000|
|Sir Martin Sorrell1,2,3||1,306||1,009||459||374||2,002||1,900||3,003||950||6,770||4,233||585||400|
- During 2011 an amount of approximately £7,402 was paid to Sir Martin Sorrell in respect of tax liabilities incurred by him on expenditure on various items considered by the UK Tax authorities as benefits in kind but which the committee consider to be essential to his ability to deliver his services successfully to the Group (£6,813 in 2010).
- Payments made in accordance with the approval granted by share owners of amounts equal to the dividends that would be payable (totalling £1,339,364) were made to Sir Martin Sorrell during 2011 (£1,081,172 during 2010) in respect of the shares reflected in the UK and US Deferred Stock Units Awards Agreements (which are the agreements that now comprise the awards granted under the Capital Investment Plan in 1995).
- Benefits include other items such as healthcare, life assurance, spouse travel, allowances for cars and housing.
There are often differences between the compensation amounts which our executive directors are granted in any particular year and the amounts they actually receive. This is because, in addition to cash (base salary and fees, pension and STIP), executive directors (and other senior management in the Group) are also awarded deferred shares (ESAs) as part of their annual bonus. ESA awards usually vest two years after grant, and can only be sold once vested.
In the case of LEAP awards, as is described elsewhere in this report, executive directors are annually invited to participate in LEAP. Such invitation requires the executive director to make and retain an investment in shares as determined by the committee. At the end of a five-year performance period (which begins in the year of grant of a LEAP award), the committee determines the number of matching shares to which participants are entitled, using criteria which are explained here. The matching shares, if any, are not received (and cannot be sold) by the participant until the performance period has ended and the committee has made that determination.
The committee believes that it is more transparent, and in the spirit of the UK government’s current proposed changes in the area of executive pay, to disclose the value of amounts received by each executive director (based on the timing differences described above) in addition to the previous emoluments table (which is required by statute). The information contained in the below table is not required by statute.
Benefits include such items as healthcare, life assurance, spouse travel and allowances for cars and housing. Both Sir Martin Sorrell and Paul Richardson currently receive part of their remuneration in pounds sterling and part in US dollars. Any US dollar amounts received in 2011 have been converted into sterling at an exchange rate of $1.6032 to £1.
Amounts received by executive directors in 2011
|Salary and fees||Other benefits1||Short-term incentives||Pension contributions||Dividend equivalents4||Deferred bonus5||LEAP award6||Total annual remuneration|
|Annual cash bonus (STIP)2||Deferred share bonus (ESA)3|
|Sir Martin Sorrell||1,306||459||2,002||1,694||585||1,340||0||5,575||12,961|
|Total received remuneration||2,408||562||3,336||3,448||826||1,340||98||8,680||20,698|
- Benefits include items such as healthcare, life assurance, spouse travel, allowance for cars and housing.
- The annual cash bonus (STIP) is in respect of 2011 performance (paid in April 2012).
- The deferred share bonus (ESA) is in respect of 2008 performance (granted in March 2009 and vested in March 2011).
- Payments made in accordance with the approval granted by share owners of amounts equal to the dividends that would be payable were made to Sir Martin Sorrell during 2011 in respect of the shares reflected in the UK and US Deferred Stock Units Awards Agreements (which are the agreements that now comprise the awards granted under the CapitalInvestment Plan in 1995).
- The deferred bonus is an ABDP award in respect of 2006 performance (granted in April 2007 and vested in March 2011).
- The value of the 2006-2010 LEAP award on vesting is the market value of the matching shares associated with the 2006 LEAP awards on the date of vesting (March 2011).
The following table shows the number and value (as at 31 December 2011) of WPP shares required to be held by the executive directors for five years, as an investment in WPP, to entitle them to receive any matching shares on vesting of their awards under LEAP. In addition to retaining such significant investments in WPP, the vesting of any matching shares is conditional on WPP’s relative TSR performance against the comparator group (as explained here).
|Aggregate number of shares |
committed to LEAP at
31 December 2011
|Value of investment at|
31 Dec 2011 1
|Sir Martin Sorrell||1,861,041||12,571|
- Share price at 31 December 2011: £6.755.
The options held by Mark Read at 31 December 2011 were granted prior to him becoming a director of the Company.
|Grant/ award date||End of exercise period||Exercise price||At 1 Jan 2011 (no. of shares)||Granted (lapsed) 2011 (no. of shares)||Exercised 2011 (no. of shares)||Share price on exercise||Value on exercise||At 31 Dec 2011 (no. of shares)||Share price 31 Dec 20111|
- Share price 12-month high/low: £8.465/£5.78.
All awards made under the Restricted Stock Plan are made on the basis of satisfaction of previous performance conditions and are subject to continuous employment until the vesting date. The table does not include grants in relation to the 2011 ESA as these were not granted at the time of going to print.
|Award date||Share plan||Share/ADR price on grant date||No. of shares/ADRs originally awarded||Value on grant day 000||Additional shares granted in lieu of dividends||Total shares vesting||Vesting date||Share price on vesting||Value on vesting 000|
|Sir Martin Sorrell||2008 ESA Award||09.03.09||ESA||£3.83625||196,285||£753||11,730||208,015||06.03.11||£8.145||£1,694|
|2009 ESA Award||04.05.10||ESA||£6.7775||80,560||£546||–||–||06.03.13||–||–|
|2010 ESA Award||31.03.11||ESA||£7.6825||123,657||£950||–||–||06.03.13||–||–|
|Paul Richardson||2008 ESA Award||09.03.09||ESA||£3.83625||143,369||£550||8,567||151,936||06.03.11||£8.145||£1,237|
|2009 ESA Award1||04.05.10||ESA||$51.59||11,813||$609||–||–||06.03.13||–||–|
|2010 ESA Award1||31.03.11||ESA||$61.76||19,121||$1,181||–||–||06.03.13||–||–|
|Mark Read||Def Bonus 2006||27.04.07||Deferred bonus||£7.4775||9,526||£71||3,4722||12,998||16.03.11||£7.575||£98|
|2008 ESA Award||09.03.09||ESA||£3.83625||59,954||£230||3,582||63,536||06.03.11||£8.145||£517|
|2009 ESA Award||04.05.10||ESA||£6.7775||23,164||£157||–||–||06.03.13||–||–|
|2010 ESA Award||31.03.11||ESA||£7.6825||38,138||£293||–||–||06.03.13||–||–|
- Paul Richardson’s 2009 and 2010 ESA Awards were granted in respect of ADRs.
- Represents the combined total of matching shares and shares granted in lieu of dividends.
|Name||Grant/ award date||Investment and performance period||Number of investment shares||Share price on grant date||Maximum number of matching units at 1 Jan 2011||During 2011||Maximum number of matching units at 31 Dec 2011||Share price on vest/ deferral date||Value on vest/ deferral date 000|
|Sir Martin Sorrell||15.11.06||01.01.06-31.12.10||156,536||£6.84||782,680||(134,621)||74,188||722,247||782,680||£7.72||£5,575|
Awards granted in 2006, 2007 and 2008 were granted under the Renewed Leadership Equity Acquisition Plan. Awards granted in 2009, 2010 and 2011 were granted under the Leadership Equity Acquisition Plan III.
The vesting schedules used for the various awards under both plans are shown in the following tables. In respect of awards granted in 2007 and 2008, when actual performance falls between these positions, the match is calculated on a proportionate basis. In respect of awards granted in 2009, 2010 and 2011, when actual performance is not exactly equal to a percentile in the table below, but is more than 50% and less than 90%, the percentage of matching shares will be determined on a straight-line basis between the relevant figures.
|Awards granted in 2007|
|Rank compared to comparator group||Number of matching shares|
|Awards granted in 2008|
|Rank compared to comparator group||Number of matching shares|
|Awards granted in 2009, 2010 and 2011|
|Aggregate market capitalisation percentile||Number of matching shares|
The comparator groups used for the awards under Renewed LEAP (2007 and 2008) and LEAP III (2009, 2010 and 2011) are shown in the following table. Where a company that delists during a performance period has an undisturbed share price for less than 40% of that performance period, the Compensation Committee would usually exclude that company from the comparator group for the award in question. Otherwise, the company would usually be deemed to be disposed of and the proceeds reinvested, in respect of LEAP III, in a market capitalisation weighted index, and in respect of Renewed LEAP, in a non-market capitalisation weighted index, both of which track the TSR of the remaining comparator companies.
|Grant year||Comparator group|
|2007||Aegis, Arbitron, Dentsu, GfK, Havas Advertising, Interpublic, Ipsos, Omnicom Group, Publicis and Taylor Nelson Sofres|
|2008||Aegis, Arbitron, Dentsu, GfK, Havas Advertising, Interpublic, Ipsos, Omnicom Group and Publicis|
|2009||Aegis, Arbitron, Dentsu, GfK, Havas, Interpublic, Ipsos, Omnicom Group and Publicis|
|2010||Aegis, Arbitron, Dentsu, GfK, Havas, Interpublic, Ipsos, Omnicom Group and Publicis|
|2011||Aegis, Arbitron, Dentsu, GfK, Havas, Interpublic, Ipsos, Nielsen, Omnicom Group and Publicis|
The fee structure used to compensate the non-executive directors (NEDs) is as follows:
|Senior independent director||£20,000|
|Chairmanship of Audit or Compensation Committee||£40,000|
|Chairmanship of Nomination and Governance Committee||£15,000|
|Member of Audit and Compensation Committee||£20,000|
|Member of Nomination and Governance Committee||£5,000|
The fees paid to NEDs are normally reviewed every two years and any changes are approved by the Board. UK-based NEDs who are required to travel outside the UK to consider Company-related matters at meetings called at short notice will be paid £1,000 for attendance at each of those meetings. The fees detailed above are the only payments receivable by NEDs. Mr Morten will also be paid a fee of £20,000 for additional services that he provides to the Board. NEDs receive no other payments or benefits other than those fees detailed in the table below.
The table below shows actual fees paid for the year 2011. The notice period for all NEDs is two months.
|Director||Date of original contract||Expiry of current contract||Committee membership||2011 £000||2010 £000|
|P Lader1||26.02.01||05.10.14||Chairman of the Company, chairman of Nomination and Governance Committee and member of Compensation Committee||425||315|
|C Day||25.07.05||05.10.14||Member of Audit Committee and member of Compensation Committee||112||65|
|E Dyson||29.06.99||05.10.14||Member of Compensation Committee and member of Nomination and Governance Committee||90||70|
|O Gadiesh||28.04.04||05.10.14||Member of Nomination Committee and Governance||70||65|
|S W Morten2||02.12.91||05.10.14||Ex officio member of all committees||85||70|
|L Olayan4||18.03.05||05.10.14||Member of Nomination Committee and Governance||70|
|J A Quelch5||10.07.91||05.10.14||70||94|
|J Rosen||20.12.04||05.10.14||Chairman of Compensation Committee, member of Audit Committee and senior independent director||145||82|
|T Shriver||06.08.07||05.10.14||Member of Compensation Committee||85||65|
|P Spencer||28.04.04||05.10.14||Chairman of Audit Committee||106||80|
|S Trujillo||11.10.10||11.10.13||Member of the Audit Committee||85||15|
- From 1 January 2011, the chairman is not entitled to any further fees or salary for either chairmanship or membership of any of the Company’s committees.
- Fee includes ex officio payment of £20,000 (£6,000 in 2010)
- Received no fees in 2010 and 2011.
- Waived fee in 2010.
- Fee includes £4,680 (£34,038 in 2010) for consulting services.
Directors’ interests in the Company’s ordinary share capital, all of which were beneficial (unless otherwise stated), are shown in the following table. Save as disclosed in this table and in the report of the Compensation Committee, no director had any interest in any contract of significance with the Group during the year. Each executive director has a technical interest as an employee and potential beneficiary in shares in the Company held under the ESOPs. As at 31 December 2011, the Company’s ESOPs (which are entirely independent of the Company and have waived their rights to receive dividends) held in total 20,599,871 shares in the Company (22,083,378 in 2010). Further details of the long-term incentive plans are given in the notes here and below.
|At 1 Jan 2011 or appointment date||Shares acquired through long-term incentive plan awards in 2011||Movement during 2011 inc. shares purchased in 2011||At 31 Dec 2011||Shares acquired through long-term incentive plan awards in 2012||Other movements since 31 Dec 2011||At |
20 Apr 2012
|Shares contributed to charity 2007-2012 (and no longer beneficially owned)|
|S W Morten||20,000||–||–||–||20,000||–||–||–||20,000||–|
|J A Quelch||12,000||–||–||–||12,000||–||–||–||12,000||–|
|P W G Richardson2,3||494,790||456,926||(415,926)||–||535,790||154,538||(77,273)||–||613,055||–|
|Sir Martin Sorrell2,4,5,6||16,857,601||930,262||–||(264,000)||17,523,863||386,344||–||–||17,910,207||805,9367|
- K Naganuma is a director of Asatsu-DK, which at 20 April 2012 had interests in 31,295,646 shares representing 2.48% of the issued share capital of the Company.
- Interests include investment shares committed to the 2008, 2009, 2010 and 2011 awards under the LEAP plans but do not include matching shares from these awards, if any.
- In March 2012, Mr Paul Richardson agreed to charge 15,453 WPP ADRs to Bank of America, N.A. as security for existing bank facilities made available to him. The total number of WPP ADRs charged by Mr Paul Richardson to Bank of America, N.A. after that transaction is 115,611.
- Includes 4,176,833 shares pursuant to the vesting of the 2004 and 2005 awards, part of the 2006 award and the 2007 award granted under LEAP. The receipt of these awards has been deferred until November 2017.
- Includes 3,636,950 shares which originally formed part of the Capital Investment Plan (an award in respect of 4,691,392 shares in total, some of which have been received by Sir Martin Sorrell) and comprised the UK and US Deferred Stock Units Awards Agreements.
- In March 2011, Sir Martin Sorrell gifted 264,000 ordinary shares to the JMMRJ Sorrell Charitable Foundation.
- The JMMRJ Sorrell Charitable Foundation, of which Sir Martin Sorrell is a joint trustee has an interest of 805,936 WPP plc shares. Sir Martin has no beneficial interest in these shares.