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
appointments

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 fromNotice 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.

Executive directors’ emoluments

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 feesOther benefitsShort-term incentivesTotal annual remunerationPension contributions
Annual cash bonus (STIP)Deferred share bonus (ESA)
 2011 £0002010 £0002011 £0002010 £0002011 £0002010 £0002011 £0002010 £0002011 £0002010 £0002011 £0002010 £000
Executive directors
Sir Martin Sorrell1,2,3 1,306 1,009 459 374 2,002 1,900 3,003 950 6,770 4,233 585 400
Paul Richardson 677 637 100 106 930 682 930 757 2,637 2,182 198 191
Mark Read 425 325 3 2 404 219 404 293 1,236 839 43 33
Total remuneration 2,408 1,971 562 482 3,336 2,801 4,337 2,000 10,643 7,254 826 624
1
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).
2
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).
3
Benefits include other items such as healthcare, life assurance, spouse travel, allowances for cars and housing.

Non-regulatory and non-audited information
on executive directors’ compensation

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 feesOther benefits1Short-term incentivesPension contributionsDividend equivalents4Deferred bonus5LEAP award6Total annual remuneration
Annual cash bonus (STIP)2Deferred share bonus (ESA)3
 £000£000£000£000£000£000£000£000£000
Executive directors
Sir Martin Sorrell 1,306 459 2,002 1,694 585 1,340 0 5,575 12,961
Paul Richardson 677 100 930 1,237 198 0 0 2,484 5,626
MarkRead 425 3 404 517 43 0 98 621 2,111
Total received remuneration 2,408 562 3,336 3,448 826 1,340 98 8,680 20,698
1
Benefits include items such as healthcare, life assurance, spouse travel, allowance for cars and housing.
2
The annual cash bonus (STIP) is in respect of 2011 performance (paid in April 2012).
3
The deferred share bonus (ESA) is in respect of 2008 performance (granted in March 2009 and vested in March 2011).
4
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).
5
The deferred bonus is an ABDP award in respect of 2006 performance (granted in April 2007 and vested in March 2011).
6
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
£000 
Sir Martin Sorrell 1,861,041 12,571
Paul Richardson 473,530 3,199
Mark Read 119,586 808
1
Share price at 31 December 2011: £6.755.

Options held by executive directors

The options held by Mark Read at 31 December 2011 were granted prior to him becoming a director of the Company.

 Grant/ award dateEnd of exercise periodExercise priceAt 1 Jan 2011 (no. of shares)Granted (lapsed) 2011 (no. of shares)Exercised 2011 (no. of shares)Share price on exerciseValue on exerciseAt 31 Dec 2011 (no. of shares)Share price 31 Dec 20111
Mark Read 17.11.2003 17.11.2013 £5.595 10,615 10,615 £6.755
  29.10.2004 29.10.2014 £5.535 9,879 9,879 £6.755
1
Share price 12-month high/low: £8.465/£5.78.

ESA and Restricted Stock Awards held by
executive directors

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 dateShare planShare/ADR price on grant dateNo. of shares/ADRs originally awardedValue on grant day 000Additional shares granted in lieu of dividendsTotal shares vestingVesting dateShare price on vestingValue 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
1
Paul Richardson’s 2009 and 2010 ESA Awards were granted in respect of ADRs.
2
Represents the combined total of matching shares and shares granted in lieu of dividends.

Long-Term Incentive Plan awards – Leadership
Equity Acquisition Plans

NameGrant/ award dateInvestment and performance periodNumber of investment sharesShare price on grant dateMaximum number of matching units at 1 Jan 2011During 2011Maximum number of matching units at 31 Dec 2011Share price on vest/ deferral dateValue on vest/ deferral date 000
Granted/
(lapsed) units
Additional
dividend
shares
Vested or
deferred
shares
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
  11.12.07 01.01.07-31.12.11 148,742 £6.23 743,710 743,710
  31.10.08 01.01.08-31.12.12 218,596 £3.749 1,092,980 1,092,980
  15.12.09 01.01.09-31.12.13 365,878 £6.1025 1,829,390 1,829,390
  24.11.10 01.01.10-31.12.14 416,666 £7.2475 2,083,330 2,083,330
  07.12.11 01.01.11-31.12.15 711,159 £6.6475 3,555,795 3,555,795
Paul Richardson 15.11.06 01.01.06-31.12.10 66,102 £6.84 330,510 (56,848) 31,328 304,990 330,510 £8.145 £2,484
  11.12.07 01.01.07-31.12.11 59,497 £6.23 297,485 297,485
  31.10.08 01.01.08-31.12.12 109,298 £3.749 546,490 546,490
  15.12.09 01.01.09-31.12.13 103,423 £6.1025 517,115 517,115
  24.11.10 01.01.10-31.12.14 100,968 £7.2475 504,840 504,840
  07.12.11 01.01.11-31.12.15 100,344 £6.6475 501,720 501,720
Mark Read 15.11.06 01.01.06-31.12.10 16,525 £6.84 82,625 (14,212) 7,832 76,246 82,625 £8.145 £621
  11.12.07 01.01.07-31.12.11 14,874 £6.23 74,370 74,370
  31.10.08 01.01.08-31.12.12 21,859 £3.749 109,295 109,295
  15.12.09 01.01.09-31.12.13 27,406 £6.1025 137,030 137,030
  24.11.10 01.01.10-31.12.14 25,281 £7.2475 126,405 126,405
  07.12.11 01.01.11-31.12.15 30,166 £6.6475 150,830 150,830

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.

Vesting Schedules

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 groupNumber of matching shares
1 5
2 5
3 4.5
4 3.5
5 2.5
Median 1.5
Below median 0
Awards granted in 2008
Rank compared to comparator groupNumber of matching shares
1 5
2 5
3 4
4 3
Median 1.5
Below median 0
Awards granted in 2009, 2010 and 2011
Aggregate market capitalisation percentileNumber of matching shares
90th percentile 500%
80th percentile 420%
70th percentile 330%
60th percentile 240%
50th percentile 150%
40th percentile 0%
30th percentile 0%
20th percentile 0%
10th percentile 0%
Bottom 0%

Comparator Groups

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 yearComparator 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

Non-executive directors’ remuneration

The fee structure used to compensate the non-executive directors (NEDs) is as follows:

Position/role2011 fees
Chairman £425,000
Senior independent director £20,000
Non-executive director £65,000
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.

DirectorDate of original contractExpiry of current contractCommittee membership2011 £0002010 £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
R Li 11.10.10 11.10.13   65 14
S W Morten2 02.12.91 05.10.14 Ex officio member of all committees 85 70
K Naganuma3 23.01.04 05.10.14      
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
1
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.
2
Fee includes ex officio payment of £20,000 (£6,000 in 2010)
3
Received no fees in 2010 and 2011.
4
Waived fee in 2010.
5
Fee includes £4,680 (£34,038 in 2010) for consulting services.

Directors’ interests

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 dateShares acquired through long-term incentive plan awards in 2011Movement during 2011 inc. shares purchased in 2011At 31 Dec 2011Shares acquired through long-term incentive plan awards in 2012Other movements since 31 Dec 2011At
20 Apr 2012
Shares contributed to charity 2007-2012 (and no longer beneficially owned)
Vested(Sold)Vested(Sold)
C Day 15,240 15,240 15,240
E Dyson 35,000 35,000 35,000
O Gadiesh
P Lader 11,950 11,950 11,950
R Li
S W Morten 20,000 20,000 20,000
K Naganuma1
L Olayan 10,000 10,000 10,000
J A Quelch 12,000 12,000 12,000
M Read2 97,126 139,782 (139,782) 7,605 104,731 38,633 (38,633) 104,731
P W G Richardson2,3 494,790 456,926 (415,926) 535,790 154,538 (77,273) 613,055
J Rosen 12,000 12,000 12,000
T Shriver 10,000 10,000 10,000
P Spencer 10,000 10,000 10,000
S Trujillo 10,000 10,000 10,000
Sir Martin Sorrell2,4,5,6 16,857,601 930,262 (264,000) 17,523,863 386,344 17,910,207 805,9367
1
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.
2
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.
3
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.
4
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.
5
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.
6
In March 2011, Sir Martin Sorrell gifted 264,000 ordinary shares to the JMMRJ Sorrell Charitable Foundation.
7
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.

Jeffrey Rosen Chairman of the Compensation Committee
on behalf of the Board of Directors of WPP plc
20 April 2012

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