Long-term incentives (audited)

2009 – 2013 LEAP III awards vesting

The 2009 awards were the first granted under LEAP III. The vesting was solely dependent on WPP’s relative TSR performance measured in common currency, against a custom group of WPP’s comparators (Aegis, Arbitron, Dentsu, GfK, Havas, Interpublic, Ipsos, Omnicom and Publicis) weighted by market capitalisation.

Over the five-year investment and performance period, WPP out-performed 82% of the weighted group, delivering TSR of 241%. In other words, a shareholding of £100 at the start of the period would be worth £241 at the end, including reinvested dividends.

Aegis and Arbitron, two of the comparator companies, were taken over during the investment and performance period by Dentsu and Nielsen respectively. In line with the guidelines established by the committee, the two companies remained in the comparator group as they were both listed for more than 40% of the investment and performance period. Their TSR performance was calculated assuming reinvestment into a synthetic stock of the remaining comparators with effect from the date immediately prior to which it was independently determined that the share price was unaffected by either a takeover premium or speculation.

On a relative basis, financial and operational performance was strong, consistent with the TSR outcome and no ‘exceptional events’ were identified. As a result, the committee found no reason to make any adjustment to the vesting outcome.

WPP’s TSR performance relative to the comparator group resulted in a match of 437%, equating to 87% of the maximum award.

Number of shares vesting Share price on vesting
£
Value of match at grant price of £6.1025
£000
Value added due to share price appreciation and dividends
£000
2013 Long-term incentives
£000
Sir Martin Sorrell 1,777,173 12.7564 10,845 11,825 22,670
Paul Richardson 502,352 12.7564 3,066 3,342 6,408
Mark Read 133,118 12.7564 812 886 1,698

2013 EPSP awards granted

In 2013, all three executive directors, along with a select number of senior managers within the Group, were granted awards under the new long-term incentive plan that was approved by share owners at the 2013 AGM, the Executive Performance Share Plan (EPSP). The 2013 awards are subject to three equally weighted independent performance conditions, being relative TSR, EPS and ROE. Performance is measured over the five financial years starting in 2013 as follows:

Measure Total Share owner Return (‘TSR’) Earnings Per Share (‘EPS’) Return On Equity (‘ROE’)
Weight One-third One-third One-third
Nature Relative to peers WPP growth WPP absolute
Performance zone (threshold to maximum) Median to upper decile 7% – 14% compound annual growth 10% – 14% average
Payout Below threshold: 0% of element vests Threshold: 20% of element vests Maximum or above: 100% of element vests Straight-line vesting between threshold and maximum
Performance period Five years ending on 31 December 2017

As in previous years, WPP’s TSR performance is compared to companies representing our most relevant, listed global competitors, weighted by market capitalisation. In 2013, the comparator group comprised Arbitron, Dentsu, GfK, Havas, Interpublic, Ipsos, Nielsen, Omnicom and Publicis. Subsequent to the grant of the 2013 awards, Arbitron was acquired by Nielsen and, in accordance with the guidelines established by the committee, Arbitron has been removed from the comparator group as it was listed for less than 40% of the investment and performance period. In light of feedback from share owners, TSR performance will be calculated on both a common currency and local currency basis, with each outcome weighted equally.

The following interests were awarded on 28 June 2013 at the preceding five-day average share price of £10.848 (ordinary shares) or $83.4186 (ADRs).

Basis and level of award (% of salary and fees) Award over Number of interests awarded Face value at date of grant
000
Sir Martin Sorrell 974% Ordinary shares 1,032,540 £11,201
Paul Richardson 400% ADRs 52,026 $4,340
Mark Read 200% Ordinary shares 78,355 £850

Chapter 9 of 13

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