Variable elements of pay (audited)
The following tables summarise the measures and performance assessment by the Compensation Committee in respect of the bonus awarded for 2013. The committee has determined that the disclosure of annual performance targets on a retrospective basis would put the Company at a competitive disadvantage and that the information is commercially sensitive. However, in the spirit of the new UK remuneration reporting regulations, details of the actual performance achieved over the year are set out below, along with an indication of where this achievement sat relative to the targets which were set. All financial measures in the short-term incentive plan are calculated on a like-for-like, constant currency basis.
Short-term incentives are determined based on performance across two areas:
|Financial objectives (Group or WPP Digital)||Individual strategic objectives|
Financial and individual strategic objectives
Sir Martin Sorrell and Paul Richardson
The operational performance in the Group was very strong in 2013 and the challenging targets set by the committee in the beginning of the year were exceeded. Like-for-like Headline PBT increased by 9.7% resulting in a performance level between target and maximum. Like-for-like Headline PBT margin increased by 0.76% resulting in a performance level above the maximum and the like-for-like revenue growth of 3.5% was just above target level.
The performance of WPP Digital is not in the public domain and is deemed to be commercially sensitive. However, the chart below illustrates that the operational performance of WPP Digital was very strong and above the maximum level set. The revenue growth was also strong and was positioned between the target and maximum performance level.
Based on the performance set out above, the resulting bonus for each executive relating to 2013 was:
|2013 actual bonus
(% of base salary and fees)
|2013 actual bonus delivery
(% of bonus)
|Target (financial and individual strategic objectives)||Maximum (financial and individual strategic objectives)||Actual|
|Financial objectives||Individual strategic objectives||Total bonus||Cash||ESA||£|
|Sir Martin Sorrell||217.5%||435%||252%||106%||358%||50%||50%||4,115,251|
As noted above, 50% of the 2013 bonus is delivered in the form of shares as an Executive Share Award (‘ESA’). These will be granted during 2014 following publication of this Annual Report and will vest, subject to continued employment, two years later.
Short-term incentive weightings and measures for 2014
The committee has reviewed the performance measures and weightings for 2014 to ensure continued alignment with Company strategy. While the weighting of financial objectives (70%) and individual strategic objectives (30%) will remain unchanged, the Group financial measures have been adjusted. The 2014 measures will be Headline PBT growth, Headline gross margin (net sales) margin improvement and gross margin (net sales) growth. The financial objectives established for WPP Digital will be consistent with last year and the individual strategic measures will continue to focus on strategic priorities for the relevant business area.
As stated in the Executive Remuneration Policy, the committee is of the view that the targets for the STIP are commercially sensitive and it would be detrimental to the Company to disclose them in advance of or during the relevant performance period. To the extent targets are no longer commercially sensitive, they will be disclosed at the end of the relevant performance period in that year’s Annual Report.
Chapter 9 of 13