WPP’s founder Martin Sorrell, the highest paid CEO in Britain, is going to receive £36 million ($US53 million) in share awards this year, on top of his salary, according to the Wall Street Journal. His salary is £1.1 million.
In 2014, Sorrell received a £22.7 million share award while his overall pay package was worth £29.8 million.
While the share awards are part of his pay packet and are 60% higher than last year’s amount, the eye-watering total does not come as a surprise because Sorrell’s pay is directly linked to the performance of the company.
Unlike many other FTSE 100 company bosses’ compensation, Sorrell and other WPP executives receive a bonus directly linked to the share performance of the company. So, for example, if the stock price tanks as WPP profits take a hit, so will their bonuses. Since executives, including Sorrell, are encouraged to invest their own money into the company’s shares, their personal cash is at stake.
At the beginning of this month WPP, the the world’s largest advertising firm reported a record £1.5 billion annual profit in 2014. For the full year, WPP grew pre-tax profits by 12% to £1.45 billion on reported revenue of £11.53 billion, which was up 4.6% year over year.
It has also seen a strong start to the start of the current trading year. Shares are up over 30% over the last year at 1,574.50p on March 16, 2015.