Star control

27 June 2003

Whopping payouts to bosses at Cordiant, WPP’s new acquisition, are ironic, since WPP’s own governance will be under fire at Monday’s AGM. The chief executive’s deal defies rules that are surely made to be broken. But boardroom power has as much to do with it as his talents.

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Executives at troubled advertising and marketing group Cordiant are in line for generous payoffs, its newlypublished annual report reveals. The group's former chairman and chief executive, who led it into a disastrous level of indebtedness, are each to receive payments in lieu of notice, totalling nearly £1m between them. Cordiant is currently the subject of an offer from media giant WPP which values it at 2.5p a share, down from a peak of 273p.

WPP faces criticism at its 30 June AGM for the way it rewards its own chief executive, Sir Martin Sorrell. The group has been "blacklisted" by a number of corporate governance lobbying organisations for its corporate governance. Complaints include Sorrell's threeyear contract best practice is one year and the number of overage and longserving directors.

In 2002 Sorrell was paid £839,000 basic salary, benefits of £24,000, and a £731,000 bonus, via a fouryear deferred share award. The group's bonus scheme rewards Sorrell for meeting targets for operating profit and operating cash flow, with 100% of salary on offer for fully hitting objectives. By taking his bonus in shares, Sorrell enhanced the bonus by 25%; the award of 70% of salary implies that WPP missed its internal targets in 2002. He waived his bonus in 2001. Sorrell also participates in an incentivised share investment scheme that entitles him to 5.4 million shares, holds options over 2.1 million shares, and owns outright 13.4 million shares.

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