Does a rich list CEO really need another £43 million?

The pay of Martin Sorrell's employees has gone down while his has continued to soar

The advertising and marketing firm WPP approved the £43 million pay package awarded to Chief Executive Sir Martin Sorrell in 2014 at its AGM yesterday, despite 22 per cent of shareholders (an unusually high number) failing to endorse the deal.

It’s a ludicrous pay package for a number of reasons. Sorrell is undoubtedly a capable business leader and has achieved great success in building WPP into a global advertising giant since taking over the business in the mid-1980s.

But with a net worth of over £300 million according to the Sunday Times rich list, he has already been amply rewarded for developing the company over the longer term.

WPP now employs over 100,000 people. This is testimony to Sorrell’s success, but also suggests that the continuing growth of the company is not solely down to his individual brilliance.

While Sorrell’s pay leapt nearly 50 per cent from a mere £29 million in 2013, the pay of the average WPP employee, actually fell slightly, from £39,900 to £38,500.

If pay is intended to reward and/or incentivise excellent performance and to retain key staff, it’s also difficult to fathom the logic behind an award of £43 million. Does somebody already worth £300 million really need this kind of money to get them out of bed?

Would Sorrell feel so de-motivated, demoralised and under-appreciated that he just wouldn’t bother if he was paid any less? Even if so, the dependency of a company employing over 100,000 people on a single individual indicates a major failure in terms of staff development and succession planning as much as the genius of the person in question.

Unfortunately, this is exactly what a lot of people involved in the executive pay-setting process think, not least because they have a vested interest in doing so. Research from the TUC found that over a third of the remuneration committee members that set executive pay at FTSE 100 companies are themselves executives of other companies.

Thus, it’s hardly surprising that they believe the senior management team is the be-all and end-all of a company, and that the leading directors deserve to be paid millions.

Similarly, it is the well-paid investment fund managers who control the shareholder votes on pay at company AGMs, not the ordinary people with a pension plan or an ISA whose money the fund managers invest.

So the ‘going rate’ for executive pay is set by something closer to a cartel than a fair and functioning market, with those lucky enough to be in on the racket bidding their own pay up while holding down wages for their employees.

The net result is a steadily widening gap between the super-rich and everybody else (tempered, perhaps only briefly, by the global financial crisis), with all sorts of potentially de-stabilising social and economic consequences.



This certainly isn’t a state of affairs that anyone who believes in the free market should feel compelled to support, but in the aftermath of the election result, there is a real danger that it will be seen as ‘anti-aspirational’ to talk about the economic power of the super-rich and their ability to capture an undeserved and disproportionate share of pay and incomes.

However, if we believe in a sustainable economy that rewards people fairly and effectively for the work that they do, a bit of outrage at a £43 million pay package is entirely appropriate.

Luke Hildyard is deputy director of the High Pay Centre. Follow him on Twitter

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17 Responses to “Does a rich list CEO really need another £43 million?”

  1. Torybushhug

    About 3 years ago on Radio 4’s ‘Desert Island Disks’ he repeatedly said “I have no interest in money”, and of course Kirsty Young failed to challenge this. At the time a strong Labour Man. Can always rely on a lefty to chose to hoard far more wealth than they need to be comfortable and then disguise this with the tried and tested virtue signalling ‘I believe passionately in re-distribution’ narrative.

  2. Torybushhug

    I agree these sorts of pay awards are disgusting but I also ask people to be a bit more sceptical of very highly paid left wing stage comedians, actors and other ‘treasures’, whilst the pay of their make up girl or stage hand is a pittance. Please do not let a Saintly narrative dislodge your forensic scepticism. If someone purports to be passionate about meaningful re-distribution, why are they choosing to hoard a massive slice of wealth? What is a compassionate narrative without meaningful leadership by example?

  3. Jacko

    It’s odd how there are never any articles criticizing what pop stars, actors and footballers earn. But I’m guessing that’s because you perceive value in what those people produce, whereas you don’t perceive value in what business leaders produce because you fundamentally don’t really know or understand what that is.

    But then why should you? Your average lefty works in the public sector, academia, charity sector, or the arts. Their degrees are not in business studies, economics, or numerate disciplines like maths but are in pyschology, sociology, history, media, politics, english, etc. Many of them have never spent a single working day in a commercial enterprise. Hardly surprising that to them business leaders are just boring men in suits who earn too much.

    Take Luke Hildyard, for example. His background is at the Institute of Public Policy Research, local government, and think tanks, and the High Pay Unit. Does he really have any understanding of the private sector, let alone what CEOs actually do? No. He’s simply approaching this subject with a preformed belief that some people earn ‘too much’ and should earn less. Cue story.

    I don’t even think most people care what others earn, because they understand that the way to earn more is to increase their skillset and persue their own career, not bleat on about what others have. That will get you nowhere in life. Only a loser blames others for his station in life.

  4. blarg1987

    There is a big difference. These people manage PLC’s which involves our money, in the form of shares which are invested usually through our pensions.

    It is right to criticise these people if they have a 50% pay rise but they have not improved the value of the company by 50% and only done it on the back of other people.

    Footballers, pop stars are usually people who do not control our money. While talking about PLC’s is likely to encourage a larger audience tot kae action such as write to their fund manager and ask them to reject said pay offers, etc.

  5. Matthew Blott

    I agree, they all earn too much but I would at least concede in the case of a world class footballer there are only a few people on the planet capable of doing the job whereas bankers and CEOs of already successful companies are more easily replaced.

  6. Matthew Blott


  7. Jacko

    Let’s examine that with a specific example. Take Apple, for instance. Without Steve Jobs and Johnny Ive, the Ipad would never have been conceived by Apple, let alone produced. Sure, it took salespeople to sell it in stores, but salespeople can be found anywhere. They’re ten a penny. Creative visionaries cannot be found anywhere. They are, by definition, rare and therefore much more valuable commodities. They’re the people that were ultimately responsible for the growth in Apple to the world’s most valuable company and the massive increase in share price, because they take strategic decisions that last years.

    Pop stars and footballers are major assets of big companies. How the lastest U2 album performs has major implications for the balance sheet of their record company, how that company is valued and all manner of financial metrics that are calculated from its accounts. But of course, pop stars are cool. A bald headed, old guy in a suit in an office is not cool. “I work in an office, and I only earn £30k, why should that guy get £50M? But U2? I saw them at Cardiff Arms Park. They’re a great rock band.”

  8. AlanGiles

    Apparently the more you have, the more you need. You only have to look at the example of Tony Blair to see that. Does he really need all those fees for speaking engagements and “advice” to dictators?. Of course he doesn’t – he is just a greedy money-grubbing hypocrite

  9. CarolBOlivares

    nowRead this leftfootforward….. Here’s a Blog


  10. Dark_Heart_of_Toryland

    Could you explain precisely how any CEO deserves to be paid more than a thousand times more than the average wage of the employees who actually do the work which produce the company’s profits?

    It’s very well to harp on about ‘increasing skillsets and pursuing their own career’, but the fact remains that grotesque levels of inequality cripple society generally and destroy social mobility. This is a fact which the right consistently ignores, as it doesn’t fit their self-interested, self-serving myth of ‘meritocracy’.

  11. AlanGiles

    Scam emails are never a good idea. If you must plaster crap on the board at least bear in mind Carole, that in the UK we are not paid in dollars. Better still why not just take your rubbish and stick it where the sun don’t shine?

  12. MariaJTorres

    nowRead this leftfootforward. ….. Here’s a Blog


  13. blarg1987

    Little more to it then that, I agree Apple did get off the shelf products and find a creative way to sell them to the mass market.

    let us remember many PLC’s are not run by visionaries but by caretaker management, they did not create the company like Jobs did with Apple merely manage an already large corporation and have paid advisers to assist in policy and decisions.

  14. Noel Darlow

    I don’t understand. You think the author is left-handed?

  15. Patrick Nelson

    Jobs and Gates both rode a wave of many other talented people with out whom they could not have done anything. Technology and IT are a group enterprise.

    Before you build your temple to him I suggest that you take a look at

  16. Patrick Nelson

    Steve Jobs stole my ideas, Apple design wizard complains…

  17. Patrick Nelson

    “It’s odd how there are never any articles criticizing what pop stars, actors and footballers earn”

    There are plenty of articles criticizing what footballers earn

    There are plenty of articles criticizing actors being paid too much

    Your problem is you are a Tory troll who loves a system that doesn’t even benefit him that much.

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