WPP Cuts Sorrell's Pay, Puts Restrictions on Agency Expenses

Email Urges Staffers to Spend More Prudently -- Including at Cannes

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Martin Sorrell
Martin Sorrell Credit: Advertising Week Europe

It's not only Martin Sorrell tightening his belt. WPP Group is asking all its employees to hold down costs -- including at Cannes.

The WPP CEO's total pay for 2016 was cut by nearly a third, according to the holding company's annual report published Friday, though not a lot of people will be crying for him -- he's still making $62.2 million, down from about $91.1 million the previous year.

The slash in pay follows WPP's first quarter earnings results; the company reported a 3% drop in North American like-for-like revenue in the first quarter of 2017. Sorrell's pay has been an issue for some time, with shareholders directly challenging his succession planning and controversial $100 million compensation package last summer at the communications group's annual general meeting in London.

In addition to trimming Sorrell's salary, WPP is being stricter on all expenses, including its hiring and employee replacement policies, according to people with knowledge of the matter. These people said an email was sent to all WPP agency leaders worldwide at the end of the first quarter advising them to cut back on non-billable expenses and expenditures for business trips and events, including Cannes.

Last year, in a video interview with Ad Age, Sorrell called Cannes "a very expensive exercise."

When it comes to hiring or replacing staff, people with knowledge of that matter told Ad Age that people can be brought on if new revenue streams are coming in and if it's approved.

WPP declined to comment.

A note to staff about cutting back on spending is not unusual at WPP, these people said, but the timing is curious. These emails tend to go out in the fourth quarter to help the holding company hit its numbers at year's end, so the early timing of the communication is noteworthy.

Sorrell told analysts on Thursday that "the U.S. performance of our clients is not as good as the international performance" among its top 20 clients.

He said WPP's U.S. clients are under more earnings pressure, which is affecting U.S. results of the holding company. He also cited extreme competition in media buying as a factor. Earlier this month, Unilever, one of WPP's biggest clients, said it would cut back on its marketing spending, and last week, Accenture shifted its global media business from MEC, part of WPP's GroupM, to Interpublic Group of Cos.' UM.

While it may be buying fewer bottles of rose in June, WPP is continuing on its acquisition trail, with 14 deals notched in the first quarter, including absorbing Deeplocal, whose clients include Google, Netflix, and Airbnb.

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