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Martin Sorrell explains how the incentive scheme will work
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Tuesday, 17 August, 1999, 17:04 GMT 18:04 UK
Record 35m bonus for advert boss
Martin Sorrell
Martin Sorrell has helped make WPP one of advertising's big players
The biggest ever bonus paid by a UK public company will go to the head of advertising giant WPP.

Martin Sorrell, chief executive of WPP, will get more than 35m ($56m) worth of share options next month.

Under the deal, Mr Sorrell will collect six million WPP shares, worth 35.4m at Friday's closing price, as the result of a five-year incentive plan.

'Fat-cat' criticism

He is now expected to take part in a new five-year incentive plan which will involve him locking up 6m cash and shares in WPP for five years in return for the bonus plan linked to total returns made by WPP investors.

The new incentive plan could yield a total of 62m ($100m) for Mr Sorrell and other senior executives.

WPP said the scheme is aimed at putting its top executives in line with other world advertising groups.

The move is expected to draw criticism from some investors and corporate pay campaigners.

However, despite government concerns over "fat-cat" salaries, the bonus scheme is unlikely to attract government censure, as it is likely to be seen as a fair reward for genuine achievement.

Profits up

Mr Sorrell has built up WPP from a small business into one of advertising's market leaders in the course of his 13 years with the company.

He defended his payout, saying: "These are entrepreneurial schemes." He added that he had invested his own money, saying: "I have put money where my mouth is".

Mr Sorrell was helped in his defence of the record breaking package by being able to report a 19% rise in profits.

The group had won new business worth almost 1bn in the first half of this year - 25% up on the same time last year, he added.

The company, which owns advertising agencies Ogilvy and Mather and J Walter Thompson posted pre-tax profits of 112.6m in the six months to 30 June, up from 93.8m at the same time last year.

Turnover also increased from 3.84bn to 4.44bn. The group attributed its better-than-expected earnings increases to strong growth in its US, UK and European markets.

WPP also unveiled plans to set up a new company to coordinate Internet and new media activities across all its subsidiary companies.

The group said it would set up the new wpp.com business as a parent company to oversee the group's new media activities. It estimated that if wpp.com was set up as a separate company, it would have revenues of around $100m (58.8m).

Its clients will include Ford, IBM and etoys.

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