Sir Martin Sorrell verus the 'shareholder spring'
Jun 18, 2012
“When investors’ pitchforks come out over pay, most chief executives hide behind the remuneration committee,” says the Financial Times. Not Sir Martin Sorrell. Bruised by reports that shareholders wanted to give him a “bloody nose” over his pay at this week’s annual general meeting in Dublin, the WPP chief has come out fighting.
This outbreak of “bloody-mindedness” is classic Sorrell; a man who “has fought his way to the top of the advertising world, despite snooty opposition from many in the creative world who dismissed him as a bean-counter”. Yet on this issue, he’s beginning to lose the plot, says The Guardian. “There is raw hurt and anger” at the “investor ingrates” lined up against him (see below). He’s “not yet King Lear raging at pernicious daughters”, but he’s “veering in that direction”.
For Sorrell, it’s always been about winning, his friend the historian Simon Schama told The Independent. As a schoolboy at Haberdashers’ Aske’s, he was “a demon batsman... getting him out was like breaking the siege of Stalingrad”. The pair went on to Christ’s College Cambridge.
In the mid-Sixties, it was “deeply unfashionable” for any student to be interested in business, says Schama. But Sorrell – the grandson of Jewish immigrants from Russia – idolised his father, who ran a radio and electrical chain, J&M Stone. “From my teens I wanted to follow him into business.”
After Harvard Business School, Sorrell got a taste of the publicity business with US sports agent, Mark McCormack. His financial brain attracted the Saatchis, who poached him in 1977 to become their group finance director. Sorrell attributes “some of his ruthless streak” to them, notes The Guardian. He had a reputation in some quarters for being “slippery”, says Management Today: one advertising man described dealing with Sorrell as “like trying to stab a dolphin with a banana”.
That dislike came to the fore when Sorrell struck out on his own in 1985, acquiring a basket maker, Wire and Plastic Products, as a shell company. He swiftly signalled his Napoleonic intentions with the giant-killing $566m acquisition of JWT in 1987. The hostile takeover of another legend, Ogilvy & Mather, two years later, saw him labelled an “odious little jerk” by David Ogilvy – and nearly bankrupted the business.
Sorrell’s coolness under pressure then, and the nerve with which he rebuilt WPP, marked a turnaround in his reputation. The worst insult usually thrown at him these days is that he’s an obsessive micro-manager.
Having built the biggest advertising and communications firm in the world, it must be a source of satisfaction for Sorrell that his £174m fortune outstrips that of the Saatchis. But they also hold out a lesson, says The New York Times. The brothers were defenestrated from their own firm in 1995 by shareholders “incensed” at their “lavish spending of the company’s money” and “disdain for investor rights”. Take heed, Sir Martin.
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Sir Martin plays the L'Oréal defence
Sir Martin Sorrell has a better claim to join the filthy rich than, say, the bankers who played “heads I win, tales you lose” with our money, says Neil Collins in the Financial Times.
He started a £10bn global company and “got stuck in instead of quitting” when it hit “an existential crisis”. Sorrell admits he behaves “as if he owns the business” – most of his fortune is tied up in it. “Mea culpa” if I behaved like an owner, he wrote in the FT. “I thought that was the object of the exercise.” He finds it “deeply disturbing” that shareholders should fail to grasp this point.
But there’s a slight problem with this argument, says Robert Lea in The Times. He owns just 2% of WPP. Having been blown up as “the Sage of Soho” by a “complicit” media who elevated his quarterly musings “to something more Delphic”, he may have begun to believe his own spin.
A 60% rise in his total package to £7.3m this year “may not be as much as that paid to his international peers in Mad Men-land”, but it seems an awful lot to everyone else. “We may have arrived at a Citizen Kane moment, where the brilliant business-builder has begun to lose touch with reality.”
Usually “sensitive to the vibrations of the economy”, Sorrell appears to have misread the public mood, agrees Tim Bradshaw in the FT. That’s putting it mildly, says Simon Goodley in The Observer. Even a cursory look at the figures blows a hole through Sir Martin’s “L’Oréal defence” (“because I’m worth it”). The WPP share price underperformed the FTSE 100 in 2011, and if you’d invested a decade ago, your total return would be 0%.
Ahead of the meeting it looked all but certain that Sorrell would face defeat, says Ruth Sunderland in the Daily Mail, and in the event nearly 60% of shareholders voted against the pay deal. The vote is not binding. However, the WPP board, chaired by former American ambassador Sir Philip Lader, is understood to be “looking for a conciliatory way forward”. He will need all his diplomatic skills to arrive at one.
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