Sorrell is different to the CEO cliché

It is probably not the fashionable view, but on balance my sympathies are more with WPP chief executive Sir Martin Sorrell than the investing institutions in the spat over pay that reaches a climax this week.

The reason is that Sorrell is, to my mind, one of the most talented executives this country has produced. Unlike many on the executive gravy train, he has made a difference to the company he runs. That is why WPP is a world-class advertising business in a sector that would otherwise be dominated by the Americans. He is different, too, in insisting on performance. Few are more scathing than he is about the executive reward schemes put in place by many companies.

WPP is also different because the executives’ own money is at risk. If they want the big rewards, they have to buy an initial shareholding. If the shares fall rather than rise, they lose money. This is different from most executive schemes.

But interestingly for someone running a media business, Sorrell’s personal PR is patchy. Perhaps this is because he is significantly brighter than most of the people who invest in his shares – and from time to time he shows it. There is very little the army of analysts, fund managers and commentators can get their teeth into in terms of suggesting ways of improving his business. But they gnaw at the things they can get their minds around: the money Sorrell might collect, or – the central issue in this case – the criteria that will trigger the rewards.

This is not a phenomenon confined to business. It is a feature of Parliament and far too many public company boardrooms that many of the most vigorous debates revolve around the emotional issues. Having said that, there is a PR cost. This is a people business with a reputation to protect. It is not healthy when institutional shareholders create the impression that all the top people are paying themselves too well.

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