Martin Sorrell and the sunset of the superstar chief executives

For more than three decades, Sir Martin Sorrell has run WPP – the world-leading advertising group he built from scratch out of a small maker of wire baskets – with an iron grip. Since jacking in his job as finance chief at Saatchi & Saatchi to start his own business at the very un-dotcom age of 40, Sorrell has built Wire & Plastic Products – the shell company he used as his vehicle for global domination, and which still makes metalware to this day – into a business with a stock market valuation of £22bn.

Investors have been rewarded handsomely: £1,000 invested at WPP’s inception in 1985 would be worth £63,000 today. Sorrell has been rewarded too. Two years ago he took home more than £70m, one of the biggest pay deals in UK corporate history, and over the last five years has pocketed £210m.

For years, investors were placated by WPP’s relentless growth, and questions about the control exerted by its founder were put to one side. “Like Domino’s, WPP continues to deliver,” said the company’s former chairman Philip Lader once, using fast food as an attempt to justify Sorrell’s proprietorial management style and ballooning pay.

The chief executive’s big paydays have been seen as symptomatic of what critics call “Sorrellcentricity” at WPP – the view that Sorrell is autocratic and dominates decision-making – which in turn has led investors to increasingly challenge the governance of the company.

“Sir Martin identifies very closely with WPP as his personal creation,” says Sarah Wilson, chief executive of shareholder advisory service Manifest. “The cult of the superstar chief executive does not create a healthy corporate culture. They’re increasingly the only person we associate with the organisation, its successes or failures. And, in fact, with any of its business decisions at all.”

A change in attitude to corporate pay from the public and investors – and more recently Theresa May’s warning that she would curb boardroom excess – has started to loosen Sorrell’s once unquestioned control. A series of investor rebellions against his pay (the biggest being in 2012, during the “shareholder spring”, when 60% of investors rejected his annual pay package) has forced WPP’s board to cut his remuneration dramatically.

Last week, WPP revealed Sorrell was paid £48m in 2016, the last year of the controversial “Leap” incentive scheme it has been forced to scrap. A new policy capping his annual pay at about £19m had already been agreed. But continued unrest among shareholders led the company to announce it would reduce pay further to a maximum of just over £13m.

This would put him much more in line with his peers. John Wren, the long-serving chief executive of the world’s second-biggest ad group, Omnicom, was paid $26m last year. Michael Roth, chief executive of rival IPG, was paid $18m.

However, the £13m cap won’t come in until 2021, when Sorrell is 76. This raises the spectre of what WPP has called the “succession elephant”, which has now superseded pay as the No 1 issue facing the company and its founder.

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“Discussions with WPP have been partly about pay, the quantum, and also very much about succession,” says one major investor in WPP who does not wish to be named. “Partly the reason Sorrell’s pay has been so large is that the company has done very well. But he also got away with negotiating [big] pay packages because of the whole [unanswered] issue of succession.”

Roberto Quarta, who is a year into his job as WPP’s new chairman, said last week that succession planning had become “even more focused and detailed over the last year”. He explained there was an “exceptional team of potential candidates” from WPP’s top management, as well as a “constantly refined list of external candidates”.

Claire Enders, of research firm Enders Analysis, said the perception of Sorrell’s domination is a fallacy. “Martin has a thousand great people across the world in the first tier,” she says. “Year in, year out, [the company] makes WPP a systemic large-scale success rather than the daily product of one man spinning.”

At 72, even with a new baby to deal with, Sorrell’s health and indefatigable work ethic seem to make the issue of age irrelevant. Indeed, gerontocracies are common in medialand: Rupert Murdoch is 86, Barry Diller is 75, as is Sorrell’s erstwhile adversary Maurice Lévy, who this summer will step down as chief executive of Publicis, the world’s third-largest advertising company. IPG’s Roth is 71, while Omnicom’s Wren is the sprightliest of the bunch, at 65.

Nevertheless, a new generation is on the horizon: Lévy’s successor, Arthur Sadoun, is just 46, for example.

One quirk of Sorrell’s relationship with WPP is in his contract. Instead of the standard notice period of 12 months, it says he can terminate his service – or that the company can – “at will”.

Sorrell may only own a few per cent of the company he founded – his stake and that of his family trust is currently worth £427m – but the idea of retirement couldn’t be further from his mind. “Only when they shoot me,” he has said.