A successor to Maurice Lévy as head of Publicis Groupe? Yes, but no, but maybe

July 24, 2012

These days, we’ve come to see Maurice Lévy, chairman and chief executive of Publicis Groupe, as something of an oracle. Every time the 70-year-old eminence grise makes one of his ceremonial public appearances – ostensibly to observe the religious rites of the financial year – we strain our ears for words of greater meaning, expertly hidden between the monotonous reporting lines.

This year’s halfway performance was no disappointment. In themselves, the figures were not terribly exciting. Organic growth of 2.8% and a 19% uplift in income were a perfectly respectable outcome, given that the Eurozone economy has developed blackspot and Publicis had lost the General Motors account. Clearly the BRICs and MISSATs (as we must now refer to Mexico, Indonesia, Singapore, South Africa and Turkey) must be doing rather well to make up the averages. And – hidden gem – Britain seems to be uncharacteristically up among them – for now at any rate – since it posted a 4.1% increase in growth.

But all this numerical incantation was historical stuff, and not what we actually wanted to hear.

What was M. Lévy’s outlook for the global advertising economy? The downward trend between the first and second quarters would halt. Much higher growth could be expected in the third quarter, starting right now. Phew!

And what of Dentsu’s acquisition of Aegis Group, what did he think of that? “The price is extremely full,” he opined in true oracular fashion. “It’s a nice acquisition for Dentsu.” But not for anyone else, we were led to believe. Not at least for anyone with a head for figures. And certainly not for Publicis Groupe, which had done something infinitely more sensible with a full buyout of BBH.

And the Publicis Groupe succession (which is all we really wanted to hear about) – any progress on that? Here M. Lévy outdid himself in Delphic obscurity and double meaning. Yes, a successor to himself would emerge. In September. Or was that just the beginning of the process? It rather looked like it: “In September the board will start the process.” Hold on a minute, hadn’t this “process” been going on for several years now? Why did it need to “begin” in September?

But, a successor would be found, wouldn’t he? Think of those poor clients and investors waiting anxiously for reassurance.

Yes, M. Lévy had his preferred private candidate, but he wasn’t going to disclose their identity to anyone else. That was a matter for the board.

So, we’ll take that as full confidence in Jean-Yves Naouri, PG’s chief operating officer  and Publicis Worldwide CEO whose name Lévy had let slip during an earlier ritual occasion? Well, possibly. Unless that successor were to be Arthur Sadoun, managing director of Publicis Worldwide. Or maybe Simon Badinter, son of its most important shareholder, Elisabeth Badinter – without whose approval no Lévy successor can be anointed.

But we could be clear on one thing, couldn’t we – M. Lévy himself would be vacating his See? Ah! Well, yes and no: “The first and most important thing is the depth and breadth of the teams at Publicis is such that my presence is almost non-important. I think it’s very important that there’s a succession plan and I’m doing everything I can, with a fantastic team, to make sure that no one who entrusts us with their confidence will be disappointed – our clients, our people, our investors,” he said with studied contradiction. Someone “almost non-important” needs a successor, eh?

Let’s get this straight then. A candidate does exist. It’s Jean-Yves Naouri, who has been working like a Stakhanovite to prove his mettle. But doubts remain about his suitability. Is La Badinter any more enthusiastic about “the approved candidate” than when his name first emerged over two years ago? Probably not, but she’s going to have to face up to reality soon, because there’s no obvious alternative to Naouri in the wings. Unless, of course, we’ve been barking up the wrong tree here. Perhaps there won’t be a single successor. Maybe Naouri will be installed with a junior partner at his side – conceivably the more charismatic Sadoun. And just to be absolutely certain the glue sticks, Maurice Lévy won’t be leaving any time soon. He won’t be président directeur-général any longer, of course. Just life president. After all, the one thing he did unambiguously tell us was: “It’s my life and I don’t intend to simply leave the company. Whatever happens to me I will always support Publicis and help Publicis as long as Publicis will need me; in whatever capacity Publicis will need me. And that is clear.”

Yes, for once, it is.

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£3bn Aegis deal will test Dentsu’s mettle

July 13, 2012

Cynics might say that £3.2bn – cash – is an awful lot to pay for digital competence and a superior market rating. And they have a point. Would Dentsu ever have planned such an audacious and costly coup as the acquisition of Aegis Group had the Japanese advertising group earlier succeeded in its seemingly knock-out offers for Razorfish and, later, AKQA? It’s subjunctive history: we’ll never know.

Aegis chief executive Jerry Buhlmann and Dentsu president Tadashi Ishii: Firm friends?

The cynics are, in any case, substantially unfair. There’s much more to the Aegis acquisition than digital. This is arguably the transformative deal of the decade. It’s as if there has been a tectonic plate shift in marketing services, revealing a series of minor preceding tremors as clearly apparent elements in a wider pattern.

These minor tremors include the foundation of a much stronger, and more independent, operating unit in the US – Dentsu North America – under the direction of Tim Andree; Andree’s earlier acquisition of some of America’s sharpest shops, McGarryBowen, Attik, and 360i; the harnessing of McGarryBowen to Dentsu’s embryonic European network, led by former WPP executive Jim Kelly; and, not least, Dentsu’ decision to pull out of its unsuccessful strategic alliance with Publicis Groupe, cashing £535m in the process.

Andree, now gone global as senior vice-president at Dentsu and no doubt a strategic architect of the acquisition, has admitted that the £535m was “helpful in this deal” – coded language referring to the cash pile making it possible at this time. But something of the sort has needed to happen for a long time if Dentsu were not to be stranded in its idiosyncratic role as a one-country wonder, with 80% of global earnings still accounted for by overwhelming dominance in the Japanese market.

There are lessons in failure, and the Japanese management of Dentsu finally seem to have learned them. Neither strategic alliances, meaning stakes of about 20% in rival but complementary marketing services companies, nor the occasional one-off acquisition, such as Collett Dickenson Pearce all those years ago, suffice  for players in a global market. They needed to delegate more, and yet be more masterful in their acquisition strategy.

The delegation came in the realisation that people like Andree, John McGarry and Kelly would know more about how Western advertising culture actually functioned than Tokyo Central would ever know.

The more masterful acquisition strategy came from the realisation that opportunities for global expansion were rapidly narrowing, and if they wanted a suitable counterweight elsewhere in the world, they would have to put aside an institutional aversion to big takeovers and get the cheque-book out.

That’s why £3.2bn to buy the Aegis Group – 18 times prospective earnings compared with a market average of about 13 – is not too much to pay for this deal. It gives Dentsu indispensable weight as a global player: at $7bn revenues combined, close competition with the Interpublic Group as the number 5 player. As a media/digital operator, it moves into the third slot, behind GroupM (WPP) and Vivaki Media (PG). And geographically, it reduces its dependence on Japan to 60%.

Over at Aegis, it’s difficult to guess whose smile is broader: that of Vincent Bolloré, 26% shareholder; Harold Mitchell, who doubles his invested capital from the sale of his business two years ago with a £112m takeaway; or Aegis chairman John Napier. Napier has had to perform a very difficult tightrope trick in the City with a monkey on his back. The monkey is Bolloré.

On the one hand, Aegis has performed extremely well in recent years, with organic growth rates defying all its bigger rivals. A cleaning-up operation, which brought Mitchell’s Australian media buying services in and off-loaded the under-performing Synovate market research business on Ipsos, improved them still further.

On the other, there was always an air of impermanence about a company as small and narrowly defined as Aegis being on the public markets. Chief executive Jerry Buhlmann knew it, Mitchell – judging from his share investment strategy –  knew it, Napier knew it and – most importantly – Vincent Bolloré knew it. Which is why he built up a stake in the first place. From the angle of Aegis’ corporate independence it is difficult to know which was worse: Bolloré Mark 1, the corporate raider stealthily engineering a boardroom takeover with a view to break-up; or Bolloré Mark 2, the disillusioned ‘strategic investor’ seeking to offload his game-changing stake at the first reasonable opportunity. Each was destabilising; neither the stuff of a good corporate narrative to wow other investors. Bolloré is now laughing all the way to his bank – £725m in pocket, representing a 50% premium on his investment. Quite what this means for the future of Havas, trailing with only $2.3bn global revenues, is of course an interesting  – but quite separate – question.

The nature of the Aegis deal – cash, and a 50% premium to the share price – makes it exceedingly unlikely that Dentsu will face any challengers for its prize. What matters now is whether it will make the deal work. The enlarged Dentsu can boast that 37% of its revenues are derived from the cutting edge, digital – a greater share than any other global marketing services group. Buhlmann has agreed to stay on until at least the end of next year, which should help the glue to set. But what then? Aegis, at nearly 40% the size of its new parent company, is by a wide margin the biggest acquisition that Dentsu is ever likely to make. That’s quite a cultural challenge.

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Sir Martin Sorrell – a fit and proper Olympic torch-bearer?

July 10, 2012

“Millionaire at centre of ‘fat cat’ row will carry the Olympic torch through streets of East London” howled the Daily Mail, in one of its ‘world exclusives’.

Downpage, there were 57 varieties of indignation from the good folk of the north-eastern London borough of Redbridge, all queuing up to express their disgust and dismay at the soiling experience of having someone not themselves carrying the sacred flame through their hallowed land.

Charlotte Law, 19, was typical (of Daily Mail reportage, at any rate): “I would be much better at carrying the torch than him. At least I’m from around here. Did he have to apply like everyone else? I don’t think so. It’s a disgrace.”

And you could sympathise with her. The bastard. He may have given up his £20m bonus rights, but here he was trying to worm his way back into the big time by wielding an Olympic torch.

But no, not Bob Diamond. It was someone most of them had never heard of, until coached by Mail hacks. Some bloke called Sir Martin Sorrell. Something to do with a big advertising company and a scandal. He’d asked for much too much money (don’t they all?) and been told he couldn’t have it.

We don’t want his sort round here. Michael Aldridge, a 51-year old care worker, summed it all up: “It goes completely against the Olympics spirit, but it’s not about that any more, it’s about money.”

Let me put you right on that, Michael: it always was. Even in ancient Greece, where a prodigious amount of vicious cheating and betting invested the quadrennial games like a swampy miasma. Come to think of it, the Olympic Torch Relay itself isn’t exactly of blameless historical pedigree. It was introduced in 1936, just in time to fanfare the Nazi games. The Nazis were very good at that sort of thing.

But, coming back to Sir Martin, what is it – precisely – that he has, or hasn’t, done to qualify as one of 8,000 bearers of the Torch? Well, behind the scenes, he has since 2005 been giving a good deal of his valuable time to promoting and supporting, pro bono, the London Olympics. And, as if that weren’t disqualification enough, he has actually been asked by the International Olympic Committee in Switzerland to carry the torch!

Outrageous. You know Sir Martin’s problem? He’s not one of the Little People – except of course in the literal sense. He’s one of them, the elite, who rule our lives. But then, the last I heard, the Olympics – motto: Faster, Higher, Stronger –  is all about elitism. It’s a gladiatorial contest where the best man – and woman – always wins. How inegalitarian is that?

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GlaxoSmithKline marketing scandal makes Barclays’ woes look like small change

July 4, 2012

This week, the US Justice Department fined a well-known multinational $3bn (£2bn) for serial corporate malpractice. And, in the manner of a suspended criminal sentence, it imposed on company managers – up to its chief executive – stringent measures for slashing their pay and bonuses should further illegal activity come to light.

Another bank getting the Barclays treatment? No. This is one of the world’s biggest pharmaceutical companies, GlaxoSmithKline, getting its comeuppance for inappropriately marketing a slew of prescription drugs.

The only reason we haven’t heard more is because Barclays’ former chief executive Bob Diamond is hogging the limelight, for which Glaxo CEO Sir Andrew Witty must be profoundly grateful. All Diamond and his colleagues did was to manipulate the money markets. What GSK has done, by contrast, is gamble with human lives – including children’s lives – in the hope of making a fast buck for its shareholders and management team.

It’s a grubby tale, stretching back over a decade, which involves bribery, treating, corporate bullying and wilful suppression of the truth. And an interesting definition of what appears to have passed for trade marketing in Big Pharma.

Glaxo admitted corporate misconduct over the mis-selling of three drugs, the anti-depressants Paxil (known over here as Seroxat) and Wellbutrin, plus the asthma drug Advair.

Most egregious, perhaps, was the “repositioning” of Paxil – once GSK’s best-selling drug – as safe for adolescents, when clinical trials had failed to establish any such premise. No expense was spared in covering up this inconvenient truth.

“Luxurious conferences were organised in exotic climes where paid-for scientific speakers hyped up the conclusions of dubious academic papers,” The Independent tells us.”GSK held 8 ‘Paxil forum’ events in Puerto Rico, Hawaii and California, where hundreds of doctors were treated to snorkelling, horse-riding, sailing, deep-sea fishing, balloon rides and spa treatments, and given an ‘honorarium’ of $750 in cash. The company knew it was worth paying for these kinds of boondoggles; it monitored the doctors who attended and found they significantly increased prescriptions of Paxil in the months after the event.” Note and appreciate the scientific attention to the analysis of marketing data.

And there is more. GSK published an article in a medical journal that mis-stated the drug was safe for use by children, despite being asked several times by the journal’s publisher to change the wording. (Why was the publisher not more insistent? Probably because it feared going out of business. It’s a small world, Big Pharma.) Copies of the offending article were then handed to sales reps, to help badger GPs into seeing GSK’s point of view.

In the case of Wellbutrin, GSK paid a well-known medical media star of the time, Dr Drew Pinsky, who hosted a then-popular radio show, nearly $300,000 to say nice things about it – like it could give you 60 orgasms in one night. Funnily enough, the good Doc failed to disclose to his audience, or anyone else for that matter, that he was taking the GSK shilling.

Woe betide you if you showed any scruples, however: when a GSK-funded doctor refused to suppress his own misgivings about the safety of the drug, GSK removed his funding.

What emerges about the marketing of the asthma drug Advair is its crassness. It was launched to sales reps in Las Vegas using images of slot machines – to emphasise the money they could make from bonuses. At the event, Jean-Pierre Garnier (pictured), the CEO on whose watch all these shenanigans went on, told them: “What is the number one reason why you should love to be a GSK rep? Advair’s bonus plan. Yeah!”

It’s reassuring to know our life is in their hands, isn’t it? Makes Barclays Bob look a bit of a saint by comparison.

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Yes, we Cannes: WPP, McDonald’s and McKinney grab top Effie Index rankings

June 18, 2012

It might seem counter-intuitive to announce the global Effie ‘Effectiveness Index’ winners at the Cannes International Festival of Creativity but then, as my colleague Stephen Foster points out, Cannes has become such a monster event it serves as global launchpad for virtually any marketing services event these days. So, before becoming immersed in a week-long self-congratulatory orgy of advertising creativity, let’s just remind ourselves of those advertisers, brands and agencies that actually bring home the bacon:

  • Unilever is the most effective advertiser;
  • McDonald’s is the most effective brand;
  • WPP Group is the most effective advertising holding company;
  • Ogilvy & Mather is the most effective advertising agency network;
  • Ogilvy & Mather (Mumbai) is the most effective individual agency office;
  • McKinney (Durham, North Carolina, USA) is the most effective independently held advertising agency.

Yes, I was wondering about that last one, too. It recently appeared in ‘The Pitch’, AMC’s unscripted programme in which two agencies vie over 7 days for  a piece of business, in this case Subway restaurants. McKinney won. It’s notable for its Audi A3 campaign, Art of the H3ist, which garnered two Effies and a Cannes Lion. And also for something called “connection planning”, which I take to mean an integrationist skill that ensures campaigns work smoothly across all channels.

Good for McKinney, I say. But I do have a qualification. Last year’s winner in this category was the slightly more universally recognised Wieden & Kennedy of Portland, Oregon. Now, I’m all for merit making its way to the forefront without having to await Buggin’s Turn. But I also look for consistency in results. The Effie Effectiveness Index, which is sponsored by insight portal WARC and compiled from 39 individual national Effie competitions, was only inaugurated last year and therefore lacks granular historical perspective. That said, there is a repeat winner this year: McDonald’s, with the most effective brand accolade. Here, for quick reference, is last year’s roll of honour:

  • Procter & Gamble was the most effective advertiser;
  • McDonald’s was the most effective brand;
  • Omnicom was the most effective advertising holding company;
  • BBDO Worldwide was the most effective agency network;
  • Sancho BBDO (Bogota, Colombia) was the most effective agency office;
  • Wieden & Kennedy (Portland, Oregon, USA) was the most effective independent advertising agency.
I don’t suppose that Sir Martin Sorrell will be worrying too much about historical perspective, as he wipes the blood away from his nose. One way or another, WPP has collared most of this year’s top Effies. So, he is worth it, after all.

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Rita Clifton to step down as UK chairman of Interbrand

June 16, 2012

Rita Clifton, one of the UK’s best-known brand experts, is stepping down as UK chairman of Interbrand, the Omnicom-owned brand consultancy which she has headed for 10 years.

Clifton will officially leave on July 31st, although she is thought to have submitted her resignation earlier this year. She has long served on a three-day-a-week basis, and has a well developed career portfolio that includes several non-executive directorships. Besides being non-executive chairman of opinion pollster to The Times Populus, she is also a NED of Dixons, the electrical retailer, and BUPA, the global healthcare company. Since 2007, she has been a trustee of WWF-UK. In 2009 she was appointed president of the Market Research Society.

“Ten years in the chair (and 5 years as CEO before that) is quite long enough when it’s not your own company, and I have wanted to set up a private office to run/extend my non-exec and pro bono portfolio and do independent speaking and writing about brands for some time,” she says.

Clifton is a prolific writer on brands. Among her publications are the Future of Brands, published by Interbrand, and Brands and Branding, published by The Economist.

She began her career as an account planner at DMB&B and J Walter Thompson (JWT). In 1986 she moved to Saatchi & Saatchi London where she rose to deputy chairman and executive planning director in 1995.

Started in 1974 by John Murphy in the UK, Interbrand has morphed into a global organisation with nearly 40 offices and claims to be the world’s largest brand consultancy. It was acquired by Omnicom in 1993.

 

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Ad industry puts the boot into ‘treacherous’ Chartered Institute of Marketing research

June 8, 2012

An amusing industry spat has broken out between the Chartered Institute of Marketing and just about everyone else over the way the industry has been handling the vexed issue of marketing to children.

One year into the Bailey era, the CIM has released research that apparently shows 85% of parents are unaware of the Government-sponsored and industry-sanctioned ParentPort website – a forum that enables parents to vent their spleen at the way marketers have been commercialising and sexualising childhood. This, from one of its own, is an unforgivable undercut to the belly of the industry, which claims to have made Stakhanovite progress in grappling with an issue in which David Cameron has taken a highly personal interest.

The result has been uproar, with other industry bodies jostling to put the boot into the CIM research.

First to weigh in with apoplectic energy was the Incorporated Society of British Advertisers (ISBA), the principal trade body for clients.

The riposte from ISBA’s director of public affairs Ian Twinn was masterly in its use of cutting irony: “ISBA is an active supporter of the industry pledge on the use of peer-to-peer marketing, along with many leading advertisers and media, but sadly the CIM remained aloof from the collective efforts of the wider industry.” Which was very silly of it, because now it’s going to enjoy zero support for its views.

Next up, and in similarly sarcastic frame of mind, is the Advertising Association, which represents clients, agencies and media. This week’s newsletter thunders:

“Thank goodness that advertising think-tank Credos has already done some far more thorough work on the same topic. Are advertising and marketing of concern to parents? Yes. But are they the biggest concern? Not by a very long shot. Are parents less concerned when rules and real life ads are explained in context? Yes they are. Should advertising respond? You bet – and we have. Ask (former AA chairman) Mark Lund.”

Industry regulator the Advertising Standards Authority has confined itself to a more diplomatic rebuke: “The work that regulators, including the ASA, continue to undertake in responding positively to the recommendations in the Bailey review (Letting Children Be Children) has been welcomed by government as well as family and parenting groups.” Subtext: ‘So what in God’s name do you people over at CIM think you are playing at?’

I’m beginning to feel sorry for David Thorp, CIM’s director of research. Just trying to help, eh, David?

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Too much spin on Tim Bell’s PR spin-off

May 31, 2012

Tim Bell’s getaway plane has received permission for take-off from the control tower and is now taxiing down the runaway. But will it actually manage lift off, or be bought back to earth with a pancake landing? Sadly, we’ll only know the answer on June 18th, date of the next gripping episode of this increasingly bizarre soap-opera.

The story so far. Bell, outwardly the bluff, iconic, chairman of highly successful communications company Chime, is inwardly tormented by thoughts of long-deferred retirement. How can this man of three-score years and ten enjoy his autumnal felicity without undermining the standing of the company in which he has invested so much? Initially in greatest secrecy, he and his boon companion Piers (whose own thoughts have been moving in the same direction) plot their escape – and come up with a foolproof plan to fund their retirement. What they’ll do is take with them a teensy-weensy bit of the company’s business and call it their own; so small in fact that shareholders won’t really notice it has gone.

After discreet soundings, it turns out that other members of the board are like-minded, though for slightly different reasons. They’ve never much enjoyed the core element of their otherwise respectable company being described as “The Dark Arts”; and have long since wondered how to pension the old boy off, without too much fuss. What a gift that Tim’s exit plan should, in a trice, rid them of both concerns!

The problem is, shareholders are not at all of the same opinion. On the contrary, they persist in the delusion – cultivated assiduously over the years by none other than Tim himself – that the dark arts are quintessential to the company’s wellbeing. And without shareholders’ assent, nothing is going to happen. At this stage someone (necessarily anonymously – we are, after all, talking about a publicly quoted company) comes up with a brilliant flash of inspiration. Why not confide the details of this plan – in strictest confidence of course – to Tim’s journalist mate, Mark? That way, everyone will know about it ASAP, and it can be presented to shareholders as a fait accompli, without the need for interminable negotiations to gain their consent.

In due course, a fully fledged management buyout document for Tim’s getaway vehicle, BPP, makes its appearance. It’s going to cost a very reasonable £19.6m, this new company. Reasonable for Tim and his friends, because that’s not an awful lot of money for what turns out to be 5 healthy PR subsidiaries. Reasonable for the board as well, because quite a lot of that £19.6m is going to be in cash, heading straight for the bottom line. And should it turn out that Tim and Piers have, unaccountably, been a little economical with their profit projections? Never mind, because Chime will still have a 25% stake in those profits – as holder of 4.1 million BPP shares.

So, perfect all round. But wait a minute, some of the shareholders are none too happy… one rather loud but diminutive individual is crying “Stitch-up!”.

Cut to runway again. A large fleet of dark-windowed Ford Mondeos is racing at top speed towards Tim’s accelerating aircraft. Will it be airborn in time? Find out on June 18th…

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Yell name change to hibu is the kind of makeover that makes you want to scream

May 23, 2012

Yellow Pages owner Yell has just changed its name to hibu, to the corporate fanfare of a £1.4bn annual loss.

If you want to draw attention to the fact that you are a loser, this is the way to do it in style. Don’t just disappoint your shareholders, really get their hackles up by spending yet more of their money on a makeover that will involve changing everything down to the last dot on letterheads and corporate literature.

It’s the kind of thing that gives rebranding a really bad name. The corporate equivalent of a crooked car dealer pushing a cut-and-shut write-off through the body-shop, in the belief that some mug out there will buy the flashy new paint job.

So why do it? Mike Pocock, Yell’s chief executive, claims to have a cunning plan. He’s actually proud  of the fact that hibu (unlike its predecessor, Yell) is a meaningless word. Yes, readers, unironically he spells it out for us: “high-boo”. As opposed to “low-boo.” Now you know.

Apparently, trendily ungrammatical hibu (lower case ‘h’, with some meaningless umlauts thrown in) is going to “connect” with under-25 year olds for whom telephone directories are relics. And while we’re there, let’s not forget “digitally-enabled housewives under 45 who have money to spend”. No, really. Must be the Sid and Doris Bonkers market that satirical magazine Private Eye has made its own.

By way of explanation, Pocock says nonsense words are now very much in vogue: “If you go back 15 to 20 years, Google and Yahoo! didn’t mean anything. It’s how you support the brands.”

You couldn’t make it up, could you? Please, Mike, stop digging and throw the spade away.  Google and Yahoo may have been nonsense words, but they represented thriving new businesses that earned the right to use a neologism. Not so tired old Yell, shackled to its Yellow Pages print platform. The best place for nonsense words is in the poetry of Edward Lear and Lewis Carroll.

WPP’s Landor, who dreamt up “hibu”, must be laughing all the way to the bank. Now comes the expensive advertising campaign to let Sid and Doris know they are being targeted.

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Bailey Trinity bonanza makes Sorrell’s WPP package look like peanuts – comparatively

May 3, 2012

WPP chief executive Sir Martin Sorrell may not have been best pleased with the publication timing of the latest Sunday Times Rich List.

Just as the awkward information trickled out that he had taken a 60% rise in pay and bonuses last year (£6.18m in 2011, as opposed to £4.2m in 2010), up popped the unhelpful information – tricked out in headline bold – that Sir Martin is the UK’s wealthiest advertising mogul, with a fortune of £174m (up from £148m the previous year) and a personal stake in WPP worth £156m.

A red rag to a bull, you might say. Some of WPP’s shareholders are becoming increasingly cantankerous about such generous settlements, as last year’s hullabaloo at the annual general meeting all too clearly demonstrated. This year’s AGM in June promises similar excitement.

However, Jeffrey Rosen, chairman of WPP’s remuneration committee, can rest easy in his bed. Shareholders, no matter how vociferous, haven’t a prayer of overturning the pay agreement. Sorrell may have an uncomfortable 15 minutes caught in some headline crossfire, but he can adduce powerful arguments he has deserved well of his shareholders. Look at the underlying performance of the company; the bonus element which is in any case increasingly linked to the share price; and – crushing final point – what would shareholders actually do without him?

Alas, Rosen’s oppo over at Trinity Mirror, Jane Lighting – who once headed Five – can expect no such easy ride. Shareholders are baying for her blood after she waved through Trinity chief executive Sly Bailey’s £1.7m pay package, apparently without a murmur of protest.

Why the fuss? After all, £1.7m is financial foothill stuff compared with Sorrell’s £6.18m. But then Sorrell – unlike Bailey – has built a £10.67bn world-leading marcoms business. And  – again unlike Bailey – he has not presided over the systematic destruction of shareholder value these past 9 years.

When in 2003 Bailey joined Trinity, publisher of The Mirror, The People and sundry local newspapers, it was valued at £1.1bn. Today, that valuation is near £84m and dwindling fast. Trinity has not paid a dividend since 2008, and its pension liabilities of £1.7bn now dwarf market capitalisation.

Personally blaming Bailey for the destruction of Trinity would be a bit like blaming Canute for the tide coming in. All said and done, it’s the internet wot done it; and no one else in the newspaper publishing sector has successfully outflanked its effects. But paying her a near-FTSE100 wedge for running a small cap company looks increasingly absurd. All the more so since Bailey has no identifiable long-term solution to Trinity’s plight.

It’s time to move on Sly, maybe to some non-exec roles. I’m sure you’ll be a lot tougher on pay deals than Lighting.

UPDATE 4/5/2012: SLY TAKES THE HINT AND RESIGNS SHOCK! Bailey handed in her notice shortly after share-trading closed last night, once it became clear she faced an unquellable revolt over her pay deal from at least 25% of Trinity’s shareholders. Interestingly, prime among the rebels was Aviva, which is experiencing internal sedition over its own chief executive’s handsome package. It seems Bailey will not exactly be missed by her staff, who have in recent times endured massive cuts to editorial budgets. A journalist at the Liverpool Echo, one of Trinity’s regional newspapers, is reported to have said: “Every time her bonuses were going up we were losing people from the newsroom. We called her the wicked witch of the south.” Apparently, unrestrained whoops and guffaws were to be heard in the Mirror’s offices after the news broke that she was leaving.

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Posted by stuartsmithsblog

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