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

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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