Daniel Farey-Jones
May 1, 2023

Martin Sorrell's bonus drops after MediaMonks owner misses targets

S4 Capital pays out lower bonuses after top execs fall short on integration, profit and diversity.

Martin Sorrell (right) with fellow executive Wesley ter Haar: both received bonuses of 40% of salary
Martin Sorrell (right) with fellow executive Wesley ter Haar: both received bonuses of 40% of salary

Martin Sorrell earned less than half of a potential $313,736 cash bonus for his performance at the helm of S4 Capital, the holding company behind MediaMonks, during 2022.

The company’s annual report out reveals that the S4 leadership fell short on a number of measures that make up the annual bonus package set by the company’s remuneration committee for the year to 31 December 2022.

Notably, the committee decided none of the targets for improving integration within S4 had been met. MediaMonks has been built through regular acquisitions of agencies around the world since 2018, and the leadership team’s 2022 targets were to:

  • Unify business processes to improve efficiency and further enhance the 'one S4 Capital' approach;
  • Identify and manage execution of opportunities to integrate the S4 Group’s physical presence; and
  • Work as an integrated team to identify and execute opportunities to grow the top line.

To tackle that issue, in August 2022 S4 promoted Chris Martin to chief operating officer to scale its organisational structure and processes and appointed Colin Day as a non-executive director to strengthen its financial control, risk and governance processes.

Sorrell admitted to Campaign in January that achieving the vision of a single P&L “is not easy”, during an interview in which he predicted 2023 would be a “tougher” year for the ad industry.

Although S4’s executive team missed their integration targets this year they did hit all of them in the 2021 financial year. This formed part of a better performance against overall bonus targets than in 2022 (57.5% versus 40%).

In preceding years Sorrell performed even better on his overall bonus targets, ranging from a 100% payout in 2018 to 75% in 2020.

Deteriorating profit measure hits exec pockets

However, 2022 was the second year running that the leadership group fell short on both EBITDA and diversity targets.

In both years the target EBITDA margin was 20% of gross profit, but actual performance came in at 18.4% in 2021 and just 13.9% in 2022.

This meant that executives, who include Sorrell’s right-hand man Scott Spirit, missed out an EBITDA bonus worth 35% of their individual salaries.

However, they did earn another bonus worth the same amount by hitting the 25% like-for-like revenue growth target.

This helped grow the cash bonuses earned by original MediaMonks founders Victor Knaap and Wesley ter Haar, for example, to $92865 – 40% of their $225890 salaries.

According to S4 remuneration committee chairman Paul Roy, the annual bonuses and salaries on offer to its top executives are below typical market level, because of its emphasis on reward through long-term share ownership.

“Many of the executive directors are significant shareowners and the [S4 directors remuneration policy] is designed with this in mind. There are also significant levels of share ownership among the wider employee base,” Roy wrote in the annual report.

Sorrell, who owns 9.4% of S4 Capital, is additionally rewarded through special incentive shares that entitle him to 15% of the total uplift in the company’s value above an annual compound rate of 6% between 2018 and 2023.

Back in September 2021, albeit when S4’s share price was much higher, Campaign calculated that Sorrell’s incentive shares could generate a $500m windfall. However, since then the share price has since dropped by around 75%, making that a much tougher ask.

Sorrell’s annual remuneration was greatly improved this year, thanks in great part to the remuneration committee agreeing a year ago to boost his base pay from $125,494 to $313,736 “as a fairer reflection of the contribution that Sir Martin makes to S4 Capital’s success”.

He received a total package of $638,767, which was over double his 2021 total of $254,753, although that was impacted by him not taking his 2021 bonus. Spirit, who is the only other holder of special incentive shares, received a total package of $633,747, up from $426,681 in 2021.

Sorrell and his fellow executives’ base pay for 2023 has not yet been finalised, according to the annual report, but his pension provision has been reduced from 30% of basic salary to 4% to bring it into line with that available to the majority of UK employees.

Diversity targets not fully met

S4’s leadership was also incentivised to make the company more diverse, via a maximum potential bonus of 7.5% of salary in 2022, which has grown in emphasis from 5% in 2021.

However, the actual bonus distributed in 2022 was 2.5%, a third of the potential level, reflecting that women made up 40% of S4 leadership but less than the 50% target and that there was limited progress in achieving S4’s goal of 13% black representation in the US (it said its US operations improved to 6% black representation in 2022).

The actual bonus in 2021 was 2.5%, half the potential payout, with the committee welcoming continued expansion of DEI education and hiring programmes and the company’s 49% women / 51% men global split, but commenting it had more to do on senior female and black representation.

The bonuses awarded to staff below board level are partly linked to the executive targets and partly based on personal targets, according to an S4 Capital spokesperson. The total sum paid out in bonuses to these employees was not disclosed.


Campaign UK

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