WPP Withdraws Guidance, Execs To Take 20% Pay Cuts As COVID-19 Bites
WPP’s head office in the UK has unveiled a number of budget-saving initiatives in the wake of the coronavirus as it withdrew its 2020 guidance, announced a hiring freeze and forced executives to take a 20 per cent pay cut in a move it hopes will save the agency £800 million ($A1.6 billion) over the coming year.
In a statement to media, the world’s biggest media organisation said that 95 per cent of its 107,000-strong global workforce was now working from home.
Its Chinese operations aside, WPP revealed that revenues were actually up 0.4 per cent in the first two months of 2020. In terms of the balance sheet, it was revealed that as of December 31 WPP had net cash of £3 billion ($A6.06 billion) and total liquidity, including undrawn credit facilities, of £4.8 billion ($A9.7 billion).
The company announced it would freeze all new hires; review freelance expenditure; stop discretionary costs, including travel and hotels and the costs of award shows; and postpone planned salary increases for 2020.
In addition, members of the WPP executive committee, as well as the Board, have committed to taking a 20 per cent reduction in their salaries or fees for an initial period of three months.
“We anticipate these measures will generate total in-year savings for 2020 of £700-800 million. In addition, we are making a detailed assessment of further actions to reduce cost subject to the impact of the virus on our business over the coming weeks and months,” the statement read.
WPP CEO Mark Read added: “The actions we have taken in the last 18 months to streamline and simplify WPP, together with raising £3.2 billion in asset disposals, have put WPP in a strong financial position. It is clear that the companies in the strongest financial position will be best placed to protect their people, serve their clients and benefit their shareholders during a period of great uncertainty, which is why we are taking the steps we are outlining today.
“Across WPP we now have close to 95 per cent of our people working effectively and productively away from their offices. I am very proud of the response from our people, who are looking out for each other and going the extra mile for clients while demonstrating the creativity, collaboration and resilience that will be key to the enduring success of WPP. At the same time, we are supporting many governments and international health organisations on communications programmes to limit the impact of COVID-19 on our communities. The important role we are playing in helping our clients navigate a difficult time gives us great confidence in the long-term future of the company,” Read said
The statement added that many agencies were now working with their respective governments on CV-19 public service announcements.
“We have seen outstanding examples of creativity from our people as they support clients, governments and NGOs in the fight against COVID-19,” the statement read.
“We are working with international health authorities to promote effective handwashing and we have offered our resources to the UK Government to assist the effort in Britain. Our global media network Wavemaker, for example, helped the Cabinet Office to launch its coronavirus information service on WhatsApp to reduce the pressure on the NHS.”
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