Bottom Line: Soft option at WPP

WPP's management has once again shown a worrying degree of self-interest.

The struggling advertising group yesterday disclosed that Robert Lerwill, finance director, had been granted options over 321,981 shares at 52.5p each, almost a 30 per cent discount to the market price. The options can be exercised for four years beginning May 1996. At this level, Mr Lerwill, who is paying nothing for the option rights, is already sitting on a paper profit of about pounds 73,000.

Share options are meant to be a management incentive to enhance shareholder value in a company. It is a reward that should follow effort, not the other way round.

WPP's management has never been strong on following industry best practice. It is worth pointing out that both Martin Sorrell, WPP's controversial chief executive, and his colleague have five-year service contracts (with onerous termination terms) with the company. While much of corporate Britain has gone a long way to comply with the Cadbury report's recommendation for maximum three-year contracts, WPP's management continues to show scant regard for shareholders' interests.

Until WPP's shareholders stand up for themselves, they will not necessarily find their own interests coinciding with those of their managers.