MARTIN SOR­RELL QUITS WPP

Leg­endary CEO leaves big­gest ad firm over al­le­ga­tion of per­sonal mis­con­duct

Financial Chronicle - - FRONT PAGE - KATE HOLTON

Martin Sor­rell, who built WPP into the world’s big­gest ad­ver­tis­ing agency through 33 years of deal­mak­ing, quit on Satur­day af­ter an al­le­ga­tion of per­sonal mis­con­duct. The de­par­ture of the CEO, who built a two-man out­fit into one of Britain’s big­gest com­pa­nies with 200,000 staff in 112 coun­tries leaves at a time when WPP is un­der great strain.

MARTIN Sor­rell, who built WPP into the world’s big­gest ad­ver­tis­ing agency through 33 years of deal­mak­ing, quit on Satur­day af­ter an al­le­ga­tion of per­sonal mis­con­duct.

The de­par­ture of the CEO who built a two-man out­fit into one of Britain’s big­gest com­pa­nies with 200,000 staff in 112 coun­tries leaves WPP with­out a boss at a piv­otal time for the in­dus­try and when the group is un­der great strain.

The 73-year-old said on Satur­day he was stand­ing down,de­part­ing at a cru­cial time for WPP which has seen its shareprice fall 30 per cent this year due to lower client spend­ing, con­tract losses and a grow­ing threat from Google and Face­book.

WPP stunned the mar­ket last week when it said it had ap­pointed lawyers to in­ves­ti­gate al­leged mis­con­duct by Sor­rell. He de­nied the al­le­ga­tions but in an email to WPP staff pub­lished late on Satur­day he said the “cur­rent dis­rup­tion” was “putting too much un­nec­es­sary pres­sure on the busi­ness”.

Sor­rell said he had de­cided that “in your in­ter­est, in the in­ter­est of our clients, in the in­ter­est of all share­own­ers, both big and small, and in the in­ter­est of all our other stake­hold­ers, it is best for me to step aside”.

Chair­man Roberto Quarta will be­come ex­ec­u­tive chair­man un­til a new chief ex­ec­u­tive is found, while Mark Read, a WPP dig­i­tal ex­ec­u­tive, and An­drew Scott, chief op­er­at­ing of­fi­cer, Europe, have been ap­pointed as joint chief op­er­at­ing of­fi­cers. The com­pany will con­sider in­ter­nal and ex­ter­nal can­di­dates for the top job in a process that could take sev­eral months.

“Ob­vi­ously I am sad to leave WPP af­ter 33 years,” Sor­rell said in a state­ment. “It has been a pas­sion, fo­cus and source of en­ergy for so long. How­ever, I be­lieve it is in the best in­ter­ests of the busi­ness if I step down now.”

WPP said the in­ves­ti­ga­tion, which re­garded fi­nan­cial im­pro­pri­ety, had con­cluded. It made no fur­ther com­ment but re­peated a pre­vi­ous state­ment that the al­le­ga­tion did not in­volve amounts that were ma­te­rial to the com­pany. for­mer ri­val chief ex­ec­u­tive and a cur­rent CEO told Reuters last week that the fact Sor­rell was un­der in­ves­ti­ga­tion showed how the dy­namic within WPP had changed.

"To me it's not ac­tu­ally about whether he did any­thing wrong but it's the fact

Athat three years ago the board would not even have gone down this path," the for­mer CEO said. "Martin was all pow­er­ful and WPP with­out Martin was not worth think­ing about." A source close to Sor­rell said he had been un­happy with how the in­ves­ti­ga­tion was han­dled, leav­ing him un­cer­tain whether he could work with the board again. An­a­lysts have spec­u­lated that the sprawl­ing group, which was be­ing re­struc­tured af­ter a year of lower spend­ing from some clients, could now sell off some as­sets if led by dif­fer­ent man­age­ment.

The longest-serv­ing CEO on the FTSE 100 blue chip in­dex, Sor­rell is one of the most high pro­file, and best paid ex­ec­u­tive in the coun­try. In his time, the group ex­panded to own top cre­ative agen­cies in­clud­ing J Wal­ter Thomp­son and Young & Ru­bi­cam, as well as me­dia plan­ners and buy­ers, mar­ket-re­search firms and pub­lic re­la­tions groups such as Fins­bury.

WPP serves clients in­clud­ing Ford, Unilever, P&G and a string of ma­jor cor­po­ra­tions around the world. It largely out­per­formed its peers Om­ni­com, Publi­cis and IPG in the years that fol­lowed the fi­nan­cial cri­sis as the group pitched ag­gres­sively for new work. But it has been hit in the last 18 months by a down­turn in spend­ing from con­sumer goods groups Unilever and P&G, and the loss of some big ac­counts.

The mi­gra­tion of ad­ver­tis­ing on­line and the en­croach­ment into mar­ket re­search of con­sul­tan­cies such as Ac­cen­ture have com­pounded the pres­sures.

The com­pany said Sor­rell would be avail­able to as­sist with the tran­si­tion, and the man syn­ony­mous with the Bri­tish mar­ket­ing group told the staff they would come through this dif­fi­cult time.

“As a founder, I can say that WPP is not just a mat­ter of life or death, it was, is and will be more im­por­tant than that,” Sor­rell said.

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