Sorrell’s swift return to the fray threatens to deepen rift with WPP

His first deal since leaving WPP could be in breach of confidentiality agreement. Jamie Prentis reports

It’s barely a month since former WPP boss Martin Sorrell called his new business venture a “peanut” that could not rival his, industry giant, previous employer. But as the advertising heavyweight also later said: “It does occur to me that some people have peanut allergies”.

In its first acquisition, Mr Sorrell’s S4 Capital captured Dutch digital agency Media Monks Multimedia Holding for about €300 million (Dh1.28 billion) – which beat out WPP and other competitors.

The move reportedly angered WPP executives and Mr Sorrell could risk not receiving millions in bonuses after failing to adhere to an agreement with the company.

At the fiery WPP AGM last month shareholders were split over the fate of Mr Sorrell, who abruptly resigned in April from the company he built, amid allegations he misused company money and verbally abused staff. WPP chairman Roberto Quarta divulged little over the murky circumstances citing confidentially clauses.

He did say, however, that Mr Sorrell had been found not guilty of gross misconduct and would continue to receive the £19 million (Dh92.5m) in long-term bonus payments as such.

Many shareholders at the AGM were ambivalent over the money. They felt it was deserving for a man who had propelled WPP to the top and given them strong returns. They were, however, concerned that he had set up a new, seemingly rival company that could harm WPP profit at a time when its status was precarious.

One shareholder seemingly predicted future events in a question to the WPP chairman: “I see he intends to set up in competition with us. Surely that must constitute gross misconduct if he’s competing with the company?”

Mr Quarta laughed off any suggestions the new venture, citing Mr Sorrell’s comments, could rival a global giant like WPP, but appeared to send a veiled threat to his former colleague. “All the management of WPP have confidentiality agreements and obviously Martin would not want to jeopardise the terms and conditions of that.”

Included in Mr Sorrell’s agreement was a clause that he could not pursue targets WPP had previously considered when the former chief executive was in charge, or his £19m worth of bonus payments would not be paid.

WPP insiders said Mr Sorrell’s move had “something of the vendetta about it” in comments to the BBC. Others questioned whether he bore a grudge against his former employers. Mr Sorrell rebuffed these accusations and said WPP was simply concerned at the power S4 Capital had – it was going from a peanut to a “coconut”.