Break-up fears at WPP as fu­ri­ous Sor­rell re­signs

Sir Martin’s exit from the com­pany he built and ran for 30 years heaps fur­ther pres­sure on the ad gi­ant

The Daily Telegraph - Business - - Front Page - By Lucy Bur­ton

AD­VER­TIS­ING go­liath WPP has been thrown into chaos af­ter Sir Martin Sor­rell’s ac­ri­mo­nious exit ended more than three decades in charge.

The 73-year-old ad­ver­tis­ing king abruptly quit late on Satur­day night af­ter grow­ing “fed up and p----- off ” dur­ing an in­ves­ti­ga­tion into al­leged mis­con­duct, sources close to Sir Martin said.

His de­par­ture leaves one of the UK’s big­gest com­pa­nies fac­ing se­ri­ous ques­tions about its fu­ture as it is forced to be­gin the hunt for a new chief ex­ec­u­tive.

In­dus­try sources said WPP’s sprawl­ing em­pire faced the prospect of be­ing bro­ken up with­out Sir Martin at the helm. The group is made up of 400 com­pa­nies. One se­nior fig­ure de­scribed his down­fall as “a mo­ment in his­tory”.

“It wasn’t a board­room bat­tle but the way they be­haved in his eyes, the man­ner they han­dled the in­ves­ti­ga­tion, in the end he thought ‘I’m 73 years old I don’t need this s---,” a friend told The

Daily Tele­graph. His res­ig­na­tion is be­ing treated as a re­tire­ment, putting him in line for a pay­out of up to £20m in the next five years.

Sir Martin trans­formed a tiny wire bas­ket man­u­fac­turer he ac­quired in the Eight­ies into an in­ter­na­tional gi­ant worth more than £20bn.

Mark Read, chief ex­ec­u­tive of WPP agency Wun­der­man, and An­drew Scott, WPP’s cor­po­rate de­vel­op­ment di­rec­tor, have been ap­pointed joint-chief op­er­at­ing of­fi­cers of WPP while it searches for a per­ma­nent re­place­ment.

“Find­ing some­one who is a charisma ma­chine with chief ex­ec­u­tives in the same way Martin is will be tough,” Claire En­ders, founder of En­ders Anal­y­sis, said. “There is no other Sir Martin Sor­rell in the world.”

The longest serv­ing chief ex­ec­u­tive of a FTSE 100 firm, his exit piles pres­sure on to a com­pany that has seen its shares dive this year af­ter be­ing ham­mered by drops in ad­ver­tis­ing spend, as well as Google and Face­book’s in­creased dom­i­nance in “ad­land”.

An­a­lysts at Beren­berg warned be­fore Sor­rell quit that the slew of bad news was “un­likely to im­prove in the short term”. WPP’s big­gest client Ford, which ac­counts for 4pc of rev­enues, is half­way through an agency re­view aimed at cut­ting costs. HSBC, Sky, Shell, Mars and Kim­berly-Clark are also in the mid­dle of re­views, it said.

In­dus­try in­sid­ers ex­pressed con­cern, ar­gu­ing that if WPP doesn’t rein­vent it­self quickly it could be split up. The next boss needs to fo­cus on se­ri­ous and rad­i­cal change, urged ad boss Johnny Hornby. “It needs a com­plete rein­ven­tion. Martin could have han­dled that, but now that he’s gone that trans­for­ma­tion still needs to [hap­pen],” said Mr Hornby, who runs Lon­don agency The&Part­ner­ship.

He said it was time for WPP to re­struc­ture, sell off its re­search busi­ness and merge its cre­ative and me­dia agen­cies. “The in­dus­try is go­ing through a phe­nom­e­nal pe­riod of change,” he said.

In­dus­try fig­ures said the choice of ex­ec­u­tives Read and Scott as in­terim chief op­er­at­ing of­fi­cers was right. Read is seen as the favourite in­ter­nal can­di­date to re­place Sir Martin. “But it may be that an ex­ter­nal per­son is a sex­ier choice for the City,” Ms En­ders said. “Martin is a very, very big name.”

Sir Martin has de­nied al­le­ga­tions of wrong­do­ing.

1985

Martin Sor­rell snaps up a stake in Wire and Plas­tic Prod­ucts, a small UK man­u­fac­turer of wire shop­ping bas­kets, af­ter search­ing for a pub­lic en­tity to build a global mar­ket­ing ser­vices com­pany from.

1986-1987

Sor­rell be­comes chief ex­ec­u­tive of the newly named WPP Group and be­gins ac­quir­ing mar­ket­ing ser­vices com­pa­nies across the UK and US, such as the ad­ver­tis­ing agency J. Wal­ter Thomp­son.

1988-1989

Lists on the Nas­daq ex­change in New York fol­low­ing a string of ac­qui­si­tions. In 1989 it ac­quires The Ogilvy Group for $864m (£607m) in­clud­ing the ad­ver­tis­ing agency Ogilvy & Mather.

2016-2017

Sor­rell faces an in­vestor re­bel­lion over a pay pack­age worth up to £70m. The next year he was named world’s sec­ond best per­form­ing CEO by Har­vard Busi­ness Re­view, and first in the UK.

April 4 2018

The board of WPP ap­points an in­de­pen­dent coun­sel to in­ves­ti­gate al­le­ga­tions of “per­sonal mis­con­duct” made against Sor­rell af­ter a re­port emerged claim­ing he had mis­used com­pany as­sets.

April 14 2018

WPP an­nounces on Satur­day night that Sor­rell has called time on his three-decade run as chief ex­ec­u­tive, re­tir­ing from the firm as the probe into his con­duct con­cluded. It did not re­veal the re­sults.

Sir Martin Sor­rell trans­formed a tiny wire bas­ket man­u­fac­turer he ac­quired in the Eight­ies into an ad gi­ant worth more than £20bn

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