WPP weakness targeted
Publicly quoted companies ignore whistleblowers at their peril. The board of advertising champion WPP had little choice but to probe allegations brought against the firm’s chief executive of 32 years Sir Martin Sorrell. What is harder to understand is why directors should have thought it necessary to employ three legal firms to conduct the inquiry.
The choice of America big hitters WilmerHale is curious given its reputation rests on Washington’s convoluted politics.
WPP’s usual legal advisers Allen & Overy could have managed on their own. The idea that Slaughter & May is needed as well is nothing short of ludicrous. The city habit of bulking up on advisers and lumbering investors with enormous bills is abhorrent.
This is especially true if the only purpose is to grant witnesses some form of qualified privilege, which makes it harder for regulators to do their work should they be called in at a later date.
Whistleblowers have a variety of reasons for intervening. but the leak to the Wall Street Journal suggests at WPP they were out to cause maximum disruption at a sensitive moment. The share price has been under pressure in recent months and the market value has almost halved to £14.2bn.
Fast-changing technology in advertising, together with the changing model in which groups such as unilever are going directly to the consumer online, is a threat. WPP also has suffered from succession jitters with investors worrying about the post-Sorrell period. if someone wanted to create mischief there was no better time.
be that as it may, chairman Roberto Quarta and senior non-executive Nicole Seligman, had no choice but to step in with an inquiry given the recent past.
An accounting whistleblower at Tesco in 2014 was at first ignored, but eventually led to the uncovering of a black hole in the retailer’s finances. At barclays, a whistleblower cast aspersions on the character of a senior manager brought into the bank by chief executive Jes Staley. When the barclays chief sought to identify the whistleblower, he found himself under investigation.
There is no suggestion that anything as serious as this has occurred at WPP. Sorrell may have come under criticism over his pay, but friends say he has been scrupulous in accounting for personal expenses. in the current climate any powerful executive alleged to have behaved in an inappropriate fashion towards colleagues must also expect their behaviour to be scrutinised.
Sorrell considered stepping aside during the inquiries, but felt his responsibility to WPP’s 200,000 workers was to carry on. What is clear is that plans for his succession at WPP will now have to be sped up.
The founder is the glue which holds WPP together. but the great communicator needs to recognise that the time for change is upon him. Nex steps THeReSA May has been vocal about Fintech, arguing that britain is at the core of the revolution changing the delivery of financial services.
yet each time the uK builds a substantial presence, the maturing company is sold off. earlier this year global payments group Worldpay was swallowed by American rival Vantiv. More recently, the chicago Mercantile exchange has swooped in and is offering £3.9bn to buy up electronic broker Nex. it has sought to pacify any opposition by promising the european headquarters would be in london.
That may be very satisfying in the context of brexit, but decisions about its future will still be taken in chicago. So far ,no binding promises on jobs, software development or anything else have been extracted by the Government.
As noted here before Nex would have been an ideal buy for the london Stock exchange. And Nex founder Michael Spencer an entrepreneurial replacement for beleaguered lSe chairman Donald brydon. Saving Intu THeRe is the first sign of weakening in Hammerson’s determination to press ahead with its sweetheart deal with Trafford centre owner intu.
Hammerson says it is waiting to see the colour of French intruder Klepierre’s cash before publishing its offer. if Hammerson is serious about being the uK’s retail champion it should end the pretence of a merger of near equals and find a way of making the intu deal more attractive to its shareholders and thwarting the overseas predator.
Highly paid Hammerson advisers Deutsche, JP Morgan cazenove and lazard need to find a way of tying the intu knot and quick.