Subject of Sorrell probe protected by data laws
WPP HAS claimed that it cannot reveal the subject of the investigation that triggered the downfall of chief executive Martin Sorrell because of data protection law.
As the advertising giant prepares to face shareholders at its AGM on Wednesday, it said that as well as a confidentiality agreement with the 73-year-old it is bound by EU laws designed to guard privacy.
Data protection covers information concerning an individual’s racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, genetic data, biometric data, data concerning health, sex life or sexual orientation.
WPP chairman Roberto Quarta faces a revolt over the company’s lack of disclosure around the investigation that prompted Sir Martin’s exit in April after 30 years at the helm.
Some shareholder groups have called for a vote against Mr Quarta, who has become executive chairman while WPP searches for a new chief executive, over the company’s failure to disclose the allegations behind Sir Martin’s sudden depature. He being treated as a “good leaver” after resigning at the conclusion of the investigation, entitling him to continued Long-term Incentive Payments (LTIPS) payments of up to £20m.
A WPP spokesman said last night: “WPP has been advised that it cannot disclose details of the allegations against Sir Martin Sorrell because it is prohibited by data protection law from giving such details.
“Martin chose to resign at the conclusion of the investigation by independent legal counsel.”
All that has been disclosed by WPP is that Sir Martin was accused of personal misconduct and misuse of company funds. His spokesman said he “strenuously denies” the allegations last night.
WPP and Sir Martin have signed a confidentiality deal.
Concerns over the terms of his exit have been further stoked by his swift establishment of a new listed advertising group, S4 Capital, and the lack of a non-compete clause in Sir Martin’s WPP contract.
Sir Martin’s spokesman said: “Sir Martin entered into a non-disclosure agreement at the time of his departure which he has and will continue to respect. He has no further comment.”
WPP added: “He remains entitled to his performance-related LTIP awards up until the date of his retirement of April 14 2018 under the terms of his contract of employment entered into in 2008, which pre-dated any of the current members of the board.
“The allegations did not amount to gross misconduct as defined under the terms of the contract. Should he ever be in breach of his confidentiality undertakings contained in his employment contract, he could jeopardise his remaining LTIP entitlement.”
Mr Quarta is expected to survive the vote on Wednesday as the City’s most influential shareholder advisory body, ISS, has urged clients to support him.
ISS said that “although a concern, the absence of disclosure is not seen to itself imply an underlying failure in governance”.
Sir Martin’s controversial exit came at a time of severe pressure on WPP as investors increasingly raised doubt over the ability of the sprawling global empire he constructed to compete in a rapidly shifting advertising landscape.
Mr Quarta has triggered a full review of the structure that is expected to lead to sales of minority stakes in businesses such as the youth media brand Vice.