Sub­ject of Sor­rell probe pro­tected by data laws

The Sunday Telegraph - Money & Business - - Front Page - By Christo­pher Wil­liams

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.

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