Martin Sorrell could quit WPP following misconduct claim

Sir Martin Sorrell’s reign as chief executive of WPP could end soon as the advertising group has hired a law firm to investigate an allegation of personal misconduct against him.

Sorrell is one of Britain’s best-known and most highly paid business leaders. He is also the longest-serving FTSE-100 chief executive and has run the sprawling WPP empire since starting the business in 1985.

In the last five years alone Sorrell has been paid well over £200m for running the world’s largest advertising group thanks to lucrative and highly controversial reward schemes. His £70m payout in 2015 was one of the biggest in UK corporate history.

The investigation will increase pressure on Sorrell, who is already feeling the strain as WPP’s share price has tumbled almost 40% in the last year to its lowest point since 2013.

The price slump has wiped £9bn off the value of the business, which owns 406 separate advertising and marketing firms in more than 100 countries, including top-flight brands such as Ogilvy & Mather and J Walter Thompson. It has 134,000 staff.

WPP recently reported its worst performance since the advertising recession in 2009, which Sorrell described as “not a pretty year”.

The 73-year-old “unreservedly” denied the misconduct allegation, which involves the improper use of company funds and allegations of improper personal behaviour.

“The board of WPP has appointed independent counsel to conduct an investigation in response to an allegation of personal misconduct against Sir Martin Sorrel, chief executive officer of WPP,” the company said.

“The investigation is ongoing. The allegations do not involve amounts which are material to WPP.”

Sorrell, who is on a rare holiday, said he rejected the allegation but understood that the company had to investigate the matter.

“WPP is investigating an allegation of financial impropriety by me, specifically as to the use of company funds,” Sorrell said.

“This allegation is being investigated by a law firm. I reject the allegation unreservedly but recognise that the company has to investigate it. I understand that this process will be completed shortly. Obviously, I shall play no part in the management of the investigation under way.”

WPP has called in two top law firms, Allen & Overy and Slaughter and May, to advise on the investigation.

The trouble at the top has once again put a spotlight on the issue of succession at WPP amid accusations of a “Sorrellcentricity” – the view that Sorrell runs the giant business autocratically as a personal fiefdom, dominating decision-making.

The question of who will succeed Sorrell is raised every year at the company’s shareholder meeting. Sorrell has never given any indication that he may be ready to step back.

Roberto Quarta, a US businessman hired as WPP’s chairman two years ago, has said that succession planning has intensified, becoming “even more focused and detailed”.

He said there was an “exceptional team of potential candidates” from WPP’s top management, as well as a “constantly refined list of external candidates”.

There is understood to be tension about Sorrell’s future among members of WPP’s 12-strong board, which has been heightened by the recent performance slump. At least one director is known to be agitating to oust him.

“If Sorrell were to leave the company for any reason, WPP has a relatively deep bench of talent who could pick up any slack on a near-term basis,” said Brian Wieser, an analyst at Pivotal. “A more significant issue relates to who would lead the company next and what strategic direction the company would pursue.”

WPP shares fell a further 2% in trading on Wednesday in response to the investigation.

Sorrell has denied the group’s poor recent performance was a result of his agencies being cut out of deals between advertisers and Google and Facebook.

He said WPP spent more than $6bn (£4.4bn) of its clients’ advertising and marketing money with Google, its biggest single investment, last year, a 10% rise. Facebook received about $2.1bn of its ad spend last year, a 30% rise.

Sorrell and his family trust owns a stake of about 1.8% in WPP, worth about £250m.

“As a significant share-owner, my commitment to the company, which I founded over 30 years ago, remains absolute – to our people, our clients, our shareholders and all of our many stakeholders,” Sorrell said.




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