WPP CEO Martin Sorrell Steps Down -- 2nd Update
April 14 2018 - 7:52PM
Dow Jones News
By Nick Kostov and Suzanne Vranica
Martin Sorrell, chief executive of advertising giant WPP PLC,
has stepped down with immediate effect following the conclusion of
a company probe into an allegation of personal misconduct.
The company said Mark Read, chief executive of WPP agency
Wunderman, and Andrew Scott, WPP corporate development director and
chief operating officer, Europe, have been appointed as joint-chief
operating officers of WPP. Roberto Quarta, chairman of WPP's board,
will take on the role of executive chairman until a new CEO is
appointed
Mr. Sorrell's departure is being treated as a retirement, the
company said. The board is conducting a search for internal and
external candidates for a new CEO with "no set time frame," the
company said.
"Obviously I am sad to leave WPP after 33 years. It has been a
passion, focus and source of energy for so long," Mr. Sorrell said.
"However, I believe it is in the best interests of the business if
I step down now."
The 73-year-old Mr. Sorrell had been at the helm since he
founded the company in 1986, and he helped build it into the
largest advertising holding company in the world. It boasts a host
of blue-chip creative agencies like J. Walter Thompson and Young
& Rubicam, as well as powerhouse media-buyer GroupM.
On April 3, WPP said an independent counsel had been appointed
to look into "an allegation of personal misconduct" after The Wall
Street Journal reported on the probe. The Journal reported that the
board was looking into whether Mr. Sorrell misused company assets.
WPP said any possible misconduct didn't involve sums that were
material to the company. Mr. Sorrell at the time issued his own
statement denying any financial impropriety.
"As I look ahead, I see that the current disruption we are
experiencing is simply putting too much unnecessary pressure on the
business," Mr. Sorrell said in a letter to WPP staff Saturday.
"That is why I have decided that in your interest, in the
interest of our clients, in the interest of all shareowners, both
big and small, and in the interest of all our other stakeholders,
it is best for me to step aside," he said.
The company said Saturday the probe wasn't related to client
business, adding the investigation has concluded and its details
would remain confidential.
"The investigation had no connection to or impact on our
operations or clients. Our work for clients is unaffected and
continues uninterrupted, " WPP said.
Mr. Sorrell's successor will be left to navigate difficult
straits. In its most recent quarter, WPP logged its worst
performance since the financial crisis, as net sales fell slightly
compared with a year earlier. The firm said it is setting budgets
for 2018 on the assumption of no growth in revenue and net sales.
WPP's stock has dropped more than 30% over the past 12 months
following a string of disappointing financial results.
Across the industry, the business model Mr. Sorrell pioneered by
snapping up an alphabet soup of ad agencies is being called into
question. WPP and its rivals have grappled with a scandal over the
transparency of the industry's ad-buying practices. At the same
time, the sector is dealing with the power of tech giants Facebook
and Google, which allow marketers to bypass agencies and place ads
directly on their platforms.
WPP executives have said they couldn't imagine the company
without Mr. Sorrell, given the huge role he has played, cutting
deals and micromanaging its far-flung operations. Mr. Sorrell has
embedded himself into every aspect of the business from coming up
with M&A targets to wooing marketers.
Write to Nick Kostov at Nick.Kostov@wsj.com and Suzanne Vranica
at suzanne.vranica@wsj.com
(END) Dow Jones Newswires
April 14, 2018 19:37 ET (23:37 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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