Sir Martin Sorrell has resigned from WPP, the world’s largest advertising group, ahead of the findings of an investigation into alleged personal misconduct.
The 73-year-old, who acquired a small Kent-based maker of wire baskets in 1985 and built it into the world’s largest marketing services group, told staff that for him WPP and its future is “more important than a matter of life or death”.
“As I look ahead, I see that the current disruption we are experiencing is simply putting too much unnecessary pressure on the business,” said Sorrell. “That is why I have decided that in your interest, in the interest of our clients, in the interest of all share owners, both big and small, and in the interest of all our other stakeholders, it is best for me to step aside.
“As a founder, I can say that WPP is not just a matter of life or death, it was, is and will be more important than that. Good fortune and Godspeed to all of you … now Back to the Future.”
Sorrell, the longest-serving FTSE 100 chief executive, has been under increasing pressure since the allegation of personal misconduct was made public by WPP’s board this month.
WPP’s board, which had appointed independent legal counsel to investigate the allegation, was expected to receive the findings of the investigation at the end of next week.
Roberto Quarta, the WPP chairman, has taken the role of executive chairman until a replacement for Sorrell can be found.
WPP has appointed two longstanding WPP executives from ad group Wunderman – Mark Read and Andrew Scott – as joint chief operating officers to run day-to-day operations.
WPP said Sorrell would be “available to assist with the transition”.
Sorrell himself said: “For the past 33 years, I have spent every single day thinking about the future of WPP. We have had a succession plan in place for some time. We have weathered difficult storms in the past. And our highly talented people have always won through, always. As some of you know, my family has expanded recently, WPP will always be my baby too.”
Quarta has said there is an “exceptional team of potential candidates” from WPP’s top management, as well as a “constantly refined list of external candidates”. However, investors and analysts believe that, given the scale of WPP, Sorrell’s successor must be an external candidate.
WPP employs more than 200,000 staff in 400 separate advertising businesses working in more than 3,000 offices in 112 countries.
Whoever takes on WPP will find keeping the sprawling empire – autocratically run with an iron hand with what has been dubbed “Sorrellcentricity” – intact perhaps an impossible task.
Observers believe that Sorrell’s departure will have rapid and catastrophic ramifications for WPP and the wider global advertising eco-system.
“Martin falls, WPP falls,” said one senior advertising executive at a rival global holding company. “There will be chaos. The industry is not prepared, clients are not prepared. In the short term there will be chaos. The advertising industry is run like show business. It’s all about short-termism and that’s the problem.”
Sorrell has come under increasing pressure in the last year as WPP, which has a market capitalisation of £15bn, has struggled resulting in its share price falling more than a third – wiping £9bn off the value of the business.
WPP recently reported its worst performance since the advertising recession in 2009, which Sorrell described as “not a pretty year”.
Sorrell is one of the UK’s best-paid business leaders, earning more than £200m from pay and lucrative – and highly controversial – reward schemes in the last five years alone. His £70m payout in 2015 was one of the biggest in UK corporate history.
In 2012, an investor rebellion in the so-called “shareholder spring” saw 60% of disgruntled share owners vote against Sorrell’s pay deal, a humbling result and at the time one of the largest revolts in UK plc history.
Sorrell and his family trust owns a stake of about 1.8% in WPP, worth about £250m.
Martin Sorrell’s full statement
To everyone at WPP,
For the past 33 years, I have spent every single day thinking about the future of WPP.
Over those decades, our family has grown and prospered.
We welcomed J. Walter Thompson, Ogilvy, Young & Rubicam, Grey, 24/7 Real Media, Taylor Nelson Sofres, among so many others.
We created GroupM, including Xaxis and Essence.
We put the focus on Asia-Pacific, Latin America, Africa and the Middle East and Central Eastern Europe, the home of the next billion consumers. We embarked on the early development of digital capabilities; and the evolution of a firm-wide integrated client and country-centered approach.
Our holding company was recognized as the world’s best and most effective through the Cannes Lions and Effie Awards year after year after year.
We pioneered Atticus Awards for original written thinking… the WPP Fellowship Awards to recognize promising talent… the Partnership and Practice Awards for client endorsed integrated market and case studies.
Our Stream digital conferences have attracted the best in the digital business for more than a decade.
Our Annual Sustainability and Pro Bono Reports highlight the unique social, environmental and public policy work that we do day in, day out across the globe.
As I look ahead, I see that the current disruption we are experiencing is simply putting too much unnecessary pressure on the business, our over 200,000 people and their 500,000 or so dependants, and the clients we serve in 112 countries.
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.
We have had a succession plan in place for some time. A new generation of management, led by Mark Read and Andrew Scott (who have each been at WPP for approximately 20 years), are well qualified and experienced in the board’s opinion, to deal with the geographic and technological opportunities and challenges our industry faces.
We have weathered difficult storms in the past. And our highly talented people have always won through, always.
Nobody, either direct competitors or newly-minted ones can beat the WPP team, as long as you work closely together, whether by client and/or country or digitally.
In the coming period, I will be available to the board and any of you, should you want help with anything, anywhere. I shall miss all of you greatly. You have given me such excitement and energy and I wanted to thank you for everything you have done and will do for WPP and me.
As some of you know, my family has expanded recently, WPP will always be my baby too.
As a founder, I can say that WPP is not just a matter of life or death, it was, is and will be more important than that. Good fortune and Godspeed to all of you…now Back to the Future.
Support for this article was provided by theguardian