WPP’s Sir Martin Sorrell Resigns
As WPP's founder & CEO resigns, there is speculation over who will replace him, what Sir Martin Sorrell will do next and what this means for the future of the company.
Late on Saturday night, WPP released a statement confirming that its founder and long-standing chief executive, Sir Martin Sorrell, had quit following investigations into his alleged personal misconduct and improper use of company funds.
Sorrell, 73, stepped down before the findings of the internal investigations had been revealed, although they have since concluded that “the allegation did not involve amounts that are material,” according to the statement.
Sorrell denied any wrong-doing and WPP hasn’t commented on the allegations against him, despite him helming the global business giant for the last 33 years. The full results of the inquiry will be delivered to the WPP board next Friday, although they will not be made public (Guardian).
"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."
Who will succeed Sorrell?
Chairman Roberto Quarta has stepped in temporarily as executive chairman until a new CEO has been appointed. He is also joined by chief executive of WPP Digital, Mark Read, and WPP’s COO for Europe, Andrew Scott, who have assumed the role of joint chief operating officers in the interim.
Pictured: Mark Read (L) and Andrew Scott.
Quarta has said that there is an “exceptional team of potential candidates” from WPP’s top management, as well as a “constantly refined list of external candidates” for the company to consider.
Industry experts have speculated that perhaps Sky’s Jeremy Darroch or BBDO’s chief executive, Andrew Robertson, could possibly succeed Sorrell (FT), who has promised that he would be “available to assist with the transition,” according to the company statement.
Implications for WPP’s future
No doubt it will be a challenge filling Sorrell’s shoes. WPP had a tough year in 2017, as it competed against the rise of tech companies, reporting a dramatic fall in revenue over the course of last year, according to The Guardian.
The FT also announced that since the announcement, WPP’s shares have dropped as much as 5 per cent once London’s stock markets fired up this morning, on Monday 16 April.
With a market capitalisation of £15bn, some analysts believe that Sorrell’s departure combined with the company’s profit slump could mean that there would be more value in restructuring the company by breaking up and selling agencies like JWT, Ogilvy and Kantar Media.
“It is inevitable that this company is going to be broken up,” said Alex DeGroote, analyst at Cenkos Securities, to the FT. “We think the market research assets such as Kantar could be sold fairly quickly, which would generate £3bn-£3.5bn. This would raise other questions about the balance of the group.”
What’s next for Sorrell?
While some have viewed Sorrell’s departure as an early retirement, others have noted that Sorrell didn't have a non-compete agreement in his contract, meaning he could be free to start a new advertising venture in the future.
Sorrell stills holds shares in the company and The Guardian expects that the former chief executive could be in line to receive almost £20m in payouts from WPP over the next five years.
But the biggest question is what will happen to the WPP network, which currently employs more than 200,000 people in 400 advertising businesses across 3,000 offices in 112 countries.
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.