WPP CEO Martin Sorrell Steps Down -- 2nd Update
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.