Martin Sorrell has stepped down from his roll as WPP CEO after more than 30 years at the helm of the conglomerate, which includes design consultancies such as Design Bridge, Landor, Fitch and Coley Porter Bell.
Many of the WPP design consultancies were tight-lipped today as they reflected on the news, which broke publicly over the weekend.
The immediate effect of Sorrell stepping down was that the WPP share price took a hit, with stock 5% lower in Monday trading.
Share price dip and internal investigation
There are more than 400 firms making up WPP, which has suffered a turbulent year in 2017, with £9bn being wiped off its share price.
Sorrell’s departure coincides with an internal investigation into personal misconduct, specifically around financial impropriety – an allegation which he denies.
One of the WPP groups Superunion was founded in January after WPP merged Brand Union, Lambie Nairn, The Partners, Addison and Vbat.
Superunion chief creative officer Greg Quinton, previously held the same role at The Partners. Speaking to Design Week, Quinton says: “WPP is Martin’s creation so we are obviously very sad for him personally. His proud legacy is quite simply, building the world’s largest advertising group and a creative force.
“He has helped thousands of companies use creativity to build better businesses. He can connect people, companies and opportunities in milliseconds.”
Sorrell’s departure has taken place with immediate effect. WPP chairman Roberto Quarta becomes executive chairman while a CEO replacement is sought. WPP Digital CEO Mark Read and WPP corporate development director and chief operating officer of Europe, Andrew Scott, have been appointed as joint chief operating officers.
“It is in the best interests of the business if I step down now,” Sorrell said in a statement. “I leave the company in very good hands as the board knows. Mark and Andrew and the management team at all levels have the knowledge and abilities to take WPP to even greater heights and capitalise on the geographic and functional opportunities.
“I will particularly miss the daily interactions with everyone across the world and want to thank them and their families for all they have done, and will do, for WPP”.
Uncertainty around future
Sorrell – who is being treated as if he had retired – stands to collect up to around £18 million over the next five years, which is part of his employment agreement and director’s compensation policy.
The maximum Sorrell could stand to gain from the “Executive Performance Share Plan” is 1.65 million shares.
A WPP spokesman says, “The eventual outcome is likely to fall a long way short of this number since the Company has to perform at the max to achieve the 1.65m shares and the last 18 months have seen significant underperformance.”
Some rumours are circulating over whether WPP might be broken up, given the combination of a dip in share value over the last year and now Sorrell’s departure. The spokesman says that this idea “emanated from a broker’s research note, which was issued in the last 10 days and does not reflect the Board’s view on the way forward for the Group”.
Sorrell acquired a controlling stake in Wire and Plastic Products in 1985 when it was a small company based in Kent manufacturing shopping baskets and teapots. Today it employs over 200,000 people in 112 countries.