WPP Plc Chief Executive Martin Sorrell is resigning after 33 years, following allegations of personal misconduct and misuse of company assets, marking an abrupt end to a storied career at the top of the advertising industry.
Sorrell, 73, will step aside immediately, according to a statement late Saturday by London-based WPP. Chairman Roberto Quarta becomes executive chairman until the appointment of a new CEO, while Mark Read, who heads WPP agency Wunderman, and Andrew Scott, WPP's corporate development director, become joint chief operating officers.
It took Sorrell decades to turn a wire shopping basket manufacturer into the world's largest advertising company, a colossus of more than 400 agencies across 112 countries, counting 200,000 employees. His fall from grace took less than a month after WPP announced April 3 that it was investigating the allegations.
The resignation preempts what could have been an inglorious departure for someone who was the public face of the advertising industry writ large. Sorrell was set to join the rest of the board early next week for scheduled meetings ahead of the company's quarterly results, making a quick resolution of the probe almost inevitable.
The investigation into Sorrell has now concluded, WPP said, reiterating that the amounts weren't material. Sorrell has denied the allegations, details of which have yet to publicly surface.
"It's favorable for WPP that the issue was resolved fast enough that it wouldn't have become a distraction, and the interim leadership choice looks like a positive move as well," said Brian Wieser, a media analyst at Pivotal Research LLC, by email. "However, there will be great interest in resolving the full-time CEO role as soon as possible."
Sorrell's 1985 investment in Wire & Plastic Products and string of acquisitions of advertising companies that followed effectively founded WPP, making him an executive seen by some as irreplaceable for his direct access to clients and active hand on a sprawling network of agencies.
For years, the board supported his outsize pay packages amid shareholder complaints because he delivered. He earned about 200 million pounds ($284 million) over the last five years, largely due to a lucrative performance-related bonus package.
But beyond the investigation that leaked this month, there were other signs Sorrell was losing his magic touch. WPP's shares have lost a third of their value of the past year — far more than rivals facing the same market challenges of reduced ad spending and competition from web giants — as its financial guidance has repeatedly proved too optimistic.
WPP on March 1 lowered its long-term profit outlook after reporting its worst annual performance since the financial crisis, capping a string of disappointments that put the ad industry's elder statesman on the defensive.
The probe served to intensify scrutiny on Sorrell and WPP's succession planning, long criticized by investors as being insufficient, prompting speculation that a CEO long seen as unstoppable might be forced to step aside.
Sorrell will be treated as having retired, based on the directors' compensation policy, the company said. His share awards will be prorated in line with the plan rules and will vest over the next five years, to the extent that performance targets are met. Sorrell is one of the largest shareholders of WPP, with a 1.46 percent stake, according to data compiled by Bloomberg.
"Mark and Andrew are both highly accomplished and experienced executives who have the board's complete confidence," Quarta said in an emailed note to employees, a copy of which was seen by Bloomberg. Read will be responsible for clients, operating companies and people, while Scott will focus on financial and operational performance and the ongoing reorganization of the group's portfolio, he said.