April 9, 2018 / 3:09 PM / 12 days ago

WPP CEO Sorrell could learn his fate next week

LONDON (Reuters) - WPP founder Martin Sorrell could find out as early as next week whether he can remain at the helm of the world’s biggest advertising company but is likely to struggle to work with its board even if he is cleared of wrongdoing, sources said.

FILE PHOTO: Martin Sorrell, chairman and chief executive officer of WPP, the world's largest advertising company, speaks at the Confederation of British Industry's (CBI) annual conference in London, Britain November 21, 2016. REUTERS/Stefan Wermuth/File Photo

WPP sent shockwaves through the industry last week when it said it was investigating alleged misconduct by Sorrell, raising the prospect that the 73-year-old could step down after more than 30 years in charge. Sorrell denies the allegations.

A source close to the company who spoke on condition of anonymity said the result of the investigation by independent counsel was likely to come next week.

However a second source who is familiar with Sorrell’s thinking questioned whether it would be business as usual if the CEO was exonerated because he is unhappy about how the situation has been handled.

“When there is a family bust up life is never the same again,” the second source said, declining to be named due to the sensitivity of the situation. “Kissing and making up would seem to be a very challenging concept after this.”

WPP declined to comment.

The longest-serving CEO on the FTSE 100 blue chip index, Sorrell built WPP into the world’s biggest advertising group by three decades of relentless dealmaking and is one of the most high profile, and best paid, executives in Britain.

In his time the group has expanded to own top creative agencies including J. Walter Thompson and Young & Rubicam, as well as media planners and buyers and market-research and public relations groups such as Finsbury.

Present in 112 countries and employing more than 200,000 people, WPP provides services to clients including Ford, Unilever, P&G and a string of major corporations.

BREAKING UP THE BUSINESS?

It largely outperformed its peers Omnicom, Publicis and IPG in the years that followed the financial crisis but it has been hit in the last 18 months by a downturn in consumer spending from some of its biggest clients.

Its shares are down around 30 percent this year, with the growing migration of advertising online also adding to the challenges facing the industry.

“It won’t be this week, it could be as soon as next,” the first person said on the timing of the investigation.

The uncertainty about Sorrell’s future has renewed speculation as to who would take over the top job if he left and whether the group would remain in its current form.

Analysts have speculated that WPP could sell its data management arm which provides market research to clients. Analysts at Liberum have valued the asset at around 3.5 billion pounds ($5 billion), compared with WPP’s current market valuation of 14.6 billion pounds.

In the past the WPP management has said that although the data management arm has recorded lower growth rates, it is attractive to clients who want to see the impact of their media spending, making it aligned with the rest of the group.

($1 = 0.7062 pounds)

Reporting by Kate Holton; Editing by Guy Faulconbridge/Keith Weir

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