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WPP shares slide on Sir Martin Sorrell's exit WPP must make misconduct probe public, says Vince Cable
(about 2 hours later)
Shares in WPP have fallen by 5.5% following the departure of chief executive Sir Martin Sorrell and as the advertising giant began a search for his replacement. Liberal Democrat leader Sir Vince Cable has called on WPP to disclose details of alleged misconduct allegations against Sir Martin Sorrell.
WPP announced late on Saturday night that Sir Martin, who has led the company for 33 years, would step down. WPP said at the weekend that its former chief executive had stepped down, and that an investigation had "concluded".
But no further details about the claims of personal misconduct and misuse of company money were disclosed.
Sir Vince accused WPP of sweeping the claims "under the carpet", saying there was a "real lack of transparency".
He said Sir Martin was a "highly respected figure", but added that "any investigations done by the company should be made public".
WPP said earlier this month that it was investigating the claims, which Sir Martin has strongly denied.
On Saturday, at the same time Sir Martin's immediate departure was announced, WPP also said that the investigation had ended, adding: "The allegation did not involve amounts that are material."
The company says it does not intend to publish a report detailing its findings.
A spokesman for WPP told the BBC: "As soon as the allegations were reported in the media, we confirmed in a formal statement that there was an independent investigation in process regarding allegations of personal misconduct.
"That investigation has now concluded and Sir Martin Sorrell has stepped down. WPP will be making no further comment."
Moving forward
Commenting on the decision to end the probe, Paul Richards, director in media research at Numis Securities, said: "Everyone is looking to move forward. It is an ignominious end to a remarkable career.
"Perhaps the report would have cleared his name. As Sir Martin said, he rejected the allegation 'unreservedly'."
Brian Wieser, a senior analyst at Pivotal, told BBC Radio 4's Today programme that it is unlikely that the public will find out exactly why Sir Martin was being investigated.
"A lot of people will want to know what it was, just because a lot of people do know Sir Martin. But at a pragmatic business level, it's more about who's going to succeed him, what's the shape of the company," he said.
Shares in WPP fell 5.22% to £11.25 on Monday as the advertising giant began a search for Sir Martin's replacement.
Despite his exit, he could still make £20m from WPP shares over five years.Despite his exit, he could still make £20m from WPP shares over five years.
While Sir Martin gets no payoff or pension, he is entitled to share bonus awards.While Sir Martin gets no payoff or pension, he is entitled to share bonus awards.
The maximum number of shares Sir Martin may be awarded if WPP meets certain targets is 1.65 million.The maximum number of shares Sir Martin may be awarded if WPP meets certain targets is 1.65 million.
They are worth about £19m.They are worth about £19m.
Sir Martin and his family own about 2% of the company - a stake worth about £300m.Sir Martin and his family own about 2% of the company - a stake worth about £300m.
After peaking at almost £19 in February 2017, WPP shares have since fallen sharply and were trading at £11.23 on Monday.
Sir Martin stepped down after it emerged that WPP was investigating an allegation of misconduct against him.
At the weekend, WPP said that the investigation had concluded, adding: "The allegation did not involve amounts that are material."
The company does not intend to publish a report detailing its findings.
Commenting on the decision to end the probe, Paul Richards, director in media research at Numis Securities, said: "Everyone is looking to move forward. It is an ignominious end to a remarkable career.
"Perhaps the report would have cleared his name. As Sir Martin said, he rejected the allegation 'unreservedly'."
Some analysts believe WPP, which comprises about 400 separate businesses, including Ogilvy & Mather, Kantar Group, Hogarth Worldwide and Young & Rubicam, could be broken up.Some analysts believe WPP, which comprises about 400 separate businesses, including Ogilvy & Mather, Kantar Group, Hogarth Worldwide and Young & Rubicam, could be broken up.
Alex deGroote, at Cenkos Securities, said divisions such as Kantar, a market research business, could be sold and be worth as much as £3.5bn. Alex de Groote, at Cenkos Securities, said divisions such as Kantar, a market research business, could be sold and be worth as much as £3.5bn.
Marc Mendoza, founder of 360 Degree Media, told BBC Radio 4's Today programme a sell-off was inevitable. Marc Mendoza, founder of 360 Degree Media, told Today a sell-off was inevitable.
"When you're that strong a personality leader within that field and you command such loyalty - a little bit of fear with it as well - you're impossible to replace with one individual, so the parts must be sold off now to create value for shareholders.""When you're that strong a personality leader within that field and you command such loyalty - a little bit of fear with it as well - you're impossible to replace with one individual, so the parts must be sold off now to create value for shareholders."
Meanwhile, the Financial Times reported that the 73-year-old is free to start a rival company because he never had a non-compete agreement, according to WPP insiders.
Roberto Quarta will become WPP's executive chairman and Mark Read, the boss of WPP Digital and Andrew Scott, the chief operating officer for Europe have been appointed as joint chief operating officers.Roberto Quarta will become WPP's executive chairman and Mark Read, the boss of WPP Digital and Andrew Scott, the chief operating officer for Europe have been appointed as joint chief operating officers.
In March WPP reported its weakest annual results since the financial crisis, with Sir Martin describing 2017 as "not a pretty year" for the company even though pre-tax profits were just over £2bn.In March WPP reported its weakest annual results since the financial crisis, with Sir Martin describing 2017 as "not a pretty year" for the company even though pre-tax profits were just over £2bn.
Brian Wieser, a senior analyst at Pivotal, told Today that it is unlikely that we will find out exactly why Sir Martin was being investigated. It will report its results for the first quarter on 30 April.
"A lot of people will want to know what it was, just because a lot of people do know Sir Martin, but at a pragmatic business level, it's more about who's going to succeed him, what's the shape of the company," he said.
Mr Wieser said that the advertising industry as a whole had been hit hard by "package-based marketers" seeking to "cut costs aggressively".Mr Wieser said that the advertising industry as a whole had been hit hard by "package-based marketers" seeking to "cut costs aggressively".
He said: "WPP's been hit harder than most - they had some unusually large account losses. AT&T was one, Volkswagen was another. But there is nothing that far away from the overall industry average that was affecting WPP at the time."He said: "WPP's been hit harder than most - they had some unusually large account losses. AT&T was one, Volkswagen was another. But there is nothing that far away from the overall industry average that was affecting WPP at the time."