Sir Martin Sorrell has stepped down from leading the company he built to become the world’s most dominant advertising agency.
The man behind WPP announced his “retirement” over the weekend, leaving more questions than answers in his wake.
As a recognised giant in the advertising sector, Sir Martin’s legacy is not in doubt. However, where he and his now former company now go, is up for debate.
Will he – at the age of 73 – have the drive and commitment to start again? Will WPP live on after his departure? Or is his baby set to be thrown out with the bath water?
How did we get to this?
Sir Martin has been under investigation since earlier this month for alleged person misconduct. He stepped aside temporarily as chief executive, denying any wrongdoing.
The Wall Street Journal claimed the matter related to the possible misuse of company assets, citing unnamed sources.
In a statement issued at the time, Sir Martin said: “Reports in the media have stated that WPP is investigating an allegation of financial impropriety by me, specifically as to the use of company funds.
“I reject the allegation unreservedly but recognise that the company has to investigate it. I understand that this process will be completed shortly.”
While that inquiry has now been completed and even though he gave every indication that he would be back in charge soon, Sir Martin stepped down completely on Saturday.
What did he say?
In a message to staff, he said: “The current disruption is simply putting too much unnecessary pressure on the business, our over 200,000 people and their 500,000 or so dependents, and the clients we serve in 112 countries.
“That is why I have decided that in your interest, in the interest of our clients, in the interest of all share owners, both big and small, and in the interest of all our other stakeholders, it is best for me to step aside.
“As a founder, I can say that WPP is not just a matter of life or death, it was, is and will be more important than that.”
So what happens next?
There are several theories surrounding the future of both WPP and Sir Martin.
One scenario, says the Financial Times, is that he could establish a rival firm. Quite whether he has the drive, energy and will to set out down that path 33 years after first launching WPP is another thing.
WPP said he would be treated as having retired from the company, meaning he will be eligible to receive payouts related to 1.6m shares should various performance targets be hit.
Based on current share price, that could see him earn almost £20m in share options over the next five years.
Sir Martin does not have a pension or payoff to ease his departure but he and his family do own a 2% stake in the £20bn company – more than enough capital, coupled with his reputation and contacts, to strike out on his own.
And what about WPP?
As for WPP, its immediate challenge is to identify a replacement. Roberto Quarta, the WPP chairman, will take on the role of executive chairman in the interim.
Industry commentators believe an outsider will be brought in – Jeremy Darroch, chief executive of Sky, and Andrew Robertson, chief of ad agency BBDO are two names mentioned.
Some analysts believe WPP, which comprises about 400 separate businesses, including Ogilvy & Mather, Kantar Group, Hogarth Worldwide and Young & Rubicam, could be broken up.
Kantar, which specialises in market research supermarket share among others, could be valued at £3.5bn, for example.
The business itself has been hit hard by the global advertising downturn, as the likes of Facebook and Google continue to muscle in on traditional formats such as TV, radio and elsewhere and big advertising clients slashed budgets.
In March, WPP reported its weakest annual results since the financial crisis, even though pre-tax profits were just over £2bn.