Sir Martin Sorrell, who reshaped the advertising business over the past four decades, stepped down Saturday as CEO of WPP, the ad and media agency giant he built through a series of acquisitions.
Sorrell, one of the industry’s most outspoken leaders, had been under investigation by the company for allegations of misconduct. WPP said the investigation concluded and that the allegations did not involve amounts that were material.
Robert Quarta, chairman of WPP, becomes executive chairman until a new CEO is appointed. Mark Read, CEO of Wunderman and WPP Digital, and Andrew Scott, WPP corporate development director and chief operating officer, Europe, were appointed as joint COOs of WPP.
Sorrell’s departure was preceded by news that Irwin Gotlieb, one of the most powerful and respected executives on Madison Avenue, was retiring as global chairman of WPP’s media buying unit, GroupM.
“Obviously I am sad to leave WPP after 33 years,” Sorrell said in a statement.
“It has been a passion, focus and source of energy for so long. However, I believe it is in the best interests of the business if I step down now. 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 capitalize on the geographic and functional opportunities,” Sorrell said. “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.”
Sorrell began transforming the world of advertising as finance chief for the Saatchi brothers, who launched the British invasion of Madison Avenue, buying established ad agencies like Compton Advertising and Ted Bates.
Staking out on his own, Sorrell acquired control of shopping cart maker WPP Plc and used it to buy giant agencies including J. Walter Thompson, Ogilvy & Mather and Young & Rubicam. Their media departments became GroupM media agencies such as MediaVest and Mindshare.
Analyst Brian Wieser of Pivotal Research said he was maintaining his buy rating on WPP stock in the wake of Sorrell’s resignation.
“On its face, Sorrell’s departure is negative considering how involved he has been in the company and how instrumental he has been in assembling the assets WPP has today. Any executive filling Sorrell’s shoes needs to orchestrate assets across the holding company and doing so is a challenge in a fragmented federation of businesses such as those which exist within WPP,” Wieser said in a note Sunday.
“It could very well be that anyone who might follow Sorrell on a full-time basis would bring new ideas to the holding company and lead the rebound that we think will eventually occur. Further, as WPP may have many of the industry’s best assets (because of the inclusion of Kantar, a decent focus on marketing technology and a superior geographic mix relative to peers), it was already evolving its long-term direction. A new leader may continue with the company’s existing strategy, although they might refine how that strategy is articulated," he said.
“Alternately, we would not be surprised if some assets were pruned to make the company more manageable or perhaps invest to more clearly establish a focus in certain areas that are likely to support improved long-term growth trends,” Wieser said.