April 16, 2018 / 7:01 AM / 5 months ago

RPT-Ad king Sorrell's abdication leaves WPP at crossroads

(Repeats Sunday’s story with no changes to text)

* CEO quits after investigation into misconduct

* Leaves the group at a time of huge change

* Sorrell became high profile, highly paid CEO

By Kate Holton

LONDON, April 15 (Reuters) - Martin Sorrell’s sudden exit from WPP marks a shocking end to the career of a chief executive who through sheer force of personality made it the world’s biggest advertising firm.

WPP said in early April it had appointed lawyers to investigate a whistleblower’s allegation of personal misconduct against Sorrell, who over 33 years turned a two-man outfit into one of Britain’s biggest companies present in 112 countries.

The 73-year-old said on Saturday he was standing down, departing at a crucial time for WPP which has seen its share price fall 30 percent this year due to lower client spending, contract losses and a growing threat from Google and Facebook.

“I shall miss all of you greatly,” he wrote in an email to staff. “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.”

WPP did not give any details of the allegation and Sorrell denied the charges, initially saying that he understood the need to investigate. However, when the matter made it into the Wall Street Journal he told friends he thought it was being used as a weapon to force him out, one source said.

A former rival chief executive and a current CEO told Reuters last week that the fact Sorrell was under investigation showed how the dynamic within WPP had changed.

“To me it’s not actually about whether he did anything wrong but it’s the fact that three years ago the board would not even have gone down this path,” the former CEO said. “Martin was all powerful and WPP without Martin was not worth thinking about.”

MAKING A NAME

The son of an electronics retailer who was educated at the University of Cambridge, Sorrell made his name as the finance director of the start-up British ad agency Saatchi & Saatchi.

He took centre stage in 1985, buying a stake in a small manufacturing firm Wire and Plastic Products Plc to use it as a public vehicle to buy communications groups around the world.

Within a few years he had sealed a string of takeovers, snapping up such storied creative agencies as J. Walter Thompson and Ogilvy before moving into the cash cow of media planning and buying by creating Group M. Market-research firms and public relations groups such as Finsbury followed.

Known for a ferocious work ethic and microscopic attention to detail, Sorrell built up the group by pitching aggressively for work, often leading the charge himself and going above the heads of marketing officers to deal directly with their bosses.

The role meant Sorrell became an authority not just on advertising but on the global economy and an ever present voice on the media and at events such as Davos.

Respected by his peers, he was however shown little affection by them in the ego-driven ad business and was sometimes dismissed as a “beancounter” because of his financial rather than advertising background.

David Ogilvy famously referred to Sorrell as an “odious little jerk” when the WPP CEO sought to buy his company. The two ad men later made up and Sorrell signed off WPP’s annual report that year as “OLJ”.

“He is so brutally competitive,” the former CEO said. “He is such a competitor and he can get so angry when he loses.”

Many executives recount stories of the CEO taking contract losses personally, including one who told Reuters how Sorrell had shared an hour’s car journey in complete silence after his rival mentioned an account he had recently won from WPP.

Sorrell sparred repeatedly with the long-time boss of French rival Publicis, Maurice Levy, and enjoyed pointing out to journalists the failings of his rivals.

His combative style earned respect from the senior staff who worked for him however. One New York-based executive told Reuters how, on a night out, senior executives would all email Sorrell at exactly the same time to see who he would respond to first.

“He has an astounding grasp of detail if you consider the scale of the enterprise,” said another executive who knew Sorrell professionally for many decades. “It’s practically a stage show.”

The success also brought great wealth for the father of four, with the perma-tanned executive earning around 200 million pounds in the last five years alone due to a performance-linked bonus scheme that angered many shareholders.

BACK TO THE FUTURE

CEOs and executives, who asked not to be named, lamented that Sorrell would not get the chance to reposition WPP, which in March posted its weakest results since the financial crash.

Whoever takes over will have to decide whether the group of 200,000 people should remain in its current form.

Having run the agencies as separate companies for years to stimulate competition, WPP had started to break down the barriers to appease clients who found it unwieldy and unsuited to the digital age where clients could create their own content and place it directly on Google and Facebook.

Brian Wieser, advertising analyst at Pivotal Research, said WPP had the right assets but it had not packaged them properly in recent years and the fact it was more fragmented than Omnicom and Publicis meant it was now harder to reposition.

The initial task will fall to Chairman Roberto Quarta, who described Sorrell as the “driving force” behind WPP, and executives Mark Read and Andrew Scott who will be joint chief operating officers while the company seeks a new CEO.

Sorrell told staff that WPP had come through difficult times before and would do so again, saying he would be available to anyone who wanted advice.

“For the past 33 years, I have spent every single day thinking about the future of WPP,” he said. “Good fortune and Godspeed to all of you. Now, Back to the Future.” ( Editing by Alexander Smith)

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