It goes from bad to worse at WPP but nobody expected an external investigation into the conduct of CEO and company founder Sir Martin Sorrell (below).
WPP said: “The Board of WPP has appointed independent counsel to conduct an investigation in response to an allegation of personal misconduct against Sir Martin Sorrell, Chief Executive Officer of WPP. The investigation is ongoing. The allegations do not involve amounts which are material to WPP.”
In another statement Sorrell 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.”
“This allegation is being investigated by a law firm. I reject the allegation unreservedly but recognise that the company has to investigate it. I understand that this process will be completed shortly.”
The report first appeared in the Wall Street Journal (a WPP client) which cited allegations of misusing company assets.
Sorrell, 73, has made plenty of enemies in his 30-odd years at the top of WPP and in the current climate allegations of any description are likely to send companies into a spin. So far he has not been suspended.
But WPP’s share price is 30 per cent down following dismal results and a number of profit warnings, the latest slipped out before Easter. An under pressure CEO’s biggest ally is a strong share price and at the moment WPP’s isn’t.
We wait to see how WPP’s shares react to the overnight news.
WPP’s shares were down just two per cent in London suggesting that (a) investors think Sorrell will survive or (b) they’re not that fussed if he doesn’t.
Any departure in the wake of this would be unbelievably messy, however. Usually in such cases there are demands for money to be paid back, which can occupy the courts for years.
When Sorrell does leave – and this will surely bring that forward whatever the investigation finds – the likeliest outcome is a break-up of WPP.