A jagged new front has opened in the war between WPP and its founder and former CEO, Sir Martin Sorrell.
WPP, the world’s largest advertising group, fired the first round via a handful of lines in its 2020 annual report, denying Sir Martin payment of long-term incentives now due.
The new dispute centres on Sir Martin's alleged conduct at least three years ago. The company cited what is called malus provisions in the profit sharing agreement. This term is widely used to refer to claw back clauses.
Sorrell, who reportedly still has a significant stake in WPP, left as CEO in April 2018, with misconduct allegations which he has rejected many times. He was replaced by Mark Read in September the same year.
The company now says Sir Martin disclosed “confidential information” when he was at the company. WPP did not detail what type of information it was referring to.
In 2018, when Sir Martin left WPP, he accused those "at the very top of the company" of leaking details of his departure to the Wall Street Journal.
Sir Martin, now founder and head of the fast-growing pure-play digital advertising group S4 Capital, says WPP appears to be driven by “blind rage” in making its latest allegation.
The board of directors, in the WPP annual report, says its compensation committee “exercised its discretion” to deny profit sharing plan grants to Sir Martin for 2016 and 2017.
The company’s annual report says the awards “will lapse as a result of Sir Martin Sorrell’s disclosure of confidential information belonging to WPP and certain of its clients to the media during his tenure as a WPP director”.
Sir Martin has referred the matter to his lawyers.
“It is a bit rich that they’re accusing me of leaks, given their own over the last three years,” he told AdNews.
“They’ve had to go back several years to try and find an excuse to deny me what’s mine.
“It seems like blind rage is driving them, not peanut or even coconut envy.”
The amount of money at stake isn’t known. Some reports put the sum at £600,000. Sir Martin received payouts for 2014 and 2015, totalling more than £3 million.
Read, the current CEO, had fixed pay of £1.1 million in 2020. His profit share, to be determined in future years, could be up to 400% of base salary (4 X £910,000).
S4 Capital’s already stellar growth -- full year revenue up almost 60% to £342.7 million in 2020 -- is being further fueled by an acceleration to digital advertising during the pandemic. The London Stock Exchange-listed company has a market capital of around £3 billion.
WPP last week reported a return to like-for-like growth in all business segments and most major markets as the advertising world emerged from the pandemic.
The March quarter results showed revenue up 1.8% and like-for-like growth of 6.3% to $US2.9 billion.
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