The Purcell Room at London’s Southbank Centre has been the venue for many fine performances over the years, from David Bowie and Marianne Faithfull to Daniel Barenboim, JK Rowling and Margaret Atwood.
Today, at noon, it’s the turn of the WPP board to take the stage at the wood-panelled auditorium as they face a showdown with unhappy shareholders at the media giant’s annual meeting.
Missing from the line-up will, of course, be Sir Martin Sorrell, the septuagenarian workaholic who built WPP over the course of three decades from a tiny manufacturer of wire baskets into the world’s biggest advertising group.
Sorrell’s abrupt departure from WPP less than two months ago was shrouded in secrecy and, officially, has remained a mystery. At the time, the City and shareholders were simply told of unspecified allegations of “misconduct” by Sorrell, which he denied. The allegations were investigated by the board but would, the company insisted, remain secret.
It's very hard to keep a secret in the City, or anywhere else these days, however, and the salacious rumours that have been doing the rounds in the advertising world for weeks have now appeared in print – just in time for the agm – courtesy of the Financial Times.
Intrigue and allegations
At the centre of what the paper billed as “a tangled web of boardroom intrigue and explosive allegations” it detailed claims by two WPP employees that they saw Sorrell visit the Mayfair premises of a sex worker on the eve of last year’s annual meeting.
Noting that despite his lavish pay package, Sorrell had a habit of using petty cash for day-to-day expenses, the paper said the alleged visit to one of London’s oldest red-light districts “appeared to fit a pattern where [Sorrell’s] personal and company expenses were hard to separate.”
Sorrell is further portrayed as an ill-tempered bully whose “brutal and inhuman” treatment of his junior colleagues and assistants went unchecked by the board, which appeared unable or unwilling to rein him in.
The former WPP boss strenuously denies all allegations and the board, headed by Roberto Quarta, has steadfastly refused to provide any detail about the alleged wrongdoing. Both sides say they are bound by confidentiality agreements.
Performance-related payouts
The problem for the WPP board, and for Sorrell, is that investors are determined to get answers, particularly as the former chief executive – who has already collected more than £200 million (€228 million) from WPP over the past five years – is entitled to a further £20 million in performance-related payouts in the future.
This is because, despite the circumstances surrounding his exit, Sorrell has been deemed a “good leaver” by the board and is thus entitled to his bonuses.
That £20 million is company money, and shareholders rightly complain that they cannot make a judgment on whether it really should be handed to Sorrell if they remain in the dark about his departure.
There will be questions, too, about the lack of a non-compete agreement with Sorrell, which has already enabled him to set up a new firm, S4 Capital, into which he has pumped £40 million of his estimated £500 million fortune. He has secured backing from City investors including Lord Rothschild and recently revealed he had a number of deals lined up.
Another source of anger among investors is the lack of succession planning at WPP. While nobody foresaw such an abrupt exit for Sorrell, he is in his 70s and any well-run board should have had a plan B to hand.
Front-runner
The front-runner for the top job is WPP’s Mark Read, recently appointed joint chief operating officer. Read yesterday addressed the WPP revelations in an email to employees in which he promised a review of rules about staff conduct.
All employees have the right to be treated with respect by their colleagues, he said. While he was unable to comment on specific allegations, Read told staff that “we should remind ourselves of and reinforce the kind of values we want and need to have within every part of our business: values of fairness, tolerance, kindness and – again – respect.”
WPP is used to shareholder revolts – Sorrell’s lavish remuneration has moved significant numbers of investors reject the group’s pay report in past years. But the stakes are much higher today. Whatever the truth of the allegations, the Sorrell saga reflects badly on everyone involved, and has severely tarnished the group’s reputation.
As head of the board, Quarta’s performance at the Purcell Room today will have to be very good indeed if he is to avoid suffering the same fate as Sorrell.
Fiona Walsh is business editor of theguardian.com
