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WPP, AD Agency To CE & Appliance Companies, Under Siege, CEO Questioned

WPP the global advertising and marketing partner to some of the world’s biggest consumer electronics and appliance brands, is investigating their CEO Martin Sorrell who has been accused of “personal misconduct” at the same time US authorities are running a separate investigation.

During the past five years Sorrell whose PR businesses in Australia are struggling to grow has been paid over $350M dollars during the past five years.

Last month it was revealed that in Australia, sales at WPP owned PR Companies Ogilvy PR Burston Marsteler PPR and Hill & Knowlton had fallen 7.2% with major tech brands such as Microsoft, Dell, Toshiba now looking to cut costs and renegotiate what is seen as expensive retainers.

His $127 payout in 2015 was one of the biggest in UK corporate history and several clients expressed shock at the amount of money WPP executives were taking out of the Company.

The latest investigation will increase pressure on Sorrell, who is already feeling the strain as WPP’s share price has tumbled almost 40% in the last year to its lowest point since 2013.

WPP, the world’s biggest advertising company, said that their board is also looking into whether Sorrell misused company assets.

Sorrell, in response to WPP’s announcement, said he rejected the allegation “unreservedly” but recognized that the company had to investigate.

“I understand that this process will be completed shortly,” he said in a statement. “Obviously, I shall play no part in the management of the investigation under way.”

The board has hired a law firm to investigate some of the issues, the Journal reported.

In the USA securities litigation firm Block & Leviton said it was looking into whether WPP and certain of its officers and directors violated federal securities laws.

The trouble at the top has once again put a spotlight on the issue of succession at WPP amid accusations of a “Sorrellcentricity” – the view that Sorrell runs the giant business autocratically as a personal fiefdom, dominating decision-making.

The question of who will succeed Sorrell is raised every year at the company’s shareholder meeting. Sorrell has never given any indication that he may be ready to step back.

Earlier this week WPP settled a lawsuit brought by an employee that alleged racist and sexist behaviour by a top executive at one of the advertising giant’s premier agencies, ending a legal dispute that had been ongoing for some time.

Erin Johnson, chief communications officer of the WPP-owned agency J. Walter Thompson, is receiving a substantial settlement, a person familiar with the matter told The Wall Street Journal.

In her 2016 lawsuit, Ms. Johnson alleged that JWT’s then-chief executive, Gustavo Martinez, engaged in a pattern of misconduct that amounted to gender discrimination and a violation of her civil rights.

In a statement, JWT confirmed it had reached the settlement and declined to disclose the terms. The company said Ms. Johnson has resigned from her role at the agency.

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