Advertising has always been a fast-moving game, but the speed with which Sir Martin Sorrell, the world's most powerful adman, has gone from hero to zero is quite breathtaking.
News last week that the longest-serving chief executive of a FTSE 100 company was being investigated following allegations of "personal misconduct" sent shockwaves not only through his WPP empire but also throughout the entire advertising industry.
WPP, built up by Sorrell over the past three decades, is the world’s largest advertising and marketing group, taking in names from J Walter Thompson and Young & Rubicam to Ogilvy & Mather and Burson-Marsteller.
It employs more than 200,000 people worldwide, and the 73-year-old Sorrell, who “unreservedly” denies any wrongdoing, has long been revered as the advertising industry’s elder statesman.
Little has been made public about the precise nature of the allegations levelled against the ad man, except that they were made by a whistleblower and involve improper use of company funds and improper personal behaviour.
In its very brief statement confirming the investigation last week, the group made it clear, however, that the allegations “do not involve amounts which are material to WPP”.
Despite that reassurance – and Sorrell’s strenuous denials – the corporate obituaries for the high-profile WPP chief have already been written and published. Whatever the outcome of the investigation, it seems, Sorrell’s time at the top is nearing an end.
Touch-paper
Results of the investigation, which is being conducted by independent counsel appointed by the WPP board, are expected as early as next week. But the probe has already acted as a touch-paper for the numerous complaints about Sorrell that have been simmering among investors for some time.
Not least of these is the WPP share price, which has fallen by around a third over the past year. Last year was not a good one for group; indeed, as Sorrell was forced to cut long-term forecasts for the group in March, he admitted 2017 had been the worst year for growth since the recession of 2009.
Then there’s the subject of succession, which is regularly raised by shareholders. Sorrell looks and behaves much younger than his years – he became a father again, for the fourth time, just 18 months ago – and has shown no signs of slowing down.
The City has long been keen to hear what will happen when the septuagenarian does eventually decide to step aside. While the WPP chairman Roberto Quarta has insisted there is a succession plan in place, the City is not so sure.
The furore over Sorrell’s lavish pay has not endeared the WPP boss to investors either, and the £70 million he was awarded in 2015 remains one of the biggest-ever corporate paydays in the UK. In total, over the past five years, he has received more than £200 million and has repeatedly and unashamedly defended his right to those riches.
Speaking at an industry conference a couple of years ago, Sorrell made the point that he was no “Johnny come lately”, sweeping in to a company and running it for a few years before cashing in and moving on.
Family wealth
He has spent 33 years building the business through a series of acquisitions, and WPP is undoubtedly his life’s work. A large portion of the chief executive’s family wealth is tied up in the company, in the form of a £200 million share stake. But that represents less than 2 per cent of the shares, and there have been complaints over the years that Sorrell behaves more like an owner of the business rather than someone who is paid by its real owners – shareholders – to manage it.
Not surprisingly, Sorrell has said in the past he does not like the term “pay”, preferring the phrase “reward for performance with risk attached”.
The very real risk now for Sorrell is that things can never go back to the way they were in the WPP boardroom, whatever the lawyers may, or may not, uncover. Indeed, there has been widespread speculation that the leak of the investigation may have come from one of the chief executive’s fellow directors.
While some shareholders remain supportive – at least until the results of the investigation are revealed – others increasingly feel the time has come for change.
It’s hard to imagine WPP without Sorrell at the helm, and the corporate veteran is certainly not going to give up without a fight. Not only is his reputation at stake, but millions more in share awards due over the next few years. With no fewer than five firms of lawyers now involved, this could get very messy indeed.
Fiona Walsh is business editor of theguardian.com
