The relatively modest reaction to the departure of WPP (WPP) chief executive Martin Sorrell may seem strange given he spent more than three decades at the helm but probably reflects an already bombed out share price and widespread expectation this news was coming.
After opening down 5%, shares in the advertising giant are now down just 1.9% to £11.66. Sorrell resigned on Saturday ahead of the results of an investigation into his conduct which has now been closed. Chairman Robert Quarta will now step into the breach until a replacement is found.
Notably Sorrell has not signed a ‘non-compete’ clause with the company but he does still own 2% of the shares and it seems unlikely he would want to damage the company which he ultimately created.
THE SUCCESSION ISSUE
In this article we discuss the succession issue with reference to WPP. The company may be some way along the road in this process already with previous reports suggesting it had lined up a shortlist of potential successors.
Liberum analyst Ian Whittaker says: ‘Mark Read, CEO of WPP's Wunderman unit, and Andrew Scott, European COO, have been announced joint-COOs of WPP, which will heighten speculation that they will be the top contenders for the slot.’
Whittaker adds that Sorrell’s departure could be the catalyst for the company, which is really a collection of hundreds of individual agencies, to sell off parts of the business, in particular its market research arm.