WPP reelected its board with 84.5% of shareholder votes at its annual shareholder meeting on Wednesday, despite concerns about slow growth and leadership.
Reported revenue was down 3.4% for the first four months of the year to roughly $6.4 billion.
Some investors, however, expressed concern and discontent about how the company handled CEO Martin Sorrell’s unanticipated exit in April, questioning whether the board agreed that its succession planning was “inadequate.”
Following Sorrell’s resignation, WPP appointed Wunderman CEO Mark Read and Andrew Scott, WPP’s corporate development director and COO for Europe, as joint COOs to guide strategy until a replacement CEO was found. WPP Chairman and interim CEO Roberto Quarta declined to comment further on the board’s investigation into personal misconduct by Sorrell, citing data protection laws.
“Right from the outset the board as acted in accordance … with data protection law,” he said. “We take that seriously. I know that questions remain, but there is nothing we can do.”
Despite offering no further details on the circumstances of Sorrell’s exit, Quarta addressed accusations in a Financial Times article that Sorrell spent company money on personal expenses and mistreated junior employees.
“At WPP, as in any other work place, everyone is entitled to be treated with respect,” Quarta said. “Everyone should feel able to raise concerns and have them listened to and acted upon as appropriate.”
Shareholders asked about Sorrell’s remuneration and pay package, which awards him significant payouts for the next five years if WPP meets its performance goals. While there’s nothing the board can do about Sorrell’s contract, the future CEO will not receive a similar pay incentive plan, Quarta assured shareholders.
“The contract required Martin to be treated as retired unless a definition of gross misconduct could be satisfied, which it could not and on which the board had clear legal advice,” Quarta said.
They also asked questions about Sorrell’s new venture, S4, which, as one shareholder put it, “surely should constitute gross misconduct” and jeopardize Sorrell’s good leaver status.
Quarta said he wasn’t worried.
“He characterized his new vehicle as a peanut that would not be able to or want to compete against a $20 billion global company like WPP,” he said. “We have confidentiality agreements and Martin would not want to jeopardize the terms and conditions of that.”
WPP is searching for a new CEO, both internally and from outside the company. Quarta said the company is looking for someone with a proven track record of strong global leadership, who understands the technology that drives businesses forward and has wide knowledge of the advertising industry.
“Last, but not least, we believe the individual concerned should be great with clients,” he said. “Clients are very important to our company.”
Quarta told shareholders that the company will move forward on its new strategy.
“Certainly, a new CEO … may want to add their own perspective,” he said. “But we’re not going to be standing still. If anything were going to accelerate the initiatives we have going forward.”
The world “horizontality” will be retired because it wasn’t well understood by employees or the market, Read said, but the idea of working in a client-centric fashion will be central to WPP’s strategy.
“Each of our clients wants to access the wealth of talent in WPP, and we have to make it easy to do that,” he said. “We need to make the group easier to navigate, simpler to navigate and, frankly, easier for us to manage.”
To do that, WPP is looking at selling off some of its assets, possibly its handful of minority stakes which make up $1 billion in investments, to reduce company debt.
“We have gotten quite complex,” Read said. “We’re not talking about merging companies, necessarily, but creating a simpler structure so we can work around our clients and countries.”
Despite the turmoil around Sorrell’s departure, Read assured shareholders that client work has gone uninterrupted and that “not one [client] has desired to change their relationship with us.”
“There is universal support amongst our key clients at the CEO and CMO level,” he said.
Some shareholders, however, expressed concern that the company Sorrell built and so scrupulously ran over the past 33 years will be unable to function without him.
“The business can succeed without him, and the people inside the company have no doubt we can do that,” Read said.