WPP’s board has hired independent counsel to investigate an allegation of personal misconduct against CEO Martin Sorrell, a move that industry experts said raises questions about the holding company’s succession plans.
The investigation into the undisclosed personal misconduct allegation is ongoing, said WPP’s Buchanan Communications in a statement. "The allegations do not involve amounts which are material to WPP," the statement added.
According to a report from Pivotal Research senior analyst Brian Wieser, the biggest risk associated with the investigation is related to succession.
"If Sorrell were to leave the company for any reason at the present time, it would be negative considering how involved he has been in the company and how instrumental he has been in assembling the assets the company has today," Wieser stated. "It is unclear how readily any executive could fill Sorrell’s shoes in orchestrating assets across the holding company when they need to work together."
One industry expert who requested anonymity told Campaign U.S. that "this is probably the beginning of the end" for Sorrell. "The optics are not great when a company hires independent counsel," the expert added.
The disclosure of the investigation came a month after WPP, the world’s largest holding company, posted its biggest stock decline in almost 20 years and predicted no growth for 2018. It also followed WPP facing increased pressure from Ford Motor and spending cutbacks from large CPG clients such as Procter & Gamble.
According to a talent management and acquisition expert in the industry, Sorrell will be "very difficult to move" because his "legacy is very important to him."
While no successors have been named, one prediction from an industry insider is that Wunderman Global CEO Mark Read is the "natural" decision because he has turned the agency around and has expertise on the investor relations side.
Wieser wrote in his Tuesday report that anyone who could follow Sorrell could "bring new ideas to the holding company and lead a rebound that we think will eventually occur, and may already have enough clout internally to execute on those ideas."
Representatives from WPP declined to comment beyond the statement from Buchanan Communications.
This story first appeared on campaignlive.com.