A couple of weeks ago, WPP Chairman Roberto Quarta rather dismissively told an analyst on a first-quarter earnings call that the company wasn’t going to divulge the details surrounding what the firm had called an allegation of personal misconduct against former CEO Martin Sorrell.
Quarta added the company also wasn’t going to share results of an investigation that it undertook to examine the allegation. Why? Because it doesn’t have to, he said at the time.
It may not be that cut and dried. A lot people and at least one major UK-based investor advisory group, Glass Lewis, are unhappy that WPP hasn’t been more forthcoming on the specifics.
Several UK publications, including The Guardian reported today that Glass Lewis has issued a report urging WPP shareholders to vote Quarta out of office at the firm’s upcoming annual meeting on June 13. The reasons? fSpearheading the firm’s position on the matter and not having a satisfactory succession plan in place — even though succession has been on Quarta’s plate since his arrival in 2015.
“Recommending a vote against Roberto Quarta is against the interests of investors at such an important time when the business needs stability until such time as a new chief executive is appointed,” a WPP rep told the Guardian.
I have to agree with the advisory group.
The way WPP has handled this whole affair has been abysmal. Out of nowhere in early April, WPP announces its investigation about Sorrell's alleged personal misconduct. He has been running the company for the last 30-plus years.
Then, 11 days later, Sorrell is gone. No details whatsoever, other than his departure is being treated officially as a retirement.
Another point made by Glass Lewis: It’s not clear what Sorrell did or didn’t do. But he’ll receive an additional $20+ million in bonuses under the terms of his contract.
But if misconduct was involved, that might be “cause” for Sorrell’s departure, in which case the company may be entitled to claw back those additional rewards. It is unclear, however, because WPP steadfastly refuses to reveal the details.
The UK press positions the whole mess as resulting in a likely “shareholder revolt” at the upcoming meeting. Given the company’s complete lack of transparency on the issue, it seems like a revolt of WPP’s own making.