Sorrell vs WPP is not about the money, what’s at stake is principle and pride
As mud is thrown, WPP might come to regret taking what may be a step more motivated by personal animus rather than sound commercial logic, writes Chris Blackhurst
Not so long ago, annual reports from WPP, the advertising and communications giant, were collectors’ items.
They weren’t treasured for the detail of the company’s performance or the various pats on the back. Few read them for those. What was delightful were the pages and pages devoted to explaining the calculation of the remuneration for the firm’s founder and driving force, Sir Martin Sorrell.
He’d built a £30bn (yes, that’s what WPP was worth at one stage) empire from a small business that produced shopping baskets. Under Sorrell, Wire & Plastic Products bestrode the world stage, snapping up media agencies galore, many of them household names. Multinational corporations were queuing up for its various services. Across it all sat Sorrell.
He was a powerhouse, someone who never appeared to rest, always flying the globe in pursuit of more deals. He was hugely well-connected, seemingly with easy access to chairs, chief executives and political leaders, and senior officials. At the annual Davos gathering, Sorrell was a star, holding forth, and meeting and greeting – and planning and plotting.
When he was in London, he would have two working breakfasts, then at his favourite George club in Mayfair. One important guest would arrive, eat, drink, discuss and leave, to be replaced soon afterwards by another.
Then, three years ago, it went horribly wrong. WPP hit a bad patch, questions were asked about its conglomerate structure and whether it shouldn’t be broken apart. Suddenly, that section of the report accounting for Sorrell’s pay package appeared out of sync with what was going on. The mood towards Sorrell changed, from admiring to challenging.
They’ve had to go back several years to try and find an excuse to deny me what’s mine. I’ve left it to my lawyers to deal with
Relations with members of the board and some investors soured and after an internal investigation into aspects of his behaviour and his management style, which Sorrell vehemently rejects, he was gone.
It was unpleasant then and left a nasty taste. Sorrell went on to set up a new holding group, S4C, which is exhibiting signs of becoming a mini-WPP. In seemingly no time at all, S4C has grown to become a £3bn enterprise. There is a definite sense of unfinished business, a point to prove, about his demeanour.
The sniping between the former boss and management of his old shop has rarely stopped. WPP asserted that if they could, they would find some way of recouping those long-standing payment awards that used to make or such entertaining reading.
Still, it comes as a shock to see that on page 150 of this year’s publication, WPP is following through with its promise and refusing to make two payouts, totalling £600,000. Sorrell, they say, has been leaking confidential information regarding WPP and some of its clients, so he will not be receiving the money.
Sorrell’s response? He called the withholding “petty” – although noticeably, he did not provide a complete denial. “They’ve had to go back several years to try and find an excuse to deny me what’s mine. I’ve left it to my lawyers to deal with.”
Apparently, WPP has uncovered emails showing their ex-boss shared details of client plans and WPP transactions with a journalist. The clients have been told about the leaks, which are said to go back several years.
It’s true that Sorrell liked to speak to journalists himself direct. Self-confident, intellectually sharp, naturally ebullient and combative, he relished the cut and thrust of the chat and questioning. He eschewed the assistance of a PR adviser, a press officer cut off, preferring to do the talking on his own. He was known for it and appreciated – nobody gave better quotes on the state of the industry and consumer and media trends than Sorrell.
He still does. But sharing confidential client information, really? Presumably, WPP would not take such a step without being sure of their facts. Presumably. Perish the thought they sought an excuse to have a go, to strike a blow and the actual evidence is flimsy.
Cash is definitely not the issue here – to Sorrell with his fortune running into hundreds of millions, £600,000 is loose change. What’s at stake are principle and pride.
There is no doubt that Sorrell was heavily briefed against in the run-up to his leaving WPP and afterwards. Damaging stories appeared that could only have emanated from the higher reaches of the group. Sorrell is quite right when he says that WPP to accuse him of leaks is “a bit rich”.
This one is not going to go away. Cue legal letters and threats, leading to, who knows, an actual court case. Stand back, too, for much sniping.
In some respects, if WPP really does have the proof it claims, then it must act. There’s no justification in having a clause saying that handouts can be refused in certain circumstances which they say are met, and nothing happens. WPP is right to make a stand – pour encourager and all that.
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Nevertheless, as mud is thrown, WPP might come to regret taking what may be a step more motivated by personal animus rather than sound commercial logic.
This could well turn out to be an instance for letting sleeping dogs lie. It depends on the strength of what WPP has found. It had better be sure of its ground.
Already, it’s possible to predict with certainty, that there will be one set of winners here: the lawyers for both sides can look forward to a fee bonanza.
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