WPP resists pressure to publish Sorrell report after his resignation

WPP (Frankfurt: A1J2BZ - news) is facing pressure to publish the findings of an internal report into allegations of personal misconduct against Sir Martin Sorrell following his surprise resignation.

News of the founder and chief executive's departure at the weekend - confirming a decision first revealed by Sky News - sent the stock over 6.5% lower in Monday trading - cutting its market value by almost £1bn.

Sir Martin, who had built up the company over 32 years, resigned following claims related to the alleged misuse of company assets - allegations he had publicly rejected but understood needed to be investigated.

Sky News understands WPP has no plans to reveal the findings of its inquiry despite pressure from the former Business Secretary, the Lib Dem leader Vince Cable, who has urged transparency.

In a statement, WPP said: "The previously announced investigation into an allegation of misconduct against Sir Martin has concluded. The allegation did not involve amounts that are material."

The 73-year-old - understood to be contemplating his future, including business projects, on a visit to the US with his wife - will be treated as having retired from WPP.

It means he will be entitled to a maximum 1.65 million shares under long-term award plans dependent on WPP's performance.

At the share price at the start of trading on Monday, they were worth just under £20m.

Sir Martin already owns shares in WPP worth more than £200m‎, while his annual remuneration packages - he earned £70m two years ago - have made him a target for critics of lavish boardroom pay.

Liberum analyst Ian Whittaker said the chief executive was the "glue that bound much of WPP together", meaning the company may now look to sell its market research and PR divisions.

Roddy Davidson, analyst at Shore Capital, said: "This is a disappointing end to Sir Martin's illustrious career at WPP which saw him build the world's largest marketing services group and deliver substantial value to shareholders over three decades.

"It also highlights the apparent lack of detailed succession planning that has troubled us and many other observers for some time."

In a statement released on Saturday (Shenzhen: 002291.SZ - news) , Sir Martin told staff he was stepping aside following an internal investigation by the company.

"As I look ahead, I see that the current disruption we are experiencing is simply putting too much unnecessary pressure on the business," he said.

"That is why I have decided that in your interest, in the interest of our clients, in the interest of all share owners, both big and small, and in the interest of all our other stakeholders, it is best for me to step aside.

"As a founder, I can say that WPP is not just a matter of life or death, it was, is and will be more important than that. Good fortune and Godspeed to all of you … now Back to the Future (Frankfurt: 923414 - news) ."

Sir Martin, who acquired the small Kent-based firm in 1985 and turned it into the world's largest marketing services group, will be treated as having retired, the company confirmed.

Chairman Roberto Quarta will become executive chairman until a new chief executive has been appointed.

Sir Martin denied any wrongdoing after the allegations surfaced earlier this month, but said he understood the company had to investigate it.

He previously worked at Saatchi & Saatchi, and was knighted in the Queen's New Year honours list in 2000.

Sir Martin has established himself as one of relatively few British business leaders who are recognised around the world.

He has cultivated a global reputation as a commentator on economic and political matters, forging relationships with government ministers, financiers and corporate bosses around the world.

However, his departure will leave the company he built virtually from ‎scratch facing profound questions about its future direction.

The marketing (Frankfurt: 2MG.F - news) services industries are being buffeted by accelerating trends such as zero-based budgeting, which has led to many consumer-facing companies abandoning increases in marketing spending.

WPP has seen its ‎shares fall by nearly a third during the last 12 months, although it still has a market capitalisation of more than £15bn.