Sorrell Prepares to Leave WPP Amid 7,000 Layoffs

WPP’s board is undertaking a “comprehensive” search for a successor to Martin Sorrell, the company’s founder and CEO, who is 64, according to its annual report. The news comes as WPP girds for up to 7,200 layoffs this year (more on that below).

The board is considering internal and external candidates “in a totally frank, highly specific manner,” the report says, but the process will remain “confidential” to avoid gossip. (Fat chance, but you can hope.)

The Guardian put it best:

Anaysts say that WPP and Sorrell have become almost interchangeable - “it is hard to imagine life without him,” said one. A shareholder said: “Just as it’s hard to imagine News Corporation without Rupert Murdoch, so it is difficult to contemplate WPP without Martin.”

Internal candidates to succeed Sorrell include Dominic Proctor, head of WPP’s media buying arm, Mindshare, and Shelly Lazarus, boss of Ogilvy & Mather.

The company denied that Sorrell is about to leave, calling the succession plan a normal process that any large corporation would undertake. (A full digest of the section of the annual report discussing the Sorrell succession comes at the end of this post.)

News that WPP is at least considering life after Sorrell comes on the heels of another imminent round of layoffs at the company. The Scotsman reported that 7,200 jobs would be lost across WPP this year; The Times said it would be 7,000 in total.

The layoffs go hand in hand with Sorrell’s confession that revenues at WPP would probably decline 5 percent this year — about double his previous prediction. The Times:

WPP, which eliminated 3,600 positions in the first quarter, is expected to reduce its headcount by a further 3,400 by the end of the year.

About 3,700 of the positions that WPP is expected to eliminate this year will be redundancies, with the remainder made up by attrition.

If a Sorrell succession is near, it will come at a time when WPP has grown into the largest agency network in revenues. But that growth has come at a steep price. Sorrell has left the company heavily indebted — in part for tax reasons — and the network is among the least efficient of the big companies at generating its own revenues.

Put another way, with a horrible year ahead of it due to declining adspend, Sorrell may be preparing to leave just as WPP faces one of the biggest crises of its life. (Is this why he chose to put a chicken on the cover of his annual report?)

Here’s the WPP succession plan note in the annual report, in full:

Among the Board’s most critical responsibilities is planning for the succession of the Group chief executive and other key executives. These individuals’ skills, resourcefulness and dedication are particularly critical to WPP, a business built on creativity. The entire Board therefore devoted extensive time to this subject in 2008, as we have for the past six years. Two separate Board meetings occasioned all
non-executive directors’ discussion of backgrounds, performance, development opportunities and potential roles for approximately 200 senior managers and “rising stars” of the parent and operating companies. For each such position, potential candidates were identified.

Not coincidentally, the Group’s structure and devolution of responsibilities to leaders of each of our “tribes” – as well as the fact that some of these businesses, if independent, would rank among our industry’s largest – provide extensive senior management experience to several dozen WPP executives, some of whom could readily undertake parent company roles.

The most comprehensive of these reviews was directed to the Group chief executive’s position. From the internal field of proven talent and a range of potential external candidates, the non-executive directors and the Group chief executive exchanged views – in a totally frank, highly specific manner – about the candidates best qualified to succeed him.

After that session, on several other structured occasions and at other times, the non-executive directors, in the absence of the Group chief executive, further discussed the succession candidates and process.

We continue to believe strongly, however, that – lest public discussion of this subject foster speculation and distraction – the content of these ongoing deliberations should remain strictly confidential.

• See previous coverage of WPP:
• WPP Q1: Debt Doubles; “It’s All Lehman Brothers’ Fault”
• WPP Accuses Spot Runner of $54 Million Scam; Was Sorrell Asleep at the Wheel?
• The Enfatico Fiasco: Isn’t This All Dell’s Fault?
• WPP’s Sorrell Calls Publicis’ Levy “Callous” in Remarks on Recession
• Sorrell’s Interest in Branded Content Is Explained by WPP’s Finances
• WPP’s Layoffs Plan Explained — Wall Street Doesn’t Believe Sorrell’s Rosy View of the Future
• WPP Q4: Lower Profits Increase Likelihood of More Layoffs