Shares at advertising giant WPP were down 5% to open trading on Monday in London as investors reacted to the announcement over the weekend that long-time CEO and founder of the ad giant Sir Martin Sorrell was leaving.
Sorrell on Saturday told his staff through a letter that he would leave the company. It became public in early April that he faced a company investigation over misuse of company assets and misconduct allegations.
Sorrell in the letter he wrote to his employees said that the current disruption has caused the business to come under too much unnecessary pressure.
Sorrell held the reins at WPP for 33 years. He created the advertising holding business via a reverse takeover of what at the time was Wire and Plastic Products, during 1985, a maker of shopping carts.
One London-based market analyst said on Monday to his clients through a note that Sorrell had been the powerhouse that was behind the rise of WPP over the last three plus decades into what is arguably the largest advertising group in the world.
The exit by Sorrell, said the analyst brings up the possibility of an empire that he built being broken up. The analyst said that the resignation of Sorrell as the CEO at WPP will create speculation over the group’s future. The analyst said that the possibility is significant that WPP would sell its Market Research division Data Investment, as well as PR, but the rest of the company would remain intact.
Officials said that no non-compete agreement was signed by Sorrell as part of the exit deal he received, which means he theoretically could start a new rival advertising business that would complete directly with WPP.
However, industry and financial analysts said that they would not read much into that speculation due in part to the age of Sir Martin, and even more importantly, WPP was and still is something he created and there lacks a likelihood that he would want to damage the business.
Sorrell was an outspoken and recognizable figure across the advertising world and recently gained much attention for the huge cut in pay he took as WPP faced its worst prospects for growth in nearly a decade.
Sorrell owns approximately 2% of the company.