
Campaign reported on the WPP annual general meeting, where outgoing
Chairman Roberto Quarto declared the White holding company is “significantly a
stronger company” than when Sir Martin Sorrell had left the building.
That’s not a surprising
summation, as even Sorrell has openly dissed the professional
unhealthiness of his own corporate
creation after departing. So, to declare WPP is significantly stronger now is
like announcing an outhouse doesn’t stink as bad as it did a few years ago.
The progressive
statement, however, doesn’t apply to the White holding company’s DEIBA+ status.
That is, while Sorrell was at the helm, the place boasted being “perhaps the most diverse example of diversity of any
single organisation.”
Yet in 2021, WPP CEO Mark
Read admitted a need for “greater
representation of Black, Asian and other under-represented communities within
WPP—especially at the more senior levels.” In short, WPP is significantly a
more systemically racist company than when Sorrell bailed out.
Then
again, WPP is probably equally adept at generating performative PR and outright lies today versus in times
past.
WPP is ‘significantly stronger company’ than when Sorrell left, chairman
says
By
Gideon Spanier
WPP
is “significantly a stronger company” than when Sir Martin Sorrell departed as
chief executive in 2018, the chairman, Roberto Quarta, has maintained in a
farewell speech.
Quarta,
who was speaking at his final annual general meeting after nine years as
chairman, said he wanted “to reflect” on “the transformation the company has
undergone since the change in executive leadership in 2018”, although he did
not mention Sorrell by name.
Quarta
told investors how “the new executive team”, led by chief executive Mark Read,
had “brought stability and a fresh vision to WPP, transforming its culture and
revitalising its offering to clients” – for example, by winning big global
pitches such as Coca-Cola.
That
contrasted with WPP’s position in 2018 when the company had high levels of
debt, revenues had declined for four consecutive quarters, North America was
under particular pressure, and its biggest client, Ford, was re-evaluating its
relationship, Quarta noted, as he looked back on his tenure as chairman.
“We
do not underestimate the task ahead. But, however, it is important to
acknowledge that today’s WPP is significantly a stronger company, one with a
modern, integrated client proposition, leading positions in a growing market
and many promising strategic opportunities on the horizon.”
He
added the board had given its “full backing” to a new strategic positioning –
“Innovating to lead” – which Read presented at a capital markets day in
January. It is focused on harnessing the benefits of creativity, technology and
scale, with a simpler operating model and six main agency brands.
However,
Quarta made no mention of WPP’s share price, which has fallen by roughly a
quarter to around £8.50 since 2018, and led to the company losing its crown as
the world’s most valuable holdco to Publicis Groupe.
WPP
had a stock market capitalisation of about £24bn at its peak in March 2017,
before falling to £16bn by the time that Sorrell abruptly left in April 2018.
It is now worth about £9bn, partly because of disposals to cut debt and share
buybacks that returned money to shareholders and reduced the total number of
shares in issue.
WPP
is now only the fourth largest group by stock market value, behind Publicis,
Omnicom and Interpublic, which are worth about £23bn, £15bn and £9.5bn
respectively, at current exchange rates, although UK stocks have also fallen
out of favour, partly because of Brexit.
Shareholders
have backed WPP’s leadership as it has sought to turn around the company’s
fortunes. WPP has returned about £4bn to shareholders through dividends and
buybacks in the last five years and increased total shareholder return, a key
metric, by 8% in the period from January 2019 to December 2023, according to
Bloomberg data, although TSR has lagged its main rivals.
Read
was re-elected with 99.87% approval in a shareholder vote at the AGM, which was
held on 8 May at Rose Court, WPP’s second London campus building, which is
close to the main headquarters, Sea Containers, on the South Bank. Quarta
received nearly 95% approval.
Quarta
and Read faced questions from several private shareholders, who asked about the
company’s performance in the last 12 months, when revenues less pass-through
costs rose only 0.9% and it lost some major US media accounts.
Read
reiterated his message from the recent Q1 results that the Pfizer account loss
and cuts by tech clients had hit growth, and he said changes, including a new
CEO for Group M in North America, should lead to some improvement during the
rest of 2024 and tech clients are “a source of great strength”.
“I
personally call clients when we’re not successful and try to get to the bottom
of what happened,” Read said, when asked what the company had learnt from the
loss of client assignments. “By the way, I also call clients when we win
and try to find out what we did well,” he added, noting “the quality of the
people” is often key.
In
response to another question about talent retention, Read said employee churn
has slowed down, with just over 20% of WPP’s staff leaving annually, compared
to 30% in 2022 – when the so-called “Great Resignation” was at its zenith in
many industries.
More
senior staff tend to stay longer and churn is higher among more junior staff,
according to Read, who said average tenure was five years.
Campaign
spoke to a number of small shareholders who were broadly supportive of WPP,
albeit some expressed frustration, after the meeting.
One
shareholder, who declined to be named, said: “They’ve had their ups and downs,
but they are more focused and pointing in the right direction [now].”
A
second shareholder, who also spoke in a private capacity, described WPP’s stock
as a “plodder” – it’s a case of “take the dividend and keep your fingers
crossed” for a better performance, this person said.
Quarta was due to step down ahead of the AGM but
has extended his tenure, as WPP has not yet appointed a replacement.