Sorrell wages war on WPP: The ousted boss was warned he’d lose £20m bonus if he took over rival firm. He did it anyway
Sir Martin Sorrell was last night headed for a legal battle with the advertising group he founded after it vowed to strip him of a £20million payout.
The row erupted after the 73-year-old’s latest venture S4 Capital outbid his former employer WPP for Netherlands-based media agency Mediamonks.
WPP had warned Sorrell that if he approached Mediamonks he would breach confidentiality agreements he had signed – and would have to forfeit £20million in share awards he is due over the next five years.
Sir Martin Sorrell’s latest venture S4 Capital outbid his former employer WPP for Netherlands-based media agency Mediamonks
But the tycoon’s lawyers rejected the claims and he pressed ahead with the £266million takeover, confirming it with an announcement yesterday.
It sets the stage for a major showdown. Sorrell would have received the first of his share payments in March 2019 but it is understood WPP no longer intends to make it.
A spokesman for Sorrell said he strenuously denied he had broken any clauses in his contract.
But last night, a WPP spokesman said: ‘Despite protestations from Sir Martin’s lawyers, we are well aware of the facts and he has jeopardised his LTIP (long-term incentive plan) entitlement.’
Friends of Sorrell said he was prepared to fight WPP in court.
The dispute centres on meetings that began with Mediamonks last summer when he was still chief executive of WPP.
Sorrell claims bid talks were abandoned and he was later put back in touch with Mediamonks through another business associate.
WPP, however, alleges discussions continued with the Dutch firm right up to Sorrell’s departure.
Over 30 years, the father-of-four built WPP from a tiny manufacturer of shopping baskets into one of the world’s most powerful advertising agencies.
But he stepped down as chief executive in April amid allegations of personal misconduct.
Reports later emerged that WPP had been investigating whether Sorrell had spent £300 of company money on a prostitute.
Two colleagues reportedly witnessed him going into a Mayfair brothel last year. Sorrell has denied the allegations.
Yesterday he also defended his decision to buy Mediamonks and insisted it was not an attempt to compete with WPP. Before he left, Sorrell had not been made to sign a non-compete agreement.
But he said: ‘We’ve probably grown from being a peanut to a coconut with Mediamonks. We are a bigger animal now, but to say a £15billion company [WPP] can be frightened of a peanut or a coconut seems ridiculous.’
Douglas McCabe, a media expert at Enders Analysis, said Sorrell will be ‘very happy with this acquisition and there will likely be a lot of annoyed people at WPP’.