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.
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