Martin Sorrell, the founder of advertising behemoth WPP, resigned over the weekend and on Monday morning the group's stock dropped by more than 5%, wiping out some £750 million ($1.1 billion) in market value. It made no further comment but repeated a previous statement that the allegation did not involve amounts that were material to the company.
"Obviously I am sad to leave WPP after 33 years", Sorrell said.
WPP did not give any details of the allegation and Sorrell denied the charges, initially saying that he understood the need to investigate. One of a kind, a tour de force with unequalled achievements.
WPP, which will consider internal and external candidates to succeed Sir Martin, faces complex set of challenges. He took a United Kingdom manufacturer of wire baskets and built it into a worldwide provider of advertising, public relations and marketing services through a series of takeovers.
We welcomed J. Walter Thompson, Ogilvy, Young & Rubicam, Grey, 24/7 Real Media, Taylor Nelson Sofres, among so many others. He is one of the most prominent and well-paid managers in the country. Respected and sometimes feared by all sides.
Whittaker adds that Sorrell's departure could be the catalyst for the company, which is really a collection of hundreds of individual agencies, to sell off parts of the business, in particular its market research arm.
"He is so brutally competitive", the former CEO said.
Sorrell sparred repeatedly with the long-time boss of French rival Publicis, Maurice Levy, and enjoyed pointing out to journalists the failings of his rivals.
WPP on 1 March lowered its long-term profit outlook after reporting its worst annual performance since the financial crisis, capping a string of disappointments that put the ad industry's elder statesman on the defensive.
Whoever takes over will have to decide whether the group of 200,000 people should remain in its current form.
"Within the a year ago, he's come under pressure because of his company's performance - WPP has seen poorer-than-expected growth and slumping stocks".
Sir Martin and his family own about 2% of the company - a stake worth about £300m. Meanwhile, Mark Read, CEO of WPP's Wunderman unit, and Andrew Scott, European COO, have been announced joint-COOs of WPP.
The company said Sorrell would be available to assist with the transition, and the man synonymous with the British marketing group told the staff they would come through this hard time.
Although WPP unequivocally owes much of its success to Sorrell, his failure to implement clear succession planning has often been criticised and now looks particularly foolhardy. "Now, Back to the Future". Roberto Quarta, Chairman of WPP, becomes Executive Chairman until the appointment of a new Chief Executive Officer.