WPP WPP PLC

Advertising company tries to address void left by sudden exit of CEO Martin Sorrell

By Ben Dummett and Nick Kostov 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 17, 2018).

A little-known private-equity executive will steer WPP PLC through one of its stormiest periods following the weekend resignation of Martin Sorrell, the ad giant's high-profile founder and chief executive.

Roberto Quarta, until Saturday WPP's chairman, has assumed the role of executive chairman pending the appointment of a new CEO, effectively putting him in charge of a global company struggling with a fast-changing advertising market.

Along with two new joint-chief operating officers, he will try to address the leadership void created by the departure of Mr. Sorrell, who built the London-based company over 30 years and closely managed the dozens of units that comprise the company.

Born in Italy, Mr. Quarta, 68 years old, moved with his family as a teenager to the U.S. and helped pay to attend College of the Holy Cross in Massachusetts by working as a security guard. Years later, in the 1990s, his corporate cost-cutting skills would in some circles help earn him the nickname "Bob the Knife" and "Spare No Quarta."

WPP has said it is looking within and outside the company for a permanent successor to Mr. Sorrell, who stepped down following an investigation into allegations of personal misconduct.

WPP said it is treating the departure as a retirement, and the investigation's findings are confidential. Mr. Sorrell, 73, has denied any financial impropriety. WPP's board is scheduled to meet Tuesday ahead of results for the first quarter. Shares were down more than 6.5% in London on Monday.

The company named Mark Read, chief executive of WPP agency Wunderman, and Andrew Scott, WPP's corporate development director and chief operating officer for Europe, as the new joint-chief operating officers for WPP. That provides Mr. Quarta with help overseeing functions such as strategy, investments and retaining clients.

While well-known in certain business circles in Europe, Mr. Quarta's success as head of what is now called BBA Aviation PLC and as an operating partner at U.S. buyout firm Clayton Dubilier & Rice have shown him to be a no-nonsense executive focused on the bottom line who can make tough decisions, according to people who have worked with and for him over the years.

In the 1990s, as chief executive at BBA Group, he cut costs and steered an effort that led to the industrial conglomerate selling five of its seven regional divisions. The move created two global players, including BBA Aviation, a leading operator of airport facilities serving private aircraft. That effort won much shareholder support as the stock surged during his tenure as CEO, which ended in 2001.

Mr. Quarta then joined Clayton Dubilier & Rice, while staying on at BBA as chairman until 2007. He focused on helping the buyout firm identify industrial companies to acquire, then applying his sector expertise to help boost revenue and profits, according to a person familiar with the matter.

At Rexel SA, acquired by CD&R in 2005, Mr. Quarta and his colleagues were central in helping the Paris-based distributor of electrical products more than double its earnings during the buyout firm's ownership, which ended in 2012, according to people familiar with the matter.

Always immaculately turned out, Mr. Quarta pushed management to expand faster into the growing markets of Latin America and Asia, and pursue the next acquisition, according to former Rexel employees.

"He's the only guy that scared the shit out of us," said one former Rexel employee. "It was all about speed and financial efficiency."

Mr. Quarta entered high school with limited English, and majored in languages at college. His father worked as a tailor in Worcester, Mass.

Today, Mr. Quarta remains CD&R's European chairman, but isn't actively involved with any of the portfolio companies. That provides him with more time for his responsibilities at both WPP and British medical-device maker Smith & Nephew PLC, where he is chairman.

Mr. Quarta is no stranger to adversity both at WPP and at Smith & Nephew.

After joining WPP in the summer of 2015, Mr. Quarta helped to persuade Mr. Sorrell to accept a steep pay cut, warding off a shareholder revolt over his pay package.

Around the middle of last year, U.S. activist investor Elliot Management Corp. took an undisclosed position in Smith & Nephew, according to people familiar with the matter. Elliott met with Mr. Quarta and argued for Smith & Nephew to sell assets to boost the company's stock price. But Mr. Quarta rejected Elliott's ideas, arguing in part that the sales would undercut Smith & Nephew's value, according to the people familiar with the matter.

That said, the company announced in October, a few months earlier than planned, that CEO Olivier Bohuon would retire by the end of the following year. Elliott declined to comment.

Now at WPP, Mr. Quarta could face a tough battle with shareholders. Some analysts suggest that without Mr. Sorrell at the helm, the company should be broken up.

"It's hard to see what can be done apart from some M&A activity which monetizes some of the assets of the company," said Alex DeGroote, a media analyst with Cenkos. "The problem isn't replacing Martin, the problem is that the model doesn't work."

Write to Ben Dummett at ben.dummett@wsj.com and Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

April 17, 2018 02:47 ET (06:47 GMT)

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