Martin Sorrell has agreed to pick up any legal tab for his new venture S4 Capital in the event that WPP sues it in connection with the $350M acquisition of Dutch digital firm MediaMonks, according to S4’s 189-page prospectus connected to its listing on the London Stock Exchange.
S4 shares are expected to begin trading on Sept. 27, following a shareholder vote.
The WPP founder, who will own 18.2 percent of S4 following the listing, gave S4 “an uncapped indemnity in respect to potential claims arising in connection with WPP allegations,” says the prospectus released Sept. 11. The indemnity remains in force for six years.
Sorrell’s lawyers, on July 3, received a letter from their counterparts at WPP, saying the ad/PR conglomerate considered Sorrell, in acquiring MediaMonks, “acted in breach of the duty of confidentially owed by him to WPP and unlawfully diverted a maturing business opportunity from WPP.
“WPP alleges that Sir Martin is ‘likely to be’ in breach of confidentiality obligations, which would mean that certain outstanding share scheme awards would no longer vest and would be forfeited,” according to the prospectus.
Upon advice from a “leading Queen’s Counsel,” Sorrell considers the WPP allegations are without substance and “he has been advised that he has not breached his confidentiality obligations or diverted a maturing business opportunity.”
The prospectus also notes that WPP’s letter stated that the firm reserved its right to take legal action against S4 to prevent it from acquiring Media Monks but failed to do so.
S4 is not aware of any WPP legal action that “might now be taken against any member of the group,” and “does not consider itself to be exposed to any potential liability in connection with the WPP allegations.”
As S4’s executive chairman, Sorrell is entitled to a yearly salary of $100K, annual bonus of up to 100 percent of pay and a yearly pension contribution equal to 30 percent of gross salary.
The 73-year-old executive has a three-year contract, which he may terminate with a year’s notice.
The pact includes a non-compete clause that runs for 12 months following Sorrell’s resignation or termination from S4.