WPP PLC (LON:WPP) has appointed an independent counsel to investigate a claim of personal misconduct against its chief executive Sir Martin Sorrell.
The advertising giant confirmed allegations that were first reported by The Wall Street Journal on Tuesday.
READ: WPP shares drop as advertising giant posts worst full-year performance since financial crisis
The newspaper also reported the company was also looking into whether Sorrell, 73, misused company assets.
In response, WPP said: “The allegations do not involve amounts which are material to WPP.”
Sorrell, who has been the chief executive of WPP since 1986, denied the claims of financial impropriety against him.
"Reports in the media have stated that WPP is investigating an allegation of financial impropriety by me, specifically as to the use of company funds," he said in a statement.
“This allegation is being investigated by a law firm. I reject the allegation unreservedly but recognise that the company has to investigate it.”
The news comes at a difficult time for the company as increased competition and a reduction in spending by clients have hurt its financial performance.
Last month WPP said 2017 was “not a pretty year” for the company and forecast no growth for 2018.
In early trading, WPP shares on the FTSE 100 index were down 1.8% at 1,097p.
AJ Bell investment director, Russ Mould, said the news puts the company's future leadership in doubt.
"Even if this probe does not amount to anything, the company needs to confront the succession issue sooner rather than later given Sorrell turned 73 in February," he said.
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