Update: A spokesperson for WPP on Tuesday responded to the Journal confirming that the company has brought on an independent counsel to look into "an allegation of personal misconduct" from Sorrell. Sorrell in a statement to the Journal on Wednesday denied the allegation of financial impropriety. 

Dive Brief:

• The board of WPP is investigating whether CEO Sir Martin Sorrell misused company assets, The Wall Street Journal reported Tuesday afternoon citing anonymous sources. One source told the Journal that the board is also looking into alleged improper behavior from Sorrell.

• A source told the publication that WPP's board, which Sorrell is a member of, has brought on a law firm to look into issues surrounding the high-powered executive.

• Sorrell has headed WPP since 1986, and has no clear successor. The executive did not respond to the Journal's multiple requests for comment via both text messages and email, and WPP declined to comment for the publication's story.

Dive Insight:

Sorrell is considered to be one of the ad industry's most influential thought leaders even as the business he helped build has, like other traditional agency holding groups, seen its stature diminished in recent years amid digital disruption, growing competition from newer marketing services providers like consultancies and brands reallocating their marketing budgets. Sorrell is well-known for spearheading criticisms of the duopoly of Facebook and Google, hoping for a third major digital advertising player, and also speculating on the growing influence of technology companies like Amazon and Snapchat. The reported issues being investigated, if substantiated, would come as serious blow to his credibility, and would hit WPP at a particularly vulnerable time.

The legacy ad giant saw flat like-for-like, top-line growth last year, on top of flat operating margins and profits. It has, in turn, accelerated the process of streamlining its agencies in order to tighten budgetary belts and increase agility for brand clients. Following the announcement of its 2017 results in March, WPP's stock plunged roughly 15% — its worst drop since 1999.

While it's also not clear what "improper behavior" is being looked into, executives at some WPP agencies have come under the spotlight for alleged misconduct in recent years. Gustavo Martinez, former CEO of WPP's J. Walter Thompson shop and reportedly a prodigy of Sorrell's, resigned from his role two years ago over a suit brought by employee Erin Johnson accusing him of inappropriate behavior, including anti-semitic remarks and rape jokes. The publication Campaign last week published a story detailing how Johnson's legal battle with JWT and WPP is ongoing and the fresh scrutiny it's receiving in the wake of movements like #TimesUp and #MeToo, which address alleged sexual harassment and abuse in the workplace.

As the Journal noted, the WPP board has taken issue with Sorrell in the past, particularly over the executive's pay, which dropped from £41.6 million in shares in 2016 to £10 million, or $14 million, last year.