Lader will divide his time between New York and London.
Lader, a close friend of former US president Bill Clinton, takes over from Hamish Maxwell who is in his mid-70s. During his time as US ambassador, Lader has co-hosted a conference to explore possible business links between the UK and the US with chancellor Gordon Brown. Lader is also expected to take on a consultancy role with US investment bank Morgan Stanley Dean Witter.
Sir Christopher Lewinton, former chairman of engineering group TI, had been tipped to succeed Maxwell as chairman, but suggestions that this was the case met with a sharp reaction from WPP shareholders.
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