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(Recasts first paragraph, adds comments, adds details onlawsuit plaintiff's paid leave)
By Jonathan Stempel
NEW YORK, March 17 (Reuters) - The chief executive of the J.Walter Thompson advertising agency resigned on Thursday, oneweek after a female subordinate accused him in a lawsuit ofracist and sexist behavior.
WPP Plc, the British parent of JWT, said GustavoMartinez resigned "by mutual agreement" following "recentevents," and that his resignation was "in the best interest" ofthe agency.
Martinez's departure came after chief communications officerErin Johnson accused him in a lawsuit in Manhattan federal courtof making "constant racist and sexist slurs" that demeanedwomen, blacks and Jews, and subjecting her to unwanted touching.
Johnson was put on paid leave last month, after JWT hadcurbed her pay and duties in retaliation for her complaintsabout Martinez, according to the March 10 lawsuit.
WPP declined to elaborate further on the resignation. A WPPspokesman said Johnson's lawyers requested her paid leave, andJWT accommodated that request.
Anne Vladeck, a lawyer for Johnson, did not respond torequests for comment.
Tamara Ingram, who was WPP's chief client team officer, isreplacing Martinez, effective immediately. Her former job willbe taken by George Rogers, who will remain WPP's global businessdevelopment director.
Martinez, an Argentina native and the first Hispanic chiefexecutive of a global advertising agency, had been JWT'schairman and chief executive since January 2015.
"The tone at the top determines the culture of a company,"said Cliff Palefsky, a San Francisco lawyer who representsplaintiffs in employment discrimination cases. "The mosteffective way to prevent discrimination and harassment is toshow that no one is immune from scrutiny."
Martinez could not be reached for comment following hisresignation.
After the complaint was filed, Martinez had said in astatement that he believed he led JWT "with a collaborative andcollegial style" and did not create the working conditions thatJohnson described.
JWT clients include such companies as Coca-Cola, HSBC,Johnson & Johnson, Nestle, Shell and Wal-Mart. Martinez'sbiographical profile has been taken down from the JWT website.
According to Johnson's lawsuit, Martinez made "numerous"comments about rape, including the raping of JWT employees.
The lawsuit also accused Martinez of referring to airportcustoms agents as "black monkeys" and "apes," and telling areporter that he disliked living in New York's suburbanWestchester County because there were "too many Jews."
Vladeck on Monday asked for court permission to file a videoshe said showed Martinez making some of the alleged slurs. (Reporting by Jonathan Stempel in New York; Editing by ChrisReese, David Gregorio and Alistair Bell)
