Mildenhall, who will leave in March, is set to attend the Advanced Management Programme at Harvard Business School.
His responsibilities will be added to Shepherd-Smith's, who becomes managing director and chief operating officer of the agency.
Mildenhall's position at the agency has been uncertain since his transfer to the New York office fell through in September last year. This followed the appointment of Brett Gosper as the president of the network's New York Group in the same month.
Mildenhall, whose responsibilities included the management of the agency's Five, News International and Ask Jeeves accounts, joined the agency from HHCL/Red Cell in 2001 as one of the agency's five managing partners.
Previously, he has worked at McCann Erickson and at Bartle Bogle Hegarty on the Audi and Coca-Cola accounts. This was followed by a three-year stint at Lowe Howard-Spink, before its merger with Ammirati Puris Lintas, heading the Vauxhall and worldwide Smirnoff business.
Andrew McGuinness, the chief executive of TBWA, said: "Jonathan's been a great asset for TBWA and we're sorry to see him go. We're very fortunate to have the depth of talent in the team that Matt can seamlessly take on his responsibilities".
Mildenhall added: "Following the collapse of conversation with TBWA\New York, I have spent a lot of time thinking about the next stage of my career. In terms of what next, I'm going to go to Harvard to do the Advanced Management Programme and then I'm going to go exploring. Post Harvard, I want to talk to lots of people and lots of companies; big, small, London-based, New York-based, even start-ups. It's only then that I will have worked out the best plan for the rest of my career."
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