In a radical redistribution of power designed to forge an independent board, four executive directors at Interpublic Group have stepped down with immediate effect. All will continue in their present executive roles.
The retiring IPG foursome are vice chairman (and former chief executive of True North Communications) David Bell, chairman and chief executive of McCann-Erickson WorldGroup James Heekin, chief executive of the FCB Group Brendan Ryan and Frank Lowe, chairman of Lowe Group.
Concurrent with the resignations, Michael I Roth, chairman and chief executive of New York-based MONY Group, joins the Interpublic board as its seventh external director. He sits alongside the six other non-executive board members and IPG’s two remaining internal directors, chairman/ceo John Dooner and chief financial officer Sean Orr. This radically changes the board’s former composition of six internal and six external directors.
In addition to Roth, the other board outsiders are: Frank Borelli (former chief financial officer of Marsh & McLennan), Reginald Brack (former chairman/ceo of Time Inc), Jill Considine (chairman/ceo of The Depository Trust & Clearing Company), Richard Goldstein (chairman/ceo of International Flavors and Fragrances), H John Greeniaus, (ex-chairman/ceo of Nabisco) and J Phillip Samper (managing director at Gabriel Venture Partners).
Explains Dooner: “The interests of Interpublic shareholders will be best served by a board that is primarily made up of independent, outside directors.” Investors clearly concurred with Dooner's view and Interpublic shares on the New York stock exchange closed Monday up 88 cents at $29.35.
One Wall Street analyst who prefers to remain anonymous believes there may also be internal political ramifications behind the changed balance of power. This, averred the hooded seer, could also be a smoke signal telling the remoter corners of Interpublic’s fiefdom – such as direct marketing and sales promotion – that the ad agency ethos is no longer the sole driving force within the group, thereby negating the perception that it is “the chief executive and a bunch of buddies who are determining the direction of the company.”
Non-conspiracy theorists believe the move simply reflects a more general trend in corporate governance – now in post-Enron hyperdrive. “Call it a fallout of the Enron situation,” said Charles Elson, director of the University of Delaware’s corporate governance center, who professed himself “delighted by the news”. Too many insiders or consultants on a board, he opined, “puts you at risk for substantial criticism and liability”.
Data sourced from: Wall Street Journal; additional content by WARC staff