Besieged Omnicom – the globe’s third largest advertising group – has called an emergency board meeting for 6pm Sunday to discuss and appraise its current stock price and litigation crisis [WAMN: 17-Jun-02].
It is also likely that the meeting agenda will include the recent information request from the Securities and Exchange Commission, revealed Monday evening. The 'request' concerns the resignation of two of the group’s independent directors and last week’s replacement of Arthur Andersen as Omnicom’s auditors.
Another potentially hot potato is the alleged conflict of interest of one of the group’s recently appointed ‘independent’ directors and member of its audit committee – Peter Foy, the chairman of London-headquartered global headhunter Whitehead Mann Group. Foy is a busy, busy bee who also sits in a non-executive capacity on a number of other boards including that of P&O Princess Cruises, whose chair he will assume in October.
But of more concern to onlookers interested in corporate governance is Foy’s membership of the audit committee of PepsiCo – which spends roughly $2 billion (€2.11bn; £1.35bn) annually in billings with Omnicom-owned shops.
Questions Charles Elson, head of the University of Delaware's Center for Corporate Governance: “You've got fiduciary duties to both sets of shareholders, and in a commercial transaction between two companies, whom do you represent?”
Veteran shareholder activist Nell Minow, the co-founder of Washington, DC think tank Corporate Library, is likewise concerned: “There are some instances where a conflict is de minimus, such as buying office supplies from Staples, but if there is a significant financial relationship between the two companies, you have to get off one board or the other,” she urges.
PepsiCo, however, is unfazed: “We are well aware that Mr Foy sits on Omnicom's board and we have disclosed that in our proxy every year since he joined the Omnicom board. We don't believe there is a conflict of interest because our board doesn't get involved in advertising decisions and Mr Foy has had no influence on our relationship.”
Omnicom’s lips were zipped on the matter and Foy himself was not available for comment
Data sourced from: AdWeek.com; Wall Street Journal; additional content by WARC staff