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Some Payout: DeCerchio Demands $55M From Doner

Former Vice Chair, Soul of the Agency, Wants to Cash out His 32% Stake

By Published on . 10

CHICAGO (AdAge.com) -- As if times weren't already tough enough for an indie ad shop, Doner finds itself in the unenviable position of having to pay $5.5 million every year for the next 10 years to a guy who no longer works for the agency.

By John DeCerchio's reckoning, Southfield, Mich.-based Doner owes him a twice-monthly payment of about $230,000 for the next 10 years. When the former vice chairman-chief creative officer left Doner in March 2008, he owned 32% of the agency and was to cash out to the tune of $55 million under a deferred-compensation plan the agency uses to pay out to its owners after they're retired, fired or deceased.

Doner Payout
But the payments he's received thus far from Doner have been for slightly less than $216,000 -- and would amount to about $3.5 million less than Mr. DeCerchio thinks he's entitled to over the full term of the payments. And so, in Circuit Court of Oakland County, Mich., the 34-year Doner veteran is suing the agency he worked to build, which could be required to effectively pay a $5.5 million salary each year for the next decade to an executive no longer working for it. That's going to put a serious dent in profit for an agency that posted $182 million in 2008 revenue.

In fact, at $5.5 million, Mr. DeCerchio's compensation for the next 10 years compares very favorably to that of active agency chiefs such as DDB's Chuck Brymer and BBDO's Andrew Robertson, who took home roughly $1.9 million apiece last year, according to Omnicom Group's proxy statement.

Doner CEO Alan Kalter declined to comment on the specifics of the lawsuit, as did Mr. DeCerchio's attorney, Constantine Kallas, who responded to a reporter's inquiry by hanging up the phone. According to the suit, filed in September, Mr. DeCerchio also alleges that Doner was a month late in commencing its payments.

Psychological blow
A lawsuit from Mr. DeCerchio is likely to shock many at Doner, where he is nothing short of a creative icon. After starting in the mailroom in 1974, he rose through the ranks and played a central role -- along with Mr. Kalter -- in transforming Doner from a midsize regional shop to the largest independent ad agency in terms of U.S. revenue, one that consistently competes for national accounts. His "Zoom, Zoom" campaign for Mazda is perhaps the best-known -- and most lucrative -- creative produced at the agency.

Given that legacy, news of a legal spat with him, coming as it does barely a month after Doner laid off 100 people (more than 12% of staff), is unlikely to help with staff morale.

Mr. Kalter said the payments to Mr. DeCerchio had nothing to do with the recent layoffs. "We took the proper, responsible steps to ensure he'd be paid just as every other partner who ever left the company has been paid," said Mr. Kalter. "There's no connection [to the layoffs.] Zero."

Of course, Doner's recent difficulties don't stop with staff reductions. It's in the process of losing its highly visible and valuable Expedia account. And the agency is still reeling in some respects from a brutal 2007 run that saw Hotels.com, Blockbuster, La-Z-Boy, Outback Steakhouse, Six Flags and Sylvan Learning Centers all depart for other shops.

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Contributing: Bradley Johnson

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