Doner CEO Recants: Pension Fund Not in Compliance

Alan Kalter's Memo to Employees Follows News That Former CMO Bryan Yolles Is Suing Agency Over Plan Disclosures

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CHICAGO (AdAge.com) -- Doner CEO Alan Kalter told employees today that the agency's pension fund is not in compliance with all laws and regulations, a situation he said could threaten "our company's good name."

Alan Kalter
Alan Kalter
A week after assuring staff at the Southfield, Mich.-based agency that the agency was in compliance, he released a memo to staff this morning in which he acknowledged that's not the case.

"I have learned of information that makes my statement about our compliance inaccurate," he wrote. "Late yesterday, I led a point-by-point review of our pension practices with the people involved and found that I was not fully informed about the agency's compliance with notification rules to pension participants. What I discovered was that we have not properly communicated with current and former employees about their pensions."

He continued, "To say that I am deeply concerned that I did not accurately inform you is an understatement. As the principal of this agency, I understand the impact this has on our company's good name, but more importantly, your trust, without which we cannot succeed."

The disclosure to staff comes one day after news that the agency has been sued over pension disclosures by its former chief marketing officer, Bryan Yolles.

Mr. Yolles, a 15-year Doner employee who departed in late 2007, has sued for information relating to how much he's entitled to under the agency's pension plan. In the suit, he says he's made more than 10 attempts to extract information from the agency relating to his pension since his departure without any luck -- until this week, when Doner forked over the documents.

The complaint was filed in U.S. District Court. Mr. Yolles, who is global CMO of Interpublic's Universal McCann, is also asking for legal expenses plus $110 per day he had to wait for the information, which the complaint says he's entitled to under federal law. That comes to about $85,000.

Mr. Yolles' Farmington, Mich.-based attorney, David Lawrence, declined to comment on any specifics about the case, including whether the receipt of the long-sought documents would resolve it.

Unrelated to DeCerchio suit
The suit is wholly unrelated to the lawsuit filed against the agency by former Vice Chairman-Chief Creative Officer John DeCerchio. That dispute concerns payouts related to Mr. DeCerchio's 32% equity stake in the agency. Mr. DeCerchio contends he's owed about $55 million over 10 years; Doner says it owes Mr. DeCerchio $51.5 million during that period.

A Doner spokeswoman declined to comment on Mr. Yolles' litigation.

But in an interview about Mr. DeCerchio's lawsuit earlier this month, Mr. Kalter was asked about Doner's pension fund, which at that point had been the subject of a number of then-unsubstantiated rumors concerning possible lawsuits.

Mr. Kalter said the agency had followed every law and regulation concerning its pension but acknowledged that the agency did a poor job communicating information about the plan to employees, some of whom were unaware they were in enrolled in a pension plan.

He repeated that insistence in a memo to staff last week but today said he misspoke.

Mr. Kalter said the agency will take three steps to deal with the situation: It will order Aon, which manages its plan, to send out statements to employees; bring in a consultant to determine how to achieve compliance; and hire a law firm with experience in pension matters.

It wasn't immediately clear if the agency would face more lawsuits a result of the pension issues, but Mr. Kalter's memo suggests the agency is girding for a test, comparing the issue to the untimely death of its founder and the 1996 fire that burned the agency's office.

"Our agency has been tested twice before, once when Brod Doner died unexpectedly and then the infamous fire. We met those challenges and flourished afterwards. Please know that I will work to make sure we meet this challenge, and that I will work tirelessly to make sure that you are fully informed with respect to your pension benefit to prevent a situation like this in the future. The senior management of the agency will join me in making this happen.

"I owe it to your loyalty, as well as my good name, to do nothing less."

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