Last week, MDC CEO Miles Nadal and his former Chief Accounting Officer Michael Sabatino stepped down amid an SEC investigation. The announcement came late last Monday evening, but it wasn't out of the blue. When the company announced the SEC investigation in April, it also said that the investigation had been going on since October. Since then, the agency services holding company has undergone a number of changes. To keep track of those events -- including a largely unreported board revamp affecting MDC execs Lori Senecal and Stephen Pustil -- Ad Age has parsed a timeline.
October 2014: SEC begins an investigation into MDC Partners that will ultimately look into the company's accounting practices, trading information and Mr. Nadal's expenses.
February 2015: MDC adopts a new aircraft policy requiring Mr. Nadal "to reimburse the company for the allocated cost of the corporate aircraft for travel by any of his family members."
April 2015: MDC announces an SEC investigation into MDC's accounting practices, trading information and Mr. Nadal's expenses. Mr. Nadal agrees to pay $8.6 million back to the company. MDC's chief accounting officer, Michael Sabatino, is transferred to a new role working on special projects as of April 23 and is replaced by Chief Financial Officer David Doft. Following the announcement about the investigation, a handful of law firms launch their own investigation into the Toronto-based holding company on behalf of shareholders.
June 2015: MDC updates its corporate governance policies, reducing the number of management directors on its board to only one: Mr. Nadal. Effective July 1, MDC execs Stephen Pustil and Lori Senecal resign from their board roles. (Ms. Senecal joined the board in September 2014, around the time when she was promoted to president of the MDC Partners Network and global executive chairman of KBS+.) MDC Partners says it retained Spencer Stuart and commences a search to identify two to four new independent director candidates. Once found, they will replace independent directors Clare Copeland and Senator Michael Kirby, who will retire from the board on or before the expiration of their terms in June 2016. "This corporate governance [change] is probably long overdue, but it's what we would have hoped for," said John Janedis, managing director, Equity Research, at Jefferies on July 24. "There needs to be more independence."
July 2015: MDC announces that Messrs. Nadal and Sabatino will retire and forgo their severance amid the ongoing investigation. The company discloses that Mr. Nadal has agreed to pay MDC $1.88 million, and $10.58 million over the next couple years (or sooner if the company sells), in addition to the $8.6 million the company said he agreed to pay in April. Scott Kauffman is named Mr. Nadal's replacement. As a result of the corporate governance changes in April, Standard & Poor's three months later upgrades the company from a B to B+ rating.