Chairman Richard Fizdale, who regained the CEO title in the ouster of President-CEO Bill Lynch and Vice Chairman-Chief Operating Officer James Jenness (AA, March 24), said he couldn't retire at yearend as planned with Burnett in its current condition.
"We've been losing some clients," he said. "The bucket has been leaking."
KEY ACCOUNT LOSSES
In recent months the agency has lost longtime client United Airlines, a $100 million account, and key creative assignments from Miller Brewing Co. and others.
But one executive close to the situation said Mr. Fizdale actually "didn't want to retire," and that the shake-up enabled him to once again take charge.
The executive changes leave Burnett with a raft of top executives who are close to retirement age, but with no clear successors to Mr. Fizdale.
Mr. Fizdale discounted the succession issue, noting that although he'll turn 58 in August, he plans to remain in charge for "a long time."
"There is no succession plan," he added. "That isn't even something that has to be dealt with this year."
Burnett will be forced to look toward its future, however. The agency has a tradition-lifted in this instance-that executives retire at Mr. Fizdale's current 57. James Oates, who took over as agency president-from president, Asia/Pacific-is 53 and was scheduled to retire later this year; Kerry Rubie, 57, new vice chairman-client services worldwide, was retiring in August.
In addition to succession, Burnett is looking at its long-term financial future. And some close to this month's shakeup said there has been discussion about whether the agency should go public or form an alliance with a publicly traded agency.
Burnett, with $5.8 billion in global billings last year and $866.3 million in gross income, has long prided itself on its private status.
Mr. Fizdale last week categorically denied an initial public offering is being considered.
Still, one executive close to the situation said several of the 17 board members would favor a stock offering.
"At the moment, [going public] is the furthest thing from my mind," said Mr. Fizdale. "Remaining private is extremely important to us.
"There is no reason to do it," he said.
Alan J. Gottesman, managing director of ad industry consultancy West End Communications, said if going public was being discussed, this would not have been the time to oust Messrs. Lynch and Jenness, the executives credited with leading the agency to financial health- by Mr. Fizdale.
"Investors aren't going to buy stock because the ads are cute. The decision is going to be primarily financial," said Mr. Gottesman.
Supporters of Messrs. Lynch and Jenness said the two took the fall for doing what they were charged with doing: cutting costs.
But Mr. Fizdale maintains Messrs. Lynch and Jenness-who couldn't be reached for comment-took cost-cutting too far.
"People whose job it was to come up with ideas for clients were overburdened with process," said Mr. Fizdale, citing the example of frequent reviews with client teams about financials, meetings that used to be held only a few times a year. The cost-efficiencies "hindered staffing" on certain clients' business, he said.
STAFFING ISSUES EASED
"It will be a lot easier in the future for people to get staffing. We'll return control of the budgets to the departments," he said. "There has to be an approval process, but it has to be responsive to client needs."
How the coup has affected large Burnett clients, such as Kellogg Co., Procter & Gamble Co. and Hallmark Cards-all close to Messrs. Lynch and Jenness-is uncertain. None was contacted before the March 21 board meeting at which the executives' departures were announced, although Mr. Fizdale and other top executives spent the last week working the phones.
An agency executive close to Burnett believes no clients will leave the agency for the time being, but said clients will be "watching management with a close eye."
Mr. Fizdale is known for his trouble-shooting skills, and has close ties with Philip Morris Cos., General Motors Corp.'s Oldsmobile Division and Kraft Foods.
On the other hand, he was the top creative executive on Miller Lite when Burnett lost the assignment to Fallon McElligott, Minneapolis, late last year.
Burnett did retain media buying and has since gained further media business from Miller, a unit of Philip Morris.