|Jim Heekin was named chairman and CEO of Euro RSCG Worldwide, the largest of Havas' two global advertising networks.
RED LOBSTER MARKETING CHIEF MEETING WITH AD AGENCIES
$80 Million Account Currently at Euro RSCG Tatham Partners
EURO RSCG MIDDLEBERG MERGED INTO MAGNET COMMUNICATIONS
Havas Consolidates Public Relations Firms
HAVAS COMPLETES BULK OF LAYOFFS, OFFICE CLOSINGS
Continues With Consolidation of Marketing Units Into Euro RSCG
HAVAS REPORTS $64.9 MILLION NET LOSS FOR FIRST HALF
Will Shed 20 Agencies, Chop 850 Jobs, Restructure Organization
Robert Schmetterer, Havas' president and chief operating officer as well as chairman-CEO of the company's global advertising network, Euro RSCG Worldwide, announced his immediate retirement.
Simultaneously, Euro RSCG's president and chief operating officer, Jim Heekin, was named the global network's chairman-CEO.
No Schmetterer replacement
A Euro RSCG spokeswoman said no replacement will be found for Mr. Schmetterer, the second-in-command to Havas' chairman-CEO, Alain de Pouzilhac, on the holding company level.
One executive inside Havas attributed Mr. Schmetterer's departure to "a power struggle" between Mr. de Pouzilhac and Mr. Schmetterer. "The company hasn't done well. It has been an uneasy partnership for some time," the executive said.
Mr. Heekin would not comment on the executive's claim.
"I'm pleased to be running the company," the 54-year-old Mr. Heekin said in an interview with AdAge.com this morning. "The timing is right." Mr. Heekin was told of the changes last week by Messrs. De Pouzilhac, 58, and Schmetterer, 60.
Mr. Heekin, who was fired as head of Interpublic Group of Cos.' McCann Erickson WorldGroup in February 2003 following a series of financial troubles at the global network, joined Euro RSCG last September.
Following the announced management changes, the company later issued a statement denying the "unfounded rumors that circulated in the financial markets ... regarding alleged accounting irregularities." In the statement, Havas asked French authorities to "immediately launch an investigation into possible manipulation of the Havas share price."
A Paris-based financial analyst said the rumors of accounting irregularities appeared to have started on French-language financial Web sites. He said Havas has asked for an investigation by French financial watchdog the AMF (Authorite des Marches Financiers).
"The AMF itself decides whether to launch an investigation, after looking carefully into the possibility that there was an attempt at share price manipulation," the analyst said. "Only if it has a suspicion that something was seriously wrong does it swing into action. Havas itself is therefore in no position to demand the opening of an investigation -- which is a long and relatively rare procedure."
A Havas spokesman said the rumor was begun "orally" by French stock market traders "trying to make a fast buck by lowering the share price."
"We got to know about it when a reporter from Bloomberg called us telling us he'd heard a rumour of accounting irregularities," the spokesman said. "We were so outraged that we immediately put out a statement denying the rumor and demanding an investigation by the AMF. Our share price has now gone up again -- so those responsible for the rumor probably made a great deal of money."
Reuters reported that Havas' share price dropped this morning on the news of Mr. Schmetterer's resignation due to speculation that his departure could be linked to the rumors of accounting irregularities. The share price dropped by about 10%, then rose again to close down by about 4%.
Havas is the world's sixth largest advertising holding company. Euro RSCG Worldwide is its global network, while Arnold Worldwide Partners has creative shops scattered across various countries worldwide. Media Planning Group plans and purchases media placements in the same markets.
Euro RSCG Worldwide is the largest entity within Havas, which had a tough 2003: Revenue declined 18.8% during the first half of the year. Last summer, seeking to improve its financial performance, the company announced a reorganization plan. One result of the move was to reinforce Euro RSCG Worldwide as Havas' dominant network.
For Euro RSCG globally, last year "wasn't a banner year," Mr. Heekin said. But, in what he described as a benefit of the reorganization, about 20 or 30 companies, such as direct-and-database marketing company Brann Worldwide, "have been brought into Euro RSCG Worldwide," he said. "Those additions, plus the money [resulting from Havas' restructuring], allowed us to rid ourselves of any inefficiencies and redundancies in our cost structure."
Mr. Heekin said he has spent the last four months "getting up to speed." Inheriting the top job at Euro RSCG was inevitable: His contract stipulated he would get the job by January 2005, Mr. Heekin said. "The plan was to work collaboratively with Bob, which we are doing," he said.
The change was a result of a confluence of circumstances, Mr. Heekin said. "Bob's turned 60. One tends to assess things when one turns 60. I think my learning curve here was way ahead of what Bob had anticipated. I think all of those things" were considered. "I was surprised only in that I wasn't prepared for it to happen that day."
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Laurel Wentz and Mark Tungate contributed to this report.