NEW YORK (AdAge.com) -- Interpublic Group of Cos. is not renominating former CEOs David Bell and John Dooner to its board of directors, according to a proxy letter sent to shareholders and filed with the Securities and Exchange Commission today.
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The board is being shrunk from 10 directors to eight. That leaves only one director from current management, Chairman-CEO Michael Roth, and seven outside directors.
Mr. Bell preceded Mr. Roth in the role of Interpublic's CEO. He was sidelined earlier this year, as the company struggled with its turnaround. Mr. Dooner was bounced from the helm of Interpublic in February 2003, and named chairman-CEO of its largest operating unit, McCann Worldgroup.
"In 2002, Interpublic moved toward a board made up primarily of outside directors. In keeping with best practices in corporate governance, we are now moving to a board made up solely of independent directors, other than the company's chief executive officer," Interpublic said in a statement.
Votes against sale
Also today in a proxy letter to shareholders filed today with the SEC, Interpublic's board of directors urged a vote against a proposal to sell the company. The proposal will be on the agenda at the annual shareholder meeting next month.
The sale proposal came from activist shareholder Charles Miller, who had submitted to Interpublic a "maximum value resolution" urging the "prompt sale" of the struggling company to the highest bidder. Interpublic asked the SEC to allow the resolution to be kept off the shareholder meeting agenda, but the SEC declined to do so.
The board's recommendation comes as no surprise, as it follows earlier company statements claiming that the third-largest holding company's ailing stock price would be improved "by resolving financial reporting issues and improving operating performance by focusing on key assets and resources -- not selling the company or its parts."
The proxy letter echoed that position. "The board agrees that its primary obligation is to maximize long-term shareholder value; however, the Board unanimously opposed the view that the way to maximize value is to put Interpublic up for sale in an auction process."
For the past few years, Interpublic has been struggling with operational and financial issues. On Sept. 30, it restated five years of financial results, knocking off $550 million in earnings. The disclosure followed a six-month investigation of its books that delayed both earning reports and its shareholder meeting. The meeting is now set for Nov. 14. Last month, the company said its turnaround plans -- once set to be complete sometime in 2006 -- had to be reconsidered and will be addressed at gathering of investors and analysts early next year.
The board, in the proxy, also recommended that shareholders reappoint long-term auditor PricewaterhouseCoopers, which has worked for the company since 1952. For the fiscal year 2004, Interpublic paid the accounting firm $92.67 million dollars, more than double its fees in 2003.
Other proposals on the agenda include an employee stock purchase plan and the re-election of the board of directors.