At the holding company's annual meeting, Chairman-CEO Michael Roth also told gathered investors that Interpublic is still considering a merger between marketing-services agency Draft and traditional ad network FCB in an effort to "create a modern-agency model, grounded in consumer insights with a full range of channel-neutral communications." He said the model the company is considering involves "one P&L [profit and loss] and one management team."
Howard Draft expected to lead
Insiders familiar with the discussions say the merger is likely to be announced in coming weeks. These people say Howard Draft, CEO of the eponymous agency, is likely to emerge as head of the combined unit.
At today's meeting, shareholders of the No. 3 ad-holding company, which has been struggling for years with accounting errors, management turmoil and client losses, also rejected a proposal to separate the roles of chairman and CEO. Both that and the performance initiative, driven by activist shareholders and opposed by Interpublic's board of directors, were defeated in overwhelming fashion.
Investor Ken Steiner, who presented the proposals, said after the meeting that the results came as no surprise. "The idea is to push them in the right direction, give them some reason to act," he said. "Every year you try to accomplish something, although it would be best if they had the right policies in place in the first place."
More than 90% oppose
Interpublic's board of directors opposed the efforts on the grounds that it has already taken the corporate-governance steps on both fronts in its own policy that allows the review of performance-based compensation during restatement periods and in its move in recent years to an independent board with a presiding director. Shareholders responded, with more than 90% voting against each proposal.
Interpublic is in the midst of a turnaround effort that has been mired by accounting difficulties. The company's current goals are to reach double-digit profit margins and peer-level revenue growth by 2008. In the first quarter of 2006, Interpublic posted a $182 million net loss.
Like last year's investors confab, the meeting was a gentle affair and in sharp contrast to bygone years' events that had been dominated by activist shareholders piqued by the company's struggles. Shareholders today also re-elected the slate of directors, reupped with independent auditor PricewaterhouseCoopers and adopted a performance-based incentive plan.