'Lovemarks' may come back to bite Roberts

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He's opinionated, bright and almost embedded at several key clients, but Saatchi chief Kevin Roberts has been accused of being more focused on his pet projects than the agency he runs.

The very public recent fallout between Mr. Roberts, CEO of Saatchi & Saatchi Worldwide, and Mike Burns, a former vice chairman and worldwide account director on General Mills, has opened a Pandora's box of issues for the agency. One of the most serious: Do Mr. Roberts' multiple business activities present conflicts between his personal interest and that of the agency he leads?

Last month, a hacker broke into Saatchi's e-mail system and sent a companywide missive that accused Mr. Roberts of "using Saatchi & Saatchi as his personal promotional device while the company's reputation and credibility declines under his leadership."

supporters, detractors

The 55-year-old, who was born in Britain but calls himself a New Zealander, has built a profile in recent years as much by promoting a marketing theory, dubbed "Lovemarks," and a management philosophy-cum-consultancy known as Peak Performance, as for running a global advertising agency. He is agency boss, but also entrepreneur and polarizing figure.

"Anyone high profile attracts supporters and detractors," said Richard Pinder, president, Europe, Middle East and Africa, Leo Burnett Worldwide, which, like Saatchi, is owned by French advertising holding company Publicis Groupe. "Good on him for having a point of view, being determined and provocative and saying what he thinks."

But others counter that Mr. Roberts, who started his career in marketing as assistant brand manager for London's famous Mary Quant cosmetics and later held posts at brewery Lion Nathan, beverage maker PepsiCo and consumer-products giant Procter & Gamble Co., should be more careful about what he says and does.

Leadership and corporate-governance expert Jeffrey Sonnenfeld, associate dean of Yale School of Management's Chief Executive Leadership Institute, sees a problem in the blurring of Mr. Roberts' roles. "It is confusing at a minimum and misleading to an extreme for clients and for employees. Whose agenda is he pursuing at which time?"

To Mr. Sonnenfeld's point, it is widely believed that the Feb. 14 mass resignation of 17 of Mr. Burns' employees at Saatchi & Saatchi New York-since been hired by Publicis Groupe competitor Interpublic-occurred out of deep-seated frustration with Saatchi's senior-most chiefs. Saatchi has also sued Mr. Burns, charging him with breach of fiduciary duty and with plotting to move General Mills business from the agency. The suit asks for damages of at least $3 million. "There was a lot of disillusionment," said one executive familiar with the agency.

Mr. Roberts' most eyebrow-raising involvement, to some, is as a director of, and shareholder in, Inspiros, a New Zealand consulting firm that runs training seminars on the Peak Performance management theory. Saatchi clients that have used Peak Performance training include Procter & Gamble. Another, Toyota, has been introduced to it. (Mr. Roberts' academic pursuits include posts at both the University of Waikato, New Zealand, and the University of Limerick, Ireland.)

not clear

Numerous Saatchi employees and clients interviewed by Advertising Age were not clear on where Saatchi's interest in Peak Performance ended and Mr. Roberts' continued.

One former senior P&G executive calls Mr. Roberts' training program a "clear conflict of interest." A P&G spokeswoman, however, confirmed that a number of P&G managers have attended Peak Performance training and said "it was clear from the beginning that that PPO training was not associated with Saatchi and Publicis." Maurice Levy, Chairman-CEO, Publicis Groupe, said that "Mr. Roberts' involvement with Inspiros is contractual and there is no conflict of interest with Publicis Groupe."

Executives familiar with Saatchi say these seminars are presented to current and potential agency clients as being sold through the agency, which a Saatchi spokeswoman disputes as incorrect.

Neither Saatchi & Saatchi nor its parent, Publicis Groupe, hold any financial stake in Inspiros, according to a Publicis Groupe spokeswoman, who also said Publicis pays Inspiros for all training seminars used. Mr. Roberts maintains that Inspiros' ownership is fully disclosed (a Publicis Groupe spokeswoman, however, conceded that that Inspiros' ownership will first be disclosed to shareholders in the company's annual report, due out in May).

For their efforts, Mr. Roberts and Inspiros, whose shareholders include other Saatchi employees-Derek Lockwood, worldwide director of design, James O'Mahoney, chairman and CEO, Saatchi & Saatchi Australiasia and Asia Pacific-receive a daily fee, which, according to one executive familiar with the matter, varies but can reach as much as $100,000 per day.

'ludicrous'

Mr. Roberts, through a spokeswoman, called that amount "completely ludicrous" and described Inspiros' fees as on par with competitive management-consulting services. One former P&G executive said that the price tag on a Peak Performance program Mr. Roberts pitched to P&G executives for use throughout the company was "a couple of million bucks." Mr. Roberts' denied that; P&G would not comment.

One public-company-accounting expert said U.S. companies are required to report "related-party" transactions, such as Inspiros' selling to Publicis and affiliates, but because Publicis is based outside the U.S., such disclosures are not required. As for selling services to clients or potential clients, the expert said, that's "a corporate-governance issue."

contributing: emma hall

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