The two partners at Select Resources International, routinely described as the "gold standard" of agency matchmakers, are locked in a dispute likely to force a split between SRI CEO and prime shareholder Catherine Bension and President Russel Wohlwerth, who has a minority interest. At the heart of the dispute is a disagreement over compensation and accounting practices that may have artificially depressed the consultancy's income.
Though the two are currently involved in an arbitration hearing, Mr. Wohlwerth is believed to remain under contract and both partners continue to work together in their Santa Monica, Calif., offices as the arbitration process unfolds. Mr. Wohlwerth declined to comment.
SRI has risen to the top of a small field of consultancies whose main service is to manage reviews for marketers. Over time, the company has handled more than 350 agency reviews, with billings over $5 billion. At the time of Mr. Wohlwerth's promotion, SRI said more than 70% of the marketer-agency marriages it created over the previous five years were still in place.
Its client list -- including Starbucks, Mitsubushi Motors, Nordstrom and Hewlett-Packard -- would make many an ad agency jealous, all the more so since last month when Wal-Mart tapped SRI to handle its review. Ms. Bension, who is handling the review, didn't return calls for comment.
A Wal-Mart spokeswoman said, "We cannot comment on what is going on between [the partners]" but said, "We don't anticipate it having any effect on our business relationship."
Since it was founded in 1992 by former Grey executive Michael G. Agate, SRI has brought a distinct process to searches, compiling large amounts of information on a vast amount of ad agencies. That search-consultant business was, at the time, under attack from agencies concerned with consultant demands for confidential financial information and with the practice of pay-for-play reviews.
Said one agency executive: "SRI was the gold standard in a business that needed a gold standard. It raised all the boats and the image of the search consultant."
The move, moreover, may have repercussions for the entire West Coast ad industry. Paul Venables, founder and co-creative director, Venables, Bell & Partners, San Francisco, called SRI a "fair and equitable" search consultancy, but said the partners' dispute had the potential "to undermine their whole business."
He said a split could be particularly hard-felt on the West Coast where SRI "brought a lot of national pitches."
"Select has been one of the jewels of agency search-relationship compensation businesses" with a reputation that's spread well beyond the West Coast, said Bill Duggan, exec VP, Association of National Advertisers.
Ms. Bension, who joined Mr. Agate in 1997, and Mr. Wohlwerth became financial partners at the agency in 2002. Mr. Wohlwerth, a former DDB executive, was promoted to president of SRI in February 2005.