Not the first time

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Michael Roth has experience running an industry struggler. Last time, his solution was to sell out in a deal that enraged top shareholders and enriched top management.

As chairman-CEO of MONY Group, Mr. Roth took the old Mutual of New York public in 1998, and the stock soared to $51 by early 2001. But then profits tanked and shares tumbled.

In September 2003, MONY agreed to sell to French insurer AXA for $31 a share. That was only 6% above the pre-deal share price and more than $10 below book value. MONY's top four shareholders slammed the plan in a conference call Mr. Roth held with the Street.

"It's been five years of bad performance capped by this enriching transaction," money manager Richard Grubman said on that call. "Enough's enough. We're going to vote against it and we're going to throw you out because, frankly, you know, the shareholders, your employees, your agents, and your customers ... couldn't possibly do worse without you." MONY later asserted Mr. Grubman's firm, Highfields Capital Management, had its own agenda: Highfields took a so-called short position in AXA bonds, allowing it to profit if the merger were scrubbed. Mr. Grubman didn't return a phone call last week.

Proxy advisers Glass, Lewis & Co. and Institutional Shareholder Services issued blistering reports recommending a "no" vote on the deal. Glass Lewis said MONY took a "fire sale" price that let management "mask its own failures and collect tens of millions in golden parachutes."

MONY decisively won court challenges and defended the deal. In the end, it squeaked by with a 53% affirmative vote. AXA closed the $1.5 billion deal July 8, 2004. Mr. Roth last week said: "Those who were most vocal and virulent in opposing the acquisition had an undisclosed economic interest in defeating the transaction. MONY management was vindicated, both in court and in the shareholder vote, in terms of how we conducted the process and maximized shareholder value."

Mr. Roth walked away with about $22 million. Already on Interpublic's board, he became chairman less than a week later. He still has an AXA tie: It's been an Interpublic investor since at least 1996.

What if Interpublic were sold? Mr. Roth could be in position to get severance equal to three years' pay-some $6 million to $8 million for selling another industry struggler.
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