Shareholders who attended Omnicom's annual meeting May 21 had every reason to believe nothing was amiss with the board in attendance. The next day, however, director and audit chair Robert Callender quit after he reportedly raised questions about a private venture last year that absorbed Omnicom's Internet holdings. As required, Omnicom promptly informed the New York Stock Exchange.
Yet it wasn't till June 5 that Omnicom disclosed the departure to the Securities and Exchange Commission. Omnicom says the SEC filing was "optional," and says its stock-exchange report was accessible to anyone who went to the NYSE records room. But the standard for disclosure is the SEC, and the investment world (and Omnicom employees and clients) learned of Mr. Callender's departure after the SEC filing-two weeks later.
Post-Enron, it's imperative investors receive disclosures relating to finances and accounting. Mr. Callender's resignation-even as the company was searching for a replacement for Arthur Andersen-was material to investors. Ironically, the day of Omnicom's stock implosion, the SEC proposed a rule requiring companies to report the departure of any director within two days.
Last week, Omnicom learned what happens when investors lose confidence: The stock tanked, losing $2.8 billion in value the day a Wall Street Journal story examined Omnicom's accounting and reported questions raised by Mr. Callender. President-CEO John Wren vows to do "whatever we need to do" to rebuild confidence. Omnicom needs good accounting and accountability-and both require full disclosure.