We've criticized Interpublic's directors on this page for being blissfully unaware as the holding company's operating, management and accounting problems unfolded ("IPG: Blame lies with the board," March 21). Interpublic made a good move early this year in appointing the strong-willed Mr. Roth, a former outside director, as CEO. But Interpublic complicated matters by leaving two ex-CEOs on the board. As we said in that earlier editorial: "It's hard for a new CEO to have candid discussions about changes when the old guard is sitting at the table."
Shareholders next Monday will get a chance to fix this problem when they vote at the annual meeting on Interpublic's proposed board slate of eight: Mr. Roth and seven incumbent outsiders. "This looks like they're doing the right thing," said the Corporate Library's Nell Minow, a corporate-governance expert.
Not all the news is positive. The board and management let down share owners when Interpublic tried to keep off the proxy an activist shareholder's proposal to put the underperforming company up for sale. SEC action forced Interpublic to put the issue up for vote. (If history of similar proposals is any guide, the proposal next Monday will be defeated by a huge margin.)
The board should be viewed with skepticism given the company's recent record. Six of the seven outside directors were onboard before Interpublic's accounting problems came to light in August 2002. In six of the past 10 years, one or more members missed 25% or more of board or committee meetings; it's a bit hard to represent shareholders if you don't show up.
Interpublic would do well to recruit one or two outside directors with deep experience in turnarounds and no connection to Interpublic's troubled past. But in removing two insiders from the board room, directors are taking a positive step toward board independence.