Miles Nadal is stepping down as CEO of MDC Partners and as chairman of the Board of Directors, the agency company announced Monday evening.
Scott Kauffman, who has served as presiding director on the company's board of directors, will succeed Mr. Nadal as chairman and CEO. Irwin Simon, a current member of the board, has been appointed as presiding director.
Mr. Nadal's retirement comes amid an SEC investigation, beginning in October, into MDC's accounting practices, trading information and Mr. Nadal's expenses. In May, the company said Mr. Nadal would pay back his employer $8.6 million, and that the investigation would be ongoing.
The company Monday evening also announced additional repayment by Mr. Nadal.
"Mr. Nadal has agreed to repay to MDC Partners all expenses that were requested to be repaid by the Special Committee of the Board of Directors, including an additional $1.88 million that was recently identified," the company said in its statement. "In connection with his retirement, Mr. Nadal is required under the Company's Incentive/Retention agreements to repay $10.58 million in retention amounts received between 2012 and 2015. In addition, Mr. Nadal is not eligible for any compensation payments or severance."
Additionally, Michael Sabatino, formerly chief accounting officer of MDC Partners, has resigned and agreed to repay the company $208,535 in cash bonus payments received between 2012 and 2014, the company said.
Mr. Nadal is credited with building MDC into a mid-sized holding company and an investor darling known for its investments and ownership stakes in hot shops like 72andSunny, CP&B and KBS+. He's known for fostering a culture that offers both support and independence to his shops and their leaders.
An MDC spokeswoman said Monday night that Mr. Kauffman would build on MDC's success so far. "Under his leadership, we remain wholly committed to the values of innovation and partnership that drive us to attract the best talent in the industry, creating gains for our clients, and ultimately, performance for our shareholders," she said in an email.
Stock in MDC hit a 52-week low Monday, but it may not be all bad.
In a note to investors, Evercore's Tracy Young wrote: "We view this evening's announcement of Miles Nadal's retirement as largely positive and see his replacement, Scott Kauffman, who has served on MDCA's Board for the past nine years, as providing a seamless transition near term as the company continues its growth momentum. We view today's 6% stock decline to a 52 week low as unwarranted and expect some relief in the stock tomorrow although we would note that the SEC investigation remains ongoing, and are keeping our Hold rating.