An advert for what can go wrong in ad-land
One of the grandest advertising agencies has lost some of its grandest names. Co-founder (and until last night, executive director) Maurice Saatchi joins Lord Michael Dobbs, Sir Michael Peat and Lorna Tilbian in a boardroom exodus.
M&C Saatchi chairman Jeremy Sinclair said “we have accepted the decision of these directors to resign.” No thanks for the years of service, no praise for a job well done.
You don’t need a magnifying glass to read into that. This was an old-school boardroom bloodbath befitting the cast of characters involved.
Lord Dobbs is the creator of House of Cards — the famous political drama riddled with plots, intrigue and scheming egos. Peat was once private secretary to Prince Charles and Tilbian is a City grandee once dubbed “the Queen of media.” She only joined the board at the start of last year.
Sinclair’s brief statement, announced last night after the market closed, said the firm planned to “reconstruct our board with new independent directors” charged with reviewing “all aspects of our governance.”
He added that he was determined to restore profitability. Clearly drastic times called for drastic measures. Last week’s profit warning saw the agency’s share price tank to 79p. It was approaching £4 in March.
Accounting “misstatements” and a fall in profits (plus the loss of valuable accounts) have left the venerable firm teetering on reputational ruin. Analyst Michael Hewson described last week’s revelations as “excruciating” and questioned “how the business was being run over the last few years.
Russ Mould of AJ Bell agreed, labelling the situation “a mess” and noting that even the agency’s top creative minds “would have a tough time selling its own update.”
Last night one of the City’s top media analysts was still trying to get his head around the boardroom cull. “Perhaps they’ve stepped down now to protect their reputations in case anything else comes out?” he mused.
Alternatively, he suggests the grand quartet may have tried to oust chief executive David Kershaw but having failed — “they’re not natural assassins” — they stepped down in defeat.
Whatever triggered the boardroom exodus, it’s hard to see Kerhsaw’s position as rock solid — and given the current state of the company (and its share price) anything’s possible — from a management buyout to a swoop from a rival.
It’s even possible that Kershaw and his team manage to turn around the firm’s fortunes. But while they try, it seems the knives are out in ad-land.
Main image: Getty