The Arnell Exodus

Was Peter Arnell laid off from his namesake agency as a cost-cutting move?

News that Arnell had parted ways with the Omnicom shop broke with the emergence of a lawsuit last week. The Manhattan agency, now led by Arnell’s wife, Sara, is also giving up its posh harbor views at 7 World Trade Center to move to an Omnicom building on Varick Street in SoHo as part of an agency downsizing. It appears that, as part of the physical shift, Arnell—who famously bought an $18.3 million Katonah estate from music honcho Tommy Mottola around the time the ad exec sold his shop to Omnicom—was deemed a luxury the agency could no longer afford.

Sara Arnell, a principal at the shop, has been named CEO and replaces her husband, who was fired on Feb. 2. Arnell recently sued the agency his wife now runs, in a complaint that also names Omnicom. The agency founder accuses the shop of trying to keep an eclectic array of vintage glasses and other collectibles that were presumably part of the initial sale to Omnicom along with acquisitions he later made on the company’s dime.

It’s not clear who at the agency or at Omnicom fired Arnell or what involvement Sara Arnell had in that decision. Arnell’s agency lists nearly 200 marketers on its Web site. In reality, it is down to about six clients, insiders say.

A former assistant editor at Vanity Fair, Sara Arnell married her husband in 1988 and has held agency titles like chief strategy officer. She did not return calls for comment. Peter Arnell could not be reached, and Omnicom declined to comment.

Assuming the Arnells are still a couple, the agency founder’s litigious response to his dismissal must make for interesting conversation at the family’s opulent dinner table. In Peter Arnell’s suit, filed two weeks ago in Manhattan Supreme Court, he leaves open the possibility of future litigation, as he questions “whether (his) termination was lawful.”

Arnell’s ego and self-promotion overshadow some of his agency’s well-received early hits for clients like DKNY, Samsung and Banana Republic. His most recent misses have attracted an almost gleeful response from critics. Many said his 2009 redesign of Tropicana orange juice cartons made a prominent consumer brand look like a generic store product. The new packaging was quickly dropped by corporate parent PepsiCo. In 2008, as acting chief of innovation at Chrysler, Arnell said he was taking his “rightful place as an industrial designer” when he created an electric vehicle called the Peapod, which he named after its creator, Peter Eric Arnell. The end result was dismissed as a tricked-out golf cart unable to go faster than 25 miles per hour.

If Arnell has been losing clients, that exodus may have been helped by the agency founder’s curious approach to damage control in the wake of the very public Tropicana debacle. His response: “So what the hell—I got paid a lot of money.” In the same 2009 Newsweek interview, he went on to describe his redesigned but much-maligned Pepsi logo as “bullshit.”

Arnell’s elitist tastes and snobbery have seemed ill-suited to a business of consumer populism. A leaked memo of his to PepsiCo invoking Pythagoras, Euclid and Leonardo da Vinci has become the stuff of industry farce.

That level of pretension may have its roots in the postmodern offices of architect Peter Graves. Arnell, whose academic credentials stop after graduation from Brooklyn Technical High School, talked his way into an internship with Graves, and he met Princeton architecture student Ted Bickford there. The two collaborated on books about architects and artists and created the ad agency Arnell/Bickford in 1980. Around that time, Dawn Mello, then the fashion director of Bergdorf Goodman, asked them to create ads for the high-end retailer. The agency subsequently came into prominence when Donna Karan launched her DKNY clothing line, and Arnell’s shop produced the designer’s Manhattan skyline logo.