Compensation

a similar product invention unit last May, Industry@Saatchi, that’s paid at times through equity and met its two-year revenue goal in just six months, office CEO Lee Daley said.

“The FTE model does not really fit either party’s purpose,” said New York lawyer Rick Kurnit, referring to the full-time equivalent measure of agency labor. Kurnit, a partner at Frankfurt, Kurnit, Klein & Selz, added, “The old model of compensation has broken down. Paying for execution doesn’t work.”

Said Foote Cone & Belding CEO Steve Blamer: “Hours are irrelevant. What would you care if a plumber takes two or 22 hours to fix something? You’ll judge the job by its success.” FCB is working with an existing client to launch a new product, and the IPG agency will be paid a percentage of the product’s sales, though Blamer wouldn’t identify the client.

Omnicom’s GSD&M waived its fee for an equity stake in SupportKids.com. The shop also earns a performance bonus for its work on the U.S. Air Force account, with recruitment targets as the key criterion. “One of the problems with alternative compensation is determining how much influence advertising has on performance,” said agency representative Eric Webber. “I think it’s a good way to do business, but there are so many factors that come into play.”

Jon Bond, co-chairman of MDC’s Kirshenbaum Bond + Partners, which has taken stock from clients such as Martha Stewart as an element of compensation, sees numerous advantages to having a stake in a client’s business. “The client treats you like a partner and not a vendor,” Bond said. “No. 2 is economics: If you have the ability to impact a client’s bottom line and you have the ability to make geometrically more money, you do what’s good for you. If I make a client a boatload of money and I get the scraps of the compensation, it’s not fair.”