After a Year of Crisis, IPG Names New CEO

Interpublic Group's board of directors may have finally pulled the trigger on its besieged top executives, but the saga is far from over. New CEO David Bell will immediately be put to the test, as the company releases an earnings report this week that insiders describe as "dismal."By replacing John Dooner with Bell and dismissing Jim Heekin as CEO of the sputtering McCann-Erickson WorldGroup, the board changed captains, but the ship is still surrounded by rocks. Bell, formerly IPG vice chairman, knows he must move quickly. "The honeymoon is over at close of business today," he said Friday, his first full day on the new job. The board's confidence in Bell stems from his experience running a public company. He was CEO of True North Communications from 1999 until 2001, when IPG acquired the holding company for $1.6 billion. While steering True North, Bell cultivated relationships with analysts, an immediate advantage over former chairman and CEO Dooner, who landed at IPG with few friends in the financial sector. "[Bell] was very accessible to Wall Street when he ran True North," said Bear Stearns' Alexia Quadrani. The peripatetic Bell is also familiar with most corners of the company. He noted that he has run just about every part of IPG's marketing communications holdings except for WorldGroup. He will need all that experience at the top of the $6.7 billion holding company. After a year of financial crises involving earnings restatements and an SEC inquiry, with an outside auditor yet to sign off on IPGs 2002 books and more bad news on the way (see "The Numbers Tell the Story"), last week's boardroom shifts are just the beginning. "There is a lot of work to do. By no means does this automatically fix things," said one executive at an IPG agency. The changes were put in motion just two weeks ago, with discussions between the board and Dooner. Frank Borelli, the board's presiding director, said it was Dooner who suggested he return to WorldGroup and be replaced by Bell. At the same time, IPG chairman emeritus Phil Geier was working behind the scenes, floating the idea of Bell's moving up at IPG to the heads of operating units and receiving mixed responses, sources said. "The board had no choice," said one source. "They had to make the move. Bell's already in there, he knows IPG, and he's known on Wall Street." "The main surprise," said Salomon Smith Barney analyst William Bird of the CEO switch, "is that it didn't happen sooner."Dooner was considered a good adman but was done in by an inability to move quickly when faced with big problems, including the deteriorating performance of McCann and Lowe's inability to grow, sources said. Some saw indecisiveness, others a misplaced loyalty to former peers. "He didn't step up to the plate and make the hard decisions" said one agency CEO. "He wouldn't take people out." After the board decided that multiple management changes were the answer, Dooner cleared the deck by firing Heekin Wednesday night at IPG headquarters. The next morning, the board agreed to promote Bell, 59, to chairman and CEO, and soon after announced that Dooner, 54, would return to WorldGroup as CEO and that Heekin, 53, was leaving. The changes took effect immediately.Even before it was official, Bell moved quickly to garner support from IPG agency CEOs. He hit the phones on Thursday, telling the chiefs he needs their help and looks forward to working together. He also called key clients. Sources said it was quintessential Bell, a politically savvy, smooth talker.Bell vows to be a collaborative leader who will seek advice from many camps before making decisions. He said he would focus initially on managing and strengthening the balance sheet, improving the overall operating margin and generating organic growth. Bell also said he intends to talk frequently to the heads of IPG's four major networks: McCann; Lowe; Foote, Cone & Belding; and Advanced Marketing Services. "Additionally, other [advisory] groups will be formed, because we need more rather than less communications," he added. Another key resource is Borelli, who said he will spend two days a week at IPG. "I will work with David as David sees fit," he said. Geier is expected to become more involved in coming weeks in an "advisory role." The search for a COO, down to a final three candidates, will continue, Bell said. And while CFO Sean Orr survived last week's housecleaning, the new COO is likely to come from outside the industry and have solid financial credentials, bad news for Orr.Dooner, meanwhile, kept a stiff upper lip among colleagues, even those who expressed sympathy. He was said to be relieved and, if his first memo upon returning to WorldGroup is any indication, he is grateful for the chance to get back to the business of advertising. "I'm very excited about what we can do there and about returning to 'active duty' as an advertising and marketing practitioner," he wrote.

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After a Year of Crisis, IPG Names New CEO

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