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Pay Cut at Top for WorldGroup

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By Andrew McMains and Jack Feuer

NEW YORK—McCann-Erickson WorldGroup, historically a growth engine that drives Interpublic Group, is falling short of revenue projections, and its managers are now paying the price—literally.

As McCann-Erickson struggles along with all the other global agency networks to meet its revenue goals in a difficult year, several other divisions of WorldGroup are posting particularly bad numbers, prompting top managers at the company to take a 10 percent pay cut.

Said a McCann representative: "The WorldGroup board did take an elective [pay] cut of 10 percent. Our objective is to protect jobs so that we are in a good position to maintain our momentum in 2003. Given continued economic uncertainties, senior WorldGroup management agreed that this was an appropriate action to take, just as a lot of our competitors have done."

Those taking a cut include WorldGroup CEO Jim Heekin, Universal McCann CEO Robin Kent and FutureBrand chairman and CEO John Elkins, sources said.

The cuts, which come amid 2003 budget meetings with IPG, are effective immediately and designed to bring costs in line, sources said.

Two divisions in particular appear to be underperforming: FutureBrand and the point-of-purchase division of Momentum.

FutureBrand, a brand identity firm, has been laying off 10-20 percent of its North American workforce after failing to meet its revenue goals [Adweek, Oct. 7].

In addition, still looming over WorldGroup—and McCann in particular—is a final resolution regarding the estimated $65.8 million internal accounting imbalance that surfaced at McCann units in Europe earlier this year.

That discrepancy caused IPG to restate revenue going back to 1997.

At the time, the holding com pany said there would be an investigation into the matter. Last week, one source said that inves tigation was nearing a conclusion and that the final analysis "is about due."