Execs at Arnold, Carmichael and Hill, Holliday: We Do
BOSTON--The acquisitive nature of agency holding companies is turning a lot of ordinary ad folk into millionaires.
For evidence, one need look no further than statements filed in recent weeks with the Securities and Exchange Commission which reveal just who got what when Carmichael Lynch and Hill, Holliday, Connors, Cosmopulos sold to the Interpublic Group of Cos., and Arnold Communications sold to Snyder Communications in Bethesda, Md., earlier this year. Industry perception that both Snyder and IPG paid top dollar for New England's two largest ad shops is proven by the numbers: Arnold's sale to little-known Snyder was valued at roughly $117 million, while Hill, Holliday gleaned $123 million from IPG. The standard formula for calculating the value of an agency is to multiply the shop's earnings by one. In 1997, Arnold's revenues were $91 million; Hill, Holliday's were $80 million.
"A lot of people made a lot of money," said Alan Gottesman of West End Consulting, New York. To actually realize any cash, shareholders would have to sell their shares.
IPG stock, continuing its steady climb, was trading last week around $62, while Snyder stock, which has fluctuated since the Arnold deal, was trading around $47.
IPG's filing showed Carmichael executives and the agency's employee stock ownership plan netting an estimated $28 million. Hill, Holliday chairman and chief executive Jack Connors and his family stand to earn more than $100 million on the sale of the 30-year-old agency [see chart]. Shares bought from retired co-founder Jay Hill were dispersed to a group of top executives, which converted to IPG shares when the shop was sold. Both
veterans and agency underlings were enriched: Connors' executive assistant, Julianne Desisto, received 379 shares worth $22,645.
Arnold, however, exhibited no such examples of largesse. Only managing partners and senior executives had shares of the agency. After chairman Ed Eskandarian's $70 million stake, the largest single shareholder was chief financial officer Charles Kiefer, with 221,621 shares valued at around $10 million.
Managing partners Tom Lawson, Lynn Rotando, Richard Emerson and Rick Britton received more than 125,000 shares apiece. Chief creative officer Ron Lawner received 94,815 shares worth around $4 million.
Name/title No. of shares ($44 per share) Total share value*
Ed Eskandarian, Chairman/chief executive 1,596,299 $70,237,156.00
Charles Keifer, Managing partner/chief financial officer 221,621 9,751,324.00
Thomas Lawson, Managing partner 144,871 6,374,324.00
Lynn Rotando, Former managing partner** 138,616 6,099,104.00
Richard Emerson, Managing partner/chief operating officer 127,315 5,601,860.00
Name/title No. of IPG shares ($59.75 per share) Total share value*
Employee Stock Ownership Plan 365,193 $21,820,281.75
Jack Supple, President/chief creative officer 82,275 4,915,931.25
Charles Anderson, Managing partner/chief financial officer 39,436 2,356,301.00
HILL, HOLLIDAY, CONNORS, COSMOPULOS
Name/title No. of shares ($59.75 per share*) Total share value
Jack Connors, chairman, chief executive officer 1,233,250 $73,686,687.50
Connors family trusts 477,049 28,503,677.75
Fred Bertino, president, chief creative officer 76,854 4,592,026.50
Joe Norberg, chief operating officer 76,854 4,592,026.50
Terry Carleton, executive vice president, group account director 75,278 4,497,860.50
*per stock price on day of registration
**Rotando left shortly after sale to join Ocean Spray Cranberries in top marketing job.
SOURCE: Securities & Exchange Commission (Forms S-3, Registration Statements for Snyder Communications, May 19, 1998, and the Interpublic Group of Companies, July 8, 1998)