In Management Shuffle, IPG Looks to Put Past Behind It

The exit next month of Interpublic Group CFO Sean Orr severs the last top management link to the fiscal failures of the holding company’s past administration. Now, both its management and analysts hope IPG can shift its focus, finally, from itself to its agencies’ business.

The departure, described by both Orr and IPG CEO David Bell as Orr’s decision, was nevertheless widely anticipated by insiders, observers and analysts when former Pharmacia and Nabisco executive Chris Coughlin was hired as chief operating officer in May. Coughlin will now inherit Orr’s CFO title as well.

“I told [Orr] he made some strong contributions,” said Bell, “and understand that I haven’t gone through the battles he did in the last couple of years.”

Described by colleagues as a stand-up guy, Orr, who joined IPG in June 1999, saw the holding company’s financial performance repeatedly fall short of expectations under his watch.

It was a tenure beset by surprises, including revenue shortfalls, missed earnings estimates and the abrupt deterioration of the once-profitable motor-sports division of Octagon. The biggest blow was a $181.3 million accounting imbalance, which was found chiefly among offices of McCann-Erickson in Europe and sparked a Securities and Exchange Commission investigation, which continues. An SEC representative declined comment.

“Fairly or not, Orr had a stigma attached to him for the poor performance and accounting irregularities, even though they were before his time and he discovered them,” said David Doft, an analyst for CIBC World Markets in New York.

Orr acknowledged the blot that the accounting imbroglio has left on his record. “One of the unfortunate aspects of being a chief financial officer is there are times that you are going to be the bearer of bad news,” said Orr, 48. “I wish it was different, but it comes with the territory.”

In recent months, Orr has seen elements of his job migrate to others. Bell is now IPG’s main conduit to Wall Street; Coughlin, who started last month, is the point man on operations; and presiding director Frank Borelli, another former CFO, is a financial advisor and liaison to the board. In addition, Orr no longer reports to the CEO, as he did under the prior John Dooner administration, but instead reports to Coughlin.

In the weeks ahead, Coughlin, 50, will continue his COO duties, visiting IPG agencies and preparing for the holding company’s second-quarter financial report, slated for mid-August, where it will unveil the details of a $200 million restructuring program, Bell said.

Coughlin was not available for comment last week.

As things calm down, the day-to-day involvement of Borelli is receding. “Hopefully, as things get back to total stabilization, the presiding director’s job will be strictly to act as a liaison between David, Chris and the board,” he said. Borelli, who assumed the presiding director’s role in November, acknowledged that he now wants to spend only about a day a week inside IPG—down from three days weekly late last year.

Meanwhile, IPG brass is understandably eager to stop talking about financial issues and, in Bell’s words, shift “towards an operational focus.”

Analysts also expect the financial worst is over, and IPG can now concentrate on keeping and winning accounts.

“From what we can tell, it doesn’t look like there’s another shoe to drop,” said Doft. “The business needs to be turned around. Grow. … There’s no reason structurally why they don’t have margins like WPP and Omnicom. … That’s the next thing they need to fix.”