Richards Unveils Succession Plan

Ending speculation about the future of his agency, Stan Richards has outlined a succession plan for The Richards Group.Richards, 68, who holds the titles principal and creative director, has named three senior creatives to a newly formed leadership council. One of the three, Richards said, will eventually take over management of the agency, most likely after his own death.At the same time, Richards said he will implement a plan to keep the Dallas agency independent indefinitely by donating his 100 percent ownership equity to an as yet undisclosed charity. As Richards described it, the charity would derive an annual income on its holdings, on the condition that the stock is never sold. Lawyers are working out the exact terms of the deal.Creative directors Glenn Dady, Gary Gibson and Mike Malone, each with between 16 and 24 years of experience at the shop, will now share what had been Richards' sole authority over creative and operational issues at the agency.All three have spent most of their careers at Richards. Dady, 49, has led creative development on accounts ranging from The Catfish Institute, a restaurant, to Neiman Marcus. Gibson, 47, is the primary creative director responsible for The Home Depot account. Malone, 48, a writer, has worked on Continental Airlines, Royal Caribbean Cruise Lines and TGI Friday's. "There's always been an understanding within the agency that my successor would be a creative, not an account service or media person," said Richards. "I think agencies should be run by creative people. These three guys ... have been with me forever [and] are as responsible for the success of this place as I am."Richards insisted he has no plans to retire or become less involved in the daily activities of the agency. "But there was speculation about 'what happens to this place when Stan croaks?' " he said. "That's a legitimate question. And I wanted to send a clear signal."The Richards Group, founded in 1976, is now the largest individually owned agency in the U.S. (and one of the few remaining major independents), with billings of more than $560 million and 533 staffers. (Doner, by comparison, has billings of more than $933 million, but is privately owned by an unknown number of shareholders, including chief executive officer Alan Kalter.)The timing of the succession plan was largely influenced by the growth of the agency, which increased both billings and revenue by 21 percent last year. In the last few years, Richards found himself unable to personally approve each piece of work, a practice he had followed in the past."There has been a need over time for other people to both have client contact and have final say on the creative," said Malone, one of the heirs apparent. "The great news is that he's superbly trained a bunch of people and they're all very good at what they do."The duties of the three creatives will not change substantially at first. "We've got it in place right now primarily to alleviate the workload of Stan," said Gibson. "I've been acting as his surrogate on Home Depot for several years already. Now I have to get a lot smarter about some of the other pieces of business and start to sit in on a few more meetings."None of the creatives will receive equity in the agency, of which Richards remains the sole owner. Like all employees, they participate in tenure-based profit sharing. Although the goal of the current succession plan—to avoid a network buyout—could offer advantages, there may also be drawbacks.Alan Gottesman, principal of West End Consulting in New York, said lack of equity participation could hamper future recruitment efforts, for example."It's almost an industry tradition. You work hard, you become partner, you get a piece of the action," Gottesman said. "If [Richards] is taking that off the table ... it may create more problems than it solves."Malone disagrees. "One of the reasons I've stayed here as long as I have is I don't have to worry about who's going to own it tomorrow," he said. "Remaining fiercely independent is a great idea. The trauma that ownership issues cause has affected the entire industry. Looking from our perch, we think we're doing it the right way."But why donate the agency to charity?"I wanted to put it in the hands of an organization that has no end date," Richards said. "I tried fora long time to figure out a waythat the people who committed their careers to this organization—and I'm not just talking about [the leadership council]—could seethat it goes through the next gen-eration without undergoing material changes."So it will always be independent whether I am here or not. We will be about the same things 20 years from now that hopefully we are about today. "

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Richards Unveils Succession Plan

J. Dee Hill

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J. Dee Hill