Roth’s Leadership Seen As A Timely Tonic For IPG

Michael Roth’s anticipated ascension to CEO of Interpublic Group became official last week and was heartily embraced by agency CEOs, and even Wall Street analysts—typically wary of top-level turnover—expressed optimism about the move.

The day after the switch, trading volume on IPG stock jumped to 4.2 million, but the share price remained stable, closing Friday at $13.15, up slightly from Tuesday’s opening of $12.85.

Several key IPG clients, including Unilever, L’Oréal and Bank of America, declined comment. But insiders praised Roth, a former CEO of The MONY Group, as a no-nonsense, savvy businessman who can tackle tricky operating issues, and many said his ascension is a timely development for the holding company.

By contrast, David Bell’s main strength was client handling, and he was increasingly viewed as from another era, when the ad business was more genteel and driven less by the exigencies of shareholder scrutiny.

When outgoing CEO Bell took the reins of IPG from John Dooner in February 2003, his insider status and reputation as a bridge builder to Wall Street were a stabilizing force for a company in financial turmoil. But on his watch the turnaround was seen to be taking longer than it should have, and his relationships with the some of his agency CEOs—in particular Foote Cone & Belding’s Brendan Ryan and McCann Erickson’s Dooner—had deteriorated, sources said.

IPG chairman emeritus Phil Geier said of Roth, “He’s got a good business mind, he’s no-nonsense, he cuts to the core of any business issue, and for Interpublic’s needs right now, he’s going to be a big help.”

Said Donny Deutsch, CEO of Deutsch: “Roth is what I call one of those brilliant thugs, like [Omnicom CEO John] Wren and [WPP CEO Martin] Sorrell. What I mean by that is that they are incredibly smart guys with terrific financial acumen, but they also know how to get things done, and they make things happen.”

Since Roth’s influence and presence have been increasing steadily, many believe the transition will be smooth. Bell will stay on as co-chairman as long as necessary. “My contract doesn’t have a terminus date,” Bell, 61, said last week by phone. “It goes on until I or the board decide otherwise. I plan to at least stay on through the [36-month] turnaround” —targeted for June 2006.

Roth, 59, sees his initial priorities as reorganizing his media agencies and how they work together, getting financial controls in line with Sarbanes-Oxley and achieving greater profitability. “I think we’ve got the best assets in the business, and it’s always good to start with a strong hand,” he said. Others said the ongoing underperformance at Lowe is also a focus.

Some analysts noted Roth’s experience with restructurings, his financial and operational skills and his straightforward attitude—all of which will likely help him in his new post—but wondered about his lack of client dealings. Roth said he dealt with clients at MONY, adding, “I’m extremely comfortable with clients.”

According to an 8-K filing by IPG on Friday, Bell will receive $1 million a year plus bonuses. Roth signed a contract in June, but the filing amended his deal to include his new title. His salary is $950,000 plus bonuses.