Someone to Watch Over Him

The board of Interpublic Group finally lost its patience last week, installing one of its own to watch over CEO John Dooner and the management of the company.The appointment of Frank Bor elli as "presiding director" is a signal to shareholders and the Street that the board is taking a more hands-on role in the management of the $6.7 billion holding company. The move came a week before IPG reports its numbers for the third quarter, which the company last month acknowledged will fall short of earlier expectations. What's more, as part of that report, several sources expect IPG to restate for the second time the size of a previously re ported accounting imbalance among McCann-Erickson WorldGroup units in Europe. One source said it could be $50 million more than last month's revised estimate of $120 million. IPG's original estimate was $68.5 million. Such news could spark further changes at the top of McCann or IPG, said sources. IPG CFO Sean Orr is particularly vulnerable, al though he gets credit for discovering the imbalance. Also under the microscope is WorldGroup CEO Jim Heekin, whose relationship with Dooner has become so strained over the ac counting imbalance that, according to one source, "they are barely speaking." The previous restatement was followed by the abrupt exit of WorldGroup CFO Sal LaGreca. A call to Orr's office Friday was forwarded to an IPG representative, who declined comment. IPG plans to report its numbers on Wed nesday after the market closes. Borelli, a retired CFO, will serve as a "point man" between the board and management, according to sources. He is expected to spend a few days a week at IPG and function as the eyes and ears of the board, sources said.In a statement, Dooner cited Borelli's "exceptional strengths in the area of finance, as we forcefully address the challenges facing our company." Borelli said he would "assist" Dooner, Orr "and their sen ior management team as they tackle the key issues at Interpublic." Dooner remains chairman of the board, but observers see Borelli, a low-key but assertive director, as the new leader of the nine-person board. And, several sources said, he will have a hand in management decisions.The move had been in the works for weeks, and Dooner shared the board's plans with his top agency CEOs when they met in Miami last month, said sources. Dooner said then—and again last week—that the appointment was in keeping with IPG's efforts to improve "corporate governance."Sources accepted that ex planation but also noted the frustration among board members and shareholders, who have seen IPG's share price plummet in recent months after a series of unpleasant financial surprises. (On Friday, the stock closed at $13.36, $3.51 above its 52-week low.) Those surprises include lower-than-expected revenue at specialty marketing units such as Octagon, Future Brand and Momentum, which collectively forced IPG to greatly reduce its earnings-per-share estimates. Sources said last week that IPG is looking to sell pieces of Octagon.Although Borelli, 67, is not seen as a successor to Dooner, he has deep management credentials, particularly in the financial realm. He served as CFO of insurance conglomerate Marsh & McLellan from 1984-99. Before that, he was CFO of Airco, a manufacturer of industrial and medical products. His career began at accounting firm Haskins & Sells, where he specialized in merger and acquisition work."He knows the business world well," said a source, adding that Bor elli is "not shy about expressing his opinion, [but] not a ranter or raver" either.Borelli joined the IPG board in 1995 and is its second most senior member. He heads the board's audit committee and has served on its finance, compensation and executive-policy committees. He is ex pected to relinquish some of those duties—particularly his leadership of the audit committee

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Someone to Watch Over Him

Andrew McMains

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Andrew McMains