A history of accounting irregularities and rumblings over lavish staff bonuses are being blamed for yesterday’s sensational news that saw all four of M&C Saatchi UK’s non-executive directors resign.
As reported on B&T, Maurice Saatchi (main photo), Lord Dobbs, Sir Michael Peat and Lorna Tilbian all quit the agency’s board following a disastrous 2019 that saw the company’s share price tumble 75 per cent.
There’s now industry rumblings that Accenture Interactive could make a play for the agency, be it a full buy out or just the juiciest cuts of the business.
M&C Saatchi play in 30 territories, Australia its second most lucrative behind its UK operations.
The agency has been plagued by accounting irregularities, something that was picked up in a PwC audit in September and later described as “a cock-up in the accounts department” by one company insider.
According to reports in the UK media, staff were paid bonuses in 2018 that the PwC report suggests they ultimately didn’t deserve given said “cock-ups”.
M&C Saatchi staff are bonused via shares in the company that allows them to be sold at a defined time and price.
Unfortunately, the company’s share price has tanked this year from a 2019 high of around £4 ($A7.70) down to almost £1 ($A1.93) on the back of grim profit warnings and client losses.
Apparently, the four board members who quit on Tuesday wanted PwC to conduct an independent audit into the company’s bonus scheme and wanted other board members who opposed it to be moved aside.
“There was a difference of opinion on the way forward. The non-executive directors were pressing for accountability and it wasn’t forthcoming,” one insider was quoted in The Financial Times.
“Things fracture under stress. It was actually quite a happy board until the [accounting] bomb went off.”
In the company’s annual report released in May, M&C Saatchi granted options worth as much as £18.4 million ($A35.3 million) in 2018. The company’s share price has since collapsed after it admitted to accounting errors of £11.6m ($A22.2 million) spread over its 2018 and 2019 financial results.
