City & Business: Rift widens at the top of Saatchi & Saatchi
Sunday 20 March 1994
A Saatchi-less Saatchi would have been unthinkable even three years ago, when the sprawling group of advertising agencies was technically bust. The Saatchi brothers were Saatchi & Saatchi and never mind the appalling losses. Now, I'm not so sure.
Throughout all their troubles, the reputation of the brothers - reclusive, art-loving Charles and earnest, businesslike Maurice - was more or less unassailable. Theirs was the one advertising agency that could justly claim to be a household name. It played a legendary role in the 1979 election with its 'Labour isn't working' campaign and went on to help keep Margaret Thatcher in power for two more elections. It produced the award-winning campaign for British Airways. Even today it makes noise: the banned Visa advert, in which Lord Healey takes the mickey out of Norman Lamont, was by Saatchi.
It's not just Mr Lamont who's fed up with the Saatchi brothers. Some Saatchi shareholders are beginning to wonder whether they wouldn't be better off without the eponymous founders. The group is performing poorly, losing clients to rivals and winning less than its fair share of new pitches. Last week it reported a return to modest profits, but the stock market was unimpressed.
It is the growing rift between Maurice, the executive chairman, and Charlie Scott, his chief executive, that is raising eyebrows in the City. Maurice has hired his own public relations adviser, and there is clearly bad blood between the two men.
Maurice Saatchi's supporters say Scott is a mere 'bean counter' - competent at cutting costs, but with little flair beyond that. The Scott wing defends him, stressing how he has slashed the huge debts and pointing to Maurice's many mistakes, including the suicidal dash for growth through costly acquisitions in the 1980s, not to mention the absurd attempt to buy Midland Bank. In the City, Scott is the favourite.
The serious trouble started in December when Charles Saatchi stepped down from the board and took on the role of president. It was decided then that the brothers should close their swanky offices in Berkeley Square and muck in with everyone else in Charlotte Street. Now Maurice is to have his luscious five-year rolling contract reduced (and not before time).
Maurice and Scott seem to get round the rift by pretending it doesn't exist. They managed to spend five hours in the same meeting in New York on Thursday without mentioning the reams of speculation in the public prints. I can't believe the peace can last much longer. The key probably lies with Sir Peter Walters, the former BP boss who was recently appointed to beef up the non-executive directors and will chair the remuneration committee. As such, he will decide on how many more of Maurice's toys to confiscate. He might also take a look at Scott's package. The chief executive's apparently laudable claim last week that he was on three months' notice was not the whole story. His contract also guarantees him a pounds 600,000 'consultancy fee' were he to be sacked.
The outcome is difficult to call. The brothers own less than 1 per cent of the company, so they have little influence there. Apart from Maurice and Scott, there are eight board members. I can count only one or two certain allies for Maurice if there is a shoot-out. Scott could probably count on four or five.
But then there is the unquantifiable factor of the Saatchi mystique and name. Putting the boot into an eponymous founder is painful and risky. There's no doubt that Maurice commands enormous respect among clients and great loyalty from some of his staff. Gerald Ratner survived for another 18 months after his fatal 'crap' remark despite widespread calls for his head.
Whatever happens, I'd be amazed if Maurice Saatchi and Charlie Scott were both still there at the end of the year.
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