Saatchi to put chairman on shorter-term contract

SAATCHI & Saatchi has begun a crucial stage in its management shake-up with a new service contract for Maurice Saatchi, chairman, and top-level changes at its struggling US business.

The advertising group, which has been wracked by boardroom rows, is poised to replace Mr Saatchi's controversial rolling five-year contract, worth more than pounds 3m, with a much shorter deal.

The two sides are expected to reach an agreement by Thursday when the company holds its annual shareholders' meeting, at which Mr Saatchi faces re-election.

The new terms, under negotiation since last October, are thought to cover a maximum three years, in line with the Cadbury code, but are likely to include a fixed one-year notice period. His annual salary is expected to be set formally at about pounds 312,500 - half his current entitlement.

But Mr Saatchi, who has waived 50 per cent his salary in the past three years, will receive a lucrative new incentive package that could substantially boost his take-home pay if performance targets are met.

A new share option scheme for directors and senior managers is also being considered by the group but is not expected to be in place for another few months. It will require specific shareholder approval at an egm.

The company has also begun a sweeping overhaul of its troubled New York agency, which has been hit by the loss of key clients over the past two years.

Harvey Hoffenberg and Rich Pounder, the agency's former chairman and vice-president, are leaving the group. Their departure is likely to be followed by substantial job cuts in the US, where Saatchi employs 2,000 staff.

The duo are being replaced by Michael Jeary, who becomes the agency's chief executive, and Stanley Becker, best known for his work for Toyota, one of the group's key clients, who has been plucked from the San Francisco office to spearhead the New York agency's creative department.

The moves are the first made by Bill Muirhead since he was sent out from Britain three months ago to turn round Saatchi's troubled North American businesses, which have been a key cause of the group's decline in revenues.