Saatchi: more shots at Maurice

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The Independent Online
MAURICE SAATCHI, the ousted Saatchi & Saatchi chairman, was under fire from three quarters this weekend as his opponents sought to counter his devastating coup in setting up a rival advertising agency.

A key UK shareholder, Mr Saatchi's former number two, and the director responsible for setting his salary and perks before he left the group all publicly condemned his performance and the scale of his rewards.

Supporters of the new regime at the beleaguered advertising agency group recognise that they have been slow to respond to Mr Saatchi's awesome public relations skills. They now plan to fight back vocally.

Tom Russell, a non-executive director of the group, accused Mr Saatchi of mismanagement on a massive scale. He also revealed that the charismatic advertising chief was nearly ousted last March and was only saved by the intervention of the chief executive, now acting chairman, Charlie Scott. "Maurice was very expensive. As a member of the compensation committee, I can tell you some of his expenses were egregious.''

He said Mr Saatchi's public relations campaign had forced him to speak out: "We have no choice. Maurice started this. We have to say something.''

Dr Russell recalled a shareholders meeting in which he saw elderly small shareholders, their Saatchi investments massively reduced in value, stuffing sandwiches provided by the company into their pockets. "I have never seen the consequences of financial mismanagement so vividly illustrated. I'm not sure Maurice understood the havoc he wreaked on his shareholders."

The controversial share option package that sparked Mr Saatchi's departure was the final straw. Eighty per cent of institutional shareholders wanted Mr Saatchi to go, he said. "The share price and margins had not improved compared with other advertising agencies. They just became tired, as Maurice made promises he did not keep.''

Dr Russell also said that the defecting clients would not be a great loss in financial terms: "We're not making much money on those accounts. British Airways was a prestige account, but to the best of my knowledge we were losing money on it.''

Richard Hughes, the manager of M&G's Recovery Fund, which owns 5 per cent of Saatchi, said the consequences of accepting Mr Saatchi's package would have been "appalling''.

"We were asked to approve one of the most generous remuneration packages for a chairman who has chaired one of the worst-performing stocks in the stock market.

"We are investors here in 750 companies. If we had approved Maurice Saatchi's package what would the chairman of the best-performing companies expect?''

Mr Hughes said that M&G, which owns more than 5 per cent of the shares, was first consulted about Mr Saatchi's intended £5m share option package in November. "We dug our heels in not out of disrespect to anybody, but because the proposal - in our opinion- was far too generous.''

Of the clients such as BA, Mirror Group and Mars, which have said that they will either terminate or review their accounts following the latest crisis, Mr Hughes said: "I wonder what Lord King or David Montgomery (respectively of BA and Mirror Group) might have said if Maurice Saatchi had presided over the loss of £600m of their shareholders' money.''

Charlie Scott also hit out at his former boss's expenses, and the three senior executives who left on Monday. Their behaviour was "appalling'' he said. "If he [Maurice] has conspired with these three people, then I do believe he has behaved badly.''

Attention is also focusing on the unofficial PR campaign conducted early last year on behalf of Maurice Saatchi. The campaign by David Burnside Associates was designed to bolster Mr Saatchi's position vis-a-vis Mr Scott. However, it is understood that a £40,000 invoice for the campaign was at one stage presented to the company for payment rather than Mr Saatchi personally. It is not clear who eventually paid the bill.

It is understood that the board has decided for the time being to do nothing about Charles Saatchi, the reclusive brother, who is still drawing a £312,500 salary from Saatchi. "We're letting sleeping dogs lie," said one source. Comment, page 2 Counter puncher, page 18