(Bloomberg) -- Maurice Saatchi, co-founder of M&C Saatchi and an icon of the British advertising industry, abruptly quit along with three independent directors in a dispute over how to address accounting problems at the company.
Saatchi, who started the advertising giant with his brother Charles in 1995, was joined in the sudden exit late Tuesday by Michael Peat, Michael Dobbs and Lorna Tilbian. The shares were down 7.8% as of 8:06 a.m. in London on Wednesday.
The departures reflect how much M&C Saatchi is reeling from accounting irregularities disclosed in August. Last week, the company said a review by PricewaterhouseCoopers found the problems were more extensive than previously thought and reduced its profit forecast, causing the shares to fall.
In a statement on Tuesday, the company vowed to rebuild its board and restore the agency's performance.
Some directors had sought the resignation of co-founder and Chief Executive Officer David Kershaw, according to a person close to the company. But he was urged to stay by advisers, and the board members chose to resign instead, said the person, who asked not to be identified because the deliberations are private.
Chairman Jeremy Sinclair said a process was underway to rebuild the board and M&C Saatchi is “determined to restore the operational performance and profitability of the business,” in a statement.
Sinclair added that the new independent directors “will have a mandate to conduct a full review of all aspects of our governance” at the company.
The departing board members are well known in the U.K. Peat is Prince Charles's former private secretary, while Dobbs is the author of the novel “House of Cards,” which Netflix adapted into a famous TV series.
Saatchi, 73, served as executive director of the company from its founding 24 years ago. He and his brother launched the business after being ousted from Saatchi & Saatchi in 1994, and he retains a 4.5% stake.
They founded Saatchi & Saatchi in 1970. It was acquired by Publicis SA in 2000.
The Financial Times previously reported on the reasons behind the departures.
To contact the reporters on this story: Gerry Smith in New York at gsmith233@bloomberg.net;Thomas Seal in London at tseal@bloomberg.net
To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Rob Golum
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