Just over a month after former WPP executive Mark Penn became CEO of MDC Partners and acquired approximately 30% of the company via his own Stagwell Group, the agency network announced several changes to its board of directors.
Perhaps most significantly, MDC has resolved a spat with hedge fund FrontFour Capital, which owns approximately 5.1% of the company. Last November, FrontFour took on the role of activist investor via an SEC filing intended to express its dissatisfaction with now former CEO Scott Kauffman’s departure and MDC leadership’s search for his replacement.
The filing stated that “significant changes to the composition of the Board are required in order to ensure that the best interests of shareholders are represented” and called for a special meeting of the board. At the time, MDC said it was “disappointed that [FrontFour] elected to go public with their concerns.”
On Monday, MDC said it has reached “a settlement agreement” with FrontFour by nominating two new board members: former WarnerMedia and Snap executive Kristen O’Hara and an unnamed person described as “a Canadian resident chosen by the Company with significant industry experience.” FrontFour will also play a more active role in the selection process for the latter member.
Kauffman and Clare Copeland, a real estate developer who has been a member of MDC’s board since 2007, will not stand for reelection. That news was previously announced.
Penn will now serve as chairman in addition to CEO.
According to a joint announcement late on Monday, FrontFour agreed to withdraw its request for a special meeting and support all MDC nominees at this year’s Annual Meeting of Shareholders on June 4.
“We are pleased to have reached this constructive outcome with FrontFour, and to welcome Kristen O’Hara as a nominee to our board,” Penn said, citing O’Hara’s “experience in marketing leadership roles at top companies across the media sector.” He continued, “These changes are consistent with my belief in the importance of having directors with first-rate industry experience as we remain focused on maximizing value for all shareholders.”
O’Hara spent more than 16 years with Time Warner, now called WarnerMedia, serving as CMO before heading to Snap last August as vice president of U.S. global business solutions. Less than two months later, she left the company after CEO Evan Spiegel reportedly promoted her to chief business officer and then rescinded the offer.
“FrontFour believes in the significant potential of MDC under the leadership of its refreshed board,” said partner Stephen Loukas. “We look forward to working with Mark Penn and the rest of MDC’s executive leadership team in order to unlock value across the Company’s exceptional network of agencies.”
An MDC spokesperson declined to comment beyond Penn’s statement. FrontFour did not immediately respond to a request for more information.
MDC Partners’ stock price has held somewhat steady after seeing a boost upon Penn’s acquisition followed by a subsequent dive. At the time of publication, it was selling for approximately $2.02 per share.
An MDC investor speaking on condition of anonymity said of Penn, “People are worried that he doesn’t know what he just bought.”