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Y & R exex hit paydirt

Mgmt team gets a big cut after going public

NEW YORK — The big payday for the management team at Young & Rubicam, which finally registered to go public last week, will include estimated windfalls of $72.5 million for CEO Peter A. Georgescu, $60 million for chief operating officer Edward H. Vick, $57.5 million for creative exec VP Thomas (Ted) D. Bell Jr. and $47.5 million for president John P. McGarry Jr.

While not the $100-million-plus bonanza that Bob Jacoby pulled down from Ted Bates’ sale to Saatchi & Saatchi a decade ago — upsetting agency-client relationships everywhere in the process — they’re not bad either, especially for a management team that hasn’t turned a profit in a couple of years.

The estimates were based on an industry rule of thumb that values ad agencies at two times revenues. For all of Y&R, this suggests a market value of $2.77 billion. But in the spirit of conservatism, the one-time take-homes were calculated on a reduced capitalization of $2.5 billion, a fair discount for a service business that has yet to prove itself as a public entity.

By registering with the Securities & Exchange Commission, Y&R disclosed figures that competitors long wanted to scrutinize. That’s because the agency has been the most vocal proponent of advertising’s pay-for-play equivalent.

Specifically, Y&R, more than any other agency, has tied its compensation to quantifiable benchmarks in the performance of the brands it serves. Good intentions aside, the SEC filing indicates the agency should not have, in this instance, adhered to its longstanding motto: “resist the usual.”

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