• by Joe Mandese  @mp_joemandese, May 11, 2007

Interpublic Group has been quietly repopulating itself with a management team steeped in digital media as part of a repositioning of its marketing and media services that is finally beginning to pay off.

That was the bottom line CEO Michael Roth delivered to Wall Street in a quarterly earnings call with securities analysts who grilled him on the agency holding company's turnaround--and why its salaries and compensation packages have been growing, not declining amid its restructuring.

At least part of the incremental compensation costs come from additional staffing related to new business won by Interpublic shops--including General Motors' Saturn division, Kmart, Sony and Weight Watchers--as well as from performance compensation payouts indicating that Interpublic managers are making their numbers.

But another chunk of Interpublic's salary inflation is coming from the need to attract new talent--particularly staff who are knowledgeable in digital media and marketing--in what has become a tight employment market.

Roth said Interpublic has quietly replaced a majority of the senior team with such managers during his tenure as CEO, but he indicated that Interpublic was having a tougher time recruiting digital talent at the "lower levels," and has had to boost compensation packages for attracting junior talent.

Roth said that 60% of the 125 most senior managers of Interpublic agencies have turned over during his tenure as CEO, and that a "significant amount of them come from the outside."

"When you get down to the lower levels, in the digital [marketplace] in particular, we are seeing a very competitive environment," he added. While he would not specify the kind of compensation inflation Interpublic has had to pay to attract new talent, Roth did say that they were "on the high end" of recent historical ranges.