• by Steve McClellan  @mp_mcclellan, May 29, 2013

The ad industry was abuzz Wednesday after UK columnist Stuart Smith wrote a piece reporting that Starcom MediaVest Group CEO Laura Desmond has been on the board of directors of Tremor Video and stands to make a possible windfall from stock options the company issued to her for board services.

The story cast Desmond’s holdings in the company as a conflict of interest, given that SMG buys millions in video ad campaigns on behalf of clients delivered through the Tremor Video Network. The IPO document reported that SMG clients spent $18 million with Tremor in 2012.

Curiously, the story ignored a similar relationship spelled out in the IPO filing that existed between AKQA and its former president and COO James Rossman. Like Desmond, he served as an outside director at Tremor and similarly received compensation in the form of stock options. Later, he was named chairman of Tremor’s board.

But Smith’s story raises a valid point: Maybe both the SMG and AKQA executives should have forgone compensation in any form from a media vendor they do business with to avoid even the appearance of a conflict.

SMG declined to comment citing a “quiet period” for Tremor. Sources said Smith failed to mention that the Tremor IPO document reported that Desmond had “recused herself from all negotiations related to SMG” and Tremor.  Sources also said that the notion of a conflict of interest was overblown, given that many such relationships exist at other public companies with other non-employee industry executives serving on their boards.

Tremor filed IPO documents with the SEC on May 23. The filing reported that Desmond was granted options for 175,000 shares in January 2012. The shares have an exercise price of $3.34 and vest over a period of four years, assuming continued board service. The document also reported that Desmond owned 58,000 Tremor shares prior to the offering.

As for Rossman and AKQA, the IPO filing reported that agency clients spent $1.1 million on video ad campaigns delivered via Tremor last year and about $300,000 the prior year. While at AKQA, Rossman -- like Desmond -- served on the Tremor board as an outside director and received stock options for his service. In 2011, he received options for more than 155,000 shares. He left AKQA in mid-2012, right around the time that WPP acquired the agency.

In August of last year, when he became chairman of the board of Tremor, Rossman received options for another 50,000 shares of Tremor stock.

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