Ten months into an SEC Investigation, MDC Partners Founder Miles Nadal is out. And he’s out without any severance package or compensation, let alone the multimillion-dollar golden parachute that his contract with the company spelled out. In fact, he owes the company nearly $11 million for leaving before the date spelled out in retention bonuses already received.
Also gone is Michael Sabatino, the former chief accounting officer of the company, who stepped down from the post for undisclosed “special projects” back in April when MDC first disclosed the ongoing SEC investigation. That probe is looking into the company’s accounting practices and stock trading activity.
Nadal is being replaced by MDC board member Scott Kauffman, who has been named chairman and CEO. He previously had the title of presiding director on the company’s board.
After the close of markets Monday, the company issued a press release stating that Nadal had “retired” both his CEO and Chairman of the Board posts. And the stock hit a yearly low Monday, down 6% to $17.61
Nadal, who has been under fire over financial irregularities since the disclosure of the SEC investigation, had already agreed to repay to MDC Partners some $8.6 million in expenses that were deemed improper. The nearly $11 million in retention bonuses that he has to repay are on top of those questionable expenses. And the company also said today that Nadal is repaying an additional $1.88 million in red-flagged expenses.
Irwin Simon, a current member of the Board, has been appointed as MDC’s Presiding Director. Of Kaufman, Simon said: “Scott is an experienced chief executive who for years has led complex entrepreneurial companies at the crossroads of advertising, technology, and data. He has intimate knowledge of MDC Partners and importantly, a passion for the unique model, culture, philosophy and initiatives that have driven MDC’s success as a network.”
Kauffman has been a Board member of MDC Partners for nine years and has served as Presiding Director since March 2012. He started his career in advertising as a media planner for Benton & Bowles. Later, he migrated to Silicon Valley and has served in leadership roles at a number of emerging technology companies -- in many cases recruited by the board to replace the founding CEO. Kauffman has served as Chairman or CEO of AdKnowledge, Coremetrics and Lotame. He was also the COO of Blue Lithium at the time of its sale to Yahoo.
MDC shops include Crispin Porter + Bogusky, 72andSunny, and KBS+.