• by Larissa Faw , December 7, 2015

MDC claims to have a healthier P&L, thanks to cost savings opportunities at its corporate office. The holding company has "aggressively pursued severance expenses" paid out to its former CEO Miles Nadal as well as reducing its real estate footprint after Nadal was ousted in July. 

Nadal’s forced exit came amid a Securities and Exchange Commission investigation into the company’s accounting practices and trading activities that specifically red-flagged nearly $10 million in bogus expenses that Nadal claimed over a period of years. The SEC probe, which formally launched in October 2014 and was disclosed by the company in April of this year, is ongoing. 

Former boss Nadal, who has sold off about $100 million in MDC stock over the past two months, has paid about $20.1 million in clawed back expenses and bonuses and was unable to accept his $27.2 million in termination fees. His replacement — Scott Kauffman — is working for a lot less. CEO Kauffman is projected to receive only $1.2 million in salary next year, while Nadal received $16.8 million in 2014. 

Shedding excessive CEO compensation is only one change that MDC Partners has made during its "interesting year," according to CFO David Doft, who commented at UBS's 43rd Annual Global Media and Communications Conference in New York on Monday. 

"It was a punch in the gut, but we digested it and came out stronger on the other side,” said Doft of Nadal’s transgressions. “We had a great business before but now we have a refined focus." 

One new area of focus is its approach to new business development. MDC has hired senior marketers that are not necessarily salespeople, but rather strategy executives to "help clients receive the full suite of services that match [them] with the right agencies," says Doft.  

MDC Partners also is putting additional resources behind what it believes are its next emerging agencies -- specifically Mono, Vitro, Concentric, and Gale Partners. While Crispin Porter + Bogusky and 72andSunny may currently attract the most attention, Doft is excited about this "layer underneath" that is projected to rise to generate about $100 million in annual revenue. 

"We have a group that are [currently] in the $20-$30 million revenue range, with characteristics that we have seen before," says Doft. "Phenomenally progressive work for clients that has been replicated over and over again [and] a broad and deep management team" as well as "award-winning buzz" and a "differentiated approach." 

Doft says MDC did not lose a single client or pitch as a result of the SEC investigation. "When this first came up, we were concerned about it impacting our business," says Doft. But the issue has nothing to do with individual agencies, he says. "Agencies go to market under their own brand names" so what happens at their parent company has no reflection on their individual day-to-day operations." We are "pleased it played out that way." Still, clients did ask about the investigation. "They were looking for comfort or wanted to gossip a little bit."