NEW YORK: MDC Partners founder, chairman, and CEO Miles Nadal resigned from the company on Monday as the Securities and Exchange Commission investigates his travel, medical, and other expenses.
Scott Kauffman, presiding director on the company’s board, replaced Nadal, who established MDC 35 years ago, according to a company statement. Board member Irwin Simon will replace Kauffman as presiding director.
In April, MDC disclosed the SEC’s probe into Nadal’s expenses during its first quarter earnings report. At the time, Nadal agreed to return $8.6 million to the holding company, which owns majority stakes in Hunter Public Relations, HL Group, Allison+Partners, Kwittken, and Sloane & Company, among others. Many of the firms have offices outside the US and one of them, Albion Drive, is located solely in London.
On Monday, MDC said in a statement that Nadal has "agreed to repay to MDC Partners all expenses that were requested to be repaid by the special committee of the board of directors, including an additional $1.88 million that was recently identified."
In regards to Nadal’s retirement, the holding company said he will be required to repay $10.6 million in retention amounts received between 2012 and 2015 in accordance with MDC’s agreements. Nadal will also not be eligible for any compensation payments or severance upon retirement.
MDC chief account officer Michael Sabatino has also stepped down from his role at the company, according to a statement. Sabatino has agreed to pay back $208,535 in cash bonus payments received between 2012 and 2014.
Representatives from MDC were not immediately available for comment.
"MDC has never been in a better position to build on its financial and operational success," the holding company said in a statement. "Through [Kauffman’s] nine-year tenure as a board member, he is fluent in MDC's culture and operations, and through his career as an entrepreneur and executive, he has proven himself a leader in the industry in which we compete and win."
MDC’s Strategic Marketing Services unit, which contains its PR agencies, reported revenue of $240.4 million in the first quarter of 2015, representing 8.7% organic growth over the same period of last year.