Major changes in Dentsu's management lie ahead as the agency's two powerful Executive VPs, Nobuo Momose (Age 65), who heads international and Teruyoshi Katsurada (66) who runs domestic operations both retire at the end of June, following the agency's AGM on June 29th.

Momose's departure comes at a critical time. Dentsu is making only slow progress in its talks to woo Leo Burnett. Meanwhile, the financial pressures on major Japanese advertisers and the growth of media specialist agencies are posing new headaches, in Japan as well as overseas.

According to sources, Momose's retirement was triggered when Katsurada decided to call it a day - protocol required the two to go together. Despite Momose's age, surprise greeted news of his retirement among many in Tokyo's international ad community. " . . . his retirement will be a great loss to Dentsu, he has been the architect and strategist for the their international plans," commented Leo Fujita, a director of Tokyu Agency. " Surprising, given his importance to their international objectives," said Tim Solomon, president of Ogilvy & Mather Japan.

But Momose won't quite disappear from the scene. Both the retirees will become non-executive [sic] 'Executive Advisors' to Dentsu's 69-year-old president/CEO, Yutaka Narita, who is expected to stay in office for a further two years.

According to Dentsu sources, Momose will continue to play a key role in Dentsu's negotiations to take equity in Leo Burnett. And at least one Dentsu client, Nestle, has been given assurances that Momose's services will continue to be available. Nestle are a key Dentsu client in Korea, China, Taiwan, the USA as well as Japan. When the news of Momose's retirement leaked, Narita flew down to Kobe, Nestle's Japan HQ, to give them assurances.

Meanwhile, in Seoul, where Dentsu snatched the Nestle AOR from McCann, the agency is busy trying to impress Leo Burnett with its firepower. Korean agency executives say the two are joining forces to try and win P&G's media business from Diamond Bates. Talk is that they may even establish a separate media company to win the P&G assignment and would ultimately merge 32nd ranked Leo Burnett's US$ 10 million Seoul agency with Dentsu's 13th Phoenix Advertising, billing US$38 million in 1998.

Neither of Dentsu's newly designated EVPs Tateo Mataki and Yozo Nakamura has international experience. Though Dentsu would not discuss who might be designated to run international, fingers point to Fumio Oshima, a 61-year-old veteran managing director who worked in Germany in the late 80's and has more recently had international responsibilities under Momose.

Narita also plans to restructure his board at the end of June, splitting it into two tiers - the upper house will include Narita and eleven 'Management Directors, ' while board members seated in the lower house will be designated as Operation Officers.

The agency is also introducing an early retirement program targeting non-board employees over 58. An initial 50 will be culled this year, though 1,850 of the agency's 5,800 employees are eligible. "The company's official goal to activate employees more by giving them another alternative [to employment at Dentsu], said a senior Dentsu manager.