SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
The Interpublic Group of Companies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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THE INTERPUBLIC GROUP OF COMPANIES, INC.
1271 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
April 17, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
The Interpublic Group of Companies, Inc., to be held at 9:30 A.M. Eastern Time,
on Monday, May 18, 1998. The meeting will be held in the Auditorium of the
Equitable Center, 787 Seventh Avenue, New York, New York.
The business to be considered is described in the attached notice of the
meeting and Proxy Statement.
In addition to these matters, there will be a report on the affairs of the
Company, an opportunity for questions and comments by stockholders and a showing
of selected commercials recently produced by the Company's subsidiaries.
We hope you will be able to attend.
Sincerely,
PHILIP H. GEIER, JR.
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
THE INTERPUBLIC GROUP OF COMPANIES, INC.
1271 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1998
The Annual Meeting of Stockholders of The Interpublic Group of Companies,
Inc. (the "Company") will be held in the Auditorium of the Equitable Center, 787
Seventh Avenue, New York, New York, on Monday, May 18, 1998, at 9:30 A.M.,
Eastern Time, for the following purposes:
1. To elect 11 directors;
2. To consider and act upon a proposal to confirm the appointment of
Price Waterhouse LLP ("Price Waterhouse") as independent accountants of the
Company for the year 1998;
3. To consider and act upon a proposed stockholder resolution regarding
Northern Ireland; and
4. To transact such other business as may properly come before the
meeting and any adjournment thereof.
The close of business on March 23, 1998, has been designated as the record
date for the determination of stockholders entitled to notice of and to vote at
this meeting and any adjournment thereof.
By Order of the Board of Directors,
NICHOLAS J. CAMERA
SECRETARY
Dated: April 17, 1998
Whether or not you plan to attend the meeting in person, please fill in,
sign, date and promptly return the enclosed proxy in the accompanying envelope,
which requires no postage if mailed in the United States. The proxy is
revocable, so that you may still vote your shares in person if you attend the
meeting and wish to do so.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
---------------------
PROXY STATEMENT
---------------------
GENERAL
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (the "Management") of The Interpublic Group of Companies,
Inc. ("Interpublic" or the "Company") of proxies to be voted at the Annual
Meeting of Stockholders, which will be held in the Auditorium of The Equitable
Center, 787 Seventh Avenue, New York, New York, at 9:30 A.M., Eastern Time, on
Monday, May 18, 1998.
The address of the Company's principal executive office is 1271 Avenue of
the Americas, New York, NY 10020. This Proxy Statement and the enclosed form of
proxy are first being sent to stockholders on or about April 17, 1998. The
Company's Annual Report to Stockholders was first sent to stockholders on or
about March 31, 1998.
Any proxy given in response to this solicitation may be revoked at any time
before it has been exercised. The giving of the proxy will not affect your right
to vote in person if you attend the meeting. If you do not attend the Annual
Meeting, or if you attend but do not vote in person, the shares represented by
your proxy will be voted in accordance with your instructions on the matters set
forth in items 1 through 3. If no voting instructions are given with respect to
any one or more of the items, a duly executed proxy will be voted on the
uninstructed matters as follows: FOR Management's nominees for election as
directors, FOR the confirmation of Price Waterhouse LLP ("Price Waterhouse") as
independent accountants for 1998 and AGAINST the stockholder resolution
regarding Northern Ireland. A duly executed proxy also will be voted in the
discretion of the proxy holder on any other matter arising and voted upon at the
meeting.
OUTSTANDING SHARES
The record date for the Annual Meeting is March 23, 1998. The outstanding
capital stock of the Company at the close of business on March 23, 1998
consisted of 131,754,675 shares of Common Stock. Each share of Common Stock is
entitled to one vote on all matters that are submitted to a vote of stockholders
at the meeting. The following table sets forth information concerning direct and
indirect beneficial ownership of the Company's Common Stock as of December 31,
1997 by persons known to the Company to have beneficial ownership of more than
5% of the Common Stock of the Company:
AMOUNT
AND NATURE OF PERCENT
NAME AND ADDRESS BENEFICIAL OF
OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
- --------------------------------------------------------------------- -------------- -----------
The Capital Group Companies, Inc..................................... 6,365,490(2) 5.1%
and subsidiaries
333 South Hope Street
Los Angeles, CA 90071
- ------------------------
(1) Securities and Exchange Commission rules deem a person to be the beneficial
owner of a security (for purposes of the proxy statement disclosure) if that
person has or shares either or both voting or investment power with respect
to such security. Additionally, a security is deemed to be beneficially
owned by a person who has the right to acquire beneficial ownership thereof
within 60 days--for example, through the exercise of a stock option.
(2) Based on information supplied by The Capital Group Companies, Inc.
("Capital") in a Schedule 13G filed with the Securities and Exchange
Commission on or about February 10, 1998. Capital reports
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
that it is the parent holding company of a group of investment management
companies that, by reason of their discretionary investment management
activities, in the aggregate have sole voting power with respect to
2,411,040 shares of Common Stock and sole dispositive power with respect to
6,365,490 shares of Common Stock. Capital disclaims beneficial ownership of
all such shares of Common Stock.
The following table sets forth information concerning the direct and
indirect beneficial ownership of the Company's Common Stock as of March 23, 1998
by each director, each nominee for election as a director, each executive
officer named in the Summary Compensation Table below, and all directors and
executive officers of the Company as a group:
COMMON
STOCK OPTIONS
OWNERSHIP EXERCISABLE
NAME OF BENEFICIAL OWNER (1)(2)(3) WITHIN 60 DAYS
- ----------------------------------------------------------------- ---------- --------------
Eugene P. Beard.................................................. 365,489 470,715
Frank J. Borelli................................................. 3,750 --
Reginald K. Brack................................................ 4,775 --
Jill M. Considine................................................ 3,000 --
John J. Dooner, Jr............................................... 381,834 32,400
Philip H. Geier, Jr.............................................. 800,599 510,300
Frank B. Lowe.................................................... 587,655 --
Leif H. Olsen.................................................... 3,600 1,411
Martin F. Puris.................................................. 769,902 --
Allen Questrom................................................... 3,000 --
J. Phillip Samper................................................ 5,100 1,411
All directors and executive officers as a group.................. 3,172,084 1,269,263
- ------------------------
(1) Securities and Exchange Commission rules deem a person to be the beneficial
owner of a security (for purposes of the proxy statement disclosure) if that
person has or shares either or both voting or investment power with respect
to such security. Additionally, a security is deemed to be beneficially
owned by a person who has the right to acquire beneficial ownership thereof
within 60 days--for example, through the exercise of a stock option. Common
Stock ownership set forth in this table includes unvested shares of
restricted stock awarded under the 1986 Stock Incentive Plan, the 1996 Stock
Incentive Plan, the 1997 Performance Incentive Plan and the Interpublic
Outside Directors' Stock Incentive Plan, respectively. Common Stock
ownership in column one, together with options exercisable within 60 days in
column two, constitute the entire direct and indirect beneficial ownership
of Common Stock of each of the named persons and the group.
(2) No individual identified in the table has beneficial ownership of more than
1% of the outstanding shares of Common Stock. The directors and executive
officers as a group beneficially own 3.3387%.
(3) Except for shares of Common Stock held by Mr. Puris, the beneficial
ownership shown is direct. The shares shown as beneficially owned by Mr.
Puris include 63,882 shares of Common Stock owned by his spouse.
2
VOTING
Election of directors will be decided by a plurality of the votes cast by
the holders of shares of Common Stock present in person or by proxy at the
meeting and entitled to vote. Approval of the proposals described in Items 2 and
3 will require the affirmative vote of a majority of the shares present in
person or by proxy at the meeting and entitled to vote. The Company's transfer
agent tabulates the votes. Abstentions and broker non-votes are each tabulated
separately and are counted toward the quorum. For Items 2 and 3, shares that are
the subject of an abstention are counted, whereas shares that are the subject of
a broker non-vote are not counted, as shares entitled to vote on the particular
matter.
STOCKHOLDERS' PROPOSALS TO BE PRESENTED AT 1999 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders scheduled to be held on May 17, 1999, must be received by the
Company by December 26, 1998, in order to be considered for inclusion in the
Company's Proxy Statement and form of proxy relating to that meeting.
1. ELECTION OF DIRECTORS
The directors of the Company to be elected at the Annual Meeting will hold
office until the next Annual Meeting of Stockholders and until their successors
are elected and qualify or until their earlier death, resignation or removal.
Certain biographical information concerning each of the Management's nominees is
provided below. All of the nominees are currently serving as directors of the
Company. The Management believes that each of the nominees will be available and
able to serve as a director. However, if for any reason any of these persons
should not be available or are unable to serve, proxies will be voted for the
remainder of those nominated and, unless the size of the Board of Directors is
reduced, for a substituted nominee designated by the Management.
The following information with respect to the principal occupation or
employment, recent employment history, age and directorships in other companies
at February 27, 1998, has been furnished or confirmed to the Company by the
respective nominees. Also listed are the committees of the Board of Directors on
which each serves.
McCann-Erickson WorldGroup, Ammirati Puris Lintas Worldwide and The Lowe
Group are worldwide advertising agency systems owned by Interpublic.
EUGENE P. BEARD has been Vice Chairman-Finance and Operations and Chief
Financial Officer of the Company since 1995 and previously was Executive Vice
President-Finance and Operations and Chief Financial Officer of the Company from
1985 to 1995. Mr. Beard has been a director of Interpublic since 1982.
He is a director of Brown Brothers Harriman--59 Wall Street Fund, Inc., Bessemer
Trust Company Old Westbury Funds, Inc., and Micrografx, Inc. He also is a member
of the Listed Company Advisory Committee to the Board of Directors of The New
York Stock Exchange. Age 62.
CHAIRMAN OF THE FINANCE COMMITTEE. MEMBER OF THE EXECUTIVE POLICY COMMITTEE.
FRANK J. BORELLI has been Senior Vice President and Chief Financial Officer
of Marsh & McLennan Companies, Inc. since 1984. He is a director of Marsh &
McLennan Companies, Inc., Mid Ocean Limited and United Water Resources, Inc. Mr.
Borelli is past Chairman and a Director of the Financial Executives Institute
and is also a Vice Chairman and Trustee of the New York City Chapter of the
National Multiple Sclerosis Society and a Trustee of the Nyack Hospital. Mr.
Borelli has been a director of Interpublic since 1995. Age 62.
CHAIRMAN OF THE AUDIT COMMITTEE. MEMBER OF THE COMPENSATION, EXECUTIVE POLICY
AND FINANCE COMMITTEES.
3
REGINALD K. BRACK has been Chairman Emeritus of Time Inc. since July 1997.
From September 1994 to June 1997, Mr. Brack was Chairman of Time Inc. and was
its Chairman, President and Chief Executive Officer from December 1986 until
August 1994. Mr. Brack has been a director of Interpublic since 1996. Age 60.
MEMBER OF THE AUDIT, COMPENSATION, FINANCE AND NOMINATING COMMITTEES.
JILL M. CONSIDINE has been President of the New York Clearing House
Association since 1993. The New York Clearing House Association is a private
payments system, clearing interbank payments and checks. She was Chief
Administrative Officer of American Express Bank Ltd. and a member of its Board
of Directors from 1991 to 1993. Prior to that time she served as New York State
Superintendent of Banks from 1985 to 1991. She is a trustee of Atlantic Mutual
Insurance Company and a director of its affiliate Centennial Insurance Company.
Ms. Considine has been a director of Interpublic since February 1997. Age 53.
MEMBER OF THE AUDIT AND COMPENSATION COMMITTEES.
JOHN J. DOONER, JR. has been Chairman and Chief Executive Officer of
McCann-Erickson WorldGroup since 1995 and previously was Chief Executive Officer
of McCann-Erickson WorldGroup from 1994 to 1995. From 1992 to 1994, Mr. Dooner
was President of McCann-Erickson WorldGroup. He served as President of
McCann-Erickson North America from 1988-1992. Mr. Dooner has been a director of
Interpublic since 1995. Age 49.
PHILIP H. GEIER, JR., Chairman of the Board and Chief Executive Officer of
the Company, has been a director of Interpublic since 1975. Mr. Geier was
elected Chairman and Chief Executive Officer of the Company in 1980. Mr. Geier
is a director of Fiduciary Trust Company International and Woolworth
Corporation. Age 63.
CHAIRMAN OF THE EXECUTIVE POLICY COMMITTEE. MEMBER OF THE FINANCE COMMITTEE.
FRANK B. LOWE, Chairman of The Lowe Group, has been a director of
Interpublic since 1990. Mr. Lowe has served as Chairman of The Lowe Group since
its founding in 1981 and also serves as Chairman of Octagon, Inc, a wholly-owned
subsidiary of the Company, specializing in sports and events marketing. Age 56.
LEIF H. OLSEN, President of Leif H. Olsen Investments, Inc., financial asset
managers and economic consultants, has been a director of Interpublic since
1972. Mr. Olsen was Senior Vice President and Economist of First National City
Bank (now Citibank, N.A.) until 1978, when he became Chairman of the Economic
Policy Committee of Citibank, N.A., a post he held until 1985. He is a director
of BNY Hamilton Funds, a trustee of Atlantic Mutual Insurance Company and a
director of its affiliate Centennial Insurance Company. Age 72.
CHAIRMAN OF THE COMPENSATION COMMITTEE. MEMBER OF THE AUDIT, EXECUTIVE POLICY
AND FINANCE COMMITTEES.
MARTIN F. PURIS, Chairman, Chief Executive Officer and Chief Creative
Officer of Ammirati Puris Lintas Worldwide as of July 1, 1995, has been a
director of Interpublic since 1995. From August 1994 until July 1995, Mr. Puris
was Vice Chairman of Ammirati Puris Worldwide and Chief Executive Officer of
Ammirati Puris Lintas, Inc., both of which are subsidiaries of Interpublic. Mr.
Puris, a founder of Ammirati & Puris Inc., has been with that company since its
inception in 1974 and was its President and Chief Executive Officer from 1974 to
1994 when Interpublic acquired that advertising agency. Age 59.
ALLEN QUESTROM, who was Chairman and Chief Executive Officer of Federated
Department Stores, Inc. from 1990 to 1997, has been a director of Interpublic
since 1995. He is a director of the Polo Ralph Lauren Corporation. Age 57.
MEMBER OF THE COMPENSATION AND NOMINATING COMMITTEES.
4
J. PHILLIP SAMPER, Chief Executive Officer and President of Avistar Systems
Corp. from 1997 to the present, has been a director of Interpublic since 1990.
Mr. Samper was Chairman, Chief Executive Officer and President of Quadlux, Inc.
from 1996 to 1997. He was Chairman and Chief Executive Officer of Cray Research,
Inc. during 1995 and was President of Sun Microsystems Computer Corporation from
1994 to 1995. Mr. Samper was Vice Chairman and Executive Officer of the Eastman
Kodak Company from 1986 to 1989 and a member of the Board of Directors from 1983
to 1989. He was President and Chief Executive Officer of Kinder-Care Learning
Centers from 1990 to 1991. Mr. Samper is a director of Armstrong World
Industries, Inc., Sylvan Learning Systems, Inc. and Ingram Micro, Inc. Age 64.
CHAIRMAN OF THE NOMINATING COMMITTEE. MEMBER OF THE COMPENSATION COMMITTEE.
PRINCIPAL COMMITTEES OF THE BOARD OF DIRECTORS
EXECUTIVE POLICY COMMITTEE--The Executive Policy Committee is authorized to
exercise when the Board of Directors is not in session all powers of the Board
of Directors which, under Delaware law and the By-Laws of the Company, may
properly be delegated to a committee, except certain powers that have been
delegated to other committees of the Board of Directors. The Executive Policy
Committee did not hold any meetings in 1997.
FINANCE COMMITTEE--The Finance Committee is authorized to review the
financial affairs of the Company and make recommendations with respect thereto
to the Board of Directors. It also approves capital budgets, guarantees by the
Company of obligations of subsidiaries and affiliates and certain capital
transactions (including mergers and acquisitions), and is the committee that
administers the Interpublic Retirement Account Plan. The Finance Committee held
thirteen meetings in 1997.
AUDIT COMMITTEE--The Audit Committee, whose members cannot be officers or
employees of the Company, is responsible for the selection and retention of,
subject to the approval of the Board of Directors, and the approval of the
annual compensation of, the Company's independent accountants. The Audit
Committee confers with the independent accountants and from time to time reports
to the Board of Directors on matters concerning the auditing of the books and
accounts of the Company. It also reviews and examines the procedures and methods
employed in the Company's internal audit program. It reviews and submits to the
Board of Directors, as soon as possible after the close of each fiscal year, the
consolidated balance sheet of the Company and its subsidiaries and the related
consolidated statements of income, of stockholders' equity and of cash flows.
The Audit Committee held three meetings in 1997.
COMPENSATION COMMITTEE--The Compensation Committee is responsible for
approving the compensation paid to officers of the Company and its subsidiaries.
For these purposes, compensation is deemed to include: (1) salary, (2) deferred
compensation, (3) bonuses and other extra compensation of all types, including
long-term performance incentive awards under the Company's 1997 Performance
Incentive Plan,(4) insurance paid for by the Company or any of its subsidiaries
other than group plans, (5) annuities and individual retirement arrangements and
(6) Special Deferred Benefit Arrangements. The Compensation Committee also
administers the 1997 Performanace Incentive Plan (and its predecessors, the
Long-Term Performance Incentive Plan, the Management Incentive Compensation
Plan, the 1996 Stock Incentive Plan and the 1986 Stock Incentive Plan), the 1986
United Kingdom Stock Option Plan and the Employee Stock Purchase Plan (1995).
The Compensation Committee held six meetings in 1997.
NOMINATING COMMITTEE--The Nominating Committee is responsible for
recommending to the Board of Directors the persons to be nominated for election
to the Board of Directors. Stockholders who desire to recommend nominees for
election at the Annual Meeting may do so by writing to the Secretary of the
Company at the Company's principal executive office set forth in the second
paragraph on page 1 of this Proxy Statement. Any such recommendation should be
submitted prior to December 31 of the year preceding the Annual Meeting of
Stockholders in question, and the recommendation will be given consideration by
the Nominating Committee. The Nominating Committee held two meetings in 1997.
5
ATTENDANCE AT BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors of the Company held seven meetings in 1997 and
committees of the Board held a total of 31 meetings. During 1997, Messrs. Lowe
and Samper each attended fewer than 75% of the total number of meetings of the
Board of Directors and committees on which he served.
DIRECTORS' FEES
Each director who is not an employee of the Company or one of its
subsidiaries receives an annual retainer of $24,000 for serving as a director,
an annual retainer of $2,000 for each committee on which he or she serves, a fee
of $1,000 for each meeting of the Board attended and a fee of $1,000 for each
committee meeting attended. The Chairman of the Compensation Committee receives
an additional retainer of $3,000 per year and the Chairman of each of the Audit
and Nominating Committees receives an additional retainer of $2,500.
Each outside director who, as of December 31, 1995, had accumulated at least
five years of service is entitled to receive an annual retirement benefit under
the Interpublic Outside Directors' Pension Plan (the "Outside Directors' Pension
Plan"). In general, the benefit becomes payable in the month following the month
the director leaves the Board. The benefit is equal to the amount of the annual
retainer paid to the director as a Board member in the year in which he or she
ceased to serve as a director and will be paid for the same number of years as
the director's years of service, up to a maximum of 15 years. In the event of
the death of a director with a vested retirement benefit, the then present value
of the director's unpaid retirement benefits will be paid to the surviving
spouse or the estate of the director. Effective December 31, 1995, the Outside
Directors' Pension Plan was terminated, except to the extent benefits were
accrued prior to termination. As a result there have been no further accruals
for the benefit of existing directors under the Outside Directors' Pension Plan
for subsequent years. Any director with fewer than five years of service on the
date that the Plan was terminated will not receive any benefits under the Plan.
In 1994, the stockholders of the Company approved the Interpublic Outside
Directors' Stock Incentive Plan (formerly called the Interpublic Outside
Directors' Stock Option Plan). The Outside Directors' Stock Incentive Plan (the
"Outside Directors' Plan") provides for an annual grant of options to purchase
the number of shares of Common Stock having an aggregate fair market value of
$30,000 on the date of grant. The exercise price of each option is equal to the
fair market value of the Common Stock on the date of grant. The options become
exercisable in full on the third anniversary after the date of grant and expire
ten years from the date of grant.
An outside director may exercise stock options granted prior to June 1, 1996
that are exercisable on the date of cessation of service for 90 days following
cessation of service as a director, except that an outside director who is
eligible to receive a benefit under the Outside Directors' Pension Plan may
exercise such options for five years following the date of retirement from the
Board of Directors, but in no event after the expiration of the ten-year option
term. Options granted on or after June 1, 1996 that are exercisable at the time
of cessation of service may be exercised for a period of three years following
cessation of service, whether or not the director is eligible to receive a
benefit under the Outside Directors' Pension Plan, but in no event after
expiration of the ten-year option term.
The Outside Directors' Plan also provides for a periodic grant of 3,000
restricted shares of the Company's Common Stock to each outside director. The
first grant was made in June 1996. An additional grant of 3,000 shares will be
made every fifth year thereafter while the Outside Directors' Plan remains in
effect.
The outside director has all rights of ownership with respect to such
restricted shares, including the right to vote and to receive dividends, except
that, prior to the expiration of a five-year period after the date of grant (the
"Restricted Period"), the outside director is prohibited from selling or
otherwise transferring the shares. If, on or after the first anniversary of the
grant, an outside director's service as a
6
director terminates for any reason (including death) during the Restricted
Period, the restrictions on transfer will lapse immediately in proportion to the
number of months that have elapsed since the date of grant and the remainder of
such restricted shares will be forfeited. If an outside director's service
terminates for any reason (including death) before the first anniversary of the
date of grant, all such restricted shares will be forfeited. The committee
administering the Outside Directors' Plan may in its discretion direct the
Company to make cash payments to an outside director to assist in satisfying the
federal income tax liability with respect to the receipt or vesting of the
restricted shares.
On June 6, 1997, Mr. Borelli, Mr. Brack, Ms. Considine, Mr. Olsen, Mr.
Questrom and Mr. Samper, each received under the Outside Director's Plan an
award of stock options, covering 750 shares of Common Stock with an exercise
price of $40 per share. On June 7, 1996, Messrs. Borelli, Olsen, Questrom and
Samper, received under the Outside Directors' Plan a grant of 3,000 restricted
shares. On June 6, 1997, Mr. Brack and Ms. Considine received a grant of 3,000
restricted shares. Such number of shares underlying the stock options and the
exercise prices thereof and the number of restricted shares awarded have been
adjusted to reflect a 3-for-2 stock split of the Company's Common Stock,
effective July 15, 1997 (the "3-for-2 Stock Split").
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation paid by the Company and its
subsidiaries to the Chief Executive Officer and the four other most highly
compensated executive officers of the Company who were serving as executive
officers on December 31, 1997 (the "named executive officers") for services
rendered in all capacities for each year in the three-year period ended on that
date. As used in this Proxy Statement, the executive officers of the Company are
deemed to include any director of the Company who currently serves as a chief
executive officer of one of the Company's three agency systems, McCann-Erickson
WorldGroup, Ammirati Puris Lintas Worldwide and The Lowe Group. In addition to
the named executive officers who are employed by Interpublic, the Company has
designated as its other executive officers its Senior Vice President-Human
Resources, its Vice President, General Counsel and Secretary, its Senior Vice
President-Financial Operations, its Senior Vice President-Planning and Business
Development and its Vice President and Controller.
7
The number of shares of the Company's Common Stock in the table below, have
been adjusted for the 3-for-2 Stock Split.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------------- ---------------------------------------
AWARDS
--------------------------
OTHER SECURITIES PAYOUTS
NAME ANNUAL RESTRICTED UNDERLYING -----------
AND PRINCIPAL FISCAL COMPEN- STOCK OPTIONS LTIP
POSITION YEAR SALARY(1) BONUS(2)(3) SATION (4) AWARDS(5) # PAYOUTS(6)
- ---------------------------------------- ----------- ---------- ------------ ---------- ------------- ----------- -----------
Philip H. Geier, Jr..................... 1997 $ 985,416 $ 1,250,000 $ 59,697 $ 2,956,253 54,000 $ 567,000
Chairman of the Board of Directors and 1996 965,000 1,200,000 89,642 0 162,000 567,000
Chief Executive Officer 1995 965,000 868,600 -- 4,605,000 162,000 843,750
Eugene P. Beard......................... 1997 $ 783,333 $ 1,100,000 $ -- $ 0 0 $ 333,375
Vice Chairman-Finance and Operations, 1996 750,000 900,000 -- 0 169,992 333,375
Chief Financial Officer and Director 1995 662,500 588,245 -- 2,878,125 95,958 375,000
John J. Dooner, Jr...................... 1997 $ 783,333 $ 990,000 $ 72,346 $ 6,503,756 75,000 $ 388,125
Chairman of McCann-Erickson WorldGroup 1996 750,000 770,000 74,393 0 90,000 354,375
and Director of Interpublic 1995 685,000 550,000 59,640 0 82,620 535,750
Frank B. Lowe........................... 1997 $ 750,000 $ 850,000 $ 238,163 $ 0 60,000 $ 525,250
Chairman of The Lowe Group and 1996 750,000 600,000 257,561 3,510,938 90,000 459,000
Director of Interpublic 1995 660,000 475,000 267,366 0 45,000 472,500
Martin F. Puris......................... 1997 $ 808,333 $ 770,000 $ -- $ 0 0 $ 0
Chairman of Ammirati Puris Lintas 1996 750,000 600,000 52,573 0 90,000 0
Worldwide and Director of Interpublic 1995 712,500 475,000 -- 1,273,125 40,500 0
ALL
NAME OTHER
AND PRINCIPAL COMPEN-
POSITION SATION (7)
- ---------------------------------------- ---------
Philip H. Geier, Jr..................... $ 10,046
Chairman of the Board of Directors and 9,557
Chief Executive Officer 9,558
Eugene P. Beard......................... $ 9,557
Vice Chairman-Finance and Operations, 9,557
Chief Financial Officer and Director 7,483
John J. Dooner, Jr...................... $ 7,397
Chairman of McCann-Erickson WorldGroup 7,726
and Director of Interpublic 7,009
Frank B. Lowe........................... $ 8,925
Chairman of The Lowe Group and 8,550
Director of Interpublic 8,082
Martin F. Puris......................... $ 58,955
Chairman of Ammirati Puris Lintas 54,464
Worldwide and Director of Interpublic 50,638
- --------------------------
(1) The salaries of executive officers continuing to serve in the same position
are reviewed every two years.
(2) Consists primarily of bonus payments made pursuant to the Company's
Management Incentive Compensation Program.
(3) Mr. Puris irrevocably waived a bonus in the amount of $1.5 million that was
to become due in 1996. In lieu thereof, he has received a
retirement/survivor benefit as more fully described under the heading
"Special Deferred Benefit Arrangements" in this Proxy Statement.
(4) Other Annual Compensation for 1997 includes $21,210 in medical/dental
coverage paid on behalf of Mr. Geier, $21,210 in medical/dental coverage and
$24,416 in respect of spousal travel paid on behalf of Mr. Dooner, and
$200,000 in reimbursement for housing expenses paid to or on behalf of Mr.
Lowe.
Other Annual Compensation for 1996 includes $24,078 in medical/dental
coverage and $32,221 in club dues paid on behalf of Mr. Geier, $24,078 in
medical/dental coverage and $28,735 in respect of spousal travel paid on
behalf of Mr. Dooner, $200,000 in reimbursement for housing expenses paid to
or on behalf of Mr. Lowe, and $18,339 for use of a company car paid to or on
behalf of Mr. Puris.
Other Annual Compensation for 1995 includes $17,490 in medical/dental
coverage and $16,407 in respect of spousal travel paid on behalf of Mr.
Dooner and reimbursement for $216,667 in housing expenses paid to or on
behalf of Mr. Lowe.
(5) The number and value of shares of restricted stock held by the named
executive officers at December 31, 1997 (based on the closing price of the
Common Stock on December 31, 1997) are as follows: Mr. Geier--356,406 shares
($17,753,652); Mr. Beard--157,743 shares ($7,857,652); Mr. Dooner--317,574
shares ($15,819,314); Mr. Lowe-- 428,154 shares ($21,327,635) and Mr.
Puris--52,500 shares ($2,615,183). The shares of restricted stock awarded to
each named executive officer were granted with at least a five-year vesting
period, subject to the discretion of the Committee administering the Plan to
release the restrictions not earlier than one year after the grant date.
Dividends on restricted stock are paid on the same basis as ordinary
dividends on the Common Stock.
(6) Payouts under the Long-Term Performance Incentive Program are made at the
end of four-year performance periods. These four-year periods begin at
two-year intervals. An initial payment of approximately 50% of the estimated
total payout for the 1993-1996 performance period was made in December 1996.
The balance of the actual payout amount was made in the first quarter of
1997. Mr. Beard's payout was deferred, at his election until his retirement.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
8
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(7) All Other Compensation for 1997 consisted of: (i) the following amounts paid
to the named executive officers as matching contributions under the
Interpublic Savings Plan--Mr. Geier--$7,238; Mr. Beard -$6,749; Mr. Dooner--
$6,701; and Mr. Lowe -$7,125; (ii) premiums paid by the Company on group
life insurance--Mr. Geier--$2,808; Mr. Beard--$2,808; Mr. Dooner--$696; Mr.
Lowe--$1,800; and Mr. Puris -$1,800; and (iii) insurance premiums paid by
the Company for Mr. Puris under: (a) life insurance policies on the life of
Mr. Puris consisting of (i) premiums for two split-dollar life insurance
policies totaling $15,164 and (ii) premiums on two other life insurance
policies totaling $34,198; and (b) a disability insurance policy, the
premiums for which were $7,793.
STOCK OPTION GRANTS IN 1997
The following table provides information on grants of stock options in 1997
to the named executive officers and the estimated grant date present value of
the options. The shares of Common Stock underlying options granted and the
exercise price have been adjusted for the 3-for-2 Stock Split.
INDIVIDUAL GRANTS
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE VALUE ($)(2)
- ------------------------------------------- --------------- ------------- ----------- ----------- ------------
Philip H. Geier, Jr........................ 54,000 5.38% $ 39.4167 5/19/07 $ 652,860
Eugene P. Beard............................ 0 0.00% 0 -- 0
John J. Dooner, Jr......................... 75,000 7.47% 39.4167 5/19/07 906,750
Frank B. Lowe.............................. 60,000 5.98% 39.4167 5/19/07 725,400
Martin F. Puris............................ 0 0.00% 0 -- 0
- ------------------------
(1) All options were granted on May 19, 1997. Each option has a ten-year term
and an exercise price equal to 100% of the fair market value of the Common
Stock on the date of the grant. Mr. Geier's options become exercisable on
January 1, 2001. The options of Messrs. Dooner and Lowe become exercisable
on May 19, 2002.
(2) The grant date present value is calculated using the Black-Scholes Option
Pricing Model and assumes that the options are held for six years. The
calculations include the following assumptions: volatility of 19.32%,
dividend yield of 1.31% and risk-free rate of return of 6.61%.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information on stock option exercises and the
number and the year-end value of options held by the named executive officers.
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1997 (#) DECEMBER 31, 1997($)(1)
SHARES ACQUIRED VALUE REALIZED -------------------------- ----------------------------
NAME ON EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- --------------- ---------------- ----------- ------------- ------------- -------------
Philip H. Geier, Jr......... 227,037 $ 7,360,996 510,300 378,000 $ 17,124,166 $ 8,060,814
Eugene P. Beard............. None 0 339,765 265,950 11,771,422 5,946,259
John J. Dooner, Jr.......... None 0 81,150 247,620 2,592,870 4,736,193
Frank B. Lowe............... 35,100 580,613 0 195,000 0 3,510,411
Martin F. Puris............. None 0 0 130,500 0 2,758,662
- ------------------------
(1) Based on the closing price of the Company's Common Stock on December 31,
1997. The number of all shares of the Company's Common Stock have been
adjusted to reflect the 3-for-2 Stock Split.
9
LONG-TERM INCENTIVE COMPENSATION--AWARDS IN LAST FISCAL YEAR
The following table provides information as to awards to the named executive
officers in 1997 under the Company's Long-Term Performance Incentive Program
(the "LTPIP").
ESTIMATED FUTURE PAYOUTS
PERFORMANCE UNDER NON-STOCK PRICE-BASED PLANS
ALLOCATION OF NUMBER OF OR OTHER PERIOD -----------------------------------
PERFORMANCE PERFORMANCE UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME UNITS UNITS (#) OR PAYOUT ($) ($) ($)
- ----------------------- ----------------------- ------------- ------------------ --------- ----------- -----------
Philip H. Geier, Jr.... IPG Worldwide 16,000 1/1/97--12/31/00 $ 320,000 $ 1,840,000 $ 2,800,000
Eugene P. Beard........ IPG Worldwide 10,334 1/1/97--12/31/00 206,680 1,188,410 1,808,450
John J. Dooner, Jr..... McCann-Erickson 10,334 1/1/97--12/31/00 206,680 1,188,410 1,808,450
WorldGroup
Frank B. Lowe.......... Lowe Worldwide 10,334 1/1/97--12/31/00 206,680 1,188,410 1,808,450
Martin F. Puris........ Ammirati Puris Lintas 10,334 1/1/97--12/31/00 206,680 1,188,410 1,808,450
Worldwide
The LTPIP provides for long-term incentive compensation awards of
"performance units" made at two-year intervals to selected employees of the
Company or its subsidiaries.
The value of the performance units is tied to the annual growth of operating
profits of the office, agency or regional or worldwide agency system with which
the employee is principally associated. Such performance units are awarded with
a provisional value of $100, which may increase to as much as $175. The value
may decrease to as little as zero, with the increase or decrease depending in
each case on the extent to which the growth rates of operating profit of the
applicable operating components exceed or fall short of pre-established compound
growth rates in operating profit over a period of four calendar years (a
"performance period").
The threshold growth rate objective is based on 8% growth in cumulative
compound operating profit of an operating component during a performance period,
resulting in a threshold payout of $20 per performance unit. Failure to reach
the threshold growth rate will result in a zero award. The LTPIP does not
provide for a target performance level. A target growth rate of 15% has been
assumed for purposes of this presentation. This growth rate would result in a
target payout of $115 per performance unit. The maximum growth rate objective is
27%, resulting in a maximum payout of $175 per performance unit. It would be
unusual to achieve the maximum growth rate objective.
EMPLOYMENT CONTRACTS, TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
EMPLOYMENT AGREEMENTS
Each of the named executive officers has an employment contract with the
Company providing for the annual compensation and termination dates set forth
below:
EXPIRATION
NAME SALARY DATE(1)
- ---------------------------------------------------------- ---------- ----------------------
Philip H. Geier, Jr....................................... $ 995,000 June 30, 2001
Eugene P. Beard........................................... 850,000 December 31, 1998
John J. Dooner, Jr........................................ 850,000 December 31, 1998
Frank B. Lowe............................................. 850,000 December 31, 2000
Martin F. Puris........................................... 850,000 August 10, 1999
- ------------------------
(1) Each employment contract is terminable by either party at any time upon
twelve months' notice, except that the Employment Agreement with Mr. Puris
permits him to terminate that contract on six months' notice.
10
SPECIAL DEFERRED BENEFIT ARRANGEMENTS
In addition to an employment contract, each of the named executive officers
has entered into special deferred benefit agreements with Interpublic as
described below.
Mr. Beard is a party to three agreements which in the aggregate provide that
if he dies while he is employed by the Company $194,000 per year will be paid to
his beneficiaries for 15 years following his death. Alternatively, he will be
paid benefits for 15 years of $194,000 per year if he retires on or after his
60th birthday. The Company also has entered into an agreement with Mr. Beard
which provides that if he dies while he is employed by the Company $230,000 per
year will be paid to his beneficiaries for 15 years following his death.
Alternatively, he will be paid an annual benefit of $230,000 for 15 years if he
retires on or after July 18, 1998. This benefit will be forfeited if Mr. Beard,
without the consent of the Compensation Committee, were to leave the Company
prior to July 18, 1998 for any reason except death or disability.
Mr. Dooner is a party to two agreements which in the aggregate provide that
if he dies while he is employed by the Company $186,000 per year will be paid to
his beneficiaries for 15 years following his death. Alternatively, if he
retires, resigns or is otherwise no longer in the employment of the Company on
or after his 55th birthday he will be paid benefits for 15 years ranging from
$130,200 to $186,000 per year depending upon the year his employment terminates.
In the event Mr. Dooner's employment terminates prior to his 55th birthday,
other than by reason of death, he will be paid lesser sums but not less than an
aggregate of $340,000. The Company also has entered into an agreement with Mr.
Dooner which provides that if he dies while he is employed by the Company, his
beneficiaries would receive $88,500 annually for 15 years. Alternatively if he
retires from the Company on or after July 18, 1998, the Company will pay him
retirement benefits at the rate of $88,500 per year for 15 years. This benefit
will be forfeited if Mr. Dooner, without the consent of the Compensation
Committee, were to leave the Company prior to July 18, 1998 for any reason
except death or disability.
Mr. Geier is a party to two agreements which in the aggregate provide that
if he dies while he is employed by the Company $160,000 per year will be paid to
his beneficiaries for 15 years following his death. Alternatively, he will be
paid benefits for 15 years of $160,000 per year if he retires on or after his
60th birthday. The Company also has entered into an agreement with Mr. Geier
which provides that if he dies while he is employed by the Company $255,000 per
year will be paid to his beneficiaries for 15 years following his death.
Alternatively, he will be paid an annual benefit of $255,000 for 15 years if he
retires on or after July 18, 1998. This benefit will be forfeited if Mr. Geier,
without the consent of the Compensation Committee, were to leave the Company
prior to July 18, 1998 for any reason except death or disability.
Mr. Lowe is a party to an agreement which provides that if he dies while he
is employed by the Company $158,400 per year will be paid to his beneficiaries
for 15 years following his death. If he retires on or after his 60th birthday,
he will be paid a benefit of $158,400 per year for 15 years. If he retires,
resigns or his employment is terminated on or after his 56th birthday, but prior
to his 60th birthday, he will be paid benefits ranging from $91,872 to $148,896
per year for 15 years based on the year his employment terminates. The Company
also has entered into an agreement with Mr. Lowe that provides that if he dies
while he is employed by the Company, an amount of $133,200 per year will be paid
to his beneficiaries for 15 years following his death. If he retires on or after
his 64th birthday, he will receive a benefit of $133,200 per year for 15 years.
If he retires or resigns or his employment is terminated on or after his 60th
birthday, but prior to his 64th birthday, he will receive benefits for a period
of 15 years ranging from $60,952 to $117,216 per year, depending upon the year
his employment terminates.
Mr. Puris is a party to an agreement which provides that if he dies while he
is employed by the Company, his beneficiaries will receive payments of $300,000
per year for 15 years following his death. If he retires on or after his 65th
birthday, Mr. Puris will receive retirement benefits of $300,000 per year for 15
years. If he retires, resigns or his employment is terminated on or after his
63rd birthday, but prior to his 65th birthday, he will be paid benefits ranging
from $230,000 to $265,000 per year for 15 years, depending upon the year his
employment terminates. In the event the employment of Mr. Puris were to
terminate
11
prior to his 63rd birthday, he would receive a lump-sum amount that in any case
would not be less than $1,500,000.
EXECUTIVE SEVERANCE AGREEMENTS
Messrs. Beard, Dooner, Geier and Lowe each have an agreement with the
Company pursuant to which (a) sums previously deferred pursuant to employment
agreements, Special Deferred Benefit Agreements and the Management Incentive
Compensation Plans of the Company and its subsidiaries would become payable
within 30 days following a "Change of Control" of the Company, if the individual
had so elected prior to the Change of Control, and (b) a cash severance payment
would become payable to such individual if, within two years after the Change of
Control, his employment should be terminated by the Company (except for "Cause")
or the individual should resign for "Good Reason".
The agreements provide that a Change of Control occurs if: (a) any person
other than Interpublic or any of its subsidiaries, becomes the beneficial owner
(within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of 30% or more of the combined voting power of Interpublic's then
outstanding voting securities; (b) the stockholders approve an agreement to
merge or consolidate with another corporation (other than a subsidiary of
Interpublic) or an agreement to sell or dispose of all or substantially all of
the business or assets of Interpublic; or (c) during any period of two
consecutive years, individuals who, at the beginning of such period, constituted
the Board of Directors cease for any reason to constitute at least a majority
thereof, unless the election or the nomination for election by Interpublic's
stockholders of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
The agreements provide, for purposes of determining an Executive's right to
receive severance payments only, that Interpublic shall have Cause to terminate
an executive, following a Change of Control, if the executive: (a) engages in
conduct that constitutes a felony and that results in the personal enrichment of
the executive at the Company's expense; (b) refuses to substantially perform his
responsibilities for the Company; or (c) deliberately and materially breaches
any agreement between himself and the Company and fails to remedy that breach
within a 30-day cure period.
For purposes of determining an executive's right to receive severance
payments only, an executive under the terms of the agreements may resign for
"Good Reason" if, without his consent, in any circumstance other than his
disability, his office in the Company or the geographical area of his employment
should be changed or his compensation should not continue to be paid and
increased on the same basis as had been in effect prior to the Change of Control
or the individual should determine in good faith that the Company had, without
his consent, effected a significant change in his status within, or the nature
or scope of his duties or responsibilities with, the Company and the Company
failed to cure such situation within 30 days after written notice from the
individual.
The severance payment would be three times the individual's average annual
compensation during the two calendar years ended prior to the date of the Change
of Control, plus a partial annual bonus based on the prior year's bonus prorated
for the elapsed portion of the year in which employment terminated. The average
compensation used in calculating the severance payment would be the individual's
taxable compensation plus any deferred compensation accrued during the two
relevant years, but would not include any deferred compensation earned in prior
years but paid during the two years and would not include any taxable
compensation relating to any stock option or restricted stock plan of the
Company.
Each contract includes the agreement of the individual providing that if the
individual's employment terminates in circumstances entitling him to a severance
payment, he will, for a period of 18 months following the termination of his
employment, neither (a) solicit any employee of the Company or any of its
subsidiaries to leave such employ to enter into the employ of the individual, or
any person or entity with which the individual is associated, nor (b) solicit or
handle, on his own behalf or on behalf of any person or
12
entity with which he is associated, the advertising, public relations, sales
promotion or market research business of any advertiser which was a client of
the Company or any of its subsidiaries on the date the individual's employment
terminates.
The agreements give the individuals who are parties thereto an option to
limit payment under the agreements to such sum as would avoid subjecting the
individual to the excise tax imposed by Section 4999 of the Internal Revenue
Code.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Shares of Interpublic Common Stock held in a trust on behalf of Mr. Lowe
were sold on May 2, 1995. The transaction was required to be but was not
reported to, the Securities and Exchange Commission on Form 4. The sale was
reported by Mr. Lowe on Form 5 filed with the Securities and Exchange Commission
in February 1998.
RETIREMENT PLAN
As of January 1, 1992, the Company adopted the Interpublic Retirement
Account Plan to provide benefits under a "cash balance formula" to employees of
Interpublic and most of its domestic subsidiaries who have at least five years
of service. Each year a participant's account balance is credited with an amount
equal to a percentage of the participant's annual compensation and interest
credits. The percentage of annual compensation varies based on the sum of the
participant's age and years of service from 1.5% for participants with a sum
less than 40 years to 5% for participants with a sum of 80 or more years.
Interest credits are based on the 1-year U.S. Treasury bill rate plus 1
percentage point, compounded quarterly, and are guaranteed to be at least 5% per
year, compounded quarterly.
Until July 31, 1987, employees of the Company and most of its domestic
subsidiaries were entitled in general to receive at retirement a monthly
retirement benefit pursuant to a defined benefit pension formula computed as a
percentage of average monthly compensation during the five consecutive calendar
years with highest compensation with certain exclusions. The percentage of
average monthly compensation used to calculate the monthly benefit was
determined by multiplying the number of years of accredited service (which is
defined in the Plan as the period of participation in the Plan) by 1.3%.
Beginning July 31, 1987, the method of calculating the pension benefit was
changed to a career average formula based on annual compensation. The percentage
of annual compensation used to calculate the benefit was 1% of each year's
compensation up to $15,000 plus 1.3% of any compensation in excess of that
amount.
Participants under the defined benefit pension formula on December 31, 1991,
had their normal retirement benefit converted on an actuarial basis into an
"opening cash balance" as of January 1, 1992. In addition, participants
continued to accrue benefits pursuant to the career average formula and became
eligible to receive upon retirement the higher of (1) the participant's benefit
under the cash balance formula or (2) the participant's accrued retirement
benefit under the career average formula as of December 31, 1991, plus any
accrual after that date calculated pursuant to the career average formula.
Employees joining the Company after December 31, 1991, were eligible to accrue
benefits only under the cash balance formula.
With certain minor exceptions, "compensation" under the career average
formula as well as the cash balance formula includes all compensation subject to
federal income tax withholding. Annual compensation for pension accruals since
December 31, 1988 has been limited by federal tax law. Currently, the limit is
$160,000, which is subject to future cost-of-living adjustments.
In December 1997, the Board of Directors of the Company adopted a resolution
to freeze benefit accruals under the Interpublic Retirement Account Plan as of
March 31, 1998. Retirement account balances as of that date will continue to be
credited with interest until benefits begin in accordance with the generally
applicable Plan provisions, but additional Company allocations have been
discontinued as of
13
March 31, 1998. In accordance with the resolution, Retirement Account Plan
participants whose benefits were not already vested became fully vested as of
April 1, 1998.
In addition, effective April 1, 1998, employees with five or more years of
Retirement Account Plan participation began to participate in a new Compensation
Plan. Under the new Compensation Plan, an account is established for each
eligible employee and credited with up to ten annual allocations depending on
the employee's years of participation in the Retirement Account Plan. Each
annual allocation approximates the discontinued allocations under the Retirement
Account Plan. In general, the balance in each employee's account begins to vest
gradually after five years of participation in the new Compensation Plan.
Payouts generally are made while the employee is still employed by the Company
or one of its subsidiaries.
The estimated annual retirement benefit that each of the named executive
officers would receive at normal retirement age, payable as a straight life
annuity together with the annual benefit under the new Compensation Plan, is as
follows: Mr. Beard--$114,374; Mr. Dooner--$82,534; Mr. Geier--$130,000; Mr.
Lowe--$13,514 and Mr. Puris--$9,058. Alternatively, each of the named executive
officers could take the benefit as a lump sum estimated as follows: Mr.
Beard--$1,185,508; Mr. Dooner -$768,044; Mr. Geier--$1,385,098; Mr.
Lowe--$136,483 and Mr. Puris--$91,487.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The Company's overall business strategy is to increase shareholder value
over the long term. Consistent with this strategy, the Compensation Committee
has endeavored to develop and administer compensation policies that are linked
to the successful achievement of the Company's strategy.
The objective of the Company's executive compensation program is to provide
key executives with short-term and long-term compensation opportunities that
will enhance shareholder value by motivating executives, increasing retention
and rewarding outstanding individual and Company performance.
The compensation paid to executives consists of a base salary and incentive
compensation which may be earned only if the Company's financial performance
meets or exceeds annual growth targets. Incentive opportunities for the most
part are long term, as well as at risk and equity oriented. Those incentive
opportunities are provided pursuant to one or more of the following programs
covered under the Company's shareholder-approved 1997 Performance Incentive
Plan:
- MANAGEMENT INCENTIVE COMPENSATION PROGRAM (the "MICP"), which is an annual
bonus plan that establishes a bonus pool based on profits for the
last-completed fiscal year. Individual awards are made based on
performance and are typically paid in cash but may be paid in stock.
- LONG-TERM PERFORMANCE INCENTIVE PROGRAM (the "LTPIP"), which provides for
biennial awards of performance units each having a four-year term. These
awards entitle a participating executive to receive cash payments based on
the extent to which long-term operating profit targets are achieved by the
division or entity of the Company for which the executive is responsible.
- STOCK INCENTIVE PROGRAM, which provides for the issuance of stock options
and restricted stock. These instruments increase in value over time only
if the market price of Interpublic Common Stock increases. They are
usually forfeited in the absence of action by the Committee if an
executive leaves the Company within a specified period following the date
of the award.
The determination of the amount and form of executive compensation,
including incentive compensation, paid to each executive officer of the Company
is made by the Committee based on a discretionary evaluation, after taking into
account a range of factors that include:
14
(i) The financial results of the Company and the anticipated
developments in the advertising industry.
(ii) The total annualized compensation for the particular executive
based on salary, bonus and incentive compensation.
(iii) The accumulated value of incentive compensation previously provided
such as stock options, restricted stock or performance units.
(iv) The current and future financial and tax impact on the Company and
on the executive of benefits under the Company's compensation plans.
(v) The particular achievements measured against pre-determined annual
objectives of the executive.
(vi) The talents and unique qualities of the executive and the value of
his or her accumulated experience with the Company as those factors are
relevant to the future management of the Company.
There is no pre-determined weight assigned to any of the above factors;
however compensation decisions by the Committee are greatly influenced by the
annual financial performance of the Company.
The Committee's overall knowledge and experience of executive compensation
practices provides the basis for making the subjective evaluations which in part
determine the salaries paid and the incentive awards made to the executive
officers.
In 1997, the Compensation Committee of the Company consisted of six
experienced outside directors. Most of the members of the Compensation Committee
have served and continue to serve on a number of other corporate boards in a
similar capacity. All members have extensive knowledge of compensation practices
in the private business sector generally.
1997 COMPENSATION OF EXECUTIVE OFFICERS
BASE SALARIES
Base salaries for certain employee directors were increased during 1997 as
well as for other executive officers not listed on the Summary Compensation
Table. Salary increases for executive officers and employee directors are based
on professional merit performance, promotions and overall financial results.
Merit increases are not awarded more frequently than once every two years.
Merit increases of 6% annualized were granted to Messrs. Puris, Beard, and
Dooner as indicated on the Summary Compensation Table. The period of time since
the last increase for each executive was twenty-seven months.
MICP
Under the Management Incentive Compensation Program, annual bonuses to
officers and key employees of the Company and its subsidiaries are paid from an
annual bonus pool that may not exceed 5% of the amount by which consolidated
pre-tax income on a worldwide basis exceeds 15% of the average equity capital of
the Company in the immediately preceding calendar year. In 1997, total MICP
payments to executive officers were higher than in 1996 as a result of the
Company satisfying or exceeding its annual business plan and objectives,
including achievement of targeted revenue, profit and net income.
LTPIP
The Long-Term Performance Incentive Program comprises a significant portion
of the total compensation for executive officers of Interpublic and key
employees of its subsidiaries. Awards under the LTPIP,
15
consisting of performance units each having a four-year term, are granted
biennially. Grants of performance units for the 1997-2000 four-year performance
period were made in 1997 to executives including the named executives officers.
A total of 10,020 performance units were granted to five executive officers of
the Company other than the named executive officers covering the 1997-2000 LTPIP
performance period. In granting individual LTPIP awards for the 1997-2000
performance period to executives the Committee considered certain factors
including but not limited to, level of position, tenure with the Company or its
subsidiaries, history of past grants, performance and current job level of the
executive or significant changes in the executive's responsibility.
EQUITY GRANTS
Under the shareholder-approved 1997 Performance Incentive Plan, stock
options and restricted stock may be awarded to officers and key employees of the
Company and its subsidiaries. Stock options are granted on such terms as are
approved by the Committee, provided that the term of the option may not exceed
ten years and the exercise price may not be less than the fair market price of
the Common Stock on the date of grant. Shares of restricted stock granted are
restricted as to the selling or transferring of the shares typically for a
minimum of five years from date of grant and are forfeited if the executive
should leave the employment of the Company, unless the Committee deems
otherwise. In determining individual grants of stock options and restricted
stock the Committee takes into consideration the number of years since previous
grants, the financial performance of the Company over recent years in terms of
annual operating margin, revenue and operating profit growth and the growth of
shareholder value and the overall compensation and performance of the executive.
The Committee also reviews various outside survey data pertaining to the pattern
of grants made by other companies having approximate capitalization and growth
similar to those of Interpublic (including several of the companies in the Peer
Group Index, appearing in the two performance graphs that follow this Report).
Restricted stock grants are periodically granted by the Committee to
executive officers and are designed to focus key executives on the long-term
performance of the Company. During 1997 Mr. Dooner, in recognition of his
increased responsibilities and performance was granted 165,000 (110,000
pre-split) restricted shares and 75,000 (50,000 pre-split) stock options. Mr.
Lowe was granted 60,000(40,000 pre-split) stock options in recognition of his
expanded executive responsibilities in the Company's sport marketing business.
A total of 39,000 (26,000 pre-split) shares of restricted stock were granted
to three executive officers other than the named executive officers during the
year in recognition of individual achievements. Stock options covering an
aggregate of 78,870 (52,580 pre-split) shares were granted to five executive
officers other than the named executive officers.
TAX LAW
Under the federal income tax laws, the deduction that a publicly-held
company is allowed for compensation paid to the chief executive officer and to
its other four most highly compensated executive officers generally is limited
to $1 million exclusive of qualifying performance-based compensation. The
Committee has and will continue to consider ways to maximize the deductibility
of executive compensation, including the utilization of performance-based plans,
while retaining the discretion the Committee deems necessary to compensate
executive officers in a manner commensurate with performance and the competitive
environment for executive talent. The 1997 Performance Incentive Plan contains
provisions relating to MICP Awards, LTPIP Awards, stock option grants and
performance units that are intended to make the awards eligible for performance
based compensation exclusive of the $1 million limitation.
16
COMPENSATION OF CHIEF EXECUTIVE OFFICER
During 1997 certain changes were made to Mr. Geier's compensation package
primarily in recognition of his continued successful tenure as Chairman and
Chief Executive Officer.
A less than 1% base salary increase was awarded to Mr. Geier which became
effective June 1, 1997. In addition to the salary increase and in lieu of
additional cash salary Mr. Geier was awarded 75,000 (50,000 pre-split)
restricted shares which are subject to forfeiture under certain conditions and
54,000 (pre-split 36,000) stock options. Mr. Geier's last salary increase was
October 1, 1991.
Mr. Geier received an MICP award for 1997 of $1,250,000. Mr. Geier's 1997
MICP award was based on a number of factors including an increase of 16.5% in
net income an increase of 12.5% in basic earnings per share and an increase of
23.2% in gross income, which in the opinion of the Committee contributed to an
increase in shareholder value.
Consistent with the Committee's desire to link key executive compensation to
the financial growth and success of the Company and stock over the long-term,
Mr. Geier was granted under the LTPIP for the 1997-2000 period 16,000
performance units. The ultimate value of the performance units, if any, will
depend on the Company's compound growth rate in operating profit as described in
the Long Term Incentive Compensation Table over the four-year period referred to
in that table.
The majority of Mr. Geier's compensation package continues to be at risk and
directly tied to the long-term financial and performance growth of the Company
and the value of Interpublic stock.
Leif H. Olsen, Chairman
Frank J. Borelli
Reginald K. Brack
Jill M. Considine
Allen Questrom
J. Phillip Samper
17
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1) OF
THE INTERPUBLIC GROUP OF COMPANIES, INC. COMMON STOCK,
THE S&P 500 AND PEER GROUP INDEX(2)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DOLLARS
Interpublic Group of Cos S&P 500 Peer Group
1992 100.00 100.00 100.00
1993 93.27 110.06 109.19
1994 95.24 111.52 118.17
1995 130.65 153.39 158.57
1996 145.16 188.59 204.67
1997 231.08 251.49 321.53
1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- --------- ---------
Interpublic.... 100.00 93.27 95.24 130.65 145.16 231.08
S & P 500...... 100.00 110.06 111.52 153.39 188.59 251.49
Peer Group..... 100.00 109.19 118.17 158.57 204.67 321.53
- ------------------------------
(1) Assumes $100 is invested on December 31, 1992, and that all dividends are
reinvested.
(2) The Peer Group Index includes Interpublic, and in addition consists of
Cordiant plc (formerly Saatchi & Saatchi plc), Omnicom, True North
Communications Inc., (formerly Foote Cone & Belding), Grey Advertising and
WPP Group. Total shareholder return is weighted according to market
capitalization at the beginning of each annual period.
18
COMPARISON OF TWELVE-YEAR CUMULATIVE TOTAL RETURN (1) OF
THE INTERPUBLIC GROUP OF COMPANIES, INC. COMMON STOCK,
THE S&P 500 AND PEER GROUP INDEX(2)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
INTERPUBLIC GROUP OF
COS. S&P 500 PEER GROUP
1985 100.00 100.00 100.00
1986 131.81 118.66 106.87
1987 155.78 124.89 112.00
1988 184.45 145.57 115.03
1989 250.70 191.60 132.02
1990 275.13 185.66 93.23
1991 458.16 242.11 135.70
1992 566.49 260.53 168.97
1993 528.34 286.75 184.50
1994 539.52 290.54 199.68
1995 740.09 399.63 267.93
1996 822.34 491.35 345.83
1997 1309.00 655.22 543.24
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Interpublic..... 100.00 131.81 155.78 184.45 250.70 275.13 458.16 566.49 528.34 539.52
S&P 500......... 100.00 118.66 124.89 145.57 191.60 185.66 242.11 260.53 286.75 290.54
Peer Group...... 100.00 106.87 112.00 115.03 132.02 93.23 135.70 168.97 184.50 199.68
1995 1996 1997
--------- --------- ---------
Interpublic..... 740.09 822.34 1309.00
S&P 500......... 399.63 491.35 655.22
Peer Group...... 267.93 345.83 543.24
- ------------------------------
(1) Assumes $100 is invested on December 31, 1985, and that all dividends are
reinvested.
(2) The Peer Group Index includes Interpublic, and in addition consists of
Cordiant plc (formerly Saatchi & Saatchi plc), Omnicom, True North
Communications Inc. (formerly Foote Cone & Belding), Grey Advertising and
WPP Group. Total shareholder return is weighted according to market
capitalization at the beginning of each annual period.
An important objective of the Company is to create long-term reward for
shareholders. The table that appears above has been presented to show
comparative cumulative return over a twelve-year period.
19
2. APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse has been appointed and is acting as independent accountants
of the Company for the year 1998. This firm has been the Company's independent
accountants since 1952. Price Waterhouse has advised the Company that they are
independent accountants with respect to the Company and its subsidiaries within
the meaning of the rules and regulations of the Securities and Exchange
Commission.
A representative of Price Waterhouse is expected to be present at the Annual
Meeting with the opportunity to make a statement and to respond to appropriate
questions.
If a majority of the shares of Common Stock present in person or by proxy
and entitled to vote do not confirm the appointment of Price Waterhouse, the
Board of Directors of the Company will take such vote into consideration and
take action consistent to the extent practicable with the stockholders' vote and
the Company's need for the services of independent accountants for the balance
of the year 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR CONFIRMATION OF THE APPOINTMENT
OF PRICE WATERHOUSE.
3. STOCKHOLDERS' PROPOSAL REGARDING NORTHERN IRELAND
Interpublic is advised that three stockholders intend to present the
proposal set forth below for consideration and action by stockholders at the
Annual Meeting. The names and addresses of these three stockholders and the
number of shares of Common Stock each has stated that each owns will be
furnished by Interpublic promptly upon receipt by Interpublic of an oral or
written request for such information. The stockholders' proposal is as follows:
WHEREAS, the Interpublic Group has a wholly-owned subsidiary in Northern
Ireland, McCann-Erickson Belfast Ltd.,
WHEREAS, the on-going peace process in Northern Ireland encourages us to
search for non-violent means for establishing justice and equality;
WHEREAS, employment discrimination in Northern Ireland has been cited by
the International Commission of Jurists as being one of the major causes of
the conflict in that country; and
WHEREAS, Dr. Sean MacBride, founder of Amnesty International and Nobel
Peace Laureate, has proposed several equal opportunity employment principles
to serve as guidelines for corporations in Northern Ireland. These include:
1. Increasing the representation of individuals from under
represented religious groups in the workforce including managerial,
supervisory, administrative, clerical and technical jobs.
2. Adequate security for the protection of minority employees both at
the workplace and while traveling to and from work.
3. The banning of provocative religious or political emblems from the
workplace.
4. All job openings should be publicly advertised and special
recruitment efforts should be made to attract applicants from under
represented religious groups.
5. Layoff, recall, and termination procedures should not in practice,
favor particular religious groupings.
6. The abolition of job reservations, apprenticeship restrictions,
and differential employment criteria, which discriminate on the basis of
religion or ethnic origin.
7. The development of training programs that will prepare substantial
numbers of current minority employees for skilled jobs, including the
expansion of existing programs and the creation of new programs to train,
upgrade, and improve the skills of minority employees.
20
8. The establishment of procedures to assess, identify and actively
recruit minority employees with potential for further advancement.
9. The appointment of a senior management staff member to oversee the
Company's affirmative action efforts and the setting up of timetables to
carry out affirmative action principles.
RESOLVED, Shareholders request the Board of Directors to:
1. Make all possible lawful efforts to implement and/or increase
activity on each of the nine MacBride Principles.
SUPPORTING STATEMENT
- We believe that our Company benefits by hiring from the widest available
talent pool. An employee's ability to do the job should be the primary
consideration in hiring and promotion decisions.
- Continued discrimination and worsening employment opportunities have been
cited as contributing to support for a violent solution to Northern
Ireland's problems.
- Implementation of the MacBride Principles by the Company will demonstrate
its concern for human rights and equality of opportunity in its
international operations.
PLEASE VOTE YOUR PROXY FOR THESE CONCERNS.
INTERPUBLIC'S STATEMENT IN OPPOSITION
Interpublic has one advertising agency in Northern Ireland, McCann-Erickson
Belfast, which was acquired in June 1986. This agency has about 32 employees.
Management of Interpublic believes that McCann-Erickson Belfast's policies
and practices are consistent with Interpublic's policy to recruit, employ and
promote all qualified personnel without regard to race, creed, color, national
origin, sex, age, veteran status or disability.
The Company shares the proponents' concern for human rights and equality of
opportunity as well as the need to encourage employment and opportunity in
Northern Ireland. It believes that an effective commitment to fair employment
has been made in good faith by McCann-Erickson Belfast, and that implementation
of all of the MacBride Principles is not necessary or desirable under the
circumstances. Furthermore, it is not practical or prudent for the Board of
Directors of the Company to develop solutions in the United States to problems
unique to Northern Ireland.
Interpublic believes that McCann-Erickson Belfast is in full compliance with
the Fair Employment (Northern Ireland) Act of 1989, as amended, effective in
Northern Ireland. Under this law, an employee designated as the Monitoring
Officer is required to monitor the religious composition of the workforce and to
submit a statutory annual report to the Fair Employment Commission. The
Monitoring Officer for McCann-Erickson Belfast reports he has found no evidence
of religious or political discrimination in the composition of its workforce.
McCann-Erickson Belfast ("MEB") has adopted and implements the following
Policy Statement on Religious Equality of Opportunity in Employment:
(1) Overall responsibility for policy and practice has been undertaken
by the Managing Director, although it is emphasized that employees at every
level within the organization have a responsibility in the promotion of
equality of opportunity in employment.
21
(2) MEB endorses the merit principle, namely that the best individual
for a job will be selected without regard for his or her religious belief or
perceived religious affiliation. This principle applies both to permanent
payroll and temporary positions. The merit principle is confirmed as
applying to recruitment to the Company, training, transfer and promotion.
(3) Job vacancies which require external candidates will be advertised
in the press or lodged with accredited organizations including the job
centers in a way which ensures that qualified candidates across the
community are made aware of such opportunities. Word of mouth as a means of
securing applicants is discontinued.
(4) MEB will periodically review its selection criteria and procedures
to maintain a system where individuals are selected, promoted and treated
solely on the basis of their merits and those abilities which are
appropriate to the job. Such reviews may include the evaluation of existing
and new objective tests related to clearly defined job attributes.
(5) MEB will monitor the religious composition of the total employee
body by defined job groupings and will carry out compositional analyses of
all applicants for vacancies at every level. The religious affiliation
records will be maintained, summarized and analyzed by the Monitoring
Officer.
(6) Where compositional analysis points to the need for further
affirmative action, MEB will determine what action is required to be taken
and will diligently implement appropriate action.
(7) MEB will distribute and publicize this policy statement throughout
the premises and elsewhere as is from time to time appropriate.
(8) MEB will ensure through the grievance procedure that any employee
who believes that inequitable treatment has been applied to him or her
within the scope of this policy is afforded full opportunity to raise the
matter.
(9) All employees have a responsibility to accept their personal
involvement in the practical application of this policy, but specific
responsibility falls upon management who are involved in recruitment,
employee administration and training.
(10) It is the responsibility of all employees in conjunction with MEB
to foster and encourage a harmonious working atmosphere in which no section
of the community feels threatened or intimidated because of their religion.
VOTE REQUIRED
The affirmative vote of the majority of the shares present in person or by
proxy and entitled to vote at the Annual Meeting is required to approve the
stockholders' proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE STOCKHOLDERS' PROPOSAL
REGARDING NORTHERN IRELAND.
22
SOLICITATION OF PROXIES
The solicitation of proxies is made on behalf of the Management of the
Company. Solicitation of proxies will be primarily by mail. In addition, proxies
may be solicited in person or by telephone, telefax or other means by officers,
directors and employees of the Company, for which they will receive no
additional compensation. Banks, brokers and others holding stock in their names
or in the names of nominees will be reimbursed for out-of-pocket expenses
incurred in sending proxy material to the beneficial owners of such shares. The
cost of solicitation will be borne by the Company. D.F. King & Co., New York,
N.Y., has been retained to assist the Company in the distribution of proxy
materials to, and the solicitation of proxies from, brokers and other
institutional holders at a fee of $7,500, plus reasonable out-of-pocket
expenses. The Company also has agreed to indemnify D.F. King for certain
liabilities, including liabilities arising under the federal securities laws.
The Management is not aware of any other matters which may be brought before
the meeting. If other matters not now known come before the meeting, the persons
named in the accompanying form of proxy or their substitutes will vote such
proxy in accordance with their best judgment.
By Order of the Board of Directors,
NICHOLAS J. CAMERA
SECRETARY
April 17, 1998
23
THE INTERPUBLIC GROUP OF COMPANIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 18, 1998
P
R The undersigned hereby constitutes and appoints Eugene P. Beard, Philip H.
O Geier, Jr. and Nicholas J. Camera, and each of them, his true and lawful
X agents and proxies, with full power of substitution in each, to represent the
Y undersigned at the Annual Meeting of Stockholders of THE INTERPUBLIC GROUP OF
COMPANIES, INC. to be held in The Equitable Center, 787 Seventh Avenue, New
York, New York, on Monday, May 18, 1998 at 9:30 A.M. Eastern Time, and at any
adjournments thereof, on all matters to come before the meeting.
Election of Directors. Nominees:
Eugene P. Beard, Frank J. Borelli, Reginald K. Brack,
Jill M. Considine, John J. Dooner, Jr., Philip H. Geier, Jr.,
Frank B. Lowe, Leif H. Olsen, Martin F. Puris,
Allen Questrom and J. Phillip Samper.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. HOWEVER, THE PROXY
HOLDERS CANNOT VOTE YOUR SHARES UNLESS YOU SIGN, DATE AND RETURN THIS CARD.
SEE REVERSE SIDE
/X/ Please mark your
votes as in this
example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF EACH OF THE
DIRECTOR NOMINEES, FOR PROPOSAL 2 AND AGAINST PROPOSAL 3 AND IN THE DISCRETION
OF THE PROXY HOLDERS ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2 AND AGAINST PROPOSAL 3.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 2. Confirmation of / / / / / /
Directors. independent accountants.
(see reverse)
For, except vote withheld from the following nominee(s): 3. Stockholders' Resolution
Regarding Northern
Ireland
The signer hereby revokes all proxies heretofore given by the signer to vote at
said meeting or any adjournments thereof.
SIGNATURE(S)_______________________________________ DATE________________
NOTE: Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
