SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by the Party other than the Registrant []
Check the appropriate box:
[ ] Preliminary Proxy Statement
[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)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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14a-6(i)(4) and 0-11.
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2) Aggregate number of securities to which transaction
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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 filing fee is calculated
and state how it was determined):
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PAGE
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
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previous filing by registration statement number, or the
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PAGE
THE INTERPUBLIC GROUP OF COMPANIES, INC.
1271 Avenue of the Americas
New York, New York 10020
April 18, 1997
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 19, 1997. 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
PAGE
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 19, 1997
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 19, 1997, 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 amend the
Company's Restated Certificate of Incorporation to
increase the number of authorized shares of Common
Stock, $.10 par value, of the Company to 225 million
shares;
3. To consider and act upon a proposal to adopt the 1997
Performance Incentive Plan of the Company;
4. 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 1997;
5. To consider and act upon a proposed stockholder
resolution regarding Northern Ireland; and
6. To transact such other business as may properly come
before the meeting and any adjournment thereof.
PAGE
The close of business on March 24, 1997, 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 18, 1997
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.
PAGE
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 19, 1997.
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 18, 1997. The Company's Annual
Report to Stockholders was first sent to stockholders on or about
March 31, 1997.
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 instruction
on the matters set forth in items 1 through 5. If no voting
instructions are given with respect to any one or more of the
items, a duly executed proxy will be voted with respect to the
uninstructed matters as follows: FOR the election of
Management's nominees for director, FOR the amendment of the
Company's Restated Certificate of Incorporation to increase the
number of authorized Common Stock to 225 million shares, FOR the
adoption of the 1997 Performance Incentive Plan of the Company,
FOR the confirmation of Price Waterhouse LLP ("Price Waterhouse")
as independent accountants 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.
PAGE
OUTSTANDING SHARES
The record date for the Annual Meeting is March 24, 1997.
The outstanding capital stock of the Company at the close of
business on March 24, 1997, consisted of 81,512,748 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, 1996, 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 Class
The Capital Group Companies, Inc. 6,334,460 7.8%
and subsidiaries
333 South Hope Street
Los Angeles, CA 90071
The 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.
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 12,
1997. Capital reports 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 2,212,860 shares of Common stock and sole
dispositive power with respect to 6,334,460 shares of Common
Stock. Capital disclaims beneficial ownership of all such
shares of Common Stock.
PAGE
The following table sets forth information concerning the
direct and indirect beneficial ownership of the Company's Common
Stock as of March 24, 1997 of 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 Options
Name of Stock Exercisable
Beneficial Owner Ownership Within 60 Days
Eugene P. Beard 245,162 226,510
Frank J. Borelli 2,500 -
Reginald K. Brack 850 -
Jill M. Considine - -
John J. Dooner, Jr. 154,866 54,100
Philip H. Geier, Jr. 480,393 483,558
Frank B. Lowe 372,878 23,400
Leif H. Olsen 2,400 -
Martin F. Puris 513,608 -
Allen Questrom 2,000 -
J. Phillip Samper 3,400 -
Joseph J. Sisco 3,600 -
All directors and
executive officers
as a group 1,918,133 974,734
The 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 restricted stock
awarded under the 1986 Stock Incentive Plan, the 1996 Stock
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.
PAGE
No person nor the group named in the foregoing table has
beneficial ownership of more than 1% of the outstanding
shares of Common Stock except, that Mr. Geier owns 1.1756%
of the outstanding Common Stock and the directors and
executive officers as a group own 3.5070%.
Except for shares of Common Stock held by Messrs. Lowe and
Puris, the beneficial ownership shown is direct. The shares
shown as beneficially owned by Mr. Lowe include 2,436 shares
that he holds indirectly through a trust, as to which he
disclaims beneficial ownership. The shares beneficially
owned by Mr. Puris include 42,588 shares of Common Stock
that are owned by his spouse of which he is the indirect
beneficial owner.
PAGE
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 proposal described in Item 2 will require the affirmative
vote of a majority of all outstanding shares of Common Stock.
Approval of the proposals described in Items 3 through 5 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 Item 2, shares that are the subject of an
abstention or a broker non-vote will constitute a vote against
the matter. For Items 3 through 5, 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 1998 ANNUAL MEETING
Proposals of stockholders intended to be presented at the
Annual Meeting of Stockholders scheduled to be held on May 18,
1998, must be received by the Company by December 26, 1997, 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 nominees of the Management for election as directors of
the Company 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
nominee is provided below. All of the nominees are currently
serving as directors of the Company. The Management believes
that all of the nominees will be available and able to serve as
directors. 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.
PAGE
The following information with respect to the principal
occupation or employment, recent employment history, age and
directorships in other companies at February 28, 1997, has been
furnished or confirmed to the Company by the respective nominees.
McCann-Erickson Worldwide, 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 59 Wall Street Fund, Inc., All American
Communications, Inc. and Micrografx, Inc. Age 61.
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 Chairman
and a Director of the Financial Executives Institute and is also
a Trustee of the New York City Chapter of the National Multiple
Sclerosis Society and the Nyack Hospital. Mr. Borelli has been a
director of Interpublic since 1995. Age 61.
Member of the Audit, Compensation and Finance Committees.
REGINALD K. BRACK has been Chairman of Time Inc. from
September 1994 to the present and its Chairman, President and
Chief Executive Officer from December 1986 until August 1994.
Mr. Brack has been a director of Interpublic since 1996. Age 59.
Member of the Compensation and Nominating Committees.
PAGE
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 52.
Member of the Compensation Committee.
JOHN J. DOONER, JR. has been Chairman and Chief Executive
Officer of McCann-Erickson Worldwide since 1995 and previously
was Chief Executive Officer of McCann-Erickson Worldwide from
1994 to 1995. From 1992 to 1994, Mr. Dooner was President of
McCann-Erickson Worldwide. He served as President of
McCann-Erickson North America from 1988-1992. Mr. Dooner has
been a director of Interpublic since 1995. Age 48.
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 62.
Chairman of the Executive Policy Committee. Member of the Finance
and Nominating Committees.
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. Age 55.
LEIF H. OLSEN, President of Leif H. Olsen Investments, Inc.,
economic consultants and financial managers, 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 71.
PAGE
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 58.
ALLEN QUESTROM, Chairman and Chief Executive Officer of
Federated Department Stores, Inc. from 1990 to the present, has
been a director of Interpublic since 1995. He is a director of
Federated Department Stores, Inc. Age 56.
Member of the Compensation and Nominating Committees.
J. PHILLIP SAMPER, Chairman, Chief Executive Officer and
President of Quadlux, Inc. from 1996 to the present, has been a
director of Interpublic since 1990. Mr. Samper 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., Network Storage Corp. and
Ingram Micro, Inc. Age 63.
Chairman of the Nominating Committee. Member of the Compensation
and Executive Policy Committees.
PRINCIPAL COMMITTEES OF THE BOARD OF DIRECTORS
Executive Policy Committee -- The Executive Policy Committee
is authorized to exercise all powers of the Board of Directors
which under Delaware law and the By-Laws of the Company may
PAGE
properly be delegated to a committee while the Board of Directors
is not in session, 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 1996.
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 of obligations of
subsidiaries and affiliates and certain capital transactions
(including mergers and acquisitions), and is the committee which
administers the Interpublic Retirement Account Plan. The Finance
Committee held twelve meetings in 1996.
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 upon the scope of 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
two meetings in 1996.
Compensation Committee -- The Compensation Committee is
responsible for approving the compensation paid by the Company or
any of its subsidiaries to officers of the Company or of any
subsidiary. For these purposes, compensation is deemed to
include: (1) salary, (2) deferred compensation, (3) bonuses and
other extra compensation of all types, including awards under the
Company's Management Incentive Compensation Plan, the 1996 Stock
Incentive Plan and its predecessor, the 1986 Stock Incentive
Plan, (4) insurance paid for by the Company or any of its
PAGE
subsidiaries other than group plans, (5) annuities and individual
retirement arrangements, (6) grants of performance units under
the Long-Term Performance Incentive Plan and (7) Special Deferred
Benefit Arrangements. It is the committee that administers the
Long-Term Performance Incentive Plan, the Management Incentive
Compensation Plan, the 1996 Stock Incentive Plan, 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 1996.
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 at
the Annual Meeting of Stockholders or any special meeting of
stockholders or to be selected by the Board of Directors to fill
any vacancy or any additional position created by the Board of
Directors. Stockholders who desire to recommend nominees 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 one meeting in 1996.
ATTENDANCE AT BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors of the Company held six meetings in
1996 and committees of the Board held a total of 27 meetings.
During 1996, each of Messrs. Geier, Lowe, Puris and Samper
attended fewer than 75% of the meetings of the Board of Directors
and committees of the Board on which each director served.
However, Mr. Geier was present at all meetings of the Board.
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 $3,000 per year and the Chairman
of each of the Audit and Nominating Committees receives an
additional $2,500.
PAGE
Effective June 1, 1994, an outside director with at least
five years of service has been 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 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 have been
accrued prior to termination. As a result there will be 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 of
termination 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) and
adopted certain amendments to that Plan in 1996 (the Interpublic
Outside Directors' Stock Incentive Plan is referred to
hereinafter as the "Outside Directors' Plan"). The Outside
Directors' Plan provides for the issuance on the first Friday in
June in each year to each outside director serving on that date
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 price of the Common Stock on the date of grant. Such
options become exercisable 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,
PAGE
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 provides for a periodic grant of
2,000 restricted shares of the Company's Common Stock to all
outside directors then in office. The first grant was made on
the first Friday in June 1996. An additional grant of 2,000
shares will be made on the first Friday in June every fifth year
thereafter while the Outside Directors' Plan remains in effect.
Upon receipt of the restricted shares, the outside director
will have 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
will be prohibited from selling or otherwise transferring such
restricted shares. If, on or after the first anniversary of the
grant of the restricted shares, an outside director's service as
a 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 of the restricted shares,
all of 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 award or vesting of the restricted shares.
On June 7, 1996, Mr. Borelli, Mr. Olsen, Mr. Questrom, Mr.
Samper and Dr. Sisco, all outside directors at that time, each
received an award of stock options, covering 642 shares of Common
Stock with an exercise price of $46.75 per share. Each of those
directors also received at the time a grant of 2,000 shares of
the Company's Common Stock.
PAGE
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,
1996 (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 Worldwide,
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.
PAGE
SUMMARY COMPENSATION TABLE
__LONG TERM COMPENSATION ___
______ ANNUAL COMPENSATION _______ ____ AWARDS ____ PAYOUTS
Other Restr All
Name Annual icted Securities Other
and Principal Fiscal Compen Stock Underlying LTIP Compen
Position Year Salary Bonus sation Awards Options Payouts sation
#
Philip H. Geier, Jr.
Chairman of the 1996 $965,000 $1,200,000 $ 89,642 $ -0- 108,000 $567,000 $ 9,557
Board of Direc- 1995 965,000 868,600 - 4,605,000 108,000 843,750 9,558
tors and Chief 1994 965,000 550,000 $106,841 -0- -0- -0- 8,550
Executive Officer
Eugene P. Beard
Vice Chairman- 1996 $750,000 $ 900,000 $ - $ -0- 113,328 $333,375 $ 9,557
Finance and 1995 662,500 588,245 - 2,878,125 63,972 375,000 7,483
Operations, Chief 1994 575,000 400,000 47,485 -0- -0- -0- 8,549
Financial Officer
and Director
John J. Dooner, Jr.
Chairman of McCann- 1996 $750,000 $ 770,000 $ 74,393 $ -0- 60,000 $354,375 $ 7,726
and Director 1995 685,000 550,000 59,640 -0- 55,080 535,750 7,009
of Interpublic 1994 600,000 375,000 84,949 2,816,795 -0- -0- 7,445
Frank B. Lowe
Chairman of The Lowe 1996 $750,000 $ 600,000 $257,561 $3,510,938 60,000 $459,000 $ 8,550
Group and Director 1995 660,000 475,000 267,366 -0- 30,000 472,500 8,082
of Interpublic 1994 660,000 375,000 101,685 -0- -0- -0- 8,082
Martin F. Puris
Chairman of Ammirati 1996 $750,000 $ 600,000 $ 52,573 $ -0- 60,000 $ -0- $ 54,464
Puris Lintas World- 1995 712,500 475,000 - 1,273,125 27,000 -0- 50,638
wide and Director 1994 240,097 -0- - -0- -0- -0- 1,900,528
of Interpublic
PAGE
The salaries of executive officers continuing to serve in the same position are reviewed every two years.
Mr. Puris became employed by one of Interpublic's subsidiaries on August 10, 1994, at the time Interpublic acquired
Ammirati & Puris Holdings Inc.
Consists primarily of bonus payments made pursuant to the Company's Management Incentive Compensation Plan.
Mr. Puris has 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.
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 paid in respect of spousal travel on behalf of Mr.
Dooner, $200,000 in housing expenses paid to Mr. Lowe, and $18,339 for use of a company car and $13,874 in parking
expenses paid to Mr. Puris.
Other Annual Compensation for 1995 includes $17,490 in medical/dental coverage and $16,407 paid in respect of spousal
travel on behalf of Mr. Dooner and $216,667 in housing expenses paid to Mr. Lowe.
Other Annual Compensation for 1994 includes $31,728 paid in respect of spousal travel on behalf of Mr. Dooner and
$62,061 paid in respect of spousal travel for Mr. Lowe.
Restricted stock grants covering 8,620 shares were made to Mr. Dooner in 1994 under the 1986 Stock Incentive Plan (the
"1986 Plan") in exchange for phantom shares held under the Long-Term Performance Incentive Plan for the 1991-1994
performance period at 120% of their value on the date of exchange pursuant to an arrangement approved by stockholders
at the 1993 Annual Meeting.
The number and value of shares of restricted stock held by the named executive officers under the 1986 Plan at
December 31, 1996 (based on the closing price of the Common Stock on December 31, 1996) are as follows: Mr. Geier -
187,604 shares ($8,911,190); Mr. Beard - 105,162 shares ($4,995,195); Mr. Dooner - 130,591 shares ($6,203,073); Mr.
Lowe - 285,436 shares ($13,558,210) and Mr. Puris - 35,000 shares ($1,662,500). The restricted stock awarded to all
named executive officers other than Mr. Dooner was issued 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
issue date. Of the restricted stock awarded to Mr. Dooner in March 1994, shares that have vested in less than three
years from the date of grant are as follows: 5,750 shares on December 15, 1995, and 2,875 shares on December 15, 1996.
Dividends on restricted stock are paid on the same basis as ordinary dividends on the Common Stock.
PAGE
Payouts under the Long-Term Performance Incentive Plan are made at the end of four-year performance periods. These
four-year periods begin at two-year intervals. An interim payment of approximately 50% of the total payout for the
1993-1996 performance period was made in December 1996 and is shown on the Table. The balance was paid in the first
quarter of 1997 and is not shown on the Table. Mr. Beard's payout was deferred until his retirement.
Other Compensation for 1996 consisted of: (i) the following amounts paid to the named executive officers as matching
contributions under the Interpublic Savings Plan - Mr. Geier - $6,749; Mr. Beard - $6,749; Mr. Dooner - $7,030; and
Mr. Lowe -$6,750; (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) premiums aggregating $52,664 paid by the
Company for Mr. Puris consisting of: (a) life insurance policies on the life of Mr. Puris including (i) premiums for
two split-dollar life insurance policies totaling $13,269; and (ii) premiums on two other life insurance policies
totaling $31,602; and (b) a disability insurance policy, the premiums for which were $7,793.
PAGE
Stock Option Grants In 1996
________________________________________________________________________________________________________________________
The following table provides information on grants of stock options in 1996 to the named executive officers and the
estimated grant date present value of the options.
________________________________________________________________________________________________________________________
Individual Grants
________________________________________________________________________________________________________________________
% of Total Grant Date
Number of Options Granted Present
Securities Underlying to Employees in Exercise Expiration Value
Name Options Granted Fiscal Year Price ($/Sh) Date ($)
Philip H. Geier, Jr. 108,000 4.62% $47.9375 5/20/06 $ 2,264,760
Eugene P. Beard 23,328 0.9987% 40.1250 1/16/06 373,015
90,000 3.8532% 47.9375 5/20/06 1,887,300
John J. Dooner, Jr. 60,000 2.57% 47.9375 5/20/06 1,258,200
Frank B. Lowe 60,000 2.57% 47.9375 5/20/06 1,258,200
Martin F. Puris 60,000 2.57% 47.9375 5/20/06 1,258,200
Mr. Beard's grant of a stock option covering 23,328 shares was awarded on January 16, 1996 pursuant to the 1986
Stock Incentive Plan. This 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 grant. The option becomes exercisable on January 1, 1998.
All other options were granted on May 20, 1996 pursuant to the 1986 Stock Incentive Plan. 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. The options become exercisable on January 1, 2001.
PAGE
The grant date present value of the January 16, 1996 options set forth in the table is based on the
Black-Scholes Option Pricing Model and assumes that the options are held until they expire on January 16, 2006.
The calculations are based on the following set of assumptions: volatility of 25.22%, dividend yield of 1.55%
and risk-free rate of return of 5.84%.
The grant date present value of the May 20, 1996 options set forth in the table is based on the Black-Scholes
Option Pricing Model and assumes that the options are held until they expire on May 20, 2006. The calculations
are based on the following set of assumptions: volatility of 24.95%, dividend yield of 1.42% and risk-free
rate of return of 6.86%.
PAGE
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 Value of
Underlying Unexercised
Unexercised Options at In-The-Money Options
December 31, 1996 December 31, 1996
(#) ($)
______________________ ____________________
Shares
Acquired
on Value Unexer Unexer
Name Exercise (#) Realized ($) Exercisable cisable Exercisable cisable
Philip H. Geier, Jr. 8,000 $227,775 386,358 313,200 $10,439,472 $3,363,525
Eugene P. Beard None -0- 179,710 224,100 4,766,452 1,959,712
John J. Dooner, Jr. None -0- 32,500 136,680 732,844 1,211,498
Frank B. Lowe None -0- -0- 113,400 -0- 856,613
Martin F. Puris None -0- -0- 87,000 -0- 390,563
Based on the closing price of the Company's Common Stock on December 31, 1996.
PAGE
EMPLOYMENT CONTRACTS, TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
EMPLOYMENT AGREEMENTS
Each of the named executive officers has employment contracts with the
Company providing for the annual compensation and termination dates set
forth below:
Expiration
Name Salary Date
Philip H. Geier, Jr. $965,000 June 30, 2001
Eugene P. Beard 750,000 December 31, 1998
John J. Dooner, Jr. 750,000 December 31, 1998
Frank B. Lowe 750,000 December 31, 2000
Martin F. Puris 750,000 August 10, 1999
Salaries do not include compensation pursuant to Special Deferred
Benefit Arrangements described below.
Each employment contract described above 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.
PAGE
SPECIAL DEFERRED BENEFIT ARRANGEMENTS
Mr. Beard is a party to three agreements which provide that if he dies
while he is employed by the Company amounts aggregating $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 the amount of $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 provide that if he dies
while he is employed by the Company amounts aggregating $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
$300,000. 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.
PAGE
Mr. Geier is a party to two agreements which provide that if he dies
while he is employed by the Company amounts aggregating $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 the amount of $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 55th birthday, but prior to his 60th birthday, he will be paid benefits
ranging from $72,864 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
PAGE
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 prior
to his 63rd birthday, he would receive a lump-sum amount that in any case
would not be less than $1,500,000.
A deferred compensation trust for the purpose of funding up to 35% of
the gross retirement benefit obligations of the Company under these Special
Deferred Benefit Arrangements and other deferred arrangements was
established in 1990.
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
PAGE
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 in those years and would not include any taxable compensation
relating to any stock option or restricted stock plan of the Company.
Each agreement includes a covenant by 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 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.
PAGE
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.
GENERAL
Since the beginning of 1996, repurchases by the Company of shares of
Common Stock under its publicly-announced stock repurchase program have
included an aggregate of 5,000 shares offered to the Company by Barry
Linsky, Senior Vice
President-Planning and Business Development of Interpublic. The shares
were purchased at the then current market price of the Common Stock.
In connection with the acquisition of Ammirati & Puris, Inc.,
Interpublic agreed to accept the terms of a loan made prior to the
acquisition by Ammirati & Puris, Inc. to Mary Herrmann, Mr. Puris' wife.
As of March 31, 1996, this note was repaid in full. The largest principal
amount outstanding during 1996 was $75,000. Interest at the average rate
of 5.79% was imputed to Ms. Herrmann and included in her reportable income
for 1996.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Shortly after he became a director of the Company in July 1996, Mr.
Brack purchased shares of the Company in one transaction that he was
required, but did not report, to the Securities and Exchange Commission on
Form 4. He reported the purchase on Form 5 that was filed timely with the
Securities and Exchange Commission.
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 plus 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
Treasury Bill Rate plus 1 percentage point, compounded quarterly, and are
guaranteed at a minimum rate of 5%. Employees who qualify for retirement
may receive their benefits as early as the first day of the month that
follows retirement. For employees who do not qualify for retirement,
benefits may be withdrawn in a single lump sum or in
PAGE
annuity form as of the first day of January following the first anniversary
of termination of employment.
Prior to January 1, 1992, employees employed by the Company and most
of its domestic subsidiaries who had attained the age of 21 and had at
least five years of service were entitled to receive a monthly benefit upon
retirement pursuant to a defined benefit pension formula. Until July 31,
1987, the monthly benefit was 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. This opening cash
balance was incorporated into the participant's cash balance benefit under
the Interpublic Retirement Account Plan and became eligible for interest
credits and withdrawal on the same terms that apply to other amounts
accrued under the cash balance formula. 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 are 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, including deferred compensation
paid during the year and non-cash items on which withholding is required,
such as shares of restricted stock as to which restrictions have
terminated. Compensation also includes contributions made to the Savings
Plan on a pre-tax basis pursuant to Section 401(k) of the
Internal Revenue Code. Annual compensation for pension accruals
since December 31, 1988 has been limited by Federal tax law. Currently,
the limit is $160,000, plus cost-of-living adjustments.
PAGE
Benefits under the cash balance formula and the career average formula
are not reduced by social security payments or by payments from other
sources. Joint and survivor and guaranteed minimum payment options, with
reduced pensions, are available upon retirement subject to certain
limitations. All benefits are funded through a trust.
The estimated annual retirement benefit that each of the named
executive officers would receive at normal retirement age, payable as a
straight life annuity, is given as follows: Mr. Beard - $114,374; Mr.
Dooner - $88,639; Mr. Geier - $125,000; Mr. Lowe - $32,276 and Mr. Puris -
$9,549. The current Internal Revenue Code limit for annual retirement
benefits is $125,000. 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 - $918,769; Mr. Geier - $1,276,038; Mr. Lowe -
$334,548 and Mr. Puris - $96,437.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In July 1996, Interpublic, in consideration for a payment in cash of
$250,000, acquired a 2.5% equity interest in Investment Sciences Systems
LLC ( ISS"), a company in which Leif H. Olsen Investments, Inc. ( LHOI")
had an investment. ISS was formed to acquire rights in and to market a
software technology (the "Software Technology") that ISS believes will be
useful to financial managers in developing global investment strategies and
programs of risk allocation for their clients. Mr. Olsen, a director of
Interpublic, and his son are principals of LHOI, economic consultants and
financial managers. As the result of Interpublic's investment in ISS and
other services rendered by Mr. Olsen, LHOI received a 2.5% equity interest
in ISS valued at the time of the investment at $250,000. LHOI and ISS also
agreed to form a joint venture, in which each have a 50% interest, to
manage third-party funds (the "Fund Manager"). In consideration for past
services rendered by LHOI to ISS and its predecessor in the development of
the Software Technology, ISS has granted to the Fund Manager a perpetual
non-exclusive license to use the Software Technology for its money
management activities. The Fund Manager currently is inactive.
PAGE
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Compensation Policies for Executive Officers
In 1996, the Compensation Committee of the Company consisted of six
experienced outside directors. Each of the members of the Compensation
Committee has 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.
The objective of the Company's executive compensation program is to
provide key executives with short 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. Base salary generally reflects the executive's
level of responsibility, performance and experience. Incentive
compensation opportunities are provided pursuant to one or more of the
following three
shareholder-approved incentive plans:
Management Incentive Compensation Plan (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 Plan (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 Plans, which provide 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.
PAGE
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 may include:
(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 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.
1996 Compensation of Executive Officers
During 1996, Mr. Lowe was the only named executive officer who
received a salary increase. Other executive officers not listed on the
Summary Compensation Table received salary increases in 1996 in accordance
with the Company's review policies. Salary increases are based on personal
performance, promotions and overall financial results. Other than with
respect to promotional increases, increases in salary generally are not
awarded more frequently than once every two years.
PAGE
Under the MICP 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 1996, total MICP payments to
executive officers were higher than in 1995 as a result of the Company
satisfying and exceeding its annual business plan and objectives, including
achievement of targeted revenue, profit and net income margins, before the
effect of a non-cash charge to record the impairment of assets and related
goodwill.
In 1996, no awards of performance units were granted under the LTPIP
to executive officers.
Under the Stock 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 market price of the
Common Stock on the date of grant. Shares of restricted stock granted are
restricted as to transfer 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 Compensation 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 shareholders
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).
A total of 83,000 shares of restricted stock were granted to three
executive officers during the year in recognition of individual
achievements.
Stock option awards that are granted together with LTPIP awards are
normally made biennially during odd numbered years. The Committee can and
has in the past, awarded grants of stock
options in the year prior to the start of a performance period of
PAGE
the LTPIP. In anticipation of LTPIP awards for the 1997-2000 performance
period, the Committee in 1996 made grants of stock options under the 1986
Stock Incentive Plan, including the stock option grants to the named
executive officers described in the Stock Option Grant Table. The number
of stock options awarded each executive officer was based on the judgment
of the Committee. The Committee considered such factors as each
executive's level of responsibility in the Company, the executive's overall
performance and his anticipated or expected contribution to the continued
success of the Company. The Committee also reviewed various outside survey
data as stated above. Mr. Beard's stock option award for 1996 included a
grant covering 23,328 shares which was made in conjunction with the
1995-1998 performance period of the LTPIP.
Stock option grants made in anticipation of LTPIP grants and covering
an aggregate of 79,800 shares of Common Stock were made to five executive
officers other than the named executive officers during the year.
Stock options covering an aggregate of 14,000 shares and unrelated to
any LTPIP awards to be made in the future were granted to three executive
officers other than the named executive officers.
Tax Law Changes
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. In 1995, shareholders approved changes to the MICP, which included
performance-based criteria and limits that the Committee could use in
determining individual MICP awards. The LTPIP historically has been a
performance-based plan. The Stock Incentive Plan and the proposed 1997
Performance Incentive Plan set forth in Appendix A of this Proxy Statement,
contain
PAGE
provisions relating to stock option grants and performance units to be
granted thereunder that are intended to make the awards thereunder eligible
for performance-based compensation exclusive from the $1 million
limitation.
Compensation of Chief Executive Officer
During 1996, Philip H. Geier, Jr., the Company's Chairman of the Board
and Chief Executive Officer received a salary of $965,000, a level that has
been unchanged since 1991. Mr. Geier received a MICP award for 1996 of
$1,200,000.
Mr. Geier's 1996 MICP award was based on a number of factors including
an increase of 22% in net income, an increase of 19% in earnings per share,
an increase of 16% in gross income, in each case before the effect of a
non-cash charge to record the impairment of assets and related goodwill all
of which in the opinion of the Committee led to a continued significant
increase in shareholder value.
Mr. Geier's stock option grant of 108,000 shares made in conjunction
with the anticipated awards for the 1997-2000 performance period of the
LTPIP, is at the same level that he received in conjunction with the
1995-1998 LTPIP, when Mr. Geier was granted the maximum award for his
participation level. The Committee considered, in addition to the factors
set forth under the heading Compensation Policies for Executive Officers"
of this Report, the Company's compensation strategy of tying a major
portion of a key executive's compensation to the value of Interpublic
stock. As of December 31, 1996, a substantial portion of the value of Mr.
Geier's entire annualized compensation package is based on or related to
the future performance of Interpublic stock.
Leif H. Olsen, Chairman
Frank J. Borelli
Reginald K. Brack
Allen Questrom
J. Phillip Samper
Joseph J. Sisco
PAGE
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
THE INTERPUBLIC GROUP OF COMPANIES, INC. COMMON STOCK,
THE S&P 500 AND PEER GROUP INDEX
____________________________________________________________________
1991 1992 1993 1994 1995 1996
Interpublic 100.00 123.64 115.32 117.76 161.53 179.49
S & P 500 100.00 107.61 118.41 120.01 164.95 202.73
Peer Group 100.00 124.51 135.96 147.14 197.44 254.62
- ---------------------------------------------------------------------
Assumes $100 is invested on December 31, 1991, and that all
dividends are reinvested.
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.
PAGE
COMPARISON OF ELEVEN-YEAR CUMULATIVE TOTAL RETURN OF
THE INTERPUBLIC GROUP OF COMPANIES, INC. COMMON STOCK,
THE S&P 500 AND PEER GROUP INDEX
The table below contains the data points used in the Performance Graph that appears in the printed proxy statement.
_________________________________________________________________________________________________________________________
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
Interpublic 100.00 131.81 155.78 184.45 250.70 275.13 458.16 566.49 528.34 539.52 740.09 822.34
S&P 500 100.00 118.62 124.76 145.34 191.25 185.30 241.51 259.88 285.96 289.84 398.37 489.60
Peer Group 100.00 106.87 112.00 115.03 132.02 93.23 135.70 168.97 184.50 199.68 267.93 345.53
_________________________________________________________________________________________________________________________
Assumes $100 is invested on December 31, 1985, and that all dividends are reinvested.
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. Accordingly the table that
appears above has been presented to show comparative cumulative return over an eleven-year period.
PAGE
2. PROPOSAL TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
On March 20, 1997, the Company's Board of Directors adopted a
resolution proposing that Article 4 of the Company's Restated Certificate of
Incorporation be amended to increase the number of authorized shares of
Common Stock, $.10 par value, from 150,000,000 to 225,000,000 shares. In
addition to the 81,571,697 shares of Common Stock outstanding at March 31,
1997, a total of 14,592,640 shares were reserved for issuance pursuant to
various employee benefit plans and a total of 2,977,671 shares are reserved
for issuance upon the conversion of outstanding subordinated convertible
debentures. This leaves an aggregate of 50,857,992 shares otherwise
available for future issuance.
Purposes of Increase
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to make additional shares available for issuance
from time to time in order to have the flexibility to meet such corporate
purposes and needs as may be determined by the Board of Directors to be
proper and as may arise from time to time, including a possible stock split.
In addition, such purposes and needs may include increases in capital through
one or more offerings of Common Stock or the issuance of shares of Common
Stock in exchange for the acquisition of other companies or properties. If
the proposed amendment to the Restated Certificate of Incorporation is
approved, the additional shares will be available for issuance at such times
as the Board of Directors deems advisable without further action of the
Company's stockholders, except to the extent required by law or the rules of
any stock exchange on which the Company's securities are listed by reason of
the nature of the transaction in which the shares are to be issued.
Stockholders will not have preemptive rights to purchase any of the
additional authorized shares of Common Stock.
Vote Required.
Under the laws of Delaware, the jurisdiction of the Company's
incorporation, the affirmative vote of the majority of all outstanding shares
of Common Stock is necessary for the adoption of the proposed amendment to
the Restated Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PAGE
3. ADOPTION OF THE 1997 PERFORMANCE INCENTIVE PLAN
The Company's Board of Directors (the Board") has adopted, and is
submitting to stockholders for approval, The Interpublic Group of Companies,
Inc. 1997 Performance Incentive Plan (the Plan"). If approved by
stockholders, the Plan will replace the 1996 Stock Incentive Plan, the
Company's current stock incentive plan (the 1996 Plan"), and the Management
Incentive Compensation Plan, the Company's annual bonus plan (the MICP").
Discription of the Plan
The text of the Plan is attached hereto as Appendix A. The following
description of the Plan is qualified in its entirety by reference to the text
of the Plan.
Purposes of the Plan. The purposes of the Plan are to promote the
interests of the Company and its shareholders, and to further align the
interests of shareholders and the participants in the Plan, by (i)
attracting, retaining, and motivating the individuals who are the
participants in the Plan, (ii) providing the participants in the Plan with
incentives tied to the achievement of business, financial, and strategic
objectives of the Company and its subsidiaries and affiliates, and (iii)
providing the participants in the Plan with equity-based incentives and
subsequent equity ownership opportunities, including incentives and
opportunities tied to the Common Stock of the Company.
Administration. The Plan will be administered by a committee that
satisfies the requirements of Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the Exchange Act"), and accordingly will be composed
solely of two or more members of the Board of Directors who are not employees
of the Company and who do not have any other disqualifying affiliations with
the Company (the Committee"). If the Committee deems it advisable, the
Committee may delegate its authority under the Plan to the extent permitted
by applicable law, except that no such delegation of authority is permitted
with respect to the participation in the Plan of persons who are subject to
Section 16 of the Exchange Act.
Eligibility. Any employee of the Company, or any of its subsidiaries
or affiliates (defined to include any corporation or other entity in which
the Company directly or indirectly owns at least a 40% interest), that the
Committee determines to be responsible for, or able to contribute to, the
growth, profitability, and success of the Company is eligible to participate
in the Plan. Directors who are not employees are not eligible to participate
in the Plan.
Shares Available for Awards. The maximum number of shares of Common
Stock in respect of which awards may be granted under the Plan (other than
management incentive compensation performance awards) in any year consists of
a base amount, supplemented by certain additional shares, if any. The base
amount is equal to 1.85% of the total number of shares of Common Stock
outstanding on the first day of the year. If, in any year, awards are made
in respect of fewer than the number of shares comprising the base amount, the
unused balance is carried forward and will be available for awards in future
years. In addition, the following shares are available for future awards
under the Plan: (i) shares tendered or withheld in payment of the exercise
price of a stock option or to satisfy a tax withholding obligation, (ii)
shares issued, or shares issuable in respect of awards, that are forfeited,
and (iii) shares issuable in respect of awards that are settled in cash in
lieu of shares of Common Stock. The shares of Common Stock issuable under
the Plan may be either authorized but unissued shares or shares held in
treasury and not reserved for any other purpose.
Aggregate Limitations on Restricted Stock and Incentive Stock Option
Awards. Of the total number of shares available for awards (other than
management incentive compensation performance awards) in any year, no more
than 25% of such shares may be the subject of restricted stock awards and no
more than 200,000 shares of Common Stock may be the subject to incentive
stock option awards.
Individual Award Limitations on Stock Options and SARS. In any year,
no participant may receive stock options and stock appreciation rights in
respect of more than 250,000 shares of Common Stock.
Awards. The following types of awards may be made to employees under
the Plan: (i) stock options, (ii) stock appreciation rights, (iii) restricted
stock, (iv) phantom shares, (v) performance units, (vi) management incentive
compensation performance awards (see Management Incentive Compensation
Performance Awards"), (vii) shares in lieu of cash, and (viii)
PAGE
dividend equivalents. The selection of employees to receive awards, the type
and amount of an award, and the terms and conditions of an award all are
matters that are determined in the sole discretion of the Committee.
Stock Options. Stock Options granted under the Plan may be either
incentive stock options ( ISOs") that are intended to satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the Code"), or options that are not intended to meet such requirements
( nonstatutory stock options"). The exercise price of a stock option may not
be less than 100% of the market price of the Common Stock on the date of the
grant and the term of a stock option may not be longer than 10 years.
Each stock option may be exercised at such times and subject to such
terms and conditions as the Committee may specify at the time of the grant or
thereafter; provided that, except in the event of the retirement, death or
disability of the holder or upon the occurrence of a change of control" (as
hereinafter defined), a stock option may not be exercised in whole or in part
during the twelve-month following the grant. Payment of the exercise price
of a stock option may be made (i) in cash or its equivalent, (ii) if and to
the extent permitted by the Committee, by the delivery or attestation to the
ownership of shares of Common Stock owned by the holder, or (iii) by a
combination of the foregoing.
Stock Appreciation Rights. A stock appreciation right entitles the
holder to receive from the Company a payment in an amount equal to the excess
of the fair market value of a share of Common Stock on the date of exercise
over the base price. The Committee has the discretion to determine the time
or times at which or the event or events upon which a stock appreciation
right may be exercised in whole or in part, subject to the limitation that,
except in the event of the retirement, death or disability of the holder or
upon the occurrence of a change of control", a stock appreciation right may
not be exercised in whole or in part during the twelve-month period following
the grant. The Committee also has the discretion to determine the method of
exercise and whether a stock appreciation right shall be settled in cash,
shares of Common Stock, or a combination of cash and shares. Stock
appreciation rights may be granted in tandem with or in addition to a stock
option and may be granted either at the same time as a stock option or at a
later time. Stock appreciation rights may not have a base price that is less
than the fair market value of the Common Stock on the date of the grant
(except that a stock appreciation right granted in tandem with a previously
granted stock option may have a base price equal to the exercise price of
such stock option) or a term that is longer than ten years.
PAGE
Restricted Stock. Restricted stock is Common Stock that is granted to
an employee subject to the satisfaction of such terms and conditions as the
Committee may determine. Vesting may be based solely on the lapse of time,
or the lapse of time combined with the satisfaction of performance or other
criteria specified by the Committee. Until such time as the restrictions
imposed by the Committee lapse (the restricted period"), shares of
restricted stock are subject to forfeiture and may not be sold, assigned,
transferred, pledged, hypothecated, or otherwise disposed of by the holder.
Except in the event of the retirement, death or disability of the holder or
upon the occurrence of a change of control", the restricted period may not
be less than one year. Subject to such terms, conditions, and restrictions
as may be imposed by the Committee, the holder, during the restricted period,
otherwise has absolute ownership of the restricted shares, including the
right to vote and receive dividends on the shares.
A holder of restricted stock may irrevocably elect to have any
withholding tax obligation associated with the lapse of restrictions on
restricted stock satisfied by (i) having the Company withhold shares of
restricted stock otherwise deliverable to the participant or (ii) delivering
to the Company such restricted stock or other shares of Common Stock;
provided that the Committee may, in its discretion, disapprove any such
election. When the restrictions on restricted stock lapse, the Committee
may, in its discretion, direct the Company to make cash payments to assist
the holder in satisfying his federal income tax liability with respect to the
restricted stock. Such payments may be made only to those holders whose
performance the Committee determines to have been fully satisfactory between
the date on which the restricted stock were granted and the date on which the
restrictions lapse.
Phantom Shares. A phantom share represents the right of the holder to
receive, subject to such terms and conditions as the Committee shall
establish, an amount determined by the Committee based on the achievement of
performance goals established by the Committee relating to the fair market
value, book value, or formula value of an equity interest in the Company or
any of its subsidiaries or affiliates (or any combination thereof). Except
in the event of the retirement, death or disability of the holder or upon the
occurrence of a change of control", phantom shares may not vest during the
twelve-month period following the grant. Payment of the value of a phantom
share may be made in cash, shares of Common Stock, or a combination of cash
and shares, at such time and in such manner as the Committee shall determine.
Performance Units. Performance units represent a contractual right of
the holder to receive a payment that becomes
PAGE
vested upon the attainment of performance objectives established by the
Committee relating to one or more of the following criteria: (i) cumulative
compound operating profit growth, (ii) total return to shareholders, (iii)
return on equity, (iv) increase in revenue, (v) net operating income, (vi)
cash flow, or (vii) any other criteria selected by the Committee (in the case
of an award to an employee who is not a covered employee" within the meaning
of Section 162(m) of the Code). The performance objectives may relate to the
performance of the Company, any of its subsidiaries or affiliates, a division
or unit of the Company or any of its subsidiaries or affiliates, an office,
group of agencies, or all or any part of an agency system, in each such case
as measured in absolute terms or in comparison with the performance of other
companies. The number of performance units granted to an employee, the
applicable performance criteria, the performance period and all other terms
and conditions of a performance unit are determined in the discretion of the
Committee.
Performance units may be settled in cash, in shares of Common Stock, or
a combination of cash and shares, as determined by the Committee. The
maximum amount that may be paid to a holder with respect to a performance
unit award for any four-year performance period is $3.5 million (which amount
shall be proportionately increased or decreased for performance periods of
other than four years). No employee may participate in more than four
performance periods at one time.
Shares in Lieu of Cash. The Committee may award shares of Common Stock
in lieu of all or part of any compensation that otherwise is payable in cash
to an employee by the Company or any of its subsidiaries or affiliates. If
shares of Common Stock are issued in lieu of cash, the number of shares to be
issued must have a fair market value equal to or less than the amount of cash
otherwise payable.
Dividend Equivalents. In connection with any award, the Committee in
its discretion may grant dividend equivalents, to be paid on a current,
deferred, or contingent basis. Dividend equivalents represent the right to
receive a payment equal to the aggregate dividend payment on a corresponding
number of shares of Common Stock, and may be paid in cash, shares of Common
Stock, or a combination of cash and shares.
Management Incentive Compensation Performance Awards. Under the
management incentive compensation performance award component of the Plan,
the Committee in its sole discretion is authorized to make management
incentive compensation awards ( MICP awards")
PAGE
to employees of the Company and its subsidiaries and affiliates, subject to
the limitation that no single individual is permitted to receive in any year
an award in excess of $2 million. The funds available for all MICP awards in
any year may not exceed 5% of the amount by which the consolidated income
(excluding extraordinary gains and income taxes applicable thereto) before
taxes of the Company and its subsidiaries on a worldwide basis, adjusted for
all extraordinary losses after income tax effect, and before provision for
such incentive compensation, exceeds 15% of the average equity capital of the
Company during the immediately preceding year.
In determining the amount of MICP awards, the Committee is required to
consider one or more of the following factors: (i) achievement of the
worldwide business plan adopted by the Company, (ii) contribution to clients'
business, consisting of improvement in the quality of work produced or
improvement in efficiency, (iii) financial factors, consisting of operating
margin, level of or growth in revenue, and level of or growth in operating
profit, and (iv) individual performance. MICP awards may be made in cash,
shares of Common Stock, or a combination of cash and shares. The number of
shares of Common Stock issuable in connection with MICP awards is limited to
the excess of 600,000 shares over the number of shares previously issued
under the MICP while it was in effect.
Nontransferability. Unless the Committee shall permit (on such terms
and conditions as it shall establish) an award to be transferred to a member
of a participant's immediate family or to a trust, partnership, corporation,
or similar vehicle the parties in interest in which are limited to the
participant and members of the participant's immediate family, no award may
be assignable or transferable except by will or by the laws of descent and
distribution.
Termination of Employment. If the employment of the holder of an award
terminates for any reason, any nonvested portion of the award will be
forfeited, unless the Committee in its sole discretion determines otherwise,
except that only in the case of the retirement, death or disability of the
holder may the Committee allow an award to become vested prior to the first
anniversary of the grant.
PAGE
Change of Control. Upon the occurrence of a change of control" all
awards then outstanding will immediately become fully vested. A change of
control is defined by the Plan to mean the occurrence of any of the following
events: (i) any person (within the meaning of Sections 13(d) and 14(d) of the
Exchange Act), other than the Company or any of its subsidiaries, becomes the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
thirty percent (30%) or more of the combined voting power of the Company's
then outstanding voting securities, (ii) a tender offer or exchange offer
(other than an offer by the Company), pursuant to which 20% or more of the
then outstanding shares of Common Stock were purchased, expires, (iii) the
stockholders of the Company approve an agreement to merge or consolidate with
another corporation and the surviving corporation is neither the Company nor
a corporation that was, prior to the merger or consolidation, a subsidiary of
the Company, (iv) the stockholders approve an agreement (including a plan of
liquidation) to sell or otherwise to dispose of all or substantially all of
the Company's assets, or (v) during any period of two consecutive years,
individuals who, at the beginning of such period, constituted the Board cease
for any reason to constitute at least a majority thereof, unless the election
or the nomination for the election by the Company'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.
Adjustments. If the Committee at any time determines that a corporate
transaction" has occurred that affects the Common Stock such that an
adjustment is required to preserve, or to prevent enlargement of, the
benefits or potential benefits available under the Plan, the Committee may,
in such manner as the Committee deems equitable, adjust any or all of (i) the
number and kind of shares that thereafter may be made the subject of awards,
(ii) the number and kinds of shares that are subject to outstanding awards,
and (iii) the grant, exercise, or conversion price of any award. In
addition, the Committee may make provisions for a cash payment to a
participant or other
PAGE
person holding an outstanding award. A corporate transaction" is defined by
the Plan to mean any stock split, stock dividend, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, exchange of shares, warrants or rights offering to
purchase Common Stock at a price substantially below fair market value or
other similar event.
Amendment of Plan. The Board or the Committee may amend, suspend, or
terminate the Plan, or any portion thereof, at any time; provided that no
amendment may be made without shareholder approval if (i) shareholder
approval is required by law or (ii) if the amendment would increase the
number of shares of Common Stock available for awards under the Plan.
Without the written consent of an affected participant, no termination,
suspension, or modification of the Plan may adversely affect any right of
such participant under the terms of an award granted before the date of such
termination, suspension, or modification.
Effective Date; Duration of the Plan. The Plan will become effective
on the date the Plan is approved by the Company's shareholders. No Awards
may be granted under the Plan after the annual meeting of the Company's
shareholders in 2002. Upon shareholder approval of the Plan, no further
awards may be made under the 1996 Plan or under the MICP.
Federal Income Tax Consequences.
The material federal income tax consequences of awards under the Plan,
based on the current provisions of the Internal Revenue Code and the
regulations thereunder, are as follows:
The grant of an option or SAR to an employee will have no tax
consequences to the employee or to the Company or its subsidiaries or
affiliates. In general, upon the exercise of an ISO, the employee will not
recognize income, and the employer will not be entitled to a tax deduction.
(However, the excess of the acquired shares' fair market value on the
exercise date over the exercise price is included in the employee's income
for purposes of the alternative minimum tax.) When an employee disposes of
ISO shares, the difference between the exercise price and the amount realized
by the employee will, in general, constitute long-term capital gain or loss,
as the case may be. However, if the employee fails to hold the ISO shares
for more than one year after exercising the ISO and for more than two years
after the grant of the ISO, the portion of any gain realized by the employee
upon the disposition of the shares that
PAGE
does not exceed the excess of the fair market value of the shares on the
exercise date over the exercise price generally will be treated as ordinary
income, the balance of any gain or any loss will be treated as a capital gain
or loss (long-term or
short-term, depending on whether the shares have been held for more than one
year), and the employer generally will be entitled to a tax deduction equal
to the amount of ordinary income recognized by the employee. If an employee
exercises an ISO, but fails to remain employed by the Company (or a
subsidiary in which the Company holds at least 50 percent of the voting
power) from the date of grant until three months preceding the date of
exercise (one year preceding the date of exercise if the employee's
employment terminated due to disability), the option will be treated for tax
purposes as a nonstatutory stock option, as described below.
In general, upon the exercise of a nonstatutory stock option, the
employee will recognize ordinary income equal to the excess of the acquired
shares' fair market value on the exercise date over the exercise price, and
the employer generally will be entitled to a tax deduction in the same
amount. Upon the exercise of a SAR, the employee will recognize as ordinary
income any cash received and the fair market value on the exercise date of
any shares received, and the employer generally will be entitled to a tax
deduction in the same amount.
With respect to other awards that are settled either in cash or in
shares that are transferable or are not subject to a substantial risk of
forfeiture, the employee will recognize ordinary income equal to the excess
of (a) the cash or the fair market value of any shares received (determined
as of the date of settlement) over (b) the amount, if any, paid for the
shares by the employee, and the employer generally will be entitled to a tax
deduction in the same amount.
In the case of an award to an employee that is settled in shares that
are nontransferable and subject to a substantial risk of forfeiture, the
employee generally will recognize ordinary income equal to the excess of (a)
the fair market value of the shares received (determined as of the date on
which the shares become transferable or not subject to a substantial risk of
forfeiture, whichever occurs first) over (b) the amount, if any, paid for the
shares by the employee, and the employer generally will be entitled to a tax
deduction in the same amount.
PAGE
An employee whose shares are both nontransferable and subject to a
substantial risk of forfeiture may elect to recognize income when the shares
are received, rather than upon the expiration of the transfer restriction or
risk of forfeiture. If an employee makes this election, the amount of
ordinary income, and the amount of the employer's tax deduction, are
determined as of the date of receipt, rather than upon the expiration of the
applicable restrictions.
When an employee sells any shares acquired under a nonqualified stock
option, a SAR, or any other award other than an ISO, the employee will
recognize capital gain or loss equal to the difference between the amount
realized on the disposition of the shares and the employee's basis in the
shares. In general, the employee's basis in any such shares will be equal to
the amount of ordinary income recognized in connection with the receipt of
the shares plus any amount paid for the shares. Any capital gain or loss
realized upon the disposition of the shares will be long-term or short-term,
depending on whether the shares have been held for more than one year from
the date as of which ordinary income was recognized.
When a cash payment is made to an employee, the employee will recognize
the amount of the cash payment as ordinary income, and the employer generally
will be entitled to a tax deduction in the same amount.
In general, a corporation is denied a deduction for any compensation
paid to its chief executive officer or to any of its four most highly
compensated officers (other than the chief executive officer) to the extent
that the compensation paid to the officer exceeds $1,000,000 in any year.
Performance-based compensation," however is not subject to this deduction
limit. The Plan permits the grant of both awards that qualify as
performance-based compensation, such as options, SARs, performance units, and
incentive compensation awards, and awards that do not so qualify, such as
restricted stock, phantom shares, awards of shares of Common Stock in lieu of
cash, and dividend equivalents.
Any acceleration, vesting, or increase in the amount of an award under
the Plan as a result of a change of control might under certain circumstances
be deemed to be a parachute payment" for tax purposes. In general, if the
present value of all parachute payments to a disqualified individual" (any
one of a limited class of shareholders, officers, and highly compensated
PAGE
employees) equals or exceeds three times the individual's base amount"
(annualized compensation over a five-year period), the individual will be
subject to a 20% excise tax on the excess of the parachute payments over the
individual's base amount, and the employer will be denied a tax deduction for
such excess, except to the extent it is established that the excess
represents a reasonable compensation for services actually rendered.
Payments outside of the Plan also may constitute parachute payments.
New Plan Benefits.
The selection of employees to receive awards under the Plan will be
determined by the Committee in its discretion. Therefore, the benefits under
the Plan that will be received by any individual or group are not
determinable. On March 24, 1997, the closing price of the Common Stock on
the New York Stock Exchange was $53 3/8 per share.
Vote Required.
The affirmative vote of a majority of the shares of the Common Stock
present in person or by proxy and entitled to vote at the Annual Meeting is
required to approve the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
4. APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse have been appointed and are acting as independent
accountants of the Company for the year 1997. 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 1997.
PAGE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR CONFIRMATION OF THE
APPOINTMENT OF PRICE WATERHOUSE.
5. STOCKHOLDERS' PROPOSAL REGARDING NORTHERN IRELAND
Interpublic is advised that two 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 two 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.
PAGE
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.
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.
PAGE
-- 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 40 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 proponent's 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 nor
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:
PAGE
(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.
(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.
PAGE
(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.
PAGE
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 18, 1997
PAGE
APPENDIX A
THE INTERPUBLIC GROUP OF COMPANIES, INC.
1997 PERFORMANCE INCENTIVE PLAN
Section 1. Purpose.
The purposes of the Plan are to promote the interests of the Company and
its shareholders, and further align the interests of shareholders and
Eligible Employees, by
(a) attracting, retaining, and motivating outstanding individuals as
Eligible Employees;
(b) providing Eligible Employees with incentives tied to the
achievement of business, financial, and strategic objectives of the
Company and its Subsidiaries and Affiliates; and
(c) providing Eligible Employees with equity-based incentives and
subsequent equity ownership opportunities, including incentives and
opportunities tied to the Company's Common Stock.
Section 2. Definitions.
Unless the context clearly indicates otherwise, the following terms, when
used in the Plan in capitalized form, shall have the meanings set forth
below:
"Affiliate" means any corporation or other entity (other than the Company or
one of its Subsidiaries) in which the Company directly or indirectly owns at
least forty percent (40%) of the combined voting power of all classes of
stock of the entity or at least forty percent (40%) of the ownership
interests in the entity.
"Award" means any grant or award under the Plan, as evidenced in a written
document delivered to a Participant as provided in Section 14(a) hereof.
PAGE
"Board" means the Board of Directors of the Company.
"Change of Control" means the occurrence of any of the following events:
(a) any person (within the meaning of Sections 13(d) and 14(d) of the
Exchange Act), other than the Company or any of its Subsidiaries, becomes the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
thirty percent (30%) or more of the combined voting power of the Company's
then outstanding voting securities; or
(b) a tender offer or exchange offer (other than an offer by the
Company), pursuant to which twenty percent (20%) or more of the then
outstanding shares of Common Stock were purchased, expires; or
(c) the stockholders of the Company approve an agreement to merge or
consolidate with another corporation and the surviving corporation is neither
the Company nor a corporation that was, prior to the merger or consolidation,
a subsidiary of the Company; or
(d) the stockholders approve an agreement (including a plan of
liquidation) to sell or otherwise to dispose of all or substantially all of
the Company's assets; or
(e) during any period of two consecutive years, individuals who, at the
beginning of such period, constituted the Board cease for any reason to
constitute at least a majority thereof, unless the election or the nomination
for the election by the Company'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.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee established by the Board pursuant to Section
3 hereof.
"Common Stock" means the Company's $.1O par value common stock.
PAGE
"Company" means The Interpublic Group of Companies, Inc.
"Corporate Transaction" means any stock split, stock dividend, extraordinary
cash dividend, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination, exchange of shares, warrants or rights
offering to purchase Common Stock at a price substantially below fair market
value, or other similar event.
"Disability" means long-term disability as defined under the terms of the
Company's applicable long-term disability plans or policies.
"Dividend Equivalent" means an Award, granted in accordance with the
provisions of Section 12 hereof, that provides for payments equivalent in
amount to the dividends on Shares.
"Eligible Employee" means any employee of the Company, its Subsidiaries, or
its Affiliates determined by the Committee to be responsible for, or able to
contribute to, the growth, profitability, and success of the Company.
However, this term does not include directors who are not employees of such
entities.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Executive Officer" means those persons who are officers of the Company
within the meaning of Rule 16a-l(f) of the Exchange Act.
"Incentive Stock Option" or "ISO" means an Option intended to meet the
requirements of Section 422 of the Code.
"Management Incentive Compensation Performance Award" or "MICP Award" means
an Award granted under Section 10 hereof and payable wholly in cash, wholly
in Shares, or partly in cash and partly in Shares in accordance with the
terms of the Award.
"Nonstatutory Stock Option" means an Option that is not intended to be an
Incentive Stock Option.
PAGE
"Option" means the right to purchase the number of Shares specified by the
Committee, at a price and during a term fixed by the Committee in accordance
with the Plan and subject to any other limitations and restrictions (required
by law or otherwise) as the Plan and the Committee shall impose.
"Participant" means an Eligible Employee selected by the Committee to receive
an Award under the Plan.
"Performance Period" means a period during which an Award of Performance
Units is subject to forfeiture. The Performance Period that applies to an
Award made to a Participant may overlap or coincide with the Performance
Period that applies to another Award made to that Participant. The duration
of a Performance Period shall not be less than one year.
"Performance Units" means any Award of a contractual right granted under
Section 9 hereof to receive cash or Shares that becomes vested upon the
attainment, in whole or in part, of performance objectives determined by the
Committee.
"Phantom Shares" means an Award of a contractual right granted under Section
8 hereof to receive cash or Shares payable in accordance with the terms of
the Award.
"Plan" means The Interpublic Group of Companies, Inc. 1997 Performance
Incentive Plan, set forth herein, and as it may be amended from time to time.
"Plan Year" means the calendar year.
"Restricted Period" means a period during which an Award of Restricted Stock
is subject to forfeiture. The Restricted Period that applies to an Award
made to a Participant may overlap or coincide with the Restricted Period that
applies to another Award made to that Participant. The duration of a
Restricted Period shall not be less than one year; provided that a Restricted
Period may terminate before the expiration of one year, pursuant to Section
13 hereof, in connection with the termination of the Participant's employment
due to retirement, death, or Disability or, pursuant to Section 14(d) hereof,
by reason of a Change of Control.
PAGE
"Restricted Stock" means any Award of Common Stock granted under Section 7
hereof that becomes vested and nonforfeitable upon the attainment, in whole
or in part, of conditions established by the Committee.
"Shares" means shares of Common Stock.
"Stock Appreciation Right" means a contractual right granted under Section 6
hereof to receive cash, Shares, or a combination thereof.
"Subsidiary" means a subsidiary of the Company that meets the definition of a
"subsidiary corporation" in Section 424(f) of the Code.
Section 3. Administration.
(a) The Committee. The Plan shall be administered by a committee (the
"Committee") that satisfies the requirements of Rule 16b-3 under the Exchange
Act. Members of the Committee shall be appointed by and shall serve at the
pleasure of the Board. No member of the Committee shall be eligible to
receive an Award under the Plan.
(b) Committee Powers. The Committee shall have and may exercise all of
the powers granted to it by the provisions of the Plan. Subject to the
express provisions and limitations of the Plan, the Committee may adopt such
rules, regulations, and procedures as it deems advisable for the conduct of
its affairs, and may appoint one of its members to be its chairman and any
person, whether or not a member, to be its secretary or agent. The Committee
shall have full authority to direct the proper officers of the Company to
issue or transfer Shares pursuant to the issuance or exercise of an Award
under the Plan.
(c) Committee Action. The Committee may act at a duly called meeting by
the vote of a majority of its members or without a meeting by unanimous
written consent. The decisions of the Committee shall be final and binding
unless otherwise determined by the Board. Each member of the Committee and
each member of the Board shall be without liability, to the fullest extent
permitted by law, for any action taken or determination made in good faith in
connection with the Plan.
PAGE
(d) Awards. Subject to the provisions of the Plan, the Committee shall
have the authority to grant the following Awards:
(a) Options,
(b) Stock Appreciation Rights,
(c) Restricted Stock,
(d) Phantom Shares,
(e) Performance Units,
(f) Management Incentive Compensation Performance Awards,
(g) Shares in Lieu of Cash, and
(h) Dividend Equivalents.
(e) Participants. Subject to the provisions of the Plan, the Committee
shall have the authority to designate the Eligible Employees who shall
receive Awards and to determine the nature and size of the Award that an
Eligible Employee shall receive.
(f) Delegation. If the Committee deems it advisable, the Committee may
delegate its authority under this Section 3 to persons other than its members
to the extent permitted by applicable law, except that no such delegation
shall be permitted with respect to the participation in the Plan of persons
who are subject to Section 16 of the Exchange Act. Any person to whom the
Committee delegates its authority under this Section 3 may receive Awards
only if the Awards are granted directly by the Committee without delegation.
Section 4. Maximum Amount Available for Awards.
(a) Basic Limitation. Subject to the provisions of subsections (b)
through (f) of this Section 4, the maximum number of Shares in respect of
which Awards may be granted in any Plan Year is 1.85% of the total number of
Shares issued and outstanding on the first day of that Plan Year, including
Shares held in the Company's treasury.
PAGE
(b) Additional Shares. In addition to the Shares authorized by Section
4(a) hereof, the following Shares may be the subject of Awards under the
Plan:
(1) Carryovers. If the maximum number of Shares in respect of which
Awards may be granted in any Plan Year pursuant to this Section 4 (the
"Maximum Shares") exceeds the number of Shares in respect of which
Awards are granted in that Plan Year (the "Covered Shares"), Shares
equal to the excess of the Maximum Shares over the Covered Shares
("Unused Shares") shall be added to the Shares otherwise available for
Awards in the immediately following Plan Year. Unused Shares may be
carried over to each subsequent Plan Year in succession to the extent
that Awards are not granted in respect of the Unused Shares.
(2) Surrender of Shares. If a Participant tenders, or has withheld,
Shares in payment of all or part of the option price under an Option
granted under the Plan, or in satisfaction of withholding tax
obligations, the Shares tendered by the Participant or so withheld shall
become available for Awards.
(3) Forfeiture of Shares. If Shares that are issued under the Plan are
subsequently forfeited (or if an Award with respect to Shares is
forfeited) in accordance with the terms of the Award, the forfeited
Shares shall immediately become available for Awards.
(4) Payment of Cash in Lieu of Shares. To the extent that cash is paid
pursuant to an Award in lieu of Shares, the Shares covered by the Award
shall become available for Awards.
(5) MICP Awards. The Shares authorized by the preceding provisions of
this Section 4 shall not be available for distribution under Section 10
hereof. However, in addition to the Shares available under the
preceding provisions of this Section 4, the excess of (A) 600,000 Shares
over (B) the number of Shares previously distributed under The
Interpublic Group of Companies, Inc. Management Incentive Compensation
Plan, as approved by the Company's shareholders on May 16, 1995, shall
be authorized for distribution under Section 10 hereof.
PAGE
(c) Aggregate Limitations on Restricted Stock and ISOs. Subject to the
adjustment provisions of Section 4(f) hereof, not more than 25% of the Shares
in respect of which Awards may be granted in any Plan Year (disregarding
Shares that may be distributed pursuant to Section 4(b)(5) hereof) may be the
subject of Awards of Restricted Stock, and no more than 200,000 Shares may be
the subject of ISOs that are granted in any Plan Year.
(d) Individual Limitations on Options and Stock Appreciation Rights.
Subject to the adjustment provisions in Section 4(f) hereof, an individual
Participant may not receive, in any Plan Year, Options and Stock Appreciation
Rights with respect to more than 250,000 Shares.
(e) Shares Available for Issuance. Shares of Common Stock may
be made available from the authorized but unissued Shares or from
Shares held in the Company's treasury and not reserved for some other
purpose. If an Award is payable solely in cash, no Shares shall be
deducted from the number of Shares available for issuance under this
Section 4 by reason of that Award.
(f) Adjustment for Corporate Transactions. If the Committee
determines that any Corporate Transaction affects the Common Stock
such that an adjustment is required to preserve, or to prevent
enlargement of, the benefits or potential benefits available under
the Plan, the Committee may, in such manner as the Committee deems
equitable, adjust any or all of
(1) the number and kind of shares that thereafter may be
made the subject of Awards,
(2) the number and kinds of shares that are subject to
outstanding Awards, and
(3) the grant, exercise, or conversion price with respect
to any of the foregoing.
Any Shares received as a result of a Corporate Transaction affecting
Restricted Stock shall have the same status, be subject to the same
restrictions, and bear the same legend as the Restricted Stock with
respect to which the Shares were issued. Additionally, the Committee
may make provisions for a
PAGE
cash payment to a Participant or other person holding an outstanding
Award. However, the number of shares subject to any Award shall
always be a whole number.
Section 5. Stock Options.
(a) Grant. The Committee shall have the authority to grant both
Incentive Stock Options and Nonstatutory Stock Options; provided that
Incentive Stock Options may not be granted to any Eligible Employee
who is not an employee of the Company or one of its Subsidiaries at
the time of grant.
(b) Exercise Price. The Committee shall establish the exercise
price at the time each Option is granted, which price shall not be
less than 100% of the fair market value of the Shares subject to the
Option on the date of grant.
(c) Exercise. Each Option shall be exercised at such times and
subject to such terms and conditions as the Committee may specify in
the applicable Award or thereafter; provided that unless the Option
becomes vested earlier pursuant to Section 13 or 14(d) hereof, an
Option may not be exercised in whole or in part during the
twelve-month period commencing with the date on which the Option was
granted. The Committee may impose such conditions on the exercise of
Options as it determines to be appropriate, including, without
limitation, conditions relating to the application of federal or
state securities laws. No Shares shall be delivered pursuant to any
exercise of an Option unless arrangements satisfactory to the
Committee have been made to assure full payment of the exercise price
therefor. Without limiting the generality of the foregoing, payment
of the exercise price may be made in cash or, if and to the extent
permitted by the Committee, by exchanging Shares owned, or the
ownership of which is attested to, by the optionee (which are not the
subject of any pledge or other security interest and which are fully
vested), or by a combination of the foregoing, provided that the
combined value of all cash and the fair market value of any Shares
tendered to the Company, valued as of the date of such tender, is at
least equal to the exercise price.
(d) Term. An Option shall be exercisable for a term determined
by the Committee, which shall not be longer than ten years from the
date on which the Option is granted.
PAGE
(e) Termination of Employment. An Option shall be exercisable
following the termination of a Participant's employment to the extent
determined pursuant to Sections 13 and 14(d) hereof, provided that
(1) If the Participant's employment terminates due to the
Participant's retirement with the approval of the Company, the
Participant (or, following the Participant's death, the
Participant's beneficiary or personal representative) may
exercise any Option held by the Participant at the time of such
termination, to the extent such Option is vested in accordance
with the terms of the Option and Sections 13 and 14(d) hereof,
for a period of three years following such termination (but not
after the date the Option otherwise expires).
(2) If the Participant's employment terminates due to the
Participant's death or Disability, the Participant (or,
following the Participant's death, the Participant's beneficiary
or personal representative) may exercise any Option held by the
Participant at the time of such termination, to the extent such
Option is vested in accordance with the terms of the Option and
Sections 13 and 14(d) hereof, for a period of one year following
such termination (but not after the date the Option otherwise
expires).
(3) If the Participant's employment terminates for any
reason not described in Section 5(e)(1) or (2) hereof, the
Participant (or, following the Participant's death, the Partici-
pant's beneficiary or personal representative) may exercise any
Option held by the Participant at the time of such termination,
to the extent such Option is vested in accordance with the terms
of the Option and Sections 13 and 14(d) hereof, for a period of
three months following such termination (but not after the date
the Option otherwise expires).
Section 6. Stock Appreciation Rights.
(a) Grant. The Committee shall have the authority to grant
Stock Appreciation Rights in tandem with an Option, in addition to an
Option, or freestanding and unrelated to an Option. If a Stock
Appreciation Right is granted in tandem
PAGE
with an Option, the Stock Appreciation Right and the related Option
shall provide alternative rights, so that a Participant may not
exercise both the Stock Appreciation Right and the Option with
respect to a Share covered by both the Option and the related Stock
Appreciation Right. Stock Appreciation Rights granted in tandem or
in addition to an Option may be granted either at the same time as
the Option or at a later time. Stock Appreciation Rights shall not
be exercisable after the expiration of ten years from the date of
grant and shall have a base price determined in the same manner as,
and subject to the same conditions that apply with respect to, the
exercise price for an Option under Section 5(b) hereof; provided that
if a Stock Appreciation Right is granted in tandem with a previously
granted Option, the base price for the Stock Appreciation Right may
be equal to the exercise price for such Option.
(b) Exercise. Each Stock Appreciation Right shall be exercised
at such times and subject to such terms and conditions as the
Committee may specify in the applicable Award or thereafter; provided
that unless the Stock Appreciation Right becomes vested earlier
pursuant to Section 13 or 14(d) hereof, a Stock Appreciation Right
may not be exercised in whole or in part during the twelve-month
period commencing with the date on which the Stock Appreciation Right
was granted. A Stock Appreciation Right shall entitle the
Participant to receive from the Company an amount equal to the excess
of the fair market value of a Share on the date of exercise of the
Stock Appreciation Right over the base price thereof. Subject to
Sections 13 and 14(d) hereof, the Committee shall determine the time
or times at which or the event or events upon which a Stock
Appreciation Right may be exercised in whole or in part, the method
of exercise and whether such Stock Appreciation Right shall be
settled in cash, Shares, or a combination of cash and Shares;
provided that unless otherwise specified by the Committee at or after
grant, a Stock Appreciation Right granted in tandem with an Option
shall be exercisable at the same time or times as the related Option
is exercisable.
(c) Termination of Employment. A Stock Appreciation Right shall
be exercisable following the termination of a Participant's
employment to the extent determined pursuant to Sections 13 and 14(d)
hereof and for periods identical with those prescribed for Options
under Section 5(e) hereof.
PAGE
Section 7. Restricted Stock.
(a) Grant. Each Share of Restricted Stock shall be subject to
the following terms and conditions, and to such additional terms and
conditions as the Committee shall deem appropriate; provided that
none of these additional terms and conditions shall be more favorable
to a Participant than the terms and conditions set forth herein.
(b) Rights of Participant. A Participant to whom Restricted
Stock has been granted shall have absolute ownership of such shares,
including the right to vote the same and to receive dividends
thereon, subject to the terms, conditions, and restrictions described
in the Plan and in the Award.
(c) Restrictions. Until the restrictions set forth in this
subsection (c) shall lapse, Restricted Stock shall be subject to the
following conditions:
(1) Restricted Stock shall not be sold, assigned,
transferred, pledged, hypothecated, or otherwise disposed of;
and
(2) if the Participant ceases to be an Employee for any
reason, except as provided in Sections 13 and 14(d) hereof, any
Restricted Stock that had been delivered to, or held in custody
for, the Participant shall be returned to the Company forthwith,
accompanied by any instrument of transfer requested by the
Company, and all of the rights of the Participant with respect
to such Shares shall immediately terminate without any payment
of consideration by the Company.
(d) Lapse of Restrictions. Unless the Restricted Stock vests
earlier pursuant to Section 13 or 14(d) hereof, the restrictions set
forth in Section 7(c) hereof shall lapse at the end of the Restricted
Period.
(e) Agreement by Participant Regarding Withholding Taxes. Each
Participant who receives Restricted Stock shall agree that, subject
to the provisions of Section 7(c) hereof:
PAGE
(1) no later than the date of the lapse of the restrictions
set forth in Section 7(c) hereof (and any additional
restrictions set forth in the Award of the Restricted Stock),
the Participant will pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any taxes of
any kind required by law to be withheld with respect to the
Restricted Stock, and
(2) the Company and its Subsidiaries and Affiliates shall,
to the extent permitted by law, have the right to deduct from
any payments of any kind otherwise due to the Participant any
taxes of any kind required by law to be withheld with respect to
the Restricted Stock.
A Participant may irrevocably elect to have any withholding tax
obligation satisfied by
(A) having the Company withhold shares otherwise
deliverable to the Participant in connection with the Award of
Restricted Stock, or
(B) delivering to the Company such Restricted Stock or
delivering to the Company other Shares;
provided that the Committee may, in its sole discretion, disapprove
any such election.
(f) Tax Assistance Payments. When the restrictions set forth in
Section 7(c) hereof, or in the Award of the Restricted Stock, lapse,
the Committee may, in its discretion, direct the Company to make cash
payments to assist the Participant in satisfying his income tax
liability with respect to the Restricted Stock. Such payments may be
made only to those Participants whose performance the Committee
determines to have been fully satisfactory between the date on which
the Restricted Stock were granted and the date on which such
restrictions lapse. The Committee may, in its discretion, estimate
the amount of the income tax liability in accordance with methods or
criteria uniformly applied to Participants similarly situated,
without regard to the individual circumstances of a particular
Participant.
PAGE
(g) Election to Recognize Gross Income in Year of Grant. If a
Participant properly elects, within 30 days of the date of grant of
Restricted Stock, to include in gross income for federal income tax
purposes an amount equal to the fair market value of the Shares
awarded on the date of grant, he shall make arrangements satisfactory
to the Committee to pay in the year of such grant any taxes required
to be withheld with respect to such Shares. If he fails to make the
payments, the Company and its Subsidiaries and Affiliates shall, to
the extent permitted by law, have the right to deduct from any
payments of any kind otherwise due to the Participant any taxes of
any kind required by law to be withheld with respect to the Shares.
(h) Restrictive Legends; Certificates May Be Held in Custody.
Certificates evidencing Restricted Stock shall bear an appropriate
legend referring to the terms, conditions, and restrictions described
in the Plan and in the instrument evidencing the grant of the
Restricted Stock. Any attempt to dispose of Restricted Stock in
contravention of the terms, conditions, and restrictions described in
the Plan or in the instrument evidencing the grant of the Restricted
Stock shall be ineffective. The Committee may require that the
certificates evidencing such shares be held in custody by a bank or
other institution, or that the Company itself hold such shares in
custody, until the restrictions thereon have lapsed.
(i) Foreign Laws. Notwithstanding any provisions of the Plan to
the contrary, if Restricted Stock is to be awarded to a Participant
who is subject to the laws, including but not limited to the tax
laws, of any country other than the United States, the Committee may,
in its discretion, direct the Company to sell, assign, or otherwise
transfer the Restricted Stock to a trust or other entity or
arrangement, rather than grant the Restricted Stock directly to the
Participant.
Section 8. Phantom Shares.
(a) Grant. The Committee shall have the authority to
PAGE
determine the number of Phantom Shares to be granted to a Participant
and the other terms and conditions of the Phantom Shares.
(b) Payment. Each Phantom Share shall represent the right of
the Participant to receive an amount determined by the Committee
based on the achievement of performance goals, established by the
Committee, relating to the fair market value, book value, or formula
value of an equity interest in the Company, an Affiliate, or a
Subsidiary (or any combination thereof). Payment of the value of a
Phantom Share shall be in cash, Shares, or both, as determined by the
Committee and shall be made at such time and in such manner as the
Committee shall determine.
(c) Conditions. Each Award of Phantom Shares shall be subject
to such terms and conditions as the Committee shall establish,
including conditions comparable to those provided in Section 7 or 9
hereof. Unless the Phantom Shares vest earlier pursuant to Section
13 or 14(d) hereof, Phantom Shares shall not be vested during the
twelve-month period commencing on the date on which the Phantom
Shares are granted.
(d) Termination of Employment. The rights of a Participant with
respect to an Award of Phantom Shares outstanding at the time of the
termination of the Participant's employment shall be governed by
Sections 13 and 14(d) hereof.
Section 9. Performance Units.
(a) Grant. The Committee shall have the authority to determine
the number of Performance Units to be granted to a Participant and
the other terms and conditions of the Performance Units. The
Performance Units shall become vested upon the determination by the
Committee that the performance objectives established by the
Committee for the Performance Units have been attained, in whole or
in part. Payment (if any) with respect to a Performance Unit shall
be made as soon as administratively practicable after the conclusion
of the applicable Performance Period. An individual Participant may
not participate in more than four Performance Periods at any one
time.
PAGE
(b) Performance Objectives. The performance objectives shall
relate to the achievement of performance objectives relating to one
or more of the following criteria:
(1) cumulative compound operating profit growth;
(2) total return to shareholders;
(3) return on equity;
(4) increase in revenue;
(5) net operating income;
(6) cash flow; or
(7) any other criteria selected by the Committee; provided
that any such other criteria shall not apply to an
Award to a "covered employee" within the meaning of
Section 162(m)(3) of the Code.
The performance objectives may relate to the performance of (A) the
Company, (B) a Subsidiary, (C) an Affiliate, (D) a division or unit
of the Company, any Subsidiary, or any Affiliate, (E) an office,
group of agencies, or all or part of any agency system, (F) the
Participant, or (G) any combination of the foregoing, over a
Performance Period established by the Committee, as measured either
in absolute terms or in comparison with the performance of other
companies. Partial achievement of the objective(s) may result in a
payment corresponding to the degree of achievement.
(c) Maximum Payment. The maximum amount that may be paid to any
Participant in respect of an Award of Performance Units shall be $3.5
million for a four-year Performance Period. If the Performance
Period is longer or shorter than four years, the $3.5 million limit
shall be proportionately increased or reduced to reflect the length
of the Performance Period. Payment may be made in cash, in Shares,
or both, as determined by the Committee.
(d) Termination of Employment. The rights of a Participant with
respect to an Award of Performance Units outstanding at the time of
the termination of the Participant's employment shall be governed by
Sections 13 and 14(d) hereof.
PAGE
(e) Interpretation. Notwithstanding any other provision of this
Section 9 to the contrary, if an Award of Performance Units is
intended at the time of grant to be "other performance-based
compensation" within the meaning of Section 162(m)(4)(C) of the Code,
and if the Committee's authority to exercise any discretion under
this Section 9 with respect to the Award would cause the Award to
fail to qualify as "other performance-based compensation," the
Committee shall not be entitled to exercise such discretion with
respect to that Award.
Section 10. Management Incentive Compensation Performance Awards
(a) Incentive Fund Determination. MICP Awards may be made in
the sole discretion of the Committee except that the fund available
for such Awards with respect to any one Plan Year may not exceed 5%
of the amount by which the consolidated income (excluding
extraordinary gains and income taxes applicable thereto) before
income taxes of the Company and its subsidiaries on a worldwide
basis, adjusted for all extraordinary losses after income tax
effects, and before provision for such incentive compensation,
exceeds 15% of the average equity capital of the Company in the Plan
Year immediately preceding the Plan Year with respect to which the
Awards are made (the "Preceding Year").
For purposes of this Section 10(a), average equity capital shall
be determined by averaging equity capital as at the first business
day of the Preceding Year, the last day of June, and the last day of
December of the Preceding Year (assuming conversion of all
outstanding convertible debentures).
No MICP Award shall be made unless the Award is approved by the
Committee in its sole discretion.
(b) Determination of MICP Amounts. The Committee shall
consider one or more of the following factors in determining the
amount of the MICP Awards:
(1) Achievement of the annual worldwide business plan
adopted by the Company
PAGE
(2) Contribution to clients' business
(A) Improvement in the quality of work produced
(B) Improvement in efficiency
(3) Financial factors
(A) Operating margin
(B) Level of or growth in revenue
(C) Level of or growth in operating profit
(4) Individual performance
(c) Maximum Individual MICP Awards. The maximum individual
MICP Award permitted, with respect to any Plan Year, is $2,000,000.
(d) Form and Timing of MICP Awards. The Committee shall be
responsible for determining the form and timing of MICP Awards under
the Plan. In its discretion, the Committee may make any Award wholly
in cash, wholly in Shares, or partly in cash and partly in Shares.
For purposes of Section 10(a) hereof, any Shares awarded under this
Section 10 shall be valued by using the average closing price of the
Shares on the New York Stock Exchange on the last ten trading days of
the calendar month preceding the month in which the Shares are
awarded.
Individual MICP Awards shall be paid on a current basis except
that, in any instance, the Committee may direct that up to 75% of an
individual's Award be paid on a deferred basis subject to such terms
and conditions as the Committee may prescribe. MICP Awards shall
normally be made as soon as possible after the end of each Plan Year.
Section 11. Shares in Lieu of Cash.
The Committee may grant Awards of Shares in lieu of all or part
of any compensation otherwise payable in cash to an Eligible Employee
by the Company or any Subsidiary or
PAGE
Affiliate. If Shares are issued in lieu of cash, the number of
Shares to be issued shall be equal to the number of whole Shares that
have an aggregate fair market value (determined on the date the cash
otherwise would have been payable) equal to or less than the amount
of such cash.
Section 12. Dividend Equivalents.
The Committee may grant to a Participant, in connection with any
Award, Dividend Equivalents, which may be paid in cash, in Shares, or
both, and which may be paid on a current, deferred, or contingent
basis, as determined by the Committee in its discretion.
Section 13. Termination of Employment.
If the Participant's employment terminates for any reason, the
Participant (or, following the Participant's death, the Participant's
beneficiary or personal representative) shall be vested only in the
portion of the Award (if any) in which the Participant was vested
immediately before the termination of the Participant's employment
except to the extent that the Committee in its sole discretion
determines otherwise. Notwithstanding the preceding sentence, and
subject to Section 14(d) hereof, the Committee may not determine that
an Award shall be vested before the first anniversary of the date on
which the Award was granted unless the Participant's employment
terminated due to retirement, death, or Disability.
Section 14. General Provisions.
(a) Awards. Each Award hereunder shall be evidenced in writing.
The written terms of the Award shall be delivered to the Participant
and shall incorporate the terms of the Plan by reference and specify
the terms and conditions thereof and any rules applicable thereto.
(b) Withholding. The Company shall have the right to deduct from
all amounts paid to a Participant in cash (whether under the Plan or
otherwise) any taxes required by law to be withheld in respect of
Awards under the Plan. In the case of
PAGE
any Award satisfied in the form of Common Stock, no Shares shall be
issued unless and until arrangements satisfactory to the Company
shall have been made to satisfy any withholding tax obligations
applicable with respect to such Award. Without limiting the
generality of the foregoing and subject to such terms and conditions
as the Committee may impose, the Company shall have the right to
retain, or the Committee may, subject to such terms and conditions as
it may establish from time to time, permit Participants to elect to
tender, Common Stock (including Common Stock issuable in respect of
an Award) to satisfy, in whole or in part, the amount required to be
withheld.
(c) Nontransferability. Unless the Committee shall permit (on
such terms and conditions as it shall establish) an Award to be
transferred to a member of the Participant's immediate family or to a
trust, partnership, corporation, or similar vehicle the parties in
interest in which are limited to the Participant and members of the
Participant's immediate family (collectively, the "Permitted
Transferees"), no Award shall be assignable or transferable except by
will or the laws of descent and distribution, and except to the
extent required by law, no right or interest of any Participant shall
be subject to any lien, obligation or liability of the Participant.
All rights with respect to Awards granted to a Participant under the
Plan shall be exercisable during the Participant's lifetime only by
such Participant or, if applicable, the Permitted Transferees.
(d) Change of Control. Upon the occurrence of a Change of
Control, all Awards then outstanding shall immediately become fully
vested.
(e) No Right to Employment. No person shall have any claim or
right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to be retained in the
employ of the Company, any Subsidiary or any Affiliate. Further, the
Company and each Subsidiary and Affiliate expressly reserve the right
at any time to dismiss a Participant free from any liability, or any
claim under the Plan, except as provided herein or in any agreement
entered into with respect to an Award.
PAGE
(f) No Rights to Awards; No Shareholder Rights. No Participant
or Eligible Employee shall have any claim to be granted any Award
under the Plan, and there is no obligation of uniformity of treatment
of Participants and Eligible Employees. Subject to the provisions of
the Plan and the applicable Award, no person shall have any rights as
a shareholder with respect to any Shares of Common Stock to be issued
under the Plan prior to the issuance thereof.
(g) Foreign Benefits. The Committee may grant Awards to
Eligible Employees of the Company and its Subsidiaries and Affiliates
who reside in jurisdictions outside the United States. The Committee
may adopt such supplements to the Plan as may be necessary to comply
with applicable laws of such jurisdictions and to afford participants
favorable treatment under such laws; provided that no Award shall be
granted under any such supplement on the basis of terms or conditions
that are inconsistent with provisions of the Plan.
(h) Amendment of Plan. The Board or the Committee may amend,
suspend, or terminate the Plan or any portion thereof at any time;
provided that no amendment shall be made without shareholder approval
if (1) shareholder approval is required by law or (2) if the
amendment would increase the number of Shares available for Awards
under the Plan, except pursuant to Section 4(f) hereof. Without the
written consent of an affected Participant, no termination,
suspension, or modification of the Plan shall adversely affect any
right of such Participant under the terms of an Award granted before
the date of such termination, suspension, or modification.
(i) Application of Proceeds. The proceeds received by the
Company from the sale of Shares under the Plan shall be used for
general corporate purposes.
(j) Compliance with Legal and Exchange Requirements. The Plan,
the grant and exercise of Awards thereunder, and the other
obligations of the Company under the Plan, shall be subject to all
applicable federal and state laws, rules, and regulations, and to
such approvals by any regulatory or governmental agency as may be
required. The Company, in its
PAGE
discretion, may postpone the grant and exercise of Awards, the
issuance or delivery of Shares under any Award or any other action
permitted under the Plan to permit the Company, with reasonable
diligence, to complete such stock exchange listing or registration or
qualification of Shares or other required action under any federal or
state law, rule, or regulation and may require any Participant to
make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of
Shares in compliance with applicable laws, rules, and regulations.
The Company shall not be obligated by virtue of any provision of the
Plan to recognize the exercise of any Award or otherwise to sell or
issue Shares in violation of any such laws, rules, or regulations;
and any postponement of the exercise or settlement of any Award under
this provision shall not extend the term of such Awards, and neither
the Company nor its directors or officers shall have any obligation
or liability to the Participant with respect to any Award (or stock
issuable thereunder) that shall lapse because of such postponement.
(k) Deferrals. The Committee may postpone the exercise of
Awards, the issuance or delivery of Shares, the payment of cash under
any Award, or any action permitted under the Plan to prevent the
Company or any of its Subsidiaries or Affiliates from being denied an
income tax benefit with respect to any Award. The Committee also may
establish rules under which a Participant may elect to postpone
receipt of Shares or cash under any Award.
(l) Severability of Provisions. If any provision of the Plan
shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, and the
Plan shall be construed and enforced as if such provision had not
been included.
(m) Incapacity. Any benefit payable to or for the benefit of a
minor, an incompetent person, or other person incapable of receipting
therefor shall be deemed paid when paid to such person's guardian or
to the party providing or reasonably appearing to provide for the
care of such person, and such payment shall fully discharge any
liability or obligation of the Committee, the Board, the Company, and
all other parties with respect thereto.
PAGE
(n) Rules of Construction. Whenever used in the Plan, words in
the masculine gender shall be deemed to refer to females as well as
to males; words in the singular shall be deemed to refer also to the
plural; and references to a statute or statutory provision shall be
construed as if they referred also to that provision (or to a
successor provision of similar import) as currently in effect, as
amended, or as reenacted.
(o) Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered
part of the Plan, and shall not be employed in the construction of
the Plan.
(p) Applicable Law. The validity, construction, interpretation,
administration, and effect of the Plan and of its rules and
regulations, and rights relating to the Plan, shall be determined
solely in accordance with the laws of the State of New York (without
regard to its rules regarding choice of law).
(q) Effective Date. The Plan shall become effective on the date
the Plan is approved by the Company's shareholders. No Awards may be
granted under the Plan after the annual meeting of the Company's
shareholders in 2002; provided that any Awards granted before such
annual meeting shall continue in effect thereafter in accordance with
the terms of the Awards and the Plan. Upon shareholder approval of
the Plan, no further awards may be made under The Interpublic Group
of Companies, Inc. 1996 Stock Incentive Plan or under The Interpublic
Group of Companies, Inc. Management Incentive Compensation Plan.
PAGE
APPENDIX
FORM OF PROXY
THE INTERPUBLIC GROUP OF COMPANIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 19, 1997
The undersigned hereby constitutes and appoints Eugene P. Beard,
Philip H. Geier, Jr. and Nicholas J. Camera, and each of them, his
true and lawful agents and proxies, with full power of substitution
in each, to represent the 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 19, 1997 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.
THE PROXY HOLDERS CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN
THIS CARD.
PAGE
PLEASE MARK YOUR
VOTES AS IN THIS X
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 PROPOSALS
2, 3 AND 4 AND AGAINST PROPOSAL 5 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 PROPOSALS 2, 3 AND 4
AND AGAINST PROPOSAL 5.
FOR WITHHELD
1. Election of Directors.
(see reverse)
For, except vote withheld from the following nominee(s):
FOR AGAINST ABSTAIN
2. Approval of increase in
Common Stock to 225
million shares
FOR AGAINST ABSTAIN
3. Approval of the 1997
Performance Incentive
Plan
FOR AGAINST ABSTAIN
4. Confirmation of independent
accountants.
FOR AGAINST ABSTAIN
5. Stockholders' Resolution
Regarding Northern
Ireland
Signature(s)____________________ Date____________________
The signer hereby revokes all proxies heretofore given by the
signer to vote at said meeting or any adjournments thereof.
Note: Joint owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give
full title as such.
