SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
THE INTERPUBLIC GROUP OF COMPANIES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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and 0-11.
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THE INTERPUBLIC GROUP OF COMPANIES, INC.
1271 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
April 17, 2002
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 20, 2002. 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,
John J. Dooner, Jr.
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
THE INTERPUBLIC GROUP OF COMPANIES, INC.
1271 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 2002
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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 20, 2002, at 9:30 A.M.,
Eastern Time, for the following purposes:
1. To elect nine directors;
2. To consider and act upon a proposal to adopt the 2002 Performance
Incentive Plan of the Company;
3. To consider and act upon a proposal to confirm the appointment of
PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") as independent
accountants of the Company for the year 2002;
4. To consider and act upon a proposed stockholder resolution regarding
Northern Ireland; and
5. To transact such other business as may properly come before the meeting
and any adjournment thereof.
The close of business on March 25, 2002 has been designated as the record
date for the determination of stockholders entitled to notice of and to vote at
this meeting and any adjournment thereof.
By Order of the Board of Directors,
Nicholas J. Camera
SECRETARY
Dated: April 17, 2002
Whether or not you plan to attend the meeting in person, please fill in,
sign, date and promptly return the enclosed proxy in the accompanying envelope,
which requires no postage if mailed in the United States. The proxy is
revocable, so that you may still vote your shares in person if you attend the
meeting and wish to do so.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
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PROXY STATEMENT
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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 20, 2002.
The address of the Company's principal executive office is 1271 Avenue of
the Americas, New York, NY 10020. The Company's Annual Report to Stockholders
together with this Proxy Statement and the enclosed form of proxy are first
being sent to stockholders on or about April 17, 2002.
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 and do not vote in person, the shares represented by
your proxy will be voted in accordance with your instructions on the matters set
forth in items 1 through 4. If no voting instructions are given with respect to
any one or more of the items, a duly executed proxy will be voted on the
uninstructed matter or matters as follows: FOR Management's nominees for
election as directors, FOR the adoption of the 2002 Performance Incentive Plan
of the Company, FOR the confirmation of PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") as independent accountants for 2002 and AGAINST the
stockholder resolution regarding Northern Ireland. A duly executed proxy also
may be voted in the discretion of the proxy holders on any other matter
submitted to a vote at the meeting.
OUTSTANDING SHARES
The record date for the Annual Meeting is March 25, 2002. The outstanding
capital stock of the Company at the close of business on March 25, 2002
consisted of 380,213,714 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,
2001 by persons known to the Company to have beneficial ownership of more than
5% of the Common Stock:
AMOUNT AND
NATURE OF BENEFICIAL
NAME AND ADDRESS OWNERSHIP OF PERCENT
OF BENEFICIAL OWNER COMMON STOCK (1) OF CLASS
- ------------------- -------------------- --------
Putnam Investments, LLC. and subsidiaries............... 19,208,671(2) 5.0%
One Post Office Square
Boston, Massachusetts 02109
Capital Research and Management Company................. 45,506,560(3) 12.0%
333 South Hope Street
Los Angeles, CA 90071
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(1) Securities and Exchange Commission rules deem a person to be the beneficial
owner of a security (for purposes of proxy statement disclosure) if that
person has or shares either or both voting or dispositive 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 conversion of notes.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(2) This disclosure is based on information supplied by Putnam Investments, LLC.
("Putnam") in a Schedule 13G filed with the Securities and Exchange
Commission on or about February 5, 2002. In this Schedule 13G, Putnam, a
wholly-owned subsidiary of Marsh & McLennan Companies, Inc., reported that
it is the parent holding company of Putnam Investment Management, LLC., the
investment adviser to the Putnam family of mutual funds, and The Putnam
Advisory Company, LLC., the investment adviser to Putnam's institutional
clients, and that these subsidiaries, collectively, have shared voting power
with respect to 2,771,384 shares of Common Stock and shared dispositive
power with respect to 19,208,671 shares of Common Stock.
(3) Based on information supplied by Capital Research and Management Company
("Capital") in a Schedule 13G filed with the Securities and Exchange
Commission on or about February 11, 2002, in which Capital reported that it
is an investment adviser that has sole dispositive power with respect to
45,506,560 shares of Common Stock including 443,360 shares issuable upon the
assumed conversion of $25,168,000 principal amount of the Company's 1.87%
Convertible Subordinated Notes due 2006.
The following table sets forth information concerning the direct and
indirect beneficial ownership of the Company's Common Stock as of March 25, 2002
by each director, each nominee for election as a director, each executive
officer named in the Summary Compensation Table below, and all directors and
executive officers of the Company as a group:
COMMON OPTIONS
NAME OF STOCK EXERCISABLE
BENEFICIAL OWNER OWNERSHIP (1)(2)(3) WITHIN 60 DAYS TOTAL
- ---------------- ------------------- -------------- ---------
Frank J. Borelli........................... 10,500 6,934 17,434
Reginald K. Brack.......................... 12,500 2,510 15,010
Jill M. Considine.......................... 6,000 2,510 8,510
John J. Dooner, Jr......................... 1,050,560 410,040 1,460,600
Richard A. Goldstein....................... 4,000 0 4,000
H. John Greeniaus.......................... 33,000 6,459 39,459
James R. Heekin III........................ 224,863 216,100 440,963
Frank B. Lowe.............................. 842,944 270,000 1,112,944
Bruce S. Nelson............................ 37,356 0 37,356
Sean F. Orr................................ 41,394 16,800 58,194
Michael I. Roth............................ 5,000 0 5,000
J. Phillip Samper.......................... 13,200 9,756 22,956
All directors and executive officers as a
group.................................... 2,366,916 1,311,507 3,678,423
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(1) Securities and Exchange Commission rules deem a person to be the beneficial
owner of a security (for purposes of proxy statement disclosure) if that
person has or shares either or both voting or dispositive power with respect
to such security. Additionally, a security is deemed to be beneficially
owned by a person who has the right to acquire beneficial ownership thereof
within 60 days--for example, through the exercise of a stock option. Common
Stock ownership set forth in this table includes unvested shares of
restricted stock awarded under the 1997 Performance Incentive Plan and the
Interpublic Outside Directors' Stock Incentive Plan due to the right of the
persons identified to exercise voting power with respect to the shares.
(2) No individual identified in the table has beneficial ownership of more than
1% of the outstanding shares of Common Stock. The directors and executive
officers as a group beneficially own less than 1% of the outstanding shares.
(3) In all cases, the beneficial ownership shown is direct.
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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 Items 2 through 4 will require the
affirmative vote of a majority of the shares present in person or by proxy at
the meeting and entitled to vote. The Company's transfer agent tabulates the
votes. Abstentions and broker non-votes are each tabulated separately and are
counted toward the quorum. For Items 2 through 4, shares that are the subject of
an abstention are included, as shares entitled to vote on the matter and,
therefore, have the same effect as a vote against the matter. Shares, if any,
that are the subject of a broker non-vote with respect to a particular matter
are not included as shares entitled to vote on that matter.
STOCKHOLDERS' PROPOSALS TO BE PRESENTED AT 2003 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders scheduled to be held on May 19, 2003, must be received by the
Company by December 20, 2002, and must comply with applicable Securities and
Exchange Commission regulations, in order to be considered for inclusion in the
Company's Proxy Statement and form of proxy relating to that meeting. If notice
of a proposal intended to be presented at the Annual Meeting is not received by
the Company before March 5, 2003, the persons named as proxies in the Company's
2003 proxy material will have the discretionary authority to vote on the matter
in accordance with their best judgment without disclosure in the proxy statement
of such matter or of how the proxy holders intend to exercise their
discretionary authority to vote on the matter.
1. ELECTION OF DIRECTORS
The directors of the Company to be elected at the Annual Meeting will hold
office until the next Annual Meeting of Stockholders and until their successors
are elected and qualify or until their earlier death, resignation or removal.
Certain biographical information concerning each of the Management's nominees is
provided below. All of the nominees are currently serving as directors of the
Company. The Management believes that each of the nominees will be available and
able to serve as a director. However, if for any reason any of these persons
should not be available or are unable to serve, all proxies will be voted for
the remainder of those nominated and, unless the size of the Board of Directors
is reduced, for a substituted nominee designated by the Management.
The following information with respect to the principal occupation or
employment, recent employment history, age and directorships in other companies
is as of March 25, 2002, and has been furnished or confirmed to the Company by
the respective nominees. Also listed are the committees of the Board of
Directors on which each director serves.
FRANK J. BORELLI has been Senior Advisor of Marsh & McLennan Companies, Inc.
("Marsh & McLennan") since his retirement on January 2, 2001. Prior to that time
he was Senior Vice President of Marsh & McLennan from January through December
2000 and was Senior Vice President and Chief Financial Officer from 1984 through
1999. He is a director of Express Scripts, Inc. and was a Director of Marsh &
McLennan until September 30, 2000. Mr. Borelli is past Chairman and Director of
the Financial Executives International and is also Chairman Emeritus of the
Board of Trustees of the New York City Chapter of the National Multiple
Sclerosis Society, a Trustee of St. Thomas Aquinas College and Chairman of the
Nyack Hospital. Mr. Borelli has been a director of Interpublic since 1995. Age
66.
CHAIRMAN OF THE AUDIT COMMITTEE. MEMBER OF THE COMPENSATION, EXECUTIVE POLICY
AND FINANCE COMMITTEES.
REGINALD K. BRACK is the Former Chairman and Chief Executive Officer of
Time, Inc. From September 1994 to June 1997, Mr. Brack was Chairman of Time,
Inc. and was its Chairman, President and
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Chief Executive Officer from December 1986 until August 1994. Mr. Brack is also
a director of Quebecor World, Inc. Mr. Brack has been a director of Interpublic
since 1996. Age 64.
CHAIRMAN OF THE COMPENSATION COMMITTEE. MEMBER OF THE AUDIT, EXECUTIVE POLICY,
FINANCE AND NOMINATING COMMITTEES.
JILL M. CONSIDINE has been Chairman and Chief Executive Officer of The
Depository Trust & Clearing Corporation since November 1999. The Depository
Trust & Clearing Corporation is a holding company that is the parent of, and
provides services to, the National Securities Clearing Corporation and The
Depository Trust Company which is a large securities depository limited purpose
trust company and clearing corporation. She has been Chairman and Chief
Executive Officer of The Depository Trust Company since January 1999. She was
President of the New York Clearing House Association from 1993 to 1998. She is a
trustee of Atlantic Mutual Insurance Company and a director of its affiliate
Centennial Insurance Company. She also is a director of Ambac Financial Group,
Inc., Ambac Assurance Corporation and the Federal Reserve Bank of New York. Ms.
Considine has been a director of Interpublic since February 1997. Age 57.
CHAIRMAN OF THE NOMINATING COMMITTEE. MEMBER OF THE AUDIT, FINANCE AND
COMPENSATION COMMITTEES.
JOHN J. DOONER, JR. became Chairman of the Board, President and Chief
Executive Officer of Interpublic, effective December 15, 2000. Prior to that
time, he was President and Chief Operating Officer of Interpublic from April 1,
2000 through December 14, 2000. Mr. Dooner was Chairman and Chief Executive
Officer of McCann-Erickson WorldGroup from 1995 through March 2000 and
previously was Chief Executive Officer of McCann-Erickson Advertising Worldwide
from 1994 to 1995. From 1992 to 1994, Mr. Dooner was President of
McCann-Erickson Advertising Worldwide. He served as President of McCann-Erickson
North America from 1988 to 1992. Mr. Dooner has been a director of Interpublic
since 1995. Age 53.
CHAIRMAN OF THE EXECUTIVE POLICY COMMITTEE. MEMBER OF THE FINANCE COMMITTEE.
RICHARD A. GOLDSTEIN became Chairman and Chief Executive Officer of
International Flavors & Fragrances Inc. in June 2000. He served as Business
Group President of Unilever North American Foods from 1996 to June 2000 and as
President and Chief Executive Officer of Unilever United States, Inc. from 1989
to 1996. Prior to that time, Mr. Goldstein served as Chairman and Chief
Executive Officer of Unilever Canada Limited from 1984 to 1989. Mr. Goldstein
has been a director of Interpublic since 2001. He also is a director of Legacy
Hotels and of Fiduciary Trust Company International. Age 60.
MEMBER OF THE COMPENSATION COMMITTEE.
H. JOHN GREENIAUS has been President of G-Force LLC since 1998. He was
Chairman and Chief Executive Officer of Nabisco, Inc. from 1993 through 1997.
Mr. Greeniaus has been a director of Interpublic since December 2001. He is a
director of Pennzoil Quaker State Company and Primedia Inc. Age 57.
MEMBER OF THE COMPENSATION COMMITTEE.
SEAN F. ORR has been Executive Vice President, Chief Financial Officer of
Interpublic since June 1999 and a director of Interpublic since February 2000.
Mr. Orr was Senior Vice President and Controller of Pepsico, Inc. from 1998
through June 1999. Prior to that time, he was Executive Vice President and Chief
Financial Officer of the Frito Lay Company from 1994 through 1997. Age 47.
CHAIRMAN OF THE FINANCE COMMITTEE.
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MICHAEL I. ROTH has been Chairman and Chief Executive Officer of The MONY
Group Inc. ("MONY") since February 1994. Mr. Roth has been a director of
Interpublic since February 2002. He is also a director of Pitney Bowes Inc. Age
56.
MEMBER OF THE AUDIT AND FINANCE COMMITTEES.
J. PHILLIP SAMPER Managing Director and Co-Founder of Gabriel Venture
Partners L.L.C. since December 1998, was Chief Executive Officer and President
of Avistar Systems Corp. from 1997 to October 1998. Prior to that time, Mr.
Samper was Chairman, Chief Executive Officer and President of Quadlux, Inc. from
1996 to 1997. He was Chairman and Chief Executive Officer of Cray Research, Inc.
during 1995 and was President of Sun Microsystems Computer Corporation from 1994
to 1995. Mr. Samper was Vice Chairman and Executive Officer of the Eastman Kodak
Company from 1986 to 1989 and a member of the Board of Directors from 1983 to
1989. He was President and Chief Executive Officer of Kinder-Care Learning
Centers from 1990 to 1991. Mr. Samper has been a director of Interpublic since
1990. Age 68.
MEMBER OF THE COMPENSATION AND NOMINATING COMMITTEES.
PRINCIPAL COMMITTEES OF THE BOARD OF DIRECTORS
EXECUTIVE POLICY COMMITTEE--The Executive Policy Committee is authorized to
exercise when the Board of Directors is not in session all powers of the Board
of Directors which, under Delaware law and the By-Laws of the Company, may
properly be delegated to a committee, except certain powers that have been
delegated to other committees of the Board of Directors. The Executive Policy
Committee did not hold any meetings in 2001.
FINANCE COMMITTEE--The Finance Committee is authorized to review the
financial affairs of the Company and make recommendations with respect thereto
to the Board of Directors. It also approves capital budgets, guarantees by the
Company of obligations of subsidiaries and affiliates and certain capital
transactions (including mergers and acquisitions), and is the committee that
administers the Interpublic Retirement Account Plan. The Finance Committee held
twelve meetings in 2001.
COMPENSATION COMMITTEE--The Compensation Committee is responsible for
approving the compensation paid to officers of the Company and its subsidiaries.
For these purposes, compensation is deemed to include: (1) salary, (2) deferred
compensation, (3) bonuses and other extra compensation of all types, including
long-term performance incentive awards under the Company's 1997 Performance
Incentive Plan,(4) insurance paid for by the Company or any of its subsidiaries
other than group plans, (5) annuities and individual retirement arrangements and
(6) Special Deferred Benefit Arrangements. The Compensation Committee also
administers the 1997 Performance Incentive Plan (and its predecessors, the Long-
Term Performance Incentive Plan, the Management Incentive Compensation Plan, the
1996 Stock Incentive Plan and the 1986 Stock Incentive Plan), the 1986 United
Kingdom Stock Option Plan and the Employee Stock Purchase Plan (1995). The
Compensation Committee held four meetings in 2001.
NOMINATING COMMITTEE--The Nominating Committee is responsible for
recommending to the Board of Directors the persons to be nominated for election
to the Board of Directors. Stockholders who desire to recommend nominees for
election at the Annual Meeting may do so by writing to the Secretary of the
Company at the Company's principal executive office set forth in the second
paragraph on page 1 of this Proxy Statement. Any such recommendation should be
submitted prior to December 31 of the year preceding the Annual Meeting of
Stockholders in question, and the recommendation will be given consideration by
the Nominating Committee. The Nominating Committee held three meetings in 2001.
AUDIT COMMITTEE--consists of members of the Board of Directors who cannot be
officers or employees of the Company. There are currently four directors who
serve on the Committee. The Audit Committee held eight meetings in 2001. Each
member of the Audit Committee is independent as that term is defined by the
listing standards of the New York Stock Exchange. The Audit Committee has
adopted a written
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charter that sets forth its responsibilities and functions. A copy of the
charter is furnished as Appendix B to this Proxy Statement. The Audit Committee
assists the Board in fulfilling its oversight responsibilities with respect to
(i) the annual financial information to be provided to stockholders and the
Securities and Exchange Commission ("SEC"); (ii) the system of internal controls
that management has established; and (iii) the internal and external audit
process. In addition, the Audit Committee provides an avenue for communication
between internal audit, the independent accountants, financial management and
the Board. The Audit Committee reports its activities to the Board of Directors.
Subject to the approval of the Board of Directors, the Audit Committee is
responsible for the selection and retention of the Company's independent
accountants and also reviews that firm's annual compensation.
AUDIT COMMITTEE REPORT
The primary function of the Audit Committee is to assist the Board of
Directors in its oversight of Interpublic's financial reporting process. The
Committee operates pursuant to a Charter approved by the Board. Management is
responsible for the Company's financial statements and overall reporting
process, including the system of internal controls. The independent auditors are
responsible for conducting annual audits and quarterly reviews of the Company's
financial statements and expressing an opinion as to the conformity of the
annual financial statements with generally accepted accounting principles. With
respect to the year ended December 31, 2001, the Audit Committee has:
- Reviewed and discussed the audited financial statements with management;
- Reviewed with management and PricewaterhouseCoopers the selection,
application and disclosure of the Company's critical accounting policies
used in the preparation of the Company's annual audited financial
statements;
- Discussed with PricewaterhouseCoopers, the Company's independent
accountants, the matters required to be discussed by Statement on Auditing
Standards No. 61 (Communications with Audit Committees); and
- Received the written disclosures and the letter from
PricewaterhouseCoopers required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), discussed with
PricewaterhouseCoopers matters relating to that firm's independence and
concluded that performance by PricewaterhouseCoopers of non-audit services
for the Company is compatible with maintaining PricewaterhouseCooper's
independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001.
Frank J. Borelli, Chairman
Reginald K. Brack
Jill M. Considine
Michael I. Roth
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ATTENDANCE AT BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors of the Company held ten meetings in 2001 and
committees of the Board held a total of twenty-seven meetings. During 2001,
Messrs. Goldstein and Lowe attended fewer than 75% of the total number of
meetings of the Board of Directors and committees on which they served.
DIRECTORS' FEES
Each director who is not an employee of the Company or one of its
subsidiaries receives an annual retainer of $24,000 for serving as a director,
an annual retainer of $2,000 for each committee on which he or she serves, a fee
of $1,000 for each meeting of the Board attended and a fee of $1,000 for each
committee meeting attended. The Chairman of the Compensation Committee and the
Chairman of the Audit Committee each receives an additional retainer of $3,500
per year and the Chairman of the Nominating Committee receives an additional
retainer of $3,000 per year.
Mr. Goldstein has entered into an agreement with the Company, effective as
of June 1, 2001, to defer the payment of all fees that he is entitled to receive
as a director or as a member of any committee of the Board of Directors. The
agreement provides that the amounts deferred will earn credits equivalent to
interest in accordance with the terms of Interpublic's Plan for Credits
Equivalent to Interest on Balances of Deferred Compensation Owing under
Employment Agreements. Mr. Goldstein or his beneficiaries as the case may be,
will receive the deferred amounts, together with accrued interest, in a lump-sum
payment upon his death, disability or retirement from the Board.
Each outside director who, as of December 31, 1995, had accumulated at least
five years of service is entitled to receive an annual retirement benefit under
the Interpublic Outside Directors' Pension Plan (the "Outside Directors' Pension
Plan"). In general, the benefit becomes payable in the month following the month
the director leaves the Board. The benefit is equal to the amount of the annual
retainer paid to the director as a Board member in the year in which he or she
ceased to serve as a director and will be paid for the same number of years as
the director's years of service, up to a maximum of 15 years. In the event of
the death of a director with a vested retirement benefit, the then present value
of the director's unpaid retirement benefits will be paid to the surviving
spouse or the estate of the director. Effective December 31, 1995, the Outside
Directors' Pension Plan was terminated, except to the extent benefits were
accrued prior to termination. As a result there have been no further accruals
for the benefit of existing directors under the Outside Directors' Pension Plan
for subsequent years. Any director with fewer than five years of service on the
date that the Plan was terminated will not receive any benefits under the Plan.
In 1994, the stockholders of the Company approved the Interpublic Outside
Directors' Stock Incentive Plan (formerly called the Interpublic Outside
Directors' Stock Option Plan). The Outside Directors' Stock Incentive Plan (the
"Outside Directors' Plan") originally provided for an annual grant of options to
purchase the number of shares of Common Stock having an aggregate fair market
value of $30,000 on the date of grant. The Board of Directors has amended the
Outside Directors' Plan effective as of May 17, 1999, to provide for an annual
grant to each outside director of options covering 2,000 shares of Interpublic
Common Stock. The exercise price of each option is equal to the fair market
value of the Common Stock on the date of grant. The options become exercisable
in full on the third anniversary after the date of grant and expire ten years
after the date of grant.
An outside director may exercise stock options granted prior to June 1, 1996
that are exercisable on the date of cessation of service for 90 days following
cessation of service as a director, except that an outside director who is
eligible to receive a benefit under the Outside Directors' Pension Plan may
exercise such options for five years following the date of retirement from the
Board of Directors, but in no event after the expiration of the ten-year option
term. Options granted on or after June 1, 1996 that are exercisable at the time
of cessation of service may be exercised for a period of three years following
cessation of service, whether or not the director is eligible to receive a
benefit under the Outside Directors' Pension Plan, but in no event after
expiration of the ten-year option term.
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The Outside Directors' Plan also provides for periodic grants of 3,000
restricted shares of the Company's Common Stock to each outside director. The
first grant was made in June 1996. An additional grant of 3,000 shares will be
made every fifth year thereafter while the Outside Directors' Plan remains in
effect. The outside director has all rights of ownership with respect to such
restricted shares, including the right to vote and to receive dividends, except
that, prior to the expiration of a five-year period after the date of grant (the
"Restricted Period"), the outside director is prohibited from selling or
otherwise transferring the shares. If, on or after the first anniversary of the
grant, an outside director's service as a director terminates for any reason
(including death) during the Restricted Period, the restrictions on transfer
will lapse immediately in proportion to the number of months that have elapsed
since the date of grant and the remainder of such restricted shares will be
forfeited. If an outside director's service terminates for any reason (including
death) before the first anniversary of the date of grant, all such restricted
shares will be forfeited. The committee administering the Outside Directors'
Plan may in its discretion direct the Company to make cash payments to an
outside director to assist in satisfying the federal income tax liability with
respect to the receipt or vesting of the restricted shares.
On June 1, 2001, Mr. Borelli, Mr. Brack, Ms. Considine, Mr. Goldstein and
Mr. Samper each received under the Outside Directors' Plan an award of stock
options, covering 2,000 shares of Common Stock with an exercise price of $36.72
per share. On June 7, 1996, Messrs. Borelli and Samper each received under the
Outside Directors' Plan a grant of 3,000 restricted shares. On June 6, 1997, Mr.
Brack and Ms. Considine each received a grant of 3,000 restricted shares. On
June 1, 2001, Messrs. Borelli, Samper and Goldstein each were awarded a grant of
3,000 restricted shares.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation paid
by the Company and its subsidiaries to Mr. Dooner who served as the Chief
Executive Officer during the last fiscal year, and each of the four other most
highly compensated executive officers of the Company, who were serving as
executive officers on December 31, 2001 (the "named executive officers"). In
each instance, this compensation shown is for services rendered in all
capacities for the three-year period ended on December 31, 2001. As used in this
Proxy Statement, the executive officers of the Company include any director of
the Company who serves as the chief executive officer of McCann-Erickson
WorldGroup or The Lowe Group, both significant operating units of the Company.
8
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------------------- -------------------------------------
AWARDS PAYOUTS
OTHER ------------------------ ---------- ALL
ANNUAL RESTRICTED SECURITIES OTHER
FISCAL COMPEN- STOCK UNDERLYING LTIP COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY(2) BONUS(3) SATION(4) AWARDS(5) OPTIONS PAYOUTS(6) SATION(7)
- --------------------------- -------- ---------- ---------- --------- ----------- ---------- ---------- ---------
John J. Dooner, Jr....... 2001 $1,250,000 $ 500,000 $ 73,246 $ -0- 100,000 $1,550,100 $ 9,146
Chairman of the 2000 1,155,000 1,500,000 94,713 14,921,875 568,000 -0- 8,883
Board, President 1999 870,000 1,750,000 87,810 -0- -0- 1,066,200 7,677
and Chief Executive
Officer
James R. Heekin III(1)... 2001 $ 920,000 $ 400,000 $ 77,002 $ 2,732,800 176,000 $ 609,750 $750,552
Chairman of McCann 2000 752,500 1,200,000 260,503 1,237,500 80,000 -0- 727
Erickson WorldGroup and 1999 500,000 600,000 -- 3,939,688 120,000 519,750 1,152
Former Director of
Interpublic
Frank B. Lowe............ 2001 $1,000,000 $ 100,000 $272,351 $ 3,416,000 270,000 $ -0- $ 9,559
Chairman of The Lowe 2000 870,000 900,000 242,516 -0- -0- 1,201,328 9,050
Group and Former Director 1999 866,667 1,350,000 244,053 -0- -0- 1,332,750 9,592
of Interpublic
Bruce S. Nelson (1)...... 2001 $ 500,000 $ 225,000 $ -- $ -0- 30,000 $ -- $ 8,260
Executive Vice President 2000 162,879 500,000 -- 743,126 70,000 -- 6,668
and Chief Marketing 1999 -- -- -- -- -- -- --
Officer
Sean F. Orr.............. 2001 $ 600,000 $ 400,000 $ -- $ -0- 48,000 $ 367,500 $ 4,035
Executive Vice President, 2000 575,000 625,000 -- -0- 100,000 -0- 4,291
Chief Financial Officer 1999 291,667 550,000 -- 1,557,500 176,800 -0- 4,202
and Director
- --------------------------
(1) Mr. Heekin has agreed to forego annual salary in the amount of $100,000 in
consideration for the receipt of three Special Deferred Benefit Agreements
which are more fully described in this Proxy Statement under the heading
"Special Deferred Benefit Arrangements".
Mr. Nelson has agreed to forego annual salary in the amount of $100,000 in
consideration for the receipt of one Special Deferred Benefit Agreement
which is more fully described in this Proxy Statement under the heading
"Special Deferred Benefit Arrangements".
(2) The salaries of executive officers continuing to serve in the same position
are generally reviewed every two years.
(3) Consists primarily of bonus payments made pursuant to the Company's
Management Incentive Compensation Program ("MICP") under the 1997
Performance Incentive Plan.
(4) Other Annual Compensation for 2001 includes $21,744 in medical/dental
coverage and $24,813 paid in respect of club dues on behalf of Mr. Dooner;
$21,744 in medical/dental coverage and $42,006 club dues paid on behalf of
Mr. Heekin; and $200,000 in reimbursement for housing expenses paid to or on
behalf of Mr. Lowe.
Other Annual Compensation for 2000 includes $40,976, paid in respect of
spousal travel on behalf of Mr. Dooner; $200,000 in reimbursement for
housing expenses paid to or on behalf of Mr. Lowe; and $220,029 in
reimbursement for relocation expenses paid to or on behalf of Mr. Heekin.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
9
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
Other Annual Compensation for 1999 includes $22,194 in medical/dental
coverage and $42,773 paid in respect of spousal travel on behalf of Mr.
Dooner; and $200,000 in reimbursement for housing expenses paid to or on
behalf of Mr. Lowe.
(5) The number and value of shares of restricted stock held by the named
executive officers at December 31, 2001 (based on the closing price of the
Common Stock on December 31, 2001) are as follows: Mr. Dooner--680,000
shares ($20,087,200); Mr. Heekin--200,000 shares ($5,908,000); Mr. Lowe--
100,000 shares ($2,954,000); Mr. Nelson--20,000 shares ($590,800) and
Mr. Orr--40,000 shares($1,181,600). The shares of restricted stock shown in
the table as awarded to each named executive officer other than Mr. Lowe
have at least a four-year vesting period, subject to the discretion of the
Committee administering the Plan to release the restrictions not earlier
than one year after the grant date. Mr. Lowe will retire from full
employment with the Company on January 2, 2003 (the "Retirement Date").
Under the Company's 1997 Performance Incentive Plan, the transfer
restrictions on 100,000 shares of Common Stock awarded to Mr. Lowe on April
2, 2001 will lapse on the Retirement Date.
Dividends on restricted stock are paid on the same basis as ordinary
dividends on the Common Stock.
(6) Payouts under the Long-Term Performance Incentive Program are made at the
end of four-year performance periods. These four-year periods begin at
two-year intervals. The total payout for the 1997-2000 performance period
was made in the first quarter of 2001. The total payout for the 1995-1998
performance period was made in the first quarter of 1999.
As a result of the merger of operations of Ammirati Puris Lintas and The Lowe
Group, the 1997-2000 performance period was reduced from a four-year to a
three-year period for certain employees of these Interpublic subsidiaries.
Mr. Lowe was the only named executive officer affected by this change. He
received a payout for this performance period during the third quarter of
2000.
(7) All Other Compensation for 2001 consisted of: (i) the following amounts paid
to the named executive officers as matching contributions under the
Interpublic Savings Plan--Mr. Dooner--$8,594; Mr. Lowe--$7,975; Mr.
Nelson--$7,708 and Mr. Orr--$3,675 and (ii) premiums paid by the Company on
group life insurance--Mr. Dooner--$552; Mr. Heekin--$552; Mr. Lowe--$1,584;
Mr. Nelson--$552 and Mr. Orr--$360.
In addition, the Company made a one-time payment to Mr. Heekin of $750,000
based on a determination that the number of performance units granted to him
for the 1997-2000 performance period under the Company's Long-term
Performance Incentive Program did not adequately reflect his increased
responsibilities and his contribution to the profitability of the Company
over that four-year period.
10
STOCK OPTION GRANTS IN 2001
The following table provides information on grants of stock options in 2001
to the named executive officers and the estimated grant date present value of
the options.
INDIVIDUAL GRANTS
NUMBER OF SECURITIES
UNDERLYING OPTIONS
GRANTED % OF TOTAL OPTIONS GRANT DATE
(#)(1),(2),(3), GRANTED TO EMPLOYEES EXERCISE EXPIRATION PRESENT
NAME (4) AND (5) IN FISCAL YEAR PRICE ($/SH) DATE VALUE ($)(6)
- ---- -------------------- -------------------- ------------ ---------- ------------
John J. Dooner, Jr...... 100,000(1) .99% $40.4688 1/ 2/11 $1,374,000
James R. Heekin III..... 64,000(2) .64% $40.4688 1/ 2/11 $ 879,360
112,000(2) 1.11% $34.2600 3/29/11 $1,284,640
Frank B. Lowe........... 270,000(3) 2.69% $40.4688 1/ 2/11 $3,709,800
Bruce S. Nelson......... 30,000(4) .30% $40.4688 1/ 2/11 $ 412,200
Sean F. Orr............. 48,000(5) .48% $40.4688 1/ 2/11 $ 659,520
- --------------------------
(1) Mr. Dooner was granted a stock option award on January 2, 2001. The award,
covering 100,000 shares of Common Stock, becomes exercisable on January 1,
2005.
The option granted to Mr. Dooner has a ten-year term and has an exercise
price equal to 100% of the fair market value of the Common Stock on the date
of grant.
(2) Mr. Heekin was granted a stock option award covering 64,000 shares of Common
Stock on January 2, 2001. This option becomes exercisable on January 1,
2005. Mr. Heekin received two other stock option awards on March 29, 2001.
These two awards, covering an aggregate of 112,000 shares of Common Stock,
become exercisable as to: (a) 12,000 shares of Common Stock on January 1,
2003; (b) 40,000 shares of Common Stock on March 29, 2004; (c) 30,000 shares
of Common Stock on March 29, 2005 and (d) 30,000 shares of Common Stock on
March 29, 2006. All options have a ten-year term from date of grant and an
exercise price equal to 100% of the fair market value of the Common Stock on
the date the award was made.
(3) Mr. Lowe received a stock option award covering 270,000 shares of Common
Stock on January 2, 2001. The award becomes exercisable as to 20,000 shares
on January 1, 2003 and as to 250,000 shares on the Retirement Date (January
2, 2003). Although the option has a ten-year term from the date of grant,
the option will only be exercisable for a three-year period after the
Retirement Date in accordance with the Company's 1997 Performance Incentive
Plan. The shares subject to the option have an exercise price equal to 100%
of the fair market value of the Common Stock on the date that the award was
made.
(4) Mr. Nelson was granted an award of stock options covering 30,000 shares of
Common Stock on January 1, 2001. The option becomes exercisable on January
1, 2005, has a ten-year term from the date of grant and is exercisable at a
price equal to 100% of the fair market value of the Common Stock on the date
the award was made.
(5) Mr. Orr was granted an award of stock options on January 1, 2001. The award,
covering 48,000 shares of Common Stock becomes exercisable on January 1,
2005. The options granted to Mr. Orr have 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.
(6) The grant date present value of each of the stock option awards to the named
executive officers is calculated using the Black Scholes Option Pricing
Model and assumes the options are held for six years. The options awarded to
the named executive officers on January 2, 2001 include the following
assumptions: volatility of 27.95%, dividend yield of .94% and risk-free rate
of return of 4.91%. The calculations with respect to Mr. Heekin's stock
option award on March 29, 2001 include the following assumptions: volatility
of 28.47%, dividend yield of 111% and risk-free rate of return of 4.85%.
11
AGGREGATED OPTION EXERCISES IN 2001 AND FISCAL YEAR-END OPTION VALUES
The following table provides information on stock option exercises and the
number and the year-end value of options held by the named executive officers.
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 2001 (#) DECEMBER 31, 2001($)(1)
SHARES ACQUIRED --------------------------- ---------------------------
NAME ON EXERCISE (#) VALUE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ------------------ ----------- ------------- ----------- -------------
John J. Dooner, Jr...... None -- 410,040 938,000 $6,895,327 $ 1,497,990
James R. Heekin III..... None 204,100 436,000 3,219,444 54,554
Frank B. Lowe........... None -- 270,000 510,000 4,179,519 1,198,392
Bruce S. Nelson......... None -0- 100,000 -- --
Sean F. Orr............. None -- 16,800 308,000 -- --
- ------------------------
(1) Based on the closing price of the Common Stock on December 31, 2001.
LONG-TERM INCENTIVE PLAN -- AWARDS IN 2001
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE
BASED PLANS
PERFORMANCE ---------------------------------
ALLOCATION OF NUMBER OF OR OTHER PERIOD
PERFORMANCE PERFORMANCE UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME UNITS UNITS (#) OR PAYOUT ($) ($) ($)
- ---- ------------------ ----------- ---------------- --------- --------- ---------
John J. Dooner, Jr..... IPG Worldwide 20,000 2001-2004 400,000 2,300,000 3,500,000
James R. Heekin III.... McCann-Erickson 600 1999-2002 12,000 69,000 105,000
Europe
McCann-Erickson 2,400 1999-2002 48,000 276,000 420,000
Worldwide
McCann Erickson 16,000 2001-2004 320,000 1,840,000 2,800,000
WorldGroup
Frank B. Lowe.......... Lowe Worldwide 2,000 2000-2002 40,000 230,000 350,000
Lowe Worldwide 11,000 2001-2004 220,000 1,265,000 1,925,000
Octagon Worldwide 3,000 2001-2004 60,000 345,000 525,000
Bruce S. Nelson........ IPG Worldwide 6,000 2001-2004 120,000 690,000 1,050,000
Sean F. Orr............ IPG Worldwide 12,000 2001-2004 240,000 1,380,000 2,100,000
The Long-Term Performance Incentive Program (the "LTPIP") provides for
awards at two-year intervals of "performance units" to select employees of the
Company or its subsidiaries who are members of the Development Council of the
Company and its subsidiaries. The value of the performance units, which are
settled in cash, is tied to the annual growth of operating profits of the
office, agency or regional or worldwide agency system with which the employee is
principally associated. Such performance units are awarded with a provisional
value of $100, which may increase to as much as $175. The value may decrease to
as little as zero, with the increase or decrease depending in each case on the
extent to which the growth rates of operating profit of the applicable operating
components exceed or fall short of pre-established compound growth rates in
operating profit over a period of four calendar years (a "performance period").
The threshold growth rate objective is based on 8% growth in cumulative
compound operating profit of an operating component during a performance period,
resulting in a threshold payout of $20 per performance unit. Failure to reach
the threshold growth rate will result in a zero award. The LTPIP does not
provide for a target performance level. A target growth rate of 15% has been
assumed for purposes of this presentation. This growth rate would result in a
target payout of $115 per performance unit. The maximum growth rate objective is
27% resulting in a maximum payout of $175 per performance unit.
12
During 2001, Mr. Heekin received an increase of three thousand performance
units awarded to him for the 1999-2002 performance period because of his
promotion to Chairman and Chief Executive Officer of McCann-Erickson Worldwide.
During 2001, Mr. Lowe received an increase of two thousand performance units
awarded to him for the 2000-2002 performance period in connection with the
negotiation of a new employment agreement.
EMPLOYMENT AGREEMENTS, TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
EMPLOYMENT AGREEMENTS
Each of the following named executive officers has an employment agreement
with the Company providing for the annual compensation and termination dates set
forth below:
NAME SALARY EXPIRATION DATE (1)
- ---- ---------- -------------------
John J. Dooner, Jr.......................................... $1,250,000 December 31, 2003
James R. Heekin III......................................... 970,000 December 31, 2003
Frank B. Lowe............................................... 1,000,000 January 2, 2003
Bruce S. Nelson............................................. 500,000 August 31, 2005
Sean F. Orr................................................. 600,000 May 31, 2004
- ------------------------
(1) Each employment agreement is terminable by either party at any time upon
twelve months' notice.
SPECIAL DEFERRED BENEFIT ARRANGEMENTS
In addition to an employment contract, each of the named executive officers
has entered into special deferred benefit agreements with Interpublic as
described below.
Mr. Dooner is a party to two agreements which in the aggregate provide that
if he dies while he is employed by the Company $186,000 per year will be paid to
his beneficiaries for 15 years following his death. Alternatively, if he
retires, resigns or is otherwise no longer in the employment of the Company on
or after his 55th birthday he will be paid benefits for 15 years ranging from
$130,200 to $186,000 per year, depending upon the year his employment
terminates. In the event Mr. Dooner's employment terminates prior to his 55th
birthday, other than by reason of death, he will be paid lesser sums but not
less than an aggregate of $500,000. 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 will receive $88,500 annually for 15 years.
Alternatively when he retires from the Company, the Company will pay him
retirement benefits at the rate of $88,500 per year for 15 years.
After his retirement, if he were to die before all payments were made under
these agreements, the Company would make the remaining payments to his
beneficiaries.
Mr. Heekin is a party to three agreements which provide that if he dies
while he is employed by the Company, an aggregate of $272,500 will be paid to
his beneficiaries for 15 years following his death. Alternatively, if he
retires, resigns or is otherwise no longer employed by the Company on or after
his 55th birthday he will be paid benefits for 15 years in the aggregate ranging
from $164,950 to $272,500 per year, depending upon the year his employment
terminates. Two of these agreements provide that in the event Mr. Heekin's
employment terminates prior to his 55th birthday, other than by reason of death,
he will be paid lesser sums not in excess of $350,000. One other agreement
provides that in the event that Mr. Heekin's employment terminates prior to his
55th birthday, other than by reason of death, he will be
13
paid lesser sums than described above, but not less than $326,575. The Company
also has entered into another agreement with Mr. Heekin which provides that if
he dies while employed by the Company, $50,000 will be paid to his beneficiaries
for 15 years following his death. If he retires, resigns or is otherwise no
longer employed by the Company on or after his 58th birthday, he will be paid
benefits for 15 years ranging from $38,000 to $50,000 per year, depending upon
the year that his employment terminates. If Mr. Heekin's employment terminates
prior to his 58th birthday, other than by reason of death, he will be paid
lesser sums not to exceed $200,000.
After he retires, if he were to die before all payments were made under
these agreements, the Company would make the remaining payments to his
beneficiaries.
Mr. Lowe is a party to three Special Deferred Benefit Arrangements with the
Company. In connection with his retirement from the Company, the Company has
agreed to certain amendments to those arrangements that increase the payments to
be made to him and allow him to defer commencement of payments beyond the date
of his retirement. Under these arrangements, as amended, if Mr. Lowe dies on or
after his 60th birthday, Interpublic will pay his beneficiaries aggregate
benefits of $556,200 per year for a period of 15 years. If he retires, resigns
or is no longer employed by the Company as an employee or as a consultant he
will receive benefits for fifteen years ranging from $300,000 per year if he
elects to begin receiving benefits on his 60th birthday, to $556,200 per year,
if he elects to begin receiving benefits on his 64th birthday. However, if he is
disabled at any time prior to the date that he elects to begin receiving
benefits, he will receive a benefit of $500,000 per year for a period of 15
years. This disability benefit would be in lieu of all other payments to which
he otherwise would be entitled under his Special Deferred Benefit Arrangements.
After he retires, if he were to die before all payments were made under
these agreements, the Company would make the remaining payments to his
beneficiaries.
Mr. Nelson is a party to two agreements with the Company. The first
agreement provides that if he dies while he is employed by the Company, $280,000
per year will be paid to his beneficiaries for fifteen years following his
death. If he retires, on or after his 60th birthday, he will be paid a benefit
of $280,000 per year for fifteen years. If he retires, resigns or his employment
is terminated with the Company on or after his 50th birthday but prior to his
60th birthday, he will receive benefits for 15 years ranging from $156,000 to
$270,160 depending upon the year his employment terminates. The second agreement
provides that if he dies while he is employed by the Company, $120,000 per year
will be paid to his beneficiaries for fifteen years following his death. If he
retires on or after his 60th birthday, the Company will pay him a benefit of
$120,000 per year for fifteen years. If he retires, resigns or his employment
with the Company terminates on or after his 55th birthday but prior to his 60th
birthday, the Company will pay him benefits for 15 years ranging from $62,400 to
$112,800 depending upon the year he leaves the Company. If Mr. Nelson's
employment with the Company terminates (other than by reason of death) prior to
his 55th birthday, he will receive lesser sums not to exceed $600,000.
If Mr. Nelson were to die before all payments were made under these
agreements, the Company would make the remaining payments to his beneficiaries.
Mr. Orr is a party to an agreement which provides that if he dies while he
is employed by the Company, $165,000 per year will be paid to his beneficiaries
for 15 years following his death. Alternatively, if he retires, resigns or is
otherwise no longer employed by the Company on or after his 55thbirthday, he
will be paid benefits for 15 years ranging from $115,500 to $165,000 per year,
depending upon the year his employment terminates. In the event Mr. Orr's
employment terminates prior to his 55th birthday, other than by reason of death,
he will be paid a sum of no more than $400,000.
After he retires, if he were to die before all payments were made under
these agreements, the Company would make the remaining payments to his
beneficiaries.
14
EXECUTIVE SEVERANCE AGREEMENTS
The named executive officers other than Mr. Nelson each have an agreement
with the Company pursuant to which (a) sums previously deferred pursuant to
employment agreements and the Management Incentive Compensation Plans of the
Company and its subsidiaries and amounts payable under Special Deferred Benefit
Agreements would become payable within 30 days following a "Change of Control"
of the Company, if the individual had so elected prior to the Change of Control,
and (b) a cash severance payment would become payable to such individual if,
within two years after the Change of Control, his employment should be
terminated by the Company (except for "cause") or the individual should resign
for "good reason".
The agreements provide that a Change of Control occurs if: (a) any person
other than Interpublic or any of its subsidiaries, becomes the beneficial owner
(within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of 30% or more of the combined voting power of Interpublic's then
outstanding voting securities; (b) the stockholders approve an agreement to
merge or consolidate with another corporation (other than a subsidiary of
Interpublic) or an agreement to sell or dispose of all or substantially all of
the business or assets of Interpublic; or (c) during any period of two
consecutive years, individuals who, at the beginning of such period, constituted
the Board of Directors cease for any reason to constitute at least a majority
thereof, unless the election or the nomination for election by Interpublic's
stockholders of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
The agreements provide, for purposes of determining an executive's right to
receive severance payments only, that Interpublic shall have cause to terminate
an executive, following a Change of Control, if the executive: (a) engages in
conduct that constitutes a felony and that results in the personal enrichment of
the executive at the Company's expense; (b) refuses to substantially perform his
responsibilities for the Company; or (c) deliberately and materially breaches
any agreement between himself and the Company and fails to remedy that breach
within a 30-day cure period.
For purposes of determining an executive's right to receive severance
payments only, an executive under the terms of the agreements may resign for
"good reason" if, without his consent, in any circumstance other than his
disability, his office in the Company or the geographical area of his employment
should be changed or his compensation should not continue to be paid and
increased on the same basis as had been in effect prior to the Change of Control
or the individual should determine in good faith that the Company had, without
his consent, effected a significant change in his status within, or the nature
or scope of his duties or responsibilities with, the Company and the Company
failed to cure such situation within 30 days after written notice from the
individual.
The severance payment would be three times the individual's average annual
compensation during the two calendar years ended prior to the date of the Change
of Control, plus a partial annual bonus based on the prior year's bonus prorated
for the elapsed portion of the year in which employment terminated. The average
compensation used in calculating the severance payment would be the individual's
taxable compensation plus any deferred compensation accrued during the two
relevant years, but would not include any deferred compensation earned in prior
years but paid during the two years and would not include any taxable
compensation relating to any stock option or restricted stock plan of the
Company.
Each contract includes the agreement of the individual providing that if the
individual's employment terminates in circumstances entitling him to a severance
payment, he will, for a period of 18 months following the termination of his
employment, neither (a) solicit any employee of the Company or any of its
subsidiaries to leave such employ to enter into the employ of the individual, or
any person or entity with which the individual is associated, nor (b) solicit or
handle, on his own behalf or on behalf of any person or entity with which he is
associated, the advertising, public relations, sales promotion or market
research
15
business of any advertiser which was a client of the Company or any of its
subsidiaries on the date the individual's employment terminates.
The agreements give the individuals who are parties thereto an option to
limit payment under the agreements to such sum as would avoid subjecting the
individual to the excise tax imposed by Section 4999 of the Internal Revenue
Code.
CERTAIN RETIREMENT ARRANGEMENTS
Mr. Lowe will retire as a full time employee of the Company on January 2,
2003. In connection with his retirement, Interpublic and Mr. Lowe, in December
2001, entered into an agreement concerning his retirement that includes the
following terms: (a) until the date of his retirement, Mr. Lowe will serve as
Chairman of Lowe Worldwide and of Octagon, acting as needed, in an advisory
capacity to the Chief Executive Officer of those companies; (b) until his
retirement, Interpublic has agreed that it will recommend that Mr. Lowe be
issued additional stock options to acquire Common Stock consistent with those
issued to other senior executives at his level, with the understanding that this
includes a grant of options to purchase 100,000 shares in January 2002 (c) until
his retirement, Mr. Lowe will be eligible for bonus payments under the MICP
consistent with other senior executives at his level, and (d) with respect to
payouts under the Company's Long-Term Performance Incentive Program, the Company
will recommend to the Compensation Committee that the performance units granted
to Mr. Lowe for the performance periods ending after 2002 will be prorated to
75% of their value at the date of his retirement.
Under the agreement, Mr. Lowe, following his retirement will act as a
consultant to Lowe Worldwide with the title of "Non-Executive Chairman" for an
initial term of one year, and thereafter subject to renewal by mutual agreement.
As compensation for his consulting services, Mr. Lowe will receive a consulting
fee of $250,000 per year. In addition, Interpublic has agreed to increase by
$250,000 the benefits provided under his Special Deferred Benefit Arrangements
and to make other changes in those arrangements. SEE "Special Deferred Benefit
Arrangements" above. Also, at the end of the one-year term of the consulting
arrangement, Mr. Lowe will be eligible for a bonus based on the recommendation
and approval of the management of Lowe Worldwide. During that year, Interpublic
will provide him with an office, secretary and driver in London.
RETIREMENT PLAN
As of January 1, 1992, the Company adopted the Interpublic Retirement
Account Plan to provide benefits under a "cash balance formula" to employees of
Interpublic and most of its domestic subsidiaries who have at least five years
of service. Each year a participant's account balance is credited with an amount
equal to a percentage of the participant's annual compensation and interest
credits. The percentage of annual compensation varies based on the sum of the
participant's age and years of service from 1.5% for participants with a sum
less than 40 years to 5% for participants with a sum of 80 or more years.
Interest credits are based on the 1-year U.S. Treasury bill rate plus 1
percentage point, compounded quarterly, and are guaranteed to be at least 5% per
year, compounded quarterly.
Until July 31, 1987, employees of the Company and most of its domestic
subsidiaries were entitled in general to receive at retirement a monthly
retirement benefit pursuant to a defined benefit pension formula computed as a
percentage of average monthly compensation during the five consecutive calendar
years with highest compensation with certain exclusions. The percentage of
average monthly compensation used to calculate the monthly benefit was
determined by multiplying the number of years of accredited service (which is
defined in the Plan as the period of participation in the Plan) by 1.3%.
Beginning July 31, 1987, the method of calculating the pension benefit was
changed to a career average formula based on annual compensation. The percentage
of annual compensation used to calculate
16
the benefit was 1% of each year's compensation up to $15,000 plus 1.3% of any
compensation in excess of that amount.
Participants under the defined benefit pension formula on December 31, 1991,
had their normal retirement benefit converted on an actuarial basis into an
"opening cash balance" as of January 1, 1992. In addition, participants
continued to accrue benefits pursuant to the career average formula and became
eligible to receive upon retirement the higher of (1) the participant's benefit
under the cash balance formula or (2) the participant's accrued retirement
benefit under the career average formula as of December 31, 1991, plus any
accrual after that date calculated pursuant to the career average formula.
Employees joining the Company after December 31, 1991, were eligible to accrue
benefits only under the cash balance formula.
With certain minor exceptions, "compensation" under the career average
formula as well as the cash balance formula includes all compensation subject to
federal income tax withholding. Annual compensation for pension accruals since
December 31, 1988 has been limited by federal tax law.
As of March 31, 1998, the Company froze benefit accruals under the
Interpublic Retirement Account Plan and participants whose benefits were not
already vested became fully vested as of April 1, 1998. Retirement account
balances as of that date will continue to be credited with interest until
benefits begin in accordance with the generally applicable Plan provisions, but
additional Company allocations have been discontinued as of March 31, 1998.
Effective April 1, 1998, employees with five or more years of Retirement
Account Plan participation began to participate in a new Compensation Plan.
Under the new Compensation Plan, an account is established for each eligible
employee and credited with up to ten annual allocations depending on the
employee's years of participation in the Retirement Account Plan. Each annual
allocation approximates the discontinued allocations under the Retirement
Account Plan. In general, the balance in each employee's account begins to vest
gradually after five years of participation in the new Compensation Plan.
Payouts generally are made while the employee is still employed by the Company
or one of its subsidiaries.
The estimated annual retirement benefit that each of the named executive
officers (other than Mr. Orr) would receive at the normal retirement age of 65,
payable as a straight life annuity under the Interpublic Retirement Account Plan
is as follows: Mr. Dooner--$62,185; Mr. Heekin--$3,831, Mr. Lowe--$6,414 and
Mr. Nelson--$58,259. Alternatively, each of them could take the benefit as a
lump sum estimated as follows: Mr. Dooner--$710,194; Mr. Heekin--$42,563, Mr.
Lowe--$71,252 and Mr. Nelson--$665,358.
Prior to normal retirement age, under the New Compensation Plan, Mr. Dooner
will receive a total distribution of $108,500 and Mr. Lowe will receive a total
distribution of $59,099.
Mr. Heekin is not eligible to participate in the New Compensation Plan
because he had less than five years of participation under the Interpublic
Retirement Account Plan at the time benefit accruals were frozen.
Mr. Nelson is not eligible to participate in the New Compensation Plan
because he was not employed with the Company at the time the New Compensation
Plan became effective.
Mr. Orr is not entitled to receive benefits under the Interpublic Retirement
Account Plan or the New Compensation Plan because he was hired by Interpublic
after the Retirement Account Plan was frozen.
17
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The Company's overall business strategy is to increase shareholder value
over the long term. Consistent with this strategy, the Compensation Committee
has endeavored to develop and administer compensation policies that are linked
to the successful achievement of the Company's strategy.
The objective of the Company's executive compensation program is to provide
key executives with short-term and long-term compensation opportunities that
will enhance shareholder value by motivating executives, increasing retention
and rewarding outstanding individual and Company performance.
The compensation paid to executives consists of a base salary and incentive
compensation which may be earned only if the Company's financial performance
meets or exceeds annual growth targets. Incentive opportunities for the most
part are long term, as well as at risk and equity oriented. Those incentive
opportunities are provided pursuant to one or more of the following programs
covered under the Company's shareholder-approved 1997 Performance Incentive
Plan:
- Management Incentive Compensation Program (the "MICP"), which is an annual
bonus plan that establishes a bonus pool based on profits for the
last-completed fiscal year. Individual awards are made based on
performance and are typically paid in cash but may be paid in stock.
- Long-Term Performance Incentive Program (the "LTPIP"), which provides for
biennial awards of performance units each having a four-year term. These
awards entitle a participating executive to receive cash payments based on
the extent to which long-term operating profit targets are achieved by the
division or entity of the Company for which the executive is responsible.
- Stock Incentive Program, which provides for the issuance of stock options
and restricted stock. These instruments increase in value over time only
if the market price of Interpublic Common Stock increases. They are
usually forfeited in the absence of action by the Committee if an
executive leaves the Company within a specified period following the date
of the award.
The determination of the amount and form of executive compensation,
including incentive compensation, paid to each executive officer of the Company
is made by the Committee based on a discretionary evaluation, after taking into
account a range of factors that include:
(i) The financial results of the Company and the anticipated developments in
the advertising industry.
(ii) The total annualized compensation for the particular executive based on
salary, bonus and incentive compensation.
(iii) The accumulated value of incentive compensation previously provided
such as stock options, restricted stock or performance units.
(iv) The current and future financial and tax impact on the Company and on
the executive of benefits under the Company's compensation plans.
(v) The particular achievements measured against pre-determined annual
objectives of the executive.
(vi) The talents and unique qualities of the executive and the value of his
or her accumulated experience with the Company as those factors are
relevant to the future management of the Company.
There is no pre-determined weight assigned to any of the above factors;
however compensation decisions by the Committee are greatly influenced by the
annual financial performance of the Company.
18
The Committee's overall knowledge and experience of executive compensation
practices provide the basis for making the subjective evaluations which in part
determine the salaries paid and the incentive awards made to the executive
officers.
In 2001, the Compensation Committee of the Company consisted of seven
outside directors. Most of the members of the Compensation Committee have served
and continue to serve on a number of other corporate boards in a similar
capacity. All members have extensive knowledge of compensation practices in the
private business sector generally.
2001 COMPENSATION OF EXECUTIVE OFFICERS
BASE SALARIES
Base salaries for certain employee directors were increased during 2001 as
well as for some executive officers other than those listed on the Summary
Compensation Table. Salary increases for executive officers and employee
directors are based on professional merit performance, promotions and overall
financial results.
MICP
Under the Management Incentive Compensation Program, annual bonuses to
officers and key employees of the Company and its subsidiaries are paid from an
annual bonus pool that may not exceed 5% of the amount by which consolidated
pre-tax income on a worldwide basis exceeds 15% of the average equity capital of
the Company in the immediately preceding calendar year. In 2001, total MICP
payments to executive officers were significantly lower than in 2000.
LTPIP
The Long-Term Performance Incentive Program comprises a significant portion
of the total compensation for executive officers of Interpublic and key
employees of its subsidiaries. Awards under the LTPIP, consisting of performance
units each having a four-year term, generally are granted biennially in odd-
numbered years. Additional grants of performance units for the 1999-2002
performance period and new grants of performance units for the 2001-2004 four
year performance period were made to executive officers including those listed
in the Long-Term Incentive Plan Table. In granting individual LTPIP awards for
these performance periods to executive officers the Committee considered a
number of factors including, but not limited to, tenure with the Company,
history of past grants, performance and current job level of the executive or
significant changes in the executive's responsibilities.
During 2001, executive officers, including the named executive officers,
received payments for the 1997-2000 performance period. SEE "Summary
Compensation Table" above.
EQUITY GRANTS
Under the shareholder-approved 1997 Performance Incentive Plan, stock
options and restricted stock may be awarded to officers and key employees of the
Company and its subsidiaries. Stock options are granted on such terms as are
approved by the Committee, provided that the term of the option may not exceed
ten years and the exercise price may not be less than the fair market price of
the Common Stock on the date of grant. Shares of restricted stock granted are
restricted as to the selling or transferring of the shares typically for a
minimum of five years from date of grant and are forfeited if the executive
should leave the employment of the Company, unless the Committee deems
otherwise. In determining individual grants of stock options and restricted
stock the Committee takes into consideration the number of years since previous
grants, the financial performance of the Company over recent years in terms of
annual
19
operating margin, revenue and operating profit growth and the growth of
shareholder value and the overall compensation and performance of the executive.
The Committee also reviews various outside survey data pertaining to the pattern
of grants made by other companies having approximate capitalization and growth
similar to those of Interpublic (including several of the companies in the Peer
Group Indices appearing in the two performance graphs that follow this Report).
Restricted stock and stock options are periodically granted by the Committee
to executive officers and are designed to focus key executives on the long-term
performance of the Company. During 2001 a total of 8,500 restricted shares and
19,000 stock options were granted to three key executives other than those named
executives shown on the preceding tables. Stock options totaling 100,000 shares
in connection with 2001-2004 LTPIP awards were granted to seven key executives
other than the named executive officers. Grants to the named executive officers
are shown in the preceding tables.
TAX LAW
Under the federal income tax laws, the deduction that a publicly-held
company is allowed for compensation paid to the chief executive officer and to
its other four most highly compensated executive officers generally is limited
to $1 million exclusive of qualifying performance-based compensation. The
Committee has and will continue to consider ways to maximize the deductibility
of executive compensation, including the utilization of performance-based plans,
while retaining the discretion the Committee deems necessary to compensate
executive officers in a manner commensurate with performance and the competitive
environment for executive talent. The 1997 Performance Incentive Plan contains
provisions relating to MICP Awards, LTPIP Awards, stock option grants and
performance units that are intended to make the awards eligible for exclusion
from the $1 million limitation.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Dooner's compensation during 2001 consisted of a cash salary of
$1,250,000 per year, as specified in his Employment Agreement, a bonus of
$500,000 and an LTPIP grant of 20,000 performance units and 100,000 stock
options. It is the Committee's policy to review the salary of the Chairman & CEO
of Interpublic at 24 month intervals. Mr. Dooner's compensation last was
reviewed in 2000.
A bonus payment of $500,000 was awarded to Mr. Dooner for the year 2001
which was 66.7% less than he received for the year 2000. In awarding Mr. Dooner
a bonus, the Committee took into consideration Interpublic's 2001 operating
results (11.5% operating profit margin on $6.7 billion revenue excluding
non-recurring items) which was a 24.4% decline in operating profits compared to
2000. The combination of operating performance and the adverse general business
conditions during 2001, the Committee believed, warranted the payment of a
limited bonus.
The Company has had a Long-Term Performance Incentive Program for many
years. The Program provides for the granting of performance units and stock
options biennially for four year cycles. The Plan provided for a new four year
performance cycle (2001-2004) commencing January 1, 2001. For the 2001-2004
cycle, Mr. Dooner was granted 20,000 performance units and 100,000 stock options
with an exercise price of $40.4688, which was equal to the average of the high
and low prices of IPG Common Stock on January 2, 2001. The stock options become
exercisable at the conclusion of the 2001-2004 LTPIP performance period.
Mr. Dooner received the maximum individual grant for a participant of
performance units available under the LTPIP which has been the consistent
practice of the Committee for the position of Chairman & CEO with a highly
leveraged incentive compensation package which only provides rewards for
excellent to outstanding financial performance and stock growth. It has been the
practice of the Committee to grant the Chairman and CEO of Interpublic under
LTPIP, five stock options for each performance unit granted.
20
The Committee in making these awards to Mr. Dooner's compensation during
2001, also took into consideration other factors including but not limited to
competitive compensation practices of other marketing communications companies.
During 2001 Mr. Dooner received a payout from the 1997-2000 LTPIP. For the
1997-2000 performance period Mr. Dooner had been awarded 10,334 performance
units and 60,000 stock options at which time he was Chairman and Chief Executive
Officer of McCann-Erickson Worldwide, the Company's largest operating
subsidiary. The ultimate value of the performance units for the period awarded
to Mr. Dooner was based on the cumulative compound profit growth of
McCann-Erickson Worldwide from 1997-2000 which was 22%. This growth rate yielded
a per unit value of $150.00 which resulted in a cash payment of $1,550,100. The
grant of 60,000 stock options was consistent with other option grants to senior
executives (six options to one performance unit) for the 1997-2000 performance
period. As a result of two stock splits during the performance period (3-for-2
on July 15, 1997 and 2-for-1 on July 15, 1999) the 60,000 option grant increased
to 180,000 options which became exercisable on January 1, 2001.
The Committee in making these awards to Mr. Dooner's compensation during
2001, also took into consideration other factors including but not limited to
competitive compensation practices of other marketing communications companies.
Reginald K. Brack, Chairman
Frank J. Borelli
Jill M. Considine
Richard A. Goldstein
H. John Greeniaus
Michael A. Miles
J. Phillip Samper
21
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN (1)
THE INTERPUBLIC GROUP OF COMPANIES, INC. COMMON STOCK,
THE S&P 500 AND PEER GROUP INDICES (2)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1996 1997 1998 1999 2000 2001
INTERPUBLIC 100.00 159.12 257.08 374.62 278.83 196.11
S & P 500 100.00 133.32 171.34 207.35 188.46 166.16
Peer Group 100.00 148.67 213.42 386.58 309.63 269.23
1996 1997 1998 1999 2000 2001
-------- -------- -------- -------- -------- --------
Interpublic................................................. 100.00 159.12 257.08 374.62 278.83 196.11
S & P 500................................................... 100.00 133.32 171.34 207.35 188.46 166.16
Peer Group.................................................. 100.00 148.67 213.42 386.58 309.63 269.23
- ----------------------------------
(1) Assumes $100 is invested on December 31, 1996, and that all dividends are
reinvested.
(2) The Peer Group index for 2001 consists of Interpublic, Cordiant plc,
Omnicom, Grey Advertising and WPP Group. The Peer Group also included, for
years prior to 2001, True North Communications, Inc., which was acquired by
Interpublic in June 2001, and for the years prior to 2000, Young & Rubicam,
Inc. which was acquired by WPP Group in October 2000. Total shareholder
return is weighted according to market capitalization at the beginning of
each annual period.
22
COMPARISON OF SIXTEEN-YEAR CUMULATIVE TOTAL RETURN OF (1)
THE INTERPUBLIC GROUP OF COMPANIES, INC. COMMON STOCK,
THE S&P 500 AND PEER GROUP INDICES (2)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Dollars
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
INTERPUBLIC 100.00 130.54 154.18 182.29 247.36 270.92 450.16 555.65 517.12 526.98 720.91 798.88 1268.77 2046.74
S&P 500 100.00 118.62 124.76 145.35 191.24 185.30 241.51 259.89 285.92 289.79 398.31 489.52 652.63 838.76
Peer Group 100.00 100.16 105.39 106.32 117.62 76.61 109.00 134.63 143.69 155.35 201.93 259.19 384.04 550.08
1999 2000 2001
INTERPUBLIC 2979.03 2214.09 1553.87
S&P 500 1015.02 922.56 813.40
Peer Group 994.87 795.48 690.21
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
IPG.................. 100.00 130.54 154.18 182.29 247.36 270.92 450.16 555.65 517.12 526.98
S&P 500.............. 100.00 118.62 124.76 145.35 191.24 185.30 241.51 259.89 285.92 289.79
Peer Grp............. 100.00 100.16 105.39 106.32 117.62 76.61 109.00 134.63 143.69 155.35
1995 1996 1997 1998 1999 2000 2001
-------- -------- -------- -------- -------- -------- --------
IPG.................. 720.91 798.88 1268.77 2046.74 2979.03 2214.09 1553.87
S&P 500.............. 398.31 489.52 652.63 838.76 1015.02 922.56 813.40
Peer Grp............. 201.93 259.19 384.04 550.08 994.87 795.48 690.21
- ----------------------------------
(1) Assumes $100 is invested on December 31, 1985, and that all dividends are
reinvested.
(2) The Peer Group index for 2001 consists of Interpublic, Cordiant plc.,
Omnicom, Grey Advertising and WPP Group. The Peer Group also included for
years prior to 2001, True North Communications, Inc. which was acquired by
Interpublic in June 2001, and for the years prior to 2000, Young & Rubicam,
Inc. which was acquired by WPP Group in October 2000. Total shareholder
return is weighted according to market capitalization at the beginning of
each annual period.
(3) An important objective of the Company is to create long-term reward for
shareholders. The table that appears above has been presented to show
comparative cumulative return over a sixteen-year period.
23
TRANSACTIONS WITH THE COMPANY
The Company in the ordinary course of its business provides guarantees to
banking institutions for loans of its subsidiaries. In one instance, the Company
provided a bank with a guarantee for borrowings of its subsidiaries and
affiliates in an amount up to $2,500,000 which included a guarantee of a short
term bridge loan made by the bank to Bruce Nelson, an executive of the Company.
The bridge loan, entered into by Mr. Nelson in December 2001, is in the
principal amount of $2,000,000. In general, the interest rate charged by the
bank on the outstanding amount of principal is 2% over the bank's base rate (as
defined in the loan documentation). The amount presently outstanding under Mr.
Nelson's loan is approximately $1,400,000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Richard A. Goldstein became a director of the Company on May 14, 2001. He
did not timely file a Form 3 with the Securities and Exchange Commission by
May 24, 2001. However, the Form 3 was filed by Mr. Goldstein with the
Securities and Exchange Commission on June 9, 2001.
H. John Greeniaus became a director of the Company on December 18, 2001. His
Form 3 was timely filed with the Securities and Exchange Commission on
December 22, 2001, but did not include among the securities identified as
benefically owned stock options covering the Company's Common Stock.
Mr. Greeniaus filed an amended Form 3 on February 20, 2002 that reported those
stock options.
David A. Bell became an executive officer of the Company on June 22, 2001.
He did not timely file a Form 3 with the Securities and Exchange Commission by
July 2, 2001. However, the Form 3 was filed by Mr. Bell with the Securities and
Exchange Commission on July 10, 2001.
Richard Sneeder became an executive officer of the Company on December 18,
2001. His Form 3, was filed with the Securities and Exchange Commission on
December 22, 2001, but did not include shares of the Company's Common Stock held
by him indirectly through the True North Communications Inc. Retirement Plan.
Mr. Sneeder filed an amended Form 3 on February 20, 2002 that reported the
shares.
2. ADOPTION OF THE 2002 PERFORMANCE INCENTIVE PLAN
The Board of Directors has adopted, and is submitting to stockholders for
approval, The Interpublic Group of Companies, Inc. 2002 Performance Incentive
Plan (the "Plan"). If approved by stockholders, the Plan will replace the 1997
Performance Incentive Plan (the "1997 Plan"), under which no further awards may
be made after the 2002 Annual Meeting. The 1997 Plan, The Interpublic Group of
Companies, Inc. 1996 Performance Incentive Plan, The Interpublic Group of
Companies, Inc. 1988 Stock Option Plan and The Interpublic Group of Companies,
Inc. 1986 Stock Incentive Plan each are referred to herein as a "Prior Plan".
DESCRIPTION OF THE PLAN
The text of the Plan is attached hereto as Appendix A and is hereby
incorporated by reference. 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
stockholders and further align the interests of stockholders 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 Company's Common Stock.
24
ADMINISTRATION
The Plan will be administered by a committee appointed by the Board of
Directors 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. No member of the Committee is
eligible to receive an award under the Plan.
ELIGIBILITY
Any employee of the Company, or any of its subsidiaries or affiliates
(defined generally 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. Approximately 5,000 employees of the Company and its subsidiaries and
affiliates will be eligible to participate in the Plan. Directors who are not
employees of the Company or any of its subsidiaries or affiliates 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 is 12,500,000, supplemented as follows: (i) if a
participant tenders shares, or shares otherwise issuable are withheld, in
payment of all or any part of the exercise price of a stock option granted under
the Plan or a Prior Plan or shares otherwise issuable are withheld to satisfy a
tax withholding obligation, the shares so tendered or withheld will be available
for future awards under the Plan, (ii) if shares issued, or shares issuable in
respect of awards made, under the Plan or a Prior Plan are forfeited, the
forfeited shares will be available for future awards under the Plan, and (iii)
to the extent that cash is paid pursuant to an award under the Plan in lieu of
the issuance of shares, the shares covered by the award will be available for
future awards under the Plan. In addition, any shares of Common Stock underlying
awards granted in assumption of, or in substitution for, outstanding awards
previously granted by a company acquired by the Company or one of its
subsidiaries or affiliates or with which the Company or one of its subsidiaries
or affiliates combines, will not, unless required by law or regulation, be
counted against the number of shares of Common Stock available for awards under
the Plan. 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
some other purpose.
AGGREGATE LIMITATIONS ON RESTRICTED STOCK AND INCENTIVE STOCK OPTION AWARDS
Of the total number of shares of Common Stock available for awards, (i) no
more than 10% of such shares may be the subject of restricted stock awards and
(ii) no more than 200,000 shares may be the subject of incentive stock option
awards in any year.
INDIVIDUAL AWARD LIMITATIONS ON STOCK OPTIONS
In any year, no participant may receive stock options with respect to more
than 500,000 shares of Common Stock.
AWARDS
The following types of awards may be made to eligible employees under the
Plan: (i) stock options, (ii) restricted stock, (iii) performance units, (iv)
management incentive compensation performance awards
25
(see "Management Incentive Compensation Performance Awards" below), (v) shares
in lieu of cash, and (vi) 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 period 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 of or
attestation to the ownership of shares of Common Stock that have been owned by
the optionholder without restriction for a period of at least six months, or
(iii) by a combination of the foregoing.
RESTRICTED STOCK
Restricted stock is Common Stock that is granted to an employee that will
become vested, and therefore nonforfeitable, upon 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 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.
PERFORMANCE UNITS
Performance units represent a contractual right of the holder to receive a
payment that becomes 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) 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, any other criteria selected by the Committee. 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, the recipient of the award, or a combination of the foregoing, 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
26
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 three-year performance period is $4 million (which amount shall be
proportionately increased or decreased for performance periods of other than
three years). No employee may participate in more than three performance periods
at one time.
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") 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 $5 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 and
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 Committee in its
discretion may direct that up to 75% of an individual's MICP award may be paid
on a deferred basis subject to such terms and conditions as the Committee may
prescribe.
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
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. In connection with any award under the Plan, the Committee in its
discretion may grant dividend equivalents, which may be paid on a current,
deferred, or contingent basis.
FOREIGN BENEFITS
The Committee may grant awards to 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 may be granted under
any such supplement on the basis of terms or conditions that are inconsistent
with provisions of the Plan.
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
27
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.
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.
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 or who were elected by directors 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 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.
REPRICING
The Company is prohibited from repricing stock options without the approval
of the stockholders.
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
stockholder approval if (i) stockholder approval is required by law or (ii) if
the amendment would increase the number of shares of Common
28
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.
USE OF PROCEEDS
All proceeds received by the Company from the sale of shares of Common Stock
under the Plan will be used for general corporate purposes.
EFFECTIVE DATE AND DURATION OF THE PLAN.
The Plan will become effective on the date that it is approved by the
Company's stockholders. No Awards may be granted under the Plan after the annual
meeting of the Company's stockholders in 2007. Upon stockholder approval of the
Plan, no further awards may be made under the 1997 Plan.
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 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
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 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, 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% 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.
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.
29
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
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.
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" is not subject to this deduction limit. The
Plan permits the grant of both awards that qualify as performance-based
compensation, such as options, performance units and incentive compensation
awards, and awards that do not so qualify, such as restricted stock, 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 stockholders, officers, and highly compensated 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 25, 2002, the closing price of the Common Stock on the New York Stock
Exchange was $33.25 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
3. APPOINTMENT OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers has been appointed and is acting as independent
accountants of the Company for the year 2002. This firm has been the Company's
independent accountants since 1952. PricewaterhouseCoopers 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.
30
A representative of PricewaterhouseCoopers 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 PricewaterhouseCoopers,
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 2002.
AUDIT FEES
The aggregate fees billed for professional services rendered by
PricewaterhouseCoopers, in connection with its audit of the Company's
consolidated financial statements as of and for the fiscal year ended December
31, 2001 and its limited reviews of the Company's unaudited condensed
consolidated interim financial statements included in the Company's Quarterly
Reports on Form 10-Q for that fiscal year were $8.0 million.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
During the year ended December 31, 2001, PricewaterhouseCoopers did not
render any professional services to the Company in connection with the design
and implementation of financial information systems.
ALL OTHER FEES
In addition to the fees described above, aggregate fees of $8.7 million were
billed by PricewaterhouseCoopers to the Company during the year ended December
31, 2001. These other services were primarily audit related and entailed audits
of foreign entities under statutory requirements, the issuance of comfort
letters to investment bankers on debt offerings, the issuance of consents of
previously issued opinions, audits of the Company's employee benefit plans, due
diligence services, income tax compliance and related tax services.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR CONFIRMATION
OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS.
4. STOCKHOLDERS' PROPOSAL REGARDING NORTHERN IRELAND
Interpublic is advised that three stockholders intend to present the
proposal set forth below for consideration and action by stockholders at the
Annual Meeting. The names and addresses of these three stockholders and the
number of shares of Common Stock each respectively has stated that it 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, Interpublic Group operates a wholly-owned subsidiary in Northern
Ireland;
WHEREAS, the securing of a lasting peace in Northern Ireland encourages us
to promote means for establishing justice and equality;
WHEREAS, employment discrimination in Northern Ireland has been cited by the
International Commission of Jurists as one of the major causes of sectarian
strife in that country;
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.
31
2. Adequate security for the protection of minority employees both at the
workplace and while traveling to and from work.
3. The banning of provocative religious or political emblems from the
workplace.
4. All job openings should be publicly advertised and special recruitment
efforts should be made to attract applicants from under-represented
religious groups.
5. Layoff, recall, and termination procedures should not, in practice favor
particular religious groupings.
6. The abolition of job reservations, apprenticeship restrictions, and
differential employment criteria, which discriminate on the basis of
religion or ethnic origin.
7. The development of training programs that will prepare substantial
numbers of current minority employees for skilled jobs, including the
expansion of existing programs and the creation of new programs to train,
upgrade, and improve the skills of minority employees.
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.
Implementation of the MacBride Principles by Interpublic Group 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 two agencies in Northern Ireland: McCann-Erickson Belfast,
an agency with approximately 30 employees, which Interpublic acquired in June
1986 (hereinafter referred to as "MEB"); and Weber Shandwick Northern Ireland,
an agency with approximately 17 employees, which Interpublic acquired in October
1998 (hereinafter referred to as "WSNI").
Management of Interpublic believes that the policies and practices of MEB
and of WSNI are consistent with Interpublic's policy to recruit, employ and
promote all qualified personnel without regard to race, creed, color, national
origin, sex, age, veteran status or disability.
The Company shares the proponents' concern for human rights and equality of
opportunity as well as the need to encourage employment and opportunity in
Northern Ireland. It believes that an effective commitment to fair employment
has been made in good faith by MEB and by WSNI, and that implementation of all
of the MacBride Principles is not necessary or desirable under the
circumstances. Furthermore, it is not practical or prudent for the Board of
Directors of the Company to develop solutions in the United States to problems
unique to Northern Ireland.
Interpublic believes that MEB and WSNI are in full compliance with the Fair
Employment and Treatment (Northern Ireland) Order 1998, effective in Northern
Ireland. Under this law, an employee
32
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 Officers for MEB and for WSNI report that
they have found no evidence of religious or political discrimination in the
composition of its workforce.
MEB has adopted and implements the following Policy Statement on Religious
Equality of Opportunity in Employment:
1. Overall responsibility for policy and practice has been undertaken by
the Managing Director, although it is emphasized that employees at every
level within the organization have a responsibility in the promotion of
equality of opportunity in employment.
2. MEB endorses the merit principle, namely that the best individual for a
job will be selected without regard for his or her religious belief or
perceived religious affiliation. This principle applies both to permanent
payroll and temporary positions. The merit principle is confirmed as
applying to recruitment to the Company, training, transfer and promotion.
3. Job vacancies which require external candidates will be advertised in
the press or lodged with accredited organizations including the job
centers in a way which ensures that qualified candidates across the
community are made aware of such opportunities. Word of mouth as a means
of securing applicants is discontinued.
4. MEB will periodically review its selection criteria and procedures to
maintain a system where individuals are selected, promoted and treated
solely on the basis of their merits and those abilities which are
appropriate to the job. Such reviews may include the evaluation of
existing and new objective tests related to clearly defined job
attributes.
5. MEB will monitor the religious composition of the total employee body by
defined job groupings and will carry out compositional analyses of all
applicants for vacancies at every level. The religious affiliation
records will be maintained, summarized and analyzed by the Monitoring
Officer.
6. Where compositional analysis points to the need for further affirmative
action, MEB will determine what action is required to be taken and will
diligently implement appropriate action.
7. MEB will distribute and publicize this policy statement throughout the
premises and elsewhere as is from time to time appropriate.
8. MEB will ensure through the grievance procedure that any employee who
believes that inequitable treatment has been applied to him or her within
the scope of this policy is afforded full opportunity to raise the
matter.
9. All employees have 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.
WSNI has advised that it has completed a review of its employment and
recruitment practices and procedures as required by Article 55 of the Fair
Employment and Treatment (Northern Ireland) Order 1998 and has implemented the
following policies with respect to religious equality of opportunity in
employment:
1. WSNI is committed to the twin principles of fair employment and equality
in the workplace.
33
2. Staff at all levels of the company are made aware of WSNI's commitment
to fairness and equity of esteem.
3. All vacancies are advertised widely in the press to ensure that all
members of society in Northern Ireland, regardless of creed, religion,
sex, age or race have the opportunity to learn of such employment
opportunities.
4. WSNI adheres to a strict recruitment process which is based entirely on
the merit principle of the best person for the job, based on experience
and qualifications.
5. 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.
6. WSNI 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.
7. WSNI 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.
8. All employees have 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.
9. It is the responsibility of all employees in conjunction with WSNI 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 of the Common Stock
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.
INFORMATION FOR STOCKHOLDERS THAT HOLD INTERPUBLIC COMMON STOCK THROUGH A BROKER
OR BANK.
In December of 2000, the Securities and Exchange Commission adopted new
rules that permit brokers and banks that hold stock for the account of their
customers to deliver a single Annual Report and proxy statement (as well as
other shareholder communications from the issuer) to two or more shareholders
that share the same address. If you and other residents at your mailing address
own shares of Common Stock through a broker or bank, you may have received a
notice notifying you that your household will be sent only one copy of the
Company's 2001 Annual Report and this Proxy Statement. If you did not notify
your broker or bank of your objection, you were deemed to have consented to the
arrangement. If you determine that you would prefer in the future to receive a
separate copy of Interpublic's Annual Reports and proxy statements, you may
revoke your consent at any time by notifying Interpublic by letter addressed to
The Interpublic Group of Companies, Inc., 1271 Avenue of the Americas, New York,
NY 10020, Attention: Secretary or by calling Investor Relations at (212)
399-8000. Your notification should include the name of your brokerage firm or
bank and the number of your account.
If you would like to receive a separate copy of the 2001 Annual Report or
this Proxy Statement, please contact the Company at the above address or
telephone number. If you hold your shares of Common Stock
34
through a broker or bank and are receiving multiple copies of our Annual Reports
and Proxy Statements at your address and would like to receive only one copy for
your household, please contact your broker or bank.
INFORMATION FOR PARTICIPANTS IN THE TRUE NORTH COMMUNICATIONS INC.
RETIREMENT PLAN
Participants in the True North Communications Inc. Retirement Plan (the
"Plan") may vote the number of shares of Interpublic's Common Stock equivalent
to the interest in Interpublic's Common Stock credited to their accounts under
the Plan as of the record date. Participants may vote by instruction to Fidelity
Management Trust Company, the trustee for the Plan, pursuant to the proxy card
being mailed with this document to Plan participants. Fidelity has informed us
that it will vote shares in accordance with duly executed instructions if
received on or before May 15, 2002. Fidelity further informs us that if Fidelity
does not receive timely instructions, the Common Stock equivalents credited to
that participant's account will be voted by Fidelity in the same proportion that
Fidelity votes the Common Stock share equivalents for which it does receive
timely instructions. Fidelity will also vote any share equivalents that are not
specifically allocated to any individual Plan participant (known as the suspense
account) in the same proportion that Fidelity votes the Common Stock share
equivalents for which it receives timely instructions.
SOLICITATION OF PROXIES
This 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 $9,000, plus reasonable out-of-pocket
expenses. The Company also has agreed to indemnify D.F. King for certain
liabilities, including liabilities arising under the federal securities laws.
The Management is not aware of any other matters which may be brought before
the meeting. If other matters not now known come before the meeting, the persons
named in the accompanying form of proxy or their substitutes will vote such
proxy in accordance with their best judgment.
By Order of the Board of
Directors,
Nicholas J. Camera
SECRETARY
April 17, 2002
35
APPENDIX A
THE INTERPUBLIC GROUP OF COMPANIES, INC.
2002 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 12(a) hereof.
"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 or who were elected by directors who
were directors at the beginning of the period.
"Code" means the Internal Revenue Code of 1986, as amended.
A-1
"Committee" means the committee established by the Board pursuant to Section
3 hereof.
"Common Stock" means the Company's $0.10 par value common stock.
"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 10 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 8 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.
"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 7 hereof to receive cash or Shares that becomes vested upon the
attainment, in whole or in part, of performance objectives determined by the
Committee.
"Plan" means The Interpublic Group of Companies, Inc. 2002 Performance
Incentive Plan, set forth herein, and as it may be amended from time to time.
"Plan Year" means the calendar year.
"Prior Plan" means The Interpublic Group of Companies, Inc. 1997 Performance
Incentive Plan, The Interpublic Group of Companies, Inc. 1996 Performance
Incentive Plan, The Interpublic Group of
A-2
Companies, Inc. 1988 Stock Option Plan and The Interpublic Group of Companies,
Inc. 1986 Stock Incentive Plan.
"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 11 hereof, in connection
with the termination of the Participant's employment due to retirement, death,
or Disability or, pursuant to Section 12(d) hereof, by reason of a Change of
Control.
"Restricted Stock" means any Award of Common Stock granted under Section 6
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.
"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.
(d) AWARDS. Subject to the provisions of the Plan, the Committee shall have
the authority to grant the following Awards:
(1) Options,
(2) Restricted Stock,
(3) Performance Units,
(4) Management Incentive Compensation Performance Awards,
(5) Shares in Lieu of Cash, and
(6) 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.
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(f) CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The Committee may
correct any defect, remedy any omission, or reconcile any inconsistancy in the
Plan or any Award in the manner and to the extent it deems desireable to carry
out the intent of the Plan and such Award.
(g) 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
(g) of this Section 4, the maximum number of Shares in respect of which Awards
may be granted is 12,500,000 Shares.
(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) 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 a Prior Plan, or in satisfaction of withholding tax
obligations, the Shares tendered by the Participant or so withheld shall
become available for Awards.
(2) FORFEITURE OF SHARES. If Shares that are issued under the Plan, or a
Prior 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.
(3) 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.
(c) AGGREGATE LIMITATIONS ON RESTRICTED STOCK AND ISOS. Subject to the
adjustment provisions of Section 4(f) hereof, not more than 10% of the Shares in
respect of which Awards may be granted may be the subject of Awards of
Restricted Stock, and in any Plan Year no more than 200,000 Shares may be the
subject of ISOs.
(d) INDIVIDUAL LIMITATIONS ON OPTIONS. Subject to the adjustment provisions
in Section 4(f) hereof, an individual Participant may not receive, in any Plan
Year, Options with respect to more than 500,000 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 cash
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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.
(g) ACQUISITIONS. Any Shares underlying awards granted in assumption of, or
in substitution for, outstanding awards previously granted by a company acquired
by the Company or a Subsidiary or Affiliate or with which the Company or a
Subsidiary or Affiliate combines, shall not, unless required by law or
regulation, be counted against the Shares available for Awards under the Plan.
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. Except as
provided in Section 4(f), the Committee may not reprice Options without the
approval of the Company's shareholders.
(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 11 or 12(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 (without restriction for
a period of at least six months), 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.
(e) TERMINATION OF EMPLOYMENT. An Option shall be exercisable following the
termination of a Participant's employment to the extent determined pursuant to
Sections 11 and 12(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 11 and 12(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 11 and 12(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 Participant's beneficiary or
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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 11 and 12(d) hereof,
for a period of three months following such termination (but not after the
date the Option otherwise expires).
SECTION 6. 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 11 and 12(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 11 or 12(d) hereof, the restrictions set forth in Section
6(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 6(c) hereof:
(1) no later than the date of the lapse of the restrictions set forth in
Section 6(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) 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
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otherwise due to the Participant any taxes of any kind required by law to be
withheld with respect to the Shares.
(g) 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 7. 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 three Performance Periods at any one time.
(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 $4 million for a three-year
Performance Period. If the Performance Period is longer or shorter than three
years, the $4 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 11 and 12(d) hereof.
(e) INTERPRETATION. Notwithstanding any other provision of this Section 7 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 7 with respect to the Award would cause the Award
to fail to qualify as "other
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performance-based compensation," the Committee shall not be entitled to exercise
such discretion with respect to that Award.
SECTION 8. 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 8(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
(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 $5,000,000.
(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 8(a) hereof, any
Shares awarded under this Section 8 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 9. 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 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.
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SECTION 10. 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 11. 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 12(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 12. 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 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.
(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.
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(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 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.
(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.
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(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 2007; 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. 1997 Stock Incentive Plan.
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APPENDIX B
THE INTERPUBLIC GROUP OF COMPANIES, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee ("the Committee") of the Board of Directors ("the
Board") of The Interpublic Group of Companies, Inc. ("the Company"), will have
the oversight responsibility, authority and specific duties as described below.
COMPOSITION
The Committee will be comprised of three or more directors as determined by
the Board. The members of the Committee will meet the independence and
experience requirements of the New York Stock Exchange (NYSE). The members of
the Committee will be elected annually at the organizational meeting of the full
Board held in May and will be listed in the annual report to shareholders. One
of the members of the Committee will be elected Committee Chair by the Board.
RESPONSIBILITY
The Committee is a part of the Board. Its primary function is to assist the
Board in fulfilling its oversight responsibilities with respect to (i) the
annual financial information to be provided to shareholders and the Securities
and Exchange Commission (SEC); (ii) the system of internal controls that
management has established; and (iii) the internal and external audit process.
In addition, the Committee provides an avenue for communication between internal
audit, the independent accountants, financial management and the Board. The
Committee should have a clear understanding with the independent accountants
that they must maintain an open and transparent relationship with the Committee,
and that the ultimate accountability of the independent accountants is to the
Board and the Committee. The Committee will make regular reports to the Board
concerning its activities.
AUTHORITY
Subject to the prior approval of the Board, the Committee is granted the
authority to investigate any matter or activity involving financial accounting
and financial reporting, as well as the internal controls of the Company. In
that regard, the Committee will have the authority to approve the retention of
external professionals to render advice and counsel in such matters. All
employees will be directed to cooperate with respect thereto as requested by
members of the Committee.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's Code of Conduct.
MEETINGS
The Committee is to meet at least four times annually and as many additional
times as the Committee deems necessary. Content of the agendas for each meeting
should be cleared by the Committee Chair. The Committee is to meet in separate
executive sessions with the chief financial officer, independent accountants and
internal audit at least once each year and at other times when considered
appropriate.
B-1
ATTENDANCE
Committee members will strive to be present at all meetings. As necessary or
desirable, the Committee Chairman may request that members of management and
representatives of the independent accountants and internal audit be present at
Committee meetings.
SPECIFIC DUTIES
The Committee will:
1. Review and reassess the adequacy of this charter annually and recommend
any proposed changes to the Board for approval. This should be done in
compliance with applicable NYSE Audit Committee Requirements.
2. Review with Company's management, internal audit and independent
accountants the Company's accounting and financial reporting controls. Obtain
annually in writing from the independent accountants their opinion as to the
adequacy of such controls.
3. Review with the Company's management, internal audit and independent
accountants significant accounting and reporting principles, practices and
procedures applied by the Company in preparing its financial statements. Discuss
with the independent accountants their judgements about the quality, not just
the acceptability, of the Company's accounting principles used in financial
reporting.
4. Review the scope of internal audit's work plan for the year and receive
a summary report of major findings by internal auditors and how management is
addressing the conditions reported.
5. Review the scope and general extent of the independent accountant's
annual audit. The Committee's review should include an explanation from the
independent accountants of the factors considered by the accountants in
determining the audit scope, including the major risk factors. The Committee
should inquire of the independent accountants as to whether the audit scope is
sufficiently comprehensive, as compared with comparable public companies and
current practice, and confirm to the Committee that no limitations have been
placed on the scope or nature of their audit procedures. The Committee will
review annually with management the fee arrangement with the independent
accountants.
6. Inquire as to the independence of the independent accountants. In
addition, review the extent of non-audit services provided by the independent
accountants in relation to the objectivity needed in the independent audit.
Receive the written disclosure and letter from the Company's independent
accountants contemplated by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committee.
7. Have a predetermined arrangement with the independent accountants that
they will advise the Committee through its Chair and management of the Company
of any matters identified through procedures followed for interim quarterly
financial statements, and that such notification is to be made prior to the
related press release and if not practicable prior to filing Forms 10-Q. Also
receive a written confirmation from the independent accountants at the end of
each of the first three quarters of the year that they have nothing to report to
the Committee, if that is the case, or written enumeration of required reporting
issues.
8. At the completion of the annual audit, review with management, internal
audit and the independent accountants the following:
- The annual financial statements and related footnotes and financial
information to be included in the Company's annual report on Form 10-K and
its annual report to shareholders.
- Results of the audit of the financial statements and the related report
thereon and, if applicable, a reporting on changes during the year in
accounting principles and their applications.
B-2
- Significant changes to the audit plan, if any, and any serious disputes or
difficulties with management encountered during the audit. Inquire about
the cooperation of the independent accountants during their audit,
including access to all requested records, data and information. Inquire
of the independent accountants whether there have been any disagreements
with management which, if not satisfactorily resolved, would have caused
them to issue a nonstandard report on the Company's financial statements.
- Other communications as required to be communicated by the independent
accountants by Statement of Auditing Standards No. 61 as amended by SAS 90
relating to the conduct of the audit. Further, receive a written
communication provided by the independent accountants concerning their
judgment about the quality of the Company's accounting principles, as
outlined in SAS 90 and that they concur with management's representation
concerning audit adjustments.
9. After preparation by management and review by the internal and external
auditors, approve the report required under SEC rules to be included in the
Company's annual proxy statement. Charter is to be published in proxy statement
every three years.
10. Discuss with the independent accountants the quality of the Company's
financial and accounting personnel. Also, elicit the comments of management
regarding the responsiveness of the independent accountants to the Company's
needs.
11. Meet with management, internal audit and the independent accountants to
discuss any relevant significant recommendations that the independent
accountants may have, particularly those characterized as 'material' or
'serious'. Typically, such recommendations will be presented by the independent
accountants in the form of a Letter of Comments and Recommendations to the
Committee. The Committee should review responses of management to the Letter of
Comments and Recommendations from the independent accountants and receive
follow-up reports on action taken to resolve the aforementioned recommendations.
12. Recommend to the Board the selection, retention or termination of the
Company's independent accountants.
13. Review the appointment and replacement of the senior Internal Audit
executive.
14. Review with management, internal audit and the independent accountants
the methods used to establish and monitor the Company's policies to prohibit
unethical or illegal activities by Company employees that may have a material
impact on the financial statements.
15. Generally as part of the review of the annual financial statements,
receive an oral report(s), at least annually, from the Company's General Counsel
concerning legal and regulatory matters that may have a material impact on the
financial statements.
Specific duties required of the Committee, which are highlighted for your
review.
The Committee will:
- Include Audit Committee Report in the Company's annual proxy statement
- Reassess the adequacy of the Charter annually
- Make a written confirmation to the NYSE concerning directors'
independence, financial literacy and expertise
- Obtain in writing from independent accountants their opinion as to
adequacy of controls
- Review any comment letters received from the NYSE or SEC
- Receive notification from independent accountants prior to release of
quarterly financial statements, in compliance with SAS 71.
- Receive written communication from independent accountants as required by
SAS 61, 89, 90 and SEC SAB 99 on Materiality and quality of accounting
principles.
B-3
THE INTERPUBLIC GROUP OF COMPANIES, INC.
P PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R OF
O THE COMPANY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 20,
X 2002
Y The undersigned hereby constitutes and appoints John J.
Dooner, Jr., Sean F. Orr 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 20,
2002 at 9:30 A.M. Eastern Time, and at any adjournments
thereof, on all matters to come before the meeting. If you
are a participant in the True North Communications Inc.
Retirement Plan (the 'Plan'), this card also constitutes
voting instructions by the undersigned to Fidelity
Management Trust Company ('Fidelity'), the trustee of the
trust maintained under the Plan, for all shares held of
record by Fidelity as to which the undersigned is entitled
to direct the voting. Any shares for which voting
instructions are not timely received, and as respects any
unallocated shares held under the Plan, Fidelity will cause
all such shares to be voted in the same proportion as it
votes shares for which timely instructions are received.
Election of Directors. Nominees:
01. Frank J. Borelli, 02. Reginald K. Brack, 03. Jill M.
Considine, 04. John J. Dooner, Jr., 05. Richard A.
Goldstein, 06. H. John Greeniaus, 07. Sean F. Orr,
08. Michael I. Roth, 09. J. Phillip Samper
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK
ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD
OF DIRECTORS' RECOMMENDATIONS. HOWEVER, THE PROXY HOLDERS
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN, DATE AND RETURN
THIS CARD.
SEE REVERSE
SIDE
TRIANGLE FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL
TRIANGLE
THE INTERPUBLIC GROUP OF COMPANIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 2002
9:30 A.M.
THE EQUITABLE CENTER
787 SEVENTH AVENUE
NEW YORK, NEW YORK
X PLEASE MARK YOUR 0279
VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF EACH OF THE
DIRECTOR NOMINEES, FOR PROPOSALS 2 AND 3, AGAINST PROPOSAL 4 AND IN THE
DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTER AS MAY PROPERLY COME BEFORE
THE MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2 AND 3 AND AGAINST
PROPOSAL 4.
1. ELECTION OF DIRECTORS: (SEE REVERSE) FOR WITHHELD
For, except vote withheld from the following nominee(s):
2. Adoption of 2002 Performance Incentive Plan. FOR AGAINST ABSTAIN
3. Confirmation of PricewaterhouseCoopers as independent FOR AGAINST ABSTAIN
accountants for 2002.
4. Approval of Proposed Shareholder Resolution on Northern FOR AGAINST ABSTAIN
Ireland.
Signature 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.
TRIANGLE FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL
TRIANGLE
VOTE BY TELEPHONE OR INTERNET
QUICK *** EASY *** IMMEDIATE
You also may take advantage of two new cost-effective and convenient ways to
vote your shares.
You may now vote your proxy 24 hours a day, 7 days a week, using either a
touch-tone telephone or through the Internet. YOUR TELEPHONE OR INTERNET VOTE
MUST BE RECEIVED BY 12:00 MIDNIGHT NEW YORK TIME ON MAY 19, 2002.
Your telephone or Internet vote authorizes the proxies named on the above proxy
card to vote your shares in the same manner as if you marked, signed, and
returned your proxy card by mail.
VOTE BY PHONE: ON A TOUCH-TONE TELEPHONE DIAL 1-877-PRX-VOTE
(1-877-779-8683) FROM THE U.S. AND CANADA OR
DIAL 201-536-8073 FROM OTHER COUNTRIES.
You will be asked to enter the VOTER CONTROL NUMBER
located in the box just below the perforation on the proxy
card. Then follow the instructions.
OR
VOTE BY INTERNET: POINT YOUR BROWSER TO THE WEB ADDRESS:
HTTP://WWW.EPROXYVOTE.COM/IPG
You will be asked to enter the VOTER CONTROL NUMBER
located in the box just below the perforation on the proxy
card. Then follow the instructions.
OR
VOTE BY MAIL: Mark, sign and date your proxy card and return
it in the postage-paid envelope.
IF YOU ARE VOTING BY TELEPHONE OR THE INTERNET, PLEASE DO NOT MAIL YOUR PROXY
CARD.
