Investment
Office
P.O. Box
2749
Sacramento,
CA 95812-2749
Telecommunications
Device for the Deaf - (916) 795-3240
Telephone:
(916) 795-2731; Fax (916) 795-2842
April 28,
2008
Dear
Shareowner of Interpublic Group of Companies:
VOTE FOR PROPOSAL #4 –
PROVIDE SHAREOWNER ADVISORY VOTE ON COMPENSATION
I am
writing to you on behalf of the California Public Employees’ Retirement System
(CalPERS). CalPERS is the largest public pension system in the U.S.,
with approximately $240 billion in assets. We manage retirement benefits and
health insurance on behalf of nearly 1.5 million members. CalPERS is a
significant long-term shareowner of Interpublic Group owning approximately 3.3
million shares. We are
requesting your support for Proposal #4 at the May 22, 2008 Annual Meeting of
Shareowners to allow shareowners the opportunity at each annual meeting to
ratify executive compensation.
PAY FOR FAILURE AT
INTERPUBLIC GROUP
Over the
last five years, pay practices at Interpublic indicate the inability of the
company’s existing executive compensation pay structure to drive shareowner
value. Shareowners of Interpublic have witnessed absolute share value
destruction and stock underperformance relative to the Russell 3000 index and
its industry peer index over the 1-, 3- and 5-year time periods ending March 31,
2008:
|
Time
period
ending
3/31/2008
|
Interpublic
Group
of
Companies
(IPG)
|
Russell
3000
Index
|
Relative
Return
IPG
to
Russell
3000
Index
|
Advertising
Agencies
Russell
Industry
Peer
Index
|
Relative
Return
IPG
to
Russell
Peer
Index
|
|
5
years
|
-9.57%
|
76.77%
|
-86.34%
|
37.12%
|
-46.7%
|
|
3
years
|
-31.51%
|
19.45%
|
-50.9%
|
-11.99%
|
-19.52%
|
|
1
year
|
-31.68%
|
-6.06%
|
-25.62%
|
-27.22%
|
-4.46%
|
Source:
Factset
|
Ø
|
As
disclosed in the 2008 Proxy Statement, the Board awarded pay increases to
themselves as directors and executive management while delivering
significant long-term absolute and relative stock underperformance to
shareowners.
|
PROPOSAL #4 SEEKS ANNUAL
NON-BINDING SHAREOWNER SAY-ON-PAY
A
non-binding shareowner advisory vote on executive compensation would enhance
constructive communication between shareowners and the board on the topic of
compensation while improving transparency in setting executive
pay. Directors should be held to a high standard of accountability in
explaining and justifying compensation policies and decisions in terms of
aligning executive performance with the creation of shareowner
value. An advisory vote would inform management and the board of
shareowner views without involving shareowners in the micromanagement of
executive compensation decisions. Shareowner voting results of an
advisory vote would:
|
Ø
|
Promote
substantive dialogue, encourage independent thinking by the board, and
stimulate healthy debate for the purpose of holding management accountable
for stock performance.
|
Interpublic
Group of Companies.
April 28,
2008
Page
2
ANNUAL ADVISORY SHAREOWNER
VOTE: A POSITIVE GLOBAL BEST PRACTICE
CalPERS
believes communicating non-binding shareowner sentiment (Positive or Negative)
about executive compensation is an effective alternative to withholding vote
from individual directors. Shareowners are serious about holding
their director representatives accountable for compensating executives. However,
withholding votes from compensation committee members can send a mixed message
for registering dissatisfaction for the way a compensation committee administers
compensation plans and policies.
Today,
Boards in the United States including Aflac, Verizon, RiskMetrics, Par
Pharmaceuticals, and Blockbuster have concluded that submitting executive
compensation practices and philosophies to shareowners for ratification is the
right thing to do. In addition, companies in other countries, such as the United
Kingdom and Australia, allow shareowners to cast an advisory vote on executive
compensation practices resulting in no apparent negative ramifications to
shareowner value.
|
Ø
|
An
executive compensation advisory vote is the RIGHT THING TO
DO as evidenced by corporate adoption and support
globally.
|
YOU CAN HELP – VOTE “FOR”
PROPOSAL #4
CalPERS
believes that approval of Proposal #4 will send a strong message to the
Interpublic Board to improve compensation policies, while having a positive
impact on shareowner value.
|
Ø
|
Send
a powerful message by voting “FOR” proposal #4 on the proxy card. The
results of such a vote would, we believe, provide useful information about
whether shareowners view senior executive compensation practices, as
reported each year, to be in shareowners’ best
interests.
|
|
|
Ø
|
Publicize
your vote to further unite and encourage investors to support this
campaign.
|
DO NOT BE MISLED BY
INTERPUBLIC
|
Ø
|
If
you are an investor and find yourself under pressure from Interpublic to
vote against this proposal, ask yourself why defeating this initiative –
which is intended to improve board accountability, shareowner rights, and
shareowner value – is so important to
them.
|
Please
refer to the proxy statement for more information or call The Altman Group, Inc.
who is assisting us with this effort toll-free at (800) 314-9816 or at (201)
460-1200 if you have any questions or need assistance in voting your
shares.
Sincerely,
Dennis
Johnson, CFA
Senior
Portfolio Manager
PLEASE NOTE: CalPERS is not
asking for your proxy card. Please do not send us your proxy card
but return it to the proxy voting agent in the envelope that was provided to
you.