SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Check the appropriate box:
|_| Preliminary Proxy Statement
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|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Omnicom Group Inc.
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(Name of Registrant as Specified In Its Charter)
Omnicom Group Inc.
---------------------------------------
(Name of Person Filing Proxy Statement)
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|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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|_| Check box if any part of the fee is offset as provided by Exchange Act
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<PAGE>
OMNICOM GROUP INC.
437 Madison Avenue
New York, New York 10022
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 24, 1994
The Annual Meeting of the Shareholders of Omnicom Group Inc. (the
"Corporation") will be held at McGraw-Hill Inc. (second floor Auditorium), 1221
Avenue of the Americas (49th Street entrance), New York, New York on Tuesday,
May 24, 1994 at 9:30 A.M. for the following purposes:
1. To elect five directors;
2. To confirm the appointment of Arthur Andersen & Co. as auditors of the
Corporation for the year 1994;
3. To consider and act upon an amendment to the Corporation's 1987 Stock
Plan providing 100,000 shares as the maximum number of shares with
respect to which options may be granted to any employee in any one
calendar year;
4. To consider and act upon an amendment to the 1987 Stock Plan providing
a three year post-employment option exercise period when termination
of employment is caused by death or by reason of Total Disability,
Retirement or Involuntary Termination as defined in the 1987 Stock
Plan;
5. To consider and act upon the 1994 Performance Compensation Plan and
the arrangements established thereunder by the Compensation Committee
of the Corporation's Board of Directors for the Chief Executive
Officer and certain other executive officers of the Corporation; and
6. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only shareholders of record at the close of business on April 5, 1994 will
be entitled to notice of and to vote at the meeting.
Whether you expect to attend the meeting or not, please mark, sign, date
and return the enclosed proxy promptly in order that your shares will be voted.
A return envelope which requires no postage if mailed in the United States is
enclosed for your convenience. The proxy is revocable, so if you attend the
meeting you may, if you wish, vote your shares in person.
A copy of the Corporation's Annual Report for 1993 is enclosed.
By order of the Board of Directors,
Raymond E. McGovern
Secretary
New York, New York
April 8, 1994
<PAGE>
OMNICOM GROUP INC.
437 Madison Avenue
New York, New York 10022
------------------------
PROXY STATEMENT
Execution and return of the enclosed proxy are solicited by the Board of
Directors of Omnicom Group Inc. (the "Corporation") for use at the Annual
Meeting of Shareholders ("Annual Meeting") to be held on May 24, 1994, and at
any adjournments thereof, for the purposes set forth in the accompanying notice.
The following information is being furnished in connection with the solicitation
of proxies, and is being mailed on or about April 8, 1994 to shareholders
entitled to notice of and to vote at the Annual Meeting.
All valid proxies which are received will be voted, and unless otherwise
specified thereon they will be voted for the election of the five nominees for
directors named under the heading "Election of Directors," for confirmation of
the appointment of Arthur Andersen & Co. as auditors of the Corporation for the
year 1994, for approval of two amendments to the Corporation's 1987 Stock Plan,
and for the approval of the 1994 Performance Compensation Plan and the
arrangements established thereunder for the Chief Executive Officer and certain
other executive officers of the Corporation. If any nominee for election as a
director shall be unable to serve, proxies shall be voted for another nominee
designated by the Board of Directors. You may revoke your proxy at any time
before it is voted.
The affirmative vote of a plurality of the votes cast by the holders of the
Common Stock entitled to vote is required for the election of directors. The
affirmative vote of a majority of the votes cast by the holders of the Common
Stock entitled to vote is required for confirmation of the appointment of the
auditors and for approval of the 1994 Performance Compensation Plan and the
related compensation arrangements. The affirmative vote of a majority of all the
votes entitled to be cast by the holders of the Common Stock is required for
approval of each of the amendments to the 1987 Stock Plan. Each holder of Common
Stock is entitled to one vote for each share held. There is no right to
cumulative voting as to any matter.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether or
not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the approval of
any matter submitted to the shareholders for a vote. If a broker indicates on
the proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter, those shares will not be considered as present and
entitled to vote with respect to that matter.
The enclosed Annual Report of the Corporation for the year 1993 is not part
of the proxy solicitation material.
On April 5, 1994, the record date for determination of shareholders
entitled to notice of and to vote at the Annual Meeting, the Corporation had
outstanding 33,523,150 shares of Common Stock, each of which is entitled to one
vote. At the record date, 1,339,000 shares of Common Stock were owned
beneficially (of which 733,576 shares were owned of record) by the directors and
executive officers of the Corporation, which constitutes approximately 4.0% of
the issued and outstanding shares of the Corporation's Common Stock.
<PAGE>
The following table sets forth information as of December 31, 1993, based
on materials filed with the Securities and Exchange Commission, with respect to
the beneficial ownership of the Corporation's Common Stock by persons known to
the Corporation to be the beneficial owners of more than 5% of its outstanding
Common Stock.
Beneficial Ownership Percent of
Name and Address of Common Stock Class
- ------------------ -------------------- ----------
FMR Corp........................................ 2,803,965(1) 8.1%
82 Devonshire Street
Boston, Massachusetts
The Travelers Inc............................... 2,468,208(2) 7.3%
65 East 55th Street
New York, New York
The Prudential Insurance Company of America..... 2,296,013(3) 6.8%
Prudential Plaza
Newark, New Jersey
Oppenheimer Group, Inc.......................... 1,753,300(4) 5.2%
Oppenheimer Tower
World Financial Center
New York, New York
- -----------
(1) In its filing with the Securities and Exchange Commission, this beneficial
owner reported having sole voting power as to 94,975 shares and sole
dispositive power as to 2,803,965 shares.
(2) In its filing with the Securities and Exchange Commission, this beneficial
owner reported having sole voting power as to 572,659 shares, shared voting
power as to 449,386 shares, sole dispositive power as to 1,523,898 shares
and shared dispositive power as to 944,310 shares.
(3) In its filing with the Securities and Exchange Commission, this beneficial
owner reported having sole voting power as to 184,700 shares, shared voting
power as to 1,518,594 shares, sole dispositive power as to 184,700 shares
and shared dispositive power as to 2,111,313 shares.
(4) In its filing with the Securities and Exchange Commission, this beneficial
owner reported having shared voting power as to 1,753,300 shares and shared
dispositive power as to 1,753,300 shares.
ELECTION OF DIRECTORS
On the date of the 1994 Annual Meeting, the Board of Directors of the
Corporation shall consist of 17 members, divided into three classes, with the
term of office of one class expiring at the 1994 Annual Meeting, the term of
another class expiring at the 1995 Annual Meeting, and the term of the remaining
class expiring at the 1996 Annual Meeting. The Board of Directors nominates
incumbent directors Robert J. Callander, John R. Purcell, Quentin I. Smith, Jr.,
William G. Tragos,* and Egon P.S. Zehnder to serve as directors of the
Corporation until the 1997 Annual Meeting. Incumbent director Raymond E.
McGovern, Secretary & General Counsel of the Corporation, chose not to stand for
election to the Board of Directors when his term of office expires at the 1994
Annual Meeting.
- -----------
* Elected a director by the Board of Directors on November 29, 1993.
2
<PAGE>
Information relating to the five nominees for director and the directors
not standing for election who will continue in office following the Annual
Meeting is set forth below.
<TABLE>
<CAPTION>
Year First Term
Name, Age and Principal Became a Will
Occupation(1) Director Expire
----------------------- ---------- ------
<S> <C> <C>
John L. Bernbach (50)................................................................... 1984 1996
Vice Chairman of DDB Needham Worldwide Inc., a subsidiary of the Corporation.
Bernard Brochand (55)................................................................... 1993 1996
President, International Division of DDB Needham Worldwide Inc.
Robert J. Callander (63)................................................................ 1992 1994
Executive-in-Residence, Columbia School of Business, Columbia University;
Retired Vice Chairman, Chemical Banking Corporation.
James A. Cannon (55).................................................................... 1986 1996
Vice Chairman & Chief Financial Officer of BBDO Worldwide Inc.,
a subsidiary of the Corporation.
Leonard S. Coleman, Jr. (45)............................................................ 1993 1996
President, National League, Major League Baseball.
Bruce Crawford (65)..................................................................... 1989 1995
President & Chief Executive Officer of the Corporation.
Peter I. Jones (51)..................................................................... 1989 1995
Chief Executive of Diversified Agency Services Limited,
a subsidiary of the Corporation.
Fred J. Meyer (63)...................................................................... 1988 1996
Chief Financial Officer of the Corporation.
John R. Purcell (62).................................................................... 1986 1994
Chairman & Chief Executive Officer of Grenadier Associates Ltd.
Keith L. Reinhard (59).................................................................. 1986 1995
Chairman & Chief Executive Officer of DDB Needham Worldwide Inc.
Allen Rosenshine (55)................................................................... 1986 1995
Chairman & Chief Executive Officer of BBDO Worldwide Inc.
Gary L. Roubos (57)..................................................................... 1986 1995
Chairman & Chief Executive Officer of Dover Corporation.
Quentin I. Smith, Jr. (66).............................................................. 1986 1994
Corporate Director; Retired Chairman & Chief Executive Officer
of Towers, Perrin, Forster & Crosby.
Robin B. Smith (54)..................................................................... 1986 1996
President & Chief Executive Officer, Publishers Clearing House.
William G. Tragos (59).................................................................. 1993 1994
Chairman & Chief Executive Officer of TBWA International B.V.
and of TBWA Advertising Inc., subsidiaries of the Corporation.
John D. Wren (41)....................................................................... 1993 1995
Chairman & Chief Executive Officer of Diversified Agency Services,
a division of the Corporation.
Egon P.S. Zehnder (64)
Chairman of Egon Zehnder International Inc........................................... 1986 1994
<FN>
- --------------
(1) Except as indicated below, all of the above-named directors holding a
position with the Corporation or one of its subsidiaries have held an
executive position during the past five years with the Corporation or one
of its subsidiaries.
</FN>
</TABLE>
3
<PAGE>
Mr. Bernbach is a director of Culbro Corporation, North American Television
Inc., and Northbridge Programming Inc.
Mr. Callander is retired Vice Chairman of Chemical Banking Corporation. He
previously served as President of Chemical Bank from August 1990 through
December 1991, and as Vice Chairman of that company from January 1987 through
July 1990. Mr. Callander is presently serving as Executive-in-Residence at the
Columbia School of Business, Columbia University, New York. Mr. Callander is a
director of ARA Group Incorporated, Barnes Group Inc., Beneficial Corporation,
and Latin American Dollar Income Fund.
Mr. Coleman has served as President, National League, Major League Baseball
since March 1994. He served as Executive Director Market Development, Major
League Baseball from December 1991 to March 1994, and previously served as a
Vice President, Kidder, Peabody & Company from 1988 to 1991. Mr. Coleman is a
director of Beneficial Corporation.
Mr. Jones served as Chief Executive of Boase Massimi Pollitt plc from
December 1, 1988 through June 1989. During the period 1983 through November 30,
1988, he served that company as a non-executive director and a part time
consultant, and managed his own publishing business. Mr. Jones commenced service
with Diversified Agency Services Limited (formerly named Omnicom UK plc) as its
Chief Executive in July 1989.
Mr. Meyer is a director of SoGen Funds, Inc., SoGen International Fund,
Inc., and Aegis Group plc.
Mr. Purcell has served as Chairman and Chief Executive Officer of Grenadier
Associates Ltd., a merchant banking and financial advisory firm, since January
1987. He also serves as Chairman of Donnelley Marketing, Inc., a data base
direct marketing firm. He served as Chairman and President of the former SFN
Companies, Inc. from 1982 through 1986, and previously served as Executive Vice
President of CBS, Inc. and as Senior Vice President - Finance and Business
Operations of Gannett Co., Inc. He is a director of Bausch & Lomb, Inc., Playboy
Enterprises, Inc., and Technology Solutions Corp.
Mr. Roubos has served as Chief Executive Officer of Dover Corporation since
1981, and as Chairman since May 1989. Dover Corporation, a Fortune 500 company,
engages through subsidiaries in the manufacture and/or distribution of
elevators, and electronic, aerospace and industrial components and supplies. Mr.
Roubos is a director of Dover Corporation, Scott Paper Company, and
Gabelli-O'Connor Treasurers Fund, and a member of the New York Advisory Board of
Liberty Mutual Insurance Company.
Mr. Smith served as Chairman and Chief Executive Officer of Towers, Perrin,
Forster & Crosby, a leading international benefits, compensation and general
management consulting firm from 1971 until his retirement on December 31, 1987.
Mr. Smith is a director of The Guardian Life Insurance Company of America, and
UGI Corporation.
Ms. Smith has served as President of Publishers Clearing House, the largest
magazine subscription company in the world, since September 1981, and as
President and Chief Executive Officer since January 1988. Ms. Smith is a
director of Huffy Corporation, Global Yield Fund, Global Utility Fund, First
Financial Fund, Prudential Institutional Liquidity Portfolio, Target Portfolio
Trust, The High Yield Plus Fund Inc., The High Yield Income Fund Inc., Springs
Industries, Inc., and Texaco Inc.
Mr. Tragos has served as Chairman and Chief Executive Officer of TBWA
International B.V. and as Chairman and Chief Executive Officer of TBWA
Advertising Inc., companies which directly or through other entities provide
advertising and marketing services, for more than five years.
Mr. Zehnder has served as Chairman of Egon Zehnder International Inc., a
leading international executive search firm with forty offices in twenty-six
countries, for more than the past five years. Mr. Zehnder is a director of IMD
Management Development Institute, Lausanne, Switzerland, and a member of the
Board of Trustees of Babson College, Wellesley, Massachusetts.
A plurality of the votes cast is required to elect each director.
4
<PAGE>
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information, as of March 22, 1994, as to the
beneficial ownership of the Common Stock of the Corporation for each director of
the Corporation (all of the Named Officers, as such term is hereinafter defined,
are directors of the Corporation), and all directors and executive officers of
the Corporation as a group.
Beneficial Ownership Percent
Name of Beneficial Owner of Common Stock (1) of Class
------------------------ -------------------- --------
John L. Bernbach ..................... 12,050 .0359
Bernard Brochand ..................... 28,000 .0835
Robert J. Callander .................. 500 .0015
James A. Cannon ...................... 109,705 .3273
Leonard S. Coleman, Jr. .............. 300 .0009
Bruce Crawford ....................... 235,274 .7018
Peter I. Jones ....................... 19,000 .0567
Raymond E. McGovern .................. 136,100 .4060
Fred J. Meyer ........................ 91,500 .2729
John R. Purcell ...................... 5,000 .0149
Keith L. Reinhard .................... 221,768 .6615
Allen Rosenshine ..................... 253,935 .7575
Gary L. Roubos ....................... 1,000 .0030
Quentin I. Smith, Jr. ................ 1,000 .0030
Robin B. Smith ....................... 100 .0003
William G. Tragos .................... 151,667 .4524
John D. Wren ......................... 59,151 .1764
Egon P.S. Zehnder .................... 2,000 .0060
All directors and executive
officers as a group (20 persons) ... 1,340,300 3.9981
- -----------
(1) Includes (i) shares held under restricted stock awards granted by the
Corporation, namely, Mr. Bernbach - 10,200 shares, Mr. Brochand - 16,800
shares, Mr. Cannon - 22,100 shares, Mr. Crawford - 36,600 shares, Mr.
McGovern - 10,500 shares, Mr. Meyer - 26,000 shares, Mr. Reinhard - 21,300
shares, Mr. Rosenshine - 28,800 shares, and Mr. Wren - 23,100 shares, (ii)
shares which certain of the named individuals have the right to purchase
under stock options granted by the Corporation, namely, Mr. Cannon - 69,500
shares, Mr. Crawford - 132,500 shares, Mr. Jones - 19,000 shares, Mr.
McGovern - 62,750 shares, Mr. Meyer - 42,000 shares, Mr. Reinhard - 91,500
shares, Mr. Rosenshine - 155,000 shares, and Mr. Wren - 19,000 shares, and
(iii) 11,974 shares credited to Mr. Crawford's account under the
Corporation's Group Profit Sharing Retirement Plan.
Based on a review of Forms 3, 4 and 5 and any amendments thereto furnished
to the Corporation pursuant to Section 16 of the Securities Exchange Act of
1934, all of such Forms were filed on a timely basis by the reporting persons.
BOARD MEETINGS AND COMMITTEES
During 1993, the Board of Directors of the Corporation (the "Board") held
seven meetings (five regular and two special). Each member of the Board attended
at least 75% of the aggregate of all meetings of the Board and Committees of the
Board on which he or she served, except Messrs. Brochand, Jones and Zehnder
(these European based directors missed the two special meetings), and
Mr.Reinhard.
5
<PAGE>
Four meetings of the Audit Committee of the Board were held in 1993, during
which time the Committee consisted of Messrs. Roubos (Chairman), Coleman
(commencing May 14, 1993) and Purcell, and Ms. Smith. On November 29, 1993 Mr.
Roubos left the Audit Committee to become Chairman of the newly established
Nominating Committee (discussed below), and Ms. Smith replaced Mr. Roubos as
Chairman of the Audit Committee. The responsibilities of the Audit Committee are
to (a) recommend to the Board the appointment of independent public accountants
to audit the books and records of the Corporation, and, in assessing the
independence of the public accountants, to review the impact of their retention
by the Corporation for non-audit related services; (b) review with the
independent public accountants the proposed scope and administration of their
audit of the annual consolidated financial statements of the Corporation and its
subsidiaries, the Corporation's internal control structure upon which the scope
was determined, and the estimated audit fees; (c) review with the independent
public accountants and corporate management the results of the annual audit,
including the accountants' recommendations relating to accounting, financial and
operating procedures and controls, and the financial statements to be included
in the Annual Report and Form 10-K; (d) review with the Corporation's internal
auditors the proposed scope of their annual activities and reports of the
results of such activities; (e) review undertakings by corporate management to
remedy fraudulent activity that may be detected within the Corporation; (f)
review the Corporation's public reporting policies and practices; and (g) report
to the Board on its activities.
During 1993, the Compensation Committee of the Board consisted of Messrs.
Smith (Chairman), Callander, and Zehnder, and Ms. Smith. Four Committee meetings
were held in 1993, and Committee action by unanimous written consent was taken
on one occasion in 1993. The responsibilities of the Compensation Committee are
to (a) review the compensation policies of the Corporation and its principal
subsidiaries, and, when appropriate, make recommendations with respect to such
policies to the Chief Executive Officer of the Corporation; (b) review proposed
compensation plans in which officers and/or directors of the Corporation will be
eligible to participate, and, when appropriate, make recommendations with
respect to such plans to the Chief Executive Officer of the Corporation; (c)
serve as the Committee to administer and grant awards and options under
compensation plans providing for the issuance of shares of stock of the
Corporation; (d) make recommendations to the Board with respect to the salary,
bonus and other elements of compensation for the Chief Executive Officer of the
Corporation; and (e) review with the Chief Executive Officer management
recommendations with respect to compensation for directors who are employees of
the Corporation or its subsidiaries and any executive officer of the Corporation
or its subsidiaries whose compensation is required to be disclosed in the
Corporation's Proxy Statement.
On November 29, 1993 the Board established a Nominating Committee, elected
Messrs. Purcell, Roubos and Zehnder members of the Committee, and appointed Mr.
Roubos as Chairman of the Committee. The Nominating Committee did not meet in
1993. The responsibilities of the Nominating Committee are to consider and make
recommendations to the Board from time to time with respect to (a) the
composition and size of the Board and Committees of the Board, (b) criteria for
evaluating the qualifications of new individuals being considered as candidates
for election to the Board, and (c) potential conflicts of interest arising as a
result of other positions held or proposed to be held by directors. The
Nominating Committee will consider shareholder written recommendations of
nominees for election to the Board if they are accompanied by a reasonably
comprehensive written resume of the recommended nominee's business experience
and background and a written consent signed by the recommended nominee wherein
he or she consents to be considered as a nominee and, if nominated and elected,
consents to serve as a director. Shareholders should send their written
recommendations of nominees accompanied by the aforesaid documents to the
offices of the Corporation, attention Corporate Secretary.
DIRECTORS' COMPENSATION
During 1993, each director who was not an employee of the Corporation or
one of its subsidiaries was paid (i) a monthly retainer of $1,000, (ii) a fee of
$2,000 for attendance at the first meeting of the Board of Directors or a
Committee of the Board of Directors on a given day, and (iii) a fee of $1,500
for attendance at any subsequent meeting on the same day. A director who is an
employee of the Corporation or one of its subsidiaries does not receive any
compensation for serving as a director.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information in respect of the compensation
of the Chief Executive Officer and each of the other four most highly
compensated executive officers of the Corporation (collectively the "Named
Officers") for services in all capacities to the Corporation and its
subsidiaries for the fiscal years ended December 31, 1991, 1992 and 1993.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
------------------------ -------------------------------
Name and All Other
Principal Restricted Stock Stock Options Compen-
Position Year Salary($) Bonus($) Awards($) (1) (# of Shares) sation($)(2)
-------- ---- --------- --------- ---------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Bruce Crawford ......... 1993 $875,000 $565,000 $715,313 50,000 $39,488
President & 1992 800,000 500,000 420,750 40,000 38,761
Chief Executive 1991 743,750 425,000 235,688 30,000
Officer of the
Corporation.
James A. Cannon, ....... 1993 380,000 335,000 381,500 25,000 33,707
Vice Chairman & 1992 353,750 335,000 280,500 20,000 34,320
Chief Financial 1991 336,250 310,000 130,938 12,500
Officer of BBDO
Worldwide Inc.
Fred J. Meyer, ......... 1993 500,000 475,000 429,188 30,000 41,968
Chief Financial 1992 462,500 400,000 315,563 25,000 37,718
Officer of the 1991 437,500 335,000 183,313 15,000
Corporation.
Keith L. Reinhard, ..... 1993 752,800 190,000 357,656 25,000 22,105
Chairman & Chief 1992 740,306 165,000 245,438 25,000 13,405
Executive Officer 1991 703,556 190,750 183,313 20,000
of DDB Needham
Worldwide Inc.
Allen Rosenshine, ...... 1993 725,000 480,000 476,875 40,000 34,919
Chairman & Chief 1992 706,250 480,000 350,625 30,000 35,842
Executive Officer 1991 650,000 440,000 209,500 20,000
of BBDO World-
wide Inc.
</TABLE>
- --------------
(1) The value of the restricted stock awards was determined by multiplying the
fair market value of the Corporation's Common Stock on the date of the
grant by the number of shares awarded, and deducting therefrom the
consideration paid for the shares, which is equal to the par value ($.50
per share) of the shares. As of December 31, 1993, Mr. Crawford held an
aggregate of 32,400 shares of restricted stock with a net pre-tax value of
$1,478,250 (equal to fair market value of the shares on said date ($46.125
per share) less consideration paid), Mr. Cannon held an aggregate of
19,200 shares of restricted stock with a net pre-tax value of $876,000,
Mr. Meyer held an aggregate of 23,600 shares of restricted stock with a
net pre-tax value of $1,076,750, Mr. Reinhard held an aggregate of 19,200
shares of restricted stock with a net pre-tax value of $876,000, and Mr.
Rosenshine held an aggregate of 26,000 shares of restricted stock with a
net pre-tax value of $1,186,250. Dividends will be payable on the
aforementioned shares if and to the extent paid on the Corporation's
Common Stock generally, regardless of whether the shares are at the time
vested or unvested. Twenty percent of the shares of restricted stock held
by each Named Officer will vest on the first anniversary of the award, and
an additional twenty percent will vest on each of the next four
anniversaries of the award.
(footnotes continued on next page)
7
<PAGE>
(2) The compensation paid for the fiscal year ended December 31, 1993 consists
of (i) employer contributions to the Corporation's Group Profit Sharing
Retirement Plan in the amount of $28,300 on behalf of each of Messrs.
Crawford and Meyer, $30,000 on behalf of each of Messrs. Cannon and
Rosenshine, and $10,613 on behalf of Mr. Reinhard, (ii) employer
contribution to the DDB Needham Joint Savings Plan in the amount of $4,717
on behalf of Mr. Reinhard, (iii) employer premium payments for life
insurance in the amount of $6,188 on behalf of Mr. Crawford, $3,707 on
behalf of Mr. Cannon, $11,168 on behalf of Mr. Meyer, $6,775 on behalf of
Mr. Reinhard, and $4,919 on behalf of Mr. Rosenshine, and (iv) a service
award of $5,000 for Mr. Crawford and $2,500 for Mr. Meyer.
Options
The following table shows all grants of options to Named Officers in 1993.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Individual Grants Appreciation for Option Term (3)
- -------------------------------------------------------------------------- --------------------------------
% of Total
Options
Options Granted to Exercise
Granted Employees Price
Name (#shares)(1) in 1993 ($ per Share) Expiration Date(2) 0%($) 5%($) 10%($)
---- ------------ ---------- ------------- ------------------ ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce Crawford...... 50,000 17.544 $40.0625 February 24, 2003 $0 $1,261,969 $3,184,969
James A. Cannon..... 25,000 8.772 40.0625 February 24, 2003 0 630,984 1,592,484
Fred J. Meyer....... 30,000 10.526 40.0625 February 24, 2003 0 757,181 1,910,981
Keith L. Reinhard... 25,000 8.772 40.0625 February 24, 2003 0 630,984 1,592,484
Allen Rosenshine.... 40,000 14.035 40.0625 February 24, 2003 0 1,009,575 2,547,975
<FN>
- --------------
(1) Each of the options is exercisable as to 30% of the total shares granted
on and after the first anniversary of the grant, as to an additional 30%
on and after the second anniversary of the grant, and as to the remaining
40% on and after the third anniversary of the grant. Each of the options
granted is a non-qualified stock option, and the Corporation is entitled
to a tax deduction equal to the excess of the fair market value of the
acquired shares over the exercise price of the option.
(2) Upon an optionee's (i) voluntary termination or termination for cause, all
outstanding options are cancelled, (ii) retirement or involuntary
termination, options outstanding for less than 12 months are cancelled and
the other outstanding options become exercisable in full only during the
three month period following termination, (iii) termination by reason of
total disability, all outstanding options become exercisable in full only
during the six month period following termination, and (iv) termination by
reason of death, all outstanding options become exercisable in full only
during the nine month period following termination (the exercise period
expires nine months after termination in event of the death, within
specified periods of time, of an optionee who was earlier terminated by
reason of retirement, involuntary termination or total disability). In no
event will an option exercise period extend beyond the expiration date of
the option term (see the information on page 15 of this Proxy Statement
relating to post-termination exercise of stock options). In the event of a
change of control transaction, the outstanding options become exercisable
in full at the effective time of the transaction absent an agreement of
the ultimate parent of the entity which survives the change of control
transaction to assume the outstanding options or substitute new options
for the outstanding options, on identical or more favorable terms.
(3) These columns present hypothetical future values of the Corporation's
Common Stock obtainable upon exercise of the options net of the options'
exercise price, assuming that the market price of the Corporation's Common
Stock appreciates at the specified compound annual rates over the ten-year
term of the option. The five and ten percent rates of stock price
appreciation are presented as examples pursuant to SEC rules, and do not
necessarily reflect management's assessment of the Corporation's future
stock price performance. The potential realizable values presented are not
intended to indicate the options' value.
</FN>
</TABLE>
8
<PAGE>
The following table provides information as to the aggregated option
exercises by the Named Officers in 1993, and as to unexercised options held by
the Named Officers on December 31, 1993.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised In-the-Money
Options at Options at
December 31, 1993 December 31, 1993(2)
Number
of Shares
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized($)(1) Unexercisable Unexercisable
---- ----------- -------------- --------------- -------------
<S> <C> <C> <C> <C>
Bruce Crawford..................... 37,500 $834,375 87,500/96,000 $1,870,313/$1,043,375
James A. Cannon.................... -- -- 51,000/44,000 1,154,500/419,562
Fred J. Meyer...................... 37,500 553,689 19,500/53,500 366,094/512,719
Keith L. Reinhard.................. 30,000 573,141 68,500/50,500 1,495,845/526,156
Allen Rosenshine................... -- -- 126,000/69,000 2,964,812/655,812
<FN>
- --------------
(1) Value calculated by subtracting the exercise price from the fair market
value of the Corporation's Common Stock on the exercise date.
(2) Value calculated by subtracting the exercise price from the fair market
value of the Corporation's Common Stock on December 31, 1993, being $46.125
per share.
</FN>
</TABLE>
COMPENSATION COMMITTEE REPORT
Compensation Committee
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of independent outside directors. The responsibilities of the
Committee and the frequency of Committee Meetings during 1993 are described on
page 6 of this Proxy Statement.
Compensation Program for Executive Officers
The Corporation's compensation program for its executive officers is
designed to enable it to attract and retain highly qualified personnel and to
motivate them to achieve corporate performance objectives and increase
shareholder value.
The program is comprised of base salary, and performance related
compensation in the form of an incentive cash bonus and long-term stock awards
which align executive and shareholder interests.
The Committee considers the recommendations of the Chief Executive Officer
with respect to the compensation of the other Named Executive Officers. In
addition to these recommendations, the Committee considers other factors in
determining their compensation. These factors are described in more detail
below.
In determining base salary and individual adjustments to base salary, the
Committee considers the executive's level of responsibility, individual
performance, salaries of executives holding similar positions at publicly held
competitor companies with worldwide operations(1), and the profitability of the
Corporation and the business unit with which the executive is associated.
Adjustments in base salary are considered periodically (currently, every
eighteen months), and are discretionary in nature.
- -----------
(1) The latest available reported salary information with respect to the chief
executive officers of the five largest publicly held competitor companies
(based on reported worldwide gross revenues) is considered in determining
a salary adjustment for the Chief Executive Officer, and such salary
information with respect to executives at the largest domestic competitor
company holding positions similar to those of the other Named Executive
Officers is considered in determining salary adjustments for the other
Named Executive Officers. All of these competitor companies are included
in the Ad Peer Group Index described on page 12 of this Proxy Statement.
9
<PAGE>
Incentive compensation (cash bonus and restricted stock award grants under
the 1987 Stock Plan) is directly related to the fully diluted earnings per share
of the Corporation and the net profit after tax of the business unit with which
the executive officer is associated. In addition, corporate and business unit
revenue growth and profit margins are considered on a discretionary basis. At
the commencement of each fiscal year, the Corporation's Chief Executive Officer
meets with the senior executives of each of the Corporation's major business
units to establish net profit goals for that fiscal year. The business unit's
performance relative to these goals and the previous fiscal year's net profit
determines the size of incentive compensation payments for participants in the
business unit. Absent unusual circumstances, if there is no increase in the
business unit's profit performance over the previous fiscal year's level, there
will be no increase in the incentive compensation available to the business
unit. An increase or decrease in profit performance over the previous year's
level will generally result in a corresponding upward or downward adjustment to
the amount of incentive compensation payable. At the end of the fiscal year, the
Chief Executive Officer reviews the financial performance of the Corporation and
each major business unit with the Committee and recommends incentive
compensation awards for other executive officers of the Corporation, which the
Committee may accept or adjust. The Committee reviews the earnings performance
of the Corporation for the current year relative to the earnings goal
established earlier in the year by the Board of Directors and the previous
fiscal year's earnings, and recommends incentive compensation awards for the
Chief Executive Officer to the Board of Directors, which the Board may accept or
adjust.
The annual cash bonus represents a substantial portion of the total annual
cash compensation of executive officers, and serves as an incentive to improve
annual profitability. Restricted stock awards are also granted annually to a
relatively broad group of key executives, and 20% of the shares vest
(restrictions lapse) on each of the next five anniversary dates of the award.
Stock options are granted annually to a much smaller group of key
executives (including executive officers) who have the ability to influence
increases in shareholder value. There is no target ownership or grant level for
executive officers. In determining the size of stock option grants, the
Committee considers, on a discretionary basis, the annual revenue growth and
profitability of the Corporation and the financial performance of the business
unit with which the executive officer was associated during the prior fiscal
year, and the executive's previous stock option grants.
On March 28, 1994, the Board of Directors amended the 1987 Stock Plan,
subject to shareholder approval, to provide 100,000 shares as the maximum number
of shares with respect to which options may be granted to any employee
(including an executive officer) in any one calendar year. Prior to this
amendment, which is to take effect June 1, 1994, there was no restriction on the
size of option awards to executive officers. The per share option exercise price
is not less than the fair market value of a share of the Corporation's Common
Stock on the grant date, and the option is exercisable as to 30% of the shares
on and after each of the first two anniversary dates of the grant and as to the
remaining 40% on and after the third anniversary date.
Stock incentives in the form of restricted stock awards and stock options
align the long-term interests of the executive officers and shareholders, serve
as an incentive to build shareholder value, and provide a vehicle for retaining
executive officers and other key employees.
Chief Executive Officer Compensation
The Committee recommends, and the Board of Directors determines based on
such recommen-dations, compensation for the Chief Executive Officer.
Mr. Crawford's salary was increased by $100,000 to $900,000 on April 1,
1993, placing his salary at about the average of the reported 1992 salaries for
the chief executive officers of the competitor companies included in the Ad Peer
Group Index. The Committee found this increase to be fair and reasonable on the
basis of the Corporation's 1992 earnings per share performance which exceeded
the performance goal for such year, and its evaluation of the Corporation's 1992
financial performance relative to the 1992 financial performance of the
competitor companies included in the Ad Peer Group Index.
10
<PAGE>
Mr. Crawford was granted an option to purchase 50,000 shares in early 1993.
The Committee found this grant to be fair and reasonable on the basis of the
Corporation's 1992 financial performance (revenues up 12%, net income up 21% and
fully diluted earnings per share up 15% over 1991), a strong performance in a
difficult business year for the advertising industry.
Mr. Crawford received a cash bonus of $565,000 and a restricted stock award
grant of 15,000 shares (valued at $715,313 in the Summary Compensation Table on
page 7 of this Proxy Statement) for 1993 performance. The Committee found the
bonus and restricted stock award to be fair and reasonable on the basis of the
Corporation's 1993 financial performance (revenues up 9%, net income up 23%, and
fully diluted earnings per share up 13% over 1992), and Mr. Crawford being
largely responsible for achieving the strategic objective of establishing a
third independent worldwide advertising network through the acquisition of TBWA
International B.V. and its operations in May 1993.
Internal Revenue Code Section 162(m)
Section 162(m) places a limit of $1 million on the deductibility of
compensation paid by the Corporation to its Chief Executive Officer and certain
other executive officers in tax years beginning on or after January 1, 1994.
Compensation that qualifies as performance-based under Section 162(m) will,
however, be excepted from the $1 million deduction cap.
The Committee intends to structure the Corporation's stock option program
and other incentive arrangements for the Chief Executive Officer and certain
executive officers of the Corporation under the cash bonus and restricted stock
programs to qualify the compensation payments to such officers as
performance-based for purposes of Section 162 (m) when, in the judgment of the
Committee, this would be consistent with the goals of motivating the executives
to achieve corporate performance objectives and increase shareholder value.
In keeping with this intention, the shareholders are being asked to approve
an amendment to the Corporation's 1987 Stock Plan (see page 15) of this Proxy
Statement) which is being submitted for shareholder approval so that
compensation attributable to the exercise of an option may qualify as
performance-based for purposes of Section 162(m). Further, the Committee has
established a Plan which sets written performance compensation arrangements for
the Chief Executive Officer and for certain other executive officers of the
Corporation (see page 18 of this Proxy Statement) which are being submitted for
shareholder approval to qualify 1994 compensation payments under such
arrangements as performance-based for purposes of Section 162(m) and preserve
the Corporation's tax deductions for such payments.
Quentin I. Smith, Jr., Chairman
Robert J. Callander
Robin B. Smith
Egon P.S. Zehnder
Members of the Compensation Committee
The above Compensation Committee Report shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Corporation
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
11
<PAGE>
PERFORMANCE GRAPH
The graph below compares cumulative total return on the Corporation's
Common Stock, Standard & Poor's 500 Composite Index ("S&P 500 Index") and a
group of publicly-held advertising companies consisting of Foote, Cone & Belding
Communications, Inc., Grey Advertising Inc., Saatchi & Saatchi Company plc, The
Interpublic Group of Companies, Inc. and WPP Group plc ("Ad Peer Group Index").
The graph assumes the investment of $100 on January 1, 1989 in the Corporation's
Common Stock, the S&P 500 Index and the Ad Peer Group Index.
1988 1989 1990 1991 1992 1993
------ ------ ------ ------ ------ ------
Omnicom 100.00 136.95 128.72 184.25 246.63 284.54
S & P 500 100.00 131.69 127.61 166.49 179.18 197.24
Ad Peer Group 100.00 107.81 71.49 105.71 129.78 132.22
Returns for the Corporation's Common Stock depicted in the graph are not
necessarily indicative of future performance.
The above graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Corporation specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
12
<PAGE>
EMPLOYMENT CONTRACTS/TERMINATION OF EMPLOYMENT
ARRANGEMENTS FOR NAMED OFFICERS
None of the Named Officers has an employment contract with the Corporation
or one of its subsidiaries.
Agreements were entered into between BBDO Worldwide Inc. ("BBDO") and
Messrs. Cannon and Rosenshine (as of January 9, 1989) and Mr. Crawford (as of
March 21, 1989), replacing earlier agreements between BBDO and these individuals
containing substantially the same terms and conditions as those found in the
current agreements except as noted below, whereunder BBDO has agreed to make
annual severance compensation payments for periods of up to ten years following
cessation of employment, the period being determined on the basis of each
individual's age and years of service with BBDO, its subsidiaries or its parent
at the time of cessation of employment. BBDO is not obligated to make payments
under these agreements if the individual's employment with BBDO, its
subsidiaries or its parent is terminated for cause (as defined in the
agreement). The payment period under these agreements is ten years for Messrs.
Crawford, Cannon and Rosenshine. The amount of an annual payment under these
agreements is limited to the lesser of (i) an assigned percentage of the
individual's annual salary, or (ii) an assigned percentage of the consolidated
net profit before tax (as defined in the agreement) of BBDO or its parent
company, whichever is greater. BBDO has agreed to make these payments so long as
the individual refrains from engaging in activities harmful to, competitive with
or of the same nature as those of his former employer, and remains available to
render consulting services to his former employer. If the individual should die
before the expiration of the payment period, BBDO has agreed to make an annual
payment to the individual's beneficiary for the number of years the individual
would have been entitled to payments had he lived, in an amount equal to
seventy-five percent of the annual payment the individual would have received
had he lived. Under the earlier agreements BBDO did not agree to make payments
to a beneficiary following the death of the individual. Payments under these
agreements are to be accrued as costs in the year in respect of which the
payments are made.
Agreements were entered into between the Corporation and Messrs. Meyer and
Reinhard (as of December 22, 1988) whereunder the Corporation has agreed to make
salary continuation payments annually for periods of up to ten years following
cessation of employment, the period being determined on the basis of the
individual's age and years of service with the Corporation or its subsidiaries
at the time of cessation of employment. The Corporation is not obligated to make
payments under these agreements if the individual's employment with the
Corporation or its subsidiaries is terminated for cause (as defined in the
agreement). The payment period under these agreements is five years for Mr.
Meyer and 10 years for Mr. Reinhard. The amount of an annual payment is limited
to the lesser of (i) an assigned percentage, not to exceed fifty percent, of the
individual's annual salary, or (ii) an assigned percentage of the consolidated
net profit before tax (as defined in the agreement) of the Corporation. The
Corporation has agreed to make these payments so long as the individual refrains
from engaging in activities harmful to, competitive with or of the same nature
as those of his former employer, and remains available to render consulting
services to his former employer. If the individual should die before the
expiration of the payment period, the Corporation has agreed to make an annual
payment to the individual's beneficiary for the number of years the individual
would have been entitled to payments had he lived, in an amount equal to
seventy-five percent of the annual payment the individual would have received
had he lived. Payments under these agreements are to be accrued as costs in the
year in respect of which the payments are made. Any payments that may be made to
Mr. Reinhard under this agreement will be reduced by the value of payments to be
made under his agreement with DDB Needham Worldwide Inc. ("DDB Needham")
described below.
Mr. Reinhard entered into an agreement with DDB Needham as of September 1,
1986, replacing an agreement between Mr. Reinhard and Needham Harper Worldwide,
Inc. made in August 1980, under which he or his beneficiary is to be paid
retirement compensation on a monthly basis for a period of ten years beginning
in the month following the month he ceases to be in the employ of DDB Needham,
provided that Mr. Reinhard's employment shall not have terminated except by
reason of his death before August 31, 1991. The annual rate of retirement income
to be paid to Mr. Reinhard is the greater of $66,667 or one-third of his average
13
<PAGE>
annual salary during the last 60 months of his employment, subject to limited
increase for annual cost of living adjustments. Mr. Reinhard has agreed to
refrain from rendering specified services that would be competitive with
services rendered by DDB Needham and its subsidiaries during the one year period
following cessation of his employment, and to refrain from engaging in specified
activities during the ten year period following such cessation of employment. If
Mr. Reinhard breaches these provisions, DDB Needham may discontinue making
payments under the agreement. Further, Mr. Reinhard has agreed, provided he is
not disabled and is under age 65, to render consulting services to DDB Needham
when requested for up to five days during each month he is entitled to receive
payments under the agreement, and if he breaches this provision of the agreement
DDB Needham may discontinue making payments during the period of the breach.
Mr. Reinhard entered into an agreement with DDB Needham on July 6, 1993
under which he is to receive monthly severance compensation payments for the 15
month period ("payment period") following termination of his DDB Needham
employment for a reason other than for cause (as therein defined). The gross
amount of each monthly payment shall equal one-twelfth of Mr. Reinhard's annual
rate of base salary at the date of termination of employment. If the employment
is terminated by DDB Needham other than for cause, the payments shall be
reduced, even up to the entire amount, by the amount of any compensation earned
by Mr. Reinhard from specified activities during the payment period. If the
employment is terminated by Mr. Reinhard, the payments shall cease if Mr.
Reinhard fails to render requested consulting services and the payments shall be
reduced, even up to the entire amount, by the amount of any compensation earned
by Mr. Reinhard during the payment period. Payments shall cease if Mr. Reinhard
should die during the payment period. As part of the agreement, Mr. Reinhard has
forfeited his right to compensation payments by reason of termination of
employment under DDB Needham policy (under current policy, Mr. Reinhard would
have been entitled to salary continuation payments for nine months if his
employment were to be terminated by DDB Needham other than for cause).
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
In August 1993, the Corporation obtained a one-year policy of insurance
from the Federal Insurance Company at a one-year premium of $149,000, under
which the Corporation and the officers and directors of the Corporation and its
subsidiaries are insured, subject to certain of the standard policy form
exclusions and specified deductibles, against 99.5% of any loss up to $1,000,000
and thereafter 100% of any loss up to a further $9,000,000, arising from any
claim or claims which may be made against any of the insureds by reason of any
wrongful act in their respective capacities as directors or officers. The term
"wrongful act" means any error, misstatement or misleading statement, act or
omission, neglect or breach of duty committed, attempted or allegedly committed
or attempted by the insureds or claimed against them solely by reason of their
being directors or officers of the Corporation or a subsidiary of the
Corporation. To date, no payments have been made to the Corporation or any
officer or director under this insurance policy or its predecessor policy.
INDEMNITY AGREEMENTS WITH DIRECTORS
Each director of the Corporation has received an Indemnification Agreement
from the Corporation.
Each Indemnification Agreement provides that the Corporation indemnifies
the director against liabilities or costs arising out of any alleged or actual
breach of duty, neglect, error, misstatement, misleading statement, omission or
other act allegedly or actually done or attempted by the director or any matter
claimed against the director solely by reason of serving as a director. This
indemnification does not apply to claims against the director for libel or
slander, return of remuneration to the Corporation, or an accounting of profits
from the sale or purchase of securities of the Corporation required under the
Securities Exchange Act of 1934 as amended, or to claims against the director
based upon the director gaining an illegal profit or advantage or the dishonesty
of the director. This indemnification does not apply to the extent that the
director is entitled to recovery under the aforesaid Directors' and Officers'
Liability policy.
14
<PAGE>
AUDITORS
On the recommendation of the Audit Committee of the Corporation, the Board
of Directors of the Corporation has appointed Arthur Andersen & Co. ("Andersen")
as auditors of the Corporation for 1994, to serve at the pleasure of the Board.
The affirmative vote of a majority of the votes cast by the holders of Common
Stock entitled to vote is required for confirmation of the appointment of
Andersen. Management recommends such confirmation by the shareholders.
Representatives of Andersen are expected to be present at the Annual
Meeting. They will be available to make a statement if they so desire, and to
answer appropriate questions.
AMENDMENTS TO THE 1987 STOCK PLAN
On March 28, 1994 the Board of Directors of the Corporation adopted two
amendments to the Corporation's 1987 Stock Plan (the "Plan"), to take effect on
June 1, 1994 subject to approval by the shareholders of the Corporation, one
relating to post-termination exercise of stock options and the other providing
for a maximum number of option shares that may be granted to any employee in a
calendar year.
Post-Termination Exercise of Stock Options Amendment
The Plan currently provides for a post-termination of employment exercise
period of (i) three months when termination is due to retirement or involuntary
termination of employment (other than for cause), (ii) six months when
termination is due to disability, (iii) nine months when termination is due to
death, and (iv) nine months from the date of death when an option holder
terminated for a reason set forth in (i) and (ii) above dies before the
expiration of the applicable exercise period; provided that in no event may any
option be exercised after the expiration date of the term of the option. The
amendment, to become effective June 1, 1994, (a) provides for a post-termination
of employment exercise period of 36 months when termination is due to
retirement, involuntary termination of employment (other than for cause),
disability or death, but in no event may any option be exercised after the
expiration date of the term of the option, and (b) authorizes the Compensation
Committee (which administers the Plan) to amend outstanding stock options to
provide for a post-termination exercise period as described in (a) above (to
date, only non-qualified options have been granted under the Plan).
This amendment brings the period in line with the exercise period found in
a number of public company stock option plans and makes stock option grants a
more meaningful incentive for attracting and retaining key employees by
providing them with a more appropriate period of time in which to exercise their
options following retirement or involuntary termination. This should encourage
the continued interest of a former key executive option holder in the long-term
performance of the Corporation.
Maximum Option Share Grant Amendment
This amendment, to become effective June 1, 1994, provides that 100,000
shares is the maximum number of shares with respect to which options may be
granted to any employee in any one calendar year. The reason for this amendment
is to qualify compensation attributable to the exercise of stock options granted
under the Plan as performance-based so as to be tax deductible under the new tax
law which places a limit of $1 million on the deductibility of compensation paid
by the Corporation to its Chief Executive Officer and other executive officers
named in the Summary Compensation Table (see page 11 of this Proxy Statement for
a discussion of this new tax law). As stock option grants are a principal
component of executive officer compensation, it is in the best interest of the
Corporation and its shareholders that the tax deduction be preserved. There is
no provision in the current Plan with respect to a maximum number of option
shares that may be granted during a specified period to any employee, and to
date 75,000 shares, granted to the Chief Executive Officer in 1990, is the
greatest number of option shares granted under the Plan to any employee in a
calendar year.
15
<PAGE>
Summary of Principal Provisions of Plan
The following summary of the principal provisions of the Plan is qualified
by reference to the text of the Plan which is on file with the Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. as Appendix I to
the Corporation's Proxy Statement dated April 15, 1987. A copy of the Plan may
be obtained, free of charge to shareholders, by writing Omnicom Group Inc., 437
Madison Avenue, New York, New York 10022, Attention: Corporate Secretary.
Number of Shares/Eligible Employees. A maximum of 4,750,000 shares of
Common Stock of the Corporation is currently authorized for restricted stock
awards or stock options to key employees of the Corporation or its Subsidiary
corporations (as defined in the Plan), subject to adjustment by reason of stock
splits, combination of shares or similar recapitalizations. The Committee
(described below) determines which individuals are key employees. Key employees
who contribute significantly to the long-term performance and growth of the
Corporation and influence shareholder value (currently, approximately 20
individuals) are eligible for stock options. Key employees who contribute
significantly to the annual profitability of the Corporation or appropriate
business unit (currently, approximately 125 individuals) are eligible for
restricted stock awards. Specific grants of options and awards under the Plan
are not determinable at this time.
Administration. The Plan is to be administered by a committee consisting of
not less than three disinterested members of the Board of Directors of the
Corporation i.e., persons who are and for the year prior to membership on the
committee have been, ineligible to receive shares under the Plan or any other
stock plan of the Corporation where selection of persons or the allocation of
shares to such persons is subject to the discretion of any person (the
"Committee"). The Committee shall have the authority, subject to the provisions
of the Plan, to determine the key employees to whom an award of restricted stock
will be made or a stock option granted, the number of shares to be granted in an
award or option, the times awards will be made or options granted; as to
options, whether the option will be an Incentive Stock Option or a Non-Qualified
Option, the option term, when the option may be exercised, and the option price
per share; and as to awards, the times when the restrictions on the shares will
lapse. The terms and conditions of restricted stock awards may be dissimilar,
and the terms and conditions of stock options may be dissimilar. The Committee
shall have full authority to interpret the Plan, and to prescribe rules and
regulations relating to it.
Stock Options. Options granted under the Plan may be either "Incentive
Stock Options" within the meaning of Section 422A(b) of the Internal Revenue
Code of 1986, as amended, or "Non-Qualified Options." The purchase price under
each option shall be determined by the Committee but shall not be less than the
fair market value of the shares at the time of the grant of the option. The
purchase price is payable in full upon the exercise of the option, and payment
may be made in cash or by delivery of shares of Common Stock of the Corporation
of equivalent fair market value. An option may be exercised by an employee in
whole or in part while there is outstanding any other stock option theretofore
or thereafter granted to such employee. No option shall be exercisable for a
period of 12 months commencing on the date of the grant of the option. No option
shall be transferable by an employee other than by the laws of descent and
distribution, and during the lifetime of the employee may be exercised only by
the employee or his or her legal guardian.
The term of each option shall be as determined by the Committee, but in no
event may the term of an option exceed ten years from the date of its grant. The
option shall terminate immediately upon termination of employment of an employee
other than by reason of retirement, death, total disability or involuntary
termination of employment other than for cause. All options may be exercised in
full within nine months after termination of employment by reason of death,
within six months after termination of employment by reason of total disability,
and within three months after termination of employment by reason of retirement
or involuntary termination of employment, except that if such retirement or
involuntary termination of employment occurs within 12 months of the grant of
the option, the option shall terminate. In no event, however, may an option be
exercised later than the expiration of the term stated in the option.
16
<PAGE>
In the event of (i) a change of control transaction involving the
Corporation, (i.e., a majority of the board of directors of the surviving entity
is comprised of persons who were not officers or directors of the Corporation or
its subsidiaries immediately prior to the transaction) and the surviving entity
does not agree to assume or substitute comparable new options for all options
then outstanding, or (ii) the liquidation or dissolution of the Corporation,
then all options shall become exercisable in full at the effective time of such
transactions, liquidations or dissolution, or earlier as determined by the Board
of Directors of the Corporation. In no event, however, shall the term of an
option be extended by operation of this provision.
Restricted Stock Awards. Shares of restricted stock awarded to a key
employee may be purchased by the employee at their par value upon execution of
an agreement between the Corporation and the employee setting forth the terms,
conditions and restrictions of the award. Restricted stock will be held by an
escrow agent until all restrictions thereon have lapsed and the stock is
delivered to the employee, or the stock is forfeited and repurchased by the
Corporation at par value. While the restricted stock is held in escrow, the
employee shall have all of the rights of a shareholder of the Corporation,
including the right to vote the stock and receive dividends paid thereon.
Restricted stock purchased by an employee may not be transferred, pledged
or encumbered until a time specified by the Committee in the award
("Restrictions Lapse Date"), which time shall not be less than one nor more than
five years from the date of the award. The restricted stock is subject to
forfeiture and repurchase by the Corporation if the employee ceases to be in the
employ of the Corporation or its subsidiary before the expiration of the
Restrictions Lapse Date by reason other than death, total disability, retirement
or involuntary termination of employment other than for cause. In the case of
death or total disability of the employee, the restrictions lapse on the
restricted stock and the shares are not subject to forfeiture. In the case of
retirement or involuntary termination of employment other than for cause, the
restrictions lapse on a portion of the restricted stock and such shares are not
subject to forfeiture, and the remaining shares are subject to forfeiture unless
otherwise determined by the Committee. In the event of a (i) change of control
transaction involving the Corporation or (ii) the liquidation or dissolution of
the Corporation, the restrictions lapse on the restricted stock and the shares
are not subject to forfeiture.
The Committee has the authority to accelerate the time at which
restrictions on the restricted stock lapse or to remove any of the restrictions
if it decides that there has been a change in circumstances after the grant of
an award, or that such action is in the best interest of the Corporation and
equitable to the employee.
Termination and Amendment. The Plan took effect on June 1, 1987, and shall
continue in effect until terminated by the Board of Directors of the
Corporation. No Incentive Stock Option may be granted after ten years from the
date the Plan is adopted by the Board of Directors or approved by the
shareholders of the Corporation, whichever first occurs. The Board of Directors
may amend the Plan at any time, except that without the affirmative vote of the
shareholders of the Corporation, the Board of Directors shall not (i) except as
otherwise provided in the Plan, increase the maximum number of shares which may
be issued under the Plan (ii) change the categories of employees eligible to
receive restricted stock awards or stock options under the Plan, (iii) change
the provisions as to the time when restrictions may lapse with respect to
restricted stock awards, and (iv) with respect to options, extend the period
during which they may be exercised, change the provisions fixing their minimum
option price, and change the provisions as to their termination. No termination
or amendment of the Plan shall, without the consent of an employee, affect
adversely the rights of such employee under an outstanding award or option.
17
<PAGE>
Shareholder Approval
Shareholder approval of each of the two amendments to the Plan requires the
affirmative vote of a majority of the votes entitled to be cast by the holders
of Common Stock. Therefore, failure to vote has the same effect as a negative
vote. Management recommends approval of these two amendments.
1994 PERFORMANCE COMPENSATION PLAN
On February 22, 1994 the Compensation Committee adopted a Plan establishing
individual written performance compensation arrangements ("Arrangements") for
the Chief Executive Officer and the Chief Financial Officer of the Corporation,
the Chief Executive Officer and the Vice Chairman & Chief Financial Officer of
BBDO Worldwide Inc., the Chief Executive Officer of DDB Needham Worldwide Inc.,
and the Chief Executive Officer of the Diversified Agency Services division of
the Corporation.
Under the Arrangements for the Chief Executive Officer and the Chief
Financial Officer of the Corporation, the executive shall be entitled to receive
an incentive cash bonus in respect of 1994 based on the Corporation's fully
diluted earnings per share before extraordinary items and the effect of any
changes in accounting principles ("EPS") for 1994 evaluated relative to the
Corporation's EPS for 1993. Under the Arrangements for the executives of the
specified operating units of the Corporation, the executive shall be entitled to
receive in respect of 1994 an incentive cash bonus and restricted stock under
the Corporation's 1987 Stock Plan based (i) 25% on the Corporation's 1994 EPS
evaluated relative to its 1993 EPS, and (ii) 75% on the applicable operating
unit's net profit after-tax ("Net Profit") for 1994 evaluated relative to the
operating unit's Net Profit for 1993. The Chief Executive Officer shall propose
and the Committee shall decide on the allocation of the performance compensation
between cash bonuses and restricted stock.
The following table provides information as to the maximum dollar amount of
compensation that the Named Officers and all executive officers as a group could
receive under the Arrangements:
NEW PLAN BENEFITS UNDER 1994 PERFORMANCE COMPENSATION PLAN
Name and Position Dollar Value ($)(1)
----------------- -------------------
Bruce Crawford,
President & Chief Executive Officer
of the Corporation............................. $1,170,000
James A. Cannon,
Vice Chairman & Chief Financial Officer
of BBDO Worldwide Inc.......................... 1,035,000
Fred J. Meyer,
Chief Financial Officer of the
Corporation.................................... 885,000
Keith L. Reinhard,
Chairman & Chief Executive Officer of
DDB Needham Worldwide Inc...................... 1,350,000
Allen Rosenshine,
Chairman & Chief Executive Officer of
BBDO Worldwide Inc............................. 1,380,000
All executive officers,
as a group..................................... 6,900,000
- --------------
(1) The amounts set forth in the table represent the maximum dollar
amount of compensation which each of the named individuals could be
paid under his Arrangement. With respect to the Arrangements for
Messrs. Crawford and Meyer, this would require the Corporation's 1994
EPS to be more than 120% of its 1993 EPS. With respect to the other
Arrangements, this would require the Corporation's 1994 EPS to be
more than 120% of its 1993 EPS and the 1994 Net Profit of the
applicable operating unit to be more than 120% of its 1993 Net
Profit.
18
<PAGE>
Under each Arrangement, the Committee has retained the discretion to reduce
the fixed maximum dollar amount of compensation the executive would otherwise be
entitled to receive by attaining a described performance target, thus enabling
the Committee to take into consideration operating and pretax profit margins,
revenue growth, and such other factors (including subjective factors) the
Committee may deem appropriate.
In order to make compensation payments under these Arrangements and to
qualify the payments as performance-based so as to be tax deductible under the
new tax law which places a limit of $1 million on the deductibility of
compensation paid by the Corporation to its Chief Executive Officer and the
other executive officers named in the Summary Compensation Table (see page 11 of
this Proxy Statement for a discussion of this new tax law), the shareholders
must approve these Arrangements.
The affirmative vote of a majority of the votes cast by the holders of
Common Stock entitled to vote is required for the approval of the 1994
Performance Compensation Plan and the Arrangements established thereunder.
Managment recommends approval of these Arrangements.
SHAREHOLDER PROPOSALS
Shareholders wishing to present resolutions at the 1995 Annual Meeting of
Shareholders must submit copies of such proposed resolutions to the Corporation
at its principal executive offices, 437 Madison Avenue, New York, New York
10022, Attention: Corporate Secretary, no later than December 8, 1994.
OTHER MATTERS
The Board of Directors is not aware of any matters to be submitted for
consideration at the Annual Meeting other than those set forth in the
accompanying notice. If any other matters properly come before the meeting for
action, the enclosed proxy will be voted on such matters in accordance with the
best judgment of the persons named in the proxy.
COST OF SOLICITATION
The cost of solicitation of proxies will be borne by the Corporation. In
addition to solicitation by mail, directors, officers, and other regular
employees of the Corporation and its subsidiaries may solicit proxies personally
by telephone or by telegraph. The Corporation will reimburse persons holding
stock in their names or those of their nominees for their reasonable expenses in
sending proxy material to their principals and obtaining their proxies. In
addition, the Corporation has retained D.F. King & Co. Inc. to assist in the
solicitation of proxies from its shareholders and will pay a fee of up to
$12,500 plus reimbursement of out-of-pocket expenses for such services.
Shareholders are urged to send in their proxies without delay.
Raymond E. McGovern
Secretary
New York, New York
April 8, 1994
19
<PAGE>
AMENDMENTS TO 1987 STOCK PLAN
Pursuant to resolutions adopted by the Board of Directors of Omnicom Group
Inc. ("Omnicom") on March 28, 1994, the Omnicom 1987 Stock Plan (the "Plan") is
hereby amended, effective June 1, 1994 and subject to the approval of the
shareholders of Omnicom, as set forth below.
A. Subsections (f), (g) and (h) of Section 7 are hereby deleted and the
following substituted therefor:
"(f) Retirement/Involuntary Termination of Employment of Holder of
Option. In the event of Termination of Employment of an Employee to whom an
Option has been granted by reason of his or her Retirement (other than for
Total Disability), or Involuntary Termination of Employment:
(i) if the date of such termination occurs before the expiration
of the Waiting Period of an Option, such Option(s) shall automatically
be cancelled and be of no further force or effect;
(ii) if the date of such termination occurs after the expiration
of the Waiting Period of an Option, such Option(s) may be exercised in
full only during the thirty-six month period immediately following the
date of such termination, but in no event may such Option(s) be
exercised after the expiration of the term specified in the Option.
(g) Total Disability of Holder of Option. In the event of Termination
of Employment of an Employee to whom an Option has been granted by reason
of his or her Total Disability, such Option(s) may be exercised in full
only during the thirty-six month period immediately following the date of
such termination, but in no event may such Option(s) be exercised after the
expiration of the term specified in the Option.
(h) Death of Holder of Option. In the event of Termination of
Employment of an Employee to whom an Option has been granted by reason of
his or her death, such Option(s) may be exercised in full only during the
thirty-six month period immediately following the date of death, but in no
event may such Option(s) be exercised after the expiration of the term
specified in the Option, provided, however, that such Option(s) may only be
exercised by those to whom such person's rights under the Option(s) have
passed by will or through the laws of descent and distribution. In the
event of the death of a former employee within the thirty-six month period
following his or her termination of employment by reason of Retirement,
Involuntary Termination of Employment or Total Disability, Option(s)
exercisable under subsections (f) and (g) of this Section 7 may only be
exercised by those to whom such person's rights under the Option(s) have
passed by will or through the laws of descent and distribution.
(i) The Committee shall have the authority to extend the
post-termination of employment exercise periods of outstanding options to
conform with the provisions of subsections (f), (g) and (h) of this Section
7."
B. Subsections (i) through (l) of Section 7 are hereby redesignated as
subsections (j) through (m).
C. A new subsection (n) is hereby added to Section 7 and reads as follows:
"(n) The maximum number of shares with respect to which options may be
granted by the Committee to any employee in any one calendar year shall be
100,000 shares."
<PAGE>
1994 Performance Compensation
Bruce Crawford
Mr. Crawford's cash bonus in respect of 1994 shall be based on Omnicom
Group Inc. ("OMC") earnings per share fully diluted before extraordinary items
and the effect of any changes in accounting principles ("EPS") for 1994
evaluated relative to OMC's EPS for 1993. The cash bonus shall be determined in
the manner, and shall be subject to the provisions, set forth below.
Performance Criterion - 1994 EPS vs. 1993 EPS
Performance Targets Amount of Cash
1994 EPS vs. 1993 EPS Bonus (Maximum)
--------- ----------- ---------------
More than 120.0%........................ $1,170,000
115.1% - 120.0%........................ $1,125,000
110.1% - 115.0%........................ $1,040,000
105.0% - 110.0%........................ $ 950,000
Less than 105.0%........................ $ 865,000
If Omnicom's 1994 operating margin is less than its 1993 operating margin
and/or Omnicom's 1994 EPS is less than 100% of its 1993 EPS, the Compensation
Committee of the Board ("Committee") may make a downward adjustment to the
amount of cash bonus Mr. Crawford should otherwise be entitled to receive under
the above table. The operating margin shall be determined by dividing Omnicom's
commissions and fees by the sum of its profits before tax and net interest
expense.
The Committee retains the overall discretion to reduce the cash bonus Mr.
Crawford may otherwise be entitled to receive hereunder.
<PAGE>
1994 Performance Compensation
Fred J. Meyer
Mr. Meyer's cash bonus in respect of 1994 shall be based on Omnicom Group
Inc. ("OMC") earnings per share fully diluted before extraordinary items and the
effect of any changes in accounting principles ("EPS") for 1994 evaluated
relative to OMC's EPS for 1993. The cash bonus shall be determined in the
manner, and shall be subject to the provisions, set forth below.
Performance Criterion - 1994 EPS vs. 1993 EPS
Performance Targets Amount of Cash
1994 EPS vs. 1993 EPS Bonus (Maximum)
--------- ----------- ---------------
More than 120.0%........................ $885,000
115.1% - 120.0%........................ $850,000
110.1% - 115.0%........................ $785,000
105.0% - 110.0%........................ $720,000
Less than 105.0%........................ $655,000
If Omnicom's 1994 operating margin is less than its 1993 operating margin
and/or Omnicom's 1994 EPS is less than 100% of its 1993 EPS, the Compensation
Committee of the Board ("Committee") may make a downward adjustment to the
amount of cash bonus Mr. Meyer should otherwise be entitled to receive under the
above table. The operating margin shall be determined by dividing Omnicom's
commissions and fees by the sum of its profits before tax and net interest
expense.
The Committee retains the overall discretion to reduce the cash bonus Mr.
Meyer may otherwise be entitled to receive hereunder.
<PAGE>
1994 Performance Compensation
John Wren
Mr. Wren's cash bonus and restricted stock award value in respect of 1994
("Performance Compensation") shall be based (i) twenty-five percent (25%) on
Omnicom Group Inc. ("OMC") earnings per share fully diluted before extraordinary
items and the effect of any changes in accounting principles ("EPS") for 1994
evaluated relative to OMC's EPS for 1993 and (ii) seventy-five percent (75%) on
Diversified Agency Services ("DAS") net profit after-tax ("Net Profit") for 1994
evaluated relative to DAS's Net Profit for 1993. The amount of Performance
Compensation shall be determined in the manner, and shall be subject to the
provisions, set forth below.
OMC Performance Criterion - 1994 EPS vs. 1993 EPS
Performance Targets 25% Performance
1994 EPS vs. 1993 EPS Compensation (Maximum)
---------- ---------- ----------------------
More than 120.0%......................... $270,000
115.1% - 120.0%......................... $260,000
110.1% - 115.0%......................... $240,000
105.0% - 110.0%......................... $220,000
Less than 105.0%......................... $200,000
If Omnicom's 1994 operating margin is less than its 1993 operating margin
and/or Omnicom's 1994 EPS is less than 100% of its 1993 EPS, the Compensation
Committee of the Board ("Committee") may make a downward adjustment to the
amount of Performance Compensation Mr. Wren should otherwise be entitled to
receive under the above table. The operating margin shall be determined by
dividing Omnicom's profits before tax and net interest expense by its
commissions and fees.
DAS Performance Criterion - 1994 Net Profit vs. 1993 Net Profit
Performance Targets
1994 Net 1993 Net 75% Performance
Profit vs.Profit Compensation (Maximum)
--------- --------- ----------------------
More than 120.0%......................... $810,000
115.1% - 120.0%......................... $780,000
110.1% - 115.0%......................... $720,000
105.0% - 110.0%......................... $660,000
Less than 105.0%......................... $600,000
If DAS's 1994 pretax profit margin is less than its 1993 pretax profit
margin and/or DAS's 1994 Net Profit is less than 100% of its 1993 Net Profit,
the Committee may make a downward adjustment to the amount of Performance
Compensation Mr. Wren should otherwise be entitled to receive under the above
table.
The pretax profit margin shall be determined by dividing DAS's pretax
profit by its commissions and fees. The maximum aggregate amount of Performance
Compensation Mr. Wren is entitled to receive under the above tables in respect
of 1994 is $1,080,000. The CEO of OMC shall propose and the Committee shall
decide on the allocation of the Performance Compensation between cash bonus and
restricted stock.
The Committee retains the overall discretion to reduce the Performance
Compensation Mr. Wren may otherwise be entitled to receive hereunder.
<PAGE>
1994 Performance Compensation
James A. Cannon
Mr. Cannon's cash bonus and restricted stock award value in respect of 1994
("Performance Compensation") shall be based (i) twenty-five percent (25%) on
Omnicom Group Inc. ("OMC") earnings per share fully diluted before extraordinary
items and the effect of any changes in accounting principles ("EPS") for 1994
evaluated relative to OMC's EPS for 1993 and (ii) seventy-five percent (75%) on
BBDO Worldwide Inc. ("BBDO") net profit after-tax ("Net Profit") for 1994
evaluated relative to BBDO's Net Profit for 1993. The amount of Performance
Compensation shall be determined in the manner, and shall be subject to the
provisions, set forth below.
OMC Performance Criterion - 1994 EPS vs. 1993 EPS
Performance Targets 25% Performance
1994 EPS vs. 1993 EPS Compensation (Maximum)
---------- ---------- ----------------------
More than 120.0%......................... $260,000
115.1% - 120.0%......................... $250,000
110.1% - 115.0%......................... $230,000
105.0% - 110.0%......................... $210,000
Less than 105.0%......................... $100,000
If Omnicom's 1994 operating margin is less than its 1993 operating margin
and/or Omnicom's 1994 EPS is less than 100% of its 1993 EPS, the Compensation
Committee of the Board ("Committee") may make a downward adjustment to the
amount of Performance Compensation Mr. Cannon should otherwise be entitled to
receive under the above table. The operating margin shall be determined by
dividing Omnicom's commissions and fees by the sum of its profits before tax and
net interest expense.
BBDO Performance Criterion - 1994 Net Profit vs. 1993 Net Profit
Performance Targets
1994 Net 1993 Net 75% Performance
Profit vs.Profit Compensation (Maximum)
-------- ---------- ----------------------
More than 120.0%......................... $775,000
115.1% - 120.0%......................... $745,000
110.1% - 115.0%......................... $690,000
105.0% - 110.0%......................... $630,000
Less than 105.0%......................... $575,000
If BBDO's 1994 pretax profit margin is less than its 1993 pretax profit
margin and/or BBDO's 1994 Net Profit is less than 100% of its 1993 Net Profit,
the Committee may make a downward adjustment to the amount of Performance
Compensation Mr. Cannon should otherwise be entitled to receive under the above
table. The pretax profit margin shall be determined by dividing BBDO's
commissions and fees by its pretax profit.
The maximum aggregate amount of Performance Compensation Mr. Cannon is
entitled to receive under the above tables in respect of 1994 is $1,035,000. The
CEO of OMC shall propose and the Committee shall decide on the allocation of the
Performance Compensation between cash bonus and restricted stock.
The Committee retains the overall discretion to reduce the Performance
Compensation Mr. Cannon may otherwise be entitled to receive hereunder.
<PAGE>
1994 Performance Compensation
Allen Rosenshine
Mr. Rosenshine's cash bonus and restricted stock award value in respect of
1994 ("Performance Compensation") shall be based (i) twenty-five percent (25%)
on Omnicom Group Inc. ("OMC") earnings per share fully diluted before
extraordinary items and the effect of any changes in accounting principles
("EPS") for 1994 evaluated relative to OMC's EPS for 1993 and (ii) seventy-five
percent (75%) on BBDO Worldwide Inc. ("BBDO") net profit after-tax ("Net
Profit") for 1994 evaluated relative to BBDO's Net Profit for 1993. The amount
of Performance Compensation shall be determined in the manner, and shall be
subject to the provisions, set forth below.
OMC Performance Criterion - 1994 EPS vs. 1993 EPS
Performance Targets 25% Performance
1994 EPS vs. 1993 EPS Compensation (Maximum)
---------- ---------- ----------------------
More than 120.0%......................... $345,000
115.1% - 120.0%......................... $330,000
110.1% - 115.0%......................... $305,000
105.0% - 110.0%......................... $280,000
Less than 105.0%......................... $255,000
If Omnicom's 1994 operating margin is less than its 1993 operating margin
and/or Omnicom's 1994 EPS is less than 100% of its 1993 EPS, the Compensation
Committee of the Board ("Committee") may make a downward adjustment to the
amount of Performance Compensation Mr. Rosenshine should otherwise be entitled
to receive under the above table. The operating margin shall be determined by
dividing Omnicom's commissions and fees by the sum of its profits before tax and
net interest expense.
BBDO Performance Criterion - 1994 Net Profit vs. 1993 Net Profit
Performance Targets
1994 Net 1993 Net 75% Performance
Profit vs.Profit Compensation (Maximum)
-------- ---------- ----------------------
More than 120.0%......................... $1,035,000
115.1% - 120.0%......................... $995,000
110.1% - 115.0%......................... $915,000
105.0% - 110.0%......................... $840,000
Less than 105.0%......................... $765,000
If BBDO's 1994 pretax profit margin is less than its 1993 pretax profit
margin and/or BBDO's 1994 Net Profit is less than 100% of its 1993 Net Profit,
the Committee may make a downward adjustment to the amount of Performance
Compensation Mr. Rosenshine should otherwise be entitled to receive under the
above table. The pretax profit margin shall be determined by dividing BBDO's
commissions and fees by its pretax profit.
The maximum aggregate amount of Performance Compensation Mr. Rosenshine is
entitled to receive under the above tables in respect of 1994 is $1,380,000. The
CEO of OMC shall propose and the Committee shall decide on the allocation of the
Performance Compensation between cash bonus and restricted stock.
The Committee retains the overall discretion to reduce the Performance
Compensation Mr. Rosenshine may otherwise be entitled to receive hereunder.
<PAGE>
1994 Performance Compensation
Keith L. Reinhard
Mr. Reinhard's cash bonus and restricted stock award value in respect of
1994 ("Performance Compensation") shall be based (i) twenty-five percent (25%)
on Omnicom Group Inc. ("OMC") earnings per share fully diluted before
extraordinary items and the effect of any changes in accounting principles
("EPS") for 1994 evaluated relative to OMC's EPS for 1993 and (ii) seventy-five
percent (75%) on DDB Needham Worldwide Inc. ("DDB") net profit after-tax ("Net
Profit") for 1994 evaluated relative to DDB's Net Profit for 1993. The amount of
Performance Compensation shall be determined in the manner, and shall be subject
to the provisions, set forth below.
OMC Performance Criterion - 1994 EPS vs. 1993 EPS
Performance Targets 25% Performance
1994 EPS vs. 1993 EPS Compensation (Maximum)
---------- ---------- ----------------------
More than 120.0%......................... $340,000
115.1% - 120.0%......................... $270,000
110.1% - 115.0%......................... $200,000
105.0% - 110.0%......................... $170,000
Less than 105.0%......................... $135,000
If Omnicom's 1994 operating margin is less than its 1993 operating margin
and/or Omnicom's 1994 EPS is less than 100% of its 1993 EPS, the Compensation
Committee of the Board ("Committee") may make a downward adjustment to the
amount of Performance Compensation Mr. Reinhard should otherwise be entitled to
receive under the above table. The operating margin shall be determined by
dividing Omnicom's commissions and fees by the sum of its profits before tax and
net interest expense.
DDB Performance Criterion - 1994 Net Profit vs. 1993 Net Profit
Performance Targets
1994 Net 1993 Net 75% Performance
Profit vs.Profit Compensation (Maximum)
--------- --------- ----------------------
More than 120.0%......................... $1,010,000
115.1% - 120.0%......................... $810,000
110.1% - 115.0%......................... $610,000
105.0% - 110.0%......................... $505,000
Less than 105.0%......................... $405,000
If DDB's 1994 pretax profit margin is less than its 1993 pretax profit
margin and/or DDB's 1994 Net Profit is less than 100% of its 1993 Net Profit,
the Committee may make a downward adjustment to the amount of Performance
Compensation Mr. Reinhard should otherwise be entitled to receive under the
above table. The pretax profit margin shall be determined by dividing DDB's
commissions and fees by its pretax profit.
The maximum aggregate amount of Performance Compensation Mr. Reinhard is
entitled to receive under the above tables in respect of 1994 is $1,350,000. The
CEO of OMC shall propose and the Committee shall decide on the allocation of the
Performance Compensation between cash bonus and restricted stock.
The Committee retains the overall discretion to reduce the Performance
Compensation Mr. Reinhard may otherwise be entitled to receive hereunder.
<PAGE>
PROXY
OMNICOM GROUP INC.
437 Madison Avenue
New York, New York 10022
This proxy is solicited on behalf of the Board of Directors and will
be voted FOR the election of Directors and FOR proposals 2, 3, 4 and 5 if
no instructions to the contrary are indicated.
The undersigned hereby appoints BRUCE CRAWFORD and RAYMOND E.
McGOVERN, jointly and severally, proxies with the power of substitution to
vote all shares the undersigned is entitled to vote at the Annual Meeting
of Shareholders on May 24, 1994 or adjournments thereof on all matters
that may properly come before the meeting, and particularly to vote as
hereinafter indicated. If more than one of such proxies or substitutes be
present and vote, a majority thereof shall have all of the powers hereby
granted. The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting of Shareholders and Proxy Statement dated April 8, 1994.
(Continued and to be signed on the reverse side)
<PAGE>
1. THE ELECTION OF FIVE DIRECTORS. NOMINEES: Robert J. Callander, John R.
Purcell, Quentin I. Smith, Jr., William G. Tragos and Egon P.S. Zehnder for a 3
year term.
|_| FOR all nominees listed except |_| WITHHOLD AUTHORITY to
as marked to the contrary vote for all nominees listed
(INSTRUCTION: To withhold authority to vote for any individual nominee,
print that nominee's name below).
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================================================================================
2.CONFIRMATION OF APPOINTMENT OF ARTHUR ANDERSEN & CO. AS AUDITORS.
FOR |_| AGAINST |_| ABSTAIN |_|
3.AMENDMENT TO 1987 STOCK PLAN PROVIDING POST- EMPLOYMENT STOCK EXERCISE
PERIOD OF 36MONTHS.
FOR |_| AGAINST |_| ABSTAIN|_|
================================================================================
4. AMENDMENT TO 1987 STOCK PLAN PROVIDING 100,000 SHARES AS MAXIMUM ANNUAL
STOCK OPTION GRANT FOR AN EMPLOYEE.
FOR |_| AGAINST |_| ABSTAIN |_|
5.APPROVAL OF 1994 PERFORMANCE COMPENSATION PLAN AND RELATED ARRANGEMENTS.
FOR |_| AGAINST |_| ABSTAIN|_|
DATED: 1994
---------------------------------------------------
SIGNATURE
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ARE SIGNING AS A TRUSTEE, EXECUTOR,
ETC., PLEASE SO INDICATE. PLEASE MARK,
SIGN, DATE AND MAIL THIS CARD PROMPTLY
IN THE POSTAGE PREPAID RETURN ENVELOPE
PROVIDED.
