SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |x|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|x| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| 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)
Payment of Filing Fee (Check the appropriate box):
|x| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
|_| $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
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<PAGE>
OMNICOM GROUP INC.
437 Madison Avenue
New York, New York 10022
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 22, 1995
The Annual Meeting of the Shareholders of Omnicom Group Inc. (the
"Corporation") will be held at the offices of BBDO Worldwide Inc. (seventh floor
Meeting Room), 1285 Avenue of the Americas (between 51st and 52nd Streets) New
York, New York on Monday, May 22, 1995 at 10:00 A.M. for the following purposes:
1. To elect six directors;
2. To confirm the appointment of Arthur Andersen LLP as auditors of the
Corporation for the year 1995;
3. To consider and act upon an amendment to the Corporation's 1987 Stock
Plan reserving an additional 1,800,000 shares for issuance under the
Plan;
4. To consider and act upon the 1995 Performance Compensation Plan
Arrangements established 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
5. 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 4, 1995 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 1994 is enclosed.
By order of the Board of Directors,
RAYMOND E. MCGOVERN
Secretary
New York, New York
April 7, 1995
<PAGE>
OMNICOM GROUP INC.
437 Madison Avenue
New York, NY 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 22, 1995, 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 7, 1995 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 six nominees for
directors named under the heading "Election of Directors," for confirmation of
the appointment of Arthur Andersen LLP as auditors of the Corporation for the
year 1995, for approval of the amendment to the Corporation's 1987 Stock Plan,
and for the approval of the 1995 Performance Compensation Plan Arrangements 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 1995 Performance Compensation Plan
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 the
amendment 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 1994 is not part
of the proxy solicitation material.
On April 4, 1995, the record date for determination of shareholders
entitled to notice of and to vote at the Annual Meeting, the Corporation had
outstanding 36,413,028 shares of Common Stock, each of which is entitled to one
vote. At the record date, 1,482,654 shares of Common Stock were owned
beneficially (of which 654,624 shares were owned of record) by the directors and
executive officers of the Corporation, which constitutes approximately 4.07% of
the issued and outstanding shares of the Corporation's Common Stock.
<PAGE>
The following table sets forth information with respect to the beneficial
ownership of the Corporation's Common Stock as at December 31, 1994 by persons
known to the Corporation to be the beneficial owners of more than 5% of its
outstanding Common Stock based on material filed by such persons with the
Securities and Exchange Commission.
Beneficial Ownership Percent of
Name and Address of Common Stock Class
---------------- -------------------- ----------
FMR Corp ..................................... 3,952,868(1) 10.81%
82 Devonshire Street
Boston, Massachusetts 02109
The Prudential Insurance Company of America .. 2,916,279(2) 8.0%
Prudential Plaza
Newark, New Jersey 07102-3777
- - --------------
(1) In its filing with the Securities and Exchange Commission, this beneficial
owner reported having sole voting power as to 233,786 shares and sole
dispositive power as to 3,952,868 shares.
(2) In its filing with the Securities and Exchange Commission, this beneficial
owner reported having sole voting power as to 381,600 shares, shared voting
power as to 2,534,679 shares, sole dispositive power as to 381,600 shares
and shared dispositive power as to 2,534,679 shares.
ELECTION OF DIRECTORS
On the date of the 1995 Annual Meeting, the Board of Directors of the
Corporation shall consist of 16 members, divided into three classes, with the
term of office of one class expiring at the 1995 Annual Meeting, the term of
another class expiring at the 1996 Annual Meeting, and the term of the remaining
class expiring at the 1997 Annual Meeting. The Board of Directors nominates
incumbent directors Bruce Crawford, Peter I. Jones, Keith L. Reinhard, Allen
Rosenshine, Gary L. Roubos and John D. Wren to serve as directors of the
Corporation until the 1998 Annual Meeting.
John L. Bernbach, a former executive of subsidiary DDB Needham Worldwide
Inc., resigned as a member of the Board of Directors on March 27, 1995.
2
<PAGE>
Information relating to the six 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>
Bernard Brochand (56) .................................................................... 1993 1996
President, International Division of DDB Needham Worldwide Inc.,
a subsidiary of the Corporation.
Robert J. Callander (64) ................................................................. 1992 1997
Executive-in-Residence, Columbia School of Business, Columbia University;
Retired Vice Chairman of Chemical Banking Corporation.
James A. Cannon (56) ..................................................................... 1986 1996
Vice Chairman & Chief Financial Officer of BBDO Worldwide Inc.,
a subsidiary of the Corporation.
Leonard S. Coleman, Jr. (46) ............................................................. 1993 1996
President, National League, Major League Baseball.
Bruce Crawford (66) ...................................................................... 1989 1995
President & Chief Executive Officer of the Corporation.
Peter I. Jones (52) ...................................................................... 1989 1995
Chief Executive of Diversified Agency Services Limited,
a subsidiary of the Corporation.
Fred J. Meyer (64) ....................................................................... 1988 1996
Chief Financial Officer of the Corporation.
John R. Purcell (63) ..................................................................... 1986 1997
Chairman & Chief Executive Officer of Grenadier Associates Ltd.
Keith L. Reinhard (60) ................................................................... 1986 1995
Chairman & Chief Executive Officer of DDB Needham Worldwide Inc.
Allen Rosenshine (56) .................................................................... 1986 1995
Chairman & Chief Executive Officer of BBDO Worldwide Inc.
Gary L. Roubos (58) ...................................................................... 1986 1995
Chairman of Dover Corporation.
Quentin I. Smith, Jr. (67) ............................................................... 1986 1997
Corporate Director; Retired Chairman & Chief Executive Officer
of Towers, Perrin, Forster & Crosby.
Robin B. Smith (55) ...................................................................... 1986 1996
President & Chief Executive Officer of Publishers Clearing House.
William G. Tragos (60) ................................................................... 1993 1997
Chairman & Chief Executive Officer of TBWA International B.V.
and of TBWA Advertising Inc., subsidiaries of the Corporation.
John D. Wren (42) ........................................................................ 1993 1995
Chairman & Chief Executive Officer of Diversified Agency Services,
a division of the Corporation.
Egon P.S. Zehnder (65)
Chairman of Egon Zehnder International Inc. ........................................... 1986 1997
</TABLE>
- - ----------------
(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.
3
<PAGE>
Mr. Callander retired from Chemical Banking Corporation on June 30, 1992,
at which time he held the office of Vice Chairman. He 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 Aramark Incorporated,
Barnes Group Inc., Beneficial Corporation, Latin American Dollar Income Fund,
Scudder World Income Opportunities Fund, and Scudder New Asia 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 served as a Vice
President, Kidder, Peabody & Company from 1988 to 1991. Mr. Coleman is a
director of Beneficial Corporation.
Mr. Meyer is a director of Aegis Group plc, SyStemix, Inc., Sandoz
Corporation, SoGen Funds, Inc., and SoGen International Fund, Inc.
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 Chairman of Dover Corporation since May 1989, and
served as Chief Executive Officer of that company from January 1981 to May 1994.
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 Bell & Howell
Holdings Corporation, Dover Corporation, Scott Paper Company, and The 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 BellSouth Corporation, Springs Industries, Inc., Texaco Inc., and
nine Prudential Securities mutual fund investment companies.
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 related 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-two offices in
twenty-eight 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, 1995, as to the
beneficial ownership of the Common Stock of the Corporation for each director of
the Corporation (all of the Named Executive Officers, as such term is
hereinafter defined, are directors of the Corporation), and all directors and
executive officers of the Corporation as a group.
<TABLE>
<CAPTION>
Beneficial Ownership Percent
Name of Beneficial Owner of Common Stock (1) of Class
- - ------------------------ -------------------- --------
<S> <C> <C>
Bernard Brochand.................................................. 34,000 .0934
Robert J. Callander............................................... 2,000 .0055
James A. Cannon................................................... 127,105 .3491
Leonard S. Coleman, Jr............................................ 300 .0008
Bruce Crawford.................................................... 247,245 .6790
Peter I. Jones.................................................... 29,000 .0796
Fred J. Meyer..................................................... 121,000 .3323
John R. Purcell................................................... 5,000 .0137
Keith L. Reinhard................................................. 267,768 .7354
Allen Rosenshine.................................................. 262,935 .7221
Gary L. Roubos.................................................... 1,000 .0027
Quentin I. Smith, Jr.............................................. 1,000 .0027
Robin B. Smith.................................................... 100 .0003
William G. Tragos................................................. 151,667 .4165
John D. Wren...................................................... 70,329 .1931
Egon P.S. Zehnder................................................. 2,000 .0055
All directors and executive
officers as a group (19 persons)................................ 1,482,654 4.0718
</TABLE>
- - ---------------
(1) Includes (i) shares held under restricted stock awards granted by the
Corporation, namely, Mr. Brochand - 17,200 shares, Mr. Cannon - 25,400
shares, Mr. Crawford - 25,800 shares, Mr. Meyer - 18,200 shares, Mr.
Reinhard - 25,400 shares, Mr. Rosenshine - 32,600 shares, and Mr. Wren -
25,965 shares, (ii) shares which certain of the named individuals have the
right to purchase under stock options granted by the Corporation, namely,
Mr. Cannon - 84,000 shares, Mr. Crawford - 144,000 shares, Mr. Jones -
29,000 shares, Mr. Meyer - 71,500 shares, Mr. Reinhard - 116,500 shares,
Mr. Rosenshine - 161,000 shares, and Mr. Wren - 35,000 shares, and (iii)
12,445 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 in
respect of 1994 transactions.
BOARD MEETINGS AND COMMITTEES
Six meetings (five regular and one special) of the Board of Directors of
the Corporation (the "Board") were held in 1994. Each incumbent 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 Mr. Brochand.
During 1994, the Audit Committee of the Board consisted of Ms. Smith
(Chairman), and Messrs. Coleman, Purcell (resigned in May 1994) and Callander
(replaced Mr. Purcell in May 1994). Three meetings of the Audit Committee were
held in 1994. The responsibilities of the Audit Committee are to (a) recommend
5
<PAGE>
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 the Corporation's 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 the Corporation's management to remedy
fraudulent activity that may be detected within the Corporation; (f) review the
Corporation's public reporting policies and practices, (g) review the derivative
activities undertaken by the Corporation's management, and (h) report to the
Board on its activities.
During 1994, the Compensation Committee of the Board consisted of Messrs.
Smith (Chairman), Callander and Zehnder, and Ms. Smith (Ms. Smith resigned on
January 3, 1995 by reason of business conflicts on certain dates Committee
meetings are scheduled in 1995). Three meetings of the Compensation Committee
were held in 1994. 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. The Compensation Committee has discretionary
authority to establish compensation arrangements for executive officers of the
Corporation with the intended purpose that payments thereunder qualify as
performance-based for purposes of Section 162(m) of the Internal Revenue Code.
During 1994, the Nominating Committee of the Board consisted of Messrs.
Roubos (Chairman), Purcell and Zehnder. One meeting of the Nominating Committee
was held in 1994. 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, (c) candidates for election to the
Board, and (d) 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 1994, each director who was not an employee or former 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 $1,500 for attendance at any subsequent meeting on the same day. A
director who is an employee or former employee of the Corporation or one of its
subsidiaries does not receive any compensation for serving as a director.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information in respect of the compensation
of the Chief Executive Officer and each of the other four most highly
compensated executive officers of the Corporation (collectively the "Named
Executive Officers") for services in all capacities to the Corporation and its
subsidiaries for the fiscal years ended December 31, 1992, 1993 and 1994.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
----------------------- -------------------------------
Name and Shares All Other
Principal Restricted Stock Underlying Compen-
Position Year Salary($) Bonus($) Awards($) (1) Stock Options sation($)(2)
---------- ---- --------- -------- ---------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Bruce Crawford........... 1994 $921,250 $1,125,000 $ 0 60,000 $24,814
President & 1993 875,000 565,000 715,313 50,000 39,488
Chief Executive 1992 800,000 500,000 515,250 40,000 38,761
Officer of the
Corporation.
Fred J. Meyer............ 1994 556,250 850,000 0 35,000 30,308
Chief Financial 1993 500,000 475,000 429,188 30,000 41,968
Officer of the 1992 462,500 400,000 429,375 25,000 37,718
Corporation.
Keith L. Reinhard........ 1994 809,056 550,000 575,000 25,000 24,086
Chairman & Chief 1993 752,800 190,000 357,656 25,000 22,105
Executive Officer 1992 740,306 165,000 300,563 25,000 13,405
of DDB Needham
Worldwide Inc.
Allen Rosenshine......... 1994 768,750 500,000 675,000 40,000 23,406
Chairman & Chief 1993 725,000 480,000 476,875 40,000 34,919
Executive Officer 1992 706,250 480,000 429,375 30,000 35,842
of BBDO World-
wide Inc.
John D. Wren............. 1994 450,000 550,000 520,000 30,000 23,445
Chairman & Chief 1993 350,000 350,000 429,188 10,000 28,300
Executive Officer 1992 -- -- -- -- --
of Diversified Agency
Services division
of the Corporation.
</TABLE>
- - -------------
(1) Restricted stock awards represent performance based compensation for the
applicable fiscal year end. The awards are normally granted in the first
quarter of the year following the fiscal year end. The value of the
restricted stock awards was determined by multiplying the fair market value
of the Corporation's Common Stock on the date of the grant by the number of
shares awarded, and deducting therefrom the consideration paid for the
shares, which is equal to the par value ($.50 per share) of the shares. As
of December 31, 1994, Mr. Crawford held an aggregate of 36,600 shares of
restricted stock with a net pre-tax value of $1,880,325 (equal to fair
market value of the shares on said date ($51.6875 per share) less
consideration paid), Mr. Meyer held an aggregate of 26,000 shares of
restricted stock with a net pre-tax value of $1,335,750, Mr. Reinhard held
an aggregate of 21,300 shares of restricted stock with a net pre-tax value
of $1,094,287, Mr. Rosenshine held an aggregate of 28,800 shares of
restricted stock with a net pre-tax value of $1,479,600, and Mr. Wren held
an aggregate of 23,100 shares of restricted stock with a net pre-tax value
of $1,186,763. 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 Executive
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, 1994 consists
of (i) employer contributions to the Corporation's Group Profit Sharing
Retirement Plan in the amount of $18,000 on behalf of each of Messrs.
Crawford, Meyer, Rosenshine and Wren, and $10,613 on behalf of Mr.
Reinhard, (ii) employer contribution to the DDB Needham Joint Savings Plan
in the amount of $6,000 on behalf of Mr. Reinhard, (iii) employer premium
payments for life insurance in the amount of $6,814 on behalf of Mr.
Crawford, $12,308 on behalf of Mr. Meyer, $7,473 on behalf of Mr. Reinhard,
$5,406 on behalf of Mr. Rosenshine, and $445 on behalf of Mr. Wren, and
(iv) a service award of $5,000 for Mr. Wren.
Options
The following table shows all grants of options to the Named Executive
Officers in 1994.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Individual Grants Appreciation for Option Term (4)
- - -------------------------------------------------------------------------------- ---------------------------------
Number % of Total
of Shares Options
Underlying Granted to Exercise
Options Employees Price
Name Granted(1)(2) in 1994 ($ per Share) Expiration Date(3) 0%($) 5%($) 10%($)
---- ------------ ---------- ------------- ------------------ ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce Crawford........ 60,000 19.672 $48.4375 March 2, 2004 $0 $1,830,936 $4,620,936
Fred J. Meyer......... 35,000 11.475 48.4375 March 2, 2004 0 1,068,046 2,695,546
Keith L. Reinhard..... 25,000 8.196 48.4375 March 2, 2004 0 762,890 1,925,390
Allen Rosenshine...... 40,000 13.114 48.4375 March 2, 2004 0 1,220,624 3,080,624
John D. Wren.......... 30,000 9.836 48.4375 March 2, 2004 0 915,468 2,310,468
</TABLE>
- - --------------
(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) The grants set forth in this Table reflect the actual option grants made by
the Corporation to the Named Executive Officers in 1994. In addition, in
1994 the Corporation amended the terms of certain outstanding options to
extend the period during which they could be exercised in the event of the
optionee's retirement, death or disability, or the involuntary termination
of his or her employment by the Corporation (but in no event beyond the
original term of the option). These amendments were made in accordance with
an amendment to the 1987 Stock Plan which was approved by the Corporation's
shareholders at the May 24, 1994 Annual Meeting, under the terms of which
all future option grants would contain the extended exercise period, and
outstanding options could be so amended at the discretion of the
Compensation Committee. The SEC has taken the position that such amendments
should be considered for purposes of Section 16 under the Securities and
Exchange Act of 1934 as the cancellation of the original option and the
grant of a replacement option as of the date of the amendment. This
position affects an aggregate of 180,000 shares underlying options
previously granted to Mr. Crawford; 108,000 shares underlying options
previously granted to Mr. Meyer; 144,000 shares underlying options
previously granted to Mr. Reinhard; 205,000 shares underlying options
previously granted to Mr. Rosenshine; and 60,000 shares underlying options
previously granted to Mr. Wren.
(3) Upon an optionee's termination of employment by reason of (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 36 month period following
termination, and (iii) termination by reason of total disability or death,
all outstanding options become exercisable in full only during the 36 month
period following termination. In no event will a post-termination of
employment option exercise period extend beyond the expiration date of the
option term. In the event of a change of control transaction, outstanding
options become exercisable in full at the effective time of the transaction
8
<PAGE>
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.
(4) 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.
The following table provides information as to the aggregated option
exercises by the Named Executive Officers in 1994, and as to unexercised options
held by the Named Executive Officers on December 31, 1994.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Shares
Underlying Value of Unexercised
Unexercised In-the-Money
Number Options at Options at
of Shares December 31, 1994 December 31, 1994(2)
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized($)(1) Unexercisable Unexercisable
---- ----------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Bruce Crawford ................. 37,500 $1,110,938 95,000/111,000 $2,204,500/$867,875
Fred J. Meyer .................. -- -- 42,000/66,000 870,749/524,124
Keith L. Reinhard .............. -- -- 91,500/52,500 2,314,249/450,937
Allen Rosenshine ............... 30,000 930,000 125,000/80,000 3,135,938/655,000
John D. Wren ................... -- -- 19,000/41,000 419,000/245,375
</TABLE>
- - --------------
(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, 1994, being
$51.6875 per share.
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 1994 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 compensation of the Chief Executive Officer and the other Named
Executive Officers is determined by the Committee, and the compensation of the
Chief Executive Officer is subject to the approval of the Board of Directors. In
determining the compensation of the Named Executive Officers, the Committee
considers the factors described below and the recommendations of the Chief
Executive Officer with respect to the other Named Executive Officers.
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Adjustments in base salary for executive officers are considered
periodically (currently every eighteen months), and are discretionary in nature.
In determining base salary and individual adjustments to base salary for the
Named Executive Officers, 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. Profitability of the Corporation is determined by
reference to its fully diluted earnings per share before extraordinary
accounting items, and profitability of a business unit is determined by
reference to its net profit after tax. The Committee does not target a
particular relationship to the competitive salary data or target specific levels
of profitability or increases therein in determining salaries, but salary
increases are evaluated for reasonableness in light of this information(2).
Salaries of executive officers who are not Named Executive Officers are
determined by the Chief Executive Officer.
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 before extraordinary items and the effect of any change in
accounting principles ("EPS"), and the net profit after tax of the business unit
with which the executive officer is associated.
Incentive compensation awards for Named Executive Officers associated with
a business unit are based 25% on the Corporation's EPS evaluated relative to its
prior year EPS and 75% on the applicable operating unit's net profit after tax
evaluated relative to its prior year net profit after tax, while awards for
Named Executive Officers not associated with a business unit are based 100% on
the Corporation's EPS evaluated relative to its prior year EPS. Absent unusual
circumstances, there will be no increase in incentive compensation available for
the corporate component if there is no increase in the Corporation's EPS over
the prior year or for the business unit component if there is no increase in a
business unit's profit over the prior year. An increase or decrease in the
Corporation's EPS and/or a business unit's profit over the prior year will
generally result in a corresponding upward or downward adjustment in the
incentive compensation available for the respective component.
As soon as practicable in a fiscal year the Committee establishes, for the
Chief Executive Officer and the executive officers expected to be the other
Named Executive Officers for the subject year, individual arrangements setting
forth the maximum amounts of incentive compensation payable if specified
performance goals (related to the Corporation's EPS and, where applicable, to
the net profit after tax of a business unit) for the year are met. The
arrangement for the Chief Executive Officer is submitted to the Board of
Directors for approval, and all arrangements are submitted to the shareholders
for approval for the purpose of qualifying resulting incentive compensation
payments as tax deductible under Section 162(m) of the Internal Revenue Code.
Following the close of a fiscal year, the Chief Executive Officer reviews the
financial performance of the Corporation and its major business units for such
year with the Committee. If a specific performance goal is met, the Committee
determines the amount of incentive compensation to be paid to a Named Executive
Officer under the arrangement and the allocation between cash bonus and
restricted stock. In making these determinations, the Committee considers the
- - -------------------
(1) The latest available reported salary information with respect to the chief
executive officers of the five largest (based on reported worldwide gross
revenues) publicly held competitor companies ("Peer Group Companies") is
considered in determining a salary adjustment for the Chief Executive
Officer, and such salary information with respect to executives at the
largest domestic Peer Group 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 the Peer Group
Companies are included in the Ad Peer Group Index described on page 13 of
this Proxy Statement.
(2) Although salaries are not targeted to competitor companies salary levels, a
review of reported salary information by the Peer Group Companies indicates
that the 1994 salary paid to the Chief Executive Officer was slightly below
the average of the 1993 salaries paid to the chief executive officers of
the Peer Group Companies, and the average salary paid in 1994 to the other
Named Executive Officers was about 16% greater than the average of the 1993
salaries paid to their peers at the largest domestic Peer Group Company.
10
<PAGE>
recommendations of the Chief Executive Officer (with respect to the Named
Executive Officers other than himself), and has the discretion to reduce the
maximum compensation amount payable by reason of meeting a performance goal by
taking into account revenue growth, profit margins and other factors (including
subjective factors). Restricted stock award grants for executive officers who
are not Named Executive Officers are recommended by the Chief Executive Officer
and determined by the Committee, and their cash bonus is determined by the Chief
Executive Officer.
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 granted by the Committee
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 by the Committee 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, and the maximum number of option shares the
Committee may grant to any employee in a calendar year is 100,000 shares. In
determining a stock option grant, the Committee considers, on a discretionary
basis, the executive's previous grant and the revenue growth and profitability
of the Corporation and the business unit with which the executive was associated
during the prior fiscal year. Except in unusual circumstances, there will be no
increase in the size of a grant over the previous grant for an executive
associated with a business unit absent revenue or profit growth by such unit
over the prior fiscal year, or for an executive not associated with a business
unit absent revenue or profit growth by the Corporation over the prior fiscal
year. 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
In early 1994, Mr. Crawford's salary was increased, with effect as of
October 1, 1994, by $85,000 to $985,000. The Committee found this increase to be
reasonable on the basis of a 13% increase in the Corporation's 1993 EPS over
1992 EPS, its review of the reported 1993 salary information for the chief
executive officers of the Peer Group Companies (Mr. Crawford's 1994 salary is
slightly below the 1993 average salary for these chief executive officers), and
its evaluation of the Corporation's 1993 financial performance relative to the
1993 financial performance of the largest domestic Peer Group Company.
Mr. Crawford was granted an option to purchase 60,000 shares in early 1994.
The Committee found this grant to be reasonable on the basis of the
Corporation's strong 1993 financial performance, namely net income up 23%, EPS
up 13% and revenues up 9% over 1992.
Under Mr. Crawford's shareholder approved 1994 Performance Compensation
Arrangement, which provides for incentive compensation in the form of a cash
bonus (no restricted stock) by reason of meeting a specific performance goal
(Corporation's 1994 EPS evaluated relative to its 1993 EPS), he received a cash
bonus of $1,125,000 in respect of 1994. The Committee found this bonus to be
reasonable on the basis of a 17% increase in the Corporation's 1994 EPS over
1993 EPS, a 16% increase in the Corporation's 1994 revenues over 1993 revenues,
and an increase in the Corporation's operating margin to 11.7% in 1994 from
11.2% in 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) is,
however, excepted from the $1 million deduction cap.
11
<PAGE>
The Corporation's 1987 Stock Plan was amended in 1994 so that compensation
attributable to the exercise of a stock option may qualify as performance-based
for purposes of Section 162(m). The Committee intends to continue to structure
the Corporation's incentive arrangements for the Chief Executive Officer and
certain executive officers of the Corporation under the cash bonus and
restricted stock programs in order to qualify the compensation payments to such
officers as performance-based for purposes of Section 162(m), provided that, 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 Committee has
adopted a Plan establishing individual written performance compensation
arrangements for the Chief Executive Officer and for certain other executive
officers of the Corporation (see pages 18 and 19 of this Proxy Statement) which
are being submitted for shareholder approval to qualify 1995 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
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.
12
<PAGE>
PERFORMANCE GRAPH
The graph below compares cumulative total return on the Corporation's
Common Stock, the Standard & Poor's 500 Composite Index ("S&P 500 Index") and a
group of publicly-held advertising companies consisting of Grey Advertising
Inc., Cordiant plc (formerly Saatchi & Saatchi Company plc), The Interpublic
Group of Companies, Inc., True North Communications (formerly Foote, Cone &
Belding Communications, Inc.), and WPP Group plc ("Ad Peer Group Index"). The
graph assumes the investment of $100 on January 1, 1990 in the Corporation's
Common Stock, the S&P 500 Index and the Ad Peer Group Index.
[THE FOLLOCWING PARAGRAPH WAS REPRESENTED BY A GRAPH IN THE PRINTED MATERIAL]
Date Omnicom S&P 500 Peer Group
---- ------- ------- ----------
1989 100 100 100
1990 93.96 96.90 64.25
1991 134.41 126.42 95.08
1992 179.78 136.05 117.65
1993 207.22 149.76 126.28
1994 237.74 151.74 132.03
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 1993 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.
13
<PAGE>
EMPLOYMENT CONTRACTS/TERMINATION OF EMPLOYMENT
ARRANGEMENTS FOR NAMED EXECUTIVE OFFICERS
None of the Named Executive Officers has an employment contract with the
Corporation or one of its subsidiaries.
Agreements were entered into between BBDO Worldwide Inc. ("BBDO") and Mr.
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 (defined therein as the
individual's misconduct involving willful malfeasance, such as breach of trust,
fraud or dishonesty). The payment period under the agreements for Messrs.
Crawford and Rosenshine is ten years. 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) and Mr. Wren (as of November 26, 1990)
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 (defined therein as the individual's
misconduct involving willful malfeasance, such as breach of trust, fraud or
dishonesty). The payment period under these agreements is six years for Mr.
Meyer, ten years for Mr. Reinhard, and five years for Mr. Wren. 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 September 1,1986 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
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<PAGE>
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
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 (defined therein as dishonesty
affecting DDB Needham or conviction of an indictable offense or crime involving
moral turpitude; willful neglect or refusal to perform assigned duties after
warning; willful act expected to injure the business of DDB Needham). 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, 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 1994, 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
15
<PAGE>
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, 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.
AUDITORS
On the recommendation of the Audit Committee of the Corporation, the Board
of Directors of the Corporation has appointed Arthur Andersen LLP ("Andersen")
as auditors of the Corporation for 1995, 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.
AMENDMENT TO THE 1987 STOCK PLAN
On March 27, 1995 the Board of Directors of the Corporation adopted an
amendment to the Corporation's 1987 Stock Plan (the "Plan"), subject to approval
by the shareholders of the Corporation, increasing the number of shares for
issuance pursuant to stock option grants and restricted stock awards under the
Plan by 1,800,000 shares (about 5% of the Corporation's outstanding shares) to
6,550,000 shares, effective January 1, 1996. The Board of Directors believes
that it is advisable and in the Corporation's best interest to have these
additional shares available for the granting of stock options and restricted
stock awards as they provide a valuable incentive for key employees to remain in
the employ of the Corporation or one of its subsidiaries and increase their
interest in the Corporation's success through ownership of its common stock. The
additional 1,800,000 shares are needed for programs that will cover calendar
years 1996, 1997 and 1998. Option shares and restricted shares heretofore
purchased by key employees under the Plan have come from treasury shares
purchased by the Corporation on the open market and not from authorized and
unissued shares, and it is the intention of management to continue this
practice.
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. 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 15
individuals) are eligible for stock options. Key employees who contribute
significantly to the annual profitability of the Corporation or appropriate
business unit (currently, approximately 130 individuals) are eligible for
restricted stock awards. Specific grants of options and awards under the Plan
are not determinable at this time. In respect of 1994, Named Executive Officers
received an aggregate of 33,565 shares of restricted stock, other executive
officers received an aggregate of 16,000 shares of restricted stock, and
non-executive officers received an aggregate of 242,700 shares of restricted
stock.
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<PAGE>
Administration. The Plan is 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 has 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
has 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 number of option
shares granted to a key employee is determined by the Committee, but 100,000
shares is the maximum number of option shares the Committee may grant to any key
employee in any one calendar year. 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 on the date 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 is exercisable for a period of 12 months commencing on the
date of the grant of the option. No option is 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 death, total disability, retirement or involuntary
termination of employment other than for cause. All options may be exercised in
full within 36 months after termination of employment by reason of death, total
disability, retirement or involuntary termination of employment (except for
options outstanding for less than 12 months in the case of retirement or
involuntary termination), but in no event may an option be exercised after the
expiration of the term stated in the option.
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) where 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. Purchased shares of restricted stock
are registered in the name of the employee and 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 has all of the rights of a
shareholder with respect to the shares, including the right to vote the shares
and receive dividends paid thereon.
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Shares of 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 any 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 May 31, 1997. 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.
Shareholder Approval
Shareholder approval of the Plan amendment reserving an additional
1,800,000 shares for the granting of stock options and restricted stock awards
thereunder 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 this amendment.
1995 PERFORMANCE COMPENSATION PLAN ARRANGEMENTS
On March 27, 1995 the Compensation Committee adopted a Plan establishing an
individual written performance compensation arrangement ("Arrangement") for each
of the Chief Executive Officer and the Chief Financial Officer of the
Corporation, the Chief Executive Officer 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 with 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 1995 based on the Corporation's fully
diluted earnings per share before extraordinary items and the effect of any
changes in accounting principles ("EPS") for 1995 evaluated relative to the
Corporation's EPS for 1994. Under the Arrangements with the executives of the
specified operating units of the Corporation, the executive shall be entitled to
receive in respect of 1995 an incentive cash bonus and restricted stock under
the Corporation's 1987 Stock Plan based (i) 25% on the Corporation's 1995 EPS
evaluated relative to its 1994 EPS, and (ii) 75% on the applicable operating
unit's net profit after-tax ("Net Profit") for 1995 evaluated relative to the
18
<PAGE>
operating unit's Net Profit for 1994. 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 Executive Officers (being the only executive
officers having an Arrangement) could receive under their Arrangements.
New Plan Benefits Under 1995 Performance Compensation Plan
Name and Position Dollar Value ($) (1)
----------------- --------------------
Bruce Crawford,
President & Chief Executive Officer
of the Corporation ................................ $1,520,000
Fred J. Meyer,
Chief Financial Officer of the
Corporation ....................................... $1,150,000
Keith L. Reinhard,
Chairman & Chief Executive Officer of
DDB Needham Worldwide ............................. $1,535,000
Allen Rosenshine,
Chairman & Chief Executive Officer of
BBDO Worldwide .................................... $1,600,000
John Wren,
Chairman & Chief Executive Officer of
Diversified Agency Services ....................... $1,460,000
- - -----------------
(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 1995 EPS to be more than 120%
of its 1994 EPS. With respect to the other Arrangements, this would require
the Corporation's 1995 EPS to be more than 120% of its 1994 EPS and the
1995 Net Profit of the applicable operating unit to be more than 120% of
its 1994 Net Profit.
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 goal, 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
Section 162(m) of the Internal Revenue Code (see pages 11 and 12 of this Proxy
Statement for a discussion of Section 162(m)), 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 1995
Performance Compensation Plan Arrangements. Management recommends approval of
these Arrangements.
19
<PAGE>
SHAREHOLDER PROPOSALS
Shareholders wishing to present resolutions at the 1996 Annual Meeting of
Shareholders must submit copies of such proposed resolutions to the Corporation
at its executive offices, 437 Madison Avenue, New York, New York 10022,
Attention: Corporate Secretary, no later than December 9, 1995.
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 telefax. 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, 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 7, 1995
20
<PAGE>
Appendix 1
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, and 4 if no
instructions to the contrary are indicated.
The undersigned hereby appoints FRED J. MEYER 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 22,
1995 or adjournments thereof on all matters that may properly come before the
meeting, and particularly to vote as hereinafter indicated. The undersigned
hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement dated April 7, 1995.
(Continued and to be signed on the reverse side)
<PAGE>
[X]
-----------
COMMON
<TABLE>
<CAPTION>
<S> <C>
- - ------------------------------------------------------------------------------------------------------------------------------------
1. THE ELECTION OF SIX DIRECTORS. NOMINEES: Bruce Crawford, Peter I. Jones, Keith L. Reinhard, Allen Rosenshine, Gary L. Roubos
and John D. Wren for a 3 year term.
FOR all nominees listed WITHHOLD AUTHORITY (INSTRUCTION: To withhold authority to vote for any individual nominee, print that
except as marked to to vote for all nominee's name below).
the contrary nominees listed
----------------------------------------------------------------------------------------
[ ] [ ]
----------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
2. CONFIRMATION OF APPOINTMENT OF 3. AMENDMENT TO 1987 STOCK PLAN RESERVING 4. APPROVAL OF 1995 PERFORMANCE
ARTHUR ANDERSEN LLP ADDITIONAL SHARES FOR ISSUANCE COMPENSATION PLAN ARRANGEMENTS
AS AUDITORS
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
Dated: , 1995
---------------------------------------------
Signature
---------------------------------------------
Signature if held jointly
---------------------------------------------
Please sign exactly as your name appears. If
stock is held in the name of joint holders,
each should sign. If you 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.
</TABLE>
PLEASE MARK YOUR CHOICE LIKE THIS [ ] IN BLUE OR BLACK INK.
<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, and 4 if no
instructions to the contrary are indicated.
The undersigned hereby appoints FRED J. MEYER 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
22, 1995 or adjournments thereof on all matters that may properly come before
the meeting, and particularly to vote as hereinafter indicated. The undersigned
hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and
Proxy Statement dated April 7, 1995.
(Continued and to be signed on the reverse side)
<PAGE>
1. THE ELECTION OF SIX DIRECTORS. NOMINEES: Bruce Crawford, Peter I. Jones,
Keith L. Reinhard, Allen Rosenshine, Gary L. Roubos and John D. Wren 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).
--------------------------------------------------------
--------------------------------------------------------
- - --------------------------------------------------------------------------------
2. CONFIRMATION OF APPOINTMENT OF 3. AMENDMENT TO 1987 STOCK PLAN
ARTHUR ANDERSEN LLP AS AUDITORS. RESERVING ADDITIONAL SHARES FOR
ISSUANCE
[ ] FOR [ ] AGAINST [ ] ABSTAIN [ ] FOR [ ] AGAINST [ ] ABSTAIN
- - --------------------------------------------------------------------------------
4. APPROVAL OF 1995 PERFORMANCE COMPENSATION PLAN ARRANGEMENTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: , 1995
--------------------------------------------
Signature
--------------------------------------------
Signature if held jointly
--------------------------------------------
Please sign exactly as your name appears. If
stock is held in the name of joint holders,
each should sign. If you 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.
<PAGE>
Appendix 2
1995 Performance Compensation
Fred J. Meyer
Mr. Meyer's cash bonus in respect of 1995 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 1995 evaluated
relative to OMC's EPS for 1994. The cash bonus shall be determined in the
manner, and shall be subject to the provisions, set forth below.
Performance Criterion - 1995 EPS vs. 1994 EPS
Performance Targets Amount of Cash
1995 EPS vs. 1994 EPS Bonus (Maximum)
- - --------------------- ---------------
More than 120.0% .................................. $1,150,000
115.1% - 120.0% .................................. $1,105,000
110.1% - 115.0% .................................. $1,020,000
105.0% - 110.0% .................................. $935,000
Less than 105.0% .................................. $850,000
If OMC's 1995 operating margin is less than its 1994 operating margin
and/or OMC's 1995 EPS is less than 100% of its 1994 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 the sum of
OMC's profits before tax and net interest expense by its commissions and fees.
The Committee retains the overall discretion to reduce the cash bonus Mr.
Meyer may otherwise be entitled to receive hereunder.
<PAGE>
1995 Performance Compensation
Bruce Crawford
Mr. Crawford's cash bonus in respect of 1995 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 1995
evaluated relative to OMC's EPS for 1994. The cash bonus shall be determined in
the manner, and shall be subject to the provisions, set forth below.
Performance Criterion - 1995 EPS vs. 1994 EPS
Performance Targets Amount of Cash
1995 EPS vs. 1994 EPS Bonus (Maximum)
--------------------- ---------------
More than 120.0% .................................. $1,520,000
115.1% - 120.0% .................................. $1,460,000
110.1% - 115.0% .................................. $1,350,000
105.0% - 110.0% .................................. $1,240,000
Less than 105.0% .................................. $1,125,000
If OMC's 1995 operating margin is less than its 1994 operating margin
and/or OMC's 1995 EPS is less than 100% of its 1994 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 the sum of
OMC's profits before tax and net interest expense by its commissions and fees.
The Committee retains the overall discretion to reduce the cash bonus Mr.
Crawford may otherwise be entitled to receive hereunder.
<PAGE>
1995 Performance Compensation
Allen Rosenshine
Mr. Rosenshine's cash bonus and restricted stock award value in respect of
1995 ("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 1995 evaluated relative to OMC's EPS for 1994 and (ii) seventy-five
percent (75%) on BBDO Worldwide Inc. ("BBDO") net profit after-tax ("Net
Profit") for 1995 evaluated relative to BBDO's Net Profit for 1994. The amount
of Performance Compensation shall be determined in the manner, and shall be
subject to the provisions, set forth below.
OMC Performance Criterion - 1995 EPS vs. 1994 EPS
Performance Targets 25% Performance
1995 EPS vs. 1994 EPS Compensation (Maximum)
--------------------- ----------------------
More than 120.0% ................................. $400,000
115.1% - 120.0% ................................. $385,000
110.1% - 115.0% ................................. $355,000
105.0% - 110.0% ................................. $325,000
Less than 105.0% ................................. $295,000
If OMC's 1995 operating margin is less than its 1994 operating margin
and/or OMC's 1995 EPS is less than 100% of its 1994 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 the sum of OMC's profits before tax and net interest expense by its
commissions and fees.
BBDO Performance Criterion - 1995 Net Profit vs. 1994 Net Profit
Performance Targets 75% Performance
1995 vs. 1994 Net Profit Compensation (Maximum)
------------------------ ----------------------
More than 120.0% ................................. $1,200,000
115.1% - 120.0% ................................. $1,160,000
110.1% - 115.0% ................................. $1,070,000
105.0% - 110.0% ................................. $980,000
Less than 105.0% ................................. $890,000
If BBDO's 1995 pretax profit margin is less than its 1994 pretax profit
margin and/or BBDO's 1995 Net Profit is less than 100% of its 1994 Net Profit,
the Committee may make a downward adjustment to the amount of Performance
Composition Mr. Rosenshine should otherwise be entitled to receive under the
above table. The pretax profit margin shall be determined by dividing BBDO's
pretax profit by its commission and fees.
The maximum aggregate amount of Performance Compensation Mr. Rosenshine is
entitled to receive under the above tables in respect of 1995 is $1,600,000. 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>
1995 Performance Compensation
Keith L. Reinhard
Mr. Reinhard's cash bonus and restricted stock award value in respect of
1995 ("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 1995 evaluated relative to OMC's EPS for 1994 and (ii) seventy-five
percent (75%) on DDB Needham Worldwide Inc. ("DDB") net profit after-tax ("Net
Profit") for 1995 evaluated relative to DDB's Net Profit for 1994. The amount of
Performance Compensation shall be determined in the manner, and shall be subject
to the provisions, set forth below.
OMC Performance Criterion - 1995 EPS vs. 1994 EPS
Performance Targets 25% Performance
1995 EPS vs. 1994 EPS Compensation (Maximum)
--------------------- ----------------------
More than 120.0% .................................. $385,000
115.1% - 120.0% .................................. $370,000
110.1% - 115.0% .................................. $340,000
105.0% - 110.0% .................................. $315,000
Less than 105.0% .................................. $285,000
If OMC's 1995 operating margin is less than its 1994 operating margin
and/or OMC's 1995 EPS is less than 100% of its 1994 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 the sum of OMC's profits before tax and net interest expense by its
commissions and fees.
DDB Performance Criterion - 1995 Net Profit vs. 1994 Net Profit
Performance Targets 75% Performance
1995 vs. 1995 Net Profit Compensation (Maximum)
------------------------ ----------------------
More than 120.0% .................................. $1,150,000
115.1% - 120.0% .................................. $1,105,000
110.1% - 115.0% .................................. $1,020,000
105.0% - 110.0% .................................. $935,000
Less than 105.0% .................................. $850,000
If DDB's 1995 pretax profit margin is less than its 1994 pretax profit
margin and/or DDB's 1995 Net Profit is less than 100% of its 1994 Net Profit,
the Committee may make a downward adjustment to the amount of Performance
Composition Mr. Reinhard should otherwise be entitled to receive under the above
table. The pretax profit margin shall be determined by dividing DDB's pretax
profit by its commissions and fees.
The maximum aggregate amount of Performance Compensation Mr. Reinhard is
entitled to receive under the above tables in respect of 1995 is $1,535,000. 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>
1995 Performance Compensation
John D. Wren
Mr. Wren's cash bonus and restricted stock award value in respect of 1995
("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 1995
evaluated relative to OMC's EPS for 1994 and (ii) seventy-five percent (75%) on
Diversified Agency Services ("DAS") net profit after-tax ("Net Profit") for 1995
evaluated relative to DAS's Net Profit for 1994. The amount of Performance
Compensation shall be determined in the manner, and shall be subject to the
provisions, set forth below.
OMC Performance Criterion - 1995 EPS vs. 1994 EPS
Performance Targets 25% Performance
1995 EPS vs. 1994 EPS Compensation (Maximum)
--------------------- ----------------------
More than 120.0% .................................. $365,000
115.1% - 120.0% .................................. $350,000
110.1% - 115.0% .................................. $325,000
105.0% - 110.0% .................................. $295,000
Less than 105.0% .................................. $270,000
If OMC's 1995 operating margin is less than its 1994 operating margin
and/or OMC's 1995 EPS is less than 100% of its 1994 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 OMC's profits before tax and net interest expense by its commissions
and fees.
DAS Performance Criterion - 1995 Net Profit vs. 1994 Net Profit
Performance Targets 75% Performance
1995 vs. 1994 Net Profit Compensation (Maximum)
------------------------ ----------------------
More than 120.0% .................................. $1,095,000
115.1% - 120.0% .................................. $1,055,000
110.1% - 115.0% .................................. $970,000
105.0% - 110.0% .................................. $890,000
Less than 105.0% .................................. $810,000
If DAS's 1995 pretax profit margin is less than its 1994 pretax profit
margin and/or DAS's 1995 Net Profit is less than 100% of its 1994 Net Profit,
the Committee may make a downward adjustment to the amount of Performance
Composition 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 commis-sions and fees.
The maximum aggregate amount of Performance Compensation Mr. Wren is
entitled to receive under the above tables in respect of 1995 is $1,460,000. 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>
