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.
------------------------------------------------
(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 O-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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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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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 20, 1996
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 20, 1996 at 10:00 A.M. for the following purposes:
1. To elect four directors;
2. To confirm the appointment of Arthur Andersen LLP as auditors of the
Corporation for the year 1996;
3. To consider and act upon the Executive Officer Incentive Plan; and
4. 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 3, 1996 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 1995 is enclosed.
By order of the Board of Directors,
BARRY J. WAGNER
Secretary
New York, New York
April 8, 1996
<PAGE>
OMNICOM GROUP INC.
437 Madison Avenue
New York, New York 10022
----------
PROXY STATEMENT
Execution and return of the enclosed proxy are solicited by the Board of
Directors of Omnicom Group Inc. (the "Corporation") for use at the Annual
Meeting of Shareholders ("Annual Meeting") to be held on May 20, 1996, and at
any adjournments thereof, for the purposes set forth in the accompanying notice.
The following information is being furnished in connection with the solicitation
of proxies, and is being mailed on or about April 8, 1996 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 four 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 1996 and for approval of the Executive Officer Incentive Plan. 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
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 Executive Officer Incentive 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 1995 is not part
of the proxy solicitation material.
On April 3, 1996, the record date for determination of Shareholders
entitled to notice of and to vote at the Annual Meeting, the Corporation had
outstanding 74,754,524 shares of Common Stock, each of which is entitled to one
vote. At the record date, 2,826,895 shares of Common Stock were owned
beneficially (of which 1,304,808 shares were owned of record) by the directors
and executive officers of the Corporation, which constitutes approximately 3.78%
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, 1995 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.............................. 8,157,711(1) 10.93%
82 Devonshire Street
Boston, Massachusetts 02109
Jennison Associates Capital Corp...... 7,281,878(2) 9.75%
466 Lexington Avenue
New York, New York 10017
- ----------
(1) In its filing with the Securities and Exchange Commission, FMR Corp.
reported having sole voting power as to 876,518 shares and sole dispositive
power as to 8,157,711 shares.
(2) In its filing with the Securities and Exchange Commission, Jennison
Associates Capital Corp. ("Jennison") reported having sole voting power as
to 1,012,600 shares, shared voting power as to 5,224,640 shares, and shared
dispositive power as to 7,281,878 shares. A separate report was filed by
The Prudential Insurance Company of America ("Prudential"), an affiliate of
Jennison, which included the shares reported by Jennison. Had the
Prudential filing not included the shares reported by Jennison, Prudential
would have reported beneficial ownership of only 39,690 shares.
ELECTION OF DIRECTORS
On the date of the 1996 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 1996 Annual Meeting, the term of
another class expiring at the 1997 Annual Meeting, and the term of the remaining
class expiring at the 1998 Annual Meeting. The Board of Directors nominates
incumbent directors Bernard Brochand, James A. Cannon, Leonard S. Coleman, Jr.
and Robin B. Smith to serve as directors of the Corporation until the 1999
Annual Meeting. Incumbent director Fred J. Meyer chose not to stand for election
to the Board of Directors when his term expires at the 1996 Annual Meeting;
nevertheless, Shareholder proxies may not be voted for more than four persons.
2
<PAGE>
Information relating to the four nominees for director, the remaining
directors, and the director not standing for election who will continue in
office following the Annual Meeting, is set forth below.
Year First Term
Name, Age and Principal Became a Will
Occupation(1) Director Expire
---------------------- --------- ------
Bernard Brochand (57)..................................... 1993 1996
President, International Division of The DDB Needham
Worldwide Communications Group Inc., a subsidiary
of the Corporation.
Robert J. Callander (65).................................. 1992 1997
Executive-in-Residence, Columbia School of Business,
Columbia University; Retired Vice Chairman of
Chemical Banking Corporation.
James A. Cannon (57)...................................... 1986 1996
Vice Chairman & Chief Financial Officer of BBDO
Worldwide Inc., a subsidiary of the Corporation.
Leonard S. Coleman, Jr. (47).............................. 1993 1996
President, National League, Major League Baseball.
Bruce Crawford (67)....................................... 1989 1998
Chairman & Chief Executive Officer of the
Corporation.
Peter I. Jones (53)....................................... 1989 1998
President of Diversified Agency Services, a division
of the Corporation.
Fred J. Meyer (65)........................................ 1988 1996
Chief Financial Officer of the Corporation.
John R. Purcell (64)...................................... 1986 1997
Chairman & Chief Executive Officer of Grenadier
Associates Ltd.
Keith L. Reinhard (61).................................... 1986 1998
Chairman & Chief Executive Officer of The DDB
Needham Worldwide Communications Group Inc.
Allen Rosenshine (57)..................................... 1986 1998
Chairman & Chief Executive Officer of BBDO Worldwide
Inc.
Gary L. Roubos (59)....................................... 1986 1998
Chairman of Dover Corporation.
Quentin I. Smith, Jr. (68)................................ 1986 1997
Corporate Director; Retired Chairman & Chief
Executive Officer of Towers, Perrin, Forster &
Crosby.
Robin B. Smith (56)....................................... 1986 1996
President & Chief Executive Officer of Publishers
Clearing House.
William G. Tragos (61).................................... 1993 1997
Chairman & Chief Executive Officer of TBWA
International B.V. and of TBWA Chiat/Day Inc.,
subsidiaries of the Corporation.
John D. Wren (43)......................................... 1993 1998
President of the Corporation and Chairman & Chief
Executive Officer of Diversified Agency Services
Egon P.S. Zehnder (66).................................... 1986 1997
Chairman of Egon Zehnder International Inc.
- ------
(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 and New Jersey Resources.
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 database 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., Repap 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
Company, Dover Corporation, The Treasurers Fund, and D I I Group Inc.
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
ten mutual funds administered by Prudential Securities.
Mr. Tragos has served as Chairman and Chief Executive Officer of TBWA
International B.V. and as Chairman and Chief Executive Officer of TBWA Chiat/Day
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-five offices in thirty
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 MANAGEMENT
The following table provides information, as of March 22, 1996, as to the
beneficial ownership of the Common Stock of the Corporation for each director of
the Corporation and the Named Executive Officers, as such term is hereinafter
defined, and all directors and executive officers of the Corporation as a group.
Beneficial Ownership Percent
Name of Beneficial Owner of Common Stock (1) of Class
----------------------- ------------------- -------
Bernard Brochand.......................... 79,000 .1057
Robert J. Callander....................... 4,000 .0054
James A. Cannon........................... 292,800 .3917
Leonard S. Coleman, Jr.................... 600 .0008
Bruce Crawford............................ 424,195 .5675
Peter I. Jones............................ 84,000 .1124
Fred J. Meyer............................. 222,000 .2970
John R. Purcell........................... 10,000 .0134
Keith L. Reinhard......................... 609,536 .8154
Allen Rosenshine.......................... 601,570 .8047
Gary L. Roubos............................ 2,000 .0027
Quentin I. Smith, Jr...................... 2,000 .0027
Robin B. Smith............................ 200 .0003
William G. Tragos......................... 257,334 .3442
John D. Wren.............................. 140,382 .1878
Egon P.S. Zehnder......................... 4,000 .0054
All directors and executive...............
officers as a group (19 persons)........ 2,826,895 3.7816
- ----------
(1) Includes (i) shares held under restricted stock awards granted by the
Corporation, namely, Mr. Brochand - 34,200 shares, Mr. Cannon - 53,200
shares, Mr. Crawford - 32,400 shares, Mr. Jones - 6,000 shares, Mr. Meyer -
22,400 shares, Mr. Reinhard - 55,000 shares, Mr. Rosenshine - 66,800
shares, and Mr. Wren - 53,704 shares, (ii) shares which certain of the
named individuals have the right to purchase under stock options granted by
the Corporation, namely, Mr. Cannon - 224,000 shares, Mr. Crawford -
217,000 shares, Mr. Jones - 78,000 shares, Mr. Meyer - 123,000 shares, Mr.
Reinhard - 289,000 shares, Mr. Rosenshine - 408,000 shares, Mr. Tragos -
9,000 shares, and Mr. Wren - 68,900 shares, and (iii) 25,595 shares
credited to Mr. Crawford's account under the Corporation's Group Profit
Sharing Retirement Plan.
The Corporation is required to identify any director or officer who failed
to timely file with the Securities and Exchange Commission a required report
relating to ownership and changes in ownership of the Corporation's equity
securities. Based on material provided to the Corporation, directors and
officers of the Corporation complied with all applicable filing requirements
during 1995, except for Dale Adams, Controller of the Corporation, Dennis
Hewitt, Treasurer of the Corporation, Mr. Reinhard, and Mr. Wren. Mr. Adams
failed to timely file a report to reflect a small number of shares received and
held indirectly through the Corporation's Group Profit Sharing Retirement Plan;
and Mr. Hewitt, Mr. Reinhard, and Mr. Wren each filed one report less than one
month late, in Mr. Hewitt's case covering one transaction, and in Mr. Reinhard's
and Mr. Wren's case each covering two transactions.
BOARD MEETINGS AND COMMITTEES
Five regular meetings of the Board of Directors of the Corporation (the
"Board") were held in 1995. 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.
5
<PAGE>
During 1995, the Audit Committee of the Board consisted of Ms. Smith
(Chairman), and Messrs. Callander and Coleman. Three meetings of the Audit
Committee were held in 1995. The responsibilities of the Audit Committee are to
(a) recommend to the Board the appointment of independent public accountants to
audit the books and records of the Corporation, assess the independence of the
public accountants, and 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 1995, the Compensation Committee of the Board consisted of Messrs.
Smith (Chairman), Callander and Zehnder. Five meetings of the Compensation
Committee were held in 1995. 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 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 (the "Code").
During 1995, the Nominating Committee of the Board consisted of Messrs.
Roubos (Chairman), Purcell and Zehnder. Three meetings of the Nominating
Committee were held in 1995. 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) the 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 1995, each director who was not an employee of the Corporation or
one of its subsidiaries was paid (i) a monthly retainer of $1,500, (ii) a fee of
$2,000 for attendance at the first meeting of the Board of Directors or a
Committee of the Board of Directors on a given day, and (iii) a fee of $1,500
for attendance at any subsequent meeting on the same day. A director who is an
employee of the Corporation or one of its subsidiaries does not receive any
compensation for serving as a director.
6
<PAGE>
EXECUTIVE COMPENSATION
The tables that follow present information relating to the compensation of,
option grants to, option exercises by, and year-end positions of, the Chief
Executive Officer of the Corporation and each of the other four most highly
compensated executive officers of the Corporation (collectively, the "Named
Executive Officers"). All references to the shares of the Corporation's Common
Stock in these tables reflect the stock split in the form of a 100% stock
dividend which was effective in December, 1995.
Summary Compensation Table
The following table sets forth information in respect of the compensation
of the Named Executive Officers for services in all capacities to the
Corporation and its subsidiaries for the fiscal years ended December 31, 1993,
1994 and 1995.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
------------------------- ------------------------------
Name and Shares All Other
Principal Restricted Stock Underlying Compen-
Position Year Salary($) Bonus($) Awards($) (1) Stock Options sation($)(2)
--------- ------ ----------- ------------ -------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Bruce Crawford........... 1995 $985,000 $1,520,000 $ 0 150,000 $21,071
Chairman & 1994 921,250 1,125,000 0 120,000 24,814
Chief Executive 1993 875,000 565,000 715,313 100,000 39,488
Officer of the
Corporation
Fred J. Meyer............ 1995 $587,500 $1,150,000 $ 0 70,000 $30,623
Chief Financial 1994 556,250 850,000 0 70,000 30,308
Officer of the 1993 500,000 475,000 429,188 60,000 41,968
Corporation
Keith L. Reinhard........ 1995 $827,806 $600,000 $835,000 70,000 $23,275
Chairman & Chief 1994 809,056 550,000 598,125 50,000 24,086
Executive Officer of 1993 752,800 190,000 357,656 50,000 22,105
The DDB Needham
Worldwide
Communications
Group Inc.
Allen Rosenshine......... 1995 $800,000 $625,000 $918,500 100,000 $48,396
Chairman & Chief 1994 768,750 500,000 706,875 80,000 23,406
Executive Officer 1993 725,000 480,000 476,875 80,000 34,919
of BBDO World-
wide Inc.
John D. Wren............. 1995 $500,000 $800,000 $734,800 70,000 $20,734
President of the 1994 450,000 550,000 520,097 60,000 23,445
Corporation 1993 350,000 350,000 429,188 20,000 28,300
</TABLE>
- ----------
(1) Restricted stock awards represent performance based compensation for the
applicable fiscal year. The awards are normally granted in the first
quarter of the year following the fiscal year end. The value of the
restricted stock awards was determined by multiplying the fair market value
of the Corporation's Common Stock on the date of the grant by the number of
shares awarded, and deducting therefrom the consideration paid for the
shares, which is equal to the par value ($.50 per share) of the shares. As
of December 31, 1995, Mr. Crawford held an aggregate of 51,600 shares of
restricted stock with a net pre-tax value of $1,909,200; Mr. Meyer held an
aggregate of 36,400 shares of restricted stock with a net pre-tax value of
$1,346,800; Mr. Reinhard held an aggregate of 50,800 shares of restricted
stock with a net pre-tax value of $1,874,100; Mr. Rosenshine held an
aggregate of 65,200 shares of restricted stock with a net pre-tax value of
$2,405,900; and Mr. Wren held an aggregate of 51,930 shares of restricted
stock with a net pre-tax value of $1,916,628. The net pre-tax value was
determined by subtracting the consideration paid from the fair market value
of the shares on said date ($37.25). 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 Other Compensation paid for the fiscal year ended December 31, 1995
consists of (i) employer contributions to the Corporation's Group Profit
Sharing Retirement Plan in the amount of $19,500 on behalf of each of
Messrs. Crawford, Meyer, Rosenshine and Wren, and $10,500 on behalf of Mr.
Reinhard; (ii) an 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 $1,571 on behalf of
Mr. Crawford, $11,123 on behalf of Mr. Meyer, $6,775 on behalf of Mr.
Reinhard, $4,896 on behalf of Mr. Rosenshine, and $1,234 on behalf of Mr.
Wren; and (iv) a service award of $24,000 for Mr. Rosenshine.
Options
The following table shows all grants of options to the Named Executive
Officers in 1995.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Individual Grants Appreciation for Option Term (4)
----------------------------------- -------------------------------
Number % of Total
of Shares Options
Underlying Granted to Exercise
Options Employees Price
Name Granted(1)(2) in 1995 ($ per Share) Expiration Date(3) 0%($) 5%($) 10%($)
------- ------------ -------- ------------ ----------------- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce Crawford........ 150,000 18.072 $25.8750 March 3, 2005 $0 $2,440,897 $6,185,713
Fred J. Meyer......... 70,000 8.434 25.8750 March 3, 2005 0 1,139,085 2,886,666
Keith L. Reinhard..... 70,000 8.434 25.8750 March 3, 2005 0 1,139,085 2,886,666
Allen Rosenshine...... 100,000 12.048 25.8750 March 3, 2005 0 1,627,265 4,123,809
John D. Wren.......... 70,000 8.434 25.8750 March 3, 2005 0 1,139,085 2,886,666
</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 1995.
(3) Upon an optionee's termination of employment by reason of (i) voluntary
termination or termination for cause, all outstanding options are canceled;
(ii) retirement or involuntary termination, options outstanding for less
than 12 months are canceled 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
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.
8
<PAGE>
The following table provides information as to the aggregated option
exercises by the Named Executive Officers in 1995, and as to unexercised options
held by the Named Executive Officers on December 31, 1995.
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, 1995 December 31, 1995(2)
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized($)(1) Unexercisable Unexercisable
----- ----------- ------------ ---------------- -------------------
<S> <C> <C> <C> <C>
Bruce Crawford .................. 112,000 $2,205,502 176,000/274,000 $3,079,741/$3,489,619
Fred J. Meyer ................... 6,000 $ 131,250 137,000/143,000 2,644,463/ 1,848,028
Keith L. Reinhard ............... -- -- 233,000/125,000 5,249,714/ 1,596,716
Allen Rosenshine ................ -- -- 322,000/188,000 7,186,740/ 2,418,246
John D. Wren .................... 41,600 $ 699,863 28,400/120,000 413,636/ 1,481,310
</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, 1995, being $37.25
per share.
COMPENSATION COMMITTEE REPORT
Compensation Committee
The Compensation Committee of the Board of Directors is composed entirely
of independent outside directors. The responsibilities of the Compensation
Committee and the frequency of Compensation Committee Meetings during 1995 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 Compensation 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 Compensation Committee considers the factors described below and
the recommendations of the Chief Executive Officer with respect to the other
Named Executive Officers.
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 Compensation Committee considers the executive's
level of responsibility, the profitability of the Corporation and the business
unit with which the executive is associated and the Compensation Committee's
knowledge of executive compensation practices. Profitability of the Corporation
is determined by reference to its fully diluted earnings per share before
extraordinary items and the effect of any change in accounting principles
("EPS"), and profitability of a business unit is determined by reference to its
net profit after tax. 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) has been directly related to EPS and the net profit after
tax of the business unit with which the executive officer is associated.
9
<PAGE>
Incentive compensation awards for Named Executive Officers associated with a
business unit have been 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. Awards for
Named Executive Officers not associated with a business unit have been based
100% on the Corporation's EPS, evaluated relative to its prior year EPS. Absent
unusual circumstances, no increase in incentive compensation is 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 net profit after tax over the prior year. An increase or
decrease in the Corporation's EPS and a business unit's net profit after tax
over the prior year generally results 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 Compensation 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. All individual arrangements had heretofore been
submitted to the Shareholders for approval for the purpose of qualifying
resulting incentive compensation payments as tax deductible under Section 162(m)
of the Code. In November, 1995, the Compensation Committee recommended that the
Board of Directors of the Corporation adopt the Executive Officer Incentive Plan
(the "Incentive Plan") discussed on pages 15-16 below, and on November 28, 1995
it was adopted by the Board of Directors. The Incentive Plan was established to
reward and motivate executives for good performance and to allow the
Corporation's compensation expense to vary with its financial performance.
Participating executives will receive bonus compensation only pursuant to their
award agreements. The Incentive Plan provides that prior to or shortly after the
beginning of each fiscal year, the Compensation Committee will determine the
incentive level assigned to each participant in the Incentive Plan. Performance
goals for the year are established, and award agreements are entered with the
participants. The performance goals are based on one or more specified business
criteria. The maximum award payable to any participant for any year is one
percent (1%) of the Corporation's operating profit.
Following the close of a fiscal year, the Chief Executive Officer reviews
with the Compensation Committee the financial performance of the Corporation and
its major business units for such year. If specific performance goals are met,
the Compensation Committee determines the amount of incentive compensation to be
paid to a Named Executive Officer under that officer's award agreement, and the
allocation between cash bonus and restricted stock. In making these
determinations, the Compensation Committee considers the 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.
Restricted stock award grants for executive officers who are not Named
Executive Officers are recommended by the Chief Executive Officer and determined
by the Compensation 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 Compensation
Committee annually to a relatively broad group of key executives, and 20% of the
shares vest (i.e. restrictions on 20% of the shares lapse) on each of the next
five anniversary dates of the award.
Stock options are granted annually by the Compensation 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 Compensation Committee may grant to any employee in a calendar
year is 200,000 shares. In determining a stock option grant, the Compensation
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
10
<PAGE>
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
Mr. Crawford's salary was not increased in 1995.
In early 1995, Mr. Crawford was granted an option to purchase 150,000
shares. The Compensation Committee found this grant to be reasonable on the
basis of the Corporation's strong 1994 financial performance in comparison to
its 1993 results, namely that EPS was up 17%, revenues were up 16% over 1993 and
operating margin increased to 11.7% from 11.2%.
Under Mr. Crawford's Shareholder-approved 1995 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 1995 EPS evaluated relative to its 1994 EPS), he received a cash
bonus of $1,520,000 (the maximum payable pursuant to his Arrangement) in respect
of 1995. On the basis of the Corporation's having achieved the required 20%
increase in its 1995 EPS over 1994 EPS, a more than 20% increase in the
Corporation's 1995 net profits over 1994 net profits, and an increase in the
Corporation's operating margin to 12% in 1995 from 11.7% (11.3% as restated),
the Compensation Committee found this bonus to be reasonable.
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.
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 Compensation 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 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 Compensation 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, in November,
1995, the Compensation Committee adopted the Incentive Plan, establishing
performance compensation arrangements for the Chief Executive Officer and for
certain other executive officers of the Corporation (see pages 15-16 of this
Proxy Statement) which is being submitted for Shareholder approval to qualify
1996 and future compensation payments under the Incentive Plan 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.
11
<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 Inc. (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 following table was represented by a graph in the printed material]
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Omniciom Group 100 143.04 191.33 220.54 253.01 371.89
Ad Peer Group Index 100 147.97 183.11 196.54 205.48 266.44
S7P 500 Index 100 130.47 140.41 154.57 156.61 215.45
Returns for the Corporation's Common Stock depicted in the graph are not
necessarily indicative of future performance.
The above graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Corporation specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
12
<PAGE>
EMPLOYMENT CONTRACTS/TERMINATION OF EMPLOYMENT
ARRANGEMENTS FOR NAMED 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), in
each case under the Corporation's Executive Salary Continuation Plan, 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 currently seven 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 The DDB Needham Worldwide
Communications Group 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
13
<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 1995, the Corporation obtained a two-year policy of insurance
from the Federal Insurance Company at an annual premium of $222,500, 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 $14,000,000, 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 which provides that the Corporation indemnifies the
director against liabilities or costs arising out of any alleged or actual
breach of duty, neglect, error, misstatement, misleading statement, omission or
other act allegedly or actually done or attempted by the director or any matter
claimed against the director solely by reason of serving as a director. This
indemnification does not apply to claims against the director for libel or
slander, return of remuneration to the Corporation, or an accounting of profits
14
<PAGE>
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 1996, 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.
EXECUTIVE OFFICER INCENTIVE PLAN
In 1993, the Code was amended to add Section 162(m), which places a limit
of $1,000,000 on the amount of compensation that may be deducted by the
Corporation in any tax year with respect to certain of the Corporation's highest
paid executives. However, certain performance based compensation which has been
approved by the Shareholders is not subject to the deduction limit. For the past
two years the Shareholders have been asked to approve individual written
performance compensation arrangements adopted by the Compensation Committee for
each of the Chief Executive Officer and Chief Financial Officer of the
Corporation, the Chief Executive Officer of BBDO Worldwide Inc., the Chief
Executive Officer of The DDB Needham Worldwide Communications Group Inc. and the
Chief Executive Officer of the Diversified Agency Services division of the
Corporation (who is now also the President of the Corporation). These
Shareholder-approved arrangements established the maximum dollar amount of
compensation that the Named Executive Officers could receive under individual
arrangements, and the Compensation Committee retained the discretion to reduce
the fixed maximum dollar amount of the compensation the Named Executive Officers
would otherwise be entitled to receive by attaining a described performance
goal, taking into consideration such factors as the Compensation Committee
deemed appropriate.
The Compensation Committee determined that it would be prudent to establish
a longer term plan. On November 28, 1995, the Board of Directors of the
Corporation adopted the Executive Officer Incentive Plan (the "Incentive Plan"),
subject to approval by the Shareholders of the Corporation. The Shareholders are
now requested to approve the Incentive Plan at this Annual Meeting to enable the
Corporation to qualify payments under the Incentive Plan as deductible for
federal income tax purposes. The Incentive Plan indicates the maximum bonus any
plan participant could earn, and indicates that such awards are to be based on
one or more stated performance criteria, each measured relative to
pre-established performance goals approved by the Compensation Committee at the
start of the year, and calculated in accordance with such criteria at year end.
Description of the Incentive Plan
The purpose of the Incentive Plan is to motivate and reward executives for
good performance and to allow the Corporation's compensation expense to vary
with the Corporation's financial performance. Only Named Executive Officers may
participate in the Incentive Plan, which is administered by the Compensation
Committee of the Board of Directors. As stated above, the present members of the
Committee are Messrs. Smith, Callander and Zehnder.
Prior to or shortly after the beginning of each fiscal year, the
Compensation Committee determines which executive officers are to participate in
the Incentive Plan for the fiscal year, the incentive level assigned to each
participant, and the performance goals applicable to the year. An award
agreement is entered with each participant in the Incentive Plan; the
participating executives will receive bonus compensation only pursuant to their
award agreements.
15
<PAGE>
Performance goals are based on one or more business criteria specified in
the Incentive Plan: earnings per share, net income, operating margin, return on
equity, stockholder total return, revenue and cash flow.
The Compensation Committee establishes the specific performance goals for
each participant based on the business criteria and assigns weights to the
goals.
At the end of the fiscal year, the Compensation Committee reviews the
performance of the participants against the established performance goals.
Awards may only be paid after the Compensation Committee has certified in
writing that the performance goals have been attained. The Compensation
Committee may reduce but not increase the amount of an award otherwise payable
to a participant upon attainment of the performance goals. The maximum award
payable under the Incentive Plan to any participant for any year shall be one
percent (1%) of the Corporation's operating profit. Awards are finalized after
results for the fiscal year have been released. The Compensation Committee
allocates awards between cash and restricted stock granted under the
Corporation's 1987 Stock Plan.
Participants whose employment is terminated by retirement, death or
disability during a fiscal year are entitled to receive all or a portion of the
award otherwise payable under the Incentive Plan. Participants whose employment
is terminated for other reasons during the fiscal year are not entitled to
receive an Incentive Plan award for that year.
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 Executive
Officer Incentive Plan. Management recommends approval of the Incentive Plan.
SHAREHOLDER PROPOSALS
Shareholders wishing to present resolutions at the 1997 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 8, 1996.
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.
Barry J. Wagner
Secretary
New York, New York
April 8, 1996
16
<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 and 3 if no
instructions to the contrary are indicated.
The undersigned hereby appoints FRED J. MEYER and BARRY J. WAGNER, jointly and
severally, proxies with the power of substitution to vote all shares the
undersigned is entitled to vote at the Annual Meeting of Share-holders on May
20, 1996 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 8, 1996.
(Continued and to be signed on the reverse side)
17
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
1. THE ELECTION OF FOUR DIRECTORS. NOMINEES: Bernard Brochand, James A. Cannon, Leonard S. Coleman, Jr. and Robin B. Smith
for a 3 year term.
FOR all nominees listed WITHHOLD AUTHORITY (INSTRUCTION: To withhold authority to vote for any individual
except as marked to to vote for all nominees nominee, print that nominee's name below).
the contrary listed
[ ] [ ] ---------------------------------------------------------------
---------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
2. CONFIRMATION OF APPOINTMENT OF 3. APPROVAL OF THE EXECUTIVE OFFICER
ARTHUR ANDERSEN LLP INCENTIVE PLAN
AS AUDITORS
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ]
Dated: , 1996
---------------------------------------------
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.
PLEASE MARK YOUR CHOICE LIKE THIS IN BLUE OR BLACK INK.
</TABLE>
<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 and 3 if no instructions
to the contrary are indicated.
The undersigned hereby appoints FRED J. MEYER and BARRY J. WAGNER, 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 20,
1996 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 8, 1996.
(Continued and to be signed on the reverse side)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
1. THE ELECTION OF FOUR DIRECTORS. NOMINEES: Bernard Brochand, James A. Cannon, Leonard S. Coleman, Jr. and Robin B. Smith
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. APPROVAL OF THE EXECUTIVE OFFICER
ARTHUR ANDERSEN LLP AS AUDITORS. INCENTIVE PLAN
| | FOR | | AGAINST | | ABSTAIN | | FOR | | AGAINST | | ABSTAIN
Dated: , 1996
---------------------------------------------
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>
<PAGE>
APPENDIX 2
OMNICOM GROUP INC.
EXECUTIVE OFFICER INCENTIVE PLAN
(as adopted effective November 28, 1995)
1. OBJECTIVES
The Omnicom Group Inc. Executive Officer Incentive Plan (the "Plan") is
designed to reward executives for making major contributions to the success and
profitability of the Company. These objectives are accomplished by making
incentive Awards under the Plan, which are in addition to base salary and grants
of stock options, thereby providing participants with a proprietary interest in
the growth and performance of the Company.
2. DEFINITIONS
(a) Award -- The Award to a Plan participant pursuant to terms and
conditions of the Plan.
(b) Award Agreement -- An agreement between the Company and a participant
that sets forth the terms, conditions and limitations applicable to an Award.
(c) Board -- The Board of Directors of Omnicom Group Inc..
(d) Code -- The Internal Revenue Code of 1986, as amended from time to
time.
(e) Committee -- The Compensation Committee of the Board, or such other
committee of the Board that is designated by the Board to administer the Plan.
The Committee shall be constituted to permit the Plan to comply with the
requirements of Section 162(m) of the Code and any regulations issued thereunder
and shall consist of not less than three members of the Board.
(f) Company -- Omnicom Group Inc. ("Omnicom") and any other corporation in
which Omnicom controls, directly or indirectly, fifty percent (50%) or more of
the combined voting power of all classes of voting securities.
(g) Executive Officer -- The Chief Executive Officer of the Company plus
the four highest compensated officers other than the Chief Executive Officer .
(h) Operating Profit-- The Company's income before income taxes, unusual
charges and changes in accounting principles.
3. ELIGIBILITY
Executive Officers and such other individuals as the Committee may
designate are eligible for participation in the Plan.
4. ADMINISTRATION
The Plan shall be administered by the Committee which shall have full power
and authority to construe, interpret and administer the Plan. Each decision of
the Committee shall be final, conclusive and binding upon all persons. The
Committee shall determine: (i) which Officers will participate in the Plan for
the fiscal year; (ii) the terms of the Award agreement for each participant; and
(iii) the awards payable to each participant in accordance with the terms of
this Plan and the applicable award agreement.
5. PERFORMANCE GOALS
(a) The Committee shall establish performance goals applicable to a
particular fiscal year, for each participant, in writing, in accordance with
proposed or final regulations issued under Code Section 162 (m).
(b) Performance goals applicable to a fiscal year shall include one or more
of the following measures:
Earnings per share Stockholder total return
Net income Revenue
Operating margin Cash flow
Return on equity
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(c) The Committee will determine the measure or measures to be used for
each participant and quantify the performance standards which will be used to
calculate the Award earned with respect to each measure.
(d) The Committee may base performance goals on one or more of the
foregoing business measures. In the event performance goals are based on more
than one business measure, the Committee shall determine the percentage
attributable to the attainment of the goal for each measure.
6. AWARDS
(a) The Committee shall make Awards only in the event the Committee
certifies in writing prior to payment of the Award that the performance goal or
goals under which the Award is to be paid has or have been attained.
(b) The maximum Award payable under this Plan to any participant for any
fiscal year shall be one percent (1%) of the Company's Operating Profit.
(c) The Committee in its sole and absolute discretion may reduce but not
increase the amount of an Award otherwise payable to a participant upon
attainment of the performance goal or goals established for a fiscal year.
(d) A participant's performance must be satisfactory, regardless of Company
performance, before he or she may be paid an incentive Award.
(e) To the extent permitted under regulations issued under Code Section
162(m), in the event the performance goals for a fiscal year are attained, the
Committee, in its discretion, may grant all or such portion of an incentive
Award for the year as it deems advisable to a participant (or his or her
beneficiary in the case of his death) who is employed during the fiscal year, or
whose employment is terminated during the fiscal year, or who suffers a
permanent disability.
7. PAYMENT OF AWARDS
(a) Each participant shall be paid the Award as soon as practicable
following the determination of the Award payment by the Committee.
(b) The Committee shall decide on the allocation of the Award payment
between cash and restricted stock granted under the Company's 1987 Stock Plan.
8. TAX WITHHOLDING
The Company shall have the right to deduct applicable taxes from any Award
payment.
9. AMENDMENT, MODIFICATION, SUSPENSION OR DISCONTINUANCE OF THIS PLAN.
The Committee may amend, modify, suspend or terminate the Plan for the
purpose of meeting or addressing any changes in legal requirements or for any
other purpose permitted by law. The Committee will seek stockholder approval of
an amendment if determined to be required by or advisable under regulations of
the Securities and Exchange Commission or the Internal Revenue Service, the
rules of any stock exchange on which the Company's stock is listed or other
applicable law or regulation. No amendment, suspension, termination or
discontinuance may impair the right of a participant or his or her designated
beneficiary to receive any Award accrued prior to the later of the date of
adoption or the effective date of such amendment, suspension, termination or
discontinuance.
10. TERMINATION OF EMPLOYMENT
If the employment of a participant terminates, other than pursuant to
paragraphs (a) and (b) of this Section 10, all unpaid Awards shall be canceled
immediately, unless the Award Agreement provides otherwise.
(a) Retirement -- When a participant's employment terminates as a result of
retirement, the Committee may permit Awards to continue in effect beyond the
date of retirement in accordance with the applicable Award agreement.
(b) Death or Disability of a Participant
(i) In the event of a participant's death, the participant's estate or
beneficiaries shall have a period up to the expiration date specified in
the Award Agreement within which to receive any outstanding Award held by
the participant under such terms as may be specified in the applicable
Award Agreement. Rights to any such outstanding Awards shall pass by will
or the laws of descent and distribution in the following order: (a) to
beneficiaries so designated by the participant; if none, then (b) to legal
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representative of the participant; if none, then (c) to the persons
entitled thereto as determined by a court of competent jurisdiction. Awards
so passing shall be made at such times and in such manner as if the
participant were living.
(ii) In the event a participant is disabled, Awards and rights to any
such Awards may be paid to the participant.
(iii) After the death or disability of a participant, the Committee
may in its sole discretion at any time (a) terminate restrictions in Award
Agreements; (b) accelerate any or all installments and rights; and (c)
instruct the Company to pay the total of any accelerated payments in a lump
sum to the participant, the participant's estate, beneficiaries or
representative.
(iv) In the event of uncertainty as to interpretation of or
controversies concerning this paragraph (b) of Section 10, the Committee's
determinations shall be binding and conclusive.
11. CANCELLATION AND RESCISSION OF AWARDS
Unless the Award Agreement specifies otherwise, the Committee may cancel
any unpaid Awards at any time if the participant is not in compliance with all
other applicable provisions of the Award Agreement and the Plan. Awards may also
be canceled if the Committee determines that the participant has at any time
engaged in activity harmful to the interest of or in competition with the
Company.
12. NONASSIGNABILITY
No Award or any other benefit under the Plan shall be assignable or
transferable by the participant during the participant's lifetime.
13. UNFUNDED PLAN
The Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to participants, any such accounts shall be used merely
as a bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash, nor shall the Plan be
construed as providing for such segregation, nor shall the Company nor the Board
nor the Committee be deemed to be a trustee of any Award under the Plan. Any
liability of the Company to any participant with respect to an Award under the
Plan shall be based solely upon any contractual obligations that may be created
by the Plan and any Award Agreement; no such obligation of the Company shall be
deemed to be secured by any pledge or other encumbrance on any property of the
Company. Neither the Company nor the Board nor the Committee shall be required
to give any security or bond for the performance of any obligation that may be
created by the Plan.
14. NO RIGHT TO CONTINUED EMPLOYMENT
Nothing in this Plan shall confer upon any employee any right to continue
in the employ of the Company or shall interfere with or restrict in any way the
right of the Company to discharge an employee at any time for any reason
whatsoever, with or without good cause.
15. EFFECTIVE DATE
The Plan shall become effective on November 28, 1995, subject to approval
by the Shareholders of the Company within twelve (12) months after said date.
The Committee may terminate or suspend the Plan at any time. No awards may be
made while the Plan is suspended or after it is terminated.
