SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definite 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)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] 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 transactions applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transactions applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] 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:
---------------------------------------
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 19, 1997
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 19, 1997 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 1997;
3. 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, 1997 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 1996 is enclosed.
By order of the Board of Directors,
Barry J. Wagner
Secretary
New York, New York
April 7, 1997
<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 19, 1997, 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, 1997 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" and for confirmation
of the appointment of Arthur Andersen LLP as auditors of the Corporation for the
year 1997. 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. 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 1996 is not part
of the proxy solicitation material.
On April 3, 1997, the record date for determination of Shareholders
entitled to notice of and to vote at the Annual Meeting, the Corporation had
outstanding 81,616,568 shares of Common Stock, each of which is entitled to one
vote. At the record date, 2,866,842 shares of Common Stock were owned
beneficially (of which 1,351,375 were owned of record) by the directors and
executive officers of the Corporation, which constitutes approximately 3.51% 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, 1996 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....................................... 10,330,018(1) 12.80%
82 Devonshire Street
Boston, Massachusetts 02109
The Prudential Insurance Company of America.... 6,039,578(2) 7.48%
751 Broad Street
Newark, New Jersey 07102
- - ----------
(1) In its filing with the Securities and Exchange Commission, FMR Corp.
reported having sole voting power as to 871,860 shares and sole dispositive
power as to 10,330,018 shares.
(2) In its filing with the Securities and Exchange Commission, The Prudential
Insurance Company of America ("Prudential") reported having sole voting
power as to 662,400 shares, shared voting power as to 4,796,440 shares, and
shared dispositive power as to 5,376,478 shares. A separate report was
filed by Jennison Associates Capital Corp. ("Jennison"), an affiliate of
Prudential, which indicated beneficial ownership of 5,977,778 shares, which
are included in the shares reported by Prudential.
ELECTION OF DIRECTORS
On the date of the 1997 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 1997 Annual Meeting, the term of
another class expiring at the 1998 Annual Meeting, and the term of the remaining
class expiring at the 1999 Annual Meeting. The Board of Directors nominates
incumbent directors Robert J. Callander, John R. Murphy*, John R. Purcell,
William G. Tragos, Quentin I. Smith, Jr. and Egon P.S. Zehnder to serve as
directors of the Corporation until the 2000 Annual Meeting.
Peter I. Jones, former President of the Diversified Agency Services
division of the Corporation, resigned as a member of the Board of Directors on
March 21, 1997. Robin B. Smith resigned as a member of the Board of Directors on
March 24, 1997; nevertheless Shareholder proxies may not be voted for more than
six persons.
- - ---------
* Elected a director by the Board of Directors on September 16, 1996.
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.
Year First Term
Name, Age and Principal Became a Will
Occupation(1) Director Expire
---------------------- --------- ------
Bernard Brochand (58)...................................... 1993 1999
President, International Division of
The DDB Needham Worldwide Communications
Group Inc., a subsidiary of the Corporation.
Robert J. Callander (66)................................... 1992 1997
Executive-in-Residence, Columbia School of
Business, Columbia University; Retired
Vice Chairman of Chemical Banking Corporation.
James A. Cannon (58)....................................... 1986 1999
Vice Chairman & Chief Financial Officer
of BBDO Worldwide Inc., a subsidiary
of the Corporation.
Leonard S. Coleman, Jr. (48)............................... 1993 1999
President, National League, Major League Baseball.
Bruce Crawford (68)........................................ 1989 1998
Chairman of the Corporation.
John R. Murphy (63)........................................ 1996 1997
Chairman and Chief Executive Officer of
National Geographic Society.
John R. Purcell (65)....................................... 1986 1997
Chairman & Chief Executive Officer of
Grenadier Associates Ltd.
Keith L. Reinhard (62)..................................... 1986 1998
Chairman & Chief Executive Officer of
The DDB Needham Worldwide
Communications Group Inc.
Allen Rosenshine (58)...................................... 1986 1998
Chairman & Chief Executive Officer of
BBDO Worldwide Inc.
Gary L. Roubos (60)........................................ 1986 1998
Chairman of Dover Corporation.
Quentin I. Smith, Jr. (69)................................. 1986 1997
Corporate Director; Retired Chairman &
Chief Executive Officer of Towers,
Perrin, Forster & Crosby.
William G. Tragos (62)..................................... 1993 1997
Chairman & Chief Executive Officer of
TBWA International B.V. and of TBWA
Chiat/Day Inc., subsidiaries of the Corporation.
John D. Wren (44).......................................... 1993 1998
President & Chief Executive Officer of the
Corporation and Chairman & Chief Executive Officer
of Diversified Agency Services, a division of
the Corporation.
Egon P.S. Zehnder (67)..................................... 1986 1997
Chairman of Egon Zehnder International Inc.
- - ----------
(1) 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, Scudder New Asia Fund and The Korea
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, New Jersey Resources and Owens Corning.
Mr. Murphy has served as President and Chief Executive Officer of National
Geographic Society since May 1996. He served as Executive Vice President,
National Geographic Society, from 1993 to May, 1996; as Publisher of the
Baltimore Sun from 1981 through 1992; and as Editor and Publisher of the San
Francisco Examiner from 1975 through 1981. Mr. Murphy is a member of the Board
of Visitors at the University of Maryland, a trustee of the M.S.D.&T. mutual
fund group, a director of Baltimore Reads, Inc., and immediate past president of
the U.S. Golf Association.
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 previously served as Chairman of Donnelley Marketing, Inc., a
database direct marketing firm, from 1991 to 1996; as Chairman and President of
the former SFN Companies, Inc. from 1982 through 1986; 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 Company.
Mr. Roubos has served as Chairman of Dover Corporation since May 1989, and
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 and The Treasurers Fund.
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.
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 31, 1997, as to the
beneficial ownership of the Common Stock of the Corporation for each director of
the Corporation, including all persons who served as a director in 1996, 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 .................. 78,000 .0956
Robert J. Callander ............... 4,000 .0049
James A. Cannon ................... 314,800 .3857
Leonard S. Coleman, Jr. ........... 600 .0007
Bruce Crawford .................... 535,350 .6559
Peter I. Jones .................... 8,000 .0098
Fred J. Meyer ..................... 180,200 .2208
John R. Murphy .................... 500 .0006
John R. Purcell ................... 10,000 .0123
Keith L. Reinhard ................. 508,536 .6231
Allen Rosenshine .................. 681,420 .8349
Gary L. Roubos .................... 2,000 .0025
Quentin I. Smith, Jr. ............. 2,000 .0025
Robin B. Smith .................... 200 .0002
William G. Tragos ................. 221,834 .2718
John D. Wren ...................... 236,781 .2901
Egon P.S. Zehnder ................. 5,000 .0061
All directors and executive
officers as a group (20 persons) 2,875,042 3.5226
- - ----------
(1) Includes (i) shares held under restricted stock awards granted by the
Corporation, namely, Mr. Brochand - 34,200 shares, Mr. Cannon - 53,000
shares, Mr. Crawford - 16,800 shares, Mr. Jones - 4,800 shares, Mr. Meyer -
11,200 shares, Mr. Reinhard - 52,000 shares, Mr. Rosenshine - 65,200
shares, and Mr. Wren - 54,025 shares, (ii) shares which certain of the
named individuals have the right to purchase under stock options granted by
the Corporation, namely, Mr. Cannon - 229,000 shares, Mr. Crawford -
355,000 shares, Mr. Meyer - 70,000 shares, Mr. Reinhard - 210,000 shares,
Mr. Rosenshine - 474,000 shares, Mr. Tragos - 28,500 shares, and Mr. Wren -
143,900 shares, and (iii) 3,732 shares credited to Mr. Wren'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 1996.
BOARD MEETINGS AND COMMITTEES
Five regular meetings of the Board of Directors of the Corporation (the
"Board") were held in 1996. 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, other than Messrs. Brochand and Rosenshine who each
attended 60% of all meetings of the Board.
During 1996, 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 1996. 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
5
<PAGE>
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 1996, the Compensation Committee of the Board consisted of Messrs.
Smith (Chairman), Callander and Zehnder. Three meetings of the Compensation
Committee were held in 1996. 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
pursuant to the Executive Officer Incentive Plan which was adopted by the
Shareholders of the Corporation at the 1996 Annual Meeting of Shareholders, 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 1996, the Nominating Committee of the Board consisted of Messrs.
Roubos (Chairman), Purcell and Zehnder. Two meetings of the Nominating Committee
were held in 1996. 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 1996, 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 $1,500
for attendance at any subsequent meeting on the same day. A director who is an
employee of the Corporation or one of its subsidiaries does not receive any
compensation for serving as a director.
6
<PAGE>
EXECUTIVE COMPENSATION
The tables that follow present information relating to the compensation of,
option grants to, option exercises by, and year-end positions of, the Chief
Executive Officer of the Corporation and each of the other four most highly
compensated executive officers of the Corporation (collectively, the "Named
Executive Officers"). Bruce Crawford served during all of 1996 as Chairman and
Chief Executive Officer of the Corporation. On January 1, 1997, John D. Wren,
President of the Corporation, succeeded Mr. Crawford as Chief Executive Officer.
Summary Compensation Table
The following table sets forth information in respect of the compensation
of the Named Executive Officers for services in all capacities to the
Corporation and its subsidiaries for the fiscal years ended December 31, 1994,
1995 and 1996.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
------------------------ ------------------------------
Name and Shares All Other
Principal Restricted Stock Underlying Compen-
Position Year Salary($) Bonus($) Awards($)(1) Stock Options sation($)(2)
--------- ------ ----------- -------- -------------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Bruce Crawford .......... 1996 $985,000 $2,130,000 $ 0 150,000 $21,653
Chairman & 1995 985,000 1,520,000 0 150,000 21,071
Chief Executive 1994 921,250 1,125,000 0 120,000 24,814
Officer of the
Corporation
Fred J. Meyer ........... 1996 $625,000 $1,610,000 $ 0 70,000 $32,260
Chief Financial 1995 587,500 1,150,000 0 70,000 30,623
Officer of the 1994 556,250 850,000 0 70,000 30,308
Corporation
Keith L. Reinhard ....... 1996 $877,806 $ 975,000 $698,250 70,000 $24,316
Chairman & Chief 1995 827,806 600,000 835,000 70,000 23,275
Executive Officer of 1994 809,056 550,000 598,125 50,000 24,086
The DDB Needham
Worldwide
Communications
Group Inc.
Allen Rosenshine ........ 1996 $829,167 $ 750,000 $997,500 80,000 $32,031
Chairman & Chief 1995 800,000 625,000 918,500 100,000 48,396
Executive Officer 1994 768,750 500,000 706,875 80,000 23,406
of BBDO World-
wide Inc.
John D. Wren ............ 1996 $625,000 $1,150,000 $881,141 100,000 $20,916
President and as of 1995 500,000 800,000 734,800 70,000 20,734
January 1, 1997 1994 450,000 550,000 520,097 60,000 23,445
Chief Executive
Officer of the
Corporation
</TABLE>
- - ----------
(1) Restricted stock awards represent performance based compensation for the
applicable fiscal year. The awards are normally granted in the first
quarter of the year following the fiscal year end. The value of the
restricted stock awards was determined by multiplying the fair market value
of the Corporation's Common Stock on the date of the grant by the number of
shares awarded, and deducting therefrom the consideration paid for the
shares, which is equal to the par value ($.50 per share) of the shares. As
of December 31, 1996, Mr. Crawford held an aggregate of 32,400 shares of
restricted stock with a net pre-tax value of $1,474,200;
(footnotes continued on next page)
7
<PAGE>
Mr. Meyer held an aggregate of 22,400 shares of restricted stock with a net
pre-tax value of $1,019,200; Mr. Reinhard held an aggregate of 55,000
shares of restricted stock with a net pre-tax value of $2,497,500; Mr.
Rosenshine held an aggregate of 66,800 shares of restricted stock with a
net pre-tax value of $3,033,900; and Mr. Wren held an aggregate of 53,704
shares of restricted stock with a net pre-tax value of $2,439,132; The net
pre-tax value was determined by subtracting the consideration paid from the
fair market value of the shares on said date ($45.75). 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.
(2) The Other Compensation paid for the fiscal year ended December 31, 1996
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; and (iii) employer
premium payments for life insurance in the amount of $2,153 on behalf of
Mr. Crawford, $12,760 on behalf of Mr. Meyer, $7,816 on behalf of Mr.
Reinhard, $12,531 on behalf of Mr. Rosenshine, and $1,416 on behalf of Mr.
Wren.
Options
The following table shows all grants of options to the Named Executive
Officers in 1996.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Individual Grants Appreciation for Option Term (4)
---------------------------------------- --------------------------------
Number % of Total
of Shares Options
Underlying Granted to Exercise
Options Employees Price Expiration
Name Granted(1)(2 in 1996 ($ per Share) Date(3) 0%($) 5%($) 10%($)
----- ------------ --------- ----------- ---------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce Crawford 150,000 15.957 $39.4375 Feb. 27, 2006 $0 $3,720,305 $9,427,983
Fred J. Meyer 70,000 7.447 39.4375 Feb. 27, 2006 0 1,736,142 4,399,725
Keith L. Reinhard 70,000 7.447 39.4375 Feb. 27, 2006 0 1,736,142 4,399,725
Allen Rosenshine 80,000 8.511 39.4375 Feb. 27, 2006 0 1,984,163 5,028,257
John D. Wren 100,000 10.638 39.4375 Feb. 27, 2006 0 2,480,203 6,285,322
</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 1996.
(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) 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 1996, and as to unexercised options
held by the Named Executive Officers on December 31, 1996.
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, 1996 December 31, 1996(2)
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized($)(1) Unexercisable Unexercisable
----- ----------- ------------ ---------------- -------------------
<S> <C> <C> <C> <C>
Bruce Crawford ............... 80,000 $1,759,621 217,000/303,000 $ 5,016,491/$4,067,248
Fred J. Meyer ................ 203,000 $5,025,636 0/147,000 0/ 2,018,624
Keith L. Reinhard ............ 21,000 $ 504,950 268,000/139,000 7,744,431/ 1,846,374
Allen Rosenshine ............. -- -- 408,000/182,000 11,859,738/ 2,585,248
John D. Wren ................. 6,500 $ 680,253 68,900/173,000 1,498,551/ 2,121,874
</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, 1996, being $45.75
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 1996 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.
9
<PAGE>
Incentive compensation (cash bonus and restricted stock award grants under
the 1987 Stock Plan) for the Named Executive Officers is awarded pursuant to the
Executive Officer Incentive Plan (the "Incentive Plan") which was adopted by the
Board of Directors on November 28, 1995 and approved at the 1996 Annual Meeting
of Shareholders and which is administered by the Compensation Committee.
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.
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 are only paid after the Compensation Committee has certified in writing
that the performance goals have been attained. The Compensation Committee
considers the recommendations of the Chief Executive Officer (with respect to
the Named Executive Officers other than himself) and 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 is 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.
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
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.
10
<PAGE>
Chief Executive Officer Compensation
Mr. Crawford's salary was not increased in 1996.
In early 1996, 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 1995 financial performance in comparison to
its 1994 results, namely that EPS was up 20%, revenues were up 18% over 1994 and
operating margin increased to 12.0% from 11.3%.
Under Mr. Crawford's Incentive Plan award agreement 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 1996 EPS evaluated
relative to its 1995 EPS), he received a cash bonus of $2,130,000 (the maximum
payable pursuant to his award agreement) in respect of 1996. On the basis of the
Corporation's having achieved the required 20% increase in its 1996 EPS over
1995 EPS, a 26% increase in the Corporation's 1996 net profits over 1995 net
profits, and an increase in the Corporation's operating margin to 12.4% in 1996
from 12%, the Compensation Committee found this bonus to be appropriate in view
of the Corporation's strong performance.
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.
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, 1991 in the Corporation's
Common Stock, the S&P 500 Index and the Ad Peer Group Index.
[The following table was represented by a line chart in the printed material]
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Omnicom Group 100 133.76 154.18 176.88 259.98 324.55
Peer Group 100 123.75 132.81 138.85 180.05 225.79
S&P 500 Index 100 107.62 118.46 120.03 165.13 203.05
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 eight 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
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
13
<PAGE>
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 1996, the Corporation obtained a two-year policy of insurance
from the Federal Insurance Company at an annual premium of $227,970, 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
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.
14
<PAGE>
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 1997, 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.
SHAREHOLDER PROPOSALS
Shareholders wishing to present resolutions at the 1998 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 5, 1997.
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 7, 1997
15
<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 proposal 2 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 19,
1997 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, 1997.
(Continued and to be signed on the reverse side)
<PAGE>
1. THE ELECTION OF SIX DIRECTORS. NOMINEES: Robert J. Callander, John R.
Murphy, John R. Purcell, William G. Tragos, Quentin I. Smith, Jr., and Egon
P.S. Zehnder for a 3 year term.
[_] FOR all nominees listed except [_] WITHHOLD AUTHORITY to
as marked to the contrary vote for all nominees listed
(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name below).
________________________________________________________________________________
________________________________________________________________________________
================================================================================
2. CONFIRMATION OF APPOINTMENT OF
ARTHUR ANDERSEN LLP AS AUDITORS.
[_] FOR [_] AGAINST [_] ABSTAIN
Dated:____________________________________________, 1997
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.
