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
[ ] 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)
-----------------------------------------------------------------
(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 transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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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 17, 1999
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 17, 1999 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 1999;
3. To consider and act upon the Omnicom Group Inc. Employee Stock
Purchase 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 1, 1999 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 1998 is enclosed.
By order of the Board of Directors
BARRY J. WAGNER
Secretary
New York, New York
April 5, 1999
<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 of the Corporation ("Annual Meeting") to be held on May
17, 1999, and at any adjournments thereof, for the purposes set forth in the
accompanying notice. This Proxy Statement is being furnished in connection with
the solicitation of proxies, and is being mailed on or about April 5, 1999 to
shareholders entitled to notice of and to vote at the Annual Meeting.
All valid proxies which are received will be voted, and unless otherwise
specified thereon, they will be voted for the election of the six nominees for
directors named under the heading "Election of Directors," for confirmation of
the appointment of Arthur Andersen LLP as auditors of the Corporation for the
year 1999, and for approval of the Omnicom Group Inc. Employee Stock Purchase
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 by any appropriate
means, including appearing at the meeting and voting your shares in person.
The affirmative vote of a plurality of the votes cast by the holders of
the Corporation's outstanding shares of common stock ("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 Common Stock entitled to vote is
required for confirmation of the appointment of the auditors and for approval of
the Corporation's Employee Stock Purchase 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.
The Corporation will appoint inspectors to act at the Annual Meeting,
whose duties shall include determining the shares represented at the Annual
Meeting and the presence (or absence) of a quorum and tabulating the votes of
shareholders. The presence, by proxy or in person, of a majority of the votes of
shares entitled to vote at the Annual Meeting will constitute a quorum for the
transaction of business. If a shareholder abstains from voting on a particular
proposal, or a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on such proposal (a "broker non-vote"),
those shares will not be considered as votes cast in favor of or against such
proposal.
On April 1, 1999, the record date for determination of shareholders
entitled to notice of and to vote at the Annual Meeting, the Corporation had
outstanding 178,233,416 shares of Common Stock. At the record date, 5,346,528
shares of Common Stock were owned beneficially (of which 2,784,882 were owned of
record) by the directors and executive officers of the Corporation, which
constitutes approximately 3.00% 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 of December 31, 1998 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..................................... 25,424,070 (1) 15.1%
82 Devonshire Street
Boston, Massachusetts 02109
AMVESCAP PLC................................. 9,309,113 (2) 5.5%
11 Devonshire Square
London EC2M 4YR
England
- ----------
(1) In its filing with the Securities and Exchange Commission, FMR Corp.
("FMR") reported having sole voting power as to 2,058,915 shares and sole
dispositive power as to 25,424,070 shares. Edward C. Johnson 3d is
Chairman of FMR and reported owner of approximately 12% of the aggregate
outstanding voting stock of FMR, and Abigail P. Johnson is a director of
FMR and reported owner of approximately 24.5% of such voting stock. Each
of Edward C. Johnson 3d and Abigail P. Johnson reported sole dispositive
power over all of the shares beneficially owned by FMR. Mr. Johnson also
reported sole voting power with respect to 1,892,715 of the shares
beneficially owned by FMR.
(2) In its filing with the Securities and Exchange Commission, AMVESCAP PLC
(and its subsidiaries, AVZ, Inc., A I M Management Group Inc., AMVESCAP
Group Services, Inc., INVESCO, Inc. INVESCO North American Holdings, Inc.,
INVESCO Capital Management, Inc., INVESCO Funds Group, Inc., INVESCO
Management & Research, Inc., INVESCO Realty Advisers, Inc., and INVESCO
(NY) Asset Management, Inc.) reported having shared voting power and
shared dispositive power as to 9,309,113 shares.
ELECTION OF DIRECTORS
On the date of the 1999 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 1999 Annual Meeting, the term of
another class expiring at the 2000 Annual Meeting, and the term of the remaining
class expiring at the 2001 Annual Meeting. The Board of Directors nominates
incumbent directors Bernard Brochand, James A. Cannon, Leonard S. Coleman, Jr.
and Gary L. Roubos to serve as directors of the Corporation until the 2002
Annual Meeting. The Board of Directors also nominates Peter Foy and Thomas L.
Harrison to serve as directors of the Corporation until the 2002 Annual Meeting.
William G. Tragos, former Chairman of subsidiary TBWA Worldwide Inc., resigned
as a member of the Board of Directors on February 1, 1999.
2
<PAGE>
Information relating to the six nominees for director and the directors not
standing for election is set forth below.
Year First Term
Name, Age and Principal Became a Will
Occupation Director Expire
----------------------- ---------- ------
John D. Wren (46) ........................................ 1993 2001
President & Chief Executive Officer
of the Corporation.
Bruce Crawford (70) ...................................... 1989 2001
Chairman of the Corporation.
Bernard Brochand (60) .................................... 1993 1999
President, International Division of
The DDB Needham Worldwide
Communications Group Inc., a
subsidiary of the Corporation.
Robert J. Callander (68) ................................. 1992 2000
Executive-in-Residence, Columbia School
of Business, Columbia University;
Retired Vice Chairman of Chemical
Banking Corporation.
James A. Cannon (60) ..................................... 1986 1999
Vice Chairman & Chief Financial Officer
of BBDO Worldwide Inc., a subsidiary
of the Corporation.
Leonard S. Coleman, Jr. (50) ............................. 1993 1999
President, National League, Major
League Baseball.
Susan S. Denison (53) .................................... 1997 2000
Partner, TASA Worldwide/Johnson,
Smith & Knisley.
Peter Foy (58) ........................................... -- --
Corporate Director.
Thomas L. Harrison (51) .................................. -- --
Chairman & Chief Executive Officer
of the Diversified Agency Services,
a division of the Corporation.
John R. Murphy (65) ...................................... 1996 2000
Vice Chairman of National Geographic Society.
John R. Purcell (67) ..................................... 1986 2000
Chairman & Chief Executive Officer
of Grenadier Associates Ltd.
Keith L. Reinhard (64) ................................... 1986 2001
Chairman & Chief Executive Officer of
The DDB Needham Worldwide
Communications Group Inc.
Allen Rosenshine (60) .................................... 1986 2001
Chairman & Chief Executive Officer
of BBDO Worldwide Inc.
Gary L. Roubos (62) ...................................... 1986 1999
Chairman of Dover Corporation.
Quentin I. Smith, Jr. (71) ............................... 1986 2000
Corporate Director; Retired Chairman
& Chief Executive Officer of
Towers, Perrin, Forster & Crosby.
Egon P.S. Zehnder (69) ................................... 1986 2000
Chairman of Egon Zehnder International Inc.
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., Spectrum Health Services Inc., Scudder Global High Income
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.
Ms. Denison has served as a Partner at TASA Worldwide/Johnson, Smith &
Knisely since 1997. She served as Executive Vice President, Entertainment and
Marketing - Madison Square Garden from 1995 to 1997. She also served as
Executive Vice President/General Manager of Showtime Satellite Networks from
1990 to 1995.
Mr. Foy served as Chairman of Baring Brothers International, the Corporate
Finance arm of ING's Investment Bank from 1996 until 1998, and prior to that he
served in various capacities for McKinsey & Co., Inc.
Mr. Harrison has served as Chairman and Chief Executive Officer of the
Diversified Agency Services division of the Corporation since May, 1998, having
previously served as its President since February, 1997. He also has served as
Chairman of the Diversified Healthcare Communications Group since its formation
by the Corporation in 1994. From 1987 to 1994 Mr. Harrison served as Chairman
and Chief Executive Officer of the Harrison & Star Business Group.
Mr. Murphy has served as Vice Chairman of National Geographic Society
since March, 1998. Prior to that he was 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 trustee of the
M.S.D.&T. mutual fund group, a director of Provant, Inc., a director of
Baltimore Reads, Inc., a trustee of Mercer University 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., Technology Solutions Company and Journal Register 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 and Dover Corporation.
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. Zehnder has served as Chairman of Egon Zehnder International Inc., a
leading international executive search firm with fifty-three offices in
thirty-five countries, for more than the past five years. Mr. Zehnder is a
member of the Board of Trustees of the IMD Management Development Institute,
Lausanne, Switzerland, a member of the Board of the University of Zurich's
Institute of Executive Education and a member of the Board of Trustees of Babson
College, Wellesley, Massachusetts.
4
<PAGE>
COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table provides information, as of March 31, 1999, as to the
beneficial ownership of the Common Stock of the Corporation for each of the
nominees named for election as a director of the Corporation, each other
director of the Corporation, including all persons who served as a director in
1998, each of 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
- ------------------------ -------------------- --------
John D. Wren (2) ............................. 901,819 .5060
Bruce Crawford ............................... 528,700 .2966
Bernard Brochand ............................. 168,000 .0943
Robert J. Callander .......................... 8,000 .0045
James A. Cannon .............................. 600,500 .3369
Leonard S. Coleman, Jr ....................... 1,418 .0008
Susan S. Denison ............................. 818 .0005
Peter Foy .................................... 0 --
Thomas L. Harrison ........................... 69,645 .0391
John R. Murphy ............................... 1,000 .0006
John R. Purcell .............................. 42,000 .0236
Keith L. Reinhard (2) ........................ 1,168,272 .6555
Allen Rosenshine (2) ......................... 1,459,640 .8189
Gary L. Roubos ............................... 4,218 .0024
Quentin I. Smith, Jr ......................... 5,218 .0029
William G. Tragos (2)(3)(4) .................. 28,500 .0160
Egon P.S. Zehnder ............................ 10,000 .0056
Fred J. Meyer (2)(3) ......................... 104,800 .0588
All directors and executive
officers as a group (22 persons) ........... 5,346,528 3.0000
- ----------
(1) Includes (i) shares held under restricted stock awards granted by the
Corporation, namely, Mr. Wren - 59,816 shares, Mr. Brochand - 55,600
shares, Mr. Cannon - 60,400 shares, Mr. Harrison - 35,700 shares, Mr.
Reinhard - 41,600 shares and Mr. Rosenshine - 72,800 shares; (ii) shares
previously held under restricted stock awards granted by the Corporation,
the payout of which has been deferred at the election of the holder,
namely Mr. Harrison - 7,600 shares, Mr. Reinhard - 27,600 shares, and Mr.
Wren - 33,179 shares; (iii) shares which certain of the named individuals
have the right to purchase under stock options granted by the Corporation,
namely, Mr. Wren - 693,800 shares, Mr. Crawford - 180,000 shares, Mr.
Cannon - 471,000 shares, Mr. Harrison - 9,000 shares, Mr. Reinhard -
682,000 shares, Mr. Rosenshine - 1,097,000 shares, Mr. Tragos - 22,500
shares, and Mr. Meyer - 56,000 shares; and (iv) 8,598 shares credited to
Mr. Wren's account and 1,145 to Mr. Harrison's account under the
Corporation's Group Profit Sharing Retirement Plan.
(2) One of the Named Executive Officers of the Corporation.
(3) Mr. Meyer and Mr. Tragos are not directors of the Corporation.
(4) Includes 6,000 shares held in William G. and Lilli Tragos Charitable
Remainder Trust.
Section 16(a) Beneficial Ownership Reporting Compliance
The Corporation is required to identify any director, officer, or
beneficial owner of in excess of 10% of the Common Stock 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, all such persons complied with all
applicable filing requirements during 1998.
5
<PAGE>
BOARD MEETINGS AND COMMITTEES
Five regular meetings and two special meetings of the Board of Directors
of the Corporation (the "Board") were held in 1998. Each of the incumbent
members of the Board attended at least 86% of the aggregate of all meetings of
the Board and Committees of the Board on which he or she served.
During 1998, the Audit Committee of the Board consisted of Messrs.
Callander (Chairman), Coleman, Murphy and Smith. Four meetings of the Audit
Committee were held in 1998. 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 1998, the Compensation Committee of the Board consisted of Messrs.
Smith (Chairman), Callander, Roubos and Zehnder. Three meetings of the
Compensation Committee were held in 1998. 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 1998
Incentive Compensation Plan which was adopted by the shareholders of the
Corporation at the 1998 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 1998, the Nominating Committee of the Board consisted of Messrs.
Roubos (Chairman), Purcell, Zehnder and Ms. Denison. Two meetings of the
Nominating Committee were held in 1998. 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.
6
<PAGE>
DIRECTORS' COMPENSATION
From January 1, 1998 through June 30, 1998, 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. Commencing July 1, 1998 the monthly retainer was increased to $2,000.
Pursuant to the 1998 Incentive Compensation Plan (the "Incentive Plan"), each
director who is not an employee of the Corporation may elect, not later than
December 15, to receive up to the portion of such director's annual retainer as
a director for the following year's service as the Board of Directors shall
determine (which may be the entire amount of the annual retainer), exclusive of
any per meeting fees, committee fees or expense reimbursements, in shares of
Common Stock, based on the fair market value of the Common Stock on such
December 15. A director who is an employee of the Corporation or one of its
subsidiaries does not receive any compensation for serving as a director.
EXECUTIVE COMPENSATION
The tables that follow present information relating to the compensation
of, option grants to, option exercises by, long-term incentive awards to and
year-end positions of, the Chief Executive Officer of the Corporation and each
of the other four most highly compensated executive officers of the Corporation
(collectively, the "Named Executive Officers").
Summary Compensation Table
The following table sets forth information in respect of the compensation
of the Named Executive Officers for services in all capacities to the
Corporation and its subsidiaries for the fiscal years ended December 31, 1996,
1997 and 1998.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
------------------------ --------------------------------
Name and Shares All Other
Principal Restricted Stock Underlying Compen-
Position Year Salary($) Bonus($) Awards($)(1) Stock Options sation($)(2)
--------- ------ --------- ----------- ---------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
John D. Wren............. 1998 $875,000 $2,550,000 $ 0 200,000 $22,552
President and Chief 1997 875,000 1,600,000 949,964 250,000 22,370
Executive Officer 1996 650,000 1,150,000 881,141 200,000 20,916
of the Corporation
Keith L. Reinhard........ 1998 $925,000 $2,065,000 $ 0 80,000 $26,672
Chairman & Chief 1997 877,806 1,625,000 0 140,000 25,006
Executive Officer of 1996 877,806 975,000 698,250 140,000 24,316
The DDB Needham
Worldwide
Communications
Group Inc.
Allen Rosenshine......... 1998 $893,750 $2,400,000 $ 0 110,000 $27,627
Chairman & Chief 1997 850,000 925,000 1,207,375 140,000 26,983
Executive Officer of 1996 829,167 750,000 997,500 160,000 32,031
BBDO Worldwide Inc.
William G. Tragos........ 1998 $737,472 $1,000,000 $ 0 75,000 $18,672
Chairman of TBWA 1997 662,472 789,633 0 70,000 $18,099
Worldwide Inc.(3) 1996 662,472 1,101,499 0 70,000 $17,573
Fred J. Meyer............ 1998 $681,250 $1,860,000 $ 0 0 $42,866
Vice Chairman of 1997 625,000 1,690,000 0 0 34,852
the Corporation (4) 1996 625,000 1,610,000 0 140,000 32,260
</TABLE>
- ----------
(1) Restricted stock awards represent performance based compensation for the
applicable fiscal year. The awards are normally granted in the first
quarter of the year following the fiscal year end. The value of the
restricted stock awards was determined by multiplying the fair market
value of the Corporation's Common
(footnotes continued on next page)
7
<PAGE>
Stock on the date of the grant by the number of shares awarded, and
deducting therefrom the consideration paid for the shares, which is equal
to the par value ($.50 per share) of the shares. As of December 31, 1998,
Mr. Wren held an aggregate of 92,995 shares of restricted stock with a net
pre-tax value of $5,344,750; Mr. Reinhard held an aggregate of 70,000
shares of restricted stock with a net pre-tax value of $4,027,950; Mr.
Rosenshine held an aggregate of 113,200 shares of restricted stock with a
net pre-tax value of $6,506,100; and Mr. Meyer held an aggregate of 7,200
shares of restricted stock with a net pre-tax value of $414,900. The net
pre-tax value was determined by subtracting the consideration paid from
the fair market value of the shares on said date ($57.75). 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) All Other Compensation paid for the fiscal year ended December 31, 1998
consists of (i) employer contributions to the Corporation's Group
Profit-Sharing Retirement Plan in the amount of $20,800 on behalf of each
of Messrs. Wren, Rosenshine and Meyer and $11,200 on behalf of Mr.
Reinhard; (ii) an employer contribution to the DDB Needham/TLP Joint
Savings Plan in the amount of $6,400 on behalf of Mr. Reinhard; (iii) an
employer contribution to the TBWA Chiat/Day 401(k) Plan in the amount of
$10,000 on behalf of Mr. Tragos; (iv) employer premium payments for life
insurance in the amount of $1,752 on behalf of Mr. Wren, $8,672 on behalf
of Mr. Tragos, $17,066 on behalf of Mr. Meyer, $9,072 on behalf of Mr.
Reinhard, and $6,827 on behalf of Mr. Rosenshine; and (v) a service award
of $5,000 for Mr. Meyer.
(3) Mr. Tragos retired from his position as an executive officer of the
Corporation effective December 31, 1998.
(4) Mr. Meyer served as Chief Financial Officer of the Corporation through
December 31, 1998; effective January 1, 1999, he assumed the role of
non-executive Vice Chairman of the Corporation.
Options
The following table shows all grants of options to the Named Executive
Officers in 1998.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Individual Grants Appreciation for Option Term (3)
------------------------------------ --------------------------------
Number % of Total
of Shares Options
Underlying Granted to Exercise
Options Employees Price Expiration
Name Granted(1) in 1998 ($ per Share) Date(2) 5%($) 10%($)
---- ---------- --------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
John D. Wren ............... 200,000 12.3077% 42.6875 March 5, 2008 $5,369,188 $13,606,576
Keith L. Reinhard .......... 80,000 4.9231% 42.6875 March 5, 2008 2,147,675 5,442,631
Allen Rosenshine ........... 110,000 6.7692% 42.6875 March 5, 2008 2,953,053 7,483,617
William G. Tragos .......... 75,000 4.6154% 42.6875 March 5, 2008 2,013,445 5,102,466
Fred J. Meyer .............. 0 0 -- -- -- --
</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) Upon an optionee's termination of employment by reason of (i) voluntary
termination or termination for cause, all outstanding options will be
canceled; (ii) retirement or involuntary termination, options outstanding
for less than 12 months will be canceled and the other outstanding options
will become exercisable in full only during the 36 month period following
termination; and (iii) total disability or death, all outstanding options
will 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 will
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.
(footnotes continued on next page)
8
<PAGE>
(3) These columns present hypothetical future values of the Corporation's
Common Stock obtainable upon exercise of the options net of the options'
exercise price, assuming that the market price of the Corporation's Common
Stock appreciates at the specified compound annual rates over the ten year
term of the option. The five and ten percent rates of stock price
appreciation are presented as examples pursuant to SEC rules, and do not
reflect management's assessment of the Corporation's future stock price
performance. The potential realizable values presented are not intended to
indicate the options' value.
The following table provides information as to the aggregated option
exercises by the Named Executive Officers in 1998, and as to unexercised options
held by the Named Executive Officers on December 31, 1998.
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, 1998 December 31, 1998(2)
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized($)(1) Unexercisable Unexercisable
----- ----------- -------------- ----------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
John D. Wren ............. 0 $ 0 478,800/455,000 $19,960,602/11,912,023
Keith L. Reinhard ........ 0 0 560,000/234,000 24,816,084/ 6,614,683
Allen Rosenshine ......... 110,000 5,295,889 958,000/272,000 44,181,049/ 7,370,808
William G. Tragos ........ 123,000 3,895,103 0/152,000 0/ 3,834,527
Fred J. Meyer ............ 98,000 3,083,925 0/ 56,000 0/ 2,129,750
</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, 1998, said value
being $57.75 per share.
Long-Term Incentive Plan Awards
The following table shows all long-term incentive plan awards to the Named
Executive Officers in 1998.
Long-Term Incentive Plan -- Awards in Last Fiscal Year
<TABLE>
<CAPTION>
Performance or
Number Other Period Estimated Future Payouts Under
of Shares, Until Non-Stock Stock Price-Based Plans
Units or Maturation ---------------------------------------------
Name Other Rights or Payout Threshold Target Maximum
----- ------------ ------------ -------------- --------- -----------
<S> <C> <C> <C> <C> <C>
John D. Wren (1) 1998-2000 $431,250 -- $2,371,875
Keith L. Reinhard -- -- -- -- --
Allen Rosenshine (2) 1997-1999 $517,500 -- $1,207,500
(1) 1997-1999 129,375 301,875
William G. Tragos -- -- -- -- --
Fred J. Meyer -- -- -- -- --
</TABLE>
- ----------
(1) Messrs. Wren and Rosenshine received awards of performance share units
pursuant to the 1998 Incentive Plan. The number of units to which a
recipient of such awards will be entitled will depend upon the average
compound annual growth in the Corporation's fully diluted earnings per
share before extraordinary items and the effect of any changes in
accounting principles ("EPS") in the three year award period, as measured
from 1997 EPS in the case of the award granted to Mr. Wren for the
1998-2000 award period or as measured from 1996 EPS in the case of the
award to Mr. Rosenshine for the 1997-1999 award period. These units
entitle the holder to payouts of cash and/or Common Stock (in such
proportion as is determined by the Compensation
(footnotes continued on next page)
9
<PAGE>
Committee) up to a maximum amount equal to the fair market value of one
share of Common Stock on the date as of which the payout of these units is
deemed to be made. Maximum payouts will be made in respect of these units
only if the average compound annual growth in the Corporation's EPS equals
or exceeds 120 percent for the award period. No payouts will be made if
such growth is 110 percent or less. The threshold and maximum payouts are
representative amounts, based on the fair market value of Common Stock on
the grant date. There is no estimated future target payout because, under
the Incentive Plan, no performance target for these performance units is
specified.
(2) This award has the same terms as the awards described above in Note (1)
except that the number of units to which Mr. Rosenshine will be entitled
will depend upon the average compound annual growth in net profit of BBDO
Worldwide Inc. ("BBDO") in the three year award period, as measured from
1996 net profit.
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 1998 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-based
awards which are intended to 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 of similar advertising agency
holding companies. Profitability of the Corporation is determined by reference
to its 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.
For 1998, incentive compensation (cash bonus) for the Named Executive
Officers was awarded pursuant to the Incentive Plan which is administered by the
Compensation Committee.
Prior to or shortly after the beginning of the 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 into 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.
10
<PAGE>
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.
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 in a discretionary manner, and cash bonuses for
such executive officers are determined by the Chief Executive Officer.
The annual cash bonus represents a substantial portion of the total annual
cash compensation of executive officers and is intended to serve 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 on each of the first 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 250,000 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
are intended to align the long-term interests of the executive officers and
shareholders, serve as an incentive for executive officers to build shareholder
value, and provide a vehicle for retaining executive officers and other key
employees.
Chief Executive Officer Compensation
In early 1998, Mr. Wren was granted an option to purchase 200,000 shares.
The Compensation Committee made this grant after consideration of the
Corporation's strong 1997 financial performance, namely that basic EPS was up
20%, revenues were up 18% over 1996 and operating margin increased to 12.9% from
12.4%.
Under Mr. Wren's award agreement, which provided for incentive
compensation in the form of a cash bonus if a specific performance goal (the
Corporation's 1998 EPS evaluated relative to 1997 EPS) was met, he received a
cash bonus of $2,550,000 (the maximum payable pursuant to his award agreement)
in respect of 1998.
Mr. Wren received no award of restricted stock in 1998 and his salary has
not been increased since January 1, 1997. He received an award of performance
units under the Incentive Plan, the payout of which will be made in 2001 based
on the three year average growth in the Corporation's EPS. Should average EPS
growth be 110% or less, no award will be made. The Compensation Committee
retains the discretion to reduce any performance award Mr. Wren may otherwise be
entitled to receive.
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 during each fiscal year of the Corporation.
Compensation that qualifies as "performance-based compensation" under Section
162(m) is, however, excepted from the $1 million deduction cap.
11
<PAGE>
Both the Corporation's 1987 Stock Plan and the Incentive Plan provide for
compensation that may qualify as "performance-based compensation" 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 compensation" for purposes of Section 162(m), provided that,
in the judgment of the Compensation Committee, this is 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
Gary L. Roubos
Egon P.S. Zehnder
Members of the Compensation Committee
The above Compensation Committee Report shall not be deemed incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Corporation
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
12
<PAGE>
PERFORMANCE GRAPH
The graph below compares cumulative total return on the Corporation's
Common Stock, the Standard & Poor's 500 Composite Index ("S&P 500 Index") and a
group of publicly-held advertising holding companies ("Ad Peer Group Index")
consisting of Grey Advertising Inc., The Interpublic Group of Companies, Inc.,
True North Communications Inc., WPP Group plc and, for 1993 - 1996, Cordiant plc
(formerly Saatchi & Saatchi plc); beginning in 1997, the Ad Peer Group Index
includes, instead of Cordiant plc, Cordiant Communications Group and Saatchi &
Saatchi, the two companies resulting from the demerger of Cordiant plc in
December 1997. The graph assumes the investment of $100 on January 1, 1993 in
the Corporation's Common Stock, the S&P 500 Index and the Ad Peer Group Index.
[The following information was depicted as a line graph in the printed material]
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Omnicom Group .............. 100 114.72 168.63 210.50 395.30 546.77
S&P 500 Index .............. 100 101.32 135.57 171.39 228.55 293.86
Ad Peer Group Index ........ 100 104.55 139.40 170.01 223.51 325.73
Returns for the Corporation's Common Stock depicted in the graph are not
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.
13
<PAGE>
EMPLOYMENT CONTRACTS/TERMINATION OF EMPLOYMENT
ARRANGEMENTS FOR NAMED EXECUTIVE OFFICERS
An agreement was entered into between BBDO and Mr. Rosenshine (as of
January 9, 1989) under which 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 his 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 this agreement if
employment with BBDO, its subsidiaries or its parent is terminated for cause
(defined therein as misconduct involving willful malfeasance, such as breach of
trust, fraud or dishonesty). The payment period under the agreement for Mr.
Rosenshine is ten years. The amount of an annual payment under this agreement is
limited to the lesser of (i) an assigned percentage of his 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 Mr. Rosenshine 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 Mr. Rosenshine should die before the
expiration of the payment period, BBDO has agreed to make an annual payment to
his beneficiary for the number of years he would have been entitled to payments
had he lived, in an amount equal to seventy-five percent of the annual payment
he would have received had he lived. Payments under this agreement 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), Mr. Wren (as of November 26, 1990) and Mr.
Tragos (as of May 26, 1993), in each case under the Corporation's Executive
Salary Continuation Plan, under which 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, six years for Mr. Wren
and five years for Mr. Tragos. 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 his agreement will be reduced by the value of payments to be
made under a prior 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, 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. 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
14
<PAGE>
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; or 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 may have been eligible to
receive salary continuation payments for nine months if his employment were to
be terminated by DDB Needham other than for cause).
Mr. Tragos entered into an employment agreement with TBWA International
B.V. ("TBWA") on May 26, 1993, pursuant to which he was entitled to be employed
as Chairman and Chief Executive Officer of the TBWA Group (defined as TBWA
collectively with its subsidiaries) and to participate in various incentive and
benefit plans for which he was eligible, including bonus and incentive plans,
medical, dental, life and long-term disability insurance plans, and profit
sharing and 401(k) plans. Mr. Tragos also was entitled to reimbursement for
certain automobile, club membership, and financial planning and tax preparation
expenses. In connection with his retirement, Mr. Tragos notified TBWA of his
intent to terminate his employment effective December 31, 1998. Mr. Tragos will
continue to receive his base compensation, as well as continuation of all
employee benefits, until December 31, 1999.
Mr. Tragos is prohibited, for a period of two years from any termination
of his employment, from attempting to solicit the business of any client of the
TBWA Group (or persuading any such client to cease or reduce the business it
does with the TBWA Group) or soliciting the employment or engagement of any
employees of the TBWA Group, and, at any time, from disclosing or utilizing any
confidential information of the TBWA Group.
Mr. Tragos entered into a deferred compensation agreement with TBWA on
October 12, 1984, pursuant to which he (or his estate) will receive for a period
of 15 years the earnings from an invested amount equal to the cumulative premium
payments made by TBWA from 1984 to 1993 in respect of a split-dollar insurance
agreement between TBWA and Mr. Tragos. Such amount will be invested, and
earnings will become payable, at the earliest of the mutual consent of Mr.
Tragos and TBWA, the bankruptcy, insolvency or dissolution of TBWA or the death
of Mr. Tragos.
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
In August, 1998, the Corporation obtained a two-year policy of insurance
from the Federal Insurance Company. The 1998 and 1999 premiums for this policy
are $230,000 for each year. 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 losses
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,
15
<PAGE>
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. Also, in August, 1998, the Corporation obtained a two-year excess
liability policy of insurance from the Federal Insurance Company which provides
additional limits of coverage for the wrongful acts as described above. The 1998
and 1999 premiums for this policy are $93,500 for each policy year. To date, no
payments have been made to the Corporation or any officer or director under
these insurance policies or any 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
policies.
AUDITORS
On the recommendation of the Audit Committee of the Corporation, the Board
of Directors of the Corporation has appointed Arthur Andersen LLP as auditors of
the Corporation for 1999, 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 Arthur Andersen LLP.
Management recommends such confirmation by the Shareholders.
Representatives of Arthur Andersen LLP 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.
EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has approved the Omnicom Group Inc. Employee Stock
Purchase Plan which is annexed hereto as Exhibit A (the "Plan"), upon the
recommendation of the Compensation Committee. The purpose of the Plan is to
provide the employees of the Corporation and its subsidiaries with a vehicle for
investing in the growth potential of the Corporation, to allow the Corporation
to be competitive in attracting new employees and to promote positive parent
Corporation recognition and visibility. The Plan is being presented for
shareholder approval to enable the Plan to qualify under Section 423 of the
Code. If approved, the Plan will become effective as of July 1, 1999, or such
later date as may be approved by the Compensation Committee.
Administration. The Plan will be administered by the Compensation
Committee of the Board of Directors or such other committee of directors as the
Board of Directors shall designate (the "Committee"). The Committee has the
discretionary authority to interpret the Plan and to determine all questions
arising in the administration, application and operation thereof. The
Corporation will bear the costs of administration, including any fees, costs and
expenses relating to the purchase of shares. Participants will be responsible
for all fees, costs and expenses due upon the issuance of share certificates or
the sale of any shares purchased under the Plan.
Eligible Employees. Any employee of the Corporation, or of a subsidiary of
the Corporation designated by the Committee as a participating employer, who
customarily works at least 20 hours per week and has performed at least six
consecutive months of service with the employer, may participate in the Plan.
The Corporation presently expects that approximately 15,300 employees initially
will be eligible to participate in the Plan.
16
<PAGE>
Contribution. Each eligible employee will be entitled to contribute from
one to ten percent of his or her base salary or hourly wage or, in the case of
employees primarily compensated on a commission-basis, commissions for each
calendar quarter (a "Plan Quarter") towards the purchase of Common Stock at a
purchase price per share equal to 85% of the Market Price of a share of the
Common Stock on the last day of the Plan Quarter. "Market Price" is defined as
the average of the high and low trading price of a share of the Common Stock on
the last trading date of the Plan Quarter. The amount to be contributed by a
participant will be deducted from each paycheck, held for the participant during
a Plan Quarter and applied towards the purchase of Common Stock on the last day
of the Plan Quarter. A participant may change the percentage of his or her
compensation to be contributed for any given Plan Quarter prior to a designated
election date established for that quarter and may elect not to participate with
respect to one or more quarters.
No employee will have the right to purchase stock under the Plan if (a)
immediately after acquiring the right to purchase stock the employee would own
five percent (5%) or more of the total combined voting power or value of all
classes of stock of the Corporation or any subsidiary, (b) such right would
permit the employee's right to purchase Common Stock under the Plan and any
other stock purchase plans of the Corporation and its subsidiaries to exceed
$25,000 of the Market Price of such stock (determined as of the first day of
each Plan Quarter) for each calendar year, or (c) such right would permit such
employee the right to purchase more than 500 shares (or such other number of
shares as may be determined in advance for any Plan Quarter by the Committee) of
Common Stock in any Plan Quarter. Shares purchased for a participant will be
held for the participant unless he or she requests that a certificate be issued
for such shares. The participant will have the right to vote and be entitled to
dividends, if any, on shares held for the participant's account. Any cash
dividends paid with respect to shares held for the account of a participant
shall be, as determined by the participant, either distributed to the
participant or used to purchase additional shares of Common Stock on the open
market.
Shares Available. Subject to adjustment as provided below, the number of
shares of Common Stock available for purchase under the Plan is 3,000,000
shares. Such shares will be newly issued shares reserved for issuance under the
Plan, treasury shares, shares purchased on the open market, or any combination
thereof. If the outstanding shares of Common Stock of the Corporation are
increased, decreased, or exchanged for a different number or kind of shares or
other securities, or if additional shares or new or different shares or other
securities are distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, spin-off, sale of all or
substantially all the property of the Corporation, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock, or
other securities, appropriate and proportionate adjustment may be made in the
maximum number and kind of shares available for purchase, subject in the case of
certain corporate reorganizations to the requirements of Section 424(a) of the
Code.
Termination of Employment. Upon a participant's termination of employment
for any reason, or upon a participant ceasing to be an eligible employee for any
other reason, all contributions to the participant's account will cease and such
participant will cease to be a participant as of the date of such termination or
cessation. As soon as practicable, such participant will receive the cash
balance remaining in his or her account and the Corporation may elect to issue
stock certificates evidencing the Common Stock purchased by the participant.
Termination and Amendment of the Plan. The Corporation may, by action of
the Board of Directors, terminate the Plan at any time for any reason. The Plan
shall automatically terminate upon the purchase by participants of all shares of
Common Stock subject to the Plan, unless such number of shares shall be
increased by the Board of Directors and such increase shall be approved by the
shareholders. The Board of Directors may modify, alter or amend the Plan at any
time and from time to time to any extent that it may deem advisable, subject to
shareholder approval to the extent deemed necessary by the Board of Directors
for compliance with Section 423 of the Code.
Basic Federal Tax Consequences. The following is a general description of
the current United States federal income tax consequences to participants and
the Corporation relating to participation in and purchases of stock under the
Plan. This discussion does not purport to cover all tax consequences relating to
the Plan.
17
<PAGE>
No federal income tax will be recognized by the participant upon
participation in the Plan or upon the purchase of shares of Common Stock under
the Plan. If a participant disposes of Common Stock purchased under the Plan
within two years from the first day of the Plan Quarter during which such Common
Stock was purchased, at the time of disposition the participant will recognize
(a) ordinary income equal to the fair market value of the Common Stock on the
day it was purchased less the amount paid for the shares, and (b) a capital gain
or loss equal to the difference between the participant's basis in the Common
Stock (the amount paid for the stock plus the amount taxed as ordinary income
under subparagraph (a) above) and the amount realized upon the disposition of
the Common Stock. The Corporation generally will be entitled to a deduction in
the amount of the ordinary income on which the participant is taxed under
subparagraph (a) above.
If a participant disposes of shares of Common Stock purchased under the
Plan more than two years from the first day of the Plan Quarter during which
such Common Stock was purchased, at the time of the disposition the participant
will recognize ordinary income equal to the lesser of (x) the excess of the fair
market value of the Common Stock on the date of disposition over the amount paid
for such Common Stock, and (y) 15% of the fair market value of such Common Stock
at the beginning of the Plan Quarter in which the Common Stock was purchased. In
addition, the participant will recognize a capital gain or loss equal to the
difference between the participant's basis in the stock (the amount paid for the
Common Stock plus the amount taxed as ordinary income under subparagraph (x)
above) and the amount realized upon the disposition of the Common Stock. The
Corporation will not be entitled to any deduction.
The Board of Directors recommends a vote "FOR" the approval for the Plan.
Proxies solicited by the Board of Directors of the Corporation will be so voted
unless shareholders specify a contrary vote. If the shareholders do not approve
the Plan, the Plan will not go into effect and the Board of Directors will
consider whether to adopt some alternative arrangement based on its assessment
of the needs of the Corporation.
SHAREHOLDER PROPOSALS
Shareholders wishing to present resolutions at the 2000 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 7, 1999 in order for such
proposed resolutions to be considered for inclusion in the Corporation's Notice
of Meeting, Proxy Statement and proxy relating to the 2000 Annual Meeting.
OTHER MATTERS
The Corporation's by-laws require that there be furnished to the
Corporation written notice with respect to the nomination of a person for
election as a director (other than a person nominated by or at the direction of
the Board of Directors), as well as the submission of a proposal (other than a
proposal submitted by or at the direction of the Board of Directors), at an
annual meeting of shareholders. In order for any such nomination or submission
to be proper, the notice must contain certain information concerning the
nominating or proposing shareholder and the nominee or the proposal, as the case
may be, and must be furnished to the Corporation not less than 60 days prior to
the meeting, which, in the case of the 1999 Annual Meeting, was March 18, 1999.
A copy of the applicable by-law provisions may be obtained, without charge, upon
written request to the Secretary of the Corporation at its principal executive
offices.
In the event that the Corporation receives notice of a shareholder
proposal prior to the date specified by its by-laws, then, so long as the
Corporation includes in its proxy statement advice on the nature of the matter
and how the named proxies intend to vote the shares for which they have received
discretionary authority, such proxies may exercise discretionary authority with
respect to such matter, subject to limited exceptions. The Corporation has not
received notice of any matters to be submitted for consideration at the Annual
Meeting other than those set forth in the accompanying notice and, accordingly,
if any matters properly come before the Annual 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.
18
<PAGE>
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 5, 1999
19
<PAGE>
Exhibit A
OMNICOM GROUP INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSE AND COMMENCEMENT
1.01 Purpose. The purpose of the Plan is to provide the employees of
Omnicom Group Inc., a New York corporation (the "Company"), and its Subsidiaries
with a vehicle for investing in the growth potential of the Company, to allow
the Company to be competitive in attracting new employees, and to promote
positive parent company recognition and visibility. The Plan is intended to
qualify as an employee stock purchase plan under Section 423 of the Code and
shall be interpreted and construed in accordance with such purpose.
1.02 Commencement. The Plan shall become effective on July 1, 1999 or such
later date as may be approved by the Committee (the "Effective Date"); provided,
however, that in no event shall the Plan become effective unless within twelve
months of the date of its adoption by the Board of Directors it has been
approved by the affirmative vote of a majority of the issued and outstanding
shares of the Company's securities entitled to vote on such matters at a duly
called meeting of the shareholders of the Company.
ARTICLE II
DEFINITIONS
2.01 Definitions. As used in the Plan, the following terms and phrases
shall have the following meanings:
(a) "Board of Directors" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code as of 1986, as amended.
(c) "Commencement Date" shall mean the first day of a Plan Quarter.
(d) "Committee" shall mean the Compensation Committee of the Board of
Directors, or such other committee of the Board of Directors designated by it
for purposes of administering the Plan.
(e) "Common Stock" means the common stock of the Company.
(f) "Company" shall mean Omnicom Group Inc., a New York corporation.
(g) "Contribution Account" shall mean the account established on behalf of
a Participant pursuant to Article IV hereof to which shall be credited his or
her Participant Contributions.
(h) "Contribution Rate" shall be a percentage of a Participant's Covered
Compensation during each payroll period designated by each Participant to be
contributed by regular payroll deductions to his or her Contribution Account as
set forth in Section 3.03 hereof.
(i) "Covered Compensation" shall mean the base salary or hourly wages
received by an Employee from any Participating Employer, or commissions received
from any Participating Employer (in the case of an Employee who is primarily
compensated on a commission-basis), before tax withholdings and other payroll
deductions (such as deductions under Section 401(k) or 125 of the Code), and
excluding any overtime, cash bonus compensation and other irregular or special
forms of compensation.
(j) "Effective Date" shall have the meaning set forth in Section 1.02
hereof.
(k) "Election Date" shall mean the number of days prior to the
Commencement Date of each Plan Quarter selected by each Participating Employer
and approved by the Committee as the date by which its Employees must elect to
participate in the Plan pursuant to Section 3.03(a) hereof.
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<PAGE>
(l) "Election Form" shall mean such form as shall be approved by the
Committee for Employees to elect participation in the Plan.
(m) "Employee" shall mean each employee of a Participating Employer whose
customary employment is at least twenty (20) hours a week and more than five
months in a calendar year. For purposes of the Plan, "employment" shall be
determined in accordance with the provisions of Section 1.421-7(h) of the
Treasury Regulations (or any successor regulations).
(n) "Market Price" shall mean the average of the high and low price
reported by the applicable composite transactions report on the date of any
determination hereunder or, if the Common Stock is not traded on such date, the
average of the high and low price so reported on the immediately preceding date
on which the Common Stock was traded on such exchange.
(o) "Participant" shall mean any Employee of a Participating Employer who
has met the conditions and provisions for becoming a Participant set forth in
Article III hereof.
(p) "Participant Contributions" shall be the aggregate dollars actually
contributed by each Participant to his or her Contribution Account for a Plan
Quarter.
(q) "Participating Employers" shall mean the Company and each Subsidiary
that (i) has been designated by the Committee as a Participating Employer under
the Plan, and (ii) has adopted the Plan for its Employees by action of its Board
of Directors.
(r) "Plan" shall mean the Omnicom Group Inc. Employee Stock Purchase Plan
as set forth herein, as it may be amended from time to time.
(s) "Plan Quarter" shall mean each calendar quarter during the term of the
Plan. The first Plan Quarter shall be the Plan Quarter commencing on the
Effective Date and ending on September 30, 1999.
(t) "Purchase Date" shall mean the last business day of a Plan Quarter on
which the Common Stock publicly trades.
(u) "Purchase Price" shall mean the purchase price for a share of Common
Stock to be paid by a Participant on a Purchase Date, as determined under
Section 4.02 hereof.
(v) "Subsidiary" shall mean a subsidiary of the Company which is treated
as a subsidiary corporation under Section 424(f) of the Code.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 Eligibility. Each Employee shall become eligible to be a Participant
of the Plan and may participate therein as of the Commencement Date coincident
with or next following the date he or she has had six consecutive months of
continuous service as an Employee of the Company. In the event any person
becomes an Employee on account of a merger, stock purchase, asset purchase or
other acquisition by the Company, such Employee shall have any continuous period
of service with the predecessor company applied towards the satisfaction of the
foregoing six-month waiting period.
3.02 Limitations. Notwithstanding anything to the contrary contained in
the Plan, no Employee shall acquire the right to purchase shares of Common Stock
(i) if immediately after receiving such right to purchase Common Stock, such
Employee would own 5% or more of the total combined voting power or value of all
classes of stock of the Company or any Subsidiary, taking into account in
determining stock ownership any stock attributable to such Employee under
Section 424(d) of the Code, (ii) which would permit such Employee's right to
purchase stock under all employee stock purchase plans (to which Section 423 of
the Code applies) of the Company and its Subsidiaries, to accrue at a rate which
exceeds $25,000 of the Market Price of such stock (as determined as of each
Commencement Date) for each calendar year, all as specified in the manner
provided by Section 423(b)(8) of the Code, or (iii) which would permit such
Employee the right to purchase more than 500 shares (or such other number as may
be determined in advance for any Plan Quarter by the Committee) of Common Stock
in any Plan Quarter.
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<PAGE>
3.03 Participation.
(a) Each Employee eligible to be a Participant in the Plan shall be
furnished a summary of the Plan and an Election Form by such Employee's
Participating Employer. If an Employee elects to participate hereunder, such
Employee shall complete such form and file it with his or her Participating
Employer not later than the Election Date for the next Plan Quarter. The
completed Election Form shall indicate the Contribution Rate authorized by the
Participant. If any Employee does not elect to participate in the Plan during
any given Plan Quarter, such Employee may elect to participate on any future
Commencement Date so long as he or she continues to be an eligible Employee.
(b) On his or her Election Form, an Employee must authorize his or her
Participating Employer to deduct through a payroll deduction the amount of such
Employee's Participant Contribution. The payroll deduction specified in an
Election Form for each payroll period shall be at a Contribution Rate in whole
percentages of not less than 1% and not more than 10% of such Employee's Covered
Compensation during such payroll period paid to him or her by his or her
Participating Employer. Such deductions shall begin as of the first pay period
occurring on or after the Commencement Date of a Plan Quarter. No interest shall
accrue to Participants on any amounts withheld under the Plan.
(c) The Participant's Contribution Rate, once established, shall remain in
effect for all Plan Quarters unless changed by the Participant on a new Election
Form filed with his or her Participating Employer not later than the Election
Date of the next Plan Quarter. A Participant's Contribution Rate for a Plan
Quarter may not be increased, decreased or otherwise modified at any time during
the period between the Election Date and the Commencement Date of such Plan
Quarter.
(d) A Participant may notify his or her Participating Employer of such
Participant's desire to discontinue his or her Participant Contributions by
delivering to his or her Participating Employer written notice on such forms as
may be provided by the Company or such Participant's Participating Employer at
least 15 days prior to the Purchase Date of the relevant Plan Quarter. Upon such
request, there shall be refunded to such Participant as soon as practicable the
entire cash balance in his or her Contribution Account. If a Participant
determines to discontinue his or her Participant Contributions pursuant to this
paragraph, (i) such Participant shall be terminated from the Plan effective upon
the date of receipt of such Participant's notice to his or her Participating
Employer and (ii) such Participant shall not be permitted to be a Participant in
the Plan until the Participant completes and files a new Election Form with his
or her Participating Employer no later than the Election Date of the Plan
Quarter the Participant wishes to again participate in the Plan. In the event
that a Participant's payroll deductions are prevented by legal process, the
Participant will be deemed to have terminated from the Plan.
(e) By enrolling in the Plan, each Participant will be deemed to have
authorized the establishment of a single security limited purchase account in
his or her name at a securities brokerage firm or other financial institution,
if approved by the Committee in its discretion.
3.04 Termination of Employment. Any Participant (i) whose employment by a
Participating Employer is terminated for any reason or (ii) who shall otherwise
cease to be an Employee for purposes of the Plan, shall cease being a
Participant as of the date of such event. Upon such termination of employment,
there shall be refunded to such Participant as soon as practicable the entire
cash balance in such Participant's Contribution Account. Section 4.03(b) hereof
shall apply to the issuance of certificates to a Participant following
termination of employment.
ARTICLE IV
COMMON STOCK
4.01 Purchase of Common Stock.
(a) On each Purchase Date, each Participant's Contribution Account shall
be used to purchase the maximum number of whole and fractional shares of Common
Stock determined by dividing (i) the Participant's Contribution Account as of
such Purchase Date by (ii) the Purchase Price in respect of such Plan Quarter.
A-3
<PAGE>
(b) If, in any Plan Quarter, the total number of shares of Common Stock to
be purchased pursuant to the Plan by all Participants exceeds the number of
shares authorized under the Plan, then each Participant shall purchase his or
her pro rata portion of the shares of Common Stock remaining available under the
Plan based on the balances in each Participant's Contribution Account as of the
Purchase Date in respect of such Plan Quarter.
(c) Any cash dividends paid with respect to shares of Common Stock held
for the account of a Participant shall be, as determined by the Participant, (i)
distributed to the Participant, or (ii) used to purchase additional shares of
Common Stock on the open market, provided that the Participant has made a prior
arrangement with the securities brokerage firm described in Section 3.03(e)
hereof to apply any cash dividends to make such purchases.
4.02 Purchase Price. For each Plan Quarter, the Purchase Price per share
of Common Stock purchased pursuant to the Plan shall be 85% of the Market Price
on the Purchase Date of such Plan Quarter.
4.03 Notice of Purchase, Stock Certificates, Voting Rights.
(a) After the Purchase Date in respect of each Plan Quarter, a report will
be made by the Company or its agent to each Participant stating the entries made
to his or her Contribution Account, the number of shares of Common Stock
purchased and the applicable Purchase Price.
(b) Evidence of shares of Common Stock purchased under the Plan shall be
maintained under the Plan for the account of each Participant and registered in
the manner determined by the Committee. Certificates for the number of whole
shares credited to a Participant's account under the Plan will be issued to a
Participant at any time promptly upon written request to the Company or its
designated agent; provided, however, that the Company may, at its election,
issue such certificates at such time or times as the Committee deems
appropriate, including, without limitation, following an Employee's termination
of employment with a Participating Employer.
(c) Whole shares of Common Stock held under the Plan for the account of
each Participant or former Participant shall be voted by the holder of record of
such shares in accordance with the Participant's instructions.
4.04 Notification of Disposition of Stock. If a Participant or former
Participant disposes of a share of Common Stock purchased under the Plan prior
to two (2) years after the Commencement Date of the Plan Quarter during which
such share was purchased, then such Participant or former Participant shall
notify his or her Participating Employer immediately of such disposition in
writing.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.01 Shares Subject to Plan; Adjustments.
(a) The maximum number of shares of Common Stock which may be purchased
under the Plan is 3,000,000 subject, however, to adjustment as hereinafter set
forth. The shares of Common Stock to be purchased under the Plan will be made
available, at the discretion of the Board of Directors or the Committee, either
from authorized but unissued shares of Common Stock or from previously issued
shares of Common Stock reacquired by the Company, including shares purchased on
the open market.
(b) If the outstanding shares of Common Stock of the Company are
increased, decreased, or exchanged for a different number or kind of shares or
other securities, or if additional shares or new or different shares or other
securities are distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, spin off, sale of all or
substantially all the property of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
distribution with respect to such shares of Common Stock, or other securities,
an appropriate and proportionate adjustment may be made in the maximum number
and kind of shares provided in Sections 3.02 and 5.01(a) hereof, subject in the
case of certain corporate reorganizations to the requirements of Section 424(a)
of the Code.
A-4
<PAGE>
5.02 Administration of the Plan.
(a) Pursuant to the direction of the Board of Directors, the Committee
shall be responsible for the administration of the Plan. The Committee shall
have the discretionary authority to interpret the Plan and determine all
questions arising in the administration, application and operation of the Plan,
including all questions of fact and all questions of interpretation of the
provisions of the Plan. All such determinations by the Committee shall be
conclusive and binding on all persons. The Committee, from time to time, may
adopt, amend and rescind rules and regulations not inconsistent with the Plan
for carrying out the Plan, and may approve the forms of any documents or
writings provided for in the Plan. The Committee shall have full discretionary
authority to delegate ministerial functions of the Plan to employees of the
Company and its Subsidiaries. No member of the Board of Directors or the
Committee shall be liable for any action, determination or omission taken or
made in good faith with respect to the Plan or any right granted hereunder.
(b) The Committee may in its discretion engage a bank trust department,
securities brokerage firm or other financial institution as agent to perform
custodial and record-keeping functions for the Plan, such as holding record
title to the Participants' stock certificates, maintaining an individual
investment account for each Participant and providing periodic account status
reports to Participants.
(c) The Committee shall have the authority to adopt and enforce such
special rules and restrictions under the Plan to be applicable to Participants
who are subject to Section 16 of the Securities Exchange Act of 1934, as
amended, as the Committee shall deem are necessary or appropriate to comply with
the requirements of such Section 16.
(d) The Company shall bear the cost of administering the Plan, including
any fees, costs and expenses relating to the purchase of shares of Common Stock
under the Plan. Notwithstanding the foregoing, Participants will be responsible
for all fees, costs and expenses incurred in connection with (i) the issuance of
stock certificates to a Participant in accordance with Section 5.01(a) or (ii)
the disposition of shares of Common Stock purchased under the Plan.
5.03 Termination and Amendment of the Plan.
(a) The Company may, by action of the Board of Directors, terminate the
Plan at any time and for any reason. The Plan shall automatically terminate upon
the purchase by Participants of all shares of Common Stock subject to the Plan
under Section 5.01 hereof, unless such number of shares shall be increased by
the Board of Directors and such increase shall be approved by the shareholders
of the Company. Upon termination of the Plan, as soon as practicable, there
shall be refunded to each Participant the entire cash balance in his or her
Contribution Account, and there shall be forwarded to each Participant
certificates for all whole shares of Common Stock held under the Plan for the
account of such Participant.
(b) The Board of Directors reserves the right to modify, alter or amend
the Plan at any time and from time to time to any extent that it may deem
advisable, subject to shareholder approval to the extent deemed necessary by the
Board of Directors for compliance with Section 423 of the Code. Notwithstanding
the foregoing, no amendment of the Plan shall operate to reduce any amounts
previously allocated to a Participant's Contribution Account nor to reduce a
Participant's rights with respect to shares of Common Stock previously purchased
and held on his or her behalf under the Plan. The Board of Directors may suspend
operation of the Plan for any period as it may deem advisable.
5.04 Governing Law; Compliance With Law. The Plan shall be construed in
accordance with the laws of New York. The Company's obligation to sell and
deliver shares of Common Stock hereunder shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any
regulatory or governmental agency as may, in the opinion of counsel for the
Company, be required. The Company may make such provisions as it may deem
appropriate for the withholding of any taxes or payment of any taxes which it
determines it may be required to withhold or pay in connection with a
Participant's participation in the Plan.
5.05 No Assignment. The purchase rights granted hereunder are not
assignable or transferable by the Participants, other than by will or the laws
of descent and distribution, and are exercisable during the Participant's
lifetime only by the participant. Any attempted assignment, transfer or
alienation not in compliance with the terms of the Plan shall be null and void
for all purposes and respects.
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<PAGE>
5.06 No Contract of Employment. The Plan will not be deemed to constitute
a contract between a Participating Employer and any Participant or to be a
consideration or an inducement for the employment of any Participant or
Employee. Nothing contained in the Plan shall be deemed to give any Participant
or Employee the right to be retained in the service of a Participating Employer
or to interfere with the right of a Participating Employer to discharge any
Participant or Employee at any time regardless of the effect which such
discharge shall have upon him or her as a Participant of the Plan.
5.07 No Rights as Shareholder. No eligible Employee or Participant shall
by reason of participation in the Plan have any rights of a shareholder of the
Company until he or she acquires shares of Common Stock as herein provided.
A-6
<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 RANDALL J. WEISENBURGER and BARRY J. WAGNER,
jointly and severally, proxies, with the power of substitution and with the
authority in each to act in the absence of the other, to vote all shares the
undersigned is entitled to vote at the Annual Meeting of Shareholders on May 17,
1999 or postponements 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 5, 1999.
(Continued and to be signed on the reverse side)
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE>
Please mark
your votes as [X]
indicated in
this example
- --------------------------------------------------------------------------------
1. THE ELECTION OF SIX DIRECTORS. NOMINEES: Bernard Brochand, James A.
Cannon, Leonard S. Coleman, Jr., Peter Foy, Thomas L. Harrison and Gary L.
Roubos for a 3 year term.
FOR all nominees listed except as marked to the contrary
[ ]
WITHHOLD AUTHORITY to 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
[ ] [ ] [ ]
3. APPROVAL OF THE OMNICOM GROUP INC. EMPLOYEE STOCK PURCHASE PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Signature ______________Signature if held jointly___________ Dated:_______, 1999
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.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
