<PAGE>
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 Section 240.14a-11(c) or Section 240.14a-12
True North Communications 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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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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:
-------------------------------------------------------------------------
(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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Notes:
<PAGE>
LOGO
NOTICE OF 1997
ANNUAL MEETING OF
SHAREHOLDERS AND
PROXY STATEMENT
Dear Shareholder:
In announcing and building the architecture of True North over the past two
years, our intention has been to create a new marketing services model with an
important competitive advantage for global clients. In 1996, we made
significant progress on achieving this vision by remaining focused on two key
priorities:
1. enhancing our global infrastructure, and
2. maximizing our investment and proven leadership in digital technology
through TN Technologies.
These highlights of our Company's overall performance and accomplishments
underscore our momentum due to this focus:
. We announced the formation of a new, fully-owned and operated FCB network
in Europe that from its inception represents over $1 billion in billings,
resulting from our acquisition of the highly-regarded Wilkens network
combined with four large FCB operations for which we gained full
ownership in the restructuring of our joint-venture with Publicis.
. FCB was a top new business performer in 1996 with over $670 million from
gross new billings, and more new business from clients consolidating
their global agency assignments than any other agency--evidence of our
increased international strength.
. TN Technologies became the largest company in the rapidly-growing
industry of digital marketing services. With the acquisition of Modem
Media, we expect TN Technologies to exceed $60 million in revenue during
1997.
. Capitalized billings grew to $8.2 billion and FCB ranked number one in
North America once again.
The Proxy Statement contains details on our upcoming Annual Meeting. You'll
also find an enclosed proxy card to register your vote on important business
items.
Thank you for being a part of the True North family. Our goal is to enhance
our Company's leadership position and your share in our ongoing success. We
appreciate your support.
Best regards,
/s/ Bruce Mason
Bruce Mason
<PAGE>
LOGO
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1997
April 15, 1997
Dear Stockholder;
You are cordially invited to attend the annual meeting of stockholders of
True North Communications Inc. The 1997 annual meeting will be held at The
University of Chicago Graduate School of Business, The Conference Center--
Sixth Floor, 450 North Cityfront Plaza, Chicago, Illinois on May 21, 1997, at
10:00 A.M., local time, for the following purposes:
1. To elect 9 directors to serve until the next annual meeting of
stockholders.
2. To approve the appointment of Arthur Andersen LLP as auditors for 1997.
3. To consider and act upon any other matters that may properly come before
the meeting and any adjournments thereof.
The close of business on March 24, 1997 has been fixed as the record date
for determination of stockholders entitled to notice of and to vote at the
annual meeting and any adjournments thereof. A complete list of such
stockholders will be filed at least ten days before the meeting at the offices
of the Company at 101 East Erie, Chicago, Illinois and will be available for
inspection by any stockholder.
Whether or not you plan to attend the meeting, please mark and then sign,
date and return the enclosed proxy card in the accompanying envelope so as to
assure the largest possible representation at the meeting. If you attend the
meeting, your proxy will not be counted with respect to any matter upon which
you vote in person.
/s/ Dale F. Perona
Dale F. Perona
Secretary
STOCKHOLDERS ARE URGED TO MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND MAIL
IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
<PAGE>
TRUE NORTH COMMUNICATIONS INC.
APRIL 15, 1997
--------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of True North Communications Inc. (the
"Company") for the annual meeting (the "Annual Meeting") of stockholders to be
held at The University of Chicago Graduate School of Business, The Conference
Center--Sixth Floor, 450 North Cityfront Plaza, Chicago, Illinois, on
Wednesday, May 21, 1997, at 10:00 A.M., local time, and at any adjournments
thereof, for the purposes set forth in the Notice of Annual Meeting of
Stockholders. The Company's principal executive offices are located at FCB
Center, 101 East Erie Street, Chicago, Illinois 60611-2897.
Any proxy given pursuant to such solicitation may be revoked by the person
giving it any time prior to its exercise. All properly executed, unrevoked
proxies which are received will be voted as specified. Proxies will be voted
in favor of each proposal set forth in the notice of meeting unless contrary
directions are given. You may revoke your proxy at any time prior to the
Annual Meeting by delivering written notice to the Secretary of the Company,
by submitting a subsequently dated proxy or by attending the Annual Meeting
and voting in person.
A copy of the Annual Report of the Company for the year ended December 31,
1996, including financial statements, is being mailed with this Proxy
Statement to all stockholders entitled to notice of and to vote at the Annual
Meeting. The Annual Report does not constitute a part of the proxy
solicitation material. This Proxy Statement and the accompanying form of proxy
were first sent or given to stockholders on or about April 15, 1997.
VOTING SECURITIES
Only stockholders of record at the close of business on March 24, 1997, the
record date fixed by the Board of Directors, are entitled to vote at the
Annual Meeting. On that date, the Company had outstanding 24,757,710 shares of
common stock (excluding 240,442 shares held in the treasury). Each stockholder
is entitled to one vote in person or by proxy for each share of common stock
owned by such stockholder on the above date. A majority of the outstanding
shares of common stock (excluding shares held in the treasury) constitute a
quorum.
A proxy may indicate that all or a portion of the shares represented by that
proxy are not being voted by the stockholder with respect to a particular
matter. Any non-voted shares will be considered present for the purpose of
determining the presence of a quorum.
The following table shows each person or group of persons known to the
management of the Company to be the beneficial owner of more than five percent
of the outstanding shares of the Company's common stock as of the record date:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OF CLASS
---------------- ----------------------- --------
<S> <C> <C>
Publicis Communication
133 Champs Elysees
75008 Paris, France........................ 4,658,000 Shares 18.81%
GeoCapital Corporation
767 Fifth Avenue
New York, New York 10153................... 2,270,700 Shares(1) 9.17%
</TABLE>
<PAGE>
- ----------------
(1) Based upon information furnished by GeoCapital Corporation in a Schedule
13G filed with the Securities and Exchange Commission on February 15,
1997.
PROPOSAL 1--ELECTION OF DIRECTORS
The Board of Directors intends that the shares represented by proxies will
(unless authority to do so is withheld) be voted in favor of the election as
directors of the nine nominees set forth in the following table to serve until
the next annual meeting of stockholders and until their successors are duly
elected and qualified. Messrs. Louis E. Scott, Newton N. Minow and William A.
Schreyer, directors of the Company, respectively, since 1962, 1980 and 1993,
are not standing for reelection in 1997. Directors are elected by a plurality
of the votes cast. The nine nominees receiving the highest number of votes
will be elected. If any nominee is unable to accept nomination or election,
which the Board of Directors has no reason to anticipate, the shares
represented by the proxies will be voted for the election of such other person
as the Board of Directors may recommend.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
OWNED
DIRECTOR MARCH 24,
NAME, AGE AND PRINCIPAL OCCUPATION SINCE 1997(1)
---------------------------------- -------- ------------
<S> <C> <C>
BRUCE MASON (57)........................................ 1986 285,788
Chairman of the Board and Chief Executive Officer of the
Company; other senior executive positions with the Com-
pany or subsidiaries for more than five years.
STEPHEN T. VEHSLAGE (57)................................ 1975 33,300
Consultant; formerly Senior Vice President, Corning
Franklin Health Inc. 1995-1996; various senior execu-
tive positions with IBM Corporation for more than five
years.
GREGORY W. BLAINE (48).................................. 1990 93,281
Chairman and Chief Executive Officer of TN Technologies
Inc., a subsidiary of the Company; other senior execu-
tive positions with the Company or subsidiaries for
more than five years.
LAUREL CUTLER (70)...................................... 1990 70,262
Consultant; formerly Director of Global Marketing Plan-
ning; other senior executive positions with the Company
or subsidiaries for more than five years; Director of
Hannaford Brothers Co. and Quaker State Corp.
J. BRENDAN RYAN (54).................................... 1994 81,514
Chairman and Chief Executive Officer of Foote, Cone &
Belding Worldwide; other senior executive positions
with the Company or subsidiaries for more than five
years; Director of Capstone Pharmacy Services, Inc.
RICHARD S. BRADDOCK (55)................................ 1994 18,900
Consultant; formerly a Partner, Clayton, Dubilier &
Rice, Inc. 1994-1995; Chief Executive Officer of MEDCO
1993; President and other executive positions with
Citicorp 1973-1992; Director of Eastman Kodak, E.
Trade, and Chairman of Ion Laser Tech.
RICHARD P. MAYER (57)................................... -- --
Retired; formerly Chairman and Chief Executive Officer
and other senior executive positions with Kraft General
Foods North America for more than five years; Director
of Brown Forman Corporation, Dean Foods and Thompson
Minwax (Forstmann-Little & Co.).
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
OWNED
DIRECTOR MARCH 24,
NAME, AGE AND PRINCIPAL OCCUPATION SINCE 1997(1)
---------------------------------- -------- ------------
<S> <C> <C>
MICHAEL E. MURPHY (60).................................. -- --
Vice Chairman, Chief Administrative Officer and Director
and other senior executive positions with Sara Lee Cor-
poration for more than five years. Director of GATX
Corporation and Payless Shoe Source, Inc.
ALI WAMBOLD (43)........................................ -- -- (2)
Managing Director of Lazard Freres & Co. LLC in New York
and of Lazard Brothers & Co., Ltd. in London; other se-
nior executive positions with the Company or subsidiar-
ies for more than five years; Director of The Albert
Fisher Group PLC, Tomkins PLC and Corporate Partners
and Lazard S.p.A. (Milan).
All directors and executive officers as a group (14).... 698,097(3)
</TABLE>
- ----------------
(1) Includes shares of the Company's common stock which certain nominees have
the right to acquire under the Company's Stock Option Plan or Outside
Director Stock Option Plan prior to May 24, 1997 as follows: Mr. Mason,
184,280 shares; Mr. Vehslage, 30,500 shares; Mr. Blaine, 46,700 shares;
Ms. Cutler, 49,200 shares; Mr. Ryan, 72,620 shares; and Mr. Braddock,
18,900 shares. Each of the individuals named in the table has sole voting
and investment power with respect to all beneficially owned shares. Except
for the 1.2% of the shares of the Company's common stock that Mr. Mason
beneficially owns, no other director, executive officer or director
nominee beneficially owns as much as 1% of the Company's outstanding
common stock.
(2) Nominated pursuant to the February 19, 1997 Memorandum of Agreement
between Publicis S.A. and True North Communications Inc. This agreement
entitles each party to be represented on the board of directors of the
other party.
(3) Equal to 2.8% of the Company's outstanding common stock.
The Company's Board of Directors met 7 times during 1996. Employee directors
receive no compensation for their services on the Board of Directors or
Committees except that they may become eligible for a benefit under the
Company's Directors Part-Time Employment Agreement. Under this Agreement an
employee director between the ages 55 to 65 can continue employment on a part-
time basis and receive part-time salary payments for five years up to the
attainment of age 65. Part-time salary is determined as 45% of the highest
five year average compensation (salary plus variable incentive compensation)
during the prior 10 years of full time employment, reduced by 1/30 for each
year of service less than 30 years.
Directors who are not employees of the Company or any of its subsidiaries
are paid $23,000 annually for their services. A per diem allowance of $2,000
is paid to non-employee directors for attendance at board meetings, meetings
of committees of the board, work on special assignments or requested
attendance at other management meetings. Aggregate per diem payments to such
directors in 1996 were $252,000. The Directors can elect to voluntarily defer
all or a part of their annual retainer and per diem. Amounts deferred are paid
to the Director at the time they leave the Board. The Outside Director Stock
Option Plan provides for 10 year grants to Outside Directors in proportion to
the total of their annual retainer and per diem allowance. The basis for
granting options is a formula tied to annual growth in net income. Under the
terms of this Plan, no options were granted to Directors for 1996. Stock
Options awarded under the plan are immediately exercisable with respect to
one-third of the shares covered thereby, and, an additional one-third on each
of the next two anniversaries of the grant. Stephen T. Vehslage received an
option to purchase up to 15,000 shares at an exercise price of $24.125 per
share of the Company's Common
3
<PAGE>
Stock until 2006, such grant being related to his work on the Special
Committee of the Board of Directors. The Outside Director Retirement Plan
provides a retirement benefit to Outside Directors after five years of board
service. The annual benefit is equal to a specified percentage of the annual
retainer calculated at 5% times each year of Board service plus 5% times each
year that net income growth is 15% or more, subject to a maximum of 10 years.
The annual benefit is paid for five years.
William A. Schreyer, Richard S. Braddock and Stephen T. Vehslage are
members of the Company's Audit Committee. The functions of this committee,
which met 3 times during 1996, are to 1) review and approve the Company's
internal audit program and the system of internal controls, 2) to select
independent public accountants for recommendation to the board and
stockholders for approval, and 3) to review with such accountants the scope
and results of the annual audit.
Stephen T. Vehslage, Newton N. Minow, Louis E. Scott and William A. Schreyer
are members of the Company's Compensation Committee. The functions of this
committee, which met 4 times during 1996, are to determine the compensation
and all other terms of employment, including the grant of options, for
employees who are directors or officers of the Company.
Newton N. Minow, Louis E. Scott, Stephen T. Vehslage and William A. Schreyer
are members of the Company's Nominating Committee. The function of this
committee, which met 4 times during 1996, is to recommend to the full board
nominees for election as directors. Stockholders may recommend director
candidates for consideration by the Committee. Any recommendations by
stockholders to the Committee for nominees for election at the 1998 Annual
Meeting must be submitted in a written notice to the Secretary of the Company
at least 30 days but no more than 90 days prior to March 31, 1998. The
Company's By-Laws provide, in general, that stockholders may directly nominate
one or more persons for election as directors at the Annual Meeting only if
written notice of the stockholder's intent to make such nomination is received
by the Secretary of the Company at least 50 days but no more than 90 days
before the date of the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED
ABOVE.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has sole authority for determining the
compensation for the directors and officers of the Company. Stock option
grants for all employees of the Company must also be reviewed and approved by
the Committee. Finally, the Committee reviews and recommends changes to the
direct compensation, remuneration and benefit programs for all employees of
True North Communications Inc.
The Compensation Committee met 4 times during 1996. In addition to decisions
regarding executive compensation, other actions and activities of the
Committee during the year included:
. A continuation of the practice of a comprehensive review of the overall
compensation program for executives using both internal staff and external
compensation consultants. This review reaffirmed that the Company is
interpreting survey data correctly in its application of the compensation
programs.
. In order to solidify the senior management of the Company and assure its
continuity for future years, the Compensation Committee negotiated
employment agreements with the senior executives.
. Approval of stock option grants to 181 key employees totaling 576,400 shares
during 1996.
. Approval of stock option grants for the True North Communications Inc.
Management Board totaling 145,000 shares in March, 1997.
4
<PAGE>
In making compensation decisions in 1996 for individual executives, the
Committee was guided by the detailed pay-for-performance principles contained
in the True North Performance Program and by the terms of any applicable
employment agreement. This program has been approved by Shareholders with the
details provided in prior proxy statements.
The principles and each component in place since 1992 and used for 1996
administration were:
Base Salary--This is managed over time to remain below the average for
comparable positions at competitive multinational advertising agencies.
Each of the agencies reported as the peer group for the Company performance
graph have been included in this group of competitive agencies for purposes
of comparison. No minimum or maximum interval between raises exists. Since
the inception of the True North Performance Program, the average interval
between raises for Employee Directors has averaged 24 months.
Variable Incentive Compensation--The potential amount of Variable
Incentive Compensation is determined by improvement in Company net income
versus the prior year on an accelerated, sliding scale basis. Actual
individual awards of Variable Incentive Compensation are then determined by
the level of profit growth and achievement of the measurable objectives for
which the individual was responsible. These objectives, in varying degrees,
include such items as establishing ways of incenting and measuring
improvement in the quality of the creative product, implementation of key
elements of the Company's growth plan, and measuring effectiveness in
fulfillment of management responsibilities. Based on overall Company
financial performance, no participant in the Performance Program received a
maximum payout for 1996.
Deferred Variable Incentive Compensation--Deferred Variable Incentive
Compensation is also determined by improvement in Company net income versus
the prior year on an accelerated sliding scale basis though with lower
potential awards than the Variable Incentive Compensation component.
Deferred Variable Incentive Compensation vests at 20% on the date of award
and an additional 20% per year for each of the four subsequent years. Like
Variable Incentive Compensation, actual individual awards are adjusted
based on performance against measurable objectives as noted above. Based on
overall Company financial performance, no participant in the Performance
Program received a payout for 1996.
Variable Incentive Stock Options--The granting of Variable Incentive
Stock Options is intended to incent executive performance over both the
short and long term. Annual grants are determined in part by the amount of
improvement in Company net income versus the prior year. The Compensation
Committee also can recognize the achievement of significant events in
determining individual awards. The Compensation Committee took into account
Performance Plan criteria and attainment of individual objectives in
awarding the Incentive Stock Option grants for options reported for 1996
and for those granted in 1997. Variable Incentive stock option grants are
made at the current fair market value, vest over five years and are
exercisable over ten years.
Mr. Bruce Mason has been the Chairman of the Board and Chief Executive
Officer of the Company since May, 1991. Compensation for 1996 for Bruce Mason
was based upon the principles of the Performance Program in conjunction with
the terms of his employment agreement.
Mr. Mason's base salary was last changed March 1, 1993. At this level of
salary, he remains below the competitive average consistent with the True
North Performance Program principles.
Mr. Mason's Variable Incentive Compensation for 1996 was $400,000. This
amount was determined based on the terms of his employment agreement as
negotiated by the Compensation Committee.
5
<PAGE>
Mr. Mason did not receive Deferred Variable Incentive Compensation for 1996
based on the criteria of the Performance Program.
Finally, Mr. Mason was granted Variable Incentive Stock Options for 42,000
shares during 1996.
All decisions regarding Mr. Mason's 1996 Variable Compensation components
were made by the Compensation Committee in March, 1997 after Company earnings
information for 1996 became available.
The Compensation Committee will continue to monitor and review all aspects
of the True North Performance Program.
William A. Schreyer, Chairman
Newton N. Minow
Louis E. Scott
Stephen T. Vehslage
Members of the Compensation
Committee
6
<PAGE>
EXECUTIVE COMPENSATION
The Summary Compensation Table shows the compensation for the past three
fiscal years of the Company for the Chief Executive Officer and the four other
most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG TERM COMPENSATION
----------------- -----------------------
AWARDS PAYOUTS
NAME ------------ ----------
AND SECURITIES ALL OTHER
PRINCIPAL UNDERLYING LTIP COMPENSATION
POSITION YEAR SALARY BONUS OPTIONS/SARS PAYOUTS(1) (2)
--------- ---- -------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Bruce Mason............. 1996 $600,000 $400,000 42,000 -- $511,759
Chairman and Chief 1995 $600,000 $580,000 46,200 $210,000 $451,326
Executive Officer 1994 $600,000 $630,000 53,000 $225,000 $420,457
Brendan Ryan............ 1996 $529,167 $400,000 22,300 -- $249,526
Chairman and CEO 1995 $439,583 $460,000 27,500 $160,000 $253,190
Foote, Cone & Belding, 1994 $394,166 $600,000 16,600 $250,000 $211,356
Worldwide
Gregory W. Blaine....... 1996 $400,000 $200,000 13,100 -- $134,922
Chairman and Chief 1995 $325,000 $240,000 16,500 $115,000 $147,810
Executive Officer of TN 1994 $325,000 $340,000 13,400 $162,000 $149,380
Technologies Inc
Mitchell T. Engel....... 1996 $323,358 $175,000 9,800 -- $ 50,022
President TN Associated 1995 $286,500 $285,000 2,600 $117,000 $ 46,005
Communications
Cos. and Corp. 1994 $280,250 $ 90,000 6,000 $ 35,000 $ 57,823
Operations
Terry M. Ashwill........ 1996 $380,000 -- 30,500 -- $167,932
Executive Vice 1995 $380,000 $280,000 37,400 $135,000 $180,988
President,
Chief Financial Officer 1994 $375,000 $395,000 31,800 $190,000 $180,101
</TABLE>
- ----------------
(1) Amounts shown in this column are the total Deferred Variable Incentive
Compensation awarded in the year shown. Upon award, this is 20% vested and
vests an additional 20% at each of the next four anniversaries of the date
of the award. There were no awards made to named executives for 1996.
(2) Amounts shown in this column are for Company contributions and accruals
under compensation and benefit programs for the named executives. The
amounts are as follows:
The Company contribution to the True North Profit Sharing-Retirement
Plan was $5,496 for 1996 for each of the named executives.
The Company matching contribution to the True North Stock Purchase
Plan was $4,904 for 1996 for each of the named executives.
The Company matching contribution to the True North Stock Purchase
Integration Plan for 1996, was $37,788 for Mr. Mason, $30,190 for Mr.
Ryan, $18,120 for Mr. Blaine, $16,476 for Mr. Engel and $18,538 for Mr.
Ashwill.
The Company contribution to the True North Profit Sharing Integration
Plan for 1996 was $44,509 for Mr. Mason, $36,314 for Mr. Ryan, $21,162
for Mr. Blaine, $19,838 for Mr. Engel and $21,822 for Mr. Ashwill.
The amount accrued under the Company's Directors Part-Time Employment
Agreement for 1996 was $406,391 for Mr. Mason, $163,851 for Mr. Ryan,
$74,857 for Mr. Blaine, and $117,172 for Mr. Ashwill. Mr. Engel is a
participant in this program, but his accrual does not start until 1997.
The Company-paid amount for life insurance for 1996 was $12,671 for
Mr. Mason, $8,771 for Mr. Ryan, $10,383 for Mr. Blaine and $3,309 for
Mr. Engel.
7
<PAGE>
STOCK OPTIONS
During 1996, stock option grants covering 576,400 shares were awarded to 181
key employees under the Company's Stock Option Plan. Each grant was made at
the fair market value on the date of the award, vests over five years and is
exercisable over ten years. The option grants in 1996 for the named executive
officers are shown in the following table.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS(1) OPTION TERM
-------------------------------------------- -------------------
NUMBER OF
SECURITIES PERCENT OF
UNDERLYING TOTAL OPTIONS
OPTIONS GRANTED TO EXERCISE
GRANTED EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ---------- ------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bruce Mason............. 42,000 7.3% $19.250 2/13/06 $508,461 $1,288,541
Brendan Ryan............ 22,300 3.9% $19.250 2/13/06 $269,969 $ 684,154
Gregory W. Blaine....... 13,100 2.3% $19.250 2/13/06 $158,592 $ 401,902
Mitchell T. Engel....... 9,800 1.7% $19.250 2/13/06 $118,641 $ 300,660
Terry M. Ashwill........ 30,500 5.3% $19.250 2/13/06 $369,240 $ 935,726
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
- ----------------
(1) Options were granted at market price on the date of grant (2/13/96). All
options are exercisable at a rate of 20% per year beginning on the first
anniversary of the date of grant.
The exercised options during 1996, number of options held and their value at
year end for the named executive officers are shown in the following table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT FY- IN-THE-MONEY
SHARES END OPTIONS AT FY-END
ACQUIRED VALUE --------------- -----------------
ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE ($) UNEXERCISABLE UNEXERCISABLE
- ---- -------- -------- --------------- -----------------
<S> <C> <C> <C> <C>
Bruce Mason................. 0 $ 0 128,340/151,360 $747,685/$488,742
Brendan Ryan................ 0 0 48,940/69,460 $295,291/$223,452
Gregory W. Blaine........... 0 0 32,340/42,380 $199,632/$125,333
Mitchell T. Engel........... 0 0 16,120/16,680 $ 132,507/$40,954
Terry M. Ashwill............ 16,602 $180,547 67,998/101,100 $365,196/$302,518
</TABLE>
PENSION PLAN
The Pension Table that follows is required by SEC regulations. However on
both a current and projected basis, none of the directors and officers is
expected to receive a benefit under the Company's Supplemental Pension Plan.
The Plan covers all eligible employees of the Company and works in conjunction
with the Company's primary retirement program, the True North Profit Sharing-
Retirement Plan, to guarantee that total retirement benefits will not fall
below a prescribed minimum level. Each of the named executives participates in
the True North Profit Sharing-Retirement Plan, and in so doing, any benefit
under the Supplemental Pension Plan is expected to be completely offset.
8
<PAGE>
The Supplemental Pension Plan provides for 45% of final average pay less
offsets of 19.5% of social security final average compensation and the annuity
value of an individual's Profit Sharing account. The table shows amounts
without regard to these offsets, the maximum recognizable compensation limit
($150,000 in 1996) or the maximum annual retirement benefit ($120,000 in
1996). Compensation as defined above includes salary and incentive payments.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE
ANNUAL --------------------------------------------
COMPENSATION 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$300,000.......................... $ 67,500 $ 90,000 $112,500 $135,000 $135,000
400,000.......................... 90,000 120,000 150,000 180,000 180,000
500,000.......................... 112,500 150,000 187,500 225,000 225,000
600,000.......................... 135,000 180,000 225,000 270,000 270,000
700,000.......................... 157,500 210,000 262,500 315,000 315,000
800,000.......................... 180,000 240,000 300,000 360,000 360,000
</TABLE>
As of December 31, 1996, Mr. Mason had 28 years; Mr. Ryan had 5 years; Mr.
Blaine had 18 years; Mr. Engel had 21 years; and Mr. Ashwill had 5 years of
credited service with the Company for qualification in the Supplemental
Pension Plan.
OTHER AGREEMENTS
The following executives entered into agreements with the Company since
January 1, 1996.
Mr. Mason entered into an employment agreement in July, 1996 that provides
for annual renewals through December 31, 1999. The agreement provides for
minimum base salary and bonus of $1,000,000 per year beginning for calendar
year 1996. Should Mr. Mason elect not to renew the agreement prior to July 1,
1997, Mr. Mason would receive $1,000,000/year through December 31, 1999.
Should the Company not renew the contract or involuntarily terminate Mr. Mason
without cause, Mr. Mason would receive $1,350,000 per year through December
31, 1999. The agreement also provides for full vesting of stock options should
termination occur prior to December 31, 1999. At the expiration of payments
described above, Mr. Mason would be entitled to a benefit under the Company's
Directors Part-Time Employment Agreement. This benefit would provide 45% of
Mr. Mason's five-year final average salary (base plus incentive compensation).
The amount determined would be payable annually for five years.
Mr. Ryan entered into an employment agreement in December, 1996 covering the
period through December 31, 2001 and renewable for one-year periods
thereafter. The agreement provides for minimum base salary and bonus of
$1,000,000 per year beginning for calendar year 1997. Should the Company
involuntarily terminate Mr. Ryan without cause, Mr. Ryan would receive
$1,000,000 per year through the term of the agreement. The agreement also
calls for full vesting of stock options and deferred compensation amounts in
this situation. At the expiration of payments described above, Mr. Ryan would
be entitled to a full benefit under the Company's Directors Part-Time
Employment Agreement. This benefit would provide 45% of Mr. Ryan's five-year
final average salary (base plus incentive compensation). The amount determined
would be payable annually for five years.
Mr. Blaine entered into an employment agreement in October, 1996 covering
the period through December 31, 1997 and renewable for one-year periods
thereafter. The agreement provides for a minimum incentive compensation
payment of $200,000 for 1996. No other incentive compensation amounts were
guaranteed under this agreement. Should the Company terminate
9
<PAGE>
Mr. Blaine without cause prior to the end of the agreement, base salary would
continue through the term of the agreement but for no less than a minimum of 12
months. He would also be entitled to a pro rata incentive compensation payment
for the year of termination or, if higher, the average of the three years'
incentive compensation awarded in the years prior to termination. In the case
of an involuntary termination by the Company without cause or a voluntary
termination by Mr. Blaine, deferred compensation accounts and stock options
would be fully vested on his behalf. In addition, at the conclusion of the
salary payments, Mr. Blaine would be entitled to a full benefit under the
Directors Part-Time Employment Agreement. This benefit would provide 45% of Mr.
Blaine's five-year final average salary (base plus incentive compensation). The
amount determined would be payable annually for five years.
Mr. Engel entered into an employment agreement in January, 1997 covering the
period through December 31, 1999 and renewable for one-year periods thereafter.
Should the Company involuntarily terminate Mr. Engel without cause prior to the
end of the agreement, base salary would continue through the term of the
agreement, but for no less than a minimum of 12 months. Mr. Engel would also be
entitled to a pro rata incentive compensation payment for the year of
termination or, if higher, the average of the three years' incentive
compensation awarded in the years prior to termination. In addition, deferred
compensation accounts and stock options would be fully vested on his behalf. At
the conclusion of the salary payments, Mr. Engel would be entitled to a pro
rata benefit based on his years of service with the Company, including the
period salary payments are made per the termination provisions of this
agreement, under the Company's Directors Part-Time Employment Agreement as
described above, regardless of any age or service restrictions of the plan.
Messrs. Mason, Ryan, Blaine and Engel are covered by the Company's Asset
Protection Plan. This plan provides for annual payments of base salary plus
bonus (the highest bonus in the last three years) for three years if
termination of the executive occurs as a result of a change in control of the
Company. Each executive would also be entitled to a pro rata benefit based on
his years of service at the time of termination under the Company's Directors
Part-Time Employment Agreement as described above regardless of any age or
service restrictions of the plan.
On January 22, 1997 Mr. Jack Balousek and Mr. Craig Wiggins resigned their
positions and directorships with the Company. Separation agreements were
negotiated by the outside directors of the Compensation Committee of the
Company. The separation agreements were filed in a separate disclosure with the
Securities and Exchange Commission on February 14, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Stephen T. Vehslage, Newton N. Minow, Louis E. Scott and William A. Schreyer
serve as the Company's Compensation Committee. Mr. Scott is a former officer of
the Company who retired in 1987. In 1996, the Company and certain of its
subsidiaries retained the legal services of Sidley & Austin, a firm where Mr.
Minow is of counsel. The Company and certain of its subsidiaries expect to
retain Sidley & Austin in 1997.
10
<PAGE>
COMPANY PERFORMANCE
The following line graph provides a five-year comparison of cumulative total
returns for the Company, the S&P 500 Composite Index and an Advertising Index
comprised of: True North Communications Inc., The Interpublic Group of
Companies, Inc., Omnicom Group Inc., Grey Advertising Inc., Cordiant PLC (ADR)
and WPP Group plc (ADR). The graph assumes the investment of $100 on December
31, 1991 in the Company's Common Stock, the S&P 500 and the Advertising Index
and that all dividends are reinvested.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
True North.................................. 100 127 200 184 164 199
S&P 500..................................... 100 108 118 120 165 203
Advertising Index........................... 100 124 132 149 209 293
</TABLE>
PROPOSAL 2--APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has selected Arthur Andersen LLP as
auditors of the Company and its subsidiaries for the fiscal year 1997. This
firm of independent public accountants has served the Company in this capacity
since 1943. A representative of Arthur Andersen LLP is expected to be present
at the annual meeting and will have the opportunity to make a statement and
will also be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS AUDITORS FOR 1997.
11
<PAGE>
SOLICITATION OF PROXIES
The solicitation of proxies on the enclosed form is made on behalf of the
Board of Directors of the Company. Such solicitation of proxies normally will
be made by mail. Employees of the Company may also solicit proxies by
telephone or personal contact, but at no additional compensation. Bankers,
brokers and others holding Common Stock of the Company in their names or in
the names of nominees will be reimbursed for reasonable expenses incurred in
sending proxies and proxy material to the beneficial owners of such shares.
The total cost of solicitation of proxies will be borne by the Company.
The Board of Directors is not aware of any other matters which may be
brought before the meeting. If other matters not currently known come before
the meeting, the persons named in the accompanying form of proxy or their
substitutes will vote such proxy in accordance with their best judgment.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's Proxy Statement for
its annual meeting to be held in 1998, all stockholder proposals must be
received by the Company on or prior to December 12, 1997.
/s/ Dale F. Perona
Dale F. Perona
Secretary
Dated: April 15, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 1996 AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE UPON THE
WRITTEN REQUEST OF ANY STOCKHOLDERS ENTITLED TO VOTE AT THE MEETING DIRECTED
TO THE ATTENTION OF DALE F. PERONA, SECRETARY OF THE COMPANY, AT 101 EAST ERIE
STREET, CHICAGO, ILLINOIS 60611-2897.
12
<PAGE>
TRUE NORTH COMMUNICATIONS INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The signatory hereby appoints BRUCE MASON and J. BRENDAN RYAN, and each or ei-
ther of them, with full power of substitution and resubstitution, attorneys and
proxies with the powers the signatory would possess if personally present to
vote all the shares of Common Stock of the signatory in TRUE NORTH COMMUNICA-
TIONS INC. at the annual meeting of its stockholders to be held at The Univer-
sity of Chicago Graduate School of Business, The Conference Center--Sixth
Floor, 450 North Cityfront Plaza, Chicago, Illinois, on May 21, 1997 at 10:00
A.M. local time, to vote on the proposals set forth on the opposite side of
this card.
Election of Directors, Nominees:
B. Mason, S.T. Vehslage, G.W. Blaine,
L. Cutler,
J. B. Ryan, R. S. Braddock, R. P.
Mayer, M. E. Murphy, A. Wambold.
P R O X Y
(change of address/comments)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(If you have written in the above space, please mark the corresponding box on
the reverse side of this card)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXY COMMITTEE
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
^ FOLD AND DETACH HERE ^
<PAGE>
Please mark your votes as in this example.
2739
----
X
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR
WITHHELD
FOR
AGAINST
ABSTAIN
1. Election of Directors
(see reverse)
2. Proposal to approve the appointment of Arthur Andersen & Co. as auditors for
1997.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(For except as marked to the contrary below.)
- ------------------------------
Change of Address/Comments on Reverse Side
The undersigned hereby acknowledges receipt of the Notice of the 1997 Annual
Meeting of Stockholders and accompanying Proxy Statement.
PLEASE SIGN BELOW EXACTLY AS NAME APPEARS. When shares are held by joint ten-
ants, both should sign. When signing as Guardian, Executor, Administrator, At-
torney, Trustee, etc. please give full title as such. If a corporation, sign in
full corporate name, by President or other authorized officer, giving title, if
a partnership, sign in partnership name by authorized person.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
^ FOLD AND DETACH HERE ^
^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^ ^
^ ^
