<PAGE>
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 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:
-------------------------------------------------------------------------
[_] 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:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
Notice of Annual Meeting of Stockholders
May 17, 2000
TIME 10:00 a.m. central time on Wednesday, May 17, 2000.
PLACE The University of Chicago, Graduate School of
Business Conference Center--Sixth Floor, 450 North
Cityfront Plaza Drive, Chicago, Illinois.
ITEMS OF BUSINESS (1)To elect 11 directors.
(2) To ratify the appointment of Arthur Andersen LLP
as True North's independent accountants.
(3) To consider such other business as may properly
come before the meeting.
RECORD DATE You are entitled to vote if you were a stockholder at
the close of business on Monday, March 20, 2000.
VOTING BY PROXY Please submit a proxy as soon as possible so that
your shares can be voted at the meeting in accordance
with your instructions. For specific instructions,
please refer to the Questions and Answers beginning
on page 1 of this proxy statement and the
instructions on the proxy card.
By order of the Board of Directors,
DALE F. PERONA
Secretary
This proxy statement and accompanying proxy card are being distributed on or
about April 13, 2000.
<PAGE>
2000 ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Questions and Answers About the Proxy Materials and the Annual Meeting..... 1
Why am I receiving these materials?...................................... 1
What is the purpose of the annual meeting?............................... 1
Who is entitled to vote?................................................. 1
What constitutes a quorum?............................................... 1
How do I vote?........................................................... 1
May I change my vote after I return my proxy card?....................... 2
How do I vote my 401(k) plan shares?..................................... 2
What are the Board's recommendations?.................................... 2
What vote is required to approve each item?.............................. 2
Proposals to be Voted Upon................................................. 3
Proposal 1--Election of Directors........................................ 3
Proposal 2--Appointment of Independent Auditors.......................... 5
Other Business........................................................... 5
Board Structure and Compensation........................................... 5
Board and Committee Information.......................................... 5
Board Compensation....................................................... 6
Executive Compensation..................................................... 8
Summary Compensation Table............................................... 8
Stock Options............................................................ 10
Long-Term Incentive Plans--Awards in the Last Fiscal Year................ 11
Compensation Committee Report............................................ 12
Employment Agreements.................................................... 14
Certain Relationships and Related Transactions............................. 17
Agreement with Mr. Mason................................................. 17
Agreement with Mr. Peebler............................................... 17
Agreement with Mr. Seeley................................................ 17
True North Performance Graph............................................... 18
Stock Ownership............................................................ 19
Additional Information..................................................... 20
Submission of Stockholder Proposals...................................... 20
Proxy Solicitation Costs................................................. 20
Section 16(a) Beneficial Ownership Reporting Compliance.................. 20
Appendix A................................................................. A-1
</TABLE>
<PAGE>
TRUE NORTH COMMUNICATIONS INC.
April 13, 2000
----------------
Proxy Statement
----------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 17, 2000
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS
AND THE ANNUAL MEETING
Why am I receiving these materials?
The Board of Directors of True North Communications Inc. is providing these
proxy materials to you and soliciting your proxy in connection with True
North's annual meeting of stockholders to be held on May 17, 2000, beginning
at 10:00 a.m. central time, at the University of Chicago Graduate School of
Business Conference Center--Sixth Floor, 450 North Cityfront Plaza Drive,
Chicago, Illinois, and at any postponements or adjournments thereof. You are
invited to attend the meeting and are requested to vote on the proposals
described in this proxy statement.
What is the purpose of the annual meeting?
At True North's annual meeting, stockholders will act upon the matters
outlined in the accompanying notice of meeting, including the election of
directors and ratification of the appointment of True North's independent
auditors. In addition, True North's management will report on performance
during fiscal 1999 and respond to questions from stockholders.
Who is entitled to vote?
Only stockholders at the close of business on the record date, March 20,
2000, are entitled to receive notice of the annual meeting and to vote the
shares of common stock that they held on that date at the meeting, or any
postponement or adjournment of the meeting. You are a "stockholder of record"
if you hold your stock directly in your own name. You are a "street-name"
stockholder if you hold your stock indirectly in the name of a bank, broker or
other nominee and they will send you voting instructions. Each outstanding
share entitles its holder to cast one vote on each matter to be voted upon. A
list of stockholders of record will be available for examination for any
purpose relevant to the annual meeting at True North's headquarters at 101
East Erie Street, Chicago, Illinois, during regular business hours for the ten
days prior to the annual meeting and at the annual meeting.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of common stock outstanding and entitled to vote on the
record date will constitute a quorum, and will therefore permit the conduct of
business at the meeting. As of the record date 49,120,503 shares of True North
common stock were outstanding. Abstentions count toward the quorum.
How do I vote?
If you hold your stock as a stockholder of record, you can vote in person
at the annual meeting or you can vote by internet, telephone or mail. If you
are a street-name stockholder, you will receive instructions from your bank,
broker or other nominee describing how to vote your stock. The enclosed proxy
card contains instructions for internet, telephone and mail voting. Whichever
method you use, your stock will be voted as you direct.
<PAGE>
May I change my vote after I return my proxy card?
Yes. You may change your proxy instructions at any time prior to the vote
at the annual meeting. If you are a stockholder of record you may accomplish
this by filing with the Secretary of True North either a notice of revocation
or a duly executed proxy bearing a later date. Attendance at the meeting will
not cause your previously granted proxy to be revoked unless you specifically
so request or vote in person at the meeting. For shares held in street-name
you may change or revise your proxy instructions by submitting new voting
instructions to your bank, broker or other nominee.
How do I vote my 401(k) plan shares?
If you participate in the True North Communications Inc. Retirement Plan,
you may vote an amount of shares of common stock equivalent to the interest in
True North's common stock credited to your account under that plan as of the
record date. You may vote by instruction to Fidelity Management Trust Company,
the trustee for the plan, pursuant to an instruction card being mailed with
this proxy statement to plan participants. Fidelity will vote your shares in
accordance with your duly executed instructions if received on or before May
12, 2000. If you do not send instructions to Fidelity, the common stock
equivalents credited to your account will be voted by Fidelity in the same
proportion that Fidelity votes the common stock share equivalents for which it
does receive timely instructions. Fidelity will also vote any common stock
share equivalents that are not specifically allocated to any individual plan
participant (known as the "suspense account") in the same proportion that
Fidelity votes the common stock share equivalents for which it receives timely
instructions.
What are the Board's recommendations?
If you sign and return your proxy card but do not complete it by giving
instructions as to how to vote, proxy holders named on the proxy card will
vote your shares in accordance with the recommendations of the Board of
Directors. The Board's recommendations, along with a description of each item,
are set forth in this proxy statement. In summary, the Board recommends a
vote:
. FOR election of the nominated slate of directors (see page 3); and
. FOR ratification of the appointment of Arthur Andersen LLP as True
North's independent auditors (see page 5).
With respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.
What vote is required to approve each item?
Election of Directors. The affirmative vote of a plurality of the votes
cast at the meeting is required for the election of directors. A properly
executed proxy marked to withhold authority with respect to any nominee will
not affect the vote on the election of that nominee, although it will be
counted for purposes of determining whether there is a quorum. There is no
cumulative voting as to any matter, including the election of directors.
Other Items. The ratification of the appointment of Arthur Andersen LLP
requires the affirmative vote of the holders of a majority of the shares
present either in person or by proxy and entitled to vote on that matter. A
properly executed proxy marked "Abstain" with respect to this matter will not
be voted, although it will be counted for purposes of determining whether
there is a quorum. Accordingly, an abstention will have the effect of a vote
against the proposal.
2
<PAGE>
If you are a street-name stockholder, New York Stock Exchange rules permit
your broker to exercise voting discretion with respect to certain "routine"
matters. Thus, if you do not give your broker specific instructions, your
shares may be voted on "routine" matters but will not be voted on "non-
routine" matters. Broker non-votes will not be counted in determining the
number of shares necessary for approval of any proposal for this meeting.
Shares represented by such "broker non-votes" will, however, be counted in
determining whether there is a quorum. The election of directors and the
appointment of independent auditors are considered "routine" matters under the
relevant New York Stock Exchange rules, so there will not be any broker non-
votes with respect to those matters.
PROPOSALS TO BE VOTED UPON
Proposal 1--Election Of Directors
There are 11 nominees for election to the Board this year. All of the
nominees have served as directors since the last annual meeting, except for
Wenda Harris Millard who will stand for election as a director by the
stockholders for the first time at this year's annual meeting. All directors
are elected annually to serve until the next annual meeting or until their
respective successors are elected. If any nominee is unable to accept
nomination or election, which the Board of Directors has no reason to
anticipate will occur, shares represented by proxies will be voted for the
election of such other person as the Board of Directors may recommend unless
the Board of Directors chooses to reduce the number of directors.
The Board of Directors recommends a vote FOR the election to the Board of
each of the nominees described below.
The following sets forth information as to each nominee for election at the
annual meeting, including age as of March 15, 2000, principal occupation and
employment during at least the past five years, directorships in other
publicly-held companies and period of service as a director of True North:
David A. Bell ............ Mr. Bell was named Chairman and Chief Executive
Director since December 1997 Officer of True North in April 1999. From 1994
Age 56 through March 1999, Mr. Bell served as President
and Chief Executive Officer of Bozell Group, Inc.
(formerly Bozell Worldwide, Inc.), a subsidiary
of True North.
Joseph A. Califano, Jr. .. Mr. Califano has served as Chairman of the Board
Director since in May 1999 and President of The National Center on Addiction
Age 68 and Substance Abuse at Columbia University since
1992. He is also an adjunct professor of public
health at Columbia University's Medical School
and School of Public Health. Mr. Califano is
Founding Chairman of the Board of the Institute
for Social and Economic Policy in the Middle East
at the Kennedy School of Government at Harvard
University and is a member of the Institute of
Medicine of the National Academy of Sciences. Mr.
Califano served as Secretary of the United States
Department of Health, Education and Welfare from
1977 to 1979. He was Special Assistant for
Domestic Affairs to the President of the United
States from 1965 to 1969. Mr. Califano is a
director of Automatic Data Processing, Inc.,
HealthPlan Services Corporation, Kmart
Corporation and The Warnaco Group, Inc.
3
<PAGE>
Donald M. Elliman, Jr..... Mr. Elliman has served as President of Ascent
Director since December 1997 Sports Holdings, a sports and arena management
Age 55 firm, since January 2000. From 1995 to 1999, Mr.
Elliman served as a director and an Executive
Vice President of Time Inc. Mr. Elliman was the
President of Sports Illustrated from September
1992 through January 1998 and held various senior
sales and marketing and publishing positions with
Time Inc. since 1967. Mr. Elliman is a director
of Modem Media . Poppe Tyson, Inc.
H. John Greeniaus......... Mr. Greeniaus has served as President of G-Force
Director since May 1999 LLC, a consulting firm, since January 1998. From
Age 55 1992 through his retirement in December 1997, Mr.
Greeniaus served as Chairman and Chief Executive
Officer of Nabisco, Inc. He also held other
senior executive positions with Nabisco, Inc.
prior to 1992. Mr. Greeniaus is a director of
Primedia Inc. and CCL Industries Inc.
Leo-Arthur Kelmenson...... Mr. Kelmenson has served as Chairman of FCB
Director since December 1997 Worldwide, a subsidiary of True North, since
Age 73 September 1999. Mr. Kelmenson served as Chairman
of Bozell Group, Inc. from 1997 to 1999 and Chief
Executive Officer of Bozell Group, Inc. from
March 1999 to September 1999. Prior to 1997, Mr.
Kelmenson served as Chairman of Bozell, Jacobs,
Kenyon & Eckhardt, Inc. ("BJK&E"). Mr. Kelmenson
is a director of Tower Air, Inc.
Wenda Harris Millard...... Ms. Harris Millard has served as Executive Vice
Slated for election in May President, Marketing and Sales, of DoubleClick,
2000 Inc., an internet advertising firm, since October
Age 45 1997. From July 1996 to October 1997, Ms. Harris
Millard served as Executive Vice President of
Marketing and Programming of DoubleClick, Inc.,
and from August 1994 to July 1996, she served as
President and Group Publisher of SRDS, a
marketing and media information company.
Michael E. Murphy......... Mr. Murphy is currently retired and formerly
Director since May 1997 served as a director and held various senior
Age 63 executive positions with Sara Lee Corporation
from 1979 through October 1997. Mr. Murphy is a
director of GATX Corporation, Payless ShoeSource,
Inc., Bassett Furniture Industries, Incorporated
and American General Corporation.
J. Brendan Ryan........... Mr. Ryan has served as Chief Executive Officer of
Director since August 1994 FCB Worldwide since March 1996. Prior thereto Mr.
Age 57 Ryan held other senior executive positions with
FCB Worldwide.
Donald L. Seeley.......... Mr. Seeley recently retired from full-time
Director since May 1999 employment but remains as a part-time advisor to
Age 56 True North. Mr. Seeley was the Vice Chairman of
True North from May 1999 to March 15, 2000. From
June 1997 to March 15, 2000, Mr. Seeley was
Executive Vice President, Chief Financial Officer
of True North. From 1993 through June 1997, Mr.
Seeley was Chief Executive Officer of The
Alexander Consulting Group. Mr. Seeley is a
director of Modem Media . Poppe Tyson, Inc.
4
<PAGE>
Marilyn R. Seymann........ Dr. Seymann has served as President and Chief
Director since January 1999 Executive Officer and a director of M ONE, Inc., a
Age 57 management and information systems consulting
firm, since 1991. Dr. Seymann is a director of
Beverly Enterprises, NorthWestern Corporation, and
Community First Bankshares, Inc.
Stephen T. Vehslage ...... Mr. Vehslage is a consultant and was a Senior Vice
Director since 1974 President of Corning Franklin Health Inc. from
Age 60 1995 to 1996. Prior thereto he held various senior
executive positions with IBM Corporation.
There are no family relationships between any of the foregoing persons.
Proposal 2--Appointment Of Independent Auditors
The Board of Directors has selected Arthur Andersen LLP as auditors of True
North for fiscal 2000. This firm of independent public accountants has served
True North 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 a vote FOR the appointment of Arthur
Andersen LLP as auditors for 2000.
Other Business
As of the date of this proxy statement, True North has no knowledge of any
other business that will be presented at the annual meeting. If any other
business should properly be brought before the annual meeting or any
postponements or adjournments thereof, the proxy holders will vote as
recommended by the Board of Directors, or, if no recommendation is given, at
their own discretion.
BOARD STRUCTURE AND COMPENSATION
Board and Committee Information
The Board of Directors met eleven times during 1999. The functions and
current members of the Audit, Compensation and Nominating Committees are noted
below. Each incumbent director attended 75% or more of the aggregate of the
number of meetings of the Board of Directors and of any committees on which
such director served that were held during 1999 while such person was a
director or a member of any such committee.
Audit Committee--Messrs. Murphy (Chairman), Greeniaus and Vehslage and Dr.
Seymann are members of True North's Audit Committee. The Audit Committee's
function is to oversee True North's financial reporting and internal financial
controls. The Audit Committee met ten times during fiscal 1999. In
anticipation of the effective date of the new Securities and Exchange
Commission rules regarding the responsibilities of the Audit Committee, the
Board of Directors has adopted a written charter for the Audit Committee,
which is attached as Appendix A hereto. Each of the members of the Audit
Committee, Messrs. Murphy, Greeniaus, Vehslage and Dr. Seymann, are
"independent" as defined by the New York Stock Exchange listing standards.
Compensation Committee--Dr. Seymann (Chairman) and Messrs. Elliman and
Greeniaus are members of True North's Compensation Committee. The Compensation
Committee is responsible for determining the compensation and other material
terms of employment, including the grant of
5
<PAGE>
stock options and other incentive compensation, for directors and executive
officers of True North and reviewing and approving the overall compensation
programs and practices of True North. The Compensation Committee reviews and
recommends to the Board of Directors the approval of changes, other than minor
technical amendments, in existing retirement, stock option and variable
incentive compensation plans affecting directors, executive officers and
employees. The Compensation Committee is also responsible for the
administration of stock options, restricted stock and related equity based
benefit programs, including awards made under these plans. The Compensation
Committee met ten times during fiscal 1999.
Nominating Committee--Messrs. Elliman (Chairman), Bell, Califano, Kelmenson
and Murphy are members of True North's Nominating Committee. The Nominating
Committee is charged with recommending to the Board of Directors nominees for
election as directors. Any stockholder may recommend to the Nominating
Committee director candidates for consideration. True North's bylaws 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
True North at least 60 days but no more than 90 days before the date of the
annual meeting; provided, that in the event that less than 70 days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholders to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure
was made, whichever occurs first. The Nominating Committee met nine times
during fiscal 1999. The notice of nomination is required to contain certain
information about both the nominee and the stockholder making the nomination
as set forth in True North's bylaws.
Board Compensation
Employee directors receive no compensation for their service on the Board
of Directors or committees thereof, except under the True North Directors
Part-Time Employment Agreement program. Under this program, an employee
director between the ages of 55 and 65 may 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 payments are determined as 45% of the
highest five-year average total compensation during the prior 10 years of
full-time employment, reduced by 1/30 for each year of service less than 30
years. This program has been discontinued and Mr. Ryan is the only current
director who remains eligible to participate.
Non-employee directors are paid an annual retainer of $23,000 for their
services. An additional annual retainer of $5,000 is paid to Committee
chairpersons. In addition, a per diem fee of $2,000 is paid for each day
during which Board and/or committee meetings are attended, special assignments
are performed or other management meetings are attended. A per diem fee of
$1,000 is paid to non-employee directors for telephonic meetings. Mr. Elliman
serves as a designee of True North on the Board of Directors of Modem Media .
Poppe Tyson, Inc., and he is also paid these per diem fees for his attendance
at Modem Media . Poppe Tyson, Inc. Board meetings. Aggregate per diem payments
to non-employee directors in fiscal 1999 were $240,000. Non-employee directors
may elect to defer all or a part of their annual retainer and per diem
allowances. At their election, these deferred amounts may effectively be
treated as if they were invested in True North common stock (in which case the
deferred amounts are referred to as phantom stock units). Amounts not treated
as if invested in True North common stock are credited with earnings at an
annual rate of return equal to 1 1/2% above the annual rate of return on five-
year U.S. Treasury Bills. Amounts deferred (including earnings and/or losses
credited on such amounts) are paid to each non-employee director in shares of
common stock or cash (as elected) at the time he or she leaves the Board of
Directors.
6
<PAGE>
Non-employee directors are also eligible for stock options under the
Outside Director Stock Option Plan, which provides for option grants with a
10-year term to non-employee directors in proportion to the total of their
annual retainer and per diem allowances. The basis for granting options is a
formula tied to annual growth in net income. The Outside Director Stock Option
Plan also provides for a one-time grant of options for 4,000 shares upon a
non-employee director's initial election to the Board of Directors. Under the
terms of the Outside Director Stock Option Plan, in January 1999, Dr. Seymann
was granted an option for 4,000 shares at an exercise price of $24.644 per
share, in March 1999, each of Messrs. Elliman, Murphy and Vehslage was granted
an option for 3,300 shares at an exercise price of $23.656 per share, in May
1999, each of Messrs. Califano and Greeniaus was granted an option for 4,000
shares at an exercise price of $24.406 per share, and in March 2000, each of
the outside directors was granted an option at an exercise price of $38.244,
with the share amounts as follows: each of Dr. Seymann and Mr. Elliman 2,300
shares, each of Messrs. Murphy and Vehslage 2,100 shares, Mr. Califano 1,100
shares and Mr. Greeniaus 1,300 shares. Stock options awarded under the Outside
Director Stock Option Plan are immediately exercisable with respect to one-
third of the shares covered thereby, and an additional one-third of such stock
options become exercisable on each of the next two anniversaries of the date
of the grant.
Mr. Vehslage is the only current director who will receive a benefit under
the Outside Director Retirement Plan (which was discontinued in 1998). The
Outside Director Retirement Plan provided a retirement benefit to non-employee
directors after five years of service on the Board of Directors. 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 greater, subject to a maximum of 10 years. The annual benefit
is paid in five annual installments or in a lump sum after retirement from the
Board.
Charles D. Peebler, Jr., a director who is not slated for reelection at
this year's annual meeting, began serving as a consultant to True North on
October 1, 1999, pursuant to his election under his employment agreement with
True North. The terms of this consulting arrangement are described below under
the heading "Certain Relationships and Related Transactions."
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The Summary Compensation Table below shows the compensation for True
North's past three fiscal years for its current Chief Executive Officer, its
former Chief Executive Officer, and its four other most highly compensated
executive officers (the "Named Executives").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------------------------- ------------------------------------------
Awards Payouts
---------- ----------
Other Restricted Securities All Other
Annual Stock Underlying Compen-
Compen- Awards Options/ LTIP sation
Name & Principal Position Year Salary($) Bonus($)(4) sation ($)(5) ($)(6) SARs(#)(7) Payouts($) ($)(8)
- ------------------------- ---- ---------- ----------- ------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David A. Bell........... 1999 $ 788,258 $652,000 $ 23,407 $184,000 40,200 -- $ 11,599
Chairman & Chief 1998 $ 830,575 $599,807 $ 16,302 $192,943 100,000 -- $ 8,143
Executive Officer of 1997 $ 816,575 $854,091 $ 19,838 -- -- -- $ 18,221
True North
Beginning April 1, 1999
Bruce Mason(1).......... 1999 $ 600,000 $750,000 $ 8,599 -- -- -- $156,314
Chief Executive Officer 1998 $ 600,000 $750,000 $ 14,255 -- 30,000 -- $440,012
of True North through 1997 $ 600,000 $675,000 $ 15,163 -- 50,000 -- $413,057
March 31, 1999
Leo-Arthur Kelmenson.... 1999 $ 969,300 $704,055 $ 70,575 $195,500 68,100 -- $ 35,222
Chairman of FCB 1998 $1,024,800 $762,029 $ 92,756 $238,175 100,000 -- $ 36,588
Worldwide LLC 1997 $ 870,630 $980,605 $1,250,156 -- -- -- $ 85,378
Harris Diamond(2)....... 1999 $ 724,250 $345,060 -- $293,940 -- -- $ 21,035
Chairman & Chief 1998 $ 724,250 $799,985 -- $603,037 -- -- $ 9,013
Executive Officer of 1997 $ 719,381 $522,540 -- -- -- -- $ 3,710
BSMG Worldwide, Inc.
J. Brendan Ryan......... 1999 $ 788,258 $346,375 $ 18,321 $ 97,750 50,200 -- $353,732
Chief Executive Officer 1998 $ 755,600 $177,779 $ 8,279 $102,221 130,000 -- $364,413
of FCB Worldwide LLC 1997 $ 600,000 $865,500 $ 18,531 -- 50,000 -- $324,050
Donald L. Seeley(3)..... 1999 $ 452,100 $431,200 $ 10,750 -- 26,600 -- $ 60,609
Vice Chairman and 1998 $ 400,000 $278,055 $ 11,681 $ 89,443 120,000 -- $ 63,852
Chief Financial Officer 1997 $ 196,700 $250,000 $ 5,375 -- 20,000 -- $ 26,552
</TABLE>
- ----------------
(1) Mr. Mason retired from full-time employment as of March 31, 1999. He
continues to serve as a part-time employee pursuant to his Employment
Agreement, the terms of which are described below under the heading
"Certain Relationships and Related Transactions."
(2) Mr. Diamond is one of the original selling shareholders of the business
unit that is now operated under the name BSMG Worldwide, Inc. His
Employment Agreement with BSMG Worldwide was originally entered into in
March 1993, in connection with the sale of this business unit to what is
now a True North subsidiary. That Employment Agreement provides for annual
incentive compensation based on a percentage of BSMG Worldwide operating
profit above a threshold level. While the entire amount of that annual
incentive compensation has been treated as a bonus (subject to the
restricted stock trade-off described in footnotes (4) and (6) below), True
North believes that the circumstances surrounding the acquisition of this
business unit and the negotiation of Mr. Diamond's Employment Agreement
were such that approximately 50% of this annual incentive compensation
effectively represents a deferred payment of purchase price. For
consistency of presentation, the amounts included in the bonus and
restricted stock columns for Mr. Diamond represent 50% of the total annual
incentive compensation amounts for these years. For 1998 and 1999, the
restricted stock column includes the entire amount provided in the form of
unvested restricted stock, while the bonus column includes the entire
amount provided in the form of immediately vested restricted stock and the
remaining amount paid in cash to get to the 50% level.
8
<PAGE>
(3) Mr. Seeley retired from full-time employment as Vice Chairman and Chief
Financial Officer as of March 15, 2000. He continues to serve as a part-
time employee pursuant to a Letter Agreement, the terms of which are
described below under the heading "Certain Relationships and Related
Transactions."
(4) Pursuant to the executive bonus program, Messrs. Bell, Diamond, Kelmenson
and Ryan received a portion of their 1999 bonuses in the form of restricted
stock (as explained in footnote (6) below), one-third of which is vested
immediately, and the remainder of which vests over the next two years. The
value of the one-third portion that is vested is included in this bonus
column. The value of the remaining restricted stock portion is reflected in
the Restricted Stock Awards column. The 1999 bonus for Mr. Kelmenson
includes a residual bonus of $11,305.
(5) For Messrs. Mason, Bell, Ryan and Seeley, amounts shown in this column
include various fringe benefits, including automobile allowances, club
dues and financial planning. For Mr. Kelmenson, the amount shown in this
column includes an auto allowance, payment of medical insurance premiums,
and $57,270 paid to his chauffeur.
(6) Amounts included in this column represent the portion of the executive's
1999 bonus that was paid in the form of restricted stock pursuant to the
executive bonus program. Under this program, 30% of the executive's 1999
bonus is paid in the form of restricted stock, and this 30% portion is
increased by 15% to account for the restricted stock vesting requirements.
The restricted shares were granted in March 2000, concurrent with the
approval of 1999 cash bonuses. The number of shares of restricted stock
was determined based on the average of the market closing prices for the
10 days prior to the date the awards were approved ($39.3813 per share).
One-third of these restricted shares were vested as of the March 16, 2000,
grant date. The remaining two-thirds of the restricted shares vest over
the next two years. Amounts included in this column represent the dollar
value of the unvested restricted shares. The value of the immediately
vested restricted shares is included in the bonus column. The total number
of unvested restricted shares awarded (before any tax withholding) are as
follows: Mr. Bell 4,672 shares, Mr. Diamond 7,464 shares, Mr. Kelmenson
4,964 shares, and Mr. Ryan 2,482 shares. Dividends are paid on the
restricted shares in the same amount and at the same time as dividends
paid to all other owners of True North common stock. The aggregate
unvested restricted stock holdings of each of the Named Executives as of
December 31, 1999, is as follows (these amounts do not include restricted
stock granted in March 2000 as part of 1999 bonuses):
<TABLE>
<CAPTION>
Mr. Bell Mr. Mason Mr. Diamond Mr. Kelmenson Mr. Ryan Mr. Seeley
-------- --------- ----------- ------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Number of Shares........ 8,112 -- 25,354 10,014 4,298 3,760
Market Value............ $362,505 -- $1,133,007 $447,500 $192,067 $168,025
</TABLE>
(7) The amounts included in this column include stock options granted in 1999
under the True North Stock Option Plan (based on 1998 performance). See
below under the heading Stock Options for a further description of these
stock option grants.
(8) Amounts shown in this column are for contributions and accruals under
compensation and benefit programs for the Named Executives. The amounts
are as follows:
The Company profit sharing contribution for 1999 to the True North
Retirement Plan was $7,409 for each of Messrs. Mason, Ryan and $8,479 for
Mr. Seeley.
The Company profit sharing contribution for 1999 to the True North
Profit Sharing and Savings Plan for BJK&E was $4,910 for each of Messrs.
Bell, Diamond and Kelmenson.
The Company matching contribution for 1999 to the True North Retirement
Plan was $3,333 for each of Messrs. Mason, Ryan and Seeley.
The Company matching contribution for 1999 to the True North Profit
Sharing and Savings Plan for BJK&E was $3,200 for each of Messrs. Bell,
Diamond and Kelmenson.
9
<PAGE>
The Company matching contribution for 1999 to the True North Executive
Deferred Compensation Plan was $1,038 for Mr. Bell, $71,269 for Mr. Mason,
$12,070 for Mr. Diamond, $15,370 for Mr. Kelmenson, $33,774 for Mr. Ryan
and $26,485 for Mr. Seeley.
The Company profit-sharing contribution for 1999 to the True North
Executive Deferred Compensation Plan was $60,426 for Mr. Mason, $49,994 for
Mr. Ryan and $26,485 for Mr. Seeley.
The amount accrued for 1999 under the True North Directors Part-Time
Employment Agreement was $252,793 for Mr. Ryan.
The Company-paid amount for life insurance for 1999 was $2,451 for Mr.
Bell, $13,877 for Mr. Mason, $855 for Mr. Diamond, $15,627 for Mr.
Kelmenson, $6,429 for Mr. Ryan and $1,552 for Mr. Seeley.
Stock Options
During 1999, stock option grants covering 1,752,350 shares were awarded to
430 key employees under True North's Stock Option Plan. Each grant was made at
the fair market value on the date of the award. These options vest over three
years and expire in ten years. The option grants in 1999 for the Named
Executives are shown in the following table:
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------
Number of Percent of Potential Realizable
Securities Total Options Value at Assumed
Underlying Granted to Annual Rates of Stock
Options Employees in Exercise Price Appreciation
Granted Fiscal Year Price Expiration for Option Term
Name (#)(1) (%)(2) ($/Sh) Date 5%($) 10%($)
- ---- ---------- ------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
David A. Bell........... 40,200 2.29% $24.00 3/2/09 $ 606,758 $1,537,643
Bruce Mason............. -- -- -- -- -- --
Harris Diamond.......... -- -- -- -- -- --
Leo-Arthur Kelmenson.... 68,100 3.89% $24.00 3/2/09 $1,027,865 $2,604,813
J. Brendan Ryan......... 50,200 2.86% $24.00 3/2/09 $ 757,692 $1,920,141
Donald L. Seeley........ 26,600 1.52% $24.00 3/2/09 $ 401,487 $1,017,445
</TABLE>
- ----------------
(1) Options were granted at market price on the date of grant. Subject in
certain cases to accelerated vesting upon certain termination of
employment events, as set forth in the employment agreements described
below under the heading "Employment Agreements," all of the above options
are exercisable at a rate of 33 1/3% per year beginning on the first
anniversary of the date of grant.
(2) The percentages shown in this table are based on total options granted by
True North in 1999 on 1,752,350 shares of True North common stock.
10
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The number of options exercised during 1999, the number of options held and
their value at year end for the Named Executives are shown in the following
table:
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised In-
Acquired Underlying Unexercised the-Money Options at FY-
on Value Options at FY-End (#)(1) End ($)(2)
Exercise Realized ------------------------- -------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David A. Bell........... -- -- 202,000 40,200 $ 5,935,626 $ 831,638
Bruce Mason............. 329,700 $7,501,125 30,000 -- $ 528,570 $ 0
Harris Diamond.......... -- -- -- -- $ 0 $ 0
Leo-Arthur Kelmenson.... -- -- 355,000 68,100 $11,870,318 $1,408,819
J. Brendan Ryan......... -- -- 229,980 118,620 $ 5,202,838 $2,568,604
Donald L. Seeley........ -- -- 112,000 54,600 $ 2,023,500 $1,118,038
</TABLE>
- ----------------
(1) Certain of the unexercised options outstanding for Messrs. Bell (102,000
shares) and Kelmenson (255,000 shares) were granted under the Bozell,
Jacobs, Kenyon & Eckhardt, Inc. ("BJK&E") Stock Option Plan prior to the
December 1997 acquisition of BJK&E by True North. For consistency of
presentation, the shares underlying these options have been adjusted to
reflect the number of shares of True North common stock into which each
outstanding share of BJK&E common stock was converted (at an exchange
ratio of 0.51 share of True North common stock for each share of BJK&E
common stock).
(2) The values shown in the table are based on the $44.6875 per share closing
price of True North common stock on December 31, 1999, less the exercise
price of the options.
Long-Term Incentive Plans-Awards in Last Fiscal Year
<TABLE>
<CAPTION>
Earnings Performance Plan Awards in 1999
Performance
or Other Estimated Future Payouts Under
Number of Period Non-Stock-Price-Based Plans
Shares, Units until ----------------------------------
or Other Maturation Target
Name Rights (#) or Payment Threshold ($) ($) Maximum ($)
- ---- ------------- ----------- ------------- -------- -----------
<S> <C> <C> <C> <C> <C>
David A. Bell........... 2,083.5 1999-2001 $83,340 $208,350 $416,700
Bruce Mason............. -- -- -- -- --
Harris Diamond.......... -- -- -- -- --
Leo-Arthur Kelmenson.... -- -- -- -- --
J. Brendan Ryan......... 1,889 1999-2001 $75,560 $188,900 $377,800
Donald L. Seeley (1).... 2,000 1999-2001 $80,000 $200,000 $400,000
</TABLE>
- ----------------
(1) This award has been forfeited upon Mr. Seeley's retirement from full-time
employment in March 2000.
The above table shows earnings performance units ("EPUs") granted in 1999
for the 1999-2001 performance period under the Earnings Performance Plan,
which was approved by stockholders in 1998. EPUs are long-term cash
incentives, which are granted to selected senior executives at the discretion
of the Compensation Committee of the Board of Directors. Payments earned at
the end of the three-year performance period will be based on the increase in
True North earnings per share over this three-year period as compared to pre-
established targets, as shown in the above table. EPUs originally granted for
the 1998-2000 performance period were two times the normal award because no
grants were expected for the 1999-2001 performance period. Instead, awards for
the 1998-2000 performance period were cut in half and awards were made for the
1999-2001 performance period. As explained below in the Compensation Committee
Report, no future awards are expected to be made under the Earnings
Performance Plan.
11
<PAGE>
Compensation Committee Report
General. The Compensation Committee has sole authority for determining the
compensation of the directors and executive officers of True North. Stock
option, stock appreciation rights, and restricted stock grants for all
employees of True North must also be approved by the Compensation Committee,
and the Compensation Committee reviews and recommends changes to the overall
compensation programs and practices affecting all employees of True North.
The Compensation Committee is comprised of members of the Board of
Directors who qualify as "non-employee directors" for purposes of relevant
federal securities regulations and as "outside directors" for purposes of
federal tax regulations.
In addition to decisions regarding specific executive compensation matters,
other actions and activities of the Compensation Committee during the year
included:
. Overseeing a comprehensive review of the overall incentive
compensation program for executives using both internal staff and
external compensation consultants.
. Approval of stock option grants to 430 key employees totaling
1,752,350 shares during 1999.
. Approval of restricted stock grants to 79 key employees totaling
241,065 shares during 1999 (virtually all of these restricted shares
were awarded as a portion of 1998 bonuses, as described below).
True North Executive Compensation Program. In making compensation decisions
in 1999 for executives, the Compensation Committee was guided by the detailed
pay-for-performance principles contained in the True North Executive
Compensation Program, and by the terms of any applicable employment
agreements. The material terms of the employment agreements in place for each
of the Named Executives (other than Mr. Seeley) are described below under the
heading "Employment Agreements." The Part-Time Employment Agreement in place
for Mr. Seeley is described below under the heading "Certain Relationships and
Related Transactions."
The Executive Compensation Program is the name for the incentive
compensation program that was developed and implemented in 1998 utilizing both
internal management and outside consultants. The objective of the Executive
Compensation Program is to provide a comprehensive plan covering executives of
True North and its subsidiaries that is competitive with industry standards
and provides incentives to senior executives to improve the overall value of
True North for its stockholders. The focus of this Program is on total
compensation, the components of which are described below.
Base Salary. For executives, base salary has been targeted to be at the
50th percentile of the market for comparable positions at competitive
multinational advertising agencies. The majority of the agencies reported
in the peer group for the True North performance graph illustrated below
have been included in this group of competitive agencies for purposes of
comparison.
Annual Incentive Compensation. The potential amount of annual incentive
compensation is determined by improvement in True North net income versus
the prior year on an accelerated, sliding scale basis. Actual individual
awards of annual incentive compensation are then typically determined by
the level of operating income and/or earnings per share growth and
achievement of the measurable objectives for which the individual is
responsible. For 1998 and 1999, a portion of executives' bonuses were
awarded in the form of restricted stock. The portion awarded in restricted
stock was increased by a factor of 15% to account for the applicable
vesting restrictions.
12
<PAGE>
Long-Term Incentives. Long-term incentives are designed to focus senior
executives on sustained performance over an extended time horizon. These
incentives include primarily stock options, but also include earnings
performance units for 1999 for certain individuals. Stock options reward
executives for an increasing stock price. Annual grants are determined in
part by the amount of improvement in True North net income versus the prior
year. The Compensation Committee also may recognize the achievement of
significant goals in determining individual awards. The Compensation
Committee took into account these criteria and attainment of individual
objectives in awarding the stock option grants reported for 1999. These
annual stock option grants are made at the current fair market value, vest
over three years and are exercisable over ten years.
Earnings performance units are awarded under the True North Earnings
Performance Plan, which was approved by stockholders in 1998. The Earnings
Performance Plan applies only to the most senior executives, and it is
designed to provide incentives to these senior executives to enhance the
long-term earnings and stock growth of True North. Earnings performance
units are granted for three-year performance cycles. The Compensation
Committee does not intend to grant earnings performance units in future
years.
Chief Executive Officer 1999 Compensation.
David Bell. David Bell was appointed as Chief Executive Officer of True
North on April 1, 1999. He has served as a Director of the company since
December 1997. From 1994 through March 1999, Mr. Bell served as President and
Chief Executive Officer of Bozell Group, Inc. (formerly Bozell Worldwide,
Inc.), a subsidiary of True North.
Mr. Bell's annual base salary was established on April 1, 1999, at
$833,400. On June 16, 1999, Mr. Bell, along with the other senior executives
of the Company, voluntarily accepted a 10% salary reduction. This salary
reduction was restored on January 1, 2000. The Compensation Committee approved
an increase to Mr. Bell's base salary on January 1, 2000, to $900,000.
Compensation for 1999 for Mr. Bell was based on the principles of the True
North Executive Compensation Program in conjunction with the terms of his
employment agreement.
Mr. Bell's annual incentive compensation for 1999 included a cash bonus of
$560,000, immediately vested restricted stock valued at $92,000 and unvested
restricted stock valued at
$184,000. Mr. Bell's 1999 compensation also included a stock option grant of
40,200 shares (based on 1998 performance) and a grant of 2,083.5 earnings
performance units. The Compensation Committee believes that Mr. Bell's total
compensation represents a fair compensation structure for his services as
Chief Executive Officer of the Company.
Bruce Mason. Bruce Mason was the Chief Executive Officer of True North from
May 1991 through March 1999. He also served as the Chairman of the Board from
May 1991 through December 1997. Mr. Mason serves as a part-time employee
beginning in April 1999 pursuant to the terms of his employment agreement.
Compensation for 1999 for Mr. Mason was based upon the principles of the True
North Executive Compensation Program in conjunction with the terms of his
employment agreement.
Mr. Mason's base salary for 1999 was $600,000, and his annual incentive
compensation for 1999 was $750,000, which equals the base salary and variable
incentive compensation payable in accordance with the terms of his employment
agreement.
Internal Revenue Code Deduction Limit. Section 162(m) of the Internal
Revenue Code generally disallows a tax deduction to public corporations for
compensation over $1,000,000 paid for any fiscal year to any of the Named
Executives. However, this limit does not apply to
13
<PAGE>
performance-based compensation if certain requirements, including stockholder
approval, are met. This limit also does not apply to compensation payable
under a written binding contract in place prior to the time a company becomes
publicly held. The Compensation Committee currently intends to structure stock
options, annual and long-term incentives and any other performance-based
compensation awarded to executive officers who may be subject to Section
162(m) in a manner that satisfies those requirements. The Compensation
Committee continues to consider ways to preserve the deductibility of
executive compensation, while complying with contractual obligations and
retaining the discretion it deems necessary to compensate executive officers
in a manner commensurate with performance and the competitive environment for
executive talent.
The Compensation Committee will continue to monitor and review all aspects
of the True North Executive Compensation Program.
Marilyn R. Seymann, Chairman
Donald M. Elliman, Jr.
H. John Greeniaus
Members of the Compensation
Committee
Employment Agreements
Bell Employment Agreement. Pursuant to an employment agreement entered into
as of January 1, 2000, Mr. Bell is employed for a term expiring on December
31, 2002. Mr. Bell's Employment Agreement provides for an initial base salary
of $900,000 per year and incentive compensation in accordance with True
North's Executive Compensation Program. Mr. Bell is also eligible to receive
stock options and to participate in certain fringe benefits and in True
North's employee benefit plans generally available to senior executives.
Mr. Bell's Employment Agreement provides that he will become a consultant
to True North for the five-year period immediately following the expiration of
the term of his employment, as extended, if applicable. During this consulting
period, Mr. Bell will receive annual compensation equal to 75% of the average
of his annual base salary over the last three full calendar years of his
employment. This consulting arrangement will also apply if Mr. Bell resigns
prior to the scheduled expiration of the term of his employment, subject to a
reduction in the annual compensation based on certain vesting requirements.
Mr. Bell's Employment Agreement provides that, in the event of termination
of employment by True North or by Mr. Bell after the occurrence of one or more
specified events (none of which have occurred to date) (a "Qualifying
Termination"), Mr. Bell would be entitled to receive his base salary,
incentive compensation and certain continuing benefits for three years and the
annual consulting compensation described above for the following two years.
Mr. Bell's Employment Agreement provides that, upon a Qualifying
Termination, each stock option granted after January 1, 2000 and then held by
Mr. Bell shall be fully vested and exercisable in full for up to three years
(but not beyond ten years after the date of grant of such option). Mr. Bell's
Employment Agreement also contains a provision prohibiting him from engaging
in certain competitive activities with True North during his employment and
during any severance and/or consulting period.
Mason Employment Agreement. See below under "Certain Relationships and
Related Transactions" for a description of Mr. Mason's Employment Agreement.
14
<PAGE>
Diamond Employment Agreement. Pursuant to an Employment Agreement entered
into as of March 1, 1993, as amended, Mr. Diamond is employed for a term
expiring on June 30, 2005. Mr. Diamond's Employment Agreement provides for a
base salary of $724,250 per year and, through June 30, 2002, an annual bonus
equal to a percentage of BSMG Worldwide operating profit above a threshold
level. Beginning July 1, 2002, Mr. Diamond shall be entitled to incentive
compensation in accordance with True North's Executive Compensation Program.
Mr. Diamond is also eligible to receive stock options and to participate in
fringe benefits and employee benefit plans generally available to senior
executives.
Mr. Diamond's Employment Agreement provides that in the event of
termination of employment by the company or by Mr. Diamond after the
occurrence of one or more specified events (none of which have occurred to
date) (a "Qualifying Termination"), Mr. Diamond would be entitled to receive
his base salary, continuing bonuses, and certain employee benefits for the
remaining term of the Employment Agreement, subject to a minimum of 18 months
and a maximum of 30 months.
Mr. Diamond's Employment Agreement provides that, upon a Qualifying
Termination, each stock option granted after January 1, 2000, and then held by
Mr. Diamond shall be fully vested and exercisable in full for up to three
years (but not beyond ten years after the date of grant of such option). Mr.
Diamond's Employment Agreement also contains a provision prohibiting him from
engaging in certain competitive activities with True North during his
employment and for one year thereafter.
Kelmenson Employment Agreement. Pursuant to an Employment Agreement dated
as of August 1, 1999, Mr. Kelmenson is employed for a term expiring on March
31, 2004. Mr. Kelmenson's Employment Agreement provides for an initial base
salary of $1,024,800 per year and incentive compensation in accordance with
True North's Executive Compensation Program. Mr. Kelmenson is also eligible to
receive stock options and certain specified fringe benefits and to participate
in True North's employee benefit plans generally available to senior
executives.
Mr. Kelmenson's Employment Agreement provides that he will be a consultant
to True North for a term commencing on April 1, 2004, and ending on March 31,
2008. During the term of this consulting arrangement, Mr. Kelmenson will be
entitled to receive annual compensation of $950,000 and continued
exercisability of stock options. Mr. Kelmenson's Employment Agreement also
provides for the application or continuation of such consulting fees in the
event of Mr. Kelmenson's death or disability, and it provides for the
application of this consulting arrangement upon a Qualifying Termination (as
defined below).
Mr. Kelmenson's Employment Agreement provides that, in the event of
termination of employment by True North or by Mr. Kelmenson after the
occurrence of one or more specified events (none of which have occurred to
date) (a "Qualifying Termination"), Mr. Kelmenson would be entitled to receive
his base salary through the end of the term (maximum of 30 months), payable in
one lump sum.
Mr. Kelmenson's Employment Agreement provides that, upon a Qualifying
Termination, each stock option granted after August 1, 1999, and then held by
Mr. Kelmenson shall be fully vested. Mr. Kelmenson's Employment Agreement also
contains a provision prohibiting him from engaging in certain competitive
activities with True North during his employment term and the term of his
consulting arrangement.
Ryan Employment Agreement. Pursuant to an employment agreement dated as of
December 31, 1996, as amended, Mr. Ryan is employed for a term ending on
December 31, 2001. Mr. Ryan's Employment Agreement provides for an initial
base salary of $600,000 per year (subject to periodic
15
<PAGE>
reviews and a minimum guaranteed increase of 10% during each 24-month period)
and incentive compensation in accordance with True North's Executive
Compensation Program; provided that the aggregate amount of Mr. Ryan's base
salary and incentive compensation for each calendar year shall not be less
than $1,000,000. Mr. Ryan's base salary for 1999 was $788,258. Mr. Ryan is
also eligible to receive stock options and to participate in certain fringe
benefits and in True North's employee benefit plans generally available to
senior executives.
If Mr. Ryan terminates his employment with True North due to the occurrence
of one or more specified events following a change in control (a "Qualifying
Termination," as defined in True North's Asset Protection Plan and Mr. Ryan's
Employment Agreement), Mr. Ryan would be entitled to receive a bonus for the
year of termination equal to the highest annual bonus paid to Mr. Ryan for the
three fiscal years prior to the fiscal year in which the change in control
occurred (pro-rated through the date of termination), any compensation
previously deferred by Mr. Ryan, plus a lump-sum cash amount equal to three
times Mr. Ryan's annual salary plus the highest annual bonus awarded to Mr.
Ryan over the prior three fiscal years.
Mr. Ryan's Employment Agreement also provides that, in the event of early
termination of employment by True North or by Mr. Ryan after the occurrence of
one or more specified events (including any material change in the corporate
organization or structure of business of True North) (also a "Qualifying
Termination"), Mr. Ryan would be entitled to receive his base salary and
incentive compensation (subject to a minimum of $1,000,000 per year) through
December 31, 2001 or for 12 months if longer (the "Severance Period"). In
connection with True North's December 1997 acquisition of BJK&E, True North
and Mr. Ryan agreed that if any of the individuals specified in the provisions
of the applicable merger agreement describing the board governance and
management structure no longer hold the positions specified, such events would
constitute a basis for a Qualifying Termination. Certain of the individuals
specified in the provisions of the merger agreement describing board
governance and management structure no longer hold the positions specified.
Mr. Ryan's Employment Agreement also provides that, upon a Qualifying
Termination, each stock option then held by Mr. Ryan shall be fully vested and
exercisable in full for up to three years (but not beyond ten years after the
date of grant of such option) and that Mr. Ryan shall be entitled to receive
all vested and unvested amounts in his deferred variable incentive
compensation account. During the Severance Period, Mr. Ryan shall be entitled
to participate in True North's benefit plans, and, upon expiration of the
Severance Period, Mr. Ryan would be entitled to compensation and benefits
payable under the Directors Part-Time Employment Agreement with the benefit
calculated at 45% of final average annual compensation and assuming 30 years
of credited service. Such Directors Part-Time Employment Agreement benefits
will also become payable to Mr. Ryan upon other termination of employment
events (other than termination for cause). This Employment Agreement also
contains a provision prohibiting Mr. Ryan from competing with True North or
soliciting its clients or employees during his employment and during any
Severance Period.
Seeley Part-Time Employment Agreement. In connection with Mr. Seeley's
retirement from full-time employment in March 2000, Mr. Seeley's Employment
Agreement with True North was superseded by a Part-Time Employment Agreement,
which is described below under the heading "Certain Relationships and Related
Transactions."
16
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mason Employment Agreement. Mr. Mason entered into an Employment Agreement
with True North effective as of December 1, 1997, as amended. The full-time
employment period under Mr. Mason's Employment Agreement expired effective
March 31, 1999. As a result of such expiration, Mr. Mason's stock options
became fully exercisable until the end of their full term, and he is employed
on a part-time basis through September 30, 2001, and receives annual cash
compensation of $1,350,000 and a continuation of benefits. After September 30,
2001, Mr. Mason will participate in True North's Directors Part-Time
Employment Agreement program.
Mr. Mason's Employment Agreement provides that he will not compete with
True North or solicit its employees or clients for five years after the end of
his full-time employment, except that Mr. Mason may compete with True North by
giving True North 60 days' notice prior to commencing competitive activity and
by releasing True North from all further obligations under his Employment
Agreement other than pursuant to retirement plans.
Peebler Consulting Agreement. Charles D. Peebler, Jr., the former Chairman
Emeritus who is not slated for reelection to the Board of Directors at this
year's annual meeting, entered into an Employment Agreement with True North
effective as of December 30, 1997, for a term that was to expire on December
30, 2001.
Effective October 1, 1999, Mr. Peebler exercised his right under his
Employment Agreement to terminate his employment and become a consultant to
True North for a five-year period ending on September 30, 2004. During this
consulting period, Mr. Peebler will receive annual compensation at the rate of
$1,350,000 and certain fringe benefits and employee benefits through July 31,
2002. From August 1, 2002, through September 30, 2004, Mr. Peebler will
receive annual compensation at the rate of $810,000. In addition, all stock
options granted to Mr. Peebler by True North have become fully vested until
the end of their full term (except for 1998 performance vesting stock options,
which have been cancelled). Mr. Peebler will also continue to receive
$2,000,000 of split-dollar life insurance coverage for the five-year
consulting period, and Mr. Peebler and his wife are entitled to continuation
of their medical benefits until their respective deaths.
Mr. Peebler's Employment Agreement also provides that he shall not compete
with True North or solicit its employees or clients during the term of his
employment and for the term of his consultancy, except that Mr. Peebler may
compete with True North by giving True North 60 days' notice prior to
commencing such competitive activity and by releasing True North from all
further obligations under his Employment Agreement.
Seeley Part-Time Employment Agreement. Mr. Seeley retired from full-time
employment as of March 2000, but remains a member of the Board of Directors
and serves as a part-time employee of True North pursuant to a Part-Time
Employment Agreement. Under that Agreement, which was entered into as of March
16, 2000, Mr. Seeley is required to provide services for at least five days
per calendar quarter and to attend all Board and applicable committee
meetings. So long as Mr. Seeley continues to perform those services, he shall
be paid compensation at the rate of $120,000 per year, plus additional
quarterly bonuses to recognize days worked in excess of 20 days per year and
attendance of special Board and Committee meetings. Mr. Seeley shall also be
entitled to reimbursement of business expenses. Pursuant to Mr. Seeley's
original Employment Agreement and this Part-Time Employment Agreement, he is
prohibited from engaging in certain competitive activities with True North
during this part-time employment period.
17
<PAGE>
TRUE NORTH PERFORMANCE GRAPH
The following line graph provides a five-year comparison of cumulative
total shareholder returns for True North, the S&P 500 Composite Index and an
industry peer group comprised of: True North, The Interpublic Group of
Companies, Inc., Omnicom Group Inc., Grey Advertising Inc., Cordiant
Communications Group (ADR), Saatchi & Saatchi plc (ADR) and WPP Group plc
(ADR).
The performance graph assumes the investment of $100 on December 31, 1994
in True North common stock, the S&P 500 and the industry peer group and that
all dividends are reinvested.
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
True North.............................. 100 88.80 107.76 125.15 138.91 235.14
S&P 500................................. 100 137.55 169.11 225.52 289.96 350.96
Advertising Index....................... 100 134.43 173.24 277.27 397.75 716.15
</TABLE>
18
<PAGE>
STOCK OWNERSHIP
The following table shows the number of shares of True North common stock
and Phantom Stock Units (which represent deferred directors' fees invested in
True North common stock) known by True North to be beneficially owned as of
March 20, 2000 by each person who was a director of True North as of December
31, 1999, each director slated for election at this year's annual meeting, the
Named Executives, the directors and executive officers as a group and all
beneficial owners of more than 5% of True North common stock.
<TABLE>
<CAPTION>
Number of Percent Number of
Shares of of Phantom
Common Stock Class Stock
Name (#)(1) (%)(2) Units (3)
- ---- ------------ ------- ---------
<S> <C> <C> <C>
David A. Bell................................... 790,254 1.60% --
Joseph A. Califano, Jr.......................... 4,033 * --
Harris Diamond.................................. 208,716 * --
Donald M. Elliman, Jr........................... 12,067 * 4,367
H. John Greeniaus............................... 25,100 * --
Leo-Arthur Kelmenson............................ 907,755 1.83% --
Bruce Mason (4)................................. 135,719 * --
Wenda Harris Millard............................ -- * --
Michael E. Murphy............................... 12,200 * 3,280
Charles D. Peebler.............................. 395,555 * --
J. Brendan Ryan................................. 292,096 * --
Donald L. Seeley................................ 183,409 * --
Marilyn Seymann................................. 5,433 * 754
Stephen T. Vehslage............................. 54,900 * 2,050
All directors and executive officers as a group
(24 persons)................................... 4,116,090 8.10% 10,451
Northwestern Mutual Life Insurance Company (5).. 2,822,199 5.75% --
750 East Wisconsin Ave.
Milwaukee, WI 53202
Publicis S.A. (6)............................... 4,658,000 9.48% --
133 Champs Elysees
75008 Paris, France
</TABLE>
- ----------------
* less than 1%
(1) To the knowledge of True North, each holder has sole voting and investment
power with respect to the shares listed unless otherwise indicated. The
number of shares includes shares of common stock owned through the True
North Retirement Plan as of December 31, 1999. The number of shares has
been rounded to the nearest whole share. The number of shares includes
shares of common stock subject to options exercisable within 60 days of
March 20, 1999 as follows: Mr. Bell 215,400 shares, Mr. Califano 3,033
shares, Mr. Elliman 6,967 shares, Mr. Greeniaus 3,100 shares, Mr.
Kelmenson 377,700 shares, Mr. Mason 30,000 shares, Mr. Murphy 8,700
shares, Mr. Peebler 64,800 shares, Mr. Ryan 272,673 shares, Mr. Seeley
174,867 shares, Dr. Seymann 3,433 shares, Mr. Vehslage 52,100 shares and
all directors and executive officers as a group 1,686,502 shares. The
number of shares also includes unvested restricted stock granted in 1999
and 2000 (net of any shares withheld for taxes).
(2) Shares subject to options exercisable within 60 days of March 20, 1999,
are considered outstanding for the purpose of determining the percent of
the class held by the holder of such option, but not for the purpose of
computing the percentage held by others.
(3) Represents outside directors' deferred stock account values as of February
28, 2000.
(4) Mr. Mason's shares do not include 40 shares owned by his daughters.
(5) Based upon information furnished by Northwestern Mutual Life Insurance
Company in a Schedule 13G filed February 12, 1998.
(6) Based upon information furnished by Publicis S.A. in Amendment No. 15 to
its Schedule 13D filed February 18, 1999.
19
<PAGE>
ADDITIONAL INFORMATION
Submission Of Stockholder Proposals
True North's bylaws provide, in general, that to be considered for
presentation at the 2001 annual meeting of stockholders, although not included
in the proxy statement, proposals of stockholders must be received in writing
by True North at least 60 days but no more than 90 days before the date of the
annual meeting; provided that, in the event that less than 70 days' notice or
prior public disclosure of the date of the meeting is given or made to the
stockholders, notice by the stockholder to be timely must be received no later
than the close of business on the tenth day following the day on which notice
of the date of the annual meeting was mailed or such public disclosure of the
date of the annual meeting was made, whichever is earlier. Notice of
stockholder proposals should be sent to the Secretary, True North
Communications Inc., 101 East Erie Street, Chicago, Illinois 60611. Proposals
of stockholders intended for presentation and for inclusion in the proxy
statement for the 2001 annual meeting must be received by True North at the
address listed above not later than December 15, 2000.
Proxy Solicitation Costs
This solicitation of proxies is being made on behalf of the Board of
Directors. Such solicitation of proxies normally will be made by mail.
Employees of True North may also solicit proxies by telephone or personal
contact, but at no additional compensation. Bankers, brokers and others
holding common stock 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. True North has retained D.F.
King & Company, Inc. to aid in the solicitation of proxies from its
stockholders. The fees of such firm are estimated to be $5,000, plus
reimbursement of out-of-pocket expenses. The total cost of solicitation of
proxies will be borne by True North.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder require that directors, officers
and beneficial owners of more than 10% of the common stock file certain
reports regarding their beneficial ownership of common stock with the
Securities and Exchange Commission. All such required reports were timely
filed during and for 1999, except that Mr. Murphy's Form 4 for the purchase of
shares in March 1999, was filed on his behalf approximately one month late,
Mr. Califano's Form 3 was filed four days late and Mr. Zammit's and Mr.
Cougias's Forms 5 for 1999 were both filed two days late.
By order of the Board of Directors,
[PERONA SIGNATURE--FOO512CHI]
DALE F. PERONA
Secretary
Dated: April 13, 2000
A copy of True North's Annual Report on Form 10-K for fiscal 1999 as filed
with the Securities and Exchange Commission (without exhibits) will be
furnished without charge upon the written request of any stockholder entitled
to vote at the meeting directed to the attention of Dale F. Perona, Secretary,
at True North's principal executive offices at 101 East Erie Street, Chicago,
Illinois 60611-2897.
20
<PAGE>
APPENDIX A
TRUE NORTH COMMUNICATIONS INC.
AUDIT COMMITTEE CHARTER
Committee Responsibilities
The Audit Committee of True North Communications Inc.'s Board of Director's
is responsible for oversight of the company's financial reporting and internal
controls. Specific responsibilities include:
. Selecting, evaluating, and replacing the independent public auditors
that perform the audit of the annual financial statements included
within the Company's Annual Report to Shareholders.
. Ensuring receipt from the independent auditors of a written statement
regarding relationships and services, which may affect objectivity
and independence. Discuss any relevant matters with the independent
auditors and recommend that the full board take appropriate action to
address the auditor's independence issues, which may come to the
Committee's attention.
. Reviewing the audit plans and audit scopes of the internal audit
staff and the Company's independent auditors.
. Reviewing and advising management and the Board on the adequacy of
the Company's internal controls and financial reporting based upon
the reports of management, the Company's internal audit staff, and
its independent public accountants.
--The Committee or its Chairman will review interim results with a
company financial officer and the independent auditors prior to the
public announcement of financial results and the filing of SEC Form
10Q.
. Providing in the annual proxy statement a report of the Committee's
findings as a result of its oversight responsibilities.
Committee Membership
The membership of the Committee will be:
. appointed by the Board of Directors.
. comprised of independent directors as defined by the applicable
regulatory authorities.
. consist of at least three members; each of whom is financially
literate or becomes financially literate within a reasonable period
of time after appointment, and at least one of which has accounting
or related financial expertise. Financial literacy and financial
expertise will be as defined by the applicable regulatory
authorities.
Committee Meetings
Meetings will be held as required, but no less than three times per year.
Minutes will be recorded and reports of committee meetings will be presented
at the next Board of Director's meeting.
Committee Charter Review and Approval
This Audit Committee Charter will be reviewed and approved by the Board of
Directors annually and will be included in the proxy at least every three
years.
A-1
<PAGE>
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[X] Please mark your votes as in this example. 3294
This Proxy, when properly executed, will be voted in the manner directed by the
stockholder. If no direction is made, this Proxy will be voted for the nominees
for directors listed in Proposal 1; and for Proposal 2 to ratify the appointment
of Arthur Andersen LLP as independent auditors for 2000. If other business is
presented at the Annual Meeting, this proxy will be voted on those matters in
accordance with the best judgement of the named proxies. The Board of Directors
recommends a vote FOR Items 1 and 2.
1. Proposal to elect 11 Directors (see reverse side):
FOR WITHHELD
[ ] [ ]
To withhold authority to vote for any nominee(s) mark the "FOR" box and write
the name of such nominee on the line provided below:
- -----------------------------------------------------
2. Proposal to ratify the appointment of Arthur Andersen LLP as independent
auditors for 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Change of Address/Comments on Reverse Side [ ]
The undersigned hereby acknowledges receipt of the Notice of the 2000 Annual
Meeting of Stockholders and accompanying Proxy Statement.
Please sign below exactly as name appears. When shares are held by joint
tenants, both should sign. When signing as Guardian, Executors, Administrator,
Attorney, 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 .
[LOGO]
================================================================================
True North stockholders can now vote their shares over the telephone or
Internet. This eliminates the need to return the proxy card.
To vote your shares over the telephone or the Internet you must have your proxy
card and Social Security Number available. The Voter Control Number that appears
in the box just below the perforation must be used in order to vote by telephone
or over the Internet. These systems can be accessed 24 hours a day, seven days a
week up until the day prior to the meeting.
1. To vote by telephone:
On a touch-tone telephone call Toll-free: 1-877-PRX-VOTE (1-877-779-8683).
2. To vote by Internet:
Log on to the Internet and go to the web site: http/www.eproxyvote.com/tno
Your vote over the telephone or the Internet registers your vote in the same
manner as if you marked, signed, dated and returned your proxy card.
Do not return this Proxy Card if you are voting by telephone or Internet.
Your vote is important. Thank you for voting.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
PROXY
TRUE NORTH COMMUNICATIONS INC.
Annual Meeting of Stockholders
May 17, 2000
This Proxy is Solicited on Behalf of the Board of Directors.
The signatory hereby appoints KEVIN J. SMITH and SUZANNE S. BETTMAN, or any of
them, with full power of substitution, 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 COMMUNICATIONS INC. at the annual meeting
of its stockholders to be held at The University of Chicago Graduate School of
Business Conference Center - Sixth Floor, 450 North Cityfront Plaza Drive,
Chicago, Illinois, on May 17, 2000 at 10:00 a.m., local time, to vote on the
proposals set forth on the opposite side of this card. This card also
constitutes voting instructions by the undersigned to the respective trustee of
the trusts maintained under the True North Communications Inc. Retirement Plan
(the "Plan") for all shares, if any, votable by the undersigned and held of
record by such trustees. If there are any shares for which voting instructions
are not timely received, and as respects any unallocated shares held under the
Plan, the trustees will cause all such shares to be voted in the same proportion
as such trustees vote shares for which timely instructions are received.
The Nominees for Election of Directors are:
(01) David A. Bell, (02) Joseph A. Califano, Jr., (03) Donald M. Elliman, Jr.,
(04) H. John Greeniaus, (05) Leo-Arthur Kelmenson, (06) Wenda Harris Millard,
(07) Michael E. Murphy, (08) J. Brendan Ryan, (09) Donald L. Seeley, (10)
Marilyn R. Seymann and (11) Stephen T. Vehslage.
(change of address/comments)-------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(If you have written in the above space, please mark the
corresponding box on the reverse side of this card) -----------
SEE REVERSE
SIDE
-----------
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
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