SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by registrant (X)
Filed by a party other than registrant ( )
Check appropriate box:
(X) Preliminary proxy statement
( ) Definitive proxy statement
( ) Definitive additional materials
( ) Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GREY ADVERTISING INC.
_______________________________________________________
(Name of registrant as specified in its charter)
GREY ADVERTISING INC.
______________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1)
or 14a-6(i)(2)
( ) $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3)
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
Common Stock, par value $1 per share
Limited Duration Class B Common Stock, par value
$1 per share
(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:
___________________
(4) Proposed maximum aggregate value of transaction:
_________________________________
( ) 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.:
____________________________________
(3) Filing party:
_____________________________________________
(4) Date files:
________________________________________________
PRELIMINARY PROXY MATERIAL -- SUBJECT TO COMPLETION AND REVISION
GREY ADVERTISING INC.
777 THIRD AVENUE
NEW YORK, NEW YORK 10017
_______________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER , 1995
To the Stockholders of
Grey Advertising Inc.
The Annual Meeting of Stockholders of Grey Advertising Inc.
("Company") will be held at the offices of APCO Associates Inc.,
the Company's public affairs subsidiary, 1615 L Street, N.W.,
Washington, D.C., on September , 1995 at 8:15 A.M., local time,
for the following purposes:
(1) To elect one director to hold office for a three year
term.
(2) To consider and take action on a proposal to amend the
Company's Restated Certificate of Incorporation to extend the
date for the automatic conversion of the Company's Limited
Duration Class B Common Stock.
(3) To consider and take action on a proposal to ratify the
selection of Ernst & Young as independent auditors for the
Company for 1995.
(4) To transact such other business as may properly come
before the meeting.
Holders of record of the Company's Common Stock and Limited
Duration Class B Common Stock at the close of business on August
, 1995, and holders of the Company's Preferred Stock, will be
entitled to vote at the meeting.
By Order of the Board of Directors
Steven G. Felsher
Secretary
New York, New York
August , 1995
PLEASE SPECIFY YOUR CHOICES, DATE AND SIGN THE ENCLOSED
PROXIES AND MAIL THEM PROMPTLY IN THE ENCLOSED ENVELOPE.
GREY ADVERTISING INC.
777 THIRD AVENUE
NEW YORK, NEW YORK 10017
(212) 546-2000
_______________
PROXY STATEMENT
_______________
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER , 1995
This Proxy Statement is being mailed to stockholders on or
about August , 1995 in connection with the solicitation of
proxies by the Board of Directors of Grey Advertising Inc.
("Company") for the Annual Meeting of Stockholders to be held at
the offices of APCO Associates Inc., the Company's public affairs
subsidiary, 1615 L Street, N.W., Washington, D.C., on September
, 1995 at 8:15 A.M., local time, and at any and all
adjournments thereof, for the purposes set forth in the Notice of
Annual Meeting of Stockholders.
Any proxy given pursuant to this solicitation may be revoked
by the person giving it at any time prior to its exercise. A
stockholder may effect revocation of a proxy by delivering
written notice to the Secretary of the Company, by giving a
later-dated proxy or by attending the meeting and voting in
person. All properly executed, unrevoked proxies will be voted
as specified. Unless contrary directions are given, proxies will
be voted for the election of the nominee for director proposed by
the Board of Directors and in favor of the proposals set forth in
the notice. Shares represented by executed proxies received by
the Company will be counted for a quorum regardless of how or
whether such shares are voted on any particular matter. Where
nominee stockholders of record do not vote on specific issues
because they did not receive instructions, such "non-votes" will
not be treated as votes cast or shares present for such issues.
The affirmative vote of the holders of a plurality of the votes
cast is required in the election of directors. The vote required
to approve each of the other matters to be voted on at the
meeting, as well as the effect of abstentions and broker non-
votes, is set forth in the sections describing each such matter.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY STOCKHOLDER A
COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1994 ("10-K"). STOCKHOLDERS DESIRING TO OBTAIN A
COPY OF THE 10-K SHOULD ADDRESS WRITTEN REQUESTS TO LUCILLE J.
CASERIO, ASSISTANT SECRETARY, GREY ADVERTISING INC., 777 THIRD
AVENUE, NEW YORK, NEW YORK 10017.
VOTING SECURITIES
Holders of record of the Company's Common Stock and Limited
Duration Class B Common Stock ("Class B Stock" or "Class B Common
Stock") at the close of business on August , 1995, and holders
of the Company's Preferred Stock, will be entitled to vote at the
meeting. On August , 1995, the Company had outstanding 917,829
shares of Common Stock and 321,251 shares of Class B Stock. The
Company also has outstanding and entitled to vote at the meeting
20,000 shares of its Series I Preferred Stock, and 5,000 shares
each of its Series II Preferred Stock and Series III Preferred
Stock. At the meeting, each share of Common Stock will be
entitled to one vote; each share of Class B Stock will be
entitled to ten votes; and each share of Preferred Stock will be
entitled to eleven votes.
To the knowledge of the Board of Directors, as of the record
date no stockholder owned of record or beneficially more than 5%
of the Company's outstanding shares of Common Stock, Class B
Stock or Preferred Stock except as indicated below:
Amount of
Shares and
Nature of
Name and address Beneficial
of Record or or Record Percentage
Title of Class Beneficial Owner Ownership of Class
Common Stock....... Edward H. Meyer, as Voting 180,768(a) 19.7
Trustee under a Voting Trust
Agreement, dated as of
February 24, 1986, and as
subsequently amended
("Voting Trust Agreement"),
among the Voting Trustee,
the Company and the
Beneficiaries of the
Voting Trust Agreement
777 Third Avenue
New York, New York 10017
Edward H. Meyer 144,786(b) 15.8
777 Third Avenue
New York, New York 10017
The committee administering 50,816(c) 5.5
the Company's Employee Stock
Ownership Plan
777 Third Avenue
New York, New York 10017
Quest Advisory Corp. 88,162(d) 9.6
1414 Avenue of the Americas
New York, New York 10019
Southeastern Asset Management,
Inc. 61,311(e) 6.7
860 Ridgelake Boulevard
Memphis, Tennessee 38120
Tweedy Browne Company L.P. 54,600(f) 5.9
52 Vanderbilt Avenue
New York, New York 10017
T. Rowe Price Associates, Inc.54,065(g) 5.9
100 E. Pratt Street
Baltimore, Maryland 21202
All executive officers and 291,675(h) 30.0
directors as a group
Class B Stock..... Edward H. Meyer, as Voting 190,295(a) 59.2
Trustee under the Voting Trust
Agreement
777 Third Avenue
New York, New York 10017
Edward H. Meyer 135,553(b) 39.1
777 Third Avenue
New York, New York 10017
The committee administering 56,961(c) 17.7
the Company's Employee Stock
Ownership Plan
777 Third Avenue
New York, New York 10017
All executive officers and 275,356(h) 79.4
directors as a group
Series I, Series II
and Series III Edward H. Meyer 30,000(i) 100
Preferred Stock.. 777 Third Avenue
New York, New York 10017
(a) Represents voting power only and includes certain
shares subject to a voting agreement pursuant to which shares
owned by an executive officer of the Company will be voted in the
same manner as the Voting Trustee votes. Does not include shares
issuable upon exercise of options which are contractually bound
to be deposited pursuant to the Voting Trust Agreement. In
general, investment power over the shares deposited in the voting
trust established pursuant to the Voting Trust Agreement is
retained by the several beneficiaries of the Voting Trust
Agreement. (See "Employment Agreements and Other Transactions"
below.)
(b) Includes shares of Common Stock and of Class B Stock,
as the case may be, issuable upon conversion of the Company's 8-
1/2% Convertible Subordinated Debentures owned by Mr. Meyer, and
shares of Common Stock issuable upon exercise of stock options
which are currently exercisable (after giving effect to the
assumed conversion and exercise thereof) and Mr. Meyer's
beneficial interest in shares of Common Stock and Class B Stock
deposited by him pursuant to the Voting Trust Agreement as to
which he retains investment power. Does not include shares of
Common Stock (5.5% of such class) and Class B Stock (17.7%) held
in the Company's Employee Stock Ownership Plan as to which Mr.
Meyer exercises shared voting power by virtue of his membership
on the committee charged with its administration. Does not
include shares of Common Stock and Class B Stock held in trust
for Mr. Meyer's children which have been deposited with the
Voting Trust under the Voting Trust Agreement, or shares of
Common Stock or of Class B Stock as to which Mr. Meyer exercises
voting power by virtue of being the Voting Trustee under the
Voting Trust Agreement.
(c) The committee which administers the Company's Employee
Stock Ownership Plan exercises voting power over shares held in
such plan, and is comprised of Mr. Meyer and Steven G. Felsher.
(d) Information based on the Company's understanding of
publicly-filed material. Quest Advisory Corp., a registered
investor advisor, which, together with a related entity, on
behalf of its clients, has sole dispositive and voting power with
respect to the shares listed.
(e) Information based on the Company's understanding of
publicly-filed material. Southeastern Asset Management, Inc., a
registered investment advisor, which, together with a related
entity, on behalf of its clients, has sole or shared dispositive
and voting power with respect to the shares listed, except with
respect to 5,000 such shares as to which there is no voting
authority.
(f) Information based on the Company's understanding of
publicly-filed material. Tweedy Browne Company L.P., a
registered investment advisor, which together with related
entities, on behalf of its clients, has sole dispositive and
voting power with respect to the shares listed except with
respect to 8,310 of such shares as to which there is no voting
authority.
(g) Information based on the Company's understanding of
publicly-filed material. T. Rowe Price Associates, Inc., a
registered investment advisor, which together with a related
entity, on behalf of its clients, has sole dispositive power with
respect to the shares listed.
(h) Includes shares of Common Stock (5.5% of such class)
and of Class B Stock (17.7%), as the case may be, as to which
certain executive officers exercise shared voting power by virtue
of their membership on the committee administering the Company's
Employee Stock Ownership Plan. Includes shares of Common Stock
and Class B Stock as to which the Voting Trustee (Mr. Meyer)
under the Voting Trust Agreement exercises voting power.
Includes shares of Common Stock and of Class B Stock issuable
upon conversion of the Company's 8-1/2% Convertible Subordinated
Debentures owned by Mr. Meyer and shares of Common Stock and of
Class B Stock issuable upon exercise of stock options which are
exercisable by beneficiaries under the Voting Trust Agreement,
who are obliged, under the terms of the Voting Trust Agreement,
to deposit shares in the Voting Trust acquired subsequent to the
execution of the Voting Trust Agreement, after giving effect to
the assumed exercise and conversion thereof. Does not include
shares of Common Stock and Class B Stock issuable to
beneficiaries under the Voting Trust Agreement upon exercise of
stock options which are not presently exercisable.
(i) Represents 20,000 of Series I Preferred Stock, and
5,000 shares of each of the Company's Series II and Series III
Preferred Stock, of which classes Mr. Meyer owns 100% of the
outstanding shares.
ELECTION OF DIRECTOR
The Board of Directors presently consists of four members,
one of whom is elected by the holders of the Series I Preferred
Stock, voting as a class, and three of whom, divided into three
classes, are elected by the holders of the Common Stock, the
Class B Stock and the Preferred Stock voting together. At each
Annual Meeting of Stockholders, directors of one class are
elected to serve for a three-year term or until the election of
their successors.
John Shannon has been nominated to be elected at the meeting
to serve as a director until the Annual Meeting of Stockholders
to be held in 1998. Mr. Shannon is currently serving on the
Board.
The Company's Restated Certificate of Incorporation provides
for cumulative voting for elections of directors. Therefore, if
more than one director is being elected at a meeting, each
stockholder is entitled to cast as many votes as shall equal the
number of votes represented by the shares owned by such
stockholder multiplied by the number of directors to be elected
and such stockholder may cast all of such votes for a single
nominee for director, or may distribute them among the number of
nominees, as the stockholder determines.
Information relating to Mr. Meyer and to the directors not
standing for election who will continue in office following the
meeting is set forth below. Each person listed below is
currently a director of the Company.
Percent
Term No. of Shares of Votes
Office of Voting Cast by
Director Will Stock Owned Voting
Name(a) Age Occupation(b) Since Expire Beneficially(c) Shares
Mark N. 65 Partner, 1973 1996 2,200(e) -(f)
Kaplan . . . Skadden,
Arps,
Slate,
Meagher &
Flom law
firm(d)
Edward H. 68 Chairman 1961 1997 591,008(g) 70.4%
Meyer . . . . of the
Board,
President
and Chief
Executive
Officer
Robert R. 77 Retired 1990 -(h) 1,000(i) -(f)
Shinn . . . . Chairman of
Metropo-
litan Life
Insurance
Company
John Shannon 58 President, 1991 1995 1,000(j) -(f)
Grey-
International
_______________________
(a) There is no family relationship between any director and any
other director or executive officer of the Company.
(b) The positions of Messrs. Meyer and Shannon are with the
Company, and each has served the Company for more than the
past five years.
Mr. Kaplan also serves on the boards of directors of
American Biltrite Inc., Congoleum, Inc.,
Diagnostic/Retrieval Systems, Inc., Movie Fone Inc., The
Harvey Group Inc., REFAC Technology Development Corporation,
USA Mobile Communications, Inc. and Volt Information
Sciences, Inc.
Mr. Meyer is also a director of Bowne & Co., Inc., Ethan
Allen Interiors, Inc., Harman International Industries, Inc.
and The May Department Stores Company. Mr. Meyer also
serves as director or trustee of thirty-five mutual funds
advised by Merrill Lynch Asset Management, Inc. or its
wholly-owned subsidiary, Fund Asset Management, Inc.
(c) Represents beneficial interests in shares of the Company's
Common Stock, Class B Stock, and Series I, II and III
Preferred Stock. (See "Voting Securities" above.)
Information is as of the record date.
(d) Skadden, Arps, Slate, Meagher & Flom, a law firm in which
Mr. Kaplan is a partner, has provided certain legal services
to the Company in 1994 and 1995.
(e) Mr. Kaplan owns 1,100 shares of each of Common Stock and
Class B Stock.
(f) Represents less than 1.0% of the votes entitled to be cast.
(g) Mr. Meyer beneficially owns 105,953 shares of Common Stock
and 110,053 shares of Class B Stock, as to which he, as the
Voting Trustee under the Voting Trust Agreement, exercises
voting power, and 20,000 shares of the Series I Preferred
Stock, and 5,000 shares of each of the Series II and of the
Series III Preferred Stock, representing approximately
11.5%, 34.3%, 100%, 100% and 100% of each class,
respectively. Also includes shares held pursuant to the
Voting Trust Agreement, as to which Mr. Meyer, as the Voting
Trustee, exercises voting power, and shares of Common Stock
and Class B Stock held in the Company's Employee Stock
Ownership Plan as to which Mr. Meyer exercises shared voting
power by virtue of his membership on the committee charged
with its administration. Also includes shares of Common
Stock (2.8%) and Class B Stock (7.9%) issuable on conversion
of the Company's 8-1/2% Convertible Subordinated Debentures
owned by Mr. Meyer after giving effect to the assumed
conversion thereof and shares of Common Stock (1.5%)
issuable upon exercise of currently exercisable stock
options owned by Mr. Meyer, after giving effect to the
assumed exercise thereof. Does not include 7,500 shares of
each of the Common Stock and the Class B Stock held in trust
for Mr. Meyer's children, as to which Mr. Meyer, as the
Voting Trustee under the Voting Trust Agreement, exercises
voting power.
(h) Mr. Shinn had been elected by the holders of the Series 1
Preferred Stock and serves until the election of his
successor.
(i) Mr. Shinn owns 1,000 shares of Common Stock.
(j) Mr. Shannon holds options to purchase 1,000 shares of Common Stock.
The Board of Directors has no reason to believe Mr. Shannon
will, for any reason, be unable to serve as a director. If,
however, Mr. Shannon becomes unavailable to serve, for any
reason, it is the intention of the persons named in the enclosed
form of proxy, unless otherwise instructed by stockholders, to
vote such proxy for the election of such other person as the
Board of Directors may in its discretion recommend.
Directors who are not employees of the Company receive a fee
of $4,500 per quarter and a fee of $3,000 for each meeting of the
Board attended. Directors who are also employees receive no
remuneration for serving on the Board. Under a separate
agreement with the Company, Mr. Kaplan has elected to have
payment of his director's fees deferred until he retires from the
Board.
During 1994, the Board met five times. Each director
attended at least 75% of the meetings of the Board. The Audit
Committee, which is comprised of Messrs. Kaplan and Shinn,
reviews the services of the Company's independent auditors, the
preparation of the Company's financial statements and the
maintenance of internal controls by the Company. Messrs. Kaplan
and Shinn also comprise the Company's Compensation Committee,
which is charged with overseeing matters relating to senior
executive compensation. The Company does not have a standing
nominating committee. Members of the Audit Committee and the
Compensation Committee receive $1,000 for each meeting of each
such committee which does not fall on the same day as a meeting
of the Board.
REMUNERATION OF MANAGEMENT
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information
concerning compensation paid or accrued by the Company to or on
behalf of its Chief Executive Officer and each of the four other
most highly compensated executive officers of the Company with
respect to the three most recently completed fiscal years of the
Company, except as indicated below:
Annual Compensation Long Term Compensation
All
Name and Rest. Stock Other
Position Year Salary Bonus Stock($)(1) Options(#) Comp. (2)
Edward H. Meyer 1994 $1,725,000 $400,833 -0- -0- $1,058,160
Chairman, 1993 1,700,000 300,000 -0- -0- 928,487
President 1992 1,700,000 200,000 -0- -0- 1,009,578
and Chief
Executive Officer
Robert L. Berenson1994 $ 485,000 $180,000 -0- -0- $ 277,113
President 1993 442,500 150,000 -0- -0- 336,530
Grey-N.Y. 1992 400,000 135,000 -0- -0- 113,271
Barbara S. Feigin 1994 $ 342,250 $130,000 -0- -0- $175,989
Executive 1993 331,000 125,000 -0- -0- 260,006
Vice President 1992 297,667 120,000 -0- -0- 87,162
Stephen A. Novick1994 $ 667,500 $ 95,000 -0- -0- $400,638
Executive 1993 635,000 85,000 -0- -0- 411,530
Vice President 1992 570,000 75,000 -0- -0- 333,001
John Shannon 1994 $ 473,616 $168,300 -0- -0- $ 56,031
President 1993 407,000 165,000 -0- -0- 52,139
Grey-
International 1992 390,000 135,000 -0- -0- 41,199
____________________
(1) As at December 31, 1994, Mr. Novick owned 5,000 shares
issued under the Company's Restricted Stock Plan as to which
the restrictions thereon had not lapsed, having an aggregate
net value of $515,000 on such date. All shares of
restricted stock are entitled to dividends on the same basis
as other shares of Common Stock or Class B Stock. (See
"Employment Agreements and Other Transactions".)
(2) All Other Compensation includes: (i) contributions of
$26,963, $25,492 and $14,600 in 1992, 1993 and 1994,
respectively, to the Company's qualified defined
contribution plans on behalf of the named executives other
than Mr. Shannon, who, as a United Kingdom resident,
participated in local pension programs to which he
contributed funds out of his salary compensation; (ii)
amounts shown for Mr. Shannon represent deferred
compensation pursuant to a subsidiary-sponsored program for
United Kingdom executives; (iii) respective premium expense
coverage or reimbursement of $54,949, $54,787, and $52,795,
$16,038, $16,038 and $17,513, $6,038, $6,038 and $6,038,
$15,199, $99,046 and $25,800, in 1992, 1993 and 1994,
respectively, for Messrs. Meyer, Berenson and Novick, and
Ms. Feigin, of which amount for Ms. Feigin included in 1993
the total premiums due under a long-term supplemental
insurance policy; (iv) accruals in the respective amounts of
$203,766, $161,058 and $186,275 for Mr. Meyer in 1992, 1993
and 1994, respectively, $10,468 and $9,726 for Ms. Feigin in
1993 and 1994, respectively, in respect of amounts which
would have been allocated to Mr. Meyer's and Ms. Feigin's
accounts under the Company's qualified defined contribution
programs for such years but for certain limitations
determined under the federal tax laws; (v) respective
allocations under the Company's Senior Management Incentive
Plan ("SMIP") in respect of 1992, 1993 and 1994,
respectively, for Messrs. Berenson, Meyer and Novick, and
Ms. Feigin of $125,000, $140,000 and $145,000, $723,900,
$687,150 and $815,100, $130,000, $150,000, and $180,000, and
$80,000, $90,000 and $125,000, such 1993 amounts further
include $55,000, $30,000 and $35,000 for Messrs. Berenson
and Novick, and Ms. Feigin, respectively, accrued in 1992 as
an advance to the five year SMIP begun in 1993; and (vi)
$100,000 for 1993 and 1994, and $200,000 for each of 1992,
1993 and 1994, and of loan forgiveness in respect of Messrs.
Berenson's and Novick's indebtedness to the Company. Does
not include payments in 1992 (in 1993 for Mr. Berenson) in
respect of SMIP allocations made in prior years and which
generally vested on December 31, 1992 in the respective
amounts of $350,000, $1,491,124, $375,060 and $265,997 for
Messrs. Berenson, Meyer and Novick, and Ms. Feigin. Does
not include a distribution of $382,500 made to Mr. Shannon
in 1994 in accordance with the terms of a subsidiary-
sponsored deferred compensation program in the United
Kingdom, which amount had vested previously in Mr. Shannon
and related to prior years.
AGGREGATED OPTION EXERCISES IN 1994 AND STOCK OPTION VALUES AS AT
DECEMBER 31, 1994(1)
Value of
Number of Unexercised
Unexercised In-the- Money
Options at Options at
December 31, 1994 December 31, 1994
Shares
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized(2) Unexercisable Unexercisable
Robert L. Berenson -- -- 1,000/0 $58,000/0
Barbara S. Feigin -- -- 334/0 $19,372/0
Edward H. Meyer -- -- 0/0 0/0
Stephen A. Novick -- -- 4,333/1,667 $89,664/$15,837
John Shannon -- -- 1,000/0 $59,000/0
______________________
(1) All options relate to shares of Common Stock.
(2) "Value Realized" represents the market price of the Common
Stock on the date of exercise less the exercise price
payable.
Compensation Committee Report
on Executive Compensation
The Compensation Committee is comprised of the Company's
outside directors. The Committee is responsible for the
establishment of the goals of the Company's compensation
practices and the implementation of the compensation programs
that further these goals. The Compensation Committee reviews
regularly the development of the Company's operations, its
revenue and profit performance, its prospects for growth, the
general trends in the advertising agency industry and the
particular needs of the Company.
The Compensation Committee reviews and approves allocations
under several long-term deferred and current compensation
programs which have been developed over the years. These
programs, which have utilized both cash and stock awards, are
designed to foster a strong commitment by the Company's senior
executives to the interests of the Company's stockholders,
clients and business by rewarding excellent performance with
current compensation, enhancing motivation for continued profit
performance, encouraging a strong community of interests with the
Company's stockholders through share awards and fostering the
long-term retention of key management personnel through extended
vesting periods.
These goals are particularly important, and not readily
subject to a short-term formula approach, in the advertising
industry where compensation is heavily negotiated and where there
is great demand for talented people, thus resulting in a high
potential for executive turnover. The Compensation Committee
believes that the programs adopted by Grey have been helpful in
retaining the Company's executive officers who average more than
20 years of service with the Company. This stability, which is
not prevalent in the advertising agency business, has, in the
judgment of the Compensation Committee, been important in
enabling the Company to achieve its performance over the last 20
years. Over such 20-year period, and as through the record date,
the Company's stock price has increased by over 5000% with a
resulting annual compounded return before dividends in excess of
21%.
The Company's executive officers, as disclosed in this proxy
statement, own a substantial interest in the Company's stock, a
significant portion of which was acquired over many years through
a number of the Company's stock programs. This indicates the
importance which the Company places on management having the same
interests as stockholders generally.
In recent years, a significant portion of the executives'
total compensation has been provided through payment of
discretionary annual bonuses and through allocations under the
Company's Senior Management Incentive Plan ("SMIP"). The total
amounts paid or allocated, as the case may be, are related to
overall corporate operating performance and have trended upwards
in better years. In granting annual bonuses, the Compensation
Committee considers the executives' relative contribution to the
Company's overall success, the need for executives to believe
they are compensated competitively, the need for bonuses to be
scaled to reflect seniority and contribution, and other relevant
factors. In approving the amount of the discretionary bonus for
1994 to Mr. Meyer which was approximately $100,000 greater than
his 1993 bonus, the Compensation Committee also considered that
Mr. Meyer has been employed by the Company since 1956 and has
served as Chief Executive Officer since 1971, that despite the
continued difficult business conditions in many major markets,
Mr. Meyer led the Company to record operating earnings and to a
strong new business record, that the Company continued its strong
and steady growth and that since 1990, Mr. Meyer had not received
a salary increase (other than the cost-of-living increase
described below). The Committee also considered Mr. Meyer's
long-term contributions in creating value for the Company and its
stockholders by establishing and maintaining many significant
client relationships, and by overseeing the Company's expansion
into new disciplines and parts of the world. Overall, it is the
generalized view of the Committee that under Mr. Meyer's
direction the Company has been and is well organized, and managed
for long-term, stable growth. Mr. Meyer's salary for 1994 was
set by agreement which was entered into a number of years ago and
reflects all adjustments since he became Chief Executive Officer
of the Company (as of July 1994, Mr. Meyer's salary was adjusted
to reflect cost-of-living increases over the prior year).
Under SMIP, as approved at last year's stockholders meeting,
participants are credited with compensation in an aggregate
amount equal to 12% of the Company's pre-tax operating earnings
for each year from 1993 through 1997. Because of Mr. Meyer's
senior position and his substantial interest in the equity of the
Company, the Compensation Committee, as agreed in prior years,
awarded Mr. Meyer with respect to 1994 an amount corresponding to
15% of the aggregate amount credited for 1994 under SMIP.
Effective in 1994, the tax law was amended to deny tax
deductions to publicly-held corporations for annual compensation
paid to certain executive officers in excess of $1,000,000,
subject to certain exceptions. The Committee believes the
Company should take appropriate steps to be in a position to
preserve the tax deductibility of compensation payments, to the
extent such steps are consistent with providing competitive
compensation to its executives and the Company otherwise
satisfies the requirements of the tax law. Thus, to satisfy the
requirements of the tax law, the Committee submitted to, and
secured the approval of, the stockholders at the 1994 annual
meeting, stock compensation and incentive plans revised to comply
with such tax laws. In addition, and for the same purpose,
during 1995, as disclosed below, the Company and Mr. Meyer
entered into arrangements intended to ensure continued compliance
in the future.
Mark N. Kaplan
Richard R. Shinn
SENIOR EMPLOYEE PENSION PLAN
The Senior Employee Pension Plan provides that certain
qualified officers of the Company and its subsidiaries will be
entitled upon retirement at or after the age of 60 to a lifetime
supplemental pension of a maximum of $50,000 per year. Persons
who are executive vice presidents of the Company, or more senior,
or are designated senior executive officers of certain of the
Company's subsidiaries, and who have met certain age and length
of service requirements are participants under the plan. In
addition, a surviving spouse of a recipient of a pension under
the plan is entitled to an annual pension equal to a maximum of
$25,000 for the shorter of such spouse's life and 20 years. Each
of the named executives (other than Mr. Shannon) were
participants under the plan. In addition, the Company has
certain understandings whereby certain additional pension amounts
may be paid to Messrs. Berenson and Novick, and Ms. Feigin.
EMPLOYMENT AGREEMENTS AND OTHER TRANSACTIONS
Messrs. Berenson, Meyer and Novick, and Ms. Feigin have
employment agreements with the Company. The Company has entered
into an employment agreement with Mr. Berenson providing for his
continued employment with the Company through December 31, 1995
at a minimum annual compensation of $485,000 per year. In
addition, the agreement with Mr. Berenson provided that the
Company would advance him a compensatory loan in an amount not to
exceed $500,000 to facilitate the purchase of a primary residence
which would secure the loan. Such loan was to be repayable five
years after it was made or upon termination of Mr. Berenson's
employment with the Company under certain circumstances (except
that the Company was to forgive 20% of the loan each December 31
on which Mr. Berenson was employed after the closing of the
loan). Mr. Berenson's agreement also contemplates that following
a change in control as defined in his agreement, and if Mr.
Berenson terminates his employment upon a breach of the agreement
by the Company or the Company terminates his agreement without
cause, the remainder of any outstanding loan would be forgiven.
During 1993, in lieu of making the loan to Mr. Berenson and
forgiving it as contemplated, the Company assisted Mr. Berenson
in securing a loan from a commercial bank by agreeing to amortize
up to $100,000 per year for up to five years of the principal on
the mortgage loan Mr. Berenson took from such bank. The
Company's obligation to reimburse the bank is essentially
parallel to the obligation it would have had to Mr. Berenson to
forgive the loan his agreement contemplated being made to him
and, therefore, it is considered the equivalent of a loan
forgiveness. In addition, following a change of control and upon
the termination of Mr. Berenson's employment under the
circumstances mentioned above, he shall thereupon vest in his
currently owned unvested stock options, and be entitled to a lump
sum payment equal to three times the sum of his then annual
salary and his most recent annual bonus, provided that all of
such consideration shall not exceed the maximum limitations on
the tax deductibility thereof imposed by Sections 280G and 4999
of the Internal Revenue Code. In addition, in early 1994, the
Company loaned Mr. Berenson $50,000 which is forgivable by the
Company assuming his continued employment through 1998 and in
early 1995, the Company loaned Mr. Berenson $125,000 which is to
be repaid, together with accrued interest, in May 1998.
In 1984, the Company entered into an employment agreement,
which has been amended subsequently, with Mr. Meyer, which
provides for Mr. Meyer's employment with the Company through
December 31, 2002. The agreement also provides for a minimum
annual salary of $1,950,000 for Mr. Meyer's services as Chief
Executive Officer. If the Company terminates Mr. Meyer's full-
time employment as Chief Executive Officer without cause (as
defined in the agreement), or if Mr. Meyer effects such
termination due to a change of control of the Company or other
good reason specified in the agreement, Mr. Meyer will receive
$3,000,000 in consideration of his employment. The agreement
further provides that the Company will defray premiums on life
insurance policies on Mr. Meyer's life payable to a beneficiary
designated by him; the Company paid $38,013 in premiums in
respect of these policies in 1994. The employment agreement also
provides that Mr. Meyer may, for a period subsequent to his
termination of full-time employment as Chief Executive Officer,
provide the Company with consulting services at $10,000 per
month. If the Company terminates Mr. Meyer's full-time
employment as Chief Executive Officer without cause, or if Mr.
Meyer effects such termination due to a change in control of the
Company or for other good reason, Mr. Meyer will receive a lump
sum payment equal to his then current aggregate remuneration
multiplied by the greater of the number of years remaining in the
term of the employment agreement and the number three. In such
event, Mr. Meyer will also have an option to sell to the Company
each share of the Common Stock and the Class B Stock which he
then owns at the per share market value of the Common Stock. Mr.
Meyer's agreement also provides that, for the ten year period
(subject to reduction or suspension in the event Mr. Meyer
becomes disabled or is in breach of his agreement) following his
termination of employment, the Company will, among other things,
provide Mr. Meyer with an office, and related office staff and
facilities, and the continued use of a car and driver. The
Company has also agreed to reimburse Mr. Meyer for certain
business expenses incurred by him following termination of his
employment up to $100,000 per year during the first five years of
such period and $50,000 per year during the remainder of such
period, with such amounts being adjusted for increases in the
consumer's price index until the date of termination of his
employment. During such ten year period, Mr. Meyer has also been
charged with the responsibility of overseeing a certain portion
of the Company's charitable contributions and, thus, will see to
the contribution to charities of $100,000 per year of the
Company's funds during the first five years of the period and of
$50,000 per year during the remainder of the period.
In the first quarter of 1995, the Company and Mr. Meyer
entered into an agreement extending the term of Mr. Meyer's
employment agreement through the date hereinabove mentioned, and
providing for the deferral of certain compensation otherwise
payable to Mr. Meyer pursuant to his employment agreement and the
payment of such deferred compensation into a trust, commonly
referred to as a rabbi trust, established with United States
Trust Company of New York. The purpose of the trust arrangement
is to enhance the Company's ability to deduct compensation paid
to Mr. Meyer without the application of Section 162(m) of the
Internal Revenue Code ("Section") at such times as the monies are
paid to Mr. Meyer from the trust. The Section, under certain
circumstances, denies a tax deduction to an employer for certain
compensation expenses in excess of $1,000,000 per year paid by a
publicly held corporation to certain of its executives. For
1995, all of cash compensation payable to Mr. Meyer from and
after March 15, 1995 will be deferred and paid into the trust.
In subsequent years, such compensation as shall be timely elected
by Mr. Meyer shall be deferred and paid into the trust provided
that no such election shall cause any compensation paid to Mr.
Meyer to be non-deductible by reason of the Section. Amounts
deferred and paid into the trust shall be paid to Mr. Meyer or to
his estate, as the case may be, upon the expiration of Mr.
Meyer's employment agreement, or the termination of his
employment by reason of death or disability.
In 1983, the Company sold and issued $3,025,000 principal
amount of its 8-1/2% Convertible Subordinated Debentures due
December 10, 1997 to Mr. Meyer in consideration of a purchase
price of equal amount, of which $25,000 was paid in cash and the
remainder by delivery of Mr. Meyer's long-term 9% full recourse
promissory note in the principal amount of $3,000,000. The
Debentures are convertible at any time into one share of Common
Stock and one share of Class B Stock, at a current conversion
price of $118.63, subject to adjustment upon the occurrence of
certain events. During 1992, Mr. Meyer exercised certain stock
options which had been granted to him in 1984, and, in connection
therewith pursuant to the stock option agreement, issued to the
Company his promissory note in the amount of $3,169,690,
representing the exercise price in excess of the par value of the
shares issued on exercise, which amount was paid in cash, and his
promissory note in the amount of $2,339,998, representing the
amount of tax required to be withheld in connection with such
option exercise. The promissory notes are each full recourse,
mature on December 22, 2001 and bear interest at the rate of
6.06% per year. Mr. Meyer is also indebted to the Company in the
aggregate amount of $762,950 pursuant to long-term 9%, full
recourse promissory notes delivered to the Company in 1981, 1982
and 1983 as part payment for Mr. Meyer's purchase of shares of
Series 1, 2 and Series 3 Preferred Stock (collectively, "Original
Preferred Stock"). In 1994, the Company and Mr. Meyer entered
into an Exchange Agreement pursuant to which Mr. Meyer exchanged
the Original Preferred Stock for a like number of shares of new
Preferred Stock, designated Series I Preferred Stock, Series II
Preferred Stock and Series III Preferred Stock (collectively, the
"New Preferred Stock"). The terms of the New Preferred Stock,
including the basic economic terms relating thereto, are
essentially the same as the Original Preferred Stock, except that
the redemption date of the three series of new preferred stock is
fixed at April 7, 2004 rather than on a date determined by
reference to Mr. Meyer's termination of full-time employment with
the Company as was the case with the Original Preferred Stock.
The terms of the New Preferred Stock also give Mr. Meyer the
option to require the Company to redeem his Preferred Stock for a
period of 12 months following his (i) death, (ii) permanent
disability or permanent mental disability, (iii) termination of
full-time employment for good reason and (iv) termination of
full-time employment by the Company without cause. Previously,
Mr. Meyer had the option to require the Company to redeem his
Preferred Stock only upon the termination of his full-time
employment with the Company prior to his attainment of age 65.
During 1994, the Company entered into an agreement with Mr.
Novick pursuant to which his employment by the Company was
continued at a minimum annual compensation of $700,000 per year.
The agreement provides that, Mr. Novick shall remain employed
with the Company through 1998, and that, during the term of his
agreement, he shall have an annual allocation pursuant to the
SMIP of not less than $150,000 and an annual bonus of not less
than $75,000. The agreement also provided for the Company to
lend to Mr. Novick $600,000 to acquire a new residence intended
to be used, in part, for business entertaining. This loan is
forgivable in three annual installments of $200,000 at the end of
each of 1996, 1997 and 1998, provided Mr. Novick is still
employed by the Company. Mr. Novick's agreement also provides
that, if prior to the end of 1995, there is a change in control,
as defined in the agreement, and either Mr. Novick terminates his
employment upon breach thereof by the Company or the Company
terminates his employment without cause, the remaining balances
of his loans shall be forgiven; in addition, and under such
circumstances, he shall thereupon vest in his currently owned
unvested stock options and restricted stock, and be entitled to a
lump sum payment equal to three times the sum of his then annual
salary and his most recent annual bonus, provided that all such
consideration shall not exceed the maximum limitations on the tax
deductibility thereof imposed by Sections 280G and 4999 of the
Internal Revenue Code. Furthermore, as at December 31, 1994, Mr.
Novick had outstanding $200,000 of a compensatory loan in the
original amount of $1,000,000 made to him pursuant to an earlier
employment agreement and used to facilitate the financing of his
purchase of a residence. Such advance was secured and the last
installment shall be repayable on December 31, 1995 (or forgiven
by the Company provided Mr. Novick is employed by the Company on
such date); during 1994 the Company forgave $200,000 of this
loan.
In 1993, the Company entered into an employment agreement
with Ms. Feigin providing for her continued employment by the
Company at least through December 31, 1997, at a minimum annual
compensation of $376,000 per year. The agreement also provides
that the Company will pay for certain life and disability
insurance coverages for Ms. Feigin. Ms. Feigin's agreement also
provides that if there is a change in control, as defined in her
agreement, and either Ms. Feigin terminates her employment upon a
breach thereof by the Company or the Company terminates her
employment, under such circumstances, she shall thereupon vest in
her currently owned unvested stock options, and be entitled to a
lump sum payment equal to three times the sum of her then annual
salary and her most recent annual bonus, provided that all of
such consideration shall not exceed the maximum limitations on
the tax deductibility thereof imposed by Sections 280G and 4999
of the Internal Revenue Code.
If Messrs. Berenson, Meyer (had his employment agreement
been extended as it was in early 1995) and Novick, and Ms. Feigin
had been terminated effective December 31, 1994 under
circumstances which would have resulted in payment of the special
severance detailed in the foregoing description of their
respective agreements, amounts then payable (inclusive of loan
forgivenesses) to each would have been $2,205,309, $28,448,920,
$2,774,861 and $1,652,834. Other than pursuant to the loans
described above in connection with Mr. Meyer's securities, and
Messrs. Berenson's and Novick's arrangements, no named executive
is indebted to the Company for more than $60,000. Certain key
employees of the Company, including the named executives and
certain members of their immediate families ("Beneficiaries"),
have entered into the Voting Trust Agreement, as amended in 1987
and 1994, pursuant to which the Beneficiaries have deposited the
shares of Common Stock and Class B Stock owned by them into a
voting trust. The Beneficiaries have also agreed to deposit into
the voting trust shares of Common Stock or Class B Stock
hereafter acquired by them. The trust was extended in 1994 and
will continue until 2004. Mr. Meyer has been designated the sole
Voting Trustee. Beneficiaries retain the sole authority to
receive dividends and, in general, to dispose of their shares
held in the voting trust. The Company has entered into
indemnification agreements with each of the members of the Board
of Directors providing, generally, for the fullest
indemnification permitted by law.
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN FOR THE COMPANY,
THE S&P 500 INDEX AND FIVE OTHER PUBLICLY-TRADED ADVERTISING
AGENCIES.
1989 1990 1991 1992 1993 1994
Grey 100.00 79.93 71.53 87.64 121.94 100.40
Peer Group Index 100.00 70.11 103.65 130.63 138.69 145.94
S&P 500 Total
Return 100.00 96.89 126.42 136.05 149.76 151.74
The Company's peer group is comprised of Cordiant plc, The
Interpublic Group of Companies, Inc., Omnicom Group Inc., True
North Communications, Inc. and WPP Group, plc. The graph assumes
the initial investment of $100 on December 31, 1989 and the
reinvestment of dividends thereafter.
PROPOSAL TO AMEND THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO EXTEND THE DATE OF THE AUTOMATIC CONVERSION OF
THE COMPANY'S CLASS B COMMON STOCK INTO SHARES OF THE COMMON
STOCK.
The Company's Board of Directors has adopted, and has voted
to recommend that stockholders adopt, an amendment ("Amendment")
to Article Fourth of the Company's Restated Certificate of
Incorporation ("Restated Certificate") which would extend for ten
years the date of the automatic conversion of the Class B Common
Stock into shares of Common Stock. The automatic conversion is
presently scheduled for April 3, 1996, the tenth anniversary of
the record date for the initial distribution of shares of Class B
Common Stock ("Distribution"). A copy of the proposed Amendment
is set forth in Exhibit A hereto.
BACKGROUND, REASONS FOR AND EFFECTS OF THE AMENDMENT
In 1986, the Company, following stockholder approval,
amended Article Fourth of the Restated Certificate and related
provisions to authorize the issuance of the Class B Common Stock.
Promptly following the amendment of the Restated Certificate, the
Company declared a distribution of one share of Class B Common
Stock for each share of Common Stock outstanding on April 3, 1986
(the "Distribution Record Date").
In general, the Class B Common Stock and the Common Stock
are identical except that the Class B Common Stock possesses ten
votes per share, while the Common Stock possesses one vote per
share. In addition, the Class B Common Stock is generally not
transferable (except to certain permitted transferees), but is
convertible on a share for share basis into the Common Stock. A
detailed summary of the relative rights, powers and limitations
of the Common Stock and the Class B Common Stock are set forth on
Exhibit B hereto.
The purpose for amending the Restated Certificate and
effecting the Distribution in 1986 was to (i) enable management
to concentrate on the long-term objectives and goals of the
Company, without being distracted by threat of a surprise or
hostile takeover attempt; (ii) encourage persons interested in a
business combination with the Company to conduct arms-length
negotiations with management and the Board of Directors; (iii)
enhance the continuity and stability of the Company's management
and employees, and their relationships with the Company's
clients; and (iv) afford the Company the maximum ability to
realize business opportunities which present themselves, by
insuring that control of the Company could not be acquired other
than in a transaction which is approved by the Company's long-
term stockholders, including its key employees.
The Company intended to achieve these objectives with the
Distribution since following the Distribution voting control
would be vested in the holders of Class B Common Stock and, as a
result, it would be difficult, if not impossible, for a third
party to acquire control of the Company in a transaction which is
not approved by the holders of Class B Common Stock. In this
regard, the Class B Common Stock presently has the effect of
increasing the voting power of the Company's employees, which is
exercised through the voting trust described herein, from almost
40% to approximately 70% of the votes entitled to be cast
generally at meetings of stockholders. See "Voting Securities"
and "Election of Directors."
The Board of Directors is proposing the Amendment so as to
extend the benefits afforded by the Class B Common Stock for an
additional ten years since, in accordance with the terms of
Article Fourth of the Restated Certificate, the Class B Common
Stock is presently scheduled to convert automatically into Common
Stock on April 3, 1996, the tenth anniversary of the Distribution
Record Date. The Board of Directors has chosen to extend the
conversion date for ten years since that mirrors the initial term
of the Class B Common Stock and to ensure that stockholders will
have another opportunity to vote on the conversion of the Class B
Common Stock should the Board of Directors believe at that time
that a further extension is appropriate.
The Board of Directors believes strongly that a service
enterprise such as Grey benefits significantly from the stability
of its management structure, and the ability of the management to
focus single-mindedly on the servicing of its clients' needs.
The Board believes that this has been a major reason for the
Company's successful performance over the past 15 years.
Further, the Company, in the Board's judgment, has benefited from
the fact that a number of its competitors have suffered and lost
ground as a result of takeovers of advertising agencies in the
1980's. While the Board of Directors is not aware of any
existing or threatened takeover, the Company, in proposing the
Amendment at this time, wishes to maintain the significant
competitive advantages it has obtained from the continuity of its
management and its uninterrupted focus and dedication to its
clients' needs.
The Board of Directors has given due consideration to the
Amendment and has concluded that its adoption would be in the
best interests of the Company. However, stockholders should
consider the fact that the Amendment would preserve the increased
voting power of the holders of Class B Common Stock, which as
described above, to a significant extent include executive
officers and other key employees of the Company, and will likely
make more difficult, and thereby discourage, takeovers of the
Company which are opposed by the holders of the Class B Common
Stock. Similarly, the existence of the Class B Common Stock
would make it more difficult for third parities to engage
successfully in proxy contests which, among other things, may
seek to change the composition of the Board of Directors. As a
result, the Amendment may be characterized as "anti-takeover" in
nature.
In addition, as described at the time the Class B Common
Stock was authorized, the continued existence of the Class B
Common Stock may limit the Company's ability to effect a business
combination eligible to be accounted for using the "pooling of
interests" method. In order for such method to be used, the
Company may be required to issue Class B Common Stock as the
consideration for the combination, which, in accordance with the
Restated Certificate, the Company is presently not authorized to
do. It should be noted, however, that the Company has not
effected any business combination utilizing any of its equity
securities as consideration in many years and has no expectation
of doing so in the foreseeable future.
The Board of Directors does not presently contemplate
adopting, or recommending to the stockholders for their adoption,
any further amendments to the Company's Restated Certificate or
By-Laws. See "Existing Provisions in the Restated Certificate
and By-Laws and Related Matters" below for a description of
existing provisions in the Company's Restated Certificate and By-
Laws, and in certain other agreements, which might be viewed as
having "anti-takeover" effects.
EXISTING PROVISIONS IN THE RESTATED CERTIFICATE AND BY-LAWS AND
RELATED MATTERS.
The Company's Restated Certificate and By-Laws currently
contain certain provisions which may have an "anti-takeover"
effect. Set forth below is a summary of these provisions, as
well as certain other agreements which also may be deemed to have
an anti-takeover effect.
The Company's Restated Certificate and By-Laws (a) require
the vote of two-thirds of the outstanding stock of the company
and the vote of a majority of the Series I Preferred Stock to
approve a merger or consolidation of the Company, or the
disposition of all or substantially all of the assets of the
Company, (b) divide the Board of Directors into three classes,
one class to be elected each year, (c) require cumulative voting
in the election of directors, (d) require the vote of four-fifths
of the outstanding stock of the Company to permit the
stockholders to amend the By-Laws for the purpose of changing the
number of directors and (e) provide that in the event a vote of
the Board of Directors is tied, the Chairman of the Board shall
be entitled to cast an additional vote.
Article Seventh of the Company's Restated Certificate also
permits the holders of the Series I Preferred Stock to vote as a
separate class to elect or remove one-quarter of the Board of
Directors. Articles Seventh and Tenth require a majority of the
outstanding shares of Series I Preferred Stock, voting as a
separate class, to approve the issuance of additional series of
Preferred Stock if the holders of such new shares will be
entitled to vote with the holders of Series I Preferred Stock on
the election of directors or the merger, consolidation or sale of
all or substantially all of the assets of the Company. Upon Mr.
Meyer's death or the redemption of the shares of Series I
Preferred Stock issued to him, the foregoing voting privileges of
the Series I Preferred Stock expire. The holders of the Series I
Preferred Stock also vote with the holders of the Common Stock on
all matters submitted to the stockholders of the Company.
Subject to applicable law, the Board of Directors of the
Company may issue, in its sole discretion, additional shares of
Common Stock and Preferred Stock without further action by
holders of Common Stock or Class B Common Stock. Preferred Stock
may be issued in one or more series and may have such
designations, preferences and relative rights, qualifications and
limitations as the Board of Directors may fix by resolution or
resolutions at the time of issuance. It might be possible for
the Board to use its authority to issue Common Stock or Preferred
Stock in a way which could deter or impede the completion of a
tender offer or other attempt to gain control of the Company of
which the Board of Directors does not approve. The Company does
not have any present plans or commitments to use its authority to
effect any such issuance, but reserves the right to take any
action in the future which the Board deems to be in the best
interests of the Company and its stockholders under the
circumstances. Additionally, the issuance of shares of Preferred
Stock could result in a class of securities outstanding that will
have certain preferences with respect to dividends and upon
liquidation superior to those of the Common Stock and Class B
Common Stock.
Mr. Meyer's employment agreement with the Company provides
that if the Company terminates Mr. Meyer's full-time employment
as Chief Executive Officer without cause (as defined in the
agreement), or if Mr. Meyer effects such termination due to
change in control of the Company or for other good reasons
specified in the agreement, Mr. Meyer will receive $3,000,000 in
consideration of his employment. If the Company terminates Mr.
Meyer's full-time employment as Chief Executive Officer without
cause, or if Mr. Meyer effects such a termination due to a change
in control of the Company or for other good reason, Mr. Meyer's
agreement also provides that he will receive a lump sum payment
equal to his then current aggregate remuneration multiplied by
the greater of the number of years remaining in the term of the
employment agreement and the number three. In such event, Mr.
Meyer will also have an option to sell to the Company all of the
Common Stock and Class B Common Stock which he then owns at the
market price therefor. The Company also has change in control
provisions in employment agreements with certain of its other
executive officers. See "Remuneration of Management - Employment
Agreements and Other Transactions".
STOCKHOLDER APPROVAL
The vote of the holders of a majority of the Company's
Common Stock, Class B Common Stock and Preferred Stock, each
voting as a separate class, is required to adopt the Amendment.
Accordingly, an abstention or a broker non-vote will have same
the effect as a negative vote.
THE BOARD OF DIRECTORS BELIEVES THAT THE AMENDMENT IS IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS. ACCORDINGLY,
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR ADOPTION OF THE AMENDMENT.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors of the Company has selected its
present auditors, the firm of Ernst & Young, as independent
auditors to examine and report on the financial statements of the
Company for the year ending December 31, 1995. Representatives
of Ernst & Young are expected to be present at the meeting to
make such statements as they deem appropriate and to respond to
appropriate stockholder questions. The Board has determined
that, although not required, it would be desirable to request
from the stockholders an expression as to whether they concur in
the foregoing selection. The Board recommends that stockholders
vote to ratify such selection. If the holders of a majority of
the votes represented at the meeting do not ratify the selection
of Ernst & Young, the selection of independent auditors will be
reconsidered by the Board. Abstentions will have the same effect
as a negative vote, while broker non-votes will be disregarded
and have no effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS
PROPOSAL.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal to be
presented at the 1996 Annual Meeting of stockholders must forward
such proposal to the Secretary of the Company at the address of
the Company which is given above, so that it is received by him
no later than , 1996.
SOLICITATION OF PROXIES
The solicitation of proxies will be conducted primarily by
mail. However, employees of the Company may solicit proxies by
telephone, telegraph or personal contact, but at no additional
compensation. Bankers, brokers and others holding stock in their
names or in the names of nominees will be reimbursed for out-of-
pocket expenses incurred in forwarding proxies and proxy material
to the beneficial owners of such shares. The total cost of
solicitation will be borne by the Company. The Company has
retained Georgeson & Company Inc., Wall Street Plaza, New York,
New York to assist in the solicitation of proxies for a fee of
$ .
OTHER MATTERS
The Board of Directors is not aware of any other matters
which may be brought before the meeting. If other matters not
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.
Steven G. Felsher
Secretary
August , 1995
Exhibit A
PROPOSED AMENDMENT TO SUBPARAGRAPH B.III(D)(9) OF
ARTICLE FOURTH OF THE RESTATED CERTIFICATE OF INCORPORATION
All outstanding shares of Class B Common Stock will
automatically convert into shares of Common Stock on April 3,
2006. Upon such conversion, certificates evidencing previously
outstanding shares of Class B Common Stock will thereafter be
deemed to evidence a like number of shares of Common Stock. None
of the provisions of this subparagraph (9) may be amended,
altered, supplemented or repealed without the affirmative vote of
the holders of the Common Stock, of the Class B Common Stock and
of each series of the Preferred Stock entitled to vote and
outstanding on the Distribution Record Date.
Exhibit B
DESCRIPTION OF THE COMMON STOCK
AND THE CLASS B COMMON STOCK
The rights, powers and limitations of the Common Stock and
the Class B Common Stock, which are set forth in full in Article
Fourth of the Restated Certificate, are summarized below.
1. VOTING. Subject to the rights of the holders of
Preferred Stock, each share of Common Stock entitles the
holder thereof to one vote on all matters submitted to the
stockholders, including the election of directors, and each
share of Class B Common Stock entitles the holder thereof to
ten votes on all such matters. Except as set forth below,
all actions submitted to a vote of stockholders are voted on
by holders of the Common Stock and the Preferred Stock
entitled to vote, voting together as a single class. The
holders of each class of stock, however, vote separately as
classes with respect to amendments to the Restated
Certificate that alter or change the powers, preferences or
special rights of their respective classes of stock to
affect them adversely, and with respect to such other
matters as may require class votes under the General
Corporation Law of the State of Delaware. The holders of
all outstanding shares of stock of the Company entitled to
vote, vote together as a single class upon any proposal to
authorize additional shares of Common Stock or Class B
Common Stock.
2. DIVIDENDS AND OTHER DISTRIBUTIONS. Each share of
Common Stock and Class B Common Stock is equal in respect of
rights to dividends and other distributions in cash, stock
or property of the Company (including distributions upon
liquidation of the Company), except that, in the case of
stock dividends or distributions, holders of each class will
receive only shares for such class. Neither Common Stock
nor Class B Common Stock will be split, divided or combined
unless the other is split, divided or combined equally.
3. TRANSFERABILITY OF COMMON STOCK; TRADING MARKET. The
Common Stock is freely transferable and is traded publicly
on the Nasdaq National Market System ("NMS") of the National
Association of Securities Dealers, Inc. ("NASD"). Although
the NASD, together with the New York Stock Exchange and the
American Stock Exchange, recently adopted uniform policies
restricting the ability of NMS companies to (i) issue
multiple classes of Common Stock with differing voting
rights or (ii) take other action which disparately reduces
or restricts the voting rights of existing stockholders, the
Voting Rights Policy of the Board of Governors of the NASD
recognizes an exemption for companies, such as the Company,
with existing dual class common stock structures. In
addition, the Company believes, based on conversations with
the staff of the NASD, that the adoption of the Amendment is
consistent with the NASD's Voting Rights Policy and,
accordingly, would not affect the continued reporting of the
Common Stock on the NMS.
4. RESTRICTIONS ON TRANSFER OF CLASS B COMMON STOCK;
CONVERTIBILITY OF CLASS B COMMON STOCK INTO COMMON STOCK.
As more fully described below, the Class B Common Stock is
not transferable by a stockholder except to or among
principally such holder's spouse, certain of such holder's
relatives and certain trusts established for their benefit.
Accordingly, no trading market exists and none will develop
in the Class B Common Stock. The Class B Common Stock,
however, will continue to be, convertible at all times, and
without cost to the stockholder (except any transfer taxes
which may be payable if certificates are to be issued in a
name other than that in which the certificate surrendered is
registered), into Common Stock on a share-for-share basis.
Therefore, stockholders desiring to sell the equity interest
in the Company represented by their shares of Class B Common
Stock may convert those shares into an equal number of
shares of Common Stock and sell the shares of Common Stock
in the public market. A stockholder who does not wish to
complete the conversion process prior to a sale may effect a
sale of the Common Stock into which such stockholder's Class
B Common Stock is convertible by simply delivering the
certificate or certificates for such shares of Class B
Common Stock to a broker, properly endorsed, in completion
of the sale. The broker will then present the Class B
Common Stock certificate or certificates to the Company's
transfer agent who will issue to the purchaser a certificate
for the number of shares of Common Stock sold in settlement
of the transaction. The Common Stock is not convertible
into the Class B Common Stock.
Shares of Class B Common Stock issued in a
stockholder's own name are not transferable into a "nominee"
or "street" name. If on the Distribution Record Date,
however, shares of Common Stock were registered in a nominee
or street name, the shares of Class B Common Stock issued in
respect thereof will be registered in the same nominee or
street name. Such shares of Class B Common Stock may be
transferred out of the nominee or street name into the name
of the person who was the beneficial owner of the Common
Stock on the Distribution Record Date (or a "Permitted
Transferee," as hereinafter described, of such person), and
once so transferred, they may not be transferred back into
nominee or street name. Shares of Class B Common Stock held
in nominee or street name may be converted into Common Stock
and the shares of Common Stock received are, depending on
the nature of the transaction, registered in the name of the
original beneficial owner, a transferee of such owner, or a
nominee for such owner or transferee.
Other than pursuant to conversions into Common Stock as
described above, a holder of shares of Class B Common Stock
may transfer such shares (whether by sale, assignment, gift,
bequest, appointment or otherwise), ONLY to a "Permitted
Transferee," which term is defined generally as follows:
i) such Class B stockholders's spouse;
ii) any of the lineal descendants of such Class B
stockholder, including adopted children (said
descendants, together with the Class B stockholder and
his or her spouse, are hereinafter referred to as "such
Class B stockholder's family members");
iii) a trust for the sole benefit of such Class B
stockholder's family members; or
iv) a voting trust created by the voting
agreement referred to elsewhere in this Proxy
Statement.
Shares of Class B Common Stock held by a corporation
may be transferred to a successor by merger or
consolidation. Shares held by trusts that are irrevocable
on the Distribution Record Date may be transferred as a
distribution for such trust in accordance with its terms to
any person to whom or for whose benefit principal may be
distributed under the terms of the trust.
The restrictions on the transferability of the Class B
Common Stock are set forth in full in Article Fourth of the
Restated Certificate. Each certificate representing shares
of Class B Common Stock bears a legend stating that there
are restrictions on transfer and registration of transfer
set forth in the Restated Certificate.
Any transfer of shares of Class B Common Stock not
permitted under Article Fourth will result in the automatic
conversion of the transferor's shares of Class B Common
Stock into shares of Common Stock, effective the date on
which certificates representing such shares are presented
for transfer on the books of the Company. The Company shall
be entitled to require the furnishing of such affidavits or
other proof as it deems necessary to establish that any
person is the beneficial owner of Class B Common Stock or is
a Permitted Transferee.
5. FUTURE ISSUANCES OF CLASS B COMMON STOCK. The Company
has not issued any additional shares of Class B Common Stock
after the Distribution Record Date and will not do so except
(i) pursuant to stock dividends stock splits and similar
distributions as described in paragraph 2 above, (ii) upon
conversion or redemption of outstanding securities and (iii)
pursuant to employee benefit plans existing as of the
Distribution Record Date. The Restated Certificate
authorizes the issuance of 2,000,000 shares of Class B
Common Stock to provide a sufficient number of authorized
shares for such future issuances. As described earlier, the
Board of Directors may not declare a stock split or dividend
on the Class B Common Stock, without declaring a similar
stock split or dividend on the Common Stock.
6. TERMINATION OF CLASS B COMMON STOCK. All outstanding
shares of Class B Common Stock will automatically be
converted into shares of Common Stock on April 3, 1996, the
tenth anniversary of the Distribution Record Date, unless
the Restated Certificate is amended in accordance with the
Amendment; in such case such conversion will occur on April
3, 2006. Upon such conversion, certificates formerly
representing outstanding shares of Class B Common Stock will
thereafter be deemed to represent a like number of shares of
Common Stock. Such automatic conversion may not be delayed
or postponed without an affirmative vote of the holders of
the Common Stock, the Class B Common Stock and the Preferred
Stock, each voting separately as a class.
7. EMPLOYEE BENEFIT PLANS. As a result of the
Distribution, each outstanding option granted prior to the
Distribution Record Date under the Company's Executive
Growth and Incentive Stock Option Plans (collectively, the
"Option Plans") were adjusted for the Distribution so that
the holders of such options were entitled, following the
Distribution, to receive upon exercise one share of Common
Stock and one share of Class B Common Stock for each share
of Common Stock subject to such options. The aggregate
exercise price of each outstanding option was not affected
by the Distribution.
8. PREFERRED STOCK AND CONVERTIBLE SECURITIES. At the
time of the Distribution, there were outstanding 34,000
shares of Preferred Stock and $3,025,000 principal amount of
the Company's 8-1/2% Convertible Subordinated Debentures
(the "Debentures"). In connection with the Distribution,
the conversion and other terms of the Preferred Stock and
the Debentures were equitably adjusted to give effect to the
Distribution.
9. OTHER. The Common Stock and the Class B Common Stock
do not carry any preemptive rights enabling a holder to
subscribe for or receive shares of stock of the Company of
any class or any other securities convertible into shares of
stock of the Company.
The Company delivers to the holders of Class B Common
Stock the same information and reports as it delivers to
holders of Common Stock.
COMMON STOCK
GREY ADVERTISING INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER __, 1995
The undersigned stockholder(s) of Grey Advertising Inc.
("Company") hereby appoint(s) Edward H. Meyer and Steven G.
Felsher, and each of them, the true and lawful proxies, agents
and attorneys of the undersigned each with full power to act
without the other and with full power of substitution and
revocation, to represent and act for the undersigned, in the
name, place and stead of the undersigned, and to vote all shares
of the Company which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders to be
held at the offices of APCO Associates Inc., the Company's public
affairs subsidiary, 1615 L Street N.W., Washington, D.C., on
September __, 1995 at 8:15 A.M., local time, and at any and all
adjournments or postponements thereof, on the following matters:
THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE
WITH THE SPECIFICATIONS HEREIN, BUT WHERE SPECIFICATIONS ARE NOT
INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEE FOR DIRECTOR AND IN FAVOR OF THE PROPOSALS REFERRED TO IN
ITEMS 2 AND 3. If other matters not now known come before the
meeting, the persons named herein or their substitutes will vote
such shares in accordance with their best judgment.
The undersigned hereby ratifies and confirms all that said
proxies, agents and attorneys, or either of them, or their
substitutes, lawfully may do at the meeting and hereby revokes
all proxies heretofore given by the undersigned to vote at said
meeting or any and all adjournments or postponements thereof.
If only one of said proxies, or his substitute, be present
and vote at said meeting, or at any or all adjournments thereof,
such person shall have and may exercise all powers hereby
granted.
(Continued on reverse side)
PROPOSAL NO. 1. The PROPOSAL NO. 2.
election of John A proposal to amend the
Shannon, as a director, Company's Restated
to hold office until the Certificate of
Annual Meeting to be Incorporation to extend
held in 1998 or until the conversion date of
the election of his the Company's Limited
successor. Duration Class B Common
Stock.
WITHHELD
FOR FROM FOR AGAINST ABSTAIN
( ) ( ) ( ) ( ) ( )
PROPOSAL NO. 3. A 4. The transaction of
proposal to ratify the such other business as
selection of Ernst & may properly come before
Young as independent the meeting, and at any
auditors for the Company and all adjournments
for 1995. thereof.
FOR AGAINST ABSTAIN
( ) ( ) ( )
The undersigned hereby
acknowledges receipt of the
Notice of the Meeting and Proxy
Statement, dated August __,
1995. Dated: August __, 1995.
_________________________ (L.S.)
Stockholder should sign exactly
as name appears at left.
__________________________(L.S.)
Stockholder should sign exactly
as name appears at left.
LIMITED DURATION CLASS B COMMON STOCK
GREY ADVERTISING INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER __, 1995
The undersigned stockholder(s) of Grey Advertising Inc.
("Company") hereby appoint(s) Edward H. Meyer and Steven G.
Felsher, and each of them, the true and lawful proxies, agents
and attorneys of the undersigned each with full power to act
without the other and with full power of substitution and
revocation, to represent and act for the undersigned, in the
name, place and stead of the undersigned, and to vote all shares
of the Company which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders to be
held at the offices of APCO Associates Inc., the Company's public
affairs subsidiary, 1615 L Street N.W., Washington, D.C., on
September __, 1995 at 8:15 A.M., local time, and at any and all
adjournments or postponements thereof, on the following matters.
THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE
WITH THE SPECIFICATIONS HEREIN, BUT WHERE SPECIFICATIONS ARE NOT
INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEE FOR DIRECTOR AND IN FAVOR OF THE PROPOSALS REFERRED TO IN
ITEMS 2 AND 3. If other matters not now known come before the
meeting, the persons named herein or their substitutes will vote
such shares in accordance with their best judgment.
The undersigned hereby ratifies and confirms all that said
proxies, agents and attorneys, or either of them, or their
substitutes, lawfully may do at the meeting and hereby revokes
all proxies heretofore given by the undersigned to vote at said
meeting or any and all adjournments or postponements thereof.
If only one of said proxies, or his substitute, be present
and vote at said meeting, or at any or all adjournments thereof,
such person shall have and may exercise all powers hereby
granted.
(Continued on reverse side)
PROPOSAL NO. 1. The PROPOSAL NO. 2.
election of John A proposal to amend the
Shannon, as a director, Company's Restated
to hold office until the Certificate of
Annual Meeting to be Incorporation to extend
held in 1998 or until the conversion date of
the election of his the Company's Limited
successor. Duration Class B Common
Stock.
WITHHELD
FOR FROM FOR AGAINST ABSTAIN
( ) ( ) ( ) ( ) ( )
PROPOSAL NO. 3. A 4. The transaction of
proposal to ratify the such other business as
selection of Ernst & may properly come before
Young as independent the meeting, and at any
auditors for the Company and all adjournments
for 1995. thereof.
FOR AGAINST ABSTAIN
( ) ( ) ( )
The undersigned hereby
acknowledges receipt of the
Notice of the Meeting and Proxy
Statement, dated August __,
1995. Dated: August __, 1995.
_________________________ (L.S.)
Stockholder should sign exactly
as name appears at left.
__________________________(L.S.)
Stockholder should sign exactly
as name appears at left.
