GREY ADVERTISING INC /DE/, DEF 14A, 1996-07-12

GREY ADVERTISING INC /DE/
DEF 14A, 1996-07-12
ADVERTISING AGENCIES

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<PAGE> 1

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant / /

Filed by a Party other than the Registrant / /

Check the appropriate box:

<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>

GREY ADVERTISING 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.

/ / $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:

(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.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2

GREY

GREY ADVERTISING INC.
777 THIRD AVENUE
NEW YORK, NEW YORK 10017

------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

JULY 26, 1996

To the Stockholders of
GREY ADVERTISING INC.

The Annual Meeting of Stockholders of Grey Advertising Inc. ("Company")
will be held at the Company's Toronto office, 1881 Yonge Street, Toronto,
Ontario, Canada, on July 26, 1996 at 8:00 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 ratify the selection
of Ernst & Young as independent auditors for the Company for 1996.

(3) 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 July 1, 1996, 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
July 11, 1996

PLEASE SPECIFY YOUR CHOICES, DATE AND SIGN THE ENCLOSED PROXIES
AND MAIL THEM PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 3

GREY ADVERTISING INC.
777 THIRD AVENUE
NEW YORK, NEW YORK 10017
(212) 546-2000

---------------------

PROXY STATEMENT

---------------------

ANNUAL MEETING OF STOCKHOLDERS

JULY 26, 1996

This Proxy Statement is being mailed to stockholders on or about July 12,
1996 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 Company's Toronto office, 1881 Yonge Street, Toronto, Ontario,
Canada on July 26, 1996 at 8:00 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, 1995 ("10-K").
STOCKHOLDERS DESIRING TO OBTAIN A COPY OF THE 10-K SHOULD ADDRESS WRITTEN
REQUESTS TO MS. ILENE P. MEISELES, 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") at the close of business on July 1, 1996, and
holders of the Company's Preferred Stock, will be entitled to vote at the
meeting. On July 1, 1996, the Company had outstanding 887,542 shares of Common
Stock and 302,579 shares of Class B Stock. The Company also has outstanding and
entitled to vote at the
<PAGE> 4

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:

<TABLE>
<CAPTION>
AMOUNT OF
SHARES AND
NATURE
NAME AND ADDRESS OF OF BENEFICIAL OR PERCENTAGE
TITLE OF CLASS RECORD OR BENEFICIAL OWNER RECORD OWNERSHIP OF CLASS
- - ---------------------------- ------------------------------------ ---------------- ----------
<S> <C> <C> <C>
Common Stock................ Edward H. Meyer, as Voting Trustee 173,783(a) 19.6
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 156,665(b) 16.7
777 Third Avenue
New York, New York 10017
The committee administering the 50,477(c) 5.7
Company's Employee Stock Ownership
Plan
777 Third Avenue
New York, New York 10017
Quest Advisory Corp. 74,762(d) 8.4
1414 Avenue of the Americas
New York, New York 10019
Southeastern Asset Management, Inc. 62,711(e) 7.1
6075 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
Tweedy Browne Company L.P. 51,930(f) 5.9
52 Vanderbilt Avenue
New York, New York 10017
T. Rowe Price Associates, Inc. 53,765(g) 6.1
100 E. Pratt Street
Baltimore, Maryland 21202
All executive officers and directors 289,295(h) 30.6
as a group
</TABLE>

2
<PAGE> 5

- - ------------
(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 (5.7% of such
class) and Class B Stock (18.8%) 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.

3
<PAGE> 6

(d) Information based on the Company's understanding of publicly-filed material.
Quest Advisory Corp., a registered investor advisor, which, on behalf of
its clients, has been a long-term investor in the Company, 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 been a
long-term investor in the Company, has sole or shared dispositive and
voting power with respect to the shares listed, except with respect to
4,400 such shares as to which it exercises 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 been a long-term
investor in the Company, has sole or shared dispositive and voting power
with respect to the shares listed.

(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 been a
long-term investor in the Company, has sole dispositive power with respect
to the shares listed.

(h) Includes shares of Common Stock (5.7% of such class) and of Class B Stock
(18.8%), 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
conversion and exercise 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.

4
<PAGE> 7

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.

Mark N. Kaplan has been nominated to be elected at the meeting to serve as
a director until the Annual Meeting of Stockholders to be held in 1999. Mr.
Kaplan 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. Kaplan 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.

<TABLE>
<CAPTION>
TERM NO. OF SHARES OF PERCENT OF
OFFICE VOTING STOCK VOTES CAST
DIRECTOR WILL OWNED BY VOTING
NAME(A) AGE OCCUPATION(B) SINCE EXPIRE BENEFICIALLY(C) SHARES
- - -------------------------- ---- ------------------ -------- ------ ---------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mark N. Kaplan............ 66 Partner, Skadden, 1973 1996 2,200(e) --(f)
Arps, Slate,
Meagher & Flom,
law firm(d)
Edward H. Meyer........... 69 Chairman of the 1961 1997 574,911(g) 70.8%
Board, President
and Chief
Executive Officer
Richard R. Shinn.......... 78 Retired Chairman 1990 --(h) 1,000(i) --(f)
of Metropolitan
Life Insurance
Company
John Shannon.............. 59 President, 1991 1998 1,000 --(f)
Grey-International
</TABLE>

- - ---------------
(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., REFAC
Technology Development Corporation and Volt Information Sciences, Inc.

5
<PAGE> 8

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-six mutual
funds advised by Merrill Lynch Asset Management, Inc. or its wholly-owned
subsidiary, Fund Asset Management, Inc.

Mr. Shinn is a director of Union Texas Petroleum, 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 1995 and
1996.

(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 104,553 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 11.8%, 36.4%,
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 (2.9%) and Class B Stock (8.4%) 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 (3%) 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 holder of the Series I Preferred Stock and
serves until the election of his successor.

(i) Mr. Shinn owns 1,000 shares of Common Stock.

The Board of Directors has no reason to believe Mr. Kaplan will, for any
reason, be unable to serve as a director. If, however, Mr. Kaplan 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 1995, the Board met four 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

6
<PAGE> 9

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:

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------------
ANNUAL COMPENSATION ALL
------------------------------- REST. STOCK OTHER
NAME AND POSITION YEAR SALARY(3) BONUS(3) STOCK($)(1) OPTIONS(#) COMP.(2)
- - ---------------------------- ---- ----------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Edward H. Meyer............. 1995 $ 2,058,333 $ 591,667 -0- 40,000 $1,278,954
Chairman, President and 1994 1,725,000 400,833 -0- -0- 1,058,160
Chief
Executive Officer 1993.. 1,700,000 300,000 -0- -0- 928,487
Robert L. Berenson.......... 1995 $ 485,000 $ 200,000 -0- 5,000 $ 310,838
President, Grey-N.Y. 1994 485,000 180,000 -0- -0- 277,113
1993 442,500 150,000 -0- -0- 336,530
Barbara S. Feigin........... 1995 $ 376,000 $ 150,000 -0- 2,000 $ 181,085
Executive Vice President 1994 342,250 130,000 -0- -0- 175,989
1993 331,000 125,000 -0- -0- 260,006
Stephen A. Novick........... 1995 $ 737,500 $ 125,000 -0- 3,500 $ 385,439
Executive Vice President 1994 667,500 95,000 -0- -0- 400,638
1993 635,000 85,000 -0- -0- 411,530
John Shannon................ 1995 $ 476,500 $ 201,500 -0- 2,000 $ 49,889
President, 1994 473,616 168,300 -0- -0- 56,031
Grey-International
1993 407,000 165,000 -0- -0- 52,139
</TABLE>

- - ---------------
(1) As at December 31, 1995, Mr. Novick owned 5,000 shares issued under the
Company's Restricted Stock Plan as to which restrictions lapsed the next day
and, which had there been no such restrictions, would have had an aggregate
net value of $757,500 on such date. All shares of restricted stock are
entitled to dividends on the same basis as other shares of Common Stock.

(2) All Other Compensation includes: (i) contributions of $25,492, $14,600 and
$14,600 in 1993, 1994 and 1995, 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
insurance premium expense coverage or reimbursement of $54,787, $52,795 and
$53,404; $16,038, $17,513 and $16,946; $6,038, $6,038 and $16,547; $99,046,
$25,800 and $25,883 in 1993, 1994 and 1995, 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 $161,058, $186,275 and
$180,000 for Mr. Meyer in 1993, 1994 and 1995, respectively, and $10,468,
$9,726 and $11,310 for Ms. Feigin in 1993,

7
<PAGE> 10

1994 and 1995, respectively, generally 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 1993, 1994 and 1995, respectively, for Messrs. Berenson, Meyer
and Novick, and Ms. Feigin, of $140,000, $145,000 and $179,292; $687,150,
$815,100 and $1,030,950; $150,000, $180,000 and $154,292; and $90,000,
$125,000 and $129,292; 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 allocation to the five year SMIP begun in
1993; and (vi) $100,000 for each of 1993, 1994 and 1995, and $200,000 for
each of 1993, 1994 and 1995, of loan forgiveness in respect of Messrs.
Berenson's and Novick's indebtedness to the Company. Does not include
distributions of $382,500 in 1994 and $155,000 in 1995 made to Mr. Shannon
in accordance with the terms of a subsidiary-sponsored deferred compensation
program in the United Kingdom, which amounts had vested previously in Mr.
Shannon and related to prior years.

(3) Includes amounts paid into a deferred compensation trust on Mr. Meyer's
behalf in 1995. (See "Employment Agreement and Transactions.")

AGGREGATED OPTIONS EXERCISED IN 1995 AND STOCK OPTION VALUES AS AT DECEMBER 31,
1995(1)

<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS IN-THE-MONEY
DECEMBER 31, 1995 OPTIONS
----------------- DECEMBER 31, 1995
SHARES -------------------
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED(2) UNEXERCISABLE UNEXERCISABLE
- - ------------------------------------ ----------- ----------- ----------------- -------------------
<S> <C> <C> <C> <C>
Edward H. Meyer..................... -- -- 26,666/13,334 $1,359,966/$680,034
Robert L. Berenson.................. 1,000 $ 96,000 0/ 5,000 0/$255,000
Barbara S. Feigin................... 334 36,907 0/ 2,000 0/$102,000
Stephen A. Novick................... 1,000 95,000 5,000/ 3,500 $290,000/$178,500
John Shannon........................ 1,000 102,000 0/ 2,000 0/$102,000
</TABLE>

- - ---------------
(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.

8
<PAGE> 11

OPTION GRANTS IN LAST FISCAL YEAR(1)

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------- GRANT DATE
% OF TOTAL VALUE(2)
NUMBER OF SHARES OPTIONS GRANTED EXERCISE --------------
UNDERLYING TO EMPLOYEES PRICE GRANT DATE
NAME OPTIONS GRANTED IN 1995 ($/SHARE) EXP. DATE PRESENT VALUE
- - ----------------------------- ----------------- ---------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Edward H. Meyer.............. 40,000 48.0 $ 148.50 1/5/04 $2,050,000
Robert L. Berenson........... 5,000 6.0 148.50 1/5/05 267,450
Barbara S. Feigin............ 2,000 2.4 148.50 1/5/05 106,980
Stephen A. Novick............ 3,500 4.2 148.50 1/5/05 187,215
John Shannon................. 2,000 2.4 148.50 1/5/05 106,980
</TABLE>

- - ---------------
(1) Options granted to acquire Common Stock at market price on the date of grant
under the Grey Advertising Inc. 1994 Stock Incentive Plan. The options are
generally exercisable at a rate of one-third per year beginning on the
initial exercise date, which for Messrs. Berenson, Novick and Shannon, and
Ms. Feigin, is January 5, 2000, and January 5, 1995 for Mr. Meyer.

(2) Amounts based on the modified Black-Scholes option pricing model with the
following assumptions: exercise price equal to fair market value on the date
of grant, ten year option term (nine year option term in the case of Mr.
Meyer), interest rate of 7.95% and a dividend rate of 2.33%. There is no
assurance that the value realized by an optionee will be at or near the
value estimated by this pricing model. Should the stock price not rise above
the option price the optionees will realize no gain.

9
<PAGE> 12

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 had an annual compounded return before dividends of approximately 20%.

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.
The Committee increased Mr. Meyer's bonus by almost $200,000 in 1995 to reflect
his instrumental personal involvement in a number of major new business wins
from significant global accounts and his very important contribution to the
Company's record profit performance in 1995. In 1995, the Committee also
approved the grant of a number of stock options to Mr. Meyer and other senior
and key executives of the Company. The Committee believes the grant of such
options is an appropriate form of compensation to reward and motivate
executives, and to align their interests with the Company's stockholders. The
Committee also believes that significant grants should not be given annually and
the size of the award to Mr. Meyer reflected, in part, that Mr. Meyer had not
been granted stock options since 1984. In approving an 18% salary increase for
Mr. Meyer in 1995, the Committee recognized that he had not a salary increase
since 1990 except for a modest cost-of-living adjustment in 1994.

10
<PAGE> 13

In reviewing Mr. Meyer's compensation elements, 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, and that the Company's continued
strong and steady growth is importantly attributed to Mr. Meyer's leadership.
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.

Under SMIP, as approved at the 1994 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 1995 an amount corresponding to 15% of the aggregate amount
credited for 1995 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 Company secured the approval of the
stockholders at the 1994 annual meeting of the 1994 Stock Incentive Plan which
is designed to comply with such tax laws. In addition, and for the same purpose,
during 1995, as discussed below, the Company and Mr. Meyer entered into
arrangements intended to ensure continued compliance in the future.

Mark N. Kaplan
Richard R. Shinn

SENIOR EXECUTIVE OFFICER POST-EMPLOYMENT COMPENSATION PLAN

The Senior Executive Officer Post-Employment Compensation 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, and have been designated by the Board of
Directors of the Company, 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. Meyer and Novick and Ms. Feigin have employment agreements with the
Company. The Company had an employment agreement with Mr. Berenson providing for
his continued employment with the

11
<PAGE> 14

Company through December 31, 1995 at a minimum annual salary of $485,000 per
year. The Company will be executing an agreement extending the understandings
with Mr. Berenson on mutually satisfactory terms. In addition, the
understandings 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 (with the Company having
agreed to forgive 20% of the original amount thereof each December 31 on which
Mr. Berenson was employed after the closing of the loan). 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, in early 1994, the Company loaned Mr. Berenson $50,000 which is
forgivable by the Company assuming his continued employment through 1998, in
early 1995 the Company loaned Mr. Berenson $125,000 which is to be repaid,
together with accrued interest, in May 1998, and in early 1996 the Company
loaned Mr. Berenson $200,000 which is to be repaid, together with accrued
interest, in May 1999.

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 $2,300,000 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 $38,539 in premiums in respect
of these policies in 1995. 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 addition, pursuant to an amendment
dated April 22, 1996, if Mr. Meyer is required to pay an excise tax (imposed by
Section 4999 of the Internal Revenue Code) on any "excess parachute payments"
(as defined in Section 280G of the Internal Revenue Code) payable to him in
connection with a change in control of the Company, then the Company is required
to pay Mr. Meyer an amount which is intended to place him in the same after-tax
financial position that he would have been in had he not incurred any such
excise tax liability, subject to certain limitations if the change in control
were to occur prior to January 1, 2000. 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

12
<PAGE> 15

$50,000 per year during the remainder of such period, with such amounts being
adjusted for increases in the consumer 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 him 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 was 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. For the purpose of the presentation
of Mr. Meyer's compensation in the Summary Compensation Table hereinabove given,
the amounts deferred and paid into the trust are deemed as having been paid to
Mr. Meyer.

In 1983, the Company sold and issued $3,025,000 principal amount of its
8 1/2% Convertible Subordinated Debentures, due December 10, 1996, 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 $118.88, 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 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 or his estate, as the case may be, the option to

13
<PAGE> 16

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 or (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 $775,000 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 then still employed by the Company. In
1995, the Company forgave the last $200,000 of a compensatory loan in the
original amount of $1,000,000 made to Mr. Novick pursuant to an earlier
employment agreement and used to facilitate the financing of his purchase of a
residence. Such advance was secured and would have been repayable had Mr. Novick
left the Company's employ before December 31, 1995 (except one-fifth of the loan
was forgiven each December 31 by the Company from 1991 through 1995 provided Mr.
Novick was employed by the Company).

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.

If Mr. Meyer had been terminated effective December 31, 1995 under
circumstances which would have resulted in payment of the special severance
detailed in the foregoing description of his agreement, the amount then payable
to him would have been $29,434,681. 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.

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<PAGE> 17

PERFORMANCE GRAPH

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN FOR THE COMPANY,
THE S&P 500 INDEX AND FIVE OTHER PUBLICLY-TRADED ADVERTISING AGENCIES

<TABLE>
<CAPTION>
MEASUREMENT PERIOD GREY ADVER- PEER GROUP S&P 500 TO-
(FISCAL YEAR COVERED) TISING INDEX TAL RETURN
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 96.92 148.30 130.47
1992 110.23 186.10 140.41
1993 153.46 199.64 154.56
1994 128.29 218.16 156.60
1995 170.55 293.67 216.45
</TABLE>

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, 1990 and the reinvestment of dividends thereafter.

15
<PAGE> 18

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, 1996.
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 RECOMMMENDS A VOTE "FOR" THIS PROPOSAL.

STOCKHOLDER PROPOSALS

Any stockholder who wishes to submit a proposal to be presented at the 1997
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 March 12, 1997.

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.

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

July 12, 1996

16
<PAGE> 19
PROXY 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 JULY 26, 1996

The undersigned stockholders(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 Company's Toronto office, 1881 Yonge
Street, Toronto, Ontario, Canada, on July 26, 1996 at 8:00 AM, local time, and
at any and all adjournments 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
PROPOSAL REFERRED TO IN ITEM 2. 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 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)

- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 20
Please mark your votes as indicated in this example. [X]

WITHHELD
FOR FROM
PROPOSAL NO. 1. The election of Mark N. Kaplan, as a director, [ ] [ ]
to hold office until the Annual Meeting to be held in 1999 or
until the election of his successor.

FOR AGAINST ABSTAIN
PROPOSAL NO. 2. A proposal to ratify the selection of [ ] [ ] [ ]
Ernst & Young as independent auditors for the Company
for 1996.

3. The transaction of such other business as may properly come before the
meeting, and at any and all adjournments thereof.

The undersigned hereby acknowledges receipt of the Notice of the Meeting and
Proxy Statement dated July 12, 1996.

Signature(s) ___________________________________ (L.S.) Dated: July ____, 1996.
Stockholder(s) should sign exactly as name appears above.
- - -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 21
PROXY COMMON STOCK