SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by the Party other than the Registrant []
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
............................................................
The Interpublic Group of Companies, Inc.
............................................................
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) 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>
THE INTERPUBLIC GROUP OF COMPANIES, INC.
1271 Avenue of the Americas
New York, New York 10020
April __, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of The Interpublic Group of Companies, Inc., to be held at 9:30 A.M. Eastern
Time, on Monday, May 17, 1999. The meeting will be held in the Auditorium of
the Equitable Center, 787 Seventh Avenue, New York, New York.
The business to be considered is described in the attached notice of the
meeting and Proxy Statement.
In addition to these matters, there will be a report on the affairs of
the Company, an opportunity for questions and comments by stockholders and a
showing of selected commercials recently produced by the Company's
subsidiaries.
We hope you will be able to attend.
Sincerely,
Philip H. Geier, Jr.
Chairman of the Board
and Chief Executive Officer
<PAGE>
THE INTERPUBLIC GROUP OF COMPANIES, INC.
1271 Avenue of the Americas
New York, New York 10020
_________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 17, 1999
The Annual Meeting of Stockholders of The Interpublic Group of
Companies, Inc. (the "Company") will be held in the Auditorium of the
Equitable Center, 787 Seventh Avenue, New York, New York, on Monday, May 17,
1999, at 9:30 A.M., Eastern Time, for the following purposes:
1. To elect 11 directors;
2. To consider and act upon a proposal to amend the
Company's Restated Certificate of Incorporation to increase the
number of authorized shares of Common Stock, $.10 par value, of
the Company to 550 million shares.
3. To consider and act upon a proposal to confirm the
appointment of PricewaterhouseCoopers LLP ("Pricewaterhouse
Coopers"), as independent accountants of the Company for the year
1999; and
4. To transact such other business as may properly come
before the meeting and any adjournment thereof.
The close of business on March 23, 1999, has been designated as the
record date for the determination of stockholders entitled to notice of and
to vote at this meeting and any adjournment thereof.
By Order of the Board of Directors,
Nicholas J. Camera
Secretary
Dated: April __, 1999
Whether or not you plan to attend the meeting in person, please
fill in, sign, date and promptly return the enclosed proxy in the
accompanying envelope, which requires no postage if mailed in the United
States. The proxy is revocable, so that you may still vote your shares in
person if you attend the meeting and wish to do so.
<PAGE>
THE INTERPUBLIC GROUP OF COMPANIES, INC.
-----------
PROXY STATEMENT
-----------
GENERAL
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Management") of The Interpublic Group of
Companies, Inc. ("Interpublic" or the "Company") of proxies to be voted at
the Annual Meeting of Stockholders, which will be held in the Auditorium of
The Equitable Center, 787 Seventh Avenue, New York, New York, at 9:30 A.M.,
Eastern Time, on Monday, May 17, 1999.
The address of the Company's principal executive office is 1271 Avenue
of the Americas, New York, NY 10020. This Proxy Statement and the enclosed
form of proxy are first being sent to stockholders on or about April 7, 1999.
The Company's Annual Report to Stockholders was mailed to stockholders on or
about March 31, 1999.
Any proxy given in response to this solicitation may be revoked at any
time before it has been exercised. The giving of the proxy will not affect
your right to vote in person if you attend the meeting. If you do not attend
the Annual Meeting, or if you attend but do not vote in person, the shares
represented by your proxy will be voted in accordance with your instructions
on the matters set forth in items 1 through 3. If no voting instructions are
given with respect to any one or more of the items, a duly executed proxy
will be voted on the uninstructed matters as follows: FOR Management's
nominees for election as directors, FOR the amendment of the Company's
Restated Certificate of Incorporation to increase the number of authorized
Common Stock to 550 million shares and FOR the confirmation of
PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") as independent
accountants for 1999. A duly executed proxy also will be voted in the
discretion of the proxy holders on any other matter arising and voted upon at
the meeting.
<PAGE>
OUTSTANDING SHARES
The record date for the Annual Meeting is March 23, 1999. The
outstanding capital stock of the Company at the close of business on March
23, 1999 consisted of 139,985,134 shares of Common Stock. Each share of
Common Stock is entitled to one vote on all matters that are submitted to a
vote of stockholders at the meeting. The following table sets forth
information concerning direct and indirect beneficial ownership of the
Company's Common Stock as of December 31, 1998, by persons known to the
Company to have beneficial ownership of more than 5% of the Common Stock:
Amount
and Nature of Percent
Name and Address Beneficial of
of Beneficial Owner Ownership <F1> Class
Putnam Investments, Inc. 7,763,009<F2> 5.6%
and subsidiaries
One Post Office Square
Boston, Massachusetts 02109
<F1> Securities and Exchange Commission rules deem a person to be the
beneficial owner of a security (for purposes of proxy statement
disclosure) if that person has or shares either or both voting or
investment power with respect to such security. Additionally, a
security is deemed to be beneficially owned by a person who has the
right to acquire beneficial ownership thereof within 60 days - for
example, through the exercise of a stock option.
<F2> Based on information supplied by Putnam Investments, Inc.
("Putnam") in a Schedule 13G filed with the Securities and Exchange
Commission on or about February 18, 1999. Putnam, a wholly-owned
subsidiary of Marsh & McLennan Companies, Inc. reports that it is
the parent holding company of Putnam Investment Management, Inc., the
investment adviser to the Putnam family of mutual funds, and the Putnam
Advisory Company, Inc., the investment adviser to Putnam's institutional
clients, and that these subsidiaries, collectively, have shared voting
power with respect to 1,759,793 shares of Common stock and shared
dispositive power with respect to 7,763,009 shares of Common Stock.
<PAGE>
The following table sets forth information concerning the direct and
indirect beneficial ownership of the Company's Common Stock as of March 23,
1999 by each director, each nominee for election as a director, each
executive officer named in the Summary Compensation Table below, and all
directors and executive officers of the Company as a group:
Common Options
Name of Stock Exercisable
Beneficial Owner Ownership <F3><F4><F5> Within 60 Days Total
Eugene P. Beard 457,671 201,150 658,821
Frank J. Borelli 3,750 1,249 4,999
Reginald K. Brack 4,775 - 4,775
Jill M. Considine 3,000 - 3,000
John J. Dooner, Jr. 405,138 115,020 520,158
Philip H. Geier, Jr. 702,889 562,300 1,265,189
Frank B. Lowe 480,419 45,000 525,419
Leif H. Olsen 3,600 2,660 6,260
Martin F. Puris 551,650 - 551,650
Allen Questrom 3,000 - 3,000
J. Phillip Samper 5,100 2,660 7,760
All directors and
executive officers 2,852,316 1,277,315 4,129,631
as a group
<F3> Securities and Exchange Commission rules deem a person to be the
beneficial owner of a security (for purposes of proxy statement
disclosure) if that person has or shares either or both voting or
investment power with respect to such security. Additionally, a
security is deemed to be beneficially owned by a person who has the
right to acquire beneficial ownership thereof within 60 days - for
example, through the exercise of a stock option. Common Stock ownership
set forth in this table includes unvested shares of restricted stock
awarded under the 1986 Stock Incentive Plan, the 1996 Stock Incentive
Plan, the 1997 Performance Incentive Plan and the Interpublic Outside
Directors' Stock Incentive Plan, respectively.
<F4> No individual identified in the table has beneficial ownership of more
than 1% of the outstanding shares of Common Stock. The directors
and executive officers as a group beneficially own 2.9234% of
the outstanding shares.
<F5> Except for shares of Common Stock held by Mr. Puris, the beneficial
ownership shown is direct. The shares shown as beneficially owned by
Mr. Puris include 55,630 shares of Common Stock owned by his spouse.
<PAGE>
VOTING
Election of directors will be decided by a plurality of the votes cast
by the holders of shares of Common Stock present in person or by proxy at the
meeting and entitled to vote. Approval of Item 2 will require the
affirmative vote of a majority of all outstanding shares of Common Stock.
Approval of Item 3 will require the affirmative vote of a majority of the
shares present in person or by proxy at the meeting and entitled to vote.
The Company's transfer agent tabulates the votes. Abstentions and broker
non-votes are each tabulated separately and are counted toward the quorum.
For Item 2, shares that are the subject of an abstention or a broker non-vote
are equivalent to a vote against the matter. For Item 3, shares that are the
subject of an abstention are counted, whereas shares, if any, that are the
subject of a broker non-vote are not counted, as shares entitled to vote on
the matter.
STOCKHOLDERS' PROPOSALS TO BE PRESENTED AT 2000 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Annual Meeting
of Stockholders scheduled to be held on May 15, 2000, must be received by the
Company by December 20, 1999, and must comply with applicable Securities and
Exchange Commission regulations, in order to be considered for inclusion in
the Company's Proxy Statement and form of proxy relating to that meeting. If
the proposal is received by the Company less than 45 days prior to the
anniversary of the mailing date of this Proxy Statement, the persons named as
proxies in the Company's 2000 proxy material will have the discretionary
authority to vote on the matter in accordance with their best judgment
without disclosure in the proxy statement of such matter or of how the proxy
holders intend to exercise their discretionary authority to vote on the
matter.
1. ELECTION OF DIRECTORS
The directors of the Company to be elected at the Annual Meeting will
hold office until the next Annual Meeting of Stockholders and until their
successors are elected and qualify or until their earlier death, resignation
or removal. Certain biographical information concerning each of the
Management's nominees are provided below. All of the nominees are currently
serving as directors of the Company. The Management believes that each of
the nominees will be available and able to serve as a director. However, if
for any reason any of these persons should not be available or are unable to
serve, proxies will be voted for the remainder of those nominated and, unless
the size of the Board of Directors is reduced, for a substituted nominee
designated by the Management.
The following information with respect to the principal occupation or
employment, recent employment history, age and directorships in other
companies is as of February 26, 1999, and has been furnished or confirmed to
the Company by the respective nominees. Also listed are the committees of
the Board of Directors on which each serves.
McCann-Erickson WorldGroup, Ammirati Puris Lintas Worldwide and The Lowe
Group are worldwide advertising agency systems owned by Interpublic.
<PAGE>
EUGENE P. BEARD has been Vice Chairman-Finance and Operations and Chief
Financial Officer of the Company since 1995 and previously was Executive Vice
President-Finance and Operations and Chief Financial Officer of the Company
from 1985 to 1995. Mr. Beard has been a director of Interpublic since
1982.
He is a director of Brown Brothers Harriman - 59 Wall Street Fund, Inc.,
Bessemer Trust Company Old Westbury Funds, Inc., and Micrografx, Inc. He
also is a member of the Listed Company Advisory Committee to the Board of
Directors of The New York Stock Exchange. Age 63.
Chairman of the Finance Committee. Member of the Executive Policy Committee.
FRANK J. BORELLI has been Senior Vice President and Chief Financial
Officer of Marsh & McLennan Companies, Inc. since 1984. He is a director of
Marsh & McLennan Companies, Inc. and United Water Resources, Inc. Mr.
Borelli is past Chairman and a Director of the Financial Executives Institute
and is also a Vice Chairman and Trustee of the New York City Chapter of the
National Multiple Sclerosis Society and of the Nyack Hospital. Mr. Borelli
has been a director of Interpublic since 1995. Age 63.
Chairman of the Audit Committee. Member of the Compensation, Executive Policy
and Finance Committees.
REGINALD K. BRACK has been Chairman Emeritus of Time Inc. since July
1997. From September 1994 to June 1997, Mr. Brack was Chairman of Time Inc.
and was its Chairman, President and Chief Executive Officer from December
1986 until August 1994. Mr. Brack has been a director of Interpublic since
1996. Age 61.
Member of the Audit, Compensation, Finance and Nominating Committees.
JILL M. CONSIDINE was appointed Chairman and Chief Executive Officer of
The Depository Trust Company, a large securities depository limited purpose
trust company and clearing corporation in January 1999. She was President of
the New York Clearing House Association from 1993 to 1998. She was Chief
Administrative Officer of American Express Bank Ltd. and a member of its
Board of Directors from 1991 to 1993. Prior to that time she served as New
York State Superintendent of Banks from 1985 to 1991. She is a trustee of
Atlantic Mutual Insurance Company and a director of its affiliate Centennial
Insurance Company. Ms. Considine has been a director of Interpublic since
February 1997. Age 54.
<PAGE>
Member of the Audit and Compensation Committees.
JOHN J. DOONER, JR. has been Chairman and Chief Executive Officer of
McCann-Erickson WorldGroup since 1995 and previously was Chief Executive
Officer of McCann-Erickson WorldGroup from 1994 to 1995. From 1992 to 1994,
Mr. Dooner was President of McCann-Erickson WorldGroup. He served as
President of McCann-Erickson North America from 1988-1992. Mr. Dooner has
been a director of Interpublic since 1995. Age 50.
PHILIP H. GEIER, JR., Chairman of the Board and Chief Executive Officer
of the Company, has been a director of Interpublic since 1975. Mr. Geier was
elected Chairman and Chief Executive Officer of the Company in 1980. Mr.
Geier is a director of Fiduciary Trust Company International, Venator Group,
Inc. and AEA Investors, Inc. Age 64.
Chairman of the Executive Policy Committee. Member of the Finance Committee.
FRANK B. LOWE, Chairman of The Lowe Group, has been a director of
Interpublic since 1990. Mr. Lowe has served as Chairman of The Lowe Group
since its founding in 1981 and also serves as Chairman of Octagon, Inc, a
wholly-owned subsidiary of the Company, specializing in sports and events
marketing. Age 57.
LEIF H. OLSEN, President of Leif H. Olsen Investments, Inc., financial
assets managers and economic consultants, has been a director of Interpublic
since 1972. Mr. Olsen was Senior Vice President and Economist of Citibank
N.A. (now Citigroup) until 1978, when he became Chairman of the Economic
Policy Committee of Citibank N.A., a post he held until 1985. He is a
trustee of Atlantic Mutual Insurance Company and a director of its affiliate
Centennial Insurance Company. Age 73.
Chairman of the Compensation Committee. Member of the Audit, Executive
Policy and Finance Committees.
MARTIN F. PURIS, Chairman, Chief Executive Officer and Chief Creative
Officer of Ammirati Puris Lintas Worldwide as of July 1, 1995, has been a
director of Interpublic since 1995. From August 1994 until July 1995, Mr.
Puris was Vice Chairman of Ammirati Puris Worldwide and Chief Executive
Officer of Ammirati Puris Lintas, Inc., both of which are subsidiaries of
Interpublic. Mr. Puris, a founder of Ammirati & Puris Inc., has been with
that company since its inception in 1974 and was its President and Chief
Executive Officer from 1974 to 1994 when Interpublic acquired that
advertising agency. Age 60.
<PAGE>
ALLEN QUESTROM, who was Chairman and Chief Executive Officer of
Federated Department Stores, Inc. from 1990 to 1997, has been a director of
Interpublic since 1995. He is a director of the Polo Ralph Lauren
Corporation, Barneys New York, Inc. and AEA Investors, Inc. Age 58.
Member of the Compensation and Nominating Committees.
J. PHILLIP SAMPER, Founder and General Partner of Gabriel Venture
Partners since November 1998 and Chairman of Placeware, Inc. since December
1998, was Chief Executive Officer and President of Avistar Systems Corp. from
1997 to October 1998. Prior to that time, Mr. Samper was Chairman, Chief
Executive Officer and President of Quadlux, Inc. from 1996 to 1997. He was
Chairman and Chief Executive Officer of Cray Research, Inc. during 1995 and
was President of Sun Microsystems Computer Corporation from 1994 to 1995.
Mr. Samper was Vice Chairman and Executive Officer of the Eastman Kodak
Company from 1986 to 1989 and a member of the Board of Directors from 1983 to
1989. He was President and Chief Executive Officer of Kinder-Care Learning
Centers from 1990 to 1991. Mr. Samper has been a director of Interpublic
since 1990. Mr. Samper is a director of Armstrong World Industries, Inc.,
Sylvan Learning Systems, Inc., and Ingram Micro, Inc. Age 65.
Chairman of the Nominating Committee. Member of the Compensation Committee.
PRINCIPAL COMMITTEES OF THE BOARD OF DIRECTORS
Executive Policy Committee -- The Executive Policy Committee is
authorized to exercise when the Board of Directors is not in session all
powers of the Board of Directors which, under Delaware law and the By-Laws of
the Company, may properly be delegated to a committee, except certain powers
that have been delegated to other committees of the Board of Directors. The
Executive Policy Committee did not hold any meetings in 1998.
Finance Committee -- The Finance Committee is authorized to review the
financial affairs of the Company and make recommendations with respect
thereto to the Board of Directors. It also approves capital budgets,
guarantees by the Company of obligations of subsidiaries and affiliates and
certain capital transactions (including mergers and acquisitions), and is the
committee that administers the Interpublic Retirement Account Plan. The
Finance Committee held 14 meetings in 1998.
<PAGE>
Audit Committee -- The Audit Committee, whose members cannot be officers
or employees of the Company, is responsible for the selection and retention
of, subject to the approval of the Board of Directors, and the approval of
the annual compensation of, the Company's independent accountants. The Audit
Committee confers with the independent accountants and from time to time
reports to the Board of Directors on matters concerning the auditing of the
books and accounts of the Company. It also reviews and examines the
procedures and methods employed in the Company's internal audit program. It
reviews and submits to the Board of Directors, as soon as possible after the
close of each fiscal year, the consolidated balance sheet of the Company and
its subsidiaries and the related consolidated statements of income, of
stockholders' equity and of cash flows. The Audit Committee held 5 meetings
in 1998.
Compensation Committee -- The Compensation Committee is responsible for
approving the compensation paid to officers of the Company and its
subsidiaries. For these purposes, compensation is deemed to include: (1)
salary, (2) deferred compensation, (3) bonuses and other extra compensation
of all types, including long-term performance incentive awards under the
Company's 1997 Performance Incentive Plan,(4) insurance paid for by the
Company or any of its subsidiaries other than group plans, (5) annuities and
individual retirement arrangements and (6) Special Deferred Benefit
Arrangements. The Compensation Committee also administers the 1997
Performance Incentive Plan (and its predecessors, the Long-Term Performance
Incentive Plan, the Management Incentive Compensation Plan, the 1996 Stock
Incentive Plan and the 1986 Stock Incentive Plan), the 1986 United Kingdom
Stock Option Plan and the Employee Stock Purchase Plan (1995). The
Compensation Committee held 6 meetings in 1998.
Nominating Committee -- The Nominating Committee is responsible for
recommending to the Board of Directors the persons to be nominated for
election to the Board of Directors. Stockholders who desire to recommend
nominees for election at the Annual Meeting may do so by writing to the
Secretary of the Company at the Company's principal executive office set
forth in the second paragraph on page 1 of this Proxy Statement. Any such
recommendation should be submitted prior to December 31 of the year preceding
the Annual Meeting of Stockholders in question, and the recommendation will
be given consideration by the Nominating Committee. The Nominating Committee
held 1 meeting in 1998.
ATTENDANCE AT BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors of the Company held 8 meetings in 1998 and
committees of the Board held a total of 26 meetings. During 1998, Mr. Samper
attended fewer than 75% of the total number of meetings of the Board of
Directors and committees on which he served.
<PAGE>
DIRECTORS' FEES
Each director who is not an employee of the Company or one of its
subsidiaries receives an annual retainer of $24,000 for serving as a
director, an annual retainer of $2,000 for each committee on which he or she
serves, a fee of $1,000 for each meeting of the Board attended and a fee of
$1,000 for each committee meeting attended. The Chairman of the Compensation
Committee receives an additional retainer of $3,000 per year and the Chairman
of each of the Audit and Nominating Committees receives an additional
retainer of $2,500.
Each outside director who, as of December 31, 1995, had accumulated at
least five years of service is entitled to receive an annual retirement
benefit under the Interpublic Outside Directors' Pension Plan (the "Outside
Directors' Pension Plan"). In general, the benefit becomes payable in the
month following the month the director leaves the Board. The benefit is
equal to the amount of the annual retainer paid to the director as a Board
member in the year in which he or she ceased to serve as a director and will
be paid for the same number of years as the director's years of service, up
to a maximum of 15 years. In the event of the death of a director with a
vested retirement benefit, the then present value of the director's unpaid
retirement benefits will be paid to the surviving spouse or the estate of the
director. Effective December 31, 1995, the Outside Directors' Pension Plan
was terminated, except to the extent benefits were accrued prior to
termination. As a result there have been no further accruals for the benefit
of existing directors under the Outside Directors' Pension Plan for
subsequent years. Any director with fewer than five years of service on the
date that the Plan was terminated will not receive any benefits under the
Plan.
In 1994, the stockholders of the Company approved the Interpublic
Outside Directors' Stock Incentive Plan (formerly called the Interpublic
Outside Directors' Stock Option Plan). The Outside Directors' Stock
Incentive Plan (the "Outside Directors' Plan") provides for an annual grant
of options to purchase the number of shares of Common Stock having an
aggregate fair market value of $30,000 on the date of grant. The exercise
price of each option is equal to the fair market value of the Common Stock on
the date of grant. The options become exercisable in full on the third
anniversary after the date of grant and expire ten years from the date of
grant.
An outside director may exercise stock options granted prior to June 1,
1996 that are exercisable on the date of cessation of service for 90 days
following cessation of service as a director, except that an outside director
who is eligible to receive a benefit under the Outside Directors' Pension
Plan may exercise such options for five years following the date of
retirement from the Board of Directors, but in no event after the expiration
of the ten-year option term. Options granted on or after June 1, 1996 that
are exercisable at the time of cessation of service may be exercised for a
period of three years following cessation of service, whether or not the
director is eligible to receive a benefit under the Outside Directors'
Pension Plan, but in no event after expiration of the ten-year option term.
<PAGE>
The Outside Directors' Plan also provides for a periodic grant of 3,000
restricted shares of the Company's Common Stock to each outside director.
The first grant was made in June 1996. An additional grant of 3,000 shares
will be made every fifth year thereafter while the Outside Directors' Plan
remains in effect.
The outside director has all rights of ownership with respect to such
restricted shares, including the right to vote and to receive dividends,
except that, prior to the expiration of a five-year period after the date of
grant (the "Restricted Period"), the outside director is prohibited from
selling or otherwise transferring the shares. If, on or after the first
anniversary of the grant, an outside director's service as a director
terminates for any reason (including death) during the Restricted Period, the
restrictions on transfer will lapse immediately in proportion to the number
of months that have elapsed since the date of grant and the remainder of such
restricted shares will be forfeited. If an outside director's service
terminates for any reason (including death) before the first anniversary of
the date of grant, all such restricted shares will be forfeited. The
committee administering the Outside Directors' Plan may in its discretion
direct the Company to make cash payments to an outside director to assist in
satisfying the federal income tax liability with respect to the receipt or
vesting of the restricted shares.
On June 5, 1998, Mr. Borelli, Mr. Brack, Ms. Considine, Mr. Olsen, Mr.
Questrom and Mr. Samper, each received under the Outside Director's Plan an
award of stock options, covering 505 shares of Common Stock with an exercise
price of $59.50 per share. On June 7, 1996, Messrs. Borelli, Olsen, Questrom
and Samper, received under the Outside Directors' Plan a grant of 3,000
restricted shares. On June 6, 1997, Mr. Brack and Ms. Considine received a
grant of 3,000 restricted shares.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation
paid by the Company and its subsidiaries to the Chief Executive Officer and
the four other most highly compensated executive officers of the Company who
were serving as executive officers on December 31, 1998 (the "named executive
officers") for services rendered in all capacities for each year in the
three-year period ended on that date. As used in this Proxy Statement, the
executive officers of the Company are deemed to include any director of the
Company who currently serves as a chief executive officer of one of the
Company's three agency systems, McCann-Erickson WorldGroup, Ammirati Puris
Lintas Worldwide and The Lowe Group. In addition to the named executive
officers who are employed by Interpublic, the Company has designated as its
other executive officers its Senior Vice President-Human Resources, its Vice
President, General Counsel and Secretary, its Senior Vice President-Financial
Operations, its Senior Vice President-Planning and Business Development and
its Vice President and Controller.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
-------LONG TERM COMPENSATION--------
------- ANNUAL COMPENSATION ------------- ------ AWARDS ----- ------------PAYOUTS-----------
Name Fiscal Salary Bonus Other Restricted Securities LTIP All
and Principal Year Annual Stock Underlying Payouts Other
Position Compensation Awards Options Compen-
sation
<F6> <F7><F8> <F9> <F10> <F11> <F12>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Philip H. Geier 1998 $995,000 $1,500,000 $ - $ -0- 100,000 $ -0- $10,007
Chairman of the 1997 985,416 1,250,000 59,697 2,956,253 54,000 567,000 10,046
Board of Dir. 1996 965,000 1,200,000 89,642 -0- 162,000 567,000 9,557
Chief Executive Officer
Eugene P. Beard 1998 $850,000 $1,300,000 $ - $ -0- 220,000 $ -0- $ 9,206
Vice Chairman- 1997 783,333 1,100,000 - -0- -0- 333,375 9,557
Finance and Oper- 1996 750,000 900,000 - -0- 169,992 333,375 9,557
tions, Chief Financial
Officer and Director
John J. Dooner, Jr. 1998 $860,000 $1,200,000 $ 76,184 $ -0- 60,000 $ -0- $11,123
Chairman of McCann 1997 783,333 990,000 72,346 6,503,756 75,000 388,125 7,397
Erickson WorldGroup 1996 750,000 770,000 74,393 -0- 90,000 354,375 7,726
And Director of Interpublic
Frank B. Lowe 1998 $833,333 $1,000,000 $267,607 $ -0- 60,000 $ -0- $ 9,300
Chairman of The 1997 750,000 850,000 238,163 -0- 60,000 525,250 8,925
Lowe Group and 1996 750,000 600,000 257,561 3,510,938 90,000 459,000 8,550
Director of Interpublic
Martin F. Puris 1998 $850,000 $ 870,000 $ 91,085 $ -0- 60,000 $ -0- $65,268
Chairman of 1997 808,333 770,000 - -0- -0- -0- 58,955
Ammirati Puris 1996 750,000 600,000 52,573 -0- 90,000 -0- 54,464
Lintas Worldwide and
Director of Interpublic
<PAGE>
<FN>
<F6> The salaries of executive officers continuing to serve in the same position are generally
reviewed every two years.
<F7> Consists primarily of bonus payments made pursuant to the Company's Management Incentive
Compensation Program.
<F8> Mr. Puris irrevocably waived a bonus in the amount of $1.5 million that was to become due in 1996.
In lieu thereof, he has received a retirement/survivor benefit as more fully described under the
heading "Special Deferred Benefit Arrangements" in this Proxy Statement.
<F9> Other Annual Compensation for 1998 includes $21,453 in medical/dental coverage and $29,357 paid in
respect of spousal travel on behalf of Mr. Dooner, $200,000 in reimbursement for housing expenses
paid to or on behalf of Mr. Lowe and $32,257 for use of a company car paid to or on behalf of Mr.
Puris.
Other Annual Compensation for 1997 includes $21,210 in medical/dental coverage paid on behalf of Mr.
Geier, $21,210 in medical/dental coverage and $24,416 in respect of spousal travel paid on behalf
of Mr. Dooner, and $200,000 in reimbursement for housing expenses paid to or on behalf of Mr. Lowe.
Other Annual Compensation for 1996 includes $24,078 in medical/dental coverage and $32,221 in club
dues paid on behalf of Mr. Geier, $24,078 in medical/dental coverage and $28,735 in respect of
spousal travel paid on behalf of Mr. Dooner, $200,000 in reimbursement for housing expenses paid to
or on behalf of Mr. Lowe, and $18,339 for use of a company car paid to or on behalf of Mr. Puris.
<F10> The number and value of shares of restricted stock held by the named executive officers at December
31, 1998 (based on the closing price of the Common Stock on December 31, 1998) are as follows: Mr.
Geier - 356,406 shares ($28,423,379); Mr. Beard - 157,743 shares ($12,580,004); Mr. Dooner -
317,574 shares ($25,326,527); Mr. Lowe - 128,154 shares ($10,220,282) and Mr. Puris - 52,500 shares
($4,186,875). The shares of restricted stock awarded to each named executive officer were granted
with at least a five-year vesting period, subject to the discretion of the Committee administering
the Plan to release the restrictions not earlier than one year after the grant date. Dividends on
restricted stock are paid on the same basis as ordinary dividends on the Common Stock.
<F11> Payouts under the Long-Term Performance Incentive Program are made at the end of four-year
performance periods. These four-year periods begin at two-year intervals. An initial payment of
approximately 50% of the estimated total payout for the 1993-1996 performance period was made in
December 1996. The balance of the actual payout amount was made in the first quarter of 1997. Mr.
Beard elected to defer his payout until his retirement.
<PAGE>
<F12> All Other Compensation for 1998 consisted of: (i) the following amounts paid to the named executive
officers as matching contributions under the Interpublic Savings Plan - Mr. Geier - $7,199; Mr.
Beard - $6,398; Mr. Dooner - $6,784; and Mr. Lowe -$7,500; (ii) premiums paid by the Company on
group life insurance - Mr. Geier - $2,808; Mr. Beard - $2,808; Mr. Dooner - $1,152; Mr. Lowe -
$1,800; and Mr. Puris - $1,800;(iii) insurance premiums paid by the Company for Mr. Puris
under: (a) life insurance policies on the life of Mr. Puris consisting of (i) premiums for two
split-dollar life insurance policies totaling $15,835 and (ii) premiums on two other life insurance
policies totaling $37,286; and (b) a disability insurance policy, the premiums for which were
$7,793 and (iv) anniversary awards of $3,187 paid to Mr. Dooner and $2,554 paid to Mr.
Puris.
</FN>
</TABLE>
<TABLE>
Stock Option Grants In 1998
_________________________________________________________________________________________________________________
The following table provides information on grants of stock options in 1998 to the named executive officers and
the estimated grant date present value of the options.
_________________________________________________________________________________________________________________
<CAPTION>
Individual Grants
_________________________________________________________________________________________________________________
Number of Securities % of Total Options Grant Date
Underlying Options Granted to Employees in Exercise Expiration PresentValue
Name Granted # <F13> Fiscal Year Price ($/Sh) Date ($)<F14>
<S> <C> <C> <C> <C> <C>
Philip H. Geier, Jr. 100,000 2.53% $69.1875 12/17/08 $1,911,000
Eugene P. Beard 150,000 3.80% 52.25 9/10/08 2,030,173
70,000 1.77% 69.1875 12/17/08 1,337,700
John J. Dooner, Jr. 60,000 1.52% 69.1875 12/17/08 1,146,600
Frank B. Lowe 60,000 1.52% 69.1875 12/17/08 1,146,600
Martin F. Puris 60,000 1.52% 69.1875 12/17/08 1,146,600
<FN>
<F13> Mr. Beard's grant of a stock option covering 150,000 shares of Common Stock was awarded on September 10,
1998 (the "September Option"). The September Option has a ten-year term and an exercise price equal to
100% of the fair market value of the Common Stock on the date of the grant. The September Option becomes
exercisable on January 1, 2000. All other options were granted on December 17, 1998 (the "December
Options"). The December Options have a ten-year term and an exercise price equal to 100% of the fair
market value on the date of grant. The December Options become exercisable on January 1, 2003.
<F14> The grant date present value of the September Option is calculated using the Black-Scholes Option
Pricing Model and assumes that the options are held for six years. The calculations include the
following assumptions: volatility of 18.22%, dividend yield of 1.15% and risk-free rate of return of
4.85%. The grant date present value of the December Options is calculated using the Black-Scholes
Option Pricing Model and assumes that the options are held for six years. The calculations include the
following assumptions: volatility of 19.87%, dividend yield of .87% and risk-free rate of return of
4.80%.
</FN>
</TABLE>
<PAGE>
<TABLE>
Aggregated Option Exercises in 1998 and Fiscal Year-End
Option Values
_________________________________________________________________________________________________________________
The following table provides information on stock option exercises and the number and the year-end value of
options held by the named executive officers.
_________________________________________________________________________________________________________________
<CAPTION>
Number of Shares Underlying Value of Unexercised
Unexercised Options at In-The-Money Options
December 31, 1998 (#) December 31,1998($)<F15>
--------------------------- --------------------
Shares Acquired
Name on Exercise (#) Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Philip H. Geier, Jr. 110,000 $ 4,915,625 400,300 478,000 $25,264,767 20,433,250
Eugene P. Beard 269,565 10,635,099 201,150 355,000 11,671,052 11,316,255
John J. Dooner, Jr. 48,750 2,048,574 32,400 307,620 1,945,351 12,782,943
Frank B. Lowe None -0- -0- 255,000 -0- 9,981,876
Martin F. Puris None -0- -0- 190,500 -0- 7,299,191
<FN>
<F15> Based on the closing price of the Common Stock on December 31, 1998.
</FN>
</TABLE>
<PAGE>
EMPLOYMENT CONTRACTS, TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
EMPLOYMENT AGREEMENTS
Each of the named executive officers has an employment contract with the
Company providing for the annual compensation and termination dates set forth
below:
Expiration
Name Salary<16> Date <F17>
Philip H. Geier, Jr. $995,000 June 30, 2001
Eugene P. Beard 870,000 December 31, 1999
John J. Dooner, Jr. 870,000 December 31, 2003
Frank B. Lowe 870,000 December 31, 2000
Martin F. Puris 870,000 August 10, 2004
<16> The employment agreements of Messrs. Beard, Lowe and Puris were
amended to provide for salary increases of $20,000 effective
March 1, 1999. Mr. Beard's employment agreement previously
had been amended to provide for a stock option award to purchase
150,000 shares of Interpublic's Common Stock and to provide for
a retroactive increase to 12,500 performance units of his long-
term performance incentive grant for the 1997-2000 performance
period under Interpublic's 1997 Performance Incentive Plan. The
terms of the stock option award are described in this Proxy
Statement under the heading "Stock Option Grants In 1998". The
value of the performance units will be determined at the end of
a four-year period based upon the extent to which targeted
compound growth rates of operating profit of the Company over
that period are achieved.
<F17> Each employment contract is terminable by either party at any time
upon twelve months' notice, except that the Employment Agreement with
Mr. Puris permits him to terminate that contract on six months notice.
<PAGE>
SPECIAL DEFERRED BENEFIT ARRANGEMENTS
In addition to an employment contract, each of the named executive officers
has entered into special deferred benefit agreements with Interpublic as
described below.
Mr. Beard is a party to three agreements which in the aggregate provide
that if he dies while he is employed by the Company $194,000 per year will be
paid to his beneficiaries for 15 years following his death. Alternatively, he
will be paid benefits for 15 years of $194,000 per year if he retires on or
after his 60th birthday. The Company also has entered into an agreement with
Mr. Beard which provides if he dies while he is employed by the Company,
$230,000 per year will be paid to his beneficiaries for 15 years following his
death. Alternatively, he will be paid an annual benefit of $230,000 for 15
years after he retires. In 1998, the Company agreed to increase all of those
benefits by 4% annually through 2003. In 1998, the Company also entered into
another contract with Mr. Beard to provide that upon his death or retirement
from the Company, Mr. Beard or his beneficiaries will receive an annual payment
of $400,000 for 15 years.
Mr. Dooner is a party to two agreements which in the aggregate provide
that if he dies while he is employed by the Company $186,000 per year will
be paid to his beneficiaries for 15 years following his death. Alternatively
if he retires, resigns or is otherwise no longer in the employment of the
Company on or after his 55th birthday he will be paid benefits for 15 years
ranging from $130,200 to $186,000 per year, depending upon the year his
employment terminates. In the event Mr. Dooner's employment terminates prior
to his 55th birthday, other than by reason of death, he will be paid lesser
sums but not less than an aggregate of $380,000. The Company also has
entered into an agreement with Mr. Dooner which provides that if he dies
while he is employed by the Company, his beneficiaries would receive $88,500
annually for 15 years. Alternatively when he retires from the Company, the
Company will pay him retirement benefits at the rate of $88,500 per year for
15 years.
Mr. Geier is a party to two agreements which in the aggregate provide that
if he dies while he is employed by the Company $160,000 per year will be paid
to his beneficiaries for 15 years following his death. Alternatively, he
will be paid benefits for 15 years of $160,000 per year when he retires. The
Company also has entered into an agreement with Mr. Geier which provides
that if he dies while he is employed by the Company $255,000 per year will be
paid to his beneficiaries for 15 years following his death. Alternatively,
he will be paid an annual benefit of $255,000 for 15 years upon his
retirement from the Company.
<PAGE>
Mr. Lowe is a party to an agreement which provides that if he dies while
he is employed by the Company $158,400 per year will be paid to his
beneficiaries for 15 years following his death. If he retires on or after
his 60th birthday, he will be paid a benefit of $158,400 per year for 15
years. If he retires, resigns or his employment is terminated on or after
his 57th birthday, but prior to his 60th birthday, he will be paid benefits
ranging from $110,880 to $148,896 per year for 15 years based on the year his
employment terminates. The Company also has entered into an agreement with
Mr. Lowe that provides that if he dies while he is employed by the Company,
an amount of $133,200 per year will be paid to his beneficiaries for 15 years
following his death. If he retires on or after his 64th birthday, he will
receive a benefit of $133,200 per year for 15 years. If he retires or
resigns or his employment is terminated on or after his 60th birthday, but
prior to his 64th birthday, he will receive benefits for a period of 15 years
ranging from $60,952 to $117,216 per year, depending upon the year his
employment terminates.
Mr. Puris is a party to an agreement which provides that if he dies while
he is employed by the Company, his beneficiaries will receive payments of
$300,000 per year for 15 years following his death. If he retires on or after
his 65th birthday, Mr. Puris will receive retirement benefits of $300,000 per
year for 15 years. If he retires, resigns or his employment is terminated on
or after his 63rd birthday, but prior to his 65th birthday, he will be paid
benefits ranging from $230,000 to $265,000 per year for 15 years, depending
upon the year his employment terminates. In the event the employment of Mr.
Puris were to terminate prior to his 63rd birthday other than for death, he
would receive a lump-sum amount that in any case would not be less than
$1,500,000.
EXECUTIVE SEVERANCE AGREEMENTS
Messrs. Beard, Dooner, Geier and Lowe each have an agreement with the
Company pursuant to which (a) sums previously deferred pursuant to employment
agreements, Special Deferred Benefit Agreements and the Management Incentive
Compensation Plans of the Company and its subsidiaries would become payable
within 30 days following a "Change of Control" of the Company, if the
individual had so elected prior to the Change of Control, and (b) a cash
severance payment would become payable to such individual if, within two
years after the Change of Control, his employment should be terminated by the
Company (except for "cause") or the individual should resign for "good reason".
<PAGE>
The agreements provide that a Change of Control occurs if: (a) any person
other than Interpublic or any of its subsidiaries, becomes the beneficial owner
(within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended) of 30% or more of the combined voting power of Interpublic's then
outstanding voting securities; (b) the stockholders approve an agreement to
merge or consolidate with another corporation (other than a subsidiary of
Interpublic) or an agreement to sell or dispose of all or substantially all of
the business or assets of Interpublic; or (c) during any period of two
consecutive years, individuals who, at the beginning of such period,
constituted the Board of Directors cease for any reason to constitute at
least a majority thereof, unless the election or the nomination for election
by Interpublic's stockholders of each new director was approved by a vote of
at least two-thirds of the directors then still in office who were directors
at the beginning of the period.
The agreements provide, for purposes of determining an Executive's right
to receive severance payments only, that Interpublic shall have cause to
terminate an executive, following a Change of Control, if the executive: (a)
engages in conduct that constitutes a felony and that results in the personal
enrichment of the executive at the Company's expense; (b) refuses to
substantially perform his responsibilities for the Company; or (c)
deliberately and materially breaches any agreement between himself and the
Company and fails to remedy that breach within a 30-day cure period.
For purposes of determining an executive's right to receive severance
payments only, an executive under the terms of the agreements may resign for
"good reason" if, without his consent, in any circumstance other than his
disability, his office in the Company or the geographical area of his
employment should be changed or his compensation should not continue to be
paid and increased on the same basis as had been in effect prior to the
Change of Control or the individual should determine in good faith that the
Company had, without his consent, effected a significant change in his status
within, or the nature or scope of his duties or responsibilities with, the
Company and the Company failed to cure such situation within 30 days after
written notice from the individual.
The severance payment would be three times the individual's average annual
compensation during the two calendar years ended prior to the date of the
Change of Control, plus a partial annual bonus based on the prior year's
bonus prorated for the elapsed portion of the year in which employment
terminated. The average compensation used in calculating the severance
payment would be the individual's taxable compensation plus any deferred
compensation accrued during the two relevant years, but would not include any
deferred compensation earned in prior years but paid during the two years
and would not include any taxable compensation relating to any stock option
or restricted stock plan of the Company.
<PAGE>
Each contract includes the agreement of the individual providing that if
the individual's employment terminates in circumstances entitling him to a
severance payment, he will, for a period of 18 months following the termination
of his employment, neither (a) solicit any employee of the Company or any of
its subsidiaries to leave such employ to enter into the employ of the
individual, or any person or entity with which the individual is associated,
nor (b) solicit or handle, on his own behalf or on behalf of any person or
entity with which he is associated, the advertising, public relations, sales
promotion or market research business of any advertiser which was a client of
the Company or any of its subsidiaries on the date the individual's
employment terminates.
The agreements give the individuals who are parties thereto an option to
limit payment under the agreements to such sum as would avoid subjecting the
individual to the excise tax imposed by Section 4999 of the Internal Revenue
Code.
<PAGE>
RETIREMENT PLAN
As of January 1, 1992, the Company adopted the Interpublic Retirement
Account Plan to provide benefits under a "cash balance formula" to employees of
Interpublic and most of its domestic subsidiaries who have at least five years
of service. Each year a participant's account balance is credited with an
amount equal to a percentage of the participant's annual compensation and
interest credits. The percentage of annual compensation varies based on the
sum of the participant's age and years of service from 1.5% for participants
with a sum less than 40 years to 5% for participants with a sum of 80 or more
years. Interest credits are based on the 1-year U.S. Treasury bill rate
plus 1 percentage point, compounded quarterly, and are guaranteed to be at
least 5% per year, compounded quarterly.
Until July 31, 1987, employees of the Company and most of its domestic
subsidiaries were entitled in general to receive at retirement a monthly
retirement benefit pursuant to a defined benefit pension formula computed as a
percentage of average monthly compensation during the five consecutive calendar
years with highest compensation with certain exclusions. The percentage of
average monthly compensation used to calculate the monthly benefit was
determined by multiplying the number of years of accredited service (which is
defined in the Plan as the period of participation in the Plan) by 1.3%.
Beginning July 31, 1987, the method of calculating the pension benefit was
changed to a career average formula based on annual compensation. The
percentage of annual compensation used to calculate the benefit was 1% of each
year's compensation up to $15,000 plus 1.3% of any compensation in excess of
that amount.
Participants under the defined benefit pension formula on December 31,
1991, had their normal retirement benefit converted on an actuarial basis into
an "opening cash balance" as of January 1, 1992. In addition, participants
continued to accrue benefits pursuant to the career average formula and became
eligible to receive upon retirement the higher of (1) the participant's benefit
under the cash balance formula or (2) the participant's accrued retirement
benefit under the career average formula as of December 31, 1991, plus any
accrual after that date calculated pursuant to the career average formula.
Employees joining the Company after December 31, 1991, were eligible to
accrue benefits only under the cash balance formula.
With certain minor exceptions, "compensation" under the career average
formula as well as the cash balance formula includes all compensation subject
to federal income tax withholding. Annual compensation for pension accruals
since December 31, 1988 has been limited by federal tax law. Currently, the
limit is $160,000, which is subject to future cost-of-living adjustments.
<PAGE>
In December 1997, the Board of Directors of the Company adopted a
resolution to freeze benefit accruals under the Interpublic Retirement Account
Plan as of March 31, 1998. Retirement account balances as of that date will
continue to be credited with interest until benefits begin in accordance with
the generally applicable Plan provisions, but additional Company allocations
have been discontinued as of March 31, 1998. In accordance with the
resolution, Retirement Account Plan participants whose benefits were not
already vested became fully vested as of April 1, 1998.
In addition, effective April 1, 1998, employees with five or more years of
Retirement Account Plan participation began to participate in a new
Compensation Plan. Under the new Compensation Plan, an account is
established for each eligible employee and credited with up to ten annual
allocations depending on the employee's years of participation in the
Retirement Account Plan. Each annual allocation approximates the
discontinued allocations under the Retirement Account Plan. In general, the
balance in each employee's account begins to vest gradually after five years
of participation in the new Compensation Plan. Payouts generally are made
while the employee is still employed by the Company or one of its subsidiaries.
The estimated annual retirement benefit that each of the named executive
officers would receive at normal retirement age, payable as a straight life
annuity together with the annual benefit under the new Compensation Plan, is as
follows: Mr. Beard $114,374; Mr. Dooner - $82,534; Mr. Geier - $130,000; Mr.
Lowe - $13,514 and Mr. Puris - $9,058. Alternatively, each of the named
executive officers could take the benefit as a lump sum estimated as follows:
Mr. Beard - $1,185,508; Mr. Dooner - $768,044; Mr. Geier - $1,385,098; Mr. Lowe
- - $136,483 and Mr. Puris - $91,487.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Compensation Policies for Executive Officers
The Company's overall business strategy is to increase shareholder value
over the long term. Consistent with this strategy, the Compensation Committee
has endeavored to develop and administer compensation policies that are linked
to the successful achievement of the Company's strategy.
The objective of the Company's executive compensation program is to
provide key executives with short-term and long-term compensation
opportunities that will enhance shareholder value by motivating executives,
increasing retention and rewarding outstanding individual and Company
performance.
The compensation paid to executives consists of a base salary and
incentive compensation which may be earned only if the Company's financial
performance meets or exceeds annual growth targets. Incentive opportunities
for the most part are long term, as well as at risk and equity oriented.
Those incentive opportunities are provided pursuant to one or more of the
following programs covered under the Company's shareholder-approved 1997
Performance Incentive Plan:
<PAGE>
- Management Incentive Compensation Program (the "MICP"),
which is an annual bonus plan that establishes a bonus
pool based on profits for the last-completed fiscal
year. Individual awards are made based on performance
and are typically paid in cash but may be paid in
stock.
- Long-Term Performance Incentive Program (the "LTPIP"),
which provides for biennial awards of performance units
each having a four-year term. These awards entitle a
participating executive to receive cash payments based
on the extent to which long-term operating profit
targets are achieved by the division or entity of the
Company for which the executive is responsible.
- Stock Incentive Program, which provides for the
issuance of stock options and restricted stock. These
instruments increase in value over time only if the
market price of Interpublic Common Stock increases.
They are usually forfeited in the absence of action by
the Committee if an executive leaves the Company within
a specified period following the date of the award.
The determination of the amount and form of executive compensation,
including incentive compensation, paid to each executive officer of the Company
is made by the Committee based on a discretionary evaluation, after taking into
account a range of factors that include:
(i) The financial results of the Company and the anticipated developments in
the advertising industry.
(ii) The total annualized compensation for the particular executive based on
salary, bonus and incentive compensation.
(iii) The accumulated value of incentive compensation previously provided such
as stock options, restricted stock or performance units.
(iv) The current and future financial and tax impact on the Company and on the
executive of benefits under the Company's compensation plans.
(v) The particular achievements measured against pre-determined annual
objectives of the executive.
(vi) The talents and unique qualities of the executive and the value of his or
her accumulated experience with the Company as those factors are relevant
to the future management of the Company.
There is no pre-determined weight assigned to any of the above factors;
however compensation decisions by the Committee are greatly influenced by the
annual financial performance of the Company.
<PAGE>
The Committee's overall knowledge and experience of executive compensation
practices provides the basis for making the subjective evaluations which in
part determine the salaries paid and the incentive awards made to the executive
officers.
In 1998, the Compensation Committee of the Company consisted of six
experienced outside directors. Most of the members of the Compensation
Committee have served and continue to serve on a number of other corporate
boards in a similar capacity. All members have extensive knowledge of
compensation practices in the private business sector generally.
1998 Compensation of Executive Officers
Base Salaries
Base salaries for certain employee directors were increased during 1998 as
well as for some executive officers other then those listed on the Summary
Compensation Table. Salary increases for executive officers and employee
directors are based on professional merit performance, promotions and overall
financial results.
MICP
Under the Management Incentive Compensation Program, annual bonuses to
officers and key employees of the Company and its subsidiaries are paid from an
annual bonus pool that may not exceed 5% of the amount by which consolidated
pre-tax income on a worldwide basis exceeds 15% of the average equity capital
of the Company in the immediately preceding calendar year. In 1998, total
MICP payments to executive officers were higher than in 1997 as a result of
the Company satisfying or exceeding its annual business plan and objectives,
including achievement of targeted revenue, profit and net income.
LTPIP
The Long-Term Performance Incentive Program comprises a significant
portion of the total compensation for executive officers of Interpublic and key
employees of its subsidiaries. Awards under the LTPIP, consisting of
performance units each having a four-year term, are granted biennially in odd-
numbered years. No awards under the LTPIP were granted in l998 to executive
officers, except that a retroactive grant of performance units was awarded to
Mr. Beard. Information with respect to that award may be found under the
heading "Employment Contracts, Termination of Employment and Change-In-Control
Arrangements" in this Proxy Statement.
<PAGE>
Equity Grants
Under the shareholder-approved 1997 Performance Incentive Plan, stock
options and restricted stock may be awarded to officers and key employees of
the Company and its subsidiaries. Stock options are granted on such terms as
are approved by the Committee, provided that the term of the option may not
exceed ten years and the exercise price may not be less than the fair market
price of the Common Stock on the date of grant. Shares of restricted stock
granted are restricted as to the selling or transferring of the shares
typically for a minimum of five years from date of grant and are forfeited if
the executive should leave the employment of the Company, unless the
Committee deems otherwise. In determining individual grants of stock options
and restricted stock the Committee takes into consideration the number of
years since previous grants, the financial performance of the Company over
recent years in terms of annual operating margin, revenue and operating
profit growth and the growth of shareholder value and the overall
compensation and performance of the executive. The Committee also reviews
various outside survey data pertaining to the pattern of grants made by other
companies having approximate capitalization and growth similar to those of
Interpublic (including several of the companies in the Peer Group Index,
appearing in the two performance graphs that follow this Report).
Restricted stock grants are periodically granted by the Committee to
executive officers and are designed to focus key executives on the long-term
performance of the Company. During 1998 a total of 5,500 restricted shares and
86,500 stock options were granted to key executives other than the named
executive officers, in recognition of individual achievements and as long term
incentives.
In 1998, stock option grants totaling 250,000 shares were granted to named
executive officers other than Mr. Geier. The individual option grants (Mr.
Beard 70,000, Mr. Puris 60,000, Mr. Lowe 60,000 and Mr. Dooner 60,000) awarded
in 1998 were made in conjunction with performance unit grants that in turn are
effective January 1, 1999, under the Company's Long Term Performance Incentive
Program. The Committee also granted Mr. Beard 150,000 stock options in 1998.
No named executive officers, including Mr. Geier were granted restricted stock
awards during l998.
Tax Law
Under the federal income tax laws, the deduction that a publicly-held
company is allowed for compensation paid to the chief executive officer and to
its other four most highly compensated executive officers generally is limited
to $1 million exclusive of qualifying performance-based compensation. The
Committee has and will continue to consider ways to maximize the deductibility
of executive compensation, including the utilization of performance-based
plans, while retaining the discretion the Committee deems necessary to
compensate executive officers in a manner commensurate with performance and
the competitive environment for executive talent. The 1997 Performance
Incentive Plan contains provisions relating to MICP Awards, LTPIP Awards,
stock option grants and performance units that are intended to make the
awards eligible for exclusion from the $1 million limitation.
<PAGE>
Compensation of Chief Executive Officer
During 1998 certain changes were made to Mr. Geier's compensation package
in recognition of his continued successful tenure as Chairman and Chief
Executive Officer.
Mr. Geier received an 1998 MICP award of $1,500,000. The award to Mr.
Geier was based on a number of factors which included an increase of 54.7% in
net income, an increase of 48.7% in basic earnings per share and an increase of
14% in gross income, which in the opinion of the Compensation Committee
contributed to an increase in shareholder value.
The Committee awarded Mr. Geier during l998 a stock option grant of
100,000 shares and a l999 grant of performance units under the Company's Long
Term Incentive Compensation Program. The option grant to Mr. Geier was
consistent with the Committee's desire to link the major portion of his
compensation to the performance and growth of the Company stock. Mr.
Geier's last salary increase in the amount of $30,000 per year was June 1, 1997
The majority of Mr. Geier's compensation package continues to be at risk
and directly tied to the long-term financial and performance growth of the
Company and the value of Interpublic stock.
Leif H. Olsen, Chairman
Frank J. Borelli
Reginald K. Brack
Jill M. Considine
Allen Questrom
J. Phillip Samper
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN <F18>
THE INTERPUBLIC GROUP OF COMPANIES, INC. COMMON STOCK,
THE S&P 500 AND PEER GROUP INDEX <F19>
- -----------------------------------------------------------------
1993 1994 1995 1996 1997 1998
Interpublic 100.00 102.12 140.08 155.65 247.77 400.61
S & P 500 100.00 101.32 139.37 171.35 228.50 293.79
Peer Group 100.00 108.23 145.22 187.44 294.47 418.52
_________________________________________________________________
<F18> Assumes $100 is invested on December 31, 1993, and that all dividends
are reinvested.
<F19> The Peer Group Index includes Interpublic, and in addition consists of
Cordiant plc (formerly Saatchi & Saatchi plc), Omnicom, True North
Communications Inc., Grey Advertising and WPP Group. Total
shareholder return is weighted according to market capitalization at
the beginning of each annual period.
<PAGE>
<TABLE>
COMPARISON OF THIRTEEN-YEAR CUMULATIVE TOTAL RETURN OF <F20>
THE INTERPUBLIC GROUP OF COMPANIES, INC. COMMON STOCK,
THE S&P 500 AND PEER GROUP INDEX <F21>
The table below contains the data points used in the Performance Graph that appears in the printed proxy statement.
_________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
IPG 100.00 131.81 155.78 184.45 250.70 275.13 458.16 566.49 528.34 539.52 740.09 822.34 1309.05 2116.54
S&P 500 100.00 118.66 124.76 145.34 191.25 185.30 241.51 259.88 286.03 289.81 398.63 490.12 653.58 840.34
Peer Grp 100.00 106.87 112.00 115.03 132.02 93.23 135.70 168.97 184.50 199.68 267.93 345.83 543.26 772.12
_________________________________________________________________________________________________________________
<FN>
<F20> Assumes $100 is invested on December 31, 1985, and that all dividends are reinvested.
<F21> The Peer Group Index includes Interpublic, and in addition consists of Cordiant plc (formerly Saatchi &
Saatchi plc), Omnicom, True North Communications Inc. (formerly Foote Cone & Belding), Grey
Advertising and WPP Group. Total shareholder return is weighted according to market capitalization at the
beginning of each annual period.
An important objective of the Company is to create long-term reward for shareholders. The table that appears
above has been presented to show comparative cumulative return over a thirteen-year period.
</TABLE>
<PAGE>
2. PROPOSAL TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
On March 25, 1999, the Company's Board of Directors adopted a resolution
proposing that Article 4 of the Company's Restated Certificate of Incorporation
be amended to increase the number of authorized shares of Common Stock, $.10
par value, from 225,000,000 to 550,000,000 shares. In addition to the
139,932,896 shares of Common Stock outstanding at February 28, 1999, a total
of 21,121,869 shares were reserved for issuance pursuant to various employee
benefit plans and a total of 4,002,479 shares are reserved for issuance upon
the conversion of outstanding subordinated convertible debentures. This
leaves an aggregate of 59,942,756 shares otherwise available for future
issuance.
Purpose of Increase
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to make additional shares available for issuance
from time to time in order to have the flexibility to meet such corporate
purposes and needs as may be determined by the Board of Directors to be proper
and as may arise from time to time, including a possible stock split. In
addition, such purposes and needs may include increases in capital through one
or more offerings of Common Stock or the issuance of shares of Common Stock in
exchange for the acquisition of other companies or properties. If the proposed
amendment to the Restated Certificate of Incorporation is approved, the
additional shares will be available for issuance at such times as the Board of
Directors deems advisable without further action of the Company's stockholders,
except to the extent required by law or the rules of any stock exchange on
which the Company's securities are listed by reason of the nature of the
transaction in which the shares are to be issued.
Vote Required
Under Delaware law, the jurisdiction of the Company's incorporation, the
affirmative vote of the majority of all outstanding shares of Common Stock is
necessary for the adoption of the proposed amendment to the Restated
Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION
3. APPOINTMENT OF INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers has been appointed and is acting as independent
accountants of the Company for the year 1999. This firm has been the Company's
independent accountants since 1952. PricewaterhouseCoopers has advised the
Company that they are independent accountants with respect to the Company and
its subsidiaries within the meaning of the rules and regulations of the
Securities and Exchange Commission.
A representative of PricewaterhouseCoopers is expected to be present at
the Annual Meeting with the opportunity to make a statement and to respond to
appropriate questions.
<PAGE>
If a majority of the shares of Common Stock present in person or by proxy
and entitled to vote do not confirm the appointment of PricewaterhouseCoopers,
the Board of Directors of the Company will take such vote into consideration
and take action consistent to the extent practicable with the stockholders'
vote and the Company's need for the services of independent accountants for
the balance of the year 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR CONFIRMATION OF THE
APPOINTMENT OF PRICE WATERHOUSECOOPERS.
<PAGE>
SOLICITATION OF PROXIES
This solicitation of proxies is made on behalf of the Management of the
Company. Solicitation of proxies will be primarily by mail. In addition,
proxies may be solicited in person or by telephone, telefax or other means by
officers, directors and employees of the Company, for which they will receive
no additional compensation. Banks, brokers and others holding stock in their
names or in the names of nominees will be reimbursed for out-of-pocket expenses
incurred in sending proxy material to the beneficial owners of such shares.
The cost of solicitation will be borne by the Company. D.F. King & Co., New
York, N.Y., has been retained to assist the Company in the distribution of
proxy materials to, and the solicitation of proxies from, brokers and other
institutional holders at a fee of $8,000, plus reasonable out-of-pocket
expenses. The Company also has agreed to indemnify D.F. King for certain
liabilities, including liabilities arising under the federal securities laws.
The Management is not aware of any other matters which may be brought
before the meeting. If other matters not now 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.
By Order of the Board of
Directors,
Nicholas J. Camera
Secretary
April __, 1999
<PAGE>
APPENDIX
FORM OF PROXY
THE INTERPUBLIC GROUP OF COMPANIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 17, 1999
The undersigned hereby constitutes and appoints Eugene P. Beard,
Philip H. Geier, Jr. and Nicholas J. Camera, and each of them,
his true and lawful agents and proxies, with full power of
substitution in each, to represent the undersigned at the Annual
Meeting of Stockholders of THE INTERPUBLIC GROUP OF COMPANIES,
INC. to be held in The Equitable Center, 787 Seventh Avenue, New
York, New York, on Monday, May 17, 1999 at 9:30 A.M. Eastern
Time, and at any adjournments thereof, on all matters to come
before the meeting.
Election of Directors. Nominees:
Eugene P. Beard, Frank J. Borelli, Reginald K. Brack, Jill
M. Considine, John J. Dooner, Jr., Philip H. Geier, Jr.,
Frank B. Lowe, Leif H. Olsen, Martin F. Puris, Allen
Questrom and J. Phillip Samper.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY
BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF
DIRECTORS' RECOMMENDATIONS. HOWEVER, THE PROXY HOLDERS CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN, DATE AND RETURN THIS CARD.
FOLD AND DETACH HERE IF YOU ARE RETURNING
YOUR VOTED PROXY CARD BY MAIL
THE INTERPUBLIC GROUP OF COMPANIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 1999
9:30 A.M.
THE EQUITABLE CENTER
787 SEVENTH AVENUE
NEW YORK, NEW YORK
<PAGE>
PLEASE MARK YOUR
VOTES AS IN THIS X
EXAMPLE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF EACH OF THE
DIRECTOR NOMINEES, FOR PROPOSAL 2 AND FOR PROPOSAL 3, AND IN THE DISCRETION
OF THE PROXY HOLDERS ON ANY OTHER MATTER AS MAY PROPERLY COME BEFORE THE
MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2 AND FOR PROPOSAL
3.
FOR WITHHELD
1. Election
of Directors.
(see reverse)
For, except vote withheld from the following nominee(s):
FOR AGAINST ABSTAIN
2. Approval of amendment to the
Company's Restated Certificate
of Incorporation to increase
the number of authorized shares
of Common Stock to 550
million.
FOR AGAINST ABSTAIN
3. Confirmation of Pricewaterhouse
Coopers as independent
accountants for 1999.
Signature(s) Date
The signer hereby revokes all proxies heretofore given by the signer to vote
at said meeting or any adjournments thereof.
Note: Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
FOLD AND DETACH HERE IF YOU ARE RETURNING
YOUR VOTED PROXY CARD BY MAIL
<PAGE>
VOTE BY TELEPHONE OR INTERNET
QUICK.EASY.IMMEDIATE
You also may take advantage of two new cost-effective and convenient
ways to vote your shares.
You may now vote your proxy 24 hours a day, 7 days a week, using either
a touch-tone telephone or through the Internet. YOUR TELEPHONE OR
INTERNET VOTE MUST BE RECEIVED BY 12:00 MIDNIGHT NEW YORK TIME ON
MAY 16, 1999.
Your telephone or Internet vote authorizes the proxies named on the
above proxy card to vote your shares in the same manner as if you
marked, signed, and returned your proxy card by mail.
VOTE BY PHONE: ON A TOUCH-TONE TELEPHONE DIAL 1-800-OK2-VOTE
(1-800-652-8683) FROM THE U.S. AND CANADA OR
DIAL 201-324-0377 FROM OTHER COUNTRIES.
You will be asked to enter the VOTER CONTROL
NUMBER located in the box just below the
perforation on the proxy card.
Then follow the instructions.
OR
VOTE BY INTERNET: POINT YOUR BROWSER TO THE WEB ADDRESS:
HTTP://WWW.VOTE-BY-NET.COM
You will be asked to enter the VOTER
CONTROL NUMBER located in the box just
below the perforation on the proxy card.
Then follow the instructions.
OR
VOTE BY MAIL: Mark, sign and date your proxy card and return
it in the postage-paid envelope. IF YOU ARE
VOTING BY TELEPHONE OR THE INTERNET, PLEASE DO
NOT MAIL YOUR PROXY CARD.
<PAGE>
