UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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THE INTERPUBLIC GROUP OF COMPANIES, INC. | ||||
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The Interpublic Group of Companies, Inc.
909 Third Avenue, New York, NY 10022
April 12, 2019
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 Thursday, May 23, 2019. The meeting will be held at the Paley Center for Media, 25 West 52 Street, New York, NY 10019.
This year, we are pleased to once again use the U.S. Securities and Exchange Commission rule that allows companies to furnish their proxy materials on the Internet. As a result, we are mailing to many of our stockholders a notice of the online availability of our proxy materials instead of paper copies of this proxy statement and our 2018 Annual Report. The notice contains instructions on how to access those documents online. The notice also contains instructions on how stockholders receiving the notice can request a paper copy of our proxy materials, including this proxy statement, our 2018 Annual Report and a form of proxy card or voting instruction card. This distribution method conserves natural resources and reduces the costs of printing and distributing our proxy materials.
The business to be considered is described in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement. In addition to these matters, we will present a report on the state of our Company.
We hope you will be able to attend.
Sincerely,
Michael I. Roth
Chairman of the Board
and Chief Executive Officer
The Interpublic Group of Companies, Inc.
909 Third Avenue, New York, NY 10022
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Time and Date: |
9:30 a.m., local time, on Thursday, May 23, 2019 |
Place: |
The Paley Center for Media, 25 West 52 Street, New York, NY 10019 |
Items of Business:
1. | To elect the eleven directors listed on pages 4-8 of the enclosed Proxy Statement; |
2. | To ratify the appointment of PricewaterhouseCoopers LLP as Interpublics independent registered public accounting firm for the year 2019; |
3. | To hold an advisory vote on named executive officer compensation; |
4. | To approve The Interpublic Group of Companies, Inc. 2019 Performance Incentive Plan; |
5. | To vote on a stockholder proposal described in the proxy statement if properly presented at the meeting; and |
6. | To transact such other business as may properly come before the meeting. |
Information about the foregoing matters to be voted upon at the Annual Meeting is contained in the Proxy Statement.
The close of business on March 28, 2019 has been established as the record date for the determination of stockholders entitled to notice of and to vote at this meeting and any adjournment thereof.
Stockholders will need to present a valid photo identification to be admitted to the Annual Meeting. Please note that the use of photographic and recording devices is prohibited at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be held on May 23, 2019.
Interpublics 2019 Proxy Statement and 2018 Annual Report are available electronically at http://www.interpublic.com.
By Order of the Board of Directors,
Andrew Bonzani
Executive Vice President, General Counsel and Secretary
Your vote is important! Whether or not you plan to attend the meeting in person, please take a moment to vote by Internet, telephone or completing a proxy card as described in the How Do I Vote section of this document. Your prompt cooperation will save Interpublic additional solicitation costs. You may revoke your proxy as described in the How Can I Revoke My Proxy or Change My Vote section of this document if you decide to change your vote or if you decide to attend the meeting and vote in person.
Dated: April 12, 2019
Frequently Asked Questions
2 | Interpublic Group 2019 Proxy Statement |
Frequently Asked Questions
Interpublic Group 2019 Proxy Statement | 3 |
Nominees for Director
The following information on each Director nominee is as of March 28, 2019, and has been provided or confirmed to Interpublic by the nominee.
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JOCELYN CARTER-MILLER
Age: 61
Director Since: 2007 |
Interpublic Committees: Audit Corporate Governance (Chair) Executive |
Public Directorships: Arlo Technologies, Inc. The Principal Financial Group, Inc.
Former Directorships Netgear, Inc. |
JOCELYN CARTER-MILLER is President of TechEdVentures, Inc., a community and personal empowerment firm that develops and markets educational and community-based programs. Ms. Carter-Miller was Executive Vice President and Chief Marketing Officer of Office Depot, Inc. from February 2002 until March 2004. Prior to that time, Ms. Carter-Miller was Corporate Vice President and Chief Marketing Officer of Motorola, Inc. from February 1999 until February 2002. Ms. Carter-Miller is also a former board member of the Association of National Advertisers.
Qualifications: Ms. Carter-Miller provides the Board with an important perspective in the marketing field, which is a critical component of Interpublics business, based on her extensive executive and marketing experience acquired during her time at Motorola, where she served as its Chief Marketing Officer and more recently as Executive Vice President and Chief Marketing Officer of Office Depot, Inc. Her current work as President of TechEdVentures provides the Board with a meaningful voice in keeping Interpublic focused on its corporate social responsibilities.
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H. JOHN GREENIAUS
Age: 74
Director Since: 2001 |
Interpublic Committees: Audit Compensation and Leadership Talent |
Former Public Directorships: Nabisco Inc. Pennzoil Inc. Primedia Inc. True North Communications, Inc. |
H. JOHN GREENIAUS retired as Chairman and Chief Executive Officer of Nabisco Inc. in 1997 having served in that position between 1993 and 1997. Mr. Greeniaus was named President and CEO of Nabisco in 1989 following KKRs leveraged buyout of the company and served in that position until 1993. Prior to that time, he held various marketing and general management positions with Nabisco in Canada, Europe and the U.S. Mr. Greeniaus began his career with Procter & Gamble in Canada and subsequently he worked at J. Walter Thompson and PepsiCo before joining Standard Brands, a Nabisco predecessor, in 1977.
Qualifications: Mr. Greeniaus provides insight into the challenges and issues facing a global enterprise from his experience as the former Chairman and Chief Executive Officer of Nabisco as well as his time managing Nabiscos European operations. His experience at PepsiCo, where he served as Vice President of Marketing, and his time at J. Walter Thompson allow him to offer
4 | Interpublic Group 2019 Proxy Statement |
Item 1. Election of Directors
valuable perspectives on issues relevant to a marketing services company. Mr. Greeniaus prior directorships at other public companies across a variety of industries give him the expertise to provide valuable contributions on accounting and corporate governance matters.
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MARY J. STEELE GUILFOILE
Age: 65
Director Since: 2007 |
Interpublic Committees: Audit (Chair) Corporate Governance Executive |
Public Directorships: C.H. Robinson Worldwide, Inc. Hudson Ltd. Pitney Bowes Inc.
Former Public Directorships: Valley National Bancorp. Viasys Healthcare, Inc.
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MARY J. STEELE GUILFOILE, is currently Chairman of MG Advisors, Inc., a privately owned financial services merger and acquisitions advisory and consulting firm. From 2000 to 2002, Ms. Guilfoile was Executive Vice President and Corporate Treasurer at JPMorgan Chase & Co. and also served as Chief Administrative Officer of its investment bank. Ms. Guilfoile is a former Partner, CFO and COO of The Beacon Group, LLC, a private equity, strategic advisory and wealth management partnership, from 1996 through 2000. Ms. Guilfoile, a licensed CPA, continues as a Partner of The Beacon Group, LP, a private investment group.
Qualifications: Ms. Guilfoiles knowledge and expertise as a financial industry executive and her training as a certified public accountant contributes an important perspective to the Board. Ms. Guilfoiles tenure at JP Morgan Chase, and its predecessor companies, serving as Corporate Treasurer, Chief Administrative Officer for its investment bank, and in various merger integration, executive management and strategic planning positions, as well as her current role as Chairman of MG Advisors, Inc., brings to the Board someone with valuable experience and expertise in corporate governance, accounting, risk management and auditing matters.
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DAWN HUDSON
Age: 61
Director Since: 2011 |
Interpublic Committees: Compensation and Leadership Talent Corporate Governance |
Public Directorships: NVIDIA Corporation
Former Public Directorships: Amplify Snack Brands, Inc. Allergan, Inc. Lowes Companies, Inc. PF Changs china Bistro, Inc. |
DAWN HUDSON was Chief Marketing Officer for the National Football League (the NFL), serving in that role from October 2014 through April 2018. Previously, she served from 2009 to 2014 as vice chairman of The Parthenon Group, an advisory firm focused on strategy consulting. Prior to that time, Ms. Hudson served as President and Chief Executive Officer of Pepsi-Cola North America, or PCNA, the multi-billion dollar refreshment beverage unit of PepsiCo, Inc. in the United States and Canada from 2005 until 2007. From 2002 to 2005, Ms. Hudson served as President of PCNA. In addition, Ms. Hudson served as Chief Executive Officer of the PepsiCo Foodservice Division from 2005 to 2007. Prior to joining PepsiCo, Ms. Hudson was Managing Director at DArcy Masius Benton & Bowles, a leading advertising agency based in New York. Ms. Hudson is a former Chair and board member of the Association of National Advertisers (the ANA). In 2006 and 2007, she was named among Fortune Magazines 50 Most Powerful Women in Business. In 2002, she received the honor of Advertising Woman of the Year by Advertising Women of New York. Ms. Hudson was also inducted into the American Advertising Federations Advertising Hall of Achievement, and has been featured twice in Advertising Ages Top 50 Marketers. Ms. Hudson is the former Chairman of the Board of the Ladies Professional Golf Association.
Qualifications: Ms. Hudsons extensive experience in strategy and marketing, with the NFL, at PepsiCo and at major advertising agencies, and her time as Chair of the ANA brings valuable expertise to the Board on matters which are vital to the Companys business. In addition, her experience as Vice Chair of The Parthenon Group, and as the former Chief Executive Officer of Pepsi-Co North America, provides the Board with valuable insight and perspective on matters involving the Companys business strategy and planning. Ms. Hudson also provides a unique perspective of having been both on the agency and client side of the industry. Her fifteen years of experience on various public company boards is a valuable resource on corporate governance matters.
Interpublic Group 2019 Proxy Statement | 5 |
Item 1. Election of Directors
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WILLIAM T. KERR
Age: 77
Director Since: 2006 |
Interpublic Committees: Audit Compensation and Leadership Talent (Chair) Executive |
Former Public Directorships: Global Partner Acquisition Corp Arbitron Inc. Maytag Corporation Meredith Corporation Principal Financial Group Storage Technology Corporation Whirlpool Corporation |
WILLIAM T. KERR is a partner of Eaglepoint Advisors, a firm that works with middle market companies facing innovative changes and transition. Most recently he served as Chairman of Global Partner Acquisition Corp., from 2015 to 2018. Previously, Mr. Kerr served as President and Chief Executive Officer of Arbitron Inc., a media and marketing research firm, from 2010 to 2013. He served as Chairman of the Board of Meredith Corporation from 2006 to 2010 and was Chairman and Chief Executive Officer of Meredith from 1998 to 2006. He was President and Chief Executive Officer of Meredith Corporation from 1997 to 1998. Mr. Kerr served as President and Chief Operating Officer for Meredith Corporation from 1994 through 1997 and as Executive Vice President of Meredith Corporation and President of its Magazine Group from 1991 through 1994. Prior to that time, Mr. Kerr served as Vice President of The New York Times Company and President of its magazine group, a position he held since 1984.
Qualifications: Mr. Kerrs general business background and knowledge in the fields of marketing research and media make a valuable contribution to the Board. In his previous leadership and executive experience at both Arbitron and at Meredith Corporation, a diversified media company, Mr. Kerr provides to the Board the perspective and insights of an organizational leader who has managed issues similar to those faced by Interpublic.
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HENRY S. MILLER
Age: 73
Director Since: 2015 |
Interpublic Committees: Audit Corporate Governance |
Public Directorships: American International Group, Inc.
Former Public Directorships: Ally Financial Inc. |
HENRY S. MILLER has been Chairman of Marblegate Asset Management, LLC, a privately owned asset management firm, since 2009. Mr. Miller was co-founder, Chairman and a Managing Director of Miller Buckfire & Co., LLC, an investment bank, from 2002 to 2011 and Chief Executive Officer from 2002 to 2009. Prior to founding Miller Buckfire & Co., LLC, Mr. Miller was Vice Chairman and a Managing Director at Dresdner Kleinwort Wasserstein and its predecessor company Wasserstein Perella & Co., where he served as the global head of the firms financial restructuring group. Prior to that, Mr. Miller was a Managing Director and Head of both the Restructuring Group and Transportation Industry Group of Salomon Brothers Inc. From 1989 to 1992, Mr. Miller was a managing director and, from 1990 to 1992, co-head of investment banking at Prudential Securities.
Qualifications: Mr. Millers expertise in business strategy and knowledge as a financial industry executive contributes an important perspective to the Board on the Companys business strategy and financial control matters.
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JONATHAN F. MILLER
Age: 62
Director Since: 2015 |
Interpublic Committees: Compensation and Leadership Talent Corporate Governance
Public Directorships: Akamai Technologies Inc. AMC Networks Inc. j2 Global, Inc. |
Former Public Directorships: Houghton Mifflin Harcourt Company Live Nation Entertainment, Inc. RTL Group SA Shutterstock, Inc. TripAdvisor, Inc. |
JONATHAN F. MILLER is the Chief Executive Officer of Integrated Media Co., a special purpose digital media investment company, and began serving in that role in February 2018. Prior to that time, Mr. Miller was a Partner of Advancit Capital, LLC, a venture capital investment fund, from July 2013 through January 2018. Previously, Mr. Miller served as Chairman and Chief Executive of News Corporations digital media group and as News Corporations Chief Digital Officer from April 2009 until
6 | Interpublic Group 2019 Proxy Statement |
Item 1. Election of Directors
October 2012. Mr. Miller had previously been a founding partner of Velocity Interactive Group (Velocity), an investment firm focusing on digital media and the consumer Internet, from its inception in February 2007 until April 2009. Prior to founding Velocity, Mr. Miller served as Chief Executive Officer of AOL LLC (AOL) from August 2002 to December 2006. Prior to joining AOL, Mr. Miller served as Chief Executive Officer and President of USA Information and Services, of USA Networks Interactive, a predecessor to IAC/InterActiveCorp.
Qualifications: Mr. Millers extensive knowledge and senior leadership positions in the media industry, including executive roles at News Corporation, AOL and USA Networks Interactive, provides the Board with a broad and valuable perspective and expertise on the complex media and advertising landscape.
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PATRICK Q. MOORE
Age: 49
Director Since: 2018 |
Interpublic Committees: Audit Compensation and Leadership Talent |
Public Directorships: Ryman Hospitality Properties, Inc. |
PATRICK Q. MOORE Patrick is Executive Vice President, Strategy and Business Development at Carters Inc., a global leader in childrens apparel and related products. From 2013 to 2017, Mr. Moore was Executive Vice President, Chief Strategy Officer with YP Holdings, a portfolio company of Cerberus Capital Management, and one of the largest local digital media businesses in the U.S. Prior to his time at YP Holdings, Mr. Moore spent more than 10 years at McKinsey & Company, a global management consulting firm, serving as a Partner and leader in the firms Consumer Practice. Mr. Moore also led McKinseys North American Consumer Digital Excellence initiative while with the firm.
Qualifications: Mr. Moores experience at a digital media company and at a management consulting firm provide him with a unique perspective on the challenges and opportunities faced by the Company. Mr. Moores experience and expertise in corporate strategy provides the Board with valuable perspective in the Boards oversight of the organizations strategic objectives.
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MICHAEL I. ROTH
Age: 73
Director Since: 2002 |
Interpublic Committees: Executive (Chair) |
Public Directorships: Pitney Bowes Inc. Ryman Hospitality Properties, Inc. |
MICHAEL I. ROTH became Chairman of the Board and Chief Executive Officer of Interpublic in January 2005. Prior to that time Mr. Roth served as Chairman of the Board of Interpublic from July 2004 to January 2005 and has been a director of Interpublic since 2002. Mr. Roth served as Chairman and Chief Executive Officer of The MONY Group Inc. from February 1994 to June 2004.
Qualifications: Mr. Roths leadership and perspective as Interpublics Chief Executive Officer gives him an intimate knowledge of the Companys operations and his role as Chairman of the Board is aided by his successful tenure as Chairman and Chief Executive Officer of The MONY Group. Mr. Roths other directorships, and his accounting, tax and legal background, as a certified public accountant and holding an L.L.M. degree from New York University Law School, also adds significant value to his overall contributions as a member of the Board and in his role as Chairman.
Interpublic Group 2019 Proxy Statement | 7 |
Item 1. Election of Directors
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DAVID M. THOMAS
Age: 69
Director Since: 2004 |
Interpublic Committees: Compensation and Leadership Talent Corporate Governance Executive |
Public Directorships: Fortune Brands Home & Security, Inc. (Non-executive Chairman)
Former Public Directorships: IMS Health Inc. The MONY Group, Inc. |
DAVID M. THOMAS retired as executive chairman of IMS Health Inc. (IMS), a healthcare information, services and technology company, in March 2006, after serving in that position since January 2005. From November 2000 until January 2005, Mr. Thomas served as Chairman and Chief Executive Officer of IMS. Prior to joining IMS, Mr. Thomas was Senior Vice President and Group Executive of IBM from January 1998 to July 2000. Mr. Thomas also serves on the Board of Trustees of Fidelity Investments.
Qualifications: Mr. Thomas experience as a Chief Executive Officer and overall management experience at premier global technology companies provides a vital perspective for the Board as it addresses the rapidly changing and growing landscape in advertising and marketing. Such leadership experience is also vital in his role as Presiding Director. Mr. Thomas also provides the Board with a great deal of insight and perspective in the healthcare advertising field having served as Chairman and Chief Executive Officer of IMS.
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E. LEE WYATT JR.
Age: 66
Director Since: 2017 |
Interpublic Committees: Audit Corporate Governance |
E. LEE WYATT JR. Mr. Wyatt is a former Executive Vice President of Fortune Brands Home & Security, Inc., a consumer home products company, where he served in that role from July 2017 until his retirement in December 2017. Prior to that, Mr. Wyatt served as Senior Vice President and Chief Financial Officer of Fortune Brands, where he served in that role from 2011 to July 2017. Mr. Wyatt also served as Chief Financial Officer and Executive Vice President of Hanesbrands Inc. (formerly, Sara Lee Branded Apparel) from 2005 to 2011. He has held various financial roles at Sonic Automotive Inc., ultimately serving as Chief Financial Officer through 2005. Mr. Wyatt has more than 40 years of experience working with public and private companies.
Qualifications: Mr. Wyatts experience as Chief Financial Officer of several publicly traded companies for 19 years and his deep financial and business expertise contributes an important perspective to the Board on accounting, risk management and auditing matters. In addition, Mr. Wyatts experience in overseeing and managing complex businesses at major global marketers is vital for Interpublic given its organizational structure.
8 | Interpublic Group 2019 Proxy Statement |
INTERPUBLIC GOVERNANCE HIGHLIGHTS
Key Governance Principles | | All directors are elected annually. | ||
| In uncontested director elections, each director is elected by a majority of shares present and entitled to vote. | |||
| Directors may not stand for reelection after age 74, unless otherwise determined by the Board that waiving this restriction is in the best interests of stockholders. | |||
| Directors annually review and assess board performance and the overall skills and areas of expertise present on the Board and, when determined to be in the best interests of the Company, recommend to stockholders the election of new directors to add a fresh perspective and ensure adequate succession planning. | |||
| No member of the Audit Committee may serve on the audit committees of more than two other public companies. | |||
Board Independence | | 10 of the 11 director nominees are independent. | ||
| Our CEO is the only member of management who serves as a director. | |||
| Our Audit, Compensation and Leadership Talent and Corporate Governance Committees are comprised solely of independent directors. | |||
| The committee chairs play a key role in shaping the agendas and information presented to their committees. | |||
| The Board and the Committees have the authority to hire independent advisors, as they deem appropriate. | |||
Presiding Director | | The independent directors annually elect an independent Presiding Director. | ||
| The Presiding Director chairs regularly scheduled executive sessions. | |||
| The Presiding Director, together with the Chairman, plays a key role in forming the agendas and information presented to the Board. The Presiding Director, as appropriate, is available for direct communication with major stockholders who request such a communication. | |||
| The Presiding Director has additional duties and responsibilities set forth on page 14. | |||
Board Oversight of Risk and Strategy |
| Enterprise-wide risk management is overseen by our Audit Committee, which reports on such matters to the Board. | ||
| Our Compensation Committee reviews compensation practices to ensure that they do not encourage imprudent risk taking. | |||
| Our Board directly oversees and advises management on development and execution of corporate strategy. | |||
Stockholder Rights | | No poison pill or similar stockholder rights plan. | ||
| No supermajority voting requirements. |
Interpublic Group 2019 Proxy Statement | 9 |
Our Corporate Governance Framework
| Stockholders owning 3% or more of our outstanding shares of common stock for a period of at least three years to have the right to include in our proxy statement nominees for election equal to the greater of two directors or 20% of our Board of Directors. | |||
| Stockholders holding 25% or more of the Companys common stock have the right to require that we hold a special meeting of stockholders to consider matters that are the proper subject of stockholder action. | |||
| Regular outreach and engagement with stockholders is a key objective. | |||
Compensation Governance | | A significant percentage of the compensation paid to our named executive officers (NEOs) is performance-based and contingent on the price of our common stock (page 26). | ||
| Robust share ownership guidelines for our directors, NEOs and other senior executives (pages 16 and 40). | |||
| The Compensation and Leadership Talent Committee engages an independent consultant on executive compensation matters. | |||
Succession Planning | | CEO and management succession planning is one of the boards highest priorities. | ||
| Our board devotes significant attention to identifying and developing talented senior leaders. |
CORPORATE GOVERNANCE PRINCIPLES AND PRACTICES
10 | Interpublic Group 2019 Proxy Statement |
Our Corporate Governance Framework
Interpublic Group 2019 Proxy Statement | 11 |
Our Corporate Governance Framework
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES OF THE BOARD
Committees of the Board of Directors
The following table shows the directors who are currently members or chairman of each of the standing Board committees and the number of meetings each committee held in 2018.
Name | Audit | Compensation and Leadership Talent |
Corporate Governance |
Executive | ||||||
Joceyln Carter-Miller |
I | ● | C | ● | ||||||
H. John Greeniaus |
I | ● | ● | |||||||
Mary J. Steele Guilfoile |
I | C | ● | ● | ||||||
Dawn Hudson |
I | ● | ● | |||||||
William T. Kerr |
I | ● | C | ● | ||||||
Henry S. Miller |
I | ● | ● | |||||||
Jonathan F. Miller |
I | ● | ● | |||||||
Patrick Q. Moore |
I | ● | ● | |||||||
Michael I. Roth |
◆ | C | ||||||||
David M. Thomas |
PD I | ● | ● | ● | ||||||
E. Lee Wyatt, Jr. |
I | ● | ● | |||||||
Number of Meetings in 2018 |
9 | 7 | 4 | 0 |
◆ Chairman of the Board C Committee Chair ● Member I Independent Director PD Presiding Director
12 | Interpublic Group 2019 Proxy Statement |
Our Corporate Governance Framework
Audit Committee
| ||
Roles and Responsibilities:
Reviews the annual financial information to be provided to stockholders and filed with the SEC;
Reviews the system of internal controls established by management;
Reviews financial reporting policies, procedures and internal controls;
Reviews and oversees the internal and external audit processes;
Responsible for the selection, compensation, retention and oversight of Interpublics registered independent public accounting firm;
Responsible for the other activities described in greater detail in the Audit Committee Report on page 20; and
Responsible for other activities described in greater detail under the heading:
The Boards Role in Risk Oversight on page 15; and
Transactions with Related Persons on page 15.
Independence and Financial Literacy
Each member of the Audit Committee is independent in accordance with the standards set forth in Interpublics Corporate Governance Guidelines and the NYSE Listing Standards.
The Board has determined that each member of the Audit Committee qualifies as an audit committee financial expert as defined by the SEC rules. |
Committee Members:
Carter-Miller (F, I) Greeniaus (F, I) Guilfoile (C, F, I) Kerr (F, I) H. Miller (F, I) Moore (F, I) Wyatt (F, I)
Number of meetings during 2018: 9 |
Compensation and Leadership Talent Committee
| ||
Roles and Responsibilities:
Reviews and adopts the executive compensation philosophy for the Company;
Reviews the Companys initiatives to attract, develop and retain key employees on an ongoing basis and, with the full Board, reviews succession plans for key executive positions;
Reviews and recommends to the Board, the compensation of the CEO;
In consultation with the CEO, approves the compensation of the executive officers, other than the CEO, and approves the compensation of other senior executives of the Company and its subsidiaries;
Oversees and administers the Companys equity performance incentive plans;
Establishes the performance measures and goals and verifies the achievement of performance goals under performance-based incentive compensation and equity plans; and
Reviews the Companys share ownership guidelines for selected senior executives.
The Compensation Committees primary processes for establishing and overseeing executive compensation are described in the Compensation Discussion & Analysis under the heading Compensation Philosophy and Basic Principles on page 35.
Independence Each member of the Compensation and Leadership Talent Committee is independent in accordance with the standards set forth in Interpublics Corporate Governance Guidelines and the NYSE Listing Standards. |
Committee Members:
Greeniaus (I) Hudson (I) Kerr (C, I) J. Miller (I) Moore (I) Thomas (I)
Number of meetings during 2018: 7 |
C = | Committee Chair |
F = | Determined by the Board to be an Audit Committee Financial Expert as defined under applicable SEC rules and regulations |
I = | Determined by the Board to be independent under the NYSE Listing Standards and applicable SEC rules and regulations |
Interpublic Group 2019 Proxy Statement | 13 |
Our Corporate Governance Framework
Corporate Governance Committee
| ||
Roles and Responsibilities:
Oversees corporate governance issues and makes recommendations to the Board;
Identifies, evaluates, and recommends candidates for nomination to the Board and the appointment of Board committee members;
Reviews and makes recommendations to the Board regarding director independence;
Reviews and advises management on the Companys social responsibility initiatives;
Oversees and recommends to the Board the CEO succession planning;
Oversees the annual self-evaluation process of the Board and Committees; and
Responsible for approving the compensation paid to the Board and committee members.
Independence
Each member of the Corporate Governance Committee is independent in accordance with the standards set forth in Interpublics Corporate Governance Guidelines and the NYSE Listing Standards. |
Committee Members:
Carter-Miller (C, I) Guilfoile (I) Hudson (I) H. Miller (I) J. Miller (I) Thomas (I) Wyatt (I)
Number of meetings during 2018: 4 |
Executive Committee
| ||
Roles and Responsibilities:
Acts on the Boards behalf between Board meetings. |
Committee Members:
Carter-Miller (I) Guilfoile (I) Kerr (I) Roth (C) Thomas (I)
Number of meetings |
C = Committee Chair
I = Determined by the Board to be independent under the NYSE Listing Standards and applicable SEC rules and regulations
14 | Interpublic Group 2019 Proxy Statement |
Non-Management Director Compensation
DIRECTOR SUMMARY COMPENSATION TABLE
The following table shows the compensation paid to Non-Management Directors for 2018.(1)
Name | Fees Earned or Paid in Cash ($) (2) |
Stock Awards ($) (3) |
All Other Compensation ($) (4) |
Total ($) |
||||||||||||
Jocelyn Carter-Miller |
120,000 | 200,000 | 10,260 | 330,260 | ||||||||||||
H. John Greeniaus |
100,000 | 200,000 | 20,000 | 320,000 | ||||||||||||
Mary J. Steele Guilfoile |
130,000 | 200,000 | 12,500 | 342,500 | ||||||||||||
Dawn Hudson |
100,000 | 200,000 | 17,500 | 317,500 | ||||||||||||
William T. Kerr |
125,000 | 200,000 | 12,000 | 337,000 | ||||||||||||
Henry S. Miller |
100,000 | 200,000 | 20,000 | 320,000 | ||||||||||||
Jonathan F. Miller |
100,000 | 200,000 | 14,919 | 314,919 | ||||||||||||
Patrick Q. Moore |
100,000 | 200,000 | 20,000 | 320,000 | ||||||||||||
David M. Thomas |
175,000 | 200,000 | 20,000 | 395,000 | ||||||||||||
E. Lee Wyatt Jr. |
100,000 | 200,000 | 10,000 | 310,000 |
(1) | Michael Roth, Interpublics Chairman of the Board and Chief Executive Officer, is not included in this table because he is an employee of Interpublic and receives no compensation for his services as director. Mr. Roths compensation as an employee of Interpublic is shown in the Summary Compensation Table on page 43, and the sections that follow the Summary Compensation Table. |
(2) | Consists of annual retainer fees, Committee chair retainer fees and, for Mr. Thomas, the retainer fee for service as the Presiding Director. |
(3) | Consists of the grant date fair value of the restricted stock awards granted on April 30, 2018, computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. The assumptions used in the calculation of these amounts are set forth in Note 11 to Interpublics audited financial statements included in Interpublics Form 10-K for the year ended December 31, 2018 (the 2018 Form 10-K). |
(4) | For each director the amount shown consists entirely of matching charitable contributions made by Interpublic under the Charitable Matching Program. |
18 | Interpublic Group 2019 Proxy Statement |
OVERVIEW OF EXECUTIVE COMPENSATION PROGRAMS
PRIMARY COMPENSATION ELEMENTS
Annual Long-term Incentives | ||||||||||||
Pay Element | Salary | Annual Incentive |
Performance-based Cash |
Performance-based Shares |
Restricted Stock Units | |||||||
RECIPIENT | All Named Executive Officers | |||||||||||
FIXED OR VARIABLE COMPENSATION |
Fixed | Variable | ||||||||||
DURATION OF PERFORMANCE |
Short-term Emphasis |
Long-term Emphasis | ||||||||||
PERFORMANCE PERIOD |
Ongoing | 1 year | 2 years (plus, 1-year time-based vesting period) |
3 years | n.a. | |||||||
FORM OF DELIVERY | Cash | Equity | ||||||||||
HOW PAYMENT IS DETERMINED |
C< Committee; Chairman & CEO recommendations considered for other NEOs | Formulaic (80%); C< Committee assesses achievment of key strategic objectives (20%) | Formulaic; C< Committee verifies performance (performance-based shares also depends on stock price on vest date) |
Formulaic; depends on stock price on vest date |
COMPENSATION PRACTICES & CORPORATE GOVERNANCE
22 | Interpublic Group 2019 Proxy Statement |
Compensation Discussion & Analysis
Interpublic Group 2019 Proxy Statement | 23 |
Compensation Discussion & Analysis
1. | During 2018 the Company transitioned from Operating Margin to Adjusted EBITA Margin as a key measure of performance. We made this change due to significant non-cash amortization expense introduced as a result of the Acxiom acquisition and to Acxiom transaction expenses incurred in the second half of 2018. |
Interpublic Group 2019 Proxy Statement | 25 |
Compensation Discussion & Analysis
CHANGES IN ONGOING TARGET COMPENSATION IN 2018
The table below shows each NEOs 2017 and 2018 total annual target compensation, each component of compensation and any difference between 2017 and 2018 total annual target compensation.
Name | Base Salary Earned |
Target AI | LTI Value at Target |
Total Ongoing Annual Target Comp. |
Difference in Total Ongoing Annual Target Comp. |
|||||||||||||||||||||||||||
Year | $ | % | $ | $ | $ | $ | % | |||||||||||||||||||||||||
Michael Roth |
2018 | $ | 1,500,000 | 300 | % | $ | 4,500,000 | $ | 10,500,000 | $ | 16,500,000 | $ | 750,000 | 5 | % | |||||||||||||||||
2017 | $ | 1,500,000 | 250 | % | $ | 3,750,000 | $ | 10,500,000 | $ | 15,750,000 | ||||||||||||||||||||||
Frank Mergenthaler |
2018 | $ | 1,100,000 | 150 | % | $ | 1,650,000 | $ | 2,500,000 | $ | 5,250,000 | $ | 500,000 | 11 | % | |||||||||||||||||
2017 | $ | 1,000,000 | 125 | % | $ | 1,250,000 | $ | 2,500,000 | $ | 4,750,000 | ||||||||||||||||||||||
Philippe Krakowsky |
2018 | $ | 1,250,000 | 150 | % | $ | 1,875,000 | $ | 3,000,000 | $ | 6,125,000 | $ | 1,375,000 | 29 | % | |||||||||||||||||
2017 | $ | 1,000,000 | 125 | % | $ | 1,250,000 | $ | 2,500,000 | $ | 4,750,000 | ||||||||||||||||||||||
Andrew Bonzani |
2018 | $ | 800,000 | 90 | % | $ | 720,000 | $ | 1,250,000 | $ | 2,770,000 | $ | 0 | 0 | % | |||||||||||||||||
2017 | $ | 800,000 | 90 | % | $ | 720,000 | $ | 1,250,000 | $ | 2,770,000 | ||||||||||||||||||||||
Ellen Johnson |
2018 | $ | 625,000 | 75 | % | $ | 468,750 | $ | 600,000 | $ | 1,693,750 | n.a. | n. | a. |
Note: Values above include ongoing compensation targets only; details related to any one-time long-term incentive awards issued to NEOs can be found in the Long-term Incentives section.
26 | Interpublic Group 2019 Proxy Statement |
Compensation Discussion & Analysis
2018 COMPENSATION ENHANCEMENTS & LINK TO STRATEGY
The table below provides an overview of each pay element provided to our NEOs.
Pay Element | Description | Recent Enhancements | Link To Business & Talent Strategies | |||
BASE SALARY (see page 28) |
Fixed cash compensation recognizing individual performance, time in role, scope of responsibility, leadership skills, future potential and internal equity
Reviewed annually and adjusted when appropriate |
As reflected on the previous page, an increase was made to the salaries for Mr. Mergenthaler and Mr. Krakowsky in 2018. For Mr. Mergenthaler this increase took place to ensure that his target cash compensation remained competitive with the market. For Mr. Krakowsky, this increase took place to account for the significant additional responsibilities he took on as Chairman & CEO, IPG Mediabrands, as of February 2016 for the Chairmans role and February 2018 for the CEO role. |
Competitive base salaries help attract and retain key executive talent
Any material adjustments are based on competitive market considerations, changes in responsibilities and individual performance | |||
ANNUAL INCENTIVES (see page 29) |
Performance-based cash compensation dependent on performance against annually established financial targets and individual performance |
As reflected on the previous page, an increase was made to the annual incentive targets for Mr. Roth, Mr. Mergenthaler and Mr. Krakowsky in 2018. For Mr. Roth and Mr. Mergenthaler this increase took place to ensure that their target cash compensation remained competitive with the market. For Mr. Krakowsky, this increase took place to account for the additional responsibilities he took on as Chairman & CEO, IPG Mediabrands.
For 2018, the annual incentives earned by Mr. Krakowsky and Ms. Johnson were based in part on IPG Corporate performance versus financial targets and in part on IPG Mediabrands performance versus financial targets, due to their respective roles at the agency. |
This plan rewards performance that grows annual organic revenue, increases profitability and involves the achievement of high priority strategic objectives, all of which we believe ultimately drive increased long-term stockholder value |
Interpublic Group 2019 Proxy Statement | 27 |
Compensation Discussion & Analysis
Pay Element | Description | Recent Enhancements | Link To Business & Talent Strategies | |||
LONG-TERM INCENTIVES (see page 32) |
Awarded one-third in each performance-based shares, performance-based cash and restricted stock units
Performance-based cash and stock compensation based on 2- and 3-year performance, respectively, against established financial targets with maximum potential payouts equal to 200% of target amounts
All awards vest on the 3rd anniversary of the grant date subject to continued employment and achieved performance |
In 2018, an increase was made to the long-term incentive opportunity for Mr. Krakowsky to account for the additional responsibilities he took on as Chairman & CEO of IPG Mediabrands (as reflected in the Changes in Target Compensation in 2018 chart on page 26)
For Mr. Krakowsky and Ms. Johnson, incentives earned related to the 2018 long-term incentive grant will be based in part on IPG Corporates long-term performance versus financial targets and in part on IPG Mediabrands long-term performance versus financial targets, due to their respective roles at the agency |
Like our annual incentives, our long-term incentives encourage senior leaders to focus on delivering on our key financial metrics, but do not encourage or allow for excessive or unnecessary risk-taking in achieving this aim
The long-term plan also ensures that executives have compensation that is at risk for longer periods of time and is subject to forfeiture in the event that they terminate their employment
The Plan also motivates executives to remain with the company for long and productive careers built on expertise |
BASE SALARY
28 | Interpublic Group 2019 Proxy Statement |
Compensation Discussion & Analysis
ANNUAL INCENTIVES
PERFORMANCE METRICS
Financial Metric | Description | Weighting | ||
ORGANIC REVENUE GROWTH % (OG) |
- Measures ability to drive revenue growth from existing operations, exclusive of acquisitions, divestitures and currency effects |
20% | ||
- Reflects the competiveness of our offerings and is defined as the percentage change in IPGs total gross revenue as compared to the prior year, excluding the impact of foreign currency rate fluctuations and the net effect of acquisitions and divestitures | ||||
OPERATING INCOME BEFORE INCENTIVES MARGIN % (OIBI) |
- Measures business efficiency and profitability and is defined as Operating Income before expenses related to the Annual and Long-term Incentive Plans, and before any restructuring and asset impairment charges divided by gross revenue |
60% | ||
SRS Ratio Modifier |
- Measurement of the relationship between salary and related costs (excluding severance and incentive compensation) and revenue |
can reduce OIBI Margin metric by 0% to -15% | ||
HIGH PRIORITY OBJECTIVES (HPO) |
- Consist of quantitative and/or qualitative objectives specific to the individual |
20% |
Interpublic Group 2019 Proxy Statement | 29 |
Compensation Discussion & Analysis
2018 ANNUAL INCENTIVE AWARD AMOUNTS
NAME |
BASE SALARY |
TOTAL TARGET ANNUAL INCENTIVE |
CORPORATE PERFORMANCE/INCENTIVE | INCENTIVE EARNED FOR NETWORK |
FINAL ANNUAL INCENTIVE AMOUNT |
|||||||||||||||||||||||||||
CORPORATE FINANCIAL PERFORMANCE RATING |
HIGH PRIORITY |
CORPORATE ANNUAL INCENTIVE |
||||||||||||||||||||||||||||||
earned in 2018 | as a % of Base Salary |
$ | 80% | 20% | ||||||||||||||||||||||||||||
MICHAEL ROTH |
$ | 1,500,000 | 300 | % | $ | 4,500,000 | 119.2 | % | 168 | % | $ | 5,800,000 | $ | 0 | $ | 5,800,000 | ||||||||||||||||
FRANK MERGENTHALER |
$ | 1,100,000 | 150 | % | $ | 1,650,000 | 119.2 | % | 152 | % | $ | 2,075,000 | $ | 0 | $ | 2,075,000 | ||||||||||||||||
PHILIPPE KRAKOWSKY1 |
$ | 1,250,000 | 150 | % | $ | 1,875,000 | 119.2 | % | 197 | % | $ | 2,526,031 | $ | 373,969 | $ | 2,900,000 | ||||||||||||||||
ANDREW BONZANI |
$ | 800,000 | 90 | % | $ | 720,000 | 119.2 | % | 148 | % | $ | 900,000 | $ | 0 | $ | 900,000 | ||||||||||||||||
ELLEN JOHNSON1 |
$ | 625,000 | 75 | % | $ | 468,750 | 119.2 | % | 170 | % | $ | 606,568 | $ | 93,432 | $ | 700,000 |
1. | A portion of the Total Target Annual Incentive for Mr. Krakowsky and Ms. Johnson are tied to the performance for the network which they have oversight of. The Company does not disclose the performance goals and actuals for its performance plans tied to a portion of the portfolio as these data are not publicly disclosed and would provide insights to competitors that could harm our business. When they were established at its March 2018 meeting, the Committee considered the performance targets for the 2018 performance year difficult to attain, while appropriate for the current economic environment. |
2018 IPG CORPORATE FINANCIAL PERFORMANCE VERSUS GOALS
Described below are the Committee-approved 2018 performance goals, achievement against these goals and the percentage of target annual incentive earned.
Financial Goals | 2018 Target | 2018 Actual | ||||||
OG % |
2.7 | % | 5.5 | % | ||||
OIBI % |
17.0 | % | 17.0 | % |
These results were factored into the formulaic calculation for IPG Corporates financial performance portion of the awards and resulted in a combined rating of 119.2% reflecting the weightings of the plan design.
2018 HPO PERFORMANCE VERSUS GOALS
30 | Interpublic Group 2019 Proxy Statement |
Compensation Discussion & Analysis
Interpublic Group 2019 Proxy Statement | 31 |
Compensation Discussion & Analysis
LONG-TERM INCENTIVES
2018 TARGET ANNUAL LONG-TERM INCENTIVE OPPORTUNITIES
Using this design, for 2018, the Committee set the following total target long-term incentive (LTI) award values for the NEOs:
Name |
Total Target LTI Award Value 1 |
Performance Shares 2 |
Performance Cash | Restricted Stock Units | ||||
(value of A+B+C) | 1/3 of Total Target | 1/3 of Total Target | 1/3 of Total Target | |||||
(A) | (B) | (C) | ||||||
MICHAEL ROTH |
$10,500,000 | $ 3,500,000 (148,054 target shares) |
$ 3,500,000 | $ 3,500,000 (148,054 units) | ||||
FRANK MERGENTHALER |
$2,500,000 | $ 833,334 (35,251 target shares) |
$ 833,333 | $ 833,333 (35,250 units) | ||||
PHILIPPE KRAKOWSKY |
$3,000,000 | $ 1,000,000 (42,300 target shares) |
$ 1,000,000 | $ 1,000,000 (42,300 units) | ||||
ANDREW BONZANI |
$1,250,000 | $ 416,667 (17,625 target shares) |
$ 416,666 | $ 416,667 (17,625 units) | ||||
ELLEN JOHNSON |
$600,000 | $ 200,000 (8,460 target shares) |
$ 200,000 | $ 200,000 (8,460 units) |
1. | In addition to the grants issued as part of the annual long-term incentive award, in February 2018, Messrs . Mergenthaler, Krakowsky and Bonzani as well as Ms . Johnson each received an incremental award of restricted cash vesting on the second anniversary of the grant date with grant date values of $1,275,000, $1,500,000, $750,000 and $100,000 respectively. Mr. Krakowsky also received an award of $1,250,000 in performance-based share to recognize his added responsibilities as CEO, Mediabrands. |
2. | The number of target shares was determined by dividing the target value by the average of the high and low stock price on the date of grant ($23.64 on February 28, 2018) and rounding down to the nearest whole share. For performance awards, the grant-date fair values estimated in accordance with ASC 718 and reported in the Summary Compensation Table and the Grants of Plan-Based Awards Table are lower than the values reported in this table since the awards do not pay any dividends or dividend equivalents while the awards are outstanding. |
32 | Interpublic Group 2019 Proxy Statement |
Compensation Discussion & Analysis
The table below provides an overview of the LTI vehicles granted to each NEO. Each of the long-term incentive vehicles employed is designed with unique characteristics that, when viewed in total, balance the need to incentivize executive performance and promote the retention of the executives, as well as provide them with clarity as to how and when the awards can be earned.
Financial Metric | Performance Shares | Performance Cash | Restricted Stock Units | |||
VESTING DATE
|
3rd Anniversary of Grant Date
| |||||
PERFORMANCE PERIOD
|
3 Years
(2018 - 2020)
|
2 Years
(2018 - 2019)
|
n.a. | |||
FINANCIAL METRICS
|
OG % (30%)
OIBI Margin % (70%)
|
n.a. | ||||
PAYOUT RANGE |
0% - 200%
|
# of shares earned is fixed at the time of grant; equal to the # of shares granted |
PERFORMANCE-BASED SHARES
Performance Period and Vesting
Interpublic Group 2019 Proxy Statement | 33 |
Compensation Discussion & Analysis
2016-2018 and 2017-2018 Financial Performance Versus Goals
Performance Shares 2016-2018 |
Performance Cash 2017-2018 |
|||||||||||||||
Financial Goals | Target | Actual | Target | Actual | ||||||||||||
OG % |
3.3% | 4.1% | 3.4% | 3.7% | ||||||||||||
OIBI % |
16.2% | 16.0% | 16.9% | 16.2% |
Based on these results, each of the NEOs earned a performance rating of 110.1% for their performance share awards and 97.7% of target for performance cash.
34 | Interpublic Group 2019 Proxy Statement |
Compensation Discussion & Analysis
Amounts Earned for Long-term Incentive Awards with Performance Periods Ending in 2018
2016-2018 Performance Shares | 2017-2018 Performance Cash | |||||||||||||||||||||||||||
Name | % of Target Achieved |
Target ($) | Target (#) |
Actual (#) |
% of Target Achieved |
Target ($) | Actual ($) | |||||||||||||||||||||
MICHAEL ROTH |
110.1 | % | $ | 5,250,000 | 243,562 | 268,161 | 97.7 | % | $ | 2,625,000 | $ | 2,564,625 | ||||||||||||||||
FRANK MERGENTHALER |
110.1 | % | $ | 1,250,000 | 57,991 | 63,848 | 97.7 | % | $ | 625,000 | $ | 610,625 | ||||||||||||||||
PHILIPPE KRAKOWSKY1 |
110.1 | % | $ | 1,250,000 | 57,991 | 63,848 | 136.7 | % | $ | 625,000 | $ | 854,375 | ||||||||||||||||
ANDREW BONZANI |
110.1 | % | $ | 625,000 | 28,995 | 31,923 | 97.7 | % | $ | 312,500 | $ | 305,313 |
1. | The 2017 Performance cash award issued to Mr. Krakowsky was based on a portion of IPG Corporates performance and a portion of Mediabrands performance versus cumulative OG and OIBI Margin targets. |
ADDITIONAL COMPENSATION INFORMATION
COMPENSATION PHILOSOPHY AND BASIC PRINCIPLES
OUR COMPENSATION PHILOSOPHY REMAINS TO PROVIDE A PERFORMANCE-BASED, MARKET-COMPETITIVE TOTAL COMPENSATION PROGRAM THAT:
|
Supports our talent needs and business objectives
|
Ties a significant portion of pay to sustaining and improving operational performance to enhance stockholder value
|
Aligns with the interests of our stockholders
|
Interpublic Group 2019 Proxy Statement | 35 |
Compensation Discussion & Analysis
Interpublic Group 2019 Proxy Statement | 37 |
Compensation Discussion & Analysis
USE OF COMPETITIVE DATA FOR COMPENSATION REVIEWS
The Market for Talent
|
To ensure that our compensation programs reflect best practices, as well as to maintain competitive compensation program designs and levels, the Committee considers market data and compensation ranges of our peer group. In 2013, the Committee approved a single peer group that reflects both talent peers as well as industry peers. Minor changes were made to this Peer Group as part of the 2017 annual review of compensation due to recent Mergers and Acquisition activity (detailed below). The Committee continues to believe that this Peer Group is appropriate. |
We believe that the peer group contains a good representation of IPGs industry competitors and size-relevant, talent-focused comparators. However, Yahoo! Inc. was removed from our Peer Group as part of the 2017 annual review due to an acquisition (note: Liberty Interactive which was previously included in our peer group changed its name to QVC Group). The final peer group included:
2017 Comparator Group (used to inform 2018 compensation decisions) | ||||
Activision Blizzard, Inc. | IAC/InterActivCorp | Thomson-Reuters Corporation | ||
CBS Corporation | News Corporation | Time Inc. | ||
Discovery Communications, Inc. | Nielsen Holdings plc | Time Warner Inc. | ||
The Dun & Bradstreet Corporation | Omnicom Group Inc. | Viacom Inc. | ||
eBay Inc. | Publicis Groupe SA | WPP plc | ||
Electronic Arts Inc. | QVC Group | |||
Gannett Co., Inc. | Sirius XM Holdings Inc. | |||
Havas SA | TEGNA, Inc. |
The median revenue in 2017 for these peer companies was approximately $6.98b as compared to IPGs 2017 revenue of $7.5b.
PURPOSE
38 | Interpublic Group 2019 Proxy Statement |
Compensation Discussion & Analysis
Name | Share Ownership Guideline as multiple of base salary |
2018 Compliance With Share Ownership Guidelines | ||||||||
MICHAEL ROTH |
6x | Yes | ||||||||
FRANK MERGENTHALER |
2x | Yes | ||||||||
PHILIPPE KRAKOWSKY |
2x | Yes | ||||||||
ANDREW BONZANI |
2x | Yes | ||||||||
ELLEN JOHNSON |
.75X | Yes |
TAX AND ACCOUNTING IMPLICATIONS
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
40 | Interpublic Group 2019 Proxy Statement |
Among its duties, the Compensation and Leadership Talent Committee is responsible for reviewing and discussing with the Companys management the Compensation Discussion & Analysis included in this Proxy Statement for the 2019 Annual Meeting (the CD&A). Based on such a review and discussion, the Committee has recommended to the Board of Directors that the CD&A be included in this Proxy Statement and incorporated by reference in the Companys Annual Report on Form 10-K for the year ended December 31, 2018.
William T. Kerr, Chair
H. John Greeniaus
Dawn Hudson
Jonathan F. Miller
Patrick Q. Moore
David M. Thomas
March 27, 2019
42 | Interpublic Group 2019 Proxy Statement |
The following table sets forth information concerning the compensation paid by Interpublic to (i) Mr. Roth, who served as the Interpublics principal executive officer during 2018, (ii) Mr. Mergenthaler, who served as the principal financial officer in 2018 and (iii) each of the three most highly compensated executive officers of Interpublic, other than the principal executive officer and the principal financial officer (as determined based on total compensation in 2018, excluding the amount, if any, shown in the column headed Change in Pension Values and Nonqualified Deferred Compensation Earnings), who were serving as executive officers on December 31, 2018 (the named executive officers). In each instance, the compensation shown is for services rendered in all capacities for the years indicated. The employment agreements for the named executive officers are summarized beginning on page 53 under the heading Employment Agreements.
Name and Principal Position | Year | Salary ($) |
Stock Awards ($) (2) |
Non-Equity Incentive Plan Compensation ($) (3) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (4) |
All Other Compen- sation ($) (5) |
Total ($) |
|||||||||||||||||||||
Michael Roth |
2018 | 1,500,000 | 6,645,940 | 8,438,125 | 0 | 386,665 | 16,970,730 | |||||||||||||||||||||
Chairman of the Board |
2017 | 1,500,000 | 7,428,657 | 7,548,750 | 40,616 | 365,795 | 16,883,818 | |||||||||||||||||||||
and Chief Executive Officer, IPG |
2016 | 1,500,000 | 7,507,388 | 8,564,600 | 19,980 | 386,209 | 17,978,177 | |||||||||||||||||||||
Frank Mergenthaler |
2018 | 1,100,000 | 1,582,345 | 2,703,125 | 0 | 219,665 | 5,605,135 | |||||||||||||||||||||
EVP and Chief Financial Officer, IPG |
2017 | 1,000,000 | 2,768,793 | 2,284,375 | 0 | 215,795 | 6,268,963 | |||||||||||||||||||||
and Chairman, CMG |
2016 | 1,000,000 | 2,537,449 | 3,033,125 | 0 | 216,209 | 6,786,783 | |||||||||||||||||||||
Philippe Krakowsky |
2018 | 1,250,000 | 3,022,331 | 3,528,125 | 0 | 187,193 | 7,987,649 | |||||||||||||||||||||
EVP, Chief Strategy and Talent |
2017 | 1,000,000 | 2,768,793 | 2,498,438 | 219,204 | 86,323 | 6,572,758 | |||||||||||||||||||||
Officer, IPG and Chairman & Chief |
2016 | 1,000,000 | 2,537,449 | 2,867,488 | 224,486 | 86,737 | 6,716,160 | |||||||||||||||||||||
Executive Officer, IPG Mediabrands |
||||||||||||||||||||||||||||
Andrew Bonzani |
2018 | 800,000 | 791,162 | 1,214,063 | 0 | 83,068 | 2,888,293 | |||||||||||||||||||||
EVP, General Counsel and |
2017 | 800,000 | 1,134,363 | 1,043,750 | 0 | 81,509 | 3,059,622 | |||||||||||||||||||||
Secretary, IPG |
2016 | 800,000 | 1,143,706 | 1,473,250 | 0 | 74,762 | 3,491,718 | |||||||||||||||||||||
Ellen Johnson (1) |
2018 | 625,000 | 379,758 | 825,625 | 0 | 96,943 | 1,927,326 | |||||||||||||||||||||
SVP of Finance and Treasurer, and |
||||||||||||||||||||||||||||
Chief Financial Officer, IPG Mediabrands |
(1) | Ellen Johnson became a named executive officer in 2018. |
(2) | The amounts shown for each year is the aggregate grant date fair value of stock awards made to the executive during the year, computed in accordance with FASB ASC Topic 718, excluding the effect of estimated service-based forfeitures. The assumptions used in the calculation of these amounts are set forth in Note 11 to Interpublics audited financial statements included in the 2018 Form 10-K. The grant date fair values of the performance share awards shown for each year in which such awards were granted were calculated assuming a target level of performance achievement. The following tables show the grant date fair values of performance share awards assuming achievement of the target performance level and maximum performance level. |
Interpublic Group 2019 Proxy Statement | 43 |
Executive Compensation
The amounts shown for each named executive officer consists solely of the grant date fair value of each executives performance share award for the performance period ending (i) for the 2018 Performance Share Award, on December 31, 2020, (ii) if applicable, for the 2017 Performance Share Award, on December 31, 2019 and (iii) if applicable, for the 2016 Performance Share Award, on December 31, 2018. The (i) 2018 Performance Share award will vest on February 28, 2021, (ii) 2017 Performance Share award will vest on February 28, 2020 and (iii) 2016 Performance Share award vested on February 28, 2019, in each case, to the extent the performance criteria established for the awards are satisfied. |
2018 Performance Share Awards | 2017 Performance Share Awards | 2016 Performance Share Awards | ||||||||||||||||||||||
Name |
Target ($) |
Maximum ($) |
Target ($) |
Maximum ($) |
Target ($) |
Maximum ($) |
||||||||||||||||||
Mr. Roth |
3,145,944 | 6,291,887 | 4,803,407 | 9,606,814 | 4,882,398 | 10,741,276 | ||||||||||||||||||
Mr. Mergenthaler |
749,035 | 1,498,070 | 1,143,658 | 2,287,315 | 1,162,477 | 2,557,449 | ||||||||||||||||||
Mr. Krakowsky |
2,022,359 | 4,044,718 | 1,143,658 | 2,287,315 | 1,162,477 | 2,557,449 | ||||||||||||||||||
Mr. Bonzani |
374,507 | 749,014 | 571,818 | 1,143,636 | 581,228 | 1,278,702 | ||||||||||||||||||
Ms. Johnson |
179,763 | 359,527 | | | | |
(3) | The amounts shown for above for each named executive officer are the sum of the payments made in respect of the executives (i) annual non-equity compensation award and (ii) performance cash awards, if applicable, for the (A) 2016-2017 performance period, which vested on February 28, 2019 (B) 2015-2016 performance period, which vested on February 28, 2018 and (C) 2014-2015 performance period, which vested on February 28, 2017, in the respective amounts shown in the following table. |
2018 Non-Equity Incentive Plan Compensation |
2017 Non-Equity Incentive Plan Compensation |
2016 Non-Equity Incentive Plan Compensation |
||||||||||||||||||||||
Name | Annual Incentive Award ($) |
2016 Performance Cash Award ($) |
Annual Incentive Award ($) |
2015 Performance Cash Award ($) |
Annual Incentive Award ($) |
2014 Performance Cash Award ($) |
||||||||||||||||||
Mr. Roth |
5,800,000 | 2,638,125 | 3,200,000 | 4,348,750 | 4,400,000 | 4,164,600 | ||||||||||||||||||
Mr. Mergenthaler |
2,075,000 | 628,125 | 1,175,000 | 1,109,375 | 1,850,000 | 1,183,125 | ||||||||||||||||||
Mr. Krakowsky |
2,900,000 | 628,125 | 1,500,000 | 998,438 | 1,850,000 | 1,017,487 | ||||||||||||||||||
Mr. Bonzani |
900,000 | 314,063 | 600,000 | 443,750 | 1,000,000 | 473,250 | ||||||||||||||||||
Ms. Johnson |
700,000 | 125,625 | | | | |
(4) | The amounts in this column for Mr. Roth reflect the change in the value of the benefits he is entitled to receive under the Senior Executive Retirement Income Plan, which is described in greater detail on page 50 under the heading Pension Arrangements The Interpublic Senior Executive Retirement Income Plan. |
The amounts in this column for Mr. Krakowsky reflect the change in the value of the benefits he is entitled to receive under his Executive Special Benefit Agreement, which is described in greater detail on page 50, under the heading Pension Arrangements Executive Special Benefit Agreement. |
In 2018, due to the increase in the discount rate from 2017 (3.70%) to 2018 (4.35%), as of December 31, 2018, the actual present value of the benefits (i) Mr. Roth is entitled to receive under the SERIP decreased by $52,408 and (ii) Mr. Krakowsky is entitled to receive under the ESBA decreased by $67,497. |
Messrs. Mergenthaler and Bonzani and Ms. Johnson do not participate in a pension plan nor do they have an Executive Special Benefit Agreement. |
While each of the named executive officers participate in deferred compensation arrangements, as described in greater detail beginning on page 51, under the heading Nonqualified Deferred Compensation Arrangements, none received earnings on deferred compensation that was above-market or preferential as defined by SEC rules. |
44 | Interpublic Group 2019 Proxy Statement |
Executive Compensation
(5) | The table below shows the components of the amounts shown in this column for 2018. |
Name | Annual Dollar Credits under the Capital Accumulation Plan ($) (a) |
Matching ($) |
Premiums paid by Interpublic ($) |
Perquisites and ($) (b) |
Total All Other Compensation ($) |
|||||||||||||||
Mr. Roth |
350,000 | 13,695 | 234 | 22,736 | 386,665 | |||||||||||||||
Mr. Mergenthaler |
200,000 | 13,695 | 234 | 5,736 | 219,665 | |||||||||||||||
Mr. Krakowsky |
150,000 | 13,695 | 234 | 23,264 | 187,193 | |||||||||||||||
Mr. Bonzani |
50,000 | 9,570 | 234 | 23,264 | 83,068 | |||||||||||||||
Ms. Johnson |
75,000 | 13,695 | 234 | 8,014 | 96,943 |
(a) | The Capital Accumulation Plan is described in greater detail on page 51 under the heading Nonqualified Deferred Compensation Arrangements The Interpublic Capital Accumulation Plan. |
(b) | The 2018 Perquisites and Other Personal Benefits table below lists the type and amount of each perquisite received by the named executive officers in 2018. |
2018 Perquisites and Other Personal Benefits
The following table describes the amount of each perquisite and other personal benefit received by the named executive officers in 2018.
Name |
Executive Dental Plan Coverage ($) |
Charitable Matching Program (a) ($) |
||||||
Mr. Roth |
2,736 | 20,000 | ||||||
Mr. Mergenthaler |
2,736 | 3,000 | ||||||
Mr. Krakowsky |
3,264 | 20,000 | ||||||
Mr. Bonzani |
3,264 | 20,000 | ||||||
Ms. Johnson |
3,264 | 4,750 |
(a) | The Charitable Matching Program is described in greater detail on page 17 under the heading Non-Management Director Compensation Charitable Matching Program. |
Interpublic Group 2019 Proxy Statement | 45 |
Executive Compensation
The following table provides information on grants of equity and non-equity plan based awards made in 2018 to the named executive officers. The awards are described in greater detail in the Compensation Discussion & Analysis, beginning on page 29.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
Estimated Future Payouts Under Equity Incentive Plan Awards |
All Other Stock Awards: Number of Shares of Stock or Units (#) |
Grant Date Fair Value of Stock and Option Awards ($) (8) |
|||||||||||||||||||||||||||||||||||||
Name | Grant Date |
Approval Date |
Thres- hold ($) |
Target ($) |
Maximum ($) |
Thres- hold (#) |
Target (#) |
Maximum (#) |
||||||||||||||||||||||||||||||||
Michael Roth |
2/14/2018 | (1) | 0 | 4,500,000 | 9,000,000 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (2) | 0 | 3,500,000 | 7,000,000 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (4) | 0 | 148,054 | 296,108 | 3,145,944 | ||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (7) | 148,054 | 3,499,997 | ||||||||||||||||||||||||||||||||||||
Frank Mergenthaler |
2/14/2018 | (1) | 0 | 1,650,000 | 3,300,000 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (2) | 0 | 833,333 | 1,666,666 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (3) | 0 | 1,275,000 | 1,275,000 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (4) | 0 | 35,251 | 70,502 | 749,035 | ||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (7) | 35,250 | 833,310 | ||||||||||||||||||||||||||||||||||||
Philippe Krakowsky |
2/14/2018 | (1) | 0 | 1,875,000 | 3,750,000 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (2) | 0 | 1,000,000 | 2,000,000 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (3) | 0 | 1,500,000 | 1,500,000 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (4) | 0 | 21,150 | 42,300 | 449,408 | ||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (5) | 0 | 21,150 | 42,300 | 449,408 | ||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (6) | 0 | 52,876 | 105,752 | 1,123,542 | ||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (7) | 42,300 | 999,972 | ||||||||||||||||||||||||||||||||||||
Andrew Bonzani |
2/14/2018 | (1) | 0 | 720,000 | 1,440,000 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (2) | 0 | 416,666 | 833,332 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (3) | 0 | 750,000 | 750,000 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (4) | 0 | 17,625 | 35,250 | 374,507 | ||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (7) | 17,625 | 416,655 | ||||||||||||||||||||||||||||||||||||
Ellen Johnson |
2/14/2018 | (1) | 0 | 468,750 | 937,500 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (2) | 0 | 200,000 | 400,000 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (3) | 0 | 100,000 | 100,000 | |||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (4) | 0 | 4,230 | 8,460 | 89,882 | ||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (5) | 0 | 4,230 | 8,460 | 89,882 | ||||||||||||||||||||||||||||||||||
2/28/2018 | 2/14/2018 | (7) | 8,460 | 199,994 |
(1) | Reflects the potential payout in cash that the executive was entitled to earn for calendar year 2018 pursuant to an annual incentive award made in 2018 under the 2014 PIP as described in greater detail on page 30, under the heading Compensation Discussion & Analysis Annual Incentives. The actual amounts paid are shown in the Summary Compensation Table in the column titled Non-Equity Incentive Plan Compensation. |
(2) | Reflects potential payout that the executive is entitled to earn pursuant to a long-term performance cash award made in 2018 under the 2014 PIP. As described in greater detail beginning on page 32, under the heading Compensation Discussion & Analysis Long-term Incentives, depending on the actual level of performance relative to goals over a two-year performance period, an individual will be entitled to receive a payout ranging from 0% to 200% of the target amount. The amount of the payout, as so determined, will vest at the end of the third year following the grant of the award and will be settled entirely in cash. |
(3) | Reflects the potential payout that the executive is entitled to earn under pursuant to a long-term restricted cash award made in 2018 under the 2014 PIP, described in greater detail on page 34. The payout is subject to forfeiture if the award recipient terminates employment before the second anniversary of the grant date. |
46 | Interpublic Group 2019 Proxy Statement |
Executive Compensation
(4) | Reflects potential payout in shares of Common Stock that the executive is entitled to earn pursuant to a performance share award made in 2018 under the 2014 PIP. As described in greater detail beginning on page 32, under the heading Compensation Discussion & Analysis Long-term Incentives, depending on the actual level of performance relative to goals over a three-year performance period, an individual will be entitled to receive a payout ranging from 0% to 200% of the target amount. The amount of the payout, as so determined, will vest at the end of the third year following the grant of the award. |
(5) | Reflects potential payout in shares of Common Stock that each of Mr. Krakowsky and Ms. Johnson is entitled to earn pursuant to a performance share award made in 2018 under the 2014 PIP. As described in greater detail on page 32, under the heading Compensation Discussion & Analysis Long-term Incentives, depending on the actual level of performance of IPG Mediabrands relative to goals over a two-year performance period, Mr. Krakowsky and Ms. Johnson will be entitled to receive a payout ranging from 0% to 200% of the target amount. The amount of the payout, as so determined, will vest at the end of the third year following the grant of the award. |
(6) | Reflects potential payout in shares of Common Stock that Mr. Krakowsky is entitled to earn pursuant to a performance share award made in 2018 under the 2014 PIP. As described in greater detail on page 32, under the heading Compensation Discussion & Analysis Long-term Incentives, depending on the actual level of performance of IPG Mediabrands relative to goals over a two-year performance period, Mr. Krakowsky will be entitled to receive a payout ranging from 0% to 200% of the target amount. The amount of the payout, as so determined, will vest on March 31, 2020. |
(7) | Reflects the number of shares under restricted stock unit award grants made under the 2014 PIP. These shares are credited with quarterly cash dividends, when and as declared by the Board of Directors on the Common Stock. All of the shares of restricted stock, and any cash dividends paid on the restricted stock, are subject to forfeiture if the award recipient terminates employment before the third anniversary of the grant date. |
(8) | Reflects the grant date fair value of the equity award disclosed in the adjacent column computed in accordance with FASB ASC Topic 718, excluding the effect of estimated service-based forfeitures. The assumptions used in the calculation of these amounts are set forth in Note 11 to Interpublics audited financial statements included in the 2018 Form 10-K. |
Interpublic Group 2019 Proxy Statement | 47 |
Executive Compensation
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table provides information on outstanding equity awards, consisting of stock option awards and stock awards, held by the named executive officers as of December 31, 2018.
Option Awards (1) | Stock Awards | |||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) |
Option Exercise Price ($) |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested ($) (6) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (9) |
|||||||||||||||||||||
Michael Roth | 628,019 | 12.7700 | 2/28/2023 | 148,054 | (2) | 3,054,354 | 296,108 | (7) | 6,108,708 | |||||||||||||||||||
546,448 | 11.7200 | 2/28/2022 | 108,035 | (3) | 2,228,762 | 432,142 | (8) | 8,915,089 | ||||||||||||||||||||
431,594 | 8.4500 | 3/31/2020 | 121,781 | (4) | 2,512,342 | |||||||||||||||||||||||
268,161 | (5) | 5,532,161 | ||||||||||||||||||||||||||
Frank Mergenthaler | 35,250 | (2) | 727,208 | 70,502 | (7) | 1,454,456 | ||||||||||||||||||||||
66,878 | (3) | 1,379,693 | 102,890 | (8) | 2,122,621 | |||||||||||||||||||||||
28,995 | (4) | 598,167 | ||||||||||||||||||||||||||
63,848 | (5) | 1,317,184 | ||||||||||||||||||||||||||
Philippe Krakowsky | 42,300 | (2) | 872,649 | 190,352 | (7) | 3,926,962 | ||||||||||||||||||||||
66,878 | (3) | 1,379,693 | 102,890 | (8) | 2,122,621 | |||||||||||||||||||||||
28,995 | (4) | 598,167 | ||||||||||||||||||||||||||
63,848 | (5) | 1,317,184 | ||||||||||||||||||||||||||
Andrew Bonzani | 17,625 | (2) | 363,604 | 35,250 | (7) | 727,208 | ||||||||||||||||||||||
23,150 | (3) | 477,585 | 51,444 | (8) | 1,061,290 | |||||||||||||||||||||||
14,497 | (4) | 299,073 | ||||||||||||||||||||||||||
31,923 | (5) | 658,571 | ||||||||||||||||||||||||||
Ellen Johnson | 8,460 | (2) | 174,530 | 16,920 | (7) | 349,060 | ||||||||||||||||||||||
5,144 | (3) | 106,121 | 20,578 | (8) | 424,524 | |||||||||||||||||||||||
5,799 | (4) | 119,633 | ||||||||||||||||||||||||||
12,769 | (5) | 263,424 |
(1) | All of the stock options have a ten-year term and an exercise price equal to 100% of the fair market value of the Common Stock on the grant date which, as established by the Compensation Committee, is the average of the high and low sales prices of the Common Stock as reported by the NYSE on the grant date. |
(2) | Reflects the number of shares under restricted stock unit award grants (Restricted Stock Unit Awards) made under the 2014 PIP that will vest on February 28, 2021. All Restricted Stock Unit Awards are credited with quarterly dividends, when and as declared by the Board of Directors, on the Common Stock. All Restricted Stock Unit Awards, and any dividends paid on the restricted stock unit, are subject to forfeiture if the award recipient terminates employment before the third anniversary of the grant date. |
(3) | Reflects the number of shares under restricted stock award grants (Restricted Stock Awards) made under the 2014 PIP that will vest on February 28, 2020. All Restricted Stock Awards are credited with quarterly dividends, when and as declared by the Board of Directors, on the Common Stock. All Restricted Stock Awards, and any dividends paid on the restricted stock, are subject to forfeiture if the award recipient terminates employment before the third anniversary of the grant date. |
(4) | Reflects the number of shares under Restricted Stock Awards made under the 2014 PIP that vested on February 28, 2019. |
(5) | Represents the number of unvested shares of Common Stock that the named executive officer has earned under performance share awards granted in 2016, for which the performance ended on December 31, 2018. The award remained subject to forfeiture had the employment of the award recipient terminated prior to the February 28, 2019 vesting date, which did not occur. |
(6) | The value shown is calculated by multiplying (i) the number of shares shown in the column headed Number of Shares or Units of Stock That Have Not Vested by (ii) the closing price of the Common Stock ($20.63), as reported by the NYSE on December 31, 2018. |
48 | Interpublic Group 2019 Proxy Statement |
Executive Compensation
(7) | Represents the maximum number of shares of Common Stock that the named executive officer would receive under a performance share award granted in 2018, for which the performance period will end on December 31, 2020. Any shares earned will remain subject to forfeiture if the employment of the award recipient terminates prior to February 28, 2021. |
(8) | Represents the maximum number of shares of Common Stock that the named executive officer would receive under a performance share award granted in 2017, for which the performance period will end on December 31, 2019. Any shares earned will remain subject to forfeiture if the employment of the award recipient terminates prior to February 28, 2020. |
(9) | The values shown in this column are calculated by multiplying (i) the number of shares shown in the column headed Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested by (ii) the closing price of the Common Stock ($20.63), as reported by the NYSE on December 31, 2018. |
OPTION EXERCISES AND STOCK VESTED
The following table provides information for 2018 on the number of shares of Common Stock acquired upon (i) the exercise of stock options and (ii) the vesting of performance share awards.
Option Awards(1) | Stock Awards | |||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($) |
||||||||||||||||
Michael Roth |
1,492,866 | 20,759,174 | 260,619 | (2) | 6,299,161 | (4) | ||||||||||||||
109,228 | (3) | 2,836.651 | (5) | |||||||||||||||||
Frank Mergenthaler |
84,981 | 1,145,106 | 66,483 | (2) | 1,606,894 | (4) | ||||||||||||||
62,658 | (3) | 1,592,086 | (5) | |||||||||||||||||
Philippe Krakowsky |
| | 59,836 | (2) | 1,446,236 | (4) | ||||||||||||||
59,872 | (3) | 1,519,733 | (5) | |||||||||||||||||
Andrew Bonzani |
| | 26,593 | (2) | 642,753 | (4) | ||||||||||||||
22,743 | (3) | 578,921 | (5) | |||||||||||||||||
Ellen Johnson |
75,000 | 1,460,723 | 25,055 | (2) | 605,579 | (4) | ||||||||||||||
9,278 | (3) | 231,579 | (5) |
(1) | Represents the number of stock options exercised in 2018. The value realized on exercise is the amount by which the market price of the Common Stock received upon exercise exceeds the exercise price. |
(2) | Represents of the total number of performance based shares which vested on February 27, 2018. |
(3) | Represents of the total number of shares of restricted stock which vested on February 28, 2018. |
(4) | The value realized on the vesting of performance share awards is equal to the product of (i) the number of shares vested, multiplied by (ii) the average of the high and low price of the Common Stock, as reported by the NYSE, on the February 27, 2018 vesting date ($24.17) (Common Stock Vesting Date Value). |
(5) | The value realized on the vesting of restricted stock awards is equal to the sum of (i) the product of (A) the number of shares vested, multiplied by (B) the Common Stock Vesting Date Value, (ii) plus the total amount of the accrued dividends from the applicable grant date of the restricted stock award through the February 2018 vesting date which, in accordance with the terms of the awards, are payable upon the vesting of the shares of restricted stock. |
Name | Grant Date | Vesting Date | Market ($) |
Number of # |
Market Value of ($) |
Accrued Cash ($) |
Value Realized ($) |
|||||||||||||||||||||
Mr. Roth |
2/27/2015 | 2/27/2018 | 24.17 | 109,228 | 2,640,041 | 196,610 | 2,836,651 | |||||||||||||||||||||
Mr. Mergenthaler |
|
2/27/2015 2/29/2016 |
|
|
2/27/2018 2/28/2018 |
|
|
24.17 23.64 |
|
|
27,864 34,794 |
|
|
673,473 822,530 |
|
|
50,155 45,928 |
|
|
723,628 868,458 |
| |||||||
Mr. Krakowsky |
|
2/27/2015 2/29/2016 |
|
|
2/27/2018 2/28/2018 |
|
|
24.17 23.64 |
|
|
25,078 34,794 |
|
|
606,135 822,530 |
|
|
45,140 45,928 |
|
|
651,275 868,458 |
| |||||||
Mr. Bonzani |
|
2/27/2015 2/29/2016 |
|
|
2/27/2018 2/28/2018 |
|
|
24.17 23.64 |
|
|
11,145 11,598 |
|
|
269,375 274,177 |
|
|
20,061 15,309 |
|
|
289,436 289,486 |
| |||||||
Ms. Johnson |
2/29/2016 | 2/28/2018 | 23.64 | 9,278 | 219,332 | 12,247 | 231,579 |
Interpublic Group 2019 Proxy Statement | 49 |
Executive Compensation
Pension Benefits
The following table provides information on pension benefits held by the named executive officers as of December 31, 2018.
Name | Plan Name | Number of Years of Credited Service (#) |
Present Value of Accumulated Benefit ($) (1)(2) |
Payments During Last Fiscal Year ($) |
||||||||||
Michael Roth |
SERIP | N/A | 1,221,569 | 0 | ||||||||||
Frank Mergenthaler |
| | | | ||||||||||
Philippe Krakowsky |
ESBA | N/A | 2,327,478 | 0 | ||||||||||
Andrew Bonzani |
| | | | ||||||||||
Ellen Johnson |
| | | |
(1) | The calculation of the present value of accumulated benefit assumes a discount rate of 4.35%. No preretirement decrements were used in the calculation of present values. Contingent benefits arising from death, early retirement or other termination of employment were not valued. |
(2) | For Mr. Krakowsky, the amount shown is the present value of the maximum benefit that he would be entitled to receive under his ESBA if his employment by Interpublic continues until he reaches age 60. The terms and conditions of the ESBA are described in greater detail on page 50 under the heading Executive Special Benefit Agreement. |
NONQUALIFIED DEFERRED COMPENSATION ARRANGEMENTS
Interpublic Group 2019 Proxy Statement | 51 |
Executive Compensation
Nonqualified Deferred Compensation
The following table provides information on non-qualified deferred compensation arrangements for the named executive officers as of December 31, 2018, which consist exclusively of benefits under the CAP.
Name | Executive contributions in last FY ($) |
Registrant contributions in last FY ($) (1) |
Aggregate earnings in last FY ($) (2) |
Aggregate withdrawals/ distributions ($) |
Aggregate balance at last FYE ($) (3) |
|||||||||||
Michael Roth |
0 | 350,000 | 115,354 | 0 | 5,259,785 | |||||||||||
Frank Mergenthaler |
0 | 200,000 | 63,613 | 0 | 2,907,574 | |||||||||||
Philippe Krakowsky |
0 | 150,000 | 16,651 | 0 | 858,744 | |||||||||||
Andrew Bonzani |
0 | 50,000 | 2,435 | 0 | 153,658 | |||||||||||
Ellen Johnson |
0 | 75,000 | 23,309 | 0 | 1,067,098 |
(1) | The amounts shown as Registrant contributions in last FY are dollar credits that were added to the named executive officers CAP account as of December 31, 2018 and are included in the All Other Compensation column for 2018 of the Summary Compensation Table on page 43. |
(2) | No earnings on deferred amounts are included in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column of the Summary Compensation Table for 2018, 2017 or 2016 because the interest credits under the CAP did not constitute above-market or preferential earnings as defined by SEC rules. |
(3) | The aggregate balances shown in this column include the following dollar credits that were included in the All Other Compensation column of the Summary Compensation Table for each of 2017 and 2016 on page 43. |
Name | 2017 ($) |
2016 ($) |
||||||
Mr. Roth |
350,000 | 350,000 | ||||||
Mr. Mergenthaler |
200,000 | 200,000 | ||||||
Mr. Krakowsky |
50,000 | 50,000 | ||||||
Mr. Bonzani |
50,000 | 50,000 | ||||||
Ms. Johnson |
75,000 | 75,000 |
52 | Interpublic Group 2019 Proxy Statement |
Executive Compensation
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
Employment Agreement Base Salary and Incentive Compensation Information
The following table provides the annual salary, annual incentive target percentage and long-term incentive target award value for each named executive officer for 2018.
Name | Salary $ |
Annual Incentive Target % |
Long-Term Incentive Target $ |
|||||||||
Michael Roth |
$ | 1,500,000 | 300 | 10,500,000 | ||||||||
Frank Mergenthaler |
1,100,000 | 150 | 2,500,000 | |||||||||
Philippe Krakowsky |
1,250,000 | 150 | 3,000,000 | |||||||||
Andrew Bonzani |
800,000 | 90 | 1,250,000 | |||||||||
Ellen Johnson |
625,000 | 75 | 600,000 |
Interpublic Group 2019 Proxy Statement | 53 |
Executive Compensation
Executive Severance Plan
54 | Interpublic Group 2019 Proxy Statement |
Executive Compensation
Change of Control Agreements
Interpublic Group 2019 Proxy Statement | 55 |
Executive Compensation
SEVERANCE AND CHANGE OF CONTROL BENEFITS
The preceding narrative describes the severance and other benefits to which the named executive officers may be entitled under the various agreements, plans and arrangements in connection with or following a termination of the executives employment. Below is a table that quantifies the benefits that each named executive officer would have received had his employment terminated as of December 31, 2018 under the following circumstances:
Triggering Event (1) | Description | |
Termination for Cause or Voluntary Termination Without Good Reason | In general (subject to certain variations in each executives employment agreement), Interpublic would have Cause to terminate an executives employment if the executive (a) materially breaches a provision in his employment agreement and fails to cure such breach within a 15-day period; (b) misappropriates funds or property of Interpublic; (c) attempts to secure any personal profit related to the business of Interpublic without proper prior written approval; (d) engages in fraud, material dishonesty, gross negligence, gross malfeasance or insubordination, or willful (i) failure to follow Interpublics Code of Conduct or (ii) misconduct in the performance of his duties, excluding, in either case, acts taken in good faith that do not cause material harm to Interpublic; (e) refuses or fails to attempt in good faith to perform such executives duties as an employee or to follow a reasonable good-faith direction of the Board of Directors or the person to whom the executive reports directly if such refusal or failure is not cured within a 15-day period; (f) has committed or is formally charged or indicted for a felony or a crime involving dishonesty, fraud or moral turpitude or (g) engages in conduct that is clearly prohibited by the policy of Interpublic prohibiting discrimination or harassment based on age, gender, race, religion, disability, national origin or any other protected category.
In general, an executive would have Good Reason to terminate such executives employment if Interpublic, without the executives consent, (a) materially reduces the executives base salary; (b) materially diminishes the authority, duties or responsibilities of the executive or the supervisor to whom the executive is required to report; (c) materially diminishes the budget over which the executive has authority; (d) requires the executive to relocate to an office more than 50 miles outside the city in which such executive is principally based or (e) materially breaches an employment agreement with the executive. Before resigning for Good Reason, the executive generally must give Interpublic notice and an opportunity to cure the adverse action. | |
Qualifying Termination | An involuntary termination of the executives employment without Cause or a resignation by the executive for Good Reason. | |
Change of Control | In general, a Change of Control will be deemed to have occurred if: (i) any person, other than Interpublic or any of its subsidiaries, becomes the beneficial owner of more than 50% of the combined voting power of Interpublics then outstanding voting securities; (ii) any person, other than Interpublic or any of its subsidiaries, acquires (during a 12-month period) ownership of 30% or more of the combined voting power of Interpublics then-outstanding voting securities; (iii) any person acquires 40% or more of Interpublics assets (determined based on gross fair market value) or (iv) during any 12-month period, a majority of the members of the Board is replaced by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of their appointment or election.
Amounts shown in the table under the heading Change of Control are paid upon a Change of Control, without regard to whether the executives employment is terminated. | |
Qualifying Termination following a Change of Control | A Qualifying Termination of an executive employment within two years after a Change of Control. | |
Death or Disability | Disability is determined in accordance with our policies and procedures based on the facts and circumstances presented. | |
Retirement | Retirement of an executive is deemed to have occurred upon the executives voluntary termination of employment with the Companys approval after (i) the executive has attained the age of 65 and (ii) has completed 10 years of service with IPG. |
56 | Interpublic Group 2019 Proxy Statement |
Executive Compensation
KEYS TO TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL PAYMENTS
Payment | Description | |
Severance | The severance amount shown as payable to each of the named executive officers in the event of a Qualifying Termination, other than following a Change of Control, is provided for under the terms of the executives employment agreement as supplemented by the terms of ESP, except that for Messrs. Roth and Krakowsky, severance benefits following a resignation for Good Reason are payable exclusively under the ESP.
In the event of a Qualifying Termination following a Change of Control, the severance amount shown for each of the named executive officers is provided for under the terms of the executives Change of Control Agreement. | |
Bonus | Mr. Mergenthalers employment agreement provides for a bonus payment in the event of a Qualifying Termination, other than following a Change of Control.
Mr. Krakowskys employment agreement provides that he is eligible for consideration for a bonus if Interpublic terminates his employment without Cause, other than following a Change of Control, but does not provide for a bonus payment if he resigns for Good Reason.
Mr. Bonzani and Ms. Johnsons respective employment agreements provide that she is eligible for consideration for a bonus if Interpublic terminates her employment without Cause or if she resigns for Good Reason.
In the event of a Change of Control, each named executive officer is entitled to a bonus payment under the 2014 PIP at the executives target level (without regard to whether his employment terminates).
In the event of a termination of employment due to death or disability, the bonus amount shown for each of the named executive officers is payable under the 2014 PIP, which provides that award is pro-rated based on the time elapsed and the performance-level achieved. In the case of death, achievement of the performance objectives is determined based on actual performance through the date of death and estimated performance for the rest of the performance period. In the case of disability, achievement is measured based on actual performance through the end of the performance period. | |
Long-Term Incentives |
Under the Interpublics Performance Incentive Plans:
In the event of termination due to death or disability:
- Restricted stock vests on a pro-rata basis; and
- Performance shares and performance cash vest on a pro-rata basis based on the time elapsed and the performance level achieved, unless employment terminates within 12 months of the grant date (in which case the entire award is forfeited). In the case of death, achievement of the performance objectives is determined based on actual performance through the date of death and estimated performance for the rest of the performance period. In the case of disability, achievement is measured based on actual performance through the end of the performance period.
Interpublics Performance Incentive Plans provide in the event of a Qualifying Termination following a Change of Control:
An executive will be entitled to payments for the following awards, each valued as of the date of the Change of Control:
- Restricted stock; and
- Performance shares and performance cash at the target performance level.
Mr. Krakowskys employment agreement provides that if his employment is terminated involuntarily without cause (but not in the event of resignation for Good Reason), his restricted stock will continue to vest during his severance period.
|
Interpublic Group 2019 Proxy Statement | 57 |
Executive Compensation
Payment | Description | |
Ms. Johnsons employment agreement provides that if her employment is terminated involuntarily without cause or if she resigns for Good Reason, her incentive, stock option and equity plan awards will continue to vest during her severance period.
In the event of retirement termination due to retirement, Mr. Roths 2018 (i) restricted stock award vests on a pro-rata basis and (ii) performance share and performance cash awards vest on a pro-rata basis based on the time elapsed and the actual performance level achieved through the performance period.
Notwithstanding the foregoing, the Compensation & Leadership Talent Committee has discretion to accelerate vesting of any award granted under the 2009 PIP, if the named executive officers employment terminates at least 12 months after the date of grant. | ||
Pension/Deferred Compensation | The amounts shown as payable under the CAP in the event of (i) a termination of employment for Cause or a voluntary termination without Good Reason or (ii) death or disability reflect the account balance as of December 31, 2018. The amounts shown as payable under the SERIP in these events reflect the sum of the 15 annual payments that would be due starting at age 60 (or 2 years after termination, if later) as of December 31, 2018.
The amounts shown as payable under the CAP and SERIP in the event of a Qualifying Termination or a Qualifying Termination following a Change of Control reflect the total amounts payable after applying the additional credits and vesting through the applicable severance period. In the event of a termination within 2 years after a Change of Control, (i) the amount shown for the SERIP will be paid in a lump sum at the then vested value of the future payments and (ii) the amount shown for the CAP will be paid in a lump sum.
The amounts shown as payable under Mr. Krakowskys ESBA, other than in the event of death, reflect amounts accrued as of December 31, 2018, which would be paid in annual installments of $50,000 per year. In the event of termination due to death, Mr. Krakowsky would receive 15 annual payments of $245,000 each. | |
Welfare Benefits | The medical, dental and vision benefits shown as payable upon a Qualifying Termination, other than following a Change of Control, are generally provided under the executives employment agreement and the ESP.
The medical, dental and vision benefits shown as payable in the event of a Qualifying Termination following a Change of Control are provided under the executives Change of Control Agreement.
Messrs. Roths, Mergenthalers, and Krakowskys and Ms. Johnsons 401(k) benefit, and Mr. Krakowskys and Ms. Johnsons life insurance premium benefit, are provided under their respective employment agreements. |
58 | Interpublic Group 2019 Proxy Statement |
Executive Compensation
ESTIMATED TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL PAYMENTS
The following table shows amounts each named executive officer would be entitled to receive had the employment of such executive officer terminated on December 31, 2018, by reason of the listed triggering events.
Name | Termination for Cause or Voluntary Termination Without Good Reason ($) |
Qualifying Termination ($) |
Death/ Disability ($) |
Retirement ($) |
Qualifying Termination following a Change of Control ($) (3) |
|||||||||||||||||
Michael Roth |
Severance | 0 | 3,000,000 | 0 | 0 | 18,000,000 | ||||||||||||||||
Bonus | 0 | 0 | 5,800,000 | 0 | 4,500,000 | |||||||||||||||||
Long Term Incentive: |
Performance Shares | 0 | 0 | 7,725,327 | 1,090,331 | 12,536,583 | ||||||||||||||||
Performance Cash | 0 | 0 | 4,057,376 | 1,965,250 | 8,750,000 | |||||||||||||||||
Restricted Stock | 0 | 0 | 3,731,196 | 848,194 | 7,795,458 | |||||||||||||||||
Benefits: |
Med/Dental/Vision | 0 | 39,346 | 0 | 0 | 59,019 | ||||||||||||||||
401(k) Match | 0 | 13,695 | 0 | 0 | 13,695 | |||||||||||||||||
Pension (1) / Def Comp (2) |
||||||||||||||||||||||
Frank Mergenthaler |
Severance | 0 | 1,650,000 | 0 | 0 | 5,500,000 | ||||||||||||||||
Annual Bonus | 0 | 3,300,000 | 2,075,000 | 0 | 1,650,000 | |||||||||||||||||
Long Term Incentive: |
Performance Shares | 0 | 0 | 1,839,359 | 0 | 2,984,893 | ||||||||||||||||
Performance Cash | 0 | 0 | 966,042 | 0 | 2,083,333 | |||||||||||||||||
Restricted Stock | 0 | 0 | 1,407,662 | 0 | 2,705,067 | |||||||||||||||||
Restricted Cash | 0 | 0 | 0 | 0 | 1,275,000 | |||||||||||||||||
Benefits: |
Med/Dental/Vision | 0 | 29,912 | 0 | 0 | 39,876 | ||||||||||||||||
401(k) Match | 0 | 13,695 | 0 | 0 | 13,695 | |||||||||||||||||
Def Comp (2) |
0 | |||||||||||||||||||||
Philippe Krakowsky |
Severance | 0 | 1,875,000 | 0 | 0 | 6,250,000 | ||||||||||||||||
Annual Bonus | 0 | 1,875,000 | 2,900,000 | 0 | 1,875,000 | |||||||||||||||||
Long Term Incentive: |
Performance Shares | 0 | 0 | 2,111,064 | 0 | 4,221,146 | ||||||||||||||||
Performance Cash | 0 | 0 | 1,115,224 | 0 | 2,250,000 | |||||||||||||||||
Restricted Stock | 0 | 2,655,908 | 1.407.662 | 0 | 2,850,509 | |||||||||||||||||
Restricted Cash | 0 | 0 | 0 | 0 | 1,500,000 | |||||||||||||||||
Benefits: |
Med/Dental/Vision | 0 | 42,757 | 0 | 0 | 56,867 | ||||||||||||||||
401(k) Match | 0 | 13,695 | 0 | 0 | 13,695 | |||||||||||||||||
Life Insurance | 0 | 1,345 | 0 | 0 | ||||||||||||||||||
Pension (1) / Def Comp (2) |
||||||||||||||||||||||
Andrew Bonzani |
Severance | 0 | 1,200,000 | 0 | 0 | 3,040,000 | ||||||||||||||||
Annual Bonus | 0 | 900,000 | 0 | 720,000 | ||||||||||||||||||
Long Term Incentive: |
Performance Shares | 0 | 0 | 919,663 | 0 | 1,128,812 | ||||||||||||||||
Performance Cash | 0 | 0 | 471,946 | 0 | 1,041,666 | |||||||||||||||||
Restricted Stock | 0 | 0 | 566,474 | 0 | 1,015,924 | |||||||||||||||||
Restricted Cash | 0 | 0 | 0 | 0 | 750,000 | |||||||||||||||||
Benefits: |
Med/Dental/Vision | 0 | 42,757 | 0 | 0 | 56,867 | ||||||||||||||||
401(k) Match | 0 | 0 | 0 | 9,570 | ||||||||||||||||||
Def Comp (2) |
0 | |||||||||||||||||||||
Ellen Johnson |
Severance | 0 | 625,000 | 0 | 0 | 2,187,500 | ||||||||||||||||
Annual Bonus | 0 | 468,750 | 700,000 | 0 | 468,750 | |||||||||||||||||
Long Term Incentive: |
Performance Shares | 0 | 239,267 | 367,992 | 0 | 626,059 | ||||||||||||||||
Performance Cash | 0 | 125,000 | 193,208 | 0 | 450,000 | |||||||||||||||||
Restricted Stock | 0 | 119,633 | 177,784 | 0 | 177,784 | |||||||||||||||||
Restricted Cash | 0 | 0 | 0 | 0 | 100,000 | |||||||||||||||||
Benefits: |
Med/Dental/Vision | 0 | 41,589 | 0 | 0 | 83,178 | ||||||||||||||||
401(k) Match | 0 | 13,695 | 0 | 0 | 13,695 | |||||||||||||||||
Life Insurance | 0 | 1,345 | 0 | 0 | 13,695 | |||||||||||||||||
Def Comp (2) |
0 |
(1) | The payment Mr. Roth is entitled to receive under the SERIP is described in detail on page 50, under the heading Pension Benefits The Interpublic Senior Executive Retirement Income Plan. |
Interpublic Group 2019 Proxy Statement | 59 |
Executive Compensation
The payment Mr. Krakowsky is entitled to receive under his ESBA is described in detail on page 50, under the heading Pension Benefits Executive Special Benefit Agreement. |
(2) | The payments each named executive officer is entitled to receive under the CAP is set forth on page 51 in the Non-Qualified Deferred Compensation table under the column heading Aggregate Balance FYE. |
Each of the named executive officers is entitled to the following additional amounts under the CAP in the event such named executive officer is terminated pursuant to either (i) a Qualifying Termination or (ii) a Qualifying Termination following a Change of Control. |
Name | Qualifying Termination ($) |
Qualifying Termination following a Change of control ($) |
||||||
Mr. Roth
|
995,640 | 1,513,598 | ||||||
Mr. Mergenthaler
|
320,852 | 563,603 | ||||||
Mr. Krakowsky
|
186,914 | 350,761 | ||||||
Mr. Bonzani
|
56,916 | 109,705 | ||||||
Ms. Johnson
|
103,652 | 159,415 |
(3) | Some benefit payments shown in the table below may be reduced if necessary to avoid adverse tax consequences to the executive under Section 280G of the Internal Revenue Code. |
60 | Interpublic Group 2019 Proxy Statement |
OUTSTANDING SHARES AND OWNERSHIP OF COMMON STOCK
The outstanding capital stock of Interpublic at the close of business on March 28, 2019, the record date for the Annual Meeting consisted of 386,949,401 shares of Common Stock. Only the holders of Common Stock on the record date are entitled to vote at the Annual Meeting. Each share of Common Stock is entitled to one vote on each matter that is submitted to a vote of stockholders at the meeting.
Share Ownership of Certain Beneficial Owners
The following table sets forth information concerning direct and indirect beneficial ownership of Common Stock as of December 31, 2018 by persons known to Interpublic to have beneficial ownership of more than 5% of the Common Stock:
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership of Common Stock(1) |
Percent of Class |
||||||
The Vanguard Group, Inc (2) 100 Vanguard Blvd. Malvern, PA 19355 |
42,016,297 | 10.93 | % | |||||
BlackRock, Inc (3) 55 East 52nd Street New York, NY 10055 |
41,701,134 | 10.8 | % | |||||
FMR LLC (4) 245 Summer Street Boston, MA 02210 |
31,458,057 | 8.184 | % | |||||
Massachusetts Financial Services Company (5) 111 Huntington Avenue, Boston, MA 02199 |
26,486,018 | 6.9 | % |
(1) | The rules of the SEC 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 dispositive 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 of the security within 60 days. |
(2) | This disclosure is based on a Schedule 13G/A filed by The Vanguard Group, Inc. (Vanguard) with the SEC on February 13, 2019, in which Vanguard reported that it is an investment manager that has sole voting power with respect to 445,823 shares of Common Stock, shared voting power with respect to 98,337 shares of Common Stock, sole dispositive power with respect to 41,472,644 shares of Common Stock and shared dispositive power with respect to 543,653 shares of Common Stock. |
(3) | This disclosure is based on a Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 31, 2019, in which it reported that it is a holding company of a group of investment management companies that in the aggregate have sole voting power with respect to 38,031,411 shares of Common Stock and sole dispositive power with respect to 41,701,134 shares of Common Stock. |
(4) | This disclosure is based on a Schedule 13G/A filed by FMR, LLC with the SEC on February 13, 2019, in which it reported that it is a holding company of a group of investment management companies that in the aggregate have sole voting power with respect to 3,686,191 shares of Common Stock and sole dispositive power with respect to 31,458,057 shares of Common Stock. |
(5) | This disclosure is based on a Schedule 13G/A filed by Massachusetts Financial Services Corp. with the SEC on February 13, 2019, in which it reported that it is an investment advisor that has sole voting power with respect to 25,311,685 shares of Common Stock and sole dispositive power with respect to 26,486,018 shares of Common Stock. |
Interpublic Group 2019 Proxy Statement | 61 |
Outstanding Shares and Ownership of Common Stock
The following table sets forth information concerning the direct and indirect beneficial ownership of the Common Stock as of March 28, 2019 by each director, each executive officer named in the Summary Compensation Table, and all directors and executive officers of Interpublic as a group:
Name of Beneficial Owner | Common Stock Ownership |
Options Exercisable Within 60 Days |
Total (1)(2) | |||||||||
Andrew Bonzani |
83,702 | 0 | 83,702 | |||||||||
Jocelyn Carter-Miller |
26,405 | 0 | 26,405 | |||||||||
H. John Greeniaus |
77,558 | 0 | 77,558 | |||||||||
Mary J. Steele Guilfoile |
96,124 | 0 | 96,124 | |||||||||
Dawn Hudson |
48,505 | 0 | 48,505 | |||||||||
Ellen Johnson |
35,258 | 0 | 35,258 | |||||||||
William T. Kerr |
145,765 | 0 | 145,765 | |||||||||
Philippe Krakowsky |
267,633 | 0 | 267,633 | |||||||||
Frank Mergenthaler(3) |
286,863 | 0 | 286,863 | |||||||||
Henry S. Miller |
37,664 | 0 | 37,664 | |||||||||
Jonathan F. Miller |
32,664 | 0 | 32,664 | |||||||||
Patrick Q. Moore |
8,362 | 0 | 8,362 | |||||||||
Michael I. Roth(4) |
1,235,925 | 1,606,061 | 2,841,986 | |||||||||
David M. Thomas |
110,018 | 0 | 110,018 | |||||||||
E. Lee Wyatt |
8,362 | 0 | 8,362 | |||||||||
Other executive officers |
120,052 | 0 | 120,052 | |||||||||
All directors and executive officers as a group ( 17 persons) |
2,620,860 | 1,606,061 | 4,226,921 |
(1) | The rules of the SEC 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 dispositive 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 that is exercisable or that will become exercisable within 60 days. Common Stock ownership set forth in this table includes unvested shares of restricted stock awarded under the 2014 PIP, 2009 PIP and the 2009 Directors Plan due to the right of the persons identified to exercise voting power with respect to the shares. Except as otherwise indicated, each person has sole voting and sole dispositive power over the shares indicated as beneficially owned. |
(2) | No individual identified in the table had beneficial ownership of more than 1% of the outstanding shares of Common Stock as of March 28, 2019. Interpublics directors and executive officers as a group had beneficial ownership of 1.09% of the outstanding shares of Common Stock. |
(3) | Includes 101,933 shares held in a family trust. |
(4) | Includes 500,000 shares held in a family trust. |
No executive officer or director of Interpublic has pledged any shares of Common Stock as security.
Section 16(a) Beneficial Ownership Reporting Compliance
62 | Interpublic Group 2019 Proxy Statement |
Item 4. Proposal to Adopt the Interpublic Group of Companies, Inc. 2019 Performance Incentive Plan
64 | Interpublic Group 2019 Proxy Statement |
Item 4. Proposal to Adopt the Interpublic Group of Companies, Inc. 2019 Performance Incentive Plan
DESCRIPTION OF THE PLAN
The text of the Plan is attached hereto as Appendix A and is hereby incorporated by reference. The following description of the Plan is qualified in its entirety by reference to the text of the Plan.
1 | IPG to insert number of eligible employees. |
Interpublic Group 2019 Proxy Statement | 65 |
Item 4. Proposal to Adopt the Interpublic Group of Companies, Inc. 2019 Performance Incentive Plan
66 | Interpublic Group 2019 Proxy Statement |
Item 4. Proposal to Adopt the Interpublic Group of Companies, Inc. 2019 Performance Incentive Plan
Interpublic Group 2019 Proxy Statement | 67 |
Item 4. Proposal to Adopt the Interpublic Group of Companies, Inc. 2019 Performance Incentive Plan
68 | Interpublic Group 2019 Proxy Statement |
Item 4. Proposal to Adopt the Interpublic Group of Companies, Inc. 2019 Performance Incentive Plan
Interpublic Group 2019 Proxy Statement | 69 |
Item 4. Proposal to Adopt the Interpublic Group of Companies, Inc. 2019 Performance Incentive Plan
70 | Interpublic Group 2019 Proxy Statement |
Item 4. Proposal to Adopt the Interpublic Group of Companies, Inc. 2019 Performance Incentive Plan
Equity Compensation Plan Information
The information required by this Item is incorporated by reference to the Outstanding Shares section of the Proxy Statement, except for information regarding the shares of common stock to be issued or which may be issued under our equity compensation plans as of December 31, 2018, which is provided in the following table.
Plan Category | Number of Shares of Common Stock to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) (1,2,3,4) |
Weighted-Average Exercise Price of Outstanding
Stock ($) |
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) (5) |
|||||||||
Equity Compensation Plans Approved by Security Holders | 11,791,132 | 10.06 | 24,868,808 | |||||||||
Equity Compensation Plans Not Approved by Security Holders | None |
1 | Included a total of 1,765,811 outstanding stock options granted under the 2006 Performance Incentive Plan and the 2009 Performance Incentive Plan (the 2009 Plan). These options are the only instruments taken into account in computing the weighted-average exercise price in column (b) of this table. |
2 | Included a total of 6,965,939 shares of Common Stock representing the target number of shares issuable under the 2014 Performance Incentive Plan (the 2014 Plan) following the completion of the 2016-2018 performance period, the 2017-2019 performance period, and the 2018-2020 performance period, respectively. |
3 | Included a total of 1,115,823 restricted stock awards made under the 2014 Plan. |
4 | Included a total of 1,943,559 shares of Common Stock issuable pursuant to restricted share units (Share Unit Awards) granted under the 2014 Plan, which are settled in shares of Common Stock. |
5 | Included (i) 15,492,903 shares of Common Stock available for issuance under the 2014 Plan, (ii) 9,234,592 shares of Common Stock available for issuance under the Employee Stock Purchase Plan (2016) and (iii) 141,313 shares of Common Stock available for issuance under the 2009 Non-Management Directors Stock Incentive Plan. |
Interpublic Group 2019 Proxy Statement | 71 |
Item 5. Stockholder Proposal
Interpublic Group 2019 Proxy Statement | 73 |
The Board of Directors 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,
Andrew Bonzani
Executive Vice President, General Counsel & Secretary
April 12, 2019
74 | Interpublic Group 2019 Proxy Statement |
THE INTERPUBLIC GROUP OF COMPANIES, INC.
2019 PERFORMANCE INCENTIVE PLAN
Section 1. Purpose.
The purposes of the Plan are to promote the interests of the Company and its shareholders by enabling the Company to:
(a) attract, retain, and motivate talented individuals as Eligible Employees and Non-Management Directors;
(b) provide Eligible Employees and Non-Management Directors with cash and equity-based incentives tied to the achievement of business, financial, and strategic objectives of the Company and its Subsidiaries and Affiliates; and
(c) provide Eligible Employees and Non-Management Directors with incentives and opportunities tied to the Companys Common Stock.
Section 2. Definitions.
Unless the context clearly indicates otherwise, the following terms, when used in the Plan in capitalized form, shall have the meanings set forth below:
Administrator means (a) for Awards to Eligible Employees, the Committee, and (b) for Awards to Non-Management Directors, the Corporate Governance Committee, in each case, subject to delegation in accordance with Section 3(h) (Delegation) hereof.
Affiliate means any corporation or other entity (other than the Company or one of its Subsidiaries) in which the Company has a controlling interest, as defined in Treas. Reg. §§ 1.409A-1(b)(5)(iii)(E)(1) and 1.414(c)-2(b)(i), provided that the language at least 40 percent is used instead of at least 80 percent each place it appears in Treas. Reg. § 1.414(c)-2(b)(2)(i).
Award means any grant or award under the Plan, as evidenced in an Award Agreement.
Award Agreement means a written agreement (which may be electronic), including any amendment thereto, that sets forth the terms of the Award, as described in Section 11(a) (Awards) hereof.
Board means the Board of Directors of the Company.
Cause means, with respect to a Participant who is an Eligible Employee: (a) a material breach by the Participant of a provision in an employment agreement with Interpublic, a Subsidiary, or an Affiliate that, if capable of being cured, has not been cured within 15 days after the Participant receives written notice from his or her Employer of such breach; (b) misappropriation by the Participant of funds or property of the Company, a Subsidiary, or an Affiliate; (c) an attempt by the Participant to secure any personal profit related to the business of the Company, a Subsidiary, or an Affiliate that is not approved in writing by the Board or by the person to whom the Participant reports directly; (d) fraud, material dishonesty, gross negligence, gross malfeasance, or insubordination by the Participant, or material (1) failure by the Participant to follow the code of conduct of the Company, a Subsidiary, or an Affiliate or (2) misconduct by the Participant in the performance of his or her duties as an employee of the Company, a Subsidiary, or an Affiliate, excluding in each case any act (or series of acts) taken in good faith by the Participant that does not (and in the aggregate do not) cause material harm to the Company, a Subsidiary or an Affiliate; (e) refusal or failure by the Participant to attempt in good faith to perform the Participants duties as an employee or to follow a reasonable good-faith direction of the Board or the person to whom the Participant reports that has not been cured within 15 days after the Participant receives written notice from his or her Employer of such refusal or failure; (f) commission by the Participant, or a formal charge or indictment alleging commission by the Participant, of a felony or a crime involving dishonesty, fraud, or moral turpitude; or (g) conduct
A-1
by the Participant that is prohibited by the policy of the Company, a Subsidiary, or an Affiliate prohibiting discrimination or harassment based on age, gender, race, religion, disability, national origin or any other protected category. With respect to a Non-Management Director, Cause means an act or failure to act that constitutes cause for removal of a director under applicable Delaware law.
Change of Control means:
(a) Subject to items (b) and (c) of this definition below, the first to occur of the following events:
(1) | Any person (within the meaning of Sections 13(d) and 14(d) of the Exchange Act becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of stock that, together with other stock held by such person, possesses more than 50 percent of the combined voting power of the Companys then-outstanding stock; |
(2) | Any person (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person) ownership of stock of the Company possessing 30 percent or more of the combined voting power of the Companys then-outstanding stock; |
(3) | Any person (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person) assets from the Company that have a total gross fair market value equal to 40 percent or more of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions (where gross fair market value is determined without regard to any associated liabilities); or |
(4) | During any 12-month period, a majority of the members of the Board is replaced by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of their appointment or election. |
(b) A Change of Control shall not be deemed to occur by reason of:
(1) | The acquisition of additional control of the Company by any person or persons acting as a group that is considered to effectively control the Company (within the meaning of guidance issued under Section 409A of the Code); or |
(2) | A transfer of assets to any entity controlled by the shareholders of the Company immediately after such transfer, including a transfer to (A) a shareholder of the Company (immediately before such transfer) in exchange for or with respect to its stock, (B) an entity, 50 percent or more of the total value or voting power of which is owned (immediately after such transfer) directly or indirectly by the Company, (C) a person or persons acting as a group that owns (immediately after such transfer) directly or indirectly 50 percent or more of the total value or voting power of all outstanding stock of the Company, or (D) an entity, at least 50 percent of the total value or voting power of which is owned (immediately after such transfer) directly or indirectly by a person described in clause (C), above. |
(c) A Change of Control shall not be deemed to have occurred unless the relevant facts and circumstances give rise to a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, within the meaning of Section 409A(a)(2)(A)(v) of the Code.
Code means the Internal Revenue Code of 1986, as amended.
Committee means the Compensation and Leadership Talent Committee of the Board or any successor thereto.
Common Stock means the Companys $0.10 par value common stock.
Company means The Interpublic Group of Companies, Inc.
Corporate Governance Committee means the Corporate Governance Committee of the Board or any successor thereto.
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Corporate Transaction means a stock split, stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Common Stock at a price substantially below fair market value, or other similar event.
Disability means long-term disability as defined under the Companys applicable long-term disability plan or policy or, for a Non-Management Director, a long-term total disability that triggers a right to Social Security disability benefits, as determined by the Social Security Administration.
Dividend Equivalent means an Award of a contractual right to receive payments equivalent to the amount of dividends paid with respect to Shares, as described in Section 9(a) (Dividend Equivalents and Shares in Lieu of Cash) hereof.
Eligible Employee means an employee of the Company, a Subsidiary, or an Affiliate who is determined by the Administrator to be responsible for, or able to contribute to, the growth, profitability, and success of the Company.
Employer means, with respect to a Participant (excluding Non-Management Directors) as of any date, the Company, Subsidiary, or Affiliate that employs the Participant as of such date.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Fair Market Value means, with respect to a Share as of any determination date, except as otherwise provided in the Award Agreement, the average of the high and low selling prices of such Share on such determination date, as reported on the composite tape for securities listed on the New York Stock Exchange or such other national securities exchange as may be designated by the Administrator. If there were no sales of Shares on the determination date, the selling prices used shall be the high and low selling prices on the last preceding date on which a sale occurred.
Full Value Award means an Award, other than an Option, SAR or Dividend Equivalent, that is settled by the issuance of Shares.
Incentive Stock Option or ISO means an Option intended to meet the requirements of Section 422 of the Code.
Non-Management Director means a member of the Board who is not an employee of the Company or any of its Subsidiaries or Affiliates.
Nonstatutory Stock Option means an Option that is not intended to be an Incentive Stock Option.
Option means the right to purchase the number of Shares specified by the Administrator, at a specified price and during a specified term in accordance with the Plan and subject to any other limitations and restrictions (required by law or otherwise) as the Plan or the Administrator shall impose.
Other Stock-Based Award means an equity-based or equity-related Award granted under Section 7 (Performance Shares, Performance Units, and Other Stock-Based Awards) hereof that is not otherwise described by the terms of the Plan.
Participant means an Eligible Employee or Non-Management Director selected to receive an Award under the Plan.
Performance Cash means an Award of a contractual right granted under Section 8 (Performance Cash) hereof to receive a dollar amount (to be settled in cash, Shares, or a combination, as determined by the Administrator) that becomes vested upon the attainment, in whole or in part, of Performance Objectives specified by the Administrator.
Performance Criteria means earnings per share (basic or diluted); adjusted net income; operating income; operating profit after tax; operating income growth; net operating profit; gross or operating margins; operating efficiency; revenue; revenue growth; organic revenue growth; return on equity; Share price (including growth measures and total shareholder return); cash flow (including operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment); earnings before interest, taxes, depreciation, and/or amortization; net earnings or net income (before or after taxes); net sales or revenue growth; return measures (including return
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on assets, capital, invested capital, equity, sales, or revenue); productivity ratios; expense targets; market share; customer satisfaction; working capital targets; economic value added or EVA® (net operating profit after tax minus the sum of capital multiplied by the cost of capital); or any other criteria selected by the Administrator. Performance Criteria may relate to the performance of (a) the Company, (b) a Subsidiary, (c) an Affiliate, (d) a division or unit of the Company, any Subsidiary, or any Affiliate, (e) an office, group of agencies, or all or part of any agency system, (f) the Participant, or (g) any combination of the foregoing, as measured either in absolute terms or in comparison with the performance of other companies.
Performance Objectives mean, for any Award that is contingent in whole or in part on achievement of performance objectives, the objectives or other performance levels with respect to specified Performance Criteria that are measured over a Plan Year or other specified period for the purpose of determining the amount of the Award and/or whether the Award is granted or vested.
Performance Shares or Performance Units means an Award of a contractual right granted under Section 7 (Performance Shares, Performance Units, and Other Stock-Based Awards) hereof to receive cash, Shares, or a combination, that becomes vested upon the attainment, in whole or in part, of Performance Objectives specified by the Administrator.
Plan means The Interpublic Group of Companies, Inc. 2019 Performance Incentive Plan, as set forth herein and amended from time to time.
Plan Year means the calendar year.
Prior Plan means The Interpublic Group of Companies, Inc. 2014 Performance Incentive Plan, the 2009 Non-Management Directors Stock Incentive Plan, or any predecessor thereto.
Prohibited Activity means, for a Participant: (i) an activity that would enable the Company or the Board to terminate the Participants employment or other service for cause (as defined in the Plan or any employment agreement or other plan or arrangement that covers the Participant); (ii) a material violation of any rule, policy or procedure of the Company or the Participants Employer, including the Code of Conduct of the Company or other applicable Employer; (iii) before a Change of Control, a failure to be in compliance with any share ownership objectives of the Company applicable to the Participant, or (iv) before a Change of Control, any other conduct or act that the Company determines is injurious, detrimental or prejudicial to any interest of the Company.
Restricted Period means a period during which an Award of Restricted Stock or Restricted Stock Units is subject to forfeiture. The Restricted Period that applies to an Award made to a Participant may overlap or coincide with the Restricted Period that applies to another Award made to that Participant.
Restricted Stock means an Award of Common Stock granted under Section 6 (Restricted Stock and Restricted Units) hereof that becomes vested and nonforfeitable, in whole or in part, upon the attainment, in whole or in part, of specified conditions, which may include Performance Objectives.
Restricted Stock Unit means an Award of a contractual right granted under Section 6 (Restricted Stock and Restricted Units) hereof corresponding to a number of Shares (to be settled in cash, Shares, or a combination, as determined by the Administrator) that becomes vested and nonforfeitable, in whole or in part, upon the attainment, in whole or in part, of specified conditions, which may include Performance Objectives. Except as otherwise provided in the Award Agreement, if a Restricted Stock Unit is settled in cash, the amount of cash shall equal the Fair Market Value of the underlying Shares on the Vesting Date.
Retirement means a Participants Termination for a reason other than Cause (as determined by the Company) if, at the time of such Termination the Participant is eligible for retirement as defined in the Award Agreement or otherwise.
Shares means shares of Common Stock.
Stock Appreciation Right or SAR means the right, denominated in Shares, to receive, upon surrender of the right, in whole or in part, an amount (payable in cash, Shares, or a combination, as determined by the Administrator) for each Share that does not exceed the excess of the Fair Market Value of the Share on the date of exercise over the
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Fair Market Value of the Share on the date of grant, subject to any other limitations and restrictions (required by law or otherwise) as the Plan and the Administrator shall impose.
Subsidiary means a subsidiary of the Company that meets the definition of a subsidiary corporation in Section 424(f) of the Code.
Termination means a Termination of Directorship or Termination of Employment, as applicable.
Termination of Directorship means, for a Non-Management Director, except as otherwise provided in the Plan or an Award Agreement, the date the Non-Management Director ceases to be a director of the Company; provided, however, that if a Non-Management Director becomes an Eligible Employee upon the termination of his or her directorship, his or her ceasing to be a director of the Company shall not be treated as a Termination of Directorship unless and until the Participant has a Termination of Employment.
Termination of Employment means, for an Eligible Employee, except as otherwise provided in the Plan or an Award Agreement, the date of the Eligible Employees separation from service (within the meaning of Section 409A(a)(2)(A)(i) of the Code) with Interpublic and all of its Subsidiaries and Affiliates. For purposes of the Plan: (a) an Eligible Employee who is on a bona fide leave of absence and does not have a statutory or contractual right to reemployment shall be deemed to have had a separation for service on the first date that is more than six months after the commencement of such leave of absence; provided, however, that if the leave of absence is due to a medically determinable physical or mental impairment that can be expected to last for a continuous period of six months or more, and such impairment causes the Eligible Employee to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, such six-month period shall be extended to 29 months; and (b) a sale of assets by the Company, a Subsidiary, or an Affiliate to an unrelated buyer that results in the Eligible Employee working for the buyer or one of its affiliates shall be treated as a separation from service unless otherwise provided in writing and permitted by Treas. Reg. § 1.409A-1(h)(4).
Vesting Date means, for an Award, the scheduled date of vesting, as specified in the Award Agreement.
Section 3. Administration.
(a) Administrator. The Plan shall be administered by the Administrator.
(b) Administrator Powers. The Administrator shall have and may exercise all of the powers granted to it by the provisions of the Plan. Subject to the express provisions and limitations of the Plan, the Administrator may adopt such rules, regulations, and procedures as it deems advisable for the conduct of its affairs. The Administrator shall have full authority to direct the proper officers of the Company to issue or transfer Shares pursuant to the issuance or exercise of an Award under the Plan.
(c) Administrator Action. The decisions of the Administrator shall be final and binding unless otherwise determined by the Board. Each member of the Administrator and each member of the Board shall be without liability, to the fullest extent permitted by law, for any action taken or determination made in good faith in connection with the Plan.
(d) Awards. Subject to the provisions of the Plan, the Administrator is authorized to grant the following Awards to Eligible Employees and Non-Management Directors:
(1) | Options and SARs, |
(2) | Restricted Stock, |
(3) | Restricted Stock Units, |
(4) | Performance Shares, |
(5) | Performance Units, |
(6) | Other Stock-Based Awards, |
(7) | Performance Cash, |
(8) | Dividend Equivalents, and |
(9) | Shares in Lieu of Cash. |
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(e) Minimum Vesting. No more than 5% of the aggregate number of Shares available for issuance under the Plan may be covered by Awards that specify a vesting date for any portion of an Award before the first anniversary of the date of grant; provided that (1) this requirement shall not restrict vesting as described in Section 10 (Termination) or 11(e) (Change of Control) hereof and (2) for Awards granted to Non-Management Directors in conjunction with an annual meeting of the Companys shareholders, the one-year requirement shall be deemed satisfied if the vesting date is on or after the next annual meeting of the Companys shareholders, so long as such next meeting is at least 50 weeks after the grant date.
(f) Participants. Subject to the provisions of the Plan, the Administrator is authorized to designate the Eligible Employees and Non-Management Directors who shall receive Awards and to determine the nature and size of each Award.
(g) Correction of Defects, Omissions, and Inconsistencies. The Administrator may correct any defect, remedy any omission, or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it deems desirable to carry out the intent of the Plan and such Award.
(h) Delegation. If the Administrator deems it advisable, the Administrator may delegate its authority under this Section 3 or any other provision of the Plan to one or more of its members or to one or more persons other than its members to the extent permitted by applicable law, except that no such delegation shall be permitted with respect to the participation in the Plan of persons who are subject to Section 16 of the Exchange Act or with respect to Awards to Non-Management Directors. Any person to whom the Administrator delegates its authority under this Section 3 may receive Awards only if the Awards are granted directly by the Administrator without delegation. To the extent that the Administrator has delegated authority pursuant to this Section 3(h), references in the Plan to the Administrator shall be deemed to include the Administrators designee.
Section 4. Shares Available for Awards.
(a) Total Shares Available. Subject to the provisions of subsections (b) through (f) of this Section 4, the total number of Shares available for grant to Participants under the Plan on or after the Effective Date shall be:
(1) | 27,000,000 Shares, plus |
(2) | the following Shares previously subject to Awards granted under a Prior Plan but not issued: (A) Shares that, as of the Effective Date, are subject to outstanding Awards, to the extent such Shares are forfeited or otherwise not issued due to Termination, (B) Shares underlying Options and SARs that expire; (C) Shares that, as of the Effective Date, are subject to outstanding Full Value Awards that were accounted for in Shares but are settled in cash; (D) Shares that are surrendered or withheld from Share-settled Full-Value Awards to satisfy withholding of taxes; and (E) Shares that, as of the Effective Date, are subject to outstanding performance share awards, to the extent that the target number of Shares under the award exceeds the number of shares actually issued pursuant to the award. |
Each Share underlying an Option, SAR, Restricted Stock, Performance Share, RSU or similar Award shall count as one share of Common Stock. No further Awards shall be granted pursuant to any Prior Plan, but Shares issued to settle Awards granted under a Prior Plan that were accounted for in Shares shall not count toward the Shares authorized for grant under this Plan.
(b) Aggregate Limitation on ISOs. Subject to the adjustment provisions in Section 4(e) (Adjustment for Corporate Transactions) hereof, ISOs may be granted with respect to no more than 2,700,000 Shares in any Plan Year and no more than 27,000,000 Shares in the aggregate.
(c) Individual Limitation of Awards. Subject to the adjustment provisions in Section 4(e) (Adjustment for Corporate Transactions) hereof, the following limitations shall apply to Awards under the Plan:
(1) | No individual Eligible Employee shall be granted, in any Plan Year, Options and/or SARs with respect to more than 2,000,000 Shares in the aggregate; |
(2) | No individual Eligible Employee shall be granted, in any Plan Year, grants of Restricted Stock and/or Restricted Stock Units with respect to more than 2,000,000 Shares in the aggregate; |
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(3) | No individual Eligible Employee shall be granted, in any Plan Year, Performance Shares, Performance Units, or Other Stock-Based Awards that provide for more than 2,000,000 Shares in the aggregate; and |
(4) | No individual Eligible Employee shall be granted, in any Plan Year, Performance Cash in an amount of more than $10,000,000. |
(5) | No individual Non-Management Director shall be granted, in any Plan Year, Awards that, taken together with the Non-Management Directors cash compensation for services rendered to the Company during the Plan Year, have a value on the date of grant that exceeds $1,000,000. |
For purposes of the individual limits set forth in this Section 4(c), any Awards that are canceled shall continue to count against the individual share and cash limits.
(d) Shares Available for Issuance.
(1) | Except as provided in paragraph (3) below, with respect to Options and SARs, the number of Shares covered by an Award shall count against the limitations prescribed by subsections (a) and (b), above, on the number of Shares available for award under the Plan only to the extent that such Shares are actually issued. |
(2) | If (A) an Award that was granted on or after the Effective Date is forfeited or otherwise terminates or is canceled without the delivery of Shares, or (B) on or after the Effective Date, Shares are surrendered or withheld from any Share-settled Full Value Award granted under the Plan or a Prior Plan to satisfy withholding of taxes, then the Shares covered by such forfeited, terminated or canceled Award, and the Shares surrendered, withheld or tendered from Full Value Awards, shall again become available to be delivered pursuant to Awards granted under this Plan. |
(3) | With respect to each Option and SAR, the number of Shares counted against the number of Shares available for award under the Plan shall equalthe full number of Shares with respect to which the Award is exercised, before reduction for a SARs grant price, shares tendered or withheld to pay the Option exercise price, or shares tendered or withheld to satisfy tax withholding. |
(4) | The Shares issued under the Plan may be authorized and unissued Shares or treasury Shares. |
(e) Adjustment for Corporate Transactions. In the event of a Corporate Transaction, the Administrator shall (in order to preserve, or to prevent enlargement of, the benefits or potential benefits available under the Plan), in such manner as the Administrator deems equitable, adjust
(1) | the number and kind of shares that thereafter may be made the subject of Awards, |
(2) | the number and kinds of shares that are subject to outstanding Awards, and |
(3) | the grant, exercise, or conversion price with respect to any of the foregoing. |
Any shares received as a result of a Corporate Transaction affecting Restricted Stock shall have the same status, be subject to the same restrictions, and bear the same legend as the Restricted Stock with respect to which the shares were issued. Additionally, the Administrator may make provisions for a cash payment to a Participant or other person holding an outstanding Award. However, the number of Shares subject to any Award shall always be a whole number.
(f) Acquisitions. Unless required by law or regulation, no Shares underlying an Award granted in assumption of, or in substitution for, an outstanding award previously granted by a company acquired by the Company, a Subsidiary, or an Affiliate or with which the Company, a Subsidiary, or an Affiliate combines, shall count against the Shares available for Awards under the Plan.
Section 5. Stock Options and SARs.
(a) Grant. The Administrator is authorized to grant Incentive Stock Options, Nonstatutory Stock Options, and SARs to Participants; provided that Incentive Stock Options may be granted only to Eligible Employees who are
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employees of the Company or one of its Subsidiaries at the time of grant. The Administrator shall not grant reload Options (i.e., Options that are automatically granted to an optionee when the optionee uses Shares to pay the exercise price, or to satisfy withholding tax obligations associated with the exercise, of previously granted Options) or any Option or SAR that is not structured to be exempt from the requirements of Section 409A of the Code.
(b) Exercise Price and Grant Price. The Administrator shall establish the exercise price for each Option and the grant price for each SAR at the time the Option or SAR is granted. Neither the exercise price nor the grant price shall be less than 100% of the Fair Market Value of the Shares subject to the Option or SAR on the date of grant. Except as described in Section 4(e) (Adjustment for Corporate Transactions) hereof, the Administrator may not (1) reprice Options or SARs or (2) exchange Options or SARs for cash, stock or other consideration, in each case without the approval of the Companys shareholders.
(c) Exercise. Each Option and SAR shall be exercised at such times and subject to such terms and conditions as the Administrator may specify in the Award Agreement or thereafter. The Administrator may impose such conditions on the exercise of Options and SARs as it determines to be appropriate, including conditions relating to the application of federal or state securities laws. No Shares shall be delivered pursuant to any exercise of an Option unless arrangements satisfactory to the Administrator have been made to assure full payment of the exercise price therefor. Without limiting the generality of the foregoing, payment of the exercise price of an Option may be made (i) in cash, (ii) if and to the extent permitted by the Administrator, by withholding Shares (net exercise) or exchanging Shares owned without restriction, or the ownership of which is attested to, by the optionee, or (iii) by a combination of the foregoing. The combined value of all cash and the fair market value of any Shares tendered to the Company, valued as of the date of such tender, shall be equal to (or greater than) the aggregate exercise price. The Administrator may not authorize a loan to an optionee to assist the optionee in making payment of the exercise price under an Option or in meeting the optionees tax obligations associated with the exercise of an Option.
(d) Term. An Option or SAR shall be exercisable for a term determined by the Administrator, which shall not be longer than ten years from the date on which the Option or SAR is granted.
(e) Termination. An Option or SAR shall be exercisable following a Participants Termination only to the extent the Award is vested and not expired (in each case, taking into account the provisions of and Sections 10 (Termination) and 11(e) (Change of Control) hereof). Except as otherwise set forth in the Award Agreement, and subject to Sections 10 and 11(e), and the requirements of any Incentive Stock Option, the exercise period following Termination shall end no later than the earlier of the date the Option or SAR otherwise expires or the following time:
(1) | If the Participant is a Non-Management Director, three years after the Participants Termination. |
(2) | If (A) as of the Participants Termination, the Participant is age 55 or older and has completed 10 or more years of service with the Company and its Subsidiaries and Affiliates, and (B) the Participants Termination is not due to Cause or the Participants death or Disability, three years after the Participants Termination. |
(3) | If the Participants Termination is due to the Participants death (and the Participant is not a Non-Management Director), one year after the Participants death. |
(4) | If the Participants Termination is due to the Participants Disability (and the Participant is not a Non-Management Director), one year after the Participants Termination. |
(5) | If the Participants Termination is not due to Cause and not described in paragraph (1), (2), (3), or (4), above, three months after the Participants Termination. |
(6) | If the Participants Termination is for Cause, the Option or SAR shall be canceled immediately upon the Participants Termination and shall not be exercisable thereafter. |
(f) Special Rules for Incentive Stock Options (ISOs). ISOs shall be subject to the requirements of Section 422 of the Code. In accordance with Section 422, an ISO shall not be granted to an individual who, immediately before the
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time the Option is granted, owns Shares possessing more than 10 percent of the total combined voting power of all classes of stock of the Company, unless the Award Agreement for such ISO provides that (i) the exercise price is no less than 110% of the fair market value of the Shares on the grant date (determined in accordance with Treas. Reg. § 1.422-2(f)(1)), and (ii) the Option expires no later than the fifth anniversary of the grant date.
Section 6. Restricted Stock and Restricted Stock Units.
(a) Grant. Subject to the limits set forth in the Plan, the Administrator is authorized to determine the number of Shares of Restricted Stock and the number of Restricted Stock Units to be granted to a Participant, and the other terms and conditions applicable to such Restricted Stock and Restricted Stock Units, including the conditions for vesting of such Awards.
(b) Performance-Based Grants. The Administrator is authorized to make the grant and/or the vesting of Awards of Restricted Stock and Restricted Stock Units contingent on the achievement of Performance Objectives specified by the Administrator. If such Performance Objectives are not satisfied, the Award shall not be granted or become vested, as the case may be. Partial achievement of such Performance Objectives may result in the grant or vesting of a portion of the Award corresponding to the degree of achievement.
(c) Rights of Participant. A Participant to whom Shares of Restricted Stock have been granted shall have absolute ownership of such Shares, including the right to vote the same and to receive dividends thereon, subject to the terms, conditions, and restrictions described in the Plan and in the Award Agreement; provided that no Participant shall be entitled to the payment of any dividends until the restrictions applicable to such Shares of Restricted Stock has lapsed. A Participant to whom Restricted Stock Units have been granted shall have no ownership interest in the Shares to which such Restricted Stock Units relate until and unless settlement with respect to such Restricted Stock Units is actually made in Shares.
(d) Restrictions. Until the restrictions applicable to Restricted Stock shall lapse, the Restricted Stock shall not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of. Subject to Sections 10 (Termination) and 11(e) (Change of Control) hereof, the restrictions set forth in this Section 6(d) shall remain in effect until the end of the Restricted Period.
(e) Termination. Except as otherwise set forth in the Award Agreement, and subject to Sections 10 (Termination) and 11(e) (Change of Control) hereof, if a Participants Termination for any reason occurs before the restrictions applicable to Restricted Stock lapse, or before an Award of Restricted Stock Units becomes fully vested:
(1) | Such Restricted Stock shall be forfeited, all rights with respect to such Restricted Stock shall immediately terminate without any payment of consideration by the Company, and all Shares of such Restricted Stock, if any, that had been delivered to, or held in custody for, the Participant shall be returned to the Company forthwith, accompanied by any instrument of transfer requested by the Company; and |
(2) | Such unvested Restricted Stock Units shall be immediately forfeited, and all of the rights of the Participant with respect to such Restricted Stock Units shall immediately terminate without any payment of consideration by the Company. |
(f) Settlement of Restricted Stock Units. Except as otherwise provided in the Award Agreement, and subject to Section 11(m) (Compliance with Legal and Exchange Requirements), (n) (Deferrals), and (o) (Section 409A of the Code) hereof, vested Restricted Stock Units shall be settled on the earlier of (x) a date determined by the Company that is within 90 days after the Participants death or (y) a date determined by the Company that is during the calendar year in which the Vesting Date occurs.
(g) Election to Recognize Gross Income from Restricted Stock in Year of Grant. If a Participant properly elects, within 30 days of the date of grant of Restricted Stock, to include in gross income for federal income tax purposes an amount equal to the fair market value of the Shares awarded on the date of grant, the Participant shall make arrangements satisfactory to the Administrator to pay any taxes required to be withheld with respect to such Shares. If the Participant fails to make the payments, the Company and its Subsidiaries and Affiliates shall, to the extent permitted by law, have the right to deduct from any payments of any kind otherwise due to the Participant any taxes of any kind required by law to be withheld with respect to the Shares.
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(h) Foreign Laws. Notwithstanding any other provision of the Plan, if Restricted Stock is to be awarded to a Participant who is subject to the laws, including the tax laws, of any country other than the United States, the Administrator may, in its discretion, direct the Company to sell, assign, or otherwise transfer the Restricted Stock to a trust or other entity or arrangement, rather than grant the Restricted Stock directly to the Participant.
Section 7. Performance Shares, Performance Units, and Other Stock-Based Awards.
(a) Grant. Subject to the limits set forth in the Plan, the Administrator is authorized to determine the number (or, for Performance Units denominated in cash, the amount) of Performance Shares, Performance Units, and Other Stock-Based Awards to be granted to a Participant and the other terms and conditions of such Awards. The Performance Shares and Performance Units shall become vested upon (and only to the extent of) the achievement of specified Performance Objectives specified by the Administrator, and any other conditions set forth in the Award Agreement. Partial achievement of the objective(s) may result in a payment corresponding to the degree of achievement.
(b) Payment. Payment of Performance Shares and Performance Units and Other Stock-Based Awards may be made in cash, Shares, or a combination, as determined by the Administrator. For purposes of calculating the amount of any payment, the Fair Market Value of Shares shall be determined on the Vesting Date. Except as otherwise provided in the Award Agreement, and subject to Section 11(m) (Compliance with Legal and Exchange Requirements), (n) (Deferrals), and (o) (Section 409A of the Code) hereof, Performance Shares and Performance Units shall be paid on the earlier of (1) a date determined by the Company that is within 90 days after the Participants death, or (2) a date determined by the Company that is during the calendar year in which the Vesting Date occurs.
(c) Termination. Except as otherwise set forth in the Award Agreement, and subject to Sections 10 (Termination) and 11(e) (Change of Control) hereof, if a Participants Termination for any reason occurs before a Performance Share, Performance Unit, or Other Stock-Based Award becomes fully vested, the unvested portion of such Performance Share, Performance Unit, or Other Stock-Based Award shall be immediately forfeited, and all of the rights of the Participant with respect to any such Award shall immediately terminate without any payment of consideration by the Company.
Section 8. Performance Cash.
(a) Grant. Subject to the limits set forth in the Plan, the Administrator is authorized to determine the amount of Performance Cash Awards to be granted to a Participant and the other terms and conditions of such Awards. The Performance Cash Awards shall become vested upon (and only to the extent of) the achievement of specified Performance Objectives specified by the Administrator, and any other conditions set forth in the Award Agreement. Partial achievement of the objective(s) may result in a payment corresponding to the degree of achievement.
(b) Payment. Payment of Performance Cash Awards may be made in cash, Shares, or a combination, as determined by the Administrator. Any Shares shall be valued in the same manner as described in Section 7(b) (Payment) hereof. Except as otherwise provided in the Award Agreement, and subject to Section 11(m) (Compliance with Legal and Exchange Requirements), (n) (Deferrals), and (o) (Section 409A of the Code) hereof, a Performance Cash Award shall be paid on the earlier of (1) a date determined by the Company that is within 90 days after the Participants death, or (2) a date determined by the Company that is during the calendar year in which the Vesting Date occurs.
(c) Termination. Except as otherwise set forth in the Award Agreement, and subject to Sections 10 (Termination) and 11(e) (Change of Control) hereof, if a Participants Termination for any reason occurs before a Performance Cash Award becomes fully vested, the unvested portion of such Performance Cash Award shall be immediately forfeited, and all of the rights of the Participant with respect to any such Award shall immediately terminate without any payment of consideration by the Company.
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Section 9. Dividend Equivalents and Shares in Lieu of Cash.
(a) Dividend Equivalents. The Administrator is authorized to grant Dividend Equivalents to Participants having Full Value Awards under which such Participant shall be entitled to receive payments (in cash or Shares, as determined in the discretion of the Administrator) equivalent to the amount of cash or share dividends paid by the Company to holders of Shares with respect to a number of Shares determined by the Administrator. Such Dividend Equivalents shall be subject to the same vesting conditions as the underlying Full Value Awards and, subject to the terms of the Plan, may have additional terms and conditions as the Administrator shall determine. For the avoidance of doubt, Dividend Equivalents shall not be granted in respect of Options or SARs.
(b) Shares in Lieu of Cash. The Administrator may grant Awards of Shares in lieu of all or part of any compensation otherwise payable in cash to a Participant by the Company or any Subsidiary or Affiliate. If Shares are issued in lieu of cash, the number of Shares to be issued shall equal the number of whole Shares that have an aggregate Fair Market Value (determined on the date the cash otherwise would have been payable) equal to or less than the amount of such cash.
Section 10. Termination.
(a) Termination Other than for Cause. If a Participant incurs a Termination for any reason other than Cause, the Participant shall be vested only in the portion of the Award (if any) in which the Participant is vested immediately before his or her Termination, except (1) an Award Agreement for an Eligible Employee may provide accelerated vesting upon death, disability, Change of Control (subject to Section 11(e)), or Retirement, (2) vesting may continue while the Participant remains on payroll (if authorized under subsection (c) below), and (3) the Administrator shall have discretion to accelerate vesting for Awards to Participants who are not Non-Management Directors under circumstances that it determines to be in the best interest of the Company. The Administrator may determine in its sole discretion to accelerate the vesting of a Non-Management Directors outstanding Awards if the Non-Management Director incurs a Termination due to death or Disability.
(b) Termination for Cause. If a Participant incurs a Termination for Cause, all of such Participants outstanding Awards shall immediately be canceled, except as the Administrator may otherwise provide in the Award Agreement.
(c) Vesting During Severance Period. If (and only if) authorized by the Administrator or the Company in accordance with its compensation policies and procedures, a Participant who remains on his or her Employers payroll after his or her Termination of Employment (e.g., by reason of receiving severance payments) may continue to vest in, and accrue rights under, his or her Awards, as if he or she had continued in employment with such Employer through the date as of which he or she is withdrawn from such Employers payroll. Neither the Administrator nor the Company shall be required to authorize continued vesting or accrual of rights for any Participant after his or her Termination of Employment, unless otherwise expressly provided by an Award Agreement or other binding agreement involving the Company, a Subsidiary, or an Affiliate; and there is no obligation of uniformity or consistency of treatment of Participants.
Section 11. General Provisions.
(a) Awards. Each Award hereunder shall be evidenced in an Award Agreement. The Award Agreement shall be delivered to the Participant (including in electronic form) and shall incorporate the terms of the Plan by reference.
(b) Amendment of Awards. Subject to any obligation under the Plan or applicable law or a listing requirement to obtain stockholders consent, the Administrator may amend the terms of any Award theretofore granted, including the Performance Criteria and Performance Objectives, prospectively or retroactively; provided that no amendment shall substantially impair the rights of a Participant without the Participants consent. Actions taken by the Administrator in accordance with Section 4(e) (Adjustment for Corporate Transactions) shall not be deemed to impair the rights of any Participant.
(c) Withholding. The Company shall have the right to deduct from all amounts paid to a Participant in cash any taxes required by law to be withheld in respect of Awards under the Plan. In the case of any Award satisfied in
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Shares, no Shares shall be issued (and restrictions on Restricted Stock shall not be lifted) unless and until arrangements satisfactory to the Company shall have been made to satisfy the withholding tax obligations (if any) applicable with respect to such Award. Without limiting the generality of the foregoing and subject to such terms and conditions as the Administrator may impose, the Company shall have the right to (i) retain Shares or (ii) subject to such terms and conditions as the Administrator may establish from time to time, permit Participants to elect to tender Shares (including Shares issuable in respect of an Award) to satisfy, in whole or in part, the amount required to be withheld; provided that (i) the value of Shares retained or tendered shall not exceed the Participants tax calculated using the maximum individual tax rate in each relevant jurisdiction at the time of such withholding and (ii) this withholding provision shall not be interpreted or administered in a way that changes the Awards accounting treatment.
(d) Nontransferability. No Award shall be assignable or transferable except by will or the laws of descent and distribution, and except to the extent required by law, no right or interest of any Participant shall be subject to any lien, obligation or liability of the Participant; provided, however, that the Administrator shall have discretion to permit (on such terms and conditions as it shall establish) transfer of a Nonstatutory Stock Option to a member of the Participants immediate family or to a trust, partnership, corporation, or similar vehicle the parties in interest in which are limited to the Participant and members of the Participants immediate family with respect to whom the exercise of such Option is covered by an effective registration statement under the Securities Act of 1933, as amended (collectively, the Permitted Transferees). All rights with respect to Awards granted to a Participant under the Plan shall be exercisable during the Participants lifetime only by such Participant or, if applicable, the Permitted Transferees. Any transfer of an Award to any Permitted Transferee shall be without consideration.
(e) Change of Control. An Award Agreement may specify provisions relating to a Change of Control, including the acceleration of the vesting, delivery and exercisability of, and the lapse of restrictions and deemed satisfaction of Performance Objectives with respect to, the Award, and replacement of a Share-settled Award with a cash-settled Award; provided, however, that vesting, delivery or exercisability of, or the lapse of restrictions on, any outstanding Award shall not be accelerated in connection with a Change of Control unless (i) the Change of Control actually occurs and (ii) the Participants Employment or service is terminated without Cause, under circumstances described in the Award Agreement, within 24 months following such Change of Control. In connection with a Change of Control, and notwithstanding any contrary provision of an Award Agreement, all Options and SARs may be canceled in exchange for the right (to the extent vested) to receive, at a time determined by the Administrator, a cash payment equal to the excess, if any, of the fair market value of the Share subject to the Option or SAR over the exercise price; for this purpose, fair market value shall be no less than the highest price paid for a share in the Change of Control transaction. For the avoidance of doubt, no payment shall be required to cancel an Option or SAR for which the exercise price exceeds the fair market value of the Share at the time of the Change of Control (i.e., an under water option or SAR).
(f) No Right to Employment or Directorship. Neither the right to participate in the Plan nor the grant of any Award shall be construed as giving a Participant the right (1) to be retained in the employ of the Company, any Subsidiary or any Affiliate or (2) to continue to provide services to the Company, any Subsidiary or any Affiliate. The Company and each Subsidiary and Affiliate expressly reserve the right at any time to dismiss a Participant free from any liability, or any claim under the Plan, except as expressly provided in the Plan or in any applicable Award Agreement.
(g) Other Conditions to Awards. Unless the Administrator determines otherwise, the Participants rights in respect of all of his or her outstanding Awards (whether or not vested) may be canceled, withheld, amended or otherwise limited or restricted at any time if the Participant is not in compliance with all applicable provisions of the Plan or Award Agreement, or if the Participant engages in any Prohibited Activity. In addition, each Award granted under the Plan shall be and remain subject to any clawback or recoupment policy as in effect or as may be adopted by the Board (or a committee or subcommittee of the Board), in each case, as may be amended from time to time. No such policy or amendment shall in any event require the prior consent of any Participant or Eligible Employee.
(h) Nature and Form of Payments. All grants of Awards and deliveries of Shares, cash or other property under the Plan shall constitute a special discretionary incentive payment to the Participant and shall not be required to be
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taken into account in computing the amount of salary or compensation of the Participant for the purpose of determining any contributions to or any benefits under any pension, retirement, profit-sharing, bonus, life insurance, severance or other benefit plan of the Company or under any agreement with the Participant, unless the Company specifically provides otherwise in any such plan or agreement.
(i) No Rights to Awards; No Shareholder Rights. No Participant or Eligible Employee shall have any claim to be granted any Award under the Plan, and there is no obligation of uniformity or consistency of treatment of Participants and Eligible Employees. Subject to the provisions of the Plan and the Award Agreement, no person shall have any rights as a shareholder with respect to any Shares to be issued under the Plan prior to the issuance thereof.
(j) Foreign Benefits. The Administrator may grant Awards to Eligible Employees or Non-Management Directors of the Company and its Subsidiaries and Affiliates who reside in jurisdictions outside the United States. The Administrator may adopt such supplements to the Plan as may be necessary to comply with applicable laws of such jurisdictions and to afford participants favorable treatment under such laws; provided that no Award shall be granted under any such supplement on the basis of terms or conditions that are inconsistent with provisions of the Plan.
(k) Amendment of Plan. The Board or the Administrator may amend, suspend, or terminate the Plan or any portion thereof at any time; provided that stockholder approval shall be required if (1) shareholder approval is required by law, regulation, a securities exchange listing requirement, or a provision of the Plan, or (2) the amendment would increase the number of Shares available for Awards under the Plan other than as described in Section 4(e) (Adjustment for Corporate Transactions) hereof. Without the written consent of an affected Participant, no termination, suspension, or modification of the Plan shall adversely affect any right of such Participant under the terms of an Award granted before the date of such termination, suspension, or modification.
(l) Application of Proceeds. The proceeds received by the Company from the sale of Shares under the Plan shall be used for general corporate purposes.
(m) Compliance with Legal and Exchange Requirements. The Plan, the grant and exercise of Awards thereunder, and the other obligations of the Company under the Plan, shall be subject to all applicable federal and state laws, rules, and regulations, and to such approvals by any regulatory or governmental agency as may be required. The Company, in its discretion, may postpone the grant and exercise of Awards, the issuance or delivery of Shares under any Award or any other action permitted under the Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of Shares or other required action under any federal or state law, rule, or regulation and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Shares in compliance with applicable laws, rules, and regulations. The Company shall not be obligated by virtue of any provision of the Plan to recognize the exercise of any Award or otherwise to sell or issue Shares in violation of any such laws, rules, or regulations; and any postponement of the exercise or settlement of any Award under this provision shall not extend the term of such Awards, and neither the Company nor its directors or officers shall have any obligation or liability to the Participant with respect to any Award (or stock issuable thereunder) that shall lapse because of such postponement.
(n) Deferrals. Subject to the Administrators reasonable efforts to comply with the requirements of Section 409A of the Code, the Administrator may:
(1) | Postpone the exercise of Awards, the issuance or delivery of Shares, the payment of cash under any Award, or any action permitted under the Plan to prevent the Company or any of its Subsidiaries or Affiliates from being denied an income tax benefit with respect to any Award, and/or |
(2) | Establish rules under which a Participant may elect to postpone receipt of Shares or cash under any Award. |
(o) Section 409A of the Code.
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(1) | The Plan shall be operated, administered, and interpreted consistently with the intent to comply with (or to be exempt from) the requirements of Section 409A of the Code. If the Administrator or the Company determines that any provision of the Plan is or might be inconsistent with the restrictions imposed by Section 409A of the Code, the Plan shall be automatically amended (without further action) to the extent that the Administrator or the Company determines is necessary to bring it into compliance with the requirements of Section 409A of the Code. No provision of the Plan or any Award Agreement shall be interpreted or construed to transfer any liability for a failure to comply with the requirements of Section 409A of the Code from a Participant or other individual to the Company, any Subsidiary, any Affiliate, the Administrator, or any other entity or individual affiliated with the Company, the Subsidiaries, and the Affiliates. |
(2) | For any Participant who, as of the date on which his or her Termination of Employment occurs, is a specified employee (within the meaning of Section 409A(2)(B)(i) of the Code, as determined by Interpublic in accordance with Treas. Reg. § 1.409A-1(i)), the payment date for any Award that is subject to Section 409A and for which the payment trigger is the Participants Termination of Employment shall be no earlier than the Participants Delayed Start Date. For purposes of the Plan, the Participants Delayed Start Date shall be the earlier of (i) the Companys first pay date for the seventh calendar month that starts after the Participants Termination of Employment or (y) a date determined by Interpublic that is within 90 days after the Participants death. |
(p) Severability of Provisions. If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, and the Plan shall be construed and enforced as if such provision had not been included.
(q) Incapacity. Any benefit payable to or for the benefit of a minor, an incompetent person, or other person incapable of receipting therefor shall be deemed paid when paid to such persons guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge any liability or obligation of the Administrator, the Board, the Company, and all other parties with respect thereto.
(r) Rules of Construction. Whenever used in the Plan, words in the masculine gender shall be deemed to refer to females as well as to males; words in the singular shall be deemed to refer also to the plural; the word include shall mean including but not limited to; and references to a statute, statutory provision, or regulation shall be construed as if they referred also to that provision (or to a successor provision of similar import) as currently in effect, as amended, or as reenacted, and to agency guidance of general applicability issued thereunder.
(s) Headings and Captions. The headings and captions in this Plan document are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.
(t) Applicable Law. The validity, construction, interpretation, administration, and effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of the State of New York, without regard to any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction.
(u) Effective Date. The Plan shall become effective on the date the Plan is approved by the Companys shareholders. No Awards may be granted under the Plan after the annual meeting of the Companys shareholders in 2029; provided that any Awards granted before such annual meeting shall continue in effect thereafter in accordance with the terms of the Awards and the Plan. Upon shareholder approval of the Plan, no awards shall be made under a Prior Plan.
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Your vote matters heres how to vote! You may vote online or by phone instead of mailing this card. Votes submitted electronically must be received by 1:00 a.m., (Eastern Time), on May, 23, 2019. Online Go to www.envisionreports.com/IPG or scan the QR code - login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Using a black ink pen, mark your votes with an X as shown in this example. Sign up for electronic delivery at Please do not write outside the designated areas. www.envisionreports.com/IPG 2019 Annual Meeting Proxy Card qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals - The Board of Directors recommend a vote FOR all the nominees listed and FOR Proposals 2, 3 and 4 and AGAINST Proposal 5. 1. Election of Directors: + For Against Abstain For Against Abstain For Against Abstain 01 - Jocelyn Carter-Miller 02 - H. John Greeniaus 03 - Mary J. Steele Guilfoile 04 - Dawn Hudson 05 - William T. Kerr 06 - Henry S. Miller 07 - Jonathan F. Miller 08 - Patrick Q. Moore 09 - Michael I. Roth 10 - David M. Thomas 11 - E. Lee Wyatt Jr. For Against Abstain For Against Abstain 2. Ratification of the appointment of PricewaterhouseCoopers 3. Advisory vote to approve named executive officer LLP as Interpublics Independent registered public accounting compensation. firm for 2019. 4. Approval of The Interpublic Group of Companies, Inc. 2019 5. Stockholder proposal entitled Independent Board Chairman. Performance Incentive Plan. B Authorized Signatures - This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) - Please print date below. Signature 1 - Please keep signature within the box. Signature 2 - Please keep signature within the box.
The Interpublic Group of Companies, Inc. Annual Meeting Stockholders May 23, 2019, 9:30 A.M. PALEY CENTER FOR MEDIA 25 W. 52nd STREET, NEW YORK, NEW YORK You can view the Annual Report and Proxy Statement on the Internet at http://www.envisionreports.com/IPG Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders. The material is available at: www.envisionreports.com/IPG Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/IPG qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy The Interpublic Group of Companies, Inc. + Notice of 2019 Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting May 23, 2019 The undersigned hereby constitutes and appoints Michael I. Roth, Frank Mergenthaler and Andrew Bonzani, 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 at the Paley Center for Media, 25 W. 52nd Street, New York, New York, on Thursday May 23, 2019 at 9:30 A.M. Eastern time, and at any adjournments thereof, on all matters to come before the meeting. If you are a participant in The Interpublic Group of Companies, Inc. Savings Plan (the Plan), this card also constitutes voting instructions by the undersigned to Great-West Trust Company, the trustee of the trust maintained under the Plan (the Trustee), for all shares held of record by the Trustee as to which the undersigned is entitled to direct the voting. Any shares for which voting instructions are not timely received, will not be voted by the Trustee. The Trustee will vote any unallocated shares held under the Plan in the same proportion as it votes shares for which timely instructions are received. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF EACH OF THE DIRECTOR NOMINEES, FOR PROPOSALS 2, 3 AND 4 AND AGAINST PROPOSAL 5, AND IN THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTER AS MAY PROPERLY COME BEFORE THE MEETING. 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. (Continued, and to be marked, dated and signed, on the other side) C Non-Voting Items Change of Address Please print new address below. Comments Please print your comments below. Meeting Attendance Mark box to the right if you plan to attend the Annual Meeting.