OMNICOM GROUP INC.
437 Madison Avenue
New York, New York 10022
NOTICE OF 2005 ANNUAL MEETING OF SHAREHOLDERS
Meeting Date: .......... Tuesday, May 24, 2005
Time: .................. 10:00 a.m. Central Time
Place: ................. Omnicom Management Services
Harwood Center
Suite 1700
1999 Bryan Street
Dallas, TX 75201
Subject: ............... Election of directors
Approval of the Senior Management
Incentive Plan
Ratification of the appointment of KPMG
LLP as our independent auditors for the
2005 fiscal year
Record Date: ............. April 8, 2005
Shareholders will also transact any other business that is properly
presented at the meeting. At this time, we know of no other matters that will be
presented.
The Board recommends that shareholders vote FOR the election of the
directors, approval of the Senior Management Incentive Plan and ratification of
the appointment of KPMG LLP.
Please sign and return your proxy card in the enclosed envelope, or vote
by telephone or Internet (instructions are on your proxy card), so that your
shares will be represented whether or not you plan to attend the 2005 Annual
Meeting.
MICHAEL J. O'BRIEN
Secretary
New York, New York
April 25, 2005
CONTENTS
Page
CORPORATE GOVERNANCE ...................................................... 1
Board Composition; Shareholder Communications;
Stock Ownership Guidelines ........................................... 1
Board Operations ....................................................... 2
Director Attendance .................................................... 4
Director Compensation .................................................. 4
Ethical Business Conduct ............................................... 5
ITEM 1: ELECTION OF DIRECTORS ............................................. 5
ITEM 2: APPROVAL OF THE SENIOR MANAGEMENT INCENTIVE PLAN .................. 8
Overview ............................................................... 8
Administration ......................................................... 8
Eligibility and Participation .......................................... 8
Bonus Awards ........................................................... 8
New Plan Benefits ...................................................... 9
EXECUTIVE COMPENSATION .................................................... 10
Summary Compensation Table ............................................. 10
Stock Options .......................................................... 11
Compensation Committee Report on Executive Compensation ................ 12
Employment and Salary Continuation Agreements .......................... 14
EQUITY COMPENSATION PLANS ................................................. 15
PERFORMANCE GRAPH ......................................................... 15
STOCK OWNERSHIP ........................................................... 16
EXECUTIVE OFFICERS ........................................................ 17
ITEM 3: RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT AUDITORS .............................................. 17
Fees Paid to Independent Auditors ...................................... 18
Audit Committee Report ................................................. 18
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE ................... 19
ADDITIONAL INFORMATION .................................................... 19
Quorum; Required Vote; Effect of an
Abstention and Broker Non-Votes ...................................... 19
Voting ................................................................. 20
Voting by Street Name Holders .......................................... 20
Default Voting ......................................................... 20
Right to Revoke ........................................................ 20
Tabulation of Votes .................................................... 21
Expense of Solicitation ................................................ 21
Incorporation by Reference ............................................. 21
Availability of Certain Documents ...................................... 21
SHAREHOLDER PROPOSALS FOR THE 2006 ANNUAL MEETING ......................... 21
APPENDIX A -- AUDIT COMMITTEE CHARTER ..................................... A-1
APPENDIX B -- SENIOR MANAGEMENT INCENTIVE PLAN ............................ B-1
OMNICOM GROUP INC.
437 Madison Avenue
New York, New York 10022
---------------
PROXY STATEMENT
---------------
The Board of Directors of Omnicom Group Inc., a New York corporation
("Omnicom", "we", "us" or "our"), is using this Proxy Statement to solicit
proxies for our 2005 Annual Meeting of Shareholders on Tuesday, May 24, 2005, at
10:00 a.m. Central Time, at the Harwood Center, Suite 1700, 1999 Bryan Street,
Dallas, Texas and at any adjournments or postponements of the Annual Meeting.
This Proxy Statement and the accompanying proxy card are being mailed on or
about April 25, 2005.
Holders of our common stock, par value $0.15 per share, as of the close of
business on April 8, 2005 will be entitled to vote their shares at the 2005
Annual Meeting. On that date, there were 183,672,214 shares of our common stock
outstanding, each of which is entitled to one vote for each matter to be voted
on at the Annual Meeting.
You can vote your shares:
o by returning the enclosed proxy card;
o through the Internet at the website shown on the proxy card;
o by telephone using the toll-free number shown on the proxy
card; or
o in person at the 2005 Annual Meeting.
Votes submitted through the Internet or by telephone must be received by
11:59 p.m. Eastern Time on Thursday, May 19, 2005, for shares held in our
employee retirement savings plan and/or our employee stock purchase plan, and by
11:59 p.m. Eastern Time on Monday, May 23, 2005, for all other shares. Internet
and telephone voting are available 24 hours a day and, if you use one of these
methods, you do not need to return a proxy card. If you attend the meeting and
vote in person, your vote will supersede any earlier voting instructions.
Additional information about the meeting is included below in this Proxy
Statement in the section entitled "Additional Information".
CORPORATE GOVERNANCE
Board Composition; Shareholder Communications; Stock Ownership Guidelines
Our Board currently consists of 11 directors: nine independent or outside
directors, our Chairman of the Board (Bruce Crawford) and our CEO (John Wren).
Due to the declassification of our Board in 2003, each director stands for
election annually. Biographical information and information about the committees
on which our directors serve is included below in this Proxy Statement in the
section entitled "Election of Directors".
Our Board has determined that all of our outside directors are
"independent" within the meaning of the rules of the Securities and Exchange
Commission ("SEC") and the New York Stock Exchange, Inc. ("NYSE"), as well as
under our Corporate Governance Guidelines. In determining that each of our
outside directors is independent, the Board considered that, although
infrequently, Omnicom and its subsidiaries sometimes, in the ordinary course of
business, sell products and services to, and/or purchase products and services
from, entities (including charitable foundations) with which certain directors
are affiliated. The Board determined that these transactions were not otherwise
material to the entity or Omnicom and that none of our directors had a material
interest in the transactions with these entities. The Board therefore determined
that none of these relationships impaired the independence of any outside
director.
As a matter of policy, the independent directors regularly meet by
themselves in executive session, and met five times in 2004. Mr. Purcell, the
Chairman of our Governance Committee, presided at these executive sessions.
Interested parties, including shareholders, may communicate (if they wish,
on a confidential, anonymous basis) directly with the independent directors as a
group, with the Board as a whole or with any individual director by writing to
our corporate secretary at the address above. Communications that are intended
specifically for the independent directors or any individual director (including
the presiding director of the executive sessions of our independent directors)
should clearly state that the independent directors or the individual director
is the intended recipient of such communication and such communications should
be marked "Confidential".
The Board encourages stock ownership by directors and senior managers. As
described below, on average approximately one-half of the directors' annual
compensation is paid in stock and directors are permitted to elect to receive
all or a portion of their cash director compensation in common stock.
Information about stock ownership by our directors and executive officers is
included below in this Proxy Statement in the section entitled "Stock
Ownership". The Board adopted stock ownership guidelines for our directors in
2004. The director guidelines provide, in general, that our directors must own
Omnicom stock equal to or greater than five times their annual cash retainer
within five years of adoption of the guidelines or within five years of their
joining the Board, whichever is later.
Board Operations
Our Board met nine times during 2004. The Board's policy is generally to
conduct specific oversight tasks through committees, with the objective of
freeing the Board as a whole to focus on strategic matters as well as particular
tasks that by law or custom require the attention of the full Board. Our Board
has established five standing committees, functioning in the following areas:
o audit and financial reporting
o management/compensation
o corporate governance
o finance and acquisitions/divestitures
o qualified legal compliance
Each of the committees operates under a written charter recommended by the
Governance Committee and approved by the Board and the Board operates pursuant
to our Corporate Governance Guidelines. The Board recently approved certain
revisions to update charters for the Audit Committee, the Governance Committee
and the Compensation Committee. Each Board committee is authorized to retain its
own outside advisors. Our Corporate Governance Guidelines and committee charters
are posted on our website at www.omnicomgroup.com.
Audit Committee: The Audit Committee's purpose is to assist the Board in
carrying out its oversight responsibilities relating to financial reporting. In
this regard, the committee assists Board oversight of (1) the integrity of our
financial statements, (2) compliance with legal and regulatory requirements, (3)
the qualifications and independence of our independent auditors, and (4) the
performance of our internal audit function and independent auditors.
Furthermore, the Audit Committee prepares the report included below in the
section entitled "Audit Committee Report". Among other responsibilities, the
Audit Committee has the power to retain or dismiss, and to approve the
compensation of, our independent auditors.
The members of our Audit Committee are Messrs. Murphy (Committee Chair),
Clark, Cook and Henning. The Board has determined that each member of our Audit
Committee is "independent" within the meaning of the rules of both the NYSE and
the SEC. The Board has also determined that each member of our Audit Committee
is an "audit committee financial expert" within the meaning of the rules of the
SEC, and is financially literate and has accounting or related financial
management expertise, as such qualifications are defined under the rules of the
NYSE.
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The Audit Committee met 14 times last year.
The Audit Committee's charter is included as Appendix A to this Proxy
Statement.
Compensation Committee: The Compensation Committee's purpose is to assist
the Board in carrying out its oversight responsibilities relating to
compensation matters, to prepare a report on executive compensation for
inclusion in our annual Proxy Statement and to serve as the Board committee
authorized to administer and approve awards under our equity and other
compensation plans.
The members of our Compensation Committee are Messrs. Roubos (Committee
Chair) and Coleman and Ms. Denison and Ms. Rice. The Board has determined that
each member of our Compensation Committee is "independent" within the meaning of
the rules of the NYSE.
The Compensation Committee met six times last year.
The report of the Compensation Committee is included below in this Proxy
Statement in the section entitled "Compensation Committee Report on Executive
Compensation".
Governance Committee: The Governance Committee's purpose is to assist the
Board in carrying out its oversight responsibilities relating to the composition
of the Board and certain corporate governance matters. As part of its
responsibilities, the committee considers and makes recommendations to the full
Board with respect to the following matters:
o nominees for election to the Board and committees it
establishes from time to time and criteria therefor;
o the functions of the Board committees;
o standards and procedures for review of the Board's
performance;
o Omnicom's corporate governance policies generally, including
with respect to director qualification standards,
responsibilities, access to management and independent
advisors, compensation, orientation and education and
performance evaluation;
o management succession;
o the Code of Conduct applicable to our directors, officers and
employees; and
o the Governance Committee's performance of its own
responsibilities.
The members of our Governance Committee are Messrs. Purcell (Committee
Chair), Clark, Coleman and Murphy, and Ms. Denison and Ms. Rice. The Board has
determined that each member of our Governance Committee is "independent" within
the meaning of the rules of the NYSE.
The Governance Committee met six times last year.
Nominations for director may be made only by the Board or a Board
committee, or by a shareholder entitled to vote who delivers notice along with
the additional information and materials required by our by-laws to our
corporate secretary not later than 60 days prior to the date set for the annual
meeting. You can obtain a copy of the full text of the by-law provision noted
above by writing to our corporate secretary at our address on the cover of this
Proxy Statement. Our by-laws have also been filed with the SEC.
The Governance Committee will consider all candidates recommended by our
shareholders in accordance with the procedures included in our by-laws and this
Proxy Statement. We did not receive any recommended nominees from shareholders
this year. Any future director candidates recommended by shareholders that are
properly submitted will be considered in the same manner in which the Governance
Committee evaluates nominees submitted by the Board or Governance Committee.
Our Board seeks to assure that it is composed of individuals with
substantial experience and judgment from diverse backgrounds but, except for the
requirement that a substantial majority be independent, non-management
directors, we do not have rigid director qualification requirements. However,
our Governance Committee will consider the following qualifications and skills
of director nominees:
3
o their independence;
o their background and experience in relation to other members
of the Board; and
o their commitment to the time required to discharge their
duties.
The Governance Committee reviews the composition of the Board at least
annually and recommends to the full Board nominees for election. The Governance
Committee identifies the skills and experience needed to replace any departing
director and may perform research to identify director candidates. The
Governance Committee has the power to engage third parties to assist in
identifying and evaluating potential nominees.
Finance Committee: The Finance Committee's purpose is to assist the Board
in carrying out its oversight responsibilities relating to financial matters
affecting Omnicom, including in respect of acquisitions, divestitures and
financings.
The members of our Finance Committee are Messrs. Crawford (Committee
Chair), Purcell and Roubos.
The Finance Committee met 11 times last year.
Qualified Legal Compliance Committee: The Board of Directors authorized
the establishment of a Qualified Legal Compliance Committee ("QLCC") in
September 2004. The QLCC is comprised of the current members of our Audit
Committee. The purpose of the QLCC is to receive, investigate and recommend
responses to reports made by attorneys employed or retained by Omnicom or one of
its subsidiaries of evidence of a material violation of U.S. federal or state
securities law, a material breach of fiduciary duty arising under U.S. federal
or state law or a similar material violation of any U.S. federal or state law.
The QLCC only meets when necessary and did not meet in 2004.
Director Attendance
Each of our directors attended at least 75% of the meetings of the Board
and the committees of the Board on which he or she served during 2004 (in each
case, which were held during the period for which he or she was a director).
Attendance at Board and committee meetings during 2004 averaged 98% for the
directors as a group. Although we do not have a formal policy regarding
attendance by members of our Board at our Annual Meeting, we do encourage our
directors to attend. In 2004, all of our directors attended the Annual Meeting
and it is anticipated that all will attend this year absent unforeseen events.
Director Compensation
Directors who are not current or former employees of Omnicom or its
subsidiaries are paid:
o an annual retainer of $60,000;
o $2,000 for attendance at a Board or committee meeting in
person, $1,000 for participation by telephone or video
conference at any regularly scheduled meeting and $2,000 for
participation by telephone or video conference at any special
meeting; and
o in accordance with our Director Equity Plan approved by
shareholders at our 2004 Annual Meeting, common stock each
quarter equal in value at the time of award to $17,500.
The Chair of our Audit Committee receives an additional fee of $10,000
each year. We do not have a retirement plan for directors.
Our Director Equity Plan provides that each director may elect to receive
all or a portion of his or her cash director compensation for the following
year's service in common stock. Directors may also elect to defer any common
shares payable to them, which will be credited to a bookkeeping account in the
directors' names. These elections generally must be made prior to the start of
the calendar year for which the fees would be payable. The number of shares of
common stock delivered or credited to a director's account will be based on the
fair market value of our common stock on the first trading day immediately
preceding the date the fees would have been paid to the director.
Directors who are also employees of Omnicom receive no compensation for
serving as directors.
4
Ethical Business Conduct
We have a Code of Conduct in place designed to assure that our business is
carried out in an honest and ethical way. The Code of Conduct requires that our
employees avoid conflicts of interest, comply with all laws and other legal
requirements and otherwise act with integrity. In addition, we have adopted a
Code of Ethics for Senior Financial Officers regarding ethical action and
integrity relating to financial matters applicable to our senior financial
officers. Our Code of Conduct and Code of Ethics for Senior Financial Officers
are available on our website at www.omnicomgroup.com, and are also available in
print to any shareholder that requests them. We will disclose any future
amendments to, or waivers from, certain provisions of these ethical policies and
standards for senior financial officers, executive officers and directors on our
website within the time period required by the SEC and the NYSE.
We also have procedures to receive, retain and treat complaints received
regarding accounting, internal accounting controls or auditing matters and to
allow for the confidential and anonymous submission by employees of concerns
regarding questionable accounting or auditing matters, as well as possible
violations of our Code of Conduct or Code of Ethics for Senior Financial
Officers. The procedures are posted on our website and the websites of our
various global networks.
ITEM 1: ELECTION OF DIRECTORS
The current 11 members of the Board have been nominated to continue to
serve as directors for another year. All of the nominees have been recommended
for re-election to the Board by our Governance Committee and approved and
nominated for re-election by the Board.
The Board recommends that shareholders vote FOR all nominees.
The Board has no reason to believe that any of the nominees would be
unable or unwilling to serve if elected. If a nominee becomes unable or
unwilling to accept nomination or election, the Board prior to the meeting may
select a substitute nominee or undertake to locate another director after the
meeting. If you have submitted a proxy and a substitute nominee is selected,
your shares will be voted for the substitute nominee.
In accordance with our by-laws, directors are elected by a plurality of
the votes cast. That means the nominees will be elected if they receive more
affirmative votes than any other nominees. Our form of proxy permits you to
withhold your vote for particular nominees. However, shares represented by
proxies so designated will count as being present for purposes of determining a
quorum and will not affect whether a given nominee is elected because directors
are elected by a plurality of the shares voted at a meeting at which a quorum is
present. Such proxies may also be voted on other matters, if any, that may be
properly presented at the meeting.
Set forth below is biographical and other information, as of the date of
the mailing of this Proxy Statement, about our nominees for election as
director, which was confirmed by them for inclusion in this Proxy Statement.
[PHOTO OMITTED] John D. Wren Mr. Wren is President and Chief
Age: 52 Executive Officer of Omnicom, a
Director since 1993 position he has held since
January 1997. Prior to 1997, he
served as President of Omnicom.
5
[PHOTO OMITTED] Bruce Crawford Mr. Crawford is Chairman of
Age: 76 Omnicom, a position he has held
Director since 1989 since 1995. He is also Chairman
Chairman of the Finance of Lincoln Center in New York
Committee City.
[PHOTO OMITTED] Robert Charles Clark Mr. Clark is Harvard University
Age: 61 Distinguished Service Professor,
Director since 2002 Harvard Law School. He was Dean
Member of the Audit and of Harvard Law School from July
Governance Committees 1989 through June 2003. He has
served as professor of law at
Harvard since 1979, and before
that, was a tenured professor at
Yale Law School. His specialty
is corporate law. Mr. Clark is a
director of Collins & Aikman
Corp. and Time Warner, Inc. Mr.
Clark is also a member of the
Board of Trustees of Teachers
Insurance and Annuity
Association (TIAA).
[PHOTO OMITTED] Leonard S. Coleman, Jr. Mr. Coleman is Senior Advisor,
Age: 56 Major League Baseball, a
Director since 1993 position he has held since
Member of the Compensation November 1999. Previously, he
and Governance Committees was Chairman of Arena Co., a
subsidiary of Yankees/Nets,
until September 2002. Before
that, he was President, National
League, Major League Baseball.
Mr. Coleman is a director of
Cendant Corporation, H.J. Heinz
Corporation, Churchill Downs
Inc., Aramark Corporation and
Electronic Arts Inc.
[PHOTO OMITTED] Errol M. Cook Mr. Cook is a private investor
Age: 65 and consultant. Previously, he
Director since 2003 was a managing director and
Member of the Audit Committee partner of Warburg Pincus from
March 1991 until his retirement
in February 1999. Before that,
Mr. Cook was a Senior Partner of
Ernst & Young (August
1961-September 1989) and a
Managing Director of Schroders
(September 1989-March 1991). Mr.
Cook is also a director of
Journal Register Company.
[PHOTO OMITTED] Susan S. Denison Ms. Denison is a partner of Cook
Age: 59 Associates, an executive search
Director since 1997 firm, a position she has held
Member of the Compensation since June 2001. Previously, she
and Governance Committees served as a Partner at TASA
Worldwide/Johnson, Smith &
Knisely and the Cheyenne Group.
She also served as Executive
Vice President, Madison Square
Garden and Executive Vice
President and General Manager at
Showtime Networks.
[PHOTO OMITTED] Michael A. Henning Mr. Henning was Deputy Chairman
Age: 64 of Ernst & Young from December
Director since 2003 1999 to October 2000 and Chief
Member of the Audit Committee Executive Officer of Ernst &
Young International from
September 1993 to December 1999.
He is a director of CTS
Corporation.
6
[PHOTO OMITTED] John R. Murphy Mr. Murphy is Vice Chairman of
Age: 71 National Geographic Society, a
Director since 1996 position he has held since March
Chairman of the Audit 1998. From May 1996 until March
Committee and member of the 1998, Mr. Murphy was President
Governance Committee and Chief Executive Officer of
National Geographic Society. He
is a trustee of Mercer
University, a trustee and
Chairman of the Board of
Mercantile Mutual Funds, a
director of SIRSI Inc. and a
director and Chairman of the
Board of eMotion Inc. Mr. Murphy
is also a past president of the
U.S. Golf Association.
[PHOTO OMITTED] John R. Purcell Mr. Purcell is Chairman and
Age: 73 Chief Executive Officer of
Director since 1986 Grenadier Associates Ltd., a
Chairman of the Governance merchant banking and financial
Committee and member of the advisory firm. He served as
Finance Committee Chairman of Donnelley Marketing,
Inc., a database direct
marketing firm, from 1991 to
1996. He is also a director of
Bausch & Lomb Inc. and
Technology Solutions Co.
[PHOTO OMITTED] Linda Johnson Rice Ms. Rice is President and Chief
Age: 47 Executive Officer of Johnson
Director since 2000 Publishing Company, Inc. and
Member of the Compensation President of Fashion Fair
and Governance Committees Cosmetics, a division of Johnson
Publishing. Ms. Rice is a
director of Bausch & Lomb Inc.,
Kimberly-Clark Corporation and
MoneyGram International Inc.
[PHOTO OMITTED] Gary L. Roubos Mr. Roubos was Chairman of Dover
Age: 68 Corporation, a diversified
Director since 1986 industrial manufacturing
Chairman of the Compensation corporation, from May 1989 to
Committee and member of the May 1999, and Chief Executive
Finance Committee Officer of that company from
January 1981 to May 1994. He is
also a director of ProQuest
Company.
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ITEM 2: APPROVAL OF THE SENIOR MANAGEMENT INCENTIVE PLAN
Upon the recommendation of the Compensation Committee, the Board of
Directors has unanimously approved the adoption of the Senior Management
Incentive Plan (the "Incentive Plan"), subject to approval by our stockholders
at the Annual Meeting.
Overview
The Incentive Plan is being submitted to stockholders for their approval.
Under the Incentive Plan, if approved, payments of bonuses will constitute
"qualified performance-based compensation" under the provisions of section
162(m) of the Internal Revenue Code (the "Code"), which limits the deductibility
of compensation in excess of $1 million paid by a publicly traded corporation to
certain "covered employees", unless the compensation is "qualified
performance-based compensation."
Under Treasury Regulations promulgated pursuant to section 162(m) of the
Code, certain conditions must be satisfied in order for compensation to qualify
as performance-based, including: (i) the compensation must be payable on account
of the attainment of one or more pre-established, objective performance goals
and (ii) the material terms of the compensation and the performance goals must
be disclosed to and approved by stockholders before payment. In an effort to
structure the compensation paid to covered employees so as to qualify as
"performance-based compensation" under section 162(m) of the Code, the Board of
Directors adopted the Incentive Plan subject to stockholder approval at the
Annual Meeting. Notwithstanding the adoption of the Incentive Plan and its
submission to stockholders, we reserve the right to pay our employees, including
participants in the Incentive Plan, other amounts which may or may not be
deductible under section 162(m) or other provisions of the Code.
The following summary of the material terms of the Incentive Plan is
qualified in its entirety by reference to the complete text of the Incentive
Plan, which is attached hereto as Appendix B.
Administration
The Incentive Plan generally will be administered by a committee of the
Board of Directors made up of at least two directors, each of whom is an
"outside director" within the meaning of section 162(m) of the Code (the
"Committee"). Unless otherwise determined by the Board of Directors, the
Compensation Committee will constitute the Committee. The Board of Directors,
may, at any time, terminate or amend the Incentive Plan. The Board of Directors
may (but is not required to) seek stockholder approval of amendments to the
Incentive Plan.
Eligibility and Participation
Executive officers selected by the Committee are eligible to participate
in the Incentive Plan. Individuals will be selected to participate in the
Incentive Plan for a fiscal year cycle (or portion of a fiscal year cycle) (each
a "Performance Period"). Participants who are selected to participate in the
Incentive Plan will be paid a Bonus (as defined below) based upon Omnicom's
"Earnings" (as defined below).
The Committee will select the executive officers to participate in the
Incentive Plan for the current Performance Period, which began on April 1, 2005
and will run through December 31, 2005, and for each subsequent Performance
Period. In its discretion, the Committee may add participants to, or remove
participants from, the Incentive Plan at any time during a Performance Period or
otherwise, except that no participant may be added after the 90th day after the
beginning of a Performance Period or otherwise unless consistent with the
requirements of section 162(m) of the Code.
Bonus Awards
Each participant in the Incentive Plan may be paid a bonus of up to 2% of
Omnicom's Earnings in such Performance Period, reduced in the discretion of the
Committee by such amount, if any, as the Committee deems appropriate (a
participant's bonus amount for each Performance Period, as so reduced, the
"Bonus").
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Bonuses will be payable, as determined by the Committee, in cash and/or
equity-based awards. To the extent that equity-based awards are granted in lieu
of cash they will be granted under another plan maintained by Omnicom. The cash
equivalent value of such awards shall be determined by the Committee, provided
that in determining the number of restricted or deferred stock units (payable in
cash or shares of our common stock), restricted shares of our common stock or
unrestricted shares of our common stock that is equivalent to a dollar amount,
that dollar amount shall be divided by the closing price of our common stock on
the date of grant by the Committee (with fractional shares being rounded to the
nearest whole share). Any equity-based award will be subject to such terms and
conditions (including vesting requirements) as the Committee may determine.
Unless the Committee indicates otherwise, if a participant's employment
with Omnicom terminates for any reason before the end of a Performance Period,
the Committee will have the discretion to determine whether such participant's
Bonus will be forfeited or reduced on a pro-rata basis to reflect the portion of
such fiscal year the participant was employed by Omnicom, or to make other
arrangements as the Committee deems appropriate.
Omnicom's Earnings means Omnicom's operating income before taxes,
incentive compensation and extraordinary gains or losses as reported in its
audited consolidated financial statements for the relevant Performance Period,
adjusted to eliminate, with respect to such Performance Period: (i) losses
related to the impairment of goodwill and other intangible assets, (ii)
restructuring expenses, (iii) gains or losses on disposal of assets or segments
of the previously separate companies of a business combination within two years
of the date of such combination, (iv) gains or losses that are the direct result
of a major casualty or natural disaster, (v) losses resulting from any
newly-enacted law, regulation or judicial order; and (vi) the cumulative effect
of accounting changes.
The above adjustments to Earnings shall be computed in accordance with
GAAP. Following the completion of each Performance Period, the Committee will
certify in writing the Earnings for such Performance Period.
New Plan Benefits
The amount of each participant's Bonus for the current Performance Period
(which runs from April 1, 2005 through December 31, 2005) will be determined
based on Earnings for the Performance Period and, in addition, will be subject
to the Committee's right to reduce any participant's Bonus by any amount in its
sole discretion. As a result, we cannot determine the amount that would be
payable under the Incentive Plan to any participant for the current Performance
Period. Moreover, because the Committee can reduce each participant's Bonus
determined under the Incentive Plan's formula by any amount in its discretion,
we cannot determine the amount that would have been paid to any person under the
Incentive Plan had it been in effect in the 2004 fiscal year. While the terms of
the Plan, if it had been in effect for the 2004 fiscal year, would have derived
a maximum bonus for each executive officer in an amount equal to 2% of Omnicom's
Earnings for fiscal 2004, the Compensation Committee would have exercised its
discretion to reduce each participant's Bonus and the Bonuses paid would have
been the same as those actually determined for 2004. The Compensation Committee
does not currently intend to materially change its criteria for awarding
Bonuses. See the Summary Compensation Table below for the bonuses the Committee
actually determined to pay to our named executive officers for the 2004 fiscal
year.
Adoption of the Incentive Plan, upon the recommendation of the
Compensation Committee, was approved by the Board of Directors subject to the
receipt of stockholder approval. If the Incentive Plan is not approved by
stockholders, no amounts will be payable under the Incentive Plan.
The Board recommends that shareholders vote FOR the adoption of the Senior
Management Incentive Plan.
9
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes the total compensation for each of the last
three years (unless otherwise indicated) for the Chief Executive Officer and for
each of our four most highly compensated executive officers during 2004. These
five persons are referred to collectively as the "named executive officers" in
this Proxy Statement.
Annual Compensation Long-Term Compensation Awards
------------------------------------------ ----------------------------------------
Shares
Name and Other Restricted Underlying All Other
Principal Annual Stock Stock Compensation
Position Year Salary($) Bonus($)(1) Compensation(2) Awards($)(3) Options (#) ($)(4)
--------- ---- ---------- ----------- --------------- ------------ ----------- ------------
John D. Wren .................... 2004 $1,000,000 $4,000,000 $193,159 -- -- $14,594
President and Chief 2003 1,000,000 1,100,000 -- -- -- 10,117
Executive Officer of 2002 875,000 -- -- -- -- 5,944
Omnicom
Jean-Marie Dru .................. 2004 $1,004,796 $2,500,000 $ 74,080 -- -- $45,387
President and Chief 2003 938,275 -- -- $1,226,025 -- 40,806
Executive Officer of 2002 813,022 -- -- 475,900 -- 33,611
TBWA Worldwide
Kenneth R. Kaess, Jr ............ 2004 $ 825,000 $1,875,000 -- -- -- $18,359
President and Chief 2003 806,000 525,000 -- $ 305,980 -- 9,774
Executive Officer of
DDB Worldwide(5)
Andrew Robertson ................ 2004 $ 900,000 $1,850,000 $ 67,418 -- -- $17,432
Chairman and Chief
Executive Officer of
BBDO(6)
Randall Weisenburger ............ 2004 $ 975,000 $3,500,000 -- -- -- $12,300
Executive Vice 2003 975,000 350,000 -- $1,147,425 -- 8,000
President and Chief 2002 750,000 -- -- -- 300,000 12,000
Financial Officer of
Omnicom
----------
(1) The named executive officers elected to receive reduced cash bonuses for
2003 and some of them elected to receive no cash bonuses in 2002, even
though they had satisfied the performance criteria established by the
Compensation Committee.
(2) The amounts in this column include perquisites and other personal benefits
where the total incremental cost of all perquisites and other personal
benefits exceeds $50,000 per year. Where no amount is shown, the value of
the perquisites or personal benefits provided was less than the minimum
amount required to be reported. Perquisites and other personal benefits
are valued on the basis of the aggregate incremental cost to Omnicom and
its subsidiaries.
For Mr. Wren, the 2004 total includes $193,159 for personal use of
aircraft hours, which reflects the incremental cost after amounts Mr. Wren
reimbursed Omnicom using the Standard Industrial Fare Level (SIFL) tables
prescribed under IRS regulations. Prior to 2004, Omnicom calculated the
cost of the personal use using the SIFL tables. Mr. Wren has reimbursed
and continues to reimburse Omnicom for the entire SIFL amount promptly
after incurring the cost of a flight. For Mr. Dru, the 2004 total includes
$33,653 for payment of professional fees and $27,435 for the cost of
family travel. For Mr. Robertson, the 2004 total includes $22,562 for auto
lease payments and $29,510 for family travel.
(3) The value shown above represents the pre-tax value of the restricted
shares based on the reported closing price of our common shares on the
date of the award. One-fifth of the restricted shares granted vest on each
of the first five anniversaries of the grant. Dividends will be payable on
the shares to the extent paid on Omnicom's common stock generally,
regardless of whether the shares are vested or unvested at the time. The
total number and value of restricted shares owned by the named executive
officers on December 31, 2004 based on the year-end market price ($84.32)
were as follows:
o Mr. Dru held 23,000 restricted shares with a pre-tax value of
$1,939,360.
o Mr. Kaess held 10,776 restricted shares with a pre-tax value of
$908,632.
o Mr. Robertson held 11,500 restricted shares with a pre-tax value of
$969,680.
o Mr. Weisenburger held 19,980 restricted shares with a pre-tax value
of $1,684,714.
10
(4) All other compensation consists of:
o employer contributions to one or more retirement savings plans in
the amount of $12,300 on behalf of each of Messrs. Wren and
Weisenburger, and $16,400 on behalf of each of Messrs. Kaess and
Robertson;
o social security and retirement costs in the amount of $42,079 to Mr.
Dru, which are mandatory in France; and
o employer premium payments for life insurance in the amount of $2,294
for Mr. Wren, $1,959 for Mr. Kaess, $3,308 for Mr. Dru, and $1,032
for Mr. Robertson.
(5) Mr. Kaess was not an executive officer prior to 2003.
(6) Mr. Robertson was not an executive officer prior to 2004.
Stock Options
Option Grants in Last Fiscal Year: No stock options were granted to the
named executive officers in 2004.
Aggregated Option Exercise Last Year and Year-End Option Values: The
following table provides information about option exercises by the named
executive officers in 2004, and the value of their unexercised options at the
end of 2004. The value realized was calculated by subtracting the exercise price
from the fair market value of our common stock on the exercise date. The value
of unexercised in-the-money options at December 31, 2004 was calculated by
subtracting the exercise price of in-the-money options from the closing sales
price ($84.32) of our common stock on December 31, 2004.
Number of Shares
Underlying Value of Unexercised
Unexercised In-the-Money
Number Options at Options at
of Shares December 31, 2004(#) December 31, 2004($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
---- ------------ ------------ -------------------- --------------------
John D. Wren (1) ......................... 120,000 $8,270,472 2,790,000/1,500,000 $53,364,965/$7,230,000
Jean-Marie Dru (1) ....................... -- -- 268,333/166,667 $5,492,214/$3,661,674
Kenneth R. Kaess, Jr. (1) ................ 25,000 $ 491,500 220,556/186,667 $1,513,765/$3,661,674
Andrew Robertson (1) ..................... -- -- 73,333/166,667 $733,126/$3,661,674
Randall Weisenburger (1)(2) .............. -- -- 1,089,999/710,001 $14,740,428/$18,666,822
----------
(1) Each of the named executive officers has stock options granted under the
2001 Long-Term Shareholder Value Plan (the "2001 Plan"), some of which are
unexercisable. In general, unexercised options granted under the 2001 Plan
are cancelled on termination of employment, except that otherwise
exercisable options may be exercised within five business days of such
termination. In certain limited circumstances, including the retirement,
involuntary termination, death or total disability of the executive, those
options would become exercisable in full and remain exercisable for the
balance of their term. In order to be eligible for acceleration upon
retirement, an executive must have reached a certain age and have devoted
a certain number of years of service to Omnicom or one of its
subsidiaries. Currently, Mr. Dru, Mr. Kaess and Mr. Wren could qualify for
acceleration upon retirement with respect to their grants under the 2001
Plan. If there is a change of control of Omnicom, all outstanding options
will become exercisable at the effective time of the transaction and
remain exercisable for the balance of their term.
For these purposes, a change of control means, with certain exceptions,
(i) the acquisition, directly or indirectly, of Omnicom stock such that
the acquirer has more than 20% of the outstanding securities entitled to
vote for a majority of the members of the Board or otherwise has the
ability to elect a majority of the Board; (ii) a change in the composition
of the Board such that a majority of the members are not continuing
directors; (iii) the consummation of a merger or consolidation which has
been approved by the shareholders of Omnicom, other than one in which the
voting securities of Omnicom outstanding immediately prior thereto
continues to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 80% of
the total voting power represented by the voting securities of Omnicom or
such surviving entity; (iv) the consummation of a plan of complete
dissolution or liquidation; (v) or an agreement for the sale or
disposition of all or substantially all of its assets which has been
approved by Omnicom's shareholders.
11
(2) Mr. Weisenburger has stock options granted under the Equity Incentive
Plan, some of which are unexercisable. In general, unexercised stock
options granted under the Equity Incentive Plan would be cancelled in the
event of termination of employment. In certain limited circumstances,
including the retirement, involuntary termination, death or total
disability of Mr. Weisenburger, those options would become exercisable in
full and remain exercisable during the 36 months following the event but
not beyond the balance of their term. Mr. Weisenburger does not currently
meet the criteria for retirement. If there is a change of control of
Omnicom, all outstanding options will become exercisable at the effective
time of the transaction and remain exercisable for the balance of their
term.
Compensation Committee Report on Executive Compensation
The members of our committee are Gary L. Roubos, Committee Chair, Leonard
S. Coleman, Jr., Susan S. Denison and Linda Johnson Rice. The Board of Directors
has determined that each member of the Compensation Committee is "independent"
within the meaning of the rules of the NYSE.
Omnicom's executive compensation structures for senior management use a
combination of three principal elements: base salary, performance-based cash
bonuses and long-term equity-linked awards. We maintain flexibility in our mix
of awards in order to meet changing market conditions and to attract, motivate
and retain talented executives critical to Omnicom's long-term success.
Historically, the fixed portion of compensation has been substantially less than
the variable portion to provide management incentives to achieve performance
goals.
We determine the compensation of the Chief Executive Officer and named
executive officers subject, in the CEO's case, to the approval of the full
Board. We consider the factors described below and the recommendations of the
CEO in determining the compensation of the named executive officers. The CEO
determines the salaries of executives who are not named executive officers.
We periodically engage compensation consultants to assist us generally in
overseeing Omnicom's compensation programs and in determining appropriate
compensation levels and structures for executive officers.
Base Salary: Adjustments in base salary for executive officers are
discretionary and generally are considered no more frequently than every 18
months. In determining base salary and adjustments to base salary, we consider:
o the executive's level of responsibility;
o Omnicom's profitability and the profitability of the business
unit with which the executive is associated; and
o information and our knowledge of executive compensation
practices of other companies of similar size, geographic reach
and financial characteristics.
Omnicom's profitability is determined by reference to its earnings per share,
and profitability of a business unit is determined by reference to its operating
profit.
Incentive Cash Bonuses: The annual cash bonus typically represents a
substantial portion of the cash compensation of executive officers. We
administer incentive bonuses for all executive officers.
Prior to or shortly after the beginning of the year, we identify the
executive officers who will receive cash bonuses and their incentive levels. We
normally establish specific performance goals based on business criteria. In
general, performance goals are based on one or more of the following criteria:
revenue growth, operating income, net income, earnings per share, cash flow and
return on equity.
At the end of the year, we review the performance of each participant
against his or her performance goals. Awards are paid only after we have
determined that the performance goals have been attained. We consider the
recommendations of the CEO as to the named executive officers other than the
CEO, and we retain the discretion to adjust the amount of an award otherwise
payable to a participant despite the attainment of previously established
performance goals.
In 2004, Omnicom exceeded threshold levels of performance, and the
executive officers were entitled to their targeted cash bonuses. These bonuses
were paid on or around March 31, 2005. In 2003, even though Omnicom exceeded
threshold levels of performance and executive officers were entitled to their
targeted cash bonuses, senior management, including the named executive officers
and other executive officers, elected to
12
receive reduced bonuses to assure that lower-level employees received
substantial incentive compensation in recognition of their performance in 2003.
For the same reason, senior management elected to receive no or substantially
reduced bonuses in 2002, even though the performance criteria were satisfied.
Stock-Based Incentive Awards: We determine the restricted stock award
grants and stock option grants for the named executive officers. Such grants for
executive officers who are not named executive officers are recommended by the
CEO and determined by us in a discretionary manner.
We grant restricted stock awards annually to a relatively broad group of
key executives, and stock options to a relatively select group of key
executives, based upon the executive's level of responsibility and our judgment
of the executive's current and expected future contribution to Omnicom's
performance. In general, we base our judgment of the executive's contribution by
evaluating such factors as the revenue growth and profitability of Omnicom and
the business unit with which the executive was associated, and various personal
performance factors, which may include such qualitative factors as
organizational leadership, staff development, progress toward strategic
initiatives and client development.
Stock options are granted with an exercise price equal to the market price
of Omnicom's stock on the day of grant and generally vest over a period of three
years. However, we made stock option grants in one year that vested over a
period of six years, subject to acceleration in certain events including the
attainment of certain share price thresholds.
Performance Share Units: In prior years, we have approved awards to
certain executive officers under which they have the right to earn performance
share units. Performance share units entitle the holder to payouts of cash
and/or common stock, as determined by our committee, up to a maximum amount,
based on the value of one share of common stock on the payout date for each
performance share unit. We retain the overall discretion to reduce any
performance compensation and performance share units that the holder would
otherwise be entitled to receive.
Our committee has awarded performance share units based on our review of
Omnicom's earnings per share growth over a three-year period. If the executive
officer is affiliated with one of Omnicom's subsidiaries, we evaluate the
executive using a formula that considers both Omnicom's earnings per share
growth over a three-year period and the three-year net profit growth of that
subsidiary. No performance share units for the performance period of 2002 to
2004 were paid out because the executive officers eligible to receive these
awards elected not to receive them, even though the specified targets were met,
including our CEO and President (John Wren) and our Executive Vice President and
CFO (Randall Weisenburger) who in 2004 would have earned sizable stock grants as
a result of Omnicom exceeding certain threshold levels of performance and
elected to waive these grants. In addition, we took into consideration the fact
that Mr. Wren and Mr. Weisenburger waived these grants when deciding upon their
cash incentive bonuses for 2004.
CEO Compensation: Mr. Wren's base salary for 2004 was set at $1,000,000
per year, the same as his base salary for 2003, and he received a cash incentive
bonus for 2004 of $4,000,000. Mr. Wren's base salary and incentive bonus were
approved by the Compensation Committee and are consistent with our practice of
having incentive compensation serve as a substantial component of our
executives' compensation. In determining the ultimate amount of the incentive
bonus to be paid to Mr. Wren, in addition to the relevant factors discussed
above that are applicable to the named executive officers, the Compensation
Committee considered Omnicom's financial performance in fiscal 2004 compared to
2003, Mr. Wren's individual contribution to that performance, competitive
compensation practices, and Mr. Wren's contribution to non-financial attributes
of Omnicom and its subsidiaries, including corporate governance matters.
Under Mr. Wren's leadership, in comparing fiscal 2004 to fiscal 2003, the
firm achieved diluted earnings per share growth of 15.1%, net income growth of
14.7%, and worldwide revenue growth of 13.1%. Mr. Wren's compensation for 2004
is a reflection of his personal performance, and Omnicom's overall performance,
in 2004.
Internal Revenue Code Section 162(m): Section 162(m) limits the tax
deduction for compensation in excess of $1 million paid in any one year to its
Chief Executive Officer and certain other executive officers unless certain
specific criteria are satisfied. The committee considers the anticipated tax
treatment to Omnicom and its subsidiaries in its review and establishment of
compensation programs and awards. We intend to continue to consider the
deductibility of compensation as a factor in assessing whether a particular
arrangement is appropriate given the goals of maintaining a competitive
executive compensation system generally, motivating executives to achieve
corporate performance objectives and increasing shareholder value.
13
Gary L. Roubos, Chairman
Leonard S. Coleman, Jr.
Susan S. Denison
Linda Johnson Rice
Members of the Compensation Committee
Employment and Salary Continuation Agreements
Salary Continuation Agreements. We have entered into salary continuation
agreements with each of the named executive officers under which we agreed to
make annual payments to them for up to ten years after termination of full time
employment, unless termination is for "cause" in consideration for their
agreements not to compete and to consult during the service period. "Cause" is
generally defined for this purpose as willful malfeasance, such as breach of
trust, fraud or dishonesty. If a covered executive dies before expiration of the
applicable payment period, his beneficiary is entitled to 75% of the executive's
payment for the remainder of that period. The payments are equal to a percentage
of the covered executive's salary and are subject to reduction in certain
circumstances. The salary percentages are equal to 50% for the named executive
officers. The payment periods are based on age and service and are currently:
ten years for Messrs. Wren and Kaess, eight years for Mr. Dru, five years for
Mr. Robertson, and two years for Mr. Weisenburger.
Employment Agreement with Mr. Dru. Mr. Dru has an agreement that provides
for an indefinite term, an annual base salary of $725,000 and (euro)225,000
(subject to future review), eligibility to receive a performance bonus including
minimum aggregate bonus payments for calendar years 2005, 2006 and 2007 of $6
million, participation in our executive benefit and incentive plans (including
stock based plans) and certain fringe benefits and perquisites.
Under the agreement, if Mr. Dru's employment is terminated by us without
cause or by Mr. Dru for good reason (as defined in the agreement), provided he
signs a separation agreement, he is entitled to receive his salary for six
months (subject to reduction in certain cases), any unpaid reimbursable expenses
and all accrued benefits through his termination date, and continued medical,
dental, disability and life insurance coverage until the earlier of the end of
the period he receives his salary continuation payments or the date he is
eligible to receive coverage under the same type of benefit plan of a subsequent
employer. In addition, if Mr. Dru is terminated without cause prior to May 1,
2008, he is entitled to receive the unpaid portion, if any, of the minimum
aggregate bonus payments described above for calendar years 2005, 2006 and 2007.
If Mr. Dru's employment is terminated for any other reason, he or his estate is
entitled to receive any unpaid salary, unpaid reimbursable expenses and all
accrued benefits through his termination date.
The agreement also prohibits Mr. Dru from soliciting or servicing
customers, or hiring or retaining employees, of the worldwide TBWA Group (except
on behalf of companies within the worldwide TBWA Group), during the term of the
agreement and for two years following termination for any reason, and prohibits
disclosure of confidential information (with certain standard exceptions). The
agreement provides for the continuation of three agreements with similar
non-solicitation provisions.
14
EQUITY COMPENSATION PLANS
Our principal equity plan for employees is our Equity Incentive Plan,
which was approved by shareholders in 2002, and amended with shareholder
approval in 2003, and replaced all prior employee equity incentive plans. As a
result, no new awards may be made under prior plans, except with respect to
shares relating to awards that are forfeited or cancelled, which may be reissued
under those prior plans. Outstanding equity awards under those plans, however,
were not affected by the adoption of our Equity Incentive Plan.
Our principal equity plan for non-employee directors is our Director
Equity Plan, which was approved by our shareholders at last year's annual
meeting. Our Director Equity Plan replaced our restricted stock plan for
non-employee directors and as a result, no new awards may be made under that
restricted stock plan. Outstanding restricted shares under that plan, however,
were not affected by the adoption of our Director Equity Plan. We also have a
tax-qualified employee stock purchase plan available to substantially all
domestic employees.
All of our current equity compensation plans have been approved by
shareholders. The following table provides information about our current equity
compensation plans as of December 31, 2004.
Number of securities
remaining available for
future issuance under
Number of securities to Weighted-average equity compensation
be issued upon exercise exercise price of plans (excluding
of outstanding options, outstanding options, securities reflected
Plan Category warrants and rights warrants and rights in first column)
------------- ----------------------- -------------------- -----------------------
Equity compensation plans
approved by security holders ........................... 17,304,047 $ 73.05 9,697,417(1)
Equity compensation plans not
approved by security holders ........................... -- -- --
---------- ---------- ----------
Total .................................................... 17,304,047 $ 73.05 9,697,417
========== ========== ==========
----------
(1) This figure includes 1,349,224 shares that remained available for purchase
as of December 31, 2004 under the employee stock purchase plan, which is a
tax-qualified plan in which all eligible full-time and part-time domestic
employees may participate.
PERFORMANCE GRAPH
The graph below compares cumulative total return on our common stock
during the last five fiscal years with the Standard & Poor's 500 Composite Index
and a peer group of publicly held corporate communications and marketing holding
companies. The peer group consists of Grey Global Group Inc., The Interpublic
Group of Companies, Inc., WPP Group plc and Publicis Groupe SA. Cordiant
Communications Group, which was included in the peer group for prior years, is
no longer included following its acquisition by WPP Group. As a result, the
graph has been restated for all years to exclude Cordiant. The graph shows the
value at the end of each year of each $100 invested in our common stock, the S&P
500 Index and the peer group. The graph assumes the reinvestment of dividends.
Returns depicted in the graph are not indicative of future performance.
[The following information was depicted as a line chart in the printed material]
INDEXED RETURNS
Years Ending
Base
Period
Company Name / Index Dec99 Dec00 Dec01 Dec02 Dec03 Dec04
--------------------------------------------------------------------------------
OMNICOM GROUP 100 83.57 90.98 66.65 91.15 89.02
S&P 500 INDEX 100 90.90 80.10 62.41 80.30 89.03
PEER GROUP 100 83.64 67.35 39.73 46.70 46.72
15
STOCK OWNERSHIP
The following table sets forth certain information as of the close of
business on April 8, 2005 (except as otherwise noted), with respect to the
beneficial ownership of our common stock by:
o each person known to Omnicom to own beneficially more than 5%
of our outstanding common stock;
o each current director or nominee;
o each named executive officer; and
o all directors and executive officers as a group.
Options Total Percent of
Number of Exercisable Beneficial Shares
Name Shares Owned (#)(1) within 60 days(#) Ownership(#) Outstanding(%)
---- ------------------- ----------------- ------------ --------------
FMR Corp. (2) .......................................... 22,421,664 -- 22,421,664 12.21%
John D. Wren ........................................... 376,342 2,650,000 3,026,342 1.62%
Bruce Crawford ......................................... 272,900 -- 272,900 *
Robert Charles Clark ................................... 2,316 -- 2,316 *
Leonard S. Coleman, Jr ................................. 6,095 -- 6,095 *
Errol M. Cook .......................................... 4,216 -- 4,216 *
Susan S. Denison ....................................... 7,269 -- 7,269 *
Jean-Marie Dru ......................................... 23,400 218,333 241,733 *
Michael A. Henning ..................................... 4,332 -- 4,332 *
Kenneth R. Kaess, Jr ................................... 17,964 240,556 258,520 *
John R. Murphy ......................................... 7,395 -- 7,395 *
John R. Purcell ........................................ 45,996 -- 45,996 *
Linda Johnson Rice ..................................... 2,411 -- 2,411 *
Andrew Robertson ....................................... 22,361 73,333 95,694 *
Gary L. Roubos ......................................... 9,196 -- 9,196 *
Randall J. Weisenburger ................................ 110,838 1,179,999 1,290,837 *
All directors and executive officers
as a group (20 persons) ............................. 1,099,264 5,382,220 6,481,484 3.43%
----------
* less than 1%
(1) Includes:
o shares held pursuant to executive restricted stock program, namely,
Mr. Dru--18,000 shares, Mr. Kaess--6,100 shares, Mr.
Robertson--14,400 shares, and Mr. Weisenburger--15,320 shares;
o shares held pursuant to outside director restricted stock program,
each director other than Messrs. Wren and Crawford holds 125 shares;
o shares held pursuant to the outside director equity plan, the payout
of which has been deferred at the election of the holder, namely,
Mr. Clark--966 shares, Mr. Cook--966 shares, Ms. Denison--2,082
shares, Mr. Henning--2,082 shares, Mr. Murphy--2,082 shares, Mr.
Purcell--966 shares, and Ms. Rice --966 shares.
o shares previously held under restricted stock awards, the payout of
which has been deferred at the election of the holder, namely, Mr.
Wren--92,996 shares and Mr. Weisenburger--52,980 shares.
o shares credited under the Omnicom Group Retirement Savings Plan,
namely, Mr. Wren--9,852 shares, Mr. Weisenburger--419 shares, and
Mr. Kaess--178 shares.
o shares purchased under an employee stock purchase plan, namely, Mr.
Weisenburger--2,119 shares.
(2) Stock ownership is based solely on a Schedule 13G/A filed by FMR Corp.
with the SEC on February 14, 2005. In its filing, FMR Corp. reported
having sole voting power over 1,649,338 shares and sole dispositive power
over 22,421,664 shares. Edward C. Johnson 3d is Chairman of FMR Corp. and
reported owner of 12.0% of its aggregate outstanding voting stock. Abigail
P. Johnson is a director of FMR Corp. and reported owner of 24.5% of its
aggregate outstanding voting stock. Mr. Johnson and Ms. Johnson each
reported sole dispositive power over all of the shares beneficially owned
by FMR Corp. The address of FMR Corp. is 82 Devonshire Street, Boston,
Massachusetts 02109.
16
EXECUTIVE OFFICERS
Name Position Age
---- -------- ---
Bruce Crawford ................ Chairman 76
John D. Wren .................. President and Chief Executive Officer 52
Randall J. Weisenburger ....... Executive Vice President and
Chief Financial Officer 46
Philip J. Angelastro .......... Senior Vice President of Finance
and Controller 40
Michael Birkin ................ Vice Chairman 46
Jean-Marie Dru ................ President and Chief Executive Officer
of TBWA Worldwide 58
Thomas L. Harrison ............ Chairman and Chief Executive Officer
of Diversified Agency Services 57
Kenneth R. Kaess, Jr. ......... President and Chief Executive Officer
of DDB Worldwide 50
Peter Mead .................... Vice Chairman 65
Michael J. O'Brien ............ Senior Vice President, General
Counsel and Secretary 44
Andrew Robertson .............. President and Chief Executive
Officer of BBDO Worldwide 44
Information concerning Mr. Crawford and Mr. Wren is included above under
Item 1: Election of Directors.
Randall J. Weisenburger was appointed Executive Vice President and Chief
Financial Officer in September 1998.
Philip J. Angelastro was promoted to Senior Vice President of Finance in
January 2002 and was appointed Controller on February 1, 1999. Mr. Angelastro
joined Omnicom in June 1997 as Vice President of Finance of Diversified Agency
Services after being a Partner at Coopers & Lybrand LLP.
Michael Birkin was appointed Vice Chairman, as well as President and CEO,
of Omnicom Asia-Pacific effective March 1, 2005. Since 1999, he has served as
Worldwide President of Diversified Agency Services ("DAS"). Mr. Birkin
previously served as International President of DAS from 1997 to 1999 and
European Managing Director of DAS from 1995 to 1997.
Jean-Marie Dru was appointed President and Chief Executive Officer of TBWA
Worldwide in March 2001. He had previously been President International of TBWA
Worldwide. Mr. Dru was co-founder and Chairman of BDDP Group, which merged with
TBWA in 1998.
Thomas L. Harrison was appointed Chairman and Chief Executive Officer of
DAS in May 1998.
Kenneth R. Kaess, Jr. has been Chief Executive Officer and President of
DDB Worldwide since January 2001, and President since December 1999. Prior to
that, he was President of DDB North America.
Peter Mead was appointed Vice Chairman in May 2000. He had previously been
Group Chief Executive of Abbot Mead Vickers plc and Joint Chairman of AMV BBDO.
Michael J. O'Brien joined Omnicom in November 2003 and was appointed
Senior Vice President, General Counsel and Secretary in December 2003. Prior to
that, he was a partner in the law firm of Goodwin Procter LLP (since April
2002). Prior to that, he was a partner in the law firm of O'Sullivan LLP.
Andrew Robertson was named Chief Executive Office of BBDO Worldwide in May
2004, having been made President of BBDO Worldwide in 2002. In 2001, Mr.
Robertson was President and CEO of BBDO North America, and was subsequently
elected to the Worldwide Board of Directors of BBDO. He joined BBDO in 1995.
ITEM 3: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
In accordance with the Audit Committee's charter, the Audit Committee has
appointed KPMG LLP as our independent auditors for our fiscal year ending
December 31, 2005. We are submitting the selection of our independent auditors
for shareholder ratification at the Annual Meeting. KPMG LLP has been our
independent auditor since June 2002.
Representatives of KPMG LLP are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions.
The Audit Committee is not bound by the results of the vote regarding
ratification of the independent auditors. If our shareholders do not ratify the
selection, the Audit Committee will reconsider whether to retain
17
KPMG LLP, but still may retain them. Even if the selection is ratified, the
Audit Committee, in its discretion, may change the appointment at any time
during the year if it determines that such a change would be in the best
interests of Omnicom and its shareholders.
The Board recommends that shareholders vote FOR ratification of the
appointment of KPMG LLP as our independent auditors. Approval of this proposal
requires the favorable vote of the holders of a majority of the shares voting on
the proposal.
Fees Paid to Independent Auditors
The following table shows information about fees billed by KPMG LLP and
affiliates for professional services (as well as all "out-of-pocket" costs
incurred in connection with these services) rendered for the last two fiscal
years:
Approved Approved
by Audit by Audit
2004 Committee 2003 Committee
----------- --------- ----------- ---------
Audit Fees (1) ................. $20,000,000 100% $10,831,225 100%
Audit-Related Fees (2) ......... 2,147,200 100% 2,798,990 100%
Tax Fees (3) ................... 609,053 100% 840,452 100%
All Other Fees (4) ............. -- --
----------- -----------
Total Fees ..................... $22,756,253 $14,470,667
=========== ===========
----------
(1) Audit Fees consist of fees for professional services for the audit or
review of our consolidated financial statements or for audit services that
are normally provided by independent auditors in connection with statutory
and regulatory filings or engagements. Audit Fees in 2004 include the
audit of internal control over financial reporting.
(2) Audit-Related Fees consist of fees for assurance and related services that
are reasonably related to the performance of the audit or review of our
consolidated financial statements and are not reported under Audit Fees,
including due diligence related to mergers and acquisitions and special
procedures to meet certain statutory requirements.
(3) Tax Fees consist primarily of fees for tax compliance including the review
and preparation of statutory and expatriate tax returns and other tax
compliance related services.
(4) All Other Fees are fees for any products or services not included in the
first three categories.
In deciding to reappoint KPMG LLP to be our auditors for 2005, the Audit
Committee considered KPMG LLP's provision of services in the last two
years to assure that they were compatible with maintaining KPMG LLP's
independence. The committee determined that these fees were compatible
with the independence of KPMG LLP as our independent auditors.
Audit Committee Report
The members of our committee are John R. Murphy, Committee Chair, Robert
Charles Clark, Errol M. Cook and Michael A. Henning. The Board of Directors has
determined that each member of the Audit Committee is independent within the
meaning of the rules of the NYSE and the SEC. The Board of Directors has also
determined that each member is "financially literate" and has "accounting or
related financial management expertise," as such qualifications are defined
under the rules of the NYSE, and is an "audit committee financial expert" within
the meaning of the rules of the SEC. The Board of Directors has adopted a
written Audit Committee Charter, a copy of which is included as Appendix A to
this Proxy Statement.
During 2004, the Audit Committee met 14 times. The Audit Committee's
purpose is to assist the Board in carrying out its oversight responsibilities
relating to Omnicom's financial reporting. In this regard, the committee: (a)
assists Board oversight of (i) the integrity of Omnicom's financial statements,
(ii) Omnicom's compliance with legal and regulatory requirements, (iii) the
qualifications and independence of Omnicom's independent auditors, and (iv) the
performance of Omnicom's internal audit function and independent auditors; and
(b) prepares this Report.
18
Management is responsible for the preparation, presentation and integrity
of Omnicom's financial statements, accounting and financial reporting principles
and the establishment and effectiveness of internal controls and procedures
designed to assure compliance with accounting standards and applicable laws and
regulations. The independent auditors are responsible for performing an
independent audit of the financial statements in accordance with the standards
of the Public Company Accounting Oversight Board (United States), expressing an
opinion as to the conformity of such financial statements with generally
accepted accounting principles and auditing management's assessment of the
effectiveness of internal control over financial reporting (commencing in the
fiscal year ending December 31, 2004). The independent auditors have free access
to the Audit Committee to discuss any matters they deem appropriate.
In performing its oversight role, the Audit Committee has reviewed and
discussed with management Omnicom's audited 2004 financial statements as of
December 31, 2004. The Committee has also discussed with KPMG LLP the matters
required to be discussed by Statement on Auditing Standards No. 61,
"Communication with Audit Committees", as amended, as issued by the Auditing
Standards Board of the American Institute of Certified Public Accountants. The
committee has received and reviewed the written disclosures and the letter from
KPMG LLP required by Independence Standard No. 1, as adopted by the Independence
Standards Board, and has discussed with KPMG LLP its independence. The Audit
Committee has adopted a policy that requires it to pre-approve each audit and
non-audit service rendered by KPMG LLP except for items exempt from pre-approval
requirements by applicable law.
Based on the review and discussions referred to in this Report, the Audit
Committee recommended to the Board that the audited financial statements of
Omnicom for the year ended December 31, 2004 be included in its Annual Report on
Form 10-K for 2004.
John R. Murphy, Chairman
Robert Charles Clark
Errol M. Cook
Michael A. Henning
Members of the Audit Committee
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers and persons who own more than 10% of our common
stock to file reports of ownership and changes in ownership of our common stock
with the SEC. The SEC has established certain due dates for these reports. Last
year, each of our directors who was not an employee or a former employee of
Omnicom filed two late reports, each with respect to a grant under the Director
Equity Plan. These reports were filed late due to an administrative oversight in
implementing the Director Equity Plan. Additionally, an amended Form 4 for each
of these individuals was filed to correct an error in the number of shares
acquired by each of them under the Director Equity Plan as reported on the Form
4 filed on May 28, 2004. Based solely upon a review of the copies of the forms
filed under Section 16(a) and furnished to Omnicom and written representations
from reporting persons, we believe that all other filing requirements applicable
to our executive officers and directors and persons who own more than 10% of our
common stock were complied with during 2004.
ADDITIONAL INFORMATION
Quorum; Required Vote; Effect of an Abstention and Broker Non-Votes
More than 50% of the shares entitled to vote will constitute a quorum for
the transaction of business at the Annual Meeting. Abstentions and broker
non-votes will be counted for purposes of determining whether a quorum exists.
(Broker non-votes are proxies returned by brokers or other nominees who do not
vote on a particular item because they did not receive instruction from the
beneficial owner and were not permitted to exercise discretionary voting
authority.) If a quorum is not present, the shareholders who are present or
represented may adjourn the meeting until a quorum exists. The time and place of
the adjourned meeting will be announced at the time the adjournment is taken,
and no other notice need be given. We will, however, publish a press release if
the meeting is adjourned to another date. An adjournment will have no effect on
business that may have already been conducted at the meeting.
19
In order to obtain approval of the Senior Management Incentive Plan and
the ratification of the appointment of KPMG LLP as our independent auditors,
assuming a quorum exists, the affirmative vote of the holders of a majority of
the shares represented at the meeting and actually voted is required. In order
to obtain approval of the election of any nominee as a director, assuming a
quorum exists, a plurality vote is required. Abstentions, broker non-votes and
withheld votes will not be considered as votes cast in favor or against any
proposal. As a result, abstentions, broker non-votes and, in the case of
election of directors, withheld votes, will have no effect on the matters
brought to a vote at the meeting.
Voting
You can vote your shares by proxy card, through the Internet, by telephone
or in person. We have adopted the Internet and telephone voting procedures to
authenticate shareholders' identities, to allow shareholders to provide their
voting instructions and to confirm that their instructions have been recorded
properly. By submitting your proxy through the Internet, by telephone or by
using the enclosed proxy card, you will authorize two of our officers or their
designees to represent you and vote your shares at the meeting in accordance
with your instructions or, if no instructions are given, in their discretion.
They may also vote your shares to adjourn the meeting and will be authorized to
vote your shares at any adjournments or postponements of the meeting.
Fidelity Management Trust Company, as trustee under our retirement savings
plan, and Computershare Trust Company, Inc., as administrator of our employee
stock purchase plan, will vote common stock held in the plans as indicated by
participants in whose accounts the shares are held, whether or not vested, on
their proxies. Please note that your shares held in either plan will be voted as
you instruct if your proxy card, telephone or Internet voting instructions are
received on or before 11:59 p.m. Eastern Time on Thursday, May 19, 2005. In
accordance with the terms of the retirement savings plan, Fidelity Management
Trust Company will vote all shares for which it does not receive voting
instructions by the deadline provided above in the same proportion on each issue
as it votes the shares for which it does receive instructions. In accordance
with the terms of the employee stock purchase plan, Computershare Trust Company,
Inc. will not vote shares for which it does not receive voting instructions by
the deadline provided above.
Voting by Street Name Holders
If you are the beneficial owner of shares held in "street name" by a
broker, bank or other nominee, the broker, bank or nominee, as the record holder
of the shares, is required to vote those shares according to your instructions.
Your broker, bank or nominee should have enclosed a voting instruction card for
you to use in directing it on how to vote your shares.
Under existing rules, if your broker holds your shares in its name and you
have not given voting instructions, your broker nonetheless has the discretion
to authorize the designated proxies to act, except on certain matters. As such,
they could vote in respect of the election of directors, the approval of the
Senior Management Incentive Plan and the ratification of the appointment of KPMG
LLP as our independent auditors.
Default Voting
If you submit a proxy but do not indicate any voting instructions, your
shares will be voted FOR the election of all nominees for director, FOR the
approval of the Senior Management Incentive Plan and FOR the ratification of the
appointment of KPMG LLP. If any other business properly comes before the
shareholders for a vote at the meeting, your shares will be voted according to
the discretion of the holders of the proxy.
Right to Revoke
If you submit your proxy, you may change your voting instructions at any
time prior to the vote at the Annual Meeting. For shares held directly in your
name, you may change your vote by granting a new proxy, through the Internet, by
telephone or in writing, which bears a later date (thereby automatically
revoking the earlier proxy) or by attending the Annual Meeting and voting in
person. For shares beneficially owned by you, but held in "street name" by a
broker, bank or other nominee, you may change your vote by submitting new voting
instructions to your broker, bank or nominee.
20
Tabulation of Votes
Mellon Investor Services will act as inspectors at the 2005 Annual
Meeting. They will determine the presence of a quorum and will tabulate and
certify the votes.
Expense of Solicitation
We will bear all costs of this proxy solicitation. Proxies may be
solicited by mail, in person, by telephone or by facsimile or electronic
transmission by our officers, directors, and regular employees. We may reimburse
brokerage firms, banks, custodians, nominees and fiduciaries for their expenses
to forward proxy materials to beneficial owners. We have retained D.F. King &
Co., Inc. to assist in the solicitation of proxies and will pay customary fees
plus reimbursement of out-of-pocket expenses for those services.
Incorporation by Reference
To the extent that this Proxy Statement is incorporated by reference into
any other filing by Omnicom under the Securities Act of 1933 or the Securities
Exchange Act of 1934, the sections of this Proxy Statement entitled
"Compensation Committee Report on Executive Compensation," "Audit Committee
Report" (to the extent permitted by the rules of the SEC) and "Performance
Graph" will not be deemed incorporated, unless specifically provided otherwise
in such filing.
Availability of Certain Documents
A copy of our 2004 Annual Report to Shareholders is enclosed and a copy of
our Audit Committee Charter is attached as Annex A to this Proxy Statement. You
also may obtain a copy of these documents, our 2004 Annual Report on Form 10-K
filed with the SEC, our Corporate Governance Guidelines, our Code of Conduct,
our Code of Ethics for Senior Financial Officers and the charters for our Audit,
Compensation, Governance, Finance and Qualified Legal Compliance Committees,
without charge, by writing to: Omnicom Group Inc., 437 Madison Avenue, New York,
New York 10022, Attn: Investor Relations. All of these documents also are
available through our website at http://www.omnicomgroup.com. Please note that
the information contained on our website is not incorporated by reference in, or
considered to be part of, this Proxy Statement.
SHAREHOLDER PROPOSALS FOR THE 2006 ANNUAL MEETING
Any shareholder who wishes to present a proposal for inclusion in next
year's Proxy Statement and form of proxy must deliver the proposal to our
principal executive offices no later than the close of business on December 20,
2005. Proposals should be addressed to Corporate Secretary, Omnicom Group Inc.,
437 Madison Avenue, New York, New York 10022.
Our by-laws require that written notice of a nomination for director or
submission of a proposal to be voted on at an annual meeting be provided to our
corporate secretary no less than 60 days prior to the date set for the meeting,
which was March 25, 2005 for the 2005 Annual Meeting. In order for a nomination
or proposal to be considered, the notice must contain certain information
prescribed by our by-laws. A copy of the applicable by-law provisions may be
obtained, without charge, upon written request addressed to Corporate Secretary,
Omnicom Group Inc., 437 Madison Avenue, New York, New York 10022. As the rules
of the SEC make clear, simply submitting a proposal does not guarantee its
inclusion.
MICHAEL J. O'BRIEN
Secretary
New York, New York
April 25, 2005
21
APPENDIX A
AUDIT COMMITTEE CHARTER
Purpose: The Audit Committee (the "Committee") is a standing committee of
the Board. The Committee's purpose is to assist the Board in carrying out its
oversight responsibilities relating to the Company's financial reporting. In
this regard, the Committee will assist Board oversight of (1) the integrity of
the Company's financial statements, (2) the Company's compliance with legal and
regulatory requirements, (3) the qualifications and independence of the
Company's independent auditors, and (4) the performance of the Company's
internal audit function and independent auditors. Furthermore, the Committee
will prepare an audit committee report as required by the Securities and
Exchange Commission (the "SEC") for inclusion in the Company's annual proxy
statement. The Company recognizes, however, that:
o Management is responsible for the preparation, presentation
and integrity of the Company's financial statements and for
the effectiveness of internal control over financial
reporting;
o The independent auditors are responsible for planning and
carrying out a proper audit of the Company's annual financial
statements, reviews of the Company's quarterly financial
statements prior to the filing of each quarterly report on
Form 10-Q, annually auditing management's assessment of the
effectiveness of internal control over financial reporting and
other procedures;
o Members of the Committee are not full-time employees of the
Company and are not, and do not represent themselves to be,
performing the functions of auditors or accountants. As such,
it is not the duty or responsibility of the Committee or its
members to conduct "field work" or other types of auditing or
accounting reviews or procedures or to set auditor
independence standards; and
o In carrying out their oversight responsibilities, the
Committee and the Board will necessarily rely on the
expertise, knowledge and integrity of management, the
Company's internal audit department and independent auditors
(collectively, "management and the accountants") and such
other persons, if any, with whom the Committee may consult
from time to time.
The Committee will have the authority to take all actions on behalf of the
Board as the Committee or its Chairperson may from time to time determine to be
consistent with its purpose and this Charter.
Composition: The Committee will have at least three members. Based upon
the recommendation of the Governance Committee, the Board will designate the
members of the Committee at least annually and will take such actions as it from
time to time determines to be appropriate to assure that the Committee and its
members comply with applicable independence requirements (including those
discussed below). Management is directed to take such steps as are necessary to
assure that the Company does not take actions which would compromise the
independence of any Committee member. In furtherance of these requirements, (1)
each Committee member will receive only director's fees as compensation from the
Company (which includes all forms of compensation paid to directors of the
Company for service as a director or member of a Board Committee) and (2) no
Committee Member will accept appointment or election to serve simultaneously on
more than three audit committees of publicly traded companies unless the Board
has determined that such service would not impair the ability of such member to
effectively serve on the Committee, which determination shall be disclosed in
the Company's annual proxy statement.
Members of the Committee must be "independent" under the rules of the New
York Stock Exchange, Inc. and Rule 10A-3 under the Securities Exchange Act of
1934, and the Board must affirmatively determine that each member of the
Committee has no material relationship with the Company and the directors. The
Board must also determine that each member is "financially literate" and that
one member of the Committee has "accounting or related financial management
expertise," as such qualifications are interpreted by the Board of Directors in
its business judgment, and whether any member of the Committee is an "audit
committee financial expert," as defined by the rules of SEC. If the Board has
determined that a member of the Committee is an audit committee financial
expert, it may presume that such member has accounting or related financial
management expertise.
The Board also will from time to time designate the Chairperson, and may
designate a Co-Chairperson or Vice Chairperson, of the Committee. The Committee
may delegate one or more of its responsibilities hereunder to any subcommittee
comprised entirely of two or more Committee members. Any such delegation will be
reported to the Chairperson of the Governance Committee.
A-1
Resources: The Committee or its Chairperson may retain at the Company's
expense (in such amount as the Committee or its Chairperson determines to be
appropriate) legal counsel and other third-party advisors as it determines to be
appropriate. Management and the accountants are directed to bring to the
attention of the Committee such matters that the Committee is required by law or
listing requirements to review or as the Committee or its Chairperson may from
time to time designate. Without limitation, management is responsible for
providing the Committee with the information and assistance contemplated by this
Charter and educational and other resources as may be required by law, listing
requirements or GAAP or as the Committee or the Chairperson may request, and
such funding as may be herein contemplated, including funding to pay fees and
disbursements of the independent auditors (and any other public accounting firm
engaged for the purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the Company) and any advisor retained
by the Committee or its Chairperson.
Proceedings: The Committee will meet from time to time, not less
frequently than quarterly, as necessary to carry out its responsibilities. The
Committee will periodically meet in executive session and meet separately with
representatives of management, the Company's internal audit staff and the
Company's independent auditors to aid in assuring direct communications relevant
to the discharge of the Committee's responsibilities. The Committee may
otherwise adopt such procedures as it or the Chairperson may from time to time
determine to be appropriate to assist in the discharge of its responsibilities.
Except as the Committee or its Chairperson may otherwise determine, the
Secretary or another person designated for this purpose by the Committee
Chairperson will prepare appropriate records of all Committee meetings and
actions, copies of which when approved by the Committee or its Chairperson will
be furnished to the Board, and will maintain copies of all materials furnished
or presented to the Committee. In addition, the Committee Chairperson will
report to the Board as to all matters that he or she determines to be
appropriate.
Responsibilities: The Committee will:
1. With respect to the independent auditors,
(i) Act as the direct contact with the Company's independent
auditors, who will ultimately be accountable to the Committee
and the Board;
(ii) Have authority and direct responsibility for the (1)
appointment or removal, (2) terms of engagement and
compensation, and (3) general oversight on behalf of the Board
of the work of the independent auditors and any other
registered public accounting firm engaged for the purpose of
preparing or issuing an audit report or to perform audit,
review or attestation services (including resolution of
disagreements between management and the auditors regarding
financial reporting);
(iii) Pre-approve all audit and non-audit work to be provided to the
Company by the independent auditors (except for items exempt
from pre-approval requirements under applicable law);
(iv) Obtain annually from the independent auditors a formal written
statement of the fees billed in each of the last two fiscal
years for each of the following categories of services
rendered by the independent auditors: (i) the audit of the
Company's annual financial statements and the reviews of the
financial statements included in the Company's Quarterly
Reports on Form 10-Q or services that are normally provided by
the independent auditors in connection with statutory and
regulatory filings or engagements (including any amounts
associated with a Sarbanes-Oxley Section 404 internal control
audit); (ii) assurance and related services not included in
clause (i) that are reasonably related to the performance of
the audit or review of the Company's financial statements, in
the aggregate and by each service; (iii) tax compliance, tax
advice and tax planning services, in the aggregate and by each
service; and (iv) all other products and services rendered by
the independent auditors, in the aggregate and by each
service;
(v) Obtain from the independent auditors in connection with any
audit a timely report relating to the Company's annual audited
financial statements describing all critical accounting
policies and practices used, all alternative treatments within
GAAP for policies and practices related to material items that
have been discussed with management, ramifications of the use
of such alternative disclosures and treatments, and the
treatment preferred by the independent auditors, and any
material written communications between the independent
auditors and management, such as any "management" letter or
schedule of unadjusted differences;
A-2
(vi) At least annually, obtain and review a report by the
independent auditors describing: the auditors' internal
quality control procedures; any material issues raised by the
most recent internal quality control review, or peer review,
of the firm, or by any inquiry or investigation by
governmental or professional authorities within the preceding
five years respecting one or more independent audits carried
out by the independent auditors, and any steps taken to deal
with any such issues; and (to assess the independent auditors'
independence) all relationships between the independent
auditors and the Company, including each non-audit service
provided to the Company and the matters set forth in
Independence Standards Board No. 1 (the "Auditors'
Statement");
(vii) Discuss with the independent auditors any relationships or
services disclosed in the Auditors' Statement that may impact
the quality of audit services or the objectivity and
independence of the Company's independent auditors; and
(viii) Discuss with management the timing and process for
implementing the rotation of the lead audit partner, the
concurring partner and any other active audit engagement team
partner;
2. Based on the advice and with the assistance of counsel, prepare any report
or other disclosures relating to the Committee's activities as required by
law, including the report to be included in the Company's annual proxy
statement;
3. Review and approve the appointment or change in the Company's principal
accounting officer;
4. Inquire of management and the accountants about significant risks or
exposures and assess steps management is taking in light of these risks.
Discuss guidelines and policies governing the process by which management
of the Company assesses and manages the Company's exposure to risk;
5. Review with management and the accountants the audit scope and plan and
coordination of audit efforts to assure completeness of coverage,
reduction of redundant efforts and the effective use of audit resources;
6. Consider and review with each of the internal audit department and the
independent auditors (together, the "accountants"):
(i) The adequacy of the Company's internal controls, including
computerized information system controls and security;
(ii) Any related significant findings and recommendations of the
accountants, together with management's responses thereto; and
(iii) Any significant changes in GAAP or the Company's accounting policies
or standards;
7. Review with management and the accountants at the completion of the annual
audit and each quarterly review:
(i) The financial statements and related MD&A disclosures;
(ii) The results of the independent auditor's audit or review, as
applicable, and related report;
(iii) Other published documents containing the Company's financial
statements, including (1) management's disclosure to the Committee
under Section 302 of the Sarbanes-Oxley Act, (2) the contents of the
certificates to be filed under Sections 302 and 906 of that Act, and
(3) assurance from management and the accountants that the matters
disclosed in these documents are consistent with the information
contained in the financial statements;
(iv) Any significant changes required in the audit or review plan;
(v) Any significant difficulties or disputes with management encountered
during the course of the audit or review, including any restrictions
on the independent auditors' activities or access to requested
information;
(vi) Any reports or communications (and management's and/or the internal
audit department's responses thereto) submitted to the Committee by
the independent auditors required by or referred to in SAS 61 (as
codified by AU Section 380), as it may be modified or supplemented;
A-3
(vii) Other matters related to the conduct of the audit or review which
are to be communicated to the Committee under GAAP;
(viii) Any major issues regarding accounting principles and financial
statement presentations, including any significant changes in the
Company's selection or application of accounting principles, and
major issues as to the adequacy of the Company's internal controls
(including computerized information system controls and security)
and any special audit steps adopted in light of material control
deficiencies;
(ix) Analyses prepared by management and/or the independent auditors
setting forth significant financial reporting issues and judgments
made in connection with the preparation of the financial statements,
including analyses of the effects of alternative GAAP methods on the
financial statements; and
(x) The effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the financial statements;
8. Review policies and procedures with respect to transactions between the
Company and officers and directors, or affiliates of officers or
directors, or transactions that are not a normal part of the Company's
business;
9. Review with management and the internal audit department:
(i) Significant findings during the year and management's responses
thereto;
(ii) Any significant difficulties encountered in the course of their
audits, including any restrictions on the scope of their work or
access to required information;
(iii) Any changes required in planned scope of their audit plan; and
(iv) The responsibilities, budget and staffing of the inside auditors;
10. Discuss and review the type and presentation of information to be included
in earnings press releases and review any financial information and
earnings guidance provided to analysts and rating agencies. The
Chairperson of the Audit Committee (or another Committee member designated
for this purpose by the Chairperson) will participate in a telephonic
meeting with management and the accountants before financial information
and earnings guidance is provided to analysts and rating agencies;
11. Discuss with the Company's General Counsel any significant legal,
compliance or regulatory matters that may have a material effect on the
financial statements or the Company's business, financial statements or
compliance policies, including material notices to or inquiries received
from governmental agencies;
12. Establish policies as to hiring employees or former employees of the
independent auditor;
13. Establish procedures for the receipt, retention and treatment of
complaints regarding accounting, internal accounting controls or auditing
matters, and the confidential, anonymous submission by employees of
concerns regarding questionable accounting or auditing matters;
14. Review correspondence with regulators or governmental agencies and any
published reports which raise material issues regarding the Company's
financial statements, accounting policies or internal controls;
15. Perform an annual performance evaluation of the Committee. The performance
evaluation by the Committee shall be conducted in such manner as may be
approved by the Board;
16. Report its activities to the full Board of Directors on a regular basis
and make such recommendations with respect to the above and other matters
as the Committee may deem necessary or appropriate.
The Committee will review this Charter at least annually and will recommend to
the Governance Committee changes in the Charter as it determines to be
appropriate. Any changes to this Charter will be effective when recommended by
the Governance Committee and approved by the Board.
As adopted by the Board of Directors on March 31, 2003, and amended on February
2, 2004 and April 18, 2005.
A-4
APPENDIX B
OMNICOM GROUP INC.
SENIOR MANAGEMENT INCENTIVE PLAN
Section 1. Purposes. The purpose of the Omnicom Group Inc. Senior
Management Incentive Plan (the "Plan") is to attract, retain and motivate
selected employees of Omnicom Group Inc. (the "Company") and its subsidiaries
and affiliates who are executive officers of the Company (and any successor
thereto) in order to promote the Company's long-term growth and profitability.
It is also intended that all Bonuses (as defined in Section 5(a)) payable under
the Plan be considered "performance-based compensation" within the meaning of
Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations thereunder, and the Plan shall be interpreted
accordingly.
Section 2. Administration.
(a) Subject to Section 2(d), the Plan shall be administered by a committee
(the "Committee") appointed by the Board of Directors of the Company (the
"Board"), whose members shall serve at the pleasure of the Board. The Committee
at all times shall be composed of at least two directors of the Company, each of
whom is an "outside director" within the meaning of Section 162(m) of the Code
and Treasury Regulation Section 1.162-27(e)(3) and a "non-employee director"
within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended. Unless otherwise determined by the Board, the Committee
shall be the Compensation Committee of the Board.
(b) The Committee shall have complete control over the administration of
the Plan, and shall have the authority in its sole and absolute discretion to:
(i) exercise all of the powers granted to it under the Plan; (ii) construe,
interpret and implement the Plan; (iii) prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations governing its
own operations; (iv) make all determinations necessary or advisable in
administering the Plan (including, without limitation, calculating the size of
the Bonus payable to each Participant (as defined in Section 4(a))); (v) correct
any defect, supply any omission and reconcile any inconsistency in the Plan; and
(vi) amend the Plan to reflect changes in or interpretations of applicable law,
rules or regulations.
(c) The determination of the Committee on all matters relating to the Plan
and any amounts payable thereunder shall be final, binding and conclusive on all
parties.
(d) Notwithstanding anything to the contrary contained herein, the
Committee may allocate among its members and may delegate some or all of its
authority or administrative responsibility to such individual or individuals who
are not members of the Committee as it shall deem necessary or appropriate;
provided, however, the Committee may not delegate any of its authority or
administrative responsibility hereunder (and no such attempted delegation shall
be effective) if such delegation would cause any Bonus payable under the Plan
not to be considered performance-based compensation within the meaning of
Section 162(m)(4)(C) of the Code.
(e) No member of the Board or the Committee or any employee of the Company
or any of its subsidiaries or affiliates (each such person a "Covered Person")
shall have any liability to any person (including, without limitation, any
Participant) for any action taken or omitted to be taken or any determination
made in good faith with respect to the Plan or any Bonus. Each Covered Person
shall be indemnified and held harmless by the Company against and from any loss,
cost, liability or expense (including attorneys' fees) that may be imposed upon
or incurred by such Covered Person in connection with or resulting from any
action, suit or proceeding to which such Covered Person may be a party or in
which such Covered Person may be involved by reason of any action taken or
omitted to be taken under the Plan and against and from any and all amounts paid
by such Covered Person, with the Company's approval, in settlement thereof, or
paid by such Covered Person in satisfaction of any judgment in any such action,
suit or proceeding against such Covered Person, provided that the Company shall
have the right, at its own expense, to assume and defend any such action, suit
or proceeding and, once the Company gives notice of its intent to assume the
defense, the Company shall have sole control over such defense with counsel of
the Company's choice. The foregoing right of indemnification shall not be
available to a Covered Person to the extent that a court of competent
jurisdiction in a final judgment or other final adjudication, in either case,
not subject to further appeal, determines that the acts or omissions of such
Covered Person giving rise to the indemnification claim resulted from such
Covered Person's bad faith, fraud or
B-1
willful criminal act or omission. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which Covered Persons
may be entitled under the Company's Restated Certificate of Incorporation or
Amended and Restated Bylaws, as a matter of law, or otherwise, or any other
power that the Company may have to indemnify such persons or hold them harmless.
Section 3. Performance Period. The Plan shall operate for successive
periods (each a "Performance Period"). The first Performance Period shall
commence on April 1, 2005 and shall terminate on December 31, 2005. Thereafter,
each Performance Period shall be one full fiscal year and/or portions of fiscal
years of the Company, as determined by the Committee.
Section 4. Participation.
(a) Prior to the 90th day after the beginning of a Performance Period, or
otherwise in a manner not inconsistent with Treasury Regulation Section
1.162-27(e)(2) (the "Participation Date"), the Committee shall designate those
individuals who shall participate in the Plan for the Performance Period (the
"Participants").
(b) Except as provided below, the Committee shall have the authority at
any time (i) during the Performance Period to remove Participants from the Plan
for that Performance Period and (ii) prior to the Participation Date (or later
in a manner consistent with the requirements of Section 162(m) of the Code) to
add Participants to the Plan for a particular Performance Period.
Section 5. Bonus Amounts.
(a) Each Participant shall be paid a bonus amount equal to 2% of the
Company's "Earnings" (as defined in Section 5(c)) with respect to each
Performance Period. Notwithstanding anything to the contrary in this Plan, the
Committee may, in its sole discretion, reduce (but not increase) the bonus
amount for any Participant for a particular Performance Period at any time prior
to the payment of bonuses to Participants pursuant to Section 6 (a Participant's
bonus amount for each Performance Period, as so reduced, the "Bonus").
(b) If a Participant's employment with the Company terminates for any
reason before the end of a Performance Period or before the date that the Bonus
is paid pursuant to Section 6, the Committee shall have the discretion to
determine whether (i) such Participant shall be entitled to any Bonus at all,
(ii) such Participant's Bonus shall be reduced on a pro-rata basis to reflect
the portion of such Performance Period the Participant was employed by the
Company or (iii) to make such other arrangements as the Committee deems
appropriate in connection with the termination of such Participant's employment.
(c) For purposes of this Section 5, "Earnings" means the Company's
operating income before taxes, incentive compensation and extraordinary gains or
losses as reported in its audited consolidated financial statements for the
relevant Performance Period, adjusted to eliminate, with respect to such
Performance Period: (i) losses related to the impairment of goodwill and other
intangible assets; (ii) restructuring expenses; (iii) gains or losses on
disposal of assets or segments of the previously separate companies of a
business combination within two years of the date of such combination; (iv)
gains or losses that are the direct result of a major casualty or natural
disaster; (v) losses resulting from any newly-enacted law, regulation or
judicial order; and (vi) the cumulative effect of accounting changes. The above
adjustments to Earnings shall be computed in accordance with GAAP. Following the
completion of each Performance Period, the Committee shall certify in writing
the Company's Earnings for such Performance Period.
Section 6. Payment of Bonus Amount; Voluntary Deferral. Each Participant's
Bonus shall be payable by such Participant's Participating Employer (as defined
in Section 7(j)), or in the case of a Participant employed by more than one
Participating Employer, by each such employer as determined by the Committee.
The Bonus shall be payable in the discretion of the Committee in cash and/or an
equity-based award of equivalent value (provided that in determining the number
of Company restricted or deferred stock units payable in cash or shares of the
Company's common stock, restricted shares of the Company's common stock or
unrestricted shares of the Company's common stock that is equivalent to a dollar
amount, that dollar amount shall be divided by the closing price of the
Company's common stock on the date of grant by the Committee (with fractional
shares being rounded to the nearest whole share). The cash portion of the Bonus
shall be paid at such time as bonuses are generally paid by the Participating
Employer(s) for the relevant fiscal year. Subject to approval by the Committee
and to any requirements imposed by the Committee in connection with such
approval, each Participant may be entitled to defer receipt, under the terms and
conditions of any applicable deferred
B-2
compensation plan of the Company, of part or all of any payments otherwise due
under this Plan. Any equity-based award shall be subject to such terms and
conditions (including vesting requirements) as the Committee and the
administrative committee of the plan under which such equity-based award is
granted may determine.
Section 7. General Provisions.
(a) Amendment, Termination, etc. The Board reserves the right at any time
and from time to time to modify, alter, amend, suspend, discontinue or terminate
the Plan, including in any manner that adversely affects the rights of
Participants. No Participant shall have any rights to payment of any amounts
under this Plan unless and until the Committee determines the amount of such
Participant's Bonus, that such Bonus shall be paid and the method and timing of
its payment. No amendment that would require stockholder approval in order for
Bonuses paid pursuant to the Plan to constitute performance-based compensation
within the meaning of Section 162(m)(4)(C) of the Code shall be effective
without the approval of the stockholders of the Company as required by Section
162(m) of the Code and the regulations thereunder.
(b) Nonassignability. No rights of any Participant (or of any beneficiary
pursuant to this Section 7(b)) under the Plan may be sold, exchanged,
transferred, assigned, pledged, hypothecated or otherwise disposed of (including
through the use of any cash-settled instrument), either voluntarily or
involuntarily by operation of law, other than by will or by the laws of descent
and distribution. Any sale, exchange, transfer, assignment, pledge,
hypothecation or other disposition in violation of the provisions of this
Section 7(b) shall be void. In the event of a Participant's death, any amounts
payable under the Plan shall be paid in accordance with the Plan to a
Participant's estate. A Participant's estate shall have no rights under the Plan
to receive such amounts, if any, as may be payable under this Section 7(b), and
all of the terms of this Plan shall be binding upon any such Participant's
estate.
(c) Plan Creates No Employment Rights. Nothing in the Plan shall confer
upon any Participant the right to continue in the employ of the Company, or any
subsidiary thereof, for the Performance Period or thereafter or affect any right
which the Company may have to terminate such employment.
(d) Arbitration. Any dispute, controversy or claim between the Company, or
any subsidiary thereof, and any Participant arising out of or relating to or
concerning the provisions of the Plan shall be finally settled by arbitration in
New York City before, and in accordance with, the rules then obtaining of the
American Arbitration Association (the "AAA") in accordance with the commercial
arbitration rules of the AAA. Prior to arbitration, all disputes, controversies
or claims maintained by any Participant must first be submitted to the Committee
in accordance with claim procedures determined by the Committee in its sole
discretion.
(e) Governing Law. ALL RIGHTS AND OBLIGATIONS UNDER THE PLAN SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
(f) Tax Withholding. In connection with any payments to a Participant or
other event under the Plan that gives rise to a federal, state, local or other
tax withholding obligation relating to the Plan (including, without limitation,
FICA tax), (i) the Company and any Participating Employer may deduct or withhold
(or cause to be deducted or withheld) from any payment or distribution to such
Participant whether or not pursuant to the Plan or (ii) the Committee shall be
entitled to require that such Participant remit cash (through payroll deduction
or otherwise), in each case in an amount sufficient in the opinion of the
Company to satisfy such withholding obligation.
(g) Right of Offset. The Company and any Participating Employer shall have
the right to offset against the obligation to pay a Bonus to any Participant,
any outstanding amounts (including, without limitation, travel and entertainment
or advance account balances, loans or amounts repayable to it pursuant to tax
equalization, housing, automobile or other employee programs) such Participant
then owes to it.
(h) Severability; Entire Agreement. If any of the provisions of this Plan
is finally held to be invalid, illegal or unenforceable (whether in whole or in
part), such provision shall be deemed modified to the extent, but only to the
extent, of such invalidity, illegality or unenforceability and the remaining
provisions shall not be affected thereby. This Plan shall not supersede any
other agreement, written or oral, pertaining to the matters covered herein,
except to the extent of any inconsistency between this Plan and any prior
agreement, in which case this Plan shall prevail.
B-3
(i) No Third Party Beneficiaries. The Plan shall not confer on any person
other than the Company and any Participant any rights or remedies hereunder.
(j) Participating Employers. Each subsidiary or affiliate of the Company
that employs a Participant shall adopt this Plan by executing Schedule A (a
"Participating Employer"). Except for purposes of determining the amount of each
Participant's Bonus, this Plan shall be treated as a separate plan maintained by
each Participating Employer and the obligation to pay the Bonus to each
Participant shall be the sole liability of the Participating Employer(s) by
which the Participant is employed, and neither the Company nor any other
Participating Employer shall have any liability with respect to such amounts.
(k) Successors and Assigns. The terms of this Plan shall be binding upon
and inure to the benefit of the Company, each Participating Employer and their
successors and assigns and each permitted successor or assign of each
Participant as provided in Section 7(b).
(l) Plan Headings. The headings in this Plan are for the purpose of
convenience only and are not intended to define or limit the construction of the
provisions hereof.
(m) Construction. In the construction of this Plan, the singular shall
include the plural, and vice versa, in all cases where such meanings would be
appropriate. Nothing in this Plan shall preclude or limit the ability of the
Company, its subsidiaries and affiliates to pay any compensation to a
Participant under any other plan or compensatory arrangement whether or not in
effect on the date this Plan was adopted.
(n) Plan Subject to Stockholder Approval. The Plan is adopted subject to
the approval of the stockholders of the Company at the Company's 2005 Annual
Meeting in accordance with Section 162(m)(4)(C) of the Code and Treasury
Regulation Section 1.162-27(e)(4), and no Bonus shall be payable hereunder
absent such stockholder approval.
B-4
OMNICOM GROUP INC.
437 Madison Avenue o New York, New York 10022
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2005 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 24, 2005.
The undersigned hereby appoints Randall J. Weisenburger and Michael J. O'Brien,
and each of them, as proxies, each with full power of substitution, to vote all
shares of common stock of Omnicom Group Inc. that the undersigned is entitled to
vote at the 2005 Annual Meeting of Shareholders to be held on May 24, 2005, and
at any postponements or adjournments thereof, as specified on the reverse of
this proxy card and in their discretion upon such other matters as may properly
come before such Annual Meeting and at any postponements or adjournments
thereof.
This proxy, when properly executed, will be voted in the manner directed by you
if received by 11:59 p.m. Eastern Time, on Monday, May 23, 2005. If you do not
give any direction, this proxy will be voted FOR Items (1), (2) and (3) and in
the discretion of the proxies upon such other matters as may properly come
before the Annual Meeting.
If the undersigned is a participant in our employee retirement savings plan
and/or our employee stock purchase plan and has Omnicom stock allocated to his
or her account(s), then the undersigned directs the trustee or the administrator
of the relevant plan likewise to appoint the above-named individuals as proxies
to vote and act with respect to all shares of such stock so allocated in the
manner specified on the reverse of this card and in their discretion on all
other matters as may properly come before the meeting. If you are such a
participant and your voting instructions are not received by 11:59 p.m., Eastern
Time, on Thursday, May 19, 2005, the trustee of the employee retirement saving
plans will vote your plan shares in the same proportion as it votes all other
shares in the plan for which it has received timely voting instructions and the
administrator of the employee stock purchase plan will not vote your shares.
Please specify your choices by marking the appropriate boxes on the REVERSE
SIDE. You need not mark any boxes if you wish to vote in accordance with the
Board of Directors' recommendations. It is important that your shares are
represented at this meeting, whether or not you attend the meeting in person.
Therefore, please complete the reverse side and mail it or use our Internet or
toll-free telephone voting system explained on the reverse side.
(Continued and to be dated and signed on the reverse side)
--------------------------------------------------------------------------------
^ FOLD AND DETATCH HERE ^
FOR INTERNET AND TELEPHONE PROXY INSTRUCTIONS, SEE REVERSE SIDE
Please
mark
with
|X|
--------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. Election of Directors 3. Ratification of KPMG LLP
as our independent |_| |_| |_|
01 John D. Wren auditors for 2005
02 Bruce Crawford
03 Robert Charles Clark
04 Leonard S. Coleman, Jr. FOR WITHHOLD
ALL FROM ALL
05 Errol M. Cook NOMINEES NOMINEES
06 Susan S. Denison |_| |_|
07 Michael A. Henning FOR all, except vote WITHHELD from the
following nominee(s):
08 John R. Murphy
_____________________________________________
09 John R. Purcell
10 Linda Johnson Rice
11 Gary L. Roubos
FOR AGAINST ABSTAIN
2. Approval of the Senior
Management Incentive Plan |_| |_| |_|
--------------------------------------------------------------------------------
The Board of Directors recommends that you vote FOR Items 1, 2 and 3.
Signature ______________________________________________________________________
Joint Signature if held jointly ___________________ Date: ________________, 2005
Please sign exactly as your name appears on this proxy. If stock is held in the
name of joint holders, each should sign. If you are signing as a trustee,
executor, etc., please so indicate. Please mark, sign, date and mail this card
promptly in the postage prepaid return envelope provided.
--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
Dear Shareholder:
We have established different ways to vote your shares. You may appoint your
proxies to vote your shares by mailing the enclosed proxy card, or through the
Internet or via toll-free telephone, 24 hours a day, 7 days a week. Please note
that all proxy appointments through the Internet or by telephone must be
received by 11:59 p.m., Eastern Time on Thursday, May 19, 2005, for shares held
in our employee plans and by 11:59 p.m. Eastern Time, on Monday, May 23, 2005,
for all other shares.
To vote over the Internet:
o Log on to the Internet and go to the website:
http://www.proxyvoting.com/omc
o Have this proxy card ready
o Follow the instructions that appear on your computer screen
To vote over the telephone:
o On a touch-tone telephone, call 1-866-540-5760
o Have this proxy card ready
o Follow the recorded instructions
Your Internet or telephone authorization allows the named proxies to vote your
shares in the same manner as if you marked, signed and returned your proxy card.
If you elect to appoint your proxies by Internet or by telephone, you do NOT
need to mail back your proxy card.