Create Value
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The Interpublic Group of Companies, Inc. / 2000
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Create>Value
The Interpublic Group of Companies, Inc. / 2000
INTERPUBLIC IS A GLOBAL MARKETING COMMUNICATIONS AND MARKETING SERVICES COMPANY.
We are in the idea business. We provide Clients with customer-driven insights, strategic communications
programs and other marketing services that help them build the demand side of their business.
Our success and growth are built on the quality of our Client base and the depth of our relationships.
TABLE OF CONTENTS:
>>
FINANCIAL HIGHLIGHTS 1 / CHAIRMEN'S REPORT 2-5 / PHILIP H. GEIER, JR. 6
/ LEADERSHIP 7
/ PUBLIC RELATIONS 18-21 / HEALTHCARE 22-25
ADVERTISING 8-13 / DIRECT MARKETING 14-17
MARKETING RESEARCH
26-29
SPORTS MARKETING 38-41
/
MEETINGS & EVENTS
34-37
/ SALES PROMOTION 42-45 / CORPORATE ID & BRAND EQUITY 46-49
MEDIA SERVICES
30-33
/
B OARD OF DIRECTORS 50 / OFFICERS & INFORMATION 51 / INTERPUBLIC COMPANIES 52
>>
Financial: Highlights
>
December 31 (Amounts In Thousands, Except Per Share Data)
2000
1999
% CHANGE
REVENUE AND INCOME
Revenue
Income from Operations*
As a % of Revenue
Net Income*
FINANCIAL POSITION
Cash and Equivalents
Total Assets
Total Debt
Debt as a % of Total Capital
Return on Average Stockholders’ Equity*
PER SHARE DATA
Diluted EPS*
Cash EPS*
Cash Dividends
OTHER
Number of Employees
Weighted Average Shares Outstanding (diluted)*
$
$
$
5,625,845
833,522
14.8 %
473,185
$
$
$
708,312
10,238,222
1,997,045
49.4 %
23.5 %
$
$
$
1.51
1.81
.37
48,200
319,346
$
$
$
4,977,823
662,679
13.3 %
382,724
$
$
$
1,029,076
9,247,044
1,311,090
42.6 %
23.6 %
$
$
$
1.24
1.51
.33
42,600
315,532
13.0 %
25.8 %
–
23.6 %
(31.2 %)
10.7 %
52.3 %
–
–
21.8 %
19.9 %
12.1 %
13.1 %
1.2 %
* Calculated excluding restructuring and other merger related costs (pre-tax charges of $116,131 and $84,183 in 2000 and 1999 respectively) and non-recurring transaction
costs related to the Deutsch acquisition (pre-tax charges of $44,715 in 2000). Reported net income including these costs was $358,658 in 2000 and $331,287 in 1999.
$ 5,625,845
$ 1.51
$ .37
26.2 %
$ 4,977,823
$ 1.24
$ 1.12
$ .33
$.29
$ 4,218,657
23.6 %
23.5 %
1998
1999
2000
1998
1999
2000
1998
1999
2000
1998
1999
2000
REVENUE
EARNINGS PER SHARE
(DILUTED)*
CASH DIVIDENDS
PER SHARE
RETURN ON AVERAGE
STOCKHOLDERS’ EQUITY*
2000 > The Interpublic Group of Companies, Inc.
1
Chairmen’s Report
>
This year, Interpublic reached a landmark in its evolution as a marketing services company.
In 1994, advertising represented 95 percent of our business.
In 2000, for the first time, our business was almost evenly balanced between advertising
and other marketing communications and marketing services.
The year 2000 was another year of robust
growth and diversification for Interpublic.
Revenue rose to more than $5.6 billion, an
increase of 13% over 1999. Net income
(before non-recurring items) grew to $473
million, up 23.6% over the prior year. On
a diluted basis, earnings per share grew to
$1.51, almost 22% above 1999. This year’s
revenue, profits and earnings per share
would have been even higher had it not
been for the strength of the dollar in the
global currency markets.
With more than 650 offices in 127 countries, we
believe our unparalleled reach is only exceeded
by the quality of our people and the services
and counsel they provide to Clients. And our
overall Client roster, especially those Clients
our companies serve across multiple markets
and multiple disciplines, is second to none.
Our agency networks continued to win new
business on an impressive scale. Net new
business billings of approximately $2.6 billion
helped drive our growth and signaled continued
Client confidence in the Interpublic companies
and the quality of their offerings.
Our company’s financial condition continues
to be excellent, with a strong balance
sheet and solid cash position. Interpublic’s
sound financial management and cost-
containment policies have helped to maintain
and improve our margins.
This year, Interpublic reached a landmark
in its evolution as a marketing services
company. In 1994, advertising represented
95 percent of our business. In 2000, for the
first time, our business was almost evenly
balanced between advertising and other
marketing communications and marketing
services. Our philosophy of owning and
growing marketing services businesses in a
wide array of sectors should prove important
to both the short-term and long-term
horizons of our investors.
It is important to note that this has been a
cumulative gain, for these disciplines
complement each other and enable further
aggressive growth for the entire company.
1 / OPPOSITE PAGE: PHILIP H. GEIER, JR. & JOHN J. DOONER, JR., THE INTERPUBLIC GROUP OF COMPANIES, INC.
2000 > The Interpublic Group of Companies, Inc.
3
This diversification of our business has
been a deliberate strategy to expand beyond
traditional advertising in order to provide
Clients with both the consumer insights
and marketing communications services that
help them build their businesses. In this
regard, Interpublic is truly a communications
partner capable of providing expertise which
is vital to global and local Clients alike.
Growth in the year 2000 was marked by
a number of acquisitions that significantly
expanded Interpublic’s portfolio of
resources. This is not simply a matter of
buying volume, but a deliberate effort
to create a group of competencies that reflects
our strategic priorities.
As the global marketing environment grows
more complex, Clients are consolidating
their accounts both geographically and
across disciplines. Interpublic is committed
to expanding its charter to enable all our
companies to provide integrated marketing
solutions to their Clients’ needs.
The acquisition in November of Deutsch,
Inc., brings one of the most highly regarded
U.S. advertising and integrated marketing
communications agencies into The Interpublic
Group. Deutsch had 2000 billings of more
than $1.5 billion, quadrupling in size over
the last three years to become the nineteenth
largest agency overall in the United States.
Deutsch shares our goal of offering a broad
range of the highest-quality marketing
communications capabilities and top-level
strategic and creative services. In addition to
its traditional advertising capability, it includes
operations in sales promotion, direct marketing,
public relations, event marketing, online
communications and urban/youth marketing.
In April, Interpublic made its first major foray
into marketing research through the acquisition
of NFO WorldGroup, one of the world’s leading
providers of research-based marketing information
and counsel. With global reach, a blue-chip
Client base and broad range of diagnostic
research products and services, NFO’s services
will also provide a feedback mechanism for
Interpublic’s advertising, marketing and PR
professionals to measure the effectiveness of
their work so that messages can be refined to
reach their targets more precisely. Since the
acquisition, we’ve already seen benefits from
introducing NFO’s services to a number of
Interpublic Clients.
Jack Morton Worldwide, Interpublic’s experiential
events and meetings unit, was formed through
the merger of The Jack Morton Company and
the Communications Group of Caribiner
International. The successful acquisition of
Caribiner and subsequent integration of these
two innovative organizations has created the
world’s largest company in this fast-growing
specialized marketing services capability.
In the specialty of recruitment advertising,
Interpublic acquired Nationwide Advertising
Service, a leading agency in this field. NAS serves
over 4,000 corporate Clients throughout the U.S.
McCann-Erickson WorldGroup continued to
lead the advertising industry in 2000, with
another year of outstanding growth and new
business results, along with unprecedented levels
of industry recognition, including Adweek’s
“global agency of the year” for an extraordinary
third year in a row.
For the fifth straight year, McCann won more
than $1 billion in net new billings, including at
least three U.S. accounts in the $100+ million
range. It also added a growing number of new
worldwide Clients from outside the United
States to its list of global Clients – already the
industry’s most extensive.
McCann also installed new top management
last year, naming Jim Heekin as Chairman
and CEO of McCann-Erickson WorldGroup,
the overall multi-unit global marketing
communications organization, as well as of
McCann-Erickson Advertising Worldwide.
Following the late 1999 consolidation of
Lowe and Lintas into Lowe Lintas & Partners
Worldwide, we saw, in 2000, their emergence
into a powerful new agency brand, with a strong
management team, superior creative product
and the clout of the fourth-largest global agency
group in the world. Their recent recognition
as U.K. and European “agency of the year” is a
testimony to their success.
Interpublic’s other operating units also reported
strong growth. Two of our public relations com-
panies, Weber and Shandwick, combined to form
Weber Shandwick Worldwide, now the world’s
number one global public relations consultancy.
In just three years, Octagon, Interpublic’s sports
marketing capability, has come of age, fulfilling
our goal to be a world leader in this discipline.
Octagon’s success illustrates the benefits of the
cross-fertilization that Interpublic is fostering
across its networks. It is now the second-largest
sports marketing firm in the world, with
strong business lines in athlete representation,
sponsorship, consulting, event management
and ownership, motor sports and television
4
The Interpublic Group of Companies, Inc. > 2000
production and distribution. In 2000, Octagon
benefited from closer integration of the Brands
Hatch Group, acquired in 1999. It won a
15-year contract to run the British Grand Prix
at Silverstone, one of the most famous and
historic racing circuits, and acquired a
significant interest in the German soccer club
Eintracht Frankfurt. All of these developments
offer considerable opportunities to generate
additional business among Interpublic’s Clients.
This year Interpublic appointed Sean Orr, EVP
and CFO, and James Heekin, Chairman and
CEO of McCann-Erickson WorldGroup, to the
Board of Directors. And at year’s end, Interpublic
seamlessly completed a nine-month transition
period as John Dooner succeeded Phil Geier,
who retired after more than 20 years as Chairman
and CEO. John, a veteran of more than 25 years
with Interpublic, was Chairman and Chief
Executive Officer of McCann-Erickson
WorldGroup before being named President and
Chief Operating Officer of Interpublic in March.
Phil will continue his involvement with the
company as Chairman Emeritus and as an advi-
sor to the Interpublic Board.
Added to the new management team was Bruce
Nelson, in the newly created position of Executive
Vice President & Chief Marketing Officer. His role
is to help shape our portfolio strategy and to posi-
tion our current companies for higher growth.
In addition, he will take on a strategic marketing
role with our most senior major Clients.
The deliberate and carefully planned
management transition is a metaphor for
Interpublic’s continuing evolution as a global
leader in marketing communications,
having systematically grown our capabilities
in numerous non-advertising disciplines in
response to Clients’ evolving marketing needs.
This strategy enables us to provide Clients with
more integrated solutions across our network,
and to meet the challenge of building more
powerful global brands. Our ever-evolving
portfolio of tools and resources helps Clients
better understand their customers and create
more effective marketing solutions. We recognize
that our future success will be determined by
how well we are able to enhance the depth and
quality of our global Client partnerships.
Both Interpublic and our Clients recognize that the
nature of marketing is undergoing rapid change.
Clients rely on us to be ahead of the curve, to be
able to interpret the significance of change and its
impact on their brands and on their customers.
We are prepared to meet those changes with a new
vision and a new vitality as embodied in our new
generation of leadership, one grown from within
the company and sharing its values.
As global brands become more dominant, brands
themselves are taking on a new significance
to consumers. They are much more than just
names. They are a part of people’s lives, an
element in their identities, and a springboard
for building consumer relationships. Today
Interpublic offers Clients numerous options to
maintain and enhance those relationships,
bringing them ever closer to their customers in
more meaningful ways.
The outlook for this industry, and particularly
for Interpublic, is bright. Although there
have been reports of some cyclical softening in
the advertising market, it is important to note
that Interpublic is far more than a collection of
advertising agencies, and far more resilient
as a result of our diversification.
In an era when many Clients may be
re-evaluating their marketing strategies,
Interpublic now has opportunities to offer
and sell other competencies and consulting
services. We anticipate continued healthy
growth in those specialized communications
sectors that account for approximately half of
our business. At Interpublic, our focus has
always been on driving our Clients’ growth and
providing the tools required to help them
become smarter managers of their businesses.
In conclusion, we extend our thanks to all
our employees throughout the world for their
continuing efforts to drive Interpublic’s
outstanding achievements. And we gratefully
acknowledge the loyalty of our shareholders,
whose investment is a mark of confidence
in our vision.
PHILIP H. GEIER, JR.
Chairman Emeritus
JOHN J. DOONER, JR.
Chairman and Chief Executive Officer
2000 > The Interpublic Group of Companies, Inc.
5
Philip H.Geier, Jr. > 20 Years of Leadership:
Few people have been as influential as Phil Geier in shaping the modern advertising
and marketing communications field. As the Chairman and CEO of Interpublic for 20 years,
Phil’s contribution goes far beyond what he delivered on behalf of our company.
He is the person who brought the advertising holding company concept to life.
In 1980, Phil took the helm of a company that
was regarded as a very large player: 8,000
employees around the world. Revenue of
$500 million and net income of $21 million.
4.5 million outstanding shares and a market
capitalization of almost $500 million. When he
became Chairman Emeritus at the end of 2000,
Interpublic was much larger: 50,000 employees
in 650 offices in 127 countries. Revenue of
$5.6 billion, generating net income of $473
million. About 320 million shares and a market
capitalization of $12+ billion. Over that 20-year
period, Interpublic’s stock had a compounded
annual growth rate of over 22%.
Phil’s success in being able to lead Interpublic to
that kind of extraordinary growth is a tribute to
his career-long commitment to providing Clients
with the best in communications resources.
On the outside, Phil’s reputation was that of a
deal-maker. No question that this was true.
Whether it was winning a new account, hiring
a major talent or acquiring a leading ad agency,
Phil genuinely loved putting together a good
deal. He had that passion and talent dating
back to his college days, when he was the eager
campus entrepreneur known as "Deals" Geier.
To those of us who have known Phil and who
had the good fortune to work with him and for
him – and his career within Interpublic has spanned
more than 40 years – it was clear that his love of
the deal stemmed from a deeper passion he had
about the business he was in. He loved advertising
and communications and had – and still has! – a
genuine enthusiasm for them, as he did for bring-
ing people together who shared his passion.
Everyone who knows him knows that Phil
lives and breathes his work. Some have said “too
much.” But it’s because of his commitment and
involvement that he developed the extraordinary
intuition about the business for which he is
famous, and which helped him guide Interpublic
to its current global stature and success.
Yet for all of his strengths, the real secret of
Phil Geier’s success has to have been his
unwavering devotion to helping his Clients.
His relentless pursuit of Client interests and
growth is something he has always been known
and admired for. No detail was too small to
escape his commitment when it came to helping
Clients grow their businesses. At the same
time, no task was too large as he acquired
and built global networks better positioned to
serve the quality Clients with whom he wanted
his company to work.
In tribute to his Client-centric ideals and
values, we are introducing a new annual award
at this year's Shareholders Meeting. It will
be called “The Philip H. Geier Award” and it
will honor the Interpublic manager or team
from any of our companies who most
embodies Phil’s one-of-a-kind commitment
to serving the needs of Clients and a relentless
pursuit of their business interests. Phil’s
Client-focused passion is an important legacy
for all of us as we seek to build further the
company he so much cared about and built
up so well. Through this award, we look to
both recognize Phil's enormous contributions
to Interpublic and to keep his values front and
center going forward.
JOHN J. DOONER, JR.
Chairman and Chief Executive Officer
ADVERTISING / DIRECT MARKETING / PUBLIC RELATIONS / HEALTHCARE
MARKETING RESEARCH / MEETINGS & EVENTS / MEDIA SERVICES
SPORTS MARKETING / SALES PROMOTION / CORPORATE ID & BRAND EQUITY
Create Leaders
>
We devise memorable advertising to
create desire. We build recognition through
corporate identity and brand equity. We
leverage the excitement and glory of sports to
generate consumer interest. We influence
perceptions through media outreach
and other public relations techniques. We
draw upon unparalleled expertise in media
planning and buying to define the time
and space for brand messages.
We gather deep insight into consumer habits
and thoughts through marketing research.
We produce dynamic meetings and events that
link brands and audiences. We establish
unique connections through direct marketing.
We build empathy and understanding
through healthcare communications. We
initiate action through sales promotion.
Interpublic is a group of best-of-class leaders,
consistently acknowledged for leadership in
their respective fields.
In addition, our unique collaborative and
action-oriented culture encourages and enables
these leaders to deliver interconnected
solutions for Clients across competencies and
across geographies.
The Interpublic Group includes many individual
units that are among the largest, the most
prominent, the most creative and the most
successful within their respective sectors.
McCann-Erickson WorldGroup is recognized as
the world’s leading integrated marketing
communications network, with top-tier firepower
across creative, marketing and media disciplines.
The Lowe Lintas & Partners Worldwide brand is
among the most respected for advertising and
marketing communications creativity, while
DraftWorldwide is an acknowledged leader in
direct marketing and CRM. Other Interpublic
brands that are newer to the family, such as
NFO WorldGroup, Jack Morton Worldwide,
FutureBrand, Deutsch and Octagon – to
mention just a few – highlight Interpublic's
leadership and capabilities in research, experiential
motivation, corporate branding, integrated
communications and sports marketing.
With its longtime Client-centric focus and its
long-held reputation for implementation,
Interpublic is committed to extending effective
strategic counsel and execution to those
companies that are leaders in their fields,
through every stage of the marketing process
around the world.
2000 > The Interpublic Group of Companies, Inc.
7
Advertising > DIRECT MARKETING / PUBLIC RELATIONS / HEALTHCARE
MARKETING RESEARCH / MEETINGS & EVENTS / MEDIA SERVICES
SPORTS MARKETING / SALES PROMOTION / CORPORATE ID & BRAND EQUITY
Create Desire
Create Desire
>
For the third consecutive year, McCann-Erickson Worldwide was named AdWeek’s
“Global Agency of the Year.” > Lowe Lintas & Partners was named Campaign magazine’s
“U.K. Agency of the Year” and Ad Age Global’s “European Agency of the Year.”
And for the second consecutive year won the Grand Prix at Cannes.
8
The Interpublic Group of Companies, Inc. > 2000
2
The Interpublic Group is the proud home of
many of the leading agency brands in advertising.
Each with its own unique creative offering, they
offer Clients unparalleled breadth of service,
quality and reach, both regionally and globally.
Once again, McCANN-ERICKSON
WORLDWIDE ADVERTISING demonstrated
why it is repeatedly recognized as the leading
global brand in advertising and in integrated
marketing communications. The agency’s
consistent record of outstanding growth and
new business results, combined with its reliable
delivery of effective communications, continues
to lead the industry. The McCann-Erickson
network continues to win extraordinary
levels of recognition.
Adweek magazine named McCann-Erickson
as its 2000 “global agency of the year”
for an extraordinary third year in a row.
Praising the agency for its “talent,
tools and teamwork,” and for its leadership
vision with regard to the “future of
communications,” the magazine called
attention to McCann-Erickson’s ability to
win and absorb major new business wins
while maintaining and even improving
the quality of its creative work. Illustrating
how the world’s largest agency network acts
“nimbly” on behalf of Clients, the magazine
profiled McCann’s expert ability to develop
coordinated global campaigns that can
be executed effectively in multiple regions
of the world.
It is important to note that this honor was
only one of many accorded the agency in 2000.
Its numerous “agency of the year” awards
around the world included European-wide
recognition for both McCann-Erickson and its
Universal McCann media network, a tribute
to McCann’s commitment to elevate and
integrate media in the overall strategic brand
communications process. And demonstrating
the unique breadth of its creativity, McCann
was able to take top positions at both a
worldwide awards show recognizing pure
creativity and at one based on effectiveness met-
rics. It had the unprecedented honor of win-
ning top awards for both integrated
marketing communications effectiveness and
advertising effectiveness.
Praising McCann-Erickson Worldwide Advertising for its “talent, tools and teamwork,”
and for its leadership vision with regard to the “future of communications,” Adweek called
attention to McCann-Erickson’s ability to win and absorb major new
business wins while maintaining and even improving the quality of its creative work.
2 / Clockwise from bottom center: Jim Heekin, Chairman & Chief Executive Officer / Don Dillon, Regional Director Europe, Africa, Middle East
Jens Olesen, Regional Director Latin America, Caribbean / Mark Gault, Regional Director North America
Peter Hamilton, Regional Director Asia Pacific / McCann-Erickson Worldwide Advertising
2000 > The Interpublic Group of Companies, Inc.
1 1
Jim Heekin was promoted to Chairman and CEO of McCann-Erickson WorldGroup,
the overall multi-unit global marketing communications organization, as well
as of McCann-Erickson Worldwide, the worldwide ad agency that remains number one in
the industry in size, geographic scope, and multinational accounts.
At the heart of McCann-Erickson’s
consistent year-in, year-out performance is
a dedicated Client-focused culture that
is determined to help Client brands
grow through measurable marketplace
success. While McCann installed new top
management last year, as John Dooner
moved up to become Chairman of
Interpublic, the agency’s intense energy and
drive toward innovation continued
unabated. Jim Heekin was promoted to
Chairman and CEO of McCann-Erickson
WorldGroup, the overall multi-unit
global marketing communications
organization, as well as of McCann-
Erickson Worldwide, the worldwide ad
agency that remains number one in the
industry in size, geographic scope, and
multinational accounts. Under Jim’s leadership,
McCann’s results-driven global culture
continued to evolve even as the company
expanded its roster of Clients, methods and
range of disciplines. Recognizing that the
key to effective communications is founded
on advanced proprietary knowledge, McCann
last year expanded its two ongoing
worldwide consumer research projects,
Media in Mind™ and McCann Pulse™,
as well as its Human Futures Development
employee learning program.
McCann-Erickson’s new business
performance was among the best in the
industry. Last year was its fifth straight
in winning substantially more than
$1 billion in net new billings, including
three U.S. accounts in the $100+ million
range. And although McCann already has
by far the industry’s most extensive list
of global Clients, the agency was in the
forefront of adding numerous new worldwide
Clients from outside the United States.
As Client corporations have sought
access to more and more marketing
communications disciplines to help them
sell their brands, McCann has responded
by building best-in-class worldwide
marketing communications networks
outside advertising. Last year, these newer
McCann-Erickson WorldGroup networks –
MRM Worldwide in the direct response
and customer relationship management
area; Momentum in the event and
promotion marketing arenas; FutureBrand
in the branding and packaging design field;
Zentropy Partners in the Internet and
digital space; Torre Lazur McCann Healthcare
WorldWide in healthcare communications;
and Weber Shandwick Worldwide as its
globally aligned partner for public relations –
all expanded the scope and global range of
their operations even as they recorded new
levels of achievement in professional quality.
Momentum and MRM, for example, both
were the big awards winners in important
shows in their respective sectors.
McCann-Erickson WorldGroup, as a
result of this marketing communications
expansion, is now working with more than
25 global Clients across three or more
disciplines. Last year alone, it added new
sector assignments around the world from
blue-chip companies as it continued to
build the level of global momentum that
has become so integrally associated with
the McCann-Erickson name.
1 2
The Interpublic Group of Companies, Inc. > 2000
The year 2000 also saw the emergence of a new Interpublic advertising brand:
Lowe Lintas & Partners Worldwide, a combination of two complementary networks:
the highly creative and entrepreneurial Lowe & Partners, and the globally and
professionally respected Ammirati Puris Lintas.
a global Interpublic network to provide
international resources for its Clients. These
agencies are Campbell-Ewald, Campbell
Mithun, Carmichael Lynch, Dailey & Associates,
Deutsch, Gotham, Hill Holliday (including Hill
Holliday/GMO), The Martin Agency, Mullen
(including Mullen/LHC), and Suissa Miller.
With worldwide billings of $12 billion and agencies
in 80 countries, Lowe Lintas & Partners is ranked
as the number four global agency network.
Early results for the new network are
encouraging. Lowe Lintas & Partners quickly
found itself winning additional assignments
from top world marketers as well as
delivering strong new business performance,
including several global wins. The agency
ranked first in growth in the United Kingdom,
and won top professional recognition,
including an unprecedented second consecutive
Grand Prix in Cannes, the AAAA O’Toole
Award for most admired large agency –
recognizing the totality of its work for all
Clients – and the Grand Prix and other top
awards from the U.K.’s Institute for Practitioners
of Advertising (IPA). Most recently, Lowe
Lintas & Partners was named “U.K. Agency of
The Year” by Campaign magazine, and
“European Agency of The Year” by Ad Age Global.
In addition to these two global powerhouse
advertising agency networks, Interpublic
includes a number of domestic advertising
agencies serving a mix of local, national and
international Clients. Each is aligned with
3
The year 2000 also saw the emergence of a new
Interpublic advertising brand: LOWE LINTAS
& PARTNERS WORLDWIDE, a combination
of two complementary networks: the highly
creative and entrepreneurial Lowe & Partners,
and the globally and professionally respected
Ammirati Puris Lintas. The new Lowe Lintas &
Partners aims to extend the intellectual rigor
and creativity which characterized the former
Lowe network to the blue-chip multinational
Clients and global reach of the former Lintas
network. As the marketing landscape evolves,
Lowe Lintas & Partners offers the timely
competitive advantage of effectiveness through
rigor on a global scale.
3 / Frank Lowe, Founder, Chairman & Chief Executive Officer / Lowe Lintas & Partners Worldwide
4 / Jerry Judge, President / Michael Sennott, Deputy Chairman / Lowe Lintas & Partners Worldwide
2000 > The Interpublic Group of Companies, Inc.
4
1 3
ADVERTISING Direct Marketing > PUBLIC RELATIONS / HEALTHCARE
MARKETING RESEARCH / MEETINGS & EVENTS / MEDIA SERVICES
SPORTS MARKETING / SALES PROMOTION / CORPORATE ID & BRAND EQUITY
Create: Connections
>
For the second consecutive year, DraftWorldwide was named AdWeek’s
“Number One U.S. Direct Marketing Agency.” > For the third consecutive year,
MRM Worldwide dominated the Direct Marketing Association ECHO Awards.
1 4
The Interpublic Group of Companies, Inc. > 2000
the second year. At the John Caples
International Awards, MRM took two first
prizes, and president and COO Pam Larrick was
awarded the Emerson Award for Lifetime Direct
Marketing Innovation and Service.
MRM’s proprietary tools help it move
fast and smart in generating CRM business
solutions. The CRMap provides a
proprietary roadmap for Clients to create
pre-emptive, profitable relationships with
their Clients. The Future Value Model
ascribes for Clients the monetary value for
each of its customers based on its return
on relationship. And the MRM Relationship
Center chronicles in real time the dynamics of
optimizing each customer’s “touch-points”
throughout his or her buying continuum.
MRM continued its global expansion with
new offices in Los Angeles and Panama City,
acquisitions in Mexico City, the United
Kingdom and Brazil, and additions to its
TPA custom publishing network.
officer, DraftWorldwide New York, into the
Direct Marketing Association Hall of Fame.
In the digital domain, the agency’s interactive
division, Draft Digital, acquired Capita
Technologies Inc., a 300-person end-to-end
e-commerce firm, skilled in Web and wireless
business strategy and implementation, and
systems and supply chain integration.
Other strategic acquisitions included AG
Worldwide, based in New York, which provides
strategic brand consulting, advertising and
marketing campaigns, e-business development
and interactive strategy and design; The Sloan
Group, a New York-based youth, entertainment
and digital marketing agency; and Group III
Promotions in Chicago, a leader in event
sponsorship and field and mobile marketing.
In Europe, DraftWorldwide acquired
Trampolin in Sweden, The Boroughloch Group
in Edinburgh, and Clouseau in Barcelona. In
Canada, Groupe Everest in Montreal, and
Fuel Advertising and Segal Communications
in Toronto were added to DraftWorldwide’s
successful Toronto operation.
McCANN RELATIONSHIP MARKETING
WORLDWIDE (MRM) is dedicated to making
Customer Relationship Management (CRM)
a powerful reality for Clients – strategically,
creatively and operationally. In 2000,
MRM had over $1 billion in billings and
operations in 31 countries.
5
The Interpublic Group offers direct,
promotional and digital marketing expertise
through two global agency networks:
DraftWorldwide, one of the world’s largest
integrated global marketing firms, and
McCann Relationship Marketing, a unit of
the McCann-Erickson WorldGroup.
DRAFTWORLDWIDE, which surpassed $3 billion
in billings in 2000, operates from more than 60
offices in 26 countries. The agency’s strength in
data management and modeling, as well as its
proprietary research tools, such as BRAND
ESSENCESM, enable it to identify, understand,
and target best prospects, and keep best customers.
In 2000, Adweek named DraftWorldwide the
number one U.S. Direct Marketing agency for
the second consecutive year; PROMO ranked it
the largest Promotional Marketing agency,
and it is a top 20 U.S. and top 25 global
agency brand, according to Advertising Age.
Awards for creative excellence included the
Global Marketing Services Agency of the Year,
won by DraftWorldwide France at the annual
Agencies Grand Prix; and the induction of
Emily Soell, vice chairman, chief creative
For the third consecutive year, MRM Worldwide
dominated the Direct Marketing Association
ECHO Awards, winning the automotive
industry category a third straight time and the
healthcare relationship marketing category for
6
5 / Clockwise from bottom center: Howard Draft, Chairman & Chief Executive Officer / Kevin Berg, President KBA Marketing / Jordan Rednor, President & Chief Operating Officer Worldwide
Yvonne Furth, President & Chief Operating Officer, U.S. / Perry Miele, President, International Group / Kevin McKay, President, Capita Technologies Inc. / DraftWorldwide
6 / Pamela Maphis-Larrick, President & Chief Operating Officer / Stan Rapp, Chairman & Chief Executive Officer / McCann Relationship Marketing
2000 > The Interpublic Group of Companies, Inc.
1 7
ADVERTISING / DIRECT MARKETING Public Relations > HEALTHCARE
MARKETING RESEARCH / MEETINGS & EVENTS / MEDIA SERVICES
SPORTS MARKETING / SALES PROMOTION / CORPORATE ID & BRAND EQUITY
Create: Influence
>
Effective January 1, 2001, Weber Shandwick Worldwide is the world’s largest
public relations company with leadership in public affairs, technology, consumer lifestyle and
entertainment, all high-growth areas. > Golin/Harris is a top ten ranked
global public relations company and it is consistently recognized by its
peers and Clients for its award-winning programs across its varied practice areas.
1 8
The Interpublic Group of Companies, Inc. > 2000
has partnered with some of the world’s best
known brand names and companies.
In 2000, a key survey of public relations
users ranked Golin/Harris as one of the top
players in consumer marketing. The firm
also won more than 30 regional and national
industry awards.
Golin/Harris expanded capabilities in
Washington, D.C., Frankfurt, London, Taiwan,
Tokyo, Hong Kong, Singapore and Mexico
City. Acquisition of The MWW Group, the
fourth-largest independent U.S. firm, specializing
in technology marketing, investor relations,
corporate communications, consumer and
business marketing and public affairs,
significantly reinforced the firm’s U.S. resources.
In 2001, Golin/Harris will be a $200+ million
agency with an expanded global footprint.
awards included six First Place CIPRAS,
and one PRSA Silver Anvil. In the United
Kingdom, PR Week UK awarded the agency
“Campaign of the Year” and “Best Crisis
Management Campaign.” The firm also won
three Gold Awards from the Institute of Public
Relations of Singapore, “Best Financial
Campaign” and “Best Event” awards from
Asian PR News and three Communicator
Awards. Cassidy & Associates, Washington,
D.C., was ranked the number one lobbying firm.
Acquisitions in Argentina, Dublin and Milan,
and establishment of offices in Guangzhou
China, and Denver, expanded the agency’s global
footprint. New programs and services include:
Signature, a proprietary approach to creating
brand value; Privacy, a suite of services
addressing online privacy issues; The European
Interactive PR Service, helping Clients take
advantage of new media; and a new internal
communications and change management unit.
In addition, Cassidy & Associates launched
Global Trade Strategies, a practice group focused
on foreign market access and trade issues.
GOLIN/HARRIS INTERNATIONAL is a global
strategic communications firm with a strong
marketing heritage and consumer focus that
specializes in corporate/employee communications,
public affairs, technology and financial relations.
It offers proprietary tools in such areas as brand
development and protection, strategic planning,
and analysis of analysts’ perceptions of publicly
traded companies. Golin/Harris had revenues
of more than $125 million in 2000.
The firm helps Clients build their brands
and their businesses by creating and managing
strong, trust-based relationships with their key
constituencies. For more than 40 years, the firm
7
The Interpublic Group delivers world-class
constituency management through its two
global public relations networks – Weber
Shandwick Worldwide and Golin/Harris
International. Each offers a full range of practice
areas and global representation, and each is
poised to address the twenty-first century public
relations needs of the world’s greatest companies.
Last fall, Interpublic announced the joining
of Shandwick International and Weber
Public Relations Worldwide into one global
brand: WEBER SHANDWICK WORLDWIDE,
effective January 1, 2001. With combined
2000 revenues of almost $325 million and
2,500 employees in 68 offices around the
world, Weber Shandwick Worldwide is the
world’s largest public relations agency, with
leadership in critical, high-growth market
areas – public affairs, technology, consumer
lifestyle and entertainment.
From its inception, the new entity represents
leading global brands in financial services,
automobiles, airlines, packaged goods and
technology, as well as a number of emerging brand
leaders in the e-commerce, telecommunications
and networking arenas. Multiple industry
7 / Scott Meyer, Chairman / Larry Weber, Chief Executive Officer / Weber Shandwick Worldwide
8 / Al Golin, Chairman / Rich Jernstedt, Chief Executive Officer / Dave Gilbert, President / Golin/Harris International
2000 > The Interpublic Group of Companies, Inc.
8
2 1
ADVERTISING / DIRECT MARKETING / PUBLIC RELATIONS Healthcare >
MARKETING RESEARCH / MEETINGS & EVENTS / MEDIA SERVICES
SPORTS MARKETING / SALES PROMOTION / CORPORATE ID & BRAND EQUITY
Create: Empathy
>
For the fourth consecutive year, Torre Lazur McCann Healthcare Worldwide
was named Med Ad News “Agency of the Year.” > Formed just three years ago,
Lowe Healthcare has grown into the world’s third-largest fully integrated
marketing and communications global healthcare network.
2 2
The Interpublic Group of Companies, Inc. > 2000
LHW employs a holistic approach to healthcare
marketing and communications in order to
help shape a brand rather than simply advertise
it. In 2000, Clients demonstrated their
endorsement of this approach through new
business and organic growth in prescription
brands, direct-to-consumer activities and digital
communications programs.
Internally, LHW successfully deployed a network
intranet to facilitate communication across
companies, and developed training initiatives to
fulfill its commitment to network knowledge
management and global best practices.
TORRE LAZUR McCANN HEALTHCARE
WORLDWIDE (TLMHWW) ranks fifth
in total worldwide gross income and first in
ex-U.S. gross income. With 38 offices in 31
cities and 15 countries, TLMHWW draws upon
the heritage of both Torre Lazur and McCann-
Erickson to provide a fully integrated
worldwide healthcare network with dual-agency
capability in every major market.
The year 2000 brought strong growth,
with new business wins including a global
assignment for the first product in a new
class of antibiotic drugs, and a U.S. program to
provide advertising, medical education,
public relations and DTC programs for a
respiratory product line.
Industry recognition included winning a total
of 74 creative awards and being named
the Med Ad News “Agency of the Year” for an
unprecedented fourth time.
TLMHWW acquired two U.S companies,
Adair-Greene (advertising) and Direct Approach
(direct marketing), and Caudex, a U.K. medical
education firm. Start-ups included Torre Lazur
McCann Brazil, Torre Lazur New Zealand and
McCann Healthcare Canada.
TLMHWW has developed a number of
proprietary tools and services that use new
digital technology. The U.S.-based Global
Launch Unit focuses solely on the rapid launch
of pharmaceutical brands in multiple
markets around the world. MELLENIUM III,
an Internet-based knowledge management
system, enables the agency to manage global
brands. PromoPulse.com is a comprehensive
Web-based marketing tool that facilitates
management, monitoring and evaluation of
all marketing activities.
ISO HEALTHCARE GROUP (ISO-HCG)
is a multinational healthcare management
consulting firm specializing in demand-
side growth strategies for Clients in the
pharmaceutical, medical device and biotech
healthcare markets. In the past year, ISO-
HCG developed several innovative software
products for the pharmaceutical industry,
expanded its high-level strategic consulting
services offering to Clients and globalized its
operations with the opening of a London office.
10
9
The Interpublic Group’s healthcare
communications networks offer a full range
of diversified services across all marketing
disciplines to help healthcare marketers
succeed in the face of increasingly complex
challenges within the healthcare industry.
LOWE HEALTHCARE WORLDWIDE
(LHW), part of The Lowe Group,
was established three years ago to provide
integrated marketing and communications
for the full range of prescription and
over-the-counter drugs, medical devices
and diagnostics, and other healthcare
brands. In 2000, LHW became the
largest Interpublic global healthcare
marketing and communications network
in revenue, and the industry’s third-
largest healthcare network worldwide.
LHW is currently composed of 10
wholly owned companies as well as
affiliations and alliances that together serve
Clients in 13 countries around the world.
This includes full-service communications
companies and advertising agencies,
as well as managed care marketing, medical
education, healthcare public relations and
digital communications firms.
9 / George Carteris, Executive Vice President & Chief Financial Officer / John R. Puglisi, Chairman & Chief Executive Officer, Lowe Healthcare Worldwide / Lowe Healthcare Group
10 / From upper left: Mike Lazur, Executive Vice President & Chief Creative Officer / Judy Capano, Executive Vice President & Director of Operations
Joe Torre, Chairman & Chief Executive Officer / Ralph DeVito, Chief Financial Officer / Torre Lazur McCann Healthcare Worldwide
2000 > The Interpublic Group of Companies, Inc.
2 5
ADVERTISING / DIRECT MARKETING / PUBLIC RELATIONS / HEALTHCARE
Marketing Research > MEETINGS & EVENTS / MEDIA SERVICES
SPORTS MARKETING / SALES PROMOTION / CORPORATE ID & BRAND EQUITY
Create: Insight
>
NFO WorldGroup maintains the world’s largest consumer behavior laboratory.
Its access panels have an ongoing dialogue with more than
3 million individuals in North America and Europe – one in every 100 households
in the United States belongs to an NFO panel.
2 6
The Interpublic Group of Companies, Inc. > 2000
NFO is the largest custom research firm in North America and,
with operations in nearly 40 countries, ranks as
11
one of the top three custom research firms in the world.
NFO WORLDGROUP is a leading provider
of research-based marketing information and
counsel to Clients around the globe. NFO is the
largest custom research firm in North America
and, with operations in nearly 40 countries,
ranks as one of the top three custom research
firms in the world. NFO fosters a culture of
entrepreneurial thinking and takes pride in its
ability to attract and retain the highest caliber
professionals in its industry.
Using leading-edge research techniques,
NFO determines what people think and feel and
do, in real time and over time, on both
a local and a multinational basis. Armed with
these insights and sophisticated analytic
techniques, NFO provides its Clients with
actionable advice to help develop better
products, build more powerful brands, and
design and implement better marketing
and advertising strategies. The company
is noted for its in-depth knowledge of
consumers, sectors and cultures, as well as its
in-depth understanding of Clients’ marketing
and business issues.
The company offers value-added, proprietary
products and services that address a Client’s
information needs throughout all phases of
the product life cycle, including brand
creation, brand tracking, brand repositioning,
advertising strategy and tactics, and the
evaluation of marketing effectiveness. Leading
products include NFO MarketMind for
corporate and brand image tracking and
NFO TRI*M for customer satisfaction and
stakeholder management issues.
Each year, more than 3,000 Client companies
rely on NFO for insights relevant to critical
business decisions. These Clients span a
variety of industry sectors including
packaged goods, healthcare, financial services,
information technology, telecommunications,
automotive and travel. NFO was also selected
by Forrester Research, a premier provider of
syndicated research on trends in technology
markets, as the primary data supplier for its
highly regarded TechnoGraphics® reports.
Founded in 1946, NFO has a heritage of
research innovation, having pioneered the
use of “panels” for custom research. Today
the company is the global leader in access
panels, maintaining an ongoing dialogue
with more than 3 million individuals in North
America and Europe – representing the
world’s largest consumer behavior laboratory.
Literally one in every 100 households in the
United States belongs to an NFO panel.
Building on this heritage of innovation,
the company established NFO Interactive
in 1996 – a unit which now offers a
wide array of Internet-enabled research
applications involving a panel of 1.5 million
online members in the United States and
Europe. Late in 2000, NFO created strategic
alliances with Lycos (one of the top Internet
portals) and NetZero (a leading Internet service
provider) that will significantly expand the
scope of NFO’s capabilities using the
Internet. A central focus of these and other
initiatives is the development of new
applications that uniquely leverage the power
of the Internet, moving well beyond the
simple transfer of traditional techniques to an
electronic environment.
11 / Bill Lipner, Chairman & Chief Executive Officer / Randy Smith, President & Chief Operating Officer / NFO WorldGroup
2000 > The Interpublic Group of Companies, Inc.
2 9
ADVERTISING / DIRECT MARKETING / PUBLIC RELATIONS / HEALTHCARE
MARKETING RESEARCH Meetings & Events > MEDIA SERVICES
SPORTS MARKETING / SALES PROMOTION / CORPORATE ID & BRAND EQUITY
Create Environments
>
Jack Morton Worldwide is the undisputed global leader in
corporate meetings and events and offers Clients
global scope and an unparalleled breadth of resources.
3 0
The Interpublic Group of Companies, Inc. > 2000
12
JACK MORTON WORLDWIDE is a
brand communications agency that helps
leading companies inspire their most
important audiences. Each year, the agency
educates and motivates the targeted customers,
prospects and employees of over 250
companies around the globe through live
meetings, events and targeted experiences
that are set in both physical and electronic
environments. Jack Morton is the undisputed
leader in its category, with over 1,200 strategic,
creative and production professionals in
more than 30 locations throughout the
United States, Europe and Asia-Pacific.
In 2000, Jack Morton significantly expanded
its business and industry leadership
through the successful acquisition and
integration of two companies. The April
acquisition of the Communications Group
of Caribiner International expanded the
agency’s global footprint, doubled its talent
pool and added a host of top-tier Clients.
The addition in January of a pre-eminent
environmental design firm, Production Design
Group, positions the company as a leader in
creating branded environments – including
retail installations, trade show exhibits and
broadcast and theatrical environments.
Jack Morton’s revenues increased nearly
100 percent in 2000, fueled by acquisitions
and the doubling of its e-learning and
environmental design and fabrication
revenues. The agency added significant
business through a number of new
Client relationships, while also
significantly growing its relationships
with existing Clients.
The agency received numerous awards
for the outstanding creativity and quality
of its work, including Communication
Arts’ Interactive Design Award, a
Broadcast Designers Association (BDA)
Silver Medal and six Worldmedals from
the New York Festivals.
Each year, Jack Morton Worldwide educates and motivates the targeted
customers, prospects and employees of over 250 companies around the globe through live
meetings, events and targeted experiences that are set in both physical and
electronic environments. Jack Morton is the undisputed leader in its category.
12 / Bill Morton, Chairman & Chief Executive Officer / Josh McCall, President & Chief Operating Officer / Jack Morton Worldwide
2000 > The Interpublic Group of Companies, Inc.
3 3
ADVERTISING / DIRECT MARKETING / PUBLIC RELATIONS / HEALTHCARE
MARKETING RESEARCH / MEETINGS & EVENTS / Media Services >
SPORTS MARKETING / SALES PROMOTION / CORPORATE ID & BRAND EQUITY
Create Time&Space
>
For the third time, Universal McCann won “Agency of the Year” at the European Media
and Marketing Awards. > For the third consecutive year, Initiative Media Worldwide
was ranked the number one Global Media Network by the Research/Analyst Institute.
3 4
The Interpublic Group of Companies, Inc. > 2000
ranked Initiative Media Worldwide the Number
One Global Media Network.
Group is a new division devoted to the
development of original television content.
In 2000, the global network opened offices in
the Czech Republic, Singapore and Thailand.
Initiative Media also formed several new
units: Initiative Partners, which provides
advertising agencies of all sizes with Initiative’s
full breadth of resources and tools; Fastbridge,
a worldwide center of expertise dedicated to
Internet,WAP/SMS and digital media; and
IM Consulting, a specific unit dedicated to
econometrics, budget modeling and other services.
In 1999, McCann-Erickson Worldwide
Advertising consolidated its media planning and
buying operations into one global organization,
UNIVERSAL McCANN. With a global network
of 3,400 people in 62 markets and billings
over $15 billion, it is one of the largest media
operations in the world.
In 2000, Universal McCann won approximately
$2 billion in new business worldwide, representing
growth of over 15% from 1999. At the European
Media and Marketing Awards, Universal McCann
and McCann-Erickson won the Grand Prize of
“Agency of the Year” for the third time.
Universal McCann launched several new
services this year. Universal Solutions is a
high-end media marketing consultancy
devoted to improving accountability and
driving incremental productivity. Universal
Interactive, a new online planning and
buying arm, currently operates in 32 offices
in 28 countries and commands total billings
of over $100 million. Universal McCann
Futures is a strategic research unit that focuses
on the evolving television landscape and
technologies. Universal McCann Entertainment
13
The Interpublic Group offers Clients the most
comprehensive media planning and buying
capabilities of any marketing communications
organization through Initiative Media Worldwide
and Universal McCann. These two networks
provide unparalleled global reach and resources.
INITIATIVE MEDIA WORLDWIDE is the
largest independent media services company in the
world, with nearly $14 billion in billings and a
network of 75 offices in 35 countries. As an
independent network, Initiative is able to offer
its power and reach to both advertising agencies
and to Clients directly.
While media planning and buying is its core
product offering, Initiative provides additional
services such as television programming and
sponsorship, product placement, direct response,
online and other interactive media, yellow pages
and proprietary newspaper and out-of-home
media services.
This year, Initiative acquired over $1.2 billion
in new business, including new Client wins and
major assignments from existing Clients.
For the third consecutive year, RECMA, the
independent Research /Analysis Institute,
The cornerstones of Universal McCann as
a global brand are the research and the tools
that demonstrate its commitment to being the
undisputed champion of consumer understanding:
Media in Mind™, the lynchpin of a strategy
to place the consumer in the “total” media
context, has been launched in 35 countries.
It follows over 60,000 consumers across the
globe, examining their lifestyles, aspirations and
product and brand consumption habits – the
largest such ongoing study in the media world.
Prophecy II is a software program that
harnesses Neural Networks for predicting most
efficient TV laydowns. Total Impact Planner
calculates accurate multimedia reach and
frequency totals.
Backed by almost 100 years of marketing
communications experience, Universal McCann
combines a deep understanding of media with
fresh insights into Clients’ businesses to provide
successful communications solutions.
14
13 / Marie-Jose Forissier, President & Chief Operating Officer / Lou Schultz, Chairman & Chief Executive Officer / Joseph Studley, Vice Chairman & Chief Finacial Officer / Initiative Media Worldwide
14 / Robin Kent, President / Ira Carlin, Chairman / Murray Dudgeon, EVP, Worldwide Operations Director / Universal McCann
2000 > The Interpublic Group of Companies, Inc.
3 7
ADVERTISING / DIRECT MARKETING / PUBLIC RELATIONS / HEALTHCARE
MARKETING RESEARCH / MEETINGS & EVENTS / MEDIA SERVICES
Sports Marketing > SALES PROMOTION / CORPORATE ID & BRAND EQUITY
Create Glory
>
Octagon is the communications industry’s leading company across the full
spectrum of sports marketing disciplines and practice areas, including motor sports
(the British Grand Prix), athlete representation (over 750 athletes represented),
sports television production and distribution, and event management.
3 8
The Interpublic Group of Companies, Inc. > 2000
marketing consultancy; event management
and ownership; global motor sports circuits
and events; and television production and
distribution. Octagon combines these skills
with marketing expertise to maximize return
for its Clients and partners.
Hewitt and Gustavo Kuerten, who finished the
year as the world’s number one, beating
Sampras and Agassi in back-to-back matches at
the Masters. Strategic acquisitions strengthened
Octagon’s capability in baseball, NFL Football
and NHL hockey.
The year 2000 was highly successful for
Octagon. Octagon Television turned
in a strong performance, particularly in cricket
and soccer, and with the introduction of
motor-sports business from the Brands Hatch
Group. The English Football Association
renewed an important contract for another
three years.
Octagon Motorsports won a 15-year contract
to run the British Grand Prix at Silverstone,
one of the most famous and historic racing
circuits in the world. In its first year as
part of Octagon, the Brands Hatch Group has
become more closely integrated, resulting in
new revenue streams. For example, Octagon
Television is now the television agency for all
Brands Hatch events and Octagon Marketing
is the exclusive sponsorship agency.
Octagon Athletic Representation performed
ahead of target, thanks to good performances
by key Clients such as Martina Hingis,
Anna Kournikova, Davis Love III, Lleyton
Octagon Marketing and Event Management
continued its focus on expanding the global
network and added agencies in key markets such
as Korea and Greece (for the 2004 Olympic
Games), as well as strengthening existing
operations through acquisitions in South Africa,
the United Kingdom and Australia.
Octagon also acquired a significant interest
in the German soccer club Eintracht Frankfurt
in June 2000. Subsequently, Germany won the
right to host the 2006 World Cup and the city
of Frankfurt will build a new stadium for the
team. Octagon has been awarded a contract
to operate and market that stadium, including
ownership of naming rights. This high-profile
partnership with the club is expected to
generate further business opportunities.
In addition to Octagon, Interpublic is further
involved in sports marketing through its
Kaleidoscope Sports and Entertainment and
Momentum organizations.
Octagon is already the second-largest sports marketing
firm in the world, with 43 offices in 21 countries. It has a Client
roster of more than 1,000 athletes, corporations, broadcasters,
sports events and governing bodies.
15
The Interpublic Group is the only marketing
communications and services group with a
global sports marketing capability. Octagon,
Interpublic’s global sports marketing unit,
competes at the highest levels in all aspects of
sports marketing and ranks among the top
agencies of the world.
OCTAGON owes its success to a unique
proposition: a marketing-led strategy with long-
term vision and understanding of partnership.
The backing of Interpublic and the group’s
marketing strength have been allied to achieve
the acquisition of some of the leading national
and regional companies in the sector.
Just three years after moving into the sector,
Octagon is already the second-largest sports
marketing firm in the world, with 43 offices
in 21 countries. It has a Client roster of more
than 1,000 athletes, corporations, broadcasters,
sports events and governing bodies. At the
core of its offering is an understanding of the
consumer – a unique skill in the marketplace.
In a complex, multifaceted market, Octagon
offers a full range of skills and services: athlete
representation; sponsorship and sports
15 / Frank Lowe, Founder, Chairman & Chief Executive Officer / Octagon
2000 > The Interpublic Group of Companies, Inc.
4 1
ADVERTISING / DIRECT MARKETING / PUBLIC RELATIONS / HEALTHCARE
MARKETING RESEARCH / MEETINGS & EVENTS / MEDIA SERVICES
SPORTS MARKETING Sales Promotion > CORPORATE ID & BRAND EQUITY
Create Action
>
Momentum had more winners than any other agency at the 2000 Pro Awards including
“Best Overall Promotion,” “Best Use of Television,” “Most Innovative Communications Strategy,”
“Best Activity Generating Brand Awareness/Trial” and “Best Business-to-Business Campaign.”
4 2
The Interpublic Group of Companies, Inc. > 2000
Through Experiential BrandingTM, Momentum’s
proprietary approach, promotional programs
engage consumers in personal, memorable
and valuable ways, to provide them with a
meaningful experience with a brand.
Momentum’s multidimensional set of services
is based on the premise that brands are
first and foremost providers of experiences.
In 2000, Momentum drove growth by adding
more than a dozen major global Clients to its
roster, and won assignments from existing Clients
to create new promotions, sponsorships, publicity
and events-based programs around the world.
Momentum received a number of industry
honors for its work, most notably the Sports
Business Journal’s ranking of Momentum as the
top consulting and marketing services firm, and
being one of the agencies featured in PROMO
magazine’s “Top 100 in 2000.”
At the Pro Awards 2000, Momentum had
more winners than any other agency. Awards
included Best Overall Promotion, Best Use of
Advertising, Most Innovative Communication
Strategy, Best Activity Generating Brand
Awareness/Trial, and Best Business-to-Business
Campaign. The 2000 Reggie Awards honored
Momentum with the Super Reggie, as well
as two Gold and one Bronze Reggie. And
in the United Kingdom, NDI Momentum
took two Silver and two Bronze prizes at the
British POP Awards.
Throughout the year, Momentum rapidly
expanded its global footprint through office
openings and strategic acquisitions. In North
America, it added a Cincinnati office and
expanded in St. Louis through the acquisition
of Waylon. The New York office also grew with
the acquisition of Diamond Promotions.
Expansion in Europe included developing a
field marketing capability in the United
Kingdom with the acquisition of GSD;
acquisition of a second agency in Germany;
addition of a second Spanish office in
Barcelona; and entry into several new markets:
Belgium, Poland, and Croatia.
In Asia, Momentum launched a joint venture in
Tokyo and entered the Hong Kong and Taiwan
markets. And in Latin America, it acquired
second offices in both Mexico and Brazil.
Momentum’s fusion of world-class expertise
and global reach will continue to help Clients
ensure that business and consumer customers
experience their brands in new, compelling
and differentiated ways, within an increasingly
crowded, competitive marketplace.
Interpublic’s DraftWorldwide and Zipatoni
agencies also provide Clients with full
promotion capabilities.
16
MOMENTUM WORLDWIDE is The
Interpublic Group’s global event marketing
and promotion company. It operates with
one simple clear mission: to bring a marketer’s
products and services to life. Momentum
has grown to be the largest Client-sponsored
presence marketing consulting company in
the world, with 2000 worldwide billings in
excess of $700 million.
Momentum offers special expertise with major
marquee entertainment, presence marketing
promotion and sporting events. As a recognized
leader in the emerging field of experiential
marketing, Momentum fulfills its mission with a
full range of capabilities, including consulting,
sales promotion, event production, presence
marketing, design and public relations. With
these service offerings, Momentum is dedicated
to supporting Clients worldwide, through its
52 offices in more than 35 countries.
Momentum has grown to be the largest Client-sponsored presence marketing consulting
company in the world, with 2000 worldwide billings in excess of $700 million. It offers special
expertise with major marquee entertainment, presence marketing promotion and sporting events.
16 / Mark Shapiro, Chairman & Chief Executive Officer, Momentum North America / Chris Weil, Regional Director, Momentum Europe
Mark Dowley, Chairman & Chief Executive Officer / Momentum Worldwide
2000 > The Interpublic Group of Companies, Inc.
4 5
ADVERTISING / DIRECT MARKETING / PUBLIC RELATIONS / HEALTHCARE
MARKETING RESEARCH / MEETINGS & EVENTS / MEDIA SERVICES
SPORTS MARKETING / SALES PROMOTION Corporate ID & Brand Equity >
Create Recognition
>
FutureBrand was named by UK Design Week as the
“Number One Global Branding and Packaging Consultancy.”
4 6
The Interpublic Group of Companies, Inc. > 2000
FutureBrand is a leading global brand consulting firm
that provides a full range of corporate and
consumer branding services and has a broad capability in
17
helping large corporations manage brands.
In 2000, FutureBrand won new assignments
from a variety of global corporations,
including some of the world’s leading names
in automobiles, transportation, food and
beverages, pharmaceuticals, chemicals,
finance, energy, and travel.
FutureBrand’s prominence in the industry
was recognized this year by a leading U.K.-
based trade magazine, Design Week. The
magazine ranked FutureBrand as the number
one global corporate identity design
consultancy, in terms of global fee income;
number one U.K. corporate identity
consultancy, in terms of U.K. fee income;
and the number one global branding and
packaging consultancy.
FUTUREBRAND is a leading global
brand consulting firm that provides a full
range of corporate and consumer branding
services including: brand strategy and
positioning, naming, corporate identity,
structural and packaging design, customer
environment branding, digital branding
and brand valuation.
With 26 offices in 19 countries, FutureBrand
is focused on key Client industries with
dedicated industry practice groups in:
technology and communications, consumer
products, financial services, travel and
hospitality, automotive, entertainment and
media and retail.
FutureBrand Coleman services a wide
range of market leaders in virtually every
consumer goods category, including: food,
beverages, health and beauty care,
pharmaceutical and household products.
FutureBrand Marketing Corporation
of America provides a range of
market and business strategy consulting
services, including: market strategy,
customer targeting, channels
management, new product development,
e-business strategy and product branding.
FutureBrand Hypermedia provides
a full spectrum of interactive, digital branding
and immersive branding services including
the development of Internet and intranet
sites as well as global brand management
utilizing proprietary tools and processes
such as Identilink, AssetLink and OnTrak.
The FutureBrand name itself stems from a
successful proprietary methodology
pioneered by the firm to help “create and build
great brands,” in response to the
need for growth into new markets and new
segments that is being experienced by most
global corporations today. This methodology
combines a rigorous strategic analysis of
market and industry landscape factors with
the highly creative resources needed in design
and communications. FutureBrand has a
broad capability in helping large corporations
manage brands both among their internal
and external audiences including employees,
customers, the financial community, the
media and other influencers.
17 / John Elkins, Chairman & Chief Executive Officer / FutureBrand
2000 > The Interpublic Group of Companies, Inc.
4 9
Board of Directors
>
FRANK J. BORELLI
REGINALD K. BRACK
JILL M. CONSIDINE
JOHN J. DOONER, JR.
PHILIP H. GEIER, JR.
(1995) 1,2,3,4
Senior Advisor,
(1996) 1,2,3,4,5
Former Chairman &
(1997) 1,2,4,5
Chairman &
(1995) 3,4
Chairman &
(1975) 3
Chairman Emeritus
Retired Chief Financial
Chief Executive Officer,
Chief Executive Officer,
Chief Executive Officer
Retired December 2000
Officer & Director,
Time Inc.
Marsh & McLennan
Companies, Inc.
The Depository Trust &
Clearing Corporation
>
JAMES R. HEEKIN
FRANK B. LOWE
MICHAEL A. MILES
LEIF H. OLSEN
SEAN F. ORR
J. PHILLIP SAMPER
(2000)
Chairman &
(1990)
Chairman &
(1999) 2,5
(1972) 1,2,3,4
(2000) 4
(1990) 2,5
Former Chairman &
President, Leif H. Olsen
Executive Vice President &
Managing Director,
Chief Executive Officer,
Chief Executive Officer,
Chief Executive Officer,
Investments, Inc.,
Chief Financial Officer
Gabriel Venture Partners
McCann-Erickson
WorldGroup
The Lowe Group
Philip Morris
Companies Inc.
Financial Managers &
Economic Consultants
(Year Elected) 1 Audit Committee 2 Compensation Committee 3 Executive Policy Committee 4 Finance Committee 5 Nominating Committee
5 0
The Interpublic Group of Companies, Inc. > 2000
Officers&Information
EXECUTIVE OFFICERS
JOHN J. DOONER, JR.
Chairman & Chief Executive Officer
SEAN F. ORR
Executive Vice President &
Chief Financial Officer
BARRY R. LINSKY
Executive Vice President,
Planning &Business Development
BRUCE NELSON
Executive Vice President &
Chief Marketing Officer
NICHOLAS J. CAMERA
Senior Vice President,
General Counsel & Secretary
THOMAS A. DOWLING
Senior Vice President, Financial Administration
C. KENT KROEBER
Senior Vice President, Human Resources
SUSAN WATSON
Senior Vice President, Investor Relations
STEVEN L. WEISS
Senior Vice President, Strategic Planning
STEVEN BERNS
Vice President & Treasurer
ALBERT S. CONTE
Vice President, Taxes & General Tax Counsel
FREDERICK MOLZ
Vice President & Controller
CORPORATE HEADQUARTERS:
1271 Avenue of the Americas
New York, New York 10020
212.399.8000
TRANSFER AGENT & REGISTRAR FOR
COMMON STOCK:
First Chicago Trust Company,
A Division of EquiServe
P.O. Box 2500
Jersey City, NJ 07303-2500
Stock of The Interpublic Group of Companies,
Inc., is traded on the New York Stock Exchange.
At December 31, 2000, there were 15,523
stockholders of record.
ANNUAL MEETING:
The annual meeting will be held on Monday,
May 14, 2001, at 9:30 a.m. EST in the
auditorium of The Equitable Center,
787 Seventh Avenue (between 51st and 52nd
Streets) New York, NY 10019.
AUTOMATIC DIVIDEND
REINVESTMENT PLAN:
An Automatic Dividend Reinvestment Plan is
offered to all stockholders of record. The Plan,
which is administered by First Chicago Trust
Company, provides a way to acquire additional
shares of Interpublic Common Stock in a systematic
and convenient manner that affords savings in
commissions for most stockholders. Those inter-
ested in participating in this plan are invited to
write for details and an authorization form to:
First Chicago Trust Company,
A Division of EquiServe,
Dividend Reinvestment Plan
P.O. Box 2598
Jersey City, NJ 07303-2598.
General Counsel & Secretary,
The Interpublic Group of Companies, Inc.
1271 Avenue of the Americas
New York, NY 10020.
Exhibits to the annual report will also be furnished,
but will be sent only upon payment of the
Company’s reasonable expense in furnishing them.
STOCK OWNER INTERNET
ACCOUNT ACCESS:
Stock owners of record may access their account
via the Internet. By accessing their account they
may view share balances, obtain current market
price of shares, historical stock prices, and the
total value of their investment. In addition, they
may sell or request issuance of dividend and cash
investment plan shares.
For information on how to access this secure site,
please call First Chicago Trust Company,
a division of EquiServe, toll-free at
(877) THE WEB7 (843.9327) or visit
www.gateway.equiserve.com.
REGISTRAR & TRANSFER AGENT:
First Chicago Trust Company,
A Division of EquiServe
P.O. Box 2500
Jersey City, NJ 07303-2500
For hearing impaired: 201.222.4955
FORM 10-K:
A copy of the Company’s annual report (Form
10-K) to the Securities and Exchange Commission
may be obtained without charge by writing to:
Nicholas J. Camera, Senior Vice President,
E-MAIL:
INTERNET:
equiserve@equiserve.com
www.equiserve.com
For more information regarding The Interpublic
Group of Companies, visit its website at
www.interpublic.com.
2000 > The Interpublic Group of Companies, Inc.
5 1
Interpublic Companies
>
1 / McCann-Erickson WorldGroup
2 / The Lowe Group
3 / DraftWorldwide
4 / Octagon
5 / Initiative Media Worldwide
6 / Weber Shandwick Worldwide
7 / Golin /Harris International
8 / Jack Morton Worldwide
9 / NFO WorldGroup
1 / The world’s largest integrated marketing
communications company includes
McCann-Erickson Advertising, McCann
Relationship Marketing, Momentum, Torre
Lazur McCann Healthcare, FutureBrand,
Zentropy Partners and its globally aligned
partner for public relations, Weber
Shandwick Worldwide.
representation; sponsorship and
sports marketing consultancy; event
management and ownership; global
motor-sports circuits and events and
television production and distribution.
5 / The world’s largest independent
media management company.
2 / The number four-ranked global
advertising agency network includes Lowe
Lintas & Partners Advertising and the Lowe
Healthcare Group of specialized healthcare
communications agencies.
6 / The world’s largest public
relations company.
7 / A top ten global public
relations company.
3 / The largest domestic and number-
three ranked global company
specializing in brand building, direct
and promotional marketing.
4 / A global leader in all aspects of sports
marketing including: athlete
8 / The global leader in experiential
marketing and corporate meetings
and events.
9 / The largest custom research firm
in North America and one of the top
three global research firms.
Interpublic U.S. Advertising Agencies > In addition to the above global companies, Interpublic has ten powerful domestic advertising
agencies serving a mix of local, national and international Clients. Each is aligned with a global Interpublic agency network to
provide international resources for its Clients. The ten agencies are: Campbell-Ewald, Campbell Mithun, Carmichael Lynch, Dailey & Associates,
Deutsch, Gotham, Hill Holliday (including Hill Holliday/GMO), The Martin Agency, Mullen (including Mullen/LHC) and Suissa Miller.
5 2
The Interpublic Group of Companies, Inc. > 2000
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C . 20549
-------------------
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
December 31, 2000 1-6686
-------------------
THE INTERPUBLIC GROUP OF COMP ANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-1024020
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1271 Avenue of the Americas 10020
New York, New York (Zip Code)
(Address of principal executive offices)
(212) 399-8000
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ------------------------
Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.___.
The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant was $10,934,268,765 as of March 27, 2001.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Common Stock outstanding at March 27, 2001: 312,407,679 shares.
- 1 -
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to Stockholders for the year ended December
31, 2000 are incorporated by reference in Parts I and II.
2. Portions of the Proxy Statement for the 2001 Annual Meeting of Stockholders
are incorporated by reference in Parts I and III.
PART I
Item 1. Business
--------
The Interpublic Group of Companies, Inc. was incorporated in Delaware in
September 1930 under the name of McCann-Erickson Incorporated as the successor
to the advertising agency businesses founded in 1902 by A.W. Erickson and in
1911 by Harri son K. McCann. It has operated under the Interpublic name since
January 1961. As used in this Annual Report, the "Registrant" or "Interpublic"
refers to The Interpublic Group of Companies, Inc. while the "Company" refers to
Interpublic and its subsidiaries.
Interpublic is a group of advertising and specialized marketing and
communications service companies that together represent one of the largest
resources of marketing and advertising expertise in the world. Interpublic's
agencies and allied companies operate in more than 650 offices in 127 countries
around the world and employ over 48,000 people.
Interpublic's business is conducted throughout the world principally
through two advertising and specialized marketi ng and communication services
systems, McCann-Erickson WorldGroup and The Lowe Group, plus a number of
additional marketing communications and marketing services networks, all as
described below.
MCCANN-ERICKSON WORLDGROUP is the leading worldwide marketing
communications company that includes McCann-Erickson Worldwide, the world's
largest advertising agency network, as well as specialized companies providing
relationship (direct) marketing, experiential (event) marketing, brand strategy
and identity development, healthcare communications and e-consultancy and
services.
THE LOWE GROUP with its flagship arm, Lowe Lintas & Partners Worldwide, is
one of the largest advertising agency networks in the world. The agency's
world-class creative reputation has been recognized with a number of prestigious
industry awards.
The other domestic stand -alone advertising agencies that operate
autonomously, but are aligned with the foregoing Interpublic networks include:
Campbell -Ewald, Campbell Mithun, Carmichael Lynch, Dailey & Associates, Deutsch,
Gotham, Hill Holliday (including GMO/Hill Holliday), The Martin Agency, Mullen
(including Mullen/LHC) and Suissa Miller.
The principal functions of an advertising agency are to plan and create
advertising programs for its clients and to place advertising in various media
such as television, cinema, radio, magazines, newspapers, direct mail, outdoor
and interactive electronic media. Planning advertising programs involves
analyzing the market for the particular product or service, creating the
appropriate advertising campaign to convey the agreed-upon benefit or message,
and choosing the appropriate media to reach the desired market most effectively.
The advertising agency develops a communication strategy and then creates
an advertising program, within the limits imposed by the client's advertising
- 2 -
budget, and places orders for space or time with the media that have been
selected.
In order to meet the growing and changing needs of our client base, we
offer many other marketing and media related services through our ownership of
companies that are closely related to our advertising business including:
DRAFTWORLDWIDE is one of the world's largest global marketing agencies,
specializing in brand building, direct and promotional marketing.
INITIATIVE MEDIA WORLDWIDE is the world's largest independent media
management and media buying company, providing media planning and buying
services at all levels.
OCTAGON is Interpublic's global sports marketing unit providing sponsorship
and sports marketing consultancy, event management and ownership, athlete
representation ownership, sports television programming, the production, sale
and distribution of sports television rights globally and the management of
global motor sports circuits and events.
NFO WORLDGROUP is the largest custom research firm in North America and a
leading provider of research-based marketing information.
THE ALLIED COMMUNICATIONS GROUP is Interpublic's leading -edge marketing
services group. The Group's c ompanies provide the Interpublic agencies and their
clients with a variety of specialized communications and marketing services
including public relations, marketing research, event creation, management and
consulting services. This group is comprised of the following autonomously run
companies:
THE GLOBAL PUBLIC RELATIONS GROUP includes two powerful public relations
companies: Weber Shandwick Worldwide, the largest global public relations agency
and Golin/Harris International, one of the ten largest U.S. public relations
company.
ISO HEALTHCARE GROUP is a multinational healthcare management consulting
firm, specializing in growth strategies for leading pharmaceutical, biotech and
medical device companies.
JACK MORTON WORLDWIDE creates, produces and coordinates live meetings and
events, environments, video, digital media and learning programs.
In addition to domestic operations, the Company provides services for
clients whose business is international in scope, as well as for clients whose
business is restricted to a single country or a small number of countries. It
has offices in Canada as well as in one or more cities in each of the following
countries:
EUROPE, AFRICA AND THE MIDDLE EAST
----------------------------------
Austria Greece Morocco Slovakia
Azerbaijan Hungary Namibia Slovenia
Bahrain Iceland Netherlands South Africa
Belgium Israel Nigeria Spain
Bulgaria Ireland Norway Sweden
Cameroon Italy Oman Switzerland
Croatia Ivory Coast Pakistan Tunisia
Czech Republic Jordan Poland Turkey
Denmark Kazakhstan Portugal Ukraine
Egypt Kenya Qatar United Arab Emirates
Estonia Kuwait Romania United Kingdom
Finland Latvia Russia Uzbekistan
France Lebanon Saudi Arabia Zambia
Germany Mauritius Senegal Zimbabwe
- 3 -
LATIN AMERICA AND THE CARIBBEAN
-------------------------------
Argentina Colombia Guatemala Peru
Barbados Costa Rica Honduras Puerto Rico
Bermuda Dominican Republic Jamaica Trinidad
Brazil Ecuador Mexico Uruguay
Chile El Salvador Panama Venezuela
ASIA AND THE PACIFIC
--------------------
Australia Korea Philippines Taiwan
Hong Kong Malaysia Singapore Thailand
India Nepal Sri Lanka Vietnam
Indonesia New Zealand South Korea
Japan People's Republic
of China
Operations in the foregoing countries are carried on by one or more
operating companies, at least one of which is either wholly owned by Interpublic
or a subsidiary or is a company in which Interpublic or a subsidiary owns a 51%
interest or more, except in Malawi and Nepal, where Interpublic or a subsidiary
holds a minority interest.
The Company also offers services in Albania, Aruba, the Bahamas, Belize,
Bolivia, Cambodia, Gabon, Ghana, Grand Cayman, Guadeloupe, Guam, Guyana, Haiti,
Reunion, Ivory Coast, Martinique, Nicaragua, Nigeria, Paraguay, Surinam, Uganda
and Zaire through association arrangements with local agencies operating in
those countries.
For information concerning revenues and long -lived assets on a geographical
basis for each of the last three years, reference is made to Note 12: Geographic
Areas of the Notes to the Consolidated Financial Statements in the Company's
Annual Report to Stockholders for the year ended December 31, 2000, which Note
is hereby incorporated by reference.
DEVELOPMENTS IN 2000
--------------------
The Company completed a number of acquisitions within the United States and
abroad in 2000.
See Note 4 to the Consolidated Financial Statements incorporated by
reference in this Report on Form 10-K for a discussion of acquisitions.
REVENUE
-------
The Company generates revenue from planning, creating and placing
advertising in various media and from planning and executing other
communications or marketing programs. Historically, the commission customary in
the industry was 15% of the gross charge ("billings") for advertising space or
time; more recently lower commissions have been negotiated, but often with
additional incentives paid for better performance. For example, an incentive
component is frequently included in arrangements with clients based on
improvements in an advertised brand's awareness or image, or increases in a
client's sales or market share of the products or services being advertised.
Under commission arrangements, media b ill the Company at their gross rates. The
Company bills these amounts to its clients, remits the net charges to the media
and retains the balance as its commission. Some clients, however, prefer to
compensate the Company on a fee basis, under which the Company bills its client
for the net charges billed by the media plus an agreed-upon fee. These fees
usually are calculated to reflect the Company's hourly rates and out -of-pocket
- 4 -
expenses incurred on the client's behalf, plus proportional overhead and a
profit mark-up.
Normally, the Company, like other agencies, is primarily responsible for
paying the media with respect to firm contracts for advertising time or space
placed on its clients' behalf. This is a problem only if the client is unable to
pay the Company because of insolvency or bankruptcy. The Company makes serious
efforts to reduce the risk from a client's insolvency, including (1) carrying
out credit clearances, (2) requiring in some cases payment of media in advance,
or (3) agreeing with the media that the Company will be solely liable to pay the
media only after the client has paid the Company for the media charges.
The Company also receives commissions from clients for planning and
supervising work done by outside contractors in the physical preparation of
finished print advertisements and the production of television and radio
commercials and other forms of advertising. This commission is customarily
17.65% of the outside contractor's net charge, which is the same as 15.0% of the
outside contractor's total charges including commission. With the expansion of
negotiated fees, the terms on which outstanding contractors' charges are billed
are subject to wide variations and even include in some instances the
elimination of commissions entirely, provided that there are adequate negotiated
fees.
The Company also derives revenue in many other ways, including the planning
and placement in media of advertising produced by unrelated advertising
agencies; the maintenance of specialized media placement facilities; the
creation and publication of brochures, billboards, point of sale materials and
direct marketing pieces for clients; the planning and carrying out of
specialized marketing research; public relations campaigns, creating and
managing special events at which clients' products are featured; and designing
and carrying out interactive programs for special uses.
The five clients of the Company that made the largest revenue contribution
in 2000 accounted individually for approximately 1.6% to 7.3% of such revenue
and in the aggregate accounted for over approximately 15% of such revenue.
Twenty clients of the Company accounted for approximately 26% of such revenue.
Based on revenue, the five largest clients of the Company are General Motors
Corporation, Nestle, Unilever and Johnson & Johnson and Coca-Cola. General
Motors Corporation first became a client of one of the Company's agencies in
1916 in the United States. Predecessors of several of the Lintas agencies have
supplied advertising services to Unilever since 1893. The client relationship
with Nestle b egan in 1940 in Argentina. While the loss of the entire business of
one of the Company's five largest clients might have a material adverse effect
upon the business of the Company, the Company believes that it is very unlikely
that the entire business of any of these clients would be lost at the same time,
because it represents several different brands or divisions of each of these
clients in a number of geographical markets - in each case through more than one
of the Company's agency systems.
Representation of a client rarely means that the Company handles
advertising for all brands or product lines of the client in all geographical
locations. Any client may transfer its business from an agency within the
Company to a compe ting agency, and a client may reduce its marketing budget at
any time.
The Company's agencies in many instances have written contracts with their
clients. As is customary in the industry, these contracts provide for
termination by either party on relatively short notice, usually 90 days but
sometimes shorter or longer. In 2000, however, 21% of revenue was derived from
clients that had been associated with one or more of the Company's agencies or
their predecessors for 20 or more years.
- 5 -
PERSONNEL
---------
As of January 1, 2001, the Company employed approximately 48,200 persons,
of whom nearly 20,100 were employed in the United States. Because of the
personal service character of the marketing communications business, the quality
of personnel is of crucial importance to continuing success. There is keen
competition for qualified employees. Interpublic considers its employee
relations to be satisfactory.
The Company has an active program for training personnel. The program
includes meetings and seminars throughout the world. It also involves training
personnel in its offices in New York and in its larger offices worldwide.
COMPETITION AND OTHER FACTORS
-----------------------------
The advertising agency and other marketing communications and marketing
services businesses are highly competitive. The Company's agencies and media
services must compete with other agencies and with other providers of creative
or media services which are not themselves advertising agencies, in order to
maintain existing client relationships and to obtain new clients. Competition in
the advertising agency business depends to a large extent on the client's
perception of the quality of an agency's "creative product". An agency's ability
to serve clients, particularly large international clients, on a broad
geographic basis is also an important competitive consideration. On the other
hand, because an agency's principal asset is its people, freedom of entry into
the business is almost unlimited and quite small agencies are, on occasion, able
to take all or some portion of a client's account from a much larger competitor.
Moreover, increasing size bring some limitations to an agency's potential
for securing new business, because many clients prefer not to be represented by
an agency that represents a competitor. Also, clients frequently wish to have
different products represented by different agencies. The fact that the Company
owns two separate worldwide agency systems and interests in other advertising
agencies gives it additional competitive opportunities.
The advertising and marketing communications businesses is subject to
government regulation, both domestic and foreign. There has been an increasing
tendency in the United States on the part of advertisers to resort to the
courts, indus try and self-regulatory bodies to challenge comparative advertising
on the grounds that the advertising is false and deceptive. Through the years,
there has been a continuing expansion of specific rules, prohibitions, media
restrictions, labeling disclosures and warning requirements with respect to the
advertising for certain products. Representatives within certain government
bodies, both domestic and foreign, continue to initiate proposals to ban the
advertising of specific products and t o impose taxes on or deny deductions for
advertising which, if successful, may have an adverse effect on advertising
expenditures.
The international operations of the Company still remain exposed to certain
risks which affect foreign operations of all kinds, such as local legislation,
monetary devaluation, exchange control restrictions and unstable political
conditions. In addition, international advertising agencies are still subject to
ownership restrictions in certain countries because they are considered an
integral factor in the communications process.
STATEMENT REGARDING FORWARD LOOKING DISCLOSURE
----------------------------------------------
Certain sections of this report, including "Business", "Competition and
Other Factors" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contain forward looking statements concerning future
events and developments that involve risks and uncertainties, including those
associated with the effect of national and regional economic conditions, the
ability of the Company to attract new clients and retain existing clients, the
- 6 -
financial success of clients of the Company, other developments of clients of
the Company, and developments from changes in the regulatory and legal
environment for advertising agencies around the world.
Item 2. Properties
----------
Most of the operations of the Company are conducted in leased pre mises, and
its physical property consists primarily of leasehold improvements, furniture,
fixtures and equipment. These facilities are located in various cities in which
the Company does business throughout the world. However, subsidiaries of the
Company own office buildings in Garden City, New York; Blair, Nebraska; Warren,
Michigan; Frankfurt, Germany; Sao Paulo, Brazil; Lima, Peru; Mexico City,
Mexico; Santiago, Chile; and Brussels, Belgium and own office condominiums in
Buenos Aires, Argentina; Bogota, Colombia; Manila, the Philippines; in England,
subsidiaries of the Company own office buildings in London, Manchester,
Birmingham and Stoke-on-Trent.
The Company's ownership of the office building in Frankfurt is subject to
three mortgages which became effective on or about February 1993. These
mortgages terminate at different dates, with the last to expire in February
2003. Reference is made to Note 10: Long-Term Debt, of the Notes to the
Consolidated Financial Statements in the Company's Annual Report to Stockholders
for the year ended December 31, 2000, which Note is hereby incorporated by
reference.
Item 3. Legal Proceedings
-----------------
Neither the Company nor any of its subsidiaries are subject to any pending
material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
There follows the information disclosed in accordance with Item 401 of
Regulation S-K of the Securities and Exchange Commission (the "Commission") as
required by Item 10 of Form 10-K with respect to executive officers of the
Registrant.
Name Age Office
---- --- ------
John J. Dooner, Jr. (1) 52 Chairman of the Board, President and
Chief Executive Officer
Sean F. Orr (1) 46 Executive Vice President, Chief
Financial Officer
Nicholas J. Camera 54 Senior Vice President, General
Counsel and Secretary
Thomas J. Dowling 49 Senior Vice President-Financial
Administration
C. Kent Kroeber 62 Senior Vice President-Human
Resources
- 7 -
Barry R. Linsky 59 Executive Vice President-Planning
and Business Development
Frank B. Lowe (1) 59 Chairman of the Board and Chief
Executive Officer of Lowe Lintas
and Partners
Frederick Molz 44 Vice President and Controller
Bruce S. Nelson 49 Executive Vice President and Chief
Marketing Officer
Susan V. Watson 48 Senior Vice President-Investor Relations
----------
(1) Also a Director
There is no family relationship among any of the executive officers.
The employment histories for the past five years of Messrs. Dooner, Lowe
and Orr are incorporated by reference to the Proxy Statement for Interpublic's
2001 Annual Meetin g of Stockholders.
Mr. Camera joined Interpublic in May, 1993. He was elected Vice President,
Assistant General Counsel and Assistant Secretary in June, 1994, Vice President,
General Counsel and Secretary in December, 1995, and Senior Vice President,
General Counsel and Secretary in February, 2000.
Mr. Dowling was elected Senior Vice President-Financial Administration of
Interpublic effective February, 2001. He joined Interpublic in January, 2000 as
Vice President and General Auditor.
Mr. Kroeber joined Interpublic in January, 1966 as Manager of Compensation
and Training. He was elected Vice President in 1970 and Senior Vice President in
May, 1980.
Mr. Linsky joined Interpublic in January, 1991 when he was elected Senior
Vice President-Planning and Business Development. Prior to that time, he was
Executive Vice President, Account Management of Lowe & Partners, Inc. Mr. Linsky
was elected to that position in July, 1980, when the corporation was known as
The Marschalk Company and was a subsidiary of Interpublic. Mr. Linsky was
elected Executive Vice President of Interpublic in February 2001.
Mr. Molz was elected Vice President and Controller of Interpublic effective
January, 1999. He joined Interpublic in August, 1982, and his most recent
position was Senior Vice President -Financial Operations of Ammirati Puris Lintas
Worldwide, a subsidiary of Interpublic, since April, 1994. He also held previous
positions in the Interpublic Controller's Department and Tax Department.
Mr. Nelson joined Interpublic in September, 2000 as Executive Vice
President, Chief Marketing Officer. Prior to that he had pursued a
multi-disciplinary career with McCann -Erickson for 19 years before leaving as
Executive Vice President, Director of Worldwide Accounts to serve as Vice
Chairman, Chief Knowledge Officer at Young & Rubicam Inc.
Ms. Watson joined Interpublic in October 2000. Prior to joining the
company, she was Vice President, Investor Relations at PepsiCo, Inc. and
previously was employed by Nielsen Media Research and Gannett Co. in a similar
capacity.
- 8 -
PART II
Item 5. Market for the Registrant's Common Equity and Rel ated Stockholder
-----------------------------------------------------------------
Matters
-------
The response to this Item is incorporated:
(i) by reference to the Registrant's Annual Report to Stockholders for the
year ended December 31, 2000. See the heading: Results by Quarter
(Unaudited), and Note 2: Stockholders' Equity, of the Notes to the
Consolidated Financial Statements and information under the heading
Transfer Agent and Registrar for Common Stock;
(ii) On October 5, 2000 the Registrant issued 20,764 shares of Interpublic
Stock and paid Pounds Sterling 1.19 million in cash to the former
shareholders of a company as part of the initial payment for 100% of
the shares of the company which was acquired in the third quarter of
2000. The shares of Interpublic Stock were valued at US$726,102 at the
date of issuance. The shares of Interpublic Stock were issued by the
Registrant without registration in an "off shore transaction" and
solely to "non U.S. persons" in reliance on Rule 903(b)3 ) of
Regulation S under the Securities Act.
(iii)On November 9, 2000, the Registrant issued 9,913 shares of Interpublic
Stock and paid US$1,000,000 in cash to the Seller of the business and
assets of a company representing the consideration paid at Closing.
The shares of Interpublic Stock were valued at US$400,000 at the date
of issuance. The shares of Interpublic Stock were issued by the
Registrant without registration in reliance on Section 4(2) under the
Securities Act, based on the sophistication of the acquired company's
former stockholder.
(iv) On December 31, 2000, the Registrant issued 53,666 shares of
Interpublic Stock to former shareholders in respect of the downpayment
for the acquisition of 100% of a company. The shares of Interpublic
Stock were valued at US$2,150,000 at the date of issuance. The shares
of Interpublic Stock were issued by the Registrant without
registration in reliance on Section 4(2) under the Securities Act,
based on the sophistication of the acquired company's former
stockholder.
(v) On October 24, 2000, the Registrant issued 26,792 shares of
Interpublic Stock and paid Austrian Dollars 36,515,274 in cash to the
former shareholders of a company as part of a deferred payment for 41%
of the shares of the company 45% of which was acquired in the first
quarter of 1997. The shares of Interpublic Stock were valued at
US$1,009,533 at the date of issuance. The shares of Interpublic Stock
were issued by the Registrant without registration in an "off shore
transaction" and solely to "non US persons" in reliance on Rule
903(b)(3) of Regulation S under the Securities Act.
(vi) On October 24, 2000, the Registrant issued 26,789 shares of
Interpublic Stock and paid Austrian Dollars 20,913,157 in cash to the
former shareholders of a company as part of a deferred payment for the
remaining 51% of the shares of the company 49% of which was acquired
in the first quarter of 1997. The shares of Interpublic Stock were
valued at US$1,009,533 at the date of issuance. The shares of
Interpublic Stock were issued by the Registrant without registration
in an "off shore transaction" and solely to "non US persons" in
reliance on Rule 903(b)(3) of Regulation S under the Securities Act.
(vii)On September 14, 2000, in respect of the second installment for the
acquisition of 80% of the company acquired in the second quarter of
1998, the Registrant issued 5,880 shares of Interpublic Stock and paid
Swiss Francs 695,752 in cash to the former shareholders of a company
- 9 -
as part of a deferred payment for the remaining 51% of the shares of
the company 49% of which was acquired in the first quarter of 1997.
The shares of Interpublic Stock were valued at US$225,542 at the date
of issuance. The shares of Interpublic Stock were issued by the
Registrant without registration in an "off shore transaction" and
solely to "non US persons" in reliance on Rule 903(b)(3) of Regulation
S under the Securities Act.
(viii) On November 7, 2000, in respect of the final payment for 31% and 20%
equity purchases, the Registrant issued 35,890 shares of Interpublic
Stock for the 31% and 62,274 shares of Interpublic Stock for the 20%.
The shares of Interpublic Stock were valued at US$3,866,903 at the
date of issuance.
Item 6. Selected Financial Data
-----------------------
The response to this Item is incorporated by reference to the Registrant's
Annual Report to Stockholders for the year ended December 31, 2000 under the
heading Selected Financial Data for Five Years.
Item 7. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
The response to this Item is incorporated by reference to the Registrant's
Annual Report to Stockholders for the year ended December 31, 2000 under the
heading Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
The response to this Item is incorporated by reference to the Registrant's
Annual Report to Stockholders for the year ended December 31, 2000 under the
heading Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
The response to this Item is incorporated in part by reference to the
Registrant's Annual Report to Stockholders for the year ended December 31, 2000
under the headings Financial Statements and Notes to the Consolidated Financial
Statements. Reference is also made to the Financial Statement Schedule listed
under Item 14(a) of this Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
Not applicable.
- 10 -
PART III
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
The information required by this Item is incorporated by reference to the
Registrant's Proxy Statement for its 2001 Annual Meeting of Stockholders (the
"Proxy Statement"), to be filed not later than 120 days after the end of the
2000 calendar year, except for the description of Interpublic's Executive
Officers which appears in Part I of this Report on Form 10-K under the heading
"Executive Officers of the Registrant".
Item 11. Executive Compensation
----------------------
The information required by this Item is incorporated by reference to the
Proxy Statement. Such incorporation by reference shall not be deemed to
incorporate specifically by reference the information referred to in Item
402(a)(8) of Regulation S-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The information required by this Item is incorporated by reference to the
Proxy Statement.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
The information required by this Item is incorporated by reference to the
Proxy Statement. Such incorporation by reference shall not be deemed to
incorporate specifically by reference the information referred to in Item
402(a)(8) of Regulation S-K.
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K
---------------------------------------------------------------
(a) Listed below are all fina ncial statements, financial statement
schedules and exhibits filed as part of this Report on Form 10-K.
1. Financial Statements:
See the Index to Financial Statements on page F -1.
2. Financial Statement Schedule:
See the Index to Financial Statement Schedule on page F-1.
3. Exhibits:
(Numbers used are the numbers assigned in Item 601 of Regulation S-K and
the EDGAR Filer Manual. An additional copy of this exhibit index immediately
precedes the exhibits filed with this Report on Form 10-K and the exhibits
transmitted to the Commission as part of the electronic filing of the Report.)
- 11 -
Exhibit No. Description
----------- -----------
3 (i) The Restated Certificate of Incorporation of the Registrant, as
amended is incorporated by reference to its Report on Form 10-Q
for the quarter ended June 30, 1999. See Commission file number
1-6686.
(ii) The By-Laws of the Registrant, amended as of February 19, 1991,
are incorporated by reference to its Report on Form 10 -K for the
year ended December 31, 1990. See Commission file number 1-6686.
4 Instruments Defining the Rights of Security Holders.
(i) Indenture, dated as of September 16, 1997 between Interpublic and
The Bank of New York is incorporated by reference to the
Registrant's Report on Form 10-Q for the quarter ended September
30, 1998. See Commission file number 1-6686.
(ii) The Preferred Share Purchase Rights Plan as adopted on July 18,
1989 is incorporated by reference to Registrant's Registration
Statement on Form 8 -A dated August 1, 1989 (No. 00017904) and, as
amended, by reference to Registrant's Registration Statement on
Form 8 dated October 3, 1989 (No. 00106686).
10 Material Contracts.
(a) Purchase Agreement, dated September 10, 1997, among The Interpublic
Group of Companies, Inc. ("Interpublic"), Morgan Stanley & Co.,
Incorporated, Goldman Sachs and Co. and SBC Warburg Dillon Read Inc.
is incorporated by reference to the Registrant's Report on Form 10-Q
for the quarter ended September 30, 1999. See Commission file number
1-6686.
(b) Employment, Consultancy and other Compensatory Arrangements with
Management.
Employment and Consultancy Agreements and any amendments or
supplements thereto and other compensatory arrangements filed with
the Registrant's Reports on Form 10-K for the years ended December
31, 1980 through December 31, 1998 inclusive, or filed with the
Registrant's Reports on Form 10-Q for the periods ended March 31,
2000, June 30, 2000 and September 30, 2000 are incorporated by
reference in this Report on Form 10-K. See Commission file number
1-6686. Listed below are agreements or amendments to agreements
between the Registrant and its executive officers which remain in
effect on and after the date hereof or were executed during the year
ended December 31, 2000 and thereafter, unless previously submitted,
which are filed as exhibits to this Report on Form 10 -K.
(i) James R. Heekin
---------------
(a) Employment Agreement dated as of October 25, 1993 between
Interpublic and James R. Heekin.
(b) Executive Special Benefit Agreement dated as of January
1, 1994 between Interpublic and James R. Heekin.
(c) Executive Severance Agreement dated as of January 1, 1998
between Interpublic and James R. Heekin.
(d) Employment Agreement dated as of January 1, 1998 between
Interpublic and James R. Heekin.
(e) Executive Special Benefit Agreement dated as of February
1, 1998 between Interpublic and James R. Heekin.
- 12 -
(f) Supplemental Agreement to an Employment Agreement dated as
of March 28, 2000 between Interpublic and James R. Heekin.
(g) Supplemental Agreement to an Executive Severance Agreement
dated as of June 1, 2000 between Interpublic and James R.
Heekin.
(h) Executive Special Benefit Agreement dated as of January 1,
2000 between Interpublic and James R. Heekin.
(ii) Barry R. Linsky
---------------
(a) Supplemental Agreement to an Executive Special Benefit
Agreement dated as of June 30, 2000 between Interpublic
and Barry R. Linsky.
(b) Executive Special Benefit -Income Replacement Agreement
dated as of June 1, 2000 between Interpublic and Barry R.
Linsky.
(c) Supplemental Agreement dated as of March 26, 2001, between
Interpublic and Barry R. Linsky.
(iii)C. Kent Kroeber
---------------
(a) Supplemental Agreement to an Executive Special Benefit
Agreement dated as of June 30, 2000 between Interpublic
and C. Kent Kroeber.
(b) Executive Special Benefit -Income Replacement Agreement
dated as of June 1, 2000 between Interpublic and C. Kent
Kroeber.
(iv) Thomas J. Volpe
---------------
(a) Supplemental Agreement to an Executive Special Benefit
Agreement dated as of June 30, 2000 between Interpublic
and Thomas J. Volpe.
(b) Supplemental Agreement to an Executive Special
Benefit-Income Replacement Agreement dated as of June 30,
2000 between Interpublic and Thomas J. Volpe.
(c) Executive Special Benefit Agreement dated as of Marc h 21,
2000 between Interpublic and Thomas J. Volpe.
(d) Executive Special Benefit -Income Replacement Agreement
dated as of June 1, 2000 between Interpublic and Thomas J.
Volpe.
(v) Bruce Nelson
------------
(a) Employment Agreement dated as of September 5, 2000 between
Interpublic and Bruce Nelson.
(b) Executive Special Benefit Agreement dated as of September
1, 2000 between Interpublic and Bruce Nelson.
(c) Supplemental Agreement dated as of September 1, 2000 to an
Executive Special Benefit Agreement dated as of Janua ry 1,
1986 between Interpublic and Bruce Nelson.
- 13 -
(vi) Frank B. Lowe
-------------
(a) Employment Agreement dated as of January 1, 2001 between
Interpublic and Frank B. Lowe.
(b) Supplemental Agreement to an Employment Agreement dated as
of January 2, 2001 between Interpublic and Frank B. Lowe.
(c) Executive Special Benefit Agreement dated as of January
15, 2001 between Interpublic and Frank B. Lowe.
(c) Executive Compensation Plans.
(i) Trust Agreement, dated as of June 1, 1990 between Interpublic,
Lintas Campbell-Ewald Company, McCann-Erickson USA, Inc.,
McCann-Erickson Marketing, Inc., Lintas, Inc. and Chemical
Bank, as Trustee, is incorporated by reference to Registrant's
Annual Report o n Form 10-K for the year ended December 31,
1990. See Commission file number 1-6686.
(ii) The Stock Option Plan (1988) and the Achievement Stock Award
Plan of the Registrant are incorporated by reference to
Appendices C and D of the Prospectus dated May 4, 1989 forming
part of its Registration Statement on Form S-8 (No. 33-28143).
(iii) The Management Incentive Compensation Plan of the Registrant
is incorporated by reference to the Registrant's Report on
Form 10-Q for the quarter ended June 30, 1995. See Commission
file number 1-6686.
(iv) The 1986 Stock Incentive Plan of the Registrant is
incorporated by reference to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993. See Commission
file number 1-6686.
(v) The 1986 United Kingdom Stock Option Plan of the Registrant is
incorporated by reference to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1992. See Commission
file number 1-6686.
(vi) The Employee Stock Purchase Plan (1985) of the Registrant, as
amended, is incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993. See
Commission file number 1-6686.
(vii) The Long-Term Performance Incentive Plan of the Registrant is
incorporated by reference to Appendix A of the Prospectus
dated December 12, 1988 forming part of its Registration
Statement on Form S-8 (No. 33-25555).
(viii) Resolution of the Board of Directors adopted on February 16,
1993, amending the Long-Term Performance Incentive Plan is
incorporated by reference to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1992. See Commission
file number 1-6686.
(ix) Resolution of the Board of Directors adopted on May 16, 1989
amending the Long-Term Performance Incentive Plan is
incorporated by reference to Registrant's Report on Form 10-K
for the year ended December 31, 1989. See Commission file
number 1-6686.
(x) The 1996 Stock Incentive Plan of the Registrant is
incorporated by reference to the Registrant's Report on Form
10-Q for the quarter ended June 30, 1996. See Commission file
number 1-6686.
- 14 -
(xi) The 1997 Performance Incentive Plan of the Registrant is
incorporated by reference to the Registrant's Report on Form
10-Q for the quarter ended June 30, 1997. See Commission file
number 1-6686.
(d) Loan Agreements.
(i) Other Loan and Guaranty Agreements filed with the Registrant's
Annual Report on Form 10-K for the years ended December 31,
1988 and December 31, 1986 are incorporated by reference in
this Report on Form 10-K. Other Credit Agreements, amendments
to various Credit Agreements, Supplemental Agreements,
Termination Agreements, Loan Agreements, Note Purchase
Agreements, Guarantees and Intercreditor Agreements filed with
the Regist rant's Report on Form 10-K for the years ended
December 31, 1989 through December 31, 1999, inclusive and
filed with Registrant's Reports on Form 10-Q for the periods
ended March 31, 2000, June 30, 2000 and September 30, 2000 are
incorporated by reference into this Report on Form 10-K. See
Commission file number 1-6686.
(e) Leases.
Material leases of premises are incorporated by reference to the
Registrant's Annual Report on Form 10 -K for the years ended December
31, 1980 and December 31, 1988. See Commission file number 1-6686.
(f) Acquisition Agreement for Purchase of Real Estate.
Acquisition Agreement (in German) between Treuhandelsgesellschaft
Aktiengesellschaft & Co. Grundbesitz OHG and McCann-Erickson
Deutschland GmbH & Co. Management Property KG ("McCann-Erickson
Deutschland") and the English translation of the Acquisition
Agreement are incorporated by reference to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1 992. See Commission
file number 1 -6686.
(g) Mortgage Agreements and Encumbrances.
(i) Summaries in German and English of Mortgage Agreements between
McCann-Erickson Deutschland and Frankfurter Hypothekenbank
Aktiengesellschaft ("Frankfurter Hypothekenbank"), Mortgage
Agreement, dated January 22, 1993, between McCann-Erickson
Deutschland and Frankfurter Hypothekenbank, Mortgage
Agreement, dated January 22, 1993, between McCann-Erickson
Deutschland and Hypothekenbank are incorporated by reference
to Registrant's Annual Report on Form 10 -K for the year ended
December 31, 1993. See Commission file number 1-6686.
Summaries in German and English of Mortgage Agreement, between
McCann-Erickson Deutschland and Frankfurter Sparkasse and
Mortgage Agreement, dated January 7, 1993, between
McCann-Erickson Deutschland and Frankfurter Sparkasse are
incorporated by reference to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1992. See Commission
file number 1-6686.
(ii) Summaries in German and English of Documents creating
Encumbrances in favor of Frankfurter Hypothekenbank and
Frankfurter Sparkasse in connection with the aforementioned
Mortgage Agreements, Encumbrance, dated January 15, 1993, in
favor of Frankfurter Hypothekenbank, and Encumbrance, dated
January 15, 1993, in favor of Frankfurter Sparkasse are
incorporated by reference to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1992. See Commission
file number 1-6686.
- 15 -
(iii) Loan Agreement (in English and German), dated January 29, 1993
between Lintas Deutschland GmbH and McCann-Erickson
Deutschland is incorporated by reference to Registrant's
Annual Report on Form 10-K for the year ended December 31,
1992. See Commission file number 1-6686.
11 Computation of Earnings Per Share.
13 This Exhibit includes: (a) those portions of the Annual Report to
Stockholders for the year ended December 31, 2000 which are included
therein under the following headings: Financial Highlights; Report of
Management; Management's Discussion and Analysis of Financial Condition and
Results of Operations; Consolidated Balance Sheet; Consolidated Statement
of Income; Consolidated Statement of Cash Flows; Consolidated Statement of
Stockholders' Equity and Comprehensive Income; Notes to Consolidated
Financial Statements (the aforementioned Consolidated Financial Statements
together with the Notes to Consolidated Financial Statements hereinafter
shall be referred to as the "Consolidated Financial Statements"); Report of
Independent Accountants; Selected Financial Data for Five Years; Results by
Quarter (Unaudited); and Stockholders Information.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants: PricewaterhouseCoopers LLP
Consent of Independ ent Public Accountants: J.H. Cohn LLP
Consent of Independent Accountants: Arthur Andersen LLP
24 Power of Attorney to sign Form 10-K and resolution of Board of Directors re
Power of Attorney.
99 The Company filed the following reports on Form 8-K during the quarter
ended December 31, 2000:
(i) Senior Debt Indenture dated as of October 20, 2000, by The
Interpublic Group of Companies, Inc. and The Bank of New York,
Trustee, relating to the 7.875% Notes due 2005 is incorporated by
reference to Exhibit 99.1 of the Registrant's Form 8 -K dated October
24, 2000.
(ii) Underwriting Agreement dated as of October 17, 2000, relating to the
7.875% Notes due 2005 is incorporated by reference to Exhibit 99.2 of
the Registrant's Form 8 -K dated October 24, 2000.
- 16 -
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Registrant)
March 29, 2001 BY: /s/ John J. Dooner, Jr.
----------------------------------
John J. Dooner, Jr.
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Name Title Date
---- ----- ----
/s/ John J. Dooner, Jr. Chairman of the Board, March 29, 2001
------------------------- President and Chief
John J. Dooner, Jr. Executive Officer (Principal
Executive Officer)
/s/ Sean F. Orr Executive Vice President, March 29, 2001
------------------------- Chief Financial Officer
Sean F. Orr (Principal Financial
Officer) and Director
/s/ Frank J. Borelli Director March 29,2001
-------------------------
Frank J. Borelli
/s/ Reginald K. Brack Director March 29, 2001
-------------------------
Reginald K. Brack
/s/ Jill M. Considine Director March 29, 2001
-------------------------
Jill M. Considine
/s/ James R. Heekin Director March 29, 2001
-------------------------
James R. Heekin
- 17 -
/s/ Frank B. Lowe Director March 29, 2001
-------------------------
Frank B. Lowe
/s/ Michael A. Miles Director March 29, 2001
-------------------------
Michael A. Miles
/s/ Frederick Molz Vice President and March 29, 2001
------------------------- Controller (Principal
Frederick Molz Accounting Officer)
/s/ Leif H. Olsen Director March 29, 2001
-------------------------
Leif H. Olsen
/s/ J. Phillip Samper Director March 29, 2001
-------------------------
J. Phillip Samper
By: /s/ Nicholas J. Camera
----------------------
Nicholas J. Camera
- 18 -
F-1
INDEX TO FINANCIAL STATEMENTS
The Financial Statements appearing under the headings: Financial Highlights,
Report of Management; Management's Discussion and Analysis of Financial
Condition and Results of Operations, Consolidated Financial Statements, Notes to
Consolidated Financial Statements, Report of Independent Accountants, Selected
Financial Data for Five Years and Results by Quarter (Unaudited), accompanying
the Annual Report to Stockholders for the year ended December 31, 2000, together
with the report thereon of PricewaterhouseCoopers LLP dated February 26, 2001
are incorporated by reference in this report on Form 10-K. With the exception of
the aforementioned information and the information incorporated in Items 5, 6
and 7, no other data appearing in the Annual Report to Stockholders for the year
ended December 31, 2000 is deemed to be filed as part of this report on Form
10-K.
The following financial sta tement schedule should be read in conjunction with
the financial statements in such Annual Report to Stockholders for the year
ended December 31, 2000. Financial statement schedules not included in this
report on Form 10-K have been omitted because they are not applicable or the
required information is shown in the financial statements or the notes thereto.
Separate financial statements for the companies which are 50% or less owned and
accounted for by the equity method have been omitted because, considered in the
aggregate as a single subsidiary, they do not constitute a significant
subsidiary.
- 19 -
INDEX TO FINANCIAL STATEMENT SCHEDULE
Page
Report of Independent Accountants on
Financial Statement Schedule F-2
Financial Statement Schedule Required to be filed by
Item 8 of this form:
II Valuation and Qualifying Accounts F-3
- 20 -
F-2
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors and Stockholders of
The Interpublic Group of Companies, Inc.
Our audits of the consolidated financial statements referred to in our report
dated February 26, 2001, except for Note 15 which is as of March 19, 2001,
appearing in the 2000 Annual Report to Stockholders of The Interpublic Group of
Companies, Inc. (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, this financial statement schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
PRICEWATERHOUSECOOPERS LLP
--------------------------
New York, New York
February 26, 2001
- 21 -
F-3
SCHEDULE II
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 2000, 1999 and 1998
================================================================================
(Dollars in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
--------------------------------------------------------------------------------
Additions/(Deductions)
----------------------
Charged
Balance at Charged to to Other Balance
Beginning Costs & Accounts- Deductions- at End
Description of Period Expenses Describe Describe of Period
--------------------------------------------------------------------------------
Allowance for Doubtful Accounts - deducted from Receivables in the Consolidated
Balance Sheet:
2000 $60,565 $24,125 $3,630(1) $(18,717)(3) $64,923
1,503(5) (4,792)(4)
(1,391)(2)
1999 $54,060 $24,013 $5,148(1) $(23,765)(3) $60,565
2,934(5) (1,215)(2)
(610)(4)
1998 $44,581 $20,421 $6,699(1) $(17,038)(3) $54,060
2,111(5) (3,310)(4)
596(2)
-------------------
[FN]
(1) Allowance for doubtful acco unts of acquired and newly consolidated
companies.
(2) Foreign currency translation adjustment.
(3) Principally amounts written off.
(4) Reversal of previously recorded allowances on accounts receivable.
(5) Miscellaneous.
- 22 -
INDEX TO DOCUMENTS
------------------
Exhibit No. Description
----------- -----------
3 (i) The Restated Certificate of Incorporation of the Registrant, as
amended is incorporated by reference to its Report on Form 10-Q
for the quarter ended June 30, 1999. See Commission file number
1-6686.
(ii) The By-Laws of the Registrant, amended as of February 19, 1991,
are incorporated by reference to its Report on Form 10 -K for the
year ended December 31, 1990. See Commission file number 1-6686.
4 Instruments Defining the Rights of Security Holders.
(i) Indenture, dated as of September 16, 1997 between Interpublic
and The Bank of New York is incorporated by reference to the
Registrant's Report on Form 10-Q for the quarter ended September
30, 1998. See Commission file number 1 -6686.
(ii) The Preferred Share Purchase Rights Plan as adopted on July 18,
1989 is incorporated by reference to Registrant's Registration
Statement on Form 8-A dated August 1, 1989 (No. 00017904) and,
as amended, by reference to Registrant's Registration Statement
on Form 8 dated October 3, 1989 (No. 00106686).
10 Material Contracts.
(a) Purchase Agreement, dated September 10, 1997, among The
Interpublic Group of Companies, Inc. ("Interpublic"), Morgan
Stanley & Co., Incorporated, Goldman Sachs and Co. and SBC
Warburg Dillon Read Inc. is incorporated by reference to the
Registrant's Report on Form 10-Q for the quarter ended September
30, 1999. See Commission file number 1 -6686.
(b) Employment, Consultancy and other Compensatory Arrangements with
Management.
Employment and Consultancy Agreements and any amendments or
supplements thereto and other compensatory arrangements filed
with the Registrant's Reports on Form 10-K for the years ended
December 31, 1980 through December 31, 1998 inclusive, or filed
with the Registrant's Reports on Form 10-Q for the periods ended
March 31, 2000, June 30, 2000 and September 30, 2000 are
incorporated by reference in this Report on Form 10-K. See
Commission file number 1-6686. Listed below are agreements or
amendments to agreements between the Registrant and its
executive officers which remain in effect on and after the date
hereof or were executed during the year ended December 31, 2000
and thereafter, unless previously submitted, which are filed as
exhibits to this Report on Form 10-K.
(i) James R. Heekin
---------------
(a) Employment Agreement dated as of October 25, 1993
between Interpublic and James R. Heekin.
(b) Executive Special Benefit Agreement dated as of
January 1, 1994 between Interpublic and James R.
Heekin.
- 23 -
(c) Executive Severance Agreement dated as of January 1,
1998 between Interpublic and James R. Heekin.
(d) Employment Agreement dated as of January 1, 1998
between Interpublic and James R. Heekin.
(e) Executive Special Benefit Agreement dated as of
February 1, 1998 between Interpublic and James R.
Heekin.
(f) Supplemental Agreement to an Employment Agreement
dated as of March 28, 2000 between Interpublic and
James R. Heekin.
(g) Supplemental Agreement to an Executive Severance
Agreement dated as of June 1, 2000 between
Interpublic and James R. Heekin.
(h) Executive Special Benefit Agreement dated as of
January 1, 2000 between Interpublic and James R.
Heekin.
(ii) Barry R. Linsky
---------------
(a) Supplemental Agreement to an Executive Special
Benefit Agreement dated as of June 30, 2000 between
Interpublic and Barry R. Linsky.
(b) Executive Special Benefit-Income Replacement
Agreement dated as of June 1, 2000 between
Interpublic and Barry R. Linsky.
(c) Supplemental Agreement dated as of March 26, 2001
between Interpublic and Barry R. Lin sky.
(iii) C. Kent Kroeber
---------------
(a) Supplemental Agreement to an Executive Special
Benefit Agreement dated as of June 30, 2000 between
Interpublic and C. Kent Kroeber.
(b) Executive Special Benefit-Income Replacement
Agreement dated as of June 1, 2000 between
Interpublic and C. Kent Kroeber.
(iv) Thomas J. Volpe
---------------
(a) Supplemental Agreement to an Executive Special
Benefit Agreement dated as of June 30, 2000 between
Interpublic and Thomas J. Volpe.
(b) Supplemental Agreement to an Executive Special
Benefit-Income Replacement Agreement dated as of
June 30, 2000 between Interpublic and Thomas J.
Volpe.
(c) Executive Special Benefit Agreement dated as of
March 21, 2000 between Interpublic and Thomas J.
Volpe.
- 24 -
(d) Executive Special Benefit-Income Replacement
Agreement dated as of June 1, 2000 between
Interpublic and Thomas J. Volpe.
(v) Bruce Nelson
------------
(a) Employment Agreement dated as of September 5, 2000
between Interpublic and Bruce Nelson.
(b) Executive Special Benefit Agreement dated as of
September 1, 2000 between Interpublic and Bruce
Nelson.
(c) Supplemental Agreement dated as of September 1, 2000
to an Executive Special Benefit Agreement dated as
of January 1, 1986 between Interpublic and Bruce
Nelson.
(vi) Frank B. Lowe
-------------
(a) Employment Agreement dated as of January 1, 2001
between Interpublic and Frank B. Lowe.
(b) Supplemental Agreement to an Employment Agreement
dated as of January 2, 2001 between Interpublic and
Frank B. Lowe.
(c) Executive Special Benefit Agreement dated as of
January 15, 2001 between Interpublic and Frank B.
Lowe.
(c) Executive Compensation Plans.
(i) Trust Agreement, dated as of June 1, 1990 between
Interpublic, Lintas Campbell-Ewald Company,
McCann-Erickson USA, Inc., McCann -Erickson Marketing,
Inc., Lintas, Inc. and Chemical Bank, as Trustee, is
incorporated by reference to Registrant' s Annual Report
on Form 10-K for the year ended December 31, 1990. See
Commission file number 1-6686.
(ii) The Stock Option Plan (1988) and the Achievement Stock
Award Plan of the Registrant are incorporated by
reference to Appendices C and D of the Prospectus dated
May 4, 1989 forming part of its Registration Statement
on Form S-8 (No. 33-28143).
(iii) The Management Incentive Compensation Plan of the
Registrant is incorporated by reference to the
Registrant's Report on Form 10-Q for the quarter ended
June 30, 1995. See Commission file number 1-6686.
(iv) The 1986 Stock Incentive Plan of the Registrant is
incorporated by reference to R egistrant's Annual Report
on Form 10-K for the year ended December 31, 1993. See
Commission file number 1-6686.
(v) The 1986 United Kingdom Stock Option Plan of the
Registrant is incorporated by reference to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1992. See Commission file number 1-6686.
(vi) The Employee Stock Purchase Plan (1985) of the
Registrant, as amended, is incorporated by reference to
- 25 -
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993. See Commission file number
1-6686.
(vii) The Long-Term Performance Incentive Plan of the
Registrant is incorporated by reference to Appendix A of
the Prospectus dated December 12, 1988 forming part of
its Registration Statement on Form S-8 (No. 33 -25555).
(viii) Resolution of the Board of Directors adopted on February
16, 1993, amending the Long-Term Performance Incentive
Plan is incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December 31,
1992. See Commission file number 1-6686.
(ix) Resolution of the Board of Directors adopted on May 16,
1989 amending the Long-Term Performance Incentive Plan
is incorporated by reference to Registrant's Report on
Form 10-K for the year ended December 31, 1989. See
Commission file number 1-6686.
(x) The 1996 Stock Incentive Plan of the Registrant is
incorporated by reference to the Registrant's Report on
Form 10-Q for the quarter ended June 30, 1996. See
Commission file number 1-6686.
(xi) The 1997 Performance Incentive Plan of the Registrant is
incorporated by reference to the Registrant's Report on
Form 10-Q for the quarter ended June 30, 1997. See
Commission file number 1-6686.
(d) Loan Agreements.
(i) Other Loan and Guaranty Agreements filed with the
Registrant's Annual Report on Form 10 -K for the years
ended December 31, 1988 and December 31, 1986 are
incorporated by reference in this Report on Form 10-K.
Other Credit Agreements, amendments to various Credit
Agreements, Supplemental Agreements, Termination
Agreements, Loan Agreements, Note Purchase Agreements,
Guarantees and Intercreditor Agreements filed with the
Registrant's Report on Form 10-K for the years ended
December 31, 1989 through December 31, 1999, inclusive
and filed with Registrant's Reports on Form 10 -Q for the
periods ended March 31, 2000, June 30, 2000 and
September 30, 2000 are incorporated by reference into
this Report on Form 10-K. See Commission file number
1-6686.
(e) Leases.
Material leases of premises are incorporated by reference to the
Registrant's Annual Report on Form 10-K for the years ended
December 31, 1980 and December 31, 1988. See Commission file
number 1 -6686.
(f) Acquisition Agreement for Purchase of Real Estate.
Acquisition Agreement (in German) between
Treuhandelsgesellschaft Aktiengesellschaft & Co. Grundbesitz OHG
and McCann-Erickson Deutschland GmbH & Co. Management Property
KG ("McCann-Erickson Deutschland") and the English translation
of the Acquisition Agreement are incorporated by reference to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992. See Commission file number 1-6686.
- 26 -
(g) Mortgage Agreements and Encumbrances.
(i) Summaries in German and English of Mortgage Agreements
between McCann -Erickson Deutschland and Frankfurter
Hypothekenbank Aktiengesellschaft ("Frankfurter
Hypothekenbank"), Mortgage Agreement, dated January 22,
1993, between McCann-Erickson Deutschland and
Frankfurter Hypothekenbank, Mortgage Agreement, dated
January 22, 1993, between McCann-Erickson Deutschland
and Hypothekenbank are incorporated by reference to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993. See Commission file number
1-6686. Summaries in German and English of Mortgage
Agreement, between McCann-Erickson Deutschland and
Frankfurter Sparkasse and Mortgage Agreement, dated
January 7, 1993, between McCann-Erickson Deutschland and
Frankfurter Sparkasse are incorporated by reference to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992. See Commission file number
1-6686.
(ii) Summaries in German and English of Documents creating
Encumbrances in favor of Frankfurter Hypothekenbank and
Frankfurter Sparkasse in connection with the
aforementioned Mortgage Agreements, Encumbrance, dated
January 15, 1993, in favor of Frankfurter
Hypothekenbank, and Encumbrance, dated January 15, 1993,
in favor of Frankfurter Sparkasse are incorporated by
reference to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1992. See Commission file
number 1-6686.
(iii) Loan Agreement (in English and German), dated January
29, 1993 between Lintas Deutschland GmbH and
McCann-Erickson Deutschland is incorporated by reference
to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992. See Commission file number
1-6686.
11 Computation of Earnings Per Share.
13 This Exhibit includes: (a) those portions of the Annual Report to
Stockholders for the year ended December 31, 2000 which are included
therein under the following headings: Financial Highlights; Report of
Management; Management's Discussion and Analysis of Financial Condition and
Results of Operations; Consolidated Balance Sheet; Consolidated Statement
of Income; Consolidated Statement of Cash Flows; Consolidated Statement of
Stockholders' Equity and Comprehensive Income; Notes to Consolidated
Financial Statements (the aforementioned Consolidated Financial Statements
together with the Notes to Consolidated Financial Statements hereinafter
shall be referred to as the "Consolidated Financial Statements"); Report of
Independent Accountants; Selected Financial Data for Five Years; Results by
Quarter (Unaudited); and Stockholders Information.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants: PricewaterhouseCoopers LLP
Consent of Independent Public Accountants: J.H. Cohn LLP
Consent of Independent Accountants: Arthur Andersen LLP
24 Power of Attorney to sign Form 10-K and resolution of Board of Directors re
Power of Attorney.
99 The Company filed the following reports on Form 8-K during the quarter
ended December 31, 2000:
- 27 -
(i) Senior Debt Indenture dated as of October 20, 2000, by The
Interpublic Group of Companies, Inc. and The Bank of New York,
Trustee, relating to the 7.875% Notes due 2005 is incorporated by
reference to Exhibit 99.1 of the Registrant's Form 8 -K dated October
24, 2000.
(ii) Underwriting Agreement dated as of October 17, 2000, relating to the
7.875% Notes due 2005 is incorporated by reference to Exhibit 99.2 of
the Registrant's Form 8 -K dated October 24, 2000.
- 28 -
Exhibit 10(b)(i)(a)
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT made as of October 25, 1993 by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a corporation of the State of Delaware (hereinafter
referred to as "Interpublic" or the "Corporation"), and JAMES R. HEEKIN
(hereinafter referred to as "Executive").
In consideration of the mutual promises set forth herein the parties
hereto agree as follows:
ARTICLE I
---------
Term of Employment
------------------
1.01 Upon the terms and subject to the conditions set forth herein,
Interpublic or one of its subsidiaries will employ Executive for the period
beginning October 25, 1993 and ending on October 25, 1998, or on such earlier
date as the employment of Executive shall terminate pursuant to Article IV or
Article V. (The period during which Executive is employed hereunder is referred
to herein as the "term of employment" and Interpublic or whichever of the
aforementioned subsidiaries shall form time to time employ Executive pursuant to
this Agreement is referred to herein as the "Corporation"). Executive will serve
the Corporation during the term of employment.
ARTICLE II
----------
Duties
------
2.01 During the term of employment, Executive will in the course of
performing his duties hereunder:
(i) use his best efforts to promote the interests of the
Corporation and devote his full time and efforts to its business and
affairs;
(ii) perform such duties as the Corporation may from time to time
assign to him consistent with his position and title of President of
McCann-Erickson North America.
2.02 Executive shall report only to John Dooner or the then-current
Chief Executive Officer of McCann-Erickson Worldwide, and the respective
managements of the offices and operations constituting McCann -Erickson North
America shall report only to Executive.
2.03 During t he term of employment, unless otherwise agreed to by
Executive, Executive shall be based in the Corporation's New York office,
subject to the travel requirements of the position and duties hereunder.
ARTICLE III
-----------
Compensation
------------
3.01 The Corporation will compensate Executive for the duties
performed by him hereunder, including all services rendered as an officer or
director of the Corporation, by payment of a salary at the initial rate of
$400,000 per annum, which salary shall be payable in equal installments, which
the Corporation may pay at either monthly or semi-monthly intervals. In
- 29 -
addition, he will receive the compensation described in Article VII, subject to
conditions set forth therein.
3.02 The Corporation may, in addition, at any time increase the
compensation paid to Executive hereunder if the Corporation in its discretion
shall deem it advisable so to do in order to compensate him fairly for services
rendered to the Corporation.
ARTICLE IV
---------
Termination
-----------
4.01 Interpublic may terminate the employment of Executive hereunder:
(i) by giving Executive notice in writing within the first
twenty-four months after his employment commences hereunder, in which
event his employment shall terminate on the date specified in such
notice. In this event the Corporation will pay Exe cutive an amount
equal to the amount by which twenty-four months salary at his then
current rate exceeds the salary paid to him from the date his
employment commenced until the termination date, plus an amount equal
to twelve months salary, such payment to be made during the period
immediately following the termination date specified in such notice,
payable in successive equal monthly installments, each of which shall
be equal to one month's salary at the rate in effect at the time of
such termination.
(ii) by giving Executive notice in writing at any time specifying
a termination date not less than twelve (12) months after the date on
which such notice is given, if given subsequent to the commencement of
the twenty-fifth month of employment hereunder, in which event his
employment hereunder shall terminate on the date specified in such
notice, or
(iii) by giving him notice in writing at any time specifying a
termination date less than twelve months after the date on which such
notice is given if such notice is given subsequent to the commencement
of the twenty-fifth month of employment hereunder. In this event his
employment hereunder shall terminate on the date specified in such
notice and the Corporation shall thereafter pay him a sum equal to the
amount by which twelve months salary at his then current rate exceeds
the salary paid to him for the period from the date on which such
notice is given to the termination date specified in such notice. Such
payment shall be made during the period immediately following the
termination date specified in such notice, in successive equal monthly
installments each of which shall be equal to one month's salary at the
rate in effect at the time of such termination, with any residue in
respect of a period less than one month to be paid together with the
last installment.
4.02 Executive may at any time give notice in writing to the
Interpub lic specifying a termination date not less than one hundred twenty (120)
days after the date on which such notice is given, in which event his employment
hereunder shall terminate on the date specified in such notice.
4.03 Executive may at any time give notice in writing to Interpublic
specifying a termination date not less than one hundred twenty (120) days after
the date on which such notice is given, in which event his employment hereunder
shall terminate on the date specified in such notice.
4.04 If Executive dies before October 24, 1998, his employment
hereunder shall terminate on the date of his death.
- 30 -
ARTICLE V
---------
Covenants
---------
5.01 While Executive is employed hereunder by the Corporation he shall
not, without the prior written consent of the Corporation engage, directly or
indirectly, in any other trade, business or employment, or have any interest,
direct or indirect, in any other business, firm or corporation; provided,
however, that he may continue to own or may hereafter acquire any securities of
any class of any publicly-owned company or any company not engaged in the
advertising business, and he may engage in public speaking, writing,
educational, charitable and other similar endeavors, as to which endeavors
Executive agrees to keep Corporation generally apprised.
5.02 Executive shall use his best efforts to treat as confidential and
keep secret the affairs of the Corporation and shall not at any time during the
term of employment or thereafter, without the prior written consent of the
Corporation, divulge, furnish or make known or accessible to, or use for the
benefit of, anyone other than the Corporation and its subsidiaries and
affiliates any information of a confidential nature relating in any way to the
business of the Corporation or its subsidiaries or affiliates or their clients
and obtained by him in the course of his employment hereunder. For purposes
herein, confidential information includes, but is not limited to, trade secrets,
budgetary information, and client or Interpublic and Corporation strategic and
business plans.
5.03 If Executive materially breaches the provisions of Section 5.02,
Interpublic may, notwithstanding the provisions of Section 4.01, terminate the
employment of Executive at any time by giving him notice in writing specifying a
termination date. In such event, his employment hereunder shall terminate on the
date specifie d in such notice. If Executive violates the provisions of Section
5.01, Interpublic may give him notice specifying the nature of the violation and
giving Executive thirty days in which to cure his performance. In the event of a
continuing violation after such notice and cure period, Executive's employment
hereunder shall terminate on the date specified in such notice.
5.04 All records, papers and documents kept or made by Executive
relating to the business of the Corporation or its subsidiaries or affiliates or
their clients shall be and remain the property of the Corporation.
5.05 All articles invented by Executive, processes discovered by him,
trademarks, designs, advertising copy and art work, display and prom otion
materials and, in general, everything of value conceived or created by him
pertaining to the business of the Corporation or any of its subsidiaries or
affiliates during the term of employment, and any and all rights of every nature
whatever thereto, shall immediately become the property of the Corporation, and
Executive will assign, transfer and deliver all patents, copyrights, royalties,
designs and copy, and any and all interests and rights whatever thereto and
thereunder to the Corporation, without further compensation, upon notice to him
from the Corporation.
5.06 Following the termination of Executive's employment hereunder for
any reason, Executive shall not for a period of twenty-four (24) months from
such termination, if such termination occurs during the first two years of
employment hereunder, or for a period of twelve months is such termination
occurs subsequent to the first two years employment, either (a) solicit any
employee of the Corporation to leave such employ to enter the employ of
Executive or of any corporation or enterprise with which Executive is then
associated or (b) solicit or handle on Executive's own behalf or on behalf of
any other person, firm or corporation, the advertising, public relations, sales
promotion or market research business of any advertiser which is a client of the
Corporation at the time of such termination and as to which brand Executive
devoted services.
- 31 -
ARTICLE VI
----------
Assignment
----------
6.01 This Agreement shall be binding upon and enure to the benefit of
the successors and assigns of Interpublic, subject to Section 4.04 hereof.
Neither this Agreement nor any rights hereunder shall be assignable by Executive
and any such purported assignment by him shall be void.
ARTICLE VII
-----------
Additional Compensation
-------------------
7.01 Within 30 days of Executive's commencing employment pursuant to
this Agreement, the Corporation will pay Executive a sign-up bonus of $100,000.
7.02 Executive will be eligible during the term of employment, to
participate in the Management Incentive Compensation Plan ("MICP"), and to
receive an an nual bonus in an amount up to 50% of Executive's annual salary,
inclusive of any amount deferred pursuant to Section 7.03 below, subject to all
of the terms and conditions of the Plan. However, any awards pursuant to the
MICP, if any, shall be determined by the Corporation and shall be based on the
profits of McCann-Erickson Worldwide, Executive's individual performance and
management discretion. Notwithstanding the foregoing and subject to full
execution of this Agreement, the Co rporation agrees to award a bonus to
Executive for the calendar year 1993 of at lest $100,000, subject to deduction
of any applicable withholding taxes, and to pay such bonus by or before February
28, 1994. Also, subject to full execution of this Agreement, the Corporation
agrees to award a bonus to Executive for the calendar year 1994 of at least
$200,000, subject to deduction of any applicable withholding taxes, and to pay
such bonus in February 1995. The guaranteed portions of Executive's 1993 and
1994 bonuses referred to in this Section 7.02 will be paid to Executive whether
or not he is in the employ of the Corporation on the payment dates for such
bonuses.
7.03 Interpublic will enter into an Executive Special Benefit
Agreement ("ESBA") with Executive consistent with the terms as provided by the
Corporation to Executive in writing. Should Executive elect not to enter into
the ESBA, the deferred amount shall be added to his annual salary.
7.04 As soon as administratively feasible after execution of this
Agreement, Interpublic will use its best efforts to have the Compensation
Committee of the Board of Directors (the "Committee") grant Executive a pro rata
award for the 1991-1994 performance period and a full award for the 1993 -1996
performance period under the Interpublic Long-Term Performance Incentive Plan
("LTPIP"). With respect to the 1991-1994 performance period, an award equal to
1,500 perfor mance units tied to the cumulative compound profit growth of
McCann-Erickson North America will be recommended, with a minimum guaranteed
value at the end of the performance period of $100,000. With respect to the
1993-1996 performance period, the Corporation will recommend to the Committee an
award of 2,025 performance units, tied to the cumulative profit growth of
McCann-Erickson North America over the four -year period. In addition, options
covering 8,100 shares of Common Stock w ill be issued to Executive under the 1986
Stock Incentive Plan no later than November 1, 1993. These options will be 100%
exercisable as of January 1 1997. The payment of benefits under the LTPIP and
the terms of options under the 1986 Stock Incentive Plan will be subject to all
of the terms and conditions of those plans.
7.05 Interpublic will also use its best efforts to have the Committee
grant to Executive no later than November 1, 1993, subject to all of the terms
and conditions of the 1986 Stock Incentive Plan, an award of 11,500 restricted
shares of Interpublic Common Stock of which 2,500 shares shall be restricted for
one year from the date of grant, 4,500 shares shall have a restriction period
- 32 -
ending three years form the date of grant and 4,500 shares shall have a
restriction period ending five years from the date of grant. If the market value
of the 4,500 shares having the three year restriction period is less than
$125,000 on the date on which the restrictions lapse, Interpublic will pay
Executive such additional amount in cash that is necessary to ensure that the
cash payment together with the value of the shares on the date of lapse (based
on the closing price of the common stock on The New York St ock Exchange) shall
equal $125,000.
7.06 Interpublic will use its best efforts to have the Committee grant
to Executive no later than November 1, 1993 options to purchase an additional
12,000 shares of Interpublic Common Stock which will be subject to all of the
terms and conditions of the 1986 Stock Incentive Plan. Forty percent of these
options will be exercisable after a three-year holding period, thirty percent
will be exercisable after a four -year holding period and the balance will be
exercisable after a five -year holding period. The grant of these options shall
be at 85% of the market value of Interpublic common stock on the date the grant
is approved by the Committee.
7.07 Interpublic agrees to have its Management Human Resources
Committee elect Executive to membership in the Development Council and Executive
shall receive, at a minimum, all fringe benefits, vacation and perquisites given
to Executive, employees of Interpublic or the Corporation holding a similar
title and position. Executive will also have an annual automobile allowance of
$7,000 and the Corporation shall pay for garage parking in proximity to his
office.
7.08 The Corporation will also pay or reimburse Executive for the cost
of club membership in the amount of $10,000 per annum.
7.09 Should the Committee fail to make any or all of the awards
referred to in Sections 7.04, 7.05 and 7.06, the Corporation will take whatever
action is n ecessary to grant Executive compensation or other benefits of
equivalent value, subject to Executive's approval, which will not unreasonably
withheld.
ARTICLE VIII
------------
Agreement Entire
----------------
8.01 This Agreement constitutes the entire understanding between
Interpublic and Executive concerning his employment by Interpublic's
aforementioned subsidiaries and supersedes any and all previous agreements
between Executive and Interpublic or any of its subsidiaries concerning such
employment. T his Agreement may not be changed orally.
- 33 -
ARTICLE IX
-----------
Applicable Law
--------------
9.01 The Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: /s/ C. Kent Kroeber
-------------------------------------
Name: C. Kent Kroeber
Title:
By: /s/ JAMES R. HEEKIN
-------------------------------------
Name: JAMES R. HEEKIN
Title:
- 34 -
Exhibit 10(b)(i)(b)
EXECUTIVE SPECIAL BENEFIT AGREEMENT
-----------------------------------
AGREEMENT made as of January 1, 1994 by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC ., a corporation of the State of Delaware (hereinafter
referred to as "Interpublic") and JAMES R. HEEKIN (hereinafter referred to as
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive is in the employ of Interpublic and/or one or more
of its subsidiaries (Interpublic and its subsidiaries being hereinafter referred
to collectively as the "Corporation"); and
WHEREAS, Interpublic and Executive desire to enter into an Executive
Special Benefit Agreement which shall be supplementary to any employment
agreement or arrangement which Executive now or hereinafter may have with
respect to Executive's employment by Interpublic or any of its subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
---------
Death and Special Retirement Benefits
--------------------------------------
1.01 For purposes of this Agreement the "Accrual Term" shall mean the
period of seventy-two months beginning on the date of this Agreement and ending
on the day preceding the sixth anniversary hereof or on such earlier date on
which Executive shall cease to be in the employ of the Corporation.
1.02 The Corporation shall provide Executive with the following
benefits contingent upon Executive's compliance with all the terms and
conditions of this Agreement and Executive's satisfactory completion of a
physical examinat ion in connection with an insurance policy on the life of
Executive which Interpublic or its assignee (other than Executive) proposes to
obtain and own. Effective at the end of the Accrual Term, Executive's annual
compensation will be increased by $25,000 if Executive is in the employ of the
Corporation at that time.
1.03 If, during the Accrual Term or thereafter during a period of
employment by the Corporation which is continuous from the date of this
Agreement, Executive shall die while in the employ of the Corporation, the
Corporation shall pay to such beneficiary or beneficiaries as Executive shall
have designated pursuant to Section 1.07 (or in the absence of such designation,
shall pay to the Executor of the Will or the Administrator of the Estate of
Executive) survivor income payments of Eighty Two Thousand Five Hundred Dollars
($82,500) per annum for fifteen years following Executive's death, such payments
to be made on January 15 of each of the fifteen years beginning with the year
following the year in which Executive dies.
1.04 If, after a continuous period of employment from the date of this
Agreement, Executive shall retire from the employ of the Corporation so that the
first day on which Executive is no longer in the employ of the Corporation
occurs on or after Executive's sixtieth birthday, the Corporation shall pay to
Executive special retirement benefits at the rate of Eighty-Two Thousand Five
Hundred Dollars ($82,500) per annum for fifteen years beginning with the
calendar month following Executive's last day of employment, such payments to be
made in equal monthly installments.
- 35 -
1.05 If, after a continuous period of employment from the date of this
Agreement, Executive shall retire, resign, or be terminated from the employ of
the Corporation so that the first day on which Executive is no longer in the
employ of the Corporation occurs on or after Executive's fifty -fifth birthday
but prior to Executive's sixtieth birthday, the Corporation shall pay to
Executive special retirement benefits at the annual rates set forth below for
fifteen years beginning with the calendar month following Executive's last day
of employment, such payments to be made in equal monthly installments:
Last Day of Employment Annual Rate
On or after 55th birthday but prior to 56th birthday $ 57,750
On or after 56th birthday but prior to 57th birthday $ 62,700
On or after 57th birthday but prior to 58th birthday $ 67,650
On or after 58th birthday but prior to 59th birthday $ 72,600
On or after 59th birthday but prior to 60th birthday $ 77,550
1.06 If, following such termination of employment, Executive shall die
before payment of all of the installments provided for in Section 1.04 or
Section 1.05, any remaining installments s hall be paid to such beneficiary or
beneficiaries as Executive shall have designated pursuant to Section 1.07 or, in
the absence of such designation, to the Executor of the Will or the
Administrator of the Estate of Executive.
1.07 For purposes of Sections 1.03, 1.04 and 1.05, or any of them,
Executive may at any time designate a beneficiary or beneficiaries by filing
with the chief personnel officer of Interpublic a Beneficiary Designation Form
provided by such officer. Executive may at any time, by filing a new Beneficiary
Designation Form, revoke or change any prior designation of beneficiary.
1.08 If Executive shall die while in the employ of the Corporation, no
sum shall be payable pursuant to Sections 1.04, 1.05, 1.06, 2.01, 2.02 or 2.03.
1.09 In connection with the life insurance policy referred to in
Section 1.02, Interpublic has relied on written representations made by
Executive concerning Executive's age and the state of Executive's health. If
said representations are untrue in any material respect, whether directly or by
omission, and if the Corporation is damaged by any such untrue representations,
no sum shall be payable pursuant to Sections 1.03, 1.04, 1.05, 1.06, 2.01, 2.02
or 2.03.
1.10 It is expressly agreed that Interpublic or its assignee (other
than Executive) shall at all times be the sole and complete owner and
beneficiary of the life insurance policy referred to in Sections 1.02 and 1.09,
shall have the unrestricted right to use all amounts and exercise all options
and privileges thereunder without the knowledge or consent of Executive or
Executive's designated beneficiary or any other person and that neither
Executive nor Executive's designated beneficiary nor any other person shall have
any right, title or interest, legal or equitable, whatsoever in or to such
policy.
ARTICLE II
----------
Alternative Deferred Compensation
---------------------------------
2.01 If Executive shall, for any reason other than death, cease to be
employed by the Corporation on a date prior to Executive's fifty -fifth birthday,
the Corporation shall, in lieu of any payment pursuant to Article I of this
Agreement, compensate Executive by payment, at the times and in t he manner
specified in Section 2.02, of a sum computed at the rate of Twenty Fivey
Thousand Dollars ($25,000) per annum for each full year and proportionate amount
for any part year from the date of this Agreement to the date of such
termination during which Executive is in the employ of the Corporation with a
maximum payment of One Hundred Fifty Thousand dollars ($150,000). Such payment
- 36 -
shall be conditional upon Executive's compliance with all the terms and
conditions of this Agreement.
2.02 The aggregate compensation payable under Section 2.01 shall be
paid in equal consecutive monthly installments commencing with the first month
in which Executive is no longer in the employ of the Corporation and continuing
for a number of months equal to the number of months which have elapsed from the
date of this Agreement to the commencement date of such payments, up to a
maximum of 72 months.
2.03 If Executive dies while receiving payments in accordance with the
provisions of Section 2.02, any installments payable in accordance with the
provisions of Section 2.02 less any amounts previously paid Executive in
accordance therewith, shall be paid to the Executor of the Will or the
Administrator of the Estate of Executive.
2.04 It is understood that none of the payments made in accordance
with this Agreement shall be considered for purposes of determining benefits
under the Interpublic Pension Plan, nor shall such sums be entitled to credits
equivalent to interest under the Plan for Credits Equivalent to Interest on
Balances of Deferred Compensation Owing under Employment Agreements adopted
effective as of January 1, 1974 by Interpublic.
ARTICLE III
----------
Non-solicitation of Clients or Employees
-----------------------------------------
3.01 Following the termination of Executive's employment hereunder for
any reason, Executive shall not for a period of twenty-four months from such
termination, if such termination occurs during the first two years of employment
hereunder, or for a period of twelve months if such termination occurs
subsequent to the first two years of employment, either (a) solicit any employee
of the Corpo ration to leave such employ to enter the employ of Executive or of
any corporation or enterprise with which Executive is then associated or (b)
solicit or handle on Executive's own behalf or on behalf of any other person,
firm or corporation, the advertising, public relations, sales promotion or
market research business of any advertiser which is a client of the Corporation
at the time of such termination and as to which brand Executive devoted
services.
ARTICLE IV
----------
Assignment
-----------
4.01 This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of Interpublic. Neither this Agreement nor any rights
hereunder shall be subject in any matter to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge by Executive, and any such
attempted action by Executive shall be void. This Agreement may not be changed
orally, nor may this Agreement be amended to increase the amount of any benefits
that are payable pursuant to this Agreement or to accelerate the payment of any
such benefits.
- 37 -
ARTICLE V
----------
Contractual Nature of Obligation
--------------------------------
5.01 The liabilities of the Corporation to Executive pursuant to this
Agreement shall be those of a debtor pursuant to such contractual obligations as
are created by the Agreement. Executive's rights with respect to any benefit to
which Executi ve has become entitled under this Agreement, but which Executive
has not yet received, shall be solely the rights of a general unsecured creditor
of the Corporation.
ARTICLE VI
----------
Applicable Law
---------------
6.01 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: /s/ C. KENT KROEBER
-------------------------------------
C. KENT KROEBER
By: /s/ JAMES R. HEEKIN, III
-------------------------------------
JAMES R. HEEKIN, III
- 38 -
Exhibit 10(b)(i)(c)
EXECUTIVE SEVERANCE AGREEMENT
------------------------
This AGREEMENT ("Agreement") dated January 1, 1998 by and between The
Interpublic Group of Companies, Inc. ("Interpublic"), a Delaware corporation
(Interpublic and its subsidiaries being referred to herein collectively as the
"Company"), and JAMES R. HEEKIN (the "Executive").
W I T N E S S E T H
WHEREAS, the Company recognizes the valuable services that the
Executive has rendered thereto and desires to be assured that the Executive will
continue to attend to the business and affairs of the Company without regard to
any potential or actual change of control of Interpublic;
WHEREAS, the Executive is willing to continue to serve the Company but
desires assurance that he will not be materially disadvantaged by a change of
control of Interpublic; and
WHEREAS, the Company is willing to accord such assurance provided
that, should the Executive's employment be terminated consequent to a change of
control, he will not for a period thereafter engage in certain activities that
could be detrimental to the Company;
NOW, THEREFORE, in consideration of the Executive's continued service
to the Company and the mutual agreements herein contained, Interpublic and the
Executive hereby agree as follows:
ARTICLE I
RIGHT TO PAYMENTS
-----------------
Section 1.1. TRIGGERING EVENTS. If Interpublic undergoes a Change of
Control, the Company shall make payments to the Executive as provided in article
II of this Agreement. If, within two years following a Change of Control, either
(a) the Company terminates the Executive other than by means of a termination
for Cause or for death or (b) the Executive resigns for a Good Reason (either of
which events shall constitute a "Qualifying Termination"), the Company shall
make payments to the Executive as provided in article III hereof.
Section 1.2. CHANGE OF CONTROL. A Change of Control of Interpublic
shall be deemed to have occurred if (a) any person (within the meaning of
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "1934
Act")), other than Interpublic or any of its majority -controlled subsidiaries,
becomes the beneficial owner (within the meaning of Rule 13d-3 under the 1934
Act) of 30 percent or more of the combined voting power of Interpublic's then
outstanding v oting securities; (b) a tender offer or exchange offer (other than
an offer by Interpublic or a majority-controlled subsidiary), pursuant to which
30 percent or more of the combined voting power of Interpublic's then
outstanding voting securities was purchased, expires; (c) the stockholders of
Interpublic approve an agreement to merge or consolidate with another
corporation (other than a majority -controlled subsidiary of Interpublic) unless
Interpublic's shareholders immediately before the merger or consolidation are to
own more than 70 percent of the combined voting power of the resulting entity's
voting securities; (d) Interpublic's stockholders approve an agreement
(including, without limitation, a plan of liquidation) to sell or otherwise
dispose of all or substantially all of the business or assets of Interpublic; or
(e) during any period of two consecutive years, individuals who, at the
beginning of such period, constituted the Board of Directors of Interpublic
- 39 -
cease for any reason to constitute at least a majority thereof, unless the
election or the nomination for election by Interpublic's stockholders of each
new director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period. However, no
Change of Control shall be deemed to have occurred by reason of any transaction
in which the Executive, or a group of persons or entities with which the
Executive acts in concert, acquires, directly or indirectly, more than 30
percent of the common stock or the business or assets of Interpublic.
Section 1.3. TERMINATION FOR CAUSE. Interpublic shall have Cause to
terminate the Executive for purposes of Section 1.1 of this Agreement only if,
following the Change of Control, the Executive (a) engages in conduct that
constitutes a felony under the laws of the United States or a state or country
in which he works or resides and that results or was intended to result,
directly or indirectly, in the personal enrichment of the Executive at the
Company's expense; (b) refuses (except by reason of incapacity due to illness or
injury) to ma ke a good faith effort to substantially perform his duties with the
Company on a full-time basis and continues such refusal for 15 days following
receipt of notice from the Company that his effort is deficient; or (c)
deliberately and materially breaches any agreement between himself and the
Company and fails to remedy that breach within 30 days following notification
thereof by the Company. If the Company has Cause to terminate the Executive, it
may in fact terminate him for Cause for purposes of section 1.1 hereof if (a) it
notifies the Executive of such Cause, (b) it gives him reasonable opportunity to
appear before a majority of Interpublic's Board of Directors to respond to the
notice of Cause and (c) a majority of the Board of Directors subsequently votes
to terminate him.
Section 1.4. RESIGNATION FOR GOOD REASON. The Executive shall have a
Good Reason for resigning only if (a) the Company fails to elect the Executive
to, or removes him from, any office of the Company, including without limitation
membership on any Board of Directors, that the Executive held immediately prior
to the Change of Control; (b) the Company reduces the Executive's rate of
regular cash and fully vested deferred base com pensation ("Regular
Compensation") from that which he earned immediately prior to the Change of
Control or fails to increase it within 12 months following the Change of Control
by (in addition to any increase pursuant to section 2.2 hereof) at least the
average of the rates of increase in his Regular Compensation during the four
consecutive 12-month periods immediately prior to the Change of Control (or, if
fewer, the number of 12-month periods immediately prior to the Change of Control
during which the Executive was continuously employed by the Company); (c) the
Company fails to provide the Executive with fringe benefits and/or bonus plans,
such as stock option, stock purchase, restricted stock, life insurance, health,
accident, disability, incentive, bonus, pension and profit sharing plans
("Benefit or Bonus Plans"), that, in the aggregate, (except insofar as the
Executive has waived his rights thereunder pursuant to article II hereof) are as
valuable to him as those that he enjoyed immediately prior to the Change of
Control; (d) the Company fails to provide the Executive with an annual number of
paid vacation days at least equal to that to which he was entitled immediately
prior to the Change of Control; (e) the Company breaches any agreement between
it and the Executive (including this Agreement); (f) without limitation of the
foregoing clause (e), the Company fails to obtain the express assumption of this
Agreement by any successor of the Compa ny as provided in section 6.3 hereof; (g)
the Company attempts to terminate the Executive for Cause without complying with
the provisions of section 1.3 hereof; (h) the Company requires the Executive,
without his express written consent, to be based in an office outside of the
office in which Executive is based on the date hereof or to travel substantially
more extensively than he did prior to the Change of Control; or (i) the
Executive determines in good faith that the
Company has, without his consent, effected a significant change in his status
within, or the nature or scope of his duties or responsibilities with, the
Company that obtained immediately prior to the Change of Control (including but
not limited to, subjecting the Executive's activities and exercise of authority
to greater immediate supervision than existed prior to the Change of Control);
PROVIDED, HOWEVER, that no event designated in clauses (a) through (i) of this
sentence shall constitute a Good Reason unless the Executive notifies
- 40 -
Interpublic that the Company has committed an action or inaction specified in
clauses (a) through (i) (a "Covered Action") and the Company does not cure such
Covered Action within 30 days after such notice, at which time such Good Reason
shall be deemed to have arisen. Notwithstanding the immediately preceding
sentence, no action by the Company shall give rise to a Good Reason if it
results from the Executive's termination for Cause or death or from the
Executive's resignation for other than a Good Reason, and no action by the
Company specified in clauses (a) through (i) of the preceding sentence shall
give rise to a Good Reason if it results from the Executive's Disability. If the
Executive has a Good Reason to resign, he may in fact resign for a Good Reason
for purposes of section 1.1 of this Agreement by, within 30 days after the Good
Reason arises, giving Interpublic a minimum of 30 and a maximum of 90 days
advance notice of the date of his resignation.
Section 1.5. DISABILITY. For all purposes of this Agreement, the term
"Disability" shall have the same meaning as that term has in the Interpublic
Long-Term Disability Plan.
ARTICLE II
PAYMENTS UPON A CHANGE OF CONTROL
---------------------------------
Section 2.1. ELECTIONS BY THE EXECUTIVE. If the Executive so elects
prior to a Change of Control, the Company shall pay him, within 30 days
following the Change of Control, cash amounts in respect of certain Benefit or
Bonus Plans or deferred compensation arrangements designated in sections 2.2
through 2.4 hereof ("Plan Amounts"). The Executive may make an election with
respect to the Benefit or Bonus Plans or deferred compensation arrangements
covered under any one or more of sections 2.2 through 2.4, but an election with
respect to any such section shall apply to all Plan Amounts that are specified
therein. Each election shall be made by notice to Interpublic on a form
satisfactory to Interpublic and, once made, may be revoked by such notice on
such form at any time prior to a Change of Control. If the Executive elects to
receive payments under a section of this article II, he shall, upon receipt of
such payments, execute a waiver, on a form satisfactory to Interpublic, of such
rights as are indicated in that section. If the Executive does not make an
election under this article with respect to a Benefit or Bonus Plan or deferred
compensation arrangement, his rights to receive payments in respect thereof
shall be governed by the Plan or arrangement itself.
Section 2.2. ESBA. The Plan Amount in respect of all Executive Special
Benefit Agreements ("ESBA's") between the Executive and Interpublic shall
consist of an amount equal to the present discounted values, using the Discount
Rate designated in section 5.8 hereof as of the date of the Change of Control,
of all payments that the Executive would have been entitled to receive under the
ESBA's if he had terminated employment with the Company on the day immediately
prior to the Change of Control. Upon receipt of the Plan Amount in respect of
the ESBA's, the Executive shall waive any rights that he may have to payments
under the ESBA's. If the Executive makes an election pursuant to, and executes
the waiver required under, this section 2.2, his Regular Compensation shall be
increased as of the date of the Change of Control at an annual rate equal to the
sum of the annual rates of deferred compensation in lieu of which benefits are
provided the Executive under any ESBA the Accrual Term for which (as defined in
the ESBA) includes the date of the Change of Control.
Section 2.3. MICP. The Plan Amount in respect of the Company's
Management Incentive Compensation Plans ("MICP") and/or the 1997 Performance
Incentive Plan ("1997 PIP") shall consist of an amount equal to the sum of all
amounts awarded to the Executive under, but deferred pursuant to, the MICP
and/or the 1997 PIP as of the date of the Change of Control and all amounts
equivalent to interest creditable thereon up to the date that the Plan Amount is
paid. Upon receipt of that Plan Amount, the Executive shall waive his rights to
receive any a mounts under the MICP and/or the 1997 PIP that were deferred prior
to the Change of Control and any interest equivalents thereon.
- 41 -
Section 2.4. DEFERRED COMPENSATION. The Plan Amount in respect of
deferred compensation (other than amounts referred to in other sections of this
article II) shall be an amount equal to all compensation from the Company that
the Executive has earned and agreed to defer (other than through the Interpublic
Savings Plan pursuant to Section 401(k) of the Internal Revenue Code (the
"Code")) but has not received as of the date of the Change of Control, together
with all amounts equivalent to interest creditable thereon through the date that
the Plan Amount is paid. Upon receipt of this Plan Amount, the Executive shall
waive his rights to receive any deferred compensation that he earned prior to
the date of the Change of Control and any interest equivalents thereon.
Section 2.5. STOCK INCENTIVE PLANS. The effect of a Change of Control
on the rights of the Executive with respect to options and restricted shares
awarded to him under the Interpublic 1986 Stock Incentive Plan, the 1996 Stock
Incentive Plan and the 1997 Performance Incentive Plan, shall be governed by
those Plans and not by this Agreement.
ARTICLE III
PAYMENTS UPON QUALIFYING TERMINATION
------------------------------------
Section 3.1. BASIC SEVERANCE PAYMENT. In the event that the Executive
is subjected to a Qualifying Termination within two years after a Change of
Control, the Company shall pay the Executive within 30 days after the effective
date of his Qualifying Termination (his "Termination Date") a cash amount equal
to his Base Amount times the number designated in Section 5.9 of this Agreement
(the "Designated Number"). The Executive's Base Amount shall equal the average
of the Executive's Includable Compensation for the two whole calendar years
immediately preceding the date of the Change of Control (or, if the Executive
was employed by the Company for only one of those years, his Includable
Compensation for that year). The Executive's Includable Compensation for a
calendar year shall consist of (a) the compensation reported by the Company on
the Form W-2 that it filed with the Internal Revenue Service for that year in
respect of the Executive or which would have been reported on such form but for
the fact that Executive's services wer e performed outside of the United States,
plus (b) any compensation payable to the Executive during that year the receipt
of which was deferred at the Executive's election or by employment agreement to
a subsequent year, minus (c) any amounts included on the Form W-2 (or which
would have been included if Executive had been employed in the United States)
that represented either (i) amounts in respect of a stock option or restricted
stock plan of the Company or (ii) payments during the year of amounts payable in
prior years but deferred at the Executive's election or by employment agreement
to a subsequent year. The compensation referred to in clause (b) of the
immediately preceding sentence shall include, without limitation, amounts
initially payable to the Executive under the MICP or a Long-Term Performance
Incentive Plan or the 1997 PIP in that year but deferred to a subsequent year,
the amount of deferred compensation for the year in lieu of which benefits are
provided the Executive under an ESBA and amounts of Regular Compensation earned
by the Executive during the year but deferred to a subsequent year (including
amounts deferred under Interpublic Savings Plan pursuant to Section 401(k) of
the Code); clause (c) of such sentence shall include, without limitation, all
amounts equivalent to interest paid in respect of deferred amounts and all
amounts of Regular Compensation paid during the year but earned in a prior year
and deferred.
Section 3.2. MICP SUPPLEMENT. The Company shall also pay the Executive
within 30 days after his Termination Date a cash amount equal to (a) in the
event that the Executive received an award under the MICP (or the Incentive
Award program applicable outside the United States) or the 1997 PIP ("Incentive
Award") in respect of the year immediately prior to the year that includes the
Termination Date (the latter year constituting the "Termination Year"), the
amount of that award multiplied by the fraction of the Termination Year
preceding the Termination Date or (b) in the event that the Executive did not
receive an MICP award (or an Incentive Award) in respect of the year immediately
prior to the Termination Year, the amount of the MICP award (or Incentive Award)
that Executive received in respect of the second year immediately prior to the
- 42 -
Termination Year multiplied by one plus the fraction of the Termination Year
preceding the Termination Date.
ARTICLE IV
TAX MATTERS
-----------
Section 4.1. Withholding. The Company may withhold from any amounts
payable to the Executive hereunder all federal, state, cit y or other taxes that
the Company may reasonably determine are required to be withheld pursuant to any
applicable law or regulation, but, if the Executive has made the election
provided in section 4.2 hereof, the Company shall not withhold amounts in
respect of the excise tax imposed by Section 4999 of the Code or its successor.
Section 4.2. Disclaimer. If the Executive so agrees prior to a Change
of Control by notice to the Company in form satisfactory to the Company, the
amounts payable to the Executive under this Agreement but not yet paid thereto
shall be reduced to the largest amounts in the aggregate that the Executive
could receive, in conjunction with any other payments received or to be received
by him from a ny source, without any part of such amounts being subject to the
excise tax imposed by Section 4999 of the Code or its successor. The amount of
such reductions and their allocation among amounts otherwise payable to the
Executive shall be determined either by the Company or by the Executive in
consultation with counsel chosen (and compensated) by him, whichever is
designated by the Executive in the aforesaid notice to the Company (the
"Determining Party"). If, subsequent t o the payment to the Executive of amounts
reduced pursuant to this section 4.2, the Determining Party should reasonably
determine, or the Internal Revenue Service should assert against the party other
than the Determining Party, that the amount of such reductions was insufficient
to avoid the excise tax under Section 4999 (or the denial of a deduction under
Section 280G of the Code or its successor), the amount by which such reductions
were insufficient shall, upon notice to the other party, be deemed a loan from
the Company to the Executive that the Executive shall repay to the Company
within one year of such reasonable determination or assertion, together with
interest thereon at the applicable federal rate provided in section 7872 of the
Code or its successor. However, such amount shall not be deemed a loan if and to
the extent that repayment thereof would not eliminate the Executive's liability
for any Section 4999 excise tax.
ARTICLE V
COLLATERAL MATTERS
------------------
Section 5.l. Nature of Payments. All payments to the Executive under
this Agreement shall be considered either payments in consideration of his
continued service to the Company, severance payments in consideration of his
past services thereto or payments in consideration of the covenant contained in
section 5.l0 hereof. No payment hereunder shall be regarded as a penalty to the
Company.
Section 5.2. Legal Expenses. The Company shall pay all legal fees and
expenses that the Executive may incur as a result of the Company's contesting
the validity, the enforceability or the Executive's interpretation of, or
determinations under, this Agreement. Without limitation of the foregoing,
Interpublic shall, prior to the earlier of (a) 30 days after notice from the
Executive to Interpublic so requesting or (b) the occurrence of a Change of
Control, provide the Execu tive with an irrevocable letter of credit in the
amount of $100,000 from a bank satisfactory to the Executive against which the
Executive may draw to pay legal fees and expenses in connection with any attempt
to enforce any of his rights under this Agreement. Said letter of credit shall
not expire before 10 years following the date of this Agreement.
Section 5.3. Mitigation. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement either by
seeking other employment or otherwise. The amount of any payment provided for
- 43 -
herein shall not be reduced by any remuneration that the Executive may earn from
employment with another employer or otherwise following his Termination Date.
Section 5.4. Setoff for Debts. The Company may reduce the amount of
any payment due the Executive under article III of this Agreement by the amount
of any debt owed by the Executive to the Company that is embodied in a written
instrument, that is due to be repaid as of the due date of the payment under
this Agreement and that the Company has not already recovered by setoff or
otherwise.
Section 5.5. Coordination with Employment Contract. Payments to the
Executive under article III of this Agreement shall be in lieu of any payments
for breach of any employment contract between the Executive and the Company to
which the Executive may be entitled by reason of a Qualifying Termination, and,
before making the payments to the Executive provided under article III hereof,
the Company may require the Executive to execute a waiver of any rights that he
may have to recover payments in respect of a breach of such contract as a result
of a Qualifying Termination. If the Executive has a Good Reason to resign and
does so by providing the notice specified in the last sentence of section l.4 of
this Agreement, he shall be deemed to have satisfied any notice requirement for
resignation, and any service requirement following such notice, under any
employment contract between the Executive and the Company.
Section 5.6. Benefit of Bonus Plans. Except as otherwise provided in
this Agreement or required by law, the Company shall not be compelled to include
the Executive in any of its Benefit or Bonus Plans following the Executive's
Termination Date, and the Company may require the Executive, as a condition to
receiving the payments provided under article III hereof, to execute a waiver of
any such rights. However, said waiver shall not affect any rights that the
Executive may have in respect of his participation in any Benefit or Bonus Plan
prior to his Termination Date.
Section 5.7. Funding. Except as provided in section 5.2 of this
Agreement, the Company shall not be required to set aside any amounts that may
be necessary to satisfy its obligations hereunder. The Company's potential
obligations to make payments to the Executive under this Agreement are solely
contractual ones, and the Executive shall have no rights in respect of such
payments except as a general and unsecured creditor of the Company.
Section 5.8. Discount Rate. For purposes of this Agreement, the term
"Discount Rate" shall mean the applicable Federal short-term rate determined
under Section 1274(d) of the Code or its successor. If such rate is no longer
determined, the Discount Rate shall be the yield on 2 -year Treasury notes for
the most recent period reported in the most recent issue of the Federal Reserve
Bulletin or its successor, or, if such rate is no longer reported therein, such
measure of the yield on 2-year Treasury notes as the Company may reasonably
determine.
Section 5.9. Designated Numb er. For purposes of this Agreement, the
Designated Number shall be Two (2.0).
Section 5.10. Covenant of Executive. In the event that the Executive
undergoes a Qualifying Termination that entitles him to any payment under
article III of this Agreement, he shall not, for 18 months following his
Termination Date, either (a) solicit any employee of Interpublic or a
majority -controlled subsidiary thereof to leave such employ and enter into the
employ of the Executive or any person or entity with which the Executive is
associated or (b) solicit or handle on his own behalf or on behalf of any person
or entity with which he is associated the advertising, public relations, sales
promotion or market research busines s of any advertiser that is a client of
Interpublic or a majority-controlled subsidiary thereof as of the Termination
Date. Without limitation of any other remedies that the Company may pursue, the
Company may enforce its rights under this section 5.l0 by means of injunction.
This section shall not limit any other right or remedy that the Company may have
under applicable law or any other agreement between the Company and the
Executive.
- 44 -
ARTICLE VI
GENERAL PROVISIONS
------------------
Section 6.l. Term of Agreement. This Agreement shall terminate upon
the earliest of (a) the expiration of five years from the date of this Agreement
if no Change of Control has occurred during that period; (b) the termination of
the Executive's employment with the Company for any reason prior to a Change of
Control; (c) the Company's termination of the Executive's employment for Cause
or death, the Executive's compulsory retirement within the provisions of 29
U.S.C. ss.631(c) (or, if Executive is not a citizen or resident of the United
States, compulsory retirement under any applicable procedure of the Company in
effect immediately prior to the change of control) or the Executive's
resignation for other than Good Reason, following a Change of Control and the
Company's and the Executive's fulfillment of all of their obligations under this
Agreement; and (d) the expiration following a Change of Control of the
Designated Number plus three years and the fulfillment by the Company and the
Executive of all of their obligations hereunder.
Section 6.2. Governing Law. Except as otherwise expressly provided
herein, this Agreement and the rights and obligations hereunder shall be
construed and enforced in accordance with the laws of the State of New York.
Section 6.3. Successors to the Company. This Agreement shall inure to
the benefit of Interpublic and its subsidiaries and shall be binding upon and
enforceable by Interpublic and any successor thereto, including, without
limitation, any corporation or corporations acquiring directly or indirectly all
or substantia lly all of the business or assets of Interpublic whether by merger,
consolidation, sale or otherwise, but shall not otherwise be assignable by
Interpublic. Without limitation of the foregoing sentence, Interpublic shall
require any successor (whether direct or indirect, by merger, consolidation,
sale or otherwise) to all or substantially all of the business or assets of
Interpublic, by agreement in form satisfactory to the Executive, expressly,
absolutely and unconditionally to assu me and agree to perform this Agreement in
the same manner and to the same extent as Interpublic would have been required
to perform it if no such succession had taken place. As used in this agreement,
"Interpublic" shall mean Interpublic as heretofore defined and any successor to
all or substantially all of its business or assets that executes and delivers
the agreement provided for in this section 6.3 or that becomes bound by this
Agreement either pursuant to this Agreement or by operation of law.
Section 6.4. Successor to the Executive. This Agreement shall inure to
the benefit of and shall be binding upon and enforceable by the Executive and
his personal and legal representatives, executors, administrators, heirs,
distributees, legatees and, subject to section 6.5 hereof, his designees
("Successors"). If the Executive should die while amounts are or may be payable
to him under this Agreement, references hereunder to the "Executive" shall,
where appropriate, be deemed to refer to his Successors.
Section 6.5. Nonalienability. No right of or amount payable to the
Executive under this Agreement shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, hypothecation, encumbrance,
charge, execution, attachment, levy or similar process or (except as provided in
section 5.4 hereof) to setoff against any obligation or to assignment by
operation of law. Any attempt, voluntary or involuntary, to effect any action
specified in the immediately preceding sentence shall be void. However, this
section 6.5 shall not prohibit the Executive from designating one or more
persons, on a form satisfactory to the Company, to receive amounts payable to
him under this Agreement in the event that he should die before receiving them.
Section 6.6. Notices. All notices provided for in this Agreement shall
be in writing. Notices to Interpublic shall be deemed given when personally
delivered or sent by certified or registered mail or overnight delivery service
to The Interpublic Group of Companies, Inc., l27l Avenue of the Americas, New
York, New York l0020, attention: Corpo rate Secretary. Notices to the Executive
shall be deemed given when personally delivered or sent by certified or
- 45 -
registered mail or overnight delivery service to the last address for the
Executive shown on the records of the Company. Either Interpublic or the
Executive may, by notice to the other, designate an address other than the
foregoing for the receipt of subsequent notices.
Section 6.7. Amendment. No amendment of this Agreement shall be
effective unless in writing and signed by both the Company and the Executive.
Section 6.8. Waivers. No waiver of any provision of this Agreement
shall be valid unless approved in writing by the party giving such waiver. No
waiver of a breach under any provision of this Agreement shall be deemed to be a
waiver of such provision or any other provision of this Agreement or any
subsequent breach. No failure on the part of either the Company or the Executive
to exercise, and no delay in exercising , any right or remedy conferred by law or
this Agreement shall operate as a waiver of such right or remedy, and no
exercise or waiver, in whole or in part, of any right or remedy conferred by law
or herein shall operate as a waiver of any other right or remedy.
Section 6.9. Severability. If any provision of this Agreement shall be
held invalid or unenforceable in whole or in part, such invalidity or
unenforceability shall not affect any other provision of this Agreement or part
thereof, each of which shall remain in full force and effect.
Section 6.l0. Captions. The captions to the respective articles and
sections of this Agreement are intended for convenience of reference only and
have no substantive significance.
Section 6.ll. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original but all
of which together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
/s/ JAMES R. HEEKIN
----------------------------------------
JAMES R. HEEKIN
- 46 -
Exhibit 10(b)(i)(d)
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT made as of January 1, 1998 by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a Delaware corporation ("Interpublic" or the
"Corporation"), and JAMES R. HEEKIN ("Executive").
In consideration of the mutual promises set forth herein the parties
hereto agree as follows:
ARTICLE I
---------
TERM OF EMPLOYMENT
------------------
1.01 Subject to the provisions of Article VII and Article VIII, and
upon the terms and subject to the conditions set forth herein, the Corporation
will employ Executive for the period beginning January 1, 1998 ("Commencement
Date") and ending on December 31, 2003. (The period during which Executive is
employed hereunder is referred to herein as the "term of employment.") Executive
will serve the Corporation during the term of employment.
ARTICLE II
----------
DUTIES
------
2.01 During the term of employment, Executive will:
(i) Serve as Regional Director Europe of McCann-Erickson Europe,
a wholly -owned subsidiary of Interpublic ("McCann").
(ii) Use his best efforts to promote the interests of the
Corporation and McCann and devote his full time and efforts to their
business and affairs;
(iii) Perform such duties as the Corporation and McCann may from
time to time assign to him; and (iv) Serve in such other offices of
the Corporation and/or McCann as he may be elected or appointed to.
ARTICLE III
-----------
REGULAR COMPENSATION
--------------------
3.01 The Corporation will compensate Executive for the duties performed
by him hereunder, by payment of a total base salary at the rate of Five Hundred
Fifty Thousand Dollars ($550,000) per annum, Fifty Thousand Dollars ($50,000) of
which shall be accrued in accordance with an Executive Special Benefit Agreement
to be entered into between the Executive and Interpublic. The non-accrued
portion of Executive's total base salary shall be payable in equal installments,
which the Cor poration shall pay at semi -monthly intervals, subject to customary
withholding for federal, state and local taxes.
3.02 The Corporation may at any time increase the compensation paid to
Executive under this Article III if the Corporation in its sole discretion shall
deem it advisable so to do in order to compensate him fairly for services
rendered to the Corporation.
- 47 -
ARTICLE IV
----------
BONUSES
-------
4.01 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Committee grant
Executive an award for the 1997-2000 performance period under Interpublic's
Long-Term Performance Incentive Plan ("LTPIP") equal to (i) one thousand three
hundred fifty (1,350) performance units tied to the cumulative compound profit
growth of McCann North America, (ii) four hundred fifty (450) performance units
tied to the cumulative compound profit growth of McCann Worldwide, and (iii)
eighteen hundred (1,800) performance units tied to the cumulative compound
profit growth of McCann Europe.
ARTICLE V
---------
INTERPUBLIC STOCK
-----------------
5.01 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Compensation
Committee of its Board of Directors ("Committee") grant to Executive ten
thousand (10,000) shares of Interpublic Common Stock which will be subject to a
five year ves ting restriction.
5.02 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Committee grant to
Executive options to purchase twenty thousand (20,000) shares of Interp ublic
Common Stock, which will be subject to all the terms and conditions of the
Interpublic Stock Incentive Plan. Forty percent (40%) of the options will be
exercisable after the third anniversary of the date of grant, thirty percent
(30%) will be exercisable after the fourth anniversary and thirty percent (30%)
will be exercisable after the fifth anniversary of the date of grant through the
tenth anniversary of the date of grant.
ARTICLE VI
----------
OTHER EMPLOYMENT BENEFITS
-------------------------
6.01 Executive shall be eligible to participate in such other employee
benefits as are available from time to time to other key management executives
of Interpublic in accordance with the then-current terms and conditions
established by Interpublic for eligibility and employee contributions required
for participation in such benefits opportunities.
6.02 Executive will be entitled to four (4) weeks of vacation per year,
to be taken in such amounts and at such times as shall be mutually convenient
for Executive and the Corporation.
ARTICLE VII
-----------
TERMINATION
-----------
7.01 The Corporation may terminate the employment of Executive
hereunder:
(i) By giving Executive notice in writing at any time specifying
a termination date not less than twelve (12) months after the date on
- 48 -
which such notice is given, in which event Executive's employment
hereunder shall terminate on the date specified in such notice, or
(ii) By giving Executive notice in writing at any time specifying
a termination date less than twelve (12) months after the date on
which such notice is given. In this event Executive's employment
hereunder shall terminate on the date specified in such notice and the
Corporation shall thereafter pay him a sum equal to the amount by
which twelve (12) months salary at his then current rate exceeds the
salary paid to him for the period from the date on which such notice
is given to the termination date specified in such notice. Such
payment shall be made during the period immediately following the
termination date specified in such notice, in successive equal monthly
installments each of which shall be equal to one month's salary at the
rate in effect at the time of such termination, with any residue in
respect of a period less than one month to be paid together with the
last installment.
During the termination period provided in subsection (i), or in the
case of a termination under subsection (ii) providing for a termination period
of less than twelve (12) months, for a period of twelve (12) months after the
termination notice, Executive will be entitled to receive all employee benefits
accorded to him prior to termination which are made available to employees
generally; provided, that such benefits shall cease upon such date that
Executive accepts employment with another employer offering similar benefits.
7.02 Executive may at any time give notice in writing to the
Corporation specifying a termination date not less than twelve (12) months after
the date on which such notice is given, in which event his employment hereunder
shall terminate on the date specified in such notice, and Executive shall
receive his salary until the termination date.
ARTICLE VIII
------------
COVENANTS
---------
8.01 While Executive is employed hereunder by the Corporation he shall
not, without the prior written consent of the Corporation, which will not be
unreasonably withheld, engage, directly or indirectly, in any other trade,
business or employment, or have any interest, direct or indirect, in any other
business, firm or corporation; provided, however, that he may continue to own or
may hereafter acquire any securities of any class of any publicly-owned company.
8.02 Executive shall treat as confidential and keep secret the affairs
of the Corporation and shall not at any time during the term of employment or
for a period of three years thereafter, without the prior written consent of the
Corporation, divulge, furnish or make known or accessible to, or use for the
benefit of, anyone other than the Corporation and its subsidiaries and
affiliates any information of a confidential nature relating in any way to the
business of the Corporation or its subsidiaries or affiliates or their clients
and obtained by him in the course of his employment hereunder.
8.03 All records, papers and documents kept or made by Executive
relating to the business of the Corporation or its subsidiaries or affiliates or
their clients shall be and remain the property of the Corporation.
8.04 All articles invented by Executive, processes discovered by him,
trademarks, designs, advertising copy and art work, display and promotion
materials and, in general, everything of value conceived or created by him
pertaining to the business of the Corporation or any of its subsidiaries or
affiliates during the term of employment, and any and all rights of every nature
whatever thereto, shall immediately become the property of the Corporation, and
Executive will assign, transfer and deliver all patents, copyrights, royalties,
designs and copy, and any and all int erests and rights whatever thereto and
thereunder to the Corporation.
- 49 -
8.05 Following the termination of Executive's employment hereunder for
any reason, Executive shall not for a period of twenty-four (24) months from
such termination, (a) solicit any employee of the Corporation, Interpublic or
any affiliated company of Interpublic to leave such employ to enter the employ
of Executive or of any person, firm or corporation with which Executive is then
associated o r (b) solicit or handle on Executive's own behalf or on behalf of
any other person, firm or corporation, the event marketing, public relations,
advertising, sales promotion or market research business of any person or entity
which is a client of the Corporation.
8.06 If at the time of enforcement of any provision of this Agreement,
a court shall hold that the duration, scope or area restriction of any provision
hereof is unreasonable under circumstances now or then existing, the parties
hereto agree that the maximum duration, scope or area reasonable under the
circumstances shall be substituted by the court for the stated duration, scope
or area.
8.07 Executive acknowledges that a remedy at law for any breach or
attempted breach of Article VIII of this Agreement will be inadequate, and
agrees that the Corporation shall be entitled to specific performance and
injunctive and other equitable relief in the case of any such breach or
attempted breach.
8.08 Executive represents and warrants that neither the execution and
delivery of this Employment Agreement nor the performance of Executive's
services hereunder will conflict with, or result in a breach of, any agreement
to which Executive is a party or by which he may be bound or affected, in
particular the terms of any employment agreement to which Executive may be a
party. Executive further represents and warrants that he has full right, power
and authority to enter into and carry out the provisions of this Employment
Agreement.
ARTICLE IX
----------
Assignment
----------
9.01 This Agreement shall be binding upon and enure to the benefit of
the successors and assigns of the Corporation. Neither this Agreement nor any
rights hereunder shall be assignable by Executive and any such purported
assignment by him shall be void.
ARTICLE X
---------
AGREEMENT ENTIRE
----------------
10.01 This Agreement constitutes the entire understanding between the
Corporation and Executive concerning his employment by the Corporation or any of
its parents, affiliates or subsidiaries and supersedes any and all previous
agreements between Executive and the Corporation or any of its parents,
affiliates or subsidiaries concerning such employment, and/or any compensation
or bonuses. Each party hereto shall pay its own costs and expenses (including
legal fees) incurred in connection with the preparation, negotiation and
execution of this Agreement. This Agreement may not be changed orally.
- 50 -
ARTICLE XI
----------
APPLICABLE LAW
--------------
11.01 The Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: /s/ C. KENT KROEBER
-------------------------------------
Name: KENT KROEBER
By: /s/ JAMES R. HEEKIN
-------------------------------------
Name: JAMES R. HEEKIN
- 51 -
Exhibit 10(b)(i)(e)
EXECUTIVE SPECIAL BENEFIT AGREEMENT
-----------------------------------
AGREEMENT made as of February 1, 1998 by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a corporation of the State of Delaware (hereinafter
referred to as "Interpublic") and JAMES R. HEEKIN (hereinafter referred to as
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive is in the employ of Interpublic and/or one or more
of its subsidiaries (Interpublic and its subsidiaries being hereinafter referred
to collectively as the "Corporation"); and
WHEREAS, Interpublic and Executive desire to enter i nto an Executive
Special Benefit Agreement which shall be supplementary to any employment
agreement or arrangement which Executive now or hereinafter may have with
respect to Executive's employment by Interpublic or any of its subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
---------
DEATH AND SPECIAL RETIREMENT BENEFITS
-------------------------------------
1.01 For purposes of this Agreement the "Accrual Term" shall mean the
period of ninety-six (96) months beginning on the date of this Agreement and
ending on the day preceding the eighth anniversary hereof or on such earlier
date on which Executive shall cease to be in the employ of the Corporation.
1.02 The Corporation shall provide Executive with the following
benefits contingent upon Executive's compliance with all the terms and
conditions of this Agreement and Executive's satisfactory completion of a
physical exa mination in connection with an insurance policy on the life of
Executive which Interpublic or its assignee (other than Executive) proposes to
obtain and own. Effective at the end of the Accrual Term, Executive's annual
compensation will be increased by Fifty Thousand Dollars ($50,000) if Executive
is in the employ of the Corporation at that time.
1.03 If, during the Accrual Term or thereafter during a period of
employment by the Corporation which is continuous from the date of this
Agreement, Executive shall die while in the employ of the Corporation, the
Corporation shall pay to such beneficiary or beneficiaries as Executive shall
have designated pursuant to Section 1.07 (or in the absence of such designation,
shall pay to the Executor of the Will or the Administrator of the Estate of
Executive) survivor income payments of One Hundred Twenty Thousand Dollars
($120,000) per annum for fifteen (15) years following Executive's death, such
payments to be made on January 15th of each of the fifteen (15) years beginning
with the year following the year in which Executive dies.
1.04 If, after a continuous period of employment from the date of this
Agreement, Executive shall retire from the employ of the Corporation so that the
first day on which Executive is no longer in the employ of the Corporation
occurs on or after Executive's sixtieth birthday, the Corporation shall pay to
Executive special retirement benefits at the rate of One Hundred Twenty Thousand
Dollars ($120,000) per annum for fifteen (15) years beginning with the calendar
month following Executive's last day of employment, such payments to be made in
equal monthly installments.
- 52 -
1.05 If, after a continuous period of employment from the date of this
Agreement, Executive shall retire, resign, or be terminated from the employ of
the Corporation so that the first day on which Executive is no longer in the
employ of the Corporation occurs on or after Executive's fifty -fifth birthday
but prior to Executive's sixtieth birthday, the Corporation shall pay to
Executive special retirement benefits at the annual rates set forth below for
fifteen years beginning with the calendar month following Executive's last day
of employment, such payments to be made in equal monthly installments:
Last Day of Employment Annual Rate
---------------------- -----------
On or after 55th birthday but prior to 56th birthday $ 62,400
On or after 56th birthday but prior to 57th birthday $ 76,800
On or after 57th birthday but prior to 58th birthday $ 91,200
On or after 58th birthday but prior to 59th birthday $105,600
On or after 59th birthday but prior to 60th birthday $112,800
1.06 If, following such termination of employment, Executive shall die
before payment of all of the installments provided for in Section 1.04 or
Section 1.05, any remaining installments shall be paid to such beneficiary or
beneficiaries as Executive shall have designated pursuant to Section 1.07 or, in
the absence of such designation, to the Executor of the Will or the
Administrator of the Estate of Executive.
1.07 For purposes of Sections 1.03, 1.04 and 1.05, or any of them,
Executive may at any time designate a beneficiary or beneficiaries by filing
with the chief personnel officer of Interpublic a Beneficiary Designation Form
provided by such officer. Executive may at any time, by filing a new Beneficiary
Designation Form, revoke or change any prior designation of beneficiary.
1.08 If Executive shall die while in the employ of the Corporation, no
sum shall be payable pursuant to Sections 1.04, 1.05, 1.06, 2.01, 2.02 or 2.03.
1.09 In connection with the life insurance policy referred to in
Section 1.02, Interpublic has relied on written representations made by
Executive concerning Executive's age and the state of Executive's health. If
said representations are untrue in any material respect, whether directly or by
omission, and if the Corporation is damaged by any such untrue representations,
no sum shall be payable pursuant to Sections 1.03, 1.04, 1.05, 1.06, 2.01, 2.02
or 2.03.
1.10 It is expressly agreed that Interpublic or its assignee (other
than Executive) shall at all times be the sole and complete owner and
beneficiary of the life insurance policy referred to in Sections 1.02 and 1.09,
shall have the unrestricted right to use all amounts and exercise all options
and privileges thereunder without the knowledge or consent of Executive or
Executive's designated beneficiary or any other person and that neither
Executive nor Executive's designated beneficiary nor any other person shall have
any right, title or interest, legal or equitable, whatsoever in or to such
policy.
ARTICLE II
----------
ALTERNATIVE DEFERRED COMPENSATION
---------------------------------
2.01 If Executive shall, for any reason other than death, cease to be
employed by the Corporation on a date prior to Executive's fifty -fifth birthday,
the Corporation shall, in lieu of any payment pursuant to Article I of this
Agreement, c ompensate Executive by payment, at the times and in the manner
specified in Section 2.02, of a sum computed at the rate of Fifty Thousand
Dollars ($50,000) per annum for each full year and proportionate amount for any
- 53 -
part year from the date of this Agreement to the date of such termination during
which Executive is in the employ of the Corporation. Such payment shall be
conditional upon Executive's compliance with all the terms and conditions of
this Agreement.
2.02 The aggregate compensation payable under Section 2.01 shall be
paid in equal consecutive monthly installments commencing with the first month
in which Executive is no longer in the employ of the Corporation and continuing
for a number of months equal to the number of months which have elapsed from the
date of this Agreement to the commencement date of such payments, up to a
maximum of ninety-six (96) months.
2.03 If Executive dies while receiving payments in accordance with the
provisions of Section 2.02, any installments payable in accordance with the
provisions of Section 2.02 less any amounts previously paid Executive in
accordance therewith, shall be paid to the Executor of the Will or the
Administrator of the Estate of Executive.
2.04 It is understood that none of the payments made in accordance
with this Agreement shall be considered for purposes of determining benefits
under the Interpublic Pension Plan, nor shall such sums be entitled to credits
equivalent to interest under the Plan for Credits Equivalent to Interest on
Balances of Deferred Compensation Owing under Employment Agreements adopted
effective as of January 1, 1974 by Interpublic.
ARTICLE III
-----------
NON-SOLICITATION OF CLIENTS OR EMPLOYEES
----------------------------------------
3.01 Following the termination of Executive's employment hereunder for
any reason, Executive shall not for a period of twenty-four (24) months from
such termination, if such termination occurs during the first two (2) years of
employment hereunder, or for a period of twelve (12) months if such termination
occurs subsequent to the first two years of employment, either (a) solicit any
employee of the Corporation to leave such employ to enter the employ of
Executive or of any corporation or enterprise with which Executive is then
associated or (b) solicit or handle on Executive's own behalf or on behalf of
any other person, firm or corporation, the advertising, public relations, sales
promotion or market research business of any advertiser which is a client of the
Corporation at the time of such termination and as to which brand Executive
devoted services.
ARTICLE IV
----------
ASSIGNMENT
----------
4.01 This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of Interpublic. Neither this Agreement nor any rights
hereunder shall be subject in any matter to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge by Executive, and any such
attempted action by Executive shall be void. This Agreement may not be changed
orally, nor may this Agreement be amended to increase the amount of any benefits
that are payable pursuant to this Agreement or to accelerate the payment of any
such benefits.
- 54 -
ARTICLE V
---------
CONTRACTUAL NATURE OF OBLIGATION
--------------------------------
5.01 The liabilities of the Corporation to Executive pursuant to this
Agreement shall be those of a debtor pursuant to such contractual obligations as
are created by the Agreement. Executive's rights with respect to any benefit to
which Executive has become entitled under this Agreement, but which Executive
has not yet received, shall be solely the rights of a general unsecured creditor
of the Corporation.
ARTICLE VI
----------
APPLICABLE LAW
--------------
6.01 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. THE INTERPUBLIC GROUP OF COMPANIES, INC.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
/s/ JAMES R. HEEKIN
----------------------------------------
JAMES R. HEEKIN
- 55 -
Exhibit 10(b)(i)(f)
SUPPLEMENTAL AGREEMENT
----------------------
SUPPLEMENTAL AGREEMENT made as of March 28, 2000 between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a Delaware corporation ("Interpublic") and
JAMES R. HEEKIN ("Executive").
W I T N E S S E T H:
-------------------
WHEREAS, Interpublic and Executive are parties to an Employment
Agreement made as of January 1, 1998 (hereinafter referred to as the
"Agreement"); and
WHEREAS, Interpublic and Executive desire to amend the Agreement; NOW,
THEREFORE, in consideration of the mutual promises herein and in the Agreement
set forth, the parties hereto, intending to be legally bound, agree as follows:
1. Paragraph 3.01 of the Agreement is hereby deleted and amended to
read in its entirety as follows: "The Corporation will compensate Executive for
the duties performed by him hereunder, by payment of a total base salary at the
rate of Eight Hundred Seventy Thousand Dollars ($870,000) per annum, One Hundred
Thousand Dollars ($100,000) of which shall be accrued in accordance with certain
Executive Special Benefit Agreements entered into between the Executive and
Interpublic. The non-accrued portion of Executive's total base salary shall be
payable in equal installments, which the Corporation shall pay at semi-monthly
intervals, subject to customary withholding for federal, state and local taxes."
2. A new paragraph 5.03 shall be added to read as follows: "Executive
has been granted: (i) effective December 16, 1999, seventy thousand (70,000)
shares of Interpublic Common Stock which are subject to a five-year vesting
restriction, and (ii) effective March 21, 2000 an additional thirty thousand
(30,000) shares of Interpublic Common Stock, which are subject to a seven -year
vesting restriction."
3. A new paragraph 5.04 shall be added to read as follows: "Executive
has been granted: (i) effective December 12, 1999, options to purchase one
hundred thousand (100,000) shares of Interpublic Common Stock, and (ii)
effective March 21, 2000, options to purchase eighty thousand (80,000) shares of
Interpublic Common Stock, all of which are subject to all the terms and
conditions of the Interpublic Stock Incentive Plan. Forty percent (40%) of the
options will be exercisable after the third anniversary of the date of grant,
thirty percent (30%) will be exercisable after the fourth anniversary and thirty
percent (30%) will be exercisable after the fifth anniversary of the date of
grant through the tenth anniversary of the date of grant."
Except as hereinabove amended, the Agreement shall continue in full
force and effect.
- 56 -
This Supplemental Agreement shall be governed by the laws of the State
of New York, applicable to contracts made and fully to be performed therein.
THE INTERPUBLIC GRO UP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
/s/ JAMES R. HEEKIN
----------------------------------------
JAMES R. HEEKIN
- 57 -
Exhibit 10(b)(i)(g)
SUPPLEMENTAL AGREEMENT
----------------------
SUPPLEMENTAL AGREEMENT made as of June 1, 2000, by and between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the State of Delaware
(hereinafter referred to as the "Corpor ation"), and James R. Heekin (hereinafter
referred to as "Executive").
W I T N E S S E T H:
-------------------
WHEREAS, the Corporation and Executive are parties to an Executive
Severance Agreement made as of January 1, 1998 (hereinafter referred to as the
"Agreement"); and
WHEREAS, the Corporation and Executive desire to amend the Executive
Severance Agreement; NOW, THEREFORE, in consideration of the mutual promises
herein and in the Agreement set forth, the parties hereto, intending to be
legally bound, agree as follows:
1. Paragraph 5.9 of the Agreement is hereby amended effective June
1, 2000, so as to delete "Two (2.0)" and to substitute therefor
"Three (3)".
2. Except as hereinabove amended, the Agreement shall continue in
full force and effect.
3. This Supplemental Agreement shall be governed by the laws of the
State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
/s/ JAMES R. HEEKIN
----------------------------------------
JAMES R. HEEKIN
- 58 -
Exhibit 10(b)(i)(h)
EXECUTIVE SPECIAL BENEFIT AGREEMENT
-----------------------------------
AGREEMENT made as of January 1, 2000, by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a corporation of the State of Delaware (hereinafter
referred to as "Interpublic") and JAMES R. HEEKIN (hereinafter referred to as
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive is in the employ of Interpublic and/or one or more
of its subsidiaries (Interpublic and its subsidiaries being hereinafter referred
to collectively as the "Corporation"); and
WHEREAS, Interpublic and Executive desire to enter into an Executive
Special Benefit Agreement which shall be supplementary to any employment
agreement or arrangement which Executive now or hereinafter may have with
respect to Executive's employment by Interpublic or any of its subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
---------
Death and Special Retirement Benefits
-------------------------------------
1.01 For purposes of this Agreement the "Accrual Term" shall mean the
period of ninety-six (96) months beginning on the date of this Agreement and
ending on the day preceding the eighth anniversary hereof or on such earlier
date on which Executive shall cease to be in the employ of the Corporation.
1.02 The Corporation shall provide Executive with the following
benefits contingent upon Executive's compliance with all the terms and
conditions of this Agreement and Executive's satisfactory completion of a
physical examination in connection with an insurance policy on the life of
Executive which Interpublic or its assignee (other than Executive) proposes to
obtain and own. Effective at the end of the Accrual Term, Executive's annual
compensation will be increased by Twenty Five Thousand Dollars ($25,000) if
Executive is in the employ of the Corporation at that time.
1.03 If, during the Accrual Term or thereafter during a period of
employment by the Corporation which is continuous from the date of this
Agreement, Executive shall die while in the employ of the Corporation, the
Corporation shall pay to such beneficiary or beneficiaries as Executive shall
have designated pursuant to Section 1.07 (or in the absence of such designation,
shall pay to the Executor of the Will or the Administrator of the Estate of
Executive) survivor income payments of Fifty Thousand Dollars ($50,000) per
annum fo r fifteen (15) years following Executive's death, such payments to be
made on January 15th of each of the fifteen (15) years beginning with the year
following the year in which Executive dies.
1.04 If, after a continuous period of employment from the date of this
Agreement, Executive shall retire from the employ of the Corporation so that the
first day on which Executive is no longer in the employ of the Corporation
occurs on or after Executive's sixtieth birthday, the Corporation sh all pay to
Executive special retirement benefits at the rate of Fifty Thousand Dollars
($50,000) per annum for fifteen (15) years beginning with the calendar month
following Executive's last day of employment, such payments to be made in equal
monthly installments.
1.05 If, after a continuous period of employment from the date of this
Agreement, Executive shall retire, resign, or be terminated from the employ of
- 59 -
the Corporation so that the first day on which Executive is no longer in the
employ of the Corporation occurs on or after Executive's fifty-eighth birthday
but prior to Executive's sixtieth birthday, the Corporation shall pay to
Executive special retirement benefits at the annual rates set forth below for
fifteen years beginning with the calendar month following Executive's last day
of employment, such payments to be made in equal monthly installments:
Last Day of Employment Annual Rate
---------------------- -----------
On or after 58th birthday but prior to 59th birthday $38,000
On or after 59th birthday but prior to 60th birthday $44,000
1.06 If, following such termination of employment, Executive shall die
before payment of all of the installments provided for in Section 1.04 or
Section 1.05, any remaining installments shall be paid to such beneficiary or
beneficiaries as Executive shall have designated pursuant to Section 1.07 or, in
the absence of such designation, to the Executor of the Will or the
Administrator of the Estate of Executive.
1.07 For purposes of Sections 1.03, 1.04 and 1.05, or any of them,
Executive may at any time designate a beneficiary or beneficiaries by filing
with the chief personnel officer of Interpublic a Beneficiary Designation Form
provided by such officer. Executive may at any time, by filing a new Beneficiary
Designation Form, revoke or change any prior designation of beneficiary.
1.08 If Executive shall die while in the employ of the Corporation, no
sum shall be payable pursuant to Sections 1.04, 1.05, 1.06, 2.01, 2.02 or 2.03.
1.09 In connection with the life insurance policy referred to in
Section 1.02, Interpublic has relied on written representations made by
Executive concerning Executive's age and the state of Executive's health. If
said representations are untrue in any material respect, whether directly or by
omission, and if the Corporation is damaged by any such untrue representations,
no sum shall be payable pursuant to Sections 1.03, 1.04, 1.05, 1.06, 2.01, 2.02
or 2.03.
1.10 It is expressly agreed that Interpublic or its assignee (other
than Executive) shall at all times be the sole and complete owner and
beneficiary of the life insurance policy referred to in Sections 1.02 and 1.09,
shall have the unrestricted right to use all amounts and exercise all options
and privileges thereunder without the knowledge or consent of Executive or
Executive's designated beneficiary or any other person and that neither
Executive nor Executive's designated beneficiary nor any other person shall have
any right, title or interest, legal or equitable, whatsoever in or to such
policy.
ARTICLE II
----------
Alternative Deferred Compensation
---------------------------------
2.01 If Executive shall, for any reason other than death, cease to be
employed by the Corporation on a date prior to Executive's fifty-eighth
birthday, the Corporation shall, in lieu of any payment pursuant to Article I of
this Agreement, compensate Executive by payment, at the times and in the manner
specified in Section 2.02, of a sum computed at the rate of Twenty Thousand
Dollars ($25,000) per annum for each full year and proportionate amount for any
part year fro m the date of this Agreement to the date of such termination during
which Executive is in the employ of the Corporation with a maximum payment of
Twenty Five Thousand Dollars ($25,000). Such payment shall be conditional upon
Executive's compliance with all the terms and conditions of this Agreement.
2.02 The aggregate compensation payable under Section 2.01 shall be
paid in equal consecutive monthly installments commencing with the first month
in which Executive is no longer in the employ of the Corporation and continuing
for a number of months equal to the number of months which have elapsed from the
- 60 -
date of this Agreement to the commencement date of such payments, up to a
maximum of ninety-six (96) months.
2.03 If Executive dies while receiving payments in accordance with the
provisions of Section 2.02, any installments payable in accordance with the
provisions of Section 2.02 less any amounts previously paid Executive in
accordance therewith, shall be paid to the Executor of the Will or the
Administrator of the Estate of Executive.
2.04 It is understood that none of the payments made in accordance
with this Agreement shall be considered for purposes of determining benefits
under the Interpublic Pension Plan, nor shall such sums be entitled to credits
equivalent to interest under the Plan for Credits Equivalent to Interest on
Balances of Deferred Compensation Owing under Employment Agreements adopted
effective as of January 1, 1974 by Interpublic.
ARTICLE III
-----------
Non-solicitation of Clients or Employees
----------------------------------------
3.01 Following the termination of Executive's employment hereunder for
any reason, Executive shall not for a period of twelve months either (a) solicit
any employee of the Corporation to leave such employ to enter the employ of
Executive or of any corporation or enterprise with which Executive is then
associated or (b) solicit or handle on Executive's own behalf or on behalf of
any other person, firm or corporation, the advertising, public relations, sales
promotion or market research business of any advertiser which is a client of the
Corporation at the time of such termination.
ARTICLE IV
----------
Assignment
----------
4.01 This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of Interpublic. Neither this Agreement nor
any rights hereunder shall be subject in any matter to anticipation, aliena tion,
sale, transfer, assignment, pledge, encumbrance or charge by Executive, and any
such attempted action by Executive shall be void. This Agreement may not be
changed orally, nor may this Agreement be amended to increase the amount of any
benefits that are payable pursuant to this Agreement or to accelerate the
payment of any such benefits.
ARTICLE V
---------
Contractual Nature of Obligation
--------------------------------
5.01 The liabilities of the Corporation to Executive pursuant to this
Agreement shall be those of a debtor pursuant to such contractual obligations as
are created by the Agreement. Executive's rights with respect to any benefit to
which Executive has become entitled under this Agreement, but which Executive
has not yet received, shall be solely the rights of a general unsecured creditor
of the Corporation.
- 61 -
ARTICLE VI
----------
Applicable Law
--------------
6.01 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
/s/ JAMES R. HEEKIN
----------------------------------------
JAMES R. HEEKIN
- 62 -
Exhibit 10(b)(ii)(a)
SUPPLEMENTAL AGREEMENT
----------------------
AGREEMENT made as of June 30, 2000 by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a corporation of the State of Delaware (hereinafter
referred to as "Interpublic") and BARRY LINSKY (hereinafter referred to as
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive and Interpublic are parties to an Executive Special
Benefit Agreement made as of March 1, 1987, and Supplemental Agreements made as
of May 23, 1990 and March 1, 1993 (hereinafter referred to collectively as the
"Agreement"); and;
WHEREAS, the Corporation and Executive desire to amend the Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereto, intending to be legally bound, agree as follows:
1. Section 1.03 of the Agreement is hereby amended, so as to delete
"per annum for fifteen years following Executive's death, such payments to be
made on January 15th of each of the fifteen (15) years beginning with the year
following the year in which Executive dies" and to substitute "per annum for
fifteen (15) years in monthly installments beginning with the 15th of the
calendar month following Executive's death, and in equal monthly installments
thereafter". 2. A new Section 1.11 to the Agreement is hereby added to read in
its entirety as follows: "If Executive's employment continues beyond the maximum
target benefit age provided in this Agreement, the maximum target age benefit
will be increased 4% annually until Executive fully retires. In no event,
however, will the 4% annual benefit increase be applied past the year 2003".
3. Except as herein above amended, the Agreemen t shall continue in
full force and effect.
4. This Supplemental Agreement shall be governed by the laws of the
State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
/s/ BARRY LINSKY
----------------------------------------
BARRY LINSKY
- 63 -
Exhibit 10(b)(ii)(b)
EXECUTIVE SPECIAL BENEFIT-INCOME REPLACEMENT AGREEMENT
------------------------------------------------------
AGREEMENT made as of June 1, 2000 by and between THE INTERPUBLIC GROUP
OF COMPANIES, INC., a corporation of the State of Delaware (hereinafter referred
to as "Interpublic") and BARRY R. LINKSY (hereinafter referred to as
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive is in the employ of Interpublic and/or one or more
of its subsidiaries (Interpublic and its subsidiaries being hereinafter referred
to collectively as the "Corporation"); and
WHEREAS, Interpublic and Executive desire to enter into an Executive
Special Benefit-Income Replacement Agreement which shall be supplementary to any
employment agreement or arrangement which Executive now or hereinafter may have
with respect to Executive's employment by Interpublic or any of its
subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
---------
Income Replacement Payment
--------------------------
1.01 Effective January 1, 2002, provided Executive is employed by the
Corporation on such date, the Corporation shall provide Executive with the
following benefits:
(a) Upon Executive's retirement from the employ of the Corporation,
the Corporation shall pay or cause to be paid, to Executive Two Hundred and
Fifty-Eight Thousand Dollars ($258,000) per annum for fifteen (15) years in
monthly installments beginning with the 15th of the month following
Executive's last day of employment and in equal monthly installments
thereafter. If Executive should die before all annual payments under this
Section 1.01(a) are made, such payments shall continue to be paid to
Executive's estate in accordance with the terms of this Agreement.
(b) If Executive shall die while in the employ of the Corporation (or
while payments are being made under Section 1.01(a) of this Agreement), the
Corporation shall pay or cause to be paid to such beneficiary or
beneficiaries as Executive shall have designated pursuant to Section 1.02
(or in the absence of such designation, shall pay to the Executor of the
Will or the Administrator of the Estate of Executive) Two Hundred and
Fifty-Eight Thousand Dollars ($258,000) per annum for fifteen (15) years in
monthly installments beginning with the 15th of the calendar month
following Executive's death and in equal monthly installments thereafter.
(c) In the event of the Executive's death, the Executor of the Will,
or its Administrator of the Estate of the Executive can apply for a present
value payment of any unpaid portion of the payments to be made under this
Agreement, which the Corporation may grant, in its discretion. In such
event, the present value shall be based on an annual rate approved by the
Board of Directors.
1.02 For purposes of this Agreement, Executive may at any time
designate a beneficiary or beneficiaries by filing with the chief personnel
officer of Interpublic a Beneficiary Designation Form provided by such officer.
- 64 -
Executive may at any time, by filing a new Beneficiary Designation Form, revoke
or change any prior designation of beneficiary.
ARTICLE II
----------
Assignment
----------
2.01 This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of Interpublic. Neither this Agreement nor any rights
hereunder shall be subject in any matter to anticipation , alienation, sale,
transfer, assignment, pledge, encumbrance or charge by Executive, and any such
attempted action by Executive shall be void. This Agreement may not be changed
orally.
ARTICLE III
-----------
Contractual Nature of Obligation
--------------------------------
3.01 The liabilities of the Corporation to Executive pursuant to this
Agreement sha ll be those of a debtor pursuant to such contractual obligations as
are created by the Agreement.
ARTICLE IV
----------
General Provisions
------------------
4.01 It is understood that none of the payments made in accordance
with this Agreement shall be considered for purposes of determining benefits
under the Interpublic Pension Plan, nor shall such sums be entitled to credits
equivalent to interest under the Plan for Credits Equivalent to Interest on
Balances of Deferred Compensation Owing under Employment Agreement adopted
effective as of January 1, 1974 by Interpublic.
4.02 This Agreement shall be governed by and construed in accordance
with the Employee Retirement Income Security Act of 1974, as amended, and to the
extent not preempted thereby, the laws of the State of New York.
4.03 The Corporation shall have the right to withhold from all
payments made to Executive or his estate or beneficiary under this Agreement all
taxes which it shall reasonably determine shall be required.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
Name: C. KENT KROEBER
Title: Senior Vice President, Human
Resources
/s/ BARRY R. LINSKY
----------------------------------------
BARRY R. LINSKY
- 65 -
Exhibit 10(b)(ii)(c)
SUPPLEMENTAL AGREEMENT
----------------------
SUPPLEMENTAL AGREEMENT made as of March 26, 2001 by and between The
Interpublic Group of Companies, Inc., a corporation of the State of Delaware
(hereinafter referred to as the "Corporation"), and BARRY R. LINSKY (hereinafter
referred to as "Executive").
W I T N E S S E T H;
-------------------
WHEREAS, the Corporation and Executive are parties to an Employment
Agreement made as of January 1, 1991, a Supplemental Agreement dated as of
August 15, 1992, a Supplemental Agreement dated as of January 1, 1995, a
Supplemental Agreement made as of January 1, 1996 and a Supplemental Agreement
dated as of August 1, 1996 (hereinafter collectively referred to as the
"Employment Agreement"); and
WHEREAS, the Corporation and Executive desire to amend the Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein and in
the Employment Agreement set forth, the parties hereto, intending to be legally
bound, agree as follows:
1. Section 1.01 of the Employment Agreement is hereby amended,
effective as of March 26, 2001, so as to delete: "and ending on December 31,
2000" therefrom and substitute "and ending on December 31, 2005" therefore.
2. Section 2.01 (iii) of the Employment Agreement is hereby amended,
effective as of March 26, 2001, so as to delete: "Executive's initial position
will be Senior Vice President-Planning and Business Development at Interpublic"
therefrom and substitute "Serve as Executive Vice President" therefore.
. 3. Except as hereinabove amended, the Employment Agreement shall
continue in full force and effect.
4. This Supplemental Agreement shall be governed by the laws of the
State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROE BER
----------------------------------------
C. KENT KROEBER
/s/ BARRY R. LINSKY
----------------------------------------
BARRY R. LINSKY
- 66 -
Exhibit 10(b)(iii)(a)
SUPPLEMENTAL AGREEMENT
----------------------
AGREEMENT made as of June 30, 2000 by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a corporation of the State of Delaware (hereinafter
referred to as "Interpublic") and C. KENT KROEBER (hereinafter referred to as
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive and Interpublic are parties to an Executive Special
Benefit Agreement made as of July 1, 1987, and Supplemental Agreements made as
of May 23, 1990, June 1, 1994 and October 27, 1998 (hereinafter referred to
collectively as the "Agreement"); and;
WHEREAS, the Corporation and Executive desire to amend the Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereto, intending to be legally bound, agree as follows:
1. Section 1.03 of the July 1, 1987 Agreement and Sections 1.02 of the
October 27, 1998 and June 1, 1994 Agreements are hereby amended, so as to delete
"per annum for fifteen (15) years following Executive's death, such payments to
be made on January 15th of each of the fifteen (15) years beginning with the
year following the year in which Executive dies" and to substitute "per annum
for fifteen (15) years in monthly installments beginning with the 15th of the
calendar month following Executive's death, and in equal monthly installments
thereafter".
2. A new Section 1.11 to the July 1, 1987 Agreement and a new Se ction
1.05 to the October 27, 1998 Agreement are hereby added to read in their
entirety as follows: "If Executive's employment continues beyond the maximum
target benefit age provided in this Agreement, the maximum target age benefit
will be increased 4% annually until Executive fully retires. In no event,
however, will the 4% annual benefit increase be applied past the year 2003".
3. Except as herein above amended, the Agreement shall continue in
full force and effect.
4. This Supplemental Agreement shall be governed by the laws of the
State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ NICHOLAS J. CAMERA
----------------------------------------
By: NICHOLAS J. CAMERA
/s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
- 67 -
Exhibit 10(b)(iii)(b)
EXECUTIVE SPECIAL BENEFIT-INCOME REPLACEMENT AGREEMENT
------------------------------------------------------
AGREEMENT made as of June 1, 2000 by and between THE INTERPUBLIC GROUP
OF COMPANIES, INC., a corporation of the State of Delaware (hereinafter referred
to as "Interpublic") and C. KENT KROEBER (hereinafter referred to as
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive is in the employ of Interpublic and/or one or more
of its subsidiaries (Interpublic and its subsidiaries being hereinafter referred
to collectively as the "Corporation"); and
WHEREAS, Interpublic and Executive desire to enter into an Executive
Special Benefit-Income Replacement Agreement which shall be supplementary to any
employment agreement or arrangement which Executive now or hereinafter may have
with respect to Executive's employment by Interpublic or any of its
subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
---------
Income Replacement Payment
--------------------------
1.01 Effective January 1, 2002, provided Executive is employed by the
Corporation on such date, the Corporation shall provide Executive with the
following benefits:
(a) Upon Executive's retirement from the employ of the Corporation,
the Corporation shall pay or cause to be paid, to Executive Two Hundred and
Eighty-Six Thousand Dollars ($286,000) per annum for fifteen (15) years in
monthly installments beginning with the 15th of the calendar month
following Executive's last day of employment and in equal monthly
installments thereafter. If Executive should die before all annual payments
under this Section 1.01(a) are made, such payments shall continue to be
paid to Executive's estate in accordance with the terms of this Agreement.
(b) If Executive shall die while in the employ of the Corporation (or
while payments are being made under Section 1.01(a) of this Agreement), the
Corporation shall pay or cause to be paid to such beneficiary or
beneficiaries as Executive shall have designated pursuant to Section 1.02
(or in the absence of such designation, shall pay to the Execu tor of the
Will or the Administrator of the Estate of Executive) Two Hundred and
Eighty-Six Thousand Dollars ($286,000) per annum for fifteen (15) years in
monthly installments beginning with the 15th of the calendar month
following Executive's death, and in equal monthly installments thereafter.
(c) In the event of the Executive's death, the Executor of the Will,
or its Administrator of the Estate of the Executive can apply for a present
value payment of any unpaid portion of the payments to be made under this
Agreement, which the Corporation may grant, in its discretion. In such
event, the present value shall be based on an annual rate approved by the
Board of Directors.
1.02 For purposes of this Agreement, Executive may at any time
designate a beneficiary or beneficiaries by filing with the General Counsel and
Secretary of Interpublic a Beneficiary Designation Form provided by such
- 68 -
officer. Exe cutive may at any time, by filing a new Beneficiary Designation
Form, revoke or change any prior designation of beneficiary.
ARTICLE II
----------
Assignment
----------
2.01 This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of Interpublic. Neither this Agreement nor any rights
hereunder shall be subject in an y matter to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge by Executive, and any such
attempted action by Executive shall be void. This Agreement may not be changed
orally.
ARTICLE III
-----------
Contractual Nature of Obligation
--------------------------------
3.01 The liabilities of the Corporation to Executive pursuant to this
Agreement shall be those of a debtor pursuant to such contractual obligations as
are created by the Agreement.
ARTICLE IV
----------
General Provisions
------------------
4.01 It is understood that none of the payments made in accordance
with this Agreement shall be considered for purposes of determining benefits
under the Interpublic Pension Plan, nor sh all such sums be entitled to credits
equivalent to interest under the Plan for Credits Equivalent to Interest on
Balances of Deferred Compensation Owing under Employment Agreement adopted
effective as of January 1, 1974 by Interpublic.
4.02 This Agreement shall be governed by and construed in accordance
with the Employee Retirement Income Security Act of 1974, as amended, and to the
extent not preempted thereby, the laws of the State of New York.
4.03 The Corporation shall have the right to withhold from all
payments made to Executive or his estate or beneficiary under this Agreement all
taxes which it shall reasonably determine shall be required.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ NICHOLAS J. CAMERA
----------------------------------------
Name: NICHOLAS J. CAMERA
Title: Senior Vice President
General Counsel and Secretary
/s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
- 69 -
Exhibit 10(b)(iv)(a)
SUPPLEMENTAL AGREEMENT
----------------------
AGREEMENT made as of June 30, 2000 by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a corporation of the State of Delaware (hereinafter
referred to as "Interpublic") and THOMAS J. VOLPE (hereinafter referred to as
"Executive"). W I T N E S S E T H:
WHEREAS, Executive and Interpublic are parties to an Executive Special
Benefit Agreement made as of April 1, 1986 and Supplemental Agreements made as
of May 23, 1990 and March 21, 2000 (hereinafter referred to collectively as the
"Agreement"); and;
WHEREAS, the Corporation and Executive desire to amend the Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereto, intending to be legally bound, agree as follows:
1. Section 1.03 of the April 1,1986 Agreement is hereby amended, so as
to delete "per annum for fifteen years following Executive's death, such
payments to be made on January 15 of each of the fifteen years beginning with
the year following the year in which Executive dies" and to substitute "per
annum for fifteen (15) years in monthly installments beginning with the 15th of
the calendar month following Executive's death, and in equal monthly
installments thereafter".
2. Section 1.02 of the March 21, 2000 agreement is hereby amended, so
as to delete "per annum for fifteen (15) years following Executive's death, such
payments to be made on the 15th of the month following the month in which
Executive dies, and on each anniversary of such date for each of the fourteen
(14) years thereafter" and substitute "per annum for fifteen years in monthly
installments beginning with the 15th of the calendar month following Executive's
death, and in equal monthly installments thereafter".
3. Section 1.03 of the March 21, 2000 agreement is hereby amended, so
as to delete "per annum for fifteen (15) years following Executive's last day of
employment, such payments to be made on the 15th of the month following the
month in which Executive retires, and on each anniversary of such date for each
of the fourteen (14) years thereafter" and substitute "per annum for fifteen
years in monthly installments beginning with the 15th of the calendar month
following Exe cutive's last day of employment, and in equal monthly installments
thereafter".
4. A new Section 1.11 to the April 1, 1986 Agreement is hereby added
to read in their entirety as follows: "If Executive's employment continues
beyond the maximum target benefit age provided in this Agreement, the maximum
target age benefit will be increased 4% annually until Executive fully retires.
In no event, however, will the 4% annual benefit increase be applied past the
year 2003".
5. Except as herein above amended, the Agreement shall continue in
full force and effect.
- 70 -
6. This Supplemental Agreement shall be governed by the laws of the
State of New York.
THE INTERPUBLIC GRO UP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
/s/ THOMAS J. VOLPE
----------------------------------------
THOMAS J. VOLPE
- 71 -
Exhibit 10(b)(iv)(b)
SUPPLEMENTAL AGREEMENT
----------------------
AGREEMENT made as of June 30, 2000 by and between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the State o f Delaware
(hereinafter referred to as "Interpublic") and THOMAS J. VOLPE (hereinafter
referred to as "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive and Interpublic are parties to an Executive Special
Benefit Agreement -Income Replacement Agreement made as of June 1, 2000
(hereinafter referred to as the "AGREEMENT"); and;
WHEREAS, the Corporation and Executive desire to amend the Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereto, intending to be legally bound, agree as follows: 1.
Section 1.01 (a) of the Agreement is hereby amended, so as to delete "per annum
for fifteen (15) years following Executive's last day of employment, such
payments to be made on the 15th of the month following the month in which
Executive retires, and on each anniversary of such date for each of the fourteen
(14) years thereafter" and substitute "per annum for fifteen (15) years in
monthly installments beginning with the 15th of the calendar month following
Executive's last day of employment, and in equal monthly installments
thereafter".
2. Section 1.01 (b) of the Agreement is hereby amended, so as to
delete "per annum for fifteen (15) years following Executive's death, such
payments to be made on the 15th of the month following the month in which
Executive di es, and on each anniversary of such date for each of the fourteen
(14) years thereafter" and substitute "per annum for fifteen (15) years in
monthly installments beginning with the 15th of the calendar month following
Executive's death, and in equal monthly installments thereafter".
3. Except as herein above amended, the Agreement shall continue in
full force and effect.
4. This Supplemental Agreement shall be governed by the laws of the
State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
/s/ THOMAS J. VOLPE
----------------------------------------
THOMAS J. VOLPE
- 72 -
Exhibit 10(b)(iv)(c)
EXECUTIVE SPECIAL BENEFIT AGREEMENT
-----------------------------------
AGREEMENT made as of March 21, 2000 by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a corporation of the State of Delaware (hereinafter
referred to as "Interpublic") and THOMAS J. VOLPE (hereinafter referred to as
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive is in the employ of Interpublic and/or one or more
of its subsidiaries (Interpublic and its subsidiaries being hereinafter referred
to collectively as the "Corporation"); and
WHEREAS, Interpublic and Executive desire to enter into an Executive
Special Benefit Agreement which shall be supplementary to any employment
agreement or arrangement which Executive now or hereinafter may have with
respect to Executive's employment by Interpublic or any of its subsidiaries ;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
---------
Death and Special Retirement Benefits
-------------------------------------
1.01 The Corporation shall provide Executive with the following
benefits contingent upon Executive's compliance with all the terms and
conditions of this Agreement.
1.02 If, during a period of employment by the Corporation which is
continuous from the date of this Agreement, Executive shall die while in the
employ of the Corporation, the Corporation shall pay to such beneficiary or
beneficiaries as Executive shall have designated pursuant to Section 1.04 (or in
the absence of such designation, shall pay to the Executor of the Will or the
Administrator of the Estate of Executive) survivor income payments of One
Hundred Forty Seven Thousand Dollars ($147,000) per annum for fifteen (15) years
following Executive's death, such payments to be made on the 15th of the month
following the month in which Executive dies, and on each ann iversary of such
date for each of the fourteen (14) years thereafter.
1.03 Upon Executive's retirement from the employ of the Corporation
the Corporation shall pay to Executive special retirement benefits at the rate
of One Hundred Forty Seven Thousand Dollars ($147,000) per annum for fifteen
(15) years following Executive's last day of employment, such payments to be
made on the 15th of the month following the month in which Executive retires,
and on each anniversary of such date for each of the fourteen (14) years
thereafter.
1.04 For purposes of Sections 1.02 and 1.03, Executive may at any time
designate a beneficiary or beneficiaries by filing with the chief personnel
officer of Interpublic a Beneficiary Designation Form provided by such officer.
Executive may at any time, by filing a new Beneficiary Designation Form, revoke
or change any prior designation of beneficiary.
- 73 -
ARTICLE II
----------
Assignment
----------
2.01 This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of Interpublic. Neither this Agreement nor any rights
hereunder shall be subject in any matter to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge by Executive, and any such
attempted action by Executive shall be void. This Agreement may not be changed
orally, nor may this Agreement be amended to increase the amount of any benefits
that are payable pursuant to this Agreement or to accelerate the payment of any
such benefits.
ARTICLE III
-----------
Contractual Nature of Obligation
--------------------------------
3.01 The liabilities of the Corporation to Executive pursuant to this
Agreement shall be those of a debtor pursuant to such contractual obligations as
are created by the Agreement. Executive's rights with respect to any benefit to
which Executive has become entitled under this Agreement, but which Executive
has not yet r eceived, shall be solely the rights of a general unsecured creditor
of the Corporation.
ARTICLE IV
----------
General Provisions
------------------
4.01 It is understood that none of the payments made in accordance
with this Agreement shall be considered for purposes of determining benefits
under the Interpublic Pension Plan, nor shall such sums be entitled to credits
equivalent to interest under the Plan for Credits Equivalent to Interest on
Balances of Deferred Compensation Owing under Employment Agreement adopted
effective as of January 1, 1974 by Interpublic.
4.02 This Agreement shall be governed by and construed in accordance
with the Employee Retirement Income Security Act of 1974, as amended, and to the
extent not preempted thereby, the laws of the State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
/s/ THOMAS J. VOLPE
----------------------------------------
THOMAS J. VOLPE
- 74 -
Exhibit 10(b)(iv)(d)
EXECUTIVE SPECIAL BENEFIT-INCOME REPLACEMENT AGREEMENT
------------------------------------------------------
AGREEMENT made as of June 1, 2000 by and between THE INTERPUBLIC GROUP
OF COMPANIES, INC., a corporation of the State of Delaware (hereinafter referred
to as "Interpublic") and THOMAS J. VOLPE (hereinafter referred to as
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive is in the employ of Interpublic and/or one or more
of its subsidiaries (Interpublic and its subsidiaries being hereinafter referred
to collectively as the "Corporation"); and
WHEREAS, Interpublic and Executive desire to enter into an Executive
Special Benefit-Income Replacement Agreement which shall be supplementary to any
employment agreement or arrangement which Executive now or hereinafter may have
with respect to Executive's employment by Interpublic or any of its
subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
---------
Income Replacement Payment
--------------------------
1.01 Effective January 1, 2001, provided Executive is employed by the
Corporation on such date, the Corporation shall provide Executive with the
following benefits:
(a) Upon Executive's retirement from the employ of the Corporation,
the Corporation shall pay or cause to be paid, to Executive One Hundred and
Three Thousand Dollars ($103,000) per annum for fifteen (15) years following
Executive's last day of employment, such payments to be made on the 15th of the
month following the month in which Executive retires, and on each anniversary of
such date for each of the fourteen (14) years thereafter. If Executive should
die before all annual payments under this Section 1.01(a) are made, such
payments shall continue to be paid to Executive's estate in accordance with the
terms of this Agreement.
(b) If Executive shall die while in the employ of the Corporation (or
while payments are being made under Section 1.01(a) of this Agreement), the
Corporation shall pay or cause to be paid to such beneficiary or beneficiaries
as Executive shall have designated pursuant to Section 1.02 (or in the absence
of such designation, shall pay to the Executor of the Will or the Administrator
of the Estate of Executive) One Hundred and Three Thousand Dollars ($103,000)
per annum for fifteen (15) years following Executive's death, such payments to
be made on the 15th of the month following the month in which Executive dies,
and on each anniversary of such date for each of the fourteen (14) years
thereafter.
(c) In the event of the Executive's death, the Executor of the Will,
or its Administrator of the Estate of the Executive can apply for a present
value payment of any unpaid portion of the payments to be made under this
Agreement, w hich the Corporation may grant, in its discretion. In such event,
the present value shall be based on an annual rate approved by the Board of
Directors.
1.02 For purposes of this Agreement, Executive may at any time
designate a beneficiary or beneficiaries by filing with the chief personnel
officer of Interpublic a Beneficiary Designation Form provided by such officer.
- 75 -
Executive may at any time, by filing a new Beneficiary Designation Form, revoke
or change any prior designation of beneficiary.
ARTICLE II
----------
Assignment
----------
2.01 This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of Interpublic. Neither this Agreement nor any rights
hereunder shall be subject in any matter to anticipation, alienation, sale,
transfer, as signment, pledge, encumbrance or charge by Executive, and any such
attempted action by Executive shall be void. This Agreement may not be changed
orally.
ARTICLE III
-----------
Contractual Nature of Obligation
--------------------------------
3.01 The liabilities of the Corporation to Executive pursuant to this
Agreement shall be those of a debtor pursuant to such contractual obligations as
are created by the Agreement.
ARTICLE IV
----------
General Provisions
------------------
4.01 It is understood that none of the payments made in accordance
with this Agreement shall be considered for purposes of determining benefits
under the Interpublic Pension Plan, nor shall such sums be entitled to credits
equivalent to interest under the Plan for Credits Equivalent to Interest on
Balances of Deferred Compensation Owing under Employment Agreement adopted
effective as of January 1, 1974 by Interpublic.
4.02 This Agreement shall be governed by and construed in accordance
with the Employee Retirement Income Security Act of 1974, as amended, and to the
extent not preempted thereby, the laws of the State of New York.
4.03 The Corporation shall have the right to withhold from all
payments made to Executive or his estate or beneficiary under this Agreement all
taxes which it shall reasonably determine shall be required.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
Name: C. KENT KROEBER
Title: Senior Vice President, Human
Resources
/s/ THOMAS J. VOLPE
----------------------------------------
THOMAS J. VOLPE
- 76 -
Exhibit 10(b)(v)(a)
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT made as of September 5, 2000 by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a Delaware corporation ("Interpublic" or the
"Corporation"), and BRUCE NELSON ("Executive").
In consideration of the mutual promises set forth herein the parties
hereto agree as follows:
ARTICLE I
---------
Term of Employment
------------------
1.01 Subject to the provisions of Article VII and Article VIII, and
upon the terms and subject to the conditions set forth herein, the Corporation
will employ Executive for the period beginning September 5, 2000 ("Commencement
Date") and ending on August 31, 2005. (The period during which Executive is
employed hereunder is referred to herein as the "term of employment.") Executive
will serve the Corporation during the term of employment.
ARTICLE II
----------
Duties
------
2.01 During the term of employment, Executive will:
(i) Serve as Executive Vice President, Chief Marketing Officer of
Interpublic;
(ii) Use his best efforts to promote the interests of the
Corporation and devote his full time and efforts to their business and
affairs;
(iii) Perform such duties as the Corporation may from time to
time assign to him; and (iv) Serve in such other offices of the
Corporation as he may be elected or appointed to.
ARTICLE III
-----------
Regular Compensation
--------------------
3.01 The Corporation will compensate Executive for the duties
performed by him hereunder, by payment of a base salary at the rate of Six
Hundred Thousand Dollars ($600,000) per annum, of which Five Hundred Thousand
Dollars ($500,000) shall be payable in equal installments, which the Corporation
shall pay at semi -monthly intervals, subject to customary withholding for
federal, state and local taxes, and One Hundred Thousand Dollars ($100,000) will
be subject to an Executive Special Benefit Agreement to be entered into between
Executive and Interpublic.
3.02 The Corporation may at any time increase the compensation paid to
Executive under this Article III if the Corporation in its sole discretion shall
deem it advisable so to do in order to compensate him fairly for services
rendered to the Corporation.
- 77 -
ARTICLE IV
----------
Bonuses
-------
4.01 Executive will be eligible during the term of employment to
participate in the Management Incentive Compensation Plan ("MICP"), in
accordance with the terms and con ditions of the Plan established from time to
time. Executive shall be eligible to receive MICP awards up to one hundred
percent (100%) of his base salary, but the actual award, if any, shall be
determined by the Corporation and shall be based on profits of Interpublic,
Executive's individual performance, and management discretion.
4.02 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Compensation
Committee of its Board of Directors ("Committee") grant Executive an award for
the 1999-2002 performance period under Interpublic's Long-Term Performance
Incentive Plan ("LTPIP") equal to three thousand one hundred twenty-five (3,125)
performance units tied to the cumulative compound profit growth of Interpublic
and options under Interpublic's Stock Incentive Plan to purchase twenty -five
thousand (25,000) shares of Interpublic common stock which may not be exercised
in any part prior to the end of the performance period and thereafter shall be
exercisable in whole or in part.
4.03 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Committee grant
Executive an award for the 2001-2004 performance period under Interpublic's
Long-Term Performance Incentive Plan ("LTPIP") equal to six thousand (6,000)
performance units tied to the cumulative compound profit growth of Interpublic
and options under Interpublic's Stock Incentive Plan to purchase thirty thousand
(30,000) shares of Interpublic common stock which may not be exercised in any
part prior to the end of the performance period and thereafter shall be
exercisable in whole or in part.
ARTICLE V
---------
Interpublic Stock
-----------------
5.01 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Compensation
Committee of its Board of Directors ("Committee") grant to Executive twenty
thousand (20,000) shares of Interpublic Common Stock which will be subject to a
five year vesting restriction.
5.02 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Committee grant to
Executive options to purchase forty-five thousand (45,000) shares of Interpublic
Common Stock, which will be subject to all the terms and conditions of the
Interpublic Stock Incentive Plan. Forty percent (40%) of the options will be
exercisable after the third anniversary of the date of grant, thirty percent
(30%) will be exercisable after the fourth anniversary and thirty percent (30%)
will be exercisable after the fifth anniversary of the date of grant through the
tenth anniversary of the date of grant.
ARTICLE VI
----------
Other Employment Benefits
-------------------------
6.01 Executive shall be eligible to participate in such other employee
benefits as are available from time to time to other key management executives
of Interpublic in accordance with the then-current terms and conditions
- 78 -
established by Interpublic for eligibility and employee contributions required
for participation in such benefits opportunities.
6.02 Executive will be entitled to four (4) weeks of vacation per
year, to be taken in such amounts and at such times as shall be mutually
convenient for Executive and the Corporation.
6.03 Executive shall be reimbursed for all reasonable out -of-pocket
expenses actually incurred by him in the conduct of the business of the
Corporation provided that Executive submits all substantiation of such expenses
to the Corporation on a timely basis in accordance with standard policies of
Interpublic.
6.04 Executive shall be entitled to an automobile allowance of Seven
Thousand Dollars ($7,000) per annum, and shall be reimbursed for actual parking
expenses in New York City relating to business purposes, provided that Executive
submits all substantiation of such parking expenses to the Corporation on a
timely basis in accordance with standard policies of Interpublic.
6.05 Executive shall be elected a member of the Interpublic
Development Council.
ARTICLE VII
-----------
Termination
-----------
7.01 The Corporation may terminate the employment of Executive
hereunder:
(i) By giving Executive notice in writing at any time specifying
a termination date not less than twelve (12) months after the date on
which such notice is given, in which event Executive's employment
hereunder shall terminate on the date specified in such notice, or
(ii) By giving Executive notice in writing at any time specifying
a termination date less than twelve (12) months after the date on
which such notice is given. In this event Executive's employment
hereunder shall terminate on the date specified in such notice and the
Corporation shall thereafter pay him a sum equal to the amount by
which twelve (12) months salary at his then current rate exceeds the
salary paid to him for the period from the date on which such notice
is given to the termination date specified in such notice. Such
payment shall be made during the period immediately following the
termination date specified in such notice, in successive equal monthly
installments each of which shall be equal to one (1) month's salary at
the rate in effect at the time of such termination, with any residue
in respect of a period less than one (1) month to be paid together
with the last installment.
During the termination period provided in subsection (i), or in the
case of a termination under subsection (ii) providing for a termination period
of less than twelve (12) months, for a period of twelve (12) months after the
termination notice, Executive will be entitled to receive all employee benefits
accorded to him prior to termination which are made available to employees
generall y; provided, that such benefits shall cease upon such date that
Executive accepts employment with another employer offering similar benefits.
7.02 Notwithstanding the provisions of Section 7.01, during the period
of notice of termination, Executive will use reasonable, good faith efforts to
obtain other employment reasonably comparable to his employment under this
Agreement. Upon obtaining other employment (including work as a consultant,
independent contractor or establishing his own business), Executive will
promptly notify the Corporation, and (a) in the event that Executive's salary
and other non -contingent compensation ("new compensation") payable to Executive
in connection with his new employment shall equ al or exceed the salary portion
- 79 -
of the amount payable by the Corporation under Section 7.01, the Corporation
shall be relieved of any obligation to make payments under Section 7.01, or (b)
in the event Executive's new compensation shall be less than the salary portion
of payments to be made under Section 7.01, the Corporation will pay Executive
the difference between such payments and the new compensation.
7.03 Executive may at any time give notice in writing to the
Corporation specifying a termination date not less than twelve (12) months after
the date on which such notice is given, in which event his employment hereunder
shall terminate on the date specified in such notice, and Executive shall
receive his salary until the termination date.
7.04 Notwithstanding the provisions of Section 7.01, the Corporation
may terminate the employment of Executive hereunder, at any time after the
Commencement Date, for Cause. For purposes of this Agreement, "Cause" means the
following:
(i) Any material breach by Executive of any provision of this
Agreement (including without limitation Sections 8.01 and 8.02 hereof)
upon notice of same by the Corporation which breach, if capable of
being cured, has not been cured within fifteen (15) days after such
notice (it being understood and agreed that a breach of Section 8.01
or 8.02 hereof, among others, shall be deemed not capable of being
cured);
(ii) Executive's absence from duty for a period of time exceeding
fifteen (15) consecutive business days or twenty (20) out of any
thirty (30) consecutive business days (other than on account of
permitted vacation or as permitted for illness, disability or
authorized leave in accordance with Interpublic's policies and
procedures) without the co nsent of the Board of Directors of the
Corporation;
(iii) The acceptance by Executive, prior to the effective date of
Executive's voluntary resignation from employment with the
Corporation, of a position with another employer, without the consent
of the Board of Directors;
(iv) Misappropriation by Executive of funds or property of the
Corporation or any attempt by Executive to secure any personal profit
related to the business of the Corporation (other than as permitted by
this Agreement) and not fairly disclosed to and approved by the Board
of Directors;
(v) Fraud, dishonesty, disl oyalty, gross negligence or willful
misconduct on the part of Executive in the performance of his duties
as an employee of the Corporation;
(vi) A felony conviction of Executive; or
(vii) Executive's engaging, during the term of employment, in
activities which are prohibited by state and/or federal laws
prohibiting discrimination based on age, sex, race, religion or
national origin, or engaging in conduct which is constituted as sexual
harassment.
Upon a termination for Cause, the Corporation shall pay Executive his
salary through the date of termination of employment, and Executive shall not be
entitled to any Special Bonus or Performance Bonus with respect to the year of
termination, or to any other payments hereunder.
- 80 -
ARTICLE VIII
------------
Covenants
---------
8.01 While Executive is employed hereunder by the Corporation he shall
not, without the prior written consent of the Corporation, which will not be
unreasonably withheld, engage, directly or indirectly, in any other trade,
business or employment, or have any interest, direct or indirect, in any other
business, firm or corporation; provided, however, that he may continue to own or
may hereafter acquire any securities of any class of any publicly-owned company.
8.02 Executive shall treat as confidential and keep secret the affairs
of the Corporation and shall not at any time during the term of employment or
for a period of three (3) years thereafter, without the prior written consent of
the Corporation, divulge, furnish or make known or accessible to, or use for the
benefit of, anyone other than the Corporation and its subsidiaries and
affiliates any information of a confidential nature relating in any way to the
business of the Corporation or its subsidiaries or affiliates or their clients
and obtained by him in the course of his employment hereunder.
8.03 All records, papers and documents kept or made by Executive
relating to the business of the Corporation or its subsidiaries or affiliates or
their clients shall be and remain the property of the Corporation.
8.04 All articles invented by Executive, processes discovered by him,
trademarks, designs, advertising copy and art work, display and promotion
materials and, in general, everything of value conceived or created by him
pertaining to the business of the Corporation or any of its subsidiaries or
affiliates during the term of employment, and any and all rights of every nature
whatever thereto, shall immediately become the property of the Corporation, and
Executive will assign, transfer and deliver all patents, copyrights, royalties,
designs and c opy, and any and all interests and rights whatever thereto and
thereunder to the Corporation.
8.05 Following the termination of Executive's employment hereunder for
any reason, Executive shall not for a period of twenty-four (24) months from
such termination, (a) solicit any employee of the Corporation, Interpublic or
any affiliated company of Interpublic to leave such employ to enter the employ
of Executive or of any person, firm or corporation with which Executive is then
associated or (b) solicit or handle on Executive's own behalf or on behalf of
any other person, firm or corporation, the event marketing, public relations,
advertising, sales promotion or market research business of any person or entity
which is a client of the Corporation.
8.06 If at the time of enforcement of any provision of this Agreement,
a court shall hold that the duration, scope or area restriction of any provision
hereof is unreasonable under circumstances now or then existing, the parties
hereto agree that the maximum duration, scope or area reasonable under the
circumstances shall be substituted by the court for the stated duration, scope
or area.
8.07 Executive acknowledges that a remedy at law for any breach or
attempted breach of Article VIII of this Agreement will be inadequate, and
agrees that the Corporation shall be entitled to specific performance and
injunctive and other equitable relief in the case of any such breach or
attempted breach.
8.08 Executive represents and warrants that neither the execution and
delivery of this Employment Agreement nor the performance of Executive's
services hereunder will conflict with, or result in a breach of, any agre ement
to which Executive is a party or by which he may be bound or affected, in
particular the terms of any employment agreement to which Executive may be a
party. Executive further represents and warrants that he has full right, power
and authority to enter into and carry out the provisions of this Employment
Agreement.
- 81 -
ARTICLE IX
----------
Arbitration
-----------
9.01 Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, including claims involving alleged legally
protected rights, such as claims for age discrimination in violation of the Age
Discrimination in Employment Act of 1967, as amended, Title VII of the Civil
Rights Act, as amended, and all other federal and state law claims for
defamation, breach of contract, wrongful termination and any other claim arising
because of Executive's employment, termination of employment or otherwise, shall
be settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association and Section 12.01 hereof, and judgement
upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. The arbitration shall take place in the city where
Executive customarily renders services to the Corporation. The prevailing party
in any such arbitration shall be entitled to receive attorney's fees and costs.
ARTICLE X
---------
Assignment
----------
10.01 This Agreement shall be binding upon and enure to the benefit of
the successors and assigns of the Corporation. Neither this Agreement nor any
rights hereunder shall be assignable by Executive and any such purported
assignment by him shall be void.
ARTICLE XI
----------
Agreement Entire
----------------
11.01 This Agreement constitutes the entire understanding between the
Corporation and Executive concerning his employment by the Corporation or any of
its parents, affiliates or subsidiaries and supersedes any and all previous
agreements between Executive and the Corporation or any of its parents,
affiliates or subsidiaries concerning such employment, and/or any compensation
or bonuses. Each party hereto shall pay its own costs and expenses (including
legal fees) incurred in connection with the prep aration, negotiation and
execution of this Agreement. This Agreement may not be changed orally.
ARTICLE XII
-----------
Applicable Law
--------------
- 82 -
12.01 The Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
Name: C. KENT KROEBER
Title: Senior Vice President, Human
Resources
/s/ BRUCE NELSON
----------------------------------------
BRUCE NELSON
- 83 -
Exhibit 10(b)(v)(b)
EXECUTIVE SPECIAL BENEFIT AGREEMENT
-----------------------------------
AGREEMENT made as of September 1, 2000, by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a corporation of the State of Delaware (hereinafter
referred to as "Interpublic") and BRUCE NELSON (hereinafter referred to as
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive is in the employ of Interpublic and/or one or more
of its subsidiaries (Interpublic and its subsidiaries being hereinafter referred
to collectively as the "Corporation"); and
WHEREAS, Interpublic and Executive desire to enter into an Executive
Special Benefit Agreement which shall be supplementary to any employment
agreement or arrangement which Executive now or hereinafter may have with
respect to Executive's employment by Interpublic or any of its subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
---------
Death and Special Retirement Benefits
-------------------------------------
1.01 For purposes of this Agreement the "Accrual Term" shall mean the
period of seventy -two (72) months beginning on the date of this Agreement and
ending on the day preceding the sixth anniversary hereof or on such earlier date
on which Executive shall cease to be in the employ of the Corporation.
1.02 The Corporation shall provide Executive with the following
benefits contingent upon Executive's compliance with all the terms and
conditions of this Agreement and Executive's satisfactory completion of a
physical examination in connection with an insurance policy on the life of
Executive which Interpublic or its assignee (other than Executive) proposes to
obtain and own. Effective at the end of the Accrual Term, Executive's annual
compensation will be increased by One Hundred Thousand Dollars ($100,000) if
Executive is in the employ of the Corporation at that time.
1.03 If, during the Accrual Term or thereafter during a period of
employment by the Corporation which is continuous from the date of this
Agreement, Executive shall die while in the employ of the Corporation, the
Corporation shall pay to such beneficiary or beneficiaries as Executive shall
have designated pursuant to Section 1.07 (or in the absence of such designation,
shall pay to the Executor of the Will or the Administrator of the Estate of
Executive) survivor income payments of One Hundred and Twenty Thousand Dollars
($120,000) per annum for fifteen (15) years in monthly installments beginning
with the 15th of the calendar month following Executive's death, and in equal
monthly installment thereafter.
1.04 If, after a continuous period of employment from the date of this
Agreement, Executive shall retire from the employ of the Corporation so that the
first day on which Executive is no longer in the employ of the Corporation
occurs on or after Executive's sixtieth birthday, the Corporation shall pay to
Executive special retirement benefits at the rate of One Hundred and Twenty
Thousand Dollars ($120,000) per annum for fifteen (15) years in monthly
installments beginning with the 15th of the calendar month following Executive's
last day of employment, and in equal monthly installments thereafter.
- 84 -
1.05 If, after a continuous period of employment from the date of this
Agreement, Executive shall retire, resign, or be terminated from the employ of
the Corporation so that the first day on which Executive is no longer in the
employ of the Corporation occurs on or after Executive's fifty -fifth birthday
but prior to Executive's sixtieth birthday, the Corporation shall pay to
Executive special retirement benefits at the annual rates set forth below for
fifteen years beginning with the calendar month following Executive's last day
of employment, such payments to be made in equal monthly installments:
Last Day of Employment Annual Rate
---------------------- -----------
On or after 55th birthday but prior to 56th birthday $62,400
On or after 56th birthday but prior to 57th birthday $76,800
On or after 57th birthday but prior to 58th birthday $91,200
On or after 58th birthday but prior to 59th birthday $105,600
On or after 59th birthday but prior to 60th birthday $112,800
1.06 If, following such termination of employment, Executive shall die
before payment of all of the installments provided for in Section 1.04 or
Section 1.05, any remaining installments shall be paid to such beneficiary or
beneficiaries as Executive shall have designated pursuant to Section 1.07 or, in
the absence of such designation, to the Executor of the Will or the
Administrator of the Estate of Executive.
1.07 For purposes of Sections 1.03, 1.04 and 1.05, or any of them,
Executive may at any time designate a beneficiary or beneficiaries by filing
with the chief personnel officer of Interpublic a Beneficiary Designation Form
provided by such officer. Executive may at any time, by filing a new Beneficiary
Designation Form, revoke or change any prior designation of beneficiary.
1.08 If Executive shall die while in the employ of the Corporation, no
sum shall be payable pursuant to Sections 1.04, 1.05, 1.06, 2.01, 2.02 or 2.03.
1.09 In connection with the life insurance policy referred to in
Section 1.02, Interpublic has relied on written representations made by
Executive concerning Executive's age and the state of Executive's health. If
said representations are untrue in any material respect, whether directly or by
omission, and if the Corporation is damaged by any such untrue representations,
no sum shall be payable pursuant to Sections 1.03, 1.04, 1.05, 1.06, 2.01, 2.02
or 2.03.
1.10 It is expressly agreed that Interpublic or its assignee (other
than Executive) shall at all times be the sole and complete owner and
beneficiary of the life insurance policy referred to in Sections 1.02 and 1.09,
shall have the unrestricted right to use all amounts and exercise all options
and privileges thereunder without the knowledge or consent of Executive or
Executive's designated beneficiary or any other person and that neither
Executive nor Executive's designated beneficiary nor any other person shall have
any right, title or interest, legal or equitable, whatsoever in or to such
policy.
ARTICLE II
----------
Alternative Deferred Compensation
---------------------------------
2.01 If Executive shall, for any reason other than death, cease to be
employed by the Corporation on a date prior to Executive's fifty -fifth birthday,
the Corporation shall, in lieu of any payment pursuant to Article I of this
Agreement, c ompensate Executive by payment, at the times and in the manner
specified in Section 2.02, of a sum computed at the rate of One Hundred Thousand
Dollars ($100,000) per annum for each full year and proportionate amount for any
part year from the date of this Agreement to the date of such termination during
which Executive is in the employ of the Corporation with a maximum payment of
- 85 -
One Hundred Thousand Dollars ($100,000). Such payment shall be conditional upon
Executive's compliance with all the ter ms and conditions of this Agreement.
2.02 The aggregate compensation payable under Section 2.01
shall be paid in equal consecutive monthly installments commencing with the
first month in which Executive is no longer in the employ of the Corporation and
continuing for a number of months equal to the number of months which have
elapsed from the date of this Agreement to the commencement date of such
payments, up to a maximum of seventy-two (72) months.
2.03 If Executive dies while receiving payments in accordance with the
provisions of Section 2.02, any installments payable in accordance with the
provisions of Section 2.02 less any amounts previously paid Executive in
accordance therewith, shall be paid to the Executor of the Will or the
Administrator of the Estate of Executive.
2.04 It is understood that none of the payments made in accordance
with this Agreement shall be considered for purposes of determining benefits
under the Interpublic Pension Plan, nor shall such sums be entitled to credits
equivalent to interest under the Plan for Credits Equivalent to Interest on
Balances of Deferred Compensation Owing under Employment Agreements adopted
effective as of January 1, 1974 by Interpublic.
ARTICLE III
-----------
Non-solicitation of Clients or Employees
----------------------------------------
3.01 Following the termination of Executive's employment hereunder for
any reason, Executive shall not for a period of twelve months either (a) solicit
any employee of the Corporation to leave such employ to enter the employ of
Executive or of any corporation or enterprise with which Executive is then
associated or (b) solicit or handle on Executive's own behalf or on behalf of
any other person, firm or corporation, the advertising, public relations, sales
promotion or market research business of any advertiser which is a client of the
Corporation at the time of such termination.
ARTICLE IV
----------
Assignment
----------
4.01 This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of Interpublic. Neither this Agreement nor any rights
hereunder shall be subject in any matter to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge by Executive, and any such
attempted action by Executive shall be void. This Agreement may not be changed
orally, nor may this Agreement be amended to increase the amount of any benefits
that are payable pursuant to this Agreement or to accelerate the payment of any
such benefits.
ARTICLE V
---------
Contractual Nature of Obligation
--------------------------------
5.01 The liabilities of the Corporation to Executive pursuant to this
Agreement shall be those of a debtor pursuant to such contractual obligations as
are created by the Agreement. Executive's rights with respect to any benefit to
which Executive has become entitled under this Agreement, but which Executive
has not yet received, shall be solely the rights of a general unsecured creditor
of the Corporation.
- 86 -
ARTICLE VI
----------
Applicable Law
--------------
6.01 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
/s/ BRUCE NELSON
----------------------------------------
BRUCE NELSON
- 87 -
Exhibit 10(b)(v)(c)
SUPPLEMENTAL AGREEMENT
----------------------
SUPPLEMENTAL AGREEMENT made as of September 1, 2000 by and between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a corporation of the State of Delaware
(hereinafter referred to as "Interpublic"), and BRUCE NELSON (hereinafter
referred to as "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Interpublic and Executive are parties to an Executive Special
Benefit Agreement made as of January 1, 1986 (hereinafter referred to as the
"Agreement"); and
WHEREAS, Interpublic and Executive desire to amend the Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein and in
the Agreement set forth, the parties hereto, intending to be legally bound,
agree as follows:
1. Section 1.03 of the Agreement is hereby amended, effective as of
September 1, 2000, so as to delete "survivor income payments of One Hundred and
Fifty Thousand Dollars ($150,000) per annum for fifteen years following
Executive's death, such payments to be made on January 15 of each of the fifteen
years beginning with the year following the year in which Executive dies" and
substitute, "survivor income payments of Two Hundred and Eighty Thousand Dollars
($280,000) per annum for fifteen years in monthly installments beginning with
the 15th of the calendar month following Executive's death and in equal monthly
installments".
2. Section 1.04 of the Agreement is hereby amended, effective as of
September 1, 2000 so as to delete "per annum for fifteen years beginning with
the calendar month following Executive's last day of employment, such payments
to be made in equal monthly installments" and substitute, "per annum for fifteen
years in monthly installments beginning with the 15th of the calendar month
following Executive's last day of employment and in equal monthly installments".
3. Section 1.05 of the Agreement is hereby amended, effective as of
September 1, 2000 so as to delete "Executive's forty-ninth birthday", and
substitute "Executive's fiftieth birthday but prior to Executive's sixtieth
birthday" and add "Executive shall receive certain supplementary retirement
benefits at the following rates. Increased benefit amounts apply if Executive
remains employed at least until age 55".
Last Day of Employment Annual Rate
---------------------- --------
On or after 49th birthday but prior to 50th birthday $150,000
On or after 50th birthday but prior to 51st birthday $156,000
On or after 51st birthday but prior to 52nd birthday $162,000
On or after 52nd birthday but prior to 53rd birthday $168,000
On or after 53rd birthday but prior to 54th birthday $174,000
On or after 54th birthday but prior to 55th birthday $180,000
On or after 55th birthday but prior to 56th birthday $219,280
On or after 56th birthday but prior to 57th birthday $232,960
On or after 57th birthday but prior to 58th birthday $246,640
On or after 58th birthday but prior to 59th birthday $260,320
On or after 59th birthday but prior to 60th birthday $270,160
4. Section 2.01 of the Agreement is hereby amended, effective as of
September 1, 2000 so as to delete "If Executive shall, for any reason other than
death, cease to be employed by the Corporation on a date prior to November 3,
- 88 -
1995, the Corporation shall, in lieu of any payment pursuant to Article I of
this Agreement, compensate Executive by payment, at the times and in the manner
specified in Section 2.02, of a sum computed at the rate of Fifty Thousand
Dollars ($50,000)" and substitute "If Executive leaves the employ of the
Corporation for any reason other than death, he will be paid, the vested
benefit".
5. This Supplemental Agreement shall be governed by the laws of the
State of New York.
Except as hereinabove amended, the Agreement shall continue in full
force and effect.
THE INTERPUBLIC GRO UP OF
COMPANIES, INC.
By: /s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
/s/ BRUCE NELSON
----------------------------------------
BRUCE NELSON
- 89 -
Exhibit 10(b)(vi)(a)
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT made as of January 1, 2001 by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a Delaware corporation ("Interpublic" or the
"Corporation"), and FRANK B. LOWE ("Executive").
In consideration of the mutual promises set forth herein the parties
hereto agree as follows:
ARTICLE I
---------
Term of Employment
------------------
1.01 Subject to the provisions of Article VII and Article VIII, and
upon the terms and subject to the conditions set forth herein, the Corporation
will employ Executive for the period beginning January 1, 2001 ("Commencement
Date") and ending on December 31, 2005. (The period during which Executive is
employed hereunder is referred to herein as the "term of employment.") Executive
will serve the Corporation during the term of employment.
ARTICLE II
----------
Duties
------
2.01 During the term of employment, Executive will:
(i) Serve as Chairman and Chief Executive Officer of The Lowe
Group, Lowe Lintas Worldwide, and Octagon Worldwide, wholly-owned
subsidiaries of Interpublic ("Lowe").
(ii) Use his best efforts to promote the interests of the
Corporation and Lowe and devote his full business time and efforts to
their business and affairs;
(iii) Perform such duties as the Corporation may from time to
time assign to him; (iv) Serve in such other offices of the
Corporation and/or Lowe as he may be elected or appointed to;
(v) No significant change in Executive's status or his nature or
scope of his duties shall be effected without his consent; and
(vi) Be proposed as a member of the Corporation's Board of
Directors.
ARTICLE III
-----------
Regular Compensation
--------------------
3.01 The Corporation will compensate Executive for the duties
performed by him hereunder, by payment of a base salary at the rate of One
Million United States Dollars ($1,000,000) per annum, payable in equal
installments, which the Corporation shall pay at semi-monthly intervals, subject
to customary withholding for federal, state and local taxes. In addition, the
Corporation will make a payment of Two Hundred Thousand United States Dollars
($200,000) per year pursuant to an Executive Special Benefit Agreement to be
entered into between the Executive and Interpublic. In addition, the Executive
Severance Agreement, dated January 1, 1998 between the Executive and the
- 90 -
Corporation ("ESA") will remain in full force and effect during the term of
employment.
3.02 The Corporation may at any time increase the compensation paid to
Executive under this Article III if the Corporation in its sole discretion shall
deem it advisable so to do in order to compensate him fairly for services
rendered to the Corporation.
ARTICLE IV
----------
Bonuses
-------
4.01 Executive will be eligible during the term of employment to
participate in the Management Incentive Compensation Plan ("MICP"), in
accordance with the terms and conditions of the Plan established from time to
time, and appropriate for an executive holding such a position.
4.02 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Compensation
Committee of its Board of Directors ("Committee") grant Executive an additional
award for th e 2000-2002 performance period under Interpublic's Long Term
Performance Incentive Plan ("LTPIP") equal to Two Thousand (2,000) performance
units tied to the cumulative compound profit growth of Lowe Lintas and options
under Interpublic's Stock Incentive Plan to purchase Twenty Thousand (20,000)
shares of Interpublic common stock which may not be exercised in any part prior
to the end of the performance period and thereafter shall be exercisable in
whole or in part.
4.03 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Committee grant
Executive an award for the 2001-2004 performance period under the LTPIP equal to
Eleven Thousand (11,000) performance units tied to the cumulative compound
profit growth of Lowe Lintas and Three Thousand (3,000) units tied to his
cumulative compound project growth of Octagon and options under Interpublic's
Stock Incentive Plan to purchase Sixty-Five Thousand (65,000) shares of
Interpublic common stock which may not be exercised in any part prior to the end
of the performance period and thereafter shall be exercisable in whole or in
part.
4.04 Executive has previously been granted an award under
Interpublic's 1999-2002 LTPIP equal to Three Thousand (3,000) units tied to the
cumulative compound profit growth of Octagon 2000.
ARTICLE V
---------
Interpublic Stock
-----------------
5.01 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Compensation
Committee of its Board of Directors ("Committee") grant to Executive One Hundred
Thirty-Five Thousand (135,000) shares of Interpublic Common Stock which will be
subject to a four year vesting restriction.
5.02 As soon as administratively feasible after full execution of this
Agreement, Interpublic will use its best efforts to have the Committee grant to
Executive options to purchase One Hundred Fifty Thousand (150,000) shares of
Interpublic Common Stock, which will be subject to all the terms and conditions
of the Interpublic Stock Incentive Plan. Forty percent (40%) of the options will
be exercisable after the third anniversary of the date of grant, thirty percent
(30%) will be exercisable after the fourth anniversary and thir ty percent (30%)
will be exercisable after the fifth anniversary of the date of grant through the
tenth anniversary of the date of grant.
- 91 -
ARTICLE VI
----------
Other Employment Benefits
-------------------------
6.01 Executive shall be eligible to participate in such other employee
benefits as are available from time to time to other key management executives
of Interpublic in accordance with the then-current terms and conditions
established by Interpublic for eligibility and employee contributions required
for participation in such benefits opportunities.
6.02 Executive shall be entitled to an automobile allowance of Ten
Thousand Dollars ($10,000) per annum.
6.03 Executive shall remain a member of the Interpublic Development
Council.
ARTICLE VII
-----------
Termination
-----------
7.01 The Corporation may terminate the employment of Executive
hereunder:
(i) By giving Executive notice in writing at any time specifying
a termination date not less than twelve (12) months after the date on
which such notice is given, in which event Executive's employment
hereunder shall terminate on the date specified in such notice, or
(ii) By giving Executive notice in writing at any time specifying
a termination date less than twelve (12) months after the date on
which such notice is given. In this event Executive's employment
hereunder shall terminate on the date specified in such notice and the
Corporation shall thereafter pay him a sum equal to the amount by
which twelve (12) months salary at his then current rate exceeds the
salary paid to him for the period from the date on which such notice
is given to the termination date specified in such notice. Such
payment shall be made during the period immediately following the
termination date specified in such notice, in successive equal monthly
installments each of which shall be equal to one (1) month's salary at
the rate in effect at the time of such termination, with any residue
in respect of a period less than one (1) month to be paid together
with the last installment.
During the termination period provided in subsection (i), or in the
case of a termination under subsection (ii) providing for a termination period
of less than twelve (12) months, for a period of twelve (12) months after the
termination notice, Executive will be entitled to receive all employee benefits
accorded to him prior to termination which are made available to employees
generally; provided, that such benefits shall cease upon such date that
Executive accepts employment with another employer offering similar benefits. In
addition, in the event of a termination pursuant to subsection (i) or (ii),
Executive will be entitled to a pro-rata portion of his LTPIP entitlements,
restricted stock grants and stock option grants. Such pro-ration shall be in
accordance with Interpublic's standard policies and practices in such cases.
7.02 Notwithstanding the provisions of Section 7.01, during the period
of notice of termination, Executive will use reasonable, good faith efforts to
obtain other employment reasonably comparable to his employment under this
Agreement. Upon obtaining other employment (including work as a consultant,
independent contractor or establishing his own business), Executive will
promptly notify the Corporation, and (a) in the event that Executive's salary
and other non -contingent compensation ("new compensation") payable to Executive
in connection with his new employment shall equal or exceed the salary portion
- 92 -
of the amount payable by the Corporation under Section 7.01, the Corporation
shall be reli eved of any obligation to make payments under Section 7.01, or (b)
in the event Executive's new compensation shall be less than the salary portion
of payments to be made under Section 7.01, the Corporation will pay Executive
the difference between such payments and the new compensation.
7.03 Executive may at any time give notice in writing to the
Corporation specifying a termination date not less than twelve (12) months after
the date on which such notice is given, in which event his employment hereunder
shall terminate on the date specified in such notice, and Executive shall
receive his salary until the termination date.
7.04 Notwithstanding the provisions of Section 7.01, the Corporation
may terminate the employment of Executive hereunder, at any time after the
Commencement Date, for Cause. For purposes of this Agreement, "Cause" means the
following:
(i) Any material breach by Executive of any provision of this
Agreement (including without limitation Sections 8.01 and 8.02 hereof)
upon notice of same by the Corporation which breach, if capable of
being cured, has not been cured within fifteen (15) days after such
notice (it being understood and agreed that a breach of Section 8.01
or 8.02 hereof, among others, shall be deemed not capable of being
cured);
(ii) Executive's absence from duty for a period of time exceeding
fifteen (15) consecutive business days or twenty (20) out of any
thirty (30) consecutive business days (other than on account of
permitted vacation or as permitted for illness, disability or
authorized leave in accordance with Interpublic's policies and
procedures) without the consent of the Board of Directors of the
Corporation;
(iii) The acceptance by Executive, prior to the effecti ve date of
Executive's voluntary resignation from employment with the
Corporation, of a position with another employer, without the consent
of the Board of Directors;
(iv) Misappropriation by Executive of funds or property of the
Corporation or any attempt by Executive to secure any personal profit
related to the business of the Corporation (other than as permitted by
this Agreement) and not fairly disclosed to and approved by the Board
of Directors;
(v) Fraud, dishonesty, disloyalty, gross negligence or willful
misconduct on the part of Executive in the performance of his duties
as an employee of the Corporation;
(vi) A felony conviction of Executive; or
(vii) Executive's engaging, during the term of employment, in
activities which are prohibited by state and/or federal laws
prohibiting discrimination based on age, sex, race, religion or
national origin, or engaging in conduct which is constituted as sexual
harassment.
Upon a termination for Cause, the Corporation shall pay Executive his
salary through the date of termination of employment, and Executive shall not be
entitled to any Special Bonus or Performance Bonus with respect to the year of
termination, or to any other payments hereunder.
7.05 If Executive dies before D ecember 31, 2005, his employment
hereunder shall terminate on the date of his death.
- 93 -
ARTICLE VIII
------------
Covenants
---------
8.01 While Executive is employed hereunder by the Corporation he shall
not, without the prior written consent of the Corporation, which will not be
unreasonably withheld, engage, directly or indirectly, in any other trade,
business or employment, or have any interest, direct or indirect, in any other
business, firm or corporation; provided, however, that he may continue to own or
may hereafter acquire any securities of any class of any publicly-owned company
as well as investments in other entities that are held for investment purposes
only provided that such entities are not in competition with the Corporation and
that investment in such entities does not create a conflict of interest on his
part of Executive.
8.02 Executive shall treat as confidential and keep secret the affairs
of the Corporation and shall not at any time during the term of employment or
thereafter, without the prior written consent of the Corporation, divulge,
furnish or make known or accessible to, or use for the benefit of, anyone other
than the Corporation and its subsidiaries and affiliates any information of a
confidential nature relating in any way to the business of the Corporation or
its subsidiaries or affiliates or their clients and obtained by him in the
course of his employment hereunder.
8.03 All records, papers and documents kept or made by Executive
relating to the business of the Corporation or its subsidiaries or affiliates or
their clients shall be and remain the property of the Corporation.
8.04 All articles invented by Executive, processes discovered by him,
trademarks, designs, advertising copy and art work, display and promotion
materials and, in general, everything of value conceived or created by him
pertaining to the business of the Corporation or any of its subsidiaries or
affiliates during the term of employment, and any and all rights of every nature
whatever thereto and which are not in the public domain, shall immediately
become the property of the Corporation, and Executive will assign, transfer and
deliver all patents, copyrights, royalties, designs and copy, and any and all
interests and rights whatever thereto and thereunder to the Corporation.
8.05 Following the termination of Executive's employment hereunder for
any reason, Executive shall not for a period of two (2) years from such
termination, (a) solicit any employee of the Corporation, Interpublic or any
affiliated company of Interpublic to leave such employ to enter the employ of
Executive or of any person, firm or corporation with which Executive is then
associated or (b) solicit or handle on Executive's own behalf or on behalf of
any other person, firm or corporation, the event marketing, public relations,
advertising, sales promotion or market research business of any person or entity
which is a client of the Corporation at the time of termination of employment.
8.06 If at the time of enforcement of any provision of this Agreement,
a court shall hold that the duration, scope or area restriction of any provision
hereof is unreasonable under circumstances now or then existing, the parties
hereto agree that the maximum duration, scope or area reasonable under the
circumstances shall be substituted by the court for the stated duration, scope
or area.
8.07 Executive acknowledges that a remedy at law for any breach or
attempted breach of Article VIII of this Agreement will be inadequate, and
agrees that the Corporation shall be entitled to specific performance and
injunctive and other equitable relief in the case of any such breach or
attempted breach.
8.08 Executive represents and warrants that neither the execution and
delivery of this Employment Agreement nor the performance of Executive's
services hereunder will conflict with, or result in a breach of, any agreement
to which Executive is a party or by which he may be bound or affected, in
- 94 -
particular the terms of any employment agreement to which Executive may be a
party. Executive further represents and warrants that he has full right, power
and authority to enter into and carry out the provisions of this Employment
Agreement.
ARTICLE IX
----------
Arbitration
-----------
9.01 Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, including claims involving alleged legally
protected rights, such as claims for age discrimination in violation of the Age
Discrimination in Employment Act of 1967, as amended, Title VII of the Civil
Rights Act, as amended, and all other federal and state law claims for
defamation, breach of contract, wrongful termination and any other claim arising
because of Ex ecutive's employment, termination of employment or otherwise, shall
be settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association and Section 12.01 hereof, and judgement
upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. The arbitration shall take place in any of the cities
where Executive customarily renders services to the Corporation. The prevailing
party in any such arbitration shall be entitled to receive attorney's fees and
costs.
ARTICLE X
---------
Assignment
----------
10.01 This Agreement shall be binding upon and enure to the benefit of
the successors and assigns of the Corporation. Neither this Agreement nor any
rights hereunder shall be assignable by Executive and any such purported
assignment by him shall be void.
ARTICLE XI
----------
Agreement Entire
----------------
11.01 This Agreement (and the ESA) constitutes the entire
understanding between the Corporation and Executive concerning his employment by
the Corporation or any of its parents, affiliates or subsidiaries and supersedes
any and all p revious agreements between Executive and the Corporation or any of
its parents, affiliates or subsidiaries concerning such employment, and/or any
compensation or bonuses. Each party hereto shall pay its own costs and expenses
(including legal fees) incurred in connection with the preparation, negotiation
and execution of this Agreement. This Agreement may not be changed orally.
- 95 -
ARTICLE XII
-----------
Applicable Law
--------------
12.01 The Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
Name: C. KENT KROEBER
Title: Senior Vice President, Human
Resources
/s/ FRANK B. LOWE
----------------------------------------
FRANK B. LOWE
- 96 -
Exhibit 10(b)(vi)(b)
SUPPLEMENTAL AGREEMENT
----------------------
SUPPLEMENTAL AGREEMENT made as of January 2, 2001 between THE
INTERPUBLIC GROUP OF COMPANIES, INC., a Delaware corporation ("Interpublic") and
FRANK B. LOWE ("Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Interpublic and Executive are parties to an Employment
Agreement made as of January 1, 2001 (hereinafter referred to as the
"Agreement"); and
WHEREAS, Interpublic and Executive desire to amend the Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein and in
the Agreement set forth, the parties hereto, intending to be legally bound,
agree as follows:
1. Paragraph 2.01(v) of the Agreement is hereby deleted i n its
entirety, effective as of the date hereof, and substituting therefor: "Both
parties agree and understand that certain changes are being considered to
the organization which may involve modifications to Executive's titles and
responsibilities. If any of Executive's current titles and/or
responsibilities are changed by the Corporation in any material way without
Executive's consent, Executive's exclusive remedy shall be, at his option,
to terminate this Agreement upon written notice to the Corporation within
thirty (30) days of such change in title and/or responsibilities. In such
event, the Executive shall be entitled to receive severance in accordance
with the provisions of Section 7.03 from the date of such notice of
termination."
Except as hereinabove amended, the Agreement shall continue in full
force and effect.
This Supplemental Agreement shall be governed by the laws of the State
of New York, applicable to contracts made and fully to be performed therein.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
C. KENT KROEBER
/s/ FRANK B. LOWE
----------------------------------------
FRANK B. LOWE
- 97 -
Exhibit 10(b)(vi)(c)
EXECUTIVE SPECIAL BENEFIT AGREEMENT
-----------------------------------
AGREEMENT made as of January 15, 2001, by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a corporation of the State of Delaware (hereinafter
referred to as "Interpublic") and FRANK LOWE (hereinafter referred to as
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive is in the employ of Interpublic and/or one or more
of its subsidiaries (Interpublic and its subsidiaries being hereinafter referred
to collectively as the "Corporation"); and
WHEREAS, Interpublic and Executive desire to enter into an Executive
Special Benefit Agreement which shall be supplementary to any employment
agreement or arrangement which Executive now or hereinafter may have with
respect to Executive's employment by Interpublic or any of its subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
---------
Death and Special Retirement Benefits
-------------------------------------
1.01 For purposes of this Agreement the "Accrual Term" shall mean the
period of seventy -two (72) months beginning on the date of this Agreement and
ending on the day preceding the sixth anniversary hereof or on such earlier date
on which Executive shall cease to be in the employ of the Corporation.
1.02 The Corporation shall provide Executive with the following
benefits contingent upon Executive's compliance with all the terms and
conditions of this Agreement and Executive's satisfactory completion of a
physical examination in connection with an insurance policy on the life of
Executive which Interpublic or its assignee (other than Executive) proposes to
obtain and own.
1.03 If, during the Accrual Term or thereafter during a period of
employment by the Corporation which is continuous from the date of this
Agreement, Executive shall die while in the employ of the Corporation, the
Corporation shall pay to such beneficiary or beneficiaries as Executive shall
have designated pursuant to Section 1.07 (or in the absence of such designation,
shall pay to the Executor of the Will or the Administrator of the Estate of
Executive) survivor income payments of One Hundred Eighty One Thousand Four
Hundred and Ninety Five Dollars ($181,495) per annum for fifteen (15) years in
monthly installments beginning with the 15th of the calendar month following
Executive's death, and in equal monthly installment thereafter.
1.04 If, after a continuous period of employment from the date of this
Agreement, Executive shall retire from the employ of the Corporation so that the
first day on which Executive is no longer in the employ of the Corporation
occurs on or after Executive's sixty-fourth birthday, the Corporation shall pay
to Executive special retirement benefits at the rate of One Hundred Eighty One
Thousand Four Hundred and Ninety Five Dollars ($181,495) per annum for fifteen
(15) years in monthly installments beginning with the 15th of the calendar month
following Executive's last day of employment, and in equal monthly installments
thereafter.
- 98 -
1.05 If, after a continuous period of employment from the date of this
Agreement, Executive shall retire, resign, or be terminated from the employ of
the Corporation so that the first day on which Executive is no longer in the
employ of the Corporation occurs on or after Executive's sixtieth birthday but
prior to Executive's sixty -fourth birthday, the Corporation shall pay to
Executive special retirement benefits at the annual rates set forth below for
fifteen years beginning with the calendar month following Executive's last day
of employment, such payments to be made in equal monthly installments:
Last Day of Employment Annual Rate
---------------------- -----------
On or after 60th birthday but prior to 61st birthday $80,648
On or after 61st birthday but prior to 62nd birthday $100,016
On or after 62nd birthday but prior to 63rd birthday $127,443
On or after 63rd birthday but prior to 64th birthday $154,606
1.06 If, following such termination of employment, Executive shall die
before payment of all of the installments provided for in Section 1.04 or
Section 1.05, any remaining installments shall be paid to such beneficiary or
beneficiary or beneficiaries as Executive shall have designated pursuant to
Section 1.07 or, in the absence of such designation, to the Executor of the Will
of the Administrator of the Estate of Executive.
1.07 For purposes of Sections 1.03 and 1.04 and 1.05, or any of them,
Executive may at any time designate a beneficiary or beneficiaries by filing
with the chief personnel officer of Interpublic a Beneficiary Designation Form
provided by such officer. Executive may at any time, by filing a new Beneficiary
Designation Form, revoke or change any prior designation of beneficiary.
1.08 If Executive shall die while in the employ of the Corporation, no
sum shall be payable pursuant to Sections 1.04, 1.05, 1.06.
1.09 In connection with the life insurance policy referred to in
Section 1.02, Interpublic has relied on written representations made by
Executive concerning Executive's age and the state of Executive's health. If
said represen tations are untrue in any material respect, whether directly or by
omission, and if the Corporation is damaged by any such untrue representations,
no sum shall be payable pursuant to Sections 1.03, 1.04, 1.05, 1.06
1.10 It is expressly agreed that Interpublic or its assignee (other
than Executive) shall at all times be the sole and complete owner and
beneficiary of the life insurance policy referred to in Sections 1.02 and 1.09,
shall have th e unrestricted right to use all amounts and exercise all options
and privileges thereunder without the knowledge or consent of Executive or
Executive's designated beneficiary or any other person and that neither
Executive nor Executive's designated beneficiary nor any other person shall have
any right, title or interest, legal or equitable, whatsoever in or to such
policy.
1.11 It is expressly agreed that if Executive should become
permanently disabled at any time prior to the end of the Accrual Term, the
Corporation shall provide Executive with a maximum benefit payment of Five
Hundred Thousand Dollars ($500,000) per year for a period of fifteen (15) years.
The term "Permanent Disability" shall mean a determination that Executive is
permanently unable to perform the ordinary responsibilities of his position
following an absence from work of sixty (60) consecutive days as a result of
illness, injury or incapacity. The determination of Disability shall be subject
to verification by the Corporation. The foregoing disability payment
incorporates all amounts to which Executive is entitled under the ESBA
Agreements between the Executive and the Corporation dated January 1, 1991 and
January 1, 1996. 1.12 It is agreed upon that should Executive become Disabled as
defined above, the Corporation has the right to appoint a Doctor to examine
Executive for purposes in verifying Executive's disability.
- 99 -
ARTICLE II
----------
Non-solicitation of Clients or Employees
----------------------------------------
2.01 Following the termination of Executive's employment hereunder for
any reason, Executive shall not for a period of twelve months either (a) solicit
any employee of the Corporation to leave such employ to enter the employ of
Executive or of any corporation or enterprise with which Executive is then
associated or (b) solicit or handle on Executive's own behalf or on behalf of
any other person, firm or corporation, the advertising, public relations, sales
promotion or market research business of any advertiser which is a client of the
Corporation at the time of such termination.
ARTICLE III
-----------
Assignment
----------
3.01 This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of Interpublic. Neither this Agreement nor any rights
hereunder shall be subject in any matter to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge by Executive, and any such
attempted action by Executive shall be void. This Agreement may not be changed
orally, nor may this Agreement be amended to increase the amount of any benefits
that are payable pursuant to this Agreement or to accelerate the payment of any
such benefits.
ARTICLE IV
----------
Contractual Nature of Obligation
--------------------------------
4.01 The liabilities of the Corporation to Executive pursuant to this
Agreement shall be those of a debtor pursuant to such contractual obligations as
are created by the Agreement. Executive's rights with respect to any benefit to
which Executive has become entitled under this Agreement, but which Executive
has not yet received, shall be solely the rights of a general unsecured creditor
of the Corporation.
ARTICLE V
---------
Applicable Law
--------------
5.01 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By /s/ C. KENT KROEBER
----------------------------------------
Name: C. KENT KROEBER
Title: Senior Vice President, Human
Resources
/s/ FRANK LOWE
----------------------------------------
FRANK LOWE
- 100 -
Exhibit 11
THE INTERPUBLIC GROUP OF COMPANIES, INC.
COMPUTATION OF EARNINGS PER SHARE
(Dollars in Thousands Except Per Share Data)
Year Ended December 31
2000 1999 1998 1997 1996
-------------------------------------------------------------------
BASIC:
Net income $358,658 $331,287 $339,907 $224,184 $228,914
Weighted average number of
common shares outstanding 303,191,966 297,992,048 294,755,783 283,795,670 284,219,045
Net income per share - Basic $1.18 $1.11 $1.15 $ .79 $ .81
DILUTED:
Net income $358,658 $331,287 $339,907 $224,184 $228,914
After tax interest savings
on assumed conversion of
subordinated debentures(1)(2) -- -- -- 5,929 6,410
Add: Dividends paid net of
related income tax applicable
to the Restricted Stock Plan 666 631 541 447 384
-------------------------------------------------------------------
Net income, as adjusted $359,324 $331,918 $340,448 $230,560 $235,708
===================================================================
Weighted average number of
common shares outstanding 303,191,966 297,992,048 294,755,783 283,795,670 284,219,045
Assumed conversion of
subordinated debentures(1)(2) -- -- -- 8,020,582 8,933,004
Weighted average number of
incremental shares in
connection with assumed
exercise of stock options 6,110,212 7,310,725 6,924,013 6,508,296 4,438,746
Weighted average number of
incremental shares in
connection with the
Restricted Stock Plan 3,350,631 3,536,805 3,453,838 3,277,294 3,211,128
-------------------------------------------------------------------
Total 312,652,809 308,839,578 305,133,634 301,601,842 300,801,923
===================================================================
Diluted earnings per share data:
Net income per share - diluted $1.15 $1.07 $1.12 $ .76 $ .78
All share data for prior periods have been adjusted the two -for-one stock split
effective July 15, 1999.
-----------------
(1) The computation of diluted EPS for 2000, 1999 and 1998 excludes the assumed
conversion of the 1.87% and 1.80% Convertibl e Subordinated Notes due 2006
and 2004, respectively, because they were antidilutive.
(2) The computation of diluted EPS for 1997 and 1996 excludes the assumed
conversion of the 1.80% Convertible Subordinated Notes due 2004 because
they were antidilutive.
- 101 -
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Exhibit 13
During 2000, The Interpublic Group of Companies, Inc. (the "Company") acquired
several companies in transactions accounted for as poolings of interests. The
Company acquired NFO Worldwide, Inc. ("NFO") in April 2000 and Deutsch, Inc. and
its affiliate companies ("Deutsch") in November 2000. The results of NFO,
Deutsch and other acquisitions, all of which have been accounted for as poolings
of interests, have been included in the Company's financial statements for all
prior periods. The following discussion relates to the combined results of the
Company after giving effect to all of the pooled companies.
For the purposes of the following discussion, the restructuring and other merger
related costs (in 2000 and 1999) and the Deutsch transaction costs (in 2000)
will be referred to, collectively, as "non-recurring items". The non -recurring
items are described in a subsequent section of this discussion. All amounts
discussed bel ow are as reported unless otherwise noted.
RESULTS OF OPERATIONS
The Company reported net income of $358.7 million or $1.15 diluted earnings per
share for the year ended December 31, 2000. Excluding the impact of
non-recurring items in all years, net income would have been $473.2 million or
$1.51 diluted earnings per share, compared to $382.7 million or $1.24 diluted
earnings per share for the year ended December 31, 1999 and $339.9 million or
$1.12 diluted earnings per share for th e year ended December 31, 1998.
The following table sets forth net income and earnings per share as reported and
before non-recurring items:
(Dollars in thousands, except per share amounts)
2000 1999 1998
---- ---- ----
Net income as reported $ 358,658 $ 331,287 $ 339,907
Earnings per share
Basic $ 1.18 $ 1.11 $ 1.15
Diluted $ 1.15 $ 1.07 $ 1.12
Net income before
non-recurring items $ 473,185 $ 382,724 $ 339,907
Earnings per share
Basic $ 1.56 $ 1.28 $ 1.15
Diluted $ 1.51 $ 1.24 $ 1.12
Revenue
-------
Worldwide revenue for 2000 was $5.6 billion, an increase of $648 million or
13.0% over 1999. Domestic revenue, which represented 54.6% of worldwide revenue
in 2000, increased $514 million or 20.1% over 1999. International revenue, which
represented 45.4% of worldwide revenue in 2000, increased $134 million or 5.6%
over 1999. International revenue would have increased 15% excluding the effect
of the strengthening of the U.S. dollar against major currencies. The increase
in worldwide revenue is a result of both growth from new business gains and
- 102 -
growth from acquisitions. Exclusive of acquisitions, worldwide revenue on a
constant dollar basis increased 13.0% over 1999.
Revenue from specialized marketing and communication services, which include
media buying, market research, relationship (direct) marketing, public
relations, sports and event marketing, healthcare marketing and e-consultancy
and services, comprised approximately 47% of total worldwide revenue in 2000,
compared to 44% in 1999.
Worldwide revenue for 1999 was $5.0 billion, an increase of $759 million or
18.0% over 1998. Domestic revenue, which represented 51.4% of worldwide revenue,
increased $401 million or 18.6% over 1998. International revenue, which
represented 4 8.6% of worldwide revenue in 1999, increased $358 million or 17.4%
over 1998. International revenue would have increased 22% excluding the effect
of the strengthening of the U.S. dollar against major currencies.
Operating Expenses
------------------
Worldwide operating expenses for 2000, excluding non-recurring items, were $4.8
billion, an increase of 11.0% over 1999. Operating expenses outside the United
States increased 3.7%, while domestic operating expenses increased 18.3%. These
increases were commensurate with the increases in revenue. Worldwide operating
expenses for 1999, excluding non-recurring items, were $4.3 billion, an increase
of 18.4% over 1998, comprised of a 16.7% increase in international expenses and
a 20.0% increase in domestic expenses.
Significant portions of the Company's expenses relate to employee compensation
and various employee incentive and benefit programs. The employee incentive
programs are based primarily upon operating results. Salaries and related
expenses were $3.1 billion in 2000 or 55.5% of revenue as compared to $2.7
billion in 1999 or 55.2% of revenue and $2.3 billion in 1998 or 55.4% of
revenue. The year over year dollar increase is a result of growth from
acquisitions and new business gains.
Office and general expenses were $1.6 billion in 2000, $1.5 billion in 1999, and
$1.2 billion in 1998. The year over year increase is a result of the continued
growth of the Company.
In the fourth quarter of 1999, NFO recorded special charges of $22 million as a
result of the difficult competitive environment due to client consolidation in
the financial services industry. Approximately $16 million of the special
charges were related to the write -off of intangible assets which were deemed
permanently impaired.
Income from Operations
----------------------
Income from operations for 2000 was $672.7 million. Excluding non -recurring
items, income from operations for 2000 was $833.5 million, an increase of $170.8
million or 25.8% over 1999. Exclusive of acquisitions, foreign exchange
fluctuations and amortization of intangible assets, income from operations
increased 25% for 2000 compared to 1999.
Income from operations for 1999 was $578.5 million. Excluding non -recurring
items, income from operations for 1999 was $662.7 million compared to $572.6
million in 1998, an increase of 15.7%. The increase is a result of growth from
acquisitions and new business gains.
Restructuring and Other Merger Related Costs
--------------------------------------------
During 2000, the Company recorded pre-tax restructuring and other merger related
costs of $116.1 million ($72.9 million net of tax). Of the total pre-tax
restructuring and other merger-related costs, cash charges represented $84
million. The key components of the charge were the costs associated with the
restructuring of Lowe Lintas & Partners Worldwide. The remaining costs r elate
principally to transaction and other merger related costs arising from the
acquisition of NFO.
- 103 -
In October 1999, the Company announced the merger of two of its advertising
networks. The networks affected, Lowe & Partners Worldwide and Ammirati Puris
Lintas were combined to form a new agency network called Lowe Lintas & Partners
Worldwide. The merger involved the consolidation of operations in Lowe Lintas
agencies in approximately 24 cities in 22 countries around the world. As of
September 30, 2000, all restructuring activities had been completed.
A summary of the components of the reserve for restructuring and other merger
related costs for Lowe Lintas is as follows:
(Dollars in millions)
Year to Date December 31, 2000
------------------------------------------------------
Balance Expense Cash Asset Balance
at 12/31/99 recognized Paid Write-offs Reclassifications at 12/31/00
----------- ---------- ---- ---------- ----------------- -----------
Severance and
termination costs $43.6 $32.0 $(46.7) $ -- $(17.2) $11.7
Fixed asset write-offs 11.1 14.2 -- (25.3) -- --
Lease termination costs 3.8 21.1 (10.1) -- -- 14.8
Investment write-offs
and other 23.4 20.5 (6.4) (37.5) -- --
--------------------------------------------------------------------------
Total $81.9 $87.8 $(63.2) $(62.8) $(17.2) $26.5
==========================================================================
The severance and termination costs recorded in 2000 relate to approximately 360
employees who have been terminated or notified that they will be terminated. The
remaining severance and termination amounts will be paid in 2001. The employee
groups affect ed include management, administrative, account management, creative
and media production personnel, principally in the U.S. and several European
countries. Included in severance and termination costs is an amount of $17.2
million related to non-cash charges for stock options which has been
reclassified to additional paid in capital.
The fixed asset write-offs relate largely to the abandonment of leasehold
improvements as part of the merger. The amount recognized in 2000 relat es to
fixed asset write-offs in 4 offices, the largest of which is in the U.K.
Lease termination costs relate to the offices vacated as part of the merger. The
lease terminations have been completed, with the cash portion to be paid out
over a p eriod of up to five years.
The investment write-offs relate to the loss on sale or closing of certain
business units. In 2000, $12.7 million has been recorded as a result of the
decision to sell or abandon 3 businesses located in Asia and Europe. In the
aggregate, the businesses being sold or abandoned represent an immaterial
portion of the revenue and operations of Lowe Lintas & Partners. The write-off
amount was computed based upon the difference between the estimated sales
proceeds (if any) and the carrying value of the related assets. These sales or
closures were completed in mid 2000.
The Company has begun to benefit from the resulting reduction in employee
related costs, compensation, benefits and space occupancy. A significant portion
of the savings is being offset by investments in creative talent, technology and
other capabilities to support the acceleration of growth in the future.
In addition to the Lowe Lintas restructuring and other merger related costs
noted above, additional charges, substantially all of which were cash costs,
were recorded through September 30, 2000. These costs relate principally to the
non-recurring transaction and ot her merger related costs arising from the
acquisition of NFO.
- 104 -
Deutsch Transaction Costs
-------------------------
In connection with the acquisition of Deutsch, the Company recognized a charge
related to one-time transaction costs of $44.7 million ($41.6 million net of
tax) . The principal component of this amount related to the expense associated
with various equity participation agreements with certain members of management.
These agreements provided for participants to receive a portion of the proceeds
in the event of the sale or merger of Deutsch.
Interest Expense
----------------
Interest expense was $109 million in 2000, $81 million in 1999 and $64 million
in 1998. The increase in 2000 was attributable to higher debt levels and higher
interest rates in 2000.
Other Income, Net
-----------------
Other income, net primarily consists of interest income, investment income and
net gains from equity investments. Net equity gains were $40 million, $49
million and $44 million in 2000, 1999, and 1998, respectively.
Other Items
-----------
Income applicable to minority interests increased by $5.8 million in 2000 and by
$5.5 million in 1999. The 2000 and 1999 increases were primarily due to the
strong performance of companies that were not wholly owned, as well as the
acquisition of additional such entities during 2000 and 1999.
The Company's effective income tax rate was 41.5% in 2000, 40.6% in 1999 and
40.5% in 1998 (39.0% , 40.4% and 40.5% excluding non-recurring items).
As described in Note 4, prior to its acquisition by the Company, Deutsch had
elected to be treated as an "S" Corporation and accordingly, its income tax
expense was lower than it would have been had Deutsch b een treated as a "C"
Corporation. Deutsch became a "C" Corporation upon its acquisition by the
Company. Assuming Deutsch had been a "C" Corporation since 1997, the effective
tax rate, on a pro forma basis excluding non-recurring items, would have been
40.4%, 41.4% and 40.9% for 2000, 1999 and 1998, respectively.
Cash Based Earnings
-------------------
Management believes that cash based earnings are a relevant measure of financial
performance as it illustrates the Company's performance and ability to support
growth. The Company defines cash based earnings as net income excluding
non-recurring items, adjusted to exclude amortization of intangible assets, net
of tax where applicable. Cash based earnings are not calculated in the same
manner by all companies and are intended to supplement, not replace, the other
measures calculated in accordance with generally accepted accounting principles.
Cash based earnings for the three years ending December 31, 2000, 1999, and 1998
were as follows:
(Amounts in thousands except per share data)
2000 1999 1998
---------------------------------------
Net income as reported $358,658 $331,287 $339,907
Non-recurring items, net of tax 114,527 51,437 --
---------------------------------------
Net income, as adjusted 473,185 382,724 339,907
Add back amortization
of intangible assets 112,478 99,326 61,396
Less related tax effect (14,411) (13,031) (6,146)
---------------------------------------
Cash based earnings (as
defined above) $571,252 $469,019 $395,157
=======================================
Per share amounts (diluted) $1.81 $1.51 $1.30
- 105 -
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial position remained strong during 2000, with cash and cash
equivalents at December 31, 2000, of $708.3 million. The ratio of current assets
to current liabilities was approximately 1 to 1 at December 31, 2000. Working
capital at December 31, 2000, was a negative $80 million, which was $251.0
million lower than the level at the end of 1999.
Total debt at December 31, 2000 was $2.0 billion, an increase of $686 million
from December 31, 1999. The increase in debt is primarily attributable to the
net effect of payments made for acquisitions and other investments.
On June 27, 2000, the Company entered into a syndicated multi-currency credit
agreement under which a total of $750 million may be borrowed; $375 million may
be borrowed under a 364-day facility and $375 million under a five -year
facility. The facilities bear interest at variable rates based on either LIBOR
or a bank's base rates, at the Company's option. As of December 31, 2000,
approximately $174 million had been borrowed under the facilities. The
weighted -average interest rate on the borrowings at December 31, 2000 was 6.5%.
The proceeds from the syndicated credit agreement were used to refinance
borrowings and for general corporate purposes including acquisitions and other
investments. Some of the pre -existing borrowing facilities were subsequently
terminated.
On October 20, 2000, the Company completed the issuance and sale of $500 million
principal amount of senior unsecured notes due 2005. The notes bear an interest
rate of 7.875% per annum. The Company used the net proceeds of approximately
$496 million from the sale of the notes to repay outstanding indebtedness under
its credit facilities.
Cash flow from operations and existing credit facilities, and refinancings
thereof, have been the primary sources o f working capital and management
believes that they will continue to be so in the future. Net cash provided by
operating activities was $300 million, $737 million and $552 million for the
years ended December 31, 2000, 1999, and 1998, respectively. The Company's
working capital is used primarily to provide for the operating needs of its
subsidiaries, which includes payments for space or time purchased from various
media on behalf of clients. The Company's practice is to bill and collect from
its clients in sufficient time to pay the amounts due for media on a timely
basis. Other uses of working capital include the repurchase of the Company's
common stock, payment of cash dividends, capital expenditures and acquisitions.
The Company acquires shares of its stock on an ongoing basis. During 2000, the
Company purchased approximately 4.8 million shares of its common stock, compared
to 6.5 million shares in 1999. The Company repurchases its stock for the purpose
of fulfilling its obligations under various compensation plans.
The Company, excluding pooled entities, paid $109.1 million ($.37 per share) in
dividends to stockholders in 2000, as compared to $90.4 million ($.33 per share)
paid during 1999.
The Company's capital expenditures in 2000 were $202 million compared to $187
million in 1999 and $160 million in 1998. The primary purposes of these
expenditures were to upgrade computer and telecommunications systems to better
serve clients and to moderniz e offices.
During 2000, the Company paid approximately $1,582 million in cash and stock for
new acquisitions, including a number of specialized marketing and communications
services companies to complement its existing agency systems and to optimally
position itself in the ever-broadening communications marketplace. This amount
includes the value of stock issued for pooled companies.
The Company and its subsidiaries maintain credit facilities in the United States
and in countries where they conduct business to manage their future liquidity
requirements. The Company's available credit facilities were approximately
$1,300 million, of which $300 million were utilized at December 31, 2000, and
- 106 -
approximately $600 million, of which $100 million were utilized at December 31,
1999.
Return on average stockholders' equity was 18.8% in 2000 and 20.7% in 1999.
Excluding non-recurring items, return on average stockholders' equity was 23.5%
in 2000 and 23.6% in 1999.
As discussed in Note 12, revenue from international operations was 45.4%, 48.6%
and 48.8% of worldwide revenue in 2000, 1999 and 1998, respectively. The Company
continuously evaluates and attempts to mitigate its exposure to foreign
exchange, economic and political risks. The notional value and fair value of all
outstanding forwards and options contracts at the end of the year were not
significant.
The Company is not aware of any significant occurrences that could negatively
impact its liquidity. However, should such a trend develop, the Company believes
that there are sufficient funds available under its existing lines of credit and
refinancings thereof, and from internal cash-generating capabilities to meet
future needs.
OTHER MATTERS
True North Communications, Inc.
-------------------------------
As discussed in Note 15, on March 19, 2001, the Company entered into an
agreement to acquire True North Communications, Inc., a global provider of
advertising and communication services. The acquisition, which will create an
industry leading combination of advertising and marketing services capabilities
to offer clients on a global basis, is expected to close mid year.
New Accounting Pronouncements
-----------------------------
Revenue Recognition
-------------------
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 101 provides guidance on the recognition, presentation, and
disclosure of revenue in financial statements. SAB 101 was adopted by the
Company effective January 1, 2000. The adoption of SAB 101 had no significant
effect on the Company's operating results or financial position.
Accounting for Derivatives Instruments and Hedging Activities
-------------------------------------------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), which had an initial adoption date by the
Company of January 1, 2000. In June 1999, the FASB postponed the adoption date
of SFAS 133 until January 1, 2001. The Company will adopt the provisions of SFAS
133 effective January 1, 2001 and believes its adoption of SFAS 133 will have no
impact on its financial condition or results of operations.
Equity Based Compensation
-------------------------
In April 2000, the FASB issued Interpretation No. 44, ("FIN 44") Accounting for
Certain Transactions Involving Stock Compensation - an interpretation of APB
Opinion No. 25. This interpretation, which was effective from July 1, 2000,
addressed various issues including the definition of employee for the purpose of
applying APB 25, criteria for determining whether a plan qualifies as a
non-compensatory plan, the accounting consequence of various modifications to
the terms of a previously fixed stock option award and the accounting for an
exchange of stock compensation awards in a business combination. The adoption of
FIN 44 did not have a material impact on the Company's financial statements.
- 107 -
Conversion to the Euro
----------------------
On January 1, 1999, certain member countries of the European Union established
fixed conversion rates between their existing currencies and the European
Union's common currency (the "Euro"). The Company conducts business in m ember
countries. The transition period for the introduction of the Euro will be
between January 1, 1999, and June 30, 2002. The Company is addressing the issues
involved with the introduction of the Euro. The major important issues facing
the Company include: converting information technology systems, reassessing
currency risk, negotiating and amending contracts and processing tax and
accounting records.
Based upon progress to date, the Company believes that use of the Euro will not
have a significant impact on the manner in which it conducts its business
affairs and processes its business and accounting records. Accordingly,
conversion to the Euro has not, and is not expected to have a material effect on
the Company's financial condition or results of operations.
Quantitative and Qualitative Disclosures about Market Risk
----------------------------------------------------------
The Company's financial market risk arises from fluctuations in interest rates
and foreign currencies. Most of the Company's debt obligations are at fixed
interest rates. A 10% change in market interest rates would not have a material
effect on the Company's pre-tax earnings, cash flows or fair value. At December
31, 2000, the Company had an insignificant amount of foreign currency derivative
financial instruments in place. The Company does not hold any financial
instrument for trading purposes.
Interactive Assets
------------------
The Company maintains a portfolio of marketable securities and other interactive
assets. The market value of these investments is subject to market volatility.
The volatility, as it relates to the marketable securities, is reflected in
unrealized gains and losses recorded in stockholders' equity. Management
continually monitors the value of all of its investments to determine whether an
"other than temporary" impairment has occurred. To the extent such an impairment
occurs, provision would be made in the appropriate period.
Cautionary Statement
--------------------
This Report on Form 10-K (the "Report"), including Management's Discussion and
Analysis of Financial Condition and Results of Operations contains
forward-looking statements. Statements that are not historical facts, including
statements about the Company's beliefs and expectations, are forward-looking
statements. These statements are based on current plans, expectations, estimates
and projections, and therefore undue reliance should not be placed on them.
Forward-looking statements speak only as of the date they are made, and
Interpublic undertakes no obligation to update publicly any of them in light of
new information, future events or otherwise.
Forward-looking statements involve inherent risks and uncertainties. The Company
cautions that a number of important factors could cause actual results to differ
materially from those contained in any forward-looking statement. Such factors
include, but are not limited to, those associated with the effect of national
and regional economic conditions, the ability of the Company to attract new
clients and retain existing clients, the financial success and other
developments of the clients of the Company, developments from changes in the
regulatory and legal environment for advertising companies around the world, the
Company's ability to effectively integrate recent acquisitions and the Company's
ability to attract and retain key management personnel.
- 108 -
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
The Interpublic Group of Companies, Inc.
In our opinion, based on our audits and the reports of other auditors, the
accompanying consolidated balance sheets and the related consolidated statements
of income, of cash flows, and of stockholders' equity and comprehensive income
present fairly, in all material respects, the financial position of The
Interpublic Group of Companies, Inc. and its subsidiaries (the "Company") at
December 31, 2000 and 1999, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of NFO
Worldwide, Inc. ("NFO"), a wholly-owned subsidiary, which statements reflect
total assets constituting approximately 5% of the related 1999 consolidated
financial st atement total. Additionally, we did not audit the financial
statements of Deutsch, Inc. and Subsidiary and Affiliates ("Deutsch"), a
wholly-owned subsidiary, which statements reflect total net loss constituting
approximately 2% of the related 2000 consolidated financial statement total and
total net income constituting approximately 5% of the related 1999 consolidated
financial statement total. Those statements were audited by other auditors whose
reports thereon have been furnished t o us, and our opinion expressed herein,
insofar as it relates to the amounts included for NFO and Deutsch, is based
solely on the reports of the other auditors. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits and the reports of other auditors provide a reasonable basis for our
opinion.
PricewaterhouseCoopers LLP
New York, New York
February 26, 2001
except for Note 15, which is as of March 19, 2001
- 109 -
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of NFO Worldwide, Inc.:
We have audited the accompanying consolidated balance sheet of NFO Worldwide,
Inc. (a Delaware corporation) and subsidiar ies as of December 31, 1999, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the years in the two-year period ended December 31, 1999. These
financial statements (not presented separately herein) are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of NFO Worldwide, Inc.
and subsidiaries as of December 31, 1999, and the results of their operations
and their cash flows for each of the years in the two-year period ended December
31, 1999, in conformity with accounting principles generally accepted in the
United States.
Our audits were made for the purpose of forming an opinion on the consolidated
financial statements taken as a whole. The schedule referred to in Item 14 (not
separately presented herein) is presented for the purpose of complying with the
Securities an d Exchange Commission's rules and is not part of the consolidated
financial statements. This schedule has been subjected to the auditing
procedures applied in our audits of the consolidated financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the consolidated financial
statements taken as a whole.
Arthur Andersen LLP
New York, New York,
February 25, 2000
- 110 -
Report of Independent Public Accountants
----------------------------------------
To the Stockholder
Deutsch, Inc. and Subsidiary and Affiliates
We have audited the combined balance sheets of Deutsch, Inc. and
Subsidiary and Affiliates as of December 31, 2000 and 1999, and the related
combined statements of operations, stockholder's equity and cash flows for the
years then ended. These combined financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
combined financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the combined financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall combined financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the financial position of Deutsch,
Inc. and Subsidiary and Affiliates as of December 31, 2000 and 1999, and their
results of operations and cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.
The 1999 combined financial statements have been restated to reflect
the correct treatment of payments made to the Company's sole stockholder. In
financial statements previously issued for the year ended December 31, 1999,
certain payments had been classified as bonuses which, it has been determined,
should have been reflected as distributions to the Company's sole stockholder.
Accordingly, the Company has restated the 1999 financial statements to reflect
the correct accounting for the payments and the related tax effects.
J.H. Cohn LLP
Roseland, New Jersey
February 13, 2001
- 111 -
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31
(Dollars in Thousands Except Per Share Data)
ASSETS 2000 1999
---------------------------
CURRENT ASSETS:
Cash and cash equivalents (includes
certificates of deposit: 2000-$110,919;
1999-$150,343) $ 708,312 $1,029,076
Marketable securities 39,777 36,765
Receivables (net of allowance for doubtful
accounts: 2000-$64,923; 1999-$60,565) 4,687,552 4,442,229
Expenditures billable to clients 379,507 337,769
Prepaid expenses and other current assets 210,905 147,085
---------------------------
Total current assets 6,026,053 5,992,924
---------------------------
OTHER ASSETS:
Investment in unconsolidated affiliates 86,055 62,225
Deferred taxes on income 283,134 --
Other investments and miscellaneous assets 486,368 719,024
---------------------------
Total other assets 855,557 781,249
---------------------------
FIXED ASSETS, AT COST:
Land and buildings 173,162 164,678
Furniture and equipment 862,043 783,698
Leasehold improvements 324,786 277,383
---------------------------
1,359,991 1,225,759
Less: accumulated depreciation (699,609) (632,488)
---------------------------
Total fixed assets 660,382 593,271
---------------------------
Intangible assets (net of accumulated
amortization: 2000-$719,895; 1999-$607,417) 2,696,230 1,879,600
---------------------------
TOTAL ASSETS $10,238,222 $9,247,044
===========================
- 112 -
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31
(Dollars in Thousands Except Per Share Data)
LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999
---- ----
CURRENT LIABILITIES:
Payable to banks $ 491,984 $ 262,483
Accounts payable 4,590,361 4,629,415
Accrued expenses 852,549 769,566
Accrued income taxes 171,186 160,484
----------------------------
Total current liabilities 6,106,080 5,821,948
----------------------------
NONCURRENT LIABILITIES:
Long-term debt 971,957 530,117
Convertible subordinated notes 533,104 518,490
Deferred compensation and reserve
for termination allowances 385,518 348,172
Deferred taxes on income -- 45,888
Accrued postretirement benefits 48,350 50,226
Other noncurrent liabilities 61,051 86,127
Minority interests in consolidated
subsidiaries 85,806 81,612
----------------------------
Total noncurrent liabilities 2,085,786 1,660,632
----------------------------
STOCKHOLDERS' EQUITY:
Preferred Stock, no par value
shares authorized: 20,000,000
shares issued: none
Common Stock, $.10 par value
shares authorized: 550,000,000
shares issued:
2000 - 320,135,098;
1999 - 315,921,839 32,013 31,592
Additional paid-in capital 1,100,898 807,308
Retained earnings 1,627,163 1,392,224
Accumulated other comprehensive
loss, net of tax (390,653) (76,695)
----------------------------
2,369,421 2,154,429
Less:
Treasury stock, at cost:
2000 - 5,462,809 shares;
1999 - 8,909,904 shares 194,758 312,930
Unamortized expense of restricted stock grants 128,307 77,035
----------------------------
Total stockholders' equity 2,046,356 1,764,464
----------------------------
Commitments and contingencies
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,238,222 $9,247,044
============================
Prior periods have been restated to reflect the aggregate effect of the
acquisitions accounted for as poolings of interests.
The accompanying notes are an integral part of these financial statements.
- 113 -
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31
(Amounts in Thousands Except Per Share Data)
2000 1999 1998
-----------------------------------------
Revenue $ 5,625,845 $ 4,977,823 $ 4,218,657
-----------------------------------------
Salaries and related expenses 3,120,289 2,745,956 2,339,894
Office and general expenses 1,559,556 1,469,862 1,244,771
Amortization of intangible assets 112,478 99,326 61,396
Restructuring and other merger
related costs 116,131 84,183 --
Deutsch transaction costs 44,715 -- --
-----------------------------------------
Total operating expenses 4,953,169 4,399,327 3,646,061
-----------------------------------------
Income from operations 672,676 578,496 572,596
Interest expense (109,111) (81,341) (64,296)
Other income, net 94,341 103,562 98,555
-----------------------------------------
Income before provision
for income taxes 657,906 600,717 606,855
Provision for income taxes 273,034 243,971 245,636
-----------------------------------------
Income of consolidated companies 384,872 356,746 361,219
Income applicable to
minority interests (39,809) (33,991) (28,503)
Equity in net income of
unconsolidated affiliates 13,595 8,532 7,191
-----------------------------------------
Net Income $ 358,658 $ 331,287 $ 339,907
=========================================
Per Share Data:
Basic EPS $ 1.18 $ 1.11 $ 1.15
Diluted EPS $ 1.15 $ 1.07 $ 1.12
Weighted average shares:
Basic 303,192 297,992 294,756
Diluted 312,653 308,840 305,134
Prior periods have been restated to reflect the aggregate effect of the
acquisitions accounted for as poolings of interests.
The accompanying notes are an integral part of these financial statements.
- 114 -
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31
(Dollars in Thousands)
2000 1999 1998
-------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 358,658 $ 331,287 $ 339,907
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization of fixed assets 150,370 128,302 110,086
Amortization of intangible assets 112,478 99,326 61,396
Amortization of restricted stock awards 36,693 25,926 20,272
Provision for (benefit of) deferred income taxes (31,546) 9,316 (11,972)
Equity in net income of unconsolidated affiliates (13,595) (8,532) (7,191)
Income applicable to minority interests 39,809 33,991 28,503
Translation losses 1,192 690 1,034
Net gain on investments (19,345) (43,390) (40,465)
Restructuring costs, non-cash 32,100 52,264 --
Deutsch transaction costs, non-cash 36,091 -- --
Other (6,011) (5,198) 12,667
Change in assets and liabilities,
net of acquisitions:
Receivables (250,966) (820,510) (269,536)
Expenditures billable to clients (30,005) (24,413) (31,199)
Prepaid expenses and other assets (61,552) 5,399 (39,790)
Accounts payable and accrued expenses (62,833) 996,630 336,799
Accrued income taxes (13,057) (64,423) 26,870
Deferred compensation and reserve for
termination allowances 21,698 20,496 14,537
------------------------------------
Net cash provided by operating activities 300,179 737,161 551,918
------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net (576,615) (248,406) (255,995)
Capital expenditures (201,871) (186,669) (159,596)
Proceeds from sales of assets 27,090 72,542 28,346
Net (purchases of) proceeds from
marketable securities (3,191) (9,114) 3,934
Other investments and miscellaneous assets (177,522) (127,494) --
Investment in unconsolidated affiliates (12,494) (10,531) (16,725)
------------------------------------
Net cash used in investing activities (944,603) (509,672) (400,036)
------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term borrowings 180,120 47,592 15,304
Proceeds from long-term debt 1,013,873 405,927 220,494
Payments of long-term debt (513,811) (70,126) (98,294)
Proceeds from ESOP -- -- 7,420
Treasury stock acquired (236,756) (300,524) (164,928)
Issuance of common stock 45,267 66,130 35,239
Cash dividends - Interpublic (109,086) (90,424) (76,894)
Cash dividends - pooled companies (14,424) (14,643) (16,461)
------------------------------------
Net cash provided by (used in) financing activities 365,183 43,932 (78,120)
------------------------------------
Effect of exchange rates on
cash and cash equivalents (41,523) (43,552) 10,998
------------------------------------
Increase/(decrease) in cash and cash equivalents (320,764) 227,869 84,760
Cash and cash equivalents at beginning of year 1,029,076 801,207 716,447
------------------------------------
Cash and cash equivalents at end of year $ 708,312 $1,029,076 $801,207
====================================
Prior periods have been restated to reflect the aggregate effect of the
acquisitions accounted for as poolings of interests.
The accompanying notes are an integral part of these financial statements.
- 115 -
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
FOR THE THREE -YEAR PERIOD ENDED DECEMBER 31, 2000
(Dollars in Thousands)
Accumulated Unamortized
Common Additional Other Expense
Stock Paid -In Retained Comprehensive Treasury of Restricted
(par value $.10) Capital Earnings Income (loss) Stock Stock Grants Total
-----------------------------------------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1999 $31,592 $ 807,308 $1,392,224 $ (76,695) $(312,930) $(77,035) $1,764,464
Comprehensive income:
Net income 358,658 $ 358,658
Adjustment for minimum pension
liability (41) (41)
Change in market value of
securities available-for -sale (223,085) (223,085)
Foreign currency translation
adjustment (90,832) (90,832)
----------
Total comprehensive income $ 44,700
Cash dividends - IPG (109,086) (109,086)
Cash dividends - pooled companies (14,424) (14,424)
Awards of stock under
Company plans:
Achievement stock and
incentive awards 11 203 214
Res tricted stock,
net of forfeitures 198 84,471 6,265 (51,272) 39,662
Employee stock purchases 63 21,965 22,028
Exercise of stock options,
including tax benefit 188 57,721 57,909
Purchase of Company's own stock (236,756) (236,756)
Issuance of shares
for acquisitions 34,561 348,460 383,021
Equity adjustments - pooled companies 94,859 (207) 94,652
Other (28) 2 (2) (28)
----------------------------------------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 2000 $32,013 $1,100,898 $1,627,163 $(390,653) $(194,758) $(128,307) $2,046,356
----------------------------------------------------------------------------------------------------------------------
- 116 -
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOL IDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
FOR THE THREE -YEAR PERIOD ENDED DECEMBER 31, 2000
(Dollars in Thousands)
Accumulated Unamortized
Common Additional Other Expense Unearned
Stock Paid-In Retained Comprehensive Treasury of Restricted ESOP
(par value $.10) Capital Earnings Income (loss) Stock Stock Grants Plan Total
-----------------------------------------------------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1998 $30,995 $597,657 $1,166,785 $(160,970) $(132,688) $(71,348) $ -- $1,430,431
Comprehensive income:
Net income $ 331,287 $ 331,287
Adjustment for minimum pension
liability 18,596 18,596
Change in market value of
securities available-for -sale 158,607 158,607
Foreign currency translation
adjustment (92,928) (92,928)
--------
Total comprehensive income $415,562
Cash dividends - IPG (90,424) (90,424)
Cash dividends - pooled companies (14,643) (14,643)
Equity adjustments - pooled companies (594) (594)
Awards of stock under
Company plans:
Achievement stock and
incentive awards 198 333 531
Restricted stock,
net of forfeitures 66 36,902 (7,927) (5,687) 23,354
Employee sto ck purchases 40 19,068 19,108
Exercise of stock options,
including tax benefit 276 81,539 81,815
Purchase of Company's own stock (300,524) (300,524)
Issuance of shares
for acquisitions 63,447 127,876 191,323
Par value of shares issued
for two -for-one stock split 187 (187) --
Other 28 8,497 8,525
------------------------------------------------------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1999 $31,592 $807,308 $1,392,224 $ (76,695) $(312,930) $(77,035) $ -- $1,764,464
------------------------------------------------------------------------------------------------------------------- -----------------
- 117 -
FINANCIAL STATEMENTS
THE INTERPUBLIC GROUP OF COMPANIES, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
FOR THE THREE -YEAR PERIOD ENDED DECEMBER 31, 2000
(Dollars in Thousands)
Accumulated Unamortized
Common Additional Other Expense Unearned
Stock Paid -In Retained Comprehensive Treasury of Restricted ESOP
(par value $.10) Capital Earnings Income (loss) Stock Stock Grants Plan Total
-------------- ---------------------------------------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1997 $30,564 $455,283 $920,448 $(159,064) $ (23,411) $(56,634) $(7,420) $1,159,766
Comprehensive income:
Net income $339,907 $ 339,907
Adjustment for minimum pension
liability (24,013) (24,013)
Change in market value of
securities available-for -sale (2,576) (2,576)
Foreign currency translation
adjustment 24,683 24,683
----------
Total comprehensive income $ 338,001
Cash dividends - IPG (76,894) (76,894)
Cash dividends - pooled companies (16,461) (16,461)
Awards of stock under
Company plans:
Achievement stock and
incentive awards 274 110 384
Restricted stock,
net of forfeitures 63 36,619 (2,406) (14,714) 19,562
Employee stock purchases 26 13,325 13,351
Exercise of stock options,
including tax benefit 123 42,518 42,641
Purchase of Company's own stock (164,928) (164,928)
Issuance of shares
for acquisitions 36,714 57,947 94,661
Conversion of convertible
debentures 3 1,002 1,005
Payments from ESOP 7,420 7,420
Par value of s hares issued
for two -for-one stock split 215 (215) --
Other 1 11,922 11,923
-----------------------------------------------------------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1998 $30,995 $ 597,657 $1,166,785 $(160,970) $(132,688) $(71,348) $ -- $1,430,431
-----------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
Prior periods have been restated to reflect the aggregate effect of the acquisitions accounted for as poolings of
interests.
- 118 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Company is a worldwide provider of advertising agency and related services.
The Company conducts business through the following subsidiaries:
McCann-Erickson WorldGroup, The Lowe Group, DraftWorldwide, Initiative Media
Worldwide, Weber Shandwick Worldwide, Golin/Harris International, Octagon, NFO
WorldGroup, Jack Morton Worldwide and other related companies. The Company also
has arrangements through association with local agencies in various parts of the
world. Other specialized marketing and communications services conducted by the
Company include media buying, market research, relationship (direct) marketing,
public relations, sports and event marketing, healthcare marketing and
e-consultancy and services.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its subsidiaries, most of which are wholly owned. The Company also has certain
investments in unconsolidated affiliates that are carried on the equity basis.
The Company's consolidated financial statements, including the related notes,
have been restated as of the earliest period presented to include the results of
operations, financial position and cash flows of the 2000 pooled entities in
addition to prior pooled entities.
Short-term and Long-term Investments
The Company's investments in marketable securities are categorized as
available-for-sale securities, as defined by Statement of Financial Accounting
Standards No. 115 ("SFAS 115"), "Accounting for Certain Investments in Debt and
Equity Securities". Unrealized holding gains and losses are reflected as a net
amount within stockholders' equity until realized. The cost of securities sold
is based on the average cost of securities when computing realized gains and
losses.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Translation of Foreign Currencies
Balance sheet accounts are translated principally at rates of exchange
prevailing at the end of the year except for fixed assets and related
depreciation in countries with highly inflationary economies, which are
translated at rates in effect on dates of acquisition. Revenue and expense
accounts are translated at average rates of exchange in effect during each year.
Translation adjustments are included within stockholders' equity except for
countries with highly inflationary economies, in which case they are included in
current operations.
Revenue
Revenue is recognized when earned. For advertising services the revenue is
earned generally when media placements appear or production costs (principally
labor) are incurred and billable, as specified in the relevant client contract.
Revenue from non-advertising services is recognized as the relevant services are
provided.
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 10 1 provides guidance on the recognition, presentation and disclosure
of revenue in financial statements. SAB 101 was adopted by the Company on
January 1, 2000. The adoption of SAB 101 had no significant effect on the
Company's operating results or financial position.
- 119 -
Depreciation and Amortization
Depreciation is computed principally using the straight-line method over
estimated useful lives of the related assets, ranging generally from 3 to 20
years for furniture and equipment and from 10 to 45 years for various component
parts of buildings.
Leasehold improvements and rights are amortized over the terms of related
leases. Company policy provides for the capitalization of all major expenditures
for renewal and improvements and for current charges to income for repairs and
maintenance.
Long-lived Assets
The excess of purchase price over the fair value of net tangible assets acquired
is amortized on a straight -line basis over periods not exceeding 40 years.
Customer lists are amortized on a straight-line basis over the expected useful
life of the customer lists (generally 5 to 40 years).
The Company evaluates the recoverability of the carrying value of long-lived
assets whenever events or changes in circumstances indicate that the net book
value of an operation may not be recoverable. If the sum of projected future
undiscounted cash flows of an operation is less than its carrying value, an
impairment loss is recognized. The impairment loss is measured by the excess of
the carrying value over fair value based on estimated discounted future cash
flows or other valuation measures.
During 1999, the Company recorded a pre -tax charge of $16 million related to the
write-off of goodwill and customer lists within NFO's North American financial
services division. Cash flow analyses were performed, resulting in the
determination by management that the intangible assets within this division were
permanently impaired.
Income Taxes
Deferred income taxes reflect the impact of temporary differences between the
amount of assets and liabilities recognized for financial reporting purposes and
such amounts recognized for income tax purposes.
Earnings per Common and Common Equivalent Share
The Company applies the principles of Statement of Financial Accounting
Standards 128 ("SFAS 128"), "Earnings Per Share". Basic earnings per share is
based on the weighted-average number of common shares outstanding during each
year. Diluted earnings per share also includes common equivalent shares
applicable to grants under the stock incentive and stock option plans and the
assumed conversion of convertible subordinated debentures and notes, if they are
determined to be dilutive.
Treasury Stock
Treasury stock is acquired at market value for the purpose of fulfilling
obligations under various compensation plans and is recorded at cost. Issuances
are accounted for on a first-in, first-out basis.
Concentrations of Credit Risk
The Company's clients are in various businesses, located primarily in North
America, Latin America, Europe and the Asia Pacific Region. The Company performs
ongoing credit evaluations of its clients. Reserves for credit losses are
maintained at levels considered adequate by management. The Company invests its
excess cash in deposits with major banks and in money market securities. These
securities typically mature within 90 days and bear minimal risk.
Segment Reporting
The Company provides advertising and many other closely related specialized
marketing and communications services. All of these services fall within one
reportable segment as defined in Statement of Financial Accounting Standards No.
131 ("SFAS 131"), "Disclosures about Segments of an Enterprise and Related
Information."
Accounting for Derivatives Instruments and Hedging Activities
In June 1998, the Financial Accounting Standards Board issued Statement of
- 120 -
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), which had an initial adoption date by the
Company of January 1, 2000. In June 1999, the FASB postponed the adoption date
of SFAS 133 u ntil January 1, 2001. The Company will adopt the provisions of SFAS
133 effective January 1, 2001 and believes its adoption of SFAS 133 will have no
impact on its financial condition or results of operations.
Equity Based Compensation
In April 2000, the FASB issued Interpretation No. 44, ("FIN 44") Accounting for
Certain Transactions Involving Stock Compensation - an interpretation of APB
Opinion No. 25. This interpretation, which was effective from July 1, 2000,
addressed various issues including the definition of employee for the purpose of
applying APB 25, criteria for determining whether a plan qualifies as a
non-compensatory plan, the accounting consequence of various modifications to
the terms of a previously fixed stock option award and the accounting for an
exchange of stock compensation awards in a business combination. The adoption of
FIN 44 did not have a material impact on the Company's financial statements.
Reclassifications
Certain amounts for prior years have been reclassified to conform to current
year presentation.
NOTE 2: STOCKHOLDERS' EQUITY
In connection with the Deutsch acquisition and based on the taxable structure of
the transaction, a deferred tax asset of approximately $110 million and a
current tax liability of $15 million were recorded with a corresponding
adjustment to additional paid in capital.
Comprehensive Income
Accumulated other comprehensive income (loss) amounts are reflected net of tax,
where applicable, in the consolidated financial statements as follows:
(Dollars in thousands)
Total
Accumulated
Foreign Unrealized Minimum Other
Currency Holding Pension Comprehensive
Translation Gains/ Liability Income/
Adjustment (Losses) Adjustment (Loss)
-------------------------------------------------
Balances, December 31, 1997 $(158,299) $ 12,465 $(13,230) $(159,064)
Current-period change 24,683 (2,576) (24,013) (1,906)
-----------------------------------------------
Balances, December 31, 1998 $(133,616) $ 9,889 $(37,243) $(160,970)
Current-period change (92,928) 15 8,607 18,596 84,275
-----------------------------------------------
Balances, December 31, 1999 $(226,544) $168,496 $(18,647) $ (76,695)
Current-period change (90,832) (223,085) (41) (313,958)
-----------------------------------------------
Balances, December 31, 2000 $(317,376) $(54,589) $(18,688) $(390,653)
===============================================
See Note 13 for additional discussion of unrealized holding gains and losses on
investments.
- 121 -
NOTE 3: EARNINGS PER SHARE
The following is a reconciliation of the components of the basic and diluted EPS
computations for income available to common stockholders for the years ended
December 31:
(Amounts in Thousands Except Per Share Data)
2000 1999 1998
------------------------------- ------------------------------- ------------------------------
Per Per Per
Share Share Share
Income Shares Amount Income Shares Amount Income Shares Amount
------------------------------- ------------------------------- ------------------------------
BASIC EPS
Income available
to common stockholders $358,658 303,192 $1.18 $331,287 297,992 $1.11 $339,907 294,756 $1.15
------------------- ------------------- ----------------------
Effect of Dilutive Securities:
Options 6,110 7,311 6,924
Restricted stock 666 3,351 631 3,537 541 3,454
DILUTED EPS $359,324 312,653 $1.15 $331,918 308,840 $1.07 $340,448 305,134 $1.12
=================== =================== ======================
The computation of diluted EPS for 2000, 1999, and 1998 excludes the assumed
conversion of the 1.80% and 1.87% Convertible Subordinated Notes (See Note 10)
because they were antidilutive.
NOTE 4: ACQUISITIONS
The Company acquired a number of advertising and specialized marketing and
communications services companies during the three-year period ended December
31, 2000. The aggregate purchase price, including cash and stock payments for
new acquisitions (including pooled entities), was $1,582 million, $559 million
and $820 million in 2000, 1999 and 1998, respectively. The aggregate purchase
price for new acquisitions accounted for as purchases was $823 million, $293
million, and $405 million in 2000, 1999, and 1998, respectively.
2000 Acquisitions
In 2000, the Company paid $500 million in cash and issued 26.8 million shares of
its comm on stock to acquire 77 companies. Of the acquisitions, 74 were accounted
for under the purchase method of accounting and 3 were accounted for under the
pooling of interests method. The Company also recorded an additional liability
for acquisition related deferred payments of $1 million, for cases where
contingencies related to acquisitions have been resolved.
For those entities accounted for as purchase transactions, the purchase price of
the acquisitions has been allocated to assets acquired and liabilities assumed
based on estimated fair values. The results of operations of the acquired
companies were included in the consolidated results of the Company from their
respective acquisition dates which occurred throughout the year. The companies
acquired in transactions accounted for as purchases included Capita Technology,
Nationwide Advertising Services, Waylon, MWW and certain assets of Caribiner
International. None of the acquisitions was significant on an individual basis.
In connection with the 2000 purchase transactions, goodwill of approximately
$744 million was recorded. The purchase price allocations made in 2000 are
preliminary and subject to adjustment. Goodwill related to the acquisitions is
being amortized on a straight -line basis over their estimated useful lives.
In April 2000, the Company acquired NFO in a transaction accounted for as a
pooling of interests. Approximately 12.6 million shares were issued. In November
2000, the Company acquired Deutsch in a transaction accounted for as a pooling
of interests. Approximately 6 million shares were issued to acquire Deutsch. The
Company's consolidated financial statements have been restated as of the
earliest period presented to include the results of operations, financial
- 122 -
position and cash flows of NFO, Deutsch and other acquisitions accounted for as
poolings.
1999 Acquisitions
In 1999, the Company paid $189 million in cash and issued 8.4 million shares of
its common stock to acquire 56 companies. Of the acquisitions, 52 were accounted
for under the purchase method of accounting and 4 were accounted for under the
pooling of interests method. The Company also recorded a liability for
acquisition related deferred payments of $28 million, for cases where
contingencies related to acquisitions have been resolved.
For those entities accounted for as purchase transactions, the purchase price of
the acquisitions has been allocated to assets acquired and liabilities assumed
based on estimated fair values. The results of operations of the acquired
companies were included in the consolidated results of the Company from their
respective acquisition dates which occurred throughout the year. The companies
acquired in transactions accounted for as purchases included The Cassidy
Companies, Spedic France, Mullen Advertising, and PDP Promotions UK. None of the
acquisitions was significant on an individual basis.
In connection with the 1999 purchase transactions, goodwill of approximately
$254 million was recorded. Goodwill related to the acquisitions is being
amortized on a straight-line basis over their estimated useful lives.
On December 1, 1999, the Company acquired Brands Hatch Leisure Plc. for 5.2
million shares of stock. The acquisition has been accounted for as a pooling of
interests. Additionally, during 1999 the Company issued 641,596 shares to
acquire 3 other companies which have been accounted for as poolings of
interests.
The following unaudited pro forma data summarize the results of operations for
the periods indicated as if the 1999 and 2000 purchase acquisitions had been
completed as of January 1, 1999. The pro forma data give effect to actual
operating results prior to the acquisition, adjusted to include the estimated
pro forma effect of interest expense, amortization of intangibles and income
taxes. These pro forma amounts do not purport to be indicative of the results
that would have actually been obtained if the acquisitions occurred as of the
beginning of the periods presented or that may be obtained in the future.
For the year ended December 31, 2000
(Amounts in thousands except per share data)
Pre- Pro forma IPG
acquisition with 2000
IPG results acquisitions
(as reported) (unaudited) (unaudited)
------------- ----------- -----------
Revenues $5,625,845 $230,549 $5,856,394
Net income 358,658 9,552 368,210
Earnings per share:
Basic 1.18 1.20
Diluted 1.15 1.16
- 123 -
For the year ended December 31, 1999
(Amounts in thousands except per share data)
Pre- Pro forma IPG
acquisition with 1999 and
IPG results 2000 acquisitions
(as reported) (unaudited) (unaudited)
------------- ----------- -----------
Revenues $4,977,823 $418,289 $5,396,112
Net income 331,287 22,781 354,068
Earnings per share:
Basic 1.11 1.15
Diluted 1.07 1.11
1998 Acquisitions
In 1998, 15 million shares of the Company's common stock were issued for
acquisitions accounted for as poolings of interests. The companies pooled and
the respective shares of the Company's common stock issued included the
following: International Public Relations - 5.2 million shares, Hill Holliday -
4.1 million shares, The Jack Morton Company - 4.3 million shares, and Carmichael
Lynch - 1 million shares.
In 1998, the Company paid $282 million in cash and issued 2.7 million shares of
its common stock to acquire 77 companies, all of which have been accounted for
as purchases. These acquisitions included Gillespie, Ryan McGinn, CSI, Flam mini,
Gingko, Defederico, Herrero Y Ochoa, Infratest Burke AG, CF Group, MarketMind
Technologies, and Ross -Cooper-Lund. The Company also recorded a liability for
acquisition related deferred payments of $24 million.
Deferred Payments
Certain of the Company's acquisition agreements provide for deferred payments by
the Company, contingent upon future revenues or profits of the companies
acquired. Deferred payments of both cash and shares of the Company's common
stock for prior years' acquisitions were $185 million, $210 million, and $84
million in 2000, 1999 and 1998, respectively. Such payments are capitalized and
recorded as goodwill.
Investments
During 2000, the Company sold its investment in Exhibition Services for combined
proceeds of approximately $12 million.
During 1999, the Company sold a portion of its investments in Lycos and USWEB
for combined proceeds of approximately $56 million. Additionally, the Company
sold its minority investment in Nicholson NY, Inc. to Icon for $19 million in
shares of Icon's common stock.
During 1998, the Company sold a portion of its investments in MarchFirst, Inc.,
(formerly USWEB, CKS Group) and Lycos with combined proceeds of approximately
$20 million.
Included in other income, net, are net equity gains of $40 million, $49 million
and $44 million in 2000, 1999, and 1998, respectively.
Restatements
As noted above, the Company acquired NFO and Deutsch during 2000 in transactions
which were accounted for as poolings of interests. The accompanying consolidated
financial statements, including the related notes, have been restated as of the
earliest period presented to include the results of operations, financial
position and cash flows of all pooled entities.
Revenue and net income for NFO for the quarter ended March 31, 2000 were $106
million, and $.2 million, respectively. Revenue and net income for Deutsch for
- 124 -
the three quarters ended September 30, 2000 were $88 million, and $19 million,
respectively.
In connection with the acquisition of Deutsch, the Company recognized a charge
related to one-time transaction costs of $44.7 million. The principal component
of this amount related to the expense associated with various equity
participation agreements with certain members of management. These agreements
provided for participants to receive a portion of the proceeds in the event of
the sale or merger of Deutsch.
Prior to its acquisition by the Company, Deutsch elected to be treated as an "S"
Corporation under applicable sections of the Internal Revenue Code as well as
for state income tax purposes. Accordingly, income tax expense was lower than
would have been the case had Deutsch been treated as a "C" Corporation. Deutsch
became a "C" Corporation upon its acquisition by the Company. On a pro forma
basis, assuming "C" Corporation status, net income for Deutsch and the Company
would have been lower by $10.7 million, $6.5 million and $2.5 million in 2000,
1999 and 1998, respectively.
NOTE 5: PROVISION FOR INCOME TAXES
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes". SFAS 109 applies
an asset and liability approach that requires the recognition of deferred tax
assets and liabilities with respect to the expected future tax consequences of
events that have been recognized in the consolidated financial statements and
tax returns.
The components of income before provision for income taxes are as follows:
(Dollars in thousands) 2000 1999 1998
------ ---- ----
Domestic $367,920 $365,118 $322,651
Foreign 289,986 235,599 284,204
---------------------------------------
Total $657,906 $600,717 $606,855
=======================================
The provision for income taxes consists of:
Federal Income Taxes (Including
Foreign Withholding Taxes):
Current $128,468 $ 92,018 $110,226
Deferred (8,434) 19,891 4,335
---------------------------------------
120,034 111,909 114,561
---------------------------------------
State and Local Income Taxes:
Current 36,838 23,168 23,713
Deferred (2,795) 4,252 802
---------------------------------------
34,043 27,420 24,515
---------------------------------------
Foreign Income Taxes:
Current 139,274 119,469 123,669
Deferred (20,317) (14,827) (17,109)
---------------------------------------
118,957 104,642 106,560
---------------------------------------
Total $273,034 $243,971 $245,636
=======================================
- 125 -
At December 31, 2000 and 1999 the deferred tax assets/(liabilities) consisted of
the following items:
(Dollars in thousands) 2000 1999
---- ----
Postretirement/postemployment benefits $ 55,230 $ 52,317
Deferred compensation 16,478 4,940
Pension costs 25,225 10,036
Depreciation (5,174) (8,537)
Rent (10,515) (8,674)
Interest 1,669 4,100
Accrued reserves 15,653 9,399
Allowance for doubtful accounts 9,695 5,222
Goodwill amortization 98,130 (5,504)
Investments in equity securities 32,856 (140,320)
Tax loss/tax credit carryforwards 49,145 47,783
Restructuring and other merger related costs 13,453 9,497
Other 4,525 86
-----------------------
Total deferred tax assets / (liabilities) 306,370 (19,655)
Deferred tax valuation allowance 23,236 26,233
-----------------------
Net deferred tax assets / (liabilities) $283,134 $(45,888)
=======================
The valuation allowance of $23.2 million and $26.2 million at December 31, 2000
and 1999, respectively, represents a provision for uncertainty as to the
realization of certain deferred tax assets, including U.S. tax credits and net
operating loss carryforw ards in certain jurisdictions. The change during 2000 in
the deferred tax valuation allowance primarily relates to the utilization of tax
credits and net operating loss carryforwards. At December 31, 2000, there were
$19.3 million of tax credit carryforwards with expiration periods through 2005
and net operating loss carryforwards with a tax effect of $29.8 million with
various expiration periods.
A reconciliation of the effective income tax rate as shown in the consolidated
statement of income to the federal statutory rate is as follows:
2000 1999 1998
---- ---- ----
Statutory federal income tax rate 35.0% 35.0% 35.0%
State and local income taxes,
net of federal income tax benefit 3.5 2.8 3.7
Impact of foreign operations, including
withholding taxes (0.5) 0.8 0.4
Goodwill and intangible assets 3.4 3.6 2.8
Effect of pooled companies 1.0 0.3 (0.8)
Other (0.9) (1.9) (0.6)
------------------------
Effective tax rate 41.5% 40.6% 40.5%
========================
Excluding the impact of non-recurring items, the effective tax rate would have
been 39.0%, 40.4% and 40.5% in 2000, 1999 and 1998, respectively.
As described in Note 4, prior to its acquisition by the Company, Deutsch had
elected to be treated as an "S" Corporation and accordingly, its income tax
expense was lower than it would have been had Deutsch been treated as a "C"
Corporation. Deutsch became a "C" Corporation upon its acquisition by the
Company. Assuming Deutsch had been a "C" Corporation since 1997, the pro forma
effective tax rate for the Company, would have been 40.4%, 41.4% and 40.9%
respectively (excluding non-recurring items) for 2000, 1999 and 1998.
- 126 -
Also, in connection with the Deutsch transaction a deferred tax asset of
approximately $110 million and a current tax liability of approximately $15
million were recognized with a corresponding adjustment to additional paid in
capital.
The total amount of undistributed earnings of foreign subsidiaries for income
tax purposes was approximately $704 million at December 31, 2000. It is the
Company's intention to reinvest undistributed earnings of its foreign
subsidiaries and thereby indefinitely postpone their remittance. Accordingly, no
provision has been made for foreign withholding taxes or United States income
taxes which may become payable if undistributed earnings of foreign subsidiaries
were paid as dividends to the Company. The additional taxes on that portion of
undistributed earnings which is available for dividends are not practicably
determinable.
NOTE 6: SUPPLEMENTAL CASH FLOW INFORMATION
Cash and Cash Equivalents
For purposes of the consolidated statement of cash flows, the Company considers
all highly liquid investments with a maturity of three months or less to be cash
equivalents.
Income Tax and Interest Payments
Cash paid for income taxes was approximately $241 million, $186 million and $200
illion in 2000, 1999 and 1998, respectively. Interest payments were
approximately $76 million, $57 million and $40 million in 2000, 1999, and 1998,
respectively.
Acquisitions
As more fully described in Note 4, the Company issued 26.8 million shares, 8.4
million shares, and 17.7 million shares of the Company's common stock in
connection with acquisitions during 2000, 1999 and 1998, respectively. Details
of businesses acquired in transactions accounted for as purchases were as
follows:
(Dollars in thousands)
2000 1999 1998
---- ---- ----
Fair value of assets acquired $1,358,623 $627,005 $726,601
Liabilities assumed 349,024 148,637 319,676
-------------------------------------
Net assets acquired 1,009,599 478,368 406,925
Less: noncash consideration 381,787 186,210 91,077
Less: cash acquired 51,197 43,752 59,853
-------------------------------------
Net cash paid for acquisitions $ 576,615 $248,406 $255,995
=====================================
The amounts shown above exclude future deferred payments due in subsequent
years, but include cash deferred payments of $127 million, $120 million and $55
million made during 2000, 1999 and 1998, respectively.
NOTE 7: INCENTIVE PLANS
The 1997 Performance Incentive Plan ("1997 PIP Plan") was approved by the
Company's stockholders in May 1997 and includes both stock and cash based
incentiv e awards. The maximum number of shares of the Company's common stock
which may be granted in any year under the 1997 PIP Plan is equal to 1.85% of
the total number of shares of the Company's common stock outstanding on the
first day of the year adjusted for additional shares as defined in the 1997 PIP
- 127 -
Plan document (excluding management incentive compensation performance awards).
The 1997 PIP Plan also limits the number of shares available with respect to
awards made to any one participant as well as limiting the number of shares
available under certain awards. Awards made prior to the 1997 PIP Plan remain
subject to the respective terms and conditions of the predecessor plans. Except
as otherwise noted, awards under the 1997 PIP Plan have terms similar to awards
made under the respective predecessor plans.
Stock Options
Outstanding options are generally granted at the fair market value of the
Company's common stock on the date of grant and are exercisable as determined by
the Compensation Committee of the Board of Directors (the "Committee").
Generally, options become exercisable between two and five years after the date
of grant and expire ten years from the grant date.
Followin g is a summary of stock option transactions during the three-year period
ended December 31:
2000 1999 1998
--------------------------------------------------- -----
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
(Shares in thousands) Shares Price Shares Price Shares Price
--------------------------------------------------------
Shares under option,
beginning of year 27,627 $ 23 29,505 $ 19 25,466 $ 13
Options granted 4,297 42 4,743 39 8,399 32
Options exercised (2,476) 14 (4,497) 11 (3,108) 8
Options cancelled (1,932) 30 (2,124) 25 (1,252) 15
------ ------ ------
Shares under option,
end of year 27,516 $ 26 27,627 $ 23 29,505 $ 19
====== ====== ======
Options exercisable
at year-end 8,179 $ 15 7,955 $ 13 6,954 $ 11
The following table summarizes information about stock options outstanding and
exercisable at December 31, 2000:
(Shares in thousands)
Weighted-
Average Weighted- Weighted-
Number Remaining Average Number Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 12/31/00 Life Price at 12/31/00 Price
-------------------------------------------------------------------------------
$ 4.33 to $9.99 1,914 2 $ 9 1,914 $ 9
10.00 to 14.99 2,728 4 11 2,652 11
15.00 to 24.99 9,075 6 18 2,654 18
25.00 to 56.28 13,799 8 37 959 31
Employee Stock Purchase Plan
Under the Employee Stock Purchase Plan ("ESPP"), employees may purchase common
stock of the Company through payroll deductions not exceeding 10% of their
compensation. The price an employee pays for a share of sto ck is 85% of the
market price on the last business day of the month. The Company issued
approximately .6 million shares in 2000 and .5 million shares in 1999, and 1998,
- 128 -
respectively, under the ESPP. An additional 14.9 million shares were reserved
for issuance at December 31, 2000.
SFAS 123 Disclosures
The Company applies the disclosure principles of Statement of Financial
Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based
Compensation". As permitted by the provisions of SFAS 123, the Company applies
APB Opinion 25, "Accounting for Stock Issued to Employees", and related
interpretations in accounting for its stock-based employee compensation plans.
If compensation cost for the Company's stock option plans and its ESPP had been
determined based on the fair value at the grant dates as defined by SFAS 123,
the Company's pro forma net income and earnings per share would have been as
follows:
(Dollars in Thousands Except Per Share Data)
2000 1999 1998
---- ---- ----
Net Income As reported $358,658 $331,287 $339,907
Pro forma $327,880 $303,645 $322,084
Earnings Per Share
Basic As reported $ 1.18 $ 1.11 $ 1.15
Pro forma $ 1.08 $ 1.02 $ 1.09
Diluted As reported $ 1.15 $ 1.07 $ 1.12
Pro forma $ 1.05 $ 0.99 $ 1.06
For purposes of this pro forma information, the fair value of shares issued
under t he ESPP was based on the 15% discount received by employees. The
weighted -average fair value (discount) on the date of purchase for stock
purchased under this plan was $6.17, $5.28, and $3.82 in 2000, 1999, and 1998,
respectively.
The weighted average fair value of options granted during 2000, 1999, and 1998
was $14.86, $12.94, and $8.85, respectively. The fair value of each option grant
has been estimated on the date of grant using the Black-Scholes option-pricing
model with the following assumptions:
2000 1999 1998
---- ---- ----
Expected option lives 6 years 6 years 6 years
Risk free interest rate 6.15% 5.72% 4.87%
Expected volatility 25.86% 19.73% 19.17%
Dividend yield .89% .81% .95%
As required by SFAS 123, this pro forma information is based on stock awards
beginning in 1995 and accordingly the pro forma information for 1999 and 1998 is
not likely to be representative of the pro forma effects in future years because
options generally vest over five years.
Restricted Stock
Restricted stock issuances are subject to certain restrictions and vesting
requirements as determined by the Committee. The vesting period is generally
five to seven years. No monetary consideration is paid by a recipient for a
restricted stock award and the grant date fair value of these shares is
amortized over the restriction periods. At December 31, 2000, there was a total
of 6.8 million shares of restricted stock outst anding. During 2000, 1999 and
1998, the Company awarded 2.2 million shares, .9 million shares and 1.3 million
shares of restricted stock with a weighted-average grant date fair value of
$42.72, $40.03 and $28.99, respectively. The cost recorded for restricted stock
- 129 -
awards in 2000, 1999 and 1998 was $36.7 million, $25.9 million, and $20.3
million, respectively.
Performance Units
Performance units have been awarded to certain key employees of the Company and
its subsidiaries. The ultimate value of these performance units is contingent
upon the annual growth in profits (as defined) of the Company, its operating
components or both, over the performance periods. The awards are generally paid
in cash. The projected value of these units is accrued by the Company and
charged to expense over the performance period. The Company expensed
approximately $40 million, $42 million and $30 million in 2000, 1999, and 1998,
respectively.
NOTE 8: RETIREMENT PLANS
Defined Benefit Pension Plans
Through March 31, 1998 the Company and certain of its domestic subsidiaries had
a defined benefit plan ("Domestic Plan") which covered substantially all regular
domestic employees. Effective April 1, 1998 this Plan was curtailed, and
participants with five or less years of service became fully vested in the
Domestic Plan. Participants with five or more years of service as of March 31,
1998 retain their vested balances and participate in a new compensation plan.
Under the new plan, each participant's account is credited with an annual
allocation, which approximates the projected discounted pension benefit accrual
(normally made under the Domestic Plan) plus interest, while they continue to
work for the Company. Participants in active service are eligible to receive up
to ten years of allocations coinciding with the number of years of plan
participation with the Company after March 31, 1998.
Net periodic pension costs (income) for the Domestic Plan for 2000, 1999 and
1998 were ($.9) million, $1.3 million and $.9 million, respectively.
Additionally, NFO maintains a defined benefit plan ("NFO Plan") covering
approximately one half of NFO's U.S. employees. The periodic pension costs for
this plan for 2000, 1999, and 1998 were $.5 million, $.8 million and $.6
million, respectively.
The Company's stockholders' equity balance includes a minimum pension liability
of $18.7 million, $18.6 million and $37.2 million at December 31, 2000, 1999 and
1998, respectively.
The Company also has several foreign pension plans in which benefits are based
primarily on years of service and employee compensation. It is the Company's
policy to fund these plans in accordance with local laws and income tax
regulations.
Net periodic pension costs for foreign pension plans for 2000, 1999 and 1998
included the following components:
(Dollars in thousands)
2000 1999 1998
---- ---- ----
Service cost $ 9,464 $ 9,619 $ 6,847
Interest cost 11,600 11,759 10,908
Expected return on plan assets (11,999) (9,380) (9,437)
Amortization of unrecognized
transition obligation 501 390 373
Amortization of
prior service cost 713 833 482
Recognized actuarial loss / (gain) (329) 508 (70)
Other -- (9) --
--------------------------------
Net periodic pension cost $ 9,950 $ 13,720 $ 9,103
================================
- 130 -
The following table sets forth the change in the benefit obligation, the change
in plan assets, the funded status and amounts recognized for the pension plans
in the Company's consolidated balance sheet at December 31, 2000, and 1999:
(Dollars in thousands)
Domestic Foreign
Pension Plans Pension Plans
------------------------------------------------
2000 1999 2000 1999
------------------------------------------------
Change in benefit obligation
Beginning obligation $ 151,878 $ 166,538 $ 226,503 $ 220,964
Service cost 701 768 9,464 9,619
Interest cost 10,512 9,869 11,600 11,759
Benefits paid (14,721) (12,671) (10,912) (12,777)
Participant contribution s - - 1,589 2,410
Actuarial (gains) / losses 5,439 (12,626) 7,991 (7,264)
Currency effect -- -- (14,912) 1,440
Other -- -- 316 352
------------------------------------------------
Ending obligation 153,809 151,878 231,639 226,503
------------------------------------------------
Change in plan assets
Beginning fair value 135,510 129,755 192,739 161,975
Actual return on plan assets 2,496 15,354 (2,338) 30,651
Employer contributions 9,185 3 ,072 8,278 7,887
Participant contributions -- -- 1,589 2,410
Benefits paid (14,721) (12,671) (10,912) (12,777)
Currency effect -- -- (5,799) 156
Other -- -- 190 2,437
------------------------------------------------
Ending fair value 132,470 135,510 183,747 192,739
------------------------------------------------
Funded status of the plans (21,339) (16,368) (47,892) (33,764)
Unrecognized net actuarial
loss/(gain) 33,542 18,927 5,374 (18,163)
Unrecognized prior service cost (7) (13) 1,306 3,704
Unrecognized transition cost -- -- 2,732 1,838
------------------------------------------------
Net asset/(liability)
recognized $ 12,196 $ 2,546 $ (38,480) $ (46,385)
================================================
At December 31, 2000 and 1999, the assets of the Domestic Plan and the foreign
pension plans were primarily invested in fixed income and equity securities.
For the Domestic Plans, discount rates of 7.5% in 2000, 7.75% in 1999 and 6.75%
to 7% in 1998 and salary increase assumptions of 4.5% in 2000 and 1999 (for the
NFO Plan) and 4.5% to 6% in 1998 were used in determining the actuarial present
value of the projected benefit obligation. The expected return of Domestic Plans
assets was 9% to 9.5% in 2000 and 1999 and 9% to 10% in 1998. For the foreign
pension plans, discount rates ranging from 3.8% to 10% in 2000, 3.75% to 14% in
1999, and 4% to 14% in 1998 and salary increase assumptions ranging from 2.5% to
10% in 2000, 3% to 10% in 1999 and 2% to 10% in 1998 were used in determining
the actuarial present value of the projected benefit obligation. The expected
rates of return on the assets of the foreign pension plans ranged from 2% to 10%
in 2000, and 2% to 14% in 1999 and 1998.
The projected benefit obligation, accumulated benefit obligation and fair value
of plan assets for the Domestic Plan with accumulated benefit obligation in
excess of plan assets were $145 million, $145 million, and $124 million,
respectively, as of December 31, 2000, and $152 million, $152 million, and $136
million, respectively, as of December 31, 1999. The projected benefit
obligation, accumulated benefit obligation, and fair value of plan assets for
the foreign p ension plans with accumulated benefit obligations in excess of plan
- 131 -
assets were $77 million, $72 million and $5 million respectively, as of December
31, 2000, and $90 million, $72 million and $9 million respectively, as of
December 31, 1999.
Other Benefit Arrangements
The Company also has special unqualified deferred benefit arrangements with
certain key employees. Vesting is based upon the age of the employee and the
terms of the employee's contract. Life insurance contracts have been purchased
in amounts which may be used to fund these arrangements.
In addition to the defined benefit plans described above, the Company also
sponsors other defined contribution plans ("Savings Plans") that cover
substantially all domestic employees of the Company and participating
subsidiaries. The Savings Plans permit participants to make contributions on a
pre-tax and/or after-tax basis. The Savings Plans allow participants to choose
among several investment alternatives. The Company matches a portion of
participants' contributions based upon the number of years of service. The
Company contributed $15.3 million, $12 million and $9.3 million to the Savings
Plans in 2000, 1999 and 1998, respectively.
Postretirement Benefit Plans
The Company and its subsidiaries provide certain postretirement health care
benefits for employees who were in the employ of the Company as of January 1,
1988, and life insurance benefits for employees who were in the employ of the
Company as of December 1, 1961. The plans cover certain domestic employees and
certain key employees in foreign countries. Effective January 1, 1993, the
Company's plan covering postretirement medical benefits was amended to place a
cap on annual benefits payable to retirees.
The coverage is self-insured, but is administered by an insurance company.
The Company accrues the expected cost of postretirement benefits other than
pensions over the period in which the active employee s become eligible for such
postretirement benefits.
The net periodic expense for these postretirement benefits for 2000, 1999 and
1998 was $2 million, $2 million and $3 million, respectively.
The following table sets forth the change in benefit obligation, change in plan
assets, funded status and amounts recognized for the Company's postretirement
benefit plans in the consolidated balance sheet at December 31, 2000 and 1999:
(Dollars in thousands)
2000 1999
---------------------
Change in benefit obligation
Beginning obligation $ 38,835 $ 41,793
Service cost 493 477
Interest cost 2,963 2,795
Participant contributions 90 90
Benefits paid (3,931) (2,020)
Plan amendments (625) --
Actuarial gain 3,623 (4,300)
--------------------
Ending obligation 41,448 38,835
--------------------
Change in plan assets
Beginning fair value -- --
Actual return on plan assets -- --
Employer contributions 3,841 1,930
Participant contributions 90 90
Benefits paid (3,931) (2,020)
--------------------
Ending fair value -- --
--------------------
Funded status of the plans (41,448) (38,835)
Unrecognized net actuarial gain (5,370) (9,440)
Unrecognized prior service cost (1,532) (1,951)
--------------------
Net amount recognized $(48,350) $(50,226)
====================
- 132 -
Discount rates of 7.5% in 2000, 7.5% to 7.75% in 1999, and 6.75% in 1998 and
salary increase assumption of 5% to 6% in 2000 and 4% to 6% in 1999 and 1998
were used in determining the accumulated postretirement benefit obligation. A 5%
to 6.7% and a 7% to 7.4% increase in the cost of covered health care benefits
were assumed for 2000 and 1999, respectively. This rate is assumed to decrease
incrementally to approximately 5.5% in the year 2002 and remain at that level
thereafter. The health care cost trend rate assumption does not have a
significant effect on the amounts reported.
Postemployment Benefits
In accordance with SFAS 112, "Employers' Accounting for Postemployment
Benefits", the Company accrues costs relating to certain benefits including
severance, worker's compensation and health care coverage over an employee's
service life.
The Company's liability for postemployment benefits totaled approximately $83
million and $67 million at December 31, 2000 and 1999, respectively, and is
included in deferred compensation and reserve for termination allowances. The
net periodic expe nse recognized in 2000, 1999 and 1998 was approximately $29
million, $34 million and $32 million, respectively.
NOTE 9: SHORT -TERM BORROWINGS
The Company and its domestic subsidiaries have lines of credit with various
banks including new facilities as discussed in Note 10. These credit lines
permit borrowings at fluctuating interest rates determined by the banks.
Short-term borrowings by subsidiaries outside the United States principally
consist of drawings against bank overdraft facilities and lines of credit. These
borrowings bear interest at the prevailing local rates. Where required, the
Company has guaranteed the repayment of these borrowings. Unused lines of credit
by the Company and its subsidiaries at December 31, 2000 and 1999 aggregated
approximately $1 billion and $500 million, respectively. The weighted-average
interest rate on outstanding balances at December 31, 2000 and 1999 were
approximately 6.7% and 5.8%, respectively. Current maturities of long-term debt
are included in the payable to banks balance.
NOTE 10: LONG-TERM DEBT
Long-term debt at December 31 consisted of the following:
(Dollars in thousands)
2000 1999
---------------------
Convertible Subordinated Notes - 1.87% $ 311,860 $304,076
Convertible Subordinated Notes - 1.80% 221,244 214,414
Term loans - 5.64% to 7.91% (4.20% to 7.91% in 1999) 273,996 289,621
Syndicated Multi-Currency Credit Agreement - 7.0% 160,000 --
Senior Notes Payable to Banks under a Revolving Credit
Agreement Due March 2003 - 4.3% to 6.9% -- 35,603
Senior Notes Payable - 6.83% to 7.52% -- 102,000
Subordinated Notes - 9.84% -- 25,000
Senior Unsecured Note - 7.88% 500,000 --
Germany mortgage note payable - 7.6% 24,537 26,779
Other mortgage notes payable and
long-term loans - 3.0% to 11.0% 67,215 75,026
---------------------
1,558,852 1,072,519
Less: current portion 53,791 23,912
---------------------
Long-term debt $1,505,061 $1,048,607
=====================
- 133 -
On June 1, 1999, the Company issued $361 million face amount of Convertible
Subordinated Notes due 2006. The 2006 notes were issued at an original price of
83% of the face amount, generating proceeds of approximately $300 million. The
notes are convertible into 6.4 million shares of the Company's common stock at a
conversion rate of 17.616 shares per $1,000 face amount.
On September 16, 1997, the Company issued $250 million face amount of
Convertible Subordinated Notes due 2004 with a coupon rate of 1.80%. The 2004
Notes were issued at an original price of 80% of the face amount, generating
proceeds of approximately $200 million. The notes are convertible into 6.7
million shares of the Company's common stock at a conversion rate of 26.772
shares per $1,000 face amount.
On June 27, 2000, the Company entered into a syndicated multi-currency credit
agreement under which a total of $750 million may be borrowed; $375 million may
be borrowed under a 364-day facility and $375 million under a five -year
facility. The facilities bear interest at variable rates based on either LIBOR
or a bank's base rates, at the Company's option. As of December 31, 2000,
approximately $174 million had been borrowed under the facilities. Of this
amount $160 million is included as long-term debt at December 31, 2000. The
proceeds from the syndicated credit agreement were used to refinance borrowings
and for general corporate purposes including acqu isitions and other investments.
Some of the pre-existing borrowing facilities were subsequently terminated.
On October 20, 2000, the Company completed the issuance and sale of $500 million
principal amount of senior unsecured notes due 2005. The notes bear an interest
rate of 7.875% per annum. The Company used the net proceeds of approximately
$496 million from the sale of the notes to repay outstanding indebtedness under
its credit facilities.
Under various loan agreements, the Company must mainta in specified levels of net
worth and meet certain cash flow requirements and is limited in its level of
indebtedness. The Company has complied with the limitations under the terms of
these loan agreements.
Long-term debt maturing over the next five years and thereafter is as follows:
2001-$53.8 million; 2002-$112.5 million; 2003-$30.8 million; 2004-$259.2
million; 2005 -$667.3 million and $435.2 million thereafter.
See Note 13 for discussion of fair market value of the Company's long-term debt.
NOTE 11: RESTRUCTURING AND OTHER MERGER RELATED COSTS
During 2000, the Company recorded pre-tax restructuring and other merger related
costs of $116.1 million ($72.9 million net of tax). Of the total pre-tax
restructuring and other merger-related costs, cash charges represented $84
million. The key components of the charge were the costs associated with the
restructuring of Lowe Lintas & Partners Worldwide. The remaining costs relate
principally to transaction and other merger related costs arising from the
merger with NFO.
In October 1999, the Company announced the merger of two of its advertising
networks. The networks affected, Lowe & Partners Worldwide and Ammirati Puris
Lintas, were combined to form a new agency network called Lowe Lintas & Partners
Worldwide. The merger involved the consolidation of operations in Lowe Lintas
agencies in approximately 24 cities in 22 countries around the world. As of
September 30, 2000, all restructuring activities had been completed.
- 134 -
A summary of the components of the reserve for restructuring and other
merger-related costs for Lowe Lintas is as follows:
(Dollars in millions)
Year to Date December 31, 2000
------------------------------------------------------
Balance Expense Cash Asset Balance
at 12/31/99 recognized Paid Write-offs Reclassifications at 12/31/00
----------- ---------- ---- ---------- ----------------- -----------
Severance and
termination costs $43.6 $32.0 $(46.7) $ -- $(17.2) $11.7
Fixed asset write-offs 11.1 14.2 -- (25.3) -- --
Lease termination costs 3.8 21.1 (10.1) -- -- 14.8
Investment write-offs
and other 23.4 20.5 (6.4) (37.5) -- --
---------------------------------------------------------------------------
Total $81.9 $87.8 $(63.2) $(62.8) $(17.2) $ 26.5
===========================================================================
The severance and termination costs recorded in 2000 relate to approximately 360
employees who have been terminated or notified that they will be terminated. The
remainin g severance and termination amounts will be paid in 2001. The employee
groups affected include management, administrative, account management, creative
and media production personnel, principally in the U.S. and several European
countries. Included in severance and termination costs is an amount of $17.2
million related to non-cash charges for stock options which has been
reclassified to additional paid in capital.
The fixed asset write-offs relate largely to the abandonment of leasehold
improvements as part of the merger. The amount recognized in 2000 relates to
fixed asset write-offs in 4 offices, the largest of which is in the U.K.
Lease termination costs relate to the offices vacated as part of the merger. The
lease terminations have been completed, with the cash portion to be paid out
over a period of up to five years.
The investment write-offs relate to the loss on sale or closing of certain
business units. In 2000, $12.7 million of investment write-offs has been
recorded, the majority of which results from the decision to sell or abandon 3
businesses located in Asia and Europe. In the aggregate, the businesses being
sold or abandoned represent an immaterial portion of the r evenue and operations
of Lowe Lintas & Partners. The write-off amount was computed based upon the
difference between the estimated sales proceeds (if any) and the carrying value
of the related assets. These sales or closings were completed in mid 2000.
In addition to the Lowe Lintas restructuring and other merger related costs
noted above, additional charges, substantially all of which were cash costs,
were recorded during 2000. These costs relate principally to the non -recurring
transaction and other merger related costs arising from the acquisition of NFO.
- 135 -
NOTE 12: GEOGRAPHIC AREAS
Long-lived assets and revenue are presented below by major geographic area:
(Dollars in thousands)
2000 1999 1998
-----------------------------------
Long-Lived Assets:
United States $2,261,601 $1,784,072 $1,198,067
-----------------------------------
International
United Kingdom 506,468 477,774 393,348
All other Europe 778,623 685,521 641,895
Asia Pacific 165,955 151,083 141,113
Latin America 101,901 79,401 58,134
Other 114,487 76,269 50,853
-----------------------------------
Total International 1,667,434 1,470,048 1,285,343
-----------------------------------
Total Consolidated $3,929,035 $3,254,120 $2,483,410
===================================
Revenue:
United States $3,073,854 $2,560,161 $2,158,777
-----------------------------------
International
United Kingdom 545,207 527,250 450,103
All other Europe 1,088,025 1,140,532 902,602
Asia Pacific 444,411 346,205 325,758
Latin America 266,217 213,260 232,940
Other 208,131 190,415 148,477
-----------------------------------
Total International 2,551,991 2,417,662 2,059,880
-----------------------------------
Total Consolidated $5,625,845 $4,977,823 $4,218,657
===================================
Revenue is attributed to geographic areas based on where the services are
performed. Property and equipment is allocated based upon physical location.
Intangible assets, other assets, and investments are allocated based on the
location of the related operation.
The largest client of the Company contributed approximately 7% in 2000, 7% in
1999 and 7% in 1998 to revenue. The Company's second largest client contributed
approximately 3% in 2000, 4% in 1999, and 4% in 1998 to revenue.
Consolidated net income includes (gains)/losses from exchange and translation of
foreign currencies of ($1.4) million, $6.7 million and $4.3 million in 2000,
1999 and 1998, respectively.
NOTE 13: FINANCIAL INSTRUMENTS
Financial assets, which include cash and cash equivalents, marketable securities
and receivables, have carrying values which approximate fair value. Long -term
equity securities, included in other investments and miscellaneous assets in the
Consolidated Balance Sheet, are deemed to be available-for-sale as defined by
SFAS 115 and accordingly are reported at fair value, with net unrealized gains
and losses reported within stockholders' equity.
- 136 -
The following table summarizes net unrealized gains and losses on marketable
securities before taxes at December 31:
(Dollars in millions)
2000 1999 1998
---------------------------
Cost $217.1 $172.3 $121.3
Unrealized gains / (losses)
- gains 1.1 302.3 20.2
- losses (94.9) (12.2) (1.5)
---------------------------
Net unrealized gains / (losses) (93.8) 290.1 18.7
---------------------------
Fair market value $123.3 $462.4 $140.0
===========================
Net of tax, net unrealized holding gains (losses) were $(55) million, $168
million and $10 million at December 31, 2000, 1999 and 1998, respectively.
Financial liabilities with carrying values approximating fair value include
accounts payable and accrued expenses, as well as payable to banks and long -term
debt. As of December 31, 2000, the 1.87% Convertible Subordinated Notes due 2006
had a cost basis of $312 million with a market value of $339 million, and the
1.80% Convert ible Subordinated Notes due 2004 had a cost basis of $221 million
with a market value of $293 million. As of December 31, 1999, the 1.87%
Convertible Subordinated Notes due 2006 had a cost basis of $304 million with a
market value of $416 million, and the 1.80% Convertible Subordinated Notes due
2004 had a cost basis of $214 million with a market value of $392 million. The
fair values were determined by obtaining quotes from brokers (refer to Note 10
for additional information on long -term debt).
On October 20, 2000, the Company completed the issuance and sale of $500 million
principal amount of senior unsecured notes due 2005. As of December 31, 2000,
the market value of this note was $509 million. The notes bear an interest rate
of 7.875% per annum.
The Company occasionally uses forwards and options to hedge a portion of its net
investment in foreign subsidiaries and certain intercompany transactions in
order to mitigate the impact of changes in foreign exchange rates on working
capital. The notional value and fair value of all outstanding forwards and
options contracts at the end of the year as well as the net cost of all settled
contracts during the year were not significant.
NOTE 14: COMMITMENTS AND CONTINGENCIES
At December 31, 2000 the Company's subsidiaries operating primarily outside the
United States were contingently liable for discounted notes receivable of $9.7
million.
The Company and its subsidiaries lease certain facilities and equipment. Gross
rental expense amounted to approximately $326 million for 2000, $293 million for
1999 and $257 million for 1998, which was reduced by sublease income of $14.6
million in 2000, $17.2 million in 1999 and $16.4 million in 1998.
- 137 -
Minimum rental commitments for the rental of office premises and equipment under
noncancellable leases, some of which provide for rental adjustments due to
increased property taxes and operating costs for 2001 and thereafter, are as
follows:
(Dollars in thousands)
Gross Rental Sublease
Commitment Income
---------- ------
Period
2001 $228,351 $13,421
2002 206,390 11,265
2003 168,093 7,513
2004 150,005 2,500
2005 133,633 1,725
2006 and thereafter 596,633 6,108
Certain of the Company's acquisition agreements provide for deferred payments by
the Company, contingent upon future revenues or profits of the companies
acquired. Such contingent amounts would not be material taking into account the
future revenues or profits of the companies acquired.
The Company and certain of its subsidiaries are party to various tax
examinations, some of which have resulted in assessments. The Company intends to
vigorously defend any and all assessments and believes that additional taxes (if
any) that may ultimately result from the settlement of such assessments or open
examinations would not have a material adverse effect on the consolidated
financial statements.
The Company is involved in legal and administrative proceedings of various
types. While any litigation contains an element of uncertainty, the Company
believes that the outcome of such proceedings or claims will not have a material
adverse effect on the Company.
Note 15 SUBSEQUENT EVENT
On March 19, 2001, the Company entered into an agreement to acquire True North
Communications Inc. ("True North"), a global provider of advertising and
communication services.
Under the terms of the agreement, True North shareholders will receive 1.14
shares of Interpublic stock for each share of True North stock. The transaction
is subject to certain conditions, including the receipt of approval from True
North's shareholders and applicable regulatory approval. The acquisition, which
is expected to close mid year, will be accounted for as a pooling of interests.
- 138 -
SELECTED FINANCIAL DATA FOR FIVE YEARS
(Amounts in Thousands Except Per Share Data)
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
OPERATING DATA
Revenue $ 5,625,845 $ 4,977,823 $ 4,218,657 $ 3,610,706 $ 3,053,926
Operatin g expenses 4,792,323 4,315,144 3,646,061 3,195,564 2,695,038
Restructuring and other merger
related costs 116,131 84,183 -- -- --
Deutsch transaction costs 44,715 -- -- -- --
Special compensation charge -- -- -- 32,229 --
Interest expense 109,111 81,341 64,296 59,820 53,321
Provision for income taxes 273,034 243,971 245,636 197,665 166,244
Net Income $ 358,658 $ 331,287 $ 339,907 $ 224,184 $ 228,914
PER SHARE DATA
Basic
Net Income $ 1.18 $ 1.11 $ 1.15 $ .79 $ .81
Weighted -average shares 303,192 297,992 294,756 283,796 284,219
Diluted
Net Income $ 1.15 $ 1.07 $ 1.12 $ .76 $ .78
Weighted -average shares 312,653 308,840 305,134 301,602 300,802
FINANCIAL POSITION
Working capital $ (80,027) $ 170,976 $ 96,881 $ 244,361 $ 149,919
Total assets $10,238,222 $ 9,247,044 $ 7,526,563 $ 6,254,577 $ 5,253,456
Total long-term debt $ 1,505,061 $ 1,048,607 $ 706,444 $ 554,550 $ 423,459
Book value per share $ 6.50 $ 5.75 $ 4.71 $ 3.79 $ 3.34
OTHER DATA
Cash dividends - Interpublic $ 109,086 $ 90,424 $ 76,894 $ 61,242 $ 51,786
Cash dividends
per share - Interpublic $ .37 $ .33 $ .29 $ .25 $ .22
Number of employees 48,200 42,600 38,100 33,000 27,000
----------------------------------------------------------------
Prior year data has been restated to reflect the aggregate effect of the acquisitions accounted
for as poolings of interests.
- 139 -
RESULTS BY QUARTER (UNAUDITED)
(Amounts in Thousands Except Per Share Data)
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
2000 1999 2000 1999 2000 1999 2000 1999
-------------------------------------------------------------- -----------------------------------------------
Revenue $1,225,365 $1,037,860 $1,446,538 $1,249,641 $1,353,081 $1,172,875 $1,600,861 $1,517,447
Operating expenses 1,107,868 944,013 1,147,332 995,159 1,178,581 1,038,041 1,358,542 1,337,931
Restructuring and other
merger related charges 36,051 -- 52,775 -- 27,305 -- -- 84,183
Deutsch transaction costs -- -- -- -- -- -- 44,715 --
Income from operations 81,446 93,847 246,431 254,482 147,195 134,834 197,604 95,333
Interest expense (20,414) (17,475) (22,082) (20,591) (32,339) (21,714) (34,276) (21,561)
Other income, net 17,011 12,884 29,274 29,213 16,676 15,151 31,380 46,314
Income before provision
for income taxes 78,043 89,256 253,623 263,104 131,532 128,271 194,708 120,086
Provision for
income taxes 31,382 35,765 105,565 104,208 53,298 52,295 82,789 51,703
Net equity interests (3,726) (2,386) (5,597) (6,203) (8,156) (4,364) (8,735) (12,506)
-------------------------------------------------------------------------------------------------------------
Net income $ 42,935 $ 51,105 $ 142,461 $ 152,693 $ 70,078 $ 71,612 $ 103,184 $ 55,877
=============================================================================================================
Per share data:
Basic EPS $ .14 $ .17 $ .47 $ .51 $ .23 $ .24 $ .34 $ .19
Diluted EPS $ .14 $ .17 $ .46 $ .49 $ .22 $ .23 $ .33 $ .18
Cash dividends per
share - Interpublic $ .085 $ .075 $ .095 $ .085 $ .095 $ .085 $ .095 $ .085
Weighted-Average Shares:
Basic 299,822 296,457 300,363 298,126 305,929 298,688 306,653 298,698
Diluted 310,522 307,701 323,161 317,381 314,958 309,298 321,715 309,790
Stock price:
High $55 9/16 $40 $48 1/4 $ 43 5/16 $44 5/8 $44 1/16 $43 3/4 $58 1/16
Low $37 $34 7/8 $38 $ 34 19/32 $33 1/2 $36 1/2 $33 1/16 $35 3/4
-------------------------------------------------------------------------------------------------------------
Prior year data has been restated to reflect the aggregate effect of the acquisitions accounted for as poolings of
interests.
- 140 -
REPORT OF MANAGEMENT
The financial statements, including the financial analysis and all other
information in this Annual Report, were prepared by management, who is
responsible for their integrity and objectivity. Management believes the
financial statements, which require the use of certain estimates and judgments,
reflect the Company's financial position and operating results in conformity
with generally accepted accounting principles. All financial information in this
Annual Report is consistent with the financial statements.
Management maintains a system of internal accounting controls which provides
reasonable assurance that, in all material respects, assets are maintained and
accounted for in accordance with management's authorization, and transactions
are recorded accurately in the books and records. To assure the effectiveness of
the internal control system, the organizational structure provides for defined
lines of responsibility and delegation of authority.
The Finance Committee of the Board of Directors, which is comprised of the
Company's Chairman and Chief Financial Officer and three outside Directors, is
responsible for defining these lines of responsibility and delegating the
authority to management to conduct the day-to-day financial affairs of the
Company. In carrying out its duties, the Finance Committee primarily focuses on
monitoring financial and operational goals and guidelines; approving and
monitoring specific proposals for acquisitions; approving capital expenditures;
working capital, cash and balance sheet management; and overseeing the hedging
of foreign exchange, interest-rate and other financial risks. The Committee
meets regularly to review presentations and reports on these and other financial
matters to the Board. It also works closely with, but is separate from, the
Audit Committee of the Board of Directors.
The Company has formally stated and communicated policies requiring of employees
high ethical standards in their conduct of its business. As a further
enhancement of the above, the Company's comprehensive internal audit program is
designed for continual evaluation of the adequacy and effectiveness of its
internal controls and measures adherence to established policies and procedures.
The Audit Committee of the Board of Directors is comprised of four directors who
are not employees of the Company. The Committee reviews audit plans, internal
controls, financial reports and related matters, and meets regularly with
management, internal auditors and independent accountants. The independent
accountants and the internal auditors have free access to the Audit Committee,
without management being present, to discuss the results of their audits or any
other matters.
The independent accountants, PricewaterhouseCoopers LLP, were recommended by the
Audit Committee of the Board of Directors and selected by the Board of
Directors, and their appointment was ratified by the stockholders. The
independent accountants have examined the financial statements of the Company
and their opinion is included as part of the financial statements.
- 141 -
EXHIBIT 21
PAGE 1
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMM EDIATE PARENT
------------ ---------- ------------------
DOMESTIC:
The Interpublic Group of
Companies, Inc. Delaware - -
(Registrant)
Access Communications, LLC California 50 Shandwick Public Affairs, Inc.
Lowe Biocore Inc. California 100 Lowe Group Holdings Inc.
Bragman Nyman Cafarelli, Inc. California 100 Registrant
Bragman Nyman Cafarelli LLC California 100 Bragman Nyman Cafarelli, Inc.
Casablanca Productions' California 100 Registrant
Casanova Pendrill
Publicidad, Inc. California 100 Registrant
CLS Sports Inc. California 100 Registrant
Conan Entertainment LLC California 50 Western Int'l Syndication Corp .
Creative Color, Inc. California 100 Graphic Orb, Inc.
Dailey & Associates, Inc. California 100 Registrant
Deutsch LA, Inc. California 100 DA Acquisition Corp.
Eidolon Corporation California 100 Registrant
Goldberg, Moser, O'Neill LLC California 80 Lowe & Partners/SMS Inc.
Graphic Orb, Inc. California 100 Registrant
International Business
Services, Inc. California 100 Infoplan Int'l, Inc.
Initiative Media Corp. California 100 Registrant
Kaleidoscope Films, Inc. California 51 Re gistrant
Main Street Media, LLC California 100 Western Int'l Media Corp.
North Light, Ltd. California 100 Dailey & Assoc., Inc.
Octagon CLS Sports Corp. California 100 Registrant
Octagon Sullivan &
Sperbeck Corp. California 100 Registrant
Outdoor Advertising
Group, Inc. California 100 Registrant
PIC-TV & Associates, Inc. California 100 Initiative Media Worldwide, Inc.
PMK, Inc. California 100 Registrant
Sagon-Phior California 100 Registrant
SMS Productions, Inc. Cali fornia 100 Registrant
Suissa Miller
Advertising LLC California 80 Lowe Group Holdings Inc.
Sullivan & Sperbeck California 100 Registrant
The FutureBrand
Company, Inc. California 100 Registrant
The Phillips -Ramsey Co. California 100 Registrant
Western Int'l
Advocacy Group California 100 Registrant
Western Int'l
Syndication Corp. California 100 Registrant
Western Motivational
Incentives Group California 100 Western Int'l Media Corp.
Western Traffic, Inc. California 100 Registrant
Momentum-NA, Inc. Colorado 100 McCann-Erickson USA, Inc.
ClinARC Co. Connecticut 100 Registrant
Adair Greene, Inc. Delaware 10 0 McCann-Erickson USA, Inc.
Advantage Int'l Holdings, Inc. Delaware 100 Registrant
AG Multimedia LLC Delaware 55 DraftWorldwide, Inc.
Ammirati Puris Lintas Inc. Delaware 100 Registrant
- 142 -
EXHIBIT 21
PAGE 2
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
DOMESTIC:
Ammirati Puris Lintas USA, Inc. Delaware 100 Registrant
Anderson & Lembke, Inc. Delaware 100 Registrant
Angotti, Thomas, Hedge, Inc. Delaware 100 Registrant
Asset Recovery Group, Inc. Delaware 100 Registrant
Barbour Griffith &
Rogers, Inc. Delaware 100 Registrant
BrandFutures, LLC Delaware 50 FutureBrand Company, Inc.
BSG Holding LLC Delaware 100 Protech Holdings
Business Science
Research Corp., Inc. Delaware 100 Registrant
Campbell-Ewald Company Delaware 100 Registrant
Campbell Mithun Esty LLC Delaware 75 Registrant
Capita Technologies, Inc. Delaware 86 Registrant
Columbian Advertising, Inc. Delaware 100 Registrant
CrossMediaCEM, Inc. Delaware 100 Registrant
Digital Cafe LLC Delaware 100 Campbell Mithun Esty, LLC
DraftWorldwide, Inc. Delaware 100 Registrant
GDI Holdings LLC Delaware 100 Protech Holdings, Inc.
Global Event Marketing &
Management (GEMM) Inc. Delaware 100 Registrant
Golin/Harris
International Inc. Delaware 100 Shandwick N. Amer. Holding Co. Inc.
Gravity Sports &
Entertainment LLC Delaware 100 Registrant
Healthcare Capital, Inc. Delaware 100 McCann Healthcare, Inc.
Hill, Holliday, Connors,
Cosmopulos, Inc. Delaware 100 Registrant
Hypermedia Solutions, LLC Delaware 55 The Coleman Group, LLC
ICN Acquisition Corp. Delaware 100 Registrant
Icon-Nicholson, Inc. Delaware 100 Registrant
Industry Entertainment, LLC Delaware 51 Registrant
Industry Entertainment
Management, LLC Delaware 100 Industry Entertainment, LLC
Industry Entertainment
Productions, LLC Delaware 100 Industry Entertainment, LLC
Infoplan International, Inc. Delaware 100 Registrant
Interpublic Game Shows, Inc. Delaware 100 Registrant
Interpublic KFI
Ventures, Inc. Delaware 100 Registrant
Interpublic SV Ventures, Inc. Delaware 100 Registrant
IPG DC Ventures, Inc. Delaware 100 Registrant
IPG Interactive
Investment Corp. Delaware 100 Registrant
IPG S&E, Inc. Delaware 100 Registrant
IPG S&E Ventures, Inc. Delaware 100 Registrant
Jack Morton Worldwide Inc. Delaware 100 Registrant
Jack Tinker Advertising, Inc. Delaware 100 Registrant
Jay Advertising, Inc. Delaware 100 Registrant
JMP Holding Company, Inc. Delaware 100 Registrant
KAL Acquisition Corp. Delaware 100 Registrant
Kaleidoscope Sports and
Entertainment LLC Delaware 100 Registrant
- 143 -
EXHIBIT 21
PAGE 3
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
DOMESTIC:
LFS, Inc. Delaware 100 Registrant
Lowe Fox Pavlika Inc. Delaware 100 Lowe & Partners/SMS Inc.
Lowe & Partners/SMS
Interactive Inc. Delaware 100 Lowe & Partners/SMS Inc.
LMMS-USA, Inc. Delaware 100 McCann-Erickson USA, Inc.
Market Reach Retail LLC Delaware 50 Skott, Inc.
MarketCorp Promotions, Inc. Delaware 100 DraftWorldwide, Inc.
Marketing Corporation
of America Delaware 100 Registrant
McAvey & Grogan, Inc. Delaware 100 Registrant
McCann-Erickson USA, Inc. Delaware 100 Registrant
McCann-Erickson
Corporation (S.A.) Delaware 100 Registrant
McCann-Erickson
Corporation (Int'l) Delaware 100 Registrant
McCann-Erickson
(Paraguay) Co. Delaware 100 Registrant
McCann-Erickson
Worldwide, Inc. Delaware 100 Registrant
McCann Healthcare, Inc. Delaware 100 McCann-Erickson USA, Inc.
McCann Worldwide Marketing
Communications Co. Delaware 100 Registrant
Media Inc. Delaware 100 Registrant
Media Direct Partners, Inc. Delaware 100 Media, Inc.
Media Partnership Corporation Delaware 100 Registrant
M. Gould Co., Inc. Delaware 100 Registrant
Miller/Huber Relationship
Marketing LLC Delaware 80 Lowe Group Holdings Inc.
Murphy Pintak Gautier
Hudome Agency, Inc. Delaware 100 Registrant
NAS Recruitment Comm.
Services, Inc. Delaware 100 McCann-Erickson USA, Inc.
Newspaper Services of
America, Inc. Delaware 100 Registrant
NFO Worldwide, Inc. Delaware 100 Registrant
Octagon Baseball, Inc. Delaware 100 Octagon Worldwide, Inc.
Octagon CSI Inc. Delaware 100 Octagon CSI Limited
Octagon Worldwide Inc. Delaware 100 Registrant
Octagon Worldwide Brazil Inc. Delaware 100 Octagon Worldwide Inc.
Pedersen & Gesk, Inc. Delaware 100 McCann-Erickson USA, Inc.
Player, LLC Delaware 51 Registrant
Player Development LLC Delaware 100 Player LLC
Player Management LLC Delaware 100 Player LLC
Powell Tate Inc. Delaware 100 The Cassidy Companies, Inc.
Protech Holdings, Inc. Delaware 100 Capita Technologies, Inc.
RABA Holdings LLC Delaware 100 Protech Holdings, Inc.
Regan, Campbell & Ward LLC Delaware 60 McCann-Erickson Worldwide USA, Inc.
R Works, Inc. Delaware 100 Registrant
R.O.I. Research, LLC Delaware 100 Kaleidoscope Sports & Entertainment
RX Media, Inc. Delaware 100 Registrant
Shandwick N. America
Holding Co. Ltd. Delaware 100 Shandwick Investments Ltd.
Skott, Inc. Delaware 100 Newspaper Services of America, Inc.
The Botway Group, Ltd. Delaware 100 Registrant
The Cassidy Companies, Inc. Delaware 100 Registrant
- 144 -
EXHIBIT 21
PAGE 4
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
DOMESTIC:
The Coleman Group, LLC Delaware 100 Registrant
The Coleman Group
Worldwide LLC Delaware 100 Registrant
The Gillespie Holding
Company, Inc. Delaware 100 The Gillespie Organization, Inc.
The ISO Healthcare
Group, Inc. Delaware 100 Registrant
The Lowe Group, Inc. Delaware 100 Lowe Worldwide Holdings B.V.
The MWW Group, Inc. Delaware 100 Registrant
The Publishing Agency, Inc. Delaware 100 Registrant
The Publishing Agency
International, Inc. Delaware 100 Registrant
The Works, LLC Delaware 100 Kaleidoscope Sports & Enter. LLC
Thunder House
Online Marketing
Communications, Inc. Delaware 100 Registrant
Weller & Klein Research, Inc. Delaware 100 Registrant
WPR Acquisition Corp. Delaware 100 McCann-Erickson USA, Inc.
Zentropy Partners, Inc. Delaware 86 Registrant
H&C Holdings Limited District of
Columbia 100 Advantage Int'l Holdings, Inc.
Octagon Financial Services District of 100 Advantage Int'l Holdings, Inc.
Columbia
Octagon Marketing & Athlete
Representation, Inc. District of 100 Advantage Int'l Holdings, Inc.
Columbia
Rowan & Blewitt, Inc. District of 100 Registrant
Columbia
Shandwick Public Affairs Inc. District of 100 Shandwick N. Amer. Holding Co. Inc.
Columbia
Accent Marketing Florida 51 Registrant (51%) and
Communications, LLC individual Shareholder (49%)
Ben Disposition, Inc. Florida 100 LFS, Inc.
Rubin Barney & Birger, Inc. Florida 100 Registrant
Austin Kelley
Advertising, Inc. Georgia 100 Registrant
Clockwork Advertising, Inc. Georgia 100 Adair Greene, Inc.
Fitzgerald & Company Georgia 100 Registrant
Studio "A", Inc. Georgia 100 Registrant
Creative Retail Environments
Worldwide, Inc. Illinois 100 Kevin Berg & Assoc., Inc.
Group III Promotions Illinois 100 Registrant
Kevin Berg & Associates, Inc. Illinois 100 Registrant
Quest Futures Group, Inc. Kansas 100 Registrant
Adware Systems, Inc. Kentucky 100 McCann-Erickson USA, Inc.
Hill Holiday Exhibition Massachusetts 100 Hill, Holliday, Connors,
Services, Inc. Cosmopulos, Inc.
Lowe Grob Health &
Science, Inc Massachusetts 80 Lowe Group Holdings Inc.
MSP Group, Inc. Massachusetts 100 Hill, Holliday, Connors,
Cosmopulos, Inc.
Mullen Advertising Inc. Massachusetts 80 Lowe Group Holdings Inc.
Neva Group, Inc. Massachusetts 100 Registrant
Planet Interactive, Inc. Massachusetts 100 Jack Morton Worldwide
Weber Group, Inc. Massachusetts 100 WPR Acquisition Corp.
- 145 -
EXHIBIT 21
PAGE 5
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
DOMESTIC:
Allied Med Comm., Inc. New Jersey 100 MPE Communications, Inc.
Biogenesis
Communications, Inc. New Jersey 100 Registrant
Complete Medical
Communications, Inc. New Jersey 90 Complete Med. Comm. Int'l Ltd.
CPR Financial Communications New Jersey 100 Shandwick USA, Inc.
Curry, Martin and
Schiavelli, Inc. New Jersey 100 Registrant
Genquest, Biomedical
Educ. Serv., Inc. New Jersey 100 Biogenesis Communications, Inc.
Gillespie, Advertising, Magazine
Mktg. & Public Relations, Inc. New Jersey 100 Registrant
Global Healthcare
Associates, Inc. New Jersey 100 Registrant
HealthVizion
Communications, Inc. New Jersey 100 Torre Lazur, Inc.
Horizon Communications, Inc. New Jersey 100 McCann-Erickson USA, Inc.
Integrated Communications
Corp. New Jersey 100 Registrant
International Oncology
Network, Inc. New Jersey 100 Torre Lazur, Inc.
Interpublic, Inc. New Jersey 100 Registrant
MPE Communications, Inc. New Jersey 100 Registrant
MWW, Inc. New Jersey 100 Registrant
Pace, Inc. New Jersey 100 Registrant
Sound Vision, Inc. New Jersey 100 Torre Lazur, Inc.
Spectral Fusion, Inc. New Jersey 100 Torre Lazur, Inc.
The Gillespie
Organization, Inc. New Jersey 100 Registrant
Torre Lazur Healthcare
Group, Inc. New Jersey 100 Registrant
Zoot Suit Kids, Inc. New Jersey 100 Gillespie Advertising Magazine Mktg.
& Public Relations, Inc.
ABP/DraftWorldwide, Inc. New York 100 Registrant
Botway Print Advert., Inc. New York 100 Registrant
Bragman Nyman Cafarelli
N.Y.C., Inc. New York 100 Bragman Nyman Cafarelli LLC
D.L. Blair, Inc. New York 100 Registrant
DA Acquisition Corp. New York 100 DA Parent Acquisition Corp.
DA Parent Acquisition Corp. New York 100 Registrant
Decipher Consulting Inc. New York 100 Decipher Ltd.
Deutsch Direct, Inc. New York 100 DA Acquisition Corp.
Deutsch Inc. New York 100 DA Acquisition Corp.
Deutsch LA, Inc. New York 100 DA Acquisition Corp.
Direct Approach Mktg.
Services, Inc. New York 100 McCann. Erickson USA, Inc.
DRush LLC New York 50 dShare Inc.
DShare Inc. New York 100 Deutsch Inc.
GDL, Inc. New York 100 The Lowe Group, Inc.(100% of Common
Stock) and Goldschmidt Dunst &
Lawson Corp. (100% Pref. Stock)
- 146 -
EXHIBIT 21
PAGE 6
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
DOMESTIC:
GlobalComm Group, Inc. New York 100 Registrant
Goldschmidt Dunst &
Lawson Corp. New York 100 The Lowe Group, Inc.
Herbert Zeltner, Inc. New York 100 Registrant
Jones Films, Inc. New York 100 DA Acquisition Corp.
LCF&L, Inc. New York 100 The Lowe Group, Inc. (99.9%) and
GDL, Inc. (.1%)
Lowe Diamond Art Studio New York 100 Lowe Diamond Marketing Group, Inc.
Lowe Diamond Marketing Group New York 100 The Lowe Group, Inc.
Lowe Diamond Promotion Group New York 100 Lowe Diamond Marketing Group, Inc.
Lowe Group Holdings, Inc. New York 100 Registrant
Lowe Healthcare PR, LLC New York 50 Lowe McAdams Healthcare, Inc.
Lowe McAdams Healthcare Inc. New York 100 Lowe Group Holding Inc.
Lowe & Partners/SMS Inc. New York 100 Lowe Int'l (16%), Lowe Worldwide
Holdings B.V. (4%) and
Registrant (80%)
Ludgate Communications, Inc. New York 100 Ludgate Group Limited
McCann Relationship
Marketing, Inc. New York 100 Registrant
McCann-Erickson
Marketing, Inc. New York 100 Registrant
Mr. Editorial, Inc. New York 100 DA Acquisition Corp.
PDG Acquisition Corp. New York 100 Registrant
Production Design Group Ltd. New York 100 Jack Morton Worldwide
Promotion &
Merchandising, Inc. New York 100 D.L. Blair, Inc.
Shandwick USA Inc. New York 100 Shandwick N. Amer. Holding Co. Inc.
The Coleman Group, LLC New York 100 Registrant
The Gotham Group, Inc. New York 100 Registrant
The Sloan Group New York 100 Kevin Berg & Associates
Western Trading LLC New York 55 Western Init. Media Worldwide
Western Trading/Cushman
& Wakefield LLC New York 83 Western Trading, LLC
Western WW Trading, LLC New York 55 Western Init. Media Worldwide
Long Haymes Carr, Inc. N. Carolina 100 Registrant
F&S Disposition, Inc. Ohio 100 Ammirati Puris Lintas Inc.
Nationwide Advertising
Services, LLC Ohio 100 McCann-Erickson USA, Inc.
ICP-Pittsburgh Pennsylvania 66.67 Int'l Cycling Productions, Inc.
Scientific Frontiers, Inc. Pennsylvania 100 Registrant
The Medicine Group USA, Inc. Pennsylvania 100 Registrant
Marketing Arts Corporation Virginia 100 The Martin Agency, Inc.
Cabell Eanes, Inc. Virginia 100 The Martin Agency, Inc.
Pros, Inc. Virginia 100 Advantage Int'l Holdings, Inc.
The Martin Agency, Inc. Virginia 100 Lowe & Partners/SMS Inc.
Weber McGinn, Inc. Virginia 100 Registrant
- 147 -
EXHIBIT 21
PAGE 7
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Dial Database Marketing Argentina 60 Interpublic S.A. de Publicidad
FutureBrand S.A. Argentina 70 Registrant (70%); Luis Rey (15%);
Gustavo Kniszczer (15%)
Grupo Nueva Comunicacion SA Argentina 80 Registrant (80%); Cesar Leonardo
Mansilla (20%)
Interpublic S.A.
de Publicidad Argentina 100 Registrant
IM Naya Argentina 50 Registrant
Nueva Argentina 80 Registrant
Promocionar Argentina 60 Interpublic S.A. de Publicidad
Adlogic Proprietary Limited Australia 50 Merchant Partners Australia Ltd.
Advantage Holdings Australia 100 Advantage Int'l Holdings Inc.
Ammirati Puris Lintas
Proprietary Ltd. Australia 100 Registrant
Ammirati Puris
Lintas Melbourne Australia 100 Ammirati Puris Lintas Prop. Ltd.
Australia Pty. Ltd. Australia 100 Charcoal Nominees Limited
Australian Safari
Pty. Limited Australia 100 Octagon Worldwide Pty. Limited
CWFS Australia 100 McCann Australia (50%) and
McCann-Erickson Ltd.(50%)
Directory Investments
Pty Ltd. Australia 100 Shandwick Holdings Pty. Ltd. (91%)
IPR Shandwick Pty. Ltd. (9%)
Direct Response Australia 51 McCann-Erickson Pty. Limited
Future Motorsports Concepts Australia 50 Octagon Worldwide Pty. Limited
Harrison Advertising
Pty Limited Australia 100 McCann-Erickson Advertising Ltd.
Impulse Art
Proprietary Limited Australia 100 Ammirati Puris Lintas Prop. Ltd.
Initiative Media Australia Australia 100 Merchant and Partners Australia
Pty. Ltd. Australia 100 Pty. Limited
International Public
Relations Pty. Ltd. Australia 100 Shandwick Holdings Pty. Ltd.
Interpublic Australia
Proprietary Ltd. Australia 100 Registrant
Interpublic Limited
Proprietary Ltd. Australia 100 Registrant
IPR Shandwick Pty. Ltd. Australia 100 Shandwick Holdings Pty. Ltd.
Lintas: Hakuhodo Pty. Ltd. Australia 50 Ammirati Puris Lintas Prop. Ltd.
Marplan Proprietary Limited Australia 100 Registrant
McCann-Erickson
Advertising Pty. Ltd. Australia 100 Registrant
McCann-Erickson Sydney
Proprietary Ltd. Australia 100 McCann-Erickson Advertising Ltd.
Merchant and Partners
Australia Pty. Ltd. Australia 100 Registrant
Octagon CSI (Australia) Pty Ltd. Australia 100 Octagon CSI Limited
Octagon Worldwide
Pty. Limited Australia 80 Advantage Holdings Pty Ltd.
Pearson Davis Australia 59 Ammirati Puris Lintas
Product Management Pty. Ltd. Australia 100 IPR Shandwick Pty. Ltd.
- 148 -
EXHIBIT 21
PAGE 8
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Shandwick Holdings Pty. Ltd. Australia 100 Shandwick Investments Ltd.
Universal Advertising
Placement Pty. Ltd. Australia 100 McCann-Erickson Advertising Ltd.
Ammirati Puris Lintas Holdings
Gesellschaft m.b.H. Austria 100 Registrant
Ammirati Puris Lintas
Werbeagentur GmbH Austria 100 Ammirati Puris Lintas Holdings GmbH
Initiatives Media
Werbemittlung Ges.m.b.H. Austria 100 Ammirati Puris Lintas Werbeagentur
Gesellschaft m.b.H.
Lowe GGK
Beteiligungsverwaltungs AG Austria 100 Lowe Worldwide Holdings BV
Lowe GGK Lintas Holding Austria 100 Lowe Beteiligungsverwaltungs AG.
Lowe Lintas GGK Werbeagentur Austria 75 Lowe GGK Lintas Holding AG.
McCann-Erickson
Gesellschaft m.b.H. Austria 100 Registrant
Panmedia Holding AG Austria 74 Lowe Worldwide Holdings BV
Panmedia Werbeplanung AG Austria 74 Panmedia Holding AG
Azerbaijan Azerbaijan 100 Registrant
Global Public Relations Ltd. Bahamas 100 Shandwick Asia Pacific Ltd.
Advertising Tractor S.A. Belgium 100 Draft Belgium Holding S.P.R.L. (80%)
and Karamba S.A. (20%)
Direct Creations S.A. Belgium 100 Lowe Lintas & Partners S.A.
Draft Belgium
Holdings S.P.R.L. Belgium 100 Draft Group Holdings Limited
Eleven Pool (KSE) Belgium 100 Interpublic Belgium Holdings SA
Feedback S.P.R.L. Belgium 100 DraftWorldwide, Inc.
Initiative Media
Brussels S.A. Belgium 100 Ammirati Puris Lintas Brussels S.A.
(96%) and Initiative Media (4%)
Initiative Media Int'l S.A. Belgium 100 Lintas Holding B.V.
Karamba S.A. Belgium 100 Draft Belgium Holding S.P.R.L.
Lowe Lintas & Partners S.A. Belgium 100 Lowe Worldwide Holdings B.V.
McCann-Erickson Co. S.A. Belgium 100 Registrant
Octagon Holdings BVBA Holdings BV Belgium 100 Octagon Worldwide Holdings BV
Outdoor Services SA.NV Belgium 100 Interpublic Belgium Holdings SA
Programming Media
Int'l PMI S.A. Belgium 100 Registrant
Promo Sapiens S.A. Belgium 100 Draft Belgium Holding S.P.R.L. (85%)
and Karamba S.A. (15%)
Shandwick Belgium S.A. Belgium 100 Shandwick Investments Ltd.
Universal Media, S.A. Belgium 100 McCann-Erickson Co., S.A. (50%);
Lowe Lintas & Partners S.A. (50%)
The Advanced Marketing Draft Belgium Holding S.P.R.L.
Centre S.A. Belgium 100 (0.2%); Karamba S.A. (99.8%)
Triad Assurance Limited Bermuda 100 Registrant
Bullet Promocoes Ltda. Brazil 60 Interpublic Publicidade e
Pesquisas Sociedade Ltda
Contemporanea Brazil 60 Interpublic Brazil (54%); Intelan
SA (Uruguay) (6%)
- 149 -
EXHIBIT 21
PAGE 9
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
DraftWorldwide Ltda. Brazil 66 DraftWorldwide, Inc.
DraftWorldwide
Sao Paulo Ltda. Brazil 66 DraftWorldwide, Inc.
Interpublic Publicidade
e Pesquisas Sociedade Ltda. Brazil 100 Int'l Business Services, Inc.
Lowe Lintas & Partners Ltda. Brazil 98.75 Registrant
McCann-Erickson
Publicidade Ltda. Brazil 100 Registrant
MPMPPA Profissionais de
Promocao Associados Ltda. Brazil 100 MPM Lintas Communicacoes Ltda.
Octagon do Brazil
Participacoes S/C Ltda. Brazil 100 Octagon Worldwide Brazil Inc.
Sight Brazil 60 McCann-Erickson Italiana S.A.
Sun Marketing Direct Brazil 65 Interpublic Publicidade e Pesquisas
Sociedade Ltda.
TMKT-MRM Servicos de
Marketing Ltda. Brazil 55 Interpublic Publicidad e Pesquisas
Sociedade Ltda (55%); TMKT
Telemarketing S/C Ltda (9%); SMK
Servicos de Marketing S/C Ltda
(36%); 4 individuals (1% each)
Universal Publicidade Ltda. Brazil 100 Interpublic Publicidade
E Pesquisas Sociedade Ltda.
Asiatic Corporation Brit. Virgin 100 PR Consultants Scotland Ltd.
Islands
Karting Marketing and
Management Corp. Brit. Virgin 51 Octagon Motorsports Ltd.
Lowe Holdings BVI Limited Brit. Virgin 100 Lowe Group Holdings Inc.
Islands
Octagon Asia Inc. Brit. Virgin 100 Octagon Prism Limited
Islands
Octagon CSI Holdings S.A. Brit. Virgin 100 Communication Services Int'l
Islands (Holdings) S.A.
Octagon CSI International
Holdings S.A. Brit. Virgin 100 Octagon CSI S.A.
Islands
Octagon Motorsports Limited Brit. Virgin 66.6 Octagon Worldwide Inc.
Islands
SBK Superbike Brit. Virgin Octagon Motorsports Ltd. (50%);
International Limited Islands 100 Octagon Worldwide Inc. (50%)
PBI Bulgaria 51 Registrant
Adware Systems Canada Inc. Canada 100 Adware Systems, Inc.
Ammirati Puris Ltd. Canada 100 Registrant
BDDS Groupe Canada 70 Shandwick Canada
Calimero Partenariat, Inc. Canada 100 DraftWorldwide Canada, Inc.
Cameron McCleery
Productions Limited Canada 100 MacLaren McCann Canada Inc.
Continental Shandwick Canada Inc. (50%)
Communications Inc. Canada 100 Golin/Harris Int'l Inc. (50%)
Continental PIR
Communications Ltd. Canada 100 Continental Communications Inc.
Diefenbach-Elkins Limited Canada 100 Diefenbach-Elkins
Dollery Rudman Freibauer Design Canada 75 McClaren McCann
- 150 -
EXHIBIT 21
PAGE 10
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
DraftWorldwide Quebec Inc. Canada 100 DraftWorldwide Canada
DRF Canada 75 McClaren McCann
Durnan Communications Canada 100 Ammirati Puris Lintas Canada Ltd.
Everest Commandities (GECM) Inc. Canada 100 DraftWorldwide Quebec, Inc.
Everest Estrie Publicite
(GECM) Inc. Canada 100 DraftWorldwide Quebec, Inc.
Everest Relations Publiques
(GECM) Inc. Canada 100 DraftWorldwide Quebec, Inc.
Fuel Canada 100 Messary Induestries Ltd. (33%);
DraftWorldwide Canada Inc. (67%)
FSA Targeting Inc. Canada 100 Registrant
Gingko Direct Ltd. Canada 100 The Gingko Group Ltd.
Groupe Everest Canada 100 DraftWorldwide, Inc.
Hawgtown Creative Ltd. Canada 100 DraftWorldwide, Inc.
HyperMedia Solutions
(1998) Inc. Canada 100 Hypermedia Solutions
ISOGROUP Canada, Inc. Canada 100 Registrant
Kelly Management Group Inc. Canada 100 Octagon Canada Inc.
Lambert Multimedia Inc. Canada 100 DraftWorldwide Quebec Inc.
Le Groupe BDDS Inc. Canada 70 3707822 Canada, Inc.(70%); Yves
St. Amand (7.5%); M. Dumas (7.5%);
Yves Dupre (7.5%); Jean-Francois
Lebron (7.5%)
Lowe Investments Limited Canada 100 Lowe Group Holdings Inc. (54%)
Lowe Worldwide Holdings BV (46%)
MacLaren McCann Canada Inc. Canada 100 Registrant
Octagon Canada Inc. Canada 100 Octagon Worldwide Inc.
Pipeline Productions, Inc. Canada 100 Fuel Advertising (40%);
DraftWorldwide Canada (60%)
P&T Communications Canada 100 Messary Industries Ltd. (49%);
DraftWorldwide Canada (51%)
Promaction Corporation Canada 100 McCann-Erickson Advert. of Canada
Promaction 1986 Inc. Canada 100 MacLaren McCann Canada, Inc.
Segal Communications Canada 100 DraftWorldwide, Inc.
Sensas (GECM) Inc. Canada 100 DraftWorldwide Quebec Inc.
Shandwick Canada Inc. Canada 100 Shandwick Investment of Canada Ltd.
Shandwick Investment
of Canada Ltd. Canada 100 Shandwick Investments Ltd.
The FutureBrand Company Canada 75 MacLaren McCann Canada Inc.
The Gingko Group Ltd. Canada 100 DraftWorldwide Canada, Inc.
The Medicine Group Limited Canada 51 Complete Medical Group Ltd.
Tribu Lintas Inc. Canada 100 MacLaren McCann Canada, Inc.
Creactiva Chile 60 DraftWorldwide Chile Limitada
Dittborn, Urzueta y
Asociados Marketing Chile 60 McCann-Erickson S.A. de Publicidad
Directo S.A.
DraftWorldwide Chile Ltda. Chile 100 DraftWorldwide Latinoamerica Ltda.
DraftWorldwide Latinoamerica Ltda. Chile 100 DraftWorldwide, Inc.
Initiative Media Servicios
de Medios Ltda. Chile 99 Ammirati Puris Lintas Chile S.A.
Lowe (Chile) Holdings SA Chile 100 Lowe & Partners South America
Holdings SA
- 151 -
EXHIBIT 21
PAGE 11
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Lowe & Partners Porta SA Chile 55 Lowe (Chile) Holdings SA (19.3%);
Lowe Worldwide Holdings BV (35.71%)
McCann-Erickson
S.A. de Publicidad Chile 100 Registrant
Ammirati Puris Lintas China China 50 Registrant,; Shanghai Bang Da Advtg.
Lowe & Partners Live
Consultants Ltd. China 90 Lowe & Partners Live Limited
McCann-Erickson Guangming
Advertising Limited China 51 McCann-Erickson Worldwide
Ammirati Puris
Lintas Colombia Colombia 100 Registrant
Epoca S.A. Colombia 60 Registrant
Harrison Publicidad
De Colombia S.A. Colombia 100 Registrant
Initiative Media Colombia SA Colombia 100 Ammirati Puris Lintas Colombia
McCann-Erickson
Centroamericana Costa Rica 100 Registrant
(Costa Rica) Ltda.
McCann-Erickson Zagreb Croatia 100 McCann-Erickson Int'l GmbH
McCann-Erickson Prague
Aisa Czech Rep. 60 NFO Worldwide, Inc.
Ammirati Lintas
Praha Spol. S.R.O. Czech Rep. 100 Ammirati Puris Lintas Deutschland
Initiative Media Prague sro Czech Rep. 100 Registrant
Lowe Lintas GGK spol. Sro Czech Rep. 93 Lowe Lintas GGK Holdings AG
McCann-Erickson
Prague, Spol. S.R.O. Czech Rep. 100 McCann-Erickson International GmbH
Pan Media Western Praha spol Czech Rep. 100 Lowe Lintas GGK Holdings AG
Pool Media International srl Czech Rep. 100 McCann-Erickson Prague, Spol. s.r.o.
Ammirati Puris
Lintas Denmark A/S Denmark 100 Lowe Lintas & Partners AS
Campbell-Ewald Aps Denmark 100 Registrant
Initiative Universal Aps Denmark 100 Registrant
Job A/S Denmark 100 Ammirati Puris Lintas Denmark
Lowe Holdings ApS Denmark 100 IPG Group Denmark Holdings ApS
Lowe Lintas & Partners A/S Denmark 75 Lowe Worldwide Holdings BV
McCann-Erickson A/S Denmark 100 Registrant
Medialog A/S Denmark 100 Registrant
Octagon Holdings ApS Denmark 100 Interpublic Group Denmark Holdings ApS
Overseas Group Denmark Aps Denmark 100 Registrant
Overseas Holdings Denmark AS Denmark 100 Overseas Group Denmark Aps
Parafilm A/S Denmark 100 Registrant
Progaganda, Reuther,
Lund & Priesler
Reklamebureau Aps Denmark 75 Registrant
Signatur APS Denmark 100 Ammirati Puris Lintas Denmark A/S
McCann-Erickson
Dominicana, S.A. Dominican Rep. 100 Registrant
McCann-Erickson (Ecuador)
Publicidad S.A. Ecuador 96 McCann-Erickson Corporation (Int'l)
McCann-Erickson Centro
Americana (El Salvador) S.A. El Salvador 100 Registrant
- 152 -
EXHIBIT 21
PAGE 12
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
AS Division Estonia 75 Registrant (75%); Urmas Lilleng (9%);
Rain Pikand (9%); Tonu Sikk (5%);
Andrus Lember (2%)
ISOGROUP/Pavias Holdings Europe 100 Registrant
Ammirati Puris Lintas Oy Finland 100 Lowe Worldwide Holdings BV
Hasan & Partners Oy Finland 100 Registrant
Lintas Service Oy Finland 100 Lintas Oy
Lowe Brindfors Oy Finland 100 Lowe Sweden AB
Lowe Brindfors Production Oy Finland 100 Lowe Brindfors Oy
Mainostoinisto Ami
Hasan & Company Oy Finland 100 Hasan & Partners, Inc.
Mainostoinisto Womena -
McCann Oy Finland 100 Registrant
McCann-Pro Oy Finland 100 Oy Liikemainonta-McCann AB
Oy Liikemainonta-McCann AB Finland 100 Registrant
PMI-Mediaporssi Oy Finland 66 Oy Liikemainonta-McCann AB (33%);
Lintas Oy (33%)
Womena-Myynninvauhdittajat Oy Finland 100 Oy Liikemainonta-McCann AB
Alice SNC France 100 Lowe Alice SA (50%); Antennes Sa (50%)
Antennes SA France 100 Lowe Alica SA
CDRG France France 74 McCann-Erickson France Holding Co.
Creation Sarl France 97.5 SP3 S.A.
Creative Marketing Service SAS France 100 France C.C.P.M.
DCI Pharma Sarl France 100 Zeta S.A.
D.L. Blair Europe SNC France 100 T.C. Promotions, I, Inc. (50%);
T.C. Promotions II, Inc. (50%)
DraftDirect Worldwide
Sante Sarl France 100 DraftWorldwide S.A.
DraftWorldwide S.A. France 100 Draft Group Holdings Limited
E.C. Television/Paris, S.A. France 100 France C.C.P.M.
Equation Graphique France 100 DraftWorldwide S.A.
Fab + S.A. France 99.4 SP3 S.A.
France C.C.P.M. France 100 Lowe Worldwide Holdings BV
FutureBrand Menu France 51 Registrant
Huy Oettgen Oettgen S.A. France 100 DraftWorldwide S.A.
Infernal Sarl France 100 SP3 S.A.
Initiatives Media Paris S.A. France 100 France C.C.P.M.
Leuthe il-autre Agence France 85 McCann-Erickson (France) Holding Co.
Lowe Alice S.A. France 100 Lowe Worldwide Holdings B.V.
Lowe Lintas & Partners SA France 100 France C.C.P.M.
MACAO France 100 McCann-Erickson France
MacLaren Lintas S.A. France 100 France C.C.P.M.
McCann Communications France 75 McCann-Erickson (France) Holding Co.
McCann-Promotion S.A. France 99.8 McCann-Erickson (France) Holding Co.
McCann-Erickson (France)
Holding Co. France 100 Registrant
McCann-Erickson (Paris) S.A. France 100 McCann-Erickson (France) Holding Co.
McCann-Erickson
Rhone Alpes S.A. France 100 McCann-Erickson (France) Holding Co.
McCann-Erickson Thera France France 74 CDRG Communications
MDEO France 80 McCann-Erickson France
Menu & Associes France 51 The Coleman Group Worldwide LLC
Nationwide Advertising Svcs. France 100 McCann France
Octagon International Sarl France 100 Advantage Int'l Holdings Inc.
- 153 -
EXHIBIT 21
PAGE 13
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Pierre De Lune S.A. France 100 Topaze Investissements S.A.
Pschitt S.A. France 100 Pschitt K France S.A.
Publi Media Service France 50 Owned in quarters by McCann,
Ammirati Puris Lintas agencies in
France, Publicis and Idemedia
SDIG France 66 McCann-Erickson France Holding Co. SA
Shandwick France Sarl France 100 Shandwick Holdings SA
Shandwick Holding SA France 100 Shandwick Investments Ltd.
Slad France 60 McCann-Erickson (France) Holding Co.
Societe our le Developpement
De L'Industrie du Gaz en
France S.A. France 66 McCann-Erickson France
SPEDIC France 100 Registrant
SP3 S.A. France 100 McCann-Erickson (France) Holding Co.
Strateus France 72 France C.C.P.M.
Synthese Marketing S.A. France 100 DraftWorldwide S.A.
Topaze Investissements S.A. France 100 DraftWorldwide S.A.
Topaze Promotions Valeur S.A. France 100 Topaze Investissements S.A.
Universal Media S.A. France 100 McCann-Erickson (France) Holding Co.
Valefi France 55 McCann-Erickson (France) Holding Co.
Virtuelle France 60 Fieldplan Limited
Western International
Media Holdings Sarl France 100 Alice SNC
Zeta Agence Consel
En Publicite S.A. France 100 DraftDirect Worldwide Sante Sarl
Zoa Sarl France 100 Alice SNC
Adplus Werbeagentur GmbH Germany 100 Lowe & Partners GmbH
Ammirati Puris Lintas
Deutschland GmbH Germany 100 Registrant
Ammirati Puris Lintas
Service GmbH Germany 100 Ammirati Puris Lintas Deutschland
Ammirati Puris Lintas
Hamburg GmbH Germany 100 Ammirati Puris Lintas Deutschland
Ammirati Puris Lintas Germany 100 Ammirati Puris Lintas Deutschland
Baader, Lang, Behnken
Werbeagentur GmbH Germany 100 Ammirati Puris Lintas Deutschland
B&L Dr. von Bergen
und Rauch GmbH Germany 100 Interpublic GmbH
Change Communications GmbH Germany 80 Ammirati Puris Lintas Deutschland
Creative Media Services GmbH Germany 100 Ammirati Puris Lintas Deutschland
DCM Dialog-Creation-Munchen
Agentur fur
Dialogmarketing GmbH Germany 80 M&V Agentur fur Dialogmarketing
und Verkaufsforderung GmbH
DeOtter & DeVries Germany 51 The Jack Morton Company
Draft Beteiligungs GmbH Germany 100 DraftDirect Worldwide Holdings
GmbH Germany
DraftDirect Worldwide
Holdings GmbH (Germany) Germany 100 Draft Group Holdings Limited
DraftWorldwide
Agentur fur Marketing
Kommunikation GmbH (Munich) Germany 70 M&V Agentur fur Dialogmarketingd
und Verkaufsforderung GmbH
- 154 -
EXHIBIT 21
PAGE 14
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Exclusiv-Verlag Meissner GmbH Germany 100 Shandwick Deut. GmbH & Co. KG
Heinrich Hoffman & Partner GmbH Germany 100 Lowe & Partners Werbeagentur GmbH
Initiativ Media GmbH Germany 100 Ammirati Puris Lintas Deut. GmbH
Interpublic GmbH Germany 100 Registrant
KMB Kommunikation Und
Marketing Bonn GmbH Germany 100 Shandwick Deut. GmbH & Co. KG
Kolitho Repro GmbH Germany 100 Peter Reincke Direkt-Marketing GmbH
Krakow McCann
Werbeagentur GmbH Germany 100 McCann-Erickson Deutschland GmbH
Kreatives Direktmarketing
Beteiligungs GmbH Germany 100 Draft Group Holdings Limited
Lowe Deutschland Holding GmbH Germany 100 Lowe Worldwide Holdings B.V. (75%);
Registrant (25%)
Lowe & Partners GmbH Germany 63.7 Lowe Deutschland Holding GmbH
Lowe Hoffmann &
Schnakenburg GmbH Germany 51.2 Lowe Deutschland Holding GmbH
Lowe & Partners GmbH Hamburg Germany 100 Lowe Deutschland Holding Gmbh
Lutz Bohme Public
Relations GmbH Germany 100 Shandwick Deutschland GmbH & Co. KG
Mailpool Adressen-
Management GmbH Germany 100 DraftDirect Worldwide Holdings GmbH
Max W.A. Kramer GmbH Germany 100 Ammirati Puris Lintas Deut. GmbH
McCann Direct GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Dusseldorf Germany 100 McCann-Erickson Deutschland
McCann-Erickson
(International) GmbH Germany 100 Registrant
McCann-Erickson
Deutschland GmbH Germany 100 McCann-Erickson (Int'l) GmbH
McCann-Erickson
Deutschland GmbH & Co. Mgmt.
Prop. KG (Partnership) Germany 100 Registrant
McCann-Erickson Scope GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson
Frankfurt GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson Hamburg GmbH Germany 100 McCann-Erickson Deutschland GmbH
McCann-Erickson
Management Property GmbH Germany 100 McCann-Erickson Deutschland GmbH
(80%), Interpublic GmbH (20%)
McCann-Erickson Nurnberg GmbH Germany 100 McCann-Erickson DeutschlandGmbH
McCann-Erickson Thunderhouse Germany 100 Registrant
McCann-Erickson Service GmbH Germany 100 McCann-Erickson Deutschland GmbH
MCS Medizinischer
Creativ Service, GmbH Germany 60 McCann-Erickson Deutschland GmbH
M&V Agentur fur Dialog
Marketing und Germany 82 Draft Direct Worldwide Holdings
Verkaufsforderung GmbH GmbH Germany
Peter Reincke/
DraftWorldwide GmbH Germany 76 DraftDirect Worldwide Holdings GmbH
PR Bonn Public Relations
Gesellschaft fur
Kommunikatins und
Marketingberatung mbH Germany 100 McCann-Erickson Deutschland GmbH
- 155 -
EXHIBIT 21
PAGE 15
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Pro concept marketing
Verwaltungsgesellschaft Germany 51 McCann-Erickson Deutschland GmbH
PWS Germany 100 McCann-Erickson Deutschland GmbH
Scherer MRM Holding GmbH Germany 75 McCann-Erickson Deutschland
Scherer Team GmbH Germany 100 Scherer MRM Holding GmbH
Servicepro Agentur fur
Dialogmarketing und Germany 100 M&V Agentur Fur Dialogmarketing
Verkaufsforderung GmbH und Verkaufsforderung GmbH
Shandwick Deutschland
GmbH & Co. KG Germany 100 Shandwick Europe Holding GmbH
Shandwick Deutschland
Verwaltungsgesellschaft MBH Germany 100 Shandwick Europe Holding GmbH
Shandwick Europe Holding GmbH Germany 100 Shandwick Investments Ltd.
Stinnes Marketing Consulting GmbH Germany 100 Shandwick Deutschland GmbH & Co. KG
Typo-Wenz Artwork GmbH Germany 100 Interpublic GmbH
Universalcommunication
Media Intensiv GmbH Germany 100 Interpublic GmbH
Unterstuetzungskasse der H.K.
McCann Company GmbH Germany 100 McCann-Erickson (Int'l) GmbH
Verwaltungsgesell Schaft
Lutz Bohme GmbH Germany 100 Shandwick Europe Holding GmbH
Western Media GmbH Germany 100 Adplus GmbH
Wolff & Partner
DraftWorldwide, Kreatives DraftDirect Worldwide Holdings
Direktmarketing GmbH & Co. Germany 100 GmbH Germany
Lowe Lintas & Partners
Advertising Company S.A. Greece 100 Interpublic Ltd.
International Media Advertising Greece 100 Fieldplan Ltd.
McCann-Erickson Athens S.A. Greece 100 Registrant
Initiative Media
Advertising S.A. Greece 100 Fieldplan Limited
Universal Media Hellas S.A. Greece 100 McCann-Erickson (Int'l) GmbH
Publicidad McCann-Erickson
Centroamericana
(Guatemala), S.A. Guatemala 100 Registrant
Asdia Limited Guernsey 70 Registrant
McCann-Erickson
Centroamericana S. de R.L. Honduras 100 Registrant
Anderson & Lembke
Asia Limited Hong Kong 100 Anderson & Lembke, Inc.
Ammirati Puris Lintas
Hong Kong Ltd. Hong Kong 54 Lowe Worldwide Holdings BV
Dailey International
Enterprises Ltd. Hong Kong 100 Registrant (50%), Ammirati Puris
Lintas (50%)
Dailey Investments Limited Hong Kong 100 Registrant (50%), Ammirati Puris
Lintas (50%)
DraftWorldwide Limited Hong Kong 100 DraftWorldwide, Inc.
Forrest Int'l Holdings, Ltd. Hong Kong 100 Registrant
Infoplan (Hong Kong) Limited Hong Kong 100 McCann-Erickson (HK) Limited
Karting Mall (Hong Kong) Ltd. Hong Kong 100 Karting Marketing & Mgmt. Corp.
Lintas Holdings B.V. Hong Kong 100 Registrant
Live Hong Kong 100 Lowe & Partners/Live Limited
- 156 -
EXHIBIT 21
PAGE 16
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Lowe & Partners/Live Limited Hong Kong 74 Lowe Group Holdings Inc.
Ludgate Asia Ltd. Hong Kong 100 Ludgate Group Limited
McCann-Erickson,
Guangming Ltd. Hong Kong 100 Registrant
McCann-Erickson (HK) Limited Hong Kong 100 Registrant
Octagon CSI Asia Pacific Ltd. Hong Kong 100 Octagon CSI Int'l Holdings SA
Octagon Prism Limited Hong Kong 85 Octagon Sports Marketing Limited
Orvieto Limited Hong Kong 100 Asiatic Corp.
Presko Limited Hong Kong 100 Shandwick Asia Pacific Limited
Prism Golf Management Ltd. Hong Kong 50 Octagon Prism Limited
Prism Holdings Limited Hong Kong 100 Octagon Prism Limited (50%);
Prism Golf Management (50%)
Shandwick Asia Pacific Limited Hong Kong 100 Shandwick Investments Limited
Shandwick Hong Kong Limited Hong Kong 100 Shandwick Asia Pacific Limited
Strategic Solutions Limited Hong Kong 100 DraftWorldwide Limited H.K.
Ammirati Puris Lintas
Budapest Reklam Es
Marketing Kommunikacios Kft Hungary 100 Ammirati Puris Lintas Deutschland
GGK Direct Kft. Hungary 70 Lowe Lintas GGK Holdings AG
Initiative Media Hungary Hungary 100 Lintas Budapest
Lowe Lintas GGK Kft. Hungary 77 Lowe Lintas GGK Holdings AG
McCann Communications
Budapest KFT Hungary 100 Registrant
McCann-Erickson
Interpress International
Advertising Agency Ltd. Hungary 100 Registrant
Panmedia Western Kft. Hungary 70 Lowe Lintas GGK Holdings AG
Gott Folk enf. Iceland 65 Overseas Holdings Denmark A/S
Associate Corp. Consl.
(India) Pvt.Ltd. India 99.60 McCann-Erickson (India) Private Ltd.
DraftWorldwide (India PVT Ltd.) India 74 DraftWorldwide, Inc.
McCann-Erickson (India) Pvt. India 60 McCann-Erickson Worldwide Inc.
Result Services Private Ltd. India 99.10 McCann-Erickson (India) Private Ltd.
APL Indonesia Indonesia 55 Ammirati Puris Lintas
Grafix Indonesia 100 PT Inpurema Konsultama
PT Intra Primustana Respati Indonesia 100 Shandwick Investment Ltd.
Financial and Corporate
Communications Limited Ireland 100 Registrant
McCann-Erickson, Limited Ireland 100 Registrant
Asdia Limited Isle of
Guernsey 74 Registrant
Pool Limited Isle of Man 100 Overseas Holdings Denmark A/S
Kesher Barel Israel 50 Registrant
Select Media Israel 100 Registrant
Shamluk, Raban, Golani Israel 60 A.T.M.Z. Holding Company Ltd.
Ammirati Puris Lintas
Milano S.p.A. Italy 100 Ammirati Puris Lintas Holding BV
Centro Media Planning-
Buying-Booking S.r.l. Italy 100 Ammirati Puris Lintas Milano SpA
Chorus Media Srl Italy 51 Lowe Pirella Gottsche SpA
Dialogo Italy 100 McCann-Erickson Italiana SpA
DraftWorldwide Italia Srl. Italy 100 DraftWorldwide, Inc.
Gio Rossi Italy 71 McCann-Erickson
- 157 -
EXHIBIT 21
PAGE 17
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Initiative Media S.R.L. Italy 100 Ammirati Puris Lintas SPA
Infoplan Italiana S.P.A. Italy 100 Registrant
Lowe Lintas Pirella Gottsche
& Partners S.p.A. Italy 100 Lowe Worldwide Holdings BV
Mass Media Partner S.r.l. Italy 100 Shandwick Corporate Comm., SpA
McCann-Erickson Italiana SpA Italy 100 Registrant
McCann Mktg. Communications SpA Italy 100 McCann-Erickson Italiana SpA
Octagon Motorsport Srl. Italy 100 Inka AG
Pool Media International Registrant (95%) and Business
(P.M.I.) S.r.l. Italy 100 Science Research Corp (5%)
SBK Motorsport Srl Italy 100 SBK Superbike International Ltd.
Shandwick Corporate
Communication SPA Italy 100 Shandwick Investments Limited
Shandwick Italia Holding Srl Italy 100 Shandwick Investments Limited
Shandwick Mktg. Communication Srl Italy 100 Shandwick Italia Holding Srl
Shandwick Roma in
Liquidazione Srl Italy 100 Shandwick Italia Holding Srl
Spring S.R.L. Italy 99 Lowe Lintas Pirella Gottsche & Ptnrs.
Universal S.R.L. Italy 100 Registrant
Universal Media Srl Italy 100 McCann-Erickson Italiana SpA
Ammirati Puris Lintas S.A. Ivory Coast 67 France C.C.P.M.
McCann-Erickson Ivory Coast Ivory Coast 98.80 McCann-Erickson France
Nelson Ivory Coast Ivory Coast 100 McCann-Erickson France
McCann-Erickson (Jamaica) Ltd. Jamaica 100 Registrant
Ammirati Puris Lintas K.K. Japan 100 Ammirati Puris Lintas Nederland
BV (29%); Registrant (71%)
Hakuhodo Lintas K.K. Japan 50 Ammirati Puris Lintas Worldwide Ltd.
Infoplan, Inc. Japan 100 McCann-Erickson Inc.
Int'l Management Consultants Ltd. Japan 100 IPR Shandwick Inc.
IPR Shandwick Inc. Japan 100 Shandwick Investments Limited
ISDM Japan Inc. Japan 73.32 McCann-Erickson Inc. (Japan)
Japan Mktg. Communications Inc. Japan 100 IPR Shandwick Inc.
KK ISD Japan Japan 75 McCann-Erickson Inc.
K.K. Momentum Japan 100 McCann-Erickson Inc.
K.K. Standard McIntyre Japan 100 McCann-Erickson Healthcare, Inc.
McCann-Erickson Inc. Japan 100 Registrant
Public Relations Services Co. Ltd. Japan 100 IPR Shandwick Inc.
Universal Public
Relations Services Ltd. Japan 100 IPR Shandwick Inc.
Third Dimension Limited Jersey 100 Interpublic Limited
Vy-McCann Limited Jersey 51 McCann-Erickson Worldwide, Inc.
Kazakhstan Kazakhstan 100 Registrant
McCann-Erickson (Kenya) Ltd. Kenya 73 Registrant
McCann-Erickson Korea Korea 51 McCann-Erickson
SIA Divizija Latvia 75 Registrant (75%); Ainars Scipcinskis
(12.5%); Aigors Rungis (12.5%)
Communication Services
(International) Holdings SA Luxembourg 100 Registrant
Inka AG Luxembourg 100 Octagon Motorsport Limited
- 158 -
EXHIBIT 21
PAGE 18
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
API Sponsorship SDM.BHD Malaysia 100 Advantage Sponsorship Canada
Ltd. (50%) & Octagon Sports
Marketing Ltd. (50%)
DraftWorldwide Sdn. Bhd. Malaysia 100 DraftWorldwide, Inc.
Initiative Media (M) Sdn. Bhd. Malaysia 100 Lowe Lintas & Partners
(Malaysia) Sdn. Bhd.
McCann-Erickson
(Malaysia) Sdn. Bhd. Malaysia 100 Registrant
Mutiara-McCann
(Malaysia) Sdn. Bhd. Malaysia 83.50 Registrant
Shandwick Sdn. Bhd. Malaysia 100 Shandwick Investments Limited
Union 2000 Malaysia 60 DraftWorldwide, Inc.
Universal Communication
Sdn. Bhd. Malaysia 100 McCann-Erickson (Malaysia) Sdn. Bhd.
Lowe Mauritius Limited Mauritius 100 Lowe Group Holdings Inc.
Ammirati Puris
Lintas S.A. de C.V. Mexico 100 Interpublic Holding Co. SA de CV
Business Strategic
Consultants, S.C. Mexico 60 Interpublic Holding Co. Sa de CV
Corporacion Interpublic
Mexicana, S.A. de C.V. Mexico 100 Interpublic Holding Co. SA de CV
Inversionistas
Asociados, S.A. De C.V. Mexico 100 Interpublic Holding Co. SA de CV
Initiative Media,
S.a. de C.V. Mexico 100 Interpublic Holding Co. SA de CV
Initiative Media Mexico Mexico 100 Interpublic Holding Co. SA de CV
Inversionistas
Asociados, S.A. De C.V. Mexico 100 Interpublic Holding Co. SA de CV
Lowe & Partners/SMS
De Mexico, S.A. Mexico 100 Interpublic Holding Co. SA de CV
Pedrote Mexico 60 Interpublic Holding Co. SA de CV
Promoideas, S.A. de CV Mexico 60 Interpublic Holding Co. SA de CV
(60%); Carlos Sanchez Guadarrama
(40%)
Publicidad Nortena,
S. De R.L. De C.V. Mexico 100 Interpublic Holding Co. SA de CV
Vierka Mexico 100 Interpublic Holding Co. SA de CV
Zimat Consultores, SA de CV Mexico 100 Zimat Golin/Harris SA (owned by
Interpublic SA de CV)
CSI International SAM Monaco 100 Communication Services Int'l
(Holdings) S.A.
Ammirati Puris Lintas
Direct B.V. Netherlands 80 Ammirati Puris Lintas Nederland BV
Anderson & Lembke Europe B.V. Netherlands 100 Anderson & Lembke, Inc.
Borremans & Ruseler
Thematische Actiemarketing BV Netherlands 100 Borus Groep BV
Borus Groep BV Netherlands 100 IPG Nederland BV
Coleman Millford BV Netherlands 71 IPG Nederland B.V.
Data Beheer BV Netherlands 100 Data Holding B.V.
- 159 -
EXHIBIT 21
PAGE 19
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Data Holding BV Netherlands 100 IPG Nederland B.V.
Gold Reclame En Marketing
Advisers BV Netherlands 100 IPG Nederland B.V.
Initiative Media
Programming BV Netherlands 100 Ammirati & Puris Lintas B.V.
IPG Nederland BV . Netherlands 100 Registrant (62%); Poundhold (37.6%)
ISOGroup Europe BV Netherlands 100 Registrant
Lowe Digital BV Netherlands 80 Lowe Direct (22.5%), Lowe
Lintas (57.5%)
L'eau Netherlands 60 Lowe Lintas BV
Lowe Holland BV Netherlands 100 Lowe Worldwide Holdings BV
Lowe Lintas BV Netherlands 100 Lowe Worldwide Holdings BV
Lowe Worldwide Holdings BV Netherlands 100 Interpublic Netherlands
McCann-Erickson (Nederland) BV Netherlands 100 IPG Nederland BV
Octagon BV Int'l Holdings Inc. Netherlands 100 Advantage Int'l Holdings Inc.
Octagon CSI International BV Netherlands 100 Octagon CSI International NV
Octagon Worldwide
Holdings BV Netherlands 100 Octagon Worldwide Inc.
Pacific Investments Trust BV Netherlands 100 SBK Superbike Int'l Limited
P. Strating Promotion BV Netherlands 100 IPG Nederland B.V.
Programming Media
International BV Netherlands 100 Registrant
Reclame-Adviesbureau Via BV Netherlands 100 IPG Nederland BV
Roomijsfabriek "De Hoop" BV Netherlands 100 Lowe Worldwide Holdings BV
Shandwick BV Netherlands 100 Shandwick Investments Limited
Shandwick International BV Netherlands 100 Shandwick Investments Limited
Shandwick Netherland BV Netherlands 100 Shandwick International B.V.
Shandwick New Zealand Limited Netherlands 100 Shandwick Investments Limited
Universal Media BV Netherlands 100 IPG Nederland B.V.
VDBJ Stichting Beheer
Sandelen VDBJ/
Communicatie Groep BV Netherlands 60 IPG Nederland B.V.
Western International
Media Holdings BV Netherlands 100 Lowe Group Holdings, Inc. (52%),
Ammirati Puris Lintas (38%),
Western Media (10%)
Zet Zet BV Netherlands 100 Data Gold B.V.
Octagon CSI International NV Netherland
Antilles 100 Octagon CSI International BV
Ammirati Puris Lintas (NZ) Ltd. New Zealand 51 Registrant
DLM New Zealand 100 McCann-Erickson
Initiative Media (NZ) Limited New Zealand 99 Ammirati Puris Lintas (NZ) Ltd.
McCann-Erickson Limited New Zealand 100 Registrant
Pritchard Wood-Quadrant Ltd. New Zealand 100 Registrant
Universal Media Limited New Zealand 100 McCann-Erickson Limited
Digit A/S Norway 100 JBR/McCann/A/S
JBR Film A/S Norway 100 JBR Reklamebyra A/S
JBR McCann A/S Norway 100 McCann-Erickson A/S
JBR McCann Signatur A/S Norway 100 McCann-Erickson A/S
JBR Purkveien A/S Norway 100 McCann-Erickson A/S
JBR Riddeersvoldgate A.S. Norway 100 McCann-Erickson A/S
- 160 -
EXHIBIT 21
PAGE 20
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Lowe Norway A/S Norway 100 Lowe Sweden AB
Lowe & Partners Norway A/S Norway 66.6 Lowe Norway A/S
McCann-Erickson A/S Norway 100 McCann-Erickson Marketing
Scandinavian Design Group AS Norway 75 McCann-Erickson AS
Showproduksjon AS Norway 100 McCann-Erickson AS
Epoca McCann S.A. Panama 100 Registrant
Ammirati Puris Lintas Manila Philippines 58 Registrant
H.K. McCann Communications
Company, Inc. Philippines 100 McCann-Erickson (Philippines) Inc.
McCann-Erickson
(Philippines), Inc. Philippines 58 Registrant (30%), Business
Science Research Corp. (28%)
McCann Group of
Companies, Inc. Philippines 100 Registrant
Ammirati Puris Lintas Sp. z.o.o. Poland 100 Ammirati Puris Lintas Deut. GmbH
GGK Direct Warszawa Sp. z.o.o. Poland 100 Lowe Lintas GGK Holding AG (80%);
Lowe Lintas GGK (Warsaw) (20%)
GGK Public Relations Sp. z.o.o. Poland 95 Lowe Lintas GGK Holding AG (95%);
Andrzej Halicki (5%)
IM Warsaw Poland 100 Ammirati Puris Lintas Warsaw
ITI McCann-Erickson
Int'l Advertising Poland 100 McCann-Erickson Int'l GmbH
Lowe Lintas GGK Sp. z.o.o. Poland 100 Lowe Lintas GGK Holding AG
McCann Communications-Poland Poland 100 Registrant
McCann-Erickson
Prague Spol. s.r.o. Poland 100 McCann-Erickson Int'l GmbH
Panmedia Western Sp. z.o.o. Poland 95 Lowe Lintas GGK Holding AG
Ammirati Puris Lintas, Lda. Portugal 100 Interpublic SGPS/Lda.
Iniciativas De Meios-Actividades
Publicitarias, Limitada Portugal 98 Ammirati Puris Lintas, Ltda.
Interpublic SGPS/Lda Portugal 100 Registrant
Kramaidem-Publicidade
E Marketing, S.A. Portugal 100 Registrant
McCann-Erickson/
Portugal Limitada Portugal 100 Interpublic SGPS/Ltda.
MKM Markimage,
Marketing E Imagem, S.A. Portugal 100 McCann-Erickson Portugal
Publicidade Ltda.
Universal Media
Publicidade, Limitada Portugal 100 McCann-Erickson/Portugal Ltda.
Ammirati Puris Lintas
Puerto Rico, Inc. Puerto Rico 100 Ammirati Puris Lintas, Inc.
McCann-Erickson,
Dublin Limited Republic of 100 Registrant
Ireland
B.V. McCann-Erickson Romania Romania 75 Registrant
Lowe GGK Bucaresti Publicitate Srl Romania 61 Lowe Lintas GGK Holdings AG
McCann-Erickson Moscow Russia 100 McCann-Erickson Int'l GmbH
Boroughloch Scotland 100 DraftWorldwide, Inc.
Ammirati Puris Lintas
(Singapore) Pte. Ltd. Singapore 100 Registrant
DraftWorldwide Pte. Ltd. Singapore 100 DraftWorldwide, Inc.
Lowe Lintas & Partners
Singapore Pte. Ltd. Singapore 100 Lowe Group Holdings Inc.
- 161 -
EXHIBIT 21
PAGE 21
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
McCann-Erickson (Singapore) Singapore 100 Registrant
Monsoon Singapore 80 Lowe Group Holdings
Shandwick Pte Limited Singapore 100 Shandwick Investments Limited
CPM Slovakia SRO Slovak Rep. 50 Panmedia Werbeplanung GmbH
Lowe GGK Bratislava Sro Slovak Rep. 92 Lowe Lintas GGK Holdings AG
McCann-Erickson Bratislava Slovak Rep. 100 McCann-Erickson Prague Spol. srl
Panmedia s.r.o. Slovak Rep. 91 Lowe Lintas GGK Holdings AG
Adsearch Proprietary Limited South Africa 100 Registrant
Ammirati Puris Lintas
(Proprietary) Limited South Africa 100 Ammirati Puris Lintas Holding (76%)
Registrant (24%)
ASDIA South Africa 70 Registrant
Campbell-Ewald
Proprietary Limited South Africa 100 McCann-Erickson South Africa
Proprietary Limited
Column Communications CC South Africa 100 Ammirati Puris Lintas (Prop.) Ltd.
ESPM South Africa 86 Octagon Sports Marketing Ltd.
Fibre Design Communication
(Proprietary) Ltd. South Africa 100 Registrant
Group Africa Investments
(Proprietary) Ltd. South Africa 70 Registrant
McCann Cape Town
(Proprietary) Limited South Africa 100 McCann Group
McCann Durban
(Proprietary) Limited South Africa 100 McCann Group
McCann-Erickson Promotions
(Proprietary) Ltd. South Africa 100 Registrant
McCann-Erickson
South Africa (Pty.)
Ltd. ("McCann Group") South Africa 100 Registrant
McCann International
(Proprietary) Limited South Africa 100 McCann Group
McCann South Africa
Proprietary Limited South Africa 100 McCann-Erickson Johannesburg
(Proprietary) Limited
McCann-Erickson
Johannesburg (Proprietary) South Africa 100 McCann-Erickson South Africa
Limited (Proprietary) Limited
McCannix Proprietary Limited
(Proprietary) Limited South Africa 100 McCann-Erickson Johannesburg
Media Initiative
(Proprietary) Limited South Africa 100 Ammirati Puris Lintas (Prop.) Ltd.
Telerix Investments
(Proprietary) Limited South Africa 100 Octagon Sports Marketing Ltd.
The Loose Cannon Company
Proprietary Limited South Africa 100 McCann-Erickson South Africa
Universal Media
(Proprietary) Limited South Africa 100 McCann Group
Lintas Korea, Inc. South Korea 100 Registrant
McCann-Erickson, Inc.-Doosan South Korea 100 McCann-Erickson Marketing, Inc.
Alpha Grupo de Comunicacion
Cientifica, S.L. Spain 60 Shandwick Iberica S.A.
- 162 -
EXHIBIT 21
PAGE 22
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Cachagua S.A. Spain 100 The Interpublic Group of
Companies de Espana S.A.
Cano & Martinez Direct, S.A. Spain 80 McCann-Erickson, S.A.
Clarin, S.A. Spain 100 McCann-Erickson S.A.
Clouseau Spain 80 DraftWorldwide S.A.
Coleman Schmidlin & Partner SA Spain 71 Coleman Group Worldwide, LLC
Common Sense Publicidad
Y Diseno, S.A. Spain 80 McCann-Erickson S.A.
Directing MRM S.A. Spain 99.99 The Interpublic Group of
Companies de Espana S.A.
DraftWorldwide S.A. Spain 100 Draft Group Holdings Limited
Encuadre S.A. Spain 67 Clarin, S.A.
Events & Programming The Interpublic Group of
International Companies de Espana S.A.
Consultancy, S.A. (EPIC) Spain 100 Interpublic de Espana S.A.
Iniciativas de Medios, S.A. Spain 100 Ammirati Puris Lintas, S.A.
Infomark, S.A. (Informatica
Aplicada al Marketing, S.A.) Spain 75 McCann-Erickson S.A.
Lowe FMRG Spain 81.02 Lowe W.W. Holdings BV (57.55%);
Lowe Int'l Holding BV (23.47%)
Lowe Lintas & Partners SA Spain 100 Interpublic Group of
Companies de Espana SA
McCann-Erickson S.A. Spain 100 The Interpublic Group of
Companies de Espana S.A.
McCann-Erickson The Interpublic Group of
Barcelona S.A. Spain 100 Companies de Espana S.A.
Pool Media International S.A. Spain 100 The Interpublic Group of
Companies de Espana S.A.
Reporter, S.A. Spain 75 Ecuacion Diferencial, SL (75%);
Marina Specht (25%)
Shandwick Iberica, S.A. Spain 100 Shandwick Investments Limited
Sidney Comunicacion S.A. Spain 75 McCann-Erickson S.A.
Sidney Marketing y
Communicacion Integral S.A. Spain 75 McCann-Erickson S.A.
Sidney System Prom, S.A. Spain 60 McCann-Erickson S.A.
Sidney Task Force S.A. Spain 60 McCann-Erickson S.A.
The Interpublic Group of
Companies de Espana Spain 100 Registrant
Think for Sale Communication
Integral S.L. Spain 100 DraftWorldwide S.A.
Universal Bus Interface
Corporation S.L. Spain 80 DraftWorldwide S.A.
Universal Media S.A. Spain 100 McCann-Erickson S.A.
Valmorisco Communications Spain 100 The Interpublic Group of
Companies de Espana S.A.
Western Int'l Media SA Spain 100 Western Int'l Media Holdings BV
Anderson & Lembke AB Sweden 100 Anderson & Lembke, Inc.
Creator Sweden 51 McCann-Erickson
Draft Promotion AB Sweden 100 DraftWorldwide Trampolin AB
DraftWorldwide Sweden AB Sweden 100 DraftWorldwide Trampolin AB
DraftWorldwide Trampolin AB Sweden 100 Inter P Group Sweden AB
Infoplan AB Sweden 100 McCann-Erickson AB
- 163 -
EXHIBIT 21
PAGE 23
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Jack Wahl Sweden 100 Lowe Brindfors AB
Large Medium AB Sweden 50 Lowe Brindfors AB
Lowe Lintas AB Sweden 100 Lowe Worldwide Holdings BV
Lowe & Partners Sweden AB Sweden 100 Lowe Worldwide Holdings BV
Lowe Brindfors Annonsbyra AB Sweden 100 Lowe & Partners Sweden AB
Lowe Forever Annonsbyra AB Sweden 100 Lowe Brindfors Annonsbyra AB
McCann Annonsbyra AB Sweden 100 McCann-Erickson AB
McCann Annonsbyra I Malmoe AB Sweden 100 McCann-Erickson AB
McCann-Erickson AB Sweden 100 Registrant
Message Plus Digital AB Sweden 100 Lowe & Partners Sweden AB
Message Plus Media AB Sweden 100 Lowe & Partners Sweden AB
PMI Initiative Universal Ammirati Puris Lintas AB (50%)
Media AB Sweden 100 McCann-Erickson AB (50%)
Ronnberg & McCann A.B. Sweden 100 McCann-Erickson AB
Storakers Sweden 50 Ronnberg & McCann A.B.
Trigge R. AKTiebolag Sweden 80 McCann Sweden
Bosch & Butz Werbeagenter AG Switzerland 100 Lowe Worldwide Holdings BV
Coleman Schmidlin Partner AG Switzerland 71 Coleman Group Worldwide LLC
Dynor Switzerland 100 Octagon Holding ApS
Get Neue Gestaltungstechnik AG Switzerland 100 Bosch & Butz Werbeagenter AG
Initiative Media Western AG Switzerland 100 Western Int'l Media Holdings BV
Initiative Media Switzerland Switzerland 100 Ammirati Puris Lintas Holding BV
Lowe GGK Switzerland 82 Lowe Int'l Holdings BV
McCann-Erickson S.A. Switzerland 100 Registrant
McCann-Erickson Services S.A. Switzerland 100 Registrant
Octagon (Switzerland) AG Switzerland 100 Octagon Holdings ApS
Octagon Worldwide AG Switzerland 100 Advantage Int'l Holdings, Inc.
P.C.M. Marketing AG Switzerland 100 Ammirati Puris Lintas Deut. GmbH
Pool Media-PMI S.A. Switzerland 100 Registrant
Target Group AG Switzerland 51 McCann-Erickson
Unimedia S.A. Switzerland 100 Registrant
Lowe Lintas & Partners Taiwan Ltd. Taiwan 100 Registrant
McCann-Erickson Communications
Group Co. Ltd. Taiwan 100 Registrant
Shandwick Taiwan Ltd. Taiwan 100 Shandwick Asia Pacific Limited
BTL (Thailand) Ltd. Thailand 100 Presko Shandwick Ltd.
Lowe Lintas & Partners
(Thailand) Ltd. Thailand 100 Registrant
McCann-Erickson (Thailand) Ltd. Thailand 100 Registrant
McCann-Erickson
(Thailand) Ltd. Thailand 100 Registrant
Presko Shandwick Limited Thailand 100 Shandwick Holdings Ltd. (51%)
Orvieto Ltd. (49%)
Shandwick Holdings Limited Thailand 100 Shandwick Investments Limited
McCann-Erickson
(Trinidad) Limited Trinidad 100 Registrant
BEC Turkey 100 Pars/McCann
Beyaz Turkey 100 Pars/McCann
Initiative Media Istanbul Turkey 70 Registrant
- 164 -
EXHIBIT 21
PAGE 24
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
IPG Tanitim ve Halkla Ilskiler AS Turkey 51 Registrant
Link Ajams Limited Sirketi Turkey 100 PARS
Lowe Adam Tanitim
Hizmetleri AS Turkey Turkey 80 Lowe Worldwide Holdings B.V.
McCann-Direct Reklam Tanitama
Servisleri A.S. Turkey 100 PARS
PARS McCann-Erickson
Reklamcilik A.S.("PARS") Turkey 100 Registrant
Universal Media Planlama
Ve Dagitim Turkey 100 PARS
Lintas Gulf Limited U.A.E. 51 Ammirati Puris Lintas Worldwide
Addison Whitney Ltd.; Interpublic Limited (50%),
Worldwide Ltd. United Kingdom 100 Business Science Research (50%)
Addition Communications
Limited United Kingdom 100 SP Group Limited
Addition Marketing Group
Limited United Kingdom 100 SP Group Limited
Advantage Soccer
Limited United Kingdom 100 Octagon Sports Marketing Ltd.
Advantage Sponsorship
Canada Limited United Kingdom 100 Octagon Sports Marketing Ltd.
Advantage Sports
Media Limited United Kingdom 100 Octagon Sports Marketing Ltd.
Adware Systems Limited United Kingdom 100 Orkestra Limited
Advantage Television Limited United Kingdom 100 Octagon Sports Marketing Ltd.
Ammirati Puris Lintas Limited United Kingdom 100 Interpublic Limited
Ammirati Puris Lintas
International Limited United Kingdom 100 Interpublic Limited
Ammirati Puris Lintas Russia Ltd. United Kingdom 100 Interpublic Limited
API United Kingdom 100 Octagon Sports Marketing Ltd.
Artel Studios Limited United Kingdom 100 Stowe, Bowden, Wilson Limited
Bahbout and Stratton Limited United Kingdom 100 Registrant
Barnett Fletcher
Promotions Co. Ltd. United Kingdom 100 Interpublic Limited
Brand Matters Limited United Kingdom 100 Registrant
Brands Hatch
Investments Limited United Kingdom 100 Brands Hatch Leisure Plc
Brands Hatch Leisure Limited United Kingdom 100 Interpublic Inc.
Brands Hatch Limited United Kingdom 100 Brands Hatch Leisure Limited
Briefcope Limited United Kingdom 100 IPR Limited
Brilliant Pictures Limited United Kingdom 100 Still Price Court Twivy D'Souza
Lintas Group Limited
British Motorsports
Promoters Limited United Kingdom 50 Octagon Motorsports Limited
Broadway Communications Group
(Holdings) Limited United Kingdom 100 Newtonvale Limited
Brompton Advertising Ltd. United Kingdom 100 The Brompton Group Ltd.
Brompton Promotions Ltd. United Kingdom 100 The Brompton Group Ltd.
Bureau of Commercial
Information Limited United Kingdom 100 Registrant
- 165 -
EXHIBIT 21
PAGE 25
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Bureau of Commercial
Research Limited United Kingdom 100 Registrant
Business Geographics United Kingdom 70 Int'l Poster Management Ltd.
Campbell-Ewald Limited United Kingdom 100 Interpublic Limited (50%),
Business Science Research (50%)
Caudex Medical Limited United Kingdom 100 Registrant
Causeway Communications Ltd. United Kingdom 100 IPR Limited
CM Lintas International Ltd. United Kingdom 100 Interpublic Limited
Coachouse Ltd. United Kingdom 100 McCann-Erickson Manchester Ltd.
Coleman Planet &
Partners Limited United Kingdom 71 Registrant
Colourwatch Group Limited United Kingdom 100 Lowe International Limited
Complete Congress
Services Limited United Kingdom 67 Complete Medical Group Ltd.
Complete Exhibition
Services Ltd. United Kingdom 80 Complete Medical Group Ltd.
Complete Healthcare
Training Limited United Kingdom 75 Complete Medical Group Ltd.
Complete Market
Research Limited United Kingdom 75 Complete Medical Group Ltd.
Complete Medical
Communications Int'l Ltd. United Kingdom 85 Complete Medical Group Ltd.
Complete Medical
Communications (UK) Ltd. United Kingdom 80 Complete Medical Group Ltd.
Complete Medical Group Ltd. United Kingdom 100 Interpublic Limited
Creation United Kingdom 100 Interpublic Limited
Davies/Baron Limited United Kingdom 100 Interpublic Limited
Davies Day Limited United Kingdom 100 Octagon Sports Mktg. Ltd.
Daytona Raceway Limited United Kingdom 100 The Rebel Group Limited
Decifer Limited United Kingdom 75 Lowe International Limited
Diagnosis Limited CMC house United Kingdom 80 Complete Medical Group Limited
DraftWorldwide Limited United Kingdom 100 Draft Group Holdings Limited
Draft Group Holdings Limited United Kingdom 100 Interpublic Limited
DRS Advertising Limited United Kingdom 100 Draft Group Holdings Limited
English and Pockett Limited United Kingdom 75 Registrant
Epic (Events & Programming
Int'l Consultancy) Ltd. United Kingdom 100 Interpublic Limited
EXP Momentum United Kingdom 100 Interpublic Limited
Fieldplan Ltd. United Kingdom 100 Interpublic Limited
Firstsale 2 Limited United Kingdom 100 Shandwick Marketing Service Ltd.
Fleet PR Limited United Kingdom 100 Shandwick Public Relations Ltd.
Gotham Limited United Kingdom 100 Interpublic Limited
Gresham Financial
Marketing Ltd. United Kingdom 100 Shandwick Consultants Ltd.
Grand Slam Millennium
Television Ltd. United Kingdom 100 Octagon Sports Marketing Ltd.
Grand Slam Sports Limited United Kingdom 100 Octagon Sports Marketing Ltd.
GSD Momentum Limited United Kingdom 100 Registrant
Harrison Advertising
(International) Ltd. United Kingdom 100 Interpublic Limited
- 166 -
EXHIBIT 21
PAGE 26
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
H.K. McCann Limited United Kingdom 100 McCann Erickson Advertising Ltd.
Hopkins & Bailey Ltd. United Kingdom 100 Radclyffe Comm. Group Ltd.
HPI 1999 Limited United Kingdom 100 Draft Group Holdings Limited
HPI International Limited United Kingdom 100 Draft Group Holdings Limited
HPI Research Group Limited United Kingdom 100 Draft Group Holdings Limited
Initiative Media Limited United Kingdom 100 Interpublic Limited
Initiative Media
London Limited United Kingdom 99.5 Still Price Court Twivy D'Souza
Lintas Group Limited
International Poster
Management Ltd. United Kingdom 100 Interpublic Limited
International Public
Relations ltd. United Kingdom 100 Interpublic Limited
Interpublic Limited United Kingdom 100 Registrant
Interpublic Pension
Fund Trustee Co. Ltd. United Kingdom 100 Interpublic Limited
IPR Communications Ltd. United Kingdom 100 IPR Limited
J V Knightsbridge
Travel Limited United Kingdom 50 Lowe International limited
Kumquat Limited United Kingdom 100 Draft Group Holdings Limited
LHSB Management Services Ltd. United Kingdom 100 Lowe International Limited
Lintas W.A. Limited United Kingdom 100 Interpublic Limited
Lovell Vass Boddey Limited United Kingdom 100 Draft Group Holdings Limited
Lowe Azure Limited United Kingdom 100 Lowe International limited
Lowe Broadway Limited United Kingdom 100 Broadway Communications Group
(Holdings) Limited
Lowe Digital Limited United Kingdom 100 Lowe International Limited
Lowe Direct Limited United Kingdom 75 Lowe International Limited
Lowe Fusion
Healthcare Limited United Kingdom 100 Lowe International limited
Lowe & Howard-Spink
Media Limited United Kingdom 100 Lowe International Limited
Lowe International Limited United Kingdom 100 Interpublic Limited
Lowe Lintas Ltd. United Kingdom 100 Lowe International Limited
Lowe & Partners
Financial Limited United Kingdom 100 Lowe International Limited
Lowe & Partners UK Limited United Kingdom 100 Lowe International Limited
Lowe Lintas & Partners
Worldwide Limited United Kingdom 100 Interpublic Limited
Lowe Plus Limited United Kingdom 100 Lowe International limited
Ludcom PLC United Kingdom 100 Ludgate Group Limited
Ludgate Bachard Limited United Kingdom 100 Ludgate Group Limited
Ludgate Communications
Limited United Kingdom 100 Ludgate Group Limited
Ludgate Design Limited United Kingdom 100 Ludgate Group Limited
Ludgate Group Limited United Kingdom 100 Interpublic Limited
Ludgate Laud Limited United Kingdom 100 Ludgate Group Limited
Matter of Fact
Communications Limited United Kingdom 100 McCann-Erickson Bristol Ltd.
McCann Communications Limited United Kingdom 100 Interpublic Limited
McCann Direct Limited United Kingdom 100 Interpublic Limited
- 167 -
EXHIBIT 21
PAGE 27
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
McCann-Erickson
Advertising Limited United Kingdom 100 Interpublic Limited
McCann-Erickson
Belfast Limited United Kingdom 100 McCann-Erickson United Kingdom Ltd.
McCann-Erickson
Bristol Limited United Kingdom 100 McCann-Erickson United Kingdom Ltd.
McCann-Erickson
Central Limited United Kingdom 100 McCann-Erickson United Kingdom Ltd.
McCann-Erickson
Manchester Limited United Kingdom 100 McCann-Erickson United Kingdom Ltd.
McCann-Erickson Payne,
Golley Ltd. United Kingdom 75.9 McCann-Erickson United Kingdom Ltd.
McCann-Erickson
Scotland Limited United Kingdom 100 McCann-Erickson United Kingdom Ltd.
McCann-Erickson United
Kingdom Limited United Kingdom 100 Interpublic Limited
McCann-Erickson Wales United Kingdom 100 McCann-Erickson Payne Golley
McCann-Erickson Payne
Golley Limited United Kingdom 100 McCann-Erickson United Kingdom Ltd.
McCann-Erickson
Scotland Limited United Kingdom 100 McCann-Erickson United Kingdom Ltd.
McCann Media Limited United Kingdom 100 McCann-Erickson Bristol
McCann Properties Limited United Kingdom 100 McCann-Erickson United Kingdom Ltd.
Miller/Shandwick
Technologies Inc. United Kingdom 100 Shandwick Europe Limited
Miller Starr Limited United Kingdom 60 Registrant
MLS Soccer Limited United Kingdom 100 Octagon Sports Marketing Limited
Movie and Media Sports United Kingdom 100 Registrant (48%); Octagon
(Holdings) Limited Worldwide Ltd. (31%); Octagon
Worldwide Inc. (26%)
Movie and Media Sports Limited United Kingdom 100 Movie & Media Sports (Holdings) Ltd.
MSW Management Limited United Kingdom 100 Octagon Sports Marketing Limited
Nationwide Public
Relations Ltd. United Kingdom 100 IPR Limited
NDI Display Group United Kingdom 100 Interpublic Limited
Neva Europe Limited United Kingdom 100 Registrant
Newtonvale Limited United Kingdom 51 Lowe International Limited
(25.5%); Registrant (25.5%)
Octagon Athlete
Representation Limited United Kingdom 100 Octagon Sports Marketing Ltd.
Octagon CSI Limited United Kingdom 100 Third Dimension Limited
Octagon Event Marketing Limited United Kingdom 100 Interpublic Limited
Octagon Sponsorship
Consulting Limited United Kingdom 100 Octagon Sports Marketing Ltd.
Octagon Mktg.
Services Limited United Kingdom 100 Octagon Sports Marketing Ltd.
Octagon Motorsports Limited United Kingdom 100 Newtonvale Limited
Octagon Motorsports
Marketing Limited. United Kingdom 100 Octagon Worldwide Limited
Octagon SC Limited United Kingdom 100 Octagon Sponsorship Consulting Ltd.
- 168 -
EXHIBIT 21
PAGE 28
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Octagon Sponsorship
Europe Limited United Kingdom 100 Octagon Sports Marketing Ltd.
Octagon Sponsorship Limited United Kingdom 100 Octagon Sponsorship Consulting Ltd.
Octagon Sports
Marketing Limited United Kingdom 100 Octagon Worldwide Limited
Octagon Worldwide Limited United Kingdom 100 Interpublic Limited
Orbit International
(1990) Ltd. United Kingdom 100 Lowe International Limited
Orkestra Ltd. United Kingdom 100 Interpublic Limited
Packaging Brands Limited United Kingdom 100 Registrant
Paragon Communications
Limited United Kingdom 100 Int'l Public Relations Ltd.
Paragon North East Limited United Kingdom 100 Paragon Communications Limited
Packaging Matters Limited United Kingdom 100 Registrant
Planet Packaging
Consultants, Ltd. United Kingdom 71 The Coleman Group Worldwide LLC
Poundhold Ltd. United Kingdom 100 Lowe International Limited
PR Consultants
Scotland Limited United Kingdom 100 Int'l Public Relations Ltd.
Prime Communications Limited United Kingdom 100 Shandwick Public Relations Ltd.
Pritchard Wood and
Partners Ltd. United Kingdom 100 Interpublic Ltd. (50%),
Business Science Research (50%)
The Quay Advertising & Marketing
Limited (Bahbout & Stratton) United Kingdom 100 Bahbout & Stratton Ltd.
Quorum Graphic Design
Consultants Ltd. United Kingdom 100 Shandwick Europe Limited
Radclyffe Communications
Group Ltd. United Kingdom 100 Shandwick Europe Ltd.
Rebel Enterprises Limited United Kingdom 100 The Rebel Group Limited
Research Matters Limited United Kingdom 100 Registrant
Rogers & Cowan
Brand Placement Ltd. United Kingdom 100 Shandwick UK Limited
Rogers & Cowan
International Ltd. United Kingdom 100 Shandwick Europe Ltd.
Royds London Limited United Kingdom 100 McCann-Erickson United Kingdom Ltd.
Salesdesk Limited United Kingdom 100 Orkestra Ltd.
Shandwick Broadcast Limited United Kingdom 100 Shandwick Europe Limited
Shandwick Communications
Limited United Kingdom 100 Shandwick Europe Limited
Shandwick Consultants
Limited United Kingdom 100 Shandwick Europe Limited
Shandwick Europe Limited United Kingdom 100 Shandwick Investments Limited
Shandwick Interactive
Design Consultancy Ltd. United Kingdom 100 Shandwick Europe Limited
Shandwick Interactive
Limited United Kingdom 100 Shandwick Europe Limited
Shandwick International
Limited United Kingdom 100 IPR Limited
Shandwick Investments
Limited United Kingdom 100 Int'l Public Relations Ltd.
- 169 -
EXHIBIT 21
PAGE 29
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
Shandwick Investor
Relations Limited United Kingdom 100 Shandwick UK Limited
Shandwick Limited United Kingdom 100 Int'l Public Relations Ltd.
Shandwick Marketing
Services Limited United Kingdom 100 Int'l Public Relations Ltd.
Shandwick North Limited United Kingdom 100 Shandwick Europe Limited
Shandwick Northern
Ireland Limited United Kingdom 100 IPR Limited
Shandwick PR Company Limited United Kingdom 100 Shandwick Europe Limited
Shandwick Public
Affairs Limited United Kingdom 100 Shandwick Europe Limited
Shandwick Public
Relations Limited United Kingdom 100 IPR Limited
Shandwick Scotland Limited United Kingdom 100 PR Consultants Scotland Limited
Shandwick Trustees
Limited United Kingdom 100 Int'l Public Relations Ltd.
Shandwick UK Limited United Kingdom 100 Shandwick Europe Limited
Shandwick Welbeck Limited United Kingdom 100 Widestrong Limited
Silverstone Haymarket Limited United Kingdom 100 Octagon Motorsports Limited
Smithfield Lease Limited United Kingdom 100 Lowe International Limited
Sports Management Limited United Kingdom 100 Octagon Sports Mrktg. Limited
SP Lintas Group Limited United Kingdom 100 Interpublic Limited
Still Price Court Twivy
D'Souza Ltd. United Kingdom 100 SP Lintas Group Limited
Stowe, Bowden,
Wilson Limited United Kingdom 100 McCann-Erickson United Kingdom Ltd.
Symphony Direct
Communications Ltd. United Kingdom 100 Draft Group Holdings Limited
Talbot Television Limited United Kingdom 100 Fremantle International Inc.
Tavistock Advertising
Limited United Kingdom 100 Lowe International Limited
The Arbor Group plc United Kingdom 100 Interpublic Limited
The Barnett Fletcher
Promotions Co., Ltd. United Kingdom 100 Registrant
The Below the Line
Agency Limited United Kingdom 100 Interpublic Limited
The Boroughloch
Consultancy Limited United Kingdom 100 Draft Group Holdings Limited
The Brompton Group Ltd. United Kingdom 100 Lowe Int'l Limited
The Business in Marketing
& Communications Ltd. United Kingdom 100 Shandwick Public Relations Ltd.
The Championship
Group Limited United Kingdom 100 Octagon Sports Marketing Limited
The Howland Street
Studio Ltd. United Kingdom 100 Interpublic Limited
The Line Limited United Kingdom 100 SP Group Limited
The Lowe Group Limited United Kingdom 100 Lowe International Limited
The Medicine Group
(Education) Ltd. United Kingdom 60 Complete Medical Group Ltd.
The PR Centre Limited United Kingdom 100 PR Consultants Scotland Limited
The Quay Advertising and
Marketing Limited United Kingdom 100 Bahbout and Stratton Limited
- 170 -
EXHIBIT 21
PAGE 30
MARCH 21, 2001
NAME PERCENTAGE
OF VOTING
SECURITIES
JURISDICTION OWNED BY
UNDER WHICH IMMEDIATE
ORGANIZED PARENT (%) IMMEDIATE PARENT
------------ ---------- ------------------
FOREIGN:
The Really Big
Promotions Co. Ltd. United Kingdom 100 Interpublic Limited
The Rebel Group Limited United Kingdom 100 Octagon Motorsports Limited
Tinker and Partners Limited United Kingdom 100 Interpublic Limited
Toca Limited United Kingdom 100 Octagon Motorsports Limited
TPS Public Relations Limited United Kingdom 100 Shandwick Public Relations Ltd.
Tweak Limited United Kingdom 100 SP Lintas Group Limited
Two Six Seven Limited United Kingdom 100 Lowe International limited
Universal Advertising
Limited United Kingdom 100 Interpublic Limited
Universal Communications
Worldwide Limited United Kingdom 100 Interpublic Limited
Virtual Reality
Sports Limited United Kingdom 100 Octagon Sports Marketing Limited
Washington Soccer Limited United Kingdom 100 Octagon Sports Marketing Limited
Weber Europe Limited United Kingdom 100 Interpublic Limited
Western International United Kingdom 100 Lowe International Limited (52%)
Media Limited. WIMC (UK) Limited (48%)
Western International
Media Europe Limited. United Kingdom 100 Western Int'l Media Limited
Widestrong Limited United Kingdom 100 PR Consultants Scotland Limited
WIMC UK Limited United Kingdom 100 Interpublic Limited
Lingfield S.A. (S.A.F.I.) Uruguay 100 Registrant
Lowe & Partners South
America Holdings, S.A. Uruguay 100 Lowe Group Holdings, Inc.
McCann-Erickson Latin
America, S.A. Uruguay 100 Registrant
Rockdone Corporation
S.A. (S.A.F.I.) Uruguay 100 Universal Publicidade SA (safi)
Steffen Corporation Uruguay 100 Ammirati Puris Lintas Brazil
Universal Publicidad
S.A. (S.A.F.I.) Uruguay 100 McCann-Erickson Publicidade Ltda.
McCann Uzbekistan Uzbekistan 100 Registrant
McCann-Erickson Publicidad
De Venezuela, S.A. Venezuela 100 Registrant
Afamal Advertising (Rhodesia)
Private Ltd. Zimbabwe 100 Registrant
Lintas (Private) Limited Zimbabwe 80 Fieldplan Ltd.
A number of inactive subsidiaries and other subsidiaries, all of which
considered in the aggregate as a single subsidiary would not constitute a
significant subsidiary, are omitted from the above list. These subsidiaries
normally do business under their official corporate names. International
Business Services, Inc. does business in Michigan under the name "McCann-I.B.S.,
Inc." and in New York under the name "McCann International Business Services".
Ammirati Puris Lintas, Inc. conducts business through its Ammirati Puris Lintas
New York division. McCann-Erickson conducts some of its business in the states
of Kentucky and Michigan under the name "McGraphics". McCann-Erickson USA, Inc.
does business in Michigan under the name SAS and does busin ess in Indiana,
Michigan, New York, Pennsylvania and Wisconsin under the name of McCann-Erickson
Universal Group.
- 171 -
Exhibit 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 of The Interpublic Group of Companies, Inc. (the
"Company"), of our report dated February 26, 2001, except for Note 15 which is
as of March 1 9, 2001, which appears in the 2000 Annual Report to Stockholders
which is incorporated in this Annual Report on Form 10-K: Registration
Statements on Form S-8 No. 2-79071; No. 2-43811; No. 2-56269; No. 2-61346; No.
2-64338; No. 2-67560; No. 2-72093; No. 2-88165; No. 2-90878; No. 2-97440; and
No. 33-28143, relating to the Stock Option Plan (1971), the Stock Option Plan
(1981), the Stock Option Plan (1988) and the Achievement Stock Award Plan of the
Company; Registration Statements on F orm S -8 No. 2-53544; No. 2-91564; No.
2-98324; No. 33-22008; No. 33 -64062; and No. 33-61371, relating to the Employee
Stock Purchase Plan (1975), the Employee Stock Purchase Plan (1985) and the
Employee Stock Purchase Plan of the Company (1995); Registration Statements on
Form S-8 No. 33-20291 and No. 33-2830 relating to the Management Incentive
Compensation Plan of the Company; Registration Statements on Form S-8 No.
33-5352; No. 33-21605; No. 333-4747; and No. 333-23603 relating to the 1986
Stock Incentive Plan, the 1986 United Kingdom Stock Option Plan and the 1996
Stock Incentive Plan of the Company; Registration Statements on Form S-8 No.
33-10087 and No. 33-25555 relating to the Long-Term Performance Incentive Plan
of the Company; Registration Statement on Form S-8 No. 333-28029 relating to The
Interpublic Outside Directors' Stock Incentive Plan of the Company; Registration
Statement on Form S-8 No. 33-42675 relating to the 1997 Performance Incentive
Plan of the Company; and Registration Statement on Form S-3 No. 333-53592
related to the public offering of shares of the Company. We also consent to the
incorporation by reference of our report dated February 26, 2001 relating to the
financial sta tement schedule, which appears in this Form 10 -K.
PricewaterhouseCoopers LLP
New York, New York
March 27, 2001
- 172 -
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the Registration Statements on Form S-8 of The Interpublic Group of
Companies, Inc. (the "Company"), of our reports dated February 25, 2000, with
respect to the consolidated financial statements of NFO Worldwide, Inc. and
subsidiaries as of December 31, 1999, and for each of the years in the two -year
period ended December 31, 1999, which appears in the Company's 2000 Annual
Report on Form 10-K: Registration Statements No. 2-79071; No. 2-43811; No.
2-56269; No. 2-61346; No. 2 -64338; No. 2-67560; No. 2-72093; No. 2-88165; No.
2-90878; No. 2-97440 and No. 33-28143, relating variously to the Stock Option
Plan (1971), the Stock Option Plan (1981), the Stock Option Plan (1988) and the
Achievement Stock Award Plan of the Company; Registration Statements No.
2-53544; No. 2-91564; No. 2-98324; No. 33-22008; No. 33-64062 and No. 33-61371,
relating variously to the Employee Stock Purchase Plan (1975), the Employee
Stock Purchase Plan (1985) and the Employee Stock Purchase Plan of the Company
(1995); Registration Statements No. 33-20291 and No. 33-2830 relating to the
Management Incentive Compensation Plan of the Company; Registration Statements
No. 33-5352; No. 33-21605; No. 333-4747 and No. 333-23603 relating to the 1986
Stock Incentive Plan, the 1986 United Kingdom Stock Option Plan and the 1996
Stock Incentive Plan, of the Company; Registration Statements No. 33 -10087 and
No. 33-25555 relating to the Long-Term Performance Incentive Plan of the
Company; Registration Statement No. 333-28029 relating to The Interpublic
Outside Directors' Stock Incentive Plan of the Company; Registration Statement
No. 33-42675 relating to the 1997 Performance Incentive Plan of the Company; and
Registration Statement on Form S-3 No. 333-53592 relating to the public offering
of shares. It should be noted that we have not audited any financial statements
of NFO Worldwide, Inc. subsequent to December 31, 1999 or performed any audit
procedures subsequent to the date of our report.
Arthur Andersen LLP
New York, New York
March 27, 2001
- 173 -
Consent of Independent Public Accountants
-----------------------------------------
We consent to the incorporation by reference in the Registration Statements on
Form S-8 of The Interpublic Group of Companies, Inc. (the "Company"), of our
report dated February 13, 2001, included in the Company's 2000 Annual Report as
Form 10-K; Registration Statements No. 2-79071; No. 2-43811; No. 2-56269; No.
2-61346; No. 2-64338; No. 2 -67560; No. 2-72093; No. 2-88165; No. 2-90878; No.
2-97440; and No. 33-28143, relating variously to the Stock Option Plan (1971),
the Stock Option Plan (1981), the Stock Option Plan (1988) and the Achievement
Stock Award Plan of the Company; Registration Statements No. 2-53544; No.
2-91564; No. 2-98324; No. 33 -22008; No. 33 -64062; and No. 33-61371, relating
variously to the Employee Stock Purchase Plan (1975), the Employee Stock
Purchase Plan (1985) and the Employee Stock Purchase Plan of the Company (1995);
Registration Statements No. 33-20291 and No. 33-2830 relating to the Management
Incentive Compensation Plan of the Company; Registration Statements No. 33-5352;
No. 33-21605; No. 333-4747; and No. 333-23603 relating to the 1986 Stock
Incentive Plan, the 1986 United Kingdom Stock Option Plan and the 1996 Stock
Incentive Plan of the Company; Registration Statements No. 33-10087 and No.
33-25555 relating to the Long-Term Performance Incentive Plan of the Company;
Registration Statement No. 333-28029 relating to The Interpublic Outside
Directors' Stock Incentive Plan of the Company; Registration Statement No.
33-42675 relating to the 1997 Performance Incentive Plan of the Company; and
Registration Statement on Form S-3 No. 333-53592 relating to the public offering
of shares.
J.H. Cohn LLP
Roseland, New Jersey
March 27, 2001
- 174 -
Exhibit 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints JOHN J. DOONER, JR., SEAN F. ORR,
FREDERICK MOLZ and NICHOLAS J. CAMERA, and each of them, as true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him, and in his name, place and stead, in any and all capacities, to sign
the Report on Form 10-K for the year ended December 31, 2000, for The
Interpublic Group of Companies, Inc., S.E.C. File No. 1-6686, and any and all
amendments and supplements thereto and all other instruments necessary or
desirable in connection therewith, and to file the same, with all exhibits
thereto, and all documents in connection therewith, with the Securities and
Exchange Commission and the New Yor k Stock Exchange, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requested and necessary to be done in
and about the premises as fully to all intents and purposes as he might do or
could do in person, hereby ratifying and confirming all that said
attorney -in-fact and agents or any of them or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Dated: March 29, 2001
------------------------- -------------------------
John J. Dooner, Jr. James R. Heekin
--------------------------- -------------------------
Sean F. Orr Frank B. Lowe
------------------------- -------------------------
Frank J. Borelli Michael A. Miles
------------------------- -------------------------
Reginald K. Brack Leif H. Olsen
------------------------- -------------------------
Jill M. Considine J. Phillip Samper
- 175 -
THE INTERPUBLIC GROUP OF COMPANIES, INC.
Certified Resolutions
---------------------
I, Nicholas J. Camera, Secretary of The Interpublic Group of
Companies, Inc. (the "Corporation"), hereby certify that the resolu tions
attached hereto were duly adopted on March 29, 2001 by the Board of Directors of
the Corporation and that such resolutions have not been amended or revoked.
WITNESS my hand and the seal of the Corporation this 29th day of
March, 2001.
/S/ NICHOLAS J. CAMERA
------------------------------
NICHOLAS J. CAMERA
- 176 -
THE INTERPUBLIC GROUP OF COMPANIES, INC.
MEETING OF THE BOARD OF DIRECTORS
Resolutions re Form 10-K
------------------------
RESOLVED, that the Chairman of the Board and the Executive Vice
President and Chief Financial Officer of the Corporation be, and each of them
hereby is, authorized to execute and deliver on behalf of the Corporation an
annual report on Form 10-K for the year ended December 31, 2000, in the form
presented to this meeting with such changes therein as either of them with the
advice of the General Counsel shall approve; and further
RESOLVED, that the Chairman of the Board in his capacity as Chief
Executive Officer, the Executive Vice-President, Chief Financial Officer in his
capacity as Chief Financial Officer, and the Vice President and Controller in
his capacity as Chief Accounting Officer of the Corporation be, and each of them
hereby is, authorized to execute such annual report on Form 10-K; and further
RESOLVED, that the officers of the Corporation be and each of them
hereby is, authorized and directed to file such annual report on Form 10-K, with
all the exhibits thereto and any other documents that may be necessary or
desirable in connection therewith, after its execution by t he foregoing officers
and by a majority of this Board of Directors, with the Securities and Exchange
Commission and the New York Stock Exchange; and further
RESOLVED, that the officers and directors of the Corporation who may
be required to execute such annual report on Form 10-K be, and each of them
hereby is, authorized to execute a power of attorney in the form submitted to
this meeting appointing John J. Dooner, Jr., Sean F. Orr, Frederick Molz and
Nicholas J. Camera, and each of them, severally, his or her true and lawful
attorneys and agents to act in his or her name, place and stead, to execute said
annual report on Form 10 -K and any and all amendments and supplements thereto
and all other instruments necessary or desirable in connection therewith; and
further
RESOLVED, that the signature of any officer of the Corporation
required by law to affix his signature to such annual report on Form 10-K or to
any amendment or supplement thereto and such additional documents as they may
deem necessary or advisable in connection therewith, may be affixed by said
officer personally or by any attorney -in-fact duly constituted in writing by
said officer to sign his name thereto; and further
RESOLVED, that the officers of the Corporation be, and each of them
hereby is, authorized to execute such amendments or supplements to such annual
report on Form 10-K and such additional documents as they may deem necessary or
advisable in connection with any such amendment or supplement and to file the
foregoing with the Securities and Exchange Commission and the New York Stock
Exchange; and further
RESOLVED, that the officers of the Corporation be, and each of them
hereby is, authorized to take such actions and to execute such other documents,
agreements or instruments as may be necessary or desirable in connection with
the foregoing.
- 177 -
INTERPUBLIC IS A GLOBAL MARKETING COMMUNICATIONS AND MARKETING SERVICES COMPANY.
We are in the idea business. We provide Clients with customer-driven insights, strategic communications
programs and other marketing services that help them build the demand side of their business.
Our success and growth are built on the quality of our Client base and the depth of our relationships.
TABLE OF CONTENTS:
>>
FINANCIAL HIGHLIGHTS 1 / CHAIRMEN'S REPORT 2-5 / PHILIP H. GEIER, JR. 6
/ LEADERSHIP 7
/ PUBLIC RELATIONS 18-21 / HEALTHCARE 22-25
ADVERTISING 8-13 / DIRECT MARKETING 14-17
MARKETING RESEARCH
26-29
SPORTS MARKETING 38-41
/
MEETINGS & EVENTS
34-37
/ SALES PROMOTION 42-45 / CORPORATE ID & BRAND EQUITY 46-49
MEDIA SERVICES
30-33
/
B OARD OF DIRECTORS 50 / OFFICERS & INFORMATION 51 / INTERPUBLIC COMPANIES 52
>>
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The Interpublic Group of Companies, Inc. / 2000
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The Interpublic Group of Companies, Inc. / 2000