IPG explains '03 bonuses as Omnicom touts reductions

NEW YORK: Two of the three largest agency holding companies have had to take different public stands regarding their 2003 bonuses: Omnicom has touted its slimmed-down special compensation in a good year, while Interpublic Group has clarified its bonuses to 10% of employees in a challenging year.

NEW YORK: Two of the three largest agency holding companies have had to take different public stands regarding their 2003 bonuses: Omnicom has touted its slimmed-down special compensation in a good year, while Interpublic Group has clarified its bonuses to 10% of employees in a challenging year.

Omnicom gave reduced pay sweeteners last year, even though the company exceeded its financial goals for the year, according to a proxy statement filed April 25. IPG, the third-largest holding company after Omnicom and WPP, gave extra compensation to nearly one in 10 of its 49,000 employees, according to the company. IPG filed a proxy statement April 23.

Omnicom CEO John Wren got a $1.1 million cash bonus, $200,000 less than his extra pay for 2001. He and other top executives declined bonuses for 2002, during a bad economy.

The amount of the reductions could not be released, said Pat Sloan, Omnicom's SVP for communications. For 2003, Omnicom's net income rose 5% to $676 million.

IPG CEO David Bell received a $1.3 million bonus last year. IPG recorded a net loss of $451.7 million in 2003, a year that also saw layoffs and the write-down of some assets at the company. Bell and some top executives declined 2002 bonuses.

News of the pay perks first leaked out through an internal e-mail anonymously sent to The New York Times. The Times reported that IPG awarded at least $41.4 million in bonuses to executives.

But Philippe Krakowsky, SVP for corporate communications at IPG, said that figure is not correct, and that bonuses did not go only to executives. Krakowsky received a $225,000 bonus last year, and a $100,000 bonus for 2002.

An internal IPG memo sent by Bell on April 13 attempted to reassure employees that the bonuses were "made to several thousand people, across all our companies and at all levels."

The memo was given to PRWeek by an IPG employee who did not want to be named.

In his memo, Bell defended giving the bonuses despite the company's poor financial performance by saying that the actions taken that depressed results "had to be taken to stabilize the company and position it for future growth."

He also said: "What's also certain is that it takes the skills and efforts of a great many individuals to create real, systematic change. We're doing that here at Interpublic. It will take two to three years to complete the journey. But if we are unable or unwilling to reward those of you who are paving the way, we may never reach the finish line."

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.