NEW YORK (AdAge.com) -- At Omnicom Group, the chief executive gets paid until death does him part -- and then even after that.
The holding company offers CEO John Wren and other top employees a perk commonly known as a "golden coffin" -- a death benefit granted to heirs after the officer's ultimate demise. Omnicom investors today rejected a proposal calling on the company to rein in this form of generosity, which could mean an additional $41 million in payouts to the 57-year-old Mr. Wren's survivors.
The proposal's proponent, Amalgamated Bank's LongView investment fund, argued that it makes no sense for shareholders to make payments to the CEO in return for no services. It added that senior executives have ample time while alive to build a pension fund, buy life insurance or engage in other estate-planning activities.
"Instead of pay-for-performance, golden-coffin provisions are simply 'pay for no pulse,'" said Scott Zdrazil, director of corporate governance at Amalgamated Bank of New York.
Although many investors are unhappy with executive pay and perks these days, Amalgamated's proposal received only 40.7% of all shareholder votes cast at Omnicom's annual meeting today in Wilmington, Del., according to a bank spokesman. Omnicom had no immediate comment on the result.
Omnicom, which owns BBDO Worldwide, PR company Fleishman-Hillard and other marketing-communications firms, opposed the Amalgamated measure. It argued that it needs to offer death benefits in order "to attract and retain top talent" and added that "such benefits are common in our industry."
According to Omnicom's proxy, it appears that the company's chief financial officer, Randall Weisenburger, and CEO of its media group, Daryl Simm, are each eligible for about $14 million in death benefits, while the head of BBDO Worldwide, Andrew Robertson, is eligible for about $12 million.
Other companies offering golden coffins include Verizon Communications. Amalgamated says a 2008 study by compensation research firm Equilar showed that 17 Fortune 100 companies provide death benefits equal to multiples of salary upon executives' deaths.
Omnicom granted Mr. Wren $7.9 million in total compensation last year, a 17% raise over 2008. The company's net income slipped by 20%, to $793 million, and revenue dipped by 12%, to $11.7 billion. Omnicom's share price, however, rose by 48%, compared to a 26% rise in the S&P 500.
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Aaron Elstein is a senior reporter at Crain's New York Business.