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GREY SHAREHOLDERS APPROVE SALE OF COMPANY

Last Hurdle for Ed Meyer's Nearly $500 Million Personal Windfall

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NEW YORK (AdAge.com) -- Grey Global Group shareholders early this morning approved the sale of the company to WPP Group, clearing the way for the deal to close March 7. Grey shareholders will get $1.7 billion in cash and WPP stock, with a nearly $500 million prize going to Grey’s Ed Meyer.
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Special meeting
Grey held the special shareholders meeting in the auditorium of a downtown New York office building occupied by Goldman Sachs, one of its advisers on the sale. The formal meeting started at 8:09 a.m. and was over at 8:14 a.m., and the vote came as no surprise. The meeting drew 26 people, including Grey executives, two board members, investment bankers and only a smattering of Grey's 444 shareholders.

The sale marks the end of independence for Madison Avenue’s last big independent. It represents a windfall for Mr. Meyer, Grey’s chairman-CEO since 1970. “I think we can declare that the merger has been completed,” Mr. Meyer said.

Adding it up
Mr. Meyer controlled 60.7% of the voting shares through stock he owned, stock options and his oversight of an employee stock ownership plan. His pay day includes:

> $397.1 million for his family’s shares, a family foundation’s shares and stock options, based on the March 2 value

> $53.1 million in cash for deferred compensation and supplemental pensions

> $22.7 million in cash for a golden parachute

> Total take: $472.9 million.

Mr. Meyer turned Grey into green -- and it will get even greener. Mr. Meyer, 77, signed a contract with WPP to keep his job through Dec. 31, 2006. He’ll get an annual salary of $1 million; annual performance bonus of $750,000 to $1 million; WPP "performance shares" with a target value of $1 million; and $2 million in stock options.

$1,138.57 a share
Mr. Meyer did well for his shareholders. When Grey Advertising went public back in 1965, the stock was valued at $9.75. He struck a deal in September to sell Grey to WPP for a cash and stock package initially worth $1,005 a share. But WPP’s shares kept rolling, hitting a 52-week high March 1 of $58.94 before pulling back to $58.50 March 2. Based on WPP’s March 2 price, each Grey share is worth $1,138.57. That’s more than a hundredfold gain since Grey went public.

Mr. Meyer controlled the majority of voting shares. The deal, however, required a two-thirds vote for Grey’s two classes of stock (Class A and Class B shares), meaning Mr. Meyer did not control the outcome. A WPP December regulatory filing noted: "Even if ... [Grey] directors, officers and employees vote all of the Grey shares they own in favor of the adoption of the merger agreement, a majority of the Grey shares held by the Grey public stockholders ... will need to be voted in favor of the adoption of the merger agreement.”

No shareholder comment
This became moot as the vote sailed through. All shareholders opted to vote by proxy; none chose to actually vote at the meeting. Shareholders offered no comments during the formal meeting.

The meeting was a convivial affair, reflecting the soaring value of Grey shares and the long relationships investors have had with what Mr. Meyer’s son, Tony Meyer, said long seemed like a family business.

Several shareholders who have owned the stock for decades came to bid goodbye to the company and to thank Mr. Meyer. One shareholder said afterwards he’d owned the stock since the ‘60s. The oldest shareholder in the room: Larry Deckinger, 87, who retired in 1982 as Grey’s general manager-international.

Mr. Meyer's first agency job
Mr. Deckinger, as an executive at now-defunct New York agency Biow Co., gave Mr. Meyer his first job at an ad agency in the 1950s. “We recognized talent when we saw it,” Mr. Deckinger said. The two decamped for Grey in 1956.

The formal meeting lasted five minutes, but Mr. Meyer then spent about 20 minutes recapping Grey’s history and showing reels of “grand old timers” commercials and more recent spots. He closed the informal session by thanking shareholders and employees. “This ends the era of the Grey Global Group,” said Mr. Meyer. He will continue to run Grey Global, but as a subsidiary of WPP and with a boss, WPP Group Chief Executive Martin Sorrell.

But WPP is still No. 2
U.K.-based WPP, the No. 2 advertising holding company, agreed Sept. 11 to buy New York-based Grey, the industry’s No. 7 firm, following a bidding contest that ran through late summer. WPP, with about $7.9 billion in revenue last year, adds Grey, with estimated revenue of $1.47 billion in 2004, creating a nearly $9.4 billion company, according to Advertising Age’s analysis. This will make Mr. Sorrell a bigger player but still leaves him trailing Omnicom Group. Omnicom had 2004 revenue of $9.7 billion.

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