Interpublic's board gave management hefty bonuses -- not as a reward for the holding company's performance, which still lags that of rivals, but for executives' work in moving Interpublic ahead in a difficult turnaround. The board also signaled a shift in incentive compensation starting in 2004 toward awards of stock tied to future results, an effort to more closely link pay to company performance.
Chairman-CEO David Bell put away $1 million in basic salary and gained a $1.3 million bonus, or 78% of what the compensation committee called his target for fulfilling goals such as improving the balance sheet and performance. He also received $76,000 in other compensation and 200,000 stock options.
Though Interpublic had a net loss of $452 million on weak revenues of $5.9 billion, Mr. Bell has been credited for bringing the advertising agency holding company back from the brink. The company was in the midst of a financial crisis before Mr. Bell took over from his predecessor, John J. Dooner.
The committee, which hired an independent executive compensation firm to determine industry pay scales, gave Mr. Bell a $100,000 signing bonus when he succeeded Mr. Dooner as chairman-CEO in February 2003.
The company's chief operating officer and chief financial officer, Chris Coughlin, received the second-largest individual bonus. Mr. Coughlin, who joined mid-year, had a partial-year salary of $433,000 and a $900,000 bonus.
Dooner's salary is highest
Mr. Dooner, who in February 2003 moved back to Interpublic's McCann Erikson WorldGroup division as chairman-CEO, kept his previous salary of $1.25 million, the highest overall salary at Interpublic. He pocketed a bonus of $750,000 plus $73,000 in "other annual compensation" and 177,000 in stock options. In the statement's explanatory notes, the bonus is described as "45% of his target," because of the improvement in McCann's operating results. The compensation committee in the statement said that "stronger performance would be required to warrant an award closer to or above target."
Brian Brooks, former executive vice president and chief talent and human resources officer who resigned from the company on Feb. 27, will continue to receive his annual salary of $495,000 until February 2005. Mr. Brooks remains a consultant to Interpublic and is entitled to $400 an hour for non-executive recruitment duties. Interpublic also paid $39.3 million to Pricewaterhouse Coopers in 2003 for tax and auditing purposes.
At the annual meeting, May 18, shareholders will be asked to approve a restructuring of Interpublic's incentive compensation plan. Under the revised plan, Interpublic will shift incentive pay from an emphasis on cash awards and stock options to one focused more on restricted stock grants, especially restricted stock grants tied to future performance.
That move would reflect an industry trend that is seeing companies pull back from stock options in favor of restricted stock grants. It comes as companies, starting next year, will be required to record as an expense item the cost of all stock options.
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Bradley Johnson contributed to this report.