Inside IPG CEO Philippe Krakowsky’s $49 million golden parachute—and big new job at Omnicom

The proposed merger of Omnicom Group and Interpublic Group of Cos. has been heralded as yielding $750 million in annual savings, partly from staff reductions. But one person who is guaranteed a job is IPG CEO Philippe Krakowsky, who snared a golden parachute currently valued at $49 million—and a big-paying post at Omnicom. Tracking the latest Omnicom-IPG merger news and analysis Omnicom and IPG disclosed golden parachutes—severance benefits following a change in control—for Krakowsky and three other top IPG executives in a joint proxy statement/prospectus filing late today. Precise payouts aren’t known yet and will be affected by IPG’s stock price. The filing said actual amounts “may materially differ” from figures shown in the proxy. But if the deal had been completed on Jan. 15, the proxy said, Krakowsky would have been entitled to golden parachute compensation of about $48.6 million, including payouts of cash, equity, pension/deferred compensation and perks/benefits. Also read: How the Omnicom-IPG merger came together Become an All Access subscriber Get access to exclusive resources including Leading National Advertisers, World’s Largest Advertisers, Agency Report, Agency Review Tracker and TV Pricing Report. Click here Omnicom and IPG expect to complete the transaction in the second half of 2025. Krakowsky is in line to get the severance package as he parachutes into a new job at Omnicom. When the deal is completed, Krakowsky will segue into a new role as Omnicom’s co-president and co-chief operating officer, reporting exclusively to Omnicom Chairman-CEO John Wren. Krakowsky also will get an Omnicom board seat and be co-chair of Omnicom’s management integration committee. Krakowsky had the solid backing of IPG’s board during deal negotiations. At a November IPG board meeting, directors “discussed the importance of Mr. Krakowsky having a meaningful role during the integration period and in the go-forward combined company,” according to the proxy. Four days before the merger deal was signed, IPG Chair David Thomas “called Mr. Wren to express the IPG board’s strong desire for Mr. Krakowsky to have a meaningful role in integrating the two businesses and in the go-forward combined company for the benefit of IPG’s stockholders, employees and clients.” Krakowsky’s employment terms with Omnicom were finalized on Dec. 7, a day before the deal was signed. Omnicom will pay for Krakowsky’s golden parachute. The proxy read: “In recognition of the fact that Mr. Krakowsky would have ‘good reason’ to terminate his IPG employment (when the deal closes) … that his new position would have reduced duties and responsibilities compared to Mr. Krakowsky’s position with IPG and that this new position with Omnicom could entail a material reduction in compensation, Omnicom has agreed to pay … Mr. Krakowsky’s entitlements upon a qualifying termination as an inducement to Mr. Krakowsky to accept the new position.” The proxy notes conversations that Wren had with Krakowsky as the companies were negotiating final details of the deal in early December. In those conversations, Wren “acknowledged that the proposed role for Mr. Krakowsky at the combined company would not be equal to his position at IPG and could also result in a material diminution in compensation, and offered for Mr. Krakowsky to be paid, in connection with closing, the amounts payable pursuant to his outstanding IPG equity and performance cash awards, and pursuant to his executive change of control severance agreement as if Mr. Krakowsky experienced a qualifying termination following the merger.” Krakowsky’s 2023 total compensation was $14.4 million. In his new job, Omnicom has agreed to a pay package “at least equal to the base salary, target annual cash bonus opportunity and target long-term incentive compensation opportunity” of Daryl Simm, Omnicom’s president and chief operating officer. Simm’s 2023 total compensation was $11.0 million. Simm has been seen as Wren’s likely successor since moving into his current role in 2021. Simm will have the same title as Krakowsky—co-president and co-chief operating officer—when the deal closes. Wren’s 2023 total compensation was $20.2 million. (For reference, Wren’s 2023 compensation package was 382 times the median annual total compensation—$52,691—of Omnicom employees other than the CEO, according to Omnicom’s spring 2024 proxy. Krakowsky’s 2023 pay package was 205 times the median annual total compensation—$70,319—of IPG employees other than the CEO, according to IPG’s spring 2024 proxy statement.) Wren, 72, has been CEO since 1997 and board chairman and CEO since 2018. Under Omnicom’s “mandatory retirement age policy” for board members, Wren would need to retire from the board no later than 2028, the year after he turns 75. There is wiggle room; the board “may waive this limitation for any director if the board determines that it is in the best interests of the company and its shareholders to extend the director’s service.” Change of control agreements On Dec. 8, one day before the acquisition was announced, IPG amended its executive change of control agreements with Krakowsky and three other top executives—Ellen Johnson, executive VP and chief financial officer; Andrew Bonzani, executive VP and general counsel; and Christopher Carroll, executive VP, controller, chief accounting and business transformation officer—by extending the expiration date of the agreements to December 2027 from October 2025. Extending those expiration dates ensures that the agreements remain in place even if the closing of the deal is delayed, as sometimes happens with deals requiring approvals from regulators in the U.S. and abroad. The deal needs regulatory approval in the U.S., European Union, Australia, Canada, China, Brazil, Colombia, Egypt, India, Japan, Mexico, New Zealand, Romania, Saudi Arabia, Singapore, South Africa, Turkey and U.K. The other three executives also are in line for sizable golden parachute compensation for a “qualifying termination” that occurs with a change in control. Johnson qualified for payments of about $15.7 million based on values as of Jan. 15, according to today’s filing. Bonzani is in line for a package worth $11.8 million. Carroll’s package is valued at $6.2 million. Big-dollar change-in-control agreements are common in the corporate world, serving in part to ensure that key executives stay through a deal’s closing. IPG outlined the potential severance benefits in earlier annual proxy filings. Omnicom at this point has not disclosed post-merger roles, if any, for those three executives. Roles for the combined organization are expected to be assessed and determined in the months leading up to the deal’s closing. The deal is expected to result in layoffs given that the companies are banking on “annual cost synergies” of $750 million. Employee costs are far and away the biggest expense for agency companies. Synergies are expected in a range of areas and will be worked out prior to the deal closing. Cost savings are expected to come in areas including investments in technology, real estate savings from combined shared spaces and efficiencies in buying. Any employees laid off in the months after completion of the merger will get severance. The proxy said: “Upon a termination without cause of a continuing [IPG] employee by Omnicom … that occurs between the closing date and the first anniversary … Omnicom will provide severance benefits that are no less favorable than those in effect by IPG immediately prior to the closing date.” Deal closing and stock prices The acquisition, assuming it closes, will make Omnicom the biggest agency company on the planet. The deal requires approval by Omnicom and IPG shareholders, as well as regulators. IPG shareholders, under Securities and Exchange Commission rules, also will vote on a “a non-binding advisory proposal” concerning the merger-related payouts for the top four executives. The proxy noted: “Because the merger-related executive compensation to be paid in connection with the merger is based on the terms of the merger agreement as well as the contractual arrangements with IPG’s named executive officers, such compensation will be payable, regardless of the outcome of this advisory vote, if the merger is completed.” Under the deal, IPG shareholders will receive 0.344 new Omnicom shares for each IPG share they own. Post-merger, existing Omnicom shareholders will own about 60.6% of Omnicom while the former IPG shareholders will have a 39.4% stake. Stock traders’ reaction to the deal has been subdued in the month since the deal was unveiled. Omnicom shares closed Jan. 17 at $85.38, down 17.4% from the closing price on Dec. 6 (the last trading day before the deal was announced) and 20.2% below the all-time high of $107 reached in early November. Omnicom shares on Jan. 13 hit a 52-week low. Omnicom’s Jan. 17 closing price implies a value of $29.37 for IPG shares based on the exchange ratio of 0.344. The final value for IPG shareholders will be determined by Omnicom’s stock price, multiplied by 0.344, at the time the deal closes. To be sure, the ultimate value of the stock is what the combined company does following the merger. IPG shares closed Jan. 17 at $27.83, which is 4.9% below IPG’s closing price of $29.26 on Dec. 6. IPG shares on Jan. 13 hit a 52-week low. For reference, shares in rival WPP as of Jan. 17 were down 13.9% from their Dec. 6 level while shares of Publicis Groupe dropped 4.8% over that period. The Standard & Poor’s 500 index is 1.5% below the all-time high reached on Dec. 6. Become an All Access subscriber Get access to exclusive resources including Leading National Advertisers, World’s Largest Advertisers, Agency Report, Agency Review Tracker and TV Pricing Report. Click here

Inside IPG CEO Philippe Krakowsky’s $49 million golden parachute—and big new job at Omnicom

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