Bcom3 pay plan aims to keep execs through a merger deal

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Details of acquisitions and executive bonuses surfaced last week as agency companies began filing annual statements with the Securities and Exchange Commission.

In its filing, BCom3 Group revealed it adopted a compensation plan that will grant several top executives lump-sum payments and continued benefits if they have to the leave the company within three years of a merger, such as the proposed acquisition by Publicis Groupe.

The plan, adopted in January, grants President Craig Brown and Christian Kimball, chief legal officer, a sum equal to twice their annual salaries. Eileen Kamerick, chief financial officer, and Elizabeth Reeves, global human-resources director, are to get three times their salaries if any leave following a merger. All will also receive benefits for the same period and an amount equal to their largest annual bonuses on the year of departure or the three previous years.

CEO Roger Haupt has the most generous agreement, including a severance sum equal to four years' salary and the same bonus and benefits. Bcom3's board also granted him a $475,000 incentive for 2001 "based on Mr. Haupt's individual performance since the formation of Bcom3 in January 2000, including his role in helping our board formulate strategic alternatives culminating in the proposed merger with Publicis."

incentives not uncommon

Such compensation plans are not unusual, said Lauren Rich Fine, advertising analyst at Merrill Lynch & Co., New York, and are put in place to retain key executives and ensure a smooth transition for the buyer.

Omnicom Group saved its executive compensation details for its proxy statement. But Omnicom spelled out some details on acquisitions.

Omnicom disclosed it spent $844.7 million on acquisitions during 2001, including $156.8 million on payments for deals done before 2001 and $687.9 million in the acquisition of 39 companies worldwide. That compares with $665.9 million on acquisitions in 2000 and $183.9 million on payments for previous years.

Omnicom also tagged $280.6 million of the proceeds from a March $900 million zero-coupon convertible notes issue to buy back stock.

The debt-plus-buyback combination is not common, Ms. Fine said. She said she heard investors describe it as a "happy meal" for its two-in-one nature. Buyers of the convertibles will typically short the underlying stock-betting it will drop in the short-term-to maximize their investment, so the company buys back its own stock as a hedge to protect its stock price.

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