IPG Shareholders Veto Move to Split Chairman-Ceo Roles

26 May 2006

At its annual general meeting in New York on Thursday Interpublic Group shareholders roundly defeated two controversial proposals from dissident investors.

The first would have separated the dual roles held by chairman/ceo Michael I Roth ; the second was intended to claw back performance bonuses paid to senior IPG executives in the event that the group's accounts were subject to a downward restatement.

The result of the two ballots was music to the ears of the IPG board which had opposed both motions. According to Roth, some 88% of shareholders eligible to vote did so, either in person or by proxy.

Other decisions taken at the meeting were the adoption of a performance incentive plan, the re-election of eight directors and the reappointment of PricewaterhouseCooopers as external auditor. The meeting lasted just fifty minutes - an indication of its unexpectedly smooth passage.

The motion to separate the roles of chairman and chief executive officer was swept into oblivion with a resounding 'no' from 92% of the voting shares. IPG argued that it already had an independent presiding director, thereby negating the need for an independent chairman.

The 'Recoup Unearned Management Bonuses' proposal was defeated by an even larger margin - 94 percent - after IPG informed stockholders it had already instituted a policy to recoup bonuses if a restatement stems from wrongdoing.

During the meeting Roth referred to speculation that IPG is mulling merger of its Foote Cone & Belding and Draft networks. While stressing that no decisions had yet been taken, he floated the view that a "modern agency model" would have one profit and loss center and a single management team - or in plain English, a merger.

According to insiders, the melding could be announced by early June. Said Roth: "I want to resolve this sooner rather than later."

Data sourced from AdWeek (USA); additional content by WARC staff