Despite posting a multimillion-dollar loss for 2003, agency giant Interpublic Group has paid out over $40 million (€33.4m; £21.9m) in executive bonuses.

According to a leaked internal email, unnamed IPG bosses last month received $41.4m in bonuses for 2003, even though the company slid $451.7m into the red for the full year [WAMN: 10-Mar-04]. The ad titan has confirmed this email is genuine, and added that the final total will be higher than the figure quoted.

IPG, which has faced a number of financial and operational difficulties over the past two years, did not reward executives with any bonuses in 2002. Indeed, several senior staff relinquished over 1.2m stock options in recognition of the company's lacklustre performance [WAMN: 21-May-03].

The 2003 handouts will be formally disclosed later this week when shareholders receive a proxy statement for the group's annual meeting in May. IPG is refusing to comment on who got what until this document is released.

However, the agency group moved quickly to counter accusations it is rewarding failure. "In 2003, a number of our companies met their financial targets and others improved their performance," declared Christopher J Coughlin, IPG's chief operating officer and chief financial officer. "Separately, Interpublic made important strides in its turnaround efforts."

Coughlin added that the bonuses reflected more than just 2003 performance. "In a professional services business such as ours, it's necessary to provide incentive pay to top performers in order to retain and attract the best talent," he continued. "Given that Interpublic paid minimal bonuses in 2001 and none in 2002, the 2003 payments were appropriate."

With IPG's stock price currently making gains, analysts appear to agree with Coughlin. "Where your assets are in your talent, if you're not incentivizing your people to work hard, they might jump ship or not perform," argued Karen Lynch Ghaffari of Fitch Ratings, which recently upgraded the agency group's debt rating from negative to stable.

But shareholders may be harder to convince. "I think investors are going to have questions about what's going on," remarked Ann Yerger, deputy director for the Council of Institutional Investors. "You don't want to see great talent leave, but if performance hasn't been terrific, who are we paying to keep?"

Data sourced from: New York Times; additional content by WARC staff