Share-Based Compensation Plans

The Omnicom Group Inc. 2007 Incentive Award Plan (“2007 Plan”) provides for the award of stock options, restricted stock and other awards. Upon adoption of the 2007 Plan, no new awards can be granted under any of our prior plans. In 2010, the shareholders approved an amendment to increase the maximum number of shares available for issuance under the 2007 Plan to 17.0 million shares plus any shares awarded under the 2007 Plan or any prior plan that have been forfeited or have expired. Any share of common stock subject to an option granted under the 2007 Plan counts against the limit as one share of common stock for every one share of common stock granted as an option award. Any share of common stock subject to an award other than an option award is counted against the limit as 2.5 shares of common stock for every one share of common stock awarded. The terms of each award and the exercise date are determined by the Compensation Committee of the Board of Directors ("Compensation Committee"). The 2007 Plan does not permit the holder of an award to elect cash settlement under any circumstances. At December 31, 2011, 6,299,646 shares are available for grant under the 2007 Plan. If all shares of common stock were subject to awards other than options, shares available for grant would be 2,519,858.

Share-based employee compensation expense in 2011, 2010 and 2009, was $74.5 million, $69.3 million and $78.6 million, respectively. At December 31, 2011, unamortized share-based employee compensation that will be expensed over the next five years is $263.3 million.

Stock Options

Under the 2007 Plan, the exercise price of stock option awards may not be less than 100% of the market price of our common stock at the grant date and the option term cannot be longer than ten years from the grant date. Generally, stock option grants vest 30% on each of the first two grant date anniversaries and 40% three years from the grant date.

Stock option activity for the three years ended December 31, 2011 was:



	2011			2010			2009
	Shares		Weighted Average Exercise Price	Shares		Weighted Average Exercise Price	Shares		Weighted Average Exercise Price

Balance January 1	24,513,590		$26.64	40,832,715		$29.37	23,398,301		$36.87
Options granted under 2007 Plan	90,000		$45.05	335,000		$38.86	22,620,000		$23.73
Options exercised	(6,034,181	)	$28.17	(14,125,525	)	$33.03	(545,586	)	$31.18
Options forfeited	(268,000	)	$27.15	(2,528,600	)	$36.58	(4,640,000	)	$39.52

Balance December 31	18,301,409		$26.22	24,513,590		$26.64	40,832,715		$29.37



Options exercisable December 31	9,672,909		$27.85	7,885,090		$31.80	16,325,715		$37.46

Options outstanding and exercisable at December 31, 2011 were:



			Options Outstanding			Options Exercisable
Range of Exercise Prices			Shares	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price	Shares	Weighted Average Exercise Price

$23.40	to	$29.99	16,023,515	7.2 years	$23.72	7,945,515	$24.05
$30.00	to	$44.99	856,894	7.1 years	$37.93	371,394	$38.24
$45.00	to	$52.83	1,421,000	1.0 years	$47.30	1,356,000	$47.30

			18,301,409			9,672,909

The fair value of each option grant was determined on the grant date using the Black-Scholes option valuation model. The Black-Scholes assumptions (without adjusting for the risk of forfeiture and lack of liquidity) and the weighted average fair value per share for options granted were:



	2011				2010				2009
Expected option lives	5.0 years				5.0 years				5.0 years
Risk free interest rate	0.9	%	-	1.8%	1.8	%	-	2.6%	1.7	%	-	2.5%
Expected volatility	27.2	%	-	29.2%	24.7	%	-	27.0%	19.6	%	-	24.1%
Dividend yield	2.3% - 2.8%				1.9% - 2.4%				1.5% - 2.5%
Weighted average fair value per option granted	$9.57				$8.25				$3.62

Restricted Shares

Restricted stock activity for the three years ended December 31, 2011 was:



	2011			2010			2009

Balance January 1	3,026,086			3,471,929			4,473,981
Shares granted	4,688,716			868,273			664,217
Shares vested	(1,096,441		)	(1,089,136		)	(1,426,456		)
Shares forfeited	(165,474		)	(224,980		)	(239,813		)


Balance December 31	6,452,887			3,026,086			3,471,929




Weighted average per share fair value of shares granted	$	44.87		$	36.63		$	32.87


Weighted average per share fair value at December 31	$	43.66		$	41.79		$	44.04

The market value of the restricted stock awards on the grant date is charged to additional paid-in capital and is amortized to expense over the restriction period. Restricted shares typically vest at 20% per year, provided the employee remains employed by us. Restricted shares may not be sold, transferred, pledged or otherwise encumbered until the forfeiture restrictions lapse. Under most circumstances, the employee forfeits the shares if employment ceases prior to the end of the restriction period.

In 2011, the Compensation Committee granted 413,909 performance restricted stock units ("PRSUs") at a weighted average grant price of $48.56 to certain employees. Each PRSU represents the right to receive one share of our common stock on vesting. The ultimate number of PRSUs received by the employee depends on the Company's average return on equity over the three year period 2011 through 2013 compared to the average return on equity of a peer group of five principal competitors over the same period. The PRSUs vest over five years. One half of the PRSUs have a service only vesting condition and compensation expense is recognized on a straight-line basis over the service period. The other half of the PRSUs have service and performance vesting conditions and compensation expense is recognized on a graded-vesting basis. Over the performance period, the recognition of compensation expense is adjusted upward or downward based on our estimate of the probability of achievement of the performance target for the portion of the awards subject to the performance vesting conditions. At December 31, 2011, we expect that a substantial portion of the PRSUs with the performance condition feature will vest.

ESPP

We have an employee stock purchase plan (“ESPP”) that enables employees to purchase our common stock through payroll deductions over each plan quarter at 95% of the market price on the last trading day of the plan quarter. Purchases are limited to 10% of eligible compensation as defined by the Employee Retirement Income Security Act of 1974 (“ERISA”). During 2011, 2010 and 2009, employees purchased 161,929 shares, 267,931 shares and 418,237 shares, respectively, all of which were treasury shares, for which $7.0 million, $9.7 million and $12.0 million, respectively, was paid to us. At December 31, 2011, 9,555,685 shares are available for the ESPP.