-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, aH3wsRM2Xj1kgLmmxmCYWjv4QPit9LhKmvvBUeW71bszxdQ7kHc6+fvyHdFH+Ek3 7Mhvo5MUsTK3gDESBlkEdA== 0000891554-94-000031.txt : 19940331 0000891554-94-000031.hdr.sgml : 19940331 ACCESSION NUMBER: 0000891554-94-000031 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OMNICOM GROUP INC CENTRAL INDEX KEY: 0000029989 STANDARD INDUSTRIAL CLASSIFICATION: 7311 IRS NUMBER: 131514814 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-10551 FILM NUMBER: 94518829 BUSINESS ADDRESS: STREET 1: 437 MADISON AVE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2124153600 FORMER COMPANY: FORMER CONFORMED NAME: DOYLE DANE BERNBACH GROUP INC DATE OF NAME CHANGE: 19861117 FORMER COMPANY: FORMER CONFORMED NAME: DOYLE DANE BERNBACH INTERNATIONAL INC DATE OF NAME CHANGE: 19850604 FORMER COMPANY: FORMER CONFORMED NAME: DOYLE DANE BERNBACH INC DATE OF NAME CHANGE: 19781226 10-K 1 ANNUAL REPORT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- FORM 10-K ANNUAL REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended: December 31, 1993 Commission File Number: 1-10551 -------------------- OMNICOM GROUP INC. (Exact name of registrant as specified in its charter) New York 13-1514814 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 437 Madison Avenue, New York, NY 10022 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 415-3600 Securities Registered Pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- ------------------- Common Stock, $.50 Par Value New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (X) At March 15, 1994, there were 33,196,570 shares of Common Stock outstanding; the aggregate market value of the voting stock held by nonaffiliates at March 15, 1994 was approximately $1,576,200,000. Indicate the number of shares outstanding of each of the registrant's classes of stock, as of the latest practicable date. Class Outstanding at March 15, 1994 Common Stock, $.50 Par Value 33,196,570 Preferred Stock, $1.00 Par Value NONE DOCUMENTS INCORPORATED BY REFERENCE Certain portions of the Registrant's definitive proxy statement relating to its annual meeting of shareholders scheduled to be held on May 24, 1994 are incorporated by reference into Part III of this Report. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- OMNICOM GROUP INC. ------------------ Index to Annual Report on Form 10-K Year Ended December 31, 1993
Page ---- PART I Item 1. Business ............................................................................... 1 Item 2. Properties ............................................................................. 4 Item 3. Legal Proceedings ...................................................................... 5 Item 4. Submission of Matters to a Vote of Security Holders .................................... 5 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters .................. 6 Item 6. Selected Financial Data ................................................................ 7 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................................................ 7 Item 8. Financial Statements and Supplementary Data ............................................ 9 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ................................................................ 9 PART III Item 10. Directors and Executive Officers of the Registrant ..................................... 10 Item 11. Executive Compensation ................................................................. 10 Item 12. Security Ownership of Certain Beneficial Owners and Management ......................... 10 Item 13. Certain Relationships and Related Transactions ......................................... 10
The information called for by Items 10, 11, 12 and 13, to the extent not included in this document, is incorporated herein by reference to such information to be included under the captions "Election of Directors," "Executive Compensation," "Directors' Compensation" and "Certain Transactions with Management" in the Company's definitive proxy statement which is expected to be filed by April 8, 1994. PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ....................... 11
PART I Item 1. Business Omnicom Group Inc., through its wholly and partially-owned companies (hereinafter collectively referred to as the "Agency" or "Company"), operates advertising agencies which plan, create, produce and place advertising in various media such as television, radio, newspaper and magazines. The Agency offers its clients such additional services as marketing consultation, consumer market research, design and production of merchandising and sales promotion programs and materials, direct mail advertising, corporate identification, and public relations. The Agency offers these services to clients worldwide on a local, national, pan-regional or global basis. Operations cover the major regions of North America, the United Kingdom, Continental Europe, the Middle East, Africa, Latin America, the Far East and Australia. In both 1993 and 1992, 52% of the Agency's billings came from its non-U.S. operations. (See "Financial Statements and Supplementary Data") According to the unaudited industry-wide figures published in the trade journal, Advertising Age, in 1993 Omnicom Group Inc. was ranked as the third largest advertising agency group worldwide. The Agency operates three separate, independent agency networks: The BBDO Worldwide Network, the DDB Needham Worldwide Network and the TBWA International Network. The Agency also operates independent agencies, Altschiller Reitzfeld, and Goodby, Berlin and Silverstein, and certain marketing service and specialty advertising companies through Diversified Agency Services ("DAS"). The BBDO Worldwide, DDB Needham Worldwide and TBWA International Networks General BBDO Worldwide, DDB Needham Worldwide and TBWA International, by themselves and through their respective subsidiaries and affiliates, independently operate advertising agency networks worldwide. Their primary business is to create marketing communications for their clients' goods and services across the total spectrum of advertising and promotion media. Each of the agency networks has its own clients and competes with each other in the same markets. The BBDO Worldwide, DDB Needham Worldwide and TBWA International agencies typically assign to each client a group of advertising specialists which may include account managers, copywriters, art directors and research, media and production personnel. The account manager works with the client to establish an overall advertising strategy for the client based on an analysis of the client's products or services and its market. The group then creates and arranges for the production of the advertising and/or promotion and purchases time, space or access in the relevant media in accordance with the client's budget. BBDO Worldwide Network The BBDO Worldwide Network operates in the United States through BBDO Worldwide which is headquartered in New York and has full-service offices in Los Angeles and San Francisco, California; Atlanta, Georgia; Chicago, Illinois; Detroit, Michigan; and Minneapolis, Minnesota. The BBDO Worldwide Network operates internationally through subsidiaries in Austria, Belgium, Brazil, Canada, Finland, France, Germany, Greece, Hong Kong, Italy, Malaysia, Mexico, the Netherlands, Peru, Poland, Portugal, Puerto Rico, Russia, Singapore, Spain, Sweden, Switzerland, Taiwan and the United Kingdom; and through affiliates located in Argentina, Australia, Chile, Croatia, the Czech Republic, Denmark, Egypt, El Salvador, Guatemala, Honduras, Hungary, India, Lebanon, Kuwait, New Zealand, Norway, Panama, the Philippines, Romania, Saudi Arabia, the Slovak Republic, Sweden, Turkey, the United Kingdom, United Arab Emirates, Uruguay, and Venezuela; and through joint ventures in China and Japan. The BBDO Worldwide Network uses the services of associate agencies in Colombia, Ecuador, Indonesia, Korea, Pakistan and Thailand. DDB Needham Worldwide Network The DDB Needham Worldwide Network operates in the United States through DDB Needham Worldwide which is headquartered in New York and has full-service offices in Los Angeles, California; Dallas, Texas; Honolulu, Hawaii; Chicago, Illinois; and Seattle, Washington. 1 The DDB Needham Worldwide Network operates internationally through subsidiaries in Australia, Austria, Belgium, Canada, China, the Czech Republic, Denmark, France, Germany, Greece, Hong Kong, Hungary, Italy, Japan, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Singapore, the Slovak Republic, Spain, Sweden, Thailand and the United Kingdom; and through affiliates located in Brazil, Estonia, Finland, Germany, India, Korea, Malaysia, the Philippines, Switzerland, Taiwan and Thailand. The DDB Needham Worldwide Network uses the services of associate agencies in Argentina, Chile, Colombia, Costa Rica, Egypt, Indonesia, Ireland, Peru, Saudi Arabia, Turkey, United Arab Emirates, Venezuela and in Denver, Colorado. TBWA International Network The TBWA International Network operates in the United States through TBWA Advertising which is headquartered in New York and through TBWA Switzer Wolfe Advertising in St. Louis, Missouri. The TBWA International Network operates internationally through subsidiaries in Belgium, France, Germany, Italy, the Netherlands, Spain, Switzerland, and the United Kingdom; and through affiliates located in Denmark, South Africa and Sweden. The TBWA International Network uses the services of associate agencies in Austria, Canada, Finland, Greece, Japan, Korea, Mexico, Norway, Portugal and Turkey. Diversified Agency Services DAS is the Company's Marketing Services and Specialty Advertising division whose agencies' mission is to provide customer driven marketing communications coordinated to the client's benefit. The division offers marketing services including sales promotion, public relations, direct and database marketing, corporate and brand identity, graphic arts, merchandising/point-of-purchase; and specialty advertising including financial, healthcare and recruitment advertising. DAS agencies headquartered in the United States include: Harrison, Star, Wiener & Beitler, Inc., The Schechter Group, Inc., Kallir, Philips, Ross, Inc., RC Communications, Inc., Merkley Newman Harty Inc. and Lavey/Wolff/Swift, Inc., in New York; Doremus & Company, Gavin Anderson & Company Worldwide, Inc., Porter Novelli, Inc., Bernard Hodes Advertising, Inc., and Rapp Collins Worldwide Inc., all in various cities and headquartered in New York; Baxter, Gurian & Mazzei, Inc., in Beverly Hills, California; Frank J. Corbett, Inc., in Chicago, Illinois; Thomas A. Schutz Co., Inc. in Morton Grove, Illinois; Rainoldi, Kerzner & Radcliffe, Inc. in San Francisco, California and Alcone Sims O'Brien, Inc., in Irvine, California and Mahwah, New Jersey. DAS operates in the United Kingdom through subsidiaries which include Countrywide Communications Group Ltd., CPM Field Marketing Ltd., Granby Marketing Services Ltd., Headway, Home and Law Publishing Group Ltd., Interbrand Ltd., Product Plus London Ltd., Specialist Publications (UK) Ltd., The Anvil Consultancy Ltd. and Colour Solutions Ltd. In addition, DAS operates internationally with subsidiaries and affiliates in Australia, Belgium, Canada, France, Germany, Hong Kong, Ireland, Italy, Japan, Mexico, Scotland, Spain, Sweden and Switzerland. Omnicom Group Inc. As the parent company of BBDO Worldwide, DDB Needham Worldwide, TBWA International, the DAS Group, Goodby, Berlin and Silverstein, Inc., and Altschiller Reitzfeld, Inc., the Company, through its wholly-owned subsidiary Omnicom Management Inc., provides a common financial and administrative base for the operating groups. The Company oversees the operations of each group through regular meetings with their respective top-level management. The Company sets operational goals for each of the groups and evaluates performance through the review of monthly operational and financial reports. The Company provides its groups with centralized services designed to coordinate financial reporting and controls, real estate planning and to focus corporate development objectives. The Company develops consolidated services for its agencies and their clients. For example, the Company participated in forming The Media Partnership, which consolidates certain media buying activities in Europe in order to obtain cost savings for clients. 2 Clients The clients of the Agency include major industrial, financial and service industry companies as well as smaller, local clients. Among its clients are Anheuser-Busch, Apple Computer, Chrysler Corporation, Delta Airlines, General Mills, Gillette, GTE, Henkel, McDonald's, PepsiCo., Volkswagen and The Wm. Wrigley Jr. Company. The Agency's ten largest clients accounted for approximately 18% of 1993 billings. The majority of these have been clients for more than ten years. The Agency's largest client accounted for less than 5% of 1993 billings. Revenues Commissions charged on media billings are the primary source of revenues for the Agency. Commission rates are not uniform and are negotiated with the client. In accordance with industry practice, the media source typically bills the Agency for the time or space purchased and the Agency bills its client for this amount plus the commission. The Agency typically requires that payment for media charges be received from the client before the Agency makes payments to the media. In some instances a member of the Omnicom Group, like other advertising agencies, is at risk in the event that its client is unable to pay the media. The Agency's advertising networks also generate revenues in arranging for the production of advertisements and commercials. Although, as a general matter, the Agency does not itself produce the advertisements and commercials, the Agency's creative and production staff directs and supervises the production company. The Agency bills the client for production costs plus a commission. In some circumstances, certain production work is done by the Agency's personnel. In some cases, fees are generated in lieu of commissions. Several different fee arrangements are used depending on client and individual agency needs. In general, fee charges relate to the cost of providing services plus a markup. The DAS Group primarily charges fees for its various specialty services, which vary in type and scale, depending upon the service rendered and the client's requirements. Advertising agency revenues are dependent upon the marketing requirements of clients and tend to be highest in the second and fourth quarters of the fiscal year. Other Information For additional information concerning the contribution of international operations to commissions and fees and net income see Note 5 of the Notes to Consolidated Financial Statements. The Agency is continuously developing new methods of improving its research capabilities, to analyze specific client requirements and to assess the impact of advertising. In the United States, approximately 136 people on the Agency's staff were employed in research during the year and the Agency's domestic research expenses approximated $13,137,000. Substantially all such expenses were incurred in connection with contemporaneous servicing of clients. The advertising business is highly competitive and accounts may shift agencies with comparative ease, usually on 90 days' notice. Clients may also reduce advertising budgets at any time for any reason. An agency's ability to compete for new clients is affected in some instances by the policy, which many advertisers follow, of not permitting their agencies to represent competitive accounts in the same market. As a result, increasing size may limit an agency's potential for securing certain new clients. In the vast majority of cases, however, the separate, independent identities of BBDO Worldwide, DDB Needham Worldwide and TBWA International and the independent agencies within the DAS Group have enabled the Agency to represent competing clients. BBDO Worldwide, DDB Needham Worldwide, TBWA International and the DAS Group have sought, and as part of the Agency's operating segments will seek, new business by showing potential clients examples of advertising campaigns produced and by explaining the variety of related services offered. The Agency competes in the United States and abroad with a multitude of full service and special service agencies. In addition to the usual risks of the advertising agency business, international operations are subject to the risk of currency exchange fluctuations, exchange control restrictions and to actions of governmental authorities. 3 Employees The business success of the Agency is, and will continue to be, highly dependent upon the skills and creativity of its creative, research, media and account personnel and their relationships with clients. The Agency believes its operating groups have established reputations for creativity and marketing expertise which attract, retain and stimulate talented personnel. There is substantial competition among advertising agencies for talented personnel and all agencies are vulnerable to adverse consequences from the loss of key individuals. Employees are generally not under employment contracts and are free to move to competitors of the Agency. The Company believes that its compensation arrangements for its key employees, which include stock options, restricted stock and retirement plans, are highly competitive with those of other advertising agencies. As of December 31, 1993, the Agency, excluding unconsolidated companies, employed approximately 14,400 persons, of which approximately 6,100 were employed in the United States and approximately 8,300 were employed in its international offices. Government Regulation The advertising business is subject to government regulation, both within and outside the United States. In the United States, federal, state and local governments and their agencies and various consumer groups have directly or indirectly affected or attempted to affect the scope, content and manner of presentation of advertising. The continued activity by government and by consumer groups regarding advertising may cause further change in domestic advertising practices in the coming years. While the Company is unable to estimate the effect of these developments on its U.S. business, management believes the total volume of advertising in general media in the United States will not be materially reduced due to future legislation or regulation, even though the form, content, and manner of presentation of advertising may be modified. In addition, the Company will continue to assure that its management and operating personnel are aware of and are responsive to the possible implications of such developments. Item 2. Properties Substantially all of the Company's offices are located in leased premises. The Company has continued a program to consolidate leased premises. Management has obtained subleases for most of the premises vacated. Where appropriate, management has established reserves for the difference between the cost of the leased premises that were vacated and anticipated sublease income. Domestic The Company's corporate office occupies approximately 25,000 sq. ft. of space at 437 Madison Avenue, New York, New York under a lease expiring in the year 2010. BBDO Worldwide occupies approximately 265,000 sq. ft. of space at 1285 Avenue of the Americas, New York, New York under a lease expiring in the year 2012, which includes options for additional growth of the agency. DDB Needham Worldwide occupies approximately 211,000 sq. ft. of space at 437 Madison Avenue, New York, New York under leases expiring in the year 2010, which include options for additional growth of the agency. TBWA International occupies approximately 51,000 sq. ft. of space at 292 Madison Avenue, New York, New York under a lease expiring in the year 2004, which includes options for additional growth of the agency. The Agency's other full-service offices in Atlanta, Beverly Hills, Chicago, Dallas, Detroit, Honolulu, Irvine, Los Angeles, Mahwah, Minneapolis, Morton Grove, New York, San Francisco, Seattle and St. Louis and service offices at various other locations occupy approximately 1,780,000 sq. ft. of space under leases with varying expiration dates. International The Company's international subsidiaries in Australia, Austria, Belgium, Brazil, Canada, China, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, Italy, Japan, Malaysia, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Puerto Rico, Russia, Singapore, the Slovak Republic, Spain, Sweden, Switzerland, Taiwan, Thailand and the United Kingdom occupy premises under leases with various expiration dates. Item 3. Legal Proceedings The Agency has no material pending legal proceedings, other than ordinary routine litigation incidental to its business. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the last quarter of 1993. 4 Executive Officers of the Company The individuals named below are Executive Officers of the Company:
Name Position Age ----- -------- --- Bruce Crawford................. President, Chief Executive Officer of Omnicom Group Inc. 65 Fred J. Meyer ................. Chief Financial Officer of Omnicom Group Inc. 63 Dennis E. Hewitt............... Treasurer of Omnicom Group Inc. 49 Dale A. Adams.................. Controller of Omnicom Group Inc. 35 Raymond E. McGovern............ Secretary, General Counsel of Omnicom Group Inc. 66 Allen Rosenshine............... Chairman, Chief Executive Officer of BBDO Worldwide Inc. 55 James A. Cannon ............... Vice Chairman, Chief Financial Officer of BBDO Worldwide Inc. 55 Keith L. Reinhard.............. Chairman, Chief Executive Officer of DDB Needham Worldwide Inc. 59 William G. Tragos.............. Chairman, Chief Executive Officer of TBWA International B.V. 59 John D. Wren................... Chairman, Chief Executive Officer of Diversified Agency Services 41
John L. Bernbach, Martin Boase and Peter I. Jones ceased to be Executive Officers of the Company in 1993 by reason of a change in their responsibilities. Effective January 1, 1994, Keith L. Bremer resigned his position as Treasurer of the Company to become Chief Financial Officer of DDB Needham Worldwide Inc. Effective January 1, 1994, Dennis E. Hewitt was promoted to Treasurer of the Company. Mr. Hewitt joined the Company in May 1988 as Assistant Treasurer. William G. Tragos became an Executive Officer of the Company upon the Company's acquisition of TBWA International B.V. in May 1993. Mr. Tragos is one of the founding partners of TBWA International B.V. and has served as the Chairman and Chief Executive Officer since its formation. John D. Wren became an Executive Officer of the Company upon his appointment as Chief Executive Officer of Diversified Agency Services in May 1993. Mr. Wren had served as President of Diversified Agency Services since February 1992, having previously served as its Executive Vice President and General Manager from January 1991 through February 1992, and as its Senior Vice President and Chief Financial Officer from September 1986 through December 1990. Dale A. Adams was promoted to Controller of the Company in July 1992. Mr. Adams joined the Company in July 1991 after ten years with Coopers & Lybrand, where he served as a general practice manager from 1987 until joining the Company. Raymond E. McGovern has served as Secretary and General Counsel of the Company since September 1986, having previously served as Secretary and General Counsel of BBDO Worldwide Inc. (then named BBDO International, Inc.) for more than 10 years. Similar information with respect to the remaining Executive Officers of the Company will be found in the Company's definitive proxy statement expected to be filed April 8, 1994. The Executive Officers of the Company are elected annually following the Annual Meeting of the Shareholders of their respective employers. 5 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Price Range of Common Stock and Dividend History The Company's Common Stock is listed on the New York Stock Exchange under the symbol "OMC". The table below shows the range of reported last sale prices on the New York Stock Exchange Composite Tape for the Company's common stock for the periods indicated and the dividends paid per share on the common stock for such periods. Dividends Paid Per Share of High Low Common Stock ---- --- ------------ 1992 First Quarter .............. $36 3/4 $31 1/4 $.275 Second Quarter ............. 36 5/8 32 .310 Third Quarter .............. 35 7/8 32 .310 Fourth Quarter ............. 41 7/8 34 3/4 .310 1993 First Quarter .............. 47 1/2 38 3/8 .310 Second Quarter ............. 47 1/4 38 1/4 .310 Third Quarter .............. 46 1/4 37 .310 Fourth Quarter ............. 46 1/2 41 1/2 .310 The Company is not aware of any restrictions on its present or future ability to pay dividends. However, in connection with certain borrowing facilities entered into by the Company and its subsidiaries (see Note 7 of the Notes to Consolidated Financial Statements), the Company is subject to certain restrictions on its current ratio, tangible net worth, and the ratio of net cash flow to consolidated indebtedness. On January 24, 1994 the Board of Directors declared a regular quarterly dividend of $.31 per share of common stock, payable April 1, 1994 to holders of record on March 18, 1994. Approximate Number of Equity Security Holders Approximate Number of Record Holders Title of Class on March 15, 1994 -------------- --------------------- Common Stock, $.50 par value ............. 2,672 Preferred Stock, $1.00 par value ......... None 6 Item 6. Selected Financial Data The following table sets forth selected financial data of the Company and should be read in conjunction with the consolidated financial statements which begin on page F-1.
(Dollars in Thousands Except Per Share Amounts) ------------------------------------------------------------------------------ 1993 1992 1991 1990 1989 ---- ---- ---- ---- ---- For the year: Commissions and fees ....................... $1,516,475 $1,385,161 $1,236,158 $1,178,233 $1,007,173 Net income ................................. 85,345 69,298 57,052 52,009 46,794 Earnings per common share: Primary ................................. 2.79 2.45 2.08 2.01 1.81 Fully diluted ........................... 2.62 2.31 2.01 1.94 1.71 Dividends declared per common share ................................... 1.24 1.21 1.10 1.07 .98 At year end: Total assets ............................... 2,289,863 1,951,950 1,885,894 1,748,529 1,547,599 Long-term obligations: Long-term debt .......................... 278,312 235,129 245,189 278,960 267,327 Deferred taxes payable .................. -- 8,411 8,932 6,552 11,723 Deferred compensation and other liabilities .................... 56,933 51,919 31,355 25,365 23,334
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations In 1993, domestic revenues from commissions and fees increased 9 percent. The effect of acquisitions, net of divestitures, accounted for a 4 percent increase. The remaining 5 percent increase was due to net new business gains and higher spending from existing clients. Domestic revenues increased 2 percent in both 1992 and 1991, primarily as a result of net new business gains and higher spending from existing clients. In 1993, international revenues increased 10 percent. The effect of the acquisition of TBWA International B.V. and several marketing services companies in the United Kingdom, net of divestitures, accounted for an 18 percent increase in international revenues. The strengthening of the U.S. dollar against several major international currencies relevant to the Company's non-U.S. operations decreased revenues by 12 percent. The increase in revenues, due to net new business gains and higher spending from existing clients, was 4 percent. In 1992, international revenues increased 25 percent, of which the effect of the acquisition of McKim Baker Lovick BBDO in Canada and the purchase of additional shares in several companies which were previously affiliates of the Company accounted for 14 percent. The remaining increase was due to net new business gains and higher spending from existing clients. The fourth quarter strengthening of the U.S. dollar did not significantly impact the revenues for the year. In 1991, international revenues increased 9 percent, of which the effect of the acquisition of Valin Pollen in the United Kingdom, the purchase of additional shares in several companies which were previously affiliates of the Company, offset by the merger of BBDO's agency in the United Kingdom into Abbott Mead Vickers. BBDO Ltd., accounted for 4 percent. The strengthening of the U.S. dollar decreased international revenues by 3 percent in 1991. The remaining increase was due to net new business gains and higher spending from existing clients. In 1993, worldwide operating expenses increased 9 percent. Acquisitions, net of divestitures during the year, accounted for a 12 percent increase in worldwide operating expenses. The strengthening of the U.S. dollar against several international currencies decreased worldwide operating expenses by 6 percent. The remaining increase was caused by normal salary increases and growth 7 in out-of-pocket expenditures to service the increased revenue base. Net foreign exchange gains did not significantly impact operating expenses for the year. In 1992, worldwide operating expenses, before the special charge, increased 12 percent. Acquisitions, net of divestitures during the year, accounted for 5 percent of the increase. The remaining increase was caused by normal salary increases and growth in out-of-pocket expenditures to service the increased revenue base. Foreign exchange gains did not significantly impact total operating expenses for the year. The ratio of worldwide operating expenses, before the special charge, as a percent of commissions and fees improved slightly over 1991. In 1991, worldwide operating expenses, increased 5 percent over 1990 levels. The ratio of worldwide operating expenses, excluding non-recurring items, as a percent of commissions and fees did not change significantly in 1991. Foreign exchange gains were comparable to those reported in 1990. Gains, net of losses, from the sales of equity interests in certain companies, together with other non-recurring items did not have a significant effect on the 1991 results. Interest expense in 1993 is comparable to 1992. Interest and dividend income decreased in 1993 by $2.2 million. This decrease was primarily due to lower average amounts of cash and marketable securities invested during the year and lower average interest rates on amounts invested. Interest expense in 1992 is comparable to 1991. Interest and dividend income decreased by $1.4 million in 1992. This decrease was primarily due to lower average funds available for investment during the year and declining interest rates in certain countries. Interest expense increased in 1991 by $1.3 million. Interest and dividend income increased by $2.8 million in 1991. This increase was primarily due to an increase of funds available for investment overseas in markets where interest rates were generally above those in the United States. In 1993, the effective tax rate decreased to 42.0%. This decrease primarily reflects a lower international effective tax rate caused by fewer international operating losses with no associated tax benefit, partially offset by an increased domestic federal tax rate. In 1992, the effective tax rate of 43.6% was comparable to the 1991 effective tax rate of 44%. In 1993, consolidated net income increased 23 percent. This increase is the result of revenue growth, margin improvement, an increase in equity income and a decrease in minority interest expense. Operating margin increased to 11.2 percent in 1993 from 11.1 percent in 1992. This increase was the result of greater growth in commission and fee revenue than the growth in operating expenses. The increase in equity income is the result of improved net income at companies which are less than 50 percent owned. The decrease in minority interest expense is primarily due to the acquisition of certain minority interests in 1993 and lower earnings by companies in which minority interests exist. In 1993, the incremental impact of acquisitions, net of divestitures, accounted for 1 percent of the increase in consolidated net income, while the strengthening of the U.S. dollar against several international currencies decreased consolidated net income by 6 percent. Consolidated net income increased 21 percent in 1992. This increase is a result of revenue growth and margin improvement. Operating margin, before the first quarter special charge discussed below, increased to 11.1 percent in 1992 from 10.9 percent in 1991. This increase was the result of greater growth in commissions and fees than the growth in operating expenses. In 1992, the incremental impact of acquisitions, net of divestitures, accounted for 6 percent of the increase in consolidated net income. Consolidated net income increased 10 percent in 1991. This increase is a result of revenue growth, margin improvement, lower net interest costs and a reduction in the effective tax rate. Operating margin, which excludes net interest expense, increased to 10.9 percent in 1991 from 10.8 percent in 1990, reflecting the greater growth of commissions and fees as compared to operating expenses. The reduction in net interest expense also contributed to an increase in the Net Income Before Tax margin from 8.7 percent to 9.1 percent. The impact of net non-recurring items in 1991 did not contribute towards net income growth. In 1991, the incremental effect of acquisitions net of dispositions had an adverse effect of 5 percent on net income. 8 At December 31, 1993, accounts payable increased by $131.3 million from December 31, 1992. This increase was primarily due to an increased volume of activity resulting from business growth and acquisitions during the year and differences in the dates on which payments to media and other suppliers became due in 1993 compared to 1992. In 1992, the Company adopted two new accounting principles which had a net favorable cumulative after tax effect of $3.8 million. At the same time, the Company recorded a special charge to provide for future losses related to certain leased property. The combination of the favorable impact of the adoption of the new accounting principles and the after tax impact of the special charge had no effect on 1992 consolidated net income. Effective January 1, 1994, the Company will adopt Statement of Financial Accounting Standards No. 112 "Employers' Accounting for Postemployment Benefits" ("SFAS No. 112"). The Company estimates that the adoption of SFAS No. 112 will result in an unfavorable after tax effect on net income of approximately $27 million. The current economic conditions in the Company's major markets would indicate varying growth rates in advertising expenditures in 1994. The Company anticipates slow growth rates in certain European economies and improved growth rates in the United States, the United Kingdom and Australia. However, the Company believes that it is properly positioned should the anticipated improved growth rates not occur. Capital Resources and Liquidity Cash and cash equivalents increased $62 million during 1993 to $175 million at December 31, 1993. The Company's positive net cash flow provided by operating activities was enhanced by an improvement in the relationship between the collection of accounts receivable and the payment of obligations to media and other suppliers. After annual cash outlays for dividends paid to shareholders and minority interests and the repurchase of the Company's common stock for employee programs, the balance of the cash flow was used to fund acquisitions, make capital expenditures, repay debt obligations and invest in marketable securities. Cash was also raised from the issuance of $144 million of 4.5%/6.25% Step-Up Convertible Subordinated Debentures due 2000, the net proceeds of which were used for general corporate purposes, including, to reduce borrowings under the Company's commercial paper program. On August 9, 1993, the Company issued a Notice of Redemption for the outstanding $85 million of its 7% Convertible Subordinated Debentures due 2013. Prior to the October 8, 1993 redemption date, debenture holders elected to convert all of their outstanding debentures into common stock of the Company at a conversion price of $25.75 per common share. The Company maintains relationships with a number of banks worldwide, which have extended unsecured committed lines of credit in amounts sufficient to meet the Company's cash needs. At December 31, 1993, the Company had $359 million in committed lines of credit, comprised of a $200 million, two and one-half year revolving credit agreement and $159 million in unsecured credit lines, principally outside of the United States. Of the $359 million in committed lines, $27 million were used at December 31, 1993. Management believes the aggregate lines of credit available to the Company are adequate to support its short-term cash requirements for dividends, capital expenditures and maintenance of working capital. The Company anticipates that the year end cash position, together with the future cash flows from operations and funds available under existing credit facilities will be adequate to meet its long-term cash requirements as presently contemplated. Item 8. Financial Statements and Supplementary Data The financial statements and supplementary data required by this item appear beginning on page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 9 PART III Item 10. Directors and Executive Officers of the Registrant Information with respect to the directors of the Company is incorporated by reference to the Company's definitive proxy statement expected to be filed by April 8, 1994. Information regarding the Company's executive officers is set forth in Part I of this Form 10-K. Item 11. Executive Compensation Incorporated by reference to the Company's definitive proxy statement expected to be filed by April 8, 1994. Item 12. Security Ownership of Certain Beneficial Owners and Management Incorporated by reference to the Company's definitive proxy statement expected to be filed by April 8, 1994. Item 13. Certain Relationships and Related Transactions Incorporated by reference to the Company's definitive proxy statement expected to be filed by April 8, 1994. 10 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K Page ---- (a) 1.Financial Statements: Report of Management ............................................ F-1 Report of Independent Public Accountants ........................ F-2 Consolidated Statements of Income for the three years ended December 31, 1993 ...................................... F-3 Consolidated Balance Sheets at December 31, 1993 and 1992 ....... F-4 Consolidated Statements of Shareholders' Equity for the three years ended December 31, 1993 .......................... F-5 Consolidated Statements of Cash Flows for the three years ended December 31, 1993 ...................................... F-6 Notes to Consolidated Financial Statements ...................... F-7 Quarterly Results of Operations (Unaudited) ..................... F-16 2.Financial Statement Schedules: For the three years ended December 31, 1993: Schedule II--Amounts Receivable from Related Parties, Underwriters, Promoters, and Employees Other Than Related Parties .................................. S-1 Schedule VIII--Valuation and Qualifying Accounts ............... S-3 Schedule IX--Short-Term Borrowings ............................. S-4 Schedule X--Supplementary Income Statement Information ......... S-5 All other schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto. 3. Exhibits: (3)(i) Articles of Incorporation. Incorporated by reference to the 1986 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 1987. (ii) By-laws. Incorporated by reference to the 1987 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 1988. (4) Instruments Defining the Rights of Security Holders, Including Indentures. 4.1 Copy of Registrant's 6 1/2% Convertible Subordinated Debentures due 2004, including the indenture, filed as Exhibit 4.2 to Omnicom Group Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1989, is incorporated herein by reference. 11 4.2 Copy of Registrant's 4.5%/6.25% Step-Up Convertible Subordinated Debentures due 2000, filed as Exhibit 4.3 to Omnicom Group Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1993, is incorporated herein by reference. (10) Material Contracts. Management Contracts, Compensatory Plans, Contracts or Arrangements. 10.1 Standard Form of Severance Compensation Agreement incorporated by reference to BBDO International Inc.'s Form S-1 Registration Statement filed with the Securities and Exchange Commission on September 28, 1973, is incorporated herein by reference. 10.2 Copy of Registrant's 1987 Stock Plan, filed as Exhibit 10.26 to Omnicom Group Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1987, is incorporated herein by reference. 10.3 Copy of Registrant's Profit-Sharing Retirement Plan dated May 16, 1988, filed as Exhibit 10.24 to Omnicom Group Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1988, is incorporated herein by reference. 10.4 Copy of Employment Agreement dated March 20, 1989, between Peter I. Jones and Boase Massimi Pollitt plc, filed as Exhibit 10.22 to Omnicom Group Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1989, is incorporated herein by reference. 10.5 Standard Form of the Registrant's 1988 Executive Salary Continuation Plan Agreement, filed as Exhibit 10.24 to Omnicom Group Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1989, is incorporated herein by reference. 10.6 Standard Form of the Registrant's Indemnification Agreement with members of Registrant's Board of Directors, filed as Exhibit 10.25 to Omnicom Group Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1989, is incorporated herein by reference. 10.7 Copy of DDB Needham Worldwide Joint Savings Plan, effective as of May 1, 1989, filed as Exhibit 10.26 to Omnicom Group Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1989, is incorporated herein by reference. 10.8 Amendment to Registrant's Profit-Sharing Retirement Plan, listed as Exhibit 10.3 above, adopted February 4, 1991, filed as Exhibit 10.28 to Omnicom Group Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1990, is incorporated herein by reference. 10.9 Amendment to Registrant's Profit-Sharing Retirement Plan listed as Exhibit 10.3 above, adopted on December 7, 1992, filed as Exhibit 10.13 to Omnicom Group Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1992, is incorporated herein by reference. 10.10 Amendment to Registrant's Profit-Sharing Retirement Plan listed as Exhibit 10.3 above, adopted on July 1, 1993. 10.11 Copy of Severance Agreement dated July 6, 1993, between Keith Reinhard and DDB Needham Worldwide Inc. 10.12 Copy of Severance Agreement dated July 6, 1993, between John L. Bernbach and DDB Needham Worldwide Inc. 10.13 Copy of Employment Agreement dated May 26, 1993, between William G. Tragos and TBWA International B.V. 10.14 Copy of Deferred Compensation Agreement dated October 12, 1984, between William G. Tragos and TBWA Advertising Inc. 12 Other Material Contracts. 10.15 Copy of $200,000,000 Amended and Restated Credit Agreement, dated January 1, 1993, between Omnicom Finance Inc., Swiss Bank Corporation and the financial institutions party thereto, filed as Exhibit 10.12 to Omnicom Group Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1992, is incorporated herein by reference. (21) Subsidiaries of the Registrant....................... S-6 (23) Consents of Experts and Counsel. 23.1 Consent of Independent Public Accountants............ S-16 (24) Powers of Attorney from Bernard Brochand, Robert J. Callander, Leonard S. Coleman, Jr., John R. Purcell, Gary L. Roubos, Quentin I. Smith, Jr., Robin B. Smith, William G. Tragos, and Egon P. S. Zehnder. (b) Reports on Form 8-K: No reports on Form 8-K were filed during the fourth quarter of the year ended December 31, 1993. 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Omnicom Group Inc. Date: March 28, 1994 By: /s/ Fred J. Meyer ------------------------------- Fred J. Meyer Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ Bruce Crawford President and Chief March 28, 1994 - ------------------------------------------------- Executive Officer and Director (Bruce Crawford) /s/ Fred J. Meyer Chief Financial Officer March 28, 1994 - ------------------------------------------------- and Director (Fred J. Meyer) /s/ Dale A. Adams Controller (Principal March 28, 1994 - ------------------------------------------------- Accounting Officer) (Dale A. Adams) /s/ Raymond E. McGovern Secretary and General March 28, 1994 - ------------------------------------------------- Counsel and Director (Raymond E. McGovern) /s/ John L. Bernbach Director March 28, 1994 - ------------------------------------------------- (John L. Bernbach) /s/ Bernard Brochand* Director March 28, 1994 - ------------------------------------------------- (Bernard Brochand) /s/ Robert J. Callander* Director March 28, 1994 - ------------------------------------------------- (Robert J. Callander) /s/ James A. Cannon Director March 28, 1994 - ------------------------------------------------- (James A. Cannon) /s/ Leonard S. Coleman, Jr.* Director March 28, 1994 - ------------------------------------------------- (Leonard S. Coleman, Jr.) /s/ Peter I. Jones Director March 28, 1994 - ------------------------------------------------- (Peter I. Jones) /s/ John R. Purcell* Director March 28, 1994 - ------------------------------------------------- (John R. Purcell) /s/ Keith L. Reinhard Director March 28, 1994 - ------------------------------------------------- (Keith L. Reinhard) /s/ Allen Rosenshine Director March 28, 1994 - ------------------------------------------------- (Allen Rosenshine) /s/ Gary L. Roubos* Director March 28, 1994 - ------------------------------------------------- (Gary L. Roubos) /s/ Quentin I. Smith, Jr.* Director March 28, 1994 - ------------------------------------------------- (Quentin I. Smith, Jr.) /s/ Robin B. Smith* Director March 28, 1994 - ------------------------------------------------- (Robin B. Smith) /s/ William G. Tragos* Director March 28, 1994 - ------------------------------------------------- (William G. Tragos) /s/ John D. Wren Director March 28, 1994 - ------------------------------------------------- (John D. Wren) /s/ Egon P.S. Zehnder* Director March 28, 1994 - ------------------------------------------------- (Egon P.S. Zehnder) *By /s/ Bruce Crawford ---------------------------------------------- Bruce Crawford Attorney-in-fact
14 REPORT OF MANAGEMENT The management of Omnicom Group Inc. is responsible for the integrity of the financial data reported by Omnicom Group and its subsidiaries. Management uses its best judgment to ensure that the financial statements present fairly, in all material respects, the consolidated financial position and results of operations of Omnicom Group. These financial statements have been prepared in accordance with generally accepted accounting principles. The system of internal controls of Omnicom Group, augmented by a program of internal audits, is designed to provide reasonable assurance that assets are safeguarded and records are maintained to substantiate the preparation of accurate financial information. Underlying this concept of reasonable assurance is the premise that the cost of control should not exceed the benefits derived therefrom. The financial statements have been audited by independent public accountants. Their report expresses an independent informed judgment as to the fairness of management's reported operating results and financial position. This judgment is based on the procedures described in the second paragraph of their report. The Audit Committee meets periodically with representatives of financial management, internal audit and the independent public accountants to assure that each is properly discharging their responsibilities. In order to ensure complete independence, the Audit Committee communicates directly with the independent public accountants, internal audit and financial management to discuss the results of their audits, the adequacy of internal accounting controls and the quality of financial reporting. /s/ Bruce Crawford /s/ Fred J. Meyer - ----------------------------------- ---------------------------------- Bruce Crawford Fred J. Meyer President and Chief Executive Officer Chief Financial Officer F-1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Shareholders of Omnicom Group Inc.: We have audited the accompanying consolidated balance sheets of Omnicom Group Inc. (a New York corporation) and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1993. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Omnicom Group Inc. and subsidiaries as of December 31, 1993 and 1992, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1993 in conformity with generally accepted accounting principles. As discussed in Note 12 to the consolidated financial statements, effective January 1, 1992, the Company changed its methods of accounting for income taxes and postretirement benefits other than pensions. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules on pages S-1 through S-5 are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. Arthur Andersen & Co. New York, New York February 22, 1994 F-2 OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, (Dollars in Thousands Except Per Share Data) --------------------------------------------------------- 1993 1992 1991 ----------- ----------- ----------- COMMISSIONS AND FEES ....................................... $ 1,516,475 $ 1,385,161 $ 1,236,158 OPERATING EXPENSES: Salaries and Related Costs ............................ 879,808 798,189 721,858 Office and General Expenses ........................... 467,468 433,884 379,183 Special Charge ........................................ -- 6,714 -- ----------- ----------- ----------- 1,347,276 1,238,787 1,101,041 ----------- ----------- ----------- OPERATING PROFIT ........................................... 169,199 146,374 135,117 NET INTEREST EXPENSE: Interest and Dividend Income .......................... (14,628) (16,810) (18,207) Interest Paid or Accrued .............................. 41,203 40,888 41,400 ----------- ----------- ----------- 26,575 24,078 23,193 ----------- ----------- ----------- INCOME BEFORE INCOME TAXES AND CHANGE IN ACCOUNTING PRINCIPLES .............................................. 142,624 122,296 111,924 INCOME TAXES ............................................... 59,871 53,268 49,248 ----------- ----------- ----------- INCOME AFTER INCOME TAXES AND BEFORE CHANGE IN ACCOUNTING PRINCIPLES ......................... 82,753 69,028 62,676 EQUITY IN AFFILIATES ....................................... 13,180 9,598 9,274 MINORITY INTERESTS ......................................... (10,588) (13,128) (14,898) ----------- ----------- ----------- INCOME BEFORE CHANGE IN ACCOUNTING PRINCIPLES ................................... 85,345 65,498 57,052 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLES ................................... -- 3,800 -- ----------- ----------- ----------- NET INCOME ................................................. $ 85,345 $ 69,298 $ 57,052 =========== =========== =========== NET INCOME PER COMMON SHARE: Income Before Change in Accounting Principles: Primary .............................................. $2.79 $2.31 $2.08 Fully Diluted ........................................ $2.62 $2.20 $2.01 Cumulative Effect of Change in Accounting Principles: Primary .............................................. -- $0.14 -- Fully Diluted ........................................ -- $0.11 -- Net Income: Primary .............................................. $2.79 $2.45 $2.08 ===== ===== ===== Fully Diluted ........................................ $2.62 $2.31 $2.01 ===== ===== =====
The accompanying notes to consolidated financial statements are an integral part of these statements. F-3 OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS A S S E T S
December 31, (Dollars in Thousands) --------------------------- 1993 1992 ---------- ---------- Current Assets: Cash and cash equivalents.................................................... $ 174,833 $ 112,459 Marketable securities, at cost, which approximates market.................... 38,003 18,431 Accounts receivable, less allowance for doubtful accounts of $17,298 and $12,825 (Schedule VIII)...................................... 901,434 826,733 Billable production orders in process, at cost............................... 59,415 57,529 Prepaid expenses and other current assets.................................... 100,791 121,577 ---------- ---------- Total Current Assets....................................................... 1,274,476 1,136,729 Furniture, Equipment and Leasehold Improvements, at cost, less accumulated depreciation and amortization of $188,868 and $163,107........... 160,543 153,155 Investments in Affiliates ...................................................... 112,232 106,536 Intangibles, less accumulated amortization of $93,105 and $75,706................ 603,494 478,581 Deferred Tax Benefit............................................................. 18,522 -- Deferred Charges and Other Assets ............................................... 120,596 76,949 ---------- ---------- $2,289,863 $1,951,950 ========== ========== L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y Current Liabilities: Accounts payable............................................................. $1,058,095 $ 926,782 Current portion of long-term debt............................................ 21,892 10,096 Bank loans (Schedule IX)..................................................... 26,155 26,505 Advance billings............................................................. 90,422 90,879 Other accrued taxes.......................................................... 32,953 27,625 Other accrued liabilities.................................................... 254,378 194,549 Accrued taxes on income...................................................... 29,974 25,381 Dividend payable............................................................. 10,349 8,826 ---------- ---------- Total Current Liabilities.................................................. 1,524,218 1,310,643 ---------- ---------- Long-Term Debt ................................................................. 278,312 235,129 Deferred Compensation and Other Liabilities ..................................... 56,933 51,919 Deferred Taxes Payable .......................................................... -- 8,411 Minority Interests .............................................................. 28,214 36,956 Commitments and Contingent Liabilities (Note 10) Shareholders' Equity: Preferred stock, $1.00 par value, 7,500,000 shares authorized, none issued................................................................... -- -- Common stock, $.50 par value, 75,000,000 shares authorized, 35,071,932 and 30,388,593 shares issued in 1993 and 1992, respectively.............. 17,536 15,195 Additional paid-in capital................................................... 252,408 155,086 Retained earnings............................................................ 287,416 245,373 Unamortized restricted stock................................................. (21,807) (15,307) Cumulative translation adjustment............................................ (65,257) (37,869) Treasury stock, at cost, 1,901,977 and 1,930,035 shares in 1993 and 1992, respectively....................................................... (68,110) (53,586) ---------- ---------- Total Shareholders' Equity.............................................. 402,186 308,892 ---------- ---------- $2,289,863 $1,951,950 ========== ==========
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. F-4 OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Three Years Ended December 31, 1993 (Dollars in Thousands)
Common Stock Additional Unamortized Cumulative Total --------------------- Paid-in Retained Restricted Translation Treasury Shareholders' Shares Par Value Capital Earnings Stock Adjustment Stock Equity ---------- --------- -------- -------- -------- ---------- -------- -------- Balance January 1, 1991............. 28,133,698 $14,067 $ 98,465 $192,388 $(10,634) $41,465 $(37,421) $298,330 Net income.......................... 57,052 57,052 Dividends declared.................. (30,259) (30,259) Issue of new shares................. 1,724,900 862 43,070 43,932 Amortization of restricted shares... 6,245 6,245 Shares issued under employee stock plans...................... 1,176 (6,588) 11,268 5,856 Shares issued for acquisitions...... 347,791 174 10,436 10,610 Conversion of 7% Debentures......... 15,417 8 401 409 Cumulative translation adjustment... (8,428) (8,428) Repurchases of shares............... (17,529) (17,529) ---------- ------- -------- -------- -------- -------- -------- -------- Balance December 31, 1991, as previously reported.............. 30,221,806 15,111 153,548 219,181 (10,977) 33,037 (43,682) 366,218 Pooling of interests adjustment..... 159,720 80 91 (6,062) (5,891) ---------- ------- -------- -------- -------- -------- -------- -------- Balance January 1, 1992, as restated 30,381,526 15,191 153,639 213,119 (10,977) 33,037 (43,682) 360,327 Net income.......................... 69,298 69,298 Dividends declared.................. (33,628) (33,628) Amortization of restricted shares... 5,993 5,993 Shares issued under employee stock plans...................... 1,227 (10,323) 16,691 7,595 Shares issued for acquisitions...... 150,168 75 220 295 Retirement of shares................ (143,101) (71) (3,416) 3,487 -- Cumulative translation adjustment... (70,906) (70,906) Repurchases of shares............... (30,082) (30,082) ---------- ------- -------- -------- -------- -------- -------- -------- Balance December 31, 1992, as previously reported.............. 30,388,593 15,195 155,086 245,373 (15,307) (37,869) (53,586) 308,892 Pooling of interests adjustment..... 1,349,260 674 124 (6,309) (1,834) (7,345) ---------- ------- -------- -------- -------- -------- -------- -------- Balance January 1, 1993, as restated 31,737,853 15,869 155,210 239,064 (15,307) (39,703) (53,586) 301,547 Net income.......................... 85,345 85,345 Dividends declared.................. (36,993) (36,993) Amortization of restricted shares... 7,096 7,096 Shares issued under employee stock plans...................... 5,709 (13,596) 15,413 7,526 Shares issued for acquisitions...... 7,303 21,948 29,251 Conversion of 7% Debentures......... 3,334,079 1,667 84,186 85,853 Cumulative translation adjustment... (25,554) (25,554) Repurchases of shares............... (51,885) (51,885) ---------- ------- -------- -------- -------- -------- -------- -------- Balance December 31, 1993........... 35,071,932 $17,536 $252,408 $287,416 $(21,807) $(65,257) $(68,110) $402,186 ========== ======= ======== ======== ======== ======== ======== ========
The accompanying notes to consolidated financial statements are an integral part of these statements. F-5 OMNICOM GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, (Dollars in Thousands) --------------------------------------------- 1993 1992 1991 --------- --------- --------- Cash Flows From Operating Activities: Net income .............................................................. $ 85,345 $ 69,298 $ 57,052 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of tangible assets ...................... 34,574 33,706 32,846 Amortization of intangible assets ..................................... 18,950 16,102 13,332 Minority interests .................................................... 10,588 13,128 14,898 Earnings of affiliates in excess of dividends received ................ (6,823) (3,765) (2,539) Increase (decrease) in deferred taxes ................................. 2,197 (921) 2,553 Provisions for losses on accounts receivable .......................... 4,742 2,545 3,085 Amortization of restricted shares ..................................... 7,096 5,993 6,245 Loss (gain) on sales of equity interests in subsidiaries and affiliates ......................................... -- 414 (1,794) Increase in accounts receivable ....................................... (35,416) (29,360) (32,978) Decrease (increase) in billable production ............................ 6,665 (8,318) (1,508) Decrease (increase) in other current assets ........................... 19,949 (12,011) (27,165) Increase in accounts payable .......................................... 73,389 81,697 42,761 (Decrease) increase in other accrued liabilities ...................... (3,498) 26,185 19,692 Increase (decrease) in accrued taxes on income ........................ 1,918 (3,830) 9,102 Other ................................................................. (10,479) (9,167) 8,061 --------- --------- --------- Net Cash Provided By Operating Activities ................................. 209,197 181,696 143,643 --------- --------- --------- Cash Flows From Investing Activities: Capital expenditures .................................................... (33,646) (34,881) (32,097 Payments for purchases of equity interests in subsidiaries and affiliates, net of cash acquired .................................. (80,577) (59,651) (77,129) Proceeds from sales of equity interests in subsidiaries and affiliates ............................................................ 558 1,840 8,334 Payments for purchases of marketable securities and other investments ..................................................... (49,733) (5,353) (35,937) Proceeds from sales of marketable securities and other investments ..................................................... 17,396 30,504 3,284 --------- --------- --------- Net Cash Used In Investing Activities ..................................... (146,002) (67,541) (133,545) --------- --------- --------- Cash Flows From Financing Activities: Issuance of common stock ................................................ -- -- 44,341 Net (repayments) borrowings under lines of credit ....................... (14,167) (9,302) 18,461 Proceeds from issuances of debt obligations ............................. 147,283 7,836 470 Repayment of principal of debt obligations .............................. (31,980) (41,371) (20,454) Share transactions under employee stock plans ........................... 7,526 7,594 5,856 Dividends and loans to minority stockholders ............................ (8,033) (9,128) (9,538) Dividends paid .......................................................... (35,470) (32,623) (29,708) Purchase of treasury shares ............................................. (51,885) (30,082) (17,529) --------- --------- --------- Net Cash Provided by (Used in) Financing Activities ....................... 13,274 (107,076) (8,101) --------- --------- --------- Effect of exchange rate changes on cash and cash equivalents ........................................................... (14,095) (8,331) (549) --------- --------- --------- Net Increase (Decrease) In Cash and Cash Equivalents ...................... 62,374 (1,252) 1,448 Cash and Cash Equivalents At Beginning of Period .......................... 112,459 113,711 112,263 --------- --------- --------- Cash and Cash Equivalents At End of Period ................................ $ 174,833 $ 112,459 $ 113,711 ========= ========= ========= Supplemental Disclosures: Income taxes paid ....................................................... $ 58,893 $ 58,292 $ 41,217 ========= ========= ========= Interest paid ........................................................... $ 38,290 $ 32,729 $ 35,417 ========= ========= =========
The accompanying notes to consolidated financial statements are an integral part of these statements. F-6 OMNICOM GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Recognition of Commission and Fee Revenue. Substantially all revenues are derived from commissions for placement of advertisements in various media and from fees for manpower and for production of advertisements. Revenue is generally recognized when billed. Billings are generally rendered upon presentation date for media, when manpower is used, when costs are incurred for radio and television production and when print production is completed. Principles of Consolidation. The accompanying consolidated financial statements include the accounts of Omnicom Group Inc. and its domestic and international subsidiaries (the "Company"). All significant intercompany balances and transactions have been eliminated. Reclassifications. Certain prior year amounts have been reclassified to conform with the 1993 presentation. Billable Production. Billable production orders in process consist principally of costs incurred in producing advertisements and marketing communications for clients. Such amounts are generally billed to clients when costs are incurred for radio and television production and when print production is completed. Treasury Stock. The Company accounts for treasury share purchases at cost. The reissuance of treasury shares is accounted for at the average cost. Gains or losses on the reissuance of treasury shares are generally accounted for as additional paid-in capital. Foreign Currency Translation. The Company's financial statements were prepared in accordance with the requirements of Statement of Financial Accounting Standards No. 52, "Foreign Currency Translation." Under this method, net transaction gains of $5.0 million, $8.1 million and $5.3 million are included in 1993, 1992 and 1991 net income, respectively. Net Income Per Common Share. Primary earnings per share is based upon the weighted average number of common shares and common share equivalents outstanding during each year. Fully diluted earnings per share is based on the above adjusted for the assumed conversion of the Company's Convertible Subordinated Debentures and the assumed increase in net income for the after tax interest cost of these debentures. For the year ended December 31, 1993, the 6.5% Convertible Subordinated Debentures were assumed to be converted for the full year; the 7% Convertible Subordinated Debentures were assumed to be converted through October 8, 1993 when they were converted into common stock; and the 4.5%/6.25% Step-Up Convertible Subordinated Debentures were assumed to be converted from their September 1, 1993 issuance date. For the years ended December 31, 1992 and 1991, the 6.5% and 7% Convertible Subordinated Debentures were assumed to be converted for the full year. The number of shares used in the computations were as follows: 1993 1992 1991 ---- ---- ---- Primary EPS computation ....... 30,607,900 28,320,400 27,415,000 Fully diluted EPS computation . 37,563,500 35,332,400 34,384,400 Severance Agreements. Arrangements with certain present and former employees provide for continuing payments for periods up to 10 years after cessation of their full-time employment in consideration for agreements by the employees not to compete and to render consulting services in the post employment period. Such payments, which are determined, subject to certain conditions and limitations, by earnings in subsequent periods, are expensed in such periods. Depreciation of Furniture and Equipment and Amortization of Leasehold Improvements. Depreciation charges are computed on a straight-line basis or declining balance method over the estimated useful lives of furniture and equipment, up to 10 years. Leasehold improvements are amortized on a straight-line basis over the lesser of the terms of the related lease or the useful life of these assets. Intangibles. Intangibles represent acquisition costs in excess of the fair value of tangible net assets of purchased subsidiaries which are being amortized on a straight-line basis over periods not exceeding forty years. Deferred Taxes. Deferred tax liabilities and tax benefits relate to the recognition of certain revenues and expenses in different years for financial statement and tax purposes. F-7 OMNICOM GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Cash Flows. The Company's cash equivalents are primarily comprised of investments in overnight interest-bearing deposits and money market instruments with maturity dates of three months or less. The following supplemental schedule summarizes the fair value of assets acquired, cash paid, common shares issued and the liabilities assumed in conjunction with the acquisition of equity interests in subsidiaries and affiliates, for each of the three years ended December 31: (Dollars in thousands) 1993 1992 1991 Fair value of non-cash assets acquired .. $ 287,177 $ 173,974 $ 89,384 Cash paid, net of cash acquired ......... (80,577) (59,651) (77,129) Common shares issued .................... (21,906) 5,596 (10,610) --------- --------- --------- Liabilities assumed ..................... $ 184,694 $ 119,919 $ 1,645 ========= ========= ========= During 1993, the Company issued 3,334,079 shares of common stock upon conversion of $85.9 million of its 7% Convertible Subordinated Debentures. Concentration of Credit Risk. The Company provides advertising and marketing services to a wide range of clients who operate in many industry sectors around the world. The Company grants credit to all qualified clients, but does not believe it is exposed to any undue concentration of credit risk to any significant degree. 2. Acquisitions During 1993 the Company made several acquisitions whose aggregate cost, in cash or by issuance of the Company's common stock, totaled $132.8 million for net assets, which included intangible assets of $149.7 million. Included in both figures are contingent payments related to prior year acquisitions totaling $16.2 million. Pro forma combined results of operations of the Company as if the acquisitions had occurred on January 1, 1992 do not materially differ from the reported amounts in the consolidated statements of income for each of the two years in the period ended December 31, 1993. Certain acquisitions entered into in 1993 require payments in future years if certain results are achieved. Formulas for these contingent future payments differ from acquisition to acquisition. In May 1993, the Company completed its acquisition of a third agency network, TBWA International B.V. The acquisition was accounted for as a pooling of interests and, accordingly, the results of operations for TBWA International B.V. have been included in these consolidated financial statements since January 1, 1993. Prior year consolidated financial statements were not restated as the impact on such years was not material. 3. Bank Loans and Lines of Credit Bank loans generally resulted from bank overdrafts of international subsidiaries which are treated as loans pursuant to bank agreements. At December 31, 1993 and 1992, the Company had unsecured committed lines of credit aggregating $359 million and $266 million, respectively. The unused portion of credit lines was $332 million and $237 million at December 31, 1993 and 1992, respectively. The lines of credit are generally extended at the banks' lending rates to their most credit worthy borrowers. Material compensating balances are not required within the terms of these credit agreements. At December 31, 1992, the committed lines of credit included $125 million under a two year revolving credit agreement. Due to the long term nature of this credit agreement, borrowings under the agreement were classified as long-term debt. As of January 1, 1993, the $125 million credit agreement was replaced by a $200 million, two and one-half year revolving credit agreement. Borrowings under this credit agreement are also classified as long-term debt. There were no borrowings under these credit agreements at December 31, 1993 and 1992. 4. Employee Stock Plans Under the terms of the Company's 1987 Stock Plan, as amended (the "1987 Plan"), 4,750,000 shares of common stock of the Company are reserved for restricted stock awards and non-qualified stock options to key employees of the Company. F-8 OMNICOM GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Under the terms of the 1987 Plan, the option price may not be less than 100% of the market value of the stock at the date of the grant. Options become exercisable 30% on each of the first two anniversary dates of the grant date with the final 40% becoming exercisable three years from the grant date. Under the 1987 Plan, 285,000, 242,500 and 175,000 non-qualified options were granted in 1993, 1992 and 1991, respectively. A summary of changes in outstanding options for the three years ended December 31, 1993 is as follows: Years Ended December 31, --------------------------------- 1993 1992 1991 ---- ---- ---- Shares under option (at prices ranging from $16.50 to $35.0625) -- Beginning of year ..................... 998,000 1,043,900 1,076,416 Options granted (at prices ranging from $23.50 to $40.0625) ................... 285,000 242,500 175,000 Options exercised (at prices ranging from $16.50 to $35.0625) .............. (197,800) (274,200) (203,600) Options forfeited ....................... (12,800) (14,200) (3,916) --------- ------- --------- Shares under option (at prices ranging from $16.875 to $40.0625)-- End of year 1,072,400 998,000 1,043,900 ========= ======= ========= Shares exercisable ...................... 562,650 443,400 371,749 Shares reserved ......................... 1,502,882 589,422 1,099,902 Under the 1987 Plan, 337,200 shares, 314,775 shares and 278,250 shares of restricted stock of the Company were awarded in 1993, 1992 and 1991, respectively. All restricted shares granted under the 1987 Plan were sold at a price per share equal to their par value. The difference between par value and market value on the date of the sale is charged to shareholders' equity and then amortized to expense over the period of restriction. Under the 1987 Plan, the restricted shares become transferable to the employee in 20% annual increments provided the employee remains in the employ of the Company. Restricted shares may not be sold, transferred, pledged or otherwise encumbered until the restrictions lapse. Under most circumstances, the employee must resell the shares to the Company at par value if the employee ceases employment prior to the end of the period of restriction. A summary of changes in outstanding shares of restricted stock for the three years ended December 31, 1993 is as follows: Years Ended December 31, ----------------------------------- 1993 1992 1991 ---- ---- ---- Beginning balance ........... 629,752 619,024 765,763 Amount granted ............ 337,200 314,775 278,250 Amount vested ............. (201,712) (278,942) (394,085) Amount forfeited .......... (24,804) (25,105) (30,904) ------- ------- ------- Ending balance .............. 740,436 629,752 619,024 ======= ======= ======= The charge to operations in connection with these restricted stock awards for the years ended December 31, 1993, 1992 and 1991 amounted to $7.1 million, $6.0 million and $6.2 million, respectively. F-9 OMNICOM GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. Segment Reporting The Company operates advertising agencies and offers its clients additional marketing services and specialty advertising through its wholly-owned and partially-owned businesses. A summary of the Company's operations by geographic area as of December 31, 1993, 1992 and 1991, and for the years then ended is presented below: (Dollars in Thousands) United States International Consolidated ---------- ------------- ------------ 1993 Commissions and Fees ........ $ 770,611 $ 745,864 $1,516,475 Operating Profit ............ 92,095 77,104 169,199 Net Income .................. 40,814 44,531 85,345 Identifiable Assets ......... 827,032 1,462,831 2,289,863 1992 Commissions and Fees ........ 706,902 678,259 1,385,161 Operating Profit ............ 70,558 75,816 146,374 Net Income .................. 33,223 36,075 69,298 Identifiable Assets ......... 675,508 1,276,442 1,951,950 1991 Commissions and Fees ........ 692,642 543,516 1,236,158 Operating Profit ............ 65,981 69,136 135,117 Net Income .................. 25,078 31,974 57,052 Identifiable Assets ......... 659,583 1,226,311 1,885,894 6. Investments in Affiliates The Company has approximately 45 unconsolidated affiliates with equity ownership ranging from 20% to 50%. The following table summarizes the balance sheets and income statements of the Company's unconsolidated affiliates, primarily in Europe, Australia, Asia and Canada, as of December 31, 1993, 1992, 1991, and for the years then ended: (Dollars in Thousands) 1993 1992 1991 ---- ---- ---- Current assets ................. $308,741 $312,423 $408,376 Non-current assets ............. 73,772 64,901 54,474 Current liabilities ............ 235,389 259,508 321,777 Non-current liabilities ........ 29,596 8,302 11,456 Minority interests ............. 1,149 1,110 275 Gross revenues ................. 290,814 288,416 374,760 Costs and expenses ............. 238,039 243,661 326,076 Net income ..................... 33,574 27,752 28,933 The Company's equity in the net income of these affiliates amounted to $13.2 million, $9.6 million and $9.3 million for 1993, 1992 and 1991, respectively. The Company's equity in the net tangible assets of these affiliated companies was approximately $58.1 million, $56.2 million and $54.5 million at December 31, 1993, 1992 and 1991, respectively. Included in the Company's investments in affiliates is the excess of acquisition costs over the fair value of tangible net assets acquired. These acquisitions costs are being amortized on a straight-line basis over periods not exceeding forty years. F-10 OMNICOM GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 7. Long-Term Debt and Financial Instruments Long-term debt outstanding as of December 31, 1993 and 1992 consisted of the following:
(Dollars in Thousands) 1993 1992 -------- -------- 4.5%/6.25% Step-Up Convertible Subordinated Debentures with a scheduled maturity in 2000 ........................................................................... $143,750 $ -- 6.5% Convertible Subordinated Debentures with a scheduled maturity in 2004 .................................................................................... 100,000 100,000 7% Convertible Subordinated Debentures with a scheduled maturity in 2013 .................................................................................... -- 85,853 Foreign currency and interest rate swaps, at floating LIBOR rates, maturing at various dates through 1997 ..................................................... 11,435 5,291 Sundry notes payable to banks and others at rates from 5.75% to 16%, maturing at various dates through 1999 ..................................................... 35,518 42,663 Loan Notes, at various rates with a scheduled maturity in 1994 ............................... 9,501 11,418 -------- -------- 300,204 245,225 Less current portion ......................................................................... 21,892 10,096 -------- -------- Total long-term debt ....................................................................... $278,312 $235,129 ======== ========
During the third quarter of 1993, the Company issued $143,750,000 of 4.5%/6.25% Step-Up Convertible Subordinated Debentures with a scheduled maturity in 2000. The average annual interest rate through the year 2000 is 5.42%. The debentures are convertible into common stock of the Company at a conversion price of $54.88 per share subject to adjustment in certain events. The debentures are not redeemable prior to September 1, 1996. Thereafter, the Company may redeem the debentures initially at 102.984% and at decreasing prices thereafter to 100% at maturity, in each case together with accrued interest. The debentures also may be repaid at the option of the holder at anytime prior to September 1, 2000 if there is a Fundamental Change, as defined in the debenture agreement, at the repayment prices set forth in the debenture agreement, subject to adjustment, together with accrued interest. On August 9, 1993, the Company issued a Notice of Redemption for its 7% Convertible Subordinated Debentures with a scheduled maturity in 2013. Prior to the October 1993 redemption date, debenture holders elected to convert all of their outstanding debentures into common stock of the Company at a conversion price of $25.75 per common share. During the third quarter of 1989, the Company issued $100,000,000 of 6.5% Convertible Subordinated Debentures with a scheduled maturity in 2004. The debentures are convertible into common stock of the Company at a conversion price of $28.00 per share subject to adjustment in certain events. Debenture holders have the right to require the Company to redeem the debentures on July 26, 1996 at a price of 123.001%, or upon the occurrence of a Fundamental Change, as defined in the debenture agreement, at the prevailing redemption price. The Company may redeem the debentures on or after July 27, 1994, initially at 118.808%, from July 27, 1995 to and including July 26, 1996 at 123.001%, and thereafter at 100%, together in each case with accrued interest. The debentures may also be redeemed in whole at any time, at par together with accrued interest, if any, in the event of certain developments regarding United States tax laws or the imposition of certain certification or identification requirements. Also in the third quarter of 1989, a wholly-owned subsidiary of the Company issued interest bearing Loan Notes in connection with the acquisition of Boase Massimi Pollitt plc. The Loan Notes are unsecured obligations guaranteed by the Company and bear interest at a yearly rate of 1/8 percent below the average of the six month London Inter-Bank Offered Rate for the three business days preceding the commencement of the relevant interest period. The Loan Notes are redeemable, at the option of the holder in whole or in part at their nominal amount, together with interest accrued to the date of redemption, on any interest payment date. Under certain conditions the Company may redeem the Loan F-11 OMNICOM GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Notes, at their nominal amount plus accrued interest, on any interest payment date on or after December 31, 1992. Unless earlier redeemed or purchased and cancelled, the Loan Notes will be repaid on December 31, 1994 at their nominal amount together with accrued interest. In January 1993, the Company amended and restated the revolving credit agreement originally entered into in 1988. This $200,000,000 revolving credit agreement is with a consortium of banks having an initial term of two and one-half years. This credit agreement includes a facility for issuing commercial paper backed by bank letters of credit. The agreement contains certain financial covenants regarding minimum tangible net worth, current ratio, ratio of net cash flow to consolidated indebtedness, limitation on foreign indebtedness, limitation on employee loans, and limitation on investments in and loans to affiliates and unconsolidated subsidiaries. At December 31, 1993 the Company was in compliance with all of these covenants. Aggregate maturities of long-term debt in the next five years are as follows: (Dollars in Thousands) ---------------------- 1994 ........................ $21,892 1995 ........................ 18,906 1996 ........................ 9,622 1997 ........................ 4,373 1998 ........................ 1,526 Periodically, the Company enters into swap agreements and other derivative financial instruments primarily to reduce the impact of changes in foreign exchange rates on net assets and liabilities denominated in foreign currencies and to reduce the impact of changes in interest rates on floating rate debt. At December 31, 1993, the Company had foreign currency and interest rate swap agreements outstanding with commercial banks having a notional principal amount of $70.6 million. These agreements effectively change a portion of the Company's foreign currency denominated debt to U.S. dollar denominated debt. The change from foreign currency denominated debt reduces the exposure to foreign currency fluctuations. The Company also has entered into U.S. dollar interest rate swap agreements which convert its floating rate debt to a fixed rate. These agreements have varying notional principal amounts, starting dates and maturity dates. The aggregate maximum notional principal amount outstanding through October 2003 is $50 million. 8. Income Taxes Income before income taxes and the provision for taxes on income consisted of the amounts shown below: Years Ended December 31, (Dollars in Thousands) ----------------------------------- 1993 1992 1991 --------- --------- --------- Income before income taxes: Domestic ......................... $ 65,571 $ 47,535 $ 44,937 International .................... 77,053 74,761 66,987 --------- --------- --------- Totals ......................... $ 142,624 $ 122,296 $ 111,924 Provision for taxes on income: Current: Federal ........................ $ 16,428 $ 17,143 $ 15,140 State and local ................ 6,531 6,215 2,765 International .................. 35,071 29,067 29,980 --------- --------- --------- 58,030 52,425 47,885 --------- --------- --------- Deferred: Federal ........................ 2,979 (3,702) 1,170 State and local ................ 139 (1,375) 239 International .................. (1,277) 5,920 (46) --------- --------- --------- 1,841 843 1,363 --------- --------- --------- Totals ......................... $ 59,871 $ 53,268 $ 49,248 ========= ========= ========= F-12 OMNICOM GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company's effective income tax rate varied from the statutory federal income tax rate as a result of the following factors: 1993 1992 1991 ---- ---- ---- Statutory federal income tax rate ..... 35.0% 34.0% 34.0% State and local taxes on income, net of federal income tax benefit .......... 3.0 2.6 1.8 International subsidiaries' tax rate in excess of federal statutory rate .... 0.1 1.3 2.7 Losses of international subsidiaries without tax benefit ................. 0.2 1.0 0.3 Non-deductible amortization of goodwill 3.9 3.7 3.3 Other ................................. (0.2) 1.0 1.9 ---- ---- ---- Effective rate ........................ 42.0% 43.6% 44.0% ==== ==== ==== The Company accounts for income taxes in accordance with the provisions of Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes," which was adopted effective January 1, 1992. Deferred income taxes are provided for the temporary difference between the financial reporting basis and tax basis of the Company's assets and liabilities. Deferred tax benefits result principally from recording certain expenses in the financial statements which are not currently deductible for tax purposes. Deferred tax liabilities result principally from expenses which are currently deductible for tax purposes, but have not yet been expensed in the financial statements. The Company has recorded deferred tax benefits as of December 31, 1993 and 1992 of $56.7 million and $21.9 million, respectively, related principally to leasehold amortization, restricted stock amortization, foreign exchange transactions, and accrued expenses. The Company has recorded deferred tax liabilities as of December 31, 1993 and 1992 of $29.3 million and $21.9 million, respectively, related principally to furniture and equipment depreciation and tax lease recognition. In 1993, legislation was enacted which increased the U.S. statutory tax rate from 34% to 35%. The effect of this rate change and other statutory rate changes in various state, local and international jurisdictions was not material to net income. A provision has been made for additional income and withholding taxes on the earnings of international subsidiaries and affiliates that will be distributed. 9. Employee Retirement Plans The Company's international and domestic subsidiaries provide retirement benefits for their employees primarily through profit sharing plans. Company contributions to the plans, which are determined by the boards of directors of the subsidiaries, have been in amounts up to 15% (the maximum amount deductible for federal income tax purposes) of total eligible compensation of participating employees. Profit sharing expense amounted to $25.8 million in 1993, $20.8 million in 1992 and $24.4 million in 1991. Some of the Company's international subsidiaries have pension plans. These plans are not required to report to governmental agencies pursuant to the Employee Retirement Income Security Act of 1974 (ERISA). Substantially all of these plans are funded by fixed premium payments to insurance companies who undertake legal obligations to provide specific benefits to the individuals covered. Pension expense amounted to $2.4 million in 1993, $2.7 million in 1992 and $2.5 million in 1991. Certain subsidiaries of the Company have an executive retirement program under which benefits will be paid to participants or their beneficiaries over 15 years from age 65 or death. In addition, other subsidiaries have individual deferred compensation arrangements with certain executives which provide for payments over varying terms upon retirement, cessation of employment or death. F-13 OMNICOM GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Some of the Company's domestic subsidiaries provide life insurance and medical benefits for retired employees. Eligibility requirements vary by subsidiary, but generally include attainment of a specified combined age plus years of service factor. In 1991 the cost of these benefits was expensed as paid and was not material to the consolidated results of operations. Effective January 1, 1992, the Company adopted the provisions of Statement of Financial Accounting Standards No. 106 "Employers' Accounting For Post- retirement Benefits Other Than Pensions" ("SFAS No. 106"). SFAS No. 106 requires that the expected cost of post retirement benefits be charged to expense during the years that the eligible employees render service. The after tax cumulative effect of the adoption of SFAS No. 106 was not material to the net worth of the Company and the expense for the year was not material to the 1993 and 1992 consolidated results of operations. 10. Commitments At December 31, 1993, the Company was committed under operating leases, principally for office space. Certain leases are subject to rent reviews and require payment of expenses under escalation clauses. Rent expense was $128.8 million in 1993, $117.3 million in 1992 and $101.7 million in 1991 after reduction by rents received from subleases of $10.0 million, $14.1 million and $17.9 million, respectively. Future minimum base rents under terms of noncancellable operating leases, reduced by rents to be received from existing noncancellable subleases, are as follows: (Dollars in Thousands) Gross Rent Sublease Rent Net Rent ---------- ------------- -------- 1994 .................... $103,531 $ 9,297 $ 94,234 1995 .................... 94,594 7,698 86,896 1996 .................... 85,395 6,459 78,936 1997 .................... 77,229 4,305 72,924 1998 .................... 66,330 2,927 63,403 Thereafter .............. 414,201 10,944 403,257 Where appropriate, management has established reserves for the difference between the cost of leased premises that were vacated and anticipated sublease income. 11. Fair Value of Financial Instruments SFAS No. 107 "Disclosures about Fair Value of Financial Instruments," which was adopted by the Company in 1992, requires all entities to disclose the fair value of financial instruments for which it is practicable to estimate fair value. The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: Cash and marketable securities: Marketable securities consist principally of investments in short-term, interest bearing instruments. The carrying amount approximates fair value. Long-term investments: Included in deferred charges and other assets are long-term investments which consist principally of an investment in Aegis Group plc., a publicly traded company, carried at fair market value and related stock warrants carried at cost. The fair value of the warrants was determined using an option pricing model. The remaining amounts, carried at cost, approximate estimated fair value. Long-term debt: The fair value of the Company's convertible subordinated debenture issues was determined by reference to quotations available in markets where those issues are traded. These quotations primarily reflect the conversion value of the debentures into the Company's common stock. These debentures are redeemable F-14 OMNICOM GROUP INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) by the Company, at prices explained in Note 7, which are significantly less than the quoted market prices used in determining the fair value. The fair value of the Company's remaining long-term debt was estimated based on the current rates offered to the Company for debt with the same remaining maturities. Swap agreements and forward contracts: The fair value of interest rate swaps and forward contracts is the estimated amount that the Company would receive or pay to terminate the agreements at December 31, 1993. The estimated fair value of the Company's financial instruments at December 31, 1993 is as follows: (Dollars in Thousands) Carrying Fair Amount Value --------- --------- Cash and marketable securities ......... $ 212,836 $ 212,836 Long-term investments .................. 26,015 27,672 Long-term debt ......................... 300,204 370,941 Other financial instruments: Interest rate swaps ................. -- (2,457) Forward contracts ................... (288) (288) 12. Special Charge and Adoption of New Accounting Principles Effective January 1, 1992, the Company adopted SFAS No. 106 and SFAS No. 109. The cumulative after tax effect of the adoption of these Statements increased net income by $3.8 million, substantially all of which related to SFAS No. 109. Due to the continued weakening of the commercial real estate market in certain domestic and international locations and the reorganization of certain operations, the Company provided a special charge of $6.7 million pretax for losses related to future lease costs. Effective January 1, 1994, the Company will adopt SFAS No. 112, "Employers' Accounting for Postemployment Benefits" ("SFAS No. 112"). The Company estimates that the adoption of SFAS No. 112 will result in an unfavorable after tax effect on net income of approximately $27 million. F-15 OMNICOM GROUP INC. AND SUBSIDIARIES QUARTERLY RESULTS OF OPERATIONS (Unaudited) The following table sets forth a summary of the unaudited quarterly results of operations for the two years ended December 31, 1993 and 1992, in thousands of dollars except for per share amounts. First Second Third Fourth --------- --------- --------- --------- Commissions & Fees 1993 ....................... $ 339,139 $ 381,758 $ 339,531 $ 456,047 1992 ....................... 308,888 347,561 327,750 400,962 Income Before Special Charge and Income Taxes 1993 ....................... 24,738 49,274 19,581 49,031 1992 ....................... 24,093 39,441 23,042 42,434 Special Charge 1993 ....................... -- -- -- -- 1992 ....................... 6,714 -- -- -- Income Before Income Taxes 1993 ....................... 24,738 49,274 19,581 49,031 1992 ....................... 17,379 39,441 23,042 42,434 Income Taxes 1993 ....................... 10,390 20,678 8,228 20,575 1992 ....................... 7,678 16,993 10,633 17,964 Income After Income Taxes 1993 ....................... 14,348 28,596 11,353 28,456 1992 ....................... 9,701 22,448 12,409 24,470 Equity in Affiliates 1993 ....................... 1,692 2,674 1,769 7,045 1992 ....................... 2,103 4,081 125 3,289 Minority Interests 1993 ....................... (1,584) (4,008) (276) (4,720) 1992 ....................... (2,876) (4,172) (2,157) (3,923) Cumulative Effect of Change in Accounting Principles 1993 ....................... -- -- -- -- 1992 ....................... 3,800 -- -- -- Net Income 1993 ....................... 14,456 27,262 12,846 30,781 1992 ....................... 12,728 22,357 10,377 23,836 Primary Earnings Per Share 1993 ....................... 0.50 0.90 0.43 0.95 1992 ....................... 0.45 0.78 0.37 0.84 Fully Diluted Earnings Per Share 1993 ....................... 0.49 0.82 0.43 0.87 1992 ....................... 0.45 0.72 0.37 0.76 F-16 Schedule II OMNICOM GROUP INC. AND SUBSIDIARIES SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES, UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES For the Three Years Ended December 31, 1993
=================================================================================================================================== Column A Column B Column C Column D Column E - ----------------------------------------------------------------------------------------------------------------------------------- Deductions Balance at End of Period ------------------------- -------------------------- Balance at Beginning Amounts Translation Not Name of Debtor of Period Additions Collected Adjustments Current(1) Current(1) - ----------------------------------------------------------------------------------------------------------------------------------- Year Ended December 31, 1993: A. Steiner .............................. $ 134,925 $ 5,673 $ 8,855 $ $ 43,914 $ 87,829 M. Garcia ............................... 183,809 15,598 62,000 137,407 A. Duynstee ............................. 116,481 109,086 7,395 L. van Schoonhoven ...................... 103,899 97,302 6,597 G. van Woerkom .......................... 106,526 99,763 6,763 H. Stephan .............................. 157,646 15,375 87,467 10,667 74,887 B. Singelmann ........................... 136,902 13,352 9,264 140,990 A. Sturgess ............................. 161,262 129,946 (400) 31,716 P. Merkley .............................. 125,000 25,000 33,333 66,667 Dr. A. Danyliuk ......................... 240,992 23,505 61,717 16,308 186,472 J. Kofner ............................... 186,283 17,251 8,775 12,606 182,153 G. Woelky ............................... 136,666 13,329 9,248 140,747 W. Amerika .............................. 250,917 234,986 15,931 E. Manen ................................ 291,492 272,985 18,507 C. Maggio ............................... 210,287 4,637 18,458 196,466 E. Wenzel ............................... 209,928 209,928 M. Switzer .............................. 410,746 407,446 3,300 ----------- ----------- ----------- ----------- ----------- ----------- $ 2,543,087 $ 729,394 $ 1,623,786 $ 112,886 $ 249,670 $ 1,286,139 =========== =========== =========== =========== =========== =========== Year Ended December 31, 1992: P. Farago ............................... $ 208,346 $ $ 208,346 $ $ $ A. Steiner .............................. 137,975 5,805 8,855 134,925 J. Bernbach ............................. 143,351 209,294 352,645 M. Garcia ............................... 200,000 10,809 27,000 183,809 R. Ferris ............................... 100,000 25,000 25,000 50,000 A. Duynstee ............................. 114,160 12,820 3,463 7,036 116,481 L. van Schoonhoven ...................... 165,784 20,165 71,833 10,217 103,899 G. van Woerkom .......................... 119,120 15,372 20,625 7,341 106,526 H. Stephan .............................. 231,672 25,352 84,498 14,880 157,646 B. Singelmann ........................... 177,197 19,391 48,304 11,382 136,902 J. Bove ................................. 138,641 4,260 59,019 22,041 61,841 A. Sturgess ............................. 161,262 161,262 P. Schierholz ........................... 145,988 133,766 9,090 3,132 P. Merkley .............................. 125,000 31,250 93,750 Dr. A. Danyliuk ......................... 262,584 21,592 240,992 J. Kofner ............................... 186,283 186,283 G. Woelky ............................... 136,666 136,666 W. Amerika .............................. 250,917 250,917 E. Manen ................................ 291,492 291,492 C. Maggio ............................... 210,287 210,287 S. Burton ............................... 126,332 75,627 50,705 J. Bradstock ............................ 231,184 231,184 ----------- ----------- ----------- ----------- ----------- ----------- $ 1,882,234 $ 2,305,275 $ 1,371,757 $ 81,987 $ 1,596,601 $ 1,137,164 =========== =========== =========== =========== =========== ===========
- ----------- (1) See footnote on Page S-2 S-1 Schedule II OMNICOM GROUP INC. AND SUBSIDIARIES SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES, UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES (Continued) For the Three Years Ended December 31, 1993
=================================================================================================================================== Column A Column B Column C Column D Column E - ----------------------------------------------------------------------------------------------------------------------------------- Deductions Balance at End of Period ------------------------- -------------------------- Balance at Beginning Amounts Translation Not Name of Debtor of Period Additions Collected Adjustments Current(1) Current(1) - ----------------------------------------------------------------------------------------------------------------------------------- Year Ended December 31, 1991: P. Farago ............................... $ 217,031 $ 19,741 $ 28,426 $ $ 208,346 $ A. Steiner .............................. 140,898 5,932 8,855 3,000 134,975 S. Gillette ............................. 140,000 46,667 46,667 46,666 J. Bernbach ............................. 143,351 143,351 M. Garcia ............................... 200,000 14,900 185,100 R. Ferris ............................... 125,000 25,000 25,000 75,000 T. Hollander ............................ 338,727 329,994 4,169 4,564 J. Klok ................................. 297,565 285,360 3,662 8,543 A. Duynstee ............................. 114,160 114,160 L. van Schoonhoven ...................... 165,784 165,784 G. van Woerkom .......................... 119,120 119,120 H. Stephan .............................. 317,770 32,443 114,266 4,275 231,672 B. Singelmann ........................... 219,728 22,433 62,008 2,956 177,197 J. Bove ................................. 203,466 64,825 138,641 A. Sturgess ............................. 104,546 104,831 (285) P. Schierholz ........................... 145,988 145,988 ----------- ----------- ----------- ----------- ----------- ----------- $ 1,776,265 $ 1,297,418 $ 1,070,232 $ 14,777 $ 1,546,933 $ 441,741 =========== =========== =========== =========== =========== =========== - ----------- (1) Interest is charged at varying rates which approximate the local fair market lending rate. Repayment terms vary in accordance with agreements between the employee and the respective company.
S-2 Schedule VIII OMNICOM GROUP INC. AND SUBSIDIARIES SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS For the Three Years Ended December 31, 1993
==================================================================================================================================== Column A Column B Column C Column D Column E - ------------------------------------------------------------------------------------------------------------------------------------ Additions Deductions ------------ ----------------------------- Balance at Charged Removal of Balance Beginning to Costs Uncollectible Translation at End of Description of Period and Expenses Receivables (1) Adjustments Period - ------------------------------------------------------------------------------------------------------------------------------------ (Dollars in Thousands) Valuation accounts deducted from assets to which they apply-- allowance for doubtful accounts: December 31, 1993 ....................... $12,825 $ 4,742 $ (686) $ 955 $17,298 December 31, 1992 ....................... 15,634 2,545 4,092 1,262 12,825 December 31, 1991 ....................... 16,532 3,085 3,974 9 15,634 - -------------- (1) Net of acquisition date balances in allowance for doubtful accounts of companies acquired of $4,581 and $589 in 1993 and 1992, respectively.
S-3 Schedule IX OMNICOM GROUP INC. AND SUBSIDIARIES SCHEDULE IX--SHORT-TERM BORROWINGS For the Three Years Ended December 31, 1993
================================================================================================================ Column A Column B Column C Column D Column E Column F - ---------------------------------------------------------------------------------------------------------------- Maximum Weighted Outstanding Average Average Category of Weighted Short-term Amount Interest Aggregate Balance at Average Borrowings Outstanding Rate Short-term End of Interest During the During the During the Borrowings Year (1) Rate Year (1) Year (2) Year (3) - ----------------------------------------------------------------------------------------------------------------- Year ended December 31, 1993............................ Banks $26,155,000 6.5% $65,463,000 $43,913,000 7.7% Year ended December 31, 1992............................ Banks 26,505,000 11.2% 75,743,000 50,643,000 8.9% Year ended December 31, 1991............................ Banks 36,229,000 10.5% 54,875,000 36,340,000 9.9% - -------------- (1) Represents balances of U.S. dollar and foreign currency bank loans generally from bank overdrafts. (2) Based upon a simple average of balances measured at regular intervals throughout the year. (3) Annualized interest expense divided by average amount outstanding.
S-4 Schedule X OMNICOM GROUP INC. AND SUBSIDIARIES SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION For the Three Years Ended December 31, 1993
================================================================================================================ Column A Column B Column C Column D - ---------------------------------------------------------------------------------------------------------------- Amount Charged to Expenses -------------------------------------------------- Category 1993 1992 1991 - ---------------------------------------------------------------------------------------------------------------- (Dollars in Thousands) Maintenance and Repairs..................................... $16,334 $14,142 $12,759 Amortization of Intangible Assets........................... 18,950 16,102 13,332
S-5 EX-10.10 2 AMD OMNICOM GROUP PROFIT-SHARING RETIREMENT PLAN EXHIBIT 10.10 AMENDMENT TO OMNICOM GROUP PROFIT-SHARING RETIREMENT PLAN WHEREAS, The OMNICOM GROUP PROFIT-SHARING RETIREMENT PLAN (the "Plan" herein) became effective as of January 1, 1988; and WHEREAS, Article 2, Section 2.1 (f) of the Plan identifies Omnicom Group Inc. as the "Company" for purposes of Article 14 of the Plan; and WHEREAS, Article 14, Section 14.1 states, in part: "The Company shall have the right to amend this Plan in any and all respects at any time . . ." and Article 14, Section 14.2 of the Plan states, in part: "Any such amendment shall be by resolution of the Board of Directors of the Company . . ."; and WHEREAS, The Board of Directors of the Company has taken steps to amend the Plan in the manner and to the extent hereinafter set forth. NOW, THEREFORE, effective as of July 1, 1993, the Plan is amended as follows: First. Article 13, Section 13.5 is amended by deleting the last sentence thereof and substituting the following: "Each Participant having any portion of his or her account held in Fund IV as of the date fixed of record for any vote of shareholders, shall have the right to direct the Trustee as to the manner in which shares of the common stock of the Company allocated to his account as of such record date are to be voted on each matter brought before an annual or special shareholders' meeting. Before each such meeting, the Trustee shall furnish to each Participant a copy of the proxy solicitation material, together with a form requesting direction on how such shares of the common stock of the Company allocated to such Participant's account shall be voted on each such matter. Upon timely receipt of such direction, the Trustee shall on each such matter vote as directed the number of shares of the common stock of the Company allocated to such Participant's account, and the Trustee shall have no discretion in such matter. The directions received by the Trustee from the Participant shall be held by the Trustee in confidence and shall not be divulged or released to any person, including officers or employees of the Company. A Trustee shall vote shares for which it has not received direction and any unallocated shares of the common stock of the Company held in Fund IV in the same proportion as directed shares are voted, and shall have no discretion in such matter." IN WITNESS WHEREOF, OMNICOM GROUP INC. has caused this Amendment to be executed and its corporate seal to be hereunto affixed and attested to by its officers thereunto duly authorized this 14th day of October, 1993. OMNICOM GROUP INC. Bruce Crawford By...................................... Attest: Raymond E. McGovern .................................................... Secretary EX-10.11 3 SEVERANCE AGREEMENT EXHIBIT 10.11 SEVERANCE AGREEMENT AGREEMENT made this 6th day of July, 1993 between DDB Needham Worldwide Inc. ("DDB Needham"), a New York Corporation with its principal place of business at 437 Madison Avenue, New York, New York, 10022, and Keith Reinhard (the "Executive") an employee of DDB Needham currently residing at 151 E. 79 Street, New York, New York 10021. 1. In the event the Executive's employment by DDB Needham is terminated by the Executive or by DDB Needham other than for cause (as defined in paragraph 2 below), DDB Needham shall be obligated to pay to the Executive severance compensation at a rate equal to the Executive's annual rate of base salary as at the effective date of termination of Executive's employment for the number of months determined in accordance with the following schedule (the "Severance Period"): Years of Continuous Service Severance Period --------------------------- ---------------- 5 years or less ............................. 6 months More than 5 but less than 10 years .......... 12 months More than 10 years .......................... 15 months Severance compensation payments shall commence in the calendar month following the effective date of termination of Executive's employment, shall be made on the same dates salary payments are made to employees of the New York office of DDB Needham, and shall be subject to tax withholding as required by law. The effective date of termination of the Executive's employment shall be the end of a calendar month, and the party terminating Executive's employment (i.e. DDB Needham or the Executive) shall give the other party not less than three calendar months prior written notice of such termination. If the Executive's employment is terminated by DDB Needham other than for cause, DDB Needham's obligation to make these severance compensation payments shall be reduced, even up to the entire amount, by any compensation earned during the Severance Period by the Executive from rendering services of the same nature as services rendered by DDB Needham. If the Executive's employment is terminated by the Executive, DDB Needham's obligation to make these severance compensation payments shall be reduced, even up to the entire amount, by any compensation earned by the Executive during the Severance Period. The Executive agrees to give DDB Needham prompt written notice of any and all such arrangements under which he earns compensation during the Severance Period. The Executive's entitlements under this Agreement supersede and replace and hereby terminate entitlements he has or may hereafter have had to compensation payments by reason of termination of employment under DDB Needham's policies and procedures as in effect from time to time. Notwithstanding the foregoing, it is understood and agreed that the Executive's entitlement to receive severance compensation pursuant to this paragraph 1 shall be separate from and in addition to, and with no right of offset against, his entitlement to receive retirement income pursuant to Paragraph 4 of the Employment Agreement dated September 1, 1986 between the Executive and DDB Needham (then known as DDB-NH Acquisition Corp.) (the "Employment Agreement"). 2. For the purposes of this Agreement, the term "cause" shall mean: (a) Dishonesty affecting DDB Needham; (b) Use of alcohol or illegal drugs, interfering with performance of the obligations assigned to the Executive, continuing after warning; (c) Conviction of an indictable offense or of any crime involving dishonesty, moral turpitude, fraud or misrepresentation, or the commission of any act which is in violation of any federal or state law or regulation protecting the rights of employees; (d) The commission of any willful or intentional act which could reasonably be expected to injure the reputation, business or business relationships of DDB Needham; (e) Willful neglect or refusal to perform the duties assigned to the Executive, continuing after warning. 3. Protection of Confidential Information/Return of Property (a) The Executive acknowledges that his position with DDB Needham and his rendering of services to DDB Needham's clients necessarily requires and has and will continue to result in the disclosure to him of confidential information and trade secrets of DDB Needham clients and of DDB Needham (such as, without limitation, marketing plans, budgets, designs, client preferences and policies, identity of appropriate personnel of client with sufficient authority to influence a shift in suppliers, and the various planning and marketing techniques and systems which DDB Needham has developed and may hereafter develop which currently include ROI, R.O.I. PLUS, Media Aperture, Integrated Communications, Personal Media Network, Blueprint for Advertising Excellence, and the related methods of training employees to utilize such systems and the Lifestyles database). The Executive agrees (i) that he will not at any time disclose to anyone any confidential information or trade secret of DDB Needham or any client of DDB Needham or utilize such confidential information or trade secret for his own benefit, or for the benefit or third parties, and (ii) that all memoranda, notes, records, or other documents complied by him or made available to him during his employment concerning the business of DDB Needham and/or its clients shall be the property of DDB Needham and shall be delivered to DDB Needham on the termination of his employment or at any time upon request. If the Executive should breach any of his agreements under this subparagraph (a), DDB Needham's obligation to make severance compensation payments hereunder shall forthwith terminate, but the Executive shall not be obligated to refund such payments theretofore made, if any, by DDB Needham. If the Executive should breach or is about to breach his agreement under (i) of this subparagraph (a), DDB Needham shall also have the right to have the provisions of (ii) specifically enforced by any court having equity jurisdiction without being required to post bond or other security and without having to prove the inadequacy of the available remedies at law (Executive hereby acknowledges that any such breach or threatened breach will cause irreparable injury to DDB Needham for which money damages will not provide an adequate remedy), and the right to take such other actions available to it at law or in equity. (b) Non-Interference It is a condition of DDB Needham's obligation to make severance compensation payments hereunder that before the expiration of the Severance Period the Executive not engage, directly or indirectly, in the following activities: (i) attempt in any manner to solicit from any client of DDB Needham (except on behalf of DDB Needham) business of the type performed by DDB Needham, or persuade, or attempt to persuade any client of DDB Needham to cease to do business or reduce the amount of business which any such client has customarily done or contemplates doing with DDB Needham, whether or not the relationship between DDB Needham and such client was originally established in whole or in part through his efforts; or (ii) render any services of the type performed by DDB Needham for its clients to or for any client of DDB Needham unless rendered as an employee or consultant of DDB Needham; or (iii)attempt in any manner to employ or otherwise retain the services of any person who is then or at any time during the preceding 12 month period was in the employ of DDB Needham. If the Executive engages in any of the aforesaid activities before the expiration of the Severance Period, DDB Needham's obligation to make severance compensation payments hereunder shall forthwith terminate, but the Executive shall not be obligated to refund such payments theretofore made, if any, by DDB Needham, (c) Consultative Services In the event the Executive's employment by DDB Needham is terminated by the Executive, a further condition of DDB Needham's obligation to make severance compensation payments hereunder is that the Executive, if not physically or mentally disabled, shall hold himself available to render to DDB Needham advisory and consultative services with respect to the business and operations of DDB Needham (i) on such business days during the first calendar month following the effective date of termination of his employment as may from time to time be 2 designated by DDB Needham to the Executive in a notice given not less than one day before the day or the first day of the period specified in said notice, and (ii) on up to ten business days during the second calendar month following the effective date of his termination of employment as may from time to time be designated by DDB Needham to the Executive in a notice given not less than three days before the day or the first day of the period specified in said notice. DDB Needham shall reimburse the Executive for reasonable travel and living expenses necessarily incurred by him while away from his principal place of residence in the performance of such advisory and consultative services. If the Executive fails to render such advisory and consultative services when so requested, DDB Needham's obligation to make severance compensation payments hereunder shall forthwith terminate, but the Executive shall not be obligated to refund such payments theretofore made, if any, by DDB Needham. (d) For purposes of this paragraph 3, "DDB Needham" includes subsidiaries of DDB Needham, and the term "client" means any person or entity (i) who is a client of DDB Needham on the date being the earlier of the date on which DDB Needham's obligation to make severance compensation payments hereunder terminates or the commencement date of the Severance Period (the applicable date hereinafter called "the Critical Date"), and (ii) who was a client of DDB Needham during the twelve month period preceding the Critical Date, and (iii) who is a prospective client to whom DDB Needham had made a presentation (or similar offering of services) during the twelve month period preceding the Critical Date. (e) The provisions of this paragraph 3 shall survive the termination of this Agreement. 4. DDB Needham shall not be obligated to make severance compensation payments hereunder in the event of the Executive's death while in the employ of DDB Needham. If the Executive's death occurs during the Severance Period, DDB Needham's obligation to make severance compensation payments hereunder shall terminate on the last day of the calendar month in which his death occurs. Nothing in this paragraph 4 shall affect the executive's entitlement to receive retirement income in the event of his death pursuant to Paragraph 4 of the Employment Agreement. 5. The Executive understands and agrees that this Agreement does not constitute nor have the effect of an express or implied contract for employment by DDB Needham for any fixed period, and that, subject to the notice requirements of paragraph 1 hereof, his employment with DDB Needham is "at will". 6. This Agreement may not be orally canceled, changed, modified or amended, and no cancellation, change, modification or amendment shall be effective or binding, unless in writing and signed by both parties to this Agreement. 7. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without application of the principle of the doctrine of conflict of laws. 8. (a) Except as provided in (b) below, this Agreement represents the entire Agreement between the Executive and DDB Needham with respect to the subject matter hereof, and all prior agreements relating to compensation payments by reason of termination of the Executive's employment, written or oral, are nullified and superseded hereby, and neither party has relied on any representations of the other party except as expressly set forth herein. (b) Notwithstanding the foregoing, it is understood and agreed that the provisions of Paragraph 4 found in the Employment Agreement survive the termination of said Employment Agreement (which occurred on August 31, 1991 by reason of the expiration of the term thereof) and remain in full force and effect and the payments of retirement income thereunder are separate from and in addition to any payments of severance compensation pursuant to this Agreement and such payments of retirement income shall be governed by the provisions of Paragraph 4 of the Employment Agreement. 3 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. Keith Reinhard ..................................... Keith Reinhard DDB Needham Worldwide Inc. Gerald Germain By:.................................... 4 EX-10.12 4 SEVERANCE AGREEMENT EXHIBIT 10.12 Severance Agreement AGREEMENT made as of the 6th day of July, 1993 between DDB Needham Worldwide Inc. ("DDB Needham"), a New York Corporation with its principal place of business at 437 Madison Avenue, New York, New York, 10022, and John L. Bernbach, an employee of DDB Needham, currently residing at 105 East 64th Street, New York, NY 10021, 1. In the event the Executive's employment by DDB Needham is terminated by the Executive or by DDB Needham other than for cause (as defined in paragraph 2 below), DDB Needham shall be obligated to pay to the Executive severance compensation at a rate equal to the Executive's annual rate of base salary as at the effective date of termination of executive's employment for the number of months determined in accordance with the following schedule (the "Severance Period"): Years of Continuous Service Severance Period --------------------------- ---------------- 5 years or less ............................. 6 months More than 5 but less than 10 years .......... 12 months More than 10 years .......................... 15 months Severance compensation payments shall commence in the calendar month following the effective date of termination of Executive's employment, shall be made on the same dates salary payments are made to employees of the New York office of DDB Needham, and shall be subject to tax withholding as required by law. The effective date of termination of the Executive's employment shall be the end of the calendar month, and the party terminating Executive's employment (i.e. DDB Needham or the Executive) shall give the other party not less than three calendar months prior written notice of such termination. If the Executive's employment is terminated by DDB Needham other than for cause, DDB Needham's obligation to make these severance compensation payments shall be reduced, even up to the entire amount, by any compensation earned during the Severance Period by the Executive from rendering services of the same nature as services rendered by DDB Needham. If the Executive's employment is terminated by the Executive, DDB Needham's obligation to make these severance compensation payments shall be reduced, even up to the entire amount, by any compensation earned by the Executive during the Severance Period. The Executive agrees to give DDB Needham prompt written notice of any and all such arrangements under which he earns compensation during the Severance Period. The Executive's entitlements under this Agreement supersede and replace and hereby terminate entitlements he has or may hereafter have had to compensation payments by reason of termination of employment under DDB Needham's policies and procedures as in effect from time to time. 2. For the purposes of this Agreement, the term "cause" shall mean: (a) Dishonesty affecting DDB Needham; (b) Use of alcohol or illegal drugs, interfering with performance of the obligations assigned to the Executive, continuing after warning; (c) Conviction of an indictable offense or of any crime involving dishonesty, moral turpitude, fraud or misrepresentation, or the commission of any act which is in violation of any federal or state law or regulation protecting the rights of employees; (d) The commission of any willful or intentional act which could reasonably be expected to injure the reputation, business or business relationships of DDB Needham; (e) Willful neglect or refusal to perform the duties assigned to the Executive, continuing after warning. 3. Protection of Confidential Information/Return of Property (a) The Executive acknowledges that his position with DDB Needham and his rendering of services to DDB Needham's clients necessarily requires and has and will continue to result in the disclosure to him of confidential information and trade secrets of DDB Needham clients and of DDB Needham (such as without limitation, marketing plans, budgets, designs, client preferences and policies, identity of appropriate personnel of client with sufficient authority to influence a shift in suppliers, and the various planning and marketing techniques and systems which DDB Needham has developed and many hereafter develop which currently include ROI, R.O.I. PLUS, Media Aperture, Integrated Communications, Personal Media Network, Blueprint for Advertising Excellence, and the related methods of training employees to utilize such systems and the Lifestyles database). The Executive agrees (i) that he will not at any time disclose to anyone any confidential information or trade secret of DDB Needham or any client of DDB Needham or utilize such confidential information or trade secret for his own benefit, or for the benefit of third parties, and (ii) that all memoranda, notes, records, or other documents compiled by him or made available to him during his employment concerning the business of DDB Needham and/or its clients shall be the property of DDB Needham and shall be delivered to DDB Needham on the termination of his employment or at any other time upon request. If the Executive should breach any of his agreements under this subparagraph (a), DDB Needham's obligation to make severance compensation payments hereunder shall forthwith terminate, but the Executive shall not be obligated to refund such payments theretofore made, if any, by DDB Needham. If the Executive should breach or is about to breach his agreement under (i) of this subparagraph (a), DDB Needham shall also have the right to have provisions of (i) specifically enforced by any court having equity jurisdiction without being required to post bond or other security and without having to prove the inadequacy of the available remedies at law (Executive hereby acknowledges that any such breach or threatened breach will cause irreparable injury to DDB Needham for which money damages will not provide an adequate remedy), and the right to take such other actions available to it at law or in equity. (b) Non-Interference It is a condition of DDB Needham's obligation to make severance compensation payments hereunder that before the expiration of the Severance Period the Executive not engage, directly or indirectly, in the following activities: (i) attempt in any manner to solicit from any client of DDB Needham (except on behalf of DDB Needham) business of the type performed by DDB Needham, or persuade any client of DDB Needham to cease to do business or reduce the amount of business which any such client has customarily done or contemplates doing with DDB Needham, whether or not the relationship between DDB Needham and such client was originally established in whole or in part through his efforts; or (ii) render any services of any type performed by DDB Needham for its clients to or for any client of DDB Needham unless rendered as an employee or consultant of DDB Needham; or (iii)attempt in any manner to employ or otherwise retain the services of any person who is then or at any time during the preceding 12 month period was in the employ of DDB Needham. If the Executive engages in any of the aforesaid activities before the expiration of the Severance Period, DDB Needham's obligation to make severance compensation payments hereunder shall forthwith terminate, but the Executive shall not be obligated to refund such payments theretofore made, if any, by DDB Needham. (c) Consultative Services In the event the Executive's employment by DDB Needham is terminated by the Executive, a further condition of DDB Needham's obligation to make severance compensation payments hereunder is that the Executive, if not physically or mentally disabled, shall hold himself available to render to DDB Needham advisory and consultative services with respect to the business and operations of DDB Needham (i) on such business days during the first calendar month following the effective date of termination of his employment as may from time to time be designated by DDB Needham to the Executive in a notice given not less than one day before the day or the first day of the period specified in said notice, and (ii) on up to ten business days during the second calendar month following the effective date of his termination of employment as may from time to time designated by DDB Needham to the 2 Executive in a notice given not less than three days before the day or the first day of the period specified in said notice. DDB Needham shall reimburse the Executive for reasonable travel and living expenses necessarily incurred by him while away from his principal place of residence in the performance of such advisory and consultative services. If the Executive fails to render such advisory and consultative services when so requested DDB Needham's obligation to make severance compensation payments hereunder shall forthwith terminate, but the Executive shall not be obligated to refund such payments theretofore made, if any, by DDB Needham. (d) For purposes of this paragraph 3, "DDB Needham" includes subsidiaries of DDB Needham, and the term "client" means any person or entity (i) who is a client of DDB Needham on the date being the earlier if the date on which DDB Needham's obligation to make severance compensation payments hereunder terminates or the commencement date of the Severance Period (the applicable date hereinafter called "the Critical Date"), and (ii) who was a client of DDB Needham during the twelve month period preceding the Critical Date, and (iii) who is a prospective client to whom DDB Needham had made a presentation (or similar offering of services) during the twelve month period preceding the Critical Date. (e) The provisions of this paragraph 3 shall survive the termination of this Agreement. 4. DDB Needham shall not be obligated to make severance compensation payments hereunder in the event of the Executive's death while in the employ of DDB Needham. If the Executives death occurs during the Severance Period, DDB Needham's obligation to make severance compensation payments hereunder shall terminate on the last day of the calendar month in which death occurs. 5. The Executive understands and agrees that this Agreement does not constitute nor have the effect of an express or implied contract for employment by DDB Needham for any fixed period, and that, subject to the notice of requirements of paragraph 1 hereof, his employment with DDB Needham is "at will". 6. This Agreement may not be orally canceled, changed, modified or amended, and no cancellation, change, modification or amendment shall be effective or binding, unless in writing and signed by both parties to this Agreement. 7. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without application of the principle of the doctrine of conflict of laws. 8. This Agreement represents the entire Agreement between the Executive and DDB Needham with respect to the subject matter hereof, and all prior agreements (including without limitation the Employment Agreement dated September 1, 1986, as amended by Letter Agreement dated February 11, 1988) relating to compensation payments by reason of termination of the Executive's employment, written or oral, are nullified and superseded hereby, and neither party has relied on any representations of the other party except as expressly set forth herein. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. John L. Bernbach .................................. John L. Bernbach DDB Needham Worldwide Inc. Gerald Germain By:................................ 3 EX-10.13 5 EMPLOYMENT AGREEMENT EXHIBIT 10.13 EMPLOYMENT AGREEMENT AGREEMENT made this 26th day of May 1993, by and between TBWA INTERNATIONAL B.V., a corporation organized under the laws of the Netherlands (the "Company"), and WILLIAM G. TRAGOS (the "Executive"). W I T N E S S E T H : WHEREAS, entering into this Agreement is a condition of closing under that certain Stock Purchase Agreement of even date herewith (the "Purchase Agreement"), whereby Omnicom Group Inc. ("Omnicom"), acquired all the issued and outstanding shares of capital stock of the Company; WHEREAS, the Company and the Executive wish to set forth the terms and conditions of the Executive's continued employment by the Company; and NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Employment The Company agrees to employ the Executive for the Term specified in paragraph 2, and the Executive agrees to accept such employment upon the terms and conditions hereinafter set forth. 2. Term Subject to the terms and conditions of this Agreement, this Agreement shall be for a term commencing on the date hereof and expiring on the close of business on May 31, 1998 (the "Initial Term"); provided, however, this Agreement shall continue thereafter unless and until either party shall give to the other at least one year's written notice of termination (the Initial Term and the period, if any, thereafter, are collectively referred to as the "Term"). Such notice of termination shall specify the date of termination (which may not be earlier than May 31, 1998 and may be given before, on or after May 31, 1998). The Company shall have the right after the completion of the Initial Term at any time during such notice period to relieve the Executive of his office, duties and responsibilities and to place him on a paid leave-of-absence status, provided that during such notice period the Executive shall remain a full-time employee of the Company and shall continue to receive his direct salary compensation and other benefits as provided in this Agreement. 3. Duties and Responsibilities (a) During the Term, the Executive shall hold the position of Chairman and Chief Executive Officer of the Company and, in addition, the Executive shall serve as the principal executive officer of the group of companies owned, directly or indirectly, by the Company (the "Company Group") and have the additional title of Chairman and Chief Executive Officer of the Company Group. The Executive may serve as a director and/or an officer of one or more companies within the Company Group. (b) The Executive shall perform such executive duties and responsibilities as may be assigned to him from time to time by or under authority of the Board of Directors of the Company or the Chief Executive Officer of Omnicom, consistent with his positions as designated in clause (a) above, and in the 2 absence of such assignment, such duties customary to such office as are necessary to the operations of the Company and the Company Group. In furtherance of the foregoing and not in limitation thereof, the Executive shall have primary responsibility and authority (subject to the terms of this Agreement) for the general management, administration and long-term planning and day-to-day operations of the Company Group, including without limitation (i) development and implementation of an annual profit plan for the Company Group, (ii) liaison between the Company Group and Omnicom, (iii) selection, review and evaluation of key personnel within the Company Group (it being understood that all such key personnel shall report to the Executive or other executives designated by him), (iv) determination of the compensation for the key personnel within the Company Group, subject to the Omnicom "Grant of Authority" limitations and the then current profit plan of the Company Group, (v) coordination of the various companies within the Company Group to the end that the Company Group operates as a coordinated network and not as separate offices, and (vi) the exclusive right and obligation to take such action under the Company's Management Incentive Plan as is required of the Chief Executive Officer of the Company under the terms of such Plan. The Executive shall use all reasonable efforts to perform his duties and responsibilities in a manner consistent with the policies set forth in Omnicom's "Grant of Authority" as from time to time in effect and the parameters of the then-current profit plan of the Company Group, and to insure that the Company Group complies on a timely basis with all budgetary and reporting requirements reasonably requested by Omnicom. The Executive shall report to the Chief Executive Officer of Omnicom at such times and in such detail as Omnicom's Chief Executive Officer shall reasonably require. The Executive further agrees that consistent with the practice of the chief executive officers of the other international networks within Omnicom, he shall consult with the Chief Executive Officer of Omnicom regarding significant transactions, developments and future 3 plans of the Company Group and shall consider the viewpoint and requests of the Chief Executive Officer of Omnicom relating thereto before implementing action in respect thereof. (c) The Executive's employment under this Agreement shall be full-time and exclusive, and during the Term, the Executive agrees that he will (i) devote all his business time and attention, his best efforts, and all his skill and ability (collectively, "best efforts") to promote the interests of Omnicom and the Company Group, (ii) use his best efforts to carry out his duties in a competent and professional manner and (iii) use his best efforts to work with other employees of the Company Group and Omnicom in a competent and professional manner. During the Term it shall not be a violation of this Agreement for the Executive to (i) serve on civic or charitable boards or committees, (ii) perform speaking engagements and (iii) manage his personal passive investments, as long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with the terms of this Agreement. (d) The Executive shall be based at the offices of the Company's subsidiary in New York City, subject to necessary travel requirements of his position and duties hereunder. 4. Compensation (a) As compensation for services hereunder (including without limitation serving as a director and/or officer of companies within the Company Group), and in consideration of his agreement not to compete as set forth in paragraph 8 below, during the Term, the Executive shall be paid salary compensation and/or director fees at an aggregate annual rate of $570,000, or such greater amount as may be established by or under the authority of the Chief Executive Officer of 4 Omnicom in accordance with the review policy applicable to senior executive officers of other Omnicom companies (currently every 18 months). Such salary and director fees may be allocated among and paid by the members of the Company Group for whom the Executive shall perform services hereunder as from time to time determined. (b) During the Term the Executive shall be eligible to receive annual bonus compensation from the various members of the Company Group in accordance with the terms of their Profit Performance Bonus programs. In addition, the Executive shall be eligible to participate in the Company's Management Incentive Plan and to receive such awards as may be allocated to him thereunder in accordance with the terms of such Plan. The Executive agrees that any amounts allocated to the Executive under the Profit Performance Bonus programs and/or the Management Incentive Plan shall be subject to the prior approval of the Chief Executive Officer of Omnicom (which approval shall be based upon the financial performance of the Company Group without reference to Omnicom's overall financial performance, the Executive's personal performance and the amount of the allocations to the Executive under such Bonus programs and Management Incentive Plan as compared to the other participants in such Bonus programs and Plan). 5. Expenses; Fringe Benefits (a) The Company agrees to pay or to reimburse and/or cause members of the Company Group to pay or to reimburse the Executive during the Term for all reasonable, ordinary and necessary vouchered business or entertainment expenses incurred in the performance of his services hereunder in accordance with the policies of the Company and Company Group as from time to time in effect. In furtherance of such policies, the Executive, as a condition precedent to obtaining such payment or reimbursement, shall provide to the Company any and all statements, bills or receipts evidencing the travel or out-of-pocket 5 expenses for which the Executive seeks payment or reimbursement, and any other information or materials, as the Company may from time to time reasonably require. (b) During the Term the Executive shall be entitled to participate in (i) the group medical, dental and life insurance program, profit sharing plan, 401(k) plan, long-term disability plan, and other fringe benefits as are now, or hereafter may be, established by the Company's subsidiary, TBWA Advertising Inc., for the benefit of its employees generally or its executive officers and (ii) the fringe benefits of other members of the Company Group for which he performs services, as from time to time determined; subject, however, in each case under (i) or (ii) to the eligibility and other provisions of the various benefit plans and programs in effect from time to time and without duplication of benefits; provided, however, that the Executive's participation in the medical, insurance and retirement benefits of the Company's French subsidiary on the same bases as such benefits are currently in effect shall not be deemed duplicative for the purposes hereof. In furtherance of the foregoing, as long as the Executive is employed by the Company, it is agreed that: (i) TBWA Advertising Inc. will provide the Executive for his business use with an automobile of the Executive's choosing and shall pay all expenses in connection with the leasing, insuring, maintaining and garaging such automobile (the "Auto Costs"), at an annual cost not to exceed $9,000; provided, however, at the expiration of his current automobile lease, such lease shall be replaced by a monthly automobile allowance of $750 per month to cover all Auto Costs; 6 (ii) TBWA Advertising Inc. shall reimburse the Executive annually for financial planning and tax preparation assistance in an amount not to exceed $5,000; (iii) TBWA Advertising Inc. shall reimburse the Executive for the dues of a club to be used for business purposes in an amount not to exceed $5,000; (iv) Within 30 days after the date hereof, the Executive will be offered an Executive Salary Continuation Plan Agreement in the form of Exhibit A hereto with a 50% salary limitation (it being agreed that the determination of the Executive's "Participation" under the Executive Salary Continuation Plan Agreement shall be made on a basis consistent with the basis that the determinations are made for other executives of comparable position and responsibility who also participate in the Plan); (v) TBWA Advertising Inc. shall continue in existence (x) the Collateral Assignment Split Dollar Agreement dated October 12, 1984 and (y) the Deferred Compensation Agreement dated October 12, 1984; provided, however, that no further premium payments shall be made by TBWA Advertising Inc. or any other company within the Company Group in respect of the insurance policy subject to the Collateral Assignment Split Dollar Agreement and (z) the Retirement Income Agreement dated May 26, 1993. (c) The Executive shall be entitled to four weeks paid vacation during each full calendar year of the Term, to be taken at such time(s) as shall not, in the reasonable judgment of the Board of Directors of the Company, materially 7 interfere with the Executive's fulfillment of his duties hereunder, and shall be entitled to as many holidays, sick days and personal days as are in accordance with the policy of TBWA Advertising Inc. then in effect for its executive employees. (d) If at any time after five "Years of Service" (as such term is defined in the Omnicom Executive Salary Continuation Plan Agreement attached to the Agreement as Exhibit A) the Executive's employment with the Company terminates for any reason other than "cause" (as defined in paragraph 6 below), the Company shall pay the Executive severance compensation in an amount equal to 50% of his then annual rate of salary and director fee compensation. Such payment shall be made in a lump sum payment within 30 days after the effective date of the Executive's termination of employment. The payment under this paragraph 5(d) shall not be deemed a Post-Employment Payment under paragraph 6 of Section IV of the Omnicom Executive Salary Continuation Plan Agreement. 6. Discharge by Company The Company, by direction of its Board of Directors or the Chief Executive Officer of Omnicom, shall be entitled to terminate the Term and to discharge the Executive for "cause", and in such event, the Executive's right to receive any unearned, non-vested or non-accrued compensation hereunder from the Company shall then terminate. The term "cause" shall be limited to the following grounds: (a) The Executive's failure or refusal to perform his duties and responsibilities as set forth in paragraph 3 hereof, or the failure of the Executive to devote all his business time and attention exclusively to the business and affairs of the Company Group in accordance with the terms hereof, in each case if such failure or 8 refusal continues after written warning to the Executive; (b) The willful misappropriation of the funds or property of any member of the Company Group; (c) Excessive use of alcohol or use of illegal drugs, interfering with performance of the Executive's obligations under this Agreement, continuing after written warning; (d) Indictment or conviction of a felony or of any crime involving moral turpitude, fraud or theft; (e) The commission by the Executive of any willful or intentional act having the effect, or likely to have the effect, of materially injuring the reputation, business or business relationships of a member of the Company Group; (f) Any material breach (not covered by any of the clauses (a) through (e)) of any of the provisions of this Agreement, if such breach is not cured within 10 days after written notice thereof to the Executive by the Company; and (g) Resignation by the Executive of his position with the Company. In any case where warning or notice to the Executive is required under this paragraph 6, such warning or notice shall identify with reasonable specificity the conduct relied upon as a basis for such warning or notice. 9 7. Disability; Death (a) In the event the Executive shall be unable to perform his duties hereunder at the offices of the Company by virtue of illness or physical or mental incapacity or disability (from any cause or causes whatsoever) in substantially the manner and to the extent required hereunder prior to the commencement of such disability (all such causes being herein referred to as "disability") and the Executive shall fail to perform such duties for periods aggregating 120 days, whether or not continuous, in any continuous period of 180 days, the Company shall have the right to terminate the Executive's employment hereunder as at the end of any calendar month upon 30 days prior written notice to him. In such event, the Executive shall be entitled to receive when otherwise payable his then salary compensation and director fees and benefits accrued to the effective date of termination. (b) In case of the death of the Executive, this Agreement shall terminate and the Company shall be obligated to pay to the Executive's estate when otherwise payable his then salary compensation and director fees and benefits accrued to the end of the month in which such death occurred. 8. Non-Competition and Protection of Confidential Information (a) The Executive agrees that his services hereunder are of a special, unique, extraordinary and intellectual character, and his position with the Company Group places him in a position of confidence and trust with the clients and employees of the Company Group. The Executive also acknowledges that the clients serviced by the various members of the Company Group are located throughout the world and that the Executive will render services to clients of various members of the Company Group. The Executive further acknowledges that the rendering of services to the clients of the Company Group necessarily requires the disclosure of confidential information and trade secrets of the 10 Company Group (such as without limitation, marketing plans, budgets, designs, client preferences and policies, and identity of appropriate personnel of clients with sufficient authority to influence a shift in suppliers). The Executive and the Company agree that in the course of employment hereunder, the Executive has and will continue to develop a personal acquaintanceship and relationship with the clients of the Company Group, and a knowledge of those clients' affairs and requirements. The Executive acknowledges that the relationships of the Company Group with its established clientele may therefore be placed in the Executive's hands in confidence and trust, and the Executive consequently agrees that it is reasonable and necessary for the protection of the goodwill and business of the Company Group that the Executive make the covenants contained herein. Accordingly, the Executive agrees that while he is in the Company's employ and for a two year period thereafter, he shall not in any country in which a member of the Company Group conducts business, except on behalf of the Company Group, directly or indirectly and regardless of the reason for his ceasing to be employed by the Company: (i) attempt in any manner to solicit from any client business of the type performed by the Company Group or to persuade any client of the Company Group to cease to do business or to reduce the amount of business which any such client has customarily done or contemplates doing with a member of the Company Group, whether or not the relationship between the Company Group and such client was originally established in whole or in part through his efforts; or (ii) employ or attempt to employ or assist anyone else to employ any person who is then or at any time during the preceding year was an employee of or consultant to a member of the Company Group; or 11 (iii) render to or for any client of the Company Group any services of the type rendered by the Company Group. As used in this paragraph 8, the verb "employ" shall include its variations, for example, retain, engage or conduct business with; the term "Company Group" shall include the Company and all members of the Company Group; and the term "client" shall mean (1) anyone who is a client of any member of the Company Group at the time of the termination of the Executive's employment or, if the Executive's employment shall not have terminated, at the time of the alleged prohibited conduct; (2) anyone who was a client at any time during the two year period immediately preceding the termination of the Executive's employment or, if the Executive's employment shall not have terminated, during the two year period immediately preceding the alleged prohibited conduct; and (3) any prospective clients to whom any member of the Company Group had made a formal presentation (or similar offering of services) within the one year period immediately preceding the termination of the Executive's employment, or if the Executive's employment with the Company shall not have terminated, within the one year period immediately preceding the alleged prohibited conduct. (b) The Executive also agrees that he will not at any time (whether during the Term or after termination of this Agreement), disclose to anyone any confidential information or trade secret of the Company Group or any client of the Company Group, or utilize such confidential information or trade secret for his own benefit, or for the benefit of third parties and all memoranda, notes, records or other documents compiled by him or made available to him during the Term concerning the business of the Company Group and/or its clients shall be the property of the Company and shall be delivered to the Company on the termination of his employment or at any other time upon request; provided, 12 however, the foregoing shall not be deemed to impose on the Executive any requirement to retain the same. (c) If the Executive commits a breach or is about to commit a breach, of any of the provisions of (a) or (b) above, the Company shall have the right to have the provisions of this Agreement specifically enforced by any court having equity jurisdiction without being required to post bond or other security and without having to prove the inadequacy of the available remedies at law, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company Group and that money damages will not provide an adequate remedy to the Company Group. In addition, the Company may take all such other actions and remedies available to it under law or in equity and shall be entitled to such damages as it can show it has sustained by reason of such breach. (d) The parties acknowledge that the type and periods of restriction imposed in the provisions of (a) and (b) above, are fair and reasonable and are reasonably required for the protection of the Company and the goodwill associated with the business of the Company Group acquired by Omnicom in connection with the purchase of capital stock of the Company; and that the time scope, geographic area and other provisions of this paragraph 8 have been specifically negotiated by sophisticated commercial parties and are given as an integral part of the transactions contemplated by the Purchase Agreement. If any of the covenants in (a) or (b) above, or any part thereof, is hereafter construed to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to the invalid portions. If any of the covenants contained in (a) or (b), or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration and/or 13 areas of such provision and, in its reduced form, said provision shall then be enforceable. The parties hereto intend to and hereby confer jurisdiction to enforce the covenants contained in (a) and (b) above upon the courts of any jurisdiction within the geographical scope of such covenants. In the event that the courts of any one or more of such jurisdictions shall hold such covenants wholly unenforceable by reason of the breadth of such scope or otherwise, it is the intention of the parties hereto that such determination not bar or in any way affect the Company's right to the relief provided above in the courts of any other jurisdictions within the geographical scope of such covenants, as to breaches of such covenants in such other respective jurisdictions, the above covenants as they relate to each jurisdiction being, for this purpose, severable into diverse and independent covenants. 9. Intellectual Property During the Term, the Executive will disclose to the Company all ideas, inventions and business plans developed by him during such period which relate directly or indirectly to the Company's business or any of its subsidiaries or affiliates, including without limitation, any process, operation, product or improvement which may be patentable or copyrightable. The Executive agrees that such will be the property of the Company and that he will at the Company's reasonable request and cost do whatever is necessary to secure the rights thereto by patent, copyright or otherwise to the Company. 10. Enforceability The failure of either party at any time to require strict compliance or performance by the other party of any provision hereunder or the failure to assert any right hereunder shall in no way be deemed to be a waiver of that provision or affect the right of that party thereafter to enforce the same, nor shall it affect any other party's right to enforce the same, or to enforce any 14 of the other provisions in this Agreement; nor shall the waiver by either party of the breach of any provision hereof be taken or held to be a waiver of any subsequent breach of such provision or as a waiver of the provision itself. 11. Assignment This Agreement is a personal contract and the Executive's rights and obligations hereunder may not be sold, transferred, assigned pledged or hypothecated by the Executive. The rights and obligations of the Company hereunder shall be binding upon and run in favor of the successors and assigns of the Company. 12. Severability In the event any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall nevertheless be binding upon the parties with the same effect as though the void or unenforceable part had been severed and deleted. 13. Life Insurance The Executive agrees that the Company shall have the right to obtain life insurance on the Executive's life, at the Company's sole expense and with the Company as the sole beneficiary thereof. The Executive shall (a) cooperate fully with the Company in obtaining such life insurance, (b) sign any necessary consents, applications and other related forms or documents and (c) take any required medical examinations. 14. Notices Any notice, request, instruction or other document to be given hereunder by 15 either party hereto to the other shall be in writing and shall be deemed effective (a) upon personal delivery, if delivered by hand, (b) three days after the date of deposit in the mails, if sent by registered or certified mail, return receipt requested, or the next business day if sent by facsimile transmission or by overnight courier service, and in each case of mailing, postage prepaid and at the respective addresses or numbers set forth below or such other address or number as such party may have fixed by notice: If to the Executive, addressed to: William G. Tragos 44 Calhoun Drive Greenwich, Connecticut 06831 If to the Company, addressed to: Omnicom Group Inc. 437 Madison Avenue New York, New York 10022 Attention: Chief Executive Officer 15. No Conflict The Executive represents and warrants that he is not subject to any agreement, instrument, order, judgment or decree of any kind, or any other restrictive agreement of any character, which would prevent him from entering into this Agreement or which would be breached by the Executive upon his performance of his duties pursuant to this Agreement. 16. Miscellaneous (a) The Company and/or the applicable members of the Company Group may withhold from any amounts payable under this Agreement such Federal, state, 16 local or foreign taxes as may be required to be withheld pursuant to any applicable law or regulation. (b) This Agreement represents the entire agreement between the Company and the Executive with respect to the subject matter hereof, and all prior agreements relating to the employment of the Executive, written or oral, are nullified and superseded hereby, including without limitation, the Service Agreement between the Executive and the Company dated August 7, 1991. (c) This Agreement may not be orally cancelled, changed, modified or amended, and no cancellation, change, modification or amendment shall be effective or binding, unless in writing and signed by both parties to this Agreement. (d) The headings contained in this Agreement are for reference purposes only, and shall not affect the meaning or interpretation of this Agreement. 17 (e) This Agreement shall be governed by and construed in accordance with the laws of the State of New York without reference to principles of conflict of laws. (f) Except as provided in section 8(c) above, any and all disputes arising out of or related to this Agreement shall be determined by arbitration in accordance with the rules of the American Arbitration Association in the City of New York, and judgment upon decision by the arbitrator may be entered in any court having jurisdiction thereof. Liability for costs of the arbitration and related reasonable attorneys' fees and expenses of the parties shall be as specified in the arbitration award, and the arbitrator is expressly authorized and directed to take into account the relative merits of the positions of the respective parties in allocating such costs, fees and expenses. IN WITNESS WHEREOF, the parties have set their hands and seals on and as of the day and year first above written. TBWA INTERNATIONAL B.V. By ---------------------------- ---------------------------- William G. Tragos 18 EXHIBIT A TO EMPLOYMENT AGREEMENT OMNICOM GROUP INC. EXECUTIVE SALARY CONTINUATION PLAN AGREEMENT Agreement made the 24th day of June, 1993 by and between Omnicom Group Inc., a New York corporation, its place of business at 437 Madison Avenue, New York, New York 10022, and William G. Tragos ("Participant"), an employee of TBWA International B.V., a subsidiary of Omnicom Group Inc. I. Purpose of the Plan. The purpose of the 1988 Executive Salary Continuation Plan (the "Plan") is to further the growth of Omnicom Group Inc. by offering a benefit to encourage experienced executives to enter the employ of Omnicom Group Inc. or one of its Subsidiary companies, and to encourage key executives to remain in the employ of Omnicom or a Subsidiary company. II. Definitions. The following terms shall have the meaning set forth below: 1. "Company" means Omnicom Group Inc. 2. "Subsidiary" means any company in which the Company holds, directly or indirectly, fifty percent (50%) or more of its outstanding voting stock. 3. "Affiliate" means any company in which the Company holds, directly or indirectly, not less than twenty percent (20%) but not more than forty nine percent (49%) of its outstanding voting stock. 4. "Employer" means the Company or a Subsidiary. 5. "Employer Group" means the Company and all Subsidiaries. 19 6. "Committee" means the Compensation Committee of the Board of Directors of the Company, or if there should be no Compensation Committee means a committee of not less than three members of the Board of Directors of the Company none of whom shall, while serving as a member of the committee, be eligible to participate in the Plan. 7. "Participant" means an employee of the Employer recommended by the Chief Executive Officer of the Company and approved by the Committee as a participant in the Plan. 8. "Beneficiary" means any person, persons, entity or entities designated in writing by the Participant to the Company to receive payment, if any, to be made hereunder following the death of the Participant, and in the absence of such designation, means (i) the Participant's surviving spouse, while living, and (ii) if there be no surviving spouse or upon the death of the surviving spouse, then to the estate of the Participant. 9. "Participation" means the highest percentage of the annual net profits of the Company specified by the Company and communicated to the Participant in writing by the President, Chief Financial Officer or the Secretary of the Company. 10.(a) "Net profits of the Company" means the consolidated net profits of the Company for a calendar year determined in accordance with its then current accounting procedures and practices before deducting any United States income tax applicable to its taxable income for such year. In determining net profits of the Company, the following shall apply: (i) dividends from Subsidiaries and Affiliates shall be excluded from income; (ii) the Company's interest in the net profit or loss of Subsidiaries and Affiliates before deducting any United States or foreign national income tax shall be included in income; (iii) any liability to make payments or payments made under this document or under like documents with others shall not be deducted as an expense; 20 (iv) the premiums for and the proceeds of life insurance policies payable to the Company and/or a Subsidiary shall not be deducted as an expense or included in income, as the case may be; (v) the aggregate amount, if any, by which employee compensation (salary, bonus, service awards, stock awards and the like, but excluding contributions to pension and/or deferred profit sharing plans) paid or accrued in respect of a calendar year by the Company and its Subsidiaries exceeds fifty-two (52%) percent of such year's consolidated gross income of the Company (income from all sources except for dividends from Subsidiaries and Affiliates, and before adjustments, if any, resulting from efficiency incentive compensation arrangements with clients) shall not be deducted as an expense; and (vi) in respect of each calendar year commencing with calendar year 1989, the aggregate amount, if any, by which interest and other charges for the borrowing of funds paid or accrued in respect of a calendar year by the Company and its Subsidiaries ("Debt Service") exceeds the Allowable Debt Service for the subject year shall not be deducted as an expense; for purposes hereof "Allowable Debt Service" means (A) for calendar year 1988 the actual Debt Service for such year, (B) for calendar year 1989, the Allowable Debt Service for calendar year 1988 increased by 20% or increased by the percentage increase, if any, in the actual Debt Service for 1989 over the actual Debt Service for 1988, whichever results in the lower amount, and (C) for each calendar year subsequent to calendar year 1989, the Allowable Debt Service for the immediately preceding calendar year increased by 20% or increased by the percentage increase, if any, in the actual Debt Service for the subject calendar year over the actual Debt Service for the immediately preceding calendar year, whichever results in the lower amount. (b) The Company, upon its own initiative may, or shall upon receipt of written demand from the Participant or the Beneficiary, as the case may, designate a firm of public accountants, which may or may not be the firm of accountants regularly employed by the Company to verify the Company's determination of net profits of the Company, and to determine any question arising in the course of such verification not herein specifically provided for. 21 The determination by such firm of public accountants shall be binding and conclusive. In computing net profits of the Company, the public accountants shall conform to the accounting procedures and practices of the Company as modified by the provisions of subparagraph (a) of this Section 10. A condition of the right to demand verification as aforesaid is that the person requesting verification shall reimburse the Company to the extent of one-half of the cost of the services of such public accountants, and, at the request of the Company and before the accountants shall have commenced the verification work, shall pay to the Company one-half of the cost of the services of the said accountants as estimated by them. 11.(a) "Year of Service" means each consecutive period of 365 days the Participant is in the continuous employ of a member or members of the Employer Group. For purposes of this Section, "continuous employ of members of the Employer Group" means consecutive employment by members of the Employer Group without interruption by reason of self-employment or employment by a third party employer, except as provided in Section 11 (b)(ii) below. (b) A Participant shall be in the employ of the Employer regardless of absences by reason of: (i) sick leave, vacation leave, maternity leave or other special leave approved by the Employer which does not exceed 6 months, provided the Participant returns to work for the Employer not later than the expiration date of the authorized leave of absence; and (ii) time spent in the service of others at the request of, or with the approval of, the Employer, provided the Participant returns to work for the Employer within 15 days following cessation of work for such other party. 12. "Salary" means the base salary paid by the Employer, excluding all other forms of compensation, such as bonuses, special awards, severance pay, contributions under benefit plans, and the compensatory elements of stock awards. The payroll records of the Employer shall be conclusive and binding on the Participant, the Beneficiary and the Employer as to the salary of the Participant. "One year's salary" shall mean the highest annual rate of salary at which the Participant was paid by the Employer at any time within five (5) years 22 of the termination of the Participant's employment giving rise to the Company's obligation to make payments under Article IV hereof. 13. "Salary Limitation" means the highest percentage of one year's salary, which may not exceed 50%, specified by the Company and communicated to the Participant in writing by the President, Chief Financial Officer or the Secretary of the Company. 14. "Disability" means the inability of the Participant, by reason of physical condition, mental illness or accident, to perform substantially all of the duties of the position at which he was employed by the Employer when such disability commenced. 15. "Cause" means the Participant's misconduct involving willful malfeasance, such as breach of trust, fraud or dishonesty. All determinations as to "Disability" or "Cause" shall be made by the Board of Directors of the Employer, after a hearing at which the Participant may be present, and the determination by the Board of Directors shall be final and conclusive. III. Employment Is Unrestricted. Nothing herein contained shall be deemed to give the Participant the right to remain in the employ of the Employer or to interfere with the right of the Employer to terminate the Participant's employment at any time, nor to give the Employer the right to require the Participant to remain in its employ or to interfere with the Participant's right to terminate employment at any time. IV. Compensation. 1. In the event (a) the Participant dies while in the employ of the Employer, (b) the Employer determines, in the manner provided in Article II, Section 14 hereof, that the Participant is disabled and the employment of the Participant is terminated by the Employer by reason of Disability, (c) the Participant, after 5 Years of Service, terminates his or her employment with the Employer for a reason other than to enter the employ of another member of the 23 Employer Group or (d) the employment of the Participant is terminated by the Employer for a reason other than Cause, then upon the happening of any such event the Company, subject to all the terms and conditions hereof, shall become obligated to pay to the Participant, or to the Beneficiary if the obligation arises under (a) above, each year, for the number of consecutive calendar years determined in accordance with the schedule on page 8 hereof, an amount equal to the lesser of (i) the Salary Limitation applied to one year's salary, or (ii) the Participation applied to the net profits of the Company for the calendar year immediately preceding the calendar year of payment, subject to adjustment as provided in Sections 3, 4 and 5 of this Article. 2. The first calendar year of payment, if any, shall be the second calendar year following the calendar year in which the event that gave rise to the Company's obligation to pay occurred. If, however, such event is the death of the participant while in the employ of the Employer, the first calendar year of payment shall be the first calendar year following the calendar year in which the Participant's death occurred. Payment shall be made by the Company in each calendar year of payment during the first ninety (90) days of the subject calendar year. 3.(a)In the event of the Participant's death after the occurrence of an event described in (b), (c) or (d) of Section 1 of this Article and before the Participant has received payment(s) for all calendar years in respect of which the Company is obligated to make payment hereunder ("Payment Period"), the Company shall thereafter be obligated to make an annual payment to the Beneficiary during the Payment Period or the remainder thereof, as the case may be, equal to seventy five (75%) percent of the amount which the Company would have been obligated to pay to the Participant had the Participant lived to receive all payments. (b) In the event of the Participant's death while in the employ of the Employer, the Company shall be obligated to make an annual payment to the Beneficiary in the same manner and to the same extent as provided in (a) of this Section 3. (c) The Company may, at any time and from time to time, seek to fund, in whole or in part, its obligation under this Section 3 by applying for insurance on the life of the Participant. The Participant shall, if requested in writing by the Company, undergo a physical examination for such purpose by medical 24 examiners designated by the Company, and if the Participant should fail or refuse to undergo such physical examination the Company shall have the right to terminate its obligation under this Section 3 by giving written notice of such termination to the Participant. 4. If the employment of the Participant is terminated by reason of an event occurring under (c) of Section 1 of this Article, and at the effective date of such termination (i) the Participant's chronological age is less than 60 and (ii) the Participant has not accumulated 20 Years of Service, the annual payment the Participant would have been entitled to receive under said Section 1 ("Proposed Payment") shall be reduced to an amount resulting from multiplying the Proposed Payment by a fraction the numerator of which is the Participant's Years of Service at the effective date of such termination and the denominator of which is 20. The Committee may, in its absolute discretion, waive this provision or reduce the number of the denominator in said fraction if it decides such action would be in the best interest of the Company and equitable to the Participant or the Beneficiary. 5. If during any period of twenty-four consecutive months assets of the Company are sold or otherwise disposed of having a value or aggregate value of thirty (30%) percent or more of the total assets of the Company as at the commencement date of said period ("Disposal Transaction"), then beginning with the calendar year in which the Disposal Transaction occurs the amount of the annual payments the Company may be obligated to make under the provisions of Section 1 of this Article shall be the Salary Limitation applied to one year's salary. If the asset sold or disposed of is stock of a Subsidiary, the value of the total assets, not net assets, of the Subsidiary shall be used for purposes of this Section 4. 25
Number of Years of Payment Years of Service Age at Termination 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 30 1 1 1 2 2 31 1 1 1 2 2 2 32 1 1 1 2 2 3 33 1 1 2 2 2 3 3 34 1 2 2 2 3 3 3 4 35 1 1 2 2 3 3 3 4 4 4 36 1 1 2 2 3 3 3 4 4 4 5 37 1 1 2 3 3 4 4 4 5 5 5 6 38 1 2 3 3 4 4 4 5 5 5 6 6 6 39 1 2 3 3 4 4 4 5 5 5 6 6 6 7 40 1 1 2 3 3 4 4 5 5 5 6 6 6 7 7 7 41 1 1 2 3 4 4 4 5 5 5 6 6 6 7 7 7 8 42 1 2 2 3 4 4 5 5 5 6 6 6 7 7 7 8 8 8 43 1 2 2 3 4 5 5 5 6 6 6 7 7 7 8 8 8 9 9 44 1 2 2 3 4 5 5 5 6 6 6 7 7 7 8 8 8 9 9 9 45 1 1 2 3 4 4 5 5 5 6 6 6 7 7 7 8 8 8 9 9 9 10 46 1 1 2 3 4 4 5 5 6 6 6 7 7 7 8 8 8 9 9 9 10 47 1 2 2 3 4 5 5 6 6 6 7 7 7 8 8 8 9 9 9 10 48 1 2 3 4 5 5 6 6 6 7 7 7 8 8 8 9 9 9 10 49 1 2 3 4 5 5 6 6 7 7 7 8 8 8 9 9 9 10 50 1 1 2 3 4 5 6 6 7 7 7 8 8 8 9 9 9 10 51 1 2 3 4 5 6 6 7 7 7 8 8 8 9 9 9 10 52 1 2 3 4 5 6 6 7 7 8 8 8 9 9 9 10 53 1 2 3 4 5 6 7 7 8 8 8 9 9 9 10 54 1 2 3 4 5 6 7 8 8 8 9 9 9 10 55 0 1 2 3 4 5 6 7 8 8 8 9 9 9 10 56 0 1 2 3 4 5 6 7 8 8 8 9 9 9 10 57 0 1 2 3 4 5 6 7 8 8 9 9 9 10 58 0 1 2 3 4 5 6 7 8 8 9 9 9 10 59 0 1 2 3 4 5 6 7 8 8 9 9 10 60 0 1 2 3 4 5 6 7 8 8 9 9 10 and up
26 6. The amount payable hereunder by the Company in respect of each calendar year of the Payment Period shall be reduced by the amount of the payment(s) to be made to the Participant or his successor in interest in respect of the same calendar year (i) under the Retirement Income Agreement between the Participant and TBWA Advertising, Inc. made as of May 26, 1993, a copy of which is attached hereto as Exhibit A, and (ii) under other agreements or arrangements, if any, between the Participant and one or more members of the Employer Group providing for payments to the Participant or his successor in interest following cessation of Participant's employment ("Post-Employment Payments"). If and to the extent Post-Employment Payments are to be made in respect of a period of time following the expiration of the Payment Period, the amount payable by the Company hereunder shall be further reduced by the present value of such Post-Employment Payments being applied to the earliest calender year(s) of the Payment Period in respect of which a payment is to be made after giving effect to the reductions provided for in (i) and (ii) above. For purposes hereof, Post-Employment Payments shall not include (i) severance pay provided for in the employment agreement between the Participant and TBWA International B.V. made as of May 26, 1993, (ii) deferred compensation provided for in the Deferred Compensation Agreement between the Participant and TBWA Advertising Inc. dated October 12, 1984, (iii) payments under a plan for the payor's executive officers approved by the Company that augments a benefit provided for in an employee benefit plan, (iv) payments under an agreement financed, in whole or in part, by the Participant to the extent such payments are attributable to the financing provided by the Participant, and (v) payments under a pension, profit-sharing or savings plan which qualifies for favorable tax treatment under the United States Internal Revenue Code. V. Company's Payment Obligation Conditional on Participant's Refraining from Competitive and Harmful Activities After Severance of Employment. It is a condition of the Company's obligation to make payments hereunder that from the date of the occurrence of an event described in (b), (c) or (d) of Section 1 of Article IV hereof that shall have given rise to the obligation to pay and until the close of the last calendar year in respect of which the Participant may become entitled to receive payments hereunder: 27 (a) that the Participant shall not, directly or indirectly, engage in, nor become employed by or otherwise associated with any persons or entities engaged in, business of the same nature as or competitive with the business engaged in, at the time of Participant's severance of employment, by the Participant's Employer ("Protected Business") in (i) the United States and (ii) any other country in which at the time of Participant's severance of employment the Employer holds, directly or indirectly, more than fifty percent (50%) of the voting stock or its equivalent of an entity engaged in the same or a related business as that of the Employer; and the Participant shall not make any financial investment, direct or indirect, in any sole proprietorship or entity engaged in the same business as that of the Employer at the time of Participant's severance of employment ("Protected investment"), provided nothing herein shall prohibit the purchase of less than a controlling interest in publicly traded securities of any such entity for bona fide investment only; (b) that the Participant shall not willfully engage in any activity which is harmful to the interest of the Company. The determination of (i) whether a business is of the same nature as, competitive with, or related to that of the Employer, (ii) whether any activity of a Participant is harmful to the interest of the Company, and (iii) whether the Participant has willfully engaged in such harmful activity, shall be made by the Board of Directors of the Company after a hearing at which the Participant shall be entitled to be present, and the determination by the Board of Directors shall be final and conclusive; and (c) Nothing herein prohibits or restricts the Participant from engaging in Protected Business in the related areas described in Subsection (a) above, making a Protected Investment, or willfully engaging in activity harmful to the interest of the Company (collectively "Activities"), and in the event the Participant chooses to engage in any of such Activities the Company's obligation to make payments hereunder shall forthwith terminate as to payments which might otherwise have become payable to the Participant in respect of the calendar year in which such Activity occurred and to the Participant or the Beneficiary in respect of all calendar years thereafter, but the Participant shall not be obligated to refund to the Company any payments theretofore paid to Participant hereunder. If requested in writing by the Company, the Participant shall, within 30 days after receipt of such request, advise the Company in writing whether the 28 Participant has or has not engaged in such Activities for a specified calendar year, and the Company shall have no obligation to make a payment in respect of such calendar year until the Company has received such written advice from the Participant. VI. Company's Payment Obligation Conditional On Participant's Availability for Advisory and Consultative Services after Severance of Employment. (a) It is a further condition of the Company's obligation to make payments hereunder that from the date of the occurrence of an event described in (b), (c) or (d) of Section 1 of Article IV hereof that shall have given rise to the obligation to pay and until the close of the last calendar year in respect of which the Participant may become entitled to receive payments hereunder, that the Participant, if not physically or mentally disabled, shall, as an independent contractor and upon not less than thirty (30) days prior written notice from the Company, make his or her services available to the Company for such periods of time as may be specified in the notice, as an advisor and consultant with respect to activities of the department or unit of the Employer's business to which the Participant was last assigned, provided, however, that the Participant shall not be obligated to make his or her services available (i) for more than sixty (60) days in the aggregate and for more than twenty (20) consecutive days in any one calendar year, and (ii) during the period December 15 through January 15. The Company shall reimburse the Participant for reasonable traveling, transportation and living expenses necessarily incurred by the Participant while away from his or her regular place of residence in the performance of such advisory and consultative services for the Company. (b) In the event the Participant chooses not to render advisory and consultative services when requested by the Company as provided in Subsection (a) above, the Company's obligation to make payments hereunder shall forthwith terminate as to payments which might otherwise have become payable to the Participant in respect of the calendar year in which such event occurred and to the Participant or the Beneficiary in respect of all calendar years thereafter, but the Participant shall not be obligated to refund to the Company any payments theretofore paid to Participant hereunder. 29 VII. Prepayments. Following the occurrence of an event described in Section 1 of Article IV hereof, the Company may, at any time and from time to time, make a prepayment, in whole or in part, of its obligation hereunder in respect of any one or more calendar years and any such prepayment shall be irrevocable and non-refundable. VIII. Participant's and Beneficiary's Rights Hereunder Are Personal, Nonassignable and Nontransferable. 1. The right of the Participant or Beneficiary to receive payments hereunder is personal, non-assignable and non-transferable by operation of law or otherwise. The word "otherwise" in the preceding sentence shall include, without limitation, any execution, levy, garnishment, attachment or seizure by any other legal process. 2. If at the time the Company is to make a payment to the Participant or a Beneficiary hereunder the Participant or Beneficiary is not entitled to receive such payment by reason of non-compliance with the provisions of Section 1 of this Article, the obligation of the Company to make such payment shall forthwith terminate. IX. Designation and Identity of Beneficiary. 1. The Participant may designate a Beneficiary by signing, dating and filing with the Secretary of the Company a written instrument setting forth the name(s) and address(es) of the Beneficiary, and if the Beneficiary be more than one person or entity, describing the allocation of the payment benefit among them. The Participant may change his or her designation of a Beneficiary and thereby revoke a prior designation of a Beneficiary at any time and from time to time by filing a new such written instrument with the Secretary. The Beneficiary named in the last unrevoked designation of Beneficiary so filed by the Participant prior to his or her death shall be the Beneficiary for purposes of this Agreement. In the absence of a designation of Beneficiary by the Participant, or in the event the last written designation of Beneficiary on file with the Secretary has been revoked by the Participant, the Beneficiary shall be as described in Section 8 of Article II of this Agreement. 30 2. It is a condition of the Company's obligation to make payments to the Beneficiary hereunder that (a) in making payments the Company may, in its sole and absolute discretion, rely upon signed, written declarations, verifying the identity of a Beneficiary filed with the Secretary of the Company by a person or entity claiming to be such Beneficiary; (b) any payment made by the Company in good faith to any claimant, whether or not such declarations shall have been filed with the Company, shall pro tanto, discharge any obligation the Company might otherwise have to make payment to any and all other actual or possible claimants; (c) any person or entity claiming to be entitled to receive payments hereunder following the death of the Participant shall have recourse only against the person or entity to whom the Company shall have made payment in good faith; and (d) in the event the Company, on advice of counsel, delays payment of any sums becoming due to a Beneficiary by reason of a dispute as to the legitimacy of the claim of such Beneficiary, no interest, penalty or damage shall accrue, become payable by or be assessed against the Company by reason of such delay in payment. X. Payment to Minors. Any payment to be made by the Company to a person under the age of twenty-one (21) years may be made to such person or to a guardian of the property of such person or to a parent of such person as the Company may, in its sole and absolute discretion, determine. As to any payment becoming due or payable to a person under the age of twenty-one (21) years, the Company may defer such payment until the Company has received notice of the appointment and qualification of a guardian of the property of such person, and no interest, penalty or damage shall accrue, become payable by or be assessed against the Company by reason of such delay in payment. XI. Miscellaneous Provisions. 1. An act or determination by the Board of Directors of the Company or the Employer may be made by a committee of directors, number not less than three, appointed by the Board for such purpose. 31 2. Notices shall be sent by registered or certified mail, return receipt requested, to the Participant at the Participant's last address on file with his or her Employer or to such other address as may hereafter be designated by the Participant to the Company, and to the Beneficiary at the address listed in the latest written designation of beneficiary filed with the Company by the Participant or to such other address as may hereafter be designated by the Beneficiary to the Company subsequent to the death of the Participant. 3. The failure of any party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of any right hereunder, nor shall it deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any waiver must be in writing. 4. This Agreement sets forth the entire understanding of the parties in respect of the subject matter hereof, superseding, and evidencing and confirming the termination of, any and all prior agreements, arrangements or understandings between the parties relating to such subject matter, and neither party has relied on any representations of the other party except as expressly set forth herein. This Agreement may be amended only by a written instrument signed by both parties. 5. This Agreement shall be construed and interpreted in accordance with the laws of the State of New York, and is subject to all applicable federal, state and municipal laws and regulations now or hereafter in force. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. ------------------------------ Participant Omnicom Group Inc. By ------------------------------ President and Chief Executive Officer 32 Name of Participant: William G. Tragos -------------------------------- Date of Birth: December 29, 1934 -------------------------------------- Date First Commenced Service: May 26, 1993 ----------------------- Name of Employer: TBWA International B.V. ----------------------------------- 33 EXHIBIT A TO EXECUTIVE SALARY CONTINUATION AGREEMENT May 26, 1993 Mr. William G. Tragos 44 Calhoun Drive Greenwich, Connecticut 06831 Dear Bill: In order to induce you to enter into your five-year arrangement with TBWA International B.V. (the "Parent") and remain in the employ of the TBWA Group, TBWA Advertising, Inc. (the "Company") has agreed to provide you with certain retirement payments upon your termination of employment with the TBWA Group. This letter will set forth our agreements as follows: 1. Retirement Income (a) When you cease to be in the employ of the TBWA Group, other than by reason of termination of your employment for cause (as defined below), the Company shall pay you retirement income of $100,000 for each consecutive period of 365 days you are in the continuous employ of a member or members of the TBWA Group on and after the date hereof, up to a maximum of 10 such periods. The first calendar year of payment, if any, of your retirement income shall be the second calendar year following the calendar year in which the event that gave rise to the Company's obligation to make the retirement payments hereunder occurred. If, however, such event is your death, the first calendar year of payment shall be the first calendar year following the calendar year in which your death occurred. Payment of each year's retirement payment shall be made by the Company in each calendar year of payment during the first 90 days of such calendar year. (b) For purposes of paragraph 1(a) above, the term "continuous employ of members of the TBWA Group" means consecutive employment by a member or members of the TBWA Group without interruption by reason of self-employment or 34 employment by a third party employer, except as provided in paragraph 1(c)(ii) below. (c) You shall be considered to be in the employ of the TBWA Group regardless of absences by reason of: (i) sick leave, vacation leave, or other special leave approved by the Parent which does not exceed 6 months, provided you return to work for the TBWA Group not later than the expiration date of the authorized leave of absence; and (ii) time spent in the service of others at the request of, or with the approval of, the Parent, provided you return to work for the TBWA Group within 15 days following cessation of work for such other party. (d) As used in this Agreement, the term "cause" shall mean your misconduct involving willful malfeasance, such as breach of trust, fraud or dishonesty. All determinations of "cause" shall be made by the Board of Directors of the Parent, after a hearing at which you shall be present, and the determination by the Board of Directors shall be final and conclusive. 2. Payment to Beneficiary In the event you die while in the employ of the TBWA Group or prior to your receipt of all retirement payments due to you under paragraph 1(a) above, the Company shall be obligated to make an annual payment to your Beneficiary (as defined below) in the same manner and to the same extent as provided in paragraph 1(a). Your "Beneficiary" shall mean any person, persons, entity or entities designated in writing by you to the Company to receive payment, if any, to be made hereunder following your death, and in the absence of such 35 designation, means (i) your surviving spouse, while living, and (ii) if there be no surviving spouse or upon the death of the surviving spouse, then to your estate. 3. Company's Payment Obligation Conditional on Refraining from Competitive and Harmful Activities After Severance of Employment It is a condition of the Company's obligation to make payments under this Agreement that from the date you cease to be employed by the TBWA Group until the close of the last calendar year in respect of which you may become entitled to receive payments hereunder: (a) that you shall not, directly or indirectly, engage in, nor become employed by or otherwise associated with any persons or entities engaged in, business of the same nature as or competitive with the business engaged in, at the time of your severance of employment with the TBWA Group ("Protected Business") in (i) the United States and (ii) any other country in which at the time of your severance of employment any member of the TBWA Group is then conducting business; and you shall not make any financial investment, direct or indirect, in any sole proprietorship or entity engaged in the same business as that of the TBWA Group at the time of your severance of employment ("Protected Investment"), provided nothing herein shall prohibit the purchase of less than a controlling interest in publicly traded securities of any such entity for bona fide investment only; and (b) that you shall not willfully engage in any activity which is harmful to the interest of the TBWA Group. 36 The determination of (i) whether a business is of the same nature as, competitive with, or related to that of the TBWA Group, (ii) whether any activity of yours is harmful to the interest of the TBWA Group, and (iii) whether you have willfully engaged in such harmful activity, shall be made by the Board of Directors of the Parent after a hearing at which you shall be entitled to be present, and the determination by the Board of Directors shall be final and conclusive; and (c) Nothing herein prohibits or restricts you from engaging in Protected Business in the related areas described in paragraph 3(a) above, making a Protected Investment, or willfully engaging in activity harmful to the interest of the TBWA Group (collectively "Activities"), and in the event you choose to engage in any of such Activities the Company's obligation to make payments hereunder shall forthwith terminate as to payments which might otherwise have become payable to you in respect of the calendar year in which such Activity occurred and to you or your Beneficiary in respect of all calendar years thereafter, but you shall not be obligated to refund to the Company any payments theretofore paid to you hereunder. If requested in writing by the Company, you shall, within 30 days after receipt of such request, advise the Company in writing whether you have or have not engaged in such Activities for a specified calendar year, and the Company shall have no obligation to make a payment in respect of such calendar year until the Company has received such written advice from you. 4. Company's Payment Obligation Conditional on Availability for Advisory and Consultative Services after Severance of Employment (a) It is a further condition of the Company's obligation to make payments under this Agreement that from the date you cease to be employed by the TBWA Group until the close of the last calendar year in respect of which you may 37 become entitled to receive payments hereunder, that you, if not physically or mentally disabled, shall, as an independent contractor and upon not less than 30 days prior written notice from the Company, make your services available to the Company for such periods of time as may be specified in the notice, as an advisor and consultant with respect to activities of the TBWA Group, provided, however, that you shall not be obligated to make your services available (i) for more than 20 days in the aggregate and for more than 3 consecutive days in any one calendar year, and (ii) during the period December 15 through January 15. The Company shall reimburse you for reasonable traveling, transportation and living expenses necessarily incurred by you while away from your regular place of residence in the performance of such advisory and consultative services for the Company. (b) In the event you choose not to render advisory and consultative services when requested by the Company as provided in paragraph 4(a) above, the Company's obligation to make payments hereunder shall forthwith terminate as to payments which might otherwise have become payable to you in respect of the calendar year in which such event occurred and to you or your the Beneficiary in respect of all calendar years thereafter, but you shall not be obligated to refund to the Company any payments theretofore paid to you hereunder. 5. Designation of Beneficiary (a) Your right or your Beneficiary's right to receive payments hereunder is personal, non-assignable and non-transferable by operation of law or otherwise. The word "otherwise" in the preceding sentence shall include, without limitation, any execution, levy, garnishment, attachment or seizure by any other legal process. If at the time the Company is to make a payment to you or your Beneficiary, you or Beneficiary is not entitled to receive such payment by reason of non-compliance with the foregoing agreement, the obligation of the 38 Company to make such payment shall forthwith terminate. (b) You may designate a Beneficiary by signing, dating and filing with the Secretary of the Company a written instrument setting forth the name(s) and address(es) of the Beneficiary, and if the Beneficiary be more than one person or entity, describing the allocation of the payment benefit among them. You may change your designation of a Beneficiary and thereby revoke a prior designation of a Beneficiary at any time and from time to time by filing a new such written instrument with the Secretary. The Beneficiary named in the last unrevoked designation of Beneficiary so filed by you prior to your death shall be the Beneficiary for purposes of this Agreement. In the absence of a designation of Beneficiary by you, or in the event the last written designation of Beneficiary on file with the Secretary has been revoked by you, the Beneficiary shall be as described in paragraph 2 of this Agreement. It is a condition of the Company's obligation to make payments to the Beneficiary hereunder that (i) in making payments the Company may, in its sole and absolute discretion, rely upon signed, written declarations, verifying the identity of a Beneficiary filed with the Secretary of the Company by a person or entity claiming to be such Beneficiary; (ii) any payment made by the Company in good faith to any claimant, whether or not such declarations shall have been filed with the Company, shall pro tanto, discharge any obligation the Company might otherwise have to make payment to any and all other actual or possible claimants; (iii) any person or entity claiming to be entitled to receive payments hereunder following your death shall have recourse only against the person or entity to whom the Company shall have made payment in good faith; and (iv) in the event the Company, on advice of counsel, delays payment of any sums becoming due to a Beneficiary by reason of a dispute as to the legitimacy of the claim of such Beneficiary, no interest, penalty or 39 damage shall accrue, become payable by or be assessed against the Company by reason of such delay in payment. (c) Any payment to be made by the Company to a person under the age of 21 years may be made to such person or to a guardian of the property of such person or to a parent of such person as the Company may, in its sole and absolute discretion, determine. As to any payment becoming due or payable to a person under the age of 21 years, the Company may defer such payment until the Company has received notice of the appointment and qualification of a guardian of the property of such person, and no interest, penalty or damage shall accrue, become payable by or be assessed against the Company by reason of such delay in payment. 6. Miscellaneous (a) An act or determination by the Board of Directors of the Parent may be made by a committee of directors, in number not less than three, appointed by the Board for such purpose. (b) Nothing herein contained shall be deemed to give you the right to remain in the employ of the Company or another member of the TBWA Group or to interfere with the right of Parent or any other member of the TBWA Group to terminate your employment at any time, nor to give the Parent or any other member of the TBWA Group the right to require you to remain in its employ or to interfere with your right to terminate employment at any time. (c) Notices shall be sent by registered or certified mail, return receipt requested, to you at your last address on file with the Company or to such other address as may hereafter be designated by you to the Company, and to the Beneficiary at the address listed in the latest written designation of the 40 Beneficiary filed with the Company by you or to such other address as may hereafter be designated by the Beneficiary to the Company subsequent to your death. (d) The failure of any party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of any right hereunder, nor shall it deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any waiver must be in writing. (e) This Agreement sets forth the entire understanding of the parties in respect of the subject matter hereof, superseding, and evidencing and confirming the termination of, any and all prior agreements, arrangements or understandings between the parties relating to such subject matter, and neither party has relied on any representations of the other party except as expressly set forth herein. This Agreement, however, is not intended to revoke or limit any other written agreement you may have with the Company or any other members of the TBWA Group relating to retirement benefits. This Agreement may be amended only by a written instrument signed by both parties. (f) This Agreement shall be construed and interpreted in accordance with the laws of the State of New York, and is subject to all applicable federal, state and municipal laws and regulations now or hereafter in force. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. ------------------------------------------ William G. Tragos TBWA ADVERTISING, INC. By: ------------------------------------------ 41 EX-10.14 6 DEFERRED COMPENSATION AGREEMENT EXHIBIT 10.14 DEFERRED COMPENSATION AGREEMENT between TBWA ADVERTISING INC., the Corporation, and WILLIAM G. TRAGOS, the Employee. Dated: October 12, 1984 DEFERRED COMPENSATION AGREEMENT THIS AGREEMENT is entered into by and between TBWA ADVERTISING INC., a New York corporation, having its principal office at 292 Madison Avenue, 11th Floor, New York, New York 10017 (hereinafter referred to as the "Corporation") and WILLIAM G. TRAGOS, residing at 44 Calhoun Drive, Greenwich, Connecticut (hereinafter referred to as the "Employee"). WHEREAS: A. The Employee is employed by the Corporation and renders valuable services for the benefit of the Corporation; and B. The Corporation desires to maintain and continue favorable relations with the Employee in order to retain the services of the Employee; and C. The Corporation wishes to enter into a deferred compensation agreement in accordance with the terms set forth below with the Employee in order to retain his services. NOW, THEREFORE, in consideration of the mutual convenants and agreements hereinafter set forth, the parties hereto agree as follows: 1. In addition to the normal compensation payable to the Employee, deferred compensation shall accrue for the Employee in an amount equal to the earnings from the Principal Amount, as hereinafter defined, for a period of fifteen (15) years payable in accordance with the terms of this Agreement. The "Principal Amount" shall be equal to the cumulative premium payments paid by the Corporation pursuant to a certain Collateral Assignment Split Dollar Agreement between the Corporation and the Employee dated as of October 12, 1984 with respect to the initial policy subject to that Agreement issued by the Penn Mutual Life Insurance Company from the date of this Agreement through the first to occur of the events listed in Paragraph 2 below. 2. The deferred compensation accrued to the account of the Employee shall become payable to the Employee or Employee's beneficiary or beneficiaries designated in accordance with Paragraph 6 hereof in accordance with the terms of this Agreement upon the happening of any of the following events: (a) Termination of the Employee's employment by the Corporation for any reason; (b) By mutual consent of the parties hereto; (c) Bankruptcy, insolvency or dissolution of the Corporation; or (d) Death of the Employee. 3. (a) Within thirty days (30) of the first to occur of the events listed in Paragraph 2 above, the Corporation shall set aside and invest the Principal Amount in such one or more interest bearing funds (hereinafter collectively referred to as the "Fund"), as may be from time to time mutually agreed upon by the Corporation and the Employee, or if the Employee is not living, the designated beneficiary or beneficiaries of the deferred compensation (hereinafter referred to as the "Recipient"). (b) The Recipient shall be entitled to receive in the manner provided for in Paragraph 4 below an amount equal to the net earnings from the Fund for a period of fifteen (15) years. (c) Notwithstanding Subparagraph (b) above, at any time when the Principal Amount or any portion thereof is held in an investment the earnings of which or any part thereof are exempt from federal income taxes, the Recipient shall be entitled to receive an increased amount equal to the net earnings of such investment multiplied by the following fraction: 1 - -------------- 1- (top marginal rate of federal income tax which earnings of the Corporation are subject to) The intent of this adjustment is to give the benefit of the exemption from federal income taxes that would otherwise inure to the benefit of the Corporation (as a result of the deductibility of payments made hereunder) to the Recipient. 4. The amount the Recipient is entitled to hereunder shall be paid in monthly installments as follows: (a) With respect to any portion of the Principal Amount which is held in an investment, the income of which is subject to federal income taxes, the Corporation shall pay the Recipient the net income generated by such investment or investments on a monthly basis. (b) With respect to any portion of the Principal Amount which is held in an investment, the income of which is exempt from federal income taxes, the Corporation shall pay the Recipient a good faith estimate of the amount the Recipient is entitled to pursuant to Paragraph 3(c) above on a monthly basis, provided, however, that in the last tax year of the Corporation in which payments are to be made hereunder to the Recipient (and in the next to the last tax year if less than six monthly payments are to be made to the Recipient in such last tax year), the Corporation shall pay the Recipient seventy percent (70%) of the amount of its good faith estimate of the amount the Recipient is entitled to pursuant to Paragraph 3(c) above on a monthly basis. At such time as the Corporation's federal income tax return is filed, the Corporation shall give written notice to the Recipient of the Corporation's marginal federal income tax rate and the amount of any overpayment or underpayment attributable to the prior tax year of the Corporation. Such overpayment or underpayment shall be amortized over the period of the next twelve (12) months or, if shorter, the remaining period of payments to be made hereunder, by either subtracting or adding to each of the Recipient's monthly payments, provided, however, that if no further payments are to be made hereunder at the time a relevant return is filed, the amount of any underpayment shall be paid in a lump sum to the Recipient, and the amount any overpayment shall be paid by the Recipient to the Corporation in equal monthly installments over the period of the next six months. (c) The written certificates of the President or a Vice President of the Corporation with respect to the Corporation's marginal federal income tax rate shall be binding and conclusive on all persons. (d) Unless otherwise agreed by the Corporation and the Recipient, no adjustment shall be made to the amounts payable hereunder on account of any change in the Corporation's marginal federal income tax rate as a result of the filing of an amended return or any adjustment to any return made on audit or otherwise. 5. The Employee understands and agrees that: (a) Payments to be made by the Corporation to the Recipient hereunder are unsecured obligations of the Corporation, and the Recipient is only a general creditor of the Corporation in that respect. (b) The Fund is available to meet claims of creditors of the Corporation. (c) The Corporation is not assuring the Employee of continued employment by the Corporation. 6. The Employee may designate a beneficiary or beneficiaries entitled to receive any of the payments to be made by the Corporation hereunder if the Employee dies. The designation may be revoked or changed by the Employee at any time. Any such designation, revocation or change shall be in writing, signed by the Employee and delivered to the Corporation. If the Employee does not designate a beneficiary to which payments are to be made after the death of the Employee, or if any designated beneficiary for payments does not survive the Employee, payments by the Corporation subsequent to the death of the Employee shall be made as provided herein to the Employee's estate. If a designated beneficiary survives the Employee but dies prior to the completion of the payments contemplated to be made to that designated beneficiary by the Corporation hereunder, the unpaid portion of those payments upon the death of the designated beneficiary shall be paid by the Corporation as provided herein to the designated beneficiary's estate. 7. This Agreement shall be binding upon the parties hereto and their successors, assigns, executors or administrators and beneficiaries. 8. This Agreement shall be subject to and be construed in accordance with the laws of the State of New York. 2 In Witness Whereof, the Corporation has caused this Agreement to be duly executed on its behalf and the Employee has hereunto set his hand as of the 12th day of October, 1984. TBWA ADVERTISING INC. By: /s/ Richard N. Costello --------------------------- Richard N. Costello (Title) ATTEST: /s/ Stuart H. Loss - ------------------------ Stuart H. Loss Secretary /s/ William G. Tragos --------------------------- William G. Tragos 3 EX-21 7 SUBSIDIARIES OF THE REGISTRANT Exhibit 21 Subsidiaries of the Registrant
Percentage of Voting Jurisdiction Securities of Owning Owned by Company Incorporation Entity Registrant ------- ------------- ------ ---------- Omnicom Group Inc................................ New York -- -- Omnicom International Inc........................ Delaware Registrant 100% Omnicom Management Inc........................... Delaware Registrant 100% Omnicom Finance Inc.............................. Delaware BBDO Worldwide Inc. 33% DDB Needham Worldwide Inc. 33% Omnicom Management Inc. 34% Altschiller Reitzfeld Inc........................ New York Registrant 100% Goodby, Berlin & Silverstein Holdings Inc........ California Registrant 100% Goodby, Berlin and Silverstein, Inc.............. California Goodby, Berlin & Silverstein Holdings Inc. 100% BBDO Worldwide Inc............................... New York Registrant 100% BBDO Atlanta, Inc................................ Georgia BBDO Worldwide Inc. 100% BBDO Chicago, Inc................................ Delaware BBDO Worldwide Inc. 100% BBDO Detroit, Inc................................ Delaware BBDO Worldwide Inc. 100% BBDO International Inc........................... Delaware Omnicom International Inc. 100% David Ratto/BBDO S.A............................. Argentina BBDO Worldwide Inc. 20% Clemenger BBDO Ltd............................... Australia BBDO Worldwide Inc. 47% Clemenger Perth Pty. Ltd......................... Australia Clemenger BBDO Ltd. 47% Clemenger Pty. Ltd............................... Australia Clemenger BBDO Ltd. 47% HCL Group Pty. Ltd. (Melbourne).................. Australia Clemenger BBDO Ltd. 47% Clemenger Adelaide Pty. Ltd...................... Australia Clemenger BBDO Ltd. 47% HCL Group Pty. Ltd. (Sydney)..................... Australia Clemenger BBDO Ltd. 47% Clemenger Direct Response Pty. Ltd. (Melbourne).. Australia Clemenger BBDO Ltd. 37% HCL Group Pty. Ltd. (Brisbane)................... Australia Clemenger BBDO Ltd. 9% Clemenger Sydney Pty. Ltd........................ Australia Clemenger BBDO Ltd. 47% Port Productions Pty. Ltd........................ Australia Clemenger BBDO Ltd. 35% Clemenger Brisbane Pty. Ltd...................... Australia Clemenger BBDO Ltd. 47% Clemenger Direct Response Pty. Ltd. (Sydney)..... Australia Clemenger BBDO Ltd. 37% Clemenger Tasmania Pty. Ltd...................... Australia Clemenger BBDO Ltd. 47% Clemenger Melbourne Pty. Ltd..................... Australia Clemenger BBDO Ltd. 47% Whybin and Partners Pty. Ltd..................... Australia Clemenger BBDO Ltd. 15% TEAM/BBDO Werbeagentur Ges. m.b.H................ Austria BBDO Worldwide Inc. 100% TEAM/BBDO Werbeagentur Ges. m.b.H & Co. Kg....... Austria TEAM/BBDO Werbeagentur Ges. m.b.H 87% Sponsoring & Event Marketing S.A................. Belgium BBDO Belgium S.A. 65% Omnimedia S.A.................................... Belgium BBDO Belgium S.A. 44% Media Team S.A................................... Belgium BBDO Belgium S.A. 65% Media Team Planning S.A.......................... Belgium BBDO Belgium S.A. 44% Morael & Partners S.A............................ Belgium BBDO Belgium S.A. 62% VVL/BBDO S.A..................................... Belgium BBDO Belgium S.A. 70% Moors Bronselaer S.A............................. Belgium BBDO Belgium S.A. 83% BBDO Belgium S.A................................. Belgium BBDO Worldwide Inc. 88% Media Team S.A................................... Belgium BBDO Worldwide Inc. 44% N'Lil S.A........................................ Belgium BBDO Belgium S.A. 45% Topolino S.A..................................... Belgium BBDO Belgium S.A. 45% RPV Comunicacoes Ltda............................ Brazil ALMAP/BBDO Comunicacoes Ltda. 70% ALMAP/BBDO Comunicacoes Ltda..................... Brazil BBDO Publicidade, Ltda. 70% BBDO Publicidade, Ltda........................... Brazil BBDO Worldwide Inc. 100% McKim Communications............................. Canada BBDO Canada Inc. 100% Stringham & Grant Tandy.......................... Canada BBDO Canada Inc. 50% PNMD, Inc........................................ Canada BBDO Canada Inc. 30% BBDO Canada Inc.................................. Canada BBDO Worldwide Inc. 100% BBDO Chile, S.A.................................. Chile BBDO Worldwide Inc. 45% BBDO/CNUAC Advertising Co. Ltd................... China BBDO Asia Pacific Ltd. 51% Percentage of Voting Jurisdiction Securities of Owning Owned by Company Incorporation Entity Registrant ------- ------------- ------ ---------- Alberto H. Garnier, S.A.......................... Costa Rica BBDO Worldwide Inc. 20% BBDO D.O.O Zagreb................................ Croatia BBDO Worldwide Inc. 40% Impact/BBDO International Ltd.................... Cyprus BBDO Worldwide Inc. 44% Mark/BBDO, joint stock company................... Czech Republic BBDO Worldwide Inc. 36% Media Direction.................................. Czech Republic BBDO Worldwide Inc. 20% BBDO Denmark A/S................................. Denmark BBDO Holding A/S 49% BBDO Business Communications A/S................. Denmark BBDO Holding A/S 30% J & J Business Communications A/S................ Denmark BBDO Holding A/S 21% BBDO Holding A/S................................. Denmark BBDO Worldwide Inc. 100% SEPIA A/S........................................ Denmark BBDO Denmark A/S 12% The Media Partnership A/S........................ Denmark BBDO Denmark A/S 10% Impact/BBDO...................................... Egypt Impact/BBDO International Ltd. 40% Apex Publicidad, S.A. de C.V..................... El Salvador Garnier/BBDO Inc. S.A. 10% Bookkeeper Investment OY......................... Finland BBDO Worldwide Inc. 86% OY Avant/BBDO Ltd................................ Finland Bookkeeper Investment OY 69% AKT/BBDO Business Communications OY.............. Finland Bookkeeper Investment OY 64% Bookkeeper Financing OY.......................... Finland Bookkeeper Investment OY 86% La Compagnie S.A................................. France BBDO GmbH 100% Nomad S.A........................................ France La Compagnie S.A. 60% The Media Partnership ........................... France La Compagnie S.A. 17% Proximite S.A.................................... France La Compagnie S.A. 70% Directment S.A................................... France La Compagnie S.A. 45% West End S.A..................................... France La Compagnie S.A. 50% Realisation S.A.................................. France La Compagnie S.A. 51% Optimum Media S.A................................ France La Compagnie S.A. 50% Deslegan S.A..................................... France La Compagnie S.A. 40% Reflexions S.A................................... France La Compagnie S.A. 55% CLM/BBDO S.A..................................... France La Compagnie S.A. 100% BBDO GmbH & Partner Kg........................... Germany BBDO GmbH 80% TEAM/BBDO Berlin GmbH............................ Germany BBDO GmbH & Partner Kg 80% Stein Holding GmbH............................... Germany BBDO GmbH & Partner Kg 80% Sponsor Partners GmbH............................ Germany BBDO GmbH & Partner Kg 40% Boebel, Adam/BBDO GmbH........................... Germany BBDO GmbH & Partner Kg 36% Kohtes & Klewes GmbH............................. Germany BBDO GmbH & Partner Kg 35% K & K Kohtes, Klewes Public Relations GmbH....... Germany Kohtes & Klewes GmbH 35% K & K Kohtes, Klewes & Partner Umwelt- kommunikation GmbH ........................... Germany Kohtes & Klewes GmbH 19% Claus Koch Corp. Communications GmbH............. Germany BBDO GmbH & Partner Kg 30% TEAM DIRECT Ges fur Direct Marketing GmbH........ Germany BBDO GmbH & Partner Kg 60% Hiel/BBDO GmbH................................... Germany BBDO GmbH & Partner Kg 32% BBDO Business Communications GmbH................ Germany BBDO GmbH & Partner Kg 64% The Media Partnership............................ Germany BBDO GmbH & Partner Kg 20% BBDO Dusseldorf GmbH............................. Germany BBDO GmbH & Partner Kg 78% Economia Holding GmbH (Hamburg).................. Germany BBDO GmbH & Partner Kg 40% BBDO/TELECOM GmbH................................ Germany BBDO GmbH & Partner Kg 64% Media Direction GmbH............................. Germany BBDO GmbH & Partner Kg 22% HM1 Heuser, Mayer, Partner GmbH.................. Germany BBDO GmbH & Partner Kg 32% Hildmann & Schneider GmbH....................... Germany BBDO GmbH & Partner Kg 76% M.I.D. GmbH...................................... Germany BBDO GmbH & Partner Kg 40% BBDO Hamburg GmbH................................ Germany BBDO GmbH & Partner Kg 80% BBDO GmbH ....................................... Germany BBDO Worldwide Inc. 100% Fotostudio as der Alster GmbH.................... Germany Economia Holding GmbH (Hamburg) 32% Economia KG...................................... Germany Economia Holding GmbH (Hamburg) 40% Manfred Baumann GmbH............................. Germany Economia Holding GmbH (Hamburg) 40% Brodersen, Stampe GmbH........................... Germany Economia Holding GmbH (Hamburg) 40% 2 Percentage of Voting Jurisdiction Securities of Owning Owned by Company Incorporation Entity Registrant ------- ------------- ------ ---------- Stein Promotions GmbH............................ Germany Stein Holding GmbH 80% Promotion Dynamics GmbH.......................... Germany Stein Holding GmbH 64% Stein Promotion Management Group GmbH............ Germany Stein Holding GmbH 64% BBDO Group S.A................................... Greece BBDO GmbH 80% BBDO/Athens S.A.................................. Greece BBDO Group S.A. 64% Team/Athens S.A.................................. Greece BBDO Group S.A. 30% Tempo S.A........................................ Greece BBDO Group S.A. 20% BBDO Direct S.A.................................. Greece BBDO Group S.A. 80% The Media Partnership S.A. ...................... Greece BBDO Group S.A. 20% Cinemax S.A...................................... Greece BBDO Group S.A. 59% Global S.A....................................... Greece BBDO Group S.A. 80% Service 800 S.A.................................. Greece BBDO Group S.A. 32% BBDO Business Communications S.A................. Greece BBDO Group S.A. 60% IKON S.A......................................... Greece BBDO Group S.A. 39% Point-Zero S.A................................... Greece BBDO Group S.A. 25% B/P/R Ltd........................................ Greece BBDO Group S.A. 79% Grafis S.A....................................... Greece BBDO Group S.A. 56% Lamda Alpha S.A.................................. Greece BBDO Group S.A. 21% BBDO Guatemala S.A............................... Guatemala Garnier/BBDO Inc. S.A. 30% Zues Publicidad S.A. de C.V...................... Honduras Garnier/BBDO Inc. S.A. 10% BBDO Hong Kong Ltd............................... Hong Kong BBDO Asia Pacific Ltd. 100% BBDO Asia Pacific Ltd............................ Hong Kong BBDO Worldwide Inc. 100% Topreklam/BBDO Int'l Advtg. Agency Ltd........... Hungary BBDO Worldwide Inc. 30% RK Swamy/BBDO Advertising Ltd.................... India BBDO Asia Pacific Ltd. 20% Italia/BBDO S.p.A................................ Italy BBDO Worldwide Inc. 100% The Media Partnership S.p.A...................... Italy Italia/BBDO S.p.A. 25% Strategies SAL................................... Lebanon Impact/BBDO International Ltd. 11% Impact/BBDO...................................... Lebanon Impact/BBDO International Ltd. 44% BBDO (Malaysia) Sdn Bhd.......................... Malaysia BBDO Asia Pacific Ltd. 70% BBDO Mexico, S.A. de C.V......................... Mexico BBDO Worldwide Inc. 100% Perik Landewe & Partners B.V..................... Netherlands BBDO BC B.V. 26% Keja/Donia B.V................................... Netherlands BBDO Nederlands B.V. 50% FHV/BBDO B.V..................................... Netherlands BBDO Nederlands B.V. 50% Bennis B/P/R B.V................................. Netherlands BBDO Nederlands B.V. 50% BBK B.V.......................................... Netherlands BBDO Nederlands B.V. 24% Signum B.V....................................... Netherlands BBDO Nederlands B.V. 50% Bartels/Verdonk Impuls B.V....................... Netherlands BBDO Nederlands B.V. 50% BBDO BC B.V...................................... Netherlands BBDO Nederlands B.V. 50% Heliberg Beheer B.V.............................. Netherlands BBDO Nederlands B.V. 30% BBDO Nederlands B.V.............................. Netherlands BBDO Worldwide Inc. 50% Liberty Films B.V................................ Netherlands FHV/BBDO B.V. 50% Mediacenter B.V.................................. Netherlands FHV/BBDO B.V. 13% Media Direction Netherlands B.V.................. Netherlands FHV/BBDO B.V. 34% The Media Partnership B.V........................ Netherlands FHV/BBDO B.V. 10% Clemenger/BBDO Ltd. (N.Z.)....................... New Zealand Clemenger BBDO Ltd. 47% Colenso Communications Ltd....................... New Zealand Clemenger/BBDO Ltd. (N.Z.) 47% HKM Advertising Ltd. ............................ New Zealand Clemenger/BBDO Ltd. (N.Z.) 47% Marcoa Direct Ltd. (Auckland).................... New Zealand Clemenger/BBDO Ltd. (N.Z.) 33% Bosby Services................................... New Zealand Clemenger/BBDO Ltd. (N.Z.) 47% BBDO Nicaragua S.A............................... Nicaragua Garnier/BBDO Inc. S.A. 25% Jenssen & Borkenhagen A/S........................ Norway BBDO GmbH 42% Schroder Production A/S.......................... Norway Jenssen & Borkenhagen A/S 42% Garnier/BBDO Inc. S.A............................ Panama BBDO Worldwide Inc. 50% Campagnani/BBDO S.A.............................. Panama Garnier/BBDO Inc. S.A. 10% BBDO Peru S.A.................................... Peru BBDO Worldwide Inc. 51% 3 Percentage of Voting Jurisdiction Securities of Owning Owned by Company Incorporation Entity Registrant ------- ------------- ------ ---------- PAC/BBDO Worldwide Inc........................... Philippines BBDO Asia Pacific Ltd. 30% BBDO Warsaw...................................... Poland BBDO Worldwide Inc. 100% The Media Partnership Ltda....................... Portugal BBDO Portugal Agencia de Publicidade, Ltda. 16% Smash Ltda....................................... Portugal BBDO Portugal Agencia de Publicidade, Ltda. 59% BBDO Portugal Agencia de Publicidade, Ltda....... Portugal BBDO Worldwide Inc. 65% Consultores de Relaciones Publicas, Inc.......... Puerto Rico BBDO Puerto Rico Inc. 85% Headline Public Relations & Promotions, Inc...... Puerto Rico BBDO Puerto Rico Inc. 85% BBDO Puerto Rico Inc............................. Puerto Rico BBDO Worldwide Inc. 85% Graffiti/BBDO.................................... Romania BBDO Worldwide Inc. 20% BBDO Marketing................................... Russia BBDO Worldwide Inc. 100% Impact/BBDO...................................... Saudi Arabia Impact/BBDO International Ltd. 44% BBDO Singapore Pte Ltd........................... Singapore BBDO Asia Pacific Ltd. 100% Mark/BBDO Ltd.................................... Slovak Republic Mark/BBDO, joint stock company 17% The Media Partnership S.A........................ Spain BBDO Espana S.A. 23% Tiempo/BBDO S.A.................................. Spain BBDO Espana S.A. 72% Contrapunto S.A.................................. Spain BBDO Espana S.A. 67% Tiempo/BBDO Madrid S.A........................... Spain BBDO Espana S.A. 70% BBDO Espana S.A.................................. Spain BBDO Worldwide Inc. 90% Extension Madrid S.A............................. Spain Tiempo/BBDO Madrid S.A. 70% Media Direction Madrid, S.A...................... Spain Tiempo/BBDO Madrid S.A. 70% Extension S.A. ................................. Spain Tiempo/BBDO S.A. 72% DEC S.A. .................................. Spain Tiempo/BBDO S.A. 61% Media Direction.................................. Spain Tiempo/BBDO S.A. 72% Ehrenstrahle & Co. A.B........................... Sweden BBDO Worldwide Inc. 74% HLR/BBDO Reklambyra A.B.......................... Sweden BBDO Worldwide Inc. 40% Ehrenstrahle & Co on Stockholm A.B............... Sweden Ehrenstrahle & Co. A.B. 74% HLR/Diversified Agencies A.B..................... Sweden HLR/BBDO Reklambyra A.B. 40% FGH Annonsbyra A.B............................... Sweden HLR/BBDO Reklambyra A.B. 4% HLR/Basic Promotion A.B.......................... Sweden HLR/BBDO Reklambyra A.B. 40% HLR/Broadcast Filmproduction A.B................. Sweden HLR/BBDO Reklambyra A.B. 40% Box Direct Marketing A.B......................... Sweden HLR/BBDO Reklambyra A.B. 13% Gester & Co. A.B................................. Sweden HLR/BBDO Reklambyra A.B. 11% ASGS Editorial A.G............................... Switzerland Aebi/BBDO A.G. 66% Aebi/BBDO A.G.................................... Switzerland BBDO Worldwide Inc. 100% Stentor/BBDO Advertising Ltd..................... Taiwan BBDO Asia Pacific Ltd. 55% MEDIA +.......................................... Turkey Alice Marketing Communication Services 27% FOCUS 4.......................................... Turkey Alice Marketing Communication Services 27% Alice Marketing Communication Services........... Turkey BBDO Worldwide Inc. 30% Impact/BBDO......................................United Arab Emirates Impact/BBDO International Ltd. 44% Abbott Mead Vickers. BBDO Ltd.................... United Kingdom BBDO Worldwide Inc. 26% Ratto/BBDO Y Asociados........................... Uruguay David Ratto/BBDO S.A. 20% BBDO Venezuela................................... Venezuela BBDO Worldwide Inc. 50% DDB Needham Worldwide Inc........................ New York Registrant 100% Doyle Dane Bernbach de Mexico S.A. de C.V........ New York Registrant 100% Milici Valenti Gabriel DDB Needham Inc........... Hawaii Registrant 100% Tracy-Locke Inc.................................. Texas Registrant 100% DDB Needham Chicago Inc.......................... Delaware DDB Needham Worldwide Inc. 100% DDB Needham Worldwide Partners, Inc.............. New York DDB Needham Worldwide Inc. 100% Elgin Syferd/DDB Needham Inc..................... Washington DDB Needham Worldwide Inc. 100% DDB Needham International Inc.................... Delaware Omnicom International Inc. 100% Tracy-Locke Public Relations, Inc................ Texas Tracy-Locke Inc. 100% The Focus Agency Inc............................. Delaware DDB Needham Chicago Inc. 100% Puskar Gibbon Chapin Inc......................... Texas Tracy-Locke Inc. 100% DDB Needham Brisbane Pty. Ltd.................... Australia DDB Needham Melbourne Pty. Ltd. 100% 4 Percentage of Voting Jurisdiction Securities of Owning Owned by Company Incorporation Entity Registrant ------- ------------- ------ ---------- DDB Needham Worldwide Pty. Ltd. (Australia) ..... Australia DDB Needham Worldwide Partners, Inc. 100% Graphique Nominees Pty........................... Australia DDB Needham Worldwide Pty. Ltd. (Australia) 25% K & Z Marketing Group Pty Limited................ Australia DDB Needham Worldwide Pty. Ltd. (Australia) 100% DDB Needham Melbourne Pty. Ltd................... Australia DDB Needham Worldwide Pty. Ltd. (Australia) 100% DDB Needham Adelaide Pty. Ltd.................... Australia DDB Needham Worldwide Pty. Ltd. (Australia) 100% DDB Needham Sydney Pty. Ltd...................... Australia DDB Needham Worldwide Pty. Ltd. (Australia) 100% Nowland Robinson Partners Adv. Pty. Ltd.......... Australia DDB Needham Worldwide Pty. Ltd. (Australia) 70% Doyle Dane Bernbach Pty.......................... Australia Registrant 100% DDB Needham Heye & Partner Werbeagentur GmbH..... Austria DDB Needham Heye & Partner GmbH 53% Acts Werbeveranstaltungen GmbH................... Austria DDB Needham Heye & Partner Werbeagentur GmbH 16% DDB Needham Heye & Partner GmbH.................. Austria DDB Needham Worldwide Partners, Inc. 55% Heye & Partner GmbH 34% DDB Needham Worldwide S.A. ...................... Belgium DDB Needham International Inc. 20% DDB Needham Worldwide Inc. 26% DDB Needham Worldwide Partners, Inc. 20% Registrant 26% DDB Needham Holding S.A.......................... Belgium DDB Needham Worldwide, Inc. 1% DDB Needham Worldwide Partners, Inc. 99% T.M.P. S.A....................................... Belgium DDB Needham Worldwide S.A. 23% Omnimedia S.A.................................... Belgium DDB Needham Worldwide S.A. 46% Optimum Media Team S.A........................... Belgium DDB Needham Worldwide S.A. 46% Marketing Power Rapp & Collins S.A............... Belgium DDB Needham Worldwide S.A. 60% DDB Needham Worldwide Brazil Ltda................ Brazil DDB Needham Worldwide Inc. 50% Olympic DDB Needham Bulgaria..................... Bulgaria Olympic DDB Needham S.A. 51% Omnicom Canada Inc............................... Canada Registrant 100% Beijing DDB Needham Advertising Co. Ltd.......... China DDB Needham Worldwide Ltd. 51% DDB Needham WW Prague............................ Czech Republic DDB Needham Worldwide Partners, Inc. 56% The Media Partnership A/S........................ Denmark DDB Needham Scandinavia A/S 6% DDB Needham Denmark A/S.......................... Denmark DDB Needham Scandinavia A/S 80% DDB Needham Scandinavia A/S...................... Denmark DDB Needham Worldwide Partners, Inc. 100% Brand Sellers DDB Needham Estonia................ Estonia Brand Sellers DDB Needham OY 20% Brand Sellers DDB Needham OY..................... Finland DDB Needham Scandinavia A/S 30% Promotive S.A.................................... France AZ Editions S.A. 51% DDB Lille S.A.................................... France DDB Needham Trade S.A. 51% DDB The Way S.A.................................. France DDB Needham Trade S.A. 80% JCR S.A.......................................... France DDB Needham Trade S.A. 51% Immomedia S.A.................................... France DDB Needham Worldwide Communication S.A. 10% Intertitres S.A................................. France DDB Needham Worldwide Communication S.A. 75% SDMP S.A. 13% Nacre S.A........................................ France DDB Needham Worldwide Communication S.A. 51% Tempo S.A........................................ France DDB Needham Worldwide Communication S.A. 19% DDB En Reseau S.A................................ France DDB Needham Worldwide Communication S.A. 51% DDB Needham GIE S.A.............................. France DDB Needham Worldwide Communication S.A. 100% TMPF S.A......................................... France DDB Needham Worldwide Communication S.A. 14% CRTV S.A......................................... France DDB Needham Worldwide Communication S.A. 17% Optimum Media S.A................................ France DDB Needham Worldwide Communication S.A. 50% Optimum Partenariat S.A.......................... France DDB Needham Worldwide Communication S.A. 66% Productions 32 S.A............................... France DDB Needham Worldwide Communication S.A. 66% SDMP S.A. 17% Directing S.A.................................... France DDB Needham Worldwide Communication S.A. 51% Orchestra S.A.................................... France DDB Needham Worldwide Communication S.A. 65% Eurocorporate S.A................................ France DDB Needham Worldwide Communication S.A. 100% Colin Guittard Nazaret S.A....................... France DDB Needham Worldwide Communication S.A. 19% Maphi S.A........................................ France DDB Needham Worldwide Communication S.A. 100% DDB Needham Worldwide Europe S.A. .............. France DDB Needham Worldwide Communication S.A. 100% 5 Percentage of Voting Jurisdiction Securities of Owning Owned by Company Incorporation Entity Registrant ------- ------------- ------ ---------- MODA S.A......................................... France DDB Needham Worldwide Communication S.A. 83% SDMP S.A......................................... France DDB Needham Worldwide Communication S.A. 51% Intermail Rapp & Collins S.A..................... France DDB Needham Worldwide Communication S.A. 40% Maphi S.A. 60% DDB Needham Trade S.A............................ France DDB Needham Worldwide Communication S.A. 100% Mediametrie S.A.................................. France DDB Needham Worldwide Communication S.A. 2% Force Directe S.A................................ France Maphi S.A. 5% Dites 33 S.A..................................... France Maphi S.A. 34% Intertel S.A..................................... France Maphi S.A. 100% Marketic Conseil S.A............................. France Maphi S.A. 51% Pigment S.A...................................... France Maphi S.A. 76% Providence S.A................................... France MODA S.A. 83% SFV S.A.......................................... France Productions 32 S.A. 79% DDB Needham Worldwide Communication S.A.......... France Registrant 100% DDB Needham Worldwide S.A. ...................... France Registrant 45% DDB Needham Worldwide Communication S.A. 55% Publiteam S.A.................................... France SDMP S.A. 17% AZ Editions S.A.................................. France SDMP S.A. 51% Perre Contact S.A................................ France SFV S.A. 79% Media Direction GmbH............................. Germany Communication Management GmbH Dusseldorf 22% BBDO GmbH & Partner KG 22% Screen GmbH...................................... Germany Communication Management GmbH Dusseldorf 99% Wensauer DDB Needham GmbH (Ludwigsburg).......... Germany Communication Management GmbH Dusseldorf 99% The Media Partnership GmbH....................... Germany Communication Management GmbH Dusseldorf 25% Wensauer DDB Needham Beteiligungsgesellschaft GmbH Germany Communication Management GmbH Dusseldorf 82% Wensauer DDB Needham GmbH........................ Germany Communication Management GmbH Dusseldorf 99% DeHaas & Partner Werbeagentur GmbH............... Germany Communication Management GmbH Dusseldorf 79% Fritsch Heine Rapp & Collins GmbH................ Germany Communication Management GmbH Dusseldorf 85% Global Ad GmbH................................... Germany Communication Management GmbH Dusseldorf 48% Heye & Partner GmbH.............................. Germany DDB Needham Worldwide Partners, Inc. 45% Data Direct Rapp & Collins GmbH.................. Germany Fritsch Heine Rapp & Collins GmbH 85% Heye Management Service GmbH..................... Germany Heye & Partner GmbH 23% Print, Munchen GmbH.............................. Germany Heye & Partner GmbH 45% HDR GmbH Dusseldorf.............................. Germany Heye & Partner GmbH 36% Communication Management GmbH Dusseldorf......... Germany Registrant 99% Camera Uno GmbH (Ludwigsburg).................... Germany Service Company GmbH (Ludwigsburg) 90% Wensauer DDBN Werbeagentur GmbH (Frankfurt)...... Germany Wensauer DDB Needham Beteiligungsgesellschaft GmbH 82% SV Studio Lichts ATZ GmbH........................ Germany Wensauer DDB Needham GmbH 99% Service Company GmbH (Ludwigsburg)............... Germany Wensauer DDB Needham GmbH (Ludwigsburg) 99% Olympic DDB Needham S.A.......................... Greece DDB Needham Holding S.A. 51% Tempo Hellas S.A................................. Greece Olympic DDB Needham S.A. 13% Inno Rapp & Collins S.A.......................... Greece Olympic DDB Needham S.A. 26% The Media Partnership S.A........................ Greece Olympic DDB Needham S.A. 13% Oxygen S.A....................................... Greece Olympic DDB Needham S.A. 46% Brilliant Shine Development Ltd.................. Hong Kong Bentley DDB Needham Public Relations, Ltd. 70% Bentley DDB Needham Public Relations, Ltd........ Hong Kong DDB Needham Asia Pacific Ltd. 70% Product Creation Ltd............................. Hong Kong DDB Needham Asia Pacific Ltd. 51% Lee DDB Needham Public Relations Ltd. (Taiwan)... Hong Kong DDB Needham Asia Pacific Ltd. 25% Delta Group Ltd.................................. Hong Kong DDB Needham Asia Pacific Ltd. 100% Doyle Dane Bernbach Hong Kong Ltd................ Hong Kong DDB Needham Asia Pacific Ltd. 100% Window Creative Ltd.............................. Hong Kong DDB Needham Asia Pacific Ltd. 85% DDB Needham Worldwide Ltd........................ Hong Kong DDB Needham Asia Pacific Ltd. 100% Integrated Marketing Services Ltd................ Hong Kong DDB Needham Asia Pacific Ltd. 70% DDB Needham Asia Pacific Ltd..................... Hong Kong DDB Needham Worldwide Partners, Inc. 100% 6 Percentage of Voting Jurisdiction Securities of Owning Owned by Company Incorporation Entity Registrant ------- ------------- ------ ---------- DDB Needham Advertising Co. (Budapest)........... Hungary DDB Needham Heye & Partner Werbeagentur GmbH 21% DDB Needham Worldwide Partners, Inc. 40% MUDRA Communications Ltd......................... India DDB Needham Worldwide Partners, Inc. 10% Verba DDB Needham S.R.L.......................... Italy Registrant 85% Corporate S.R.L.................................. Italy Verba DDB Needham S.R.L. 85% Verba PSA ....................................... Italy Verba DDB Needham S.R.L. 55% Rapp/Collins Mixer S.R.L......................... Italy Verba DDB Needham S.R.L. 85% Consilium S.R.L.................................. Italy Verba DDB Needham S.R.L. 85% TMP Italy S.R.L.................................. Italy Verba DDB Needham S.R.L. 21% Mix S.R.L........................................ Italy Verba DDB Needham S.R.L. 68% Dai Ichi Kikaku Rapp & Collins Direct Marketing Co., Ltd. JapanDDB Needham Worldwide Inc. 33% DDB Needham Japan Inc............................ Japan DDB Needham Worldwide Inc. 100% DDB Needham DIK Korea............................ Korea DDB Needham Worldwide Partners, Inc. 25% Naga DDB Needham Dik SDN BHD..................... Malaysia DDB Needham Asia Pacific Ltd. 30% DDB Needham Worldwide S.A. de C.V................ Mexico Negocios DDB Needham Worldwide S.A. de C.V. 51% Registrant 49% Negocios DDB Needham Worldwide S.A. de C.V....... Mexico Registrant 100% Capitol Advice B.V............................... Netherlands DDB B.V. 100% Rapp and Collins B.V............................. Netherlands DDB B.V. 100% Bas van Wijk Project House B.V................... Netherlands DDB B.V. 100% DDB Needham Holding B.V.......................... Netherlands DDB Needham Worldwide Partners, Inc. 100% DDB B.V.......................................... Netherlands Registrant 100% The Media Partnership B.V........................ Netherlands DDB B.V. 19% DDB Needham New Zealand Ltd...................... New Zealand DDB Needham Worldwide Ltd. 70% DDB Needham WW Ltd............................... New Zealand DDB Needham Worldwide Pty. Ltd. (Australia) 100% DDB Needham Holding Norway A/S................... Norway DDB Needham Holding B.V. 100% New Deal DDB Needham A/S......................... Norway DDB Needham Holding Norway A/S 56% Big Deal A/S..................................... Norway New Deal DDB Needham A/S 28% Pro Deal A/S..................................... Norway New Deal DDB Needham A/S 56% AMA DDB Needham Worldwide Inc.................... Philippines DDB Needham Asia Pacific Ltd. 30% DDB Needham Worldwide Warszawa................... Poland DDB Needham Worldwide Partners, Inc. 100% The Media Partnership............................ Portugal DDB Needham Worldwide & Guerreiro, Publicidade S.A. 18% DDB Needham Worldwide & Guerreiro, Publicidade S.A Portugal Registrant 70% DDB Needham Worldwide GAF Pte. Ltd............... Singapore Doyle Dane Bernbach Hong Kong Ltd. 85% DDB Needham Worldwide Bratislava................. Slovak Republic DDB Needham Worldwide Partners, Inc. 100% Tandem/DDB Needham Worldwide, S.A................ Spain DDB Needham Worldwide Inc. 7% Registrant 79% Wintel S.A....................................... Spain Rapp & Collins S.A. 77% Tandem/DDB Campmany Guasch, S.A.................. Spain Registrant 2% Tandem/DDB Needham Worldwide S.A. 84% Optimum Media S.A................................ Spain Tandem/DDB Campmany Guasch, S.A. 86% Publiexclusivas S.A.............................. Spain Tandem/DDB Campmany Guasch, S.A. 11% Tandem/DDB Needham Worldwide S.A. 15% BBDO Espana S.A. 27% Tandem Sponsoring S.A............................ Spain Tandem/DDB Needham Worldwide S.A. 86% Instrumens S.A................................... Spain Tandem/DDB Needham Worldwide S.A. 60% Rapp & Collins S.A............................... Spain Tandem/DDB Needham Worldwide S.A. 77% Oedipus S.A...................................... Spain Tandem/DDB Needham Worldwide S.A. 44% A Toda Copia S.A................................. Spain Tandem/DDB Needham Worldwide S.A. 86% The Media Partnership S.A........................ Spain Tandem/DDB Needham Worldwide S.A. 21% Paradiset DDB Needham A.B........................ Sweden Carlsson & Broman DDB Needham Worldwide A.B. 51% Carlsson & Broman DDB Needham Worldwide A.B...... Sweden DDB Needham Worldwide Partners, Inc. 100% DDB Needham Werbeagentur A.G..................... Switzerland DDB Needham Holding A.G. 100% Seiler Zur DDB Needham A.G....................... Switzerland DDB Needham Holding A.G. 30% Quadri & Partner AG Zur.......................... Switzerland Heye & Partner GmbH 15% 7 Percentage of Voting Jurisdiction Securities of Owning Owned by Company Incorporation Entity Registrant ------- ------------- ------ ---------- DDB Needham Holding A.G.......................... Switzerland Registrant 100% DDB Needham Worldwide Taiwan Ltd................. Taiwan DDB Needham Asia Pacific Ltd. 50% Far East Advertising Co. Ltd..................... Thailand DDB Needham Asia Pacific Ltd. 10% DDB Needham (Thailand) Ltd....................... Thailand DDB Needham Worldwide Partners, Inc. 51% Far East Advertising Co. Ltd. 4% Baxter, Gurian & Mazzei, Inc..................... California Health & Medical Communications, Inc. 100% Rainoldi, Kerzner & Radcliffe, Inc............... California Kallir, Philips, Ross Inc. 100% Alcone Sims O'Brien, Inc......................... California Registrant 100% Doremus & Company................................ Delaware BBDO Worldwide Inc. 100% Gavin Anderson & Company Worldwide Inc........... Delaware Doremus Holdings Corp. 100% Porter Novelli Inc............................... Delaware Doremus & Company 100% HHL Publishing Inc............................... Delaware Headway, Home and Law Publishing Group Ltd. 82% Interbrand Holdings Inc.......................... Delaware Interbrand Group plc. 100% Rapp Collins Worldwide Inc. (DE)................. Delaware Rapp Collins Worldwide Inc. (TX) 100% Doremus Holdings Corp............................ Delaware Registrant 100% Thomas A. Schutz Co., Inc........................ Delaware Registrant 100% Bernard Hodes Advertising Inc.................... Delaware Registrant 100% Merkley Newman Harty, Inc........................ Delaware Registrant 100% Rapp Collins Agency Group Inc.................... Delaware Registrant 100% Frank J. Corbett, Inc............................ Illinois Health & Medical Communications, Inc. 100% Rapp Collins Worldwide Inc. (IL)................. Illinois Rapp Collins Worldwide Inc. (TX) 100% Brodeur & Partners Inc........................... Massachusetts Registrant 100% Health & Medical Communications, Inc............. New York BBDO Worldwide Inc. 100% RC Communications, Inc........................... New York BBDO Worldwide Inc. 98% Gavin Anderson Shareholder Targeting, Inc........ New York Gavin Anderson & Company Worldwide Inc. 100% Gavin Anderson & Company Inc..................... New York Gavin Anderson & Company Worldwide Inc. 100% Lavey/Wolff/Swift, Inc........................... New York Health & Medical Communications, Inc. 100% Interbrand Corporation........................... New York Interbrand Holdings Inc. 100% Harrison & Star, Inc............................. New York Registrant 100% Health Science Communications Inc................ New York Registrant 100% Harrison Star Wiener & Beitler Public Relations, Inc. New York Registrant 100% The Schechter Group Inc.......................... New York Registrant 100% Kallir, Philips, Ross, Inc....................... New York Registrant 100% TELERx Marketing, Inc............................ Pennsylvania Health & Medical Communications, Inc. 49% Rapp Collins Worldwide Inc. (TX)................. Texas Registrant 100% TP Flower Unit Trust S.A. (Sydney)............... Australia Gavin Anderson & Co. (Australia) Ltd. 100% KPR S.A.......................................... Belgium Kallir, Philips, Ross, Inc. 100% Promotess S.A.................................... Belgium Promotess Holdings S.A. 100% Promotess Holdings S.A........................... Belgium Registrant 100% Gavin Anderson & Co. (Australia) Ltd............. Cayman Islands Gavin Anderson & Company Worldwide Inc. 100% Gavin Anderson & Company (France) S.A............ France Gavin Anderson & Company Worldwide Inc. 100% Product Plus (France) S.A........................ France Product Plus (London) Ltd. 83% AZ Promotion - Moridis........................... France Registrant 40% Hagt, Stock-Schroer & Partner GmbH............... Germany BBDO GmbH 30% Advantage GmbH................................... Germany Doremus & Company 26% Gavin Anderson & Company Worldwide GmbH.......... Germany Gavin Anderson & Company Worldwide Inc. 100% Interbrand GmbH.................................. Germany Interbrand International Holdings BV 100% Gavin Anderson & Company (H.K.) Limited.......... Hong Kong Gavin Anderson & Company Worldwide Inc. 100% Product Plus (Far East) Ltd...................... Hong Kong Product Plus (London) Ltd. 83% Counter Products Marketing (Ireland) Ltd......... Ireland CPM Field Marketing Ltd. 100% Kabushiki Kaisha Interbrand Japan................ Japan Interbrand GmbH 26% Interbrand International Holdings BV 74% Rapp Collins Marcoa Mexico S.A. de C.V........... Mexico Rapp Collins Worldwide Inc. (TX) 100% Interbrand International Holdings BV............. Netherlands Interbrand Group plc. 100% Product Plus Iberica SA.......................... Spain Product Plus (London) Ltd. 83% 8 Percentage of Voting Jurisdiction Securities of Owning Owned by Company Incorporation Entity Registrant ------- ------------- ------ ---------- David Douglass Associates Ltd.................... United Kingdom CPM Field Marketing Ltd. 100% Vandisplay Ltd................................... United Kingdom CPM Field Marketing Ltd. 25% Product Plus (London) Ltd........................ United Kingdom Davidson Pearce Group Ltd. 83% The Rapp Collins Partnership Ltd................. United Kingdom Davidson Pearce Group Ltd. 100% CPM Field Marketing (Operations) Ltd............. United Kingdom Davidson Pearce Group Ltd. 100% Medi Cine International plc...................... United Kingdom Diversified Agency Services Limited 100% Doremus & Co. Ltd................................ United Kingdom Diversified Agency Services Limited 100% Vox Prism International Ltd...................... United Kingdom Diversified Agency Services Limited 100% Omnicom UK Limited............................... United Kingdom Diversified Agency Services Limited 100% Countrywide Communications Group Limited......... United Kingdom Diversified Agency Services Limited 75% BMP Countrywide Limited.......................... United Kingdom Countrywide Communications Group Limited 71% Countrywide Communications (London) Limited...... United Kingdom Countrywide Communications Group Limited 75% Government Policy Consultants Limited............ United Kingdom Countrywide Communications Group Limited 42% Countrywide Communications Limited............... United Kingdom Countrywide Communications Group Limited 75% Countrywide Communications North Limited......... United Kingdom Countrywide Communications Group Limited 75% Countrywide Communications (Scotland) Limited.... United Kingdom Countrywide Communications Group Limited 56% Affinity Consulting Limited...................... United Kingdom Countrywide Communications Group Limited 75% Countrywide Employee Trust Limited............... United Kingdom Countrywide Communications Group Limited 75% VandenBurg Marketing Limited..................... United Kingdom Countrywide Communications Group Limited 75% Lynam Creasy Sponsorship Limited................. United Kingdom Countrywide Communications Group Limited 8% Affinity PIPR Consulting Limited................. United Kingdom Affinity Consulting Limited 25% First City/BBDO Ltd.............................. United Kingdom Diversified Agency Services Limited 60% First City Public Relations Ltd.................. United Kingdom Diversified Agency Services Limited 60% Bernard Hodes Advertising Ltd.................... United Kingdom Diversified Agency Services Limited 81% Omnicom Finance Ltd.............................. United Kingdom Diversified Agency Services Limited 100% Headway, Home and Law Publishing Group Ltd....... United Kingdom Diversified Agency Services Limited 82% Gavin Anderson (UK) Ltd.......................... United Kingdom Diversified Agency Services Limited 75% Clareville HHL Ltd............................... United Kingdom Headway, Home and Law Publishing Group Ltd. 74% Headway, Home and Law Publishing Ltd............. United Kingdom Headway, Home and Law Publishing Group Ltd. 82% Premier Magazines Limited........................ United Kingdom Headway, Home and Law Publishing Group Ltd. 40% Interbrand UK Ltd................................ United Kingdom Interbrand Group plc. 100% Markforce Associates Ltd......................... United Kingdom Interbrand Group plc. 100% Hoare Wilkins Ltd................................ United Kingdom Omnicom UK Limited 86% Colour Solutions Ltd............................. United Kingdom Omnicom UK Limited 100% Interbrand Group plc............................. United Kingdom Omnicom UK Limited 100% Macmillan Davies Consultants Ltd................. United Kingdom Omnicom UK Limited 100% Solutions in Media Ltd........................... United Kingdom Omnicom UK Limited 100% Davidson Pearce Group Ltd........................ United Kingdom Omnicom UK Limited 100% The Anvil Consultancy Ltd........................ United Kingdom Omnicom UK Limited 100% Macmillan Davies Advertising Ltd................. United Kingdom Omnicom UK Limited 100% WWAV Group plc................................... United Kingdom Omnicom UK Limited 100% Granby Marketing Services Ltd.................... United Kingdom Omnicom UK Limited 100% Specialist Publications (UK) Ltd................. United Kingdom Omnicom UK Limited 100% BMP DDB Needham Worldwide Ltd.................... United Kingdom Omnicom UK Limited 97% Paling Ellis/KPR Ltd............................. United Kingdom Omnicom UK Limited 100% CPM Field Marketing Ltd.......................... United Kingdom Omnicom UK Limited 100% Phoenix Travel (Paddington) Ltd.................. United Kingdom Omnicom UK Limited 50% Excel Plus Ltd................................... United Kingdom Product Plus (London) Ltd. 42% Diversified Agency Services Limited.............. United Kingdom Registrant 100% The Computing Group Ltd.......................... United Kingdom WWAV Group plc 86% WWAV (North) Ltd................................. United Kingdom WWAV Group plc 78% HLB Ltd.......................................... United Kingdom WWAV Group plc 100% Watson, Ward, Albert, Vandell Ltd................ United Kingdom WWAV Group plc 100% Hooton Schofield Ltd............................. United Kingdom WWAV Group plc 100% TBWA International Inc. ......................... Delaware TBWA International B.V. 100% 9 Percentage of Voting Jurisdiction Securities of Owning Owned by Company Incorporation Entity Registrant ------- ------------- ------ ---------- Grand Central Partners L.P....................... Missouri TBWA Advertising, Inc. 23% TBWA Switzer Wolfe Advertising Inc. ............. Missouri TBWA Advertising, Inc. 80% TBWA Advertising, Inc. .......................... New York TBWA International Inc. 100% TBWA/GBD Holdings, Inc........................... New York TBWA Advertising, Inc. 100% Beisler & Associates, Inc........................ New York TBWA Advertising, Inc. 100% TBWA CU Holdings, Inc............................ New York TBWA Advertising, Inc. 100% Lois Geller Direct, Inc.......................... New York TBWA Advertising, Inc. 100% GBB Advertising Co............................... New York TBWA/GBD Holdings, Inc. 51% Castle Underwood Advertising Co.................. New York TBWA CU Holdings, Inc. 70% TBWA S.A. (Brussels)............................. Belgium TBWA International B.V. 100% Illuco S.A. (Brussels)........................... Belgium TBWA S.A. (Brussels) 100% TBWA Reklamebureau A/S........................... Denmark TBWA International B.V. 9% TBWA de Plas S.A. (Paris)........................ France TBWA International B.V. 100% Offensive Media S.A.............................. France TBWA de Plas S.A. (Paris) 100% TBWA (Deutschland) Holding GmbH (Frankfurt)...... Germany TBWA International B.V. 100% TBWA Direct Werbeagentur GmbH ................... Germany TBWA (Deutschland) Holding GmbH (Frankfurt) 100% Eurospace Media GmbH............................. Germany TBWA (Deutschland) Holding GmbH (Frankfurt) 100% Mandel Und Wermier Agentur Fur Marketing Und Werbung GmbH.............................. Germany TBWA (Deutschland) Holding GmbH (Frankfurt) 25% TBWA Werbeagentur GmbH........................... Germany TBWA (Deutschland) Holding GmbH (Frankfurt) 100% AM-C Werbeagentur GmbH........................... Germany TBWA (Deutschland) Holding GmbH (Frankfurt) 100% TBWA Dusseldorf GmbH............................. Germany TBWA Werbeagentur GmbH 100% Graf Bertel Buczek GmbH.......................... Germany GBB Advertising Co. 51% TBWA Italia SpA (Milan).......................... Italy TBWA International B.V. 100% Group Services S.R.L............................. Italy TBWA Italia SpA (Milan) 100% Eurospace S.R.L.................................. Italy TBWA Italia SpA (Milan) 49% Ma.Ma.Fin S.R.L.................................. Italy TBWA Italia SpA (Milan) 100% Nadler & Larimer (Milan)......................... Italy Ma.Ma.Fin S.R.L. 60% TBWA Italia SpA (Milan) 40% TBWA International B.V........................... Netherlands Registrant 100% TBWA NETH-work B.V............................... Netherlands TBWA International B.V. 50% TISSA Holding B.V................................ Netherlands TBWA International B.V. 100% TBWA Groep B.V................................... Netherlands TISSA Holding BV 100% TBWA Reklame & Marketing B.V..................... Netherlands TBWA Groep BV 100% Multicom Direkt Marketing & Advertising B.V...... Netherlands TBWA Groep BV 100% Hunt Lascaris TBWA Holdings (Pty) Ltd............ South Africa TBWA International B.V. 20% TBWA Espana S.A.................................. Spain TBWA International B.V. 80% Ervaco/TBWA...................................... Sweden TBWA International B.V. 9% TBWA International A.G........................... Switzerland TBWA International B.V. 100% TBWA A.G. (Zurich)............................... Switzerland TBWA International A.G. 100% Floral Street Holdings Ltd....................... United Kingdom TBWA International B.V. 100% TBWA Holmes Knight Ritchie Ltd................... United Kingdom Floral Street Holdings Ltd. 100% TISSA Ltd........................................ United Kingdom Floral Street Holdings Ltd. 100% FSC Group Ltd.................................... United Kingdom TBWA Holmes Knight Ritchie Ltd. 92% Boxtech Ltd...................................... United Kingdom TBWA Holmes Knight Ritchie Ltd. 75% Rose Video Ltd................................... United Kingdom TBWA Holmes Knight Ritchie Ltd. 100%
10 EX-23.1 8 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated February 22, 1994 included in this Form 10-K into the previously filed Registration Statement File Nos. 33-51493, 2-98222, 33-29375 and 33-37380 on Form S-8 of Omnicom Group Inc. and into the previously filed Registration Statement File Nos. 33-29375, 33-37380, 33-52385, 33-54110, 33-62976, 33-63200, 33-62978, 33-61852, 33-50409, 33-50267, 33-50271, 33-50269, 33-50257 and 33-45881 on Form S-3 of Omnicom Group Inc. Arthur Andersen & Co. New York, New York March 28, 1994 EX-24 9 POWER OF ATTORNEY EXHIBIT 24 Power of Attorney Know all men by these presents, that the undersigned, a director of Omnicom Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce Crawford and Raymond E. McGovern, and each of them, his true and lawful attorney-in-fact and agent, with full and several power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for the fiscal year ended December 31, 1993 including any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, including specifically this Power of Attorney, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated March 28, 1994 /s/ Bernard Brochand --------------------------- Bernard Brochand Power of Attorney Know all men by these presents, that the undersigned, a director of Omnicom Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce Crawford and Raymond E. McGovern, and each of them, his true and lawful attorney-in-fact and agent, with full and several power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for the fiscal year ended December 31, 1993 including any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, including specifically this Power of Attorney, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated March 28, 1994 /s/ Robert J. Callander --------------------------- Robert J. Callander 2 Power of Attorney Know all men by these presents, that the undersigned, a director of Omnicom Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce Crawford and Raymond E. McGovern, and each of them, his true and lawful attorney-in-fact and agent, with full and several power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for the fiscal year ended December 31, 1993 including any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, including specifically this Power of Attorney, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated March 28 , 1994 /s/ Leonard S. Coleman, Jr. --------------------------- Leonard S. Coleman, Jr. 3 Power of Attorney Know all men by these presents, that the undersigned, a director of Omnicom Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce Crawford and Raymond E. McGovern, and each of them, his true and lawful attorney-in-fact and agent, with full and several power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for the fiscal year ended December 31, 1993 including any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, including specifically this Power of Attorney, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated March 28 , 1994 /s/ John R. Purcell --------------------------- John R. Purcell 4 Power of Attorney Know all men by these presents, that the undersigned, a director of Omnicom Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce Crawford and Raymond E. McGovern, and each of them, his true and lawful attorney-in-fact and agent, with full and several power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for the fiscal year ended December 31, 1993 including any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, including specifically this Power of Attorney, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated March 28 , 1994 /s/ Quentin I. Smith, Jr. --------------------------- Quentin I. Smith, Jr. 5 Power of Attorney Know all men by these presents, that the undersigned, a director of Omnicom Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce Crawford and Raymond E. McGovern, and each of them, his true and lawful attorney-in-fact and agent, with full and several power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for the fiscal year ended December 31, 1993 including any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, including specifically this Power of Attorney, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated March 28, 1994 /s/ Robin B. Smith --------------------------- Robin B. Smith 6 Power of Attorney Know all men by these presents, that the undersigned, a director of Omnicom Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce Crawford and Raymond E. McGovern, and each of them, his true and lawful attorney-in-fact and agent, with full and several power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for the fiscal year ended December 31, 1993 including any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, including specifically this Power of Attorney, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated March 28, 1994 /s/ Gary L. Roubos --------------------------- Gary L. Roubos 7 Power of Attorney Know all men by these presents, that the undersigned, a director of Omnicom Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce Crawford and Raymond E. McGovern, and each of them, his true and lawful attorney-in-fact and agent, with full and several power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for the fiscal year ended December 31, 1993 including any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, including specifically this Power of Attorney, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated March 28, 1994 /s/ William G. Tragos --------------------------- William G. Tragos 8 Power of Attorney Know all men by these presents, that the undersigned, a director of Omnicom Group Inc., a New York corporation ("Omnicom"), constitutes and appoints Bruce Crawford and Raymond E. McGovern, and each of them, his true and lawful attorney-in-fact and agent, with full and several power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K to be filed by Omnicom for the fiscal year ended December 31, 1993 including any or all amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, including specifically this Power of Attorney, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated March 28, 1994 /s/ Egon P.S. Zehnder --------------------------- Egon P. S. Zehnder 9 -----END PRIVACY-ENHANCED MESSAGE-----