-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DkNibkah6sKE2Un/itj2lBXdczX0KyJ0GqVMsiBigjktgnPhvWC96M5PUzgblCdd BTH9KIq6nvbcAM7/NpX7tA== 0000950123-97-004809.txt : 19970605 0000950123-97-004809.hdr.sgml : 19970605 ACCESSION NUMBER: 0000950123-97-004809 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970623 FILED AS OF DATE: 19970604 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREY ADVERTISING INC /DE/ CENTRAL INDEX KEY: 0000043952 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] IRS NUMBER: 130802840 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-07898 FILM NUMBER: 97618852 BUSINESS ADDRESS: STREET 1: 777 THIRD AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2125462000 MAIL ADDRESS: STREET 1: 777 THIRD AVE STREET 2: 777 THIRD AVE CITY: NEW YORK STATE: NY ZIP: 10017 DEF 14A 1 GREY ADVERTISING INC. 1 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
GREY ADVERTISING INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ (5) Total fee paid: ------------------------------------------------------------------------ [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------ (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ (3) Filing Party: ------------------------------------------------------------------------ (4) Date Filed: ------------------------------------------------------------------------ 2 GREY GREY ADVERTISING INC. 777 THIRD AVENUE NEW YORK, NEW YORK 10017 ------------------------ NOTICE OF ANNUAL MEETING OF STOCKHOLDERS JUNE 23, 1997 To the Stockholders of GREY ADVERTISING INC. The Annual Meeting of Stockholders of Grey Advertising Inc. ("Company") will be held at the Company's Toronto office, 1881 Yonge Street, Toronto, Ontario, Canada, on June 23, 1997 at 8:00 A.M., local time, for the following purposes: (1) To elect one director to hold office for a three year term. (2) To consider and take action on a proposal to ratify the selection of Ernst & Young LLP as independent auditors for the Company for 1997. (3) To transact such other business as may properly come before the meeting. Holders of record of the Company's Common Stock and Limited Duration Class B Common Stock at the close of business on May 30, 1997, and holders of the Company's Preferred Stock, will be entitled to vote at the meeting. By Order of the Board of Directors STEVEN G. FELSHER Secretary New York, New York June 3, 1997 PLEASE SPECIFY YOUR CHOICES, DATE AND SIGN THE ENCLOSED PROXIES AND MAIL THEM PROMPTLY IN THE ENCLOSED ENVELOPE. 3 GREY ADVERTISING INC. 777 THIRD AVENUE NEW YORK, NEW YORK 10017 (212) 546-2000 --------------------- PROXY STATEMENT --------------------- ANNUAL MEETING OF STOCKHOLDERS JUNE 23, 1997 This Proxy Statement is being mailed to stockholders on or about June 4, 1997 in connection with the solicitation of proxies by the Board of Directors of Grey Advertising Inc. ("Company") for the Annual Meeting of Stockholders to be held at the Company's Toronto office, 1881 Yonge Street, Toronto, Ontario, Canada on June 23, 1997 at 8:00 A.M., local time, and at any and all adjournments thereof, for the purposes set forth in the Notice of Annual Meeting of Stockholders. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time prior to its exercise. A stockholder may effect revocation of a proxy by delivering written notice to the Secretary of the Company, by giving a later-dated proxy or by attending the meeting and voting in person. All properly executed, unrevoked proxies will be voted as specified. Unless contrary directions are given, proxies will be voted for the election of the nominee for director proposed by the Board of Directors and in favor of the proposal set forth in the notice. Shares represented by executed proxies received by the Company will be counted for a quorum regardless of how or whether such shares are voted on any particular matter. Where nominee stockholders of record do not vote on specific issues because they did not receive instructions, such "non-votes" will not be treated as votes cast or shares present for such issues. The affirmative vote of the holders of a plurality of the votes cast is required in the election of directors. The vote required to approve the other matter to be voted on at the meeting, as well as the effect of abstentions and broker nonvotes, is set forth in the section describing such matter. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY STOCKHOLDER A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 ("10-K"). STOCKHOLDERS DESIRING TO OBTAIN A COPY OF THE 10-K SHOULD ADDRESS WRITTEN REQUESTS TO MS. ILENE P. MEISELES, ASSISTANT SECRETARY, GREY ADVERTISING INC., 777 THIRD AVENUE, NEW YORK, NEW YORK 10017. VOTING SECURITIES Holders of record of the Company's Common Stock and Limited Duration Class B Common Stock ("Class B Stock") at the close of business on May 30, 1997, and holders of the Company's Preferred Stock, will be entitled to vote at the meeting. On May 30, 1997, the Company had outstanding 899,082 shares of Common Stock and 285,769 shares of Class B Stock. The Company also has outstanding and entitled to 4 vote at the meeting 20,000 shares of its Series I Preferred Stock, and 5,000 shares each of its Series II Preferred Stock and Series III Preferred Stock. At the meeting, each share of Common Stock will be entitled to one vote; each share of Class B Stock will be entitled to ten votes; and each share of Preferred Stock will be entitled to eleven votes. To the knowledge of the Board of Directors, as of the record date, no stockholder owned of record or beneficially more than 5% of the Company's outstanding shares of Common Stock, Class B Stock or Preferred Stock except as indicated below:
AMOUNT OF SHARES AND NATURE NAME AND ADDRESS OF OF BENEFICIAL OR PERCENTAGE TITLE OF CLASS RECORD OR BENEFICIAL OWNER RECORD OWNERSHIP OF CLASS - ---------------------------- ------------------------------------ ---------------- ---------- Common Stock................ Edward H. Meyer, as Voting Trustee 164,004(a) 18.2 under a Voting Trust Agreement, dated as of February 24, 1986, and as subsequently amended ("Voting Trust Agreement"), among the Voting Trustee, the Company and the Beneficiaries of the Voting Trust Agreement 777 Third Avenue New York, New York 10017 Edward H. Meyer 178,128(b) 19.8 777 Third Avenue New York, New York 10017 The committee administering the 49,774(c) 5.5 Company's Employee Stock Ownership Plan 777 Third Avenue New York, New York 10017 Tweedy Browne Company L.P. 65,264(d) 7.3 52 Vanderbilt Avenue New York, New York 10017 Southeastern Asset Management, Inc. 62,711(e) 7.0 6075 Poplar Avenue, Suite 900 Memphis, Tennessee 38119 T. Rowe Price Associates, Inc. 54,565(f) 6.1 100 E. Pratt Street Baltimore, Maryland 21202 All executive officers and directors 290,453(g) 29.9 as a group
2 5
AMOUNT OF SHARES AND NATURE NAME AND ADDRESS OF OF BENEFICIAL OR PERCENTAGE TITLE OF CLASS RECORD OR BENEFICIAL OWNER RECORD OWNERSHIP OF CLASS - ---------------------------- ------------------------------------ ---------------- ---------- Class B Stock............... Edward H. Meyer, as Voting Trustee 168,674(a) 58.7 under the Voting Trust Agreement 777 Third Avenue New York, New York 10017 Edward H. Meyer 135,562(b) 47.4 777 Third Avenue New York, New York 10017 The committee administering the Com- 56,944(c) 19.9 pany's Employee Stock Ownership Plan 777 Third Avenue New York, New York 10017 All executive officers and directors 251,227(g) 80.7 as a group Series I, Series II and Series III Preferred Stock..................... Edward H. Meyer 30,000(h) 100 777 Third Avenue New York, New York 10017
- ------------ (a) Represents voting power only and includes certain shares subject to a voting agreement pursuant to which shares owned by an executive officer of the Company will be voted in the same manner as the Voting Trustee votes. Does not include shares issuable upon exercise or conversion of options or other securities which are contractually bound to be deposited pursuant to the Voting Trust Agreement. In general, investment power over the shares deposited in the voting trust established pursuant to the Voting Trust Agreement is retained by the several beneficiaries of the Voting Trust Agreement. (See "Employment Agreements and Other Transactions" below.) (b) Includes shares of Common Stock and of Class B Stock, as the case may be, issuable upon conversion of the Company's 8 1/2% Convertible Subordinated Debentures owned by Mr. Meyer, shares of Common Stock issuable upon exercise of stock options which are currently exercisable (after giving effect to the assumed conversion and exercise thereof), and Mr. Meyer's beneficial interest in shares of Common Stock and Class B Stock deposited by him pursuant to the Voting Trust Agreement as to which he retains investment power. Does not include shares of Common Stock (5.5% of such class) and Class B Stock (19.9%) held in the Company's Employee Stock Ownership Plan as to which Mr. Meyer exercises shared voting power by virtue of his membership on the committee charged with its administration. Does not include shares of Common Stock and Class B Stock held in trust for Mr. Meyer's children which have been deposited in the voting trust under the Voting Trust Agreement, or shares of Common Stock or of Class B Stock as to which Mr. Meyer exercises voting power by virtue of being the Voting Trustee under the Voting Trust Agreement. (c) The committee which administers the Company's Employee Stock Ownership Plan exercises voting power over shares held in such plan, and is comprised of Mr. Meyer and Steven G. Felsher. 3 6 (d) Information based on the Company's understanding of publicly-filed material. Tweedy Browne Company L.P., a registered investment advisor, which, together with related entities, on behalf of its clients, has been a long-term investor in the Company, has sole or shared dispositive and voting power with respect to the shares listed, except with respect to 1,000 such shares as to which it exercises no voting authority. (e) Information based on the Company's understanding of publicly-filed material. Southeastern Asset Management, Inc., a registered investment advisor, which, together with a related entity, on behalf of its clients, has been a long-term investor in the Company, has sole or shared dispositive and voting power with respect to the shares listed, except with respect to 4,400 such shares as to which it exercises no voting authority. (f) Information based on the Company's understanding of publicly-filed material. T. Rowe Price Associates, Inc., a registered investment advisor, which, together with a related entity, on behalf of its clients, has been a long-term investor in the Company, has sole dispositive and voting power with respect to the shares listed. (g) Includes shares of Common Stock (5.5% of such class) and of Class B Stock (19.9%), as the case may be, as to which certain executive officers exercise shared voting power by virtue of their membership on the committee administering the Company's Employee Stock Ownership Plan. Includes shares of Common Stock and Class B Stock as to which the Voting Trustee (Mr. Meyer) under the Voting Trust Agreement exercises voting power. Includes shares of Common Stock and of Class B Stock issuable upon conversion of the Company's 8 1/2% Convertible Subordinated Debentures owned by Mr. Meyer and shares of Common Stock issuable upon exercise of stock options which are exercisable by beneficiaries under the Voting Trust Agreement who are obliged, under the terms of the Voting Trust Agreement, to deposit shares in the voting trust acquired subsequent to the execution of the Voting Trust Agreement, after giving effect to the assumed conversion and exercise thereof. Does not include shares of Common Stock issuable to beneficiaries under the Voting Trust Agreement upon exercise of stock options which are not presently exercisable. (i) Represents 20,000 of Series I Preferred Stock, and 5,000 shares of each of the Company's Series II and Series III Preferred Stock, of which classes Mr. Meyer owns 100% of the outstanding shares. 4 7 ELECTION OF DIRECTOR The Board of Directors presently consists of four members, one of whom is elected by the holders of the Series I Preferred Stock, voting as a class, and three of whom, divided into three classes, are elected by the holders of the Common Stock, the Class B Stock and the Preferred Stock voting together. At each Annual Meeting of Stockholders, a director of one class is elected to serve for a three-year term or until the election of his successor. Edward H. Meyer has been nominated to be elected at the meeting to serve as a director until the Annual Meeting of Stockholders to be held in 2000. Mr. Meyer is currently serving on the Board. The Company's Certificate of Incorporation provides for cumulative voting for elections of directors. Therefore, if more than one director is being elected at a meeting, each stockholder is entitled to cast as many votes as shall equal the number of votes represented by the shares owned by such stockholder multiplied by the number of directors to be elected and such stockholder may cast all of such votes for a single nominee for director, or may distribute them among the number of nominees, as the stockholder determines. Information relating to Mr. Meyer and to the directors not standing for election who will continue in office following the meeting is set forth below. Each person listed below is currently a director of the Company.
TERM NO. OF SHARES OF PERCENT OF OFFICE VOTING STOCK VOTES CAST DIRECTOR WILL OWNED BY VOTING NAME(A) AGE OCCUPATION(B) SINCE EXPIRE BENEFICIALLY(C) SHARES - ------------------------- ---- ------------------- -------- ------ ---------------- ---------- Mark N. Kaplan........... 67 Partner, Skadden, 1973 1999 2,200(e) --(f) Arps, Slate, Meagher & Flom LLP, law firm(d) Edward H. Meyer.......... 70 Chairman of the 1961 1997 567,479(g) 70.65% Board, President and Chief Executive Officer Richard R. Shinn......... 79 Retired Chairman 1990 --(h) 1,000(i) --(f) of Metropolitan Life Insurance Company John Shannon............. 60 President, 1991 1998 1,000 --(f) Grey-International
- --------------- (a) There is no family relationship between any director and any other director or executive officer of the Company. 5 8 (b) The positions of Messrs. Meyer and Shannon are with the Company, and each has served the Company for more than the past five years. Mr. Kaplan also serves on the boards of directors of American Biltrite Inc., Congoleum, Inc., Diagnostic/Retrieval Systems, Inc., Movie Fone Inc., REFAC Technology Development Corporation and Volt Information Sciences, Inc. Mr. Meyer is also a director of Bowne & Co., Inc., Ethan Allen Interiors, Inc., Harman International Industries, Inc. and The May Department Stores Company. Mr. Meyer also serves as director or trustee of thirty-six mutual funds advised by Merrill Lynch Asset Management, Inc. or its wholly-owned subsidiary, Fund Asset Management, Inc. Mr. Shinn is also a director of Union Texas Petroleum, Inc. (c) Represents beneficial interests in shares of the Company's Common Stock, Class B Stock, and Series I, II and III Preferred Stock. (See "Voting Securities" above.) Information is as of the record date. (d) Skadden, Arps, Slate, Meagher & Flom LLP, a law firm in which Mr. Kaplan is a partner, has provided certain legal services to the Company in 1996 and 1997. (e) Mr. Kaplan owns 1,100 shares of each of Common Stock and Class B Stock. (f) Represents less than 1.0% of the votes entitled to be cast. (g) Mr. Meyer owns beneficially 105,953 shares of Common Stock and 110,053 shares of Class B Stock, as to which he, as the Voting Trustee under the Voting Trust Agreement, exercises voting power, and 20,000 shares of the Series I Preferred Stock, and 5,000 shares of each of the Series II and of the Series III Preferred Stock, representing approximately 11.8%, 38.5%, 100%, 100% and 100% of each class, respectively. Also includes shares held pursuant to the Voting Trust Agreement, as to which Mr. Meyer, as the Voting Trustee, exercises voting power, and shares of Common Stock and Class B Stock held in the Company's Employee Stock Ownership Plan as to which Mr. Meyer exercises shared voting power by virtue of his membership on the committee charged with its administration. Also includes shares of Common Stock (2.8%) and Class B Stock (8.9%) issuable on conversion of the Company's 8 1/2% Convertible Subordinated Debentures owned by Mr. Meyer after giving effect to the assumed conversion thereof and shares of Common Stock (5.2%) issuable upon exercise of currently exercisable stock options owned by Mr. Meyer after giving effect to the assumed exercise thereof. Does not include 7,500 shares of each of the Common Stock and the Class B Stock held in trust for Mr. Meyer's children, as to which Mr. Meyer, as the Voting Trustee under the Voting Trust Agreement, exercises voting power. (h) Mr. Shinn had been elected by the holder of the Series I Preferred Stock and serves until the election of his successor. 6 9 (i) Mr. Shinn owns 1,000 shares of Common Stock. The Board of Directors has no reason to believe Mr. Meyer will, for any reason, be unable to serve as a director. If, however, Mr. Meyer becomes unavailable to serve, for any reason, it is the intention of the persons named in the enclosed form of proxy, unless otherwise instructed by stockholders, to vote such proxy for the election of such other person as the Board of Directors may in its discretion recommend. Directors who are not employees of the Company receive a fee of $4,500 per quarter and a fee of $3,000 for each meeting of the Board attended. Directors who are also employees receive no remuneration for serving on the Board. Under a separate agreement with the Company, Mr. Kaplan has elected to have payment of his director's fees deferred until he retires from the Board. During 1996, the Board met four times. Each director attended all of the meetings of the Board. The Audit Committee, which is comprised of Messrs. Kaplan and Shinn, reviews the services of the Company's independent auditors, the preparation of the Company's financial statements and the maintenance of internal controls by the Company. Messrs. Kaplan and Shinn also comprise the Company's Compensation Committee, which is charged with overseeing matters relating to senior executive compensation. The Company does not have a standing nominating committee. Members of the Audit Committee and the Compensation Committee receive $1,000 for each meeting of each such committee which does not fall on the same day as a meeting of the Board. 7 10 REMUNERATION OF MANAGEMENT SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION The following table provides certain summary information concerning compensation paid or accrued by the Company to or on behalf of its Chief Executive Officer and each of the four other most highly compensated executive officers of the Company with respect to the three most recently completed fiscal years of the Company, except as indicated below:
LONG TERM COMPENSATION --------------------------------------- ANNUAL COMPENSATION ALL ------------------------------- REST. STOCK OTHER NAME AND POSITION YEAR SALARY(2) BONUS(2) STOCK($)(1) OPTIONS(#) COMP.(1) - ---------------------------- ---- ----------- --------- ----------- ---------- ---------- Edward H. Meyer............. 1996 $ 2,300,000 $ 325,000 -0- 20,000 $1,519,957 Chairman, President and 1995 2,058,333 591,667 -0- 40,000 1,278,954 Chief Executive Officer 1994 1,725,000 400,833 -0- -0- 1,058,160 Robert L. Berenson.......... 1996 $ 540,000 $ 240,000 -0- -0- $ 339,466 President, Grey-N.Y. 1995 485,000 200,000 -0- 5,000 310,838 1994 485,000 180,000 -0- -0- 277,113 Barbara S. Feigin........... 1996 $ 376,000 $ 160,000 -0- -0- $ 188,843 Executive Vice President 1995 376,000 150,000 -0- 2,000 181,085 1994 342,250 130,000 -0- -0- 175,989 Stephen A. Novick........... 1996 $ 775,000 $ 125,000 -0- -0- $ 419,345 Executive Vice President 1995 737,500 125,000 -0- 3,500 385,439 1994 667,500 95,000 -0- -0- 400,638 John Shannon................ 1996 $ 555,022 $ 240,000 -0- -0- $ 51,498 President, 1995 476,500 201,500 -0- 2,000 49,889 Grey-International 1994 473,616 168,300 -0- -0- 56,031
- --------------- (1) All Other Compensation includes: (i) contributions of $14,650 in 1996 to the Company's qualified defined contribution plans on behalf of the named executives other than Mr. Shannon, who, as a United Kingdom resident, participated in local pension programs to which he contributed funds out of his salary compensation; (ii) amount shown for Mr. Shannon represents deferred compensation pursuant to a subsidiary-sponsored program for United Kingdom executives; (iii) respective insurance premium expense coverage or reimbursement of $58,217, $16,232, $21,111 and $25,050 in 1996, for Messrs. Meyer, Berenson and Novick, and Ms. Feigin; (iv) accruals in the amounts of $215,000 for Mr. Meyer and $15,559 for Ms. Feigin in 1996 generally in respect of amounts which would have been allocated to Mr. Meyer's and Ms. Feigin's accounts under the Company's qualified defined contribution programs for such year but for certain limitations determined under the federal tax laws; (v) respective allocations under the Company's Senior Management Incentive Plan ("SMIP") in 1996, for Messrs. Berenson, Meyer and Novick, and Ms. Feigin of $208,584, $1,232,090, $183,584 and $133,584; and (vi) $100,000 and $200,000, respectively, of loan forgiveness in 1996 in respect of Messrs. Berenson's and Novick's indebtedness to the Company. (2) Includes amounts paid into a deferred compensation trust on Mr. Meyer's behalf in 1996. (See "Employment Agreement and Other Transactions.") 8 11 AGGREGATE OPTIONS EXERCISED IN 1996 AND STOCK OPTION VALUES AS AT DECEMBER 31, 1996(1)
NUMBER OF VALUE OF UNEXERCISED UNEXERCISED OPTIONS IN-THE-MONEY DECEMBER 31, 1996 OPTIONS ----------------- DECEMBER 31, 1996 SHARES --------------------- ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/ NAME ON EXERCISE REALIZED(2) UNEXERCISABLE UNEXERCISABLE - ----------------------------------- ----------- ----------- ----------------- --------------------- Edward H. Meyer.................... -- -- 33,333/26,667 $2,940,023/$1,659,978 Robert L. Berenson................. -- -- 0/ 5,000 0/ 527,500 Barbara S. Feigin.................. -- -- 0/ 2,000 0/ 211,000 Stephen A. Novick.................. 5,000 $ 467,500 0/ 3,500 0/ 369,250 John Shannon....................... -- -- 0/ 2,000 0/ 211,000
- --------------- (1) All options relate to shares of Common Stock. (2) "Value Realized" represents the market price of the Common Stock on the date of exercise less the exercise price paid. OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS ---------------------------------------------------------------- % OF TOTAL NUMBER OF SHARES OPTIONS GRANTED EXERCISE UNDERLYING TO EMPLOYEES PRICE GRANT DATE NAME OPTIONS GRANTED IN 1996 (PER SHARE) EXP. DATE PRESENT VALUE(2) - -------------------------- ----------------- ---------------- ------------ ---------- ---------------- Edward H. Meyer........... 20,000(1) 50.0 $ 235.00 11/26/05 $1,589,400
- --------------- (1) Options granted to acquire Common Stock at market price on the date of grant under the Grey Advertising Inc. 1994 Stock Incentive Plan. The options are exercisable at a rate of one-third per year beginning with the date of grant which is November 26, 1996. (2) Amounts based on the modified Black-Scholes option pricing model with the following assumptions: exercise price equal to fair market value on the date of grant, nine year option term, interest rate of 6.22% and a dividend rate of 1.7%. There is no assurance that the value realized by an optionee will be at or near the value estimated by this pricing model. Should the stock price not rise above the option price, the optionee will realize no gain. 9 12 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee is comprised of the Company's outside directors. The Committee is responsible for the establishment of the goals of the Company's compensation practices and the implementation of the compensation programs that further these goals. The Compensation Committee reviews regularly the development of the Company's operations, its revenue and profit performance, its prospects for growth, the general trends in the advertising agency industry and the particular needs of the Company. The Compensation Committee reviews and approves allocations under several long-term deferred and current compensation programs which have been developed over the years. These programs, which have utilized both cash and stock awards, are designed to foster a strong commitment by the Company's senior executives to the interests of the Company's stockholders, clients and business by rewarding excellent performance with current compensation, enhancing motivation for continued profit performance, encouraging a strong community of interests with the Company's stockholders through share awards and fostering the long-term retention of key management personnel through extended vesting periods. These goals are particularly important, and not readily subject to a short-term formula approach, in the advertising industry where compensation is heavily negotiated and where there is great demand for talented people, thus resulting in a high potential for executive turnover. The Compensation Committee believes that the programs adopted by Grey have been helpful in retaining the Company's executive officers who average more than 20 years of service with the Company. This stability, which is not prevalent in the advertising agency business more generally, has, in the judgment of the Compensation Committee, been important in enabling the Company to achieve its performance over the last 20 years. Over such 20-year period, and as through the record date, the Company's stock price has had an annual compounded return, exclusive of dividends, of approximately 18%. The Company's executive officers, as disclosed in this proxy statement, own a substantial interest in the Company's stock, a significant portion of which was acquired over many years through a number of the Company's stock programs. This indicates the importance which the Company places on management having the same interests as stockholders generally. In recent years, a significant portion of the executives' total compensation has been provided through payment of discretionary annual bonuses and through allocations under the Company's Senior Management Incentive Plan ("SMIP"). The total amounts paid or allocated, as the case may be, are related to overall corporate operating performance and have trended upwards in better years. In granting annual bonuses, the Compensation Committee considers the executives' relative contribution to the Company's overall success, the need for executives to believe they are compensated competitively, the need for bonuses to be scaled to reflect seniority and contribution, and other relevant factors. The Compensation Committee increased Mr. Meyer's salary effective the beginning of 1997. The raise, the first since 1995, on an annualized basis amounted to 7.9%, significantly less than the Company's growth and record profit performance. Mr. Meyer's bonus for 1996 was $325,000. In 1996, the Committee also granted a number of stock options to Mr. Meyer and other executives of the Company. The Committee believes the grant of such options to be an appropriate form of compensation to reward and motivate executives, and to align their interests with the Company's stockholders. The Committee also recognizes the increasingly costly marketplace for senior executive talent in the advertising agency industry generally and the necessity for the Company to remain competitive. In reviewing Mr. Meyer's compensation elements, the Compensation Committee further considered that Mr. Meyer has been employed by the Company since 1956 and has served as the Chief Executive Officer 10 13 since 1971, and that the Company's continued strong and steady growth is importantly attributed to Mr. Meyer's leadership. The Committee also considered Mr. Meyer's long-term contributions in creating value for the Company and its stockholders by establishing and maintaining many significant client relationships, and by overseeing the Company's expansion into new disciplines and parts of the world. Overall, it is the generalized view of the Compensation Committee that under Mr. Meyer's direction the Company has been and is well organized, and managed for long-term, stable growth. Under SMIP, as approved by the Company's stockholders, participants are credited with compensation in an aggregate amount equal to 12% of the Company's pre-tax operating earnings for each year from 1993 through 1997. Because of Mr. Meyer's senior position and his substantial interest in the equity of the Company, the Compensation Committee, as agreed in prior years, awarded Mr. Meyer with respect to 1996 an amount corresponding to 15% of the aggregate amount credited for 1996 under SMIP. The income tax laws deny tax deductions to publicly-held corporations for annual compensation paid to certain executive officers in excess of $1,000,000, subject to certain exceptions. The Committee believes the Company should take appropriate steps to be in a position to preserve the tax deductibility of compensation payments, to the extent such steps are consistent with providing competitive compensation to its executives and the Company otherwise satisfies the requirements of the tax law. Thus, to satisfy the requirements of the tax law, the Compensation Committee submitted to, and secured the approval of, the stockholders at the 1994 annual meeting, stock compensation and incentive plans designed to comply with such tax laws. In addition, and for the same purpose, as discussed below, the Company has entered arrangements with each of Messrs. Meyer and Novick intended to ensure continued compliance in the future. Mark N. Kaplan Richard R. Shinn SENIOR EXECUTIVE OFFICER POST-EMPLOYMENT COMPENSATION PLAN The Senior Executive Officer Post-Employment Compensation Plan provides that certain qualified officers of the Company and its subsidiaries will be entitled upon retirement at or after the age of 60 to a lifetime supplemental pension of a maximum of $50,000 per year. Persons who are executive vice presidents of the Company, or more senior, or are designated senior executive officers of certain of the Company's subsidiaries, and who have met certain age and length of service requirements, and have been designated by the Board of Directors of the Company, are participants under the plan. In addition, a surviving spouse of a recipient of a pension under the plan is entitled to an annual pension equal to a maximum of $25,000 for the shorter of such spouse's life and 20 years. Each of the named executives (other than Mr. Shannon) were participants under the plan. In addition, the Company has certain understandings whereby certain additional pension amounts may be paid to Messrs. Berenson and Novick, and Ms. Feigin. EMPLOYMENT AGREEMENTS AND OTHER TRANSACTIONS Messrs. Berenson, Meyer and Novick, and Ms. Feigin have employment agreements with the Company. The Company has an agreement with Mr. Berenson providing for his continued employment with the Company through 1999 at a base annual salary of $540,000 per year. In addition, understandings with Mr. Berenson provided that the Company would advance him a compensatory loan in an amount not to exceed $500,000 to facilitate the purchase of a primary residence which would secure the loan. Such loan was 11 14 to be repayable five years after it was made or upon termination of Mr. Berenson's employment with the Company under certain circumstances (with the Company having agreed to forgive 20% of the original amount thereof each December 31 on which Mr. Berenson was employed after the closing of the loan). During 1993, in lieu of making the loan to Mr. Berenson and forgiving it as contemplated, the Company assisted Mr. Berenson in securing a loan from a commercial bank by agreeing to amortize up to $100,000 per year for up to five years of the principal on the mortgage loan Mr. Berenson took from such bank. The Company's obligation to reimburse the bank is essentially parallel to the obligation it would have had to Mr. Berenson to forgive the loan his agreement contemplated being made to him and, therefore, it is considered the equivalent of a loan forgiveness. In addition, in early 1994, the Company loaned Mr. Berenson $50,000 which is forgivable by the Company assuming his continued employment through 1998. In 1995, the Company loaned Mr. Berenson $125,000 which is forgivable by the Company assuming Mr. Berenson's continued employment through 1999. During 1996, the Company loaned Mr. Berenson $700,000, $200,000 of which is to be repaid with accrued interest in May 1999 and $500,000 of which is to be repaid with accrued interest in December 2003. In 1984, the Company entered into an employment agreement, which has been amended subsequently, with Mr. Meyer, which provides for Mr. Meyer's employment with the Company through December 31, 2002. The agreement also provides for a minimum annual salary of $2,575,000 for Mr. Meyer's services as Chief Executive Officer. If the Company terminates Mr. Meyer's full-time employment as Chief Executive Officer without cause (as defined in the agreement), or if Mr. Meyer effects such termination due to a change of control of the Company or other good reason specified in the agreement, Mr. Meyer will receive $3,000,000 in consideration of his employment. The agreement further provides that the Company will defray premiums on life insurance policies on Mr. Meyer's life payable to a beneficiary designated by him; the Company paid $42,217 in premiums in respect of these policies in 1996. The employment agreement also provides that Mr. Meyer may, for a period subsequent to his termination of full-time employment as Chief Executive Officer, provide the Company with consulting services for compensation at the rate of $10,000 per month. If the Company terminates Mr. Meyer's full-time employment as Chief Executive Officer without cause, or if Mr. Meyer effects such termination due to a change in control of the Company or for other good reason, Mr. Meyer will receive a lump sum payment equal to his then current aggregate remuneration multiplied by the greater of the number of years remaining in the term of the employment agreement and the number three. In such event, Mr. Meyer will also have an option to sell to the Company each share of the Common Stock and the Class B Stock which he then owns at the per share market value of the Common Stock. Mr. Meyer's agreement also provides that, for the ten year period (subject to reduction or suspension in the event Mr. Meyer becomes disabled or is in breach of his agreement) following his termination of employment, the Company will, among other things, provide Mr. Meyer with an office, and related office staff and facilities, and the continued use of a car and driver. The Company has also agreed to reimburse Mr. Meyer for certain business expenses incurred by him following termination of his employment up to $100,000 per year during the first five years of such period and $50,000 per year during the remainder of such period, with such amounts being adjusted for increases in the consumer's price index until the date of termination of his employment. During such ten year period, Mr. Meyer has also been charged with the responsibility of overseeing a certain portion of the Company's charitable contributions and, thus, will see to the contribution to charities of $100,000 per year of the Company's funds during the first five years of the period and of $50,000 per year during the remainder of the period. The Company and Mr. Meyer have entered into an agreement providing for the deferral of certain compensation otherwise payable to him and the payment of such deferred compensation into a trust, 12 15 commonly referred to as a rabbi trust, established with United States Trust Company of New York. The purpose of the trust arrangement is to enhance the Company's ability to deduct compensation paid to Mr. Meyer without the application of Section 162(m) of the Internal Revenue Code ("Section") at such times as the monies are paid to Mr. Meyer from the trust. The Section, under certain circumstances, denies a tax deduction to an employer for certain compensation expenses in excess of $1,000,000 per year paid by a publicly-held corporation to certain of its executives. For 1996, all of cash compensation payable to Mr. Meyer in excess of $930,000 was deferred and paid into the trust. In 1997 and subsequent years, such compensation as shall be timely elected by Mr. Meyer shall be deferred and paid into the trust provided that no such election shall cause any compensation paid to Mr. Meyer to be non-deductible by reason of the Section. Amounts deferred and paid into the trust shall be paid to Mr. Meyer or to his estate, as the case may be, upon the expiration of Mr. Meyer's employment agreement, or the termination of his employment by reason of death or disability. For the purpose of the presentation of Mr. Meyer's compensation in the Summary Compensation Table hereinabove provided, the amounts deferred and paid into the trust are deemed having been paid to Mr. Meyer. In 1983, the Company sold and issued $3,025,000 principal amount of its 8 1/2% Convertible Subordinated Debentures to Mr. Meyer in consideration of a purchase price of equal amount, of which $25,000 was paid in cash and the remainder by delivery of Mr. Meyer's long-term 9% full recourse promissory note in the principal amount of $3,000,000. During 1996, the Company and Mr. Meyer amended the Debentures and related promissory note to extend the maturity date of the Debentures to December 31, 2003 and the maturity date of the promissory note to December 31, 2004. The Debentures are convertible at any time into one share of Common Stock and one share of Class B Stock, at a current conversion price of $118.59, subject to adjustment upon the occurrence of certain events. During 1992, Mr. Meyer exercised certain stock options which had been granted to him in 1984, and, in connection therewith pursuant to the stock option agreement, issued to the Company his promissory note in the amount of $3,169,690, representing the exercise price in excess of the par value of the shares issued on exercise, which amount was paid in cash, and his promissory note in the amount of $2,339,998, representing the amount of tax required to be withheld in connection with such option exercise. The promissory notes are each full recourse, mature on December 22, 2001 and bear interest at the rate of 6.06% per year. Mr. Meyer is also indebted to the Company in the aggregate amount of $762,950 pursuant to long-term 9%, full recourse promissory notes delivered to the Company in 1981, 1982 and 1983 as part payment for Mr. Meyer's purchase of shares of Series 1, 2 and Series 3 Preferred Stock (collectively, "Original Preferred Stock"). In 1994, the Company and Mr. Meyer entered into an Exchange Agreement pursuant to which Mr. Meyer exchanged the Original Preferred Stock for a like number of shares of new Preferred Stock, designated Series I Preferred Stock, Series II Preferred Stock and Series III Preferred Stock (collectively, the "New Preferred Stock"). The redemption date of the three series of new preferred stock is fixed at April 7, 2004. The terms of the New Preferred Stock also give Mr. Meyer or his estate, as the case may be, the option to require the Company to redeem his Preferred Stock for a period of 12 months following his (i) death, (ii) permanent disability or permanent mental disability, (iii) termination of fulltime employment for good reason or (iv) termination of full-time employment by the Company without cause. The Company has an agreement with Mr. Novick pursuant to which he is employed by the Company through 1998 at a base annual salary of $825,000 per year. The agreement also provides that during the term of his agreement, he shall have an annual allocation pursuant to the SMIP of not less than $150,000 and an annual bonus of not less than $75,000. The agreement also provided for the Company to lend to Mr. Novick $600,000 to acquire a new residence intended to be used, in part, for business entertaining. This loan is forgivable in three annual installments of $200,000 at the end of each of 1996, 1997 and 1998, provided 13 16 Mr. Novick is still employed by the Company. During 1996 the Company forgave $200,000 of this loan. In addition, in order to have Mr. Novick's compensation remain fully deductible for tax purposes pursuant to the Section, the bonus allocated to Mr. Novick for 1996, and disclosed in the Summary Compensation Table, has been deferred until such time as the payment thereof will be deductible pursuant to the Section. The Company has an employment agreement with Ms. Feigin pursuant to which she is employed by the Company through 1997 at a base annual salary of $400,000 per year. If Mr. Meyer had been terminated effective December 31, 1996 under circumstances which would have resulted in payment of the special severance detailed in the foregoing description of his agreement, the amount then payable to him would have been $36,655,230. Other than pursuant to the loans described above in connection with Mr. Meyer's securities, and Messrs. Berenson's and Novick's arrangements, no executive named above is indebted to the Company for more than $60,000. Certain key employees of the Company, including the named executives (other than Mr. Shannon) and certain members of their immediate families ("Beneficiaries"), have entered into the Voting Trust Agreement, as amended in 1987 and 1994, pursuant to which the Beneficiaries have deposited the shares of Common Stock and Class B Stock owned by them into a voting trust. The Beneficiaries have also agreed to deposit into the voting trust shares of Common Stock or Class B Stock hereafter acquired by them. The voting trust was extended in 1994 and will continue until 2004. Mr. Meyer has been designated the sole Voting Trustee. Beneficiaries retain the sole authority to receive dividends and, in general, to dispose of their shares held in the voting trust. The Company has entered into indemnification agreements with each of the members of the Board of Directors providing, generally, for the fullest indemnification permitted by law. 14 17 PERFORMANCE GRAPH COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN FOR THE COMPANY, THE S&P 500 INDEX AND FIVE OTHER PUBLICLY-TRADED ADVERTISING AGENCIES
MEASUREMENT PERIOD PAPER & FOREST (FISCAL YEAR COVERED) AIPM S&P 500 PRDS 1991 100.00 100.00 100.00 1992 103.33 107.62 114.34 1993 107.77 118.47 126.01 1994 121.10 120.03 131.30 1995 115.41 165.13 144.57 1996 119.89 203.05 159.92
The Company's peer group is comprised of Cordiant plc, The Interpublic Group of Companies, Inc., Omnicom Group, Inc., True North Communications, Inc. and WPP Group, plc. The graph assumes the initial investment of $100 on December 31, 1991 and the reinvestment of dividends thereafter. 15 18 RELATIONSHIP WITH INDEPENDENT AUDITORS The Board of Directors of the Company has selected its present auditors, the firm of Ernst & Young LLP, as independent auditors to examine and report on the financial statements of the Company for the year ending December 31, 1997. Representatives of Ernst & Young LLP are expected to be present at the meeting to make such statements as they deem appropriate and to respond to appropriate stockholder questions. The Board has determined that, although not required, it would be desirable to request from the stockholders an expression as to whether they concur in the foregoing selection. The Board recommends that stockholders vote to ratify such selection. If the holders of a majority of the votes represented at the meeting do not ratify the selection of Ernst & Young LLP, the selection of independent auditors will be reconsidered by the Board. Abstentions will have the same effect as a negative vote, while broker non-votes will be disregarded and have no effect. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL. STOCKHOLDER PROPOSALS Any stockholder who wishes to submit a proposal to be presented at the 1998 Annual Meeting of Stockholders must forward such proposal to the Secretary of the Company at the address of the Company which is given above, so that it is received no later than February 3, 1998. SOLICITATION OF PROXIES The solicitation of proxies will be conducted primarily by mail. Employees of the Company, however, may solicit proxies by telephone, other means of communication or personal contact, but at no additional compensation. OTHER MATTERS The Board of Directors is not aware of any other matters which may be brought before the meeting. If other matters not known come before the meeting, the persons named in the accompanying form of proxy or their substitutes will vote such proxy in accordance with their best judgment. STEVEN G. FELSHER Secretary June 3, 1997 16 19 PROXY COMMON STOCK GREY ADVERTISING INC. PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 23, 1997 The undersigned stockholders(s) of Grey Advertising Inc. ("Company") hereby appoint(s) Edward H. Meyer and Steven G. Felsher, and each of them, the true and lawful proxies, agents and attorneys of the undersigned each with full power to act without the other and with full power of substitution and revocation, to represent and act for the undersigned, in the name, place and stead of the undersigned, and to vote all shares of the Company which the undersigned would be entitled to vote if personally present at the Annual Meeting of Stockholders to be held at the Company's Toronto office, 1881 Yonge Street, Toronto, Ontario, Canada, on June 23, 1997 at 8:00 AM, local time, and at any and all adjournments thereof, on the following matters. THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS HEREIN, BUT WHERE SPECIFICATIONS ARE NOT INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEE FOR DIRECTOR AND IN FAVOR OF THE PROPOSAL REFERRED TO IN ITEM 2. If other matters not now known come before the meeting the persons named herein or their substitutes will vote such shares in accordance with their best judgment. The undersigned hereby ratifies and confirms all that said proxies, agents and attorneys, or either of them, or their substitutes, lawfully may do at the meeting and hereby revokes all proxies heretofore given by the undersigned to vote at said meeting or any and all adjournments thereof. If only one of said proxies, or his substitute, be present and vote at said meeting, or at any or all adjournments thereof, such person shall have and may exercise all powers hereby granted. (Continued on reverse side) - ------------------------------------------------------------------------------- - FOLD AND DETACH HERE - 20 PLEASE MARK YOUR VOTE AS INDICATED IN THIS EXAMPLE. [X] WITHHELD FOR FROM PROPOSAL NO. 1. The election of Edward H. Meyer, as [ ] [ ] a director, to hold office until the Annual Meeting to be held in 2000 or until the election of his successor. FOR AGAINST ABSTAIN PROPOSAL NO. 2. A proposal to ratify the selection of [ ] [ ] [ ] Ernst & Young LLP as independent auditors for the Company for 1997. 3. The transaction of such other business as may properly come before the meeting, and at any and all adjournments thereof. The undersigned hereby acknowledges receipt of the Notice of the Meeting and Proxy Statement dated June 3, 1997. Signature(s) ____________________________________ (L.S.) Dated: June ___, 1997. Stockholder(s) should sign exactly as name appears above. - ------------------------------------------------------------------------------- - FOLD AND DETACH HERE - 21 PROXY LIMITED DURATION CLASS B COMMON STOCK GREY ADVERTISING INC. PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 23, 1997 The undersigned stockholder(s) of Grey Advertising Inc. ("Company") hereby appoint(s) Edward H. Meyer and Steven G. Felsher, and each of them, the true and lawful proxies, agents and attorneys of the undersigned each with full power to act without the other and with full power of substitution and revocation, to represent and act for the undersigned, in the name, place and stead of the undersigned, and to vote all shares of the Company which the undersigned would be entitled to vote if personally present at the Annual Meeting of Stockholders to be held at the Company's Toronto office, 1881 Yonge Street, Toronto, Ontario, Canada, on June 23, 1997 at 8:00 AM, local time, and at any and all adjournments thereof, on the following matters. THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS HEREIN, BUT WHERE SPECIFICATIONS ARE NOT INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEE FOR DIRECTOR AND IN FAVOR OF THE PROPOSAL REFERRED TO IN ITEM 2. If other matters not now known come before the meeting the persons named herein or their substitutes will vote such shares in accordance with their best judgment. The undersigned hereby ratifies and confirms all that said proxies, agents and attorneys, or either of them, or their substitutes, lawfully may do at the meeting and hereby revokes all proxies heretofore given by the undersigned to vote at said meeting or any and all adjournments thereof. If only one of said proxies, or his substitute, be present and vote at said meeting, or at any or all adjournments thereof, such person shall have and may exercise all powers hereby granted. (Continued on reverse side) - -------------------------------------------------------------------------------- - FOLD AND DETACH HERE - 22 Please mark your votes as indicated in /X/ this example. PROPOSAL NO. 1. The election of Edward H. Meyer, as a director, to hold office until the Annual Meeting to be held in 2000 or until the election of his successor. WITHHELD FOR FROM / / / / PROPOSAL NO. 2. A proposal to ratify the selection of Ernst & Young LLP as independent auditors for the Company for 1997. FOR AGAINST ABSTAIN / / / / / / 3. The transaction of such other business as may properly come before the meeting, and at any and all adjournments thereof. The undersigned hereby acknowledges receipt of the Notice of the Meeting and Proxy Statement dated June 3, 1997. Signature(s) (L.S.) Dated: June , 1997. --------------------------------------- -- Stockholder(s) should sign exactly as name appears above. - -------------------------------------------------------------------------------- - FOLD AND DETACH HERE - -----END PRIVACY-ENHANCED MESSAGE-----