APPENDIX A
THE INTERPUBLIC GROUP OF COMPANIES, INC.
1997 PERFORMANCE INCENTIVE PLAN
Section 1. Purpose.
The purposes of the Plan are to promote the interests of the
Company and its shareholders, and further align the interests of
shareholders and Eligible Employees, by
(a) attracting, retaining, and motivating
outstanding individuals as Eligible Employees;
(b) providing Eligible Employees with
incentives tied to the achievement of business, financial,
and strategic objectives of the Company and its Subsidiaries
and Affiliates; and
(c) providing Eligible Employees with
equity-based incentives and subsequent equity ownership
opportunities, including incentives and opportunities tied
to the Company's Common Stock.
Section 2. Definitions.
Unless the context clearly indicates otherwise, the following
terms, when used in the Plan in capitalized form, shall have the
meanings set forth below:
"Affiliate" means any corporation or other entity (other than the
Company or one of its Subsidiaries) in which the Company directly
or indirectly owns at least forty percent (40%) of the combined
voting power of all classes of stock of the entity or at least
forty percent (40%) of the ownership interests in the entity.
"Award" means any grant or award under the Plan, as evidenced in
a written document delivered to a Participant as provided in
Section 14(a) hereof.
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"Board" means the Board of Directors of the Company.
"Change of Control" means the occurrence of any of the following
events:
(a) any person (within the meaning of Sections 13(d) and
14(d) of the Exchange Act), other than the Company or any of its
Subsidiaries, becomes the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of thirty percent (30%) or
more of the combined voting power of the Company's then
outstanding voting securities; or
(b) a tender offer or exchange offer (other than an offer
by the Company), pursuant to which twenty percent (20%) or more
of the then outstanding shares of Common Stock were purchased,
expires; or
(c) the stockholders of the Company approve an agreement to
merge or consolidate with another corporation and the surviving
corporation is neither the Company nor a corporation that was,
prior to the merger or consolidation, a subsidiary of the
Company; or
(d) the stockholders approve an agreement (including a plan
of liquidation) to sell or otherwise to dispose of all or
substantially all of the Company's assets; or
(e) during any period of two consecutive years, individuals
who, at the beginning of such period, constituted the Board cease
for any reason to constitute at least a majority thereof, unless
the election or the nomination for the election by the Company's
stockholders of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were
directors at the beginning of the period.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee established by the Board pursuant
to Section 3 hereof.
"Common Stock" means the Company's $.1O par value common stock.
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"Company" means The Interpublic Group of Companies, Inc.
"Corporate Transaction" means any stock split, stock dividend,
extraordinary cash dividend, recapitalization, reorganization,
merger, consolidation, split-up, spin-off, combination, exchange
of shares, warrants or rights offering to purchase Common Stock
at a price substantially below fair market value, or other
similar event.
"Disability" means long-term disability as defined under the
terms of the Company's applicable long-term disability plans or
policies.
"Dividend Equivalent" means an Award, granted in accordance with
the provisions of Section 12 hereof, that provides for payments
equivalent in amount to the dividends on Shares.
"Eligible Employee" means any employee of the Company, its
Subsidiaries, or its Affiliates determined by the Committee to be
responsible for, or able to contribute to, the growth,
profitability, and success of the Company. However, this term
does not include directors who are not employees of such
entities.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Executive Officer" means those persons who are officers of the
Company within the meaning of Rule 16a-l(f) of the Exchange Act.
"Incentive Stock Option" or "ISO" means an Option intended to
meet the requirements of Section 422 of the Code.
"Management Incentive Compensation Performance Award" or "MICP
Award" means an Award granted under Section 10 hereof and payable
wholly in cash, wholly in Shares, or partly in cash and partly in
Shares in accordance with the terms of the Award.
"Nonstatutory Stock Option" means an Option that is not intended
to be an Incentive Stock Option.
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"Option" means the right to purchase the number of Shares
specified by the Committee, at a price and during a term fixed by
the Committee in accordance with the Plan and subject to any
other limitations and restrictions (required by law or otherwise)
as the Plan and the Committee shall impose.
"Participant" means an Eligible Employee selected by the
Committee to receive an Award under the Plan.
"Performance Period" means a period during which an Award of
Performance Units is subject to forfeiture. The Performance
Period that applies to an Award made to a Participant may overlap
or coincide with the Performance Period that applies to another
Award made to that Participant. The duration of a Performance
Period shall not be less than one year.
"Performance Units" means any Award of a contractual right
granted under Section 9 hereof to receive cash or Shares that
becomes vested upon the attainment, in whole or in part, of
performance objectives determined by the Committee.
"Phantom Shares" means an Award of a contractual right granted
under Section 8 hereof to receive cash or Shares payable in
accordance with the terms of the Award.
"Plan" means The Interpublic Group of Companies, Inc. 1997
Performance Incentive Plan, set forth herein, and as it may be
amended from time to time.
"Plan Year" means the calendar year.
"Restricted Period" means a period during which an Award of
Restricted Stock is subject to forfeiture. The Restricted Period
that applies to an Award made to a Participant may overlap or
coincide with the Restricted Period that applies to another Award
made to that Participant. The duration of a Restricted Period
shall not be less than one year; provided that a Restricted
Period may terminate before the expiration of one year, pursuant
to Section 13 hereof, in connection with the termination of the
Participant's employment due to retirement, death, or Disability
or, pursuant to Section 14(d) hereof, by reason of a Change of
Control.
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"Restricted Stock" means any Award of Common Stock granted under
Section 7 hereof that becomes vested and nonforfeitable upon the
attainment, in whole or in part, of conditions established by the
Committee.
"Shares" means shares of Common Stock.
"Stock Appreciation Right" means a contractual right granted
under Section 6 hereof to receive cash, Shares, or a combination
thereof.
"Subsidiary" means a subsidiary of the Company that meets the
definition of a "subsidiary corporation" in Section 424(f) of the
Code.
Section 3. Administration.
(a) The Committee. The Plan shall be administered by a
committee (the "Committee") that satisfies the requirements of
Rule 16b-3 under the Exchange Act. Members of the Committee
shall be appointed by and shall serve at the pleasure of the
Board. No member of the Committee shall be eligible to receive
an Award under the Plan.
(b) Committee Powers. The Committee shall have and may
exercise all of the powers granted to it by the provisions of the
Plan. Subject to the express provisions and limitations of the
Plan, the Committee may adopt such rules, regulations, and
procedures as it deems advisable for the conduct of its affairs,
and may appoint one of its members to be its chairman and any
person, whether or not a member, to be its secretary or agent.
The Committee shall have full authority to direct the proper
officers of the Company to issue or transfer Shares pursuant to
the issuance or exercise of an Award under the Plan.
(c) Committee Action. The Committee may act at a duly
called meeting by the vote of a majority of its members or
without a meeting by unanimous written consent. The decisions of
the Committee shall be final and binding unless otherwise
determined by the Board. Each member of the Committee and each
member of the Board shall be without liability, to the fullest
extent permitted by law, for any action taken or determination
made in good faith in connection with the Plan.
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(d) Awards. Subject to the provisions of the Plan, the
Committee shall have the authority to grant the following Awards:
(a) Options,
(b) Stock Appreciation Rights,
(c) Restricted Stock,
(d) Phantom Shares,
(e) Performance Units,
(f) Management Incentive Compensation
Performance Awards,
(g) Shares in Lieu of Cash, and
(h) Dividend Equivalents.
(e) Participants. Subject to the provisions of the Plan, the
Committee shall have the authority to designate the Eligible
Employees who shall receive Awards and to determine the nature
and size of the Award that an Eligible Employee shall receive.
(f) Delegation. If the Committee deems it advisable, the
Committee may delegate its authority under this Section 3 to
persons other than its members to the extent permitted by
applicable law, except that no such delegation shall be permitted
with respect to the participation in the Plan of persons who are
subject to Section 16 of the Exchange Act. Any person to whom
the Committee delegates its authority under this Section 3 may
receive Awards only if the Awards are granted directly by the
Committee without delegation.
Section 4. Maximum Amount Available for Awards.
(a) Basic Limitation. Subject to the provisions of
subsections (b) through (f) of this Section 4, the maximum number
of Shares in respect of which Awards may be granted in any Plan
Year is 1.85% of the total number of Shares issued and
outstanding on the first day of that Plan Year, including Shares
held in the Company's treasury.
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(b) Additional Shares. In addition to the Shares authorized
by Section 4(a) hereof, the following Shares may be the subject
of Awards under the Plan:
(1) Carryovers. If the maximum number of Shares in
respect of which Awards may be granted in any Plan Year
pursuant to this Section 4 (the "Maximum Shares") exceeds
the number of Shares in respect of which Awards are granted
in that Plan Year (the "Covered Shares"), Shares equal to
the excess of the Maximum Shares over the Covered Shares
("Unused Shares") shall be added to the Shares otherwise
available for Awards in the immediately following Plan Year.
Unused Shares may be carried over to each subsequent Plan
Year in succession to the extent that Awards are not granted
in respect of the Unused Shares.
(2) Surrender of Shares. If a Participant tenders, or
has withheld, Shares in payment of all or part of the option
price under an Option granted under the Plan, or in
satisfaction of withholding tax obligations, the Shares
tendered by the Participant or so withheld shall become
available for Awards.
(3) Forfeiture of Shares. If Shares that are issued
under the Plan are subsequently forfeited (or if an Award
with respect to Shares is forfeited) in accordance with the
terms of the Award, the forfeited Shares shall immediately
become available for Awards.
(4) Payment of Cash in Lieu of Shares. To the extent
that cash is paid pursuant to an Award in lieu of Shares,
the Shares covered by the Award shall become available for
Awards.
(5) MICP Awards. The Shares authorized by the
preceding provisions of this Section 4 shall not be
available for distribution under Section 10 hereof.
However, in addition to the Shares available under the
preceding provisions of this Section 4, the excess of (A)
600,000 Shares over (B) the number of Shares previously
distributed under The Interpublic Group of Companies, Inc.
Management Incentive Compensation Plan, as approved by the
Company's shareholders on May 16, 1995, shall be authorized
for distribution under Section 10 hereof.
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(c) Aggregate Limitations on Restricted Stock and ISOs.
Subject to the adjustment provisions of Section 4(f) hereof, not
more than 25% of the Shares in respect of which Awards may be
granted in any Plan Year (disregarding Shares that may be
distributed pursuant to Section 4(b)(5) hereof) may be the
subject of Awards of Restricted Stock, and no more than 200,000
Shares may be the subject of ISOs that are granted in any Plan
Year.
(d) Individual Limitations on Options and Stock Appreciation
Rights. Subject to the adjustment provisions in Section 4(f)
hereof, an individual Participant may not receive, in any Plan
Year, Options and Stock Appreciation Rights with respect to more
than 250,000 Shares.
(e) Shares Available for Issuance. Shares of Common Stock
may be made available from the authorized but unissued Shares
or from Shares held in the Company's treasury and not reserved
for some other purpose. If an Award is payable solely in cash,
no Shares shall be deducted from the number of Shares available
for issuance under this Section 4 by reason of that Award.
(f) Adjustment for Corporate Transactions. If the
Committee determines that any Corporate Transaction affects the
Common Stock such that an adjustment is required to preserve,
or to prevent enlargement of, the benefits or potential
benefits available under the Plan, the Committee may, in such
manner as the Committee deems equitable, adjust any or all of
(1) the number and kind of shares that thereafter may
be made the subject of Awards,
(2) the number and kinds of shares that are subject
to outstanding Awards, and
(3) the grant, exercise, or conversion price with
respect to any of the foregoing.
Any Shares received as a result of a Corporate Transaction
affecting Restricted Stock shall have the same status, be
subject to the same restrictions, and bear the same legend as
the Restricted Stock with respect to which the Shares were
issued. Additionally, the Committee may make provisions for a
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cash payment to a Participant or other person holding an
outstanding Award. However, the number of shares subject to
any Award shall always be a whole number.
Section 5. Stock Options.
(a) Grant. The Committee shall have the authority to
grant both Incentive Stock Options and Nonstatutory Stock
Options; provided that Incentive Stock Options may not be
granted to any Eligible Employee who is not an employee of the
Company or one of its Subsidiaries at the time of grant.
(b) Exercise Price. The Committee shall establish the
exercise price at the time each Option is granted, which price
shall not be less than 100% of the fair market value of the
Shares subject to the Option on the date of grant.
(c) Exercise. Each Option shall be exercised at such
times and subject to such terms and conditions as the Committee
may specify in the applicable Award or thereafter; provided
that unless the Option becomes vested earlier pursuant to
Section 13 or 14(d) hereof, an Option may not be exercised in
whole or in part during the twelve-month period commencing with
the date on which the Option was granted. The Committee may
impose such conditions on the exercise of Options as it
determines to be appropriate, including, without limitation,
conditions relating to the application of federal or state
securities laws. No Shares shall be delivered pursuant to any
exercise of an Option unless arrangements satisfactory to the
Committee have been made to assure full payment of the exercise
price therefor. Without limiting the generality of the
foregoing, payment of the exercise price may be made in cash
or, if and to the extent permitted by the Committee, by
exchanging Shares owned, or the ownership of which is attested
to, by the optionee (which are not the subject of any pledge or
other security interest and which are fully vested), or by a
combination of the foregoing, provided that the combined value
of all cash and the fair market value of any Shares tendered to
the Company, valued as of the date of such tender, is at least
equal to the exercise price.
(d) Term. An Option shall be exercisable for a term
determined by the Committee, which shall not be longer than ten
years from the date on which the Option is granted.
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(e) Termination of Employment. An Option shall be
exercisable following the termination of a Participant's
employment to the extent determined pursuant to Sections 13 and
14(d) hereof, provided that
(1) If the Participant's employment terminates due to
the Participant's retirement with the approval of the
Company, the Participant (or, following the Participant's
death, the Participant's beneficiary or personal
representative) may exercise any Option held by the
Participant at the time of such termination, to the extent
such Option is vested in accordance with the terms of the
Option and Sections 13 and 14(d) hereof, for a period of
three years following such termination (but not after the
date the Option otherwise expires).
(2) If the Participant's employment terminates due to
the Participant's death or Disability, the Participant
(or, following the Participant's death, the Participant's
beneficiary or personal representative) may exercise any
Option held by the Participant at the time of such
termination, to the extent such Option is vested in
accordance with the terms of the Option and Sections 13
and 14(d) hereof, for a period of one year following such
termination (but not after the date the Option otherwise
expires).
(3) If the Participant's employment terminates for
any reason not described in Section 5(e)(1) or (2) hereof,
the Participant (or, following the Participant's death,
the Participant's beneficiary or personal representative)
may exercise any Option held by the Participant at the
time of such termination, to the extent such Option is
vested in accordance with the terms of the Option and
Sections 13 and 14(d) hereof, for a period of three months
following such termination (but not after the date the
Option otherwise expires).
Section 6. Stock Appreciation Rights.
(a) Grant. The Committee shall have the authority to
grant Stock Appreciation Rights in tandem with an Option, in
addition to an Option, or freestanding and unrelated to an
Option. If a Stock Appreciation Right is granted in tandem
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with an Option, the Stock Appreciation Right and the related
Option shall provide alternative rights, so that a Participant
may not exercise both the Stock Appreciation Right and the
Option with respect to a Share covered by both the Option and
the related Stock Appreciation Right. Stock Appreciation
Rights granted in tandem or in addition to an Option may be
granted either at the same time as the Option or at a later
time. Stock Appreciation Rights shall not be exercisable after
the expiration of ten years from the date of grant and shall
have a base price determined in the same manner as, and subject
to the same conditions that apply with respect to, the exercise
price for an Option under Section 5(b) hereof; provided that if
a Stock Appreciation Right is granted in tandem with a
previously granted Option, the base price for the Stock
Appreciation Right may be equal to the exercise price for such
Option.
(b) Exercise. Each Stock Appreciation Right shall be
exercised at such times and subject to such terms and
conditions as the Committee may specify in the applicable Award
or thereafter; provided that unless the Stock Appreciation
Right becomes vested earlier pursuant to Section 13 or 14(d)
hereof, a Stock Appreciation Right may not be exercised in
whole or in part during the twelve-month period commencing with
the date on which the Stock Appreciation Right was granted. A
Stock Appreciation Right shall entitle the Participant to
receive from the Company an amount equal to the excess of the
fair market value of a Share on the date of exercise of the
Stock Appreciation Right over the base price thereof. Subject
to Sections 13 and 14(d) hereof, the Committee shall determine
the time or times at which or the event or events upon which a
Stock Appreciation Right may be exercised in whole or in part,
the method of exercise and whether such Stock Appreciation
Right shall be settled in cash, Shares, or a combination of
cash and Shares; provided that unless otherwise specified by
the Committee at or after grant, a Stock Appreciation Right
granted in tandem with an Option shall be exercisable at the
same time or times as the related Option is exercisable.
(c) Termination of Employment. A Stock Appreciation Right
shall be exercisable following the termination of a
Participant's employment to the extent determined pursuant to
Sections 13 and 14(d) hereof and for periods identical with
those prescribed for Options under Section 5(e) hereof.
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Section 7. Restricted Stock.
(a) Grant. Each Share of Restricted Stock shall be subject
to the following terms and conditions, and to such additional
terms and conditions as the Committee shall deem appropriate;
provided that none of these additional terms and conditions
shall be more favorable to a Participant than the terms and
conditions set forth herein.
(b) Rights of Participant. A Participant to whom
Restricted Stock has been granted shall have absolute ownership
of such shares, including the right to vote the same and to
receive dividends thereon, subject to the terms, conditions,
and restrictions described in the Plan and in the Award.
(c) Restrictions. Until the restrictions set forth in
this subsection (c) shall lapse, Restricted Stock shall be
subject to the following conditions:
(1) Restricted Stock shall not be sold, assigned,
transferred, pledged, hypothecated, or otherwise disposed
of; and
(2) if the Participant ceases to be an Employee for
any reason, except as provided in Sections 13 and 14(d)
hereof, any Restricted Stock that had been delivered to,
or held in custody for, the Participant shall be returned
to the Company forthwith, accompanied by any instrument of
transfer requested by the Company, and all of the rights
of the Participant with respect to such Shares shall
immediately terminate without any payment of consideration
by the Company.
(d) Lapse of Restrictions. Unless the Restricted Stock
vests earlier pursuant to Section 13 or 14(d) hereof, the
restrictions set forth in Section 7(c) hereof shall lapse at
the end of the Restricted Period.
(e) Agreement by Participant Regarding Withholding Taxes.
Each Participant who receives Restricted Stock shall agree
that, subject to the provisions of Section 7(c) hereof:
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(1) no later than the date of the lapse of the
restrictions set forth in Section 7(c) hereof (and any
additional restrictions set forth in the Award of the
Restricted Stock), the Participant will pay to the
Company, or make arrangements satisfactory to the
Committee regarding payment of, any taxes of any kind
required by law to be withheld with respect to the
Restricted Stock, and
(2) the Company and its Subsidiaries and Affiliates
shall, to the extent permitted by law, have the right to
deduct from any payments of any kind otherwise due to the
Participant any taxes of any kind required by law to be
withheld with respect to the Restricted Stock.
A Participant may irrevocably elect to have any withholding tax
obligation satisfied by
(A) having the Company withhold shares otherwise
deliverable to the Participant in connection with the
Award of Restricted Stock, or
(B) delivering to the Company such Restricted Stock
or delivering to the Company other Shares;
provided that the Committee may, in its sole discretion,
disapprove any such election.
(f) Tax Assistance Payments. When the restrictions set
forth in Section 7(c) hereof, or in the Award of the Restricted
Stock, lapse, the Committee may, in its discretion, direct the
Company to make cash payments to assist the Participant in
satisfying his income tax liability with respect to the
Restricted Stock. Such payments may be made only to those
Participants whose performance the Committee determines to have
been fully satisfactory between the date on which the
Restricted Stock were granted and the date on which such
restrictions lapse. The Committee may, in its discretion,
estimate the amount of the income tax liability in accordance
with methods or criteria uniformly applied to Participants
similarly situated, without regard to the individual
circumstances of a particular Participant.
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(g) Election to Recognize Gross Income in Year of Grant.
If a Participant properly elects, within 30 days of the date of
grant of Restricted Stock, to include in gross income for
federal income tax purposes an amount equal to the fair market
value of the Shares awarded on the date of grant, he shall make
arrangements satisfactory to the Committee to pay in the year
of such grant any taxes required to be withheld with respect to
such Shares. If he fails to make the payments, the Company and
its Subsidiaries and Affiliates shall, to the extent permitted
by law, have the right to deduct from any payments of any kind
otherwise due to the Participant any taxes of any kind required
by law to be withheld with respect to the Shares.
(h) Restrictive Legends; Certificates May Be Held in
Custody. Certificates evidencing Restricted Stock shall bear
an appropriate legend referring to the terms, conditions, and
restrictions described in the Plan and in the instrument
evidencing the grant of the Restricted Stock. Any attempt to
dispose of Restricted Stock in contravention of the terms,
conditions, and restrictions described in the Plan or in the
instrument evidencing the grant of the Restricted Stock shall
be ineffective. The Committee may require that the
certificates evidencing such shares be held in custody by a
bank or other institution, or that the Company itself hold such
shares in custody, until the restrictions thereon have lapsed.
(i) Foreign Laws. Notwithstanding any provisions of the
Plan to the contrary, if Restricted Stock is to be awarded to a
Participant who is subject to the laws, including but not
limited to the tax laws, of any country other than the United
States, the Committee may, in its discretion, direct the
Company to sell, assign, or otherwise transfer the Restricted
Stock to a trust or other entity or arrangement, rather than
grant the Restricted Stock directly to the Participant.
Section 8. Phantom Shares.
(a) Grant. The Committee shall have the authority to
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determine the number of Phantom Shares to be granted to a
Participant and the other terms and conditions of the Phantom
Shares.
(b) Payment. Each Phantom Share shall represent the right
of the Participant to receive an amount determined by the
Committee based on the achievement of performance goals,
established by the Committee, relating to the fair market
value, book value, or formula value of an equity interest in
the Company, an Affiliate, or a Subsidiary (or any combination
thereof). Payment of the value of a Phantom Share shall be in
cash, Shares, or both, as determined by the Committee and shall
be made at such time and in such manner as the Committee shall
determine.
(c) Conditions. Each Award of Phantom Shares shall be
subject to such terms and conditions as the Committee shall
establish, including conditions comparable to those provided in
Section 7 or 9 hereof. Unless the Phantom Shares vest earlier
pursuant to Section 13 or 14(d) hereof, Phantom Shares shall
not be vested during the twelve-month period commencing on the
date on which the Phantom Shares are granted.
(d) Termination of Employment. The rights of a
Participant with respect to an Award of Phantom Shares
outstanding at the time of the termination of the Participant's
employment shall be governed by Sections 13 and 14(d) hereof.
Section 9. Performance Units.
(a) Grant. The Committee shall have the authority to
determine the number of Performance Units to be granted to a
Participant and the other terms and conditions of the
Performance Units. The Performance Units shall become vested
upon the determination by the Committee that the performance
objectives established by the Committee for the Performance
Units have been attained, in whole or in part. Payment (if
any) with respect to a Performance Unit shall be made as soon
as administratively practicable after the conclusion of the
applicable Performance Period. An individual Participant may
not participate in more than four Performance Periods at any
one time.
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(b) Performance Objectives. The performance objectives
shall relate to the achievement of performance objectives
relating to one or more of the following criteria:
(1) cumulative compound operating profit growth;
(2) total return to shareholders;
(3) return on equity;
(4) increase in revenue;
(5) net operating income;
(6) cash flow; or
(7) any other criteria selected by the Committee;
provided that any such other criteria shall not
apply to an Award to a "covered employee" within
the meaning of Section 162(m)(3) of the Code.
The performance objectives may relate to the performance of (A)
the Company, (B) a Subsidiary, (C) an Affiliate, (D) a division
or unit of the Company, any Subsidiary, or any Affiliate, (E)
an office, group of agencies, or all or part of any agency
system, (F) the Participant, or (G) any combination of the
foregoing, over a Performance Period established by the
Committee, as measured either in absolute terms or in
comparison with the performance of other companies. Partial
achievement of the objective(s) may result in a payment
corresponding to the degree of achievement.
(c) Maximum Payment. The maximum amount that may be paid
to any Participant in respect of an Award of Performance Units
shall be $3.5 million for a four-year Performance Period. If
the Performance Period is longer or shorter than four years,
the $3.5 million limit shall be proportionately increased or
reduced to reflect the length of the Performance Period.
Payment may be made in cash, in Shares, or both, as determined
by the Committee.
(d) Termination of Employment. The rights of a
Participant with respect to an Award of Performance Units
outstanding at the time of the termination of the Participant's
employment shall be governed by Sections 13 and 14(d) hereof.
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(e) Interpretation. Notwithstanding any other provision
of this Section 9 to the contrary, if an Award of Performance
Units is intended at the time of grant to be "other
performance-based compensation" within the meaning of Section
162(m)(4)(C) of the Code, and if the Committee's authority to
exercise any discretion under this Section 9 with respect to
the Award would cause the Award to fail to qualify as "other
performance-based compensation," the Committee shall not be
entitled to exercise such discretion with respect to that
Award.
Section 10. Management Incentive Compensation Performance
Awards
(a) Incentive Fund Determination. MICP Awards may be made
in the sole discretion of the Committee except that the fund
available for such Awards with respect to any one Plan Year may
not exceed 5% of the amount by which the consolidated income
(excluding extraordinary gains and income taxes applicable
thereto) before income taxes of the Company and its
subsidiaries on a worldwide basis, adjusted for all
extraordinary losses after income tax effects, and before
provision for such incentive compensation, exceeds 15% of the
average equity capital of the Company in the Plan Year
immediately preceding the Plan Year with respect to which the
Awards are made (the "Preceding Year").
For purposes of this Section 10(a), average equity capital
shall be determined by averaging equity capital as at the first
business day of the Preceding Year, the last day of June, and
the last day of December of the Preceding Year (assuming
conversion of all outstanding convertible debentures).
No MICP Award shall be made unless the Award is approved
by the Committee in its sole discretion.
(b) Determination of MICP Amounts. The Committee shall
consider one or more of the following factors in determining
the amount of the MICP Awards:
(1) Achievement of the annual worldwide business
plan adopted by the Company
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(2) Contribution to clients' business
(A) Improvement in the quality of work produced
(B) Improvement in efficiency
(3) Financial factors
(A) Operating margin
(B) Level of or growth in revenue
(C) Level of or growth in operating profit
(4) Individual performance
(c) Maximum Individual MICP Awards. The maximum
individual MICP Award permitted, with respect to any Plan Year,
is $2,000,000.
(d) Form and Timing of MICP Awards. The Committee shall
be responsible for determining the form and timing of MICP
Awards under the Plan. In its discretion, the Committee may
make any Award wholly in cash, wholly in Shares, or partly in
cash and partly in Shares. For purposes of Section 10(a)
hereof, any Shares awarded under this Section 10 shall be
valued by using the average closing price of the Shares on the
New York Stock Exchange on the last ten trading days of the
calendar month preceding the month in which the Shares are
awarded.
Individual MICP Awards shall be paid on a current basis
except that, in any instance, the Committee may direct that up
to 75% of an individual's Award be paid on a deferred basis
subject to such terms and conditions as the Committee may
prescribe. MICP Awards shall normally be made as soon as
possible after the end of each Plan Year.
Section 11. Shares in Lieu of Cash.
The Committee may grant Awards of Shares in lieu of all or
part of any compensation otherwise payable in cash to an
Eligible Employee by the Company or any Subsidiary or
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Affiliate. If Shares are issued in lieu of cash, the number of
Shares to be issued shall be equal to the number of whole
Shares that have an aggregate fair market value (determined on
the date the cash otherwise would have been payable) equal to
or less than the amount of such cash.
Section 12. Dividend Equivalents.
The Committee may grant to a Participant, in connection
with any Award, Dividend Equivalents, which may be paid in
cash, in Shares, or both, and which may be paid on a current,
deferred, or contingent basis, as determined by the Committee
in its discretion.
Section 13. Termination of Employment.
If the Participant's employment terminates for any reason,
the Participant (or, following the Participant's death, the
Participant's beneficiary or personal representative) shall be
vested only in the portion of the Award (if any) in which the
Participant was vested immediately before the termination of
the Participant's employment except to the extent that the
Committee in its sole discretion determines otherwise.
Notwithstanding the preceding sentence, and subject to Section
14(d) hereof, the Committee may not determine that an Award
shall be vested before the first anniversary of the date on
which the Award was granted unless the Participant's employment
terminated due to retirement, death, or Disability.
Section 14. General Provisions.
(a) Awards. Each Award hereunder shall be evidenced in
writing. The written terms of the Award shall be delivered to
the Participant and shall incorporate the terms of the Plan by
reference and specify the terms and conditions thereof and any
rules applicable thereto.
(b) Withholding. The Company shall have the right to
deduct from all amounts paid to a Participant in cash (whether
under the Plan or otherwise) any taxes required by law to be
withheld in respect of Awards under the Plan. In the case of
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any Award satisfied in the form of Common Stock, no Shares
shall be issued unless and until arrangements satisfactory to
the Company shall have been made to satisfy any withholding tax
obligations applicable with respect to such Award. Without
limiting the generality of the foregoing and subject to such
terms and conditions as the Committee may impose, the Company
shall have the right to retain, or the Committee may, subject
to such terms and conditions as it may establish from time to
time, permit Participants to elect to tender, Common Stock
(including Common Stock issuable in respect of an Award) to
satisfy, in whole or in part, the amount required to be
withheld.
(c) Nontransferability. Unless the Committee shall permit
(on such terms and conditions as it shall establish) an Award
to be transferred to a member of the Participant's immediate
family or to a trust, partnership, corporation, or similar
vehicle the parties in interest in which are limited to the
Participant and members of the Participant's immediate family
(collectively, the "Permitted Transferees"), no Award shall be
assignable or transferable except by will or the laws of
descent and distribution, and except to the extent required by
law, no right or interest of any Participant shall be subject
to any lien, obligation or liability of the Participant. All
rights with respect to Awards granted to a Participant under
the Plan shall be exercisable during the Participant's lifetime
only by such Participant or, if applicable, the Permitted
Transferees.
(d) Change of Control. Upon the occurrence of a Change of
Control, all Awards then outstanding shall immediately become
fully vested.
(e) No Right to Employment. No person shall have any
claim or right to be granted an Award, and the grant of an
Award shall not be construed as giving a Participant the right
to be retained in the employ of the Company, any Subsidiary or
any Affiliate. Further, the Company and each Subsidiary and
Affiliate expressly reserve the right at any time to dismiss a
Participant free from any liability, or any claim under the
Plan, except as provided herein or in any agreement entered
into with respect to an Award.
PAGE
(f) No Rights to Awards; No Shareholder Rights. No
Participant or Eligible Employee shall have any claim to be
granted any Award under the Plan, and there is no obligation of
uniformity of treatment of Participants and Eligible Employees.
Subject to the provisions of the Plan and the applicable Award,
no person shall have any rights as a shareholder with respect
to any Shares of Common Stock to be issued under the Plan prior
to the issuance thereof.
(g) Foreign Benefits. The Committee may grant Awards to
Eligible Employees of the Company and its Subsidiaries and
Affiliates who reside in jurisdictions outside the United
States. The Committee may adopt such supplements to the Plan
as may be necessary to comply with applicable laws of such
jurisdictions and to afford participants favorable treatment
under such laws; provided that no Award shall be granted under
any such supplement on the basis of terms or conditions that
are inconsistent with provisions of the Plan.
(h) Amendment of Plan. The Board or the Committee may
amend, suspend, or terminate the Plan or any portion thereof at
any time; provided that no amendment shall be made without
shareholder approval if (1) shareholder approval is required by
law or (2) if the amendment would increase the number of Shares
available for Awards under the Plan, except pursuant to Section
4(f) hereof. Without the written consent of an affected
Participant, no termination, suspension, or modification of the
Plan shall adversely affect any right of such Participant under
the terms of an Award granted before the date of such
termination, suspension, or modification.
(i) Application of Proceeds. The proceeds received by the
Company from the sale of Shares under the Plan shall be used
for general corporate purposes.
(j) Compliance with Legal and Exchange Requirements. The
Plan, the grant and exercise of Awards thereunder, and the
other obligations of the Company under the Plan, shall be
subject to all applicable federal and state laws, rules, and
regulations, and to such approvals by any regulatory or
governmental agency as may be required. The Company, in its
PAGE
discretion, may postpone the grant and exercise of Awards, the
issuance or delivery of Shares under any Award or any other
action permitted under the Plan to permit the Company, with
reasonable diligence, to complete such stock exchange listing
or registration or qualification of Shares or other required
action under any federal or state law, rule, or regulation and
may require any Participant to make such representations and
furnish such information as it may consider appropriate in
connection with the issuance or delivery of Shares in
compliance with applicable laws, rules, and regulations. The
Company shall not be obligated by virtue of any provision of
the Plan to recognize the exercise of any Award or otherwise to
sell or issue Shares in violation of any such laws, rules, or
regulations; and any postponement of the exercise or settlement
of any Award under this provision shall not extend the term of
such Awards, and neither the Company nor its directors or
officers shall have any obligation or liability to the
Participant with respect to any Award (or stock issuable
thereunder) that shall lapse because of such postponement.
(k) Deferrals. The Committee may postpone the exercise of
Awards, the issuance or delivery of Shares, the payment of cash
under any Award, or any action permitted under the Plan to
prevent the Company or any of its Subsidiaries or Affiliates
from being denied an income tax benefit with respect to any
Award. The Committee also may establish rules under which a
Participant may elect to postpone receipt of Shares or cash
under any Award.
(l) Severability of Provisions. If any provision of the
Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof,
and the Plan shall be construed and enforced as if such provi-
sion had not been included.
(m) Incapacity. Any benefit payable to or for the benefit
of a minor, an incompetent person, or other person incapable of
receipting therefor shall be deemed paid when paid to such
person's guardian or to the party providing or reasonably ap-
pearing to provide for the care of such person, and such
payment shall fully discharge any liability or obligation of
the Committee, the Board, the Company, and all other parties
with respect thereto.
PAGE
(n) Rules of Construction. Whenever used in the Plan,
words in the masculine gender shall be deemed to refer to
females as well as to males; words in the singular shall be
deemed to refer also to the plural; and references to a statute
or statutory provision shall be construed as if they referred
also to that provision (or to a successor provision of similar
import) as currently in effect, as amended, or as reenacted.
(o) Headings and Captions. The headings and captions
herein are provided for reference and convenience only, shall
not be considered part of the Plan, and shall not be employed
in the construction of the Plan.
(p) Applicable Law. The validity, construction,
interpretation, administration, and effect of the Plan and of
its rules and regulations, and rights relating to the Plan,
shall be determined solely in accordance with the laws of the
State of New York (without regard to its rules regarding choice
of law).
(q) Effective Date. The Plan shall become effective on
the date the Plan is approved by the Company's shareholders.
No Awards may be granted under the Plan after the annual
meeting of the Company's shareholders in 2002; provided that
any Awards granted before such annual meeting shall continue in
effect thereafter in accordance with the terms of the Awards
and the Plan. Upon shareholder approval of the Plan, no
further awards may be made under The Interpublic Group of
Companies, Inc. 1996 Stock Incentive Plan or under The
Interpublic Group of Companies, Inc. Management Incentive
Compensation Plan.