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How Omnicom Brass Turned a Pay Cut Into a Pay Rise

Omnicom (OMC) CEO John Wren turned a pay cut in 2008 into a pay rise in 2009 by substituting a cash bonus -- which he gave up in light of the recession -- for stock options that are now worth millions, according to page 16 of this SEC filing.

Wren's compensation leaped 17 percent to $7.9 million in 2009, from only $2.9 million in 2008. If you're thinking, "these numbers don't add up," you're right -- they don't. Here's how to solve the riddle:

What seems to have happened is that although Omnicom's top brass did indeed take a cut in "non-equity incentive plan compensation" in 2008, they also received stock option awards. They didn't get those awards the year before, in 2007. Those awards came at a time when Omnicom's stock price was depressed due to the recession. A year later, and now they're looking really good.

First take a look at page 13 of Omnicom's proxy filing for 2008. Wren's total compensation was valued at just $2.9 million. Most of that was cash and hardly any of it was stock. His pay reflected the trouble Omnicom was in during 2008-2009, when the agency network laid off 5,000 people. Crucially, his stock options were worth only $7,143.

Options change in value as stock rises, however, and change those options did: If you look at page 16 of the 2009 proxy, Wren's 2008 options are now valued at $3.8 million. In 2009 he was given another set of options worth $1.7 million.

All of Omnicom's top executives took option awards in 2008, the year they gave up their cash bonuses. And those options have all gone up dramatically in value. Here's the summary of the total value of their 2009 compensation:

  • CEO John Wren: $7.9 million
  • CFO Randall Weisenberger: $5.6 million
  • CEO/Das Thomas Harrison: $4.4 million
  • BBDO CEO Andrew Robertson: $4.3 million
  • CEO/OMG Daryl Simm: $5.5 million
They also got some nice perks:
The total perquisites and other personal benefits include: for Mr. Wren, personal use of aircraft hours ($105,364), an auto allowance and a medical allowance; for Mr. Weisenburger, personal use of aircraft hours ($77,125), an auto allowance and a health club membership; for Mr. Harrison, employer premium payments for health and disability insurance ($66,627); for Mr. Robertson, an auto allowance ($25,447), club membership, personal financial planning services and entertainment expenses; and for Mr. Simm, a car lease ($22,302), an auto allowance and parking.
That's how to weather a recession!


Image by Flickr user pfala, CC.
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