Omnicom CEO Says Staff Bonuses Will Go Up: Normalcy Returns to the Ad Biz

Last Updated Apr 20, 2010 6:02 PM EDT

Omnicom (OMC) CEO John Wren talked about restoring bonuses for his staff during his Q1 2010 earnings call today -- a sign that normalcy seems to have returned to the advertising business. In an off-the-cuff comment, CFO Randall Weisenburger even mentioned making those bonuses "as high as possible."

While bonuses were never completely axed at Omnicom -- some top executives went without theirs so their underlings could keep them -- today's numbers from Omnicom suggest that it's time to (tentatively) party like it's early 2008!

Generally speaking, restoring or increasing staff bonuses is one of the fastest and easiest ways that management can increase morale among employees. Agencies often depend on staff believing their business is gathering "momentum," as unlike construction workers or farmers the products of their labor are often intangible or short-lived.

Omnicom's revenues increased 6.3 percent to $2.9 billion from last year. And while those numbers look good in part because they looked so bad last year, they're a sign of things to come. Wren said he expected sequential improvement from now on as clients embark first on more one-off "project" work and as the economy -- and therefore organic revenue -- grows generally.

Here's what brass said about incentive compensation for rank and file staffers:

Ben Swinburne â€" Morgan Stanley: I know the industry has â€" had pulled back on bonus payments and comp over the last few years and now there is an opportunity sort to normalize that. Can you give us a sense for in the first quarter, either directionally or maybe quantify the incentive comp accrual growth either in dollar terms or how you think about that this year?

John Wren: Well, I prefer not to talk about specific dollars, but I will tell you this. We are able to pay bonuses for 2009 and as we â€" that's because our improvement, we had an improving result last year as we went through it.

Ben Swinburne â€" Morgan Stanley: And John your expectation for the year, they will be up year-on-year?

John Wren: Well, it's my hope, it's my hope. We adjust our incentives based upon what the outlook is. It's done at least once a quarter where we look at that and we make whatever adjustments are appropriate. And we are not shy, where companies are not meeting their objectives to reduce those incentives from time to time. But for the first quarter, we were able to restore some of those costs.

Randall Weisenburger: And certainly our objective is â€" are to get those numbers as high as possible, still delivering for shareholders what we expect and balancing those out.

Now take a look at the earnings release and the investor presentation. Notice anything unusual or worrying? No? Precisely. It's like looking at a normal, non-recessionary earnings release. The company is even hiring again.

Time to break out a small bottle of modestly priced champagne: we're on the upswing again!

Image by Flickr user velo steve, CC.