Omnicom (OMC) CEO John Wren is fast becoming the poster boy for self-dealing in advertising given the $41 million "golden coffin" he gets if he dies. Amalgamated Bank's failure to persuade Omnicom shareholders to nix this pointless transfer of wealth to Wren's family -- who have added no value to the company -- comes shortly after Wren was accused of taking advantage of the company's stock option grants. The race for the title of "Most Astonishing Compensation Package" among ad agency chiefs is competitive: Interpublic (IPG)'s John Dooner will walk off into the sunset with a $37 million; Publicis (PUB) CEO Maurice Levy has a $26.5 million package awaiting him; and WPP (WPPGY) CEO Martin Sorrell gets a $96 million payday if he outperforms his rivals.
The details of Wren's death benefits are scattered throughout this SEC filing (start on page 19). Here's a breakdown of what the top brass at Omnicom gets just for dropping dead:
- Beneficiaries get 75% of their annual payments (in Wren's case that's $18.75 million over 15 years).
- Unvested options vest in full
- Restricted stock granted in 2006 and 2007 vests in full.
In our view, "golden coffin" arrangements, which can require a company to make significant payments or awards after an executive's death, are inconsistent with [pay for performance]. Senior executives should have ample opportunities while they are alive to contribute to a pension fund, purchase life insurance or engage in other estate planning strategies suitable to their needs. We see no reason to saddle shareholders with payments or awards in return for no services.Omnicom defended the payments by saying that they are needed to attract talent and to keep them focused on long-term performance goals. "Such benefits are common in our industry," the company told shareholders. But there's more than one way to create long-term incentives. (Sorrell, for instance, only gets his riches if he's successful -- he loses his own money if he's not.)
Omnicom has this backwards: Golden coffins aren't the solution to executive pay; they're the problem.
- Hiding in Plain Sight: Omnicom CEO Disclosed His 1.5M Options Grant, But No One Noticed
- Omnicom CEO All But Accused of Backdating His Stock Options
- How Omnicom Brass Turned a Pay Cut Into a Pay Rise
- Omnicom Drops Bonuses for Top Execs Who Get Fired; Another Example of Lax Board Oversight
- Omnicom's Top Execs Saw Pay Slashed to Save Bonuses for Underlings
- Omnicom's John Wren Got $25 Mil. Stock Bonus Days After 3,500 Layoffs