Top Interpublic Group executives to return stock options

LONDON - Executives at Interpublic Group are to return 1.2m stock options and give up millions in bonuses.

The options are being given up by executives who are former and current executives of the company, which has been the subject of accounting scandals that led to an investigation by US financial watchdog the Securities & Exchange Commission.

The investigation is related to $181.3m (£110.9m) in improperly booked revenues at McCann-Erickson WorldGroup, which cost Sal LaGreca, chief financial officer of the agency, his job and saw John Dooner dumped as CEO.

However, the executives say that they will not give up bonuses already paid to them, according to an Interpublic spokesman.

News that the options were to be handed back came from Interpublic CEO David Bell, who told shareholders that he believed that "financial accountability must be a priority for Interpublic".

"To that end, I have chosen to lead by example and give back to the company a substantial number of options," he said.

According to a report on AP, the bonuses paid under the incentive plan range from $160,000 to senior vice-president Gunnar Wilmot to $2.48m to Dooner.

Bell is returning 210,900 options, with an exercise price of between $32.46 and $33.60 a share; Dooner, who is now running Interpublic's McCann Erickson, is to return 500,000 options, with exercise prices ranging from $41.85 to $60.

Bell also told shareholders that the company also is abandoning its long-term incentive plan for executives for 2002 through 2004.

Just how much the move will appease investors is unclear as the options are currently worthless. Interpublic's shares were at $12.45 at the close of business yesterday, down more than 60% from the stock's 52-week high of $34.05.

Investors were also unhappy that Dooner and other top executives will not return bonuses they have already received for the years 1999 to 2001, despite getting the firm into so much financial trouble.

Some investors vented their ire by refusing to support the board's proposals. Maybe not surprisingly, more than a quarter opposed Dooner's re-election to the Interpublic board of directors.

If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the Forum here.

Topics