Employment Agreement - Interpublic Group of Companies Inc. and James R. Heekin
EMPLOYMENT AGREEMENT
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AGREEMENT made as of October 25, 1993 by and between THE INTERPUBLIC
GROUP OF COMPANIES, INC., a corporation of the State of Delaware (hereinafter
referred to as "Interpublic" or the "Corporation"), and JAMES R. HEEKIN
(hereinafter referred to as "Executive").
In consideration of the mutual promises set forth herein the parties
hereto agree as follows:
ARTICLE I
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Term of Employment
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1.01 Upon the terms and subject to the conditions set forth herein,
Interpublic or one of its subsidiaries will employ Executive for the period
beginning October 25, 1993 and ending on October 25, 1998, or on such earlier
date as the employment of Executive shall terminate pursuant to Article IV or
Article V. (The period during which Executive is employed hereunder is referred
to herein as the "term of employment" and Interpublic or whichever of the
aforementioned subsidiaries shall form time to time employ Executive pursuant to
this Agreement is referred to herein as the "Corporation"). Executive will serve
the Corporation during the term of employment.
ARTICLE II
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Duties
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2.01 During the term of employment, Executive will in the course of
performing his duties hereunder:
(i) use his best efforts to promote the interests of the
Corporation and devote his full time and efforts to its business and
affairs;
(ii) perform such duties as the Corporation may from time to time
assign to him consistent with his position and title of President of
McCann-Erickson North America.
2.02 Executive shall report only to John Dooner or the then-current
Chief Executive Officer of McCann-Erickson Worldwide, and the respective
managements of the offices and operations constituting McCann-Erickson North
America shall report only to Executive.
2.03 During the term of employment, unless otherwise agreed to by
Executive, Executive shall be based in the Corporation's New York office,
subject to the travel requirements of the position and duties hereunder.
<PAGE>
ARTICLE III
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Compensation
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3.01 The Corporation will compensate Executive for the duties
performed by him hereunder, including all services rendered as an officer or
director of the Corporation, by payment of a salary at the initial rate of
$400,000 per annum, which salary shall be payable in equal installments, which
the Corporation may pay at either monthly or semi-monthly intervals. In
addition, he will receive the compensation described in Article VII, subject to
conditions set forth therein.
3.02 The Corporation may, in addition, at any time increase the
compensation paid to Executive hereunder if the Corporation in its discretion
shall deem it advisable so to do in order to compensate him fairly for services
rendered to the Corporation.
ARTICLE IV
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Termination
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4.01 Interpublic may terminate the employment of Executive hereunder:
(i) by giving Executive notice in writing within the first
twenty-four months after his employment commences hereunder, in which
event his employment shall terminate on the date specified in such
notice. In this event the Corporation will pay Executive an amount
equal to the amount by which twenty-four months salary at his then
current rate exceeds the salary paid to him from the date his
employment commenced until the termination date, plus an amount equal
to twelve months salary, such payment to be made during the period
immediately following the termination date specified in such notice,
payable in successive equal monthly installments, each of which shall
be equal to one month's salary at the rate in effect at the time of
such termination.
(ii) by giving Executive notice in writing at any time specifying
a termination date not less than twelve (12) months after the date on
which such notice is given, if given subsequent to the commencement of
the twenty-fifth month of employment hereunder, in which event his
employment hereunder shall terminate on the date specified in such
notice, or
(iii) by giving him notice in writing at any time specifying a
termination date less than twelve months after the date on which such
notice is given if such notice is given subsequent to the commencement
of the twenty-fifth month of employment hereunder. In this event his
employment hereunder shall terminate on the date specified in such
notice and the Corporation shall thereafter pay him a sum equal to the
amount by which twelve months salary at his then current rate exceeds
the salary paid to him for the period from the date on which such
notice is given to the termination date specified in such notice. Such
payment shall be made during the period immediately following the
termination date specified in such notice, in successive equal monthly
installments each of which shall be equal to one month's salary at the
rate in effect at the time of such termination, with any residue in
respect of a period less than one month to be paid together with the
last installment.
<PAGE>
4.02 Executive may at any time give notice in writing to the
Interpublic specifying a termination date not less than one hundred twenty (120)
days after the date on which such notice is given, in which event his employment
hereunder shall terminate on the date specified in such notice.
4.03 Executive may at any time give notice in writing to Interpublic
specifying a termination date not less than one hundred twenty (120) days after
the date on which such notice is given, in which event his employment hereunder
shall terminate on the date specified in such notice.
4.04 If Executive dies before October 24, 1998, his employment
hereunder shall terminate on the date of his death.
ARTICLE V
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Covenants
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5.01 While Executive is employed hereunder by the Corporation he shall
not, without the prior written consent of the Corporation engage, directly or
indirectly, in any other trade, business or employment, or have any interest,
direct or indirect, in any other business, firm or corporation; provided,
however, that he may continue to own or may hereafter acquire any securities of
any class of any publicly-owned company or any company not engaged in the
advertising business, and he may engage in public speaking, writing,
educational, charitable and other similar endeavors, as to which endeavors
Executive agrees to keep Corporation generally apprised.
5.02 Executive shall use his best efforts to treat as confidential and
keep secret the affairs of the Corporation and shall not at any time during the
term of employment or thereafter, without the prior written consent of the
Corporation, divulge, furnish or make known or accessible to, or use for the
benefit of, anyone other than the Corporation and its subsidiaries and
affiliates any information of a confidential nature relating in any way to the
business of the Corporation or its subsidiaries or affiliates or their clients
and obtained by him in the course of his employment hereunder. For purposes
herein, confidential information includes, but is not limited to, trade secrets,
budgetary information, and client or Interpublic and Corporation strategic and
business plans.
5.03 If Executive materially breaches the provisions of Section 5.02,
Interpublic may, notwithstanding the provisions of Section 4.01, terminate the
employment of Executive at any time by giving him notice in writing specifying a
termination date. In such event, his employment hereunder shall terminate on the
date specified in such notice. If Executive violates the provisions of Section
5.01, Interpublic may give him notice specifying the nature of the violation and
giving Executive thirty days in which to cure his performance. In the event of a
continuing violation after such notice and cure period, Executive's employment
hereunder shall terminate on the date specified in such notice.
5.04 All records, papers and documents kept or made by Executive
relating to the business of the Corporation or its subsidiaries or affiliates or
their clients shall be and remain the property of the Corporation.
<PAGE>
5.05 All articles invented by Executive, processes discovered by him,
trademarks, designs, advertising copy and art work, display and promotion
materials and, in general, everything of value conceived or created by him
pertaining to the business of the Corporation or any of its subsidiaries or
affiliates during the term of employment, and any and all rights of every nature
whatever thereto, shall immediately become the property of the Corporation, and
Executive will assign, transfer and deliver all patents, copyrights, royalties,
designs and copy, and any and all interests and rights whatever thereto and
thereunder to the Corporation, without further compensation, upon notice to him
from the Corporation.
5.06 Following the termination of Executive's employment hereunder for
any reason, Executive shall not for a period of twenty-four (24) months from
such termination, if such termination occurs during the first two years of
employment hereunder, or for a period of twelve months is such termination
occurs subsequent to the first two years employment, either (a) solicit any
employee of the Corporation to leave such employ to enter the employ of
Executive or of any corporation or enterprise with which Executive is then
associated or (b) solicit or handle on Executive's own behalf or on behalf of
any other person, firm or corporation, the advertising, public relations, sales
promotion or market research business of any advertiser which is a client of the
Corporation at the time of such termination and as to which brand Executive
devoted services.
ARTICLE VI
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Assignment
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6.01 This Agreement shall be binding upon and enure to the benefit of
the successors and assigns of Interpublic, subject to Section 4.04 hereof.
Neither this Agreement nor any rights hereunder shall be assignable by Executive
and any such purported assignment by him shall be void.
ARTICLE VII
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Additional Compensation
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7.01 Within 30 days of Executive's commencing employment pursuant to
this Agreement, the Corporation will pay Executive a sign-up bonus of $100,000.
7.02 Executive will be eligible during the term of employment, to
participate in the Management Incentive Compensation Plan ("MICP"), and to
receive an annual bonus in an amount up to 50% of Executive's annual salary,
inclusive of any amount deferred pursuant to Section 7.03 below, subject to all
of the terms and conditions of the Plan. However, any awards pursuant to the
MICP, if any, shall be determined by the Corporation and shall be based on the
profits of McCann-Erickson Worldwide, Executive's individual performance and
management discretion. Notwithstanding the foregoing and subject to full
execution of this Agreement, the Corporation agrees to award a bonus to
Executive for the calendar year 1993 of at lest $100,000, subject to deduction
of any applicable withholding taxes, and to pay such bonus by or before February
28, 1994. Also, subject to full execution of this Agreement, the Corporation
agrees to award a bonus to Executive for the calendar year 1994 of at least
$200,000, subject to deduction of any applicable withholding taxes, and to pay
such bonus in February 1995. The guaranteed portions of Executive's 1993 and
1994 bonuses referred to in this Section 7.02 will be paid to Executive whether
or not he is in the employ of the Corporation on the payment dates for such
bonuses.
<PAGE>
7.03 Interpublic will enter into an Executive Special Benefit
Agreement ("ESBA") with Executive consistent with the terms as provided by the
Corporation to Executive in writing. Should Executive elect not to enter into
the ESBA, the deferred amount shall be added to his annual salary.
7.04 As soon as administratively feasible after execution of this
Agreement, Interpublic will use its best efforts to have the Compensation
Committee of the Board of Directors (the "Committee") grant Executive a pro rata
award for the 1991-1994 performance period and a full award for the 1993-1996
performance period under the Interpublic Long-Term Performance Incentive Plan
("LTPIP"). With respect to the 1991-1994 performance period, an award equal to
1,500 performance units tied to the cumulative compound profit growth of
McCann-Erickson North America will be recommended, with a minimum guaranteed
value at the end of the performance period of $100,000. With respect to the
1993-1996 performance period, the Corporation will recommend to the Committee an
award of 2,025 performance units, tied to the cumulative profit growth of
McCann-Erickson North America over the four-year period. In addition, options
covering 8,100 shares of Common Stock will be issued to Executive under the 1986
Stock Incentive Plan no later than November 1, 1993. These options will be 100%
exercisable as of January 1 1997. The payment of benefits under the LTPIP and
the terms of options under the 1986 Stock Incentive Plan will be subject to all
of the terms and conditions of those plans.
7.05 Interpublic will also use its best efforts to have the Committee
grant to Executive no later than November 1, 1993, subject to all of the terms
and conditions of the 1986 Stock Incentive Plan, an award of 11,500 restricted
shares of Interpublic Common Stock of which 2,500 shares shall be restricted for
one year from the date of grant, 4,500 shares shall have a restriction period
ending three years form the date of grant and 4,500 shares shall have a
restriction period ending five years from the date of grant. If the market value
of the 4,500 shares having the three year restriction period is less than
$125,000 on the date on which the restrictions lapse, Interpublic will pay
Executive such additional amount in cash that is necessary to ensure that the
cash payment together with the value of the shares on the date of lapse (based
on the closing price of the common stock on The New York Stock Exchange) shall
equal $125,000.
7.06 Interpublic will use its best efforts to have the Committee grant
to Executive no later than November 1, 1993 options to purchase an additional
12,000 shares of Interpublic Common Stock which will be subject to all of the
terms and conditions of the 1986 Stock Incentive Plan. Forty percent of these
options will be exercisable after a three-year holding period, thirty percent
will be exercisable after a four-year holding period and the balance will be
exercisable after a five-year holding period. The grant of these options shall
be at 85% of the market value of Interpublic common stock on the date the grant
is approved by the Committee.
7.07 Interpublic agrees to have its Management Human Resources
Committee elect Executive to membership in the Development Council and Executive
shall receive, at a minimum, all fringe benefits, vacation and perquisites given
to Executive, employees of Interpublic or the Corporation holding a similar
title and position. Executive will also have an annual automobile allowance of
$7,000 and the Corporation shall pay for garage parking in proximity to his
office.
7.08 The Corporation will also pay or reimburse Executive for the cost
of club membership in the amount of $10,000 per annum.
7.09 Should the Committee fail to make any or all of the awards
referred to in Sections 7.04, 7.05 and 7.06, the Corporation will take whatever
action is necessary to grant Executive compensation or other benefits of
equivalent value, subject to Executive's approval, which will not unreasonably
withheld.
<PAGE>
ARTICLE VIII
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Agreement Entire
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8.01 This Agreement constitutes the entire understanding between
Interpublic and Executive concerning his employment by Interpublic's
aforementioned subsidiaries and supersedes any and all previous agreements
between Executive and Interpublic or any of its subsidiaries concerning such
employment. This Agreement may not be changed orally.
ARTICLE IX
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Applicable Law
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9.01 The Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By: /s/ C. Kent Kroeber
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Name: C. Kent Kroeber
Title:
By: /s/ JAMES R. HEEKIN
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Name: JAMES R. HEEKIN
Title: