Omnicom Group Inc. (OMC) Earnings Call Transcript & Summary

Good morning. It's now 10 a.m., and I hereby call to order Omnicom Group's 2021 Annual Meeting of Shareholders. I'm John Wren, Chairman of the Board and Chief Executive Officer, and I will chair today's meeting. Joining me are Phil Angelastro, Executive Vice President and Chief Financial Officer of the company; and Michael O'Brien, Executive Vice President, General Counsel and Secretary of the company. Michael will act as secretary of the meeting. I will also introduce other Board members who are joining us today. Our Lead Independent Director, Leonard S. Coleman, Jr., Former President National League of Professional Baseball Clubs; Mary C. Choksi, Former Founding Partner and Senior Manager, Strategic Investment Group; Susan S. Denison, Former Partner, Cook Associates; Ronnie S. Hawkins, Managing Director, Global Infrastructure Partners; Deborah J. Kissire, Former Vice Chairman and Regional Managing Partner of E&Y; Gracia C. Martore, Former President and Chief Executive of TEGNA, Inc.; Linda Johnson Rice, Chief Executive Officer of Johnson Publishing Company; and Valerie M. Williams, Former Southwest Assurance Managing Partner at E&Y. In addition, Jennie Friedman, Michael Sambus and Whitney [ Rakonia ] of KPMG, the company's independent auditors, are in attendance today. To conduct an orderly meeting, we ask the participants to abide by the rules of conduct for the annual meeting made available to them either in person or on the virtual meeting website. Michael O'Brien has the affidavit from Eq -- what is this?

Equiniti.

Equiniti Trust Company, sorry, which certifies the timely mailing of the combined Notice of Annual Meetings of Shareholders and Proxy Statement, Proxy Card and 2020 Annual Report to shareholders of record who held shares at the close of business on March 15, 2021, in the company's 401(k) retirement savings plan, and which also certifies the timely mailing of the Notice of Availability of Proxy Materials to all other shareholders of record at the close of business on March 15, 2021. It appears from the affidavit that the notice of this meeting has been duly given. A copy of the affidavit of mailing is available here today and will be filed in the records of the company together with the minutes of this meeting. The Board of Directors has appointed Tracie Balach of Equiniti Trust Company as Inspector of Election. I have also appointed Eric Cleary, Assistant Secretary of the company, to act as an additional inspector of election here at the meeting site. Will the Secretary please report the number of common shares outstanding and entitled to vote at this meeting and whether or not a quorum is present?

At the close of business on March 15, 2021, the record date for the 2021 Annual Meeting, there were 215,053,136 shares of common stock outstanding entitled to vote at this meeting. Holders representing a majority of these shares are present in person or by proxy. And therefore, a quorum is present.

Since the notice of the meeting was duly given and a quorum is present, this Annual Meeting of Shareholders is duly convened and authorized to proceed with business. The first item on the agenda is the election of the 9 directors included in the proxy statement, each to serve until the year 2022 Annual Meeting of Shareholders and each to hold office until his or her respective successor has been duly elected and qualified. The Board recommends the election of each of the following persons as directors of the company for a term of 1 year that will expire at the 2022 Annual Meeting: John D. Wren; Leonard S. Coleman; Mary C. Choksi; Susan S. Denison; Ronnie S. Hawkins; Deborah J. Kissire; Gracia C. Martore; Linda Johnson Rice; and Valerie M. Williams. The second item on the agenda is the advisory resolution to approve the company's named executive officers' compensation. The third item on the agenda is the ratification of the appointment of KPMG LLP as the company's independent auditors for the fiscal year ending December 31, 2021. The fourth item on the agenda is the approval of Omnicom's 2021 Incentive Award Plan. The fifth item on the agenda is a shareholder proposal regarding political spending disclosure. The shareholder proposal and its supporting statement are included in the proxy statement. This proposal has been submitted by Mr. John Chevedden. The chair recognizes Mr. Chevedden's representative, Glenn Beatty, for a period of 3 minutes. Will the operator please unmute the line?

This is Glenn Beatty for Mr. Chevedden. Policies and -- shareholders request that management provide a report disclosing Omnicom's: one, policies and procedures for making, with corporate funds, contributions to participate or intervene in any campaign on behalf of any candidate for public office or influence the general public or any segment thereof with respect to an election; two, monetary and nonmonetary contributions used in the manner described above, including the identity of the recipient as well as the amount paid to each, and the titles of the persons at Omnicom responsible for decision-making. Transparency and accountability in corporate electoral spending is a best management practice. This includes any activity considered intervention in a political campaign under the Internal Revenue Code, such as direct or indirect contributions to political candidates, parties or organizations, and independent expenditures or electioneering communications on behalf of federal, state or local candidates. Relying on publicly available data does not provide a complete picture of Omnicom's electoral spending. For example, Omnicom's payments to trade associations or other tax-exempt dark money groups that may be used for election-related activities are undisclosed and unknown. This proposal asks our management to disclose all of its electoral spending, including payments to trade associations and other tax-exempt organizations, which may be used for electoral purposes. This would bring Omnicom in line with a growing number of leading companies, including Cognizant Technology Solutions, Automatic Data Processing and Accenture, which present this information on their websites or disclose that corporate election-related spending is entirely prohibited. Omnicom's Board and shareholders need comprehensive disclosure to fully evaluate the use of corporate assets in elections. Even if there is little political spending now, this can change suddenly. This proposal would centralize political spending and information and make director oversight more efficient. Please vote to make this important information easily available for our directors, Political Spending Disclosure, Proposal 5.

Will the operator please now mute the line? The Board unanimously recommends a vote against this proposal for the reasons set forth in the proxy statement. We will now proceed with voting on these matters. Those attending online should cast their ballots now if they have not already submitted their votes, as the polls will close momentarily. [Voting]

The polls are now closed. I believe the Inspector of Election has completed tallying the votes. Will the Secretary please report on the preliminary results of the votes?

The inspector of election reports that holders representing 89% of the shares of common stock entitled to vote at this meeting are present in person or by proxy. Therefore, a quorum has been present and acting that a majority of the shares of common stock voting at this meeting have been voted in favor of the election of each of the 9 nominees for director. For Item 2, with respect to the advisory resolution to approve the company's executive compensation, 88% of the shares of common stock voting at this meeting have been voted for, and the advisory resolution regarding the company's executive compensation has been approved. For Item 3, with respect to the ratification of the appointment of KPMG, 98% of the shares of common stock voting at this meeting have been voted for, and the ratification of the appointment of KPMG as the company's independent auditors for the 2021 fiscal year is approved. For Item 4, with respect to the approval of the Omnicom Group Inc. 2021 Incentive Award Plan, 97% of the shares of common stock voting at this meeting have been voted for, and the plan is approved. And finally, for Item 5 with respect to the shareholder proposal regarding political spending disclosure, 51% of the shares of common stock voting at this meeting have been voted for, and the shareholder proposal is approved.

We have now completed the formal business scheduled for this meeting, and this meeting is adjourned. We will now be glad to answer questions submitted by the shareholders. We ask that you abide by the rules of conduct that were previously distributed. If you wish to ask a question, please identify yourself and state whether or not you are a shareholder or hold a proxy to vote shares. If you are a proxy holder, please state the name of the person or company you represent.

We have a question from the United Brotherhood of Carpenters. The question is, would you -- would the Chairman of the Board speak to whether Omnicom Group might be better served by an executive compensation plan tailored specifically to the company's particular circumstances and its unique long-term strategic business plan.

A balanced approach is taken to building long-term shareholder value, ensuring executive compensation is aligned with the short- and long-term interest of the shareholders. The approach is a balance of short-term and long-term compensation and achievement of company-specific financial targets, performance relative to our peers based upon comparative financial targets, and corporate responsibility goals such as DE&I and other objectives.

We have a second question, also from the United Brotherhood of Carpenters. Could you discuss the Board's perspective on the concept of stakeholder capitalism, and what principles the Board would use to balance the interests of varied stakeholders as it develops and implements the company's long-term business strategy?

Sure. I believe the Board of Directors takes into consideration not just shareholder capitalism, but also employees, suppliers, customers as well as the communities that we operate in as stakeholders. And these are all important considerations in running the business.

And there are no further questions.

It seems that there are no further questions. So thank you for joining us, and have a great day.