The Interpublic Group of Companies, Inc. (IPG) Earnings Call Transcript & Summary

Hello, and welcome to the 2020 Annual Meeting of the Interpublic Group of Companies, Inc. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Michael Roth, Chairman of the Board and Chief Executive Officer of Interpublic. Mr. Roth, the floor is yours.

Thank you very much. Good morning, and welcome to our annual meeting. Thank you for joining us this morning to IPG's first fully virtual annual stockholders' meeting. Above all, we hope that you, your families and those you who hold dear are safe and well. Our thoughts are with all of those who have been affected by this pandemic, with frontline health workers and others who provide essential services and with our colleagues around the world. Participating this morning are Ellen Johnson, our Executive Vice President and Chief Financial Officer of the corporation; Andrew Bonzani, Executive Vice President, General Counsel and Secretary of the corporation. Also participating today are the members of our Board of Directors. Other than John Greeniaus, Bill Kerr and Henry Miller, who are scheduled to retire following this annual meeting, all of the members are standing for reelection. We'd like to take this time to thank John, Bill and Henry for their many years of valuable leadership and contribution to the Board, and we wish them the very best in their future endeavors. The Board members standing for reelection are Jocelyn Carter-Miller, President of TechEdVentures; Mary J. Steele Guilfoile, Chairman of MG Advisors; Dawn Hudson, former Chief Marketing Officer of the National Football League; Jonathan Miller, Chief Executive Officer of Integrated Media Company. Patrick Moore, Executive Vice President, Strategy and Business Development at Carter's; Linda Sanford, Former Senior Vice President of Enterprise Transformation, IBM. Lee Wyatt, former Chief Financial Officer of Fortune Brands Home & Security; and David Thomas, Former Executive Chairman of IMS Health and our Presiding Director. All participating are members of -- also participating are members of Computershare share owner services who are appointed as inspectors of election to count the votes and to certify the results of the voting. The secretary reports that the holders of over 89% of the outstanding shares of common stock are present or represented by proxy. A quorum is present, and we can conduct our business. You may submit questions online by clicking on the dialogue icon in the upper right corner of the meeting center screen. We will dispense with the reading of the minutes of the 2019 annual meeting, and we will now move forward with the proposal set forth in our proxy statement. If you need a copy of the 2019 annual report or the proxy statement, the link to the annual meeting materials is provided online. If you have not voted or wish to change your vote, I encourage you to do so by clicking on the cast your vote link. The polls will remain open until the end of the meeting. The first order of business is the election of the directors to serve until the annual meeting of stockholders in 2021. Information about our directors standing for reelection appears on Pages 4 to 7 of our proxy statement. The second item of business is the ratification of the appointment of PricewaterhouseCoopers as the independent public accounting firm of the corporation for 2020. This proposal appears on Page 21 of our proxy statement. The third item of business is the advisory stockholder vote on the compensation paid to Interpublic's named executive officers. This proposal appears on Page 23 of our proxy. Now that we presented the proposals, we will address any questions or comments on the proposals raised by the secretary. Mr. Secretary?

Mr. Chairman, there are no questions to be raised at this time.

Thank you. The final item of business is the stockholder proposal requesting that the corporation give holders in the aggregate of 10% of the corporation's outstanding common stock the power to call a special stockholder meeting. Is the stockholder of this -- or the -- stockholders' representative present to make a statement in support of this proposal?

Yes.

If present, please give us your name and deliver the resolution and make your statement.

Thank you, and good morning. My name is [ Jesse Alba ], and I am representing Mr. Kenneth Steiner. Proposal 4 makes stockholders' right to call a special meeting more accessible, sponsored by Kenneth Steiner. Shareholders ask our Board to take the steps necessary to amend our bylaws in each appropriate governing document to give the owners of a total of 10% of the outstanding common stock the power to call a special shareholder meeting. Special stockholder meetings allow stockholders to vote on important matters such as electing new directors that can arise between annual meetings. This proposal topic won more than 70% support at Edwards Lifesciences. This proposal topic also won 78% support at a Sprint annual meeting with 1.7 billion yes votes. Nuance Communications stockholders' gave 94% support to a 2018 stockholder proposal calling for 10% of stockholders to call a special meeting. Making the right to call the special meeting more accessible to stockholders is showing increased support. For instance, this proposal topic won 51% support at O'Reilly Automotive in 2019, up from 41% support the year before. The current stock ownership threshold of 25% can mean that more than 50% of stockholders must be contacted during a short window of time to simply call a special meeting. Plus, many stockholders, who are convinced that a special meeting should be called, can make a small paperwork error that will disqualify them from counting towards the 25% ownership threshold that is now needed for a special meeting. Since special stockholder meetings allow stockholders to vote on important matters such as electing new directors, adoption of this proposal might motivate our directors to perform better. For instance, Mr. Michael Roth, Chairman and CEO, received the most negative vote at the 2019 annual meeting. Mr. Roth also had 17 years' long tenure and was busy elsewhere with 2 outside directorships. Plus Mr. David Thomas, Lead Director, have long tenure of 15 years. Long tenure can impair the independence of a director no matter how well qualified. Independence is a priceless attribute in chairman and in a lead director. Meanwhile, the stock price has had a 5-year drought. Please vote yes to make stockholder right to call a special meeting more accessible. Proposal 4. Thank you.

Thank you for your comments. It's worth noting that this proposal had come up before in a prior year and defeated by our shareholders. Our position with respect to this year is on Page 68 of the proxy statement. Mr. Secretary, are there any other questions or comments to be raised at this time?

Mr. Chairman, there are no questions to be raised at this time.

Thank you very much. At this point, I would like to briefly speak about how IPG has navigated through the COVID-19 crisis. Our top priority has been and continues to be the safety, health and well-being of our employees, clients and other key partners. Over 95% of our people globally are working from home, where they are safest against risk to their health. We're fortunate to have a workforce that is comfortable leveraging technology, collaborating virtually and being part of a highly supportive set of networks, both within our company and with the client organizations as well. As such, we will not rush back at scale to our offices and will be cautious and prudent in our phased return. Under this new normal, we posted solid first results in April on schedule. Unfortunately, our solid results in the quarter cannot be indicative of the remainder of the year. Our performance, however, is an indication of the competitiveness and the strength of our offerings and our people and our value to clients. Our company's balance sheet and liquidity are strong, and we're further enhanced when we proactively access the capital markets in March of this year. We're thankful for the continued close partnership with our clients and proud of our employees around the world in how they've come together during these exceptional times, consistently delivering high-quality work to our clients. At IPG, we have a strong foundation in place. Our highly relevant offerings and track record are collaborative. Open architecture client solutions position us to leverage opportunity once the macroeconomic situation stabilizes and a recovery begins. Although the remainder of the year is uncertain, the competitiveness and the strength of our offerings and our people is unwavering, and our ability to deliver best-in-class services and offerings will continue to be what sets Interpublic apart from our competitors. I encourage all attendees to visit our website, where we share our work produced by our company since the beginning of the pandemic as well as the examples of the award-winning work from 2019 when IPG won more Gram pre honors at Cannes than any other holding company combined. With that, I think that brings us to the conclusion. The polls are now closed, and we have the results of the voting. All nominees have been elected as directors. The ratification of PricewaterhouseCoopers was approved by shareholders. The advisory vote on the compensation paid to named executive officers was approved by shareholders. The stockholder proposal requesting that the corporation give holders of 10% or more of the corporation's outstanding common stock the power to call a special stockholder meeting was not approved by the stockholders. The Secretary has a tally of the actual votes on these proposals. Mr. Secretary, are there any questions?

Mr. Chairman, no questions at this time.

Thank you very much. Therefore, having no other questions and no further items of business, this meeting is hereby adjourned. I thank you all for attending, and everyone please be safe.

This concludes today's meeting. You may now disconnect.