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

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

Thank you very much. Good morning, and welcome to our Annual Meeting. I am Michael Roth, Executive Chairman of the Board, and thank you for joining us this morning for our virtual Annual Stockholders Meeting. Above all, we hope that you, your families and those you 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 Philippe Krakowsky, our Chief Executive Officer and member of the Board of Directors; Ellen Johnson, Executive Vice President and Chief Financial Officer of the Corporation; Andrew Bonzani, Executive Vice President and General Counsel of the Corporation; and Robert Dobson, Senior Vice President and Secretary of the Corporation. Also participating today are the independent members of our Board of Directors, all of whom are standing for reelection. They 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 Co.; Patrick Moore, Executive Vice President, Strategy and Business Development at Carter's; Linda Sanford, Former Senior Vice President of Enterprise Transformation at IBM; David Thomas, formerly the Executive Chairman of IMS Health and our Presiding Director; and E. Lee Wyatt, Jr., former Chief Financial Officer of Fortune Brands Home & Security. Also participating are members of Computershare services who are appointed as inspectors of election to count the votes and to certify the results of the voting. The secretary reports that holders of over 91% 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 set to screen. We will dispense with the reading of the minutes of the 2020 Annual Meeting, and we will now move forward with the proposal set forth in our proxy statement. If you need a copy of the 2020 annual report of the proxy statement, the link to the annual meeting materials is provided online. If you have not yet voted or wish to change your vote, I encourage you to do so now by clicking on the cast your vote link. The polls will remain open until the end of the meeting. The first order of the business is the election of the directors to serve until the Annual Meeting of Stockholders in 2022. Information about our directors standing for reelection appears on Pages 4 through 8 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 2021. This proposal appears on Page 24 of our proxy statement. The third item of business is the advisory stockholders vote on the compensation paid to Interpublic's named executive officers. This proposal appears on Page 26 of our proxy. Now that we presented the proposals, we will address any questions or comments on the proposals. Mr. Secretary, are there any questions?

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

Thank you very much. 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 or stockholder's representative present to make a statement in support of this proposal? Operator?

Hello. This is John Chevedden. Can you hear me okay?

I can hear you, John. Please give us your name and deliver your resolution and make your statement.

This is John Chevedden, proposal 4, special shareholder meeting improvement sponsored by Kenneth Steiner. He chose to ask our Board to take the steps necessary to amend the appropriate governing documents to give the owners of a combined 10% of our outstanding common stock the power to call a special shareholder meeting. It currently takes 30% of the shares that normally vote at the Interpublic Group Annual Meeting to call a special shareholder meeting. It takes 30% of the shares that normally vote at Interpublic Group annual meeting to equal the 25% requirement in the bylaws. It would be hopeless to expect that shareholders who do not even vote would take the bureaucratic steps to call for a special shareholder meeting. A special shareholder meeting is the means shareholders can use to raise support matters outside the normal annual meeting cycle like the election of a new director. The election of a new director can be more important at a company that does not have an independent Board Chairman like in Interpublic Group. And Mr. Michael Roth, our non-independent Chairman at age 75, received the most negative director votes in 2020. Management promotes the fallacy that shareholders should take a penny-pinching attitude when it comes to shareholder rights and holding management accountable to shareholders. However, there's no text that mean materials today that shareholders should take a penny-pinching attitude when it comes to CEO pay. The effectiveness of a good governance proposal like this proposal is that it would not result in more cost, but it would instead pay dividends because the mere presence of good governance serves as a guardrail to make sure that management performs well on its own. Because if management does not perform well, then shareholders have a remedy with teeth to make their improvement suggestions known to management. Shareholders deserve a more reasonable stock ownership threshold to call a special shareholder meeting to make up for the transition to online shareholder meetings that make it easier for management to dominate a shareholder meeting. For instance, the 2021 Kohl's Annual Meeting was 9 minutes. An example of the near total dominance that management can now display at online shareholder meeting is AT&T, which would not even let shareholders speak at 2 consecutive online shareholder meetings. Please vote yes, special shareholder meeting improvement, Proposal 4.

Thank you very much, John. I might comment that last year, the proposal was defeated, and our position on this resolution begins on Page 68 of the proxy, and you can read that position there. Mr. Secretary, are there any questions or comments to be raised at this time?

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

Okay. Thank you very much. At this point, I would now turn the meeting over to Philippe, who will provide an update on our business.

Thanks, Michael. Without question, the past 15 months have been a time of stress and upheaval for individuals, organizations and the broader global community. We're all aware that the pandemic has taken a huge human toll and cast a harsh light on underlying fault lines in our society. And as such, we've been addressing a number of key challenges and related priorities as a business. First and foremost, we've been focused on looking after our people, ensuring their physical safety and supporting their mental well-being. Second, we've made sure that we stay close to our clients who are dealing with many of the same issues, including the economic impact of the health crisis and further disruption of marketing caused by technology. Going back a number of years now, we'd anticipated some of these sector trends, so they dovetail with areas where IPG had been making long-term strategic investments. Now these include embedding digital capabilities throughout our organization and building a foundational layer of technology and data infrastructure that informs all of the work we do on behalf of clients. Third, we've also worked to address broader societal issues highlighted during this pandemic and to further elevate other facets of our ESG commitments and programs. In a related step, we're working on finalizing our SASB report, which will provide key data to investors on ESG-related issues material to our business, and that plan will be published sometime before the end of the second quarter. As expected, our results for 2020 reflected the effects of the pandemic, which weighed on organic revenue. And under these challenging conditions, we were still able to report full year operating performance as well as total shareholder return that once again placed us at the top of the industry. We continue to be disciplined with respect to expenses, highly strategic in our approach to structured costs. And at the same time, we were able to continue to invest in the business during the course of last year to enhance capabilities where we see the strongest opportunity. Turning to the start of '21, while IPG delivered a strong first quarter as a function of the quality of our talent that sits across the organization as well as the successful evolution of our offering at this time of accelerating change in the business and the ability to create marketing and media solutions that marry outstanding creativity with the benefits of technology, positions us to address higher order business opportunities and be a more valuable partner for our clients. As we emerge from the pandemic, we're a stronger company. And on behalf of the senior team, we want to thank clients, our colleagues around the world for their commitment and their remarkable accomplishments as well as shareholders for your continued support. And with that, I will turn things back over to Michael.

Thank you, Philippe, and congratulations to you and the team on a great performance in the first quarter and, frankly, last year as well. I think that brings us to the point where 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, and the advisory vote on the compensation paid to named executive officers was approved by the stockholders. 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 of these proposals. There being no further items of business, I want to congratulate our Board of Directors for being reelected, and I hereby call the meeting adjourned.

This concludes the meeting. You may now disconnect.