Interpublic Group CEO Michael Roth today defended his compensation as mid-tier compared to his competitors.
Roth, speaking at IPG's annual shareholder meeting in New York, received $11.7 million in salary, stock, stock options, incentives and benefits last year. A shareholder questioned if that was excessive, given that the company failed to reach its own operating margin target of at least 10 percent. IPG ended the year with a margin of 9.3 percent.
Roth replied that the margin goal was just one of several factors that determined his compensation. Others include the company's share price, which rose more than 60 percent last year to close at $17.70 on Dec. 31.
What's more, IPG's board conducts a "competitive analysis of where our compensation fared versus our competitive set. And once again, we're on the middle to below competitive compensation overall, including my compensation," Roth said. "Most of my compensation—a significant part of it—is based on the performance of our shares and the performance of our financial vectors. And, as you can see, we continue to outperform our competitors in the marketplace."
That said, Roth acknowledged missing the margin goal, saying, "We have some work to do in terms of expanding our margin." This year's target is 10.3 percent.
To Roth's point on his own pay, he earned less than other holding company CEOs last year. For example, WPP Group's Martin Sorrell and Omnicom Group's John Wren received total compensation of about $50 million and $18 million, respectively. WPP and Omnicom are much bigger companies, however, with total revenue of $18.5 billion and $14.5 billion, respectively, last year, compared to IPG's $7.1 billion.
The same IPG shareholder also questioned the compensation of board members, which last year ranged from $251,000 for Dawn Hudson to more than $296,000 for David Thomas, according to IPG's proxy statement. Again, though, Roth, defended the pay level as within the range of competitors and not the highest in the group.
"We're very comfortable with the level of compensation for our directors," Roth said simply.
Not withstanding the questions about pay, IPG shareholders represented at the meeting reelected the company's nine directors and overwhelmingly approved compensation, incentive and performance plans for its top executives.
For example, nearly 98 percent of the voting stockholders authorized the executive compensation plan, and almost 97 percent approved the executive performance plan. Shareholders also reappointed PricewaterhouseCoopers as the IPG's accounting firm for another year.