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Making Money
The CEOs of the largest public agencies and agency holding companies all got raises last year, with John Wren, perhaps for completing his probationary period in the top job at Omnicom, getting the biggest boost. (The company's stock market and financial performance was pretty good, too.) It is interesting that Omnicom was almost as ready to share last year's abundance of wealth with shareholders as it was with the CEO. Although you don't hear much about it, the industry's major players all pay dividends to their shareholders. The dividend yields (which is the ratio of stock price to annual dividend) are quite low--with the highest being True North's roughly 2 percent. And investors typically don't buy these stocks for their current returns; rather, they are seeking capital gains from price appreciation. But the same business success that drives stock prices also prompts dividend increases, and for long-term holders, a pattern of steady increases, such as those of Interpublic and Omnicom, is a nice reward. The catch is, in order to realize the capital gain, you need to sell the stock. In order to benefit from increases in the dividend, you just have to hang on. --Alan Gottesman (westendal pobox.com) is principal of West End Consulting.
THE GOTTESMAN FILE
Ad-shop bosses all got raises in 1997; many ad-stock owners did, too.
Company CEO's raise Dividend increase
Omnicom 37.5% 20.0%
True North 27.5% 0.0%
Grey 16.2% 5.0%
WPP Group 5.6% 39.1%
Interpublic 3.3% 13.6%
Source: West End Research