NEW YORK An Interpublic Group shareholder is again calling for IPG to separate the roles of chairman and CEO, and another investor has proposed that shareholders have the ability to call special meetings as needed. IPG opposed both proposals.
A special meeting would require the approval of investors holding at least 10 percent of IPG's outstanding common shares, according to that proposal, which defines "special" as "sufficiently important to merit expeditious consideration." It adds that "shareholder control over timing is especially important in the context of a major acquisition or restructuring, when events unfold quickly and issues may become moot by the next annual meeting."
The shareholder resolutions are part of IPG's proxy statement, which IPG filed today with the Securities and Exchange Commission. The document lays out the company's agenda for its annual Meeting of Stockholders, which is set for May 24 in New York.
The argument for separating the chairman from the CEO (Michael Roth currently holds both titles) is that the board represents shareholders and its chairman at times needs to objectively evaluate the performance of the CEO. "The primary purpose of our chairman and board of directors is to protect shareholders' interests by providing independent oversight of management, including our CEO," the chairman/CEO proposal says, in part. "Separating the roles of CEO and chairman can promote greater management accountability to shareholders and lead to a more objective evaluation of our CEO."
Shareholders rejected a similar proposal last year, at the urging of IPG. In the proxy, the holding company spelled out its objections to the proposals, which nonetheless will come before shareholders for a vote at next month's meeting.
IPG maintains that seven of its nine board members are independent, and that the company has instituted "strong corporate governance practices." In addition, "We believe it would be detrimental to shareowner interests to remove the board's business judgment to decide who is the best person to serve as chairman . . . whether such person is independent or a member of management," IPG said in its opposition statement.
IPG's argument against the special meeting resolution is rooted in the cost and labor required to set up such a gathering. "A special meeting of stockholders is a very expensive and time-consuming affair because of the legal costs in preparing required disclosure documents, printing and mailing costs and the time commitment required of the board and members of senior management to prepare for and conduct the meeting," IPG said. "Calling special meetings of stockholders is not a matter to be taken lightly, and should be extraordinary events that only occur when either fiduciary obligations or strategic concerns require that the matters to be addressed cannot wait until the next annual meeting."