Omnicom, the world’s second-biggest marcomms group with a reputation for treating its staff and the companies it acquires well, is under fire for doing precisely the opposite.
US fund manager David Poppe of Ruane Cunniff & Goldfarb’s, which owns about one per cent of Omnicom stock, has accused CEO John Wren of granting cheap stock options to himself and senior managers in 2008 and 2009 when the company’s profits were going into reverse and thousands of employees were being made redundant.
The stock was granted at half its current level, helping to increase Wren’s salary package from$2.9m to $7.9m even at a time when board members were waiving salary increases to share the pain with employees.
There are always two sides to these stories of course and Wren and co might argue that they deserve rewarding for steering the company through a ferocious recession and, anyway, there was no guarantee the stock would rise.
But it’s always dangerous to have a fund manager on your tail.
Charles and Maurice Saatchi were rudely defenestrated from the original Saatchi & Saatchi when Chicago fund manager David Herro, hardly a big noise on the US business scene at the time, took exception to what he saw as the company’s profligate ways in the recession of the early 1990s.
Wren, like his rival Sir Martin Sorrell at WPP, is under great pressure to show that his sprawling company (both groups own hundreds if not thousands of companies, many of which compete with each other) can increase earnings in line with smaller rivals and independents as the advertising recovery develops.