Shareholders refuse to put nail in golden coffin

Shareholders refuse to put nail in golden coffin
17 of Fortune 100 companies provide death benefits for heirs of top execs. Omnicom stockowners are just the latest to vote down a 'pay-for-no-pulse' proposal
MAY 12, 2010
At Omnicom Group, the chief executive gets paid until death do he part — and then even after. The Manhattan-based advertising holding company offers CEO John Wren and other top employees a perk commonly known as a “golden coffin” — a death benefit granted to heirs after the officer's ultimate demise. Omnicom investors on Tuesday rejected a proposal calling on the company to rein in this form of generosity, which could mean an additional $41 million in payouts to the 57-year-old Mr. Wren's survivors. The proposal's proponent, Amalgamated Bank's LongView investment fund, argued that it makes no sense for shareholders to make payments to the CEO in return for no services. It added that senior executives have ample time while alive to build a pension fund, buy life insurance or engage in other estate-planning activities. “Instead of pay-for-performance, golden coffin provisions are simply ‘pay-for-no-pulse,' ” said Scott Zdrazil, director of corporate governance at Amalgamated Bank of New York. Although many investors are unhappy these days with executive pay and perks, Amalgamated's proposal received only 40.7% of all shareholder votes cast at Omnicom's annual meeting Tuesday in Wilmington, Del., according to a bank spokesman. Omnicom had no immediate comment on the result. Omnicom, which owns ad agency BBDO Worldwide, public relations company Fleishman-Hillard and many other such firms, opposed the Amalgamated measure. It argued that it needs to offer death benefits in order “to attract and retain top talent” and added that “such benefits are common in our industry.” According to Omnicom's proxy, it appears that the company's chief financial officer and CEO of its media group are each eligible for about $14 million in death benefits, while the head of BBDO Worldwide is eligible for about $12 million. Other companies offering golden coffins include Verizon Communications. Amalgamated says a 2008 study by compensation research firm Equilar showed that 17 Fortune 100 companies provide death benefits equal to multiples of salary upon executives' deaths. Omnicom granted Mr. Wren $7.9 million in total compensation last year, a 17% raise over 2008. The company's net income slipped by 20%, to $793 million, and revenue dipped by 12%, to $11.7 billion. Omnicom's share price, however, rose by 48%, compared to a 26% rise in the S&P 500. [This story first appeared in Crain's New York Business, a sister publication of InvestmentNews]

Latest News

Advisor moves: LPL recruitment momentum continues with $815M Northwestern Mutual team
Advisor moves: LPL recruitment momentum continues with $815M Northwestern Mutual team

Meanwhile, Raymond James and Tritonpoint Partners separately welcomed father-son teams, including a breakaway from UBS in Missouri.

SEC chief Atkins signals caution on prediction market ETFs amid broader rethink of novel fund structures
SEC chief Atkins signals caution on prediction market ETFs amid broader rethink of novel fund structures

Paul Atkins has asked staff to solicit public comment on novel ETFs, pausing the clock on as many as 24 filings linked to the booming event contracts market.

Private capital's $1 trillion bet on the American retirement account
Private capital's $1 trillion bet on the American retirement account

From 401(k)s to retail funds, Deloitte sees private equity and credit crossing into mainstream investing on two fronts at once.

Advisor moves: Wells Fargo Advisors pulls in $9.6b in fresh talent during first half of May
Advisor moves: Wells Fargo Advisors pulls in $9.6b in fresh talent during first half of May

Big-name defections from Morgan Stanley, UBS, and Merrill Lynch headline a busy two weeks of recruiting for the wirehouse.

Why uncertainty is making behavioral coaching more valuable than ever
Why uncertainty is making behavioral coaching more valuable than ever

Markets have always been unpredictable. What has changed is the amount of information investors are trying to process and the growing role advisors play in helping clients avoid emotional decisions

SPONSORED Are hedge funds the missing ingredient?

Wellington explores how multi strategy hedge funds may enhance diversification

SPONSORED Beyond wealth management: Why the future of advice is becoming more human

As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management