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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.               )

Filed by the Registrantýx


Filed by a Party other than the Registranto


Check the appropriate box:


o



Preliminary Proxy Statement


o



Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))


ý

x



Definitive Proxy Statement


o



Definitive Additional Materials


o



Soliciting Material Pursuant to §240.14a-12


THE INTERPUBLIC GROUP OF COMPANIES, INC.

(Name of Registrant as Specified In Its Charter)


(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):


ý

x



No fee required.


o



Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)

(1)

Title of each class of securities to which transaction applies:

(2)

(2)

Aggregate number of securities to which transaction applies:

(3)

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)

(4)

Proposed maximum aggregate value of transaction:

(5)

(5)

Total fee paid:


o



o

Fee paid previously with preliminary materials.


o



Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.



(1)


(1)

Amount Previously Paid:

(2)

(2)

Form, Schedule or Registration Statement No.:

(3)Filing Party:

(3)

(4)Date Filed:

Filing Party:





(4)


Date Filed:

Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.




THE INTERPUBLIC GROUP OF COMPANIES, INC.
12711114 Avenue of the Americas
New York, New York 10020
10036

April 23, 2004October 21, 2005

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of The Interpublic Group of Companies, Inc., to be held at 9:30 A.M. Eastern Time, on Tuesday, May 18, 2004.Monday, November 14, 2005. The meeting will be held in the MT&R TheaterMcGraw Hill Building, 1221 Avenue of The Museum of Television & Radio, 25 West 52nd Street,the Americas, New York, New York.

The business to be considered is described in the attached notice of the meeting and Proxy Statement. In addition to these matters, we will present a report on the state of our company.

        Last year was an important period in the history of Interpublic, as we began a necessary turnaround under a new management team. Our initial efforts proved very successful in stabilizing the company and paving the way for its recovery. We began to change the corporate culture to one focused on organic growth and governed by greater accountability. We will continue on this path as we look to reinvent Interpublic and make it into the organization that best understands and leverages the new realities that are transforming how our clients approach marketing.

        Major corporate accomplishments in 2003 spanned a number of key areas:


Much was accomplished at Interpublic in the past year. We established a solid base from which to launch the second phase of the turnaround program. There remains much work to be done. We look forward to discussing our progress and our plans with you at the Annual Meeting. We will also provide an opportunity for shareholders to voice questions or comments. And we will share a sampling of work recently produced by a range of our companies.

We hope you will be able to attend.

Sincerely,



Michael I. Roth





David A. Bell
Chairman of the Board President
and Chief Executive Officer




THE INTERPUBLIC GROUP OF COMPANIES, INC.
12711114 Avenue of the Americas
New York, New York 10020
10036

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held May 18, 2004
November 14, 2005

The Annual Meeting of Stockholders of The Interpublic Group of Companies, Inc. ("Interpublic"(“Interpublic”) will be held in the MT&R TheaterMcGraw Hill Building, 1221 Avenue of The Museum of Television & Radio (the "Museum"), 25 West 52nd Street,the Americas, New York, New York, on Tuesday, May 18, 2004,Monday, November 14, 2005, at 9:30 A.M., Eastern Time, for the following purposes:

1.

    1.
    To elect teneight directors;

    2.

    To consider and act upon a proposal to adopt the 2004 Performance IncentiveEmployee Stock Purchase Plan (2006) of Interpublic;

    3.
    To consider and act upon a proposal to adopt the Interpublic Non-Management Directors' Stock Incentive Plan;

    4.
    Company;

    3.To consider and act upon a proposal to confirm the appointment of PricewaterhouseCoopers LLP as independent auditors of Interpublic for the year 2004;

    5.
    2005;

    4.To consider and act upon a proposed stockholder resolution regarding Northern Ireland;to arrange for the prompt sale of the Company to the highest bidder; and

    6.

    5.To transact such other business as may properly come before the meeting and any adjournment thereof.

The close of business on March 26, 2004September 20, 2005 has been designated as the record date for the determination of stockholders entitled to notice of and to vote at this meeting and any adjournment thereof.

By Order of the Board of Directors,







Nicholas J. Camera

Secretary

Dated: October 21, 2005

Secretary

Dated: April 23, 2004

Whether or not you plan to attend the meeting in person, please fill in, sign, date and promptly return the enclosed proxy in the accompanying envelope, which requires no postage if mailed in the United States. The proxy is revocable, so that you may still vote your shares in person if you attend the meeting and wish to do so.



        The use of the Museum's facilities does not constitute endorsement by the Museum of any views expressed during this Annual Meeting of Stockholders.


TABLE OF CONTENTS


Page


Proxy Statement



1


Proxy Statement

1

Share Ownership of Certain Beneficial Owners


2


2


Share Ownership of Management


3


3


Election of Directors


4


4


Corporate Governance Practices and Board Matters


7


6


Audit Committee Report


10


10


Change of Address

13

Compensation of Executive Officers


14


13


Stock Performance Graph


35


37


Section 16(a) Beneficial Ownership Reporting Compliance


35


37


Proposal To Adopt 2004 Performance Incentive2006 Stock Purchase Plan


36


38


Proposal To Adopt The Interpublic Non-Management Directors' Stock Incentive Plan

46

Appointment of Independent Auditors


37


50


Stockholders'

Stockholders’ Proposal—Northern IrelandSale of the Company to the Highest Bidder


38


51


Information For Stockholders That Hold Common Stock Through A Bank or Broker


39


54


Information For Participants In the Interpublic Savings Plan


40


54


Solicitation of Proxies


40


55


Appendix A


A-1


A-1


Appendix B


B-1


B-1


Appendix C

C-1

i




THE INTERPUBLIC GROUP OF COMPANIES, INC.

PROXY STATEMENT

GENERAL

GENERAL

Introduction

This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of The Interpublic Group of Companies, Inc. ("Interpublic"(“Interpublic”) of proxies to be voted at the Annual Meeting of Stockholders, which will be held in the MT&R TheaterMcGraw Hill Building, 1221 Avenue of The Museum of Television & Radio (the "Museum"), 25 West 52nd Street,the Americas, New York, New York, at 9:30 A.M., Eastern Time, on Tuesday, May 18, 2004. (The use of the Museum's facilities does not constitute endorsement by the Museum of any views expressed at the Annual Meeting.)Monday, November 14, 2005.

The address of Interpublic'sInterpublic’s principal executive office is 12711114 Avenue of the Americas, New York, NY 10020.10036. This Proxy Statement and the enclosed form of proxy, together with Interpublic'sInterpublic’s Annual Report to Stockholders, are first being sent to stockholders on or about April 23, 2004.October 21, 2005.

Any proxy given in response to this solicitation may be revoked at any time before it has been exercised. The giving of the proxy will not affect your right to vote in person if you attend the meeting. Your proxy may be revoked at any time prior to its exercise by giving written notice to our Secretary at The Interpublic Group of Companies Inc., 1114 Avenue of the Americas, New York, NY 10036, by delivering a later dated proxy, or by voting in person at the meeting. If you do not attend the Annual Meeting, or if you attend and do not vote in person, the shares represented by your proxy will be voted in accordance with your instructions on the matters set forth in items 1 through 5.4. If no voting instructions are given with respect to any one or more of the items, a duly executed proxy will be voted on the uninstructed matter or matters as follows:

    •

    ·FOR the Board'sBoard’s nominees for election as directors,

    •

    ·FOR the adoptionapproval of the 2004 Performance Incentiveproposal to adopt the Employee Stock Purchase Plan (2006) of Interpublic,

    •
    FOR the adoption of The Interpublic Non-Management Directors' Stock Incentive Plan,

    •
    Company;

    ·FOR the confirmation of PricewaterhouseCoopers LLP ("PricewaterhouseCoopers"(“PricewaterhouseCoopers”) as independent auditors for 2004,2005, and

    •

    ·AGAINST the stockholder resolution regarding Northern Ireland.

to arrange for the prompt sale of the Company to the highest bidder.

A duly executed proxy also may be voted in the discretion of the proxy holders on any other matter submitted to a vote at the meeting.



Outstanding Shares

The record date for the Annual Meeting is March 26, 2004.September 20, 2005. The outstanding capital stock of Interpublic at the close of business on March 26, 2004September 20, 2005 consisted of 418,034,182430,141,313 shares of Common Stock and 7,475,000 shares of 53/¤8% Series A Mandatory Convertible Preferred Stock (the "Series“Series A Preferred Stock"Stock”). Holders of Interpublic'sInterpublic’s Common Stock are the only security holders entitled to vote at this meeting of stockholders. Each share of Common Stock is entitled to one vote on each matter that is submitted to a vote of stockholders at the meeting. The following table sets forth information concerning

direct and indirect beneficial ownership of Interpublic'sInterpublic’s Common Stock as of December 31, 20032004 (assuming no change in their beneficial ownership of Common Stock since the date indicated) by persons known to Interpublic to have beneficial ownership of more than 5% of the Common Stock:

Name and Address
of Beneficial Owner
 Amount and Nature of
Beneficial Ownership of
Common Stock (1)
 Percent of
Class
 

Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071
 
46,147,140(2
)
11.1
%

Capital Group International Inc
11100 Santa Monica Boulevard
Los Angeles, CA 90025
 
31,578,160(3
)
7.6
%

Harris Associates L.P
Harris Associates, Inc.
Two North LaSalle Street
Suite 500
Chicago, Illinois 60602
 
27,049,592(4
)
6.9
%

Pacific Financial Research, Inc
9601 Wilshire Boulevard
Suite 800
Beverly Hills, California 90210
 
25,812,605(5
)
6.20
%

Barclays Global Investors NA
45 Fremont Street
San Francisco, CA 94105
 
22,191,105(6
)
5.25
%

Name and Address of Beneficial Owner

 

 

 

Amount and Nature of
Beneficial Ownership of
Common Stock(1)

 

Percent of
Class

 

AMVESCAP PLC

 

 

23,115,284

 

 

 

5.47

%

 

11 Devonshire Square

 

 

 

 

 

 

 

 

 

London EC2M 4YR

 

 

 

 

 

 

 

 

 

Engalnd

 

 

 

 

 

 

 

 

 

AXA Financial, Inc.

 

 

42,312,272

 

 

 

10.0

%

 

1290 Avenue of the Americas

 

 

 

 

 

 

 

 

 

New York, NY

 

 

 

 

 

 

 

 

 

Capital Research and Management Company

 

 

28,658,220

 

 

 

6.71

%

 

333 South Hope Street

 

 

 

 

 

 

 

 

 

Los Angeles, CA 90071

 

 

 

 

 

 

 

 

 

Capital Group International Inc

 

 

22,275,090

 

 

 

5.30

%

 

11100 Santa Monica Boulevard

 

 

 

 

 

 

 

 

 

Los Angeles, CA 90025

 

 

 

 

 

 

 

 

 

Pacific Financial Research, Inc

 

 

25,501,405

 

 

 

6.00

%

 

9601 Wilshire Boulevard

 

 

 

 

 

 

 

 

 

Suite 800

 

 

 

 

 

 

 

 

 

Beverly Hills, CA 90210

 

 

 

 

 

 

 

 

 

Barclays Global Investors NA

 

 

22,668,039

 

 

 

5.25

%

 

45 Fremont Street

 

 

 

 

 

 

 

 

 

San Francisco, CA 94105

 

 

 

 

 

 

 

 

 

(1)

The rules of the Securities Exchange Commission ("SEC"(“SEC”) deem a person to be the beneficial owner of a security (for purposes of proxy statement disclosure) if that person has or shares either or both voting or dispositive power with respect to such security. Additionally, a security is deemed to be beneficially owned by a person who has the right to acquire beneficial ownership thereof within 60 days—days for example, through the conversion of notes.

(2)          Calculated based on the number of shares of Common Stock outstanding on December 31, 2004.

(3)          This disclosure is based on information supplied by AMVESCAP PLC and a number of its subsidiaries in a Schedule 13G filed with the SEC on February 15, 2005, in which AMVESCAP PLC and such subsidiaries report that collectively they have sole voting power with respect to 23,115,284 shares of Common Stock and sole dispositive power with respect to 23,115,284 shares of Common Stock.



(2)

(4)          This disclosure is based on information supplied by AXA Financial, Inc., primarily through Alliance Capital Management L.P., as well as a number of other affiliates, in a Schedule 13G filed with the SEC on March 10, 2005, in which AXA Financial, Inc. and such affiliates report that collectively they have sole voting power with respect to 21,198,110 shares of Common Stock and sole dispositive power with respect to 42,278,457 shares of Common Stock.

(5)This disclosure is based on information supplied by Capital Research and Management Company ("Capital"(“Capital”) in an amended Schedule 13G filed with the SEC on February 13, 2004,14, 2005, in which Capital reported that it is an investment adviser that has sole dispositive power with respect to 46,147,14028,658,220 shares of Common Stock including 758,9502,664,220 shares issuable upon the conversion of 250,000877,600 shares of the Series A Preferred Stock and 143,890 shares issuable upon the conversion of $8,168,000 principal amount of Interpublic's 1.87% Convertible Subordinated Notes due 2006.

(3)
Stock.

(6)This disclosure is based on information supplied by Capital Group International Inc. ("CGI"(“CGI”) in an amended Schedule 13G filed with the SEC on February 13, 2004,14, 2005, in which CGI reported that it is a holding company of a group of investment management companies that hasin the aggregate have sole voting power with respect to 29,031,46018,708,850 shares of Common Stock and sole dispositive power with respect to 31,578,16022,275,090 shares of Common Stock, including 856,100563,140 shares issuable upon the conversion of 282,000185,500 shares of Series A Preferred Stock.

(4)
This disclosure is based on information supplied by Harris Associates L.P. ("Harris") and Harris Associates Inc., as the general partner of Harris, in an amended Schedule 13G filed with the SEC on February 13, 2004. In this Schedule 13G, Harris reported that it is an investment adviser to various clients and also serves as investment adviser to Harris Associates Investment Trust, and that it has shared voting power with respect to 27,049,592 shares of Common Stock, sole dispositive power with

    respect to 19,254,592 shares of Common Stock and shared dispositive power with respect to 7,795,000 shares of Common Stock.

(5)
(7)This disclosure is based on information supplied by Pacific Financial Research, Inc. ("Pacific"(“Pacific”) in an amended Schedule 13G filed with the SEC on February 12, 2004,11, 2005, in which Pacific reported that it is an investment adviser that has sole voting power with respect to 24,105,905 shares of Common Stock, shared voting power with respect to 1,706,70023,853,205 shares of Common Stock and sole dispositive power with respect to 25,812,60525,501,405 shares of Common Stock.

(6)

(8)This disclosure is based on information supplied by Barclays Bank PLC and a number of its affiliates in a Schedule 13G filed with the SEC on February 17, 2004,14, 2005, in which Barclays Bank PLC and such affiliates report that collectively they have sole voting power with respect to 20,422,33320,890,747 shares of Common Stock and sole dispositive power with respect to 20,443,73322,668,039 shares of Common Stock.

The following table sets forth information concerning the direct and indirect beneficial ownership of Interpublic'sInterpublic’s Common Stock as of March 26, 2004September 20, 2005 by each director, each nominee for election as a director, each executive officer named in the Summary Compensation Table below, and all directors and executive officers of Interpublic as a group:

Name of
Beneficial Owner(1)
 Common Stock
Ownership (2)(3)(4)
 Options
Exercisable
Within 60 Days (4)
 Total

Name of Beneficial Owner(1)(2)

 

 

 

Common Stock
Ownership(2)(3)(4)(5)

 

Options
Exercisable
Within 60 Days

 

Total

 

David A. Bell 629,354 159,828 789,182

David A. Bell

 

 

646,836

 

 

 

333,578

 

 

980,414

 

Frank J. Borelli 15,300 12,934 28,234

Frank J. Borelli

 

 

17,700

 

 

 

14,436

 

 

32,136

 

Reginald K. Brack 26,850 8,510 35,360

Reginald K. Brack

 

 

25,700

 

 

 

12,510

 

 

38,210

 

Brian J. Brooks 157,661 0 157,661
Nicholas J. Camera 23,929 122,200 146,129
Jill M. Considine 13,800 8,510 22,310

Jill M. Considine

 

 

16,200

 

 

 

12,510

 

 

28,710

 

Christopher J. Coughlin 28,500 0 28,500

Christopher J. Coughlin

 

 

0

 

 

 

0

 

 

0

 

Nick Cyprus

Nick Cyprus

 

 

89,268

 

 

 

27,672

 

 

116,940

 

John J. Dooner, Jr. 1,155,466 654,440 1,809,906

John J. Dooner, Jr.

 

 

1,027,770

 

 

 

826,913

 

 

1,854,683

 

Stephen A. Gatfield

Stephen A. Gatfield

 

 

27,479

 

 

 

0

 

 

27,479

 

Richard A. Goldstein 11,831 0 11,831

Richard A. Goldstein

 

 

14,231

 

 

 

4,000

 

 

18,231

 

H. John Greeniaus 42,820 0 42,820

H. John Greeniaus

 

 

45,220

 

 

 

2,000

 

 

47,220

 

Philippe Krakowsky 58,000 0 58,000
Bruce S. Nelson 75,000 43,000 118,000
Michael I. Roth 12,800 0 12,800

Michael I. Roth

 

 

625,990

 

 

 

2,000

 

 

627,990

 

J. Phillip Samper 18,000 15,756 33,756

J. Phillip Samper

 

 

25,720

 

 

 

14,436

 

 

40,156

 

Gunnar Wilmot 21,060 57,440 78,500

David M. Thomas

David M. Thomas

 

 

2,400

 

 

 

0

 

 

2,400

 

All directors and executive officers as a group 2,343,776 1,082,618 3,426,394

All directors and executive officers as a group

 

 

2,564,514

 

 

 

1,250,055

 

 

3,814,569

 

(1)

          On January 19, 2005, Michael Roth succeeded David Bell as President and Chief Executive Officer. Mr. BrooksRoth had been executive Chairman at Interpublic since July 2004.


(2)          Mr. Coughlin resigned his position as Chief Financial Officer from and became a consultant to, Interpublic, effective February 27,December 31, 2004.

(2)

(3)The rules of the SEC deem a person to be the beneficial owner of a security (for purposes of proxy statement disclosure) if that person has or shares either or both voting or dispositive power with respect to such security. Additionally, a security is deemed to be beneficially owned by a person who has the right to acquire beneficial ownership thereof within 60 days—days, for example through the exercise of a stock option. Common Stock ownership set forth in this table includes unvested shares of restricted stock awarded under any of the 2004 Performance Incentive Plan, 2002 Performance Incentive Plan, the 1997 Performance Incentive Plan, the Interpublic Outside Directors’ Stock Incentive Plan and the Interpublic Outside Directors'Non-Management Directors’ Stock Incentive Plan due to the right of the persons identified to exercise voting power with respect to the shares. Except as otherwise indicated, each person has sole voting and sole dispositive power over the shares.


(3)
shares indicated as beneficially owned.

(4)No individual identified in the table has beneficial ownership of more than 1% of the outstanding shares of Common Stock. The directors and executive officers as a group do not beneficially own more than 1% of the outstanding shares.

(4)

(5)Includes for Mr. Bell 13,0048,047 shares owned by a family trust.


Includes for Mr. Dooner, 2,000 shares owned by his children.


Includestrust and for Mr. Goldstein 800 shares owned by his spouse.


Includes for Mr. Wilmot, 99 shares owned by

(6)          No executive officer or director of the Company is a minor child. Includes for Mr. Wilmot an option that he has purchased to acquire atbeneficial owner of any time through January 20, 2006, 1,000 shares of common stock at $10.00 per share.


the Series A Preferred Stock.

Voting

Election of directors will be decided by a plurality of the votes cast by the holders of shares of Common Stock present in person or represented by proxy at the meeting and entitled to vote. Approval of Items 2 through 54 will require the affirmative vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote. Interpublic'sInterpublic’s transfer agent tabulates the votes. Abstentions and broker non-votes are each tabulated separately and are counted as shares present for the purpose of determining whether there is a quorum present for the conduct of business at the Annual Meeting. For Items 2 through 5,4, shares that are the subject of an abstention are included as shares entitled to vote on the matter and, therefore, have the same effect as a vote against the matter, and shares, if any, that are the subject of a broker non-vote with respect to a particular matter are not included as shares entitled to vote on that matter.

Stockholder Proposals To Be Presented At 20052006 Annual Meeting

Proposals of stockholders intended to be presented at the Annual Meeting of Stockholders scheduled to be held on May 17, 2005,16, 2006, must be received by Interpublic by December 27, 2004,2005, and must comply with applicable SEC regulations, in order to be considered for inclusion in Interpublic'sInterpublic’s Proxy Statement and form of proxy relating to that meeting. If notice of a proposal intended to be presented at the Annual Meeting is not received by Interpublic before March 14, 2005,13, 2006, the persons named as proxies in Interpublic's 2005Interpublic’s 2006 proxy material will have the discretionary authority to vote on the matter in accordance with their best judgment without disclosure in the proxy statement of such matter or of how the proxy holders intend to exercise their discretionary authority to vote on the matter.


1. ELECTION OF DIRECTORS

The Board of Directors, on the recommendation of the Corporate Governance Committee, has nominated the individuals listed below as its candidates for election as directors at the Annual Meeting.


Persons elected as directors at the Annual Meeting will hold office until the 20052006 Annual Meeting of Stockholders and until their successors are elected and qualify or until their earlier death, resignation or removal. Certain biographical information concerning each of the nominees is provided below. All of the nominees are currently serving as directors of Interpublic. The Board of Directors believes that each of the nominees will be available and able to serve as a director. However, if for any reason any of the nominees is unable to serve, all proxies will be voted for the remainder of the nominees and, unless the size of the Board of Directors is reduced, for a replacement nominee designated by the Board of Directors having due regard for any recommendation of the Corporate Governance Committee.

The following information with respect to the principal occupation or employment, recent employment history, age and directorships in other companies is as of March 26, 2004,August 31, 2005, and has been


furnished or confirmed to Interpublic by the respective nominees. The information provided also identifies the committees of the Board of Directors on which each director serves.

DAVID A. BELL became Chairman of the Board, President and Chief Executive Officer of Interpublic, effective February 27, 2003. Prior to that time, he was Vice Chairman of Interpublic from June 2001 to February 2003. Mr. Bell also served as a director of Interpublic between June 2001 and February 2002. Mr. Bell served as Chairman and Chief Executive Officer of True North Communications, Inc. ("True North") from April 1999 through June 2001. From 1994 through March 1999, Mr. Bell served as President and Chief Executive Officer of Bozell Group, Inc. (formerly Bozell Worldwide, Inc.), a subsidiary of True North. Mr. Bell has been a director of Interpublic since February 2003. He is a director of Primedia Inc. and Warnaco Inc. Age 60.

Chairman of Executive Committee.

FRANK J. BORELLI has been a Senior Adviser to Stone Point Capital, a former wholly-owned subsidiary of Marsh & McLennan Companies, Inc. ("(“Marsh & McLennan"McLennan”) since his retirement on January 2, 2001. Prior to that time he was Senior Vice President of Marsh & McLennan from January through December 2000 and was Senior Vice President and Chief Financial Officer from 1984 through 1999. He is a Directordirector of Express Scripts, Inc. and Genworth Financial, Inc. and was a Directordirector of Marsh & McLennan until September 30, 2000. Mr. Borelli is past Chairman and Directordirector of the Financial Executives International and is also a member of the Board of Trustees of the National Multiple Sclerosis Society, a Trustee of St. Thomas Aquinas College and Chairman of the Nyack Hospital. Mr. Borelli has been a director of Interpublic since 1995. Age 68.70.

Presiding Director. Member of the Executive Committee.

REGINALD K. BRACK is the Former Chairman and Chief Executive Officer of Time, Inc. From September 1994 to June 1997, Mr. Brack was Chairman of Time, Inc. and was its Chairman, President and Chief Executive Officer from December 1986 until August 1994. Mr. Brack is also a director of Quebecor World, Inc. Mr. Brack has been a director of Interpublic since 1996. Age 66.

    Chairman of the Compensation Committee. Member of the Audit, Executive and Corporate Governance Committees.

JILL M. CONSIDINE has been Chairman and Chief Executive Officer of The Depository Trust & Clearing Corporation since November 1999. The Depository Trust & Clearing Corporation is a holding company that is the parent of various securities clearing corporations and The Depository Trust Company which is a large securities depository limited purpose trust company and clearing corporation. She has been Chairman and Chief Executive Officer of The Depository Trust Company since January 1999. She was President of the New York Clearing House Association from 1993 to 1998. Ms. Considine served as Managing Director, Chief Administrative Officer and a member of the Board of Directors of American Express Bank, Ltd. from 1991 to 1993. She is a trustee of Atlantic Mutual Insurance Companies. She also is a director of Ambac Financial Group, Inc. Ms. Considine has been a director of Interpublic since February 1997. Age 59.60.

Chairman of the Corporate Governance Committee. Member of the Audit and Finance Committees.

CHRISTOPHER J. COUGHLIN became Executive Vice President and Chief Operating Officer of Interpublic in June 2003 and was elected Chief Financial Officer of Interpublic, effective August 31, 2003. Mr. Coughlin served as Executive Vice President and Chief Financial Officer of Pharmacia Corporation, a pharmaceutical company, from 1998 to 2003. From 1997 to 1998, Mr. Coughlin served as President of Nabisco International, a unit of Nabisco, Inc. In 1996, Mr. Coughlin joined Nabisco, Inc. as Executive Vice President and Chief Financial Officer. Mr. Coughlin has been a director of Interpublic since July 2003. Age 51.

JOHN J. DOONER, JR. became Chairman and Chief Executive Officer of Interpublic's McCann-Erickson WorldGroup, effective February 27, 2003. Prior to that time, Mr. Dooner served as Chairman of the Board, President and Chief Executive Officer of Interpublic, from December 2000 to February 2003. Mr. Dooner was President and Chief Operating Officer of Interpublic from April 1, 2000 through



December 14, 2000. Mr. Dooner was Chairman and Chief Executive Officer of McCann-Erickson WorldGroup from 1995 through March 2000 and previously was Chief Executive Officer of McCann-Erickson Advertising Worldwide from 1994 to 1995. From 1992 to 1994, Mr. Dooner was President of McCann-Erickson Advertising Worldwide. He served as President of McCann-Erickson North America from 1988 to 1992. Mr. Dooner has been a director of Interpublic since 1995. Age 55.

Member of the Finance Committee.

RICHARD A. GOLDSTEINbecame Chairman and Chief Executive Officer of International Flavors & Fragrances Inc. in June 2000. He served as Business Group President of Unilever North American Foods from 1996 to June 2000 and as President and Chief Executive Officer of Unilever United States, Inc. from 1989 to June 2000. Prior to that time, Mr. Goldstein served as Chairman and Chief


Executive Officer of Unilever Canada Limited from 1984 to 1989. He also is a director of Fiduciary Trust Company International and Continuum Health Partners. Mr. Goldstein has been a director of Interpublic since 2001. He also is a director of Legacy Hotel, Fiduciary Trust Company International and Continuum Health Partners. Age 62.63.

    Chairman of the Finance Committee.and Audit Committees. Member of the Audit and Corporate Governance Committees.Committee.

H. JOHN GREENIAUS has been President of G-Force, Inc. since 1998. He was Chairman and Chief Executive Officer of Nabisco, Inc. from 1993 through 1997. Mr. Greeniaus has been a director of Interpublic since December 2001. He is a director of Primedia Inc. Age 59.60.

Member of the Audit, Compensation and Finance Committees.

MICHAEL I. ROTH has been became Chairman of the Board and Chief Executive Officer of Interpublic, effective January 19, 2005. Prior to that time Mr. Roth served as Chairman of the Board of Interpublic from July 13, 2004 to January 2005. Mr. Roth served as Chairman and Chief Executive Officer of The MONY Group Inc. sincefrom February 1994.1994 to June 2004. Mr. Roth has been a director of Interpublic since February 2002. He is also a director of Pitney Bowes Inc. and Gaylord Entertainment Company. Age 58.59.

Chairman of the Audit Committee. Member of the Compensation and Finance Committees.

J. PHILLIP SAMPERhas been Founding Partner of Gabriel Venture Partners L.L.C. since December 1998 and was Chief Executive Officer and President of Avistar Systems Corp. from 1997 to October 1998. Prior to that time, Mr. Samper was Chairman, Chief Executive Officer and President of Quadlux, Inc. from 1996 to 1997. He was Chairman and Chief Executive Officer of Cray Research, Inc. during 1995 and was President of Sun Microsystems Computer Corporation from 1994 to 1995. Mr. Samper was Vice Chairman and Executive Officer of the Eastman Kodak Company from 1986 to 1989 and a member of the Board of Directors from 1983 to 1989. He was President and Chief Executive Officer of Kinder-Care Learning Centers from 1990 to 1991. Mr. Samper has been a director of Interpublic since 1990. Age 69.70.

    Member of the Audit, Compensation and Corporate Governance Committees.

DAVID M. THOMAS has been the Executive Chairman of IMS Health Inc. (“IMS”) since January 2005. From November 2000 until January 2005, Mr. Thomas served as Chairman and Chief Executive Officer of IMS. Prior to joining IMS, Mr. Thomas was Senior Vice President and Group Executive of IBM from January 1998 to July 2000. Mr. Thomas is a director of Fortune Brands Inc. Mr. Thomas has been a director of Interpublic since October 2004. Age 56.

Member of the Audit and Corporate Governance Committees.

6




CORPORATE GOVERNANCE PRACTICES AND BOARD MATTERS

Corporate Governance Guidelines

Interpublic has a strong commitment to sustaining sound corporate governance practices. Interpublic'sInterpublic’s Corporate Governance Guidelines are available free of charge on Interpublic'sInterpublic’s website athttp://www.interpublic.com /www.interpublic.com or by writing to The Interpublic Group of Companies, Inc., 12711114 Avenue of the Americas, New York, NY 10020,10036, Attention: Secretary.

Board Structure, Committees and Independence

Interpublic has ten directors, three of whom are employees of Interpublic or one of its subsidiaries (those employee Directorsdirectors are referred to hereinafter in this Proxy Statement as "Management Directors"“Management Directors”) and seven of whom are not employees of Interpublic or its subsidiaries (those non-employee Directorsdirectors are referred to hereinafter in this Proxy Statement as the "Non-Management Directors"“Non-Management Directors” or "Outside Directors"“Outside Directors”). CommitteesThe standing committees of the Board includeconsist of the Executive Committee, the Finance



Committee, the Compensation Committee, the Corporate Governance Committee and the Audit Committee. The activities of the Compensation Committee, the Corporate Governance Committee and the Audit Committee are each governed by a charter that is available free of charge on Interpublic'sInterpublic’s website athttp: //www.interpublic.comhttp://www.interpublic.com or by writing to The Interpublic Group of Companies, Inc., 12711114 Avenue of the Americas, New York, NY 10020,10036, Attention: Secretary. A description of the responsibilities of each standing Committee of the Board is provided in this Proxy Statement under the heading "Principal“Principal Committees of the Board of Directors"Directors”. All of the members of the Compensation Committee, the Corporate Governance Committee and the Audit CommitteesCommittee are Non-Management Directors. Of the seven Non-Management Directors, the Board has determined that Ms. Considine and Messrs. Brack, Goldstein, Greeniaus, RothSamper and SamperThomas are each independent under the independence standards set forth in Interpublic'sInterpublic’s Corporate Governance Guidelines, and under the applicable rules of the SEC and the New York Stock Exchange ("NYSE"(“NYSE”) listing standards which will take effect for Interpublic as of May 18, 2004 (the "NYSE“NYSE Listing Standards"Standards”). Under the NYSE Listing Standards, Mr. Borelli, Interpublic'sInterpublic’s Presiding Director as described below, is not deemed to be independent because his son is a principal of Deloitte & Touche, to which Interpublic has outsourced its internal audit function. Mr. Borelli'sBorelli’s son is not engaged in providing services to Interpublic.

Presiding Director

Interpublic created the position of Presiding Director of the Board in November 2002. The Presiding Director of the Board helps to coordinate communications between the Board and management of Interpublic. Specifically, the Presiding Director convenes and chairs meetings of the Non-Management Directors, coordinates and develops the agenda for, and chairs executive sessions of, the Non-Management Directors, coordinates feedback to the Chairman and Chief Executive Officer on behalf of the Non-Management Directors regarding business issues and management, and coordinates and develops with the Chairman of the Board and Chief Executive Officer the agendas and presentations for meetings of the Board together with the informational needs associated with those agendas and presentations. In addition, the Presiding Director meets monthly with Interpublic's major business units to ensure an understanding of their issues and needs and to communicate observations to the Non-Management Directors. The Non-Management Directors have elected Mr. Borelli as Presiding Director for a second term of one year effective as of November 2003.that began in March 2005.

The NYSE Listing Standards require that if the group of Non-Management Directors includes one or more directors that is not independent, then at least once annually, the Non-Management Directors should hold an executive session that includes only independent Directors. At the meeting of the Board in February 2004,March 2005, the independent Directors met in executive session without Mr. Borelli. Ms. Considine served as the Chairperson of that executive session of the Non-Management Directors.


Communications with the Board of Directors and Non-Management Directors

Interested parties may contact Interpublic'sInterpublic’s Board of Directors, or the Non-Management Directors as a group, at the following address:

    Board of Directors or Non-Management Directors, as applicable

    The Interpublic Group of Companies, Inc.
    1271

    1114 Avenue of the Americas

    New York, NY 1002010036

Communications may also be sent to individual directors at the above address. Communications to the Board, the Non-Management Directors or to any individual director that relate to Interpublic'sInterpublic’s accounting, internal accounting controls or auditing matters will also be referred to the Chairperson of the Audit Committee. Other communications will be referred to the Presiding Director or the appropriate committee chairperson.


Director Selection Process

The Corporate Governance Committee is charged with the responsibilities described in this Proxy Statement under the heading "Principal“Principal Committees of the Board of Directors—Directors—Corporate Governance Committee"Committee”.

One of the Committee'sCommittee’s responsibilities is to identify and recommend to the Board candidates for election as directors. The Committee considers candidates suggested by its members, other directors, senior management and shareholders as necessary in anticipation of upcoming director elections or due to Board vacancies. The Committee is given broad authorization to retain, at the expense of Interpublic, external legal, accounting or other advisers including the retention of search firms to identify candidates and to perform "background reviews"“background reviews” of potential candidates. The Committee is expected to provide guidance to search firms it retains about the particular qualifications the Board is then seeking. No search firms or other advisers were retained in the past fiscal year to identify director candidates.

All director candidates, including those recommended by shareholders, are evaluated on the same basis. Candidates are considered in light of the entirety of their credentials, including:

    •

    ·their business and professional achievements, knowledge, experience and background, particularly in light of the principal current and prospective businesses of Interpublic and the strategic challenges facing Interpublic and its industry as a whole;

    •

    ·their integrity and independence of judgment;

    •

    ·their ability and willingness to devote sufficient time to Board duties;

    •

    ·their qualifications for membership on one or more of the committees of the Board;

    •

    ·their potential contribution to the diversity and culture of the Board;

    •

    ·their educational background;

    •

    ·their independence from management under NYSE Listing Standards and Interpublic'sInterpublic’s Corporate Governance Guidelines;

    •

    ·the needs of the Board and Interpublic; and

    •

    ·the Board'sBoard’s policies regarding the number of boards on which a director may sit, director tenure, retirement and succession as set out in Interpublic'sInterpublic’s Corporate Governance Guidelines.

In determining the needs of the Board and Interpublic, the Committee considers the qualifications of sitting directors and consults with other members of the Board (including as part of the Board'sBoard’s annual


self-evaluation), the CEO and other members of senior management and, where appropriate, external advisers. The Corporate Governance Committee recently has extended the mandatory retirement age of a director from 70 to 74 years old in order to encourage continuity of Board membership at a time when Interpublic and its subsidiaries are engaged in an ambitious turnaround effort. All directors are expected to exemplify the highest standards of personal and professional integrity and to assume the responsibility of challenging management through their active and constructive participation and questioning in meetings of the Board and its various committees, as well as in less formal contacts with management.

Director candidates, other than sitting directors, are interviewed by each of the members of the Committee and by other directors, the CEO and other key management personnel, and the results of those interviews are considered by the Committee in its deliberations. The Committee also reviews sitting directors whose terms are nearing expiration, and who are considered potential candidates for re-election, in light of the above considerations and their past contributions to the Board.

Shareholders wishing to recommend a director candidate to the Committee for its consideration should write to the Committee, in care of its Chairperson, at The Interpublic Group of Companies, Inc., 12711114 Avenue of the Americas, New York, NY 10020.10036. Any recommendations will be considered for the next



annual election of directors in 2005.2006. A recommendation should include the candidate'scandidate’s name, biographical data and a description of his or her qualifications in light of the above criteria. If Interpublic receives in a timely manner, in accordance with the SEC requirements, any recommendation of a director candidate from a shareholder, or group of shareholders, that beneficially owns more than 5% of Interpublic'sInterpublic’s Common Stock for at least one year as of the date of recommendation, as determined under SEC rules, Interpublic will disclose in its proxy statement the names of the recommending shareholder(s) and the candidate if the shareholder (or each member of the group) and the candidate consent in writing to that disclosure.

Principal Committees of The Board of Directors

Executive Committee—The Executive Committee is authorized, when the Board of Directors is not in session, to exercise all powers of the Board of Directors which, under Delaware law and the By-Laws of Interpublic, may properly be delegated to a committee, except certain powers that have been delegated to other committees of the Board of Directors. Due to the frequency in number of meetings of the Board and other committees of the Board, the Executive Committee did not hold any meetings in 2003.2004.

Finance Committee—The Finance Committee is authorized to review the financial affairs of Interpublic and make recommendations with respect thereto to the Board of Directors. It also approves capital budgets, guarantees by Interpublic of obligations of subsidiaries and affiliates and certain capital transactions (including mergers and acquisitions), and is the committee that administers the Interpublic Retirement Account Plan. The Finance Committee held five meetingsone meeting in 2003.2004.

Compensation Committee—The Compensation Committee is responsible for the adoption and periodic review of a remuneration strategy for Interpublic and its subsidiaries which ensures that executive compensation for key senior executives is designed to incentivize and reward long-term growth, profitability and return to stockholders. The Compensation Committee is responsible for approving the compensation paid to senior executives of Interpublic and its subsidiaries. For these purposes, compensation is deemed to include: (1) salary, (2) deferred compensation, (3) bonuses and other extra compensation of all types, including long-term performance incentive awards under Interpublic's 2002Interpublic’s 2004 Performance Incentive Plan, (4) insurance paid for by Interpublic or any of its subsidiaries other than group plans, (5) annuities and individual retirement arrangements, (6) Special Deferred Benefit Agreements, (7) Interpublic'sInterpublic’s Senior Executive Retirement Income Plan ("SERIP"(“SERIP”), and (8) Interpublic'sInterpublic’s Capital Accumulation Plan. The Compensation Committee also administers the 20022004 Performance Incentive Plan (and its predecessors, the 2002 Performance Incentive Plan, the 1997 Performance


Incentive Plan, the Long-Term Performance Incentive Plan, the Management Incentive Compensation Plan, the 1996 Stock Incentive Plan and the 1986 Stock Incentive Plan), the 1986 United Kingdom Stock Option Plan and the Employee Stock Purchase Plan (1995). The Committee approves any newly adopted or major changes made to these plans and makes recommendations to the Board with respect to incentive-compensation plans and equity-based plans. The Committee also reviews initiatives of Interpublic and its subsidiaries to retain and develop key employees on an ongoing basis and coordinates, manages and reports to the Board on the annual performance evaluation of key executives of Interpublic. In addition, the Committee is authorized, if appropriate, to hire experts or other independent advisers or legal counsel to assist the Committee in the discharge of its duties. The Compensation Committee held sevensix meetings in 2003.2004.

Corporate Governance Committee—The Corporate Governance Committee is responsible for recommending to the Board of Directors the persons to be nominated for election to the Board of Directors and the membership and chairman of each Board committee. The other responsibilities of the Corporate Governance Committee include the establishment of criteria for membership on the Board and its committees, the review and recommendation to the Board as to the independence of Non-Management Directors under the standards set forth in Interpublic'sInterpublic’s Corporate Governance Guidelines and the NYSE Listing Standards, the evaluation on an annual basis of the collective performance of the Board and the Board'sBoard’s committees, the recommendation to the Board of compensation and benefits for Non-Management Directors, and the review, the continual assessment and the recommendation to the Board of the best practices in corporate governance matters generally. The Corporate Governance Committee held foursix meetings in 2003.2004.


The Audit Committee—The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to (i) the annual financial information to be provided to stockholders and the SEC; (ii) the system of internal controls that management has established; and (iii) the internal and external audit processes. In addition, the Audit Committee provides an avenue for communication among internal audit, the independent auditors, financial management and the Board. The Audit Committee also is responsible for the selection and retention of Interpublic'sInterpublic’s independent auditors and the review of their compensation, subject to approval of the Board of Directors. Specific activities of the Committee are described in the Audit Committee Report below. In light of the importance of the Audit Committee, on the recommendation of the Corporate Governance Committee, each independent Non-Management Director is a member of the Audit Committee. The Board has determined that each member of the Audit Committee qualifies as an "audit“audit committee financial expert"expert” within the meaning of applicable SEC rules. The Audit Committee held eightseven meetings in 2003.2004.


AUDIT COMMITTEE REPORT

The primary function of the Audit Committee is to assist the Board of Directors in its oversight of Interpublic'sInterpublic’s financial reporting process. The Committee operates pursuant to a Charter approved by the Board. A copy of the Charter is included as Appendix A of this Proxy Statement.

Management is responsible for Interpublic'sInterpublic’s consolidated financial statements and overall reporting process, including the system of internal controls. PricewaterhouseCoopers LLP, the independent auditor of Interpublic, is responsible for conducting annual audits and timely quarterly reviews of Interpublic'sInterpublic’s consolidated financial statements and expressing an opinion as to the conformity of the annual consolidated financial statements with generally accepted accounting principles. With respect to the year ended December 31, 2003,2004, the Audit Committee has:

    •

    ·Reviewed and discussed the audited consolidated financial statements with management;

    •

    ·Reviewed and discussed with PricewaterhouseCoopers the scope, staffing and general extent of the audit;



    •

·Reviewed with management and PricewaterhouseCoopers the selection, application and disclosure of Interpublic'sInterpublic’s critical accounting policies used in the preparation of Interpublic'sInterpublic’s annual audited financial statements;

•

·Evaluated PricewaterhouseCoopers'PricewaterhouseCoopers’ performance, qualifications and quality control procedures;

•

·Pre-approved all services, both audit (including all audit engagement fees and terms) and permitted, non-audit services performed by PricewaterhouseCoopers;

•

·Established clear policies with management for the hiring of current or former employees of PricewaterhouseCoopers who participate in any capacity in Interpublic'sInterpublic’s audit;

•

·Overseen compliance with Interpublic'sInterpublic’s Code of Ethics and procedures for the confidential and anonymous submission by employees of Interpublic and others of complaints about accounting, internal controls or auditing matters;

•

·Reviewed with management, Interpublic'sInterpublic’s internal auditors and PricewaterhouseCoopers, Interpublic'sInterpublic’s significant internal accounting and financial reporting controls and any significant deficiencies or material weaknesses relating to such internal accounting and financial reporting controls;

•

·  Overseen, with the assistance of outside counsel and a forensic accounting firm retained by the Audit Committee, the comprehensive review by management, Interpublic’s internal auditors and PricewaterhouseCoopers, of Interpublic’s previously reported financial results and the resulting restatement of Interpublic’s previously issued financial results;

·  Overseen, with the assistance of outside counsel and a forensic accounting firm retained by the Audit Committee, the internal investigations conducted by management and Interpublic’s internal auditors of potential employee misconduct and the Remediation Plan developed by management with respect thereto;

·Reviewed and discussed with management, Interpublic'sInterpublic’s internal auditors and PricewaterhouseCoopers, any disclosures made to the Committee by Interpublic'sInterpublic’s Chief Executive Officer and Chief Financial Officer in connection with the certifications required by SEC rules to be


      made by each such officer in Interpublic'sInterpublic’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q;

    •

    ·Discussed with PricewaterhouseCoopers the matters required to be discussed by Statement on Auditing Standards ("SAS"(“SAS”) No. 61, as amended by SAS 90 (Codification of Statements on Auditing Standards AU Section 380), as may be modified or supplemented; and

    •

    ·Received the written disclosures and the letter from PricewaterhouseCoopers required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), discussed with PricewaterhouseCoopers matters relating to that firm'sfirm’s independence and considered whether performance by PricewaterhouseCoopers of non-audit services for Interpublic is compatible with maintaining PricewaterhouseCoopers'PricewaterhouseCoopers’ independence.


Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in Interpublic'sInterpublic’s Annual Report on Form 10-K for the year ended December 31, 2003.2004.

Michael I. Roth,

Richard A. Goldstein, Chairman

Reginald K. Brack

Jill M. Considine
Richard A. Goldstein

H. John Greeniaus

J. Phillip Samper

David M. Thomas

Attendance at Board of Directors and Committee Meetings

The Board of Directors has articulated in its Corporate Governance Guidelines its policy with respect to attendance of each director at Board meetings. Specifically, the Corporate Governance Guidelines provide that each director is expected to prepare for, attend and participate in, at least 75% of all meetings of the Board, absent special circumstances. The Board of Directors of Interpublic held fourteentwelve meetings in 20032004 and committees of the Board held a total of twenty-fourtwenty-one meetings. During 2003,2004, each director attended 75% or more of the total number of meetings of the Board of Directors and committees on which he or she served, except for Mr. Samper who attended 72% (representing 21 out of 29) of the meetings of the Board and committees on which he served.

Attendance at Annual Meeting of Stockholders

Interpublic does not have a specific policy for attendance by directors at the Annual Meeting of Stockholders. However, all directorsother than Michael I. Roth, who aredid not attend the 2004 Annual Meeting, each director who is currently membersa member of the Board and who areis standing for re-election attended the 20032004 Annual Meeting.

Non-Management Directors'Directors’ Compensation

Each Non-Management Director receives as cash compensation for services rendered, an annual retainer of $40,000, an annual retainer of $2,000 for each committee on which he or she serves, a fee of $1,500 for each meeting of the Board attended and a fee of $1,500 for each committee meeting attended. The Chairperson of the Compensation Committee, the Chairperson of the Finance Committee and the Chairperson of the Corporate Governance Committee each receives an additional retainer of $7,500 per year and the Chairperson of the Audit Committee receives an additional retainer of $10,000 per year.

As Presiding Director of the Board, Mr. Borelli receives an annual retainer of $200,000.$50,000, reduced from $200,000 effective March 2, 2005.

Each Non-Management Director also receives, as consideration for services rendered as a member of the Board, stock-based compensation under the Interpublic Outside Directors'Non-Management Directors’ Stock Incentive Plan, (formerly called the Interpublic Outside Directors' Stock Option Plan), which was approved by the



stockholders in 19942004 (the "Outside Directors' Plan"“Non-Management Directors’ Plan”). Effective August 1, 2003, the Board amended and replaced the Outside Directors'Directors Stock Incentive Plan (the “Outside Directors’ Plan”). The Non-Management Directors’ Plan to provide for an annual grant to each Non-Management Director of (i) 800 shares of Interpublic Common Stock that are not subject to transfer restrictions or forfeiture (the "Freely“Freely Tradeable Shares"Shares”) and (ii) at the election of each Non-Management Director, either (a) 1,600 restricted shares of Interpublic Common Stock ("(“Restricted Shares"Shares”) or (b) 1,600 restricted share units (“Share Units”). The amendment providedNon-Management Directors’ Plan provides that the initial grants would be made in August 2003 and subsequent grants would be made each January, commencing with the year 2005, while the Non-Management Directors’ Plan remains in effect. With respect to the Restricted Shares, the recipient has all rights of ownership, including the right to vote and to receive dividends, except that, prior to the expiration of a three-year period after the date of grant (the "Restricted Period"“Restricted Period”), the recipient is prohibited from selling or otherwise transferring the shares.


With respect to the Share Units, and subject to the expiration of Restricted Period, each recipient has the right to receive at the time such recipient’s service as a director terminates, a cash payment in an amount equal to the fair market value of the corresponding number of shares of Common Stock. At the discretion of the Corporate Governance Committee the Share Units balance of a Non-Management Director may be credited with additional Share Units corresponding to any dividends that are paid from time on the Common Stock. If, on or after the first anniversary of the grant of the recipient'sRestricted Shares or the Share Units, as applicable, the recipient’s service as a director terminates for any reason (including death) during the Restricted Period, the respective restrictions on transfer will lapse immediately in proportion that the number of months that have elapsed since the date of grant bears to the total number of months of the Restricted Period, and the remainder of such Restricted Shares or the remaining value of the Restricted Units, as applicable, will be forfeited. If the recipient'srecipient’s service as a director terminates for any reason (including death) before the first anniversary of the date of grant, all such Restricted Shares and Share Units, as applicable, will be forfeited. The Corporate Governance Committee, which is responsible for the administration of the Outside Directors'Non-Management Directors’ Plan, may in its discretion direct Interpublic to make cash payments to the recipient of Restricted Shares to assist in satisfying the federal income tax liability with respect to the receipt or vesting of the Restricted Shares.

On August 1, 2003,March 9, 2004, in accordance with the Outside Director’s Plan, each of Ms. Considine and Messrs. Borelli, Brack, Goldstein, Greeniaus, Roth and Samper received a grant of 800 Freely-Tradeable Shares of Common Stock and a grant of 1,600 Restricted Shares. In 2004,On January 5, 2005, in accordance with the Non-Management Directors’ Plan, each of Ms. Considine and Messrs. Borelli, Brack, Goldstein, Greeniaus, RothSamper and SamperThomas received an additionala grant of 800 Freely-Tradeable Shares and 1,600 Restricted Shares.

Mr. Goldstein and Ms. Considine each has an agreement with Interpublic for the deferral of all fees that the individual is entitled to receive as a director or as a member of any committee of the Board of Directors. The amounts deferred earn credits equivalent to interest in accordance with the terms of Interpublic'sInterpublic’s Plan for Credits Equivalent to Interest on Balances of Deferred Compensation Owing under Employment Agreements. Payments of the amounts deferred, together with accrued interest, will be made to the director, or his or her designated beneficiaries as the case may be, in a lump-sum upon the director'sdirector’s death, disability or retirement from the Board.

Each outside directorNon-Management Director who, as of December 31, 1995, had accumulated at least five years of service is entitled to receive an annual retirement benefit under the Interpublic Outside Directors'Directors’ Pension Plan (the "Outside Directors'“Outside Directors’ Pension Plan"Plan”). In general, the benefit becomes payable in the month following the month the director leaves the Board. The benefit is equal to the amount of the annual retainer paid to the director as a Board member in the year in which he or she ceased to serve as a director and will be paid for the same number of years as the director'sdirector’s years of service, up to a maximum of 15 years. In the event of the death of a director with a vested retirement benefit, the then present value of the director'sdirector’s unpaid retirement benefits will be paid to the surviving spouse or the estate of the director. Effective December 31, 1995, the Outside Directors'Directors’ Pension Plan was terminated, except to the extent benefits were accrued prior to termination. As a result there have been no further accruals for the benefit of existing directors under the Outside Directors'Directors’ Pension Plan for subsequent years. Any director with fewer than five years of service on the date that the Plan was terminated will not receive any benefits under the Plan. Mr. Samper is the only current director who participates in this plan.entitled to receive benefits under the Outside Directors Pension Plan.


CODE OF CONDUCT

Interpublic has adopted a code of ethics, known as the Code of Conduct, which applies to all employees of Interpublic and its subsidiaries and affiliates. Interpublic'sInterpublic’s Corporate Governance Guidelines provide that members of the Board of Directors and officers (which includes Interpublic'sInterpublic’s Chief Executive


Officer, Chief Financial Officer, Controller and other persons performing similar functions) must comply with the Code of



Conduct. In addition, the Corporate Governance Guidelines state that the Board will not waive any provision of the Code of Conduct for any Director or executive officer. The Code of Conduct, including future amendments, is available free of charge on Interpublic'sInterpublic’s website athttp://www.interpublic.com or by writing to The Interpublic Group of Companies, Inc., 1271 Avenue of the Americas, New York, NY 10020, Attention: Secretary.


CHANGE OF ADDRESS

        Interpublic will be moving its corporate headquarters during the second quarter of 2004. Please consult Interpublic's website athttp://www.interpublic.com for the effective date of the move. After the move, all written communication to members of the Board of Directors or a Chairperson of a Board Committee, as applicable, should be sent to The Interpublic Group of Companies, Inc., 1114 Avenue of the Americas, New York, NY 10036. After10036, Attention: Secretary.

NYSE CERTIFICATION

In 2004, our CEO provided the move, any written requests for Interpublic's Corporate Governance Guidelines, By-Laws or Code of Conduct should be sentAnnual CEO Certification to the attentionNYSE, required under Section 303A.12(a) of Interpublic's Secretary at the new address provided above.New York Stock Exchange Listed Company Manual.


COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth information concerning the compensation paid by Interpublic and its subsidiaries to (i) Messrs.Mr. Bell, and Dooner, each of whomwho served as the Chief Executive Officer during 2003,2004, (ii) each of the four most highly compensated executive officers of Interpublic other than either CEO (based on aggregate salary and bonus in 2003)2004), who were serving as executive officers on December 31, 20032004 and (iii) two additional individualsMichael I. Roth, who ceased to be executive officers during 2003 who, based on their 2003 compensation, would have been amongbecame Chairman of the four most highly compensated executive officersBoard and Chief Executive Officer of Interpublic, for 2003 if they had been serving aseffective January 19, 2005 (the “named executive officers on December 31, 2003 (the "named executive officers"officers”). In each instance, thisthe compensation shown is for services rendered in all capacities for the three-year period ended on December 31, 2003.2004. As used in this Proxy Statement, the executive officers of Interpublic include any director of Interpublic who served as the chief executive officer of McCann-Erickson WorldGroup, a significant operating unit of Interpublic.




SUMMARY COMPENSATION TABLE

 

 

Annual Compensation

 

Long Term Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

Awards

 

Payouts

 

 

 

Name and Principal
Position

 

 

 

Fiscal
Year

 

Salary(2)(3)

 

Bonus(4)

 

Other
Annual
Compen-
sation(5)

 

Restricted
Stock
Awards(6)

 

Securities
Underlying
Options(7)

 

LTIP
Payouts(8)

 

All Other
Compen
sation(9)

 

David A. Bell(1)

 

 

2004

 

 

$

1,000,000

 

$

0

 

$

66,381

 

$

1,750,000

 

 

248,933

 

 

$

0

 

$

9,565

 

President and

 

 

2003

 

 

$

1,000,000

 

$

1,300,000

 

$

75,658

 

$

0

 

 

200,000

 

 

$

0

 

$

13,745

 

Chief Executive Officer, Director of Interpublic

 

 

2002

 

 

$

1,000,000

 

0

 

0

 

$

294,750

 

 

55,000

 

 

0

 

$

212,472

 

Michael I. Roth(1)

 

 

2004

 

 

$

446,212

 

$

0

 

$

0

 

$

1,049,996

 

 

161,974

 

 

$

0

 

$

100,129

 

Executive Chairman,

 

 

2003

 

 

—

 

—

 

—

 

—

 

 

—

 

 

—

 

—

 

Director of Interpublic

 

 

2002

 

 

—

 

—

 

—

 

—

 

 

—

 

 

—

 

—

 

Christopher J. Coughlin(1)

 

 

2004

 

 

$

800,000

 

$

0

 

$

0

 

$

750,000

 

 

106,685

 

 

$

0

 

$

6,679

 

Executive Vice President,

 

 

2003

 

 

$

433,333

 

$

900,000

 

$

0

 

$

0

 

 

200,000

 

 

$

0

 

$

3,120

 

Chief Operating Officer, Chief Financial Officer and Director

 

 

2002

 

 

—

 

—

 

—

 

—

 

 

—

 

 

—

 

—

 

Nicholas Cyprus(1)

 

 

2004

 

 

$

272,727

 

$

2,005,000

 

$

0

 

$

1,249,997

 

 

118,797

 

 

$

0

 

$

83,026

 

Senior Vice President,

 

 

2003

 

 

—

 

—

 

—

 

—

 

 

—

 

 

—

 

—

 

Chief Accounting Officer

 

 

2002

 

 

—

 

—

 

—

 

—

 

 

—

 

 

—

 

—

 

John J. Dooner, Jr.

 

 

2004

 

 

$

1,250,000

 

$

1,000,000

 

$

97,683

 

$

375,000

 

 

53,342

 

 

$

0

 

$

78,020

 

Chairman and CEO of

 

 

2003

 

 

$

1,250,000

 

$

750,000

 

$

73,029

 

$

0

 

 

176,709

 

 

$

0

 

$

82,904

 

McCann-Erickson WorldGroup, Director of Interpublic

 

 

2002

 

 

1,250,000

 

0

 

80,046

 

$

2,947,500

 

 

375,000

 

 

2,480,000

 

$

9,927

 

Stephen Gatfield(1)

 

 

2004

 

 

$

605,303

 

$

1,327,500

 

$

56,183

 

$

317,400

 

 

30,000

 

 

$

0

 

$

255

 

Executive Vice President,

 

 

2003

 

 

—

 

—

 

—

 

—

 

 

—

 

 

—

 

—

 

Global Operations and Innovation

 

 

2002

 

 

—

 

—

 

—

 

—

 

 

—

 

 

—

 

—

 

(1)


Annual Compensation
Long Term Compensation






Awards
Payouts

Name and Principal
Position
Fiscal Year
Salary(2)(3)
Bonus(4)
Other Annual Compen- sation(5)
Restricted Stock Awards(6)
Securities Underlying Options(7)
LTIP Payouts(8)
All Other Compen- sation(9)
David A. Bell(1)
Chairman of the Board, President and Chief Executive Officer		2003
2002
2001		$

1,000,000
1,000,000
491,667		$

1,300,000
0
200,000		$

75,658
—
—		$

0
294,750
2,064,375		200,000
55,000
256,100		$

0
0
—		$

13,745
212,472
19,165

John J. Dooner, Jr.(1)
Chairman and CEO of McCann-Erickson WorldGroup, Director of Interpublic and Former Chairman, President and CEO of Interpublic

2003
2002
2001

$


1,250,000
1,250,000
1,250,000

$


750,000
0
500,000

$


73,029
80,046
73,246

$


0
2,947,500
0

176,709
375,000
100,000

$


0
2,480,000
1,550,100

$


82,904
9,927
9,146

Brian J. Brooks(1)
Former Executive Vice President, Chief Talent and Human Resources Officer

2003
2002
2001

$


463,750
52,500
—

$


160,000
250,000
—

$


—
—
—

$


1,893,699
420,450
—

24,800
56,000
—

$


0
—
—

$


6,240
1,148
—

Nicholas J. Camera
Senior Vice President, General Counsel and Secretary

2003
2002
2001

$


361,250
328,750
297,500

$


220,000
0
75,000

$


—
39,497
—

$


0
316,325
107,610

15,000
36,000
22,000

$


0
350,000
280,000

$


8,773
7,735
6,204

Christopher J. Coughlin(1)
Executive Vice President, Chief Operating Officer, Chief Financial Officer and Director

2003
2002
2001

$


433,333
—
—

$


900,000
—
—

$


—
—
—

$


0
—
—

200,000
—
—

$


0
—
—

$


3,120
—
—

Philippe Krakowsky(1)
Senior Vice President, Director of Corporate Communications

2003
2002
2001

$


375,000
279,167
—

$


225,000
100,000
—

$


—
40,364
—

$


466,250
225,000
—

18,000
25,000
—

$


0
0
—

$


6,240
3,573
—

Bruce S. Nelson
Executive Vice President and Chief Marketing Officer

2003
2002
2001

$


600,000
500,000
500,000

$


400,000
0
225,000

$


—
50,971
—

$


402,775
442,125
0

30,000
83,500
30,000

$


0
437,500
0

$


9,048
9,719
8,260

Gunnar P. Wilmot
Chief Operating Officer of Lowe + Draft and Former Senior Vice President, Planning and Business Development of Interpublic

2003
2002
2001

$


516,570
449,167
430,000

$


100,000
0
90,000

$


—
52,739
52,896

$


0
147,375
102,075

20,000
14,500
18,000

$


0
160,000
71,000

$


28,935
109,702
8,154
(1)
On February 27, 2003,January 19, 2005, Michael Roth succeeded David Bell succeeded John J. Dooner, Jr. as Interpublic'sChief Executive Officer.

On January 19, 2005, Mr. Bell was appointed co-Chairman of Interpublic.

On July 13, 2004, Mr. Roth became Executive Chairman and CEO and became a member of Interpublic's Board of Directors.


On February 27, 2003, Mr. Dooner stepped down from the position of Chairman and CEO of Interpublic and instead assumed an active operating role as Chairman and CEO of McCann-Erickson WorldGroup. Mr. Dooner retained his seat on Interpublic's Board of Directors.


No compensation information for Mr. Brooks is included in the Summary Compensation Table in 2001 because he was first hired by Interpublic in 2002.


Mr. Coughlin joined Interpublic on June 16, 2003 and his compensation is reported from and after that date. Consequently, no

On May 24, 2004, Mr. Cyprus was hired as Senior Vice President, Controller and Chief Accounting Officer and his compensation information foris reported from and after that date.

On June 16, 2003, Mr. Coughlin was hired as Executive Vice President and Chief Operating Officer and his compensation is included in the Summary Compensation Table for 2001reported from and 2002.


Noafter that date.

On April 1, 2004, Mr. Gatfield was hired as Executive Vice President, Global Operations and Innovation and his compensation information for Mr. Krakowsky is included in the Summary Compensation Table in 2001 because he was first hired by Interpublic in 2002.

reported from and after that date.

(2)

The salaries of executive officers continuing to serve in the same position are generally reviewed every two years.

15



(3)

Does not include annual salary in the amount of $112,500 that Mr. Bell has elected to forgo in 2003 in consideration for the receipt of a Special Deferred Benefit Agreement which is more fully described in this Proxy Statement under the heading "Special“Special Deferred Benefit Agreements"Agreements”.


Does not include annual salary in the amount of $13,750, $15,000 and $15,000 that Mr. Camera has elected to forgo in 2003, 2002 and 2001, respectively, in consideration for the receipt of a Special Deferred Benefit Agreement which is more fully described in this Proxy Statement under the heading "Special Deferred Benefit Agreements".


Does not include annual salary in the amount of $54,167 that Mr. Coughlin has elected to forgo in 2003 in consideration for receipt of a Special Deferred Benefit Agreement which is more fully described in this Proxy Statement under the heading "Special“Special Deferred Benefit Agreements"Agreements”.


Does not include annual salary

(4)   The bonus shown for Mr. Cyprus in 2004 includes a cash sign-on bonus of $1,830,000 that was paid to him shortly after he was hired by Interpublic. Fifty percent of the amountbonus shown for Mr. Dooner was paid in April 2005 and the balance will be paid when the 2004 year-end financial statements for McCann-Erickson WorldGroup have been reported in final form and assessed. The bonus shown for Mr. Gatfield in 2004 includes a cash sign-on bonus of $50,000 and $45,833$750,000 that Mr. Krakowsky has electedwas paid to forgo in 2003 and 2002, respectively, in consideration for receipt of a Special Deferred Benefit Agreement which is more fully described in this Proxy Statement under the heading "Special Deferred Benefit Agreements".


Does not include annual salary in the amount of $156,667, $100,000 and $100,000 that Mr. Nelson has elected to forgo in 2003, 2002 and 2001, respectively, in consideration for the receipt of two Special Deferred Benefit Agreements which are more fully described in this Proxy Statement under the heading "Special Deferred Benefit Agreements".


Does not include annual salary in the amount of $108,125, $80,000 and $50,000 that Mr. Wilmot has elected to forgo in 2003, 2002 and 2001, respectively, in consideration for the receipt of four Special Benefit Deferred Agreements which are more fully described in this Proxy Statement under the heading "Special Deferred Benefit Agreements".

(4)
him shortly after he was hired by Interpublic. The bonus shown for Mr. Bell in 2003 includes a cash sign-on bonus of $100,000 that was paid to him shortly after he assumed the position of Chairman, CEO and President of Interpublic. The bonus in 2003 for Mr. Coughlin includes a sign-on bonus consisting of unrestricted shares of Interpublic Common Stock with a fair market value of $400,000 on June 16, 2003, his date of hire. The bonuses, for Messrs. Brooks and Krakowsky in 2002 consist of sign-on cash bonuses of $250,000 and $100,000, respectively, paid in each instance shortly after the executive became employed by Interpublic.

(5)

In accordance with SEC rules, information is shown in this column only if as to any named executive officer the aggregate value of perquisites and other personal benefits received during the year exceeds the lesser of (i) $50,000 and (ii) 10% of the named executive officer'sofficer’s total salary and bonus for that year. SEC rules further require that if the value of perquisites and other personal benefits are required to be reported for any year, the type and amount of any perquisite or other personal benefit that exceeds 25% of total perquisites and other personal benefits must be described.


Other Annual Compensation for 2004 includes $31,278 in premiums for medical/dental coverage paid on behalf of Mr. Bell; $31,278 in premiums for medical/dental coverage paid on behalf of Mr. Dooner; and $25,000 in club dues and $22,156 in premiums for medical/dental coverage paid on behalf of Mr. Gatfield.

Other Annual Compensation for 2003 includes $28,755 in premiums for medical/dental coverage and $26,885 in respect of club dues paid on behalf of Mr. Bell (including a one-time club initiation fee); and $28,755 in premiums for medical/dental coverage and $19,108 in club dues paid on behalf of Mr. Dooner.


Other Annual Compensation for 2002 includes $28,272 in premiums for medical/dental coverage and $22,887 of club dues paid on behalf of Mr. Dooner; $28,272 in premiums for medical/dental coverage and a $10,000 automobile allowance for Mr. Camera; $25,916 in premiums for medical/dental coverage and a $10,000


    Dooner.

    automobile allowance for Mr. Krakowsky; $28,272 in premiums for medical/dental coverage for Mr. Nelson; and $28,272 in premiums for medical/dental coverage for Mr. Wilmot.


Other Annual Compensation for 2001 includes $21,744 in premiums for medical/dental coverage and $24,813 for club dues paid on behalf of Mr. Dooner; $21,744 in premiums for medical/dental coverage and $31,152 as a market differential allowance paid on behalf of Mr. Wilmot during his employment in London.

(6)
The aggregate number and value of shares of restricted stock held by the named executive officers at December 31, 20032004 (based on the closing price of the Common Stock on December 31, 2003)2004) are as follows: Mr. Bell—85,000Bell–209,466 shares ($1,326,000)2,806,844); Mr. Dooner—780,000Roth–87,187 shares ($12,168,000)1,168,305); Mr. Brooks—154,833Coughlin–53,342 shares ($2,415,395)714,783); Mr. Camera—13,000Cyprus–87,351 ($1,170,503); Mr. Dooner–476,671 shares ($202,800)6,387,391); Mr. Krakowsky—58,000 sharesGatfield–20,000 ($904,800); Mr. Nelson—75,000 shares ($1,170,000) and Mr. Wilmot—14,000 shares ($218,400)268,000). Mr. Bell and Mr. Dooner have announced publicly that they will not sell any of their shares of restricted stock when the transfer restrictions are released until the shares of Interpublic Common Stock reach a price of $20.00 per share.


The shares of restricted stock shown in the table as awarded to each named executive officer generally have at least a three-year vesting period, subject to the discretion of the Compensation Committee to release the restrictions not earlier than one year after the grant date, except for the following grants:


Mr. Brooks hasCyprus received the following awards of restricted stock that vest, in whole or in part, in less than three years:

•
Anan award of 4,800 shares on November 18, 2002 which vested in its entirety on November 18, 2003.

•
An award of 3,900 shares on November 18, 2002 which is scheduled to vest in its entirety on November 18, 2004.

•
An award of 25,000 shares on April 1, 2003, as to which 8,333 vested on April 1, 2004, 8,333 shares are scheduled to vest on April 1, 2005, and 8,334 shares are scheduled to vest on April 1, 2006, (the "April 2003 Award").


Effective as of February 27, 2004, Mr. Brooks entered into a Confidential Separation Agreement and General Release with Interpublic, pursuant to which he resigned from each of his officer positions ("the Separation Agreement"). See "Employment Agreements, Termination of Employment and Change-In-Control Arrangements—Termination and Change In Control Agreements—Brian Brooks' Separation Agreement". This Agreement provides for the continued vesting of his69,881 shares of restricted stock for a one-year severance period. Under the agreement (i) a restricted stock award granted on November 18, 2002 in the amount of 21,300 shares will vest as to 15,975 shares on February 28, 2005; (ii) 13,309May 24, 2004, 23,060 shares of the April 2003 Awardwhich vested on May 24, 2005 and another 23,060 shares of which will vest on February 28, 2005; (iii) a restricted stock award granted on November 10, 2003 in the amount of 102,233 shares (the "November 2003 Award")May 24, 2006. The balance will vest as to 18,255 shares on February 28, 2005; and (iv) a restricted stock award granted on November 18, 2003 in the amount of 2,400 shares will vest as to 600 shares on February 28, 2005. The restricted stock awards that do not vest on an accelerated basis under the Separation Agreement will be forfeited by May 24, 2007.


Mr. Brooks, except for the November 2003 Award which will vest in full on January 31, 2008 if Mr. Brooks abides by a non-solicitation provision of the Separation Agreement through that date. The November 2003 Award was originally granted to Mr. Brooks together with a retirement benefit under The Interpublic Senior Executive Retirement Income Plan as consideration for his cancellation of a Special Deferred Benefit Agreement that Interpublic provided him at the time he had joined Interpublic in recognition of his forfeiture of certain benefits that he had received from his prior employer.


Mr. KrakowskyGatfield received an award of 50,00020,000 shares of restricted stock on April 1, 2003, 16,50015, 2004, all of which shares of which vested on April 1, 2004 and another 16,500 shares of which will vest on April 1,15, 2005. The balance will vest on April 1, 2006. This award was made to Mr. Krakowsky at the time of his periodic review in recognition of his performance.


Mr. Nelson received an award of 25,000 shares of restricted stock on April 1, 2003, 8,250 shares of which vested on April 1, 2004 and 8,250 of which will vest on April 1, 2005. The balance will vest on April 1, 2006. He also received an award of 15,000 shares of restricted stock on April 29, 2003, 4,950 shares of which will vest on April 29, 2004, and another 4,950 shares will vest on April 29, 2005. The balance will vest on April 29, 2006. These awards were made to Mr. Nelson at the time of his periodic review in recognition of his performance.


Dividends on restricted stock are paid on the same basis as ordinary dividends on the Common Stock. No ordinary dividends were paid on the Common Stock during 2003.

2004.

(7)

Options granted in 2001 include an option to purchase 131,100 shares of Interpublic Common Stock issued to Mr. Bell in replacement of stock options held by him under a stock option plan of True North. This option was granted in connection with Interpublic's acquisition of True North.   During 2003, Mr. Bell voluntarily cancelledagreed to the cancellation of 131,100 of the 256,100 shares of Interpublic'sInterpublic’s Common Stock underlying stock options that he received in 2001. He relinquished these option awards with the express intent of permitting the underlying shares to be issued to other employees of Interpublic under the 2002 Performance Incentive Plan.


During 2003, Mr. Dooner voluntarily cancelled option awards with respect to 248,000 shares and 252,000 shares of Common Stock that were granted to him on March 24, 2000 and December 15, 2000, respectively. These awards are not required to be reported in this Proxy Statement but were reported in previous years. Mr. Dooner relinquished these grants with the express intent of permitting the underlying shares to be issued to employees of an Interpublic subsidiary under the 2002 Performance Incentive Plan.


On March 26, 2003, the award of stock options granted to Mr. Nelson was cancelled by Interpublic, in exchange for a grant of 15,000 shares of restricted Common Stock that he received on April 29, 2003.


During 2003, Mr. Wilmot voluntarily cancelled a stock option award with respect to 18,000 shares of Common Stock that he received in 2001 and a stock option award with respect to 8,000 shares that he received in 2000. The 2000 stock option award was reported last year in Interpublic's Proxy Statement. He relinquished these option awards with the express intent of permitting the underlying shares to be issued to employees of an Interpublic subsidiary under the 2002 Performance Incentive Plan.


In addition to Messrs. Dooner Bell and Wilmot,Bell, several executives of Interpublic'sInterpublic’s subsidiaries also voluntarily cancelled options with the express intent of permitting the underlying shares to be issued to other employees of Interpublic and its subsidiaries under the 2002 Performance Incentive Plan. Options to purchase a total of 1,350,348 shares were cancelled (including those awards described above for Messrs. Bell Dooner and Wilmot)Dooner). Of this amount, approximately 641,598 shares remain available for reallocation to other employees of Interpublic and its subsidiaries.

(8)

Payouts under the Long-Term Performance Incentive Plan ("LTPIP"(“LTPIP”) prior to 2002 were made at the end of four-year performance periods. In 2002, the original 1999-2002 performance period was shortened to three years in order to institute a new performance plan. Payouts received in 2002 were calculated based on the value of the 1999-2001 performance period at the end of 2001 after giving effect to Interpublic'sInterpublic’s restructuring costs taken in 2001.


The total payout for the 1997-2000 LTPIP performance period was made in the first quarter of 2001.

(9)

All Other Compensation for 20032004 consisted of: (i) the following amounts paid to the named executive officers: matching contributions under the Interpublic Savings Plan—Plan-Mr. Bell—Bell-$9,000;9,225; Mr. Dooner—Coughlin-$9,000;6,150; Mr. Brooks—Cyprus-$6,000; Mr. Camera—$6,975; Mr. Coughlin—$3,000; Mr. Krakowsky—$6,000; Mr. Nelson—$9,000;2,750; and Mr. Wilmot—Dooner-$9,000;9,225; (ii) premiums paid by Interpublic on group life insurance—insurance-Mr. Bell—Bell-$4,745;5,465; Mr. Dooner—Roth-$48;129; Mr. Brooks—Coughlin-$240;529; Mr. Camera—Cyprus-$240;276; Mr. Coughlin—Dooner-$120;Mr. Krakowsky—$240; Mr. Nelson—$48;1,032; and Mr. Wilmot—Gatfield-$240;255; (iii) supplemental compensation plan payout—payout-Mr. Dooner—Dooner-$23,856;17,763; (iv) supplemental compensation plan payout—annual contributions paid by Interpublic under the Interpublic Capital Accumulation Plan-Mr.Roth-$100,000; and Mr. Wilmot—Cyprus-$19,69580,000; and (v) premiums paid by Interpublic on a life insurance policy for Mr. Dooner—Dooner-$50,000; and (vi) anniversary award for Mr. Camera in the amount of $1,558.
50,000.



Stock Option Grants In 2003
2004

The following table provides information on grants of stock options in 20032004 to the named executive officers and the estimated grant date present value of the options.


Individual Grants

Name

 

 

 

Number of Securities
Underlying Options
Granted(1)

 

% of Total Options
Granted to Employees
In Fiscal Year

 

Exercise Price
($/Sh)

 

Expiration
Date

 

Grant Date Present
Value ($)(9)

 

David A. Bell

 

 

248,933

(2)

 

 

11.31

%

 

 

$

14.0600

 

 

 

05/18/14

 

 

 

$

1,720,127

 

 

Michael I. Roth.

 

 

161,974

(3)

 

 

7.36

%

 

 

$

12.9650

 

 

 

07/16/14

 

 

 

$

1,015,577

 

 

Christopher J. Coughlin

 

 

106,685

(4)

 

 

4.85

%

 

 

$

14.0600

 

 

 

05/18/14

 

 

 

$

737,193

 

 

Nicholas Cyprus

 

 

118,797

(5)

 

 

5.40

%

 

 

$

14.3100

 

 

 

05/24/14

 

 

 

$

835,143

 

 

John J. Dooner, Jr.

 

 

53,342

(6)

 

 

2.42

%

 

 

$

14.0600

 

 

 

05/18/14

 

 

 

$

368,593

 

 

Stephen Gatfield

 

 

30,000

(7)

 

 

1.36

%

 

 

$

15.8700

 

 

 

04/15/14

 

 

 

$

230,100

 

 

(1)

Name
 Number of Securities Underlying Options Granted
 % of Total Options Granted to Employees In Fiscal Year
 Exercise Price ($/Sh)
 Expiration Date
 Grant Date Present Value ($)(9)
David A. Bell 200,000(1)3.19%$9.6400 03/26/13 $900,000
John J. Dooner, Jr. 176,709(2)2.82%$9.6400 03/26/13 $795,191
Brian J. Brooks 20,000
4,800		(3)
(3)		0.32
0.08		%
%		$
$		9.6400
14.8250		 03/26/13
11/18/13		 $
$		90,000
33,984
Nicholas J. Camera 15,000(4)0.24%$9.6400 03/26/13 $67,500
Christopher J. Coughlin 200,000(5)3.19%$14.0350 06/16/13 $1,322,000
Philippe Krakowsky 18,000(6)0.29%$9.6400 03/26/13 $81,000
Bruce S. Nelson 30,000(7)0.48%$9.6400 03/26/13 $135,000
Gunnar P. Wilmot 20,000(8)0.32%$9.6400 03/26/13 $90,000
(1)
Mr. Bell was granted a stock option award covering 200,000 shares of Common Stock on March 26, 2003. The option becomes exercisable as to (i) 66,000 shares of Common Stock on March 26, 2005, (ii) 66,000 shares of Common Stock on March 26, 2006 and (iii) 68,000 shares of Common Stock on March 26, 2007.


The option has          All options have a ten-year term and hashave an exercise price equal to 100% of the fair market value of the Common Stock on the date of grant.

(2)

          Mr. Bell was granted a stock option award covering 248,933 shares of Common Stock on May 18, 2004. The option becomes exercisable as to (i) 82,147 shares of Common Stock on May 18, 2006, (ii) 82,147 shares of Common Stock on May 18, 2007 and (iii) 84,639 shares of Common Stock on May 18, 2008.

(3)          Mr. Roth was granted a stock option award covering 161,974 shares of Common Stock on June 16, 2004. The option becomes exercisable as to (i) 53,451 shares of Common Stock on July 16, 2006, (ii) 53,451 shares of Common Stock on July 16, 2007 and (iii) 55,072 shares of Common Stock on July 16, 2008.

(4)          Mr. Coughlin was granted a stock option award covering 106,685 shares of Common Stock on May 18, 2004. The option becomes exercisable as to (i) 35,206 shares of Common Stock on May 18, 2006, (ii) 35,206 shares of Common Stock on May 18, 2007, and (iii) 36,273 shares of Common Stock on May 18, 2008.

(5)          Mr. Cyprus was granted a stock option award covering 83,857 shares of Common Stock on May 24, 2004. The option becomes exercisable as to (i) 27,672 shares of Common Stock on May 24, 2005, (ii) 27,672 shares of Common Stock on May 24, 2006, and (iii) 28,513 shares of Common Stock on May 24, 2007. Mr. Cyprus received another stock option award covering 34,940 shares of Common Stock on May 24, 2004. The option becomes exercisable as to (i) 11,530 shares of Common Stock on May 24, 2006, (ii) 11,530 shares of Common Stock on May 24, 2007, and (iii) 11,880 shares of Common Stock on May 24, 2008.

(6)Mr. Dooner was granted a stock option award covering 176,70953,342 shares of Common Stock on March 26, 2003.May 18, 2004. The option becomes exercisable as to (i) 58,31317,602 shares of Common Stock on March 26, 2005,May 18, 2006, (ii) 58,31317,602 shares of Common Stock on March 26, 2006May 18, 2007 and (iii) 60,08318,138 shares of Common Stock on March 26, 2007.


The option has a ten-year term and has an exercise price equal to 100% of the fair market value of the Common Stock on the date of grant.

(3)
May 18, 2008.

(7)Mr. BrooksGatfield was granted a stock option award covering 20,00030,000 shares of Common Stock on March 26, 2003 (the "March 2003 Option").April 15, 2004. The option as originally granted, became exercisable as to (i) 6,600 shares of Common Stock on March 26, 2005, (ii) 6,600 shares of Common Stock on March 26, 2006 and (iii) 6,800 shares of Common Stock on March 26, 2007. Mr. Brooks received another stock option award covering 4,800 shares on November 18, 2003 (the "November 2003 Option"). This option, as originally granted, became exercisable as to (i) 1,584 shares of Common Stock on November 18, 2005, (ii) 1,584 shares of Common Stock on November 18, 2006 and (iii) 1,632 shares of Common Stock on November 18, 2007.


Each option has a ten-year term and has an exercise price equal to 100% of the fair market value of the Common Stock on the date of grant.


Subsequent to the grant of the March 2003 Option and the November 2003 Option, Mr. Brooks entered into a Confidential Separation Agreement and General Release with Interpublic. Under that agreement, on February 28, 2005, the March 2003 Option will become exercisable as to 6,388 shares of Common Stock and the November 2003 Option will become exercisable as to 1,000 shares of Common Stock. Mr. Brooks will have a period of 90 days from February 28, 2005 to exercise these options. The balance of the March 2003 Option and November 2003 Option were forfeited by

    Mr. Brooks, see "Employment Agreements, Termination of Employment and Change-In-Control Agreements—Termination and Change in Control Agreements—Brian Brooks' Separation Agreement".

(4)
Mr. Camera was granted a stock option award covering 15,000 shares of Common Stock on March 26, 2003. The option becomes exercisable as to (i) 4,950 shares of Common Stock on March 26, 2005, (ii) 4,950 shares of Common Stock on March 26, 2006, and (iii) 5,100 shares of Common Stock on March 26, 2007.


The option has a ten-year term and has an exercise price equal to 100% of the fair market value of the Common Stock on the date of grant.

(5)
Mr. Coughlin was granted a stock option award covering 200,000 shares of Common Stock on June 16, 2003. The option becomes exercisable as to (i) 66,000 shares of Common Stock on June 16, 2005, (ii) 66,000 shares of Common Stock on June 16, 2006, and (iii) 68,000 shares of Common Stock on June 16, 2007.


The option has a ten-year term and has an exercise price equal to 100% of the fair market value of the Common Stock on the date of grant.

(6)
Mr. Krakowsky was granted a stock option award covering 18,000 shares of Common Stock on March 26, 2003. The option becomes exercisable as to (i) 5,940 shares of Common Stock on March 26, 2005, (ii) 5,940 shares of Common Stock on March 26, 2006, and (iii) 6,120 shares of Common Stock on March 26, 2007.


The option has a ten-year term and has an exercise price equal to 100% of the fair market value of the Common Stock on the date of grant.

(7)
Mr. Nelson was granted a stock option award of Common Stock covering 30,000 shares on March 26, 2003. The option originally became exercisable as to (i) 9,900 shares of Common Stock on March 26, 2005,April 15, 2006, (ii) 9,900 shares of Common Stock on March 26, 2006,April 15, 2007, and (iii) 10,200 shares of Common Stock on March 26, 2007. The option had a ten-year term and had an exercise price equal to 100% of the fair market value on the date of grant. This award was cancelled by Interpublic on the date of grant. In lieu of an award of stock options, Mr. Nelson received a grant of 15,000 shares of restricted Interpublic Common Stock on April 29, 2003.15, 2008.



(8)

Mr. Wilmot was granted a stock option award of Common Stock covering 20,000 shares on March 26, 2003. The option becomes exercisable as to (i) 6,600 shares of Common Stock on March 26, 2005, (ii) 6,600 shares of Common Stock on March 26, 2006, and (iii) 6,800 shares of Common Stock on March 26, 2007.


The option has a ten-year term and has an exercise price equal to 100% of the fair market value of the Common Stock on the date of grant.

(9)
The grant date present value of each of the stock option awards to the named executive officers is calculated using the Black Scholes Option Pricing Model and assumes the options are held for six years. The optionsoption awarded to the named executive officersMr. Gatfield on March 26, 2003 includeApril 15, 2004 includes the following assumptions: volatility of 43.51%44.58%, dividend yield of 0% and risk-free rate of return of 3.38%3.89%. The optionoptions awarded to Mr. Coughlinthe named executive officers on June 16, 2003 includesMay 18, 2004 include the following assumptions: volatility of 46.07%44.68%, dividend yield of 0% and risk-free rate of return of 2.54%4.32%. The optionoptions awarded to Mr. BrooksCyprus on November 18, 2003May 24, 2004 includes the following assumptions: volatility of 44.85%44.68%, dividend yield of 0% and risk-free rate of return of 3.46%4.31%.

The option awarded to Mr. Roth on July 16, 2004 includes the following assumptions: volatility of 44.52%, dividend yield of 0% and risk-free rate of return of 3.93%.


Aggregated Option Exercises in 20032004 and Fiscal Year-End Option Values

The following table provides information on stock option exercises and the number and the year-end value of options held by the named executive officers.

 
  
  
 Number of Shares of Common Stock Underlying Unexercised Options At
December 31, 2003 (#)
 Value of Unexercised In-the-Money Options at December 31, 2003 ($)(1)
Name
 Shares Acquired on Exercise (#)
 Value Realized ($)
 Exercisable
 Unexercisable
 Exercisable
 Unexercisable
David A. Bell None 0 159,828 380,000 $0 $1,242,750
John J. Dooner, Jr. None 0 654,440 680,509  811,742  1,053,186
Brian J. Brooks None 0 0 80,800  0  211,680
Nicholas J. Camera None 0 119,800 73,000  84,285  89,400
Christopher J. Coughlin None 0 0 200,000  0  313,000
Philippe Krakowsky None 0 0 43,000  0  107,280
Bruce S. Nelson None 0 43,000 140,500  0  60,900
Gunnar P. Wilmot None 0 56,440 34,500  0  119,200

 

 

Shares Acquired

 

 

 

Number of Shares
of Common Stock
Underlying Unexercised
Options At
December 31, 2004 (#)

 

Value of Unexercised
In-the-Money
Options at
December 31, 2004 ($)(1)

 

Name

 

 

 

on Exercise (#)

 

Value Realized ($)

 

Exercisable

 

Unexercisable

 

Exercisable

 

Unexercisable

 

David A. Bell

 

 

None

 

 

 

0

 

 

 

218,078

 

 

 

570,683

 

 

 

              0

 

 

 

  752,000

 

 

Michael I. Roth

 

 

None

 

 

 

0

 

 

 

0

 

 

 

165,974

 

 

 

0

 

 

 

70,459

 

 

Christopher J. Coughlin

 

 

None

 

 

 

0

 

 

 

50,000

 

 

 

0

 

 

 

0

 

 

 

0

 

 

Nicholas Cyprus

 

 

None

 

 

 

0

 

 

 

0

 

 

 

118,797

 

 

 

0

 

 

 

0

 

 

John J. Dooner, Jr.

 

 

None

 

 

 

0

 

 

 

668,840

 

 

 

719,451

 

 

 

448,214

 

 

 

664,426

 

 

Stephen Gatfield

 

 

None

 

 

 

0

 

 

 

0

 

 

 

30,000

 

 

 

0

 

 

 

0

 

 

(1)

Calculated based on the closing price of $15.6000$13.400 for the Common Stock on December 31, 2003.
2004.

19




Long-Term Incentive Plan Awards in 2003

        The following table presents information regarding awards made to each of the named executive officers under the LTPIP in 2003. However, in December 2003, the Compensation Committee decided to terminate the LTPIP. In order to prepare for the implementation of a new incentive compensation program, and because it became apparent that the performance goals of Interpublic and its subsidiaries for the 2003–2005 performance period would not be achieved, the Committee also decided to determine the payout under the awards made in 2003 in advance of the completion of the performance period. Accordingly, as more fully described below, the information in the table with respect to the estimated future payouts pursuant to the 2003 awards, which is provided in accordance with Securities and Exchange Commission rules, does not reflect the payment, if any, that actually will be received.

 
  
  
  
 Estimated Future Payouts Under Non-Stock Price Based Plans
 
  
  
 Performance or Other Period Until Maturation Or Payout
Name (1)
 Allocation of
Performance Units
 Number of Performance Units (#)
 Threshold ($)
 Target
($)
 Maximum ($)
David A. Bell IPG Worldwide 20,000 2003-2005 $400,000 $2,300,000 $4,500,000

John J. Dooner, Jr.
 
McCann-Erickson
WorldGroup Worldwide
 
20,000
 
2003-2005
 
$
400,000
 
$
2,300,000
 
$
4,500,000

Brian J. Brooks (1)
 
IPG Worldwide
 
5,000
 
2003-2005
 
$
100,000
 
$
575,000
 
$
1,125,000

Nicholas J. Camera
 
IPG Worldwide
 
4,000
 
2003-2005
 
$
80,000
 
$
460,000
 
$
900,000

Christopher J. Coughlin
 
IPG Worldwide
 
10,000
 
2003-2005
 
$
200,000
 
$
1,150,000
 
$
2,250,000

Philippe Krakowsky
 
IPG Worldwide
 
4,000
 
2003-2005
 
$
80,000
 
$
460,000
 
$
900,000

Bruce S. Nelson
 
IPG Worldwide
 
5,000
 
2003-2005
 
$
100,000
 
$
575,000
 
$
1,125,000

Gunnar P. Wilmot
 
IPG Worldwide
 
4,000
 
2003-2005
 
$
80,000
 
$
460,000
 
$
900,000
(1)
Under a Confidential Separation Agreement and General Release, Mr. Brooks will be entitled to retain 3,611 of the 5,000 performance units granted to him under the LTPIP for the 2003-2005 Performance Period. Any amounts payable with respect to these performance units are subject to the terms of the LTPIP. See "Employment Agreements, Termination of Employment and Change-In-Control Arrangements—Termination and Change In Control Agreements—Brian Brooks' Separation Agreement".

        The LTPIP as in effect in 2003 provided for annual awards of "performance units" to select employees of Interpublic or its subsidiaries. The value of the performance units, which are settled in cash, was tied to the annual growth of operating income of the office, agency or regional or worldwide agency system with which the employee is principally associated. The performance units awarded in 2003 could increase in value to as much as $225, or could decrease to as little as zero, with the increase or decrease depending in each case on the extent to which the growth rates of operating income of the applicable operating components exceed or fall short of the pre-established compound growth rates in operating income over a period of three calendar years (a "performance period").

        The estimated payout shown on the table is based on an assumed 4% growth in cumulative compound operating income of an operating component during the performance period, resulting in a threshold payout of $20 per performance unit. Failure to reach the threshold growth rate would result in a zero award. A target growth rate of 10% is assumed for purposes of this presentation. This growth rate would result in a target payout of $115 per performance unit. The maximum growth rate objective was 20% resulting in a maximum payout of $225 per performance unit.

        In December 2003, in connection with its decision to terminate the LTPIP, the Compensation Committee assigned a payout value of $38.33 per unit to the 2003 awards made to Interpublic executives other than those employed by one of the operating divisions and valued the 2003 awards to be made to operating division employees using 2003 actual results and 2004 budgeted performance. In accordance with the original payment schedule: (i) one third of the award will be paid in early 2005 and (ii) the remaining two-thirds of the award will be paid in early 2006. Based on these determinations, the payment to the named executive officers in respect of their 2003 LTPIP awards will be as follows:

Name
 Payout Amount
David A. Bell $766,600
John J. Dooner, Jr.  0
Brian J. Brooks (1)  138,410
Nicholas J. Camera  153,320
Christopher J. Coughlin  383,300
Philippe Krakowsky  153,320
Bruce S. Nelson  191,650
Gunnar P. Wilmot  153,320
(1)
Reflects that Mr. Brooks' award was prorated to 3,611 out of 5,000 performance units granted to him under the LTPIP for the 2003-2005 Performance Period. See "Employment Agreements Termination of Employment and Change-In-Control Arrangements—Termination and Change In Control Agreements—Brian Brooks' Separation Agreement".

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information as of December 31, 2004 regarding the shares of Common Stock to be issued or which may be issuedissuable under theInterpublic equity compensation plans of Interpublic.plans:


Equity Compensation Plan Information

Plan Category

 

 

 

Number of Shares of
Common Stock to be
Issued Upon Exercise of
Outstanding Stock
Options
(a)

 

Weighted Average
Exercise Price of
Outstanding Stock
Options
(b)

 

Number of Securities Remaining
Available for Future
Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
(c)(1)

 

Equity Compensation Plans Approved by Security Holders

 

 

38,646,208

 

 

 

$

26.36

 

 

 

26,529,906

 

 

Equity Compensation Plans Not Approved by Security
Holders(2)

 

 

840,075

 

 

 

$

27.53

 

 

 

0

 

 

(1)          Includes 11,681,753 shares of Interpublic our common stock available for issuance under the Employee Stock Purchase Program (1995) (the “Stock Purchase Program”) as of December 31, 2004. The Stock Purchase Program expired by its terms on June 30, 2005, and consequently, these shares are no longer available for issuance.

Plan Category
 Number of shares of Common Stock to be Issued Upon Exercise of Outstanding Stock Options
(a)
 Weighted-Average Exercise Price of Outstanding Stock Options
(b)
 Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
(c)
Equity Compensation Plans Approved by Holders 40,842,736 $25.94 8,492,960

Equity Compensation Plans Not Approved by Security Holders (1)
 
1,017,000
 
$
27.53
 
0
(1)
Special

(2)          Consists of special stock option grants awarded to certain True North executives following Interpublic'sour acquisition of True North (the "True(“True North Options"Options”). The True North Options were granted on August 23, 2001 at the fair market value of Interpublic'sour common stock on the date of the grant. The terms and conditions of these stock option awards are governed by Interpublic'sour 1997 Performance Incentive Plan which provides that stock options are exercisable as determined by the Compensation Committee of the Board of Directors. Generally, options become exercisable between two and five years after the date of the grant and expire ten years from the grant date. The True North Options generally will vestvested approximately 40% on August 23, 2004, 30% on August 23, 2005 and 30% on August 23, 2004 and August 23, 2005, respectively, and will vest approximately 30% on August 23, 2006.



EMPLOYMENT AGREEMENTS, TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS

Employment Agreements

Each of the following named executive officers has an employment agreement with Interpublic. Each employment agreement includes provisions describing the named executive officer'sofficer’s position and responsibilities, his salary and eligibility for incentive compensation. Each agreement also includes covenants pursuant to which the named executive officer agrees not to divulge confidential information of Interpublic and its subsidiaries and agrees for a period of time after termination of employment to refrain from soliciting employees of Interpublic and its subsidiaries and from soliciting or handling the business of clients of Interpublic. The annual salary and the termination date of the respective employment agreements and the current annual salary of each of the named executive officers are set forth below:

Name
 Salary
 Expiration Date

 

 

 

Salary

 

Termination Date

 

David A. Bell $1,000,000 March 1, 2005

David A. Bell

 

$

1,000,000

 

 

None

*

 

Michael I. Roth

Michael I. Roth

 

1,100,000

 

 

None

*

 

Christopher J. Coughlin

Christopher J. Coughlin

 

800,000

 

 

 

**

 

Nicholas Cyprus

Nicholas Cyprus

 

483,400

 

 

None

*

 

John J. Dooner, Jr. 1,250,000 None*

John J. Dooner, Jr.

 

1,250,000

 

 

None

*

 

Brian J. Brooks 495,000 **
Nicholas J. Camera 375,000 None*
Christopher J. Coughlin 800,000 None*
Philippe Krakowsky 400,000 December 31, 2006
Bruce S. Nelson 650,000 None*

Stephen J. Gatfield

Stephen J. Gatfield

 

850,000

 

 

None

*

 

*

The Executive'sexecutive’s employment has no termination date. However, underWe may in the termsmanner described in the summary of the executive’s employment agreement Interpublic may terminate the executive's employment either (i) by giving twelve months' prior written notice; or (ii) by written notice coupled with a severance payment equal to the amount by which the salary to which the executive is entitled over a twelve month period exceeds the salary paid to the executive from the date of notice of termination to the date of termination.

below.

**

Mr. Brooks'Coughlin’s Employment Agreement has been terminated. See "Employment“Employment Agreements Termination of Employment and Change-In-Control Arrangements—Termination and Change In Control Agreements—Brian Brooks'Agreements—Christopher Coughlin Separation Agreement"Agreement”.

David Bell Employment Agreement

Effective January 18, 2005, David Bell became Co-Chairman of Interpublic and entered into an employment agreement with Interpublic, replacing both his previous agreement with Interpublic and his employment agreement with True North Communications, Inc. (“True North”) to which Interpublic became a party when it acquired True North in June of 2001. The agreement provides that in addition to his annual salary in the amount indicated above, Mr. Bell's Employment AgreementBell will be eligible for an target annual bonus under the Annual Management Incentive Plan equal to 133% of his base salary, with the actual award between 0% and 200% of the target depending on the performance of Interpublic, his individual performance, and management discretion. The agreement also provides that Interpublic is obligated to (i) purchase an annuity on his behalf in the amount of $2 million, with the terms and conditions of payment of the annuity to be agreed upon between Interpublic and Mr. Bell and (ii) provide a car and driver and a garage space in New York City.

Under the agreement (i) Interpublic may terminate earlier than March 1, 2005Mr. Bell’s employment with or without “cause” (as that term is defined in the agreement) and (ii) at any time after January 18, 2006, Mr. Bell may voluntarily terminate his employment upon providing the occurrence of a Qualifying Termination. See "Termination and Change In Control Agreements—David Bell Severance Agreement".

        Messrs. Camera, Dooner and Nelson have the right to terminate their respective Employment Agreements upon twelve months' prior writtenrequisite notice to Interpublic. In the event of a termination of Mr. Coughlin hasBell’s employment by Interpublic without “cause,” he would continue to receive payment of his base salary for a period of 12 months and all employee benefits accorded to him prior to the termination of his employment, as well as suitable office space, the services of an assistant and a car and driver. In the event of a termination of Mr. Bell’s employment by Interpublic without “cause” or a voluntary termination, the agreement provides that (a) Mr. Bell shall become a consultant to Interpublic for a period of five years (the “Consulting Period”), subject to the right of Interpublic to terminate the


consulting arrangement for “cause,” and (b) stock options grants and restricted stock awards previously awarded to Mr. Bell will fully vest on the date of the termination of Mr. Bell’s employment. During the Consulting Period, Mr. Bell is required to make himself available, upon reasonable notice, to provide services that are commensurate with his years of experience and level of skill for no more than the equivalent of ten full business days per quarter. As compensation for his consulting services, Mr. Bell will receive an annual consulting fee of $750,000. Upon termination for “cause,” Mr. Bell would be entitled to received his salary through the date of termination, but no other benefits under the agreement.

Michel Roth Employment Agreement upon ninety days'

On July 13, 2004, in connection with becoming the Executive Chairman of Interpublic, Mr. Roth entered into an employment agreement, which provided for (i) an annual salary of $950,000, (ii) a target annual bonus under the Annual Management Incentive Plan equal to 133% of his base salary, with the actual award between 0% and 150% of the target depending Interpublic profits, his individual performance, and management discretion, (iii) a grant of restricted stock having an aggregate market value of $1,050,000 on the date of grant vesting on the third anniversary of the grant date, and (iv) a grant of options to purchase shares of Interpublic Common Stock having an aggregate market value of $1,050,000 on the grant date vesting in equal annual amounts on the second, third and fourth anniversaries of the grant date.

Mr. Roth’s agreement also provides that, commencing in 2005, he shall participate in the Company’s performance based long-term incentive programs with a total expected annual target award value of $2,100,000 provided in a manner consistent with those provided to other executives and may comprise stock options, restricted stock, performance-based restricted stock or another form of incentive at the discretion of the Compensation Committee, with awards subject to performance and vesting terms and conditions consistent with those generally required of the executive team. In addition, the agreement provides that Mr. Roth is entitled to (i) participate in Interpublic’s Capital Accumulation Plan, with an annual contribution of $100,000, (ii) an automobile allowance of $10,000, (iii) a club allowance of $20,000, (iv) a financial planning allowance of $2,500, and (v) participate in such other employee benefits and programs as are available from time to time to other key management executives generally.

After Mr. Roth, effective January 19, 2005, became the Chief Executive Officer of Interpublic in addition to the Chairman, Interpublic and Mr. Roth entered into a supplement to his employment agreement increasing his base salary to $1,100,000 and granting him (i) options to purchase 450,000 shares of Interpublic Common Stock vesting in three equal installments on the second, third and fourth anniversaries of the date of grant, and (ii) 450,000 shares of restricted stock, of which 150,000 shares will vest on the second anniversary of the grant date, subject to the Company achieving specified performance goals over such two year period, and 300,000 shares will vest on the fifth anniversary of the grant date, subject to the Company achieving specified performance goals over such five year period.

If Interpublic terminates Mr. Roth’s employment without “cause” (as defined in the agreement), he is entitled to receive a severance payment equal to the amount by which his annual salary rate exceeds the salary paid to him over the period beginning on the date such notice is given and ending on the employment termination date (the “Severance Period”). During the Severance Period, Mr. Roth will be entitled to receive all employee benefits accorded him prior writtento termination which are made available to employees generally until he accepts employment with another employer offering similar benefits. Mr. Roth may terminate his employment at any time by giving notice to Interpublic.Interpublic at least three months in advance.


Nicholas Cyprus Employment Agreement

On May 24, 2005, Interpublic entered into an employment agreement with Mr. Krakowsky hasCyprus. The agreement provides that in addition to his annual salary in the rightamount indicated above, Mr. Cyprus will be eligible for a target annual bonus under the Annual Management Incentive Plan equal to at least 50% of his base salary, with a guaranteed minimum award for 2004 equal to 75% of the target award (without pro-ration) and with the actual award in future years dependent on the achievement of established performance criteria. Under the agreement, Mr. Cyrus received a cash sign-on bonus of $1,830,000, but which is subject to forfeiture if within two years either (i) Mr. Cyprus terminates his employment by Interpublic other than for “good reason” (as defined by the agreement) or (ii) Interpublic terminates his employment for “cause” (as defined by the agreement). In addition, the agreement provides that Mr. Cyprus is entitled to (i) participate in Interpublic’s Capital Accumulation Plan, with an annual deferral of $80,000, (ii) a perquisite allowance of $45,000, (iii) in the event of his termination of his employment by Interpublic, other than for “cause”, post-termination personal and family medical coverage to age 65 at a level comparable with the coverage being provided by Interpublic to its active employees, and (iv) participate in such other employee benefits and programs as are available from time to time to other key management executives generally.

The agreement also provides for (i) a long-term incentive grant of restricted stock having an aggregate market value of $1,000,000 on the date of grant vesting in three equal annual amounts on the first, second and third anniversaries of the grant date, (ii) a long-term incentive grant of options to purchase shares of Interpublic Common Stock having an aggregate Black-Scholes value of $600,000 on the date of grant, vesting in three equal annual amounts on the first, second and third anniversaries of the grant date, (iii) a long-term incentive grant of restricted stock having an aggregate market value of $250,000 vesting on the third anniversary date of the grant date, and (iv) a grant of options to purchase shares of Interpublic Common Stock having an aggregate Black-Scholes value of $250,000 vesting in equal annual amounts on the second, third and fourth anniversaries of the grant date.

If Interpublic terminates Mr. Cyprus’ employment without “cause” (as defined in the agreement) or Mr. Cyprus terminates his employment for “good reason” (as defined by the agreement), (i) he will be entitled to the continued payment of his base salary for a period of 24 months if his employment is terminated on of before May 24, 2006, or for a period of 12 months if his employment is terminated thereafter (the “severance period”), and during the severance period, the payment of bonuses that become payable during the severance period and, unless he commences employment with another employer offering similar benefits, the continued receipt of all employee benefits accorded him prior to termination and (ii) the $1,000,000 restricted stock and the $600,000 stock option grants referred to above will become non-forfeitable. Mr. Cyprus may terminate his Employment Agreement upon six months' prior writtenemployment at any time by giving notice to Interpublic.Interpublic at least 45 days in advance.

John Dooner Employment Agreement

On January 1, 1994, Interpublic entered into an employment agreement with Mr. Dooner dated January 1, 1994. On April 1, 2000, Interpublic entered into a supplement to Mr. Dooner’s agreement increasing his base salary to $1,250,000. On November 7, 2002, Interpublic entered into a supplemental agreement with Mr. Dooner which provides for Interpublic to obtain a 10 year $10,000,000 term life insurance policy for Mr. Dooner and to pay the annual premiums of such policy, which shall be taxable income to Mr. Dooner.

If Interpublic terminates Mr. Dooner’s employment, other than for violating certain covenants contained in the agreement, (i) he will be entitled to the continued payment of his base salary for a period of 12 months. Mr. Dooner may terminate his employment at any time by giving notice to Interpublic at least twelve months in advance.

23



Stephen Gatfield Employment Agreement

On February 2, 2004, Interpublic entered into an employment agreement with Mr. Gatfield, which provided for the commencement of his employment to begin on April 1, 2004 (the “Commencement Date”). The agreement provides that in addition to his annual salary in the amount indicated above, Mr. Gatfield will be eligible for a target annual bonus under the Annual Management Incentive Plan equal to 100% of his base salary, with a guaranteed minimum award for 2004 equal to 50% of his base salary and with the actual award in future years up to a maximum of 150% of base salary depending Interpublic profits, his individual performance, and management discretion. Under the agreement, Mr. Gatfield received a cash sign-on bonus of $750,000. In addition, the agreement provides that Mr. Gatfield is entitled to (i) an automobile allowance of $10,000, (ii) a club allowance of $25,000, (iii) a financial planning allowance of $2,500, and (iv) participate in such other employee benefits and programs as are available from time to time to other key management executives generally.

The agreement also provides for (i) a grant of 20,000 shares of restricted stock vesting on the first anniversary of the grant date and (ii) a grant of options to purchase 30,000 shares of Interpublic Common Stock, vesting in equal annual amounts on the second, third and fourth anniversaries of the grant date.

Interpublic may terminate Mr. Gatfield’s employment without “cause” (as defined in the agreement) after the second anniversary of the Commencement Date and Mr. Gatfield terminates his employment for “good reason” (as defined by the agreement), which, under either event he is entitled to the continued payment of his base salary for a period of 12 months (the “severance period”), and during the severance period, the payment of bonuses that become payable during the severance period and, unless he commences employment with another employer offering similar benefits, the continued receipt of all employee benefits accorded him prior to termination. During the Severance Period, (i) Mr. Gatfield will be entitled to the payment of any bonuses that become payable during the severance period and, unless he commences employment with another employer offering similar benefits, the continued receipt of all employee benefits accorded him prior to termination and (ii) the restricted stock and stock option grants referred to above will continue to vest. Mr. Gatfield may terminate his employment at any time by giving notice to Interpublic at least 45 days in advance.

Deferred Benefit Arrangements

Bell Deferred Compensation Arrangement

Mr. Bell is a participant in the True North Communications Inc. Deferred Compensation Plan, which provides that if he dies while he is employed by Interpublic, his beneficiaries will receive $60,000 annually for 15 years. In addition, upon Mr. Bell'sBell’s retirement at any age or the termination of his employment Interpublic will pay him (or in the event of his death, his beneficiaries) $60,000 per year for 15 years. Mr. Bell no longer makes any deferred payments to this Plan.

        After Mr. Bell's employment terminates, if he were to die before all applicable payments were made under this arrangement, Interpublic would make the remaining payments to his beneficiaries.

Krakowsky Special Deferred Compensation Agreement

        Mr. Krakowsky entered into a Special Deferred Compensation Agreement with Interpublic as of April 1, 2002 that provides that he is entitled to receive on the earlier to occur of his termination of employment (whether by death, disability or otherwise) or April 1, 2004, a lump-sum payment of $140,000 plus credits equivalent to interest in accordance with the terms of Interpublic's Plan for Credits Equivalent to Interest on Balances of Deferred Compensation owing under Employment Agreements. This payment recently was made to Mr. Krakowsky.

Special Deferred Benefit Agreements

        In addition to an employment contract, eachEach of the following named executive officers has entered into special deferred benefit agreements with Interpublic as described below.

In 2003, Mr. Bell entered into an agreement with Interpublic which provides that if he dies while he is employed by Interpublic $232,500 per year will be paid to his beneficiaries for 15 years following his death. In addition, this agreement provides if he retires, resigns or is no longer in the employment of Interpublic (other than by reason of his death) on or after his 68th birthday, but before his 69th birthday, he will receive payments of $204,600 per year for a period of 15 years, and if he retires, resigns or is no longer in the employment of Interpublic (other than by reason of his death) on or after his 69th birthday, he will receive payments of $232,500 per year for a period of 15 years. If he ceases to be employed by Interpublic prior to his 68th birthday for any reason other than his


death, he will receive a lump sum payment of $150,000 for each full year (and a proratapro-rata portion for each partial year) that he was employed by Interpublic beginning from the date he entered into the agreement.

After Mr. Bell'sBell’s employment terminates, if he were to die before all applicable payments were made under the agreement, Interpublic would make the remaining payments to his beneficiaries.

Mr. Dooner is a party to three agreements which in the aggregate provide that if he dies while he is employed by Interpublic $2,186,000 per year will be paid to his beneficiaries for 15 years following his death. In addition, these agreements provide that if Mr. Dooner'sDooner’s employment is terminated due to him becoming disabled $2,186,000 per year will be paid to him for 15 years following such termination. Alternatively, if he retires, resigns or is otherwise no longer in the employment of Interpublic on or after



(other than by reason of his 55th birthdaydeath) he will receive payments for 15 years ranging from $930,200 to $2,186,000 per year, depending upon the year his employment terminates. In the event Mr. Dooner's employment terminates prior to his 55th birthday (other than by reason of death or disability) he will be paid lesser sums but not less than an aggregate of $540,000. Mr. Dooner is a party to a fourth agreement that provides that if he dies while he is employed by Interpublic, $240,000 per year will be paid to his beneficiaries for 15 years following his death. Alternatively, if he retires, resigns or is otherwise no longer in the employment of Interpublic (other than by reason of his death) on or after his 56th birthday he will receive payments for 15 years ranging from $153,600 to $240,000 per year, depending upon the year his employment terminates. In the event Mr. Dooner'sDooner’s employment terminates prior to his 56th birthday (other than by reason of death), he will be paid lesser sums but not less than an aggregate of $700,000. Interpublic also has entered into an agreement with Mr. Dooner which provides that (i) if he dies while he is employed by Interpublic, his beneficiaries will receive $88,500 annually for 15 years. In addition,years, (ii) if Mr. Dooner'shis employment is terminated due to him becoming disabled, $88,500 per year will be paid to him for 15 years following such termination. Alternatively, whentermination or (iii) upon his retirement he retires from Interpublic, Interpublic will pay himreceive retirement benefits at the rate of $88,500 per year for 15 years.

After Mr. Dooner'sDooner’s employment terminates, if he were to die before all applicable payments were made under these agreements, Interpublic would make the remaining payments to his beneficiaries.

        Mr. Camera is a party to an agreement which provides that if he dies while he is employed by Interpublic, $36,000 per year will be paid for fifteen years to his beneficiaries. If he retires from employment with Interpublic on or after his 60th birthday, Interpublic will make payments for 15 years of $36,000 per year. If he retires, resigns or is terminated from his employment with Interpublic on or after his 57th birthday but prior to his 60th birthday, he will receive payments for 15 years ranging from $27,360 to $33,840 per year, depending upon the year of termination of employment.

        If Mr. Camera were to die before all payments were made under the agreement, Interpublic would pay the remaining benefits to his beneficiaries.

Mr. Coughlin is a party to an agreement with Interpublic that provides if he dies while employed by Interpublic, his beneficiaries will be paid $200,000 per year for 15 years. If he retires from employment with Interpublic on or after his 60th birthday, Interpublic will make payments to him for 15 years of $200,000 per year, and if he retires, resigns or is terminated from employment with Interpublic on or after his 59th birthday but prior to his 60th birthday, he will receive payments for 15 years of $176,000 per year. If he ceased to be employed by Interpublic (other than by reason of death) prior to his 59th birthday, he will receive lesser sums but not less than $75,000. If his employment is terminated prior to June 16, 2005 (other than for cause or voluntary resignation), then in addition to any other payments to which he would be entitled under the agreement he would receive an annuity payment of $50,000 per year for 15 years commencing on his 60th birthday.

        If Mr. Coughlin were to die before all payments were made to him under this agreement,Coughlin’s employment with Interpublic would makewas terminated on December 31, 2004. In accordance with the remainderterms of the payments to his beneficiaries.

        Mr. Krakowsky is party to an agreement with Interpublic that provides if he dies while employed by Interpublic, his beneficiaries would receive payments of $245,000 per year for fifteen years. If he retires from Interpublic on or after his 60th birthday, Interpublic will make payments to him for 15 years of $245,000 per year, and if he retires, resigns or is terminated from employment with Interpublic on or after his 55th birthday, but prior to his 60th birthday, hedescribed in the previous paragraph, Mr. Coughlin will receive payments for 15 years ranging from $171,500$168,548 to $230,300 per year, depending upon the year of his termination. If his employment terminates (other than by reason of death) prior to his 55th birthday, he would receive lesser amounts but not less than $100,000.

        If he were to die before all payments were made under the agreement, the remaining payments would be made to his beneficiaries.



        Mr. Nelson is a party to three agreements with Interpublic. The first agreement provides that if he dies while he is employed by Interpublic, $280,000 per year will be paid to his beneficiaries for 15 years following his death. If he retires, on or after his 60th birthday, Interpublic will make payments to him for 15 years of $280,000 per year. If he retires, resigns or his employment is terminated with Interpublic on or after his 50th birthday but prior to his 60th birthday, he will receive payments for 15 years ranging from $156,000 to $270,160, depending upon the year his employment terminates. The second agreement provides that if he dies while he is employed by Interpublic, $120,000 per year will be paid to his beneficiaries for 15 years following his death. If he retires on or after his 60th birthday, Interpublic will pay him a benefit of $120,000 per year for 15 years. If he retires, resigns or his employment with Interpublic terminates on or after his 55th birthday but prior to his 60th birthday, Interpublic will make payments to him for 15 years ranging from $62,400 to $112,800, depending upon the year he leaves Interpublic. If Mr. Nelson's employment with Interpublic terminates (other than by reason of death) prior to his 55th birthday, he will receive lesser sums not to exceed $600,000.in 21 equal monthly installments.

        The third agreement provides that if he dies while employed by Interpublic, his beneficiaries will receive $85,000 per year for 15 years following his death. If he retires on or after his 61st birthday, Interpublic will make payments to him for 15 years of $85,000 per year, and if he retires, resigns or is terminated by Interpublic on or after his 60th birthday but prior to his 61st birthday, he will receive payments for 15 years of $80,750 per year. If he ceases to be employed by Interpublic for any reason (other than death) prior to his 60th birthday, he will receive a maximum payment of $680,000.

        After Mr. Nelson's employment terminates, if he were to die before all applicable payments were made under these agreements, Interpublic would make the remaining payments to his beneficiaries.

        Mr. Wilmot is a party to four agreements which provide that if he dies while he is employed by Interpublic, an aggregate of $314,000 will be paid to his beneficiaries for 15 years following his death. Alternatively, if he retires, resigns or is otherwise no longer employed by Interpublic on or after his 55th birthday, Interpublic will make payments to him for 15 years in the aggregate ranging from $208,340 to $314,000 per year, depending upon the year his employment terminates. Two of these agreements provide that in the event Mr. Wilmot's employment terminates prior to his 55th birthday (other than by reason of death) he will be paid lesser sums than described above, but not less than $335,000. The third agreement provides that in the event that Mr. Wilmot's employment terminates prior to his 55th birthday (other than by reason of death) he will be paid lesser sums not to exceed $240,000. The fourth agreement provides that if Mr. Wilmot's employment terminates prior to his 55th birthday (other than by reason of death) he would receive a maximum payment of $360,000. Interpublic also has entered into another agreement with Mr. Wilmot which provides that if he dies while employed by Interpublic, $66,000 will be paid to his beneficiaries for 15 years following his death. If he retires, resigns or is otherwise no longer employed by Interpublic on or after his 58th birthday, Interpublic will make payments to him for 15 years ranging from $54,120 to $66,000 per year, depending upon the year that his employment terminates. If Mr. Wilmot's employment terminates prior to his 58th birthday (other than by reason of death) he will be paid lesser sums than described above for this agreement, but not less than $30,000.

        After Mr. Wilmot's employment terminates, if he were to die before all applicable payments were made under these agreements, Interpublic would make the remaining payments to his beneficiaries.

Termination and Change in Control Agreements

David Bell Severance Arrangement

        Effective February 27, 2003, David Bell became Chairman and Chief Executive Officer of Interpublic. Mr. Bell has an employment agreement with True North Communications, Inc. ("True North"), dated January 1, 2000, to which Interpublic became a party when it acquired True North in June of 2001. As amended, the employment agreement provides for the employment of Mr. Bell through March 1, 2005 (the "Employment Period").



        The employment agreement also provides that upon (i) the expiration of the Employment Period, if Mr. Bell retires, or Interpublic does not extend the Employment Period or (ii) if Mr. Bell resigns from Interpublic prior to the expiration of the Employment Period (other than upon a Qualifying Termination) (as defined below), Mr. Bell shall become a consultant to Interpublic for a period of five years (the "Consulting Period"). During the Consulting Period, Mr. Bell is required to make himself available, upon reasonable notice, to provide services that are commensurate with his years of experience and level of skill for up to ten full business days during any calendar quarter. As compensation for his consulting services, Mr. Bell will receive an annual consulting fee equal to 75% of the average of his annual base salary for the last three full calendar years of his employment ("Consulting Payments"). During the Consulting Period, stock option grants and restricted stock awards made to Mr. Bell prior to becoming a consultant will continue to vest. The Consulting Period will terminate and the Consulting Payments will immediately cease to be paid prior to the end of the five-year Consulting Period upon the material failure of Mr. Bell to perform the duties requested of him by Interpublic during the Consulting Period or upon a material breach by Mr. Bell of the employment agreement or other action by Mr. Bell that constitutes "cause", as defined below. If, however, Mr. Bell were to die or become permanently disabled during the Consulting Period, then his benefits would continue to be paid to him or to his estate, as applicable, for the remainder of the Consulting Period.

        If Mr. Bell's employment terminates prior to the expiration of the Employment Period under the circumstances constituting a Qualifying Termination, Mr. Bell, or his executor as the case may be, is entitled to receive the following benefits: (a) annual incentive compensation for the calendar year in which such termination occurs, prorated through the termination date (based on actual results for the full year); and (b) the right to exercise each stock option granted after January 1, 2001, to the extent that it is vested at the date of termination for up to three years after the date of termination but in no case beyond ten years following the date that the stock option was granted.

        If the Qualifying Termination is for any reason, other than death or disability, Mr. Bell also is entitled to: (a) receive for a period of three years (the "Severance Period") a cash severance of an amount equal to (i) his base salary at the rate payable to him on the date of his termination and (ii) the higher of the annual incentive compensation payable to Mr. Bell for the calendar year in which he is terminated or the average annual incentive during the three full calendar years prior to the year his employment is terminated; (b) the vesting of all stock options granted to Mr. Bell after January 1, 2001; and (c) receipt of Consulting Payments for a period of two years after the end of the Severance Period. Alternatively, if the Qualifying Termination is due to disability, Mr. Bell will be entitled to the receipt of Consulting Payments for a period of five years after the date of termination.

        A Qualifying Termination means the occurrence of any of the following events prior to the expiration of the Employment Period: (a) the termination of Mr. Bell's employment by Interpublic without "cause" (as defined below) where Interpublic does not either provide Mr. Bell with twelve months notice of termination or pay his salary for twelve months in lieu of such notice; (b) the termination by Mr. Bell of his employment due to the occurrence of any of the following events, without his written consent: (i) an assignment of duties that are inconsistent in any material respect with his position, duties, responsibilities or status or a material diminution in his responsibilities, (ii) a material adverse change in his reporting responsibilities, title or offices with Interpublic, (iii) a material breach by Interpublic of its obligations under the employment agreement, (iv) a decrease in his base salary, or (v) a material change in the location where he is based; (c) the disability of Mr. Bell for a period of more than six consecutive months; or (d) Mr. Bell's death.

        The employment agreement provides that Interpublic shall have "cause" to terminate Mr. Bell, if Mr. Bell: (a) engages in conduct that violates a material provision of the employment agreement or any significant policy of Interpublic after Mr. Bell is notified of such violations, (b) fails to perform his duties or carry out directions from the Board of Directors after being notified of such failure, or (c) engages in embezzlement or a misappropriation of corporate funds or other acts of fraud, dishonesty or self-dealing,



or commits a felony or any significant violation of any material statutory or common law duty of loyalty to Interpublic.

Brian Brooks'Christopher Coughlin Separation Agreement

Effective February 27,December 31, 2004, Mr. BrooksCoughlin resigned from all positions that he held at Interpublic and its subsidiaries. In connection with his resignation, Mr. BrooksCoughlin entered into a Confidential Separation Agreement and General Release with Interpublic (the "Separation Agreement"“Separation Agreement”) which provides.

The Separation Agreement provided that Interpublic will (a) as severance continue to make salary payments to Mr. BrooksCoughlin would remain eligible for a period of one year ending February 27, 2005 (the "Severance Period") at his annual base salary of $495,000,bonus under the Interpublic Annual Management Incentive Plan and (b) retain Mr. Brooks to provide, as requested by Interpublic, executive recruiting and human resource services duringdefer amounts under his Special Deferred Benefit Agreement described above under the Severance Period and for a period of one year thereafter (the "Consulting Period")heading “Deferred Benefit Arrangements—Special Deferred Benefit Agreements”. Under


In addition, the Separation Agreement Mr. Brooks is entitled to compensation at an hourly rateaccelerated the vesting of $400 per hour as consideration for services other than in connection with executive recruitment and at a commission of 25%50,000 stock options (25% of the first year's total cash compensation of salary and bonus not to exceed $500,000 per person of individuals placed at Interpublic or its subsidiaries as a result of Mr. Brooks' executive recruitment efforts. During the Severance Period, Mr. Brooks will be entitled to receive consultancy compensation to the extent such compensation is in excess of his base salary of $495,000, up to a total of $700,000. During the Consulting Period, Mr. Brooks will be entitled to receive a guaranteed minimum annual compensation of $400,000.

        The Separation Agreement also provides that during the Severance Period, Mr. Brooks (i) will continue to be entitled to his current employee benefits, including medical, life insurance, profit sharing, club, automobile and financial planning allowances, (ii) will remain eligible for a bonus for 2003 and (iii) will remain eligible for deferral amounts under Interpublic's Senior Executive Retirement Income Plan, which is described below under the heading "The Interpublic Senior Executive Retirement Income Plan".

        In addition, under the Separation Agreement, all shares of restricted stock granted to Mr. Brooks will continue to vest on a pro rata basis through the end of the Severance Period, and in the case of a November 10, 2003 award of 102,233 shares of restricted stock, the award will vest in full on January 31, 2008 if Mr. Brooks abides by a non-solicitation provision of the Separation Agreement through that date. All200,000 stock options granted to Mr. Brooks will continueCoughlin upon the commencement of his employment by Interpublic) and allowed the accelerated options to vest through the end of the Severance Period and, to the extent then exercisable, will remain exercisable for a 90-day period following the endDecember 31, 2004. The balance of the Severance Period. At the end of the Severance Period, Mr. Brooks will be entitled to receive 3,611 performance units out of the 5,000 performance units originally granted to Mr. Brooks under Interpublic's LTPIP for the 2003-2005 performance period.these options were forfeited.

Executive Severance Agreements

Interpublic has entered into an agreement with each of the named executive officers, other than Messrs.Mr. Bell, and Wilmot, pursuant to which a cash severance payment would become payable to the executive individual if, within two years after a "change“change of control,"” (i) the executive'sexecutive’s employment is terminated by Interpublic other than for "cause"“cause” or (ii) the executive'sexecutive resigns for "good“good reason."”

The agreements provide that a "change“change of control"control” occurs if: (a) any person, other than Interpublic or any of its subsidiaries, becomes the beneficial owner (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of 30% or more of the combined voting power of Interpublic'sInterpublic’s then outstanding voting securities; (b) the stockholders approve an agreement to merge or consolidate with another corporation (other than a subsidiary of Interpublic) or an agreement to sell or dispose of all or substantially all of the business or assets of Interpublic; or (c) during any period of two consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors cease for any reason to constitute at least a majority thereof, unless the election or the nomination for election by Interpublic's



Interpublic’s stockholders of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.

Under the agreements, Interpublic shall have "cause"“cause” to terminate an executive, following a "change“change of control"control”, if the executive: (a) engages in conduct that constitutes a felony and that results in the personal enrichment of the executive at Interpublic'sInterpublic’s expense; (b) refuses to substantially perform his responsibilities for Interpublic; or (c) deliberately and materially breaches any agreement between himself and Interpublic and fails to remedy that breach within a 30-day cure period. An executive may resign for "good reason"“good reason” following a "change“change in control"control” if, without his consent, in any circumstance other than his disability, his office in Interpublic or the geographical area of his employment should be changed or his compensation should not continue to be paid and increased on the same basis as had been in effect prior to the "change“change of control"control” or the individual should determine in good faith that Interpublic had, without his consent, effected a significant change in his status within, or the nature or scope of his duties or responsibilities with, Interpublic and Interpublic failed to cure such situation within 30 days after written notice from the individual.

The severance payment to which an executive, other than Messrs. CameraCyprus and Krakowsky,Gatfield, would be entitled is equal to three times the individual'sindividual’s average annual compensation during the two calendar years ended prior to the date of a "change“change of control"control”. Messrs. CameraCyprus and KrakowskyGatfield are entitled to receive two times such executive'sexecutive’s average annual compensation. In addition, each executive is entitled to receive a partial annual bonus based on the most recent bonus paid to such executive within the two years preceding the year such executive is terminated prorated for the elapsed portion of the year in which employment terminated. In general, if no bonus was paid to an executive in such prior years, such executive would be entitled to a pro rata bonus based on the greater of the last bonus actually awarded to such executive and the target bonus award established for such executive. The average compensation used in calculating the severance payment would be the executive'sexecutive’s taxable compensation plus any deferred compensation accrued during the two relevant years, but would not include any deferred compensation earned in prior years but paid during the two years and would not include any taxable compensation relating to any stock option or restricted stock plan of Interpublic.

Each agreement also provides that if the executive'sexecutive’s employment terminates in circumstances entitling him to a severance payment, he will, for a period of 18 months following the termination of his


employment, neither (a) solicit any employee of Interpublic or any of its subsidiaries to leave such employ to enter into the employ of the individual, or any person or entity with which the individual is associated, nor (b) solicit or handle, on his own behalf or on behalf of any person or entity with which he is associated, the advertising, public relations, sales promotion or market research business of any advertiser which was a client of Interpublic or any of its subsidiaries on the date the individual'sindividual’s employment terminates.

The agreements give the executive an option to limit payment under the agreements to such sum as would avoid subjecting the individual to the excise tax imposed by Section 4999 of the Internal Revenue Code.

Also under the severance agreements, sums previously deferred by the executive pursuant to employment agreements and under the Management Incentive Compensation Plans of Interpublic and its subsidiaries and amounts payable under Special Deferred Benefit Agreements would become payable within 30 days following a "change“change of control"control” if the individual has elected to receive the distribution prior to the "change“change of control."”

In accordance with the terms of the Separation Agreement between Mr. Coughlin and Interpublic, Mr. Coughlin’s Executive Severance Agreement was terminated, effective December 31, 2004.

The Interpublic Senior Executive Retirement Income Plan

Effective as of August 1, 2003, Interpublic established a new planSenior Executive Retirement Income Plan (“SERIP”) to provide U.S.-based senior executives of Interpublic and its subsidiaries with certain retirement benefits. This new plan is intended to replace Interpublic'sInterpublic’s prior program of providing Special Deferred Benefit Agreements to key executives.executives selected by the Compensation Committee. In general, under the Senior Executive Retirement Income Plan ("SERIP"),SERIP, Interpublic will provide an



eligible participant with an annuala monthly payment for 15 years payable whenbeginning upon the participant attainstermination of the executive’s employment at age of 60 or older and after any non-competition and non-solicitation agreements of the participant's employment has terminated with Interpublic or its subsidiaries. Under certain conditions, payments may begin as early asexecutive have expired. However, a participant who is at least age 55 and who has completed at least five years of participation in the SERIP may be paid over ten years.elect to receive a reduced benefit. Each participant must execute a Participation Agreement that provides for the amount of the annual benefit to be paid. Any portionGenerally, at the end of a participant's benefit that is not vested will be forfeited upon termination of employment. Generally, the retirement benefit will begin to vest after three years of participation in the SERIP, and will vest in full after ten30% of the annual benefit is vested, with the vested portion increasing by 10% for the next seven years. However, if the executive breaches a non-competition or non-solicitation agreement, the executive’s entire vested benefit is subject to forfeiture. Any participant who is a party to a Special Deferred Benefit Agreement at the time the participant begins to participate in the SERIP is deemed to have participated in the SERIP for up to three years. At the endAny portion of three yearsa participant’s benefit that is not vested will be forfeited upon termination of participationemployment.

An executive who becomes disabled will continue to participate fully in the SERIP 30% ofuntil the annualexecutive’s employment terminates. If an executive dies before his benefit is fully vested, withthe participant’s beneficiaries will be entitled to only the vested portion increasing by 10% forof the next seven years.benefit.

        If a participant becomes disabled or dies, the participant (or the participant's beneficiary) may be entitled to a full or reduced annual benefit, depending upon his age and years of participation under the SERIP at the time his employment is terminated by reason of death or disability.

Of the named executive officers, only Mr. BrooksGatfield participates in the SERIP. Under his Participation Agreement, Mr. Brooks' annual benefit is $247,500 per year which, in accordance with his Separation Agreement, will vest as to 40% of this amount at the end of his Severance Period. Consequently, Mr. BrooksGatfield will be entitled to receive an annual payment of $99,000$200,000 per year. This benefit will become fully vested on April 14, 2014.

The Interpublic Capital Accumulation Plan

Effective as of August 1, 2003, Interpublic established a Capital Accumulation Plan (“CAP”) to provide deferred compensation to senior management employees of Interpublic and its subsidiaries selected by the Management Human Resources Committee (the “Committee”). This new plan is intended to replace Interpublic’s prior program of providing Special Deferred Benefit Agreements to key executives. Under the plan, a participant receives an annual credit of a specified dollar amount on December 31 of each year that the participant continues to be employed by Interpublic. The credited


amount accrues interest each year at an applicable interest rate which can be adjusted upward or downward at the discretion of the Committee. This account balance becomes fully vested as to both prior and future dollar and interest credits when the executive has completed three years of participation in the CAP, except that all interest credits are subject to forfeiture if the executive breaches a non-competition or non-solicitation agreement. Any portion of a participant’s benefit that is not vested will be forfeited upon termination of employment.

The vested account balance will be distributed following termination of employment with Interpublic and its subsidiaries and the expiration of any non-competition and non-solicitation agreements of the executive at such time as the executive shall elect. Unless otherwise specified by the participant, the vested account balance will be paid by Interpublic in a lump sum payment. Alternatively, a participant whose employment terminates after age 55 and who has completed at least five years of participation in the CAP may elect a distribution in monthly installment over a period of between 10 and 15 years. Each participant must execute a Participation Agreement that specifies for the amount of the annual credit. An executive who becomes disabled will continue to participate fully in the CAP until the executive’s employment terminates. An executive who dies before his account balance is vested will forfeit the entire account balance.

Of the named executive officers, only Messrs. Cyprus and Roth participate in the CAP. Under Mr. Cyprus’ Participation Agreement, he is entitled to an annual credit of $80,000 and his account balance will fully vest on May 15, years beginning2007. Under Mr. Roth’s Participation Agreement, he is entitled to an annual credit of $100,000 and his account balance will fully vest on his 60th birthday.May 15, 2007. During 2004, interest was credited at the rate of 4.25%.

Retirement Plan

As of January 1, 1992, Interpublic adopted the Interpublic Retirement Account Plan to provide benefits under a "cash“cash balance formula"formula” to employees of Interpublic and most of its domestic subsidiaries who have at least five years of service. Each year a participant'sparticipant’s account balance is credited with an amount equal to a percentage of the participant'sparticipant’s annual compensation and interest credits. The percentage of annual compensation varies based on the sum of the participant'sparticipant’s age and years of service from 1.5% for participants with a sum less than 40 years to 5% for participants with a sum of 80 or more years. Interest credits are based on the 1-year U.S. Treasury bill rate plus 1 percentage point, compounded quarterly, and are guaranteed to be at least 5% per year, compounded quarterly.

Until July 31, 1987, employees of Interpublic and most of its domestic subsidiaries were entitled in general to receive at retirement a monthly retirement benefit pursuant to a defined benefit pension formula computed as a percentage of average monthly compensation during the five consecutive calendar years with highest compensation with certain exclusions. The percentage of average monthly compensation used to calculate the monthly benefit was determined by multiplying the number of years of accredited service (which is defined in the Plan as the period of participation in the Plan) by 1.3%.

Beginning July 31, 1987, the method of calculating the pension benefit was changed to a career average formula based on annual compensation. The percentage of annual compensation used to calculate the benefit was 1% of each year'syear’s compensation up to $15,000 plus 1.3% of any compensation in excess of that amount.

Participants under the defined benefit pension formula on December 31, 1991, had their normal retirement benefit converted on an actuarial basis into an "opening“opening cash balance"balance” as of January 1, 1992. In addition, participants continued to accrue benefits pursuant to the career average formula and became eligible to receive upon retirement the higher of (1) the participant'sparticipant’s benefit under the cash balance formula or (2) the participant'sparticipant’s accrued retirement benefit under the career average formula as of December 31, 1991, plus any accrual after that date calculated pursuant to the career average formula.


Employees joining Interpublic after December 31, 1991, were eligible to accrue benefits only under the cash balance formula.



With certain minor exceptions, "compensation"“compensation” under the career average formula as well as the cash balance formula includes all compensation subject to federal income tax withholding. Annual compensation for pension accruals since December 31, 1988 has been limited by federal tax law.

As of March 31, 1998, Interpublic froze benefit accruals under the Interpublic Retirement Account Plan and participants whose benefits were not already vested became fully vested as of April 1, 1998. Retirement account balances as of that date will continue to be credited with interest until benefits begin in accordance with the generally applicable Plan provisions, but additional Company allocations have been discontinued as of March 31, 1998.

Effective April 1, 1998, employees with five or more years of Retirement Account Plan participation began to participate in a new Compensation Plan. Under the newNew Compensation Plan, an account is established for each eligible employee and credited with up to ten annual allocations depending on the employee'semployee’s years of participation in the Retirement Account Plan. Each annual allocation approximates the discontinued allocations under the Retirement Account Plan. In general, the balance in each employee'semployee’s account begins to vest gradually after five years of participation in the new Compensation Plan. Payouts generally are made while the employee is still employed by Interpublic or one of its subsidiaries.

Mr. Dooner is the only eligible participant in both the Retirement Account Plan and the New Compensation Plan. The estimated annual retirement benefit that each of the following named executive officersMr. Dooner would receive at the normal retirement age of 65 years old, payable as a straight life annuity under the Interpublic Retirement Account Plan is as follows:$62,185. Alternatively, Mr. Camera—$3,519; Mr. Dooner—$62,185; Mr. Nelson—$58,259 and Mr. Wilmot—$37,447. Alternatively, each of themDooner could take the benefit as a lump sum estimated as follows: Mr. Camera—$40,699; Mr. Dooner—$735,889; Mr. Nelson—$689,431 and Mr. Wilmot—$442,205.at $740,292.

        Prior to normal retirement age, underUnder the New Compensation Plan, Mr. Dooner will receive, a total distribution of $108,500.

        Priorprior to normal retirement age, under the New Compensation Plan, Mr. Wilmot will receive a total distribution in the amount of $97,441.$108,500.

        Mr. Camera is not eligible to participate underMessrs. Bell, Coughlin, Cyprus Gatfield and Roth each were hired by Interpublic after the New Compensation Plan because he had less than five years of participation under the Interpublic Retirement Age Account Plan at the time benefit accruals were frozen.

        Mr. Nelson is ineligible to participate under the New Compensation Plan because he was not employed with Interpublic at the time the New Compensation Plan became effective.

        Each of Messrs. Bell, Brooks, Coughlinfrozen and Krakowskyaccordingly is not entitled to receive any benefits under the Interpublic Retirement Account Plan or the New Compensation Plan because he was hired by Interpublic after the Retirement Account Plan was frozen.Plan.



REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

The Committee's ResponsibilitiesCompensation Governance

        TheAs the Compensation Committee, ofwe are responsible for approving compensation awarded to senior corporate and operating executives, including the named executive officers, and authorizing all awards under Interpublic’s 2004 Performance Incentive Plan. We operate under a written charter adopted by the Board is responsible for settingof Directors and administering the policies that govern executive compensation. The Committee is composed entirely of independent,available on Interpublic’s web site, and comprise three non-employee directors based onin accordance with the Committee’s Charter. Each Committee member qualifies as an independent director as defined by the New York Stock Exchange Listing Standards. Reportslisting standards, a “non-employee director” under Rule 16b-3 under the Securities Exchange Act of 1934 and an “outside director” under Section 162(m) of the Committee's actions and recommendations are presented to the full Board and independent directors who are notInternal Revenue Code.

As a Committee, members will, on occasion, attend and participate in Committee meetings. The purpose of this report is to summarize the philosophical principles, specific program elements and other factors considered by the Committee in making decisions about executive compensation.

        The Committee approves all of thewe approve policies under which compensation is paid or awarded to Interpublic'sInterpublic’s executives, and individually reviewsreview the performance and compensation levels of, and all compensation actions pertaining to, Interpublic'sInterpublic’s senior executive group. The Committee has delegatedgroup, including the Chairman and Chief Executive Officer. Annually, we evaluate and revise, as necessary, the Company’s compensation philosophy and approaches, including the fixed and variable elements of total compensation, and the design of incentive compensation programs.

29



During 2004, we engaged Hewitt Associates to provide independent counsel to the Management Human Resources Committee, consisting of Interpublic's Chairman, President and CEO, its COO and CFO, its General Counsel, and its Chief Talent and Human Resources Officer, responsibility for the review of the performance of, and compensation actions affecting, a broader management group based on guidelines established by the Compensation Committee. Both the Compensation Committee and the Management Human Resources Committee use qualified outside advisers to assist in making pay practice decisions.

        The Committee's basic goal in establishing compensation guidelines is to attract, motivate, reward and retain executives who contribute to the creation of long-term investor value. The Committee adheres to the following principles when making compensation decisions:

    •
    Pay is performance-based. Pay practices at Interpublic have historically followed those found more broadly in the advertising and marketing services industry. Pay based upon Interpublic's performance has been an important philosophical underpinning for pay decisions and its effect has been evident in reduced, or in some cases the absence of, annual and long-term incentive awards for recent years. The Committee intends to continue to maintain the strong linkage betweenBoard on executive compensation and Interpublic's performance.

    talent management matters, both generally and specific to our industry. Hewitt Associates’ selection was the result of a review of proposals from three highly-regarded firms, and represented a change from prior consulting relationships. We will assess this relationship annually.

    Working with the Committee and management, Hewitt Associates provided valuable input to the Committee in the form of latest trends and policies noted in other world-class compensation committees and has provided independent perspectives on a wide variety of talent-related topics. Early in 2005, we completed a self-assessment of the Committee’s capabilities and performance and we intend to repeat this process annually.

    Policy on Deductibility of Compensation

    •
    Stock ownership

    Section 162(m) of the Internal Revenue Code limits to $1 million the tax deduction for compensation paid to the executive officers listed in the Summary Compensation Table on page 15  (the “named executive officers”). Compensation in excess of $1 million is emphasized. The Committee believesdeductible only if requirements are met that management stock ownership effectively alignsqualify the compensation as performance-based. Our policy is to comply with the requirements of Section 162(m) except where we determine that compliance is not in the best interests of employees with thosethe Company and its shareowners. The Company’s stock option grants currently meet the performance-based requirements under Section 162(m). The Company’s 2004 restricted stock grants do not meet the performance-based requirements under Section 162(m).

    The February 2005 grant of shareholders and provides a strong motivationperformance-based restricted shares, discussed below, to build shareholder value. UnderMr. Roth exceeded the newindividual award limit under the 2004 Performance Incentive Plan, which isresulting in a portion of this award being submitted to stockholdersnon-tax deductible under 162(m). The Committee nevertheless concluded that this award was appropriate in light of Mr. Roth’s promotion, the degree of stretch inherent in the related performance objectives, and its preference for approval at the 2004 Annual Meeting, the Committee expects to reduce the number of recipients of stock-based incentives to include only those executives expected tousing performance-based restricted shares rather than time-vested restricted stock.

    Compensation Philosophy

    The Company’s executive compensation programs have the most significant potential impact on future operational health, financial results, and shareholder value, but to increase for executives who receive stock-based incentives the emphasis on stock awards as a form of incentive compensation.

    •
    Compensation opportunities must be competitivebeen designed to attract, retain and retain talented employees. The Committee periodically comparesmotivate the actualexecutive resources necessary to Interpublic’s long-term success and targeted compensationthe creation of Interpublic's executives with data for advertisingshareholder value. In evaluating and professional services companies, and general industry, in an effort to ensure that Interpublic's compensation arrangements are competitive.

Program Elements

        Interpublic'sadministering Interpublic’s executive compensation program, consistswe are guided by three key principles:

·       Alignment with shareholders:   Compensation should align the interests of executives and shareholders through the use of equity-based compensation and performance-based awards.

·       Performance-based:   Compensation should emphasize pay-for-performance by placing a significant portion of total compensation “at risk,” the payout of which is tied to the financial performance of the Company and the achievement of other critical objectives.

·       Market-based:   Total compensation levels should be competitive with those at other advertising and marketing service companies, and within other relevant executive labor markets as appropriate.

We find it is more appropriate to compare our compensation programs to those of competitors for talent, rather than limit our focus to the companies that make up the Peer Group used in the Stock Performance Graph on page 35. Important to this consideration is the limited amount of competitive pay data available for Interpublic’s direct competitors and the fact that, for some positions, the Company competes for executive talent within a broader labor market.


The Company’s overall compensation program comprises three principal elements: base salary, annual incentiveincentives, and long-term incentive compensation. Incentive opportunities are weighted toward the long-term for Interpublic's most senior executives and a major portion of long-term incentives are equity-oriented. Interpublic's



shareholder-approved 2002 Performance Incentive Plan, provides for equity and cash incentive awards under one or more of the following programs:

    •
    The Management Incentive Compensation Program (the "MICP"), an annual bonus plan under which bonus pools are funded based on corporate and operating unit operating income for the last-completed fiscal year. Eligible individuals receive awards from funded bonus pools based on their achievement of established performance criteria and other contributions. Awards are typically paid in cash, but may be paid in stock.

    •
    The Long-Term Performance Incentive Program (the "LTPIP"), which provides for annual awards of performance units generally having a three-year term. These awards entitle a participating executive to receive cash payments based on the extent to which operating income and margin targets are achieved over the performance period. The performance targets may be tied to a particular operating entity, a division of the company or the entire company depending on the responsibilities of the executive.

    •
    The Stock Incentive Program, which provides for the issuance ofthat include stock options and restricted stock. These instruments increase in value over time only if the market pricestock awards. An overview of Interpublic Common Stock increases. They are forfeited if an executive fails to remain employed by Interpublic for a specified period following the dateeach of the award, unlessmajor compensation program elements follows.

    Base Salary

    Each year, we determine the Committee elects to waive this requirement given the merits of a specific case.

        The determination of the amount and form of executive compensation, including incentive compensation, paid to each Interpublic executive officer is made by the Committee based on an evaluation, after taking into account a range of factors that include:

    (i)
    Interpublic's financial results and anticipated developments in the marketing communications industry.

    (ii)
    The total annualized compensationbase salaries for the particularChairman and Chief Executive Officer, senior executive officers reporting to the Chief Executive Officer, and selected other senior executive positions. We consider several quantitative and qualitative factors when determining base salaries, including salary, benefits, and short-term and long-term incentive compensation.

    (iii)
    The cumulative value of previously provided incentive compensation, such as stock options, restricted stock and/orthe executive’s individual performance, units.

    (iv)
    The current and expected future financial impact on Interpublic and the executive of benefits under Interpublic's compensation plans.

    (v)
    The executive's level of achievement against annual performance expectationsresponsibility, tenure, prior experience, and contributions in a dynamic environment.

    (vi)
    The executive's skills, talents, experiences, and relationships and their importancecomparison to Interpublic's future performance.

    (vii)
    The competitive environment in which Interpublic operates.

        Although the Committee does not assign a pre-determined weight to any of these factors, its compensation decisions are greatly influenced by Interpublic's annual financial performance.

        During 2003, the Committee retained the services of an independent executive compensation firm to review the competitive pay positioning for approximately 40 senior corporate and operating company positions. The consultants' analyses and findings were presented to the Committee in November 2003. During the course of 2003, these and other consultants provided the Committee with data, findings and/or recommendations related to executive compensation, benefits, and other related topics. The Committee considered this input in its deliberations.



2003 Compensation of Executive Officers

        Base Salary.    Salary increases for executive officers are based on individual performance, role and responsibilities, competitive labor market conditions, and Interpublic's overall financial results. Basebase salaries for executive officers and other senior executives of Interpublic are established by reference to the factors noted above and with the advice of outside compensation consultants. The Compensation Committee has established a policy of setting base salary levels within 15% above or below mid-market levelspaid for comparable positions inwithin the Company and multiple compensation survey groups comprising comparably-sized advertising, marketing, communications industry. Theand general service industry companies with similar client focus and talent strategies. For many of the senior executives, salary is fixed by contract, which Interpublic has the ability to increase, but not decrease.

For 2004, base salaries of executive officers continuingfor Named Executive Officers were not increased.

Annual Incentives

Annual incentive awards to serve insenior executives are made under the same position are generally reviewed every two years.

        Annual Incentive.shareholder-approved 2004 Performance Incentive Plan (the “2004 PIP”). For purposes of bonus awards, under the MICP, the executive officers of Interpublic participate in the Interpublic corporate bonus pool, unless they are employed byaffiliated with one of Interpublic'sInterpublic’s operating units, in which case they participate in that operating subsidiary's MICPsubsidiary’s bonus pool. UnderThe 2004 PIP limits the termsbonus amount that may be earned by any one individual to $5 million. For named executive officers, awards are earned under Committee-approved formulas that meet the requirements for tax deductibility under Section 162(m) of the MICP,Internal Revenue Code, and we retain the corporateright to exercise negative discretion and reduce the bonus amount based on our further assessment of performance for the previous calendar year.

The size of 2004 bonus pool may not exceed 5% of the amount by which consolidated pre-tax income on a worldwide basis,for corporate and before provision for the payment of incentive compensation, for the calendar year in which the bonuses are to be paid exceeds 15% of the average equity capital of Interpublic in the immediately preceding calendar year. In 2003, due in part to substantial restructuring, litigation, and asset impairment charges, Interpublic incurred a pre-tax loss, and as a consequence under the terms of the MICP no funds were available for the payment of incentive awards from the corporate bonus pool. After not making MICP awards to executive officers in 2002, and recognizing the significant progress made in 2003 in implementing of the company's turnaround plan, the Committee concluded that it was necessary to acknowledge and reward the participants in the corporate bonus pool who made this progress possible. Accordingly, the Committee authorized a waiver for 2003 of the earnings requirement for funding of the corporate bonus pool and approved a corporate bonus pool in the aggregate amount of $6.3 million. The 2003 bonus pools of the operating units reflected each unit'sunit’s specific operating results and progress toward improving future operating performance. Bonus awards to executive officers in 2003 were generally made at 75% of target, with this percentage varying among individuals based on relative contribution to Interpublic's ongoing financial and operating turnaround.

Long-Term Incentives

Long-term Incentives.    In 2003, the Committee made both long-term incentive awards are made under the 2004 PIP. In 2004, we approved grants of stock options and/or restricted stock to executive officers and key employees of Interpublic and its subsidiaries in the form of cash-based LTPIP awards and equity grants and also cancelled or modified LTPIP awards made in 2003.

        LTPIP Awards.    In early 2003, the Committee cancelled the 2002-2004 LTPIP units granted Corporate Participants due to the financial performance of Interpublic, which indicated that no payout under the awards was likely.

        In March 2003, new grants of performance units under the LTPIP for the 2003-2005 performance period were made to executive officers including those listed in the Long-Term Incentive Plan Table. In determining individual LTPIP awards to executive officers, the Committee considered several factors including, but not limited to, the executive's recent performance and expected future contributions, current role and responsibilities, and history of past grants. However, in December 2003, the Committee decided to terminate the LTPIP because it has determined that it no longer meets the Committee's goal of more closely aligning executive incentives with shareholder interests. Accordingly, no future awards will be made under the LTPIP. In addition, due to Interpublic's financial performance during 2003, it became apparent to the Committee that the performance goals of Interpublic and its operating units as contemplated by the terms of the 2003-2005 awards would not be achieved. The Committee, therefore, in order to prepare for the implementations of a new incentive compensation program elected to determine the payouts under the awards in advance of the completion of the performance period in the following manner:

    •
    2003 – 2005 LTPIP units granted to Interpublic executives other than those employed by one of the operating divisions of Interpublic ("Corporate Participants") have been assigned a value of $38.33, which is equal to1/3 the original unit target value of $115. The awards will be paid as originally

      scheduled: (i) one third of the award in early 2005 and (ii) the remaining two-thirds of the award in early 2006.

    •
    2003 – 2005 LTPIP units granted to participants employed by an operating division, have been valued using 2003 actual results and 2004 budgeted performance of the applicable operating division. The awards will be paid as originally scheduled: (i) one-third of the award in early 2005 and (ii) the remaining two-thirds in early 2006.

        In connection with the Committee's decision to discontinue the LTPIP, the Committee also decided to shorten by one year the 2002-2004 LTPIP performance period for operating division participants. For such participants, 2002-2004 LTPIP units have been valued using the 2002 and 2003 actual results of the applicable operating division. Awards will be paid as originally scheduled: (i) one-half of the award in early 2004 and (ii) the remaining one-half in early 2005.

        Equity Grants.    In 2003, the Committee provided officers and key employees of Interpublic and its subsidiaries with a long-term incentive opportunity in the form of stock options and/or restricted stock awards.subsidiaries. Such awards are designed to focus the recipients on the long-termlong-term performance of Interpublic. Interpublic and align their interests with our shareholders.

Beginning in 2004, the Company has significantly shifted the long-term incentive mix away from stock options toward restricted stock and also dramatically reduced the number of stock option recipients. This shift was in response to labor market trends, changes in stock option accounting requirements that take affect in 2005, and our assessment of the appropriateness and effectiveness of the respective types of award for different employee groups. We intend to introduce performance-based stock awards for senior executives in 2005.

Stock options, when granted are granted on such terms as are approved by theour Committee, provided that the term of the option may not exceed ten years and the exercise price may not be less than the fair market price of the Common Stock on the date of grant. The majority of stock options granted in 2003,2004, and all stock options granted to executive officers in 2003,2004, vest in increments of one-thirdone-third on the second, third and fourth anniversaries of the date of grant. Grants to the named executive officers are shown in the preceding tables.Option Grant Table on page 18.


The sale or transfer of shares granted as restricted stock are typically restricted for a period of three to five years from date of grant and are generally forfeited if the executive should leave the employment of Interpublic before the restrictions expire, unless thewe as a Committee determinesdetermine otherwise.

In determining grants of stock options and restricted stock, the Committee considers the executive'swe consider each executive’s current total compensation, recent performance, expected future contributions and impact on shareholder value, equity grant history, and potential retention risk; competitive need to provide equity-basedequity-based compensation to a given position; and Interpublic'sInterpublic’s financial performance in terms of operating margin, revenue and operating income growth, and total shareholder return. The Committeeperformance. We also reviewsreview outside survey data describingthat describe the equity grant practices within Interpublic'sInterpublic’s relevant labor markets, including bymarkets.

Other Programs

The Company also provides its officers and key managers with life and medical insurance, retirement savings and compensation deferral programs, perquisites, and other companies having similar business interests, capitalizationbenefits that are competitive with market practices (disclosed on pages  21 through 29 of this proxy statement). As part of our review of senior executive compensation, we assess the appropriateness of these plans and scopethe level of operations to those of Interpublic (including some companies included in the Peer Group Index appearing in the performance graph that follows this Report).participation annually.

CEO and Chairman Compensation of Chief Executive Officerand Evaluation

        Mr. Bell assumed the role of Chairman, President and Chief Executive Officer, and became a member of the Board of Directors on February 27, 2003, at which time Mr. Dooner assumed the role of Chairman and Chief Executive Officer of McCann-Erickson WorldGroup.

        At the time of his promotion, the Committee reviewed Mr. Bell's compensation and that for his industry peers. The Committee decidedFor 2004, we elected not to adjust his baseMr. Bell’s salary and it remained at $1,000,000 for the year. To secure his servicesAfter considering the Company’s 2004 financial performance, including reviewing performance relative to Earnings per Share (EPS) and revenue objectives, we decided not to grant Mr. Bell an annual incentive award for 2004.

In May 2004, we awarded Mr. Bell 124,466 shares of restricted stock, which vest in his new role,full three years after the grant date. In addition, the Committee elected to provideawarded Mr. Bell with a $100,000 signing bonus, 20,000 LTPIP units for the 2003-2005 performance period and 200,000 stock options. In addition, Mr. Bell entered into a special deferred benefit agreement under which he elected to forego $150,000 of salary per year for 8 years to fund a retirement benefit payable over 15 years. See "Employment Agreements, Termination of Employment and Change-in-Control Arrangements—Deferred Benefit Arrangements—Special Deferred Benefit Agreements".

        In 2003, Mr. Bell received an MICP award in the amount of $1,200,000, representing 78% of his target award. Mr. Bell's performance goals in 2003 included improving Interpublic's balance sheet, developing a long-term strategy for Interpublic and improved financial performance. In determining the payout amount,



the Committee also gave considerable weight to the circumstances under which he assumed the Chairman and CEO role at the end of February. Under the leadership of Mr. Bell, Interpublic began a turnaround in 2003 and achieved the following:

    •
    Improvements in second half 2003 revenues and operating margins (excluding principally restructuring charges and asset impairment charges) in comparison to those of the second half of 2002;

    •
    Improvements in second half 2003 operating margins (excluding principally restructuring charges and asset impairment charges) in comparison with those of the first half of 2003; and

    •
    A significant improvement in Interpublic's balance sheet in 2003 in the form of an improved cash position and lower debt.

        In 2002, Mr. Bell received a 2002-2004 LTPIP grant of 5,000 units tied to the performance of Interpublic's Foote, Cone & Belding division. As discussed above, the 2002-2004 performance period for awards to operating division employees has been shortened by one year, with the value of the units based on the actual performance of the applicable division for the years 2002 and 2003. Based on the results of Foote, Cone & Belding, Mr. Bell's 2002-2004 units were valued at $0, and accordingly he will not receive a payment. A 2002-2004 LTPIP grant of 5,000 units tied to the financial performance of Interpublic, like those of other executives, was cancelled.

        In conjunction with his promotion, Mr. Bell received 20,000 units under the LTPIP for the 2003-2005 performance period tied to Interpublic performance, each with a target value of $115. As discussed above, when the Committee decided to terminate the LTPIP program, it elected to fix the payouts with respect to the 2003-2005 performance period in advance of the completion of the performance period at a value of $38.33 per unit. As a result, Mr. Bell will receive a payment of $255,533 representing one-third of the award in early 2005, and a payment of $511,067, representing the remaining two-thirds will be paid in early 2006.

        The 200,000248,933 stock options awarded to Mr. Bell havewith an exercise price of $9.64$14.06, based on the average of the high and low market prices of Interpublic Common Stock on the May 18, 2004 grant date. These stock options become exercisable in increments of one-third on the second, third and fourth anniversaries of the date of grant.

As a result of these compensation actions, we believe Mr. Bell’s total compensation was appropriate to his role and performance relative to external market practices and the compensation levels for similar positions at other like-sized advertising, marketing and service companies. We also believe these actions ensured that his total compensation would have the appropriate level of performance sensitivity.

Michael I. Roth was named Chairman of Interpublic on July 13, 2004. After considering data and counsel from Hewitt Associates related to appropriate pay levels and form to non-CEO Chairmen in other publicly-held companies, and Mr. Roth’s compensation relative to Mr. Bell’s as CEO, we approved an employment agreement with Mr. Roth that set his base salary at $950,000, provided him with a $100,000 annual contribution to a Capital Accumulation Account, granted him 161,974 stock options with an exercise price equal to the then current fair market price for Interpublic stock and vesting in equal parts on the second, third and fourth anniversaries of their grant, and granted 80,987 shares of restricted stock that vest on the third anniversary of their grant. In addition, after considering the Company’s 2004 financial performance, including reviewing performance relative to Earnings per Share (EPS) and revenue objectives, we decided not to grant Mr. Roth an annual incentive award for 2004.


On January 19, 2005, Mr. Roth was promoted to Chairman and Chief Executive Officer of the Company. In conjunction with this promotion, we, with the support of all non-employee directors of the Company, approved several amendments to his employment agreement. These pay-related actions were based on an assessment of competitive data for CEOs of comparable companies, advice from Hewitt Associates, and consideration of the Company’s ongoing priorities and desired results and consisted of the following:

·       An increase in Mr. Roth’s annual base salary from $950,000 to $1,100,000, effective January 19, 2005.

·       A grant of options (the “Options”) to purchase 450,000 shares of Interpublic Common Stock at an exercise price of $13.645 per share, based on the average of the high and low market prices of Interpublic Common Stock on the March 26, 2003February 14, 2005 grant date. The Options will vest and become exercisable in three equal annual installments of 150,000 on the second, third and fourth anniversaries of the grant date, subject to Mr. Roth’s continued employment with Interpublic through the applicable vesting date, and will become exercisable 33%, 33% and 34% after two, three and four years, respectively, from datevest automatically on a change of grant. The Committee's objective in awarding Mr. Bell this grant of stock options, was to begin to bring Mr. Bell's compensation up to external competitive practices and levels among other marketing communications companies.

        Mr. Dooner's compensation during 2003 consisted of a cash salary of $1,250,000 per year as specified in his Employment Agreement. Mr. Dooner also received a grant of 176,709 stock options with an exercise price of $9.64 per share, based on the average of the high and low market pricescontrol of Interpublic Common Stock on the March 26, 2003 grant date. The options will become exercisable 33%, 33% and 34% after two, three and four years, respectively, from date of grant. The Committee's objective in awarding Mr. Dooner this grant of stock options, was to secure Mr. Dooner's services in leading the McCann-Erickson WorldGroup turnaround amid ongoing concerns that Mr. Dooner could be lured awayaccordance with sizable option grants from other companies. Mr. Dooner also received an LTPIP grant of 20,000 performance units for the 2003-2005 performance period linked to McCann-Erickson WorldGroup performance. After giving effect to the shortened performance period, as described above, this grant had no value based on 2003 actual results and 2004 budgeted performance. Therefore, Mr. Dooner will not receive any payment under the 2003-2005 performance period. A 2002-2004 LTPIP grant of 20,000 units tied to the financial performance of Interpublic like those of other executives, was cancelled.

        Finally, the Committee elected to pay Mr. Dooner an MICP award of $750,000, or 45% of his target, to reflect its balanced assessment of his performance, including consideration of the improvement in McCann-Erickson's operating results under his direction, his mid-year reduction in responsibilities and its belief that stronger performance would be required to warrant an award closer to or above target.



2004 Performance Incentive Plan

        At the 2004 Annual Meeting, shareholders will be asked to consider the proposed 2004 Performance Incentive Plan, which, if approved by shareholders, will replace the 2002 Performance Incentive Plan. The purpose of the new plan is to facilitate a shift in Interpublic's long-term incentive compensation practices from an emphasis on cash awards and stock options to focus more heavily on restricted stock awards, particularly restricted stock awards the receipt of which is tied to future performance. For a description of the 2004 Performance Incentive Plan, please refer to the discussion in the proxy statement under the heading "Proposal to Adopt the 2004 Performance Incentive Plan" and the text of the new plan, which is attached as Appendix B.

Deductibility of Executive Compensation

        Under federal income tax laws, the deduction that a publicly-held company is allowed for compensation paid to its chief executive officer and to its other four most highly compensated executive officers generally is limited to $1 million exclusive of qualifying performance-based compensation. The Committee has and will continue to consider ways to maximize the deductibility of executive compensation, including the utilization of performance-based plans, while retaining the discretion the Committee deems necessary to compensate executive officers in a manner commensurate with performance and the competitive environment for executive talent. The 2002 Performance Incentive Plan and the proposed 2004 Performance Incentive Plan each contain provisions relating to MICP awards, stock option grants and performance units that are intended to make the awards eligible for exclusion from the $1 million limitation. Due to the waiver of the earnings requirement for the funding of the Interpublic corporate bonus pool, the 2003 MICP payments to Interpublic's executive officers will not qualify as performance-based compensation. The aggregate amount of such disqualified MICP compensation, which is payable in 2004, cannot exceed, but likely will be less than, $3.4 million. Likewise, due to the modifications of the terms of the LTPIP2004 PIP. On any termination of Mr. Roth’s employment with Interpublic, any unvested Options will be forfeited.

·       A grant of 450,000 performance based restricted shares (the “Restricted Shares”) under the 2004 PIP. At grant, the Restricted Shares had an aggregate value of $6,120,000 and a risk-adjusted value of $4,500,000. The Restricted Shares will only vest if certain performance conditions are met (subject to accelerated vesting of a portion of the Restricted Shares on a change of control of Interpublic, as described below). In particular:

·       150,000 of the Restricted Shares will vest on the second anniversary of the grant date, subject to Mr. Roth’s continued employment with Interpublic through such date, if: (1) Interpublic attains cumulative constant dollar revenue reflecting average annual growth of 4.5% or better in
2005–2006; (2) in 2006, Interpublic’s growth equals or exceeds 5%; and (3) Interpublic’s average operating margins during 2005 and 2006 are at 10.5% or higher. In the event these performance targets are not achieved, these restricted shares are forfeited.

·       300,000 of the Restricted Shares will vest on the fifth anniversary of the grant date, subject to Mr. Roth’s continued employment with Interpublic through such date, if: (1) Interpublic’s average constant-dollar revenue growth for the 2007–2009 period is 6.3% or higher; (2) during 2009, constant dollar revenue growth is at least 7%; (3) Interpublic’s average operating margins during the period from 2007–2009 are at 14.7% or higher; (4) cumulative constant dollar revenue during the period from 2005–2010 is $35.6 billion or greater; and (5) cumulative operating income during the period from 2005–2010 is $4.7 billion or greater. In the event these performance targets are not achieved, these restricted shares are forfeited.

The Board of Directors of Interpublic retains discretion to make adjustments to the performance goals in the event of extraordinary corporate events, such as acquisitions or divestitures.

If Mr. Roth’s employment terminates for any reason prior to the vesting of the Restricted Shares, the unvested Restricted Shares will be forfeited. A pro rata portion of any unvested portion of the Restricted Shares will vest in the event of a “change of control” of Interpublic, as such term is defined in Mr. Roth’s executive severance agreement described in greater detail on page 26  of this proxy statement. The
pro-rata portion will be determined based on a fraction the numerator of which will equal the number of months elapsed since the grant date plus 12 and the denominator equal to 60.


Executive Compensation for 2005

For 2005, we expanded on the three key principles articulated early in this report. These expanded principles provide direction related to the Company’s general people-related practices, compensation approaches for the executive and broad employee populations, and talent management, including, but not limited to, succession planning, employee and leadership development.

Following our original three and this expanded set of principles, we have redesigned the Company’s senior executive annual incentive program to increase its link to performance against the Company and its units’ key financial and strategic objectives by providing individual incentive payouts directly tied to the achievement of pre-established performance goals set at the beginning of the plan year and approved by the Committee. Specifically, annual incentive awards for senior executives will be based on the 2003-2005achievement of pre-defined operating income, operating margin, and other measurable individual performance period, as described above, nonegoals. We believe these goals serve to focus executives on the factors that are critical to the future success and financial health of the payments pursuant to suchCompany.

In addition, 2005 long-term incentive awards to Interpublic's executive officers will qualify as performance-based compensation. The aggregate amount of such disqualified LTPIP compensation cannot exceed, but likely will be less than, $0.5 milliondelivered in the form of stock options, restricted stock and/or performance-based stock, the grant of which is contingent on the Company or unit’s attainment of pre-established multi-year performance goals. Generally, stock options will vest in increments of one-third on the second, third and fourth anniversaries of the date of grant. Restricted stock grants vest fully on the third anniversary of the date of grant and performance-based stock grants will be tied to the attainment of three-year operating margin and revenue growth goals of the unit and may vary from 0% to 200% of target award levels based on performance.

We approved the revised long-term incentive design to reinforce the achievement of critical performance priorities of the Company, improve the performance-orientation of executive total compensation, better align management and shareholder interests, and facilitate executive stock ownership. Stock option grants and performance-based restricted stock grants made in 2005 and $1.1 in 2006.

Conclusion

        The Committee is satisfied that the compensation and long-term incentive plans providedbeyond are intended to executives of Interpublic foster a performance-oriented culture and create strong alignmentcomply with Section 162(m) consistent with the Committee’s policy stated above.

Conclusion

Attracting, motivating and retaining talented employees and managers is central to our mission of increasing long-term bestshareholder value. Aligning our executives’ interests to our shareholders, making certain that compensation is linked to performance, and ensuring that executive compensation is competitive within the source markets for the Company’s talent are our objectives and the cornerstones of Interpublic's shareholders. The Committee is further satisfiedour methodology. We believe that theInterpublic’s 2004 executive compensation levels are reasonable in light of performance, industry practice and, in isolated cases, historical practice. Finally, the Committee will continue in its search to further tighten the relationship between pay and meaningful performance.program met these objectives.

Respectfully submitted,

Reginald K. Brack, Chairman
Chair

H. John Greeniaus
Geeniaus

J. Phillip Samper
Michael I. Roth



COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN (1)RETURN(1)
THE INTERPUBLIC GROUP OF COMPANIES, INC. COMMON STOCK,
THE S&P 500 AND PEER GROUP INDICES (2)
INDICES(2)

GRAPHICGRAPHIC

 

 

1999

 

2000

 

2001

 

2002

 

2003

 

2004

 

Interpublic

 

100.0

 

74.46

 

52.27

 

25.36

 

28.09

 

24.13

 

S & P 500

 

100.0

 

90.89

 

80.09

 

62.39

 

80.29

 

89.02

 

Peer Group

 

100.0

 

80.11

 

69.67

 

46.01

 

59.32

 

59.43

 

(1)

 
 1998
 1999
 2000
 2001
 2002
 2003
Interpublic 100.00 145.75 108.50 76.33 37.06 41.07
S & P 500 100.00 121.04 110.02 96.96 75.54 97.19
Peer Group 100.00 181.16 145.13 126.21 83.36 107.46
(1)
Assumes $100 is invested on December 31, 1998,1999, and that all dividends are reinvested.

(2)

The Peer Group index for 2003 consists of Interpublic, Omnicom, Grey Advertising and WPP Group. The Peer Group also included, for years prior to 2003, Cordiant plc which was acquired by WPP Group on August 1, 2003, for years prior to 2001, True North Communications, Inc., which was acquired by Interpublic in June 2001, and for the years prior to 2000, Young and Rubicam, Inc., which was acquired by WPP Group in October 2000. Total shareholder return is weighted according to market capitalization at the beginning of each annual period.

Section 16(a) Beneficial Ownership Reporting Compliance

        On March 26, 2003, certainSection 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires Interpublic’s directors and executive officers, and persons who beneficially own more than 10 percent of Interpublic received awardsa registered class of stock options. The respective Form 4s of each of David Bell, Brian Brooks, Nicholas Camera, Albert Conte, Thomas Dowling, Philippe Krakowsky, Bruce Nelson, and Gunnar Wilmot reporting the grant were filedInterpublic’s equity securities, to file with the SEC three business days after the date the filing was due, and the respective Form 4s of Sean Orr and Susan Watson were filed five business days after the date the filing was due.

        On March 26, 2003, Richard Sneeder received awards of stock options and restricted stock. His Form 4 reporting the grants was filed with the SEC three business days after the date the filing was due, and the Form 4s of Sean Orr and Susan Watson were filed ten business days after the date the filing was due.



        H. John Greeniaus, in hisNYSE initial statementreports of beneficial ownership on Form 3 originallyand reports of changes in beneficial ownership of Interpublic’s equity securities.

To Interpublic’s knowledge, based upon the reports filed withor written statements that no such reports were required to be filed, during the SEC onfiscal year ended December 24, 2001,31, 2004, none of Interpublic’s directors or executive officers failed to include 925 sharesfile on a timely basis reports required by Section 16(a) of Interpublic Common Stock among the securities identified as beneficially owned by him. These shares were included in an amended Form 3 filed by Mr. Greeniaus with the SEC on October 13, 2003. During 2002, Mr. Greeniaus purchased an aggregate of 1,704 shares of Interpublic Common Stock in two separate transactions and sold an aggregate of 2,629 shares of Interpublic Common Stock in 11 separate transactions, none of which were timely reported as required on corresponding Form 4s. The transactions subsequently were reported on an amended Form 5 filed by Mr. Greeniaus with the SEC on October 13, 2003.Exchange Act.

Related Party Transactions

Since January 1, 2004, a brother of Christopher J. Coughlin, who is the Executive Vice President, Chief Operating Officer andresigned as Chief Financial Officer of Interpublic and a Director, has a brother who, from April 1, 2003 throughas of December 31, 2003, provided services as an independent consultant to one2004, was employed by a subsidiary of Interpublic's subsidiaries that specializes in sports marketing and events planning activities. Mr. Coughlin's brother received $155,000 in the aggregate in consulting fees for his services. Effective January 1, 2004, Mr. Coughlin's brother became an employee of this subsidiaryInterpublic at an annual salary of $250,000.


        Gunnar Wilmot,2. ADOPTION OF THE INTERPUBLIC GROUP OF COMPANIES
EMPLOYEE STOCK PURCHASE PLAN (2006)

At the 1995 Annual Meeting, the stockholders approved the adoption of the Employee Stock Purchase Plan (1995) of the Company (the “1995 Plan”). Under the 1995 Plan, employees of the Company and its subsidiaries, including officers and those directors who is Chief Operating Officerwere employees of Lowe+Draft (an operating unit of Interpublic) and former Senior Vice President, Planning and Business Developmentthe Company have been entitled to purchase shares of Interpublic hasCommon Stock of the Company at a brother who is employed by Interpublic at an annual salary15% discount from the market price on the date of $275,000 per year.


2. PROPOSAL TO ADOPT THE 2004 PERFORMANCE INCENTIVE PLAN

        Thepurchase and without payment of a commission. Subject to stockholder approval, the Company’s Board of Directors has adopted, and is submitting to stockholders for approval, Theon October 17 , 2005 approved the establishment of an Interpublic Group of Companies Inc. 2004 Performance IncentiveEmployee Stock Purchase Plan (2006) (the "Plan"“2006 Plan”).

Background

        At to replace the 2002 Annual Meeting, the stockholders of Interpublic approved The Interpublic Group of Companies, Inc. 2002 Performance Incentive Plan (the "2002 Plan"). Under the 2002 Plan a maximum of 12.5 million shares of Common Stock were reserved for issuance, of which approximately 2.6 million shares (net of the addition of shares surrendered or forfeited under the 2002 Plan and prior plans) have been issued or are reserved for issuance pursuant to outstanding awards, leaving approximately 9.9 million shares of Common Stock available for future awards. If the Plan is approved by stockholders at the Annual Meeting, no further awards will be made under the 2002 Plan.

        In recent years, Interpublic's long-term incentive awards under the 2002 Plan have consisted primarily of cash awards based on performance over a three-year period and stock options. Based on a reevaluation of Interpublic's incentive compensation practices, the Board of Directors has determined such cash-based awards are not adequately tailored to the goal of closely aligning Interpublic's long-term incentive arrangements with the interests of the company's stockholders and that stock option awards raise accounting issues and stockholder dilution concerns. Accordingly, the Board of Directors believes that it is in the best interests of Interpublic and its stockholders to focus more heavily on restricted stock awards, particularly restricted stock awards the receipt of which is tied to future performance, as the company's primary form of long-term incentive compensation. The Plan is designed to facilitate this change in Interpublic's incentive compensation objectives.

        Among the key features of the1995 Plan which the Board of Directors believes reflect Interpublic's strong commitment to sound compensation and governance practices, are the following:

    •
    The authorization for future issuance of up to 18.5 million shares, representing approximately 4.4 percent of the shares currently outstanding, of which only 4 million shares are available for stock option awards, with any increase in authorized shares subject to stockholder approval.

    •
    Prohibitions of stock option repricings, discounted stock options, reload stock options and loans to plan participants.

      •
      The administration of the Plan by the Compensation Committee, which is comprised solely of non-employee directors who qualify as independent under the rules of the NYSE.

            While future needs will dependits terms expired on actual grant practices, potential future hires and the price of the Common Stock, the Board of Directors currently believes that the shares of Common Stock authorized for issuance under the Plan will be sufficient to meet the company's incentive compensation needs for at least a three-year period.June 30, 2005.

            If the Plan is approved by stockholders, the Board of Directors currently anticipates that restricted stock awards under the Plan in 2004 will predominantly have service-based vesting provisions. However, the Board of Directors expects that in future years the Compensation Committee will place increasing emphasis on restricted stock awards that vest only if pre-established performance criteria are satisfied.

    Description of the 2006 Plan

            The text of the Plan is attached hereto as Appendix B and is hereby incorporated by reference. The following description of the 2006 Plan is qualified in its entirety by reference to the text of the Plan.thereof set forth in Appendix B.

    Purposes ofUnder the Plan,

            The purposes the Company, beginning January 1, 2006, may make offerings of the Plan are to promote the interestsshares of Interpublic by enabling Interpublic to:

      •
      attract, retain,Common Stock. Each offering will be approximately three months in duration, and motivate talented individuals who are the participants in the Plan,

      •
      provide the participants in the Planone offering period may not overlap with incentives tied to the achievement of business, financial and strategic objectives of Interpublic and its subsidiaries and affiliates and

      •
      provide the participants in the Plan with equity-based incentives and subsequent equity ownership opportunities, including incentives and opportunities tied to Interpublic's Common Stock.

    Administration

            The term of the Plan requires that it be administered by a committee (the "Committee") appointed by the Board of Directors that satisfies the requirements of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Under Rule 16b-3, the committee responsible for the administration of the plan must be composed solely of two or more members of the Board of Directors who are not employees of Interpublic and who do not have any other disqualifying affiliations with Interpublic. The Board of Directors has assigned the responsibility for the administration of the Plan to the Compensation Committee.

            If the Committee deems it advisable, it may delegate its authority under the Plan to the extent permitted by applicable law to one or more of its members or to one or more persons other than its members, except that no such delegation of authority is permitted with respect to the participation in the Plan of persons who are subject to Section 16 of the Exchange Act. No member of the Committee is eligible to receive an awardanother offering period under the Plan. An aggregate of 15,000,000 shares will be reserved for issuance under the Plan. An employee may not purchase more than 900 shares under any three-month offering.

    Eligibility

            AnyAn eligible employee may participate in an offering by authorizing payroll deductions of Interpublic,up to 10% of compensation during the offering period. Participants in the 2006 Plan will be offered Common Stock of the Company at a price per share equal to 90% of the lesser of the market price of a share on the offering date or anythe market price of a share on the last business day of the offering period, and without commission. All employees of the Company and certain of its subsidiaries or affiliates (defined generally to include any corporation or other entity in which Interpublic directly or indirectly owns at least a 40% interest), that the Committee determines to be responsible for, or able to contribute to, the growth, profitability, and success of Interpublic is eligible to participate in the Plan. Approximately 5,600 employees of Interpublic and its subsidiaries and affiliates will be eligible to participate in the Plan. Directors who are not employees of Interpublic or any of its subsidiaries or affiliates are not eligible2006 Plan in accordance with such rules as may be prescribed from time to participatetime by the Committee administering the 2006 Plan, which rules may neither permit nor deny participation in the Plan.



    Shares Available for Awards

            Under the Plan:

        •
        stock options may be granted in respect of a maximum of 4.5 million shares of Common Stock, of which no more than 200,000 shares may be the subject of incentive stock option awards in any calendar year; and

        •
        awards other than stock options may be granted in respect of 14 million shares of Common Stock.

            In determining at any time the number of shares of Common Stock available in the respective share pools for future awards under the2006 Plan the following rules will apply:

        •
        If a participant tenders shares, or shares otherwise issuable are withheld, in payment of all or any part of the exercise price of a stock option granted under the Plan or any prior stock incentive plan of Interpublic (a "Prior Plan"), or shares otherwise issuable are withheld to satisfy a tax withholding obligation in connection with the exercise of a stock option granted under the Plan or a Prior Plan, the shares so tendered or withheld will be addedcontrary to the pool of shares available for future stock option awards under the Plan.

        •
        If shares issued, issuable in respect of awards other than stock options, made, under the Plan or any Prior Plan are forfeited or if shares are surrendered in satisfaction of tax withholding obligations associated with the grant or vesting of an award under the Plan or a Prior Plan, other than stock options, the forfeited or surrendered shares will be added to the pool of shares available under the Plan, for future awards other than stock options.

    In addition, any shares of Common Stock underlying awards granted in assumption of, or in substitution for, outstanding awards previously granted by a company acquired by Interpublic or one of its subsidiaries or affiliates or with which Interpublic or one of its subsidiaries or affiliates combines, will not, unless required by law or regulation, be counted against the number of shares of Common Stock available for awards under the Plan.

            The shares of Common Stock issuable under the Plan may be either authorized but unissued shares or shares held in treasury and not reserved for some other purpose.

    Types of Awards

            The following types of awards may be made to eligible employees under the Plan:

      •
      stock options,

      •
      restricted stock,

      •
      restricted stock units,

      •
      performance units,

      •
      management incentive compensation performance awards,

      •
      shares in lieu of cash, and

      •
      dividend equivalents.

            The selection of employees to receive awards, the type and amount of an award, and the terms and conditions of an award all are matters that are determined in the sole discretion of the Committee.

            Stock Options    Stock options granted under the Plan may be either incentive stock options ("ISOs") that are intended to satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or options that are not intendedIRS regulations. No employee is entitled to meet such requirements ("nonstatutory stock options"). No participant may receive stock options with respectpurchase shares under the 2006 Plan if, after giving effect to more than 500,000 shares of Common Stock in any calendar year. The Plan prohibitsa purchase right, the Committee from granting any stock option with a so-called "reload" feature (under which the holder of a stock optionemployee owns or is automatically granted additional stock



    optionsentitled to the extent the holder tenders shares of Common Stock in paymentacquire 5% or more of the exercise pricetotal combined voting power or value of all classes of stock of the Company and its subsidiaries. No employee is permitted to accrue the right to purchase stock optionunder the 2006 Plan or to satisfy tax withholding obligations associated withany other stock purchase plan of the exercise).

            The exercise price ofCompany or its subsidiaries at a stock option may not be less than 100%rate exceeding $25,000 of the fair market value of the stock in any calendar year.

    The Board of Directors may at any time, or from time to time, amend the 2006 Plan in any respect, except that without the approval of shareholders, the 2006 Plan may not be amended (i) to increase or decrease the number of shares of Interpublic Common Stock reserved for issuance under the 2006 Plan or (ii) decrease the purchase price per share of the Interpublic Common Stock sold under the 2006 Plan.

    The 2006 Plan will terminate on December 31, 2015, or, if earlier, when all of the shares authorized for issuance under the 2006 Plan are sold or the Board of Directors in its discretion determines to terminate the 2006 Plan.

    Management estimates that approximately 17,000 employees of the Company and its subsidiaries, including three directors who are employees of the Company or its subsidiaries and other officers of the Company, will be eligible to participate in the 2006 Plan. The benefits to be received from the 2006 Plan will depend on the extent to which employees elect to participate and, therefore, are not determinable.

    U.S. Federal Income Tax Consequences

    The 2006 Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code. For U.S. federal income tax purposes, an employee does not


    realize income when the employee purchases shares under the Plan. If an employee disposes of shares purchased in an offering under the Plan more than two years after the date of the offering and more than one year after the date of purchase (the “holding periods”), the employee will realize ordinary income in the year of the disposition equal to the lesser of (a) the excess of the amount realized on the disposition over the purchase price or (b) 10% of the value of the shares on the date of the grant andoffering. Any additional gain that the term of a stock option mayemployee realizes will be capital gain. If the employee does not be longer than 10 years. Each stock option may be exercised at such times and subject to such terms and conditions as the Committee may specify at the timedispose of the grant or thereafter; provided that, except inshares before the event ofholding periods expire, the retirement, death or disability of the holder or upon the occurrence of a "change of control" (as hereinafter defined), a stock option may not be exercised in whole or in part during the twelve-month period following the grant. Payment of the exercise price of a stock option may be made (i) in cash or its equivalent, (ii) if and to the extent permitted by the Committee, by the delivery of or attestation to the ownership of shares of Common Stock that have been owned by the optionholder without restriction for a period of at least six months, or (iii) by a combination of the foregoing. The Plan prohibits the Committee form authorizing a loan to a holder of a stock option for the purpose of enabling the holder to pay all or any portion of the option exercise price or the associated tax withholding obligations.

            Restricted Stock    Restricted stock is Common Stock that is granted to an employee that will become vested, and therefore nonforfeitable, upon the satisfaction of such terms and conditions as the Committee may determine. Vesting may be employment-based, performance-based, or both. Employment-based awards of restricted stock vest if the holder completes a period of employment designated by the Committee. Performance-based awards of restricted stock vest to the extent that performance objectives established by the Committee are attained.

            The performance criteria selected by the Committee for performance-based awards of restricted stock must be based on one or more of the following criteria:

      •
      earnings per share,

      •
      operating income or operating income growth,

      •
      operating margin,

      •
      revenue or revenue growth,

      •
      organic revenue growth,

      •
      return on equity,

      •
      total shareholder return,

      •
      cash flow,

      •
      earnings before interest, taxes, depreciation and amortization or

      •
      any other criteria selected by the Committee in the case of any recipient of an award who is not a "covered employee" within the meaning of Section 162(m)(3) of the Internal Revenue Code.

    The foregoing performance criteria may relate to the performance of (i) Interpublic, (ii) a subsidiary of Interpublic, (iii) an affiliate of Interpublic, (iv) a division or unit of Interpublic or any subsidiary or any affiliate of Interpublic, (v) an office, group of agencies, or all or part of any agency system of Interpublic, (vi) the recipient of the award, or (vii) any combination of the foregoing, over a period established by the Committee, as measured either in absolute terms or in comparison with the performance of other companies.

            In any calendar year, no participant may be granted performance-based awards of restricted stock and restricted stock units relating in the aggregate to more than 300,000 shares of Common Stock.

            Until such time as the restrictions imposed by the Committee lapse (the "restricted period"), shares of restricted stock may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of by the holder. Except in the event of the retirement, death or disability of the holder or upon the occurrence of a "change of control", the restricted period may not be less than one year. Subject to such terms,



    conditions, and restrictions as may be imposed by the Committee, the holder, during the restricted period, otherwise has absolute ownership of the restricted shares, including the right to vote and receive dividends on the shares. A holder of restricted stock may irrevocably elect to have any withholding tax obligation associated with the lapse of restrictions on restricted stock satisfied by (i) having Interpublic withhold shares of restricted stock otherwise deliverable to the participant or (ii) delivering to Interpublic such restricted stock or other shares of Common Stock; provided that the Committee may, in its discretion, disapprove any such election.

            Restricted Stock Units    A restricted stock unit is a contractual right to receive a payment, in cash or in shares of common stock, as determined by the Committee that is based on the fair market value of a share of common stock and that becomes vested and nonforfeitable in whole or in part, upon the attainment of conditions established by the Committee. Vesting may be employment-based, performance-based, or both. Employment-based awards of restricted stock units vest if the holder completes a period of employment designated by the Committee. Performance-based awards of restricted stock units vest to the extent that performance objectives established by the Committee are attained. The performance criteria that may be selected by the Committee for performance-based awards of restricted stock units are the same as those described above with respect to the vesting of performance-based restricted stock awards.

            In any calendar year, no participant may be granted performance-based awards of restricted stock and restricted stock units relating in the aggregate to more than 300,000 shares of Common Stock.

            Restricted stock units may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of by the holder at any time. Except in the event of the retirement, death or disability of the holder or upon the occurrence of a "change of control", the restricted period may not be less than one year. The holder of a restricted stock unit has no ownership interest in the shares of Common Stock to which the restricted stock unit relates unless and until a payment in respect thereof is made in shares of Common Stock.

            Performance Units    Performance units represent a contractual right of the holder to receive a payment that becomes vested upon the attainment of performance objectives established by the Committee relating to one or more of the same criteria described above with respect to the vesting of performance-based restricted stock awards. The number of performance units granted to an employee, the applicable performance objectives, the performance period and all other terms and conditions of a performance unit are determined in the discretion of the Committee. Performance units may be settled in cash, in shares of Common Stock or a combination of cash and shares, as determined by the Committee. The maximum amount that may be paid to a holder with respect to a performance unit award for any three-year performance period is $4 million. If the performance period is longer or shorter than three years, this limit is subject to proportionate increase or reduction to reflect the length of the performance period. No employee may participate in more than three performance periods at one time.

    Management Incentive Compensation Performance Awards

            Under the management incentive compensation performance award component of the Plan, the Committee in its sole discretion is authorized to make management incentive compensation awards ("MICP awards") to employees of InterpublicCompany and its subsidiaries and affiliates, subject to the limitation that no single individual is permitted to receive in any calendar year an award in excess of $5 million (prorated to reflect the length of the period for which the MICP award is granted). The amount of any MICP awards is determined by the Committee and is contingent upon the achievement of performance objectives relating to one or more of the performance criteria that are the same as those described above with respect to the vesting of performance-based restricted stock awards.

            MICP awards may be made in cash, shares of Common Stock, or a combination of cash and shares. The Committee in its discretion may direct that up to 75% of an individual's MICP award may be paid on a deferred basis, subject to such terms and conditions as the Committee may prescribe.



            Shares in Lieu of Cash    The Committee may award shares of Common Stock in lieu of all or part of any compensation that otherwise is payable in cash to an employee by Interpublic or any of its subsidiaries or affiliates. If shares of Common Stock are issued in lieu of cash, the number of shares to be issued must have a fair market value equal to or less than the amount of cash otherwise payable.

            Dividend Equivalents    Dividend equivalents represent the right to receive a payment equal to the aggregate dividend payment on a corresponding number of shares of Common Stock, and may be paid in cash, shares of Common Stock, or a combination of cash and shares. In connection with any award under the Plan, the Committee in its discretion may grant dividend equivalents, which may be paid on a current, deferred, or contingent basis.

    Foreign Benefits

            The Committee may grant awards to employees of Interpublic and its subsidiaries and affiliates who reside in jurisdictions outside the United States. The Committee may adopt such supplements to the Plan as may be necessary to comply with applicable laws of such jurisdictions and to afford participants favorable treatment under such laws; provided that no award may be granted under any such supplement on the basis of terms or conditions that are inconsistent with provisions of the Plan.

    Termination of Employment

            If the employment of the holder of an award terminates for any reason, any nonvested portion of the award will be forfeited, unless the Committee in its sole discretion determines otherwise, except that only in the case of the retirement, death or disability of the holder may the Committee allow an award to become vested prior to the first anniversary of the grant.

    Nontransferability

            Unless the Committee shall permit (on such terms and conditions as it shall establish) an award to be transferred to a member of a participant's immediate family or to a trust, partnership, corporation, or similar vehicle, the parties in interest in which are limited to the participant and members of the participant's immediate family, no award may be assignable or transferable except by will or by the laws of descent and distribution.

    Change of Control

            Upon the occurrence of a "change of control" all awards then outstanding will immediately become fully vested. A change of control is defined by the Plan to mean the occurrence of any of the following events: (i) any person (within the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Interpublic or any of its subsidiaries, becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the combined voting power of Interpublic's then outstanding voting securities, (ii) a tender offer or exchange offer (other than an offer by Interpublic), pursuant to which 20% or more of the then outstanding shares of Common Stock were purchased, expires, (iii) the stockholders of Interpublic approve an agreement to merge or consolidate with another corporation and the surviving corporation is neither Interpublic nor a corporation that was, prior to the merger or consolidation, a subsidiary of Interpublic, (iv) the stockholders approve an agreement (including a plan of liquidation) to sell or otherwise to dispose of all or substantially all of Interpublic's assets, or (v) during any period of two consecutive years, individuals who, at the beginning of such period, constituted the Board cease for any reason to constitute at least a majority thereof, unless the election or the nomination for the election by Interpublic's stockholders of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period or who were elected by directors who were directors at the beginning of the period.


    Adjustments

            If the Committee at any time determines that a "corporate transaction" has occurred that affects the Common Stock such that an adjustment is required to preserve, or to prevent enlargement of, the benefits or potential benefits available under the Plan, the Committee may, in such manner as the Committee deems equitable, adjust any or all of (i) the number and kind of shares that thereafter may be made the subject of awards, (ii) the number and kind of shares that are subject to outstanding awards, and (iii) the grant, exercise, or conversion price of any award. In addition, the Committee may make provisions for a cash payment to a participant or other person holding an outstanding award. A "corporate transaction" is defined by the Plan to mean any stock split, stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Common Stock at a price substantially below fair market value, or other similar event.

    Repricing of Options

            Except adjustments to preserve, or prevent the enlargement of, benefits of a participant in the Plan in connection with a corporate transaction (as defined above), the Committee is not permitted to reprice stock options without the approval of Interpublic's shareholders.

    Amendment of the Plan

            The Board of Directors or the Committee may amend, suspend, or terminate the Plan, or any portion thereof, at any time; provided that no amendment may be made without shareholder approval if (i) shareholder approval is required by law, regulation or stock exchange listing requirement or (ii) if the amendment would increase the number of shares of Common Stock available for awards under the Plan, other than in connection with a corporate transaction as described above. Without the written consent of an affected participant, no termination, suspension, or modification of the Plan may adversely affect any right of such participant under the terms of an award granted before the date of such termination, suspension, or modification.

    Use of Proceeds

            All proceeds received by Interpublic from the sale of shares of Common Stock under the Plan will be used for general corporate purposes.

    Effective Date and Duration of the Plan

            The Plan will become effective on the date that it is approved by Interpublic's stockholders. No awards may be granted under the Plan after the annual meeting of Interpublic's stockholders in 2010. Upon stockholder approval of the Plan, no further awards may be made under the 2002 Plan.

    Federal Income Tax Consequences

            The material federal income tax consequences of awards under the Plan, based on the current provisions of the Internal Revenue Code and the regulations thereunder, are as follows:

            The grant of an option to an employee will have no tax consequences to the employee or to Interpublic or its subsidiaries or affiliates. In general, upon the exercise of an ISO, the employee will not recognize income, and the employer will not be entitled to a tax deduction. However,deduction in connection with the employee’s purchase or disposition of the shares. If the employee disposes of the shares before the holding periods expire, the employee will realize ordinary income in the year of the disposition equal to the excess of the acquired shares' fair market value on the exercise date over the exercise price is included in the employee's income for purposes of the alternative minimum tax. When an employee disposes of ISO shares, the difference between the exercise price and the amount realized by the employee will, in general, constitute capital gain or loss, as the case may be. However, if the employee fails to hold the ISO shares for more than one year after exercising the ISO and for more than two years after the grant of the ISO, the portion of any gain realized by the employee upon the disposition of the shares that does not exceed the excess of



    the fair market value of the shares on the exercise date of purchase over the exercise price generallythat the employee paid for the shares; any additional gain that the employee realizes will be treated as ordinary income, the balance of any gain or any loss will be treated as a capital gain, or loss, and the employerCompany or a subsidiary generally will be entitled to a tax deduction equal to the amount of ordinary income recognized by the employee. If an employee exercises an ISO, but fails to remain employed by Interpublic (or a subsidiary in which Interpublic holds at least 50% of the voting power) from the date of grant until three months preceding the date of exercise (one year preceding the date of exercise if the employee's employment terminated due to disability), the option will be treated for tax purposes as a nonstatutory stock option, as described below.

            In general, upon the exercise of a nonstatutory stock option, the employee will recognize ordinary income equal to the excess of the acquired shares' fair market value on the exercise date over the exercise price, and the employer generally will be entitled to a tax deduction in the same amount.

            With respect to other awards that are settled either in cash or in shares that are transferable or are not subject to a substantial risk of forfeiture, the employee will recognize ordinary income equal to the excess of (a) the cash or the fair market value of any shares received (determined as of the date of settlement) over (b) the amount, if any, paid for the shares by the employee, and the employer generally will be entitled to a tax deduction in the same amount.

            In the case of an award to an employee that is settled in shares that are nontransferable and subject to a substantial risk of forfeiture, the employee generally will recognize ordinary income equal to the excess of (a) the fair market value of the shares received (determined as of the date on which the shares become transferable or not subject to a substantial risk of forfeiture, whichever occurs first) over (b) the amount, if any, paid for the shares by the employee, and the employer generally will be entitled to a tax deduction in the same amount.

            An employee whose shares are both nontransferable and subject to a substantial risk of forfeiture may elect to recognize income when the shares are received, rather than upon the expiration of the transfer restriction or risk of forfeiture. If an employee makes this election, the amount of ordinary income, and the amount of the employer's tax deduction, are determined as of the date of receipt, rather than upon the expiration of the applicable restrictions.

            When an employee sells any shares acquired under a nonqualified stock option or any other award other than an ISO, the employee will recognize capital gain or loss equal to the difference between the amount realized on the disposition of the shares and the employee's basis in the shares. In general, the employee's basis in any such shares will be equal to the amount of ordinary income recognized in connection with the receipt of the shares plus any amount paid for the shares.

            When a cash payment is made to an employee, the employee will recognize the amount of the cash payment as ordinary income, and the employer generally will be entitled to a tax deduction in the same amount.

            In general, a corporation is denied a deduction for any compensation paid to its chief executive officer or to any of its four most highly compensated officers (other than the chief executive officer) to the extent that the compensation paid to the officer exceeds $1,000,000 in any year. "Performance-based compensation" is not subject to this deduction limit. The Plan permits the grant of both awards that qualify as performance-based compensation, such as options, performance-based restricted stock and restricted stock units, performance units and incentive compensation awards, and awards that do not so qualify, such as restricted stock and restricted stock units that are not performance-based, awards of shares of Common Stock in lieu of cash, and dividend equivalents.

            Any acceleration, vesting, or increase in the amount of an award under the Plan as a result of a change of control might under certain circumstances be deemed to be a "parachute payment" for tax purposes. In general, if the present value of all parachute payments to a "disqualified individual" (any one of a limited class of stockholders, officers, and highly compensated employees) equals or exceeds three times the individual's "base amount" (annualized compensation over a five-year period), the individual will be



    subject to a 20% excise tax on the excess of the parachute payments over the individual's base amount, and the employer will be denied a tax deduction for such excess, except to the extent it is established that the excess represents a reasonable compensation for services actually rendered. Payments outside of the Plan also may constitute parachute payments.

    New Plan Benefits

            The selection of employees to receive awards under the Plan will be determined by the Committee in its discretion. Therefore, the benefits under the Plan that will be received by any individual or group are not determinable. On April 6, 2004, the closing price of the Common Stock on the New York Stock Exchange was $16.15 per share.

    Vote Required

            The affirmative vote of a majority of the shares of the Common Stock, present in person or by proxy and entitled to vote at the Annual Meeting, is required to approve the Plan.

    The Board of Directors recommends a vote FOR this proposal.


    3. PROPOSAL TO ADOPT THE INTERPUBLIC NON-MANAGEMENT
    DIRECTORS' STOCK INCENTIVE PLAN

            The Board of Directors has adopted, and is submitting to stockholders for approval, the Interpublic Non-Management Directors' Stock Incentive Plan.

    Background

            In 1994, the stockholders of Interpublic approved the Interpublic Outside Directors' Stock Incentive Plan (formerly called the Interpublic Outside Directors' Stock Option Plan) for the purpose of enabling Interpublic to make equity compensation awards to its non-management directors. A description of the awards currently provided to non-management directors under the plan is set forth in this Proxy Statement under the heading "Election of Directors—Corporate Governance Practices and Board Matters—Non-Management Directors' Compensation".

            The Outside Directors' Stock Incentive Plan will expire by its terms on June 7, 2004. The Board of Directors believes that it is in the best interest of Interpublic and its stockholders to adopt a new plan that will permit Interpublic to continue to provide equity compensation to its non-management directors after expiration of the current plan.

            On March 25, 2004, the Board of Directors adopted the Interpublic Non-Management Directors' Stock Incentive Plan (the "Plan"), subject to approval by Interpublic's stockholders. The Board believes that the new plan will enable Interpublic to continue to attract and retain qualified people to serve as directors, and to enhance shareholder value by aligning the interests of the participating directors with stockholders through the granting of equity awards.

    Description of the Non-Management Directors' Stock Incentive Plan

            The text of the Plan is annexed hereto as Appendix C and is hereby incorporated by reference. The following description of the Plan is qualified in its entirety by reference to the text of the Plan.

    Administration

            The Plan is administered by the Corporate Governance Committee of the Board of Directors (the "Committee").



    Eligibility

            Participation in the Plan is limited to directors who are not employees of Interpublic or any of its subsidiaries ("Non-Management Directors"). Each of the seven nominees for election as a director at this Annual Meeting who is not an employee of Interpublic or its subsidiaries will be eligible participants.

    Shares Available

            An aggregate of 200,000 shares of Common Stock will be reserved for issuance under the Plan. These shares may be either authorized but unissued shares, treasury shares or shares purchased by Interpublic in the open market. The number of shares reserved for issuance under the Plan is subject to proportionate adjustment by the Corporate Governance Committee to the extent required to prevent dilution or enlargement in the event of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares or other similar event.

    Awards

            The following types of awards are granted in accordance with the specifications of the Plan or are available for grants as the Committee may determine from time to time in its discretion:

            Unrestricted Shares.    Unrestricted shares are shares of Common Stock that are not subject to forfeiture and are free of any and all restrictions on transfer.

            Restricted Shares.    Restricted shares are shares of Common Stock that for an initial period of time are not transferable and are subject to forfeiture. A Non-Management Director who receives a grant of restricted shares has all rights of ownership with respect to the restricted shares, including the right to vote and to receive dividends, except that, prior to the expiration of a three-year restriction period that begins on the date of grant, the Non-Management Director is prohibited from selling, assigning, pledging, hypothecating or otherwise transferring the restricted shares. If a Non-Management Director's service as a director terminates for any reason (including death) on or after the first anniversary of a grant of restricted shares, that portion of the restricted shares corresponding to the number of months of the three-year restriction period that have elapsed since the date of grant will vest and become immediately transferable, and the remainder of the restricted shares will be forfeited. If a Non-Management Director's service terminates for any reason (including death) before the first anniversary of a grant of restricted shares, all of such restricted shares will be forfeited.

            Restricted Share Units.    Restricted share units entitle the holder to receive at the time of the grantee's cessation of service as a Non-Management Director (or at such earlier time as the Committee may approve) a payment indeduct an amount equal to the fair market valueordinary income realized by the employee.

    The affirmative vote of the corresponding number of shares of Common Stock as of the date of cessation of service, payable in cash or in shares of Common Stock, as determined by the Committee. If a Non-Management Director's service as a director terminates for any reason (including death) prior to the first anniversary of a grant of restricted share units, the restricted share units will be immediately forfeited without any payment to the Non-Management Director. If a Non-Management Director's service as a director terminates for any reason (including death) on or after the first anniversary of a grant of restricted share units, the Non-Management Director will retain that portion of the restricted share units corresponding to the number of months of the three-year restriction period that have elapsed since the date of grant, and the remainder of the restricted share units will be forfeited. The Committee, in its discretion may credit the restricted share unit balance of a Non-Management Director with additional restricted share units corresponding to the dividends that are paid from time to time on the Common Stock. Restricted share units are not transferable other than by will or the laws of descent and distribution.

            Stock Options    Stock options entitle the holder to purchase shares of Common Stock at an exercise price equal to the fair market value of the Common Stock on the date of grant. Any options granted become exercisable three years after the date of grant and have a term of ten years, unless sooner



    terminated. If the holder of an option ceases to be a Non-Management Director before the option is exercisable, the option is forfeited. Any options that are not so forfeited will remain exercisable by the Non-Management Director or his or her legal representatives, heirs or beneficiaries for up to 36 months, but in no event after the expiration of the ten-year option term.

    Automatic Annual Grants

            Under the terms of the Plan, the following awards automatically will be made annually to each Non-Management Director:

      •
      On or about January 15 of each year, each Non-Management Director who is serving on the Board of Directors as of that date automatically will receive a grant of 800 unrestricted shares of Common Stock. This grant constitutes part of the director's annual retainer for service on the Board.

      •
      On or about January 15 of each year, each Non-Management Director who is serving on the Board of Directors as of that date automatically will receive a grant, at the election of the Non-Management Director, of either (i) 1,600 restricted shares or (ii) 1,600 restricted share units.

            Any other awards made under the Plan are at the sole discretion of the Committee.

    Termination and Amendment of the Plan

            The Plan may be terminated or amended by the Committee or the Board of Directors as it deems advisable; provided however that no amendment may revoke or alter in a manner unfavorable to a participant any grant of options, unrestricted shares, restricted shares or restricted share units then outstanding, nor may the Committee or the Board of Directors amend the Plan without stockholder approval if such approval is required by any applicable law, regulation or securities exchange listing requirement. No awards under the Plan may be made after May 31, 2009.

    Federal Income Tax Consequences

            The material federal income tax consequences of awards under the Plan, based on the current provisions of the Internal Revenue Code and regulations thereunder, are as follows:

            In the case of a grant to a director of restricted shares that are nontransferable and subject to a substantial risk of forfeiture, the director generally will recognize ordinary income equal to the fair market value of the shares received (determined as of the date on which the shares become transferable or not subject to a substantial risk of forfeiture, whichever occurs first), and Interpublic generally will be entitled to a tax deduction in the same amount.

            A director whose shares are both nontransferable and subject to a substantial risk of forfeiture may elect to recognize income when the shares are received, rather than upon the expiration of the transfer restriction or risk of forfeiture. If a director makes this election, the amount of ordinary income, and the amount of Interpublic's tax deduction, are determined as of the date of receipt, rather than upon the expiration of the applicable restrictions.

            In the case of a grant to a director of unrestricted shares, the director generally will recognize ordinary income equal to the fair market value of the shares received (determined as of the date of grant), and Interpublic generally will be entitled to a tax deduction in the same amount.

            When a cash payment is made to a director, the director will recognize the amount of the cash payment as income, and Interpublic generally will be entitled to a tax deduction in the same amount.

            The grant of a stock option to a director will not have tax consequences to the director or to Interpublic. In general, upon the exercise of a stock option, the director will recognize ordinary income equal to the excess of the acquired shares' fair market value on the exercise date over the exercise price, and Interpublic generally will be entitled to a tax deduction in the same amount.

            When a director sells shares that Interpublic granted to the director or shares that the director acquired under a stock option granted by Interpublic, the director will recognize capital gain or loss equal to the difference between the amount realized on the disposition of the shares and the director's basis in the shares. In general, the director's basis in any such shares will be equal to the amount of ordinary income that the director recognized in connection with the receipt or acquisition of the shares plus, in the case of shares acquired under a stock option, the exercise price.


    New Plan Benefits—2004

            The following table presents the benefits that would have been received in 2003 by each of the following persons and groups if the Plan had been in effect in 2003 to the extent such benefits would have been determinable.

    Name and Position
    		 Unrestricted Shares
    		 Restricted Shares
    		 Aggregate Dollar Value
    		 

    David A. Bell
     
    0
     
    0
     
     
    0
     
     Chairman of the Board,        
     President and Chief Executive Officer        

    John J. Dooner, Jr.
     
    0
     
    0
     
     
    0
     
     Chairman and CEO of McCann-Erickson        
     WorldGroup        

    Brian J. Brooks
     
    0
     
    0
     
     
    0
     
     Former Executive Vice President,        
     Chief Talent and Human Resources Officer        

    Nicholas J. Camera
     
    0
     
    0
     
     
    0
     
     Senior Vice President, General Counsel and        
     Secretary        

    Christopher J. Coughlin
     
    0
     
    0
     
     
    0
     
     Executive Vice President, Chief Operating        
     Officer, Chief Financial Officer        

    Philippe Krakowsky
     
    0
     
    0
     
     
    0
     
     Senior Vice President,        
     Director of Corporate Communications        

    Bruce S. Nelson
     
    0
     
    0
     
     
    0
     
     Executive Vice President        
     and Chief Marketing Officer        

    Gunnar P. Wilmot
     
    0
     
    0
     
     
    0
     
     Chief Operating Officer of Lowe +        
     Draft        

    Executive Group
     
    0
     
    0
     
     
    0
     

    Non-Executive Director Group
     
    5,600
     
    11,200
     
    $
    269,304
    (1)

    Non-Executive Officer Employee Group
     
    0
     
    0
     
     
    0
     
    (1)
    Assumes that the restricted stock and unrestricted shares of Common Stock were issued to the Non-Management Directors' on April 6, 2004, on which date the average of the high and low trading prices of the Common Stock, as reported on NYSE, was $16.03 per share.

    Vote Required

            The favorable vote of a majority of the shares of Common Stock present in person or by proxy and entitled to vote at the Annual Meeting is required to approve this proposal.

    The Board of Directors recommends a voteTHE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR this proposal.THE INTERPUBLIC GROUP
    OF COMPANIES EMPLOYEE STOCK PURCHASE PLAN (2006)



    4.3. APPOINTMENT OF INDEPENDENT AUDITORS

    PricewaterhouseCoopers has been appointed and is acting as independent auditors of Interpublic for 2004. This firm has been Interpublic'sInterpublic’s independent auditors since 1952. PricewaterhouseCoopers has advised Interpublic that they are independent auditors with respect to Interpublic and its subsidiaries within the meaning of the rules and regulations of the SEC.

    A representative of PricewaterhouseCoopers is expected to be present at the Annual Meeting and will have the opportunity to make a statement and to respond to appropriate questions.

    Interpublic is submitting to the vote of shareholders at the annual Meeting a proposal to confirm the appointment of PricewaterhouseCoopers LLP as independent auditors of Interpublic for the year 2005. Interpublic is submitting this proposal to you because the Board of Directors believes that such action follows sound corporate practice. If you do not confirm the appointment of independent auditors, the Board of Directors will consider it a direction to consider selecting other auditors for next year.2006. However, even if you confirm the appointment, the Board of Directors may still appoint new independent auditors at any time during the year2005 if it believes that such a change would be in the best interests of Interpublic and its stockholders.

    Fees Paid to PricewaterhouseCoopers

    The following table sets forth the aggregate fees billed by PricewaterhouseCoopers for audit services performed in connection with the consolidated financial statements and reports for fiscal years 20032004 and 2002,2003, respectively, and for other services rendered during those years with respect to Interpublic and its subsidiaries.

    Fee Category
    		 Fiscal 2003
    		 % of Total
    		 Fiscal 2002
    		 % of Total
    		 

     

     

     

    2004

     

    % of Total

     

    2003

     

    % of Total

     

    Audit Fees 26,540,000 67% 19,934,000 73%

    Audit Fees

     

    $

    81,210,000

     

     

    88

    %

     

    $

    26,540,000

     

     

    67

    %

     

    Audit Related Fees 3,909,000 10% 3,100,000 11%

    Audit Related Fees

     

    3,692,100

     

     

    4

    %

     

    3,909,000

     

     

    10

    %

     

    Tax Fees 8,918,900 23% 4,264,000 16%

    Tax Fees

     

    7,768,000

     

     

    8

    %

     

    8,918,900

     

     

    23

    %

     

    All Other Fees —   —   

    All Other Fees

     

    —

     

     

     

     

     

    —

     

     

     

     

     

     
    		   
    		   
    Total Fees $39,367,900 100%$27,298,000 100%

    Total Fees

     

    $

    92,670,100

     

     

    100

    %

     

    $

    39,367,900

     

     

    100

    %

     

     
    		   
    		   

    37



    Audit Fees:   Consists of fees billed for professional services rendered for the audit of Interpublic'sInterpublic’s consolidated financial statements and review of the interim condensed consolidated financial statements included in quarterly reports and services that are normally provided by PricewaterhouseCoopers in connection with statutory and regulatory filings or engagements, and attest services, except those not required by statute or regulation.

            2002 Audit Fees have been revised to include additional international fees previously not reported.

    Audit Related Fees:   Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of Interpublic'sInterpublic’s consolidated financial statements and are not reported under "Audit Fees"“Audit Fees”. These services include employee benefit plan audits, accounting consultations in connections with acquisitions/divestitures, workingassisting Interpublic with Interpublic as it preparesits preparations for compliance with Section 404 of the Sarbanes Oxley Act of 2002, advice on policies and procedures regarding the financial statement close process, attest services that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards.

    Tax Fees:   Consists of tax compliance/preparation and other tax services. Tax compliance/preparation consist of fees billed for professional services related to federal, state and international tax compliance, assistance with tax audits and appeals, assistance with custom and duties audits, expatriate tax services and assistance related to the impact of mergers, acquisitions and divestitures on tax return preparation. Other tax services include miscellaneous tax consulting and planning.

    All Other Fees:   There were no amounts that comprised other fees



    Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

    The Audit Committee pre-approvesapproves all audit and permissible non-audit services provided by the independent auditors. The permissible non-audit services may include audit-related services, tax-related services and all other services. The Audit Committee has adopted a policy for the pre-approval of services provided by the independent auditors. Under the policy, pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is subject to a specific budget. In addition, the Audit Committee may also pre-approve particular services on a case-by-case basis. For each proposed non-audit service, the independent auditor is required to provide detailed back-up documentation at the time of approval. The Audit Committee has delegated pre-approval authority to its Chairman for projects less than $100,000, who must report any decision to the Audit Committee at the next scheduled meeting.

    The affirmative vote of the majority of the shares of Common Stock present in person or by proxy and entitled to vote at the Annual Meeting is required to approve this proposal.


    THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR CONFIRMATION
    OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS.


    5. STOCKHOLDERS'4. STOCKHOLDERS’ PROPOSAL REGARDING NORTHERN IRELANDRECOMMENDING THAT THE BOARD ARRANGE FOR THE
    PROMPT SALE OF THE COMPANY TO THE HIGHEST BIDDER

    Interpublic is advised that three stockholders intenda stockholder intends to present the proposal set forth below for consideration and action by stockholders at the Annual Meeting. The namesname and addressesaddress of these three stockholdersthis stockholder and the number of shares of Common Stock eachthe stockholder has stated that ithe owns will be furnished to any shareholder by Interpublic promptly upon receipt by Interpublic of an oral or written request for such information. The stockholders'text of the stockholder’s proposal and supporting statement is as follows:

            WHEREAS,Text of Shareholder Proposal

    Resolved that the shareholders of Interpublic Group of Companies, Inc. has a wholly-owned subsidiary in Northern Ireland;

            WHEREAS,urge the securing of a lasting peace in Northern Ireland encourages us to promote means for establishing justice and equality;

            WHEREAS, employment discrimination in Northern Ireland was cited by the International Commission of Jurists as being one of the major causes of sectarian strife;

            WHEREAS, Dr. Sean MacBride, founder of Amnesty International and Nobel Peace Laureate, has proposed several equal opportunity employment principles to serve as guidelines for corporations in Northern Ireland. These include:

      1.
      Increasing the representation of individuals from under-represented religious groups in the workforce, including managerial, supervisory, administrative, clerical and technical jobs.

      2.
      Adequate security for the protection of minority employees both at the workplace and while traveling to and from work.

      3.
      The banning of provocative religious or political emblems from the workplace.

      4.
      All job openings should be publicly advertised and special recruitment efforts should be made to attract applicants from under-represented religious groups.

      5.
      Layoff, recall, and termination procedures should not in practice, favor particular religious groupings.

      6.
      The abolition of job reservations, apprenticeship restrictions, and differential employment criteria, which discriminate on the basis of religion or ethnic origin.

      7.
      The development of training programs that will prepare substantial numbers of current minority employees for skilled jobs, including the expansion of existing programs and the creation of new programs to train, upgrade, and improve the skills of minority employees.

        8.
        The establishment of procedures to assess, identify and actively recruit minority employees with potential for further advancement.

        9.
        The appointment of a senior management staff member to oversee the Company's affirmative action efforts and the setting up of timetables to carry out affirmative action principles.

      RESOLVED: Shareholders request the Board of Directors to:

              Make all possible lawful efforts to implement and/or increase activity on each of the nine MacBride Principles.

      Supporting Statement

              We believe that our company benefits by hiring from the widest available talent pool. An employee's ability to do the job should be the primary consideration in hiring and promotion decisions.

              Implementation of the MacBride Principles by Interpublic Group of Companies, Inc. Board of Directors to arrange for the prompt sale of Interpublic Group of Companies, Inc. to the highest bidder.


      Supporting Statement

      The purpose of the Maximize Value Resolution is to give all Interpublic Group of Companies, Inc. shareholders the opportunity to send a message to the Interpublic Group of Companies, Inc. Board that they support the prompt sale of Interpublic Group of Companies, Inc. to the highest bidder. I believe that a strong and or majority vote by the shareholders would indicate to the board the displeasure felt by the shareholders of the shareholder returns over many years and the drastic action that should be taken. Even if it is approved by the majority of the Interpublic Group of Companies, Inc. shares represented and entitled to vote at the annual meeting, the Maximize Value Resolution will demonstratenot be binding on the Interpublic Group of Companies, Inc. Board. The proponent however believes that if this resolution receives substantial support from the shareholders, the board may choose to carry out the request set forth in the resolution:

      The prompt auction of Interpublic Group of Companies, Inc. should be accomplished by any appropriate process the board chooses to adopt including a sale to the highest bidder whether in cash, stock or a combination of both.

      The proponent further believes that if the resolution is adopted, the management and the board will interpret such adoption as a message from the company’s stockholders that it is no longer acceptable for the board to continue with its concern for human rightscurrent management plan and equality of opportunity in its international operations.strategies.

              Please vote your proxyI URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTIONFOR these concerns.

      Interpublic'sInterpublic’s Statement in Opposition

              Interpublic has two agencies in Northern Ireland: McCann-Erickson Belfast, an agency with approximately 30 employees, which Interpublic acquired in June 1986 (hereinafter referred to as "MEB"); and Weber Shandwick Northern Ireland, an agency with approximately 17 employees, which Interpublic acquired in October 1998 (hereinafter referred to as "WSNI").

      The Board believes the proposed action is not in the best interest of Directors believesInterpublic or its shareholders. The Board agrees that its primary obligation is to maximize long-term shareholder value; however, the Board unanimously opposes the view that the policiesway to maximize value is to put Interpublic up for sale in an auction process.

      The Board continuously reviews Interpublic’s business to determine how to maximize value for the shareholders. The Board evaluates the current portfolio of businesses, assesses business processes and practices of MEBpasses judgment on the results achieved by management. The Board considers all available strategic and of WSNI are consistent with Interpublic's policy to recruit, employ and promote all qualified personnel without regard to race, creed, color, national origin, sex, age, veteran status or disability.

              Interpublic shares the proponents' concern for human rights and equality of opportunity as well as the need to encourage employment and opportunity in Northern Ireland. It believes that an effective commitment to fair employment has been made in good faith by MEB and by WSNI, and that implementation of all of the MacBride Principles is not necessary or desirable under the circumstances. Furthermore, the Board of Directors believes that it is not practical or prudent for Interpublic to develop solutions in the United States to problems unique to Northern Ireland.

              Interpublic believes that MEB and WSNI are in full compliance with the Fair Employment and Treatment (Northern Ireland) Order 1998, effective in Northern Ireland. Under this law, an employee designated as the Monitoring Officer is required to monitor the religious composition of the workforce and to submit a statutory annual report to the Fair Employment Commission. The Monitoring Officers for MEB and for WSNI report that they have found no evidence of religious or political discrimination in the composition of its workforce.

              MEB has adopted and implements the following Policy Statement on Religious Equality of Opportunity in Employment:

        1.
        Overall responsibility for policy and practice has been undertaken by the Managing Director, although it is emphasized that employees at every level within the organization have a responsibility in the promotion of equality of opportunity in employment.

        2.
        MEB endorses the merit principle, namely that the best individual for a job will be selected without regard for his or her religious belief or perceived religious affiliation. This principle applies both to permanent payroll and temporary positions. The merit principle is confirmed as applying to recruitment to Interpublic, training, transfer and promotion.

          3.
          Job vacancies which require external candidates will be advertised in the press or lodged with accredited organizationstactical options, including the job centers inconditions under which a way which ensures that qualified candidates across the community are made awaresale of such opportunities. Word of mouth as a means of securing applicants is discontinued.

          4.
          MEB will periodically review its selection criteria and procedures to maintain a system where individuals are selected, promoted and treated solely on the basis of their merits and those abilities which are appropriate to the job. Such reviews may include the evaluation of existing and new objective tests related to clearly defined job attributes.

          5.
          MEB will monitor the religious composition of the total employee body by defined job groupings and will carry out compositional analyses of all applicants for vacancies at every level. The religious affiliation records willInterpublic should be maintained, summarized and analyzed by the Monitoring Officer.

          6.
          Where compositional analysis points to the need for further affirmative action, MEB will determine what action is required to be taken and will diligently implement appropriate action.

          7.
          MEB will distribute and publicize this policy statement throughout the premises and elsewhere as is from time to time appropriate.

          8.
          MEB will ensure through the grievance procedure that any employee who believes that inequitable treatment has been applied to him or her within the scope of this policy is afforded full opportunity to raise the matter.

          9.
          All employees have responsibility to accept their personal involvement in the practical application of this policy, but specific responsibility falls upon management who are involved in recruitment, employee administration and training.

          10.
          It is the responsibility of all employees in conjunction with MEB to foster and encourage a harmonious working atmosphere in which no section of the community feels threatened or intimidated because of their religion.
        considered.

                WSNI has advised that it has completed a review of its employment and recruitment practices and procedures as required by Article 55 of the Fair Employment and Treatment (Northern Ireland) Order 1998 and has implemented the following policies with respect to religious equality of opportunity in employment:

          1.
          WSNI is committed to the twin principles of fair employment and equality in the workplace.

          2.
          Staff at all levels of WSNI are made aware of WSNI's commitment to fairness and equity of esteem.

          3.
          All vacancies are advertised widely in the press to ensure that all members of society in Northern Ireland, regardless of creed, religion, sex, age or race have the opportunity to learn of such employment opportunities.

          4.
          WSNI adheres to a strict recruitment process which is based entirely on the merit principle of the best person for the job, based on experience and qualifications.

          5.
          Overall responsibility for policy and practice has been undertaken by the Managing Director, although it is emphasized that employees at every level within the organization have a responsibility in the promotion of equality of opportunity in employment.

          6.
          WSNI will periodically review its selection criteria and procedures to maintain a system where individuals are selected, promoted and treated solely on the basis of their merits and those abilities which are appropriate to the job. Such reviews may include the evaluation of existing and new objective tests related to clearly defined job attributes.

            7.
            WSNI will ensure through the grievance procedure that any employee who believes that inequitable treatment has been applied to him or her within the scope of this policy is afforded full opportunity to raise the matter.

            8.
            All employees have responsibility to accept their personal involvement in the practical application of this policy, but specific responsibility falls upon management who are involved in recruitment, employee administration and training.

            9.
            It is the responsibility of all employees in conjunction with WSNI to foster and encourage a harmonious working atmosphere in which no section of the community feels threatened or intimidated because of their religion.

          Vote Required

          The affirmative vote of the majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting is required to approve the stockholders'this proposal.


          THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE
          STOCKHOLDERS'THIS PROPOSAL REGARDING NORTHERN IRELAND.

          INFORMATION FOR STOCKHOLDERS THAT HOLD INTERPUBLIC COMMON STOCK THROUGH A BANK OR BROKER.

          Under SEC rules, brokers and banks that hold stock for the account of their customers are permitted to elect to deliver a single Annual Report and proxy statement (as well as other shareholder communications from the issuer) to two or more shareholders that share the same address. If you and other residents at your mailing address own shares of Common Stock through a broker or bank, you may have received a notice notifying you that your household will be sent only one copy of Interpublic's 2003Interpublic’s 2004 Annual Report and this Proxy Statement. If you did not notify your broker or bank of your objection, you may have been deemed to have consented to the arrangement. If you determine that you would prefer in the future to receive a separate copy of Interpublic'sInterpublic’s Annual Reports and Proxy Statements, you may revoke your consent at any time by notifying Interpublic by letter addressed to The Interpublic Group of Companies, Inc., 12711114 Avenue of the Americas, New York, NY 10020,10036, Attention: Secretary or by calling


          Corporate Communications at (212) 399-8000.704-1200. Your notification should include the name of your brokerage firm or bank and the number of your account.

          If you would like to receive a separate copy of the 20032004 Annual Report or this Proxy Statement, please contact Interpublic at the above address or telephone number. If you hold your shares of Common Stock through a broker or bank and are receiving multiple copies of our Annual Reports and Proxy Statements at your address and would like to receive only one copy for your household, please contact your broker or bank.

          INFORMATION FOR PARTICIPANTS IN THE INTERPUBLIC GROUP OF COMPANIES, INC. SAVINGS PLAN.

          Participants in The Interpublic Group of Companies, Inc., Savings Plan (the "Plan"“Plan”) may vote the number of shares of Interpublic'sInterpublic’s Common Stock equivalent to the interest in Interpublic'sInterpublic’s Common Stock credited to their accounts under the Plan as of the record date. Participants may vote by instructions given to JPMorgan Chase Bank ("JPMorgan"(“JPMorgan”), the trustee of the Plan, pursuant to the proxy card being mailed with this document to Plan participants. JPMorgan has informed us that it will vote shares in accordance with duly executed instructions if received on or before May 13, 2004.November 9, 2005. JPMorgan further informs us that if JPMorgan does not receive timely instructions, the Common Stock credited to that participant'sparticipant’s account, pursuant to the terms of the Trust Agreement executed by Interpublic and JPMorgan, will not be voted by JPMorgan. JPMorgan will vote any shares of Common Stock held by the Plan that are not specifically



          allocated to any individual Plan participant (known as the suspense account) in the same proportion that JPMorgan votes the Common Stock for which it receives timely instructions.


          SOLICITATION OF PROXIES

          This solicitation of proxies is made on behalf of the Board of Directors of Interpublic. Solicitation of proxies will be primarily by mail. In addition, proxies may be solicited in person or by telephone, telefax, e-mail or other means by officers, directors and employees of Interpublic, for which they will receive no additional compensation. Banks, brokers and others holding stock in their names or in the names of nominees for the account of their customers will be reimbursed for out-of-pocket expenses incurred in sending proxy material to the beneficial owners of such shares. The cost of solicitation will be borne by Interpublic. D.F. King & Co., New York, N.Y., has been retained to assist Interpublic in the distribution of proxy materials to, and the solicitation of proxies from, brokers and other institutional holders at a fee of $9,000, plus reasonable out-of-pocket expenses. Interpublic also has agreed to indemnify D.F. King for certain liabilities, including liabilities arising under the federal securities laws.

          The Board of Directors is not aware of any other matters which may be brought before the meeting. If other matters not now known come before the meeting, the persons named in the accompanying form of proxy or their substitutes will vote such proxy in accordance with their best judgment.

                                By Order of the Board of Directors,

                                Nicholas J. Camera

                                Secretary

                                October 21, 2005

                                Nicholas J. Camera40


          Secretary


          April 23, 2004


          APPENDIX A

          THE INTERPUBLIC GROUP OF COMPANIES, INC.


          The Interpublic Group of Companies, Inc.
          AUDIT COMMITTEE CHARTER

          Purpose of Committee

          The purpose of the Audit Committee of the Board of Directors of The Interpublic Group of Companies, Inc. (IPG) is to assist the Board in fulfilling its oversight responsibilities with respect to (i) the integrity of IPG'sIPG’s financial statements, (ii) the qualifications, independence and performance of IPG'sIPG’s independent auditors, (iii) the performance of IPG'sIPG’s internal audit function, and (iv) compliance by IPG with legal and regulatory requirements.

          The Committee also:

            •

            ·Prepares the Audit Committee report that Securities and Exchange Commission ("SEC"(“SEC”) rules require to be included in IPG'sIPG’s annual proxy statement, and

            •

            ·Provides an avenue for communication between internal audit, the independent auditors, financial management and the Board. The Committee should have a clear understanding with the independent auditors that they must maintain an open and transparent relationship with the Committee, and that the ultimate accountability of the independent auditors is to the Board and the Committee.

          The Committee shall report to the Board on a regular basis.

          Committee Membership

          The Committee shall comprise three or more directors, each of whom, in the business judgment of the Board, shall satisfy the independence and experience requirements of the New York Stock Exchange and any other legal and regulatory requirements. At least one member shall be a financial expert as defined by the SEC.

          Members of the Committee shall be recommended by the IPG Directors and be elected by the full Board. The Committee members will be listed in the annual report to stockholders.

          Resources and Authority of the Committee

          The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including full access to IPG employees and officers and internal or external advisors or consultants. If in the course of fulfilling its duties, the Committee wishes to consult with outside legal, accounting or other advisors, the Committee may retain these advisors without seeking Board Approval. IPG shall provide for appropriate funding, as determined by the Committee, for payment of compensation to the independent auditors for the purpose of rendering or issuing an audit report and to any advisors employed by the Committee.

          Committee Structure and Operations

          The Board shall designate one member of the Committee as its Chair. The Committee may meet in person or telephonically or act by unanimous written consent. The Committee Chair, in consultation with Committee members, shall determine the schedule of meetings of the Committee, but no less than at least quarterly. Further meetings shall occur, or matters submitted for action by unanimous written consent, when deemed necessary or desirable by the Committee, its Chair or the Chairman of IPG. The Committee is to meet periodically in separate executive sessions with the Chief Financial Officer (and/or other management personnel) internal audit and the independent auditors.

          A-1



          The scheduling of meetings is the responsibility of the Committee Chair. The Committee Chair, who may consult with internal audit, management or other Committee members, develops the Committee'sCommittee’s agenda for its meetings. Where practicable, materials should be distributed to Committee members prior to each Committee meeting.

          Delegation to Subcommittee

          The Committee may delegate all or a portion of its duties and responsibilities to subcommittees of the Committee.

          Attendance

          The Committee Chair may invite such members of management, the Board, representatives of the independent accountantsauditors and internal audit and other persons to the Committee'sCommittee’s meetings, as he or she may deem desirable or appropriate.

          Committee Authorities, Duties and Responsibilities

          The following are the authorities, duties and responsibilities of the Committee:

          1.

          To have the sole authority to select, (subject to shareholder ratification) retain and terminate IPG'sIPG’s independent auditors. The Committee shall be directly responsible for the compensation and oversight of the work of the independent auditors (including resolution of disagreements between management and the independent auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or related work. The independent auditors shall report directly to the Committee. The Committee shall:

          ·

          •
          Review and discuss with the independent auditors the scope, staffing and general extent of the audit. The Committee'sCommittee’s review should include an explanation from the independent auditors of the factors considered by the auditors in determining the audit scope, including the major risk factors. The independent auditors should confirm to the Committee that no limitations have been placed on the scope or nature of their audit procedures.

          •

          ·Pre-approve all services, both audit (including all audit engagement fees and terms), and permitted non-audit, to be performed for IPG by the independent auditors. The Committee:

          ·

          •
          may consult with management in the decision making process, but may not delegate this authority to management.

          •

          ·may, from time to time, delegate its authority to pre-approve such services to one or more Committee members, provided that any such approvals are presented to the full Committee at the next scheduled Audit Committee meeting.

          •

          ·hereby delegates to the Chair of the Committee the authority to pre-approve audit or non-audit services whenever compensation for such services is $100,000 or less, provided that any such approvals are presented to the full Committee at the next scheduled Audit Committee meeting.

          •

          ·Evaluate the independent auditors'auditors’ qualifications, performance and independence, including considering whether the independent auditors'auditors’ quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the independent auditors'auditors’ independence and present the Committee'sCommittee’s conclusions and recommendations with respect to the


              independent auditors to the full Board on at least an annual basis. As part of such evaluation, the Committee shall:

              •

              ·Review a report or reports prepared at least annually by the independent auditors:

              ·

              •
              describing their internal quality control procedures,

              A-2



              •

              ·describing any material issues raised by (i) the most recent peer or internal quality control review of the firm or (ii) by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more audits carried out by the firm and any steps taken to deal with any such issues, and

              •

              ·describing all relationships between the independent auditors and IPG and providing confirmations with respect to the SEC'sSEC’s auditor independence rules.

              •

              ·Review and evaluate the senior members of the independent auditors'auditors’ team, particularly the lead partner of the independent auditors.

              •

              ·Discuss with management and internal audit their views of the independent auditors'auditors’ performance.


          The Committee shall set clear policies with management for the hiring of current or former employees of the independent auditors, who participated in any capacity in the audit of IPG.

          2.

          To review and discuss with management, and the independent auditors, in separate meetings if the Committee deems it appropriate:

          ·

          •
          the annual audited financial statements, including IPG'sIPG’s disclosures under "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations"Operations”, prior to the filing of IPG'sIPG’s Form 10-K and recommend to the Board whether the audited financial statements should be included in IPG'sIPG’s Form 10-K,

          •

          ·the quarterly financial statements, including IPG'sIPG’s disclosures under "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations"Operations”, prior to the filing of IPG'sIPG’s Form 10-Q including the results of the independent auditors'auditors’ review of the quarterly financial statements,

          •

          ·any major issues regarding accounting principles and financial statement presentations, alternatively—significant financial reporting issues and judgments made in connection with the preparation of IPG'sIPG’s financial statements, including any significant changes in IPG'sIPG’s selection or application of accounting principles,

          •

          ·any analyses or other written communications prepared by management, and/or the independent auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements,

          •

          ·the effect of regulatory and accounting initiatives including any SEC investigations or proceedings, as well as off-balance sheet structures, on the financial statements of IPG

          •
          and

          ·any correspondence with regulators or governmental agencies and any published reports which raise material issues regarding IPG'sIPG’s financial statements or accounting policies, and

          •
          policies.

          ·disclosures made to the Audit Committee by IPG'IPG’s Chief Executive Officer and Chief Financial Officer during their certification process for the Form 10-KForm-10K and Form 10-Qs10-Q’s about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in IPG'sIPG’s internal controls.


            3.

            To review and discuss with the independent IPG's auditors:

            ·

            •
            reports from the independent auditors on:

            ·

            •
            all critical accounting policies and practices, to be used,

            A-3



            •

            ·all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditors, and

            •

            ·other material written communications between the independent auditors and IPG management, such as any management letter or schedule of unadjusted differences;

            •

            ·their judgments about the quality of IPG'sIPG’s accounting principles used in financial reporting.

            reporting, and may request confirmation from the independent auditors at the end of each of the four quarters of the year that they have nothing to report to the Committee, if that is the case, or the enumeration of required reporting issues; and

            ·       their views about the quality of IPG’s financial and accounting personnel.

            4.

            To discuss with the independent auditors any audit problems or difficulties and management'smanagement’s response thereto, including those matters required to be communicated by the independent auditors by Statement on Auditing Standards (SAS) 61 as amended by SAS 90 relating to the conduct of the audit, including:

            ·

            •
            Any restrictions on the scope of activities or access to requested information,

            •

            ·any significant disagreements with management,

            •

            ·any accounting adjustments that were noted or proposed by the independent auditors but were "passed"“passed” as immaterial or otherwise,

            •

            ·any significant consultation on matters that otherwise are required to be disclosed to the Committee made with the external auditors'auditors’ national office, and any "management"“management” or "internal control"“internal control” letter issued, or proposed to be issued, by the independent auditors to IPG.

            The Committee shall receive a written communication provided by the independent auditors concerning their judgment about the quality of IPG'sIPG’s accounting principles, as outlined in SAS 61 as amended by SAS 90, and that they concur with management'smanagement’s representation concerning audit adjustments.

            5.

            To review with IPG'sIPG’s management, internal audit and independent auditors IPG'sIPG’s significant accounting and financial reporting controls, any major issues as to the adequacy of IPG'sIPG’s internal controls and any special audit steps adopted in light of material control deficiencies. Obtain annually, the independent auditors management letter as to their commentary on internal control recommendations.

            6.

            To meet with management, internal audit and the independent auditors to discuss any relevant significant recommendations that the independent auditors may have, particularly those characterized as "material"“material”, "reportable"reportable” or "serious"“serious”.

            7.

            To discuss with management, IPG'sIPG’s policies with respect to earnings press releases and all financial information, such as earnings guidance, provided to analysts and rating agencies, including the types of information to be disclosed and the types of presentation to be made and paying particular attention to the use of "pro forma"“pro forma” or "adjusted"“adjusted” non-GAAP information. The Committee or its Chair may review any of IPG'sIPG’s earnings press releases as the Committee or the Chair deems appropriate.

            8.

            To discuss with management and internal audit IPG'sIPG’s major financial risk exposures and the steps that have been taken to monitor and control such exposures, including IPG'sIPG’s risk assessment and risk management policies.
            policies, i.e. Enterprise Risk Management, utilizing the COSO framework.

            A-4



            9.

            To review the scope of internal audit'saudit’s work plan for the year. The Committee should discuss the responsibilities, budget and staffing of internal audit with the independent auditors. The Committee should also receive regular reports of major findings by internal audit and how management is addressing the conditions reported.

            10.

            To review the appointment and replacement of the senior internal audit executive.

            11.

            To oversee compliance with IPG'sIPG’s Code of Ethics and report on such compliance to the Board. Review reports and disclosures of insider and affiliated party transaction. The Committee shall consider any reports from the independent auditors pursuant to Section 10AQ(b) of the Securities Exchange Act of 1934.

            12.

            To establish procedures for:

            ·

            •
            The receipt, retention and treatment of complaints received by IPG regarding accounting, internal accounting controls or auditing matters, and

            •

            ·The confidential, anonymous submission by employees of IPG of concerns regarding questionable accounting or auditing matters.

            The Committee shall review any significant complaints regarding accounting, internal accounting controls or auditing matters received pursuant to such procedures.

            13.

            To review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. This should be done in compliance with applicable NYSE Audit Committee requirements.

            14.

                      To review and assess the Company’s compliance to its Anti-fraud Program as required under the Sarbanes-Oxley Act of 2002.

            15.Any other duties or responsibilities expressly delegated to the Committee by the Board.

            Committee Report

            The Committee shall produce and provide to the Board the Audit Committee Report for inclusion in IPG'sIPG’s proxy statement in accordance with applicable SEC rules and regulations.

            Performance Evaluation

            The Committee shall evaluate at least annually its own performance.

            Limitation of Committee Role

            While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that IPG'sIPG’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. IPG'sIPG’s financial statements are the responsiblityresponsibility of management. The independent auditors are responsible for planning and conducting audits to determine whether the financial statements present fairly in all material respects the financial position of IPG. Furthermore, while the Audit Committee is responsible for reviewing IPG'sIPG’s policies and practices with respect to risk assessment and management, it is the responsibility of the Chief Executive Officer and senior management to determine the appropriate level of IPG'sIPG’s exposure to risk.

            Approved by the Board of Directors (2004)


            A-5



            AppendixB

            APPENDIX B


            THE INTERPUBLIC GROUP OF COMPANIES INC.

            2004 PERFORMANCE INCENTIVEEMPLOYEE STOCK PURCHASE PLAN
            (2006)

            Section 1.    Purpose.

            The purposespurpose of the Plan is to provide employees an opportunity to purchase shares of IPG stock through offerings to be made from time to time during the ten-year period commencing January 1, 2006. 15,000,000 shares in the aggregate are reserved for this purpose.

            1.Administration:   The Plan shall be administered by a Committee appointed by the Board of Directors, consisting of at least 3 members. The Committee shall have authority to promoteadopt rules and regulations for the interestsadministration of the CompanyPlan; its interpretations and its shareholdersdecisions with regard thereto shall be final and conclusive.

            2.Eligibility:   All employees of the Corporation and any subsidiaries designated by enabling the Company to:

              (a)
              attract, retain,Committee shall be eligible to participate in the Plan, subject to and motivate talented individualsin accordance with such rules as Eligible Employees;

              (b)
              provide Eligible Employees with incentives tiedthe Committee may prescribe from time to time, which rules, however, shall neither permit nor deny participation in the Plan contrary to the achievement of business, financial, and strategic objectivesrequirements of the CompanyCode (including, but not limited to, Section 423(b)(3), (4) and its Subsidiaries(8) thereof) and Affiliates; and

              (c)
              provide Eligible Employees with equity-based incentives and subsequent equity ownership opportunities, including incentives and opportunities tied to the Company's Common Stock.

            Section 2.    Definitions.

            regulations promulgated thereunder. Unless the context clearly indicatesCommittee determines otherwise, the following terms, when usedemployees shall not be eligible to participate in an offering:

            (a)    employees who were not employed by the Plan in capitalized form, shall have the meanings set forth below:

                    "Affiliate" means any corporation or other entity (other than the CompanyCorporation or one of its Subsidiaries)subsidiaries on the Eligibility Date,

            (b)   employees whose customary employment on the Date of Offering is 20 hours or less per week, and

            (c)    employees whose customary employment on the Date of Offering is for not more than 5 months in whichany calendar year.

            Notwithstanding the Company directlyforegoing, no employee may be granted an option to purchase IPG stock under an offering if such employee, immediately after the option is granted, owns 5% or indirectly owns at least forty percent (40%)more of the total combined voting power or value of all classes of stock of the entityCorporation or at least forty percent (40%)its subsidiaries. For purposes of the preceding sentence, the rules of Section 424(d) of the Code shall apply in determining the stock ownership interests inof an individual, and stock that an employee may purchase under outstanding options shall be treated as stock owned by the entity.employee.

                    "3.Offerings:   The Corporation shall make one or more offerings to eligible employees to purchase IPG stock under the Plan. The first such offering shall be made on the Date of Offering specified by the Committee, which shall occur no earlier than January 1, 2006. The Date of Offering for each subsequent offering shall not occur before the expiration of approximately 3 months since the next preceding Date of Offering. The terms and conditions of each such offering shall specify the number of shares of IPG stock that may be purchased thereunder and a Purchase Period of approximately 3 months’ duration, commencing on the Date of Offering. The Purchase Period for one offering shall not overlap with the Purchase Period for any other offering. An eligible employee’s participation in an offering shall be based on the Compensation that such eligible employee receives during the Purchase Period for such offering (or during the portion of such Purchase Period in which the eligible employee elects to participate).

            4.Participation:   An employee who is eligible to participate in an offering may elect, in a manner approved by the Committee, to participate in such offering. Such election shall authorize a regular payroll deduction from the employee’s Compensation and shall specify the date on which such deduction is to commence, which may not be retroactive.

            5.Deductions:   The Corporation shall maintain payroll deduction accounts for all participating employees. An eligible employee may authorize a payroll deduction, with respect to an offering, of up to a

            B-Award1" means any grant or award



            maximum of 10% of the Compensation he receives during the Purchase Period for such offering (or during the portion of such Purchase Period in which the eligible employee elects to participate).

            No employee may be granted an option that permits his rights to purchase stock under the Plan, as evidencedor any other stock purchase plan of the Corporation or its subsidiaries, to accrue (within the meaning of Section 423(b)(8) of the Code and the regulations thereunder) at a rate that exceeds $25,000 of the fair market value of stock (determined at the date of the offering) for each calendar year in which the option is outstanding at any time.

            6.Deduction Changes:   An eligible employee may elect, in a written documentmanner approved by the Committee, to increase or decrease his payroll deduction. The change may not become effective sooner than the next pay period after the employee makes such election. During a Purchase Period, an eligible employee may elect to increase his payroll deduction only once and to reduce his payroll deduction only once.

            7.Withdrawal of Funds:   An employee may at any time and for any reason permanently withdraw the balance accumulated in his payroll deduction account hereunder, and thereby withdraw from participation in the then-current offering. He may thereafter begin participation again only once during the remainder of the Purchase Period specified in such offering. Partial withdrawals shall not be permitted.

            8.Purchase of Shares:   Each employee participating in any offering under the Plan shall be granted an option, on the Date of Offering, for as many full shares of IPG stock as he elects to purchase with the following amounts:

            (a)    up to 10% of the Compensation received by such employee during the specified Purchase Period (or during the portion of such Purchase Period in which the eligible employee elects to participate), to be paid by payroll deductions during such period; and

            (b)   the balance (if any) carried forward from his payroll deduction account for the preceding Purchase Period pursuant to the final paragraph of this Section 8.

            Notwithstanding the preceeding sentence, in no event may the number of shares of IPG stock purchased by any employee under an offering exceed 900 shares.

            Payroll deductions from an eligible employee’s Compensation shall be made under each offering to the extent authorized by such employee in a manner approved by the Committee and subject to the limitations that apply to such offering. A separate payroll deduction account shall be maintained for each participating employee with respect to each offering. The payroll deductions from an eligible employee’s Compensation during the Purchase Period for an offering shall be credited to such employee’s payroll deduction account for such offering.

            The purchase price for each share purchased under any offering shall be equal to 90% of the lesser of (i) the Average Market Price on the Date of Offering or (ii) the Average Market Price on the last business day of the Purchase Period specified by the offering.

            As of the last business day of each Purchase Period, the balance in each participating employee’s payroll deduction account and the purchase price for such Purchase Period shall be determined. If a participating employee has sufficient funds in his payroll deduction account to purchase one or more full shares of IPG stock as of such date, the employee shall be deemed to have exercised his option to purchase such share or shares of IPG stock at such price, his payroll deduction account shall be charged for the amount of the aggregate purchase price for such share or shares, and the ownership of such share or shares shall be appropriately evidenced on the books of the Corporation. If an employee purchases shares of IPG stock hereunder, the Corporation shall deliver, or cause to be delivered, promptly to such employee, a Participant as provided in Section 12(a) hereof.statement reflecting the status of his payroll deduction account.

                    "B-2



            A participating employee may not purchase a share of IPG stock under any offering after the end of the applicable Purchase Period for such offering. Any balance remaining in an employee’s payroll deduction account at the end of a Purchase Period shall be carried forward into the employee’s payroll deduction account for the following Purchase Period under the Plan or, upon the termination of the Plan, into the employee’s payroll deduction account for the first Purchase Period under any successor plan if a successor plan is then in effect. In no event shall the balance carried forward from a Purchase Period be equal to or greater than the purchase price for such Purchase Period. Any balance remaining in an employee’s payroll deduction account at the termination of the Plan shall be refunded automatically to such employee in accordance with Section 18 hereof unless a successor plan becomes effective immediately following the termination of the Plan.

            9.BoardIssuance of Certificates:   The Corporation shall issue certificates for shares of IPG stock purchased under the Plan to participating employees upon request.

            "10.Registration of Certificates:   Certificates for shares of IPG stock purchased under the Plan shall be registered only in the name of the employee, provided that if the employee so elects, in a manner approved by the Committee, such certificates shall be registered in the employee’s name jointly with a member of his family, with right of survivorship. If an employee resides in a jurisdiction that does not recognize such a joint tenancy, such employee may elect, in a manner approved by the Committee, to have such certificates for shares of IPG stock registered in his name as tenant in common with a member of his family, without right of survivorship.

            11.Definitions:   “Average Market Price” on any day means the average of the high and low sales prices, on such day, of shares of IPG stock on the principal securities exchange on which such shares are traded or, if there are no such sales on such day, then the average of the high and low sales prices of such shares on the day or days that the Committee determines to be appropriate for purposes of valuation.

            “Board of Directors” means the Board of Directors of the Company.Corporation.

                    "Change of Control" means the occurrence of any of the following events:

              (a)
              any person (within the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than the Company or any of its Subsidiaries, becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of thirty percent (30%) or more of the combined voting power of the Company's then outstanding voting securities; or

              (b)
              a tender offer or exchange offer (other than an offer by the Company), pursuant to which twenty percent (20%) or more of the then outstanding shares of Common Stock were purchased, expires; or

              (c)
              the stockholders of the Company approve an agreement to merge or consolidate with another corporation and the surviving corporation is neither the Company nor a corporation that was, prior to the merger or consolidation, a subsidiary of the Company; or

              (d)
              the stockholders approve an agreement (including a plan of liquidation) to sell or otherwise to dispose of all or substantially all of the Company's assets; or

              (e)
              during any period of two consecutive years, individuals who, at the beginning of such period, constituted the Board cease for any reason to constitute at least a majority thereof, unless the election or the nomination for the election by the Company's stockholders of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period or who were elected by directors who were directors at the beginning of the period.

                    "Code"“Code” means the Internal Revenue Code of 1986, as amended.amended from time to time.

                    "Committee"“Committee” means the committee establishedappointed by the Board of Directors pursuant to Section 31 hereof.



                    "Common Stock"“Compensation” means only basic compensation, including any employer contribution to a profit-sharing or stock bonus plan (including the Company's $0.10 par value common stock.Interpublic Savings Plan) or to any other employee benefit plan to the extent that such employer contribution represents an amount that would have been paid to the employee in cash, as basic compensation, but for the employee’s election pursuant to a qualified cash or deferred arrangement under Section 401(k) of the Code (an “elective cash or deferred contribution”) or pursuant to a cafeteria plan within the meaning of Section 125 of the Code (a “salary reduction contribution”), and excluding overtime, bonuses, cost-of-living allowances, deferred compensation awards (apart from any elective cash or deferred contribution), or any other extra payment of any kind (apart from any salary reduction contribution). Solely for purposes of the Plan, “Compensation” consisting of an elective cash or deferred contribution or a salary reduction contribution shall be deemed to be received by the employee on the date on which the contribution would have been paid to the employee but for the employee’s election.

                    "Company"“Corporation” means The Interpublic Group of Companies, Inc.

                    "Corporate Transaction" means“Date of Offering” shall be the first Working Day during the Purchase Period specified for any stock split, stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Common Stock at a price substantially below fair market value, or other similar event.

                    "Disability" means long-term disability as definedmade under the termsPlan.

            “Eligibility Date” means, with respect to every offering with a Date of Offering in the same calendar year, the first day of the Company's applicable long-term disability plans or policies.second calendar month immediately preceding the first Date of Offering in such calendar year. For example, if February 1st is the first Date of Offering in a calendar year, the

                    "B-Dividend Equivalent3"



            December 1st immediately preceding such February 1st shall be the Eligibility Date for every offering with a Date of Offering in such calendar year.

            “IPG stock” means an Award, granted in accordance with the provisions of Section 10 hereof, that provides for payments equivalent in amount to the dividends on Shares.

                    "Eligible Employee" means any employeecommon stock of the Company, its Subsidiaries, or its Affiliates determined by the Committee to be responsible for, or able to contribute to, the growth, profitability, and success of the Company. However, this term does not include directors who are not employees of such entities.Corporation.

                    "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time.

                    "Executive Officer" means those persons who are officers of the Company within the meaning of Rule 16a-l(f) of the Exchange Act.

                    "Incentive Stock Option" or "ISO" means an Option intended to meet the requirements of Section 422 of the Code.

                    "Management Incentive Compensation Performance Award" or "MICP Award" means an Award granted under Section 8 hereof and payable wholly in cash, wholly in Shares, or partly in cash and partly in Shares in accordance with the terms of the Award.

                    "Nonstatutory Stock Option" means an Option that is not intended to be an Incentive Stock Option.

                    "Option" means the right to purchase the number of Shares specified by the Committee, at a price and during a term fixed by the Committee in accordance with the Plan and subject to any other limitations and restrictions (required by law or otherwise) as the Plan and the Committee shall impose.

                    "Participant" means an Eligible Employee selected by the Committee to receive an Award under the Plan.

                    "Performance Criteria" means earnings per share, operating income, operating income growth, operating margin, revenue, revenue growth, organic revenue growth, return on equity, total shareholder return, cash flow, earnings before interest, taxes, depreciation, and amortization ("EBITDA"), or any other criteria selected by the Committee; provided that any such other criteria shall not apply to an Award to a "covered employee" within the meaning of Section 162(m)(3) of the Code. Performance Criteria may relate to the performance of (a) the Company, (b) a Subsidiary, (c) an Affiliate, (d) a division or unit of the Company, any Subsidiary, or any Affiliate, (e) an office, group of agencies, or all or part of any agency system, (f) the Participant, or (g) any combination of the foregoing, as measured either in absolute terms or in comparison with the performance of other companies.

                    "Performance Period" means a period during which an Award of Performance Units is subject to forfeiture. The Performance Period that applies to an Award made to a Participant may overlap or coincide with the Performance Period that applies to another Award made to that Participant. The duration of a Performance Period shall not be less than one year.

                    "Performance Units" means any Award of a contractual right granted under Section 7 hereof to receive cash or Shares that becomes vested upon the attainment, in whole or in part, of performance objectives determined by the Committee.

                    "Plan"“Plan” means The Interpublic Group of Companies, Inc. 2004 Performance IncentiveEmployee Stock Purchase Plan (2006), as set forth herein and as it may be amended from time to time.



                    "Plan Year"“Purchase Period” means the calendar year.

                    "Prior Plan" means The Interpublic Groupperiod of Companies, Inc. 2002 Performance Incentive Plan, The Interpublic Groupapproximately 3 months, commencing on the Date of Companies, Inc. 1997 Performance Incentive Plan, The Interpublic Group of Companies, Inc. 1996 Performance Incentive Plan, The Interpublic Group of Companies, Inc. 1988 Stock Option Plan,Offering and The Interpublic Group of Companies, Inc. 1986 Stock Incentive Plan.

                    "Restricted Period" means a period during which an Award of Restricted Stock is subject to forfeiture. The Restricted Period that applies to an Award made to a Participanteligible employee may overlap or coincide with the Restricted Period that applies to another Award made to that Participant. The duration of a Restricted Period shall not be less than one year; provided that a Restricted Period may terminate before the expiration of one year, pursuant to Section 11 hereof, in connection with the termination of the Participant's employment due to retirement, death, or Disability or, pursuant to Section 12(d) hereof, by reason of a Change of Control.

                    "Restricted Stock" means any Award of Common Stock granted under Section 6 hereof that becomes vested and nonforfeitable, in whole or in part, upon the attainment, in whole or in part, of conditions established by the Committee.

                    "Restricted Stock Unit" means any Award of a contractual right granted under Section 6 hereof to receive an amount (payable in cash or Shares, as determined by the Committee) that is based on the fair market value of a Share and that becomes vested and nonforfeitable, in whole or in part, upon the attainment, in whole or in part, of conditions established by the Committee.

                    "Shares" meanspurchase shares of Common Stock.IPG stock.

                    "Subsidiary"“Subsidiary” means aany subsidiary of the Company that meetsCorporation, whether presently a subsidiary or hereafter becoming a subsidiary, all within the definitionmeaning of a "subsidiary corporation" in Section 424(f) of the Code.Code and the regulations promulgated thereunder.

            “Working Day” means a day other than a Saturday, Sunday, or a holiday scheduled by the Corporation.

            Section 3.    Administration.12.

              (a)
              The Committee.Rights as a Stockholder The Plan shall be administered by a committee (the "Committee") that satisfies the requirements of Rule 16b-3 under the Exchange Act. Members:   None of the Committee shall be appointed by and shall serve at the pleasurerights or privileges of a stockholder of the Board. No member of the CommitteeCorporation shall be eligible to receive an Award under the Plan.

              (b)
              Committee Powers. The Committee shall have and may exercise all of the powers granted to it by the provisions of the Plan. Subject to the express provisions and limitations of the Plan, the Committee may adopt such rules, regulations, and procedures as it deems advisable for the conduct of its affairs, and may appoint one of its members to be its chairman and any person, whether or not a member, to be its secretary or agent. The Committee shall have full authority to direct the proper officers of the Company to issue or transfer Shares pursuant to the issuance or exercise of an Award under the Plan.

              (c)
              Committee Action. The Committee may act at a duly called meeting by the vote of a majority of its members or without a meeting by unanimous written consent. The decisions of the Committee shall be final and binding unless otherwise determined by the Board. Each member of the Committee and each member of the Board shall be without liability, to the fullest extent permitted by law, for any action taken or determination made in good faith in connection with the Plan.

              (d)
              Awards. Subject to the provisions of the Plan, the Committee shall have the authority to grant the following Awards:

              (1)
              Options,

              (2)
              Restricted Stock,

              (3)
              Restricted Stock Units,

                (4)
                Performance Units,

                (5)
                Management Incentive Compensation Performance Awards,

                (6)
                Shares in Lieu of Cash, and

                (7)
                Dividend Equivalents.

              (e)
              Participants. Subject to the provisions of the Plan, the Committee shall have the authority to designate the Eligible Employees who shall receive Awards and to determine the nature and size of the Award that an Eligible Employee shall receive.

              (f)
              Correction of Defects, Omissions, and Inconsistencies. The Committee may correct any defect, remedy any omission, or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it deems desirable to carry out the intent of the Plan and such Award.

              (g)
              Delegation. If the Committee deems it advisable, the Committee may delegate its authority under this Section 3 to one or more of its members or to one or more persons other than its members to the extent permitted by applicable law, except that no such delegation shall be permittedexist with respect to the participation in the Plan of persons who are subject to Section 16 of the Exchange Act. Any person to whom the Committee delegates its authority under this Section 3 may receive Awards only if the Awards are granted directly by the Committee without delegation.

            Section 4.    Maximum Amount Available for Awards.

              (a)
              Basic Limitations. Subject to the provisions of subsections (b) through (g) of this Section 4, Options may be granted hereunder with respect to a maximum of 4,500,000 Shares, and Awards other than Options may be granted hereunder with respect to a maximum of 14,000,000 Shares. As provided in Section 12(q) hereof, the Shares available for Awardsshares purchased under the Plan unless and until such shares shall have been appropriately evidenced on the books of the Corporation.

              13.Rights on Retirement, Death or Termination of Employment:   In the event of a participating employee’s retirement, death, or termination of employment, a payroll deduction shall be in lieu of the Shares available for additional awards under The Interpublic Group of Companies, Inc. 2002 Performance Incentive Plan immediately before the approval of this Plan by the Company's shareholders.

              (b)
              Additional Shares. In additiontaken from any Compensation due and owing to the Shares authorized by Section 4(a) hereof, the following Shares may be the subject of Awards under the Plan:

              (1)
              Surrender of Shares. If a Participant tenders, or has withheld, Shares in payment of all or part of the option price under an Option granted under the Plan or a Prior Plan, or in satisfaction of withholding tax obligations in connection with the exercise of an Option issued under the Plan or a Prior Plan, the Shares tendered by the Participant or so withheld shall immediately become available for Option Awards.

              (2)
              Forfeiture of Shares. If Shares that are issued under the Plan or a Prior Plan are subsequently forfeited (or if an Award with respect to such Shares is forfeited) in accordance with the terms of the Award, or if Shares under an Award, other than an Option Award, that are issued under the Plan or a Prior Plan are surrendered in satisfaction of withholding tax obligations, the forfeited or surrendered Shares shall immediately become available for Awards other than Option Awards.

              (c)
              Aggregate Limitations on ISOs. Subject to the adjustment provisions of Section 4(f) hereof, in any Plan Year no more than 200,000 Shares may be the subject of ISOs.

              (d)
              Individual Limitations on Options. Subject to the adjustment provisions in Section 4(f) hereof, an individual Participant may not receive, in any Plan Year, Options with respect to more than 500,000 Shares.

              (e)
              Shares Available for Issuance. Shares of Common Stock may be made available from the authorized but unissued Shares or from Shares held in the Company's treasury and not reserved for some other purpose. If an Award is payable solely in cash, no Shares shall be deducted from the number of Shares available for issuance under this Section 4 by reason of that Award.

                (f)
                Adjustment for Corporate Transactions. If the Committee determines that any Corporate Transaction affects the Common Stock such that an adjustment is required to preserve, or to prevent enlargement of, the benefits or potential benefits available under the Plan, the Committee may, in such manner as the Committee deems equitable, adjust any or all of

                (1)
                the number and kind of shares that thereafter may be made the subject of Awards,

                (2)
                the number and kinds of shares that are subject to outstanding Awards, and

                (3)
                the grant, exercise, or conversion price with respect to any of the foregoing.

                      Any shares received as a result of a Corporate Transaction affecting Restricted Stock shall have the same status, be subject to the same restrictions, and bear the same legend as the Restricted Stock with respect to which the shares were issued. Additionally, the Committee may make provisions for a cash payment to a Participant or other person holding an outstanding Award. However, the number of shares subject to any Award shall always be a whole number.

                (g)
                Acquisitions. Any Shares underlying awards granted in assumption of, or in substitution for, outstanding awards previously granted by a company acquired by the Company or a Subsidiary or Affiliate or with which the Company or a Subsidiary or Affiliate combines, shall not, unless required by law or regulation, be counted against the Shares available for Awards under the Plan.

              Section 5.    Stock Options.

                (a)
                Grant. The Committee shall have the authority to grant both Incentive Stock Options and Nonstatutory Stock Options; provided that Incentive Stock Options may not be granted to any Eligible Employee who is not an employee of the Company or one of its Subsidiaries at the time of grant. However, the Committee shall not have the authority to grant "reload" Options (i.e., Options that are automatically granted to an optionee when the optionee uses Shares to pay the exercise price, or to satisfy withholding tax obligations associated with the exercise, of previously granted Options).

                (b)
                Exercise Price. The Committee shall establish the exercise price at the time each Option is granted, which price shall not be less than 100% of the fair market value of the Shares subject to the Optionhim on the date of grant. Except as providedsuch event, and the balance in Section 4(f) hereof, the Committee may not reprice Options without the approval of the Company's shareholders.

                (c)
                Exercise. Each Optionhis payroll deduction account shall be exercised at such times and subject to such terms and conditions as the Committee may specify in the applicable Award or thereafter; provided that unless the Option becomes vested earlier pursuant to Section 11 or 12(d) hereof, an Option may not be exercised in whole or in part during the twelve-month period commencing with the date on which the Option was granted. The Committee may impose such conditions on the exercise of Options as it determines to be appropriate, including, without limitation, conditions relating to the application of federal or state securities laws. No Shares shall be delivered pursuant to any exercise of an Option unless arrangements satisfactory to the Committee have been made to assure full payment of the exercise price therefor. Without limiting the generality of the foregoing, payment of the exercise price may be made in cash or, if and to the extent permitted by the Committee, by exchanging Shares owned (without restriction for a period of at least six months), or the ownership of which is attested to, by the optionee (which are not the subject of any pledge or other security interest and which are fully vested), or by a combination of the foregoing, provided that the combined value of all cash and the fair market value of any Shares tendered to the Company, valued as of the date of such tender, is at least equal to the exercise price. The Committee may not, however, authorize a loan to an optionee to assist the optionee in making payment of the exercise price under an Option or in meeting the optionee's tax obligations associated with the exercise of an Option.

                  (d)
                  Term. An Option shall be exercisable for a term determined by the Committee, which shall not be longer than ten years from the date on which the Option is granted.

                  (e)
                  Termination of Employment. An Option shall be exercisable following the termination of a Participant's employment to the extent determined pursuant to Sections 11 and 12(d) hereof, provided that:

                  (1)
                  If the Participant's employment terminates due to the Participant's retirement with the approval of the Company, the Participant (or, following the Participant's death, the Participant's beneficiary or personal representative) may exercise any Option held by the Participant at the time of such termination, to the extent such Option is vested in accordance with the terms of the Option and Sections 11 and 12(d) hereof, for a period of three years following such termination (but not after the date the Option otherwise expires).

                  (2)
                  If the Participant's employment terminates due to the Participant's death or Disability, the Participant (or, following the Participant's death, the Participant's beneficiary or personal representative) may exercise any Option held by the Participant at the time of such termination, to the extent such Option is vested in accordance with the terms of the Option and Sections 11 and 12(d) hereof, for a period of one year following such termination (but not after the date the Option otherwise expires).

                  (3)
                  If the Participant's employment terminates for any reason not described in Section 5(e)(1) or (2) hereof, the Participant (or, following the Participant's death, the Participant's beneficiary or personal representative) may exercise any Option held by the Participant at the time of such termination, to the extent such Option is vested in accordance with the terms of the Option and Sections 11 and 12(d) hereof, for a period of three months following such termination (but not after the date the Option otherwise expires).

                Section 6.    Restricted Stock and Restricted Stock Units.

                  (a)
                  Grant. The Committee shall have the authority to determine the number of Shares of Restricted Stock and the number of Restricted Stock Units to be granted to a Participant and the other terms and conditions applicable to such Restricted Stock and Restricted Stock Units. In addition, as provided in Section 6(e) hereof, the Committee shall have the authority to make the grant of an Award of Restricted Stock or Restricted Stock Units contingent on the achievement of performance objectives specified by the Committee. Regardless of whether the grant was contingent on the achievement of performance objectives, an Award of Restricted Stock or Restricted Stock Units shall become vested when the Participant completes the period of employment designated by the Committee (the "Restricted Period"). Payment (if any) with respect to a Restricted Stock Unit shall be made as soon as administratively practicable after the conclusion of the applicable Restricted Period. Each Award of Restricted Stock or Restricted Stock Units shall be subject to the following terms and conditions, and to such additional terms and conditions as the Committee shall deem appropriate; provided that none of these additional terms and conditions shall be more favorable to a Participant than the terms and conditions set forth herein.

                  (b)
                  Rights of Participant. A Participant to whom Shares of Restricted Stock has been granted shall have absolute ownership of such Shares, including the right to vote the same and to receive dividends thereon, subject to the terms, conditions, and restrictions described in the Plan and in the Award. A Participant to whom Restricted Stock Units have been granted shall have no ownership interest in the Shares to which such Restricted Stock Units relate until and unless payment with respect to such Restricted Stock Units is actually made in Shares.

                    (c)
                    Restrictions. Until the restrictions applicable to Restricted Stock shall lapse, the Restricted Stock shall be subject to the following conditions:

                    (1)
                    Restricted Stock shall not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of; and

                    (2)
                    if the Participant ceases to be an Employee for any reason, except as provided in Sections 11 and 12(d) hereof, any Restricted Stock that had been delivered to, or held in custody for, the Participant shall be returned to the Company forthwith, accompanied by any instrument of transfer requested by the Company, and all of the rights of the Participant with respect to such Shares shall immediately terminate without any payment of consideration by the Company.

                          Restricted Stock Units may not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of at any time. Until the restrictions applicable to Restricted Stock Units shall lapse, if the Participant ceases to be an Employee for any reason, except as provided in Sections 11 and 12(d) hereof, such Restricted Stock Units shall be immediately forfeited, and all of the rights of the Participant with respect to such Restricted Stock Units shall immediately terminate without any payment of consideration by the Company.

                    (d)
                    Lapse of Restrictions. Unless the Restricted Stock or Restricted Stock Unit vests earlier pursuant to Section 11 or 12(d) hereof, the restrictions set forth in Section 6(c) hereof shall lapseapplied at the end of the Restricted Period.

                    (e)
                    Performance-Based Grants. The Committee may make either the grant or the vesting of Awards of Restricted Stock and Restricted Stock Units contingent on the achievement of performance objectives relating to one or more of the Performance Criteria during a Plan Year or during the Restricted Period. If the performance objective or objectives specified by the Committee are satisfied, the Award shall be granted or become vested, as the case may be, but the restrictions imposed by Section 6(c) hereof shall apply to the Award until the end of the Restrictedthen-current Purchase Period designated by the Committee. If the performance objectives specified by the Committee are not satisfied, the Award shall not be granted or become vested, as the case may be. Partial achievement of such performance objectives may result in the grant or vesting of a portion of the Award corresponding to the degree of achievement.

                    (f)
                    Maximum Annual Performance-Based Award. In any Plan Year, no individual Participant may be granted performance-based Awards of Restricted Stock and Restricted Stock Units in accordance with Section 6(e)8 hereof relating to more than 300,000 Sharesafter which any then-remaining balance in the aggregate.

                    (g)
                    Agreement by Participant Regarding Withholding Taxes. Each Participant who receives Restricted Stocksuch account shall agree that, subject to the provisions of Section 6(c) hereof:

                    (1)
                    no later than the date of the lapse of the restrictions applicable to the Restricted Stock, the Participant will pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any taxes of any kind required by law to be withheld with respect to the Restricted Stock, and

                    (2)
                    the Company and its Subsidiaries and Affiliates shall, to the extent permitted by law, have the right to deduct from any payments of any kind otherwise due to the Participant any taxes of any kind required by law to be withheld with respect to the Restricted Stock. A Participant may irrevocably elect to have any withholding tax obligation satisfied by:

                    (A)
                    having the Company withhold shares otherwise deliverable to the Participant in connection with the Award of Restricted Stock, or

                    (B)
                    delivering to the Company such Restricted Stock or delivering to the Company other Shares; provided that the Committee may, in its sole discretion, disapprove any such election.

                      (h)
                      Election to Recognize Gross Income in Year of Grant. If a Participant properly elects, within 30 days of the date of grant of Restricted Stock, to include in gross income for federal income tax purposes an amount equal to the fair market value of the Shares awarded on the date of grant, he shall make arrangements satisfactory to the Committee to pay in the year of such grant any taxes required to be withheld with respect to such Shares. If he fails to make the payments, the Company and its Subsidiaries and Affiliates shall, to the extent permitted by law, have the right to deduct from any payments of any kind otherwise due to the Participant any taxes of any kind required by law to be withheld with respect to the Shares.

                      (i)
                      Interpretation. Notwithstanding any other provision of this Section 6 to the contrary, if the Committee's authority to exercise any discretionary authority under this Section 6 with respect to a performance-based Award of Restricted Stock or Restricted Stock Units granted in accordance with Section 6(e) hereof would cause such Award to fail to qualify as "other performance-based compensation" within the meaning of Section 162(m)(4)(C) of the Code, the Committee shall not be entitled to exercise such discretion with respect to that Award. For example, in the case of such an Award, the Committee may not exercise discretion to increase the size of the Award that is contingent upon the attainment of one or more designated performance objectives.

                      (j)
                      Foreign Laws. Notwithstanding any provisions of the Plan to the contrary, if Restricted Stock is to be awarded to a Participant who is subject to the laws, including but not limited to the tax laws, of any country other than the United States, the Committee may, in its discretion, direct the Company to sell, assign, or otherwise transfer the Restricted Stock to a trust or other entity or arrangement, rather than grant the Restricted Stock directly to the Participant.

                    Section 7.    Performance Units.

                      (a)
                      Grant. The Committee shall have the authority to determine the number of Performance Units to be granted to a Participant and the other terms and conditions of the Performance Units. The Performance Units shall become vested upon the determination by the Committee that the performance objectives established by the Committee for the Performance Units have been attained, in whole or in part. Payment (if any) with respect to a Performance Unit shall be made as soon as administratively practicable after the conclusion of the applicable Performance Period. An individual Participant may not participate in more than three Performance Periods at any one time.

                      (b)
                      Performance Objectives. The performance objectives shall relate to the achievement of performance objectives relating to one or more of the Performance Criteria. Partial achievement of the objective(s) may result in a payment corresponding to the degree of achievement.

                      (c)
                      Maximum Payment. The maximum amount that may be paid to any Participant in respect of an Award of Performance Units shall be $4 million for a three-year Performance Period. If the Performance Period is longeremployee or, shorter than three years, the $4 million limit shall be proportionately increased or reduced to reflect the length of the Performance Period. Payment may be made in cash, in Shares, or both, as determined by the Committee.

                      (d)
                      Termination of Employment. The rights of a Participant with respect to an Award of Performance Units outstanding at the time of the termination of the Participant's employment shall be governed by Sections 11 and 12(d) hereof.

                      (e)
                      Interpretation. Notwithstanding any other provision of this Section 7 to the contrary, if an Award of Performance Units is intended at the time of grant to be "other performance-based compensation" within the meaning of Section 162(m)(4)(C) of the Code, and if the Committee's authority to exercise any discretion under this Section 7 with respect to the Award would cause the Award to fail to qualify as "other performance-based compensation," the Committee shall not be entitled to exercise such discretion with respect to that Award. For example, in the caseevent of such an Award, the Committee may not exercise discretionhis death, to increase the amount otherwise due upon the attainment of one or more designated performance objectives.

                      Section 8.    Management Incentive Compensation Performance Awards

                        (a)
                        MICP Awards. The Committee may, in its sole discretion, grant MICP Awards with respect to a full or partial Plan Year.

                        (b)
                        Determination of MICP Amounts. The amount of an MICP Award shall be determined by the Committee and shall be contingent upon the achievement of performance objectives relating to one or more of the Performance Criteria determined by the Committee. Partial achievement of such performance objective(s) may result in an Award corresponding to the degree of achievement. The Committee may, however, authorize payment of less than the amount corresponding to the degree of achievement of such performance objectives.

                        (c)
                        Maximum Individual MICP Awards. The maximum individual MICP Award permitted, with respect to any Plan Year, is $5,000,000; provided that if an MICP Award is granted with respect to a partial Plan Year, the $5,000,000 limit shall be prorated to reflect the length of the period for which the MICP Award is granted.

                        (d)
                        Form and Timing of MICP Awards. The Committee shall be responsible for determining the form and timing of MICP Awards under the Plan. In its discretion, the Committee may make any Award wholly in cash, wholly in Shares, or partly in cash and partly in Shares. For purposes of Section 8(a) hereof, any Shares awarded under this Section 8 shall be valued by using the average closing price of the Shares on the New York Stock Exchange on the last ten trading days of the calendar month preceding the month in which the Shares are awarded. Individual MICP Awards shall be paid on a current basis except that, in any instance, the Committee may direct that up to 75% of an individual's Award be paid on a deferred basis subject to such terms and conditions as the Committee may prescribe. MICP Awards shall normally be made as soon as possible after the end of each Plan Year.

                      Section 9.    Shares in Lieu of Cash.

                              The Committee may grant Awards of Shares in lieu of all or part of any compensation otherwise payable in cash to an Eligible Employee by the Company or any Subsidiary or Affiliate. If Shares are issued in lieu of cash, the number of Shares to be issued shall be equal to the number of whole Shares that have an aggregate fair market value (determined on the date the cash otherwise would have been payable) equal to or less than the amount of such cash.his estate.

                      Section 10.    Dividend Equivalents.14.

                              The Committee may grant to a Participant, in connection with any Award, Dividend Equivalents, which may be paid in cash, in Shares, or both, and which may be paid on a current, deferred, or contingent basis, as determined by the Committee in its discretion.

                      Section 11.    Termination of Employment.

                              If the Participant's employment terminates for any reason, the Participant (or, following the Participant's death, the Participant's beneficiary or personal representative) shall be vested only in the portion of the Award (if any) in which the Participant was vested immediately before the termination of the Participant's employment except to the extent that the Committee in its sole discretion determines otherwise. Notwithstanding the preceding sentence, and subject to Section 12(d) hereof, the Committee may not determine that an Award shall be vested before the first anniversary of the date on which the Award was granted unless the Participant's employment terminated due to retirement, death, or Disability.

                      Section 12.    General Provisions.

                        (a)
                        Awards.Rights Not Transferable Each Award hereunder shall be evidenced in writing. The written terms of the Award shall be delivered to the Participant and shall incorporate the terms of the Plan by reference and specify the terms and conditions thereof and any rules applicable thereto.

                          (b)
                          Withholding. The Company shall have the right to deduct from all amounts paid to a Participant in cash (whether:   Rights under the Plan or otherwise) any taxes requiredare not transferable by law to be withheld in respect of Awards under the Plan. In the case of any Award satisfied in the form of Common Stock, no Shares shall be issued unless and until arrangements satisfactory to the Company shall have been made to satisfy any withholding tax obligations applicable with respect to such Award. Without limiting the generality of the foregoing and subject to such terms and conditions as the Committee may impose, the Company shall have the right to retain, or the Committee may, subject to such terms and conditions as it may establish from time to time, permit Participants to elect to tender, Common Stock (including Common Stock issuable in respect of an Award) to satisfy, in whole or in part, the amount required to be withheld.

                          (c)
                          Nontransferability. Unless the Committee shall permit (on such terms and conditions as it shall establish) an Award to be transferred to a member of the Participant's immediate family or to a trust, partnership, corporation, or similar vehicle the parties in interest in which are limited to the Participant and members of the Participant's immediate family (collectively, the "Permitted Transferees"), no Award shall be assignable or transferable exceptparticipating employee other than by will or the laws of descent and distribution, and are exercisable during his lifetime only by him.

                          15.Application of Funds:   All funds received or held by the Corporation under the Plan may be used for any corporate purpose.

                          16.Adjustment in Case of Changes Affecting IPG Stock:   In the event of a subdivision of the outstanding shares of IPG stock, or the payment of a stock dividend on shares of IPG stock, the number of shares of IPG stock reserved under the Plan, including shares covered by outstanding grants to participating employees, shall be increased proportionately, and the purchase price for each participant at such time reduced proportionately, and such other adjustment shall be made as may be deemed equitable by the Board of Directors. In the event of any other change affecting IPG stock, such adjustment shall be made as may be deemed equitable by the Board of Directors to give proper effect to such event.

                          17.Amendment of the Plan:   The Board of Directors may at any time, or from time to time, amend the Plan in any respect, except that, without the approval of the stockholders of the Corporation, no amendment shall be made (i) increasing or decreasing the number of shares reserved under the Plan (other than as provided in Section 16 hereof) or (ii) decreasing the purchase price per share (other than as provided in Section 16 hereof).

                          18.Termination of the Plan:   The Plan and all rights of employees under any offering hereunder shall terminate on December 31, 2015, or, if earlier:

                          (a)    on the day that participating employees become entitled to purchase a number of shares of IPG stock equal to or greater than the number of such shares then available for purchase hereunder. If the number of shares of IPG stock so purchasable exceeds the number of such shares then available

                          B-4



                          for purchase hereunder, the available shares of IPG stock shall be allocated by the Committee among such participating employees in such manner (consistent with the requirements of Section 423(b)(4) and (5) of the Code and the regulations thereunder) as it deems fair; or

                          (b) on any other date determined by the Board of Directors in its discretion.

                          The Purchase Period under any offering hereunder may not end after December 31, 2015. Upon termination of the Plan, all amounts in the payroll deduction accounts of participating employees shall be promptly refunded unless those amounts are carried forward, in accordance with the final paragraph of Section 8 hereof, into the payroll deduction accounts established under a successor plan.

                          19.Governmental Regulations:   The Corporation’s obligation to sell and deliver IPG stock under the Plan is subject to the extent required by law, no right or interestapproval of any Participantgovernmental authority required in connection with the authorization, issuance or sale of such stock.

                          20.General Provisions:

                          (a)    Effective Date.   The Plan shall become effective on January 1, 2006.

                          (b)   No Right to Options; No Shareholder Rights.   No employee shall have any right to be subject togranted any lien, obligation or liability ofoption under the Participant. AllPlan. No person shall have any rights as a shareholder with respect to Awards grantedany IPG stock to a Participantbe issued under the Plan shall be exercisable duringprior to the Participant's lifetime only by such Participant or, if applicable, the Permitted Transferees.

                          (d)
                          issuance thereof.

                          (c)    Change of Control. Upon the occurrence of a Change of Control, all Awards then outstanding shall immediately become fully vested.

                          (e)
                          No Right to Employment.Employment.   No person shall have any claim or right to be granted an Award,option, and the grant of an Awardoption shall not be construed as giving a Participantany person the right to be retained in the employ of the Company, any SubsidiaryCorporation or any Affiliate.subsidiary. Further, the CompanyCorporation and each Subsidiary and Affiliatesubsidiary expressly reserve the right at any time to dismiss a Participantan employee free from any liability, or any claim under the Plan, except as expressly provided herein or in any agreement entered into with respect to an Award.

                          (f)
                          herein.

                          (d)   No Rights to Awards; No Shareholder Rights. No Participant or Eligible Employee shall have any claim to be granted any Award under the Plan, and there is no obligation of uniformity of treatment of Participants and Eligible Employees. Subject to the provisions of the Plan and the applicable Award, no person shall have any rights as a shareholder with respect to any Shares of Common Stock to be issued under the Plan prior to the issuance thereof.

                          (g)
                          Foreign Benefits. The Committee may grant Awards to Eligible Employees of the Company and its Subsidiaries and Affiliates who reside in jurisdictions outside the United States. The Committee may adopt such supplements to the Plan as may be necessary to comply with applicable laws of such jurisdictions and to afford participants favorable treatment under such laws; provided that no Award shall be granted under any such supplement on the basis of terms or conditions that are inconsistent with provisions of the Plan.

                          (h)
                          Amendment of Plan. The Board or the Committee may amend, suspend, or terminate the Plan or any portion thereof at any time; provided that no amendment shall be made without shareholder approval if (1) shareholder approval is required by law, regulation, or securities exchange listing requirement or (2) if the amendment would increase the number of Shares available for Awards under the Plan, except pursuant to Section 4(f) hereof. Without the written consent of an affected Participant, no termination, suspension, or modification of the Plan shall adversely affect any right of such Participant under the terms of an Award granted before the date of such termination, suspension, or modification.

                          (i)
                          Application of Proceeds. The proceeds received by the Company from the sale of Shares under the Plan shall be used for general corporate purposes.

                            (j)
                            Compliance with Legal and Exchange Requirements. The Plan, the grant and exercise of Awards thereunder, and the other obligations of the Company under the Plan, shall be subject to all applicable federal and state laws, rules, and regulations, and to such approvals by any regulatory or governmental agency as may be required. The Company, in its discretion, may postpone the grant and exercise of Awards, the issuance or delivery of Shares under any Award or any other action permitted under the Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of Shares or other required action under any federal or state law, rule, or regulation and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Shares in compliance with applicable laws, rules, and regulations. The Company shall not be obligated by virtue of any provision of the Plan to recognize the exercise of any Award or otherwise to sell or issue Shares in violation of any such laws, rules, or regulations; and any postponement of the exercise or settlement of any Award under this provision shall not extend the term of such Awards, and neither the Company nor its directors or officers shall have any obligation or liability to the Participant with respect to any Award (or stock issuable thereunder) that shall lapse because of such postponement.

                            (k)
                            Deferrals. The Committee may postpone the exercise of Awards, the issuance or delivery of Shares, the payment of cash under any Award, or any action permitted under the Plan to prevent the Company or any of its Subsidiaries or Affiliates from being denied an income tax benefit with respect to any Award. The Committee also may establish rules under which a Participant may elect to postpone receipt of Shares or cash under any Award.

                            (l)
                            Severability of Provisions.Provisions.   If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, and the Plan shall be construed and enforced as if such provision had not been included.

                            (e)    Incapacity

                            (m)
                            Incapacity..   Any benefit payable to or for the benefit of a minor, an incompetent person, or other person incapable of receipting therefor shall be deemed paid when paid to such person'sperson’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge any liability or obligation of the Committee, the Board of Directors, the Company,Corporation, and all other parties with respect thereto.

                            (n)

                            (f)    Rules of Construction.Construction.   Whenever used in the Plan, words in the masculine gender shall be deemed to refer to females as well as to males; words in the singular shall be deemed to refer also to the plural; and references to a statute or statutory provision shall be construed as if they referred also to that provision (or to a successor provision of similar import) as currently in effect, as amended, or as reenacted.

                            (o)

                            (g)    Headings and Captions.Captions.   The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

                            (p)

                            (h)   Applicable Law.Law.   The validity, construction, interpretation, administration, and effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of the State of New York (without regard to its rules regarding choice of law).

                            (q)
                            Effective Date. The Plan shall become effective on the date the Plan is approved by the Company's shareholders. No Awards may be granted under the Plan after the annual meeting of the Company's shareholders in 2010; provided that any Awards granted before such annual meeting shall continue in effect thereafter in accordance with the terms of the Awards and the Plan. Upon shareholder approval of the Plan, no further awards may be made under The Interpublic Group of Companies, Inc. 2002 Stock Incentive Plan.

                            APPENDIX CB-5


                            THE INTERPUBLIC NON-MANAGEMENT DIRECTORS' STOCK INCENTIVE PLAN

                            ARTICLE I
                            INTRODUCTION

                                    1.1.    Name of Plan.    The name of the Plan is the "Interpublic Non-Management Directors' Stock Incentive Plan."

                                    1.2.    Purpose of Plan.    The Plan is being established to attract, retain and compensate for service highly qualified individuals to serve as members of the Board of Directors of the Corporation, but not current employees of the Corporation or any of its Subsidiaries, and to enable them to increase their ownership in the Corporation's Common Stock. The Plan will be beneficial to the Corporation and its stockholders since it will allow these directors to have a greater personal financial stake in the Corporation through the ownership of the Corporation's Common Stock, in addition to strengthening their common interest with stockholders in increasing the value of the Corporation's Common Stock longer term.

                                    1.3.    Effective Date.    The Plan shall be effective as of the date of the Company's 2004 Annual Meeting of Stockholders held on May 18, 2004, if at the Annual Meeting the Plan is duly approved by stockholders. If the stockholders do not approve the Plan at the 2004 Annual Meeting, the Plan shall be of no force or effect.


                            ARTICLE II
                            DEFINITIONS

                             When used in capitalized form in the Plan, the following terms shall have the following meanings, unless the context clearly indicates otherwise:

                              Committee.    "Committee" means the Corporate Governance Committee of the Corporation.

                              Common Stock.    "Common Stock" means shares of the Corporation's $.10 par value common stock.

                              Corporation.    "Corporation" means The Interpublic Group of Companies, Inc.

                              Fair Market Value.    "Fair Market Value" means the mean of the high and low prices at which the Common Stock of the Corporation is traded on the date in question, as reported on the composite tape for New York Stock Exchange issues.

                              Option.    "Option" means an option to purchase shares of Common Stock that has the terms and conditions set forth in Article VI of the Plan.

                              Non-Management Directors.    "Non-Management Directors" means members of the Board of Directors of the Corporation who are not employees of the Corporation or any of its Subsidiaries.

                              Plan.    "Plan" means the Interpublic Non-Management Directors' Stock Incentive Plan, as amended from time to time.

                              Restricted Share Units.    "Restricted Share Units" means awards having the terms and conditions set forth in Article VIII of the Plan.

                              Restricted Shares.    "Restricted Shares" means shares of Common Stock that are subject to the restrictions and other terms and conditions set forth in Article VII of the Plan.

                              Subsidiary.    "Subsidiary" means a subsidiary of the Corporation that meets the definition of a "subsidiary corporation" in Section 424(f) of the Internal Revenue Code of 1986, as amended.



                              Unrestricted Shares.    "Unrestricted Shares" means shares of Common Stock granted pursuant to Section 5.1 of the Plan.


                            ARTICLE III
                            ELIGIBILITY

                                    3.1.    Condition.    An individual who is a Non-Management Director on or after May 18, 2004, shall be eligible to participate in the Plan.


                            ARTICLE IV
                            SHARES AVAILABLE

                                    4.1.    Number of Shares Available.    An aggregate of Two Hundred Thousand (200,000) shares of Common Stock are reserved for issuance under the Plan pursuant to the exercise of Options, the award of Unrestricted Shares and Restricted Shares and the settlement of Restricted Share Units. Such shares of Common Stock may be authorized but unissued shares, treasury shares, or shares purchased on the open market.

                                    4.2.    Adjustments.    The number of shares of Common Stock of the Corporation reserved for awards under the Plan, the number of shares comprising outstanding awards under the Plan, and the exercise price and the number of shares issuable upon the exercise of any outstanding Options, shall be subject to proportionate adjustment by the Committee to the extent required to prevent dilution or enlargement of shares issuable under the Plan and the rights of the grantee in the event of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, or other similar event. All determinations made by the Committee with respect to adjustment under this Section 4.2 shall be conclusive and binding for all purposes of the Plan.

                                    4.3.    Effect of Stock Splits, etc. on Restricted Shares.    Any shares of Common Stock of the Corporation received by a grantee as a stock dividend on Restricted Shares, or as a result of stock splits, combinations, exchanges of shares, reorganizations, mergers, consolidations, or other events affecting Restricted Shares, shall have the same status, be subject to the same restrictions, and bear the same legend as the shares with respect to which they were issued.


                            ARTICLE V
                            AWARDS

                                    5.1.    Unrestricted Shares.    Each year, on or about January 15, commencing with the year 2005, the Corporation shall grant Eight Hundred (800) shares of Common Stock to each person who is serving as a Non-Management Director as of such date. Such shares shall not be subject to forfeiture and shall be free of any and all restrictions on transfer.

                                    5.2.    Restricted Shares or Restricted Share Units.    Each year, on or about January 15, commencing with the year 2005, the Corporation shall grant to each person who is serving as a Non-Management Director as of such date, at the election of such person, either (i) One Thousand Six Hundred (1,600) Restricted Shares or (ii) One Thousand Six Hundred (1,600) Restricted Share Units.

                                    5.3.    Options.    The Committee shall have the authority to grant Options at any time, and from time to time, to any one or more Non-Management Directors covering such number of shares of Common Stock as the Committee deems appropriate.

                                    5.4.    Restricted Shares.    The Committee shall have the authority to grant Restricted Shares, in addition to the Restricted Shares referred to in Section 5.2, at any time, and from time to time, to any one



                            or more Non-Management Directors in such number and having such terms and conditions, subject to the terms of the Plan, as the Committee deems appropriate.

                                    5.5.    Restricted Share Units.    The Committee shall have the authority to grant Restricted Share Units, in addition to the Restricted Share Units referred to in Section 5.2, at any time, and from time to time, to any one or more Non-Management Directors in such number and having such terms and conditions, subject to the terms of the Plan, as the Committee deems appropriate.


                            ARTICLE VI
                            OPTIONS

                                    6.1.    Type of Options.    The Options granted under the Plan are not intended to be options that qualify as "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code of 1996, as amended.

                                    6.2.    Option Exercise Price.    The exercise price per share of an Option shall be the Fair Market Value of the Common Stock on the date of the grant and shall be paid in cash in U.S. Dollars on the date of exercise.

                                    6.3.    Duration.    An Option granted under the Plan shall become exercisable in full three years after the date of grant and shall expire ten years after the date of grant (the "Option Period"), unless it is sooner terminated in accordance with Section 6.5.

                                    6.4.    Exercise After Termination of Service.    If the recipient of an Option grant ceases to be a Non-Management Director for any reason (including without limitation death), such Option, if exercisable immediately prior to the date of cessation of service, shall continue to be exercisable by the grantee, or by the grantee's legal representatives, heirs or beneficiaries, for a period of thirty-six months following the date of cessation of service, but in no event after the expiration of the Option Period.

                                    6.5.    Forfeiture.    If an Option is not exercisable on the date on which the grantee ceases to serve as a Non-Management Director, or if an Option has not been exercised in full before it ceases to be exercisable in accordance with Section 6.4, the Option shall, to the extent not previously exercised, thereupon be forfeited.


                            ARTICLE VII
                            RESTRICTED SHARES

                                    7.1.    Rights with Respect to Restricted Shares.    A grantee to whom Restricted Shares have been granted shall have absolute ownership of such shares, including the right to vote the same and to receive dividends thereon, subject, however, to the terms, conditions, and restrictions described in this Article 7. The grantee's absolute ownership shall become effective only after he or she has received a certificate or certificates for the number of shares of Common Stock awarded, or after he or she has received notification that such certificate or certificates have been issued and are being held in custody by the Corporation.

                                    7.2.    Restrictions.    Until the expiration of the period beginning on the date on which the Restricted Shares are granted and ending on the third anniversary of the date of grant (the "Restricted Stock Restriction Period"), Restricted Shares shall be subject to the following conditions:

                              (i)
                              Restricted Shares shall not be sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of; and

                              (ii)
                              if the grantee ceases to serve as a Non-Management Director for any reason, all the rights of the grantee with respect to such Restricted Shares, except as otherwise provided in Section 7.3, shall immediately terminate without any payment of consideration by the Corporation. If the grantee

                                has custody of the shares, upon such forfeiture, the grantee shall forthwith deliver to the Secretary or any Assistant Secretary of the Corporation the certificate or certificates for the shares so forfeited, accompanied by such instrument of transfer as may be required by the Secretary or any Assistant Secretary of the Corporation.

                                    7.3.    Lapse of Restrictions in Connection With Cessation of Service.    Upon a grantee's cessation of service as a Non-Management Director for any reason (including death), on or after the first anniversary of the date on which Restricted Shares were granted, the restrictions set forth in Section 7.2 shall lapse on the date of the grantee's cessation of service with respect to a fraction of the Restricted Shares awarded to such grantee. The numerator of the fraction shall be the number of months that have elapsed since the Restricted Shares were granted, and the denominator of the fraction shall be the number of months in the Restricted Share Restriction Period; provided that in the case of a fractional month, a period of fifteen days or more shall be treated as a full month, and a period of less than fifteen days shall be disregarded.

                                    7.4.    Restrictive Legends; Certificates May be Held in Custody.    Certificates evidencing Restricted Shares shall bear an appropriate legend referring to the terms, conditions, and restrictions described in the Plan. Any attempt to dispose of such Restricted Shares in contravention of the terms, conditions, and restrictions described in the Plan shall be ineffective. The Committee may enact rules that provide that the certificates evidencing Restricted Shares may be held in custody by a bank or other institution, or that the Corporation may itself hold the certificates evidencing Restricted Shares in custody, until the restrictions thereon shall have lapsed.


                            ARTICLE VIII
                            RESTRICTED SHARE UNITS

                                    8.1.    Rights with Respect to Restricted Share Units.    A grantee to whom Restricted Share Units have been granted shall have the right to receive at the time of the grantee's cessation of service as a Non-Management Director (or at such earlier time as the Committee shall approve), a payment in an amount equal to the Fair Market Value of the corresponding number of shares of Common Stock as of the date of cessation of service, payable in cash or in shares of Common Stock, as determined by the Committee, subject, however, to the terms, conditions, and restrictions set forth in this Article 8.

                                    8.2.    Restrictions.    Except as otherwise provided in Section 8.3, until the expiration of the period beginning on the date on which the Restricted Share Units are granted and ending on the third anniversary of the date of grant (the "Restricted Share Unit Restriction Period"), the Restricted Share Units shall be immediately forfeited without any payment to the grantee of consideration by the Corporation if the grantee ceases to serve as a Non-Management Director for any reason.

                                    8.3.    Lapse of Restrictions in Connection With Cessation of Service.    Upon a grantee's cessation of service as a Non-Management Director for any reason (including death), on or after the first anniversary of the date on which Restricted Share Units were granted, the restrictions set forth in Section 8.2 shall lapse on the date of the grantee's cessation of service with respect to a fraction of the Restricted Share Units awarded to such grantee. The numerator of the fraction shall be the number of months that have elapsed since the Restricted Share Units were granted, and the denominator of the fraction shall be the number of months in the Restricted Share Unit Restriction Period; provided that in the case of a fractional month, a period of fifteen days or more shall be treated as a full month, and a period of less than fifteen days shall be disregarded.

                                    8.4    Dividend Equivalent Credits.    At the discretion of the Committee, the Restricted Share Unit balance of a Non-Management Director may be credited with additional Restricted Share Units corresponding to the dividends that are paid from time to time on the Common Stock.




                            ARTICLE IX
                            ADMINISTRATION, AMENDMENT AND TERMINATION OF THE PLAN

                                    9.1.    Administration.    The Plan shall be administered by the Committee.

                                    9.2.    Amendment and Termination.    The Plan may be terminated or amended by the Committee or the Board of Directors as it deems advisable. No amendment may revoke or alter in a manner unfavorable to the grantees any Options, Unrestricted Shares, Restricted Shares, or Restricted Share Units then outstanding, nor may the Committee or the Board of Directors amend the Plan without stockholder approval where the absence of such approval would cause the Plan to fail to comply with any requirement of any applicable law, regulation or securities exchange listing requirement.

                                    9.3.    Expiration of the Plan.    No Options, Unrestricted Shares, Restricted Shares or Restricted Share Units may not be granted under the Plan after May 31, 2009, but Options granted prior to that date shall continue to become exercisable and may be exercised according to the terms of the Plan.


                            ARTICLE X
                            NONTRANSFERABILITY

                                    10.1.    Options and Restricted Share Units Not Transferable.    The Options and Restricted Share Units granted under the Plan are not transferable by sale, assignment, pledge, hypothecation, or otherwise, other than by will or the laws of descent and distribution. During the grantee's lifetime, an Option may be exercised only by the grantee or the grantee's guardian or legal representative.


                            ARTICLE XI
                            RIGHTS OF DIRECTORS

                                    11.1.    Rights to Awards.    Except as provided in the Plan, no Non-Management Director shall have any claim or right to be granted an award under the Plan. Neither the Plan nor any action thereunder shall be construed as giving any Non-Management Director any right to be retained in the services of the Corporation in any capacity.


                            APPENDIX

                            FORM OF PROXY
                            THE INTERPUBLIC GROUP OF COMPANIES, INC.
                            PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
                            THE COMPANY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 18, 2004

                            The undersigned hereby constitutes and appoints David A. Bell, Christopher J. Coughlin and Nicholas J. Camera, and each of them, his true and lawful agents and proxies, with full power of substitution in each, to represent the undersigned at the Annual Meeting of Stockholders of THE INTERPUBLIC GROUP OF COMPANIES, INC. to be held in the MT&R Theater of The Museum of Television & Radio, 25 West 52nd Street, New York, New York, on Tuesday, May 18, 2004 at 9:30 A.M. Eastern Time, and at any adjournments thereof, on all matters to come before the meeting. If you are a participant in The Interpublic Group of Companies, Inc. Savings Plan (the "Plan"), this card also constitutes voting instructions by the undersigned to JPMorgan Chase Bank ("JPMorgan"), the trustee of the trust maintained under the Plan, for all shares held of record by JPMorgan as to which the undersigned is entitled to direct the voting. Any shares for which voting instructions are not timely received, will not be voted by JPMorgan. JPMorgan will vote any unallocated shares held under the Plan in the same proportion as it votes shares for which timely instructions are received.

                            THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF EACH OF THE DIRECTOR NOMINEES, FOR PROPOSALS 2, 3 AND 4, AGAINST PROPOSAL 5 AND IN THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTER AS MAY PROPERLY COME BEFORE THE MEETING.

                            YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. HOWEVER, THE PROXY HOLDERS CANNOT VOTE YOUR SHARES UNLESS YOU SIGN, DATE AND RETURN THIS CARD.

                            (Continued, and to be marked, dated and signed, on the other side)

                            ^    Detach here from proxy voting card.    ^

                            PLEASE MARK YOUR VOTES AS IN THIS EXAMPLEý
                            THE INTERPUBLIC GROUP OF COMPANIES, INC.
                            ANNUAL MEETING OF STOCKHOLDERS
                            MAY 18, 2004
                            9:30 A.M.
                            MT&R THEATER OF THE MUSEUM
                            OF TELEVISION & RADIO
                            25 WEST 52ND STREET
                            NEW YORK, NEW YORK

                            THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF EACH OF THE DIRECTOR NOMINEES, FOR PROPOSALS 2 3 and 4,3, AGAINST PROPOSAL 54 AND IN THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTER AS MAY PROPERLY COME BEFORE THE MEETING.

                            Please
                            Mark Here
                            for Address
                            Address Change or
                            Comments

                            o

                            		o

                            SEE REVERSE SIDE

                            PLEASE MARK YOUR VOTES
                            AS IS IN THIS EXAMPLE

                            ý

                            THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2 AND 3 AND AGAINST PROPOSAL 4.

                            FOR

                            AGAINST

                            ABSTAIN

                            1. Election of Directors


                            WITHHELD

                            o

                            o

                            o

                            Nominees:

                            FOR


                            FOR ALL

                            2.

                            Approval of The Interpublic Group of

                            01. David A. Bell
                            02. Frank J. Borelli
                            03.02. Reginald K. Brack
                            04.03. Jill M. Considine
                            05. Christopher J. Coughlin



                            06. John J. Dooner, Jr.
                            07.04. Richard A. Goldstein
                            08.

                            05. H. John Greeniaus
                            09.06. Michael I. Roth
                            10.07. J. Phillip Samper
                            08. David Thomas


                            o


                            FOR


                            o



                            WITHHELD
                            FOR ALL

                            o

                            Companies Employee Stock Purchase Plan (2006).



                            FOR

                            AGAINST

                            ABSTAIN

                            3.

                            Confirmation of the appointment of PricewaterhouseCoopers as independent auditors for 2005.

                            o

                            o

                            o

                            FOR

                            AGAINST

                            ABSTAIN

                            For, except vote withheld from the following nominee(s):

                            4.

                            Shareholder Proposal Concerning the Sale of Interpublic.

                            o

                            o

                            o

                            WILL ATTEND

                            If you plan to attend the Annual Meeting please mark the WILL ATTEND box.


                            o


                            WILL
                            ATTEND

                            o

                            For, except vote withheld from the following nominee(s):


                            THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2, 3 AND 4 AND AGAINST PROPOSAL 5

                            		FOR

                            		AGAINST

                            		ABSTAIN

                            ITEM 2

                            		Approval of 2004 Performance Incentive Plan

                            		o

                            		o

                            		o


                            ITEM 3



                            Approval of the Interpublic Non-Management Directors Stock Incentive Plan



                            o



                            o

                            o


                            ITEM 4



                            Confirmation of PricewaterhouseCoopers as independent auditors for 2004.



                            o



                            o

                            o


                            ITEM 5

                            Signature



                            Approval of Proposed Shareholder Resolution on Northern Ireland

                            Signature



                            o


                            Date


                            o

                            o
                            SignatureSignatureDate

                            The signer hereby revokes all proxies heretofore given by the signer to vote at said meeting or any adjournments thereof. NOTE: Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.

                            The signer hereby revokes all proxies heretofore given by the signer to vote at said meeting or any adjournments thereof.
                            NOTE: Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.------------------------------------------------------------------------------------------------------------------------------------------------------------------

                              FOLD AND DETACH HERE 

                            ^    Detach here from proxy voting card.    ^

                            Vote by Internet, Telephone, or Mail

                            24 Hours a Day, 7 Days a Week

                            Telephone and Internet voting is available through 11:59 PM EST

                            the day prior to annual meeting day.

                            Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as

                            if you
                            marked, signed, and returned your proxy card.

                            INTERNETInternet
                            http://www.eproxy.com/ipg

                            ORTelephone

                            TELEPHONEMail
                            1-800-435-6710

                            		ORMAIL

                            http://www.proxyvoting.com/ipg
                            Use the Internet to vote your proxy.
                            Have your proxy card in hand
                            when you access the website.web site.


                            OR

                            1-866-540-5760



                            Use any touch-tone telephone to
                            vote your proxy. Have your proxy
                            card in hand when you call.


                            OR




                            Mark, sign and date
                            your proxy card and
                            return it in the
                            enclosed postage-paid
                            envelope.

                            If you submit your proxy by Internet or by telephone,

                            you do NOT need to mail back your proxy card.

                            You can view the Annual Report and Proxy Statement

                            on the Internet at http://www.Interpublic.com


                            FORM OF PROXY

                            THE INTERPUBLIC GROUP OF COMPANIES, INC.


                            PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF

                            THE COMPANY FOR ANNUAL MEETING OF STOCKHOLDERS, November 14, 2005

                            The undersigned hereby constitutes and appoints Michael I. Roth, Frank Mergenthaler and Nicholas J. Camera, and each of them, his true and lawful agents and proxies, with full power of substitution in each, to represent the undersigned at the Annual Meeting of Stockholders of THE INTERPUBLIC GROUP OF COMPANIES, INC. to be held in the McGraw Hill Building, 1221 Avenue of the Americas, New York, New York, on Monday, November 14, 2005 at 9:30 A.M. Eastern Time, and at any adjournments thereof, on all matters to come before the meeting. If you are a participant in The Interpublic Group of Companies, Inc. Savings Plan (the “Plan”), this card also constitutes voting instructions by the undersigned to JPMorgan Chase Bank (“JPMorgan”), the trustee of the trust maintained under the Plan, for all shares held of record by JPMorgan as to which the undersigned is entitled to direct the voting. Any shares for which voting instructions are not timely received, will not be voted by JPMorgan. JPMorgan will vote your proxy by Internet or by telephone,
                            you do NOT need to mail back your proxy card.any unallocated shares held under the Plan in the same proportion as it votes shares for which timely instructions are received.


                            You can view the Annual Report

                            THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF EACH OF THE DIRECTOR NOMINEES, FOR PROPOSALS 2 AND 3, AGAINST PROPOSAL 4 AND IN THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTER AS MAY PROPERLY COME BEFORE THE MEETING.

                            YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS. HOWEVER, THE PROXY HOLDERS CANNOT VOTE YOUR SHARES UNLESS YOU SIGN, DATE AND RETURN THIS CARD.

                            (Continued, and Proxy Statement
                            to be marked, dated and signed, on the Internet at: http://www.Interpublic.com





                            other side)


                            Address Change/Comments (Mark the corresponding box on the reverse side)


                            QuickLinks

                            ------------------------------------------------------------------------------------------------------------------------------------------------------------------

                              FOLD AND DETACH HERE 

                            THE INTERPUBLIC GROUP OF COMPANIES, INC. 1271 Avenue of the Americas New York, New York 10020

                            THE INTERPUBLIC GROUP OF COMPANIES, INC. 1271 Avenue of the Americas New York, New York 10020
                            NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To Be Held May 18, 2004

                            November 14, 2005

                            9:30 A.M.

                            MCGRAW HILL BUILDING,
                            TABLE OF CONTENTS
                            THE INTERPUBLIC GROUP OF COMPANIES, INC.
                            PROXY STATEMENT
                            GENERAL
                            1. ELECTION OF DIRECTORS
                            CORPORATE GOVERNANCE PRACTICES AND BOARD MATTERS
                            AUDIT COMMITTEE REPORT
                            CODE OF CONDUCT
                            CHANGE OF ADDRESS
                            COMPENSATION OF EXECUTIVE OFFICERS
                            SUMMARY COMPENSATION TABLE
                            Stock Option Grants In 2003
                            Individual Grants
                            Aggregated Option Exercises in 2003 and Fiscal Year-End Option Values
                            Long-Term Incentive Plan Awards in 2003
                            Equity Compensation Plan Information
                            EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
                            REPORT1221 AVENUE OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORSAMERICAS,
                            NEW YORK, NEW YORK
                            COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN (1) THE INTERPUBLIC GROUP OF COMPANIES, INC. COMMON STOCK, THE S&P 500 AND PEER GROUP INDICES (2)
                            2. PROPOSAL TO ADOPT THE 2004 PERFORMANCE INCENTIVE PLAN
                            3. PROPOSAL TO ADOPT THE INTERPUBLIC NON-MANAGEMENT DIRECTORS' STOCK INCENTIVE PLAN
                            4. APPOINTMENT OF INDEPENDENT AUDITORS
                            THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR CONFIRMATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS.
                            5. STOCKHOLDERS' PROPOSAL REGARDING NORTHERN IRELAND
                            THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE STOCKHOLDERS' PROPOSAL REGARDING NORTHERN IRELAND.
                            SOLICITATION OF PROXIES
                            The Interpublic Group of Companies, Inc. AUDIT COMMITTEE CHARTER
                            THE INTERPUBLIC GROUP OF COMPANIES, INC. 2004 PERFORMANCE INCENTIVE PLAN
                            THE INTERPUBLIC NON-MANAGEMENT DIRECTORS' STOCK INCENTIVE PLAN
                            ARTICLE I INTRODUCTION
                            ARTICLE II DEFINITIONS
                            ARTICLE III ELIGIBILITY
                            ARTICLE IV SHARES AVAILABLE
                            ARTICLE V AWARDS
                            ARTICLE VI OPTIONS
                            ARTICLE VII RESTRICTED SHARES
                            ARTICLE VIII RESTRICTED SHARE UNITS
                            ARTICLE IX ADMINISTRATION, AMENDMENT AND TERMINATION OF THE PLAN
                            ARTICLE X NONTRANSFERABILITY
                            ARTICLE XI RIGHTS OF DIRECTORS