XML 138 R17.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Incentive Compensation Plans (Notes) | 12 Months Ended
--- | ---
Dec. 31, 2019
Share-based Payment Arrangement, Additional Disclosure [Abstract] |
Incentive Compensation Plans | Incentive Compensation Plans 2019 & 2014 Performance Incentive Plan We issue stock-based compensation and cash awards to our employees under various plans established by the Compensation and Leadership Talent Committee of the Board of Directors (the “Compensation Committee”) and approved by our shareholders. In May 2019, our shareholders approved the 2019 Performance Incentive Plan (the “2019 PIP”), replacing the 2014 Performance Incentive Plan (the “2014 PIP”) and previous incentive plans. The number of shares of common stock initially available for grants of all equity awards under the 2019 PIP is 27.0. Pursuant to the terms of the 2019 PIP, the number of shares that may be awarded to any one participant for any stock based awards is limited to 2.0. The vesting period of awards granted is generally commensurate with the requisite service period. We generally issue new shares to satisfy the exercise of stock options or the distribution of other stock-based awards. Additionally, under the 2019 PIP, we have the ability to issue performance cash awards. The performance cash awards are granted to certain employees who otherwise would have been eligible to receive performance-based stock awards. These awards have a service period vesting condition and a performance vesting condition. The amount of the performance cash award received by an employee with a performance vesting condition can range from 0% to 300% of the target amount of the original grant value, except for Executive Officers of IPG, with a range of 0% to 200%. Performance cash awards generally vest in three years. The Compensation Committee may grant performance cash awards to any eligible employee; however, no employee can receive more than $10.0 during a performance period. The amounts of stock-based compensation expense as reflected in salaries and related expenses in our Consolidated Statements of Operations, and the related tax benefit, are listed below.
| Years ended December 31,
| 2019 |  | 2018 |  | 2017
Stock-settled awards | $ | 33.5 |  |  | $ | 24.7 |  |  | $ | 20.5 |
Cash-settled awards | 0.8 |  |  | 0.6 |  |  | 1.0 |
Performance-based awards | 46.7 |  |  | 57.5 |  |  | 61.5 |
Employee stock purchase plan | 1.1 |  |  | 0.9 |  |  | 1.0 |
Other 1 | 0.6 |  |  | 0.9 |  |  | 0.5 |
Stock-based compensation expense | $ | 82.7 |  |  | $ | 84.6 |  |  | $ | 84.5 |
Tax benefit | $ | 20.0 |  |  | $ | 20.4 |  |  | $ | 30.4 |
1 | Represents charges recorded for severance expense related to stock-based compensation awards.
Stock Options Stock options are granted with the exercise price equal to the fair market value of our common stock on the grant date. We use the Black-Scholes option-pricing model to estimate the fair value of options granted, which requires the input of subjective assumptions including the option’s expected term and the price volatility of the underlying stock. They are generally first exercisable between two and four years from the grant date and expire ten years after the grant date (or earlier in the case of certain terminations of employment). There were no stock options granted during the years ended December 31, 2019, 2018 and 2017. As of December 31, 2019, all stock options granted were fully vested and exercisable. The following table summarizes our stock option activity during 2019.
|  | Options |  | Weighted- Average Exercise Price (per option) |  | Weighted- Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value
Stock options outstanding as of January 1, 2019 |  | 1.8 |  |  | $ | 10.66 |  |  |  |  |
Exercised |  | (0.6 | ) |  | $ | 7.38 |  |  |  |  |
Stock options outstanding as of December 31, 2019 |  | 1.2 |  |  | $ | 12.26 |  |  | 2.7 |  | $ | 12.9 |
There were 0.6, 1.9 and 1.1 stock options exercised in 2019, 2018 and 2017, respectively. The total intrinsic value of stock options exercised during 2019, 2018 and 2017 was $9.1, $27.9 and $15.1, respectively. The cash received from the stock options exercised in 2019, 2018 and 2017 was $8.3, $29.0 and $20.0, which included taxes withheld of $4.0, $13.3, and $6.8, respectively. Stock-Based Compensation We grant other stock-based compensation awards such as stock-settled awards, cash-settled awards and performance-based awards (settled in cash or shares) to certain key employees. The number of shares or units received by an employee for performance-based awards depends on Company performance against specific performance targets and could range from 0% to 300% of the target amount of shares originally granted, except for Executive Officers of IPG, with a range of 0% to 200%. Incentive awards are subject to certain restrictions and vesting requirements as determined by the Compensation Committee. The fair value of the shares on the grant date is amortized over the vesting period, which is generally three years. Upon completion of the vesting period for cash-settled awards, the grantee is entitled to receive a payment in cash based on the fair market value of the corresponding number of shares of common stock. No monetary consideration is paid by a recipient for any incentive award. The fair value of cash-settled awards is adjusted each quarter based on our share price. The holders of stock-settled awards have absolute ownership interest in the underlying shares of common stock prior to vesting, which includes the right to vote and receive dividends. Dividends declared on common stock are accrued during the vesting period and paid when the award vests. The holders of performance-based awards have no ownership interest in the underlying shares of common stock until the awards vest and the shares of common stock are issued. Stock-based compensation awards expected to be settled in cash have been classified as liabilities in our Consolidated Balance Sheets as of December 31, 2019 and 2018.
|  | Years ended December 31,
|  | 2019 |  | 2018 |  | 2017
Stock-Settled Awards: |  |  |  |  |  |
Awards granted |  | 2.5 |  |  | 2.1 |  |  | 0.8 |
Weighted-average grant-date fair value (per award) |  | $ | 22.78 |  |  | $ | 23.60 |  |  | $ | 24.18 |
Total fair value of vested awards distributed |  | $ | 15.2 |  |  | $ | 24.2 |  |  | $ | 22.6 |
Cash-Settled Awards: |  |  |  |  |  |
Awards granted |  | 0.0 |  |  | 0.1 |  |  | 0.0 |
Weighted-average grant-date fair value (per award) |  | $ | 22.83 |  |  | $ | 23.62 |  |  | $ | 23.33 |
Total fair value of vested awards distributed |  | $ | 0.9 |  |  | $ | 0.8 |  |  | $ | 0.9 |
Performance-Based Awards: |  |  |  |  |  |
Awards granted |  | 2.1 |  |  | 2.9 |  |  | 4.8 |
Weighted-average grant-date fair value (per award) |  | $ | 20.16 |  |  | $ | 21.13 |  |  | $ | 20.06 |
Total fair value of vested awards distributed |  | $ | 64.9 |  |  | $ | 87.2 |  |  | $ | 112.4 |
In conjunction with common stock dividends declared in 2019 and 2018, we accrued dividends of $4.2 and $2.4, respectively, on non-vested stock-settled awards and paid dividends of $1.2 and $1.5 for stock-settled awards that vested during 2019 and 2018, respectively. A summary of the activity of our non-vested stock-settled awards, cash-settled awards and performance-based awards during 2019 is presented below (performance-based awards are shown at 100% of the shares originally granted).
|  | Stock-Settled Awards |  | Cash-Settled Awards |  | Performance-Based Awards
|  | Awards |  | Weighted- Average Grant-Date Fair Value (per award) |  | Awards |  | Weighted- Average Grant-Date Fair Value (per award) |  | Awards |  | Weighted- Average Grant-Date Fair Value (per award)
Non-vested as of January 1, 2019 |  | 3.1 |  |  | $ | 23.51 |  |  | 0.1 |  |  | $ | 23.47 |  |  | 7.0 |  |  | $ | 21.10 |
Granted |  | 2.5 |  |  | 22.78 |  |  | 0.0 |  |  | 22.83 |  |  | 2.1 |  |  | 20.16 |
Vested |  | (0.7 | ) |  | 22.78 |  |  | 0.0 |  |  | 23.53 |  |  | (2.9 | ) |  | 19.93 |
Forfeited |  | (0.2 | ) |  | 23.42 |  |  | 0.0 |  |  | 22.84 |  |  | (0.6 | ) |  | 21.01 |
Non-vested as of December 31, 2019 |  | 4.7 |  |  | $ | 23.21 |  |  | 0.1 |  |  | $ | 23.20 |  |  | 5.6 |  |  | $ | 21.36 |
Total unrecognized compensation expense remaining |  | $ | 56.0 |  |  |  |  | $ | 1.2 |  |  |  |  | $ | 45.7 |  |  |
Weighted-average years expected to be recognized over |  | 1.6 |  |  |  |  | 1.5 |  |  |  |  | 1.7 |  |  |
In conjunction with our annual grant of long-term incentive compensation awards, we reviewed our estimates and assumptions in 2019, which resulted in a forfeiture rate slightly less than prior years. 2009 Restricted Cash Plan In March 2009, the Compensation Committee approved the Interpublic Restricted Cash Plan (the “Cash Plan”). Under the Cash Plan, the Board, the Compensation Committee or the Plan Administrator may grant cash awards to certain employees eligible to receive cash-settled awards. Cash awards, when granted, have a service-period vesting condition and generally vest in three years. Cash Awards During the years ended December 31, 2019, 2018 and 2017, the Compensation Committee granted cash awards under the Cash Plan with a total target value of $22.3, $20.9 and $2.8, respectively. For those same years, we recognized $15.6, $7.0 and $2.5, respectively, in salaries and related expenses in our Consolidated Statements of Operations. During the years ended December 31, 2019, 2018 and 2017, the Compensation Committee granted performance awards to be settled in cash under the 2019 PIP with a total target value of $40.7, $39.9, and $38.4, respectively. For those same years, we recognized $39.9, $37.6 and $35.3, respectively, in salaries and related expenses in our Consolidated Statements of Operations. We amortize the present value of the amount expected to vest for cash awards and performance cash awards over the vesting period using the straight-line method, less an assumed forfeiture rate. Cash awards do not fall within the scope of the authoritative guidance for stock compensation as they are not paid in equity and the value of the award is not correlated with our stock price. Due to the cash nature of the payouts and the vesting period, we account for these awards in accordance with authoritative guidance for deferred compensation arrangements. Employee Stock Purchase Plans In May 2016, our shareholders approved The Interpublic Group of Companies Employee Stock Purchase Plan (2016) (the “ESPP”), replacing the prior employee stock purchase plan under which, prior to its expiration on December 31, 2015, 3.0 shares were issued. Under the ESPP, eligible employees may purchase our common stock through payroll deductions not exceeding 10% of their eligible compensation or 900 (actual number) shares each offering period, consistent with the prior employee stock purchase plan. The price an employee pays for a share of common stock under the ESPP is 90% of the lesser of the average market price of a share on the first business day of the offering period or the average market price of a share on the last business day of the offering period of three months. An aggregate of approximately 10.0 shares are reserved for issuance under the ESPP, of which 1.1 shares have been issued since the inception of the ESPP through December 31, 2019.

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_EmployeeServiceShareBasedCompensationAggregateDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration