CTO Employment Agreement - Steve Gatfield

Exhibit 10(iii)(A)(1)

EMPLOYMENT AGREEMENT

AGREEMENT made as of February 2, 2004 by and between THE INTERPUBLIC GROUP OF COMPANIES, INC. , a Delaware corporation ("Interpublic" or the "Corporation" ) and STEVE GATFIELD ( "Executive" ).

In consideration of the mutual promises set forth herein the parties hereto agree as follows:

ARTICLE I

Term of Employment

1.01 Subject to the provisions of Article VII and Article VIII, and upon the terms and subject to the conditions set forth herein, Interpublic will employ Executive for the period beginning April 1, 2004 ( "Commencement Date" ) and continuing thereafter, subject to termination in accordance with the provisions of Article VII hereof. (The period during which Executive is employed hereunder is referred to herein as the "term of employment." )

ARTICLE II

Duties

2.01 During the term of employment, Executive will:

(i) Serve as Executive Vice President, Director of Global Architecture and Innovation, reporting to the Chairman/Chief Executive Officer of Interpublic;

(ii) Use his best efforts to promote the interests of Interpublic and devote his full time and efforts to its business and affairs;

(iii) Perform such duties as Interpublic may from time to time assign to him consistent with the responsibilities of an Executive Vice President;

(iv) Serve in such other offices of Interpublic as he may be elected or appointed to; and

(v) Be located at the corporate headquarters of Interpublic in New York City.

ARTICLE III

Regular Compensation

3.01 Interpublic will compensate Executive for the duties performed by him hereunder, by payment of a base salary at the rate of Eight Hundred Fifty Thousand Dollars ($850,000) per annum, payable in equal installments, which Interpublic shall pay at semi-monthly intervals, subject to customary withholding for federal, state and local taxes.

3.02 Interpublic may at any time increase the compensation paid to Executive under this Article III if Interpublic in its sole discretion shall deem it advisable so to do in order to compensate him fairly for services rendered to Interpublic. Executive's salary will be reviewed every twenty-four (24) months and will not be reduced, except with Executive's consent or in the event that there is a reduction in the salary of all key management employees of Interpublic at Executive's level.

ARTICLE IV

Bonuses

4.01 Executive will be eligible during the term of employment to participate in Interpublic's Annual Incentive Plan, or any successor plan, in accordance with the terms and conditions of the Plan established from time to time. Executive shall be eligible for a target annual bonus equal to one hundred percent (100%) of his base salary up to a maximum bonus equal to one hundred fifty percent (150%) of his base salary. The actual award, if any, shall be determined by Interpublic and shall be based on profits, Executive's individual performance, and management discretion. Provided however that Executive shall be guaranteed a minimum bonus for calendar year 2004 equal to fifty percent (50%) of his base salary.

4.02 Executive will be eligible to participate in Interpublic's 2004 incentive program currently under development. This program is expected to utilize Interpublic restricted stock and include performance-based vesting. In addition, Executive will be eligible for participation in other long-term incentive plans consistent with other senior Interpublic executives at his level.

4.03 Executive will be entitled to a sign-on bonus of Seven Hundred Fifty Thousand Dollars ($750,000), payable upon commencement of his employment under this Agreement.

ARTICLE V

Interpublic Stock

5.01 As soon as administratively feasible after full execution of this Agreement, Interpublic will use its best efforts to have the Management Human Resources Committee ( "MHRC" ) grant to Executive twenty thousand (20,000) shares of Interpublic Common Stock which will be subject to a one-year vesting restriction from their date of grant.

5.02 As soon as administratively feasible after full execution of this Agreement, Interpublic will use its best efforts to have the MHRC grant to Executive options to purchase thirty thousand (30,000) shares of Interpublic Common Stock, which will be subject to all the terms and conditions of the Interpublic Stock Incentive Plan. One-third (1/3) of the options will be exercisable after the second anniversary of the date of grant, one-third (1/3) will be exercisable after the third anniversary and one-third (1/3) will be exercisable after the fourth anniversary of the date of grant through the tenth anniversary of the date of grant.

ARTICLE VI

Other Employment Benefits

6.01 Executive shall be eligible to participate in such other employee benefits as are available from time to time to other key management executives of Interpublic in accordance with the then-current terms and conditions established by Interpublic for eligibility and employee contributions required for participation in such benefits opportunities.

6.02 Employee will be entitled to a minimum of twenty-five (25) days of paid time off per annum (exclusive of holidays), in accordance with Interpublic's policies and procedures, to be taken in such amounts and at such times as shall be mutually convenient for Executive and Interpublic.

6.03 Executive shall be reimbursed for all reasonable out-of-pocket expenses actually incurred by him in the conduct of the business of Interpublic provided that Executive submits all substantiation of such expenses to Interpublic on a timely basis in accordance with standard policies of Interpublic.

6.04 Executive shall be entitled to an annual automobile allowance of Ten Thousand Dollars ($10,000) per year, payable monthly in accordance with Interpublic's standard procedures.

6.05 Executive shall be entitled to a club allowance of up to Twenty-Five Thousand Dollars ($25,000) per year, as well as reimbursement for "joining fees" for up to two clubs, provided that Executive submits substantiation in accordance with standard policies of Interpublic.

6.06 Executive shall be eligible to participate in the Executive Medical Plus Plan.

6.07 Executive shall be entitled to an annual financial planning allowance of Two Thousand Five Hundred Dollars ($2,500) per year.

6.08 Executive shall be entitled to participate in The Interpublic Senior Executive Retirement Income Plan ( "SERIP" ), pursuant to the terms of a SERIP Agreement to be entered into between Interpublic and Executive.

6.09 Interpublic will, at its own expense, assist Executive in obtaining all necessary visas, including sponsorship and retention of legal counsel. It is understood that this Agreement is subject to all appropriate authorizations being obtained.

ARTICLE VII

Termination

7.01 Interpublic may terminate the employment of Executive hereunder:

(i) At any time after the second anniversary of the Commencement Date, by giving Executive notice in writing at any time specifying a termination date not less than twelve (12) months after the date on which such notice is given, in which event Executive's employment hereunder shall terminate on the date specified in such notice, or

(ii) At any time after the second anniversary of the Commencement Date, by giving Executive notice in writing at any time specifying a termination date less than twelve (12) months after the date on which such notice is given. In this event Executive's employment hereunder shall terminate on the date specified in such notice and Interpublic shall thereafter pay him a sum equal to the amount by which twelve (12) months salary at his then current rate exceeds the salary paid to him for the period from the date on which such notice is given to the termination date specified in such notice. Such payment shall be made during the period immediately following the termination date specified in such notice, in successive equal monthly installments each of which shall be equal to one (1) month's salary at the rate in effect at the time of such termination, with any residue in respect of a period less than one (1) month to be paid together with the last installment.

(iii) During the termination period provided in subsection (i), or in the case of a termination under subsection (ii) providing for a termination period of less than twelve (12) months, for a period of twelve (12) months after the termination notice, Executive will be entitled to receive all employee benefits accorded to him prior to termination under the same terms as if he were actively employed by the Corporation; provided, that such benefits shall cease upon such date that Executive accepts employment with another employer offering similar benefits. In addition, Stock Options, Restricted Stock, and SERIP benefits granted to Executive will continue to vest during the twelve-month benefit period referred to above and Executive will continue to be eligible for the annual bonus contemplated by Section 4.01.

7.02 Notwithstanding the provisions of Section 7.01, if Executive obtains other employment (including work as a consultant, independent contractor or establishing his own business) during the period of notice of termination, Executive will promptly notify the Corporation.

7.03 Executive may at any time give notice in writing to Interpublic specifying a termination date not less than thirty (30) days after the date on which such notice is given, in which event his employment hereunder shall terminate on the date specified in such notice. Provided however, Interpublic may, at its option, upon receipt of such notice determine an earlier termination date. During the notice period, Executive will continue to be an employee, will assist Interpublic in the transition of his responsibilities and will be entitled to continue to receive base salary and to participate in all benefit plans for which an employee at Executive's level is eligible, but not to receive any bonus award that might otherwise be paid during that period except as otherwise provided herein. Interpublic may require that Executive not come in to work during the notice period. In no event, however, may Executive perform services for any other employer during the notice period.

7.04 Notwithstanding the provisions of Section 7.01, Interpublic may terminate the employment of Executive hereunder, at any time after the Commencement Date, for Cause. For purposes of this Agreement, "Cause" means the following:

(i) Any material breach by Executive of any provision of this Agreement (including without limitation Sections 8.01 and 8.02 hereof) upon notice of same by Interpublic which breach, if capable of being cured, has not been cured within fifteen (15) business days after such notice (it being understood and agreed that a breach of Section 8.01 or 8.02 hereof, among others, shall be deemed not capable of being cured);

(ii) Executive's absence from duty for a period of time exceeding fifteen (15) consecutive business days or twenty (20) out of any thirty (30) consecutive business days (other than on account of permitted vacation or as permitted for illness, disability or authorized leave in accordance with Interpublic's policies and procedures or applicable law) without the consent of the Interpublic Board of Directors;

(iii) Misappropriation by Executive of funds or property of Interpublic or any attempt by Executive to secure any personal profit related to the business of Interpublic (other than as permitted by this Agreement) and not fairly disclosed to and approved by the Interpublic Board of Directors;

(iv) Fraud, gross negligence, or willful misconduct on the part of Executive in the performance of his duties as an employee of Interpublic;

(v) A felony conviction of Executive; or

(vi) Executive's engaging, during the term of employment, in discrimination or harassment based on age, sex, race, religion, disability, national origin or any other protected category in violation of Interpublic's policies.

Upon a termination for Cause, Interpublic shall pay Executive his salary through the date of termination of employment, and Executive shall not be entitled to any bonus with respect to the year of termination, or to any other payments hereunder.

7.05 Executive may terminate his employment with the Corporation for "Good Reason" by giving the Company written notice of the termination, setting forth in reasonable detail the specific conduct of the Company that constitutes Good Reason. A termination of employment by the Executive for Good Reason shall be effective on the 21st business day following the date the notice is given, unless the Corporation cures the conduct giving rise to Good Reason prior to that date. "Good Reason" means:

(i) the assignment to Executive of any duties inconsistent in any material respect with Section 2.01, or any other action by the Corporation that results in a material diminution in the Executive's position or authority, duty, titles, responsibilities, or reporting requirements other than an isolated, insubstantial and inadvertent action that is not taken in bad faith;

(ii) any relocation of the Executive's principal business location to a location other than the New York Metropolitan area (within fifty (50) miles of Manhattan); or

(iii) any breach by Interpublic of a material term of this Agreement.

In the event of a termination for Good Reason, all of the compensation, benefits and perquisites provided by Section 7.01 shall apply as if Executive were terminated by the Corporation.

ARTICLE VIII

Covenants

8.01 While Executive is employed hereunder by Interpublic he shall not, without the prior written consent of Interpublic, which will not be unreasonably withheld, engage, directly or indirectly, in any other trade, business or employment, or have any interest, direct or indirect, in any other business, firm or corporation; provided, however, that he may continue to own or may hereafter acquire any securities of any class of any publicly-owned company and provide services to charitable organizations.

8.02 Executive shall treat as confidential and keep secret the affairs of Interpublic and shall not at any time during the term of employment or thereafter, without the prior written consent of Interpublic, divulge, furnish or make known or accessible to, or use for the benefit of, anyone other than Interpublic and its subsidiaries and affiliates any information of a confidential nature relating in any way to the business of Interpublic or its subsidiaries or affiliates or their clients and obtained by him in the course of his employment hereunder.

8.03 All records, papers and documents kept or made by Executive relating to the business of Interpublic or its subsidiaries or affiliates or their clients shall be and remain the property of Interpublic.

8.04 All articles invented by Executive, processes discovered by him, trademarks, designs, advertising copy and art work, display and promotion materials and, in general, everything of value conceived or created by him pertaining to the business of Interpublic or any of its subsidiaries or affiliates during the term of employment, and any and all rights of every nature whatever thereto, shall immediately become the property of Interpublic, and Executive will assign, transfer and deliver all patents, copyrights, royalties, designs and copy, and any and all interests and rights whatever thereto and thereunder to Interpublic.

8.05 During any period in which payments are being made to Executive pursuant to Section 7.01 above (the "Severance Period") and for a period of one (1) year following either the end of the Severance Period or the termination of Executive's employment hereunder for any reason, whichever is later, Executive shall not: (a) directly or indirectly solicit any employee of Interpublic to leave such employ to enter the employ of Executive or of any person, firm or corporation with which Executive is then associated, or induce or encourage any such employee to leave the employment of Interpublic or to join any other company, or hire any such employee, or otherwise interfere with the relationship between Interpublic and any of its employees or (b) directly or indirectly solicit or handle on Executive's own behalf or on behalf of any other person, firm or corporation, the event marketing, public relations, advertising, sales promotion or market research business of any person or entity which is a client of Interpublic and with whom Executive had contact during his employment with Interpublic, or to induce any such client to cease to engage the services of Interpublic or to use the services of any entity or person that competes directly with a material business of Interpublic, where the identity of such client, or the client's need, desire or receptiveness to services offered by Interpublic is known by Executive as a part of his employment with Interpublic. In addition, during the Severance Period, Executive shall not accept any form of employment (including as an advisor, consultant or otherwise) with an employer that is in competition with the business of Interpublic, working in the same capacity and providing the same or similar services to those he was providing to Interpublic. Executive acknowledges that these provisions are reasonable and necessary to protect Interpublic's legitimate business interests, and that these provisions do not prevent Executive from earning a living.

8.06 If at the time of enforcement of any provision of this Agreement, a court shall

hold that the duration, scope or area restriction of any provision hereof is unreasonable under circumstances now or then existing, the parties hereto agree that the maximum duration, scope or area reasonable under the circumstances shall be substituted by the court for the stated duration, scope or area.

8.07 Executive acknowledges that a remedy at law for any breach or attempted breach of Article VIII of this Agreement will be inadequate, and agrees that Interpublic shall be entitled to specific performance and injunctive and other equitable relief in the case of any such breach or attempted breach.

8.08 Executive represents and warrants that neither the execution and delivery of this Employment Agreement nor the performance of Executive's services hereunder will conflict with, or result in a breach of, any agreement to which Executive is a party or by which he may be bound or affected, in particular the terms of any employment agreement to which Executive may be a party. Executive further represents and warrants that he has full right, power and authority to enter into and carry out the provisions of this Employment Agreement.

ARTICLE IX

Arbitration

9.01 Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, including claims involving alleged legally protected rights, such as claims for age discrimination in violation of the Age Discrimination in Employment Act of 1967, as amended, Title VII of the Civil Rights Act, as amended, and all other federal and state law claims for defamation, breach of contract, wrongful termination and any other claim arising because of Executive's employment, termination of employment or otherwise, shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association and Section 12.01 hereof, and judgement upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitration shall take place in the city where Executive customarily renders services to Interpublic. The prevailing party in any such arbitration shall be entitled to receive reasonable attorney's fees and costs.

ARTICLE X

Assignment

10.01 This Agreement shall be binding upon and enure to the benefit of the successors and assigns of Interpublic. Neither this Agreement nor any rights hereunder shall be assignable by Executive and any such purported assignment by him shall be void.

ARTICLE XI

Agreement Entire

11.01 This Agreement, along with the Executive Severance Agreement and Senior Executive Retirement Income Plan Agreement executed as of today's date constitute the entire understanding between Interpublic and Executive concerning his employment by Interpublic or any of its parents, affiliates or subsidiaries and supersedes any and all previous agreements between Executive and Interpublic or any of its parents, affiliates or subsidiaries concerning such employment, and/or any compensation or bonuses. Each party hereto shall pay its own costs and expenses (including legal fees) incurred in connection with the preparation, negotiation and execution of this Agreement. This Agreement may not be changed orally.

ARTICLE XII

Applicable Law

12.01 The Agreement shall be governed by and construed in accordance with the laws of the State of New York.

THE INTERPUBLIC GROUP OF

COMPANIES, INC.

By: /s/ Christopher J. Coughlin

Name: Christopher J. Coughlin

Title: Chief Operating Officer

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