Key staff at Clemenger have unlocked millions of dollars in the agency’s share scheme in a deal with majority owner Omnicom.
The scheme, which also reduces the agency’s overhead of loans to staff for shares, sees Omnicom take a larger stake in the business founded by John Clemenger in 1946, Melbourne.
The $3.29 per share offer for half the shares held by 320 staff valued the company at $577.395 million.
Those staff who took up the offer shared in tens of millions of dollars, paid back all or some of their share loans and extinguished any tax liabilities.
Liquidity is an issue for staff share schemes and this deal is a bonus for staff. Normally, they have one opportunity a year to sell, providing an insider could be found who can buy.
The agency itself is doing well. Clemenger posted net profit after tax of $50 million for the year to December 2022, up from $49 the previous year, according to documents lodged with corporate regulator ASIC.
Commissions and fees came to $342.3 million, up from $327.4 million in 2021. Traditional advertising and media made up $164.67 million of that, digital $28.6 million and public relations $30.85 million.
Those holding shares at that time were given 13.75 cents a share in full franked dividends, a total of about $24 million.
Staff shareholders would have shared $6.2 million.
The Employee Share Assistance Scheme is considered by Clemenger to be “an important point of difference” from its competitors and key to attracting the best employees.
Clemenger makes loans to staff so they can buy shares. Staff loans, before the latest deal, stood at $89 million, charged at 5.1% a year to June last year and 7.8% from June 2023, reflecting Reserve Bank hikes in the official cash rate.
All or most of the 320 staff took up the latest offer to sell half their shares. Omnicom paid out $76 million.
The biggest return of more than $5 million, according to one unconfirmed report, went to Robert Morgan, the chairman.
Morgan says the share scheme is an important part of the company’s DNA and remains unique in the industry.
“It plays a vital role in finding and keeping the best people, and has contributed to the success of our company over many years, ” he says.
“Omnicom and the BBDO Network has had a majority ownership in Clemenger Group since 2011. This further acquisition preserves significant ongoing ownership by our people while representing a strong sign of confidence by Omnicom and BBDO in Clemenger Group’s future.”
“This change has no impact on the management of our companies locally. Clemenger Group and Omnicom have a strong relationship extended over several decades, based on mutual respect and with strong local management.”
The group had 1,119 employees at the end of 2022. Fewer than 30% of those were shareholders.
Omnicom, before the latest deal, held 73.67% of Clemenger through a local fully-owned subsidiary company, Portview Holdings Australia.
The latest deal gives Omnicom another 13.16%.
Omnicom took majority control of Clemenger in 2010, paying $6.43 for each share.
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