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What changed in Interpublic Group of Companies (The)'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Interpublic Group of Companies (The)'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+309 added−325 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-21)

Top changes in Interpublic Group of Companies (The)'s 2023 10-K

309 paragraphs added · 325 removed · 257 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeMD&E is comprised of IPG Mediabrands, Acxiom, and Kinesso, as well as our digital and commerce specialist agencies, which include MRM, R/GA, and Huge. IA&C is comprised of leading global networks and agencies that provide a broad range of services, including McCann Worldgroup, IPG Health, MullenLowe Group, Foote, Cone & Belding ("FCB"), and our domestic integrated agencies.
Biggest changeIA&C is comprised of leading global networks and agencies that provide a broad range of services, including McCann Worldgroup, IPG Health, MullenLowe Group, Foote, Cone & Belding ("FCB"), and our domestic integrated agencies. SC&E is comprised of agencies that provide a range of marketing services expertise, including Weber Shandwick, Golin, our sports, entertainment, and experiential agencies, and IPG DXTRA Health.
IPG brands include DXTRA Health, The Weber Shandwick Collective, Golin, Jack Morton, Momentum and Octagon. These agencies create engaging experiences that allow consumers to build emotional connections and lasting relationships with brands.
IPG brands include IPG DXTRA Health, The Weber Shandwick Collective, Golin, Jack Morton, Momentum and Octagon. These agencies create engaging experiences that allow consumers to build emotional connections and lasting relationships with brands.
This data which we began measuring in 2015, is reported in line with frameworks that include the Global Reporting Initiative (“GRI”), the CDP (formerly the Carbon Disclosure Project) and the Sustainability Accounting Standards Board (“SASB”) and the Task Force on Climate-Related Financial Disclosures ("TCFD").
This data, which we began measuring in 2015, is reported in line with frameworks that include the Global Reporting Initiative (“GRI”), the CDP (formerly the Carbon Disclosure Project), the Sustainability Accounting Standards Board (“SASB”) and the Task Force on Climate-Related Financial Disclosures ("TCFD").
Consistent with this strategic principle, IPG’s agency brands are grouped into reportable segments based on the agencies’ primary capabilities. • Media, Data & Engagement Solutions provides innovative capabilities and scale in global media and communications services, digital services and products, advertising and marketing technology, e‐commerce services, data management and analytics, strategic consulting, and digital brand experience.
Consistent with this strategic principle, IPG’s agency brands are grouped into reportable segments based on the agencies’ primary capabilities. • Media, Data & Engagement Solutions provides innovative capabilities and scale in global media and communications services, digital services and products, advertising and marketing technology, digital commerce, data management and analytics, strategic consulting, and digital brand experience.
In recent years, we have taken several major strategic steps to position our agencies as leaders in the global advertising and communications market. These include: • Investment in leading talent: We believe our continued ability to attract and develop top talent and to be the industry’s employer of choice for an increasingly diverse workforce have been key differentiators for IPG.
In recent years, we have taken several major strategic steps to position our agencies as leaders in the global advertising and communications market. These include: • Investment in leading talent: We believe our continued ability to attract and develop top talent and to be an industry employer of choice for an increasingly diverse workforce have been key differentiators for IPG.
We are also subject to rules related to marketing directed to certain groups, such as children. Digital marketing services are a dynamic and growing sector of our business. Our service offerings in this area are covered by laws and regulations concerning user privacy, use of personal information, data protection and online tracking technologies.
We are also subject to rules related to marketing directed to certain groups, such as children. Digital marketing services are a dynamic and growing component of our business. Our service offerings in this area are covered by laws and regulations concerning user privacy, use of personal information, data protection and online tracking technologies.
Carroll 56 Senior Vice President, Controller and Chief Accounting Officer There is no family relationship among any of the executive officers. Mr. Krakowsky is Chief Executive Officer of IPG, a role he assumed on January 1, 2021. He is also a member of IPG’s Board of Directors. Prior to being named IPG's CEO, Mr.
Carroll 57 Senior Vice President, Controller and Chief Accounting Officer There is no family relationship among any of the executive officers. Mr. Krakowsky is Chief Executive Officer of IPG, a role he assumed on January 1, 2021. He is also a member of IPG’s Board of Directors. Prior to being named IPG's CEO, Mr.
Our holding company structure allows us to maintain a diversified client base across and within a full range of industry sectors. In the aggregate, our top ten clients based on revenue before billable expenses accounted for approximately 20% of revenue before billable expenses in 2022 and 2021.
Our holding company structure allows us to maintain a diversified client base across and within a full range of industry sectors. In the aggregate, our top ten clients based on revenue before billable expenses accounted for approximately 20% of revenue before billable expenses in 2023 and 2022.
Carroll served in various Chief Accounting Officer and Controller roles, as well as a Financial Vice President at Lucent Technologies, Inc. and began his professional career at PricewaterhouseCoopers from October 1991 to September 2000. 10 Table of Contents
Carroll served in various Chief Accounting Officer and Controller roles, as well as a Financial Vice President at Lucent Technologies, Inc. and began his professional career at PricewaterhouseCoopers from October 1991 to September 2000. 9 Table of Contents
The Company has operated under the Interpublic name since January 1961. About Us We provide marketing, communications and business transformation services that help marketers and brands succeed in today’s digital economy. Combining the power of creativity and technology, our 58,400 employees and operations span all major world markets.
The Company has operated under the Interpublic name since January 1961. About Us We provide marketing, communications and business transformation services that help marketers and brands succeed in today’s digital economy. Combining the power of creativity and technology, our approximately 57,400 employees and operations span all major world markets.
Financial Objectives Our financial goals include competitive organic growth of revenue before billable expenses and expansion of Adjusted EBITA margin, as defined and discussed within the Non-GAAP Financial Measure section of the MD&A, which we expect 6 Table of Contents will further strengthen our balance sheet and total liquidity and increase value to our shareholders.
Financial Objectives Our financial goals include competitive organic growth of revenue before billable expenses and expansion of Adjusted EBITA margin, as defined and discussed within the Non-GAAP Financial Measure section of the MD&A, which we expect will further strengthen our balance sheet and total liquidity and increase value to our shareholders.
Generally, we act as the client’s agent rather than the primary obligor in these arrangements. 7 Table of Contents Our revenue is typically lowest in the first quarter and highest in the fourth quarter.
Generally, we act as the client’s agent rather than the primary obligor in these arrangements. 6 Table of Contents Our revenue is typically lowest in the first quarter and highest in the fourth quarter.
Based in New York City, our holding company sets company-wide financial objectives and corporate strategy, establishes financial management and operational controls, guides personnel policy, directs collaborative inter-agency programs, conducts investor relations, manages environmental, social and governance ("ESG") programs, provides enterprise risk management and oversees mergers and acquisitions.
Based in New York City, our corporate center sets company-wide financial objectives and corporate strategy, establishes financial management and operational controls, guides personnel policy, directs collaborative programs, conducts investor relations, manages environmental, social and governance ("ESG") programs, provides enterprise risk management and oversees mergers and acquisitions.
We also foster business resource groups that offer programs on all facets of diversity and inclusion in support of specific communities of employees. Environmental Sustainability Initiatives IPG understands that climate change has consequences for all of us, bringing challenges for environmental protection, social wellbeing and good governance (ESG).
We also foster business resource groups that offer programs on all facets of diversity and inclusion in support of our employees. Environmental Sustainability Initiatives IPG understands that climate change has consequences for all of us, bringing challenges for environmental protection, social wellbeing and good governance.
As part of its sustainability efforts, IPG supports numerous community-based organizations and is actively involved in partnerships that bring together companies to advance diversity, equity and inclusion, and climate action.
As part of its sustainability efforts, IPG supports numerous community-based organizations and is actively involved in partnerships that bring together companies to advance climate action.
Our operations support the strategic position that marketers have access to the best and most appropriate Company resources to drive business success, and may access these capabilities from across the IPG network in a seamless model called Open Architecture®.
Our operations support the strategic position that marketers have access to the best and most appropriate Company resources to drive business success, and may access these capabilities from across the IPG network in an agile model called Open Architecture®.
Our largest client accounted for approximately 4% and 3% of revenue before billable expenses in 2022 and 2021, respectively. Based on revenue before billable expenses for the year ended December 31, 2022, our largest client sectors (in alphabetical order) were financial services, healthcare, and technology and telecom.
Our largest client accounted for approximately 4% of revenue before billable expenses in 2023 and 2022. Based on revenue before billable expenses for the year ended December 31, 2023, our largest client sectors (in alphabetical order) were financial services, healthcare, and technology and telecom.
Likewise, our Treasury 8 Table of Contents operations must comply with exchange controls, restrictions on currency repatriation and the control requirements of applicable anti-money-laundering statutes.
Likewise, our Treasury operations must comply with exchange controls, restrictions on currency repatriation and the control requirements of applicable anti-money-laundering statutes.
Our brands in this segment include IPG Mediabrands, UM, Initiative, Kinesso, Acxiom, and our digital and commerce specialist agencies Huge, MRM and R/GA. • Integrated Advertising & Creativity Led Solution s provides advertising, corporate and brand identity services, and strategic consulting.
Our brands in this segment include IPG Mediabrands, UM, Initiative, KINESSO, Acxiom, Huge, MRM and R/GA. • Integrated Advertising & Creativity Led Solution s provides advertising, corporate and brand identity services, and strategic consulting.
We operate in a highly competitive advertising and marketing communications industry. Our operating companies compete against other large multinational advertising and marketing communications companies as well as numerous independent and niche agencies and new forms of market participants to win new clients and maintain existing client relationships.
We operate in a highly competitive advertising and marketing communications industry. Our operating companies compete against other large multinational advertising and marketing communications companies as well as numerous independent and niche agencies and new forms of market participants to win new clients and maintain existing client relationships. See Item 1A, Risk Factors - We operate in a highly competitive industry.
The IPG brands include our leading global networks FCB, IPG Health, McCann Worldgroup, and MullenLowe Group as well as our domestic integrated agencies Campbell Ewald, Carmichael Lynch, Deutsch NY and LA, Hill Holliday, The Martin Agency, Tierney and others.
The IPG brands include our leading global networks FCB, IPG Health, McCann Worldgroup, and MullenLowe Group as well as our domestic integrated agencies Campbell Ewald, Carmichael Lynch, Deutsch LA, The Martin Agency and others.
Bonzani worked at IBM for 18 years, holding a number of positions in the legal department, most recently as Vice President, Assistant General Counsel and Secretary from July 2008 to March 2012. Mr. Carroll was named Senior Vice President, Controller and Chief Accounting Officer in April 2006. Mr.
Bonzani worked at IBM for 18 years, holding a number of positions in the legal department, most recently as Vice President, Assistant General Counsel and Secretary from July 2008 to March 2012. Mr. Carroll was named Senior Vice President, Controller and Chief Accounting Officer in April 2006. In 2017, Mr. Carroll assumed additional responsibilities as Chief Financial Officer for DXTRA.
Among these, IPG is a member of the Global Leadership Group of Ad Net Zero, a trade organization with a goal of supporting the advertising industry as it moves toward a net-zero carbon future for advertising production. We are also a signatory to the U.N. Global Compact and an active supporter of the U.N.
Among these, IPG is a member of the Global Leadership Group of Ad Net Zero, a trade organization with a goal of supporting the advertising industry as it moves toward a net-zero carbon future for advertising production. We are also a participant of the U.N. Global Compact and an active supporter of the 5 Table of Contents U.N.
Information on our website is not part of this report. 9 Table of Contents Executive Officers of IPG Name Age Office Philippe Krakowsky 60 Chief Executive Officer Ellen Johnson 57 Executive Vice President and Chief Financial Officer Andrew Bonzani 59 Executive Vice President and General Counsel Christopher F.
Information on our website is not part of this report. 8 Table of Contents Executive Officers of IPG Name Age Office Philippe Krakowsky 61 Chief Executive Officer Ellen Johnson 58 Executive Vice President and Chief Financial Officer Andrew Bonzani 60 Executive Vice President and General Counsel Christopher F.
We continue to acquire and develop top strategic, creative and digital talent from a range of backgrounds. • Growing our data, commerce and precision marketing capabilities: Our investments in talent and technology - growing data, emerging media and platform capabilities - promise to drive further growth in this dynamic sector of our business.
We continue to acquire and develop top strategic, creative and digital talent from a range of backgrounds. • Growing our identity, data, digital commerce and platform capabilities: Our investments in talent and technology - growing data, identity resolution and platform capabilities - promise to drive further growth in this dynamic sector of our business.
With IPG’s 2021 ESG report, the Company became the first U.S.-based advertising holding company to receive limited external assurance on certain ESG data and the first to disclose in accordance with TCFD recommendations. Our 2022 report will add third-party assurance for GHG emissions from Scope 3/Category 6, Business Travel.
With IPG’s 2021 ESG report, the Company became the first U.S.-based advertising holding company to receive limited external assurance on certain ESG data and the first to disclose in accordance with TCFD recommendations. Our 2022 report added third-party assurance for GHG emissions from Scope 3/Category 6, Business Travel, and our 2023 report will include this metric as well.
While we maintain policies and operational procedures to promote effective privacy protection and data management, existing and proposed laws and regulations in this area, such as the General Data Protection Regulation (“GDPR”) in the European Union; the California Consumer Privacy Act (“CCPA”), the California Privacy Rights Act (“CPRA”), and other comprehensive privacy laws in Colorado, Connecticut, Utah, and Virginia in the United States; and other different forms of privacy legislation enacted or under consideration across the markets in which we operate, can impact the development, efficacy and profitability of internet-based and other digital marketing.
While we maintain policies and operational procedures to promote effective privacy protection and data management, existing and proposed laws and regulations in this area, such as the General Data Protection Regulation (“GDPR”) in the European Economic Area and as retained in the United Kingdom; the California Consumer Privacy Act (“CCPA”), the California Privacy Rights Act (“CPRA”), and other comprehensive privacy laws in several U.S. states; and other different forms of privacy legislation enacted or under consideration across the markets in which we operate, can impact the development, efficacy and profitability of internet-based and other digital marketing.
The world in which we live is increasingly digital, and more than ever clients need audience-led thinking to solve for a widening set of business problems and opportunities. • Reinventing healthcare marketing : We have enhanced and strengthened our position to deliver a comprehensive suite of services and global reach for healthcare clients.
More than ever clients need audience-led thinking to solve for a widening set of business problems and opportunities in a digital-first world. • Reinventing healthcare marketing : We have enhanced and strengthened our leadership position to deliver a comprehensive suite of services and global reach for healthcare clients.
We conduct extensive employee training and development throughout our agencies and benchmark our compensation programs against those of our industry for their competitiveness and effectiveness in recruitment and retention. There is keen competition for qualified employees. As of December 31, 2022, we employed approximately 58,400 people, of which approximately 25,000 were employed in the United States.
We conduct extensive employee training and development throughout our agencies and benchmark our compensation programs against those of our industry for their competitiveness and effectiveness in recruitment and retention. There is keen competition for qualified employees. As of December 31, 2023, we employed approximately 57,400 people, of which approximately 23,800 were employed in the United States.
See Note 15 in Item 8, Financial Statements and Supplementary Data , for further information. Sources of Revenue Our revenues are primarily derived from the planning and execution of multi-channel advertising, marketing and communications programs around the world.
We also report results for the “Corporate and other” group. See Note 15 in Item 8, Financial Statements and Supplementary Data , for further information. Sources of Revenue Our revenues are primarily derived from the planning and execution of multi-channel advertising, marketing and communications programs around the world.
Consolidated Total Revenues for the Three Months Ended 2022 2021 2020 (Amounts in Millions) % of Total % of Total % of Total March 31 $ 2,568.5 23.5% $ 2,257.0 22.0% $ 2,359.8 26.0% June 30 2,735.7 25.1% 2,509.6 24.6% 2,025.7 22.4% September 30 2,637.7 24.1% 2,542.0 24.8% 2,125.5 23.5% December 31 2,985.9 27.3% 2,932.1 28.6% 2,550.0 28.1% $ 10,927.8 $ 10,240.7 $ 9,061 Clients Our large and diverse client base includes many of the most recognizable companies and brands throughout the world.
Consolidated Total Revenues for the Three Months Ended 2023 2022 2021 (Amounts in Millions) % of Total % of Total % of Total March 31 $ 2,521.0 23.2% $ 2,568.5 23.5% $ 2,257.0 22.0% June 30 2,666.5 24.4% 2,735.7 25.1% 2,509.6 24.6% September 30 2,678.5 24.6% 2,637.7 24.1% 2,542.0 24.8% December 31 3,023.3 27.8% 2,985.9 27.3% 2,932.1 28.6% $ 10,889.3 $ 10,927.8 $ 10,240.7 Clients Our large and diverse client base includes many of the most recognizable companies and brands throughout the world.
To learn more about our broad range of capabilities, visit our website at www.interpublic.com. Information on our website is not part of this report. Market Strategy We operate in a media, consumer and technology ecosystem that continues to evolve at a rapid pace. Media channels continue to fragment, and clients face an increasingly complex consumer environment.
To learn more about our broad range of capabilities, visit our website at www.interpublic.com. Information on our website is not part of this report. Market Strategy We operate in a media, consumer and technology ecosystem that continues to evolve at a rapid pace.
In June 2021, Interpublic announced that as part of its commitment to environmental sustainability, the Company is moving forward on an ambitious climate action plan that consists of three simultaneous quantitative goals: • Science-Based Targets: The Company has submitted its emissions reduction targets to the Science Based Targets initiative (SBTi).
In June 2021, Interpublic announced that as part of its commitment to environmental sustainability, the Company is moving forward on an ambitious climate action plan that consists of three simultaneous quantitative goals: • Science-Based Targets: The Company's near-term emissions reduction targets have been submitted to and validated by the Science Based Targets initiative (SBTi).
Comprehensive global services are critical to effectively serve our multinational and local clients in markets throughout the world as they seek to build brands, increase sales of their products and services, and gain market share. The work we produce for our clients is specific to their unique needs.
Comprehensive global services are critical to effectively serve our multinational and local clients in markets throughout the world as they seek to build brands, increase sales of their products and services, and gain market share. The work we produce for our clients is specific to their unique needs. Our solutions vary from project-based activity to long-term, fully integrated campaigns.
This commitment also makes Interpublic a signatory to the Business Ambition for 1.5°C and a member of the United Nations-backed Race to Zero campaign. • Renewable Electricity: The Company also committed to sourcing 100% renewable electricity by 2030 for its entire portfolio. • Net-Zero Carbon Emissions: Additionally, the Company formally joined The Climate Pledge, a commitment to reaching net-zero carbon across our business by 2040. 5 Table of Contents As part of our sustainability efforts and to record our commitments and progress, we currently report annually on our energy use and greenhouse gas emissions.
This commitment also makes Interpublic a signatory to the Business Ambition for 1.5°C and a member of the United Nations-backed Race to Zero campaign. • Renewable Electricity: The Company also committed to sourcing 100% renewable electricity by 2030 for its entire portfolio. • Net-Zero Carbon Emissions: Additionally, the Company formally joined The Climate Pledge, a commitment to reaching net-zero carbon across our business by 2040.
All our brands leverage IPG’s data and tech offerings to connect brand marketing and performance marketing, driving accelerated growth for our clients. 2 Table of Contents We list approximately 100 of our companies on our website under the "Our Companies" section, with descriptions, capabilities and office locations for each.
All our brands leverage IPG’s unique assets in data and technology, creativity and production, media, consulting, technology and artificial intelligence to connect brand marketing and performance marketing, driving accelerated growth for our clients. 2 Table of Contents We list approximately 80 of our companies on our website under the "Our Companies" section, with descriptions, capabilities and office locations for each.
In addition, we provide certain centralized functional services that offer our companies operational efficiencies, including accounting and finance, information technology, executive compensation management and recruitment assistance, employee benefits, market research, internal audit, legal services, real estate expertise and travel services. Our Brands IPG is a client‐centric company.
In addition, we provide certain centralized functional services that enable operational efficiencies, including accounting and finance, research and development, technology, executive compensation management and recruitment assistance, employee benefits, market research, internal audit, legal services, real estate expertise and travel services.
As of December 31, 2022 Total 58,400 Domestic 25,000 International 33,400 United Kingdom 5,400 Continental Europe 6,700 Asia Pacific 10,300 Latin America 7,000 Other 4,000 4 Table of Contents We employ a balanced approach in managing our human capital resources.
As of December 31, 2023 Total 57,400 Domestic 23,800 International 33,600 United Kingdom 5,200 Continental Europe 6,800 Asia Pacific 10,500 Latin America 7,000 Other 4,100 We employ a balanced approach in managing our human capital resources.
At the corporate level, centralized human capital management processes include development of human resources governance and policy; executive compensation for senior leaders across the Company; benefits programs; succession planning focusing on the performance, development and retention of the Company’s senior-most executives and key roles in the operating units; and executive development.
At the corporate level, centralized human capital management processes include development of human resources governance and policy; executive compensation for senior leaders across the Company; benefits programs; succession planning focusing on the performance, development and retention of the Company’s senior-most executives and key roles in the operating units; and executive development. 4 Table of Contents IPG sets specific standards for human capital management and, on a yearly basis, assesses each operating unit’s performance in managing and developing its workforce.
Our companies specialize in data, creativity, media, consulting, commerce, behavioral science and communications. Our agencies create customized marketing solutions for clients that range in scale from large global marketers to regional and local clients.
Our companies specialize in insights, data, media, creative and production, digital commerce, healthcare marketing and communications. We create customized marketing solutions for clients that range in scale from large global marketers to regional and local clients.
Sustainable Development Goals (SDGs), 17 global goals adopted by the United Nations General Assembly as part of its 2030 Agenda for Sustainable Development. We have specifically adopted SDG #6: Access to Water and Sanitation for all. In recognition of our commitment to and implementation of sustainable business practices, IPG is listed on several ESG-related indices.
Sustainable Development Goals (SDGs), 17 global goals adopted by the United Nations General Assembly as part of its 2030 Agenda for Sustainable Development. In recognition of our commitment to and implementation of sustainable business practices, IPG is listed on several ESG-related indices, including the Dow Jones Sustainability Index (DJSI) North America.
It is a priority for the entire IPG network to take action to address both causes and impacts of climate change. Interpublic is committed to operating sustainably. On the environmental front, this commitment includes measuring our carbon footprint and working toward limiting that footprint.
It is a priority for our company to take action to address both causes and impacts of climate change. Our commitment includes measuring our carbon footprint and working toward limiting that footprint.
We plan to continue to report regularly on our greenhouse gas emissions, and have set ambitious climate goals to move forward on our emissions reduction targets. We believe that an integrated approach to ESG – which pursues environmental protection, social protection and good governance simultaneously – brings mutual benefits to our people and the communities where we live and work.
We believe that an integrated approach to ESG – which pursues environmental protection, social protection and good governance simultaneously – brings mutual benefits to our people and the communities where we live and work.
Limitations on the scheduling, content or delivery of direct marketing activities can likewise impact the activities of our agencies offering those services. With agencies and clients located in over 100 countries worldwide, we are also subject to laws governing our international operations. These include broad anti-corruption laws such as the U.S. Foreign Corrupt Practices Act ("FCPA") and the U.K.
With agencies and clients located in over 100 countries worldwide, we are also subject to laws governing our international operations. These include broad anti-corruption laws such as the U.S. Foreign Corrupt Practices Act ("FCPA") and the U.K. Bribery Act (2010), which generally prohibit the making or offering of improper payments to government officials and political 7 Table of Contents figures.
We believe that an environment that encourages respect and trust is key to a creative business like ours, and that a competitive advantage comes with having a variety of perspectives and beliefs in our workforce. We have been widely recognized for our efforts in this area.
Since then, IPG has seen notable improvements in the diversity of our workforce, and further progress is a management priority. We believe that an environment that encourages respect and trust is key to a creative business like ours, and that a competitive advantage comes with having a variety of perspectives and beliefs in our workforce.
To do so, we have attracted and developed the industry’s most awarded and experienced talent, including scientists, strategists, creatives and engagement specialists across the entire healthcare marketing spectrum, enabling us to deliver healthcare information at speed, in ways that are highly personal, culturally relevant, as well as respectful of privacy. • Integrated marketing solutions: A differentiating aspect of our business is our utilization of Open Architecture solutions that integrate the best talent from our strong agency brands to fulfill the needs of our clients.
To do so, we have attracted and developed the industry’s most awarded and experienced talent, including scientists, strategists, creatives and engagement specialists across the entire healthcare marketing spectrum, enabling us to deliver healthcare information at speed, in ways that are highly personal, culturally relevant, as well as respectful of privacy. • Retail media: We developed and launched a unified retail media network solution to provide brands with a holistic view of their performance across this fast-growth ecosystem of retail platforms.
IPG sets specific standards for human capital management and, on a yearly basis, assesses each operating unit’s performance in managing and developing its workforce. We undertake human capital initiatives with an aim of ensuring that employees have the high level of competence and commitment our businesses need to succeed.
We undertake human capital initiatives with an aim of ensuring that employees have the high level of competence and commitment our businesses need to succeed.
IPG has once again been included on the Dow Jones Sustainability Index (DJSI) North America. The DJSI North America scores and ranks the ESG performance of the 600 largest U.S. and Canadian companies; the top 20% of sustainability performers are listed on the Index.
The DJSI North America scores and ranks the ESG performance of the 600 largest U.S. and Canadian companies; the top 20% of sustainability performers are listed on the Index. The Company is also included on the FTSE4Good Index, which identifies companies that demonstrate strong ESG practices measured against international standards.
During 2022, IPG continued to further evolve our offerings, investing in new capabilities and innovation to help our clients succeed in today’s digital economy. This included acquiring a stake in The Famous Group, a company that creates mixed and augmented reality for sports and other live events.
During 2023, IPG continued to further evolve our offerings, investing in new capabilities and innovation to help our clients succeed in today’s digital economy.
Our solutions vary from project-based activity involving one agency to long-term, fully integrated campaigns created by multiple IPG agencies working together. With operations in over 100 countries, we can operate in a single region or deliver global integrated programs.
With operations in over 100 countries, we can operate in a single region or deliver global integrated programs.
We believe that our strategy and execution position us to meet our financial goals and to deliver long-term value to all of our stakeholders. Financial Reporting Segments Effective January 1, 2022, the Company completed a managerial and operational review, which resulted in organizational realignments to our financial reporting segment structure.
We believe that our strategy and execution position us to meet our financial goals and to deliver long-term value to all of our stakeholders. Financial Reporting Segments We determined we conduct our business across three reportable segments described in Note 15 in Item 8, Financial Statements and Supplementary Data .
Carroll has also served as the finance lead for multiple units within IPG, including as Senior Vice President and Controller of McCann Worldgroup in 2005 and 2006, and as Segment Manager of what is now our Specialized Communications & Experiential Solutions segment from 2017 until 2022. Prior to joining us, Mr.
Mr. Carroll served as Senior Vice President and Controller of McCann Worldgroup from November 2005 to March 2006. Prior to joining us, Mr.
As a result, the Company determined we conduct our business across three reportable segments described in Note 15 in Item 8, Financial Statements and Supplementary Data . The three reportable segments are: Media, Data & Engagement Solutions ("MD&E"), Integrated Advertising & Creativity Led Solutions ("IA&C"), and Specialized Communications & Experiential Solutions ("SC&E").
The three reportable segments are: Media, Data & Engagement Solutions ("MD&E"), Integrated Advertising & Creativity Led Solutions ("IA&C"), and Specialized Communications & Experiential Solutions ("SC&E"). MD&E is comprised of IPG Mediabrands, Acxiom, and KINESSO, as well as our digital and commerce specialist agencies, which include MRM, R/GA, and Huge.
These results demonstrate the continued competitiveness of our offerings, the value of our long-term strategy, and the strength of our culture. In 2022, IPG was once again ranked as the #1 most creatively effective holding company at the U.S. Effie Awards.
In 2023, IPG was once again ranked as the #1 most creatively effective holding company at the U.S. Effie Awards, the second consecutive year the Company has won this title. Altogether, 18 IPG agencies secured top honors across a range of categories and clients at the awards.
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The role of our holding company is to provide resources and support to ensure that our agencies can best meet clients’ needs and to facilitate collaborative client service among our agencies.
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IPG provides our agencies and clients with centralized resources, including unique assets in data, creativity and production, technology and artificial intelligence, which together form a foundation that enables our company to deliver ideas that drive growth for marketers and engage consumers at every touchpoint.
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Accordingly, our offerings and businesses can be integrated by design, in recognition of today’s complex, high‐velocity markets, and the digital‐first, fragmented media environment in which our clients operate. These factors have increased the need for specialized marketing capabilities, developed and housed within IPG’s strong and collaborative agency brands.
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Our Brands IPG is a client‐centric company, and we seek to be essential partners to our clients in their own transformation journeys, providing them with seamless access to our best-in-class expertise across our entire portfolio.
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To stay ahead of these challenges and to achieve our objectives, we have made and continue to make investments in creative, strategic and technology talent in areas including commerce, fast-growth digital marketing channels, high-growth geographic regions and strategic world markets.
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To help our clients win in a data-led and digital first world, we have made and continue to make investments in strategic areas including digital commerce, retail media, artificial intelligence, audience resolution, and production across world markets.
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Together, these steps have built a culture of strategic creativity and high performance across IPG. In 2022, we once again delivered strong growth. Our three-year organic growth stack stands at 14% – a level of performance that speaks to the strength and relevance of our offerings, particularly in services and sectors demanding emerging media, precision and accountability.
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This capability, in turn, integrates with our commerce offering across the company, which extends to all core marketing functions – whether that’s media, creative, experiential, or PR and earned impressions. Analytics teams, as well as modeling and decisioning tools, are core to all these strategic efforts. These are also areas where we continue to make investments in artificial intelligence.
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Other distinctions of note included being listed on the Dow Jones Sustainability Index for North America for the third year in a row, on the Bloomberg Gender Equality Index (GEI) Index for the fourth year in a row and on Newsweek ’s Most Responsible Companies for the second year in a row.
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Combined with the latest advances in generative AI, we are now adding intelligence to the creation of content across the marketing spectrum. Together, these steps have built a culture of strategic creativity and high performance for marketers across IPG. We believe in the continued competitiveness of our offerings, the value of our long-term strategy, and the strength of our culture.
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Since then, IPG has seen notable improvements in the diversity of our workforce, and further progress is a management priority. In 2020, IPG became the first advertising holding company to release race and gender composition of its leadership based on its EEO-1 report, and we released our most recent updated report in September 2022.
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We have been widely recognized for our efforts in this area. In January 2024 we announced that IPG had received several honors that recognize its initiatives and transparency around Environmental, Social and Governance (ESG) efforts this year.
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In January 2023 we announced that IPG had been included on the Bloomberg GEI for the fourth consecutive year. The index gauges the performance of public companies dedicated to reporting gender related data, and measures gender equality across five pillars: leadership & talent pipeline, equal pay & gender pay parity, inclusive culture, anti-sexual harassment policies, and external brand.
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The honors include IPG’s fourth year on the Dow Jones Sustainability Index (North America), 14th year on the Human Rights Campaign Foundation’s 2023-2024 Corporate Equality Index, and recognition on “Best Places to Work for Disability Inclusion” by Disability Equality Index, among other accolades and ratings.
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Additionally, IPG was listed on Forbes and Statista’s “America’s Best Large Employers 2023” and “World’s Top Female Friendly Companies 2022” indices. The “World’s Top Female Friendly Companies 2022” list is based on a survey of 85,000 women around the world who evaluated their company on topics including supportive policies for women in the workplace and balanced recruitment.
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As part of our sustainability efforts and to record our commitments and progress, we currently report annually on our energy use and greenhouse gas emissions.
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We also formed a joint venture with LeBron James’ The SpringHill Company, known for empowering creative and diverse voices for marketers. In October 2022, we completed our majority acquisition of RafterOne, a leading global provider of multi-cloud commerce solutions on the Salesforce platform, with options to purchase the remaining outstanding shares.
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Limitations on the scheduling, content or delivery of direct marketing activities can likewise impact the activities of our agencies offering those services. See Item 1A, Risk Factors - We are subject to industry regulations and other legal or reputational risks that could restrict our activities or negatively impact our financial performance or financial condition.
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We plan for RafterOne to continue to focus on building around Salesforce to support clients across the IPG network that want to leverage the CRM platform.
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IPG was also listed on the S&P 500 ESG and the S&P Global 1200 ESG, two S&P indices that recognize companies’ work in the ESG space. The Company was also included for a fourth consecutive year on the FTSE4Good Index, which identifies companies that demonstrate strong ESG practices measured against international standards.
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Impact of COVID-19 Although the pace and impact of the COVID-19 pandemic has abated in recent months in many locations, both in the United States and internationally, COVID-19 continues to spread extensively, with the regular emergence of new variants of concern of varying degrees of transmissibility and virulence.
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The early months of the pandemic were characterized by extensive public and private sector measures to address the spread of the virus and its impact on public health systems worldwide, including business closures and limits on operations and public and private adoption of social distancing measures, which adversely impacted our business throughout 2020.
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In 2021 and early 2022, despite the economic and health impacts from the spread of the Delta and Omicron variants of the COVID-19 virus, we positively benefited from the effects of robust economic recovery in many of our principal markets as vaccination efforts took hold and the overall public health situation improved in many markets. 2022 was characterized by a steady decrease in the impact on our business attributable to COVID-19 and the efforts to address its spread.
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Although the future course of the pandemic is unpredictable, we continue to believe that our focus on our strategic strengths, which include talent, our differentiated go-to-market strategy, data management capabilities, and the relevance of our offerings, position us well to navigate a rapidly changing marketplace.
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At the outset of the COVID-19 pandemic, 95 percent of our global workforce moved to a remote work environment. By the end of 2022, a significant portion of our workforce had returned to the office at least part of the time. We continue to adjust our policies and practices to facilitate the new hybrid working environments.
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We believe we have had significant success in maintaining and continuing to advance the quality of our services notwithstanding extensive changes precipitated by the pandemic. In 2020, we took restructuring actions to lower our operating expenses structurally and permanently relative to revenue and to accelerate the transformation of our business.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeChanges in the interpretation of existing consumer protection laws, including restrictions on digital or targeted advertising practices or the enactment or future enforcement of state privacy laws, such as the California CCPA, as amended by the CCPA, or other comprehensive privacy laws in Colorado, Connecticut, Utah, and Virginia, or the application in an unanticipated manner of such laws and regulations, may increase the costs of compliance, harm our business or result in significant penalties or legal liability.
Biggest changeRestrictions on digital or targeted advertising practices, the enactment or future enforcement of state privacy laws, or the unanticipated application of such laws and regulations, could affect the manner in which we provide our services or adversely affect our financial results.
See also Statement Regarding Forward-Looking Disclosure. Risks Related to the Global Market and the Economy • Our results of operations are highly susceptible to unfavorable economic conditions. We are exposed to risks associated with weak or uncertain regional or global economic conditions and disruption in the financial markets.
See also Statement Regarding Forward-Looking Disclosure. Risks Related to the Global Market and the Economy • Our results of operations are highly susceptible to unfavorable or uncertain economic conditions. We are exposed to risks associated with weak or uncertain regional or global economic conditions and disruption in the financial markets.
Furthermore, we could suffer reputational risk as a result of governmental or legal action or from undertaking work that may be challenged by consumer groups or considered controversial, in poor taste or not conforming to contemporary social standards. • We rely extensively on information technology systems and could face cybersecurity risks.
Furthermore, we could suffer reputational risk as a result of governmental or legal action or from undertaking work that may be challenged by consumer groups or considered controversial, in poor taste or not conforming to contemporary social standards. • We rely extensively on information technology systems and face cybersecurity risks.
Many companies put their advertising and marketing communications business up for competitive review from time to time, and we have won and lost client accounts in the past as a result of such periodic competitions. Our clients may choose to terminate their contracts, or reduce their relationships with us, on a relatively short time frame and for any reason.
Many companies put their advertising and marketing communications business up for competitive review from time to time, and we have lost client accounts in the past as a result of such periodic competitions. Our clients may choose to terminate their contracts, or reduce their relationships with us, on a relatively short time frame and for any reason.
The incidence of malicious technology-related events, such as cyberattacks, computer hacking, computer viruses, worms or other destructive or disruptive software, phishing attacks and other attempts to gain access to confidential or personal data, denial of service or ransomware attacks or other malicious activities is on the rise worldwide and highlights the need for continual and effective cybersecurity awareness and education.
The incidence of malicious technology-related events, such as cyberattacks, computer hacking, computer viruses or other destructive or disruptive software, phishing attacks and other attempts to gain access to confidential or personal data, denial of service or ransomware attacks or other malicious activities, is on the rise worldwide and highlights the need for continual and effective cybersecurity awareness and education.
In the past, some clients, particularly in the early months of the pandemic, responded to weak or volatile economic and financial conditions by reducing their marketing budgets, thereby decreasing the market and demand for our services, or adjusted, reduced or suspended operating activities, which negatively impacted certain of the markets or industries we serve.
Some clients, particularly in the early months of the pandemic, responded to resulting weak or volatile economic and financial conditions by reducing their marketing budgets, thereby decreasing the market and demand for our services, or adjusted, reduced or suspended operating activities, which negatively impacted certain of the markets or industries we serve.
When actual financial results differ, our returns on the investment could be adversely affected. 14 Table of Contents We may also experience difficulty integrating new employees, businesses, assets or systems into our organization, including with respect to our internal policies and required controls.
When actual financial results differ, our returns on the investment could be adversely affected. 13 Table of Contents We may also experience difficulty integrating new employees, businesses, assets or systems into our organization, including with respect to our internal policies and required controls.
The impact of the Covid-19 pandemic has contributed in recent years to an increase in labor costs, shortages, disruptions and turnover.
The impact of the COVID-19 pandemic contributed in recent years to an increase in labor costs, shortages, disruptions and turnover.
For further discussion of goodwill and 15 Table of Contents other intangible assets, as well as our sensitivity analysis of our valuation of these assets, see Critical Accounting Estimates in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations . • Our financial results are exposed to exchange rate risk.
For further discussion of goodwill and 14 Table of Contents other intangible assets, as well as our sensitivity analysis of our valuation of these assets, see Critical Accounting Estimates in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations . • Our financial results are exposed to exchange rate risk.
Our ability to meet any target or milestone is subject to inherent risks and uncertainties, and we caution investors against placing undue reliance on them. See Statement Regarding Forward-Looking Disclosure . 16 Table of Contents Item 1B. Unresolved Staff Comments None.
Our ability to meet any target or milestone is subject to inherent risks and uncertainties, and we caution investors against placing undue reliance on them. See Statement Regarding Forward-Looking Disclosure . 15 Table of Contents Item 1B. Unresolved Staff Comments None.
Power outages, equipment failure, natural disasters (including extreme weather), terrorist activities or human error may also affect our systems and result in disruption of our services or loss or improper disclosure of personal data, business information, including intellectual property, or other confidential information.
Power outages, equipment failure, natural disasters (including extreme weather), terrorist activities or human error also affect our systems and can result in disruption of our services or loss or improper disclosure of personal data, business information, including intellectual property, or other confidential information.
If we were unable to comply with any of the covenants contained in the Credit Agreement, we could be required to seek an amendment or waiver from our lenders, and our costs under these agreements could increase.
If we were unable to comply with any of the covenants contained in the Credit Agreement, we could be required to seek an amendment or waiver from our lenders, and our costs under these agreements would likely increase.
We utilize in-house and third-party services, including third-party “cloud” computing services, to perform key operational functions, including the storage, transfer or processing of data. System failures or network disruptions or breaches in such in-house or third-party systems could adversely affect our reputation or business or expose us to increased risk of litigation or regulatory enforcement action.
We utilize in-house and third-party services, including third-party “cloud” computing services, to perform key operational functions, including the storage, transfer or processing of data. System failures or network disruptions or breaches in such in-house or third-party systems could adversely affect our business operations, financial condition and reputation or expose us to increased risk of litigation or regulatory enforcement action.
An agency’s ability to serve clients, particularly large international clients, on a broad geographic basis and across a range of services and technologies may also be an important competitive 11 Table of Contents consideration.
An agency’s ability to serve clients, particularly large international clients, on a broad geographic basis and across a range of services and technologies may also be an important competitive 10 Table of Contents consideration.
Any such breaches or breakdowns could result in a loss of our or our clients’ or vendors’ proprietary information, expose us to legal liability and be expensive to remedy. We consider the ethical treatment of data to be a business strength, and the damage to our reputation and business from any such breach could be significant and costly.
Breaches or breakdowns that result in a loss of our or our clients’ or vendors’ proprietary information expose us to legal liability and can be expensive to remedy. We consider the ethical treatment of data to be a business strength, and so the damage to our reputation and business from any such breach could be significant and costly.
As of December 31, 2022, we had substantial amounts of long-lived assets, deferred tax assets and investments on our Consolidated Balance Sheet, including approximately $5.1 billion of goodwill.
As of December 31, 2023, we had substantial amounts of long-lived assets, deferred tax assets and investments on our Consolidated Balance Sheet, including approximately $5.1 billion of goodwill.
A relatively small number of clients contribute a significant portion of our revenue. In the aggregate, our top ten clients based on revenue before billable expenses accounted for approximately 20% of revenue before billable expenses in 2022.
A relatively small number of clients contribute a significant portion of our revenue. In the aggregate, our top ten clients based on revenue before billable expenses accounted for approximately 20% of revenue before billable expenses in 2023.
Furthermore, in response to the challenges of the COVID-19 pandemic, modified processes, procedures and controls have been required to respond to the changes in our business environment as a significant number of our employees have continued to work from home for at least a portion of the work week.
Furthermore, as part of our response to the challenges of the COVID-19 pandemic, modified processes, procedures and controls were required to respond to the changes in our business environment as a significant number of our employees have continued to work from home for at least a portion of the work week.
We operate in many respects on a decentralized basis, with a large number of agencies and legal entities, and the resulting size, diversity and disparity of our technology systems and complications in implementing standardized technologies and procedures could increase our potential vulnerability to such breakdowns, malicious intrusions or attacks.
We operate in many respects on a decentralized basis, with a large number of agencies and legal entities, and the resulting size, diversity and disparity of our technology systems and complications in implementing standardized technologies and procedures increases our vulnerability to such breakdowns, malicious intrusions or attacks.
Rising interest rates will likely increase borrowing costs. We cannot assure you that we would be able to access any new sources of liquidity, including in the capital markets, on commercially reasonable terms or at all or, if accomplished, that we would raise sufficient funds to meet our needs.
Increases in interest rates raise our borrowing costs. We cannot assure you that we would be able to access any new sources of liquidity, including in the capital markets, on commercially reasonable terms or at all or, if accomplished, that we would raise sufficient funds to meet our needs.
We maintain a $1.5 billion committed corporate credit facility (the “Credit Agreement”) as a backstop source of liquidity. The Credit Agreement also supports borrowings under our commercial paper program.
We maintain a $1.5 billion committed corporate credit facility (the “Credit Agreement”) as a backstop source of liquidity. The Credit Agreement also supports our ability to borrow under our commercial paper program.
We operate worldwide, and the legal rules governing data transfers are often complex, conflicting, unclear or ever-changing. Increased privacy and cybersecurity requirements may increase our operating costs and negatively impact our business.
We operate worldwide, and the legal rules governing data transfers are often complex, conflicting, unclear or ever-changing. Increased privacy and cybersecurity requirements increase our operating and compliance costs and can negatively impact our business or financial condition.
As data-driven marketing solutions become increasingly core to the success of our brands, any failure to keep up with rapidly changing technologies and standards in this space could harm our competitive position.
As data-driven marketing solutions become increasingly core to the success of our brands, and with the development of new and emerging technologies like generative AI, any failure to keep up with rapidly changing technologies and standards in this space could harm our competitive position.
If our business is significantly adversely affected by unfavorable economic conditions or other market disruptions that adversely affect client spending, the negative impact on our revenue could pose a challenge to our operating income and cash generation from operations. • The continuing impact of the COVID-19 pandemic remains uncertain and may adversely impact our business, financial condition and results of operations.
If our business is significantly adversely affected by unfavorable economic conditions or other market disruptions that adversely affect client spending, the negative impact on our revenue could pose a challenge to our operating income and cash generation from operations. • The impact of the COVID-19 pandemic and any future public health crises may in the future adversely impact our business, financial condition and results of operations.
Our business, which increasingly involves the collection, use and transmission of customer data, may make us and our agencies attractive targets for malicious third-party attempts to access this data.
Our business, which increasingly involves the collection, use and transmission of customer data, including personal information, makes us and our agencies attractive targets for malicious third-party attempts to access this data.
Unfavorable economic and financial conditions, including those resulting from regional or global economic downturns, the COVID-19 pandemic, and military conflict and other geopolitical risks, could result in an increase in client financial difficulties that affect us.
Unfavorable economic and financial conditions, including those resulting from regional or global economic downturns, and military conflicts or other geopolitical risks could result in an increase in client financial difficulties that negatively affect us.
A cybersecurity incident or data breach affecting the confidentiality, integrity, or availability of the information we process, our data systems, or those operated on our behalf by third-party service providers could adversely affect our ability to manage our risk exposure and could significantly harm our business.
The threat landscape is constantly evolving. Cybersecurity incidents or data breaches affecting the confidentiality, integrity, or availability of the information we process, our data systems, or those operated on our behalf by third-party service providers adversely affect our ability to manage our risk exposure and could significantly harm our business.
In the past, including in connection with the outbreak of the COVID-19 pandemic in 2020, some clients have responded to weak economic and financial conditions by reducing their marketing budgets, which include discretionary components that are easier to reduce in the short term than other operating expenses. This pattern may recur in the future.
Previously in response to negative economic and financial conditions, including in connection with the outbreak of the COVID-19 pandemic in 2020, some clients responded by reducing their marketing budgets, which include discretionary components that are easier to reduce in the short term than other operating expenses.
Economic downturns or uncertainty about the strength of the global economy generally, or economic conditions in certain regions or market sectors, and caution on the part of marketers, can have an effect on the demand for advertising and marketing communication services.
Economic downturns or uncertainty about the strength of the global economy generally, or adverse economic conditions in certain regions or market sectors and resulting caution with respect to spending on the part of marketers, can have and has had a negative effect on the demand for advertising and marketing communication services.
The increase in remote working of our employees may exacerbate risks related to the increased demand for information technology resources, malicious technology-related events, including cyberattacks and phishing attacks, and improper dissemination of personal, proprietary or confidential information. • International business risks could adversely affect our operations.
The increase in remote working of our employees exacerbates risks related to the increased demand for information technology resources, malicious technology-related events, including cyberattacks and phishing attacks, and improper dissemination of personal, proprietary or confidential information. • International business risks could adversely affect our operations. We are a global business, with agencies operating in over 100 countries.
Our industry can be affected more severely than other sectors by an economic downturn and can recover more slowly than the economy in general.
Our industry has in the past been affected more severely than other sectors by an economic downturn and recovered more slowly than the economy in general.
The global economy continues to be challenging and may be deteriorating in certain of our principal markets, including as a result of the adverse effects of the continuing impact of the COVID-19 pandemic and related supply chain and labor disruptions, inflationary pressures and conflict in Ukraine.
The global economy continues to be challenging, including as a result of the adverse effects of the continuing impact of supply chain and labor disruptions, inflationary pressures and conflict in Ukraine and the Middle East.
Data privacy or cybersecurity breaches, as well as improper use of social media, by employees and others may pose a risk that sensitive data, such as personal identifiable information, strategic plans and trade secrets, could be exposed to third parties or to the general public.
Data privacy or cybersecurity breaches, or any failure to maintain the confidentiality of sensitive information, by employees and others poses the risk that sensitive data, such as personal information, strategic plans and trade secrets, could be exposed to third parties or to the general public.
These operations are exposed to risks that include local legislation, currency variation, exchange control restrictions, local labor and employment laws that hinder workforce flexibility, large-scale local or regional public health crises, and other difficult social, political or economic conditions.
These operations are exposed to risks that include local legislation, currency variation, exchange control restrictions, local labor and employment laws that hinder workforce flexibility, large-scale local or regional public health crises, and other difficult social, political or economic conditions. 12 Table of Contents We also must comply with applicable U.S., local and other international anti-corruption laws, including the FCPA and the U.K.
If we are unable to transfer data between countries and regions in which we operate, or if we are prohibited from sharing data among our products and services, it could affect the manner in which we provide our services or adversely affect our financial results. 12 Table of Contents Legislators, agencies and other governmental units may also continue to initiate proposals to ban the advertising of specific products, such as alcohol, tobacco or marijuana products, and to impose taxes on or deny deductions for advertising, which, if successful, may hinder our ability to accomplish our clients’ goals and have an adverse effect on advertising expenditures and, consequently, on our revenues or results.
The imposition of restrictions on these technologies by private market participants in response to privacy concerns could also have a negative impact on our digital business. 11 Table of Contents Legislators, agencies and other governmental units may also continue to initiate proposals to ban the advertising of specific products, such as alcohol, tobacco or marijuana products, and to impose taxes on or deny deductions for advertising, which, if successful, may hinder our ability to accomplish our clients’ goals and have an adverse effect on advertising expenditures and, consequently, on our revenues or results.
Failure to comply or to implement business practices that sufficiently prevent corruption or violation of sanctions laws could result in significant remediation expense and expose us to significant civil and criminal penalties and reputational harm., In addition, in developing countries or regions, we may face further risks, such as slower receipt of payments, nationalization, social and economic instability, currency repatriation restrictions and undeveloped or inconsistently enforced commercial laws.
In addition, in developing countries or regions, we may face further risks, such as slower receipt of payments, nationalization, social and economic instability, currency repatriation restrictions and undeveloped or inconsistently enforced commercial laws.
We are a global business, with agencies operating in over 100 countries, including every significant world market. Operations outside the United States represent a significant portion of our revenue before billable expenses, approximately 35% in 2022.
Operations outside the United States represent a significant portion of our revenue before billable expenses, approximately 35% in 2023.
Furthermore, unexpected revenue shortfalls can result in misalignments of costs and revenues, resulting in a negative impact to our operating margins.
Our 2023 results for example, were negatively impacted by significant reductions in spending by clients in the technology & telecom sector. This pattern may recur in the future. Furthermore, unexpected revenue shortfalls can result in misalignments of costs and revenues, resulting in a negative impact to our operating margins.
We also must comply with applicable U.S., local and other international anti- 13 Table of Contents corruption laws, including the FCPA and the U.K. Anti-Bribery Act (2010), which can be comprehensive, complex and stringent, in all jurisdictions where we operate, certain of which present heightened compliance challenges.
Anti-Bribery Act (2010), which can be comprehensive, complex and stringent, in all jurisdictions where we operate, certain of which present heightened compliance challenges. Export controls and economic sanctions, such as those maintained by the Office of Foreign Assets Control of the U.S.
Existing and proposed laws and regulations, in particular in the European Union, the United Kingdom and the United States, concerning user privacy, use and protection of personal information and on-line tracking technologies could affect the efficacy and profitability of internet-based, digital and targeted marketing.
Existing and proposed laws and regulations, in particular in the European Union, the United Kingdom and the United States, concerning user privacy, use and protection of personal information and whether and how we can transfer, process or receive certain data that we use in our operations, including the General Data Protection Regulation (the “GDPR”) in the European Economic Area and as retained in the United Kingdom, the California Consumer Privacy Act (the “CCPA”), and other U.S. state comprehensive privacy laws, could affect the efficacy and profitability of internet-based, digital and targeted marketing.
Export controls and economic sanctions, such as those maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, can impose limitations on our ability to operate in certain geographic regions or to seek or service certain potential clients, including in Russia and, increasingly, China.
Department of the Treasury, can impose limitations on our ability to operate in certain geographic regions or to seek or service certain potential clients, including in Russia and, increasingly, China. These restrictions can place us at a competitive disadvantage with respect to those competitors who may not be subject to comparable restrictions.
We rely extensively and increasingly on information technologies and infrastructure to manage our business (including the digital storage of marketing strategies and client information), develop new business opportunities and digital products, and process business transactions.
As discussed under Item 1C, Cybersecurity , we rely extensively and increasingly on information technologies and infrastructure to manage our business, develop new business opportunities and digital products, and process business transactions, and our business operations depend on the availability, integrity and secure processing, storage, and transmission of confidential and sensitive information digitally and through interconnected systems, including those of our vendors, service providers and other third parties.
We could also incur related costs indirectly through our clients or investors.
We are increasingly impacted by the effects of climate change and laws and regulations related to climate and other ESG concerns. We could also incur related costs indirectly through our clients or investors.
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The global reach of the COVID-19 pandemic, including the emergence of new variants of the virus, continues to create both regional and worldwide operational volatility, uncertainty and disruption.
Added
Any prolonged disruption to business or financial markets in the United States, which accounted for approximately 65% of our consolidated total revenue in 2023, as a result of anticipated or actual governmental shutdowns or debt defaults could have an adverse impact on our clients and our business.
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The extent of the continuing impact will depend on numerous evolving factors, which are highly uncertain and unpredictable, including: • the duration, severity and scope of the pandemic, including as new variants emerge and spread; • governmental actions that may be taken in response to the outbreak, including travel restrictions and local or regional business shut-downs and other restrictions; • the impact of the pandemic on labor costs and supply; and • the effect of the pandemic on our clients and other business partners, including the impact of supply-chain disruptions.
Added
The COVID-19 pandemic created both regional and worldwide operational volatility and uncertainty in certain markets and sectors that have been slower to rebound or continue to face lingering disruptions.
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We are also subject to laws and regulations that govern whether and how we can transfer, process or receive certain data that we use in our operations.
Added
These technologies also present risks related to ethical considerations, intellectual property protection and privacy and data protection.
Removed
Since July 2020, the transfer of personal data, including via cookies or other tracking technologies, under GDPR from the European Economic Area to the United States has come under scrutiny, the lawfulness of which, and the adequacy of protection afforded that data in the United States, continue to be the subject of negotiations between the European Commission and the United States.
Added
For instance, the GDPR imposes strict requirements on transfers of personal data to third countries, including the United States, whose protection of that data is not deemed to be adequate.
Removed
Separate negotiations are underway between the United Kingdom Information Commissioner’s Office and the United States to determine the lawfulness of data transfers from the United Kingdom to the United States. The collection, processing, and storage of biometric identifiers is increasingly regulated in the United States, and is the subject of class action litigation.
Added
Changes in the interpretation of existing consumer protection laws, including if our ability to transfer data between countries and regions in which we operate is restricted, may increase the costs of compliance, harm our business or result in significant penalties or legal liability.
Removed
The imposition of restrictions on certain technologies by private market participants in response to privacy concerns could also have a negative impact on our digital business.
Added
Regulators and legislators in the European Union, United Kingdom, and United States are increasingly focused on the use of cookies, online tracking technologies, and the sharing of personal data with third parties for targeted or behavioral advertising.
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Our business operations depend on the secure processing, storage, and transmission of confidential and sensitive information over the internet and through interconnected systems, including those of our vendors or service providers.
Added
This has resulted in the promulgation or consideration of new or updated regulations under the GDPR, the CCPA, and other U.S. state privacy laws. Our digital business could be adversely affected if such laws or regulations are adopted, interpreted or implemented in a manner that is inconsistent with, or that requires changes to, our current business practices.
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We maintain, and we require our third-party service providers to maintain, security controls designed to ensure the confidentiality, integrity, and availability of our systems and the confidential and sensitive information we maintain and process. Despite our best efforts, however, the threat landscape is constantly evolving.
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Furthermore, if we are prohibited from sharing data among our products and services, or if regulators enforce strict limitations on the use of tracking technologies for targeted or behavioral advertising, this could lead to substantial costs, limit the effectiveness of our services, and subject us to additional liabilities.
Removed
These restrictions can place us at a competitive disadvantage with respect to those competitors who may not be subject to comparable restrictions.
Added
Failure to comply or to implement business practices that sufficiently prevent corruption or violation of sanctions laws could result in significant remediation expense and expose us to significant civil and criminal penalties and reputational harm.
Removed
While as a non–location–specific, non–manufacturing service business we have to date been sheltered from or able to mitigate many direct impacts from climate change and related laws and regulations, we are nevertheless increasingly impacted by the effects of climate change and laws and regulations related to other ESG concerns.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeSee Note 3 in Item 8, Financial Statements and Supplementary Data for further information on our lease commitments and the discussion under "2022 Real Estate Actions" and “2020 Restructuring Plan” in our Item 7 MD&A for further detail.
Biggest changeSee the discussion under "2022 Real Estate Actions" and “2020 Restructuring Plan” in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations for further detail and Note 3 in Part II, Item 8, Financial Statements and Supplementary Data, for further information on our lease commitments. 17
In the fourth quarter of 2022, the Company took actions to further optimize our real estate footprint as a result of a shift in our hybrid model used to deliver and support our services in a post-pandemic economy.
In the fourth quarter of 2022, the Company took actions to optimize our real estate footprint as a result of a shift in our hybrid model used to deliver and support our services in a post-pandemic economy. These real estate actions further reduced our occupied global real estate footprint by approximately 6.7%, or 500,000 square feet.
These actions reduced our global real estate footprint by approximately 15% or 1,700,000 square feet. We believe that facilities leased or owned by us are adequate for the purposes for which they are currently used and are well maintained.
We believe that facilities leased or owned by us are adequate for the purposes for which they are currently used and are well maintained.
Removed
These Real Estate Actions, taken during the fourth quarter of 2022, reduced our occupied global real estate footprint by approximately 6.7% or 500,000 square feet. In 2020, we took restructuring actions to lower our operating expenses based on our recent experience and learning in the COVID-19 pandemic and a resulting review of our operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe repurchased 8,658 Withheld Shares in October 2022; 810 Withheld Shares in November 2022; and 2,778 Withheld Shares in December 2022, for a total of 12,246 Withheld Shares during the three-month period. 2 The average price per share for each of the months in the fiscal quarter and for the three-month period was calculated by dividing (a) the sum for the applicable period of the aggregate value of the tax withholding obligations and the aggregate amount we paid for shares acquired under our share repurchase program, described in Note 7 of Item 8, Financial Statements and Supplementary Data , by (b) the sum of the number of Withheld Shares and the number of shares acquired in our share repurchase program.
Biggest changeWe repurchased 3,950 Withheld Shares in October 2023; 1,464 Withheld Shares in November 2023; and 959 Withheld Shares in December 2023, for a total of 6,373 Withheld Shares during the three-month period. 2 The average price per share for each of the months in the fiscal quarter and for the three-month period was calculated by dividing (a) the sum for the applicable period of the aggregate value of the tax withholding obligations and the aggregate amount we paid for shares acquired under our share repurchase program, described in Note 7 of Item 8, Financial Statements and Supplementary Data , by (b) the sum of the number of Withheld Shares and the number of shares acquired in our share repurchase program. 3 On February 8, 2023, the Board authorized a share repurchase program to repurchase from time to time up to $350.0 million, excluding fees, of our common stock.
Equity Compensation Plans See Item 1 2 for information about our equity compensation plans. Sales of Unregistered Securities Not applicable. Repurchases of Equity Securities The following table provides information regarding our purchases of our equity securities during the period from October 1, 2022 to December 31, 2022.
Equity Compensation Plans See Item 1 2 for information about our equity compensation plans. Sales of Unregistered Securities Not applicable. Repurchases of Equity Securities The following table provides information regarding our purchases of our equity securities during the period from October 1, 2023 to December 31, 2023.
There are no expiration dates associated with the share repurchase programs. 18 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts)
There are no expiration dates associated with the share repurchase programs. 19 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts)
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed and traded on the New York Stock Exchange under the symbol “IPG”. As of February 15, 2023, there were approximately 8,200 registered holders of our outstanding common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed and traded on the New York Stock Exchange under the symbol “IPG”. As of February 15, 2024, there were approximately 7,800 registered holders of our outstanding common stock.
We announced on February 9, 2023 that our Board of Directors (the "Board") had declared a common stock cash dividend of $0.310 per share, payable on March 15, 2023 to holders of record as of the close of business on March 1, 2023.
We announced on February 8, 2024 that our Board of Directors (the "Board") had declared a common stock cash dividend of $0.330 per share, payable on March 15, 2024 to holders of record as of the close of business on March 1, 2024.
Securities and Exchange Commission ("SEC") rules, derivative transactions or other means. We expect to continue to repurchase our common stock in future periods, although the timing and amount of the repurchases will depend on market conditions and other funding requirements.
We may effect our share repurchases through open market purchases, trading plans established in accordance with U.S. Securities and Exchange Commission ("SEC") rules, derivative transactions or other means. We expect to continue to repurchase our common stock in future periods, although the timing and amount of the repurchases will depend on market conditions and other funding requirements.
Total Number of Shares (or Units) Purchased 1 Average Price Paid per Share (or Unit) 2 Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs 3 Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 1 - 31 833,385 $ 27.34 824,727 $ 155,992,682 November 1 - 30 946,467 $ 30.68 945,657 $ 126,984,596 December 1 - 31 1,427,778 $ 32.90 1,425,000 $ 80,105,214 Total 3,207,630 $ 30.80 3,195,384 1 The total number of shares of our common stock purchased includes shares withheld under the terms of grants under employee stock-based compensation plans to offset tax withholding obligations that arose upon vesting and release of restricted shares (the “Withheld Shares”).
Total Number of Shares (or Units) Purchased 1 Average Price Paid per Share (or Unit) 2 Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs 3 Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs 3 October 1 - 31 3,950 $ 27.76 — $ 211,185,785 November 1 - 30 2,106,464 $ 29.49 2,105,000 $ 149,106,991 December 1 - 31 2,165,959 $ 31.89 2,165,000 $ 80,068,304 Total 4,276,373 $ 30.70 4,270,000 1 The total number of shares of our common stock purchased includes shares withheld under the terms of grants under employee stock-based compensation plans to offset tax withholding obligations that arose upon vesting and release of restricted shares (the “Withheld Shares”).
On February 8, 2023, the Board authorized a share repurchase program to repurchase from time to time up to $350.0, excluding fees, of our common stock, which was in addition to any amounts remaining under the 2022 share repurchase program. We may effect such repurchases through open market purchases, trading plans established in accordance with U.S.
There is no expiration date associated with this share repurchase program. On February 7, 2024, the Board authorized a share repurchase program to repurchase from time to time up to $320.0, excluding fees, of our common stock, which was in addition to any amounts remaining under the 2023 share repurchase program.
Removed
On February 10, 2022, the Company's Board of Directors reauthorized a program to repurchase, from time to time, up to $400.0 million of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

138 edited+34 added−34 removed154 unchanged
Biggest changeNet restructuring charges were comprised of $0.1 at MD&E, $2.6 at IA&C, $10.0 at SC&E and $(2.1) at Corporate and Other for the year ended December 31, 2021, which include non-cash lease impairment costs of $(0.9), $(0.1), $7.3 and $0.0, respectively. 2020 Plan Restructuring Expense Non-Cash Items Cash Payments Liability at December 31, 2020 Severance and termination costs $ 140.4 $ 4.5 $ 61.3 $ 74.6 Lease impairment costs 256.0 256.0 0.0 0.0 Other 17.4 5.1 12.3 0.0 Total $ 413.8 $ 265.6 $ 73.6 $ 74.6 25 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) Our restructuring charges for the year ended December 31, 2020 totaled $413.8 and were designed to reduce our expenses, such as occupancy expense and salaries and related expenses, relative to our revenue before billable expenses on an ongoing basis.
Biggest changeA summary of the restructuring activities related to the 2020 Plan as of the year ended December 31, 2023 is as follows: 2020 Plan Liability at December 31, 2022 Restructuring Expense Non-Cash Items Cash Payments Liability at December 31, 2023 Severance and termination costs $ 2.3 $ 0.4 $ 0.0 $ 2.1 $ 0.6 Lease impairment costs 0.0 (0.3) (0.3) 0.0 0.0 Other restructuring costs 0.0 0.1 0.1 0.0 0.0 Total $ 2.3 $ 0.2 $ (0.2) $ 2.1 $ 0.6 A summary of the restructuring activities related to the 2020 Plan as of the year ended December 31, 2022 is as follows: 27 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) 2020 Plan Liability at December 31, 2021 Restructuring Expense Non-Cash Items Cash Payments Liability at December 31, 2022 Severance and termination costs $ 9.4 $ (0.1) $ 0.0 $ 7.0 $ 2.3 Lease impairment costs 0.0 1.0 1.0 0.0 0.0 Other restructuring costs 0.0 2.9 2.9 0.0 0.0 Total $ 9.4 $ 3.8 $ 3.9 $ 7.0 $ 2.3 A summary of the restructuring activities related to the 2020 Plan as of the year ended December 31, 2021 is as follows: 2020 Plan Liability at December 31, 2020 Restructuring Expense Non-Cash Items Cash Payments Liability at December 31, 2021 Severance and termination costs $ 74.6 $ 0.4 $ 0.3 $ 65.3 $ 9.4 Lease impairment costs 0.0 6.3 6.3 0.0 0.0 Other restructuring costs 0.0 3.9 3.2 0.7 0.0 Total $ 74.6 $ 10.6 $ 9.8 $ 66.0 $ 9.4 A summary of the restructuring activities related to the 2020 Plan by segment is as follows: Years ended December 31, 2023 2022 2021 Restructuring charges: MD&E $ (0.3) $ 0.1 $ 0.1 IA&C 0.5 7.7 2.6 SC&E 0.0 (4.2) 10.0 Corporate and other 0.0 0.2 (2.1) Total $ 0.2 $ 3.8 $ 10.6 Non cash lease impairment costs: MD&E $ (0.3) $ 0.0 $ (0.9) IA&C 0.0 7.0 (0.1) SC&E 0.0 (5.9) 7.3 Corporate and other 0.0 (0.1) 0.0 Total $ (0.3) $ 1.0 $ 6.3 EXPENSES AND OTHER INCOME Years ended December 31, 2023 2022 2021 Cash interest on debt obligations $ (223.2) $ (164.3) $ (165.6) Non-cash interest (2.4) (3.6) (5.0) Interest expense (225.6) (167.9) (170.6) Interest income 140.8 56.6 27.2 Net interest expense (84.8) (111.3) (143.4) Other income (expense), net 10.2 (1.0) (70.7) Total (expenses) and other income $ (74.6) $ (112.3) $ (214.1) Net Interest Expense 28 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) Net interest expense decreased by $26.5 in 2023 compared to a year ago, primarily attributable to higher interest rates on net deposits, partially offset by lower net cash balances.
Investing Activities Net cash used in investing activities during 2022 consisted primarily of payments for acquisitions, net of cash acquired, of $232.2 primarily related to the acquisition of RafterOne which closed on October 3, 2022, as well as payments for capital expenditures of $178.1, related mostly to computer software and hardware.
Net cash used in investing activities during 2022 consisted primarily of payments for acquisitions, net of cash acquired, of $232.2 primarily related to the acquisition of RafterOne which closed on October 3, 2022, as well as payments for capital expenditures of $178.1, related mostly to computer software and hardware.
Other – During 2022, the majority of the amounts recognized were primarily related to a cash gain from the sale of an equity investment, partially offset by a non-cash loss related to the deconsolidation of a previously consolidated entity in which we maintain an equity interest.
During 2022, the majority of the amounts recognized were primarily related to a cash gain from the sale of an equity investment, partially offset by a non-cash loss related to the deconsolidation of a previously consolidated entity in which we maintain an equity interest.
For certain less-frequent commission-based contracts which 37 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) contain clauses allowing our clients to terminate the arrangement at any time for no compensation, revenue is recognized at a point in time, typically the date of broadcast or publication.
For certain less-frequent commission-based contracts which 39 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) contain clauses allowing our clients to terminate the arrangement at any time for no compensation, revenue is recognized at a point in time, typically the date of broadcast or publication.
RECENT ACCOUNTING STANDARDS See Note 17 in Item 8, Financial Statements and Supplementary Data for further information on certain accounting standards that have been adopted during 2022 or that have not yet been required to be implemented and may be applicable to our future operations. NON-GAAP FINANCIAL MEASURE This MD&A includes both financial measures in accordance with U.S.
RECENT ACCOUNTING STANDARDS See Note 17 in Item 8, Financial Statements and Supplementary Data for further information on certain accounting standards that have been adopted during 2023 or that have not yet been required to be implemented and may be applicable to our future operations. NON-GAAP FINANCIAL MEASURE This MD&A includes both financial measures in accordance with U.S.
A 25 basis-point increase or decrease in the discount rate would have decreased or increased the benefit obligation as of December 31, 2022 by approximately $12.0 and $12.0, respectively. The expected rate of return on pension plan assets is another significant assumption that impacts our net pension cost and is determined at the beginning of the year.
A 25 basis-point increase or decrease in the discount rate would have decreased or increased the benefit obligation as of December 31, 2023 by approximately $12.0, respectively. The expected rate of return on pension plan assets is another significant assumption that impacts our net pension cost and is determined at the beginning of the year.
Segment Results of Operations As discussed in Note 15 in Item 8, Financial Statements and Supplementary Data , we have three reportable segments as of December 31, 2022: MD&E, IA&C and SC&E. We also report results for the "Corporate and other" group. Segment information for the prior period has been recast to conform to the current-period presentation.
Segment Results of Operations As discussed in Note 15 in Item 8, Financial Statements and Supplementary Data , we have three reportable segments as of December 31, 2023: MD&E, IA&C and SC&E. We also report results for the "Corporate and other" group. Segment information for the prior period has been recast to conform to the current-period presentation.
Changes in the rates are typically due to lower or higher expected future returns based on the mix of assets held. A lower expected rate of return would increase our net pension cost. A 25 basis-point increase or decrease in the expected return on plan assets would have decreased or increased the 2022 net pension cost by approximately $1.0.
Changes in the rates are typically due to lower or higher expected future returns based on the mix of assets held. A lower expected rate of return would increase our net pension cost. A 25 basis-point increase or decrease in the expected return on plan assets would have decreased or increased the 2023 net pension cost by approximately $1.0.
Revenue before billable expenses growth of 3.3% was outpaced by the increase in salaries and related expenses as compared to the prior-year period, primarily driven by increases in base salaries, benefits and tax, which was driven by hiring to support revenue growth, partially offset by decreases in performance-based incentive compensation and temporary help expense.
Revenue before billable expenses growth of 4.4% was outpaced by the increase in salaries and related expenses as compared to the prior-year period, primarily driven by increases in base salaries, benefits and tax, which was driven by hiring to support revenue growth, partially offset by decreases in performance-based incentive compensation and temporary help expense.
Management utilizes Credit Agreement EBITDA, which is a non-GAAP financial measure, as well as the amounts shown in the table below, calculated as required by the Credit Agreement, in order to assess our compliance with such covenants. The table below sets forth the financial covenant in effect as of December 31, 2022.
Management utilizes Credit Agreement EBITDA, which is a non-GAAP financial measure, as well as the amounts shown in the table below, calculated as required by the Credit Agreement, in order to assess our compliance with such covenants. The table below sets forth the financial covenant in effect as of December 31, 2023.
There was no commercial paper activity during 2022 and as of December 31, 2022, there was no commercial paper outstanding. Cash Pooling We aggregate our domestic cash position on a daily basis. Outside the United States, we use cash pooling arrangements with banks to help manage our liquidity requirements.
There was no commercial paper activity during 2023 and as of December 31, 2023, there was no commercial paper outstanding. Cash Pooling We aggregate our domestic cash position on a daily basis. Outside the United States, we use cash pooling arrangements with banks to help manage our liquidity requirements.
The 2022 and 2021 fair values of reporting units for which we performed quantitative impairment tests were estimated using a combination of the income approach, which incorporates the use of the discounted cash flow method, and the market approach, which incorporates the use of earnings and revenue multiples based on market data.
The 2023 and 2022 fair values of reporting units for which we performed quantitative impairment tests were estimated using a combination of the income approach, which incorporates the use of the discounted cash flow method, and the market approach, which incorporates the use of earnings and revenue multiples based on market data.
RECENT ACCOUNTING STANDARDS, by reference to Note 17 to the Consolidated Financial Statements, provides a discussion of certain accounting standards that have been adopted during 2022 or that have not yet been required to be implemented and may be applicable to our future operations.
RECENT ACCOUNTING STANDARDS, by reference to Note 17 to the Consolidated Financial Statements, provides a discussion of certain accounting standards that have been adopted during 2023 or that have not yet been required to be implemented and may be applicable to our future operations.
Based on this analysis, for the indefinite lived-intangible asset for which we performed a quantitative impairment test as of October 1, 2022, we concluded that it was not impaired because its fair value was in excess of its carrying value.
Based on this analysis, for the indefinite lived-intangible asset for which we performed a quantitative impairment test as of October 1, 2023, we concluded that it was not impaired because its fair value was in excess of its carrying value.
A 25 basis-point increase or decrease in the discount rate would not have impacted the 2022 net pension and postretirement benefit cost. The discount rate used to measure our benefit obligations is determined at the end of each year.
A 25 basis-point increase or decrease in the discount rate would not have impacted the 2023 net pension and postretirement benefit cost. The discount rate used to measure our benefit obligations is determined at the end of each year.
RESULTS OF OPERATIONS provides an analysis of the consolidated and segment results of operations for 2022 compared to 2021 and 2021 compared to 2020. LIQUIDITY AND CAPITAL RESOURCES provides an overview of our cash flows, funding requirements, contractual obligations, financing and sources of funds, and debt credit ratings.
RESULTS OF OPERATIONS provides an analysis of the consolidated and segment results of operations for 2023 compared to 2022 and 2022 compared to 2021. LIQUIDITY AND CAPITAL RESOURCES provides an overview of our cash flows, funding requirements, contractual obligations, financing and sources of funds, and debt credit ratings.
See "Restructuring Charges" in MD&A and Note 11 of Item 8, Financial Statements and Supplementary Data for further information. 31 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) Segment EBITA margin increased during 2022 when compared to 2021, as the increase in revenue before billable expenses, outpaced the overall increase in our operating expenses, excluding billable expenses and amortization of acquired intangibles.
See "Restructuring Charges" in MD&A and Note 11 of Item 8, Financial Statements and Supplementary Data for further information. 33 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) Segment EBITA margin increased during 2023 when compared to 2022, as the increase in revenue before billable expenses, outpaced the overall increase in our operating expenses, excluding billable expenses and amortization of acquired intangibles.
We have 10 reporting units that were subject to the 2022 annual impairment testing. Our annual impairment review as of October 1, 2022 did not result in an impairment charge at any of our reporting units.
We have 10 reporting units that were subject to the 2023 annual impairment testing. Our annual impairment review as of October 1, 2023 did not result in an impairment charge at any of our reporting units.
CORPORATE AND OTHER Our corporate and other segment is primarily comprised of selling, general and administrative expenses including corporate office expenses as well as shared service center and certain other centrally managed expenses that are not fully allocated to operating divisions; salaries, long-term incentives, annual bonuses and other miscellaneous benefits for corporate office employees; professional fees related to internal control compliance, financial statement audits and legal, information technology and other consulting services that are engaged and managed through the corporate office; and rental expense for properties occupied by corporate office employees.
CORPORATE AND OTHER Our corporate and other segment is primarily comprised of selling, general and administrative expenses, discussed in the Results of Operations section, including corporate office expenses as well as shared service center and certain other centrally managed expenses that are not fully allocated to operating divisions; salaries, long-term incentives, annual bonuses and other miscellaneous benefits for corporate office employees; professional fees related to internal control compliance, financial statement audits and legal, information technology and other consulting services that are engaged and managed through the corporate office; and rental expense for properties occupied by corporate office employees.
The following table presents the reconciliation of Net Income Available to IPG Common Stockholders to Adjusted EBITA for the years ended December 31, 2022, 2021 and 2020.
The following table presents the reconciliation of Net Income Available to IPG Common Stockholders to Adjusted EBITA for the years ended December 31, 2023, 2022 and 2021.
See “Restructuring Charges” in this MD&A and Note 11 in Item 8, Financial Statements and Supplementary Data , for further information. 43 Table of Contents
See “Restructuring Charges” in this MD&A and Note 11 in Item 8, Financial Statements and Supplementary Data , for further information. 45 Table of Contents
If actual market conditions vary significantly from those currently projected, these estimates and assumptions could materially change resulting in adjustments to the carrying values of our assets and liabilities. 20 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) The following table presents a summary of our financial performance for the years ended December 31, 2022, 2021 and 2020.
If actual market conditions vary significantly from those currently 21 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) projected, these estimates and assumptions could materially change resulting in adjustments to the carrying values of our assets and liabilities. 22 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) The following table presents a summary of our financial performance for the years ended December 31, 2023, 2022 and 2021.
Revenue before billable expenses growth of 3.5% was outpaced by the increase in salaries and related expenses as compared to the prior-year period, primarily driven by increases in base salaries, benefits and tax, which was driven by hiring to support revenue growth, partially offset by decreases in performance-based incentive compensation and temporary help expense.
Revenue before billable expenses growth of 2.4% was outpaced by the increase in salaries and related expenses as compared to the prior-year period, primarily driven by increases in base salaries, benefits and tax, which was driven by hiring to support revenue growth, partially offset by decreases in performance-based incentive compensation and temporary help expense.
In our international markets, the 7.6% o rganic increase was primarily driven by strong performance at our media, advertising and experiential businesses and our public relations agencies across all geographic regions.
In our international markets, the 7.6% organic increase was primarily driven by strong performance at our media, advertising and experiential businesses and our public relations agencies across all geographic regions.
Restructuring Charges Years ended December 31, 2022 1 2021 2 2020 Severance and termination costs $ (0.1) $ 0.4 $ 140.4 Lease restructuring costs 85.4 6.3 256.0 Other restructuring costs 17.1 3.9 17.4 Total restructuring charges $ 102.4 $ 10.6 $ 413.8 1 The amounts for the year ended December 31, 2022 represent 2022 Real Estate Actions, as well as adjustments to the actions taken in 2020.
Restructuring Charges Years ended December 31, 2023 1 2022 2 2021 3 Severance and termination costs $ 0.4 $ (0.1) $ 0.4 Lease restructuring costs (1.2) 85.4 6.3 Other restructuring costs 0.9 17.1 3.9 Total restructuring charges $ 0.1 $ 102.4 $ 10.6 1 The amounts for the year ended December 31, 2023 represent adjustments to the 2022 Real Estate Actions, as well as adjustments to the actions taken in 2020. 2 The amounts for the year ended December 31, 2022 represent 2022 Real Estate Actions, as well as adjustments to the actions taken in 2020.
GAAP measures. Total revenue, which includes billable expenses, increased 6.7% during the year ended year ended December 31, 2022.
Total revenue, which includes billable expenses, increased 6.7% during the year ended December 31, 2022.
When a third-party is involved in the production of an advertising campaign and for media buying services, we have determined that we act as the agent and are solely arranging for the third-party suppliers to provide services to the customer.
In the vast majority of our business, when a third-party is involved in the production of an advertising campaign and for media buying services, we have determined that we act as the agent and are solely arranging for the third-party suppliers to provide services to the customer.
Specialized Communications & Experiential Solutions Revenue before billable expenses Year ended December 31, 2021 Components of Change Year ended December 31, 2022 Change Foreign Currency Net Acquisitions/ (Divestitures) Organic Organic Total Consolidated $ 1,310.5 $ (34.8) $ (1.5) $ 112.0 $ 1,386.2 8.5 % 5.8 % Domestic 905.1 — — 78.0 983.1 8.6 % 8.6 % International 405.4 (34.8) (1.5) 34.0 403.1 8.4 % (0.6) % The organic increase was mainly attributable to net higher spending from existing clients in our technology & telecom, auto & transportation and food & beverage sectors and net client wins in our healthcare sector.
Year ended December 31, 2021 Components of Change Year ended December 31, 2022 Change Foreign Currency Net Acquisitions/ (Divestitures) Organic Organic Total Consolidated $ 1,310.5 $ (34.8) $ (1.5) $ 112.0 $ 1,386.2 8.5 % 5.8 % Domestic 905.1 — 0.0 78.0 983.1 8.6 % 8.6 % International 405.4 (34.8) (1.5) 34.0 403.1 8.4 % (0.6) % The organic increase was mainly attributable to net higher spending from existing clients in our technology & telecom, auto & transportation and food & beverage sectors and net client wins in our healthcare sector.
Office and Other Direct Expenses Years ended December 31, Change 2022 vs 2021 2021 vs 2020 2022 2021 2020 % Increase/ (Decrease) % Increase/ (Decrease) Office and other direct expenses $ 1,346.4 $ 1,279.6 $ 1,367.9 5.2 % (6.5) % As a % of revenue before billable expenses: Office and other direct expenses 14.2 % 14.0 % 17.0 % Occupancy expense 4.8 % 5.0 % 6.2 % All other office and other direct expenses 1 9.4 % 9.0 % 10.8 % 1 Includes production expenses, travel and entertainment, professional fees, spending to support new business activity, telecommunications, office supplies, bad debt expense, adjustments to contingent acquisition obligations, foreign currency losses (gains) and other expenses.
Office and Other Direct Expenses Years ended December 31, Change 2023 vs 2022 2022 vs 2021 2023 2022 2021 % Increase/ (Decrease) % Increase/ (Decrease) Office and other direct expenses $ 1,342.5 $ 1,346.4 $ 1,279.6 (0.3) % 5.2 % As a % of revenue before billable expenses: Office and other direct expenses 14.3 % 14.2 % 14.0 % Occupancy expense 4.6 % 4.8 % 5.0 % All other office and other direct expenses 1 9.7 % 9.4 % 9.0 % 1 Includes production expenses, travel and entertainment, professional fees, spending to support new business activity, telecommunications, office supplies, bad debt expense, adjustments to contingent acquisition obligations, foreign currency losses (gains) and other expenses.
The effect of foreign exchange rate changes on cash, cash equivalents and restricted cash included in the Consolidated Statements of Cash Flows resulted in a net decrease of $45.4 in 2021. 33 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) LIQUIDITY OUTLOOK We expect our cash flow from operations and existing cash and cash equivalents to be sufficient to meet our anticipated operating requirements at a minimum for the next twelve months.
The effect of foreign exchange rate changes on cash, cash equivalents and restricted cash included in the Consolidated Statements of Cash Flows resulted in a net decrease of $31.7 in 2022. 35 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) LIQUIDITY OUTLOOK We expect our cash flow from operations and existing cash and cash equivalents to be sufficient to meet our anticipated operating requirements at a minimum for the next twelve months.
INCOME TAXES Years ended December 31, 2022 2021 2020 Income before income taxes $ 1,268.9 $ 1,222.1 $ 361.3 Provision for income taxes $ 318.4 $ 251.8 $ 8.0 Effective income tax rate 25.1 % 20.6 % 2.2 % Effective Tax Rate Our tax rates are affected by many factors, including our worldwide earnings from various countries, changes in legislation and tax characteristics of our income.
INCOME TAXES Years ended December 31, 2023 2022 2021 Income before income taxes $ 1,408.0 $ 1,268.9 $ 1,222.1 Provision for income taxes $ 291.2 $ 318.4 $ 251.8 Effective income tax rate 20.7 % 25.1 % 20.6 % Effective Tax Rate Our tax rates are affected by many factors, including our worldwide earnings from various countries, changes in legislation and tax characteristics of our income.
For the 2022 test, the discount rate we used for our reporting units tested ranged between 11.5% and 13.0%, and the terminal value growth rate was 3.0%. The terminal value growth rate represents the expected long-term growth rate for our industry, which incorporates the type of services each reporting unit provides as well as the global economy.
For the 2023 test, the discount rate we used for our reporting units tested ranged between 13.0% and 15.5%, and the terminal value growth rate ranged between 2.0% and 3.0%. The terminal value growth rate represents the expected long-term growth rate for our industry, which incorporates the type of services each reporting unit provides as well as the global economy.
The 8.5% organic increase in our domestic market was driven by growth in our advertising businesses. In our international markets, the 4.5% organic increase was driven by growth in our advertising businesses, and was most notable in the Other region led by the Middle East and Canada.
The 7.7% organic increase in our domestic market was driven by growth in our advertising businesses. In our international markets, the 3.8% organic increase was driven by growth in our advertising businesses, and was most notable in the Other region led by the Middle East and Canada.
For 2022, the weighted-average expected rates of return of 5.00% and 4.47% were used in the calculation of net pension costs for the domestic and significant foreign pension plans, respectively. For 2023, we plan to use expected rates of return of 6.00% and 5.62% for the domestic and significant foreign pension plans, respectively.
For 2023, the weighted-average expected rates of return of 6.00% and 5.62% were used in the calculation of net pension costs for the domestic and significant foreign pension plans, respectively. For 2024, we plan to use expected rates of return of 4.25% and 4.20% for the domestic and significant foreign pension plans, respectively.
Our Consolidated Balance Sheets reflect cash, net of bank overdrafts, under all of our pooling arrangements, and as of December 31, 2022 and 2021 the amounts netted were $2,411.2 and $2,774.7, respectively. 36 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) DEBT CREDIT RATINGS Our debt credit ratings as of February 15, 2023 are listed below.
Our Consolidated Balance Sheets reflect cash, net of bank overdrafts, under all of our pooling arrangements, and as of December 31, 2023 and 2022 the amounts netted were $2,718.0 and $2,411.2, respectively. 38 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) DEBT CREDIT RATINGS Our debt credit ratings as of February 15, 2024 are listed below.
Depreciation and amortization, excluding amortization of acquired intangibles, as a percentage of revenue before billable expenses decreased slightly to 2.6% in 2022 from the prior-year period.
Depreciation and amortization, excluding amortization of acquired intangibles, as a percentage of segment revenue before billable expenses decreased to 1.6% in 2022 from the prior-year period.
For the 2022 test, the revenue growth rates for our reporting units used in our analysis were generally between 2.0% and 6.5%. Factors influencing the revenue growth rates include the nature of the services the reporting unit provides for its clients, the geographic locations in which the reporting unit conducts business and the maturity of the reporting unit.
For the 2023 test, the revenue growth rates for our reporting units used in our analysis were generally between 1.5% and 9.0%. Factors influencing the revenue growth rates include the nature of the services the reporting unit provides for its clients, the geographic locations in which the reporting unit conducts business and the maturity of the reporting unit.
Assuming we pay a quarterly dividend of $0.310 per share and there is no significant change in the number of outstanding shares as of December 31, 2022, we would expect to pay approximately $479.0 over the next twelve months.
Assuming we pay a quarterly dividend of $0.330 per share and there is no significant change in the number of outstanding shares as of December 31, 2023, we would expect to pay approximately $500.0 over the next twelve months.
Segment EBITA margin increased during 2021 when compared to 2020, as the increase in revenue before billable expenses, outpaced the overall increase in our operating expenses, excluding billable expenses and amortization of acquired intangib les.
Segment EBITA margin increased during 2022 when compared to 2021, as the increase in revenue before billable expenses, outpaced the overall increase in our operating expenses, excluding billable expenses and amortization of acquired intangibles.
On February 9, 2023, we announced that our Board of Directors (the "Board") had declared a common stock cash dividend of $0.310 per share, payable on March 15, 2023 to holders of record as of the close of business on March 1, 2023.
On February 8, 2024, we announced that our Board of Directors (the "Board") had declared a common stock cash dividend of $0.330 per share, payable on March 15, 2024 to holders of record as of the close of business on March 1, 2024.
If we lose access to these credit lines, we would have to provide funding directly to some of our operations. As of December 31, 2022, the Company had uncommitted lines of credit in an aggregate amount of $936.2, under which we had outstanding borrowings of $44.3 classified as short-term borrowings on our Consolidated Balance Sheet.
If we lose access to these credit lines, we would have to provide funding directly to some of our operations. As of December 31, 2023, the Company had uncommitted lines of credit in an aggregate amount of $780.7, under which we had outstanding borrowings of $34.2 classified as short-term borrowings on our Consolidated Balance Sheet.
For the 2022 and 2021 annual impairment tests, we performed a qualitative impairment assessment for eight and six reporting units, respectively, and performed the quantitative impairment test for two and three reporting units, respectively.
For the 2023 and 2022 annual impairment tests, we performed a qualitative impairment assessment for seven and eight reporting units, respectively, and performed the quantitative impairment test for three and two reporting units, respectively.
Years ended December 31, 2022 2021 2020 Revenue before billable expenses $ 9,449.4 $ 9,107.9 $ 8,064.5 Adjusted EBITA Reconciliation: Net Income Available to IPG Common Stockholders 1 $ 938.0 $ 952.8 $ 351.1 Add Back: Provision for income taxes 318.4 251.8 8.0 Subtract: Total (expenses) and other income (112.3) (214.1) (227.1) Equity in net income of unconsolidated affiliates 5.6 2.5 0.9 Net income attributable to non-controlling interests (18.1) (20.0) (3.1) Operating Income 1 1,381.2 1,436.2 588.4 Add Back: Amortization of acquired intangibles 84.7 86.2 85.9 Adjusted EBITA 1 $ 1,465.9 $ 1,522.4 $ 674.3 Adjusted EBITA Margin on Revenue before billable expenses 1 15.5 % 16.7 % 8.4 % 1 Calculations include restructuring charges of $102.4 in 2022, $10.6 in 2021 and $413.8 and 2020.
Years ended December 31, 2023 2022 2021 Revenue before billable expenses $ 9,400.6 $ 9,449.4 $ 9,107.9 Adjusted EBITA Reconciliation: Net Income Available to IPG Common Stockholders 1 $ 1,098.4 $ 938.0 $ 952.8 Add Back: Provision for income taxes 291.2 318.4 251.8 Subtract: Total (expenses) and other income (74.6) (112.3) (214.1) Equity in net income of unconsolidated affiliates 1.3 5.6 2.5 Net income attributable to non-controlling interests (19.7) (18.1) (20.0) Operating Income 1 1,482.6 1,381.2 1,436.2 Add Back: Amortization of acquired intangibles 84.0 84.7 86.2 Adjusted EBITA 1 $ 1,566.6 $ 1,465.9 $ 1,522.4 Adjusted EBITA Margin on Revenue before billable expenses 1 16.7 % 15.5 % 16.7 % 1 Calculations include restructuring charges of $0.1 in 2023, $102.4 in 2022 and $10.6 in 2021.
Depreciation and amortization, excluding amortization of acquired intangibles, as a percentage of revenue before billable expenses decreased to 1.7% in 2021 from the prior-year period.
Depreciation and amortization, excluding amortization of acquired intangibles, as a percentage of segment revenue before billable expenses decreased to 1.2% in 2022 from the prior-year period.
The average amount outstanding during 2022 was $61.2, with a weighted-average interest rate of approximately 4.6%. Commercial Paper The Company is authorized to issue unsecured commercial paper up to a maximum aggregate amount outstanding at any time of $1,500.0. Borrowings under the commercial paper program are supported by the Credit Agreement described above.
The average amount outstanding during 2023 was $47.9, with a weighted-average interest rate of approximately 7.9%. Commercial Paper The Company is authorized to issue unsecured commercial paper up to a maximum aggregate amount outstanding at any time of $1,500.0. Borrowings under the commercial paper program are supported by the Credit Agreement described above.
Four Quarters Ended Four Quarters Ended Financial Covenant December 31, 2022 Credit Agreement EBITDA Reconciliation 1 December 31, 2022 Leverage ratio (not greater than) 1 3.50x Net income available to IPG common stockholders $ 938.0 Actual leverage ratio 1.61x Non-operating adjustments 2 443.2 Operating income 1,381.2 Add: Depreciation and amortization 340.3 Other non-cash charges reducing operating income 85.4 Other non-cash adjustments 6.7 Credit Agreement EBITDA 1 $ 1,813.6 1 The leverage ratio is defined as debt as of the last day of such fiscal quarter to EBITDA (as defined in the Credit Agreement) for the four quarters then ended. 2 Includes adjustments of the following items from our Consolidated Statement of Operations in Item 8, Financial Statements and Supplementary Data : provision for income taxes, total (expenses) and other income, equity in net income (loss) of unconsolidated affiliates, and net income attributable to noncontrolling interests .
Four Quarters Ended Four Quarters Ended Financial Covenant December 31, 2023 Credit Agreement EBITDA Reconciliation 1 December 31, 2023 Leverage ratio (not greater than) 1 3.50x Net income available to IPG common stockholders $ 1,098.4 Actual leverage ratio 1.79x Non-operating adjustments 2 384.2 Operating income 1,482.6 Add: Depreciation and amortization 311.8 Other non-cash charges reducing operating income (1.2) Credit Agreement EBITDA 1 $ 1,793.2 1 The leverage ratio is defined as debt as of the last day of such fiscal quarter to EBITDA (as defined in the Credit Agreement) for the four quarters then ended. 2 Includes adjustments of the following items from our Consolidated Statement of Operations in Item 8, Financial Statements and Supplementary Data : provision for income taxes, total (expenses) and other income, equity in net income of unconsolidated affiliates, and net income attributable to noncontrolling interests .
As of December 31, 2022, we used discount rates of 5.65% for the domestic pension plan and 5.65% for the domestic postretirement benefit plan and a weighted-average discount rate of 4.62% for our significant foreign pension plans to measure our benefit obligations.
As of December 31, 2023, we used discount rates of 5.40% for both the domestic pension plan and the domestic postretirement benefit plan and a weighted-average discount rate of 4.32% for our significant foreign pension plans to measure our benefit obligations.
Years ended December 31, Change 2022 vs 2021 2021 vs 2020 Statement of Operations Data 2022 2021 2020 % Increase/ (Decrease) % Increase/ (Decrease) REVENUE: Revenue before billable expenses $ 9,449.4 $ 9,107.9 $ 8,064.5 3.7 % 12.9 % Billable expenses 1,478.4 1,132.8 996.5 30.5 % 13.7 % Total revenue $ 10,927.8 $ 10,240.7 $ 9,061.0 6.7 % 13.0 % OPERATING INCOME 1 $ 1,381.2 $ 1,436.2 $ 588.4 (3.8) % 144.1 % Adjusted EBITA 1, 2 $ 1,465.9 $ 1,522.4 $ 674.3 (3.7) % 125.8 % NET INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS $ 938.0 $ 952.8 $ 351.1 Earnings per share available to IPG common stockholders: Basic 1 $ 2.40 $ 2.42 $ 0.90 Diluted 1 $ 2.37 $ 2.39 $ 0.89 Operating Ratios Organic change in revenue before billable expenses 7.0 % 11.9 % (4.8) % Operating margin on revenue before billable expenses 1 14.6 % 15.8 % 7.3 % Operating margin on total revenue 1 12.6 % 14.0 % 6.5 % Adjusted EBITA margin on revenue before billable expenses 1, 2 15.5 % 16.7 % 8.4 % Expenses as a % of revenue before billable expenses: Salaries and related expenses 66.2 % 65.6 % 66.3 % Office and other direct expenses 14.2 % 14.0 % 17.0 % Selling, general and administrative expenses 0.9 % 1.3 % 0.7 % Depreciation and amortization 2.9 % 3.1 % 3.6 % Restructuring charges 1 1.1 % 0.1 % 5.1 % 1 For the years ended December 31, 2022, 2021 and 2020, results include restructuring charges of $102.4, $10.6 and $413.8 , respectively.
Years ended December 31, Change 2023 vs 2022 2022 vs 2021 Statement of Operations Data 2023 2022 2021 % Increase/ (Decrease) % Increase/ (Decrease) REVENUE: Revenue before billable expenses $ 9,400.6 $ 9,449.4 $ 9,107.9 (0.5) % 3.7 % Billable expenses 1,488.7 1,478.4 1,132.8 0.7 % 30.5 % Total revenue $ 10,889.3 $ 10,927.8 $ 10,240.7 (0.4) % 6.7 % OPERATING INCOME 1 $ 1,482.6 $ 1,381.2 $ 1,436.2 7.3 % (3.8) % Adjusted EBITA 1, 2 $ 1,566.6 $ 1,465.9 $ 1,522.4 6.9 % (3.7) % NET INCOME AVAILABLE TO IPG COMMON STOCKHOLDERS $ 1,098.4 $ 938.0 $ 952.8 Earnings per share available to IPG common stockholders: Basic 1 $ 2.86 $ 2.40 $ 2.42 Diluted 1 $ 2.85 $ 2.37 $ 2.39 Operating Ratios Organic change in revenue before billable expenses (0.1) % 7.0 % 11.9 % Operating margin on revenue before billable expenses 1 15.8 % 14.6 % 15.8 % Operating margin on total revenue 1 13.6 % 12.6 % 14.0 % Adjusted EBITA margin on revenue before billable expenses 1, 2 16.7 % 15.5 % 16.7 % Expenses as a % of revenue before billable expenses: Salaries and related expenses 66.4 % 66.2 % 65.6 % Office and other direct expenses 14.3 % 14.2 % 14.0 % Selling, general and administrative expenses 0.7 % 0.9 % 1.3 % Depreciation and amortization 2.8 % 2.9 % 3.1 % Restructuring charges 1 0.0 % 1.1 % 0.1 % 1 For the years ended December 31, 2023, 2022 and 2021, results include restructuring charges of $0.1, $102.4 an d $10.6, respectively.
Years ended December 31, Cash Flow Data 2022 2021 2020 Net income $ 956.1 $ 972.8 $ 354.2 Adjustments to reconcile to net cash provided by operating activities 1 417.6 458.7 734.7 Net cash (used in) provided by working capital 2 (672.3) 743.4 900.1 Changes in other non-current assets and liabilities (92.6) (99.3) (141.8) Net cash provided by operating activities $ 608.8 $ 2,075.6 $ 1,847.2 Net cash used in investing activities (430.1) (185.3) (216.2) Net cash used in financing activities (899.4) (1,084.2) (346.2) 1 Consists primarily of depreciation and amortization of fixed assets and intangible assets, non-cash restructuring charges, amortization of restricted stock and other non-cash compensation, net losses on sales of businesses and provision for uncollectible receivables. 2 Reflects changes in accounts receivable, other current assets, accounts payable, accrued liabilities and contract liabilities. 32 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) Operating Activities The presentation of the three components of net cash provided by operating activities above reflects the manner in which management views and analyzes this information.
Years ended December 31, Cash Flow Data 2023 2022 2021 Net income $ 1,118.1 $ 956.1 $ 972.8 Adjustments to reconcile to net cash provided by operating activities 1 333.3 417.6 458.7 Net cash (used in) provided by working capital 2 (676.1) (672.3) 743.4 Changes in other non-current assets and liabilities (220.6) (59.3) (99.3) Net cash provided by operating activities $ 554.7 $ 642.1 $ 2,075.6 Net cash used in investing activities (85.4) (430.1) (185.3) Net cash used in financing activities (634.3) (899.4) (1,084.2) 1 Consists primarily of depreciation and amortization of fixed assets and intangible assets, amortization of restricted stock and other non-cash compensation, net (gains) losses on sales of businesses and provision for uncollectible receivables. 2 Reflects changes in accounts receivable, other current assets, accounts payable, accrued liabilities and contract liabilities. 34 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) Operating Activities The presentation of the three components of net cash provided by operating activities above reflects the manner in which management views and analyzes this information.
Depreciation and amortization, excluding amortization of acquired intangibles, as a percentage of revenue before billable expenses decreased to 1.5% in 2022 from the prior-year period. 30 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) Segment EBITA margin increased during 2021 when compared to 2020, as the increase in revenue before billable expenses, outpaced the overall increase in our operating expenses, excluding billable expenses and amortization of acquired intangibles.
Depreciation and amortization, excluding amortization of acquired intangibles, as a percentage of segment revenue before billable expenses decreased slightly to 1.5% in 2023 from the prior-year period. 32 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) Segment EBITA margin decreased during 2022 when compared to 2021, as the increase in revenue before billable expenses, was outpaced by the overall increase in our operating expenses, excluding billable expenses and amortization of acquired intangibles, primarily due to an increase in restructuring charges in 2022.
We will continue to ev aluate strategic opportunities to grow and continue to strengthen our market position, particularly in our digital and marketing services offerings, and to expand our presence in high-growth and key strategic world markets. • Dividends – During 2022, we paid four quarterly cash dividends of $0.290 per share on our common stock, which corresponded to aggregate dividend payments of $457.3.
We will continue to evaluate strategic opportunities to grow and continue to strengthen our market position, particularly in our digital and marketing services offerings, and to expand our presence in high-growth and key strategic world markets. • Dividends – During 2023, we paid four quarterly cash dividends of $0.310 per share on our common stock, which corresponded to aggregate dividend payments of $479.1.
Segment EBITA Years ended December 31, Change 2022 2021 2020 2022 vs 2021 2021 vs 2020 Segment EBITA 1 $ 234.5 $ 188.6 $ 41.4 24.3 % 355.6 % Segment EBITA margin on revenue before billable expenses 1 16.9 % 14.4 % 3.5 % 1 Segment EBITA and Segment EBITA margin on revenue before billable expenses include $3.8, $10.0 and $88.7 of restructuring charges in the year ended December 31, 2022, 2021 and 2020 respectively.
Segment EBITA Years ended December 31, Change 2023 2022 2021 2023 vs 2022 2022 vs 2021 Segment EBITA 1 $ 265.2 $ 234.5 $ 188.6 13.1 % 24.3 % Segment EBITA margin on revenue before billable expenses 1 18.4 % 16.9 % 14.4 % 1 Segment EBITA and Segment EBITA margin on revenue before billable expenses include $1.1, $3.8 and $10.0 of restructuring charges in the year ended December 31, 2023, 2022 and 2021 respectively.
During the year ended December 31, 2021, our Adjusted EBITA margin on revenue before billable expenses increased to 16.7% from 8.4% in the prior-year period as the increase in revenue before billable expenses, discussed below in the “Results of Operations” section, outpaced the overall increase in our operating expenses, excluding billable expenses and amortization of acquired intangibles.
During the year ended December 31, 2023, our Adjusted EBITA margin on revenue before billable expenses increased to 16.7% from 15.5% in the prior-year period as the decrease in revenue before billable expenses, discussed below in the “Results of Operations” section, was outpaced by the overall decrease in our operating expenses, excluding billable expenses and amortization of acquired intangibles.
The table below displays the midpoint of the fair value range for each reporting unit tested in the 2022 and 2021 annual impairment tests, indicating that the fair value exceeded the carrying value for all reporting units by greater than 20%. 2022 Impairment Test 2021 Impairment Test Reporting Unit Goodwill Fair value exceeds carrying value by: Reporting Unit Goodwill Fair value exceeds carrying value by: A $ 448.6 > 200% A $ 536.0 > 60% B $ 528.3 > 100% B $ 209.1 > 85% C $ 300.4 > 175% Based on the analysis described above, for the reporting units for which we performed the quantitative impairment test, we concluded that our goodwill was not impaired as of October 1, 2022, because these reporting units passed the test as the fair values of each of the reporting units were substantially in excess of their respective carrying values.
The table below displays the midpoint of the fair value range for each reporting unit tested in the 2023 and 2022 annual impairment tests, indicating that the fair value exceeded the carrying value for all reporting units by greater than 20%. 2023 Impairment Test 2022 Impairment Test Reporting Unit Goodwill Fair value exceeds carrying value by: Reporting Unit Goodwill Fair value exceeds carrying value by: A $ 483.7 > 70% A $ 448.6 > 200% B $ 735.5 > 25% B $ 528.3 > 100% C $ 99.7 > 45% Based on the analysis described above, for the reporting units for which we performed the quantitative impairment test, we concluded that our goodwill was not impaired as of October 1, 2023, because these reporting units passed the test as the fair values of each of the reporting units were substantially in excess of their respective carrying values.
EARNINGS PER SHARE Basic earnings per share available to IPG common stockholders for the years ended December 31, 2022, 2021 and 2020 were $2.40, $2.42 and $0.90 per share, respectively. Diluted earnings per share available to IPG common stockholders for the years ended December 31, 2022, 2021 and 2020 were $2.37, $2.39 and $0.89 per share, respectively.
EARNINGS PER SHARE Basic earnings per share available to IPG common stockholders for the years ended December 31, 2023, 2022 and 2021 were $2.86, $2.40 and $2.42 per share, respectively. Diluted earnings per share available to IPG common stockholders for the years ended December 31, 2023, 2022 and 2021 were $2.85, $2.37 and $2.39 per share, respectively.
In addition, as more fully described below, we believe that providing Adjusted EBITA, together with a reconciliation of this non-GAAP financial measure to net income, helps investors make comparisons between our Company and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation.
In addition, as more fully described below, we believe that providing Adjusted EBITA, together with a reconciliation of this non-GAAP financial measure to net income, helps 44 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) investors make comparisons between our Company and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation.
Refer to the segment discussion later in this MD&A for information on changes in revenue by segment. 22 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) Salaries and Related Expenses Years ended December 31, Change 2022 vs 2021 2021 vs 2020 2022 2021 2020 % Increase/ (Decrease) % Increase/ (Decrease) Salaries and related expenses $ 6,258.3 $ 5,975.4 $ 5,345.0 4.7 % 11.8 % As a % of revenue before billable expenses: Salaries and related expenses 66.2 % 65.6 % 66.3 % Base salaries, benefits and tax 56.6 % 53.4 % 55.9 % Incentive expense 3.6 % 5.2 % 3.8 % Severance expense 0.8 % 0.9 % 1.5 % Temporary help 4.1 % 4.8 % 3.8 % All other salaries and related expenses 1.1 % 1.3 % 1.3 % Revenue before billable expenses growth of 3.7% was outpaced by the increase in salaries and related expenses of 4.7% during the year ended December 31, 2022 as compared to the prior-year period, primarily driven by increases in base salaries, benefits and tax, partially offset by decreased performance-based employee incentive compensation and temporary help expense.
Refer to the segment discussion later in this MD&A for information on changes in revenue by segment. 24 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) Salaries and Related Expenses Years ended December 31, Change 2023 vs 2022 2022 vs 2021 2023 2022 2021 % Increase/ (Decrease) % Increase/ (Decrease) Salaries and related expenses $ 6,243.9 $ 6,258.3 $ 5,975.4 (0.2) % 4.7 % As a % of revenue before billable expenses: Salaries and related expenses 66.4 % 66.2 % 65.6 % Base salaries, benefits and tax 58.1 % 56.6 % 53.4 % Incentive expense 2.7 % 3.6 % 5.2 % Severance expense 1.3 % 0.8 % 0.9 % Temporary help 3.3 % 4.1 % 4.8 % All other salaries and related expenses 1.0 % 1.1 % 1.3 % Revenue before billable expenses decrease of (0.5)% outpaced the overall decrease in salaries and related expenses of (0.2)% during the year ended December 31, 2023 as compared to the prior-year period.
Depreciation and Amortization For the years ended December 31, 2022, 2021 and 2020, depreciation and amortization was $189.3, $197.6 and $204.7, respectively. For the years ended December 31, 2022, 2021 and 2020, amortization of acquired intangibles was $84.7, $86.2 and $85.9, respectively.
Depreciation and Amortization For the years ended December 31, 2023, 2022 and 2021, depreciation and amortization was $180.3, $189.3 and $197.6, respectively. For the years ended December 31, 2023, 2022 and 2021, amortization of acquired intangibles was $84.0, $84.7 and $86.2, respectively.
Foreign Exchange Rate Changes The effect of foreign exchange rate changes on cash, cash equivalents and restricted cash included in the Consolidated Statements of Cash Flows resulted in a net increase of $1.6 in 2022. This increase was primarily a result of the U.S. dollar being weaker than several foreign currencies, including the British Pound Sterling.
Foreign Exchange Rate Changes The effect of foreign exchange rate changes on cash, cash equivalents and restricted cash included in the Consolidated Statements of Cash Flows resulted in a net increase of $7.0 in 2023. This increase was primarily a result of the U.S. dollar being weaker than several foreign currencies, including the Euro.
For example, while annual cash incentive awards are accrued throughout the year, they are generally paid during the first quarter of the subsequent year. Net cash provided by operating activities during 2022 was $608.8, which was a decrease of $1,466.8 as compared to 2021.
For example, while annual cash incentive awards are accrued throughout the year, they are generally paid during the first quarter of the subsequent year. Net cash provided by operating activities during 2023 was $554.7, which was a decrease of $87.4 as compared to 2022.
During the past few years, we have acquired companies that we believe will enhance our offerings and disposed of businesses that are not consistent with our strategic plan.
We continually evaluate our portfolio of businesses and over the past several years, we have acquired companies that we believe will enhance our offerings and disposed of businesses that are not consistent with our strategic plan.
Our organic increase of revenue before billable expenses of 7.0% for the year ended December 31, 2022 was driven by net higher spending from existing clients across nearly all sectors, most notably in the healthcare, financial services, other and retail sectors, which also each increased from net client wins.
Our organic increase of revenue before billable expenses of 7.0% for the year ended December 31, 2022 was driven by net higher spending 23 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) from existing clients across nearly all sectors, most notably in the healthcare, financial services, other and retail sectors, which also each increased from net client wins.
Years ended December 31, 2022 2021 2020 Net losses on sales of businesses $ (11.3) $ (19.4) $ (67.0) Loss on early extinguishment of debt 0.0 (74.0) 0.0 Other 10.3 22.7 2.6 Total other expense, net $ (1.0) $ (70.7) $ (64.4) Net losses on sales of businesses – During 2022 , 2021 and 2020, the amounts recognized were related to sales of businesses and the classification of certain assets and liabilities, consisting primarily of cash, as hel d for sale within our MD&E, IA&C, and SC&E reportable segments.
Years ended December 31, 2023 2022 2021 Net gains/(losses) on sales of businesses $ 17.9 $ (11.3) $ (19.4) Loss on early extinguishment of debt 0.0 0.0 (74.0) Other (7.7) 10.3 22.7 Total other income (expense), net $ 10.2 $ (1.0) $ (70.7) Net gains/(losses) on sales of businesse s – During 2023, 2022 and 2021, the amounts recognized were related to sales of businesses and the classification of certain assets and liabilities, consisting primarily of accounts receivable and accounts payable, as held for sale within our MD&E, IA&C, and SC&E reportable segments.
Financing Activities Net cash used in financing activities during 2022 was driven primarily by payments for common stock dividends of $457.3 and common stock repurchases of $320.1, as well as the settlement of a senior note.
See Note 4 in Item 8, Financial Statements and Supplementary Data , for further information. Net cash used in financing activities during 2022 was driven primarily by payments for common stock dividends of $457.3 and common stock repurchases of $320.1, as well as the settlement of a senior note.
The 10.8% organic increase in our domestic market was primarily driven by growth across all disciplines, most notably our media businesses and data management and analytics. In our international markets, the 18.6% organic increase was primarily driven by increases at our media businesses and digital project-based offerings, and was most notable in the Continental Europe and Asia Pacific regions.
The 4.9% organic increase in our domestic market was driven by increases at our media businesses and data management and analytics. In our international markets, the 10.8% organic increase was driven by growth across all disciplines, primarily at our media businesses, and was most notable in the Continental Europe, Latin America and Asia Pacific regions.
We were in compliance with all of our covenants in the Credit Agreement as of December 31, 2022. The financial covenant in the Credit Agreement requires that we maintain, as of the end of each fiscal quarter, a certain leverage ratio for the four quarters then ended.
The financial covenant in the Credit Agreement requires that we maintain, as of the end of each fiscal quarter, a certain leverage ratio for the four quarters then ended.
A deterioration in profitability, adverse market conditions, significant client losses, changes in spending levels of our existing clients or a different economic outlook than currently estimated by management could have a significant impact on the estimated fair value of our reporting units and could result in an impairment charge in the future.
A deterioration in profitability, adverse market conditions, significant client losses, changes in spending levels of our existing clients or a different economic outlook than currently 42 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) estimated by management could have a significant impact on the estimated fair value of our reporting units and could result in an impairment charge in the future.
The Credit Agreement is a revolving facility under which amounts borrowed by us or any of our subsidiaries designated under the Credit Agreement may be repaid and reborrowed, subject to an aggregate lending limit of $1,500.0, or the equivalent in other currencies.
The Credit Agreement is a revolving facility under which amounts borrowed by us or any of our subsidiaries designated under the Credit Agreement may be repaid and reborrowed, subject to an aggregate lending limit of $1,500.0, or the equivalent 37 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) in other currencies.
During 2021, the majority of the amounts recognized were related to a non-cash gain related to the deconsolidation of a previously consolidated entity in which we maintain an equity interest, and pension and postretirement costs. During 2020, the amounts recognized were primarily a result of gains on remeasurement of equity interests arising from a change in ownership.
During 2021, the majority of the amounts recognized were related to a non-cash gain related to the deconsolidation of a previously consolidated entity in which we maintain an equity interest, and pension and postretirement costs.
Revenue before billable expenses growth of 15.1% outpaced the increase in salaries and related expenses as compared to the prior-year period, primarily driven by increases in base salaries, benefits and tax, performance-based incentive compensation expense as well as temporary help expense, partially offset by lower severance expense.
Revenue b efore billable expenses growth of 0.7% was outpaced by the increase in salaries and related expenses as compared to the prior-year period, primarily due to increases in base salaries, benefits and tax and severance expense, partially offset by decreases in temporary help expense and performance-based incentive compensation.
The principal macroeconomic risks to our performance include the impact of any general economic slowdown or contraction, the extent of inflation of labor costs and potential for labor shortages, inflationary pressures on our clients and their customers, the economic impacts of geopolitical conflict and uncertainty, and the impact of continuing and unpredictable supply chain disruptions across the global economy.
The principal macroeconomic risks to our performance include the impact of any general or regional economic slowdown or contraction, the extent of inflation of labor costs and potential for labor shortages, continuing inflationary pressures on our clients and their customers, and the economic impacts of geopolitical conflict and resulting potential for uncertainty and restrictions on spending on the part of some clients and consumers.
Revenue before billable expenses growth of 10.5% was outpaced by the increase in salaries and related expenses as compared to the prior-year period, primarily driven by increases in base salaries, benefits and tax and increases in performance-based incentive compensation and temporary help expense.
Revenue before billable expenses growth of 3.7% was outpaced by the increase in salaries and related expenses of 4.7% during the year ended December 31, 2022 as compared to the prior-year period, primarily driven by increases in base salaries, benefits and tax, partially offset by decreased performance-based employee incentive compensation and temporary help expense.
In countries where markets for high-quality long-term AA corporate bonds are not well developed, a portfolio of long-term government bonds is used as a basis to develop hypothetical corporate bond yields, which serve as a basis to derive the discount rate.
In countries where markets for high-quality long-term AA corporate bonds are not well developed, a portfolio of long-term 43 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) government bonds is used as a basis to develop hypothetical corporate bond yields, which serve as a basis to derive the discount rate.
The 12.3% organic increase in our domestic market was driven by revenue increases at both our public relations agencies and experiential businesses. In our international market, the 6.1% organic increase was driven by growth at both our public relations agencies and experiential businesses, and was most notable in the United Kingdom region.
The 3.3% organic increase in our domestic market was driven by revenue increases at our public relations agencies and experiential businesses. In our international market, the 6.2% organic increase was driven by growth at both our public relations agencies and experiential businesses across all regions.
Segment EBITA Years ended December 31, Change 2022 2021 2020 2022 vs 2021 2021 vs 2020 Segment EBITA 1 $ 624.1 $ 645.2 $ 328.5 (3.3) % 96.4 % Segment EBITA margin on revenue before billable expenses 1 15.8 % 16.9 % 9.6 % 1 Segment EBITA and Segment EBITA margin on revenue before billable expenses include $33.6, $2.6 and $148.1 of restructuring charges in the year ended December 31, 2022, 2021 and 2020 respectively.
Segment EBITA Years ended December 31, Change 2023 2022 2021 2023 vs 2022 2022 vs 2021 Segment EBITA 1 $ 541.3 $ 581.4 $ 597.9 (6.9) % (2.8) % Segment EBITA margin on revenue before billable expenses 1 14.9 % 15.4 % 16.2 % 1 Segment EBITA and Segment EBITA margin on revenue before billable expenses include $0.2, $28.7 and $2.6 of restructuring charges in the year ended December 31, 2023, 2022 and 2021 respectively.
SG&A decreased in 2022 as compared to the prior-year period, primarily due to a decrease in performance-based incentive compensation expense, partially offset by an increase in professional consulting fees. SG&A increased in 2021 as compared to the prior-year period, primarily due to increases in salaries and related expenses and performance-based incentive compensation expense.
SG&A decreased in 2023 as compared to the prior-year period, prim arily driven by decre ases in performance-based incentive compensation expense, partially offset by increases in software and cloud-based expe nses. SG&A decreased in 2022 as compared to the prior-year period, primarily due to a decrease in performance-based incentive compensation expense, partially offset by an increase in professional consulting fees.
Media, Data & Engagement Solutions Revenue before billable expenses Year ended December 31, 2021 Components of Change Year ended December 31, 2022 Change Foreign Currency Net Acquisitions/ (Divestitures) Organic Organic Total Consolidated $ 3,973.6 $ (132.6) $ 17.1 $ 253.4 $ 4,111.5 6.4 % 3.5 % Domestic 2,403.6 — 14.4 94.1 2,512.1 3.9 % 4.5 % International 1,570.0 (132.6) 2.7 159.3 1,599.4 10.1 % 1.9 % The organic increase was mainly attributable to net client wins in our financial services sector and net higher spending from existing clients in our retail and other sectors.
Year ended December 31, 2021 Components of Change Year ended December 31, 2022 Change Foreign Currency Net Acquisitions/ (Divestitures) Organic Organic Total Consolidated $ 4,117.7 $ (132.2) $ 17.1 $ 294.3 $ 4,296.9 7.1 % 4.4 % Domestic 2,552.0 — 14.4 124.5 2,690.9 4.9 % 5.4 % International 1,565.7 (132.2) 2.7 169.8 1,606.0 10.8 % 2.6 % The organic increase was mainly attributable to net client wins in our financial services sector and net higher spending from existing clients in our retail and other sectors.
Share Repurchase Programs In February 2022, our Board of Directors (the "Board") reauthorized a program to repurchase, from time to time, up to $400.0 of our common stock. As of December 31, 2022, $80.1, excluding fees, remained available for repurchase under the share repurchase program.
Share Repurchase Programs In February 2022, our Board of Directors (the "Board") reauthorized a program to repurchase from time to time up to $400.0 of our common stock.
The improvements we have made and continue to make in our financial reporting and business information systems in recent years allow us more timely and actionable insights from our global operations.
The improvements we have made and continue to make in our financial reporting and business information systems in recent years 20 Table of Contents Management’s Discussion and Analysis of Financial Condition and Results of Operations (Amounts in Millions, Except Per Share Amounts) allow us more timely and actionable insights from our global operations.
We consistently invest in opportunities within our Company to enhance the professional skills of our employees and encourage intra-company collaboration. As appropriate, we also make acquisitions, enter into strategic alliances, and develop relationships with technology and media companies that are building leading-edge marketing tools that complement our agencies’ skill sets and capabilities.
In addition, we consistently review opportunities within our Company to enhance our operations through acquisitions and strategic alliances and internal programs that encourage client-centric collaboration. As appropriate, we also develop relationships with technology and emerging media companies that are building leading-edge marketing tools that complement our agencies' skill sets and capabilities.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+0 added−0 removed9 unchanged
Biggest changeOur foreign subsidiaries generally collect revenues and pay expenses in their functional currency, mitigating transaction risk. However, certain subsidiaries may enter into transactions in currencies other than their functional currency. Assets and liabilities denominated in currencies other than the functional currency are susceptible to movements in foreign currency until final settlement.
Biggest changeThe resulting translation adjustments are recorded as a component of accumulated other comprehensive loss, net of tax, in the stockholders’ equity section of our Consolidated Balance Sheets. Our foreign subsidiaries generally collect revenues and pay expenses in their functional currency, mitigating transaction risk. However, certain subsidiaries may enter into transactions in currencies other than their functional currency.
Dollar until the currency is no longer considered highly inflationary. 44 Table of Contents Credit and Market Risks Balance sheet items that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents, short-term marketable securities, accounts receivable and accounts receivable billable to clients.
Dollar until the currency is no longer considered highly inflationary. 46 Table of Contents Credit and Market Risks Balance sheet items that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents, short-term marketable securities, accounts receivable and accounts receivable billable to clients.
The fair value of our pension plan assets may appreciate or depreciate during the year, which can result in lower or higher pension expense and funding requirements in future periods. 45
The fair value of our pension plan assets may appreciate or depreciate during the year, which can result in lower or higher pension expense and funding requirements in future periods. 47
The majority of our debt (approximately 98% and 97% as of December 31, 2022 and 2021, respectively) bears interest at fixed rates. We do have debt with variable interest rates, but a 10% increase or decrease in interest rates would not be material to our interest expense or cash flows.
The majority of our debt (approximately 99% and 98% as of December 31, 2023 and 2022, respectively) bears interest at fixed rates. We do have debt with variable interest rates, but a 10% increase or decrease in interest rates would not be material to our interest expense or cash flows.
Based on our 2022 results, a 100 basis-point increase or decrease in interest rates would affect our interest income by approximately $25.5, assuming that all cash, cash equivalents and marketable securities are impacted in the same manner and balances remain constant from year-end 2022 levels.
Based on our 2023 results, a 100 basis-point increase or decrease in interest rates would affect our interest income by approximately $23.9, assuming that all cash, cash equivalents and marketable securities are impacted in the same manner and balances remain constant from year-end 2023 levels.
Increase/(Decrease) in Fair Market Value As of December 31, 10% Increase in Interest Rates 10% Decrease in Interest Rates 2022 $ (99.2) $ 127.1 2021 (110.0) 69.2 We had $2,546.4 of cash, cash equivalents and marketable securities as of December 31, 2022 that we generally invest in conservative, short-term bank deposits or securities.
Increase/(Decrease) in Fair Market Value As of December 31, 10% Increase in Interest Rates 10% Decrease in Interest Rates 2023 $ (115.3) $ 111.0 2022 (99.2) 127.1 We had $2,388.3 of cash, cash equivalents and marketable securities as of December 31, 2023 that we generally invest in conservative, short-term bank deposits or securities.
The interest income generated primarily from these investments is subject to both domestic and foreign interest rate movements. During 2022 and 2021, we had interest income of $63.4 and $29.7, respectively.
The interest income generated primarily from these investments is subject to both domestic and foreign interest rate movements. During 2023 and 2022, we had interest income of $140.8 and $56.6, respectively.
Currency transaction gains or losses primarily arising from transactions in currencies other than the functional currency are included in office and other direct expenses.
Assets and liabilities denominated in currencies other than the functional currency are susceptible to movements in foreign currency until final settlement. Currency transaction gains or losses primarily arising from transactions in currencies other than the functional currency are included in office and other direct expenses.
Dollar were to strengthen or weaken by 10%, we currently estimate operating income would decrease or increase approximately 4%, assuming that all currencies are impacted in the same manner and our international revenue and expenses remain constant at 2022 levels. The functional currency of our foreign operations is generally their respective local currency.
Based on 2023 exchange rates and operating results, if the U.S. Dollar were to strengthen or weaken by 10%, we currently estimate operating income would decrease or increase approximately 3%, assuming that all currencies are impacted in the same manner and our international revenue and expenses remain constant at 2023 levels.
The foreign currencies that most adversely impacted our results during the year ended December 31, 2022 were the British Pound Sterling, the Euro, the Japanese Yen and the Australian Dollar. Based on 2022 exchange rates and operating results, if the U.S.
The foreign currencies that most adversely impacted our results during the year ended December 31, 2023 were the Argentine Peso, the Israeli Shekel, the Canadian Dollar, the Indian Rupee and the Japanese Yen. The foreign currencies that most favorably impacted our results during the year ended December 31, 2023 were the Euro and the Mexican Peso.
Assets and liabilities are translated at the exchange rates in effect at the balance sheet date, and revenues and expenses are translated at the average exchange rates during the period presented. The resulting translation adjustments are recorded as a component of accumulated other comprehensive loss, net of tax, in the stockholders’ equity section of our Consolidated Balance Sheets.
The functional currency of our foreign operations is generally their respective local currency. Assets and liabilities are translated at the exchange rates in effect at the balance sheet date, and revenues and expenses are translated at the average exchange rates during the period presented.

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