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Pension and Other Postemployment Benefits
 12 Months Ended
Dec. 31, 2024
Pension and Other Postemployment Benefits [Abstract]  
Pension and Other Postemployment Benefits Pension and Other Postemployment Benefits
Defined Contribution Plans
Our domestic and international subsidiaries provide retirement benefits for their employees primarily through defined contribution profit sharing and savings plans. Contributions to the plans vary by subsidiary and have generally been in amounts up to the maximum percentage of total eligible compensation of participating employees that is deductible for income tax purposes. Contribution expense was $87.9 million, $127.9 million and $123.2 million in 2024, 2023 and 2022, respectively.
Defined Benefit Pension Plans
Two of our U.S. businesses and several of our non-U.S. businesses sponsor noncontributory defined benefit pension plans. These plans provide benefits to employees based on formulas recognizing length of service and earnings. The U.S. plans are subject to ERISA and cover approximately 700 participants. These plans are closed to new participants and do not accrue future benefit credits. The non-U.S. plans, which include statutory plans, are not subject to ERISA and cover approximately 12,000 participants.
We have a Senior Executive Restrictive Covenant and Retention Plan, or Senior Executive Retention Plan, for certain executive officers and senior executives selected by the Compensation Committee. In 2024, we adopted a Key Executive Restrictive Covenant and Retention Plan, or Key Executive Retention Plan, for certain key employees who are not executive officers selected by the Compensation Committee. These plans are non-qualified deferred compensation severance plans that are not subject to ERISA. These plans were adopted to secure non-competition, non-solicitation, non-disparagement and ongoing consulting services from such individuals and to strengthen the retention aspect of executive officer, senior executive or key executive compensation.
The Senior Executive Retention Plan provides annual payments to the participants or to their beneficiaries upon termination following at least seven years of service with Omnicom or its subsidiaries. A participant’s annual benefit is payable for 15 consecutive calendar years following termination, but in no event prior to age 55. The annual benefit is generally equal to the lesser of (i) the participant’s final average pay times an applicable percentage, which is based upon the executive’s years of service as an executive officer, not to exceed 35% or (ii) $1.5 million adjusted for cost-of-living, not to exceed 2.5% per year. The Senior Executive Retention Plan is not funded, and benefits are paid when due.
The Key Executive Retention Plan provides annual payments to the participants or to their beneficiaries upon termination following at least six years of service from the date of the participant’s award agreement with Omnicom or its subsidiaries. A participant’s annual benefit is payable for 12 consecutive calendar years following termination, but in no event prior to age 55. The annual benefit is equal to the lesser of (i) the participant’s final average pay times an applicable percentage, which is based upon the employee’s years of service, not to exceed 65% or (ii) $1.0 million. The annual benefit vests 100% after six years of service from the date of the award agreement. The Key Executive Retention Plan is not funded, and benefits are paid when due.
Postemployment Arrangements
We have executive retirement agreements under which benefits will be paid to participants or to their beneficiaries over periods up to ten years beginning after cessation of full-time employment. Our postemployment arrangements are unfunded and benefits are paid when due.
Pension and other postemployment benefits net periodic benefit expense:
Defined Benefit Pension PlansPostemployment Arrangements
Year Ended December 31,Year Ended December 31,
202420232022202420232022
Service cost$1.6 $2.4 $2.8 $2.9 $3.4 $4.5 
Interest cost8.5 11.1 5.6 5.9 5.7 2.6 
Expected return on plan assets(2.2)(0.3)(1.4)— — — 
Amortization of prior service cost0.4 0.3 0.4 4.4 3.8 3.8 
Amortization of actuarial loss0.8 0.7 4.0 0.2 — 2.5 
Net Periodic Benefit Expense$9.1 $14.2 $11.4 $13.4 $12.9 $13.4 
Included in AOCI for Defined Benefit Pension Plans at December 31, 2024 and 2023 were unrecognized costs for actuarial gains and losses and prior service cost of $6.5 million ($4.5 million net of income taxes) and $15.9 million ($11.0 million net of income taxes), respectively, that have not yet been recognized in net periodic benefit cost. The unrecognized costs for actuarial gains and losses and prior service cost included in AOCI and expected to be recognized in net periodic benefit cost in 2025 is a benefit of $0.4 million.
Included in AOCI for Postemployment Arrangements at December 31, 2024 and 2023 were unrecognized costs for actuarial gains and losses and prior service cost of $25.3 million ($17.6 million net of income taxes) and $41.1 million ($28.8 million net of income taxes), respectively, that have not yet been recognized in the net periodic benefit cost. The unrecognized costs for actuarial gains and losses and prior service cost included in AOCI and expected to be recognized in net periodic benefit cost in 2025 is $3.7 million.
Weighted average assumptions:
Defined Benefit Pension PlansPostemployment Arrangements
Year Ended December 31,Year Ended December 31,
202420232022202420232022
Discount rate4.5 %4.7 %2.1 %4.5 %4.7 %1.8 %
Compensation increases3.4 %2.6 %2.6 %3.5 %3.5 %3.5 %
Expected return on plan assets2.2 %1.5 %1.6 %
The expected long-term rate of return for plan assets for the U.S. plans is based on several factors, including current and expected asset allocations, historical and expected returns on various asset classes and current and future market conditions. A total return investment approach using a mix of equities and fixed income investments maximizes the long-term return. This strategy is intended to minimize plan expense by achieving long-term returns in excess of the growth in plan liabilities over time. The discount rate used to compute net periodic benefit cost is based on yields of available high-quality bonds and reflects the expected cash flow as of the measurement date. The expected returns on plan assets and discount rates for the non-U.S. plans are based on local factors, including each plan’s investment approach, local interest rates and plan participant profiles.
Experience gains and losses and the effects of changes in actuarial assumptions are generally amortized over a period no longer than the expected average future service of active employees.
Our funding policy is to contribute amounts sufficient to meet minimum funding requirements in accordance with the applicable employee benefit and tax laws that the plans are subject to, plus such additional amounts as we may determine to be appropriate. In 2024 and 2023, we contributed $10.6 million and $8.8 million, respectively, to the defined benefit pension plans. We do not expect the contributions for 2025 to differ materially from the 2024 contributions.
Change in benefit obligation and fair value of plan assets:
Defined Benefit Pension PlansPostemployment Arrangements
Year Ended December 31,Year Ended December 31,
2024202320242023
Benefit obligation:
Benefit obligation, January 1$224.3 $228.6 $142.2 $130.8 
Service cost1.6 2.4 2.9 3.4 
Interest cost8.5 11.1 5.9 5.7 
Amendments, curtailments and settlements16.1 (0.4)(0.6)6.9 
Actuarial (gain) loss(23.1)(2.1)(12.4)6.3 
Benefits paid(11.7)(12.4)(11.4)(10.9)
Foreign currency translation0.3 (2.9)— — 
Benefit obligation, December 31$216.0 $224.3 $126.6 $142.2 
Fair value of plan assets:
Fair value of plan assets, January 1$45.5 $44.0 $— $— 
Actual return on plan assets2.0 3.9 — — 
Employer contributions10.6 8.8 — — 
Benefits paid(11.7)(12.4)— — 
Foreign currency translation and other(0.5)1.2 — — 
Fair value of plan assets, December 31$45.9 $45.5 $— $— 
Funded status, December 31$(170.1)$(178.8)$(126.6)$(142.2)
Funded status recognized in the balance sheet:
Other assets$1.5 $2.1 $— $— 
Other current liabilities(10.7)(8.6)(13.5)(11.9)
Long-term liabilities(160.9)(172.3)(113.1)(130.3)
$(170.1)$(178.8)$(126.6)$(142.2)
Weighted average assumptions:
Discount rate5.2 %4.6 %5.3 %4.6 %
Compensation increases2.5 %3.5 %3.5 %3.5 %
At December 31, 2024 and 2023, the accumulated benefit obligation for our defined benefit pension plans was $169.1 million and $179.5 million, respectively.
Defined benefit pension plans with benefit obligations in excess of plan assets:
Year Ended December 31,
20242023
Benefit obligation$(208.3)$(215.5)
Plan assets36.7 34.7 
 $(171.6)$(180.8)
At December 31, 2024, the estimated pension and other postemployment benefits expected to be paid over the next 10 years:
Defined Benefit Pension PlansPostemployment Arrangements
2025$12.3 $13.5 
202611.8 12.2 
202712.6 13.7 
202816.0 13.4 
202922.2 12.7 
2030 - 2034102.0 48.0