Generally speaking, Publicis Groupe has introduced a stringent compensation policy designed to motivate employees so that they make a real contribution to the achievement of the Groupe’s strategic objectives and to ensure long-term performance.
The compensation structure is communicated to employees, shareholders and investors in a clear and transparent manner. Publicis Groupe refers to the recommendations of the Afep-Medef Code. The compensation policy for corporate officers is based on the same principles as applicable to employees: clarity, competitiveness (vis-à-vis competitors and in the markets in which Publicis Groupe operates), internal fairness, performance incentives and gender equality.
The structure of compensation is based on the position and responsibilities within the Groupe and combines the following elements: the basic salary (reflecting experience and responsibilities), the target variable compensation (reflecting performance during the year) and awards of performance shares (reflecting the contribution to the Groupe’s medium and long-term performance on the basis of quantitative criteria).
The compensation policy sets out the measurement methods to be applied to corporate officers to determine the extent to which they have satisfied the performance criteria specified for variable compensation and share-based compensation. To determine the extent to which corporate officers have satisfied these performance criteria, the Supervisory Board has regard to the proposals and work of the Compensation Committee, which prepares and checks, with the support in particular of the Secretary General and of the Executive Vice President, Group Chief Financial Officer, the level of achievement of performance criteria. These checks are documented and made available to the members of the Supervisory Board. The criteria used to distribute the annual fixed sum allocated by the General Shareholders’ Meeting to Supervisory Board members are set out in Section 3.2.1.2 of this document.
The principles of the compensation policy applicable to corporate officers, subject to approval by the General Shareholders’ Meeting on May 27, 2020, are also intended to apply to newly appointed corporate officers or those who are reappointed at the General Shareholders’ Meeting. For the Chair of the Supervisory Board and the Chair of the Management Board and the newly appointed members of the Management Board, the Supervisory Board may, on the proposal of the Compensation Committee, temporarily decide the fixed and variable compensation of the newly appointed corporate officer, taking into account, in particular, his or her profile and experience. This decision must be in the best interests of the Company and necessary to ensure the Groupe’s long-term future and/or viability.
For 2020, the Covid-19 pandemic is resulting in a considerable slowdown of the world’s economies through the cessation of non-essential economic activities.
There is talk of the largest recession in modern times, comparable to or even greater that experienced in times of war. The budgets prepared by the Groupe must therefore be reviewed regularly so that they can be adapted to economic developments as quickly as they become known, while at the same time taking appropriate measures to safeguard the future of the Company.
As a result, even though the system of compensation adopted by the Supervisory Board on the proposal of the Compensation Committee can be considered appropriate, it is clear that the budgets on which it was based are no longer up to date. In accordance with the law, which gives the Board full latitude to decide on executive compensation when exceptional circumstances so require, it is proposed that the proposals adopted by the Board be maintained with the insertion of the following clause.
In accordance with article L. 225-82-2 III, paragraph 2 of the French Commercial Code, the Supervisory Board may derogate from the application of the compensation policy if such derogation is temporary, triggered by exceptional circumstances, complies with the corporate interest, and necessary to ensure the sustainability or viability of the Company. Such circumstances result from and are already being observed as a result of the Covid-19 pandemic and require exceptional management of the Company, and the Supervisory Board meeting, following the recommendation of the Compensation Committee, used its best judgment to determine the variable compensation of corporate officers. In these very exceptional circumstances of an expected sharp recession, as already announced by experts and major institutions, the Supervisory Board will take into account, in its assessment of the performance of each member of the Management Board, whose overall variable compensation as a percentage of the fixed compensation remains unchanged, the manner in which the crisis will have been managed on the following fundamental aspects:
