The fixed part is determined by taking into account:
The level of fixed compensation is reviewed every two years both for the Management Board members as for the other Groupe executives in order to regularly assess its relevance and competitiveness. Compensation for Management Board members is generally reassessed at relatively long intervals, in accordance with the Afep-Medef Corporate Governance Code recommendations, and when such a revision is justified, for example in the event of a change in scope or an adjustment relative to market practices or internal practices.
Annual variable compensation is intended to represent a substantial part of the total annual compensation of the Management Board member, if objectives set are achieved. It encourages overperformance as a specific reward is paid when the objectives are exceeded. Annual variable compensation is subject to financial, and non- financial, quantifiable performance conditions. No minimum amount is guaranteed. Annual variable compensation is calculated on a prorata basis for the year of the start of the term of office to the year of the end of the term of office. It is based on several quantifiable and qualitative criteria, assessed separately, which take into account:
These parameters are determined in advance for each financial year and proposed by the Compensation Committee to the Supervisory Board for approval.
For the purposes of illustration, in 2020, the organic growth and operating margin targets will be the same for all Management Board members and defined as follows:
Detailed elements of annual variable compensation for the 2020 financial year are explained below in Section 3.2.1.5 for the Chair of the Management Board and further down this section for the other members of the Management Board.
The share-based compensation program is meant to incentivize on a long-term basis. It is subject to stringent performance conditions to develop loyalty and encourage the organization’s key talents over the long-term and common interests with Publicis Groupe SA shareholders (see Section 6.6 Note 30 to the consolidated financial statements).
The performance shares are not only intended to incentivize Executive corporate officers over the long-term but also to retain them and to help align their interests with the best interests of the Company and shareholders. The members of the Management Board may therefore receive compensation in the form of Publicis Groupe shares, specifying that the allocation of shares is subject to performance and continued presence conditions to be met over a period generally set at three years. By way of illustration, the members of the Management Board currently benefit from the “LTIP Directoire” performance share plan, which is set up every three years.
The acquisition of Publicis Groupe shares is subject to performance criteria that are measured following a three-year period, such that the total number of shares delivered will depend on the level of achievement of financial performance objectives, namely achieving a certain rate of organic growth and an operating margin compared to a peer group of companies competing with Publicis Groupe. Since 2019, some of the Publicis Groupe shares awarded are also subject to a CSR (Corporate Social Responsibility) criterion.
The number of shares actually awarded is determined in accordance with the level of attainment of these performance targets. Moreover, the vesting of Publicis Groupe shares is also subject to the fulfillment of continued presence during the three-year vesting period. To take into account the three-year grant period, this plan is subject to an annual valuation during the three-year vesting period in the financial statements.
