2020 Annual Financial Report

Chapter 3 : Governance and compensation

Annual variable compensation to be paid in 2021 for financial year 2020

The variable part of Arthur Sadoun’s compensation, which, if targets are met, may represent up to 200% of his fixed compensation, without exceeding this percentage, for financial year 2020, is based on financial and Stock Exchange performance criteria, essentially based, on the one hand, a comparison with the performance of the main competitors of Publicis Groupe (Omnicom, WPP and IPG) and, on the other hand, individual quantifiable non-financial performance criteria, considered as major for the development of the Groupe. The compensation of the Chairman of the Management Board for 2020 is thus based on two types of criteria:

  • three financial performance and Stock Exchange criteria, accounting for 75% of the overall weight of the criteria, taking into consideration trends in Publicis Groupe growth and profitability:
  • the Groupe’s organic revenue growth based on the Commitment submitted to the Supervisory Board for 25%,
  • the operating margin (the highest in the market compared to that of a peer group composed of the other three main global communications groups, namely Omnicom, WPP and IPG) for 25%, and
  • for 25%, the rate of change of the Groupe’s headline diluted earnings per share (headline diluted EPS), comparing the headline diluted earnings per share of the financial year and the average headline diluted earnings per share of the two previous financial years and the TSR (Total Shareholder Return) which reflects the difference between the share price of Publicis Groupe SA at the end of the financial year under review and the share price at the start of that same year (on the basis of the average of the opening listed share prices recorded in the last 20 trading sessions in the year, compared to the average of the opening listed share prices in the first 20 trading sessions of the year), increased by the amount of the dividends paid during the financial year. This criterion is directly linked to the interests of shareholders.

These financial and Stock Exchange performance criteria were chosen by the Supervisory Board, following the proposal of the Compensation Committee, because they best express the quality of the Company’s performance. Two of them are measured in comparison with the main competitors of Publicis Groupe, thus encouraging over performance:

  • individual non-financial criteria corresponding to 25% of the overall weight of the criteria in order to value the implementation of key strategic actions which will yield long-term effects on the Groupe’s development:
  • development of “data and Epsilon Cloud” accounting for 8%,
  • execution of the Digital Business Transformation development plan (Publicis Sapient) accounting for 8%, and
  • two CSR criteria accounting for 9%:
  • 40% women on the Groupe’s key Executive Committees, and
  • 6% increase in the Groupe’s consumption of renewable energy to the detriment of fossil fuels (compared with 2019 – 31.3%).

In addition, as indicated in the compensation policy for the 2020 financial year, in the 2019 Universal Registration Document (see Section 3.2.1.1 “Exceptional items related to the Covid-19 pandemic”), the valuation of the performance of Arthur Sadoun takes into account, for the year 2020, without modifying his overall variable portion as a percentage of the fixed amount, his ability to manage the crisis by ensuring the health and safety of employees, maintaining smooth operations, protecting revenue and the client portfolios, rigorously managing costs, taking appropriate measures for the strict management of resources and the protection of the Groupe’s assets.

In accordance with the compensation policy adopted for the 2020 financial year, the Supervisory Board, after consulting the Compensation Committee, decided to take into account, in its assessment of the performance of Arthur Sadoun, the fundamental way in which the Covid-19 crisis was managed as described in Section 3.2.2.3 of this document.