3.2.1.5 Compensation policy for the Chairman of the Management Board
The compensation policy for the Chairman of the Management Board is based on the same items as those for all corporate officers set out in Section 3.2.1.1 and includes the items applicable to Management Board members presented in Section 3.2.1.4 as well as the specific items detailed below.
Fixed compensation
The Chairman of the Management Board receives fixed compensation in consideration for his role.
The gross annual compensation of Arthur Sadoun as Chairman of the Management Board of Publicis Groupe SA amounts to euro 1,000,000 per year, unchanged since June 1, 2017.
Annual variable compensation
The Chairman of the Management Board may receive annual variable compensation.
The Supervisory Board, on the recommendation of the Compensation Committee, decided on the criteria for the variable compensation of Arthur Sadoun for the 2021 financial year.
The variable compensation of Arthur Sadoun, which, if targets are met, may represent up to 200% of his fixed compensation, without exceeding this percentage, is based on the following for the 2021 financial year:
- four financial and Stock Exchange criteria, accounting for 75% of the overall weight of the criteria, taking into consideration trends in Publicis Groupe growth and profitability:
- organic growth in Groupe revenue based on the Target submitted to the Supervisory Board for 25% (10% if the Commitment (annual budget) is achieved) – see Section 3.2.1.4 “Annual variable compensation”,
- operating margin (the highest in the market compared with that of a peer group comprising three other major international communications groups, i.e. Omnicom, WPP and IPG) accounting for 25% (see Section 3.2.1.4 “Annual variable compensation”),
- for 10%, the rate of change of the Groupe’s headline diluted earnings per share (headline diluted EPS), comparing the diluted headline EPS for the fiscal year and the diluted headline EPS for fiscal year 2019 (the year 2020 is not significant), and
- for 15%, the TSR (Total Shareholder Return) which reflects the difference between the share price of the Publicis Groupe SA share at the end of the fiscal year in question and the stock market price at the beginning of the same fiscal year (based on the average of the opening prices recorded over the last 20 trading days of the year, compared to the average of the opening prices over the first 20 trading days of the year), plus the amount of dividends paid during the financial year.
These last two criteria are directly related to the immediate 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 (operating margin and EPS), and encourage overperformance. These criteria are unchanged compared to 2020;
- quantifiable 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:
- the implementation of the Epsilon Product Plan for 15%, and
- Corporate Social Responsibility (CSR) for 10%. The assessment of the progress of the CSR policy with regard to the 2025 trajectory will be made on the basis of the following priorities:
- Diversity, Equality and Inclusion: the trajectory aims for 45% women among key executives in 2025 with a target benchmark of 41% at the end of 2021, and
- Combating climate change: the trajectory aims for 100% of energy from direct renewable sources by 2030 with a target benchmark of around +8% at the end of 2021 compared to 2020.
ARTHUR SADOUN
Annual variable compensation target for 2021
Financial targets 75 %
- Organic growth 25 %
- Operating margin 25 %
- EPS 10 %
- TSR 15 %
Non-Financial Quantitative targets 25 %
- CRS 10 %
- Epsilon Products Plan 15 %
Long-term variable share-based compensation
The Chairman of the Management Board may receive long-term variable share-based compensation.
Publicis Groupe decided to set up a new share plan each year for management and certain key employees of the Groupe. As Chairman of the Management Board, Arthur Sadoun is also eligible for this new plan from 2021. Under this plan, the number of shares that may be delivered at the end of a three-year vesting period (except in the event of death or disability), i.e. in 2024 for the “LTIP 2021 Directoire”, will depend – for 90% of the shares awarded – on Publicis Groupe’s average financial performance over a three-year period (2021-2023) as compared with the financial performance of a peer group comprising WPP, Omnicom, IPG and Publicis Groupe, plus two conditions relating to Corporate Social Responsibility for 10% of the shares awarded.