This policy is adopted once the Supervisory Board has ensured i) that it is in line with the best interests of Publicis Groupe while ensuring that it is attractive and competitive to make it possible to attract and retain top talent, and ii) that it will contribute to the Groupe’s long-term future while at the same time serving the commercial strategy set out in Section 1.3.2 of this document. In this regard, the compensation policy is built on a fair balance between the items of compensation (fixed compensation, target annual variable compensation and long-term variable compensation, in particular using performance shares) to reflect market practices and incorporate the Groupe’s performance criteria over the medium to long term.
In this respect, the variable compensation of the members of the Management Board includes a preponderant portion of financial criteria based on targets communicated to the market. They are supplemented by criteria related to the Groupe’s Corporate Social Responsibility (CSR) ambitions, also publicly communicated. These varied and measurable criteria are relevant and transparent to support both short- and long-term performance.
The other performance criteria are all quantifiable, measurable, set in advance and validated by the Compensation Committee on the basis of a clear and pre-determined scale.
In accordance with the decisions of the Supervisory Board of February 2, 2022 and March 17, 2022, upon the proposals of the Compensation Committee of February 1, 2022 and March 15, 2022, the following substantial changes to the compensation policy previously approved by the shareholders at the last General Meeting of May 26, 2021 will be proposed to the General Shareholders’ Meeting of May 25, 2022 :
- the structure of the compensation of the Supervisory Board members, which has been unchanged since 2005, would be brought into line with market practices (i) by introducing fixed compensation of euro 10,000 per year for a member of the Board plus euro 7,500 for a Committee Chair, and (ii) by increasing the amount of compensation related to attendance at meetings, which would change from euro 5,000 to euro 6,000 per meeting for members of the Board or Committees and euro 7,500 per meeting for Committee Chairs;
- the annual compensation budget for members of the Supervisory Board would be increased from euro 1.2 million to euro 1.5 million;
- the fixed compensation of the Chairman of the Management Board, not reviewed since June 1, 2017, would be increased to euro 1,170,000 per year, representing an increase of 17%;
- the annual variable compensation of the Chairman of the Management Board would be subject to more stringent performance criteria in terms of organic growth, operating margin, Free Cash Flow and Corporate Social Responsibility (CSR). The criteria related to organic growth and operating margin would now be half based on the Groupe’s internal objectives and half compared to those of our peer group composed of the other three main global communications groups, namely Omnicom, WPP and IPG;
- in order to encourage overperformance and positioning as a leader among peers and to reconcile the variable compensation conditions with the other Groupe executives, an overperformance clause would apply to the absolute organic growth and operating margin criteria for all members of the Management Board. Thus, the annual variable compensation for these two criteria could be increased if the objectives are exceeded, with a cap of 20% on each of these two criteria;
- the performance criteria applicable to free performance shares granted to the Chairman of the Management Board would be modified and would include a relative TSR criterion (Total Shareholder Return) until now included in the annual variable compensation targets. This criterion would be assessed over three years and compared to the performance of the CAC 40 groups. The Corporate Social Responsibility criteria would be supplemented by a criterion on talent management, a material strategic issue for the Groupe. The weighting of each performance criterion of the plan in performance shares would be adapted accordingly (35% for organic growth, 35% for the operating margin, 15% for the TSR and 15% for CSR and Talent);
