As the CSR criteria could be illegal and/or uncertain and, moreover, cannot be applied to all our employees in view of the changes in the regulations in the United States, it has been decided to remove them from our LTIP plans. The performance conditions of the long-term variable compensation of the Chair and Chief Executive Officer will then be solely based on the achievement of financial criteria assessed on a larger reference group, in order to take into account the reorganizations underway in our industry.
Fixed compensation
The fixed compensation of the Chair and Chief Executive Officer is determined by taking into account:
- the scope of responsibility and the complexity of tasks;
- the career path and experience of the person holding the position;
- consistency compared to the other Groupe functions (internal equity);
- market practice for identical or comparable positions (external competitiveness).
The level of fixed compensation of the Chair and Chief Executive Officer is reviewed every two years, as for other senior executives, in order to regularly assess its relevance and competitiveness.
Compensation of the Chair and Chief Executive Officer is generally reassessed at relatively long intervals, pursuant to 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.
The gross annual fixed compensation of Arthur Sadoun as Chair and Chief Executive Officer of Publicis Groupe SA amounts to euro 1,170,000 per year. This gross annual fixed compensation has been applicable to him since January 1, 2022.
The analysis of Mr. Arthur Sadoun’s fixed compensation in comparison with that of peers in the “CAC 25” reference group(1) (as illustrated below), as well as that of the executives of Publicis Groupe’s main competitors, i.e. WPP, Omnicom and IPG, shows that his fixed compensation remains below the median of the “CAC 25” and that of the group of comparable companies (i.e. WPP, Omnicom and IPG). It is proposed that it be left unchanged.
- Reference Group 1st quartile: 1,030
- Publicis Current Fixed Compensation: 1,170
- Median Reference Group: 1,300
- Reference Group 3rd quartile: 1,550
Annual variable compensation
The annual variable compensation is intended to represent a substantial (33%), but not predominant, portion of the total annual target compensation of the Chair and Chief Executive Officer, if the objectives set are achieved. It encourages overperformance, which is rewarded when the objectives are exceeded.
Annual variable compensation is subject to measurable and verifiable performance conditions for both financial and non-financial objectives.
No minimum amount is guaranteed. Annual variable compensation is calculated, if applicable, on a pro rata 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 criteria whose performance is measurable. These criteria are assessed separately and take into account:
- the Groupe’s overall performance (organic growth and operating margin);
- the achievement of objectives related to Corporate Social Responsibility (CSR);
- the achievement, where applicable, of the executive’s individual objectives, assessed a posteriori by taking into account the quantitative results and the context in which the performance was achieved.
These parameters are determined in advance for each financial year and proposed by the Compensation Committee to the Board of Directors.
In order for the variable portion of Mr. Arthur Sadoun’s compensation to better motivate good performance and more strongly penalize under-performance, objectives are set in scales for the financial criteria (between scales, on a proportional basis):
- if the first scale was not reached, the corresponding portion of the annual variable compensation would be zero;
- at the first scale, the corresponding portion of the annual variable compensation would be 80%;
- at the second scale, the corresponding portion of the annual variable compensation would be 100%;
- if the third scale is reached or exceeded, the corresponding portion of the annual variable compensation would be 162.5%.
Thus, the annual variable compensation, the target of which is 200% of the annual fixed compensation, may be 300% in the best case. A contrario, in case of underperformance, the annual variable compensation would be significantly negatively impacted and could be zero.