Fiscal 2020 Universal Registration Document

STRUCTURE OF THE CHIEF EXECUTIVE OFFICER’S COMPENSATION FOR FISCAL 2021

Fixed compensation

The fixed compensation of the Chief Executive Officer is awarded as payment for the duties and responsibilities inherent to such a position.

Consequently, the following factors are considered:

• the level and complexity of the roles and responsibilities attributed to the Chief Executive Officer, who has the broadest powers to act on behalf of the Company in all circumstances and to represent the Company in its dealings with third parties;
• the skills, experience, expertise and professional profile of the holder of the position;
• market analyses and benchmark studies on the compensation awarded for comparable positions in peer companies.

The Chief Executive Officer’s annual fixed compensation is used as the yardstick for determining his annual variable compensation and long-term compensation. The amount of this fixed compensation is not systematically reviewed each year.

The Chief Executive Officer’s annual fixed compensation is 900,000 euro, unchanged since he was first appointed on January 23, 2018.

As stated earlier in this chapter, given the unprecedented sanitary crisis caused by the Covid-19 pandemic and the resulting social and economic impacts, the Board of Directors decided to reduce his fixed salary by 50% for the second half of Fiscal 2020 – a decision that was based on the Group’s underlying values of solidarity and fairness. This decision was fully supported by Denis Machuel and allowed him to express his solidarity with the Group’s employees.

Annual variable compensation

CALCULATION METHODS

The Chief Executive Officer’s annual variable compensation is intended to encourage the achievement of the annual performance targets determined by the Board of Directors in line with Sodexo’s strategy.

Based on the Compensation Committee’s recommendations, each year the Board of Directors ensures that the Chief Executive Officer’s variable compensation – which is governed by specific performance criteria – constitutes a sufficiently significant portion compared to his fixed compensation.

Provided that all the applicable targets are achieved, it amounts to 100% of his annual fixed compensation.

It is based mainly on financial criteria, as follows:

• 70% is contingent upon targets based on the Group’s financial performance for the fiscal year, including organic revenue growth, underlying operating profit margin, Group net income and free cash fl ow generation ;
• 30% is contingent upon non-financial targets, primarily quantitative targets (including occupational health and safety, talent management and Sodexo’s ranking in the Dow Jones Sustainability Index).

The annual variable compensation due to the Chief Executive Officer is calculated and set by the Board of Directors following the close of the fiscal year to which it applies.

In the first quarter of each year, based on the Compensation Committee’s recommendations, the Board of Directors reviews the various targets, their weightings, and the expected performance levels. It then sets:

• the trigger threshold under which no variable compensation is paid;
• the variable compensation target level, corresponding to the amount due when each target is reached; and
• the quantitative performance measurement, which also applies to non-financial criteria.

Consequently:

• 100% of the annual variable compensation is paid if the targets are achieved;
• 150% of the annual variable compensation is paid if the targets are exceeded.