The Chief Executive Officer is a beneficiary of a defined benefit pension plan governed by article L.137-11-2 of the French Social Security Code. This plan is also available to the Group’s most senior executives holding an employment contract with one of its French subsidiaries.
This pension plan was introduced in 2021 in line with the following rules: subject to one year of seniority within the Group, pension rights of up to 0.5% per year are granted for the first five years of the plan, and then up to 1% beyond five years, not exceeding a total of 10%. The rights are determined based on the fixed and variable compensation received during the calendar year. The rights vest subject to an achievement rate for the Chief Executive Officer’s annual variable compensation targets of at least 80%. The resulting pension will top up the pensions provided by the basic compulsory plans and will not generate any corresponding obligation on the Company’s balance sheet.
This benefit was approved by the January 21, 2020 Annual Shareholders Meeting in the twelfth resolution on the supplemental pension plan for the Chief Executive Officer.
Until December 31, 2019, the Denis Machel was a beneficiary of a defined benefit pension plan governed by article 39 of the French General Tax Code and article L.137-11-1 of the French Social Security Code. Under this supplemental pension plan (subject to a minimum of five years of presence in the plan), as a member of the plan for at least 15 years, the pension paid could represent up to 15% of the average of his/her last three years' fixed compensation preceding his/her retirement. This pension complements the pensions due to him/her under compulsory pension plans, provided that he/she is a Corporate Officer or employee of the Company at the time of his/her retirement.
The entitlements under this plan would only accrue if the achievement rate for the Chief Executive Officer's annual variable compensation targets was at least 80%. If this rate were to be reached, the beneficiary would acquire 1% additional rights to the defined benefit plan for the year concerned. However, an achievement rate of less than 80% would not trigger additional rights under the supplemental pension plan for that year.
This plan has been closed to new members since February 28, 2018. In order to comply with the PACTE Act and with the Ordonnance of July 3, 2019 implementing the EU Pensions Portability Directive into French law, rights acquired as at December 31, 2019, were frozen at that date. As this plan is not portable, its members will only be eligible for it if they are still with Sodexo on the date they retire. However, pursuant to the requirements of French ministerial circular no. 105/2004 of March 8, 2004, the plan rules stipulate that, in the event of dismissal past the age of 55, the beneficiary retains the rights established at the date of his or her departure from the Company, provided that he or she does not resume his or her professional activity.
The Chief Executive Officer has the use of a Company car, the insurance, maintenance and fuel costs (related to its professional use) are covered by Sodexo.
The Chief Executive Officer is a member of the Company's collective health and benefit plans, subject to the same terms and conditions as those applicable to all employees of the Group's French entities.
As the Chief Executive Officerdoes not have a French employment contract, the Company subscribes to a private unemployment insurance policy with the French association of unemployment insurance for Corporate Officers (Association pour la garantie sociale des chefs et dirigeants d'entreprises - GSC). Under this policy, if the Chief Executive Officer were to lose his/her office, he/she would receive benefits for a maximum period of 24 months.
The compensation policy does not permit the granting of exceptional compensation to the Chief Executive Officer.
If one or more Deputy Chief Executive Officers were appointed, the principles and criteria for determining, allocating and awarding the compensation components provided for in the Chief Executive Officer's compensation policy would also apply to the Deputy Chief Executive Officer(s). In such a case, the Board of Directors, acting on the recommendation of the Compensation Committee, would adapt the principles and criteria to the person(s) concerned in order to determine the applicable targets, performance levels, conditions, compensation structures and maximum percentages of the fixed compensation that their variable compensation may represent (which may not be higher than those set for the Chief Executive Officer).
If the Chief Executive Officer were to become a member of the Company's Board of Directors, he/she would not receive any directors' compensation.
Pursuant to the recommendations of the AFEP-MEDEF Code, if a new Chief Executive Officer is recruited from outside Sodexo, the Board of Directors may decide to grant him or her an indemnity (in cash and/or shares) in order to compensate for any loss of previous compensation or benefits (excluding pension benefits).
This indemnity would be arranged so as to reflect the type, risk profile and the vesting horizon of the lost benefits.
In accordance with article L.22-10-8 of the French Commercial Code, the payment or implementation of any such compensation would be subject to shareholder approval.
The compensation awarded to directors includes is made up of fixed and variable compensation components and a travel allowance for directors coming from the United States.
Directors are not eligible for any long-term compensation, supplemental pension plan or compensation or benefits that may result from any change in their duties, new duties, or a removal from office.
