6.5.1.3 Compensation policy for the Chief Executive Officer for Fiscal 2023
Structure of the compensation
The Chief Executive Officer’s compensation includes annual fixed and variable compensation and, if appropriate long-term compensation. The Chief Executive Officer also receives other benefits, such as a supplemental pension plan, collective health and benefit plans, a termination benefit and/or a non-compete indemnity, as well as benefits in kind.
The aim of the compensation policy for the Chief Executive Officer is to achieve a balance between short and long-term performance in order to promote the Group’s development for the benefit of all of its stakeholders, in line with a sound risk management strategy.
To this end, and with a view to protecting stakeholders interests, the Company strives to ensure consistency between the Chief Executive Officer’s compensation package and Sodexo’s performance. In this respect, a correlation analysis between the change in the Chief Executive Officer’s compensation and the change in the stock market performance compared with companies on the benchmark panel is presented every year to the Compensation Committee.
It is specified that the Chairwoman and Chief Executive Officer does not receive compensation for her office as Director of Sodexo S.A.
TARGET STRUCTURE OF THE CHIEF EXECUTIVE OFFICER’S COMPENSATION
This diagram shows the target structure of the chief executive officer’s compensation
75% subject to performance conditions
50% long-term compensation
Performance conditions
- Presence during 3-year vesting period
- 20% Revenue
- 30% UOP margin (excluding change effect)
- 30% TSR vs peer panel
- 20% Corporate Responsibility
25% not subject to performance conditions
50% cash: annual compensation
25% Fixed
25% annual variable
Performance conditions
70% financial:
- 20% organic revenue growth;
- 20% underlying operating margin excluding change effect;
- 10% client retention rate;
- 10% group net income;
- 10% cash flow generation
30% non-financial:
- 10% occupational health and safety;
- 10% talent management;
- 10% DJSI ranking
Fixed compensation
The fixed compensation of the Chief Executive Officer is awarded as payment for the duties and responsibilities inherent to such a position.
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 benchmarks on the compensation awarded for comparable positions in peer companies and their market reference.
The Chief Executive Officer’s annual fixed compensation is the basis for determining his/her annual variable compensation and long-term compensation. The amount of this fixed compensation is not systematically reviewed each year.
The annual fixed compensation of Sophie Bellon as Chairwoman and Chief Executive Officer since March 1, 2022 is 900,000 euros.
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.
The variable element amounts to 100% of his/her annual fixed compensation, on full achievement of targets.
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 cash flow generation. In addition, the financial criterion of client retention rate has been added to the previous criteria from Fiscal 2023 onwards. The Board of Directors believes this represents one of the key levers in the model of sustainable and profitable growth for the Group. The percentages applicable to each of these criteria are shown in the above graph,
- 30% is contingent upon non-financial and quantitative targets (including occupational health and safety, talent management, Sodexo’s ranking in the Dow Jones Sustainability Index of environmental, social and governance performance).