Fiscal 2022 Universal Registration Document

6.5.4 Compensation policy for members of the Executive Committee

6.5 Compensation

6.5.4 Compensation policy for members of the Executive Committee

6.5.4 Compensation policy for members of the Executive Committee

The compensation policy applicable to members of the Executive Committee is reviewed each year by the Compensation Committee and the Board of Directors. It is fully aligned with that of the Chief Executive Officer.

The compensation of Executive Committee members is made up of the following:

  • a fixed salary;
  • annual variable compensation.

The annual variable compensation represents between 55% and 90% of the fixed salary.

The bonus is calculated and paid following the close of the fiscal year to which it applies and after the Board of Directors has approved the financial statements;

a long-term incentive plan, consisting of restricted share grants. Shares are subject to continued presence and performance conditions.

The applicable performance conditions are equivalent to those set for the Chief Executive Officer and described in section 6.5.1.3. of this Universal Registration Document.

In addition to this compensation, Executive Committee members may receive benefits in kind (primarily a car and a travel allowance) and pension plan contributions (under defined contribution and, where applicable, defined benefit plans).

Total compensation paid during Fiscal 2022 by the Group to members of the Executive Committee in office as of August 31, 2022 (including the Chairwoman and Chief Executive Officer, details of whose compensation are provided in section 6.5.2.1 of this document), amounted to 11,035,908 euros.

This amount comprises:

  • a fixed portion of 8,264,799 euros;
  • a variable portion of 2,771,109 euros comprising variable compensation due for the Second half of Fiscal 2021 to members of the Executive Committee; to be reminded that Sophie Bellon, Chairwoman of the Board of Directors was not eligible for the variable compensation for Fiscal 2021 in accordance with the policy that applied to her).

6.5.5 Description of the long-term incentive plan – Restricted share plans

Sodexo's long-term incentive policy has two objectives:

  • to incentivize the Group's executives, managers and other employees by aligning their financial interests with those of Sodexo’s shareholders;
  • to attract and retain the intra-entrepreneurs needed to expand and strengthen Sodexo’s market leadership.

Since Fiscal 2013, long-term incentive plans have consisted exclusively of restricted share plans.

In the 20th resolution adopted at the Combined Annual Shareholders Meeting on December 14, 2021, the Company’s shareholders renewed the authorization given to the Board of Directors to grant, on one or more occasions, existing and/or newly issued restricted shares of the Company to employees and Corporate Officers of the Group.

The terms and conditions of the restricted share plans (including the related continued presence and performance conditions) and the list of beneficiaries are determined by the Board of Directors based on recommendations issued by the Compensation Committee.

As from the 2021 plans, the terms and conditions of the restricted share plans granted within the Group are as follows:

  • the restricted share grants take place annually and are decided during the first half of each fiscal year, after the publication of the financial statements for the previous fiscal year;
  • vesting of the shares is subject to a three-year continued presence condition for each beneficiary and to performance conditions assessed over a three-year period.

The restricted share grants have no dilutive impact for shareholders as the shares concerned are treasury shares held by the Company.

During Fiscal 2022, the vesting periods of the restricted share plans set up by the Board of Directors on September 14, 2017 and April 27, 2018 ended on September 14, 2021 and April 27, 2022, respectively.

The plan granted on September 14, 2017 included the following two performance conditions:

  • outperform the CAC 40 GR index of Sodexo’s TSR by 12% over a four-year period;
  • average growth in Sodexo’s operating profit at least 10% per year over four years.

These performance conditions were not met, as Sodexo’s TSR decreased by 17.7% versus an increase of 29.6% for the CAC 40 GR index, and average annual growth in operating profit was a negative 10.95%.

As a result, on September 14, 2021, 5,700 shares only subject to presence condition have vested under the plan granted on September 14, 2017.

The plan granted on April 27, 2018 included the following three performance conditions:

  • outperform two benchmark peer groups of Sodexo’s TSR over a four-year period — the CAC 40 GR index by 50% and an international industry peer group by 50%, made up of the following groups: ABM, Aramark, CBRE, Compass, Edenred, Elior, Elis, G4S, ISS, JLL, Rentokil, and Securitas. It should be noted that G4S is no longer a listed company and has therefore been excluded from the benchmark peer group;
  • average growth in Sodexo’s operating profit of between +8 and +10% per year over four financial years;
  • a diversity performance condition geared toward encouraging the promotion of women to top management positions;

With an average growth in operating profit of -9.9%, the growth condition was not met. Neither was the relative performance condition for Sodexo’s TSR to outperform the CAC 40 GR index, as it came in lower than the bottom quartile. The condition for Sodexo’s TSR to outperform its industry peer group was partially met with a result of 27%. The diversity performance condition was achieved, with women occupying more than 40% of the roles at the highest level of the Company.

As a result, on April 27, 2022, 434,672 shares had vested under the plan granted on April 27, 2018.