Universal Registration Document - Fiscal 2023

With respect to the assumptions provided in the above table, for Fiscal 2023, a reduction of 1% in the discount rate would increase the gross obligation to 1,056 million euros (compared with 902 million euros based on the assumptions used as of August 31, 2023), while a rise of 0.5% in the general long-term inflation rate would increase the gross obligation to 976 million euros.

Based on estimates derived from reasonable assumptions, the amount to be recorded in the income statement for defined benefit plans in Fiscal 2024 is 20 million euros.

Multi-employer plans

In the United States, as of August 31, 2023, Sodexo contributed to 47 multi-employer defined benefit pension plans under the terms of collective-bargaining agreements (“CBA”) that cover its union-represented employees. The risks of participating in these multi-employer plans are different to those of single-employer plans in the following respects:

• assets contributed to the multi-employer plan are used to provide benefits to all beneficiaries of the plan, including beneficiaries of other participating employers;
•  if a multi-employer plan is considered to be in “critical” status as defined by the U.S. Pension Protection Act of 2006, the plan will be required to adopt a rehabilitation plan which may require Sodexo to increase its required contributions to the plan;
• if a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may have to be borne by Sodexo and the other remaining participating employers; and
• if Sodexo ceases to participate in a multi-employer plan, entirely or partially in excess of a threshold, or if substantially all of the participating employers of a given plan cease to participate, Sodexo may be required to pay that plan an amount based on the value of unfunded vested benefits of the plan and the Sodexo’s pro-rata share of total plan contributions, referred to as withdrawal liability.

The Group does not have the ability to account for these multi-employer plans as defined benefit plans because it does not have timely access to information about plan assets, plan obligations, actuarial gains and losses, service costs, and interest costs. As such, the multi-employer plans are accounted for as defined contribution plans.

The Group contributed 12 million euros to U.S. multi-employer defined benefit plans in Fiscal 2023 and 11 million euros in Fiscal 2022. Of the contributions made by Sodexo, 57% and 2% were made to plans considered to be in “critical” status or “endangered” status respectively, as defined by the U.S. Pension Protection Act of 2006 and per each plan’s most-recent notice of plan funding status. Plans are generally considered to be in “critical” status when they are funded at less than 65%, among other factors, and are considered to be “endangered” when they are funded at 65% or more, but at less than 80%, among other factors.

5.1.1.2 OTHER EMPLOYEE BENEFITS

Other employee benefits, for an amount of 136 million euros as of August 31, 2023 (151 million euros as of August 31, 2022), mainly comprise a liability related to a deferred compensation program in the United States and obligations relating to long-service awards.

The total expense recognized with respect to these benefits in Fiscal 2023 was 8 million euros (8 million euros in Fiscal 2022).