The Board of Directors considers that the long-term variable compensation plan – which also applies to other key positions within the Company – is particularly suited to the position of Chief Executive Officer in view of the direct contribution that he/she is expected to make to Sodexo’s long-term performance. This plan – which is based on performance share grants subject to criteria selected by the Board of Directors – is in direct alignment with the Company’s strategic priorities. The system therefore helps to increase the executive officer’s motivation and loyalty while aligning his/her interests with those of the Company and its shareholders. The applicable performance conditions are based on (i) organic revenue growth and underlying operating profit margin over a period of several years, in line with market guidance (ii) Sodexo's share performance compared with a peer group, and (iii) corporate responsibility criteria.
Sodexo’s long-term compensation program currently consists solely of performance share grants.
Performance share grants are decided by the Board of Directors, acting on the recommendations issued by the Compensation Committee, during the first half of each fiscal year, after the publication of the financial statements for the previous fiscal year.
The vesting period is three years, in line with the period over which performance conditions are measured and in line with market practices.
The Board of Directors has capped the value of the performance shares granted to the Chief Executive Officer at 150% of his/her total annual compensation (comprising fixed compensation and annual variable compensation, assuming targets achieved).
In addition, the percentage of performance shares granted to him/her which was limited to 5% of the total shares granted annually by the Board, has been raised to 8% as a result of the review of the annual variable compensation target.
The proportion of the performance shares that will vest depends on the achievement of both internal and external performance conditions, as measured over a three-year period. The achievement rates will be disclosed on a criterion-by-criterion basis once the Board of Directors has assessed whether the performance targets have been reached.
The performance conditions reflect a good balance between operating performance, investor confidence and the Group’s corporate responsibility performance. They are fully in line with Sodexo’s value creation model aimed at achieving sustainable and profitable growth and meet the expectations of all of the Company’s stakeholders.
The criteria used are intended to measure overall performance and are directly related to the Group’s main strategic objectives, with the following weightings:
As the Group’s medium-term objectives are not publicly disclosed, the organic growth for revenue and underlying operating margin targets will remain confidential.
A revised Sustainable Development index is introduced for the Fiscal 2024 LTI plan. This indicator, which is aligned with the Group's Net-Zero 2040 ambition, is a continuation of the Better Tomorrow 2025 commitments:
More information is available in chapter 2 of the present document.
