If the targets are achieved, the variable compensation is equal to 100% of the fixed compensation; this can be increased up to a limit of 150% if the targets are exceeded.
The precise targets set at the beginning of the fiscal year are predominantly based on financial parameters, as presented below.
As of Fiscal 2023, the criterion of client retention rate has been added to the existing financial targets. The Board of Directors believes this constitutes a key lever in the model in the Company's sustainable and profitable growth model.
| TARGETS | WEIGHTING | MAXIMUM IN% OF TARGET | ACHIEVEMENT RATE | CORRESPONDING AMOUNT (in euros) | |
| 70% based on financial targets | Organic growth | 20% | 185% | 185% | 333,000 |
|---|---|---|---|---|---|
| Client retention | 10% | 100% | 0% | 0 | |
| Underlying operating profit margin (excluding exchange rate impacts) | 20% | 185% | 123% | 222,075 | |
| Growth in Group net income | 10% | 180% | 144% | 129,600 | |
| Free cash flow | 10% | 180% | 113% | 101,520 | |
| 30% based on non financial targets | Health and safety target; | 10% | 100% | 0% | 0 |
| Talent management | 10% | 100% | 100% | 90,000 | |
| Dow Jones Sustainability Index, in the top three for the industry | 10% | 100% | 100% | 90,000 | |
| TOTAL ANNUAL VARIABLE COMPENSATION AWARDED FOR FISCAL 2023 | 100% | 150% | 107% | 966,195 | |
In Fiscal 2023, the Group’s strong financial performance has resulted in the outperformance of the organic revenue growth, underlying profit margin, net income (Group share) and free cash flow targets. The client retention rate criteria, introduced in the annual variable compensation for Fiscal 2023 as a key lever for sustainable and profitable growth, reached a record 95.2%, +70 bps higher than the previous year. However, this excellent result was not enough to reach the very ambitious target set at the start of the year.
With regard to the achievement of non-financial targets, two criteria were fully met for Fiscal 2023. Talent management criteria, comprising three indicators aimed at promoting women to operational executive roles, increasing retention rate and internal promotions versus external executive recruitments, was achieved. Sodexo was ranked second in the latest DJSI sector ranking, above the defined target. On the other hand, despite the 15.4% reduction in the Lost Time Injury Rate (LTIR) to 0.55 for Fiscal 2023, the Health and Safety target set for Fiscal 2023 was not achieved.
In accordance with the compensation policy for the Chief Executive Officer approved by the Shareholders Meeting of December 19, 2022 and the authorization of the Shareholders Meeting of December 14, 2021 (twentieth resolution), on January 31, 2023, the Board of Directors decided to grant Sophie Bellon 24,500 performance shares (i.e., 0.02% of the share capital and 2.9% of the total number of shares granted in the fiscal year).
The value of the grant amounts to 1,784,516 euros, i.e., approximately 100% of her target annual fixed and variable compensation.
The shares will vest after a vesting period of three years, subject to achieving the performance conditions related to the Group’s main strategic objectives as follows:
| SODEXO TSR RANK | PERCENTAGE OF SHARES THAT VEST * |
|---|---|
| SODEXO TSR RANK
1st Quartile |
PERCENTAGE OF SHARES THAT VEST * 100% |
| SODEXO TSR RANK
2nd Quartile |
PERCENTAGE OF SHARES THAT VEST * 50-100% |
| SODEXO TSR RANK Median |
PERCENTAGE OF SHARES THAT VEST * 50% |
| SODEXO TSR RANK
Below the median |
PERCENTAGE OF SHARES THAT VEST * 0% |
* Between the two targets, the percentage of shares vested will be linearly proportional and rounded down to the nearest whole number.
