Universal Registration Document - Fiscal 2024

Introduction

5.2 Share-based payments
ACCOUNTING PRINCIPLES

Some Group employees receive compensation in the form of share-based payments, for which payment is made in equity instruments.

In accordance with IFRS 2 “Share-based Payments”, these plans are classified as equity-settled share-based payment transactions and, accordingly, the services compensated by these plans are recognized as an operating expense over the vesting period (i.e. the period in which the service and, where applicable, the performance conditions are fulfilled), with a corresponding entry recorded in shareholders' equity.

The services compensated by these plans are recognized as an expense, with the offset recognized in shareholders’ equity, over the vesting period. The amount of expense recognized in each period is determined by reference to the fair value of the equity instruments granted, as of the grant date.

The fair value of restricted shares is estimated at the date of grant based on the share price at that date after deductions for dividends on the shares that will not be paid to beneficiaries during the vesting period. The fair value of restricted shares subject to a performance condition based on Total Shareholder Return is estimated using a binomial model that takes into account the vesting conditions.

Each year, Sodexo reassesses the number of shares that are likely to be delivered to beneficiaries of restricted shares based on the applicable vesting conditions. The impact of any change in estimates is recognized in the income statement, with the offset recognized in shareholders’ equity.

5.2.1 Performance free share plans
PRINCIPLE FEATURES OF RESTRICTED SHARE PLANS

Rules governing restricted share plans are as follows:

  • shares vest only if the beneficiary is still working for the Group on the vesting date; in addition, some restricted share grants are subject to performance conditions;
  • the presence condition is 3 years from the grant date, which is consistent with the acquisition period and the performance conditions evaluation; this presence condition applies to all beneficiaries;
  • the proportion of shares subject to a performance condition ranges from 10% to 100%, depending on the total number of shares awarded and on the role of the beneficiary in the company.

The performance criteria applied are directly linked to the Group's strategic priorities and are describes as follows:

  • two criteria linked to the financial performance with the revenue and the underlying operating profit margin excluding currency effects from 2020 plans;
  • two criteria are subject to the achievement of Corporate Responsibility objectives including diversity in top Group management as well as an internal sustainable development index for the shares granted since 2020;
  • a performance criterion is related to stock market performance with the TSR (Total Shareholder Return) of Sodexo compared to that of one peer group. This one is made up of companies selected based on their size, the similarity of their operations to those of Sodexo. For the plan 2022, 7 companies were included in the panel (Aramark, Compass, Edenred, Elior, ISS, Rentokil, Securitas). For the plan 2023, it is composed of the same companies, with the removal of Edenred post the spin-off of Pluxee (ex Benefits & Rewards Services activity). For the 2024 plan, the panel is made up of the six companies mentioned above, excluding Edenred.
MOVEMENTS IN FISCAL 2024 AND FISCAL 2023

The table below shows movements in restricted shares during the fiscal year:

not-included FISCAL 2024 FISCAL 2023
Outstanding at the beginning of the fiscal year 2,324,628 2,287,665
Granted during the fiscal year* 1,360,745 852,820
Forfeited during the fiscal year (397,427) (478,279)
Delivered during the fiscal year (679,081) (337,578)
Outstanding at the end of the fiscal year 2,608,865 2,324,628
Download the table

* of which 497,626 shares corresponding to the beneficiaries rights adjusted as per the ratio calculated for the spin off Pluxee (ex Benefits & Rewards Services activity), (see note 3.2).

The weighted average fair value of the restricted shares granted in Fiscal 2024 is 65.45 euros per share (80.68 euros per share granted in Fiscal 2023).