If the targets are achieved, the variable compensation is equal to 120% of the fixed compensation; this can be increased to 170% if the targets are exceeded.
The precise targets set at the beginning of the fiscal year are predominantly based on financial criteria (for 70% of total objectives) and non-financial criteria (for 30% of total objectives), in line with the Sodexo’s commitment to social responsibility and sustainable development. All objectives are quantifiable.
It should be remembered that the objectives set at the beginning of the year were based on a scope that did not include Pluxee and did not need to be adjusted after the effective date of the spin-off.
| not-included | not-included | WEIGHTS (as a % of fixed compensation) | not-included | not-included | not-included | ||
|---|---|---|---|---|---|---|---|
| CRITERIA | THRESHOLD | TARGET | MAXIMUM** | PUBLISHED RESULTS | PAYOUT RATE (as a % of target |
CORRESPONDING AMOUNT (in euros) |
|
| 2024 financial objectives* | Organic growth | N/A | 24% | 41% | 7,9% | 0% | 0 |
| Client retention | 6% | 12% | 12% | 94,2% | 0% | 0 | |
| Underlying operating profit margin (at constant exchange rates) | N/A | 24% | 41% | 4,7% | 0% | 0 | |
| Group net income*** | N/A | 12% | 20% | €738m | 0% | 0 | |
| Free cash flow | N/A | 12% | 20% | €661m | 165% | 178,200 | |
| 2024 non-financial objectives | CSR criteria: | ||||||
| • Health & Safety | |||||||
| –LTIR ≤ 0.35 | N/A | 6% | 6% | 47% | 0% | 0 | |
| – NMIR ≥ 25:1 | N/A | 6% | 6% | 102:1 | 100% | 54,000 | |
| • Sustainable development - Deployment of the WasteWatch food waste measurement program ≥ 70% of of RMC | N/A | 12% | 12% | 76,9% | 100% | 108,000 | |
| Talent management (GSE): | |||||||
| • Retention, expressed as a % of regrettable turnover rate ≤ 5% | N/A | 4% | 4% | 1% | 100% | 36,000 | |
| • % of women in Operations ≥ 31% | N/A | 4% | 4% | 31% | 100% | 36,000 | |
| • Internal promotion rate between 66% and 80% | N/A | 4% | 4% | 80% | 100% | 36,000 | |
|
TOTAL ANNUAL VARIABLE AWARDED FOR FISCAL 2024 (as a % of fixed compensation) |
6% | 120% | 170% | not-included | not-included | 448,200 | |
(*) calculated on a straight-line basis between values
(**) the maximum % have been rounded off to ease reading
(***) continuing operations
The Group’s organic growth in revenues for Fiscal 2024 reached +7.9%, at the top end of the guidance range communicated to the market. Similarly, the underlying operating profit margin was at the upper end of the range, driven by the operating leverage of higher revenue, rigorous inflation management and enhanced on-site productivity. However, the internal targets for both criteria were set, as in past years, above market guidance, and were not met, nor was the net income target, despite a +31.8% increase.
The client retention criterion, which corresponds to the percentage of Fiscal 2023 revenues retained in Fiscal 2024, was not met, due to the loss of one large global contract and two Energy & Resources contracts in Latin America, due to a very competitive environment.
On the other hand, the free cash flow target was met, highlighting our capacity to generate robust cash flow.
In terms of health and safety, the monitoring of the Near Miss Incident Rate (NMIR) is aimed at developing a culture of accident prevention. The objective was largely achieved, contributing to a further -14.5% reduction in the Lost Time Injury Rate (LTIR). However, this reduction was not sufficient to achieve the very ambitious LTIR target that had been set.
The sustainable development objective, measured by the deployment of the WasteWatch in-house food waste measurement program, was also achieved. The program now covers almost 77% of food raw material costs (RMC) (more information on Sodexo’s commitments to sustainable development is provided in chapter 2).
Lastly, the talent management target, consisting in three indicators covering the scope of the Group’s senior executives (GSE) - gender diversity in operational positions, regrettable turnover rate and ratio of internal promotions compared with external hires - was met. This good result highlights the continued focus given by Group senior management on managing its executive teams, developing succession plans and encouraging diversity, equity and inclusion.
Ultimately, despite the Group's solid financial and non-financial results, the Chairman and CEO’s annual variable compensation is 49.8% of her fixed compensation. This rate demonstrates the stringency of the targets set by the Board of Directors.
