The long-term incentive (LTI) plan is generally awarded in the first half of the fiscal year, and the Board of Directors validates the three-year financial and non-financial objectives. A communication published on Sodexo's website at the grant date sets out these objectives as well as the fair value of the performance shares granted to the Chief Executive Officer.
Should it become necessary to revise these objectives, the Board of Directors would set consistent and demanding long-term criteria.
As Sodexo does not communicate medium-term financial objectives to the market, the objectives for the organic revenue growth and underlying operating profit margin criteria are not disclosed for confidentiality reasons.
Details of the LTI plan set up in Fiscal 2025 are presented in section 7.3.2.1.
In order for his performance shares to be delivered, the Chief Executive Officer must still form part of the Group at the vesting date.
In accordance with article L.225-197-1 of the French Commercial Code, the Chief Executive Officer is required to hold a number of vested shares in registered form for the duration of his term of office. The value has been set by the Board of Directors at 30% of his annual fixed compensation at the date of delivery of said shares.
In addition, the Chief Executive Officer is required to hold a portfolio of shares with a value equivalent to 200% of the gross amount of his annual fixed compensation, and this portfolio must be built up over a maximum period of three years.
When a new Chief Executive Officer is appointed from outside the Group, the compliance period for this shareholding requirement will run from the vesting date of the first share grant, i.e., three years following the initial grant by the Company.
The shareholding requirements applied to the Chief Executive Officer ensure that his interests remain closely aligned with the interests of the Group's shareholders.
In addition, the Chief Executive Officer undertakes not to use hedging instruments on any of the performance shares granted to him throughout the duration of his term of office.
The Board of Directors has decided not to set up a multi-year compensation system, preferring instead to apply a share-based long-term compensation program, which it considers to be more closely aligned with the interests of the Company's shareholders.
However, the Board may envisage putting in place such a system if any regulatory changes or other changes in circumstances were to render a share-based system inappropriate or impossible. If a multi-year compensation plan were to be set up, it would be based on the same principles and criteria as those used for determining and allocating performance shares and the same grant cap would apply.
The compensation policy does not permit exceptional compensation to be granted to the Chief Executive Officer.
The Chief Executive Officer is the beneficiary of a defined benefit pension plan governed by article L. 137-11-2 of the French Social Security Code. This plan is also available to key senior executives who hold an employment contract with a French entity of the Group.
This pension plan was introduced in 2021 in accordance with the rules set out below: pension rights of up to 0.5% per year are granted for the first five years of participation, and then up to 1% beyond five years, not exceeding a total of 10%. These rights are calculated based on the fixed and variable compensation received during the calendar year by virtue of the role of Chief Executive Officer. In order to enable the beneficiary to build up supplementary pension rights while maintaining a close link with the Company's performance, the vesting of annual rights is subject to achieving a performance rate of 80% against the targets set in respect of the annual variable compensation. Where the achievement rate falls below 50%, no pension rights are granted; between 50% and 80% achievement, the annual pension rights are determined on a linear basis. Rights are definitively acquired only after 12 months of seniority in the plan. The resulting pension tops up the pensions provided by the basic compulsory plans and does not generate any corresponding obligation on the Company's balance sheet.
The Chief Executive Officer has the use of a Company car. Insurance, maintenance, and fuel costs related to the professional use of the vehicle are borne by the Company.
The Chief Executive Officer is a member of the Company's collective health and benefit plans, subject to the same terms and conditions as those applicable to the Company's employees.
As the Chief Executive Officer does not have an employment contract, the Company reserves the right to subscribe to a private unemployment insurance policy, allowing him to receive benefits for a maximum duration of 18 months in the event of the loss of his professional activity.
The compensation policy for the Chief Executive Officer provides that, in the event of a forced departure from the Group, he may receive an indemnity, the maximum amount of which would be equal to twice the gross annual compensation (fixed and variable) he received during the 12 months preceding the termination of office.
This indemnity is not applicable in the event of voluntary resignation, retirement, or removal from office for gross or willful misconduct.
Payment of this indemnity would be subject to the Chief Executive Officer achieving at least 80% of the annual performance objectives applicable to his variable compensation for each of the two fiscal years preceding the termination of office.
