Adjustment of certain elements of the
Compensation of the Management Board
Saint-Cloud, March 10, 2021
Adjustment of the 2018 and 2019 performance share plans
As part of a dynamic policy of employee involvement in the performance of the company, the Group allocates performance shares each year to several hundred employees, including members of the Management Board.
The Chairman and the members of the Management Board benefit in particular from the following two performance share plans:
· A performance share plan adopted by the Management Board on March 29, 2018, with the authorization of the Supervisory Board on December 14, 2017 and March 6, 2018. The number of shares allocated to each member of the Management Board in respect of of this plan is as follows:
|Beneficiaries||Total number of shares granted||Number of category A shares allocated||Number of category B shares allocated|
|Louis Guyot||49 164||34,415||14 749|
|Matthieu lecharny||39 331||24,582||14 749|
· A performance share plan adopted by the Management Board on May 2, 2019, with the authorization of the Supervisory Board on March 6 and May 2, 2019. The number of shares allocated to each member of the Management Board under this plan is as follows:
|Beneficiaries||Number of shares allocated|
|Louis Guyot||45 337|
Under these plans, the definitive vesting of the performance shares awarded, respectively set for April 6, 2021 (for the 2018 plan) and May 2, 2022 (for the 2019 plan), is subject to the fulfillment of performance conditions, assessed over a period of three consecutive years.
Given the exceptional impact of the health crisis, the Supervisory Board, at its meeting on March 8, 2021, on the proposal of the Appointments, Compensation and Governance Committee, decided, in accordance with the policy of compensation respectively applicable and approved by the shareholders at the general meetings of shareholders of May 18, 2018 (for the 2018 plan) and May 23, 2019 (for the 2019 plan), to adjust the performance criteria as follows:
- For category A shares allocated under the 2018 plan and shares allocated under the 2019 plan, adjustment of performance criteria based on new projections approved by the Board, taking into account the impact of the health crisis (in terms of customer activity volumes and changes in the main exchange rates) on the theoretical trajectory of the Group; and
- For B shares allocated under the 2019 plan, adjustment of the 2nd performance criterion (EBIT Germany margin), considering that the objective would have been reached without the health crisis. The 3rd criterion (operational synergies) had already been validated and communicated; on the other hand, the 1st criterion (EBIT margin UK) is considered not fulfilled.
Under this adjustment, the number of shares definitively acquired by each member of the Management Board under the 2018 performance share plan should represent 50% of the number of category A shares and 66% of the number of category shares. B initially allocated, according to the following distribution:
|Beneficiaries||Total number of shares acquired||Number of Class A shares acquired||Number of Class B shares acquired|
|Xavier Martire||63 717||44,248||19,469|
|Louis Guyot||26 942||17 208||9,734|
The achievement of the performance conditions attached to the 2019 performance share plan will be assessed in 2022, on the basis of the Group’s performance during the fiscal year ended December 31, 2021.
It should be noted that such adjustments were made for all of the 500 managers concerned.
Proposal to revise the performance criteria used to determine the variable portion of the compensation of members of the Management Board
The Supervisory Board, in its meeting of March 8, 2021, noted that the quantitative performance criteria for fiscal year 2020 had not been met and therefore resulted in a quantitative portion of the variable portion equal to 0.
In order to take into account the consequences of the Covid-19 health crisis and to recognize the performance of the Executive Committee during this crisis, the Supervisory Board, at its meeting on March 8, 2021, on the proposal of the Appointments, Compensation and Committee Board of Governance, has decided to submit to the vote of the general meeting of shareholders the following revision of the quantitative performance criteria used to determine the variable part of the compensation of the Chairman and of the members of the Management Board for the 2020 financial year:
- The quantitative objectives (representing 70% of the variable compensation) based on financial indicators would be set, no longer on the basis of the budget previously approved by the Supervisory Board, but on the basis of new financial projections established on June 30, 2020 by the Board of Directors, taking into account the impact of the health crisis (in terms of customer business volumes and changes in the main exchange rates) on the theoretical trajectory of the Group
- The nature (i.e. revenue, EBIT and operating cash flow) of the quantitative performance criteria would remain unchanged
- However, the weighting of these criteria would be significantly reduced to take into account the context of the health crisis: no variable portion would be paid for the first half of the year and, for the second half, the rate of achievement of the turnover criteria and EBIT would be capped at 100%. As a result, the maximum amount allocated would be divided by three compared to 2019
In the end, the Supervisory Board, at its meeting on March 8, 2021, considered that the Group’s performance during the crisis turned out to be of very high quality, well above the expectations discussed on June 30, and above. above the benchmark of European service companies. :
Revenue amounted to € 2,806 million, down 13.3%, strongly impacted by negative customer activity (down around 16%). Over the year as a whole, Hore customer activity (regardless of price, business development and currency effects) was down 55% due to health restrictions. The activity of ICS customers is down 5%, while that of Healthcare customers is slightly negative.
The Board praised the excellent work carried out by the teams on the part that depended on it:
- very responsive development of new offers adapted to the context, whether it is professional clothing for ICS, blockwear or waterproof gowns for Health, offers for hand hygiene, disinfection … permanently or temporarily (temporary hospitals in the United Kingdom, waterproof gowns in Brazil, etc.)
- quality of service maintained during the crisis, which improved customer loyalty and led to some commercial successes
The same goes for cost control, where the Board noted:
- a cost reduction effort that increased the EBITDA margin by 20bp, making all costs variable,
- an effort to reduce investments,
- the considerable effort made on customer receipts, which resulted in a positive change in working capital,
This brings the FCF to 217 million euros, an improvement of 43 million euros compared to 2019, while EBITDA is down 155 million euros.
In the end, the quantitative variable portions allocated to members of the Management Board for 2020 would be as follows, down sharply (-64%) compared to 2019:
|Beneficiaries||Amount 2020||Amount 2019|
|Xavier Martire||€ 360,000||€ 995,180|
|Louis Guyot||€ 126,000||€ 348,313|
|Matthieu lecharny||€ 94,500||€ 261,235|
The conditions which led to this proposed revision are also detailed in the additional report of the Supervisory Board, the information of which will be included in the company’s 2020 Universal Registration Document.
The revision of the performance criteria will be submitted to the vote of the shareholders at the next general meeting of shareholders on May 20, 2021, in accordance with the provisions of article L. 22-10-26 of the French Commercial Code (“ ex ante vote “). The payment of annual variable compensation to members of the Management Board will also be subject to the prior approval of the shareholders at the same general meeting, in accordance with the provisions of Article L. 22-10-34 of the French Commercial Code Coded (” a posteriori vote “).
It should also be noted that, in the context of the Covid-19 health crisis, the members of the Management Board have reduced their fixed compensation twice:
- In April, May and June, Xavier Martiré reduced his remuneration by 25%; Louis Guyot and Matthieu Lecharny by 10%, and
- The 3 members of the Management Board again waived 10% of their fixed compensation paid for November 2020.
The other elements of the compensation policy for corporate officers for 2020, as described in the report on corporate governance in chapter 2 of the 2019 Universal Registration Document and the supplement to this report describing the first reduction of a portion of their compensation granted by the members of the Management Board, remain applicable and unchanged.
Nicolas buron, Director of Investor Relations – Tel: +33 1 75 49 98 30 – [email protected]