Gideon Spanier
Jun 1, 2023

Publicis to award Arthur Sadoun $12 million ‘retention’ bonus to stay as CEO until 2027

Share award is worth ten times his annual salary, but ultimate value will depend on the share price in five years’ time.

Publicis to award Arthur Sadoun $12 million ‘retention’ bonus to stay as CEO until 2027

Publicis shareholders have approved an unusual “retention contract” that will pay Arthur Sadoun a one-off share award worth ten times his annual salary if he remains as chief executive for five more years.

The company will make a provision for shares worth double his salary each year over the period and that will be worth a total “theoretical” value of €11.7m (about $12.4m) by the end of 2027, on the basis of his current annual base salary of €1.17m, Publicis told its annual general meeting in Paris on 31 May.

Almost three-quarters of shareholders (74.3%) supported the new compensation policy, but a significant minority (25.7%) voted against it.

The French agency group said it wanted to give Sadoun the additional award — on top of his existing package, which includes an annual short-term bonus and a long-term bonus  — “to ensure that he remains at the helm of the company for a long period of time”.

Sadoun, who earned an annual package of $3.94 million, including a $2.68 million short-term bonus, last year, has been the CEO and chairman of the management board since 2017.

He can already earn a long-term bonus worth up to 3.5 times his salary if Publicis over-performs against its financial and other targets.

By contrast, the “retention contract” has no performance conditions attached, so long as he remains at the owner of agencies including Leo Burnett, Saatchi & Saatchi, Starcom and Zenith for five years.

“Anxious to act without delay”

It is the first time that Publicis has created such an award for its CEO. The supervisory board, which is chaired by Maurice Lévy, Sadoun’s predecessor, cited multiple reasons why it is “in the interest of the company and all stakeholders”.

Sadoun is only the third CEO in nearly a century, after Marcel Bleustein-Blanchet led Publicis for 60 years and Lévy for 30 years, and Publicis Groupe’s long-term approach has been paying off as it has been out-performing rivals financially since the pandemic, which has boosted the share price, the company said.

It was especially important to “secure the main manager” because the agency sector is like “no other” and “only a leader from the core business is legitimate and able to take the leading role and succeed”.

Sadoun has already proved himself to be “an indisputable leader in our industry” where “great talent is rare and the higher you go in the hierarchy of companies, the rarer and more visible they are”.

Publicis added that its CEO’s compensation lagged rivals elsewhere in “the Anglo-Saxon world”, most notably in the United States, where Publicis generates 60% of its revenues and Omnicom and Interpublic, two of its biggest rivals, are listed.

Sadoun earns less than agency peers

Sadoun has had a lower compensation package than his peers, despite Publicis growing faster in recent years when it became the biggest by stock market valuation and overtook Omnicom to become the second biggest by revenue behind WPP.

Omnicom’s John Wren received a package of $20.7 million (£16.6m) and IPG’s Philippe Krakowsky $13.2 million last year. Mark Read, chief executive of UK-based WPP, earned $7.19 million.

The supervisory board hinted there may have been a degree of “urgency” in keeping Sadoun, saying it created the retention contract because it was “anxious to act without delay” and it was “also taking into account the remarks made by some shareholders”.

The board added the compensation committee “carefully designed the mechanism likely to achieve the objective pursued of [CEO] retention” and decided a “fixed” amount and “its unwinding in shares” were “relevant, sufficient and fair”.

Source:
Campaign UK

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