Publication of information relating to the compensation of the executive company officers in line with the recommendations of the AFEP-MEDEF Code

At its meeting of 24 February 2017, the Board of Directors of Sopra Steria Group made the following decisions on compensation received by the executive company officers, after considering the Compensation Committee’s recommendations:

Compensation of Pierre Pasquier, Chairman of the Board of Directors

The Board of Directors decided to submit a proposal to the General Meeting to suppress the variable component of compensation for the Chairman without altering the amount of his effective overall compensation. Under this proposal, the average amount of variable compensation paid since the last update of the fixed component in January 2011 would be included within his fixed compensation, whose gross annual amount would thus be raised from €350,000 to €500,000 in respect of financial year 2017.

This proposal aims to bring the structure of the compensation received by the Chairman of the Board of Directors in line with the AFEP-MEDEF Code, and specifically the provisions of its Article 24.2.

The variable component of the Chairman’s compensation in respect of financial year 2016 had been set, at his request, to €150,000, below the amount recommended by the Compensation Committee. It is thus in keeping with his average compensation since 2011 and consistent with the Board’s decision for 2017.

Annual compensation of Vincent Paris, Chief Executive Officer

Compensation in respect of the 2016 financial year

After taking into account the extent of achievement of the targets relating to the 2016 financial year, the variable component of Vincent Paris’ compensation in respect of financial year 2016 was set at the gross amount of €162,400 (i.e. 68% of its upper limit). It reflects the fact that the quantifiable target was partially met while the qualitative targets were exceeded.

Compensation in respect of the 2017 financial year

  1. Taking into account both internal and external comparatives, the Board of Directors decided to raise the fixed annual component of the Chief Executive Officer’s compensation from €400,000 to €500,000, effective from 1 January 2017.

     

  2. The Board of Directors also decided to submit a proposal to the General Meeting to effect a shift in the balance between the fixed and variable components of the Chief Executive Officer’s compensation in respect of financial year 2017.

    Under this proposal, the Chief Executive Officer’s variable compensation would be raised from 40% to 60% of his annual fixed compensation and its upper limit from 60% to 100%, should the targets be met.

    This change is intended to reinforce the link between the performance for the financial year and total compensation; it would also ensure that ambitious targets can continue to be set while preserving the role of the Chief Executive Officer’s compensation ascribed by the AFEP-MEDEF Code in terms of motivation and retention.

     

  3. Lastly, the Board of Directors decided to submit a proposal to the General Meeting to amend the criteria for the granting of annual variable compensation beginning with the 2017 financial year.

    Under the current system, variable compensation is based on the achievement of a unique and quantifiable target tied to operating profit on business activity. Meeting personal and qualitative targets does not alone ensure eligibility to receive variable compensation, but the level of achievement can raise or lower the amount payable that is calculated on the basis of the main profitability target. This adjustment to the amount can lead, in extreme cases, to the suppression of variable compensation or to an increase in the amount paid as high as 30% of the upper limit for variable compensation.

    It is proposed that this system be amended so as to determine the annual variable compensation in relation to the quantifiable target for two-thirds of the amount and in relation to one or more qualitative targets for the remaining one-third, thus doing away with the possibility of raising or lowering the amount. The qualitative targets will be precisely defined, in line with the Group’s strategy and/or the assessment of the Chief Executive Officer’s performance.
     
    For financial year 2017, the operating profit on business activity target and the four qualitative targets in line with strategy were unanimously approved by the Board of Directors at this same meeting on 24 February 2017, without the Chief Executive Officer being present. They are not made public for confidentiality reasons.

Multi-year compensation of Vincent Paris, Chief Executive Officer, under the long-term incentive plan

At this same meeting, the Board of Directors made use of the authorisation given by Resolution 25 adopted by the Combined General Meeting of 22 June 2016 and decided to set up a long-term incentive plan for the Group’s senior managers, covering a total of 104,000 rights to free performance shares, and to grant 3,000 rights under this plan to Vincent Paris, Chief Executive Officer.

This granting of rights is subject to strict performance conditions, evaluated over a period of three financial years and measured against targets for organic consolidated revenue growth, operating profit on business activity expressed as a percentage of revenue and free cash flow. These targets are at least equal to any guidance disclosed to the market.

The Board of Directors also decided that Vincent Paris will need to maintain possession of at least 50% of the shares that will vest under this plan for his entire tenure as Chief Executive Officer.