The remuneration policy applicable to the corporate officers is described in its entirety in the 2020 Universal Registration Document (pages 188 to 195). It was drawn up by the Board of Directors on February 9, 2021, upon the recommendation of the Remuneration Committee which had carried out in-depth analyses on the subject. It is in line, in terms of principles and structure, with the policy approved by the General Meeting of May 5, 2020.
The remuneration policy reflects the level of responsibility of the Group’s senior executives and is adapted to the Group’s context, remains competitive and is an incentive to promote the Group’s performance over the medium to long-term, in compliance with the Company’s interests and the interests of all the stakeholders.
It applies whether the Group’s senior Executive Officer acts as the Chairman and Chief Executive Officer or, if circumstances so require, the Chief Executive Officer of the Company. In such circumstances, a Chairman who does not also have the duties of Chief Executive Officer would receive fixed remuneration to the exclusion of any variable remuneration. Furthermore, if such a situation were to arise, the remuneration policy applicable to a Senior Executive Vice President would be determined on the basis of the policy applicable to a Chief Executive Officer of the Company, after taking account, however, of the difference in the level of responsibility, consistent with the earlier practices applied at the Company for this type of Executive Officer.
The variable remuneration and the long-term incentives (or “LTI”) cumulated continue to represent approximately 75 % of the total annual remuneration.Thus, the fixed remuneration represents approximately 25%, the variable remuneration 35% and the LTI 40% of the total annual remuneration (a greater relative weight given to the LTI).
The principles applicable to the annual variable remuneration are unchanged :
The performance conditions reflects the Company’s strategy. For 2021, they were set in the trajectory of the principal objectives of the NEOS company program incorporating notably sales growth and the ROCE. Accordingly, the quantifiable components of the annual variable remuneration include a criterion of an increase in the recurring EPS which makes it possible to take into account all the items in the income statement. The criterion of an increase in sales turn reflects the momentum of the activity. The two criteria, growth in revenue and the recurring EPS reflect the Group’s ambition to achieve profitable growth. Moreover, the efficiency, objectives that were reevaluated in 2019 compared to the initial NEOS objective contribute to the increase in the recurring EPS.
The LTI performance conditions in turn incorporate the ROCE, which makes it possible to measure the Return on Capital Employed and is relevant in a highly capital-intensive industry.
The Total Shareholder ReturnThe Total Shareholder Return (TSR) n turn makes it possible to align the Company’s performance with the regular profits expected by its shareholders. Moreover, consistent with the Group’s responsible growth approach, the LTI plans incorporate with effect from 2020 a performance condition linked to the Group’s Carbon Intensity. The objective of this condition is consistent with the trajectory of the Group’s Climate Objectives announced at the end of 2018 and which aim to reduce the Carbon Intensity by 30% between 2015 and 2025.
The performance conditions which apply to the termination indemnity and the collective pension insurance contract are based on the gap between the ROCE and the WACC (average gap over three years) which makes it possible to measure the regular value creation.
The qualitative components of the annual variable remuneration incorporate the pursuit over the long-term of objectives related to safety, sustainable development, Human Resources and the preparation of the succession, plans, thus supporting the Company’s sustainability.
The selection of the components for the remuneration of the Executive Officers is made by taking into account the conditions of remuneration and employment of the Company’s employees, for both the setting of the components of the variable part (the objectives of the variable remuneration for the Executive Officers are reflected in those for the employees who have a variable remuneration) and the LTI (performance conditions are identical for all the beneficiaries). These alignments provide for greater coherence of efforts in achieving the Company’s performance objectives. The importance given to the safety objectives helps implement a high-quality working environment for the employees that has a direct impact on their engagement and performance. The variable remuneration also incorporates objectives of talent development, the achievement of which requires in particular the implementation of programs for the training and development of employees.
Finally, the other principles which apply to the LTI are unchanged (the proration of the LTI in the event of the Executive Officer’s departure from the Group during the period of assessment of the performance conditions, the level of requirement of the objectives and the rules which are specific to the Executive Officers as described below).
The defined contribution pension plan applicable to all employees and Executive Officers is being transferred on a collective basis to a mandatory company retirement savings plan (“PERO”) on January 1, 2021 to bring it into line with the new legal and regulatory framework arising from the PACTE Law (see details below).
