Elon Musk’s (re)proposed equity package is understandably hogging the spotlight, but it’s not the only executive pay vote on investors’ radar. In particular, France’s Publicis Groupe and India’s Wipro Ltd are seeking approval of pay decisions that are each highly unusual, and potentially precedent-setting, for their markets.
With thousands of companies holding AGMs during proxy season, it’s hard to know where to start. Glass Lewis’ Controversy Alert service can help, identifying the most crucial meetings globally and allowing investors to make better informed voting decisions with the latest information in hand.
In this post, we provide a roundup of the AGMs taking place this week that were previously highlighted by Controversy Alerts, and look deeper into the situation at Publicis Groupe and Wipro Ltd. To get alerted ahead of time, get in touch and sign up for Glass Lewis’ Controversy Alert service.
Controversy Alerts May 27 — May 31, 2024
May 29 Exxon Mobil Corporation; Controversy Alert issued May 15
May 29 Meta Platforms, Inc; issued May 22
May 29 Publicis Groupe S.A.; issued May 13
May 29 Wipro Ltd.; issued May 17
May 30 JDE Peet’s N.V.; issued May 15
Deep Dives: Publicis Groupe S.A.
French shareholders get a separate vote on each executive’s compensation. For Publicis Groupe’s management board chair, Arthur Sadoun, that includes a €9.0 million retention bonus intended to keep him in the role through 2028.
The award was calculated to equal 2x fixed pay for a five-year period, or 1,000% of base salary in total. The shares are not subject to any performance conditions, but will only vest in full if Sadoun remains in office until December 31, 2027. He is also eligible for a prorated payout in the case of termination or a change of control. According to the company, Sadoun will not receive any additional grants over the period.
In its annual report, Publicis states that “this is not a “departure” compensation package, but rather a retention contract designed to encourage Arthur Sadoun to remain in his position as Group executive in exchange for exceptional and specific compensation“.
The decision to grant such an award will prompt questions in and of itself – unlike the United States, retention grants remain highly uncommon in France. Moreover, the size of the award, which exceeds the overall remuneration granted to him under his ordinary remuneration policy in 2023, and the decision to forego any performance-based conditions are also likely to raise concerns.
Wipro Ltd.
Meanwhile, proxy season has yet to fully kick off in India, but ahead of its regularly scheduled AGM in July, Wipro Ltd. is holding a special shareholder meeting on May 29 to approve the appointment of new CEO and managing director Srinivas Pallia, and an unusual severance arrangement for his predecessor, Thierry Delaporte.
Shareholders are being asked to approve a US$4.33 million payment to Delaporte, in recognition for his contribution in driving significant transformation during his tenure, and to enable a smooth transition, ensure business continuity and to ensure adherence to post- engagement obligations (including, but not limited to, confidentiality, non-solicitation, non-disparagement, and other obligations).
The payment is notable for its size, particularly in the context of Delaporte’s not-too-distant sign-on package; for the relative lack of specifics in the board’s disclosed rationale for its necessity; and for its timing, with Delaporte’s resignation in early April occuring before he had completed a single term in the position. Recruited away from CapGemini in 2020, Delaporte’s service as CEO and managing director was highly lucrative despite its short duration. In financial year 2022-23, he was the second highest paid top executive director amongst Indian-listed companies, thanks in part to salary in the €1.1-1.4 million range and an additional expatriate allowance worth roughly half a million euros. Moreover, his sign-on package included a one-time cash award of US$3 million payable over two years, along with performance- and time-based share awards worth over $1.75 million at grant, payable over three years. Setting the proposed exit payment aside, Delaporte’s departure raises questions about the effectiveness of his retention package. Though of course, an additional US$4.33 million is a lot to set aside.
The IT and business consulting multinational is taking a slightly different approach with the remuneration of its new CEO and managing director, Srinivas Pallia. As an in-house promotion, Pallia will not be receiving any one-time cash or equity payouts. On the other hand, his ongoing remuneration package is potentially much higher than that of his predecessor, with salary and target bonus ranging from US$1,750,000 per annum to US$3,000,000 per annum, along with long-term incentives comprising US$1,400,000 worth of American Depository Shares (ADS) Restricted Stock Units (ADS RSUs) and US$2,600,000 worth of ADS Performance Stock Units (ADS PSUs).
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