I note that Publicis Groupe chairman and chief executive Maurice Lévy has used his first quarter earnings call to confirm what we knew all along: that he is stepping down at the end of 2011. However, details about his preferred successor and his continuing relationship with the global marketing services empire he has built up remain elusive; any interested readers may wish to visit my previous post on this subject.
With more certainty I can throw some light on his likely severance payment, thanks to information that has come to hand. Lévy does not receive a pension from Publicis. Instead he will be given what is called a “deferred bonus” and sometimes “deferred conditional compensation” in company documents.
What this boils down to is a two-part payment. The first part is linked to annual bonuses received since January 2003. A sum equivalent to their gross total is benchmarked against performance, calculated by taking the average for the last three years’s bonuses and comparing it with the average achieved since 2003. If the figure is less than 25%, Lévy gets nothing; if it’s 75% or above, he gets everything; if in between, it’s a sliding scale. Still with me? Because there’s a second element. When Lévy steps down as chairman, he gets an additional 18 months’ worth of base salary, plus maximum bonus.
How does all this translate into millions of euros? Lévy is currently paid €900,000 a year, with a maximum bonus of 300% of his salary. Most years he has achieved, or very nearly achieved, this maximum. So, on current showing, that would make the second part of his severance deal worth €5.4m. The aggregate bonuses, according to Publicis, so far total just under €12m, but outside estimates put them far higher at €17.6m – and of course, there is still 2010 and 2011 to go. In 2009, Lévy – along with the rest of the Publicis executive board – waived his bonus (notionally maximum, even in a recession); but for the purposes of the final deferred payment, it will still be counted. So waiving it hasn’t been quite the unalloyed gesture of socialist “solidarity” it appeared at first sight.
Short of using a crystal ball we cannot be sure of the performance element. But it seems likely, given the general recovery and Publicis’s sparkling Q1 figures out this week, that Lévy will comfortably achieve, or nearly achieve, the maximum. In rounded terms, adding the two elements together, that could mean a jackpot of over €35m (£30m).
Did I also mention 60,800 shares, worth about €2m at today’s values, vested in a long-term investment plan?