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Jam tomorrow, but never today, as Maurice Lévy contemplates final bonus of €16m

March 28, 2012

Readers of this blog will recall that Publicis Groupe supremo Maurice Lévy’s €900,000 “salary sacrifice” isn’t quite as altruistic as it appears (although, all credit for some skilful self-publicity on his part).

Among the emoluments he won’t be foregoing is a one-off “deferred compensation payment”, which crystallises when he (supposedly) retires at the end of this year.

Thus far, the exact amount has been shrouded in mystery. It was with great interest, therefore, that I read the following extract in The Economic Times:

PARIS: Publicis boss Maurice Levy is set to collect 16.2 million euros ($21.6 million) in deferred pay this year after the advertising agency hit some performance targets and based on the length of his service as chief executive, according to a regulatory filing.

“The deferred compensation is due to Maurice Levy because of his commitment to carry out his responsibilities until December 31, 2011,” Publicis said in its annual report. “It was from the beginning a loyalty tool that was not linked to his departure from the group but to his commitment to remain in his post until the end of his fixed contract.”

A loyalty tool, eh? More perhaps what Arthur Daley, of saintly memory, would have called “a nice little earner”.

UPDATE 3/4/12: With a general election only weeks away, Lévy’s €16m terminal bonus has now become ready ammunition in a mudslinging match between the two leading French presidential candidates. Parti Socialiste candidate Philippe Hollande has called the bonus “unacceptable”. Others in the PS have termed it “obscene”.

But Nicolas Sarkozy, incumbent president and candidate of the right-wing UMP, has not pulled his punches either. He rounded on Elisabeth Badinter, Publicis Groupe’s biggest shareholder, as the guilty party (though not by name). “M. Hollande, it is shareholders who decide on remuneration, and they are your friends,” Sarkozy said in a speech on March 28th, the day after Hollande’s outburst. “The champagne Left, the bohemian-bourgeois Left, has no morality lessons to give us.” Badinter is a friend of Hollande, and has widely-known radical chic leanings. Her husband was a minister under Socialist president Francois Mitterand.

Eventually, Laurent Parisot – head of employers’ association Medef, in which Lévy plays a prominent role – had to come to the embattled adman’s rescue:

 “Publicis, which has [had] exceptional results, is one of the biggest French companies and, most importantly, is a world leader in the advertising business. What isn’t acceptable is high compensation when companies are in trouble.”

An interesting rumour was doing the rounds about a year ago, to the effect that Lévy would seek an ambassadorship after stepping down from PG. Not the kind of controversy he would be wanting if so.

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Maurice Lévy’s “salary sacrifice” is not quite as self-sacrificing as it appears

December 16, 2011

For Maurice Lévy and Sir Martin Sorrell – a pair who love to loathe  each other – politics is clearly a continuation of war by other means.

By now we’re all familiar with the WPP chief executive’s increasingly assured role as a political and economic soothsayer. He’s forever popping up on the Today programme as a commentator; he recently made his debut on Any Questions (which proved a surprisingly bruising experience for its quizmaster, Jonathan (or is that “David”?) Dimbleby); and he’s even opened up to us on Desert Island Discs. If you want an authoritative opinion on David Cameron’s Euro veto, ask Sir Martin. The national newspapers certainly did – his scathing denunciation of our isolationism has been plastered all over their front pages.

Less familiar by far, at least on these shores, is the accomplished political role played by the head of Publicis Groupe in his native France. Perhaps because he is nearing 70 – and therefore inevitable retirement despite the recent extension of his term of office as PG pdg – Lévy has become an increasingly outspoken, if measured, critic of French president Nicolas Sarkozy’s handling of the economy.

It’s important to note that Lévy and his company are regarded by the French business and political class with a reverence out of all proportion to that enjoyed by WPP in the UK. WPP is no slouch, but Sir Martin can only dream of headlines such as the following: “Maurice Lévy est le patron le plus “performant” du CAC 40” – substituting, of course, the FTSE 100 for France’s principal financial index.

Lévy has used this enviable reputational platform to morph himself into the key spokesman of French private enterprise – as chairman of Afep (Association Françaises des Entreprises Privées), a sort of French CBI.

Last August, in transparent imitation of the Sage of Omaha (aka Warren Buffett), he and a number of leading French businessmen signed an open letter in Le Nouvel Observateur pledging to plug the gaping holes in their country’s budget by means of a Robin Hood tax levied on France’s richest – such as themselves.

Entirely consistent with this initiative, Lévy proudly announced at the beginning of this month that he would waive his annual PG salary (€900,000) in favour of a performance-based bonus.

In these straitened times what could be fairer, more laudable, or altruistic than that?

Well, let’s put it this way: Lévy will not exactly be losing out as a result of this apparently noble gesture. In the first place, as he himself admitted, he will be receiving a generous “deferred compensation package” (ie pension) when he retires next year (as he assures us he will, though I still have my doubts if Arthur Sadoun fails to cut the mustard). The calculus for this severance package is somewhat delphic, but it is increasingly certain to be worth around €35m when he cashes it in (for more on this issue, see my earlier post). And that’s not to mention a personal fortune estimated at €164m by the French media.

Nothing wrong with that you may say, while inwardly noting the laxity of French corporate governance. After all, Lévy is a man who has deserved well of his company: he has, during his long career there, propelled Publicis from French hot shop to the world’s third largest marketing services group, making a lot of other people rich along the way.

But let’s move on. Have I mentioned the 2009 so-called Lion Lead long-term staff incentive scheme? I have not. It’s so complicated that virtually no one fully understands it. But the bottom line is that it vests in March 2012 and Lévy liked it so much he invested in it himself. I’m told the pay-off, providing all the complicated provisos are satisfied, is about 20 times the original investment.

Then there is the annual bonus itself to consider. Most of Lévy’s conventional package is, as it happens, already performance-related, allowing him to earn about €3m a year gross. The “double digit” (ie several million euros) bonus conditionally granted him by PG’s supervisory board this year will not, I speculate, actually leave him out of pocket. Given PG’s stonking organic growth recently, he may even end up ahead of his normal game. Yes, I know Lévy was studiedly downbeat about the global economy in his message to staff yesterday. And that his subsidiary Zenith Optimedia has pared back its 2012 global ad forecast of 5.3% growth. But the downgraded figure of 4.7% is not exactly zero growth territory.

One last thought before leaving this dusty financial subject. There’s a Sorrell angle here as well. Lévy may feel that by making a “salary sacrifice” he is getting one over on his long time foe into the bargain (never underestimate the driving force of enmity). Chief executives (and Sorrell is no exception here), are forever justifying their increasingly handsome remuneration packages by pointing to the competition abroad. But what if the competition abroad is actually taking a high profile pay-cut? What will WPP shareholders have to say then?

We’ll find out when the next pay round arrives, and Sir Martin asks for a raise on his existing £4.5m (€5.4m) annual package.


Naouri’s path to the top at Publicis leaves Pinder stranded

March 31, 2011

This week, a famous media-oriented company, family-built yet globally traded, publicly acknowledged its succession strategy. No, it’s not NewsCorp I’m talking of here (though it certainly fits the description), but Publicis Groupe.

It seems that my tentative question of over a year ago – Will Jean-Yves Naouri be the next ceo of Publicis Groupe? – has been strongly answered in the affirmative.

Little alternative interpretation can be placed on Groupe CEO Maurice Lévy’s statement to the Financial Times that Naouri “is clearly in a leading position for winning the race” to taking over as chief executive when he himself departs in “a few more years.”

As it happens, Publicis insiders have long since been placing their bets on Naouri, albeit with a few reservations about his candidature. Like any leader-in-waiting, Naouri has gradually been acquiring the instruments of power. He’s on the Groupe senior management board, he’s its chief operating officer and, thanks to his reputation as an experienced trouble-shooter, he’s been given “special powers” to shore up Publicis’ strategic weakness (relatively speaking) in China.

However, what marks out his transition from heir presumptive to heir apparent is the decision to install him as executive chairman of Publicis Worldwide. This really is entrusting the heir with the crown jewels. It means putting Naouri very much in the public eye, by letting him run a high-profile creative network.

Not any high-profile creative network, either. It is the Groupe’s flagship – quintessentially Gallic yet global – and very much Lévy’s personal fiefdom.

That is certainly one explanation for why, under first Rick Bendel and then Richard Pinder, it has effectively been run by chief operating officers rather than a formal CEO. In effect, it didn’t need one, since Lévy kept a watchful but fatherly eye on its activities.

Publicis has, of course, been here before. In 2006, Lévy poached Olivier Fleurot, a former FT Group chief executive, as executive chairman of the creative network, at the same time that Pinder was brought in as COO. Then, as now, the honorific appointment gave rise to speculation that Lévy was grooming his successor. However, by Spring 2009 Fleurot had moved off the boil (or at least off the board): to head the holding company’s PR operations, leaving Pinder soldiering on alone at Publicis Worldwide – with effective responsibility for the network, but not full empowerment.

This being so, it is understandable why Pinder should choose to quit now. Being British in a top French company is not quite the barrier to top-flight promotion it might appear at first sight – as David Jones’ recent elevation at Havas Groupe demonstrates. Even so, the odds on Pinder being further promoted – despite his successful 5-year tenure at Publicis Worldwide – seemed remote. In effect, the appointment of Naouri was the coup de grâce to his career advancement. It’s a loss for Publicis, too, because the relentlessly itinerant Pinder gave the network a genuinely cosmopolitan aura.

As far as I can make out, the parting has been amicable enough: Lévy appears to have been keen for Pinder to stay on; and was financially generous when it became apparent he would not. Pinder seems to have a clear idea of what he wants to do next, though what that is I do not know.

Anyway, back to Naouri. Is there any reason to suppose that he may suffer the same fate as Fleurot? Not really. For one thing, time is pressing in a way it was not back in 2006. Lévy is now in “extra time” as group CEO, and shareholders will want a definitive solution sooner rather than later. True, Naouri still has to be anointed by the most important shareholder of them all, Elisabeth Badinter (daughter of Publicis’ founder and the single-biggest stakeholder). But that’s beginning to seem more and more a formality as the alternatives ebb away. The job is now Naouri’s to lose, not someone else’s to win.

The more interesting question is: what will happen to Lévy himself when Naouri is formally given the top job. Will he really retire?

As a candidate, Naouri certainly ticks many boxes. He comes from the right French social and educational background. His relationship with Dominique Strauss-Kahn could be invaluable, should the current managing director of the IMF ever run for president (polls indicate he would beat Nicolas Sarkozy). But charismatic he is not.

The possibility therefore exists that Lévy might be asked to stay on in some capacity. Perhaps as lifetime president.


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