Disclosure: elements of compensation, Chief Executive Officer of Sopra Steria Group As required by Article L. 225-42-1 of the French Commercial Code

Paris, 6 October 2014

 

Compensation of François Enaud, Chief Executive Officer of Sopra Steria Group

 

As part of the tie-up between Sopra and Steria, François Enaud, General Manager of Groupe Steria SCA, was appointed Chief Executive Officer of Sopra Steria Group on 3 September 2014. At the current time François Enaud receives no compensation for his role as Chief Executive Officer of Sopra Steria Group.

A General Meeting of Groupe Steria SCA shareholders will be held on 16 October 2014 to vote on the conversion of Groupe Steria SCA into a société anonyme (French limited-liability company). Depending on the decision of Groupe Steria SCA’s shareholders, François Enaud will step down as General Manager of that company.

 

At the recommendation of the Compensation Committee and after deliberation, the Board of Directors of Sopra Steria Group decided, at a meeting on 6 October 2014, to attribute as from the date of Group Steria SCA’s conversion into a société anonyme the following elements of compensation to François Enaud, Chief Executive Officer of Sopra Steria Group:

 

  • gross annual fixed compensation equivalent to that which he currently receives as General Manager of Groupe Steria SCA, i.e. €410,000;
  • gross annual variable compensation identical to that which he receives as General Manager of Groupe Steria SCA, i.e. €318,000 with targets met;
  • the Board of Directors also decided:
  • to keep unchanged until the end of the year the quantitative targets (70% of the variable amount) set by the Supervisory Board of Groupe Steria SCA for the 2014 financial year;
  • to adjust the qualitative target (30% of the variable amount) to the Group’s current position;
  • to not disclose these targets for confidentiality reasons.

The Board of Directors decided furthermore to allot François Enaud, until the end of the 2014 financial year, a compensation package in the event of severance identical to that which he currently has as General Manager of Groupe Steria SCA.

The terms of payment of the severance compensation are as follows:

Severance compensation would be due in the event of non-voluntary departure (removal from or non-renewal of the Chief Executive Officer position) or resignation consequent to a change of control, except in cases of gross or wilful misconduct. Severance compensation would not be due in the event of voluntary retirement or resignation not consequent to a change of control.

 

The amount of severance compensation would be calculated based on the following three performance criteria applied over the entire time for which the position of General Manager of Groupe Steria was held. As the executive term of office of the General Manager began in 1997, the benchmarks to be used in computing the performance criteria are those of the 1997 financial year, the point at which the benchmark period starts.

 

Criterion No. 1: growth:

 

The Group’s revenue growth must be greater than the average revenue growth of IT services companies in Europe (benchmarking by Gartner or another industry analysis provider) over the benchmark period;

 

Criterion No. 2: operating margin:

 

The increase in the average operating margin (average of the last three years to date) must be at least 5% per annum, on average, over the benchmark period;

 

Criterion No. 3: current fully diluted EPS:

 

The increase in current fully diluted EPS (average of the last three years to date) must be more than 10% per annum, on average, over the reference period.

  • If the above three criteria are met: 100% of the severance compensation amount will be paid;
  • If two of the above three criteria are met: 66% of the severance compensation amount will be paid;
  • If one criterion is met: 33% of the severance compensation amount will be paid;
  • If no criteria are met: no severance compensation will be paid.

Assuming performance conditions are met, the severance compensation paid cannot exceed two years of the Chief Executive Officer’s gross fixed and variable compensation. The amount of one “year of compensation” would be determined on the basis of (i) annual fixed compensation for the year in which severance occurs and (ii) the average of the last two annual variable compensation amounts paid prior to the severance date.

If severance occurs consequent to a change of control of the Company, and except in cases of gross or wilful misconduct, the amount of severance compensation cannot be less than that of one year of compensation, irrespective of the satisfaction of performance criteria, in consideration notably of François Enaud’s length of service at the Company.

 

This commitment conforms to AFEP/MEDEF recommendations, with the following two exceptions:

 

  • As recommended, severance compensation is due only in the event of non-voluntary departure of the Chief Executive Officer. However, the rule relating to the combination of non-voluntary departure and departure consequent to change of control or strategy is not applied;
  • The amount of the severance compensation paid in the event of departure consequent to a change of control is, at all events, except in cases of gross or wilful misconduct, fixed at a minimum of one year of compensation.
    In closing, the Board of Directors decided:
  • to authorise Sopra Steria Group to continue allowing François Enaud to use his company car as well as the IT and telecommunications resources to which he currently has access, or to provide him with equivalent resources as set forth in company policy;
  • to authorise the reimbursement of his travel and representation expenses (with proof of payment).
    The Board of Directors will reexamine François Enaud’s compensation and targets at a later time with a view to finalising them for the 2015 financial year.