Additional information to shareholders on the 2018 remuneration report (Agenda item 1.2. at the annual general meeting on 16 April 2019)March 28, 2019
Additional information to shareholders on the 2018 remuneration report (Agenda item 1.2. at the annual general meeting on 16 April 2019)
This supplementary information is provided in conjunction with the advisory vote on the 2018 Remuneration Report at the upcoming Annual General Meeting on 16 April 2019 for further consideration. The Remuneration Report is available in the recently published Annual Report.
The remuneration philosophy of the Adecco Group is to reward performance, to create a strong alignment between management’s and shareholders’ interests and to ensure internal fairness and external competitiveness. The Board of Directors aims to ensure that the structure of executive remuneration adheres to market best practices and that shareholders receive adequate information on remuneration matters.
Since publication of the 2018 Annual Report, some shareholders and shareholders’ representatives have requested further disclosure with regard to changes to the Long Term Incentive (LTI) target amount of the Group CEO, which was increased to 120% of annual base salary in 2018, compared to 100% in 2017 and 80% in 2016. Shareholders want to better understand the rationale behind these changes.
The Board would like to address the questions regarding the Group CEO’s compensation and provides additional information to support shareholders in making fully informed voting decisions at the upcoming Annual General Meeting:
- Mr. Dehaze was promoted internally to the Group CEO position in 2015. At that time, the Board decided to set his compensation below the market level to reflect that it was his first role as CEO of a large public company.
- The intention was to gradually adjust his target remuneration over time, in alignment with the market median, subject to his performance and specific achievements related to the Group’s strategy (‘Perform, Transform and Innovate’).
- The base salary and short-term incentive (STI) target of Mr. Dehaze have remained unchanged since his promotion to CEO in 2015. In order to gradually align his total remuneration to market, as originally foreseen, the Board decided to adjust the LTI target amount. The LTI is the compensation element that is most aligned with shareholders’ interests, as it rewards relative long-term performance and is delivered in Adecco Group shares. After recent changes, the CEO’s total target compensation remains below the median of the peer group, as defined in the Remuneration Report.
- Following the gradual increases of the LTI target, the target variable remuneration (i.e. STI plus LTI) represents 66% of total compensation for the CEO, which reflects Adecco Group’s remuneration principle of ‘pay-for-performance' and strengthens the alignment with shareholders’ interests.
- In parallel, the Board decided to introduce minimum shareholding requirements for the Group CEO (and the other Executive Committee members) in 2018.
The Board of Directors is convinced that the above-mentioned decisions are reflective of the remuneration philosophy of the company and are well aligned with shareholders’ interests. The Board kindly asks shareholders to take into consideration the above when casting their vote on the agenda item 1.2 ‘Advisory Vote on the Remuneration Report 2018’ at the 2019 Annual General Meeting.