Publicis Groupe CEO Maurice Levy is set to receive a $21.6 million payday shortly -- the result of a deferred compensation plan tied to performance goals and length of service that was set up in 2003, a spokeswoman for the company has confirmed.
But Wednesday, as word of the big payday spread, it became a huge political football in the company’s home market of France. Executive pay is sensitive at a time when the country is struggling financially and bracing for economic austerity measures.
The country is gearing up for an election in May and the two leading candidates -- incumbent President Nicolas Sarkozy and Socialist Party contender Francois Hollande have made an issue of excessive pay for corporate executives. Both sides have commented on Levy’s package, although it was created nearly a decade ago, well before the emergence of economic difficulties currently besetting much of Western Europe.
A Publicis Groupe spokeswoman confirmed that the plan was designed to serve as both a performance incentive for Levy to achieve various growth and profit measures and also as a mechanism to keep the CEO in place through the nine-year period ending Dec. 31, 2011.
“Since it has been in effect, details of this system have been regularly communicated to shareholders and to the market, in complete transparency, and have been submitted for vote and approved by Publicis Groupe shareholders’ meetings,” the Paris-based rep replied via email to a query seeking comment.
The rep also indicated that the $21.6 million payout represents 0.4% of the value created for the company and its shareholders over the nine-year period that the program has been in place. Levy had to remain on board as CEO for the full nine years to collect the payment.
Still, the politicians were having a field day Wednesday, using Levy as a whipping boy for excessive CEO compensation. Dow Jones quoted French government spokesman Valerie Pecresse as saying the payment was "disproportionate" at a time when the country was struggling economically.
And the Dow wire also quoted Hollande as saying: "As we ask our fellow citizens to prepare for difficult times, there are some people who grant themselves high pay. That will change." Hollande, who is currently leading in the French election polls, has proposed a 75% tax bracket for the nation’s wealthiest individuals.
Levy had intended to retire at the end of last year, but has agreed to stay on until the search for his successor has been completed and at least through the end of 2012.