Publicis Groupe chief executive Arthur Sadoun has issued a stinging response to comments made by S4 Capital executive chairman Sir Martin Sorrell in a Campaign interview regarding the French agency group’s recent "cost of living" bonus for employees.
Following its Q3 results in October, Publicis announced it was giving nearly $50m as an 'exceptional bonus' to 45,000 staff to cope with rising inflation and cost of living expenses.
Only Publicis employees who are not entitled to variable remuneration received the bonus, which was worth one week's salary and was paid in November, so it arrived before the Thanksgiving and Christmas holidays.
In an interview published last week in Campaign Asia, Sorrell stated that the French holding company was merely gifting an extra week’s salary to make up for lost incentives that it failed to pay out during the pandemic.
That comment drew an uncharacteristically sharp retort from the Publicis chairman and CEO in an unsolicited statement to Campaign.
"It’s quite amusing that Sir Martin is using childish make-believe stories about others to distract from the epic fall of S4 value in the last 18 months," Sadoun said.
"S4 may have failed to pay out incentives during the pandemic, but that’s not the case at Publicis, as he wrongly stated in your article. In 2020, not only did we fully reimburse at the end of year the salary sacrifices made by our teams voluntarily when Covid hit. We also paid out a record high level of bonus for all of our teams, who have been fighting so hard during the crisis."
Sadoun's statement went on, with more barbs aimed at S4 Capital: "At Publicis, we have always stood for putting our people first. Sorrell should give it a try. I just hope he’s not recompensing them with stock options."
While it's not unusual for publicly-listed companies to defend their actions, particularly those affecting their own employees, Sadoun's decision to launch a personal attack on the S4 Capital boss is a surprise.
Sorrell is known for criticising rivals, particularly his old company, WPP, but most agency chiefs have resisted the urge to respond in the past because they wanted to avoid a public slanging match with him.
S4 Capital had a meteoric rise after Sorrell launched it on the stock market in 2018 but the share price peaked above 800p in September 2021 and since then it has lost approximately 75% of its value. In the same period Publicis' share price has gained roughly 13%.
It is thought that Sadoun felt especially strongly about Sorrell’s comments because Publicis has given extra financial support to its 90,000-strong global workforce in 2022.
Publicis paid out record annual bonuses in February and, in an additional move, it gave one week’s salary to about 35,000 employees who were not entitled to variable remuneration and had been "fighting by our side for the past two years”.
Sadoun described it as a “bonus for everyone” and the annual bonus pool of 400 million euros ($418m) for the 2021 financial year was double 2019 levels.
He went on to announce the second, exceptional bonus of one week’s salary for those without variable remuneration at this year’s Q3 results in recognition of Publicis’ strong performance (organic revenues increased 10% in each of the first three quarters of 2022) and the rising cost of living.
Other Publicis staff who are eligible for bonuses will receive them at the normal time, after the annual results next February.
None of the other “big six” agency groups has paid a special bonus in recent months.
While Publicis Groupe cut pay for 6,000 managers in 2020 during the worst of the pandemic and ended that year with more than 4,000 departures than new arrivals according to its annual financial report, it announced at the year-end in February 2021 that it would be repaying the salary sacrifice and setting aside a higher bonus pool.
Sorrell did not respond directly to Sadoun's comments when contacted by Campaign, but a source close to S4 Capital pointed out that an investment in the company has appreciated significantly more than Publicis over the last four years.
S4 Capital’s stock price has increased about 70% since 2018, when Sorrell first set it up through a reverse takeover of an existing shell company, and it has expanded through M&A. Publicis is up about 15% over the same period and has paid annual dividends — unlike S4 Capital.