DEF 14A 1 d655319ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

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  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material under § 240.14a-12

 

MANPOWERGROUP INC.

(Name of registrant as specified in its charter)

 

 

(Name of person(s) filing proxy statement, if other than the registrant)

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LOGO

2019 Notice of Annual Meeting of Shareholders and Proxy Statement


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MANPOWERGROUP INC.

100 MANPOWER PLACE

MILWAUKEE, WISCONSIN 53212

Notice of Annual Meeting of Shareholders

 

 

 

May 10, 2019

  

 

International Headquarters of ManpowerGroup

  

 

Record Date

 
  9:00 a.m. CDT    100 Manpower Place    The close of business  
    

Milwaukee, Wisconsin 53212

 

  

March 1, 2019

 

 

Items of Business:

 

(1)

To elect eleven individuals nominated by the Board of Directors of ManpowerGroup to serve until 2020 as directors;

 

(2)

To ratify the appointment of Deloitte & Touche LLP as our independent auditors for 2019;

 

(3)

To hold an advisory vote on approval of the compensation of our named executive officers; and

 

(4)

To transact such other business as may properly come before the meeting.

Holders of a majority of the outstanding shares must be present in person or by proxy in order for the annual meeting to be held. As allowed under the Securities and Exchange Commission’s rules, we have elected to furnish our proxy materials over the Internet. Accordingly, we have mailed to our shareholders of record and beneficial owners a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access the attached proxy statement and our annual report on Form 10-K via the Internet and how to vote online.

Whether or not you expect to attend the annual meeting in person, you are urged to vote by a telephone vote, by voting electronically via the Internet or, as applicable, by completing and mailing the proxy card. Instructions for telephonic voting and electronic voting via the Internet are contained in the Notice or, as applicable, on the accompanying proxy card. If you attend the meeting and wish to vote your shares personally, you may do so by revoking your proxy at any time prior to the voting thereof. In addition, you may revoke your proxy at any time before it is voted by advising the Secretary of ManpowerGroup in writing (including executing a later-dated proxy or voting via the Internet) or by telephone of such revocation.

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 10, 2019: The annual report on Form 10-K and proxy statement of ManpowerGroup are available for review on the Internet. Instructions on how to access and review the materials on the Internet can be found on the Notice and the accompanying proxy card.

Richard Buchband, Secretary

March 8, 2019


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CORPORATE GOVERNANCE DOCUMENTS

     2  
          

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     3  
          

PROPOSAL 1. ELECTION OF DIRECTORS

     4  

Director Nominee Biographies

     5  

Board Independence and Related Party Transactions

     11  

Meetings and Committees of the Board

     12  

Board Composition and Qualifications of Board Members

     14  

Board Diversity and Tenure

     16  

Board Leadership Structure

     17  

Board Effectiveness and Evaluations

     18  

Board Oversight of Risk

     18  

Compensation Consultant

     19  
          

BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

     21  
          

COMPENSATION DISCUSSION AND ANALYSIS

     23  
          

REPORT OF THE EXECUTIVE COMPENSATION AND HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS

     52  
          

EXECUTIVE COMPENSATION AND HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     52  
          

COMPENSATION POLICIES AND PRACTICES AS THEY RELATE TO RISK MANAGEMENT

     53  
          

COMPENSATION TABLES

     54  

Summary Compensation Table

     54  

All Other Compensation in 2018

     55  

Grants of Plan-Based Awards in 2018

     56  

Compensation Agreements and Arrangements

     57  

2018 Annual Incentive Award Calculations

     58  

Grants Under the 2011 Equity Incentive Plan

     60  

Outstanding Equity Awards at December 31, 2018

     61  

Option Exercises and Stock Vested in 2018

     63  

Nonqualified Deferred Compensation in 2018

     64  

Termination of Employment and Change of Control Arrangements

     66  

Post-Termination and Change of Control Benefits

     69  

Director Compensation for 2018

     75  

Non-Employee Director Stock Ownership Guidelines

     78  
          

CEO PAY RATIO

     79  
          

AUDIT COMMITTEE REPORT

     80  
          

PROPOSAL 2. RATIFICATION OF INDEPENDENT AUDITORS

     83  
          

PROPOSAL 3.  ADVISORY VOTE ON APPROVAL OF THE COMPENSATION OF NAMED EXECUTIVE OFFICERS

     84  
          

SUBMISSION OF SHAREHOLDER PROPOSALS

     86  
          

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     86  
          

OTHER VOTING INFORMATION

     86  
          

OTHER MATTERS

     86  
          

APPENDIX A-1

     A-1  
          

 

  


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MANPOWERGROUP INC.

100 Manpower Place

Milwaukee, Wisconsin 53212

March 8, 2019

Proxy Statement

This proxy statement relates to the solicitation of proxies by the board of directors of ManpowerGroup Inc. for use at the annual meeting of shareholders to be held at 9:00 a.m., local time, on May 10, 2019 or at any postponement or adjournment of the annual meeting, for the purposes set forth in this proxy statement and in the accompanying notice of annual meeting of shareholders. The annual meeting will be held at ManpowerGroup’s International Headquarters, 100 Manpower Place, Milwaukee, Wisconsin.

Under rules adopted by the Securities and Exchange Commission, ManpowerGroup is making this proxy statement and other annual meeting materials available on the Internet instead of mailing a printed copy of these materials to each shareholder. Shareholders who received a Notice of Internet Availability of Proxy Materials (the “Notice”) by mail will not receive a printed copy of these materials other than as described below. Instead, the Notice contains instructions as to how shareholders may access and review all of the important information contained in the materials on the Internet, including how shareholders may submit proxies by telephone or over the Internet.

If you received the Notice by mail and would prefer to receive a printed copy of ManpowerGroup’s proxy materials, please follow the instructions for requesting printed copies included in the Notice.

The expense of this solicitation will be paid by us. No solicitation other than by mail and via the Internet is contemplated, except that our officers or employees may solicit the return of proxies from certain shareholders by telephone. In addition, we have retained Innisfree M&A Incorporated to assist in the solicitation of proxies for a fee of approximately $15,000 plus expenses.

Only shareholders of record at the close of business on March 1, 2019 are entitled to notice of and to vote the shares of our common stock, $.01 par value, registered in their name at the annual meeting. As of the record date, we had outstanding 60,039,776 shares of common stock. The presence, in person or by proxy, of a majority of the shares of the common stock outstanding on the record date will constitute a quorum at the annual meeting. Abstentions and broker non-votes, which are proxies from brokers or nominees indicating that such persons have not received instructions from the beneficial owners or other persons entitled to vote shares, will be treated as present for purposes of determining the quorum. Each share of common stock entitles its holder to cast one vote on each matter to be voted upon at the annual meeting. With respect to the proposals to elect the individuals nominated by our Board of Directors to serve as directors for one year, to ratify the appointment of Deloitte & Touche LLP as our independent auditors for 2019 and the advisory vote on approval of the compensation of our named executive officers, abstentions and broker non-votes will not be counted as voting on the proposals.

The Notice is being mailed to shareholders commencing on or about March 26, 2019.

If a proxy is properly submitted to us and not revoked, it will be voted in accordance with the instructions contained in the proxy. Each shareholder may revoke a previously granted proxy at any time before it is exercised by advising the secretary of ManpowerGroup in writing (either by submitting a duly executed proxy bearing a later date or voting by telephone or via the Internet) or by telephone of such revocation. Attendance at the annual meeting will not, in itself, constitute revocation of a proxy. Unless otherwise directed, all proxies will be voted for the election of each of the individuals nominated by our board of directors to serve as directors for one year, will be voted for the appointment of Deloitte & Touche LLP as our independent auditors for 2019 and will be voted for approval of the compensation of our named executive officers.

 

   | ManpowerGroup


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  Corporate Governance Documents

 

 

Corporate Governance Documents

Certain documents relating to corporate governance matters are available in print by writing to Richard Buchband, Secretary, ManpowerGroup Inc., 100 Manpower Place, Milwaukee, Wisconsin 53212 and on ManpowerGroup’s website at http://investor.manpowergroup.com/governance. These documents include the following:

 

   

Amended and restated articles of incorporation;

 

   

Amended and restated bylaws;

 

   

Corporate governance guidelines;

 

   

Code of business conduct and ethics;

 

   

Charter of the nominating and governance committee, including the guidelines for selecting board candidates;

 

   

Categorical standards for relationships deemed not to impair independence of non-employee directors;

 

   

Charter of the audit committee;

 

   

Independent auditor services policy;

 

   

Charter of the executive compensation and human resources committee;

 

   

Executive officer stock ownership guidelines;

 

   

Outside director stock ownership guidelines; and

 

   

Anti-corruption policy.

Information contained on ManpowerGroup’s website is not deemed to be a part of this proxy statement.

 

2019 Proxy Statement | 2   


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Security Ownership of Certain Beneficial Owners  

 

 

Security Ownership of Certain Beneficial Owners

The following table lists as of the record date (except as noted below) information as to the persons believed by us to be beneficial owners of more than 5% of our outstanding common stock:

 

     

Name and Address of

Beneficial Owners

  

Amount and Nature of

Beneficial Ownership

 

Percent of  

Class(1)  

BlackRock, Inc.

55 East 52nd Street

New York, New York 10055

       6,577,310 (2)       11.0 %  

Vanguard Group, Inc.

100 Vanguard Boulevard

Malvern, PA 19355

       5,713,279 (3)       9.5 %  

 

(1)

Based on 60,039,776 shares of common stock outstanding as of the record date.

 

(2)

This information is based on a Schedule 13G filed on January 31, 2019, by BlackRock, Inc. on its behalf and on behalf of its following affiliates: BlackRock Advisors, LLC, BlackRock Advisors (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Japan Co., Ltd., BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Life Limited, BlackRock Institutional Trust Company, National Association, BlackRock Investment Management, LLC, BlackRock Investment Management (Australia) Limited, BlackRock (Luxembourg) S.A., BlackRock (Netherlands) B.V., BlackRock International Limited, BlackRock Investment Management (UK) Ltd, BlackRock Fund Managers Ltd, BlackRock Asset Management North Asia Limited, BlackRock (Singapore) Limited and BlackRock Asset Management Schweiz AG. According to this Schedule 13G, these securities are owned of record by BlackRock, Inc. BlackRock, Inc. has sole voting power with respect to 5,955,051 shares held and sole dispositive power with respect to 6,577,310 shares held.

 

(3)

This information is based on a Schedule 13G filed on February 11, 2019. According to this Schedule 13G, these securities are owned by various individual and institutional investors for which Vanguard Group, Inc. (“Vanguard”) serves as investment advisor. Vanguard has sole voting power with respect to 43,563 shares held, shared voting power with respect to 22,940 shares held, sole dispositive power with respect to 5,648,348 shares held and shared dispositive power with respect to 64,931 shares held.

 

   | ManpowerGroup


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  1. Election of Directors

 

 

1. Election of Directors

Our articles of incorporation provide that our board of directors will consist of three to fifteen members. Our board of directors currently consists of twelve members. All directors are elected annually to serve until the next annual meeting of shareholders and until the directors’ successors are duly elected and shall qualify.

The board of directors may appoint additional directors, in accordance with our articles of incorporation, based upon the recommendation of the nominating and governance committee and subject to re-election by our shareholders at the next annual meeting of shareholders.

The following individuals are being nominated as directors, each for a one-year term expiring at the 2020 annual meeting of shareholders:

 

Gina R. Boswell    Ulice Payne, Jr.
Cari M. Dominguez    Jonas Prising
William Downe    Paul Read
John F. Ferraro    Elizabeth P. Sartain
Patricia Hemingway Hall    Michael J. Van Handel
Julie M. Howard   

In accordance with the Company’s corporate governance guidelines regarding retirement, John R. Walter is retiring from the board of directors effective May 10, 2019, and will therefore not be seeking re-election.

The nominating and governance committee reviewed the qualifications of the directors listed above who are seeking election or re-election and recommended to the board of directors that each be elected or re-elected to serve for an additional one-year term. The board of directors has confirmed the nominations.

In accordance with our articles of incorporation and bylaws, a nominee will be elected as a director if the number of votes cast in favor of the election exceeds the number of votes cast against the election of that nominee. Abstentions and broker non-votes will not be counted as votes cast. If the number of votes cast in favor of the election of a director is less than the number of votes cast against the election of the director, the director is required to tender his or her resignation from the board of directors to the nominating and governance committee. The nominating and governance committee will recommend to the board of directors whether to accept or reject the tendered resignation or whether other action should be taken. Any such resignation will be effective only upon its acceptance by the board of directors. The board of directors will act on the recommendation of the nominating and governance committee and publicly disclose its decision, and the rationale behind its decision, within 90 days from the date of the announcement of the final results of balloting for the election.

 

LOGO    The board of directors recommends you vote FOR the election of each of the nominees listed above.

 

2019 Proxy Statement | 4   


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1. Election of Directors  

 

 

Director Nominee Biographies

Gina R. Boswell

 

 

 

LOGO   

Age: 56

Director since: 2007

Committees: Audit, Nominating and Governance

Biographical Information:

President, US Customer Development at Unilever, a global food, personal care and household products company, since May 2017. General Manager, U.K. and Ireland, at Unilever from September 2015 to May 2017. Executive Vice President, Personal Care, at Unilever from 2011 to September 2015. President, Global Brands, of Alberto-Culver Company, a consumer goods company, from 2008 to July 2011. Prior thereto, Ms. Boswell held several leadership positions, including Senior Vice President and Chief Operating Officer-North America of Avon Products, Inc. from 2005 to 2007 and as an executive with Ford Motor Company from 1999 to 2003. A director of Wolverine World Wide, Inc. since 2013.

 

Qualifications:

Ms. Boswell has significant international, managerial, strategic, operational, global and financial management expertise as a result of the various senior leadership positions she has held at several companies with global operations. Ms. Boswell also brings an important perspective from her service as a director on other public company boards.

Cari M. Dominguez

 

 

 

LOGO   

Age: 69

Director since: 2007

Committees: Executive Compensation and Human Resources

Biographical Information:

President, Dominguez & Associates, a management consulting firm, since January 2007. Prior thereto, Ms. Dominguez held several leadership positions within the United States government as well as in the public and private sectors, including Chair of the U.S. Equal Employment Opportunity Commission (“EEOC”) from 2001 to 2006, Partner, Heidrick & Struggles, a consulting firm, from 1995 to 1998, Director, Spencer Stuart, a consulting firm, from 1993 to 1995, Assistant Secretary for Employment Standards Administration, and Director of the Office of Federal Contract Compliance Programs, U.S. Department of Labor, from 1989 to 1993. A trustee of The Calvert Funds since 2008, director of Triple-S Management Corporation since 2012 and a director with the National Association of Corporate Directors since 2013.

 

Qualifications:

Ms. Dominguez has significant expertise in government relations and labor markets from her position as Chair of the EEOC and other various governmental positions she held. Ms. Dominguez also has managerial, international and operational experience in the human resources industry as a result of the various positions she held at various human resource consulting groups.

 

   | ManpowerGroup


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  1. Election of Directors

 

 

William Downe

 

 

 

LOGO   

Age: 66

Director since: 2011

Lead Director since: 2017

Committees: Executive Compensation and Human Resources (Chair)

Biographical Information:

Non-Executive Chairman of Trans Mountain Corporation since November 2018. Chief Executive Officer of BMO Financial Group, a highly diversified financial services provider based in North America from 2007 to October 2017. Prior thereto, Mr. Downe held several leadership positions with BMO Financial Group and its subsidiaries, including Chief Operating Officer of BMO Financial Group from 2006 to 2007, and Deputy Chair of BMO Financial Group and Chief Executive Officer, BMO Nesbitt Burns and Head of Investment Banking Group from 2001 to 2006. A director of Loblaw Companies Limited since May 2018 and a director of BMO Financial Group from 2007 to October 2017.

 

Qualifications:

Mr. Downe brings to the board significant managerial, operational and global experience he gained during his tenure as Chief Executive Officer of BMO Financial Group and serving on its Board.

John F. Ferraro

 

 

 

LOGO   

Age: 63

Director since: 2016

Committees: Audit

Biographical Information:

Executive Vice President, Strategy and Sales of Aquilon Energy Services, a software and services company for the energy industry, since February 2019. Global Chief Operating Officer of Ernst & Young (“EY”), a global professional services organization, from 2007 to January 2015. Prior thereto, Mr. Ferraro held several senior leadership positions at EY, including Global Vice Chair Audit. In addition, Mr. Ferraro served as a member of EY’s Global Executive board for more than 10 years. A director of Advance Auto Parts since 2015 and International Flavor and Fragrances, Inc. since 2015.

 

Qualifications:

Mr. Ferraro brings to the board significant managerial, operational, financial and global experience he gained during his tenure as Global Chief Operating Officer of EY and the other various positions he held at EY as well as his service as a director on other public company boards.

 

2019 Proxy Statement | 6   


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1. Election of Directors  

 

 

Patricia Hemingway Hall

 

 

 

LOGO   

Age: 66

Director since: 2011

Committees: Audit, Nominating and Governance (Chair)

Biographical Information:

President and Chief Executive Officer of Health Care Service Corporation (“HCSC”), a mutual health insurer, from 2008 to December 2015. Prior thereto, Ms. Hemingway Hall held several leadership positions at HCSC, including President and Chief Operating Officer from 2007 to 2008 and Executive Vice President of Internal Operations from 2006 to 2007. A director of Cardinal Health since 2013, Celgene Corporation since April 2018 and Halliburton since February 2019.

 

Qualifications:

Ms. Hemingway Hall brings to the board significant managerial, operational, sales, marketing and government relations, experience from her tenure as President and Chief Executive Officer of HCSC and the other various positions she held at HCSC. Ms. Hemingway Hall also brings an important perspective gained from her service as a director on other public company boards.

Julie M. Howard

 

 

 

LOGO   

Age: 56

Director since: 2016

Committees: Executive Compensation and Human Resources, Nominating and Governance

Biographical Information:

Chief Executive Officer of Navigant Consulting, Inc. (“Navigant”), a specialized global professional services firm, since 2012. Chairman of the Board of Navigant since 2014. Prior thereto, Ms. Howard held several leadership positions at Navigant including Chief Operating Officer. A director of InnerWorkings, Inc. since 2012 and a former director of Kemper Corporation from 2010 to 2015.

 

Qualifications:

Ms. Howard brings to the board significant managerial and operational experience from her tenure as Chief Executive Officer of Navigant and the other various positions she held at Navigant. Ms. Howard also brings an important perspective from serving on other public company boards.

 

   | ManpowerGroup


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  1. Election of Directors

 

 

Ulice Payne, Jr.

 

 

 

LOGO   

Age: 63

Director since: 2007

Committees: Audit, Nominating and Governance

Biographical Information:

President and Managing Member of Addison-Clifton, LLC, a provider of global trade compliance advisory services, since May 2004. Prior thereto, Mr. Payne held several leadership positions, including President and Chief Executive Officer of the Milwaukee Brewers Baseball Club from 2002 to 2003 and Partner with the law firm Foley & Lardner LLP from 1998 to 2002. A trustee of The Northwestern Mutual Life Insurance Company since 2005, a director of WEC Energy Group, Inc. (formerly Wisconsin Energy Corporation) since 2003 and Foot Locker, Inc. since 2016.

 

Qualifications:

Mr. Payne brings to the board significant managerial, operational, financial and global experience as a result of many senior positions he has held including as President of Addison-Clifton, LLC. The board of directors also benefits from his broad experience in and knowledge of international business.

Jonas Prising

 

 

 

LOGO   

Age: 54

Director since: 2014

Committees: none

Biographical Information:

Chief Executive Officer of ManpowerGroup since May 2014. Chairman of ManpowerGroup since December 2015. ManpowerGroup President from 2012 to April 2014. Executive Vice President, President of ManpowerGroup — The Americas from 2009 to 2012. Prior thereto, Mr. Prising was the Executive Vice President, President of ManpowerGroup — United States and Canadian Operations from 2006 to 2008 and held other positions at ManpowerGroup since 1999. A director of Kohl’s Corporation since 2015.

 

Qualifications:

Mr. Prising brings to the board a deep knowledge of ManpowerGroup and its operations from his many years of experience with the Company, including as President with responsibility for the Americas and Southern Europe and currently as Chairman and Chief Executive Officer. He also brings a deep understanding of the industry, a global perspective, having lived and worked in multiple countries around the world, and a strong knowledge of the relevant marketplaces in Europe and Asia.

 

2019 Proxy Statement | 8   


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1. Election of Directors  

 

 

Paul Read

 

 

 

LOGO   

Age: 52

Director since: 2014

Committees: Audit (Chair)

Biographical Information:

President and Chief Operating Officer of Ingram Micro, Inc., a technology distributor and supply-chain services provider, from 2013 to February 2016. Chief Financial Officer of Flextronics International, Ltd., an electronics manufacturing services provider, from 2008 to June 2013.

 

Qualifications:

Mr. Read brings to the board significant managerial, operational, financial and global experience as a result of many senior positions he has held, including his tenure as President and Chief Operating Officer of Ingram Micro, Inc. and Chief Financial Officer of Flextronics International, Ltd.

Elizabeth P. Sartain

 

 

 

LOGO   

Age: 64

Director since: 2010

Committees: Executive Compensation and Human Resources

Biographical Information:

Independent Human Resource Advisor and Consultant since April 2008. Prior thereto, Ms. Sartain held several leadership positions, including Executive Vice President and Chief People Officer at Yahoo! Inc. from 2001 to 2008 and an executive with Southwest Airlines serving in various positions from 1988 to 2001. A director of Shutterfly Inc. since 2016.

 

Qualifications:

Ms. Sartain brings to the board significant human resources experience as a result of the various senior management positions she held at various multi-national companies as well as being an independent human resource advisor for many years. Ms. Sartain also brings an important perspective gained from her service as a director on other public company boards.

 

   | ManpowerGroup


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  1. Election of Directors

 

 

Michael J. Van Handel

 

 

 

LOGO   

Age: 59

Director since: 2017

Committees: None

Biographical Information:

Senior Executive Vice President of ManpowerGroup from February 2016 to February 2017. Chief Financial Officer of ManpowerGroup from July 1998 to February 2016. Prior thereto, Mr. Van Handel held several other senior finance and accounting positions within ManpowerGroup since 1989. A director of BMO Financial Corporation, a subsidiary of BMO Financial Group, since 2006 and a Director of ICF International since June 2017. Formerly, a director of Cellular Dynamics International, Inc. from 2010 to 2015.

 

Qualifications:

Mr. Van Handel brings to the board significant managerial, operational, financial and global experience including his time as Chief Financial Officer and the other senior financial positions he held while employed at ManpowerGroup. He also brings deep knowledge of ManpowerGroup and its operations as well as a deep understanding of the industry with his over 20 years of experience at ManpowerGroup. Mr. Van Handel also brings an important perspective gained from his service as a director on other public company boards.

 

 

 

Each director attended at least 75% of the board meetings and meetings of committees on which he or she served in 2018. The board of directors held five regular meetings during 2018. The board of directors did not take action by written consent during 2018.

Under the Company’s corporate governance guidelines, an individual cannot be nominated for election to the board of directors after his or her 72nd birthday. Any director who turns 72 during his or her normal term will continue in office until the expiration of that term. As previously stated, Mr. Walter will retire from the board of directors at the end of his current term, May 10, 2019, and will therefore not be seeking re-election.

Under ManpowerGroup’s bylaws, nominations, other than those made by the board of directors or the nominating and governance committee, must be made pursuant to timely notice in proper written form to the Secretary of ManpowerGroup. To be timely, a shareholder’s request to nominate a person for election to the board of directors at an annual meeting of shareholders, together with the written consent of such person to serve as a director, must be received by the Secretary of ManpowerGroup not less than 90 days nor more than 150 days prior to the anniversary of the annual meeting of shareholders held in the prior year. To be in proper written form, the notice must contain certain information concerning the nominee and the shareholder submitting the nomination, including the disclosure of any hedging, derivative or other complex transactions involving the Company’s common stock to which a shareholder proposing a director nomination is a party.

 

2019 Proxy Statement | 10   


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1. Election of Directors  

 

 

Board Independence and Related Party Transactions

The board of directors has adopted categorical standards for relationships deemed not to impair independence of non-employee directors to assist it in making determinations of independence. The categorical standards are included in our Corporate Governance Guidelines and are available on ManpowerGroup’s website at http://investor.manpowergroup.com/governance. As required under the Corporate Governance Guidelines, our board of directors reviews and determines the independence of all directors on an annual basis.

In making its independence determinations, the nominating and governance committee evaluates the various commercial and employment transactions and relationships known to the committee that exist between ManpowerGroup and the entities with which certain of our directors or members of their immediate families are, or have been, affiliated. The nominating and governance committee also reviews any other relevant facts and circumstances regarding the nature of these relationships to determine whether other factors, regardless of the categorical standards, might compromise a director’s independence.

The board of directors has determined that ten of twelve of the current directors of ManpowerGroup are independent under the listing standards of the New York Stock Exchange after taking into account the categorical standards and the following:

 

   

Ms. Boswell is President, US Customer Development at Unilever, which has engaged ManpowerGroup to provide services to the company.

 

   

Mr. Payne is a trustee of Northwestern Mutual. Northwestern Mutual and certain of its affiliates have engaged ManpowerGroup to provide services to the company.

The independent directors are Ms. Boswell, Ms. Dominguez, Mr. Downe, Mr. Ferraro, Ms. Howard, Ms. Hemingway Hall, Mr. Payne, Mr. Read, Ms. Sartain, and Mr. Walter.

Mr. Van Handel previously served as an executive officer of the company and, as such, does not currently qualify as independent under the listing rules of the New York Stock Exchange. Mr. Prising also does not qualify as independent under the listing rules of the New York Stock Exchange because he is currently an executive officer.

The nominating and governance committee will evaluate eligible shareholder-nominated candidates for election to the board of directors in accordance with the procedures described in ManpowerGroup’s bylaws and in accordance with the guidelines and considerations relating to the selection of candidates for membership on the board of directors described under the heading “Board Composition and Qualifications of Board Members.”

ManpowerGroup does not have a policy regarding board members’ attendance at the annual meeting of shareholders. All of the directors attended the 2018 annual meeting of shareholders.

Any interested party who wishes to communicate directly with the lead director or with the non-management directors as a group may do so by calling 1-800-210-3458. The third-party service provider that monitors this telephone number will forward a summary of all communications directed to the non-management directors to the lead director.

 

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Meetings and Committees of the Board

The board of directors has standing audit, executive compensation and human resources, and nominating and governance committees. The board of directors has adopted written charters for these committees, which are available on ManpowerGroup’s web site at http://investor.manpowergroup.com/governance.

The following table sets forth the current members of each of the committees and the number of meetings held during 2018:

 

       
        Audit    Executive
Compensation and
Human Resources
  

Nominating and  

Governance  

Gina R. Boswell

    

     

Cari M. Dominguez

       

  

William Downe(1)

       

Chair

  

John F. Ferraro

    

     

Patricia Hemingway Hall

    

     

Chair

Julie M. Howard

       

  

Ulice Payne, Jr.

    

     

Paul Read

    

Chair

     

Elizabeth P. Sartain(1)

       

  

John R. Walter(2)

         

  

  Number of Meetings in 2018

    

5

  

6

  

4

 

(1)

Ms. Sartain will become chair of the executive compensation and human resources committee in May 2019 succeeding Mr. Downe. Mr. Downe will remain a member of the committee.

(2)

Mr. Walter is retiring from the board of directors effective May 10, 2019.

Audit Committee

The board of directors has determined that each member of the audit committee meets the financial literacy and independence requirements of the SEC and New York Stock Exchange, as applicable, and that Ms. Boswell, Mr. Ferraro and Mr. Read are each an “audit committee financial expert” as defined under the applicable rules of the SEC. Under the Company’s corporate governance guidelines, no member of the audit committee may serve on the audit committee of more than three public companies, including ManpowerGroup. No member of the audit committee currently serves on the audit committee of more than three public companies, including ManpowerGroup.

The functions of this committee are to:

 

   

appoint the independent auditors for the annual audit and approve the fee arrangements with the independent auditors;

 

   

monitor the independence, qualifications and performance of the independent auditors;

 

   

review the planned scope of the annual audit;

 

   

review the financial statements to be included in our quarterly reports on Form 10-Q and our annual report on Form 10-K, and our disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of those reports;

 

   

review compliance with and reporting under Section 404 of the Sarbanes-Oxley Act of 2002;

 

   

review our financial reporting processes and internal controls and any significant audit adjustments proposed by the independent auditors;

 

   

make a recommendation to the board of directors regarding inclusion of the audited financial statements in our annual report on Form 10-K;

 

   

review recommendations, if any, by the independent auditors resulting from the audit to ensure that appropriate actions are taken by management;

 

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review matters of disagreement, if any, between management and the independent auditors;

 

   

periodically review our Policy Regarding the Retention of Former Employees of Independent Auditors;

 

   

oversee compliance with our Independent Auditor Services Policy;

 

   

meet privately on a periodic basis with the independent auditors, internal audit staff and management to review the adequacy of our internal controls and other finance related matters;

 

   

meet privately with management to review the competence, performance and independence of the independent auditors;

 

   

monitor our internal audit department, including our internal audit plan;

 

   

review guidelines and policies regarding compliance by our employees with our code of business conduct and ethics, including the anti-corruption policy;

 

   

review procedures for receipt, retention and treatment of, and the confidential and anonymous submission of concerns regarding questionable accounting or auditing matters;

 

   

assist the board of directors with its oversight of the performance of the Company’s risk management function;

 

   

review current tax matters affecting us;

 

   

periodically discuss with management our risk management framework;

 

   

monitor any litigation involving ManpowerGroup that may have a material financial impact on ManpowerGroup or that relates to matters entrusted to the audit committee; and

 

   

approve the retention, compensation and termination of outside legal, accounting and other such advisors to the committee.

In addition, the charter of the audit committee provides that the audit committee shall review and approve all related party transactions that are material to ManpowerGroup’s financial statements or that otherwise require disclosure to ManpowerGroup’s shareholders, provided that the audit committee shall not be responsible for reviewing and approving related party transactions that are reviewed and approved by the board of directors or another committee of the board of directors. The audit committee did not take action by written consent during 2018.

Executive Compensation and Human Resources Committee

Each member of the executive compensation and human resources committee is “independent” within the meaning of the applicable listing standards of the New York Stock Exchange.

The functions of this committee are to:

 

   

establish the compensation of the chief executive officer of ManpowerGroup, subject to ratification by the independent members of the board of directors;

 

   

approve the compensation, based on the recommendations of the chief executive officer of ManpowerGroup, of any president and the chief financial officer, and certain other senior executives of ManpowerGroup;

 

   

determine the terms of any agreements concerning employment, compensation or employment termination, as well as monitor the application of ManpowerGroup’s retirement and other fringe benefit plans, with respect to the individuals listed above;

 

   

monitor the professional development of ManpowerGroup’s key executive officers;

 

   

review succession plans for the chief executive officer of ManpowerGroup, of any president and the chief financial officer and certain other senior executives of ManpowerGroup;

 

   

administer ManpowerGroup’s equity incentive plans and employee stock purchase plans and oversee ManpowerGroup’s employee retirement and welfare plans;

 

   

administer ManpowerGroup’s annual incentive plan;

 

   

review and recommend the “Compensation Discussion and Analysis” to be included in our annual proxy statement;

 

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develop and implement policies regarding the recoupment or “clawback” of excess compensation paid to executive officers of the Company;

 

   

approve the retention, compensation and termination of outside compensation consultants, independent legal advisors or other advisors and have oversight of their work; and

 

   

consider the independence of any outside compensation consultant, independent legal advisor or other advisor to the committee.

In accordance with the terms of its charter, the executive compensation and human resources committee may from time to time delegate authority and assign responsibility with respect to such of its functions to officers of the Company, or to a subcommittee of the committee. The executive compensation and human resources committee took two actions by written consent during 2018.

Nominating and Governance Committee

Each member of the nominating and governance committee is “independent” within the meaning of the applicable listing standards of the New York Stock Exchange.

The functions of this committee are to:

 

   

recommend nominees to stand for election at annual meetings of shareholders, to fill vacancies on the board of directors and to serve on committees of the board of directors;

 

   

establish procedures and assist in identifying candidates for board membership;

 

   

review the qualifications of candidates for board membership, including any candidates nominated by shareholders in accordance with our bylaws;

 

   

periodically review the compensation arrangements in effect for the non-management members of the board of directors and recommend any changes deemed appropriate;

 

   

oversee the annual self-evaluation of the performance of the board of directors and each of its committees and oversee, or ensure another committee oversees, the annual evaluation of the performance of management;

 

   

establish and review, for recommendation to the board of directors, guidelines and policies on the size and composition of the board, the structure, composition and functions of the board committees, and other significant corporate governance principles and procedures;

 

   

oversee the content and format of our code of business conduct and ethics and recommend any changes as deemed appropriate;

 

   

monitor compliance by the non-management directors with our code of business conduct and ethics;

 

   

develop and periodically review succession plans for the directors;

 

   

periodically review the corporate governance guidelines and recommend any changes as deemed appropriate;

 

   

review and recommend categorical standards for determining non-management director independence consistent with the rules of the New York Stock Exchange and other requirements; and

 

   

approve the retention, compensation and termination of any outside independent advisors to the committee.

The nominating and governance committee has from time to time engaged director search firms to assist it in identifying and evaluating potential board candidates. The nominating and governance committee did not take any action by written consent during 2018.

Board Composition and Qualifications of Board Members

The nominating and governance committee has adopted, and the board of directors has approved, guidelines for selecting board candidates that the committee considers when evaluating candidates for nomination as directors. The guidelines call for the following with respect to the composition of the board:

 

   

a variety of experience and backgrounds;

 

   

a core of business executives having substantial senior management and financial experience;

 

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individuals who will represent the best interests of the shareholders as a whole rather than special interest constituencies;

 

   

the independence of at least a majority of the directors; and

 

   

individuals who represent a diversity of gender, race and age.

In connection with its consideration of possible candidates for board membership, the committee also has identified areas of experience that members of the board should as a goal collectively possess. The below graphic lists these skills and attributes and indicates which of the director nominees possess each. As shown, these skills and attributes are well represented within this group.

 

LOGO

Gina R. Boswell Cari M. Dominguez William Downe John F. Ferraro Patricia Hemingway Hall Julie M. Howard Ulice Payne, Jr. Jonas Prising Paul Read Elizabeth P. Sartain Michael J. Van Handel Previous Board Experience serving as a director of another public company International Business Experience in diverse geographic, political and regulatory environments Corporate Governance Supports our goals of strong Board and management accountability Active or Former CEO/Chairperson or other C-Suite Officer Served in a senior leadership role at a large organization Sales Experience developing strategies to grow sales and market share Government Relations Understanding of government regulations affecting our business Human Resources Experience building knowledge, skills and abilities of employees Marketing and Branding Experience in a senior management position managing marketing/branding Technology Experience with technology, cybersecurity, information systems/data management or privacy Accounting or Financial Oversight Experience to provide valuable insight in overseeing finances Operations Experience with our business, strategy and marketplace dynamics.

The Company believes that the present composition of the board of director nominees satisfies the guidelines for selecting board candidates set out above; specifically, the nominees include individuals who have a variety of experience and backgrounds, the nominees include a core of business executives having substantial experience in management as well as one member having government experience, and nine of eleven of the nominees are independent under the rules of the New York Stock Exchange.

 

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The board of directors and the nominating and governance committee evaluated each of the director nominees’ contributions to the board of directors as well as their role in the operation of the board of directors as a whole. The nominating and governance committee considered both the background and experience of each director nominee as well as the qualifications set forth in the biographies on pages 5 to 10 of this proxy statement.

Board Diversity and Tenure

The composition of the nominees for the board also reflects diversity of gender, race and age, an objective that the nominating and governance committee continually strives to enhance when searching for and considering new directors. Based on the composition of the nominees for our board of directors, we believe this objective has been achieved.

 

 

 

5

Directors are Women

 

    

Five  

new directors   

joined the Board in   

the last five years   

 

    

 

LOGO   

 

Average tenure of   

6.7 years 

 

 

2

Directors of

Ethnic Diversity

 

 

 

 

Average age  

of directors is  

61 

 

 

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Board Leadership Structure

Chairman of the Board

Under ManpowerGroup’s bylaws and in accordance with the Company’s corporate governance guidelines, the board of directors can choose whether the roles of chairman and chief executive officer should be combined or separated, based on what it believes is best for the Company and its shareholders at a given point in time. Jonas Prising has been chairman of the board of directors since December 31, 2015. The board of directors has evaluated the Company’s leadership structure and determined that the presence of our independent lead director who, as described below, has meaningful oversight responsibilities, together with a strong leader in the combined role of chairman and chief executive officer, serves the best interests of ManpowerGroup and its shareholders. The board of directors believes that in light of Mr. Prising’s extensive knowledge of ManpowerGroup and its industry, gained through his tenure with the Company, he is well positioned to serve as both chairman and chief executive officer of the Company.

Lead Director

The board of directors has selected Mr. Downe, retired CEO of BMO Financial Group, to serve as lead director. Our corporate governance guidelines provide that if the same person holds the chief executive officer and chairman roles or if the chairman is not independent, the board of directors will designate one of the independent directors to serve as the lead director. The lead director helps ensure that there is an appropriate balance between management and the independent directors and that the independent directors are fully informed and able to discuss and debate the issues that they deem important.

Our corporate governance guidelines contemplate that the lead director will be appointed annually and that he or she should be willing to serve for at least three years in such capacity. The board of directors believes having a lead director serving continuous terms provides greater continuity to the role, enhances board leadership and performance and facilitates effective oversight of the performance of senior management. Mr. Downe has served as lead director since May 2017, and at a board meeting in February 2019, the board of directors re-appointed Mr. Downe to serve as lead director for another year.

The lead director’s duties include the following:

 

   

Preside at executive sessions of the non-employee directors;

 

   

Preside at all other meetings of directors where the chairman of the board is not present;

 

   

Serve as liaison between the chairman of the board and the non-employee directors;

 

   

Approve what information is sent to the board;

 

   

Approve the meeting agendas for the board;

 

   

Approve meeting schedules to assure that there is sufficient time for discussion on all agenda items;

 

   

Provide feedback from executive sessions of the independent directors to the Chairman and CEO and other senior management;

 

   

Serve in a key role in the board evaluation processes and in evaluation of the CEO;

 

   

Recommend to the board and the board committees the retention of advisers and consultants who report directly to the board;

 

   

Have the authority to call meetings of the non-employee directors;

 

   

If requested by major shareholders, ensure that he or she is available for consultation and direct communication; and

 

   

Perform such other duties as the board may delegate from time to time.

 

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Board Effectiveness and Evaluation

Our board of directors is committed to performing effectively for the benefit of the Company and its shareholders at both the board and committee level. Each year, the nominating and governance committee oversees the board and committee evaluation process and determines the format and framework for the process.

Annual Evaluation Process

The purpose of the annual evaluation process is to ensure that the board continues to operate at a high level, with an opportunity for self-reflection and improvement. Historically, we have conducted an internal assessment at the board level and at each of the committees, making use of both externally developed questionnaires and internal discussion materials. The responses to the written questionnaires, and the internal discussion materials, formed the basis for a self-evaluation process conducted by each committee, which was then summarized for the full board. The board followed a similar process, conducted by the board in full, regarding its own effectiveness.

Independent Consultant

For 2018, we determined to expand the process. The nominating and governance committee engaged a third-party consultant, experienced in corporate governance matters, to assist with the board and committee evaluation process. Directors were interviewed by the independent third party, and gave specific feedback addressing board effectiveness, individual contributions, committee functioning, and similar topics, as well as suggestions to enhance the efficiency and productivity of the board in general. Directors responded to questions designed to elicit this information, and the independent third party synthesized the results and comments received during such interviews. These findings were then presented by the independent third party and the chair of the nominating and governance committee to the nominating and governance committee and to the board, followed by a review and discussion by the full board. Each committee also conducted a committee assessment discussion. The board believes this facilitated process provided additional insight and perspective that it can utilize to further enhance effectiveness, including in areas such as board and committee composition, information flow between management and the board, development of materials for board discussion, focus on corporate strategy and director recruitment.

Board Oversight of Risk

The board of directors is responsible for overseeing management in the execution of management’s Company-wide risk management responsibilities. The board of directors fulfills this responsibility both directly and through its standing committees (as discussed further below), each of which assists the board in overseeing a part of the Company’s overall risk management.

The committees of the board oversee specific areas of the Company’s risk management as described below:

Audit Committee

The audit committee is responsible for assisting the board of directors with its oversight of the performance of the Company’s risk management functions including:

 

   

Periodically reviewing and discussing with management the Company’s risk management framework, including policies, practices and procedures regarding risk assessment and management;

 

   

Periodically receiving, reviewing and discussing with management reports on selected risk topics as the committee or management deems appropriate from time to time; and

 

   

Periodically reporting to the board of directors on its activities in this oversight role.

Executive Compensation and Human Resources Committee

The executive compensation and human resources committee reviews and discusses with management the Company’s compensation policies and practices and management’s assessment of whether any risks arising from such policies and practices are reasonably likely to have a material adverse effect on the Company.

 

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Nominating and Governance Committee

The nominating and governance committee evaluates the overall effectiveness of the board of directors, including its focus on the most critical issues and risks.

As part of this oversight, the committees engage in reviews and discussions with management (and others if considered appropriate) as necessary to be reasonably assured that the Company’s risk management processes (1) are adequate to identify the material risks that we face in a timely manner, (2) include strategies for the management of risk that are responsive to our risk profile and specific material risk exposure, (3) serve to integrate risk management considerations into business decision-making throughout the Company, and (4) include policies and procedures that are reasonably effective in facilitating the transmission of information with respect to material risks to the senior executives of the Company and each committee.

Compensation Consultant

The executive compensation and human resources committee directly retains Mercer (US) Inc. to advise it on executive compensation matters. Mercer reports to the chair of the committee. On an annual basis, the committee and Mercer enter into an engagement letter, which sets out the services to be performed by Mercer for the committee during the ensuing year. Mercer’s primary role is to provide objective analysis, advice and information and otherwise to support the committee in the performance of its duties. Mercer’s fees for executive compensation consulting to the committee in 2018 were $342,680.

The committee requests information and recommendations from Mercer as it deems appropriate in order to assist it in structuring and evaluating ManpowerGroup’s executive compensation programs and practices. The committee’s decisions about executive compensation, including the specific amounts paid to executive officers, are its own and may reflect factors and considerations other than the information and recommendations provided by Mercer.

Mercer was engaged by the committee to perform the following services in 2018:

 

   

Evaluate the competitiveness of our total executive compensation and benefits program for the senior executives, including base salary, annual incentive, total cash compensation, long-term incentive awards, total direct compensation, retirement benefits and total remuneration against the market;

 

   

Assess how well the compensation and benefits programs are aligned with the committee’s stated philosophy to align pay with performance, including analyzing our performance against comparator companies;

 

   

Review and recommend the companies used in our comparator group and our industry peer group;

 

   

Provide advice and assistance to the committee on the levels of total compensation and the principal elements of compensation for our senior executives;

 

   

Advise committee on salary, target incentive opportunities and equity grants as well as on the design and features of our short-term and long-term incentive programs for our senior executives;

 

   

Brief the committee on trends in executive compensation and benefits among large public companies and on regulatory, legislative and other developments; and

 

   

Assist in reviewing the Compensation Discussion and Analysis and other executive compensation disclosures to be included in this proxy statement.

The committee has reviewed whether the work provided by Mercer raises any conflict of interest. Factors considered by the committee include:

 

   

Other services provided to the Company by the consultant;

 

   

What percentage of the consultant’s total revenue is made up of fees from the Company;

 

   

Policies or procedures of the consultant that are designed to prevent a conflict of interest;

 

   

Any business or personal relationships between individual consultants involved in the engagement and committee members;

 

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Any shares of the Company’s stock owned by individual consultants involved in the engagement; and

 

   

Any business or personal relationships between our executive officers and the consulting firm or the individual consultants involved in the engagement.

Based on its review, the committee does not believe that Mercer has a conflict of interest with respect to the work performed by the Company or the committee in 2018. The committee has also evaluated the independence of Mercer pursuant to the rules of the Securities and Exchange Commission and the New York Stock Exchange and no relationships were identified that would impact Mercer’s independence.

Ultimately, the consultant provides recommendations and advice to the committee in an executive session where management is not present, which is when critical pay decisions are made. This approach protects the committee’s ability to receive objective advice from the consultant so that the committee may make independent decisions about executive pay at our company.

Besides Mercer’s involvement with the committee, it and its affiliates also provide other non-executive compensation services to us. These services are approved by management who oversee the specific areas of business for which the services are provided.

The total amount paid for these other services provided in 2018 was $379,175. These services included actuarial and pension reporting services, workers compensation reporting and insurance services. The majority of these services are provided not by Mercer itself, but by other companies owned by Marsh & McLennan, the parent company of Mercer, which therefore, are considered affiliates even though they operate independently of Mercer.

The committee concluded that the services provided by the Marsh & McLennan affiliates (other than Mercer), did not raise any conflicts of interest.

The committee believes the advice it receives from the individual executive compensation consultant is objective and not influenced by Mercer’s or its affiliates’ other relationships with us because of the procedures Mercer and the committee have in place, including the following:

 

   

The consultant receives no incentive or other compensation based on the fees charged to us for other services provided by Mercer or any of its affiliates;

 

   

The consultant is not responsible for selling other Mercer or affiliate services to us;

 

   

Mercer’s professional standards prohibit the individual consultant from considering any other relationships Mercer or any of its affiliates may have with us in rendering his or her advice and recommendations; and

 

   

The committee evaluates the quality and objectivity of the services provided by the consultant each year and determines whether to continue to retain the consultant.

 

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Beneficial Ownership of Directors and Executive Officers  

 

 

Beneficial Ownership of Directors and Executive Officers

Set forth in the table below, as of March 1, 2019, are the shares of ManpowerGroup common stock beneficially owned by each director and nominee, each of the executive officers named in the table under the heading “Summary Compensation Table,” and all directors and executive officers of ManpowerGroup as a group and the shares of ManpowerGroup common stock that could be acquired within 60 days of March 1, 2019 by such persons.

 

       

Name of Beneficial Owner

  

Common Stock

Beneficially

Owned(1)(3)

    

Right to

Acquire

Common

Stock(1)(2)

     Percent of
Class

Jonas Prising

    

 

463,206

      

 

250,401

      

 

*

Gina R. Boswell

    

 

10,339

      

 

      

 

*

Richard Buchband

    

 

30,327

      

 

20,363

      

 

*

Ram Chandrashekar

    

 

13,522

      

 

13,522

      

 

*

Cari M. Dominguez

    

 

22,823

      

 

      

 

*

William Downe

    

 

22,261

      

 

      

 

*

John F. Ferraro

    

 

      

 

      

 

*

Darryl Green

    

 

175,910

      

 

108,705

      

 

*

Patricia Hemingway Hall

    

 

6,882

      

 

      

 

*

Julie M. Howard

    

 

      

 

      

 

*

John T. McGinnis

    

 

41,773

      

 

28,049

      

 

*

Ulice Payne, Jr

    

 

8,036

      

 

      

 

*

Paul Read

    

 

5,353

      

 

      

 

*

Elizabeth P. Sartain

    

 

20,428

      

 

      

 

*

Mara E. Swan

    

 

49,750

      

 

27,651

      

 

*

Michael J. Van Handel

    

 

17,283

      

 

      

 

*

John R. Walter

    

 

5,982

      

 

      

 

*

All directors and executive officers as a group (17 persons)

    

 

893,875

      

 

448,691

      

 

1.49

%

 

*

Less than 1% of outstanding shares.

 

(1)

Except as indicated below, all shares shown in this column are owned with sole voting and dispositive power. Amounts shown in the Right to Acquire Common Stock column are also included in the Common Stock Beneficially Owned column.

 

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  Beneficial Ownership of Directors and Executive Officers

 

 

 

 

The table does not include vested shares of deferred stock, which will be settled in shares of ManpowerGroup common stock on a one-for-one basis, held by the following directors that were issued under the 2003 Equity Incentive Plan and the Terms and Conditions Regarding the Grant of Awards to Non-Employee Directors under the 2003 Equity Incentive Plan and the 2011 Equity Incentive Plan and the Terms and Conditions Regarding the Grant of Awards to Non-Employee Directors under the 2011 Equity Incentive Plan:

 

   
       Vested Deferred Stock

 

 

Director

 

    

2003 Plan

 

      

2011 Plan

 

      

Total

 

 

William Downe

    

 

 

    

 

22,843

 

    

 

22,843

 

John F. Ferraro

    

 

 

    

 

8,248

 

    

 

8,248

 

Patricia Hemingway Hall

    

 

 

    

 

2,995

 

    

 

2,995

 

Julie M. Howard

    

 

 

    

 

5,283

 

    

 

5,283

 

Ulice Payne, Jr.

    

 

 

    

 

1,298

 

    

 

1,298

 

Paul Read

    

 

 

    

 

1,298

 

    

 

1,298

 

Michael J. Van Handel

    

 

 

    

 

1,364

 

    

 

1,364

 

John R. Walter

    

 

3,501

 

    

 

6,482

 

    

 

9,983

 

 

 

The table does not include 2,469 unvested shares of deferred stock, which will be settled in shares of ManpowerGroup common stock on a one-for-one basis, held by each of Mr. Downe, Mr. Ferraro, Ms. Hemingway Hall, Ms. Howard, Mr. Payne, Mr. Read, Mr. Van Handel, and Mr. Walter that were issued under the 2011 Plan and the Terms and Conditions on January 1, 2019. These shares of deferred stock vest in equal quarterly installments during 2019.

 

(2)

Common stock that may be acquired within 60 days of the record date through the exercise of stock options and the settlement of restricted stock units.

 

(3)

Includes the following number of shares of unvested restricted stock as of the record date:

 

   

Director

 

  

 Unvested Restricted     

Stock    

 

Gina R. Boswell

    

 

2,469    

Cari M. Dominguez

    

 

2,469    

Elizabeth P. Sartain

    

 

2,469    

 

 

The holders of the restricted stock have sole voting power with respect to all shares held and no dispositive power with respect to all shares held.

 

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Compensation Discussion and Analysis  

 

 

Compensation Discussion and Analysis

Table of Contents

 

Background

     25  
          

Executive Summary

     25  

2018 Compensation Reflected Challenging Environment in 2018

     25  

We Continue to Focus on Three Key Performance Metrics

     25  

Our Executive Pay is Designed to be Variable and Affordable

     27  

CEO Compensation Declined in 2018, in Alignment with Pay-For-Performance Principles

     27  

Realizable Pay for our CEO Declined Significantly in 2018

     28  

Our Business is Impacted by Global Macroeconomic Forces, Business Cycles and Complexity

     28  

We Utilize a Broad Group of Comparators for Compensation

     28  

Key Compensation and Governance Policies

     29  
          

ManpowerGroup Compensation Principles

     30  
          

Say on Pay Vote

     31  
          

Shareholder Engagement

     31  
          

Compensation Elements

     32  
          

Pay for Results

     34  
          

Target Total Compensation

     35  

Balancing Short- and Long-Term Compensation

     36  
          

Market Positioning: We Target Compensation Outcomes to the Median of the Competitive Market

     37  

How We Determine the Competitive Market: Challenges in Identifying a Relevant Peer Group

     37  

Assessing Individual Factors

     38  
          

The Committee’s Decision-Making Process

     38  

Annual Incentive Plan

     39  

Setting Annual Incentive Goals and Equity Awards for Mr. Prising

     39  

Setting Annual Incentive Goals and Equity Awards for Messrs. McGinnis, Chandrashekar, Buchband, Green and Ms. Swan

     39  
          

Components of the 2018 Executive Compensation Program  — Base Salary

     40  
          

Components of the 2018 Executive Compensation Program  — Annual Cash Incentives

     40  

How the Committee Sets Underlying Goals for EPS and ROIC

     40  

Why the Company Uses EPS and ROIC

     41  

The Committee Also Uses AOUP for Certain NEOs

     42  

Annual Incentive Award Opportunities by NEO

     42  

Jonas Prising — Annual Incentive Award Opportunities

     42  

John T. McGinnis — Annual Incentive Award Opportunities

     43  

Ram Chandrashekar — Annual Incentive Award Opportunities

     43  

Mara E. Swan — Annual Incentive Award Opportunities

     44  

Richard Buchband — Annual Incentive Award Opportunities

     44  

Darryl Green — Annual Incentive Award Opportunities

     45  
          

 

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Components of the 2018 Executive Compensation Program  — Long-Term Incentives

     46  

Performance Share Units

     46  

Why the Company Uses Annual Operating Profit Margin and How it Sets Goals

     46  

Shares Earned for the 2016-2018 Performance Period

     47  

Changes for 2019

     47  

Stock Options

     47  

Restricted Stock Units

     47  
          

Career Shares, Retirement and Deferred Compensation Plans

     47  
          

Other Benefits

     48  

Consulting Agreement with Mr. Green

     48  

We Provide Limited Expatriate Benefits

     48  

Severance Agreements

     48  
          

Governance Features of our Executive Compensation Programs

     49  

We Have Stock Ownership Guidelines for Executive Officers

     49  

We Have a Clawback Policy

     49  

We Prohibit Hedging, Pledging and Short-Sale Transactions

     49  
          

Realizable Pay in 2018

     50  

Supplemental Table of CEO Realizable Compensation

     50  
          

Other Material Tax Implications of the Executive Compensation Program

     51  
          

 

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Compensation Discussion and Analysis  

 

 

Background

This compensation discussion and analysis (“CD&A”) describes ManpowerGroup’s executive compensation program for our executive officers for whom disclosure is required under the rules of the Securities and Exchange Commission (“SEC”). We refer to this group of executives as our named executive officers (“NEOs”). ManpowerGroup’s NEOs for the year ended December 31, 2018 are the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and the three most highly compensated executive officers (other than the CEO and CFO), who were serving as executive officers as of December 31, 2018. As required under SEC rules, our NEOs also include our former Chief Operating Officer, who retired from the role effective August 31, 2018. Our NEOs are listed below with their titles as of December 31, 2018:

 

   

Jonas Prising — Chairman and Chief Executive Officer

 

   

John T. McGinnis — Executive Vice President and CFO

 

   

Ram Chandrashekar — Executive Vice President, Operational Excellence and IT, and President, Asia Pacific Middle East (1)

 

   

Mara E. Swan — Executive Vice President, Global Strategy and Talent

 

   

Richard Buchband — Senior Vice President, General Counsel and Secretary

 

   

Darryl Green — Former President and Chief Operating Officer(2)

 

(1)

Effective January 1, 2019, Mr. Chandrashekar relinquished his role as President, Asia Pacific Middle East. He continues as our Executive Vice President, Operational Excellence, Technology and Transformation.

 

(2)

Mr. Green retired from his role as President and Chief Operating Officer of the Company on August 31, 2018 and remained an employee of the Company until October 1, 2018.

Executive Summary

2018 Compensation Reflected Challenging Environment in 2018

Our executive compensation programs are designed to reward performance. Our results are highly dependent on labor market conditions, business cycles and other macroeconomic forces. During 2018 we experienced a softening in the economic environment in which our revenue growth, while still positive, was lower than we have experienced in the past several years. It is our experience that during declines in the economic cycle, or periods of uncertainty, we will see declines in our revenue, or its rate of growth, and this occurred during the second half of 2018. We will also typically experience decreasing profit margins during such periods.

Our consolidated revenues were up 2.5% in constant currency in 2018 compared to 2017. Our operating leverage and profitability in 2018 reflected a deteriorating economic environment in Europe, where the majority of our business is located. Management’s actions to mitigate the impact of reduced revenue growth involved pricing discipline and strong cost management. As a result, we accomplished solid financial performance in 2018 in light of the economic environment. Although our key performance metrics of Earnings Per Share (“EPS”) and Return on Invested Capital (“ROIC”) recorded year-over-year improvements for purposes of our compensation plans, they fell short of the challenging targets that were set by the Executive Compensation and Human Resources Committee (the “Committee”) at the beginning of 2018. Accordingly, our short-term compensation program paid out considerably below targeted levels. For our long-term incentives, our key performance metric of Operating Profit Margin Percent (“OPMP”), which we use in the three-year performance periods in our performance share units, declined in 2018, coming in below the level for the prior two years. This not only reduced the OPMP payout percentage for the three-year performance period that began in 2016 and ended in 2018, but will likewise have an adverse impact on the payout percentage for previously granted performance share unit awards covering 2017-2019 and 2018-2020.

We Continue to Focus on Three Key Performance Metrics

We believe these three key performance metrics continue to identify whether we are running our business effectively for our shareholders.

 

   

Earnings Per Share. Focuses our NEOs on producing financial results that align with shareholder interest. We consider this metric a critical measure of executive performance.

 

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Return on Invested Capital. Even though we operate in the services industry, our business is capital intensive. We must pay our associates and consultants before we typically bill and collect from our clients. ROIC measures how efficiently we are converting our services into cash.

 

   

Operating Profit Margin Percent. Measures how efficiently our NEOs have deployed our operating resources to generate a profit. We believe using this metric drives a long-term focus on achieving sustainable profits, and it is the cornerstone of our long-term incentive plan.

The results of these three key performance metrics, as reported for 2018, were as follows:

 

LOGO

Earnings Per Share - Diluted ("EPS"), as reported Return on Invested Capital ("ROIC") Operating Profit Margin Percent ("OPMP"), as reported

In addition to these three metrics, the Committee also sets individual operating objectives for each executive officer.

When it adopted financial targets at the beginning of the 2018 performance year, the Committee determined that certain items should be excluded from our performance metrics to ensure our NEOs are compensated only for the underlying performance of our business:

 

   

Constant Currency. We eliminate the impact of changes in exchange rates for EPS and ROIC. This allows us to better capture year-over-year changes in underlying performance.

 

   

Share Repurchases. We remove the benefit of share repurchases from our EPS calculation except to the extent necessary to offset dilution resulting from shares issued under our equity plans.

 

   

Restructuring Costs. We exclude restructuring costs from our EPS, ROIC and OPMP calculations, net of the savings related to these costs. This allows us to better reflect the Company’s performance for the year.

 

   

Goodwill Impairment. We exclude goodwill impairment charges from our EPS and ROIC calculations. This, too, better reflects the Company’s performance for the year.

 

   

Other Non-Recurring Costs. We exclude from OPMP any non-recurring accrual adjustments greater than $10 million that pertain to prior periods. As explained above, excluding these costs better reflects the Company’s performance during the year.

The following table shows the impact of each of these items on our performance metrics for 2018:

 

               
      As
Reported
    Impact
of
Constant
Currency
    Impact of
Share
Repurchases
    Restructuring
Costs
    Goodwill
Impairment(1)
    Other
Non-Recurring
Costs
    As calculated  
under  
Compensation  
Plans  
 

EPS

   $ 8.56     $ (0.04   $ (0.19   $ 0.42     $ 0.02       n/a     $ 8.77  

ROIC

     15.4     (0.1 )%      n/a       0.7         n/a       16.0

OPMP

     3.62     n/a       n/a       0.19     n/a       (0.07 )%      3.74

 

(1)

The goodwill impairment charge did not have a significant impact on ROIC in 2018.

 

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Compensation Discussion and Analysis  

 

 

Our key performance metrics, calculated as described above, are shown here, compared against the comparable metrics for 2017:

 

LOGO

Earnings Per Share Diluted ("EPS"), under our compensation plans Return on Invested Capital ("ROIC"), under our compensation plans Operating Profit Margin Percent ("OPMP"), under our compensation plans

See page 40 for further explanation of the calculations for EPS and ROIC and page 46 for OPMP.

Our Executive Pay is Designed to be Variable and Affordable

We believe the interests of our shareholders are served when strong operating performance drives enhanced financial performance. Therefore, the pay for our CEO and our other executive officers is closely aligned with our results, and their compensation varies year-over-year based on whether they have achieved collective and individual performance goals set by our Committee. This also reflects our philosophy of affordability — compensation is higher when our executives have delivered financial results that make it more affordable for the Company and lower when financial results underperform and make it less affordable for the Company.

CEO Compensation Declined in 2018, in Alignment with Pay-For-Performance Principles

We remain committed to performance-based compensation. Approximately 75% of Mr. Prising’s 2018 target compensation was tied to Company performance and 90% of his total pay was variable. Given our below-target financial performance in 2018, Mr. Prising’s total compensation in 2018 was 94% of target. (In 2017, when our performance exceeded the Committee’s financial targets, his total compensation was 103% of target.) The discussion below highlights each component of Mr. Prising’s compensation in 2018.

Annual Cash Incentive: Payout Was 61% of Target. In light of the financial performance of the Company and the Committee’s assessment of Mr. Prising’s achievement of his operating objectives as CEO, Mr. Prising’s annual cash incentive payout was 61% of target.

The following table shows the actual cash incentive payout to Mr. Prising for 2018:

 

     
     

2018 Actual

Payout $

    

% Compared    

to Target    

 

EPS Goal

  

 

414,063

 

  

 

55

%     

ROIC Goal

  

 

348,214

 

  

 

46

%     

Operating Objectives

  

 

375,000

 

  

 

100

%     

Total

  

 

1,137,277

 

  

 

61

%     

 

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Long-Term Equity Awards: Approximately 60% are Based on Performance. Mr. Prising’s 2018 compensation package included three types of long-term equity awards:

 

   

Approximately 60% were performance share units, again using a three-year performance period, and calibrated to OPMP. In 2018, OPMP for the 2018 performance share unit grant was well-below target, which also has an adverse impact to the performance share units granted in 2017 and 2016. For the 2016 performance share unit grant, Mr. Prising earned 96% of the target level performance share units for the 3-year performance period of 2016-2018.

 

   

Approximately 20% were stock options that vest over a four-year period.

 

   

Approximately 20% were restricted stock units that cliff vest in full after three years.

Other Compensation Was Limited. The level of perquisites provided to Mr. Prising is limited. We reimburse him for financial planning expenses, which are capped at $12,000 per year. Mr. Prising’s Other Compensation in 2018 also included a Company match and profit-sharing contribution under our Nonqualified Savings Plan, in which Mr. Prising has elected to participate. Mr. Prising does not have a current pension plan, does not participate in the Company’s auto program and does not participate in the Company’s 401(k) plan for “catch-up” contributions for employees over 50.

Realizable Pay for Our CEO Declined Significantly in 2018

We calculated realizable pay for Mr. Prising to show the impact of Company performance and stock price on his compensation granted or awarded during the year. The Company’s stock price declined significantly during 2018: from $126.11 on January 1, 2018 to $64.80 as of December 31, 2018. The combination of the stock price decline and the Company’s below-target operating performance resulted in Mr. Prising’s calculated realizable pay being $6.2 million for 2018. This is substantially lower than $11.4 million of total compensation shown in the Summary Compensation Table using SEC reporting methodology. It also reflects a 56% decrease from his realizable pay for 2017, when strong operating performance and considerable stock price appreciation resulted in realizable pay that was greater than reported compensation. See page 50 for further details.

Our Business is Impacted by Global Macroeconomic Forces, Business Cycles and Complexity

We derive approximately 88% of our revenue from outside the United States, with the largest portions coming from our operating segments in Southern Europe (43%), Northern Europe (24%) and Asia Pacific Middle East (13%). Our business is truly global in nature and complexity. Through our global network including approximately 2,600 offices in 80 countries and territories, we serve global, multinational and local clients across multiple industry segments and provide a broad range of workforce solutions including recruitment and assessment, training and development, career management, outsourcing and workforce consulting.

We Utilize a Broad Group of Comparators for Compensation

It is difficult to find an industry-specific group of peer companies for benchmarking our executive compensation. We are significantly larger than other U.S.-listed companies in our industry (with $22.0 billion in revenue in 2018, compared to $5.8 billion of our nearest U.S.-listed competitor). Our two largest competitors, Adecco and Randstad, are based in Europe, and although the Committee reviews available compensation data for these two companies, their pay practices are different, and full compensation information is not disclosed. To ensure that we are utilizing meaningful data, the Committee’s independent compensation consultant, Mercer, has customized a peer group, which consists of 90 companies within the S&P 500. This peer group has a median revenue that approximates that of ManpowerGroup, with a range of approximately 70% to approximately 180% of our revenue. The peer group is designed to properly benchmark our NEOs’ compensation against the relevant talent marketplace. The Committee believes that using this group provides a robust basis for comparing us to companies of similar scale and also represents the universe of top-tier companies we consider when looking for executive talent.

 

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Key Compensation and Governance Policies

The Committee continually reviews the Company’s executive compensation program to maintain compensation practices that are in the best interests of our shareholders. Some of our key policies are summarized below:

 

         WHAT WE DO:             WHAT WE DON’T DO:
     We tie pay to performance, including the use of performance share units. The majority of executive pay is performance-based and variable.     ×     We do not pay any of our long-term incentives in cash as the objective of our long-term incentive plan is to incentivize executives to increase shareholder return.
     We set challenging performance objectives.     ×     We do not use Total Shareholder Return (“TSR”) as a performance metric for our NEOs. In our experience, TSR captures fluctuations in stock price, rather than measuring the performance of our executive team in operating our business. Our stock price can be sensitive to perceived changes in the global business climate, and we often experience fluctuations in stock price that are de-coupled from the fundamentals of our business. Instead of using TSR, our Committee sets meaningful targets each year for our three key metrics.
     We appropriately balance short-term and long-term incentives.     ×     We do not provide tax gross up payments for any amounts considered excess parachute payments.
     We have caps on the potential payouts under the performance share unit grants and our annual incentive program.     ×     We do not pay dividends on performance share units.
     We use double triggers in our severance agreements and our equity awards.     ×     We do not encourage undue risk taking in our compensation plans. By using varied financial metrics and setting caps on potential payouts the company mitigates undue risk taking.
     We maintain significant stock ownership guidelines for our NEOs.     ×     We do not permit the repricing of stock options without prior shareholder approval, except in connection with a transaction.
     The Committee engages an independent compensation consultant that works solely in support of the Committee.     ×     We do not allow hedging or pledging of ManpowerGroup stock.
     We use appropriate peer groups when establishing compensation.     ×     We do not provide excessive perquisites to our NEOs.
     We listen to our shareholders. We regularly reach out to leading shareholders and their advisory firms to discuss our governance and executive compensation. In 2018, we continued to meet with our shareholders to review these topics and ensure our programs are well-understood and consistent with their expectations.        

 

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WE MAINTAIN STRONG COMPENSATION AND CORPORATE GOVERNANCE PRACTICES:

 

Over the years we have continued to enhance our compensation and corporate governance practices:

 

   

 

Use ROIC as a key performance metric: We replaced Economic Profit with ROIC to more clearly measure how effectively we are using our capital.

 

 

   

 

Return to 3-year performance period for performance share units: We returned to a 3-year performance period for performance share units to better align the interests of executive officers with long-term shareholder value.

 

 

   

 

Further expanded use of performance-based equity: We modified our long-term incentive program to increase our use of performance share units to represent approximately 60% of long-term equity grants.

 

 

   

 

Elimination of classified board: We eliminated our classified board structure and hold annual elections of directors.

 

 

   

 

Strengthened role of lead director: We eliminated a practice in which we rotated our lead director annually. Today, our board appoints a lead director with the intent that the individual will serve for at least three years. The roles and responsibilities of the lead director have been clarified, and the lead director receives additional compensation for serving in this role.

 

 

   

 

Adoption of clawback policy: Under our clawback policy, if the Committee determines an employee engaged in intentional misconduct that causes a financial restatement, it may revoke any outstanding awards, including cash incentives or equity awards, that were received as a result of the misconduct.

 

 

   

 

Tightened stock ownership guidelines: Senior executives who have not met their individual ownership requirement must hold 50% of any of the shares they receive from an exercise or vesting of awards until the requirement is satisfied.

 

 

   

 

Redoubled Our Commitment to Board Diversity and Refreshment: Our board is focused on having fresh perspective on the board and its committees, including a diversity of thought and background. Our board is more than 40% female and has an average tenure of 6.7 years.

 

 

   

 

Enhanced our Board Evaluation Program: We have strengthened our board evaluation process by including a facilitated evaluation, led by an experienced external resource.

 

 

   

 

Enhanced our Succession Plan for Executive Officers: We have developed a robust succession planning process for our executive officers and senior leadership designed to ensure we have experienced and capable leaders who are prepared to assume executive roles as they become available.

 

ManpowerGroup Compensation Principles

Our Committee is guided by a series of principles, listed below. Within the framework of these principles, the Committee considers governance trends, the competitive market, corporate, business unit and individual results, and various individual factors.

ManpowerGroup’s executive compensation guiding principles are to:

 

   

Pay for results: We tie a significant portion of compensation to the achievement of Company and business unit goals as well as to recognize individual accomplishments that contribute to success. For example, in 2018, approximately 60% of the CEO’s and 56% of the CFO’s target compensation, respectively, was tied to short- and long-term financial performance goals.

 

   

Not pay for failure: We set threshold goals for each performance-based incentive element of our executive compensation program. The Committee believes these threshold goals are the lowest acceptable levels at which it is appropriate for the NEOs to receive an award. If the threshold level is not met, NEOs do not receive a payout related to that performance measure. In 2018, our results were between the threshold level and target level for EPS and ROIC under the annual incentive plan as well as for OPMP under the performance share unit grants.

 

   

Align with shareholder interests: The Committee sets performance goals and chooses compensation elements that closely align executives’ interests with those of shareholders. For example, performance share

 

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units, which make up approximately 45% of target compensation for the CEO and 38% for the CFO, respectively, are tied to operating profit margin, which we believe helps to drive enterprise value. Stock options and restricted stock units are directly aligned with shareholders’ economic interests as the ultimate value the NEOs realize is dependent upon the value of our stock. In addition, a substantial portion of the annual cash incentive awards paid to our CEO and CFO is based on achievement of EPS and ROIC goals for the year.

 

   

Balance cash and equity: We balance the mix of cash and equity compensation to align compensation to both long- and short-term results of the Company.

 

   

Use internal and external performance reference points: We evaluate the elements of our compensation program against appropriate comparator company practices as well as other executives within the Company. However, identifying our competitive market is a challenge. See page 37 for further information regarding our competitive market.

 

   

Recognize the cyclical nature of our business: Our business is highly cyclical, and our financial results are impacted by global economic cycles, which are difficult to predict. In determining executive compensation, the Committee tries to strike an appropriate balance between fixed and variable pay, and to create meaningful incentives at all points in an economic cycle.

 

   

Pay competitively: In order for ManpowerGroup to be successful, we need senior executives who have the capability and experience to operate in a global and complex environment. The Committee believes it must provide pay opportunities to the NEOs that are competitive in order to attract and retain executives of this caliber.

 

   

Attract and retain executives: The Company structures its compensation program for the NEOs so that the overall target outcome generally falls within the median of the competitive market. The Committee believes this is the appropriate level to provide in order to attract and retain executives.

 

   

Assure total compensation is affordable: Our NEOs’ compensation is variable year-over-year, which means compensation is higher when financial objectives are achieved and incremental compensation is more affordable for the Company and compensation is lower when financial results decline and it is less affordable for the Company. In addition, payouts under the annual cash incentive plan and the performance share units are capped at the outstanding performance levels, which make the maximum cost predictable and ensures affordability.

 

   

Clearly communicate plans so that they are understood: We clearly communicate to each NEO their specific goals, targets and objectives to ensure our executives are focused on achieving the financial and operational results that the Committee believes will best promote shareholder value.

Say on Pay Vote

ManpowerGroup held a non-binding shareholder advisory vote at its 2018 Annual Meeting of Shareholders to approve the compensation of ManpowerGroup’s NEOs, also known as “Say on Pay.” This shareholder resolution was approved by approximately 92% of the votes cast. This was the fifth consecutive year we received a say on pay result above 90%, which we believe demonstrates our shareholders’ satisfaction with the alignment of our NEOs’ compensation with the Company’s performance. In some years, this result has been as high as 98%. Accordingly, we have not made significant changes to the compensation program for 2019 in response to this vote.

Shareholder Engagement

We believe that shareholder engagement is an important part of our governance practices. Over the past four years, we have enhanced our shareholder outreach program, to better understand our investors’ perspectives on our compensation philosophies and our governance structure, and to answer their questions. These efforts are conducted by members of executive management, and have included:

 

   

Contacting our top shareholders, representing more than 50% of our shares.

 

   

Meeting with shareholders representing approximately 40% of our shares.

 

   

Presenting shareholder feedback to the Committee as well as the nominating and governance committee.

 

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The Committee evaluated this feedback, as well as our say on pay voting results (92% in 2018 and 91% in 2017), among other factors in developing our executive compensation programs as discussed in this CD&A. Similarly, our nominating and governance committee has reviewed the feedback concerning our governance practices in developing our governance policies, including our approach to board refreshment.

Additionally, our executive management team, primarily through our Chairman and CEO and Executive Vice President and CFO, regularly engage in dialogue with our shareholders through our quarterly earnings calls, investor meetings and conferences, and other channels for communication.

Compensation Elements

The following are the main elements used by ManpowerGroup in its compensation program in 2018 along with key decisions by the Committee related to those elements:

 

       

Compensation Element

 

 

Key Characteristics

 

 

Objective and Determination

 

 

2018 Decisions

 

Base Salary   Fixed compensation for performing the core areas of responsibility in amounts that are competitive in the markets in which we operate.  

Provide fixed compensation for performing the core areas of responsibility of the NEO. These are reviewed annually and adjusted when appropriate.

 

Factors used to determine base salaries:

 

  NEO’s experience, skill, and performance.

 

  The breadth of the NEO’s responsibilities.

 

  Internal equity among other
NEOs.

 

  Pay relative to market.

 

  Mr. McGinnis was the only NEO to receive an increase in base salary in 2018.

Annual Incentive Award   Variable compensation payable in cash based on performance against annually established goals and assessment of individual performance.  

Motivate and reward NEOs for achievement of key strategic, operational and financial measures over the year.

 

Measures used to determine annual incentive for NEOs in 2018:

 

  The annual incentives for the NEOs were made under the Annual Incentive Plan (“Incentive Plan”). The Incentive Plan provides for the payment of annual cash rewards to a participant based on the Company’s attainment of one or more performance metrics and operating objectives established for that participant for the relevant year. The maximum individual limit in any year under the Incentive Plan is $5 million.

 

  The performance metrics used to determine NEOs annual incentive were:

 

  EPS and ROIC for all NEOs.

 

  Adjusted Operating Unit Profit (AOUP) for Mr. Chandrashekar, who during 2018 had responsibility for an operating unit (i.e. for a geographical region). See page 42 for the definition of AOUP.

 

  The EPS and ROIC levels achieved were between the threshold and target level.

 

  The AOUP level for Mr. Chandrashekar was at the outstanding level.

 

  Each of the NEOs received a percentage of their incentive for achieving a specified level of their individual operating objectives.

 

  See page 40 for more information.

 

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Compensation Element

 

 

Key Characteristics

 

 

Objective and Determination

 

 

2018 Decisions

 

Performance Share

Units

 

Variable compensation payable in shares of stock.

 

The performance share units vest based on achievement of a pre-established performance metric over a period of time. If goals are not met, shares are not received.

 

Motivate and reward NEOs for performance against long-term financial objectives to align the interests of the NEOs with long-term shareholder value. Target amount awarded is determined based on job scope, market practice and individual performance.

 

Measures used to determine performance share units earned:

 

  A threshold level of average operating profit margin percent must be achieved during the 2018-2020 performance period to receive any performance share unit vesting.

 

  Payout levels for threshold, target and outstanding results are determined, and the actual payout percentage is calculated by interpolation.

 

  However, if average operating profit does not meet a certain pre-determined dollar “gate” over the 2018-2020 performance period, NEOs will not receive more than 100% of the target level payout.

 

 

  In 2018, performance share units represented approximately 60% of the total long-term equity incentive grants awarded to all of the NEOs.

 

  Also in 2018, for the performance share units granted in 2016, the NEOS earned 96% of target performance share units based on the three-year performance period ended December 31, 2018.

 

  See page 46 for more information.

Restricted Stock Units   Variable compensation payable in shares of stock. 100% of the restricted stock units vest on the third anniversary date.  

  Restricted stock units cliff vest in full after three years and are paid in stock.

 

  Through stock price and dividend equivalents, restricted stock units directly align NEOs with the shareholders and add balance to the compensation program as they provide both upside potential and downside risk and add an additional retention incentive. Amount awarded is determined based on job scope, market practice and individual performance.

 

 

  Approximately 20% of all of the NEOs’ long-term equity incentive grants in 2018 were in the form of restricted stock units.

Stock Options   Nonqualified stock options that expire in ten years and become exercisable ratably over four years.  

  Align the interests of the NEOs with long-term shareholder value as well as retain executive talent. Amount awarded is determined based on job scope, market practice and individual performance.

 

 

  Approximately 20% of all of the NEOs long-term equity incentive grants in 2018 were in the form of stock options.

 

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Compensation Element

 

 

Key Characteristics

 

 

Objective and Determination

 

 

2018 Decisions

 

Qualified Retirement Plans   Generally not available to NEOs.  

  No pension plan benefit in the United States, as we froze the qualified, noncontributory defined benefit pension plan, as well as the nonqualified, noncontributory defined benefit deferred compensation plans as of February 29, 2000.

 

  Although we maintain a qualified 401(k) plan in the United States, our NEOs are not eligible to participate (except as described in the following sentence) because of limitations on participation by highly compensated employees under the rules governing such plans. NEOs are eligible to participate only in the first year of their employment (after which they are eligible to participate in the nonqualified savings plan) and in making catch-up contributions for individuals over the age of 50.

 

 

  Mr. Buchband participated in the catch-up contribution under the 401(k) plan in 2018.

Nonqualified Savings Plan  

Similar to a 401(k) plan, however not as flexible in regard to timing of the payouts of the retirement benefits for nonqualified plans. These benefits are unsecured and subject to risk of forfeiture in bankruptcy.

 

 

  Used to provide NEOs with reasonably competitive benefits to those in the competitive market. NEOs are eligible to participate after the first year of employment.

 

  Mr. Prising, Mr. McGinnis, Ms. Swan and Mr. Buchband participated in the NQSP in 2018.

Career Shares  

Used selectively by the Committee, taking into account what is most appropriate for an NEO in view of the retention incentive provided by the award. Restricted stock units vest completely on a single date several years into the future.

 

 

  Used as an incentive in the form of restricted stock units to attract and retain executives. The Committee considers each year whether to make any such grants and to whom.

 

  No grants of career shares were made to the NEOs in 2018.

Other Benefits   Used to attract and retain talent needed in the business.  

  Additional benefits include financial planning reimbursement and broad-based automobile benefits, selected benefits for expatriate executives, participation in broad-based employee benefit plans, and certain other benefits required by local law or driven by local market practice.

 

 

  Limited participation by the NEOs in these programs.

Pay for Results

Our executive compensation program is designed to motivate our NEOs to contribute to the Company’s long-term performance and success. As such, the following pay components include pay for results features:

 

   

Annual Incentive Award: Performance goal ranges for our cash-based annual incentive award were established for Messrs. Prising, McGinnis, Buchband and Green and Ms. Swan for the performance metrics EPS and ROIC. For Mr. Chandrashekar, performance ranges were established for EPS, ROIC and AOUP, since his responsibilities included an operating unit for 2018. Award opportunities are established for achievement at threshold, target and outstanding levels. Payouts are generally based on actual performance on these metrics as well as the individual operating objectives for each NEO.

 

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Performance Share Units: Approximately 60% of the NEOs’ long-term awards for 2018 were made in the form of performance share units. As stated earlier, the NEOs receive a certain number of shares of stock at the end of a specified period based on achievement measured against pre-established performance goals for that period, typically operating profit margin percent. For 2018, the Committee again used a three-year performance period (2018-2020) for performance share unit awards. Award opportunities are established for achievement at threshold, target and outstanding levels. The Committee believes using operating profit margin percent is appropriate because it is a driver of shareholder value.

 

   

Stock Options: Approximately 20% of the NEOs’ long-term awards are made in the form of stock options. The Committee believes stock options provide an important overall longer term incentive for the NEOs. Because stock options are granted at a specific value on the date of grant, the ultimate compensation realized will depend on the stock price at the time of exercise.

Target Total Compensation

Target total compensation is the value of the compensation package that is intended to be delivered based on performance against pre-established goals. The following chart illustrates for each of the NEOs the composition of his or her target total compensation for 2018 among the various compensation elements:

 

LOGO

2018 Target Compensation Components

The Committee’s compensation consultant, Mercer, provides the Committee with market data that is used in setting target levels for compensation for the NEOs. Actual compensation paid out to the NEOs in a given year may vary significantly from the target levels depending on the actual performance achieved under the pre-established financial and operating goals set by the Committee. The target compensation is detailed for each NEO in the following table.

 

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This table outlines the values of the various elements and the percentage of each NEO’s total target compensation package that is variable (both short- and long-term) and performance-based (both short- and long-term).

2018 NEO Target Compensation

 

                 

NEO

 

Base

Salary

   

Annual

Incentive

   

Stock

Options(1)

   

Performance

Share

Units(1)

   

Restricted
Stock

Units(1)

   

Total 2018

Target

Comp

   

% Total

2018

Target

Comp

Variable(2)

   

% Total 2018
Target

Comp

Performance-

Based(3)

 
    

$

 

   

$

 

   

$

 

   

$

 

   

$

 

   

$

 

               

Jonas Prising

    1,250,000       1,875,000       1,800,015       5,400,014       1,800,046       12,125,075       90     75

John T. McGinnis

    700,000       700,000       480,017       1,440,036       480,053       3,800,106       82     69

Ram Chandrashekar

    627,849       470,887       380,005       1,140,111       380,037       2,998,889       79     66

Mara E. Swan

    610,000       457,500       270,021       810,082       270,068       2,417,671       75     64

Richard Buchband

    500,000       300,000       160,006       480,053       160,100       1,600,159       69     59

Darryl Green

 

   

 

850,000

 

 

 

   

 

850,000

 

 

 

   

 

760,011

 

 

 

   

 

2,280,099

 

 

 

   

 

760,074

 

 

 

   

 

5,500,184

 

 

 

   

 

86

 

 

   

 

72

 

 

 

(1)

The value of equity awards in this table represents the grant date fair value of the equity awards at the target levels granted in 2018, as computed in accordance with FASB ASC Topic 718.

 

(2)

Includes annual incentive, stock options, performance share units and restricted stock units.

 

(3)

Includes annual incentive, stock options and performance share units.

Balancing Short- and Long-Term Compensation

The Committee also considers how much incentive compensation is short-term in nature, and how much is long-term, with the intention that a significant portion of incentive compensation be based on the long-term performance of the Company. This reduces the risk that executives will place too much focus on short-term achievements to the detriment of the long-term success of the Company.

The following chart details how incentive compensation is allocated between short-term (annual cash incentive) and long-term incentive compensation (stock options, performance share units and restricted stock units) for each of the NEOs.

 

LOGO

2018 Long-Term vs. Short-Term Incentive Compensation

 

 

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Market Positioning: We Target Compensation Outcomes to the Median of the Competitive Market

The Company’s practice is to target compensation outcomes generally to the 50th percentile of compensation paid in the competitive market for target results. Our maximum award opportunities for outstanding results are generally set to approximate the 75th percentile of the competitive market. This is not strictly formulaic and some compensation levels or award opportunities may fall above or below the reference points. When setting each component of compensation, the Company takes into consideration the allocation of awards in the competitive market between current cash compensation and non-cash compensation including stock options, performance share units and restricted stock units.

How We Determine the Competitive Market: Challenges in Identifying a Relevant Peer Group

Our Committee has devoted considerable effort to identifying an appropriate competitive market for benchmarking our executive compensation, given that we are significantly larger and more global in scope than other U.S.-listed companies in our industry. The following outlines the analysis by the Committee, and its independent compensation consultant, Mercer, to develop meaningful peer groups.

The Committee primarily utilizes a customized peer group developed by Mercer consisting of companies within the S&P 500. For ManpowerGroup, Mercer has removed companies that are not comparable to us, to arrive at a research subset of 90 companies within the S&P 500 with minimum revenues of approximately $13 billion, maximum revenues of approximately $40 billion, and median revenues of $20 billion. The Committee believes that using this group provides a robust basis for assessing the competitive range of compensation for senior executives of companies of ManpowerGroup’s scale and that it also represents the universe of top-tier companies we consider when looking for executive talent. A list of the companies included in the peer group used by ManpowerGroup is attached as Appendix A-1.

One reason we utilize the customized set of comparison companies is that it is difficult to find an industry-specific group of peer companies. Our two largest competitors, Adecco and Randstad, are based in Europe, and although we review available compensation data for these two companies, their pay practices are different and full compensation data is not disclosed. Our nearest U.S. public competitor had revenue of approximately $5.8 billion in 2018 compared to our revenue of $22.0 billion and the other U.S. public competitors are even smaller. Mercer has confirmed to the Committee that attempting to use such competitors would not produce meaningful data.

The Committee also utilizes data from U.S. compensation surveys published by Mercer and other third-party data providers that are recommended by Mercer as a means to evaluate compensation for certain NEO positions. For the CEO, CFO and COO, their positions were only compared to companies within the subset group of the S&P 500. For NEOs with responsibility for leading a business unit, such as Mr. Chandrashekar, his position was compared to top division executives within the subset group of the S&P 500 Data and secondarily compared with U.S. compensation survey data of executives in similar sized groups and divisions. Compensation for global functional leaders was compared against U.S. compensation survey data recommended by Mercer for executives with similar roles and responsibilities. For Ms. Swan, her position was compared to human resource management executives of companies within the subset group of the S&P 500 and secondarily compared with U.S. compensation survey data of human resource management executives. For Mr. Buchband, his position was only compared with U.S. compensation survey data of legal executives. Both Ms. Swan and Mr. Buchband’s market data were adjusted to reflect the scope of their responsibilities. For executives whose positions were located outside of the U.S., ManpowerGroup also took into account international (regional and local) compensation survey data in an effort to set compensation that is not only equitable among the members of a global team, but also competitive within the global markets where ManpowerGroup competes for talent.

 

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Prior to setting compensation for 2018 for our NEOs, the Committee reviewed the following table which illustrates how the total opportunity at target performance for total direct compensation for 2017 compared to the median compensation of executives in similar positions taken from the primary data source used for that executive.

Total Direct Compensation

 

NEO

   % Variance Median of
Competitive Market(1)
 

 

Jonas Prising

 

  

 

 

 

 

(14

 

 

)% 

 

 

John T. McGinnis

 

  

 

 

 

 

(12

 

 

)% 

 

 

Ram Chandrashekar

 

  

 

 

 

 

3

 

 

 

 

Mara E. Swan

 

  

 

 

 

 

(8

 

 

)% 

 

 

Richard Buchband

 

  

 

 

 

 

(11

 

 

)% 

 

 

Darryl Green

  

 

 

 

 

15

 

 

 

 

  (1)

For Mr. Prising, Mr. McGinnis and Mr. Green, the primary data source was the peer group subset of the S&P 500. For Mr. Chandrashekar and Ms. Swan, the primary data source was a composite of the peer group subset of the S&P 500 and published surveys. For Mr. Buchband, the primary data source was published surveys.

It was observed that Mr. Prising’s and Mr. McGinnis’s target compensation for 2017 fell below the median total direct compensation when benchmarked against survey data for CEOs and CFOs, respectively. The Committee determined that in light of this, adjustments to both Mr. Prising’s and Mr. McGinnis’s total direct compensation would be appropriate. Mr. Prising received an increase in equity while Mr. McGinnis received an increase in both base salary and equity in 2018. For all other NEOs, the Committee determined their target compensation was within a suitable range of the median.

Assessing Individual Factors

An individual NEO’s total compensation or any element of compensation may be adjusted upwards or downwards relative to the competitive market based on a subjective consideration of the NEO’s experience, potential, tenure and results (individual and relevant organizational results), internal equity (which means that comparably positioned executives within ManpowerGroup should have comparable award opportunities), the NEO’s historical compensation, and any retention concerns. The Committee uses a historical compensation report to review the compensation and benefits provided to each NEO in connection with its compensation decisions concerning that NEO.

The Committee’s Decision-Making Process

The Committee determines the CEO compensation levels, including base salary, establishing and determining the achievement of the financial goals and operating objectives for the annual cash incentives, and any equity-based compensation awards. Generally, the CEO establishes and determines the achievement of the goals and objectives for the annual incentives for the other NEOs, with the Committee making the final determinations. Similarly, the CEO generally recommends to the Committee any salary adjustments, cash incentive awards or equity-based awards for the other NEOs, which are then evaluated and determined by the Committee. Mercer also provided input to the Committee regarding the final 2018 compensation for all of the NEOs. This input reflected the Company’s performance results for 2018, external market references against the peer group, internal compensation references and the individual performance of each of the NEOs. Under the Committee’s charter, compensation for our CEO, CFO and President (who was our COO) is subject to ratification by the board of directors. Accordingly, the board of directors ratified the determinations for Mr. Prising, Mr. McGinnis and Mr. Green, who were our executives at this level.

 

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Annual Incentive Plan

In February 2018, the annual incentive awards for our NEOs were granted under the ManpowerGroup Inc. Annual Incentive Plan (the “Incentive Plan”). The Incentive Plan provides for the payment of annual cash awards to a participant based on the Company’s attainment of one or more financial goals and operating objectives established for that participant for the relevant year. Under the Incentive Plan, the participant is assigned award opportunities for threshold, target, and outstanding performance upon the attainment of the financial goal or goals established for the participant, as determined by the Committee at the beginning of the year. Depending upon the actual performance of ManpowerGroup for the year as measured against these financial goals, and the assessment of the participant’s performance in achieving the operating objectives, the participant would be paid a cash award following the close of the year. The maximum award that a participant may receive for any year under the Incentive Plan is $5 million.

Setting Annual Incentive Goals and Equity Awards for Mr. Prising

The annual financial goals for the CEO under the Incentive Plan are based on EPS and ROIC for the year. The process begins with collaboration among Mercer, the CFO and the Executive Vice President, Global Strategy and Talent. The full Committee then reviews and determines the goals and range of award opportunities for achievement of the goals, including the weighting of each goal for the CEO, subject to ratification by the board of directors. In determining these goals, the Committee considers financial information including historical and projected earnings growth, the prior year financial results and the Company’s expected financial performance for the current year, consulting with management, including financial personnel, and Mercer.

Setting the operating objectives for the CEO begins with the CEO recommending to the Committee the objectives for himself for the year. The Committee reviews and ultimately approves these operating objectives, subject to any adjustments, in the context of ManpowerGroup’s strategic and financial plans.

At each Committee meeting during the year, the Committee reviews the progress the CEO is making towards the achievement of his financial goals and operating objectives for the year. After the close of each year, the Committee reviews and approves, subject to ratification by the board of directors, an award amount for the annual cash incentive based on whether the annual financial goals have been achieved and based on the CEO’s performance towards each of his annual operating objectives.

The Committee will generally determine and approve equity awards to the CEO and the related vesting schedules, at its regularly scheduled meeting in February each year, subject to ratification by the board of directors. The grant date for the awards is the date the Committee approves the awards. The exercise price for any options granted is the closing price on the date of grant.

As part of the decision-making process for the CEO’s compensation matters, any decisions of the Committee or ratifications by the board of directors regarding the CEO’s compensation, are done in executive session without any management present.

Setting Annual Incentive Goals and Equity Awards for Messrs. McGinnis, Chandrashekar, Buchband, Green, and Ms. Swan

The process for setting the annual financial goals for the other NEOs also begins with collaboration among Mercer, the CFO and the Executive Vice President, Global Strategy and Talent selecting the objective financial metrics and establishing proposed goals for those selected metrics for each of the NEOs. The recommended financial metrics and proposed goals are then reviewed and approved by the CEO. The EPS and ROIC metric are used for each NEO, with the same goals as those used for the CEO. The CFO and the Executive Vice President, Global Strategy and Talent recommend the proposed goals and award opportunities for Mr. Chandrashekar’s other objective financial metric, AOUP, which is then reviewed and approved by the CEO. The Committee reviews these recommended financial goals, makes any adjustments it deems appropriate and then approves the financial goals and range of award opportunities, including the weighting of each goal.

For 2018, Mr. Prising approved the operating objectives for Messrs. McGinnis, Chandrashekar, Buchband and Green and Ms. Swan, which were reviewed by the Committee.

 

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After the close of each year, the Committee reviews and approves an award amount for the annual incentive to each NEO based on achievement of the NEO’s annual objective financial goals under the Incentive Plan. The CEO determines the amount of any award to each of the NEOs for performance towards each of their annual operating objectives. The CEO presents the recommended award for each NEO to the Committee for its review and approval, subject to ratification by the board of directors for Messrs. McGinnis and Green. For Mr. Green, the Committee approved an incentive for 2018, based on actual results for the year but prorated through the date of his retirement as COO.

The Committee generally determines and approves equity awards to the other NEOs, including vesting schedules, at its regularly scheduled meeting in February each year, and as required under the Committee’s charter, subject to ratification by the board of directors in the case of the CFO and President. These are generally based on recommendations by the CEO (although not with regard to himself). The Committee may make grants to NEOs at other times during the year, as it deems appropriate. The grant date for the awards is the date the Committee approves the awards. The exercise price for any options granted is the closing price on the date of grant.

Components of the 2018 Executive Compensation Program—Base Salary

Base salaries for NEOs are set near the median of base salaries paid in the relevant competitive market, for the particular position, subject to individual performance factors as described earlier. For 2018, the Committee increased the base salary for Mr. McGinnis to $700,000. None of the other NEOs received an increase in base salary.

Base salary levels affect the value of the annual incentive awarded to the NEOs because the incentive award is awarded as a percentage of base salary. A higher base salary will result in a higher annual incentive, assuming the same level of achievement against goals. The level of severance benefit each NEO may receive is also increased if his or her salary is increased. The value of long-term incentive awards is not determined as a multiple of base salary.

Components of the 2018 Executive Compensation Program—Annual Cash Incentives

As explained previously, all of the NEOs participate in the Incentive Plan, which provides for annual incentive compensation awards that are tied to ManpowerGroup’s financial results. The Incentive Plan provides for the payment of annual cash rewards to a participant based on the Company’s attainment of one or more financial goals and operating objectives established for that participant for the relevant year. The incentive amounts are based on achievement of pre-established goals using these metrics. The Incentive Plan provides for a variety of financial goals that are used in determination of the amount of any annual incentives earned by the NEOs. The financial goals include EPS, ROIC and AOUP, as well as other metrics. The operating objectives are typically tied to broad strategic or operational initiatives.

How the Committee Sets Underlying Goals for EPS and ROIC

As noted above, the annual cash incentives for NEOs are based on two objective factors — EPS and ROIC — plus regional operating unit performance, where applicable, and individual performance objectives. For EPS and ROIC, the Committee sets target outcomes at a number that reflects an annual growth target. For 2018, when setting the targets, the Committee established the targets of EPS and ROIC excluding anticipated restructuring charges. As mentioned earlier, the Committee has also determined to exclude the impact of currency when calculating EPS and ROIC to ensure that payments under our annual incentives reflect the underlying performance of our business. The Committee has also determined to exclude the benefit of current year share repurchases in excess of dilution when calculating EPS. The calculation of EPS and ROIC are as follows:

 

   

EPS — net earnings per share — diluted, including net earnings from continuing and discontinued operations, but excluding the impact of currency, restructuring charges net of related savings, any cumulative effects of changes in accounting principles, extraordinary items or goodwill impairment or the benefit of current year share repurchases in excess of dilution.

 

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ROIC — consolidated net operating profit after taxes divided by average capital. Net operating profit equals earnings before income taxes plus net interest expense and goodwill impairment (including the results of continuing and discontinued operations) minus taxes, excluding the impact of currency and restructuring charges net of related savings. Average capital is the average monthly ending balance of capital employed plus or minus adjustments.

The EPS target is generally based on the Company’s targeted long-term growth rate for EPS, but may be adjusted year-by-year based on economic conditions and the Company’s expected financial performance for the year. From that target, the Committee then sets levels for threshold and outstanding performance. The threshold EPS growth rate reflects a level of performance that is below target but still appropriate for a partial award to be earned. Conversely, the outstanding EPS growth rate reflects a level of performance appropriate for the maximum incentive to be earned. So the comparisons are valid between the two years, the growth rates are based on growth over results of the previous year excluding non-recurring items.

The ROIC target is then determined based on the earnings growth reflected by the EPS target as well as consideration by the Committee of factors relating to the Company’s level of capital. The other financial performance metrics under the plan used to determine the annual incentives earned by the other NEOs are determined in a similar way, taking into consideration the economic conditions and expected financial performance of each individual region, where applicable, as well as the overall EPS and ROIC targets. This methodology is not the same as the Company’s financial budgeting or business outlook for the year. As a result, target performance for purposes of achieving an incentive award will not be the same as performance at the budgeted financial plan, which may be higher or lower than target performance depending on economic conditions and trends at the time.

Why the Company Uses EPS and ROIC

The Committee believes using EPS as a performance goal keeps the NEOs focused on producing financial results that align with shareholder interests. In that regard, ManpowerGroup is in a cyclical business, which is influenced by economic and labor market cycles that are outside of ManpowerGroup’s control, and it is important that the senior executives manage short-term results closely to be able to adjust strategy and execution in quick response to external cycle changes. The Company uses ROIC as a performance goal for the NEOs because it measures how effectively our senior management is converting our services into cash. Although we are a provider of services, and not a manufacturer of products, our business is still highly capital intensive. Our requirement for capital arises from the timing characteristics of our business. We typically pay our associates and consultants before we can bill and collect from our clients.

Using an ROIC metric incentivizes our executives to carefully manage our accounts receivable and other capital investments in order to maximize the return on capital deployed. Our goal is to continuously improve our internal capital employed each year resulting in stable to improving ROIC. For 2018, the Committee continued its practice of setting threshold, target and outstanding goals for EPS and ROIC that were based on its view of appropriate rates of EPS growth compared to prior year achievement. In setting these levels for 2018, the Committee assumed continuing improvement in global economic conditions. Correspondingly, the EPS and ROIC targets for outstanding performance represent what the Committee believed was an appropriate growth rate for outstanding performance. The Committee believed the threshold levels for EPS and ROIC were the minimum levels at which it would be appropriate to earn an incentive, based on global economic conditions as they existed at the time when the goals were set.

The following table shows the EPS and ROIC goals established by the Committee for 2018:

 

       

Goal

     Threshold      Target      Outstanding    

 

EPS

 

    

 

$

 

 

8.48

 

 

 

 

  

 

$

 

 

9.20

 

 

 

 

  

 

$

 

 

9.91

 

 

 

 

 

ROIC

 

    

 

 

 

 

15.6

 

 

 

  

 

 

 

 

17.0

 

 

 

  

 

 

 

 

18.6

 

 

 

 

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The Committee Also Uses AOUP for Certain NEOs

Where an individual executive has specific responsibility for a geographic operating unit, the Committee also uses AOUP as a financial performance metric, to drive profitability in the executive’s business unit, while factoring in the cost of carrying accounts receivable. The calculation of AOUP is as follows:

 

   

AOUP — Operating unit profit less a cost of net capital.

 

   

Operating unit profit is equal to revenues less direct costs and branch and national headquarters operating costs translated into U.S. Dollars in constant currency. It includes the results of continuing and discontinued operations and excludes items consistent with the adjustments to EPS.

 

   

Cost of net capital is average net capital multiplied by 12%. Average net capital equals average trade accounts receivable less allowance for doubtful accounts and other miscellaneous adjustments, calculated based on the average of the monthly ending balances, translated into U.S. Dollars using the same monthly exchange rates as used for operating unit profit.

In 2018, Mr. Chandrashekar was the only NEO with AOUP used as a performance metric for his annual incentive goals.

Annual Incentive Award Opportunities by NEO

Jonas Prising Annual Incentive Award Opportunities

The Committee determined that EPS and ROIC were the appropriate performance metrics in 2018 for Mr. Prising as the CEO. The following chart shows the Committee’s determination of award opportunities for the annual incentive payable to Mr. Prising for 2018, as a percentage of his 2018 base salary of $1,250,000:

 

       
        Threshold      Target      Outstanding  

 

EPS goal (weighted 40%)

 

    

 

 

 

 

15.0

 

 

 

  

 

 

 

 

60.0

 

 

 

  

 

 

 

 

120.0

 

 

 

 

ROIC goal (weighted 40%)

 

    

 

 

 

 

15.0

 

 

 

  

 

 

 

 

60.0

 

 

 

  

 

 

 

 

120.0

 

 

 

 

Operating Objectives (weighted 20%)

 

    

 

 

 

 

7.5

 

 

 

  

 

 

 

 

30.0

 

 

 

  

 

 

 

 

60.0

 

 

 

 

Total

 

    

 

 

 

 

37.5

 

 

 

  

 

 

 

 

150.0

 

 

 

  

 

 

 

 

300.0

 

 

 

The operating objectives for Mr. Prising for 2018 were as follows:

 

   

Meet/exceed growth rate of gross profit of certain competitors

 

   

Develop a strong team and a robust and diverse talent pipeline, including key leadership

 

   

Drive continuing transformation of the Company’s IT operating model and platform to enhance governance and accelerate business performance

 

   

Plan, design and execute strategic initiatives focused on transformation of the business

The Committee determined that Mr. Prising earned a cash incentive award for 2018 between the threshold and target level for all of his financial objectives in 2018. The Committee also approved an incentive award to Mr. Prising based on its determination of the level of performance towards achievement of his various operating objectives. Based on these accomplishments, the Committee determined to pay the 2018 award to Mr. Prising as follows:

 

     
      Target Award        Actual Award    

 

CEO

 

  

 

$

 

 

1,875,000

 

 

 

 

    

 

$

 

 

1,137,277

 

 

 

 

For 2018, the calculation for EPS for Mr. Prising and the other NEOs excluded the impact of changes in foreign currency exchange rates, the impact of share repurchase activity during the year except to the extent necessary to offset dilution resulting from shares issued under equity plans, a goodwill impairment charge and restructuring costs net of related savings. ROIC excluded the impact of currency and restructuring costs net of related savings. The goodwill impairment charge did not have a significant impact on ROIC. See page 58 for the calculations for Mr. Prising and the other NEOs.

 

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John T. McGinnis Annual Incentive Award Opportunities

Similar to the CEO, the Committee determined EPS and ROIC as the appropriate performance metrics for Mr. McGinnis as the CFO.

The following chart shows the Committee’s determination of award opportunities for the annual incentive payable to Mr. McGinnis for 2018, as a percentage of his 2018 base salary of $700,000.

 

       
        Threshold      Target      Outstanding    

EPS goal (weighted 40%)

    

 

10.0

  

 

40.0

  

 

80.0

ROIC goal (weighted 40%)

    

 

10.0

  

 

40.0

  

 

80.0

Operating Objectives (weighted 20%)

    

 

5.0

  

 

20.0

  

 

40.0

Total

    

 

25.0

  

 

100.0

  

 

200.0

The operating objectives for Mr. McGinnis for 2018 were as follows:

 

   

Meet/exceed growth rate of gross profit of certain competitors

 

   

Make progress towards transformation initiatives

 

   

Deepen leadership impact to meet or exceed strategic and operational goals

 

   

Lead implementation and execution of certain initiatives to support our operations and transformation

 

   

Develop succession within the finance department to strengthen talent base

The Committee determined that Mr. McGinnis earned a cash incentive award between threshold and target for 2018 for EPS and ROIC. The Committee also approved an incentive award for Mr. McGinnis based on its determination of the level of performance towards achievement of his operating objectives. Based on these accomplishments, the Committee determined to pay the 2018 award to Mr. McGinnis as follows:

 

     
      Target Award        Actual Award    

 

CFO

 

  

 

$

 

 

700,000

 

 

 

 

    

 

$

 

 

500,000

 

 

 

 

Ram Chandrashekar — Annual Incentive Award Opportunities

The Committee determined that EPS, ROIC and AOUP were the appropriate performance metrics for Mr. Chandrashekar, Executive Vice President, Operational Excellence and IT, and President, Asia Pacific Middle East.

The following chart shows the Committee’s determination of award opportunities for the annual incentive payable to Mr. Chandrashekar for 2018, as a percentage of his 2018 base salary of $627,849:

 

       
        Threshold      Target      Outstanding    

 

AOUP goal (weighted 40%)

 

    

 

 

 

 

10.0

 

 

 

  

 

 

 

 

30.0

 

 

 

  

 

 

 

 

60.0

 

 

 

 

EPS goal (weighted 20%)

 

    

 

 

 

 

5.0

 

 

 

  

 

 

 

 

15.0

 

 

 

  

 

 

 

 

30.0

 

 

 

 

ROIC goal (weighted 20%)

 

    

 

 

 

 

5.0

 

 

 

  

 

 

 

 

15.0

 

 

 

  

 

 

 

 

30.0

 

 

 

 

Operating Objectives (weighted 20%)

 

    

 

 

 

 

5.0

 

 

 

  

 

 

 

 

15.0

 

 

 

  

 

 

 

 

30.0

 

 

 

 

Total

 

    

 

 

 

 

25.0

 

 

 

  

 

 

 

 

75.0

 

 

 

  

 

 

 

 

150.0

 

 

 

The operating objectives for Mr. Chandrashekar for 2018 were as follows:

 

   

Meet/exceed growth rate of gross profit of certain competitors

 

   

Make progress towards transformation initiatives

 

   

Drive execution of technology initiatives

 

   

Accelerate the development of the Experis brand, achieving operational and strategic plan objectives

The Committee determined that Mr. Chandrashekar earned a cash incentive award between threshold and target for both EPS and ROIC and at outstanding for AOUP. The Committee also approved an incentive award for Mr. Chandrashekar based on its determination of the level of performance towards achievement of his operating

 

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objectives. Based on these accomplishments, the Committee determined to pay the 2018 award to Mr. Chandrashekar as follows:

 

     
        Target Award(1)        Actual Award(1)    

 

EVP, Operational Excellence and IT, and President, Asia Pacific Middle East

 

    

 

$

 

 

470,887

 

 

 

 

    

 

$

 

 

578,124

 

 

 

 

 

  (1)

Mr. Chandrashekar’s target award and actual award received have been translated at an exchange rate of 0.789017 (in U.S. Dollars), which was the exchange rate on February 11, 2014, the date Mr. Chandrashekar was promoted to Executive Vice President, Operational Excellence and IT and President, Asia Pacific Middle East.

Mara E. Swan — Annual Incentive Award Opportunities

The Committee determined EPS and ROIC were the appropriate performance metrics for Ms. Swan, Executive Vice President, Global Strategy and Talent.

The following chart shows the Committee’s determination of award opportunities for the annual incentive payable to Ms. Swan for 2018, as a percentage of her 2018 base salary of $610,000:

 

       
        Threshold      Target      Outstanding    

 

EPS goal (weighted 40%)

 

    

 

 

 

 

10.0

 

 

 

  

 

 

 

 

30.0

 

 

 

  

 

 

 

 

60.0

 

 

 

 

ROIC goal (weighted 40%)

 

    

 

 

 

 

10.0

 

 

 

  

 

 

 

 

30.0

 

 

 

  

 

 

 

 

60.0

 

 

 

 

Operating Objectives (weighted 20%)

 

    

 

 

 

 

5.0

 

 

 

  

 

 

 

 

15.0

 

 

 

  

 

 

 

 

30.0

 

 

 

 

Total

 

    

 

 

 

 

25.0

 

 

 

  

 

 

 

 

75.0

 

 

 

  

 

 

 

 

150.0

 

 

 

The operating objectives for Ms. Swan for 2018 were as follows:

 

   

Meet/exceed growth rate of gross profit of certain competitors

 

   

Develop and execute on value and share strategy for several of our brands

 

   

Collaborate with the CEO to map out the evolution of the Company’s business model and strategy

 

   

Develop strategy to enhance efficiencies for clients and associates

The Committee determined that Ms. Swan earned a cash incentive award between threshold and target for 2018 for both EPS and ROIC. The Committee also approved an incentive award to Ms. Swan based on its determination of the level of performance towards achievement of her operating objectives. Based on these accomplishments, the Committee determined to pay the 2018 award to Ms. Swan as follows:

 

     
        Target Award        Actual Award    

 

EVP, Global Strategy and Talent

 

    

 

$

 

 

457,500

 

 

 

 

    

 

$

 

 

330,000

 

 

 

 

Richard Buchband — Annual Incentive Award Opportunities

The Committee determined EPS and ROIC were the appropriate performance metrics for Mr. Buchband, Senior Vice President, General Counsel and Secretary.

The following chart shows the Committee’s determination of award opportunities for the annual incentive payable to Mr. Buchband for 2018, as a percentage of his 2018 base salary of $500,000.

 

       
        Threshold      Target      Outstanding    

 

EPS goal (weighted 40%)

 

    

 

 

 

 

10.0

 

 

 

  

 

 

 

 

24.0

 

 

 

  

 

 

 

 

48.0

 

 

 

 

ROIC goal (weighted 40%)

 

    

 

 

 

 

10.0

 

 

 

  

 

 

 

 

24.0

 

 

 

  

 

 

 

 

48.0

 

 

 

 

Operating Objectives (weighted 20%)

 

    

 

 

 

 

5.0

 

 

 

  

 

 

 

 

12.0

 

 

 

  

 

 

 

 

24.0

 

 

 

 

Total

 

    

 

 

 

 

25.0

 

 

 

  

 

 

 

 

60.0

 

 

 

  

 

 

 

 

120.0

 

 

 

 

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The operating objectives for Mr. Buchband for 2018 were as follows:

 

   

Meet/exceed growth rate of gross profit of certain competitors

 

   

Make progress towards transformation initiatives

 

   

Provide strong leadership and strategic direction to global legal function

 

   

Serve as trusted advisor to the board of directors and executive team

The Committee determined that Mr. Buchband earned a cash incentive award between threshold and target for 2018 for both EPS and ROIC. The Committee also approved an incentive award for Mr. Buchband based on its determination of the level of performance towards achievement of his operating objectives. Based on these accomplishments, the Committee determined to pay the 2018 award to Mr. Buchband as follows:

 

     
        Target Award        Actual Award    

 

Senior Vice President, General Counsel and Secretary

 

    

 

$

 

 

300,000

 

 

 

 

    

 

$

 

 

215,000

 

 

 

 

Darryl Green — Annual Incentive Award Opportunities

Similar to the CEO and CFO, the Committee determined EPS and ROIC as the appropriate performance metrics for Mr. Green as President and COO.

The following chart shows the Committee’s determination of award opportunities for the annual incentive payable to Mr. Green for 2018, as a percentage of his full 2018 annual base salary of $850,000:

 

       
        Threshold      Target      Outstanding    

 

EPS goal (weighted 40%)

 

    

 

 

 

 

10.0

 

 

 

  

 

 

 

 

40.0

 

 

 

  

 

 

 

 

80.0

 

 

 

 

ROIC goal (weighted 40%)

 

    

 

 

 

 

10.0

 

 

 

  

 

 

 

 

40.0

 

 

 

  

 

 

 

 

80.0

 

 

 

 

Operating Objectives (weighted 20%)

 

    

 

 

 

 

5.0

 

 

 

  

 

 

 

 

20.0

 

 

 

  

 

 

 

 

40.0

 

 

 

 

Total

 

    

 

 

 

 

25.0

 

 

 

  

 

 

 

 

100.0

 

 

 

  

 

 

 

 

200.0

 

 

 

The operating objectives for Mr. Green for 2018 were as follows:

 

   

Meet/exceed growth rate of gross profit of certain competitors

 

   

Make progress towards transformation initiatives

 

   

Ensure implementation and achievement of the Company’s long-term strategy

 

   

Accelerate Manpower performance in permanent recruitment globally

 

   

Provide operational and strategic insight that aligns with, and supports, the CEO’s objectives

As stated earlier, Mr. Green retired from the position of COO effective August 31, 2018 and remained an employee of the company until October 1, 2018. Under the terms of the Incentive Plan, Mr. Green was entitled to receive a prorated annual incentive for 2018 based on actual performance results for the objectives first approved for him in February 2018.

The Committee determined that Mr. Green earned a cash incentive award between threshold and target for 2018 for both EPS and ROIC. The Committee also approved an incentive award to Mr. Green based on its determination of the level of performance towards achievement of his various operating objectives. Based on these accomplishments, the Committee determined to pay the 2018 prorated award to Mr. Green as follows:

 

     
        Target Award(1)        Actual Prorated  
Award  
 

 

COO

 

    

 

$

 

 

850,000

 

 

 

 

    

 

$

 

 

400,031

 

 

 

 

 

  (1)

The target award amount for Mr. Green is based on his full annual salary of 2018. His actual award represented 63% of target and was prorated through his retirement date on October 1, 2018

 

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Components of the 2018 Executive Compensation Program—Long-Term Incentives

Each year the Committee determines the appropriate mix of performance share units, stock options and restricted stock units that should comprise the long-term incentives for the NEOs. This flexibility allows the Committee to tailor its program to create the incentive structure that it believes will best align executive performance and the needs of the Company. The Committee determined for 2018 that the performance needs of the Company would be best met through a package of awards for the NEOs made up of 60% performance share units, 20% stock options and 20% restricted stock units. We believe this will further align the NEOs’ interests with long-term shareholder value, particularly as 60% of the awards vest based on the achievement of performance criteria.

The performance share units, stock options and restricted stock units awarded in 2018 have the characteristics below. The specific long-term incentive grants for each officer are shown in the Grants of Plan Based Awards table on page 56.

Performance Share Units

For the performance share units granted in 2018, vesting will be based on achievement of a pre-established goal for average annual operating profit margin percent, over a three-year period ending December 31, 2020. The Committee believes operating profit margin percent correctly focuses executive officers on the long-term profitability of the Company. Following completion of the 2018-2020 performance period, the Committee will compare operating profit margin percent performance against target levels. The number of shares earned will vest and be settled in common stock in February 2021, after the Committee determines the achievement of the performance goals.

Why the Company Uses Annual Operating Profit Margin and How it Sets Goals

The following table shows the goals established by the Committee for the 2018-2020 performance period for these performance share units and the associated payout percentage:

 

       
        Threshold      Target      Outstanding    

 

Average Operating Profit Margin Percent 2018-2020

 

    

 

 

 

 

3.10

 

 

 

  

 

 

 

 

4.10

 

 

 

  

 

 

 

 

4.50

 

 

 

 

Payout Percentage

 

    

 

 

 

 

50

 

 

 

  

 

 

 

 

100

 

 

 

  

 

 

 

 

200

 

 

 

To determine the average operating profit margin percent at the end of the three-year period, the actual performance results from each year will be averaged to determine the three-year average performance results. The final award will be determined by using the 3-year payout scale relative to the 3-year average performance.

When determining the financial goals for 2018, the Committee determined that for the 2018 financial year, restructuring charges would be excluded from the operating profit margin percent calculation. This increased the operating profit margin percent for 2018 by 0.19% to 3.81%. The Committee also determined, for the 2018 financial year, operating profit margin would exclude any non-recurring accrual adjustments greater than $10 million that pertain to prior periods. This exclusion decreased OPMP by 0.07% to 3.74%.

Under new accounting guidance effective January 1, 2018, we started to record certain pension costs in interest and other expense, moving them out of operating income, beginning with our 2018 fiscal year. This resulted in an increase to our OPMP. Following the principle under our equity plan that OPMP should be adjusted to reverse the impact of any change in accounting principles, the fiscal year 2018 OPMP calculation as it relates to performance share unit grants made in 2016 and 2017 was further reduced by 0.01%. Accordingly, for the 3-year performance periods of 2016-2018 and 2017-2019, the OPMP achieved for 2018 is calculated as 3.73% instead of 3.74%. This accounting change was contemplated in the targets set by the Committee at the beginning of 2018, and therefore no adjustment is made for purposes of the performance period beginning in 2018.

An operating profit “gate” was also established for the performance share units to ensure operating profit margins are achieved without significantly decreasing revenues. This gate was set at $780 million, meaning participants cannot receive more than 100% of the target level payout unless average operating profit for the 2018-2020 performance period exceeds $780.0 million.

 

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Shares Earned for the 2016-2018 Performance Period

Based on the Company’s average operating margin percent for the 3-year performance period of 2016-2018, the Committee determined the 2016 performance share unit awards vested at 96% of the target level. The operating profit dollar gate for these awards was also reached. These shares vested and were settled in common stock in February 2019, after the Committee determined the achievement of the performance goals. The number of shares earned for each of the NEOs is as follows:

 

     

NEO

   Performance Share
Units Granted(#)
    

Performance Share  

Units Earned(#)  

 

 

Jonas Prising

 

  

 

 

 

 

59,945

 

 

 

 

  

 

 

 

 

57,547

 

 

 

 

 

John T. McGinnis

 

  

 

 

 

 

15,986

 

 

 

 

  

 

 

 

 

15,347

 

 

 

 

 

Ram Chandrashekar

 

  

 

 

 

 

11,190

 

 

 

 

  

 

 

 

 

10,742

 

 

 

 

 

Mara E. Swan

 

  

 

 

 

 

9,592

 

 

 

 

  

 

 

 

 

9,208

 

 

 

 

 

Richard Buchband

 

  

 

 

 

 

5,595

 

 

 

 

  

 

 

 

 

5,371

 

 

 

 

 

Darryl Green(1)

 

  

 

 

 

 

27,974

 

 

 

 

  

 

 

 

 

26,855

 

 

 

 

 

  (1)

Under the terms of Mr. Green’s performance share unit agreement, upon Mr. Green’s retirement, if the Committee approved a succession plan for his position, Mr. Green would be entitled to the full number of shares earned. The Committee approved such a plan and Mr. Green received the full number of shares earned. See page 68 for more information.

Changes for 2019

The Committee determined to modify the terms of the performance share units granted to the NEOs in 2019. In addition to the three-year operating profit margin goal and operating profit “gate,” the Committee will add a modifier to the final performance share unit payout that can increase or decrease the final payout by up to 30%. This modifier will be based on an evaluation of pre-established strategic growth objectives over the performance period. At the end of the 3-year performance period, the Committee will first determine the initial payout of the performance share units based on the average operating margin percent for the 3-year performance period and the gate. The Committee will then assess the achievement (or non-achievement) of the strategic growth objectives over the 3-year period and modify the final payout of the performance share units based on their assessment. The modifier will not decrease the payout below the threshold payout nor increase the payout above the outstanding payout.

Stock Options

The Committee uses stock options to align the interests of the NEOs with long-term shareholder value. Consistent with past years, these will vest ratably over a four-year period.

Restricted Stock Units

As stated earlier, the Committee chose to include restricted stock units because they align the interests of the NEOs with long-term shareholder value and add balance to the compensation program as they provide both upside potential and downside risk. In addition, restricted stock units provide a retention incentive to the NEOs as they are only payable in stock if the NEO remains with the Company through the vesting date. The restricted stock units have a three-year cliff vest.

Career Shares, Retirement and Deferred Compensation Plans

Career Shares

The Committee selectively grants restricted stock units in order to provide a retention incentive. These career shares vest completely on a single date several years into the future. The Committee considers each year whether to make any such grants. None of the NEOs received a career share grant in 2018.

Retirement and Deferred Compensation Plans

ManpowerGroup maintains tax-qualified 401(k) plans for its U.S. employees. For compliance reasons, once an executive is deemed to be “highly compensated” within the meaning of Section 414(q) of the Internal Revenue

 

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Code, the executive is no longer eligible to participate in ManpowerGroup’s 401(k) plans except for “catch-up” contributions for employees over 50. ManpowerGroup maintains a separate non-qualified savings plan for “highly compensated” employees, including eligible executives. The non-qualified plan provides similar benefits to the tax-qualified 401(k) plans, including a Company match and enhanced matching contribution. However, the nonqualified savings plan is a poor substitute because of the inflexibility as to the timing of the payouts and taxability of the retirement benefits relative to a qualified plan. Furthermore, the plan benefits are unsecured and subject to risk of forfeiture in bankruptcy. The Committee maintains this program in an effort to provide NEOs with reasonably competitive benefits to those in the competitive market.

As required under applicable law, we contribute to the Central Provident Fund of Singapore on behalf of Mr. Chandrashekar. The Central Provident Fund is a nondiscriminatory, tax qualified savings plan operated and managed by the government of Singapore, to which the employers of Singapore-based employees are required to contribute. All employees of our Singapore branch participate in the Central Provident Fund.

Other Benefits

The NEOs are provided health and dental coverage, company-paid term life insurance, disability insurance, paid time off, and paid holiday programs applicable to other employees in their locality. These rewards are designed to be competitive with overall market practices, while keeping them at a reasonable level.

ManpowerGroup reimburses NEOs for financial planning assistance. This benefit is provided to ensure that executives prepare adequately for retirement, file their taxes and conduct all stock transactions appropriately. In addition, for several of our NEOs, the company pays dues at a club in Milwaukee that is used for business entertainment. Any personal use of the club would be covered by the executive; however none of the NEOs used this club for personal use in 2018. ManpowerGroup also reimburses the NEOs for annual physicals.

ManpowerGroup also maintains a broad-based auto program that covers approximately 300 management employees in the U.S., including the U.S. based NEOs, except Mr. Prising who no longer participates in the program. Pursuant to this program, ManpowerGroup pays 75% of the cost of a leased car for NEOs based in the U.S. who participate in the program. Consistent with local practice in Singapore, where Mr. Chandrashekar is based, ManpowerGroup provided him with a car in 2018.

Except in connection with expatriate assignments, as discussed below, ManpowerGroup does not pay tax gross ups on taxable benefits for its NEOs.

Consulting Agreement with Mr. Green

As previously stated, Mr. Green retired from his position as COO on August 31, 2018 and from the Company on October 1, 2018. Effective October 1, 2018, the Company entered into an agreement with Mr. Green to provide various consulting services to the Company, including services related to our joint venture in China. This agreement can be terminated at any time.

We Provide Limited Expatriate Benefits

In connection with Mr. Chandrashekar’s role as Executive Vice President, Operational Excellence and IT, and President, Asia Pacific Middle East, Mr. Chandrashekar receives tax equalization payments related to any compensation earned for the time required to be spent in the United States as part of his role. He also receives certain other benefits, including a car and return visit expenses and payment of his tax preparation expenses.

Severance Agreements

ManpowerGroup has entered into severance agreements (which include change of control benefits) with each of the NEOs. These severance agreements are more fully described on pages 66-68. The Committee believes that severance and change of control policies are necessary to attract and retain senior talent in a competitive market. The Committee also believes that these agreements benefit ManpowerGroup because they clarify the NEOs’ terms of employment and protect ManpowerGroup’s business during an acquisition. Furthermore, the Committee

 

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believes that change of control benefits, if structured appropriately, allow the NEOs to focus on their duties and responsibilities during an acquisition.

The agreements do not provide for any tax gross up payments and require a double trigger in order for our NEOs to receive benefits following a change in control.

Governance Features of our Executive Compensation Programs

We Have Stock Ownership Guidelines for Executive Officers

The Committee believes that NEOs should hold a meaningful stake in ManpowerGroup to align their economic interests with those of other shareholders. To that end, the Committee adopted stock ownership guidelines that currently require each executive to own a target number of shares based on a salary multiple, dependent on the NEO’s position. Under the guidelines, the Committee takes into account actual shares owned by the executive, unvested restricted stock units, and unvested performance share units calculated at the threshold level. The Committee does not consider any stock options or performance share units above the threshold level held by the NEOs. Additionally, to enforce our stock ownership policies, we limit the ability of an executive officer to sell equity until he or she is in compliance with the guidelines. An executive who has not yet met, or who falls below, the stock ownership guidelines, is required to hold 50% of the shares received from the exercise of stock options or the vesting of restricted stock units or performance share units until the ownership guidelines have been satisfied. The following table shows the status as of December 31, 2018 of each of the NEOs guidelines:

 

           

NEO

 

  

Target as
a multiple
of salary

 

      

Target
value($)

 

      

Target
number of
shares(#)

 

      

Number of
shares held as
of December 31,
2018(#)

 

    

Status as of  

December 31, 2018(1)  

 

 

Jonas Prising

     6          6,600,000          94,011          300,042        Guideline Met  

John T. McGinnis(2)

     4          2,400,000          32,994          49,724        Guideline Met  

Ram Chandrashekar

     3          1,710,000          24,359          34,397        Guideline Met  

Mara E. Swan

     3          1,680,000          23,931          34,307        Guideline Met  

Richard Buchband

     2          910,000          12,962          20,716        Guideline Met  

Darryl Green

 

    

 

4

 

 

 

      

 

3,200,000

 

 

 

      

 

45,584

 

 

 

      

 

(3

 

 

    

 

(3

 

 

 

(1)

The target values were set as of May 1, 2014 for all NEOs except Mr. McGinnis. Under the policy, executive officers have five years from January 1, 2014 to attain the targeted ownership levels or five years from date of hire for executive officers that were hired after January 1, 2014.

 

(2)

The target values for Mr. McGinnis are based on his base salary and stock price on his date of hire.

 

(3)

Mr. Green remained in compliance with his stock ownership guidelines through his retirement from his position as COO on August 31, 2018.

We Have a Clawback Policy

The Committee maintains a compensation recoupment (“clawback”) policy that is applicable to the members of the Company’s senior management. Under the policy, if the Committee determines an employee engaged in intentional misconduct that causes a financial restatement, the Committee may require the employee to forfeit any outstanding awards, including cash incentives or equity awards that were received as a result of the misconduct.

We Prohibit Hedging, Pledging and Short-Sale Transactions

Under ManpowerGroup’s Insider Trading Policy, designated individuals, including the NEOs, are prohibited from engaging in short sales or hedging transactions involving ManpowerGroup securities, including forward sale or purchase contracts, equity swaps or exchange funds. Designated individuals are also prohibited from engaging in puts, calls or other options or derivative instruments involving ManpowerGroup securities. Further, we do not allow designated individuals to pledge ManpowerGroup securities at any time, which includes having ManpowerGroup stock in a margin account or using ManpowerGroup stocks as collateral for a loan.

 

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Realizable Pay in 2018

We also calculate realizable pay for Mr. Prising. This is a measure of the value of compensation granted or awarded during the reporting year. It shows the impact of Company performance and stock price on potential pay values for Mr. Prising, and provides an alternative means to the Summary Compensation Table on page 54 to evaluate the alignment between pay and performance.

In particular, our calculation of realizable pay does not value equity awards using the accounting grant date fair value metric, as required in the Summary Compensation Table under Topic 718. Instead, for realizable pay we measure equity awards at their period-end value, in this case using the year-end stock price on December 31, 2018 of $64.80.

For realizable pay our method of calculating equity award values is as follows:

 

   

Stock Options. We use the “intrinsic value” of the stock options granted to Mr. Prising in February 2018, meaning the spread between the grant price and the price of the underlying stock at year end.

 

   

Restricted Stock Units. We use the year-end value of the restricted stock units awarded to Mr. Prising in February 2018 and value these shares using the year-end stock price on December 31, 2018.

 

   

Performance Share Units. We calculate performance share units using the target performance shares granted in 2018 and value these shares using the year-end stock price on December 31, 2018.

Our realizable pay calculation reflects the significant equity component of Mr. Prising’s total compensation and illustrates how the value of Mr. Prising’s 2018 compensation is sensitive to movements in our stock price. The Company’s stock price declined significantly during 2018: from $126.11 on January 1, 2018 to $64.80 as of December 31, 2018. In addition, the December 31, 2018 stock price was lower than the fair market value used to value the equity grants of $122.87 as of February 15, 2018 (the closing stock price on the date of grant). The combination of the stock price decline during the year, and the Company’s below-target operating performance resulted in Mr. Prising’s calculated realizable pay being $6.2 million for 2018. This is substantially lower than $11.4 million of total compensation shown in the Summary Compensation Table using SEC reporting methodology. It also reflects a 56% decrease from his realizable pay for 2017, when strong operating performance and considerable stock price appreciation resulted in realizable pay that was greater than reported compensation.

The table below shows realizable pay for Mr. Prising in 2018 as compared to his compensation as reported in the Summary Compensation Table on page 54.

Supplemental Table of CEO Realizable Compensation

 

     
     

2018 Compensation as
Reported in the
Summary
Compensation Table

 

      

2018 Total Realizable  

Compensation  

 

 

Base Salary

   $ 1,250,000        $ 1,250,000  

Annual Incentive

     1,137,277          1,137,277  
  

 

 

      

 

 

 

Total Cash

     2,387,277          2,387,277  
  

 

 

      

 

 

 

Stock Options

     1,800,015          0 (1) 

Restricted Stock Units

     1,800,046          949,320  

Performance share units

     5,400,014          2,847,895  
  

 

 

      

 

 

 

Total

     11,387,352          6,184,492  
  

 

 

      

 

 

 

 

(1)

Because the stock price of $64.80 as of December 31, 2018 was less than the stock price on February 15, 2018 (the date of grant) of $122.87, there is no intrinsic value of the stock options.

 

 

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Compensation Discussion and Analysis  

 

 

Other Material Tax Implications of the Executive Compensation Program

Tax Implications for ManpowerGroup

For tax years occurring prior to 2018, Section 162(m) of the Internal Revenue Code generally disallowed a tax deduction to public corporations for compensation over $1,000,000 paid in any tax year to any “covered employee.” Prior to 2018, covered employees included the corporation’s CEO and each of its three most highly compensated NEOs (other than the CEO and CFO) in service as of the end of any such tax year. However, Section 162(m) also provided that qualifying performance-based compensation would not be subject to the deduction limit if certain requirements were met. Accordingly, for tax years prior to 2018, the Committee generally sought to structure compensation amounts and plans to meet the requirements for deductibility under that provision where it thought such structures were appropriate. However, the Committee had the ability to implement compensation arrangements that did not satisfy these requirements for deductibility if it determined that such arrangements were appropriate under the circumstances.

Pursuant to tax reform legislation signed into law on December 22, 2017 (“Tax Reform”), the exception to the $1,000,000 annual limitation for qualifying performance-based compensation was repealed for tax years starting in 2018, subject to limited transition relief for certain grandfathered arrangements that were in effect on November 2, 2017. In addition, Tax Reform amended the definition of covered employees so that the compensation of our CEO, CFO, and our three most highly compensated NEOs (other than the CEO and CFO and regardless of whether they serve at the end of the tax year) for any tax year would be subject to Section 162(m)’s deduction limitation. Further, for each NEO whose compensation was or is subject to this limitation in 2017 or any later tax year, that officer’s compensation will remain subject to this annual deductibility limitation for any future tax year in which he or she receives compensation from ManpowerGroup, regardless of whether he or she remains a NEO.

Accordingly, starting in 2018, ManpowerGroup is only able to deduct up to $1,000,000 per year of the compensation payable to any of our NEOs who is a “covered employee” as determined under Tax Reform, except to the extent that transition relief would apply to a payment.

Tax Implications for NEOs

The Committee generally seeks to structure compensation amounts and arrangements so that they do not result in penalties for the NEOs under the Internal Revenue Code. For example, Section 409A imposes substantial penalties and results in the loss of any tax deferral for nonqualified deferred compensation that does not meet the requirements of that section. The Committee has structured the elements of ManpowerGroup’s compensation program so that they are either not characterized as nonqualified deferred compensation under Section 409A or meet the distribution, timing and other requirements of Section 409A. Without these steps, certain elements of compensation could result in substantial tax liability for the NEOs. Section 280G and related provisions impose substantial excise taxes on so-called “excess parachute payments” payable to certain executives upon a change of control and results in the loss of the compensation deduction for such payments by the executive’s employer. The severance agreements with the NEOs limit the amount of the severance payment in the event that the severance payment will be subject to excise taxes imposed under Section 280G, but only where the after-tax amount received by the NEO would be greater than the after-tax amount without regard to such limitation.

 

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Table of Contents

 

  Report of the Executive Compensation and Human Resources Committee of the Board of Directors

 

 

Report of the Executive Compensation and Human Resources Committee of the Board of Directors

The executive compensation and human resources committee of the board of directors of ManpowerGroup has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement. Based on this review and discussion, the executive compensation and human resources committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement.

The Executive Compensation and Human Resources Committee

William Downe, Chair

Cari M. Dominguez

Julie M. Howard

Elizabeth P. Sartain

John R. Walter

Executive Compensation and Human Resources Committee Interlocks and Insider Participation

No member of the executive compensation and human resources committee has ever been an officer or employee of ManpowerGroup or any of our subsidiaries or had any relationships requiring disclosure under Item 404 of Regulation S-K. None of our executive officers has served on the compensation committee or board of directors of any company of which any of our other directors is an executive officer.

 

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Compensation Policies and Practices as They Relate to Risk Management  

 

 

Compensation Policies and Practices as They Relate to Risk Management

Members of the Company’s senior management team have considered and discussed the Company’s compensation policies and practices and specifically whether these policies and practices create risks that are reasonably likely to have a material adverse effect on ManpowerGroup. Management has also discussed this issue with the executive compensation and human resources committee and has determined there are no risks arising from our compensation policies and practices that are reasonably likely to have a material adverse effect on ManpowerGroup.

As ManpowerGroup operates in various countries around the world, we have several incentive plans. Our plans use various financial performance growth metrics, generally relating to profitability. As a result, there is no common incentive driving behavior. We also have controls in place that mitigate any impact these plans might have on us as follows:

 

   

In general, each of our incentive plans has a threshold, target and outstanding payout level, which is not material to the Company, that is earned based on the results of the financial metrics.

 

   

The annual incentive and performance share unit awards are capped at a maximum level such that employees cannot receive a bonus that is significant enough to create a significant risk to the Company.

 

   

We have multiple financial metrics under the annual incentive which focus on company-wide and segment-wide goals and objectives, and the results of those metrics are reviewed and approved at multiple levels in the Company.

 

   

There is an approval process of the various incentive plans in each country, which are approved by the general manager and financial manager in the respective country to ensure the growth metrics are based on that respective country’s performance.

 

   

Each of the NEOs is subject to stock ownership guidelines.

 

   

We have adopted a clawback policy.

 

   

We do not permit executives to engage in short-selling of ManpowerGroup securities or trading in puts and calls on ManpowerGroup securities.

 

   

We do not permit our NEOs to pledge shares of our common stock.

Based on the above factors, we do not believe our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on ManpowerGroup.

 

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  Compensation Tables

 

 

Compensation Tables

Summary Compensation Table

The table below sets forth the compensation information for our NEOs during the fiscal years ended December 31, 2018, December 31, 2017, and December 31, 2016. All amounts are calculated in accordance with SEC disclosure rules, including amounts with respect to our equity compensation plan awards, as further described below.

 

                   

Name &

Principal Position

 

 

Year

 

   

Salary

($)

 

   

Bonus

($)

 

   

Stock

Awards

($)(1)

 

   

Option

Awards

($)(2)

 

   

Non-Equity

Incentive

Plan

Compensation

($)

 

   

Change in

Pension
Value and
Non-

Qualified
Deferred

Compensation
Earnings

($)

 

   

All

Other

Compensation

($)(3)

 

   

Total

($)

 

 

Jonas Prising

    2018       1,250,000             7,200,060       1,800,015       1,137,277             56,658       11,444,010  

CEO

    2017       1,250,000             6,760,111       1,690,019       2,240,546             47,197       11,987,873  
     

 

2016

 

 

 

   

 

1,200,000

 

 

 

   

 

 

 

 

   

 

6,000,120

 

 

 

   

 

1,500,010

 

 

 

   

 

2,238,000

 

 

 

   

 

 

 

 

   

 

52,010

 

 

 

   

 

10,990,140

 

 

 

John T. McGinnis(4)

    2018       700,000             1,920,089       480,017       500,000             88,227       3,688,333  

CFO

    2017       650,000             1,840,115       460,005       755,040             43,798       3,748,958  
     

 

2016

 

 

 

   

 

519,231

 

 

 

   

 

 

 

 

   

 

2,600,125

 

 

 

   

 

400,016

 

 

 

   

 

712,680

 

 

 

   

 

 

 

 

   

 

309,047

 

 

 

   

 

4,541,099

 

 

 

Ram Chandrashekar(5)

    2018       627,849             1,520,148       380,005       578,124             367,155       3,473,281  

EVP, Operational Excellence & IT and President, Asia Pacific Middle East

 

   
2017
2016
 
 
   
627,849
568,035
 
 
   

 
 
   
1,520,019
1,620,086
 
 
   
380,016
280,007
 
 
   
653,967
370,188
 
 
   

 
 
   
175,269
294,960
 
 
   
3,357,120
3,133,276
 
 

Mara E. Swan

    2018       610,000             1,080,150       270,021       330,000             67,788       2,357,959  

EVP, Global Strategy

    2017       610,000             1,080,106       270,022       546,682             61,507       2,568,317  

& Talent

 

   

 

2016

 

 

 

   

 

560,000

 

 

 

   

 

 

 

 

   

 

960,145

 

 

 

   

 

240,017

 

 

 

   

 

522,648

 

 

 

   

 

 

 

 

   

 

83,271

 

 

 

   

 

2,366,081

 

 

 

Richard Buchband(6)

    2018       500,000             640,153       160,006       215,000             66,539       1,581,698  

SVP, General Counsel

    2017       500,000             640,095       160,003       343,500             47,266       1,690,864  

and Secretary

 

   

 

2016

 

 

 

   

 

450,000

 

 

 

   

 

 

 

 

   

 

560,022

 

 

 

   

 

140,004

 

 

 

   

 

337,929

 

 

 

   

 

 

 

 

   

 

51,248

 

 

 

   

 

1,539,203

 

 

 

Darryl Green(7)

    2018       657,115             3,040,172       760,011       400,031             101,958       4,959,287  

Former President & COO

    2017       850,000             3,040,039       760,007       1,004,360             53,385       5,707,791  
     

 

2016

 

 

 

   

 

800,000

 

 

 

   

 

 

 

 

   

 

2,800,036

 

 

 

   

 

700,018

 

 

 

   

 

990,240

 

 

 

   

 

 

 

 

   

 

55,499

 

 

 

   

 

5,345,793

 

 

 

 

(1)

The value of stock awards in this table for all years includes the grant date fair value (calculated at the target level) for performance share units and restricted stock units (including career shares) as computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, “Stock Compensation.” See page 56 for the breakout in the grant date fair value of performance share units (“PSUs”) and restricted stock units (RSUs”).

 

    

The grant date fair value of the 2018 PSU awards at the outstanding level for each executive officer was:

 

   

Name

 

  

2018

 

 

Jonas Prising

   $ 10,800,027  

John T. McGinnis

   $ 2,880,073  

Ram Chandrashekar

   $ 2,280,221  

Mara E. Swan

   $ 1,620,164  

Richard Buchband

   $ 960,106  

Darryl Green

 

   $

 

4,560,197

 

 

 

 

(2)

The value of options in this table represents the grant date fair value of the stock options as computed in accordance with FASB ASC Topic 718.

 

(3)

These amounts are described in further detail in the All Other Compensation in 2018 Table.

 

(4)

As previously disclosed, in 2016 as part of his offer package to join the Company, Mr. McGinnis received a grant of 13,321 career shares with a grant date fair value of $1,000,007.

 

(5)

Mr. Chandrashekar’s annual salary is 795,736 Singapore Dollars (“SGD”). Mr. Chandrashekar’s salary and incentive payment are paid in SGD. His salary and incentive payment have been translated at an exchange rate of 0.789017 (in U.S. Dollars), which was the exchange rate on February 11, 2014, the date Mr. Chandrashekar was promoted to Executive Vice President, Operational Excellence & IT and

 

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Compensation Tables  

 

 

  President, Asia Pacific Middle East. The amounts included in the all other compensation column have been translated at an exchange rate of 0.7337 (in U.S. Dollars), the rate in effect on December 31, 2018. Based on the exchange rate of 0.7337 (in U.S. Dollars), as of December 31, 2018, Mr. Chandrashekar’s salary was $583,832 and incentive compensation was $537,592.

 

(6)

Under SEC disclosure rules, Mr. Buchband did not become a NEO until this year, which is why his compensation has not been disclosed in the Summary Compensation Table previously.

 

(7)

The amount reported in the Salary column for Mr. Green represents his salary through his retirement date on October 1, 2018.

All Other Compensation in 2018

 

           

Name & Principal Position

 

Perquisites

& Other

Personal

Benefits

($)(1)

 

Tax
Reimbursements

($)(2)

 

Payments/
Accruals
on
Termination
Plans

($)

 

Company

Contributions

to Defined

Contribution

Plans

($)(3)

 

Total Other

Compensation

($)

 

Jonas Prising

CEO

  19,158       37,500   56,658

John T. McGinnis

CFO

  55,174       33,053   88,227

Ram Chandrashekar

EVP, Operational Excellence & IT and President, Asia Pacific Middle East

  97,684 (4)   256,749 (5)     12,722   367,155

Mara E. Swan

EVP, Global Strategy and Talent

  30,288       37,500   67,788

Richard Buchband

SVP, General Counsel and Secretary

  29,039       37,500   66,544

Darryl Green

Former President & COO

 

  101,958 (6)         101,958

 

(1)

Except as otherwise indicated, these amounts include the value attributable to each executive’s participation in ManpowerGroup’s company car program, auto insurance, the cost of an annual physical, life insurance premiums paid and/or the value of financial services paid for by ManpowerGroup. Any of these items with a value greater than $25,000 are separately disclosed below.

 

(2)

Due to the complex nature of calculating these tax reimbursements, in certain cases the amounts are paid to the executive officers one or more years after the income to which they relate was earned by the executive officer.

 

(3)

Other than for Mr. Chandrashekar, these contributions were made by ManpowerGroup on behalf of the executive officers under the terms of the Nonqualified Savings Plan and the Company’s 401(k) Plan to the extent the NEO has made a “catch-up” contribution. For Mr. Chandrashekar, the amount represents our contributions to the Central Provident Fund of Singapore (CPF). Further information regarding the Nonqualified Savings Plan can be found in the Nonqualified Deferred Compensation Table and accompanying narrative.

 

(4)

In addition to the amounts described above in footnote (1), this amount reflects $40,305 for tax preparation services, $39,174 for the lease and maintenance payments associated with Mr. Chandrashekar’s car and $14,786 for round-trip airfare from India to the U.S. and from India to Singapore for members of Mr. Chandrashekar’s family. These items have been translated at an exchange rate for SGD of 0.7337 (in U.S. Dollars) which was the exchange rate in effect on December 31, 2018. These benefits are paid to Mr. Chandrashekar in connection with his assignment to Singapore.

 

(5)

This amount reflects tax payments paid on Mr. Chandrashekar’s behalf for compensation he received in 2018 in connection with time spent in the United States as part of his roles and responsibilities. The amount of these taxes is subject to future adjustment after calculation of the final taxes due by Mr. Chandrashekar.

 

(6)

In addition to the amounts described above in footnote (1), this amount includes $75,000 in consulting fees paid to Mr. Green under the consulting agreement he entered into with the Company effective October 2, 2018, which was after his retirement from the Company.

 

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Table of Contents

 

  Compensation Tables

 

 

Grants of Plan-Based Awards in 2018

 

               
         

 

Estimated Future Payouts

Under Non-Equity Incentive
Plan Awards(1)

    Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
   

All

Other

Stock

Awards:

Number

of Shares

of Stock

or Units

(#)(3)

   

All Other

Option

Awards:

Number of

Securities

Underlying

Options

(#)(4)

   

Exercise

or Base

Price of

Option

Awards

($/Sh)

   

Grant

Date

Fair

Value of

Stock

and

Option

Awards

($)(5)

 

Name &

Principal Position

 

Grant

Date

   

Threshold

($)

   

Target

($)

   

Maximum

($)

   

Threshold

(#)

   

Target

(#)

   

Maximum

(#)

 

Jonas Prising

CEO

    2/15/2018       468,750       1,875,000       3,750,000                                            
    2/15/2018                         21,975       43,949       87,898                         5,400,014  
    2/15/2018                                           14,650                   1,800,046  
   

 

2/15/2018

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

57,216

 

 

 

   

 

122.87

 

 

 

   

 

1,800,015

 

 

 

John T. McGinnis

CFO

    2/15/2018       175,000       700,000       1,400,000                                            
    2/15/2018                         5,860       11,720       23,440                         1,440,036  
    2/15/2018                                           3,907                   480,053  
   

 

2/15/2018

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

15,258

 

 

 

   

 

122.87

 

 

 

   

 

480,017

 

 

 

Ram Chandrashekar

    2/15/2018       156,962       470,877       941,774                                            

EVP, Operational Excellence & IT and President Asia Pacific Middle East

 

    2/15/2018                         4,640       9,279       18,558                         1,140,111  
    2/15/2018                                           3,093                   380,037  
    2/15/2018                                                 12,079       122.87       380,005  
                                                                                       

Mara E. Swan

EVP, Global Strategy and Talent

    2/15/2018       152,500       457,500       915,000                                            
    2/15/2018                         3,297       6,593       13,186                         810,082  
    2/15/2018                                           2,198                   270,068  
   

 

2/15/2018

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

8,583

 

 

 

   

 

122.87

 

 

 

   

 

270,021

 

 

 

Richard Buchband

SVP, General Counsel and Secretary

    2/15/2018       125,000       300,000       600,000                                            
    2/15/2018                         1,954       3,907       7,814                         480,053  
    2/15/2018                                           1,303                   160,100  
   

 

2/15/2018

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

5,086

 

 

 

   

 

122.87

 

 

 

   

 

160,006

 

 

 

Darryl Green

Former President & COO

    2/15/2018       212,500       850,000       1,700,000                                            
    2/15/2018                         9,279       18,557       37,114                         2,280,099  
    2/15/2018                                           6,186                   760,074  
   

 

2/15/2018

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

24,158

 

 

 

   

 

122.87

 

 

 

   

 

760,011

 

 

 

 

(1)

These amounts represent the threshold, target, and maximum annual cash incentive awards established under the Annual Incentive Plan. The amounts for Mr. Green represent the threshold, target, and maximum annual cash incentive for the full year.

 

(2)

These amounts represent the number of PSUs that could be earned related to the PSUs granted in 2018 under the 2011 Equity Incentive Plan.

 

(3)

Amounts represent the number of restricted stock units granted in 2018 under the 2011 Equity Incentive Plan.

 

(4)

These amounts represent the number of shares underlying stock options that were granted in 2018 under the 2011 Equity Incentive Plan.

 

(5)

The grant date fair value of stock and option awards granted in 2018 that are reported in this column have been computed in accordance with FASB ASC Topic 718.

 

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Compensation Tables  

 

 

Compensation Agreements and Arrangements

Mr. Prising, Mr. McGinnis, Mr. Chandrashekar, Mr. Buchband, and Ms. Swan currently receive an annual incentive bonus determined pursuant to an incentive arrangement with ManpowerGroup and all have entered into severance agreements with ManpowerGroup. The annual incentive bonus arrangements are described in further detail in the Compensation Discussion and Analysis included in this proxy statement and the severance agreements for each executive officer are described in further detail in the section entitled “Termination of Employment and Change of Control Arrangements” following the Nonqualified Deferred Compensation Table.

In connection with his assignment in Singapore as Executive Vice President, Operational Excellence and IT, and President, Asia Pacific Middle East, Mr. Chandrashekar also receives certain benefits. These include a car, return visit expenses to India for his family, a visit to the United States for his family, tax equalization payments related to any compensation earned by him for the time required to be spent in the United States as part of his role and payment of tax preparation expenses.

Prior to his retirement in October 2018, Mr. Green had a severance agreement with ManpowerGroup. The severance agreement was similar to the agreement with Messrs. Chandrashekar, Mr. Buchband and Ms. Swan. The severance agreement expired upon Mr. Green’s retirement and no amounts were due to him under the severance agreement as a result of his retirement. Mr. Green is bound by the terms of the non-competition provisions in the severance agreement for a period of one-year following his retirement.

After Mr. Green’s retirement, effective October 2, 2018, the Company entered into an agreement with Mr. Green to provide various consulting services to the Company, including services related to our joint venture in China.

 

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Table of Contents

 

  Compensation Tables

 

 

2018 Annual Incentive Award Calculations

The following tables illustrate the achievement of the performance targets in relation to the payment of the 2018 Annual Incentive Awards. The awards are reflected in the Summary Compensation Table on page 54 under the heading “Non-Equity Incentive Plan Compensation.”

For 2018, ManpowerGroup’s EPS, as reported, was $8.56 and ROIC was 15.4%.

When it adopted financial targets for the 2018 performance year, the Committee determined that certain items should be excluded from our performance metrics to ensure our NEOs are compensated only for the underlying performance of our business. For 2018, the Committee’s calculation of EPS for Mr. Prising and the other NEOs excluded the changes in foreign currency exchange rates, which resulted in an EPS of $8.52, as well as the impact of share repurchase activity during the year (except to the extent necessary to offset dilution resulting from shares issued under equity plans), which further adjusted EPS downward to $8.33. The Committee additionally adjusted EPS upward by $0.42 to exclude restructuring costs, net of the savings related to these costs. The Committee also determined to exclude any goodwill impairment charges taken in 2018, which also increased EPS by $0.02. These adjustments resulted in the Committee utilizing an EPS figure of $8.77 in calculating annual incentive compensation for 2018. This compared to EPS goals of $8.48 at threshold, $9.20 at target and $9.91 at outstanding.

The ROIC calculation in 2018 excluded the impact of currency, which resulted in ROIC of 15.3%. Similar to EPS, the Committee adjusted ROIC upward by 0.7% to exclude restructuring costs, net of the savings related to these charges. The Committee also determined to exclude goodwill impairment charges from the ROIC calculations for 2018 but the charge incurred in 2018 did not have a significant impact to ROIC. These adjustments resulted in the Committee utilizing an ROIC figure of 16.0% in calculating annual incentive compensation for 2018. This compared to ROIC goals of 15.6% at threshold, 17.0% at target and 18.6% at outstanding.

Jonas Prising — 2018 Annual Incentive Calculation

 

       
     

Performance

Level

 

      

Percentage

of 2018

Salary

 

    

Amount

Earned

 

 

EPS Goal

     Above Threshold          33.1    $ 414,063  

ROIC Goal

     Above Threshold          27.9    $ 348,214  

Operating Objectives

     At Target          30.0    $ 375,000  

Total Incentive

 

               

 

91.0

 

 

   $

 

1,137,277

 

 

 

John T. McGinnis — 2018 Annual Incentive Calculation

 

       
     

Performance

Level

 

      

Percentage

of 2018

Salary

 

    

Amount

Earned

 

 

EPS Goal

     Above Threshold          22.1    $ 154,560  

ROIC Goal

     Above Threshold          18.5    $ 130,000  

Operating Objectives

     Above Target          30.8    $ 215,440  

Total Incentive

 

               

 

71.4

 

 

   $

 

500,000

 

 

 

 

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Ram Chandrashekar — 2018 Annual Incentive Calculation(1)

 

       
     

Performance

Level

 

      

Percentage

of 2018

Salary

 

    

Amount

Earned

 

 

AOUP of APME Goal

     At Outstanding          60.0    $ 376,710  

EPS Goal

     Above Threshold          9.0    $ 56,695  

ROIC Goal

     Above Threshold          7.9    $ 49,349  

Operating Objectives

     Above Target          15.2    $ 95,370  

Total Incentive

 

               

 

92.1

 

 

   $

 

578,124

 

 

 

 

(1)

Mr. Chandrashekar’s incentive is paid in SGD and has been translated above at an exchange rate of 0.789017 (in U.S. Dollars), which was the exchange rate on February 11, 2014, the date Mr. Chandrashekar was promoted to Executive Vice President, Operational Excellence & IT and President, Asia Pacific Middle East.

Mara E. Swan — 2018 Annual Incentive Calculation

 

       
     

Performance

Level

 

      

Percentage

of 2018

Salary

 

    

Amount

Earned

 

 

EPS Goal

     Above Threshold          18.1    $ 110,166  

ROIC Goal

     Above Threshold          15.7    $ 95,831  

Operating Objectives

     Above Target          20.3    $ 124,003  

Total Incentive

 

               

 

54.1

 

 

   $

 

330,000

 

 

 

Richard Buchband — 2018 Annual Incentive Calculation

 

       
     

Performance

Level

 

      

Percentage

of 2018

Salary

 

    

Amount

Earned

 

 

EPS Goal

     Above Threshold          15.6    $ 78,200  

ROIC Goal

     Above Threshold          14.0    $ 70,000  

Operating Objectives

     Above Target          13.4    $ 66,800  

Total Incentive

 

               

 

43.0

 

 

   $

 

215,000

 

 

 

Darryl Green — 2018 Annual Incentive Calculation(1)

 

       
     

Performance

Level

 

      

Percentage

of 2018

Salary

 

    

Amount

Earned

 

 

EPS Goal

     Above Threshold          21.4    $ 140,760  

ROIC Goal

     Above Threshold          18.1    $ 118,384  

Operating Objectives

     Above Target          21.4    $ 140,887  

Total Incentive

 

               

 

60.9

 

 

   $

 

400,031

 

 

 

 

(1)

The Amount Earned for Mr. Green represents a prorated amount through his retirement date of October 1, 2019.

 

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  Compensation Tables

 

 

Grants Under the 2011 Equity Incentive Plan

Stock options. ManpowerGroup made grants of stock options to all of the executive officers under the 2011 Equity Incentive Plan in February 2018. The stock options granted in 2018 vest 25% per year over a four-year period and if they are not exercised, they expire in ten years (or earlier following a termination of employment). Additional vesting terms applicable to these options are described in further detail in the section entitled “Termination of Employment and Change of Control Arrangements” following the Nonqualified Deferred Compensation Table.

PSUs. ManpowerGroup made grants of PSUs to all of the executive officers under the 2011 Equity Incentive Plan in February of 2018. Each executive officer received a performance share unit grant that will vest if the relevant performance goal of average Operating Profit Margin Percentage is met for the three-year performance period. See page 46 for a description of the goals established by the Committee for the 2018 performance share unit grant.

No dividends are paid on the PSUs unless and until actual shares are issued to the executive officer upon the vesting of the PSUs and in such case, dividends would be paid only for record dates occurring after the issuance date. Additional vesting terms applicable to these grants are described in further detail in the section entitled “Termination of Employment and Change of Control Arrangements” following the Nonqualified Deferred Compensation Table.

Restricted stock units. The restricted stock units granted to the executive officers under the 2011 Equity Incentive Plan in February 2018 have a three-year cliff vest and are earned as long as the executive officer continues to be employed by the Company. Dividend equivalents are paid on the restricted stock units under these awards. Additional vesting terms applicable to these grants are described in further detail in the section entitled “Termination of Employment and Change of Control Arrangements” following the Nonqualified Deferred Compensation Table.

Career shares. ManpowerGroup did not make any career share grants to any of the NEOs in 2018.

 

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Outstanding Equity Awards at December 31, 2018