Publicis Groupe acknowledged a series of cost-cutting measures in its Q1 performance today, announced ahead of its previously scheduled date of April 23.
“We are implementing a 500 million euro cost-reduction plan with full impact in 2020, to adapt and be recovery ready. We are asking our shareholders for solidarity with our company and our people by cutting dividends by 50% and exceptionally delaying payment until the end of September,” Publicis Groupe CEO Arthur Sadoun said in a statement. “At the same time, the Groupe’s management team has decided to reduce its fixed remuneration.”
That includes a decision by Sadoun to reduce his base salary by 30% for the second and third quarters of 2020, while the management board and committee will take a 20% pay cut over the same period. Supervisory board chairman and former CEO Maurice Lévy has also opted to reduce his annual compensation by 30%.
Asked whether further reductions for senior leadership were under consideration, Sadoun said he could only speak for himself personally, but that he would potentially consider such a measure at a later date.
“I will do everything personally and as a CEO to make sure that we weather the storm,” he said, adding that he is working 16 hour days, seven days a week. “It’s a very tough moment for our industry, he added.
“My feeling is that people are ready to show a lot of solidarity to actually make sure that we protect our people,” he said when asked if he anticipated broader salary cuts at the agency level.
In addition to these measures, Sadoun mentioned in an internal video that Publicis Groupe will consider a targeted “strategic restructuring,” which will be determined at a country level and may include furloughs and layoffs.
Sadoun told Adweek that the holding company is utilizing furloughs and other measures to avoid layoffs wherever possible and characterized the holding company’s move to a country model 18 months ago as beneficial to its handling of the situation. Necessary cost-cutting measures will be directed at a country level, with further actions deemed necessary also varying agency to agency, according to a source with direct knowledge of the holding company’s operations.
“Everywhere there is a need for furloughs, we are doing it,” Sadoun said, pointing to Publicis Communications innovation hub Drugstore, which has been closed for a month due after widespread furloughs. “Our obsession since Day One has been to take all measures to protect our people,” he continued, adding that Publicis Groupe was utilizing internal resources such as its AI-powered connectivity platform Marcel and trying to find new resources of revenue to accomplish that goal.
Sadoun claimed the accelerated launch of Marcel has helped employees combat isolation and aided in resource management across Publicis’ offices. Since launching 10 days ago, 20,000 of Publicis Groupe’s 24,000 U.S. employees have registered for Marcel, according to Sadoun. He noted that job opportunities on the platform were currently limited to existing Publicis Groupe employees.
Publicis Groupe’s cost-cutting measures began around a month ago, Sadoun explained, with the postponement of new hires and moving away from using freelancers wherever possible.
While organic growth was down 2.9% for Q1, in line with expectations, Sadoun positioned the results as a strong start to 2020 for Publicis Groupe.
Given the unprecedented nature and extent of the economic crisis created by the coronavirus pandemic—and the unclear timetable for recovery—Publicis Groupe has declined to issue any financial guidelines.
Sadoun explained that it didn’t make sense to offer such guidance during a crisis that is “unprecedented” and “unparalleled in terms of magnitude, complexity and probably length.”
In a statement, Sadoun said, “It is slightly awkward to share encouraging news at a time when we are preparing ourselves for tougher days. But we actually had a good start to the year, meeting our internal objectives despite the impact of Covid-19,” posting a 2.9% loss Q1.