Emmanuel Babeau
Group Chief Financial Officer at PM
Executive
About Emmanuel Babeau
Emmanuel Babeau has served as Philip Morris International’s Chief Financial Officer since May 1, 2020, joining from Schneider Electric where he was Deputy CEO in charge of Finance and Legal Affairs; he previously spent 15 years at Pernod Ricard, including six years as Group CFO, and is a graduate of ESCP Business School . Company performance under PMI’s incentive frameworks shows strong recent execution: the 2022–2024 PSU cycle delivered a 95th percentile TSR (200% metric rating) and a 12.2% currency-neutral adjusted diluted EPS CAGR (200% metric rating) , while 2024 annual IC targets were met/exceeded on net revenue growth (+9.8%), adjusted OI (+14.9%), and operating cash flow ($12.2B) . PMI’s say‑on‑pay support rebounded to 92.88% in 2024 after lower approvals in 2022–2023, reflecting investor endorsement of pay design changes and performance .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Schneider Electric | Deputy CEO (Finance & Legal) | c. 10 years | Helped grow market cap from ~€18B to ~€60B; led transformation to digital energy/Industry 4.0; HBR cited Schneider among top 15 transformations of the decade |
| Pernod Ricard | Group CFO; earlier roles | 15 years; 6 years as CFO | Led global expansion and major M&A (Seagram, Allied Domecq), scaling brands like Chivas Regal, Martell, Malibu |
External Roles
| Organization | Role | Years/Status | Notes |
|---|---|---|---|
| Sodexo | Director | As of Mar 2, 2020 press release | Board service disclosed by PMI; timing beyond 2020 not specified |
| AVEVA PLC | Director | As of Mar 2, 2020 press release | Board service disclosed by PMI; timing beyond 2020 not specified |
| Sanofi | Director (Audit Committee) | Resigned May 22, 2020 | Board coopted successor; resignation noted by Sanofi |
Fixed Compensation
| Component (2024) | Detail |
|---|---|
| Base Salary | $1,443,726 (CHF 1,260,012 effective Feb 1, 2024) |
| Target Annual Cash Incentive (% of Base) | 125% |
| Actual Annual Cash Incentive Paid (% of Base) | 179% (approved Feb 2025 for 2024 performance) |
| Perquisites (selected) | Car expenses $28,948; tax preparation & other $10,682; incremental international health insurance cost $349 |
Performance Compensation
Annual Incentive (IC) – 2024 Company Metrics and Outcome
| Metric | Weight | Target | Actual | Performance Rating |
|---|---|---|---|---|
| Share of Top 30 OI Markets | 15% | 15–17 markets | 18 markets | 105 |
| Smoke‑Free Shipment Volume | 15% | 153.4–158.0 bn sticks (converted) | 156.5 bn sticks | 100 |
| Adjusted Net Revenues (organic) | 20% | 7.5–8.5% growth | 9.8% growth | 147 |
| Adjusted Operating Income (organic) | 15% | 8.4–9.7% growth | 14.9% growth | 150 |
| Operating Cash Flow (USD) | 20% | $9.8–$10.2B | $12.2B | 150 |
| Strategic Initiatives | 15% | 100% | 110% | 110 |
| Overall IC Performance Rating | — | — | — | 129–130 (rounded to 130) |
Babeau’s individual IC result was 179% of base salary for 2024, with Committee commentary noting leadership on revenue/cost management, margin expansion, working capital, inflation mitigation, and FX strategies .
Long‑Term Equity (PSUs/RSUs) – Structure and 2024 Grants
| PSU Metric | Weight | Notes |
|---|---|---|
| Relative TSR vs Peer Group | 40% | Rolling 3‑yr TSR vs peer ADRs; cap at target if absolute TSR<0 |
| Adjusted Diluted EPS CAGR (currency neutral) | 30% | Currency‑neutral adjusted diluted EPS CAGR target range maintained |
| Sustainability Index | 30% (20% Product; 10% Operational) | KPI‑based product and operational sustainability index; adjusted in 2024/2025 for strategy focus |
| Grant (Feb 8, 2024) | Units/Value | Vesting |
|---|---|---|
| PSUs (target/max) | 26,940 / 53,880; grant date fair value $2,362,476 | 0–200% vests Feb 17, 2027 per certified performance |
| RSUs | 17,960; grant date fair value $1,598,620 | 100% vests Feb 17, 2027; quarterly dividend equivalents |
Prior cycle results: 2022–2024 PSUs certified at 170% overall vesting; TSR at 95th percentile (200% rating) and EPS CAGR at 12.2% (200% rating) .
Equity Ownership & Alignment
Beneficial Ownership
| Holder | Shares Beneficially Owned (Mar 14, 2025) | % of Outstanding |
|---|---|---|
| Emmanuel Babeau | 90,085 | <1% (each director/NEO less than 1%) |
Unvested vs Unearned Equity (as of Dec 31, 2024)
| Grant Date | Unvested RSUs (#) | Market Value ($) | Unearned PSUs (#) | Market/Payout Value ($) |
|---|---|---|---|---|
| Feb 8, 2024 | 17,960 | $2,161,486 | 53,880 | $6,484,458 |
| Feb 9, 2023 | 17,560 | $2,113,346 | 52,680 | $6,340,038 |
| Feb 10, 2022 | 16,000 | $1,925,600 | 40,800 | $4,910,280 |
Note: Market values use PMI closing price $120.35 on Dec 31, 2024 .
Vesting Schedule and Recent Vesting
| Grant | Vesting Schedule |
|---|---|
| 2024 PSUs | 0–200% vests Feb 17, 2027, subject to certified performance |
| 2024 RSUs | 100% vests Feb 17, 2027 |
| 2023 PSUs | 0–200% vests Feb 18, 2026 |
| 2023 RSUs | 100% vests Feb 18, 2026 |
| 2022 PSUs/RSUs | Vested on Feb 19, 2025 (PSUs at 170%); Babeau vested 40,800 PSUs and 16,000 RSUs |
Shares acquired on vesting and realized value (2024): Babeau 69,820 shares; $6,281,705 .
Alignment Policies
- Share ownership guidelines: Salary Grade 26 requires ownership of 5× base salary; all NEOs complied as of Dec 31, 2024 .
- Anti‑hedging/anti‑pledging: Directors and executive officers prohibited from hedging, short‑selling, or pledging PMI shares; post‑termination 12‑month holding period applies to any accelerated awards .
- Equity program uses PSUs/RSUs; no stock options are used .
Employment Terms
Severance and Change-in-Control Economics
| Provision | Terms |
|---|---|
| Employment Agreement | Babeau eligible for severance if terminated without cause after two years from commencement; lump sum equal to one times annual base salary plus pro‑rated incentive award; RSUs vest fully; PSUs vest pro‑rated per cycle certification; 24‑month non‑compete |
| Estimated Severance (as of Dec 31, 2024) | Severance $1,393,202; Estimated value of stock awards $12,024,530; Incentive award $2,490,349; Total $15,908,081 |
| Change‑in‑Control (double‑trigger in plans) | If awards not replaced or terminated involuntarily, estimated: Unvested PSUs $9,300,648; Unvested RSUs $6,200,432; Completed 2024 IC $1,741,503; Total $17,242,583 (assumes PMI share price $120.35) |
| Clawback | Board policy allows recovery/cancellation of incentive and equity compensation for fraud, misconduct, restatements, or significant write‑offs; NYSE‑aligned |
Multi‑Year Compensation (Summary Compensation Table)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | $1,256,882 | $1,335,944 | $1,426,010 |
| Stock Awards ($) | $4,575,952 | $4,810,773 | $3,961,096 |
| Non‑Equity Incentive Plan ($) | $2,245,614 | $2,166,914 | $2,490,349 |
| Change in Pension Value ($) | $403,940 | $1,868,986 | $1,371,989 |
| All Other Compensation ($) | $37,078 | $28,934 | $39,630 |
| Total Compensation ($) | $8,519,466 | $10,211,551 | $9,289,074 |
Compensation Structure Analysis
- Mix and design: PMI emphasizes at‑risk pay—annual IC with pre‑set weighted metrics and multi‑year PSUs/RSUs; no stock options used .
- 2024 vs 2023: Babeau’s equity grant fair value decreased (from $4.81M to $3.96M) while cash incentive increased (from $2.17M to $2.49M), consistent with strong IC rating and calibrated individual performance .
- Targets unchanged: 2024 IC target % and 2025 LT equity targets by grade remained unchanged; 2025 IC adds a currency impact modifier on operating income ±5 points to further align incentives with dollar‑based outcomes .
Say‑on‑Pay & Shareholder Feedback
- Say‑on‑pay approvals: >91% (2016–2021), 70.00% (2022), 73.95% (2023), 92.88% (2024); reflects engagement and program changes .
- 2024 outreach: discussions with large holders; support for program noted; feedback reported to compensation and governance committees and full Board .
Risk Indicators & Red Flags
- Hedging/pledging prohibited; strong ownership guidelines and clawback framework reduce misalignment risks .
- No stock option repricing (no options in use) .
- Change‑in‑control governed by double‑trigger plans; severance terms for Babeau are moderate (1× base + IC) with non‑compete .
Expertise & Qualifications
- Education: ESCP Business School graduate .
- Technical/industry experience: Finance leadership across consumer goods and energy/digital sectors; led major transformations and M&A (Schneider Electric; Pernod Ricard) .
Equity Ownership Guidelines & Compliance
- Required multiple: Grade 26 = 5× salary; all NEOs compliant as of Dec 31, 2024 .
- Post‑termination share retention: 12‑month holding period for any accelerated awards .
Investment Implications
- Alignment: Rigorous ownership requirements, PSU weighting (TSR/EPS/Sustainability), and anti‑hedging/pledging policies indicate high pay‑for‑performance alignment and reduced hedging/pledging risk .
- Vesting calendar: Significant RSU/PSU events for Babeau in Feb 2026 and Feb 2027 could create mechanical selling pressure; upcoming tranches include 2023 RSUs (17,560) and PSUs (target 52,680) vesting Feb 18, 2026, and 2024 RSUs (17,960) and PSUs (target 26,940; 0–200% actual) vesting Feb 17, 2027 .
- Retention: Contractual severance (1× base + IC) with 24‑month non‑compete, plus meaningful unearned PSUs/RSUs, supports retention while keeping parachute economics controlled .
- Performance momentum: Company IC metrics exceeded or met targets in 2024; prior PSU cycle paid above target (170%), signaling execution strength in CFO’s domain (cash flow, margin, FX, capital allocation) .