2022 Universal Registration Document

Chapter 2 : Corporate governance

Qualitative criteria: Management  Weighting: 7.5%

Qualitative criteria: Management

2022 Results

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  • Continuation of the renewal of the Executive Committee. High retention rate for the Top 300.
  • Management of the health (Covid-19) and geopolitical (Ukraine) situation.
  • Transformation of the Group/Beauty tech/cultural transformation.
  • Pulse survey (internal employee opinion survey): 91% participation, 34 out of 39 questions up or stable compared with 2021.
  • Launch of the L’Oréal Group’s second communication campaign centred around its sense of purpose:  Grand Prix de la Raison d’être awarded to L’Oréal by the Institut du Capitalisme Responsable.
Qualitative criteria: Image, Company reputation, Dialogue with stakeholders   Weighting: 7.5%

Qualitative criteria: Image, Company reputation, Dialogue with stakeholders  
  •  The Group’s influence and that of its teams
    • Nicolas Hieronimus spoke at the Davos Forum on Responsible Consumption, the Challenges magazine’s Economic Summit in December 2022, the Chinese Business Club in December 2022 and the Vivatech fair in June 2022.
    • Barbara Lavernos, one of the 40 ForbesWomen in 2022.
    • Alexandra Palt spoke at the Clinton Foundation and at Climate Week NYC.
  • Sustainable development 
    • L’Oréal is the only company in the world, among nearly 6,000, to have received 3 “A” ratings from the Carbon Disclosure Project for the seventh consecutive year, which is the highest score in three areas: climate, sustainable water management and the fight</span
      against deforestation.
    • L’Oréal was ranked No. 1 across all categories in the Vigeo Eiris ranking.
    • L’Oréal successfully priced its inaugural €3 billion bond including a sustainability-link goals tranche.
    • L’Oréal announced the launch of a new circular innovation fund to scale breakthrough circular innovative solutions from around the world.
  • Commitment to young people
    • Celebrated the 30th anniversary of the international Brandstorm competition, in partnership with Salesforce.
    • Following on from the L’Oréal for Youth programme, the L’Oréal Boost programme was launched.
    • Nicolas Hieronimus and Alexandra Palt attended the final of the Urban Shakers award for socially engaged urban cultures.
    • A delegation of secondary school teachers and pupils visited the Ormes plant during Industry Week.
  • Diversity and inclusion
    • L’Oréal was one of the top 100 companies in the Refinitiv Diversity & Inclusion ranking.
    • L’Oréal was one of the top most advanced companies in the world in terms of gender equality, according to the Equileap Global Gender Equality Ranking 2022, which assesses nearly 4,000 companies in 23 countries.
    • A “Beauty and well-being” space in Paris was opened in collaboration with Emmaüs.
  • Ethics>
    • L’Oréal was recognised for the 13th time as one of the “World’s Most Ethical Companies” by the Ethisphere Institute.
    • For the eighth consecutive year, L’Oréal was recognised as a Global Compact LEAD company by the United Nations.
    • Ethics Day on 20 October 2022: two live webchats with Nicolas Hieronimus were open to all employees worldwide.
  • Value sharing
    • L’Oréal announced the launch of its third employee share ownership plan.
    • L’Oréal created Bold Female Founders to invest in start-ups founded by women.
2.4.2.2.3. Granting of performance shares

Pursuant in particular to Articles L. 225-197-1 and L. 22-10-8 of the French Commercial Code and the authorisation of the Ordinary and Extraordinary General Meeting of 21 April 2022,the Board of Directors meeting on 13 October 2022, taking in to account the performance of Mr Nicolas Hieronimusand the share price valuation, decided to grant him 20,000performance shares (ACAs – “Attributions Conditionnelles d’Actions”, existing conditional grants of shares), in accordance with the remuneration policy.

The estimated fair value, according to the IFRS standards applied in preparing the Consolidated Financial Statements, of one performance share (ACAs) for the 13 October 2022 plan, of which Mr Nicolas Hieronimus is part, is €303.33.

The estimated fair value, according to the IFRS standards, of the 20,000 performance shares (ACAs) granted in 2022 to Mr Nicolas Hieronimus is therefore €6,066,600.

These shares will only vest, in whole or in part, once   conditions described below are met.

Performance conditions

Final vesting of these shares is subject to achievement of performance conditions which will be recorded at the end of a four-year vesting period as from the grant date.

The number of fully vested shares will depend on growth incomparable cosmetics sales compared to the growth of a panel of competitors, which consists in 2022 of Unilever, Procter & Gamble, Estée Lauder, Shiseido, Beiersdorf, Johnson & Johnson, Henkel, LVMH, Kao, and Coty (40%); on the growth in the Group’s consolidated operating profit (40%); on the achievement of environmental and social responsibility commitments made by the Group as part of the L’Oréal for the Future programme (15%) and on a gender balance target in strategic positions including the Executive Committee (5%).

The calculation will be based on the arithmetical average fort he 3 full financial years of the vesting period. The first full year taken into account for assessment of the performance conditions relating to this grant is 2023.

As regards all the free shares granted pursuant to the criterion relating to sales, in order for these to finally vest at the end of the vesting period, L’Oréal must outperform the average growth in sales of the panel of competitors. Below this level, the grant decreases. If the L’Oréal’s comparable growth in net sales is lower than the average growth in net sales of the panel of competitors, no shares will be finally vested under this criterion.