2022 Universal Registration Document

Pursuant to the criterion relating to sales, in order for all the free shares granted to be fully vested by the beneficiaries 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 L’Oréal’s comparable growth in net sales is less than the average growth in sales of the panel of competitors over the period, no share will be allocated for this criterion.

Pursuant to the criterion relating to operating profit, in order for all the free shares granted to be fully vested by the beneficiaries at the end of the vesting period, a level of growth defined by the Board of Directors, but not made public for confidentiality reasons, must be achieved or exceeded. Below this level, the grant decreases. If the operating profit does not increase in absolute value over the period, no share will finally vest pursuant to this criterion.

Pursuant to the criterion relating to the achievement of the L’Oréal for the Future Commitments, in order for all the free shares granted to be fully vested by the beneficiaries at the end of the vesting period, the L’Oréal for the Future Commitments have to be met at a certain level, as defined and publicised by the Board of Directors, on average over the course of the vesting period. Below this level, the grant decreases. No shares will fully vest under this criterion if the average level of achievement of the L’Oréal for the Future Commitments falls below the minimum level defined and publicised by the Board of Directors.

Pursuant to the criterion relating to the gender balance in management bodies, in order for all the free shares granted to be fully vested by the beneficiaries at the end of the vesting period, the average proportion of employees of each gender in strategic positions must be at least 40%. Below this level, the grant decreases. No shares will vest in relation to this criterion if the average representation of one of the sexes is less than 35% over the vesting period.

These performance conditions will apply, for all individual grants greater than 100 free shares per plan, to all shares above the hundredth share, with the exception of grants to the directors and corporate officers and members of the Executive Committee, for which they will apply in total. The free grant of shares may be carried out for all Group staff without performance conditions, or for shares allocated on the basis of cash subscriptions carried out as part of an increase in share capital reserved for Group employees.

The Board of Directors will be able to provide for vesting and holding periods which are longer than the minimum periods set above.

The mechanism for the Conditional Grant of Shares to employees complies with the AFEP-MEDEF Code of Corporate Governance.

Any allocations of shares to the directors and corporate officers will be decided by the Board of Directors on the basis of the proposals of the Human Resources and Remuneration Committee after assessment of their performance. The corporate officers of L’Oréal will be required to hold 50% of their fully vested shares in registered form until they cease to hold office.

7.4.3.2. Conditional Grants of Shares granted within the framework of the authorisation of 21 April 2022 (ACAs Plan of 13 October 2022)

On the basis of the proposals made by the General Management and examined by the Human Resources and Remuneration Committee, the Board of Directors decided, at its meeting on 13 October 2022, to make a Conditional Grant of Shares within the scope of the authorisation granted by the Annual General Meeting on 21 April 2022.

The share capital at 13 October 2022 was composed of 536,728,876 shares, and 3,220,373 shares could therefore be issued.

The Board of Directors used this authorisation at its meeting of 13 October 2022 by granting 700,000 shares to 2,647 beneficiaries. This is a free grant of shares to be issued.

Vesting of the shares is subject to a dual condition:

• presence: the shares granted will only vest after a period of 4 years at the end of which the beneficiary must still be an employee of the Group (except in the cases provided by the law or the Plan rules); and
• performance, evaluated as follows:

Financial criteria represent 80% of the performance conditions, split evenly between:

• the growth in L’Oréal’s like-for-like cosmetics sales as compared to those of a panel of its biggest direct competitors⁽¹⁾; and
• the growth in L’Oréal’s consolidated operating profit.

Non-financial criteria represent 20% of performance conditions and are based on:

• the fulfilment of environmental and social responsibility commitments made by the Group as part of the L’Oréal for the Future programme (accounts for 15% of the performance conditions), i.e. the % of sites that are “carbon neutral”⁽²⁾; the % of formula ingredients that are bio-based, traceable and come from sustainable sources; and the % of plastic packaging that comes from either recycled or biobased sources; number of people benefitting from the Group’s brands’ social commitment programmes; and
• the gender balance within strategic positions including the Executive Committee (accounts for 5% of the performance conditions).

The calculation will be made on the basis of the arithmetic average of the performances for 2023, 2024 and 2025.