2022 Universal Registration Document

Chapter 2 : Corporate governance

  Amount Description
Performance shares Performance sharesAmount

 

 Performance sharesDescription

Concerning the granting of performance shares in 2023, the Board of Directors will be called upon to decide on the implementation of a new Plan within the scope of the authorisation approved by the Annual General Meeting on 21 April 2022.

The grant that would be decided for Mr Nicolas Hieronimus would comply with the recommendations of the AFEP-MEDEF Code. The value of the grant (estimated according to the IFRS standards), represents approximately 50% of the executive corporate officer’s total remuneration without exceeding 60%.

Mr Nicolas Hieronimus is also required to hold 50% of the free shares that are fully vested to him at the end of the vesting period in registered form until the termination of his term of corporate office.

Final vesting of these shares is subject to achievement of performance conditions which will be recorded at the end of a 4-year vesting period as from the grant date. The number of vested shares would depend:

  • on growth in comparable cosmetics sales versus those of a panel of competitors, which consists of Unilever, Procter & Gamble, Estée Lauder, Shiseido, Beiersdorf, Johnson & Johnson, Henkel, LVMH, Kao and Coty (40%);
  • on growth in the Group’s consolidated operating profit (40%);
  • on the fulfilment of environmental and social responsibility commitments made by the Group as part of the L’Oréal for the Future programme (% of sites that are “carbon neutral”(1); % of formula ingredients that are biobased, traceable and come from sustainable sources; % of plastic packaging that comes from either recycled or biobased sources; number of people benefitting from the Group’s brands’ social commitment programmes) (15%);
  • on gender balance within strategic positions including the Executive Committee (5%).

The calculation will be based on the arithmetical average for the three full financial years of the vesting period. The first full year taken into account for assessment of the performance conditions relating to this grant would be 2024.

Details of the conditional vesting thresholds are given on page 97.
Remuneration as Director Remuneration as DirectorAmount

€0

 Remuneration as DirectorDescription

Mr Nicolas Hieronimus will not receive remuneration for his position as Director.
Benefits in addition to remuneration Benefits in addition to remunerationAmount

 

 Benefits in addition to remunerationDescription
  • Benefits in kind

Mr Nicolas Hieronimus will benefit from the material resources needed for the performance of his office such as, for example, the provision of a car with a driver. These arrangements, which are strictly limited to professional use, to the exclusion of all private use, are not benefits in kind.

  • Additional social protection schemes: defined contribution pension, employee benefit and healthcare schemes

Mr Nicolas Hieronimus will continue to be treated in the same way as a senior manager during the term of his corporate office, which will allow him to continue to benefit from the additional social protection schemes and, in particular, the defined contribution pension scheme, and the employee benefit and healthcare schemes applicable to the Company’s employees. The amount of the pension resulting from the employer’s contributions for the defined contribution pension scheme will be deducted from the pension due in respect of the defined benefit pension in accordance with the provisions of this collective scheme.
2.4.1.2.2.Remuneration policy applicable to the Chairman of the Board who does not assume the office of Chief Executive Officer
Fixed annual remuneration only

The Board of Directors, in accordance with the recommendation of the AFEP-MEDEF Code (Article 25-2), is proposing to the Annual General Meeting of 21 April 2023 that the exercise of the office of Chairman of the Board of Directors without assuming the office of Chief Executive Officer, would be remunerated only by fixed remuneration, excluding any variable remuneration, grant of performance shares and any indemnity related to departure or any consideration for a non-compete agreement.

The Board of Directors also decided that the tenure as Director held by the Chairman of the Board would not be remunerated.

The Chairman of the Board will benefit from the necessary material resources for the performance of his office such as, for example, the provision of a car with a driver. These arrangements, which are strictly limited to professional use, are not benefits in kind.

The Chairman of the Board will benefit from the same employee benefit scheme as the senior managers of the Company.

Principles for determining the fixed annual remuneration

The remuneration of the Chairman of the Board of Directors is determined based on the following components:

  • goals of L’Oréal’s Board of Directors for the performance of the Chairman’s legal duties without assuming the office of Chief Executive Officer;
  • experience, expertise and reputation of the Chairman in Corporate Governance and Sustainable Governance;
  • specific duties assigned to the Chairman by the Board of Directors;
  • competitiveness and level of the remuneration compared to that of a relevant reference panel: 17 international companies, including 6 companies already selected in the remuneration panel for the Chairman and Chief Executive Officer, prepared by the Mercer firm; and
  • appeal of the remuneration compared with the prior remuneration of the corporate officer and the pension amount they are likely to receive.

(1) A site can claim “carbon neutral” status if it meets the following requirements:

  • Direct CO2 (Scope 1) = 0, with the exception of: the gas used for catering, the fuel oil used for sprinkler tests, fossil energy consumptions during maintenance of on-site renewable facilities, cooling gas leaks if they are lower than 130 tonnes CO2eq./year; and
  • Indirect CO2 Market Based (Scope 2) = 0. The renewable energy sources must be located on site or less than 500 kilometres from the site, and be connected to the same distribution network. The “carbon neutral” status, as defined above, is achieved without carbon offsetting. See section 4.3.1.1.3. B/.