It must make it possible to attract the most talented employees of L’Oréal to the very top positions in General Management, without them being deprived for all that, after a long career in the Group, of the benefits to which they would have continued to be entitled if they had remained employees.
To achieve this objective, the Board of Directors decided to maintain the employment contract of the executive corporate officer with at least 15 years’ service at the time of their appointment in the Group and ensured that the benefits under the suspended employment contract are not combined with those in respect of the corporate office.
The Board of Directors has considered that the objective pursued by the AFEP-MEDEF and intended to avoid the combination of benefits drawn from both an employment contract and a corporate office, could be fully achieved by maintaining the suspended employment contract and clearly separating the benefits related to the corporate office from those relating to the employment contract.
This is why the Board of Directors has decided to make a clear distinction between:
Remuneration in respect of the corporate office will in no event be taken into consideration in the calculation of all benefits that may be due under the employment contract described above.
The reference remuneration to be taken into account for all rights attached to the employment contract, in particular, for the calculation of the aforementioned pension scheme, will be based on the amount of remuneration at the date of suspension of the employment contract. This reference remuneration is revised annually by applying the revaluation coefficient in respect of salaries and pension contributions published by the French state pension fund (Caisse Nationale d’Assurance Vieillesse). The seniority applied will cover the entire career, including the years spent as a corporate officer.
Information on the benefits that could be owed under the suspended employment contract are discussed in subsection 2.4.3. “Termination indemnities and supplementary pension scheme applicable to corporate officers”.
The executive corporate officer is also considered in the same way as a senior manager during the term of their corporate office, which allows them to continue to benefit from the additional social protection schemes and, in particular, from the defined contribution pension scheme, and the employee benefit and healthcare schemes applicable to the Company’s employees.
The remuneration policy for the executive corporate officer is in line, where applicable, with the policy which was applied to them as senior managers.
Their level of remuneration as an executive corporate officer is set on the basis of the level of responsibilities they exercised in the company at the time of their appointment.
The remuneration policy is based on the same foundations and instruments as those applied to the Company’s senior managers. The remuneration principles are therefore stable and durable.
The Board of Directors is informed every year of the Group’s Human Resources policy. It is in a position to verify the consistency between the remuneration of the executive corporate officer and the procedures in place, particularly for the members of the Group’s Executive Committee, on the basis of the work by the Human Resources and Remuneration Committee and the Nominations and Governance Committee.
The remuneration of the executive corporate officer must be competitive in order to attract, motivate and retain the best talents in the Company’s top positions.
This remuneration is assessed overall, namely by taking into account all the components that make it up.
To assess the competitiveness of this remuneration, a coherent and stable reference panel is defined with the assistance of an external consulting firm.
The panel consists of French and international companies that have leading global positions. These companies operate on similar markets and are, in the cosmetics sector, direct competitors of L’Oréal, or operate on the wider everyday consumer goods market, as regards all or part of their business activities.
This panel is composed of the remuneration of executives in the following companies:
| Colgate Palmolive | Kimberly Clark | Reckitt Benckiser | Beiersdorf | Danone |
|---|---|---|---|---|
Colgate Palmolive GSK |
Kimberly Clark Henkel |
Reckitt Benckiser LVMH |
Beiersdorf Unilever |
Danone
|
Colgate Palmolive Estée Lauder |
Kimberly Clark Kenvue |
Reckitt Benckiser Procter & Gamble |
Beiersdorf Kering |
Danone
|
This panel is re-examined every year by the Human Resources and Remuneration Committee in order to check its relevance. It may evolve, particularly to take into account the changes in the structure or business activities of selected companies, on the basis of the proposals made by the external advisory firm.
The Board of Directors has aligned the remuneration policy for an executive corporate officer in the interests of the Company, in order to ensure the long-term sustainability and development of the Company, taking into consideration the social and environmental challenges of its business activity and the sense of purpose (raison d’être) of L’Oréal.
The remuneration policy applied to the executive corporate officer is directly linked to the Group’s strategy. It supports its development model. It promotes harmonious, regular, durable growth, both over the short and long term. Indeed, the Board of Directors strives constantly to incite the General Management both to maximise performance for each financial year and to ensure that it is repeated and regular year-on-year. This is in line with L’Oréal’s stated objective of economic and societal excellence.
