Performance conditions
The performance criteria cover all shares granted to the executive corporate officer. They take into account:
- in part, criteria for financial performance based on:
- growth in comparable cosmetics net sales of L’Oréal ascompared to a panel of L’Oréal’s major directcompetitors;
- growth in L’Oréal’s consolidated operating profit;
- in part, criteria for non-financial performance based on:
- fulfilment of environmental and social responsibility commitments made by the Group as part of the L’Oréal for the Future programme (hereinafter “L’Oréal for the Future Commitments”):
- % of renewable energy(1) achieved by operated sites;
- % of plastic packaging that comes from either recycled or biobased sources;
- number of people benefitting from the Group’s brands’ social commitment programmes;
- gender balance within strategic positions including the Executive Committee.
- fulfilment of environmental and social responsibility commitments made by the Group as part of the L’Oréal for the Future programme (hereinafter “L’Oréal for the Future Commitments”):
The Board of Directors considers that both these types of criteria, assessed over a long period of three full financial years and reapplied to several plans, are complementary, in line with the objectives and specificities of the Group and likely to promote continuous, balanced and sustainable long-term growth. They are exacting but remain a source of motivation for the beneficiaries.
The shares are only finally vested at the end of a 4-year period, allowing sufficient time to be able to assess the performance achieved over three full financial years.
DETAILS OF WEIGHTING OF CRITERIA FOR GRANTING PERFORMANCE SHARES
This diagram indicates the details of weighting of criteria for granting performance shares.
80% Financial criteria
40% Sales
40% Operating Profit
20% Non-financial criteria
15% CSR L’Oréal for the Future Programme
- % of renewable energy achieved by the operated sites (1) On the Group’s operated sites, excluding safety and security installations as defined in paragraph 4.5.1.3. “Environmental data” in this document.
- % of original plastic packaging recycled or bio-sourced
- Number of people benefiting from the Group's brands’ social commitment programmes
5% Gender diversity objective
Conditional vesting thresholds
Pursuant to the criterion relating to net sales, in order for all the free shares granted to be finally vested by the beneficiaries at the end of the vesting period, L’Oréal must outperform the average growth in net sales of the panel of competitors. Below this level, the number of finally vested shares is in decline. If 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.
Pursuant to the criterion related to operating profit, a level of growth, defined by the Board, but not made public for confidentiality reasons, must be met or exceeded in order for all free shares granted to be finally vested by the beneficiaries at the end of the vesting period. Below this level, the number of finally vested shares is in decline. If the operating profit does not increase in absolute value over the period, no share will finally vest pursuant to this criterion.
With regard to the criterion of fulfilling commitments made under the L’Oréal for the Future programme, in order for all the free shares granted to be finally vested by the beneficiaries at the end of the vesting period, a certain average level of achievement of the L’Oréal for the Future Commitments, defined by the Board and made public, must be reached over the vesting period. Below this level, the grant decreases. No shares will vest if the average of the results for the L’Oréal for the Future Commitments falls below the minimum level defined by the Board and made public.
Pursuant to the criterion relating to gender balance in strategic positions, in order for all the free shares granted to be finally vested by the beneficiaries at the end of the vesting period, the average representation of one of the sexes must account for at least 40% of employees in strategic positions. 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. The results recorded each year to determine the levels of performance achieved are published in chapter 7.
(1) On the Group’s operated sites, excluding safety and security installations as defined in paragraph 4.5.1.3. “Environmental data” in this document.