2023 universal registration document

They are the following dual governance companies:

The analysis of the remunerations of Chairs of Boards of Directors of companies in the reference panel used, which includes six companies with a dissociated governance structure already used in the reference panel for the remuneration of the executive corporate officer, reports an average remuneration of €1,670,000 and a median remuneration of €756,900 with large standard deviations.

The Human Resources and Remuneration Committee has all the useful internal information in its possession

This information enables it to assess the performance of the Company and that of its executive corporate officer both from a financial standpoint and in non-financial areas.

The Group’s annual economic and financial results are presented every year completely and exhaustively to the members of the Human Resources and Remuneration Committee at its Committee meeting in February, and are used as a basis for the assessment of the financial performance criteria for the executive corporate officer’s variable remuneration.

The principles of the Human Resources policy are regularly presented to the Committee members or at a Board of Directors meeting by the Chief Human Relations Officer. The Directors are therefore able to verify the consistency between the remuneration of the executive corporate officer and the remuneration and employment conditions of the Company’s employees. 

Similarly, the Chief Ethics, Risk and Compliance Officer also regularly explains the policy and the actions taken in this field.

2 members of the Human Resources and Remuneration Committee are members of the Strategy and Sustainability Committee at which the actions taken with regard to the programmes concerning the Group’s social and environmental responsibility are discussed

This information contributes to the assessment of the non‑financial and qualitative portion of the annual variable remuneration.

The Committee can also carry out a more in-depth evaluation of the Company’s performance by contacting the Company’s main senior managers, after having informed the General Management.

This information enriches their vision of the strategy and performances of the Company and its executive corporate officer.

Recommendations are made on these bases to the Board of Directors, which then makes its decisions on the executive corporate officer’s remuneration collectively, in accordance with the remuneration policy approved by the Annual General Meeting.

The organisation of the work of the Committee on the remuneration of the executive corporate officer is shown in the chart below.

The Committee examines the expectations of investors and proxy advisors, and the rules and recommendations of the regulatory authorities

The Human Resources and Remuneration Committee carefully analyses the law and reports concerning executive remuneration, notably the French financial markets authority’s (AMF) report on corporate governance and the remuneration of executives of listed companies, and the report of the High Committee on Corporate Governance.

It is mindful of the observations and requests of investors and strives to accommodate them while preserving consistency in the remuneration policy adopted by the Board and subject to constraints relating to the confidentiality of certain information.

Adjustment of the remuneration policy in the event of exceptional circumstances

In accordance with Article L. 22-10-8 of the French Commercial Code, the Board of Directors can, in the event of exceptional circumstances, make an exception from the application of the remuneration policy, provided that the exemption applied is temporary and compliant with the company’s interest and necessary to ensure the company’s continuity or viability. In such case, the Board of Directors would be able to grant an element of remuneration not provided for in the remuneration policy previously approved by the Annual General Meeting, but necessary in view of these exceptional circumstances.

The Board of Directors may also, within the framework of its discretionary power, adapt the remuneration policy if unforeseeable or exceptional circumstances so justify. Thus, for example, the recruitment of a new corporate officer under unforeseen conditions might require the temporary adaptation of some existing remuneration elements or the proposal of new remuneration elements. In this case, the  Board of Directors would take into account the experience, expertise and remuneration of the executive concerned in order to propose exceptional remuneration that could not exceed the amount of the benefits he or she would have had to relinquish by leaving his or her previous role.

It might also be necessary to amend, subject to compliance with the caps determined in the remuneration policy, the performance conditions governing the acquisition of all or some of the existing remuneration elements in the event of exceptional circumstances resulting from a significant change in the Group’s scope following a merger or sale, the acquisition or creation of a significant new business activity or the elimination of a significant business activity, a change in accounting policy or a major event affecting the markets and/ or L’Oréal’s major competitors.

The Board of Directors will make its decisions on the recommendation of the Human Resources and Remuneration Committee and, when necessary, after obtaining the opinion of an independent consulting firm.

It is specified that this derogation can only be temporary pending approval of the amended remuneration policy by the forthcoming Annual General Meeting, and would be duly documented.