In 2022, L’Oréal set up the L’Oréal Retention Plan, a new employee retention scheme. Local talents who are not yet eligible to the employee share plans are the targets of this plan, which takes the form of a deferred bonus over three years. The scheme is implemented and managed at country level, based on a Group wide guideline. More than 2,300 employees in more than 50 countries are now beneficiaries of this scheme.
L’Oréal wishes to include employees in the results of the Company to enhance their feeling of belonging and motivation. In 2023, on the basis of its 2022 results, the Group redistributed €461 million to employees under the profit sharing schemes in place. The first profit sharing schemes were introduced in France in 1968 when a Group profit sharing agreement (“participation”) was signed in France, followed by another Group incentive agreement (“intéressement”) in 1988, and these agreements have been constantly renewed since then. Since 2001, L’Oréal has implemented a Worldwide Profit Sharing Programme in all the Group’s subsidiaries in which the employees do not benefit from legal or contractual profit sharing schemes. The amounts paid within this framework are calculated locally on the basis of the turnover and profit of each subsidiary, as compared to the budgeted targets.
| Amounts paid under these programmes (€ millions) | 2021 | 2022 | 2023 |
|---|---|---|---|
| TOTAL (1)Profit sharing schemes. | TOTAL (1)Profit sharing schemes.2021352 | TOTAL (1)Profit sharing schemes.2022418 | TOTAL (1)Profit sharing schemes.2023461 |
(1) Profit sharing schemes.
L’Oréal ensures that its employees benefit from competitive retirement and death/disability insurance plans in all countries. Since 2002, an International Benefits Supervisory Committee has overviewed the management of these schemes in the subsidiaries and monitored the implementation of L’Oréal’s Retirement and Employee Benefits policy.
L’Oréal’s commitments with regard to welfare schemes are part of the Protection pillar of the L’Oréal Share & Care programme. In all subsidiaries, L’Oréal guarantees the payment of a lump sum, or equivalent pension, equal to a minimum of 24 months’ salary in the event of death or total permanent disability, or a higher amount where it is the local practice.
The characteristics of retirement schemes and other end of career benefits offered by the subsidiaries vary depending on the applicable laws and regulations as well as local practices.
In 89% of the countries where L’Oréal employees work, the Group contributes to the build-up of supplemental retirement benefits for its employees in addition to the minimum benefits of the public social security system.
Retirement plans are financed by payments into specialised funds, or by setting up provisions, in accordance with the accounting standards adopted by L’Oréal. The performance of the managers of the main investment funds, as well as the financial stability rating of the custodians, are regularly reviewed by the International Benefits Supervisory Committee.
L’Oréal does not offer company retirement plans in countries that do not have an appropriate legal framework, or long term investment instruments, and in countries where there is a satisfactory public social security system. The International Benefits Supervisory Committee remains attentive to changes to local situations and, when needed, additional complementary schemes are put in place.
Pension schemes: To supplement the pensions provided for by the compulsory French pension scheme, L’Oréal has implemented some supplementary pension schemes described below.
Defined contribution schemes: L’Oréal set up a “defined contribution pension scheme”. After one year of employment, all categories of employees are beneficiaries of this scheme, which is financed jointly by L’Oréal and the employee. This makes it possible for everyone to build up retirement savings. This scheme entitles pensioners to a life annuity (or to a lump sum, under certain conditions), calculated after they claim their pension rights under the Social Security pension system. This annuity is calculated on the basis of the capital formed by the contributions paid and the financial income on such contributions at the end of the employee’s career, as well as the annuity option selected. On 1 April 2021, the scheme was converted into a Mandatory Company Savings Plan (Plan d’Épargne Retraite Obligatoire – PERO) within the framework laid down by the French Pacte law (Loi Pacte). This made it possible to introduce many improvements to the scheme, such as new options for paying into it, more diversified financial investments and more flexible exit conditions.
Defined benefit schemes: L’Oréal has set up several defined benefit schemes with unvested entitlements, that were initially differential and then additive. The aim was to take into account important developments impacting these schemes, with the aim of building a coherent system between the different pension schemes that exist in the Company.
French Order No. 2019-697 of 3 July 2019(1)Transposing the European Directive of 16 April 2014 into French law. no longer allows the acquisition of unvested new rights in schemes open on 20 May 2014 for employment periods after 31 December 2019. In this context, L’Oréal froze the rights at 31 December 2019. In 2021, the Group finalised the establishment of two substitution schemes with vested rights(2)Pursuant to French Order no. 2019-697 for employment periods from 1 January 2020, following the publication of the circular of 23 December 2020: the “Supplementary pension scheme for Former Senior Managers with vested rights” (Retraite supplémentaire des Retraités Anciens Cadres Dirigeants à droits acquis)and the “Retirement Income Guarantee for former senior managers with vested rights” (Garantie de Ressources des Retraités Anciens Cadres Dirigeants à droits acquis) . These schemes are considered as the continuations of the old schemes because of the consistency in terms of population and benefits.
The “Supplementary pension scheme for Former Senior Managers” concerns retirees who have held positions as senior managers for a minimum of 10 years, hired or promoted to this position between 1 January 2016 and 4 July 2019, who end their career in the Company. This is an additive defined benefit pension scheme which grants entitlement to payment of a life annuity. The reference salary used to calculate the pension is the fraction of the salary which exceeds six times the French annual Social Security ceiling. The calculation base of the supplementary pension is the average of the revalued reference salaries for the best three full years of activity out of the seven calendar years prior to the end of their career. The supplementary pension is 1.36% of the calculation base per year of service within the Group until 31 December 2019, up to a maximum of 25 years. Any retiree who so wishes could elect an option of a surviving spouse pension.
(1) Transposing the European Directive of 16 April 2014 into French law.
(2) Pursuant to French Order no. 2019-697 for employment periods from 1 January 2020, following the publication of the circular of 23 December 2020.
