The Annual General Meeting of 21 April 2022 gave the Board of Directors the authorisation to carry out free grants of existing shares and/or shares to be issued to employees and corporate officers of the Company and of its French or foreign subsidiaries under the conditions of Article L. 225-197- 2 of the French Commercial Code.
The Annual General Meeting set the period of validity of the authorisation, which may be used on one or more occasions, at 26 months.
The total number of free shares thus granted may not represent more than 0.6% of the share capital recorded on the date of the Board of Directors’ decision.
The number of free shares granted to the Company’s corporate officers may not represent more than 10% of the total number of free shares granted during a financial year pursuant to this resolution.
The Board of Directors will determine the identity of the beneficiaries of the free shares and the number granted to each of them. It will also determine the conditions to be met in order for the shares to fully vest, in particular the financial and non-financial performance conditions.
The financial performance criteria are based on:
The non-financial performance criteria are based on:
The Board of Directors indeed considers that these two types of criteria, assessed over a long period of three financial years and applied to several plans, are complementary, in line with the Group’s objectives and its specificities and likely to promote balanced, continuing growth over the long term. They are challenging but remain a source of motivation for the beneficiaries. The grant of such shares to their beneficiaries, for all or part of the shares granted, will become final provided that the other conditions set at the time of grant are met, at the end of a minimum vesting period of four years.
Pursuant to the criterion related to net sales, in order for all the free shares granted to be fully 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 grant decreases. If L’Oréal’s comparable growth in net sales is less than the average growth in net sales of the panel of competitors over the period, no share will be allocated for this criterion.
Pursuant to the criterion related to operating profit, in order for all the free shares granted to be fully vested by the beneficiaries at the end of the vesting period, a level of growth defined by the Board of Directors, but not made public for confidentiality reasons, must be achieved or exceeded. Below this level, the grant decreases. If the operating profit does not increase in absolute value over the period, no share will finally vest pursuant to this criterion.
Pursuant to the criterion related to the achievement of the L’Oréal for the Future Commitments, in order for all the free shares granted to be fully vested by the beneficiaries at the end of the vesting period, the L’Oréal for the Future Commitments have to be met at a certain level, as defined by the Board of Directors and made public, on average over the course of the vesting period. Below this level, the grant decreases. No shares will fully vest under this criterion if the average level of achievement of the L’Oréal for the Future Commitments falls below the minimum level defined by the Board of Directors and made public.
With regard to the criterion of gender balance in strategic positions, including the Executive Committee, in order for all the free shares granted to be finally vested by the beneficiaries at the end of the vesting period, the average proportion of employees of each gender in strategic positions must be at least 40%. Below this level, the grant decreases. No shares will vest in relation to this criterion if the average representation of one of the genders is less than 35% over the vesting period.
These performance conditions will apply, for all individual grants greater than 100 free shares per plan, to all shares above the hundredth share, with the exception of grants to the corporate officers and members of the Executive Committee, for which they will apply in total. The free grant of shares may be carried out for all Group employees without performance conditions, or for shares allocated on the basis of cash subscriptions carried out as part of an increase in share capital reserved for Group employees.
The Board of Directors will be able to settle vesting and holding periods which are longer than the minimum periods set above. This mechanism for the conditional grant of shares complies with the AFEP-MEDEF Code.
Any allocations of shares to the corporate officers will be decided by the Board of Directors on the basis of the proposals of the Human Resources and Remuneration Committee after assessment of their performance. The corporate officers of L’Oréal will be required to hold 50% of their fully vested shares in registered form until they cease to hold office.
