2023 universal registration document

7.4.3.2. Conditional Grants of Shares granted within the framework of the authorisation of 21 April 2022 (ACAs Plan of 12 October 2023)

On the basis of the proposals made by the General Management and examined by the Human Resources and Remuneration Committee, the Board of Directors decided, at its meeting on 12 October 2023, to make a Conditional Grant of Shares within the scope of the authorisation granted by the Annual General Meeting on 21 April 2022.

The share capital at 12 October 2023 comprised 535,997,107 shares, and 3,215,982 shares could therefore be issued.

The Board of Directors used this authorisation at its meeting of 12 October 2023 by granting 650,580 shares to 2,763 beneficiaries. This is a free grant of shares to be issued.

Vesting of the shares is subject to a dual condition:

• presence: the shares granted will only vest after a period of four years at the end of which the beneficiary must still be an employee of the Group (except in the cases provided by the law or the Plan rules); and
• performance, evaluated as follows:

Financial criteria represent 80% of the performance conditions, split evenly between: 

• the growth in L’Oréal’s like-for-like cosmetics sales as compared to those of a panel of its biggest direct competitors⁽¹⁾The panel consists of the following companies: Unilever, Procter & Gamble, Estée Lauder, Shiseido, Beiersdorf, Kenvue, Henkel, LVMH, Kao, Coty. ; and 
• the variation in L’Oréal’s consolidated operating profit.

Non-financial criteria represent 20% of performance conditions and are based on: 

• for 15%, the fulfilment of environmental and social responsibility commitments made by the Group as part of the L’Oréal for the Future program ( % of sites achieving 100% renewable energy, formerly known as “carbon neutral”⁽²⁾A site must meet the following criteria: Direct CO2 (Scope 1) = 0, with the specific exception of the gas used for catering, the fuel oil used for sprinkler tests, the fuel oil (or diesel) used temporarily by backup units, fossil energy consumed during maintenance of on-site renewable facilities and cooling gas leaks if they are lower than 130 tonnes CO2 eq./year; and indirect Market Based CO2 (Scope 2) = 0. It should be noted that renewable energy sources no longer need to be located less than 500 kilometres from the site. ; % of formula ingredients that are biobased, traceable and come from sustainable sources; % of plastic packaging that comes from either recycled or biobased sources; number of people benefiting from the Group’s brands’ social commitment programs); and 
• for 5%, the gender balance within strategic positions including the Executive Committee. 

The calculation will be made on the basis of the arithmetic average of the performances for financial years 2024, 2025 and 2026.

Pursuant to the criterion relating 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. The Board of Directors defines a threshold, not made public for confidentiality reasons, below which no share will finally vest pursuant to 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 met 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, an average of 70% of the L’Oréal for the Future Commitments must be achieved during the vesting period. Below this level, the grant decreases. If the average level of achievement for the L’Oréal for the Future Commitments falls below 55%, no shares will finally vest pursuant to this criterion.

Pursuant to the criterion related 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 genders must account for at least 40% of employees in strategic positions. Below this level, the grant decreases. If the average representation of one of the genders is less than 35% over the vesting period, no shares will finally vest in relation to this criterion.

The Human Resources and Remuneration Committee is responsible for communicating to the Board of Directors the level of indicators recorded for the years to be used for the calculation of the performance conditions. The Board of Directors records, at the appropriate time, the level of performance achieved on which the number of shares that finally vests depends.

The figures recorded each year to determine the levels of performance achieved are published in paragraph 7.4.3.6.

The vesting of the first 100 conditional grants of shares is not subject to fulfilment of the performance conditions except for beneficiaries who were members of the Executive Committee at grant date, including the Chief Executive Officer.

7.4.3.3. Shares granted to the 10 employees other than directors and corporate officers to whom the largest number of shares have been granted

The total number of shares granted in 2023 to the 10 employees other than corporate officers who received the largest number of shares was 70,650 shares.