L'Oréal - 2018 Registration Document

5 Parent company financial statements

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

Stock purchase or subscription options – Free shares NOTE 17

Share subscription or purchase options 17.1. The table below sets out data concerning option plans in force at 31 December 2018:

Exercise period

Number of options not yet exercised

Number of options

Exercise price

Share grant date 25.03.2009 27.04.2010 22.04.2011

From

To

3,650,000 4,200,000 1,470,000

113,078 724,851 425,872

26.03.2014 28.04.2015 23.04.2016

25.03.2019 27.04.2020 22.04.2021

50.11 80.03 83.19

All plans have a five-year exercise period and no performance-related conditions, except the 22 April 2011 plan (for all participants) and the 27 April 2010 and 25 March 2009 plans for members of the Management Committee. All of the performance conditions of these plans have been definitively fulfilled.

Free shares 17.2. The table below summarises data relating to the free share plan.

Grant date

Number of shares granted

Number of shares issued/allotted

Nmber of shares not definitively vested

Stock subscription plans

Stock purchase plans 17.04.2012

Vesting date 18.04.2016 27.04.2017 18.04.2018 23.04.2019 21.04.2020 21.04.2021 18.04.2022

1,325,050 1,057,820 1,068,565

1,233,900

- - -

26.04.2013

988,180 994,815

17.04.2014 22.04.2015 20.04.2016 20.04.2017 17.04.2018

860,150 906,100 906,000 931,000

675 125

809,150 874,225 888,050 927,700

- -

For the conditional grant of shares, the plan provides for a four-year vesting period after which vesting is effective and final, subject to meeting the conditions of the plan. After this vesting period, a two-year mandatory holding period applies for French residents, for plans prior to 1 January 2016, during which the shares cannot be sold. The performance conditions concern: for the 17 April 2018, 20 April 2017, 20 April 2016 and 22 April s 2015 plans: for 50% of shares attributed, the increase in comparable • Cosmetics revenues for the 2019, 2020 and 2021 fiscal years under the 2018 plan; for the 2018, 2019 and 2020 fiscal years under the 2017 plan; for the 2017, 2018 and 2019 fiscal years under the 2016 plan; and the 2016, 2017 and 2018 fiscal years under the 2015 plan in relation to the growth in revenues for a panel of competitors, for 50% of shares granted, the increase over the same • period in the Group’s consolidated operating profit. The calculation will be based on the arithmetic average of the performance in the 2019, 2020 and 2021 fiscal years under the 2018 plan; in the 2018, 2019 and 2020 fiscal years under the 2017 plan; in the 2017, 2018 and 2019 fiscal years under the 2016 plan; and in the 2016, 2017 and 2018 fiscal years under the 2015 plan; and will use a predefined allocation scale based on the performance percentage achieved. No performance condition applies below a block of 200 shares.

The plans of 17 April 2012, 26 April 2013 and 17 April 2014 were definitively vested by the allocation of, respectively, 1,230,850 shares on 18 April 2016, 986,220 shares on 27 April 2017 and 993,765 shares on 18 April 2018. At 31 December 2018, the performance conditions were deemed satisfied, except for the 22 April 2015 plan for which the expense was reviewed on the basis of the predefined scale having regard to the best current estimate of the performance achieved at the end of the plan. A rebilling agreement concerning the cost of free shares has been set up between L’Oréal S.A. and the subsidiaries concerned for the plans 2012 and 2013. In June 2018, Group employees had the opportunity of subscribing to a Shareholding Plan based on a traditional format with discount and matching contribution. The subscription price was set at €162.52, representing 80% of the average share price over the 20 trading sessions prior to the decision by the Chairman and Chief Executive Officer setting the subscription period from 4 June to 18 June 2018 during which 423,916 shares were subscribed. This number does not include the subscription reserved for a Trustee under the laws of England and Wales, as part of a Share Incentive Plan established for Group employees in the UK, with the final number of shares subscribed determined at 4,514 in November 2018.

REGISTRATION DOCUMENT / L'ORÉAL 2018

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