L'Oréal - 2018 Registration Document

6 Stock Market Information Share capital LONG-TERM INCENTIVE PLANS

LONG-TERM INCENTIVE PLANS * 6.4.

PRESENTATION OF THE STOCK 6.4.1. OPTION PLANS FOR THE PURCHASE OR SUBSCRIPTION OF SHARES AND PLANS FOR

beneficiaries including the Chairman and Chief Executive Officer. Since 2013, the Board of Directors, on the proposal of the Human Resources and Remuneration Committee, has continued this policy to make conditional grants of shares (ACAs), to the exclusion of any other long-term incentive instrument. The plans are proposed by General Management to the Board of Directors which decides, after receiving the opinion of the Human Resources and Remuneration Committee, with regard to the opening of these plans and the applicable conditions and rules. Since 2009, these grants are made after publication of the financial statements for the previous financial year, in accordance with the AFEP-MEDEF recommendation. The decision with regard to each individual grant is, in every case, contingent on the quality of the performance rendered at the time of implementation of the plan with particular attention being paid to the main talents for the future. According to the eligibility criteria linked to the position held by the beneficiary and the size of the entity or the country in which the beneficiary works, in a concern for equity on an international scale, these grants are made every year, every two years or every three years. The General Management and the Board of Directors stress the importance that is given to bringing together the interests of the beneficiaries of stock options and conditional grants of shares and those of the shareholders themselves. The employees and executive officers who are the beneficiaries share with the shareholders the same confidence in the strong steady growth of the Company with a medium and long-term vision. This is why stock options were granted for a period of 10 years including a five-year vesting period, and conditional grants of shares for a period of four years followed, for France up until the 2015 plan, by a 2-year holding period during which these shares cannot be sold. The Board of Directors draws the attention of the beneficiaries of stock options and conditional grants of shares to the regulations in force concerning persons holding “inside information”. The beneficiaries of stock options and conditional grants of shares undertake to read the Stock Market Code of Ethics which is attached to the regulations for the stock option plans or the plans for the conditional grant of shares from which they benefit and to comply with the provisions thereof. Number of beneficiaries 50% of the beneficiaries of the 17 April 2018 plan are women. Nearly 3,400 employees representing 11% of the managers throughout the world, who were employed at 31 December 2018, 62% of whom are in international subsidiaries, benefit from at least one stock option plan or one conditional grant of shares plan (ACAs).

THE CONDITIONAL GRANTS OF SHARES TO EMPLOYEES (ACAS)

Policy For severaly years L’Oréal has set up long-term remuneration plans in favour of its employees and executive officers in an international context, in the form of grants of performance shares. It pursues a dual objective: motivating and associating those who make big s contributions with future increases in the Group’s results; strengthening involvement and the sense of belonging of its s beneficiaries by fostering long-term loyalty in a context of increased competition for talents. Until 2009, L’Oréal’s Board of Directors exclusively granted stock options to the senior managers and executive officers whom L’Oréal wished to reward for their performance and their important role in business development and in the Group’s current and future projects, wherever they might be located. In 2009, L’Oréal’s Board of Directors enlarged its policy by introducing a mechanism for the conditional grants of shares to employees (ACAs). The objective was: to provide a long-term incentive offering greater motivation s to all those who only received stock options occasionally or in limited numbers; to reach out to a broader population of potential s beneficiaries, particularly internationally, in a context of increased competition with regard to talents. In 2011, L’Oréal’s Board of Directors decided to make ACAs the primary tool for its long-term incentive policy by extending the grant of shares to the main senior managers of the Group who until then had only received stock options: thus, except for the Chairman and Chief Executive Officer who received stock options only, the main senior managers of L’Oréal, including the members of the Executive Committee, received a mix of stock options and conditional grants of shares in order to encourage both their spirit of enterprise and to reward their performance in the medium to long term. Other eligible employees were incentivised by conditional grants of shares only. In 2012, the Board of Directors, on the proposal of the Human Resources and Remuneration Committee, went one step further in this policy and decided to replace the grant of stock options by conditional grants of shares (ACAs) for all

This information forms an intergral part of the Annual Financial Report as provided in the Article L.451-1-2 of the French Monetary and Financial Code. *

REGISTRATION DOCUMENT / L'ORÉAL 2018

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