L'Oréal - 2018 Registration Document

2 Corporate Governance

REMUNERATION OF THE EXECUTIVE OFFICERS

REMUNERATION OF THE EXECUTIVE OFFICERS 2.5.

REPORT ON THE PRINCIPLES 2.5.1. AND CRITERIA FOR THE DETERMINATION, ALLOCATION

The remuneration policy applicable to the executive officers is the logical result of this choice. It must make it possible to attract the most talented employees of L’Oréal to the very top positions in General Management, without them being deprived for all that, after a long career in the Group, of the benefits to which they would have continued to be entitled had they remained employees. To achieve this objective, the Board of Directors decided to maintain the employment contract of the executive officers who have at least 15 years of length of service in the Group and ensured that the benefits under the suspended employment contract are not combined with those in respect of the corporate office. This is why the Board of Directors has decided to make a clear distinction between: firstly, the remuneration components related to the s corporate office that are the subject matter of this report: fixed and variable remuneration and grant of performance shares. The policy adopted by the Board for each of these components and the breakdown thereof are set out in section 2.5.1.2. of this chapter; secondly, the other benefits that may be due pursuant to s the suspended employment contract and calculated on the basis of the remuneration on the date of suspension of the employment contract: termination indemnities, retirement indemnities in the event of voluntary retirement or retirement at the Company’s request, financial consideration for the non-competition clause and the defined benefit pension scheme. All these benefits do not relate to the corporate office and are therefore not covered by this report. The Chairman and Chief Executive Officer’s benefits were approved by the Annual General meeting on 27 April 2010 deciding on the basis of the Statutory Auditors’ Special Report. Information relative to benefits attached to suspended employment contract are developed in section 2.5.2 of this chapter. Remuneration that is consistent with that of the Company’s senior managers The executive officers’ remuneration policy is in line with the policy which was applied to them as senior manager. It is based on the same foundations and the same instruments as those applied to the Company’s executive officers. The remuneration principles are therefore stable and durable. The Board of Directors is informed every year of the Group’s Human Resources Policy. It is in a position to verify the consistency between the executive officer’s remuneration and the arrangements put in place, in particular, for the members of the Group’s Executive Committee, on the basis of the work

AND DISTRIBUTION OF THE REMUNERATION APPLICABLE TO THE EXECUTIVE OFFICERS, IN RESPECT OF THEIR OFFICE, AS PROVIDED FOR BY ARTICLE L. 225-37-2 OF THE FRENCH COMMERCIAL CODE

Pursuant to Article L. 225-37-2 of the French Commercial Code, as introduced pursuant to the law relating to transparency, the fight against corruption and the modernisation of economic life known as the Sapin II law, the Annual General meeting of 18 April 2019 is called upon to approve, by voting on Resolution N°6 in the draft resolutions for approval, on the basis of this report, the principles and criteria for the determination, allocation and distribution of the fixed, variable and exceptional components of total remuneration and benefits of all kinds that may be granted to the executive (1) officers for their office. It is specified, pursuant to Article L. 225-37-2, that the payment of the variable and exceptional components, in respect of the 2018 financial year, is conditional on the approval thereof by the Annual General meeting called to approve the 2018 financial statements. At the present time, Mr Jean-Paul Agon, in the capacity of Chairman and Chief Executive Officer, is the only executive officer concerned by this report. The Board refers, in particular, to the recommendations of the AFEP-MEDEF Code for the determination of the remuneration and benefits granted to the executive officers. In accordance with these recommendations, it makes sure that the remuneration policy complies with the principles of comprehensiveness, balance, comparability, consistency, transparency and proportionality, and takes into account market practices. Appointment as executive officers of employees who have completely succeeded in the various stages of their careers in the Group L’Oréal’s constant practice has been to appoint as executive officers employees who have completely succeeded in the various stages of their careers in the Group. Fundamental principles for 2.5.1.1. determination of the remuneration of the executive officers

Executive officers of a French “société anonyme à conseil d’administration” (i.e. limited company with a Board of Directors) are the following: the (1) Chairman of the Board of Directors who is responsible for the company’s general management or the Chairman & Chief Executive Officer, the Chief Executive Officer and the Deputy Chief Executive Officers.

REGISTRATION DOCUMENT / L'ORÉAL 2018

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