LOREAL_Registration_Document_2017

L'Oréal’s corporate social, environmental and societal responsibility* L’ORÉAL’S CORPORATE SOCIAL, ENVIRONMENTAL AND SOCIETAL POLICIES

Remuneration policy 3.1.2.3. The principles

It pursues a dual objective: motivating and associating those who make major s contributions with future increases in the Group’s results; increasing solidarity and helping to instil a Group spirit s among its managers by seeking to foster their loyalty over time, notably internationally, in a context of stronger competition for talents. The acquisition of these shares is subject to the achievement of performance targets. In order to ensure consistency with the Group’s strategic objectives, the choice of tools, beneficiaries and performance criteria is the subject of a precise policy (see section 6.4 “Long-term incentive plans”). The Board of Directors decides, after receiving the opinion of the Human Resources and Remuneration Committee, on the opening of these plans and the applicable rules. 50% of the beneficiaries of the 20 April 2017 Plan are women. Nearly 3,200 employees representing 10% of the managers throughout the world, 62% of whom are in international subsidiaries, benefit from at least one stock option plan or one conditional grant of shares plan (ACAs). For many years, L’Oréal’s policy has been to associate employees with the results of the Company with the aim of strengthening the Group spirit and enhancing their motivation. In the context of the existing profit sharing, incentive and mandatory profit sharing schemes €298 million were redistributed to L’Oréal’s employees in 2017, on the basis of the 2016 results. In 1968, a mandatory employee profit sharing agreement (“participation”) was signed in France, followed by an incentive profit sharing agreement (“intéressement”) in 1988, and these agreements have been consistently renewed since then. Since 2001 L’Oréal has implemented a Worldwide Profit Sharing programme (WPS) in all the Group’s subsidiaries in which the employees do not benefit from profit sharing programmes provided for by law or employee agreements. The amounts paid within this framework are calculated locally on the basis of the sales and earnings of each subsidiary, as compared to the budgeted targets. Worldwide profit sharing, incentive and mandatory profit sharing schemes

The L’Oréal’s remuneration policy has the objective of contributing to the achievement of the Group’s objectives and is an integral part of its development strategy. L’Oréal wants to attract and foster the loyalty of talented employees, propose motivating career paths and encourage its employees' performance and commitment, while accompanying the evolution of jobs and business. For L’Oréal, social performance and economic performance are indeed closely linked. The Group wishes to offer each and every one of its employees a remuneration policy that combines external competitiveness with internal equity, and which rewards both individual and collective performances. To do so, external surveys are conducted every year with specialist firms to ensure that L’Oréal’s positioning is appropriate as compared to the local market. A “total remuneration” approach is also adopted, which proposes a very competitive system of remuneration for each employee, consisting of monetary and non-monetary components. The Group furthermore undertakes to associate its employees with the Company’s results through profit sharing systems set up all over the world. Finally, L’Oréal’s ambition is for every employee to understand his/her remuneration and how it is determined. Accordingly, the Group makes sure that it communicates clearly and transparently on this subject to everyone. L’Oréal’s remuneration policy is based on an annual performance assessment system (MAP) for employees applied in all the Group’s subsidiaries. It makes it possible to communicate on the rules for determining remuneration, the process and the decisions made. Furthermore, the Group’s subsidiaries are encouraged to give employees once a year, a document showing the increases in their remuneration and its various components with the aim of clarity and transparency.

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PERSONNEL COSTS (INCLUDING PAYROLL COSTS)

2017

2015 2016

€ millions

TOTAL 4,967.5 5,182.6 5,433.5 comparison between the three years takes into account the foreign exchange The impacts and is not representative of the real changes in personnel costs.

AMOUNTS PAID UNDER THESE PROGRAMMES

Plans for the conditional grant of shares to employees (ACAs)

2017

2015 2016

€ millions TOTAL*

260 268 298 Incentive Profit Sharing, Mandatory Profit Sharing, Additional Employer * Contributions, Worldwide Profit Sharing.

L’Oréal sets up long-term incentive plans in favour of its employees and executive officers in an international context, based on the grant of performance shares.

REGISTRATION DOCUMENT / L'ORÉAL 2017

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