LOREAL_Registration_Document_2017

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

Access to the “Pension Cover for Members of the Comité de Conjoncture” ( Garantie de Retraite des Membres du Comité de Conjoncture ) has been closed since 31 December 2000. This former scheme granted entitlement to payment to the beneficiary retiree, after having ended his/her career with the Company, of a Life Annuity as well as, after his/her death, payment to the spouse and/or ex-spouse(s) of a Surviving Spouse Pension and, to the children, of an Orphan Pension, subject to the children fulfilling certain conditions. The calculation base for the Pension Cover is the average of the salaries for the best three years out of the seven calendar years prior to the end of the beneficiary’s career at L’Oréal. The Pension Cover is calculated on the basis of the beneficiary’s number of years’ service and limited to a maximum of 40 years, it being specified that at the date of closure of the scheme, on 2000, the minimum length of service required was 10 years. The Pension Cover may not exceed 40% of the calculation base for the Pension Cover, plus 0.5% per year for the first 20 years, then 1% per year for the following 20 years, nor exceed the average of the fixed part of the salaries for the 3 years used in the calculation base. Around 120 Senior managers (active or retired) are eligible for this scheme subject to the proviso, for those in active employment, that they fulfil all the conditions after having ended their career with the Company. Since 2003, L’Oréal has proposed that employees make savings with a view to their retirement within the scope of the PERCO. L’Oréal has added an additional employer contribution of +50% to the investment made by employees in the PERCO every year since 2004. Since 2016, the additional employer contribution for the mandatory profit sharing amount invested in the PERCO has been increased to +100% for the first gross amount of €1,000 invested, remaining at 50% over and above such amount. Each year, employees may also invest up Collective Retirement Savings plan (PERCO)

ten days of holiday from the time savings account (CET) in the PERCO. When these day are put into the PERCO, they give rise to an additional employer contribution of +20%. Pre-retirement arrangements L’Oréal pays close attention to the retirement conditions of its employees and pre-retirement arrangements that have been in force for a number of years were confirmed and improved within the scope of the agreement on the employment of older workers, signed on 30 September 2013. The existing arrangements are, in particular: early retirement leave (“congé de fin de carrière”, CFC): this s early retirement arrangement consists of exempting employees from the requirement to perform their activities. However, during this period, they remain employees of L’Oréal and continue to receive their remuneration (within the limit of €10,009 gross/month) as well as mandatory profit sharing, incentive profit sharing payments and paid leave; retirement indemnities (“indemnité de départ à la retraite”, s IDR): a new scale of indemnities at L’Oréal was implemented by a company-level agreement as from 2011. It is more favourable than the French National Collective Bargaining Agreement for the Chemical Industries. Thus, when he/she retires, an employee may benefit from retirement indemnities ranging from 2 months’ salary for 5 years’ service to eight months’ salary for 40 years of service. In order to increase the special leave prior to retirement, the employee may opt to convert his/her retirement indemnities into time, or he/she may choose to receive payment of the retirement indemnities which will be made at the time when he/she leaves the Company.

Focus France

3

31.12.2017

31.12.2015

31.12.2016

Men Women

Total

Men Women

Total 246

Men Women

Total 258

Early retirement leave

81

165

87

171

82

177

259

Compulsory retirement on the Company’s initiative

0

0

0

0

0

0

0

0

0

Voluntary retirement

75

160

235

80

135

215

85

144

229

: HR France statistics for 2015, 2016 and 2017. Source

These commitments are guaranteed by external financial cover aimed at gradually building up funds derived from premiums paid to external organisations. The commitments net of funds invested and the actuarial differences are booked as a provision in consolidated to balance sheet liabilities. The position at a given year does not prejudge future changes in provisions due, in particular, to actuarial gains and losses related to financial market variations which might impact pension scheme commitments and plan assets.

The evaluation method used to calculate the retirement and pre-retirement benefit commitments is the retrospective method based on estimated calculations of the final salary. These commitments take into account the employer’s contribution to the healthcare schemes for retirees.

31.12.2017

31.12.2015 31.12.2016

€ millions

Provision for pension commitments in consolidated balance sheet liabilities

376.5

146.1

-63.9

REGISTRATION DOCUMENT / L'ORÉAL 2017

149