LOREAL_Registration_Document_2017

Corporate governance * FRAMEWORK FOR THE IMPLEMENTATION OF CORPORATE GOVERNANCE PRINCIPLES

THE BALANCE OF POWERS ON THE BOARD 2.1.2.

The balance of powers on the Board 2.1.2.2. The Board of Directors ensures that it is in a position to fully perform its role so that the balance of powers is guaranteed. Harmonious composition of the Board of Directors The balance of powers on the Board of Directors principally rests on its coherent and harmonious composition and on the qualities of its Directors. Serving alongside the Chairman and Chief Executive Officer are five Directors appointed by the majority shareholders, who include the two Vice-Chairmen of the Board, seven independent Directors who are in the majority on the Board (seven out of thirteen Board members, excluding the employee Directors) and two Directors representing the employees. All of them are strongly committed and vigilant. The diversity and complementarity of the Directors' experience and expertise (entrepreneurial, financial, industrial, digital, etc.) enable them to quickly and thoroughly understand the development issues facing the L’Oréal Group, the leader in the highly competitive, globalised cosmetics market in which the requirement to innovate and adapt is very high. The balance between the Directors who have longstanding knowledge and those who have been appointed more recently makes it possible to combine new viewpoints with consistency of decisions over the long-term. The Board has the means enabling it to handle with complete freedom the questions that concern it, notably when this involves determining the Company’s strategic orientations, ensuring and monitoring their implementation and overseeing the good management thereof. It has the possibility to meet with the senior managers of L’Oréal at the time of presentations or sessions dedicated to strategy. The Board provides the General Management with invaluable support for strategic decision-making through its reflections and the impetus it provides. The Chairman and Chief Executive Officer conducts the Board’s work in order to obtain this adherence to strategy and to ensure the Company’s development with complete confidence and peace of mind. It is naturally in the interest of all the shareholders but also of all the stakeholders for the Chairman and Chief Executive Officer to lead the debates and encourage discussions on the Board of Directors. The Board may meet at any time if required by current events. It may also decide to organise meetings without the presence of executive corporate officers (executive sessions). The relationships organised between the Board and the General Management The General Management communicates completely transparently with all the Directors and keeps them regularly informed of all aspects of the Company’s affairs and its performances.

L’Oréal has a method of corporate governance that is suited to its specificities and is part of a constant quest for progress Method of performance of General 2.1.2.1. Management adapted to the specificities of L'Oréal After a period of five years (between 2006 and 2011) during which the duties of Chairman of the Board of Directors and those of Chief Executive Officer were separated in order to ensure a smooth transition between Sir Lindsay Owen-Jones and Mr Jean-Paul Agon, the Board of Directors decided in 2011 to reunify these duties and to appoint Mr Jean-Paul Agon as Chairman and Chief Executive Officer of L’Oréal. On 17 April 2014, the Annual General meeting renewed the tenure of Mr Jean-Paul Agon as Director. At its meeting on the same day, the Board of Directors decided to continue to combine the duties of Chairman and Chief Executive Officer and to entrust Mr Jean-Paul Agon with such duties once again, considering that this method of General Management was the best suited to L’Oréal’s specificities. This decision was made, following the recommendations by the Appointments and Governance Committee, in the best interest of the Company and with the constant concern that the mode of governance chosen will make it possible to optimise the Group’s financial and economic performances and to create the most favourable conditions for its long-term development. The Board of Directors indeed considers that the quality and longstanding nature of this performance cannot be dissociated from a clear vision of the Group’s future prospects, directly shared with Board members. This vision is that of a Chairman and Chief Executive Officer who, after spending his entire career in the Group, has precise operational knowledge of the commercial entities and the business lines. The business sector in which L’Oréal operates is one in which decisions have to be taken quickly in a highly competitive international environment, and the beauty profession also requires strong, coherent communication. In addition, this method of implementing General Management duties is appropriate for L’Oréal’s particular shareholder structure: stable, loyal shareholders with two major shareholders highly committed to the Group’s long-term development. As the tenure of Mr Jean-Paul Agon as Director is due to expire in 2018, the renewal of his tenure for a term of four years will be submitted to the Annual General meeting of 17 April 2018. The meeting of the Board of Directors of 17 April 2018, following the Annual General meeting of the same day, will decide on the rules governing General Management. It will decide whether or not to maintain the combination of duties of Chairman and Chief Executive Officer and on the duties it will entrust to Mr Agon subject to the renewal of his term of office.

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REGISTRATION DOCUMENT / L'ORÉAL 2017

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