LOREAL_Registration_Document_2017

2 Corporate governance *

COMPOSITION OF THE BOARD OF DIRECTORS

Concerning the relations between L’Oréal and Google, of which Mrs Eileen Naughton is a senior management executive, following a review thereof, the Board considers that they are not significant, either in terms of total purchases by the L’Oréal Group or in terms of its total media purchases. Google is a significant digital provider for L’Oréal, without however having any exclusive relationship. Furthermore, in light of the Human Resources position she holds at Google, Mrs Eileen Naughton does not have any decision-making power with regard to the contracts that constitute the business relationship with L’Oréal. Finally, Mrs Naughton has undertaken not to take part in any discussion or decision that could concern the business relationships between either of the companies. The business relations with Google are therefore unlikely to affect Mrs Naughton’s independence. (2) Based on the work conducted by the Appointments and Governance Committee, the Board of Directors carefully examined the situation of Mr Xavier Fontanet and Mr Bernard Kasriel whose tenures have exceeded 12 years. The Board of Directors took into account the objectivity that Mr Xavier Fontanet and Mr Bernard Kasriel have always shown at the time of the debates and decisions of the Board, their ability to express their convictions from specific and different angles and provide a balanced judgement under all circumstances during Board discussions, notably, with regard to General Management. They have consistently shown, thanks to their experience as senior management executives at the very highest levels of large international groups and their current and previous eminent duties outside of the Board, an independent spirit, perspective and remarkable freedom to speak, enabling them to simultaneously challenge and support General Management in defining the Group’s strategy. Their good knowledge of the Group adds to their well-informed, critical judgment capacity. Furthermore, the Board considered that the personality, leadership and commitment shown by Mr Xavier Fontanet, recognised by L’Oréal’s shareholders, 98.28% of whom approved the renewal of his tenure on 17 April 2014, were all guarantees of his independent-mindedness. It also considered that the freedom of speech, close involvement and critical mind of Mr Bernard Kasriel, whose tenure was renewed by 98.49% of the shareholders on 20 April 2016, are all qualities proving his independence. These qualities, combined with a deep understanding of the Group, enable them to understand the challenges facing the Company in order to make an effective contribution to the work of the Board in the sole interest of the Company and to provide perspective on its decisions while ensuring the continuity of the Board's debates. In light of these assessment elements, which were analysed with great care, the Board of Directors considered that the 12-year criterion, defined by the AFEP-MEDEF Code, among five other criteria, was not sufficient in and of itself for Mr Xavier Fontanet and Mr Bernard Kasriel to automatically lose their status as independent Directors.

reports made by each Director, the Board has not identified any conflict of interests. The information pursuant to Annex I of European regulation No. 809/2004 set out hereafter contains additional details in this respect. Information relating to corporate officers pursuant to Annex I of European regulation No. 809/2004 Family links existing between the corporate officers (Article 11 of the Annex) Mrs Françoise Bettencourt Meyers is Mr Jean-Pierre Meyers’ wife and the mother of Mr Jean-Victor Meyers. Mr Jean-Pierre Meyers is the husband of Mrs Françoise Bettencourt Meyers and the father of Mr Jean-Victor Meyers. Mr Jean-Victor Meyers is the son of Mrs Françoise Bettencourt Meyers and of Mr Jean-Pierre Meyers. To the Company’s knowledge, over the last five years, the corporate officers and Directors have not been convicted for fraud, associated with a bankruptcy, receivership or liquidation, or the subject of any official public incrimination or sanction imposed by statutory or regulatory authorities (including designated professional bodies) or a decision by a court disqualifying them from acting as a member of an administrative, management or supervisory body or from acting in the management or conduct of the business of any issuer. Absence of any conviction or incrimination on the part of the corporate officers (Article 11 of the Annex)

In summary, on 31 December 2017, seven members of the Board of Directors out of 13 (excluding the Directors representing the employees) qualify as independent (i.e. 53.8% o f th e Board of Directors): Mrs Sophie Bellon; s Mr Charles-Henri Filippi; s Mr Xavier Fontanet; s

Mrs Belén Garijo; s Mr Bernard Kasriel; s Mrs Virginie Morgon; s Mrs Eileen Naughton. s

Responsible Directors 2.2.4.5. Handling of conflicts of interest

Within the scope of the law and the rights and obligations of the Directors as defined in the Internal Rules of the Board of Directors of L’Oréal, and in accordance with the AFEP-MEDEF Code, the Directors are subject to compliance with the rules in force with regard to conflicts of interest and stock market ethics. Thus, “all Directors are obliged to notify the Board of any situation that may constitute a conflict of interest, or potential conflict of interest, and must refrain from participating in the corresponding deliberation” . In this regard, on the basis of the

REGISTRATION DOCUMENT / L'ORÉAL 2017

64