LOREAL_Registration_Document_2017

2 Corporate governance *

REMUNERATION OF THE EXECUTIVE OFFICERS

REMUNERATION OF THE 2.5.4.

share as compared to its main competitors, in operating profit, EPS and cash flow. At its meeting on 7 February 2018, the Human Resources and Remuneration Committee assessed the performance of Mr Jean-Paul Agon with regard to each of the criteria set by the Board for allocation of the annual variable remuneration. The assessment is carried out on a criterion-by-criterion basis without offsetting among the criteria. The tight correlation between the criteria selected and the economic performance of the Company requires strict confidentiality. The Board has decided not to disclose the rate of achievement of each of the criteria selected in order to avoid providing the competition with information about the operational implementation of its strategy. The achievement rate is provided for all of the financial criteria and for all of the extra-financial and qualitative criteria. On the basis of the recommendations of the Human Resources and Remuneration Committee, the Board of Directors decided, at its meeting on 8 February 2018, to allocate €2,038,732 to Mr Jean-Paul Agon in respect of the 2017 annual variable remuneration. This represents 92.7% of the maximum amount of variable remuneration that could be paid to him, respectively 91.1% for financial targets and 95.0% for extra-financial and qualitative targets.

CHAIRMAN AND CHIEF EXECUVE OFFICER DUE OR ALLOCATED WITH RESPECT TO 2017

Fixed remuneration 2.5.4.1. On the proposal of the Human Resources and Remuneration Committee, the Board of Directors decided on 9 February 2017 to maintain the fixed annual remuneration of Mr Jean-Paul Agon at a gross amount of €2,200,000. Annual variable remuneration 2.5.4.2. Concerning Mr Jean-Paul Agon’s annual variable remuneration for 2017, the objective had been set at a gross amount of €2,200,000, representing 100% of the fixed remuneration. This sum represents the maximum amount of variable remuneration that may be paid to him. At its meeting on 9 February 2017, the Board of Directors had set the variable remuneration criteria applicable for 2017 and the respective weighting of such criteria. The financial criteria represent 60% of the variable remuneration while the extra-financial and qualitative criteria represent 40%. These financial criteria are directly correlated with the Company’s economic performance indicators: growth in sales and market

2017 FINANCIAL TARGETS: 60% OF TOTAL ANNUAL VARIABLE REMUNERATION

FINANCIAL CRITERIA

WEIGHTING

2017

Comparable sales as compared to the budget

€26,023.7 million*

15%

Market share as compared to the main competitors**

+0.4 point

15%

Operating profit as compared to 2016

€4,676.3 million or +3.0%

10%

Net earnings per share as compared to 2016***

€6.65 or +3.0%

10%

Cash-flow**** as compared to 2016

€3,969.8 million or +19.6%

10%

RATE OF ACHIEVEMENT OF FINANCIAL CRITERIA

91.1%

Budget not disclosed for confidentiality reasons. * Panel of competitors: Unilever, Procter & Gamble, Estée Lauder, Shiseido, Beiersdorf, Johnson & Johnson, Henkel, LVMH, Kao and Coty. ** Diluted net earnings per share attributable to owners of the Company from continuing operations excluding non-recurring items. *** Operational cumulative cash flow = Cash provided by operating activities – Purchases of property, plant and equipment and intangible assets. ****

REGISTRATION DOCUMENT / L'ORÉAL 2017

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