L'Oréal - 2018 Registration Document

2 Corporate Governance

REMUNERATION OF THE EXECUTIVE OFFICERS

REMUNERATION OF THE 2.5.4.

compared to its main competitors, in operating profit, EPS and cash flow. At its meeting on 6 February 2019, 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 decided that to disclose objectives, even after the event, would provide the competition with information about the implementation of its strategy at operational level. The achievement rate is, however, published for each of the financial criteria and for all non-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 7 February 2019, to allocate €2,045,998 to Mr Jean-Paul Agon in respect of the 2018 annual variable remuneration. This represents 93% of the maximum amount of variable remuneration that could be paid to him, respectively 91.7% for financial targets and 95% for non-financial and qualitative targets. The achievement rate of the financial criteria is detailed in the table below.

CHAIRMAN AND CHIEF EXECUTIVE OFFICER DUE OR ALLOCATED WITH RESPECT TO 2018

Fixed remuneration 2.5.4.1. On the proposal of the Human Resources and Remuneration Committee, the Board of Directors decided on 8 February 2018 to maintain the fixed annual remuneration of Mr Jean-Paul Agon at a gross amount of €2,200,000. This has remained unchanged since 2014. Annual variable remuneration 2.5.4.2. Concerning Mr Jean-Paul Agon’s annual variable remuneration for 2018, 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 8 February 2018, the Board of Directors had set the variable remuneration criteria applicable for 2018 and the respective weighting of such criteria. The financial criteria represent 60% of the variable remuneration while the non-financial criteria represent 40%. These financial criteria are directly correlated with the Company’s economic performance indicators: growth in sales and market share as

2018 FINANCIAL TARGETS (60% OF TOTAL ANNUAL VARIABLE REMUNERATION)

ACHIEVEMENT RATE 2018

FINANCIAL CRITERIA

WEIGHTING 2018 RESULTS

ASSESSMENT

Comparable sales as compared to the budget

> 100%

15% €26,937.4 million (1)

Outperformance in relation to the objective Capped at 100%

Growth in market share compared to the main competitors (2) Operating profit as compared to 2017

80%

15%

+1.2 points

Below objective

> 100%

10%

€4,922 million, i.e. +5.3%

Outperformance in relation to the objective Capped at 100% Outperformance in relation to the objective Capped at 100%

Net earnings per share as compared to 2017 (3)

> 100%

10%

€7.08, i.e. +6.5%

Cash flow as compared to 2017 (4)

80%

10% €3,875.8 million, i.e. -2.4%

Below objective

RATE OF ACHIEVEMENT OF FINANCIAL CRITERIA

91.7%

Budget not disclosed for confidentiality reasons. (1) Panel of competitors: Unilever, Procter & Gamble, Estée Lauder, Shiseido, Beiersdorf, Johnson & Johnson, Henkel, LVMH, Kao and Coty. (2) Diluted net earnings per share attributable to owners of the Company from continuing operations excluding non-recurring items. (3) Operational cumulative cash flow = Cash provided by operating activities – Purchases of property, plant and equipment and intangible assets. (4)

REGISTRATION DOCUMENT / L'ORÉAL 2018

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