L'Oréal - 2018 Registration Document

L’Oréal’s corporate social, environmental and societal responsibility POLICIES, PERFOR MANCE INDICATORS AND RESULTS

Employee representative institutions are in place in most of the European subsidiaries, in several Asian subsidiaries (China, India, Indonesia, Japan, South Korea, etc.), in Africa (South Africa, Kenya, Morocco, etc.), in North and South America (Argentina, Brazil, Canada, Chile, Mexico, the United States), and also in Australia and New Zealand. In total, 84% of the Group’s employees work in subsidiaries where there are employee representative institutions. 43% of the Group’s employees are covered by a collective agreement, and in almost all cases, 96%, these are company-level agreements. In the cases where there is no employee representative institution (often in subsidiaries with a small workforce), the dialogue is conducted directly with the employees, in complete compliance with the principles of transparency and trust that are applied uniformly throughout the Group.

number of agreements in force at 31 December 2018 was 812, of which 533 are in France. These agreements, which mainly concern working-time organisation, remuneration and working conditions (working hours, quality of life at work, gender equality, telecommuting, etc.), contribute to the smooth running of the Company and to its performance, by reinforcing employee participation and dialogue with their representatives. L’Oréal’s health and safety standards are very strict and often exceed the statutory obligations in the various countries concerned. The Health and Safety committees and their activities do not necessarily lead to the signing of specific agreements, but rather to shared monitoring on this subject (application of legal and L’Oréal’s standards, analysis of situations, etc.) in accordance with the principle of continuous improvement. Ninety agreements in force at 31 December 2018 which totally or partially relate to health and safety issues have nevertheless been identified, including 24 outside France. Information on company-level agreements in force with regard to health and safety The IEDS/EWC leads discussions and formal meetings with its members about the Group’s current situation and future prospects, on the basis of an agenda prepared with the Liaison Secretariat following a one-day preparatory meeting with the members of this body. It has 30 members, who receive regular training on economic and social issues. In 2018, training was focused on the text of the agreement governing the operation of the body, and on digital technology. On this second point, the participants were able to exchange with business experts during presentations. They were also able to enjoy a practical experience thanks to the presence of external and internal partners, who encouraged them to test the solutions used. Today, the IEDS/EWC covers approximately 31,000 employees in 27 countries that are part of the European Economic Area, including the direct representation of the 18 countries with more than 150 employees. The Group wishes to offer each and every one of its employees a remuneration policy that combines external competitiveness with internal equity, and which rewards both individual and collective performances. A “total package” approach is used. It offers each employee a highly competitive remuneration package, consisting of a range of components (basic pay, variable pay, long-term remuneration) and employee benefits. To this end, external surveys are conducted every year with specialist firms to ensure that L’Oréal’s positioning is appropriate in comparison with the local reference market. The Group is also committed to allowing employees to share in the Company’s results through collective profit-sharing schemes rolled out worldwide. The implementation of the remuneration policy is ensured by a network of Rewards experts present in the various countries.

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Number of company-level agreements

L’Oréal’s social policy permits the signing of a certain number of company-level agreements in the subsidiaries every year. In 2018, 229 agreements were signed in France and 85 agreements were signed in the rest of the world. In total, the

A EUROPEAN WORKS COUNCIL An agreement signed in 1996 between L’Oréal and French and European trade unions (FECCIA and EMCEF) led to the establishment of the Company’s Instance Européenne de Dialogue Social/European Works Council (IEDS/EWC). The initial agreement has been regularly updated, in particular in 2009 to introduce a new information and consultation procedure which applies to transnational projects involving local consultation procedures. This procedure is implemented with the Liaison Secretariat extended to include members from the countries concerned or with the entire IEDS/EWC, depending on the geographic and strategic dimensions of the transnational project. This process allows for the possibility of an opinion from the IEDS/EWC. This revision of the agreement represented an important advance which aims to reinforce social dialogue at L’Oréal while remaining a step ahead of changes in legislation. The agreement has been renewed, without any major change, for the period 2017-2020.

Offering a motivating and 3.3.2.5.

competitive remuneration system

The principles of the remuneration policy The L’Oréal’s remuneration policy has the objective of contributing to the achievement of the Group’s objectives and is an integral part of its development strategy. L’Oréal wants to attract and foster the loyalty of talented employees, propose motivating career paths and encourage its employees’ performance and commitment, while accompanying the evolution of jobs and business. For L’Oréal, social performance and economic performance are indeed closely linked.

REGISTRATION DOCUMENT / L'ORÉAL 2018

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