L'Oréal - 2018 Registration Document

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

strengthening involvement and the sense of belonging of its s beneficiaries by fostering long-term loyalty in a context of increased competition for talents. The vesting of these shares is subject to the achievement of performance targets and the beneficiary’s continued presence in the Company. To ensure consistency with the Group’s strategic objectives, the choice of beneficiaries and the vesting criteria are the subject of a specific policy (see section 6.4. “Long-term remuneration plans”). The Board of Directors, subject to the opinion of the Human Resources and Remuneration Committee, carries out the conditional grant of shares and lays down the applicable rules. 50% of the beneficiaries of the 17 April 2018 plan are women. Nearly 3,400 employees representing 11% of managers worldwide, 62% of whom are in international subsidiaries, benefit from or have benefited from at least one stock option plan or conditional grant of shares (ACAs) plan, and were part of the workforce as at 31 December 2018. For many years, L’Oréal’s policy has been to associate employees with the results of the Company with the aim of strengthening the Group spirit and enhancing their motivation. In the context of the existing profit sharing, incentive and mandatory profit sharing schemes, €296 million were redistributed to L’Oréal’s employees in 2018, on the basis of the 2017 results. In 1968, a mandatory employee profit sharing agreement (“participation”) was signed in France, followed by an incentive profit sharing agreement (“intéressement”) in 1988, and these agreements have been consistently renewed since then. Since 2001 L’Oréal has implemented a Worldwide Profit Sharing programme (WPS) in all the Group’s subsidiaries in which the employees do not benefit from profit sharing programmes provided for by law or employee agreements. The amounts paid within this framework are calculated locally on the basis of the sales and earnings of each subsidiary, as compared to the budgeted targets. Worldwide profit sharing, incentive and mandatory profit sharing schemes

Finally, L’Oréal’s ambition is for every employee to understand his/her remuneration and how it is determined. Accordingly, the Group makes sure that it communicates clearly and transparently on this subject to everyone. L’Oréal’s remuneration policy is based on an annual performance assessment system (MAP) for employees applied in all the Group’s subsidiaries. It makes it possible to communicate on the rules for determining remuneration, the process and the decisions made. Furthermore, the Group’s subsidiaries are encouraged to give employees once a year, a document showing the increases in their remuneration and its various components with the aim of clarity and transparency. TOTAL 5,634 The comparison between the three years takes into account the foreign exchange impacts and is not representative of the real changes in personnel costs. Employee shareholding plan In 2018, L’Oréal launched its first Employee Shareholding Plan in more than 50 countries with a view to pursuing and strengthening its HR policy, which aims to allows its employees to benefit from the Group’s development and results. The plan gave eligible employees the chance to buy shares on very advantageous terms and, where permitted by local law, to benefit from a discount of 20% on the share price and up to four shares offered as an additional employer contribution. The plan, which allows employees to benefit from the Company’s growth, aims to gather, unite and build loyalty around the Company’s strategy everywhere in the world by strengthening the sense of belonging, commitment and solidarity. The plan was designed to encourage broad support among employees, and the results were very satisfactory, with a 35% buy-in rate, which is a high level compared with other companies that have similar plans in place (1) . The result was applauded by the FAS (French Federation of Employee and Former Employee Shareholder Associations), which awarded L’Oréal the CAC All Tradable Grand Prix in 2018. L’Oréal sets up long-term remuneration plans in favour of its employees and executive officers in an international context, in the form of grants of performance shares. It pursues a dual objective: motivating and associating those who make major s contributions to future changes in the Group’s results; Plans for the conditional grant of shares to employees (ACAs) Personnel costs (including welfare contributions) € millions 2016 5,183 2017 5,433 2018

Amounts paid under these programmes € millions

2018

2016

2017

TOTAL (1)

268

298

296

Incentives, Profit Sharing, Additional Employer Contributions, (1) Mandatory Profit Sharing.

Employee benefit and pension schemes L’Oréal wants to make sure that its employees benefit from competitive pension and benefit schemes in all countries. Since 2002, a Supervisory Committee for Pension and Employee Benefit schemes ensures the implementation of these schemes in the subsidiaries and the monitoring of L’Oréal’s Pension and Employee Benefits policy. L’Oréal’s commitments with regard to benefit coverage are part of the “Protect” pillar of the L’Oréal Share & Care programme. In all countries, L’Oréal guarantees the payment of a lump sum, or equivalent pension, equal to a minimum of

2018 Employee Share Ownership Survey by FAS (Fédération Actionnariat Salarié). The study looks at entities in France that practise employee share (1) ownership and involves an annual analysis of these entities.

REGISTRATION DOCUMENT / L'ORÉAL 2018

202