L'Oréal - 2018 Registration Document

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

24 months’ salary in the event of death or total permanent disability, or more where local practice is higher. The characteristics of the pension schemes and other pre-retirement benefits offered by the subsidiaries vary depending on the applicable laws and regulations as well as the practices of the companies in each country. In 82% of the countries where L’Oréal operates, the Group contributes to the building up of additional retirement benefits for its employees, in excess of the minimum benefits provided for under the Social Security system. This policy is carried out through defined benefit and/or defined contribution schemes. In some cases, defined benefit schemes have been closed to new recruits, who are offered defined contribution schemes. In defined contribution schemes, the Company’s commitment mainly consists in paying a percentage of the employee’s annual salary (into a pension plan) each year. Defined benefit schemes are financed by payments into specialist funds or by setting up provisions, in accordance with the accounting standards adopted by L’Oréal. The performance of the managers of the main funds established, as well as the financial stability rating of the custodians, are regularly reviewed by the Supervisory Committee. L’Oréal does not propose company pension schemes in countries which do not have an appropriate legal framework or a long-term investment instrument and in countries where there is satisfactory public social security coverage. The Supervisory Committee continues to be attentive to changes in local situations and, when required, additional Employee Benefit schemes are put in place. To supplement the pensions provided for by the compulsory French pension scheme, L’Oréal has implemented the following supplementary pension schemes: Defined contribution plan In September 2003, L’Oréal set up a “defined contribution pension scheme”. All categories of employees are beneficiaries of this scheme, which is financed jointly by L’Oréal and the employee, and which makes it possible for everyone to build up pension savings. As of 1 January 2016, the contributions have been increased on Brackets A, B and capped at half of Bracket C. The scheme entitles beneficiary pensioners to a lifelong annuity calculated after they claim their pension rights with the Social Security pension system, calculated on the basis of the capital formed by the contributions paid and the financial income on such contributions at the end of the employee’s career. The employer’s commitment is limited to the payment of the contributions stipulated. Defined benefit pension schemes L’Oréal has also set up several differential or additive defined benefit schemes with conditional entitlements, in order to take into account the important developments impacting these schemes and with the aim of arriving at a coherent system between the different pension schemes that exist in the Company. Overview of the Pension and Employee Benefit schemes in France Pension schemes

The “Supplementary pension scheme for former senior managers” ( Retraite supplémentaire des Retraités Anciens Cadres Dirigeants ) concerns retirees who held positions as senior managers for a minimum of 10 years, hired or promoted to this position as from 1 January 2016, and who end their career in the Company. This is an additive defined benefit pension scheme which grants entitlement to payment of a life annuity. The reference salary taken into account for calculation of the pension is the fraction of the salary which exceeds six times the French annual social security ceiling. The basis for calculation of the supplementary pension is the average of the revalued reference salaries for the best three full years of activity out of the seven calendar years prior to the end of their career. The supplementary pension would be 1.36% of the calculation base per year of service within the Group, up to a maximum of 25 years. Any retiree who so wishes will be able to choose an option of a surviving spouse pension. Access to the “Retirement Income Guarantee for former senior managers” (Garantie de Ressources des Retraités Anciens Cadres Dirigeants) was closed on 31 December 2015. This scheme, created on 1 January 2001, was open to former L’Oréal senior managers who, in addition to fulfilling the requirement of having ended their career with the Company, met the condition of having had the status of senior manager for at least 10 years at the end of their career. It provides entitlement to payment to the beneficiary retiree of a life annuity, as well as, after his/her death, the payment, subject to conditions, to the beneficiary’s spouse and/or ex-spouse(s) of a surviving spouse pension and, to the children, of an orphan pension. The calculation base for the Income Guarantee is the average of the salaries for the best three years out of the seven calendar years prior to the end of the senior manager’s career at L’Oréal. The Income Guarantee is calculated based on the number of years of professional service in the Company, capped at 25 years, each year leading to a progressive and regular increase of 1.8% of the level of the Guarantee. The Income Guarantee cannot exceed 50% of the calculation base or exceed the average of the fixed part of wages. A gross annuity and gross lump sum equivalent are then calculated, taking into account the sum of the annual pensions accrued by the beneficiary as a result of his/her professional activity and assuming that the beneficiary’s age is 65 . The life annuity is the result of the conversion into an annuity at the beneficiary’s age on the date he/she applies for his/her pension of the gross lump sum equivalent, less the amount of all payments due as a result of termination of the employment contract, excluding any paid notice period and paid holiday, and less all salaries paid under any early retirement leave. Around 340 senior managers are eligible for this scheme if they fulfil all conditions after having ended their career with the Company. Access to the “Pension Cover for Members of the Comité de Conjoncture” (Garantie de Retraite des Membres du Comité de Conjoncture) has been closed since 31 December 2000. This former scheme granted entitlement to payment to the beneficiary retiree, after having ended his/her career with the Company, of a life annuity as well as, after his/her death, the payment under certain conditions to the spouse and/or ex-spouse(s) of a surviving spouse pension and, to the children, of an orphan pension. The calculation base for the Pension Cover is the average of the salaries for the best three years out of the seven calendar years prior to the end of the beneficiary’s career at L’Oréal. The Pension Cover is calculated on the basis of the beneficiary’s number of years’ service,with a ceiling of 40 years. it being specified that at the date of closure of the scheme, on 31 December 2000, the minimum length of service required was 10 years. The Pension Cover may not exceed 40% of

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REGISTRATION DOCUMENT / L'ORÉAL 2018

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