L'Oréal - 2018 Registration Document

Corporate Governance AND MODUS OPERANDI OF THE BOARD OF DIRECTORS

THE ACTIVITIES OF THE BOARD 2.3.2. OF DIRECTORS Main Remits and Internal Rules 2.3.2.1 The Directors oversee the Group’s economic and financial management and contribute to defining its strategy. They examine and approve the main lines of action adopted by the General Management, which implements them. In this connection, the Board seeks on an ongoing basis to adopt a modus operandi which, while strictly complying with the law, assures the conditions of good corporate governance. The Board’s work is based on Internal Rules, regularly updated, designed to supplement the legal, regulatory and statutory rules and the market recommendations to which the Board refers. The Internal Rules are made public in full in this document and published on L’Oréal’s website. The Board’s debates and decisions are assisted by the work performed by its Committees, which report to it after each of their meetings. The Board ensures that all of the topics within its remit are thoroughly investigated by the Committees in charge of those issues. In 2018, the subjects of sustainable development, diversity, and gender balance, as well as succession plans, were reviewed by the Committees in order to report quality information to the Board with which to inform its decisions. Details on the activity of these Committees appear in section 2.3.3. The Board’s work in 2018 2.3.2.2. In 2018, the Board of Directors met 7 times. Directors also participated in a strategy seminar held in Shanghai on 5, 6, and 7 June. The work and agendas were prepared so as to cover all of the subjects within the Board’s remit and to meet the expectations expressed by the Directors in the annual evaluation of the modus operandi of the Board. The Board is consistently informed of the work of the various Committees by each Chairperson and bases its decisions on their recommendations. In 2018, the Board’s activity was mainly focused on the following areas: Corporate governance In 2018, the Board of Directors deliberated on its composition, taking diversity into consideration in terms of gender, skills, and expertise (see section 2.2.1.2.). At the Annual General Meeting of 17 April 2018, it proposed renewal of the terms of office of Mr Jean-Paul Agon and Ms Belén Garijo as well as the appointment of two new Directors, Mr Patrice Caine and Mr Axel Dumas. It debated the method of organisation of General Management. It opted to continue to combine the duties of Chairman of the Board and Chief Executive Officer, as this mode of governance appeared the most suited to L’Oréal’s

specific needs, and decided to entrust Mr Jean-Paul Agon with his duties as Chairman and Chief Executive Officer (see section 2.1.2.1). Further to the renewal of a portion of its members, the Board of Directors also reviewed the chairperson and composition of the Committees in 2018. Ms Sophie Bellon was appointed Chairwoman of the Human Resources and Remuneration Committee, Mr Patrice Caine joined the Appointments and Governance Committee, and Mr Axel Dumas the Audit Committee. The Board approved the agenda and the draft resolutions submitted to voting by the Annual General Meeting. It was informed of the expectations and positions of the main investors and proxy advisors, as expressed in meetings with the Company managers in charge of preparing for the Annual General Meeting. It approved the answers to the written questions. It is noted that dialogue with shareholders is the domain either directly of the Chairman and Chief Executive Officer (General Meetings, meetings of the main investors, Actionaria Stock Market Fair, etc.), or the L'Oréal teams (governance roadshows, Consultative Committee of Individual Shareholders, etc.) in accordance with the principles of stock market ethics and equal access to information. As every year, the Board made a full evaluation of its modus operandi and its organisation. It discussed this evaluation when the item was put on the Board meeting agenda. This evaluation led to proposals for improvements and made it possible to define the strategic topics on which the Board particularly wished to focus its reflections (see section 2.3.4). Remuneration Policy and Human Resources The Board deliberated on the rules relating to the remuneration of the executive officer and approved the remuneration of this latter for 2018, based on the extensive work by and recommendations from the Human Resources and Remuneration Committee. It approved the 2018 Plan for the award of performance shares. It decided on a worldwide employee shareholding Plan. The Board was updated on the diversity and gender balance policy deployed in the Company, specifically with regard to the equal number of men and women in management bodies. Business activity and results The systematic and in-depth review, at each meeting, of the Group’s activities and results and sales generated by Division, geographic area, brand, and e-commerce, as well as an analysis of market share gains, enabled the Directors to be immersed in the Company’s economic realities and to be continually informed of the problems faced by L’Oréal. The Board was also informed throughout the year of developments in the cosmetics market, the results of competitors and the Group’s relative positioning.

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REGISTRATION DOCUMENT / L'ORÉAL 2018

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