L'Oréal - 2018 Registration Document

Corporate Governance ORGANISATION AND MODUS OPERANDI OF THE BOARD OF DIRECTORS

SELF-EVALUATION BY THE BOARD 2.3.4. OF DIRECTORS Every year, the Board carries out the formal evaluation provided for by the AFEP-MEDEF Code of its composition, its organisation and its modus operandi, in particular in order to verify that, under these conditions, the agenda for its work duly covers the scope of its remits, that important questions have been appropriately prepared for and discussed and to measure the contribution made by each member to the Board’s work. This evaluation is carried out within the framework of the AFEP-MEDEF Code, to which the Board refers and market recommendations like those of the AMF. The evaluation procedure for 2018 was examined by the Appointments and Governance Committee. This evaluation is carried out with the help of a thematic interview guide setting out the principles provided for by the Code, accompanied by a questionnaire enabling each Director to think about the Board’s due and proper functioning and his/her personal contribution to the Board’s work and decisions. This document, approved by the Appointments and Governance Committee before it was sent to each Director, served as a basis for the individual interviews arranged between the Directors and the Secretary of the Board. These interviews concerned the Board’s composition, its organisation and its modus operandi. The Directors were called to once again consider certain Governance issues, specifically: separation of the functions of Chairman and Chief Executive Officer, scheduling of meetings of the Board of Directors without the presence of the Executive Directors, appointment of a Lead Director, and relations with shareholders over Corporate Governance issues. The activities of the Committees were reviewed, in particular the procedure for analysis of the independence of the Directors and any conflicts of interest. The Directors expressed their opinion more specifically with regard to the quality and relevance of the information provided to them and on the agendas for the Board meeting, and gave their points of view on the Board’s involvement in the definition of L’Oréal’s strategy. They formulated suggestions for improvements and submitted proposals with regard to strategic issues and subjects which they would like to discuss in further detail in 2019. The summary of these interviews, carried out by the Secretary of the Board, was submitted first to the Appointments and Governance Committee meeting on 4 December 2018, and, the next day, to the Board of Directors, followed by a debate between the Directors and decisions for 2019. Firstly, concerning the Board’s composition, the Directors gave very positive feedback. The Board has a balance of major shareholders, independent Directors and salaried Directors. The Directors are complementary in terms of ages, genders, nationalities, and personalities. Their high-level experience and skills are varied. They cover all areas connected with L’Oréal’s strategy, as defined by the Board (see section 2.2.1.2.) There is

a great cohesion among the Board members, and the new Directors were integrated rapidly and positively. With regard to the modus operandi of the Board, it was stressed that the Directors are present, active, and involved, and support General Management in a constructive approach, providing real added value. They share the same concern for acting in L’Oréal’s long-term interests. The quality of dialogue was highlighted. Members are able to debate in a good atmosphere and a climate of trust. The Chairman and Chief Executive Officer is intent on allowing everyone to express themselves. He is open and transparent. He does not hesitate to bring up any topic, including critical points. The Directors feel free to ask questions. Discussions are productive and constructive. The Directors thus exercised their complete freedom of judgment in 2018, as they have in previous years. This freedom of judgment enabled them to participate, in total independence, in the work and the collective decisions of the Board and the activities of the Committees. The composition and preparation of the Committees are considered appropriate, with the right experts serving on each one. The pace and frequency of their meetings are deemed appropriate. Meetings are well organised, with a good level of information enabling very thorough work. Agendas are interesting and leave ample time for business and strategy issues. The reports provided by the Committee Chairs during the Board meetings were interesting and very comprehensive. They provided a good understanding of the topics covered and enable the Board to take the right decisions. The Directors are of the opinion that the Board is completely and transparently informed, with a sufficient degree of detail. Making documentation available prior to Board or Committee meetings, in compliance with the requirements of confidentiality and the time constraints with which the Company is faced, is satisfactory and boosts the quality of the debates. The monthly press briefing, “L’Oréal This Month,” covering activity in general and the main events of life in the Group, is very useful. The consistent presentation at every Board meeting of sales, markets and competition, and the expansion of the analysis to include e-commerce and Travel Retail, are essential. They enable the Directors to be immersed in the realities of the Company and remain fully informed of L’Oréal issues on a continuous basis. The Directors appreciate that business topics are predominant on the meeting agendas. Management’s presentations on their activities are interesting; they raise real issues and inspire thought and discussion. The Directors are happy that a point on the Board’s agenda is dedicated to them on a regular basis. Thus, in 2018, the Board found that the in-depth presentations by the Deputy Chief Executive Officer in charge of Divisions about the transformation of the distribution networks and the strong growth in e-commerce, along with his presentation on the developments in business drivers (expenses relating to the advertising and promotion of products to customers and consumers) in the highly digitised cosmetics universe addressed the issues from a strategic angle. These presentations fuel discussion and promote forward-looking thought.

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REGISTRATION DOCUMENT / L'ORÉAL 2018

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