L'Oréal - 2018 Registration Document

Corporate Governance OF THE EXECUTIVE OFFICERS

In the light of the legal characteristics of defined benefit pension schemes (the rights only accrue if the beneficiary ends his career in the Company and the funding of this scheme cannot be broken down individually by employee) and on account of the characteristics specific to the L’Oréal schemes, known as “differential” schemes since they take into account, in order to supplement them, all the other pensions such as those resulting, inter alia, from the French basic and supplementary pension schemes, the precise amount of the pension annuity will in fact only be calculated on the date when the beneficiary applies for all his pensions. Situation of Mr Jean-Paul Agon 2.5.2.4. Mr Jean-Paul Agon, then Deputy Chief Executive Officer, was appointed as Chief Executive Officer in April 2006, following a brilliant career spanning 27 years with L’Oréal. The Board of Directors noted that if, in accordance with the AFEP-MEDEF recommendation, Mr Jean-Paul Agon’s employment contract with L’Oréal was to be terminated, Mr Agon would lose the status he had acquired as a result of the 27 years he spent working for the Group as an employee. The Board did not want Mr Jean-Paul Agon, who accepted the office of Chief Executive Officer after 27 years working with

L’Oréal, to be deprived of the benefits to which he would have continued to be entitled had he remained an employee, and adopted the following measures: 1) Maintenance of the employment contract and separation of the benefits attached to the employment contract on the one hand and to the corporate office on the other The remuneration under the suspended employment contract to be taken into account for all the rights attached thereto, and in particular for the calculation of the defined benefit pension referred to below, is based on the amount of remuneration at the date of suspension of the contract in 2006, namely fixed remuneration of €1,500,000 and variable remuneration of €1,250,000. This remuneration is reviewed every year by applying the revaluation coefficient in respect of salaries and pension contributions published by the French State pension fund. As of 1 January 2019, the fixed remuneration amounted to €1,684,500 and the variable remuneration to €1,403,750. The length of service applied takes into consideration his entire career, including the years during which he was Chief Executive Officer and Chairman and Chief Executive Officer.

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2) Termination indemnities, retirement indemnities in the event of voluntary retiremenrt or retirement at the Company's request, financial consideration for the non-competition clause

Termination indemnity and non-competition indemnity

Payment of the indemnities due under the suspended employment contract was approved by the Annual General meeting on 27 April 2010. In the event of departure, and depending on the reasons, Mr Jean-Paul Agon would only be paid the dismissal indemnities, except in the event of gross misconduct or gross negligence, or retirement indemnities, in the event of voluntary retirement or retirement at the Company’s request, due under the employment contract that has been suspended. These indemnities, which are attached solely to termination of the employment contract and in strict application of the National Collective Agreement for the Chemical Industries and the Company-level agreements applicable to all L’Oréal’s managers, are due in any event pursuant to the public policy rules of French labour law. They are not subject to any condition other than those provided for by the collective bargaining agreement or the above-mentioned Company-level agreements. The same applies to the non-competition clause and the related financial consideration. Pursuant to the schedule of indemnities under the National Collective Agreement for Chemical Industries, in the event of dismissal, except in the event of gross misconduct or gross negligence, the indemnity would be capped, in light of Mr Jean-Paul Agon’s length of service, at 20 months’ remuneration under the suspended employment contract. In respect of the employment contract, pursuant to the provisions of the National Collective Agreement for Chemical Industries, in the event of termination of the employment contract, the indemnity due in consideration of the non-competition clause would be payable every month for two years on the basis of two-thirds of the monthly fixed remuneration attached to the suspended employment contract unless Mr Jean-Paul Agon were to be released from application of the clause. This clause does not apply in the event of voluntary retirement or compulsory retirement on the Company’s initiative: no consideration for non-competition would be paid in such a situation. For information purposes, the cumulative amount of the indemnity provided for under the collective bargaining agreement and the indemnity in consideration of the non-competition clause which would have been due to Mr Jean-Paul Agon had his employment contract ended on 31 December 2018 through termination, except in the event of gross misconduct or gross negligence, would have represented an amount of less than 24 months of the fixed and variable remuneration which he received in 2018 as executive officer.

REGISTRATION DOCUMENT / L'ORÉAL 2018

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