L'Oréal - 2018 Registration Document

2 Corporate Governance

REMUNERATION OF THE EXECUTIVE OFFICERS

3) Defined benefit pension scheme

Supplementary pension scheme

Mr Jean-Paul Agon benefits, under his suspended employment contract, from the Garantie de Retraite des Membres du Comité de Conjoncture (Pension Cover of the Members of the “Comité de Conjoncture”) scheme closed on 31 December 2000. The main features of this scheme, which falls under Article L. 137-11 of the French Social Security Code, are as follows: around 120 senior managers (active or retired) are concerned; s the minimum length of service requirement was 10 years at the time of closure of the scheme on 31 December 2000; s the Pension Cover may not exceed 40% of the calculation basis, plus 0.5% per year for the first twenty years, then 1% per year for s the following twenty years, nor may it exceed the average of the fixed portion of the remuneration for the three years used as the calculation basis out of the last seven years prior to the end of the beneficiary’s career in the Company; the Guarantee is financed by contributions paid to an insurance institution. These contributions are deductible from corporate s income tax and are subject to the employer’s contribution as provided by Article L. 137-11,2a) of the French Social Security Code at a rate of 24%. For information purposes, the estimated amount of the pension that would be paid to Mr Jean-Paul Agon, under L’Oréal’s “Garantie de Retraite des Membres du Comité de Conjoncture” scheme, had he been able to apply for a full-rate pension from the French social security scheme on 31 December 2018, after 40 years’ length of service at L’Oréal, would be €1.57 million, i.e. around 37% of the fixed and variable remuneration he received as executive officer in 2018. This information is given as an indication after estimating the main pension entitlements accrued by Mr Jean-Paul Agon, at 65 years of age, as a result of his professional activities, according to the rules regarding the application for payment of such pensions in force at 31 December 2018 and which may be subject to change. The amount of the pension paid to Mr Jean-Paul Agon, under L’Oréal’s “Garantie de Retraite des Membres du Comité de Conjoncture” scheme will in fact only be calculated on the date when he applies for all his pensions. As a reminder, the rights to the defined benefit pension are uncertain and conditional on the beneficiary ending his career in the Company. The funding of this scheme by L’Oréal cannot be broken down individually by employee.

The above provisions are subject to the regulated agreements and commitments procedure. The corresponding agreement was approved by the Annual General meeting on 27 April 2010 making a decision with regard to the Special Report prepared by the Statutory Auditors. The provisions of this agreement remained unchanged within the scope of the appointment of Mr Jean-Paul Agon as Chairman and Chief Executive Officer as from 18 March 2011 and the renewal of his term of office on 17 April 2014. Pursuant to Article L. 225-40-1 of the French Commercial Code, this agreement was examined by the Board of Directors on 7 February 2019, which confirmed the relevance and terms thereof. The provisions of the suspended employment contract representing defined benefit pension scheme commitments for the period of service in the corporate office are subject to the scheme provided for by Article L. 225-42-1 of the French Commercial Code, pursuant to Article L. 225-22-1 as amended by the law of 6 August 2015 on economic growth, activity and equal opportunities. These legal provisions were applied for the first time at the time of renewal of the term of office of Mr. Jean-Paul Agon, the Chairman and Chief Executive Officer, decided by the Board of Directors at its meeting of 17 April 2018, following the Annual General Meeting on the same day. The Annual General Meeting of 17 April 2018 approved the implementation of the provisions of Mr Jean-Paul Agon’s employment contract for the duration of the renewed corporate office, as approved by the Annual General meeting on 27 April 2010, corresponding to defined benefit pension scheme commitments. The Board of Directors has subordinated the increase in conditional rights for the period to the achievement of the performance conditions, assessed in light of the Company’s performance.

It is specified that pursuant to the provisions of the agreement to suspend the employment contract on defined benefit pension commitments and for the period of exercise of his new term of office: the calculation basis of the Chairman and Chief Executive s Officer’s pension will be revalued on the basis of the salaries and contributions revaluation coefficient published by the French state pension fund (Caisse nationale d’assurance vieillesse), as set out above; and his seniority corresponding to the number of years of service s in the renewed corporate office will be included, until such time as Mr Jean-Paul Agon will reach the 40-year seniority ceiling provided for by the scheme, i.e. , 1 September 2018. Consequently, he cannot be granted any other additional annuities at a later date. Pursuant to Article L. 225-42-1 of the Commercial Code, the Board of Directors, on the basis of the proposals made by the Human Resources and Remuneration Committee, has decided to take into account the same performance as that retained to determine the annual variable remuneration of the executive officer. The increase for a financial year will depend on the achievement of at least 80% of the performance targets taken into account to determine the annual variable remuneration of Mr Jean-Paul Agon. If the 80% threshold is not met, no increase will be granted for the financial year in question. Pursuant to Article L 225-42-1 of the French Commercial Code, at its meeting on 7 February 2019 the Board of Directors found that the performance conditions had been met in full. It therefore decided that: the calculation basis of the Chairman and Chief Executive s Officer’s pension will be revalued on the basis of the salaries and contributions revaluation coefficient published by the French state pension fund (Caisse nationale d’assurance

REGISTRATION DOCUMENT / L'ORÉAL 2018

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