LOREAL_Registration_Document_2017

Corporate governance * ORGANISATION AND MODUS OPERANDI OF THE BOARD OF DIRECTORS

Preamble The Board of Directors of L’Oréal (“the Company”) is a collegial body which is mandated by all the shareholders. It has the authority given to it by law to act in all circumstances in the best interests of the Company. By exercising its legal prerogatives, the Board of Directors (“the Board”) fulfills the following main duties: it validates the Company’s strategic orientations, appoints the executive officers given responsibility for managing the Company within the scope of this strategy, chooses the method of organisation of General Management (combination or separation of the roles of Chairman and Chief Executive Officer), oversees management and ensures the quality of the financial and extra-financial information provided to the shareholders and to the markets. The organisation of the Board’s work and its composition is adapted to the specificities of L’Oréal and is in line with an approach of constant progress. The Board’s main responsibility is to adopt the method of organisation and the modus operandi which enable it to perform its duties to the best of its ability. Its organisation and its modus operandi are described in these Internal Rules which it draws up, and which are published in full on L’Oréal’s website and in the Registration Document. The Board’s actions are carried out within the framework of the AFEP-MEDEF Code. The Report of the Chairman on the Board’s composition and on the way in which the Board’s work is prepared and organised explains, where applicable, the recommendations that have not been adopted in light of the Company’s specificities. These Rules apply to all the Directors, both current and future, whether they are appointed by the Annual General Meeting or the employees, and are intended to complement the legal, regulatory and statutory rules and those under the Articles of Association in order to state accurately the modus operandi of the Board of Directors and its Committees. The general powers of the Board 1.1. The Board of Directors determines the Company’s business strategy and oversees the implementation thereof. Subject to the powers expressly conferred to General Shareholders’ Meetings and within the limit of the Company’s purpose, the Board deals with all matters regarding the smooth running of the Company and settles issues concerning the Company by virtue of its decisions. At any time in the year, the Board carries out the controls and verifications it deems appropriate. The Board prepares for and convenes General Shareholders’ Meetings and sets the agenda. It puts the parent company and consolidated financial statements to the vote and presents to the meeting its Management Report to which is attached the Report of the Chairman approved by the Board. DUTIES AND AUTHORITY OF BOARD OF DIRECTORS 1.

The Board sets the remuneration of the Directors and executive officers. It reports on its policy and its decisions in its Management Report and in the Report of its Chairman. The General Shareholders’ Meeting is consulted every year on the components of remuneration due or allocated to each executive officer for the past financial year. The Board is a collegial body which is legally unable to delegate its authority, except to the General Management in those cases expressly provided for by law. Within the scope of its work, it may decide to set up committees which do not have decision-making powers but have the task of providing all useful information for the discussions and decisions which it is called upon to make. The Board decides on the composition of the committees and the rules with regard to their modus operandi . The Board may ask one or more of its members or third parties to carry out special assignments or projects aimed in particular at studying one of more specific topics. Form of General Management 1.2.1. General Management of the Company is carried out, under his responsibility, by either the Chairman of the Board of Directors (the Chairman and Chief Executive Officer) or by another individual with the position of Chief Executive Officer. Leaving the possibility to choose between the separation or combination of roles, the law does not give preference to any form and gives the Board authority to choose between the two methods of organisation of the General Management in light of the specificities of the Company. Whether the General Management is carried out by a Chairman and Chief Executive Officer or a Chief Executive Officer, the Board has the same prerogatives. It may in particular take all specific measures aimed at ensuring the continued balance of powers. Powers of General Management 1.2.2. The General Management, which may be carried out by the Chairman of the Board of Directors or by a Chief Executive Officer, is vested with the broadest powers to act in all circumstances in the name of the Company. It must exercise these powers within the limit of the Company’s purpose subject to the powers expressly granted by French law to General Shareholders’ Meetings and the Board of Directors. The Board has the possibility to provide for limitations on the powers of the General Management. Thus, transactions which may materially impact the scope of consolidation of the Company, in particular, transactions involving an amount in excess of €250,000,000 and all new transactions which are outside the normal course of business for an amount in excess of €50,000,000, must be submitted to the Board. In any event, the Board of Directors must be informed of the conclusion and implementation of all transactions. The General Management represents the Company in its dealings with third parties. Relations between General Management and the Board 1.2.

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REGISTRATION DOCUMENT / L'ORÉAL 2017

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