LOREAL_Registration_Document_2017

2 Corporate governance *

REMUNERATION OF THE EXECUTIVE OFFICERS

time as Mr Jean-Paul Agon will reach the 40-year seniority ceiling provided for by the scheme, i.e. , 1 September 2018. He will not be granted any other additional annuities. 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. In the event that the 80% threshold is not met, no increase will be granted for the financial year. Pursuant to Article L. 225-42-1 of the French Commercial Code, the Board of Directors will verify, on an annual basis, compliance with the conditions that it set and will determine, for that year, before the Ordinary General meeting called to approve the financial statements of the last financial year, the increase in the conditional entitlements for the Chairman and Chief Executive Officer corresponding to commitments for the defined benefit pension scheme for the duration of the renewed corporate office. The Board of Directors submits for approval to the Annual General Meeting on 17 April 2018, the application of the provisions of the suspended employment contract to calculate the entitlement of Mr Agon to receive the defined pension benefit scheme, for the duration of the renewed corporate office. In so doing, the Board of Directors has decided to continue with the policy it has always implemented at the Company, whereby employees who are appointed executive officers are not deprived of the benefits that they would have continued to receive if they had remained employees. This is the case with Mr Jean-Paul Agon, who is being appointed an executive officer after 27 years with L’Oréal. The table set out below, presented in the form recommended by the AMF, clearly shows that there are no concurrent benefits under the suspended employment contract and the corporate office. It is moreover stated that the AMF considers that a company complies with the AFEP-MEDEF Code when it explains the maintenance of the employment contract of a senior manager as being due to his length of service as an employee in the Company and his personal situation and provides detailed substantiation in this respect.

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. This is the only agreement entered into and authorised in previous years for which performance continued during the 2017 financial year. Pursuant to Article L. 225-40-1 of the French Commercial Code, this agreement was examined by the Board of Directors on 8 February 2018, which confirmed the relevance and terms thereof. Pursuant to Article L. 225-22-1 of the French Commercial Code as amended by the law of 6 August 2015 on economic growth, activity and equal opportunities, 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. These legal provisions are applicable for the first time at the time of renewal of the tenure of Mr Jean-Paul Agon, the Chairman and Chief Executive Officer, about which the Board of Directors will decide following the Annual General meeting of 17 April 2018. The Board of Directors, at its meeting of 8 February 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 as described in paragraph 2.5.2.3. of this document. 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 should be noted that, pursuant to the provisions of the employment contract suspension agreement corresponding to defined benefit pension commitments for the period of service of the new tenure, the Chairman and Chief Executive Officer will benefit from: revaluation of the calculation basis of his pension based on s the revaluation coefficient for salaries and pension contributions published by the Caisse Nationale d’Assurance Vieillesse (French State pension fund); and the inclusion of his seniority corresponding to the number of s years of service in the renewed corporate office, until such

REGISTRATION DOCUMENT / L'ORÉAL 2017

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