LOREAL_Registration_Document_2017

Corporate governance * REMUNERATION OF THE EXECUTIVE OFFICERS

Indemnities or benefits due or which may become due as a

Mr Jean-Paul Agon (1) Chairman and Chief Executive Officer

Supplementary pension scheme (3)

result of termination or change of duties (4)

Indemnities relating to a non-competition clause (5)

Employment contract (2)

Yes

No

Yes

No

Yes

No

Yes

No

X X Mr Jean-Paul Agon has been a Director since 25 April 2006, the date on which he was appointed as Chief Executive Officer. His tenure was renewed at the Annual General (1) meeting on 27 April 2010. Mr Jean-Paul Agon has been Chairman and Chief Executive Officer since 18 March 2011. His mandate was renewed on 17 April 2014 and is submitted once again to the Annual General Meeting of 17 April 2018. Mr Jean-Paul Agon’s employment contract is suspended throughout the entire length of his corporate office. (2) Pursuant to his employment contract, Mr Jean-Paul Agon is entitled to benefit from the Garantie de Retraite des Membres du Comité de Conjoncture (Pension Cover of the (3) Members of the Comité de Conjoncture) as described in the chapter 3. This defined benefit pension scheme provides that the building up of rights to benefits is 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. No indemnity is due in respect of termination of the corporate office. In respect of the employment contract, pursuant to the schedule of indemnities of the National (4) Collective Agreement for the Chemical Industries, in the event of termination, except in the case of gross misconduct or gross negligence, the termination indemnity would be capped, in light of Mr Jean-Paul Agon’s length of service, at 20 months’ remuneration related to the employment contract. In respect of the employment contract, pursuant to the provisions of the National Collective Agreement for the Chemical Industries, in the event of termination of the (5) 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 related to the employment contract unless Mr Jean-Paul Agon were to be released from application of the clause. PROCEDURE FOR SETTING THE REMUNERATION OF THE EXECUTIVE OFFICER 2.5.3. Remuneration is established in such a way as to guarantee the due and proper application of the policy and rules set by the Board of Directors. It bases its decision on the work and recommendations of the Human Resources and Remuneration Committee which has the necessary information to prepare its recommendations, and more particularly to assess the performances of the executive officer in light of the Group’s short and long-term objectives. The Group’s annual economic and financial results are presented every year completely and exhaustively to the members of the Human Resources and Remuneration Committee at its meeting in February, and are used as a basis for the assessment of the financial performance criteria for the executive officer’s variable remuneration. X X

2

The principles of the Human Resources policy are regularly presented to the committee members or at a Board of Directors meeting by the Executive Vice-President Human Resources. Similarly, the Senior Vice-President, Chief Ethics Officer, also regularly explains the policy and the actions taken in this field. Two members of the Human Resources and Remuneration Committee are members of the Strategy and Sustainable Development Committee at which the actions taken with regard to the programmes concerning the Group’s social and environmental responsibility are discussed. This information contributes to the assessment of the qualitative portion of the annual variable remuneration. The Chairman of the Human Resources and Remuneration Committee is a member of the Audit Committee and participates in the closing of the financial statements as well as the examination of the risk prevention policy. The committee can also carry out a more in-depth evaluation of the Company’s performance by contacting the Company’s main senior managers, after informing the General Management. This information enriches their vision of the strategy and performances of the Company and its executive officer. The recommendations to the Board of Directors are made on these bases, and the Board then makes its decisions collectively concerning the executive officer’s remuneration. The organisation of the work of the Human Resources and Remuneration Committee concerning the remuneration of the executive officer is shown in the chart on the next page.

The Human Resources and 2.5.3.1.

Remuneration Committee uses the studies conducted by an independent consulting firm.

These studies are based on an international panel of world leaders, which will serve as a reference for the comparative remuneration studies. This panel is made up of executive officers of French and international companies with a position of world leader in comparable luxury and consumer goods industries (see paragraph 2.5.1.1.). The studies conducted with the independent consulting firm also enable the committee to measure: the comparative results of L’Oréal in light of the criteria s adopted by the Group to assess the executive officer’s performance; the link between the executive officer’s remuneration and s his performance; the relevance over time of the remuneration structure and s the objectives assigned to him.

The Human Resources and 2.5.3.2.

Remuneration Committee has all useful internal information in its possession

This information enables it to assess the performance of the Company and that of its executive officer both from an economic standpoint and in extra-financial fields.

REGISTRATION DOCUMENT / L'ORÉAL 2017

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