The executive corporate officer is required to retain 50% of the free shares finally vested to him or her at the end of the vesting period, in registered form, until the termination of his or her duties, following a review of the performance conditions.
The executive corporate officer makes a formal undertaking not to enter into any risk hedging transactions with regard to the performance shares, until the end of the holding period set by the Board of Directors.
An executive corporate officer may not be granted performance shares at the time of his or her departure.
The performance criteria cover all shares granted to the executive corporate officer.
They take into account:
- % of sites that are “carbon-neutral”;
- % of formula ingredients that are bio-sourced, traceable and come from sustainable sources;
- % of plastic packaging that comes from either recycled or bio-based sources;
- number of people benefitting from the Group’s brands’ social commitment programmes; and
The Board of Directors considers that both these types of criteria, assessed over a long period of three full financial years and reapplied to several plans, are complementary, in line with the objectives and specificities of the Group and likely to promote continuous, balanced and sustainable long-term growth. They are exacting, but remain a source of motivation for the beneficiaries.
The shares are only finally vested at the end of a 4-year period, allowing sufficient time to be able to assess the performance achieved over three full financial years.
Pursuant to the criterion relating to sales, in order for all the free shares granted to be finally vested by the beneficiaries at the end of the vesting period, L’Oréal must outperform the average growth in sales of the panel of competitors. Below this level, the number of finally vested shares is in decline. If the L’Oréal’s comparable growth in net sales is lower than the average growth in net sales of the panel of competitors, no shares will be finally vested under this criterion.
Pursuant to the criterion related to operating profit, a level of growth, defined by the Board, but not made public for confidentiality reasons, must be met or exceeded in order for all free shares granted to be finally vested by the beneficiaries at the end of the vesting period. Below this level, the number of finally vested shares is in decline. If the operating profit does not increase in absolute value over the period, no share will finally vest pursuant to this criterion.
With regard to the criterion of fulfilling commitments made under the L’Oréal for the Future programme, in order for all the free shares granted to be finally vested by the beneficiaries at the end of the vesting period, a certain average level of achievement of the L’Oréal for the Future Commitments, defined by the Board and made public, must be reached over the period. Below this level, the grant decreases. No shares will vest if the average of the results for the L’Oréal for the Future Commitments falls below the minimum level defined by the Board and made public.
With regard to the criterion of gender balance within the Management Bodies, in order for all the free shares granted to be finally vested by the beneficiaries at the end of the vesting period, the average representation of one of the sexes must account for at least 40% of employees on the Management Bodies. Below this level, the grant decreases. No shares will vest in relation to this criterion if the average representation of one of the sexes is less than 35% over the vesting period.
The results recorded each year to determine the levels of performance achieved are published in Chapter 7 “Stock Market Information Share Capital” of this document.
