The Board of Directors, in accordance with the recommendation of the AFEP-MEDEF Code (Article 25-2), is proposing to the Annual General Meeting of 21 April 2022 that the exercise of the office of Chairman of the Board of Directors without assuming the office of Chief Executive Officer, would be remunerated only by fixed remuneration, excluding any variable remuneration, grant of performance shares and any indemnity related to departure or any consideration for a non-compete agreement.
The Board of Directors also decided that the tenure as Director held by the Chairman of the Board would not be remunerated.
The Chairman of the Board will benefit from the necessary material resources for the performance of his office such as, for example, the provision of a car with a driver. These arrangements, which are strictly limited to professional use, are not benefits in kind.
The Chairman of the Board will benefit from the same employee benefit scheme as the senior managers of the Company.
The remuneration of the Chairman of the Board of Directors is determined based on the following components:
The Board of Directors is fully aware of the challenges of sustainable Governance, notably in light of European legislative initiatives and the growing expectations of authorities and stakeholders.
It is essential for the Board to count on a committed, experienced and competent Chairman, like Mr Jean‑Paul Agon, who is recognised for his involvement in governance issues and in relations with stakeholders.
Mr Jean-Paul Agon, who organises the work of the Board of Directors, which he has chaired since 2011, has already brought the Governance of L’Oréal to an exemplary level, while successfully assuming the General Management of the Company. His full-time commitment to the benefit of the Company’s Governance is an importance source of added value for the Board, which wants to highlight the expertise of Mr Jean-Paul Agon whose in-depth knowledge of the company, its environment and its strategic challenges is a major asset.
The Chairman’s remuneration matches the Board’s goal of ensuring the continuity of its work and to allow development in light of the increasingly important duties expected from a Board of Directors.
The Board has also taken into consideration the extensive duties it has decided to entrust to Mr Jean-Paul Agon in his position as Chairman of the Board of Directors.
Finally, the Board took account of the expectations of the stakeholders, by placing this remuneration in perspective with the remuneration offered by an international reference panel that was defined with the assistance of an external independent consultancy firm. The analysis of remunerations of Chairs of Boards of Directors of companies in the reference panel used, which includes 6 companies with a dissociated governance structure already used in the reference panel for the remuneration of executive corporate officers, reports an average remuneration of €1,521,200 and a median remuneration of €695,200 with large standard deviations.
As a result of this analysis and on the recommendation of the Human Resources and Remuneration Committee, the Board of Directors at its meeting of 9 February 2022 propose to the Annual General Meeting of 21 April 2022 to set the fixed annual remuneration of Mr Jean-Paul Agon, Chairman of the Board, at €1,600,000.
Mr Jean-Paul Agon notified the Company of the termination of his employment contract on 30 April 2021, in order to be able to benefit from his mandatory retirement rights as from 1 May 2021. Under his employment contract, he is able to benefit from a gross annual pension benefit of €1.59 million under L’Oréal’s supplementary defined benefit pension scheme“Garantie de Retraite des Membres du Comité de Conjoncture” (Pension Cover of Members of the Comité de Conjoncture) which has been closed since 31 December 2000(1). The Board of Directors agreed to Mr Jean-Paul Agon’s wish to waive the benefit of this supplementary pension so as not to combine it with a fair remuneration for the duties of Chairman as expressed by the Board in this policy.
(1) The benefit of this pension was approved, in the context of the related-party agreements procedure, by the Annual General Meeting of 27 April 2010 and by the Annual General Meeting of 17 April 2018 at the time of the renewal of the current term of office.
