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. The Board relies on the work and recommendations of the Human Resources and Remuneration Committee, composed of six Directors, 60% of whom are independent Directors, including its Chairwoman, and one member of whom is a Director representing the employees. The corporate officer is not a member of the Committee. The Committee’s recommendations are made taking into account the studies carried out at its request by an independent consulting firm.
The Committee met 4 times in 2021 and its work is detailed in section 2.3.3. “Activities of the Board Committees” of this document.
The Committee has the necessary information to prepare its recommendations and more particularly to assess the performance of the corporate officer in light of the Group’s short-and long-term objectives.
The purpose of this organisation and this process is to prevent any conflicts of interest.
These studies are based on an international panel of world leaders, which serves as a reference for the comparative remuneration studies.
This panel is made up of French and international companies that hold the position of global leader. These companies operate on similar markets and are, in the cosmetics sector, direct competitors of L’Oréal, or operate on the wider everyday consumer goods market, as regards all or part of their business activities.
The panel applicable for 2021 comprised Directors of the following 14 companies:
| Beiersdorf | Colgate Palmolive | Coty | Danone |
|---|---|---|---|
| Estée Lauder | Estée Lauder Colgate Palmolive GSK |
Estée Lauder Coty Henkel |
Estée Lauder Danone Johnson & Johnson |
| Kimberly Clark | Kimberly Clark Colgate Palmolive Kering |
Kimberly Clark Coty LVMH |
Kimberly Clark Danone Procter & Gamble |
| Reckitt Benckiser | Reckitt Benckiser Colgate Palmolive Unilever |
Reckitt Benckiser Coty
|
Reckitt Benckiser Danone
|
It is used to assess the competitiveness of the executive corporate officer’s total remuneration.
This panel reports an average remuneration of €12,384,400 and a median remuneration of €9,140,600.
In terms of market capitalisation, L’Oréal is above the third quartile of companies on this panel.
It should be noted that the Company’s remuneration policy, specifically that in place for senior management executives, aims to position their remuneration between the median and the third quartile.
The studies conducted with the independent consulting firm also enable the Committee to measure:
To determine the positioning of the Chairman’s remuneration, a panel was defined with the help of an independent consultancy firm. It is composed of 17 international companies, selected on the basis of governance, industry, size and nationality.
They are the following dual governance companies:
| AstraZeneca | AB In Bev | BASF | Bayer | Coty | Diageo |
|---|---|---|---|---|---|
| Estée Lauder | Estée Lauder AB In Bev GSK |
Estée Lauder BASF Henkel |
Estée Lauder Bayer Kraft Heinz |
Estée Lauder Coty Linde |
Estée Lauder Diageo Nestlé |
| Novartis | Novartis AB In Bev Reckitt Benckiser |
Novartis BASF Roche |
Novartis Bayer Starbucks |
Novartis Coty Unilever |
Novartis Diageo
|
The analysis of remunerations of Chairs of Boards of Directors of companies in the reference panel used, which includes six companies with a dissociated governance structure already used in the reference panel for the remuneration of the executive corporate officer, reports an average remuneration of €1,521,200 and a median remuneration of €695,200 with large standard deviations.
This information enables it to assess the performance of the Company and that of its executive corporate officer both from a financial standpoint and in non-financial areas.
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 Committee meeting in February, and are used as a basis for the assessment of the financial performance criteria for the executive corporate officer’s variable remuneration.
The principles of the Human Resources policy are regularly presented to the Committee members or at a Board of Directors meeting by the Chief Human Relations Officer. The Directors are therefore able to verify the consistency between the remuneration of the executive corporate officer and the remuneration and employment conditions of the Company’s employees.
Similarly, the Chief Ethics, Risk and Compliance Officer also regularly explains the policy and the actions taken in this field.
