The Board of Directors at its meeting of 20 April 2021 appointed Mr Nicolas Hieronimus, the then Deputy Chief Executive Officer in charge of Divisions, and an employee of L’Oréal, as Chief Executive Officer following a brilliant career spanning 34 years within L’Oréal.
The Board of Directors did not wish for Mr Nicolas Hieronimus, by accepting the role of Chief Executive Officer, to be deprived (at the age of 57 and after 34 years with L’Oréal) of the benefits to which he would have continued to be entitled had he remained an employee. Therefore, the Board adopted the following measures, which were approved by the Annual General Meeting of 20 April 2021 as part of the procedure for related-party agreements:
The reference remuneration of Mr Nicolas Hieronimus to be taken into account for all rights attached to the employment contract and, in particular, for the calculation of the pension under the defined-benefit scheme described below, is based on his remuneration at the date of suspension of his employment contract. This reference remuneration is €1,750,000 of fixed remuneration and €1,850,000 of variable remuneration. This remuneration will be revised annually by applying the revaluation coefficient in respect of salaries and pension contributions published by the French state pension fund (Caisse Nationale d’Assurance Vieillesse). As at 1 January 2022, it was €1,769,250 for fixed remuneration and €1,870,350 for variable remuneration.
The seniority applied covers his entire career within the Group, including the years spent as an executive corporate officer.
In the event of termination of his suspended employment contract during the term of corporate office, and depending on the reasons for such termination, Mr Nicolas Hieronimus would only be paid termination indemnities, except in the event of gross misconduct or gross negligence, or retirement indemnities in the event of voluntary retirement or at the Company’s request pursuant to the suspended employment contract.
These indemnities, which are attached solely to termination of the employment contract and in strict application of the National Collective Bargaining Agreement for the Chemical Industries (Convention Collective Nationale des Industries Chimiques) and the company-level agreements applicable to all L’Oréal managers, are automatically due pursuant to the public policy rules of French labour law. They are not subject to any condition other than those provided for by the National Collective Bargaining Agreement for the Chemical Industries or the above-mentioned Company-level agreements. The same applies to the non-compete clause and the related financial consideration.
Pursuant to the schedule of indemnities under the National Collective Bargaining Agreement for the Chemical Industries, in the event of dismissal, except in the event of gross misconduct or gross negligence, the indemnity would be capped, in light of Mr Nicolas Hieronimus’ length of service, at 20 months’ remuneration under the suspended employment contract.
In respect of the employment contract, pursuant to the provisions of the National Collective Bargaining Agreement for the Chemical Industries, in the event of termination of the employment contract, the indemnity due in consideration of the non-compete clause would be payable monthly for two years on the basis of two-thirds of the monthly fixed remuneration attached to the suspended employment contract unless Mr Hieronimus were to be released from application of the clause. This clause does not apply in the event of voluntary retirement or compulsory retirement on the Company’s initiative: no consideration for non-competition would be paid in such a situation.
Mr Nicolas Hieronimus will continue to benefit, under his suspended employment contract, from the “Garantie de Ressources des Retraites Anciens Cadres Dirigeants” (Retirement Income Guarantee for Former Senior Managers) scheme closed to new members effective from 31 December 2015. The income guarantee is calculated on the basis of the number of years of professional service in the Company up to 31 December 2019, up to a limit of 25 years. Generally, after 31 December 2019, no new rights will be granted under this scheme pursuant to French Order no. 2019-697 of 3 July 2019 concerning supplementary professional retirement schemes, which stipulated the closure of all defined benefit schemes governed by Article L. 137-11 of the French Social Security Code.
The main features of this scheme are as follows:
The pension rights of Mr Nicolas Hieronimus are no longer likely to change insofar as he has more than 25 years of service, the ceiling above which no additional annuity is granted under this scheme.
For information purposes, the gross estimated amount of the pension that would be paid to Mr Nicolas Hieronimus, under L’Oréal’s “ Garantie de Ressources des Retraités Anciens Cadres Dirigeants ” (Retirement Income Guarantee for Former Senior Managers) scheme, had he been able liquidate on 31 December 2021 his full-rate pension rights under French Social Security, after 34 years of service within L’Oréal, would represent €1.56 million.
This information is given as an indication after estimating the main pension rights accrued by Mr Nicolas Hieronimus as a result of his professional activities, according to the rules for payment of such pensions in force at 31 December 2021,which may be subject to change.
The amount of the pension paid to Mr Nicolas Hieronimus under L’Oréal’s “Garantie de Ressources Dirigeants” (income guarantee for senior managers) will only be calculated on the date when he applies for all his pensions.
As a reminder, the rights to the defined benefit pension are uncertain and conditional on the completion of the beneficiary’s career in the Company. The funding of this scheme by L’Oréal cannot be broken down individually by employee.
