L’Oréal sets up long-term incentive plans in favour of its employees and corporate officers in an international context, in the form of grants of performance shares.
These grants serve a dual purpose:
The vesting of these shares is subject to the achievement of performance targets and the beneficiary’s continued presence in the Company. Under the 19th resolution submitted for approval by the Annual General Meeting of 21 April 2022, the Board of Directors, at its meeting of 9 February 2022 and on the recommendation of the Human Resources and Remuneration Committee, decided to introduce new criteria to assess the extra-financial performance in addition to the financial performance for the conditional grant of shares to employees, in order to align them with L’Oréal’s strategy in which economic and social performance go hand-in-hand.
To ensure consistency with the Group’s strategic objectives, the choice of beneficiaries and the vesting criteria are determined by a specific policy (see section 7.4. “Long-term incentive plans” of this document). The Board of Directors, subject to the recommendation of the Human Resources and Remuneration Committee, approves the conditional grant of shares and lays down the applicable rules.
53% of the beneficiaries of the 7 October 2021 plan are women. More than 3,600 employees, representing around9.5% of the managers around the world, nearly 58% of whom are in international subsidiaries, benefit or have benefited from at least one stock-option plan or one conditional grant of shares plan (ACAs) since 2017, and were still employees of the Company as of 31 December 2021.
For many years, L’Oréal’s policy has been to associate employees in the results of the Company with the aim of strengthening their feeling of belonging and their motivation. In the context of the profit-sharing schemes in place, €352 million were redistributed to L’Oréal’s employees in 2021on the basis of 2020 results.
In 1968, an employee profit sharing agreement (“participation”) was signed in France, followed by another agreement (“intéressement”) in 1988, and these agreements have been constantly renewed since then.
Since 2001, L’Oréal has implemented a Worldwide Profit Sharing Programme in all the Group’s subsidiaries in which the employees do not benefit from legal or contractual profit sharing schemes. The amounts paid within this framework are calculated locally on the basis of the turnover and profit of each subsidiary, as compared to the budgeted targets.
In 2021, L’Oréal decided to give employees an exceptional profit sharing award equivalent to a minimum of two weeks’ salary throughout the world, following the Covid-19 health crisis that marked the year 2020. With this gesture, the Group wished to recognise the collective effort of its employees during this difficult period.
|
Amounts paid under these programmes (in € million) |
2019 | 2020 | 2021 |
|---|---|---|---|
| Total(1) | Total (1)2019310 |
Total (1)2020368 |
Total (1)2021352 |
(1) Profit sharing schemes.
L’Oréal wants to ensure that its employees benefit from competitive retirement and welfare schemes in all countries. Since 2002, an International Benefits Supervisory Committee overviews the management of these schemes in the subsidiaries and monitors the implementation of L’Oréal’s Retirement and Employee Benefits policy.
L’Oréal’s commitments with regard to welfare schemes are part of the Protection pillar of the L’Oréal Share & Care programme. In all subsidiaries, L’Oréal guarantees the payment of a lump sum, or equivalent pension, equal to a minimum of 24 months’ salary in the event of death or total permanent disability, or a higher amount where it is the local practice.
The characteristics of retirement schemes and other end of career benefits offered by the subsidiaries vary depending on the applicable laws and regulations as well as local practices.
In 88% of the countries where L’Oréal operates, the Group contributes along with its employees to the build-up of supplemental retirement benefits for its employees in addition to the minimum benefits of the public social security system.
Retirement plans are financed by payments into specialised funds or by setting up provisions, in accordance with the accounting standards adopted by L’Oréal. The performance of the managers of the main investment funds, as well as the financial stability rating of the custodians, are regularly reviewed by the International Benefits Supervisory Committee.
L’Oréal does not propose company retirement plans in countries that do not have an appropriate legal framework or without long-term investment instruments and in countries where there is a satisfactory public social security system. International Benefits Supervisory Committee remains attentive to changes to local situations and, when needed additional complementary schemes are put in place.
To supplement the pensions provided for by the compulsory French pension scheme, L’Oréal has implemented some supplementary pension schemes described below:
In September 2003, L’Oréal set up a “defined contribution pension scheme”.
All categories of employees are beneficiaries of this scheme, after one year of employment, that is financed jointly by L’Oréal and the employee, and that makes it possible for everyone to build up retirement savings.
This scheme entitles pensioners to a lifelong annuity (or to a lump-sum, under certain conditions), calculated after they claim their pension rights with the Social Security pension system, calculated on the basis of the capital formed by the contributions paid and the financial income on such contributions at the end of the employee’s career, as well as the annuity option selected.
