2021 UNIVERSAL REGISTRATION DOCUMENT

7.4.3.2. Conditional Grants of Shares granted within the framework of the authorisation of 30 June 2020 (ACAs Plan of 7 October 2021)

On the basis of the proposals made by the General Management and examined by the Human Resources and Remuneration Committee, the Board of Directors decided, at its meeting on 7 October 2021, to make a  Conditional Grant of Shares within the scope of the authorisation granted by the Annual General Meeting on 30 June 2020.

The share capital at 7 October 2021 was composed of 557,671,748 shares, and 3,346,030 shares could therefore be issued.

The Board of Directors used this authorisation at its meeting of 7 October 2021 by granting 588,750 shares to 2,408 beneficiaries.

This is a free grant of shares to be issued.

Vesting of the shares is subject to a dual condition:

• presence: the shares granted will only vest after a period of 4 years at the end of which the beneficiary must still be an employee of the Group (except in the cases provided by the law or the Plan rules); and
• performance:
  • vesting of all or part of 50% of the shares granted will depend on the growth in comparable cosmetics sales for financial years 2022, 2023 and 2024 compared with those of a panel of L’Oréal’s biggest direct competitors made of Unilever, Procter & Gamble, Estée Lauder, Shiseido, Beiersdorf, Johnson & Johnson, Henkel, LVMH, Kao and Coty, and
  • vesting of all or part of 50% of the shares granted will depend on growth in the Group’s consolidated operating profit, over the same period.

The calculation will be made on the basis of the arithmetic average of the performances for 2022, 2023 and 2024.

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 grant decreases. If L’Oréal’s comparable growth in net sales is less than the average growth in sales of the panel of competitors over the period, no share will be allocated for this criterion. The Board of Directors defines a threshold, not made public for confidentiality reasons, below which no share will finally vest pursuant to this criterion.

Pursuant to the criterion relating to operating profit, in order for all the free shares granted to finally vest for the beneficiaries at the end of the vesting period, a level of growth defined by the Board of Directors, but not made public for confidentiality reasons, must be met or exceeded. Below this level, the grant decreases. If the operating profit does not increase in absolute value over the period, no share will finally vest pursuant to this criterion.

The Human Resources and Remuneration Committee is responsible for communicating to the Board of Directors the level of indicators recorded for the years to be used for the calculation of the performance conditions. The Board of Directors records, at the appropriate time, the level of performance achieved on which the number of shares that finally vests depends.

The figures recorded each year to determine the levels of performance achieved are published in sections 7.4.3.5.“Shares finally vested under the 17 April 2018 ACAs plan” and 7.4.3.6. “Tables monitoring performance conditions for the ACAs plans that are currently in progress”.

The vesting of the first 200 conditional grants of shares is not subject to fulfilment of the performance conditions except for beneficiaries who were members of the Executive Committee on the date they were granted, including the Chief Executive Officer.

7.4.3.3. Shares granted to the ten employees other than directors or corporate officers to whom the largest number of shares have been granted

The total number of shares granted in 2021 to the ten employees other than directors or corporate officers who received the largest number of shares was 72,400 shares.

7.4.3.4. Existing Conditional Grants of Shares at 31 December 2021

(1) Employees who are not corporate officers of L’Oréal or employees of companies included within the scope of the grant of shares.

(2) The panel consists of the following companies: Unilever, Procter & Gamble, Estée Lauder, Shiseido, Beiersdorf, Johnson & Johnson, Henkel, LVMH, Kao and Coty.