The Board appreciates that its agendas and those of the Committee meetings cover all of the Group’s business activities – relating not only to business but also to Ethics, CSR, and Human Resources, which give an extremely complete picture of L’Oréal’s commitment to these issues that are deemed to be strategic. The aim is for these topics to be included on the Board’s agenda at least once a year, as was the case in 2021.
Thus, in 2021, the Board reviewed the Ethics Policy with the Chief Ethics, Risk and Compliance Officer, specifically in the area of Human Rights and corruption risks. The intervention of the Chief Corporate Responsibility Officer was considered very useful. Her presentation acted as a final review, as at 31 December 2020, of the Group’s Sharing Beauty with All CSR programme, while providing details of the commitments of the new L’Oréal for the Future programme over the next decade. Directors welcomed the suggestion to organise CSR training in 2022, and noted that it could be an opportunity to involve an external expert. The Board was also able to listen to the Chief Human Relations Officer and learn more about the issues related to professional equality between women and men and the targets established for gender balance in management bodies. The Directors appreciate that these issues are discussed in detail with a constant concern for promoting best practices.
The Directors appreciate receiving analysts’ reports after the publication of the annual and half-yearly results and sales figures. The July 2021 presentation of the Chief Financial Officer on feedback from roadshows was considered very interesting. This subject should appear regularly on the agenda.
During the period between meetings of the Board and the Committees, the monthly press briefing, “L’Oréal This Month” covering business activities in general and the main events in the life of the Group, is considered very useful. Information, including press releases, that is systematically sent between Board meetings enables Directors to be continually in line with L’Oréal’s business activity.
Overall, Directors think that the Board performs its various duties satisfactorily, in particular, its role as a think-tank and driver of Group strategy. Strategic issues are shared properly, at the right level, and without going into operational detail. The “Strategic guidelines” document is very well written. The Board and the Committees regularly address CRS topics. Decisions are taken after consideration of L’Oréal’s corporate social challenges.
Directors also expressed their opinions on the following governance-related issues:
The separation of the functions of Chairman and Chief Executive Officer: Directors believe that the separation of the functions in place since 1 May 2021 is the governance structure best suited to L’Oréal’s current situation. The change in governance occurred in the best possible manner. This new governance structure functions in a balanced and satisfactory manner. These changes were made smoothly. The Directors highlighted the complementary relationship between the Chairman and the Chief Executive Officer. The Chairman fully fulfils the role defined by the Board and stimulates debate. The Chief Executive Officer is allowed to focus entirely on business and management. The balance of power is assured, given the composition of the Board (particularly the presence of two long-standing shareholders, and the number and background of the independent Directors) and the freedom of speech available for all Directors. The Directors expressed their high confidence in the new governance structure.
Appointment of a Lead Director: the Directors do not consider it necessary to appoint a Lead Director. There would be little interest for L’Oréal in doing so, given the Board’s current composition and modus operandi, as well as the freedom of speech enjoyed by the Directors.
Executive sessions: since 2016, the Directors meet at least once a year without the presence of any corporate officers, Directors representing employees or other Group employee. These meetings work well and there are no specific comments in this regard. The Board made changes to the organisation of these meetings as part of the separation of the functions of the Chairman of the Board and the Chief Executive Officer. They now involve two stages: the Chairman of the Board introduces the meeting by presenting a review of his work. After this, he leaves the meeting and it is chaired by the Chairwoman of the Nominations and Governance Committee.
There is a special emphasis on conflicts of interest since strategy themes are discussed openly at Board meetings. The Directors believe that the rules in force are satisfactory: non-participation in debates and decisions, and an annual declaration of independence. They attach great importance to the analysis of the independence of Directors, which is carried out in depth each year, and deem appropriate the procedure for regular evaluation of agreements concluded in the ordinary course of business under normal conditions, which was implemented in 2021.
Directors consider that the current procedure for organising meetings with shareholders, investors, and proxy advisors on issues of corporate governance (meetings organised by the department in charge of financial communication and shareholder relations that are attended by the Secretary of the Board and Legal Corporate and Securities) is satisfactory. They appreciate that their expectations are detailed in the minutes taken in the Committee and Board meetings.
Regarding the self-evaluation of the Board in 2022, the Board considers that the current procedure does not need to be reviewed. The Interview Guide will be examined again by the Nominations and Governance Committee, after having been reviewed, where applicable, by an external firm consulted on the best operating practices for Boards of directors. The Nominations and Governance Committee will supervise the process in liaison with the Secretary of the Board. The summary of the interviews with the Directors has been discussed at a Board meeting as is the case every year.
For 2022, various decisions with regard to improvements were made. They mainly concern the earlier provision of management information and presentations and the optimisation of the use of the Nasdaq Boardvantage digital platform. The Directors also stated their desire to go into further detail about certain strategic points. The Directors made proposals for topics to be included on the Board’s agenda in 2022 and the organisation of the 2022 strategy seminar. After discussion and review, a list of priority subjects was drawn up by the Board meeting of 7 December 2021. These topics will be included on the agenda of Board meetings in 2022.
