The Board refers, in particular, to the recommendations of the AFEP-MEDEF Code for the determination of the remuneration and benefits granted to corporate officers.
According to this Code, corporate officers (“dirigeants mandataires sociaux”) of a French “société anonyme à conseil d’administration” (public limited company with a Board of Directors) are: the Chairman and Chief Executive Officer (Président-Directeur Général), the CEO, and Directeurs Généraux Délégués (executive corporate officers), and the Chairman of the Board without assuming the office of Chief Executive Officer (non-executive corporate officers).
Following the dissociation of the functions of Chairman of the Board of Directors and Chief Executive Officer from 1 May 2021, the remuneration policies are intended to apply to:
In accordance with the recommendations of the AFEP-MEDEF Code, the Board ensures that the remuneration policy complies with the principles of comprehensiveness, balance, comparability, consistency, transparency and proportionality, and takes into account market practices.
L’Oréal’s constant practice has been to appoint senior managers who have completely succeeded in the various stages of their careers in the Group as executive corporate officers.
The remuneration policy applicable to the executive corporate officer is the logical result of this choice.
It must make it possible to attract the most talented employees of L’Oréal to the very top positions in General Management, without them being deprived for all that, after a long career in the Group, of the benefits to which they would have continued to be entitled if they had remained employees.
To achieve this objective, the Board of Directors decided to maintain the employment contract of the executive corporate officer with at least 15 years’ service at the time of their appointment in the Group and ensured that the benefits under the suspended employment contract are not combined with those in respect of the corporate office.
The Board of Directors has considered that the objective pursued by the AFEP-MEDEF and intended to avoid the combination of benefits drawn from both an employment contract and a corporate office, could be fully achieved by maintaining the suspended employment contract and clearly separating the benefits related to the corporate office from those relating to the employment contract.
This is why the Board of Directors has decided to make a clear distinction between:
Remuneration in respect of the corporate office will in no event be taken into consideration in the calculation of all benefits that may be due under the employment contract described above.
The reference remuneration to be taken into account for all rights attached to the employment contract and, in particular, for the calculation of the aforementioned pension scheme, will be based on the amount of remuneration at the date of suspension of the employment contract. This reference remuneration is 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). The seniority applied will cover the entire career, including the years spent as a corporate officer. Information on the benefits that could be owed under the suspended employment contract are discussed in section 2.4.3. “Termination indemnities and supplementary pension scheme applicable to executive corporate officers” of this document.
The executive corporate officer is also considered in the same way as a senior manager during the term of their corporate office, which allows them to continue to benefit from the additional social protection schemes and, in particular, from the defined contribution pension scheme, and the employee benefit and healthcare schemes applicable to the Company’s employees.
The remuneration policy for the executive corporate officer is in line, where applicable, with the policy which was applied to them as senior managers.
Their level of remuneration as an executive corporate officer is set on the basis of the level of responsibilities they exercised in the company at the time of their appointment.
The remuneration policy is based on the same foundations and instruments as those applied to the Company’s senior managers. The remuneration principles are therefore stable and durable.
The Board of Directors is informed every year of the Group’s Human Resources policy. It is in a position to verify the consistency between the remuneration of the executive corporate officer and the procedures in place, particularly for the members of the Group’s Executive Committee, on the basis of the work by the Human Resources and Remuneration Committee and the Nominations and Governance Committee.
The remuneration of the executive corporate officer must be competitive in order to attract, motivate and retain the best talents in the Company’s top positions.
