2024 universal registration document

To give more stretch to the Chief Executive Officer's annual variable remuneration, by:

• capping the variable amount that can be awarded in the event of outperformance at 130.4% of his fixed remuneration (i.e., €3 million) instead of 120% previously (€2.4 million), representing a 25% increase; This outperformance is assessed on a criterion-by-criterion basis with no possibility to offset between criteria;
• setting a target variable amount of 113% of fixed remuneration (i.e., €2.6 million) instead of 100% previously (€2 million), representing a 30% increase;
• reinforcing the performance assessment matrix that incorporates floor values for each financial criterion below which no amount would be due, in order to ensure that underperformance is penalised at least as harshly as outperformance is rewarded, with no possibility to offset between criteria.

To simplify the non-financial criteria by reducing the number of criteria based on the L'Oréal for the Future programme.

The Board’s aim is to:

• encourage outperformance, without excessive risk taking, in an increasingly complex and tough operating environment, and to penalise underperformance proportionately;
• ensure that the Chief Executive Officer’s annual variable remuneration is competitive in relation to the benchmark panel (described in section 2.4.1.2.1A) by positioning the target amount between the median and the 3^rd quartile in accordance with his remuneration policy;
• ensure consistency, both within the Group in comparison with the maximum annual variable remuneration of Executive Committee members, and outside the Group as compared with the variable remuneration structure for the benchmark panel (target and maximum amounts).

In view of considerations expressed by the Company's main investors and by proxy advisory firms with voting rights, the Board, on the recommendation of the Human Resources and Remuneration Committee, wishes to improve transparency by clarifying details around performance criteria trigger points, without however sharing expected levels, which would breach business confidentiality.

The Board took into account the opinions of the main investors and proxy advisory firms. It also ensured that the quantitative criteria based on the L'Oréal for the Future programme that continue to apply to the Chief Executive Officer’s variable remuneration are fully aligned with the Group's overall business strategy.

To reduce the ceiling on potential additional share grants to 3% of the total number of shares granted during a given financial year, taking into account any grants already awarded (instead of 5% previously).

In view of observations by the Company's main investors and by proxy advisory firms, on the recommendation of the Human Resources and Remuneration Committee, the Board of Directors decided to reduce the ceiling on these potential additional share grants, which have never actually been used.

To strengthen the obligation for the Chief Executive Officer to hold the performance shares granted to him by adding a two-year lock-up period for 50% of the shares granted and fully vested.

In view of observations by the Company's main investors and by proxy advisory firms, on the recommendation of the Human Resources and Remuneration Committee, the Board of Directors wishes to strengthen alignment with shareholders’ interests over the long term, including in the event of the termination of the Chief Executive Officer’s corporate office.

To introduce a clawback mechanism authorising the Board of Directors, on the recommendation of the Human Resources and Remuneration Committee, to reduce or cancel certain components of remuneration in the event of an accounting fraud where the Chief Executive Officer was aware of the situation and the financial statements have to be restated.

In view of observations by the Company’s main investors and by proxy advisory firms, on the recommendation of the Human Resources and Remuneration Committee, the Board is proposing to introduce a clawback mechanism to more closely align the remuneration structure with shareholders' interests over the long term, and protect the interests of the Company when required.