b) Performance targets that are directly correlated with those of the Company and create value
The Board of Directors chooses to correlate executive corporate officer’s performance directly with the Company’s performance by using the same performance indicators, and in particular financial indicators.
The choice of correlating the performance criteria for the executive corporate officer’s remuneration with the Company’s performance indicators, particularly those of a financial nature, serves as a guarantee of a clear and relevant remuneration policy.
These criteria make it possible to use internal performance indicators to assess L’Oréal’s intrinsic performance, namely its year-on-year progress, as well as its relative performance as compared to the market and its competitors through external growth indicators.
The objectives adopted generate long-term value creation. In particular, the choice of varied operational financial criteria aims at encouraging durable, balanced growth. Overall longterm performance results from the convergence of these criteria.
These objectives must also be an incentive for the executive corporate officer to adapt the Group’s strategy to the profound transformations in the world of beauty, and in particular the digital revolution.
c) Major portion of remuneration subject to performance conditions
A major component of executive corporate officer remuneration must be subject to performance conditions, with annual and multi-annual assessment periods adapted to the time horizon of each of these objectives.
Remuneration that is directly aligned with the Group’s ambitious social, societal and environmental commitments
The remuneration must promote ongoing and sustainable development, in line with the Group’s commitments with regard to ethics, and be respectful of the environment in which L’Oréal operates. In 2020, L’Oréal unveiled its 2030 Corporate Social Responsibility vision as part of the L’Oréal for the Future programme.
The social and societal commitment is just as important since no environmental transition is possible without an inclusive society. The annual variable portion of executive corporate officer remuneration, and their long-term remuneration, includes non-financial criteria related to L’Oréal’s Sense of Purpose and the commitments made by the Group, particularly in the context of its corporate social, societal and environmental responsibility programmes.
These criteria will be assessed year-on-year with a long-term perspective.
Remuneration that creates medium- and long‑term value for shareholders
Executive corporate officer remuneration must be linked to the medium‑to long-term variation in the Company’s intrinsic value and share performance. A significant portion of executive corporate officer remuneration therefore consists of performance shares, a significant percentage of which is retained until the end of his/her corporate office and even beyond, with the undertaking not to carry out risk hedging transactions.
This leads to alignment with the shareholders’ interests, which serves as long-term value creation.
B/ Policy on fixed and variable remuneration and granting of performance shares to the executive corporate officer
The key for allocating target annual remuneration
The annual remuneration of the executive corporate officer consists of annual fixed remuneration, annual variable remuneration and the granting of performance shares.
It does not include any exceptional components.
The Board of Directors adopts the various components of this remuneration, paying attention to the necessary balance between each of them.
Each component of the target annual remuneration corresponds to a well-defined and clearly substantiated objective.
At its meeting on 13 March 2025, on the recommendation of the Human Resources and Remuneration Committee, the Board decided that at the Annual General Meeting it will ask the shareholders to amend the remuneration policy for the Chief Executive Officer. This followed an in-depth analysis of the components of his remuneration package to ensure that it is competitive both within the Group and with regard to the market, and that it is directly aligned with the Group's overall business strategy and shareholders' interests.
The Board maintained the overall balance between the different components of the Chief Executive Officer’s annual remuneration – which has remained the same since May 2021 – while reinforcing the variable portion subject to performance conditions.
The various components of annual remuneration therefore form a balanced whole, breaking down approximately as follows:
