2024 universal registration document

2. Corporate governance

DIAGRAM SHOWING THE BALANCE BETWEEN THE DIFFERENT COMPONENTS OF THE TARGET ANNUAL REMUNERATION

This diagram provides a graphical illustration of the balance between the different components of the target annual remuneration.

Breakdown of internal components:

Fixed remuneration: 23%

Target annual variable remuneration: 27%

Performance shares (long-term remuneration): 50%

Nature of the remuneration:

77% of the remuneration is subject to performance conditions.

23% of the remuneration with no subject to performance conditions.

Form of the remuneration:

50% in cash: annual remuneration(2)

50% in shares: long-term remuneration(1)

N.B.: the employer’s contributions to the additional social protection plans are to be added to the above.

Fixed remuneration

The fixed remuneration must reflect the responsibilities of the executive corporate officer, his/her level of experience and skills.

It has remained stable for several years and may be re-examined at the time of their re-appointment. It serves as a basis to determine the maximum percentage of the target annual variable remuneration.

The Chief Executive Officer’s fixed remuneration was set at €2 million when he took up office in May 2021 and has remained the same since then, in accordance with his remuneration policy.

At the Annual General Meeting on 29 April 2025, the shareholders will be invited to re-appoint Nicolas Hieronimus as a Director. Consequently, at its meeting on 13 March 2025, on the recommendation of the Human Resources and Remuneration Committee, the Board of Directors decided that at the Annual General Meeting on 29 April 2025 it will ask the shareholders to raise Nicolas Hieronimus’ annual fixed

remuneration to €2.3 million, i.e., an increase of 15%. In reaching this decision, the Board took into consideration the fact that:

  • the Chief Executive Officer's skills and experience in his role have increased and been strengthened over the past four successful years of his leadership, as reflected in (i) the findings of the Board of Directors’ 2024 self-assessment (see section 2.3.5), (ii) the growth percentages between 2021 and 2024 for sales (34.7%), operating profit (41%) and EPS(1) (43.5%), and (iii) the Group’s top-class financial and ESG ratings (see section 1.1.6);
  • the responsibilities of the Chief Executive Officer have become wider in an ever-more complex and highly competitive environment which demands constant change and adaptation for the Group;
  • L'Oréal is exploring adjacencies to its position as a pure beauty player, in line with the Group's mantra of "seize what is starting" (saisir ce qui commence) ;
  • the Chief Executive Officer’s fixed remuneration has remained the same since he was first appointed in 2021, and by principle, the new amount of his fixed remuneration will remain unchanged for the next four years;
  • there has been an overall upward trend for fixed remuneration within L'Oréal in view of the inflationary environment (a 13.7% increase in France since 2021(2) according to INSEE):
    • fixed remuneration for the members of the Executive Committee based in France increased by an average of 14.5% between 2022 and 2025(3),
    • fixed salaries for employees based in France rose by an average of 17% over the same period(4).

Annual variable remuneration

The variable remuneration is designed to align the executive corporate officer’s remuneration with the Group’s annual performance and to promote the implementation of its strategy year after year.

The aim is not to encourage inappropriate and excessive risk taking. For this purpose, the annual variable remuneration remains reasonable in comparison with the fixed portion.