The Board of Directors considers that both these types of criteria, assessed over a period of three full financial years and reapplied to several plans, are complementary, in line with the objectives and specificities of the Group and likely to promote continuous, balanced and sustainable long-term growth. They are exacting but remain a source of motivation for the beneficiaries.
The shares are only fully vested at the end of a four-year period, allowing sufficient time to be able to assess the performance achieved over three full financial years.
DETAILS OF WEIGHTING OF CRITERIA FOR GRANTING PERFORMANCE SHARES
This diagram shows the detailed weighting of the criteria for the allocation of performance shares.
80% Financial criteria
40% Revenue
40% Operating profit
20% Non-financial criteria
15% CSR – L’Oréal for the Future program, based on:
Percentage of renewable energy(1) achieved by operated sites
Percentage of plastic packaging from recycled or bio-based sources
Number of people benefiting from the Group’s brand social commitment programmes
5% Gender balance
Conditional vesting thresholds
Pursuant to the criterion relating to net sales, in order for all of the free shares granted to beneficiaries to be fully vested at the end of the vesting period, L’Oréal must outperform the average growth in net sales of the panel of competitors. If this is not achieved, the number of shares that fully vest is reduced. If L’Oréal’s comparable growth in net sales is lower than the average growth in net sales of the panel of competitors, no shares will be fully vested under this criterion.
Pursuant to the criterion related to operating profit, a measure of growth, defined by the Board, but not made public for confidentiality reasons, must be met or exceeded in order for all free shares granted to be fully vested to the beneficiaries at the end of the vesting period. If this is not achieved, the number of shares that fully vest is reduced. If the operating profit does not increase in absolute value over the period, no shares will fully vest in relation to this criterion.
With regard to the criterion of fulfilling commitments made under the L’Oréal for the Future programme, in order for all the free shares granted to be fully vested to the beneficiaries at the end of the vesting period, a certain average level of achievement of the L’Oréal for the Future Commitments, defined by the Board and made public, must be reached over the vesting period. If this is not achieved, the grant is reduced. No shares will fully vest if the average of the results for the L’Oréal for the Future Commitments fall below the minimum level defined by the Board and made public.
Pursuant to the criterion relating to gender balance in strategic positions, in order for all the free shares granted to be fully vested to the beneficiaries at the end of the vesting period, the average gender quota in strategic positions must be a minimum of 40% of members that are the same gender. If this is not achieved, the grant is reduced. No shares will fully vest in relation to this criterion if the average representation of one of the genders is below 35% over the vesting period.
The results recorded each year to determine the levels of performance achieved are published in chapter 7.