2024 universal registration document

5.5 Free shares – Employee Shareholding Plan

Accounting principles

In accordance with the requirements of IFRS 2 “Sharebased Payment”, the value of options or free shares granted as calculated at the grant date is expensed in the income statement over the vesting period, which is generally five years for purchase options and four years for free shares.

The fair value of free shares corresponds to the value of the share at the grant date, less dividends expected to be paid during the vesting period.

The impact of IFRS 2 on profit for the period is booked on the Selling, general and administrative expenses item of the income statement at Group level, and is not allocated to the Divisions or geographic zones.

a) Free shares

The table below summarises the data on free share plans vesting after 1 January 2022.

Grant date	Vesting date	Number of shares granted	Number of shares issued/allotted	Number of shares not fully vested
Stock subscription plans
17.04.2018	17.04.2018 Vesting date 18.04.2022	17.04.2018 Number of shares granted 931,000	17.04.2018 Number of shares issued/allotted 868,575	17.04.2018 Number of shares not fully vested —
18.04.2019	18.04.2019 Vesting date 19.04.2023	18.04.2019 Number of shares granted 843,075	18.04.2019 Number of shares issued/allotted 776,975	18.04.2019 Number of shares not fully vested —
14.10.2020	14.10.2020 Vesting date 15.10.2024	14.10.2020 Number of shares granted 713,660	14.10.2020 Number of shares issued/allotted 661,270	14.10.2020 Number of shares not fully vested —
07.10.2021	07.10.2021 Vesting date 08.10.2025	07.10.2021 Number of shares granted 588,750	07.10.2021 Number of shares issued/allotted 1,875	07.10.2021 Number of shares not fully vested 559,100
13.10.2022	13.10.2022 Vesting date 14.10.2026	13.10.2022 Number of shares granted 700,000	13.10.2022 Number of shares issued/allotted 2,025	13.10.2022 Number of shares not fully vested 686,530
12.10.2023	12.10.2023 Vesting date 13.10.2027	12.10.2023 Number of shares granted 650,580	12.10.2023 Number of shares issued/allotted —	12.10.2023 Number of shares not fully vested 644,700
10.10.2024	10.10.2024 Vesting date 11.10.2028	10.10.2024 Number of shares granted 700,000	10.10.2024 Number of shares issued/allotted —	10.10.2024 Number of shares not fully vested 700,000

For the conditional grant of shares, the plan provides for a four-year vesting period after which vesting is effective and final, subject to meeting the conditions of the plan.

The performance conditions apply to the 14 October 2020 and 7 October 2021 plans:

for 50% of shares granted, the growth in comparable Cosmetics sales in relation to growth in net sales for a panel of competitors:
- 2021, 2022 and 2023 financial years under the 2020 plan,
- 2022, 2023 and 2024 financial years under the 2021 plan;
for 50% of shares granted, the increase over the same period in the Group’s consolidated operating profit.

The calculation will be based on the mean of the performance in the:

2021, 2022 and 2023 financial years under the 2020 plan;
2022, 2023 and 2024 financial years under the 2021 plan, and will use a predefined allocation scale based on the performance percentage achieved. No performance condition applies below a block of 200 shares. For the 13 October 2022, 12 October 2023 and 10 October 2024 plans, the performance conditions comprise the following:
80% based on financial performance criteria, split evenly between:
- growth – compared with that of a panel of competitors – in comparable cosmetics sales:
  - 2023, 2024 and 2025 financial years under the 2022 plan,
  - 2024, 2025 and 2026 financial years under the 2023 plan,
  - 2025, 2026 and 2027 financial years under the 2024 plan,
- the increase over the same period in the Group’s consolidated operating profit. The calculation will be made on the basis of the arithmetic average of the performances for:
  - 2023, 2024 and 2025 financial years under the 2022 plan,
  - 2024, 2025 and 2026 financial years under the 2023 plan,
  - 2025, 2026 and 2027 financial years under the 2024 plan;
20% based on non-financial performance criteria, of which:
- 15% is associated with the fulfilment of environmental and social responsibility commitments made by the Group as part of the L’Oréal for the Future programme,
- 5% is associated with the gender balance within strategic positions, including the Executive Committee.

No performance condition applies below a block of 100 shares.

At 31 December 2024, the performance conditions for plans in progress were deemed achieved.

2024 universal registration document

5. 2024 Consolidated Financial Statements

5.5 Free shares – Employee Shareholding Plan