For several years, L’Oréal has set up long-term incentive plans in favour of its employees and corporate officers in an international context, in the form of grants of performance shares.
These grants serve a dual purpose:
Since the 2022 ACAs Plan, performance conditions have included the non-financial criteria described below. These criteria serve L’Oréal’s dual goal: economic and social excellence to create sustainable value for all.
Until 2009, L’Oréal’s Board of Directors exclusively granted stock subscription or purchase options to the senior managers and corporate officers whom L’Oréal wished to reward for their performance and their important role, wherever they might be geographically located.
In 2009, L’Oréal’s Board of Directors enlarged its policy by introducing an ACAs vehicle.
The objective was:
In 2011, L’Oréal’s Board of Directors decided to make ACAs the main vehicle for its long-term incentive policy by extending the grant of shares to the main senior managers of the Group who until then only had received stock options. In 2012, at the suggestion of the Human Resources and Remuneration Committee, the Board of Directors went one step further in this policy and decided to replace the grant of stock options with conditional grants of shares for all beneficiaries as of the 2013 Plan.
The plans are proposed by General Management(1) to the Board of Directors which decides, after receiving the opinion of the Human Resources and Remuneration Committee, the principle of these plans and the applicable conditions and rules.
In accordance with the recommendation of the AFEP-MEDEF Code, these grants are made over the same period each year: between 2009 and 2019 they were put in place following the approval of the financial statements for the previous year by the Annual General Meeting, and since 2020 they have been put in place at the end of the year, it being specified that the first year the performance conditions are assessed is the financial year following the year of grant.
The decision with regard to each individual grant is, in every case, contingent upon the quality of the performance rendered at the time of implementation of the plan with particular attention being paid to the main talents for the future. According to the eligibility criteria linked to the position held by the beneficiary and the size of the entity or the country in which the beneficiary works, to ensure worldwide fairness, these grants are made every year, on a recurring basis every two to three years, or more regularly.
The General Management and the Board of Directors reiterate the importance that is given to bringing together the interests of the beneficiaries of conditional share grants and those of the shareholders themselves.
The beneficiaries (senior managers and corporate officers) share with the shareholders the same confidence in the strong, steady growth of the Company with a medium and long-term vision.
The attention of the beneficiaries of conditional share grants is drawn to the regulations in force concerning persons holding "inside information". The beneficiaries of conditional share grants undertake to read and comply with L’Oréal’s Stock Market Code of Ethics, as referred to in the plan rules.
54% of the beneficiaries of the 10 October 2024 Plan are women. Nearly 3,700 employees, representing 10% of the managers around the world, nearly 54% of whom are in international subsidiaries, benefit or have benefited from at least one conditional grant of shares plan since 2020 and were still employees of the Company on 31 December 2024.
(1) As part of its long-term incentive plans, and outside the ACA scope, in 2022, L’Oréal also set up the L’Oréal Retention Plan (LOREP) for local talent not yet eligible for the ACA share plans. The plan takes the form of a deferred bonus over three years, and does not generate any rights to shares for the beneficiaries. Historically, L'Oréal very quickly sought to involve employees in the company's performance and results, setting up a Group profit-sharing agreement in France in 1968, followed by a Group incentive agreement in 1988, both of which have been regularly renewed. At the international level, in 2001, the Group put in place the Worldwide Profit Sharing (WPS) programme in all the Group's subsidiaries in which employees do not benefit from statutory or contractual profit-sharing schemes.
