2024 universal registration document

2. Corporate governance

At its meeting on 13 March 2025, on the recommendation of the Human Resources and Remuneration Committee, the Board of Directors also decided that at the Annual General Meeting it will propose that the Chief Executive Officer’s remuneration policy be amended to give more stretch to his annual variable remuneration. This proposal entails:

  • capping the variable amount that can be awarded in the event of outperformance at 130.4% of his fixed remuneration (i.e., €3 million) instead of 120% previously (€2.4 million), representing a 25% increase. This outperformance is assessed on a criterion-by-criterion basis with no possibility to offset between criteria;
  • setting a target variable amount of 113% of fixed remuneration (i.e., €2.6 million) instead of 100% previously (€2 million), representing a 30% increase;
  • defining floor values for each financial criterion below which no amount would be due, in order to ensure that underperformance is penalised at least as harshly as outperformance is rewarded, with no possibility to offset between criteria.
  Weighting (out of 100) As a % of fixed remuneration
Financial criteria Min Target Max
FINANCIAL CRITERIA
Like-for-like sales as compared to budget(1) 15% 0% 17% 19.5%
Sales growth differential as compared to main competitors(2) 15% 0% 17% 19.5%
Operating profit as compared to the budget(1) 10% 0% 11.25% 13.1%
Earnings per share(3) as compared to the budget(1) 10% 0% 11.25% 13.1%
Cash flow(4) as compared to net profit 10% 0% 11.25% 13.1%
TOTAL FINANCIAL CRITERIA 60% 0% 67.8% 78.3%
NON-FINANCIAL AND QUALITATIVE CRITERIA
CSR criteria: L’Oréal for the Future programme 10% 0% 11.25% 13.1%
Human Resources criteria 7.5% 0% 8.5% 9.75%
Digital development criteria 7.5% 0% 8.5% 9.75%
Qualitative criteria: Management 7.5% 0% 8.5% 9.75%
Qualitative criteria: Image, company reputation, dialogue with stakeholders 7.5% 0% 8.5% 9.75%
TOTAL NON-FINANCIAL AND QUALITATIVE CRITERIA 40% 0% 45.2% 52.1%
TOTAL 100% 0% 113% 130.4%

The Board’s aim is to:

  • encourage outperformance, without excessive risk taking, in an increasingly complex and tough operating environment, and to penalise underperformance proportionately;
  • ensure that the Chief Executive Officer’s annual variable remuneration is competitive in relation to the benchmark panel (described in section 2.4.1.2.1A) by positioning the target amount between the median and the 3rd quartile in accordance with his remuneration policy; The detailed findings and figures of the study carried out by Mercer are set out in 2.4.1.2.3;
  • ensure consistency, both within the Group in comparison with the maximum annual variable remuneration of Executive Committee members, and outside the Group as compared with the variable remuneration structure for the benchmark panel (target and maximum amounts).

Eight quantitative criteria related to the L’Oréal for the Future programme were originally set to measure the programme's overall progress. Taking into account observations by the Company's main investors and by proxy advisory firms, on the recommendation of the Human Resources and Remuneration Committee, the Board has decided to reduce the number of quantitative criteria related to this programme to five. The following three criteria will therefore be removed: (i) by 2030, average reduction of 50% in greenhouse gas emissions per finished product related to the transportation of Group products, compared with 2016; (ii) by 2030, 95% of ingredients in the Group’s formulas will be biobased, and come from abundant minerals or circular processes; (iii) by 2030, all Group products will be ecodesigned. The aim is to retain one indicator per pillar of the L’Oréal for the Future programme to ensure continuity.

The Board ensured that the quantitative criteria based on the L'Oréal for the Future programme that continue to apply to the Chief Executive Officer’s variable remuneration are fully aligned with the Group's overall business strategy.