Corporate governance *

Transcription

1 Corporate governance * 2.1. Framework for implementation of the corporate governance principle AFEP-MEDEF Code: the reference code The balance of power on the Board of Director 45 Compoition of the Board of 2.2. Director Lit of corporate office and directorhip held by Director at December 31t, Table howing the compoition of the Board at December 31t, Change in corporate office and directorhip of the Director The guiding principle Organiation and modu operandi of the Board of Director General information on the meeting of the Board of Director and it committee in The activitie of the Board of Director The activitie of the Board Committee Self-evaluation by the Board of Director Appendix: complete text of the Internal Rule of the Board of Director 70 Remuneration of the member of 2.4. the Board of Director Rule for allocation in repect of the 2016 financial year Amount paid in repect of the 2016 financial year Rule for allocation in repect of the 2017 financial year Remuneration of the executive officer Report on the principle and criteria for determination, allocation and ditribution of the remuneration applicable to the executive officer, due to their corporate office, a provided for by Article L of the French Commercial Code Termination indemnitie and penion cheme Procedure for etting the remuneration of the executive officer Remuneration of the chairman and Chief Executive Officer due or allocated with repect to Summary table of the recommendation of the AFEP-MEDEF Code which have not been applied 98 Summary of trading by Director 2.7 and executive officer in L Oréal hare in Rik factor and control environment Definition and objective of Internal Control Component of the Internal Control and rik management ytem Sytem relating to the preparation and proceing of financial and accounting information Rik factor and rik management Statutory auditor' report Statutory Auditor' Report, prepared in accordance with Article L of the French Commercial Code Statutory Auditor' Special Report on regulated agreement and commitment with third partie * Thi information form an integral part of the Annual Financial Report a provided in the Article L of the French Monetary and Financial Code. 43

2 Corporate governance * FRAMEWORK FOR IMPLEMENTATION OF THE CORPORATE GOVERNANCE PRINCIPLES Thi chapter decribe the way in which the Board' work i prepared and organied and include, in particular, a ummary of the principle of organiation guaranteeing a balance of power. It include the complete text of the Internal Rule of the Board of Director. All component of the remuneration of the Director and executive officer are mentioned a well a the trading by Director and executive officer in L'Oréal hare reported in 2016, and alo the remuneration policy puruant to Article L of the French Commercial Code. The Internal Control procedure implemented by the Company are alo decribed a well a the Rik Factor. The Statutory Auditor' Report related to Corporate Governance, namely their report on the report prepared by the Chairman and that on regulated agreement and commitment are included here FRAMEWORK FOR IMPLEMENTATION OF THE CORPORATE GOVERNANCE PRINCIPLES AFEP-MEDEF CODE: THE REFERENCE CODE The Corporate Governance Code to which the Company refer i the AFEP-MEDEF Code. Thi code may be conulted on it webite at the following addre: In accordance with the proviion of Article L , paragraph 6 to 10 of the French Commercial Code, thi chapter integrate the Report of the Chairman of the Board of director regarding the Board' compoition and the way in which the Board' work i prepared and organied, and the Internal Control procedure. Thi chapter deal alo with the following in particular: the Board compoition and the application of the principle of balanced gender repreentation on the Board; the way in which the Board work i prepared and organied; the Code of Corporate Governance to which the Company refer, the proviion which have not been applied and the reaon for thi non-application; the principle and rule adopted by the Board of Director to determine the remuneration and benefit of all kind granted to the Director and executive officer; limitation placed by the Board of Director on the power of the Chief Executive Officer; the Internal Control and rik management procedure implemented by the Company. The Rik Factor are decribed in thi Chapter. The other information provided for in Article L of the French Commercial Code and particularly that relating to the hare capital and the hareholder are publihed in chapter 6. Puruant to Article L of the French Commercial Code, the Board of Director of L Oréal approved thi document at it meeting on February 9 th, In accordance with the recommendation of the AFEP-MEDEF Code, thi chapter identifie, in a ummary table, thoe proviion of the code which were not applied and explain the reaon for that choice. 44

3 Corporate governance * FRAMEWORK FOR IMPLEMENTATION OF THE CORPORATE GOVERNANCE PRINCIPLES THE BALANCE OF POWERS ON THE BOARD OF DIRECTORS L Oréal ha a method of corporate governance that i uited to it pecificitie and i part of a contant quet for progre Method of performance of General Management adapted to the pecificitie of L'Oréal After a period of five year (between 2006 and 2011) during which the dutie of Chairman of the Board of Director and thoe of Chief Executive Officer were eparated in order to enure a mooth tranition between Sir Linday Owen-Jone and Mr. Jean-Paul Agon, the Board of Director decided in 2011 to reunify thee dutie and to appoint Mr. Jean-Paul Agon a Chairman and Chief Executive Officer of L Oréal. On April 17 th, 2014, the Annual General Meeting renewed the tenure of Mr. Jean-Paul Agon a Director. At it meeting on the ame day, the Board of Director decided to continue the combination of the dutie of Chairman and Chief Executive Officer and to entrut Mr. Jean-Paul Agon with uch dutie once again, conidering that thi method of General Management wa the bet uited to L Oréal pecificitie. Thi deciion wa made, following the recommendation by the Appointment and Governance Committee, in the bet interet of the Company and with the contant concern that the mode of governance choen will make it poible to optimie the Group financial and economic performance and to create the mot favourable condition for it long-term development. The Board of Director indeed conider that the quality and longtanding nature of thi performance cannot be diociated from a clear viion of the Group future propect, directly hared with Board member. Thi viion i that of a Chairman and Chief Executive Officer who, after pending hi entire career in the Group, ha precie operational knowledge of the commercial entitie and the buine line. The buine ector in which L Oréal operate i one in which deciion have to be taken quickly in a highly competitive international environment, and the beauty profeion alo require trong, coherent communication. In addition, thi method of organiation of the General Management i appropriate for L Oréal particular hareholder tructure: table, loyal hareholder with, in particular, two majority hareholder, highly committed to the Group long-term development The balance of power on the Board The Board of Director enure that it i in a poition to fully perform it role o that the balance of power i guaranteed. Harmoniou compoition of the Board of Director The balance of power on the Board of Director principally ret on it coherent and harmoniou compoition and on the qualitie of it Director. Serving alongide the Chairman and Chief Executive Officer are five Director appointed by the majority hareholder, who include the two Vice-Chairmen of the Board, even independent Director who are in the majority on the Board (even out of thirteen Board member, excluding the employee Director) and two Director repreenting the employee. All of them are trongly committed and vigilant. The Director diverity and complementarity of experience and expertie (entrepreneurial, financial, indutrial, digital, etc.) enable them to undertand quickly and thoroughly the development iue facing the L Oréal Group, the leader on a highly competitive globalied cometic market where there are very ubtantial requirement to innovate and adapt. The balance between the Director who have longtanding knowledge and thoe who have been appointed more recently make it poible to combine new viewpoint with conitency of deciion over the long-term. The relationhip organied between the Board and the General Management The General Management communicate completely tranparently with all the Director and keep them regularly informed of all apect of the Company affair and it performance. The Board ha the mean enabling it to handle with complete freedom the quetion that concern it, notably when thi involve determining the Company trategic orientation, enuring and monitoring their implementation and overeeing the good management thereof. It ha the poibility to meet with the enior manager of L Oréal at the time of preentation or eion dedicated to trategy. The Board provide the General Management with invaluable upport for trategic deciion-making through it reflection and the impetu it provide. The Chairman and Chief Executive Officer conduct the Board work in order to obtain thi adherence to trategy and to enure the Company development with complete confidence and peace of mind. It i naturally in the interet of all the hareholder but alo of all the takeholder for the Chairman and Chief Executive Officer to lead the debate and encourage dicuion on the Board of Director. The Board may meet at any time if required by current event. It may alo decide to organie meeting outide the preence of the executive officer (executive eion). Furthermore, although the General Management i veted with the broadet power to act in all circumtance in the name of the Company, tranaction for a ignificant amount or which are outide the Company normal coure of buine are ubmitted to the Board of Director. 2 45

4 Corporate governance * FRAMEWORK FOR IMPLEMENTATION OF THE CORPORATE GOVERNANCE PRINCIPLES Attentive management of conflict of interet The Director have to act in all circumtance in the interet of the Company and of all it hareholder. Every year, the Board of Director evaluate the ituation of Director with the aim of preventing conflict of interet. Each Director ha the formal obligation to report potential conflict of interet which could concern him/her and, in any event, mut abtain from participating in the correponding debate and deliberation. Active, effective pecialied Board Committee The etting-up of Board Committee, their compoition and the enlargement of their reponibilitie contribute to the good balance of power and are a point to which the Board of Director pay particular attention. All the committee include independent Director, 60% for the Audit Committee and half for the Appointment and Governance Committee and the Human Reource and Remuneration Committee. The Chairman/Chairwoman of each of thee committee i independent. Only the Strategy and Sutainable Development Committee i chaired by the Chairman and Chief Executive Officer, who doe not erve on any other committee. Two of the four committee are chaired by women, the Audit Committee and the Appointment and Governance Committee. The employee Director are active on the Board Committee. One i a member of the Human Reource and Remuneration Committee and the other a member of the Audit Committee. Thee committee are completely free to define their repective agenda. They report on their work to the Board of Director, prepare for it meeting and make propoal to the Board. Within the framework of the review of it activitie at the end of 2016, the Board once again appreciated the quality of the work and recommendation of it committee which helped it to make well-informed deciion. A regular evaluation of the organiation and modu operandi of the Board Within the framework of the annual evaluation of it modu operandi, on the bai of the bet corporate governance practice, the Director et themelve new objective every year for an improvement in the quality of their organiation. They trive to adopt an optimal method of functioning and enure that they have all the neceary trength to perform their remit uccefully, with complete freedom. Thu in 2016, the Board of Director confirmed that the current mode of governance wa well-balanced and effective. The deciion-making procee are clear and the balance of power i properly enured. A it prefer to have a direct relationhip with the Chairman and Chief Executive Officer, it doe not conider the appointment of a Lead Director to be neceary. Internal Rule that are regularly updated In order to tructure and organie it action, L Oréal Board of Director ha adopted Internal Rule reaffirming the guiding principle of it remit and the mean at it dipoal to perform it remit. The Internal Rule addre both the formal apect of the Board remit and the right and obligation of the Director (knowledge of and compliance with regulation, recommendation and obligation, repect of the Company interet, obligation of diligence and proviion of information, reerve and confidentiality, reponibility with regard to tock market ethic, etc.). It i updated by the Board in order to take account of the change in the law and regulation, good corporate governance practice and it own modu operandi, particularly within the cope of the annual evaluation of it work. The Internal Rule were lat updated on December 7 th, 2016 and February 9 th, They concern the rule providing for a minimum number of L'Oréal hare to be held by the Director, tock market ethic following the entry into application of the European Market Abue Regulation, the Audit Committee remit following the entry into force of the Ordinance of March 17 th, 2016 relative to Statutory Auditor and the introduction of meeting without the preence of the executive officer. The Internal Rule are publihed in full in thi Chapter. 46

5 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS 2.2. COMPOSITION OF THE BOARD OF DIRECTORS L'Oréal' Board of Director i made up of talented individual, from different background who have extenive experience of the buine. The compoition of the Board of L Oréal, the rule it applie to it work, it modu operandi, and the work that it ha carried out in the year, evaluated on an annual bai by the Director, a well a the deciion made, are decribed in thi chapter. The Board wihe to point out that it carrie out it work above all on a collective bai, in accordance with ethical principle and in compliance with the legal proviion, regulation and market recommendation. At December 31 t, 2016, the Board of Director comprie 15 member: the Chairman and Chief Executive Officer, Mr. Jean-Paul Agon; five Director appointed by the majority hareholder, three of whom are from the Bettencourt Meyer family, Mr. Françoie Bettencourt Meyer, Mr. Jean-Pierre Meyer, Mr. Jean-Victor Meyer and two appointed by Netlé, Jean-Paul Agon Chairman and Chief Executive Officer Mr. Peter Brabeck-Letmathe, Mr. Béatrice Guillaume-Grabich (the two Vice-Chairmen of the Board being choen from among thee member); even independent Director: Mr. Sophie Bellon, Mr. Belén Garijo, Mr. Virginie Morgon, Mr. Eileen Naughton (ince April 20 th, 2016), Mr. Charle-Henri Filippi, Mr. Xavier Fontanet and Mr. Bernard Kariel; two Director repreenting the employee, Mr. Ana Sofia Amaral and Mr. George Liarokapi. Following the appointment of Director repreenting the employee to the Board of Director, an elected repreentative of the Central Work Council of L Oréal, Mr. Thierry Magontier, alo attend Board meeting, with an adviory vote. The breakdown of L Oréal hare capital at December 31 t, 2016 i hown in chapter 6 of thi Document LIST OF CORPORATE OFFICES AND DIRECTORSHIPS HELD BY DIRECTORS AT DECEMBER 31ST, 2016 JEAN-PAUL AGON French Age: 60 With the L'Oréal Group ince 1978, after an international career a General Manager of the Conumer Product Diviion in Greece and of L'Oréal Pari in France, International Managing Director of Biotherm, General Manager of L'Oréal Germany, Executive Vice-Preident of the Aia Zone, Preident and CEO of L'Oréal USA, Jean-Paul Agon wa appointed a Deputy Chief Executive Officer of L'Oréal in 2005 and then Chief Executive Officer in April 2006 and finally Chairman and CEO in A Director of L'Oréal ince 2006, he i the Chairman of the Strategy and Sutainable Development Committee. Jean-Paul Agon i alo Chairman of the L'Oréal Corporate Foundation and a Director of Air Liquide. EXPIRY DATE OF TERM OF OFFICE 2018 Profeional addre: L Oréal 41, rue Martre Clichy Cedex Hold 556,500 L Oréal hare OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD French company Air Liquide S.A.* Director Other L Oréal Corporate Foundation Chairman of the Board of Director CORPORATE OFFICES AND DIRECTORSHIPS OVER THE LAST FIVE YEARS THAT HAVE EXPIRED Expiry date of term of office Foreign companie Galderma Pharma S.A. (Switzerland) Director 2014 L Oréal USA Inc. (United State) Director 2014 Galderma Pharma S.A. (Switzerland) Chairman of the Board of Director 2012 The Body Shop International PLC (United Kingdom) Vice-Chairman and Director 2012 * Lited company. 47

6 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS FRANÇOISE BETTENCOURT MEYERS French Age: 63 Daughter of Mr. Liliane Bettencourt and granddaughter of the founder of L'Oréal, Mr. Eugène Schueller. She ha been the Chairwoman of the family-owned holding company Téthy ince January 31t, 2012, i the Chairwoman of the Superviory Board of the invetment ubidiary Téthy Invet, Chairwoman of the Bettencourt Schueller Foundation and Honorary Preident of the Agir Pour l'audition Foundation. She ha been a Director of L'Oréal ince 1997 and a member of the Strategy and Sutainable Development Committee ince Profeional addre: Téthy 27-29, rue de Poionnier Neuilly-ur-Seine Hold 24,443 L Oréal hare in abolute ownerhip and 33,141,389 hare in bare ownerhip OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD French companie Téthy SAS Chairwoman Chairwoman of the Superviory Board Chairwoman of the Superviory Board Chairwoman Chairwoman EXPIRY DATE OF TERM OF OFFICE 2017 Téthy Invet SAS Financière l Arcouet SAS Société Immobilière Sebor SAS Other Bettencourt Schueller Foundation Chairwoman of the Board of Director Agir Pour l'audition Foundation Honorary Preident and member of the Board of Director CORPORATE OFFICES AND DIRECTORSHIPS OVER THE LAST FIVE YEARS THAT HAVE EXPIRED Expiry date of term of office French company Clymène SAS Chairwoman

7 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS PETER BRABECK-LETMATHE Autrian Age: 72 Chairman of the Board of Director of Netlé. Peter Brabeck-Letmathe ha been a Director of L'Oréal ince 1997, and i Vice-Chairman of the Board of Director. He i a member of the Strategy and Sutainable Development Committee, the Appointment and Governance Committee and the Human Reource and Remuneration Committee. 2 EXPIRY DATE OF TERM OF OFFICE 2017 Profeional addre: Netlé Avenue Netlé, 55 CH 1800 Vevey Switzerland Hold 27,500 L Oréal hare MAIN CORPORATE OFFICE HELD OUTSIDE L ORÉAL Netlé S.A. (Switzerland)* OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD Chairman of the Board Foreign companie Delta Topco Limited (Jerey) Director Exxon Mobil (USA)* Director Netlé Skin Health SA (Switzerland) Chairman Other World Economic Forum (Switzerland) Vice-Chairman Verbier Fetival Foundation (Switzerland) Vice-Chairman Hong Kong-Europe Buine Council Director Water Reource Group 2030 (WRG) Chairman CORPORATE OFFICES AND DIRECTORSHIPS OVER THE LAST FIVE YEARS THAT HAVE EXPIRED Expiry date of term of office Foreign companie Netlé Health Science S.A. à Lutry (Switzerland) Chairman of the Board of Director and 2016 Director Delta Topco Limited (Jerey) Chairman of the Board of Director 2016 Credit Suie Group (Switzerland) Vice-Chairman of the Board 2014 Director Other Table Ronde de Indutriel Européen (Belgium) Member of the Executive Committee Chairman of the Working group on External Economic Relation 2013 * Lited companie. 49

8 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS JEAN-PIERRE MEYERS French Age: 68 Director of L'Oréal ince 1987, Vice-Chairman of the Board of Director ince 1994, Jean-Pierre Meyer i a member of the Strategy and Sutainable Development Committee, the Appointment and Governance Committee and the Human Reource and Remuneration Committee. He i Vice-Chairman of the Superviory Board and Chief Executive Officer of the family-owned holding company Téthy, Chairman of the invetment ubidiary Téthy Invet, Vice-Chairman of the Bettencourt Schueller Foundation and Preident of the Agir Pour l'audition Foundation. Profeional addre: Téthy 27-29, rue de Poionnier Neuilly-ur-Seine Hold 15,332 L Oréal hare OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD French compagnie Téthy SAS Vice-Chairman of the Superviory Board Chief Executive Officer Chairman and member of the Superviory Board EXPIRY DATE OF TERM OF OFFICE 2020 Téthy Invet SAS Other Bettencourt Schueller Foundation Vice-Chairman of the Board of Director Agir Pour l'audition Foundation Chairman and member of the Board of Director CORPORATE OFFICES AND DIRECTORSHIPS OVER THE LAST FIVE YEARS THAT HAVE EXPIRED Expiry date of term of office Foreign company Netlé S.A. (Switzerland) Director 2014 French company Clymène SAS General Manager 2012 ANA SOFIA AMARAL Portuguee Age: 51 Scientific and Technical Affair Director for L'Oréal Portugal, Ana Sofia Amaral wa appointed in 2014 by L'Oréal' Intance Européenne de Dialogue ocial/european Work Council a Director repreenting the employee. She i a member of the Human Reource and Remuneration Committee. EXPIRY DATE OF TERM OF OFFICE 2018 Profeional addre: Rua Dr António Loureiro Borge, Edificio 7 Arquiparque Miraflore Linda A Velha Portugal OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD Foreign companie EMBOPAR Embalagen de Portugal SGPS S.A. Permanent repreentative of L'Oréal Portugal on the Board of Director Sociedade Ponto Verde Director CORPORATE OFFICES AND DIRECTORSHIPS OVER THE LAST FIVE YEARS THAT HAVE EXPIRED Expiry date of term of office None 50

9 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS SOPHIE BELLON French Age: 55 Chairwoman of the Board of Director at Sodexo which he joined in 1994, after a career in the United State in finance, a a Merger & Acquiition advior, then in the fahion ector a an agent for major international brand, Sophie Bellon ha been a Director of L Oréal ince 2015 and Chairwoman of the Appointment and Governance Committee and member of the Audit Committee. 2 Profeional addre: Sodexo 255 Quai de la Bataille de Stalingrad Iy-Le-Moulineaux Hold 1,043 L Oréal hare MAIN CORPORATE OFFICE HELD OUTSIDE L ORÉAL Sodexo* OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD French companie PB Holding SAS** Bellon SA** Other Pierre Bellon Foundation SWIFT (Sodexo Women International Forum for Talent) Aociation Nationale de Société par Action (ANSA) Chairwoman of the Board of Director Chairwoman Member of the Management Committee Founding Member Co-Chair Member of the Board of Director CORPORATE OFFICES AND DIRECTORSHIPS OVER THE LAST FIVE YEARS THAT HAVE EXPIRED French companie Sodexo Vice-Chair of the Board In charge of Reearch-Development-Innovation Strategy EXPIRY DATE OF TERM OF OFFICE 2019 Expiry date of term of office Bellon S.A. Chairwoman of the Management Board 2015 Alty Multiervice SAS Chairwoman of the Board of Director 2012 SORESCOM SARL Managing Director 2012 Société Françaie de Retauration et Service SAS Member of the Management Board 2012 Société Françaie de Propreté SAS Member of the Management Board 2012 Sodexo Santé Medico-Social Member of the Management Board 2012 Sodexo Entreprie SAS General Manager 2012 * Lited company. ** Sodexo group companie

10 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS CHARLES-HENRI FILIPPI French Age: 64 Chairman of Citigroup for France after having pent hi career within the HSBC group, in which he wa notably Chairman and Chief Executive Officer of HSBC France from 2004 to 2007 and Chairman of the Board of Director in 2007 and Charle-Henri Filippi ha been a Director of L'Oréal ince 2007 and i a member of the Audit Committee, the Appointment and Governance Committee and Chairman of the Human Reource and Remuneration Committee. He i alo a Director of Orange and Nexity. EXPIRY DATE OF TERM OF OFFICE 2019 Profeional addre: Citigroup France 1-5, rue Paul-Cézanne Pari Hold 2,000 L Oréal hare MAIN CORPORATE OFFICE HELD OUTSIDE L ORÉAL Citigroup France Chairman OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD French companie Nexity* Director Orange* Director Piaa S.A Director Foreign company ABERTIS * (Spain) Member of the International Adviory Board Other ADIE (Aociation pour le Droit à l Initiative Économique) Director Aociation de Ami de l Opéra-Comique Director CORPORATE OFFICES AND DIRECTORSHIPS OVER THE LAST FIVE YEARS THAT HAVE EXPIRED Expiry date of term of office French companie Femu Qui S.A. Member of the Superviory Board 2015 Nexity Non-voting member of the Board of Director 2014 Euri Member of the Superviory Board 2014 Viveri Reim S.A. Member of the Superviory Board 2012 Octagone (parent company) and Alfina (ubidiary) Chairman 2012 Other Aociation de Ami de l Opéra-Comique Chairman 2015 Centre National d Art et de Culture George Pompidou Director 2013 * Lited companie. 52

11 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS XAVIER FONTANET French Age: 68 Former Chairman and Chief Executive Officer of Eilor ( ) and former Chairman of the Board of Director of Eilor ( ), Xavier Fontanet ha been a Director of L'Oréal ince May 2002 and member of the Strategy and Sutainable Development Committee. He i alo a member of the Board of Director of Schneider Electric. 2 EXPIRY DATE OF TERM OF OFFICE 2018 Profeional addre: 41, rue Martre Clichy Cedex Hold 1,050 L Oréal hare OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD French company Schneider Electric S.A. * Other Centre de Profeion Financière (Financial Profeion Centre) Carrefour Foundation ANSA (Aociation Nationale de Société par Action) Director Director Director Permanent repreentative of Eilor International and member of the Board of Director CORPORATE OFFICES AND DIRECTORSHIPS OVER THE LAST FIVE YEARS THAT HAVE EXPIRED Expiry date of term of office French companie Eilor International S.A. Director 2016 Crédit Agricole S.A. Director 2012 Eilor International S.A Chairman of the Board of Director 2012 * Lited companie. BELÉN GARIJO Spanih Age:56 Chairwoman and Chief Executive Officer of Merck Healthcare, a company bringing together all the pharmaceutical buinee of the German Merck group and a member of thi group' Executive Committee, Belén Garijo ha been a Director of L'Oréal ince 2014 and i a member of the Human Reource and Remuneration Committee. She i alo a Director of BBVA (Spain). EXPIRY DATE OF TERM OF OFFICE 2018 Profeional addre: Merck KGAA Frankfurter STR 250 Potcode F131/ Darmtadt Germany Hold 1,000 L Oréal hare MAIN CORPORATE OFFICE HELD OUTSIDE L'ORÉAL Merck Healthcare (Germany) Chairwoman and Chief Executive Officer OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD Foreign company BBVA* (Spain) Director CORPORATE OFFICES AND DIRECTORSHIPS OVER THE LAST FIVE YEARS THAT HAVE EXPIRED None * Lited company. 53

12 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS BÉATRICE GUILLAUME-GRABISCH French Age: 52 General Manager of Netlé Germany, Béatrice Guillaume-Grabich ha been a Director of L'Oréal ince April 2016 and i a member of the Audit Committee. EXPIRY DATE OF TERM OF OFFICE 2020 Profeional addre: Netlé AG Lyoner Straße Frankfurt am Main Germany Hold 1,000 L Oréal hare MAIN CORPORATE OFFICE HELD OUTSIDE L'ORÉAL Netlé Germany General Manager OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD Foreign company MarkenVerband/Brand producer aociation (Germany) Member of the Management Board CORPORATE OFFICES AND DIRECTORSHIP OVER THE LAST FIVE YEARS THAT HAVE EXPIRED Expiry date of term of office Foreign company Henkel (Germany) Director 2016 BERNARD KASRIEL French Age: 70 A former Chief Executive Officer of Lafarge, Bernard Kariel ha been a Director of L'Oréal ince 2004, and i a member of the Strategy and Sutainable Development Committee. He i alo a Director of Arkema and Nucor (United State). EXPIRY DATE OF TERM OF OFFICE 2020 Profeional addre: 1, rue Saint-Jame Neuilly-ur-Seine Hold 1,525 L Oréal hare OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD French company Arkema S.A.* Director Foreign company Nucor (United State)* Director CORPORATE OFFICES AND DIRECTORSHIP OVER THE LAST FIVE YEARS THAT HAVE EXPIRED None * Lited companie. Expiry date of term of office 54

13 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS GEORGES LIAROKAPIS French and Greek Age: 54 Coordinator of Sutainability for L'Oréal Wetern Europe, George Liarokapi wa appointed in 2014 by the CFE-CGC a a Director repreenting the employee. He i a member of the Audit Committee. 2 EXPIRY DATE OF TERM OF OFFICE 2018 Profeional addre: 41, rue Martre Clichy Cedex OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD None CORPORATE OFFICES AND DIRECTORSHIPS OVER THE LAST FIVE YEARS THAT HAVE EXPIRED None JEAN-VICTOR MEYERS French Age: 30 A member of the Superviory Board of the family-owned holding company Téthy ince January 2011, member of the Superviory Committee of the invetment ubidiary Téthy Invet and Chairman of Exemplaire, Jean-Victor Meyer ha been a Director of L'Oréal ince 2012 and i a member of the Audit Committee. EXPIRY DATE OF TERM OF OFFICE 2020 Profeional addre: Téthy 27-29, rue de Poionnier Neuilly-ur-Seine Hold 1,500 L Oréal hare OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD French companie Téthy SAS Member of the Superviory Board Téthy Invet SAS Member of the Superviory Board Exemplaire SAS Chairman CORPORATE OFFICES AND DIRECTORSHIPS OVER THE LAST FIVE YEARS THAT HAVE EXPIRED None 55

14 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS VIRGINIE MORGON French Age: 47 Deputy Chief Executive Officer of Eurazeo which he joined in 2008 after working for 16 year at Lazard, and Preident and CEO of Eurazeo North America Inc. (USA), Virginie Morgon ha been a Director of L'Oréal ince 2013 and i Chairwoman of the Audit Committee. She i Vice-Chairwoman of the Board of Director of Moncler SpA, Chairwoman of the Superviory Board of Amodee Holding and Eurazeo PME, Director of Abaic (Deigual), member of the Superviory Board of Grandir (Le Petit Chaperon Rouge) and of Vivendi. She i alo Vice-Preident of the Pari Committee of Human Right Watch. EXPIRY DATE OF TERM OF OFFICE 2017 Profeional addre: 1, rue George Berger Pari Hold 1,000 L Oréal hare MAIN CORPORATE OFFICE HELD OUTSIDE L ORÉAL Eurazeo* E Deputy CEO and Member of the Executive Board OTHER CORPORATE OFFICES AND DIRECTORSHIPS HELD French companie Eurazeo PME E Chairwoman of the Superviory Board Grandir E (Le Petit Chaperon Rouge invetment) Member of the Superviory Board Amodee Holding E Chairwoman of the Superviory Board Legendre Holding 43 E (People Doc invetment) Chairwoman Legendre Holding 44 E (Fintrax invetment) Chairwoman Legendre Holding 47 E (Le Petit Chaperon Rouge invetment) Chairwoman Vivendi* Member of the Superviory Board Foreign companie Abaic SL (Spain) E Director Eurazeo North America Inc. (USA) E Preident Moncler SpA (Italy)* E Vice-Chairwoman of the Board of Director Other Human Right Watch Vice-Preident of Pari Committee CORPORATE OFFICES AND DIRECTORSHIPS OVER THE LAST FIVE YEARS THAT HAVE EXPIRED Expiry date of term of office French companie AccorHotel Director 2016 Eli Member of the Superviory Board 2016 Holdeli Member of the Board of Director 2016 LH APCOA Chief Executive Officer 2016 Legendre Holding 45 Chairwoman 2016 Legendre Holding 46 Chairwoman 2016 Eli Chairwoman of the Superviory Board 2015 Holdeli Chairwoman of the Board of Director 2014 Legendre Holding 33 Chairwoman 2014 Edenred Director 2013 OFI Private Equity Capital (now Eurazeo PME capital) Chairwoman of the Superviory Board 2012 Foreign companie APCOA group GmbH (Germany) Managing Director 2016 Broletto 1 Srl (Italy) Chairwoman of the Board of Director 2015 Euraleo Srl (Italy) Managing Director 2015 APCOA Parking AG (Germany) Chairwoman of the Superviory Board 2014 APCOA Parking Holding GmbH (Germany) Chairwoman of the Adviory Board 2014 Interco SpA (Italy) Managing Director 2014 Sportwear Indutrie Srl (Italy) Director 2013 Other Women Forum (WEFCOS) Member of the Board of Director 2014 * E Lited companie. Subidiarie or invetment managed by Eurazeo (whether alone or in concert). 56

15 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS EILEEN NAUGHTON American Age: 59 Vice-Preident, People Operation at Google which he joined in 2006 after holding variou reponibilitie with Time Warner, including the poition of Preident of Time group from 2002 to 2005, Eileen Naughton ha been a Director of L'Oréal ince April 20th, EXPIRY DATE OF TERM OF OFFICE 2020 Profeional addre: Google Inc 1600 Amphitheatre Parkway, Mountain View, CA 94043, USA Hold 885 L Oréal hare in the form of ADR (American Depoitary Receipt) MAIN CORPORATE OFFICE HELD OUTSIDE L ORÉAL Google Inc.* Vice-Preident, People Operation CORPORATE OFFICES AND DIRECTORSHIPS OVER THE LAST FIVE YEARS THAT HAVE EXPIRED Expiry date of term of office Foreign companie Google UK & Ireland Vice-Preident Managing Director 2016 XO group (USA) Director 2014 * Lited company. 57

16 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS TABLE SHOWING THE COMPOSITION OF THE BOARD AT DECEMBER 31ST, 2016 Independence Expiry Date Of Current Tenure Strategy & Sutainable Development Audit Board Committee HR & Remuneration Appointment & Governance Mr. Jean-Paul AGON 2018 Mr. Françoie BETTENCOURT MEYERS 2017 Mr. Peter BRABECK-LETMATHE 2017 Mr. Jean-Pierre MEYERS 2020 Mr. Ana Sofia AMARAL Employee Director 2018 Mr. Sophie BELLON 2019 Mr. Charle-Henri FILIPPI 2019 Mr. Xavier FONTANET 2018 Mr. Belén GARIJO 2018 Mr. Béatrice GUILLAUME-GRABISCH 2020 Mr. Bernard KASRIEL 2020 Mr. George LIAROKAPIS Employee Director 2018 Mr. Jean-Victor MEYERS 2020 Mr. Virginie MORGON 2017 Mr. Eileen NAUGHTON 2020 Independence within the meaning of the criteria of the AFEP-MEDEF Code a aeed by the Board of Director. Committee Chairman/Chairwoman Committee Member % Average age of the Director at 12/31/2016 independent Director female Director (excluding the Director repreenting the employee) 58

17 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS Change in 2016 CHANGES IN CORPORATE OFFICES AND DIRECTORSHIPS OF THE DIRECTORS Renewal of the tenure a Director of Mr. Jean-Pierre Meyer, Mr. Bernard Kariel and Mr. Jean-Victor Meyer The Annual General Meeting held on April 20 th, 2016 renewed the tenure of Mr. Jean-Pierre Meyer, Mr. Bernard Kariel and Mr. Jean-Victor Meyer a Director for four year. Reignation of Mr. Loui Schweitzer a Director Appointed a a Director in 2005, Mr. Loui Schweitzer tendered hi reignation to the Board of Director, in accordance with the Internal Rule of the Board of Director, a the 2016 Annual General Meeting wa that following hi 73 rd birthday. Tenure a Director expiring in 2016: Mr. Chritiane Kuehne The tenure of Mr. Chritiane Kuehne, Head of the Food Strategic Buine Unit at Netlé until September 2015, expired at the end of the Annual General Meeting on April 20 th, Appointment of Mr. Béatrice Guillaume-Grabich and Mr. Eileen Naughton a Director The Annual General Meeting held on April 20 th, 2016 appointed Mr. Béatrice Guillaume-Grabich, General Manager of Netlé Germany and Mr. Eileen Naughton, Vice-Preident Managing Director Google UK & Ireland, for a four-year tenure. Change cheduled in 2017 Renewal of the tenure a Director of Mr. Françoie Bettencourt Meyer Mr. Françoie Bettencourt Meyer i the daughter of Mr. Liliane Bettencourt, and granddaughter of the founder of L'Oréal, Eugène Schueller. She ha been a Director of L'Oréal ince Mr. Françoie Bettencourt Meyer ha been the Chairwoman of the family-owned holding company Téthy ince January 31 t, 2012, i the Chairwoman of the Superviory Board of the invetment ubidiary Téthy Invet, Chairwoman of the Bettencourt Schueller Foundation and Honorary Preident of the Agir Pour l'audition Foundation. Mr. Françoie Bettencourt Meyer ha in-depth knowledge of the Company, of which he i extremely fond. She actively contribute to the quality of the Board trategic debate. She ha been a member of the Strategy and Sutainable Development Committee ince She participated in all Board meeting and meeting of that committee in Renewal of the tenure a Director of Mr. Virginie Morgon Mr. Virginie Morgon ha been a Director of L Oréal ince 2013, and i the Chairwoman of the Audit Committee. Mr. Virginie Morgon i Deputy CEO of Eurazeo which he joined in 2008, after working for ixteen year with Lazard, and Preident and CEO of Eurazeo North America. Since January 2008, he ha been a member of the Executive Board of Eurazeo. She i alo a member of the Superviory Board of Vivendi and Vice-Preident of the Pari Committee of Human Right Watch. Highly committed, exerciing freedom of judgment, he provide the Board with her recognied financial expertie and her dynamic and entrepreneurial viion of buine. Mr. Virginie Morgon participated in all the meeting of the Board and the Audit Committee in End of Mr. Peter Brabeck-Letmathe tenure The tenure of Mr. Peter Brabeck-Letmathe expire at the cloe of the Annual General Meeting on April 20 th, Mr. Peter Brabeck-Letmathe ha informed the Board of Director that he doe not want hi tenure to be renewed after the end of hi office a Chairman of the Board of Director of Netlé in April At the Board meeting on February 9 th, 2017, Mr. Jean-Paul Agon extended the Board incere thank to Mr. Peter Brabeck-Letmathe for hi active contribution to it work over the lat twenty year: A viionary but alo pragmatic, Peter Brabeck-Letmathe ha made an exceptional contribution to our Board. Hi unfailing upport, hi trategic input and hi commitment to trict governance tandard have been very preciou to the Board. Hi intimate conumer knowledge, hi multicultural approach and hi great intellectual rigour have been real aet in helping L Oréal to tackle the major challenge of the lat two decade. Appointment of a new Director in 2017: Mr. Paul Bulcke Following the propoal made by Netlé and on the recommendation of the Appointment and Governance Committee, the Board of Director ubmit the appointment of Mr. Paul Bulcke a Director to the Annual General Meeting for a tenure of four year. Mr. Paul Bulcke, Belgian, aged 62, who ha been with Netlé ince 1979, purued an international career in Latin America and then in Europe. He wa appointed a Executive Vice-Preident of Netlé SA in 2004 in charge of the America Diviion. He wa Chief Executive Officer of Netlé SA. from 2008 to 2016 and the Board of Director of Netlé ha propoed to appoint Mr. Paul Bulcke a Preident of the Board of Director of Netlé S.A. (Annual General Meeting of 7 April 2017). He i alo a Director of Roche Holding in Switzerland. Mr. Paul Bulcke wa a Director of L Oréal and a member of the Strategy and Sutainable Development Committee from 2012 until July He reigned on July 2014 a the part of the reduction from 3 to 2 of the number of Netlé repreentative on the Board of Director of L'Oréal (ee paragraph of the Regitration Document). 2 59

18 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS The appointment of Mr. Paul Bulcke a Director for a tenure of four year i ubmitted to the Annual General Meeting. On the bai of thee propoal, the number of independent Director would remain unchanged, repreenting 53.8% of the Board of Director at 12/31/2016, and the percentage repreentation of women on the Board would alo remain unchanged, at 46% THE GUIDING PRINCIPLES Experienced Director who complement one another L Oréal Director come from different background; they complement one another due to their different profeional experience, their kill and their nationalitie. They have good knowledge of the Company. The Director are preent, active and trongly committed. Thee are all aet which contribute to the quality of the Board deliberation in the context of the deciion that it i called on to make Two Director repreenting the employee ince July 2014 Two Director repreenting the employee are member of the Board of Director and of two of it committee. With the particular looking gla related to their wide knowledge of the Company, they provide further inight that enriche the quality of the Board debate and deciion and thoe of the committee of which they are member. Mr. Ana Sofia Amaral wa appointed by the Intance Européenne de Dialogue Social/European Work Council (IEDS/EWC). She hold the dutie of Scientific and Technical Affair Director for L Oréal Portugal. Mr. George Liarokapi wa appointed by the CFE-CGC, the mot repreentative trade union in L Oréal for France. He hold the dutie of Coordinator of Sutainability for L Oréal Wetern Europe. They both reigned from their dutie a employee repreentative before joining the Board of Director. A oon a they took up their office, they benefited from a training programme provided by an external body concerning, in particular, the role and functioning of the Board of Director, the right and obligation of Director and their liability. Like any new Director, the Director repreenting the employee followed an induction coure intended to perfect their knowledge of the Company organiation and activitie, which involved in particular individual interview with the Group main enior manager. After an integration period of one year to allow them to know the Board modu operandi and the main challenge faced by the Company, Mr. Ana Sofia Amaral and Mr. George Liarokapi joined the Human Reource and Remuneration Committee and the Audit Committee repectively after the Annual General Meeting on April 22 nd, Their tenure cover a period of four year and they receive attendance fee according to the ame allocation rule a the other Director. The component of their remuneration a employee are not publihed Gender equity on the Board of Director At December 31 t, 2016, out of a total of 13 Director (excluding the 2 Director repreenting the employee), 6 women are member of L Oréal Board of Director, repreenting a proportion of 46%. In addition, 2 committee out of 4 are chaired by a woman: the Audit Committee and the Appointment and Governance Committee Independent Director All the Director of L Oréal have freedom of judgment The balance of power on the Board i enured through a very precie definition and haring of the tak to be carried out by everyone. All the Director receive information on an ongoing bai and have uitable mean for the performance of their dutie. They all have a duty of acting with due care and attention and participate, in total independence, in the deciion and work of the Board and, where applicable, it committee. They are all required to comply with the rule in force with regard to conflict of interet. The Director who qualify a independent in light of the criteria defined by the AFEP-MEDEF Code A member of the Board i conidered a independent when he/he doe not maintain any relationhip of any kind with the Company, it Group or it Management which could interfere with hi/her freedom of judgement. With thi in mind, the criteria which guide the Board in determining whether a member can qualify a independent are the following criteria pecified by the AFEP-MEDEF Code: the member mut not be an employee or executive officer of the Company, employee or an executive officer or Director of a company that i conolidated by the Company, an employee, executive officer or Director of it parent company or of a company conolidated by thi parent company and mut not have held any of thee poition during the previou five year; the member mut not be an executive officer of a company in which the Company directly or indirectly hold the office of Director or in which an employee deignated a uch or an executive officer of the Company (either currently or having performed uch dutie within the lat five year) hold an office a Director; 60

19 Corporate governance * COMPOSITION OF THE BOARD OF DIRECTORS the member mut not be a cutomer, upplier, invetment banker or financial banker which i important for the Company or it Group, or for which the Company or it Group repreent a ignificant proportion of activitie; the member mut not have any cloe family link with a corporate officer; the member mut not have been the Company auditor over the five previou year; the member mut not have been a Director of the Company for more than twelve year. At it meeting on December 7 th, 2016, the Board of Director examined, on a cae-by-cae bai, the ituation of each of the member concerned in light of the independence criteria provided for in the AFEP-MEDEF Code. Not an employee or executive officer No crodirectorhip No buine relationhip No family link Not a tatutory auditory Not a Director for Claification over 12 year adopted Mr. Sophie Bellon Ye Ye Ye Ye Ye Ye Independent Mr. Belén Garijo Ye Ye Ye Ye Ye Ye Independent Mr. Virginie Morgon Ye Ye Ye Ye Ye Ye Independent Mr. Charle Henri Filippi Ye Ye Ye (1) Ye Ye Ye Independent Mr. Xavier Fontanet Ye Ye Ye Ye Ye No (2) Independent Mr. Bernard Kariel Ye Ye Ye Ye Ye No (2) Independent Mr. Eileen Naughton Ye Ye Ye (1) Ye Ye Ye Independent 2 (1) On the bai of the work carried out by the Appointment and Governance Committee, the Board of Director analyed on December 7 th, 2016 a it doe every year, the financial flow that took place during the financial year between L Oréal and the companie in which the Director who qualify a independent alo hold an office or perform dutie. Particular attention wa paid to the ituation of Mr. Charle-Henri Filippi and Mr. Eileen Naughton. Concerning the relation between L Oréal and Citigroup France of which Mr. Charle-Henri Filippi i the Chairman, the Board noted that they were not ignificant in term of their volume. Furthermore, the poibility for L Oréal to ue a panel of bank, in a competitive context, rule out all relationhip of dependence. Furthermore, Mr. Charle-Henri Filippi i aware that he i under the obligation of notifying the L Oréal Board of Director of all ituation contituting a conflict of interet, even if uch conflict i only potential, and that he mut refrain from participating in the correponding deliberation and deciion. Furthermore, at Citigroup, he will not take part in the work that could concern L Oréal. The buine relation with Citigroup France are not therefore liable to affect Mr. Charle-Henri Filippi independence. Concerning the relation between L Oréal and Google of which Mr. Eileen Naughton i a enior management executive, the Board conider, after reviewing them, that they are not ignificant, either in term of total purchae by the L Oréal Group or in term of it total media purchae. Google i a ignificant digital provider for L Oréal, without however having any excluive relationhip. Furthermore, in light of the Human Reource poition he hold at Google, Mr. Eileen Naughton doe not have any deciion-making power with regard to the contract that etablih the buine relationhip with L Oréal. Finally, Mr. Naughton ha undertaken not to take part in any dicuion or deciion that could concern the buine relationhip between either of the companie. The buine relation with Google are not therefore liable to affect Mr. Naughton independence. (2) On the bai of the work conducted by the Appointment and Governance Committee, the Board of Director carefully examined the ituation of Mr. Xavier Fontanet and Mr. Bernard Kariel whoe tenure have exceeded 12 year. The Board of Director took into account the objectivene that Mr. Xavier Fontanet and Mr. Bernard Kariel have alway hown at the time of the debate and deciion of the Board and their ability to expre their conviction and make a balanced judgment in all circumtance with regard to the General Management. Their experience at the very top level a enior management executive of large international group give them a perpective and authority enabling them both to challenge and upport General Management in defining the Group trategy. Their good knowledge of the Group add to their well-informed, critical judgment capacity. Furthermore, the Board conidered that the peronality, leaderhip and commitment hown by Mr. Xavier Fontanet, recognied by L Oréal hareholder, 98.28% of whom approved the renewal of hi tenure on April 17th, 2014, were all guarantee of hi independent-mindedne. It alo conidered that the freedom of peech, cloe involvement and critical mind of Mr. Bernard Kariel, whoe tenure wa renewed by 98.49% of the hareholder on April 20th, 2016, are all qualitie proving hi independence. Finally, the Board conidered that the experience of Mr. Xavier Fontanet and Mr. Bernard Kariel on the Board are eential in light of the large number of recent appointment of new independent Director and the integration of the Director repreenting the employee. Thee qualitie, combined with a good undertanding of the challenge facing the Company, contribute to a great extent to the continuity of the Board debate and help to put it deciion into perpective. In light of thee element of aement concretely analyed with great care, the Board of Director conidered that the 12-year criterion, defined by the AFEP-MEDEF Code in addition to five other criteria, wa not ufficient in and of itelf for Mr. Xavier Fontanet and Mr. Bernard Kariel to automatically loe the tatu of independent Director. 61