Loreal 2011 Annual Report Download - page 32

30 REGISTRATION DOCUMENT − L’ORÉAL 2011
2Corporate governance
The Board’s composition and the way in which theBoard’s work is prepared andorganised
2.2.1.2. Corporate officers
L’Oréal’s Directors, who are extremely committed to their role,
exercise complete freedom of judgment. The composition of
the Board of Directors complies with the recommendations of
the AFEP-MEDEF Code of Corporate Governance both in terms
of independence and in terms of the proportion of male and
female Directors.
Experienced Directors who complement
oneanother
L’Oréal’s Directors come from different backgrounds, they
complement one another due to their different professional
experience, their skills and their nationalities. They have good
knowledge of the Company. The Directors are present, active
and closely involved. These are all assets which contribute to
the quality of the Board’s deliberations in the context of the
decisions that the Board is called on to make.
Representation of women and men that
complies with the provisions of the French law
ofJanuary27th,2011
Three women have seats on L’Oréal’s Board of Directors. The
Board has thus anticipated the French law of January27th, 2011
relating to the balanced representation of women and men,
which provides for a proportion of 20% of women to be reached
by2014. The Board is doing everything it can to appoint more
female Directors. In2017, its composition will comply with the law
which requires balanced represention of women and men, with
a proportion of 40% of Directors of the same gender.
Independent directors
The Directors are independently minded. They have a duty of
vigilance and exercise complete freedom of judgment. This
freedom of judgment enables them in particular to participate,
in complete independence, in the decisions or work of the Board
and its committees.
At the end of2011, the Board of L’Oréal reviewed the situation
of each of its members on a case-by-case basis, in particular
in light of the independence criteria provided for in the AFEP-
MEDEF Code.
A member of the Board is considered as independent when
he/she does not maintain any relationship of any kind with the
Company, its Group or its G eneral M anagement which may
interfere with his/her freedom of judgment.
In this spirit, the criteria which guide the Board in determining
whether a member can qualify as independent are the following
criteria specified by the AFEP-MEDEF Code:
♦the member must not be an employee or corporate officer
of the Company, an employee or Director of its parent
company or a company which it consolidates in its financial
statements, and must not have held any of these positions
during the previous five years;
♦the member must not be a corporate officer of a company
in which the Company directly or indirectly holds the office
of Director or in which an employee designated as such or a
corporate officer of the Company (either currently or having
performed such duties within the last five years) holds an
office as Director;
♦the member must not be a customer, supplier, investment
banker or financial banker:
− which is important for the Company or its group,
− or for which the Company or its group represents a
significant portion of activities;
♦the member must not have any close family links with a
corporate officer;
♦the member must not have been the Company’s auditor
over the five previous years.
The Board failed to adopt one of the criteria specified by the
AFEP-MEDEF Code as it considers that the fact that a member
has performed a term of office for over 12years does not lead to
such member losing his independent status. Indeed, the quality
of a Director is also measured on the basis of his experience, his
skills, his authority and his good knowledge of the Company,
which are all assets that make it possible to conduct a long-
term strategy.
Out of the 14members of the Board of Directors, six Directors
qualify as independent:
Mrs.Annette Roux, Mr.Charles-Henri Filippi, Mr.Xavier
Fontanet, Mr.Bernard Kasriel, Mr.Marc Ladreit de Lacharrière
and Mr.Louis Schweitzer. Mr.Ladreit de Lacharrière has been
a Director of L’Oréal for over 12years but his professional
experience and his freedom of judgment, combined with his
good knowledge of the Company, make a big contribution to
the Board’s discussions and decisions.
It is furthermore specified that a review was carried out of the
financial flows that took place in2011 between L’Oréal and the
companies in which the six independent D irectors also hold
an office. It appears from this that the nature of these business
relationships is not significant.
The proportion of independent D irectors is thus equal to
at least one-third and in line with the recommendations of
the AFEP-MEDEF Code. Under these conditions, the Board’s
tasks are carried out with the necessary objectiveness and
independence and all the Directors take account of the
interests of all the shareholders.
Responsible Directors
Handling of conflicts of interest
Within the scope of the rights and obligations of the Directors
as defined in the Internal Rules of the Board of Directors of
L’Oréal and in accordance with the AFEP-MEDEF Code, “The
Directors are under the obligation of notifying the Board of
all situations constituting a conflict of interest, even if such
conflict is only potential, and must refrain from participating in
the corresponding deliberations”. In this regard, on the basis
of the declarations made by each Director, the Board has not
identified any conflict of interests. The information pursuant to
Annex I of European Regulation No.809/2004 set out hereafter
contains additional details in this respect.