Loreal 2011 Annual Report Download - page 59

57REGISTRATION DOCUMENT − L’ORÉAL 2011
Corporate governance
2
Remuneration of the members oftheBoard ofDirectors andthecorporate of cers
2.3.4. Stock options exercised during thefinancial year
bytheexecutiveofficers
Date of the Plan
Number of share subscription (S) or purchase (A)
options exercised during the financial year Exercise price
Mr.Jean-Paul Agon 12.01.2004 20,000 (S) €55.54
Sir Lindsay Owen-Jones
(until March17th, 2011) - - -
2.3.5. Conditional shares granted
to theexecutive officers
Neither Mr.Jean- Paul Agon nor Sir Lindsay Owen-Jones are the
beneficiaries of conditional shares either in respect of 2011 or
in respect of any previous year.
2.3.6. Commitments made
withregard to
theexecutiveofficers
2.3.6.1. Commitments made with regard
tothe Chairman and Chief Executive
Officer
The Code of Corporate Governance for listed companies,
prepared jointly by the AFEP and the MEDEF, to which L’Oréal
refers, recommends that companies should put an end to the
practice of combining an employment contract with a corporate
office (point19) although it does not impose this as a mandatory
requirement. L’Oréal’s Board of Directors shares the objectives
of this recommendation which aims at avoiding the possibility
of concurrently obtaining benefits both from the employment
contract and the corporate office and at prohibiting any
interference with the possibility of removing corporate officers
adnutum. The Board of Directors has formally provided for the
methods of application of the objectives of the recommendation,
as adapted to the professional context in the L’Oréal Group.
The Board’s intention is to use the treatment set out below for
Mr.Jean-Paul Agon and, in future, for any new corporate officer
appointed who has over 15years’ length of service in the Group
at the time of appointment.
L’Oréal’s ongoing policy has been to appoint employees who
have completely succeeded in the various stages of their
careers in the Group as corporate officers. This is how Mr.Jean-
Paul Agon, then Deputy Chief Executive Officer, was appointed
as Chief Executive Officer of L’Oréal in April2006, following a
brilliant career spanning 27years within the Group.
The Board of Directors noted that if, in accordance with
the AFEP-MEDEF recommendation, Mr.Jean-Paul Agon’s
employment contract with L’Oréal was to be terminated,
Mr.Agon would lose the status he acquired as a result of
the twenty-seven years he spent working for the Group as an
employee.
The Board did not want Mr.Jean-Paul Agon, who accepted
the office of Chief Executive Officer after 27years working with
L’Oréal, to be deprived of the benefits to which he would have
continued to be entitled had he remained an employee.
The Board of Directors considered that the objective pursued
by the AFEP-MEDEF recommendation can be fully achieved by
maintaining the suspension of the employment contract and
clearly separating out the benefits related to the employment
contract on the one hand from those relating to his corporate
office on the other.
The Board of Directors has decided to eliminate all right to any
indemnity in the event of termination of the corporate office.
In the event of departure, and depending on the reasons,
Mr.Jean-Paul Agon would only be paid the dismissal indemnities,
except in the event of gross misconduct or gross negligence, or
retirement indemnities due in the event of voluntary retirement
or compulsory retirement on the Company’s initiative pursuant
to the employment contract that has been suspended. These
indemnities, which are attached solely to termination of the
employment contract and in strict application of the National
Collective Bargaining Agreement for the Chemical Industries
and the Company-level agreements applicable to all L’Oréal
senior managers, are due in any event pursuant to public policy
rules of employment law. They are not subject to any condition
other than those provided for by the National Collective
Bargaining Agreement for the Chemical Industries or the above-
mentioned Company-level agreements. The same applies to the
non-competition clause and the related financial consideration.
Remuneration in respect of the corporate office will in no event
be taken into consideration for calculation of the indemnities
due pursuant to the collective bargaining agreement and the
Company-level agreements applicable to all L’Oréal senior
managers.
Mr.Jean-Paul Agon will continue to benefit from the defined
benefit pension scheme currently applicable to the Group’s
senior managers, as described in paragraph 6.1.2.1. on
pages181
et seq .
The reference remuneration to be used to calculate all the
rights attached to the employment contract and in particular
to compute the pension under the above-mentioned defined
benefit scheme, is based on the amount of remuneration at the
date of suspension of the employment contract in2006, namely
fixed remuneration of €1,500,000 and variable remuneration of
€1,250,000.
This reference remuneration is reviewed every year by applying
the revaluation coefficient in respect of salaries and pension
contributions published by the French State pension fund.