Three members of the Human Resources and Remuneration Committee are also members of the Audit Committee, which reviews the Group's financial and non-financial results and the Sustainability Report.
This information contributes to the assessment of the non-financial and qualitative portion of annual variable remuneration.
The Committee can also carry out a more in-depth evaluation of the Company's performance by contacting the Company's main senior executives, after having informed General Management.
This information enriches their vision of the implementation of the strategy decided by the Board and performance of the Company and its executive corporate officer.
Recommendations are made on these bases to the Board of Directors, which then decides on the executive corporate officer's remuneration collectively, in accordance with the remuneration policy approved by the General Meeting.
The organisation of the work of the Committee on the remuneration of the executive corporate officer is shown in the table below.
The Human Resources and Remuneration Committee carefully analyses the law and reports concerning executive remuneration, notably the report of the French Financial Markets Authority (AMF) on corporate governance and the remuneration of executives of listed companies, and the report of the French High Committee on Corporate Governance (Haut Comité de Gouvernement d'Entreprise).
It is mindful of the observations and requests of investors and strives to accommodate them while preserving consistency in the remuneration policy adopted by the Board and subject to constraints relating to the confidentiality of certain information.
In accordance with Article L. 22-10-8 of the French Commercial Code, the Board of Directors can, in exceptional circumstances, deviate from the application of the remuneration policy, provided that the exemption applied is temporary and in line with the best interests of the Company or necessary to ensure the Company's continuity or viability. In this case, the Board of Directors would be able to grant an element of remuneration not provided for in the remuneration policy previously approved by the General Meeting, but necessary in view of these exceptional circumstances.
The Board of Directors also has discretionary powers to adapt the remuneration policy if unforeseeable or exceptional circumstances so justify. For example, the recruitment of a new corporate officer under unforeseen conditions might require the temporary adaptation of certain existing remuneration components or the proposal of new ones. In this case, the Board of Directors would take into account the experience, expertise and remuneration of the corporate officer concerned in order to propose a sign-on bonus that may not exceed the amount of the benefits he or she would have had to relinquish by leaving his or her previous role.
It might also be necessary to amend, subject to compliance with the limits determined in the remuneration policy, the performance conditions governing the vesting of some or all of the existing remuneration components in the event of exceptional circumstances resulting from a significant change in the Group's scope following a merger or sale, the acquisition or creation of a significant new business activity or the elimination of a significant business activity, a change in accounting policy or a major event affecting the markets and/ or L'Oréal's major competitors.
The Board of Directors makes its decisions on the recommendation of the Human Resources and Remuneration Committee and, when necessary, after obtaining the opinion of an independent consultancy firm.
It is specified that any such derogation may only be temporary, pending approval of the amended remuneration policy by the subsequent General Meeting, and would be duly documented.
To the extent permitted by law, in the event of an accounting fraud where the executive corporate officer was aware of the situation and the financial statements had to be restated, on the recommendation of the Human Resources and Remuneration Committee, the Board of Directors would reserve the right to (i) reduce or cancel any unvested performance shares or amounts of annual variable remuneration due, (ii) demand, within a period of three years, repayment of all or some of any annual variable remuneration paid, and/or (iii) seek damages.
