2025 Universal Registration Document

7. Information on the Company and the share capital

7.4 Long-term Incentive Plans

7.4.1 Presentation of the stock option plans for the purchase or subscription of shares and conditional grants of shares for employees (ACAs)

Policy

For several years, L’Oréal has set up long-term incentive plans in favour of its employees and corporate oﬀicers in an international context, in the form of performance share grants. These grants serve a dual purpose:

motivate and reward those who make significant contributions to future increases in the Group’s financial and non-financial results; and
strengthen involvement and the sense of belonging of its beneficiaries by fostering long-term loyalty in a context of increased competition for talent.

Since the 2022 ACAs Plan, performance conditions have included the non-financial criteria described below. These criteria serve L’Oréal’s dual goal: economic and social excellence to create sustainable value for all.

History

Until 2009, L’Oréal’s Board of Directors exclusively granted stock subscription or purchase options to the senior executives and corporate oﬀicers whom L’Oréal wished to reward for their performance and their important role, wherever they might be geographically located. In 2009, L’Oréal’s Board of Directors enlarged its policy by introducing an ACAs vehicle.

The objective was:

to provide a long-term incentive oﬀering greater motivation to all those who received stock options only occasionally or in limited numbers; and
to reach out to a broader population of potential beneficiaries, particularly internationally, in a context of increased competition for talent.

In 2011, L’Oréal’s Board of Directors decided to make ACAs the main vehicle for its long-term incentive policy by extending the grant of shares to the main senior executives of the Group who, until then, had only received stock options. In 2012, on the recommendation of the Human Resources and Remuneration Committee, the Board of Directors went one step further in this policy and decided to replace the grant of stock options with conditional grants of shares for all beneficiaries as of the 2013 Plan.

Grant process

The plans are proposed by General Management⁽¹⁾ to the Board of Directors which decides, after receiving the opinion of the Human Resources and Remuneration Committee, the principle of these plans and the applicable conditions and rules.

In accordance with the recommendation of the AFEP-MEDEF Code, these grants are made over the same period each year: between 2009 and 2019 they were put in place following the approval of the financial statements for the previous year by the Annual General Meeting, and since 2020 they have been put in place at the end of the year, it being specified that the first year the performance conditions are assessed is the financial year following the year of the grant.

The decision with regard to each individual grant is, in every case, contingent upon the quality of the performance rendered at the time of implementation of the plan, with particular attention being paid to the main talents for the future. According to the eligibility criteria linked to the position held by the beneficiary and the size of the entity or the country in which the beneficiary works, to ensure global fairness, these grants are made every year, on a recurring basis every two to three years, or more occasionally.

General Management and the Board of Directors reiterate the importance that is given to bringing together the interests of the beneficiaries of conditional grants of shares and those of the shareholders themselves.

The beneficiaries (employees and corporate oﬀicers) and shareholders all have confidence in the Company's strong and steady growth over the medium- and long-term.

Beneficiaries of conditional share grants are informed of the regulations in force concerning persons who have inside information. The beneficiaries of conditional share grants undertake to read and comply with L’Oréal’s Stock Market Code of Ethics, as referred to in the plan rules.

Number of beneficiaries

55% of the beneficiaries of the 10 October 2025 Plan are women. Nearly 3,600 employees, representing 10% of the managers around the world, nearly 53% of whom are in international subsidiaries, benefit or have benefited from at least one conditional grants of shares plan since 2021 and were still employees of the Company on 31 December 2025.

(1) As part of its long-term incentive plans, and outside the ACA scope, in 2022, L’Oréal also set up the L’Oréal Retention Plan (LOREP) for local talent not yet eligible for the ACA share plans. The plan takes the form of a deferred bonus over three years, and does not generate any rights to shares for the beneficiaries. Historically, L’Oréal very quickly sought to involve employees in the company’s performance and results, setting up a Group profit-sharing agreement in France in 1968, followed by a Group incentive agreement in 1988, both of which have been regularly renewed. At the international level, in 2001, the Group put in place the Worldwide Profit Sharing (WPS) programme in all the Group’s subsidiaries in which employees do not benefit from statutory or contractual profit-sharing schemes.