Organizational Strategy - Sustainable Development - L'Oréal

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5 L’oréaL - GrI DaTa SHEETS 2011 approximately 450 senior managers are eligible for this plan, subject to them meeting the conditions on completion of their career in the company. access to the “Pension Guarantee for Members of the Management Committee” has been closed since 31 December 2000. This old system opened the right to payment to the retired beneficiary, upon completion of his/her career in the company, of an annuity and, after his/her death, of payment to the spouse and/or former spouse(s) of a reversionary annuity and of an orphan’s annuity, subject to certain conditions being met. The basis for calculating the retirement Guarantee is the average of the salaries of the three best years from the seven calendar years prior to the end of the career with L’oréal. The retirement Guarantee is calculated according to the beneficiary’s seniority up to a limit of 40 years, knowing that on the date the plan closed, 31 December 2000, the required minimum seniority was 10 years. The retirement Guarantee may not exceed 40% of the calculation basis of the retirement Guarantee, up-rated by ½% per year during the first 20 years then 1% per year during the following 20 years, nor exceed the average of the fixed part of the salary during the three years taken into consideration in this base. approximately 120 active or retired managers are affected by this plan, subject to, for those still working, that they meet the conditions upon completing their career in the company. DeFINeD CONTRIbUTIONs PLaN In September 2003, L’oréal introduced a “Defined Contributions retirement Plan”. a new agreement was signed in December 2007 to come into force on 1 January 2008, and also an amendment on 1 January 2009. all executives and salesmen affiliated to the CIPC-r are beneficiaries under the plan. The contributions basis, which is unchanged, is between 1 and 6 times the Social Security ceiling, with a contribution, from 1 January 2008, of 4% shared between the company and the employee. This plan opens the right to the payment to the retired beneficiary, after liquidating his/her pension rights with the Social Security retirement Plan, to an annuity and also, after his/her death to a reversionary annuity to the spouse and/or former spouse(s). The annuity is calculated according to the capital constituted by the contributions paid in and the accumulated financial product at the end of the employee’s career. The employer’s commitment is limited to the payment of the planned contributions. In euros 31.12.2009 31.12.2010 31.12.2011 Number of members 11,806 11,967 12,594 Total net contributions 7,497,479 8,027,527 8,742,485 CaReeR eND aRRaNGeMeNTs L’oréal has paid great attention to its employees’ retirement conditions and the career end arrangements in force for many years have been confirmed and improved as part of the agreement of the Employment of Seniors, signed on 3 December 2009, which provides, in particular, for the introduction of a Senior Time Savings account. CaReeR eND HOLIDaY (CFC) This career end arrangement consists of allowing employees to stop work but during this period, they remain L’oréal employees and benefit from holding on to their salary (up to a limit of €9,280 a month) along with dividends, profit sharing and paid holidays. THe “TaLON” This device, linked to the 35-hour agreement and the Time Saving account (CET), allows an employee who has saved three days holiday in the CET per year every year since 2001, to benefit from an early end to work of a minimum of 3 months (6 months for sales staff) which may be added to the CFC. seVeRaNCe PaY UPON ReTIReMeNT (IDR) a new L’oréal scale was introduced by collective agreement as from 2011, more favourable than the Chemical Industries National Collective agreement. Thus, an employee may benefit, at the point where he/she retires, from an IDr going from 2 months salary for 5 years service to 8 months salary for 40 years service. To bring forward his/her early end to work, he/she may opt to convert the IDr into time or choose to have it paid, which occurs at the moment of leaving. 31.12.2009 31.12.2010 31.12.2011 M F Total M F Total M F Total Career end leave 77 109 186 49 102 151 51 127 178 Involuntary retirees 37 25 5 Voluntary retirees 187 234 162 (Source: Hr Statistics France 2009, 2010 and 2011). 8/14
5 L’oréaL - GrI DaTa SHEETS 2011 These commitments are subject to partial external financial cover, the objective of which is to progressively assemble funds supplied by the premiums paid to external organizations. The net commitments to funds invested in and the actuarial shortfalls are covered by a provision in the liabilities on the consolidated balance sheet. The valuation method used for calculating pension commitments and career end arrangements is the retrospective method with projection of the career end salary. These commitments take into account the employer’s contribution to the health expenses plan for pensioners. In millions of euros 31.12.2009 31.12.2010 31.12.2011 Provision in consolidated balance sheet liabilities for pension commitments 585.9 687.8 662.6 (Source: Hr Statistics France 2009, 2010 and 2011). PROVIDeNT PLaNs IN FRaNCe Besides the obligatory Capital on Death for Executives under articles 4 and 4bis of the 1947 National Collective agreement (1.5% in tranche a) and the guarantees provided by the Chemical Industries National Collective agreement, L’oréal has put in place in France, through an agreement, a Provident Plan, providing additional collective cover to its employees. all of these guarantees are based on gross remuneration up to eight times the Social Security ceiling, except for the Education annuity, which is up to four times. They are generally financed on tranches a, B and C, except for the Education annuity which is financed on a and B and the Spouse’s annuity on levels B and C. The Provident Plan guarantees: • For all employees, in the event of incapacity, 90% of their gross salary, limited to eight times the Social Security ceiling, up to this net level of charges, after the first 90 days of stoppage; • For all employees, in the event of invalidity, a fraction, according to the level of invalidity, of up to 90% of the gross remuneration limited to eight times the Social Security ceiling, up to that net level of charges; • In the event of death: • For all employees, the payment of a Capital Sum on Death, up-rated according to the family situation. Its amount is doubled in the event of accidental death. • For Executives and Executive Level Employees, the payment of a Spouse’s annuity to the surviving spouse. It provides resources approaching those for a reversionary pension which aGIrC would have paid if death had occurred at 65. • For Executives, Executive Level Employees and sales people, the payment of an Education annuity to each dependent child, according to an age-related scale. For other employees, this guarantee is optional, substituting for a part of the Capital Sum on Death. The total amount of the capital making up these guarantees may not exceed €2.3 million per event. The capital making up the Spouse’s annuity is put together as a priority; the Education annuity is calculated afterwards; finally, the remainder of the basic plan is used to make up the Capital Sum on Death, possibly supplemented by the Guaranteed Minimum Death Capital Sum. In thousands of euros 31.12.2009 31.12.2010 31.12.2011 Net provident contributions for the financial year 9,340.5 9,877.1 10,170.0 (1) (1) Estimated. GUaRaNTeeD MINIMUM CaPITaL sUM ON DeaTH on 1 December 2004, then 1 January 2005 for sales people, L’oréal put in place an additional death benefit which, where applicable, and for all employees, extends the death benefit up to three years of average earnings. This benefit is capped. The total amount of the capital at risk, making up the Spouse and Education annuities, the Capital Sum on Death and the Guaranteed Minimum Capital Sum on Death, is also capped. HeaLTHCaRe COsTs Employees of L’oréal S.a. and its French subsidiaries benefit from top-up cover plans for healthcare costs. The healthcare costs plan is compulsory for all employees of L’oréal and its subsidiaries. Their family members may also to be covered. Contributions are usually individual. The employee’s contribution is partly financed by the Company. Pensioners may continue to benefit from the healthcare costs plan with contributions from L’oréal, conditional on the duration of membership. The L’oréal pensioners plan was detailed in a retirement regulation on additional defined benefits applicable from 1 January 2008. The financial management of this plan was outsourced to insurance companies in July 2011. > For more information, see the 2011 reference Document, p.183: Provident and retirement plans and other benefits. 9/14
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