Loreal 2011 Annual Report Download - page 217

215REGISTRATION DOCUMENT − L’ORÉAL 2011
Stock market information andsharecapital
7
Shareholder structure
the beneficiary works, in a concern for equity on an international
scale, these grants are made every year, every two years or every
three years.
Since2009, the plans are proposed by the General Management
to the Board of Directors after publication of the financial
statements for the previous financial year, in accordance with
the AFEP-MEDEF recommendation.
The General Management and the Board of Directors stress the
importance that is given in this way to bringing together the
interests of the beneficiaries of stock options and conditional
grants of shares and those of the shareholders themselves.
The employees and corporate officers who are the beneficiaries
share with the shareholders the same confidence in the strong
steady growth of the Company with a medium and long-term
vision. This is why stock options are granted for a period of 10years
including a 5-year lock-up period, and conditional grants of
shares for a period of 4years followed by a 2-year waiting period
for France during which these shares cannot be sold.
In all, nearly 2,800employees ( i.e. approximately 14% of the
senior managers throughout the world) benefit from at least one
currently existing stock option plan or plan for the conditional
grant of shares.
The Board of Directors draws the attention of the beneficiaries of
stock options and conditional grants of shares to the regulations
in force concerning persons holding “inside ” information.
The beneficiaries of stock options and conditional grants of
shares undertake to read the Stock Market Code of Ethics which
is attached to the regulations for the stock option plans or the
plans for the conditional grant of shares from which they benefit
and to comply with the provisions thereof.
7.3.8. Stock option plans
topurchase or subscribe
to L’Oréal p arent company
shares
7.3.8.1. Authorisation of the Ordinary
andExtraordinary General Meeting
of April22nd, 2011
The Ordinary and Extraordinary General Meeting of April22nd, 2011
gave the Board of Directors the authorisation to grant options
to purchase existing shares of the Company or to subscribe for
new shares to employees or certain corporate officers of the
Company and its French or foreign affiliates under the conditions
of ArticleL.225-180 of the French Commercial Code.
This authorisation was granted for a period of twenty-six months.
The total number of options that may be granted may not grant
entitlement to subscribe for or purchase a total number of shares
representing more than 0.6% of the share capital on the date of
the Board of Directors’ decision.
The purchase price or subscription price for the shares is set
by the Board of Directors, without any discount, on the day the
options are granted.
The stock options must be exercised within a maximum time
period of ten years as from the date on which they are granted.
The mechanism for the allocation of stock options complies with
the AFEP-MEDEF Code of Corporate Governance of April2010
and in particular:
♦any grants to the corporate officers will be decided by the
Board of Directors after assessment of their performance;
♦exercise by the corporate officers of all the options will be
linked to performance conditions to be met that are set by
the Board;
♦the corporate officers will be obliged to retain a certain
number of the shares resulting from the exercise of the stock
options in registered form until the termination of their duties.
This has been set by the Board of Directors at a number of
shares corresponding to 50% of the balance of the shares
resulting from the exercise of the stock options. The methods of
calculation of this balance are described in paragraph2.3.3
page 56 ;
♦a corporate officer may not be granted stock options at the
time of his departure.
Furthermore, the value of the stock options granted to the
corporate officers during a given financial year together with the
value of the free shares granted to the corporate officers during
the same financial year may not represent over 10% of the total
value of all the stock options allocated and free shares granted
during such financial year. The value of the stock options and the
value of the shares mean the estimated fair value used to prepare
the Company’s consolidated financial statements under IFRS.
7.3.8.2. Stock options granted in2011
(ShareSubscription Option Plan
ofApril22nd, 2011)
The share capital as of April 22nd, 2011 consisted of
601,788,112shares, which offered the possibility to distribute
approximately 3,610,728options within the scope of the
authorisation of April22nd, 2011.
At its meeting on April22nd, 2011, the Board of Directors allocated
1,470,000share subscription options at a unit price of €83 .19,
namely a price equal to 100% of the average of the closing share
prices on the NYSE-Euronext Paris market for the twenty trading
days before the date of their allocation to 89beneficiaries. The fair
unit value of these options amounts to €18.58.
It was decided to make the exercise of these options subject to
achievement of performance conditions taking into consideration:
♦for half the amount, growth in cosmetics sales as compared
to a panel of competitors;
♦and for the other half growth in the Group’s consolidated
operating profit;
calculated at the end of the lock-up period on the basis of the
arithmetical mean for the four full financial years from 2012 to 2015.
The number of stock options that may be exercised will depend on
the level of performance achieved. For reasons of confidentiality,
the various levels of performance required were communicated
precisely to the beneficiaries but may not be made public.