EXHIBIT 10.16

Compensation Arrangements for the Named Executive Officers

Set forth below is a summary of the compensation paid, or that may be paid by
Elizabeth Arden, Inc. (the “Company”) to its named executive officers (defined
in Regulation S-K Item 402(a)(3) (the “Named Executives”)) in their positions as
of June 30, 2006. All of the Company’s executive officers are at-will employees
whose compensation and employment status may be changed at any time in the
discretion of the Company’s Board of Directors (the “Board”), subject only to
the terms of the Severance and Change-in-Control Arrangements described below.

Base Salary

Effective April 1, 2006, the Named Executives are scheduled to receive the
following annual base salaries in their current positions:

 

Named Executive

  

Position

   Salary($)

E. Scott Beattie

   Chairman of the Board and Chief Executive Officer    728,000

Paul West

   President and Chief Operating Officer(1)    494,500

Stephen J. Smith

   Executive Vice President and Chief Financial Officer    360,000

Ronald Rolleston

   Executive Vice President, Global Fragrance Marketing    330,000

Jacobus A.J. Steffens

   Executive Vice President, General Manager - International    410,000

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(1) Effective on August 16, 2006, Mr. West was elected to the Board as Vice
Chairman and is no longer the President and Chief Operating Officer of the
Company. Mr. West, as an employee of the Company, will not be entitled to
receive compensation as a director but will be paid a salary commensurate with
his responsibilities to the Company, will receive stock incentive grants
consistent with non-employee Directors and will be entitled to a bonus, as
determined by the Company’s Chief Executive Officer in consultation with the
Compensation Committee.

Annual Management Bonus Program and Long-Term Incentive Plans

Cash Bonuses

The Named Executives are eligible to participate in two cash bonus plans:
(i) the Company’s 2005 Performance Bonus Plan (the “Performance Plan”), and
(ii) the 2005 Management Bonus Plan (the “Management Plan”), on the basis of
performance goals established for them under the applicable plan and in
accordance with the arrangements established by the Compensation Committee for
the payment of cash bonuses (“Bonus”). The Management Plan was approved by the
shareholders of the Company at the annual shareholders meeting on November 16,
2005.

Cash bonus awards under the Performance Plan are based on achievement of various
key performance indicators or business criteria or completion of certain
projects that benefit the Company and apply to the individual participant or the
participant’s business unit (the “Individual Criteria”) and may be a single goal
or a range with a minimum goal up to a maximum goal, with corresponding
increases in the bonus up the maximum award set by the

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Compensation Committee of the Board (the “Compensation Committee”). For the
fiscal year ended June 30, 2007, the Compensation Committee determined that cash
bonuses only will be paid to the Named Executives under the Management Plan.

During the fiscal year ending June 30, 2007, the Named Executives listed in the
following table are eligible to earn cash bonus payments (the “Bonus”) under the
Management Plan upon the Company’s achievement of performance goals described in
the notes to the following table:

 

Named Executive

  

Position

  

Percentage

of Base

Salary

Payable if

all Quarterly

Targets are

Achieved(1)

   

Percentage

of Base

Salary

Payable if

Goal Level

Annual

Target

is

Achieved(2)

   

Additional

Percentage

of Base

Salary

Payable if

Superior

Level

Annual

Target is

Achieved(3)

 

E. Scott Beattie

   Chairman of the Board and Chief Executive Officer    51 %   34 %   42.5 %

Paul West

   President and Chief Operating Officer    —       —       —    

Stephen J. Smith

   Executive Vice President and Chief Financial Officer    30 %   20 %   25 %

Ronald Rolleston

   Executive Vice President, Global Fragrance Marketing    30 %   20 %   25 %

Jacobus A.J. Steffens

   Executive Vice President, General Manager - International    30 %   20 %   25
%

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(1) For the fiscal year ended June 30, 2007, the Named Executives, other than
Mr. West, will be able to earn 15% of their par bonus potential (which is 85% of
base salary for Mr. Beattie and 50% of base salary for all other Named
Executives other than Mr. West) each fiscal quarter (for a total of 60% of their
par bonus potential) if the Company achieves the applicable quarterly earnings
(loss) per diluted share (“EPS”) targets.

(2) The Goal Level Annual Target Bonus under the Management Plan is payable if
the Company achieves its annual EPS target for the fiscal year ended June 30,
2007.

(3) In addition to the Goal Level Annual Target Bonus, the Superior Level Annual
Target Bonus under the Management Plan is payable if the Company achieves the
superior EPS target for the fiscal year ended June 30, 2007.

Long Term Incentive Plans

The Named Executives participate in the Company’s long-term incentive program
(the “LTI Program”), which currently involves the award of stock options,
performance-based restricted stock, service-based restricted stock and
market-based restricted stock as determined by the Compensation Committee
pursuant to the Company’s 2004 Stock Incentive Plan (filed as

 

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Annex E as part of the Company’s Proxy Statement dated May 14, 2004). Under the
LTI Program, target annual long-term incentives (“LTI”), as a percent of salary,
for the following Named Executives for fiscal 2005 are as set forth in the
following table:

 

Named Executive

  

Position

   Target
LTI %  

E. Scott Beattie

   Chairman of the Board and Chief Executive Officer    225 %

Paul West

   President and Chief Operating Officer    —    

Stephen J. Smith

   Executive Vice President and Chief Financial Officer    100 %

Ronald Rolleston

   Executive Vice President, Global Marketing    100 %

Jacobus A.J. Steffens

   Executive Vice President, General Manager - International    100 %

While the allocation of the LTI components fluctuate from time-to-time, LTI is
planned to be allocated to the Named Executives one-third to stock options,
one-sixth to performance-based restricted stock, one sixth to service-based
restricted stock and one-third to market-based restricted stock based on a value
of the equity awards as determined by the Compensation Committee. Actual LTI
grants may vary from the target LTI percentages based on the Compensation
Committee’s assessment of the Named Executive’s job responsibilities, individual
performance and market conditions.

Performance-Based Restricted Common Stock

Effective August 21, 2006, the Company awarded shares of performance-based
restricted common stock (“PBRS”) as set forth in the table below to the Named
Executives. The PBRS will vest in full on the second business day after the
Company’s financial results for the fiscal year ended June 30, 2009 are released
to the public, but only if the Named Executive receiving the grant is employed
by the Company at the time of vesting and the Company achieves a specified
cumulative EPS target for the fiscal years ended June 30, 2007, June 30, 2008
and June 30, 2009 (the “PBRS Target”). If, however, the Company achieves
cumulative EPS during that same three-year fiscal period that is $.30 per share
less than the PBRS Target (the “PBRS Threshold”), 50% percent of the PBRS
granted to a Named Executive will vest. For cumulative EPS results between the
PBRS Threshold and the PBRS Target, the number of shares of PBRS that will vest
will be determined based on interpolation.

 

Named Executive

  

Position

   PBRS
Awarded

E. Scott Beattie

   Chairman of the Board and Chief Executive Officer    15,800

Paul West

   President and Chief Operating Officer    —  

Stephen J. Smith

   Executive Vice President and Chief Financial Officer    5,600

Ronald Rolleston

   Executive Vice President, Global Fragrance Marketing    4,700

Jacobus A.J. Steffens

   Executive Vice President, General Manager - International    2,400

Service-Based Restricted Common Stock

Effective August 21, 2006, the Named Executives listed in the following table
were granted

 

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shares of the Company’s service-based restricted common stock (“SBRS”) that vest
over a three year period in equal thirds two business days after the Company’s
release of its financial results for its fiscal years ending June 30,
2007, June 30, 2008 and June 30, 2009, as applicable, if the Named Executive is
still employed by the Company:

 

Named Executive

  

Position

   SBRS
Awarded

E. Scott Beattie

   Chairman of the Board and Chief Executive Officer    15,800

Paul West

   President and Chief Operating Officer    —  

Stephen J. Smith

   Executive Vice President and Chief Financial Officer    5,600

Ronald Rolleston

   Executive Vice President, Global Fragrance Marketing    4,700

Jacobus A.J. Steffens

   Executive Vice President, General Manager - International    2,400

Stock Options

On August 16, 2006, the Board approved a grant of stock options effective on
August 21, 2006 for shares of the Company’s common stock, $.01 par value (the
“Common Stock”), to the Named Executives as listed in the table below. The stock
options vest over a three year period in equal thirds two business days after
the Company’s release of its financial results for its fiscal years ending
June 30, 2007, June 30, 2008 and June 30, 2009, as applicable if the Named
Executive is still employed by the Company. The exercise price of the stock
options is $15.00 per share, which represents the closing price of the Common
Stock on the date of grant. The stock options will expire ten years from the
date of grant.

 

Named Executive

  

Position

   Options
Awarded

E. Scott Beattie

   Chairman of the Board and Chief Executive Officer    67,300

Paul West

   President and Chief Operation Officer    —  

Stephen J. Smith

   Executive Vice President and Chief Financial Officer    24,000

Ronald Rolleston

   Executive Vice President, Global Fragrance Marketing    20,000

Jacobus A.J. Steffens

   Executive Vice President, General Manager - International    10,000

Benefit Plans and Other Arrangements

In their current positions, the Named Executives, with the exception of
Mr. Steffens who is based in Geneva, Switzerland, are eligible to:

 

  •   Participate in the Company’s broad-based benefit programs generally
available to its salaried employees, including health, disability and life
insurance programs, qualified 401(k) plans and (other than with respect to the
Company’s Chief Executive Officer) the ability to purchase shares of the
Company’s common stock at a discount pursuant to the Amended 2002 Employee Stock
Purchase Plan (the “ESPP”) (filed as Exhibit 10.4 to the Company’s 10-Q for the
quarter ended April 26, 2003).

 

  •   Receive a deferred cash award once a year equal to 3% of the Named
Executive’s cash compensation (base salary plus cash bonus earned during the
prior twelve-month period), which will become payable, one year from the date of
award if the Named Executive is

 

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still employed by the Company (the “Deferred Cash Award”). The Deferred Cash
Award is an annual ongoing award made available to all United States and Puerto
Rico-based participants in the Company’s management bonus program.

 

  •   Receive certain perquisites offered by the Company to executive officers,
including an automobile allowance, tax preparation and financial planning
services and, excluding Mr. Smith, participate in an executive disability
program.

Mr. Steffens is eligible to participate in the Company’s broad-based benefit
programs generally available to all salaried employees in Geneva, Switzerland,
including health, disability, life and other insurance programs, a lunch
allowance program, a pension plan and the ability to purchase shares of the
Company’s common stock at a discount under the ESPP. In addition, the Company
pays pre-university education expenses for Mr. Steffen’s children as long as he
is employed by the Company.

Severance and Change-in-Control Arrangements

In addition to the benefit plans and other arrangements listed above, each of
our Named Executives (other than Mr. West) is entitled to benefits under a
severance and change-in-control arrangement. Under the arrangement, the Named
Executive receives severance benefits, based on his or her position and
responsibility, in the event the executive’s employment is terminated without
“cause” and is not the result of a resignation or death. Currently, the
severance benefit for the Named Executives is as follows: (a) Mr. Beattie, 24
months of base salary; (b) Mr. Smith, 24 months of base salary plus preceding
year’s bonus; (c) Mr. Rolleston, 12 months of base salary; and (d) Mr. Steffens,
12 months of base salary and par bonus.

Under the change-in-control arrangement, a severance benefit is paid based on a
“base amount” in the event there is an actual or constructive termination of
employment (e.g., decrease in pay or job responsibility) following a change in
control, except as noted below. “Base amount” is the average base salary plus
average cash bonus the executive has received over the most recent five-year
period. The monthly base amount is the base amount divided by twelve. Currently,
the severance benefit due to a change in control for the Named Executives is as
follows: (a) Mr. Beattie, 35.88 months of monthly base amount; (b) Mr. Smith, 24
months of base salary plus preceding year’s bonus; (c) Mr. Rolleston, 18 months
of monthly base amount; and (d) Mr. Steffens, 12 months of base salary and par
bonus.

 

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