Exhibit 10.1

 

Each of the Stock Plan Subcommittee of the Compensation Committee and the
Compensation Committee of the Board of Directors of The Estée Lauder Companies
Inc. reserves the right to change provisions of this Agreement to comply with
applicable laws or regulations.

 

Performance Share Unit Award Agreement Under

The Estée Lauder Companies Inc.

Amended and Restated Fiscal 2002 Share Incentive Plan (as of July 20, 2017) (the
“Plan”)

 

This PERFORMANCE SHARE UNIT AWARD AGREEMENT (“Agreement”) provides for the
granting of performance share unit awards by The Estée Lauder Companies Inc., a
Delaware corporation (the “Company”), to the participant, an employee of the
Company or one of its subsidiaries (the “Participant”), representing a notional
account equal to a corresponding number of shares of the Company’s Class A
Common Stock, par value $0.01 (the “Shares”), subject to the terms below (the
“Performance Share Units”). The name of the “Participant,” the “Grant Date,” the
“Target Number of Shares,” the “Service Period,” the “Performance Period” and
the “Plan Achievement” (as defined below) goals are stated in the “Notice of
Grant” attached or posted electronically together with this Agreement and are
incorporated by reference. The other terms of this Performance Share Unit Award
are stated in this Agreement and in the Plan. Terms not defined in this
Agreement are defined in the Plan, as amended.

 

1.              Award Grant. The Company hereby awards to the Participant a
target award of Performance Share Units in respect of the number of Shares set
forth in the Notice of Grant (the “Target Award”), representing Stock Unit and
Performance Awards under the terms of the Plan.

 

2.              Right to Payment of Performance Share Units. It is understood
that the percentage of the Target Award earned and paid will be established by
the Subcommittee based on the plan achievement (the “Plan Achievement”) during
the Performance Period(s) specified in the Notice of Grant (the “Award Period”
or “Performance Period”). Except as otherwise provided in paragraph 3, 4 or 5
below, at the end of a Performance Period, the number of Shares earned in
respect of the Performance Share Units will be determined in accordance with the
Notice of Grant.

 

3.              Payment of Awards. Payments under this Agreement will be made in
the number of Shares that is equivalent to the number of Performance Share Units
earned and payable to the Participant pursuant to paragraph 2 above. Except as
otherwise provided in paragraph 4 or 5 below, payments, if any, with respect to
both the First Tranche and the Second Tranche will be made on September 3, 2024,
and the form of such payout will be in Shares. In addition, each Performance
Share Unit that becomes earned and payable pursuant to paragraph 2 above carries
a Dividend Equivalent Right, payable in cash at the same time as the payment of
Shares in accordance with this paragraph 3 and paragraph 4 or 5. For the
avoidance of doubt, with respect to each Tranche, such Dividend Equivalent Right
shall not attach to, and no payment shall be made as a result of, dividends
(a) the record date for which is prior to the grant date with respect to such
Tranche or (b) paid with respect to Performance Share Units that are not
ultimately earned.

 

4.              Change in Control.

 

(a)         Upon a Change in Control, the Plan Achievement Goal with respect to
each Tranche having a Performance Period ending after the Change in Control
shall be deemed met in full, and one hundred percent (100%) of the Target Number
of Shares granted with respect to each such Tranche shall be paid in accordance
with paragraph 3 or, if earlier, in accordance with this paragraph 4.

 

(b)         If on or after a Change in Control, the Participant terminates for
Good Reason (as defined below), dies, becomes disabled as described in paragraph
5(b), or is terminated by the Company without Cause in accordance with paragraph
5(c), the following provisions shall apply:

 

(i)             For the avoidance of doubt, one hundred percent (100%) of the
Target Number of Shares granted

 

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with respect to each Tranche Performance Period ending after the Change in
Control but not yet paid in accordance with paragraph 3 will vest and be paid in
accordance with this paragraph 4.

 

(ii)        The number of Performance Share Units earned and payable pursuant to
paragraph 2 with respect to any Tranche Performance Period ending on or prior to
the Change in Control but not yet paid in accordance with paragraph 3 will be
paid in accordance with this paragraph 4.

 

(iii)           If any such termination occurs within two years following a
Change in Control that constitutes a “change in control event” within the
meaning of Section 409A of the Code or the Participant dies or becomes disabled
as described in paragraph 5(b), payments under this paragraph will be made
within two weeks following the date on which Participant terminates employment
or dies or becomes disabled as described in paragraph 5(b); provided such
termination (excluding Participant’s death or disability as described in
paragraph 5(b)) constitutes a “separation from service” for purposes of section
409A of the Code; provided further that if such termination (excluding
Participant’s death or disability as described in paragraph 5(b)) does not
constitute a “separation from service” for purposes of section 409A of the Code
or such “separation from service” does not occur within two years following a
Change in Control that constitutes a “change in control event” within the
meaning of Section 409A of the Code, such payments shall be made in accordance
with paragraph 3. If the Shares cease to be outstanding immediately after the
Change in Control (e.g., due to a merger with and into another entity), then the
amount and type of consideration to be received in respect of each Share earned
under a Performance Share Unit will be based on the consideration paid to each
stockholder per Share generally upon the Change in Control as determined by the
Subcommittee. Notwithstanding anything herein to the contrary, the Subcommittee
shall have the right to terminate and pay out any amounts hereunder in
accordance with Treasury Regulation 1.409A-3(j)(4)(ix). In the event that a
Change in Control occurs after the Participant’s termination of employment, each
Performance Share Unit shall be converted into the right to receive an amount in
cash based on the consideration paid to each stockholder per Share generally
upon the Change in Control as determined by the Subcommittee.

 

(iv)      For purposes hereof, “Good Reason” means the occurrence of any of the
following, without the express written consent of the Participant:

 

(a)         the assignment to the Participant of any duties inconsistent in any
material adverse respect with the Participant’s position, authority or
responsibilities immediately prior to the Change in Control, or any other
material adverse change in such position, including title, authority or
responsibilities;

 

(b)         any failure by the Company to pay any amounts for compensation or
benefits owed to the Participant or a material reduction of the overall amounts
of compensation and benefits in effect prior to the Change in Control, other
than an insubstantial or inadvertent failure remedied by the Company promptly
after receipt of notice thereof given by the Participant;

 

(c)          the Company’s requiring the Participant to be based at any office
or location more than fifty (50) miles from that location at which he performed
his or her services for the Company immediately prior to the Change in Control,
except for travel reasonably required in the performance of the Participant’s
responsibilities; or

 

(d)         any failure by the Company to obtain the assumption and agreement to
perform this Agreement by a successor, unless such assumption occurs by
operation of law.

 

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5.              Termination of Employment. If the Participant’s employment
terminates, except as otherwise provided in paragraph 4, payouts will be as
follows:

 

(a)         Death. If the Participant dies prior to the end of the Service
Period for a Tranche, a pro rata portion of such Tranche will be paid. As to
each such Tranche, the pro rata portion will be determined by multiplying the
Target Number of Shares subject to such Tranche by a fraction, the numerator of
which is the number of full calendar months of service completed during the
Service Period for such Tranche through the Participant’s death and the
denominator of which is the number of full calendar months in the Service Period
for such Tranche. Payment thereof will be made on the 75th day following the
Participant’s death. If the Participant dies on or after the last day of the
Service Period for a Tranche, the full Target Number of Shares with respect to
such Tranche, if otherwise earned and vested in accordance with the Notice of
Grant but not yet paid, will be paid. Payment thereof will be made on the
earlier of (i) the 75th day following the Participant’s death, and (ii) the date
such payment would otherwise be made in accordance with paragraph 3 of this
Agreement. All payments under this paragraph 5(a) shall be made in accordance
with any applicable laws or Company procedures regarding such payments.

 

(b)         Disability. If the Participant becomes “disabled” (within the
meaning of Treasury Regulation 1.409A-3(i)(4)) prior to the end of the Service
Period for a Tranche, a pro rata portion of such Tranche will be paid. As to
each such Tranche, the pro rata portion will be determined by multiplying the
Target Number of Shares subject to such Tranche by a fraction, the numerator of
which is the number of full calendar months of service completed during the
Service Period for such Tranche through the date the Participant becomes
disabled and the denominator of which is the number of full calendar months in
the Service Period for such Tranche. Payment thereof will be made within two
weeks following the date on which the Participant becomes disabled. If the
Participant becomes disabled on or after the last day of the Service Period for
a Tranche, the Shares, if any, otherwise earned and vested with respect to such
Tranche in accordance with the Notice of Grant but not yet paid, will be paid.
Payment thereof will be made within two weeks following the date on which
Participant becomes disabled or, if earlier, the date such payment would
otherwise be made in accordance with paragraph 3 of this Agreement.

 

(c)          Termination of Employment Without Cause. If the Participant’s
employment is terminated at the instance of the Company or relevant subsidiary
without Cause (as defined below), each Tranche Performance Period that has not
ended will continue through the end of such Performance Period, and the
Participant will earn and vest in the Relevant Portion of such Tranche subject
to actual achievement of the Plan Achievement Goal for such Tranche. As to each
such Tranche, the “Relevant Portion” will be determined by multiplying (i) the
Target Number of Shares otherwise earned and vested in accordance with the
Notice of Grant, if any, and (ii) a fraction, the numerator of which is the sum
of (A) the number of full calendar months of service completed during the
Service Period for such Tranche through the Participant’s termination of
employment and (B) the lesser of (x) 12 months or (y) the number of full
calendar months remaining in the Service Period for such Tranche after the
Participant’s termination of employment and the denominator of which is the
number of full calendar months in the Service Period for such Tranche.
Notwithstanding the foregoing, if (1) the Participant’s employment is terminated
without Cause prior to the end of a Tranche Performance Period, (2) the Plan
Achievement Goal is ultimately achieved for any full Performance Periods that
have not ended as of the date of termination, and (3) under the Company’s
Executive Annual Incentive Plan (the “EAIP”) (or a successor plan), the Company
has achieved Company-wide performance criteria (currently referred to as the
“Corporate Multiplier”) as established by the Compensation Committee of the
Board of Directors of the Company (such committee, or any other body designated
by the Board of Directors of the Company, the “Compensation Committee”) for
purposes of the EAIP, of at least 90%, as determined by the Compensation
Committee, for each of the two full Company fiscal years immediately preceding
the Company fiscal year in which the Participant’s employment is terminated
without Cause (the “Performance Standard”), then such Tranche shall be deemed
fully earned and vested at the Target Number of Shares subject thereto;
provided, that the Performance Standard shall be subject to replacement by the
Compensation Committee with a substantially equivalent performance standard

 

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based on any change to the design, or replacement, of the EAIP. If such
termination occurs after the end of a Tranche Performance Period, the Shares, if
any, otherwise earned and vested with respect to such Tranche in accordance with
the Notice of Grant but not yet paid, will be paid. Payment hereunder will be
made the date(s) such payment would otherwise be made in accordance with
paragraph 3 of this Agreement.

 

(d)         Termination of Employment By Employee. If the Participant terminates
his or her employment (e.g., by retiring or by voluntarily resigning), any
unearned, unvested Tranche will be forfeited, and any earned and vested Tranche
will be paid in accordance with paragraph 3 of this Agreement.

 

(e)          Termination of Employment With Cause. If the Participant is
terminated for Cause, all Tranches of the Award will be forfeited, regardless of
whether a Tranche has been otherwise earned and vested. If (a) the Participant
is no longer employed by the Company for any reason, (b) payment of a Tranche
has not previously been made, and (c) it is determined that Participant’s
behavior while he was employed would have constituted Cause, then each Tranche
not previously paid will be forfeited, regardless of whether such Tranche has
been otherwise earned and vested. For this purpose, “Cause” is defined in the
employment agreement in effect between the Participant and the Company or any
subsidiary, including any employment agreement entered into after the Grant
Date. In the absence of an employment agreement, “Cause” means any breach by the
Participant of any of his or her material obligations under any Company policy
or procedure, including, without limitation, the Code of Conduct.

 

(f)           Post Employment Conduct. Payout of any Performance Share Unit
Award after termination of employment is subject to satisfaction of the
conditions precedent that the Participant neither (i) competes with, takes
employment with, or renders services to a competitor of the Company, its
subsidiaries, or affiliates for the lesser of (A) 24 months following
termination of employment or (B) the period remaining until date of payment for
the Tranche as described in paragraph 3, nor (ii) conducts himself in a manner
adversely affecting the Company. The term “competitor” means any business that
is engaged in, or is preparing to become engaged in, the makeup, skin care, hair
care, toiletries or fragrance business or other business in which the Company is
engaged or preparing to become engaged, or that otherwise competes with, or is
preparing to compete with, the Company. If the Participant’s employment
terminates after the expiration of the Award Period but prior to payout, payout
will be subject to this paragraph 5(f).

 

6.              No Rights of Stock Ownership. This grant of Performance Share
Units does not entitle the Participant to any interest in or to any voting or
other rights normally attributable to Share ownership other than the Dividend
Equivalent Rights granted under paragraph 3 above.

 

7.              Withholding Taxes. Regardless of any action the Company or the
Participant’s employer (the “Employer”) takes with respect to any or all income
tax, social security (or social insurance), payroll tax, fringe benefits tax,
payment on account or other tax-related items related to the participation in
the Plan and this Agreement and legally applicable to the Participant
(“Tax-Related Items”), the Participant acknowledges that the ultimate liability
for all Tax-Related Items legally due by the Participant is and remains his or
her responsibility and may exceed the amount actually withheld by the Company or
the Employer. Furthermore, the Participant acknowledges that the Company and/or
the Employer (i) make no representations or undertakings regarding the treatment
of any Tax-Related Items in connection with any aspect of the Performance Share
Units, including, but not limited to, the grant of the Performance Share Units,
the vesting of the Performance Share Units, the delivery of Shares, the
subsequent sale of Shares acquired under the Plan and the receipt of any
dividends, and (ii) do not commit to and are under no obligation to structure
the terms of the grant of the Performance Share Units or any aspect of the
Participant’s participation in the Plan to reduce or eliminate his or her
liability for Tax-Related Items or achieve any particular tax result. If the
Participant is or becomes subject to Tax-Related Items in more than one
jurisdiction, the Participant acknowledges that the Company and/or the Employer
(or former employer, as applicable) may be required to withhold or account for
Tax-Related Items in more than one jurisdiction.

 

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Prior to any relevant taxable event, or tax withholding event, as applicable,
the Participant agrees to pay or make adequate arrangements satisfactory to the
Company and/or the Employer to satisfy all withholding obligations of the
Company and/or the Employer. In this regard, the Participant authorizes the
Company and/or the Employer, or his or her respective agents, at the Company’s
discretion, to satisfy any applicable withholding obligations with regard to all
Tax-Related Items by one or a combination of the following: (i) withholding from
the Participant’s wages or other cash compensation paid by the Company and/or
the Employer; (ii) withholding from proceeds of the sale of the Shares acquired
upon settlement of the Performance Share Units either through a voluntary sale
or through a mandatory sale arranged by the Company (on the Participant’s behalf
pursuant to this authorization); and/or (iii) withholding in whole Shares to be
issued upon settlement of the Performance Share Units, provided that the Company
only withholds the amount of whole Shares necessary to satisfy the statutory
withholding requirements, not to exceed the maximum withholding tax rate in the
Participant’s applicable jurisdiction. If the Company satisfies the withholding
obligation for the Tax-Related Item by withholding a number of Shares as
described herein, the Participant will be deemed to have been issued the full
number of Shares due to Participant at vesting, notwithstanding that a number of
the Shares is held back solely for purposes of such Tax-Related Items.

 

Finally, the Participant further agrees to pay to the Company or the Employer
any amount of Tax-Related Items that the Company or the Employer may be required
to withhold or account for as a result of his or her participation in the Plan
that cannot be satisfied by the means previously described. The Company may
refuse to issue or deliver the Shares or the proceeds of the sales of Shares, if
the Participant fails to comply with his or her obligations in connection with
the Tax-Related Items.

 

8.              Nonassignability. This award may not be assigned, pledged, or
transferred except, if the Participant dies, to a designated beneficiary or by
will or by the laws of descent and distribution. The foregoing restrictions do
not apply to transfers under a court order, including, but not limited to, any
domestic relations order.

 

9.              Effect Upon Employment. The Participant’s right to continue to
serve the Company or any of its subsidiaries as an officer, employee, or
otherwise, is not enlarged or otherwise affected by an award under this
Agreement. Nothing in this Agreement or the Plan gives the Participant any right
to continue in the employ of the Company or any of its subsidiaries or interfere
in any way with any right the Company or any of its subsidiaries may have to
terminate his or her employment at any time. Payment of Shares is not secured by
a trust, insurance contract or other funding medium, and the Participant does
not have any interest in any fund or specific asset of the Company by reason of
this Award or the account established on his or her behalf. A Performance Share
Unit confers no rights as a shareholder of the Company until Shares are actually
delivered to the Participant.

 

10.       Electronic Notice, Delivery and Acceptance. The Company may, in its
sole discretion, decide to deliver any documents related to Performance Share
Units awarded under the Plan or future Performance Share Units that may be
awarded under the Plan by email or other electronic means. The Participant
hereby consents to receive such documents by email or other electronic delivery
and agrees to access information concerning the Plan through an on-line or
electronic system established and maintained by the Company or by another third
party designated by the Company.

 

11.       Data Privacy. As a condition of this Performance Share Unit grant, the
Participant hereby expressly consents to the collection, use, disclosure,
transfer and other processing of his or her personal data as set out in this
Section 11 and as otherwise required by applicable law.

 

The Company, its affiliates, subsidiaries or agents, the Employer, and the
Company’s stock plan service provider will process personal data of the
Participant for the purposes of implementing, managing and administering the
Participant’s grant of Performance Share Units and the Plan. Such personal data,
in electronic or other form, may include the Participant’s name, home address,
telephone number, email address, date of birth, social insurance number or other
national identification number, beneficiary information

 

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(including beneficiary name, address social insurance number or other national
identification number, and date of birth), hire date, salary and deductions,
banking details, tax certification information, any Shares or directorships held
in the Company, details of all equity grants or any other entitlement to Shares
awarded, canceled, vested, unvested, or outstanding in the Participant’s favor.

 

For the purposes set out above, personal data may be transferred to countries
other than the country in which the Participant resides, including to the United
States and Australia. As required by applicable law, when personal data is
transferred to a country outside of the country in which the Participant
resides, measures will be put in place to ensure that the personal data is
protected as required by law. These measures may include European Union Standard
Contractual Clauses.

 

The Participant’s personal data will be retained for as long as necessary to
implement, manage and administer the Participant’s grant of Performance Share
Units and participation in the Plan. The Participant may request to access,
modify or delete his or her personal data, request additional information about
the processing of his or her personal data, or refuse or withdraw consent to the
processing of the Participant’s personal data by contacting the local human
resources representative in writing. Refusal or withdrawal of consent may affect
the Participant’s ability to participate in the Plan but will not affect the
Participant’s employment status or service and career with the Company.

 

12.       Discretionary Nature and Acceptance of Award. The Participant agrees
to be bound by the terms of this Agreement and acknowledges, understands and
agrees that:

 

(a)       The Plan is established voluntarily by the Company, it is
discretionary in nature, and it may be modified, amended, suspended or
terminated by the Company at any time, unless otherwise provided in the Plan and
this Agreement;

 

(b)       The award is exceptional, voluntary and occasional, and does not
create any contractual or other right to receive future awards, or benefits in
lieu of Performance Share Units, even if Performance Share Units have been
awarded in the past;

 

(c)          All decisions with respect to future Performance Share Units or
other awards, if any, will be at the sole discretion of the Company;

 

(d)       The Participant’s participation in the Plan is voluntary;

 

(e)        The Performance Share Units and any Shares acquired under the Plan,
and the income and value of the same, are not intended to replace any pension
rights or compensation;

 

(f)         The Participant’s participation in the Plan shall not create a right
to further employment with the Employer and shall not interfere with the ability
of the Company or the Employer to terminate the Participant’s employment at any
time;

 

(g)        This Award of the Performance Share Units will be deemed accepted
unless it is declined by way of written notice by the Participant within 30 days
of the Grant Date to the Equity Based Compensation Department of the Company
located at 767 Fifth Avenue, New York, NY 10153;

 

(h)       The Performance Share Units are an extraordinary item that does not
constitute compensation of any kind for services of any kind rendered to the
Company or any subsidiary, and which is outside the scope of the Participant’s
employment or service contract, if any;

 

(i)           The Performance Share Units and any Shares acquired under the
Plan, and the income and value of the same, are not part of normal or expected
compensation or salary for any purposes, including, but not limited to,
calculating any severance, resignation, termination, redundancy, dismissal end
of service

 

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payments, bonuses, holiday pay, long-service awards, pension or retirement or
welfare benefits or similar payments and in no event should be considered as
compensation for, or relating in any way to, past services for the Employer, or
the Company or any of its subsidiaries;

 

(j)          In the event the Participant is not an employee of the Company, the
Performance Share Units and the Participant’s participation in the Plan will not
be interpreted to form an employment or service contract or relationship with
the Company or with any subsidiary of the Company;

 

(k)       The future value of the underlying Shares is unknown and
indeterminable and cannot be predicted with certainty;

 

(l)           In consideration of the Award, no claim or entitlement to
compensation or damages shall arise from forfeiture of the Performance Share
Units or diminution in value of the Performance Share Units, or Shares acquired
upon vesting of the Performance Share Units, resulting from termination of
Participant’s employment (for any reason whatsoever and whether or not later
found to be invalid or in breach of employment laws in the jurisdiction where
the Participant is employed, or the terms of the Participant’s employment), and
in consideration of the Award, Participant irrevocably releases the Employer,
the Company and any of its subsidiaries from any such claim that may arise; if,
notwithstanding the foregoing, any such claim is found by a court of competent
jurisdiction to have arisen, then, by acknowledging and agreeing to or signing
the Notice of Grant, the Participant shall be deemed irrevocably to have waived
his or her right to pursue or seek remedy for any such claim or entitlement
against the Employer, the Company or any of its subsidiaries;

 

(m)     For Purposes of the Performance Share Units, the Participant’s
employment or service relationship will be considered terminated as of the date
the Participant is no longer actively providing services to the Employer, the
Company or any of its subsidiaries as determined by the Administrator in its
sole discretion (regardless of the reason for such termination and whether or
not later found to be invalid or in breach of employment laws in the
jurisdiction where the Participant is employed or the terms of the Participant’s
employment agreement, if any);

 

(n)         The Company is not providing any tax, legal or financial advice, nor
is the Company making any recommendations regarding the Participant’s
participation in the Plan or Participant’s acquisition or sale of the underlying
Shares; and

 

(o)         Participant is hereby advised to consult with Participant’s own
personal tax, legal and financial advisors regarding the Participant’s
participation in the Plan before taking any action related to the Plan.

 

13.       Failure to Enforce Not a Waiver. The Company’s failure to enforce at
any time any provision of this Agreement does not constitute a waiver of that
provision or of any other provision of this Agreement.

 

14.       Governing Law. The Performance Share Unit Award Agreement is governed
by and is to be construed according to the laws of the State of New York that
apply to agreements made and performed in that state, without regard to its
choice of law provisions. For purposes of litigating any dispute that arises
under the Performance Share Units or this Agreement, the parties hereby submit
to and consent to the jurisdiction of the State of New York, and agree that such
litigation will be conducted in the courts of New York County, New York, or the
federal courts for the United States for the Southern District of New York, and
no other courts, where the Performance Share Units are made and/or to be
performed.

 

15.       Partial Invalidity. The invalidity or illegality of any provision of
the Agreement will be deemed not to affect the validity of any other provision.
Furthermore, it is the parties’ intent that any order striking any portion of
this Agreement and/or the Plan should modify the stricken terms as narrowly as
possible to give as much effect as possible to the intentions of the parties
hereunder.

 

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16.       Entire Agreement. This Agreement and the Plan constitute the entire
agreement between the Participant and the Company regarding the award and
supersede all prior and contemporaneous agreements and understandings, oral or
written, between the parties regarding the award. Except as expressly set forth
herein, this Agreement (and any provision of this Agreement) may not be
modified, changed, clarified, or interpreted by the parties, except in a writing
specifying the modification, change, clarification, or interpretation, and
signed by a duly authorized Company officer.

 

17.       Section 409A Compliance. This Agreement is intended to comply with
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
any regulations, rulings, or guidance provided thereunder. Each payment under
this Agreement shall be treated as a separate payment for purposes of
Section 409A of the Code. In no event may the Participant, directly or
indirectly, designate the calendar year of any payment to be made under this
Agreement. The Company reserves the unilateral right to amend this Agreement
upon written notice to the Participant to prevent taxation under Section 409A of
the Code.

 

18.       Recoupment. Notwithstanding any other provision of this Agreement to
the contrary, the Participant acknowledges and agrees that the Performance Share
Units, any Shares acquired pursuant thereto and/or any amount received with
respect to any sale of such Shares are subject to potential cancellation,
recoupment, rescission, payback or other action in accordance with the terms of
the Company’s recoupment policy as in effect on the Grant Date and as such
policy applicable to the Company’s executive officers may be amended from time
to time, including in order to comply with changes in laws, rules or regulations
that are applicable to the Performance Share Units and Shares. The Participant
agrees and consents to the Company’s application, implementation and enforcement
of (a) the recoupment policy, and (b) any provision of applicable law relating
to cancellation, recoupment, rescission or payback of compensation and expressly
agrees that the Company may take such actions as are necessary to effectuate the
recoupment policy (as applicable to the Participant) or applicable law without
further consent or action being required by the Participant. For purposes of the
foregoing, the Participant expressly and explicitly authorizes the Company to
issue instructions, on his or her behalf, to any brokerage firm and/or third
party administrator engaged by the Company to hold his or her Shares and other
amounts acquired under the Plan to re-convey, transfer or otherwise return such
Shares and/or other amounts to the Company upon the enforcement of the
provisions continued in this Section 18. To the extent that the terms of this
Agreement and the recoupment policy conflict, the terms of the recoupment policy
shall prevail.

 

19.       Insider Trading/Market Abuse Laws. By Participating in the Plan, the
Participant agrees to comply with the Company’s Insider Trading Policy. Further,
the Participant acknowledges that the Participant’s country of employment (and
country of residence, if different) may also have laws or regulations governing
insider trading and that such laws or regulations may impose additional
restrictions on the Participant’s ability to participate in the Plan (e.g.,
acquiring or selling Shares) and that the Participant is solely responsible for
complying with such laws or regulations.

 

20.       Prohibition on Pledging or Hedging Before Payment of Shares. The
Participant agrees not to purchase any financial instruments (including prepaid
variable forward contracts, equity swaps, collars, and exchange funds) or
otherwise engage in transactions that are designed to or have the effect of
pledging, hedging or offsetting any decrease in the market value of the awards
in this Agreement prior to the payment of Shares under this Agreement.

 

21.       Exchange Control, Tax and/or Foreign Asset/Account Reporting. The
Participant acknowledges that there may be exchange control, tax, foreign asset
and/or account reporting requirements that may affect the Participant’s ability
to acquire or hold Shares acquired under the Plan or cash received from
participating in the Plan (including from any Dividend Equivalents Rights paid
with respect to the Performance Share Units or dividends paid on Shares acquired
under the Plan) in a brokerage/bank account or legal entity outside the
Participant’s country of employment (and country of residence, if different).
The Participant may be

 

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required to report such accounts, assets, the balances therein, the value
thereof and/or the transactions related thereto to the tax or other authorities
in the Participant’s country of employment (and country of residence, if
different). The Participant also may be required to repatriate sale proceeds or
other funds received as a result of the Participant’s participation in the Plan
to the Participant’s country of employment (and country of residence, if
different) through a designated bank or broker within a certain time after
receipt. The Participant acknowledges that it is the Participant’s
responsibility to be compliant with such regulations, and the Participant should
consult his or her personal legal advisor for any details.

 

22.       Imposition of Other Requirements. The Company reserves the right to
impose other requirements on the Participant’s participation in the Plan, on the
Performance Share Units and on any Shares acquired under the Plan, to the extent
the Company determines it is necessary or advisable for legal or administrative
reasons, and to require the Participant to sign any additional agreements or
undertakings that may be necessary to accomplish the foregoing.

 

 

 

The Estée Lauder Companies Inc.

 

 

 

 

By:

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Michael O’Hare

 

 

Executive Vice President,

 

 

Global Human Resources

 

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NOTICE OF GRANT
UNDER
THE ESTÉE LAUDER COMPANIES INC.
AMENDED AND RESTATED FISCAL 2002 SHARE INCENTIVE PLAN (AS OF JULY 20, 2017)

(The “Plan”)

 

This Notice of Grant is incorporated by reference into the Agreement and made a
part thereof.

 

This is to confirm that you were awarded a grant of Performance Share Units at
the most recent meeting of the Stock Plan Subcommittee of the Compensation
Committee of the Board of Directors (the “Subcommittee”) representing the right
to receive shares of Class A Common Stock of The Estee Lauder Companies Inc.
(the “Shares”), subject to the terms of the Plan and the Performance Share Unit
Award Agreement. This award was made in recognition of the significant
contributions you have made as a key employee of the Company, and to motivate
you to achieve future successes by aligning your interests more closely with
those of our stockholders. This Performance Share Unit Award is granted under
and governed by the terms and conditions of the Plan and the Performance Share
Unit Award Agreement (the “Agreement”) which are made a part hereof. Please read
these documents and the Summary Plan Description and keep them for future
reference. The specific terms of your award are as follows:

 

Participant:

 

Fabrizio Freda

 

 

 

Grant Date:

 

February 14, 2018

 

 

 

Target Number of Shares:

 

There are two separate Awards granted hereby. Each is a “Tranche,” and will be
separately, the “First Tranche” and the “Second Tranche,” respectively. The
Target Number of Shares subject to the First Tranche is 97,970, and the Target
Number of Shares subject to the Second Tranche is 97,970. For the avoidance of
doubt, except as provided in paragraph 3 of the Agreement, it is understood that
a Participant’s rights, if any, with respect to any one Tranche shall be
determined independently of the Participant’s rights, if any, with respect to
any other Tranche.

 

 

 

Service Period:

 

For the First Tranche: January 1, 2018 to June 30, 2021 (the “First Tranche
Service Period”); and for the Second Tranche: January 1, 2018 to June 30, 2022
(the “Second Tranche Service Period”).

 

 

 

Performance Period:

 

For the First Tranche: July 1, 2018 to June 30, 2021 (the “First Tranche
Performance Period”); and for the Second Tranche: July 1, 2018 to June 30, 2022
(the “Second Tranche Performance Period”).

 

 

 

Type of Award:

 

Stock Unit and Performance Award (referred to herein as a “PSU”).

 

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Plan Achievement Goal:

 

(a)                                 Cumulative Operating Income Goal

 

(i)                                   Except as otherwise provided in Section 4
or 5 of the Agreement:

 

·                  The Target Number of Shares subject to the First Tranche
shall be earned and vested upon the conclusion of the First Tranche Performance
Period, provided that the Company has achieved positive Cumulative Operating
Income (certified by the Subcommittee), as defined below, for the First Tranche
Performance Period (the “First Tranche Plan Achievement Goal”). If the First
Tranche Plan Achievement Goal is not achieved, the First Tranche shall be
immediately forfeited, and the Participant shall have no further rights with
respect thereto.

 

·                  The Target Number of Shares subject to the Second Tranche
shall be earned and vested upon the conclusion of the Second Tranche Performance
Period, provided that the Company has achieved positive Cumulative Operating
Income (certified by the Subcommittee), as defined below, for the Second Tranche
Performance Period (the “Second Tranche Plan Achievement Goal”). If the Second
Tranche Plan Achievement Goal is not achieved, the Second Tranche shall be
immediately forfeited, and the Participant shall have no further rights with
respect thereto.

 

(ii)                                For purposes of this PSU Award Agreement,
“Cumulative Operating Income” means the sum of operating income for each fiscal
year in a Performance Period. Operating income of the Company shall have the
meaning utilized by the Company in its consolidated financial statements in
accordance with generally accepted accounting principles as in effect on July 1,
2018, calculated without regard to the following:

 

·                                          Changes in accounting principles
(i.e., cumulative effect of GAAP changes)

 

·                                          Income/loss from discontinued
operations and income/loss on sale of discontinued operations or adjustments to
previously disposed businesses and such items which are the result of a change
in the law or the Company’s response thereto.

 

·                                          Impairments of intangibles and
goodwill related to acquisitions.

 

·                                          The impact of an acquired business’
income statement not included in the Long-Range Plan (LRP) coincident with the
performance period of the PSU, whether dilutive or accretive.  For the sake of
clarity, the LRP will be adjusted to include the expected performance of the
acquired business(es) (i.e., the income statement acquisition Model used to
support the purchase decision). The adjustment includes due diligence fees,
investment banking fees, the operating performance of business and any
transition and/or integration costs as reflected on the income statement of the
acquired brand, as well as any fair value accounting charges or credits to the
statement of earnings.

 

·                                          Non-recurring and non-operating
income/expenses that are separately stated and disclosed in the financial
statements and/or Management’s Discussion and Analysis of Financial Condition
and Results of Operations appearing in the Company’s reports for the applicable
period — e.g., restructuring charges, legal settlement charges.

 

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(b)                                 If the Participant’s employment is
terminated by reason of, or pursuant to, Paragraph 5(a) or 5(b) of the
Agreement, then in determining the percentage of the Target Number of Shares
earned, the Performance Period shall end on the date of termination. If there is
a Change in Control, then evaluation of performance and payout shall be in
accordance with Paragraph 4 of the Agreement, and the Performance Period shall
end on the date of the Change in Control.

 

If you wish to accept this grant, please sign this Notice of Grant and return it
immediately to the Compensation Department.

 

The undersigned hereby accepts, and agrees to, all terms and provisions of the
Agreement, including those contained in this Notice of Grant.

 

 

By 

/s/ Fabrizio Freda

 

Date

February 15, 2018

 

Fabrizio Freda

 

 

 

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