Exhibit 10.21

AVON PRODUCTS, INC.

COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

(Effective May 1, 1997; Amended and Restated as of January 1, 2008)

 

I. GENERAL PROVISIONS

1.1 Purpose. The purpose of the Avon Products, Inc. Compensation Plan for
Non-Employee Directors (this “Plan”) is to provide a comprehensive revised
compensation program that will attract and retain qualified individuals who are
not employed by Avon Products, Inc. (the “Company”) or its subsidiaries to serve
on the Board of Directors. In particular, this Plan aligns the interests of such
directors with those of the Company’s shareholders by providing that a
significant portion of such directors’ compensation is directly linked to
increases in the value of the Company’s common stock.

1.2 Eligibility. Only members of the Board of Directors who are not also
employees of the Company or its subsidiaries may participate in this Plan.

1.3 Relationship to 2005 Stock Incentive Plan. The Company’s 2005 Stock
Incentive Plan (the “2005 Plan”), which was approved by the Company’s
shareholders at the Annual Meeting of Shareholders on May 5, 2005, provides for
the award of stock incentives, including stock options, restricted stock, and
restricted stock units, to key employees and non-employee directors of the
Company. Grants of stock incentives made under this Plan on or after May 5, 2005
shall be made under the 2005 Plan. Grants of stock options and restricted stock
made under this Plan prior to May 5, 2005 were made under the Company’s 2000
Stock Incentive Plan (the “2000 Plan”) or other prior stock plan. With respect
to such grants under the 2000 Plan or other prior stock plan, references in this
Plan to the 2005 Plan shall instead be construed to refer to the 2000 Plan or
such other prior stock plan, as applicable.

1.4 Definitions. Capitalized words and phrases in this Plan and not otherwise
defined herein shall have the same meaning as the definitions set forth in the
2005 Plan to the extent they are defined therein.

 

II. ANNUAL RETAINER AND COMMITTEE FEES

2.1 Annual Retainer. Each non-employee director shall be entitled to receive an
annual retainer consisting of cash and/or Restricted Stock Units in such amounts
as determined by the Board of Directors from time to time. Any cash portion of
the retainer shall be payable in quarterly installments.

--------------------------------------------------------------------------------

2.2 Committee Fees. A non-employee director appointed as a member of a standing
committee of the Board of Directors shall receive an annual cash retainer in
such amount as determined by the Board of Directors from time to time. Committee
retainers shall be paid within thirty days following the annual organizational
meeting occurring immediately after the Annual Meeting of Shareholders. These
committee retainers are in addition to the annual retainer set forth in
Section 2.1 above.

2.3 Retainer Fees for Committee Chairs. A non-employee director appointed to
chair a standing committee of the Board of Directors shall be paid an annual
cash retainer in such amount as determined by the Board of Directors from time
to time. Payment to committee chairs shall be made within thirty days following
the annual organizational meeting occurring immediately after the Annual Meeting
of Shareholders. These committee chair retainers are in addition to the retainer
fees set forth in Sections 2.1 and 2.2 above.

2.4 Deferred Cash Alternative. Each non-employee director annually may elect to
have all or a part of his or her cash compensation under this Article II
deferred for payment in accordance with the provisions of the Board of Directors
of Avon Products, Inc. Deferred Compensation Plan (the “Director Deferral
Plan”).

 

III. STOCK OPTIONS

3.1 Annual Retainer Grants of Stock Options. Prior to 2006, non-employee
directors were granted non-qualified options to purchase shares of Stock.
Effective as of January 1, 2006, there will be no additional annual grants of
stock options under this Plan.

3.2 Option Exercise Price. The per share price to be paid to exercise an Option
shall be the Fair Market Value of the Stock on the date of grant in accordance
with the 2005 Plan, as such term is defined on the corresponding date of grant.

3.3 Vesting and Exercise of Option. Each Option will become exercisable one year
after the date of grant and may be exercised for a period of ten years after the
date of grant. In the event of death, a vested Option may be exercised by the
estate of the non-employee director. All Options shall become fully exercisable
upon the occurrence of a Change in Control.

3.4 Method of Exercise and Purchase. An Option shall be exercised by giving
written notice to the Secretary, or an Assistant Secretary, of the Company
specifying the number of shares to be purchased and the particular grant being
exercised. Such notice shall be accompanied by a check as payment of the
exercise price of the shares with respect to which such Option, or portion
thereof, is exercised. Alternatively,

 

2

--------------------------------------------------------------------------------

such notice may include an election to have such shares delivered to a
broker-dealer with whom arrangements have been made to immediately sell the
shares and withhold from the net sale proceeds the full purchase price amount to
be delivered to the Company. The Company may also require payment of all
withholding taxes to exercise an Option, whether or not a broker-dealer
arrangement has been used.

 

IV. RESTRICTED STOCK

4.1 Annual Retainer Grants of Restricted Stock. Effective January 1, 2006, at
the close of business on the date of each Annual Meeting of Shareholders before
January 1, 2008, each non-employee director who then continues as a member of
the Board of Directors may be granted shares of Restricted Stock. The number of
shares of Restricted Stock to be granted will have a fair market value equal to
an amount determined by the Board of Directors from time to time. The fair
market value per share shall be deemed to be the closing price of a share of
Stock as reported on the New York Stock Exchange averaged over the ten trading
days immediately preceding the grant date. A fractional share resulting from
such calculation will be rounded to the nearest whole share. Effective as of
January 1, 2008, there will be no additional annual grants of restricted stock
under this Plan.

4.2 Restrictions and Terms and Conditions. All shares of Restricted Stock
granted under this Plan may not be sold, traded, assigned, transferred, or
otherwise encumbered until and unless restrictions are removed. The Company
shall retain custody of all shares until restrictions are removed or may hold
such shares by book entry registration. Each non-employee director granted
Restricted Stock shall have all the rights of a shareholder with respect to such
shares, including the right to vote such shares and receive dividends and other
distributions.

4.3 Removal of Restrictions. No shares of Restricted Stock will become free of
restrictions for a non-employee director until the termination of the director’s
services as a member of the Board of Directors in accordance with the terms and
conditions of this Plan as in existence on the applicable date of grant of such
Restricted Stock. Forfeiture of shares of Restricted Stock will result with
respect to a non-employee director who, without the Company’s written consent,
becomes employed by, or provides consulting services to, a company substantially
engaged in a business that is competitive with a principal business conducted by
the Company.

 

V. RESTRICTED STOCK UNITS

5.1 Annual Retainer Grants of Restricted Stock Units. Effective January 1, 2008,
at the close of business on the date of each Annual Meeting of Shareholders,
each non-employee director who then continues as a member of the Board of
Directors

 

3

--------------------------------------------------------------------------------

may be granted Restricted Stock Units. A Restricted Stock Unit grant is an award
that entitles the non-employee director to receive at the time(s) set forth in
Sections 5.3 and 5.4 payment of an amount equal to all or a portion of the Fair
Market Value of the specified number of shares granted to the non-employee
director as a Restricted Stock Unit.

5.2 Length of Risk of Forfeiture. Prior to vesting, all Restricted Stock Units
shall be subject to a substantial risk of forfeiture. A non-employee director’s
Restricted Stock Units shall vest on the first anniversary of the date of grant
of the applicable Restricted Stock Unit, provided that such non-employee
director continues as a member of the Board of Directors for the entirety of
such one-year period. If the non-employee director ceases to be a member of the
Board of Directors before the expiration of such one-year period (except as
provided in Section 5.4), then the Restricted Stock Units shall be forfeited.
Forfeiture of Restricted Stock Units, whether vested or unvested, will result
with respect to a non-employee director who, without the Company’s written
consent and while serving as a member of the Board of Directors, becomes
employed by, or provides consulting services to, a company substantially engaged
in a business that is competitive with a principal business conducted by the
Company.

5.3 Payment of Restricted Stock Units. A non-employee director’s vested
Restricted Stock Units shall be paid to the non-employee director (or, if he or
she is dead, to his or her estate) within 30 days after such non-employee
director ceases to serve as a member of the Board of Directors. Vested
Restricted Stock Units may be paid in shares of Stock or in cash equal to the
Fair Market Value of the shares of Stock on the date that the non-employee
director ceases to serve as a member of the Board of Directors.

5.4 Earlier Vesting and Payment. Notwithstanding anything in this Article V to
the contrary, a non-employee director’s Restricted Stock Units shall immediately
become vested in the event of, and will be paid within 30 days after, (a) such
non-employee director’s death or (b) the occurrence of a Change in Control. Such
Restricted Stock Units may be paid in shares of Stock or in cash equal to the
Fair Market Value of the shares of Stock on the date of the non-employee
director’s death or the date of the Change in Control, as applicable.

5.5 Voting and Dividends. A non-employee director does not have the right to
vote any Restricted Stock Units or to receive dividends on them prior to the
date such Restricted Stock Units are paid to the non-employee director in the
form of shares of Stock (and only to the extent that such Restricted Stock Units
are not paid in cash). However, unless otherwise determined by the Board of
Directors, prior to settlement of a Restricted Stock Unit, a non-employee
director shall be entitled to “Dividend Equivalent Rights” so that the
non-employee director will receive a cash payment in respect of the shares of
Stock in amounts that would otherwise be payable as dividends with respect to
such number of shares of Stock, when and as dividends are paid.

 

4

--------------------------------------------------------------------------------

VI. ADDITIONAL PROVISIONS

6.1 This Plan shall be administered by the Nominating and Corporate Governance
Committee of the Board of Directors, which shall have the power to interpret
this Plan and amend it from time to time as it deems proper. To the fullest
extent practicable, however, the terms and conditions of the 2005 Plan shall be
applicable to this Plan.

6.2 This Plan may be suspended or terminated at any time by action of the Board
of Directors. Notwithstanding any such suspension or termination, amounts
deferred under Section 2.4 above shall continue to be payable in accordance with
the terms of the Director Deferral Plan, and any outstanding stock incentive
awards under this Plan will continue to be governed by the terms of this Plan as
in effect at the time of such suspension or termination, the 2005 Plan or a
prior stock plan, as applicable, and any applicable stock incentive award
agreements.

6.3 The number of shares of Stock covered by any Option, or an award of
Restricted Stock or Restricted Stock Units, shall be proportionately adjusted in
accordance with, and to the extent set forth in, the 2005 Plan.

6.4 The right to receive any compensation under this Plan may not be
transferred, assigned, or subject to attachment or other legal process.

6.5 This Plan shall be governed by and subject to the laws of the State of New
York and applicable Federal laws.

The Company has caused this Plan, effective as of May 1, 1997, to be amended and
restated as of January 1, 2008.

 

AVON PRODUCTS, INC. By:  

/s/ Kim K. Azzarelli

Title:   VP, Associate General Counsel and Corporate Secretary Date:   December
5, 2007

 

5