<PAGE>
                                                                   Exhibit 10(e)


                              THE GILLETTE COMPANY
                         DEFERRED COMPENSATION PLAN FOR
                                OUTSIDE DIRECTORS
                          (As amended October 18, 2001)


1.   PURPOSE

     The purpose of this Deferred Compensation Plan for Outside Directors (the
"Plan") is to advance the interests of The Gillette Company (the "Company") by
enhancing the ability of the Company to attract and retain Directors who are in
a position to make significant contributions to the success of the Company and
to reward Directors for such contributions by payment of one half of their
annual Board retainer on a deferred basis. The Plan also provides a means
whereby Directors may, in addition, elect deferral of the payment of the
remainder of their annual Board retainer, as well as other retainers and fees
which may otherwise become payable to them.

2.   EFFECTIVE DATE OF PLAN

     The Plan shall become effective with respect to all Director retainers and
meeting fees earned on and after January 1, 1997.

3.   ADMINISTRATION

     The Plan shall be administered by the Compensation Committee of the Board
of Directors (the "Committee"). The Committee shall have the authority, not
inconsistent with the express provisions of the Plan, (1) to prescribe forms and
procedures in connection with any election or designation with respect to the
deferral of Directors' retainers and meeting fees, (2) to adopt, amend, and
rescind rules and regulations for the administration of the Plan and (3) to
interpret the Plan and decide any questions and settle any controversies or
disputes that may arise in connection with the Plan. Such interpretations,
determinations and actions of the Committee, and all other determinations and
actions made or taken by the Committee under authority of any provisions of the
Plan, shall be conclusive and binding on all parties.

4.   DELEGATION OF AUTHORITY

     The Committee may delegate to designated officers of the Company its duties
under the Plan subject to such conditions and limitations as the Committee may
prescribe. The Secretary of the Corporation, as the designee of the Committee,
shall act as the Administrator (the "Administrator") of the Plan and shall have
authority to prescribe forms and procedures in connection with any election to
defer compensation made under the Plan.

5.   ELIGIBILITY

     Directors eligible to participate in the Plan ("Eligible Directors") shall
be any Director of the Company who receives retainers and fees as a Director of
the Company and is neither an officer nor an employee of the Company or any of
its subsidiaries.
<PAGE>
                                      -2-


6.   TERMS AND CONDITIONS

     A.  Mandatory Deferrals

     For each Eligible Director, fifty percent (50%) of the annual Board
retainer shall be mandatorily deferred and converted into Deferred Stock Units
(`DSUs'), which shall be credited semiannually in January and July to an account
(a `Deferred Stock Unit Account') maintained for the Eligible Director on the
books of the Company. In the event a director is taxed on the deferred retainer
at the time of deferral under tax laws applicable to the director's income, the
amount of the retainer deferred under this Section shall be reduced by an amount
sufficient to pay the required tax. The number of DSUs (rounded to the nearest
thousandth of a share) to be credited to each Eligible Director's Deferred Stock
Unit Account shall be calculated by dividing the amount of the mandatorily
deferred semiannual retainer by the Fair Market Value of the Company's common
stock for the applicable six-month period. The Fair Market Value of the
Company's common stock for the six-month period shall be based upon the average
of the high and the low prices for the stock as reported by the New York Stock
Exchange for the second trading day following the Company's regular release of
reported earnings after the close of such six-month period unless for good
reason the Administrator determines an alternate date or dates for calculating
the DSUs to be credited for the applicable six-month period.

     B.  Voluntary Deferrals

     Each Eligible Director may elect, in lieu of receiving current payment of
all or any portion of the remainder of the semi-annual Board retainer and/or all
or a portion of any other retainer and meeting fees to which such Eligible
Director otherwise would be entitled, that such payment be deferred until after
the Eligible Director's retirement or resignation as a Director of the Company,
or in either case upon an earlier Change in Control (as that term is defined in
The Gillette Company Retirement Plan) as provided below. The Eligible Director
shall make such election (i) prior to December 15 of the year preceding the year
in which the retainer and fees would be earned or (ii) with respect to an
Eligible Director's first year or partial year of service as a Director, within
thirty days following the date on which such Director first became a Director.
The Eligible Director's election shall include (a) whether the deferred amounts
shall be converted into DSUs and credited to a Deferred Stock Unit Account, or
shall be credited to an account ("Deferred Cash Account", and together with the
Deferred Stock Unit Account, "Accounts") maintained for such Eligible Director
on the books of the Company, and (b) whether payment of the Eligible Director's
Accounts shall be accelerated upon the occurrence of a Change in Control. A
deferral election made by an Eligible Director shall remain in force for the
calendar year so elected and for each year thereafter until changed or revoked
prospectively by written notice to the Administrator not later than December 15
of the year preceding the year to which such change or revocation relates. A
deferral election may not be changed or revoked after the beginning of the year
to which it relates.

     While an Eligible Director's deferral election is in effect, as of the
first day of January and July with respect to Board retainers, or as of the date
when any other retainer is earned, the Company shall credit the amount of
voluntarily deferred retainers and fees for the applicable period either (i) as
DSUs to a Deferred Stock Unit Account, in the same manner as described in
Paragraph 6A above based upon the average of the high and the low prices for the
Company's
<PAGE>
                                      -3-


common stock as reported by the New York Stock Exchange for the applicable date
above or, in the case of any month in which the Company's earnings or other
material information are reported, for the second trading day following the
Company's release of reported earnings in the month to which the deferred
amounts relate, or (ii) to a Deferred Cash Account, in accordance with the
Eligible Director's election.

     C.   Additional Credits to Accounts

     (1) Interest amounts shall be credited semiannually, on June 30 and
December 31, to each Eligible Director's Deferred Cash Account based upon the
balances in the Eligible Director's Deferred Cash Account during that calendar
year. Interest shall be credited at a rate equivalent to the average yield on
10-year U.S. Treasury Bills on the first trading day of each calendar year
("Interest Rate"). The Interest Rate shall be adjusted annually.

     (2) Each time a dividend is paid on the Company's common stock, the Company
shall make additional credits of DSUs to each Eligible Director's Deferred Stock
Unit Account. The number of DSUs to be credited shall be calculated by
multiplying the dividend amount per share of the Company's common stock by the
number of DSUs credited to the Eligible Director's account as of the record date
for the dividend, and dividing the result by the Fair Market Value of the
Company's common stock on the dividend payment date based upon the average of
the high and the low prices for the Company's common stock as reported by the
New York Stock Exchange for that date.

     D.  Payment of Accounts

     As of the date an Eligible Director ceases to serve as a Director of the
Company, the balance then credited to the Eligible Director's Deferred Stock
Unit Account shall be converted to a fixed amount calculated by multiplying the
number of DSUs in his or her Account by the Fair Market Value of the Company's
common stock (determined based upon the average of the high and low prices of
the stock as reported by the New York Stock Exchange for the 20 trading days
immediately preceding the applicable date). The resulting amount shall be
credited to the Eligible Director's Deferred Cash Account, which shall continue
to be credited with additional amounts as prescribed in Paragraph 6C(1) above
until paid in full.

     The entire balance of an Eligible Director's Accounts shall be paid in cash
to the Eligible Director in ten approximately equal annual installments
beginning in January of the year after the Eligible Director ceases to serve as
a Director of the Company, unless the Eligible Director has elected, at least 12
months prior to the cessation of his or her service as a Director of the
Company, to have payment of the Accounts made in a lesser number of
approximately equal annual installments or in a single lump sum.

     Upon the death of an Eligible Director, any remaining amount then credited
to the Eligible Director's Accounts shall be paid in a single lump sum to the
beneficiary designated by the Eligible Director. If the designated beneficiary
does not survive the Eligible Director, or if the Eligible Director does not
designate a beneficiary under this paragraph, any remaining amount then credited
to the Eligible Director's Accounts at the death of the Eligible Director shall
be paid in a single lump sum to the estate of the Eligible Director. An Eligible
Director may
<PAGE>
                                      -4-


designate or change a beneficiary at any time by completing and delivering to
the Administrator a beneficiary designation form as prescribed by the
Administrator.

     E.  Change in Control

     Upon the occurrence of a Change in Control, notwithstanding anything
contained in the Plan to the contrary, the amounts then credited to the Accounts
of each Eligible Director who has previously elected to have payment of his or
her Accounts accelerated hereunder shall be paid as soon as practicable
following the Change in Control. For the purposes of the preceding sentence,
DSUs credited to the Deferred Stock Unit Accounts subject to the payment
acceleration elections of Eligible Directors shall be valued based upon the
average of the high and low prices of the Company's common stock as reported by
the New York Stock Exchange for the 20 trading days immediately preceding the
Change in Control.

7.   AMENDMENT AND TERMINATION

     The Board of Directors may amend or terminate this Plan at any time;
however no such amendment shall reduce the then existing balance in any Eligible
Director's Account or extend the time during which the Director has elected to
receive payments. In the event of termination of the Plan, the Company may elect
to satisfy its obligations under this Plan by making an immediate lump sum
payment in cash or in such other manner as it determines appropriate.

8.   PRIOR PLANS

     This Plan is intended to replace The Gillette Company Outside Directors'
Stock Ownership Plan ("ODSOP") and the Directors' Deferred Compensation
Provisions, subject to the following:

     (1) No new contributions to Directors' ODSOP accounts shall be made after
October 31, 1996; however, these accounts shall be maintained and the shares of
Company common stock held in these accounts shall continue to earn dividends.

     (2) Eligible Directors may convert cash amounts previously deferred under
the Directors' Deferred Compensation Provisions into DSUs under this Plan by
making a written election before December 15, 1996. These cash deferrals shall
be converted to DSUs based the average of the high and low prices of the
Company's common stock as reported by the New York Stock Exchange for last
trading day of the months of July through December, 1996, and shall be credited
to the Eligible Director's Deferred Stock Unit Account. If such an election is
not made, the Eligible Director's cash deferral balance under the Directors'
Deferred Compensation Provisions as of December 31, 1996 shall be credited to a
Deferred Cash Account under this Plan as of January 1, 1997.

9.   SEVERABILITY

     If it shall ever be determined that, notwithstanding the Company's intent
and purpose for establishing and maintaining this Plan, an Eligible Director is
required to include all or part of any deferred amount in his or her gross
income for any tax purposes prior to the time that such amount would be required
to be paid under the terms of the Plan, whether by taxing authorities of
<PAGE>
                                      -5-


the United States or other sovereign nation or political subdivisions thereof,
the Administrator has the discretion to cause the amount equal to the consequent
tax liability to be paid to the Eligible Director from his or her Accounts.

10.  ADJUSTMENT PROVISIONS

     In the event of a stock dividend, stock split or combination of shares,
recapitalization or other changes in the Company's common stock, or other
distribution to common stockholders other than regular cash dividends, after the
effective date of the Plan, the number of DSUs credited to Deferred Stock Unit
Accounts and other relevant provisions hereunder shall be adjusted accordingly
by the Committee.

11.  SOURCE OF PAYMENTS

     All amounts payable under the Plan shall be paid by the Company from its
general assets. Notwithstanding the maintenance of records on its books as
described in Paragraph 6 above, no Eligible Director shall have any right to or
interest in any assets of the Company other than as an unsecured general
creditor, and no separate fund shall be established in which any Eligible
Director has any right or interest. The foregoing shall not prevent the Company
from establishing a fund from which to satisfy its payment obligations under the
Plan.

12.  NO ASSIGNMENT OF INTEREST

     The interest of any Eligible Director under the Plan may not be assigned,
alienated, encumbered or otherwise transferred, and shall not be subject to
attachment, garnishment, execution or levy; and any attempted assignment,
alienation, encumbrance, transfer, attachment, garnishment, execution or levy
shall be void and of no force or effect.


                                     ###