[Form of Deferred Compensation Agreement (stock-based)]


[DATE]

[Name of Director]
[Address]

Dear [Director]:

You have elected to defer receipt of certain amounts which will otherwise become
payable to you by The Estee Lauder Companies Inc. (the "Company") in connection
with your service on the Board of Directors of the Company and one or more
Committees of that Board and requested that such deferrals be measured by
reference to the Company's Class A Common Stock. This letter sets forth the
terms of the deferral facility.

1.   This agreement shall cover all amounts otherwise payable to you in cash by
     the Company in connection with your service as a member of the Board of
     Directors of the Company, and meeting and chairmanship fees otherwise
     payable in connection with your service on the Company's Board and any
     Committees of that Board (the "Deferred Payments"). Deferred Payments shall
     not include stock-based compensation paid or payable to you (plus the
     reimbursement for taxes related to the grant of 2,000 shares to you) or
     reimbursement for expenses incurred in connection with your Company
     activities.

2.   The Company shall establish a Stock Unit Account in your name, and shall
     credit to such Account that number of units equal to (a) the amount of a
     Deferred Payment otherwise payable to you in cash divided by (b) the
     closing price per share of the Class A Common Stock on the New York Stock
     Exchange the date such payment would have been made had it not been
     deferred. Until full payment has been made to you in accordance with
     paragraph 3, on each date that a dividend is paid on the Class A Common
     Stock, the Company shall credit to the Stock Unit Account a number of units
     equal to (x) the aggregate dividend payable on a number of shares equal to
     the number of units credited to the Stock Unit Account as of such payment
     date divided by (y) the closing price per share of the Class A Common Stock
     on the New York Stock Exchange on such payment date.

3.   Subject to the terms of paragraph 4, below, the amounts credited to the
     Stock Unit Account shall be paid in a lump sum in cash, as of the first
     January 1st after the last date of your service as a member of the Board of
     Directors of the Company. The value of each unit shall be equal to the
     average closing price of the Class A Common Stock on the New York Stock
     Exchange for the 20 trading days next preceding the payment date. If payout
     of the Stock Unit Account shall


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     be made after a record date for dividends on the Class A Common Stock but
     before the payment date for such dividend, then the dividend equivalent
     amount that would have been credited to the Stock Unit Account shall be
     paid to you in cash.

4.   In the event of your death prior to the payment to you of all amounts then
     credited to the Stock Unit Account, all such remaining amounts shall be
     paid to your executor or administrator within ninety days after the date
     that such person shall be duly qualified in such capacity. For purposes of
     this paragraph, the units shall be valued and dividend equivalents shall be
     handled, as provided in paragraph 3 above.

5.   This agreement shall continue in full force and effect unless it shall be
     terminated, by you or by the Company, by either party giving written notice
     of such termination. If such notice is given, termination shall be
     effective as of the first January 1 that occurs more than ninety (90) days
     after the date of such notice. Notwithstanding the giving of such notice,
     amounts deferred prior to the effective date of termination shall be paid
     at the time and in the manner set forth in paragraph 3 or 4, above.

6.   If any changes or adjustments are made to the outstanding Class A Common
     Stock then corresponding adjustments shall be made to units in the Stock
     Unit Account as if the units were governed by the Company's Fiscal 1999
     Share Incentive Plan or as authorized by the Board of Directors of the
     Corporation.

7.   Nothing in this letter agreement shall be deemed to create a trust or
     segregated asset account of any nature, and no money or other thing of
     value shall be separately held by the Company in connection with its
     obligation to make Deferred Payments hereunder. The attempt by any person
     to anticipate, hypothecate or otherwise receive value in respect of such
     obligation prior to the date scheduled for the payment of Deferred Payments
     under the terms of this letter agreement shall be null and void and of no
     force or effect.


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<PAGE>


Please indicate your acknowledgment of and agreement to all of the foregoing by
signing the enclosed copy of this letter and returning it to [Paul E. Konney,
Senior Vice President, General Counsel and Secretary] of the Company at the
address above.

                                            Very truly yours,

                                            THE ESTEE LAUDER COMPANIES INC.



                                            By:
                                                --------------------------------
                                                Name:
                                                Title:

ACKNOWLEDGED AND AGREED TO:



--------------------------------
[Name]
Date:


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