[Form of Deferred Compensation Agreement (interest-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 the future
in connection with your service on the Board of Directors of the Company and
certain Committees of that Board. 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 certain Committees of that Board
     during the period covered by this agreement (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 Deferred Payment Account in your name, and
     shall credit to such Account the amounts otherwise payable to you in cash
     on the date such cash payment would have been made had it not been
     deferred.

3.   (a) Amounts accrued from time to time in the Deferred Payment Account shall
     additionally be credited with interest, compounded annually, as of December
     31, [year] and each December 31 thereafter until all Deferred Payments and
     accrued interest credited to the Deferred Payment Account shall have been
     paid in accordance with the terms of this letter agreement. Appropriate
     pro-ration shall be made for part year interest credits.

     (b) The rate of interest credited from time to time pursuant to this
     paragraph 3 shall be the Citibank base rate in effect as of the date of
     such credit.

<PAGE>


4.   Subject to the terms of paragraph 5, below, the amounts credited to the
     Deferred Payment Account shall be paid in a lump sum, as of the earlier to
     occur of the first January 1st after the last date of your service as a
     member of the Board of Directors of the Company.

5.   In the event of your death prior to the payment to you of all amounts then
     credited to the Deferred Payment Account, amounts then unpaid, including
     interest as set out at paragraph 3, above, from the preceding December 31
     to the date of payment, shall be paid to your executor or administrator
     within ninety days of the date of your death.

6.   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 above.

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.

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:


-------------------------------
[Director]
Date: