Exhibit 10.1


 


Amendment to Employment Agreement


 


THIS
AMENDMENT (“Amendment”), dated as of December 31, 2008,
to the Employment Agreement, dated as of July 1, 2000 and amended as of July 1,
2002 and  November 16, 2005 (the
“Agreement”), between The Estée Lauder Companies Inc., a Delaware corporation
(“the “Company”), and Leonard A. Lauder, a resident of (omitted) (the
“Executive”).


 


W I T N E S S E T H:


 


WHEREAS, the Executive
and the Company are parties to the Agreement; and


 


WHEREAS, the Company and
the Executive wish to amend the Agreement to comply with Section 409A of
the Internal Revenue Code and the regulations promulgated thereunder as set
forth herein;


 


NOW, THEREFORE, in
consideration of the foregoing and of the mutual covenants and obligations hereinafter
set forth, the parties hereto, intending to be legally bound, hereby agree to
amend the Agreement as follows:


 


1.               Amendments.


 


A.           Section 3(a) of
the Agreement shall be deleted and shall read in its entirety as follows:


 


Base Salary.
As compensation for all services to be rendered pursuant to this Agreement and
as payment for the rights and interests granted by the Executive hereunder, the
Company shall pay or cause any of its subsidiaries to pay the Executive a base
salary (the “Base Salary”) of $ 1,440,000. 
Subject to Section 5(i) of
this Agreement, all amounts of Base Salary provided for hereunder shall be
payable in accordance with the regular payroll policies of the Company in
effect from time to time.


 


B.             Section 3(b) of
the Agreement shall be amended by deleting the last sentence and replacing it
with the following:


 


Any bonus opportunities granted to the Executive shall be at the
discretion of the Compensation Committee. 
All such opportunities shall be subject to the terms and conditions of
the Bonus Plan, which are incorporated herein by reference; provided, however,
except that with respect to bonuses deferred in accordance with Section 3(d) hereof
and as otherwise indicated under Section 5, the bonus payout with respect
to any fiscal year shall be paid to Executive no later than the 15th day of the
third month following the end of such fiscal year.


 


C.             Section 3(d) of
the Agreement shall be deleted and shall read in its entirety as follows:


 


(d) Deferral.


 


(i)  Deferral
Elections—In General.  The Executive
may elect to defer payment of all or any part of any incentive bonus
compensation payable under 


 


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Section 3(b) by making an election, in a
manner prescribed by the Company, on or before December 31 of the calendar
year before the Contract Year begins (or such earlier date as may be necessary
to comply with the applicable tax laws and regulations).


 


(ii)  Deferral
Elections—Performance-Based Compensation. 
For any incentive bonus compensation that qualifies as performance-based
compensation under Treas. Reg. Section 1.409A-1(e) and is based upon
a performance period of at least twelve (12) months, the Executive may make a
deferral election at any time before the date that is six (6) months before
the applicable performance period ends, but only if (i) the incentive
bonus compensation is not readily ascertainable when the election is made and (ii) the
service provider has performed services continuously from the later of the
beginning of the performance period or the date the performance criteria are
established.


 


(iii)  Amounts
Subject to Section 162(m).  If
any amount of Base Salary, any amount payable under the Bonus Plan, or any
other amount payable to the Executive is not currently deductible under Section 162(m) of
the Internal Revenue Code of 1986, as amended (the “Code”), or like or
successor provisions (a “Non-Deductible Amount”), the Company will defer
payment of the Non-Deductible Amount until section 162(m) no longer
applies to the Executive.  Any amounts so
deferred will be credited to a bookkeeping account in the name of the Executive
as of the date scheduled for payment (the “Deferred Compensation
Account”).  The Deferred Compensation
Account will be credited with interest as of each June 30 during the term
of deferral, compounded annually, at an annual rate equal to the annual rate of
interest announced by Citibank N.A. in New York, New York as its base rate in
effect on such June 30, but limited to a maximum annual rate of 9%.


 


(iv)  Payment of
Amounts Deferred and Vested On or Before December 31, 2004.  Amounts credited to the Executive’s Deferred
Compensation Account on or before December 31, 2004, and any subsequently
credited interest, will be paid in cash to the Executive (or the Executive’s
designated beneficiary if the Executive dies before payment)  subject to applicable withholding taxes.  The Company will choose the payment date,
which will be no later than 90 days after Executive’s employment with the
Company terminates, unless the Executive requests before terminating a later
payment date or dates and the Company agrees to the request.


 


(v)  Payment of
Amounts Deferred and Vested After December 31, 2004.  Subject to Section 5(i), amounts
credited to the Executive’s Deferred Compensation Account after December 31,
2004 will be paid to the Executive (or the Executive’s designated beneficiary
if the Executive dies before payment), subject to applicable withholding taxes
on, or as soon as practicable after, the date the Executive separates from
service with the Company (as defined in Treas. Reg. section 1.409A-1(h)).  The Non-Deductible Amount will be paid at the
earliest date at which the Company reasonably expects that the deduction will
not be limited or eliminated by Code section 162(m).  The Company, in its sole discretion, may
provide an investment facility for all or a portion of such deferred amounts,
but is not required to do so.


 


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(vi)  For purposes
of clarity, the provisions of this Section 3(d) do not apply to the
arrangement referred to in Section 3(e).


 


D.            Section 4(b) of
the Agreement shall be amended by adding the following sentence to the end of
such section:


 


Such
reimbursement shall generally occur within seventy-five (75) days after the end
of the calendar year of presentment, provided that such presentment occurs
within ninety (90) days after the date the related expense were incurred.


 


E.              Section 5(a) of
the Agreement shall be deleted and shall read in its entirety as follows:


 


(a) Permanent Disability. 
In the event of the “permanent disability” (as hereinafter defined) of
the Executive during the Term of Employment, the Company shall have the right,
upon written notice to the Executive, to terminate the Executive’s employment
hereunder, effective upon the giving of such notice (or such later date as
shall be specified in such notice).  In
the event of such termination, the Company shall have no further obligations
hereunder, except that the Executive shall be entitled (i) to receive any
amounts or benefits to which the Executive may otherwise have been entitled to
hereunder prior to the effective date of termination; (ii) to be paid his
Base Salary under Section 3(a) hereof for a period of two (2) years
from the effective date of termination (the “Disability Continuation Period”); provided,
however, that the Company shall only be required to pay that amount of
the Executive’s Base Salary which shall exceed payments, if any, to the
Executive under pension or long-term disability plans of the Company; and (iii) to receive bonus compensation during the
Disability Continuation Period  at an
annual rate equal to the average of actual bonuses paid or payable to Executive
during the Term of Employment in accordance with Section 3(b) hereof,
or, if no such bonus has been paid or is payable as of the date of such
termination, at an annual rate equal to his Base Salary under Section 3(a) hereof
(the “Calculated Bonus Rate”).    In
addition, upon termination for permanent disability, the Executive shall
continue to participate, to the extent permitted by applicable law and
regulations and the applicable benefit plan, program or arrangement, in any and
all healthcare, life insurance and accidental death and dismemberment insurance
benefit plans, programs or arrangements of the Company during the Disability
Continuation Period (disregarding any required delay in payments under Section 5(i)).
Thereafter, the Executive’s rights to participate in such programs and plans,
or to receive similar coverage, if any, shall be as determined under such
programs. Because continued participation in any qualified pension and
qualified retirement savings plans of the Company is not permitted during the
Disability Continuation Period, the Company shall provide to the Executive,
subject to Section 5(i), cash payments, to be paid in accordance with Section 5(i)(ii),
equal to the sum of (x) the maximum qualified defined contribution
retirement savings plan match for pre-tax and after-tax contributions allowable
by the plan and by applicable laws and regulations for each year during the
Disability Continuation Period (or other period as expressly provided herein),
and (y) the excess of the benefit that would have been received by the
Executive had he been credited with additional years of age and service equal
to the Disability Continuation Period (or other period as expressly provided
herein) over the actual benefit to which the Executive is entitled, in each
case, under any and all qualified and non-qualified defined 


 


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benefit pension plans and qualified defined contribution retirement
savings plans in which the Executive participates as of the date of termination
of employment, calculated as of and based upon the Executive’s date of
termination (such sum, the “Pension Replacement Payment”).  Notwithstanding the above, any amounts
payable under this Section 5(a) that are separation pay as described
under Treas. Reg. §1.409A-1(b)(9)(iii)(A) shall be paid no later than December 31
of the second calendar year following the year in which the Executive’s
termination for permanent disability occurs; any amounts payable under this Section 5(a) that
are not otherwise exempt from Code section 409A are subject to, and payable in
accordance with, Section 5(i) of this Agreement.  Except as otherwise provided in this Section 5(a),
the Company will have no further obligations under Sections 3 and 4 hereof or
otherwise.  For purposes of this
paragraph, “permanent disability” means any disability as defined under the
Company’s applicable disability insurance policy or, if no such policy is
available, any physical or mental disability or incapacity that renders the
Executive incapable of performing the services required of him in accordance
with his obligations under Section 2 hereof for a period of six (6) consecutive
months or for shorter periods aggregating six (6) months during any
twelve-month period.


 


F.              Section 5(d) of
the Agreement shall be deleted and shall read in its entirety as follows:


 


(d) Termination
Without Cause.  The Company shall have the right, upon sixty
(60) days’ prior written notice given to the Executive, to terminate the
Executive’s employment for any reason whatsoever (excluding for Cause (as defined
below)).  In the event of such
termination, the Company shall have no further obligations hereunder, except
that the Executive shall be entitled to (i) to receive any amounts or
benefits to which the Executive may otherwise have been entitled to hereunder
prior to the effective date of termination; (ii) receive as damages for a
period ending on a date three (3) years from the date of termination
without Cause, to be paid in accordance with Section 5(i)(ii), (A) Base
Salary as established under and in accordance with Section 3(a) hereof
and (B) bonus compensation at the Calculated Bonus Rate, to be paid in
accordance with Section 5(i)(ii);
and (iii) participate for a period ending on a date three (3) years
from the date of termination without Cause (the “Without Cause Continuation
Period”), to the extent permitted by applicable law and regulations and the
applicable benefit plan, program or arrangement, in any and all healthcare,
life insurance and accidental death and dismemberment insurance benefit plans,
programs or arrangements, on terms identical to those applicable to full-term
senior officers of the Company.  Because
continued participation in any qualified pension and qualified retirement
savings plans of the Company is not permitted during the Without Cause
Continuation Period, the Company shall provide to the Executive, subject to Section 5(i),
cash payments, to be paid in accordance with Section 5(i)(ii), equal to
the Pension Replacement Payment (as defined in Section 5(a)) with respect
to the Without Cause Continuation Period. 
Notwithstanding the above, any amounts payable under this Section 5(d) that
are separation pay as described under Treas. Reg. §1.409A-1(b)(9)(iii)(A) shall
be paid no later than December 31 of the second calendar year following
the year in which the Executive’s termination pursuant to this Section 5(d) occurs;
any amounts payable under this Section 5(d) that are not otherwise
exempt from Code section 409A are subject to, and payable in accordance with, Section 5(i) of
this Agreement. Except as otherwise provided in this Section 5(d), the
Company will have no further obligations under Sections 3 and 4 hereof or 


 


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otherwise.  In the event of termination pursuant to this Section 5(d),
the Executive shall not be required to mitigate his damages hereunder.


 


G.             Section 5(f) of
the Agreement shall be deleted and shall read in its entirety as follows:


 


(f)                                    Change
of Control.


 


(i)                                     Definitions.  For purposes of this Agreement,


 


(A) a “Change of
Control” shall be deemed to have occurred upon any of the following events:


 


(1)  a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14(A) promulgated
under the Securities Exchange Act of 1934, as amended; or


 


(2)  during any period of two (2) consecutive years, the
individuals who at the beginning of such period constitute the Company’s Board
of Directors or any individuals who would be “Continuing Directors” (as defined
below) cease for any reason to constitute a majority thereof; or


 


(3)  the Company’s Class A Common Stock shall cease to be
publicly traded; or


 


(4)  the Company’s Board of Directors shall approve a sale of all
or substantially all of the assets of the Company, and such transaction shall
have been consummated; or


 


(5)  the Company’s Board of Directors shall approve any merger,
exchange, consolidation, or like business combination or reorganization of the
Company, the consummation of which would result in the occurrence of any event
described in Section 5(f)(i)(A)(2) or (3) above, and such
transaction shall have been consummated.


 


Notwithstanding
the foregoing, (X) changes in the relative beneficial ownership among
members of the Lauder family and family-controlled entities shall not, by
itself, constitute a Change of Control of the Company, (Y) any spin-off of
a division or subsidiary of the Company to its stockholders  shall not constitute a Change of Control of
the Company.


 


(B)  “Continuing
Directors” shall mean (1) the directors in office on December 31,
2008 and (2) any successor to such directors and any additional director
who after December 31, 2008 was nominated or selected by a majority of the
Continuing Directors in office at the time of his or her nomination or
selection.


 


(C)  “Good Reason”
means the occurrence of any of the following, without the express written
consent of the Executive, after the occurrence of a Change in Control:


 


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(1)  (a) the assignment to the Executive of any duties
inconsistent in any material adverse respect with the Executive’s position,
authority or responsibilities as contemplated by Section 2 hereof, or (b) any
other material adverse change in such position, including title, authority or
responsibilities;


 


(2)  any failure by the Company to comply with any provisions of
Sections 3 or 4 hereof, other than an insubstantial or inadvertent failure
remedied by the Company promptly after receipt of notice thereof given by the
Executive ;


 


(3)  the Company’s requiring the Executive to be based at any
office or location more than fifty (50) miles from that location at which he
performed his services specified under the provisions of Section 2
immediately prior to the Change in Control, except for travel reasonably
required in the performance of the Executive’s responsibilities; or


 


(4)  any failure by the Company to obtain the assumption and
agreement to perform this Agreement by a successor as contemplated by Section 13,
unless such assumption occurs by operation of law.


 


(ii)                                  Termination for Good Reason. 
Following the occurrence of a Change of Control, the Executive may
terminate his employment for Good Reason. 
Such termination shall be deemed to be a termination without Cause and
shall be controlled by the provisions of Section 5(d) and Section 5(i) hereof,
including the required delay in payment for the six-month period following the
date of termination for any amounts determined to be subject to Code section
409A, as described in Section 5(i). 
Except as otherwise provided in this Section 5(f)(ii), the Company
will have no further obligations under Sections 3 and 4 or otherwise.


 


H.            A new Section 5(i) shall
be added to the Agreement and shall read in its entirety as follows:


 


(i)                               Section 409A of the Code.  (i) It
is the intention of the parties to this Agreement that no payment or
entitlement pursuant to this Agreement will give rise to any adverse tax
consequences to the Executive under Section 409A of the Code and
Department of Treasury regulations and other interpretive guidance issued
thereunder, including that issued after the date hereof (collectively, “Section 409A”).  The Agreement shall be interpreted to that
end and, consistent with that objective and notwithstanding any provision
herein to the contrary, the Company may unilaterally take any action it deems
necessary or desirable to amend any provision herein to avoid the application
of or excise tax under Section 409A. 
Further, no effect shall be given to any provision herein in a manner
that reasonably could be expected to give rise to adverse tax consequences
under that provision.  The Company shall
from time to time compile a list of “specified employees” as defined in, and
pursuant to, Treas. Reg. Section 1.409A-1(i).  Notwithstanding any other provision herein,
if the Executive is a specified employee on the date of termination, no payment
of compensation under this Agreement shall be made to the Executive during the
period lasting six (6) months from the date of termination unless the
Company determines that there is no reasonable basis for believing that making
such payment would cause the Executive to suffer any adverse tax consequences 


 


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pursuant to Section 409A of the Code.  If any payment to the Executive is delayed
pursuant to the foregoing sentence, such payment instead shall be made on the
first business day following the expiration of the six-month period referred to
in the prior sentence, unless specified otherwise in Section 5(i)(ii)   hereof. Although the Company shall consult
with Executive in good faith regarding implementation of this Section 5(i),
neither the Company nor its employees or representatives shall have liability
to the Executive with respect to any additional taxes that the Executive may be
subject to in the event that any amounts under this Agreement are determined to
violate Code section 409A.


 


(ii)  Notwithstanding
the above, amounts described as being subject to payment in accordance with the
provisions of this Section 5(i)(ii) shall be subject to a delay in
payment for a six-month period following the date of termination and shall be
paid as follows:  For any Base Salary
under Section 5(a)(ii) or Section 5(d)(ii)(A) and for any
bonus compensation under Section 5(a)(iii) or Section 5(d)(ii)(B) to
be continued beyond the date of termination and for any Pension Replacement
Payment, all payments that would have been made during the six-month period
immediately following the date of termination shall be made in a single cash
payment on the first business day following the expiration of such six-month
period, and as of the first business day following the expiration of such
six-month period all such payments shall resume in accordance with the regular
payroll practices of the Company until the end of the specified period; any
bonus payments under Section 5(a)(iii) or Section 5(d)(ii)(B) shall
be paid in a single lump sum payment on the first business day following the
expiration of such six-month period.


 


2.               Miscellaneous.


 


A.                          Except
as provided above, all other terms and conditions of the  Agreement shall remain the same.


B.                            Capitalized
terms used in this Amendment shall have the meanings ascribed to such terms in
the Agreement, except to the extent the term is modified herein.


C.                            This
Amendment shall be subject to, and governed by, the laws of the State of New
York applicable to contracts made and to be performed therein.


 


IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first written above.


 


	
   

  	
  THE ESTÉE LAUDER COMPANIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Amy DiGeso

  
	
   

  	
  Name: 

  	
  Amy DiGeso

  
	
   

  	
  Title:

  	
  Executive Vice
  President –

  
	
   

  	
   

  	
   Global
  Human Resources

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Leonard A.
  Lauder

  
	
   

  	
   

  	
  Leonard A.
  Lauder

  
				



 


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