Document:

Exhibit 10.1

 

DOMESTIC

 

Stock Option Agreement

Under

The Estée Lauder Companies Inc.

Amended and Restated Fiscal 2002 Share Incentive Plan (the “Plan”)

 

This
STOCK OPTION AGREEMENT (the “Agreement”) provides for the granting of options
by The Estée Lauder Companies Inc., a Delaware corporation (the “Company”), to
the participant, an employee of the Company or one of its subsidiaries (the “Employee”
or the “Participant”), to purchase shares of the Company’s Class A Common
Stock, par value $0.01 (the “Shares”), subject to the terms below (the “Stock
Options” or “Options”).  The name of the “Participant,”
the “Grant Date,” the aggregate number of Shares that may be purchased pursuant
to this Agreement, and the “Exercise Price” per Shares are stated in the attached
“Notice of Grant,” and are incorporated by reference.  The other terms of the Options are stated in
this Agreement and in the Plan.  Terms
not defined in this Agreement are defined in the Plan, as amended.

 

The
Stock Options described in this Agreement are granted pursuant to the Company’s
Amended and Restated Fiscal 2002 Share Incentive Plan, as may be amended from
time to time (the “Plan”), and are subject in all respects to the provisions of
the Plan.  The Stock Options granted
under this Agreement are not Incentive Stock Options (as defined in Section 422(b) of
the Internal Revenue Code of 1986, as amended (the “Code”)).

 

1.  Payment of Exercise
Price.  The Company will
provide and communicate to the Employee various methods of exercise.  In
all cases, upon exercise, the Employee must deliver or cause to be delivered to
the Company (or its agent designated for the purpose) upon settlement of the
exercise sufficient cash or sufficient number of Shares with value equal to or
exceeding the Exercise Price per Share.  The Employee also is required to
deliver or cause to be delivered sufficient cash to cover the applicable tax
withholding in accordance with Section 5 of this Agreement and fees in
connection with the exercise.  To facilitate exercise, the Company may
enter into agreements for coordinated procedures with one or more brokerage
firms or financial institutions.

 

2.   Exercise Period.

 

a.  General.  Subject to other provisions contained in this
Agreement and in the Plan, Stock Options granted under this Agreement will be
exercisable in installments as specified under “Exercise Period” in the
attached “Notice of Grant”.

 

Stock
Options awarded under this Agreement are exercisable until the close of
business on the tenth anniversary of the Grant Date; after this date, the Stock
Options expire.

 

b.  Death or Disability.  If the Employee dies or becomes totally and
permanently disabled (as determined under the Company’s long term disability
program), each Stock Option awarded but not yet exercisable as of the Employee’s
date of death or disability determination will become immediately
exercisable.  The period during which the
Stock Option may be exercised will commence on the day after the Employee’s
date of death or disability determination and end on the earlier of the close
of business on the date of (i) the first anniversary of the Employee’s
death or disability determination or (ii) the tenth anniversary of the
Grant Date.

 

c.  Retirement.  Subject to Section 3, if the Employee
formally retires under the terms of the Estée Lauder Inc. Retirement Growth
Account Plan (or an affiliate or a successor plan or program of similar
purpose), each Stock Option awarded but not yet exercisable as of the date of
retirement will become immediately exercisable. Each Stock Option awarded may
thereafter be exercised until the close of business on the date of the tenth
anniversary of the Grant Date.  If the
Employee dies during active employment after the attainment of age 55 and the
completion of 10 or more years of service, or after the attainment of age 65
and the completion of 5 or more years of service, without formally retiring
under the terms of the Estée Lauder Inc. Retirement Growth Account Plan (or an
affiliate or a successor plan or program of similar purpose), the Employee will
have deemed to be retired as of the date of death and this

 

 

Section 2(c) will
apply rather than Section 2(b).  If
the Employee dies or becomes disabled after retirement as contemplated by this Section 2(c),
the provisions of this section shall apply.

 

d.  Other Termination of
Employment..

 

(1) Subject
to Section 3, if the Employee terminates voluntarily, each Stock Option
exercisable but unexercised as of the effective date of such termination may be
exercised until the close of business on the date first to occur of (i) ninety
(90) days after the effective date of such termination and (ii) the tenth
anniversary of the Grant Date.  Each
Stock Option awarded but unexercisable as of the date of such termination will
be forfeited.

 

(2) Subject
to Section 3, if the Employee is terminated at the instance of the Company
or relevant subsidiary without Cause (as defined below) or by the Employee for
Good Reason (as defined below) after a Change in Control, each Stock Option
awarded but unexercisable as of the date of termination will become immediately
exercisable.  Each Stock Option awarded
may be exercised until the close of business on the date first to occur of (i) ninety
(90) days after the effective date of such termination and (ii) the tenth
anniversary of the Grant Date.  For this
purpose, “Cause” is defined in the employment agreement in effect between the
Employee and the Company or any subsidiary, including an employment agreement
entered into after the Grant Date.  In
the absence of an employment agreement, “Cause” means any breach by the
Employee of any of his or her material obligations under any Company policy or
procedure, including, without limitation, the Code of Corporate Conduct and the
Policy on Avoidance of Insider Trading.

 

(3) Subject
to Section 3, if the Employee terminates for Good Reason (as defined
below) on or following a Change in Control, each Stock Option awarded but
unexercisable as of the date of termination will become immediately
exercisable.  Each Stock Option awarded
may be exercised until the close of business on the date first to occur of (i) ninety
(90) days after the effective date of such termination and (ii) the tenth
anniversary of the Grant Date.  “Good
Reason” means the occurrence of any of the following, without the express
written consent of the Participant, within three (3) years after the
occurrence of a Change in Control:

 

(a)           (i) the
assignment to the Participant of any duties inconsistent in any material
adverse respect with the Participant’s position, authority or responsibilities
immediately prior to the Change in Control, or (ii) any other material
adverse change in such position, including title, authority or
responsibilities;

 

(b)           any failure by the
Company to pay any amounts for compensation or benefits owed to the Participant
or a material reduction of the overall amounts of compensation and benefits in
effect prior to the Change in Control, other than an insubstantial or
inadvertent failure remedied by the Company promptly after receipt of notice
thereof given by the Participant;

 

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

 

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

 

(4) In
the event of termination for Cause, all outstanding Stock Options held by the
Employee are forfeited.

 

3.  Post-Employment Exercises.  No Stock Option represented by this Agreement
may be exercised after termination of the Employee’s employment with the
Company (or any of its subsidiaries) unless as provided for in Section 2b,
2c or 2d hereof.  The exercise of any
Stock Option after termination of the Employee’s employment by reason of
retirement in accordance with Section 2c, or due to termination

 

2

 

by
the Employee or termination by the Company or relevant subsidiary without Cause
in accordance with Section 2d, is subject to satisfaction of the
conditions precedent that the Employee neither (i) competes with, takes
other employment with, or renders services to a competitor of the Company, its
subsidiaries, or affiliates without the Company’s written consent, nor (ii) conducts
herself or himself in a manner adversely affecting the Company.  All Stock Options that cannot be exercised
after termination of the Employee’s employment will be forfeited.

 

4.  Change in
Control.  Upon a Change in
Control during the Exercise Period, each unexercisable Stock Option will vest
and become exercisable by the Participant in accordance with the Plan and this
Agreement, unless the unexercisable Stock Option is assumed by an acquirer in
which case the provisions of Section 2 shall continue to apply.  If an unexercisable Stock Option is not
assumed by the acquirer and the Shares cease to be outstanding immediately
after the Change in Control (e.g., due to a merger with and into another
entity), then the consideration to be received per Share upon exercise of the
stock option will equal the consideration paid to each stockholder per Share
generally upon the Change in Control.  If
the exercise price of the Stock Option is equal to or greater than the
consideration paid to each stockholder per Share generally upon the Change in
Control and the Stock Option is not assumed, then the Stock Options shall
expire upon the Change in Control.

 

5.  Withholding.  Regardless of any action the Company or the
Participant’s employer (the “Employer”) takes with respect to any or all income
tax, social security, payroll tax, or other tax-related withholding (“Tax-Related
Items”), Participant acknowledges that the ultimate liability for all
Tax-Related Items legally due by Participant is and remains his or her
responsibility.  Furthermore, Participant
acknowledges that the Company and/or the Employer (i) make no
representations or undertakings regarding the treatment of any Tax-Related
Items in connection with any aspect of the Stock Options, including the grant
of the Stock Options, the exercise of the Stock Options, the subsequent sale of
Shares acquired under the Plan and the receipt of any dividends; and (ii) do
not commit to structure the terms of the grant of the Stock Options or any
aspect of Participant’s participation in the Plan to reduce or eliminate his or
her liability for Tax-Related Items.

 

Prior
to the relevant taxable event, Participant shall pay or make adequate
arrangements satisfactory to the Company and/or the Employer to satisfy all
withholding obligations of the Company and/or the Employer.  In this regard, Participant authorizes the
Company and/or the Employer to withhold all applicable Tax-Related Items
legally payable by Participant from his or her wages or other cash compensation
paid by the Company and/or the Employer or from proceeds of the sale of the
Shares acquired under the Plan. 
Alternatively, or in addition, the Company may (i) sell or arrange
for the sale of Shares that Participant acquires under the Plan to meet the
withholding obligation for the Tax-Related Items, and/or (ii) withhold in
Shares, provided that the Company only withholds the amount of Shares necessary
to satisfy the minimum withholding amount. 
If the Company satisfies the Tax-Related Item withholding obligation by
withholding a number of Shares as described herein, Participant will be deemed
to have been issued the full number of Shares due to Participant at exercise,
notwithstanding that a number of the Shares is held back solely for purposes of
such Tax-Related Items.

 

Finally,
Participant shall pay to the Company or the Employer any amount of Tax-Related
Items that the Company or the Employer may be required to withhold as a result
of his or her participation in the Plan that cannot be satisfied by the means
previously described.  The Company may
refuse to issue Shares under the Plan and refuse to deliver the Shares if
Participant fails to comply with his or her obligations in connection with the
Tax-Related Items as described in this Section.

 

6.   Transferability. Stock
Options granted under this Agreement may be transferred under laws of descent
and distribution or, during Employee’s lifetime, solely to the Employee’s
spouse, siblings, parents, children and grandchildren or trusts for the
benefits of such persons, or partnerships, corporations, limited liability
companies, or other entities owned solely by such persons, including trusts for
such persons.  Any transfer of Stock
Options will have no effect until written notice (providing sufficient details
relating to the proposed transfer, as required by the Company at that time) is
received and confirmed by the Company. 
The Employee will remain liable for all obligations of Employee and his
or her transferee or

 

3

 

transferees.  Each transferee will also be subject the
Employee’s obligations under this Agreement relating to the Stock Options
transferred to him or her.

 

7.  Limitations.  The Employee’s right to
continue to serve the Company or any of its subsidiaries as an officer,
employee, or otherwise, is not enlarged or otherwise affected by an award under
this Agreement.  Nothing in this
Agreement or the Plan gives the Employee any right to continue in the employ of
the Company or any of its subsidiaries or to interfere in any way with the
right of the Company or any subsidiary to terminate his or her employment at
any time.  Stock Options are not secured
by a trust, insurance contract or other funding medium, and the Employee does
not have any interest in any fund or specific asset of the Company by reason of
this award or the account established on his or her behalf.  A Stock Option award confers no rights as a
shareholder of the Company until Shares are actually delivered to the Employee.

 

8.  Specific Restrictions Upon
Option Shares.  The Employee
and the Company agree to each of the following:

 

a.  The Employee will acquire Shares hereunder
for investment purposes only and not with a view to reselling or otherwise
distributing  the Shares to the public in
violation of the United States Securities Act of 1933, as amended (the “1933
Act”), and will not dispose of any such Shares in transactions which, in the
opinion of counsel to the Company, violate the 1933 Act or the rules and
regulations thereunder, or any applicable state or national securities or “blue
sky” laws.

 

b.  If any Shares are registered under the 1933
Act, no public offering (other than on a national securities exchange, as
defined in the United States Securities Exchange Act of 1934, as amended) of
any Shares acquired under this Agreement will be made by the Employee (or any
other person) under circumstances where he or she (or such person) may be
deemed an underwriter, as defined in the 1933 Act.

 

c.  The Employee agrees that the Company has the
authority to endorse upon the certificate or certificates representing the
Shares acquired under this Agreement any legends referring to the restrictions
described under this Section 8 and any other application restrictions, as
the Company may deem appropriate.

 

9.  Notices.  Any notice required or permitted under this Agreement
is deemed to have been duly given if delivered, telecopied, mailed (certified
or registered mail, return receipt requested) or sent by
internationally-recognized courier guaranteeing next day delivery (a) to
the Employee at the address on file in the Company’s (or relevant subsidiary’s)
personnel records, or (b) to the Company, attention Stock Plan
Administration at its principal executive offices, which are currently located
at 767 Fifth Avenue, New York, NY 10153.

 

10.  Disclosure and Use of Information.

 

a.     By signing and returning
the attached Notice of Grant, and as a condition of the grant of the Stock
Options, the Employee hereby expressly and unambiguously consents to the
collection, use, and transfer of personal data as described in this Section by
and among, as necessary and applicable, the Employer, the Company and its
subsidiaries and by any agent of the Company or its subsidiaries for the
exclusive purpose of implementing, administering and managing Employee’s
participation in the Plan.

 

b.     The Employee understands
that the Employer, the Company and/or its other 
subsidiaries holds, by means of an automated data file or otherwise,
certain personal information about the Employee, including, but not limited to,
name, home address and telephone number, date of birth, social insurance
number, salary, nationality, job title, any shares or directorships held in the
Company, details of all Stock Options or other entitlement to shares awarded,
canceled, exercised, vested, unvested, or outstanding in the Employee’s favor,
for purposes of managing and administering the Plan (“Data”).

 

c.     The Employee also
understands that part or all of his or her Data may be held by the Company or
its subsidiaries in connection with managing and administering previous award
or incentive 

 

4

 

plans
or for other purposes, pursuant to a prior transfer made with the Employee’s
consent in respect of any previous grant of stock options or other awards.

 

d.     The Employee further
understands that the Employer may transfer Data to the Company or its
subsidiaries as necessary to implement, administer, and manage his or her
participation in the Plan.  The Company
and its subsidiaries may transfer data among themselves, and each, in turn, may
further transfer Data to any third parties assisting the Company in the
implementation, administration, and management of the Plan (“Data Recipients”).

 

e.     The Employee understands
that the Company, its subsidiaries, and the Data Recipients are or may be
located in his or her country of residence or elsewhere. The Employee
authorizes the Employer, the Company, its subsidiaries, and Data Recipients to
receive, possess, use, retain, and transfer Data in electronic or other form,
to implement, administer, and manage his or her participation in the Plan,
including any transfer of Data that the Administrator deems appropriate for the
administration of the Plan and any transfer of Shares on his or her behalf to a
broker or third party with whom the Shares may be deposited.

 

f.      The Employee understands
that he or she may request a list with the names and addresses of any potential
recipients of the Data by contacting his or her local human resources
representative.

 

g.     The Employee understands
that Data will be held as long as is reasonably necessary to implement,
administer and manage his or her participation in the Plan and he or she may
oppose the processing and transfer of his or her Data and may, at any time,
review the Data, request that any necessary amendments be made to it, or
withdraw his or her consent by notifying the Company in writing. The Employee
further understands that withdrawing consent may affect his or her ability to
participate in the Plan.

 

11.  Discretionary
Nature and Acceptance of Award.  By accepting this Award, the Employee agrees
to be bound by the terms of this Agreement and acknowledges that:

 

a.     The Plan is established
voluntarily by the Company, it is discretionary in nature, and it may be
modified, amended, suspended, or terminated by the Company at any time, unless
otherwise provided in the Plan and this Agreement.

 

b.     The award of the Stock
Options is voluntary and occasional, and does not create any contractual or
other right to receive future grants of Stock Options, or benefits in lieu of
Stock Options, even if Stock Options have been granted repeatedly in the past;

 

c.     All decisions with respect
to future Stock Option grants, if any, will be at the sole discretion of the
Company;

 

d.     Employee’s participation in
the Plan is voluntary;

 

e.     Employee’s participation in
the Plan shall not create a right to further employment with the Employer and
shall not interfere with the ability of the Company or the Employer to
terminate Employee’s employment at any time;

 

f.    The Stock Option is an
extraordinary item that does not constitute compensation of any kind for
services of any kind rendered to the Company or any subsidiary, and which is
outside the scope of Participant’s employment or service contract, if any;

 

g.   The Stock Option is not part
of normal or expected compensation or salary for any purposes, including, but
not limited to, calculating any severance, resignation, termination,
redundancy, end of service payments, bonuses, long-service awards, pension or
retirement or welfare benefits or similar 

 

5

 

payments and in no event should be considered as compensation for, or
relating in any way to, past services for the Company or any subsidiary;

 

h.     In the event the
Participant is not an Employee of the Company, the Stock Option and Participant’s
participation in the Plan will not be interpreted to form an employment or
service contract or relationship with the Company; and furthermore, the Stock
Option and Participant’s participation in the Plan will not be interpreted to
form an employment or service contract with any subsidiary of the Company;

 

i.      The future value of the
Shares is unknown and cannot be predicted with certainty;

 

j.      If the Shares decrease in
value, the Stock Option will have no value;

 

k.     If Participant exercises
the Stock Option and obtains Shares, the value of the Shares obtained upon
exercise may increase or decrease in value, even below the Exercise Price;

 

l.      In consideration of the
award of the Stock Option, no claim or entitlement to compensation or damages
shall arise from termination of the Stock Option or diminution in value of the
Stock Option, or Shares purchased through exercise of the Stock Option,
resulting from termination of Participant’s employment by the Company or any
subsidiary (for any reason whatsoever and whether or not in breach of local
labor laws) and in consideration of the grant of the Stock Option, Participant
irrevocably releases the Company and any subsidiary from any such claim that may
arise; if, notwithstanding the foregoing, any such claim is found by a court of
competent jurisdiction to have arisen, then, by signing the Notice of Grant,
Participant shall be deemed irrevocably to have waived his or her right to
pursue or seek remedy for any such claim or entitlement;

 

m.    In the event of termination
of Participant’s employment (whether or not in breach of local labor laws),
Participant’s right to receive Stock Options under the Plan and to vest in such
Stock Options, if any, will terminate effective as of the date that Participant
is no longer actively employed and will not be extended by any notice period
mandated under local law (e.g., active
employment would not include a period of “garden leave” or similar period
pursuant to local law); furthermore, in the event of termination of  Participant’s employment (whether or not in
breach of local labor laws), Participant’s right to exercise the Stock Options
after termination of employment, if any, will be measured by the date of
termination of active employment and will not be extended by any notice period
mandated under local law; the Administrator shall have the exclusive discretion
to determine when Participant is no longer actively employed for purposes of
this Agreement;

 

n.     The Company is not
providing any tax, legal or financial advice, nor is the Company making any
recommendations regarding Participant’s participation in the Plan or
Participant’s acquisition or sale of the underlying Shares; and

 

o.     Participant is hereby
advised to consult with Participant’s own personal tax, legal and financial
advisors regarding Participant’s participation in the Plan before taking any
action related to the Plan.

 

12.  Failure to Enforce Not a
Waiver.  The Company’s failure
to enforce at any time any provision of this Agreement does not constitute a
waiver of that provision or of any other provision of this Agreement.

 

13.  Governing Law.  This Agreement is governed by and is to be
construed according to the laws of the State of New York that apply to
agreements made and performed in that state, without regard to its choice of
law provisions.  For purposes of
litigating any dispute that arises under this Stock Option or this Agreement,
the parties hereby submit to and consent to the jurisdiction of the State of
New York, and agree that such litigation will be conducted in the courts of New
York County, New York, or the federal courts for the United States for the
Southern District of New York, and no other courts, where this Stock Option is
made and/or to be performed.

 

6

 

14.  Partial Invalidity.  The invalidity or illegality of any provision
of this Agreement will be deemed not to affect the validity of any other
provision.

 

15.  Section 409A.  The Stock Options are intended to be exempt
from Code Section 409A.  The Company
reserves the unilateral right to amend this Agreement upon written notice to
the Participant to prevent taxation under Code Section 409A.

 

16.  Electronic Delivery.  The Company may, in its sole
discretion, decide to deliver any documents related to Stock Options awarded
under the Plan or future Stock Options that may be awarded under the Plan by
electronic means or request Employee’s consent to participate in the Plan by
electronic means.  Employee hereby
consents to receive such documents by electronic delivery and agrees to
participate in the Plan through any on-line or electronic system established
and maintained by the Company or another third party designated by the Company.

 

	
   

  	
  The
  Estée Lauder Companies Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Amy
  DiGeso

  
	
   

  	
   

  	
  Executive
  Vice President,

  
	
   

  	
   

  	
  Global
  Human Resources

  

 

7

 

NOTICE OF GRANT

UNDER

THE ESTÉE LAUDER COMPANIES INC.

AMENDED AND RESTATED FISCAL 2002 SHARE INCENTIVE PLAN
(The “Plan”)

 

This is to confirm that,
upon the recommendation of your management, you were awarded options to
purchase shares of Class A Common Stock of The Estee Lauder Companies Inc.
(the “Shares”) at the most recent meeting of the Stock Plan Subcommittee of the
Compensation Committee of the Board of Directors.  This award was made in recognition of the
significant contributions you have made as a key employee of the Company, and
to motivate you to achieve future successes by aligning your interests more
closely with those of our stockholders. 
These options are granted under and governed by the terms and conditions
of the Plan and the Stock Option Agreement (the “Agreement”) made part
hereof.  The Agreement and Summary Plan
Description are being sent to you in a separate email.  Please read these documents and keep them for
future reference.  The specific terms of
your award are as follows:

 

Participant:

 

Employee Number:

 

	
  Grant Date:

  	
   

  	
  September 1,
  2010

  
	
   

  	
   

  	
   

  
	
  Type of Award:

  	
   

  	
  Non-Qualified
  Stock Options

  
	
   

  	
   

  	
   

  
	
  Exercise Price per Share:

  	
   

  	
  $58.08

  	
  (Closing
  trading price on NYSE of the Class A Common Stock on the date of grant)

  

 

Aggregate number of Shares subject to your options:

 

Exercise Period:         Your options shall become exercisable on the following dates (or upon
death, disability, retirement, or involuntary termination of employment if
these occurrences are earlier), but are subject to termination or forfeiture as
per Paragraphs 2 and 3 of the Agreement:

 

	
  Number of Shares

  	
   

  	
  Date Exercisable

  	
   

  	
  Expiration Date

  
	
   

  	
   

  	
  January 1, 2012

  	
   

  	
  September 1, 2020

  
	
   

  	
   

  	
  January 1, 2013

  	
   

  	
  September 1, 2020

  
	
   

  	
   

  	
  January 1, 2014

  	
   

  	
  September 1, 2020

  

 

Questions regarding the
stock option program can be directed to Thomas Fellenbaum at (212) 572-3705 or
Patricia Zakrzewski at (973) 492-3609.

 

If you wish to accept this
grant, please sign this Notice of Grant
and return immediately to:

 

Compensation
Department

767 Fifth Avenue, 43rd Floor

New York, New York 10153

Attention:
Thomas Fellenbaum

 

The undersigned hereby
accepts, and agrees to, all terms and provisions of the Agreement, including
those contained in this Notice of Grant.

 

	
  By

  	
   

  	
   

  	
  Date

  	
   

  

 

Enclosure:  Share Incentive Plan Overview

 

Sign and Return this Notice of
Grant Immediately!Exhibit 10.2

 

Each of the
Stock Plan Subcommittee of the Compensation Committee and the Compensation
Committee of the Board of Directors of The Estée Lauder Companies Inc. reserves
the right to change provisions of this Agreement to comply with the American
Jobs Creation Act of 2004 or other applicable laws or regulations.

 

Performance Share Unit Award Agreement Under

The Estée Lauder Companies Inc.

Amended and Restated Fiscal 2002 Share Incentive Plan
(the “Plan”)

 

This PERFORMANCE SHARE UNIT AWARD AGREEMENT (“Agreement”)
provides for the granting of performance share unit awards by The Estée Lauder
Companies Inc., a Delaware corporation (the “Company”), to the participant, an
employee of the Company or one of its subsidiaries (the “Participant”),
representing a notional account equal to a corresponding number of shares of
the Company’s Class A Common Stock, par value $0.01 (the “Shares”), subject to
the terms below (the “Performance Share Units”).  The name of the “Participant,” the “Grant
Date,” the aggregate number of Shares representing the Target Award, and the
Plan Achievement (as defined below) goals are stated in the attached “Notice of
Grant,” and are incorporated by reference. 
The other terms of this Performance Share Unit Award are stated in this
Agreement and in the Plan. Terms not defined in this Agreement are defined in
the Plan, as amended.

 

1.     Award Grant. The Company
hereby awards to the Participant a target award of Performance Share Units in
respect of the number of Shares set forth in the Notice of Grant (the “Target
Award”), representing a Stock Unit and Performance-Based Award under the terms
of the Plan.

 

2.     Right to Payment of Performance
Share Units. It is understood that the percentage of the Target
Award earned and paid will be established by the Committee based on the plan
achievement (the “Plan Achievement”) during the period specified in the Notice
of Grant (the “Award Period”).  The Plan
Achievement is comprised of, and is measured separately with respect to the
components stated in the attached Notice of Grant.  Actual payment of the Performance Share Units
awarded will be determined for each component in accordance with the table
attached hereto as Schedule “A.”

 

3.     Payment of Awards. Payments
under this Agreement will be made in the number of Shares that is equivalent to
the number of Performance Share Units earned and payable to the Participant
pursuant to paragraph 2 above. Except as otherwise provided in paragraph 4
below, payments will be made as soon as practicable after the Award Period
ends, but in no event later than 2 and 1/2 months following the last day of the
calendar year in which the Award Period ends. The form of payout will be in
Shares.  In addition, each Performance
Share Unit that becomes earned and payable pursuant to paragraph 2 above
carries a Dividend Equivalent Right, payable in cash at the same time as the
payment of Shares in accordance with this paragraph 3 and paragraph 4.

 

Upon
a Change in Control, each Performance Share Unit with a Performance Period ending
after the Change in Control will become payable to the Participant with the
total number of Shares to be paid equal to the greater of (a) the Target Award
or (b) the amount of Shares to be paid based upon performance assuming the
Performance Period ended on the date of the Change in Control.  Payments upon a Change in Control will be
made within two weeks following the Change in Control.  If the Shares cease to be outstanding
immediately after the Change in Control (e.g., due to a merger with and 

 

EO

 

 

into
another entity), then the consideration to be received per Share will equal the
consideration paid to each stockholder per Share generally upon the Change in
Control.  Each Performance Share Unit for
a Performance Period ended on or prior to the Change in Control shall be paid
out in accordance with the Plan and this Agreement.

 

4.     Termination of Employment. If the
Participant’s employment terminates during the Award Period, payouts will be as
follows:

 

(a)                      Death.  If the Participant dies, the Performance
Share Units will be paid as a pro rata Target Award for the number of full
months employed during the Award Period (i.e.,
the proration of the Target Award equals a fraction, the numerator of which is
the number of full calendar months of service completed during the Award Period
through the Participant’s death and the denominator of which is the number of
full calendar months in the Award Period). 
Payment will occur as soon as practicable following the Participant’s
death and in accordance with any applicable laws or Company procedures
regarding the payments.

 

(b)                     Retirement.  If the Participant formally retires under the
terms of The Estée Lauder Companies Retirement Growth Account Plan (or an
affiliate or a successor plan or program of similar purpose), the Performance
Share Unit Award will continue through the Award Period and the Participant
will be paid based on actual Plan Achievement, at the same time the awards are
paid to active employees.  If the Participant
dies during active employment after the attainment of age 55 and the completion
of 10 or more years of service, or after the attainment of age 65 and the
completion of 5 or more years of service, without formally retiring under the
terms of the Estée Lauder Inc. Retirement Growth Account Plan (or an affiliate
or a successor plan or program of similar purpose), the Participant will have
deemed to be retired as of the date of death and this Section 4(b) will apply
rather than Section 4(a).  If the Participant
dies or becomes disabled after retirement as contemplated by this Section 4(b),
the provisions of this section shall apply.

 

(c)                      Disability.  If the Participant becomes totally and
permanently disabled (as determined under the Company’s long-term disability
program), the Performance Share Unit Award will continue through the Award
Period and the Participant will be paid a pro rata amount for the number of
full months employed during the Award Period (determined under the proration
methodology in paragraph 4(a)) based on actual Plan Achievement.  Payment will occur at the same time the
awards are paid to active employees.

 

(d)                     Termination of
Employment Without Cause.  If the
Participant’s employment is terminated at the instance of the Company or
relevant subsidiary without Cause (as defined below) on or prior to the end of
the first year of the Award Period, the Performance Share Unit Award will be
forfeited.  If such termination occurs
after the end of the first year of the Award Period, the Performance Share Unit
Award will continue through the Award Period and the Participant will be paid a
pro rata amount for the number of full months employed during the Award Period (determined
under the proration methodology in paragraph 4(a)) based on actual Plan
Achievement.  Payment will occur at the
same time the awards are paid to active employees.

 

2

 

(e)                      Termination of
Employment By Employee.  If the
Participant terminates his or her employment (e.g.,
by voluntary resigning) other than by retirement, which is subject to paragraph
4(b) above, the Performance Share Unit Award will be forfeited.

 

(f)                        Termination of
Employment With Cause.  If the
Participant is terminated for Cause, the Performance Share Unit Award will be
forfeited.  For this purpose, “Cause” is
defined in the employment agreement in effect between the Participant and the
Company or any subsidiary, including any employment agreement entered into
after the Grant Date.  In the absence of
an employment agreement, “Cause” means any breach by the Participant of any of
his or her material obligations under any Company policy or procedure,
including, without limitation, the Code of Conduct.

 

(g)                     Post Employment
Conduct.  Payout of any Performance Share
Unit Award after termination of employment is subject to satisfaction of the
conditions precedent that the Participant neither (i) competes with, takes
employment with, or renders services to a competitor of the Company, its
subsidiaries, or affiliates without the Company’s written consent, nor (ii)
conducts himself or herself in a manner adversely affecting the Company.

 

If
the Participant’s employment terminates after the expiration of the Award
Period but prior to payout, payout will be subject to the above.

 

5.     No Rights of Stock Ownership. This grant of
Performance Share Units does not entitle the Participant to any interest in or
to any voting or other rights normally attributable to Share ownership other
than the Dividend Equivalent Rights granted under paragraph 3 above.

 

6.     Withholding. Regardless of
any action the Company or the Participant’s employer (the “Employer”) takes
with respect to any or all income tax, social security, payroll tax, or other
tax-related withholding (“Tax-Related Items”), Participant acknowledges that
the ultimate liability for all Tax-Related Items legally due by Participant is
and remains his or her responsibility. 
Furthermore, Participant acknowledges that the Company and/or the
Employer (i) make no representations or undertakings regarding the treatment of
any Tax-Related Items in connection with any aspect of the Performance Share
Units, including the grant of the Performance Share Units, the vesting of the
Performance Share Units, the delivery of Shares, the subsequent sale of Shares
acquired under the Plan and the receipt of any dividends; and (ii) do not
commit to structure the terms of the grant of the Performance Share Units or
any aspect of Participant’s participation in the Plan to reduce or eliminate
his or her liability for Tax-Related Items.

 

Prior to the relevant
taxable event, Participant shall pay or make adequate arrangements satisfactory
to the Company and/or the Employer to satisfy all withholding obligations of
the Company and/or the Employer.  In this
regard, Participant authorizes the Company and/or the Employer to withhold all
applicable Tax-Related Items legally payable by Participant from his or her
wages or other cash compensation paid by the Company and/or the Employer or
from proceeds of the sale of the Shares acquired under the Plan.  Alternatively, or in addition, the Company
may (i) sell or arrange for the sale of Shares that Participant acquires under
the Plan to meet the withholding obligation for the Tax-Related Items, and/or
(ii) withhold in Shares, provided that the Company only withholds the amount of
Shares necessary to satisfy the minimum withholding amount.  If the Company satisfies the Tax-Related Item

 

3

 

withholding obligation by
withholding a number of Shares as described herein, Participant will be deemed
to have been issued the full number of Shares due to Participant at vesting,
notwithstanding that a number of the Shares is held back solely for purposes of
such Tax-Related Items.

 

Finally, Participant shall
pay to the Company or the Employer any amount of Tax-Related Items that the
Company or the Employer may be required to withhold as a result of his or her
participation in the Plan that cannot be satisfied by the means previously
described.  The Company may refuse to issue
Shares under the Plan and refuse to deliver the Shares if Participant fails to
comply with his or her obligations in connection with the Tax-Related Items as
described in this paragraph.

 

7.     Nonassignability. This award
may not be assigned, pledged, or transferred except, if the Participant dies,
to a designated beneficiary or by will or by the laws of descent and
distribution. The foregoing restrictions do not apply to transfers under a
court order, including, but not limited to, any domestic relations order.

 

8.     Effect Upon Employment. The
Participant’s right to continue to serve the Company or any of its subsidiaries
as an officer, employee, or otherwise, is not enlarged or otherwise affected by
an award under this Agreement.  Nothing in this Agreement or the Plan gives
the Participant any right to continue in the employ of the Company or any of
its subsidiaries or to interfere in any way with any right the Company or any
subsidiary may have to terminate his or her employment at any time.  Payment of Shares is not secured by a trust,
insurance contract or other funding medium, and the Participant does not have
any interest in any fund or specific asset of the Company by reason of this
Award or the account established on his or her behalf.  A Performance Share Unit confers no rights as
a shareholder of the Company until Shares are actually delivered to the
Participant.

 

9.     Notices.  Any notice required or permitted under this
Performance Share Unit Award Agreement is deemed to have been duly given if delivered,
telecopied, mailed (certified or registered mail, return receipt requested), or
sent by internationally-recognized courier guaranteeing next day delivery (a)
to the Participant at the address on file in the Company’s (or relevant
subsidiary’s) personnel records or (b) to the Company, attention Stock Plan
Administration at its principal executive offices, which are currently located
at 767 Fifth Avenue, New York, NY 10153.

 

10.  Disclosure and Use of Information.

 

a.     By
signing and returning the attached Notice of Grant, and as a condition of the
grant of the Performance Share Units, the Participant hereby expressly and
unambiguously consents to the collection, use, and transfer of personal data as
described in this paragraph by and among, as necessary and applicable, the
Employer, the Company and its subsidiaries and by any agent of the Company or
its subsidiaries for the exclusive purpose of implementing, administering and
managing Participant’s participation in the Plan.

 

b.     The
Participant understands that the Employer, the Company and/or its other
subsidiaries holds, by means of an automated data file or otherwise, certain
personal information about the Participant, including, but not limited to,
name, home address and telephone number, date of birth, social insurance
number, salary, nationality, job title, any shares or directorships held in the
Company, details of all Performance Share Units or other entitlement to shares
awarded, 

 

4

 

canceled, exercised, vested, unvested, or
outstanding in the Participant’s favor, for purposes of managing and
administering the Plan (“Data”).

 

c.     The
Participant also understands that part or all of his or her Data may be held by
the Company or its subsidiaries in connection with managing and administering
previous award or incentive plans or for other purposes, pursuant to a prior
transfer made with the Participant’s consent in respect of any previous grant
of performance share units or other awards.

 

d.     The
Participant further understands that the Employer may transfer Data to the
Company or its subsidiaries as necessary to implement, administer, and manage
his or her participation in the Plan. 
The Company and its subsidiaries may transfer data among themselves, and
each, in turn, may further transfer Data to any third parties assisting the
Company in the implementation, administration, and management of the Plan (“Data
Recipients”).

 

e.     The
Participant understands that the Company, its subsidiaries, and the Data Recipients
are or may be located in his or her country of residence or elsewhere. The
Participant authorizes the Employer, the Company, its subsidiaries, and the
Data Recipients to receive, possess, use, retain, and transfer Data in
electronic or other form to implement, administer, and manage his or her
participation in the Plan, including any transfer of Data that the
Administrator deems appropriate for the administration of the Plan and any
transfer of Shares on his or her behalf to a broker or third party with whom
the Shares may be deposited.

 

f.      The
Participant understands that he or she may request a list with the names and
addresses of any potential recipients of the Data by contacting his or her
local human resources representative.

 

g.     The
Participant understands that Data will be held as long as is reasonably
necessary to implement, administer and manage his or her participation in the
Plan and he or she may oppose the processing and transfer of his or her Data
and may, at any time, review the Data, request that any necessary amendments be
made to it, or withdraw his or her consent by notifying the Company in writing.
The Participant further understands that withdrawing consent may affect his or
her ability to participate in the Plan.

 

11.  Discretionary
Nature and Acceptance of Award.  By accepting this Award, the Participant
agrees to be bound by the terms of this Agreement and acknowledges that:

 

a.     The Plan is established
voluntarily by the Company, it is discretionary in nature, and it may be
modified, amended, suspended or terminated by the Company at any time, unless
otherwise provided in the Plan and this Agreement;

 

b.     The award of Performance
Share Units is voluntary and occasional, and does not create any contractual or
other right to receive future awards of Performance Share Units, or benefits in
lieu of Performance Share Units, even if Performance Share Units have been
awarded repeatedly in the past.

 

c.     All decisions with respect
to future awards, if any, will be at the sole discretion of the Company;

 

5

 

d.     Participant’s participation
in the Plan is voluntary;

 

e.     Participant’s participation
in the Plan shall not create a right to further employment with the Employer
and shall not interfere with the ability of the Company or the Employer to
terminate Participant’s employment at any time;

 

f.      Performance Share Units
are an extraordinary item that does not constitute compensation of any kind for
services of any kind rendered to the Company or any subsidiary, and which is
outside the scope of Participant’s employment or service contract, if any;

 

g.     The Performance Share Units
are not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculating any severance, resignation,
termination, redundancy, end of service payments, bonuses, long-service awards,
pension or retirement or welfare benefits or similar payments and in no event
should be considered as compensation for, or relating in any way to, past services
for the Company or any subsidiary;

 

h.     In the event the
Participant is not an employee of the Company, the Performance Share Units and
Participant’s participation in the Plan will not be interpreted to form an
employment or service contract or relationship with the Company; and
furthermore, the Performance Share Units and Participant’s participation in the
Plan will not be interpreted to form an employment or service contract with any
subsidiary of the Company;

 

i.      The future value of the
underlying Shares is unknown and cannot be predicted with certainty;

 

j.      In consideration of the
award of the Performance Share Units, no claim or entitlement to compensation
or damages shall arise from termination of the Performance Share Units or
diminution in value of the Performance Share Units, or Shares acquired upon
vesting of the Performance Share Units, resulting from termination of
Participant’s employment by the Company or any subsidiary (for any reason
whatsoever and whether or not in breach of local labor laws) and in
consideration of the award of the Performance Share Units, Participant
irrevocably releases the Company and any subsidiary from any such claim that
may arise; if, notwithstanding the foregoing, any such claim is found by a
court of competent jurisdiction to have arisen, then, by signing the Notice of
Grant, Participant shall be deemed irrevocably to have waived his or her right
to pursue or seek remedy for any such claim or entitlement;

 

k.     In the event of termination
of Participant’s employment (whether or not in breach of local labor laws),
Participant’s right to receive Performance Share Units under the Plan and to
vest in such Performance Share Units, if any, will terminate effective as of
the date that Participant is no longer actively employed and will not be
extended by any notice period mandated under local law (e.g., active
employment would not include a period of “garden leave” or similar period
pursuant to local law); the Administrator shall have the exclusive discretion
to determine when Participant is no longer actively employed for purposes of
this Agreement;

 

l.      The Company is not
providing any tax, legal or financial advice, nor is the Company making any
recommendations regarding Participant’s participation in the Plan or Participant’s
acquisition or sale of the underlying Shares; and

 

6

 

m.    Participant is hereby
advised to consult with Participant’s own personal tax, legal and financial
advisors regarding Participant’s participation in the Plan before taking any
action related to the Plan.

 

12.  Failure to Enforce Not a Waiver.  The Company’s failure to enforce at any time
any provision of this Agreement does not constitute a waiver of that provision
or of any other provision of this Agreement.

 

13.  Governing Law.  The Performance Share Unit Award Agreement is
governed by and is to be construed according to the laws of the State of New
York that apply to agreements made and performed in that state, without regard
to its choice of law provisions.  For
purposes of litigating any dispute that arises under the Performance Share
Units or this Agreement, the parties hereby submit to and consent to the
jurisdiction of the State of New York, and agree that such litigation will be
conducted in the courts of New York County, New York, or the federal courts for
the United States for the Southern District of New York, and no other courts,
where the Performance Share Units are made and/or to be performed.

 

14.  Partial Invalidity.  The invalidity or illegality of any provision
of the Agreement will be deemed not to affect the validity of any other
provision.

 

15.  Section 409A Compliance.  This Agreement is intended to comply with
section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
any regulations, rulings, or guidance provided thereunder.  The Company reserves the unilateral right to
amend this Agreement upon written notice to the Participant to prevent taxation
under Code section 409A.

 

16.  Electronic Delivery.  The Company may,
in its sole discretion, decide to deliver any documents related to Performance
Share Units awarded under the Plan or future Performance Share Units that may
be awarded under the Plan by electronic means or request Participant’s consent
to participate in the Plan by electronic means. 
Participant hereby consents to receive such documents by electronic
delivery and agrees to participate in the Plan through any on-line or
electronic system established and maintained by the Company or another third
party designated by the Company.

 

	
   

  	
  The Estée Lauder Companies
  Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Amy DiGeso

  
	
   

  	
   

  	
  Executive Vice President,

  
	
   

  	
   

  	
  Global Human Resources

  

 

7

 

Schedule
“A”

 

For Net Sales Cumulative
Annual Growth Rate:

 

	
   

  	
   

  	
  Component Plan Achievement

  	
   

  	
  Component Payout (Percentage of Target Award)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum

  	
   

  	
  (***)

  	
   

  	
  (***)

  
	
   

  	
   

  	
  (***)

  	
   

  	
  (***)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Threshold

  	
   

  	
  (***)

  	
   

  	
  (***)

  

 

For Net
Earnings Per Share Cumulative Annual Growth Rate:

 

	
   

  	
   

  	
  Component Plan Achievement

  	
   

  	
  Component Payout (Percentage of Target Award)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum

  	
   

  	
  (***)

  	
   

  	
  (***)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (***)

  	
   

  	
  (***)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Threshold

  	
   

  	
  (***)

  	
   

  	
  (***)

  

 

For
ROIC Cumulative Annual Growth Rate:

 

	
   

  	
   

  	
  Component Plan Achievement

  	
   

  	
  Component Payout (Percentage of Target Award)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum

  	
   

  	
  (***)

  	
   

  	
  (***)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (***)

  	
   

  	
  (***)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Threshold

  	
   

  	
  (***)

  	
   

  	
  (***)

  

 

Payout amount for levels of
Plan Achievement between the maximum and threshold achievement shall be
interpolated on a straight line basis (rounded up to the nearest integer).  In no event shall the Participant receive a
payout in excess of (*)% of the Target Award for any component.  No payout shall be made in the event of
component Plan Achievement less than the threshold achievement.  Notwithstanding anything to the contrary
stated above, the Committee may reduce the payment based on other factors at
the discretion of the Committee unless a Change of Control has occurred.

 

For purposes of this
Performance Share Unit Award Agreement, “Net Sales” has the meaning utilized by
the Company in its consolidated financials in accordance with generally
accepted accounting principles as in effect on the first day of the Award
Period, excluding the impact of foreign currency fluctuations, “Earnings Per
Share” means “diluted earnings per share” as utilized by the Company in its
consolidated financials and ROIC represents Return on Invested Capital with
invested capital defined as assets less liabilities (excluding debt).  Actual payment of the Performance Share Units
awarded will be determined for each component in accordance with the table
above.

 

In measuring Plan
Achievement, financial performance measures (e.g., “Earnings Per Share”, “Net
Sales” and “ROIC”) will be calculated without regard to the following:

 

8

 

·                  Changes in
accounting principles (i.e., cumulative effect of GAAP changes)

·                  Extraordinary
items as defined in accordance with US GAAP or which are the result of a change
in the law or the Company’s response thereto

·                  Income/loss
from discontinued operations and income/loss on sale of discontinued operations

·                  Non-recurring
operating income/expenses (separately stated and disclosed in the financial
statements — e.g., restructuring charges, legal settlement charges, goodwill
write-off)

·                  Impairment of
intangibles

 

In calculating net sales
during the Award Period, net sales in currencies other than U.S. dollars shall
be translated into U.S. dollars at the Company’s budget exchange rate at the
beginning of the Award Period.

 

Earnings Per Share will be
calculated based on the weighted average number of Shares outstanding as of the
measurement date and will be adjusted to eliminate the effect of material
changes in the number or type of outstanding Shares due to events such as:

 

·                  Stock splits

·                  Stock dividends

·                  Recapitalizations

·                  Acquisitions
involving stock of the Company

 

No adjustment will be made
for the impact of stock repurchases under any plans approved by the Board.

 

9

 

NOTICE OF GRANT

UNDER

THE ESTÉE LAUDER COMPANIES INC.

AMENDED AND RESTATED FISCAL 2002 SHARE INCENTIVE PLAN
(The “Plan”)

 

This is to confirm that you
were awarded a grant of Performance Share Units at the most recent meeting of
the Stock Plan Subcommittee of the Compensation Committee of the Board of
Directors representing the right to receive shares of Class A Common Stock of
The Estée Lauder Companies Inc. (the “Shares”), subject to the terms of the
Plan and the Performance Share Unit Award Agreement.  This award was made in recognition of the
significant contributions you have made as a key employee of the Company, and
to motivate you to achieve future successes by aligning your interests more
closely with those of our stockholders. 
This Performance Share Unit Award is granted under and governed by the
terms and conditions of the Plan and the Performance Share Unit Award Agreement
(the “Agreement”) made part hereof.  The
Agreement and Summary Plan Description are being sent to you in a separate
e-mail.  Please read these documents and
keep them for future reference.  The
specific terms of your award are as follows:

 

Participant:

 

Employee Number:

 

	
  Grant Date:

  	
   

  	
  September
  15, 2010

  
	
   

  	
   

  	
   

  
	
  Award Period:

  	
   

  	
  July 1, 2010 to June 30,
  2013

  
	
   

  	
   

  	
   

  
	
  Type of Award:

  	
   

  	
  Stock Unit and
  Performance-Based Award (referred to herein as a “Performance Share Unit”)

  
	
   

  	
   

  	
   

  
	
  Target Award:

  	
   

  	
  shares of Class A Common
  Stock.  See Schedule “A” to the
  Agreement for actual payouts depending upon level of performance.

  

 

Plan Achievement goal at 100% for
Award Period:

 

	
  Net Sales Cumulative Annual
  Growth Rate

  
	
  %

  	
   

  
	
   

  	
   

  
	
  Earnings Per Share Cumulative
  Annual Growth Rate

  
	
  %

  	
   

  
	
   

  	
   

  
	
  ROIC Cumulative Annual Growth
  Rate

  
	
  %

  	
   

  

 

Questions regarding the
award can be directed to Thomas Fellenbaum at (212) 572-3705 or Patricia
Zakrzewski at (973) 492-3609.

 

If you wish to accept this
grant, please sign this Notice of Grant
and return immediately to:

 

Compensation
Department

767 Fifth Avenue, 43rd Floor

New York, New York 10153

Attention:
Thomas Fellenbaum

 

The undersigned hereby
accepts, and agrees to, all terms and provisions of the Agreement, including
those contained in this Notice of Grant.

 

	
  By

  	
   

  	
   

  	
  Date

  	
   

  

 

Enclosure:  Performance Share Unit Fact Sheet

 

Sign and Return this Notice of
Grant Immediately!

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