Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT (“Agreement”), dated
as of July 1, 2007, between THE ESTÉE LAUDER COMPANIES INC., a
Delaware corporation (the “Company”), and PATRICK
BOUSQUET-CHAVANNE, a resident of [Address] (the
“Executive” or “you”),
W I T N E S S E T H:
WHEREAS, the
Company and its subsidiaries are principally engaged in the
business of manufacturing, marketing and selling skin care, makeup,
fragrance and hair care products and related services (the
“Business”); and
WHEREAS, the
Company and the Executive are parties to an employment agreement
dated as of September 5, 1989 and as superseded by agreements dated
September 8, 1998, July 1, 2001, as amended July 1, 2002, and July
1, 2004; and
WHEREAS, the Company desires to continue to
retain the services of the Executive as Group President from
July 1, 2007 through June 30, 2008, and the Executive desires to
provide services in such capacities to the Company, upon the terms
and subject to the conditions hereinafter set forth; and
WHEREAS, the
Compensation Committee of the Board of Directors of the Company
(the “Compensation Committee”) and the Stock Plan
Subcommittee of the Compensation Committee have approved the terms
of this Agreement; and
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 as follows:
1.
Employment Term.
The
Company hereby agrees to employ the Executive, and the Executive
hereby agrees to enter into employment as Group President
from July 1, 2007 through June 30, 2008, unless terminated sooner
pursuant to Section 6 hereof (the “Term of
Employment”). This Agreement shall be reviewed for
renewal by the Company and the Executive on an annual basis
effective as of each July 1 thereafter.
2.
Duties and Extent of Services.
(a)
During the Term of Employment, the Executive shall serve as Group
President of the Company from July 1, 2007 through June 30, 2008,
reporting to the Chief Executive Officer, (or such other direct
supervisor as determined by the Chief Executive Officer from time
to time) and, in such capacities, shall render such executive,
managerial, administrative and other services as customarily are
associated with and incident to such positions, and as the Company
may, from time to time, reasonably require of him consistent with
such positions.
(b)
The Executive shall also hold such other positions and executive
offices of the Company and/or of any of the Company’s
subsidiaries or affiliates as may from time to
time be agreed by the Executive or assigned by
the Chief Executive Officer (or the Executive’s direct
supervisor if not the Chief Executive Officer) or the Board of
Directors . The Executive shall not be entitled to any
compensation other than the compensation provided for herein for
serving during the Term of Employment in any other office or
position of the Company or any of its subsidiaries or affiliates,
unless the Board of Directors of the Company or the appropriate
committee thereof shall specifically approve such additional
compensation.
(c)
The Executive shall be a full-time employee of the Company and
shall exclusively devote all his business time and efforts
faithfully and competently to the Company and shall diligently
perform to the best of his ability all of the duties required of
him as Group President, and in the other positions or offices of
the Company or its subsidiaries or affiliates assigned to him
hereunder. Notwithstanding the foregoing provisions of this
section, the Executive may serve as a non-management director of
such business corporations (or in a like capacity in other
for-profit or not-for-profit organizations) as the Chief Executive
Officer (or the Executive’s direct supervisor if not the
Chief Executive Officer) or the Board of Directors of the Company
may approve, such approval not to be unreasonably withheld.
(d)
The Executive shall comply with the Company’s stock ownership
guidelines applicable to the Executive as they may be implemented
and/or amended by the Board of Directors or the Compensation
Committee of the Board of Directors.
3. Base
Salary and Incentive Bonus Compensation .
(a) Base
Salary. As compensation for all services to be rendered
pursuant to this Agreement and as payment for the rights and
interests granted by Executive hereunder, the Company shall pay or
cause any of its subsidiaries to pay the Executive a base salary
(the “Base Salary”) during the Term of Employment
subject to the provisions of Section 3(c) below at the annualized
rate of not less than $1,000,000.00. Subject to Section 6(m)
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) Incentive Bonus Compensation.
The Compensation Committee has established for the Executive
the target bonus payout for the aggregate opportunities that may be
awarded in respect of each fiscal year of the Company under the
Company’s Executive Annual Incentive Plan or any subsequent
Bonus Plan for executives that is approved by the stockholders of
the Company (the “Bonus Plan”) in respect of each
Contract Year under this Agreement. The target bonus payout
for the aggregate opportunities in respect of each Contract Year
shall be no less than $2,000,000.00. All such opportunities
shall be subject to the terms and conditions of the Bonus Plan,
which are incorporated herein by reference; provided ,
however , that except with respect to bonuses deferred in
accordance with Section 3(c) hereof, and as otherwise
indicated under Section 6, 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)
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 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).
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(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 12
months, the Executive may make a deferral election at any time
before the date that is six 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 ninety (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 6(m), 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.
4.
Equity-Based Compensation .
(a)
General. In respect of each Contract Year, the
Company shall recommend to the Stock Plan Subcommittee of the
Compensation Committee that the Executive be awarded under the
terms and conditions of the Amended and Restated Fiscal 2002 Share
Incentive Plan (the “Share Incentive Plan”), which are
incorporated herein by reference, or successor plan and subject to
the provisions of Section 6(k) below, equity-based compensation
awards in accordance with the policies and procedures of the
Company as in effect from time to time for its Executive Officers.
The terms of such equity-based compensation awards shall be set
forth in separate grant letters approved by the Stock Plan
Subcommittee of
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the Compensation
Committee. The recommended annual equity-based compensation
awards shall be of an equivalent value to a grant of stock options
with respect to 125,000 shares of the Company’s Class A
Common Stock and determined in accordance with procedures generally
utilized by the Company for its financial reporting at the time of
grant.
(b)
Certain Conditions . Executive acknowledges and agrees
that any grant of equity-based compensation otherwise provided for
in this Section 4 shall be effective as provided herein only to the
extent permitted by the Share Incentive Plan, and this Agreement
shall not obligate the Company to adopt any successor plan
providing for the grant of equity-based compensation. If
authority over the Company’s equity compensation programs is
changed from the Stock Plan Subcommittee to the Compensation
Committee (or other committee), then after such change, references
herein to the Stock Plan Subcommittee shall be to the appropriate
committee.
5.
Benefits.
(a)
Standard Benefits. During the Term of Employment, the
Executive shall be entitled to participate in all pension and
retirement savings, fringe benefit and welfare plans, including
life insurance, medical, health and accident, disability, and
vacation plans and programs maintained by the Company from time to
time for senior executives at a level commensurate with his
position. The Executive acknowledges that participation in
such programs may result in the receipt by him of additional
taxable income.
(b)
Perquisite Reimbursement; Financial Counseling .
During the Term of Employment, the Company shall reimburse the
Executive for the actual expenses incurred by him in connection
with his professional standing, in accordance with the guidelines
set out in the Company’s Senior Executive Compensation
Program Perquisite Plan and upon presentation of proper expense
statements or vouchers or such other supporting information as the
Company may reasonably require of the Executive. 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. Notwithstanding the above, to
the extent that the expenses were incurred in one calendar year and
presentment occurs in the following calendar year, such
reimbursement shall occur by the end of the calendar year in which
the presentment occurs. In no event shall the gross amount of
such reimbursements be greater than $15,000.00 in respect of any
calendar year during the Term of Employment, nor shall amounts that
are not reimbursed in one calendar year up to the $15,000.00 per
year limitation be able to be used in another calendar year or
otherwise be made available to the Executive. Additionally,
the Company will pay directly to the service provider following
presentment of invoice(s) reasonably acceptable to the Company up
to $5,000.00 per year for reasonable financial counseling services
for the Executive, and in no event shall amounts up to the
$5,000.00 per year limitation that are not paid in one calendar
year be able to be used in another calendar year or otherwise be
made available to the Executive. The Executive acknowledges
that participation in such programs will result in the receipt by
him of additional taxable income.
(c)
Executive Auto. The Executive will participate in the
Executive Automobile Program of the Company, and may elect to be
provided an automobile having an acquisition value of up to
$50,000.00. Alternatively, the Executive may receive an
automobile allowance in the gross monthly amount of
$1,100.00. The Executive acknowledges that participation in
this program will result in the receipt by him of additional
taxable income.
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(d)
Expenses . The Company agrees to reimburse the Executive for
all reasonable and necessary travel (inclusive of first class air
travel), business entertainment and other business out-of-pocket
expenses incurred or expended by him in connection with the
performance of his duties hereunder upon presentation of proper
expense statements or vouchers or such other supporting information
as the Company may reasonably require of the Executive. The
timing of payment of such reimbursements and presentation by the
Executive of expenses incurred shall be in accordance with the
rules described in Section 5(b).
(e)
Spousal Travel . The Executive may upon prior approval of
the Chief Executive Officer (or the Executive’s direct
supervisor if not the Chief Executive Officer) or his or her
designee arrange for his spouse or domestic partner to accompany
him on up to two (2) business related travel itineraries per fiscal
year, on a reasonable basis, at Company expense. Any
reimbursement for such travel shall require presentation of proper
expense statements or vouchers or such other supporting information
as the Company may reasonably require of the Executive, in
accordance with the timeframe described in Section 5(b). The
Executive acknowledges that participation in this program will
result in the receipt by him of additional taxable
income.
(f) Executive Term Life
Insurance . During the Term of Employment, the Company
shall pay premiums on a term life insurance policy with a face
amount of $5,000,000.00. Such obligation to pay premiums is
subject to standard underwriting conditions. The
Executive acknowledges that this coverage will result in the
receipt by him of additional taxable income.
(g) Certain Social Scheme
Participation . During the period of the Executive’s
employment in the US, the Company shall, at its expense, continue
the Executive’s participation in the applicable French
National Social Security and supplementary regimes (
CFE and CRE IRCAFEX).
(h) Home Leave Travel
Expenses . The Company agrees to reimburse the Executive
for the cost of two (2) round trip first class tickets for himself,
his spouse and his dependent children from New York to their city
of origin (Paris) and back to New York in respect of any full year
of employment during the Term of Employment. Any
reimbursement for such travel shall require presentation of proper
expense statements or vouchers or such other supporting information
as the Company may reasonably require of the Executive, in
accordance with the timeframe described in Section 5(b). The
Executive acknowledges that participation in this program will
result in the receipt by him of additional taxable income.
6.
Termination.
(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 to receive (i) any accrued but unpaid salary and other
amounts to which the Executive otherwise is entitled hereunder
prior to the date of his termination of employment, such salary to
be paid in accordance with Section 3(a) and such other amounts to
be paid in accordance with applicable payment provisions herein;
(ii) bonus compensation earned but not paid under Section 3(b)
hereof that relates to any Contract Year ended prior to the date of
his termination of employment, to be paid in accordance with
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Section 3(b) hereof;
(iii) a pro-rata portion of the annual bonus payout that the
Executive would have been entitled to receive had he remained in
employment through the end of the Contract Year during which
termination due to permanent disability occurred, based on the
portion of the Contract Year that has elapsed prior to such
termination, and paid in accordance with Section 3(b) hereof; (iv)
reimbursement for financial counseling services specified under
Section 5(b) hereof in the amount of $5,000.00 for a period of one
(1) year from the date of termination, in accordance with Section
5(b) hereof; and (v) his Base Salary under Section 3(a) hereof for
a period of one (1) year from the date of termination as a result
of permanent disability (the “Disability Continuation
Period”), paid in accordance with Section 6(m)(i) hereof;
provided , however , that the Company shall only be
required to pay that amount of the Executive’s Base Salary
which shall not be covered by short-term disability payments or
benefits or long-term disability payments or benefits, if any, to
the Executive under any Company plan or arrangement. 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 6(m)). 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 6(m), cash payments,
to be paid in accordance with Section 6(m)(i), 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 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 6(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
6(a) that are not otherwise exempt from Code section 409A are
subject to, and payable in accordance with, Section 6(m) of this
Agreement. Except as otherwise provided in this Section 6(a),
the Company will have no further obligations under Sections 3, 4
and 5 hereof or otherwise. For purposes of this Section 6(a),
“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.
(b)
Death . In the event of the death of the Executive
during the Term of Employment, Executive’s employment and
this Agreement shall automatically terminate. In the event of
such termination the Company shall have no further obligations
hereunder, except to pay the Executive’s beneficiary or legal
representative (i) any accrued but unpaid salary and other amounts
to which the Executive otherwise is entitled hereunder prior to the
date of his
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death, in accordance
with Section 3(a) and other applicable payment provisions herein;
(ii) bonus compensation earned but not paid under Section 3(b)
hereof that relates to any Contract Year ended prior to the date of
his death, in accordance with Section 3(b) hereof; (iii) a pro-rata
portion of the annual bonus payout the Executive would have been
entitled to receive had he remained in the employ of the Company
through the end of the Contract Year during which termination due
to his death occurred, based on the portion of the Contract Year
that has elapsed prior to such termination, and paid in accordance
with Section 3(b) hereof; (iv) reimbursement for financial
counseling services specified under Section 5(b) hereof in the
amount of $5,000.00 per year for a period of one (1) year from the
date of termination, in accordance with Section 5(b) hereof; and
(v) for a period of one (1) year from the date of his death, the
Executive’s Base Salary as established under Section 3(a)
hereof as of the date of his death, paid in accordance with Section
3(a) hereof; provided , however , that, except as
otherwise provided in this Section 6(b), the Company will have no
further obligations under Sections 3, 4 and 5 hereof or
otherwise.
(c)
Termination Without Cause . The Company shall have the
right, upon ninety (90) 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) receive any accrued but unpaid salary and
other amounts to which the Executive otherwise is entitled
hereunder prior to the date of his termination without Cause, such
salary to be paid in accordance with Section 3(a) and such other
amounts to be paid in accordance with applicable payment provisions
herein; (ii) receive bonus compensation earned but not paid under
Section 3(b) hereof that relates to any Contract Year ended prior
to the date of his termination without Cause, to be paid in
accordance with Section 3(b) hereof; (iii) receive a pro-rata
portion of the annual bonus payout that the Executive would have
been entitled to receive had he remained in employment through the
end of the Contract Year during which the termination without Cause
occurred, based on the portion of the Contract Year that has
elapsed prior to such termination, and paid in accordance with
Section 3(b) hereof; (iv) receive as damages (A) for a period
ending on a date two (2) years from the date of termination without
Cause, to be paid in accordance with Section 6(m)(i), his Base
Salary as established under and in accordance with Section 3(a)
hereof and (B) bonus compensation equal to fifty percent (50%) of
the average of the actual annual bonuses paid or payable (with
respect to completed Contract Years) to the Executive during the
Term of Employment , or, if such termination occurs prior to the
payment of any bonus hereunder, $1,000,000.00, to be paid in
accordance with Section 6(m)(i) ; (v) receive reimbursement
for financial counseling services specified under Section 5(b)
hereof in the amount of $10,000.00 for a period of two (2) years
from the date of termination, in accordance with Section 5(b)
hereof; and (vi) participate for a period ending on a date two (2)
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 6(m), cash payments,
to be paid in accordance with Section 6(m)(i), equal to the Pension
Replacement Payment (as defined in Section 6(a)) with respect to
the Without Cause Continuation Period. Notwithstanding the
above, any amounts payable under this Section 6(c) 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 6(c) occurs;
any
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amounts payable under
this Section 6(c) that are not otherwise exempt from Code section
409A are subject to, and payable in accordance with, Section 6(m)
of this Agreement. Except as otherwise provided in this Section
6(c), the Company will have no further obligations under Sections
3, 4 and 5 hereof or otherwise. In the event of termination
pursuant to this Section 6(c), the Executive shall not be required
to mitigate his damages hereunder.
(d)
Cause. The Company shall have the right, upon notice
to the Executive, to terminate the Executive’s employment
under this Agreement for “Cause” (as defined below),
effective upon the Executive’s receipt of such notice (or
such later date as shall be specified in such notice), and the
Company shall have
