Exhibit 10.3
EACH OF THE STOCK PLAN SUBCOMMITTEE OF THE
COMPENSATION COMMITTEE AND THE
COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS OF THE ESTEE LAUDER COMPANIES
INC. RESERVES THE RIGHT TO CHANGE
PROVISIONS OF THIS AGREEMENT TO COMPLY WITH
THE AMERICAN JOBS CREATION ACT OF 2004.
PERFORMANCE SHARE UNIT AWARD AGREEMENT
UNDER
THE ESTEE LAUDER COMPANIES INC.
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 Estee Lauder Companies Inc., a
Delaware corporation (the "Company"), to
the participant, an employee of the
Company or one of its subsidiaries (the
"Participant"), of the Company's Class A
Common Stock, par value $0.01 (the
"Shares"), on the terms and subject to the
conditions hereinafter provided. 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 incorporated herein by
reference. The other terms and conditions of
this Performance Share Unit Award are
stated in this Agreement and in the Plan.
Terms not defined herein shall have the
meaning set forth in the Plan (including
any amendments thereto).
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 shall be comprised of, and
measured separately with respect to, the
following two components:
(a) Net Sales
Cumulative Annual Growth Rate (which shall represent
[--] of the Target Award); and
(b) Earnings Per
Share Cumulative Annual Growth Rate (which shall
represent [--] of the Target Award).
For purposes of this Performance Share Unit
Award Agreement, "Net Sales" shall
have 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 and "Earnings Per Share" shall
have the meaning "diluted earnings
per share" as utilized by the Company in
its consolidated financials. 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 made
hereunder shall be equal in amount to the
number of Shares 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
shall be made as soon as practicable
following the end of the Award Period, but
in no event later than 2 and 1/2
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months following the last day of the
calendar year in which the Award Period
ends. The form of payout shall be in
Shares. In addition, each Performance Share
Unit that becomes earned and payable
pursuant to paragraph 2 above shall carry a
Dividend Equivalent Right, payable in cash
at the same time as the payment of
Shares in accordance with this paragraph
3.
Upon the occurrence of a Change in Control, each Performance Share
Unit
will become payable to the Participant with
the total Shares to be paid equal to
the Target Award. Payments upon the
occurrence of a Change in Control shall be
made as soon as practicable following the
Change of Control, but in no event
later than two weeks after 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 into another entity), then the
consideration to be received per Share shall
equal the consideration paid to each
stockholder per Share generally upon such
Change in Control.
4. TERMINATION OF EMPLOYMENT. In the event
the Participant's employment
terminates during the Award Period, payouts
will be as follows:
(a) Death. In
the event of the Participant's death, the Performance
Share Units shall be paid as a pro rata Target Award for full
months employed during the Award Period (i.e., the proration of
the Target Award shall equal a fraction the numerator of which
is
the number of full months of service completed in the Award
Period through the Participant's death and the denominator of
which is the number of full months in the Award Period), as
soon
as practicable following such Participant's death.
(b) Retirement.
In the event of the Employee's formal retirement
under the terms of The Estee Lauder Companies Retirement Growth
Account Plan (or an affiliate or a successor plan or program of
similar purpose), the Performance Share Unit Award shall
continue
through the Award Period and the Participant shall be paid
based
on actual Plan Achievement, at the same time as such awards are
paid to active employees.
(c) Disability.
In the event of the occurrence of the Participant's
total and permanent disability (as such status shall be
determined under the Company's long-term disability program),
the
Performance Share Unit Award shall continue through the Award
Period and the Participant shall be paid a pro rata amount for
full months employed during the Award Period (with such
proration
methodology set forth in paragraph 4(a)) based on actual Plan
Achievement, at the same time as such awards are paid to active
employees.
(d) Termination
of Employment Without Cause. In the event 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 shall be forfeited. In the event
of
such termination after the end of the first year of the Award
Period, the Performance Share Unit Award shall continue through
the Award
Period and the Participant shall be paid a pro rata
amount for months employed during the Award Period (with such
proration methodology set forth in paragraph 4(a)) based on
actual Plan Achievement, at the same time as such awards are
paid
to active employees.
(e) Termination
of Employment By Employee. In the event the
Participant terminates his or her employment (e
