Exhibit 10.4
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.
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 comprises, and is measured separately with respect
to, the following two components:
(a)
Net Sales Cumulative Annual Growth Rate (which shall represent 50%
of the Target Award); and
(b)
Earnings Per Share Cumulative Annual Growth Rate (which shall
represent 50% of the Target Award).
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 and “Earnings Per Share”
means “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 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 will become payable to the
Participant with the total number of Shares to be paid equal to the
Target Award. 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 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.
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.
(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
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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.
(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.
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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
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
del
