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.
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. 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
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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.
(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
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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 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
