Current Report — Form 8-K Filing Table of Contents
Document/ExhibitDescriptionPagesSize 1: 8-K Current Report HTML 27K
2: EX-10.1 Ex.10.1 - Employment Agreement HTML 134K
3: EX-10.2 Ex.10.2 - Form of Market Share Unit Agreement HTML 62K
(Former name or former address, if changed since last report)
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ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 9, 2011, The Estée Lauder Companies Inc. (the “Company”) entered into a new employment agreement with Fabrizio Freda, President and Chief Executive Officer of the Company. The new agreement will be effective as of July 1, 2011. His current employment agreement expires on June 30, 2011.
Under the new employment agreement, Mr. Freda will be an employee-at-will and continue as President and Chief Executive Officer until he leaves the Company or his employment is otherwise terminated. The agreement provides for a base salary to be set by the Compensation Committee. For the fiscal year ending June 30, 2012 (“fiscal 2012”), his base salary shall be $1,750,000. His bonus opportunities and equity grants shall be determined by the Compensation Committee or Stock Plan Subcommittee. For fiscal 2012, his aggregate bonus opportunities at target are $3,250,000. In addition, the Company agreed to recommend to the Stock Plan Subcommittee annual stock-based awards under the
Company’s Amended and Restated Fiscal 2002 Share Incentive Plan with a value equivalent at the time of grant of no less than $5 million with such value determined in accordance with procedures generally utilized by the Company for its financial reporting at the time of grant; provided however, at no time shall an annual grant exceed or be in respect of more than 500,000 shares of Class A Common Stock at target performance (provided that above-target performance payouts on performance-based awards shall not be subject to that limitation). The additional benefits to be provided to Mr. Freda, including the supplemental deferral to be made on his behalf, and payments and benefits upon termination of employment are substantially the same as those described in the Company’s proxy statement, dated
September 24, 2010, under “Executive Compensation – Employment Agreements” and “-- Potential Payments Upon Termination of Employment or Change in Control.” Benefits provided to Mr. Freda under the agreement may be modified by the Compensation Committee at any time other than in contemplation of a “Change of Control” (as defined in the agreement) or after a Change of Control. Any such modification shall not be effective until at least two years after such modification is approved by the Compensation Committee.
In connection with the new agreement, the Stock Plan Subcommittee granted to Mr. Freda a market share unit (“MSU”) payable in shares of the Company’s Class A Common Stock. Such MSU will be paid out depending upon performance of the Class A Common Stock on the New York Stock Exchange during the 20 trading days ending June 30, 2014. If the average closing stock price per share of the Class A Common Stock during that period (the “Average Price”) equals or exceeds $150.00 per share, then Mr. Freda will receive 160,000 shares of Class A Common Stock. If the Average Price is less than $150.00 per share and equal to or greater than $37.50 per share, then Mr. Freda will receive that number of shares equal to 160,000 times the Average Price divided by $150.00. Mr. Freda will receive
no shares if the Average Price is less than $37.50 per share. If the Average Price equals $92.92, which is the closing price per share on the date of grant, then, assuming all other conditions are met, Mr. Freda would receive 99,915 shares of Class A Common Stock. If Mr. Freda resigns or is terminated for cause prior to June 30, 2014, he will receive no shares. If Mr. Freda dies or becomes disabled prior to June 30, 2014 or is terminated without cause after February 9, 2012 and prior to June 30, 2014, then the number of shares to be paid out will be multiplied by a fraction, the numerator of which will be the number of completed months of services starting with July 2010 and the denominator of which shall be 48. The MSU will vest and be paid out upon a “change in
control,” with performance being determined by the consideration per share to be received by the holders of the Company’s Class A Common Stock. Dividend equivalents will be paid out in cash in connection with the shares that are earned by Mr. Freda. Shares and cash paid out pursuant to the MSU are subject to applicable tax withholding requirements.
* Exhibit is a management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.