SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
the Securities Exchange Act of 1934 (Amendment No. )
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| | The Estée Lauder Companies Inc. 767 Fifth Avenue New York, New York 10153 | | | | |
| | William P. Lauder Executive Chairman | | | ![[MISSING IMAGE: lg_esteelauder-pn.jpg]](/files/DEF 14A/0001104659-23-104591/lg_esteelauder-pn.jpg) | |
| | | | | September 28, 2023 | |
![[MISSING IMAGE: sg_williamplauder-pn.jpg]](/files/DEF 14A/0001104659-23-104591/sg_williamplauder-pn.jpg)
BY INTERNET, TELEPHONE, OR MAIL.
767 Fifth Avenue
New York, New York 10153
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Date: Tuesday,Friday, November 10, 2020
17, 2023
Due to COVID-19, we
EL2023.
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| | By Order of the Board of Directors | | ||
| | | | SPENCER G. SMUL | |
Senior Vice President, Deputy General Counsel and Secretary | | ||||
| | | | New York, New York September | |
20202023 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 10, 2020: 17, 2023:
The Company'sCompany’s Proxy Statement for the 20202023 Annual Meeting of Stockholders and the Annual Report on Form 10-K for the fiscal year ended June 30, 20202023 with certain exhibits (which constitutes the "Annual“Annual Report to Stockholders"Stockholders”) are available at www.proxyvote.com.
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202028, 2023.
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| Date and Time: | | | Friday, November 17, 2023 10:00 a.m., Eastern Time | | | Place: | | | The Annual Meeting will be held in a virtual-only |
Voting Matters
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| Record Date: | | | ||||||
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| ITEMS OF BUSINESS | | | BOARD RECOMMENDATION | | | PROXY STATEMENT DISCLOSURE | | |||||||
1 | | | | Election of Class III Directors | | | FOR each Director Nominee | | | Page 9 | | |||
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2 | | | | Ratification of Appointment of PricewaterhouseCoopers LLP as Independent Auditors | | FOR | | | | |||||
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3 | | | | Advisory Vote to Approve Executive Compensation | | FOR | | | | |||||
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4 | | | | Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation | | | One Year | | | Page 98 | | |||
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Financial Measure Net Sales Net Sales as adjusted(1) Net Sales as adjusted in constant currency(1) Operating Margin Operating Margin as adjusted(1) Diluted EPS Diluted EPS as adjusted(1) Diluted EPS as adjusted in constant currency(1) Return on Invested Capital Return on Invested Capital as adjusted(2) Cash Flow from Operations Total Stockholder Return ("TSR")(3) TSR – S&P 500 Composite(3) The following table provides20232026 Annual Meeting of Stockholders. InformationStockholders, reflecting committee assignments as of the Record Date. Additional information about allthese Director Nominees and the other Directors can be found in this Proxy Statement beginning on page 10.NomineeCurrent PositionCommittee MembershipCharlene Barshefsky Senior International Partner, WilmerHaleNominee Current Position Committee Membership Charlene Barshefsky Chair of Parkside Global Advisors Compensation Committee
and Stock Plan Subcommittee Wei Sun Christianson Managing Director and Co-Chief Executive Officer of Asia Pacific and Chief Executive Officer of China, Morgan StanleyAngela Wei Dong NominatingGlobal Vice President and GovernanceGeneral Manager of Greater China for NIKE, Inc. Audit Committee Fabrizio Freda President and Chief Executive Officer, The Estée Lauder Companies Inc. None Gary M. Lauder Managing Director of Lauder Partners LLC None Jane Lauder Executive Vice President, Enterprise Marketing and Chief Data Officer, The Estée Lauder Companies Inc. None Leonard A. Lauder Chairman Emeritus, The Estée Lauder Companies Inc. None As explained in the "Compensation Discussion and Analysis," we drive our annual and long-term performance through our executive compensation programs. Annual incentive pay is tied to business objectives that are specific to each employee's responsibilities and encourage collaboration across the organization. Long-term equity incentives are tied to both the Company's share price and financial goals over a period of three or more years. As explained below, this combination of compensation elements is intended to help drive and promote strong, balanced, and sustainable corporate performance. Fiscal 2020 was an extraordinarily difficult year for the global economy, our business and our Company. Our performance in the first half of fiscal 2020 was exceptional and on track to achieve better than maximum performance on numerous metrics. The momentum continued into the second half until the unprecedented impacts of COVID-19 significantly disrupted the lives of our consumers, as well as the abilities of our customers and suppliers to operate. During those first few months, and continuing through the rest of fiscal 2020, our management pivoted to capture opportunities in the channels that remained fully functional, made difficult choices, and executed with excellence using new and existing technologies and new ways of working. The second half also marked a period of profound pain as tragic events in the United States highlighted the systemic racial injustice that has plagued our society for far too long. In June 2020, we announced a comprehensive set of commitments to act with urgency on achieving racial equity. Throughout the past several months, our executive officers and other employees have showcased their agility and flexibility, as well as the family values at the heart of our Company. Reflecting how we are managed on the principles of long-term stewardship and "patient capital," our citizenship and sustainability goals remain on track. To help employees in light of the impacts of COVID-19, the Company developed global initiatives that were implemented at the regional and local levels, including (i) the establishment of the ELC Cares Employee Relief Fund to provide immediate and critical financial relief to eligible employees; (ii) a Medical Review Board comprised of senior leaders and leading medical experts to guide the Company on a number of matters, including health and safety policies, guidelines, and protocols; (iii) access to Company-paid supplemental COVID-19 support (e.g., medical triage services and telehealth services) for full-time and part-time employees where necessary and permissible; (iv) a new global Employee Assistance Program with expanded services; (v) enhanced childcare and eldercare benefits; and (vi) for point-of-sale and field employees in locations where retail operations were closed or experiencing slow recovery, the Company maintained Company-paid healthcare and other benefits for a period of time. In fiscal 2020, our multiple engines of growth strategy proved highly effective. The Estée Lauder brand grew double-digits for the third consecutive year. Asia/Pacific was strong with organic sales growth in mainland China and several other markets driving prestige beauty share gains, our skin care category grew and was further boosted by the acquisition of Have&Be Co. Ltd. (i.e. Dr. Jart+), and our online channel surged. We quickly pivoted to capture consumption online during COVID-19 as retail stores around the world temporarily closed. Our closing stock price of $188.68 on June 30, 2020 was above our closing stock price of $183.11 on June 28, 2019 (the last trading day of fiscal 2019). In fiscal 2020, we increased the common stock dividend rate by 12%, repurchased 5 million shares of our Class A Common Stock for $893 million, and used $623 million of cash flow from operations for capital expenditures.Fiscal 2020 Change over
Prior Year3-Year
Compound Annual
Growth Rate
(or Basis Point
Change)5-Year
Compound Annual
Growth Rate
(or Basis Point
Change) $ 14.3 billion (4)% 7% 6% $ 14.3 billion (4)% 7% 5% $ 14.4 billion (3)% N/A N/A 4.2% (1,140)bp (1,010)bp (1,070)bp 14.7% (280)bp (120)bp (120)bp $ 1.86 (61)% (18)% (8)% $ 4.12 (23)% 6% 6% $ 4.16 (22)% N/A N/A 18.5% (720)bp (40)bp (310)bp $ 2.3 billion (9)% 8% 3% 3.8% — 102.5% 130.7% 7.5% — 35.8% 66.5% (1)Fiscal 2020 Net Sales as adjusted in constant currency excludes the $154 million unfavorable impact of foreign currency translation. Fiscal 2020, 2019, and 2017 have been adjusted to exclude returns and charges associated with restructuring and other activities and goodwill and other intangible asset impairments. Fiscal 2020, 2019, 2017 and 2015 have been adjusted to exclude the impact of changes in the fair value of contingent consideration. Fiscal 2020 has also been adjusted to exclude long-lived asset impairments, and fiscal 2020 Diluted EPS as adjusted also excludes the gain on a previously held equity method investment. Fiscal 2020 Diluted EPS as adjusted in constant currency excludes the $.04 unfavorable impact of foreign currency translation. Fiscal 2019 Diluted EPS as adjusted also excludes the gain on liquidation of an investment in a foreign subsidiary, net, and the impact of the provisional charges resulting from the enactment of the Tax Cuts and Jobs Act (the "TCJA"). Fiscal 2017 has also been adjusted to exclude the China deferred tax asset valuation allowance reversal. Fiscal 2015 has been adjusted for a charge to remeasure net monetary assets in Venezuela and for the impact of the accelerated orders associated with the Company's July 2014 implementation of its Strategic Modernization Initiative ("SMI"). See Appendix A for reconciliation and other information about these non-GAAP financial measures.(2)Excludes returns and charges associated with restructuring and other activities, goodwill and other intangible asset impairments, long-lived asset impairments and the impact of changes in the fair value of contingent consideration in each period, where applicable. Fiscal 2020 also
TABLE OF CONTENTS 
2020 Proxy Statement|3excludes the tax impact of the gain on a previously held equity method investment. Fiscal 2019 excludes the impact of the provisional charges resulting from the enactment of the TCJA on the effective tax rate and the tax impact of the gain on liquidation of an investment in a foreign subsidiary, net. See Appendix A for information about this non-GAAP financial measure.(3)The TSR amounts in the 3-Year and 5-Year Compound Annual Growth Rate columns represent the actual 3-Year and 5-Year total return. As COVID-19 impacted our business, we implemented a number of cash conservation measures, including suspension of our share repurchase program; not declaring the quarterly cash dividend that would have been payable in June 2020; temporary salary reductions for senior management; temporary elimination of cash retainers for the Board of Directors; and cutting approximately one-third of our planned capital investments for fiscal 2020. For fiscal 2021, we remain focused on the safety and well-being of our employees and consumers. Our strategic priorities rightly balance investment in those engines of growth where we see the greatest opportunities with cost discipline amid the ongoing pandemic. Through the Post-COVID Business Acceleration Program announced in August 2020, we plan to better align our brick-and-mortar footprint to improve productivity and invest for growth. We are well-positioned to drive growth as the market dynamics support it, yet remain equally mindful of the effects of COVID-19 on consumers, the retail sector and economics, in general, as well as geopolitical uncertainty. The following summarizes key executive compensation matters:•In September 2019, the Compensation Committee (the "Committee") determined that the fiscal 2020 base salary for Fabrizio Freda, our President and Chief Executive Officer, would remain at $2.0 million, and his bonus opportunity would remain at $5.0 million; the Stock Plan Subcommittee (the "Subcommittee") increased Mr. Freda's equity target to $10.5 million (from $9.15 million) for fiscal 2020, resulting in target total annual compensation for fiscal 2020 of $17.5 million, an increase of 8.4% from the prior fiscal year. As explained below, Mr. Freda and the other senior management took temporary reductions in their base salaries, over a six-month period beginning in late fiscal 2020, to show their solidarity with impacted employees and to contribute to the Company's initiatives to reduce expenses and enhance financial flexibility and liquidity in light of COVID-19. See additional information in "Compensation Discussion and Analysis — Impact of COVID-19 on Compensation Matters." •The annual stock-based compensation awarded to our Named Executive Officers (the "NEOs") in fiscal 2020 was based on target grant levels and an assessment of each officer's performance and expected future contributions. The annual equity mix remained weighted equally among performance share units ("PSUs"), stock options, and restricted stock units ("RSUs"). •Payouts under the Executive Annual Incentive Plan for fiscal 2020 reflected the impacts of COVID-19, and actual payouts were determined by applying the respective payout percentages to the fiscal 2020 target bonus opportunities. Given the outstanding performance collectively and individually by the various executive officers, the Subcommittee decided to grant additional value, in the form of additional amounts to fiscal 2021 annual equity grants, to the NEOs and other executive officers. See "Compensation Discussion and Analysis – Impact of COVID-19 on Compensation Matters" and "Impact of COVID-19 on Fiscal 2020 Annual Incentive Bonus Payouts and Fiscal 2021 Annual Equity Grants to Named Executive Officers." •Based on the Company's performance over the three-year period ended June 30, 2020, the PSUs granted to our executive officers in September 2017 resulted in an aggregate payout of 109.9% of target. The PSUs were on track to be paid out at the maximum of 150% through the first six months of fiscal 2020, but the impacts of COVID-19 on the three metrics resulted in the lower payout percentage. Actual payouts for the NEOs, as applicable, are described in note (4) of "Outstanding Equity Awards at June 30, 2020" table. CEO Annual Compensation
for Fiscal 2023 Payout of Third (final) Tranche of September 2015 PSU
granted to CEO
NEO Annual Stock-Based Compensation for Fiscal 2023
Payout of PSUs granted to
NEOs in Fiscal 2021
EAIP Payout for NEOs for
Fiscal 2023
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•As part of our efforts to reduce costs and to enhance financial flexibility and liquidity due to COVID-19, the Compensation Committee (i) reduced the base salaries for senior management, including the NEOs, for the six-month period ending October 2020; and (ii) decided to keep the fiscal 2021 base salaries at the rates established at the start of fiscal 2020, subject to the above-mentioned six-month reduction period.•In August 2020, the Subcommittee approved the payout for the last of three tranches of the non-annual PSU that was granted to Mr. Freda in September 2015. For the final tranche Performance Period that ended June 30, 2020, positive Cumulative Operating Income has been achieved, and 129,283 shares will be delivered to him in June 2023, subject to the award's terms and conditions. Between September 4, 2015 (the grant date of this award) and June 30, 2020, (i) the Company has achieved TSR of 158% (the TSR of the S&P 500 Index was 78%); and (ii) our market capitalization increased from $29 billion to $68 billion.
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17, 2023 28, 2023 by providing access to these documents on the Internet rather than mailing printed copies. Accordingly,
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 10, 202024, 2020"Company," "we,"“Company,” “we,” or "us"“us”), a Delaware corporation, to be voted at the Annual Meeting of Stockholders to be held in a virtual-only meeting format via live webcast on Tuesday,Friday, November 10, 2020,17, 2023, at 10:00 a.m., Eastern Time, and at any adjournment or postponement of the meeting. Due to COVID-19, wethe record date (September 11, 2020)September 18, 2023 (the “Record Date”), you may attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/EL2020EL2023 and logging in with the 16-digit control number found on your proxy card, voting instruction form, or Notice of Internet Availability of Proxy Materials (the “Notice”), as applicable. If you do not have your 16-digit control number or are not a stockholder, you will be able to register as a guest to view the live webcast by visiting the website referenced in this paragraph; however, you will not be able to vote or submit questions during the meeting. You may log into www.virtualshareholdermeeting.com/EL2020EL2023 beginning at 9:45 a.m., Eastern Time, on November 10, 2020.17, 2023. The Annual Meeting will begin promptly at 10:00 a.m., Eastern Time.EL2020EL2023 using the 16-digit control number and follow the instructions to submit a question.August 31, 2020,the Record Date, there were 226,139,308232,296,514 shares of Class A Common Stock and 135,067,429125,542,029 shares of Class B Common Stock issued and outstanding."SEC"“SEC”), we have elected to furnish to our stockholders this Proxy Statement and our Annual Report to Stockholders 6|2020 Proxy Statementathe Notice of Internet Availability of Proxy Materials (the "Notice") is being mailed to our stockholders of record and beneficial owners (other
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New York 10153. If you attend the Annual Meeting at www.virtualshareholdermeeting.com/EL2020EL2023, you may revoke your proxy and change your vote by voting online during the meeting.
| | 6 | 2023 Proxy Statement | | | | |
How many votes are
The following table notes for each proposal: (i) the vote required of Class A Common Stock and Class B Common Stock (voting together) for approval; (ii) whether abstentions count as votes cast; and (iii) whether broker discretionary voting is allowed.
| | | Proposal | | | Vote required for approval (Class A and Class B Common Stock, voting together) | | | Do abstentions count as votes cast? | | | Is broker discretionary voting allowed? | | |
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| Item 1: Election of Class III Directors | | | Plurality of Votes Cast* | | | Not Applicable | | | No | | | ||
| | | Item 2: Ratify appointment of PricewaterhouseCoopers LLP as independent auditors | | | Majority of Votes Cast | | | No | | | Yes | | |
| | | Item 3: Advisory vote to approve Executive Compensation | | | Majority of Votes Cast** | | | No | | | No | | |
| | | Item 4: Advisory vote on the frequency of the advisory vote on Executive Compensation | | | Majority of Votes Cast*** | | | No | | | No | | |
- *
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How will my shares be voted?
| | | | | 2023 Proxy Statement | 7 | |
Meeting.
| | 8 | 2023 Proxy Statement | | | | |
(Item 1)
Effective November 17, 2023, the Board size will decrease from 16 to 15 directors, and the size of Class III will decrease from 6 to 5 directors. The Company is tremendously grateful for the valuable insights and contributions of Mr. L. Lauder and Ms. Christianson during the time they served on our Board. Currently,"Board"“Board”) is comprised of sixteen16 directors. The directors are divided into three classes, each serving for a period of three years. As of the Record Date, Class I is comprised of fivefour directors, Class II is comprised of six directors, and Class III is comprised of fivesix directors.of Directors annually. The directors whose terms will expire at the 20202023 Annual Meeting of Stockholders are Charlene Barshefsky, Wei Sun Christianson, Angela Wei Dong, Fabrizio Freda, Jane Lauder, and Leonard A. Lauder. EachWith the exception of Ms. Christianson and Mr. L. Lauder, each of these directors has been nominated to stand for re-election as a Class III director at the 20202023 Annual Meeting, to hold office until the 20232026 Annual Meeting and until his or her successor is elected and qualified.JaneGary M. Lauder, Leonard A.Jane Lauder, Ronald S. Lauder, and William P. Lauder. The term "Lauder“Lauder Family Members"Members” is defined below (see "Certain“Certain Relationships and Related Transactions – Lauder Family Relationships and Compensation"Compensation”).Company'sCompany’s long-term strategy, monitor progress, and oversee management.
| | | | | 2023 Proxy Statement | 9 | |
| | ![[MISSING IMAGE: ic_circletick-pn.jpg]](/files/DEF 14A/0001104659-23-104591/ic_circletick-pn.jpg) | ||
 | | The Board recommends a vote FOR each nominee as a director to hold office until the | |
| | 10 | 2023 Proxy Statement | | | | |
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| Charlene Barshefsky |
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![[MISSING IMAGE: ph_charlenebarshefsky-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_charlenebarshefsky-bw.jpg)
73 | | | BACKGROUND Ambassador Barshefsky is Chair of Parkside Global Advisors, an international consulting company. Until March 2021, she was Senior International Partner at | | | QUALIFICATIONS • International, government, and public policy experience as United States Trade Representative • Legal experience, including • Board experience at American Express Company, Intel Corporation, • Trustee of the Howard Hughes Medical Institute | | |||
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| Angela Wei Dong | | ||||||||
49 | | | BACKGROUND Ms. |
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| | | QUALIFICATIONS • Global financial and consumer branding and marketing experience in various roles at NIKE, Inc. • Consumer goods experience, particularly for Chinese consumers • Board experience at Barry Callebaut AG • Financial experience | | |||||||
![[MISSING IMAGE: ph_angelaweidong-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_angelaweidong-bw.jpg)
| | | | | 2023 Proxy Statement | 11 | |
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TABLE OF CONTENTS
| | Fabrizio Freda | | ||||||||
| | | BACKGROUND Mr. Freda has served as President and Chief Executive Officer of the Company since July 2009. From March 2008 through June 2009, he was President and Chief Operating Officer where he oversaw a number of brands in the | | | QUALIFICATIONS • Global management, marketing, and other business, consumer and luxury brand industry experience as President and Chief Executive Officer of The Estée Lauder Companies Inc. • Similar experience, including developing and leading global organizations, in leadership positions at P&G and Gucci SpA • Experience leading successful, creative organizations with innovation programs based on research and development • Board experience at BlackRock, Inc. • Experience living and working in several countries • Financial experience | | |||
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| Gary M. Lauder | | ||||||||
| | ![[MISSING IMAGE: ph_garylauder-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_garylauder-bw.jpg) Director Nominee Age 61 Class III | | | BACKGROUND Mr. G. Lauder is the Managing Director of Lauder Partners LLC, a Silicon Valley-based venture capital firm. He has been a venture capitalist since 1985, investing in over 170 private companies across diverse industries. Presently, he invests in technology companies in biomedical, law enforcement, security, and other fields. Mr. Lauder has served as a board member or observer at a number of private companies. In addition, he currently serves on the Advisory Council of the Aspen Institute Science & Society Program and on the Board of Governors of the Alzheimer’s Drug Discovery Foundation. | | | QUALIFICATIONS • Venture capital and investment experience as Managing Director of Lauder Partners LLC • Technology innovation and intellectual property experience • Board experience at ShotSpotter Inc. (renamed SoundThinking, Inc.) • Affiliation with non-profit organizations (Aspen Institute and Alzheimer’s Drug Discovery Foundation) • Financial experience • Lauder family stockholder and party to Stockholders’ Agreement | | ||
![[MISSING IMAGE: ph_fabriziofreda-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_fabriziofreda-bw.jpg)
| | 12 | 2023 Proxy Statement | | | | |
| | Jane Lauder | | ||||||
| ![[MISSING IMAGE: ph_janelauder-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_janelauder-bw.jpg) Director since 2009 Age Class III | | | BACKGROUND Ms. Lauder is Executive Vice President, Enterprise Marketing and Chief Data | | | QUALIFICATIONS • Management, marketing, and other industry experience through leadership roles at The Estée Lauder Companies Inc. • Digital and technology experience • Board experience at Eventbrite, Inc. •
Lauder family stockholder and party to | |
| | | | | 2023 Proxy Statement | 13 | |
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| Mr. Fribourg is the Chairman and Chief Executive Officer of Continental Grain Company, an international agribusiness and investment company. He joined Continental Grain Company in 1976 and worked in various positions there with increasing responsibility in both the United States and Europe. Mr. Fribourg is | | | QUALIFICATIONS • Global management, marketing, and other business experience as Chairman and Chief Executive Officer of Continental Grain Company • Board experience at Apollo Global Management, LLC, Bunge Limited, Loews Corporation, and Restaurant Brands International Inc. • Affiliation with leading business and public policy associations (Council on Foreign Relations) • Financial experience | | |||
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| | Jennifer Hyman | | ||||||
| | ![[MISSING IMAGE: ph_jenniferhyman-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_jenniferhyman-bw.jpg) Director since 2018 Age 43 Class I Committee: • Audit Committee | | | |||||
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| Ms. Hyman is Co-founder, | | | QUALIFICATIONS • Management and entrepreneurial experience as Co-founder and Chief Executive Officer of Rent the Runway, Inc. • Deep knowledge about millennials, Gen Z, and other consumer segments • Omnichannel, disruptive technology, and social-digital experience • Board experience at Rent the Runway, Inc. and Zalando SE • Financial experience | | |
| | 14 | 2023 Proxy Statement | | | | |
| | Arturo Nuñez | | |||||||
| | ![[MISSING IMAGE: ph_arturonunez-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_arturonunez-bw.jpg) Director since 2022 Age 56 Class I Committee: • Audit Committee | | | BACKGROUND Mr. Nuñez manages private investments on his own behalf. From June 2021 until October 2022, he was the Chief Marketing Officer of Nu Holdings Ltd. (“Nubank”), a digital banking platform headquartered in Brazil that serves customers across Brazil, Mexico, and Colombia. Prior to joining Nubank in June 2021, he founded AIE Creative, a branding and marketing firm, and from 2014 to 2018, he was the Head of Marketing, Latin America, for Apple Inc. From 2007 to 2014, Mr. Nunez held various marketing positions at NIKE, Inc., including Global Vice President, Basketball Marketing, and from 1999 to 2007, he held various positions at the National Basketball Association (“NBA”) including Vice President, Managing Director, NBA Latin America and U.S. Hispanic. | | | QUALIFICATIONS • Global business, marketing, management, retail, and consumer brand experience in various roles at Apple Inc., NIKE, Inc., the National Basketball Association, and Nu Holdings Ltd. • Deep knowledge about consumers and consumer goods • Innovative technology and digital experience | | |
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| | Barry S. Sternlicht | | |||||||
| ![[MISSING IMAGE: ph_barryssternlicht-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_barryssternlicht-bw.jpg) Director since 2004 Age 62 Committee: • Nominating and | | | BACKGROUND Mr. Sternlicht is Chairman and Chief Executive Officer of Starwood Capital Group, a privately-held global investment firm | | | QUALIFICATIONS • Global business, investment, real estate, financial, private equity, entrepreneurial, and consumer brand and luxury industry expertise at Starwood Capital Group, as Chairman of Starwood Property Trust, Inc., as Chairman of the Board of Starwood Real Estate Trust, Inc., and as founder and former Chief Executive of Starwood Hotels & Resorts Worldwide, Inc. • Board experience at A.S. Roma, Baccarat S.A., Cano Health, Inc., Invitation Homes, Inc., Restoration Hardware Holdings, Inc., Riviera Holdings Corporation, Starwood Property Trust, Inc., and TRI Pointe Group, Inc. • Financial experience | | |
| | | | | 2023 Proxy Statement | 15 | |
| | Ronald S. Lauder | | ||||||
| | ![[MISSING IMAGE: ph_ronaldslauder-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_ronaldslauder-bw.jpg) Director since 2016 Age 79 Class II | | | |||||
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| Mr. R. Lauder is Chairman of Clinique Laboratories, LLC. He was Chairman of Estee Lauder International, Inc. from 1987 through 2002. Mr. Lauder joined the Company in 1964 and has served in various capacities. He was a member of the Board of Directors of the Company from 1968 to 1986 and again from 1988 to July 2009, prior to rejoining the Board in 2016. From 1983 to 1986, Mr. Lauder served as Deputy Assistant Secretary of Defense for European and NATO Affairs. From 1986 to 1987, he was U.S. Ambassador to Austria. Mr. Lauder is an Honorary Chairman of the Board of Trustees of the Museum of Modern Art and President of the Neue Galerie. He is also Chairman of the Board of Governors of the Joseph H. Lauder Institute of Management and International Studies at The Wharton School at the University of Pennsylvania and the co-founder and Co-Chairman of the | | | QUALIFICATIONS • Global business, marketing, and consumer and luxury brand industry experience through leadership roles at The Estée Lauder Companies Inc. • Affiliation with leading business, civic, and government associations • Board experience at Central European Media Enterprises Ltd. •
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| William P. Lauder | | |||||||||
| ![[MISSING IMAGE: ph_williamplauder-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_williamplauder-bw.jpg) Director since 1996 Age 63 Committee: • Nominating and | | | BACKGROUND Mr. W. Lauder is Executive Chairman of the Company and, in such role, he is Chairman of the Board of Directors. He was Chief Executive Officer of the Company from March 2008 through June 2009 and President and Chief Executive Officer from July 2004 through February 2008. From January 2003 through June 2004, he was Chief Operating Officer. Mr. Lauder joined the Company in 1986 and has served in various capacities. From July 2001 through 2002, he was Group President, responsible for the worldwide business of the Clinique and Origins brands and the | | | QUALIFICATIONS • Global business, marketing, Internet, retail, and consumer and luxury brand industry experience through leadership roles at The Estée Lauder Companies Inc. • Experience leading successful creative organizations with innovation programs based on research and development • Board experience at GLG Partners, Inc., Jarden Corporation, and True Temper Sports, Inc. • Trustee of the University of Pennsylvania and lecturer at The Wharton School • Financial experience •
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| | 16 | 2023 Proxy Statement | | | | |
| | Richard D. Parsons | | ||||||
| | ![[MISSING IMAGE: ph_richarddparsons-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_richarddparsons-bw.jpg) Director since 1999 Age 75 Class II Committees: • Compensation Committee • Nominating and ESG Committee | | | |||||
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| Mr. Parsons | | | QUALIFICATIONS • Global business, marketing, media, Internet, banking, and other business and consumer brand experience through leadership roles at Time Warner Inc. and Dime Bancorp, Inc. • Board experience at CBS Corporation, Citigroup Inc., Group Nine Acquisition Corp., Lazard Ltd., • Private equity experience at Providence Equity Partners LLC • Legal and government experience • Financial experience | | |||||
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| Lynn Forester de Rothschild | | |||||||||
| ![[MISSING IMAGE: ph_lynnfderothschild-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_lynnfderothschild-bw.jpg) Director since 2000 Age 69 Committee: • Nominating and | | | BACKGROUND Lady de Rothschild is | | | QUALIFICATIONS • Global business and investment experience as as an advisor to Inclusive Capital Partners • Board experience at Nikola Corporation • Board and media experience as director of The Economist Group • Affiliation with leading business and public policy associations (Council for Inclusive Capitalism and Council on Foreign Relations) • Experience working abroad • Legal and government experience • Financial experience | | ||
| | | | | 2023 Proxy Statement | 17 | |
| | Jennifer Tejada | | ||||||
| | ![[MISSING IMAGE: ph_jennifertejada-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_jennifertejada-bw.jpg) Director since 2018 Age 52 Class II Committee: • Compensation Committee and Stock Plan Subcommittee | | | |||||
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| Ms. Tejada is Chief Executive Officer and Chair of the Board of PagerDuty, Inc., a digital operations management platform for businesses. Prior to joining PagerDuty in 2016, she was President and Chief Executive Officer of Keynote Systems Corporation, a software company specializing in digital performance analytics and web and mobile testing, from 2013 to 2015. Ms. Tejada was Executive Vice President and Chief Strategy Officer of Mincom, an enterprise software company, from 2008 to 2011. She has also previously held senior positions at Merivale Group, The Procter & Gamble Company, and i2 | | | QUALIFICATIONS • Management experience at PagerDuty, Inc., Keynote Systems Corporation, and Mincom • Digital, mobile, cyber, and software experience • Consumer goods experience • Experience working abroad • Board experience at PagerDuty, Inc., Keynote Systems Corporation, , and UiPath, Inc. • Financial experience | | |||||
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| Richard F. Zannino | | |||||||||
| ![[MISSING IMAGE: ph_richardzannino-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ph_richardzannino-bw.jpg) Director since 2010 Age 64 Committee: • Audit Committee (Chair) | | | BACKGROUND Mr. Zannino is a Managing Director at the private equity firm CCMP Capital Advisors, LLC. He is a partner on the | | | QUALIFICATIONS • Management, media, finance, retail, and consumer brand industry experience in various positions at Dow Jones & Company, Inc., Liz Claiborne, Inc., and Saks Fifth Avenue • Consumer, retail, media, and private equity experience at CCMP Capital Advisors, LLC • Board experience at Dow Jones & Company, Inc., • Trustee of Pace University • Financial experience | | ||
| | 18 | 2023 Proxy Statement | | | | |
Richard F. Zannino (Chair) Angela Wei Dong Paul J. Fribourg Jennifer Paul J. Fribourg Richard D. Parsons Wei Sun Christianson (Chair) Lynn Forester de Rothschild Barry S. Sternlicht non-employee directors (10 of whom are independent); and (iii) 4 directors who are ” many factors, including general understanding of marketing, finance, and other disciplines relevant to the success of a large publicly traded company in ” As Additionally, the following relationships will not be considered to be the Board. See Fiscal See “Executive Compensation” for information regarding fiscal 2023 compensation, and the employment agreement, for William P. Lauder. Pursuant to the LAL Agreement, Mr. L. Lauder previously deferred certain compensation, and his deferred compensation account is 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 in no event more than 9%. The LAL Agreement provides the Company with the ability to select the date of payment to Mr. L. Lauder of the amounts he deferred prior to December 31, 2004 and the associated earnings thereon (the “Pre-409A Balance”). As disclosed in the Company’s fiscal 2022 Proxy Statement, in December 2021 (fiscal 2022), the Company selected July 2022 (fiscal 2023) for the timing of the deferred compensation payout to Mr. L. Lauder of his entire Pre-409A Balance, and such payment was made on August 1, 2022 (the first business day following the end of July 2022) in the amount of $5,242,452. In accordance with the LAL Agreement, the remainder balance of Mr. L. Lauder’s deferred compensation account (approximately $960,000 as of June 30, 2023) is payable upon the first to occur of (i) his death or (ii) the first business day following the expiration of the 6-month period after his separation from service. We also pay travel expenses for her spouse/companion or domestic partner to accompany her on up to two business-related travel itineraries per fiscal year. Ms. J. Lauder’s employment agreement requires the Company to make certain post-termination payments and continue certain benefits during the enforced non-compete period in such agreement. outstanding equity is owned by Lauder Family Members; (iii) any partnership if at least 80% of the value of its partnership interests are owned by Lauder Family Members; and (iv) any limited liability or similar company if at least 80% of the value of the company is owned by Lauder Family Members. The term ” such pledges. The retailers. In addition, in fiscal At June 30, 2023, such entities had approximately $624,000 deposited with the Company to cover expenses. The approximate dollar value of the amount of Mr. Lauder’s interest in these transactions was $821,000. Name Charlene Barshefsky Rose Marie Bravo Wei Sun Christianson Paul J. Fribourg Irvine O. Hockaday, Jr. Jennifer Hyman Richard D. Parsons Lynn Forester de Rothschild Barry S. Sternlicht Jennifer Tejada Richard F. Zannino Name of Beneficial Owner Leonard A. Lauder(3)(4) LAL Family Corporation(3)(5) Ronald S. Lauder(3)(6) William P. Lauder(3)(7) Gary M. Lauder(3)(8) Aerin Lauder(3)(9) Jane Lauder(3)(10) Joel S. Ehrenkranz, as trustee(3)(11) Richard D. Parsons, individually and as trustee(3)(12) Charlene Barshefsky(13) Rose Marie Bravo(14) Wei Sun Christianson(15) Paul J. Fribourg(16) Irvine O. Hockaday, Jr.(17) Jennifer Hyman(18) Lynn Forester de Rothschild(19) Barry S. Sternlicht(20) Jennifer Tejada(21) Richard F. Zannino(22) Fabrizio Freda(23) John Demsey(24) Cedric Prouvé(25) Deirdre Stanley(26) Tracey T. Travis(27) BlackRock, Inc.(28) FMR LLC(29) The Vanguard Group(30) All directors and executive officers as a group (26 persons)(31) Financial Measure Net Sales Net Sales as adjusted(1) Net Sales as adjusted in constant currency(1) Operating Margin Operating Margin as adjusted(1) Diluted EPS Diluted EPS as adjusted(1) Diluted EPS as adjusted in constant currency(1) Return on Invested Capital Return on Invested Capital as adjusted(2) Cash Flow from Operations Total Stockholder Return ("TSR")(3) TSR – S&P 500 Composite(3) CEO Annual Compensation Key level of responsibility of the particular executive officer, internal pay equity, and competitive considerations. strategic initiatives and progress towards goals and commitments. For example, such business goals were included in the fiscal 2023 EAIP program and were used as an input into determining fiscal 2023 equity grants. The fiscal 2023 business unit strategic goals for the NEOs encompassed multiple strategic focus areas concerning SI&S matters. Specifically, the fiscal 2023 business goals for our NEOs incorporated inclusion, diversity, and equity matters; support for enterprise-wide talent initiatives; and progress in connection with Company sustainability objectives. We periodically refine the way we manage ESG (Environmental, Social, and Governance) matters at the Company, recognizing the importance of further embedding SI&S into our business. In fiscal 2023, the Company appointed its first Chief Sustainability Officer (“CSO”). The CSO leads the Global Corporate Citizenship and Sustainability (“GCCS”) function and reports to our Executive Chairman and our President and CEO. The CSO also serves on the Company’s Executive Leadership Team. Our ESG strategy is further directed by individual Environment, Social, and Governance subcommittees composed of senior leaders and subject matter experts. The subcommittees meet on a periodic basis to discuss, harmonize, and accelerate social impact and sustainability initiatives across the business and drive progress towards related goals and commitments. PSU. and the BALMAIN licensing agreement. Diluted EPS OI Margin Percent Net Sales ROIC Corporate Multiplier Division Net Sales John Demsey Cedric Prouvé Division NOP Margin John Demsey Cedric Prouvé Inventory Management – Days to Sell John Demsey Cedric Prouvé Productivity – Employee Costs John Demsey Cedric Prouvé Productivity – Employee Costs as % of Net Sales John Demsey Cedric Prouvé Online Sales John Demsey Cedric Prouvé Online NOP Margin John Demsey Cedric Prouvé Total Company Sales John Demsey Cedric Prouvé Total Company NOP Margin John Demsey Cedric Prouvé these metrics are confidential commercial or financial information, the disclosure of which would cause competitive harm to the Company. We believe that such annual targets are achievable in connection with strong performance. Online Net Sales includes sales of our products from our websites and third party platforms, as well as estimated sales of our products sold through our retailers’ websites. Other Executives Functions Average Business Unit Strategic Objectives Division Net Sales* Division NOP Margin* Inventory Management Productivity – Employee Costs Productivity – Employee Costs as % of Net Sales Online Sales* Online NOP Margin* Total Company Sales* Total Company NOP Margin* Business Unit Payout (a) Corporate Multiplier (b) EAIP Payout % (a) x (b) Named Executive Officer(1) F. Freda T. Travis J. Demsey C. Prouvé Long-Term Equity-Based Compensation members of our senior management. As with each other element of compensation, and compensation overall, the Subcommittee (or the Committee for non-equity-based compensation), PSUs are accompanied by dividend equivalent rights that will be payable in cash at the time of payout of the related shares. To the extent shares are paid out on a PSU award, the cash amount paid is equal to the dividends declared per share over the performance period times the number of shares paid out. PSUs do not have any voting rights with respect to the underlying shares of Class A Common Stock. PSUs are subject to restrictions on transfer and forfeiture prior to vesting, and upon payout of such awards, shares will be withheld to satisfy statutory tax obligations. Payout of annual PSUs generally assumes continued employment and is subject to acceleration upon the occurrence of certain events as described in “Potential Payments ” results in Net Sales (CAGR)(1) Diluted EPS (CAGR) ROIC (CAGR) Aggregate Payout Net Sales (CAGR)(1) Diluted EPS (CAGR) ROIC (CAGR) Targets for each grant are based on the long-term strategic plan and conditions that exist at the beginning of each grant period. Multiple factors influence the setting of underlying measures including the anticipated Company-specific goals and objectives as well as macroenvironmental influences for the three-year performance period. Each grant period targets are set independent of other outstanding grants. We believe that the components underpinning each grant are reasonably aggressive when set. Additional (non-annual) date assuming continued employment and subject to acceleration upon the occurrence of certain events as described in “Potential Payments upon Termination of Employment or Change of Control – Events of Termination under the Employment Agreements and under the Share Incentive Plan.” Stock options do not have dividend equivalent rights or any voting rights with respect to the underlying shares of Class A Common Stock. The vesting of RSUs is subject to continued employment and subject to acceleration upon the occurrence of certain events as described in “Potential Payments upon Termination of Employment or Change of Control – Events of Termination under the longer term. ” Fiscal Year 2020 2019 2018 least June 30, 2024. In its consideration of the appropriate size and structure for The achievement of the Cumulative Operating Income Goal and other terms and conditions. This for each fiscal year in such Performance Period, subject to certain automatic adjustments impact of unplanned acquisitions. performance period. For purposes of this award, would be delivered shortly thereafter. William P. Lauder, Tracey T. Travis, Jane Hertzmark Hudis, and Peter Jueptner 5,563 shares of Class A Common Stock. These grants reflect the application of an individual performance 2024. 2023. Our revenues approximate the Revlon has been removed. 2023. amounts to be paid), equity grants, and other compensation matters related to executive officers are made by the Committee or Subcommittee, as the case may be. The EVP HR and the human resources staff work with the Executive Vice President and General Counsel, the legal staff, the Executive Vice President and Chief Financial Officer, and the finance staff to support the Committee and Subcommittee. ” In addition, beginning in fiscal 2023, the employee healthcare coverage provided by the Company for Mr. Freda has been expanded to provide full coverage outside the United States. Potential Payments upon Termination of Employment. As discussed in more detail under ” Executive Stock Ownership Guidelines and Holding Requirements Executive Officer Multiple of Salary Multiple of Salary Executive Chairman President and Chief Executive Officer Chief Financial Officer Group Presidents Other Executive Officers requirement. As of June 30, requirements. with the incremental change in ownership requirements. If an executive officer fails to achieve the requisite ownership level by the required deadline, then until such time as the ownership guidelines are achieved, such executive officer must continue to hold (a) 100% of the net after-tax shares of Common Stock received due to the vesting of RSUs, PSUs, or any other share unit and (b) 100% of the net after-tax shares of any stock option exercise. An executive officer may satisfy the ownership guideline but subsequently, due to a drop in the stock price, the The Company intends to adopt a recoupment policy that complies with new NYSE listing standards regarding clawbacks by the required compliance date. Name and Fabrizio Freda(1) President and Chief Executive Officer Tracey T. Travis(2) Executive Vice President and Chief Financial Officer John Demsey Executive Group President Cedric Prouvé Group President – International Deirdre Stanley(3) Executive Vice President and General Counsel Certain amounts do not sum due to rounding Fiscal Year Date of Grant September 3, 2019 and October 28, 2019 (fiscal 2020) September 4, 2018 (fiscal 2019) September 5, 2017 (fiscal 2018) Name Fabrizio Freda Tracey T. Travis John Demsey Cedric Prouvé Deirdre Stanley Certain amounts do not sum due to rounding The Mr. Freda’s employment agreement requires the Company to make certain post-termination payments and continue certain benefits during the enforced non-compete period in such agreement. 2023 Name Fabrizio Freda Tracey T. Travis EAIP John Demsey EAIP Cedric Prouvé EAIP Deirdre Stanley EAIP 2023 Name Fabrizio Freda Tracey T. Travis John Demsey Cedric Prouvé Deirdre Stanley 2023 Fabrizio Freda Tracey T. Travis John Demsey Cedric Prouvé Deirdre Stanley value realized for the 2,561 shares delivered to Mr. Jueptner on November 1, 2022 from a non-annual RSU grant to him in September 2019. As reflected in note (11), shares were withheld to satisfy taxes upon (i) vesting of annual PSUs and RSUs, and (ii) delivery of shares from his September 2019 non-annual RSU. Restoration Plan is payable in accordance with the terms of the plan, and as applicable, in compliance with Section 409A. Set forth in the table below are each Name Fabrizio Freda Tracey T. Travis John Demsey Cedric Prouvé Deirdre Stanley (ii) the first business day following the expiration of the 6-month period after Mr. Lauder’s separation from service. Voluntary Termination and Retirement. Pursuant to each NEO employment agreement, the executive may terminate employment for any reason at any time upon 90 Hudis are entitled to life-time annual supplemental payments in connection with healthcare benefits. become immediately exercisable and may be exercised until the earlier of one year after the last day of salary continuation or the expiration of the option term, subject to the non-competition and good conduct provisions of the ” If Mr. Freda dies or becomes disabled, the Cumulative Operating Income goal for the non-annual March 2021 PVU will be deemed met and for each Performance Period that has not yet concluded, he will earn and vest in each tranche only to extent the Stock Price Goal for such tranche was met on or prior to the earlier of (i) the one-year anniversary of the date of death or termination by reason of disability and (ii) June 30, 2024, and the delivery of shares, if any, would be made shortly thereafter. As reflected in “Compensation Discussion and Mr. Freda, see “Compensation Discussion and Analysis – CEO Compensation.” time such awards are paid to active executives. If the executive is retirement eligible, the provisions relating to termination upon retirement will apply in lieu of the provisions described in this paragraph. See control in shares equal to the greater of the target award or what the payout would be based on performance as if the performance period ended on the date of the change in control. For information about the treatment of Mr. Freda’s additional (non-annual) PVU and PSU grants upon a Change in Control, see “Compensation Discussion and Analysis – CEO Compensation.” Effect of Section 409A on Equity Awards. Payment of amounts subject to Section 409A is permitted only upon certain defined events including a change of control that satisfies the definition under Section 409A and related regulations. In addition, if any payment under any equity award is subject to Section 409A, the required six-month delay after termination of service will apply to payments due by reason of separation from service. 2023. Fabrizio Freda Base Salary Bonus Options PSUs RSUs Continued Health Care Benefits(1) Continued Participation in Pension and Retirement Plans(2) Other Benefits and Perquisites(3) Total Tracey T. Travis Base Salary Bonus Options PSUs RSUs Continued Health Care Benefits(1) Continued Participation in Pension and Retirement Plans(2) Other Benefits and Perquisites(3) Total John Demsey Base Salary Bonus Options PSUs RSUs Continued Health Care Benefits(1) Continued Participation in Pension and Retirement Plans(2) Other Benefits and Perquisites(3) Total Cedric Prouvé Base Salary Bonus Options PSUs RSUs Continued Health Care Benefits(1) Continued Participation in Pension and Retirement Plans(2) Other Benefits and Perquisites(3) Total Deirdre Stanley Base Salary Bonus Options PSUs RSUs Continued Health Care Benefits(1) Continued Participation in Pension and Retirement Plans(2) Other Benefits and Perquisites(3) Total have been entitled to the following amounts: Mr. Lauder, $1,639,871; Mr. Freda, Additionally, the Company notes that nearly 30% of our employees who are within the scope of the pay ratio rules are part-time or temporary. EPS (Company-Selected Measure) Net Sales PwC. PwC has served as the Company’s auditor since 2020. Fee Type Audit Fees(1) Audit-Related Fees(2) Tax Fees(3) All Other Fees Total ” Financial Metric Net Sales as reported Accelerated orders associated with SMI rollout Returns associated with restructuring activities Net Sales as adjusted Operating Margin as reported Accelerated orders associated with SMI rollout Goodwill, other intangible asset and long-lived asset impairments Changes in fair value of contingent consideration Venezuela remeasurement charges Returns and charges associated with restructuring activities Operating Margin as adjusted Diluted EPS as reported Accelerated orders associated with SMI rollout Goodwill, other intangible asset and long-lived asset impairments Transition Tax resulting from the TCJA Remeasurement of U.S. net deferred tax assets resulting from the TCJA Net deferred tax liability related to certain foreign withholding taxes on planned repatriation resulting from the TCJA Changes in fair value of contingent consideration Other income, net, primarily the gain on previously held equity method investment Gain on liquidation of an investment in a foreign subsidiary, net Venezuela remeasurement charges China deferred tax asset valuation allowance reversal Returns and charges associated with restructuring activities Diluted EPS as adjusted Return on Invested Capital, as reported Return on Invested Capital, as adjusted(2)stockholders'stockholders’ agreement with the Company (the "Stockholders' Agreement"“Stockholders’ Agreement”) have agreed to vote shares beneficially owned by them for Leonard A. Lauder (or for one of his sons), Ronald S. Lauder (or for one of his daughters), and one person, if any, designated by each as a director of the Company. Aerin Lauder and Jane Lauder are parties to the Stockholders'Stockholders’ Agreement solely as trustees of certain trusts. The term "Lauder“Lauder Family Members"Members” is defined below (see "Certain“Certain Relationships and Related Transactions – Lauder Family Relationships and Compensation"Compensation”). Shares subject to the Stockholders'Stockholders’ Agreement represent approximately 84%83% of the voting power of the Company as of the Record Date. The right of each of Leonard A. Lauder (or his sons) and Ronald S. Lauder (or his daughters) to designate a nominee exists only when he (including his descendants) beneficially owns (other than by reason of the Stockholders'Stockholders’ Agreement) shares of Common Stock with at least 10% of the total voting power of the Company. Currently,In accordance with the Stockholders’ Agreement, Leonard A. Lauder designated William P. Lauder is the nominee of Leonard A.and Gary M. Lauder as directors, and Ronald S. Lauder designated himself and Jane Lauder is the nominee of Ronald S. Lauder.as directors. The right of each of Leonard A. Lauder (or one of his sons) and Ronald S. Lauder (or one of his daughters) to be nominated will exist so long as he (including his descendants) beneficially owns shares of Common Stock with at least 5% of the total voting power of the Company. In the event that Leonard A. Lauder ceases to be a member of the Board of Directors by reason of his death or disability, then his sons, William P. Lauder and Gary M. Lauder, will succeed to his rights to be nominated as a director and to designate one nominee. If either son is unable to serve by reason of his death or disability, the other son will have the right to designate a nominee. Similarly, Aerin Lauder and Jane Lauder, Ronald S. Lauder'sLauder’s daughters, will succeed to their father'sfather’s rights upon his death or disability. If either daughter is unable to serve by reason of her death or disability, the other daughter will have the right to designate a nominee. In the event none of Leonard A. Lauder and his sons and Ronald S. Lauder and his daughters are able to serve as directors by reason of death or disability, then the rights under the Stockholders'Stockholders’ Agreement to be a nominee and to designate a nominee will cease. The Stockholders'Stockholders’ Agreement contains a "sunset“sunset provision."” Under this provision, the Stockholders'Stockholders’ Agreement will terminate upon the occurrence of certain specified events, including the transfer of shares of Common Stock by a party to the Stockholders'Stockholders’ Agreement that causes all parties thereto immediately after such transaction to own beneficially in the aggregate shares having less than 10% of the total voting power of the Company.86%84% of the voting power of the Company as of the Record Date. The Company is a "controlled company"“controlled company” under the rules of the New York Stock Exchange (the "NYSE"“NYSE”) because the Lauder family and their related entities hold more than 50% of the voting power of the outstanding voting stock. As such, the Company may avail itself of exemptions relating to the Board and certain Board committees. Despite the availability of such exemptions, the Board of Directors has determined that it will have a majority of independent directors and that both the Nominating and GovernanceESG Committee and the Compensation Committee will have otherwise required provisions in their charters. As permitted by the NYSE rules for "controlled“controlled companies,"” our Board does not require that the Nominating and GovernanceESG Committee and the Compensation Committee be comprised solely of independent directors.GovernanceESG Committee. Each director on these committees is an independent director except for William P. Lauder, who is a member of the Nominating and ESG Committee, and Richard D. Parsons.Parsons, who is a member of the Nominating and ESG Committee and the Compensation Committee. Each committee reports regularly to the Board and has the authority to engage its own advisors. From time to time, the Board considers the composition of our Board committees. During fiscal 2023, there were a number of changes in our committee composition. Effective July 11, 2022, Ms. Dong joined the Audit Committee, and effective November 18, 2022: (i) Ms. Tejada joined the Compensation Committee (and the Stock Plan Subcommittee) and left the Audit Committee, and (ii) Mr. Zannino left the Compensation Committee (and the Stock Plan Subcommittee). As previously
TABLE OF CONTENTS 2020 Proxy Statement|19 The members ofcommittees2023 Annual Meeting, and therefore, she will no longer be on the Nominating and ESG Committee after such meeting. are set forth in the following table:DirectorAuditCommitteeCompensationCommitteeNominating andGovernanceCommitteeCharlene Barshefsky† 
Rose Marie Bravo†Director Audit
Committee 
Compensation
Committee
ESG
Committee Wei Sun Christianson Paul J. FribourgJennifer HymanIrvine O. Hockaday, Jr.* William P. LauderRichard D. Parsons![[MISSING IMAGE: ic_member-bw.gif]](/files/DEF 14A/0001104659-23-104591/ic_member-bw.gif)
Lynn Forester de RothschildBarry S. SternlichtWei Sun Christianson Jennifer Tejada ![[MISSING IMAGE: ic_chair-bw.gif]](/files/DEF 14A/0001104659-23-104591/ic_chair-bw.gif)
Angela Wei Dong Jennifer Hyman William P. Lauder Arturo Nuñez Richard D. Parsons Lynn Forester de Rothschild Barry S. Sternlicht Richard F. Zannino ![[MISSING IMAGE: ic_chair-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ic_chair-bw.jpg)
Chair ![[MISSING IMAGE: ic_member-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ic_member-bw.jpg)
Member
Chair 
Member"Investors"“Investors” section of the Company'sCompany’s website, www.elcompanies.com, under "Corporate“Corporate Governance."
Committee AuditJennifer HymanCommittee
Tejada Company'sCompany’s Internal Audit department; reviews audit results; reviews and discusses the Company'sCompany’s financial statements with management and the independent auditors; reviews and discusses with the Board the Company'sCompany’s policies for risk assessment and risk management; and is responsible for our related person transactions policy. The committee'scommittee’s scope of oversight responsibilities includes information technology, cybersecurity, taxes, treasury, and legal matters. The committee meets periodically with the Chief Financial Officer, the head of internal audit, and representatives of the independent auditors. The Board of Directors has determined that each of Mr. Fribourg and Mr. Zannino qualifies as an "Audit“Audit Committee Financial Expert"Expert” in accordance with SEC rules. 20|2020 Proxy Statement
Committee CompensationCharlene Barshefsky (Chair)•Committee (Chair)*
•Rose Marie Bravo *Also a member of the Stock Plan Subcommittee Company'sCompany’s executive officers and administers the Company'sCompany’s Executive Annual Incentive Plan. The Stock Plan Subcommittee has authority over all decisions regarding awards to executive officers under the Company'sCompany’s share incentive plans and authority to administer the Company'sCompany’s share incentive plans under which executive officers and other employees may receive equity grants. The Company also has an Employee Equity Award Committee, the sole member of which is Mr. Freda; the purpose of this committee is to make limited grants of equity awards under the share incentive plan to employees who are not executive officers. During fiscal 2020, the Employee Equity Award Committee did not make any grants.2020,2023, Ambassador Barshefsky, Ms. Bravo, Mr. Fribourg, Mr. Parsons, Ms. Tejada, and Mr. ParsonsZannino served on the Compensation Committee. None of these directors is a former or current officer or employee of the Company or any of its subsidiaries. During fiscal 2020,2023, none of our executive officers served as a member of the compensation committee (or other committee performing similar functions) or as a director of any other entity of which an executive officer served on our Board or Compensation Committee. None of the directors who served on our Compensation Committee during fiscal 20202023 has any relationship requiring disclosure under this caption under SEC rules.
ESG Committee
•Irvine O. Hockaday, Jr. (Chair)Governance
•Wei Sun ChristiansonCommitteeWilliam P. Lauder• Governance Committee'sESG Committee’s responsibility for corporate governance matters includes oversight of the Company'sCompany’s environmental, social, and governance ("ESG"(“ESG”) activities and practices, including citizenship and sustainability matters. Among other things, the committee proposes candidates to fill vacancies on the Board and recommends nominees for election as members of the Board; oversees CEO succession planning; considers and makes recommendations regarding Board practices and procedures; considers corporate governance issues that arise from time to time and makes appropriate recommendations for the Board regarding such matters; and reviews the compensation for service as a Board member.
As previously noted, Ms. Christianson is not standing for re-election at the 2023 Annual Meeting, and therefore, she will no longer be on this committee after such meeting.
Directors are expected to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on the Board for an extended period of time. In furtherance of the Board'sBoard’s role, directors are expected to attend all scheduled Board and Board committee meetings and all meetings of stockholders. In fiscal 2020,2023, the Board of Directors met fivesix times, the Audit Committee met eight times, the Compensation Committee met sixfive times (and the Stock Plan Subcommittee met five times), and the Nominating and GovernanceESG Committee met four times. The total combined attendance for all Board and committee meetings in fiscal 20202023 was over 95%. No director attended less than 75% of Board and committee meetings in fiscal 2020.2023. The non-employee directors met five times in executive session in fiscal 2020.2023. Directors are expected to attend the Annual Meeting of Stockholders, and allStockholders. Fifteen of the 16 directors who were on the Board attended theour Annual Meeting of Stockholders in November 2019.At present,As of our Record Date, there are 16 directors on our Board, comprised of: (i) our President and Chief Executive Officer ("CEO"(“CEO”); (ii) 11 2020 Proxy Statement|21 family'sfamily’s significant investment in the Company. The structure also comports with the Stockholders'Stockholders’ Agreement among various members of the Lauder family and the Company. See "Additional“Additional Information Regarding the Board of Directors – Stockholders'Stockholders’ Agreement and Lauder Family Control."President and CEO to set overall vision, strategy, financial objectives, and investment priorities for the business. Mr. W. Lauder also continues to provideprovides high-level leadership in areas that are important to the Company, including marketing, trade relations, global communications, social impact and sustainability, and regulatory affairs.Mr. HockadayAmbassador Barshefsky served as the Presiding Director for all executive sessions of the Board of Directors in fiscal 2020, and he2023. She has been appointedre-appointed by the Board to serve as the Presiding Director for an additional one-year term beginning after the 20202023 Annual Meeting. GovernanceESG Committee regarding CEO succession planning and reviews succession plans on an ongoing basis. The Board has numerous opportunities to meet with, and assess development plans for, members of management and other potential leaders, including through formal presentations to the Board and its committees, as well as informal discussions and events. The Board has established a succession process in the event of the death or disability of the CEO.Company'sCompany’s various risk exposures on a day-to-day basis. In this regard, various management functions within the Company, such as Legal, Finance, Treasury, Internal Audit, Information Technology, Global Supply Chain, Research & Development, and Environmental AffairsEnvironment, Health and Safety, focus on particular risks. Management has a systemic and integrated approach to overall risk management that includes the identification of risks and mitigation plans in the strategic planning process. The Board'sBoard’s role is one of oversight, assessing major risks facing the Company and reviewing options for their mitigation with management. In addition, the Audit Committee reviews and discusses with management our enterprise risk management processes.2020,2023, we concluded that our compensation programs are not reasonably likely to have a material adverse effect on the Company. The results were reviewed with senior management and the Compensation Committee.GovernanceESG Committee works with the Board on an annual basis to determine the appropriate characteristics, skills, and experience for the Board as a whole and its individual members. All directors should possess the highest personal and professional ethics as well as an inquisitive and objective perspective, practical wisdom, and mature judgment. In evaluating the suitability of individual Board members, the Board takes into account 22|2020 Proxy Statementtoday'stoday’s business environment; understanding of the Company'sCompany’s business on a technical level; and educational and professional background. The Board evaluates each individual in the context of the Board as a whole, with the objective of recommending a group that can best support the success of the business and, based on its diversity of experience, represent stockholder interests through the exercise of sound judgment. In determining whether to recommend a director for re-election, the Nominating and GovernanceESG Committee also considers the director'sdirector’s past attendance at meetings and participation in and contributions to the activities of the Board.GovernanceESG Committee will identify one or more director candidates and evaluate each candidate under the criteria described above based on the information it receives with a recommendation or that it otherwise possesses, which information may be supplemented by additional inquiries. Application of these criteria involves the exercise of judgment and cannot be measured in any mathematical or routine way. Based on its assessment of each candidate'scandidate’s independence, skills, and qualifications and the criteria described above, the Committee will make recommendations regarding potential director candidates to the Board. TheFrom time to time, the Committee has engagedmay engage a third-party firm to assist with identifying and evaluating potential director candidates. The Committee will evaluate stockholder-recommended candidates in the same manner as other candidates. Candidates may also be designated pursuant to the Stockholders'Stockholders’ Agreement. See "Additional“Additional Information Regarding the Board of Directors – Stockholders'Stockholders’ Agreement and Lauder Family Control." "independent"“independent” for purposes of membership on the Company'sCompany’s Board of Directors, the Board must determine that a director has no material relationship with the Company, including any of its subsidiaries, other than as a director. For each director, the Board broadly considers all relevant facts and circumstances. In making its determination, the Board considers the following categories of relationships to be material, thus precluding a determination that a director is "independent:"Company'sCompany’s internal or external auditor, (B) the director has an immediate family member who is a current partner of such a firm, (C) the director has an immediate family member who is a current employee of such a firm and personally works on the Company'sCompany’s audit, or (D) the director or an immediate family member of the director was within the last three years a partner or employee of such a firm and personally worked on the Company'sCompany’s audit within that time.Company'sCompany’s present executive officers at the same time serves or served on that company'scompany’s compensation committee.company'scompany’s consolidated gross revenues. 2020 Proxy Statement|23"material"“material” relationships that would impair a director'sdirector’s independence:company'scompany’s consolidated gross revenues, whichever is greater."immediate“immediate family member"member” includes a director'sdirector’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers-andbrothers- and sisters-in-law, and anyone (other than domestic employees) who shares such person'sperson’s home."independent"“independent” pursuant to NYSE rules and the Company'sCompany’s Independent Director Standards described above: Charlene Barshefsky, Rose Marie Bravo, Wei Sun Christianson, Angela Wei Dong, Paul J. Fribourg, Irvine O. Hockaday, Jr., Jennifer Hyman, Arturo Nuñez, Lynn Forester de Rothschild, Barry S. Sternlicht, Jennifer Tejada, and Richard F. Zannino. In addition toThe Board also determined that Rose Marie Bravo, who retired from the foregoing, inBoard effective "independent"“independent” under NYSE rules for purposes of serving on the Company'sCompany’s Audit Committee or Compensation Committee, a director also may not accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company, other than as a director, and may not be an "affiliated person"“affiliated person” of the Company. Audit Committee members may receive directors'directors’ fees and fixed payments for prior service with the Company. The Board has determined that each member of the Audit Committee and each independent member of the Compensation Committee meets these additional independence requirements.GovernanceESG Committee will consider stockholder recommendations of nominees in the same manner as and pursuant to the same criteria by which it considers all other nominees, except for nominations received pursuant to the Stockholders'Stockholders’ Agreement. Stockholders who wish to suggest qualified candidates should send their written recommendation to the Nominating and GovernanceESG Committee, c/o General Counsel, The Estée Lauder Companies Inc., 767 Fifth Avenue, New York, New York 10153. The following information must accompany any such recommendation by a stockholder: (i) the name and address of the stockholder making the recommendation; (ii) the name, address, telephone number, and social security number of the proposed nominee; (iii) the class or series and number of shares of the Company that are beneficially owned by the stockholder making the recommendation; (iv) a description of all arrangements or understandings between the stockholder and the candidate, and an executed written consent of the proposed nominee to serve as a director of the Company if so elected; (v) a copy of the proposed nominee'snominee’s resume and references; and (vi) an analysis of the candidate'scandidate’s qualifications to serve on the Board of Directors and on each of the Board'sBoard’s committees in light of the criteria for Board membership established by 24|2020 Proxy Statement"Board“Board Membership Criteria."” For stockholders intending to nominate an individual for election as a director directly, there are specific procedures set forth in our bylaws. See "Stockholder“Stockholder Proposals and Director Nominations for the 20212024 Annual Meeting"Meeting” below.Company'sCompany’s Corporate Governance Guidelines. The Company also has a Code of Conduct (the "Code"“Code”) applicable to all employees, officers, and directors of the Company including the Chief Executive Officer and the Chief Financial Officer. These documents, as well as any waiver of a provision of the Code granted to any senior officer or director or any material amendment to the Code, may be found in the "Investors"“Investors” section of the Company'sCompany’s website: www.elcompanies.com under "Corporate“Corporate Governance.""Related“Related Person Transactions Policy"Policy”) that sets forth procedures for the review, approval, and ratification of transactions involving "Related“Related Persons."” Such persons consist of any director, director nominee, executive officer, any beneficial owner of more than 5% of the Company'sCompany’s Common Stock, any immediate family member of such persons, and any other person deemed to be a Related Person under the rules of the SEC. Under the Related Person Transactions Policy, a "Transaction"“Transaction” includes any financial transaction, arrangement, or relationship (including Person'sPerson’s relationship to the Company; (ii) a description of the Transaction, including the material terms, the approximate aggregate value, and the identities of other parties; (iii) the benefits of the Transaction to the Company and the Related Person; (iv) the availability of other sources of comparable products or services; and (v) any other relevant information. If the Audit Committee determines that the Related Person has a direct or indirect material interest in any Transaction, the Transaction shall be disclosed in the Company'sCompany’s proxy statement. If the Related Person at issue is a director of the Company, or an immediate family member of a director, then such director shall not participate in the assessment or determination of the Transaction being reviewed."Agreements“Agreements with Aerin Lauder"Lauder” below for additional information). Jane Lauder, is an employeeexecutive officer of the Company. During fiscal 2020, she was Global Brand President, Clinique, and beginning July 1, 2020 (fiscal 2021), she becameCompany, is Executive Vice President, Enterprise Marketing and Chief Data Officer. Jane LauderShe is also a member of our Board of Directors. 2020 Proxy Statement|25 Impact of COVID-19 on Compensation Matters for Certain Lauder Family Members. In April 2020, the Company announced that, as part of its initiatives to enhance financial flexibility and liquidity, certain base salary reductions would be made over a six month period from May 1 through October 31, 2020 (i.e. the last two months of fiscal 2020 and the first four months of fiscal 2021), including the following: (i) for Leonard A. Lauder and Ronald S. Lauder, base salaries reduced by nearly 100%; (ii) for William P. Lauder, base salary reduced by 50%; and (iii) for Jane Lauder, base salary reduced by 30%.20202023 Compensation for Certain Lauder Family Members. Leonard A. Lauder'sLauder’s annual base salary for fiscal 20202023 was $1,505,187, as adjusted for the above-referenced reduction for the last two months of fiscal 2020; without this adjustment, his fiscal 2020 annual base salary would have been $1,800,000. Ronald S. Lauder'sLauder’s annual base salary for fiscal 20202023 was $546,854, as adjusted for the above-referenced reduction for the last two months of fiscal 2020; without this adjustment, his fiscal 2020 annual base salary would have been $650,000. In addition to his salary, Mr. R. Lauder also received a bonus of $253,600$179,150 for fiscal 2020. William P. Lauder's2023. Jane Lauder’s annual base salary for fiscal 20202023 was $1,375,000, as adjusted for the above-referenced reduction for the last two months of fiscal 2020; without this adjustment, his fiscal 2020 annual base salary would have been $1,500,000.$970,000. In addition to hisher salary, for fiscal 2020, Mr. W.Ms. J. Lauder also received a bonus of $1,516,050, Performance Share Units ("PSUs")$447,950, PSUs with a target payout of 5,0132,957 shares of Class A Common Stock, stock options for 18,2408,997 shares of Class A Common Stock with an exercise price of $246.15 per share, and Restricted Stock Units ("RSUs")RSUs for 5,013 shares of Class A Common Stock. The aggregate earnings for fiscal 2020 on Mr. W. Lauder's nonqualified deferred compensation account were $263,523, and his aggregate account balance as of June 30, 2020 was $8,284,419. Jane Lauder's annual base salary for fiscal 2020 was $812,250, as adjusted for the above-referenced reduction for the last two months of fiscal 2020; without this adjustment, her fiscal 2020 annual base salary would have been $855,000. In addition to her salary, for fiscal 2020, Ms. J. Lauder also received a bonus of $185,150, PSUs with a target payout of 2,2102,957 shares of Class A Common Stock, stock optionsin each case for 8,039 shares of Class A Common Stock, and RSUs for 2,210 shares of Class A Common Stock.fiscal 2023. Each of these Lauder Family Members is entitled to participate in standard benefit plans, such as the Company'sCompany’s pension and medical plans.20212024 Compensation for Certain Lauder Family Members. Leonard A. Lauder'sLauder’s annual base salary for fiscal 20212024 is expected to be $1,210,375, as adjusted for the above-referenced reduction for the first four months of fiscal 2021; without this adjustment, his fiscal 2021 annual base salary would be $1,800,000. Ronald S. Lauder'sLauder’s annual base salary for fiscal 20212024 is expected to be $443,708, as adjusted for the above-referenced reduction for the first four months of fiscal 2021; without this adjustment, his fiscal 2021 annual base salary would be $650,000. In addition, Mr. R. Lauder$650,000, and he has a target incentive bonus opportunity of $350,000. William P. Lauder'sJane Lauder’s annual base salary for fiscal 20212024 is expected to be $1,250,000, as adjusted for the above-referenced reduction for the first four months of fiscal 2021; without this adjustment, his fiscal 2021 annual base salary would be $1,500,000.$970,000. For fiscal 2021, Mr. W.2024, Ms. Lauder also has a target incentive bonus opportunity of $3.1 million$870,000 and a target equity opportunity of $2.4 million.$1,775,000. In September 2020, Mr. W.August 2023, Ms. Lauder was granted equity-based compensation with an aggregate value of approximately $3.82$2.06 million, comprised of PSUs with a target payout of 5,8374,389 shares of Class A Common Stock, stock options for 21,90012,706 shares of Class A Common Stock with an exercise price of $218.06$156.39 per share, and RSUs for 5,8374,389 shares of Class A Common Stock, in each case for fiscal 2021. The aggregate value of Mr. W. Lauder's equity-based2024. For information regarding fiscal 2024 compensation for fiscal 2021 includes additional amounts as explained below. See "CompensationWilliam P. Lauder, see “Compensation Discussion and Analysis—Impact of COVID-19 on Compensation Matters." Jane Lauder's annual base salary for fiscal 2021 is expected to be $810,000, as adjusted for the above-referenced reduction for the first four months of fiscal 2021; without this adjustment, her fiscal 2021 annual base salary would be $900,000. For fiscal 2021, Ms. Lauder also has a target incentive bonus opportunity of $800,000 and a target equity opportunity of $1,600,000. In September 2020, Ms. Lauder was granted equity based compensation with an aggregate value of approximately $1.93 million, comprised of PSUs with a target payout of 2,946 shares of Class A Common Stock, stock options for 11,062 shares of Class A Common Stock with an exercise price ofAnalysis.”
TABLE OF CONTENTS 26|2020 Proxy Statement$218.06 per share, and RSUs for 2,946 shares of Class A Common Stock, in each case for fiscal 2021. The aggregate value of Ms. Lauder's equity-based compensation for fiscal 2021 includes additional amounts as explained below. See "Compensation Discussion and Analysis – Impact of COVID-19 on Compensation Matters." The grants were consistent with those made to employees at Ms. Lauder's level.Lauder'sLauder’s current employment agreement (the "LAL Agreement"“LAL Agreement”) provides for his employment as Chairman Emeritus until such time as he resigns, retires, or is terminated. Mr. L. Lauder is entitled to participate in standard benefit plans, such as the Company'sCompany’s pension and medical plans. He is also entitled to participate in the Amended and Restated Fiscal 2002 Share Incentive Plan, but no grants have been made to him under the plan to date. If Mr. L. Lauder retires, the Company will continue to provide him with the office he currently occupies (or a comparable office if the Company relocates) and a full-time executive assistant. The Company may terminate Mr. L. Lauder'sLauder’s employment at any time if he becomes "permanently“permanently disabled,"” in which event he will be entitled to (i) receive his base salary for a period of two years after termination, (ii) receive bonus compensation during such salary continuation period at an annual rate equal to the average of the actual bonuses paid to him prior to such termination under the LAL Agreement (the "Leonard“Leonard Lauder Bonus Compensation"Compensation”), and (iii) participate in the Company'sCompany’s benefit plans for two years. In the event of Mr. L. Lauder'sLauder’s death during the term of his employment, for a period of one year from the date of Mr. L. Lauder'sLauder’s death, his beneficiary or legal representative will be entitled to receive Mr. L. Lauder'sLauder’s base salary and the Leonard Lauder Bonus Compensation. Mr. L. Lauder may terminate his employment at any time upon six months'months’ written notice to the Company, in which event he will be entitled to receive his base salary and the Leonard Lauder Bonus Compensation for the six-month period following termination. In addition, the Company may terminate Mr. L. Lauder'sLauder’s employment for any reason upon 60 days'days’ written notice. In the event of termination of his employment by the Company (other than for cause, disability, or death) or a termination by Mr. L. Lauder for good reason after a change of control, (a) Mr. L. Lauder, for a period of three years from the date of termination, will be entitled to (i) receive his base salary in effect at the time of termination, (ii) receive the Leonard Lauder Bonus Compensation, (iii) participate in the Company'sCompany’s benefit plans and (b) in the case of termination by the Company (other than for cause, disability, or death), Mr. L. Lauder will not be subject to the non-competition covenant contained in the LAL Agreement. Upon termination for any reason, any options previously granted to Mr. L. Lauder will remain exercisable for the remainder of their respective terms, subject to certain non-competition and good conduct provisions.William P.Jane Lauder. Under hisher employment agreement effective July 1, 2010, William P.January 30, 2023, Ms. J. Lauder is an employee-at-will, and heshe will continue as Executive ChairmanVice President Enterprise Marketing and Chief Data Officer until hisher retirement or other termination of hisher employment. The agreement generally provides that Mr. W. Lauder'sfor a base salary and bonus opportunities willto be set by the Compensation Committee and that hisfor equity grants are to beas determined by the Stock Plan Subcommittee. In addition to the benefits generally available to our senior executives (e.g., annual perquisite reimbursement under our Executive Perquisite Plan up to $20,000,$15,000, financial counseling services up to $5,000, and participation in our Executive Automobile Program with an automobile having an acquisition value of $75,000)$50,000), we pay annual premiums for additional executive term life insurance with a face amount of $5 million for Mr. W.Ms. J. Lauder. "Lauder“Lauder Family Members"Members” includes only the following persons: (i) the estate of Mrs. Estée Lauder; (ii) each descendant of Mrs. Estée Lauder (a "Lauder Descendant"“Lauder Descendant”) and their respective estates, guardians, conservators, or committees; (iii) each "Family“Family Controlled Entity" (asEntity” (as defined below); and (iv) the trustees, in their respective capacities as such, of each "Family“Family Controlled Trust" (asTrust” (as defined below). The term "Family“Family Controlled Entity"Entity” means: (i) any not-for-profit corporation if at least 80% of its board of directors is composed of Lauder Descendants; (ii) any other corporation if at least 80% of the value of its2020 Proxy Statement|27"Family“Family Controlled Trust"Trust” includes certain trusts existing on November 16, 1995 and trusts the primary beneficiaries of which are Lauder Descendants, spouses of Lauder Descendants, and/or charitable organizations, provided that if the trust is a wholly charitable trust, at least 80% of the trustees of such trust consist of Lauder Descendants.("(“Morgan Guaranty"Guaranty”), and the Company are parties to a Registration Rights Agreement (the "Registration“Registration Rights Agreement"Agreement”), pursuant to which each of Leonard A. Lauder, Ronald S. Lauder, and Morgan Guaranty has three demand registration rights and The Estée Lauder 1994 Trust has six demand registration rights in respect of shares of Class A Common Stock (including Class A Common Stock issued upon conversion of Class B Common Stock) held by them. Three of the demand rights granted to The Estée Lauder 1994 Trust may be used only by a pledgee of The Estée Lauder 1994 Trust'sTrust’s shares of Common Stock. All the parties to the Registration Rights Agreement (other than the Company) also have an unlimited number of piggyback registration rights in respect of their shares. The rights of Morgan Guaranty and any other pledgee of The Estée Lauder 1994 Trust under the Registration Rights Agreement will be exercisable only in the event of a default under certain loan arrangements. Leonard A. Lauder and Ronald S. Lauder may assign their demand registration rights to Lauder Family Members. The Company is not required to effect more than one registration of Class A Common Stock in any consecutive twelve-month period. The piggyback registration rights allow the holders to include their shares of Class A Common Stock in any registration statement filed by the Company, subject to certain limitations. The Company is required to pay all expenses (other than underwriting discounts and commissions of the selling stockholders, taxes payable by the selling stockholders, and the fees and expenses of the selling stockholders'stockholders’ counsel) in connection with any demand registrations, as well as any registrations pursuant to the exercise of piggyback rights. The Company has agreed to indemnify the selling stockholders against certain liabilities, including liabilities arising under the Securities Act of 1933.Stockholders'Stockholders’ Agreement have agreed to vote shares beneficially owned by them for Leonard A. Lauder (or for one of his sons), Ronald S. Lauder (or for one of his daughters), and one person, if any, designated by each as a director of the Company. Aerin Lauder and Jane Lauder are parties to the Stockholders'Stockholders’ Agreement solely as trustees of certain trusts. Shares subject to the Stockholders'Stockholders’ Agreement represent a substantial majority of the voting power of the Company as of the Record Date. See "Additional“Additional Information Regarding the Board of Directors – Stockholders'Stockholders’ Agreement and Lauder Family Control."Stockholders'Stockholders’ Agreement may, without restriction under the agreement, sell their shares in a widely distributed underwritten public offering, in sales made in compliance with Rule 144 under the Securities Act of 1933, or to other Lauder Family Members. In addition, each party to the Stockholders'Stockholders’ Agreement may freely donate shares in an amount not to exceed 1% of the outstanding shares of Common Stock in any 90-day period. In the case of other private sales, each stockholder who is a party to the Stockholders'Stockholders’ Agreement (the "Offering Stockholder"“Offering Stockholder”) has granted to each other party (the "Offeree"“Offeree”) a right of first offer to purchase shares of Class A Common Stock that the Offering Stockholder intends to sell to a person (or group of persons) who is not a Lauder Family Member. Each Offeree has the opportunity to purchase the Offeree'sOfferee’s pro rata Stockholders'Stockholders’ Agreement also includes provisions for bona fide pledges of shares of Common Stock and procedures related to 28|2020 Proxy StatementStockholders'Stockholders’ Agreement will terminate upon the occurrence of certain specified events, including the transfer of shares of Common Stock by a party to the Stockholders'Stockholders’ Agreement that causes all parties thereto immediately after such transaction to own beneficially in the aggregate shares having less than 10% of the total voting power of the Company.("ELI"(“ELI”), a subsidiary of the Company, is party to (i) a creative consultant agreement with Aerin Lauder (the "Creative“Creative Consultant Agreement"Agreement”) and (ii) a brand license agreement with Ms. Lauder and Aerin LLC, a limited liability company wholly owned by Ms. Lauder (the "License Agreement"“License Agreement”).is a spokespersonas the Style and Image Director for the Estée Lauder brand, acts as a creative consultant and is a spokesperson for the brand. In her role, she collaborates with the Estée Lauder Creative Director on creative aspects of the brand as Style and Image Director. The currentpromotes the brand through personal appearances and her social media presence. In fiscal 2021, the Creative Consultant Agreement was amended to extend the term of this agreement expiresthrough June 30, 2021.2024. For fiscal 2020,2023, Ms. Lauder received approximately $654,000$680,000 for her services under the agreement. For fiscal 2021, she2024, Ms. Lauder will receive approximately $680,000the same amount ($680,000) for such services. Duringservices, plus any additional amounts per day, if applicable, as described below. The Company has the right to use Ms. Lauder’s name and image to promote Estée Lauder beauty products and related makeup services of the Estée Lauder brand during the term of the Creative Consultant Agreement, the Company has the exclusive right to use Ms. Lauder's name and image to market beauty products and related services of the Estée Lauder brand, andAgreement. Ms. Lauder has agreed to no more than 25 days of personal appearances per year forto promote the brand, the Company, or its subsidiaries, after which ELI is required to pay her an additional amount per day (for fiscal 2020, $28,000; and for fiscal 2021, $29,000)($29,000). No additional amount per day was paid in fiscal 2020.2023. An office and access to an assistant are also provided to Ms. Lauder in connection with her services."Aerin"“Aerin” trademark and "A"“A” logo (and related marks) and Ms. Lauder'sLauder’s name and image (i) exclusively in connection with "Core“Core Beauty Products" (cosmetics,Products” (cosmetics, fragrances, toiletries, skin care, hair care, value sets, and beauty accessories) and (ii) non-exclusively in connection with "Non-Core“Non-Core Beauty Products" (cosmeticsProducts” (cosmetics bags, tote bags, and fragranced candles). The License Agreement covers the name "Aerin"“Aerin” and not the name "Lauder,"“Lauder,” for which the Company and its subsidiaries retain sole ownership. TheFollowing the expiration of the initial license term expired on June 30, 2017, at which time the agreement automatically renewed for antwo additional 5-year periods.The first renewal period was through June 30, 2022.2022, and the second renewal period is through June 30, 2027. The License Agreement provides for two additionala third 5-year renewal termsterm if ELI does not give notice of non-renewal and net sales hit certain performance targets (or if ELI cures a sales shortfall, in certain circumstances).Lauder'sLauder’s reasonable travel expenses in connection with such appearances. Aerin LLC may terminate the License Agreement if an unaffiliated third party obtains more than 50% of the voting power or equity of ELI. ELI may terminate the License Agreement if control of Aerin LLC (or substantially all of its assets) is transferred to a competitor of ELI or to certain categories of retailers not engaged in prestige distribution. Either side may terminate the License Agreement for an uncured material breach.2020,2023, Aerin LLC was paid approximately $532,000$690,000 in royalties. Under the agreement, ELI must spend the following minimum ELI'sELI’s net sales each annual period (July 1 —– June 30) in the remaining term of the agreement, with such requirement capped each year at 50% of Aerin LLC'sLLC’s similar expenditures, either directly or through other licensees, on Aerin-branded products. Both ELI and Aerin LLC will distribute Aerin-branded products only through prestige2020 Proxy Statement|292020,2023, in connection with the License Agreement, the Company received approximately $131,000$589,000 from Aerin LLC for AERIN products provided for sale in Aerin retail locations and on Aerin LLC'sLLC’s website.agreement,provision, the Company has agreed to pay Aerin LLC 50% of any royalty obtained from the third party. InSuch royalty payments to Aerin LLC were less than $10,000 in fiscal 2020, no such payments were made.an affiliateaffiliates of Ronald S. Lauder. ThisLauder and Leonard A. Lauder and receives payments from affiliates of those individuals in connection therewith. As used herein, the “Ronald S. Lauder Office” refers to one or more affiliates of Ronald S. Lauder that are involved in these office space arrangements, and the “Leonard A. Lauder Office” refers to one or more affiliates of Leonard A. Lauder that are involved in these office space arrangements.2020,2023, the rent paid or accrued was approximately $951,000, which equals the Company's lease payments for that space.$1.01 million. The Company also has agreed to provide such affiliatethe Ronald S. Lauder Office with certain services, such as phone systems, payroll service, and office and administrative services, which are reimbursed at a rate approximating the Company's incremental cost thereof.services. For fiscal 2020, such affiliate paid2023, the Company received approximately $12.6$15.89 million pursuant to such agreement. The payments received by the Company from the Ronald S. Lauder Office approximated the Company’s incremental cost of the relevant space and services. At June 30, 2020, such affiliate2023, the Ronald S. Lauder Office had deposited with the Company approximately $1.10$1.05 million to cover expenses.2020, that affiliate paid2023, the Company received payments of approximately $8.5$5.8 million from such affiliate and certain charitable organizations for office space and certain services, such as phone systems, payroll service, and office and administrative services. At June 30, 2020, that affiliate had approximately $790,000 deposited withThe payments received by the Company to cover expenses. The payments by both offrom the affiliatesLeonard A. Lauder Office approximated the Company'sCompany’s incremental cost of the relevant space and services. (the "Aircraft") for certain business travel by Mr. Lauder himself and other Company employees. For such use, the Company pays no more than market rates for comparable travel. ForDuring fiscal 2020,2023, the Company paid the Aircraft Management Company approximately $324,000$867,000 for business travel on the Aircraft.Company'sCompany’s offices. The Company pays no fee to the owners for displaying such works, and the owners of the works pay for their maintenance. In fiscal 2020,2023, the Company paid premiums of less than $10,000 for insurance relating to such works. directors, including temporary actions taken in light of COVID-19.Retainer for Presiding Director. The Presiding Director receives an additional annual cash retainer of $30,000, payable quarterly, which may be deferred as explained below. Annual Cash RetainerRetainers for Committee and Chair Service.GovernanceESG Committee. The Chair of the Audit Committee receives a furtheran additional annual cash retainer of $25,000. The Chairs of the Compensation Committee and the Nominating and GovernanceESG Committee each receive a furtheran additional annual cash retainer of $15,000 each.$15,000. Cash retainers for committee and chair service are paid quarterly and may be deferred, as explained below. Impact of COVID-19 on Director Compensation Matters— Annual Cash Retainers. In April 2020, the Company announced that, as part of its initiatives to enhance financial flexibility and liquidity due to the impacts of COVID-19, non-employee directors would forego cash retainers that would have been paid through November 2020. As a result, the cash retainers that would have been paid in May 2020 (fiscal 2020) and July 2020 (fiscal 2021) were not paid; in addition, the non-employee directors will not receive the cash retainers that would have been payable in November 2020 (fiscal 2021). Initial Stock Grant. On the date of the first annual meeting of stockholders that is more than six months after a non-employee director's initial election to the Board, the director receives a grant of 2,000 shares of Class A Common Stock (plus a cash payment in an amount to cover related income taxes), pursuant to the Amended and Restated Non-Employee Director Share Incentive Plan (the "Director Share Plan"). An additional $75,000 is payable In addition to the cash retainers described above, each non-employee director byalso receives a grant of stock units (accompanied by dividend equivalent rights) as an annual stock retainer, pursuant to the Amended and Restated Non-Employee Director Share Plan.Incentive Plan (the “Director Share Plan”). This grant is made on the date of each annual meeting of stockholders. The number of stock units to be awarded is determined by dividing $75,000a dollar amount determined by the Board by the average closing price of the Class A Common Stock on the twenty trading days preceding the date of grant. The current amount of this annual stock units retainer is $75,000. Each stock unit is convertible into one share of Class A Common Stock, and the Class A Common Stock represented by the stock units is distributed to the director on or after the first business day of the calendar year following the date on which the director ceases to be a member of the Board.2020 Proxy Statement|31
Annual Stock Options. In addition to the cash and stock portion of the retainer, each non-employee director receives an annual grant of options valued at no more than $100,000 on the date of grant, pursuant to the Director Share Plan. This grant is made on the date of each annual meeting of stockholders. The exercise price of the options is equal to the closing price of the Class A Common Stock on the date of grant. The options are exercisable beginning one year after the date of grant, provided that the director continues to serve as of such date. The options generally terminate ten years after the date of grant. Company'sCompany’s Corporate Governance Guidelines, the Board believes that in order to align the interests of directors and stockholders, directors should have a significant financial stake in the Company. Specifically, each director should own shares of the Company'sCompany’s Common Stock with a value equal to or greater than fourfive times the annual cash retainer for Board service.service, no later than five years after initial election to the Board. Applying this guideline, for fiscal 2020, each director wasis required to own shares of the Company'sCompany’s Common Stock with a value equal to or greater than $400,000$500,000 (i.e. $100,000 × 4)5). A director must beMr. Nuñez, who joined our Board in compliance with this requirement no later than threeApril 2022, and Ms. Dong, who joined in July 2022, have five years after their respective dates of initial election to the Board. Therefore, Ms. Hyman and Ms. Tejada have until April 2021Board to satisfymeet this ownership requirement. As of the end of fiscal 2020,June 30, 2023, each of our other directors owned shares of the directors wasCompany’s Common Stock with a value in compliance with thisexcess of $500,000. What Counts* What Does Not Count ![[MISSING IMAGE: ic_tick-bw.gif]](/files/DEF 14A/0001104659-23-104591/ic_tick-bw.gif)
Common Stock ![[MISSING IMAGE: ic_cross-bw.gif]](/files/DEF 14A/0001104659-23-104591/ic_cross-bw.gif)
Stock Options (vested or unvested) Stock Units (share payout) Stock Units (cash payout) requirement.directors'directors’ knowledge of the Company'sCompany’s business. The Company also provides each non-employee director with the opportunity to purchase up to $1,280 worth of the Company'sCompany’s products each calendar year (based on suggested retail prices) at no charge; if a director chooses to take advantage of this opportunity and purchases more than $640 worth of the Company'sCompany’s products, the excess is imputed as taxable income to the director. For the year ended June 30, 2020,2023, the aggregate incremental cost to the Company for products provided to the directors was substantially less than $10,000 per director. Non-employee directors may also purchase Company products with the same discount made available to employees of the Company. In fiscal 2020, the The Nominating and GovernanceESG Committee has engaged Semler Brossy Consulting Group, LLC ("(“Semler Brossy"Brossy”) to assess trends and developments in director compensation practices and assist the Committeecommittee in fulfilling its responsibilities regarding compensation of directors for service on the Company'sCompany’s Board and its committees. Semler Brossy'sBrossy’s work for the Nominating and ESG Committee includes a competitive benchmarking of director compensation practices, referencing the same peer group used for the Company'sCompany’s executive compensation analysis, as set forth in the Compensation Discussion and Analysis. The Nominating and ESG Committee determined that Semler Brossy is free of conflicts of interest.
TABLE OF CONTENTS 32|2020 Proxy Statement Name
Earned or
Paid in
Cash
($)(1)(2)
Awards
($)(3)(4)
Awards
($)(5)(6)
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(7)
Compensation
($)
($) Charlene Barshefsky $ 138,000 $ 74,999 $ 99,927 $ 69,088 — $ 382,014 Rose Marie Bravo* 25,000 — — — — 25,000 Wei Sun Christianson 123,000 74,999 99,927 — — 297,926 Angela Wei Dong 112,000 74,999 99,927 — — 286,926 Paul J. Fribourg 135,000 74,999 99,927 — — 309,926 Jennifer Hyman 112,000 74,999 99,927 — — 286,926 Arturo Nuñez 112,000 374,999 99,927 — — 586,926 Richard D. Parsons 116,000 74,999 99,927 — — 290,926 Lynn Forester de Rothschild 108,000 74,999 99,927 — — 282,926 Barry S. Sternlicht 108,000 74,999 99,927 — — 282,926 Jennifer Tejada 109,000 74,999 99,927 — — 283,926 Richard F. Zannino 139,000 74,999 99,927 — — 313,926 table sets forth compensation information regardingher departure from the Company's non-employee directors in fiscal 2020.Fees
Earned or
Paid in
Cash
($)(1)(2)Stock
Awards
($)(3)(4)Option
Awards
($)(5)(6)Non-Equity
Incentive Plan
Compensation
($)Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(7)All Other
Compensation
($)Total
($) $ 92,250 $ 75,000 $ 99,993 — $ 46,079 — $ 313,322 81,000 75,000 99,993 — — — 255,993 81,000 75,000 99,993 — — — 255,993 90,000 75,000 99,993 — — — 264,993 114,750 75,000 99,993 — — — 289,743 84,000 75,000 99,993 — — — 258,993 87,000 75,000 99,993 — — — 261,993 81,000 75,000 99,993 — — — 255,993 81,000 75,000 99,993 — — — 255,993 84,000 75,000 99,993 — — — 258,993 102,750 75,000 99,993 — — — 277,743
As noted above,Ms. Bravo retired from the Board effective November 17, 2022, and the amount shown in this column for her reflects one quarter of cash retainers that would have been paid in May 2020 were not paid.2020,2023, Mr. Fribourg, Mr. Hockaday, Lady de Rothschild, and Mr. Sternlicht deferred their Annual Cash Retainers into stock units; all earnings on the fees deferred by these directors were based on the value of a hypothetical investment in shares of Class A Common Stock made at the time of the deferral, plus the accrual of dividend equivalents on dividends paid by the Company on the Class A Common Stock. As of June 30, 2020,2023, the directors held units in respect of the following amounts of shares of Class A Common Stock: Mr. Fribourg, 33,102; Mr. Hockaday, 78,880;35,272; Lady de Rothschild, 69,146;72,089; and Mr. Sternlicht, 39,589.400.77358.28 shares of Class A Common Stock for each director asdirector). In addition, the amount shown for Mr. Nuñez also includes the aggregate grant date fair value of the Initial Equity Grant for New Non-employee Directors (specifically, units for 1,433.13 shares of Class A Common Stock) that he received on November 18, 2023. The Annual Stock Units Retainer for Board Service and the Initial Equity Grant for New Non-employee Directors are computed in accordance with Financial Accounting Standards Board Accounting Standard Codification Topic 718, Compensation – Stock Compensation ("(“FASB ASC Topic 718")718”).
(4) 2020 Proxy Statement|33(4)2020,2023, which include dividend equivalents. Name NameTotal Number of Shares of Class A Common Stock
Underlying Stock Awards Outstanding as of
June 30, 2020Charlene Barshefsky18,7012023 Rose Marie Bravo Charlene Barshefsky 15,080 20,146 Wei Sun Christianson Rose Marie Bravo(a) 8,687 — Paul J. Fribourg Wei Sun Christianson 10,291 9,856 Irvine O. Hockaday, Jr. Angela Wei Dong 22,347 361 Jennifer Hyman Paul J. Fribourg 975 11,503 Richard D. Parsons Jennifer Hyman 17,649*Lynn Forester de Rothschild 18,4781,930 Barry S. Sternlicht Arturo Nuñez 14,137 1,807 Jennifer Tejada Richard D. Parsons 975 19,065(b) Richard F. Zannino Lynn Forester de Rothschild 9,516 19,917 Barry S. Sternlicht 15,456 Jennifer Tejada 1,930 Richard F. Zannino 10,707(c) *5,8886,051 stock units held indirectly by Mr. Parsons as a co-trustee of a family trust.1,9051,238 shares of Class A Common Stock for each director), as computed in accordance with FASB ASC Topic 718. Amounts shown disregard estimatesFor a description of forfeitures relatedthe assumptions used to service-based vesting conditions. The fair-market valuescalculate the aggregate grant date fair value of such stock options, atsee Note 18 (“Stock Programs”) to our consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2023. An Annual Stock Option grant date (November 15, 2019) were calculated using the Black-Scholes options-pricing model, with the following assumptions: an expected volatility of 25% determined using a combination of both current and historical implied volatilities of the underlying Class A Common Stock obtained from public data sources; an expected termwas not made on November 18, 2022 (fiscal 2023) to exercise of 9 yearsMs. Bravo because she retired from the date of grant; a risk-free interest rate of 1.48%; and a dividend yield of 1.05%.
(6) 34|2020 Proxy Statement(6)2020. Name NameTotal Number of Shares of Class A Common Stock
Underlying Stock Options Outstanding as of
June 30, 2020Charlene Barshefsky33,308*Rose Marie Bravo7,1402023 Wei Sun Christianson Charlene Barshefsky 33,308 27,830(a) Paul J. Fribourg Rose Marie Bravo 4,234 2,596 Irvine O. Hockaday, Jr. Wei Sun Christianson 4,234 24,017 Jennifer Hyman Angela Wei Dong 4,234 1,238 Richard D. Parsons Paul J. Fribourg 4,234 3,834 Lynn Forester de Rothschild Jennifer Hyman 33,308 3,834 Barry S. Sternlicht Arturo Nuñez 43,308 1,238 Jennifer Tejada Richard D. Parsons 4,234 5,739 Richard F. Zannino Lynn Forester de Rothschild 23,996 24,017 Barry S. Sternlicht 27,830 Jennifer Tejada 8,068 Richard F. Zannino 24,017(b) *4,57622,091 shares of Class A Common Stock underlying stock options that are held indirectly by Ambassador Barshefsky through a family trust.CertainSome of the Company'sCompany’s directors in fiscal 20202023 and prior years deferred their Annual Cash Retainers pursuant to applicable deferral agreements. Ambassador Barshefsky defers her Annual Cash Retainers into an interest-bearing cash account; the interest rate is the Citibank base rate at the last day of the calendar year. The amount shown for Ambassador Barshefsky is the interest that accrued above the applicable federal rate set by the Internal Revenue Service (the "AFR"“AFR”) in fiscal 2020,2023, using the Citibank base rate and the AFR at December 31, 20192022 as the rates for fiscal 2020.2023. Company'sCompany’s Class A Common Stock and Class B Common Stock as of August 3, 2020July 31, 2023 by: (i) each person known by the Company to own beneficially more than 5% of the outstanding shares of either Class A Common Stock or Class B Common Stock; (ii) each of the Company'sCompany’s directors or nominees; (iii) each of the executive officers whose names appear in the Summary Compensation Table; and (iv) all current directors and executive officers as a group. Except as set forth in the notes to the table, the business or mailing address of each 5% stockholder is 767 Fifth Avenue, New York, New York 10153. As described in the notes to the table, certain named beneficial owners share voting and/or investment power with respect to certain shares of Common Stock. Consequently, such shares are shown as beneficially owned by more than one person.
Common Stock(1) Class B
Common Stock
Power† Name of Beneficial Owner % Number % % Leonard A. Lauder(3)(4) 281,638 0.1% — — * LAL Family Corporation(3)(5) — — 80,437,628 64.1% 54.1% Ronald S. Lauder(3)(6) 73,335 * 4,775,210 3.8% 3.2% William P. Lauder(3)(7) 42,875 * 8,515,960 6.8% 5.7% Gary M. Lauder(3)(8) 10,468 * 45,740 * * Aerin Lauder(3)(9) 1,692 * 6,585,594 5.2% 4.4% Jane Lauder(3)(10) 160,519 0.1% 22,346,614 17.8% 15.0% Joel S. Ehrenkranz, as trustee(3)(11) 266,638 0.1% — — * 26,608 * 7,745,877 6.2% 5.2% Charlene Barshefsky(13) 123,566 0.1% — — * Wei Sun Christianson(14) 46,850 * — — * Angela Wei Dong(15) 361 * — — * Paul J. Fribourg(16) 18,099 * — — * Jennifer Hyman(17) 5,526 * — — * Arturo Nuñez(18) 1,807 * — — * Lynn Forester de Rothschild(19) 57,421 * — — * Barry S. Sternlicht(20) 109,030 * — — * Jennifer Tejada(21) 10,760 * — — * Richard F. Zannino(22) 37,299 * — — * Fabrizio Freda(23) 867,816 0.4% — — * Jane Hertzmark Hudis(24) 56,623 * — — * Peter Jueptner(25) 88,301 * — — * Tracey T. Travis(26) 151,619 0.1% — — * BlackRock, Inc.(27) 15,864,590 6.8% — — 1.1% The Vanguard Group(28) 18,236,234 7.9% — — 1.2% 2,273,814 1.0% 43,383,661 34.6% 29.3% Class A
Common Stock(1)Class B
Common StockVoting
Power† Number(2) % Number % % 601,138 0.3 % — — * — — 86,437,628 63.9 % 54.8 % 73,335 * 7,581,210 5.6 % 4.8 % 29,116 * 8,515,960 6.3 % 5.4 % 10,468 * 45,740 * * 1,692 * 6,585,594 4.9 % 4.2 % 165,073 * 22,346,614 16.5 % 14.2 % 586,138 0.3 % — — * 24,420 * 8,633,277 6.4 % 5.5 % 119,688 * — — * 28,315 * — — * 44,225 * — — * 16,620 * — — * 30,416 * — — * 5,304 * — — * 53,881 * — — * 122,522 * — — * 5,304 * — — * 31,607 * — — * 917,706 0.4 % — — * 11,904 * — — * 273,279 0.1 % — — * — — — — — 315,810 0.1 % — — * 15,894,921 7.1 % — — 1.0 % 15,924,277 7.1 % — — 1.0 % 17,527,874 7.8 % — — 1.1 % 3,233,631 1.4 % 47,077,061 34.8 % 30.0 %
††August 3, 2020.July 31, 2023. On that date, there were 225,380,023232,112,477 shares of Class A Common Stock and 135,235,429125,542,029 shares of Class B Common Stock outstanding.
(1) 36|2020 Proxy Statement(1)"Certain“Certain Relationships and Related Transactions – Lauder Family Relationships and Compensation"Compensation”). In addition, the Company's Certificate of Incorporation contains a "sunset provision." Under this provision, if on the record date for any meeting of stockholders of the Company, the outstanding Class B Common Stock constitutes less than 10% of the total outstanding Common Stock, then each share of Class B Common Stock shall be converted automatically as of the record date into one share of Class A Common Stock with one vote per share. As of the record date for the 2020 Annual Meeting of Stockholders, the outstanding Class B Common Stock constituted approximately 37% of the total outstanding Common Stock. August 3, 2020July 31, 2023 (i.e. by October 2, 2020)September 29, 2023), and any exercisable options (including options that will be exercisable as of October 2, 2020)September 29, 2023). It does not include Performance Share Units ("PSUs"(“PSUs”) that were paid out after August 3, 2020;July 31, 2023; for more information on those awards, see "Outstanding“Outstanding Equity Awards at June 30, 2020,"2023,” as well as the Form 4s filed for the Company'sCompany’s executive officers after the payouts of those PSUs. The stock units included in the table that are beneficially owned by the non-employee directors represent the Annual Stock Units Retainer for Board Serviceservice and, as applicable, the Initial Equity Grant for new non-employee directors (plus dividend equivalents)equivalents on each). Such units will be settled in shares of Class A Common Stock. Amounts are rounded to the nearest whole unit.("LALFP"(“LALFP”) are parties to a Stockholders'Stockholders’ Agreement pursuant to which each has agreed to vote his or the trust'strust’s or partnership'spartnership’s shares for the election of Leonard A. Lauder (or one of his sons), Ronald S. Lauder (or one of his daughters), and one person, if any, designated by each as a director of the Company. See note (12) for certain exceptions. Shares underlying stock options and stock units are not subject to the Stockholders'Stockholders’ Agreement until the stock options are exercised or the stock units are converted. For purposes of the table, shares owned by each such individual are not attributed to the others by reason of such voting arrangement.586,138Lauder'sLauder’s spouse with respect to which Mr. Lauder may be deemed to have shared voting and investment power.86,437,628the shares of Class B Common Stock owned directly by LALFP.7,574,8461,249,846393,846 shares, and (iii) shared investment power for 6,325,0004,375,000 shares as described below.6,325,0004,375,000 shares of Class B Common Stock are pledged by Mr. R. Lauder to secure loans under loan facilities with certain banks as to which he has sole voting power and shares investment power with certain pledgees under the loan facilities. In March 2020, a 2020 Proxy Statement|37previously-disclosed prepaid variable forward sale contract between Mr. Lauder and an unaffiliated third-party buyer was settled in shares of Class A Common Stock; that transaction and a related pledge of shares of Class B Common Stock are no longer outstanding.(7)29,116(b)Stock;Stock as custodian for his nieces and "2008“2008 Descendants Trust"Trust”) with respect to which she shares voting and investment power with Jane Lauder, as co-trustee.Stockholders'Stockholders’ Agreement. Richard D. Parsons is trustee of a trust for the benefit of Ms. A. Lauder that holds shares of Class B Common Stock. See note (12).47,334117,739Stockholders'Stockholders’ Agreement.Ehrenkranz'sEhrenkranz’s business address is 375 Park Avenue, New York, New York 10152.4,44211,7615,8886,051 shares of Class A Common Stock underlying stock units held indirectly through a family trust that are payable in shares;
(c) 38|2020 Proxy Statement(c)2,3294,501 shares of Class A Common Stock underlying options;8,383,916249,361"4202 Trust"“4202 Trust”) and with respect to which Mr. Parsons has sole voting power and sole investment power.Stockholders'Stockholders’ Agreement; therefore, any shares of Class A Common Stock and Class B Common Stock owned by The 4202 Corporation are not subject to that agreement. Mr. Parsons disclaims beneficial ownership of the shares held by The 4202 Corporation. Mr. Parsons's business address is 31 West 52nd Street, Suite 2400, New York, New York 10019.4,000 65,584 shares of Class A Common Stock indirectly through a family trust;(c)18,701(d)31,403options, including options that are held indirectly through a family trust.(14)Includes shares owned beneficially by Rose Marie Bravo as follows:(a)8,000 sharesoptions. Class A Common Stock directly and with respect to which she has sole voting and investment power;(b)15,080 shares of Class A Common Stock underlying stock units payable in shares; and(c)5,235 shares of Class A Common Stock underlying options.(15)Includes shares owned beneficially by Wei Sun Christianson as follows:(a)4,135 shares of Class A Common Stock directly and with respect to which she has sole voting and investment power;(b)8,687 shares of Class A Common Stock underlying stock units payable in shares; and(c)31,403 shares of Class A Common Stock underlying options.10,2912,329Irvine O. Hockaday, Jr.Jennifer Hyman as follows:5,74022,347(c)2,329(18)HymanTejada as follows:9752,329
(22) 2020 Proxy Statement|39(19)Lynn Forester de RothschildRichard F. Zannino as follows:4,000directlyheld indirectly through a limited liability company owned by Mr. Zannino and with respect to which shehis spouse. Mr Zannino has sole voting and investment power;18,478shares;shares, including stock units that are held indirectly by Mr. Zannino through a limited liability company owned by Mr. Zannino and31,403options.(20)Includes sharesoptions, including options that are held indirectly by Mr. Zannino through a limited liability company owned beneficially or deemed to be owned beneficially by Barry S. Sternlicht as follows:(a)30,982 shares of Class A Common Stock directlyMr. Zannino and with respect to which hehis spouse. Mr. Zannino has sole voting and investment power;(b)36,000 shares of Class A Common Stock indirectly through three family trusts;(c)14,137 shares of Class A Common Stock underlyingpower over these stock units payable in shares; and(d)41,403 shares of Class A Common Stock underlying options.(21)Includes shares owned beneficially by Jennifer Tejada as follows:(a)2,000 shares of Class A Common Stock directly and with respect to which she has sole voting and investment power;(b)975 shares of Class A Common Stock underlying stock units payable in shares; and(c)2,329 shares of Class A Common Stock underlying options.(22)Includes shares owned beneficially by Richard F. Zannino as follows:(a)9,516 shares of Class A Common Stock underlying stock units payable in shares; and(b)22,091 shares of Class A Common Stock underlying options.68,174849,532 Representsheshe has sole voting and investment power.Cedric ProuvéPeter Jueptner as follows:222,34250,937Deirdre Stanley joined the Company as Executive Vice President and General Counsel during fiscal 2020. See "Outstanding Equity Awards at June 30, 2020" for information about her equity holdings as of June 30, 2020.(27)31,339284,471(28)5, 20201, 2023 by BlackRock, Inc. ("BlackRock"(“BlackRock”), 55 East 52nd Street, New York, New York 10055, BlackRock may be deemed to be the beneficial owner of 15,894,92115,864,590 shares of Class A Common Stock, over which it has (a) sole investment power for all such shares and (b) sole voting power for 13,165,95114,090,265 shares, all of which shares are held by certain of its subsidiaries.(29)7, 2020 by FMR LLC ("FMR"), 245 Summer Street, Boston, Massachusetts 02210, FMR may be deemed to be the beneficial owner of 15,924,277 shares of Class A Common Stock, over which it has (a) sole investment power for all such shares and (b) sole voting power for 2,379,435 shares, all of which shares are held by certain of its subsidiaries. 40|2020 Proxy Statement(30)Based on a Schedule 13G Amendment filed February 12, 20209, 2023 by The Vanguard Group ("Vanguard"(“Vanguard”), 100 Vanguard Boulevard, Malvern, Pennsylvania 19355, Vanguard may be deemed to be the beneficial owner of 17,527,87418,236,234 shares of Class A Common Stock, over which it has (a) sole investment power for 17,144,46717,267,353 shares, (b) shared investment power for 383,407968,881 shares, (c) sole voting power for 342,743over none of the shares, and (d) shared voting power for 60,307343,614 shares, all of which shares are held by certain of its subsidiaries.(31)and (12) through (27)(26). Includes for executive officers not named in the table:205,008158,960 Fiscal 2020an extraordinarily difficultslower than anticipated. Nevertheless, we continued to gain share in all major product categories in mainland China, demonstrating the strong demand for our products, although we remain conscious of the evolving economic conditions. Elsewhere, the recovery from the COVID-19 pandemic progressed across markets globally over the course of the fiscal year foras restrictions lifted. In the global economy,West, our businessrecovery from the pandemic continued with strong organic net sales growth in nearly all markets in Europe, the Middle East and Africa and in Latin America. In Asia/Pacific, the markets in which we operate emerged strongly into recovery across the fiscal year, to deliver broad-based organic net sales growth throughout the region. In the United States, organic net sales growth was unfavorably impacted by the slower than anticipated pace of our Company. Our performanceimprovement at retail and the tightening of inventory by certain retailers in the first half of fiscal 20202023 due to inflationary pressures and recession concerns. Finally, our business was exceptionalalso pressured by the strong U.S. dollar, inflation, and on trackrecession concerns globally.achieve better than maximum performance on numerous metrics. The momentum continued intoreturn to organic net sales growth and deliver sequentially improving margin throughout the second half untilyear, leveraging the unprecedented impacts of COVID-19 significantly disrupted the livesstrong equity and desirability of our consumers, as well asbrands. We are focused on driving momentum in markets that are thriving and re-accelerating growth in North America. In Asia travel retail, we are taking actions to capture demand from the abilities of our customers and suppliers to operate. During those first few months,returning individual travelers and continuing through the rest of fiscal 2020, our management pivoted to capture opportunitiesreduce inventories in the channels that remained fully functional, made difficult choices, and executed with excellence using new and existing technologies and new ways of working. The second half also marked a period of profound paintrade as tragic events inwe navigate the United States highlighted the systemic racial injustice that has plagued our society for far too long. In June 2020, we announced a comprehensive set of commitments to act with urgency on achieving racial equity. Throughout the past several months, our executive officers and other employees have showcased their agility and flexibility, as well as the family values at the heart of our Company. Reflecting how we are managed on the principles of long-term stewardship and "patient capital," our citizenship and sustainability goals remain on track. To help employees in light of the impacts of COVID-19, the Company developed global initiatives that were implemented at the regional and local levels, including (i) the establishment of the ELC Cares Employee Relief Fund to provide immediate and critical financial relief to eligible employees; (ii) a Medical Review Board comprised of senior leaders and leading medical experts to guide the Company on a number of matters, including health and safety policies, guidelines, and protocols; (iii) access to Company-paid supplemental COVID-19 support (e.g., medical triage services and telehealth services) for full-time and part-time employees where necessary and permissible; (iv) a new global Employee Assistance Program with expanded services; (v) enhanced childcare and eldercare benefits; and (vi) for point-of-sale and field employees in locations where retail operations were closed or experiencing slow recovery, the Company maintained Company-paid healthcare and other benefits for a period of time. 42|2020 Proxy Statement In fiscal 2020, our multiple engines of growth strategy proved highly effective. The Estée Lauder brand grew double-digits for the third consecutive year. Asia/Pacific was strong with organic sales growth in mainland China and several other markets driving prestige beauty share gains, our skin care category grew and was further boosted by the acquisition of Have&Be Co. Ltd. (i.e. Dr. Jart+), and our online channel surged. We quickly pivoted to capture consumption online during COVID-19 as retail stores around the world temporarily closed. Our closing stock price of $188.68 on June 30, 2020 was above our closing stock price of $183.11 on June 28, 2019 (the last trading day of fiscal 2019). In fiscal 2020, we increased the common stock dividend rate by 12%, repurchased 5 million shares of our Class A Common Stock for $893 million, and used $623 million of cash flow from operations for capital expenditures.Fiscal 2020 Change over
Prior Year3-Year
Compound Annual
Growth Rate
(or Basis Point
Change)5-Year
Compound Annual
Growth Rate
(or Basis Point
Change) $ 14.3 billion (4)% 7% 6% $ 14.3 billion (4)% 7% 5% $ 14.4 billion (3)% N/A N/A 4.2% (1,140)bp (1,010)bp (1,070)bp 14.7% (280)bp (120)bp (120)bp $ 1.86 (61)% (18)% (8)% $ 4.12 (23)% 6% 6% $ 4.16 (22)% N/A N/A 18.5% (720)bp (40)bp (310)bp $ 2.3 billion (9)% 8% 3% 3.8% — 102.5% 130.7% 7.5% — 35.8% 66.5% (1)Fiscal 2020 Net Sales as adjusted in constant currency excludes the $154 million unfavorable impact of foreign currency translation. Fiscal 2020, 2019, and 2017 have been adjusted to exclude returns and charges associated with restructuring and other activities and goodwill and other intangible asset impairments. Fiscal 2020, 2019, 2017 and 2015 have been adjusted to exclude the impact of changes in the fair value of contingent consideration. Fiscal 2020 has also been adjusted to exclude long-lived asset impairments, and fiscal 2020 Diluted EPS as adjusted also excludes the gain on a previously held equity method investment. Fiscal 2020 Diluted EPS as adjusted in constant currency excludes the $.04 unfavorable impact of foreign currency translation. Fiscal 2019 Diluted EPS as adjusted also excludes the gain on liquidation of an investment in a foreign subsidiary, net, and the impact of the provisional charges resulting from the enactment of the Tax Cuts and Jobs Act (the "TCJA"). Fiscal 2017 has also been adjusted to exclude the China deferred tax asset valuation allowance reversal. Fiscal 2015 has been adjusted for a charge to remeasure net monetary assets in Venezuela and for the impact of the accelerated orders associated with the Company's July 2014 implementation of its Strategic Modernization Initiative ("SMI"). See Appendix A for reconciliation and other information about these non-GAAP financial measures.
TABLE OF CONTENTS 2020 Proxy Statement|43(2)Excludes returnscharges associatedto build a sustainable business based on uncompromising ethics, integrity, fairness, diversity, and trust, consistent with restructuring and other activities, goodwill and other intangible asset impairments, long-lived asset impairmentsour Company values. We view human capital management and the impact of changes in the fair value of contingent consideration in each period, where applicable. Fiscal 2020 also excludes the tax impact of the gain on a previously held equity method investment. Fiscal 2019 excludes the impact of the provisional charges resulting from the enactment of the TCJA on the effective tax rate and the tax impact of the gain on liquidation of an investment in a foreign subsidiary, net. See Appendix A for information about this non-GAAP financial measure.(3)The TSR amounts in the 3-Year and 5-Year Compound Annual Growth Rate columns represent the actual 3-Year and 5-Year total return. As COVID-19 impacted our business, we implemented a number of cash conservation measures, including suspension of our share repurchase program; not declaring the quarterly cash dividend that would have been payable in June 2020; temporary salary reductions for senior management; temporary elimination of cash retainers for the Board of Directors; and cutting approximately one-third of our planned capital investments for fiscal 2020. For fiscal 2021, we remain focused on the safety and well-beingstrength of our employees as integral to the long-term success and consumers.resilience of our business. Our human capital management includes the following strategic priorities rightly balance investment in those enginesareas:growthnew products and services.see the greatest opportunities with cost discipline amid the ongoing pandemic. Through the Post-COVID Business Acceleration Program announced in August 2020, we plan to better align our brick-and-mortar footprint to improve productivity and invest for growth. We are well-positioned to drive growth as the market dynamics support it, yet remain equally mindful of the effects of COVID-19 on consumers, the retail sector and economics, in general, as well as geopolitical uncertainty. The following summarizes key executive compensation matters:
presence.•In September 2019, the Compensation Committee (the "Committee") determined that the fiscal 2020 base salary for Fabrizio Freda, our President and Chief Executive Officer, would remain at $2.0 million, and his bonus opportunity would remain at $5.0 million; the Stock Plan Subcommittee (the "Subcommittee") increased Mr. Freda's equity target to $10.5 million (from $9.15 million) for fiscal 2020, resulting in target total annual compensation for fiscal 2020 of $17.5 million, an increase of 8.4% from the prior fiscal year. As explained below, Mr. Freda and the other senior management took temporary reductions in their base salaries, overhave a six-month period in late fiscal 2020 and early fiscal 2021, to show their solidarity with impacted employees and to contribute the Company's initiatives to reduce expenses and enhance financial flexibility and liquidity due to COVID-19. See additional information in "Impact of COVID-19 on Compensation Matters" and "CEO Compensation" below. •The annual stock-based compensation awarded to our Named Executive Officers ("NEOs") in fiscal 2020 was based on target grant levels and an assessment of each officer's performance and expected future contributions. These awards are shown in "Grants of Plan-Based Awards in Fiscal 2020." The annual equity mix remained weighted equally among performance share units ("PSUs"), stock options, and restricted stock units ("RSUs"). •Payouts under the Executive Annual Incentive Plan for fiscal 2020 reflected the impacts of COVID-19, and actual payouts were determined by applying the respective payout percentages to the fiscal 2020 target bonus opportunities. Given the outstanding performance collectively and individually by the various executive officers, the Subcommittee decided to grant additional value, in the form of additional amounts to fiscal 2021 annual equity grants, to the NEOs and other executive officers. See "Impact of COVID-19 on Compensation Matters."
for Fiscal 2023 In September 2022, the Compensation Committee determined that the base salary rate for Fabrizio Freda, our CEO, would remain at $2.1 million and increased Mr. Freda’s bonus opportunity to $5.78 million (from $5.25 million). The Stock Plan Subcommittee increased Mr. Freda’s equity target to $12.5 million (from $11.86 million), resulting in target total annual compensation for fiscal 2023 of $20.38 million. 44| Payout of Third (final) Tranche of September 2015 PSU granted to CEO On June 30, 2023, Mr. Freda received payout of the Third (final) Tranche (129,283 shares) of the non-annual performance share unit (“PSU”) that was granted in September 2015, as well as a cash payment for dividend equivalents. For additional information, see “Option Exercises and Stock Vested in Fiscal 2023” and “Additional (non-annual) Performance-Based Long-Term Equity Grants to CEO in Fiscal 2016, Fiscal 2018, and Fiscal 2021.” NEO Annual Stock-Based Compensation for Fiscal 2023 The annual equity mix remained weighted equally among PSUs, stock options, and restricted stock units. The annual stock-based compensation awarded to our Named Executive Officers (the “NEOs”) in fiscal 2023 was based on target grant levels and an assessment of each officer’s performance and expected future contributions. These awards are shown in “Grants of Plan-Based Awards in Fiscal 2023.” Payout of PSUs granted to NEOs in Fiscal 2021 Based on the Company’s performance over the three-year period ended June 30, 2023, the PSUs granted in September 2020 Proxy Statementresulted in an aggregate payout of 32.6% of target out of a possible maximum of 175%. Actual payouts of shares of Class A Common Stock to the NEOs were made in late August 2023 and are described in note (4) of “Outstanding Equity Awards at June 30, 2023.” EAIP Payout for NEOs for Fiscal 2023 Our NEOs achieved fiscal 2023 payout percentages under the Executive Annual Incentive Plan (“EAIP”) ranging from 46.4% to 51.5% out of a possible maximum of 165% of target bonus opportunities. Actual payouts were made in mid-September 2023. Such payouts were determined by applying the payout percentages to the fiscal 2023 target bonus opportunities and are shown in the “Summary Compensation Table.” For information regarding the fiscal 2023 EAIP design, see “Design of EAIP and PSU for Fiscal 2023 and Fiscal 2024.” •Based on the Company's performance over the three-year period ended June 30, 2020, the PSUs granted to our executive officers in September 2017 resulted in an aggregate payout of 109.9% of target. The PSUs were on track to be paid out at the maximum of 150% through the first six months of fiscal 2020, but the impacts of COVID-19 on the three metrics resulted in the lower payout percentage. Actual payouts for the NEOs, as applicable, are described in note (4) of "Outstanding Equity Awards at June 30, 2020" table. •As part of our efforts to reduce costs and to enhance financial flexibility and liquidity due to COVID-19, the Committee (i) reduced the base salaries for senior management, including the NEOs, for the six-month period ending October 2020; and (ii) decided to keep the fiscal 2021 base salaries at the rates established at the start of fiscal 2020, subject to the above-mentioned six-month reduction period. See additional information in "Impact of COVID-19 on Compensation Matters." •In August 2020, the Subcommittee approved the payout for the last of three tranches of the non-annual PSU that was granted to Mr. Freda in September 2015. For the final tranche Performance Period that ended June 30, 2020, positive Cumulative Operating Income has been achieved, and 129,283 shares will be delivered to him in June 2023, subject to the award's terms and conditions. Between September 4, 2015 (the grant date of this award) and June 30, 2020, (i) the Company has achieved TSR of 158% (the TSR of the S&P 500 Index was 78%); and (ii) our market capitalization increased from $29 billion to $68 billion. For additional information, see "Additional (non-annual) PSU Grants to CEO in Fiscal 2018 and Fiscal 2016."20192022 Annual Meeting, approximately 99%95% of the votes cast in connection with the stockholdersstockholders’ advisory vote on compensation of the NEOs were cast in favor of the proposal. We have considered this voting result, and as explained below, our compensation policies and decisions continue to be focused on sustainable financial performance and aligning the interests of senior management with the interests of stockholders. 2020 Proxy Statement|45featuresFeatures of our compensation programs, policies,Compensation Programs, Policies, and practices are as follows: 
![[MISSING IMAGE: ic_tick-bw.jpg]](/files/DEF 14A/0001104659-23-104591/ic_tick-bw.jpg)
PSUs, with failure to achieve the pre-established minimum threshold amount resulting in no payout under the PSUsPerformance Share Units
our compensationsuch programs are not reasonably likely to have a material adverse effect on the Company
executives'executives’ interests with our long-term and short-term goals and the interests of our stockholders; rewards performance at the Company, business unit, and individual levels; is competitive with the compensation practices at other leading beauty and consumer products companies; and is equitable among our executive officers.20202023 for our NEOs are described under "Employment Agreements" and, for Ms. Stanley, also under "Compensation for Other NEOs."“Employment Agreements.” Our standard employment agreements for executive officers cover termination and severance and include non-competition, confidentiality, and related provisions. TheyEach NEO’s employment agreement has a two-year non-compete provision. Such provisions in the employment agreements for certain NEOs expressly provide for post-termination payments and certain continued benefits during the enforced non-compete period. Our standard employment agreements for executive officers do not include specified amounts of salary, bonus opportunities, or equity-based compensation for future years. For executive officers who are recruited to join the Company, we will specify levels of salary, bonus opportunities, and equity-based compensation grants for certain initial periods or that relate to initial grants (e.g., to compensate the officer for amounts or awards that may be forfeited at a prior employer).Subcommittee.Stock Plan Subcommittee (the “Subcommittee”). The Subcommittee approves the terms of all equity grants to executive officers under our long-term equity incentive plan (including any equity compensation-related terms of employment agreements for executive officers). The Committee approves all other aspects of executive compensation.Impact COVID-19 on Compensation Mattersabove, fiscal 2020 was an extraordinarily difficult year for the global economy, our business and our Company. Given the impacts of COVID-19 on the market and the ongoing uncertainty around potential future impacts, employees are working differently and with greater flexibility. As COVID-19 impacted our business, we implemented a number of expense reduction and cash conservation measures as part of our initiatives to enhance financial flexibility and liquidity. Against this extremely challenging backdrop, the Compensation Committee and the Subcommittee made certain decisions, in their discretion, described below. These decisions are meant to balance the impact on employees with the impact on our stockholders who saw an increase in the fiscal year end stock price ($188.68 at June 30, 2020 as compared to $183.11 at June 28, 2019, the last trading day of fiscal 2019) despite the impacts of COVID-19. Under the 46|2020 Proxy Statementprinciples of trying to ensure that employees are not overly impacted for outcomes outside their control and to ensure that they remain incentivized for future performance, we took the following compensation actions as further explained below:a)Temporary base salary reductions for all ofdetail below, our executive officers, including allcompensation program generally consists of the Named Executive Officers;b)Payoutmultiple elements of bonuses for fiscal 2020 under the Executive Annual Incentive Plan ("EAIP") in accordance with the plan, and additional amounts for the fiscal 2021 annual equity grants;c)Changes to the fiscal 2021 EAIP design; andd)Changes to the fiscal 2021 PSU design.Temporary Base Salary Reductions As the significant impacts of COVID-19 on our business became clearer, especially for point-of-sale and field employees in retail operations, senior management took reductions in their base salaries to show their solidarity with impacted employees and to contribute to the Company's initiatives to reduce expenses and enhance financial flexibility and liquidity. Similarly, non-employee directors are foregoing cash retainers that would have been paid through November 2020. See "Director Compensation" above. These temporary reductions were part of the numerous actions we took in the fourth quarter of fiscal 2020 to reduce expenses so we could prioritize areas of growth and cash generation among our geographic regions, product categories, brands, and channels of distribution. The salary reductions for executive officers, including those mentioned by name in this paragraph, are for the six-month period ending October 31, 2020, so they impact salaries in both fiscal 2020 and fiscal 2021. For the NEOs, the salary reductioncompensation. This is 50% for Mr. Freda and 30% for Ms. Travis, Mr. Demsey, Mr. Prouvé, and Ms. Stanley. The base salaries for Leonard A. Lauder, Chairman Emeritus, and Ronald S. Lauder, Chairman of Clinique Laboratories, LLC, are being reduced by nearly 100%. The base salary for William P. Lauder, Executive Chairman, is being reduced by 50%, and the base salaries for the remainder of the Company's executive officers are being reduced by 30%. Base salary reductions for the NEOs between May 1, 2020 and June 30, 2020 are reflected in the fiscal 2020 Summary Compensation Table. The impact of the salary reductions between July 1, 2020 and October 31, 2020 will be reflected in the fiscal 2021 Summary Compensation Table, as applicable.Fiscal 2020 EAIP Payouts – In addition to cash payments as calculated, additional amounts awardedchart below, which notes certain plan design features for fiscal 2021 annual equity grants For2023 and fiscal 2024.![[MISSING IMAGE: fc_direct-pn.jpg]](/files/DEF 14A/0001104659-23-104591/fc_direct-pn.jpg)
NEOs and other executive officers, the Compensation Committee, measured the results against the EAIP goals set in September 2019. As such, the bonus payouts in cash reflect the impacts of COVID-19 onSubcommittee, our business operations during fiscal 2020. Our incentive plan payouts were disproportionately impacted by COVID-19 relative to actual employee performance, resulting in payouts substantially less than in previous years. Given the outstanding performance collectively and individually by the various executive officers, the Subcommittee decided to grant additional value, in the form of additional amounts to the annual fiscal 2021 equity grants, to the NEOs and other executive officers, as applicable. While the additional amounts are not intended to, and will not, close the gap on bonus payouts caused by the impacts of COVID-19, the Subcommittee believes they will further align employees' and stockholders' interests on a long-term basis while driving collaboration across the enterprise and recognizing the continued resiliency and creativity of the Company's employees. In determining the additional amounts for each executive officer's fiscal 2021 annual equity grants, the Subcommittee considered the difference between the actual payout under the EAIPsenior management, and the amount the individual would have received for fiscal 2020 (a) assuming a floor of 40% for the Business Unit Multiplier and (b) assuming a floor of 90% for the Corporate Multiplier. The 2020 Proxy Statement|47Subcommittee decided that these actions regarding the Business Unit Multiplier and the Corporate Multiplier serve to better protect the stronger performing business units while at the same time providing a reasonable reward and incentives to those business units that were more deeply affected. See "Impact of COVID-19 on Fiscal 2020 Annual Incentive Bonus Payouts and Fiscal 2021 Annual Equity Grants to Named Executive Officers" for information about how these decisions impacted the NEOs, as applicable.Changes to the Fiscal 2021 EAIP and Fiscal 2021 PSU Design The Compensation Committee and the Subcommittee, each in consultation with management, considered whether to simplify both the fiscal 2021 EAIP and fiscal 2021 PSU design in order to focus employee efforts on overall Company Net Sales and Operating Margin recovery, and to continue to incent performance and reward agility through these challenging and unprecedented times. At the same time, the Compensation Committee and the Subcommittee recognized the importance of maintaining the core design of our plans and energizing participants by increasing the maximum payouts. After significant consideration and discussion, the Compensation Committee and the Subcommittee determined that the decisions explained below would most appropriately balance the interests of our employees and our stockholders and position us well going forward by (a) providing for reasonable protection to employees with regard to aggressive goals in a volatile environment, (b) continuing to drive a performance orientation, through sustained engagement, that motivates and rewards results for each individual business unit and the overall Company, (c) contributing to our Company's cash conservation efforts, and (d) tying EAIP and PSU awards to align, over the long term, with stockholders' interests. These modifications will apply for fiscal 2021, and the Compensation Committee and the Subcommittee plan to revisit the EAIP design and PSU design in fiscal 2022 once more is known about the duration and impacts of COVID-19.Changes to Fiscal 2021 EAIP For the reasons explained above, the Compensation Committee, in its discretion, approved the following changes to the fiscal 2021 EAIP:•Increase maximum payout to 165% of target (up from 150%), which includes (i) an increase to the Corporate Multiplier maximum to 140% (up from 120%) and (ii) a decrease to the Business Unit Multiplier to 118% (down from 125%); •Suspend, for the Corporate Multiplier, the use of ROIC as a performance measure and increase the weightings of EPS, Net Sales, and NOP, such that all three are weighted equally; •Suspend, for the Business Unit Multiplier, explicit productivity and inventory measures; and •Implement an overall payout floor of 50%, such that any performance that yields a payout of below 50% would result in an overall payout of 50%.Changes to Fiscal 2021 PSU Design The Subcommittee recognizes that setting three-year financial goals is far more challenging at this time, given the uncertainty and volatility due to COVID-19; however, the Subcommittee decided that it was important to continue granting PSUs to drive performance accountability and alignment with stockholders' interests and long-term results. Therefore, the Subcommittee considered and discussed appropriate and thoughtful modifications to the PSU design in order to drive increased focus on Net Sales and Diluted EPS. For the reasons explained above, the Subcommittee, in its discretion, approved the following changes to the fiscal 2021 PSU design:•The ROIC performance measure has been removed, and the weightings have been increased for the Net Sales and Diluted EPS goals (so both are weighted equally); and 48|2020 Proxy Statement•The maximum payout has been increased to 175% (from 150%). The Compensation Committee and the Subcommittee determined that these decisions most appropriately balanced the interests of our employees and our stockholders and position us well going forward by providing for reasonable protection to employees with regard to aggressive goals in a volatile environment; continuing to drive a performance orientation that motivates and rewards results for each individual business unit and the overall Company; contributing to the Company's cash conservation efforts; and tying EAIP and PSU awards to align, over the long term, with stockholders' interests.Elements of Compensation Our executiveCommittee’s compensation program for fiscal 2020 generally consisted of the following:
For information regarding changes to the EAIP and design changes to our PSUs, in each case for fiscal 2021, see "Impact of COVID-19 on Compensation Matters." The Committee, Subcommittee, and our senior managementconsultant (Semler Brossy) begin their review of compensation by looking first at the components of total direct compensation, gauging, for each type of position in the executive officer group, the extent to which total direct compensation is broadly aligned with that of our executive compensation peer group. The Committee and the Subcommittee consult with management and our senior management then reviewSemler Brossy regarding the design for the EAIP and PSU. This group reviews the elements of compensation (i.e., base salary, annual cash incentive bonus opportunities, and long-term equity-based compensation opportunities) and determinedetermines a mix of these elements as a percentage of total direct compensation. The mix is intended to be performance basedpredominantly performance-based (i.e., provide a greater percentage of compensation in the form of variable annual and long-term incentive compensation) and reasonable when compared with the peer group. As shown below, the CEO annual target pay mix for fiscal 20202023 was 89% performance based,90% performance-based, and the average annual target pay mix for the other NEOs for fiscal 20202023 was 84% performance based.81% performance-based. Executive officers with similar responsibilities generally have a similar mix of pay elements. There is internal pay equity among similarly situated executive officers, which is intended to foster a team-oriented approach to managing the business. Total direct compensation and allocations of metrics within the EAIP are determined based on the type and 2020 Proxy Statement|49("LTI"(“LTI”), followed by annual cash incentives, and then by base salary. 2020,2023, the mix of pay for executive officersour NEOs is shown below:
![[MISSING IMAGE: pc_ceoannual-pn.jpg]](/files/DEF 14A/0001104659-23-104591/pc_ceoannual-pn.jpg)
at least 1% ahead of global prestige beauty, improving operating margin, achieving competitive levels of return on invested capital, and optimizing inventory. We assess global macro-economic risks to prudently plan activities in marketsbusiness units that are currently over-attaining goals and to challenge marketsbusiness units that are lagging net sales and profit objectives. We carefully plan to drive sustained, profitable sales growth over the long-term horizon. We do this by strategically planning category and subcategory innovation and extending consumer reach by pivoting to online channels to help enable net sales and profit growth.CitizenshipCompany's citizenshipCompany’s social impact and sustainability ("C&S"(“SI&S”) initiatives are deeply embedded in our culture and overall corporate strategy and help drive innovation, growth, and efficiency.strategy. Across our business and within our brand portfolio, we incorporate sustainable practices, methodologies, and 50|2020 Proxy Statementdesign, reflecting the C&S focus in our leadership's DNA. design. Our CSI&S strategy and goals reflect theare designed to link between our commitments and business value creation. For example,In particular, our goals related to climate and environmentally-related goalsthe environment support efficiency and conservation within our facilities and internal supply chain. Somechain, and some of these goals are also meantintended to help us reduce cost and waste. Our Cstrategic initiativeswork is an important part of our future success. These efforts are led by our Executive Chairman and our CEO and overseen by our Board of Directors, particularly the Nominating and ESG Committee. Senior Vice President,leaders from Finance; Global Corporate Citizenship and Sustainability, who reports to our CEO. We have a management committee – the Sustainability Executive Committee – composed of senior leaders from Finance,Sustainability; Human Resources; Inclusion, Diversity, and Equity; Legal; Human Resources, and Corporate Citizenship and Sustainability, along with additional representationas well as representatives across brands, regions, channels and other functions. This executive committee drivesfunctions, drive our CSI&S strategy."patient“patient capital,"” and our compensation approach reflects and supports this approach.this. Consistent with our culture and our compensation philosophy and objectives, our combination of compensation elements is intended to help drive and promote strong, balanced, and sustainable corporate performance. We evaluate the performance of our employees, including our NEOs, under CSI&S goals holistically, within the framework of our corporate strategy, as an input into compensation decisions. For example, the bonuses and long-term incentive awards for executive officers, including our NEOs, areIn particular, we incorporate specific goals tied to achievement ofthe Company’s broader SI&S strategy into the business goals that include goals regarding our C&S strategy. As such, our executive officers, including ourfor the NEOs, are assessed on the achievement of these goals, and compensation decisions are made based on their achievement.executive'sexecutive’s position, current salary, tenure, and internal pay equity among executives with similar responsibilities, as well as competitiveness of the salary level in the marketplace. The Committee also considers recommendations from the Executive Chairman, the CEO, the Executive Vice President – Global Human Resources,EVP HR, and the Committee's outsideCommittee’s compensation consultant (Semler Brossy Consulting Group)Brossy). As explained herein,Company is temporarily reducing base salariesoverall EAIP payout floor of 50% as compared to fiscal 2022. For the Corporate Multiplier, the range of 80% – 140% was maintained for senior management, includingfiscal 2023. This results in an overall payout range of 0% – 165% for the fiscal 2023 EAIP. The fiscal 2023 EAIP payouts for the NEOs shown in the Summary Compensation Table reflect, among other things, (i) applying a Corporate Multiplier of 80% (the minimum payout range in the fiscal 2023 EAIP design) and (ii) overall payouts ranging from 46.4% to 51.5%. See “Annual Incentive Bonus” below for additional information about the EAIP. period May 2020Business Unit Multiplier, the fiscal 2024 EAIP will include Weighted Forecast Accuracy, in order to drive focus on inventory/integrated planning and management. The fiscal 2023 PSU design will be maintained into fiscal 2024.October 2020 as partsustained engagement, which motivates and rewards results for each individual business unit and the overall Company and (b) tying EAIP and PSU awards to align, over the long term, with stockholders’ interests.its efforts to enhance financial flexibilityCompensation” above for a chart that shows the design of the EAIP and liquidity due to the impacts of COVID-19.of key importanceimportant in aligning the interests of our executives with our short-term goals and rewarding them for performance. For executive officers, the level of bonus opportunities and performance targets are based on the scope of the executive'sexecutive’s responsibilities, internal pay equity among executives with similar responsibilities, and competitive considerations. The measures in our annual incentive program are balanced, designed to foster interdependence and collaboration among brands, regions, and functions to drive the corporate strategy by ensuring alignment of business unit performance with overall corporate performance. Annual incentives payable to our executive officers, including the NEOs, are limited to a pool set at the beginning of the fiscal year by the Committee (3% of our net operating profit plan in fiscal 2020)2023). Within that limit, the Committee sets annual aggregate bonus opportunities and exercises negative discretion to determine the annual incentives to be paid. Total fiscal 2023 EAIP payouts were less than the amount of the approved bonus pool. For fiscal 2020,2023, the EAIP payout was the product of the target for each executive officer and the EAIP payout percentage ("(“EAIP Payout %"%”), which is comprised of (a) the Corporate Multiplier and (b) the Business Unit Multiplier, as described below. For additional information about each NEO's fiscal 2020 EAIP payout, see "Impact of COVID-19 on Fiscal 2020 Annual Incentive Bonus Payouts and Fiscal 2021 Annual Equity Grants to Named Executive Officers." Total EAIP cash payouts were less thanThe charts below describe the amountkey components of the bonus pool.EAIP, as well as the minimum and maximum payout ranges for the fiscal 2023 EAIP:![[MISSING IMAGE: fc_corporate-pn.jpg]](/files/DEF 14A/0001104659-23-104591/fc_corporate-pn.jpg)
TABLE OF CONTENTS2020 Proxy Statement|51
officer'sofficer’s target opportunity. Provided the minimum threshold has been achieved, payouts can range from 31.25% of target up to a maximum of 150% of target. Failure to achieve the pre-established minimum threshold level of performance would result in no credit for that particular criteriaperformance measure and, depending upon performance in respect of other criteria,measures, could result in no bonus being paid. While failure to achieve the pre-established minimum threshold level of performance could result in no bonus being paid, payouts can range from 50% of target up to a maximum of 165% of target, provided the minimum threshold has been achieved for each of the performance metrics. For the reasons explained above, the fiscal 2023 EAIP was designed as follows: (i) maximum payout of 165% of target, which includes (a) Corporate Multiplier maximum of 140% and (b) Business Unit Multiplier maximum of 118% and (ii) a Corporate Multiplier minimum of 80%, such that any performance that yields a Corporate Multiplier below 80% would result in a Corporate Multiplier of 80%. Measurement of performance, including establishment of the bonus pool, is subject to certain automatic adjustments, such as changes in accounting principles, goodwill and other intangible asset impairments, the impact of unplanned completed business acquisition activity, restructuring and other activities, discontinued operations, certain non-recurring income/expenses, and the impact on net sales of unplanned changes in foreign currency rates. Such automatic adjustments (which reflect the impact, where appropriate, of tax, currency and non-controlling interest) for fiscal 20202023 were: the impact of charges associated with restructuring and other activities related to the Company'sCompany’s Leading Beauty Forward initiatives, changesand Post-COVID Business Acceleration initiatives; other intangible asset impairments; change in fair value of contingent consideration, goodwill, other intangible, and long-lived asset impairments, gain on previously held equity method investment, and incremental net lossacquisition- related stock options associated with the increased ownership of DECIEM and expenses related to both the TOM FORD acquisition of Dr. Jart+.wereare set by the Committee in consultation with management and the Committee's outsideCommittee’s compensation consultant (Semler Brossy) during the first quarter of the fiscal year. Target payouts for executive officers are largely based on the prior year's target amount and are reviewed by the Committee annually. The Each executive officer’s incentive payment is subject to the Corporate Multiplier. For fiscal 2023, the Corporate Multiplier iswas comprised of four equally weighted, Company-wide performance criteria: (1) diluted net earnings per share from continuing operations ("(“Diluted EPS"EPS”); (2) Operating Income Margin Percentage ("(“OI Margin Percent"Percent”); (3) Net Sales; and (4) return on invested capital ("ROIC"(“ROIC”). The weightings for each of these performance measures is discussed above. Measurement of performance for each of these measures is subject to certain automatic adjustments described above in “Annual Incentive Bonus.” If actual performance under the Corporate Multiplier is between the target and the maximum, or between the threshold and the target, the payout factor is calculated mathematically using straight-line interpolation with target level of performance as a base. As an example, for Net Sales performance that is between the threshold and the target, for each 1% that performance is below target, the payout will be 31/3% 1/3% below the target payout of 100%. The chart below shows the threshold, target, and maximum for each criteria making up the Corporate Multiplier as well as the results for fiscal 2020. Performance2023. For fiscal 2023, performance was between threshold and target for OI Margin Percent, Net Sales, and ROIC, and performance was below targetthe threshold for each of the four performance criteriaDiluted EPS, resulting in a Corporate Multiplier of 71.8% for80%, the minimum payout factor in the fiscal 2020. Each executive officer's incentive payment is subject to the Corporate Multiplier.2023 EAIP design. Threshold Target Maximum Actual
Performance Fiscal 2023
Target % of
Target Payout
(% of
Oppty) % of
Target Payout
(% of
Oppty) % of
Target Payout
(% of
Oppty) % of
Target Payout
(% of
Oppty) Diluted EPS $7.54 50% 50% 100% 100% 107.0% 140% 46.4% 0.0% OI Margin Percent 19.9% 50% 50% 100% 100% 103.8% 140% 57.6% 13.9% Net Sales* $18.68 billion 85% 50% 100% 100% 103.2% 140% 86.5% 17.7% ROIC 19.8% 50% 50% 100% 100% 110.1% 140% 56.6% 11.0% Corporate Multiplier Before Application of Minimum Payout Factor 42.6% Corporate Multiplier After Application of Minimum Payout Factor 80.0% Threshold Target Maximum Actual
Performance* Fiscal 2020 Target % of
TargetPayout
(% of
Oppty)% of
TargetPayout
(% of
Oppty)% of
TargetPayout
(% of
Oppty)% of
TargetPayout
(% of
Oppty) $5.79 50 % 50 % 100 % 100 % 102.1 % 120 % 73.2 % 67.4 % 17.8% 50 % 50 % 100 % 100 % 101.3 % 120 % 84.6 % 76.0 % $15.87 billion 85 % 50 % 100 % 100 % 100.7 % 120 % 89.6 % 77.6 % 25.8% 50 % 50 % 100 % 100 % 101.9 % 120 % 71.7 % 66.3 % 71.8 %
** Measurement of performance for each of the metrics is subject to certain automatic adjustments described above in "Annual Incentive Bonus."
TABLE OF CONTENTS 52|2020 Proxy Statement The For fiscal 2023, the Business Unit Multiplier works similarly,in a manner similar to the Corporate Multiplier but is based on various combinations of business criteria at the business unit level, including: (1) Net Sales; (2) Net Operating Margin ("(“NOP Margin"Margin”); (3) inventory management; (4) productivity and other cost savings; and (5)(3) other divisional goals specific to the individual executive officer and tied to our long-term strategy ("(“Business Unit Strategic Objectives"Goals”). The weighting of the various measures is fixed for each executive officer depending upon position and responsibilities. As with the Corporate Multiplier, targetTarget level performance on all the applicable criteria leads to a Business Unit Multiplier of 100%. If the threshold level of performance is not achieved for any of the applicable criteria, then the Business Unit Multiplier would be zero for those criteria. When performance exceeds the maximum level, the payout factors are at 125%118% of target. In the case where the actual performance was between the target and the maximum, or between the threshold and the target, the payout factor was calculated mathematically using straight-line interpolation with target level of performance and associated payout as a base.ObjectivesGoals for six Corporate Functions (i.e. Finance; Human Resources; Legal; Global Communications; Global Researchthe various corporate functions. For Ms. Hudis and Development, Corporate Product Innovation, Package Development; and Global Supply Chain). For Messrs. Demsey and Prouvé,Mr. Jueptner, the threshold, target, and maximum for each criteria making up the Business Unit Multiplier for their respective units, as well as the results for fiscal 2020,2023, are shown in the table set forth below. Threshold Target Maximum
Performance(1)
2023
Target % of
Target Payout
(% of
Oppty) % of
Target Payout
(% of
Oppty) % of
Target Payout
(% of
Oppty) % of
Target Payout
(% of
Oppty) Division Net Sales Jane Hertzmark Hudis $9.86 billion 85% 62.5% 100% 100% 103.3% 118% 86.8% 67.1% Peter Jueptner $13.21 billion 85% 62.5% 100% 100% 103.3% 118% 85.7% 64.3% Division NOP Margin Jane Hertzmark Hudis 27.2% 85% 62.5% 100% 100% 102.4% 118% 66.4% 0.0% Peter Jueptner 41.8% 85% 62.5% 100% 100% 101.2% 118% 78.2% 0.0% Online Net Sales Jane Hertzmark Hudis 85% 62.5% 100% 100% 103.0% 118% 89.5% 73.7% Peter Jueptner 85% 62.5% 100% 100% 103.0% 118% 93.9% 84.8% Online NOP Margin Jane Hertzmark Hudis 85% 62.5% 100% 100% 105.0% 118% 94.3% 85.7% Peter Jueptner 85% 62.5% 100% 100% 105.0% 118% 100.1% 101.0% Total Company Sales Jane Hertzmark Hudis $18.46 billion 85% 62.5% 100% 100% 103.3% 118% 86.2% 65.6% Peter Jueptner $18.46 billion 85% 62.5% 100% 100% 103.3% 118% 86.2% 65.6% Total Company NOP Margin Jane Hertzmark Hudis 19.9% 85% 62.5% 100% 100% 103.6% 118% 57.1% 0.0% Peter Jueptner 19.9% 85% 62.5% 100% 100% 103.6% 118% 57.1% 0.0% Threshold Target Maximum Actual
Performance* Fiscal
2020
Target% of
TargetPayout
(% of
Oppty)% of
TargetPayout
(% of
Oppty)% of
TargetPayout
(% of
Oppty)% of
TargetPayout
(% of
Oppty) $ 7.6 billion 85 % 62.5 % 100 % 100 % 101.6 % 125 % 75.4 % 0.0 % $ 11.1 billion 85 % 62.5 % 100 % 100 % 101.6 % 125 % 94.2 % 85.4 % 17.9% 85 % 62.5 % 100 % 100 % 102.1 % 125 % 12.7 % 0.0 % 37.5% 85 % 62.5 % 100 % 100 % 100.8 % 125 % 95.8 % 89.5 % 186 85 % 62.5 % 100 % 100 % 105.0 % 125 % 82.9 % 0.0 % 124 85 % 62.5 % 100 % 100 % 105.0 % 125 % 92.1 % 80.2 % $ 567 million 90 % 62.5 % 100 % 100 % 103.0 % 125 % 104.3 % 125.0 % $ 838 million 90 % 62.5 % 100 % 100 % 103.0 % 125 % 103.4 % 125.0 % 7.4% 90 % 62.5 % 100 % 100 % 105.0 % 125 % 77.4 % 0.0 % 7.4% 90 % 62.5 % 100 % 100 % 105.0 % 125 % 95.8 % 84.2 % $ 1.1 billion 85 % 62.5 % 100 % 100 % 101.6 % 125 % 131.3 % 125.0 % $ 1.3 billion 85 % 62.5 % 100 % 100 % 101.6 % 125 % 136.9 % 125.0 % 48.7% 85 % 62.5 % 100 % 100 % 100.4 % 125 % 85.4 % 63.5 % 44.7% 85 % 62.5 % 100 % 100 % 100.6 % 125 % 106.7 % 125.0 % – – – – – – – – – $ 15.8 billion 85 % 62.5 % 100 % 100 % 101.6 % 125 % 90.6 % 76.5 % – – – – – – – – – 18.1% 85 % 62.5 % 100 % 100 % 100.8 % 125 % 78.2 % 0.0 %
(1)* all of the income statement measures are calculated at weighted averagebudgeted exchange rates for the measurement period. Measurement of performance, for each of the metrics, is subject to certain automatic adjustments described above in "Annual“Annual Incentive Bonus."
(2) 2020 Proxy Statement|53TableContentsMr. DemseyMs. Hudis, and Mr. ProuvéJueptner were each assigned Business Unit Strategic ObjectivesGoals for fiscal 20202023 that accounted for the percentages of the individual'sindividual’s aggregate bonus opportunity target indicated below.ObjectivesGoals are aligned with high-level themes, explained below, that help focus collective efforts in areas that are important to shared success across business units and drive the corporate strategy.(a)Strategy – Continue cascading the corporate strategy its key elements throughout the organization. Translate each Business Unit's strategy into measurable and time bound action items and execute against them. Clearly track progress through key performance indicators and leverage these metrics to reinforce accountability.(b)Collaboration and Talent Development – Championing and leading collaborative, transformational behavior and the development of talent in the organization, integrating our inclusion and diversity strategy. Align our organizations for speed and efficiency.(c)Key Business Capability Building/Business Transformation – Identifying and taking action on developing capabilities for continuous improvement related to the key operational and financial building blocks that will impact sustainable growth and profitability and the effective use of resources. 2020,2023, the Executive Chairman, the CEO, and the Executive Vice President – Global Human Resources,EVP HR, with appropriate input from other employees, reviewed the actions taken by executive officers including the NEOs, as applicable, in connection with the Business Unit Strategic ObjectivesGoals and, based on that assessment, recommended the payout percentages shown in the table below (with a maximum of 125%118%). The assessment of these achievements and payouts were confirmed by the Committee in its business judgment.officer'sofficer’s Business Unit Multiplier depend upon the officer'sofficer’s position and responsibilities, as shown in the calculation of the Business Unit Multiplier below. The calculation W. P. Lauder &
F. Freda T. T. Travis J. Hertzmark Hudis P. Jueptner % of
Target Actual
Payout % % of
Target Actual
Payout % % of
Target Actual
Payout % % of
Target Actual
Payout % Business Unit Strategic Goals (Functions Average) 33.3% 110.7% 10.0% 110.7% — — — — Business Unit Strategic Goals
(Individual) — — 30.0% 112.0% 20.0% 110.0% 20.0% 105.0% Total Company Net Sales* 33.4% 65.6% 30.0% 65.6% 5.0% 65.6% 5.0% 65.6% Total Company NOP Margin* 33.3% 0.0% 30.0% 0.0% 5.0% 0.0% 5.0% 0.0% Division Net Sales* — — — — 25.0% 67.1% 25.0% 64.3% Division NOP Margin* — — — — 25.0% 0.0% 25.0% 0.0% Online Net Sales* — — — — 10.0% 73.7% 10.0% 84.8% Online NOP Margin* — — — — 10.0% 85.7% 10.0% 101.0% Business Unit Payout (a) 100.0% 58.8% 100.0% 64.4% 100.0% 58.0% 100.0% 58.9% Corporate Multiplier (b) — 80.0% — 80.0% — 80.0% — 80.0% EAIP Payout % (a) x (b) — 47.0% — 51.5% — 46.4% — 47.1% individual's EAIP Payout % for fiscal 2020, including both the Business Unit Multiplier (weighted accordingly) and the Corporate Multiplier,metrics is shown for the NEOs, as applicable,subject to certain automatic adjustments described above in the table below. Ms. Stanley is not included in this table because, as discussed below, her employment agreement provided for a minimum incentive bonus payout for fiscal 2020. F. Freda T.T. Travis J. Demsey C. Prouvé % of
TargetActual
payout %% of
TargetActual
payout %% of
TargetActual
payout %% of
TargetActual
payout % 25.0 % 121.0 % 10.0 % 121.0 % – – – – – – 30.0 % 125.0 % 15.0 % 100.0 % 15.0 % 116.0 % 27.5 % 76.5 % 20.0 % 76.5 % 27.5 % 0.0 % 17.5 % 85.4 % 27.5 % 0.0 % 20.0 % 0.0 % 27.5 % 0.0 % 17.5 % 89.5 % 10.0 % 69.9 % 10.0 % 69.9 % 10.0 % 0.0 % 10.0 % 80.2 % 5.0 % 125.0 % 5.0 % 125.0 % 5.0 % 125.0 % 5.0 % 125.0 % 5.0 % 71.5 % 5.0 % 87.7 % 5.0 % 0.0 % 5.0 % 84.2 % – – – – 5.0 % 125.0 % 7.5 % 125.0 % – – – – 5.0 % 63.5 % 7.5 % 125.0 % – – – – – – 7.5 % 76.5 % – – – – – – 7.5 % 0.0 % 100.0 % 68.1 % 100.0 % 82.5 % 100.0 % 30.7 % 100.0 % 91.0 % – 71.8 % – 71.8 % – 71.8 % – 71.8 % – 48.9 % – 59.3 % – 22.0 % – 65.3 % * Measurement of performance for each of the metrics is subject to certain automatic adjustments described above in "Annual Incentive Bonus."
TABLE OF CONTENTS 54|2020 Proxy StatementImpact of COVID-19 on Fiscal 2020 Annual Incentive Bonus Payouts and Fiscal 2021 Annual Equity Grants to Named Executive Officers As explained above, the Compensation Committee measured the performance against the fiscal 2020 EAIP goals set in September 2019. As such, the September 2020 bonus payouts in cash for the NEOs reflect the impacts of COVID-19 on our business operations during fiscal 2020. Because our incentive plan payouts were disproportionately impacted by COVID-19 relative to actual employee performance, the Subcommittee decided to grant additional value to the NEOs and other executive officers in the form of additional amounts to their annual fiscal 2021 equity grants. While the additional amounts are not intended to, and will not, close the gap on bonus payouts caused by the impacts of COVID-19, the Subcommittee believes they will further align employees' and stockholders' interests on a long-term basis while driving collaboration across the enterprise and recognizing the continued resiliency and creativity of the Company's employees. In determining the additional amounts for each officer's fiscal 2021 annual equity grants, the Subcommittee considered the difference between the actual payout under the EAIP and the amount the individual would have received for fiscal 2020 (a) assuming a floor of 40% for the Business Unit Multiplier and (b) assuming a floor of 90% for the Corporate Multiplier. The final column in the table below shows this difference. As noted above, the Subcommittee believes that these actions better protect the stronger performing business units while at the same time providing a reasonable reward and incentives to the more deeply affected business units. The table below shows this approach applied to the NEOs, as applicable, approximately. Fiscal 2020
EAIP Target
Bonus
($)
Fiscal 2020
EAIP Bonus
Paid in Cash,
as calculated
($)
Fiscal 2020 EAIP
Bonus Paid in
Cash
(as % of
Target)(2)Fiscal 2020
EAIP Bonus
Assuming 40%
Business Unit
Floor and 90%
Corporate
Multiplier
(as % of Target)
Additional
Amounts Included
in Fiscal 2021
Annual Equity
Grants
($)
$ 5,000,000 $ 2,445,250 48.9% 61.3% $ 618,950 1,400,000 829,700 59.3% 74.3% 210,050 3,220,000 709,400 22.0% 36.0% 449,800 2,725,000 1,780,700 65.3% 81.9% 450,750 (1)Ms. Stanley was not impacted by the above-referenced decision regarding fiscal 2020 EAIP payouts because, as discussed below, her employment agreement provided for a minimum incentive bonus payout for fiscal 2020.(2)See additional information above in "Calculation of EAIP Payout Percentage." For more information about the potential bonus opportunities of our NEOs for fiscal 2020, see "Grants of Plan-Based Awards in Fiscal 2020.""Share“Share Incentive Plan"Plan”) to be of key importance in aligning executives with our long-term goals and rewarding them for performance. The awards also provide an incentive for continued employment with us. The Subcommittee typically makes equity-based compensation awards to our executive officers at itsa regularly scheduled meeting during the first quarter of each fiscal year. We generally grant certain executive officers a combination of PSUs, stock options, and RSUs. Since fiscal 2000, no grants of equity-based compensation have been made to Leonard A. Lauder, Chairman Emeritus, or Ronald S. Lauder, Chairman of Clinique Laboratories, LLC.outsidecompensation consultant (Semler Brossy) and certain 2020 Proxy Statement|55its outside consultant,Semler Brossy, and management take into account the level of responsibility of the particular executive officer, recent performance and expected future contributions, internal pay equity, and competitive practice. They also consider applicable employment agreements as necessary.20202023 is weighted equally among PSUs (at target), stock options, and RSUs – reflecting, in the business judgment of the Subcommittee, a balance among motivating and retaining executive officers, rewarding performance, mitigating risk, and helping executive officers increase their equity ownership to further align their interests with those of our stockholders. Such allocation may change depending upon any additional (non-annual) grants made to executive officers. No specific weightings were used to determine the amounts of the equity-based compensation. The Subcommittee applied an individual performance factorpercentage to the target equity opportunity for each executive officer. Theofficer based on performance factorsand achievement of individual goals and objectives, including the high-level themes that align with the executive’s Business Unit Strategic Goals. For fiscal 2023, the individual performance percentage for employees ranged from 100% –a minimum of 62.5% to a maximum of 125% of target. The individual performance percentages applied for the NEOs and the other executive officers for fiscal 2023 ranged from 114% to 125% of target. As with the amount of equity-based compensation granted, the allocation among the equity-based compensation elements are compared with practices of the peer group companies (see "Compensation“Compensation Planning and the Decision Making Process – Peer Group"Group” below) to ensure they are competitive and appropriate.![[MISSING IMAGE: eq_trgtperf-bw.jpg]](/files/DEF 14A/0001104659-23-104591/eq_trgtperf-bw.jpg)
PSUs are accompanied by dividend equivalents that are accrued and paid in cash after the end of the performance period. To the extent shares are paid out on a PSU award, the cash amount paid is equal to the dividends declared per share over the performance period times the number of shares paid out. The target amount of a PSU award represents the aggregate payout if the performance of all opportunities equal 100% of the related target performances. AnFor the annual PSU grants in fiscal 2023, an above-target payout can be achieved under a particular opportunity if the performance associated with such opportunity exceeds 100% of the target, up to a maximum of 150%160% of target. For the annual PSU grants in fiscal 2024, which were made in August 2023, the maximum is 160% of target. Failure to achieve the pre-established minimum threshold amount would result in no payout being made under the opportunity.expenses, and the impact on net sales of unplanned changes in foreign currency rates.expenses. Payout of PSUs is contingent on the Company achieving positive Net Earnings for the fiscal year in which the grant is made. Because the Company achieved positive Net Earnings for fiscal 2020,2023, the payout of the PSUs granted in September 20192022 is based solely on achievement of the financial measures described below in "Fiscal 2020“Fiscal 2023 Annual PSU Grants."20182021 Annual PSU Grants. The PSU targets for the three-year period ended June 30, 20202023 were based on compound annual growth rates ("CAGR"(“CAGR”) in Company-wide Net Sales and Diluted EPS, and ROIC, weighted equally. Each 1%2% increase in performance over the threshold results in a 5%10% increase in the associated payout for Net Sales and 31/3% increasesa 3% increase in the associated payoutspayout for Diluted EPS and ROIC up to the target performance levels. Each 1%0.4% increase in performance above target 56|2020 Proxy Statement35.4%, 18.1%, and 13.7%10% increases in the associated payouts for Net Sales and Diluted EPS, and ROIC, respectively.EPS. Performance above maximum results in a payout of 150%175% of target opportunity.thatwhich were paid out after the end of fiscal 2020 (specifically, in September 2020)late August 2023 (fiscal 2024), the aggregate payout of the threetwo measures, weighted equally, was 109.9%32.6%.
2021
through
Fiscal
2023
Target Threshold Target Maximum
Performance(2) % of
Target Payout
(% of
Oppty) % of
Target Payout
(% of
Oppty) % of
Target Payout
(% of
Oppty) % of
Target Payout
(% of
Oppty) Net Sales (CAGR)(1) 6.0% – 8.0% 90.0% 50.0% 100.0% 100.0% 111.5% 175.0% 87.4% 65.3% Diluted EPS (CAGR) 8.5% – 10.4% 85.0% 50.0% 100.0% 100.0% 127.6% 175.0% 62.1% 0.0% Aggregate Payout 32.6% Fiscal
2018
throughThreshold Target Maximum Actual
Performance(2) Fiscal
2020
Target% of
TargetPayout
(% of
Oppty)% of
TargetPayout
(% of
Oppty)% of
TargetPayout
(% of
Oppty)% of
TargetPayout
(% of
Oppty) 7.0 % 90.0 % 50.0 % 100.0 % 100.0 % 101.4 % 150.0 % 98.5 % 92.6 % 9.7 % 85.0 % 50.0 % 100.0 % 100.0 % 102.8 % 150.0 % 96.1 % 87.1 % (4.6 )% 85.0 % 50.0 % 100.0 % 100.0 % 103.7 % 150.0 % 114.6 % 150.0 % 109.9 %
(1)(1)20182021 grants (which reflect the impact, where appropriate, of tax, currency and non-controlling interest), these include charges associated with restructuring and other activities related to the Company'sCompany’s Leading Beauty Forward and Post COVID Business Acceleration initiatives, changesother intangible asset impairments, the change in fair value of contingent consideration, goodwill, other intangible, and long-lived asset impairments,acquisition-related stock options, incremental gain on previously held equity method investment, incremental net loss associated with the acquisition of Dr. Jart+DECIEM offset by incremental losses associated with the acquisitions of TOM FORD and the BALMAIN licensing agreement.the impact of the adoption of the new revenue recognition accounting standard (ASC 606). Fiscal 2020 PSU Grants. The targets for the PSU opportunities and corresponding payouts for PSUs granted in fiscal 2020 for the three-year period ending June 30, 2022 are based on CAGR in Company-wide Net Sales, Diluted EPS, and ROIC weighted equally, as follows: Fiscal
2020
throughThreshold(2) Target Maximum Fiscal 2022 Target % of Target Payout (% of Oppty) % of Target Payout (% of Oppty) % of Target Payout (% of Oppty) 7.2 % 90.0 % 50.0 % 100.0 % 100.0 % 102.5 % 150.0 % 9.6 % 85.0 % 50.0 % 100.0 % 100.0 % 103.9 % 150.0 % 0.0 % 85.0 % 50.0 % 100.0 % 100.0 % 101.9 % 150.0 % (1)Net Sales are calculated(weighted at budgeted exchange rates at the time the target was set.20%). Measurement of performance for each of the metrics is subject to certain automatic adjustments described above in "Performance“Performance Share Units."
2023
through
Fiscal
2025
Target Target Maximum % of
Target Payout
(% of
Oppty) % of
Target Payout
(% of
Oppty) % of
Target Payout
(% of
Oppty) Net Sales (CAGR)(1) 7.0% – 7.7% 84.9% 50.0% 98.2% – 100.0% 100.0% 111.2% 160.0% Diluted EPS (CAGR) 8.3% – 9.0% 81.4% 50.0% 98.1% – 100.0% 100.0% 117.5% 160.0% ROIC (CAGR) (10.8)% – (10.1)% 85.2% 50.0% 97.9% – 100.0% 100.0% 115.0% 160.0% For fiscal 2021 PSU design changes, see "Impact of COVID-19 on Compensation Matters." 2020 Proxy Statement|57PSUPSUs and other Performance-Based Long-Term Equity Grants. From time to time, the Subcommittee makes grants of additional PSUs and other performance-based long-term awards to certain executive officers to incentivize and retain them for extended periods of time. Such PSUs generally vest in their entirety after an extended vesting period, subject to achievement of certain Company-wide performance criteria during the performance period, and are forfeited if the executive officer retires before the vesting date. In fiscal 2023, no additional (non-annual) PSUs were granted to executive officers. For example, for information relating to the additional PSUs granted to Mr. Freda in fiscal 2018 and in fiscal 2016, see "Additional (non-annual) PSU Grants to CEO in Fiscal 2018 and Fiscal 2016" below and "Outstanding Equity Awards at June 30, 2020." We believe that stock options are performance-based because the exercise price is equal to the closing price of the underlying Class A Common Stock on the date the option is granted. Under our Share Incentive Plan, the exercise price of options cannot be lower than suchthe closing price.price of our Class A Common Stock on the date the option is granted. Despite the value attributed on the date of option grant for accounting purposes, value is realized by the executive officer only to the extent that the stock price exceeds the exercise price during the period in which the executive officer is entitled to exercise the options and the officer exercises them. Options granted to our executive officers generally become exercisable in three equal installments approximately 16 months, 28 months, and 40 months after the date of grant, and expire ten years from the grant date.cash;cash at the time an RSU vests, thevests. The cash amount paid to the executive officer is equal to the dividends declared per share between the grant date and the vesting date multiplied by the number of shares paid out. RSUs do not have any voting rights with respect to the underlying shares of Class A Common Stock. RSUs granted to our executive officers generally vest in three equal installments approximately 14 months, 26 months, and 38 months from the date of grant. makes grants of additional (non-annual) RSUs to executive officers. Such RSUs generally vest in their entirety after an extended vesting period and are forfeited if the executive officer retires before the vesting date. On September 3, 2019February 27, 2023 (fiscal 2020)2023), the Subcommittee granted Tracey T. Travis, Executive VicePeter Jueptner, Group President, and Chief Financial Officer,International, an additional (non-annual) RSU award for 10,02610,325 shares, valued at $2.0$2.5 million on the date of grant. This award vests 100% on November 1, 2022February 27, 2026 assuming Ms. Travis'shis continued employment through such date. TheThis award is intended to recognizefurther align Mr. Jueptner’s interests with those of our stockholders and motivate his continued stewardship and progression of our business over the expanded responsibilities that Ms. Travis has assumed in connection with certain strategic initiatives and to provide additional incentive for her to remain in her role for the duration of the award.2020.2023. As noted above, target award levels and actual grants of equity made to executive officers are determined by taking into account many factors, including an assessment of recent performance and expected future contributions. For the Executive Chairman and the CEO, this determination is made by the Subcommittee; for the remaining executive officers, a recommendation is made by the executive officer'sofficer’s immediate manager, and the actual grant is approved by the Subcommittee. Fiscal 2020 annual equity grants were awarded in September 2019; the resultingThe equity grant percentages awarded to our NEOs as applicable, in fiscal 2020 were based on target grant levels and an assessment of each officer'sofficer’s performance and expected future contributions. Fiscal 2023 annual equity grants were awarded in September 2022. See "Grantsalso “Grants of Plan-Based Awards in Fiscal 2020"2023” and "Summary“Summary Compensation Table." ![[MISSING IMAGE: tb_period-4c.jpg]](/files/DEF 14A/0001104659-23-104591/tb_period-4c.jpg)
Service Period Performance Period Share Payment Date First Tranche
(129,282 shares) July 1, 2015 – June 30, 2018 July 1, 2015 – June 30, 2018 Second Tranche
(129,283 shares) July 1, 2015 – June 30, 2019 July 1, 2016 – June 30, 2019 Third Tranche
(129,283 shares) July 1, 2015 – June 30, 2020 July 1, 2017 – June 30, 2020 Service Period Performance Period
Payment Date* First Tranche
(97,970 shares) January 1, 2018 – June 30, 2021 July 1, 2018 – June 30, 2021 September 3, 2024 Second Tranche
(97,970 shares) January 1, 2018 – June 30, 2022 July 1, 2018 – June 30, 2022 September 3, 2024 extendedcontinued to extend his track record of outstanding leadership as our Chief Executive Officer. The depth and breadth of his experience as a steward of our Company for over ten years, along with the impressive performance by the entire management team, were critical in driving our performance in response to COVID-19 and to the resiliency demonstrated by our business during these unprecedented challenges. Since becoming President and Chief Executive Officer in July 2009, Mr. Freda has led the development and implementation of our long-term strategy. Between that 58|2020 Proxy Statementtime and June 30, 2020, (i) we have achieved TSR of 1,214% (the TSRIn view of the S&P 500 Index was 324%);long-term performance by the Company and (ii) our market capitalization has increased from $6 billion to $68 billion. Fiscal 2020 Compensation. In September 2019, in recognition ofby Mr. Freda's leadership and expected future contributions,Freda, the Company’s long-term strategy, as well as our strong multi-year performance, the Committeechallenges facing the Company as it was recovering from the initial impacts of the COVID-19 pandemic, the Board and the Stock Plan Subcommittee increased(the “Subcommittee”) determined to extend Mr. Freda's annual equity targetFreda’s arrangements with the Company to $10.5 million (from $9.15 million); his annual base salary remainedincentivize him to continue to serve as President and Chief Executive Officer through at $2.0 million, and his target bonus opportunity remained at $5.0 million. The change in Mr. Freda's annual equity target for fiscal 2020 represented an increase of 8.4% for total direct annual compensation, and his total target compensation for fiscal 2020 was $17.5 million. As noted above, Mr. Freda's base salary for the last two months of fiscal 2020 (i.e., May and June) was reduced by 50% as part of the Company's initiatives to enhance financial flexibility and liquidity in light of COVID-19. CEO Compensation on Annualized Basis. Mr. Freda's total compensation, as disclosed in the Summary Compensation Table, shows significant fluctuations year-over-year due to the value and timing of additional (non-annual) equity awards he has received in the past in addition to his annual equity grants. These fluctuations are attributable to applicable disclosure rules that require we report the total value of equity grants on the grant date rather than over the life of the award. When the additional (non-annual) equity awards were granted, the Subcommittee considered the impact of those awards on an annualized basis. The table below reflects the amounts shown for Mr. Freda for each year in the "Stock Awards" column in the Summary Compensation Table adjusted to (a) deduct the aggregate grant date fair value of the February 2018 PSU ($27.4 million) from fiscal 2018 and (b) instead include the amounts relating to that award and other non-annual awards that were expensed for accounting purposes in each fiscal year shown in the Summary Compensation Table, including the amounts expensed for such awards granted prior to fiscal 2018 as disclosed in previous proxy statements. As adjusted, the amounts shown for Mr. Freda for "Stock Awards" and "Total" in the Summary Compensation Table would be as follows: Stock Awards ($000s) Total ($000s) Annualized
Stock AwardsGrant Date Fair
Value as Reported
in Summary
Compensation
TableIncluding
Annualized
Stock AwardsAs Reported
in Summary
Compensation
Table $ 17,931 $ 8,750 $ 27,605 $ 18,424 19,414 7,625 33,225 21,435 19,162 35,371 32,545 48,754 Fiscal 2021 Compensation Decisions for the CEO. For fiscal 2021, Mr. Freda's annual base salary is expected to be $1.67 million, reflecting the adjustment for the above-referenced base salary reduction for the first four months of fiscal 2021. Without this adjustment, his fiscal 2021 annual base salary would be $2.0 million. His target incentive bonus opportunity remains at $5.0 million, and his target equity opportunity was increased to $11.13 million (from $10.5 million). In setting Mr. Freda's compensation for fiscal 2021, the Committee and Subcommittee considered additional equity awards that were made to him in prior years. In September 2020 (fiscal 2021), we granted Mr. Freda equity-based compensation with an aggregate value of approximately $15.64 million, comprised of PSUs with a target payout of 23,914 shares of Class A Common Stock, stock options for 89,746 shares of Class A Common Stock with an exercise price of $218.06 per share, and RSUs for 23,914 shares of Class A Common Stock. These grants reflect (i) the application of an individual performance factor to the target equity opportunity approved for fiscal 2021, and (ii) value in the form of additional amounts included in these annual fiscal 2021 equity grants (see "Impact of COVID-19 on Fiscal 2020 Annual Incentive Bonus Payouts and Fiscal 2021 Annual Equity Grants to Named Executive Officers"). These equity awards will appear in our "Summary Compensation Table" and "Grants of Plan-Based Awards" for fiscal 2021. 2020 Proxy Statement|59Additional (non-annual) PSU Grants to CEO in Fiscal 2018 and Fiscal 2016 Additional PSU Grant in February 2018 (fiscal 2018). On February 14, 2018, the Subcommittee, with input from members of the Board of Directors, granted a PSU award (the "February 2018 PSU") to Mr. Freda to further align his interests with those of our stockholders and motivate his continued stewardship of the Company's brands, talent base, and reputation over the longer term. The shares of Class A Common Stock subject to this award are not intended to be delivered fully to Mr. Freda until after the end of fiscal 2024, which reflects the Company's desire to further align his interests with those of our stockholders over that extended period of time. The award covers an aggregate of 195,940 shares divided in two equal tranches (i.e. 97,970 shares per tranche) and was valued at approximately $27.4 million on the date of grant. The service periods, performance periods, and share payment dates for the February 2018 PSU are as follows:Service PeriodPerformance PeriodSharePayment Date(1)First Tranche(97,970 shares)January 1, 2018 – June 30, 2021July 1, 2018 – June 30, 2021September 3, 2024Second Tranche(97,970 shares)January 1, 2018 – June 30, 2022July 1, 2018 – June 30, 2022September 3, 2024(1)Payment, if any, and the timing of payment are subject to achievement of the performance goal and other terms and conditions described below.the February 2018 PSU grant,these grants, the Subcommittee considered the input from its compensation consultant (Semler Brossy) and other Board members, as well as the feedback and concerns received from some institutional investors following the September 2015prior differentiated long-term awardawards to Mr. Freda. Ultimately, the Subcommittee determined that the February 2018 grant wasthese grants were appropriate and consistent with the Company'sour long-term business and compensation strategy, providing an incentive for sustainable and effective stewardship of the Company'sour business, brands, talent base, and reputation over an extended period of time.goalgoals for this award,these awards, the Subcommittee determined that any absolute or relative operational goals would become meaningless or counterproductive in light of a rapidly evolving competitive environment.environment, but that direct alignment with stockholders with price goals would be an important element of the new design. Together, the PVUs, which vest based on stock price growth conditions (as discussed below), and the PSUs are intended to motivate continued outperformance versus the broader market and stewardship of the Company’s long-term strategy and growth in a sustainable way. The performance goal (positivepositive Cumulative Operating Income as discussed below)goal in each award is intended to prevent thisthe award from vesting if our performance were to suffer a substantial reversal during the vesting period and is accompanied by carefully considered payout restrictions around termination scenarios as described below.February 2018 PSU coversPVUs are a new element of award design that further aligns Mr. Freda with stockholders, as he will not earn the shares subject to the PVUs unless the Company achieves the share price hurdles during the multi-year performance period. The Subcommittee believes this was an important addition to the mix of awards to ensure and underscore stockholder alignment.six-and-a-halffour-and-a-half years in total, and involves two separate tranches that vest after three-and-a-half and four-and-a-half years based on Mr. Freda's continued employment and achievementa longer period than typical in many executive compensation programs. A key element of the performance goal described above.design is that, as a general matter, goalgoals for aan award (or tranche isthereof) are achieved, the shares of common stockClass A Common Stock underlying such award (or tranche thereof) would be paid outdelivered to Mr. Freda in September 2024, a period2025, provided the Cumulative Operating Income goal is met as of time that is much longer than typical grants.June 30, 2025. The delayed distribution feature is a key component of the award, intended to ensure that Mr. Freda is further incentivized to drive sustainable, long-term performance. By separating the service period of the award vesting from the delivery of the underlying common stock,Class A Common Stock, we continue to tie a portion of Mr. Freda'sFreda’s wealth to share value and performance over an extended time horizon (i.e. six-and-a-halffour-and-a-half years, through the delivery in September 2024)2025).Company notesPVU award covers an aggregate of 85,927 shares divided into three tranches each with its own stock price goal that between February 14, 2018 (themust be achieved on or before June 30, 2024, and all three tranches are subject to the Cumulative Operating Income goal that is measured from July 1, 2021 through June 30, 2025 as described below. The goals were determined by applying cumulative annual growth rates of 6%, 7% and 8% to the average closing price of the Class A Common Stock for the 60 trading days prior to the grant. The aggregate grant date fair value of the February 2018 PSU)award (i.e. all three tranches) is approximately $20 million, estimated using the Monte Carlo Method that includes assumptions relating to share price volatility, dividend yield and June 30, 2020, (i) we haverisk-free interest rate. Number
of
Shares
per
Tranche Stock
Price
Goal
(per
share) Service Period Performance Period
for Stock Price
Goal Performance Period
for Cumulative
Operating Income
Goal
Delivery Date(4) First Tranche 27,457 $ 323.03(1) March 11, 2021 –
June 30, 2024 March 11, 2021 –
June 30, 2024 July 1, 2021 –
June 30, 2025 September 2, 2025 Second Tranche 28,598 $ 333.21(2) March 11, 2021 –
June 30, 2024 March 11, 2021 –
June 30, 2024 July 1, 2021 –
June 30, 2025 September 2, 2025 Third Tranche 29,872 $ 343.61(3) March 11, 2021 –
June 30, 2024 March 11, 2021 –
June 30, 2024 July 1, 2021 –
June 30, 2025 September 2, 2025 TSRas of 38% (the TSRJuly 29, 2021.S&P 500 Index was 20%);shares is subject to achievement of the Cumulative Operating Income goal and (ii) our market capitalization increased from approximately $51 billionother terms and conditions described below. Dividend equivalents will be paid out in cash in connection with the delivery of any shares.$68 billion.awarddelayed payout provides continued alignment with stockholders.during the relevant Performance Period.from July 1, 2021 through June 30, 2025. For purposes of thisthe PVU award, "Cumulative “Cumulative Income"Income” means the sum of the operating income 60|2020 Proxy Statementset forthincluding: changes in accounting principles; impairment of intangibles; impact of discontinued operations; non-recurring and non-operating income and expenses; and the award agreement.Freda'sFreda’s employment is terminated for cause as(as defined in the February 2018 PSU award agreement,PVU Agreement) prior to the delivery of the shares associated with any tranche, regardless of whether that tranche has been otherwise earned or vested, the PVU award will be forfeited and he will receive no shares. If (a) Mr. Freda is no longer employed by us for any reason, (b) payment ofthe shares subject to a tranche hashave not previously been made,delivered, and (c) it is determined that his behavior while he was employed would have constituted cause, then each tranche not previously paid will be forfeited, regardless of whether such tranche has been otherwise earned and vested. In addition, payoutsdelivery of the shares under the PVU award after termination of Mr. Freda'sFreda’s employment are subject to Mr. Freda not (x) competing with the Company duringor (y) conducting himself in a manner adversely affecting the Company, in each case for the lesser of (i) the remaining term of his PVU award or (ii) a period of 24 months nor (y) conducting himself in a manner adversely affecting the Company.following such termination. If heMr. Freda voluntarily resigns or retires prior to July 1, 2024, the end of the Service Period, any unearned, unvested tranchesPVU award will be forfeited. If Mr. Freda'sFreda’s employment is terminated without cause, or he voluntarily resigns or retires on or after July 1, 2024, then for each Performance Period that has not yet concluded and subject to actual achievement of the performance goal for such tranche, he will earn and vest in each tranche of the pro rata portionPVU award subject to achievement of the Stock Price Goals and Cumulative Operating Income goal applicable to such tranche inclusive of credit for an additional 12 months of service (up to a maximum of 100%through the end of the Service Period for that tranche). However, instead of a pro rata portion, Mr. Freda would earn and vest fully in such tranche ifperformance period applicable to the Company also has achieved Company-wide performance criteria (currently known as the "corporate multiplier") under the Company's Executive Annual Incentive Plan of at least 90% for each of the Company's two fiscal years preceding the year of Mr. Freda's termination, as determined by the Compensation Committee.Stock Price Goals. If Mr. Freda dies or becomes disabled, then the Cumulative Operating Income goal will be deemed met and for each Performance Period that has not yet concluded, he will earn and vest in a pro rata portion ofeach tranche only to the extent the Stock Price Goal for such tranche was met on or prior to the earlier of (i) the one-year anniversary of the date of death or termination by reason of disability and (ii) June 30, 2024, and the share paymentdelivery of shares, if any, would be made shortly thereafter.performance goalStock Price Goal for a tranche has been met prior to the Change of Control, then the PVU award will vest and the shares will be deemed to be met, and the award will be paiddelivered on the earliest of(i) the original paymentdelivery date or (ii) shortly after a qualifying "double trigger"“double trigger” termination of employment, or aif applicable.determined byfair value of the Subcommittee in accordance withPSU award is approximately $20 million, based on the Share Incentive Plan.closing price of our Class A Common Stock on the date of grant. The structure of this PSU award is similar to the long-term (non-annual) PSU grants to Mr. Freda on September 4, 2015 and February 14, 2018. Service Period Performance Period Share
Delivery Date* March 11, 2021 – June 30, 2024 July 1, 2021 – June 30, 2025 September 2, 2025 shares that are earned. Additionalthe delivery of any shares.Grant in September 2015 (fiscal 2016). The size and structure of the February 2018 PSU described above, as well as the reasons for the grant, are similar to the differentiated long-term grant to Mr. Freda on September 4, 2015 (the "September 2015 PSU"), which is discussed below. The September 2015 PSU award reflected the Company's strong performance, the importance of ensuring the sustainability of the Company's performance and its longer term success, and the desire to retain Mr. Freda and further align his interests with the interests of our stockholders. The Subcommittee also wanted to recognize and provide an incentive for sustainable and effective stewardship of the Company's brands, talent base, and reputation over that extended period of time. The final performance period for the September 2015 grant ended on June 30, 2020, and the share payment date is June 30, 2023. The timing dovetails with the performance periods for the February 2018 PSU that end on June 30, 2021 and June 30, 2022, each with a payment date of September 3, 2024. The Company notes that between September 4, 2015 (the grant date of the September 2015 PSU) and June 30, 2020, (i) we have achieved TSR of 158% (the TSR of the S&P 500 Index was 78%); and (ii) our market capitalization increased from $29 billion to $68 billion. The September 2015 PSU is a long-term equity award that is designed to not be delivered fully to Mr. Freda until the end of fiscal 2023. This PSU grant has a target payout of 387,848 shares and was valued at $30 million on the date of grant. The award is designed to be earned in tranches at the end of certain fiscal years with no shares being delivered to Mr. Freda until the end of subsequent fiscal years as reflected below. 2020 Proxy Statement|61 The September 2015 PSU is divided into three tranches with service periods, performance periods, and payment dates, if any, as follows:Service PeriodPerformance PeriodShare Payment Date(1)First Tranche(129,282 shares)July 1, 2015 – June 30, 2018July 1, 2015 – June 30, 2018June 30, 2021Second Tranche(129,283 shares)July 1, 2015 – June 30, 2019July 1, 2016 – June 30, 2019June 30, 2022 Third Tranche(129,283 shares)July 1, 2015 – June 30, 2020July 1, 2017 – June 30, 2020June 30, 2023(1)Payment, if any, and the timing of payment are subject to conditions described below. This awardAgreement generally provides that the vesting of each of the three tranches wasPSU award is contingent on the Company achieving (i) positive Cumulative Operating Income during the relevant Performance Periods as well as (ii) positive Net Earnings, as defined in the agreement, for the fiscal year ended June 30, 2016. As of June 30, 2020, the Company has achieved positive Cumulative Operating Income during each of the three Performance Periods. In addition, the Company achieved positive Net Earnings for the fiscal year ended June 30, 2016. Therefore, subject to the terms and conditions of the September 2015 PSU award agreement described below, Mr. Freda will receive payout of the First Tranche, Second Tranche, and Third Tranche on the Share Payment Dates noted above."Cumulative“Cumulative Operating Income" meansIncome” has the sum of the operating income for each fiscal year in such Performance Period, subject to certain automatic adjustments including changes in accounting principles; impairment of intangibles; the impact of discontinued operations; non-recurring operating income and expenses; and the impact of unplanned acquisitions. Dividend equivalents will be paid out in cash in connection with shares that are earned under this award. As set forthsame meaning as in the September 2015 PSU award agreement, ifPVU Agreement.Freda'sFreda’s employment is terminated for cause (as defined in the PSU Agreement) prior to the delivery of the shares associated with any tranche,subject to the PSU award, regardless of whether that tranchethe PSU award has been (a) no longer employed by us for any reason, (b) payment of a tranche hasthe shares subject to the PSU award have not previously been made,delivered, and (c) it is determined that his behavior while he was employed would have constituted cause, then each tranche not previously paidthe PSU award will be forfeited, regardless of whether such trancheit has been otherwise earned and vested. In addition, payoutsdelivery of the shares under the PSU award after termination of Mr. Freda'sFreda’s employment are subject to Mr. Freda not (x) competing with the Company, nor (y) conducting himself in a manner adversely affecting the Company, in each case for the lesser of (i) the remaining term of his award or (ii) for a period of 24 months consistent with hisfollowing such termination.agreement, nor (y) conducting himselfis terminated without cause prior to July 1, 2024, then, subject to actual achievement of the Cumulative Operating Income goal, he will vest in a manner adversely affectingpro rata portion of the Company. Dividend equivalentsPSU award based on complete months worked during the service period plus up to an additional 12 months of service. However, Mr. Freda would fully vest in the PSU award instead of vesting in a pro rata portion if the Company also has achieved Company-wide performance criteria (currently known as the “corporate multiplier”) under the Company’s Executive Annual Incentive Plan of at least 90% on average for each of the Company’s three fiscal years preceding the year of Mr. Freda’s termination, as determined by the Compensation Committee. If Mr. Freda’s employment is terminated without cause on or after July 1, 2024, the PSU award will fully vest if the Cumulative Operating Income goal is achieved as of June 30, 2025. If Mr. Freda dies or becomes disabled prior to July 1, 2024, the Cumulative Operating Income goal will be paid outdeemed met and he will earn and vest in casha pro rata portion of the PSU award based on complete months worked during the service period plus up to an additional 12 months of service, and the shares would be delivered shortly thereafter. If Mr. Freda dies or becomes disabled on or after July 1, 2024, the Cumulative Operating Income goal will be deemed met and he will earn and vest in connection with100% of the PSU award, and the shares that are earned.Other NEOsVice President and Chief Financial Officer.Chairman. For fiscal 2021, Ms. Travis's2024, Mr. Lauder’s annual base salary is expected to be $990,000, reflecting the adjustment for the above-referenced base salary reduction for the first four months of fiscal 2021. Without this adjustment, her fiscal 2021 annual base salary would be $1.1 million. Herremains at $1.58 million, his target incentive bonus opportunity remains at $1.4$3.54 million, and herhis target equity opportunity was increased to $4.24 million (from $4.0 million).remains at $2.9 million. In September 2020August 2023 (fiscal 2021)2024), we granted Ms. TravisMr. Lauder equity-based compensation with an aggregate value of approximately $5.93$2.61 million, comprised of PSUs with a target payout of 9,0715,563 shares of Class A Common Stock, stock options for 34,04016,109 shares of Class A Common Stock with an exercise price of $218.06$156.39 per share, and RSUs for 9,071 shares of Class A Common Stock. These grants reflect (i) the application of an individual performance factor to the target equity opportunity approved for fiscal 2021, and (ii) value in the form of additional amounts included in these annual fiscal 2021 equity grants (see "Impact of COVID-19 on Fiscal 2020 Annual Incentive Bonus Payouts and Fiscal 2021 Annual Equity Grants to Named Executive Officers"). 62|2020 Proxy Statement John Demsey, Executive Group President. For fiscal 2021, Mr. Demsey's compensation is unchanged from fiscal 2020. His annual base salary is expected to be $1.06 million, reflecting the adjustment for the above-referenced salary reduction for the first four months of fiscal 2021. Without this adjustment, his fiscal 2021 annual base salary would be $1.18 million. His target incentive bonus opportunity remains at $3.22 million, and his target equity opportunity remains at $4.8 million. In September 2020 (fiscal 2021), we granted Mr. Demsey equity-based compensation with an aggregate value of approximately $5.24 million, comprised of PSUs with a target payout of 8,018 shares of Class A Common Stock, stock options for 30,081 shares of Class A Common Stock with an exercise price of $218.06 per share, and RSUs for 8,018 shares of Class A Common Stock. These grants reflect (i) the application of an individual performance factor to the target equity opportunity approved for fiscal 2021, and (ii) value in the form of additional amounts included in these annual fiscal 2021 equity grants (see "Impact of COVID-19 on Fiscal 2020 Annual Incentive Bonus Payouts and Fiscal 2021 Annual Equity Grants to Named Executive Officers"). Cedric Prouvé, Group President—International. For fiscal 2021, Mr. Prouvé's annual base salary is expected to be $1.04 million, reflecting the adjustment for the above-referenced salary reduction for the first four months of fiscal 2021. Without this adjustment, his fiscal 2021 annual base salary would be $1.16 million. His target incentive bonus opportunity remains at $2.73 million, and his target equity opportunity was increased to $4.52 million. In September 2020 (fiscal 2021), we granted Mr. Prouvé equity-based compensation with an aggregate value of approximately $5.70 million, comprised of PSUs with a target payout of 8,711 shares of Class A Common Stock, stock options for 32,690 shares of Class A Common Stock with an exercise price of $218.06 per share, and RSUs for 8,711 shares of Class A Common Stock. These grants reflect (i) the application of an individual performance factor to the target equity opportunity approved for fiscal 2021, and (ii) value in the form of additional amounts included in these annual fiscal 2021 equity grants (see "Impact of COVID-19 on Fiscal 2020 Annual Incentive Bonus Payouts and Fiscal 2021 Annual Equity Grants to Named Executive Officers"). Deirdre Stanley, Executive Vice President and General Counsel. Ms. Stanley joined us in October 2019 (fiscal 2020), and she is a Named Executive Officer for fiscal 2020. Her employment agreement provides for an initial annual base salary of $875,000, a minimum incentive bonus payout of $1.2 million for fiscal 2020, and equity grants valued at $1.7 million for fiscal 2020 (see "Grants of Plan-Based Awards in Fiscal 2020" for additional information on these equity grants). As noted above, Ms. Stanley's base salary for May through October 2020 was reduced by 30% as part of the Company's initiatives to reduce costs and enhance financial flexibility and liquidity in light of COVID-19; she agreed to an amendment to her employment agreement to effect this temporary salary reduction. Pursuant to her employment agreement, Ms. Stanley received the following to compensate her for bonus amounts and equity awards forfeited at her prior employer: (a) a cash bonus of $1.5 million in January 2020 (fiscal 2020) and (b) two non-annual RSU grants with an aggregate value of $5.0 million. The first non-annual RSU award was granted in October 2019 (fiscal 2020) with an aggregate value of approximately $2.5 million, equal to 13,462 shares of Class A Common Stock; and the second was granted in September 2020 (fiscal 2021) with an aggregate value of approximately $2.5 million, equal to 11,465 shares of Class A Common Stock. Both of these non-annual RSU grants vest at the same time as the annual RSU grants to the other NEOs in such fiscal year, based on continued employment. For fiscal 2021, Ms. Stanley's annual base salary is expected to be $787,500, reflecting the adjustment for the above-referenced salary reduction for the first four months of fiscal 2021. Without this adjustment, her fiscal 2021 annual base salary would be $875,000. Her target incentive bonus opportunity remains at $1.2 million, and her target equity opportunity was increased to $1.47 million (from $1.43 million). In September 2020 (fiscal 2021), we granted Ms. Stanley annual equity-based compensation with an aggregate value of approximately $1.71 million, comprised of PSUs with a target payout of 2,607 shares of Class A Common Stock, stock options for 9,779 shares of Class A Common Stock with an exercise price of $218.06 per share, and annual RSUs for 2,607 2020 Proxy Statement|63factorpercentage to the target equity opportunity approved for fiscal 2021. The2020, which is the same peer group used for fiscal 2019, is set forth below:•Avon Products •Capri Holdings •Clorox • Colgate-Palmolive •Coty •The Gap • International Flavors & Fragrances • Johnson & Johnson • Kimberly-Clark•L Brands • PepsiCo • Procter & Gamble •PVH Corp. •Ralph Lauren •Revlon • Starbucks • Tapestry • Tiffany & Co.59th64th percentile relative to thethis peer group, using each company'scompany’s most recently completed fiscal year ended on or prior to June 30, 2020. For assessing fiscal 2021 compensation levels, the2023. asfor compensation in fiscal 2020,2024, except that Avon Products will be removed from our peer group due to its recent acquisition by a third party. Consulting Group ("Semler Brossy") as its consultant for executive compensation. The Committee determined that Semler Brossy is free of conflicts of interest. The consultantSemler Brossy reports directly to the Committee and works with the Committee (and the Subcommittee) and management to, among other things, provide advice regarding compensation structures in general and competitive compensation data. The consultantSemler Brossy also reviews information prepared by management for the Committee or Subcommittee. All of the decisions with respect to determining the amount or form of executive compensation under our executive compensation programs are made by the Committee or Subcommittee alone and may reflect factors and considerations other than the information and advice provided by the consultant.Semler Brossy. As noted in "Director“Director Compensation,"” Semler Brossy provides advice and guidance to the Nominating and GovernanceESG Committee regarding non-employee director compensation. No other services were provided by Semler Brossy to the Committee, Subcommittee, or the Company in fiscal 2020. —– Global Human Resources (the "EVP HR"“EVP HR”) to provide information regarding the executive officers, their roles and responsibilities, and the general performance of the Company and the various business units. These three executive officers providing support take directions from and bring suggestions to the Committee and Subcommittee. They suggest performance measures and targets for each of the executive officers under the EAIP and for PSUs. They also make suggestions regarding terms of employment agreements. The final decisions regarding salaries, bonuses (including measures, targets, and 64|2020 Proxy StatementThe NEOs are entitled to the following two Company-paid benefits that are not generally available to the employee population: (a)Each NEO receives supplemental executive life insurance with a face amount of $5 million ($10 million for Mr. Freda) and (b) for the NEOs who were employees prior to January 1, 2011 (i.e.. In addition, Mr. Freda, Mr. Demsey, and Mr. Prouvé),Lauder receives payment in lieu of a medical reimbursement program that was discontinued as of such date.discontinued. Such life insurance and medical reimbursement program are not generally available to the employee population. For costs associated with such programs, see note (8)(10) to the "Summary“Summary Compensation Table."; and, in the case of the CEO and the Executive Chairman, use of the Company’s aircraft for personal travel in the interests of safety and security; (c) financial counseling costs up to $5,000 per year (other than Leonard A. Lauder and Ronald S. Lauder, who do not receive a financial counseling allowance); and (d) spousal or companion travel (with required approval, the executive'sexecutive’s spouse, companion, or domestic partner may accompany the executive on up to two business trips per fiscal year). On occasion, we will provide expense reimbursements relating to relocations. In addition, we make available to our employees, including the NEOs, the ability to obtain a limited amount of our products for free or at a discount."RGA Plan"“RGA Plan”), the related The Estee Lauder Inc. Benefits Restoration Plan (the "Restoration Plan"“Restoration Plan”), and The Estee Lauder Companies 401(k) Savings Plan. Executive officers who have worked for our subsidiaries outside the United States may also be covered under plans covering such employees. As with other benefits, the retirement plans are intended to enable us to attract and retain employees. The plans provide employees, including executive officers, with an opportunity to plan for future financial needs during retirement. For a more detailed discussion on the retirement plans, see "Pension“Pension Benefits."” In addition, certain executive officers who joined us mid-career, or who forfeited certain retirement benefits from their former employers to join us, have been provided with nonqualified supplemental pension arrangements. officer'sofficer’s incentive bonus compensation, subject to the requirements of Section 409A of the Internal Revenue Code ("(“Section 409A"409A”). The ability to defer is provided to participating executive officers as a way to assist them in saving for future financial needs with relatively little cost to us. The amounts deferred are a general obligation of ours, and the cash that is not paid currently may be used by us for our general corporate purposes. None of the NEOs for fiscal 2020 has any nonqualifiedFor information about deferred compensation, agreements or account balances. 2020 Proxy Statement|65"Potential“Potential Payments upon Termination of Employment or Change of Control,"” the NEOs'NEOs’ employment agreements (as well as agreements related to equity compensation awards) provide for certain payments and other benefits in the event the officer'sofficer’s employment is terminated under certain circumstances, such as retirement, disability, death, termination by us without cause, termination by us for material breach of the officer'sofficer’s employment arrangement, or termination by the executive officer for "good reason"“good reason” following a "change“change of control."family'sfamily’s ownership of shares with substantial voting power, they have the ability to determine whether our Company will undergo a "change“change of control."” In order to protect the interests of the executive officers and to keep them involved and motivated during any process that may result in a "change“change of control,"” outstanding annual PSUs contain provisions that accelerate vesting upon a "change“change in control."” Unvested RSUs, stock options, and other (non-annual) long-term equity awards including PSUs (i.e.and PVUs (e.g., the PSU and PVU granted to Mr. Freda on February 14, 2018March 11, 2021 and the PSU granted to Mr. Fredahim on September 4, 2015 for 387,848 shares)February 14, 2018) contain provisions that provide for accelerated vesting, exercisability, or exercisabilitypayment after a "change“change of control"control” only if we terminate the executive officer'sofficer’s employment without cause or the executive officer terminates employment for "good“good reason."” The executive employment agreements similarly provide such a "double trigger"“double trigger” for other severance benefits. and annual RSUs granted to executive officers who are retirement-eligible contain provisions that allow them to continue to participate in the longer-term success of the business following retirement. For example,Specifically, to the extent the performance is achieved, a retiree'sretiree’s annual PSUs will vest in accordance with the original vesting schedule. Similarly, a retiree’s annual RSUs will vest in accordance with the original vesting schedule. In addition, stock options become immediately exercisable upon retirement and are exercisable for the remainder of their ten-year terms."covered employees"“covered employees” under Section 162(m) of the Internal Revenue Code ("(“Section 162(m)"”). Prior to the TCJA,Tax Cuts and Jobs Act (the “TCJA”), performance-based compensation meeting specified requirements was exempt from this deduction limit. As a result of the TCJA, however, effective for the Company in fiscal 2019, compensation in excess of $1 million paid to our "covered employees"“covered employees” under Section 162(m) is generally not tax deductible, even if such compensation is performance-based or paid following termination of employment. Under the TCJA, once an executive officer becomes a "covered“covered employee,"” that individual will remain a "covered employee"“covered employee” for all subsequent years. The TCJA includes a transition rule under which compensation that would have been exempt from the deduction limitation prior to TCJA that is payable pursuant to a written binding contract that was in effect on November 2, 2017, and was not materially modified after that date, will remain tax deductible. To the extent "Compensation“Compensation Discussion and Analysis"Analysis” and the limitations imposed by the TCJA, the Committee and Subcommittee approve the payment of compensation that may not be deductible. 66|2020 Proxy StatementRequirementofficer'sofficer’s annual base salary. Any temporary salary reductions do not impact the stock ownership requirements. In fiscal 2019, we increased our stock ownership requirements. Individuals who were executive officers on July 31, 2018 must comply with the new requirements by July 31, 2021. The chart below sets forth the applicable stock Executive Officer Required Multiple
of Salary Executive Chairman 8 President and Chief Executive Officer 8 Chief Financial Officer 4 Group Presidents 4 Other Executive Officers 3 guidelines for fiscal 2020 as well as the new requirements.
Required for FY 2020
Required by July 31, 2021 5 8 5 8 3 4 3 4 2 3* *As noted above, Ms. Stanley joined the Company in October 2019. Under our stock ownership guidelines, she has until November 2024 to comply with these ownership requirements.2020,2023, all executive officers, including each of the other NEOs met or exceeded their stock ownership requirements for fiscal 2020.
What Counts
What Does Not Count Common Stock(1) 
Stock Options (vested or unvested) Unvested RSUs Vested PSUs(2) mean PSUsand PVUs means long-term equity awards still subject to performance condition(s). 2020 Proxy Statement|67officer'sofficer’s ownership may fall below officer'sofficer’s holdings still do not meet the required threshold, then until such time as the ownership guidelines are achieved, the officer must continue to hold (a) at least 50% of the net after-tax shares of Common Stock received due to the vesting of RSUs, PSUs, or any other share unit and (b) 50% of the net after-tax shares of any stock option exercise. In addition, in settling bonus payouts under the EAIP for an executive officer who continues to be below the guidelines after the required deadline, the Compensation Committee may request that up to 50% of the bonus payout be settled in shares of the Company'sCompany’s Common Stock or additional RSUs."blackout“blackout periods,"” and certain individuals must receive preclearance from the Legal Department before trading in Company securities. We"Company Person"“Company Person”), as well as their Designees (as defined below), from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds) or otherwise engaging in transactions, that hedge or offset or are designed to hedge or offset, any decrease in the market value of Company Equity Securities (as defined below) (any such financial instruments or transactions, "Hedge Transactions"“Hedge Transactions”), unless such Hedge Transaction is approved in advance by the Legal Department and made in compliance with the Company'sCompany’s Insider Trading Policy. However, no such approval shall be given for Hedge Transactions with regard to Outstanding Equity Grants (as defined below), which are prohibited under all circumstances. "CompanySecurities"Securities” means (i) the Company'sCompany’s Class A or Class B Common Stock (collectively, "Common Stock"“Common Stock”), (ii) options, rights or units where shares of Common Stock are the underlying security, (iii) Outstanding Equity Grants, and (iv) to the extent not covered by the foregoing, any "equity securities" (as“equity securities” (as defined in Section 3(a)(11) of the Securities Exchange Act of 1934, as amended, and Rule 3a-11-1 promulgated thereunder) that are issued by the Company or any subsidiary of the Company. "Designee"person'sperson’s household or any other person (other than a tenant or employee) living in such person'sperson’s household, and (ii) any corporation, partnership, limited liability company, trust or other entity controlled by a Company Person or any person listed in clause (i) above. 68|2020 Proxy Statement "Outstanding“Outstanding Equity Grant"Grant” means any outstanding compensatory grant or award by the Company to a Company Person in respect of the Company'sCompany’s Common Stock (for example, outstanding stock options, restricted stock unit (RSU) and performance stock unit (PSU) awards under the Company'sCompany’s incentive plans).Company'sCompany’s Insider Trading Policy and the Company'sCompany’s Executive Stock Ownership Guidelines). "clawback."“clawback.” Under the policy, recoupment would apply in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under the applicable securities laws. Recoupment would apply to any current or former executive officer who received incentive compensation within the three-year period prior to the restatement, and the amount to be recouped would be the amount in excess of what the executive officer would have been paid under the restatement.Company'sCompany’s Annual Report on Form 10-K for the year ended June 30, 2020. Compensation Committee Stock Plan Subcommittee Charlene Barshefsky (Chair)Rose Marie Bravo
Paul J. Fribourg
(Chair)
Charlene Barshefsky
Richard D. Parsons
Jennifer Tejada Charlene Barshefsky Rose Marie Bravo
Paul J. Fribourg
Jennifer Tejada during the past three fiscal years, as applicable, for our “Named Executive Officers,” consisting of our (a) our Chief Executive Officer, (b) our Chief Financial Officer, and (c) our three other most highly compensated executive officers serving at the end of our fiscal year ended June 30, 2020 ("2023 (“fiscal 2020"2023”). Our fiscal year ended June 30, 20192022 is referred to as "fiscal 2019,"“fiscal 2022,” and our fiscal year ended June 30, 20182021 is referred to as "fiscal 2018."“fiscal 2021.” See "Compensation“Compensation Discussion and Analysis"Analysis” and other disclosures under "Executive Compensation"“Executive Compensation” for a description of the material factors necessary to an understanding of the information disclosed below. Name and
Principal Position Year
($)(5)
($)
Awards
($)(6)
Awards
($)(7)
Incentive
Plan
Compensation
($)(8)
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(9)
Compensation
($)(10)
($)
Executive Chairman 2023 $ 1,575,000 $ 0 $ 2,416,701 $ 1,208,360 $ 1,666,450 $ 854,016 $ 83,466 $ 7,803,992 2022 1,575,000 0 2,283,182 1,141,841 4,348,150 200,014 53,809 9,601,996 2021 1,250,000 0 2,545,632 1,272,609 4,512,650 376,289 69,480 10,026,660
President and Chief Executive Officer 2023 2,100,000 0 10,416,576 5,208,432 2,715,450 1,057,600 313,186 21,811,244 2022 2,100,000 0 9,883,468 4,941,572 7,013,150 974,688 567,178 25,480,056 2021 1,666,667 0 50,429,620 5,215,140 7,278,500 685,266 721,792 65,996,984
Executive Vice President and Chief Financial Officer 2023 1,195,000 0 4,050,644 2,025,632 813,450 169,409 77,174 8,331,309 2022 1,150,000 0 8,841,998 1,920,773 2,061,850 84,388 35,927 14,094,936 2021 990,000 0 3,956,044 1,978,065 2,054,250 93,865 60,274 9,132,498
Executive Group
President 2023 1,344,000 0 3,038,476 1,519,466 957,950 316,629 62,026 7,238,547 2022 1,305,000 0 6,383,345 1,441,848 2,289,400 157,387 68,737 11,645,717
Group President, International 2023 1,176,250 0 4,259,083 879,380 636,350 148,602 120,491 7,220,157
Principal PositionYear Salary
($)Bonus
($)Stock
Awards
($)(4)Option
Awards
($)(5)Non-Equity
Incentive
Plan
Compensation
($)(6)Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(7)All Other
Compensation
($)(8)Total
($) 2020 $ 1,833,333 $ 0 $ 8,750,030 $ 4,375,020 $ 2,445,250 $ 773,432 $ 246,862 $ 18,423,928 2019 2,000,000 0 7,625,052 3,812,470 7,084,100 740,273 173,533 21,435,428 2018 1,900,000 0 35,370,666 3,996,044 6,804,050 589,517 93,542 48,753,819
2020
1,045,000
0
5,280,101
1,639,995
829,700
172,073
40,015
9,006,884 2019 1,060,000 0 2,951,990 1,476,030 1,842,400 150,875 63,383 7,544,678 2018 980,000 0 2,807,780 1,403,892 1,718,400 66,629 49,123 7,025,824
2020
1,121,000
0
3,196,628
1,598,387
709,400
363,695
75,786
7,064,896 2019 1,180,000 0 3,356,492 1,678,272 2,658,100 430,009 71,700 9,374,573 2018 1,161,000 0 3,827,692 1,913,782 3,240,750 280,891 73,404 10,497,519
2020
1,097,250
0
3,509,030
1,754,514
1,780,700
515,024
96,192
8,752,710 2019 1,130,000 0 3,244,868 1,622,657 3,676,150 471,491 83,618 10,228,784 2018 1,105,000 0 3,254,908 1,627,599 3,480,200 185,800 121,701 9,775,208
2020
551,736
1,500,000
(9)
3,633,230
(10)
566,841
1,200,000
(11)
0
8,942
7,460,749 "Stock Awards"“Stock Awards” column and the "Total"“Total” column for 20192022 and 20182021 is due to the additional (non-annual) PVUs and PSUs granted to him in fiscal 2018 (i.e. the "February 2018 PSU") that was valued at approximately $27.4 million on the date of grant. For informational purposes, the table below reflects the amounts shown for each year in the "Stock Awards" column in the Summary Compensation Table adjusted to (a) deduct theMarch 11, 2021 (fiscal 2021) (the “March 2021 PVU and PSU Grants”), with a combined aggregate grant date fair value of the February 2018 PSU from fiscal 2018 and (b) instead include the amounts relating to that award and other non-annual awards that were expensed for accounting purposes in each fiscal year shown in the Summary Compensation Table, including the amounts expensed for such awards granted prior to fiscal 2018 as disclosed in previous proxy statements. As adjusted, the amounts shown for "Stock Awards" and "Total" in the Summary Compensation Table for Mr. Freda would be as follows:Stock Awards ($) Total ($) 2020 $ 17,930,646 $ 27,604,543 2019 19,414,375 33,224,751 2018 19,162,234 32,545,387 70|2020 Proxy StatementIn connection with the February 2018 PSU, approximately $17.2 million in total was recognized in fiscal years 2018 through 2020, and approximately $10.2 million in total is expected to be recognized in fiscal years 2021 and 2022, subject to the award's terms and conditions. For the additional (non-annual) September 2015 PSU (fiscal 2016) award to Mr. Freda, the total grant date fair value was approximately $30 million, which was recognized in total in fiscal years 2016 through 2020.$40.0 million. See "Compensation“Compensation Discussion and Analysis – Additional (non-annual) PSU Grants to CEO in Fiscal 2018 and Fiscal 2016"Compensation” for additional information about these awards.2020,2022, an additional (non-annual) RSUPSU grant on September 3, 20192, 2021 with a grant date fair value of approximately $2.0$5.0 million. See "Compensation“Outstanding Equity Awards at June 30, 2023” for additional information about this award. – Elements of Compensation – Long-Term Equity-Based Compensation – Additional (non-annual) RSU Grants"Grants” for additional information about this award.(3)Duringthe non-annual RSU grant in February 2023 to Mr. Jueptner.Ms. Stanley joinedas part of our efforts to enhance financial flexibility and Company as Executive Vice President and General Counsel.(4)"Stock Awards"“Stock Awards” column shows the grant date fair values of all stock awards, which are comprised of annual grants of PSUs and RSUs and, where applicable, additional (non-annual) awards. Amounts represent the aggregate grant date fair value of PSUs, PVUs, and RSUs granted in the respective fiscal year computed in accordance with Financial Accounting Standards Board Accounting Standard Codification Topic 718, Compensation – Stock Compensation ("(“FASB ASC Topic 718"718”). For a description of the assumptions used to calculate the aggregate grant date fair value of Stock Awards, see Note 18 (“Stock Programs”) to our consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2023. Amounts shown for Mr. Freda for fiscal 20182021 include the February 2018March 2021 PVU and PSU notedGrants referenced in note (1); amounts. Amounts shown for Ms. Travis for fiscal 20202022 include an additional PSU award referenced in note (2). The amount shown for Ms. Hudis for fiscal 2022 includes an additional RSU award notedreferenced in note (2); and amounts(3). The amount shown for Ms. StanleyMr. Jueptner for fiscal 2020 include2023 includes an additional RSU award notedreferenced in note (10)(4). Amounts shown disregard estimates of forfeitures related to service-based vesting conditions and were calculated generally based on the closing prices of our Class A Common Stock on the NYSE on the dates of grant.conditions. For annual PSUs, the amount included was calculated based on the probable (i.e. likely) outcome with respect to satisfaction of the performance conditions at the date of grant, which is the target payout, consistent with the recognition criteria in FASB ASC Topic 718 (excluding the effect of estimated forfeitures). The maximum potential values of annual PSUs (assuming the grant date stock price) awarded at the date of grant for fiscal 2020,2023, fiscal 2019,2022, and fiscal 2018, as applicable,2021 were as follows: for Mr. Lauder, $1,933,508, $1,826,615, and $2,227,483, respectively; Mr. Freda, $6,562,623, $5,718,857,$8,333,408, $7,906,843, and $33,372,728,$9,125,811, respectively; Ms. Travis, $2,460,111, $2,213,992,$3,240,565, $3,073,488, and $2,105,889,$3,461,703, respectively; Mr. Demsey, $2,397,471, $2,517,369,for Ms. Hudis, $2,430,977 and $2,870,822, respectively; Mr. Prouvé, $2,631,872, $2,433,650,$2,306,578 for fiscal 2023 and $2,441,181,fiscal 2022, respectively; and for Ms. Stanley, $849,995Mr. Jueptner, $1,407,240 for fiscal 2020.(5)model based on the following assumptions:Expected
VolatilityExpected
Term to
ExerciseDividend
YieldRisk-Free
Interest
Rate 25 % 9 1.0 % 1.5 % 25 % 8 1.1 % 2.8 % 26 % 9 1.5 % 2.1 % The expected volatility assumption ismodel. For a combination of both current and historical implied volatilitiesdescription of the underlying stock. The implied volatilities were obtained from publicly available data sources.assumptions used to calculate such amounts, see Note 18 (“Stock Programs”) to our consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2023. See "Grants“Grants of Plan-Based Awards in Fiscal 2020"2023” for information about option awards granted in fiscal 20202023 and "Outstanding“Outstanding Equity Awards at June 30, 2020"2023” for information with respect to options outstanding at June 30, 2020.
(8) 2020 Proxy Statement|71(6)"Grants“Grants of Plan-Based Awards in Fiscal 2020"2023” for the potential payouts to which the executive was entitled depending on the outcome of the performance criteria in fiscal 2020.2023. See "Compensation“Compensation Discussion and Analysis – ImpactElements of COVID-19 on Compensation Matters"– Design of EAIP and PSU for information about payout decisions regarding fiscal 2020 EAIP. For a description of the performance criteria for fiscal 2020, see "CompensationFiscal 2023 and Fiscal 2024” and “Compensation Discussion and Analysis – Elements of Compensation – Annual Incentive Bonus."(7)NEO'sNEO’s accumulated pension benefits under the RGA Plan and the Restoration Plan and any above market portion of interest earned during each fiscal year on deferred compensation balances. Mr. Lauder is the only Named Executive Officer with a deferred compensation balance. The above market portions of interest earned by Mr. Lauder during fiscal 2023, fiscal 2022, and fiscal 2021 were $208,122, $86,414, and $62,638, respectively. See “Nonqualified Deferred Compensation in Fiscal 2023 and at June 30, 2023” and the related discussion for information about our deferred compensation arrangements applicable to executive officers. For Mr. Freda, the amount also represents a supplemental deferral intended to replicate pension benefits foregone at his former employer plus earnings on such deferral. See "Pension“Pension Benefits." None of the Named Executive Officers has a deferred compensation balance.(8) Name Year Matching 401(k)
Savings Plan
Contributions
Made on
Behalf
of the
Executives Company-Paid
Premiums
for
Executive
Life
Insurance
Medical
Reimbursement
Payment(a)
Allowance(b)
Counseling(b)
Use of
Company
Autos and
Company
Aircraft(c) Companion
Travel
All
Other
Compensation William P. Lauder 2023 $ 16,971 $ 18,598 $ 17,897 $ 20,000 $ 10,000 $ 0 $ 0 $ 83,466 2022 15,211 18,598 0 20,000 0 0 0 53,809 2021 14,405 18,598 6,477 20,000 10,000 0 0 69,480 Fabrizio Freda 2023 16,821 48,465 13,232 0 0 234,668 0 313,186 2022 15,197 35,735 0 20,000 5,000 491,246 0 567,178 2021 14,370 35,735 6,475 20,000 5,000 640,212 0 721,792 Tracey T. Travis 2023 16,330 7,644 — 30,000 10,000 13,200 0 77,174 2022 15,083 7,644 — 0 0 13,200 0 35,927 2021 14,250 7,644 — 15,000 10,000 13,200 180 60,274 Jane Hertzmark Hudis 2023 16,751 12,225 — 14,850 5,000 13,200 0 62,026 2022 15,327 12,225 — 22,985 5,000 13,200 0 68,737 Peter Jueptner 2023 16,590 90,701 — 0 0 13,200 0 120,491 Year Matching 401(k)
Savings Plan
Contributions
Made on Behalf
of the
ExecutiveCompany-Paid
Premiums for
Executive Life
InsuranceCompany-Paid
Medical
Reimbursement
PaymentPerquisite
Allowance(a)Financial
Counseling(a)Personal
Use of
Company
Autos and
Company
Aircraft(b)Companion
TravelTotal –
All Other
Compensation 2020 $ 14,300 $ 35,735 $ 6,475 $ 20,000 $ 5,000 $ 165,353 — $ 246,862 2019 14,027 35,735 6,382 40,000 5,000 57,280 15,109 173,533 2018 13,824 35,735 8,551 20,000 5,000 1,406 9,026 93,542
2020
14,171
7,644
—
—
5,000
13,200
—
40,014 2019 14,050 7,644 — 15,000 5,000 13,200 8,489 63,383 2018 13,279 7,644 — 15,000 — 13,200 — 49,123
2020
16,250
19,285
8,551
15,000
3,500
13,200
—
75,786 2019 12,164 19,285 8,551 15,000 3,500 13,200 — 71,700 2018 13,868 19,285 8,551 15,000 3,500 13,200 — 73,404
2020
14,333
44,190
5,976
15,000
3,500
7,125
6,068
96,192 2019 14,087 44,190 6,587 15,000 3,500 254 — 83,618 2018 13,841 44,190 6,058 15,000 3,500 6,852 32,260 121,701
2020
—
—
—
—
—
8,942
—
8,942 (b)For the amounts in this column reflect personal use of a company car or cash in lieu of a company car. For Mr. Freda, the amount reflectsshown in this column for fiscal 2023 is for personal use of company aircraft. In light of the heightened importance of safe travel, the CEO is authorized to use the company’s aircraft for personal travel in the interests of safety and security. The incremental cost for personal use of the company aircraft in fiscal 2023 is based on the invoiced amounts and, since the company aircraft is used primarily for business travel, does not include fixed costs that do not change based on usage, such as management fees and acquisition costs.(9)Amount represents a cash bonus to Ms. Stanley pursuant to her employment agreement, as explained in "Compensation Discussion and Analysis – Compensation for Other NEOs."(10)Amount is comprised of (a) Ms. Stanley's annual PSU grant and annual RSU grant in October 2019 (with a combined grant date fair value of approximately $1.1 million) and (b) the additional (non-annual) RSU grant to her in October 2019 (with a grant date fair value of approximately $2.5 million). See additional information about these grants in "Compensation Discussion and Analysis – Compensation for Other NEOs."(11)Ms. Stanley's employment agreement provided for a minimum incentive bonus payout of $1.2 million for fiscal 2020, as explained in "Compensation Discussion and Analysis – Compensation for Other NEOs." 72|2020 Proxy StatementCompany'sCompany’s flight safety policy provides that our Chairman Emeritus, our Executive Chairman, and our Chief Executive Officer should not fly together for any reason. We pay for the travel expenses for non-business trips for one or two of these officers, as the case may be, where it is necessary to comply with the flight safety policy. For fiscal 2020,2023, there was no Company reimbursement to any of the NEOs under the Flight Safety Policy. In addition, we make available to our employees, including the NEOs, the ability to obtain a limited amount of our products for free or at a discount. The incremental cost of the free product program did not exceed $1,000$2,500 in any of the last three fiscal years for any of the NEOs, as applicable.NEOs. The sales of products to employees at a discount are profitable for us.NEO'sNEO’s employment agreement are described below: Fabrizio Freda. Company'sCompany’s Executive Automobile Program with an automobile having an acquisition value of $75,000), we pay annual premiums for additional executive term life insurance with a face amount of $10 million for Mr. Freda. We also pay travel expenses for his spousespouse/companion or domestic partner to accompany him on up to two business-related travel itineraries per fiscal year. In addition, Mr. Freda is entitled to an annual supplemental deferral computed by taking the difference between $485,000 and the actual vested annual accruals and contributions made to the Company'sCompany’s qualified and nonqualified pension and qualified retirement savings plans on his behalf. Such deferrals are credited with interest annually at a rate per annum equal to the Citibank base rate but in no event more than 9%. Mr. Freda will also be reimbursed for relocation costs of his family from New York to Italy in the event of the termination of his employment. John Demsey. Under his employment agreement effective July 1, 2010, Mr. Demsey is an employee-at-will, and he will continue as Group President until his retirement We also pay travel expenses for her spouse/companion or other termination of his employment. The agreement provides for a base salary and bonus opportunitiesdomestic partner to be set by the Compensation Committee and for equity grants as determined by the Subcommittee. In addition to the benefits generally available to our senior executives (e.g., annual perquisite reimbursement under our Executive Perquisite Planaccompany her on up to $15,000, financial counseling services up to $5,000, and participation in our Executive Automobile Program with an automobile having an acquisition value of $50,000), we pay annual premiums for additional executive term life insurance with a face amount of $5 million for Mr. Demsey. 2020 Proxy Statement|73 Cedric Prouvé. Under his employment agreement effective July 1, 2011, Mr. Prouvé is an employee-at-will, and he will continue as Group President, International until his retirement or other termination of his employment. The agreement provides for a base salary and bonus opportunities to be set by the Compensation Committee and for equity grants as determined by the Subcommittee. In addition to the benefits generally available to our senior executives (e.g., annual perquisite reimbursement under our Executive Perquisite Plan up to $15,000, financial counseling services up to $5,000, and participation in our Executive Automobile Program with an automobile having an acquisition value of $50,000), we pay annual premiums for additional executive term life insurance with a face amount of $5 million for Mr. Prouvé. Deirdre Stanley.Jane Hertzmark Hudis. Under her employment agreement effective November 4, 2019,July 12, 2018, Ms. StanleyHudis is an employee-at-will, and she will continue as Executive ViceGroup President and General Counsel until her retirement or other termination of her employment. The agreement generally provides for a base salary and bonus opportunities to be set by the Compensation Committee and for equity grants as determined by the Subcommittee. In addition to the benefits generally available to our senior executives (e.g., annual perquisite reimbursement under our Executive Perquisite Plan up to $15,000, financial counseling services up to $5,000, and participation in our Executive Automobile Program with an automobile having an acquisition value of $50,000), we pay annual premiums for additional executive term life insurance with a face amount of $5 million for Ms. Stanley. See "Compensation DiscussionHudis. We also pay travel expenses for her spouse/companion or domestic partner to accompany her on up to two business-related travel itineraries per fiscal year.Analysis –he will continue as Group President, International until his retirement or other termination of his employment. The agreement generally provides for a base salary and bonus opportunities to be set by the Compensation Committee and for Other NEOs"equity grants as determined by the Subcommittee. In addition to the benefits generally available to our senior executives (e.g., annual perquisite reimbursement under our Executive Perquisite Plan up to $15,000, financial counseling services up to $5,000, and participation in our Executive Automobile Program with an automobile having an acquisition value of $50,000), we pay annual premiums for additional information about Ms. Stanley'sexecutive term life insurance with a face amount of $5 million for Mr. Jueptner. We also pay travel expenses for his spouse/companion or domestic partner to accompany him on up to two business-related travel itineraries per fiscal year. Mr. Jueptner’s employment agreement requires the Company to make certain post-termination payments and continue certain benefits during the enforced non-compete period in such agreement. "Potential“Potential Payments upon Termination of Employment or Change of Control," (b)” (b) provides that the executive must abide by restrictive covenants relating to non-competition and non-solicitation during employment and, under certain circumstances, for two years following termination of employment, (c) provides that the executive must abide by restrictive covenants regarding non-disclosure of our confidential information, (d) provides that the executive may elect to defer all or part of his or her annual incentive bonus compensation in compliance with Section 409A of the Internal Revenue Code (“Section 409A”), and (e) provides that benefits under the agreement may be modified by the Compensation Committee at any time other than in contemplation of a "Change“Change of Control" (asControl” (as defined in the agreement) or after a Change of Control, provided that any such modification shall not be effective until at least two years after such modification is approved by the Compensation Committee. 202020202023 to each NEO, including bonus opportunities under the EAIP and PSUs, RSUs, and stock optionsequity grants under the Share Incentive Plan. The material terms of the incentive bonus opportunities are described in "Compensation“Compensation Discussion and Analysis – Elements of Compensation – Annual Incentive Bonus,"” and the material terms of the equity awards are described in "Compensation“Compensation Discussion and Analysis – Elements of Compensation – Long-Term Equity-Based Compensation"Compensation” and "Compensation“Compensation Discussion and Analysis – CEO Compensation."” See "Compensation“Compensation Discussion and Analysis"Analysis” and other disclosures under "Executive Compensation"“Executive Compensation” for a description of the material factors necessary to an understanding of the information disclosed below.
Under Non-Equity Incentive
Plan Awards(1)
Under Equity Incentive
Plan Awards(2)
Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)(3)
Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(4) Exercise
or Base
Price of
Option
Awards
($/Sh)
Fair Value
of Stock
and Option
Awards
($)(5) Name Award
Type Grant
Date
($)
($)
($)
(#)
(#)
(#) William P. Lauder EAIP N/A $ 1,772,000 $ 3,544,000 $ 5,847,600 PSU 9/6/2022 2,455 4,909 7,855 $ 1,208,350 RSU 9/6/2022 4,909 1,208,350 Options 9/6/2022 14,942 $ 246.15 1,208,360 Fabrizio Freda EAIP N/A 2,887,500 5,775,000 9,528,750 PSU 9/6/2022 10,580 21,159 33,855 5,208,288 RSU 9/6/2022 21,159 5,208,288 Options 9/6/2022 64,405 246.15 5,208,432 Tracey T. Travis EAIP N/A 790,000 1,580,000 2,607,000 PSU 9/6/2022 4,114 8,228 13,165 2,025,322 RSU 9/6/2022 8,228 2,025,322 Options 9/6/2022 25,048 246.15 2,025,632 Jane Hertzmark Hudis EAIP N/A 1,032,500 2,065,000 3,407,250 PSU 9/6/2022 3,086 6,172 9,876 1,519,238 RSU 9/6/2022 6,172 1,519,238 Options 9/6/2022 18,789 246.15 1,519,466 Peter Jueptner EAIP N/A 675,000 1,350,000 2,227,500 PSU 9/6/2022 1,787 3,573 5,717 879,494 RSU 9/6/2022 3,573 879,494 RSU 2/27/2023 10,325(6) 2,500,096 Options 9/6/2022 10,874 246.15 879,380 Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards(1)Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)All
Other
Stock
Awards:
Number
of Shares
of StockAll
Other
Option
Awards:
Number of
Securities
UnderlyingExercise
or Base
Price of
OptionGrant Date
Fair Value
of Stock
and Option Award
TypeGrant
DateThreshold
($)Target
($)Maximum
($)Threshold
(#)Target
(#)Maximum
(#)or Units
(#)(3)Options
(#)(4)Awards
($/Sh)Awards
($)(5) EAIP N/A $ 1,562,500 $ 5,000,000 $ 7,500,000 PSU 9/3/2019 10,966 21,931 32,897 $ 4,375,015 RSU 9/3/2019 21,931 4,375,015 Options 9/3/2019 79,807 199.49 4,375,020
N/A
437,500
1,400,000
2,100,000 PSU 9/3/2019 4,111 8,221 12,332 1,640,007 RSU 9/3/2019 8,221 1,640,007 RSU 9/3/2019 10,026 (6) 2,000,087 Options 9/3/2019 29,916 199.49 1,639,995
N/A
1,006,250
3,220,000
4,830,000
PSU 9/3/2019 4,006 8,012 12,018 1,598,314 RSU 9/3/2019 8,012 1,598,314 Options 9/3/2019 29,157 199.49 1,598,387
N/A
851,563
2,725,000
4,087,500 PSU 9/3/2019 4,398 8,795 13,193 1,754,515 RSU 9/3/2019 8,795 1,754,515 Options 9/3/2019 32,005 199.49 1,754,514
N/A
1,200,000
1,200,000
1,800,000
PSU 10/28/2019 1,526 3,051 4,577 566,601 RSU 10/28/2019 3,051 566,601 RSU 10/28/2019 13,462 (7) 2,500,028 Options 10/28/2019 11,108 185.71 566,841
(1)(1)20202023 under the EAIP for the achievement of all performance metrics at the threshold, target, and maximum levels. Actual payouts for fiscal 20202023 are disclosed in the Summary Compensation Table in the column "Non-Equity“Non-Equity Incentive Plan Compensation."” No future cash payout will be made under these awards. For a discussion of the EAIP and the fiscal 2020 payouts, see "CompensationSee “Compensation Discussion and Analysis – Elements of Compensation – Annual Incentive Bonus"Bonus” and "Compensation“Compensation Discussion and Analysis – ImpactElements of COVID-19 on Compensation Matters." Also see "Compensation Discussion– Design of EAIP and Analysis – CompensationPSU for Other NEOs" for additional information about Ms. Stanley's EAIP payout for fiscal 2020.underlyingfor the achievement of all performance metrics for the annual PSUs granted in fiscal 2023 at the threshold, target, and maximum payoutlevels. See “Compensation Discussion and Analysis – Elements of PSUs granted under theCompensation – Long-Term Equity-Based Compensation – Performance Share Incentive Plan in fiscal 2020.Units” and “Compensation Discussion and Analysis – Elements of Compensation – Design of EAIP and PSU for Fiscal 2023 and Fiscal 2024.” Future payout of annual PSUs shown in this table is generally subject to the achievement of our Net Sales, Diluted EPS, and ROIC compound annual growth rate goals for the three-year period ending June 30, 2022;2025; these goals were set in September 2019.2022. Payout of annual PSUs generally assumes continued employment and is subject to acceleration upon the occurrence of certain events as described in "Potential“Potential Payments upon Termination of Employment or Change of Control – Events of Termination under the Employment Agreements and under the " For each executive officer,2020 Proxy Statement|75no payout of annual PSUs will be made pursuant to the Net Sales, Diluted EPS, or ROIC compound annual growth rate opportunities unless the threshold for such opportunity is achieved, and additional shares shall be paid out if performance exceeds the targeted performance goals. Measurement of performance is subject to certain automatic adjustments.” See "Compensation“Compensation Discussion and Analysis – Elements of Compensation – Long-Term Equity-Based Compensation – Performance Share Units." The PSUs shown in the table above are subject to restrictions on transfer and forfeiture prior to vesting. Upon payout of the PSUs, shares will be withheld to satisfy statutory tax obligations. PSUs are accompanied by dividend equivalent rights that will be payable in cash at the time of payout of the related shares. PSUs do not have any voting rights with respect to the shares of Class A Common Stock underlying the award.(3)The amounts shown represent the number of shares of Class A Common Stock underlying RSUs granted under the Share Incentive Plan in fiscal 2020. Annual RSUs generally vest in three equal installments approximately 14 months, 26 months, and 38 months from the date of grant. Ms. Stanley's annual RSU, granted in October 2019, vests at the same time as the annual RSU grants to the other NEOs in September 2019. The vesting of RSUs is subject to continued employment and subject to acceleration upon the occurrence of certain events as described in "Potential Payments upon Termination of Employment or Change of Control – Events of Termination under the Employment Agreements and under the Share Incentive Plan." RSUs are subject to restrictions on transfer and forfeiture prior to vesting. Upon payout, shares will be withheld to satisfy statutory tax obligations. RSUs are accompanied by dividend equivalent rights that will be payable in cash at the time of payout of the related shares. RSUs do not have any voting rights with respect to the shares of Class A Common Stock underlying the award. See "Compensation Discussion and Analysis – Elements of Compensation – Long-Term Equity-Based Compensation – Restricted Stock Units."under the Share Incentive Plan in fiscal 2020.2023. The exercise price of the stock options is equal to the closing price of our Class A Common Stock on the date of grant. The stock options become exercisable in three equal installments approximately 16 months, 28 months, and 40 months after the date of grant, and expire ten years from the grant date assuming continued employment and subject to acceleration upon the occurrence of certain events as described in "Potential“Potential Payments upon Termination of Employment or Change of Control – Events of Termination under the Employment Agreements and under the Share Incentive Plan." Ms. Stanley's stock option grant in October 2019 vests at the same time as the stock option grants to the other NEOs in September 2019. Stock options do not have dividend equivalent rights or any voting rights with respect to the shares of Class A Common Stock underlying the options.” See "Compensation“Compensation Discussion and Analysis – Elements of Compensation – Long-Term Equity-Based Compensation – Annual Stock Options."(4)(6) and (5)(7) of the Summary Compensation Table. The grant date fair values of PSU awards were calculated assuming the target payout.The additional (non-annual) RSU grant to Ms. Travis vests in full on November 1, 2022 assuming her continued employment through such date. "Compensation“Compensation Discussion and Analysis – Additional (non-annual) RSU Grants"Grants” for additional information.(7)The additional (non-annual)information about the non-annual February 2023 RSU grant to Ms. Stanley vests in thirds over a three-year period from the grant date, based on continued employment. See "Compensation Discussion and Analysis – Compensation for Other NEOs" for additional information. 2020stock options, RSUs, and PSUs outstanding equity awards on June 30, 20202023 under our plans existing at the time of grant for each NEO. Stock Awards Name Grant
Date
Securities
Underlying
Unexercised
Options
(#)
Exercisable
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
Exercise
Price
($) Option
Expiration
Date Award
Type
Shares or
Units of
Stock That
Have Not
Vested
(#)(2)
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(3) Award
Type
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)(4)
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
($)(5) William P. Lauder 9/4/18 7,053 0 $ 138.150 9/4/28 9/3/19 12,160 0 199.490 9/3/29 9/3/20 14,600 7,300 218.060 9/3/30 RSU 1,946 $ 394,804 PSU 1,903 $ 386,081 9/2/21 4,278 8,556 344.060 9/2/31 RSU 2,212 444,081 PSU 3,318 666,122 9/6/22 0 14,942 246.150 9/6/32 RSU 4,909 973,749 PSU 4,909 973,749 Fabrizio Freda 9/4/15 148,258 0 77.350 9/4/25 9/6/16 151,163 0 89.470 9/6/26 9/5/17 135,597 0 107.950 9/5/27 2/14/18 — — — — — — — 195,940 40,594,849 9/4/18 92,200 0 138.150 9/4/28 — — — — — — 9/3/19 79,807 0 199.490 9/3/29 — — — — — — 9/3/20 59,830 29,916 218.060 9/3/30 RSU 7,972 1,617,359 PSU 7,796 1,581,652 3/11/21 — — — — — — — 85,927 17,341,787 3/11/21 — — — — — — — 68,578 13,840,412 9/2/21 18,514 37,028 344.060 9/2/31 RSU 9,576 1,922,478 PSU 14,363 2,883,516 9/6/22 0 64,405 246.150 9/6/32 RSU 21,159 4,197,099 PSU 21,159 4,197,099 Tracey T. Travis 9/4/18 35,696 0 138.150 9/4/28 9/3/19 29,916 0 199.490 9/3/29 9/3/20 22,693 11,347 218.060 9/3/30 RSU 3,024 613,509 PSU 2,958 600,119 9/2/21 7,196 14,393 344.060 9/2/31 RSU 3,722 747,229 PSU 5,583 1,120,843 9/2/21 — — — — — — — 14,533 2,917,645 9/6/22 0 25,048 246.150 9/6/32 RSU 8,228 1,632,106 PSU 8,228 1,632,106 Jane Hertzmark Hudis 9/3/19 21,893 0 199.490 9/3/29 9/3/20 17,922 8,962 218.060 9/3/30 RSU 2,389 484,680 PSU 2,336 473,928 9/2/21 5,402 10,804 344.060 9/2/31 RSU 2,794 560,923 PSU 4,190 841,184 9/2/21 — — — — 10,173 2,042,331 — — — 9/6/22 0 18,789 246.150 9/6/32 RSU 6,172 1,224,278 PSU 6,172 1,224,278 Peter Jueptner 9/3/14 12,786 0 76.230 9/3/24 9/4/15 15,238 0 77.350 9/4/25 9/6/16 17,128 0 89.470 9/6/26 9/5/17 14,592 0 107.950 9/5/27 9/4/18 9,982 0 138.150 9/4/28 9/3/19 7,661 0 199.490 9/3/29 9/3/20 5,477 2,740 218.060 9/3/30 RSU 681 135,550 PSU 657 133,292 9/2/21 1,645 3,291 344.060 9/2/31 RSU 816 162,396 PSU 1,216 244,124 9/6/22 0 10,874 246.150 9/6/32 RSU 3,573 708,740 PSU 3,573 708,740 2/27/23 — — — — 10,325 2,041,253 — — — Option Awards(1) Stock Awards Grant
DateNumber of
Securities
Underlying
Unexercised
Options
(#)
ExercisableNumber of
Securities
Underlying
Unexercised
Options
(#)
UnexercisableOption
Exercise
Price
($)Option
Expiration
DateAward
TypeNumber of
Shares or
Units of
Stock That
Have Not
Vested
(#)(2)Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(3)Award
TypeEquity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)(4)Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
($)(5) 9/4/12 183,822 0 $ 59.780 9/4/22 9/4/13 117,239 0 67.310 9/4/23 9/3/14 127,919 0 76.230 9/3/24 9/4/15 148,258 0 77.350 9/4/25 9/4/15 — — — — — — — PSU (6) 387,848 $ 75,801,013 9/6/16 151,163 0 89.470 9/6/26 9/5/17 90,398 45,199 107.950 9/5/27 RSU 12,339 $ 2,379,946 PSU 40,682 7,846,744 2/14/18 — — — — — — — PSU (7) 195,940 37,718,450 9/4/18 30,733 61,467 138.150 9/4/28 RSU 18,398 3,520,641 PSU 27,597 5,280,962 9/3/19 0 79,807 199.490 9/3/29 RSU 21,931 4,158,995 PSU 21,931 4,158,995 9/4/12 44,862 0 59.780 9/4/22 9/4/13 42,990 0 67.310 9/4/23 9/3/14 45,848 0 76.230 9/3/24 9/4/15 53,584 0 77.350 9/4/25 9/6/16 53,531 0 89.470 9/6/26 9/5/17 31,758 15,880 107.950 9/5/27 RSU 4,335 836,135 PSU 14,293 2,756,834 9/4/18 11,898 23,798 138.150 9/4/28 RSU 7,123 1,363,057 PSU 10,684 2,044,490 9/3/19 0 29,916 199.490 9/3/29 RSU 8,221 1,559,030 PSU 8,221 1,559,030 9/3/19 — — — — RSU (8) 10,026 1,901,331 — — — 9/5/17 0 21,647 107.950 9/5/27 RSU 5,910 1,139,921 PSU 19,485 3,758,267 9/4/18 0 27,058 138.150 9/4/28 RSU 8,099 1,549,825 PSU 12,148 2,324,641 9/3/19 0 29,157 199.490 9/3/29 RSU 8,012 1,519,396 PSU 8,012 1,519,396 9/6/16 19,447 0 89.470 9/6/26 9/5/17 18,410 18,410 107.950 9/5/27 RSU 5,026 969,415 PSU 16,569 3,195,829 9/4/18 13,080 26,162 138.150 9/4/28 RSU 7,830 1,498,349 PSU 11,744 2,247,332 9/3/19 0 32,005 199.490 9/3/29 RSU 8,795 1,667,884 PSU 8,795 1,667,884 10/28/19 0 11,108 185.710 10/28/29 RSU 3,051 578,592 PSU 3,051 578,592 10/28/19 — — — — RSU (9) 13,462 2,552,934
(1)(1)"Potential“Potential Payments upon Termination of Employment or Change of Control – Events of Termination under the Employment Agreements and under the Share Incentive Plan." As noted in note (4) in "Grants of Plan-Based Awards in Fiscal 2020," Ms. Stanley's stock option grant in October 2019 vests at the same time as the stock option grants to the other NEOs in September 2019."Potential“Potential Payments upon Termination of Employment or Change of Control – Events of Termination " Ms. Stanley's annual RSU award and her non-annual RSU award, each granted in October 2019, vest at the same time as the annual RSU grants to the other NEOs in” The September 2019. The October 20192, 2021 non-annual RSU grant to Ms. StanleyHudis for 13,46210,173 shares is discussed in note (9)(10) below. The September 3, 2019February 27, 2023 non-annual RSU grant to Ms. Travis for 10,026 sharesMr. Jueptner is discussed in note (8)(11) below. 2020 Proxy Statement|77(3)of (i) $188.68of(i) $196.38 (which was the closing price of the Class A Common Stock on June 30, 2020, the last trading day of fiscal 2020)2023) and (ii) the number of shares of Class A Common Stock underlying the RSUs, and (b) the cash dividend equivalents related to such RSUs. As of June 30, 2020,2023, the NEOs had earned dividend equivalents on outstanding unvested RSUs with dollar values as follows: Mr. Lauder, $32,057; Mr. Freda, $122,184;$135,656; Ms. Travis, $54,814;$52,250; Ms. Hudis, $84,545; and Mr. Demsey, $67,999; Mr. Prouvé, $65,664; and Ms. Stanley, $15,852.September 2020August 2023 of the annual PSUs granted on September 5, 20173, 2020 (fiscal 2018)2021), at an aggregate payout of 109.9%32.6%; (b) the target level of payout for the annual PSUs granted (i) on September 4, 20182, 2021 (fiscal 2019),2022) and (ii) on September 3, 20196, 2022 (fiscal 2020), and (iii) to Ms. Stanley on October 28, 2019 (fiscal 2020)2023); and (c) the shares underlying the non-annual PSUsadditional (non-annual) equity awards granted to Mr. Freda in September 2015 (fiscal 2016) and in(i) February 2018 (fiscal 2018) and (ii) March 2021 (fiscal 2021) (PVUs and PSUs), which are discussed in notes (6), (7), and (8), below; and (d) the shares underlying the additional (non-annual) equity award granted to Ms. Travis in September 2021 (fiscal 2022), which is discussed in note (6) and (7) below, respectively.(9) below. In connection with the September 2020August 2023 PSU payouts referenced in clause (a) above, each NEO as applicable, also received a cash payment in September 20202023 reflecting dividend equivalents on such shares as follows: Mr. Lauder, $12,370; Mr. Freda, $190,392;$50,674; Ms. Travis, $66,891; Mr. Demsey, $91,910;$19,227; Ms. Hudis, $15,184; and Mr. Prouvé, $77,543.Jueptner, $4,271. Payouts under the fiscal 20192022 annual PSUs and the fiscal 20202023 annual PSUs will be made in early fiscal 20222025 and early fiscal 2023,2026, respectively, assuming the performance criteria are achieved.$188.68$196.38 (which was the closing price of the Class A Common Stock on June 30, 2020, the last trading day of fiscal 2020)2023) and (ii) the number of shares of Class A Common Stock underlying the PSUs and PVUs at the levels described in notes (4), (6), (7), (8), and (7)(9), and (b) the cash dividend equivalents related to such PSUs.PSUs and PVUs. As of June 30, 2020,2023, the NEOs had dividend equivalents on the outstanding PSUs and PVUs shown in the table, (except foras follows (these amounts do not include the annual PSUs grantedcash dividend equivalents addressed in fiscal 2018note (4) that were paid out in September 2020, which are addressed in note (4) above) with dollar values as follows:2023): Mr. Lauder, $24,253; Mr. Freda, $3,465,357;$3,061,464; Ms. Travis, $36,525;$104,400; Ms. Hudis, $30,573; and Mr. Demsey, $40,248; Mr. Prouvé, $55,045; and Ms. Stanley, $2,929.September 4, 2015February 14, 2018 with a performance period divided into three tranches. Thetwo tranches, with the first tranche hadhaving a three-year performance period that ended June 30, 2018;2021 and the second, had a three-yearfour-year performance period that ended June 30, 2019; and the third had a three-year performance period that ended June 30, 2020.2022. Payment with respect to afor each tranche will be made on September 3, 2024, subject to the third anniversaryterms and conditions of the last day of the respective performance period. Accordingly, the payouts of the first, second, and third tranches will be made on June 30, 2021, June 30, 2022, and June 30, 2023, respectively.this award. The PSUs are accompanied by dividend equivalent rights that will be payable in cash at the same time as the payment of shares of Class A Common Stock, and such accumulated dividend equivalents are included in the dollar amount shown in the table as well as in the amount shown in note (5) above.non-annual PSUs granted to Mr. Freda on February 14, 2018 with a performance periodlong-term (non-annual) March 2021 PVU award. This award is divided into twothree tranches each with its own stock price goal, all of which were achieved in fiscal 2022, and all three tranches are subject to the first having a three-year performance period endingCumulative Operating Income goal that is measured from July 1, 2021 through June 30, 2021 and2025. Delivery of the second, a four-year performance period ending June 30, 2022. Paymentshares for each tranche will be made on September 3, 2024. The PSUs are accompanied by dividend equivalent rights that2, 2025, subject to the terms and conditions of this award. Dividend equivalents will be payablepaid out in cash in connection with the delivery of any shares. For additional information about this award, including Service Periods and Performance Periods, see “Compensation Discussion and Analysis – Additional (non-annual) Performance-Based Long-Term Equity Grants to CEO in Fiscal 2016, Fiscal 2018, and Fiscal 2021.” same time asdate of the paymentgrant, and is intended to further align Ms. Travis’s interests with those of our stockholders, incentivize her to remain with the Company at least through June 30, 2025, and motivate her continued stewardship of our business over the longer term. The shares of Class A Common Stock and such accumulated dividend equivalentsunderlying this award are included in the dollar amount shown in the table as well as in the amount shown in note (5) above.(8)Represents non-annual RSUs grantednot intended to be delivered to Ms. Travis that vest in full on November 1, 2022, assuming continued employment through such date. See "Compensation Discussionuntil September 2, 2025, subject to the award’s terms and Analysis – Additional (non-annual) RSU Grants" for additional information about this RSU grant.conditions. The accumulated dividend equivalents are included in the dollar amount shown in the table as well as in the amount shown in note (3) above.
(10) 78|2020 Proxy Statement(9)non-annual RSUs grantedan additional (non-annual) RSU grant to Ms. StanleyHudis that vestvests in thirdsfull on November 1, 2024, assuming continued employment through such date. This award was valued at $3.5 million on the date of grant, and it is intended to further align Ms. Hudis’s interests with those of our stockholders and motivate her continued stewardship and progression of our business over a three-year period from the grant date. See "Compensation Discussion and Analysis – Compensation for Other NEOs" for additional information about this RSU grant.longer term. The accumulated dividend equivalents for this non-annual RSU are included in the dollar amount shown in the table as well as in the amount shown in note (3) above. 2020on the vesting ofin connection with stock awards in fiscal 2020.2023. Option Awards Stock Awards Name
Acquired on
Exercise
(#)
on Exercise
($)(1)
Acquired on
Vesting
(#)(2)
on Vesting
($)(3) William P. Lauder — — 10,709(4) $ 2,507,067 Fabrizio Freda — — 175,538(5) 38,007,254(6) Tracey T. Travis — — 27,468(7) 6,218,665(8) Jane Hertzmark Hudis 33,711(9) $ 2,463,525 12,971(10) 3,033,682 Peter Jueptner — — 6,624(11) 1,477,196(12) Option Awards Stock Awards Number of Shares
Acquired on
Exercise
(#)Value Realized
on Exercise
($)(1)Number of Shares
Acquired on
Vesting
(#)(2)Value Realized
on Vesting
($)(3) 0 $ 0 96,836 (4) $ 19,227,767 66,000 (5) 9,367,380 51,329 (6) 10,060,067 61,954 (7) 6,344,255 73,878 (8) 14,830,939 114,134 (9) 13,407,282 38,004 (10) 7,539,863 0 0 0 0
(1)(1)2016,2019, September 2017,2020, and September 2018,2021, and (b) for Ms. Travis and Mr. Jueptner, the non-annual RSU granted to hereach of them on September 6, 2016.3, 2019. Also represents the payout of (a) the annual PSUs granted to the NEOs as applicable, in September 2016,2019 and (b) for Mr. Demsey,Freda, the third (final) trancheof three tranches of the non-annual PSUsPSU granted to him on January 28, 2016.51,5385,925 shares withheld from Mr. FredaLauder to satisfy taxes upon vesting of PSUs and RSUs at a combined value of $10,033,440.The options exercised by Ms. Travisgrantedpaid to him in cash on such date, for the third (final) tranche of the September 2012.(6)24,3998,309 shares withheld from Ms. Travis to satisfy taxes upon vesting of annual PSUs and RSUs at a combined value of $4,676,288.Mr. DemseyMs. Hudis were granted betweenin September 20162017 and September 2018.(8)38,5956,581 shares withheld from Mr. DemseyMs. Hudis to satisfy taxes upon vesting of annual PSUs and RSUs at a combined value of $7,568,921.(9)The options exercised by Mr. Prouvé were granted between September 2014 and September 2017.(10) 18,6131,748 shares withheld from Mr. ProuvéJueptner to satisfy taxes upon vesting of annual PSUs and RSUs at a combined value of $3,621,004.
(12) 2020 Proxy Statement|79TableContents"RGA Plan"“RGA Plan”), which is a qualified plan, and The Estee Lauder Inc. Benefits Restoration Plan (the "Restoration Plan"“Restoration Plan”), which is a nonqualified plan. The Restoration Plan provides for pension benefit payments that employees would have received under the RGA Plan if eligible compensation (including deferred salary and bonuses, where the RGA Plan allows) had not been subject to certain compensation limits as dictated by tax laws under ERISA that apply to qualified retirement plans.The aggregate amountUpon retirement, the accumulated benefit under the RGA Plan is payable, at the election of the retiree, as a one-time lump sum under both plans or converted to monthly lifetime paymentspayments. Upon retirement, the accumulated benefit under the RGA Plan.Company'sCompany’s qualified and nonqualified pension and qualified retirement savings plans on his behalf. Such deferrals are credited with interest as of each June 30 during the term of deferral, compounded annually, at an annual rate equal to the annual rate of interest announced by Citibank N.A. in New York, New York as its base rate in effect on such June 30, but in no event more than 9%. 80|2020 Proxy StatementNEO'sNEO’s years of credited service and the present value of the accumulated benefit under each of the pension plans and executive employment agreements pursuant to which the officer would be entitled to a retirement benefit, computed in each case as of the same pension plan measurement date used for financial statement reporting purposes with respect to our audited financial statements for the fiscal year ended June 30, 2020. Plan Name Number of Years
Credited Service
(#)*Present Value of
Accumulated Benefit
($)Payments During
Last Fiscal Year
($) RGA Plan 12 $ 148,140 $ 0 Restoration Plan 3,203,048 0 Employment Agreement 3,943,535 0 RGA Plan 7 78,630 0 Restoration Plan 527,049 0 RGA Plan 29 549,093 0 Restoration Plan 4,055,381 0 RGA Plan 27 410,205 0 Restoration Plan 3,386,899 0 RGA Plan 0 0 0 Restoration Plan 0 0 Name Plan Name
Credited Service
(#)*
Accumulated
Benefit
($)
Last Fiscal Year
($) William P. Lauder RGA Plan 37 $ 743,827 $ 0 Restoration Plan 7,293,474 0 Fabrizio Freda RGA Plan 15 212,542 0 Restoration Plan 4,632,954 0 Employment Agreement 5,166,781 0 Tracey T. Travis RGA Plan 10 118,700 0 Restoration Plan 834,641 0 Jane Hertzmark Hudis RGA Plan 37 763,854 0 Restoration Plan 2,258,708 0 Peter Jueptner RGA Plan 14 188,103 0 Restoration Plan 654,290 0 20202023 and is used to determine the level of annual credits for calendar 2020.2023.(age(i.e. the greater of (i) a participant’s age at June 30, 2023 and (ii) age 65)., or retirement date, if applicable. The present values for the RGA Plan also reflect the assumption that 75% of benefits are payable as a one-time lump sum, and 25% are payable as lifetime monthly payments. Amounts calculated under the pension formula based on compensation that exceeds IRS limits will be paid under the Restoration Plan and are included in the present values shown in the table above. The present values for the Restoration Plan also reflect the assumption that 100% of the benefits are payable as a one-time lump sum. The present values of accumulated benefits under the RGA Plan were calculated using a 3.0%5.3% discount rate and, for annuities, the SOA PRI-2012 mortality table projected generationally using scale MP-2019,MP-2021, and present values under the Restoration PlansPlan were calculated using a 2.5%5.2% discount rate. These assumptions are consistent with the assumptions used in the calculation of our benefit obligations as of June 30, 2020,2023, as disclosed in Note 15 (Pension, Deferred Compensation and Post-Retirement Benefit Plans) to our audited consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2020.20202023 and at June 30, 2020 None of2023Named Executive Officers for fiscal 2020 hastable below is information about any contributions and earnings credited to the accounts maintained by the NEOs under nonqualified deferred compensation agreementsarrangements and the account balances on June 30, 2023. Mr. Lauder is the only NEO who has deferred a portion of his compensation. Name
Contributions
in Last FY
($)
Contributions
in Last FY
($)
Earnings
in Last FY
($)(1)
Withdrawals/
Distributions
($)
Balance at
Last FYE
($) William P. Lauder — — $ 464,056(2) $ 3,411,670(3) $ 6,014,640(4) Fabrizio Freda — — — — — Tracey T. Travis — — — — — Jane Hertzmark Hudis — — — — — Peter Jueptner — — — — — account balances.Certain employment agreements may also impact the treatment of equity grants upon termination of employment. For purposes of the following descriptions, "Contract Year"“Contract Year” means the twelve-month period beginning July 1 and ending the following June 30. 2020 Proxy Statement|81days'days’ prior written notice, in which event we will have no further obligations after termination other than (i) to pay the executive'sexecutive’s accrued but unpaid salary and bonus compensation, if any, earned but not paid that relates to any Contract Year ended prior to the date of termination.termination, and (ii) if applicable, to make certain post termination payments and continue certain benefits in connection with the enforcement of the non-compete provision. The executive may also be entitled to benefits under applicable employee benefit plans and programs (e.g., health care and pension plans).those NEOsexecutives who are retirement eligible, including all of the NEOs, if they choose to retire, (i) stock options that are not yet exercisable become immediately exercisable and may be exercised until the end of the option term; (ii) annual RSUs will continue to vest and be paid in accordance with the vesting schedule for each award; and (iii) annual PSUs will continue to vest and be paid as if the executive had been employed throughout the entire award period, with payment to be made at the same time such awards are paid to active executives.executives, provided, however, that such equity awards were granted more than 6 months prior to the retirement date. If an executive who is retirement eligible, including all the NEOs, chooses to retire within 6 months of any equity grant date, such equity grant(s) shall become null and void on the last day of active employment (last day worked). Such conditions for treatment of equity for executives who are retirement eligible do not apply to the (i) non-annual PSUs granted to Mr. Freda onin February 2018 and March 2021; (ii) non-annual PVUs granted to Mr. Freda in March 2021; (iii) non-annual PSUs granted to Ms. Travis in September 4, 2015 for 387,848 shares2021; (iv) non-annual RSUs granted to Ms. Hudis in September 2021; and (v) non-annual RSUs granted to Mr. Jueptner in February 14, 2018 for 195,940 shares. Therefore, for2023. For those PSUs, With regard toThe Share Incentive Plan provides for forfeiture of outstanding awards in the non-annual RSUs granted to Ms. Travis and Ms. Stanleyevent that after termination of employment, a participant competes with or otherwise conducts herself or himself in fiscal 2020, upon voluntary termination, any unvested RSUs are forfeited. Among oura manner adversely affecting the Company. All of the NEOs Mr. Freda, Mr. Demsey, and Mr. Prouvé were retirement eligible as of June 30, 2020,2023. Pursuant to HR policy, retired executives are eligible to receive (i) payments for retirement transition services (up to a total of $75,000), and (ii) Company products (up to $1,280 per year, based on suggested retail prices) at no cost to the retired executive. In addition, Mr. Lauder is entitled to payment in lieu of a medical reimbursement program that was discontinued a number of years ago. Mr. Freda is no longer entitled to payment in lieu of such medical reimbursement program, as explained in “Compensation Discussion and Analysis – Other Benefits and Perquisites – Benefits.” Additionally, upon retirement, Mr. Lauder and Ms. Travis and Ms. Stanley were not.NEO'sNEO’s employment at any time by reason of a "permanent disability" (as“permanent disability” (as defined in the executive'sexecutive’s employment agreement), in which event the executive will be entitled to receive the following payments: (i) any accrued but unpaid salary and other amounts to which the executive otherwise is entitled prior to the date of termination; (ii) base salary in effect at the time of termination (less disability payments) for a period of one year from the date of termination; (iii) bonus compensation earned but not paid that relates to any Contract Year ended prior to the date of termination; (iv) unpaid bonus compensation otherwise payable for the Contract Year in which the disability occurred pro-rated to the date of termination; and (v) reimbursement for financial counseling services in the amount of $5,000 for a period of one year from the date of termination.executive'sexecutive’s permanent disability, the executive will be entitled to continue to participate, to the extent permitted by applicable law and the applicable plan, in our health care, life insurance, and accidental death and dismemberment insurance benefit plans for a period of one year from the date of termination (the "Disability“Disability Continuation Period"Period”) disregarding any required delay in payments pursuant to Section 409A of the Internal Revenue Code ("(“Section 409A"409A”). Since continued participation in the 401(k) Savings Plan and the RGA Plan is not permitted under law during the Disability Continuation Period, the executive will be entitled to receive cash payments equivalent in value to the executive'sexecutive’s continued participation in all qualified and nonqualified pension plans and the maximum matching contribution allowable under the 401(k) Savings Plan (the "Pension“Pension Replacement Payment"Payment”) during the Disability Continuation Period. See "Effect“Effect of Certain Tax Regulations on Payments"Payments” below.executive'sexecutive’s permanent disability (as determined in the applicable grant agreement), stock options that are not yet exercisable 82|2020 Proxy Statementexecutive'sexecutive’s employment agreement and the Share Incentive Plan (including the applicable grant agreements). For annual equity grants, (i) RSUs will continue to vest pro-rated for the number of full months the executive was employed or receiving salary continuation payments during the applicable vesting period and will be paid in accordance with the vesting schedule for each award. The executiveaward and (ii) PSUs will continue to vest and be entitled to a pro-rated payment of PSUspaid based on actual achievement of PSU opportunities, for the number of full months the executive was employed or receiving salary continuation payments during the award period, with the payment to be made at the same time payments for the award periodsuch awards are paid to active executives. If the executive is retirement eligible, the provisions relating to termination upon retirement for annual equity grants will apply in lieu of the provisions relating to "permanent“permanent disability." officer'sofficer’s death during the term of employment, the executive'sexecutive’s beneficiary or legal representative will be entitled to receive the payments described in clauses (i) through (v) in the first paragraph above under "Termination“Termination of Employment upon Permanent Disability"Disability” as if employment had been terminated by us upon permanent disability.executive'sexecutive’s death, stock options RSUs, and PSUsRSUs will be treated the same as if employment had been terminated by us upon permanent disability, except that PSUs and RSUs will be paid as soon as practicable after the executive'sexecutive’s death. Annual PSUs are paid at target if an executive’s death occurs prior to the end of the Award Period. If such termination occurs after the end of the Award Period, the annual PSU will be paid based on actual achievement. For provisions regarding termination of employment upon death with regard to the non-annual PVUs and PSUs are pro-rated based on target. If the executive is retirement eligible at the time of death, the provisions relatinggranted to termination upon retirement will apply in lieu of the provisions relating to death.executive'sexecutive’s employment for any reason upon 90 days'days’ prior written notice. In the event of our termination of the executive'sexecutive’s employment (other than for cause, permanent disability, or death) or a termination by the executive for an uncured "material breach" (as“material breach” (as defined below), the executive will be entitled to payments described in clauses (i), (iii), and (iv) above under "Termination“Termination of Employment upon Permanent Disability"Disability” as if employment had been terminated by us upon permanent disability. In addition, the executive will be entitled to receive: (i) his or her base salary in effect at the time of termination for a period ending on a date two years from the date of termination; (ii) his or her bonus compensation equal to 50% of the average of incentive compensation bonuses previously paid or payable to the executive under the EAIP during the past two completed fiscal years; (iii) reimbursement for financial counseling services in the amount of $10,000 covering a period of two years from the date of termination; and (iv) participation, for a period ending on a date two years from the date of termination, to the extent permitted by applicable law, in our benefit plans and receipt of cash payments equivalent in value to the executive'sexecutive’s Pension Replacement Payment during such period. For purposes of the employment agreements, "material breach"“material breach” is a material reduction in the executive'sexecutive’s authority, functions, duties, or responsibilities, a material reduction in the executive'sexecutive’s target compensation (unless such reduction is similar to other officers and/or employees generally), or our failure to pay any award to which the executive is entitled under his or her employment agreement.executive'sexecutive’s employment by us without "cause" (as“cause” (as defined in the applicable grant agreement), stock options and RSUs will be treated the same as if employment had been terminated by us upon permanent disability. Annual PSUs are forfeited if termination by us without "cause"“cause” occurs before the end of the first year of the award period. However, if termination occurs after the end of the first year of the award period, the executive will be entitled to a pro-rated payout based on actual achievement of annual PSU opportunities for the number of full months the executive was employed or receiving salary continuation payments during the award period, with the payment to be made at the same 2020 Proxy Statement|83"Compensation“Compensation Discussion and Analysis – Additional (non-annual) PSU Grants to CEO in Fiscal 2018 and Fiscal 2016"Compensation” for information about the treatment of Mr. Freda'sFreda’s additional (non-annual) PVU and PSU grants upon termination of employment."good reason" (as“good reason” (as defined below) within two years of a "change“change of control" (ascontrol” (as defined below) of "good reason"“good reason” means that the executive is assigned duties that are materially inconsistent with his or her position, the executive'sexecutive’s position is materially diminished, we breach the compensation arrangements of the employment agreement (and fail to timely cure the breach), the executive is required to relocate to any location more than 50 miles from the location at which the executive performed services prior to the change of control, or we fail to have any successor company assume the executive'sexecutive’s employment agreement."change“change of control"control” or "change“change in control"control” is deemed to have occurred upon any of the following events:"continuing directors" (as“continuing directors” (as defined below) cease for any reason to constitute a majority of the board of directors. "Continuing directors"“Continuing directors” mean the directors in office on the effective date of the executive officer'sofficer’s employment agreement and any successor to those directors and any additional director who was nominated or selected by a majority of the continuing directors in office at the time of his or her nomination or selection;SEC'sSEC’s proxy rules."change“change in control,"” each annual PSU and each RSU will vest and become payable in shares as soon as practicable, but not later than two weeks after the change in control. If the executive is retirement eligible, the provisions relating to termination upon retirement will apply in lieu of the provisions described in this paragraph. If stock options are assumed by an acquirer, then exercisability will be accelerated after a change in control if the executive is terminated without "cause"“cause” or the executive terminates for "good“good reason."” Similarly, if RSUs are assumed by the acquirer, vesting will be accelerated after a change in control if the executive is terminated without "cause"“cause” or the executive terminates for "good“good reason."” Annual PSUs in respect of the performance period that has not ended will become payable after a change in 84|2020 Proxy Statement"cause" (as“cause” (as defined in the employment agreement), the executive will be entitled to receive accrued but unpaid salary and any benefit under our employee benefit programs and plans as of the date of such termination. In addition, the employment agreements contain certain provisions concerning termination for "cause."“cause.” For purposes of these agreements and the equity grant agreements, "cause"“cause” means that the executive has engaged in any of a list of specified activities including, but not limited to, material breach of, or willful refusal to perform duties under, the agreements, failure to follow a material lawful directive of the Chief Executive Officer, Executive Chairman, or the Board of Directors that is within the scope of the executive'sexecutive’s duties, willful stock options, PSUs, and RSUsequity grants are forfeited.executive'sexecutive’s employment agreement or any vested benefit the executive may have in any of our benefit plans. The agreements also include provisions relating to nondisclosure of our confidential information and non-competition with us."specified employee"“specified employee” for purposes of Section 409A at the time of termination of service. Amounts that otherwise would have been paid during this six-month delay will be paid in a lump sum on the first day after such period expires. 2020 Proxy Statement|85officer'sofficer’s estate under the officer'sofficer’s employment agreement or related plans and agreements, including the Share Incentive Plan (including the applicable grant agreements), if employment had been terminated under various circumstances on June 30, 2020.2023. For equity awards, we used the closing stock price on June 30, 2020, the last trading day of fiscal 2020. to a NEO can only be determined at the time of the actual termination.NEO'sNEO’s employment is terminated. These amounts include accrued but unpaid salary and bonus compensation earned but not paid that relate to any Contract Year ended prior to termination, and in all circumstances but termination for cause, unpaid bonus compensation otherwise payable for the Contract Year in which termination occurred pro-rated to the date of termination.20202023 that would have become vested and/or exercisable upon a terminating event are shown at a value using the closing stock price on June 30, 20202023 of $188.68.$196.38, including the related cash dividend equivalents. The value of annual PSUs was computed at target for each of the NEOs. The value of non-annual PSUs and PVUs were computed assuming the achievement of the applicable performance goals, meaning that amounts are shown in the eventtable below for awards including the non-annual March 2021 PVU and PSU to Mr. Freda and the non-annual September 2021 PSU to Ms. Travis, despite the fact these awards have performance periods that run significantly past June 30, 2023. For example, the non-annual March 2021 PSU granted to Mr. Freda has a performance period of death (unless retirement eligible, in which caseJuly 1, 2021 – June 30, 2025, and the valuenon-annual March 2021 PVU granted to Mr. Freda has a performance period for cumulative operating income goal of PSUs was computed at maximum) and at maximum in the event of all other applicable termination events. , including stock options, stock awards, RSUs, and PSUs.. The exercise of stock options after termination of employment and the payment of RSUs, PVUs, or PSUs areis subject to the executive neither competing with, nor taking employment with or rendering service to one of our competitors, nor conducting himself or herself in a manner adversely affecting us.
• 86|2020 Proxy Statement• Retirement
($)Voluntary
Termination
($)Death
($)Disability
($)Termination
without
Cause or by
Executive for
Material
Breach
($)Termination
without Cause
or for Good
Reason
After Change
of Control
($)(4) $ 0 $ 0 $ 2,000,000 $ 2,000,000 $ 4,000,000 $ 4,000,000 0 0 0 0 2,382,338 2,382,338 6,754,843 6,754,843 6,754,843 6,754,843 6,754,843 6,754,843 9,439,957 9,439,957 42,967,468 42,967,468 47,158,407 47,158,407 10,059,582 10,059,582 10,059,582 10,059,582 10,059,582 10,059,582 0 0 0 32,906 65,813 65,813 0 0 0 485,000 969,900 969,900 0 0 5,000 53,935 107,870 127,870 $ 26,254,382 $ 26,254,382 $ 61,786,893 $ 62,353,734 $ 71,498,752 $ 71,518,752
$ 0 $ 0 $ 1,100,000 $ 1,100,000 $ 2,200,000 $ 2,200,000 0 0 0 0 668,025 668,025 0 0 2,484,505 2,484,505 2,484,505 2,484,505 0 0 3,083,844 3,083,844 3,603,521 3,603,521 0 0 3,936,005 3,936,005 5,454,004 5,659,553 0 0 0 27,309 54,618 54,618 0 0 0 53,955 141,924 141,924 0 0 5,000 25,844 51,688 71,688 $ 0 $ 0 $ 10,609,354 $ 10,711,462 $ 14,658,285 $ 14,883,834
$ 0 $ 0 $ 1,180,000 $ 1,180,000 $ 2,360,000 $ 2,360,000 0 0 0 0 841,875 841,875 3,114,803 3,114,803 3,114,803 3,114,803 3,114,803 3,114,803 3,844,037 3,844,037 3,844,037 3,844,037 3,844,037 3,844,037 4,209,141 4,209,141 4,209,141 4,209,141 4,209,141 4,209,141 0 0 0 25,084 50,167 50,167 0 0 0 62,969 199,851 199,851 0 0 5,000 37,485 74,970 94,970 $ 11,167,981 $ 11,167,981 $ 12,352,981 $ 12,473,519 $ 14,694,844 $ 14,714,844
($)
Termination
($)
($)
($)
without
Cause or by
Executive for
Material
Breach
($)
without Cause
or for Good
Reason
After Change
of Control
($)(5) William P. Lauder $ 0 $ 0 $ 1,575,000 $ 1,575,000 $ 3,150,000 $ 3,150,000 Bonus 0 0 0 0 1,503,650 1,503,650 Options 0 0 0 0 0 0 Annual PSUs 1,639,871 1,639,871 1,639,871 1,639,871 1,639,871 1,639,871 RSUs 1,812,635 1,812,635 1,812,635 1,812,635 1,812,635 1,812,635 0 0 0 22,310 44,619 44,619 0 0 0 91,839 266,537 266,537 0 0 5,000 36,798 73,596 93,596 Total $ 3,452,506 $ 3,452,506 $ 5,032,506 $ 5,178,452 $ 8,490,908 $ 8,510,908 Fabrizio Freda $ 0 $ 0 $ 2,100,000 $ 2,100,000 $ 4,200,000 $ 4,200,000 Bonus 0 0 0 0 2,432,150 2,432,150 Options 0 0 0 0 0 0 Annual PSUs 7,080,615 7,080,615 7,080,615 7,080,615 7,080,615 7,080,615 Non-annual PSUs 0 0 13,840,412 13,840,412 13,840,412 13,840,412 PVUs 0 0 17,341,787 17,341,787 17,341,787 17,341,787 RSUs 7,736,936 7,736,936 7,736,936 7,736,936 7,736,936 7,736,936 0 0 0 54,498 108,995 108,995 0 0 0 485,000 969,358 969,358 0 0 5,000 66,665 133,330 153,330 Total $ 14,817,551 $ 14,817,551 $ 48,104,751 $ 48,705,913 $ 53,843,584 $ 53,863,584 Tracey T. Travis $ 0 $ 0 $ 1,195,000 $ 1,195,000 $ 2,390,000 $ 2,390,000 Bonus 0 0 0 0 718,825 718,825 Options 0 0 0 0 0 0 Annual PSUs 2,752,949 2,752,949 2,752,949 2,752,949 2,752,949 2,752,949 Non-annual PSUs 0 0 2,188,234 2,188,234 2,917,645 2,917,645 RSUs 2,992,844 2,992,844 2,992,844 2,992,844 2,992,844 2,992,844 0 0 0 18,242 36,483 36,483 0 0 0 67,831 180,686 180,686 0 0 5,000 25,844 51,687 71,687 Total $ 5,745,793 $ 5,745,793 $ 9,134,027 $ 9,240,943 $ 12,041,120 $ 12,061,120 Jane Hertzmark Hudis $ 0 $ 0 $ 1,344,000 $ 1,344,000 $ 2,688,000 $ 2,688,000 Bonus 0 0 0 0 811,838 811,838 Options 0 0 0 0 0 0 Annual PSUs 2,065,462 2,065,462 2,065,462 2,065,462 2,065,462 2,065,462 Annual RSUs 2,269,882 2,269,882 2,269,882 2,269,882 2,269,882 2,269,882 Non-annual RSUs 0 0 2,042,331 2,042,331 2,042,331 2,042,331 0 0 0 18,242 36,483 36,483 0 0 0 81,142 208,041 208,041 0 0 5,000 30,425 60,850 80,850 Total $ 4,335,344 $ 4,335,344 $ 7,726,675 $ 7,851,484 $ 10,182,887 $ 10,202,887 Peter Jueptner $ 0 $ 0 $ 1,250,000 $ 1,250,000 $ 2,500,000 $ 2,500,000 Bonus 0 0 0 0 431,563 431,563 Options 0 0 0 0 0 0 Annual PSUs 952,864 952,864 952,864 952,864 952,864 952,864 RSUs 1,006,687 1,006,687 1,006,687 1,006,687 1,006,687 1,006,687 Non-annual RSUs 0 0 2,041,253 2,041,253 2,041,253 2,041,253 0 0 0 28,833 57,667 57,667 0 0 0 75,817 178,278 178,278 0 0 5,000 108,901 217,802 237,802 Total $ 1,959,551 $ 1,959,551 $ 5,255,804 $ 5,464,355 $ 7,386,113 $ 7,406,113 20208789 Retirement
($)Voluntary
Termination
($)Death
($)Disability
($)Termination
without
Cause or by
Executive for
Material
Breach
($)Termination
without Cause
or for Good
Reason
After Change
of Control
($)(4) $ 0 $ 0 $ 1,155,000 $ 1,155,000 $ 2,310,000 $ 2,310,000 0 0 0 0 1,364,213 1,364,213 2,808,205 2,808,205 2,808,205 2,808,205 2,808,205 2,808,205 3,915,216 3,915,216 3,915,216 3,915,216 3,915,216 3,915,216 4,135,647 4,135,647 4,135,647 4,135,647 4,135,647 4,135,647 0 0 0 22,941 45,881 45,881 0 0 0 64,690 206,983 206,983 0 0 5,000 62,390 124,780 144,780 $ 10,859,068 $ 10,859,068 $ 12,019,068 $ 12,164,089 $ 14,910,925 $ 14,930,925
$ 0 $ 0 $ 875,000 $ 875,000 $ 1,750,000 $ 1,750,000 0 0 0 0 600,000 600,000 0 0 32,991 32,991 32,991 32,991 0 0 385,728 385,728 578,592 578,592 0 0 1,739,736 1,739,736 2,783,578 3,131,525 0 0 0 26,432 52,863 52,863 0 0 0 0 0 0 0 0 5,000 18,200 36,400 56,400 $ 0 $ 0 $ 3,038,455 $ 3,078,086 $ 5,834,424 $ 6,202,371 officer'sofficer’s position.(2)(3)in all events other than retirement, voluntary termination, and death, and reimbursement for financial consulting services in all events other than retirement and voluntary termination;services; also includes up to $20,000 in legal fees upon termination for good reason after a change of control.(4)the PSU grantgrants to Mr. Freda on February 14, 2018,March 11, 2021, and the non-annual PSU grant to Ms. Travis on September 2, 2021, in each case made under the Share Incentive Plan, provide for "double trigger"“double trigger” payment events (i.e. payment is triggered as a result of a change of control and the termination of the executive'sexecutive’s employment other than voluntarily by such person). Based upon the unvested stock options, RSUs, and the above-referenced PSUPVU and PSUs held by the NEOs as of June 30, 2020,2023, if a change of control had occurred on that date, and such NEO'sNEO’s employment had been discontinued other than voluntarily by such person, each would have been entitled to the following amounts: Mr. Lauder, $1,812,635; Mr. Freda, $54,532,875$38,919,135 (including $37,718,450$13,840,412 in connection with the PSU grant made on February 14, 2018)March 11, 2021, and $17,341,787 in connection with the PVU grant made on March 11, 2021); Ms. Travis, $8,144,059;$5,910,489 (including $2,917,645 in connection with the non-annual PSU grant made on September 2, 2021); Ms. Hudis, $4,312,213; and Mr. Demsey, $7,323,944; Mr. Prouvé, $6,943,853; and Ms. Stanley, $3,164,516.Jueptner, $3,047,939. The change in control provisions for annual PSUs made under the Share Incentive Plan provide for "single trigger"“single trigger” payment events (i.e. payment is triggered as a result of the change of control itself, regardless of the executive'sexecutive’s continued employment). Based upon the unvested PSUs with a "single trigger"“single trigger” held by each of the NEOs as of June 30, 2020,2023, if a change of control had occurred on that date, the NEOs would 88|2020 Proxy Statement
Jueptner, $952,864.$9,439,957;$7,080,615; Ms. Travis, $3,603,521;$2,752,949; Ms. Hudis, $2,065,462; and Mr. Demsey, $3,844,037; Mr. Prouvé, $3,915,216; and Ms. Stanley, $578,592.20202023 other than our CEO was $28,879; $18,423,928$21,811,244 for fiscal 2020,2023, as reported in the "Total"“Total” column of our 20202023 Summary Compensation Table; and2020,2023, the total compensation of our CEO to the median of the annual total compensation of all employees resulted in a ratio of 638:645:1.the nature of retail operations in prestige beauty relies significantly on part-time and temporary employees. Over 35% of our employees who are within the scope of the pay ratio rules are part-time or temporary. Additionally, more than 65%over 70% of our employees who are within the scope of these rules are outside the United 2020,2023, to identify the median annual total compensation of our employees, we used the methodology and material assumptions, adjustments, and estimates noted below.2020,2023, which is within the last three months of fiscal 2020,2023, as the date upon which we would identify the median employee. We determined that, as of such date, our employee population consisted of approximately 72,00060,000 individuals working at the Company and consolidated subsidiaries. This was comprised of full-time, part-time, and temporary employees, with approximately 33%70% working outside the United States, and nearly 30% of these employees working in the United States, and approximately 67% working outside the United States.68,20057,000 individuals. Of these employees, approximately 37%70% were part-time or temporary employees,employed on a full-time basis, with the remainder (approximately 63%30%) employed on a full-timepart-time or temporary basis. Individuals working on a part-time or temporary basis include on-call and freelance employees. Under the de minimis exemption provided in the SEC rules, we excluded a total of 3,5912,838 employees from certain countries. The specific number of employees excluded from each country was: Argentina (225), Colombia (236)(156), India (427)(592), Kazakhstan (30)(79), Malaysia (624), Mexico (1,576)(984), Philippines (294)(207), Slovakia (31)Turkey (632), Ukraine (17)(55), and Vietnam (131)(133). The excluded employees did not exceed 5% of our total U.S. and non-U.S. employee population.20192022 and ending on March 31, 2020.2023. We used the 12-month average exchange rate to convert each non-U.S. employee'semployee’s total annual compensation to U.S. dollars to identify our median employee. We annualized compensation for full-time and part-time employees who were hired during this time frame. Using this methodology, we identified our median employee, who provides beauty adviceworks at a retail store outside the U.S.Company'sCompany’s pay ratio may not be comparable to the pay ratio reported by other companies. Fiscal Year
Compensation
Table Total for
PEO
Actually Paid
to PEO(1) Average
Summary
Compensation
Table Total for
Non-PEO
NEOs
Compensation
Actually Paid
to Non-PEO
NEOs(1) Value of Initial Fixed $100
Investment Based On: Net
Earnings
(millions)
EPS(3)
(non-GAAP)
(% Change in) Total
Shareholder
Return
Total
Shareholder
Return(2) (a) (b) (c) (d) (e) (f) (g) (h) (i) 2023 $ 21,811,244 $ (29,053,372) $ 7,648,501 $ 828,470 $ 106.96 $ 140.17 $ 1,010 (52)% 2022 25,480,056 (14,802,124) 11,203,938 8,968,835 137.13 131.49 2,408 12% 2021 65,996,984 198,805,234 9,918,104 26,666,930 169.92 123.29 2,875 57% Fiscal Year 2023 2022 2021 Adjustments ($) PEO Average for
Non-PEO
NEOs* PEO Average for
Non-PEO
NEOs* PEO Average for
Non-PEO
NEOs* Summary Compensation Table $ 21,811,244 $ 7,648,501 $ 25,480,056 $ 11,203,938 $ 65,996,984 $ 9,918,104 Less: Stock and Option
Awards Values Reported in
SCT for the Covered Year (15,625,008) (4,849,436) (14,825,039) (6,642,574) (55,644,760) (5,173,955) Plus: Fiscal Year-End Fair
Value of Outstanding and
Unvested Equity Awards
Granted in the Covered
Year 8,765,725 2,876,831 11,311,591 4,591,577 78,552,484 9,736,762 Increase (Decrease) in Fair
Value of Outstanding and
Unvested Equity Awards
Granted in Prior Years (35,941,852) (4,253,191) (34,764,409) (2,082,351) 83,008,440 8,984,489 Increase (Decrease) in Fair
Value as of Vesting Date of
Equity Awards Granted and
Vested in the Fiscal Year 0 0 0 462,276 0 0 Increase (Decrease) in Fair
Value of Equity Awards
Granted in Prior Years that
Vested in the Covered Year (8,810,463) (465,290) (3,001,535) 1,399,154 25,424,068 3,153,442 Plus: Fair Value of Dividends
or other Earnings Paid on
Stock Awards not otherwise
reflected in Fair Value or
Total Compensation 1,493,269 82,185 1,673,197 98,928 1,575,927 105,402 Less: Aggregate Change in
Actuarial Present Value of
Accumulated Benefit Under
Pension Plans (1,057,600) (320,134) (974,688) (197,538) (685,266) (214,243) Plus: Aggregate Service Cost
and Prior Service Costs for
Pension Plans 311,313 109,003 298,703 135,426 577,357 156,929 Compensation Actually Paid
(as calculated) $ (29,053,372) $ 828,470 $ (14,802,124) $ 8,968,835 $ 198,805,234 $ 26,666,930 Adjusted Performance Measures* 2020 ROIC OI Margin Percent ![[MISSING IMAGE: bc_capvstsr-pn.jpg]](/files/DEF 14A/0001104659-23-104591/bc_capvstsr-pn.jpg)
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8993 "independent directors"”independent directors” as defined by the Board and consistent with the rules of the New York Stock Exchange, has:Company'sCompany’s audited financial statements for the fiscal year ended June 30, 20202023 with management;KPMGPricewaterhouseCoopers LLP ("KPMG"(“PwC”) the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board (the "PCAOB"“PCAOB”) and the U.S. Securities and Exchange Commission (the "SEC"“SEC”); andKPMGPwC required by applicable requirements of the PCAOB regarding KPMG'sPwC’s communications with the Audit Committee concerning independence, and has discussed KPMG'sPwC’s independence with representatives of KPMG.20202023 be included in the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended June 30, 20202023 filed with the SEC.
Angela Wei Dong
Paul J. Fribourg
Jennifer HymanJennifer Tejada
Arturo Nuñez
(Item 2)Company'sCompany’s independent auditors and to approve the compensation for the independent auditors. The Audit Committee has appointed the firm of PricewaterhouseCoopers LLP ("PwC"(“PwC”), a registered public accounting firm, to serve as independent auditors of the Company for the fiscal year ending June 30, 2021,2024, subject to ratification of this appointment by the stockholders of the Company.appointmentcontinued retention of PwC is in the best interest of the Company and its stockholders. The Audit Committee Chair is directly involved in the selection of PwC'sPwC’s lead engagement partner. PwC has advised the Company that neither it nor any of its members has any direct or material indirect financial interest in the Company. One or more representatives of PwC is expected to be present at the Annual Meeting of Stockholders, will have an opportunity to make a statement, if any such representative desires to do so, and is expected to be available to respond to appropriate questions.Change in Independent Auditors As disclosed in the Company's Form 8-K filed on February 26, 2020, the Audit Committee approved the dismissal of KPMG LLP ("KPMG") as the Company's independent registered public accounting firm effective upon the completion of KPMG's audits and the issuance of its reports on the Company's consolidated financial statements and the effectiveness of internal control over financial reporting for the Company's fiscal year ended June 30, 2020 (fiscal 2020); such reports were included in the Company's Form 10-K for fiscal 2020 filed on August 28, 2020. KPMG had served as the Company's independent auditors since 2002. KPMG's audit reports on the Company's consolidated financial statements as of and for the fiscal years ended June 30, 2020 (fiscal 2020) and June 30, 2019 (fiscal 2019) did not contain any adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that (a) KPMG's fiscal 2020 audit report contained explanatory paragraphs stating that (i) "As discussed in Note 7 to the consolidated financial statements, the Company has changed its method of accounting for leases effective July 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases" and (ii) "As discussed in Note 14 to the consolidated financial statements, the Company has changed its method of accounting for revenue and related costs effective July 1, 2018 due to the adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers;" and (b) KPMG's fiscal 2019 audit report contained an explanatory paragraph stating that "As discussed in Note 13 to the consolidated financial statements, the Company has changed its method of accounting for revenue and related costs effective July 1, 2018 due to the adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers." KPMG's audit reports on the effectiveness of internal control over financial reporting as of June 30, 2020 and 2019 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. During the fiscal years ended June 30, 2020 and June 30, 2019, and in the subsequent interim period through August 28, 2020 (i) there were no disagreements with KPMG (within the meaning of Item 304(a)(1)(iv) of Regulation S-K ("Regulation S-K") of the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC")) on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure that if not resolved to KPMG's satisfaction, would have caused KPMG to make reference thereto in its reports; and (ii) there were no reportable events (as defined by Item 304(a)(1)(v) of Regulation S-K). One or more representatives of KPMG is expected to be present at the Annual Meeting of Stockholders, will have an opportunity to make a statement if any such representative desires to do so, and is expected to be available to respond to appropriate questions. 2020 Proxy Statement|9120202023 (fiscal 2023) and 2019,June 30, 2022 (fiscal 2022), the Company paid, or will pay, the following fees to KPMG and its affiliatesPwC for services rendered during the year or for the audit in respect of those years: Fee Type Fiscal 2023 Fiscal 2022 (in thousands) Audit Fees(1) $ 11,357 $ 10,537 Audit-Related Fees(2) 479 1,157 Tax Fees(3) 621 771 All Other Fees — — Total $ 12,457 $ 12,465 Fiscal 2020 Fiscal 2019 (in thousands) $ 10,863 $ 10,534 282 398 2,408 2,202 — — $ 13,553 $ 13,134 (1) Fiscal 2020 also includes fees for consents and comfort letters related to registration statements.audits concerning certain payments related to a previous acquisitionforeign statutory and/or contractual requirements and other audit-relatedassurance and related services.2020,2023, and none the independent auditorsPwC requires the affirmative vote of a majority of the votes cast by the holders of the shares of Class A Common Stock and Class B Common Stock of the Company voting in person or by proxy at the Annual Meeting of Stockholders. If the stockholders do not ratify the appointment of PwC, the Audit Committee will reconsider the appointment. The Board recommends a vote FOR the proposal to ratify the appointment of PricewaterhouseCoopers LLP as independent auditors of the Company for the fiscal year ending June 30, 2021.2024. Proxies received by the Board will be so voted unless a contrary choice is specified in the proxy. "Compensation“Compensation Discussion and Analysis"Analysis” above, the Company'sCompany’s compensation program for executive officers is designed to attract and retain world class talent and to motivate achievement of both our long-term and short-term goals. We believe that the design and governance of the Company'sCompany’s program supports, and aligns executive officers with, the business strategy and the overall goal to continue sustainable growth of net sales, profitability, and return on invested capital on an annual and long-term basis."Say“Say on Pay"Pay” resolution, seeks a stockholder advisory vote on the compensation of our Named Executive Officers as disclosed pursuant to Item 402 of Regulation S-K through the following resolution: "RESOLVED,Company'sCompany’s stockholders approve, on an advisory basis, the compensation paid to the Company'sCompany’s Named Executive Officers, as disclosed in the Company'sCompany’s Proxy Statement for the 20202023 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including Compensation Discussion and Analysis, compensation tables and narratives." The Company currently intends to hold an advisory vote to approve executive compensation annually, consistent with the advisory vote of the stockholders at the Company's 2017 Annual Meeting of Stockholders. The Board recommends a vote FOR the proposed resolution. Proxies received by the Board will be so voted unless a contrary choice is specified in the proxy.
(Item 4) 2020 Proxy Statement|93 stockholder'sstockholder’s vote to management; or (iv) to allow the independent inspectors of election to certify the results of the vote. The Company will retain an independent tabulator to receive and tabulate the proxies and independent inspectors of election to certify the results.20212024 Annual Meeting20212024 Annual Meeting and wishes to have such proposal considered for inclusion in the Company'sCompany’s proxy materials in reliance on Rule 14a-8 under the Securities Exchange Act of 1934, the proposal must be submitted in writing and received by the Secretary of the Company after the 20202023 Annual Meeting and no later than May 27, 2021.31, 2024. Such proposal also must meet the other requirements of the rules of the Securities and Exchange Commission relating to stockholder proposals.Company'sCompany’s bylaws establish an advance notice procedure with regard to certain matters, including stockholder proposals and nominations of individuals for election to the Board of Directors, outside the process of Rule 14a-8. In general, notice of a stockholder proposal or a director nomination for an annual meeting must be received by the Company not less than 60 days nor more than 90 days prior to the first anniversary of the date on which the Company first mailed its proxy materials for the preceding annual meeting of stockholders and must contain specified information and conform to certain requirements, as set forth in the bylaws. To be timely for the 20212024 Annual Meeting, the notice must be received by the Company on any date beginning no earlier than June 26, 202130, 2024 and ending on July 26, 2021.30, 2024. In order to comply with the SEC’s universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our Board’s nominees must provide notice to the Secretary of the Company that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934 no later than September 18, 2024. If the chairman at any meeting of stockholders determines that a stockholder proposal or director nomination was not made in accordance with the bylaws, the Company may disregard such proposal or nomination. In addition, if a stockholder submits a proposal outside of Rule 14a-8 for the 20212024 Annual Meeting and the proposal fails to comply with the advance notice procedure prescribed by the bylaws, then the Company'sCompany’s proxy may confer discretionary authority on the persons being appointed as proxies on behalf of the Board of Directors to vote on the proposal. SPENCER G. SMUL
Senior Vice President,
Deputy General Counsel and Secretary
New York, New York
September 28, 2023September 24, 2020 "Proxy“Proxy Statement Summary"Summary” and in the "Compensation“Compensation Discussion and Analysis,"” the Company presents certain non-GAAP financial information. We use certain non-GAAP financial measures, among other financial measures, to evaluate our operating performance, which represent the manner in which we conduct and view our business. Management believes that excluding certain items that are not comparable from period to period, or do not reflect the Company'sCompany’s underlying ongoing business, provides transparency for such items and helps investors and others compare and analyze our operating performance from period to period. In the future, we expect to incur charges or adjustments similar in nature to those presented below; however, the impact to the Company'sCompany’s results in a given period may be highly variable and difficult to predict. Our non-GAAP financial measures may not be comparable to similarly titled measures used by, or determined in a manner consistent with, other companies. While we consider the non-GAAP measures useful in analyzing our results, they are not intended to replace, or act as a substitute for, any presentation included in the consolidated financial statements prepared in conformity with U.S. GAAP.2020, 20192021 and 2017 goodwill and other intangible asset impairments; the fiscal 2020 long-lived asset impairments; the fiscal 2020impairments and gain on previously held equity method investment;investment (fiscal 2021 is net of the portion attributable to redeemable noncontrolling interest); fiscal 2019 impact of the provisional charges resulting from the enactment of the TCJA;Tax Cuts and Jobs Act (“TCJA”) on the fiscal 2019effective tax rate and gain on liquidation of an investment in a foreign subsidiary, net; the fiscal 2017 China deferred tax asset valuation allowance reversal; the fiscal 2015 impact of accelerated orders associated with the SMI rollout; the fiscal 2015 Venezuela remeasurement charge; and the effects of foreign currency translation.translation on Net Sales and Diluted EPS. The table below provides reconciliations between these non-GAAP financial measures and the most directly comparable U.S. GAAP measures. Also shown in the table below is information about our adjusted Return on Invested Capital financial measuremeasures disclosed in this Proxy Statement. Financial Metric
($ in million)
2023
2022
2021
2020
2019 Net Sales as reported $ 15,910 $ 17,737 $ 16,215 $ 14,294 $ 14,863 Returns associated with restructuring and other activities 27 4 14 — 3 Net Sales as adjusted $ 15,937 $ 17,741 $ 16,229 $ 14,294 $ 14,866 As Reported, year-over-year variance (10)% 9% 13% (4)% 9% Adjusted, year-over-year variance (10)% 9% 14% (4)% 9% (7)% 10% 11% (3)% 11% As Reported Net Sales growth (10)% 9% Impact of Acquisitions, Divestitures and
Brand Closures, net 1% (2)% Impact of Foreign Currency Translation 4% 1% Returns associated with restructuring and other activities — — Organic Net Sales growth(2) (6)% 8%
TABLE OF CONTENTS 2020 Proxy Statement|A-1 Financial Metric
2023
2022
2021
2020
2019 Operating Margin as reported 9.5% 17.9% 16.1% 4.2% 15.6% Goodwill, other intangible asset and long-lived asset
impairments 1.3% 1.3% 1.2% 10.0% 0.6% Changes in fair value of contingent
consideration — — — (0.1)% (0.2)% Returns and charges associated with
restructuring and other activities 0.5% 0.8% 1.4% 0.6% 1.6% Change in fair value of acquisition-related stock options 0.1% (0.3)% 0.2% — — Operating Margin as adjusted 11.4% 19.7% 18.9% 14.7% 17.5% Financial Metric
2023
2022
2021
2020
2019 Diluted EPS as reported $2.79 $6.55 $7.79 $1.86 $4.82 Goodwill, other intangible asset and long-lived asset impairments 0.44 0.50 0.40 3.31 0.23 Transition Tax resulting from the TCJA — — — — (0.03) Remeasurement of U.S. net deferred tax assets resulting from the TCJA — — — — 0.02 Net deferred tax liability related to certain foreign withholding taxes on planned repatriation resulting from the TCJA — — — — 0.02 Changes in fair value of contingent consideration — — (0.01) (0.04) (0.08) Other income, net, primarily the gain on previously held equity method investment — — (2.30) (1.20) — Gain on liquidation of an investment in a foreign subsidiary, net — — — — (0.15) Returns and charges associated with restructuring and other activities 0.18 0.31 0.48 0.19 0.51 Change in fair value of acquisition-related stock options
(less portion attributable to redeemable noncontrolling
interest) 0.05 (0.12) 0.09 — — Diluted EPS as adjusted $3.46 $7.24 $6.45 $4.12 $5.34 As Reported, year-over-year variance (57)% (16)% 100+% (61)% 63% Adjusted, year-over-year variance (52)% 12% 57% (23)% 18% (49)% 12% 54% (22)% 22% Return on Invested Capital, as reported 10.4 22.2 22.5 17.4 22.6 Return on Invested Capital, as adjusted (PSUs)(3) N/A(5) 26.6 24.6 18.5 25.7 11.2 22.1 N/A(5) 18.5 24.9 Certain amounts may not sum due to rounding Fiscal 2020 Fiscal 2020,
Constant
CurrencyFiscal
2019Change
over
Prior
YearChange over
Prior Year in
Constant
Currency(1)Fiscal
20173-Year
Compound
Annual Growth
Rate (or Basis
Point Change)Fiscal
20155-Year
Compound
Annual Growth
Rate (or Basis
Point Change) $ 14,294 $ 14,448 $ 14,863 (4%) (3% ) $ 11,824 7 % $ 10,780 6% — — — 178 — 3 2 — $ 14,294 $ 14,448 $ 14,866 (4%) (3% ) $ 11,826 7 % $ 10,958 5% 4.2 % 15.6 % (1,140)bp 14.3 % (1,010 )bp 14.9 % (1,070)bp — — — 1.2 % 10.0 % 0.6 % 0.3 % — (0.1 %) (0.2 %) (0.5 %) — — — — — 0.6 % 1.6 % 1.8 % — 14.7 % 17.5 % (280)bp 15.9 % (120 )bp 15.9 % (120)bp $ 1.86 $ 1.92 $ 4.82 (61%) (60% ) $ 3.35 (18% ) $ 2.82 (8%) — — — 0.21 3.31 0.23 0.06 — — (0.03 ) — — — 0.02 — — — 0.02 — — (0.04 ) (0.08 ) (0.12 ) 0.02 (1.20 ) — — — — (0.15 ) — — — — — 0.01 — — (0.20 ) — 0.19 0.51 0.38 — $ 4.12 $ 4.16 $ 5.34 (23%) (22% ) $ 3.47 6 % $ 3.07 6%
17.4
22.6
(520)bp
18.3
(90
)bp
21.5
(410)bp 18.5 25.7 (720)bp 18.9 (40 )bp 21.6 (310)bp
(1)Certain amounts do not sum due to rounding(1)WeBeginning in fiscal 2022, we calculate constant currency information by translating current yearcurrent-period results using prior year weighted-averagemonthly average foreign currency exchange rates and adjusting for the period-over-period impact of foreign currency cash flow hedging impactgain on previously held equity method investment and the incremental net loss associated with the acquisition of goodwill, other intangible assetDr.Jart+. Fiscal 2020 and long-lived asset impairments. Fiscal 2019 excludesalso exclude the impact of chargeschanges in the fair value of contingent consideration. Fiscal 2019 also excludes the gain on liquidation of an investment in a foreign subsidiary, net, the impact of the provisional adjustments resulting from the enactment of the TCJA on the effective tax rate, and the impact of the adoption of ASC 606.well as goodwill and other intangible asset impairments.a performance measure was not applicable for the respective period. 
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AVENUE NEWAVENUENEW YORK, NY 10153 VOTESCAN TO VIEW MATERIALS & VOTEVOTE BY INTERNET BeforeINTERNETBefore The Meeting - Go to www.proxyvote.com or scan the QR Barcode above UseaboveUse the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date.on November 16, 2023. Have your proxy card in hand when you access the web sitewebsite and follow the instructions to obtain your records and to create an electronic voting instruction form. Duringform.During The Meeting - Go to www.virtualshareholdermeeting.com/EL2020 YouEL2023You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTEinstructions.VOTE BY PHONE - 1-800-690-6903 Use1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date.on November 16, 2023. Have your proxy card in hand when you call and then follow the instructions. VOTEinstructions.VOTE BY MAIL Mark,MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D22166-P43128 KEEPV22212-P98385KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THISRECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. THEDATED.DETACH AND RETURN THIS PORTION ONLYTHE ESTÉE LAUDER COMPANIES INC. The Board of Directors recommends a vote "FOR" each nominee in Item 1 and "FOR" Items 2 and 3. 1. Election3.1.Election of five (5) Class III Directors Withhold Nominees: For For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. Charlene Barshefsky 2. Ratification1b. Angela Wei Dong 1c. Fabrizio Freda 1d. Gary M. Lauder 1e. Jane Lauder 2.Ratification of appointment of PricewaterhouseCoopers LLP as independent auditors for the 20212024 fiscal year. 1b. Wei Sun Christianson ! ! ! 1c. Fabrizio Freda 3. Advisory3.Advisory vote to approve executive compensation. 1d. Jane Lauder ForWithholdThe Board of Directors recommends "1 Year" for1 Year2 Years3 YearsAbstainthe following proposal:!!4. Advisory vote on the frequency of the advisory!!!!vote on executive compensation.!!We also will transact such other business as may properly come come!!before the meeting and any adjournments or postponements ofpostponementsof the meeting. 1e. Leonard A. Lauder!!!!For Against Abstain! ! !! ! ! Please sign exactly as your name appears hereon, date, and return in the enclosed envelope. If acting as executor, administrator, trustee, guardian, etc., you should so indicate when signing. If the signer is a corporation, please sign the full corporate name by duly authorized officer. If shares are held jointly, each stockholder named should sign. Signaturesign.Signature [PLEASE SIGN WITHIN BOX] Date SignatureDateSignature (Joint Owners)Date
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Stockholders. TheStockholders.The Proxy Statement and the Annual Report on Form 10-K are available at www.proxyvote.com. D22167-P43128 Proxy THEwww.proxyvote.com.V22213-P98385ProxyTHE ESTÉE LAUDER COMPANIES INC. CLASSINC.CLASS A COMMON STOCK ANNUALSTOCKANNUAL MEETING OF STOCKHOLDERS THISSTOCKHOLDERSTHIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS TheDIRECTORSThe undersigned, revoking all previous proxies, hereby constitutes and appoints Fabrizio Freda, Deirdre Stanley and Spencer G. Smul, and each of them, proxies with full power of substitution to vote for the undersigned all shares of Class A Common Stock of The Estée Lauder Companies Inc. (the "Company") which the undersigned would be entitled to vote if personally present at the Annual Meeting of Stockholders to be held on November 10, 2020,17, 2023, held virtually via www.virtualshareholdermeeting.com/EL2020,EL2023, at 10:00 a.m. (Eastern Time), and at any adjournment thereof, upon the matters described in the accompanying Proxy Statement and upon any other business that may properly come before the meeting or any adjournment thereof. Said proxies are directed to vote or refrain from voting as checked on the reverse side upon the matters listed on the reverse side, and otherwise in their discretion. Thisdiscretion.This proxy, when properly executed, will be voted as directed herein. If no direction is given, this proxy will be voted in accordance with the recommendations of the Company’s Board of Directors and, in the discretion of the proxy holders, upon such other business as may properly come before the meeting or any adjournment thereof. Continuedthereof.Continued and to be dated and signed on the reverse side.
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AVENUE NEWAVENUENEW YORK, NY 10153 VOTESCAN TO VIEW MATERIALS & VOTEVOTE BY INTERNET BeforeINTERNETBefore The Meeting - Go to www.proxyvote.com or scan the QR Barcode above UseaboveUse the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date.on November 16, 2023. Have your proxy card in hand when you access the web sitewebsite and follow the instructions to obtain your records and to create an electronic voting instruction form. Duringform.During The Meeting - Go to www.virtualshareholdermeeting.com/EL2020 YouEL2023You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTEinstructions.VOTE BY PHONE - 1-800-690-6903 Use1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date.on November 16, 2023. Have your proxy card in hand when you call and then follow the instructions. VOTEinstructions.VOTE BY MAIL Mark,MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D22168-Z78096 KEEPV22214-Z86010KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THISRECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. THEDATED.DETACH AND RETURN THIS PORTION ONLYTHE ESTÉE LAUDER COMPANIES INC. The Board of Directors recommends a vote "FOR" each nominee in Item 1 and "FOR" Items 2 and 3. 1. Election3.1.Election of five (5) Class III Directors For Withhold Nominees: For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. Charlene Barshefsky 2. Ratification1b. Angela Wei Dong 1c. Fabrizio Freda 1d. Gary M. Lauder 1e. Jane Lauder 2.Ratification of appointment of PricewaterhouseCoopers LLP as independent auditors for the 20212024 fiscal year. 1b. Wei Sun Christianson ! ! ! 1c. Fabrizio Freda 3. Advisory3.Advisory vote to approve executive compensation. 1d. Jane Lauder ForWithholdThe Board of Directors recommends "1 Year" for1 Year2 Years3 YearsAbstainthe following proposal:!!4. Advisory vote on the frequency of the advisory!!!!vote on executive compensation.!!We also will transact such other business as may properly come come!!before the meeting and any adjournments or postponements ofpostponementsof the meeting. 1e. Leonard A. Lauder!!!!For Against Abstain! ! !! ! ! Please sign exactly as your name appears hereon, date, and return in the enclosed envelope. If acting as executor, administrator, trustee, guardian, etc., you should so indicate when signing. If the signer is a corporation, please sign the full corporate name by duly authorized officer. If shares are held jointly, each stockholder named should sign. Signaturesign.Signature [PLEASE SIGN WITHIN BOX] Date SignatureDateSignature (Joint Owners)Date
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Stockholders. TheStockholders.The Proxy Statement and the Annual Report on Form 10-K are available at www.proxyvote.com. D22169-Z78096 Proxy THEwww.proxyvote.com.V22215-Z86010ProxyTHE ESTÉE LAUDER COMPANIES INC. CLASSINC.CLASS B COMMON STOCK ANNUALSTOCKANNUAL MEETING OF STOCKHOLDERS THISSTOCKHOLDERSTHIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS TheDIRECTORSThe undersigned, revoking all previous proxies, hereby constitutes and appoints Fabrizio Freda, Deirdre Stanley and Spencer G. Smul, and each of them, proxies with full power of substitution to vote for the undersigned all shares of Class B Common Stock of The Estée Lauder Companies Inc. (the "Company") which the undersigned would be entitled to vote if personally present at the Annual Meeting of Stockholders to be held on November 10, 2020,17, 2023, held virtually via www.virtualshareholdermeeting.com/EL2020,EL2023, at 10:00 a.m. (Eastern Time), and at any adjournment thereof, upon the matters described in the accompanying Proxy Statement and upon any other business that may properly come before the meeting or any adjournment thereof. Said proxies are directed to vote or refrain from voting as checked on the reverse side upon the matters listed on the reverse side, and otherwise in their discretion. Thisdiscretion.This proxy, when properly executed, will be voted as directed herein. If no direction is given, this proxy will be voted in accordance with the recommendations of the Company’s Board of Directors and, in the discretion of the proxy holders, upon such other business as may properly come before the meeting or any adjournment thereof. Continuedthereof.Continued and to be dated and signed on the reverse side.
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