As filed with the Securities and Exchange Commission on November 5, 1998
Registration No. ___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE ESTEE LAUDER COMPANIES INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 11-2408943
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
767 Fifth Avenue
New York, New York 10153
(212) 572-4200
(Address, Including Zip Code, and Telephone Number,
including Area Code, of Registrant's Principal Executive Offices)
THE ESTEE LAUDER COMPANIES INC.
FISCAL 1999 SHARE INCENTIVE PLAN
(Full Title of Plan)
Saul H. Magram, Esq.
Senior Vice President, General Counsel and Secretary
The Estee Lauder Companies Inc.
767 Fifth Avenue
New York, New York 10153
(212) 572-4200
(Name and Address, Including Zip Code,
and Telephone Number, Including Area Code, of Agent For Service)
Copies to:
Jeffrey J. Weinberg, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
Title of Each Class of Securities to be Amount to be Proposed Maximum Proposed Maximum Amount of
Registered Registered(1) Offering Price Per Aggregate Offering Registration Fee
Share(2) Price(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock, par value $.01 per 5,000,000 $63.96875 $319,843,750 $88,916.56
share
===================================================================================================================================
</TABLE>
(1) Plus such indeterminate number of shares of Common Stock of the Registrant
as may be issued to prevent dilution resulting from stock dividends, stock
splits or similar transactions in accordance with Rule 416 under the Securities
Act of 1933.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 of the Securities Act of 1933.
================================================================================
NYFS11...:\90\44090\0009\2579\FRM9308R.11B
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1.
The documents containing the information specified in Part I of this
Registration Statement will be sent or given to employees as specified by Rule
428(b)(1). Such documents are not required to be and are not filed with the
Securities and Exchange Commission (the "Commission") either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424. These documents and the documents incorporated by reference in this
Registration Statement pursuant to Item 3 of Part II of this Form S-8, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act of 1933, as amended (the "Securities Act").
Item 2.
Upon written or oral request, any of the documents incorporated by
reference in Item 3 of Part II of this Registration Statement (which documents
are incorporated by reference in this Section 10(a) Prospectus), other documents
required to be delivered to eligible employees pursuant to Rule 428(b) or
additional information about The Estee Lauder Companies Inc. Fiscal 1999 Share
Incentive Plan are available without charge by contacting:
The Estee Lauder Companies Inc.
767 Fifth Avenue
New York, New York 10153
(212) 572-4200
Attention: Human Resources Department -
Stock Plan Administration
I-1
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Commission by The Estee
Lauder Companies Inc. (the "Company") are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1998;
(b) The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998; and
(c) The description of the Company's Class A Common Stock contained
in the Company's Registration Statement on Form 8-A filed with the Commission
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on November 8, 1995 including any amendment or report filed for
the purpose of updating such description.
All documents subsequently filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment to this Registration Statement which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Generally, Section 145 of the General Corporate Law of the State of
Delaware (the "GCL") permits a corporation to indemnify certain persons made a
party to an action, by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or enterprise. To the extent that person has been successful in any
such matter, that person shall be indemnified against expenses actually and
reasonably incurred by him. In the case of an action by or in the right of the
corporation, no indemnification may be made in respect of any matter as to which
that person was adjudged liable unless and only to the extent that the Delaware
Court of Chancery or the court in which the action was brought determines that
despite the adjudication of liability that person is fairly and reasonably
entitled to indemnify for proper expenses.
Section 102(b)(7) of the GCL enables a Delaware corporation to
include a provision in its certificate of incorporation limiting a director's
liability to the corporation or its stockholders for monetary damages for
breaches of fiduciary duty as a director. The Company has adopted a provision in
its Certificate of Incorporation that provides for such limitation to the full
extent permitted under Delaware law.
II-1
<PAGE>
The Company's Bylaws provide for indemnification of its directors
and officers to the fullest extent permitted by law.
The directors and officers of the Company are covered by insurance
policies indemnifying against certain liabilities, including certain liabilities
arising under the Securities Act which might be incurred by them in such
capacities and against which they cannot be indemnified by the Company.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
4(a) - Form of Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 of
Amendment No. 3 to the Company's Registration
Statement on Form S-1, dated as of November 13, 1995
("Amendment No. 3")).
4(b) - Form of Amended & Restated By-Laws (incorporated by
reference to Exhibit 3.2 to Amendment No. 3).
4(c) - The Estee Lauder Companies Inc. Fiscal 1999 Share
Incentive Plan.
5 - Opinion of Weil, Gotshal & Manges LLP.
23(a) - Consent of Arthur Andersen LLP.
23(b) - Consent of Weil, Gotshal & Manges LLP (included in
Exhibit 5).
24 - Power of Attorney (included as part of the signature
page to this Registration Statement and incorporated
herein by reference).
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraph (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by the foregoing paragraphs is contained in periodic
reports filed with or furnished to the Commission by the Company
pursuant to
II-2
<PAGE>
Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of
the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provi-
sions, or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connec- tion with the
securities being registered, the Company will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate juris- diction the question whether
such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, State of New York, on this 5th day of
November, 1998.
THE ESTEE LAUDER COMPANIES INC.
By: /s/ Robert J. Bigler
--------------------------------------
Name: Robert J. Bigler
Title: Senior Vice President and Chief
Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Robert J. Bigler, Andrew
Cavanaugh and Saul H. Magram acting individually, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments to this Registration Statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Leonard A. Lauder Chairman of the Board of November 5, 1998
- ------------------------ Directors, Chief Executive
Leonard A. Lauder Officer and Director
(Principal Executive Officer)
/s/ Ronald S. Lauder Director November 5, 1998
- ------------------------
Ronald S. Lauder
/s/ William P. Lauder Director November 5, 1998
- ------------------------
William P. Lauder
/s/ Fred H. Langhammer Director November 5, 1998
- ------------------------
Fred H. Langhammer
Director November 5, 1998
- ------------------------
Marshall Rose
II-4
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ P. Roy Vagelos Director November 5, 1998
- ------------------------
P. Roy Vagelos
/s/ Faye Wattleton Director November 5, 1998
- ------------------------
Faye Wattleton
/s/ Robert J. Bigler Senior Vice President and November 5, 1998
- ------------------------ Chief Financial Officer
Robert J. Bigler (Principal Financial and
Accounting Officer)
II-5
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
4(a) - Form of Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3.1 of Amendment No. 3 to the
Company's Registration Statement on Form S-1, dated as of
November 13, 1995 ("Amendment No. 3")).
4(b) - Form of Amended & Restated By-Laws (incorporated by
reference to Exhibit 3.2 to Amendment No. 3).
4(c) - The Estee Lauder Companies Inc. Fiscal 1999 Share Incentive
Plan.
5 - Opinion of Weil, Gotshal & Manges LLP.
23(a) - Consent of Arthur Andersen LLP.
23(b) - Consent of Weil, Gotshal & Manges LLP (included in Exhibit
5).
24 - Power of Attorney (included as part of the signature page
to this Registration Statement and incorporated herein by
reference).
II-6
EXHIBIT 4(c)
THE ESTEE LAUDER COMPANIES INC.
FISCAL 1999 SHARE INCENTIVE PLAN
1. Purpose. The Estee Lauder Companies Inc. Fiscal 1999 Share Incentive
Plan (the "Plan") is intended to provide incentives which will attract, retain
and motivate highly competent persons as non-employee directors, officers, and
key employees of, and consultants to, The Estee Lauder Companies Inc. (the
"Company") and its subsidiaries and affiliates, by providing them opportunities
to acquire shares of the Class A Common Stock, par value $.01 per share, of the
Company ("Class A Common Stock") or to receive monetary payments based on the
value of such shares pursuant to the Benefits (as defined below) described
herein. Additionally, the Plan is intended to assist in further aligning the
interests of the Company's non-employee directors, officers, key employees and
consultants to those of its other stockholders.
2. Administration.
(a) The Plan will be administered by a committee (the "Committee")
appointed by the Board of Directors of the Company from among its members (which
may be the Compensation Committee) and shall be comprised, unless otherwise
determined by the Board of Directors, solely of not less than two members who
shall be (i) "Non-Employee Directors" within the meaning of Rule 16b-3(b)(3) (or
any successor rule) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and (ii) "outside directors" within the meaning of
Treasury Regulation Section 1.162-27(e)(3) under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Committee is authorized,
subject to the provisions of the Plan, to establish such rules and regulations
as it deems necessary for the proper administration of the Plan and to make such
determinations and interpretations and to take such action in connection with
the Plan and any Benefits granted hereunder as it deems necessary or advisable.
All determinations and interpretations made by the Committee shall be binding
and conclusive on all participants and their legal representatives. No member of
the Committee and no employee of the Company shall be liable for any act or
failure to act hereunder, except in circumstances involving his or her bad
faith, gross negligence or willful misconduct, or for any act or failure to act
hereunder by any other member or employee or by any agent to whom duties in
connection with the administration of this Plan have been delegated. The Company
shall indemnify members of the Committee and any agent of the Committee who is
an employee of the Company, a subsidiary or an affiliate against any and all
liabilities or expenses to which they may be subjected by reason of any act or
failure to act with respect to their duties on behalf of the
NYFS11...:\90\44090\0009\306\PLN5038N.13I
<PAGE>
Plan, except in circumstances involving such person's bad faith, gross
negligence or willful misconduct.
(b) The Committee may delegate to one or more of its members, or to one or
more agents, such administrative duties as it may deem advisable, and the
Committee, or any person to whom it has delegated duties as aforesaid, may
employ one or more persons to render advice with respect to any responsibility
the Committee or such person may have under the Plan. The Committee may employ
such legal or other counsel, consultants and agents as it may deem desirable for
the administration of the Plan and may rely upon any opinion or computation
received from any such counsel, consultant or agent. Expenses incurred by the
Committee in the engagement of such counsel, consultant or agent shall be paid
by the Company, or the subsidiary or affiliate whose employees have benefitted
from the Plan, as determined by the Committee.
3. Participants. Participants will consist of such officers and key
employees of, and such consultants to, the Company and its subsidiaries and
affiliates as the Committee in its sole discretion determines to be
significantly responsible for the success and future growth and profitability of
the Company and whom the Committee may designate from time to time to receive
Benefits under the Plan. Non-employee directors of the Company shall participate
in the Plan only to the extent provided in Section 12 hereof. Designation of a
participant in any year shall not require the Committee to designate such person
to receive a Benefit in any other year or, once designated, to receive the same
type or amount of Benefit as granted to the participant in any other year. The
Committee shall consider such factors as it deems pertinent in selecting
participants and in determining the type and amount of their respective
Benefits.
4. Type of Benefits. Benefits under the Plan may be granted in any one or
a combination of (a) Stock Options, (b) Stock Appreciation Rights, (c) Stock
Awards, (d) Performance Awards and (e) Stock Units (each as described below, and
collectively, the "Benefits"). Stock Awards, Performance Awards, and Stock Units
may, as determined by the Committee in its discretion, constitute
Performance-Based Awards, as described in Section 11 hereof. Benefits shall be
evidenced by agreements (which need not be identical) in such forms as the
Committee may from time to time approve; provided, however, that in the event of
any conflict between the provisions of the Plan and any such agreements, the
provisions of the Plan shall prevail.
2
<PAGE>
5. Common Stock Available Under the Plan.
(a) Subject to the provisions of this Section 5 and any adjustments made
in accordance with Section 14 hereof, the maximum number of shares of Class A
Common Stock that may be delivered to participants (including permitted
assignees) and their beneficiaries under this Plan shall be equal to the sum of:
(i) 5,000,000 shares of Class A Common Stock, which may be authorized and
unissued or treasury shares; and (ii) up to 2,000,000 shares of Class A Common
Stock that are represented by awards granted or to be granted under any prior
plan of the Company or under any employment agreement with the Company, which
are forfeited, expire or are cancelled without the delivery of shares of Class A
Common Stock or which result in the forfeiture of shares of Class A Common Stock
back to the Company. Any shares of Class A Common Stock covered by a Benefit (or
portion of a Benefit) granted under the Plan, which is forfeited or canceled,
expires or, in the case of a Benefit other than a Stock Option, is settled in
cash, shall be deemed not to have been delivered for purposes of determining the
maximum number of shares of Class A Common Stock available for delivery under
the Plan. The preceding sentence shall apply only for purposes of determining
the aggregate number of shares of Class A Common Stock subject to Benefits but
shall not apply for purposes of determining the maximum number of shares of
Class A Common Stock with respect to which Benefits (including the maximum
number of shares of Class A Common Stock subject to Stock Options and Stock
Appreciation Rights) may be granted to an individual participant under the Plan.
(b) If any Stock Option is exercised by tendering shares of Class A Common
Stock, either actually or by attestation, to the Company as full or partial
payment in connection with the exercise of a Stock Option under this Plan or any
prior plan of the Company, only the number of shares of Class A Common Stock
issued net of the shares of Class A Common Stock tendered shall be deemed
delivered for purposes of determining the maximum number of shares of Class A
Common Stock available for delivery under the Plan. Further, shares of Class A
Common Stock delivered under the Plan in settlement, assumption or substitution
of outstanding awards (or obligations to grant future awards) under the plans or
arrangements of another entity shall not reduce the maximum number of shares of
Class A Common Stock available for delivery under the Plan, to the extent that
such settlement, assumption or substitution is as a result of the Company or its
subsidiaries or affiliates acquiring another entity (or an interest in another
entity). This Section 5(b) shall apply only for purposes of determining the
aggregate number of shares of Class A Common Stock subject to Benefits but shall
not apply for purposes of determining (x) the maximum number of shares of Class
A Common Stock with respect to which Benefits (including the maximum number of
shares of Class A Common Stock subject to Stock Options and Stock Appreciation
Rights) may be granted to an individual participant under the Plan or (y) the
maximum number of shares of Class A Common Stock that may be delivered through
Stock Options under the Plan.
3
<PAGE>
(c) Subject to any adjustments made in accordance with Section 14 hereof,
the following additional aggregate and individual maximums are imposed under the
Plan. The aggregate number of shares of Class A Common Stock that may be
delivered through Stock Options shall be the lesser of (i) 7,000,000 and (ii)
the maximum number of shares of Class A Common Stock that may be delivered under
the Plan, as specified in Section 5(a) hereof. The number of shares of Class A
Common Stock with respect to which Stock Options and Stock Appreciation Rights
may be granted to an individual participant under the Plan during the term of
the Plan shall not exceed 2,000,000. The number of shares of Class A Common
Stock with respect to which Benefits may be granted to an individual participant
under the Plan during the term of the Plan shall not exceed 2,000,000.
6. Stock Options. Stock Options will consist of awards from the Company
that will enable the holder to purchase a number of shares of Class A Common
Stock, at set terms. Stock Options may be "incentive stock options" ("Incentive
Stock Options"), within the meaning of Section 422 of the Code, or Stock Options
which do not constitute Incentive Stock Options ("Nonqualified Stock Options").
The Committee will have the authority to grant to any participant one or more
Incentive Stock Options, Nonqualified Stock Options, or both types of Stock
Options (in each case with or without Stock Appreciation Rights). Each Stock
Option shall be subject to such terms and conditions consistent with the Plan as
the Committee may impose from time to time, subject to the following
limitations:
(a) Exercise Price. Each Stock Option granted hereunder shall have
such per-share exercise price as the Committee may determine at the date
of grant; provided, however, subject to subsection (d) below, that the
per-share exercise price shall not be less than 100% of the Fair Market
Value (as defined below) of the Common Stock on the date the Stock Option
is granted.
(b) Payment of Exercise Price. The option exercise price may be paid
in cash or, in the discretion of the Committee, by the delivery of shares
of Class A Common Stock of the Company then owned by the participant, by
the withholding of shares of Class A Common Stock for which a Stock Option
is exercisable or by a combination of these methods. In the discretion of
the Committee, payment may also be made by delivering a properly executed
exercise notice to the Company together with a copy of irrevocable
instructions to a broker to deliver promptly to the Company the amount of
sale or loan proceeds to pay the exercise price. To facilitate the
foregoing, the Company may enter into agreements for coordinated
procedures with one or more brokerage firms. The Committee may prescribe
any other method of paying the exercise price that it determines to be
consistent with applicable law and the purpose of the Plan, including,
without limitation, in lieu of the exercise of a Stock Option by delivery
of shares of Class A Common Stock of the Company then owned by a
participant, providing the
4
<PAGE>
Company with a notarized statement attesting to the number of shares
owned, where upon verification by the Company, the Company would issue to
the participant only the number of incremental shares to which the
participant is entitled upon exercise of the Stock Option. The Committee
may, at the time of grant, provide for the grant of a subsequent
Restoration Stock Option if the exercise price is paid for by delivering
previously owned shares of Class A Common Stock of the Company.
Restoration Stock Options (i) may be granted in respect of no more than
the number of shares of Class A Common Stock tendered in exercising the
predecessor Stock Option, (ii) shall have an exercise price equal to the
Fair Market Value on the date the Restoration Stock Option is granted, and
(iii) may have an exercise period that does not extend beyond the
remaining term of the predecessor Stock Option. In determining which
methods a participant may utilize to pay the exercise price, the Committee
may consider such factors as it determines are appropriate.
(c) Exercise Period. Stock Options granted under the Plan shall be
exercisable at such time or times and subject to such terms and conditions
as shall be determined by the Committee; provided, however, that no Stock
Option shall be exercisable later than ten years after the date it is
granted except in the event of a participant's death, in which case, the
exercise period of such participant's Stock Options may be extended beyond
such period but no later than one year after the participant's death. All
Stock Options shall terminate at such earlier times and upon such
conditions or circumstances as the Committee shall in its discretion set
forth in such option agreement at the date of grant.
(d) Limitations on Incentive Stock Options. Incentive Stock Options
may be granted only to participants who are employees of the Company or
one of its subsidiaries (within the meaning of Section 424(f) of the Code)
at the date of grant. The aggregate Fair Market Value (determined as of
the time the Stock Option is granted) of the Class A Common Stock with
respect to which Incentive Stock Options are exercisable for the first
time by a participant during any calendar year (under all option plans of
the Company and of any parent corporation or subsidiary corporation (as
defined in Sections 424(e) and (f) of the Code, respectively)) shall not
exceed $100,000. For purposes of the preceding sentence, Incentive Stock
Options will be taken into account in the order in which they are granted.
The per-share exercise price of an Incentive Stock Option shall not be
less than 100% of the Fair Market Value of the Class A Common Stock on the
date of grant, and no Incentive Stock Option may be exercised later than
ten years after the date it is granted; provided, however, Incentive Stock
Options may not be granted to any participant who, at the time of grant,
owns stock possessing (after the application of the attribution rules of
Section 424(d) of the Code) more than 10% of the total combined voting
power of all classes of stock of the
5
<PAGE>
Company or any parent or subsidiary corporation of the Company, unless the
exercise price is fixed at not less than 110% of the Fair Market Value of
the Class A Common Stock on the date of grant and the exercise of such
option is prohibited by its terms after the expiration of five years from
the date of grant of such option. In addition, no Incentive Stock Option
may be issued to a participant in tandem with a Nonqualified Stock Option.
(e) Post-Employment Exercises. The exercise of any Stock Option after
termination of employment shall be subject to satisfaction of the
conditions precedent that the participant neither (i) competes with, or
takes other employment with or renders services to a competitor of, the
Company, its subsidiaries or affiliates without the written consent of the
Company, nor (ii) conducts himself or herself in a manner adversely
affecting the Company.
7. Stock Appreciation Rights.
(a) The Committee may, in its discretion, grant Stock Appreciation
Rights to the holders of any Stock Options granted hereunder. In addition,
Stock Appreciation Rights may be granted independently of, and without
relation to, Stock Options. A Stock Appreciation Right means a right to
receive a payment in cash, Class A Common Stock or a combination thereof,
in an amount equal to the excess of (x) the Fair Market Value, or other
specified valuation, of a specified number of shares of Class A Common
Stock on the date the right is exercised over (y) the Fair Market Value,
or other specified valuation (which shall be no less than the Fair Market
Value) of such shares of Class A Common Stock on the date the right is
granted, all as determined by the Committee; provided, however, that if a
Stock Appreciation Right is granted in tandem with or in substitution for
a Stock Option, the designated Fair Market Value in the award agreement
may be the Fair Market Value on the date such Stock Option was granted.
Each Stock Appreciation Right shall be subject to such terms and
conditions as the Committee shall impose from time to time.
(b) Stock Appreciation Rights granted under the Plan shall be
exercisable at such time or times and subject to such terms and conditions
as shall be determined by the Committee; provided, however, that no Stock
Appreciation Rights shall be exercisable later than ten years after the
date it is granted except in the event of a participant's death, in which
case, the exercise period of such participant's Stock Appreciation Rights
may be extended beyond such period but no later than one year after the
participant's death. All Stock Appreciation Rights shall terminate at such
earlier times and upon such conditions or circumstances as the Committee
shall in its discretion set forth in such right at the date of grant.
6
<PAGE>
(c) The exercise of any Stock Appreciation Right after termination of
employment shall be subject to satisfaction of the conditions precedent
that the participant neither (i) competes with, or takes other employment
with or renders services to a competitor of, the Company, its subsidiaries
or affiliates without the written consent of the Company, nor (ii)
conducts himself or herself in a manner adversely affecting the Company.
8. Stock Awards. The Committee may, in its discretion, grant Stock Awards
(which may include mandatory payment of bonus incentive compensation in stock)
consisting of Class A Common Stock issued or transferred to participants with or
without other payments therefor. Stock Awards may be subject to such terms and
conditions as the Committee determines appropriate, including, without
limitation, restrictions on the sale or other disposition of such shares, the
right of the Company to reacquire such shares for no consideration upon
termination of the participant's employment within specified periods, and may
constitute Performance-Based Awards, as described in Section 11 hereof. The
Committee may require the participant to deliver a duly signed stock power,
endorsed in blank, relating to the Class A Common Stock covered by such an
Award. The Committee may also require that the stock certificates evidencing
such shares be held in custody or bear restrictive legends until the
restrictions thereon shall have lapsed. The Stock Award shall specify whether
the participant shall have, with respect to the shares of Class A Common Stock
subject to a Stock Award, all of the rights of a holder of shares of Class A
Common Stock of the Company, including the right to receive dividends and to
vote the shares.
9. Performance Awards.
(a) Performance Awards may be granted to participants at any time and from
time to time, as shall be determined by the Committee. Performance Awards may
constitute Performance-Based Awards, as described in Section 11 hereof. The
Committee shall have complete discretion in determining the number, amount and
timing of awards granted to each participant. Such Performance Awards may be in
the form of shares of Class A Common Stock or Stock Units. Performance Awards
may be awarded as short-term or long-term incentives. Performance targets may be
based upon, without limitation, Company-wide, divisional and/or individual
performance.
(b) With respect to those Performance Awards that are not intended to
constitute Performance-Based Awards, the Committee shall have the authority at
any time to make adjustments to performance targets for any outstanding
Performance Awards which the Committee deems necessary or desirable unless at
the time of establishment of such targets the Committee shall have precluded its
authority to make such adjustments.
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(c) Payment of earned Performance Awards shall be made in accordance with
terms and conditions prescribed or authorized by the Committee. The participant
may elect to defer, or the Committee may require or permit the deferral of, the
receipt of Performance Awards upon such terms as the Committee deems
appropriate.
10. Stock Units.
(a) The Committee may, in its discretion, grant Stock Units to
participants hereunder. The Committee shall determine the criteria for the
vesting of Stock Units. Stock Units may constitute Performance-Based Awards, as
described in Section 11 hereof. A Stock Unit granted by the Committee shall
provide payment in shares of Class A Common Stock at such time as the award
agreement shall specify. Shares of Class A Common Stock issued pursuant to this
Section 10 may be issued with or without other payments therefor as may be
required by applicable law or such other consideration as may be determined by
the Committee. The Committee shall determine whether a participant granted a
Stock Unit shall be entitled to a Dividend Equivalent Right (as defined below).
(b) Upon vesting of a Stock Unit, unless the Committee has determined to
defer payment with respect to such unit or a participant has elected to defer
payment under subsection (c) below, shares of Class A Common Stock representing
the Stock Units shall be distributed to the participant unless the Committee,
with the consent of the participant, provides for the payment of the Stock Units
in cash or partly in cash and partly in shares of Class A Common Stock equal to
the value of the shares of Class A Common Stock which would otherwise be
distributed to the participant.
(c) Prior to the year with respect to which a Stock Unit may vest, the
participant may elect not to receive Class A Common Stock upon the vesting of
such Stock Unit and for the Company to continue to maintain the Stock Unit on
its books of account. In such event, the value of a Stock Unit shall be payable
in shares of Class A Common Stock pursuant to the agreement of deferral.
(d) A "Stock Unit" means a notional account representing one share of
Class A Common Stock. A "Dividend Equivalent Right" means the right to receive
the amount of any dividend paid on the share of Class A Common Stock underlying
a Stock Unit, which shall be payable in cash or in the form of additional Stock
Units.
11. Performance-Based Awards. Certain Benefits granted under the Plan may
be granted in a manner such that the Benefits qualify for the performance-based
compensation exemption of Section 162(m) of the Code ("Performance-Based
Awards"). As determined by the Committee in its sole discretion, either the
granting or vesting of such Performance-Based
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Awards shall be based on achievement of hurdle rates and/or growth rates in one
or more business criteria that apply to the individual participant, one or more
business units or the Company as a whole. The business criteria shall be as
follows, individually or in combination: (i) net earnings; (ii) earnings per
share; (iii) net sales growth; (iv) market share; (v) net operating profit; (vi)
expense targets; (vii) working capital targets relating to inventory and/or
accounts receivable; (viii) operating margin; (ix) return on equity; (x) return
on assets; (xi) planning accuracy (as measured by comparing planned results to
actual results); (xii) market price per share; and (xiii) total return to
stockholders. In addition, Performance-Based Awards may include comparisons to
the performance of other companies, such performance to be measured by one or
more of the foregoing business criteria. With respect to Performance-Based
Awards, (i) the Committee shall establish in writing (x) the performance goals
applicable to a given period, and such performance goals shall state, in terms
of an objective formula or standard, the method for computing the amount of
compensation payable to the participant if such performance goals are obtained
and (y) the individual employees or class of employees to which such performance
goals apply no later than 90 days after the commencement of such period (but in
no event after 25% of such period has elapsed) and (ii) no Performance-Based
Awards shall be payable to or vest with respect to, as the case may be, any
participant for a given period until the Committee certifies in writing that the
objective performance goals (and any other material terms) applicable to such
period have been satisfied. With respect to any Benefits intended to qualify as
Performance-Based Awards, after establishment of a performance goal, the
Committee shall not revise such performance goal or increase the amount of
compensation payable thereunder (as determined in accordance with Section 162(m)
of the Code) upon the attainment of such performance goal. Notwithstanding the
preceding sentence, the Committee may reduce or eliminate the number of shares
of Class A Common Stock or cash granted or the number of shares of Class A
Common Stock vested upon the attainment of such performance goal.
12. Non-Employee Director Formula Awards.
(a) (i) On the date of the first annual meeting of stockholders of the
Company which is at least six months after the date a non-employee director is
first elected to the Board of Directors of the Company, he or she will be
granted 1,000 shares of Class A Common Stock, without restrictions, accompanied
by an amount in cash for reimbursement of income taxes related to such grant.
(ii) During the first five years of service as a director of the
Company, 25% of the annual retainer payable to a non-employee director will
automatically be paid in shares of Class A Common Stock, without restrictions,
on the date of the annual meeting of stockholders. The number of shares to be
received by the non-employee director as part of the annual retainer will be
equal to 25% of the annual retainer divided by the average closing price
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of the Company's Class A Common Stock for the twenty days on which trading
occurred next preceding the date of payment.
(iii) Notwithstanding the foregoing, neither clauses (i) nor (ii)
shall be effective until the date on which grants of, and annual retainers paid
in, shares of Class A Common Stock cease to be made to non-employee directors
pursuant to Section 11 of Company's Fiscal 1996 Share Incentive Plan, or on such
other date as the Committee may determine.
(b) The agreements accompanying the awards and grants made under this
Section 12 may contain additional restrictions or limitations not inconsistent
with the provisions of the Plan.
13. Foreign Laws. The Committee may grant Benefits to individual
participants who are subject to the tax laws of nations other than the United
States, which Benefits may have terms and conditions as determined by the
Committee as necessary to comply with applicable foreign laws. The Committee may
take any action which it deems advisable to obtain approval of such Benefits by
the appropriate foreign governmental entity; provided, however, that no such
Benefits may be granted pursuant to this Section 13 and no action may be taken
which would result in a violation of the Exchange Act, the Code or any other
applicable law.
14. Adjustment Provisions; Change in Control.
(a) If there shall be any change in the Class A Common Stock of the
Company, through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, reverse stock split, split up, spinoff, combination of
shares, exchange of shares, dividend in kind or other like change in capital
structure or distribution (other than normal cash dividends) to stockholders of
the Company, an adjustment shall be made to each outstanding Stock Option and
Stock Appreciation Right such that each such Stock Option and Stock Appreciation
Right shall thereafter be exercisable for such securities, cash and/or other
property as would have been received in respect of the Class A Common Stock
subject to such Stock Option or Stock Appreciation Right had such Stock Option
or Stock Appreciation Right been exercised in full immediately prior to such
change or distribution, and such an adjustment shall be made successively each
time any such change shall occur. In addition, in the event of any such change
or distribution, in order to prevent dilution or enlargement of participants'
rights under the Plan, the Committee will have authority to adjust, in an
equitable manner, the number and kind of shares that may be issued under the
Plan, the number and kind of shares subject to outstanding Benefits, the
exercise price applicable to outstanding Benefits, and the Fair Market Value of
the Class A Common Stock and other value determinations applicable to
outstanding Benefits. Appropriate adjustments may also be made by the Committee
in the terms of any
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Benefits under the Plan to reflect such changes or distributions and to modify
any other terms of outstanding Benefits on an equitable basis, including
modifications of performance targets and changes in the length of performance
periods. In addition, other than with respect to Stock Options, Stock
Appreciation Rights, and other awards intended to constitute Performance-Based
Awards, the Committee is authorized to make adjustments to the terms and
conditions of, and the criteria included in, Benefits in recognition of unusual
or nonrecurring events affecting the Company or the financial statements of the
Company, or in response to changes in applicable laws, regulations, or
accounting principles. Notwithstanding the foregoing, (i) each such adjustment
with respect to an Incentive Stock Option shall comply with the rules of Section
424(a) of the Code, and (ii) in no event shall any adjustment be made which
would render any Incentive Stock Option granted hereunder other than an
incentive stock option for purposes of Section 422 of the Code.
(b) Notwithstanding any other provision of this Plan, if there is a Change
in Control of the Company, all then outstanding Stock Options and Stock
Appreciation Rights shall immediately become exercisable. For purposes of this
Section 14(b), a "Change in Control" of the Company shall be deemed to have
occurred upon any of the following events:
(i) A change in control of the direction and administration of the
Company's business of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Exchange Act; or
(ii) During any period of two (2) consecutive years, the individuals
who at the beginning of such period constitute the Company's Board of
Directors or any individuals who would be "Continuing Directors" (as
hereinafter defined) cease for any reason to constitute at least a
majority thereof; or
(iii) The Company's Class A Common Stock shall cease to be publicly
traded; or
(iv) The Company's Board of Directors shall approve a sale of all or
substantially all of the assets of the Company, and such transaction shall
have been consummated; or
(v) The Company's Board of Directors shall approve any merger,
consolidation, or like business combination or reorganization of the
Company, the consummation of which would result in the occurrence of any
event described in Section 14(b)(ii) or (iii) above, and such transaction
shall have been consummated.
Notwithstanding the foregoing, (A) changes in the relative beneficial ownership
among members of the Lauder family and family-controlled entities shall not, by
itself, constitute a Change in Control of the Company, (B) any spin-off of a
division or subsidiary of the
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Company to its stockholders and (C) any event listed in (i) through (v) above
that the Board of Directors determines not to be a Change in Control of the
Company, shall not constitute a Change in Control of the Company.
For purposes of this Section 14(b), "Continuing Directors" shall mean (x)
the directors of the Company in office on the Effective Date (as defined below)
and (y) any successor to any such director and any additional director who after
the Effective Date was nominated or selected by a majority of the Continuing
Directors in office at the time of his or her nomination or selection.
The Committee, in its discretion, may determine that, upon the occurrence
of a Change in Control of the Company, each Stock Option and Stock Appreciation
Right outstanding hereunder shall terminate within a specified number of days
after notice to the holder, and such holder shall receive, with respect to each
share of Class A Common Stock subject to such Stock Option or Stock Appreciation
Right, an amount equal to the excess of the Fair Market Value of such shares of
Class A Common Stock immediately prior to the occurrence of such Change in
Control over the exercise price per share of such Stock Option or Stock
Appreciation Right; such amount to be payable in cash, in one or more kinds of
property (including the property, if any, payable in the transaction) or in a
combination thereof, as the Committee, in its discretion, shall determine. The
provisions contained in the preceding sentence shall be inapplicable to a Stock
Option or Stock Appreciation Right granted within six (6) months before the
occurrence of a Change in Control if the holder of such Stock Option or Stock
Appreciation Right is subject to the reporting requirements of Section 16(a) of
the Exchange Act and no exception from liability under Section 16(b) of the
Exchange Act is otherwise available to such holder.
15. Nontransferability. Each Benefit granted under the Plan to a
participant shall not be transferable otherwise than by will or the laws of
descent and distribution, and shall be exercisable, during the participant's
lifetime, only by the participant. In the event of the death of a participant,
each Stock Option or Stock Appreciation Right theretofore granted to him or her
shall be exercisable during such period after his or her death as the Committee
shall in its discretion set forth in such option or right at the date of grant
and then only by the executor or administrator of the estate of the deceased
participant or the person or persons to whom the deceased participant's rights
under the Stock Option or Stock Appreciation Right shall pass by will or the
laws of descent and distribution. Notwithstanding the foregoing, at the
discretion of the Committee, an award of a Benefit other than an Incentive Stock
Option may permit the transferability of a Benefit by a participant solely to
the participant's spouse, siblings, parents, children and grandchildren or
trusts for the benefit of such persons or partnerships, corporations, limited
liability companies or other entities owned solely by such persons,
12
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including trusts for such persons, subject to any restriction included in the
award of the Benefit.
16. Other Provisions. The award of any Benefit under the Plan may also be
subject to such other provisions (whether or not applicable to the Benefit
awarded to any other participant) as the Committee determines appropriate,
including, without limitation, for the installment purchase of Class A Common
Stock under Stock Options, for the installment exercise of Stock Appreciation
Rights, to assist the participant in financing the acquisition of Class A Common
Stock, for the forfeiture of, or restrictions on resale or other disposition of,
Class A Common Stock acquired under any form of Benefit, for the acceleration of
exercisability or vesting of Benefits in the event of a change in control of the
Company, for the payment of the value of Benefits to participants in the event
of a change in control of the Company, or to comply with federal and state
securities laws, or understandings or conditions as to the participant's
employment in addition to those specifically provided for under the Plan.
17. Fair Market Value. For purposes of this Plan and any Benefits awarded
hereunder, Fair Market Value shall be the closing price of the Company's Class A
Common Stock on the date of calculation (or on the last preceding trading date
if Class A Common Stock was not traded on such date) if the Company's Class A
Common Stock is readily tradeable on a national securities exchange or other
market system, and if the Company's Class A Common Stock is not readily
tradeable, Fair Market Value shall mean the amount determined in good faith by
the Committee as the fair market value of the Class A Common Stock of the
Company.
18. Withholding. All payments or distributions of Benefits made pursuant
to the Plan shall be net of any amounts required to be withheld pursuant to
applicable federal, state and local tax withholding requirements. If the Company
proposes or is required to distribute Class A Common Stock pursuant to the Plan,
it may require the recipient to remit to it or to the corporation that employs
such recipient an amount sufficient to satisfy such tax withholding requirements
prior to the delivery of any certificates for such Class A Common Stock. In lieu
thereof, the Company or the employing corporation shall have the right to
withhold the amount of such taxes from any other sums due or to become due from
such corporation to the recipient as the Committee shall prescribe. The
Committee may, in its discretion and subject to such rules as it may adopt
(including any as may be required to satisfy applicable tax and/or non-tax
regulatory requirements), permit an optionee or award or right holder to pay all
or a portion of the federal, state and local withholding taxes arising in
connection with any Benefit consisting of shares of Class A Common Stock by
electing to have the Company withhold shares of Class A Common Stock having a
Fair Market Value equal to the amount of tax to be withheld, such tax calculated
at rates required by statute or regulation.
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19. Tenure. A participant's right, if any, to continue to serve the
Company or any of its subsidiaries or affiliates as an officer, employee, or
otherwise, shall not be enlarged or otherwise affected by his or her designation
as a participant under the Plan.
20. Unfunded Plan. Participants shall have no right, title, or interest
whatsoever in or to any investments which the Company may make to aid it in
meeting its obligations under the Plan. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship between the Company and any
participant, beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall be paid
from the general funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of such
amounts except as expressly set forth in the Plan. The Plan is not intended to
be subject to the Employee Retirement Income Security Act of 1974, as amended.
21. No Fractional Shares. No fractional shares of Class A Common Stock
shall be issued or delivered pursuant to the Plan or any Benefit. The Committee
shall determine whether cash, or Benefits, or other property shall be issued or
paid in lieu of fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
22. Duration, Amendment and Termination. No Benefit shall be granted more
than ten years after the Effective Date. The Committee may amend the Plan from
time to time or suspend or terminate the Plan at any time. No amendment of the
Plan may be made without approval of the stockholders of the Company if the
amendment will: (i) disqualify any Incentive Stock Options granted under the
Plan; (ii) increase the aggregate number of shares of Class A Common Stock that
may be delivered through Stock Options under the Plan; (iii) increase either of
the maximum amounts which can be paid to an individual participant under the
Plan as set forth in the third and fourth sentences of Section 5(c) hereof; (iv)
change the types of business criteria on which Performance-Based Awards are to
be based under the Plan; or (v) modify the requirements as to eligibility for
participation in the Plan.
23. Governing Law. This Plan, Benefits granted hereunder and actions taken
in connection herewith shall be governed and construed in accordance with the
laws of the State of New York (regardless of the law that might otherwise govern
under applicable New York principles of conflict of laws).
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24. Effective Date.
(a) The Plan shall be effective as of July 21, 1998, the date on which the
Plan was adopted by the Committee (the "Effective Date"), provided that the Plan
is approved by the stockholders of the Company at an annual meeting or any
special meeting of stockholders of the Company within 12 months of the Effective
Date, and such approval of stockholders shall be a condition to the right of
each participant to receive any Benefits hereunder. Any Benefits granted under
the Plan prior to such approval of stockholders shall be effective as of the
date of grant (unless, with respect to any Benefit, the Committee specifies
otherwise at the time of grant), but no such Benefit may be exercised or settled
and no restrictions relating to any Benefit may lapse prior to such stockholder
approval, and if stockholders fail to approve the Plan as specified hereunder,
any such Benefit shall be cancelled.
(b) This Plan shall terminate on July 21, 2008 (unless sooner terminated
by the Committee).
15
EXHIBIT 5
WEIL, GOTSHAL & MANGES LLP
A LIMITED LIABILITY PARTNERSHIP
INCLUDING PROFESSIONAL CORPORATIONS
767 FIFTH AVENUE
NEW YORK, NY 10153
212-310-8000
(FAX) 212-310-8007
November 5, 1998
The Estee Lauder Companies Inc.
767 Fifth Avenue
New York, New York 10153
Ladies and Gentlemen:
We have acted as counsel to The Estee Lauder Companies Inc. (the
"Corporation") in connection with the preparation of the Registration Statement
on Form S-8 (the "Registration Statement") filed by the Corporation with the
Securities and Exchange Commission on the date hereof with respect to 5,000,000
shares of Class A Common Stock, par value $.01 per share (the "Common Stock"),
of the Corporation being registered in connection with The Estee Lauder
Companies Inc. Fiscal 1999 Share Incentive Plan (the "Plan").
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Registration Statement, the
Plan and such corporate records, agreements, documents and other instruments,
and such certificates or comparable documents of public officials and of
officers and representatives of the Corporation, and have made such inquiries of
such officers and representatives, as we have deemed relevant and necessary as a
basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such latter documents. As to all questions
of fact material to this opinion that have not been independently established,
we have relied upon certificates or comparable documents of officers and
representatives of the Corporation.
NYFS11...:\90\44090\0009\2579\OPN0268L.550
<PAGE>
The Estee Lauder Companies Inc.
November 5, 1998
Page 2
Based upon the foregoing, and subject to the qualifications stated
herein, we are of the opinion that the 5,000,000 shares of Common Stock being
registered pursuant to the Registration Statement have been duly authorized and,
if and when issued and delivered upon receipt by the Corporation of the required
consideration in accordance with the Plan, will be validly issued, fully paid
and non-assessable.
We hereby consent to the filing of a copy of this opinion with the
Securities and Exchange Commission as an exhibit to the Registration Statement
The opinions expressed herein are limited to the laws of the State
of New York, the corporate laws of the State of Delaware and the federal laws of
the United States, and we express no opinion as to the effect on the matters
covered by this letter of the laws of any other jurisdiction.
Very truly yours,
/s/ Weil, Gotshal & Manges LLP
Exhibit 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement on Form S-8 of our
report dated August 11, 1998 included in The Estee Lauder Companies Inc.'s
Annual Report on Form 10-K for the fiscal year ended June 30, 1998 and to all
references to our firm included in this registration statement.
/s/ Arthur Andersen LLP
New York, New York
November 5, 1998
