Estee Lauder tightens option vesting rules and adds clawbacks

Rhea-AI Filing Summary

The company adopted a new form of Stock Option Award Agreement for grants under its Amended and Restated Fiscal 2002 Share Incentive Plan. Under the new form, employees terminated without cause who are not retirement-eligible (including executive officers) will receive pro rata vesting of unvested options only through the last day paid, with remaining unvested options forfeited; retirement-eligible employees retain full vesting on retirement. The agreement expands restrictive covenants—confidentiality, non-competition, non-solicitation, non-disclosure, non-interference, and non-disparagement—and adds a forfeiture and clawback provision for covenant non-compliance. The full form is filed as Exhibit 10.1 and incorporated by reference.

Positive

• Strengthened governance: addition of forfeiture and clawback provisions improves contractual remedies for covenant breaches
• Reduced contingent dilution: pro rata vesting on termination without cause limits potential full vesting of unvested options and may modestly lower long-term dilution

Negative

• Tighter post-employment restrictions: expanded non-compete and non-solicit clauses may increase legal and compliance risk in some jurisdictions
• Potential retention impact: reduced vesting protections on termination could affect employee and executive retention or severance negotiations

Insights

Compensation and Governance Analyst

TL;DR: The change reduces post-termination option vesting for non-retirement eligible employees and strengthens employer protections via expanded covenants and clawbacks.

The amendment shifts the balance of post-employment equity treatment toward the company by replacing prior full vesting on termination without cause with pro rata vesting through the last paid day for non-retirement-eligible employees, which lowers potential dilution and long-term compensation cost tied to involuntary terminations. Enhanced restrictive covenants and a clawback/forfeiture mechanism increase contractual protections against competitive activity and disclosure risk, strengthening governance and enforceability. For investors, this is a governance/compensation-policy update rather than an immediate financial event; it may modestly reduce future long-term dilution and executive retention risk but does not provide near-term financial metrics.

Labor and Employment Risk Specialist

TL;DR: Stronger covenants and clawbacks raise compliance and litigation risk while tightening the company’s post-employment protections.

Expanding non-competition, non-solicitation, and non-disparagement clauses and introducing clawbacks increases the company’s ability to enforce post-employment restrictions but may elevate the risk of disputes or challenges depending on jurisdictional enforceability. The pro rata vesting change reduces contingent compensation obligations for terminated, non-retirement-eligible employees, which could affect retention dynamics and severance negotiations. The filing does not disclose any quantification of affected headcount, historical grant sizes, or expected financial impact, so materiality to earnings or cash flows cannot be determined from the text provided.

0001001250false00010012502025-08-212025-08-21

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

August 21, 2025

The Estée Lauder Companies Inc.

(Exact name of registrant as specified in its charter)

Delaware

1-14064

11-2408943

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

767 Fifth Avenue, New York, New York

10153

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code

212-572-4200

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Class A Common Stock, $.01 par value			EL			New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 5.02(e) Compensatory Arrangements of Certain Officers

On August 21, 2025, the Stock Plan Subcommittee of the Compensation Committee of the Board of Directors of The Estée Lauder Companies Inc. (the “Company”) approved a new form of Stock Option Award Agreement, which will be used to make grants to executive officers and non-executive employees under the Company’s Amended and Restated Fiscal 2002 Share Incentive Plan, as amended November 8, 2024.

The new form provides that, in the event of a termination of employment without cause, employees who are not retirement-eligible, including executive officers, will receive pro rata vesting of unvested stock options through the last day paid, rather than full vesting under the prior forms. All remaining unvested stock options will be forfeited. Retirement-eligible employees will continue to receive full vesting upon retirement. The new form also expands and revises the restrictive covenants applicable to option holders, including confidentiality, non-competition, non-solicitation, non-disclosure, non-interference, and non-disparagement provisions, and includes a new forfeiture and clawback provision for non-compliance with such covenants.

The foregoing description of the new form of Stock Option Award Agreement is qualified in its entirety by reference to the form which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits. See Exhibit Index below, incorporated herein by reference.

Exhibit Index

Exhibit No.						Description
10.1*						Form of Stock Option Agreement under The Estée Lauder Companies Inc. Amended and Restated Fiscal 2002 Share Incentive Plan (including Notice of Grant).
104						Cover Page Interactive Data File (embedded within the Inline XBRL document).
*Exhibit is a management contract or compensatory plan or arrangement.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

						THE ESTÉE LAUDER COMPANIES INC.
Date:			August 21, 2025			By:			/s/ Rashida La Lande
									Rashida La Lande
									Executive Vice President and General Counsel

3

FAQ

What change did EL make to stock option vesting on termination without cause?

The new form provides pro rata vesting of unvested stock options through the last day paid for employees who are not retirement-eligible; remaining unvested options are forfeited.

Do retirement-eligible employees lose vesting under the new agreement?

No. The filing states retirement-eligible employees will continue to receive full vesting upon retirement.

What new restrictive covenants were added in EL's form of Stock Option Award Agreement?

The agreement expands and revises covenants including confidentiality, non-competition, non-solicitation, non-disclosure, non-interference, and non-disparagement.

Is there a clawback provision in the new agreement?

Yes. The new form includes a forfeiture and clawback provision for non-compliance with the restrictive covenants.

Where can I find the full text of the new Stock Option Award Agreement?

The filing indicates the full form is filed as Exhibit 10.1 to the Current Report and is incorporated by reference.