The Estée Lauder Cos.’ stock was on the rise on Monday, along with the pay of its chief executive officer.
Fabrizio Freda’s total compensation for fiscal 2016 rose 5.1 percent year-over-year to $14.5 million because of increases to his base salary, now $1.9 million; bonus opportunity, now $4.7 million, and equity target, now $7.9 million, according to a filing with the U.S. Securities and Exchange Commission made Friday afternoon. The company’s stock was up slightly midday Monday, to $88.57.
Lauder’s stock plan subcommittee also granted Freda $30 million in performance share units that won’t be fully delivered to him until fiscal 2023 as part of an effort to keep him at the company and “further align his interests with the interests of our stockholders,” the company said in the filing. Freda also received payout from the second tranche of a PSU granted to him in 2012 as an incentive award, totaling 49,882 shares, which is valued at almost $4.4 million.
Since taking over as ceo in July 2009, Freda has grown the company’s market capitalization by $27 billion to $33 billion, Lauder said in the public filing. Under his tenure, Lauder has acquired a handful of brands, including perfume businesses By Kilian, Editions de Parfums Frédéric Malle, Le Labo and Rodin Olio Lusso. In May, the company announced a restructuring plan called Leading Beauty Forward that aims to realign funds towards investing in growth, and includes between 900 and 1,200 job cuts, about 2.5 percent of the workforce. The initiative is meant to yield between $200 million and $300 million in annual net benefits, which will then be reinvested. “We’re going to invest in a lot of new training and development in areas where our current employees need to retrain and develop,” Freda said in May. “An example would be digital media or retail activities, depending on the groups of people. The second area of Leading Beauty Forward is about building new organizational models for agility, fast decision-making.”
For the fiscal year ended June 30, Lauder posted a 2 percent gain in net earnings, with $1.11 billion compared with $1.09 billion for fiscal 2015. The beauty giant had $11.26 billion in net sales, a 4 percent gain over the prior year. Color cosmetics proved the fastest-growing category, gaining 9 percent to $4.7 billion from $4.3 billion in 2015. Lauder is adding a heightened focus on distribution through specialty retailers Sephora and Ulta Beauty, announcing its new plans to bring more products to J.C. Penney-based Sephora outposts and the Estée Lauder brand to Ulta online, and in 30 doors. Lauder is also said to be considering a deal for Becca Cosmetics, a makeup brand with significant specialty retail distribution, sources have said.