NEW YORK — The Estée Lauder Cos. made impressive strides in 2003, including higher profits, and the beauty giant rewarded its top officers with higher bonuses.
However, difficult business conditions at the end of the prior year led to 5 percent salary reductions among its top executives.
Fred Langhammer, president, chief executive officer and the firm’s highest paid executive, saw his salary for the year ended June 30 fade 5 percent to $1.9 million against $2 million last year. However, his bonus nearly doubled, mushrooming 93.3 percent to $2.9 million over his 2002 bonus of $1.5 million. Additionally, he collected $2 million in restricted stock awards, the same as in 2002.
Langhammer’s other compensation, a category that mushroomed to $3.5 million in 2002 because of company-paid insurance premiums, was just $5,500 last year, according to data in the company’s proxy statement, released this week.
Leonard Lauder, chairman, saw his 2003 salary dip to $1.7 million for the fiscal year ended June 30, 5 percent less than the $1.8 million he earned in 2002. However, Lauder’s annual performance-based bonus also fattened 93.3 percent to $1.7 million from $900,000 the year before.
Lauder’s other compensation contracted to $5,500 from $412,000.
Bonuses are tied to year-to-year achievements in financial and operational indicators, including improvements in earnings and sales.
In determining salaries for the year, the compensation committee in 2002 “considered projected business conditions and the need to control overall expenses,” the company’s proxy said. “Accordingly, the committee recommended and most executive officers, including those with contractual rights, accepted 5 percent reductions in salary in fiscal 2003, as compared to fiscal 2002 levels.”
Last year, as reported, Lauder crossed the $5 billion sales threshold, logging sales of $5.12 billion, 7.9 percent above the $4.74 registered in 2002. Net income reached $319.8 million, or $1.26 a diluted share, two-thirds higher than prior-year income of $191.9 million, or 70 cents.
William Lauder, chief operating officer, was the only executive to receive a higher annual salary in 2003 as his wages rose 12.5 percent to $1.1 million from $1 million. His bonus more than doubled, jumping 124.9 percent to $1.5 million from $650,000.
The proxy also noted that Leonard Lauder, 70, has 45 years of qualifying company employment and is eligible for retirement. If he were to retire now, his annual retirement benefit would be roughly $1 million.
— Jennifer Weitzman
Sephora Grows in Europe
PARIS — Sephora is continuing its eastward expansion in Europe.
The LVMH Moët Hennessy Louis Vuitton-owned perfumery chain said Tuesday it signed a partnership deal with Maxim Klimov, owner of the 104-door L’Etoile chain in Russia.
As a result of the deal, several L’Etoile stores will be converted into Sephoras, while some Sephora sales points will be opened in Russia under the supervision of Sephora and the franchise.
“Sephora thus confirms its intention to expand into markets with strong growth potential, following its successes in Poland, the Czech Republic and Romania,” the company said in a statement.
Clarins Distribution Deal
Clarins will distribute Valentino fragrances in the U.S. as part of a deal struck recently between the French house and Valentino licensee Procter & Gamble Prestige Beauté. Clarins USA Inc. will handle the Valentino brand within its Clarins Fragrance Group unit. P&G Prestige Beaute signed a license for Valentino fragrances effective Aug. 1, as reported.
The Art of Shaving is celebrating the October opening of its first Las Vegas barber spa and retail emporium, located at the Mandalay Bay hotel. The 2,000-square-foot space is designed to offer traditional barber services, aromatherapy skin treatments, as well as a large retail area. For VIP customers, in-suite shave services are available.