Estée Lauder layoffs follow chief exec's raise

Cosmetics giant Estée Lauder Cos. laid off an unspecified number of employees in Melville on Thursday, less than two months after giving its top executive a raise.

A company spokeswoman declined to say how many people were laid off but confirmed the move was part of a 2,000 workforce reduction plan announced in 2009.

"After a strategic analysis, the company has concluded it must make changes in its manufacturing operations in Melville, which will include consolidating certain positions," the spokeswoman said in an email. "The company is committed to Melville and continuing to be a key employer in the area."

The company consolidated assembler positions at its Melville manufacturing facility, she said.

Estée Lauder will continue work in research and development, manufacturing and finance in Melville, the spokeswoman said.

Several people leaving Estée Lauder's research park on Pinelawn Road Thursday afternoon said they hadn't heard about layoffs as they headed to their cars in a mostly full parking lot.

Efforts to boost earnings and stock price could be a boon to Estée Lauder president and chief executive Fabrizio Freda.

An incentive agreement disclosed to the Securities and Exchange Commission on Feb. 9 could be worth more than $24 million if stock targets are met. Should the company's Class A common stock price average $150 per share or more in the month of June 2014, he'll receive 160,000 shares.

With the company's stock closing at $92.48 Exchange Thursday, the value of that package today would be worth $9 million, in part because he would get fewer shares under the agreement.

The package has penalty for poor performance: He gets no additional shares if the average share price falls below $37.50 during the specified time period.

Assuming he is still there, that wouldn't affect his base salary, which will increase to $1.75 million in July, after he received a $250,000 raise last month.

The company also set Freda's bonus target at $3.25 million in Estée Lauder's 2012 fiscal year.

In response to queries about Freda's compensation and the layoffs, an Estée Lauder representative said, "The company has publicly announced its long-term strategy, which includes several initiatives aimed at improving overall effectiveness and ensuring the company remains competitive in the global marketplace."

The company was profitable during the second half of 2010. Net earnings increased to $535 million during that period, a $138.1-million boost compared to the second half of 2009, according to SEC filings.