[Company Letterhead] May 18, 2011 Ms. Kimberly Ross [Address]
Dear Kimberly:
We are pleased to offer you the position of Executive Vice President and Chief
Financial Officer for Avon Products, Inc. ("Avon") reporting to Andrea Jung,
Chairman and CEO. Your annual base salary will be $750,000. Although this
salary is quoted on an annual basis, it does not imply a specific period of
employment.
You will be eligible to participate in Avon's annual incentive program available
to Executive Vice President level associates beginning with the 2012 plan year.
We will recommend to the Compensation Committee that your annual target award be
90% of your earned base salary for the performance period, with the opportunity
for a maximum payout of 200% of target. Annual awards are contingent on relevant
individual and business performance goals being achieved. Payment, if any, will
be in 2013.
Should joining Avon result in the forfeiture of your 2011 annual incentive cash
award with your current company (Ahold), Avon will pay you a cash bonus equal to
the amount you forfeited, calculated as your current annual incentive target
multiplied by the payout percentage as disclosed in Ahold's 2011 annual report,
less any payment made to you for such bonus by Ahold and converted from EURO to
USD using a 2011 average exchange rate. This payment will be made within 30 days
of Ahold's annual report public filing date.
You will be eligible to participate in the long-term incentive program available
to all Executive Vice President level associates. Long-term incentives are
currently delivered 70% in performance-based restricted stock units ("PRSUs")
and 30% in performance-based cash. PRSUs are generally settled in shares of Avon
common stock. The number of PRSUs that vest and the payout percentage for
performance cash are subject to performance against pre-set goals. Cycles are
generally three years in duration. We will recommend to the Compensation
Committee that your target award be 230% of base salary. If your hire date with
Avon is prior to December 1, 2011, you will receive your first grant in 2011 and
participate in the 2011-2013 performance cycle. If your hire date is on or after
December 1, 2011, you will receive your first regular award in 2012 and
participate in the 2012-2014 performance cycle.
We recognize that you will be forfeiting a significant amount of value in
unvested equity and other benefits when you leave your current employer. In
order to help offset this loss, we
Kimberly Ross May 18, 2011 Page 2
will recommend to the Compensation Committee that you receive the cash sign-on
bonus and time-based restricted stock unit ("RSU") award as described in the two
paragraphs below.
We will provide a total cash sign-on bonus of $300,000, paid in two equal
installments less applicable taxes. The first installment (50% of the award) is
payable within 30 days of your start date with Avon. The second installment is
payable as soon as practicable after your one-year anniversary with Avon but no
later than the end of such calendar year. Should you leave Avon voluntarily
within one year of your first date of employment, you will be required to repay
the first installment of this sign-on bonus to Avon, prorated to reflect the
number of months you have not worked over the twelve month period. Such
repayment would be due within 45 days of your termination of employment.
We will also recommend that you receive a one-time RSU award in accordance with
Avon's off-cycle granting policy under the Avon Products Inc. 2010 Stock
Incentive Plan. Should your start date be prior to December 1, 2011, then this
RSU award will be granted at a value equal to $1,800,000 and vest 50% per year
over two years. If your start date is on or after December 1, 2011, this RSU
award will be granted at a value equal to $2,400,000 and vest 40% on the first
anniversary of grant, 40% on the second anniversary of grant and 20% on the
third anniversary of grant. Settlement is generally in shares of Avon common
stock.
As a senior executive of Avon, you will need to adhere to stock ownership
guidelines, which encourage executive share ownership and align executive
interests with those of shareholders consistent with best practices among
high-performing companies. You will be required to own Avon stock equal to three
times base salary within five years from the date of hire.
As you are currently working as an expatriate, Avon will repatriate you to the
United States and provide the repatriation benefits as described under our
Long-Term International Assignment Policy. Should you accept this offer, Avon
will also provide assistance to you in finding and either renting or purchasing
a home in the New York area, provided you decide to rent or purchase a home
within twelve months from your start date with Avon. This assistance includes
home finding support and reasonable closing costs associated with a home
purchase. Should you decide to purchase a home, in order to assist with your
move to a higher cost-of-living area, Avon will provide a special bonus in three
installments, intended to reimburse you for three percentage points of interest
on your mortgage in year one, two percentage points of interest on your mortgage
in year two and one percentage point of interest on your mortgage in year three
(up to a mortgage of $1,000,000). The first, second and third payments will be
made to you in approximately 12 months, 24 months and 36 months after you
purchase your home in New York, respectively. Should you decide to rent a home,
you will instead receive a special bonus in line with the rental subsidy benefit
provided under our relocation policy. Should you leave prior to your first
anniversary date, you will not be eligible for these payments. Should you leave
the company after your first anniversary, but prior to any of the payment dates
reference above, you will receive a
Kimberly Ross May 18, 2011 Page 3
prorated bonus reflecting the time you have been with Avon. In addition, Avon
will also provide tax preparation services for the first calendar year of your
relocation.
You will be eligible to participate in the benefit programs generally available
to all associates who satisfy certain eligibility requirements as of your date
of hire. Accordingly, you will be eligible for our health and welfare benefits
such as medical, dental, vision and long-term disability plans as of your date
of hire. In addition, assuming you satisfy the eligibility requirements, the
Avon Personal Savings Account Plan (Avon's 401(k) plan) is available to you on
your date of hire. Also, assuming you are in an eligible class and you satisfy
the eligibility requirements under the Avon Products, Inc. Personal Retirement
Account Plan (the "PRA"), Avon's retirement plan, we will automatically open a
PRA account for you after you complete one year of service. The PRA is a cash
balance pension account designed to provide you with a source of retirement
income if you should leave Avon at any time after becoming vested. You will also
be covered under other Avon compensation plans and policies in which similarly
situated Avon executives participate, including Avon's change in control policy
and compensation recoupment policy.
Under the Avon Products, Inc. Severance Pay Plan (the "Severance Plan"),
generally, you are eligible to receive 24 months base pay as severance in the
form of salary continuation. Please note that payment of your severance benefits
will be in accordance with the provisions of Section 409A, including any
applicable six-month delay for certain payments made upon termination of
employment. In order to be eligible for severance benefits under the Severance
Plan, you will be required to sign a general release of all claims. The
Severance Plan may be amended at any time.
You will be eligible for a transportation allowance equal to $11,000 per year
and paid monthly (approximately $916.67 per month). You will also be eligible
for a financial planning allowance up to $12,500 per year. This allowance will
be reduced to $9,500 in your first calendar year in order to account for the
fact that tax filing support will be provided as part of your relocation to New
York, as described above. These benefits are subject to the terms of Avon's
executive perquisite program as in effect from time to time.
You will be eligible for four weeks of vacation. If you leave Avon's employment
you will be paid for any unused vacation earned and not used until the
termination date. Your employment at Avon is contingent upon your passing a
satisfactory background investigation, reference checks, compliance with
immigration law and passing a drug screening test. As you may be aware,
immigration law requires that Avon verify the employment authorization status of
all new employees. Therefore, on your first day you will be asked to provide
documents which establish your identity and employment eligibility. We will
forward a list of acceptable documents for verification purposes in due course.
Avon maintains a drug free work environment and requires that all new hires pass
a drug screen as a condition of employment. The results of this test must be
received prior to your date of employment; you should allow 3-4 business days
for the results to be processed.
Kimberly Ross May 18, 2011 Page 4
Kimberly, I very much look forward to your joining Avon. We appreciate that you
have an obligation to provide a certain amount of notice to your current
employer, however, I am hopeful that your start date with Avon is as soon as
possible but not later than the end of this calendar year (unless mutually
agreed). I am confident your career at Avon will be rewarding. If you have any
questions, please feel free to call me at [telephone number].
Sincerely,
/s/ Lucien Alziari
Lucien Alziari Senior Vice President, Human Resources and Corporate
Responsibility
cc: Andrea Jung, Chief Executive Officer Gina Fitzsimons, Executive Director, Global Compensation and Benefits
Accepted and Agreed to:
/s/ Kimberly Ross May 20, 2011 Kimberly Ross Date