2017 GENDER PAY REPORT 2

2017 GENDER PAY REPORT

“Our company was founded in 1946 by an inspirational woman and business visionary, Mrs Estée Lauder. Her influence has helped guide our values, especially our unwavering commitment to the principles of gender equality, that are central to the approach we take to building and managing our teams.”

Philippe Warnery,

Senior Vice President / General Manager,

The Estée Lauder Companies UK & Ireland

“Gender equality and full respect for each individual are integral to our company values. Our inclusive culture encourages advocacy, openness and appreciation of our employees’ individuality. Like many other businesses, we are examining how we can address the societal and company-specific challenges that are factors in the gender pay gap.”

Usha Kakaria-Cayaux,

Vice President, Human Resources,

The Estée Lauder Companies UK & Ireland

2017 GENDER PAY REPORT 3

2017 GENDER PAY REPORT

MEDIAN PAY GAPThe median pay gap is the mid-point between high

and low earnings between all women and men.

LOW PAID HIGH PAIDMEDIAN

MEAN PAY GAP The mean pay gap is the difference in the average

earnings between all women and men.

We are committed to fostering a transparent and fair

working environment, rewarding employees on the basis

of their performance, and we acknowledge that there is

more that we can do to reduce our gender pay gap.

The gender pay gap should not be confused with equal pay, which requires that women and men carrying out the same or similar work in the same employment receive the same pay. The Estée Lauder Companies pays equal pay for equal work. All roles are evaluated in a consistent way and all employees are rewarded based on their performance.

The principles of gender equality, respect of each individual

and inclusion and diversity are integral to the way we build

and manage our business. We ensure that our policies,

structures and working practices align with these. As

an example, all our activities to promote inclusion and

diversity are reported to the Chairman of the Board.

WHAT IS THE GENDER PAY GAP?

The gender pay gap measures the difference between

the average earnings of women and men across the

business (shown as a percentage of men’s earnings). This

is expressed through reporting the differences in mean and

median earnings between women and men calculated on

the basis of equivalent hourly rates.

In addition to measuring the mean and median pay gap,

the legislation requires that we publish:

• Our bonus gender pay gap.

• The proportion of women and men who received

bonus pay.

• The proportion of women and men in each of the four

pay quartile bands.

In January 2018, The Estée Lauder Companies was

included in Bloomberg’s inaugural 2018 Gender Equality Index, which highlights companies that

are committed to advancing gender equality.

2017 GENDER PAY REPORT 4

Female representation in senior leadership positions within our organisation is strong and growing. We are committed to reducing the gap by developing a truly diverse representation (encompassing gender, ethnic and social differentials) at all levels, from retail to senior management, taking into account individual merit. This includes highly-skilled specialist and technical roles in our corporate offices.

OVERVIEW

This report includes separate gender pay gap figures

for The Estée Lauder Companies in the UK (‘ELC UK’),

our corporate and point of sale business, and Whitman

Laboratories (‘Whitman’), our UK-based manufacturing

business.

THE ESTÉE LAUDER COMPANIES IN THE UK

Our gender pay figures show that the average male

employee has a higher hourly rate of pay than the average

female. There are two main reasons for this:

• Firstly, as a beauty company, we tend to attract women

into consumer-facing roles and this also reflects the

profile of our consumers.

These roles are competitively paid, however they

reflect the salary norms of the retail environment,

and store-based roles are typically lower paid than

office-based roles.

Work in retail roles also tends to attract women because

of the part-time* and flexible working opportunities.

• Secondly, we have more men in corporate office,

specialist, technical and managerial roles.

Our bonus gap figures are also influenced by the fact that

almost half of our retail staff work part-time, which has an

impact on the level of sales-related bonus and commission.

OVERVIEW

BREAKING DOWN OUR RESULTS - THE ESTÉE LAUDER COMPANIES IN THE UK

ALL ELC UK STAFF

36.31% mean pay

21.01% median pay

88.06% mean bonus

51.31% median bonus

QUARTILE BREAKDOWN

% Males within Quartile

% Females within Quartile

97.3%

Lower Lower Middle

97.1%

2.7% 2.9%

Upper Middle

92.3%

7.7%

Upper

85.1%

14.9%

PROPORTION OF ALL ELC UK STAFF RECEIVING A BONUS

90.91%

89.27%

*Defined as less than 30 hours a week.

OF THE 35 HIGHEST BONUS PAYMENTS WERE MADE TO FEMALES

71%

2017 GENDER PAY REPORT 5

BREAKING DOWN OUR RESULTS - WHITMAN LABORATORIES

“Whilst the gender pay gap at Whitman compares favourably to the national average, we recognise that there are still many opportunities to reduce this differential. Internally, we strive to challenge gender stereotyping associated with particular roles. In the wider community we work with local schools and charities to promote career paths in science, technology, engineering and maths.”

John Gander,

Plant Manager,

Whitman Laboratories Limited

“We are committed to gender equality and I am pleased to say that Whitman has made good progress in taking practical steps to improve gender equality over recent years, recognising that diversity drives innovation and creativity and helps to deliver better results. Internally, we are leading the way with three supply chain-related Employee Resource Groups and the roll-out of our global inclusion and diversity training. Whilst the pay gap at Whitman is lower than the national average, we are keen to reduce this further.”

Vicky Hughes,

Executive Manager Human Resources,

Whitman Laboratories Limited

2017 GENDER PAY REPORT 6

WHITMAN LABORATORIES

Our figures show that, on average, across the whole

business men are earning more than women. Our mean

gender pay gap is 16.06% and our median gender pay

gap is 10.12%, lower than the national average. The gap is

largely the result of men occupying more of the technical

and leadership roles than women.

There are a number of initiatives that Whitman has in place to encourage more women to apply for and thrive in technical and leadership roles. We plan to narrow the pay gap by developing a stronger female representation in these roles, taking into account individual merit. We will continue to offer attractive, competitive and flexible long term career opportunities and ensure that everyone who works with us develops the confidence and capability to succeed on whatever career path they choose.

QUARTILE BREAKDOWN

% Males within Quartile

% Females within Quartile

73.7%

Lower Lower Middle

26.3%

51.4%

Upper Middle Upper

32.6%42.8%

67.4%57.2%

48.6%

ALL WHITMAN LABORATORIES STAFF

16.60% mean pay

10.12% median pay

47.93% mean bonus

10.62% median bonus

PROPORTION OF ALL WHITMAN LABORATORIES STAFF RECEIVING A BONUS

84.59%

88.03%

BREAKING DOWN OUR RESULTS - WHITMAN LABORATORIES

2017 GENDER PAY REPORT 7

Gender equality and inclusion, stemming from the Lauder family values, are central to the way we build and manage our business. We believe that an inclusive culture results in greater innovation, collective creativity and better problem-solving across our organisation, as well as enabling us to connect with our different consumers.

All of our activities to promote inclusion and diversity are reported to the Chairman of the Board and we will use existing governance bodies to measure progress against our strategy, holding ourselves accountable for achieving our goals.

Our approach includes:

THE ESTÉE LAUDER COMPANIES IN THE UK

TALENT MANAGEMENT

• Leverage our Regional Talent Council to identify and

develop strong talent in our business, building future leaders.

• Inclusive recruitment and management processes, end

to end, to create a diverse slate of candidates for all roles.

• Expansion of tools such as Unconscious Bias education.

• Increased encouragement of ‘leadership from every chair’ to amplify each person’s unique strengths and

talents from across all parts of the business.

WORK / LIFE HARMONISATION

• Increased support for all employees returning to work after maternity leave and long career breaks, accommodating

flexible working and part-time requests and offering remote

training through online portals.

• Leverage Families@Work UK to support employees who

are striving to align work and family responsibilities.

• Increased communication of our existing agile working policies and benefits, recognising that each person is

unique and has different requirements to align with their

personal commitments.

PROFESSIONAL DEVELOPMENT

• Offer continuous long term career development for all

UK employees through The Apprenticeship Academy.

• Increase take-up of 18-month Retail Management Development Programme, focusing on driving retail as

an aspirational career.

OUR STRATEGY AND COMMITMENTS

Our approach includes:

WHITMAN LABORATORIES

ASSESSING BARRIERS TO ENTRY

• Continuously assess barriers to entry and use the

assessment data to encourage more women to apply

for roles in currently predominately male departments.

• Ongoing work with all suppliers and recruitment agencies to share our belief in inclusion and diversity

and create a diverse slate of candidates for all roles.

WOMEN IN STEM / LEADERSHIP

• Expanded partnership with schools and charities,

through open days and careers events, to inspire girls to

embark on careers in science, technology, engineering

and mathematics.

• Continuously support and encourage women to reach

their full potential, both personally and professionally,

through our Women’s Leadership Network.

PROFESSIONAL DEVELOPMENT

• Equip line managers for success and offer development

opportunities through qualifications, including

apprentices and our Leadership Academy.

• Continue our Prospect talent development programme,

offering the opportunity to learn about the supply chain,

end to end.

In November 2017, Fabrizio Freda, President

and CEO of The Estée Lauder Companies,

signed the “CEO Action for Diversity and

Inclusion pledge,” the largest CEO-driven

business commitment to advancing diversity and

inclusion within the workplace.

2017 GENDER PAY REPORT 8

“There are a lot of people in this business who started on a beauty counter or in distribution. I started with a job 21 years ago and now I have a career. It’s our family values that truly count, our work culture is inclusive and authentic. Many people have worked in the business for a substantial part of their professional working life and the company has a great track record when it comes to supporting career progression.”

Michaela Horner, Regional Head of Distribution and Logistics The Estée Lauder Companies UK & Ireland

“I joined The Estée Lauder Companies in 1990, starting out on counter at Clinique. I’ve had the most amazing 28 years working across four of The Estée Lauder Companies’ brands, receiving incredible support every step of the way, and now I’m proud to be at the helm of one of our largest brands.”

Rachel Baker, Vice President/General Manager, Clinique UK

This report has been prepared in accordance with the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, which require large employers to publish their gender pay gap data. We confirm that the data included in this report is accurate.

Signed:

Alison Day, Vice President – Finance, UK & Ireland Estée Lauder Cosmetics Limited

Signed:

Simon Gibson, Executive Manager – Finance Whitman Laboratories Limited

“During my 17 years at Whitman Laboratories my career has progressed from working on the shopfloor to becoming a fully qualified manufacturing engineer. The company supported my apprenticeship and I gained distinctions throughout, leading me to be named as runner up for ‘apprentice of the year’ at The News Business Excellence Awards. I am confident that Whitman will continue to support my career aspirations and I hope to inspire other women working in careers involving science, technology, engineering and maths to achieve their full potential.”

Claire Cox, Production Maintenance TechnicianWhitman Laboratories Limited