It’s the end of an era: Leonard A. Lauder will step down from the board of directors of the Estée Lauder Cos. in November when his current term expires.
Lauder, who turned 90 this year, will retain the title of chairman emeritus of the firm, which was founded by his parents, Estée and Joseph Lauder, in 1946. He will also continue his role as “chief teacher officer,” and be involved in key initiatives around employee engagement and brand symposiums.
“You’ll still see me out and about, and perhaps at your desk, your retail store or at a company event,” Lauder wrote in an internal memo to company employees obtained by WWD. “As we head into the future together, my calling to you is to keep on creating, keep on pushing and keep on supporting one another. I look forward to seeing you all in action.”
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The Lauder family overall owns 35 percent of the company’s total common stock and about 84 percent of the outstanding voting power. Leonard Lauder remains a significant stockholder of the company, and has the right to designate two directors. His son, William P. Lauder, occupies one of those seats and is executive chairman of the board.
Gary M. Lauder, his youngest son, and the managing director of Lauder Partners LLC, a Silicon Valley-based venture capital firm, will stand for election to the board in November to occupy the second seat. This is the first time Gary Lauder will assume an official role with the Estée Lauder Cos., although the company said he has periodically attended board meetings over the years as an invited observer.
“My father envisioned and helped drive the growth and expansion of our company from an iconic single brand to the global, brand-building powerhouse it is today,” William Lauder said in a statement. “It has been an incredible honor and privilege to have worked and learned from my father over the years. I look forward to continuing to learn from him, and know his passion for this industry, this company, our employees and our consumers is as strong as ever.”
The news was revealed at a tumultuous time for the business, which has been particularly hard hit by the downturn in China and challenges in the travel retail channel. Last week, the company released its fiscal 2023 results, with full-year net sales decreasing 10 percent and diluted EPS decreasing 57 percent. Net earnings were $1.01 billion, compared with net earnings of $2.39 billion the previous year.
Lauder’s struggles this year have led to speculation that chief executive officer Fabrizio Freda might be forced to exit his role. Those reports were quelled in May when William Lauder and the board of directors sent an internal memo to employees reiterating the family’s support for the executive.
In his internal memo, Leonard Lauder once again voiced his strong support for the company’s current leadership, writing “I never make a move without believing in my heart our cherished company is in good hands, and I continue to believe in the success of our company through the skillful and thoughtful management of William, Fabrizio and the entire leadership team. The nomination of Gary to the board further reflects my family’s long-term stewardship, and our support of the visions, values and people who will drive the company’s success.”
The timing of Lauder’s announcement is not thought to be tied to the company’s current performance, but is timed in connection with the normal cadence of director nominations for the annual meeting that will take place in November.
Leonard Lauder joined the business in 1958, and built the enterprise into the largest prestige beauty company in the world. He was named president in 1972 and CEO 10 years later, taking the company public in 1995 at an opening stock price of $26. Lauder oversaw the company’s globalization and an ever-expanding portfolio of brands, both incubated and acquired, including Clinique, Origins and MAC Cosmetics. Today the company owns 24 brands and operates in 150 countries. Most recently, it ventured into fashion with the $2.8 billion acquisition of both the Tom Ford beauty and fashion businesses, which it subsequently licensed to Ermenegildo Zegna Group and, in eyewear, Marcolin.
In 2021, when asked by WWD Beauty Inc what his biggest impact on the industry has been, Lauder cited his vision of creating a multibranded luxury conglomerate. “I truly believe I created the modern beauty industry. This is hard for me to say, but when I joined Estée Lauder, Elizabeth Arden was Arden, Helena Rubinstein was Rubinstein, Revlon was Revlon. Everyone was a single brand operating in a single way.
“I bought a portfolio of companies,” he continued, “each one of which has started a different aspect of the cosmetics industry. I believe that all of the acquisitions you see today and the indies that want to be acquired stem from our first acquisition of MAC — that one acquisition changed our company and indeed changed the industry.”
In 2009, Lauder handed over the reins as chairman of the board to William Lauder, but has remained very involved in the strategic direction of the company and relishes musing on the future of beauty, telling Beauty Inc, “Anyone who says they can have their finger on the pulse of tomorrow for life is wrong. The challenge is to keep up every day. You have to read and travel, see what is going on in the world. You have to keep up to date and know what to see and not to see.”
In the internal memo obtained by WWD, Leonard Lauder reiterated how excited he is to continue in his mentorship role. “I have always believed that the success of our company lies in its people, in you,” he wrote. “As I’ve said, I want the Estée Lauder Cos. to be the best company in the world. Not the biggest, not the richest, but the best.”
“On behalf of the board, I share my deep admiration and appreciation to Leonard for his invaluable contributions to the company as an officer and member of the board,” said Charlene Barshefsky, the company’s presiding director. “He is a visionary whose creative thinking is unmatched in the industry. His innovative insights will continue to serve as inspiration for us all.”
Estée Lauder also announced that Wei Sun Christianson, who has been a company director since 2011, will not stand for reelection in November.