Compensation Arrangements for the Named Executive Officers

EXHIBIT 10.16

Compensation Arrangements for the Named Executive Officers

Set forth below is a summary of the compensation paid, or that may be paid, by Elizabeth Arden, Inc. (the “Company”) to its named executive officers (defined in Regulation S-K Item 402(a)(3) (the “Named Executives”)) in their current positions as of the date of filing of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (the “Form 10-K”). All of the Company’s executive officers are at-will employees whose compensation and employment status may be changed at any time in the discretion of the Company’s Board of Directors (the “Board”), subject only to the terms of the Severance and Change in Control Arrangement for Senior Executives described below.

Base Salary

Effective April 1, 2005, the Named Executives are scheduled to receive the following annual base salaries in their current positions:

Annual Management Bonus Program and Long-Term Incentive Plans

Cash Bonuses

The Named Executives are eligible to participate in two cash bonus plans: (i) the Company’s 2005 Performance Bonus Plan (the “Performance Plan”), and (ii) the 2005 Management Bonus Plan (the “Management Plan”), on the basis of performance goals established for them under the applicable plan and to ensure that cash bonus payments (“Bonus”) are in accordance with the arrangements established by the Compensation Committee.

Cash bonus awards under the Performance Plan are based on achievement of various key performance indicators or business criteria or completion of certain projects that benefit the Company and apply to the individual participant or the participant’s business unit (the “Individual Criteria”) and may be a single goal or a range with a minimum goal up to a maximum goal, with corresponding increases in the bonus up the maximum award set by the Compensation Committee of the Board (the “Compensation Committee”).

Cash bonus awards under the Management Plan are based on business criteria established by the Compensation Committee that apply generally to the Company as a whole (the “Company Criteria”), may be a single goal or a range with a minimum goal up to a maximum goal, with corresponding increases in the Bonus up to the maximum award set by the Compensation Committee and are established within 90 days of the beginning of the period of service to which

the Bonus relates. The Management Plan will be subject to shareholders approval at the Company’s annual shareholders meeting on November 16, 2005. If approved, cash bonuses paid under the Management Plan will be exempt from the limitations of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). For bonus awards under the Management Plan relating to Company performance for the fiscal year ending June 30, 2006, the Compensation Committee established EBITDA (defined as the Company’s net income plus the provision for income taxes (or net loss less the benefit from income taxes), plus interest expense, plus depreciation and amortization expense) and earnings per share targets (absent one-time or extraordinary charges) as the Company Criteria.

Cash bonus payments under the Performance Plan are based on the Named Executives par bonus percentage listed below and achievement of the Individual Criteria established for the specific individual under the plan. During the fiscal year ended June 30, 2006, neither Mr. Beattie nor Mr. West will be eligible for bonuses under the Performance Plan as all bonuses for them will be based on the Company Criteria under the Management Plan.

The following table sets forth the par bonus percentages for the Named Executives under the Bonus Program:

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Long Term Incentive Plans

The Named Executives participate in the Company’s long-term incentive program (the “LTI Program”), which currently involves the award of stock options, performance-based restricted stock and market-based restricted stock as determined by the Compensation Committee pursuant to the Company’s 2004 Stock Incentive Plan (filed as Annex E as part of the Company’s Proxy Statement dated May 14, 2004). Under the LTI Program, target annual long-term incentives (“LTI”), as a percent of salary, for the following Named Executives for fiscal 2005 are as set forth in the following table:

While the allocation of the LTI components fluctuate from time-to-time, LTI is planned to be allocated to the Named Executives one-third to stock options, one-third to performance-based restricted stock and one-third to market-based restricted stock based on a value of the equity awards as determined by the Compensation Committee. Actual LTI grants may vary from the target LTI percentages based on the Compensation Committee’s assessment of the Named Executive’s job responsibilities, individual performance and market conditions.

On August 10, 2005, in recognition of corporate performance for the year ended June 30, 2005, the Company awarded shares of performance-based accelerated restricted stock (“PBRS”) as set forth below to the Named Executives. One third of the PBRS vest in two years from the date of award and remaining two thirds vest in three years from the date of grant if the Company achieves a 10% cumulative annualized increase in earnings per diluted share over the relevant measurement periods.

On August 10, 2005, in recognition of corporate performance for the year ended June 30, 2005, the Company granted stock options for shares of the Company’s common stock to the Named Executives as set forth below. The stock options vest over three years in equal thirds on

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the anniversary date of the grants and the exercise price of the stock options is the fair market value of the common stock on the date of grant.

On March 22, 2005, the Company granted shares of market-based accelerated restricted stock (“MBRS”) to the Named Executives as set forth below consistent with the terms of the performance accelerated restricted stock (“PARS”) which vested on March 22, 2005. The MBRS will only vest if the Company’s total shareholder return surpasses the total shareholder return of the Russell 2000 Index over a three, four, five or six-year period from the date of grant, in which case the MBRS will vest at that time.

Benefit Plans and Other Arrangements

In their current positions, the Named Executives, with the exception of Mr. Steffens who is based in Geneva, Switzerland, are eligible to:

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Mr. Steffens is eligible to participate in the Company’s broad-based benefit programs generally available to all salaried employees in Geneva, Switzerland, including health, disability, life and other insurance programs, a lunch allowance program, a pension plan and purchase shares of the Company’s common stock at a discount under the ESPP. In addition, the Company pays pre-university education expenses for Mr. Steffen’s children as long as he is employed by the Company.

Severance and Change in Control Arrangements

In addition to the benefit plans and other arrangements listed above, each of our Named Executives is entitled to benefits under a severance and change in control arrangement. Under the arrangement, the Named Executive receives severance benefits, based on his or her position and responsibility, in the event the executive’s employment is terminated without “cause” and is not the result of a resignation or death. Currently, the severance benefit for the Named Executives is as follows: (a) Mr. Beattie, 24 months of base salary; (b) Mr. West, 18 months of base salary; (c) Mr. Smith, 24 months of base salary plus preceding year’s bonus; (d) Mr. Rolleston, 12 months of base salary; and (e) Mr. Steffens, 12 months of base salary and par bonus.

Under the change in control arrangement, a severance benefit is paid based on a “base amount” in the event there is an actual or constructive termination of employment (e.g., decrease in pay or job responsibility) following a change in control, except as noted below. “Base amount” is the average base salary plus average cash bonus the executive has received over the most recent five-year period. The monthly base amount is the base amount divided by twelve. Currently, the severance benefit due to a change in control for the Named Executives is as follows: (a) Mr. Beattie, 35.88 months of monthly base amount; (b) Mr. West, 24 months of monthly base amount; (c) Mr. Smith, 24 months of base salary plus preceding year’s bonus; (d) Mr. Rolleston, 18 months of monthly base amount; and (e) Mr. Steffens, 12 months of base salary and par bonus.

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