1. Microwave caramels and cream in a microwave-safe bowl at HIGH 1 to 2 minutes or until smooth, stirring at 30-second intervals. Let cool until lukewarm (about 30 minutes).
2. Beat butter at medium speed with an electric mixer until creamy. Gradually add powdered sugar alternately with caramel mixture, beating at low speed until blended and smooth after each addition. Stir in vanilla.