SECURITIES AND EXCHANGE COMMISSION
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant x
☒ Filed by a Party other than the Registrant ¨
☐Check the appropriate box:
|
| |
¨☐ | | Preliminary Proxy Statement |
¨ | |
| ☐ | | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
x | |
| ☒ | | Definitive Proxy Statement |
¨ | |
| ☐ | | Definitive Additional Materials |
¨ | |
| ☐ | | Soliciting Material under § 240.14a-12 |
|
|
International Flavors & Fragrances Inc. |
International Flavors & Fragrances Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|
| |
¨☐ | | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| | |
|
| (1) | | Title of each class of securities to which transaction applies: |
|
| (2) | | Aggregate number of securities to which transaction applies: |
|
| (3) | | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
|
| (4) | | Proposed maximum aggregate value of transaction: |
|
| (5) | | Total fee paid: |
|
|
| |
¨☐ | | Fee paid previously with preliminary materials. |
|
| |
¨☐ | | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| | |
|
| (1) | | Amount Previously Paid: |
|
| (2) | | Form, Schedule or Registration Statement No.: |
| | (3) | | Filing Party: |
(3) Filing Party: |
| |
(4) Date Filed |
| | Date Filed: |
2019 Annual Meeting of Shareholders |
| | | | | | | | | |
| | International Flavors & Fragrances Inc.
521 West 57th Street
Date and Time Wednesday, May 1, 2019 10:00 a.m. Eastern Daylight Time Place Boston Consulting Group 10 Hudson Yards, 45th Floor New York, NY 10019 |
NOTICE OF 2016 ANNUAL MEETING OF SHAREHOLDERS
March 17, 2016
Dear Shareholder:
It is my pleasure to invite you to attend International Flavors & Fragrances Inc.’s 2016 Annual Meeting of Shareholders (the “2016 Annual Meeting”). The meeting will be held on Monday, May 2, 2016, at 3 p.m. local time / 9:00 a.m. Eastern Daylight Time, at our offices at 61 rue de Villiers, Neuilly-sur-Seine, France. At the meeting, you will be asked to:
| |
1. | New York 10001 Items to be Voted On  Elect eleven members of the Board of Directors for aone-year term expiring at the 20172020 Annual Meeting of Shareholders.
|
| |
2. |  Ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 20162019 fiscal year.
|
| |
3. |  Approve, on an advisory basis, the compensation of our named executive officers in 2015.
|
| |
4. | 2018.  Transact such other business as may properly come before the 20162019 Annual Meeting and any adjournment or postponement of the 20162019 Annual Meeting.
Record Date Only shareholders of record as of the close of business on March 6, 2019 may vote at the 2019 Annual Meeting. Sincerely, 
Andreas Fibig Chairman and Chief Executive Officer March 18, 2019 |
Only shareholders of record as of the close of business on March 8, 2016 may vote at the 2016 Annual Meeting. A live audio webcast of our 2016 Annual Meeting will be available on our website, www.iff.com, starting at 9:00 a.m. Eastern Daylight Time and a replay will also be available on our website.
It is important that your shares be represented at the 2016 Annual Meeting, regardless of the number of shares you may hold. Whether or not you plan to attend, please vote using the Internet, by telephone or by mail, in each case by following the instructions in our proxy statement. Doing so will not prevent you from voting your shares in person if you are present.
I look forward to seeing you on May 2, 2016.
| | | | | Live Audio Webcast A live audio webcast of our 2019 Annual Meeting will be available on our website,www.iff.com, starting at 10:00 a.m. Eastern Daylight Time and a replay will also be available on our website. Proxy Voting It is important that your shares be represented at the 2019 Annual Meeting, regardless of the number of shares you may hold. Whether or not you plan to attend, please vote using the Internet, by telephone or by mail, in each case by following the instructions in our proxy statement. Doing so will not prevent you from voting your shares in person if you are present. Advance Voting Methods 
Telephone Internet Mail |
| | | | | Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 1, 2019: Our Notice, Proxy Statement and 2018 Annual Report are available atwww.proxyvote.com. We are making the Proxy Statement and the form of proxy first available on or about March 18, 2019. |
| | | | | | | | | |
| | Sincerely, | | | | | | | | |
| | | | | | | | | | |
| | Andreas Fibig | | | | | | | | |
| | Chairman and Chief Executive Officer |
We mailed a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy statement and our 2015 Annual Report on or about March 17, 2016.
Our proxy statement and our 2015 Annual Report are available online at www.proxyvote.com.
Except as stated otherwise, information on our website is not part of this proxy statement.
This proxy summary highlights information contained elsewhere in this proxy statement and does not contain all information that you should review and consider. Please read the entire proxy statement with care before voting.
ANNUAL MEETING
| | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | 
521 W. 57th Street New York, NY 10019 |
| | | | | |
PROXY STATEMENT SUMMARY
| | |
| | We provide below highlights of certain information in this Proxy Statement. As it is only a summary, please refer to the complete Proxy Statement and 2018 Annual Report before you vote. |
Proxy Statement Summary
2018 Highlights
We Solidified our Position as a Global Leader in Taste, Scent and Nutrition
2018 was a transformative year for us. We completed our acquisition of Frutarom, creating a global leader in taste, scent and nutrition. Through our acquisition, we significantly increased our product portfolio, including new access to attractive adjacencies, and expanded our customer base to include a significant number of faster-growing small andmid-size customers. We expect that our combined cultures of innovation and partnership will allow us to further capitalize on this expansion and continue to offer our customers innovative and differentiated products. Because our product offerings now extend beyond our legacy Flavors and Fragrances businesses, we have renamed our business units from Flavors to Taste and from Fragrances to Scent, and added Frutarom as a third business unit.
In 2018, we made notable progress in both our strategic goals and financial performance, and achieved currency neutral growth in all of our key metrics. Our financial results in 2018 reflected continued strong results in our legacy business and the addition of Frutarom results in the fourth quarter.
| | |
2018 Results | | |
| | |
Date and Time:
Net Sales | Monday, May 2, 2016 at 3:00 p.m. local time / 9:00 a.m. Eastern Daylight Time |
Place:
| 61 rue de Villiers, Neuilly-sur-Seine, France |
Record Date:
| March 8, 2016 |
Voting:
| Each share of our common stock outstanding at the close of business on March 8, 2016 has one vote on each matter that is properly submitted for a vote at the 2016 Annual Meeting. |
VOTING MATTERS AND BOARD RECOMMENDATION
|
| $4.0 B |
| | |
| |
Operating Profit | | $584 M |
| |
| |
Adjusted Operating Profit* | | $677 M |
| |
| |
Diluted EPS | | $3.79 |
| |
| |
Adjusted Diluted EPS* | | $5.58 |
| |
Adjusted Diluted EPS ex Amortization* | | $6.28 |
* See reconciliation of GAAP toNon-GAAP financial measures in Exhibit A to this Proxy Statement.
In 2018, our cash returned to shareholders, made largely through dividends and, to a lesser extent share repurchases, totaled $245 million and we increased our quarterly dividend by 6%.
In addition to successfully completing the Frutarom acquisition, we continued to execute on our strategic priorities in 2018, including the following achievements:
Ø Established our 2025 sustainability goals which focuses on Emission Reductions, Zero Waste to Landfill and Water Stewardship;
Ø Cosmetic Active Ingredients continued to grow double-digits;
Ø TastepointSM in North America continued to grow double-digits; and
Ø Opened two new facilities in China, a flavors manufacturing facility and a natural product research lab, supporting our efforts to become a partner of choice and to grow in the region
IFF | 2019 PROXY STATEMENT i
PROXY STATEMENT SUMMARY
Our Corporate Governance Policies Reflect Best Practices
| | |
Ø All Directors other than our CEO are Independent | | Ø No Exclusive Forum orFee-Shifting Provisions Ø No Limitation on Shareholder Litigation Rights Ø Proxy AccessBy-Law Provisions Ø Prohibit Short Sales or Hedging of our Stock By our Employees, Officers and Directors Ø Executives and Directors are Subject to Rigorous Stock Retention Guidelines Ø Extensive Executive Clawback Policy Ø Independent Lead Director Facilitates and Strengthens the Board’s Independent Oversight |
Ø Long Standing Commitment to Sustainability |
Ø Annual Election of Directors |
Ø Majority Voting and Director Resignation Policy |
Ø Diverse Board Brings Balance of Skills, Professional Experience and Perspectives |
Ø Annual Board and Committee Assessments |
Ø Formal Board and Executive Succession Planning |
Ø No Shareholder Rights Plan (“Poison Pill”) |
ii IFF | 2019 PROXY STATEMENT
PROXY STATEMENT SUMMARY
Proposals and Board Recommendations
| | | | |
MatterProposal 1 Election of 11 Director Nominees | | Board Recommendation | | Page Reference
(for more details)
|
ElectionThe Board recommends a vote FOR the election of Directors | | FORall Director NomineesOur Nominating and Governance Committee and our Board have determined that each Director Nominee | | 5 |
Ratification of Independent Registered Public Accounting Firm | | FOR | | 25 |
Advisory Vote on Executive Compensation | | FOR | | 50 |
2015 FINANCIAL HIGHLIGHTS
|
| the nominees possesses the skills and qualifications to collectively comprise a highly effective Board. |
| |  | | See “Proposal 1 — Election of Directors” beginning on page 1 of this Proxy Statement. |
| | | | |
In 2015, we announced our Vision 2020 strategy, which focuses on building differentiationDirector Nominees
| | | | | | | | | | | | |
| | | | | | | | | Committee Membership |
Name and Primary Occupation | | Joined | | Age | | Indep. | | Audit | | Comp. | | Nom.& Gov. |
Marcello V. Bottoli Partner, Es Vedra Capital Advisors LLP | | 2007 | | 57 | | • | |  | | | | |
Dr. Linda Buck Full Member, Fred Hutchinson Cancer
Research Center | | 2007 | | 72 | | • | | | | | | • |
Michael L. Ducker Former President and CEO, FedEx Freight | | 2014 | | 65 | | • | | | | • | | |
David R. Epstein Executive Partner, Flagship Pioneering | | 2016 | | 57 | | • | | | | | | • |
Roger W. Ferguson, Jr. President and CEO, TIAA | | 2010 | | 67 | | • | | | |  | | |
John F. Ferraro Former Global COO, Ernst & Young | | 2015 | | 63 | | • | | | | | | |
Andreas Fibig Chairman and CEO, IFF | | 2011 | | 57 | | | | | | | | |
Christina Gold Former CEO, The Western Union Company | | 2013 | | 71 | | • | | | | • | | |
Katherine M. Hudson Former CEO, Brady Corporation | | 2008 | | 72 | | • | | | | • | | |
Dale F. Morrison (Lead Director) Founding Partner of Twin Ridge Capital Management | | 2011 | | 70 | | • | | | | • | | • |
Stephen Williamson Senior Vice President and CFO, Thermo Fisher Scientific | | 2017 | | 52 | | • | | | | | | |
| | | | | | |
Committee Chair Financial Expert | | | | | | | | | | | | |
Skills and accelerating profitable growth. During 2015, we began to execute on the four pillars of this strategy with the following achievements:
| | |
▪Our Board continuously evaluates desired attributes in light of the Company’s strategy and needs. Key skills, qualifications and experience currently maintained on the Board include: | “Innovating Firsts” — strengthening our position and driving differentiation in priority R&D platforms:
|  |
International and Emerging Markets M&A Operations R&D / Innovation Corporate Governance Sustainability Financial and Accounting Risk and Crisis Management Consumer Products Technology / IT Regulatory
IFF | 2019 PROXY STATEMENT iii
PROXY STATEMENT SUMMARY
| |
▪ | Our Fragrance encapsulation portfolio improved double-digits on a currency neutral basis, led primarily by Fabric Care, as well as Toiletries and Home Care, which also grew double-digits. |
| |
▪ | We launched four new captive and proprietary Fragrance Ingredient molecules. |
| |
▪ | Sales of our Flavors sweetness and savory modulation portfolio improved strong double-digits as we added two new natural taste modulators. |
| |
▪ | Proprietary Flavors delivery systems grew strong double-digits globally given the expansion into additional categories. |
“Win Where We Compete” —achieving a #1 or #2 market leadership position in key markets and categories, and with specific customers:
| |
▪ | We fortified our market share position in North American Flavors, one of our key markets, with our acquisition of Ottens Flavors. |
| |
▪ | North American Flavors grew 11%. |
| |
▪ | We continued to leverage our long-standing presence in emerging markets, which grew 5% on a currency neutral basis, led by double digit growth in the Middle East and Africa. |
| |
▪ | From a category perspective, Home Care improved high single digits globally on a currency neutral basis. |
“Become Our Customers’ Partner of Choice” — attaining commercial excellence by providing our customers with in-depth local consumer understanding, industry-leading innovation, outstanding service and the highest quality products:
| |
▪ | We continued our commitment to sustainability and innovation, winning multiple global sustainability certifications. |
| |
▪ | Our largest Flavors customer awarded us an innovation award for North America. |
| |
▪ | We continued to expand our relationships with regional customers and achieved additional core list status with several key customers across both flavors and fragrances. |
“Strengthen and Expand the Portfolio” — pursuing value-creation through partnerships, collaborations, and acquisitions within flavors, fragrances and adjacencies:
| |
▪ | During 2015, we negotiated and closed two acquisitions that fit into our Vision 2020 strategy. |
| |
▪ | Through our acquisition of Ottens Flavors in May 2015, we expanded our flavors position in North America and increased our penetration of small and mid-size customers. |
| |
▪ | Our acquisition of Lucas Meyer Cosmetics expanded our ingredients offerings into the cosmetic industry thereby allowing us to build greater customer intimacy and entry into the skin care and hair care businesses. |
2015 was a solid year for the Company in financial and operating performance.
|
| | | | | | | | | | | | |
| (dollars in millions except earnings per share amounts) | | 2013 |
| | 2014 |
| | 2015 |
|
| Net Sales | |
| $2,953 |
| |
| $3,089 |
| |
| $3,023 |
|
| Currency Neutral Sales Growth* | | 5 | % | | 5 | % | | 5 | % |
| Diluted Net Earnings Per Share - as Reported | |
| $4.29 |
| |
| $5.06 |
| |
| $5.16 |
|
| Diluted Net Earnings Per Share - as Adjusted* | |
| $4.46 |
| |
| $5.08 |
| |
| $5.25 |
|
| Operating Profit - as Reported | |
| $516 |
| |
| $592 |
| |
| $588 |
|
| Operating Profit - as Adjusted* | |
| $540 |
| |
| $601 |
| |
| $612 |
|
| Net Cash Provided by Operations | |
| $408 |
| |
| $518 |
| |
| $434 |
|
* See reconciliation of GAAP to Non-GAAP financial measures in Exhibit A to this proxy statement.
For more information relating to the Company’s financial performance, please review our 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 1, 2016.
EXECUTIVE COMPENSATION HIGHLIGHTS
ALIGNING PAY WITH PERFORMANCE
Our compensation program for executive officers is designed to align the interests of our executives with those of our shareholders by linking their compensation to the achievement of financial and operational performance metrics that build shareholder value.
Our annual incentive plan (“AIP”) provides awards based on (i) local currency sales growth, operating profit, gross margin and working capital, and (ii) individual objectives relating to leadership, succession planning and people development.
Our long-term incentive plan (“LTIP”) aligns our executives’ interests with those of our shareholders by paying 50% of the earned award in shares of our common stock, with awards based on the achievement of financial and total shareholder return targets by our executives.
In 2015, our financial performance exceeded all but one of the target levels for our performance metrics under our 2015 LTIP. For our 2015 AIP, at the corporate level, we achieved between threshold and target for three of the four financial performance metrics and did not meet the threshold for one of the financial performance metrics. Our Fragrance business unit achieved between threshold and target for three of the four financial performance metrics and did not meet the threshold for one of the financial performance metrics. Our Flavors business unit performance exceeded target for one of the four financial performance metrics, was between threshold and target for two of the financial performance metrics and did not meet the threshold for one of the financial performance metrics. We encourage you to read our Compensation Discussion & Analysis (“CD&A”), beginning on page 29 of this proxy statement, which describes our pay for performance philosophy.
CORPORATE GOVERNANCE HIGHLIGHTS
The following facts outline certain of our corporate governance policies. For a comprehensive discussion of our corporate governance policies, see “Corporate Governance,” beginning on page 11 of this proxy statement.
Our Board has adopted a new “proxy access” by-law that permits eligible shareholders to nominate candidates for election to our Board.
Our Board consists entirely of independent directors, other than our Chairman and CEO.
We have an independent Lead Director to facilitate and strengthen the Board’s independent oversight.
Our Board is elected annually. Our Board is elected via a majority voting standard in uncontested elections.
Our Directors are subject to term limits.
Our Board is diverse, bringing an appropriate balance of skills, professional experience and perspectives.
Our executive clawback policies allow us to recoup certain amounts in cases of accounting misstatements, financial restatements and misstatements (without regard to fault), willful misconduct or violations of Company policy that are material and detrimental to the Company, and violations of non-competition, non-solicitation, confidentiality and similar covenants.
We require our executives and directors to meet stock retention guidelines.
We do not permit short sales or hedging of our stock by our employees, officers or directors.
PROXY STATEMENT
TABLE OF CONTENTS
PROXY STATEMENT
You are receiving this proxy statement because you own shares of IFF common stock that entitle you to vote at the 2016 Annual Meeting. Our Board of Directors is soliciting proxies from shareholders who wish to vote at the meeting. By using a proxy, you can vote even if you do not attend the meeting. This proxy statement describes the matters on which you are being asked to vote and provides information on those matters so you can make an informed decision.
I. ANNUAL MEETING INFORMATION
| |
A:
| At the 2016 Annual Meeting you will be asked to vote on the following proposals. Our Board recommendation for each of these proposals is set forth below. |
|
| | | |
| | |
Proposal | | Board
Recommendation
|
1. | To elect eleven members of the Board of Directors, each to hold office for a one-year term expiring at the 2017 Annual Meeting of Shareholders. | | FOR each Director Nominee |
| | | |
2. | To ratify 2Ratify the selection of PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for the 20162019 fiscal year.year | | | | The Board recommends a vote FOR this proposal Our Board recommends that shareholders vote “FOR” the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2019 fiscal year. |
| | | | See “Proposal 2 — Ratification of Independent Registered Public Accounting Firm” beginning on page 35 of this Proxy Statement. |
| | | | |
3. | To approve,Proposal 3 Approve, on an advisory basis, the compensation of our named executive officers in 2015, which we refer to as “Say on Pay.”2018 | | | | The Board recommends a vote FOR this proposal Our Board recommends a vote “FOR” the advisory vote to approve executive compensation for the 2018 performance year. |
| | | | See “Proposal 3 — Advisory Vote on Executive Compensation” on page 62 of this Proxy Statement and “Compensation Discussion and Analysis” beginning on page 39 of this Proxy Statement. |
We will also consider other business that properly comes before the meeting in accordance with New York law and our By-Laws.
| |
A: | Holders of our common stock at the close of business on March 8, 2016, are entitled to vote their shares at the 2016 Annual Meeting. As of March 8, 2016, there were 79,685,747 shares of common stock issued, outstanding and entitled to vote. Each share of common stock issued and outstanding is entitled to one vote. |
| |
Q: | What constitutes a quorum, and why is a quorum required? |
| |
A: | We are required to have a quorum of shareholders present to conduct business at the meeting. The presence at the meeting, in person or by proxy, of the holders of a majority of the shares entitled to vote on the record date (39,842,875 shares) will constitute a quorum, permitting us to conduct the business of the meeting. Abstentions and broker non-votes are counted as present for purposes of determining a quorum. Shares of common stock for which we have received executed proxies will be counted for purposes of establishing a quorum at the meeting, regardless of how or whether such shares are voted on any specific proposal. |
| |
Q: | What is the difference between a “shareholder of record” and a “street name” holder? |
| |
A: | If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered a “shareholder of record” or a “registered shareholder” of those shares. In this case, your Notice of Internet Availability of Proxy Materials (“Notice”) has been sent to you directly by us. |
If your shares are held in a stock brokerage account or by a bank, trust or other nominee or custodian (each, a “Broker”), including shares you may own as a participant in one of our 401(k) plans, you are considered the “beneficial owner” of those shares, which are held in “street name.” A Notice has been forwarded to you by or on behalf of your Broker, whoCompensation Governance
Ourpay-for-performance compensation program is considered the shareholder of record of those shares. As the beneficial owner, you have the right to direct your Broker how to vote your shares by following the instructions for voting set forthreflected in the Notice.
| |
A: | If you are a shareholder of record, you may vote: |
via Internet;
by telephone;
by mail, if you received a paper copy of the proxy materials; or
in person at the meeting.
Detailed instructions for Internet and telephone voting are set forth in the Notice, which contains instructions on how to access our proxy statement, annual report and shareholder notice online, and the printed proxy card.
If your shares are held in one of our 401(k) plans, your proxy will serve as a voting instruction for the trustee of the 401(k) plan, who will vote your shares as you instruct. To allow sufficient time for the trustee to vote, your voting instructions must be received by 11:59 pm Eastern Daylight Time on April 29, 2016. If the trustee does not receive your instructions bystrong compensation governance that date, the trustee will vote the shares you hold through the 401(k) plan in the same proportion as those shares in the 401(k) plan for which voting instructions were received.
If you are a beneficial owner, you must follow the voting procedures of your Broker.
we have adopted. | |
Q: | What are the requirements to elect the director nominees and to approve each of the proposals in this proxy statement? |
A:
|
| | | | |
| ProposalWhat We Do | | Vote Required
| | Significant portion of NEO compensation in the form ofat-risk variable compensation |
| | 1. | Election of Directors
| | Majority of Votes CastVariable compensation based on multiple performance metrics to encourage balanced incentives |
| | 2.
| | Appropriate mix of fixed and variable compensation to reward company, business unit and individual performance |
|
| | Majority of variable compensation awarded as equity-based awards |
|
| | Executive clawback policies to recoup cash and equity compensation upon certain triggering events |
|
| | Executives required to meet share retention guidelines |
|
| | Independent compensation consultant |
|
| | Annual risk assessment of compensation programs |
| What We Don’t Do | | 
| | No taxgross-ups on severance payments |
|
| | No single-trigger vesting of cash or equity-based awards upon change in control |
|
| | No short-sales, hedging or pledging of our stock by our employees, officers or directors |
|
| | No fixed-duration employment agreements with executive officers |
|
| | No stock option/SAR repricing or exchange of underwater options or SARs for cash without shareholder approval |
|
| | No guaranteed pay increases or equity awards for NEOs |
iv IFF | 2019 PROXY STATEMENT
PROXY STATEMENT SUMMARY
TABLE OF CONTENTS
Under our By-Laws, in an uncontested election of directors, as we have this year, a majority of votes cast is required in order for a director to be elected, which means that a nominee must receive a greater number of votes “FOR” his or her election than votes “AGAINST” in order to be elected. Abstentions are not counted as votes “FOR” or “AGAINST” a director nominee.
Under our By-Laws, the votes cast “FOR” must exceed the votes cast “AGAINST” the ratification of PwC as our independent registered public accounting firm for the 2016 fiscal year. Abstentions are not counted as votes “FOR” or “AGAINST” this proposal.
Proposal 3 is an advisory vote. This means that while we ask shareholders to approve a resolution regarding Say on Pay, it is not an action that requires shareholder approval. If a majority of votes are cast “FOR” the Say on Pay proposal, we will consider the proposal to be approved. Abstentions are not counted as votes “FOR” or “AGAINST” this proposal.
| | 37 | |
A:Compensation Committee Report | If you are a beneficial owner and your shares are held in “street name,” the Broker is bound by the rules of the New York Stock Exchange (“NYSE”) regarding whether or not it can exercise discretionary voting power for any particular proposal if the Broker has not received voting instructions from you. Brokers have the authority to vote shares for which their customers do not provide voting instructions on certain routine matters. A broker non-vote occurs when a Broker returns a proxy but does not vote on a particular proposal because the Broker does not have discretionary authority to vote on the proposal and has not received specific voting instructions for the proposal from the beneficial owner of the shares. Broker non-votes are considered to be present at the meeting for purposes of determining the presence of a quorum but are not counted as votes cast. | | 59 | |
The table below sets forth, for each proposal on the ballot, whether a Broker can exercise discretion and vote your shares absent your instructions and, if not, the impact of such broker non-vote on the approval of the proposal.
|
| | | | | |
| Proposal | | Can Brokers
3 — Advisory Vote Absent Instructions?
| | Impact of
Broker
Non-Vote
|
| on Executive Compensation | | | | 60 | |
1. | Election of Directors | | No | | None |
2. | Ratification of Independent Registered Public Accounting Firm | | Yes | | Not Applicable |
3. | Say on Pay | | No | | None |
Potential Payments upon Termination or Change in Control | | | 81 | |
| |
A:Information About The Meeting | If you sign and return your proxy without making any selections, your shares will be voted “FOR” each of the director nominees, and “FOR” each of the two other proposals. If other matters properly come before the meeting, the proxy holders will have the authority to vote on those matters for you at their discretion. If your shares are held in “street name,” see the question above on how to vote your shares. | | 85 | |
If your shares are held in “street name,” you may change your vote by following your Broker’s procedures for revoking or changing your proxy.
| |
Q: | What shares are covered by my proxy card? |
| |
A: | Your proxy reflects all shares owned by you at the close of business on March 8, 2016. For participants in our 401(k) plans, shares held in your account as of that date are included in your proxy. |
| |
Q: | What does it mean if I receive more than one proxy card? |
| |
A: | If you receive more than one proxy card, it means that you hold shares in more than one account. To ensure that all of your shares are voted, you should sign and return each proxy card. Alternatively, if you vote by telephone or via the Internet, you will need to vote once for each proxy card and voting instruction card you receive. |
IFF | 2019 PROXY STATEMENT v
Table
Proposal 1 Election of Contents
| |
Q: | Who can attend the 2016 Annual Meeting? |
| |
A: | Only shareholders and our invited guests are permitted to attend the 2016 Annual Meeting. To gain admittance, you must bring a form of personal identification to the meeting, where your name will be verified against our shareholder list. If a Broker holds your shares and you plan to attend the meeting, you should bring a brokerage statement showing your ownership of the shares as of the record date or a letter from the Broker confirming such ownership, and a form of personal identification. If you wish to vote your shares that are held by a Broker at the meeting, you must obtain a proxy from your Broker and bring such proxy to the meeting. |
| |
Q: | If I plan to attend the 2016 Annual Meeting, should I still vote by proxy? |
| |
A: | Yes. Casting your vote in advance does not affect your right to attend the 2016 Annual Meeting. If you send in your proxy card and also attend the meeting, you do not need to vote again at the meeting unless you want to change your vote. Written ballots will be available at the 2016 Annual Meeting for shareholders of record. |
| |
Q: | How can I listen to the live audio webcast of the 2016 Annual Meeting? |
| |
A: | You may listen to a live audio webcast of the 2016 Annual Meeting at www.iff.com. The webcast will allow you to listen to the Annual Meeting, but shareholders accessing the 2016 Annual Meeting through the webcast will not be considered present at the 2016 Annual Meeting and will not be able to vote their shares through the webcast or ask questions. If you plan to listen to the live audio webcast, then please submit your vote prior to the 2016 Annual Meeting using one of the methods described under “How do I vote?” above. An archived copy of the webcast will be available at www.iff.com following the 2016 Annual Meeting. Registration to listen to the webcast will be required. We have included our website address for reference only. The information contained on our website is not incorporated by reference into this Proxy Statement. |
Directors
II. PROPOSAL I — ELECTION OF DIRECTORS
Our Current BoardOur Board of Directors (“Board”) currently has eleven members. Upon the recommendation of the Nominating and Governance Committee, of our Board, our Board has nominated the following current directors for election at the 20162019 Annual Meeting, each for aone-year term that expires at the 20172020 Annual Meeting: (i) Marcello V. Bottoli, (ii) Dr. Linda Buck, (iii) Michael L. Ducker, (iv) David R. Epstein, (v) Roger W. Ferguson, Jr., (vi) John F. Ferraro; (vii) Andreas Fibig, (viii) Christina Gold, (ix) Henry W. Howell, Jr., (x)
| | | | | | |
Andreas Fibig (Chairman) | | Dale F. Morrison (Lead Director) |
Marcello V. Bottoli | | David R. Epstein | | Christina Gold |
Dr. Linda Buck | | Roger W. Ferguson, Jr. | | Katherine M. Hudson |
Michael L. Ducker | | John F. Ferraro | | Stephen Williamson |
| | | | |
Director Nominee Experience and (xi) Dale F. Morrison. Each nomineeQualifications
Board Membership Criteria and Selection
Our Certificate of Incorporation provides that we have at least six but not more than fifteen directors. To ensure independence and to provide the breadth of needed expertise and diversity of our Board, the Board periodically reviews its size and makes appropriate adjustments pursuant to ourBy-Laws. Our Nominating and Governance Committee, together with other Board members, from time to time, as appropriate, identifies the need for new Board members.
Board candidates are considered based on various criteria which may change over time and as the composition of the Board changes. At a minimum, our Nominating and Governance Committee considers the following factors as part of its review of all director candidates and in recommending potential director candidates:
judgment, character, expertise, skills and knowledge useful to the oversight of our business;
diversity of viewpoints, backgrounds, experiences and other demographics;
business or other relevant experience; and
the extent to which the interplay of the candidate’s expertise, skills, knowledge and experience with that of other Board members will build a Board that is effective, collegial and responsive to our needs and to the requirements and standards of the New York Stock Exchange (“NYSE”) and the Securities and Exchange Commission (“SEC”).
Proposed director candidates who satisfy the criteria and who otherwise qualify for membership on the Board are identified by the Nominating and Governance Committee. In identifying candidates, the Nominating and Governance Committee seeks input and participation from other Board members and other appropriate sources so that all points of view are considered and the best possible candidates identified. The Nominating and Governance Committee also has consentedengaged a search firm to serve if elected. Proxies cannotassist it in identifying potential candidates. Members of the Nominating and Governance Committee and other Board members, as appropriate, interview selected director candidates, evaluate the director candidates and determine which candidates are to be voted for a greater numberrecommended by the Nominating and Governance Committee to the Board. Our Nominating and Governance Committee evaluates the suitability of persons thanpotential candidates nominated by shareholders in the number of nominees named.same manner as other candidates recommended to the Nominating and Governance Committee.
IFF | 2019 PROXY STATEMENT 1
PROPOSAL1 — ELECTION OF DIRECTORS
We believe that each of our nominees has the experience, skills and qualities to fully perform his or her duties as a director and to contribute to our success. Each of our nominees is being nominated because he or she adheres to the highest standards of personal integrity and possesses excellent interpersonal and communication skills, is highly accomplished in his or her field, has an understanding of the interests and issues that are important to our shareholders and is able to dedicate sufficient time to fulfilling his or her obligations as a director. Our nominees as a group complement each other and each other’s respective experiences, skills and qualities.
Each nominee’s principal occupationDiversity and other pertinent information aboutTenure
Diversity is one of the factors that the Nominating and Governance Committee considers in identifying and selecting director nominees. As part of this process, the Nominating and Governance Committee evaluates how a particular experience, qualifications, attributescandidate would strengthen and skills that ledincrease the diversity of the Board in terms of how that candidate may contribute to concludethe Board’s overall balance of perspectives, backgrounds, knowledge, experience, skill sets and expertise in substantive matters pertaining to our business. To maintain a balance of experience and new perspectives, our Corporate Governance Guidelines also sets guidance on the number of full annual terms that such person should serve as a director appearscan serve on the following pages.
Theour Board.We Strive for a Balanced and Diverse Board recommends a vote FOR the election of each of the following director nominees.
NOMINEES FOR DIRECTOR
| | | | | | |
| Diversity | | Tenure | | Executive Leadership Experience |
| | | |
MARCELLO V. BOTTOLI, 54
| | Director Since: 2007
Board Committees:
Compensation (until May 2016)
Audit (beginning May 2016)
| | | | |
| | 
| | 
|
4 of our 11 Director Nominees are women or minorities | | 73% of our Director Nominees have served 8 or less full annual terms on our Board | | 91% of our Director Nominees have Senior Executive Leadership Experience |
Shareholder Nominations and Proxy Access
Under ourBy-Laws, if a shareholder wishes to submit a director candidate for consideration by the Nominating and Governance Committee, or wishes a director nomination to be included in the Company’s proxy statement for an annual meeting pursuant to our proxy accessby-law, the shareholder must deliver or mail notice of the request to the Company’s Corporate Secretary, in writing, so that it is received not less than 90 days nor more than 120 days prior to the anniversary date of the prior year’s annual meeting of shareholders. However, if the annual meeting is not within 30 days of the anniversary date of the prior year’s annual meeting, such notice must be received by the Corporate Secretary no later than 10 days following the mailing of notice of the annual meeting or public disclosure of the annual meeting date, whichever occurs first. The notice must be accompanied by the information concerning the director candidate and nominating shareholder described in Article I, Section 3 and Section 4 of our
2IFF | 2019 PROXY STATEMENT
PROPOSAL1 — ELECTION OF DIRECTORS
By-Laws. The Nominating and Governance Committee may also request any additional background or other information from any director candidate or recommending shareholder as it may deem appropriate. Our proxy accessby-law permits an eligible shareholder (or group of up to 20 eligible shareholders) who owns shares representing at least 3% of our outstanding shares, and has held the shares for at least 3 years, to nominate and include in our proxy materials for an annual meeting, director candidates constituting up to 20% of our Board.
Continued Service
The Nominating and Governance Committee annually reviews each current Board member’s suitability for continued service as a member of our Board and recommends to the Board whether such member should bere-nominated. In addition, each director is required to promptly tender his or her resignation to the Chair of the Nominating and Governance Committee if, during his or her tenure as a director, such director
has a material change in employment,
has a significant change in personal circumstances which may adversely affect his or her reputation, or the reputation of the Company, or
intends to join the board of anotherfor-profit company,
so that the Nominating and Governance Committee can review the change and make a recommendation to the full Board regarding the director’s continued service. Such resignation becomes effective only upon acceptance by the Board.
|
Ö YOUR BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES. |
IFF | 2019 PROXY STATEMENT 3
PROPOSAL1 — ELECTION OF DIRECTORS
Nominees for Director
Marcello V. Bottoli
| | | | | | | | | | | | |
| | 
Director Since: 2007 Committees: • Audit Age:57 | | Business Experience An Italian national with extensive international experience, Mr. Bottoli has beenis a Partner at Es Vedra Capital Advisors LLP, an operating partner ofadvisory and investment firm dedicated to venture capital and growth equity. Previously, Mr. Bottoli was an Operating Partner at Boston-based Advent International, a global private equity firm, sincebetween 2010 and 2015. Mr. Bottoli also served as Interim Chief Executive Officer of Pandora A/S, a designer, manufacturer and marketer of hand-finished and modern jewelry, from August 2011 until March 2012. Mr. Bottoli served as President and Chief Executive Officer of Samsonite Inc., a luggage manufacturer and distributor, from March 2004 through January 2009, and President and Chief Executive Officer of Louis Vuitton Malletier, a manufacturer and retailer of luxury handbags and accessories, from 2001 through 2002. Previously, Mr. Bottoli held a number of roles with Benckiser N.V., and then Reckitt Benckiser plc, a home, health and personal care products company, following the merger of Benckiser with Reckitt & Colman Ltd. His experience as | | | | | | | | Public Board Memberships • Pandora A/S, a chief executive and emphasis on consumer products, strategic insights and marketing as well as his experience with strategic transactions, has enabled Mr. Bottoli to provide many insights and contributions to our Board. Mr. Bottoli is Chairman of Pharmafortune S.A., a pharmaceuticals and biotechnologydesigner, manufacturer and is a membermarketer of the advisory board of Aldo Group, a Canadian footwear retailer,hand-finished and serves on the board of directors of Desigual, an international fashion retailer based in Spain. Mr. Bottoli served on the board ofcontemporary jewelry, from 2010 to 2014 • True Religion Apparel, Inc., a California-based fashion jeans, sportswear and accessory manufacturer and retailer, from 2009 to 2013 on Additional Accomplishments and Memberships • Chairman of the board of Pandora A/SPharmafortune Ltd., a pharmaceuticals and biotechnology manufacturer • Board of Desigual, an international fashion retailer based in Spain from 20102014 to 2014, on the2018 • Board of Pelostop S.A., a beauty services retailer based in Spain • Board of Il Bisonte S.p.A., a leather goods retailer based in Italy from 2015 to 2018 • Board of FaceGym Ltd., a beauty services retailer based in London • Advisory Board of Aldo Group, a Canadian footwear retailer from 2013 to 2018 • Board of Ratti Spa,S.p.A., an Italian manufacturer ofhigh-end fabrics and textiles for the fashion industry from 2003 to 2010 Qualifications Mr. Bottoli brings to our Board his experience as a chief executive and as an investor, with an emphasis on the Board of Blushington LLC, a California-based makeupconsumer products, strategic insights and beauty services retailer between 2011marketing. In addition, his experience with strategic transactions and 2014. M&A has enabled Mr. Bottoli to provide many insights and contributions to our Board. |
4IFF | 2019 PROXY STATEMENT
PROPOSAL1 — ELECTION OF DIRECTORS
Dr. Linda Buck
| | | | | | | | | | | | |
| | | |
DR. LINDA BUCK, 69
Director Since: 2007 Committees: • Nominating and Governance Age:72 | | Director Since: 2007
Board Committees:
Nominating and Governance
|
Business Experience Dr. Linda Buck has been a Howard Hughes Medical Institute Investigator since 1994, aFull Member of the Fred Hutchinson Cancer Research Center since 2002, and2002. In addition, Dr. Buck has been an Affiliate Professor of Physiology and Biophysics at the University of Washington since 2003. She was previously Full Professor of Neurobiology at Harvard Medical School. Dr. Buck serves onBuck’s research has provided key insights into the mechanisms that underlie the sense of smell and she has been the recipient of numerous awards, including The Nobel Prize in Physiology or Medicine in 2004. | | | | | | | | Public Board Memberships • DeCode Genetics Inc., a biotechnology company, from 2005 to 2009 Additional Accomplishments and Memberships • Scientific Advisory BoardsBoard of The Picower Institute for Learning and Memory at Massachusetts Institute of Technology and The Center for Molecular Medicine, Karolinska Institute, Sweden, and previously served on the Medical Advisory Board of The Gairdner Foundation, a Canadian non-profit organization devoted to the recognition of outstanding achievement in biomedical research worldwide. She is a member • Member of the International Advisory Panel of the Knut and Alice Wallenberg Foundation, the largest private foundation promoting scientific research in Sweden and the • President’s Council of the New York Academy of Sciences. Dr. Buck is an electedSciences • Elected Member of the National Academy of Sciences, the National Academy of Medicine, the American Academy of Arts & Sciences, the European Academy of Sciences, and the Royal Society, the United Kingdom’s national academy of science. science • Previous Member of the Medical Advisory Board of The Gairdner Foundation, a Canadiannon-profit organization devoted to the recognition of outstanding achievement in biomedical research worldwide Qualifications Dr. Buck’s research has provided key insights into the mechanisms that underlie the sense of smell and she has been the recipient of numerous awards, including The Nobel Prize in Physiology or Medicine in 2004. In May 2015, Dr. Buck received an honorary Doctor of Science degree from Harvard University. Herscientific knowledge is important to our research and development efforts in both flavors, fragrances and fragrances,nutrition, as is Dr. Buck’sher technical and advisory board experience in evaluating a host of issues. Dr. Buck served on the Board of Directors of DeCode Genetics Inc., a biotechnology company, from 2005issues that are relevant to 2009. | our innovation and research and development activities. |
IFF | 2019 PROXY STATEMENT 5
PROPOSAL1 — ELECTION OF DIRECTORS
Michael L. Ducker
|
| | | | | | | | | | | |
MICHAEL L. DUCKER, 62
| | 
Director Since: 2014
Board Committees: • Compensation Age:65 |
| Business Experience Mr. Ducker has beenserved as President and Chief Executive Officer of FedEx Freight sincefrom January 2015.2015 – August 2018. In that role, he providesprovided strategic direction for FedEx'sFedEx’s less-than-truckload (LTL) companies throughout North America and for FedEx Custom Critical, a leading carrier of time sensitive, critical shipments. Mr. Ducker was formerly the Chief Operating Officer and President of International for FedEx Express, where he led all customer-facing aspects of the company’s U.S. operations and its international business, spanning more than 220 countries and territories across the globe. Mr. Ducker also oversaw FedEx Trade Networks and FedEx Supply Chain. During his FedEx career, which began in 1975, Mr. Ducker has also served as president of FedEx Express Asia Pacific in Hong Kong and led the Southeast Asia and Middle East regions from Singapore, as well as Southern Europe from Milan, Italy. His significant experience at | | | | | | | | Public Board Memberships • nVent Electric plc, a global organizationprovider of electrical connection and protection solutions Additional Accomplishments and Memberships • Chairman of the Compensation Committee of the U.S. Chamber of Commerce • Board of Amway Corporation • National Advisory Board of the Salvation Army • Executive Committee and Treasurer of the American Trucking Association • Board of the American Transportation Research Institute • Board member of University of Mississippi Foundation Qualifications Mr. Ducker’s significant senior executive and international experience coupled with his extensive expertise in complex operations and logistics complements the strength of our Board. Mr. Ducker serves as an ExecutiveDucker’s career with FedEx Freight provided him with knowledge of a number of important areas that assist our Board, Memberincluding leadership, risk assessment and Chairman of the U.S. Chamber of Commerce, and as a board member of the Coalition of Service Industries. Mr. Ducker also serves on the board of directors of Amway Corporation, the National Advisory Board of the Salvation Army, the Executive Committee of the American Trucking Association and as a member of the American Transportation Research Institute Board of Directors.operational issues. |
6IFF | 2019 PROXY STATEMENT
PROPOSAL1 — ELECTION OF DIRECTORS
David R. Epstein
| | | | | | | | | | | | |
| | | |
DAVID R. EPSTEIN, 54
Director Since: 2016 Committees: • Nominating and Governance Age:57 | | Director Since: 2016
Board Committees:
Audit
|
Business Experience Mr. Epstein is an Executive Partner at Flagship Pioneering, a venture capital firm focused on life sciences companies, where he has served since January 2017. Previously, Mr. Epstein served as Division Head and CEO atof Novartis Pharmaceuticals, a division of Novartis AG, a Swiss multinational pharmaceutical company, and isfrom January 2010 until July 2016. In addition, Mr. Epstein was a member of Novartis’s Executive Committee. He has been the Head of Novartis Pharmaceuticals since 2010. From September 2000 to February 2010, Mr. Epstein served as President and Chief Executive Officer of Novartis Oncology division. He joined Sandoz, the predecessor of Novartis, in 1989 and held various leadership positions of increasing responsibility, including Chief Operating Officer of Novartis Pharmaceuticals Corporation in the United States and Global Head of Novartis Specialty Medicines until August 2000. Before joining Sandoz, Mr. Epstein was an associate in the strategy practice of Booz Allen Hamilton, a consulting firm. | | | | | | | | Public Board Memberships • Chairman of the Board of Rubius Therapeutics, Inc., a company focused on the development of red cell therapeutics • Board of Evelo Biosciences, a leading immuno-microbiome company Additional Accomplishments and Memberships • Chairman of the Board of Axcella Health, Inc., a company focused on the development of products to treat multifactorial metabolic diseases • Novartis Representative on the CEO Roundtable on Cancer, anon-profit organization working to make continual progress toward the elimination of cancer from 2001 to 2008 • Named by FierceBiotech as one of “The 25 most influential people in Biopharma” Qualifications Mr. Epstein’s extensive global business experience, deep understanding of life sciences and understanding of research and development initiatives provides valuable insights to our Board. We benefit from Mr. Epstein served onEpstein’s senior leadership experience and achievement in both business and the board of Molecular Insight Pharmaceuticals from 2008 to 2010 and on the board of Novartis Oncology and Molecular Diagnostics from 1999 to 2010. He also participated in the inaugural CEO Roundtable on Cancer, a non-profit organization working to make continual progress toward the elimination of cancer, which was held May 8, 2001 and was the Novartis member representative through 2008. | life sciences. |
IFF | 2019 PROXY STATEMENT 7
PROPOSAL1 — ELECTION OF DIRECTORS
Roger W. Ferguson, Jr.
|
| | | | | | | | | | | |
ROGER W. FERGUSON, JR., 64
| | 
Director Since: 2010 Board Committees: • Compensation (Chair) Age:67 |
| Business Experience Mr. Ferguson has been the President and Chief Executive Officer of TIAA (formerly TIAA-CREF), a major financial services company, since April 2008. He joinedPrior to joining TIAA, after his tenure at Swiss Re, a global reinsurance company, where heMr. Ferguson served as Chairman of the firm’sSwiss Re America Holding Corporation, Head of Financial Services, and a member of the Executive Committeeglobal insurance company, from 2006 to 2008. Mr. Ferguson currently servesserved as Vice Chairman of the Board of Governors of the U.S. Federal Reserve System from 1999 to 2006. He represented the Federal Reserve on several international policy groups and served on key Federal Reserve System committees, including Payment System Oversight, Reserve Bank Operations and Supervision and Regulation. In addition, Mr. Ferguson led the board of directors ofFed’s initial response on 9/11. From 1984 to 1997, Mr. Ferguson was an associate and partner at McKinsey & Company. | | | | | | | | Public Board Memberships • General Mills, Inc., a manufacturer and marketer of branded consumer foods • Alphabet Inc., the parent holding company of Google Inc. Additional Accomplishments and the Advisory Board of Brevan Howard Asset Management LLP, a global alternative asset manager. He serves on the boardsMemberships • Boards of a number of charitable andnon-governmental organizations, including the Institute for Advanced Study, Memorial Sloan-KetteringSloan Kettering Cancer Center and the American Council of Life Insurers, the Partnership for New York, and Math for America. He isSmithsonian Institution • Chairman of The Conference Board a member of the Executive Committee of the Business-Higher Education Forum, and a member • Member of the Economic Club of New York • Member of the Council on Foreign Relations and • Member of the Group of Thirty. Mr. Ferguson is also a fellowThirty • Fellow of the American Academy of Arts and Sciences, and co-chairCo-Chair of the Academy’s Commission on the Future of Undergraduate Education. Mr. Ferguson previously served onEducation • Fellow of the Congressional Budget Office's PanelAmerican Philosophical Society • Previous Chairman and Executive Committee Member of Economic Advisers. Mr. Ferguson holds a B.A. and a Ph.D. in Economics and a J.D., all from Harvard University. the Business-Higher Education Forum Qualifications Mr. Ferguson brings to our Board his sound business judgment, and extensive knowledge of the finance industry.financial services industry and regulatory experience. We benefit from Mr. Ferguson’s service as Chief Executive Officer of TIAA and his experience as a member of other public company boards, which provides him an enhanced perspective on issues applicable to our company. |
8IFF | 2019 PROXY STATEMENT
PROPOSAL1 — ELECTION OF DIRECTORS
John F. Ferraro
| | | | | | | | | | | | |
| | | |
JOHN F. FERRARO, 60
Director Since: 2015 Committees: • Audit (Chair) Age:63 | | Director Since: 2015
Board Committees: Audit (Chair beginning May 2016)
|
Business Experience Mr. Ferraro is currently the Executive Vice President, Strategy and Sales of Aquilon Energy Services, a software company for the energy industry. He was previously the global chief operating officerGlobal Chief Operating Officer of Ernst & Young, a leading professional services firm, from 2007 to January 2015. In that role, he was responsible for the overall operations and services of Ernst & Young worldwide. Prior to the COO role, Mr. Ferraro served in several leadership positions, including as Global Vice Chair of Audit and as the senior advisory partner on some of the firm’s largest and global accounts. Mr. Ferraro began his career with Ernst & Young Milwaukee in 1976 and has served a variety of global companies. He has worked in Europe (London and Rome), throughout the Midwest (Chicago, Cleveland and Kansas City) and New York. Mr. Ferraro has served on the board of | | | | | | | | Public Board Memberships • Advance Auto Parts, Inc., an automotive aftermarket parts provider since February 2015, and on the board of • ManpowerGroup Inc., a global workforce solution and service provider since January 2016. He founded Additional Accomplishments and Memberships • Member of the Global Executive Board of Ernst & Young from 2001-2002 and 2004-2014 • Founded the Audit Committee Leadership Network in 2003 and is a member • Chaired the Board of theTrustees of Boston College High School boardand Former Board of trustees. He isTrustee of Marquette University • Practiced as a CPA and is a member of the American Institute of Certified Public Accountants. Mr. Ferraro was elected to the Marquette University Board of Trustees in 2006, served as vice chair from 2011 to 2014, and was elected chair in 2014. Accountants Qualifications Mr. Ferraro brings to our Board his extensive accounting,executive, auditing and executiveaccounting experience working with large and global corporations. | We benefit from his extensive understanding of global business operations, markets and risks. |
IFF | 2019 PROXY STATEMENT 9
PROPOSAL1 — ELECTION OF DIRECTORS
Andreas Fibig
|
| | | | | | | |
ANDREAS FIBIG, 54
| | 
Director Since: 2011 Board Age:57 |
| Business Experience Mr. Fibig joined our Board in 2011 and has been our Chairman since December 2014 and Chief Executive Officer since September 2014. Previously, he served as President and Chairman of the Board of Management of Bayer HealthCare Pharmaceuticals, the pharmaceutical division of Bayer AG, from September 2008 to September 2014. Prior to that position, Mr. Fibig held a number of positions of increasing responsibility at Pfizer Inc., a research-based pharmaceutical company, including as Senior Vice President of the US Pharmaceutical Operations group from 2007 through 2008 and as President, Latin America, Africa and Middle East from 2006 through 2007. | | | | Public Board Memberships • Board of Novo Nordisk, a global healthcare company • Board of Bunge Limited, a leading agribusiness and food company with integrated operations from September 2016 to May 2018 Additional Accomplishments and Memberships • Executive Committee of the World Business Council for Sustainable Development, aCEO-led organization focused on creating a sustainable future for business, society and the environment • Board member of the German American Chamber of Commerce, Inc. • German Academy of New York Qualifications Mr. Fibig’s prior work experience with various pharmaceutical companies has provided him with extensive experience in international business, product development and strategic planning, which are directly translatable to his work as our Chairman and CEO. Mr. Fibig chairs the Board of Trustees of the Max Planck Institute for Infection Biology. |
10IFF | 2019 PROXY STATEMENT
PROPOSAL1 — ELECTION OF DIRECTORS
Christina Gold
| | | | | | | | | | | | |
| | | |
CHRISTINA GOLD, 68
Director Since: 2013 Committees: • Compensation • Nominating and Governance (Chair) Age:71 | | Business Experience Director Since: 2013
Board Committees: Compensation, Nominating and Governance
|
| From September 2006 until September 2010, Ms. Gold was Chief Executive Officer, President and a director of The Western Union Company, a leader in global money movement and payment services. She was President of Western Union Financial Services, Inc. and Senior Executive Vice President of First Data Corporation, former parent company of The Western Union Company and provider of electronic commerce and payment solutions, from May 2002 to September 2006. Prior to that, Ms. Gold served as Vice Chairman and Chief Executive Officer of Excel Communications, Inc., a former telecommunications ande-commerce services provider, from October 1999 to May 2002. From 1998 to 1999, Ms. Gold served as President and CEO of Beaconsfield Group, Inc., a direct selling advisory firm that she founded. Prior to founding Beaconsfield Group, Ms. Gold spent 28 years (from 1970 to 1998) with Avon Products, Inc., a leading global beauty company, in a variety of positions, including as Executive Vice President, Global Direct Selling Development, Senior Vice President and later President of Avon North America, and Senior Vice President & CEO of Avon Canada. | | | | | | | | Public Board Memberships • ITT Corporation, a manufacturer of highly engineered components and technology solutions for industrial markets • Korn/Ferry International, a leadership and talent management organization • Exelis, Inc., a diversified, global aerospace, defense and information solutions company, from October 2011 to May 2013 Additional Accomplishments and Memberships • Board of New York Life Insurance, a private mutual life insurance company • Board of Safe Water Network, anon-profit organization working to develop locally owned, sustainable solutions to provide safe drinking water • Board of Governors of Carleton University in Ottawa, Canada Qualifications Ms. Gold brings a number of valuable characteristics to our Board, including her extensive international and domestic business experience, her familiarity with the Company’s customer base, her financial expertise and her prior experience as a chief executive officer. Ms. Gold is currently a director of ITT Corporation, a manufacturer of highly engineered components and technology solutions for industrial markets (since 1997), New York Life Insurance, a private mutual life insurance company, and Korn/Ferry International, a leadership and talent management organization. From October 2011 to May 2013, Ms. Gold was a director of Exelis, Inc., a diversified, global aerospace, defense and information solutions company. She also sits on the board of Safe Water Network, a non-profit organization working to develop locally owned, sustainable solutions to provide safe drinking water, and is a member of the Board of Governors of Carleton University in Ottawa, Canada. | |
IFF | 2019 PROXY STATEMENT 11
PROPOSAL1 — ELECTION OF DIRECTORS
Katherine M. Hudson
|
| | |
HENRY W. HOWELL, JR., 74
| | Director Since: 2004
Board Committees: Audit, Nominating and Governance (Chair)
|
Until 2000, Mr. Howell served in various positions during his 34 years with J.P. Morgan, a financial services firm. At J.P. Morgan, Mr. Howell secured extensive business development, finance and international management experience which enables him to provide both a public and a private sector perspective on corporate finance, corporate governance and mergers and acquisitions. This experience also serves us well in conjunction with his service on our Nominating and Governance and Audit Committees. While at J.P. Morgan, Mr. Howell held several overseas positions including head of banking operations in Germany and Chief Executive Officer of J.P. Morgan’s Australian merchant banking affiliate, which was publicly listed. Both of these assignments enhanced his ability to analyze complex international business and financial matters. He is currently Chairman of the board of trustees of the Norton Art Museum and is a life trustee of the Chicago History Museum. | | | |
| | | |
KATHERINE M. HUDSON, 69
Director Since: 2008 Committees: • Compensation Age:72 | | Director Since: 2008
Board Committees: Audit (Chair)(until May 2016)
Compensation (beginning May 2016)
|
Business Experience As Chairperson, President and Chief Executive Officer of Brady Corporation, a global manufacturer of identification solutions and specialty industrial products, from 1994 until 2004, Ms. Hudson oversaw a doubling of annual revenues. Her prior experience during 24 years with Eastman Kodak, an imaging technology products provider, covered various areas of responsibility, including systems analysis, supply chain, finance and information technology. Her general management experience spans both commercial and consumer product lines. Ms. Hudson served as | | | | Public Board Memberships •Charming Shoppes, Inc., a directorwoman’s specialty retailer from 2000 to 2012 •CNH Global NV, a manufacturer of agricultural and construction equipment, from 1999 to 2006. •Apple Computer Corporation, a designer and manufacturer of consumer electronics and software products, CNH Global NV, a manufacturer of agricultural and construction equipment where she was as a member of the audit committee, and, between 2000 and 2012, Charming Shoppes, Inc., a woman’s specialty retailer, where she served as chair of the audit committee. from 1994 to 1997 Qualifications Ms. Hudson’s executive experience in supply chain, finance and information technology at Eastman Kodak and Brady Corporation and her governance leadership on other boards have translated to sound guidance to our Board on governance, supply chain, finance matters and as Chair of our Audit Committee.information technology. |
12IFF | 2019 PROXY STATEMENT
PROPOSAL1 — ELECTION OF DIRECTORS
Dale F. Morrison
| | | | | | | | | | | | |
| | | |
DALE F. MORRISON, 67
Director Since: 2011 Committees: • Audit • Compensation • Nominating and Governance Lead Director Age:70 | | Director Since: 2011
Board Committees: Audit, Nominating and Governance,
Lead Director
(Compensation beginning May 2016)
|
Business Experience Mr. Morrison has beenis a founding partner of TriPointeTwin Ridge Capital Partners,Management, a private equity firm, since 2011.2016. Prior to Twin Ridge, he founded TriPointe he served fromCapital Partners in 2011. From 2004 until 2011, Mr. Morrison served as the President and Chief Executive Officer of McCain Foods Limited, an international leader in the frozen food industry. A food industry veteran, his experience includes service as Chief Executive Officer and President of Campbell Soup Company, various roles at General Foods and PepsiCo and as an operating partner of Fenway Partners, a private equity firm. | | | | | | | | Public Board Memberships •InterContinental Hotels Group, an international hotel company •Trane Inc. from 2005 to 2008 Additional Accomplishments and Memberships •Non-Executive Chairman of the Center of Innovation at the University of North Dakota •Non-Executive Chairman of Young’s, a frozen foods company •Board of Harvest, a food distribution company Qualifications Mr. Morrison is a seasoned executive with strong consumer marketing, sales and international credentials and his knowledge of our customer base is very valuable to our Board. His experience in private equity and mergers and acquisitions is also an important asset for our Board. |
IFF | 2019 PROXY STATEMENT 13
PROPOSAL1 — ELECTION OF DIRECTORS
Stephen Williamson
| | | | | | | | |
| | 
Director Since: 2017 Committees: • Audit Age:52 | | Business Experience Mr. MorrisonWilliamson currently serves as Senior Vice President and Chief Financial Officer at Thermo Fisher Scientific, a leader in life sciences and healthcare technologies. Appointed to this role in August 2015, Mr. Williamson is currently Non-Executive Chairmanresponsible for the company’s finance, tax, treasury and investor relations functions. He joined Thermo Fisher in 2001 as Vice President, European Financial Operations, based in the U.K., and oversaw its integration activities across Europe. In 2004, Mr. Williamson moved to the U.S. and held finance leadership roles for many of Thermo Fisher’s operating businesses. In 2008, he became Vice President of Financial Operations for the company and led the finance function supporting all businesses. Prior to Thermo Fisher, Mr. Williamson served as Vice President and Chief Financial Officer, Asia Pacific for Honeywell International (formerly AlliedSignal) in Singapore and held other finance roles in corporate development and operational finance. He began his career with Price Waterhouse in the transaction support group and the audit practice, working in both London and New York. | | | | Additional Accomplishments and Memberships • Member of the CenterInstitute of Innovation at the UniversityChartered Accountants of North Dakota, the Non-Executive Chairman of Findus Group, a frozen foods company,England and a director of Hale and Hearty, a restaurant business, and InterContinental Hotels Group,Wales Qualifications Mr. Williamson is an accomplished finance leader with extensive international hotel company,senior management experience and he previously servedbrings a deep understanding of the power of innovation and R&D as a directorwell as the value of Trane, Inc. | M&A – core components of IFF’s strategy. His deep understanding of complex, global businesses, 20 years of M&A experience and extensive financial insight adds considerable guidance to our Board and Audit Committee. |
14IFF | 2019 PROXY STATEMENT
Corporate Governance
TableCode of Contents
III. CORPORATE GOVERNANCE
Business Conduct and EthicsWe have adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) that applies to all of our employees, including our Chief Executive Officer (“CEO”), our Chief Financial Officer (“CFO”) and our Chief Accounting Officer. We also have adopted a Code of Conduct for Directors and a Code of Conduct for Executive Officers (together with the Code of Ethics, the “Codes”). The Codes are available through the Investor—Leadership & Governance—Governance link on our website, www.iff.com.
Only the Board or the Audit Committee may grant a waiver from any provision of our Codes in favor of a director or executive officer, and any such waiver and any amendments to the Codes will be publicly disclosed on our website, www.iff.com.
Shareholder EngagementWe regularly engage with our shareholders to better understand their perspectives on our Company, including our strategies, performance, matters of corporate governance and executive compensation. This dialogue has helped inform the Board’s decision-making and ensure our interests remain well-aligned with those of our shareholders. During 2018, we interacted with our largest active shareholders, representing approximatelytwo-thirds of our outstanding shares. We believe that all these engagements provide valuable feedback and this feedback is shared regularly with our Board and its relevant committees. As a result of feedback we received from our shareholders in the past few years, we have, among other things, raised our annual dividend, executed our share repurchase program, pursued value-creating acquisitions, completed a perception study on capital allocation preferences, and increased our investor relations exposure with enhanced marketing in key markets in the United States and across continental Europe.
Corporate Governance Guidelines
Our Board of Directors is responsible for overseeing the management of our Company. The Board has adopted Corporate Governance Guidelines which set forth our governance principles relating to, among other things:
director qualifications and responsibilities;
board and committee structure and meetings;
management succession; and
the Chief Executive Officer (“CEO”)CEO evaluation and succession process.
Pursuant to our Corporate Governance Guidelines, a person that has served for twelve consecutive, full annual terms on our Board cannot continue to serve as a director following the twelfth year of service, unless (i) unless:
such person is one of our employeesemployees; or (ii)
our Board has made a determination that the nomination of such person would be in the best interests of our Company and our shareholders.
A director’s first full annual term begins on the date he or she is first elected at an annual meeting of shareholders and continues until the next annual meeting of shareholders. Unless a director is an employee of our Company, prior to the conclusion of the twelfth full annual term, the director shall submit his or her resignation as a director effective immediately prior to that year’s annual meeting of shareholders.
IFF | 2019 PROXY STATEMENT 15
CORPORATE GOVERNANCE
The Nominating and Governance Committee reviews our Corporate Governance Guidelines annually, and recommends changes to the Board as appropriate. A copy of our Corporate Governance Guidelines is available through the Investor - Investor—Leadership & Governance - Governance—Governance link on our website, www.iff.com.
www.iff.com.
Our sustainability vision—to lead positive transformational changes toward a regenerative, healthy and abundant world—is based on the concept of a circular economy, one that is restorative and regenerative by design. We are leveraging this mindset to transform how we design and manufacture our products and how we engage our employees, customers, suppliers and communities.
In 2018, IFF was named to Barron’s 100 Most Sustainable Companies, the FTSE4Good Index Series and the Euronext Vigeo World 120. Additional achievements included:
Launching new environmental goals focused on emission reductions, zero waste to landfill and water stewardship, an initiative known collectively as “EcoEffective+”;
Obtaining FairWild certification for Peru Balsam—the first-ever FairWild-certified flavor and fragrance ingredient that is commercially available globally; and
| • | | Achieving a place on the CDP Climate “A” List for the 4th year in a row, as well as an “A” for Water Security for the first time. |
We review our sustainability programs and performance in our annual sustainability report, which is posted on our website for investors, customers and suppliers.
Independence of DirectorsThe Board has affirmatively determined that each of our current directors (other than Mr. Fibig, our CEO) meets our independence requirements and those of the NYSE’s corporate governance listing standards. Pursuant to our Corporate Governance Guidelines, the Board undertakes an annual review of director independence, which includes a review of each director’s responses to questionnaires asking about any relationships with us.the Company. This review is designed to identify and evaluate any transactions or relationships between a director or any member of his or her immediate family and the Company or members of our senior management.
The Board has affirmatively determined that each of our current directors (other than Mr. Fibig, our CEO) meets our independence requirements and those of the NYSE’s corporate governance listing standards:
| | |
Independent Directors |
| Marcello V. Bottoli | | Roger W. Ferguson, Jr. |
| |
| Dr. Linda Buck | | Christina Gold |
| |
| Michael L. Ducker | | Katherine M. Hudson |
| |
| David R. Epstein | | Dale F. Morrison |
John F. Ferraro | | Stephen Williamson |
In the ordinary course of business, transactions may occur between the Company or members of our senior management and entities with which some of our directors are or have been affiliated. During 2015, inIn connection with its evaluation of director independence, our Board reviewed transactions between the Company and any company that has any ofwhere our directors or their family members of our directors servingserve as executive officers. Specifically, (i) in the ordinary course of business, we utilize the services of FedEx Freight, of which Mr. Ducker servesserved as President and Chief Executive Officer of FedEx Freight, a shipping company that provides services to the Company. We reviewed this commercial relationship and found that all the transactions between the Company and FedEx were madeuntil his retirement on August 15, 2018 (ii) in the ordinary course of business we purchase services from, and were negotiated at arm’s length. Assell products and services to Thermo Fisher Scientific, a result,life sciences and healthcare technology company, of which Mr. Williamson serves as Senior Vice President and Chief Financial Officer and (iii) one of our executive officers has purchased an immaterial interest in aco-investment vehicle managed by Mr. Bottoli. The Board determined that this commercial relationship did not impair Mr. Ducker’s independence.
Other Information
On August 5, 2008,none of these transactions impaired the
SEC approved a settlement with Ernst & Young LLP and two of its partners, including Mr. Ferraro, relating to auditor independence
issues arising out of business relationships between Ernst & Young LLP and an individual who was also a member of the
board of directors of three of its audit clients. The matter arose out of actions taken by Mr. Ferraro in 2002 in his role as Vice Chairman of Ernst & Young LLP. Ernst & Young LLP and Mr. Ferraro resolved that matter by way of a negotiated settlement in which the respondents neither admitted nor denied the underlying allegations and accepted an administrative cease and desist order. The negotiated resolution did not involve any suspension, fines or other sanctions against Mr. Ferraro. Mr. Ferraro thereafter remained a partner in good standing at Ernst & Young through January 2015. Our Board of Directors took into consideration all factors regarding Mr. Ferraro’s character and experience and believes that he is a significant asset to the Board.respective director.16IFF | 2019 PROXY STATEMENT
CORPORATE GOVERNANCE
Board Leadership Structure
As stated in our Corporate Governance Guidelines, the Board does not have a policy that requires a separation of the Chairman of the Board (“Chairman”) and CEO positions. The Board believes that it is important to have the flexibility to make this determination from time to time based on the particular facts and circumstances then affecting our business.
Currently, we combine the positions of Chairman and CEO. We believe that the CEO, as the Company’s chief executive, is in the best position to fulfill the Chairman’s responsibilities, including those related to identifying emerging issues facing our Company, and communicating essential information to the Board about our performance and strategies. We also believe that the combined role of Chairman and CEO provides us with a distinct leader and allows us to present a single, uniform voice to our customers, business partners, shareholders and employees. If at any point in time the Board feels that its current leadership structure may be better served by separating the roles of Chairman and CEO, it may then determine to separate these positions.
In order to mitigate potential disadvantages of a combined Chairman and CEO, the Board has created the position of Lead Director to facilitate and strengthen the Board’s independent oversight of our performance, strategy and succession planning and to promote effective governance standards. The independent directors of the Board elect a Lead Director from among the independent directors. Our current Lead Director is Mr. Morrison.
The duties of our Lead Director include:
presiding at all meetings of the Board at which the Chairman and CEO is not present, including executive sessions of the independent directors, and providing prompt feedback regarding those meetings to the Chairman and CEO;
approving, and providing suggestions for, Board meeting agendas, with the involvement of the Chairman and CEO and input from other directors;
serving as the liaison between the Chairman and CEO and the independent directors;
monitoring significant issues occurring between Board meetings and assuring Board involvement when appropriate; and
ensuring, in consultation with the Chairman and CEO, the adequate and timely exchange of information between our management and the Board.
|
Duties of our Lead Director |
Ø Presides at all meetings of the Board at which the Chairman and CEO is not present, including executive sessions of the independent directors, and provides prompt feedback regarding those meetings to the Chairman and CEO; |
|
Ø Approves and provides suggestions for Board meeting agendas, with the involvement of the Chairman and CEO and input from other directors; |
|
Ø Serves as liaison between the Chairman and CEO and the independent directors; |
|
Ø Monitors significant issues occurring between Board meetings and assures Board involvement when appropriate; and |
|
Ø Ensures, in consultation with the Chairman and CEO, the adequate and timely exchange of information between the management team and the Board. |
Board Committees
Our Board has an Audit Committee, a Compensation Committee and a Nominating and Governance Committee, each of which operates under a written charter adopted by the Board. Each Committee reviews its charter at least annually and recommends charter changes to the Board as appropriate. In December 2015,2018, each of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee reviewed its charter, and amended it where appropriate. Each Committee charter provides that the Committee will annually review its performance.performance, and each Committee reviewed and discussed its performance in 2018. A current copy of each of the Audit Committee, Compensation Committee and Nominating and Governance Committee charters is available through the Investor - Investor—Leadership & Governance - Governance—Governance link on our website, www.iff.com.
IFF | 2019 PROXY STATEMENT www.iff.com17
The table below provides the current and expected membership and chairperson for each of our Committees and identifies our current Lead Director.
|
| | | | | | | |
| Name | | Audit | | Compensation | | Nominating and | | Lead Director |
Marcello V. Bottoli | X1
| X1
● | | | | | | |
Dr. Linda Buck | | | X | |
Michael L. DuckerDr. Linda Buck | | X | | | | ● | | |
| | | | |
Michael L. Ducker | | | | ● | | | | |
| | | | |
David R. Epstein | X | | | | | ● | | |
| | | | |
Roger W. Ferguson, Jr. | | | |  | | | | |
| | | | |
John F. Ferraro | | | | | | | | |
| | | | |
Christina Gold | | | | ● | | | | |
| | | | |
Katherine M. Hudson | | | | ● | | | | |
| | | | |
Dale F. Morrison | | ● | | ● | | ● | | ● |
| | | | |
Stephen Williamson | | ● | | | | | | |
Roger W. Ferguson, Jr. | | X (Chair) | | |
John F. Ferraro | X (Chair elect)1
| | | |
Christina Gold | | X | X | |
Henry W. Howell, Jr. | X | | X (Chair) | |
Katherine M. Hudson | X (Chair)1
| X1
| | |
Dale F. Morrison | X | X1
| X | X |
X = Committee
member1 = Effective immediately following the 2016 Annual Meeting, if elected to our Board of Directors (i) Mr. Bottoli will become a member of the Audit Committee and rotate off the Compensation Committee, (ii) Mr. Ferraro will become Chair of the Audit Committee, (iii) Ms. Hudson will become a member of the Compensation Committee and rotate off the Audit Committee and (iv) Mr. Morrison will become a member of the Compensation Committee.
Board and Committee Meetings
Our Board held fiveeight meetings during 2015.2018. The Audit Committee held seveneight meetings, the Compensation Committee held five meetings and the Nominating and Governance Committee held sixfive meetings during 2015. Each of our2018. All incumbent directors attended at least 75% of the total meetings of the Board and CommitteesCommittee meetings on which he or she served during 2015.2018. All of our directors who were serving on the day of last year’s annual meeting of shareholders attended that meeting. Under our Corporate Governance Guidelines, unless there are mitigating circumstances, such as medical, family or business emergencies, Board members should endeavor to participate (either in person or by telephone) in all Board meetings and all Committee meetings of which the director is a member and to attend our annual meeting of shareholders. Ournon-employee directors, all of whom are currently independent, meet in executive session, without the presence of any corporate officer or member of management, in conjunction with regular meetings of the Board and Committees. During 2015, our non-employee directors met in executive session as part of every regularly scheduled
18IFF | 2019 PROXY STATEMENT
CORPORATE GOVERNANCE
Audit Committee
| | |
| Current Members: | | Responsibilities |
| |
John F. Ferraro (Chair) Marcello V. Bottoli Dale F. Morrison Stephen Williamson Meetings in 2018: 8 | | The Audit Committee’s responsibilities include overseeing and reviewing: • the financial reporting process and the integrity of our financial statements, capital structure and related financial information; • our internal control environment, systems and performance; • the audit process followed by our independent accountant and our internal auditor; • the appointment, compensation, retention and oversight of our independent accountant and our internal auditor; • our independent accountant’s and internal auditor’s qualifications, performance and independence, and whether our independent accountant and internal auditor should be rotated, considering the advisability and potential impact of selecting a different independent accountant or internal auditor; • the procedures for monitoring compliance with laws and regulations and with our Code of Business Conduct and Ethics; • assisting the Board in overseeing and reviewing with management financial risks and the policies and practices established to manage such risks; • establishing, monitoring and reviewing procedures for the treatment of concerns regarding compliance, accounting, internal accounting controls and auditing matters, including critical audit matters; and • reviewing andpre-approving all audit andnon-audit services performed by our independent accountant. Delegation. Under its charter, the Audit Committee may, when it deems appropriate, delegate certain of its responsibilities to one or more Audit Committee members or subcommittees. Independence and Financial Expertise The Board reviewed the background, experience and independence of the current Audit Committee members and based on this review, the Board determined that each member of the Audit Committee: • meets the independence requirements of the NYSE’s corporate governance listing standards; • meets the enhanced independence standards for audit committee members required by the SEC; • is financially literate, knowledgeable and qualified to review financial statements; and • qualifies as an “audit committee financial expert” under the SEC rules. |
IFF | 2019 PROXY STATEMENT 19
CORPORATE GOVERNANCE
Compensation Committee
| | |
| Current Members: | | Responsibilities |
| |
Roger W. Ferguson, Jr. (Chair) Michael Ducker Christina Gold Katherine M. Hudson Dale F. Morrison Meetings in 2018: 5 | | The Compensation Committee’s responsibilities include: • determining, subject to approval by the independent directors of the Board, the CEO’s compensation; • reviewing and making determinations regarding compensation of executive officers (other than the CEO) and certain other members of senior management; • reviewing, adopting and recommending to the Board, or shareholders as required, general compensation and benefits policies, plans and programs, and overseeing the administration of such policies, plans and programs; • reviewing and discussing with management each year the Compensation Discussion and Analysis included in our annual proxy statement; • recommending to the Board any changes to the compensation and benefits ofnon-employee directors; • conducting a risk assessment of our overall compensation policies and practices; and • reviewing succession planning for executive officers (other than the CEO) and certain members of senior management. Authority and Delegation. Under its charter, the Compensation Committee is responsible for assisting the Board in ensuring that long-term and short-term compensation provide performance incentives to management, and that compensation plans are appropriate and competitive and reflect the goals and performance of management and our Company. As discussed in more detail in this proxy statement under the heading “Compensation Discussion and Analysis,” the Compensation Committee considers Company-wide performance against applicable annual and long-term performance goalspre-established by the Compensation Committee, taking into account economic and business conditions, and comparative compensation and benefit performance levels. If the Compensation Committee deems it appropriate, it may delegate certain of its responsibilities to one or more Compensation Committee members or subcommittees. Independence The Board reviewed the background, experience and independence of the Compensation Committee members and, based on this review, the Board determined that each member of the Compensation Committee: • meets the independence requirements of the NYSE’s corporate governance listing standards; • is an “outside director” pursuant to the criteria established by the Internal Revenue Service; and • is a“non-employee” director within the meaning of Rule16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). |
20IFF | 2019 PROXY STATEMENT
CORPORATE GOVERNANCE
| | |
| | Role of Compensation Consultant. The Compensation Committee has the sole authority to retain compensation consultants or advisors to assist it in fulfilling its responsibilities, including evaluating CEO, executive andnon-employee director compensation, and in fulfilling its other responsibilities. From time to time, management also retains its own outside compensation consultants. In 2018, the Committee directly engaged Frederic W. Cook & Co., Inc. (“FW Cook”) as its independent compensation consultant. FW Cook’s work with the Committee included analyses, advice, guidance and recommendations on executive compensation levels versus peers, market trends and incentive plan designs. In addition, in 2018, FW Cook conducted a review of our current peer group to ensure that it continues to serve as an appropriate benchmark (after the acquisition of Frutarom) for executive andnon-employee director compensation levels and practices for 2019. FW Cook also reviewed our executive pay for performance, our executive benefit and perquisite programs, our aggregate long-term incentive practices, and provided updates on executive compensation trends and developments. FW Cook will continue to work with the Committee to provide it with analyses, advice, guidance and recommendations on executive compensation levels versus peers, market trends and incentive plan designs. FW Cook was engaged exclusively by the Committee on executive and director compensation matters and does not have any other consulting arrangements with the Company. The Compensation Committee considered the independence of FW Cook and determined that no conflicts of interest exist. |
| |
| | Role of Management. Our Compensation Committee relies on management for legal, tax, compliance, finance and human resource recommendations, and data and analysis for the design and administration of the compensation, benefits and perquisite programs for our executives. The Compensation Committee combines this information with the recommendations and information from its independent compensation consultant. |
| |
| | Our CEO, our Executive Vice President, Chief Human Resources Officer (“CHRO”) and our Executive Vice President, General Counsel and Corporate Secretary (“General Counsel”) generally attend Compensation Committee meetings. CEO performance and compensation are discussed by the Compensation Committee in executive session, with advice and participation from the Compensation Committee’s independent compensation consultant as requested by the Compensation Committee. Our CEO and CHRO, without the presence of any other members of senior management, actively participate in the compensation discussions of our executives, including making recommendations to the Compensation Committee as to the amount and form of compensation (other than their own). |
| |
| | Compensation Committee Interlocks and Insider Participation. None of the members of the Compensation Committee was at any time during 2018 or at any other time an officer or employee of our Company. None of our executive officers serves as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving as a member of our Board or Compensation Committee. |
IFF | 2019 PROXY STATEMENT 21
CORPORATE GOVERNANCE
Nominating and Governance Committee
| | |
| Current Members: | | Responsibilities |
| |
Christina Gold (Chair) Linda Buck David R. Epstein Dale F. Morrison Meetings in 2018: 5 | | The Nominating and Governance Committee’s responsibilities include: • developing and reviewing criteria for the selection of directors, and making recommendations to the Board with respect thereto; • identifying qualified individuals to serve on the Board, reviewing the qualifications of director candidates and recommending to the Board the nominees to be proposed by the Board for election as directors at the annual meeting of shareholders; • reviewing the suitability of directors for continued service, including in case of a resignation tendered by a director following a change in employment or anticipated board memberships, and making recommendations to the Board with respect to their continued service; • reviewing director candidates recommended by shareholders for election; • establishing and reviewing policies pertaining to roles, responsibilities, tenure and removal of directors; • overseeing CEO succession planning; • developing and reviewing the Board and Board committee evaluation process; • overseeing the annual CEO evaluation process and recommend to the Board the annual performance goals for the CEO; • reviewing and recommending changes to our Corporate Governance Guidelines and monitoring corporate governance issues; and • reviewing and, if appropriate, approving transactions with related parties. Delegation. The Nominating and Governance Committee may, when it deems appropriate, delegate certain of its responsibilities to one or more Nominating and Governance Committee members or subcommittees. Independence The Board reviewed the background, experience and independence of the Nominating and Governance Committee members, and based on this review, the Board determined that each member of the Nominating and Governance Committee meets the independence requirements of the NYSE’s corporate governance listing standards. |
Board and Committee meeting.
AuditAssessment ProcessEach year, the Nominating & Governance Committee
Responsibilities
The Audit Committee’s responsibilities include overseeing leads an evaluation of the effectiveness of the Board and reviewing:
each of its committees. Each member of the
financial reporting processBoard responds to an anonymous survey regarding the effectiveness of the Board, its committees and their leadership, and the
integritydynamics between the Board and management. In 2018, the Board supplemented this process through the use ofin-person director interviews. The Lead Director and the Chair of the Nominating & Governance Committee interviewed22IFF | 2019 PROXY STATEMENT
CORPORATE GOVERNANCE
each director to obtain his or her assessment of director performance, Board dynamics and the effectiveness of the Board and its committees. After consulting with each other, the Lead Director and Chair of the Nominating & Governance Committee summarized and reviewed the results with the Board.
Succession Planning
Our Board recognizes that one of its most important duties is to ensure excellence and continuity in our senior leadership by overseeing the development of executive talent and planning for the effective succession of our financial statements, capital structureChairman and related financial information;
CEO and other senior members of executive management. As part of this process, our internal control environment, systems and performance;
the audit process followed by our independent accountantCEO and our internal auditors;
executive officers are required to prepare a detailed development and succession plan for themselves and for their direct reports on an annual basis. The Company’s executives regularly attend Board meetings and maintain an ongoing dialogue with Board members, which is critical to the appointment, compensation, retentionCompany’s succession planning. The Compensation Committee reviews, on an annual basis, potential successors for the Company’s executive officers and oversight of our independent accountantsuch other senior management employees as the Compensation Committee may determine. In addition, the Nominating and our internal auditors;
our independent accountant's qualifications, performanceGovernance Committee also agrees upon and independence, and whether it should be rotated, considering the advisability and potential impact of selecting a different independent public accountant; and
the procedures for monitoring compliance with laws and regulations and with our Code of Business Conduct and Ethics.
Additional responsibilities include assistingrecommends to the Board
a succession plan for our CEO, including in
overseeingemergency situations. Our Board is committed to being prepared for a planned or unplanned change in our leadership in order to ensure our stability.Risk Management Oversight
Board and reviewing enterprise-wideCommittee Roles in Overseeing Risk
BOARD OF DIRECTORS Oversees and reviews our significant risks Audit Committee Oversees financial risks and the policies and practices established to manage such risks, in particular as they relate to financial risk, cybersecurity and information security risk generally.
Underalso oversees and reviews procedures adopted by the Audit Committee, the Audit Committee reviews and pre-approves all audit and non-audit services performed by our independent accountant. The Audit Committee may, when it deems appropriate, delegate certain of its responsibilities to one or more Audit Committee members or subcommittees.
Independence and Financial Expertise
The Board reviewed the background, experience and independence of the current Audit Committee members and based on this review, the Board determined that each member of the Audit Committee:
meets the independence requirements of the NYSE’s corporate governance listing standards;
meets the enhanced independence standards for audit committee members required by the SEC;
is financially literate, knowledgeable and qualified to review financial statements; and
qualifies as an “audit committee financial expert” under SEC rules.
Compensation Committee
Responsibilities
The Compensation Committee’s responsibilities include:
determining, subject to approval by the independent directors of the Board, the CEO’s compensation;
reviewing and making determinations regarding compensation of executive officers (other than the CEO) and other members of senior management;
reviewing, adopting and recommending to the Board, or shareholders as required, general compensation and benefits policies, plans and programs, and overseeing the administration of such policies, plans and programs;
reviewing and discussingmonitoring compliance with management each year the Compensation Discussion and Analysis included in our annual proxy statement or annual report on Form 10-K;
recommending to the Board any changes to the compensation and benefits of non-employee directors; and
conducting a risk assessment of our overall compensation policies and practices.
Under its charter, the Compensation Committee is responsible for assisting the Board in ensuring that long-term and short-term compensation provide performance incentives to management, and that compensation plans are appropriate and competitive and reflect the goals and performance of managementlaws and our Company. As discussed in more detail in this proxy statement under the heading “Compensation DiscussionCode of Business Conduct and Analysis,” the Compensation Committee considers Company-wide performance against applicable annual and long-term performance goals pre-established by the Compensation Committee, taking into account economic and business conditions, and comparative compensation and benefit performance levels. If the Compensation Committee deems it appropriate, it may delegate certain of its responsibilities to one or more Compensation Committee members or subcommittees.
Independence
The Board reviewed the background, experience and independence of the Compensation Committee members and based on this review, the Board determined that each member of the Compensation Committee:
meets the independence requirements of the NYSE’s corporate governance listing standards;
is an “outside director” pursuant to the criteria established by the Internal Revenue Service; and
is a “non-employee” director within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Role of Compensation Consultant
The Compensation Committee has the sole authority to retain compensation consultants or advisors to assist it in evaluating CEO, senior executive and non-employee director compensation. From time to time, management also retains its own outside compensation consultants. In connection with the approval of the 2015 compensation program, including individual targets, as in prior years, the Committee directly engaged W.T. Haigh & Company (“Haigh & Company”) as its independent compensation consultant. From late 2014 through August 2015, Haigh & Company’s work with the Committee included analyses, advice, guidance and recommendations on executive compensation levels versus peers, market trends and incentive plan designs, and the design of our 2015 SAIP. In addition, Haigh & Company provided the Committee with advice and recommendations regarding compensation provided to Ms. Cornell in connection with her hiring. In August 2015, the Compensation Committee directly engaged F.W. Cook & Co., Inc. (“FW Cook”) as its independent consultant. In late 2015, FW Cook provided the Committee with advice and a review of director compensation. FW Cook will continue to work with the Committee to provide it with analyses, advice, guidance and recommendations on executive compensation levels versus peers, market trends and incentive plan designs. Both Haigh & Company and FW Cook were engaged exclusively by the Committee on executive and director compensation matters and do not have other consulting arrangements with the Company. The Compensation Committee considered the independence of each of Haigh & Company and FW Cook and determined that no conflicts of interest were raised.
Role of Management
Our Compensation Committee relies on management for legal, tax, compliance, finance and human resource recommendations, and data and analysis for the design and administration of the compensation, benefits and perquisite programs for our senior executives. The Compensation Committee combines this information with the recommendations and information from its independent compensation consultant.
Our CEO, our Executive Vice President, Chief Human Resources Officer (“CHRO”) and our Executive Vice President, General Counsel and Corporate Secretary (“General Counsel”) generally attend Compensation Committee meetings. CEO performance and compensation are discussed by the Compensation Committee in executive session, with advice and participation from the Compensation Committee’s independent compensation consultant as requested by the Compensation Committee. Our CEO and CHRO, without the presence of any other members of senior management, actively participate in the compensation discussions of our senior executives, including making recommendations to the Compensation Committee as to the amount and form of compensation (other than their own).
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee was at any time during 2015 or at any other time an officer or employee of our Company. None of our executive officers serves as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving as a member of our Board or Compensation Committee.
Nominating and Governance Committee
Responsibilities
The Nominating and Governance Committee’s responsibilities include:
developing and reviewing criteria for the selection of directors, and making recommendations to the Board with respect thereto;
reviewing the suitability of directors for continued service, including in case of a resignation tendered by a director, and making recommendations to the Board with respect to their re-nomination or action to be taken with respect to the resignation;
identifying qualified individuals to serve on the Board, reviewing the qualifications of director candidates and recommending to the Board the nominees to be proposed by the Board for election as directors at the annual meeting of shareholders;
reviewing director candidates recommended by shareholders for election;
establishing and reviewing policies pertaining to roles, responsibilities, tenure and removal of directors;
overseeing CEO and senior management succession plans;
developing and reviewing the Board and Board committee evaluation process and overseeing the annual CEO evaluation process;
reviewing and recommending changes to our Corporate Governance Guidelines and monitoring corporate governance issues; and
reviewing and, if appropriate, approving transactions with related parties.
TheEthics. Nominating and Governance Committee may, when it deems appropriate, delegate certain of its responsibilities to one or more NominatingOversees governance risk and Governancerisks arising with CEO succession. Compensation Committee members or subcommittees.
Independence
The Board reviewed the background, experienceOversees risks associated with compensation policies and independence of the Nominating and Governance Committee members, and based on this review, the Board determined that each member of the Nominating and Governance Committee meets the independence requirements of the NYSE’s corporate governance listing standards.
Director Candidates
Our Nominating and Governance Committee has established a policy regarding the consideration of director candidates. The Nominating and Governance Committee, together with other Board members, from time to time, as appropriate, identifies the need for new Board members. Proposed director candidates who satisfy the criteria described below and who otherwise qualify for membership on the Board are identified by the Nominating and Governance Committee. In identifying candidates, the Nominating and Governance Committee seeks input and participation from other Board memberspractice, our compensation plans (including equity compensation plans, severance, change in control and other appropriate sources so that all points of view are consideredemployment-related matters). MANAGEMENT Manages our day-to-day business risks and the best possible candidates identified. The Nominating and Governance Committee may also engage a search firm to assist it in identifying potential candidates. Members of the Nominating and Governance Committee and other Board members, as appropriate, interview selected director candidates, evaluate the director candidates and determine which candidates are to be recommended by the Nominating and Governance Committee to the Board. Our Nominating and Governance Committee evaluates the suitability of potential candidates nominated by shareholders in the same manner as other candidates recommended to the Nominating and Governance Committee.
In addition, in December 2015, our Board adopted a “proxy access” by-law, which permits eligible shareholders to nominate candidates for election to our Board. Proxy access candidates will be included in the Company’s proxy statement and ballot. The proxy access bylaw provides that holders:
of at least 3% of the Company’s outstanding shares, which can comprise up to 20 shareholders,
holding the shares continuously for at least 3 years,
can nominate individuals constituting up to 20% of the Board for election at an annual shareholders meeting.
Board candidates are considered based on various criteria which may change over time and as the composition of the Board changes. At a minimum, our Nominating and Governance Committee considers the following factors as part of its review of all director candidates and in recommending potential director candidates:
judgment, character, expertise, skills and knowledge useful to the oversight of our business;
diversity of viewpoints, backgrounds, experiences and other demographics;
business or other relevant experience; and
the extent to which the interplay of the candidate’s expertise, skills, knowledge and experience with that of other Board members will build a Board that is effective, collegial and responsive to our needs and to the requirements and standards of the NYSE and the SEC.
Under our By-Laws, if a shareholder wishes to submit a director candidate for consideration by the Nominating and Governance Committee, or wishes a director nomination to be included in the Company’s proxy statement for an annual meeting pursuant to our proxy access by-law, the shareholder must deliver or mail notice of the request to the Corporate Secretary of International Flavors & Fragrances Inc., in writing, so that it is received not less than 90 days nor more than 120 days prior to the anniversary date of the prior year’s annual meeting of shareholders. However if the annual meeting is not within 30 days of the anniversary date of the prior year’s annual meeting, such notice must be received by the Corporate Secretary no later than 10 days following the mailing of notice of the annual meeting or public disclosure of the annual meeting date, whichever occurs first. The notice must be accompanied by the information concerning the director candidate and nominating shareholder described in Article I, Section 3 and Section 4 of our By-Laws. The Nominating and Governance Committee may also request any additional background or other information from any director candidate or recommending shareholder as it may deem appropriate.
Our Certificate of Incorporation provides that we have at least six but not more than fifteen directors. To ensure independence and to provide the breadth of needed expertise and diversity of our Board, the Board periodically reviews its size and makes appropriate adjustments pursuant to our By-Laws. While the Nominating and Governance Committee has not adopted a formal diversity policy with regard to the selection of director nominees, diversity is one of the factors that the Nominating and Governance Committee considers in identifying director nominees. As part of thisrisk management process the Nominating and Governance Committee evaluates how a particular candidate would strengthen and increase the diversity of the Board in terms of how that candidate may contribute to the Board’s overall balance of perspectives, backgrounds, knowledge, experience, skill sets and expertise in substantive matters pertaining to our business. The Nominating and Governance Committee also annually reviews each current Board member’s suitability for continued service as a member of our Board and recommends to the Board whether such member should be re-nominated. In addition, each director is required to promptly tender his or her resignation to the Chair of the Nominating and Governance Committee if, during his or her tenure as a director, such director (i) has a material change in employment, or (ii) a significant change in personal circumstances, which may adversely affect his or her reputation, or the reputation of the Company, or (iii) intends to join the board of another for-profit company, so that the Nominating and Governance Committee can review the change and make a recommendation to the full Board regarding the director’s continued service. Such resignation becomes effective only upon acceptance by the Board.
Risk Management Oversight
Board Role in Overseeing Risk
Our Board is actively involved in the oversight of risks that could affect our Company. This oversight is conducted primarily through the AuditCompany and Compensation Committees of the Board, but the full Board has retained responsibility for the general oversight of risks. The Board is responsible for overseeing and reviewing with management the Company’s enterprise-wide risks and the policies and
IFF | 2019 PROXY STATEMENT 23
CORPORATE GOVERNANCE
practices established to manage such risks. It is the responsibility of the CEO and other senior management to manage the Company’sday-to-day business risks and its risk management process. We believe this division of responsibility is the most effective approach for addressing risk management.
Management maintains an enterprise risk management (“ERM”) process which is designed to identify and assess our global risks and to develop steps to mitigate and manage risks. The Board receives regular reports onexercises its risk oversight function both at the ERM process.Board level and through delegation to its committees. The Board and the Audit Committeeits committees focus on the most significant risks facing us, including operational risk, financial risk, regulatory risk, litigation risk, cybersecurity and information security risk, tax risk, credit risk, and liquidity risk, as well as our general risk management strategy, and how these risks are being managed. The Board receives updates on the Company’s risk through management’s enterprise risk management (“ERM”) program report to the Board, which includes management’s approach to mitigating and managing such risks. The Board also receives updates on the Company’s risk from its committees. Each of the Audit, Nominating and Governance and Compensation Committee is primarilyare responsible for assistingthe oversight of risks relevant to their function (as described above) and regularly report to the Board. The Board believes that its risk oversight structure allows for open communication between the Board, in its responsibilitycommittees and management.
Management
Management maintains an ERM program which is designed to overseeidentify and review with managementassess our enterprise-wideglobal risks and to develop steps to mitigate and manage risks. As part of its risk management practices, the policiesCompany has established a management risk committee made up of key members of the Company’s management to integrate global risk activities (including cybersecurity, compliance, business and practices establishedcrisis management) and to manage such risks, in particular as they relate to financialensure appropriate prioritization of resources and alignment across the Company. The Board receives regular reports on the ERM process and the Company’s risk cybersecurity andmitigation activities, including an annual report focused on information security risk. The Compensation Committee is primarily responsible for overseeing the management of risks associated with compensation policies and practice, our compensation plans (including equity compensation plans and programs), severance, change in control and other employment-related matters.
In the fourth quarter of 2015,2018, the Compensation Committee, working with its independent compensation consultant, conducted a risk assessment of our executive compensation programs. The goal of this assessment was to determine whether the general structure of our executive compensation policies and programs, annual and long-term performance goals or the administration of the programs posed any material risks to our Company. In addition, with the input of our CHRO, the Compensation Committee reviewed compensation programs and policies below the executive level in a Company-wide risk assessment. The Compensation Committee shared the results of this review with our full Board.
The Compensation Committee determined, based on the reviews of its independent compensation consultant and management’s input and other factors, that the compensation policies and practices for the Company’s employees in 2015,2018, including the established performance goals and incentive plan structures, did not result in excessive risk taking or the implementation of inappropriate business decisions or strategies by the Company’s senior executives or employees generally, and that there are no risks arising from our compensation policies and practices for our employees that are reasonably likely to have a material adverse effect on the Company.
Related Person Transactions
and Other InformationTransactions with Related Persons
In 2015,2018, there were no transactions and there are no currently proposed transactions in excess of $120,000 in which the Company was or will be a participant and in which any director or executive officer of the Company, any known 5% or greater shareholder of the Company or any immediate family member of any of the foregoing persons, had or will have a direct or indirect material interest as defined in Item 404(a) of RegulationS-K.
24IFF | 2019 PROXY STATEMENT
CORPORATE GOVERNANCE
Related Person Transactions Policy
In accordance with SEC rules, our Board has adopted a written policy for the review and the approval or ratification of related person transactions. This policy is available through the Investor-Leadership & Governance-Governance link on our website, www.iff.com.www.iff.com. Under the policy, a “related person” is specifically defined as an executive officer, a director, a director nominee, a beneficial owner of more than 5% of any class of voting securities, an immediate family member of any of the foregoing, or a controlled entity, which is defined as an entity owned or controlled by any of the foregoing or in which any such person serves as an officer or partner, or together with all of the foregoing persons, owns 5% or more equity interests. The policy defines a “related person transaction” as a transaction or series of transactions involving a related person and the Company, excluding employment arrangements involving an executive officer or other senior officer or employee of the Company and director compensation arrangements. The policy requires that any such transaction be approved or ratified by the Nominating and Governance Committee. If accounting issues are involved in the transaction, the Nominating and Governance Committee will consult with the Audit Committee if deemed appropriate.
Pursuant to the policy, a related person transaction will be approved or ratified only if the Nominating and Governance Committee determines that it is being entered into in good faith and on fair and reasonable terms which are in the best interest of our Company and our shareholders. In determining whether to approve or ratify a transaction, the Nominating and Governance Committee considers the following factors, to the extent relevant:
the related person’s relationship to the Company and interest in the transaction;
the material facts of the transaction;
the benefits to the Company;
the availability of alternate sources of comparable products or services and the terms of such alternative; and
an assessment as to whether the transaction is on terms comparable to the terms available to an unrelated third party or to employees generally.
No related person may participate in the review of a transaction in which he or she may have an interest. In addition, except fornon-discretionary contributions made pursuant to our matching contributions program, a charitable contribution by our Company to an organization in which a related person is known to be an officer, director or trustee, is subject to approval by the Nominating and Governance Committee.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) that applies to all of our employees, including our CEO, our Chief Financial Officer (“CFO”) and our Chief Accounting Officer (“CAO”). We also have adopted a Code of Conduct for Directors and a Code of Conduct for Executive Officers (together with the Code of Ethics, the “Codes”). The Codes are available through the Investor - Leadership & Governance - Governance link on our website, www.iff.com.
Only the Board or the Audit Committee may grant a waiver from any provision of our Codes in favor of a director or executive officer, and any such waiver and any amendments to the Codes will be publicly disclosed on our website, www.iff.com.
Share Retention Policy
We encourage our executives and directors to own our common stock so that they share the same long-term investment risk as our shareholders.
Our Share Retention Policy provides executives and directors flexibility in personal financial planning, yet requires them to maintain ongoing and substantial investment in our common stock.Under our Share Retention Policy, each executive and director must retain shares of Company common stock based onat a targeted ownership level. There is no deadline by which an executive or director must meet his or her targeted ownership level. The targeted ownership level for directors is five times the cash portion of the annual retainer (not including any retainer for service as a committee chairperson or lead director). The targeted ownership levels for executives are (1) are:
the lesser of shares equal in value to five times base salary or 120,000 shares for our CEO, (2)
the lesser of shares equal in value to three times base salary or 35,000 shares for our CFO and Group Presidents,Divisional Chief Executive Officers, and (3)
IFF | 2019 PROXY STATEMENT 25
CORPORATE GOVERNANCE
the lesser of shares equal in value to two times base salary or 20,000 shares for certain other executives, including our General Counsel and Mr. O'Leary.Counsel.
If an executive or director does not meet the targeted ownership level, the executive or director may not sell or transfer any shares held in an equity, a deferred compensation or a retirement plan account managedprovided by us,the Company, and the executive or director must retain such shares in such accounts until the targeted ownership level is met. For executives, until theif their retention requirement is not met, the executive must alsois required to retain a portion (50%, in the case of our named executive officers) of any shares of common stock acquired from the exerciseas a result of a stock option orexercising any stock settled appreciation right (“SSAR”) or as a result of the vesting of restricted stock or a restricted stock unit (“RSU”) (after payment of any exercise price and taxes).
Our Share Retention Policy provides executives and directors flexibility in personal financial planning, yet requires them to maintain ongoing and substantial investment in our common stock. As of March 8, 2016,6, 2019, all of our named executive officers and directors were in compliance with their individual retention requirements.our Share Retention Policy. Additional detail regarding ownership of our common stock by our executivesexecutive officers and directors is included in this proxy statement under the heading “Securities Ownership of Management, Directors and Certain Other Persons.”
Equity Grant Policy
The Compensation Committee has adopted an equity grant policyEquity Grant Policy with respect to the issuance of equity awards under our equity plans. Under the equity grant policy,Equity Grant Policy, the Compensation Committee approves all equity awards to our executives exceptexecutive officers (other than our CEO) and certain other members of senior management, and our Board approves all equity awards to our CEO and to ournon-employee directors, which are approved by our Board. directors. The grant date for annual awards to all employees and for annual awards to ournon-employee directors is the date of the Company’s annual meeting of shareholders. The grant date for LTIPawards under our Long-Term Incentive Plan (“LTIP”) is the date that the Compensation Committee (or Board in the case of our CEO) approves the applicable LTIP metrics. In addition to the annual grants, equity awards may be granted “off-cycle”“off-cycle” at other times during the year to new hires, employees receivingfor promotions, retention purposes, director appointments and inor other special circumstances. The grant price of equity awards (other than LTIP awards) will beis the closing price of our common stock on the NYSE on the date of the grant or, if the grant date is not a business day, the closing price on the NYSE on the following business day. The grant price for LTIP awards will beis the 20-day trailingtwenty-day average closing price of our common stock on the NYSE as of the first trading day of the applicable LTIP performance cycle.
Policy Regarding Derivatives, Short Sales, Hedging and Pledges
Under our insider trading policy, directors and executive officers,all employees, including our named executive officers, are prohibited from entering into transactions designed to hedge against economic risks associated with an investment in our common stock. These individuals may not trade in derivatives in our securities (such as put and call options), effect “short sales” of our common stock, or enter into monetization transactions or similar arrangements (such as prepaid variable forwards, equity swaps, collars or exchange funds) relating to our securities. These individuals are also prohibited from holding shares of our common stock in margin accounts or pledging shares of our common stock as collateral for a loan.
26IFF | 2019 PROXY STATEMENT
IV. DIRECTORS’ COMPENSATION
Directors Compensation
Director Compensation ProgramAnnual Director Cash and Equity Compensation
In 2015,Under ournon-employee director compensation program, for the service year from the 2018 Annual Meeting of Shareholders (the “2018 Annual Meeting”) to the 2019 Annual Meeting, eachnon-employee director received an annual retainer of $225,000 (or a prorated portion for a partial year$235,000, of service) relating to the service year from the 2015 Annual Meeting of Shareholders (the “2015 Annual Meeting”) to the 2016 Annual Meeting. Of this amount,which $112,500 was paid in cash in November 2015, and $112,500$122,500 was paid in RSUs issued under our 2015 Stock Award and Incentive Plan (“2015 SAIP”) on the date of the 20152018 Annual Meeting. These RSUs vest at least one year from the grant date and are subject to accelerated vesting upon a change in control. The 952874 RSUs granted to each director on the date of the 20152018 Annual Meeting was calculated using the closing market price of our common stock on the grant date. Any director who is an employee of our Company does not receive any additional compensation for his or her service as a director.
Annual Committee Chair andCompensation for our Lead Director Compensation
During 2015,and Committee ChairsFor the service year from the 2018 Annual Meeting to the 2019 Annual Meeting, the Lead Director received an additional annual cash retainer of $20,000, the Chair of each of the Audit Committee andreceived an additional annual cash retainer of $17,500, the Chair of the Compensation Committee received an additional annual cash retainer of $15,000 and the Chair of the Nominating and Governance Committee received an additional annual cash retainer of $10,000.
$12,500.Participation in our Deferred Compensation Plan
Non-employee directors are eligible to participate in our Deferred Compensation Plan (“DCP”). Anon- employee director may defer all or a portion of his or her cash compensation as well as any RSUs granted to him or her, subject to tax law requirements. Additional details regarding our DCP may be found in this proxy statement under the heading “Executive Compensation - Compensation—Non-Qualified Deferred Compensation.”Non-employee directors are not entitled to matching contributions or the 25% premium on deferrals into our common stock fund that are applicable to employees under the DCP.
Other
Additional Benefits
We reimburse ournon-employee directors for travel and lodging expenses incurred in connection with their attendance at Board and Committee meetings, our shareholder meetings and other Company-related activities.
In addition, our current directors are eligible to participate in our Matching Gift Program. Under this program, we match, on a dollar for dollar basis, contributions made by directors to qualifying charitable organizations up to a maximum of $10,000 per person per year.
Changes for 2019
In October 2018, our Board approved changes to ournon-employee director compensation program for the service year beginning with the 2019 Annual Meeting. Beginning in 2019, the annual retainer paid to ournon-employee directors will be increased to $250,000, of which $112,500 will be paid in cash and $137,500 will be paid in RSUs. In addition, the annual retainer for each of the Chair of the Audit Committee, Chair of the Compensation Committee and Chair of the Nominating and Governance Committee will be increased to $20,000, $17,500 and $15,000, respectively, and the annual retainer for the Lead Director will be increased to $25,000.
IFF | 2019 PROXY STATEMENT 27
DIRECTORS’ COMPENSATION
The following table details the compensation paid to or earned by ournon-employee directors for the year ended December 31, 2015.
20152018.2018 Directors’ Compensation
|
| | | | | | | | | |
| Name (1) | | Fees Earned or Paid in Cash($)(2) | | Stock Awards ($)(3)(4)(5) | | All Other Compensation ($)(6) | | Total ($) |
| Marcello V. Bottoli | | 112,569 | | 107,081 | | 5,000 | | 224,650 |
|
| Dr. Linda Buck | | 112,500 | | 107,081 | | — | | 219,581 |
|
| J. Michael Cook (7) | | — | | — | | 10,000 | | 10,000 |
|
| Michael L. Ducker | | 112,500 | | 107,081 | | 10,000 | | 229,581 |
|
| Roger W. Ferguson, Jr. | | 127,500 | | 107,081 | | — | | 234,581 |
|
| John F. Ferraro | | 112,500 | | 107,081 | | 10,000 | | 229,581 |
|
| Christina Gold | | 112,569 | | 107,081 | | 10,000 | | 229,650 |
|
| Alexandra A. Herzan (7) | | — | | — | | 10,000 | | 10,000 |
|
| Henry W. Howell, Jr. | | 122,500 | | 107,081 | | 10,000 | | 239,581 |
|
| Katherine M. Hudson | | 127,500 | | 107,081 | | 10,000 | | 244,581 |
|
| Arthur C. Martinez (7) | | — | | — | | 10,000 | | 10,000 |
|
| Dale F. Morrison | | 132,500 | | 107,081 | | 10,000 | | 249,581 |
|
| | | | | | | | | | | | | | |
Name | | Fees Earned or Paid in Cash ($)(1) | | Stock Awards ($)(2)(3)(4) | | | All Other Compensation ($)(5) | | | Total ($) | |
Marcello V. Bottoli | | 112,500 | | | 120,096 | | | | 10,000 | | | | 242,596 | |
Dr. Linda Buck | | 112,500 | | | 120,096 | | | | 0 | | | | 232,596 | |
Michael L. Ducker | | 112,500 | | | 120,096 | | | | 0 | | | | 232,596 | |
David R. Epstein | | 112,500 | | | 120,096 | | | | 10,000 | | | | 242,596 | |
Roger W. Ferguson, Jr. | | 127,500 | | | 120,096 | | | | 0 | | | | 247,596 | |
John F. Ferraro | | 130,000 | | | 120,096 | | | | 10,000 | | | | 260,096 | |
Christina Gold | | 125,053 | | | 120,096 | | | | 10,000 | | | | 255,149 | |
Katherine M. Hudson | | 112,500 | | | 120,096 | | | | 10,000 | | | | 242,596 | |
Dale F. Morrison | | 132,500 | | | 120,096 | | | | 10,000 | | | | 262,596 | |
Stephen Williamson | | 112,500 | | | 120,096 | | | | 0 | | | | 232,596 | |
| |
| (1) | Mr. Epstein joined our Board in 2016 and is not included in the table above, as he received no director compensation for 2015. |
| |
(2) | The amounts in this column include (i) the annual cash retainer for service as anon-employee director, (ii) for certain directors, the annual cash retainer for service as Lead Director or as chairperson of a Board committee during 2015,2018, and (iii) nominal amounts of cash paid in lieu of fractional shares of common stock. Of the amounts in this column, the following amounts were deferred in 20152018 under our DCP: Dr. Buck - $112,500;Buck—$112,500; Mr. Ducker - $112,500;Ducker—$112,500; Mr. Ferguson - $127,500;Epstein—$112,500; Mr. Ferraro - $112,500;Ferguson—$127,500; Mr. Howell - $122,500;Ferraro—$130,000; Ms. Hudson - $127,500;Hudson—$112,500; Mr. Morrison—$132,500 and Mr. Morrison - $132,500.Williamson—$112,500. Earnings in our DCP were not above-market or preferential and thus are not reported in this table. |
| (2) | |
(3) | The amounts in this column represent the aggregate grant date fair value of equity awards granted during the fiscal year ended December 31, 2015,2018, computed in accordance with FASB ASC Topic 718. Details on and assumptions used in calculating the grant date fair value of RSUs and options may be found in Note 1214 to our audited financial statements for the year ended December 31, 20152018 included in our Annual Report on Form10-K filed with the SEC on March 1, 2016.February 26, 2019. |
| (3) | |
(4) | Each director received a grant on May 6, 20152, 2018 of 952874 RSUs under our 2015 SAIP, other than Messrs. Cook and Martinez and Ms. Herzan, who retired prior to last year's annual meeting.SAIP. None of our directors forfeited any RSUs or shares of deferred stock during 2015.2018. |
| (4) | |
(5) | As of December 31, 2015,2018, the following directors held the following number of unvested RSUs and shares of deferred common stock.stock indicated in the table below. |
| | | | | | | | |
| Director | | RSUs | | | Deferred Stock | |
Marcello V. Bottoli | | | 874 | | | | 17,961 | |
Dr. Linda Buck | | | 874 | | | | 19,187 | |
Michael L. Ducker | | | 874 | | | | 5,205 | |
David R. Epstein | | | 874 | | | | 2,795 | |
Roger W. Ferguson, Jr. | | | 874 | | | | 11,146 | |
John F. Ferraro | | | 874 | | | | 2,858 | |
Christina Gold | | | 874 | | | | 1,360 | |
Katherine M. Hudson | | | 874 | | | | 19,853 | |
Dale F. Morrison | | | 874 | | | | 16,731 | |
Stephen Williamson | | | 874 | | | | 2,037 | |
28IFF | 2019 PROXY STATEMENT
|
| | | | | | | |
| Director | | RSUs | | Deferred Stock | |
| Marcello V. Bottoli | | 2,247 |
| | 12,959 |
| |
| Dr. Linda Buck | | 2,247 |
| | 14,115 |
| |
| Michael L. Ducker | | 952 |
| | 2,213 |
| |
| Roger L. Ferguson, Jr. | | 2,247 |
| | 6,532 |
| |
| John Ferraro | | 952 |
| | — |
| |
| Christina Gold | | 2,247 |
| | — |
| |
| Henry W. Howell, Jr. | | 2,247 |
| | 39,881 |
| |
| Katherine M. Hudson | | 2,247 |
| | 14,743 |
| |
| Dale F. Morrison | | 2,247 |
| | 9,097 |
| |
DIRECTORS’ COMPENSATION
The deferred shares, which are held under the DCP, result from deferral of vested equity grants, voluntary deferral of retainer fees or the crediting of additional share units as a result of reinvestment of dividend equivalents. Deferred shares will be settled by delivery of common stock upon the director’s separation from service on the Board, or as otherwise elected by the director. All of the deferred shares are included for each director in the Beneficial Ownership Table.
| (5) | |
(6) | The amounts in this column are contributions made by us under our Matching Gift Program to eligible charitable organizations matching contributions of the director to those charitable organizations during 2015.2018. |
| |
(7) | Each of Messrs. Cook and Martinez and Ms. Herzan retired from our Board in 2015 and therefore did not receive any cash retainer or equity compensation in 2015. |
IFF | 2019 PROXY STATEMENT 29
V. SECURITIES OWNERSHIP OF MANAGEMENT, DIRECTORS AND CERTAIN OTHER PERSONS
Beneficial Ownership Table
Directors and Executive Officers
The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 8, 2016,6, 2019, by each current director, each director nominee, the persons named in the Summary Compensation Table in this proxy statement and all current directors and executive officers as a group. To our knowledge, except as otherwise indicated, beneficial ownership includes sole voting and dispositive power with respect to all shares.
|
| | | | | |
| Name and Address of Beneficial Owner (1) | | Shares of Common Stock Beneficially Owned(2)(3) | | Percent of Class** |
| | | | | |
| Marcello V. Bottoli | | 17,451 |
| (4) | * |
| Dr. Linda Buck | | 16,362 |
| (5) | * |
| Anne Chwat | | 58,871 |
| (6) | * |
| Alison A. Cornell | | 3,103 |
| (7) | * |
| Michael L. Ducker | | 3,165 |
| (8) | * |
| David R. Epstein | | — |
| | * |
| Roger W. Ferguson, Jr. | | 8,779 |
| (9) | * |
| John F. Ferraro | | 952 |
| (10) | * |
| Andreas Fibig | | 35,760 |
| (11) | * |
| Christina Gold | | 3,392 |
| (12) | * |
| Matthias Haeni | | 23,678 |
| (13) | * |
| Henry W. Howell, Jr. | | 42,128 |
| (14) | * |
| Katherine M. Hudson | | 19,490 |
| (15) | * |
| Nicolas Mirzayantz | | 78,144 |
| (16) | * |
| Dale F. Morrison | | 11,344 |
| (17) | * |
| Richard O’ Leary | | 19,900 |
| (18) | * |
| All Directors and Executive Officers as a Group (19 persons) | | 437,563 |
| (19) | * |
_____________________
| | | | | | |
Name and Address of Beneficial Owner (1) | | Shares of Common Stock Beneficially Owned (2)(3) | | | Percent of Class** |
Marcello V. Bottoli | | | 22,000 | (4) | | * |
Dr. Linda Buck | | | 20,061 | (5) | | * |
Anne Chwat | | | 52,573 | (6) | | * |
Michael L. Ducker | | | 6,079 | (7) | | * |
David R. Epstein | | | 3,669 | (8) | | * |
Roger W. Ferguson, Jr. | | | 12,020 | (9) | | * |
John F. Ferraro | | | 3,732 | (10) | | * |
Andreas Fibig | | | 95,562 | (11) | | * |
Christina Gold | | | 6,151 | (12) | | * |
Matthias Haeni | | | 33,333 | (13) | | * |
Katherine M. Hudson | | | 23,227 | (14) | | * |
Nicolas Mirzayantz | | | 53,116 | (15) | | * |
Dale F. Morrison | | | 21,615 | (16) | | * |
Richard O’ Leary | | | 24,531 | (17) | | * |
Stephen Williamson | | | 2,911 | (18) | | * |
All Directors and Executive Officers as a Group (19 persons) | | | 411,492 | (19) | | * |
| |
| ** | Based on 79,685,747106,634,767 shares of common stock outstanding as of March 8, 2016.6, 2019. |
| |
| (1) | Except as otherwise indicated, the address of each person named in the table is c/o International Flavors & Fragrances Inc., 521 West 57th Street, New York, New York 10019. |
| |
| (2) | This column includes (i) shares held by our executive officers in our 401(k) Retirement Investment Fund Plan and (ii) shares of Purchased Restricted Stock Units (“PRS”PRSU”) held by our executive officers. Shares of PRS are subject to vesting and may be forfeited if the executive’s employment is terminated. |
| |
| (3) | In determining the number and percentage of shares beneficially owned by each person, shares that may be acquired by such person within 60 days after March 8, 20166, 2019 are deemed outstanding for purposes of determining the total number of outstanding shares for such person and are not deemed outstanding for such purpose for all other shareholders. Certain stock equivalent units held in the IFF Stock Fund under our DCP are premium stock equivalent units paid to executivesexecutive officers that are subject to vesting and may be forfeited if the executive’sexecutive officer’s employment is terminated. To our knowledge, except as otherwise indicated, beneficial ownership includes sole voting and dispositive power with respect to all shares. |
| |
| (4) | Includes (i) 2,2453,165 shares held indirectly by a trust for which Mr. Bottoli is the settlor/grantor and Mr. Bottoli and twothree immediate family members are the beneficiaries and (ii) 12,959 stock equivalent units held in the IFF Stock Fund under our DCP and (iii) 2,247874 shares issuable pursuant to RSUs that vest within 60 days afterof March 8, 2016 that will be automatically deferred6, 2019 which Mr. Bottoli has elected to defer to our DCP. |
30IFF | 2019 PROXY STATEMENT
SECURITIES OWNERSHIP
| |
| (5) | Represents (i) 14,11519,187 stock equivalent units held in the IFF Stock Fund under our DCP and (ii) 2,247874 shares issuable pursuant to RSUs that vest within 60 days after March 8, 20167, 2018 which Dr. Buck elected to defer to our DCP. |
| (6) | Includes (i) 6,292 stock equivalent units held in the IFF Stock Fund under our DCP, (ii) 5,258 shares issuable pursuant to PRSUs that will vest within 60 days after March 6, 2019 and (iii) 944 shares earned under the completed 2016-2018 LTIP cycle that will be automatically deferred to our DCP.issued within 60 days of March 6, 2019. |
| (7) | |
(6) | IncludesRepresents (i) 7,5495,205 stock equivalent units held in the IFF Stock Fund under our DCP and (ii) 3,006874 shares earned under the completed 2013-2015 LTIP cycleissuable pursuant to RSUs that have not yet been issued.will vest within 60 days after March 6, 2019 which Mr. Ducker has elected to defer to our DCP. |
| |
(7) | Includes 495 shares earned under the completed 2013-2015 LTIP cycle that have not yet been issued. |
| |
| (8) | Represents (i) 2,2132,795 stock equivalent units held in the IFF Stock Fund under our DCP and (ii) 952874 shares issuable pursuant to RSUs that will vest within 60 days after March 8, 2016 that will be automatically deferred6, 2019 which Mr. Epstein has elected to defer to our DCP. |
| |
| (9) | Represents (i) 6,53211,146 stock equivalent units held in the IFF Stock Fund under our DCP and (ii) 2,247874 shares issuable pursuant to RSUs that vest within 60 days after March 8, 2016 that will be automatically deferred6, 2019 which Mr. Ferguson has elected to defer to our DCP. |
| |
| (10) | Represents 952 shares issuable pursuant to RSUs that will vest within 60 days after March 8, 2016 that will be automatically deferred to our DCP. |
| |
(11) | Includes (i) 4,602 stock equivalent units held in the IFF Stock Fund under our DCP, (ii) 1,295 shares issuable pursuant to RSUs that vest within 60 days after March 8, 2016 and (iii) 6,114 shares earned under the completed 2013-2015 LTIP cycle that have not yet been issued. |
| |
(12) | Includes 2,247 shares issuable pursuant to RSUs that will vest within 60 days after March 8, 2016, of which 952 shares will be automatically deferred to our DCP. |
| |
(13) | Includes (i) 1,922 shares issuable pursuant to RSUs that will vest within 60 days after March 8, 2016 and (ii) 1,822 shares earned under the completed 2013-2015 LTIP cycle that have not yet been issued. |
| |
(14) | Represents (i) 39,8812,858 stock equivalent units held in the IFF Stock Fund under our DCP and (ii) 2,247874 shares issuable pursuant to RSUs that will vest within 60 days after March 6, 2019 which Mr. Ferraro has elected to defer to our DCP. |
| (11) | Includes (i) 29,351 stock equivalent units held in the IFF Stock Fund under our DCP, (ii) 6,009 shares issuable pursuant to RSUs and 11,685 shares issuable pursuant to PRSUs, each that vest within 60 days after March 8, 20166, 2019 and (iii) 6,632 shares earned under the completed 2016-2018 LTIP cycle that will be automatically deferred to our DCP.issued within 60 days of March 6, 2019. |
| (12) | |
(15) | Includes (i) 14,7431,360 stock equivalent units held in the IFF Stock Fund under our DCP and (ii) 2,247874 shares issuable pursuant to RSUs that vest within 60 days after March 8, 20166, 2019. |
| (13) | Includes (i) 5,007 shares issuable pursuant to PRSUs that vest within 60 days after March 6, 2019 and (ii) 1,658 shares earned under the completed 2016-2018 LTIP cycle that will be automatically deferred to our DCP.issued within 60 days of March 6, 2019. |
| (14) | |
(16) | Includes (i) 1,54319,853 stock equivalent units held in the IFF Stock Fund under our DCP and (ii) 4,851874 shares issuable pursuant to RSUs that vest within 60 days after March 6, 2019 which Ms. Hudson has elected to defer to our DCP. |
| (15) | Includes (i) 2,593 stock equivalent units held in the IFF Stock Fund under our DCP, (ii) 6,510 shares issuable pursuant to PRSUs that vest within 60 days after March 6, 2019 and (iii) 1,658 shares earned under the completed 2013-20152016-2018 LTIP cycle that have not yet been issued.will be issued within 60 days of March 6, 2019. |
| (16) | |
(17) | RepresentsIncludes (i) 9,09716,731 stock equivalent units held in the IFF Stock Fund under our DCP and (ii) 2,247874 shares issuable pursuant to RSUs that vest within 60 days after March 8, 20166, 2019 which Mr. Morrison has elected to defer to our DCP. |
| (17) | Includes (i) 3,714 stock equivalent units held in the IFF Stock Fund under our DCP, (ii) 2,754 shares issuable pursuant to PRSUs that vest within 60 days after March 6, 2019 and (iii) 664 shares earned under the completed 2016-2018 LTIP cycle that will be automatically deferred to our DCP.issued within 60 days of March 6, 2019. |
| |
| (18) | Includes (i) 1,1442,037 stock equivalent units held in the IFF Stock Fund under our DCP and (ii) 1,570874 shares earned under the completed 2013-2015 LTIP cycleissuable pursuant to RSUs that have not yet been issued.vest within 60 days after March 6, 2019 which Mr. Williamson has elected to defer to our DCP |
IFF | 2019 PROXY STATEMENT 31
SECURITIES OWNERSHIP
| |
| (19) | Includes an aggregate of (i) 114,621141,084 stock equivalent units held in the IFF Stock Fund under our DCP, (ii) 21,82150,720 shares issuable pursuant to restricted stock unitsPRSUs that vest within 60 days after March 8, 2016,6, 2019, and (iii) 24,19713,482 shares earned under the completed 2013-20152016-2018 LTIP cycle that have not yet been issued.will be issued within 60 days after March 6, 2019. |
Certain Other Owners
5% ShareholdersThe following table sets forth information regarding each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, as of March 8, 2016,6, 2019, based on a review of filings with the SEC. Unless otherwise indicated, beneficial ownership is direct.
|
| | | | | | |
| Name and Address of Beneficial Owner | | Number of Shares and Nature of Beneficial Ownership | | Percent of Class* |
| | | | | |
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | | 4,655,216 |
| (1) | 5.8 | % |
Capital Research Global Investors 333 South Hope Street Los Angeles, CA 90071 | | 6,225,302 |
| (2) | 7.8 | % |
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | | 7,467,990 |
| (3) | 9.4 | % |
| | | | | | | | |
Name and Address of Beneficial Owner | | Number of Shares and Nature of Beneficial Ownership | | | Percent of Class* | |
Winder Investment Pte Ltd and related persons #17-01 6 Battery Road Singapore 049909 | | | 21,227,193 | (1) | |
| 19.3
| %
|
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | �� | | 12,292,106 | (2) | |
| 11.5
| %
|
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | | | 6,840,108 | (3) | |
| 6.4
| %
|
| |
| * | Based on 79,685,747106,634,767 shares of common stock outstanding.outstanding as of March 6, 2019. |
| |
| (1) | This amount is based solely on (i) a Form 4 filed with the SEC on February 25, 2019, by Winder Investment Pte Ltd (“Winder”) and (ii) Amendment No. 6 to Schedule 13G filed with the SEC on January 26, 2016February 12, 2019 by BlackRock, Inc. OfWinder. This amount includes 927,193 shares of common stock that would be issued upon voluntary settlement of 2,958,500 purchase contracts held by Winder. William Cornelius Lexmond and Sharon Yam Kwai Ying share voting and dispositive power over these shares, BlackRock has the sole power to vote or direct the vote with respect to 3,969,533 of these shares and sole power to dispose of or direct the disposition of 4,655,216 of these shares. |
| |
| (2) | This amount is based solely on Amendment No. 310 to Schedule 13G filed with the SEC on February 16, 2016 by Capital Research Global Investors, a division of Capital Research and Management Company (“Capital Research”). Capital Research has the sole power to vote or direct the vote and the sole power to dispose of or direct the disposition of these shares. |
| |
(3) | This amount is based solely on Amendment No. 5 to Schedule 13G filed with the SEC on February 10, 201613, 2019 by The Vanguard Group. Of these shares, The Vanguard Group has the (i) sole power to vote or direct the vote with respect to 149,808115,952 of these shares, (ii) shared power to vote or direct the vote with respect to 7,70026,157 of these shares, (iii) the sole power to dispose of or direct the disposition of 7,308,51812,150,535 of these shares, and (iv) shared power to dispose of or direct the disposition of 159,472141,571 of these shares. |
| (3) | This amount is based solely on Amendment No. 9 to Schedule 13G filed with the SEC on February 4, 2019 by BlackRock, Inc. Of these shares, BlackRock has the (i) sole power to vote or direct the vote with respect to 5,923,406 of these shares and (ii) sole power to dispose or direct the disposition of 6,840,108 of these shares. |
32IFF | 2019 PROXY STATEMENT
VI. PROPOSAL II — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Proposal 2 Ratification of Independent Registered Public Accounting Firm
Selection of our Independent Registered Public Accounting Firm
The Audit Committee of our Board is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. To execute this responsibility, the Audit Committee engages in a comprehensive annual evaluation of the independent registered public accounting firm’s qualifications, performance and independence to determine whether the independent registered public accounting firm should be rotated, and considers the advisability and potential impact of selecting a different independent registered public accounting firm.
The Audit Committee has selected PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for 2016,2019, and our Board has directed that our management submit that selection for ratification by our shareholders at the 20162019 Annual Meeting. PwC has been retained as our external auditor continuously since 1957. In connection with the selection of PwC, the Audit Committee annually reviews and negotiates the terms of the engagement letter entered into with PwC. This letter sets forth important terms regarding the scope of the engagement, associated fees, payment terms, responsibilities of each party and the election of the parties to be subject to binding arbitration in the case of any dispute.
In accordance with SEC rules and PwC policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide audit service to our Company. For lead and quality review audit partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of our lead audit partner pursuant to this rotation policy involves a meeting between the Chair of the Audit Committee and the candidate for the role, as well as discussion by the full Audit Committee and management.
The Audit Committee and the Board believe that the continued retention of PwC as our independent registered public accounting firm is in the best interest of the Company and our shareholders, and we are asking our shareholders to ratify the selection of PwC as our independent registered public accounting firm for 2016.2019. Although ratification is not required by ourBy-Laws or otherwise, we are submitting the selection of PwC to our shareholders for ratification because we value our shareholders'shareholders’ views on our Company'sCompany’s independent registered public accounting firm and as a matter of good corporate governance. The Audit Committee will consider the outcome of our shareholders’ vote in connection with the Audit Committee’s selection of our independent registered public accounting firm in the next fiscal year, but is not bound by the shareholders’ vote. Even if the selection is ratified, the Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time if it determines that a change would be in the best interests of our Company and our shareholders.
Representatives of PwC are expected to attend the 20162019 Annual Meeting, where they will be available to respond to questions and, if they desire, to make a statement.
IFF | 2019 PROXY STATEMENT 33
Our Board recommends a vote FOR the ratification of the Audit Committee’s selection of PwC as our Independent Registered Public Accounting Firm for 2016.
PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Principal Accountant Fees and Services
The following table provides detail about fees for professional services rendered by PwC for the years ended December 31, 20152018 and December 31, 2014.
|
| | | | | | | |
| | 2015 | | 2014 |
| Audit Fees (1) | $ | 4,674,019 |
| | $ | 4,733,219 |
|
| Audit-Related Fees (2) | $ | 60,006 |
| | $ | 610,004 |
|
| Tax Fees (3) | | | |
| Tax Compliance | $ | 554,447 |
| | $ | 1,148,853 |
|
| Other Tax Services | $ | 90,786 |
| | $ | 82,127 |
|
| All Other Fees (4) | $ | 67,849 |
| | $ | 63,799 |
|
| Total | $ | 5,447,107 |
| | $ | 6,638,002 |
|
________________________
2017.
| | | | | | | | |
| | | 2018 | | | 2017 | |
Audit Fees (1) | | $ | 8,902,295 | | | $ | 6,501,799 | |
Audit-Related Fees (2) | | $ | 183,160 | | | $ | 69,140 | |
Tax Fees (3) | | | | | | | | |
Tax Compliance | | $ | 189,626 | | | $ | — | |
Other Tax Services | | $ | 1,258,333 | | | $ | 391,107 | |
All Other Fees (4) | | $ | 9,260 | | | $ | 9,015 | |
Total | | $ | 10,542,674 | | | $ | 6,971,061 | |
| |
| (1) | Audit Fees were for professional services rendered for audits of our consolidated financial statements and statutory and subsidiary audits, consents and review of reports filed with the SEC and consultations concerning financial accounting and reporting standards. Audit Fees also included the fees associated with an annual audit of our internal control over financial reporting, as required by Section 404 of the Sarbanes- OxleySarbanes-Oxley Act of 2002, integrated with the audit of our annual financial statements. Additional fees in 2018 primarily relate to professional services rendered in connection with our acquisition of Frutarom, including services related to purchase accounting and subsidiary and statutory audits of Frutarom. |
| |
| (2) | Audit-Related Fees were for due diligence.services related to review of certain governance, risk and compliance procedures and other local statutory requirements. |
| |
| (3) | Tax Compliance services consisted of fees related to tax compliance professional services incurred with respect to the acquisition and integration of Frutarom, preparation of tax returns, assistance with tax audits and appeals, indirect taxes, expatriate tax compliance services and transfer pricing services. Other Tax Services consisted of tax planning and tax advisory services. |
| |
| (4) | All Other Fees were for software licenses and other professional services. |
Pre-Approval Policies and Procedures for Audit and PermittedNon-Audit Services
Consistent with requirements of the SEC and the Public Company Accounting Oversight Board (PCAOB) regarding auditor independence, the Audit Committee has responsibility for (i) for:
negotiating, and setting the compensation of, and (iii)
overseeing the performance of, the independent registered public accounting firm.
In recognition of this responsibility, the Audit Committee has established policies and procedures topre-approve all audit andnon-audit services to be provided by the independent registered public
34IFF | 2019 PROXY STATEMENT
PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
accounting firm to our Company by category, including audit-related services, tax services and other permittednon-audit services. Under the policy, the Audit Committeepre-approves all services obtained from our independent registered public accounting firm by category of service, including a review of specific services to be performed, fees expected to be incurred within each category of service and the potential impact of such services on auditor independence. The term of anypre-approval is for the financial year, unless the Audit Committee specifically provides for a different period in thepre-approval. If it becomes necessary to engage the independent registered public accounting firm for additional services not contemplated in the originalpre-approval, the Audit Committee requires separate pre- approvalpre-approval before engaging the independent registered public accounting firm. To facilitate the process, the policy delegatespre-approval authority to the Audit Committee chairperson topre-approve services up to $20,000, and the Audit Committee may also delegate authority to one or more of its members topre-approve services. The Audit Committee member to whom such authority is delegated must report, for informational purposes, only, anypre-approval decisions to the Audit Committee at its next scheduled meeting.
All services rendered by PwC to our Company are permissible under applicable laws and regulations. During 2015,2018, all services performed by PwC which were subject to the SEC’spre-approval requirements were approved by the Audit Committee in accordance with the Audit Committee’spre-approval policy in effect during 2015.
AUDIT COMMITTEE REPORT
Audit Committee ReportThe Audit Committee (“we,” “us” or the “Committee”) operates in accordance with a written charter, which was adopted by the Board of Directors.Board. A copy of that charter is available through the Investor - Investor—Leadership & Governance - Governance—Governance link on the Company’s website at www.iff.com. The Committee comprises fiveis composed of four directors whom the Board has determined are “independent,” as required by the applicable listing standards of the NYSE and the rules of the SEC, and each of whom qualify as an “audit committee financial expert”experts” as defined by the rules of the SEC.
Management has the primary responsibility for the financial statements and the reporting process, including internal control over financial reporting and disclosure controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), is responsible for performing an integrated audit of the Company’s financial statements and internal control over financial reporting in accordance with the auditing standards of the Public Company Accounting Oversight Board (“PCAOB”).
The Committee oversees the Company’s financial reporting process and internal control structure on behalf of the Board of Directors.Board. We met seveneight times during 2015,2018, including meeting regularly with PwC and the Company’s internal auditor, both privately and with management present. For 2015,2018, we have reviewed and discussed the Company’s audited financial statements with management. We have reviewed and discussed with management its process for preparing its report on its assessment of the Company’s internal control over financial reporting, and at regular intervals we received updates on the status of this process and actions taken by management to respond to issues and deficiencies identified. We discussed with PwC its audit of the financial statements and of the Company’s internal control over financial reporting. We discussed with PwC and the Company’s internal auditorsauditor the overall scope and plans for their respective audits.
We have discussed with PwC the matters required to be discussed by PCAOB Auditing Standard No. 16,1301, Communications with Audit Committees. We also received the written disclosures and the letter from PwC as required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and discussed with PwC its independence. We concluded that PwC’s independence was not adversely affected by thenon-audit services provided by PwC, the majority of which consisted of audit-related, and tax compliance services.
PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Based on the reviews and discussions referred to above, we recommended to the Board (and the Board subsequently approved our recommendation) that the audited financial statements be included in the Annual Report on Form10-K for the fiscal year ended December 31, 2015 for filing2018 filed with the SEC.
SEC on February 26, 2019.In determining whether to retain PwC as the Company’s independent registered public accounting firm for the 20162019 fiscal year, we took into consideration a number of factors, including:
the quality and effectiveness of PwC’s historical and recent performance on the Company’s audit;
the length of PwC’s tenure as the Company’s independent registered public accounting firm, and its familiarity with our business, accounting policies and practices, and internal control over financial reporting;
PwC’s capability, understanding and expertise in handling the breadth and complexity of our global operations;
the appropriateness of PwC’s fees and payment terms; and
Based on this evaluation, we believe that it is in the best interests of the Company and its shareholders to retain PwC as the Company’s independent registered public accounting firm for 2016,2019, which the shareholders will be asked to ratify at the 20162019 Annual Meeting of Shareholders.
Audit Committee
John F. Ferraro (Chair)
Marcello V. Bottoli
Dale F. Morrison
Stephen Williamson
|
| |
| Audit Committee |
| |
| Katherine M. Hudson (Chair) |
| |
| David R. Epstein
John Ferraro
Henry W. Howell, Jr.
Dale F. Morrison
Ö YOUR BOARD RECOMMENDS A VOTE “FOR” RATIFICATION OF PWC AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2019 |
36IFF | 2019 PROXY STATEMENT
VII. COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Compensation Discussion and Analysis
Reference Guide to our CD&A
This Compensation Discussion and Analysis, is designed to provideor CD&A, describes and analyzes our shareholders with a clear understanding of ourexecutive compensation philosophy and objectives, compensation-setting processprogram in the context of the compensation paid during the last fiscal year to our chief executive officer, our chief financial officer and the 2015 compensationeach of our namedthree most highly compensated executive officers or NEOs. (collectively referred to as our NEOs). This CD&A is organized as follows:
As discussed in Proposal III,3, we are conducting our annual Say on Pay vote that requests your approval of the compensation of our NEOs as described in this section and in the tables and accompanying narrative contained below under “Executive Compensation.” To assist you with this vote, please review our compensation philosophies,philosophy, the design of our executive compensation programs and how, we believe, these programs have contributed to and are aligned with our performance.
For 20152018 was a transformative year for our Company as we completed the acquisition of Frutarom, becoming a global leader in taste, scent and nutrition. Our acquisition of Frutarom expands our customer base and product offerings, and we believe will accelerate our financial performance. Because the Frutarom acquisition was not completed until the fourth quarter of 2018, the Compensation Committee (the “Committee”) did not factor the Frutarom acquisition into the 2018 compensation program. Therefore, the 2018 compensation program for our NEOs does not include Frutarom results.
As discussed above, our product offerings have extended beyond our legacy Flavors and Fragrances businesses, therefore, during the fourth quarter of 2018 we renamed our business segments from Flavors to Taste and from Fragrances to Scent, and added Frutarom as a third business segment.
Executive Summary
For 2018, our NEOs were:
|
| | | |
| Name | | Title |
Andreas Fibig | | Chairman and CEO |
| Alison A. Cornell Richard O’Leary | | CFO |
| Nicolas Mirzayantz | | Group President, FragrancesDivisional Chief Executive Officer, Scent |
| Matthias Haeni | | Group President, FlavorsDivisional Chief Executive Officer, Taste |
| Anne Chwat | | General Counsel |
| Richard O’Leary | | Former Interim CFO |
IFF | 2019 PROXY STATEMENT 37
Alison A. Cornell was appointed as our CFO, effective July 8, 2015, replacing Richard O’Leary who served as our interim CFO from December 2014 through July 2015. Upon the appointment of Ms. Cornell, Mr. O’Leary was named SVP, Controller and Chief Accounting Officer.
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy
The core of our executive compensation philosophy is that our executives’ paycompensation should be linked to achievement of financial and operating performance metrics that build shareholder value. Consequently,value over both the short- and long-term. As such, we consistently focus on the following key drivers of shareholder value maximization:
Acquisitions Financial Results Return of Capital Increase Shareholder Value
We designed our compensation program to motivatefocus on elements that we believe will contribute to these shareholder value drivers. Our compensation program:
Is Variable and rewardTied to Value Creating Performance Metrics Reflects Each Executive's Level of Responsibility Shareholder Value Includes a Significant Equity Component Rewards Individual Performance and Contributions
38IFF | 2019 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
The design of our executives for the achievement of both annual and long-term business goals that are challenging yet attainable. A significant portion ofexecutive compensation is variable and tied directly to Company and individual performance. We believeprogram reflects our belief that executive compensation should (i) be tied to overall Company performance, (ii) reflect each executive’s level of responsibility, (iii) reflect individual performance and contributions and (iv) include a significant equity component. We believe that by keeping the majority of executive pay variable and equity-based we can best ensure alignment(1) aligned with shareholder value and Company growth.
Our Executive Compensation Program Rewards Executives for Achievements that Create Shareholder Value. During 2015, we continued to compensate our executive officers based on (i) the achievement of financial and operational metrics offor both the companyour Company and the respective segmentbusiness function in which the executive serves which we believe creates shareholder value and (ii)(2) tied to the total shareholder return delivered to our shareholders. In addition, for 2015, we added an individual performance metric for a portion ofThe following illustrates how our Annual Incentive Program (“AIP”) to measure our executive officers’ achievement in the areas of leadership, succession planningCEO’s and people development as we believe that the strength of our employees will be key to our ability to build differentiation and accelerate growth.
Compensation is Variable and Tied to Our Performance. Our targetother NEOs’ total direct compensation for 2015 reflects our commitment thatis designed to tie a significant portion of our executivetheir compensation should beto variable and tied directly to achievement of our financial, operational and shareholder return objectives. During 2015, as in prior years, our executive officers’ direct compensation elements primarily consisted of (1) base salary, (2) AIP awards, (3)long-term goals:
CEO Target Opportunity Mix 17% Fixed 83% Variable 24% Variable Short-Term 76% Variable Long-Term Incentive Plan (“LTIP”) awards and (4)25% Long-Term Cash 75% Long-Term Equity Choice Program (“ECP”) awards. For 2015, 76% on average of the target total direct compensation payable to Messrs. Fibig, Haeni and Mirzayantz and Mmes. Cornell and Chwat was variable, and the value of such variable compensation was tied directly to stock price performance or performance versus pre-defined annual and long-term performance metrics, with
NEO Average (excluding CEO) Target Opportunity Mix 29% Fixed 71% of this performance-based compensation tied to long-term performance.
______
| |
(1) | Compensation for Mr. O’Leary is not included in the amounts reflected due to his status as interim CFO and the distinct nature of his compensation. Compensation for Ms. Cornell is included on an annualized basis. |
Variable 30% Variable Short-Term 70% Variable Long-Term 23% Long-Term Cash 77% Long-Term EquityCompensation Aligns Executives with Our Shareholders. We have designed our executive compensation program to provide a significant portion of our executives’ total direct compensation in the form of equity and to encourage both their direct investment in the Company and long-term ownership. For 2015, approximately 56% of the variable target compensation payable to Messrs. Fibig, Haeni and Mirzayantz and Mmes. Cornell and Chwat was payable in equity. The proportion of long-term incentive compensation opportunity provided in the form of equity versus cash under our LTIP and ECP for (i) Mr. Fibig and (ii) Messrs. Haeni and Mirzayantz and Mmes. Cornell and Chwat, on average, for 2015, was as follows:
Target Long-Term Incentive2018 NEO Compensation
______
| |
(1) | Compensation for Mr. O’Leary is not included in the amounts reflected due to his status as interim CFO and the distinct nature of his compensation. Compensation for Ms. Cornell is included on an annualized basis. |
Our 2015 NEO Pay Reflects Our Overall 20152018 Performance
During 2015,We achieved strong results in 2018, delivering on all our key financial resultsmetrics and completing our acquisition of Frutarom. In 2018, sales were affected by softening of$4.0 billion, including sales performance in certain markets, currency pressures, and operating expenses, offset by contributions from our recent acquisitions. Forrelated to the year, on a currency neutral basis, we achieved 5% sales growth, 8%Frutarom acquisition, adjusted operating profit growth,was $677 million and 11% adjusted earnings per share growth, in each case within our long-term growth targets. In addition, we delivered Total Shareholder Return at the 80th percentile relative to the S&P 500.was $5.58. As a result of our financial and operational results, (1) our AIPAnnual Incentive Plan (“AIP”) achievement levels ranged fromwere approximately 42%101.7% for those executive officers evaluated at the corporate level, to 39%66.9% for our Group President, FragrancesDivisional CEO, Scent, and 41%113.9% for our Group President, FlavorsDivisional CEO, Taste, and (2) our 20152016-2018 LTIP achievement level was approximately 117% of target.
2015 Annual Incentive Plan Targets and Payout. For 2015, our AIP was based on the achievement of (1) four financial performance metrics that management and the Board believe are significant indicators of our financial performance: (i) local currency sales growth, (ii) operating profit, (iii) gross margin and (iv) working capital and (2) individual objectives relating to leadership, succession planning and people development. Financial performance metrics are measured (A) at the consolidated corporate level for our CEO, CFO, interim CFO and General Counsel and (B) at both the consolidated corporate level and the business unit level for the Group Presidents of Fragrances and Flavors.
For 2015, at the corporate level, we achieved between threshold and target for three of the four financial performance metrics and did not meet the threshold for one of the financial performance metrics. As a result, the overall corporate AIP payout was approximately
42%79.1% of target.In addition to our successful completion of the target award forFrutarom transaction, during 2018, we made significant progress on our CEO, CFO, interim CFOstrategic objectives, including:
Launched EcoEffective+, a set of environmental sustainability goals focused on emission reductions, zero waste to landfill and General Counsel, whom are evaluated solely on corporate performance for purposeswater stewardship;
IFF | 2019 PROXY STATEMENT 39
COMPENSATION DISCUSSION AND ANALYSIS
Cosmetic Active Ingredients continued to grow double-digits;
| • | | TastepointSM in North America continued to grow double-digits; and |
Opened two new facilities in China, a flavors manufacturing facility and a natural product research lab, supporting our efforts to become a partner of choice and to grow in the region; and
During 2018, we paid $230 million in dividends to our AIP. Our Fragrance business unit achieved between thresholdshareholders, increased our quarterly dividend by 6% to $0.73 per share in August, and, target for three of the four financial performance metrics and did not meet the threshold for one of the four performance metrics. This resultedbefore suspending our share repurchase program in an AIP payout, when combinedconnection with the corporate level performance,acquisition of Frutarom, we repurchased approximately 39%108,000 shares of the target awardcommon stock for our Group President, Fragrances. Our Flavors business unit performance exceeded target for one of the four financial performance metrics, was between threshold and target for two of the four performance metrics and did not meet the threshold for one of the financial performance metrics. This resulted in an AIP payout, when combined with the corporate level performance, of approximately 43% of the target award for our Group President, Flavors.
$15.5 million.Long-Term Incentive Plan Results for 2015. Our LTIP is structured in three-year cycles, which are administered in four equally-weighted performance segments: Year 1, Year 2, Year 3 (each an “annual performance segment”) and cumulative performance over the three-year period (the “cumulative performance segment”). During the three annual performance segments, Company performance is measured against two equally-weighted financial metrics, Economic Profit (“EP”) and relative Total Shareholder Return (“TSR”). Relative TSR is the sole financial metric for the cumulative performance segment for all of the current LTIP cycles.
For 2015, our EP was $273 million, as adjusted for 2015 non-core items. As a result, our NEOs earned approximately 34% of the EP goal for the 2015 segment of its current LTIP cycles. Our TSR for 2015 was at the 80th percentile and generated a payout of approximately 200%. Our cumulative TSR for the 2013-2015 LTIP cycle was at the 74th percentile, and resulted in a 196% payout.
For additional details regarding the AIP and LTIP, including the threshold, target and maximum levels for each performance metric, please see the sections below titled “Direct Compensation Components and 2015 Compensation Decisions “- Annual Incentive Plan” and “- Long Term Incentive Plan.”Compensation-Related Corporate Governance
To ensure continued alignment of compensation with Company performance and the creation of shareholder value on a long term,long-term, sustainable basis, we maintain strong compensation-related corporate governance policies, including the following:
Our clawback policies for recovery of cash and equity compensation from executives apply to accounting restatements, financial restatements and misstatements (without regard to fault), an employee’s willful misconduct or violation of a Company policy that is materially detrimental to the Company, and an employee’s violation of non-competition, non-solicitation, confidentiality and similar covenants;
We require our executives, including our NEOs, to meet share retention guidelines to align our executives’ interests with those of our shareholders, as described above under “Share Retention Policy”;
We do not permit short-sales or hedging of our stock by our employees, officers or directors;
Our Executive Severance Policy (“ESP”) provides that all equity awards are subject to a “double trigger” and only accelerate in connection with a change in control if an ESP participant is terminated without cause or terminates for “good reason” within two years following a change in control; and
None of our NEOs are entitled to a tax gross-up for severance payments.
Compensation Setting Process
AnnualReview
Our Compensation Committee (the “Committee”) is responsible for overseeing the design, implementation and administration of short-term and long-term compensation (including equity awards, benefits and perquisites) for all executive officers and other members of senior management. The Committee recommends CEO compensation to the independent directors of the Board for their approval. In connection with the approval of the 2015 compensation program, including individual targets, as in prior years, the Committee engaged W.T. Haigh & Company (“Haigh & Company”) as its independent compensation consultant to assist the Committee in fulfilling its responsibilities. From late 2014 through August 2015, Haigh & Company’s work with the Committee included analyses, advice, guidance and recommendations on executive compensation levels versus peers, market trends and incentive plan designs, and the design of our 2015 SAIP. In addition, Haigh & Company provided the Committee with advice and recommendations regarding compensation provided to Ms. Cornell in connection with her hiring. In August 2015, the Compensation Committee directly engaged Frederic W. Cook & Co., Inc. (“FW Cook”) as its independent consultant. FW Cook works with the Committee to provide it with analyses, advice, guidance and recommendations on executive compensation levels versus peers, market trends and incentive plan designs. Both Haigh & Company and FW Cook were engaged exclusively by the Committee on executive and director compensation matters and do not have other consulting arrangements with the Company. The Compensation Committee considered the independence of each of Haigh & Company and FW Cook and determined that no conflicts of interest were raised.
Our CEO and CHRO evaluate the individual performance and, with input from the Committee’s independent consultant, the competitive pay positioning for senior management members that report directly to the CEO, including our NEOs, and make recommendations to the Committee concerning each such executive’s target compensation. Our CEO follows the same process with regard to the target compensation for our CHRO, without her input, and the Committee follows the same process with regard to the target compensation for our CEO, without his input.
As part of its compensation setting process, the Committee also considers the results of the prior year’s shareholder advisory vote on our executive compensation. The Committee believes these voting results provide useful insight as to whether shareholders agree that the Committee is achieving its goal of designing and administering an executive compensation program that promotes the best interests of the Company and its shareholders by providing its executives with appropriate compensation and meaningful incentives to deliver strong financial performance and increase shareholder value. As part of its 2015 compensation setting process, the Committee reviewed the results of the 2014 shareholder advisory vote, in which 94.6% of the votes cast were voted in favor of our executive compensation program.
New Executive Officer Compensation
In May 2015, in connection with our hiring of Ms. Cornell as CFO, the Committee approved Ms. Cornell’s compensation package after consultation with the Committee’s compensation consultant. As part of establishing Ms. Cornell’s compensation package, the Committee reviewed the compensation package of the Company’s prior CFO and the median to 75th percentile of the relevant market benchmarks. The Committee approved offering Ms. Cornell a base salary of $560,000, an AIP target of 80%, and an ECP award of $500,000 (pro-rated for time she served as CFO during 2015). Consistent with the treatment of previous newly-hired senior executives, Ms. Cornell was also granted pro-rata participation in each of the current LTIP cycles, with a pro-rated LTIP target award for each of the current three-year performance cycles equal to $500,000. The Committee also approved a one-time sign-on cash bonus of $250,000. The Committee believed that the $250,000 cash bonus would facilitate Ms. Cornell selecting PRS for her pro-rated ECP award of $250,000, which requires a co-investment, and therefore further align her interests with those of the shareholders.
Concurrently with Ms. Cornell’s appointment as CFO, Mr. O’Leary, who had been serving as our Interim CFO, was appointed to serve as our Senior Vice President, Controller and Chief Accounting Officer. In this role, the Committee approved an increase to Mr. O’Leary’s on-going base salary to $400,000. In accordance with the terms of his agreement to serve as Interim CFO, during such service, Mr. O’Leary received an additional $15,000 per month in base salary, of which $7,500 was paid each month and $7,500 was deferred until three months following the appointment of Ms. Cornell. All other terms of Mr. O’Leary’s compensation remained unchanged.
Principles for Setting Compensation Targets
On an annual basis, the Committee reviews and approves the compensation of our NEOs. We use a global grading structure for our NEOs, with compensation ranges for each grade. Our NEOs are placed in a particular grade based on internal factors (including scope of responsibilities and job complexity) and an external market evaluation. The external market evaluation is based on published third party general survey information and a review of similar positions within our selected peer groups described below. This process is referred to as “market benchmarking.”
Market Benchmarking
The Committee reviews its external market benchmarking and peer group data annually. The Committee��s goals are to position (i) target total cash compensation at median or slightly above and (ii) target total direct compensation (salary, annual incentive compensation and long-term incentive compensation) between the median to 75th percentile of relevant market benchmarks. In July 2014, the Committee reviewed peer group data with our independent compensation consultant for purposes of determining the appropriate peer group for setting 2015 compensation levels and opportunities.
2015 Benchmarking for the CEO, CFO and Group Presidents. For 2015 compensation decisions regarding (i) the CEO, (ii) the CFO (which was evaluated at the time of her appointment) and (iii) each of the Group Presidents, the Committee, based on recommendations from Haigh & Company, decided to benchmark compensation against the average of (1) its Select Peer Group of consumer products-based companies and (2) the General Industry Cut of the Towers Watson General Industry Index Survey.
The Committee annually reviews the Select Peer Group versus the criteria set forth below, taking into consideration its belief that short-term market and performance volatility should not affect the benefit of maintaining a level of consistency within the Select Peer Group:
policies. | |
1. | U.S. publicly traded companies of comparable size with manufacturing operations (generally based on revenue of $1B - $7B and market capitalization of $1B - $14B); |
| |
2. | Strong in-house R&D activities; |
| |
3. | Global scope with significant international presence (international operations generally accounting for at least 25% of total revenues); |
| |
4. | Growth orientation, with positive sales and earnings growth over the three years prior to the review and selection of the peer group; |
| |
5. | Companies with which we compete for executive talent; and |
| |
6. | Progressive companies with positive reputations. |
For 2015, the Select Peer Group consisted of the following companies:
|
| |
Church & Dwight Co., Inc. | Hormel Foods Corporation |
The Clorox Company | Jarden Corporation |
Coty, Inc. | McCormick & Company, Incorporated |
Elizabeth Arden, Inc. | Newell Rubbermaid Inc. |
Energizer Holdings, Inc. | Nu Skin Enterprises, Inc. |
The Estee Lauder Companies Inc. | Revlon, Inc. |
Herbalife Ltd. | Sensient Technologies Corporation |
The Hershey Company | Tupperware Brands Corporation |
There were four companies in the Select Peer Group that did not meet all of the desired criteria-Elizabeth Arden, Estee Lauder, Hershey and Jarden. Each of Hershey, Jarden and Estee Lauder were slightly above either the revenue or market capitalization criteria, while Elizabeth Arden was slightly below the market capitalization criteria. The Committee decided to keep these companies in the Select Peer Group (i) based on the significant comparability of these businesses to one of our two business units and (ii) to allow for year-over-year consistency in the peer group.
At the time of the Committee’s determination of the Select Peer Group, we were positioned at approximately the 38th percentile of the Select Peer Group in terms of revenue, the primary scope comparison measure, for the respective fiscal year. Our current relative revenue positioning remains at approximately the 38th percentile of the Select Peer Group.
As discussed above, the Committee weighted the compensation data derived from the General Industry Cut of the Towers Watson Survey equally with the Select Peer Group data. The General Industry Cut comprises 230 companies having $1 billion to $7 billion in reported revenues, with median revenues of $2.9 billion. Energy and financial companies were excluded from this selection as the Committee believed that the industry business models and the pay practices of these two industries are less comparable to ours, particularly in a volatile economic climate.
In August 2015, the Committee reviewed its Select Peer Group with Haigh & Company for purposes of its upcoming 2016 compensation setting process and determined that for 2016 the only change was the deletion of Energizer Holdings, as a result of its split into two companies, and the addition of Edgewell Personal Care, which consists of the former personal care division of Energizer Products.
2015 Benchmarking for Other Executive Officers. Based on recommendations by its compensation consultant, the Committee determined that the Select Peer Group did not provide sufficient comparative data for the other executive officer positions that were reviewed by the Committee. Consequently, for all other executive officer positions, including the General Counsel, instead of using the Select Peer Group, the Committee used the aggregate data available from a select cut of the Towers Watson General Industry Index that (i) identified themselves as belonging to the consumer products or the food and beverage industry and (ii) had revenues between $1 billion and $7 billion (the “Consumer Products Select Cut”). The Committee averaged (1) the Consumer Products Select Cut with (2) the Towers Watson General Industry Index to determine median and 75th percentile target compensation.
For 2015, Towers Watson modified its General Industry Index to remove Dr. Pepper Snapple Group. Inc., Flowers Foods and Owens Corning and to add Acuity Brands, Brown-Forman, Brunswick and Nu Skin Enterprises. Therefore, for 2015, the Consumer Products Select Cut comprised 23 companies, (including seven companies that are also part of the Select Peer Group) with median revenue of $4.4 billion. The companies included in the Consumer Products Select Cut were as follows:
|
| | |
Acuity Brands | | Jack In The Box Inc. |
Armstrong World Industries, Inc.
What We Do | | The J.M. Smucker Company |
Beam | | Lorillard, Inc.
What We Don’t Do |
Brown-Forman | | | | |
| | Mattel, Inc. |
BrunswickPay for performance.A significant portion of the compensation for our NEOs is in the form ofat-risk variable compensation | | Molson Coors Brewing Company |
The Estee Lauder Companies Inc. | | Newell Rubbermaid Inc. |
Hanesbrands Inc.
| | Nu Skin EnterprisesNo taxgross-ups for severance payments |
Harman International Industries, Incorporated | | | | |
| | Polaris Industries Inc. |
Hasbro, Inc.Base variable compensation onmultiple performance metrics to encourage balanced focus | | Revlon, Inc. |
The Hershey Company | | Steelcase Inc. |
HNI
| | Tupperware Brands CorporationNo single-trigger vesting of cash or equity-based awards upon change in control |
Hormel | | | | |
| | Use anappropriate mix of fixed and variable compensation to reward Company, business unit and individual performance | | | |
| | No short-sales, hedging or pledging of our stock by our employees, officers or directors |
| | | | |
| | Award a majority of variable compensationas equity-based awards | | | |
| | No fixed-duration employment agreementswith executive officers |
| | | | |
| | Maintainexecutiveclawback policiesto recoup cash and equity compensation upon certain triggering events | | | |
| | No stock option/SAR repricing or exchangeof underwater options or SARs for cash |
| | | | |
| | Require our executives tomeet share retention guidelines | | | | | | No guaranteed pay increases or equity awards for NEOs |
| | | | |
| | Engage anindependent compensation consultant | | | | | | |
| | | | |
| | Conduct anannual risk assessment of our compensation programs | | | | | | |
Use of Market Reference Ranges40. The Committee’s independent compensation consultant derives the median and 75th percentile “market reference” values for each executive position based on the average of the two relevant compensation indexes and uses these values to analyze each NEO’s actual pay from the prior fiscal year and base salary, target total cash compensation and target total direct compensation for the current year. This analysis is reviewed with the Committee and, in the case of the compensation of NEOs other than the CEO, with the CEO. In determining target total direct compensation for each executive in 2015, the Committee considered the consultant’s market reference analysis. In addition, the Committee considered a number of other important factors, including each executive’s:IFF | 2019 PROXY STATEMENT
individual experience and performance;
scope of responsibilities;
relative responsibilities compared with other senior Company executives;
contribution relative to overall Company performance;
compensation relative to his or her peers within the organization; and
long-term potential.
The Committee uses the market reference range in order to establish a starting point for the compensation levels that the Committee believes would provide our NEOs with competitive compensation. However, the actual target total direct compensation approved by the Committee may be above or below the market reference range based on the Committee’s review of market compensation levels, its desire to create internal pay equity among our executives and the individual factors set forth above.
For 2015, the target total direct compensation awarded by the Committee to Mr. Fibig and to each of Messrs. Haeni and Mirzayantz and Ms. Chwat was between or slightly below the targeted 50th to 75th percentile range. The target total direct compensation awarded by the Committee to Ms. Cornell, excluding a one-time sign on bonus, was also between the 50th and the 75th percentile of the relevant market reference range. The total actual compensation paid for the year, as compared to target compensation approved at the beginning of the year, may differ depending on Company and individual performance. Consequently, the actual pay received by a NEO may be higher or lower than his or her market reference range.
COMPENSATION DISCUSSION AND ANALYSIS
2018 Compensation Elements and Targeted Mix
Our executive compensation program includes direct and indirect compensation elements. Our indirect compensation elements consist of (i) our Deferred Compensation Program, (ii) a limited perquisite program, (iii) severance and other benefits under our Executive Severance Policy, (iv) benefits under an Executive Death Benefit Plan and (v) long-term disability coverage. The Committee regularly reviews the costs and benefits of these programs.
We believe that direct compensation should be the principal form of compensation. The table below provides a brief description of the principal elements of direct compensation, whether such compensation is fixed or variable, and the compensation program objectives served by each pay element. From time to time, the Committee may also approve discretionary bonusesawards to executives in connection with their initial employment or for extraordinary individual performance, or a significant contribution to Companythe Company’s strategic objectives or for retention purposes.
|
| | | | |
| | |
| Element | | Fixed or Variable | | | Primary Objective |
| | |
Base Salary | | Fixed Short-Term Cash | | | To attract and retain executives by offering salary that is competitive with market opportunities and that recognizes each executive’s position, role, responsibilityresponsibilities, experience and experience.individual contributions. |
| | | | | | |
AIP award | | Variable Short-Term Cash | | | To motivate and reward the achievement of our annual financial performance objectives, including local currency neutral sales growth, operating profit, gross margin and working capital, and individual objectives.capital. |
| | | | | | |
LTIP award | | Variable Long-Term Cash and Equity | | | To motivate and reward theefficient capital allocation and annual profitability performance, measured by annual economic profit, and long-term shareholder value creation, measured by the annual and cumulative relative TSR performance over rolling three-year periods. |
| | To align executives’ interests with those of shareholders by paying 50% of the earned award in shares of our common stock (with the remaining 50% being payablesettled in cash) and including TSR as a key measure of long-term performance.. |
| | | | | | |
ECPEquity Choice Program (“ECP”) award | | Variable Equity | | | To align executives’ interests with the interests of shareholders through equity-based compensation. |
| | To encourage direct investment in theour Company. |
| | To serve as an important retention tool. • To recognize individual contributions. |
The payouts under our AIP and LTIP plans are based on our achievement of performance metrics set at the beginning of the relevant measurement period. Our ECP awards are used as a retention tool and the amounts are determined at the beginning of each year and reflect the executive’s performance in the prior year. These payouts vary from year to year and thus compensation of our NEOs varies with performance.
For 2015, based on target AIP and LTIP achievement levels and actual ECP awards, the components of total direct compensation for Mr. Fibig and the average of the total direct compensation components for Messrs. Haeni and Mirzayantz and Mmes. Cornell and Chwat, as a group, were as follows:
We believe that the significant portion of direct compensation that is variable; i.e., 78% in the case of Mr. Fibig and 73% in the case of Messrs. Haeni and Mirzayantz and Mmes. Cornell and Chwat, as a group, closely aligns our executives’ compensation opportunity with our performance by enabling our executives to earn more than target compensation if we achieve superior performance, or causing them to earn less than target compensation if we do not meet our performance goals or if the value of our common stock does not increase over time. The proportionately greater variable portion of direct compensation targeted for our CEO reflects his role and responsibility as our executive most accountable to our shareholders for company-wide performance.
Long-term compensation to our NEOs includes LTIP awards and ECP awards. LTIP awards, if earned, are paid 50% in common stock and 50% in cash. Equity makes up a larger portion of total long-term compensation than cash. This approach, combined with our Share Retention Policy discussed above, is intended to promote significant long-term share ownership by each of our executives and to align their interests, and their at-risk longer term compensation, with those of our shareholders.
The Committee periodically reviews the mix between variable and fixed and short-term and long-term incentive compensation opportunities and between cash andnon-cash opportunities based on (1) benchmarking and other external data provided by our independent compensation consultant, (2) recommendations from our independent compensation consultant and (3) recommendations from our CEO and CHRO.
DirectOur indirect compensation elements consist of (1) our Deferred Compensation ComponentsPlan (“DCP”) and 2015our Retirement Investment Fund Plan (the “401(k)”) savings plan, (2) a perquisite program, (3) severance and other benefits under our Executive Severance Policy (“ESP”), (4) benefits under an Executive Death Benefit Plan and (5) long-term disability coverage. The Committee regularly reviews the costs and benefits of these programs.
IFF | 2019 PROXY STATEMENT 41
COMPENSATION DISCUSSION AND ANALYSIS
2018 Compensation Decisions
The Committee reviews the salaries of our NEOs annually, and adjusts salaries periodically. In February 2015,2018, the Committee reviewed the base salaries of our NEOs after consultation with its NEOs. As a result of this review, the base salaries of each of Messrs. Haeniindependent compensation consultant, and Mirzayantz, were increased,effective April 1, 2018, approved salary increases for all NEOs except our CEO, ranging between 2% and the base salaries of Mr. Fibig and Ms. Chwat remained unchanged. Mr. Haeni, who had been appointed3% to his position in April 2014, received a $40,000 increase and Mr. Mirzayantz received a $60,000 increase in April 2015.
maintain market competitive target total annual compensation levels.Annual Incentive Plan
The Committee maintains theDuring 2018, our AIP forcompensated our NEOs and other employees. Overall, the Committee seeks to establish corporate performance goals that are challenging yet attainable. For our NEOs, 2015 AIP payouts dependedexecutive officers based on the achievement of certain levels of Company financial performance. Financial performance metrics are measured (1) specific Company-wide quantitativeat the consolidated corporate level for our CEO, CFO, and General Counsel and (2) at both the consolidated corporate level and the business unit level for the Divisional CEO, Scent and Divisional CEO, Taste.
In February 2018, the Committee approved certain changes to the AIP to better align corporate and business unit metrics. For NEOs that are evaluated solely on corporate performance, goalsthe 2018 AIP weightings were adjusted to reduce the currency neutral sales growth component from 35% to 30% and inincrease the caseworking capital component from 15% to 20%. For our NEOs that are evaluated on a combination of business unit and corporate performance, the corporate components now constitute 20% of the Group Presidents,overall weighting and the business unit goalscomponents constitute 80% of the overall weighting. The Committee believes that these changes reflect our focus on profitable growth. In addition, if our Company does not meet the corporate operating profit threshold, then no AIP payouts will be awarded to any participant, including the NEOs.
The performance metrics for the 2018 AIP and their assigned weightings were as well, and (2) individual objectives relating to leadership, succession, planning and people development. follows:
Annual Incentive Program
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Currency neutral sales growth | | | | | Operating profit | | | | | Gross Margin | | | | | Working Capital | | | | | Total Weighting |
All NEOs Except Divisional CEOs Corporate Weighting | |  | | 30% | | | | | | 35% | | | | | | 15% | | | | | | 20% | | | | | | 100% |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Currency neutral sales growth | | | | | Operating profit | | | | | Gross Margin | | | | | Working Capital | | | | | Total Weighting |
Divisional CEOs Corporate Weighting | | | | 5% | | | | | | 10% | | | | | | 0% | | | | | | 5% | | | | | | 20% | | 100% |
Divisional CEOs Business Unit Weighting | | | | 25% | | | | | | 25% | | | | | | 15% | | | | | | 15% | | | | | | 80% |
42IFF | 2019 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
Each year the Committee sets an AIP target (stated as a percentage of base salary) for each NEO. For 2015,2018, the Committee maintained the AIP percentage targets at the same level as 2014.
|
| | | | | | | | | | |
| | 2015 Salary | | Target AIP as % Base Salary | | AIP Target |
| Andreas Fibig |
| $1,200,000 |
| | 120 | % | |
| $1,440,000 |
|
| Alison A. Cornell(1) |
| $560,000 |
| | 80 | % | |
| $448,000 |
|
| Nicolas Mirzayantz |
| $600,000 |
| | 80 | % | |
| $480,000 |
|
| Matthias Haeni |
| $500,000 |
| | 80 | % | |
| $400,000 |
|
| Anne Chwat |
| $465,000 |
| | 60 | % | |
| $279,000 |
|
| Richard O’Leary(2) |
| $445,311 |
| | 50 | % | |
| $220,603 |
|
| | | | | | | | | | |
| | | | |
| | | 2018 Salary | | | Target AIP as % Base Salary | | AIP Target | |
| | | | |
Andreas Fibig | | $ | 1,300,000 | | | 120% | | $ | 1,560,000 | |
| | | | |
| | | | |
Richard O’Leary | | $ | 515,000 | | | 80% | | $ | 412,000 | |
| | | | |
| | | | |
Nicolas Mirzayantz | | $ | 612,000 | | | 80% | | $ | 489,600 | |
| | | | |
| | | | |
Matthias Haeni (1) | | $ | 581,451 | | | 80% | | $ | 465,161 | |
| | | | |
| | | | |
Anne Chwat | | $ | 485,000 | | | 60% | | $ | 291,000 | |
| |
| (1) | Reflects Ms. Cornell’sMr. Haeni is paid in Euros. For 2018, his salary was €512,156 and his AIP Target was €409,725. The table above reflects the US Dollar equivalent of his salary and AIP target based on an annualized basis. Her actual 2015 AIP payout was calculated on a pro rata basisexchange rate of 1.1353 US Dollars to reflect her appointment as CFO effectiveEuros (the exchange rate as of July 8, 2015.December 28, 2018). |
| |
(2) | Includes Mr. O’Leary’s salary as interim CFO through Ms. Cornell’s appointment as CFO in July 2015 (including the $7,500 per month that was deferred until appointment of the permanent CFO) and as Controller and Chief Accounting Officer thereafter. Mr. O’Leary’s AIP target percentage remained unchanged following his change in role. |
Performance Metrics and Capped AIP Payouts
: Based on a review of the annual and long-term financial goals, operational plans, strategic initiatives and the prior year’s actual results, the Committee annually sets the financial performance metrics for theour Company and the respective business units that it will use to measure performance as well as the relative weighting that will be assigned to each metric. The Committee then approves threshold, target and maximum performance levels for each performance metric. Upon achievement of the relative performance level, an executive has the opportunity to earn upthreshold (25%), target (100%) and maximum (200%) amounts with performance levels achievements in between calculated on a linear basis. The Committee seeks to the following AIP target award for such metric: |
| | | | |
Threshold | — | | 25 | % |
Target | — | | 100 | % |
Maximum | — | | 200 | % |
2015 AIP Performance Metrics: establish corporate performance goals that are challenging yet attainable.As discussed above, for 20152018 AIP awards, the Committee approved (1) the following four financial performance metrics: (i) local currency sales growth, (ii) operating profit, (iii) gross margin percentage and (iv) working capital percentage; and (2) individual leadership objectives. The financial performance metrics were selected for the following reasons:
Local currency sales growth reflects both increases in market share and sales expansion, which drives increases in gross profit. By measuring achievement exclusive of currency fluctuations, this goal helps to ensure that we are rewarding real incremental growth.
An increase in operating profit (in dollar terms) encourages the management of gross profit dollars against operating expenses. Achieving this goal helps provide the Company with the funding to reinvest in the business to drive future growth.
Improvement in gross margin percentage is an important measure for analyzing our ability to effectively recover increases in the cost of raw materials, cost discipline and operating efficiencies.
Reductions in working capital drive better operating cash flow generation. For this purpose, we define working capital as inventories and trade accounts receivable less trade accounts payable.
In addition, each NEO was assigned individual leadership objectives that were reflective of our focus on continuing to develop the people of our organization.
For 2015, the weighting assigned to each of the performance metrics was as follows:
|
| | | | | | | | | | | | | | | |
| | | Corporate Participants(1) | | Business Unit Participants(2) |
| Performance Metric | | Corporate Weighting | | Bus. Unit Weighting | | Corporate Weighting | | Bus. Unit Weighting | | Total Weighting |
| Local Currency Sales Growth | | 40 | % | | 0 | % | | 20 | % | | 20 | % | | 40 | % |
| Operating Profit | | 25 | % | | 0 | % | | 12.5 | % | | 12.5 | % | | 25 | % |
| Gross Margin | | 15 | % | | 0 | % | | 0 | % | | 15 | % | | 15 | % |
| Working Capital | | 10 | % | | 0 | % | | 10 | % | | 0 | % | | 10 | % |
| Individual | | 10 | % | | 0 | % | | 0 | % | | 0 | % | | 10 | % |
| Total | | 100 | % | | 0 | % | | 42.5 | % | | 47.5 | % | | 100 | % |
| | |
(1) | All NEOs except our two Group Presidents. |
| |
(2)2018 AIP Performance Metrics | Our two Group Presidents. | Reasons for Selection |
| |
| Currency neutral sales growth | | • Reflects both increases in market share and sales expansion, which drives increases in gross profit. By measuring achievement exclusive of currency fluctuations, this goal helps to ensure that we are rewarding actual incremental growth. |
| |
| |
| Operating profit | | • An increase in operating profit (in dollar terms) encourages the management of gross profit dollars against operating expenses. Achieving this goal helps provide us with the funding to reinvest in the business to drive future growth. |
| |
| |
| Gross margin percentage | | • Improvement in gross margin percentage is an important measure of our ability to effectively recover increases in the cost of raw materials, cost discipline and operating efficiencies. • Gross margin also promotes greater focus on R&D and innovation. |
| |
| |
| Working capital percentage | | • Reductions in working capital drive better operating cash flow generation. For this purpose, we define working capital as inventories and trade accounts receivable less trade accounts payable, expressed as a percentage of sales. |
IFF | 2019 PROXY STATEMENT 43
For 2015, a new individual performance metric was introduced as the Committee believes establishing operating objectives tied to the development of our people and the next generation of leadership will directly contribute to building differentiation and accelerating growth on a sustainable basis. Working capital and operating profit metrics were reduced by 5% each to accommodate the new metric. Otherwise, 2015 weightings for corporate and business unit participants remained unchanged, and continue to assign greater weight to local currency sales growth and operating profit goals because the Committee believes that these two performance metrics are the most relevant measures of overall annual Company performance and are key to driving sustained long-term growth.
COMPENSATION DISCUSSION AND ANALYSIS
Determination of 20152018 Performance LevelsLevels: In determining our 20152018 AIP performance threshold, target and maximum levels, the Committee considered our annual targets for 2015, our 20142018, 2017 actual results and payout trends over the prior three-year and five-year periods and the pro forma impact of the Aromor acquisition.periods. The performance target level waslevels for the financial metrics were set in line with our 2015 budget and above our 2014 actual results, and the threshold performance target level was set above the low end of our Company’s long-term strategic growth targets.
20152018 budget.2018 Corporate and Business Unit AIP Performance
: Our actual performance against our 20152018 AIP corporate financial metrics is set forth in the tables below. In establishing AIP financial performance metrics and inwe took into consideration certainnon-operational metrics known to us at the time. In determining actual achievement against those performance metrics, we eliminated the net impact of certainnon-core expenses andnon-core gains in order to reflect our fundamental operating results. 20152018 LTIP and AIP target performance levels and actual achievement against the target performance levels excluded costs or income associated with (i)(1) adjustments related to operational improvement initiative costs and restructuring charges, (2) the closingFrutarom acquisition, including unbudgeted operating profit resulting from the inclusion of our Fragrance ingredients plant in Augusta, Georgia, (ii) plant closings and relocations in Asia, (iii) acquisition related items, (iv) items related to the reclassification of certain liability accounts, (v) adjustments related to profit improvement initiatives undertakenFrutarom results in the fourth quarter of 2015, (vi) with respect2018 and, legal, accounting, consulting and integration expenses, (3) othernon-Frutarom acquisition related items, including integration costs, (4) an FDA mandated recall, (5) adjustments due to 2015 LTIP only, certain tax-related items,hyper inflationary accounting for our Argentina subsidiary, (6) the impact of the BASF supply disruption, (7) gains and (vii) with respect to 2015 AIP only,sales of assets, (8) unbudgetedmark-to-market adjustments related to our Deferred Compensation Plan, and (is) solely with respect to LTIP, charges associated with the enactment of the Tax Cuts and Jobs Act (together, the “2015 “2018non-core items”). Similarly, we excluded the effects of incentive compensation provisions in calculating gross margin performance in order to better focus on the underlying operating performance of our product portfolio. The Committee believes that the necessary self-funding of incentive compensation payments is covered in the operating profit component of the AIP program.The table below reflects the 20152018 AIP metrics, their respective targets and the payoutspercentage payout earned for each metric and overall by each of Messrs. Fibig and O’Leary and Mmes. Cornell andMs. Chwat, who were all evaluated solely on corporate performance.
|
| | | | | | | | | | | | | | | | | | | | | |
| Performance Metric | | Threshold | | Target | | Maximum | | Actual | | Award Payout (as % of Target) | | Corporate Weighting | | Total Weighted Award |
| Local Currency Sales Growth | | 2.3 | % | | 4.8 | % | | 7.3 | % | | 2.7 | % | | 37.0 | % | | 40 | % | | 14.8 | % |
| Operating Profit | | $611M |
| | $643M |
| | $675M |
| | $603M |
| | — |
| | 25 | % | | — |
|
| Gross Margin | | 44.0 | % | | 45.5 | % | | 47.0 | % | | 45.0 | % | | 75.0 | % | | 15 | % | | 11.3 | % |
| Working Capital | | 30.0 | % | | 28.5 | % | | 27.0 | % | | 28.7 | % | | 91.7 | % | | 10 | % | | 9.2 | % |
| Individual Objectives | | — |
| | — |
| | — |
| | 100.0 | % | | 69.0 | % | | 10 | % | | 6.9 | % |
| Total Award (as % Target) | | 25 | % | | 100 | % | | 200 | % | | | | — |
| | 100 | % | | 42.2 | % |
During 2015,Corporate Level
Threshold Target Maximum Award Payout as a % of Target 3.2% 4.7% 6.2% Currency Neutral 34.0% Sales Growth Actual 4.9% $619M $652M $684M Operating Profit 42.4% Actual $659 42.7% 44.2% 45.7% Gross Margin 10.0% Actual 43.5% 29.0% 28.6% 27.0% Working Capital 15.3% Actual 28.7% Overall Corporate Payout 101.7%
As indicated above, during 2018, our corporate performance was between target and maximum for the currency neutral sales growth and operating profit performance metrics, and between threshold and target for three of the performance metrics, local currency sales growth, gross margin metric and the working capital and was below threshold for the remaining performance metric, operating profit.metric. The actual dollar amount earned by each NEO is set forth below under “2015“2018 Individual AIP Payouts.” With respect to the individual objectives component, the Committee reviewed each NEOs performance in 2015 against the NEO’s leadership and execution of strategic and organizational individual objectives established by the Committee. The Committee determined that each NEO had met his or her individual objectives for 2015.
44IFF | 2019 PROXY STATEMENT
Fragrance COMPENSATION DISCUSSION AND ANALYSIS
Scent Business Unit Performance
The table below reflects the 20152018 AIP metrics, their respective targets and the payoutspercentage payout earned for each metric and overall by Mr. Mirzayantz, our Group President, Fragrance.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Performance Metric | | Threshold | | Target | | Max. | | Award Payout (as % of Target) | | Bus. Unit Weight | | Bus. Unit Weighted Award | | Corp. Weight % | | Corp. Weighted Award | | Total Weighted Award |
| Local Currency Sales Growth | | 2.2 | % | | 4.7 | % | | 7.2 | % | | 37.0 | % | | 20 | % | | 7.4 | % | | 20 | % | | 7.4 | % | | 14.8 | % |
| Operating Profit | | $333M |
| | $349M |
| | $376M |
| | — |
| | 12.5 | % | | — |
| | 12.5 | % | | — |
| | — |
|
| Gross Margin | | 44.3 | % | | 45.8 | % | | 47.3 | % | | 50.0 | % | | 15 | % | | 7.5 | % | | — |
| | — |
| | 7.5 | % |
| Working Capital | | 33.2 | % | | 31.5 | % | | 29.8 | % | | 95.5 | % | | 0% |
| | — |
| | 10 | % | | 9.2 | % | | 9.2 | % |
| Individual | | — |
| | — |
| | — |
| | 69.0 | % | | 10 | % | | 6.9 | % | | — |
| | — |
| | 6.9 | % |
| Total Award (as % Target) | | 25 | % | | 100 | % | | 200 | % | | — |
| | 57.5 | % | | — |
| | 42.5 | % | | — |
| | 38.4 | % |
During 2015,Divisional CEO, Scent.Scent Business Unit
Threshold Target Maximum Award Payout as a % of Target 3.7% 5.2% 6.7% Currency Neutral Sales 18.8% Growth (Business Unit) Actual 4.7% 3.2% 4.7% 6.2% Currency Neutral Sales 5.7% Growth (Corporate) Actual 4.9% $328M $343M $369M Operating Profit 19.9% (Business Unit) Actual $339 $619M $652M $684M Operating Profit 12.1% (Corporate) Actual $659M 42.8% 44.3% 45.8% Gross Margin 6.6% (Business Unit) Actual 43.2% 39.6% 39.1% 36.9% Working Capital 3.8% (Business Unit) Actual 41.1% 29.0% 28.6% 27.0% Working Capital 0.0% (Corporate) Actual 28.7% Overall Payout for Divisional CEO, Scent 66.9%
As indicated above, during 2018, our FragranceScent business unit performance was between threshold and target for three of the currency neutral sales growth, operating profit and gross margin business unit performance metrics, local currency sales growth, gross margin and working capital, and was below threshold for the remainingworking capital business unit performance metric, operating profit.metric. The actual dollar amount earned by our Group President, FragranceDivisional CEO, Scent is set forth below under “2015“2018 Individual AIP Payouts.”
IFF | 2019 PROXY STATEMENT 45
Flavors COMPENSATION DISCUSSION AND ANALYSIS
Taste Business Unit Performance
The table below reflects the 20152018 AIP metrics, their respective targets and the payoutspercentage payout earned for each metric and overall by Mr. Haeni, our Group President, Flavors.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Performance Metric | | Threshold | | Target | | Max. | | Award Payout (as % of Target) | | Bus. Unit Weight | | Bus. Unit Weighted Award | | Corp. Weight % | | Corp Weighted Award | | Total Weighted Award |
| Local Currency Sales Growth | | 2.8 | % | | 5.3 | % | | 7.8 | % | | 37.0 | % | | 20 | % | | 7.4 | % | | 20 | % | | 7.4 | % | | 14.8 | % |
| Operating Profit | | $326M |
| | $342M |
| | $369M |
| | — |
| | 12.5 | % | | — |
| | 12.5 | % | | — |
| | — |
|
| Gross Margin | | 43.0 | % | | 44.5 | % | | 46.0 | % | | 65.0 | % | | 15 | % | | 9.8 | % | | — |
| | — |
| | 9.8 | % |
| Working Capital | | 26.6 | % | | 25.3 | % | | 24.0 | % | | 115.0 | % | | 0% |
| | — |
| | 10 | % | | 9.2 | % | | 9.2 | % |
| Individual | | — |
| | — |
| | — |
| | 69.0 | % | | 10 | % | | 6.9 | % | | — |
| | — |
| | 6.9 | % |
| Total Award (as % Target) | | 25 | % | | 100 | % | | 200 | % | | — |
| | 57.5 | % | | — |
| | 42.5 | % | | — |
| | 40.7 | % |
Divisional CEO, Taste.Taste Business Unit
Threshold Target Maximum Award Payout as a % of Target 3.4% 4.9% 6.4% Currency Neutral Sales 35.0% Growth (Business Unit) Actual 5.5% 3.2% 4.7% 6.2% Currency Neutral Sales 5.7% Growth (Corporate) Actual 4.9% $370M $387M $416M Operating Profit 36.5% (Business Unit) Actual $400M $619M $652M $684M Operating Profit 12.1% (Corporate) Actual 659M 43.2% 44.7% 46.2% Gross Margin 14.7% (Business Unit) Actual 44.7% 35.8% 35.4% 33.4% Working Capital 6.1% (Business Unit) Actual 35.7% 29.0% 28.6% 27.0% Working Capital 3.8% (Corporate) Actual 28.7% Overall Payout for Divisional CEO, Taste 113.9%
During 2015,2018, our FlavorsTaste business unit performance was between target and maximum for one of the currency neutral sales growth and operating profit business unit performance metrics, working capital,at target for the gross margin business unit performance metric, and was between threshold and target for two of the working capital business unit performance metrics, local currency sales growth and gross margin, and was below threshold for the remaining performance metric, operating profit.metric. The actual dollar amount earned by our Group President, FlavorsDivisional CEO, Taste is set forth below under “2015“2018 Individual AIP Payouts.”
20152018 Individual AIP Payouts
The AIP payout for 20152018 for theour NEOs, based on the actual achievement of each of the performance metrics, is included in the “Non-Equity“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table in this proxy statement. Based on the Corporate and Business Unit performance outlined in the tables above, 20152018 AIP payouts were as follows:
| | | | | | | | | | | | |
| | | 2018
AIP Target ($) | | | 2018 Payout | |
Executive | | As % of Target | | | Award ($) | |
| | | | |
Andreas Fibig | | $ | 1,560,000 | | | | 101.7% | | | $ | 1,586,520 | |
| | | | |
| | | | |
Richard O’Leary | | $ | 412,000 | | | | 101.7% | | | $ | 419,004 | |
| | | | |
| | | | |
Nicolas Mirzayantz | | $ | 489,600 | | | | 66.9% | | | $ | 327,542 | |
| | | | |
| | | | |
Matthias Haeni | | $ | 465,161 | | | | 113.9% | | | $ | 529,818 | (1) |
| | | | |
| | | | |
Anne Chwat | | $ | 291,000 | | | | 101.7% | | | $ | 295,947 | |
46IFF | 2019 PROXY STATEMENT
|
| | | | | | | | | | | |
| | | 2015 AIP Target ($) | | 2015 Payout |
| Executive | | As % of Target | | Award ($) |
| Andreas Fibig | |
| $1,440,000 |
| | 42 | % | |
| $607,680 |
|
| Alison Cornell(1) | |
| $448,000 |
| | 20 | % | |
| $91,679 |
|
| Nicolas Mirzayantz | |
| $480,000 |
| | 38 | % | |
| $184,320 |
|
| Matthias Haeni | |
| $400,000 |
| | 41 | % | |
| $162,800 |
|
| Anne Chwat | |
| $279,000 |
| | 42 | % | |
| $117,738 |
|
| Richard O’Leary(2) | |
| $220,603 |
| | 42 | % | |
| $93,094 |
|
COMPENSATION DISCUSSION AND ANALYSIS
| |
| (1) | Reflects Ms. Cornell’sMr. Haeni’s AIP target was established in Euros. The table above converts Mr. Haeni’s €409,725 AIP target to US Dollar equivalent of 80% of his salary, based on an annualized basis.exchange rate of 1.1353 US Dollars to Euros (the exchange rate as of December 28, 2018). The actual 2015 AIP payout was calculated on a pro rata basis to reflect her appointment as CFO effective as of July 8, 2015.amount reflects the US Dollar equivalent using the same December 28, 2018 exchange rate. |
| |
(2) | Mr. O’Leary’s actual 2015 AIP payment was calculated based on his actual salary received in 2015. |
We believe that LTIP awards reward our executive officers, including our NEOs, for financial results and align their interests with the interests of our shareholders. Annually, the Committee reviews the LTIP to determine (1) the metrics that should be used to encourage long-term success, (2) the weightings that should be applied to such metrics and (3) the annual and cumulative targets for such metrics. The Committee believes that commencing a new three-year LTIP cycle each year (i) year:
provides a regular opportunity tore-evaluate long-term metrics, (ii)
aligns goals with the ongoing strategic planning process, and (iii)
reflects our evolving business priorities and market factors.
The Committee also annually sets a total LTIP target award for each NEO, which reflects the total LTIP award aan NEO has the opportunity to receive at the end of the three-year cycle if we meet all of our targets. To the extent that we meet the minimumDepending upon our actual performance relative to financial and TSR goals or the maximum financial and TSRrelative total shareholder return goals, the actual payout to the NEO could be significantlygreater or less or more than the total LTIP target award.
Performance Segments
. Given the difficulty in setting long-term goals in the current volatile global economic environments, for 2018 the Committee believesdecided that the LTIP should continue to comprise four performance segments.segments: Year 1, Year 2, Year 3 (each an “annual performance segment”) and cumulative performance over the three-year period (the “cumulative performance segment”).Performance Metrics. For 2018, each annual performance segment is measured against Economic Profit (“EP”) (12.5%) and the cumulative performance segment is measured against Relative TSR (62.5%). The performance segments consistCommittee believes that a LTIP consisting of three annual performance segments (Year 1, Year 2 and Year 3)based on EP and a cumulative performance segment coveringbased on Relative TSR better aligns its compensation objectives with the interests of our shareholders and our focus on long-term growth initiatives. As described below in “2019 Compensation Actions,” for the 2019-2021 LTIP Cycle, annual EP Performance segments will be replaced by a cumulative, three-year period, with 25% ofnet debt ratio to EBITDA ratio performance metric.
Long-Term Incentive Plan
| | | | | | | | | | | | |
| | | | | Segment | | EP | | Relative TSR | | | | |
| | | | Year 1 | | 12.5% | | 0% | | | | |
| | Year 2 | | 12.5% | | 0% |
| | Year 3 | | 12.5% | | 0% |
| | Cumulative Segment | | — | | 62.5% |
| | | | Total | | 37.5% | | 62.5% | | | | 100% |
For 2018, the total LTIP target award creditedCommittee determined that EP was a factor in each performance segment.
Performance Metrics. During the three annual performance segments, Company performance is measured against two equally-weighted financial metrics, TSR and EP. We believe that evaluating EP helps us identifyidentifying the sources and drivers of value across our businesses and that EP growth is closely linked to the creation of long-term shareholder value. EP measures operating profitability after considering (i)(1) all our revenues and operating costs, (ii)(2) incomeIFF | 2019 PROXY STATEMENT 47
COMPENSATION DISCUSSION AND ANALYSIS
taxes and (iii)(3) a charge for the capital employed in the business. Capital employed primarily consists of working capital, property, plant and equipment, and intangible assets. The capital charge is determined by applying the estimated weighted average cost of capital (“WACC”) to the adjusted average invested capital employed (including changescharges and/or loss provisions associated withnon-operating events such as restructurings and tax or litigation settlements) during the relevant period. The estimated WACC rate is the blendedweighted average cost of our debt and equity capital. In determining the EP target for the 20152018 annual performance segments of the current LTIP cycles, the Committee considered our annual targets for 2015,2018, our 20142017 actual results and payout trends over the prior three-year and five-year periods, and thepro-forma impact of recent acquisitions. During 2018, our EP goal for the acquisitionsannual performance segments was set at the beginning of Lucas Meyer Cosmeticseach annual performance segment. While the Committee continues to believe that EP is an important metric, in light of the Frutarom acquisition and Ottens Flavors.
Forthe company-wide focus on deleveraging by 2021, the Committee decided to replace the three annual EP performance segments with a cumulative three-year performance metric of net debt to EBITDA ratio in addition to the cumulative,
performancethree-year Relative TSR for the cumulative segment,
Company performance is measured by TSR. Thewhich will be weighted equally.For 2018, the Committee believesalso decided that three-year Relative TSR as compared to other public companies in which shareholders may choose to invest, is a good indicator of our overall long-term performance, and directly ties our executives’ compensation opportunity to our share price appreciation and dividend payments relative to a majorlarge-cap index.
Relative TSR is calculated by measuring the change in the market price of stock plus dividends paid (assuming the dividends are reinvested) for theour Company and the S&P 500 companies over the three-year performance period. The market price for purposes of calculating the Relative TSR of theour Company and the S&P 500 on each year-end or cycle-end date is determined based on the average closing price per share of each company’s common stock over the period of 20 consecutive trading days preceding that date, as reported by S&P Capital IQ.
For each of the three annual performance segments, each of the goals The Relative TSR goal for EP and TSR is set at the beginning of each annual performance segment and is equally weighted. For the cumulative performance segment the TSR goal is set at the beginning of the three-year cycle.
The table below sets forth the relative weightings of each metric for each of our current LTIP cycles:
|
| | | | | | | | | |
| Segment | | Economic Profit (EP) Growth | | Total Shareholder Return (TSR) relative to the S&P 500 | | Total Weighting of Segment |
| Year 1 | | 12.5 | % | | 12.5 | % | | 25 | % |
| Year 2 | | 12.5 | % | | 12.5 | % | | 25 | % |
| Year 3 | | 12.5 | % | | 12.5 | % | | 25 | % |
| Cumulative Segment (Year 1-Year 3) | | 0 | % | | 25 | % | | 25 | % |
| Total LTIP Cycle | | 37.5 | % | | 62.5 | % | | 100 | % |
At the end of each year, the Committee reviews our annual performance and cumulative performance for the newly completed three-year cycle. To the extent that our annual performance has met or exceeded the threshold annual EP goal and the threshold annual TSR goal, the Committee approves “banking” the credit that will be applied to the payout at the end of the three-year cycle. For the completed three-year cycle, the Committee approves the total payout, taking into consideration the performance for each of the prior annual performance segments.
2015-2017segments and the cumulative performance segment.2018-2020 LTIP Target Awards
In early 2015,2018, the Committee approved the following total LTIP target awards to each of our NEOs for the 2015-2017 performance cycle, other than Ms. Cornell’s2018-2020 LTIP target award which was approved in May 2015 as part of her employment arrangement:
cycle: |
| | | | | | | |
NEO | | | | | Total | |
| | |
Andreas Fibig | |
| $2,000,000 |
|
Alison A. Cornell (1) | |
| $2,500,000 | |
| | |
| | |
Richard O’Leary | | | | | | | $500,000 |
|
| | |
| | |
Nicolas Mirzayantz | |
| | | | | $500,000 |
|
| | |
| | |
Matthias Haeni | |
| | | | | $500,000 |
|
| | |
Anne Chwat | |
| $279,000 |
|
Richard O’Leary | |
| $195,395 |
| $291,000 | |
| |
(1) | Reflects Ms. Cornell’s LTIP target on an annualized basis. Ms. Cornell’s actual LTIP award was pro-rated to reflect her partial year of employment. |
The Committee set the cumulative three-year Relative TSR goal for the 2015-20172018-2020 LTIP cycle at the same level that had been set for the prior year’s LTIP cycle, as follows:
|
| | | | | | |
Criteria | | Threshold (25%) | | Target (100%) | | Maximum (200%) |
Cumulative TSR vs. S&P 500 | | 35th percentile | | 55th percentile | | 75th percentile |
For the 2015-2017 LTIP cycle, thewhich required above median performance to achieve target payout. The Committee
again determined that 50% of the value of
any payoutsthe awards would be
denominated and paid in cash and 50% would be
denominated and paid in shares, consistent with
the 2013-2015 and 2014-2016prior LTIP cycles. The Committee believes that paying 50% of the LTIP value in shares creates a stronger alignment between executives and shareholders, and provides additional incentive for executives to achieve superior Company performance and to produce share price appreciation over the three-year performance cycle. The number of shares of our common stock for the 50% portion that would be paid in
stock48IFF | 2019 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
shares is determined based on the market price of the common stock at the beginning of the cycle. For the 20152018-2020 LTIP cycle, it was based on $102.14$153.26 per share, the average closing market price for the twenty trading days prior to January 2, 2015,2018, the first stock trading day of the cycle. At the conclusion of each of the first two annual performance segments, the dollar value and number of shares will be “banked” based on the performance of each such segment. When the final performance segment and the three-year cycle areis concluded and the Committee approves the LTIP payouts are approved by the Committee,payout, the cumulative dollar value and cumulative number of shares will beare paid to the executive.
Annual2018 LTIP Goals and 2015 LTIP Performance
In early 2015, the Committee also set the threshold, target and maximum 2015 annual EP goal and threshold, target and maximum annual TSR goal which applies to each of the three current LTIP performance cycles, as follows:
|
| | | | | | |
Criteria | | Threshold (25%) | | Target (100%) | | Maximum (200%) |
EP | | $270M | | $294M | | $318M |
Annual TSR vs S&P 500 | | 35th percentile | | 55th percentile | | 75th percentile |
LTIP Cycle Performance
For the 20152018 segment of each of the existing LTIP cycles, our EP of $273$252 million, as adjusted for 2015 2018non-core items, was between thresholdtarget and targetmaximum performance level. As a result, our NEOs earned approximately 34%190.6% of the annual target based on the EP goal for the year. Our Relative TSR for 2015the cumulative, three-year performance period ended in 2018 was at the 80th percentile,between threshold and target and, as a result, our NEOs earned approximately 200%43.8% of target based on the Relative TSR goal for the 2015 segment.three-year cycle. The LTIP award earned and “banked” for the 2015 segment2018 segments of each existingthe 2017-2019 and 2018-2020 LTIP cyclecycles was therefore equal to approximately 117%23.8%.
2018 LTIP Results
Maximum $254M 2018 EP Actual $252M Maximum 75th percentile 3-Year Relative TSR Target $228M Target 55th percentile Threshold $202M Payout at 190.6% of target..
2013-2015Target Threshold 35th percentile Payout at 43.8% of Target Actual 40th percentile2016-2018 LTIP Payout
As noted above, our NEOs earned approximately 34%The 2018 segment was 190.6% of target based on the annual 2018 EP goal for 2015,(resulting in a segment weighting of 23.8%) and ourthe Cumulative TSR for 2015result was at43.8% of target on the 80th percentile, resulting in our NEOs earning approximately 200% of thecumulative, three-year Relative TSR goal for(resulting in a segment weighting of 27.3%). Consequently, the 2015 segment. Our cumulative TSR was positioned at approximately the 74th percentile versus the S&P 500, which equates to a payout of 196% of target.
The overall payout for the
2013-20152016-2018 LTIP cycle was approximately
142%79.1% of target, based on the following EP and
Relative TSR results against objectives, as determined by the Committee.
| | | | | | | | | | | | | | | | |
| Segment | | Segment
Weighted
EP Result | | | Cumulative
TSR Result | | | Segment
Weighting | | | Overall
Result | |
| | | | | |
| 2016 | | | 76.7% | | | | — | | | | 12.5 | % | | | 9.6 | % |
| | | | | |
| | | | | |
| 2017 | | | 146.6% | | | | — | | | | 12.5 | % | | | 18.3 | % |
| | | | | |
| | | | | |
| 2018 | | | 190.6% | | | | — | | | | 12.5 | % | | | 23.8 | % |
| | | | | |
| | | | | |
| Cumulative | | | — | | | | 43.8% | | | | 62.5 | % | | | 27.4 | % |
| | | | | |
Total | | | | | | | | | | | 100.0 | % | | | 79.1 | % |
IFF | 2019 PROXY STATEMENT 49
|
| | | | | | | | | | | | | | | |
| Segment | | Segment Weighted EP Result | | Segment Weighted TSR Result | | Combined Segment Weighted Result | | Segment Weighting | | Overall Result |
| 2013 | | 191 | % | | 77 | % | | 133.8 | % | | 25.00 | % | | 33.4 | % |
| 2014 | | 133 | % | | 112 | % | | 122.4 | % | | 25.00 | % | | 30.6 | % |
| 2015 | | 34 | % | | 200 | % | | 117.0 | % | | 25.00 | % | | 29.3 | % |
| Cumulative | | — |
| | 196 | % | | 195.5 | % | | 25.00 | % | | 48.9 | % |
| | | | | | | | | | | |
| Total | | | | | | | | 100.00 | % | | 142.2 | % |
COMPENSATION DISCUSSION AND ANALYSIS
The LTIP payout for the 2013-2015 performance2016-2018 LTIP cycle for the NEOs, based on the actual achievement of quantitative objectives, is discussed in greater detail following the Grants of Plan-Based Awards Table.
For the LTIP performance cycles that concluded in 2011 through and including 2015,the five-year period from 2014 to 2018, the actual overall corporate percentage payout under the LTIP against those long-term cycle performance goals ranged from approximately 105%79.1% to 150%146.4%, with an average payout of 133% over the five LTIP performance cycles.
119.8%.
Equity Choice Program
We believe that equityEquity is a key component of our long-term incentive compensation as it (1) provides participants with a meaningful stake in theour Company, thereby aligning their interests more closely with shareholders, (2) encourages participants to focus on long-term success, and (3) helps to attract and retain top talent.talent and (4) recognizes individual contributions. We believe that our ECP is an effective vehicle to encourage ownership as it provides participants the flexibility to allocate their award among three types of equity.
Annually our Committee determinesUnder the dollar range of ECP awards for each level of participating executive based on peer group and long-term incentive practices survey data, a review of the competitiveness of the combined value of the ECP awards and LTIP awards with market practices and other factors that it deems appropriate. In 2015, the Committee increased the range for ECP grants to our CEO from $750,000 to $2,250,000 with a midpoint of $1,500,000 to a range of $1,000,000 to $3,500,000
with a midpoint of $2,000,000. The other ranges remained the same in 2015 and were as follows: |
| | | | | | |
| | | Lower Limit | | Midpoint | | Upper Limit |
| CEO | | $1,000,000 | | $2,000,000 | | $3,500,000 |
| Group Presidents and CFO | | $250,000 | | $500,000 | | $750,000 |
| General Counsel | | $175,000 | | $350,000 | | $525,000 |
The Committee then approves the actual dollar award to be granted to each NEO other than the CEO, and recommends to the independent members of the Board for approval the actual dollar award for the CEO. All ECP awards are generally subject to a vesting period of approximately three years. The Committee believes the ECP is an attractive tool for recruiting, motivating and retaining executive talent and encourages alignment with shareholders by reinforcing investment and ownership in our Company by our executives.
ECP, participants, including all of our NEOs, may choose from three types of equity award grants. For ECP
grantedawards in
2015,2018, these three types were (1) Purchased Restricted Stock
or Purchased Restricted Stock Units (“
PRS”PRSUs”), (2)
stock settled appreciation rightsStock-Settled Appreciation Rights (“SSARs”), and (3) Restricted Stock Units (“RSUs”).
PRS isPRSUs are assigned an adjustment factor of 120% to provide incentive to participants to invest in and accumulate shares to promote retention and increase alignment of participants’ interests with those of our shareholders. Elections are made in 5% increments. Based on the participant’s election, a participant’s dollar award value is converted into
PRS,PRSUs, SSARs or RSUs on the grant date based on the market price of our common stock on such date.
All ECP awards are generally subject to a vesting period of approximately three years. The Committee believes the ECP is an attractive tool for recruiting, motivating and retaining executive talent and encourages alignment with shareholders by reinforcing investment and ownership in our Company by our executives.
50IFF | 2019 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
The table below sets forth each of the three types of equity awards offered and their adjustment factor. During 2015,2018, ECP participants, including all of our NEOs, made choices based on the differences among thedifferent equity award types described below.
|
| | | | |
| | Description of Equity Type |
PRSUs | | Adjustment
Factor
|
PRS | | PRSPRSUs are shares of restricted stock or restricted stock units which the Company grantsthat are granted as a match against shares of ourCompany stock purchased at full value by an ECP participant on the grant date. As an incentive to promote share accumulation and direct investment in our stock, there is a 20% adjustment upward of the award value if PRS isPRSUs are elected. If an ECP participant chooses PRS,PRSUs, then he or she must deliver funds (or shares with an equivalent value) equal to the dollar amount of the ECP award (including the 20% adjustment) that he or she is electing to receive in PRS.. Upon receipt of the funds by the Company, the ECP participant receives a matching number of PRS shares or RSUs from the Company.
During the restricted period, a PRS holder has the same rights as an ordinary shareholder including the right to vote and dividend rights (or dividend equivalents in the case of restricted stock units). Holders of restricted stock unitsPRSUs.PRSU holders have no voting rights during the vesting period. On the vesting date, which isperiod but accrue dividend equivalents on their PRSUs. PRSUs vest approximately three years from the date of grant, PRS shares become unrestricted. PRS sharesgrant. PRSUs are the most rapid way for participants to accumulate and build share ownership based on the participant’s direct investment in ourCompany stock. |
SSARs | | 120% |
SSARs | | SSARs are a contractual right to receive the value, in shares of Company stock, of the appreciation in our stock price from the SSAR grant date to the date the SSAR is exercised by the participant. As an approximation of binomial stock option valuation methods used under ASC Topic 718 (as used for financial reporting purposes), participantsParticipants receive a number of SSARs equivalent to 4.55 times (i.e. the approximate binomial value of the SSARs) the elected SSAR award value divided by the grant price. SSARs provide upside potential for share accumulation and greater alignment with shareholders because SSARS only have value if the stock price increases after the grant date. The adjustment factor for SSARs is 1.0.
SSARs become exercisable on a stated vesting date, which is approximately three years from the grant date, and expire on the seventh anniversary of the grant date. SSARs do not require a financial investment by the SSAR grantee. |
RSUs | | 100% |
RSUs | | RSUs are our promise to issue unrestricted shares of our stock on the stated vesting date, which is approximately three years from the grant date. The adjustment factor for RSUs is 1.0. RSUs do not require a financial investment by the RSU grantee. | | 100% |
As an example of howthe value that may be delivered by the ECP offersto the participant a range of outcomes,based on the three election types, the following table shows the different number of shares and valuesvalue to the participant at vesting for an ECP award of $500,000. For all three choices, vesting occurs approximately three years from the grant date:
| | | | | | | | | | | | |
Assumes a Common Share Value of $140.00 at Award (1) | |
| | | PRSU (2) | | | RSUs | | | SSARs (3) | |
| | | | |
| | | | |
| Award Value | | $ | 500,000 | | | $ | 500,000 | | | $ | 500,000 | |
| | | | |
| | | | |
| Adjustment Factor | | | 1.2 | | | | 1.0 | | | | 1.0 | |
| | | | |
| | | | |
| Post-Factor Value | | $ | 600,000 | | | $ | 500,000 | | | $ | 500,000 | |
| | | | |
| | | | |
| Participant Required Investment | | $ | 600,000 | | | | — | | | | — | |
| | | | |
| | | | |
| Award Shares/SSARs at Grant Date | | | 4,286 Shares | | | | 3,571 Shares | | | | 17,857 SSARs | |
| | | | |
| | | | |
| Dollar Value of Award at Vesting/Exercise (Assuming 8% Compounded Annual Stock Price Increase) | | $ | 755,827 | | | $ | 629,856 | | | $ | 649,280 | |
| | | | |
Dollar Value of Award at Vesting/Exercise (Assuming 8% Compounded Annual Stock Price Decrease) | | $ | 476,299 | | | $ | 396,916 | | | | — | |
IFF | 2019 PROXY STATEMENT 51
|
| | | | | | | | | | | | |
| Assumes a Common Share Value of $100.00 at Award(1) |
| | | PRS(2) | | RSUs | | SSARs(3) |
| Award Value | |
| $500,000 |
| |
| $500,000 |
| |
| $500,000 |
|
| Adjustment Factor | | 1.2 |
| | 1.0 |
| | 1.0 |
|
| Post-Factor Value | |
| $600,000 |
| |
| $500,000 |
| |
| $500,000 |
|
| Participant Required Investment | |
| $600,000 |
| | — |
| | — |
|
| Award Shares/SSARs At Grant Date | | 6,000 Shares |
| | 5,000 Shares |
| | 22,500 SSARs |
|
| Dollar Value of Award At Vesting/Exercise (Assuming 8% Compounded Annual Stock Price Increase) (2) | |
| $755,827 |
| |
| $629,856 |
| |
| $584,352 |
|
| Dollar Value of Award At Vesting/Exercise (Assuming 8% Compounded Annual Stock Price Decrease) | |
| $476,299 |
| |
| $396,916 |
| | — |
|
______
COMPENSATION DISCUSSION AND ANALYSIS
| |
| (1) | ShareDollar values and share value increase/decreaseof awards are used in this table are for illustrative purposes only and are not intended as forecasts of future stock price performance. All values shown are before tax withholding. |
| |
| (2) | PRS values at grant and vesting include the participant’s appreciation or loss on the required investment in addition to the value of the granted restricted stock. ThePRSU values exclude dividends.dividend equivalents. |
| |
| (3) | The examples above illustrate value delivered for each ECP grant form over the approximate three-year vesting period. However, SSARs are only taxable when the SSAR is exercised. Participants may choose to hold their SSARs longer than the three-year vesting period (up to the full seven-year contractual term) and continue to participate in future stock price appreciation, if any. |
20152018 Equity Choice Program Awards
The Committee annually determines the dollar range of ECP awards for each level of participating executive based on peer group and long-term incentive practices survey data, a review of the competitiveness of the combined value of the ECP awards and LTIP awards with market practices and other factors that it deems appropriate. For 2018, these ranges were as follows:
| | | | | | |
| | | Lower Limit | | | Upper Limit |
| | | |
CEO | | $ | 1,000,000 | | | $ 3,500,000 |
| | | |
| | | |
Divisional CEOs and CFO | | $ | 250,000 | | | $ 750,000 |
| | | |
General Counsel | | $ | 175,000 | | | $ 525,000 |
The Committee then approves the actual dollar award to be granted to each NEO other than the CEO, and recommends to the independent members of the Board for approval the actual dollar award for the CEO.
In January 2015,February 2018, the Committee approved the 20152018 ECP values awarded to each executive, including our NEOs, (other than our CFO), with an effective grant date of May 6, 2015.2, 2018. The period of time between approval of ECP values and the actual grant date gives ECP participants time to make their irrevocable ECP elections and to arrange for the purchase of PRSshares from the Company if soPRSUs are elected. The Committee determined that the 20152018 ECP grants would vest on April 6, 2018, which is slightly less than three years2, 2021 (35 months from the grant date, to enable participants to use vested PRS shares to acquire new PRS shares in 2018, to the extent granted.
For 2015, similardate).Similar to prior years, the actual amount of each ECP awarded to each NEO in 2018 was based on an evaluation of the NEO’s individual performance, long-term potential, and market factors includingand retention considerations. As part of her compensation package, Ms. Cornell received an ECP award of $500,000, prorated for her hire date, which will vest in 2018. The actual value of these awards will depend on future stock price performance.
The following table shows the ECP dollar award value approved by the Committee or Board for each NEO during 20152018 and the percentage and adjusted dollar value after application of the adjustment factor of each type of award elected by each NEO. None of the NEOs elected SSARs in 2015.
|
| | | | | | | | | | | | | | | | | |
| | 2015 Unadjusted ECP Award | | PRS Election | | RSU Election |
| | Percent Election | | Adjusted Value | | Percent Election | | Adjusted Value |
| Adjustment Factor | | | | | 120 | % | | | | 100 | % |
| Andreas Fibig |
| $2,000,000 |
| | 55 | % | |
| $1,320,000 |
| | 45 | % | |
| $900,000 |
|
| Alison A. Cornell (1) |
| $250,000 |
| | 100 | % | |
| $300,000 |
| | — |
| | — |
|
| Nicolas Mirzayantz |
| $700,000 |
| | 100 | % | |
| $840,000 |
| | — |
| | — |
|
| Matthias Haeni |
| $400,000 |
| | 100 | % | |
| $480,000 |
| | — |
| | — |
|
| Anne Chwat |
| $500,000 |
| | 100 | % | |
| $600,000 |
| | — |
| | — |
|
| Richard O’Leary |
| $250,000 |
| | 100 | % | |
| $300,000 |
| | — |
| | — |
|
______
| |
(1) | Represents prorated amount received by Ms. Cornell based on her hire date. |
| | | | | | | | | | | | |
| | | | | | PRSU Election | |
| | | 2018 Unadjusted
ECP Award | | | Percent Election | | | Adjusted
Value | |
| | | | |
| Adjustment Factor | | | | | | | | | | | 120% | |
| | | | |
| | | | |
| Andreas Fibig | | $ | 2,500,000 | | | | 100% | | | $ | 3,000,000 | |
| | | | |
| | | | |
| Richard O’Leary | | $ | 500,000 | | | | 100% | | | $ | 600,000 | |
| | | | |
| | | | |
| Nicolas Mirzayantz | | $ | 550,000 | | | | 100% | | | $ | 660,000 | |
| | | | |
| | | | |
| Matthias Haeni | | $ | 550,000 | | | | 100% | | | $ | 660,000 | |
| | | | |
Anne Chwat | | $ | 450,000 | | | | 100% | | | $ | 540,000 | |
The actual equity award grants to each NEO, based on the above elections, are identified in the Grants of Plan-Based Awards Table. Information on prior ECP awards that were exercised or vested in 20152018 can be found in the Options Exercised and Stock Vested Table.
52IFF | 2019 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
2018 Retention Award
In September 2018, the Committee granted Mr. Haeni a special retention award of 14,544 RSUs, with 9,454 RSUs vesting on December 31, 2019 and 5,090 RSUs vesting on December 31, 2020, subject to his continued employment as of such vesting dates.
Indirect Compensation
Deferred Compensation Plan
As part of our compensation program, we offer U.S.-based executives and other senior employees an opportunity to participate in our DCP. Pursuant to the terms of the DCP, we provide the same level of matching contributions to our executive officersexecutives that are available to other employees under our 401(k) savings plan. We also use the DCP to encourage executives to acquire deferred shares of our common stock that are economically equivalent to ownership of our common stock but on atax-deferred basis. We do this to encourage executives to be long-term owners of a significant equity stake in theour Company and to enhance the alignment between the interests of executives and those of our shareholders.
Our costs in offering the DCP consist of the time-value of money costs, the cost of the matching contribution that supplements the 401(k) savings plan, administrative costs and a 25% premium for cashamounts deferred into the IFF Stock Fund in an executive’s DCP accountaccount. The premium on amounts deferred into the IFF Stock Fund typically do not vest until approximately two years after the deferral is made, as the premium is contingent on the executive remaining employed by the Companyus (other than for retirement) for the full calendar year following the year when such deferral is made. If notional investments within the DCP increase in value, the amount of our payment obligation will increase. The time-value of money cost results from the delay in the time at which we can take tax deductions for compensation payable to a participating executive.
Additional information about the DCP and supplemental matching contributions and premiums on cash deferrals into the IFF Stock fund under the DCP made for NEOs may be found below under “2015 “2018Non-Qualified Deferred Compensation.”
Perquisite Program
Our NEO perquisites program offers non-monetary benefits that are competitive and consistent with the marketplace as determined through a market study conducted by our independent compensation consultant. Under the perquisites program, our NEOs are eligible to receive certain benefits including:
Company car or car allowance;
Annual physical exam;
Financial planning and tax preparation (up to approximately $10,000 per year);
Estate planning (up to $4,000 over a three-year period); and
Health club membership (up to $3,000 annually).
As part of the terms of his employment, Mr. Haeni is also entitled to certain transitional assistance associated with his tax, housing and retirement savings for a limited period with such benefits declining annually.
The Committee believes that the total value of our perquisites program is reasonable. Additional details concerning perquisites are included in the footnotes to the All Other Compensation Table.
Executive Severance Policy
The ESP provides severance and other benefits to executives, including NEOs, whose employment is terminated not forby the Company without cause or in the event of a termination by the executive for good reason in connection with a change in control of the Company and, in the case of the NEOs (other than Mr. O’Leary), for good reason not in connection with a change in control.certain circumstances. This policy helps us in competing with other companies in recruiting and retaining qualified executives. When recruiting an executive from another company, the executive in most cases will seek contract terms that provide compensation if his or her employment is terminated by us in cases in which the executive has not engaged in misconduct. The level of severance pay under the ESP is based on a tier system and each executive’s assigned tier is based on the executive’s grade level. All of our NEOs are in Tier I other than Mr. O’Leary, who is in Tier II. The specific severance pay by tier was developed with the assistance of our independent compensation consultant and determined by the Committee.I. We believe that the ESP provides a level of severance pay and benefits that is within a range of competitive practice ofwith our peer group companies.
A discussion of our ESP and the payments that each of our NEOs would have been eligible to receive had a covered termination occurred as of December 31, 20152018 is set forth below under “Potential Payments upon Termination andor Change in Control.”
Additional Benefits
Perquisite Program
Our NEO perquisite program offersnon-monetary benefits that are within the range of market practice as determined through a market study conducted by our independent compensation consultant. The Committee reviews our perquisite program on abi-annual basis with its independent compensation consultant. Based on its last review, the Committee determined that the total value of our perquisite
IFF | 2019 PROXY STATEMENT 53
COMPENSATION DISCUSSION AND ANALYSIS
program is within the range of market practice. Additional details concerning perquisites are included in the footnotes to the All Other Compensation Table.
Under the perquisite program, our NEOs participate in our health and welfare benefits that are generally available to all employees, including group medical insurance, group life insurance, and group long-term disability insurance. In addition, our NEOs are generally eligible to receive certain benefits including:
Financial planning and tax preparation (up to $10,000 per year);
Estate planning (up to $4,000 over a three-year period); and
Fitness dues or membership (up to $3,000 annually).
We may provide additional or modified perquisites to our NEOs in connection with their employment arrangements. In addition, Mr. Fibig is provided a Company driver, and an annual financial planning and tax preparation allowance of $25,000.
Supplemental Long-Term Disability
In addition to our group long-term disability (“LTD”) insurance, we also offer Supplemental LTD insurance to those U.S.-based employees, including our NEOs, who earn a base salary plus bonus in excess of the maximum base salary of $300,000 under our group plan. The Supplemental LTD insurance provides a maximum monthly benefit of $25,000. The Supplemental LTD insurance premium, like our basic group LTD policy, is fully paid by us and is taxable income to employees upon receipt of the benefit.
Executive Death Benefit Plan
Our Executive Death Benefit Plan provides participants, including each of the NEOs, (other than Mr. O’Leary), with apre-retirement death benefit equal to twice the participant’s annual base salary less $50,000 (the death benefit provided by our basic group term life insurance plan for employees and retirees). The plan also provides a death benefit post-retirement, orpre-retirement after attaining age 70, equal to the participant’s base salary for the year in which the participant retires or reaches the age of 70, assuming the participant was an executive officer, less $12,500 of group coverage for retired participants and less $50,000 for senior participants (those who have attained the age of 70 and remain employed with us).
54IFF | 2019 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Setting Process
Roles and Responsibilities
| | | | |
| | |
Compensation Committee | | | | The Committee is responsible for overseeing the determination, implementation and administration of executive compensation (including equity awards, benefits and perquisites). The Committee recommends CEO compensation to the independent directors of the Board for their approval and approves the compensation of all other NEOs. |
| | |
Compensation Consultant | | | | Frederic W. Cook & Co., Inc. (“FW Cook”) is engaged as the Committee’s independent compensation consultant. Since August 2015, FW Cook has worked with the Committee to provide it with analyses, advice, guidance and recommendations on executive compensation levels versus peers, market trends and incentive plan designs. FW Cook is engaged exclusively by the Committee on executive andnon-employee director compensation matters and does not have other consulting arrangements with us. The Committee considers the independence of FW Cook on an annual basis, and in 2018 it determined FW Cook was independent and that no conflicts of interest existed. |
| | |
Management | | | | Our CEO evaluates individual performance and, with input from the Committee’s independent compensation consultant, the CEO and CHRO evaluate the competitive pay positioning for senior management members that report directly to the CEO, including our NEOs, and make recommendations to the Committee concerning each such executive’s target compensation. Our CEO follows the same process with regard to the target compensation for our CHRO, without her input, and the Committee follows the same process with regard to the target compensation for our CEO, without his input. |
Shareholder Advisory Vote
As part of its compensation setting process, the Company).
Committee also considers the results of the prior year’s shareholder advisory vote on our executive compensation. The Committee believes these voting results provide useful insight as to whether shareholders agree that the Committee is achieving its goal of designing and administering an executive compensation program that promotes the best interests of our Company and our shareholders by providing its executives with appropriate compensation and meaningful incentives to deliver strong financial performance and increase shareholder value. As part of its 2018 compensation setting process, the Committee reviewed the results of the 2017 shareholder advisory vote, in which 93.1% of the votes cast were voted in favor of our executive compensation program.
Supplemental Long Term Disability
our NEOs. We
offeruse a global grading structure for our
U.S.-based employees Long Term Disability (“LTD”) coverageNEOs, with compensation ranges for each grade. Our NEOs are placed in a particular grade based on internal factors (including scope of responsibilities and job complexity) and anIFF | 2019 PROXY STATEMENT 55
COMPENSATION DISCUSSION AND ANALYSIS
external market evaluation. The external market evaluation is based on published third-party general survey information and a review of similar positions within our selected peer groups described below. This process is referred to as “market benchmarking.”
Market Benchmarking
The Committee reviews its external market benchmarking and peer group data annually. The Committee’s goals are to position (1) target total cash compensation at Company expense, whichmedian or slightly above and (2) target total direct compensation (salary, annual incentive compensation and long-term incentive compensation) between the median to 75th percentile of relevant market benchmarks. This philosophy reflects the Committee’s approach to setting stretch goals that require above median performance to generate target payouts. In July 2017, the Committee reviewed peer group data with our independent compensation consultant for purposes of determining the appropriate peer group for setting 2018 compensation levels and opportunities.
The Committee’s independent compensation consultant provides a benefit, calculatedthe 25th percentile, median and 75th percentile “market reference” data for each executive position based on the average of the three relevant compensation benchmarks, as a percentagefurther explained below. This data is used to analyze the external competitiveness of each NEO’s base salary, target total cash compensation and target total direct compensation. This analysis is reviewed with the Committee and, in the case of full disability. Underthe compensation of NEOs other than the CEO, with the CEO as well. In determining target total direct compensation for each executive in 2018, the Committee considered the consultant’s market reference analysis. In addition, the Committee considered a number of other important factors, including each executive’s:
individual experience and performance;
scope of responsibilities;
relative responsibilities compared with other senior Company executives;
contribution relative to overall Company performance;
compensation relative to his or her peers within the organization; and
The Committee uses the market reference range in order to establish a starting point for the compensation levels that the Committee believes would provide our group plan,NEOs with competitive compensation. However, the maximum base salary is $300,000,actual target total direct compensation approved by the Committee may be above or below the market reference range based on the Committee’s review of market compensation levels, its desire to create internal pay equity among our executives and the maximum monthly benefit is $15,000. We also offer Supplemental LTD insuranceindividual factors set forth above.
For 2018, the Committee awarded target total direct compensation to provide a maximum monthly benefit of $25,000 for U.S.-based employees, including our NEOs who earn a base salary plus bonus in excessthat was within the competitive range of the maximum base salarytargeted median to 75th percentile. The total actual compensation paid for the year, as compared to target compensation approved at the beginning of $300,000 underthe year, may differ depending on Company and individual performance. Consequently, the actual compensation received by an NEO may be higher or lower than his or her market reference range.
56IFF | 2019 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
For 2018 compensation decisions regarding our NEOs, the Committee benchmarked compensation of our NEOs (other than our General Counsel) against our Peer Group and a size appropriate cut of the 2017 Towers Watson General Industry Survey and the compensation of our General Counsel against a size appropriate cut of the 2017 Towers Watson General Industry Survey and a size appropriate cut of food, beverage and other consumer products companies included in the 2017 Towers Watson Industry Survey (the “Consumer Products / Food & Beverage Select Cut”). Information about these benchmarking groups is set forth below.
| | | | | | |
| | |
Selected Peer Group | | Selection Criteria | | Ø U.S. publicly traded companies of comparable size with manufacturing operations (generally based on revenue of 0.4x to 2.5x and market capitalization of 0.25x to 4x compared to our Company) Ø Strongin-house R&D activities Ø Global scope with significant international presence (international operations generally accounting for at least 25% of total revenues) Ø Growth orientation, with positive sales and earnings growth over the three years prior to the review and selection of the peer group Ø Companies that are included in the peer groups of at least 3 of the 16 companies that are within our current compensation peer group (“peers of current peers”) Ø Companies that include us in their compensation peer group |
| Component Companies | | Ø Church & Dwight Co, Inc. Ø The Clorox Company Ø Coty, Inc. Ø Dr Pepper Snapple Group, Inc. Ø Edgewell Personal Care Ø The Estée Lauder Companies Inc. Ø The Hain Celestial Group, Inc. Ø Herbalife Ltd. | | Ø The Hershey Company Ø McCormick & Company, Inc. Ø Mead Johnson Nutrition Company Ø Nu Skin Enterprises, Inc. Ø Revlon, Inc. Ø Sensient Technologies Corporation Ø Spectrum Brands Holdings, Inc. Ø Tupperware Brands Corporation |
| Position in Group | | Ø Between the 25th percentile and median for revenue and near the 50th percentile of market capitalization |
| | |
Size Appropriate Cut of the Towers
Watson General Industry Survey | | Selection Criteria | | Ø 33 to 168 companies (depending on the position) Ø Revenues interpolated to our 2017 trailing four-quarter revenue size: • $3.3 billion for corporate positions • $1.7 billion for Fragrances • $1.1 billion for Consumer Fragrances • $1.6 billion for Flavors |
| | |
Towers Watson Consumer Products / Food & Beverage
Select Cut | | Selection Criteria | | Ø 27 companies (including six companies that are also part of the 2018 selected peer group) Ø $1 billion to $7 billion in reported revenues, with median revenues of $4 billion |
IFF | 2019 PROXY STATEMENT 57
COMPENSATION DISCUSSION AND ANALYSIS
Changes to 2019 Selected Peer Group
In August 2018, the Committee reviewed with its independent compensation consultant the selected peer group plan. The Supplemental LTD insurance premium, like our basicfor purposes of the upcoming 2019 target compensation setting process. In light of the acquisition of Frutarom, the Committee wanted to ensure that companies in the selected peer group LTD policy, is fully paid byremained reasonable relative to the increased size of the Company and is taxable income to employees upon receiptfollowing the completion of the benefit.
Clawback Policy
The triggersacquisition, and that the selected peer group as a whole would continue to be representative of the market for
recoveryexecutive talent with reasonable overlap in key areas of
compensation under our compensation recoupment and clawback policies include accounting restatements, financial restatements and misstatements (without regard to fault), an employee’s willful misconduct or violationbusiness focus. As a result of
a Company policy that is materially detrimentalthis review, the Committee approved the following changes to the
peer group for purposes of the 2019 target compensation setting process: (i) each of Mead Johnson Nutrition Company,
Revlon, Inc., Sensient Technologies Corporation and
an employee's violationTupperware Brands Corporation were removed from the peer group; and (ii) each of
non-competition, non-solicitation, confidentialityAshland Global Holdings Inc., Celanese Corporation, Perrigo Company plc and
similar covenants. Post Holdings, Inc. were added to the peer group.Clawback Policy
All compensation under our 2010 Stock Award and Incentive Plan and our 2015 Stock Award and Incentive Plan, including AIP, LTIP, ECP and other cash and equity awards, is subject to clawback, as well as payments made under our ESP.ESP, are subject to clawback.
The triggers for recovery of compensation under our compensation recoupment and clawback policies include:
financial misstatements (without regard to fault);
an employee’s willful misconduct;
violation of a Company policy that is materially detrimental to our Company; or
an employee’s violation ofnon-competition,non-solicitation, confidentiality or similar covenants.
Tax Deductibility
We generally attemptPrior to structurethe effectiveness of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), Section 162(m) of the Internal Revenue Code (“Section 162(m)”) imposed an annual deduction limit of $1 million on the amount of compensation paid to each of the chief executive officer and certain other named executive officers. The deduction limit did not apply to performance-based compensation to be tax deductible. However,satisfying the requirements of Section 162(m). Effective in fiscal year 2018, the Tax Act eliminated the Section 162(m) provisions exempting performance-based compensation from the $1 million deduction limit. While the Committee also believes that under some circumstances, such as to attract or to retain key executives, to recognize outstanding performance orwill continue to take into account the externaltax and accounting implications (including with respect to the expected lack of deductibility under the revised Section 162(m)) when making compensation decisions, it reserves the right to make compensation decisions based on other factors if the Committee determines it is in its best interests to do so. Further, taking into account the elimination of the exemption for performance-based compensation under Section 162(m), the Committee may determine to make changes or amendments to its existing compensation programs in order to revise aspects of our programs that were initially designed to comply with Section 162(m) but that may no longer serve as an appropriate incentive measure for our executive officers.
58IFF | 2019 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
2019 Compensation Actions
In October 2018, the Company successfully completed its acquisition of Frutarom, with Frutarom now reporting as a third business environment, it may be importantsegment alongside Scent and Taste. In general, for 2019, the Company expects to continue to compensate oneFrutarom employees consistent with the past practice of Frutarom. The Committee reviewed with its independent compensation consultant the structure of our AIP in light of the acquisition of Frutarom and, as a result of this review, approved the expansion of AIP in fiscal year 2019 to include a business segment to reward performance at Frutarom. During 2019, the President, Frutarom will be an eligible participant in the AIP. However, at this time, we do not currently anticipate that Frutarom executives will participate in our existing LTIP or more key executives above tax deductible limits.
2016 Compensation Actions
In December 2015,ECP programs.The Committee, in consultation with management and FW Cook also evaluated the LTIP performance metrics for the 2019-2021 cycle in light of the Frutarom acquisition. While the Committee approved a changecontinues to our LTIP program effective withbelieve that EP is an important metric, in light of the 2016-2018 grant cycle. Going forward,Frutarom acquisition and the TSR component will be eliminated for each ofcompany-wide focus on deleveraging by 2021, the Committee decided to replace the three annual EP performance segments andwith a cumulative three-year performance metric of net debt to EBITDA ratio in addition to the cumulative, three-year Relative TSR will continue to be used as the sole measure of Company performance for the three-year cumulative performance segment. The three-year TSRsegment, which will continue to have a 62.5% overall weighting for each award consistent with prior years.
be weighted equally.Non-GAAP Reconciliation
This Compensation Discussion and AnalysisCD&A includes the followingnon-GAAP financial measures: local currency neutral sales, adjusted operating profit and adjusted earnings per share. Please seeExhibit A of this proxy statement for a reconciliation of such metrics.
COMPENSATION COMMITTEE REPORT
Compensation Committee ReportThe Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement. Based on those reviews and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement for filing with the Securities and Exchange Commission and incorporated by reference into the Company’sour Annual Report onForm 10-K for the fiscal year ended December 31, 2015.2018.
Compensation Committee
Roger W. Ferguson, Jr. (Chair)
Michael Ducker
Christina Gold
Katherine M. Hudson
Dale F. Morrison
IFF | 2019 PROXY STATEMENT 59
|
| |
| Compensation Committee |
| |
| Roger W. Ferguson, Jr. (Chair) |
| |
| Marcello V. Bottoli
Michael Ducker
Christina Gold
|
VIII. PROPOSAL III — ADVISORY VOTE ON EXECUTIVE COMPENSATION
Proposal 3 Advisory Vote on Executive CompensationProposal 3 - Advisory Vote on Executive Compensation
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (known as the “Dodd- Frank“Dodd-Frank Act”) requires us to provide our shareholders with the opportunity to approve, on a nonbinding, advisory basis, the compensation of our NEOs as disclosed in this proxy statement in accordance with the compensation disclosure rules of the SEC, often referred to as “Say on Pay.”
As discussed in detail in the Compensation Discussion and Analysis and the compensation tables and narratives that follow, the compensation program for our NEOs is designed (i) to attract, retain and motivate our executives who are critical to our success, (ii) to reward achievementThe core of both annual and long-term performance goals and (iii) to align the interests of our executives with those of our shareholders. Pursuant to our compensation program, an average of 76% of our NEOs’ 2015 target total direct compensation is considered “variable” and tied to our Company’s performance based on a number of financial goals and Company stock price performance and dividend return (TSR).
We believe that our executive compensation
program strikes the appropriate balance between utilizing responsible, measured pay practices and rewarding thephilosophy is that our executives’ compensation should be linked to achievement of financial and
operationaloperating performance metrics that build shareholder
value. This balance value over both the short- and long-term. We have designed our compensation program to focus on elements that we believe will contribute to these shareholder value drivers. As such, our compensation program:includes a significant equity component,
is evidenced by the following:variable and tied to multiple value-creating performance metrics,
Our AIP reflects each executive’s position, role, responsibility and experience, and
rewards the achievement ofindividual performance and contributions toward our annual performance objectives by providing awards based on the attainment of (1) four financial performance metrics: (i) local currency sales growth, (ii) operating profit, (iii) gross margin and (iv) working capital and (2) individual objectivesobjectives.
In 2018, 93.1% of the votes cast on oursay-on-pay proposal relating to leadership, succession, planning and people development.
Our LTIP rewards solid Company performance by providing awards based2017 executive compensation voted for the proposal. In deciding how to cast your vote on (i) EP and (ii) TSR performance relative tothis proposal, the S&P 500. In addition,Board requests that you consider the LTIP aligns our executives’ interests with those of our shareholders by paying 50%structure of the earned award in shares of our common stock.
Our ECP incentivizes our executives to create value for our shareholders by providing equity-based compensation and encouraging direct investment by our executives.
We require our NEOs to meet certain stock ownership guidelines under our Share Retention Policy to promote alignment of our executives’ interests with those of our shareholders and to discourage excessive risk taking for short-term gains.
For additional information on theCompany’s executive compensation program,
for our NEOs, including specific information about compensation in 2015, please see the informationwhich is more fully discussed in this proxy statement under the heading “Compensation Discussion and
Analysis,Analysis.”
along withThis vote isnon-binding; however, we value the compensation tables and narrative descriptions that follow.
We provideopinions of our shareholders
withand accordingly the
opportunity to cast the Say on Pay vote on an annual basis. In accordance with the Dodd-Frank Act, the Say on Pay vote will be an advisory vote regarding our Company’s NEO compensation program generallyBoard and
does not examine any particular compensation element individually. Because the Say on Pay vote is advisory, it is not binding on our Company, our Compensation Committee or our Board. However, the Compensation Committee
intends to reviewwill consider the
resultsoutcome of
thethis advisory vote
and will be cognizant ofin connection with future executive compensation decisions.For reasons set forth above, the feedback received from the voting results as it completes its annual review and engages inBoard recommends that you vote for the compensation planning process.
paid to the NEOs in 2018.Accordingly, we will ask our shareholders to vote on the following resolution at the 20162019 Annual Meeting:
“RESOLVED, that, the compensation paid to the Company’s NEOs in 2018, as disclosed in this proxy statement for our 20162019 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and related narrative disclosure, is hereby approved.”
|
Ö YOUR BOARD RECOMMENDS A VOTE “FOR” THE COMPENSATION PAID TO OUR NEOS IN 2018 |
60IFF | 2019 PROXY STATEMENT
The Board of Directors believes the compensation of our NEOs is appropriate and promotes the best interests of our shareholders and therefore recommends that shareholders vote FOR approval of this resolution.
IX. EXECUTIVE COMPENSATION
Executive Compensation
Summary Compensation Table
The following table sets forth the compensation for:
our current CFO and former interim CFO; and
our three other most highly compensated executive officers who were serving as executive officers as of December 31, 2015.2018.
We refer to the executive officers included in the Summary Compensation Table as our NEOs. A detailed description of the plans and programs under which our NEOs received the following compensation can be found in this proxy statement under the heading “Compensation Discussion and Analysis.”
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | Salary ($)(1) | | Bonus ($) | | Stock Awards ($)(2)(3) | | | Non-Equity Incentive Plan Compensation ($)(4)(5) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | | All Other Compensation ($)(7) | | Total ($) |
| Andreas Fibig | | 2015 | | 1,200,000 |
| | — |
| | 3,173,165 |
| | | 1,702,478 |
| | — |
| | 133,099 |
| | 6,208,742 |
|
| Chairman and CEO | | 2014 | | 400,000 |
| | 1,000,000 |
| | 2,244,414 |
| | | 760,534 |
| | — |
| | 134,027 |
| | 4,538,975 |
|
| | | | | | | | | | | | | | | | | | |
| Alison A. Cornell (8) | | 2015 | | 271,562 |
| | 250,000 |
| | 506,228 |
| | | 217,787 |
| | — |
| | 32,996 |
| | 1,278,573 |
|
| CFO | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Richard O’Leary (9) | | 2015 | | 445,311 |
| | — |
| | 541,687 |
| | | 200,542 |
| | — |
| | 78,053 |
| | 1,265,593 |
|
| Former Interim CFO | | 2014 | | 302,872 |
| | — |
| | 349,635 |
| | | 225,148 |
| | — |
| | 86,897 |
| | 964,552 |
|
| | | | | | | | | | | | | | | | | | |
| Nicolas Mirzayantz | | 2015 | | 585,000 |
| | — |
| | 1,088,973 |
| | | 506,351 |
| | — |
| | 169,083 |
| | 2,349,407 |
|
| Group President, Fragrances | | 2014 | | 532,500 |
| | — |
| | 2,998,513 |
| | | 762,039 |
| | 303,665 |
| | 163,172 |
| | 4,759,889 |
|
| 2013 | | 510,000 |
| | — |
| | 946,526 |
| | | 1,000,974 |
| | (96,591 | ) | | 122,110 |
| | 2,483,019 |
|
| | | | | | | | | | | | | | | | | | |
| Matthias Haeni | | 2015 | | 490,000 |
| | — |
| | 729,004 |
| | | 375,043 |
| | — |
| | 782,736 |
| | 2,376,783 |
|
| Group President, Flavors | | 2014 | | 445,653 |
| | — |
| | 624,912 |
| | | 407,888 |
| | — |
| | 485,920 |
| | 1,964,373 |
|
| | | | | | | | | | | | | | | | | | |
| Anne Chwat | | 2015 | | 465,000 |
| | — |
| | 738,915 |
| | | 308,330 |
| | — |
| | 155,487 |
| | 1,667,732 |
|
| General Counsel | | 2014 | | 465,000 |
| | — |
| | 708,594 |
| | | 419,022 |
| | — |
| | 562,425 |
| | 2,155,041 |
|
| | | 2013 | | 461,250 |
| | — |
| | 650,471 |
| | | 606,067 |
| | — |
| | 144,650 |
| | 1,862,438 |
|
_______________________
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | | Salary
($)(1) | | | Stock
Awards
($)(2)(3) | | | Non-Equity
Incentive Plan
Compensation
($)(4) | | | Change in Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(5) | | | All Other
Compensation
($)(6) | | | | | | Total ($) | |
| | | | | | | | | |
Andreas Fibig | | | 2018 | | | | 1,300,000 | | | | 4,095,961 | | | | 2,634,583 | | | | — | | | | 491,396 | | | | | | | | 8,521,940 | |
| | | | | | | | | |
| | | | | | | | | |
Chairman and CEO | | | 2017 | | | | 1,300,000 | | | | 3,042,803 | | | | 2,916,010 | | | | — | | | | 488,636 | | | | | | | | 7,747,449 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | 2016 | | | | 1,275,000 | | | | 2,963,837 | | | | 1,670,801 | | | | — | | | | 300,595 | | | | | | | | 6,210,233 | |
| | | | | | | | | |
| | | | | | | | | | | | | | �� | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Richard O’Leary | | | 2018 | | | | 511,250 | | | | 819,108 | | | | 589,329 | | | | — | | | | 144,333 | | | | | | | | 2,064,020 | |
| | | | | | | | | |
CFO | | | 2017 | | | | 500,000 | | | | 680,887 | | | | 584,579 | | | | — | | | | 130,331 | | | | | | | | 1,895,797 | |
| | | | | | | | | |
| | | | 2016 | | | | 422,131 | | | | 1,346,578 | | | | 227,620 | | | | — | | | | 112,537 | | | | | | | | 2,108,866 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Nicolas Mirzayantz | | | 2018 | | | | 609,000 | | | | 879,071 | | | | 574,667 | | | | (118,955) | | | | 144,745 | | | | | | | | 2,088,528 | |
| | | | | | | | | |
| | | | | | | | | |
Divisional Chief Executive Officer, Scent | | | 2017 | | | | 600,000 | | | | 907,888 | | | | 741,723 | | | | 195,808 | | | | 126,646 | | | | | | | | 2,572,065 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | 2016 | | | | 600,000 | | | | 1,010,428 | | | | 452,834 | | | | 43,291 | | | | 153,913 | | | | | | | | 2,260,466 | |
| | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Matthias Haeni (7) | | | 2018 | | | | 577,217 | | | | 2,826,550 | (8) | | | 776,943 | | | | — | | | | 104,680 | | | | | | | | 4,285,390 | |
| | | | | | | | | |
Divisional Chief Executive Officer, Taste | | | 2017 | | | | 543,750 | | | | 699,793 | | | | 855,316 | | | | — | | | | 1,057,801 | | | | | | | | 3,156,660 | |
| | | | | | | | | |
| | | | 2016 | | | | 518,750 | | | | 830,353 | | | | 492,074 | | | | — | | | | 1,537,189 | | | | | | | | 3,378,366 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Anne Chwat | | | 2018 | | | | 482,500 | | | | 667,520 | | | | 437,523 | | | | — | | | | 174,805 | | | | | | | | 1,762,347 | |
| | | | | | | | | |
| | | | | | | | | |
General Counsel | | | 2017 | | | | 475,000 | | | | 668,346 | | | | 481,731 | | | | — | | | | 175,383 | | | | | | | | 1,800,460 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | 2016 | | | | 472,500 | | | | 761,326 | | | | 293,960 | | | | — | | | | 183,826 | | | | | | | | 1,711,612 | |
| | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| (1) | The 20152018 amounts in this column include (i) the following amounts deferred under the DCP: Ms. Cornell -- $81,667;Mr. Fibig — $650,000; Mr. O’Leary — $61,350; Mr. Mirzayantz - $58,500;— $60,900 and Ms. Chwat - $139,500,— $120,625, and (ii) the following amounts deferred under the Retirement Investment Fund Plan (401(k)): Mr. Fibig - $24,000; Ms. Cornell - $3,000;— $24,500; Mr. O’Leary - $22,839;— $18,878; Mr. Mirzayantz - $24,000;— $18,500 and Ms. Chwat - $24,000.— $18,500. |
| |
| (2) | The amounts in the Stock Awards and Option Awards columnscolumn represent the aggregate grant date fair value of all equity awards granted during each respective fiscal year, including 50% portion of 2018-2020 LTIP cycle awards that will be payable in our common stock if the performance conditions are satisfied. The grant date fair value is calculated in accordance with FASB ASC Topic 718. Details on and assumptions used in calculating the grant date fair value of RSUs, PRS, SSARs, optionsPRSUs and LTIP equity incentive compensation may be found in Note 1214 to our audited financial statements for the fiscal year ended December 31, 201528, 2018 included in our Annual Report on Form10-K for the fiscal year ended December 31, 2015.28, 2018. The grant date fair value attributable to the 2015-20172018-2020 LTIP cycle awards included in the Stock Awards column pertains to the 50% portion of those awards that will be payable in our common stock if the performance conditions are satisfied and is |
IFF | 2019 PROXY STATEMENT 61
EXECUTIVE COMPENSATION
| based on the probable outcome of suchthe performance conditions. The value of these awards at the grant date if the maximum level of performance conditions were to be achieved is as follows: Mr. Fibig - $2,035,200; Ms. Cornell -- $421,541;— $2,192,000; Mr. O’Leary - $198,835;— $438,400; Mr. Mirzayantz - $508,800;— $438,400; Mr. Haeni - $508,800;— $438,400; and Ms. Chwat - $283,910.— $255,149. The actual number of shares earned byand credited for the NEOs for the completed 2013-2015 LTIP cycle, for the 2015 segment of the 2014-20162016-2018 LTIP cycle and for the 20152018 segment of each of the 2015-20172017-2019 LTIP cycle and 2018-2020 LTIP cycle can be found in the narrative following the Grants of Plan-Based Awards Table under the heading “Long-Term Incentive Plan.” |
| |
| (3) | The grant date fair value attributable to PRS awardsPRSUs included in the Stock Awards column pertains to the value of the matching portion of the award. Not reflected in this column is the value of shares delivered or cash paid by NEOs to purchase shares in fiscal year 20152018 for the participant’s portion of the PRSPRSUs award. As discussed in the Compensation Discussion and Analysis, participants in our ECP are permitted to satisfy the purchase price of PRS sharesPRSUs by tendering shares of our common stock or paying cash. The following NEOs purchased or tendered the number of shares indicated in fiscal year 2015,2018, in each case at a price per share equal to the closing stock price on the date of grant: Mr. Fibig - $1,319,886— $2,999,961 for 11,176 shares; Ms. Cornell - $299,894 for 2,60821,413 shares; Mr. O’Leary - $299,974— $599,908 for 2,5404,282 shares; Mr. Mirzayantz - $839,927— $659,871 for 7,1124,710 shares; Mr. Haeni - $479,958— $659,871 for 4,064 shares;4,710 shares and Ms. Chwat - $599,948— $539,945 for 5,0803,854 shares. |
| |
| (4) | The 20152018 amounts in this column include the following(1) amounts earned under the 2015 AIP: Mr. Fibig - $607,680; Ms. Cornell - $91,679; Mr. O’Leary - $93,094; Mr. Mirzayantz - $194,320; Mr. Haeni - $192,800;2018 AIP and Ms. Chwat - $117,738. |
| |
(5) | LTIP cycles have four performance segments related to each year in(2) the three-year LTIP cycle and the cumulative results for the full three-year cycle. Any amounts earned under a performance segment are credited on behalf of the executive at the end of the relevant segment, but such credited amounts are not paid until the completion of the three-year LTIP cycle. Upon completion, one-half of any award earned for a completed LTIP cycle is paid in cash and the remaining half is paid in shares of our common stock. Theaggregate cash portion of the NEOs’LTIP awards earned and credited awards is reported in this column for the year in which such amount was2018 segment of the 2017-2019, 2018-2020 and 2016-2018 LTIP cycles and for the cumulative segment under the 2016-2018 LTIP cycle. Amounts earned rather than inunder the year in which such award is actually paid. The amounts in this column related to 2015 include the2018 AIP were as follows: Mr. Fibig—$1,586,520; Mr. O’Leary—$419,004; Mr. Mirzayantz — $327,542; Mr. Haeni—$529,818 and Ms. Chwat — $295,947. Aggregate amounts earned and credited for the 2015 segment of the 2014-2016 and 2015-2017 LTIP cycles and the following amounts earned for the 2015 and cumulative segments2018 under the completed 2013-2015 LTIP cycle:were as follows: Mr. Fibig - $509,798; Ms. Cornell - $55,192;Fibig—$1,048,036; Mr. O’Leary - $56,876;O’Leary—$170,325; Mr. Mirzayantz - $175,781;— $247,125; Mr. Haeni - $65,992; and— $247,125; Ms. Chwat - $108,984.— $141,576, please see the discussion under “Long-Term Incentive Plan” below. |
| (5) | |
(6) | The amounts in this column represent the aggregate change in the actuarial present value of the NEO’s accumulated benefit under our U.S. Pension Plan (our qualified defined benefit plan) and our Supplemental Retirement Plan (ournon-qualified defined benefit plan). Earnings in the interest bearing account in the DCP were not above-market, and earnings in other investment choices under the DCP were not preferential, and therefore are not included. |
| (6) | |
(7) | Details of the 20152018 amounts set forth in this column are included in the All Other Compensation Table. |
| (7) | All amounts for Mr. Haeni have been converted from Euros to USD, based on an exchange rate of 1.1353 US Dollars to Euros (the exchange rate as of December 28, 2018). |
| (8) | Ms. Cornell was appointed CFO effective July 8, 2015. The amounts in the Salary and Non-Equity Incentive Plan Compensation columns represent prorated amounts based on her partial year of service. The amount in the Bonus column represents the cash bonus paid to Ms. Cornell in connection with her hiring, as further described above in "Compensation Discussion and Analysis - Compensation Setting Process - New Executive Officer Compensation."Includes 2018 RSU retention awards. |
| |
(9) | The amount in the Salary column includes $50,055 of deferred salary that was received three months following the appointment of our new CFO. |
Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K, we are providing the following information about the relationship of the median annual total compensation of our employees and the annual total compensation of our CEO, Andreas Fibig.
As of December 28, 2018, our employee population consisted of approximately 7,647 individuals working at our parent company and consolidated subsidiaries, of which approximately 1,825 are located in the United States and 5,822 are located outside the United States. In accordance with a permitted exemption under the pay ratio rules, our employee population did not include approximately 5,570 individuals who became employees after October 4, 2018, as a result of our acquisition of Frutarom. We selected
62IFF | 2019 PROXY STATEMENT
EXECUTIVE COMPENSATION
December 28, 2018, the last day of our fiscal year, as the determination date for identifying the median employee.
We previously identified our median employee as of December 29, 2017 (the last day of the 2017 fiscal year), by calculating the amount of annual target total cash compensation (salary plus target annual incentive compensation) paid to all of our employees (other than the CEO) based on the compensation information maintained in a centralized database. Since we do not widely distribute annual equity-based awards to our employees, the value of such awards was excluded from the compensation calculation used to determine the median employee. We did not make anycost-of-living or other adjustments in identifying the median employee.
Based on this methodology, the median employee was a full-time, salaried employee in the Netherlands. As of December 28, 2018, this employee was employed in the same capacity, without any substantial salary increase, as December 29, 2017. Given our permitted exclusion of Frutarom employees, we believe there were no significant changes in our employee population and, accordingly, we reasonably believe that there have been no changes that would significantly affect our pay ratio disclosure. Therefore, to determine our pay ratio for 2018, we used the same median employee identified in 2017.
We calculated the 2018 total annual compensation of such employee in accordance with the requirements of the executive compensation rules for the Summary Compensation Table (Item 402(c)(2)(x) of ContentsRegulationS-K). Under this calculation, the median employee’s annual total compensation was $60,167 based on a Euro to US Dollar exchange rate of $1.1353 (the exchange rate as of December 28, 2018).
Utilizing the same executive compensation rules, and consistent with the amount reported in the “Total” Column of our 2018 Summary Compensation Table above for the CEO, the annual total compensation of our CEO was $8,521,940. The resulting ratio of the annual total compensation of the CEO to the annual total compensation of the median employee was 142 to 1.
20152018 All Other Compensation
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Dividends on Stock Awards ($)(1) | | Company Contributions to Savings and Defined Contribution Plans($)(2) | | Auto ($)(3) | | Financial/ Estate Planning, Tax Preparation and Legal Services($) | | Executive Death Benefit Program ($)(4) | | Matching Charitable Contributions($) | | Relocation Expenses ($(5) | | Tax Equalization / Assistance ($)(6) | | Other ($)(7) | | Total ($) |
| Andreas Fibig | 17,502 |
| | 18,550 |
| | 61,472 |
| | 15,222 |
| | 9,105 |
| | — |
| | 1,800 |
| | 120 |
| | 8,237 |
| | 133,098 |
|
| Alison A. Cornell | 1,460 |
| | 3,000 |
| | 15,698 |
| | 5,450 |
| | 2,738 |
| | — |
| | — |
| | — |
| | 4,650 |
| | 32,996 |
|
| Richard O’Leary | 21,628 |
| | 18,550 |
| | 11,803 |
| | 7,500 |
| | 11,681 |
| | 2,500 |
| | — |
| | — |
| | 4,391 |
| | 78,053 |
|
| Nicolas Mirzayantz | 60,025 |
| | 55,751 |
| | 16,010 |
| | 10,055 |
| | 12,455 |
| | 3,500 |
| | — |
| | — |
| | 11,287 |
| | 169,083 |
|
| Matthias Haeni | 19,812 |
| | 90,305(8) |
| | 6,746 |
| | — |
| | 3,900 |
| | — |
| | 145,458(8) |
| | 507,559(8) |
| | 8,957 |
| | 782,736 |
|
| Anne Chwat | 42,156 |
| | 59,527 |
| | 15,462 |
| | 9,836 |
| | 11,290 |
| | 10,000 |
| | — |
| | — |
| | 7,216 |
| | 155,487 |
|
______________________
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Dividends
on Stock
Awards
($)(1) | | | Company
Contributions
to Savings
and Defined
Contribution
Plans
($)(2) | | | Auto
($)(3) | | | Financial/
Estate
Planning,
Tax
Preparation
and Legal
Services ($) | | | Executive
Death
Benefit
Program
($)(4) | | | Matching
Charitable
Contributions
($) | | | Other
($)(5) | | | Total
($) | |
Andreas Fibig | | | 86,855 | | | | 307,531 | | | | 49,907 | | | | 6,459 | | | | 31,705 | | | | | | | | 8,939 | | | | 491,396 | |
Richard O’Leary | | | 26,976 | | | | 68,903 | | | | 14,184 | | | | 7,500 | | | | 18,064 | | | | 450 | | | | 8,256 | | | | 144,333 | |
Nicolas Mirzayantz | | | 49,252 | | | | 53,122 | | | | 12,033 | | | | 600 | | | | 15,201 | | | | | | | | 14,537 | | | | 144,745 | |
Matthias Haeni (6) | | | 27,151 | | | | 44,446 | | | | 11,428 | | | | | | | | 18,498 | | | | | | | | 3,158 | | | | 104,680 | |
Anne Chwat | | | 38,699 | | | | 75,522 | | | | 13,500 | | | | 10,000 | | | | 14,050 | | | | 10,000 | | | | 13,033 | | | | 174,805 | |
| |
| (1) | The amounts in this column represent dividendsdividend equivalents paid during 20152018 on shares of PRS.PRSUs. |
| |
| (2) | The amounts in this column represent: (i) matching amounts paid under our Retirement Investment Fund Plan (401(k)); (ii) amounts matched or set aside by our Company under our DCP (which are matching contributions that would otherwise be made under our 401(k) plan but for limitations under U.S. tax law); (iii) the dollar value of premium shares credited to the accounts of participants in the DCP who elect to defer their cash compensation into the IFF Stock Fund; and (iv) for Mr. Haeni, $35,663$44,446 contributed to his European retirement plan in lieu of participation in the Company'sCompany’s savings plans and an additional savings allowance of $54,642.plans. The premium shares may be forfeited if the executive does not remain employed by our Company for the full calendar year following the year during which such shares are credited. Dividend equivalents are credited on shares (including premium shares) held in accounts of participants who defer into the IFF Stock Fund. Dividend equivalents are included in the Aggregate Earnings in Last Fiscal Year column of theNon-Qualified Deferred Compensation Table and are not included in the amounts represented in this column. |
IFF | 2019 PROXY STATEMENT 63
EXECUTIVE COMPENSATION
| |
| (3) | The amounts in this column represent the personal use of automobiles provided by our Company. The value of such use was determined by using standard IRS vehicle value tables and multiplying that value by the percent of personal use. The value of fuel was determined by multiplying the overall fuel cost by the percent of personal use. In both cases personal use percentages were determined on a mileage basis. The amounts in this column also include the cost paid by us for a parking garage and for use of our Company driver. |
| |
| (4) | The amounts in this column represent costs for the corporate-owned life insurance coverage we have purchased to offset liabilities that may be incurred under our Executive Death Benefit Program. No participant in this program has or will have any direct interest in the cash surrender value of the underlying insurance policy. |
| |
| (5) | The amounts in this column represent, (i) for Mr. Fibig, expenses paid in connection with his relocation and (ii) for Mr. Haeni, $1,458each of relocation expenses and an additional $144,000 of living allowance. |
| |
(6) | The amounts in this column represent (i) for Mr. Fibig, the tax gross up o $1,210 on his relocation expenses, and (ii) for Mr. Haeni, a tax gross up of $1,220 on his relocation expenses, a tax equalization payment of $96,623, and a tax gross up of $409,716 on the tax equalization payment. |
| |
(7) | The amounts in this column representour executives (i) health club membership, (ii) annual physical examination and (iii) amounts paid under our Supplemental Long-Term Disability Plan. |
| |
(8) | In connection with his relocation to the United States, we agreed to providePlan and for Mr. Haeni, an alternate savings program and certain transitional assistancerelocation expenses of $1,500. |
| (6) | All amounts for the four years following his relocation. In lieu of his participation in our 401(k) plan and DCP, the Company will provide Mr. Haeni have been converted from Euros to USD, based on an annual savings allowance equalexchange rate of 1.1353 US Dollars to 11%Euros (the exchange rate as of his annual base salary as an employer contribution to the Swiss pension plan of his choosing. In addition, the Company will provide (i) a monthly living allowance during 2015 of $12,000, decreasing by $3,000 annually for each subsequent year through 2017, (ii) tax equalization payments (which will be subject to gross-up) during 2015 equal to 75% of the difference in income taxation between Singapore and New York City, decreasing by 25% for each subsequent year through 2017, and (iii) an additional savings allowance during 2015 equal to 75% of the difference between the annual savings allowance and his previous pension payments, decreasing by 25% for each subsequent year through 2017.December 28, 2018). |
Employment Agreements or Arrangements
Pursuant to the terms of a letter agreement dated May 26, 2014 between our Company and Mr. Fibig, he became our CEO effective September 1, 2014 and Chairman of the Board as of December 1, 2014.
Under this agreement, Mr. Fibig’s employment is on anat-will basis until terminated by either party. Mr. Fibig is entitled to the following compensation under the agreement:
Minimum annual base salary of $1,300,000 in 2016;
A target AIP bonus of 120% of his base salary and a potential maximum annual bonus of 240% of his base salary;
An LTIP target of $2,000,000 and a maximum of up to 200% of the LTIP target; and
Participation in the ECP program.
Mr. Fibig’s salary is reviewed by the Board periodically and may be increased, but not decreased. The letter agreement provides fornon-competition,non-solicitation,non-disclosure, cooperation andnon-disparagement covenants.
Mr. Fibig’s letter agreement grants him certain rights upon termination of his employment. These rights are described in this proxy statement under the heading “Termination of Employment and Change in Control Arrangements -— Other Separation Arrangements.”
The compensation of our other NEOs is approved by the Compensation Committee and is generally determined by the terms of the various compensation plans in which they are participants and which are described in this proxy statement more fully above in the Compensation Discussion and Analysis, in the narrative following the Grants of Plan-Based Awards Table and under the heading “Termination of Employment and Change in Control Arrangements.” In addition, their salary is reviewed, determined and approved on an annual basis by our Compensation Committee. Executives also may be entitled to certain compensation arrangements provided or negotiated in connection with their commencement of employment with our Company.Company, or as required by local law.
64IFF | 2019 PROXY STATEMENT
EXECUTIVE COMPENSATION
2018 Grants ofPlan-Based Awards
The following table provides information regarding grants of plan-based awards to our NEOs during 2015.2018. The amounts reported in the table under “Estimated Future Payouts underNon-Equity Incentive Plan Awards” and “Estimated Future Payouts under Equity Incentive Plan Awards” represent the threshold, target and maximum awards under our AIP and LTIP programs. The
For a further understanding of the performance conditions applicable to the AIP and LTIP are described in the Compensation Discussion and Analysis.
With regard to the AIP,awards, the percentage of each NEO’s target award that was actually achieved for 20152018 based on satisfaction of such conditions, and the amount earned by each NEO under the 2018 AIP performance conditions is discussedand the 2016-2018 LTIP, 2017-2019 LTIP and 2018-2020 LTIP cycles, please review the discussion under “Annual Incentive Plan” in the Compensation Discussion and Analysis. The amount actually paid to each NEO in 2016 based on 2015 performance under the AIP is included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.
With regard to the LTIP, the amounts of each NEO’s award that were actually achieved for 2013-2015 based on satisfaction of the performance conditions for the 2013-2015 LTIPAnalysis above and the 2015 segment of each of the 2014-2016 LTIP and 2015-2017 LTIP cycles are set forth following the Grants of Plan-Based Awards Table. In addition, cash amounts earned by each NEO for the cumulative and 2015 segment of the 2013-2015 LTIP cycle and the 2015 segments of the 2014-2016 LTIP and 2015-2017 LTIP cycles are also included in the Non-Equitydiscussion under “Long-Term Incentive Plan Compensation column of the Summary Compensation Table. However, any cash or shares credited to a NEO based on achievement of performance conditions during a segment will not be paid until completion of the full LTIP cycle and could be forfeited if a NEO leaves the Company prior to the payment date.
2015 Grants of Plan-Based Awards
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Type of Award (1) | | Grant Date (2) | | Date of Compensation Committee Approval | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (3) | | Estimated Future Payouts Under Equity Incentive Plan Awards (4) | | All Other Stock Awards: Number of Shares of Stock or Units (#)(5) | | Grant Date Fair Value of Stock Awards ($)(6) |
| | | | | | | | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold ($) | | Target ($) | | Maximum ($) | | | | |
| Andreas Fibig | | AIP | | 2/9/2015 | | 2/9/2015 | | 360,000 | | 1,440,000 |
| | 2,880,000 |
| | | | | | | | | | |
| | | 2015 LTIP | | 2/9/2015 | | 2/9/2015 | | 250,000 | | 1,000,000 |
| | 2,000,000 |
| | 250,000 |
| | 1,000,000 |
| | 2,000,000 |
| | | | 996,182 |
|
| | | PRS | | 5/6/2015 | | 2/9/2015 | | | | | | | | | | | | | | 11,176 |
| | 1,319,886 |
|
| | | RSU | | 5/6/2015 | | 2/9/2015 | | | | | | | | | | | | | | 7,620 |
| | 857,098 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Alison A. Cornell | | AIP | | 7/8/2015 | | 5/19/2015 | | 54,312 | | 217,249 |
| | 434,498 |
| | | | | | | | | | |
| | | 2015 LTIP | | 7/8/2015 | | 5/19/2015 | | 51,781 | | 207,125 |
| | 414,250 |
| | 51,781 |
| | 207,125 |
| | 414,250 |
| | | | 206,334 |
|
| | | PRSU | | 8/17/2015 | | 5/19/2015 | | | | | | | | | | | | | | 2,608 |
| | 299,894 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Richard O’Leary | | AIP | | 2/9/2015 | | 2/9/2015 | | 55,151 | | 220,603 |
| | 441,205 |
| | | | | | | | | | |
| | | 2015 LTIP | | 2/9/2015 | | 2/9/2015 | | 24,425 | | 97,698 |
| | 195,396 |
| | 24,425 |
| | 97,698 |
| | 195,396 |
| | | | 97,325 |
|
| | | RSU | | 1/2/2015 | | 11/20/2014 | | | | | | | | | | | | | | 1,487(7) |
| | 144,388 |
|
| | | PRS | | 5/6/2015 | | 2/9/2015 | | | | | | | | | | | | | | 2,540 |
| | 299,974 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Nicolas Mirzayantz | | AIP | | 2/9/2015 | | 2/9/2015 | | 120,000 | | 480,000 |
| | 960,000 |
| | | | | | | | | | |
| | | 2015 LTIP | | 2/9/2015 | | 2/9/2015 | | 62,500 | | 250,000 |
| | 500,000 |
| | 62,500 |
| | 250,000 |
| | 500,000 |
| | | | 249,046 |
|
| | | PRS | | 5/6/2015 | | 2/9/2015 | | | | | | | | | | | | | | 7,112 |
| | 839,927 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Matthias Haeni | | AIP | | 2/9/2015 | | 2/9/2015 | | 100,000 | | 400,000 |
| | 800,000 |
| | | | | | | | | | |
| | | 2015 LTIP | | 2/9/2015 | | 2/9/2015 | | 62,500 | | 250,000 |
| | 500,000 |
| | 62,500 |
| | 250,000 |
| | 500,000 |
| | | | 249,046 |
|
| | | PRS | | 5/6/2015 | | 2/9/2015 | | | | | | | | | | | | | | 4,064 |
| | 479,958 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Anne Chwat | | AIP | | 2/9/2015 | | 2/9/2015 | | 69,750 | | 279,000 |
| | 558,000 |
| | | | | | | | | | |
| | | 2015 LTIP | | 2/9/2015 | | 2/9/2015 | | 34,875 | | 139,500 |
| | 279,000 |
| | 34,875 |
| | 139,500 |
| | 279,000 |
| | | | 138,967 |
|
| | | PRS | | 5/6/2015 | | 2/9/2015 | | | | | | | | | | | | | | 5,080 |
| | 599,948 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Type of
Award (1) | | Grant
Date (2) | | | Date of
Compensation
Committee /
Board
Approval | | | Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (3) | | | Estimated Future Payouts Under
Equity Incentive Plan Awards (4) | | | All Other
Stock
Awards:
Number
of Shares
of Stock
or Units (#) (5) | | | Grant Date
Fair Value
of Stock
Awards ($) (6) | |
| | | | | | | | | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | | | | | |
Andreas Fibig | | AIP | | | 2/6/2018 | | | | 2/6/2018 | | | | 390,000 | | | | 1,560,000 | | | | 3,120,000 | | | | | | | | | | | | | | | | | | | | | |
| | 2018 LTIP | | | 2/6/2018 | | | | 2/6/2018 | | | | 312,500 | | | | 1,250,000 | | | | 2,500,000 | | | | 312,500 | | | | 1,250,000 | | | | 2,500,000 | | | | | | | | 1,096,000 | |
| | | PRSU | | | 5/2/2018 | | | | 2/6/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 21,413 | | | | 2,999,961 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Richard O’Leary | | AIP | | | 2/6/2018 | | | | 2/6/2018 | | | | 103,000 | | | | 412,000 | | | | 824,000 | | | | | | | | | | | | | | | | | | | | | |
| | 2018 LTIP | | | 2/6/2018 | | | | 2/6/2018 | | | | 62,500 | | | | 250,000 | | | | 500,000 | | | | 62,500 | | | | 250,000 | | | | 500,000 | | | | | | | | 219,200 | |
| | | PRSU | | | 5/2/2018 | | | | 2/6/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,282 | | | | 599,908 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nicolas Mirzayantz | | AIP | | | 2/6/2018 | | | | 2/6/2018 | | | | 122,400 | | | | 489,600 | | | | 979,200 | | | | | | | | | | | | | | | | | | | | | |
| | 2018 LTIP | | | 2/6/2018 | | | | 2/6/2018 | | | | 62,500 | | | | 250,000 | | | | 500,000 | | | | 62,500 | | | | 250,000 | | | | 500,000 | | | | | | | | 219,200 | |
| | | PRSU | | | 5/2/2018 | | | | 2/6/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,710 | | | | 659,871 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Matthias Haeni | | AIP | | | 2/6/2018 | | | | 2/6/2018 | | | | 116,290 | | | | 465,161 | | | | 930,322 | | | | | | | | | | | | | | | | | | | | | |
| | 2018 LTIP | | | 2/6/2018 | | | | 2/6/2018 | | | | 62,500 | | | | 250,000 | | | | 500,000 | | | | 62,500 | | | | 250,000 | | | | 500,000 | | | | | | | | 219,200 | |
| | | PRSU | | | 5/2/2018 | | | | 2/6/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,710 | | | | 659,871 | |
| | | 2018 RSU
Retention (7) | | | 9/19/2018 | | | | 9/16/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,454 | | | | 1,274,683 | |
| | | 2018 RSU
Retention (7) | | | 9/19/2018 | | | | 9/16/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,090 | | | | 672,796 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Anne Chwat | | AIP | | | 2/6/2018 | | | | 2/6/2018 | | | | 72,750 | | | | 291,000 | | | | 582,000 | | | | | | | | | | | | | | | | | | | | | |
| | 2018 LTIP | | | 2/6/2018 | | | | 2/6/2018 | | | | 36,375 | | | | 145,500 | | | | 291,000 | | | | 36,375 | | | | 145,500 | | | | 291,000 | | | | | | | | 127,574 | |
| | | PRSU | | | 5/2/2018 | | | | 2/6/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,854 | | | | 539,945 | |
| | | | | | | | | | | | |
20152018 LTIP = 2015-20172018-2020 Long-Term Incentive Plan Cycle
RSU = Restricted Stock Unit
PRS = Purchased Restricted Stock
PRSU = Purchased Restricted Stock Unit
RSU = Restricted Stock Unit
| |
| (2) | All equity, AIP and LTIP grants were made under our 2015 SAIP. The material terms of these types of awards are described in this proxy statement under the heading “Compensation Discussion and Analysis.” |
| |
| (3) | AIP amounts in this column are the threshold, target and maximum dollar values under our 20152018 AIP. 20152018 LTIP amounts in this column are the threshold, target and maximum dollar values of the 50% portion of our 2015-20172018-2020 LTIP cycle that would be payable in cash if the performance conditions are satisfied. |
| |
| (4) | 20152018 LTIP amounts in this column are the threshold, target and maximum dollar values of the 50% portion of our 2015-20172018-2020 LTIP cycle that would be payable in stock if the performance conditions are satisfied. The number of shares of our common stock for the 50% portion payable in stock was determined at the beginning of the 20152018 LTIP cycle, based on $102.14$153.26 per share, the average closing market price of a share of our common stock for the 20 trading days preceding January 1, 2015,2, 2018, the |
IFF | 2019 PROXY STATEMENT 65
EXECUTIVE COMPENSATION
| first trading day of the 2015-20172018-2020 LTIP cycle (except for Ms. Cornell's stock portion which was based on $111.19 per share, the average closing market price for the 20 trading days preceding July 8, 2015).cycle. However, the actual value to be realized may vary depending on the closing market price of a share of our common stock on the payout date of 20152018 LTIP awards. |
| |
| (5) | The amounts in this column represent the number of PRS shares or PRSUs and RSUs granted under the ECP in 2015 on the grant date. DividendsECP. Dividend equivalents are paid on PRS shares.PRSUs. Footnote 43 to the Summary Compensation Table states the dollar amount delivered by our NEOs (in tendered shares or cash) for these PRSPRSU awards. The material terms of the ECP awards are described in this proxy statement under the “Equity Choice Program” heading in the “Compensation Discussion & Analysis.” |
| |
| (6) | The amounts in this column represent the aggregate grant date fair value of equity awards granted to our NEOs during the fiscal year ended December 31, 2015,2018, calculated in accordance with FASB ASC Topic 718. The grant date fair value of LTIP awards pertains to the 50% portion of those awards that will be payable in shares of our common stock if the performance conditions are satisfied, and is based on the probable outcome of such conditions. |
| |
| (7) | ThisReflects the two vesting dates of the retention award represents a grant of RSUsgranted to Mr. O'Leary for acting as Interim Chief Financial Officer.Haeni in September 2018. |
66IFF | 2019 PROXY STATEMENT
EXECUTIVE COMPENSATION
Long-Term Incentive Plan
2013-2015As discussed above, LTIP cycles have four performance segments (1) one for each of the three years in the LTIP cycle and (2) the cumulative results for the full three-year LTIP cycle. Any amounts earned under a performance segment are credited on behalf of the executive at the end of the relevant segment, but such credited amounts are not paid until the completion of the three-year LTIP cycle and could be forfeited if a NEO leaves the Company prior to the payment date. As 50% of the LTIP award is payable in cash and 50% is payable in stock, (i) at the beginning of each cycle, the grant date fair market value of the 50% of the LTIP award payable in stock is included in the “Stock Awards” column of the Summary Compensation Table for that year and (ii) each year upon determination of the amount to be credited to the NEO for the annual segment or the cumulative segment, as the case may be, the cash portion of the NEO’s credited awards is included in the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for the year in which it is earned.
2016-2018 LTIP Payout
The following table sets forth the total amount earned by each NEO based on achievement of the corporate performance goals for each segment under the 2013-20152016-2018 LTIP cycle and based on each executive’s target amount (or reduced target amount for each NEO who was not employed in his or her current role for the entire three-year cycle). The amount reported in the “Total” column is the amount being paid out to the NEOs in 20152018 following completion of the 2013-20152016-2018 LTIP cycle.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Segment I (2013) | | Segment 2 (2014) | | Segment 3 (2015) | | Cumulative (2013 – 2015) | | Total |
| | Cash ($) | | Shares (#) | | Cash ($) | | Shares (#) | | Cash ($) | | Shares (#) | | Cash ($) | | Shares (#) | | Cash ($) | | Shares (#) |
| Andreas Fibig (1) | — |
| | — |
| | 102,265 |
| | 1,021 |
| | 292,500 |
| | 2,921 |
| | 217,298 |
| | 2,172 |
| | 612,063 |
| | 6,114 |
|
| Alison A. Cornell (2) | — |
| | — |
| | — |
| | — |
| | 35,458 |
| | 319 |
| | 19,734 |
| | 176 |
| | 55,192 |
| | 495 |
|
| Richard O’Leary | 24,350 |
| | 369 |
| | 22,276 |
| | 338 |
| | 21,293 |
| | 323 |
| | 35,583 |
| | 540 |
| | 103,502 |
| | 1,570 |
|
| Nicolas Mirzayantz | 75,263 |
| | 1,141 |
| | 68,850 |
| | 1,044 |
| | 65,813 |
| | 998 |
| | 109,969 |
| | 1,668 |
| | 319,895 |
| | 4,851 |
|
| Matthias Haeni | 28,255 |
| | 428 |
| | 25,848 |
| | 392 |
| | 24,708 |
| | 374 |
| | 41,285 |
| | 628 |
| | 120,096 |
| | 1,822 |
|
| Anne Chwat | 46,663 |
| | 708 |
| | 42,687 |
| | 647 |
| | 40,804 |
| | 619 |
| | 68,181 |
| | 1,032 |
| | 198,335 |
| | 3,006 |
|
____________________
(1) Amount related to 2014 is prorated based on Mr. Fibig’s appointment as CEO in September 2014.
(2) Amount related to 2015 is prorated based on Ms. Cornell’s appointment as CFO in July 2015.
2014-2016 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Segment 1 (2016) | | | Segment 2 (2017) | | | Segment 3 (2018) | | | Cumulative (2016 – 2018) | | | Total | |
| | | Cash ($) | | | Shares (#) | | | Cash ($) | | | Shares (#) | | | Cash ($) | | | Shares (#) | | | Cash ($) | | | Shares (#) | | | Cash ($) | | | Shares (#) | |
Andreas Fibig | | | 95,875 | | | | 939 | | | | 407,000 | | | | 3,985 | | | | 238,250 | | | | 1,997 | | | | 273,750 | | | | 2,295 | | | | 791,125 | | | | 6,632 | |
| | | | | | | | | | | |
Richard O’Leary | | | 9,367 | | | | 92 | | | | 39,763 | | | | 389 | | | | 23,825 | | | | 200 | | | | 27,375 | | | | 229 | | | | 79,113 | | | | 664 | |
| | | | | | | | | | | |
Nicolas Mirzayantz | | | 23,969 | | | | 235 | | | | 101,750 | | | | 996 | | | | 59,563 | | | | 499 | | | | 68,438 | | | | 574 | | | | 197,783 | | | | 1,658 | |
| | | | | | | | | | | |
Matthias Haeni | | | 23,969 | | | | 235 | | | | 101,750 | | | | 996 | | | | 59,563 | | | | 499 | | | | 68,438 | | | | 574 | | | | 197,783 | | | | 1,658 | |
| | | | | | | | | | | |
Anne Chwat | | | 13,375 | | | | 131 | | | | 56,777 | | | | 555 | | | | 33,951 | | | | 284 | | | | 39,009 | | | | 328 | | | | 112,738 | | | | 944 | |
2017-2019 LTIP Credit
Based on our achievement of the corporate performance goals for the 20152018 segment (the second segment) of the 2014-20162017-2019 LTIP cycle and the executive’s target amount, the following cash amounts and number of shares of our stock have been credited on behalf of the executive:
| | | | | | | | | | | | |
| | | Segment 2 (2018) | |
| | | Cash ($) | | | | | | Shares (#) | |
Andreas Fibig | | $ | 238,250 | | | | | | | | 1,980 | |
| | | | |
Richard O’Leary | | $ | 59,563 | | | | | | | | 496 | |
| | | | |
Nicolas Mirzayantz | | $ | 59,563 | | | | | | | | 496 | |
| | | | |
Matthias Haeni | | $ | 59,563 | | | | | | | | 496 | |
| | | | |
Anne Chwat | | $ | 33,951 | | | | | | | | 282 | |
IFF | 2019 PROXY STATEMENT 67
|
| | | | |
| | Segment 2 (2015) |
| | Cash ($) | Shares (#) |
| Andreas Fibig | 292,500 |
| 2,921 |
|
| Alison A. Cornell (1) | 35,458 |
| 319 |
|
| Richard O’Leary | 21,995 |
| 257 |
|
| Nicolas Mirzayantz | 73,125 |
| 855 |
|
| Matthias Haeni | 73,125 |
| 855 |
|
| Anne Chwat | 40,804 |
| 477 |
|
____________________
(1) Amount prorated based on Ms. Cornell’s appointment as CFO in July 2015.
2015-2017 EXECUTIVE COMPENSATION
2018-2020 LTIP Credit
Based on our achievement of the corporate performance goals for the 20152018 segment (the first segment) of the 2015-20172018-2020 LTIP cycle and the executive’s target amount, the following cash amounts and number of shares of our stock have been credited on behalf of the executive:
| | | | | | | | | | | | |
| | | Segment 1 (2018) | |
| | | Cash ($) | | | | | | Shares (#) | |
Andreas Fibig | | | 297,813 | | | | | | | | 1,944 | |
| | | | |
Richard O’Leary | | | 59,563 | | | | | | | | 389 | |
| | | | |
Nicolas Mirzayantz | | | 59,563 | | | | | | | | 389 | |
| | | | |
Matthias Haeni | | | 59,563 | | | | | | | | 389 | |
| | | | |
Anne Chwat | | | 34,665 | | | | | | | | 227 | |
68IFF | 2019 PROXY STATEMENT
|
| | | | |
| | Segment 1 (2015) |
| | Cash ($) | Shares (#) |
| Andreas Fibig | 292,500 |
| 2,864 |
|
| Alison A. Cornell (1) | 35,458 |
| 319 |
|
| Richard O’Leary | 28,576 |
| 280 |
|
| Nicolas Mirzayantz | 73,125 |
| 716 |
|
| Matthias Haeni | 73,125 |
| 716 |
|
| Anne Chwat | 40,804 |
| 399 |
|
____________________
(1) Amount prorated based on Ms. Cornell’s appointment as CFO in July 2015.
EXECUTIVE COMPENSATION
Equity Compensation Plan Information
We currently grant equity awards under our 2015 SAIP only, which replaced our 2010 SAIP.Stock Award and Incentive Plan (the “2010 SAIP”). The following table provides information regarding our common stock which may be issued under our equity compensation plans as of December 31, 2015.
|
| | | | | | | | | | |
| Plan Category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted-average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |
| | | (a) | | (b) | | (c) | |
| Equity compensation plans approved by security holders (1) | | 843,326 |
| (2) | 52.59 |
| (3) | 2,547,132 |
| |
| Equity compensation plans not approved by security holders (4) | | 204,433 |
| | 52.59 |
| (3) | 229,995 |
| (5) |
| Total | | 1,047,759 |
| | 52.59 |
| (3) | 2,777,127 |
| |
| | | | | | | | | | | | | | | | | | | | |
Plan Category | | Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights | | | | | | Weighted-average
exercise price of
outstanding
options, warrants
and rights | | | | | | Number of
securities
remaining
available for
future issuance
under
equity
compensation
plans (excluding
securities
reflected in
column (a)) | |
| | | (a) | | | | | | (b) | | | | | | (c) | |
| | | | | | |
Equity compensation plans approved by security holders (1) | | | 616,791 | | | | (2) | | | $ | 117.21 | | | | (3) | | | | 1,772,737 | |
| | | | | | |
| | | | | | |
Equity compensation plans not approved by security holders (4) | | | 220,404 | | | | | | | $ | 117.21 | | | | (3) | | | | 154,880 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total | | | 837,196 | | | | | | | $ | 117.21 | | | | (3) | | | | 1,927,617 | |
| |
| (1) | Represents outstanding under the 2015 Stock AwardSAIP and Incentive Plan (the “2015 SAIP”).the 2010 SAIP. The 2015 PlanSAIP replaced the Company’s 2010 Stock Award and Incentive Plan (the “2010 Plan”)SAIP and provides the source for future deferrals of cash into deferred stock under the Company’s Deferred Compensation PlanDCP (with the Deferred Compensation PlanDCP being deemed a subplansub-plan under the 2010 Plan2015 SAIP for the sole purpose of funding deferrals under the IFF ShareStock Fund). |
| |
| (2) | Includes options, RSUs, SSARs, the number of shares to be issued under the 2013-20152016-2018 LTIP cycle based on actual performance, and the maximum number of shares that may be issued under the 2014-20162017-2019 and 2015-20172018-2020 LTIP cycles if the performance conditions for each of those cycles are satisfied at the maximum level. The number of SSARs that may be issued upon exercise was calculated by dividing (i) the product of (a) the excess of the closing market price of our common stock on the last trading day of 20152018 over the exercise price, and (b) the number of SSARs outstanding by (ii) the closing market price on the last trading day of 2015.2018. Excludes outstanding shares of PRS under the 2010 SAIP and 2000 SAIP. |
| |
| (3) | Weighted average exercise price of outstanding options and SSARs. Excludes RSUs, shares credited to accounts of participants in the DCP and shares that may be issued under the 2013-20152016-2018 and 2014-20162018-2020 LTIP cycles. |
| |
| (4) | We currently have two equity compensation plans that have not been approved by our shareholders: (i) the DCP, which is described on page 4656 and (ii) a pool of shares that may be used for annual awards of 1,000 shares to eachnon-employee director. Although we are no longer granting these annual 1,000 share stock awards to directors, the pool of shares remains authorized. |
| |
(5) | Includes 186,245157,240 shares remaining available for issuance under the DCP and 43,750 shares remaining available for issuance from a pool of shares that may be used for annual awards of 1,000 shares to eachnon-employee director. |
IFF | 2019 PROXY STATEMENT 69
EXECUTIVE COMPENSATION
2018 Outstanding Equity Awards at FiscalYear-End
The following table provides information regarding outstanding equity awards held by our NEOs at December 31, 2015.
2015 Outstanding Equity Awards at Fiscal Year-End
|
| | | | | | | | | | | | | | | | |
| Name | | Grant Date | | Grant Type (1) | | Number of Shares or Units of Stock That Have Not Vested (#) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) |
| Andreas Fibig | | 4/30/2013 | | RSU | | 1,295 |
| (3) | 154,934 |
| | — |
| | — |
|
| | | 9/1/2014 | | 2014 LTIP | | 3,942 |
| (4) | 471,657 |
| | 8,886 |
| (5) | 1,063,121 |
|
| | | 2/11/2015 | | 2015 LTIP | | 2,864 |
| (6) | 342,668 |
| | 14,684 |
| (7) | 1,756,794 |
|
| | | 10/15/2014 | | RSU | | 7,967 |
| (8) | 953,172 |
| | — |
| | — |
|
| | | 5/6/2015 | | RSU | | 7,620 |
| (9) | 911,657 |
| | — |
| | — |
|
| | | 5/6/2015 | | PRS | | 11,176 |
| (9) | 1,337,097 |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Alison A. Cornell | | 7/8/2015 | | 2014 LTIP | | 319 |
| (4) | 38,214 |
| | 1,682 |
| (5) | 201,234 |
|
| | | 7/8/2015 | | 2015 LTIP | | 319 |
| (6) | 38,214 |
| | 3,180 |
| (7) | 380,455 |
|
| | | 8/17/2015 | | PRSU | | 2,608 |
| (10) | 312,021 |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Richard O’Leary | | 4/30/2013 | | PRS | | 3,109 |
| (11) | 371,961 |
| | — |
| | — |
|
| | | 2/5/2014 | | 2014 LTIP | | 526 |
| (4) | 62,892 |
| | 878 |
| (5) | 105,044 |
|
| | | 5/13/2014 | | PRS | | 2,749 |
| (12) | 328,890 |
| | — |
| | — |
|
| | | 1/2/2015 | | RSU | | 1,487 |
| (13) | 177,905 |
| | — |
| | — |
|
| | | 2/11/2015 | | 2015 LTIP | | 280 |
| (6) | 33,455 |
| | 1,436 |
| (7) | 171,803 |
|
| | | 5/6/2015 | | PRS | | 2,540 |
| (9) | 303,886 |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Nicolas Mirzayantz | | 4/30/2013 | | PRS | | 9,327 |
| (11) | 1,115,882 |
| | — |
| | — |
|
| | | 2/5/2014 | | 2014 LTIP | | 1,750 |
| (4) | 209,372 |
| | 2,924 |
| (5) | 349,827 |
|
| | | 5/13/2014 | | PRS | | 7,943 |
| (12) | 950,301 |
| | — |
| | — |
|
| | | 6/13/2014 | | RSU | | 20,000 |
| (14) | 2,392,800 |
| | — |
| | — |
|
| | | 2/11/2015 | | 2015 LTIP | | 716 |
| (6) | 85,667 |
| | 3,672 |
| (7) | 439,318 |
|
| | | 5/6/2015 | | PRS | | 7,112 |
| (9) | 850,880 |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Matthias Haeni | | 4/30/2013 | | PRS | | 1,922 |
| (11) | 229,948 |
| | — |
| | — |
|
| | | 2/5/2014 | | 2014 LTIP | | 1,750 |
| (4) | 209,372 |
| | 2,924 |
| (5) | 349,827 |
|
| | | 5/13/2014 | | PRS | | 3,666 |
| (12) | 438,600 |
| | — |
| | — |
|
| | | 2/11/2015 | | 2015 LTIP | | 716 |
| (6) | 85,667 |
| | 3,672 |
| (7) | 439,318 |
|
| | | 5/6/2015 | | PRS | | 4,064 |
| (9) | 486,217 |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Anne Chwat | | 4/30/2013 | | PRS | | 6,607 |
| (11) | 790,461 |
| | — |
| | — |
|
| | | 2/5/2014 | | 2014 LTIP | | 976 |
| (4) | 116,739 |
| | 1,630 |
| (5) | 195,013 |
|
| | | 5/13/2014 | | PRS | | 5,499 |
| (12) | 657,900 |
| | — |
| | — |
|
| | | 2/11/2015 | | 2015 LTIP | | 399 |
| (6) | 47,733 |
| | 2,050 |
| (7) | 245,262 |
|
| | | 5/6/2015 | | PRS | | 5,080 |
| (9) | 607,771 |
| | — |
| | — |
|
_________________________
2018.
| | | | | | | | | | | | | | | | | | | | | | |
| Name | | Grant
Date | | Grant
Type (1) | | Number of
Shares or
Units of
Stock That
Have Not
Vested (#) | | | | | Market
Value of
Shares
or Units of
Stock That
Have Not
Vested
($)(2) | | | Equity Incentive
Plan Awards:
Number of Unearned
Shares, Units Or Other Rights That Have Not Vested (#) | | | Equity Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($)(2) | |
| | | | | | | | |
Andreas Fibig | | 5/2/2016 | | PRSU | | | 6,009 | | | (7) | | | 794,570 | | | | | | | | | |
| | | | | | | | |
| | | 5/2/2016 | | RSU | | | 11,685 | | | (7) | | | 1,545,108 | | | | | | | | | |
| | | | | | | | |
| | | 2/7/2017 | | 2017 LTIP | | | 3,503 | | | (3) | | | 463,202 | | | | 12,468 (4) | | | | 1,648,644 | |
| | | | | | | | |
| | | 5/3/2017 | | RSU | | | 7,203 | | | (8) | | | 952,453 | | | | | | | | | |
| | | | | | | | |
| | | 5/3/2017 | | PRSU | | | 8,643 | | | (8) | | | 1,142,864 | | | | | | | | | |
| | | | | | | | |
| | | 2/6.2018 | | 2018 LTIP | | | 1,944 | | | (5) | | | 257,071 | | | | 14,272 (6) | | | | 1,887,187 | |
| | | | | | | | |
| | | 5/2/2018 | | PRSU | | | 21,413 | | | (9) | | | 2,831,441 | | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Richard O’Leary | | 5/2/2016 | | PRSU | | | 2,754 | | | (7) | | | 364,161 | | | | | | | | | |
| | | | | | | | |
| | | 11/1/2016 | | RSU | | | 7,472 | | | (10) | | | 988,023 | | | | | | | | | |
| | | | | | | | |
| | | 2/7/2017 | | 2017 LTIP | | | 877 | | | (3) | | | 115,966 | | | | 3,116 (4) | | | | 412,029 | |
| | | | | | | | |
| | | 5/3/2017 | | PRSU | | | 3,457 | | | (8) | | | 457,119 | | | | | | | | | |
| | | | | | | | |
| | | 2/6/2018 | | 2018 LTIP | | | 389 | | | (5) | | | 51,414 | | | | 2,854 (6) | | | | 377,384 | |
| | | | | | | | |
| | | 5/2/2018 | | PRSU | | | 4,282 | | | (9) | | | 566,209 | | | | | | | | | |
| | | | | | | | |
Nicolas Mirzayantz | | 5/2/2016 | | PRSU | | | 6,510 | | | (7) | | | 860,817 | | | | | | | | | |
| | | | | | | | |
| | | 2/7/2017 | | 2017 LTIP | | | 877 | | | (3) | | | 115,966 | | | | 3,116 (4) | | | | 412,029 | |
| | | | | | | | |
| | | 5/3/2017 | | PRSU | | | 5,186 | | | (8) | | | 685,745 | | | | | | | | | |
| | | | | | | | |
| | | 2/6/2018 | | 2018 LTIP | | | 389 | | | (5) | | | 51,414 | | | | 2,854 (6) | | | | 377,384 | |
| | | | | | | | |
| | | 5/2/2018 | | PRSU | | | 4,710 | | | (9) | | | 622,803 | | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Matthias Haeni (12) | | 5/2/2016 | | PRSU | | | 5,007 | | | (7) | | | 662,076 | | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | 2/7/2017 | | 2017 LTIP | | | 877 | | | (3) | | | 115,966 | | | | 3,116 (4) | | | | 412,029 | |
| | | | | | | | |
| | | | | | | | |
| | | 5/3/2017 | | RSU | | | 3,601 | | | (8) | | | 476,160 | | | | | | | | | |
| | | | | | | | |
| | | 2/6/2018 | | 2018 LTIP | | | 461 | | | (5) | | | 60,991 | | | | 3,394 (6) | | | | 448,789 | |
| | | | | | | | |
| | | 5/2/2018 | | PRSU | | | 4,710 | | | (9) | | | 622,803 | | | | | | | | | |
| | | | | | | | |
| | | 9/19/2018 | | RSU | | | 5,090 | | | (11) | | | 673,051 | | | | | | | | | |
| | | | | | | | |
| | | 9/19/2018 | | RSU | | | 9,454 | | | (12) | | | 1,250,102 | | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Anne Chwat | | 5/2/2016 | | PRSU | | | 5,258 | | | (7) | | | 695,265 | | | | | | | | | |
| | | | | | | | |
| | | 2/7/2017 | | 2017 LTIP | | | 499 | | | (3) | | | 65,983 | | | | 1,776 (4) | | | | 234,840 | |
| | | | | | | | |
| | | 5/3/2017 | | PRSU | | | 4,105 | | | (8) | | | 542,804 | | | | | | | | | |
| | | | | | | | |
| | | 2/6/2018 | | 2018 LTIP | | | 227 | | | (5) | | | 29,992 | | | | 1,660 (6) | | | | 219,502 | |
| | | | | | | | |
| | | 5/2/2018 | | PRSU | | | 3,854 | | | (9) | | | 509,614 | | | | | | | | | |
| |
| (1) | 20142017 LTIP = 2014-20162017-2019 Long-Term Incentive Plan Cycle |
20152018 LTIP = 2015-20172018-2020 Long-Term Incentive Plan Cycle
PRS = Purchased Restricted Stock
RSU = Restricted Stock Unit
PRSU = Purchased Restricted Stock Unit
RSU = Restricted Stock Unit
| |
| (2) | The market value was determined based on the closing price of our common stock on December 31, 2015. For PRS and PRSU awards, the amounts in this column do not reflect the purchase price paid by the NEO for PRS shares under the ECP as described in the Compensation Discussion and Analysis.28, 2018. |
| |
| (3) | This award was granted to Mr. Fibig as a non-employee director and vests on April 30, 2016. |
| |
(4) | This amount represents the number of shares of stock that have been credited for the 20142017 and 2015 segment2018 segments of the 2014-20162017-2019 LTIP cycle. These shares will remain unvested until the completion of the full three-year LTIP cycle. |
| (4) | |
(5) | This amount represents the maximum number of shares of stock that remain subject to the achievement of specified performance objectives over the remaining two open segments of the 2014-20162017-2019 LTIP cycle. Shares earned during any segment of the 2014-20162017-2019 LTIP cycle will remain unvested until the completion of the full three-year cycle. |
| (5) | |
(6) | This amount represents the number of shares of stock that have been credited for the 20152018 segment of the 2015-20172018-2020 LTIP cycle. These shares will remain unvested until the completion of the full three-year LTIP cycle. |
70IFF | 2019 PROXY STATEMENT
EXECUTIVE COMPENSATION
| (6) | |
(7) | This amount represents the maximum number of shares of stock that remain subject to the achievement of specified performance objectives over the remaining three open segments of the 2015-20172018-2020 LTIP cycle. Shares earned during any segment of the 2015-20172018-2020 LTIP cycle will remain unvested until the completion of the full three-year cycle. |
| (7) | |
(8) | This award vests on April 13, 2017.2, 2019. |
| (8) | |
(9) | This award vests on April 6, 2018.3, 2020. |
| (9) | |
(10) | This award vests on July 17, 2018. |
| |
(11) | This award vests on March 31, 2016. |
| |
(12) | This award vests on April 13, 2017.2, 2021. |
| (10) | |
(13) | This award vests on January 2, 2017.November 1, 2020. |
| (11) | |
(14) | This award vests on June 13, 2016.December 31, 2019. |
| (12) | This award vests on December 31, 2020. |
IFF | 2019 PROXY STATEMENT 71
EXECUTIVE COMPENSATION
Option Exercises and2018 Stock Vested
The following table provides information regarding stock vested during 20152018 for each of our NEOs. NoNone of our NEOs hold options orand no SSARs were exercised by our NEOs during 2015.
2015 Option Exercises and Stock Vested
|
| | | | | | | | |
| | | Stock Awards |
| Name | | Type of Award(1) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) |
| Andreas Fibig | | RSU | (2) | 1,655 |
| | 194,330 |
|
| | | RSU | (3) | 1,145 |
| | 129,030 |
|
| | | PRS | (4)(5) | 6,373 |
| | 745,450 |
|
| | | 2013 LTIP | (6) | 6,114 |
| | 731,479 |
|
| | | | | | | |
| Alison A. Cornell | | 2013 LTIP | (6) | 495 |
| | 67,617 |
|
| | | | | | | |
| Richard O’Leary | | PRS | (4)(5) | 7,948 |
| | 689,688 |
|
| | | 2013 LTIP | (6) | 1,570 |
| | 187,835 |
|
| | | | | | | |
| Nicolas Mirzayantz | | PRS | (4)(5) | 19,870 |
| | 1,724,219 |
|
| | | 2013 LTIP | (6) | 4,851 |
| | 580,374 |
|
| | | | | | | |
| Matthias Haeni | | PRS | (4)(5) | 4,912 |
| | 426,239 |
|
| | | 2013 LTIP | (6) | 1,822 |
| | 217,984 |
|
| | | | | | | |
| Anne Chwat | | RSU | (7) | 250 |
| | 27,160 |
|
| | | PRS | (4)(5) | 13,909 |
| | 1,206,953 |
|
| | | 2013 LTIP | (6) | 3,006 |
| | 359,638 |
|
_______________________
2018.
| | | | | | | | | | |
| | | | | Stock Awards |
Name | | | | Type of Award (1) | | Number of
Shares Acquired
on Vesting (#) | | | Value Realized
on Vesting ($) |
Andreas Fibig | | | | PRSU (2)(4) | | | 11,176 | | | 1,512,448 |
| | | | | RSU (2) | | | 7,620 | | | 1,031,215 |
| | | | | 2016 LTIP (3) | | | 6,632 | | | 876,949 |
Richard O’Leary | | | | PRSU (2)(4) | | | 2,540 | | | 343,738 |
| | | | | 2016 LTIP (3) | | | 664 | | | 87,801 |
Nicolas Mirzayantz | | | | PRSU (2)(4) | | | 7,112 | | | 962,467 |
| | | | | 2016 LTIP (3) | | | 1,658 | | | 219,237 |
Matthias Haeni | | | | PRSU (2)(4) | | | 4,064 | | | 549,981 |
| | | | | 2016 LTIP (3) | | | 1,658 | | | 219,237 |
Anne Chwat | | | | PRSU (2)(4) | | | 5,080 | | | 687,476 |
| | | | | 2016 LTIP (3) | | | 944 | | | 124,825 |
| |
| (1) | RSU = Restricted Stock Unit |
PRS = Purchased Restricted Stock
2013 LTIP = 2013-2015 Long-Term Incentive Plan Cycle
| PRSU = Purchased Restricted Stock Unit |
| 2016 LTIP = 2016-2018 Long-Term Incentive Plan Cycle |
| (2) | The award represented in this row was granted in 2012 to Mr. Fibig while he was a member of2015 under the Board of DirectorsECP and vested on May 1, 2015.April 6, 2018. The value realized is based on the closing price of our common stock on the vesting date ($117.42)135.33). |
| |
| (3) | The award represented in this row is the equity portion of the 2016-2018 LTIP award, for which performance was grantedcompleted on December 31, 2018. The number of shares represents the actual number of shares that will be issued to the participant in 2014 to Mr. Fibig while he was a member ofMarch 2019, as determined by the Board of Directors and vested on May 13, 2015.in February 2019. The value realized is based on the number of shares and the closing market price of a share of our common stock on December 28, 2018 ($132.23); however, the actual value realized may vary depending on the closing market price of a share of our common stock on the vesting date ($112.69).payout date. |
| |
| (4) | The award represented in this row was granted in 2012 under the ECP and vested on April 1, 2015. The value realized is based on the closing price of our common stock on the vesting date ($116.97). |
| |
(5) | The amounts set forth in this table as the value realized attributable to vested PRSPRSUs is the product of (a) the number of vested shares of PRSPRSUs and (b) the closing price of our common stock on the vesting date, less the aggregate amount paid by the executive to purchase the PRS.PRSUs. Without taking into account the amount paid by the respective executive for his or her PRS shares,PRSUs, the value realized on vesting in the Value Realized on Vesting column attributable to PRSPRSUs for this executive would be: Mr. Fibig - $745,450;— $1,512,448.08; Mr. O’Leary - $929,678;— $343,738.20; Mr. Mirzayantz - $2,324,194;— $962,466.96; Mr. Haeni - $574,557;— $549,981.12 and Ms. Chwat - $1,626,936.— $687,476.40. |
| |
(6) | The award represented in this row is the equity portion of the 2013-2015 LTIP award, for which performance was completed on December 31, 2015. The number of shares represents the actual number of shares that will be issued to the participant in March 2016, as determined by the Board of Directors in February 2016. The value realized is based on the number of shares and the closing market price of a share of our common stock on December 31, 2015 ($119.64); however, the actual value realized may vary depending on the closing market price of a share of our common stock on the payout date. |
| |
(7) | This award represents a special recognition award of RSUs to Ms. Chwat in connection with the Aromor acquisition. The value realized is based on the closing price of our common stock on the vesting date of February 2, 2015 ($106.78). |
72IFF | 2019 PROXY STATEMENT
EXECUTIVE COMPENSATION
Pension Benefits
We provide a defined benefit pension plan (the “U.S. Pension Plan”) to eligible United States-based employees hired before January 1, 2006. Of our NEOs, only Mr. Mirzayantz currently participates in the U.S. Pension Plan. U.S. employees hired on or after January 1, 2006, including all of our other NEOs, are not eligible to participate in the U.S. Pension Plan. We pay the full cost of providing benefits under the U.S. Pension Plan.
Compensation and service earned after December 31, 2007 are not taken into account in determining an employee’s benefit under the U.S. Pension Plan except for employees whose combined age and years of service equaled or exceeded 70 as of December 31, 2007. As Mr. Mirzayantz did not satisfy this requirement, Mr. Mirzayantz had his benefit frozen as of December 31, 2007.
The monthly pension benefit is equal to the number of years of credited service as of December 31, 20152007 times the difference between (a) 1.7% times final average compensation, and (b) 1.25% times the social security amount. Final average compensation for purposes of the U.S. Pension Plan is the average of the five consecutive years of compensation during the last ten years before December 31, 2007 that produce the highest average. The term “compensation” means the basic rate of monthly salary (as of April 1 each year) plus 1/12 of any AIP cash award received for the preceding year, reduced by any compensation deferred under our DCP. The normal retirement age under the U.S. Pension Plan is age 65.
Various provisions of the Internal Revenue Code of 1986, as amended (“IRC”) limit the amount of compensation used in determining benefits payable under our U.S. Pension Plan. We established anon-qualified Supplemental Retirement Plan to pay that part of the pension benefit that, because of these IRC limitations, cannot be paid under the U.S. Pension Plan to our U.S. senior executives. For purposes of the Supplemental Retirement Plan, “compensation” includes any salary and AIP amounts, including amounts deferred under our DCP.
Employees with at least 10 years of service are eligible for early retirement under the U.S. Pension Plan and the Supplemental Retirement Plan beginning at age 55. The benefit at early retirement is an unreduced benefit payable at age 62 or a reduced benefit (4% per year) if paid prior to age 62.
The following table provides information for Mr. Mirzayantz regarding our U.S. Pension Plan and Supplemental Retirement Plan. The present value of accumulated benefits payable under each of our retirement plans was determined using the following assumptions: an interest rate of 4.1%4.32%; the RP-2000 Healthy Participant Male/Female Mortalitymorality base table isRP-2014 (rebased to 2006) adjusted for IFF experience with projections ofMP-2018 mortality improvements;improvement projection scale; 80% of participants are married with a spouse four years younger and are receiving a 50% joint and survivor annuity and 20% of participants are unmarried and are receiving a straight life annuity with a five-year guarantee. Additional information regarding the valuation method and material assumptions used to determine the accumulated benefits reported in the table is presented in Note 1416 to our consolidated financial statements included in our 20152018 Annual Report. The information provided in the columns other than the Payments During Last Fiscal Year column is presented as of December 31, 2015,2018, the measurement date used for financial statement reporting purposes with respect to our audited financial statements for the fiscal year ended December 31, 2015.2018.
IFF | 2019 PROXY STATEMENT 73
EXECUTIVE COMPENSATION
Pension Benefits
|
| | | | | | | | | | | | | | |
| Name | | Plan Name | | Number of Years Credited Service (#) | | Present Value of Accumulated Benefits Assuming Retirement Age of 62 ($)(1) | | Present Value of Accumulated Benefits Assuming Retirement Age of 65 ($)(2) | | Payments During Last Fiscal Year ($) |
| Nicolas Mirzayantz (3) | | U.S. Pension Plan | | 16.23 |
| | 542,078 |
| | 450,062 |
| | — |
|
| | | Supplemental Retirement Plan | | 16.23 |
| | 863,751 |
| | 717,132 |
| | — |
|
| | | | | | | 1,405,829 |
| | 1,167,194 |
| | — |
|
_____________________
| | | | | | | | | | | | | | | | | | |
Name | | Plan Name | | Number
of Years
Credited
Service
(#) | | | Present
Value of
Accumulated
Benefits
Assuming
Retirement
Age of 62
($)(1) | | | Present
Value of
Accumulated
Benefits
Assuming
Retirement
Age of 65
($)(2) | | | Payments
During
Last
Fiscal
Year ($) | |
Nicolas Mirzayantz (3) | | U.S. Pension Plan | | | 16.23 | | | | 588,868 | | | | 486,867 | | | | — | |
| | | Supplemental Retirement Plan | | | 16.23 | | | | 937,105 | | | | 774,783 | | | | — | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | 1,525,973 | | | | 1,261,650 | | | | — | |
| |
| (1) | The amounts in this column assume benefit commencement at unreduced early retirement at age 62 (with at least 10 years of credited service) and otherwise were determined using interest rate, mortality and payment distribution assumptions consistent with those used in our financial statements. |
| |
| (2) | The amounts in this column assume benefit commencement at normal retirement at age 65 and otherwise were determined using interest rate, mortality and payment distribution assumptions consistent with those used in our financial statements. |
| |
| (3) | Benefits for Mr. Mirzayantz under the U.S. Pension Plan and Supplemental Retirement Plan were frozen as of December 31, 2007 because his age and service as of December 31, 2007 did not equal or exceed 70. |
Non-Qualified Deferred Compensation
We offer our executive officersexecutives and other senior employees based in the United States an opportunity to defer compensation under ournon-qualified deferred compensation plan, or DCP. The DCP allows these employees to defer salary, annual and long-term incentive awards and receipt of stock under some equity awards. There is no limit on the amount of compensation that a participant may elect to defer. Subject to certain limitations on the number of installments and periods over which installments will be paid, participants in the DCP elect the timing and number of installments as to which the participant’s DCP account will be settled. Deferred cash compensation may be treated at the election of the participant as invested in (i) in:
a variety of equity and debt mutual funds offered by The Vanguard Group, which administers the DCP, or (ii)
a fund valued by reference to the value of our common stock with dividends reinvested (the “IFF Stock Fund”), or (iii)
an interest-bearing account.
Except for deferrals into the IFF Stock Fund, the participant may generally change his or her choice of funds at any time. For the interest-bearing account, our Compensation Committee establishes an interest rate each year which we intend to be equal to 120% of the applicable federal long-term interest rate. For 20152018 this interest rate was 3.25%3.13% and for 20162019 this interest rate is 3.10%3.92%.
We make matching contributions under the DCP to make up for tax limitations on our matching contributions under our Retirement Investment Fund Plan, a 401(k) plan. The 401(k) plan provides for matching contributions at a rate of $1.00 for each dollar of contribution up to 4% of a participant’s salary
74IFF | 2019 PROXY STATEMENT
EXECUTIVE COMPENSATION
plus $0.75 for each dollar of contribution above 4% up to 8% of a participant’s salary.
Tax rules limit the amount of the Company match under the 401(k) plan for our senior executives. The DCP matching contribution reflects the amount of the matching contribution which is limited by the tax laws. The same requirements under the 401(k) plan for matching, including vesting, apply to matching contributions under the DCP. These matching contributions automatically vest once a participant completes three years of service with our Company.
The DCP gives participants an incentive to defer compensation into the IFF Stock Fund by granting a 25% premium, credited in additional deferred stock, on all cash compensation deferred into the stock fund contingent upon the participant remaining employed by the Company (other than for retirement) for the full calendar year following the year when such credit was made. If the participant withdraws any deferred stock within one year of a deferral, any premium shares credited will be forfeited. Vesting of the premium deferred stock accelerates upon a change in control. RSUs granted to Directors under our equity compensation plans may also be deferred upon vesting, but no premium is added.
The following table provides information for our NEOs regarding participation in our DCP.
2015 2018Non-Qualified Deferred Compensation
|
| | | | | | | | | | | | | | | |
| Name | | Executive Contributions in Last FY ($) | | Registrant Contributions in Last FY ($)(1) | | Aggregate Earnings in Last FY ($) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at Last FYE ($)(2) |
| Andreas Fibig | | 194,330 |
| | — |
| | 49,952 |
| | — |
| | 754,171 |
|
| Alison A. Cornell | | 81,667 |
| (3) | — |
| | 84 |
| | — |
| | 81,803 |
|
| Richard O’Leary | | — |
| | — |
| | 21,369 |
| | — |
| | 129,646 |
|
| Nicolas Mirzayantz | | 217,562 |
| (4) | 37,201 |
| | 52,608 |
| | — |
| | 1,678,204 |
|
| Matthias Haeni | | — |
| | — |
| | — |
| | — |
| | — |
|
| Anne Chwat | | 210,394 |
| (5) | 40,977 |
| | 155,507 |
| | — |
| | 1,684,961 |
|
____________________
| | | | | | | | | | | | | | | | | | | | |
| Name | | Executive Contributions in
Last FY ($) | | | Registrant Contributions in Last FY
($)(1) | | | Aggregate Earnings in Last FY
($) | | | Aggregate Withdrawals/ Distributions
($) | | | Aggregate Balance at Last FYE
($)(2) | |
| | | | | | | | | | | | | | | | | | | | |
Andreas Fibig | | | 650,000 | (3) | | | 288,281 | | | | 81,952 | | | | — | | | | 4,214,355 | |
Richard O’Leary | | | 105,190 | (4) | | | 51,995 | | | | 8,464 | | | | — | | | | 486,647 | |
Nicolas Mirzayantz | | | 157,627 | (5) | | | 36,313 | | | | 11,274 | | | | — | | | | 2,572,307 | |
Matthias Haeni | | | — | | | | — | | | | — | | | | — | | | | — | |
Anne Chwat | | | 276,805 | (6) | | | 58,240 | | | | 263,631 | | | | 845,857 | | | | 1,751,063 | |
| |
| (1) | The amounts in this column are included in the All Other Compensation column for 20152018 in the Summary Compensation Table, and represent employer contributions credited to the participant’s account during 2015,2018, as well as certain contributions credited in the first quarter of 20162019 related to compensation earned in 2015.2018. |
| |
| (2) | If a person was a NEOAmounts reported in previous years’ proxy statements, this amount includescolumn for each named executive officer include amounts that were included as compensation previously reported for that person in theIFF’s Summary Compensation Table for thosein previous years. Ofyears when earned if that officer’s compensation was required to be disclosed in a previous year. Amounts previously reported in such years include previously earned, but deferred, salary and AIP, LTIP, matching and premium contributions. This total reflects the totals in this column, the following amounts were reported as compensation in the Summary Compensation Table for 2006: Mr. Mirzayantz – $87,985; for 2007: Mr. Mirzayantz – $160,010; for 2008: Mr. Mirzayantz – $63,269; for 2009: Mr. Mirzayantz – $31,228; for 2010: Mr. Mirzayantz – $243,228; for 2011: Mr. Mirzayantz – $45,600; Ms. Chwat – $316,928; for 2012: Mr. Mirzayantz – $516,144; Ms. Chwat – $398,970; for 2013: Mr. Mirzayantz – $751,443; Ms. Chwat – $509,236;cumulative value of each named executive officer’s deferrals, IFF contributions and for 2014: Mr. Fibig – $443,624; Mr. O'Leary – $161,002; Mr. Mirzayantz – $500,852; Ms. Chwat – $305,561.investment experience |
| |
| (3) | This amount is included in the Salary columnColumn for 20152018 in the Summary Compensation Table. |
| |
| (4) | Of this amount, $58,500$61,350 is included in the Salary column for 20152018 in the Summary Compensation Table and $43,840 included as a portion of his 2018 AIP award in theNon-Equity Incentive Plan Compensation column in the Summary Compensation Table. |
| (5) | Of this amount, $60,900 is included in the Salary column for 2018 in the Summary Compensation Table. Mr. Mirzayantz also deferred $159,062$30,703 of the cash portion of the 2015-2017 LTIP as well as $66,024 which is a portion of his 2018 AIP and was includedaward in theNon-Equity Incentive Plan Compensation column for 2014 in the Summary Compensation Table. |
| (6) | |
(5) | Of this amount, $139,500$120,624.96 is included in the Salary column for 20152017 in the Summary Compensation Table. Ms. Chwat also deferred $70,894$156,180 which is a portion of her 2018 AIP and was included in theNon-Equity Incentive Plan Compensation column for 20142018 in the Summary Compensation Table. |
IFF | 2019 PROXY STATEMENT 75
EXECUTIVE COMPENSATION
Potential Payments upon Termination and Change in Control
ArrangementsExecutive Severance Policy
We currently provideOur ESP provides severance payments and benefits to our NEOs and other senior executives in the event of a termination of their employment in certain specified circumstances. In addition, under our ESP.incentive plans, the vesting of equity awards may also be accelerated in connection with certain terminations. The level of severance pay under the ESP is based on a tier system. Each executive'sexecutive’s assigned tier is based on the executive'sexecutive’s grade level. The Compensation Committee may also agree to provide enhanced severance payments and benefits to specific executives. All our NEOs are in Tier I other thanI. Mr. O’Leary, who is in Tier II. Our ESP was last modified in March 2015 to conform to the 2015 SAIP, including to streamline the Change in Control provisions, to clarify the clawback provisions and severance rights, and to modify the non-compete provisions. Mr. Fibig'sFibig’s offer letter has modified some of the relevant definitions, amounts and other terms regarding the benefits that he is eligible to receive under the ESP. See “Other Separation Arrangements - Mr. Fibig”Arrangements” below for a discussion of Mr. Fibig’s benefits.
Our ESP provides for acceleration of equity, severance payments and continuation of benefits in connection with ana Tier 1 executive’s termination (1) if his or her employment is terminated by us without Cause or (2) in the case that such termination occurs within two years of a Change in Control, if his or her employment is terminated without Cause or he or she terminates his or her employment for Good Reason. In addition, a Tier I executive is eligible to receive payments if he or she terminates his or her employment for Good Reason prior to or more than two years after a Change in Control.
Control (or “CiC”). An executive maybe able to receive enhanced benefits if separation occurs within two years of CiC, as describe below.Our ESP states that a “Change in Control” (or “CiC”) will be deemed to have occurred when any of the following has occurred:
| |
(i) | a person or group becomes the beneficial owner of 40% or more of the combined voting power of our then outstanding voting securities, other than beneficial ownership by us, any of our employee benefit plans or any person organized, appointed or established pursuant to the terms of any such benefit plan; |
| |
(ii) | individuals who, at March 9, 2015, constituted a majority of the Board (the “Incumbent Directors”) cease to constitute a majority of the Board for any reason; provided, however, that any individual becoming a director subsequent to March 9, 2015 whose election or nomination for election to the Board was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board shall be an Incumbent Director; or |
| |
(iii) | the consummation of (A) a merger, consolidation, reorganization or similar transaction with us or in which our securities are issued, as a result of which the holders of our outstanding voting securities immediately before such event own, directly or indirectly, immediately after such event less than 60% of the combined voting power of the outstanding voting securities of the parent entity resulting from, or issuing its voting securities as part of, such event; (B) our complete liquidation or dissolution; or (C) a sale or other disposition of all or substantially all of our assets to any person. |
Table of Contents40% or more of the combined voting power of our then outstanding voting securities, other than beneficial ownership by us, any of our employee benefit plans or any person organized, appointed or established pursuant to the terms of any such benefit plan;the directors of the Board as of November 1, 2018 (the “Incumbent Directors”) cease to constitute a majority of the Board for any reason; provided, however, that (i) any individual becoming a director subsequent to November 1, 2018 whose election or nomination for election to the Board was approved by a vote of at leasttwo-thirds of the Incumbent Directors then on the Board shall be an Incumbent Director and (ii) any individual initially elected or nominated as a director as a result of an actual or threatened election contest shall not be an Incumbent Director; or
the consummation of (A) a merger, consolidation, reorganization or similar transaction with us or in which our securities are issued, as a result of which the holders of our outstanding voting securities immediately before such event own, directly or indirectly, immediately after such event less than 60% of the combined voting power of the outstanding voting securities of the parent entity resulting from, or issuing its voting securities as part of, such event; (B) a complete liquidation or dissolution of the Company; or (C) a sale or other disposition of all or substantially all of our assets to any person, with certain exceptions.
76IFF | 2019 PROXY STATEMENT
EXECUTIVE COMPENSATION
Severance Payments and Benefits Other than in Connection with a Change in Control
Payment for Termination Without Cause or for Good Reason. Pursuant to our ESP, any coveredTier 1 executive that is terminated by us without Cause or by a Tier 1 executive for Good Reason prior to or more than two years after a CiC is entitled to receive the following:
A severance payment equal to (a) two times (2x) in case of our CEO, or (b) one andone-half
| |
(i) | A severance payment equal to (a) one and a half times (1.5x) in case of our Tier I executives, and (b) one times (1x) in case of our Tier II executives, the sum of the executive's annual base salary at the date of termination plus the prorated portion of the executive's times (1.5x) in case of our other Tier I executives, the sum of the executive’s annual base salary at the date of termination plus the prorated portion of the executive’s target AIP award for the year in which termination occurs (payable to the Tier I or Tier II executive in regular installments over 18 or 12 months, respectively, following termination); |
| |
(ii) | A prorated portion of the executive’s target AIP award for the year in which termination occurs, payable when such AIP amounts otherwise become payable; |
| |
(iii) | A prorated portion of the executive’s target LTIP award for the cycles then in progress, payable when such LTIP amounts otherwise become payable; |
| |
(iv) | Vesting of a prorated portion of any unvested equity award(s); and |
| |
(v) | Continuation of medical, dental, disability and life insurance coverage for 18 months years in the case of our Tier I executives and 12 months for Tier II executives or until the executive obtains new employment providing similar benefits or attains age 65. |
Payment for Termination With Good Reason. Pursuant to the ESP, if aexecutive in regular installments over 24 months for our CEO, or 18 months for other Tier I employee terminates hisexecutives, following termination);
A prorated portion of the executive’s target AIP award for the year in which termination occurs, payable when such AIP amounts otherwise become payable;
A prorated portion of the executive’s target LTIP award for the cycles then in progress, payable when such LTIP amounts otherwise become payable;
Vesting of a prorated portion of any unvested equity award(s), settled on the applicable vesting date as if termination had not occurred; and
Continuation of medical, dental, disability and life insurance coverage for 24 months for our CEO and 18 months for our other Tier I executives, or heruntil the executive obtains new employment for Good Reason prior toproviding similar benefits or more than two years after a CiC, than he or she is entitled to receive the same benefits as set forth above for “Termination Without Cause.”attains age 65.
Severance Payments and Benefits in Connection with a Change in Control
Upon the occurrence of a termination of any Tier 1 executive by us without Cause or by ana Tier 1 executive for Good Reason within two years following a CiC, the executive would be entitled to the following:
| |
(i) | A severance payment equal to two times (2x)A severance payment equal to (a) three times (3x) in case of our Tier I executives, and one and a half times (1.5x) in case of our Tier II executives, the sum of the executive’s annual base salary at the date of termination plus the higher of (x) his or her average AIP award for the three most recent years and (y) his or her target AIP award for the year in which termination occurs, payable in a lump sum; |
| |
(ii) | A prorated portion of the executive’s target AIP award for the year in which termination occurs, payable in a lump sum; |
| |
(iii) | For each performance segment that ended prior to the termination, a payment equal to the LTIP award payment the executive would have been entitled to receive for such performance segment had the termination not occurred, payable in a lump sum; |
| |
(iv) | For each performance segment in which the executive’s date of termination occurs, a prorated portion of the executive’s target LTIP award for each performance segment in which the termination occurs, payable in a lump sum; |
| |
(v) | Vesting of any equity awards not already vested upon the CiC and, unless deferred by the executive, settlement of such equity awards; |
| |
(vi) | Vesting of any benefits under our Supplemental Retirement Plan; and |
| |
(vii) | Continuation of medical, dental, disability and life insurance coverage for 18 months for our Tier I executives, and 12 months for our Tier II executives or until the executive obtains new employment providing similar benefits or attains age 65. |
Table of Contentsour CEO, or (b) two times (2x) in case of our other Tier I executives, the sum of the executive’s annual base salary at the date of termination plus the higher of (1) his or her average AIP award for the three most recent years and (2) his or her target AIP award for the year in which termination occurs, payable in a lump sum;A prorated portion of the executive’s target AIP award for the year in which termination occurs, payable in a lump sum;
For each performance segment that ended prior to the termination, a payment equal to the LTIP award payment the executive would have been entitled to receive for such performance segment had the termination not occurred, payable in a lump sum;
For each performance segment in which the executive’s date of termination occurs, a prorated portion of the executive’s target LTIP award for each performance segment in which the termination occurs, payable in a lump sum;
Vesting of any equity awards not already vested upon the CiC and, unless deferred by the executive, settlement of such equity awards;
Vesting of any benefits under our Supplemental Retirement Plan; and
Continuation of medical, dental, disability and life insurance coverage for 24 months for our CEO, and 18 months for our other Tier I executives, or until the executive obtains new employment providing similar benefits or attains age 65.
Definitions.IFF | 2019 PROXY STATEMENT 77
EXECUTIVE COMPENSATION
Definitions.Our ESP defines Cause and Good Reason as follows:
| ○ | | failure of the executive to perform his or her material duties in any material respect, which if reasonably susceptible to cure, has continued after written notice of such failure has been provided and the executive has not cured such failure within 10 days of receipt of such written notice; |
| ○ | | willful misconduct or gross negligence by the executive that has caused or is reasonably expected to result in material injury to our business, reputation, or prospects; |
| ○ | | the engagement by the executive in illegal conduct or any act of serious dishonesty which could reasonably be expected to result in material injury to our business or reputation or which adversely affects the executive’s ability to perform his or her duties; |
| ○ | | the executive being indicted or convicted of (or having pled guilty or nolo contendere to) a felony or any crime involving moral turpitude, dishonesty, fraud, theft or financial impropriety; or |
| ○ | | a material and willful violation by the executive of our rules, policies or procedures. |
"Cause" means (i) failure of the executive to perform his or her material duties in any material respect, which if reasonably susceptible to cure, has continued after written notice of such failure has been provided and the executive has not cured such failure within 10 days of receipt of such written notice; (ii) willful misconduct or gross negligence by the executive that has caused or is reasonably expected to result in material injury to our business, reputation, or prospects; (iii) the engagement by the executive in illegal conduct or any act of serious dishonesty which could reasonably be expected to result in material injury to our business or reputation or which adversely affects the executive’s ability to perform his or her duties; (iv) the executive being indicted or convicted of (or having pled guilty or nolo contendere to) a felony or any crime involving moral turpitude, dishonesty, fraud, theft or financial impropriety; or (v) a material and willful violation by the executive of our rules, policies or procedures.
“Good Reason” means any of the following: (i) a material decrease in the executive’s base salary, target bonus under an AIP, LTIP or Equity Choice Award, other than as part of an across-the-board reduction applicable to all similarly situated employees; (ii) a material diminution in the executive’s authority, duties or responsibilities; (iii) relocation of executive’s primary work location more than 50 miles from executive’s primary work location at the time of such requested relocation; or (iv) our failure to obtain the binding agreement of any successor expressly to assume and agree to fully perform our obligations under the ESP.
| ○ | | a material decrease in the executive’s base salary, target bonus under an AIP, LTIP or Equity Choice Award, other than as part of anacross-the-board reduction applicable to all similarly situated employees; |
| ○ | | a material diminution in the executive’s authority, duties or responsibilities; |
| ○ | | relocation of executive’s primary work location more than 50 miles from executive’s primary work location at the time of such requested relocation; or |
| ○ | | our failure to obtain the binding agreement of any successor expressly to assume and agree to fully perform our obligations under the ESP. |
However, “good reason” will only exist if the executive gives us notice within 90 days after the initial occurrence of any of the foregoing events and we fail to correct the matter within 30 days following receipt of such notice.
TaxTax Gross-Up. Executives are not entitled to receive a tax “gross-up”“gross-up” payment. Instead, their severance payments would be subject to a “modifiedcut-back” provision, where severance or other payments to that executive would be reduced if this reduction would produce a betterafter-tax result for the executive. There would be no reduction, however, if the executive (who would be responsible for any excise tax) would have a betterafter-tax result without the reduction.
Participant Obligations for the Protection of Our Business and Clawback.
As a condition of the executive’s right to receive severance payments and benefits, the ESP requires that he or she (i) she:not compete with us, (ii)
not solicit, induce, divert, employ, retain or interfere with or attempt to influence our relationship with any employee or person providing services to the Company and (iii)
not interfere with or attempt to influence our relationship with any supplier, customer or other person with whom we do business.
78IFF | 2019 PROXY STATEMENT
EXECUTIVE COMPENSATION
These restrictions apply while an executive is employed and following a termination of employment during the period of 12 months in case ofnon-compete obligations and 24 months in case ofnon-solicitation obligations. In addition, executives are not entitled to severance if they engage in willful misconduct or a violation of a Company policy that is materially detrimental to us while employed by the Company. The ESP also conditions severance payments and benefits on the executive signing a release and termination agreement, and meeting continuing commitments relating to confidentiality, cooperation in litigation and return of our property.
As discussed above in “Compensation Discussion and Analysis - Analysis—Clawback Policy,” compensation received under our ESP is subject to our clawback policy if the executive breaches the obligations noted above or if any of the other events triggering a clawback, such as a financial misstatement or restatement, occur.
Effect of IRC Section 409A.
The timing of some payments and benefits may be restricted under IRC Section 409A, which regulates deferred compensation. Some amounts payable to our NEOs or other participants under the ESP upon termination may be delayed until six months after termination.Payments in connection with death, disability or retirement.
Our executives may also receive payment if their employment terminates as a result of death, disability or retirement as set forth in the terms and conditions of their award agreements with the Company and, in the case of our CEO, his letter agreement as described below under “Other Separation Arrangements - Arrangements—Mr. Fibig.” Our NEOs are also entitled to payments under our Executive Death Benefit Plan as described in this proxy statement under the heading “Compensation Discussion and Analysis - Analysis—Executive Death Benefit Plan.” In the event of disability, our NEOs would be entitled to payments under our Disability Insurance Program that applies to salaried employees generally (60% of monthly salary up to a maximum of $15,000 per month).
Other Separation Arrangements
Details regarding Mr. Fibig’s letter agreement dated May 26, 2014 are included in this proxy statement under the heading “Employment Agreements or Arrangements” following the Summary Compensation Table. Under the terms of his letter agreement, Mr. Fibig is a participant in our ESP and is entitled to receive the benefits set forth for Tier I executivesabove, with the following modifications:
In connection with any termination without Cause or for Good Reason, not in connection with a CiC:
| |
(i)○ | In connection with any termination without Cause or for Good Reason, not in connection with a CiC: |
| |
a. | Mr. Fibig’s severance payment will be a multiple of two times (2x) the sum of his annual base salary plus the average AIP bonus paid to him in the three years prior to termination, payable over 24 months; and |
| |
b.○ | | Mr. Fibig will be entitled to receive a pro-ratedprorated portion of any LTIP award that is in progress on the date of termination, based on target, in alump-sum cash payment.payment; and |
| |
(ii) | Mr. Fibig’s severance payment in connection with any termination without Cause or for Good Reason that occurs within two years after a CiC will be a multiple of three times (3x) the sum of his annual base salary plus the greater of his (a) target AIP award for the year of termination and (b) the average AIP award paid to him for the three fiscal years prior to the termination, and such payments will be payable in a lump sum. In addition, all of Mr. Fibig's outstanding equity awards will vest in full at target; |
| |
(iii) | Mr. Fibig will be entitled to continuation of medical, dental, disability and life insurance coverage for 24 months in the case of termination without Cause or for Good Reason, whether or not in connection with a CiC. |
In connection with any termination without Cause or for Good Reason that occurs within two years after a CiC, all of Mr. Fibig’s outstanding equity awards will vest in full at target;
Any termination by us without cause (as described below) or by Mr. Fibig for any reason requires prior written notice of (i) six months, if the termination occurs on or after the first anniversary but before the second anniversary of his date of employment, or (ii) 90 days, if the termination occurs on or after the second anniversary of his date of employment.
days. Under Mr. Fibig’s letter agreement, “Cause”
means (i) means:willful and continued failure to perform substantially his duties with the Company (other than any such failure resulting from his incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to him by the Board which specifically identifies the manner in which he has not substantially performed his duties, and which provides a 20 day20-day cure period; (ii)
IFF | 2019 PROXY STATEMENT 79
EXECUTIVE COMPENSATION
willful engagement in conduct which is not authorized by the Board or within the normal course of his business decisions and is known by him to be materially detrimental to our best interests or the best interests of any of our subsidiaries, including any misconduct that results in material noncompliance with any financial reporting requirements under the Federal securities laws if such noncompliance results in an accounting restatement; (iii)
willful engagement in illegal conduct or any act of serious dishonesty which adversely affects, or in the reasonable estimation of the Board, could in the future adversely affect his value, reliability or performance to our Company in a material manner (other than any act or failure to act based upon authority given by the Board or advice of counsel for the Company, which shall be presumed to be done in good faith and in the best interests of the Company); or (iv)
his being indicted for or convicted of (or pleading guilty or nolo contendere to) a felony or any crime involving moral turpitude, dishonesty, fraud, theft or financial impropriety.
Under Mr. Fibig’s letter agreement, “Good Reason” means any of the following (i) following:
any reduction in his base salary or target AIP bonus; (ii)
an adverse change in his status or position as CEO (including as a result of a material diminution in his duties or responsibilities); (iii)
required relocation to a principal place of employment outside of the New York City metropolitan area; or (iv)
our failure to obtain an agreement from any successor to all or substantially all of our assets or business to assume and agree to perform his Employment Agreement within fifteen (15)15 days after a merger, consolidation, sale or similar transaction.
However, “Good Reason” will only exist if the CEO resigns from employment within 180 days after the occurrence, without his express written consent, of one of the events enumerated in (i) - (iv)listed above; provided he providegives written notice within 90 days after the event allegedly constituting Good Reason, and the Company will have 30 days after such notice is given to cure.
If Mr. Fibig’s employment terminates on account of death, disability or retirement, he (or his beneficiary or estate) is entitled to any unpaid base salary through the date of termination, any unpaid bonus earned with respect to any fiscal year ending on or preceding the date of termination, payable when bonuses are paid to other senior executives, apro-rata AIP bonus for the fiscal year in which the termination occurs, based on actual performance and payable when bonuses are paid to other senior executives, and all other payments, benefits or perquisites to which he may be entitled under the terms of the Company’s programs. Mr. Fibig will not be entitled to any payment (including any taxgross-up) respecting taxes he may owe under IRC Section 4999 (so-called(so-called “golden parachute taxes”). The separation benefits payments are subject to Mr. Fibig’s delivery to us of an executed general release, resignation from all offices, directorships and fiduciary positions with us and continued compliance with restrictive covenants regardingnon-competition,non-solicitation, confidentiality, cooperation andnon-disparagement. Upon a termination of Mr. Fibig’s employment for any reason, thenon-competition andnon-solicitation covenants continue to apply for two years. If Mr. Fibig’s employment terminates prior to a CiC and he fails to comply with the restrictive covenants, the clawback provisions in the ESP apply.
80IFF | 2019 PROXY STATEMENT
EXECUTIVE COMPENSATION
Potential Payments and Benefits upon aTermination or Change in Control and Various Types of Terminations
The following table shows the estimated payments and value of benefits that we would provide to each of our NEOs if the triggering events described in the heading of the table had occurred on December 31, 2015.
2018.We do not provide any additional benefits to our NEOs upon a voluntary resignation or termination for Cause. Certain assumptions made for purposes of presenting this information and certain amounts not reflected in the table are explained below or in the footnotes to the table.
For all cases, theper-share market price of our common stock is assumed to be $119.64,$134.27, the actual closing price per share on the last trading day of the year, December 31, 2015.2018. In preparing the estimates in this table, we have assumed that any CiC would also constitute a “change in ownership and control” for purposes of the golden parachute excise tax rules. All amounts included in the table are stated in the aggregate, even if the payments will be made on a monthly basis. Except as noted in footnote (7) of the table, these amounts do not include payments and benefits to the extent that they are provided on anon-discriminatory basis to salaried employees generally upon termination of employment. The salary, AIP award and LTIP award otherwise payable to each NEO through December 31, 20152018 is included in the Summary Compensation Table. In addition to the amounts set forth in the table below, in the event of a CiC, the aggregate balance held in our DCP for each of our NEOs who participate in that plan will be automatically accelerated and settled within five business days of the CiC, as opposed to the participant’s original deferral election. The amounts that would have been accelerated in the event of a CiC as well as, in all other cases, the amounts each of our NEOs who participate in that plan would have received according to the participant’s original deferral election, are shown in the Aggregate Balance at FiscalYear-End column of theNon-Qualified Deferred Compensation Table.
IFF | 2019 PROXY STATEMENT 81
EXECUTIVE COMPENSATION
Potential Payments upon Termination or Change in Control
| | | | | | | | | | | | | | | | | | | | |
| | | Involuntary
Termination
Not for Cause
or for Good
Reason Prior
to or More
Than 2 Years
After a CiC | | | Termination
due to Death
(1) | | | Separation
Due to
Retirement or
Disability
Prior to or
More Than 2
Years After a
CiC (2) | | | Involuntary
Termination
Not for Cause
or for Good
Reason
Within 2
Years After a
CiC | | | Separation
Due to
Retirement or
Disability
Within 2
Years After a
CiC (2) | |
Andreas Fibig | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Salary | | $ | 2,600,000 | | | $ | — | | | $ | — | | | $ | 3,900,000 | (3) | | $ | — | |
AIP | | | 3,120,000 | (4) | | | — | | | | — | | | | 4,680,000 | (5) | | | — | |
LTIP (6) | | | 1,140,679 | | | | 1,140,679 | | | | 1,140,679 | | | | 1,140,679 | | | | 1,140,679 | |
Equity (7) | | | 5,210,711 | | | | 9,654,684 | | | | — | | | | 9,654,684 | | | | 9,654,684 | |
Benefits Continuation (8) | | | 78,475 | | | | — | | | | — | | | | 78,475 | | | | — | |
Executive Death Benefit (9) | | | — | | | | 2,600,000 | | | | — | | | | — | | | | — | |
Disability Insurance (10) | | | — | | | | — | | | | 120,000 | | | | — | | | | 120,000 | |
| | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 12,149,865 | | | $ | 13,395,364 | | | $ | 1,260,679 | | | $ | 19,453,839 | | | $ | 10,915,363 | |
| | | | | | |
Richard O’Leary | | | | | | | | | | | | | | | | | | | | |
Salary | | $ | 772,500 | | | $ | — | | | $ | — | | | $ | 1,030,000 | | | $ | — | |
AIP | | | 618,000 | (4) | | | — | | | | — | | | | 824,000 | (5) | | | — | |
LTIP (6) | | | 264,373 | | | | 264,373 | | | | 264,373 | | | | 264,373 | | | | 264,373 | |
Equity (7) | | | 2,011,546 | | | | 2,687,236 | | | | — | | | | 2,687,236 | | | | 2,687,236 | |
Benefits Continuation (8) | | | 55,765 | | | | — | | | | — | | | | 55,765 | | | | — | |
Executive Death Benefit (9) | | | — | | | | 1,030,000 | | | | — | | | | — | | | | — | |
Disability Insurance (10) | | | — | | | | — | | | | 120,000 | | | | — | | | | 120,000 | |
| | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 3,722,184 | | | $ | 3,981,609 | | | $ | 384,373 | | | $ | 4,861,374 | | | $ | 3,071,609 | |
| | | | | | |
Nicolas Mirzayantz | | | | | | | | | | | | | | | | | | | | |
Salary | | $ | 918,000 | | | $ | — | | | $ | — | | | $ | 1,224,000 | | | $ | — | |
AIP | | | 734,400 | (4) | | | — | | | | — | | | | 979,200 | (5) | | | — | |
LTIP (6) | | | 264,373 | | | | 264,373 | | | | 264,373 | | | | 264,373 | | | | 264,373 | |
Equity (7) | | | 1,614,325 | | | | 2,477,909 | | | | — | | | | 2,477,909 | | | | 2,477,909 | |
Benefits Continuation (8) | | | 53,263 | | | | — | | | | — | | | | 53,263 | | | | — | |
Executive Death Benefit (9) | | | — | | | | 1,224,000 | | | | — | | | | — | | | | — | |
Disability Insurance (10) | | | — | | | | — | | | | 120,000 | | | | — | | | | 120,000 | |
| | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 3,584,361 | | | $ | 3,966,282 | | | $ | 384,373 | | | $ | 4,998,745 | | | $ | 2,862,282 | |
Matthias Haeni(11) | | | | | | | | | | | | | | | | | | | | |
Salary | | $ | 872,176 | | | $ | — | | | $ | — | | | $ | 1,162,902 | | | $ | — | |
AIP | | | 697,741 | (4) | | | — | | | | — | | | | 930,322 | (5) | | | — | |
LTIP (6) | | | 264,373 | | | | 264,373 | | | | 264,373 | | | | 264,373 | | | | 264,373 | |
Equity (7) | | | 1,686,309 | | | | 4,029,867 | | | | — | | | | 4,029,867 | | | | 4,029,867 | |
Benefits Continuation (8) | | | 34,133 | | | | — | | | | — | | | | 34,133 | | | | — | |
Executive Death Benefit (9) | | | — | | | | 1,162,902 | | | | — | | | | — | | | | — | |
Disability Insurance (10) | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 3,554,732 | | | $ | 5,457,142 | | | $ | 264,373 | | | $ | 6,421,597 | | | $ | 4,294,240 | |
| | | | | | |
Anne Chwat | | | | | | | | | | | | | | | | | | | | |
Salary | | $ | 727,500 | | | $ | — | | | $ | — | | | $ | 970,000 | | | $ | — | |
AIP | | | 436,500 | (4) | | | — | | | | — | | | | 582,000 | (5) | | | — | |
LTIP (6) | | | 151,690 | | | | 151,690 | | | | 151,690 | | | | 151,690 | | | | 151,690 | |
Equity (7) | | | 1,234,437 | | | | 1,932,266 | | | | — | | | | 1,932,266 | | | | 1,932,266 | |
Benefits Continuation (8) | | | 55,328 | | | | — | | | | — | | | | 55,328 | | | | — | |
Executive Death Benefit (9) | | | — | | | | 970,000 | | | | — | | | | — | | | | — | |
Disability Insurance (10) | | | — | | | | — | | | | 120,000 | | | | — | | | | 120,000 | |
| | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 2,605,455 | | | $ | 3,053,957 | | | $ | 271,690 | | | $ | 3,691,285 | | | $ | 2,203,957 | |
82IFF | 2019 PROXY STATEMENT
|
| | | | | | | | | | | | | | | | | | | |
| | Involuntary Termination Not for Cause or Good Reason Prior to or More Than 2 Years After a CiC | | Termination due to Death(1) | | Separation Due to Retirement or Disability Prior to or More Than 2 Years After a CiC(2) | | Not for Cause or Good Reason Termination Within 2 Years After a CiC | | Separation Due to Retirement or Disability Within 2 Years After a CiC(2) |
| Andreas Fibig | | | | | | | | | |
| Salary | $ | 2,400,000 |
| | $ | — |
| | $ | — |
| | $ | 3,600,000 |
| (3) | $ | — |
|
| AIP | 2,880,000 |
| (4) | — |
| | — |
| | 4,320,000 |
| (5) | — |
|
| LTIP (6) | 771,807 |
| | 771,807 |
| | 771,807 |
| | 771,807 |
| | 771,807 |
|
| ECP Acceleration (7) | 2,018,851 |
| | 5,480,589 |
| | — |
| | 5,480,589 |
| | 5,480,589 |
|
| Medical Benefits (8) | 58,990 |
| | — |
| | — |
| | 58,990 |
| | — |
|
| Executive Death Benefit (9) | — |
| | 2,400,000 |
| | — |
| | — |
| | — |
|
| Executive Death Benefit Cost (10) | 16,471 |
| | — |
| | — |
| | 24,706 |
| | — |
|
| Disability Insurance (11) | — |
| | — |
| | 180,000 |
| | — |
| | 180,000 |
|
| Total | $ | 8,146,119 |
| | $ | 8,652,396 |
| | $ | 951,807 |
| | $ | 14,256,092 |
| | $ | 6,432,396 |
|
| Alison A. Cornell | | | | | | | | | |
| Salary | $ | 840,000 |
| | $ | — |
| | $ | — |
| | $ | 1,120,000 |
| | $ | — |
|
| AIP | 325,874 |
| (4) | — |
| | — |
| | 900,000 |
| (5) | — |
|
| LTIP (6) | 42,626 |
| | 42,626 |
| | 42,626 |
| | 42,626 |
| | 42,626 |
|
| ECP Acceleration (7) | 85,756 |
| | 357,932 |
| | — |
| | 357,932 |
| | 357,932 |
|
| Medical Benefits (8) | 13,571 |
| | — |
| | — |
| | 13,571 |
| | — |
|
| Executive Death Benefit (9) | — |
| | 1,120,000 |
| | — |
| | — |
| | — |
|
| Executive Death Benefit Cost (10) | 339 |
| | — |
| | — |
| | 453 |
| | — |
|
| Disability Insurance (11) | — |
| | — |
| | 180,000 |
| | — |
| | 180,000 |
|
| Total | $ | 1,308,166 |
| | $ | 1,520,558 |
| | $ | 222,626 |
| | $ | 2,434,582 |
| | $ | 580,558 |
|
| Richard O’Leary | | | | | | | | | |
| Salary | $ | 400,000 |
| | $ | — |
| | $ | — |
| | $ | 600,000 |
| | $ | — |
|
| AIP | 220,603 |
| (4) | — |
| | — |
| | 330,904 |
| (5) | — |
|
| LTIP (6) | 86,870 |
| | 86,870 |
| | 86,870 |
| | 86,870 |
| | 86,870 |
|
| ECP Acceleration (7) | 780,607 |
| | 1,296,728 |
| | — |
| | 1,296,728 |
| | 1,296,728 |
|
| Medical Benefits (8) | 29,495 |
| | — |
| | — |
| | 29,495 |
| | — |
|
| Executive Death Benefit (9) | — |
| | 800,000 |
| | — |
| | — |
| | — |
|
| Executive Death Benefit Cost (10) | 7,912 |
| | — |
| | — |
| | 11,868 |
| | — |
|
| Disability Insurance (11) | — |
| | — |
| | 180,000 |
| | — |
| | 180,000 |
|
| Total | $ | 1,525,487 |
| | $ | 2,183,598 |
| | $ | 266,870 |
| | $ | 2,355,865 |
| | $ | 1,563,598 |
|
| Nicolas Mirzayantz | | | | | | | | | |
| Salary | $ | 900,000 |
| | $ | — |
| | $ | — |
| | $ | 1,200,000 |
| | — |
|
| AIP | 720,000 |
| (4) | — |
| | — |
| | 1,120,037 |
| (5) | — |
|
| LTIP (6) | 263,886 |
| | 263,886 |
| | 263,886 |
| | 263,886 |
| | 263,886 |
|
| ECP Acceleration (7) | 3,904,113 |
| | 5,660,181 |
| | — |
| | 5,660,181 |
| | 5,660,181 |
|
| Medical Benefits (8) | 44,243 |
| | — |
| | — |
| | 44,243 |
| | — |
|
| Executive Death Benefit (9) | — |
| | 1,200,000 |
| | — |
| | — |
| | — |
|
| Executive Death Benefit Cost (10) | 8,741 |
| | — |
| | — |
| | 11,655 |
| | — |
|
| Disability Insurance (11) | — |
| | — |
| | 180,000 |
| | — |
| | 180,000 |
|
| Total | $ | 5,840,983 |
| | $ | 7,124,067 |
| | $ | 443,886 |
| | $ | 8,300,002 |
| | $ | 6,104,067 |
|
|
| | | | | | | | | | | | | | | | | | | |
| | Involuntary Termination Not for Cause Prior to or More Than 2 Years After a CiC | | Termination due to Death(1) | | Separation Due to Retirement or Disability Prior to or More Than 2 Years After a CiC(2) | | Not For Cause or Good Reason Termination Within 2 Years After a CiC | | Separation Due to Retirement or Disability Within 2 Years After a CiC(2) |
| Matthias Haeni | | | | | | | | | |
| Salary | $ | 750,000 |
| | $ | — |
| | $ | — |
| | $ | 1,000,000 |
| | $ | — |
|
| AIP | 600,000 |
| (4) | — |
| | — |
| | 800,000 |
| (5) | — |
|
| LTIP (6) | 263,886 |
| | 263,886 |
| | 263,886 |
| | 263,886 |
| | 263,886 |
|
| ECP Acceleration (7) | 902,800 |
| | 1,505,084 |
| | — |
| | 1,505,084 |
| | 1,505,084 |
|
| Medical Benefits (8) | 19,647 |
| | — |
| | — |
| | 19,647 |
| | — |
|
| Executive Death Benefit (9) | — |
| | 1,000,000 |
| | — |
| | — |
| | — |
|
| Executive Death Benefit Cost (10) | 339 |
| | — |
| | — |
| | 453 |
| | — |
|
| Disability Insurance (11) | — |
| | | | 180,000 |
| | — |
| | 180,000 |
|
| Total | $ | 2,536,672 |
| | $ | 2,768,970 |
| | $ | 443,886 |
| | $ | 3,589,070 |
| | $ | 1,948,970 |
|
| Anne Chwat | | | | | | | | | |
| Salary | $ | 697,500 |
| | $ | — |
| | $ | — |
| | $ | 930,000 |
| | $ | — |
|
| AIP | 418,500 |
| (4) | — |
| | — |
| | 679,775 |
| (5) | — |
|
| LTIP (6) | 147,248 |
| | 147,248 |
| | 147,248 |
| | 147,248 |
| | 147,248 |
|
| ECP Acceleration (7) | 1,393,191 |
| | 2,251,503 |
| | — |
| | 2,251,503 |
| | 2,251,503 |
|
| Medical Benefits (8) | 44,243 |
| | — |
| | — |
| | 44,243 |
| | — |
|
| Executive Death Benefit (9) | — |
| | 930,000 |
| | — |
| | — |
| | — |
|
| Executive Death Benefit Cost (10) | 11,984 |
| | — |
| | — |
| | 17,976 |
| | — |
|
| Disability Insurance (11) | — |
| | — |
| | 180,000 |
| | — |
| | 180,000 |
|
| Total | $ | 2,712,666 |
| | $ | 3,328,751 |
| | $ | 327,248 |
| | $ | 4,070,745 |
| | $ | 2,578,751 |
|
_____________________
EXECUTIVE COMPENSATION
| |
| (1) | The amounts in this column represent payments made in the event of the death of the executive either prior to, within two years or more than two years after a CiC, assuming a termination date of December 31, 2015.2018. With respect to amounts shown in the AIP row, if the death of an executive occurred within two years of a CiC, this amount may change as it is the prorated amount of the executive'sexecutive’s target bonus in the year of termination. |
| |
| (2) | Pursuant to the terms of the ESP, an executive who elects to retire after attaining age 62 is entitled to the benefits in this column (less any disability insurance proceeds). |
| |
| (3) | Pursuant to the terms of our ESP, if severance payments are deemed to trigger the excise tax imposed by IRC Section 4999, the executive would receive the greater net after tax benefit of either (1) payment of the excise tax or (2) a reduction to cash severance to the "safe harbor"“safe harbor” level so as not to trigger the excise tax. In Mr. Fibig'sFibig’s case, payment of the excise tax results in the greater net after tax benefit to him. |
| |
| (4) | This amount represents (i) for Mr. Fibig, 2.0x the greater of the average AIP award paid for performance in the three years preceding the year of the presumed December 31, 20152018 termination (i.e., the three years ending December 31, 2014)2017) (or averaged over the lesser number of years during which the executive was eligible for AIP awards) or the executive'sexecutive’s target annual incentive under the AIP for 2015,2018, prorated for the number of active days of employment with the Company during the performance period; (ii) for Messrs. Mirzayantz, and Haeni and Mses.O’Leary and Ms. Chwat, and Cornell, 1.5x the executive'sexecutive’s target annual incentive under the AIP for 2015 prorated for the number of active days of employment with the Company during the performance period; (iii) for Mr. O'Leary, 1.0x the executive's target annual incentive under the AIP for 20152018 prorated for the number of active days of employment with the Company during the performance period. This amount does not take into account any actual AIP amounts paid for 2015,2018, which are set forth in theNon-Equity Incentive Plan Compensation column of the Summary Compensation Table. |
| |
| (5) | For Mr. O'Leary, this amount represents 1.5x, for Messrs. Mirzayantz, and Haeni and Mses.O’Leary and Ms. Chwat and Cornell 2.0x, and Mr. Fibig 3.0x the greater of: (i) the average AIP award paid for performance in the three years preceding the year of the presumed December 31, 20152018 termination (i.e., the three years ending December 31, 2014)2017) (or averaged over the lesser number of years during which the executive was eligible for AIP awards); or (ii) the executive'sexecutive’s target annual incentive under the AIP for 2015.2018. This amount does not take into account any actual AIP amounts paid for 2015,2018, which are set forth in theNon-Equity Incentive Plan Compensation column of the Summary Compensation Table. |
| |
| (6) | The amounts in this row are the additional LTIP amounts that would be payable as severance in cash with respect to the 2014-20162017-2019 and 2015-20172018-2020 LTIP cycles, that would be paid in cash, based on prorated target LTIP for the relevant LTIP cycles in progress. Prorated amounts are based on the number of days worked in each performance period divided by the total number of days in each performance period for each relevant LTIP cycle. This amount does not take into account the actual AIP amounts paid out under the completed 2013-20152016-2018 LTIP cycle, which are discussed in the narrative following the Grants of Plan-Based Award Table under the heading "Long-Term“Long-Term Incentive Plan."” |
| |
| (7) | For termination due to involuntary termination not for cause or by the executive for good reason absent a CiC, this amount represents the value of equity that would continue to vest on a prorated basis. For termination due to death or disability more than two years prior to a CiC, the amounts in this row represent the aggregate value of RSU, PRS and PRSPRSU awards which would immediately vest upon occurrence of the termination event. For termination events within two years after a CiC, the amounts in this row represent the aggregatein-the-money value of the options, SSARs, RSUs, PRS, PRSUs and other equity awards which would become vested as a direct result of the CiC before the stated vesting date specified in the applicable equity award document. The calculation of these amounts does not attribute any additional value to options based on their remaining exercise term and does not discount the value of awards based on the portion of the vesting period elapsed at the date of the CiC. These amounts also do not include any value for equity awards that, by their terms, are not accelerated and continue to vest. |
| |
| (8) | Amounts in this row are the COBRA costs of to provide benefits continuation, including medical, dental, executive and group life insurance and group and supplemental long-term disability. The amounts for |
IFF | 2019 PROXY STATEMENT 83
EXECUTIVE COMPENSATION
| medical and dental benefits are the COBRA costs for the covered period based on assumptions used for financial reporting purposes. Although our medicalThe life insurance and dental insurance is generally availablelong-term disability costs are the premiums to our employees, only participants in our ESP, including our NEOs, would be entitled to haveprovide the benefits paidbenefit for by our Company.the covered period. |
| |
| (9) | The amounts in this row are the amounts that would be payable under our Executive Death Benefit Plan upon the death of the NEO. |
| |
| (10) | The amounts in this row are the costs that we would incur to continue the Executive Death Benefit Plan for the NEO. |
| |
(11) | The amounts in this row are the amounts that would be payable under our disability insuranceSupplemental LTD program upon the NEO's separation from employment due todisability of the NEO. Although long-term disability. This programdisability coverage is generally available to salaried employees.our employees, only certain executives, including our NEOs, participate in the Supplemental LTD program. |
| (11) | For purposes of this table, all amounts were determined by converting by his Euro salary for the full year at an exchange rate of 1.1353 US Dollars to Euros (the exchange rate as of December 28, 2018). |
84IFF | 2019 PROXY STATEMENT
Table
Information About The Meeting
What am I voting on?
At the 2019 Annual Meeting you will be asked to vote on the following proposals. Our Board recommendation for each of Contents
these proposals is set forth below. | | |
Proposal | | Board
Recommendation |
1. To elect eleven members of the Board of Directors, each to hold office for aone-year term expiring at the 2020 Annual Meeting of Shareholders. | | FOR each Director
Nominee |
2. To ratify the selection of PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for the 2019 fiscal year. | | FOR |
3. To approve, on an advisory basis, the compensation of our named executive officers in 2018, which we refer to as “Say on Pay.” | | FOR |
We also will consider other business that properly comes before the meeting in accordance with New York law and ourBy-Laws.
Who can vote?
Holders of our common stock at the close of business on March 6, 2019, are entitled to vote their shares at the 2019 Annual Meeting. As of March 6, 2019, there were 106,634,767 shares of common stock issued, outstanding and entitled to vote. Each share of common stock issued and outstanding is entitled to one vote.
What constitutes a quorum, and why is a quorum required?
We are required to have a quorum of shareholders present to conduct business at the meeting. The presence at the meeting, in person or by proxy, of the holders of a majority of the 106,634,767 shares entitled to vote on the record date (53,317,384 shares) will constitute a quorum, permitting us to conduct the business of the meeting. Abstentions and brokernon-votes are counted as present for purposes of determining a quorum. Shares of common stock for which we have received executed proxies will be counted for purposes of establishing a quorum at the meeting, regardless of how or whether such shares are voted on any specific proposal.
What is the difference between a “shareholder of record” and a “street name” holder?
If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered a “shareholder of record” or a “registered shareholder” of those shares. In this case, your Notice of Internet Availability of Proxy Materials (“Notice”) has been sent to you directly by us.
If your shares are held in a stock brokerage account or by a bank, trust or other nominee or custodian (each, a “Broker”), including shares you may own as a participant in one of our 401(k) plans, you are considered the “beneficial owner” of those shares, which are held in “street name.” A Notice has been forwarded to you by or on behalf of your Broker, who is considered the shareholder of record of those shares. As the beneficial owner, you have the right to direct your Broker how to vote your shares by following the instructions for voting set forth in the Notice.
IFF | 2019 PROXY STATEMENT 85
INFORMATION ABOUT THE MEETING
How do I vote?
If you are a shareholder of record, you may vote:
X. OTHER MATTERSby telephone;
by mail, if you received a paper copy of the proxy materials; or
in person at the meeting.
Detailed instructions for Internet and telephone voting are set forth in the Notice, which contains instructions on how to access our proxy statement, annual report and shareholder notice online, and the printed proxy card.
If your shares are held in one of our 401(k) plans, your proxy will serve as a voting instruction for the trustee of the 401(k) plan, who will vote your shares as you instruct. To allow sufficient time for the trustee to vote, your voting instructions must be received by 11:59 pm Eastern Daylight Time on April 30, 2019. If the trustee does not receive your instructions by that date, the trustee will vote the shares you hold through the 401(k) plan in the same proportion as those shares in the 401(k) plan for which voting instructions were received.
If you are a beneficial owner, but do not hold your shares through the Tel Aviv Stock Exchange (the “TASE”), you must follow the voting procedures of your Broker.
If you are a beneficial owner and your shares are held through the TASE, you must sign and date your proxy card, and attach to it a proof of ownership certificate from the TASE Clearing House Member through which your shares are held (which you can obtain from your TASE broker), which certificate indicates that you were the beneficial owner of such shares as of the record date, and return the proxy card, along with the proof of ownership certificate, to the Company, c/o Gornitzky & Co., via fax to+972-3-560-6555, Attention: Ari Fried, Adv., or bye-mail to: IFFproxy@gornitzky.com.
What are the requirements to elect the director nominees and to approve each of the proposals in this proxy statement?
| | |
Proposal | | Vote Required |
1. Election of Directors | | Majority of Votes Cast |
| |
2. Ratification of Independent Registered Public Accounting Firm | | Majority of Votes Cast |
| |
3. Say on Pay | | Majority of Votes Cast |
Under ourBy-Laws, in an uncontested election of directors, as we have this year, a majority of votes cast is required in order for a director to be elected, which means that a nominee must receive a greater number of votes “FOR” his or her election than votes “AGAINST” in order to be elected. Abstentions are not counted as votes “FOR” or “AGAINST” a director nominee.
The votes cast “FOR” must exceed the votes cast “AGAINST” the ratification of PwC as our independent registered public accounting firm for the 2019 fiscal year. Abstentions are not counted as votes “FOR” or “AGAINST” this proposal.
Proposal 3 is an advisory vote. This means that while we ask shareholders to approve a resolution regarding Say on Pay, it is not an action that requires shareholder approval. If a majority of votes are cast “FOR” the Say on Pay proposal, we will consider the proposal to be approved. Abstentions are not counted as votes “FOR” or “AGAINST” this proposal and will have no effect on the outcome of this proposal.
86IFF | 2019 PROXY STATEMENT
INFORMATION ABOUT THE MEETING
What if I am a beneficial owner and I do not give the nominee voting instructions?
If you are a beneficial owner and your shares are held in “street name,” the Broker is bound by the rules of the NYSE regarding whether or not it can exercise discretionary voting power for any particular proposal if the Broker has not received voting instructions from you. Brokers have the authority to vote shares for which their customers do not provide voting instructions on certain routine matters. A brokernon-vote occurs when a Broker returns a proxy but does not vote on a particular proposal because the Broker does not have discretionary authority to vote on the proposal and has not received specific voting instructions for the proposal from the beneficial owner of the shares. Brokernon-votes are considered to be present at the meeting for purposes of determining the presence of a quorum but are not counted as votes cast.
The table below sets forth, for each proposal on the ballot, whether a Broker can exercise discretion and vote your shares absent your instructions and, if not, the impact of such brokernon-vote on the approval of the proposal.
| | | | |
Proposal | | Can Brokers
Vote Absent
Instructions? | | Impact of
Broker
Non-Vote |
1. Election of Directors | | No | | None |
| | |
2. Ratification of Independent Registered Public Accounting Firm | | Yes | | Not Applicable |
| | |
3. Say on Pay | | No | | None |
What if I sign and return my proxy without making any selections?
If you sign and return your proxy without making any selections, your shares will be voted “FOR” each of the director nominees and “FOR” Proposals 2 and 3. If other matters properly come before the meeting, the proxy holders will have the authority to vote on those matters for you at their discretion. If your shares are held in “street name” or through the TASE, see the question above on how to vote your shares.
How do I change my vote?
A shareholder of record may revoke his or her proxy by giving written notice of revocation to our Corporate Secretary before the meeting, by delivering a later-dated proxy (either in writing, by telephone or over the Internet), or by voting in person at the 2019 Annual Meeting.
If your shares are held in “street name,” you may change your vote by following your Broker’s procedures for revoking or changing your proxy.
If you are a beneficial owner and your shares are held through the TASE, you may revoke or change your vote at any time before the meeting by: (i) communicating such change in writing to our Corporate Secretary or by executing and delivering a later-dated proxy to the Company, c/o Gornitzky & Co., via fax to+972-3-560-6555, Attention: Ari Fried, Adv., or bye-mail to: IFFproxy@gornitzky.com, or (ii) by voting in person at the 2019 Annual Meeting, subject to the satisfaction of the conditions set forth in “How do I vote?” above and “Who can attend the 2019 Annual Meeting” below.
What shares are covered by my proxy card?
Your proxy reflects all shares owned by you at the close of business on March 6, 2019. For participants in our 401(k) plans, shares held in your account as of that date are included in your proxy.
What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, it means that you hold shares in more than one account. To ensure that all of your shares are voted, you should sign and return each proxy card. Alternatively, if you vote by telephone or via the Internet, you will need to vote once for each proxy card and voting instruction card you receive.
IFF | 2019 PROXY STATEMENT 87
INFORMATION ABOUT THE MEETING
Who can attend the 2019 Annual Meeting?
Only shareholders and our invited guests are permitted to attend the 2019 Annual Meeting. To gain admittance, you must bring a form of personal identification to the meeting, where your name will be verified against our record date shareholder list. If a Broker holds your shares and you plan to attend the meeting, you should bring a brokerage statement showing your ownership of the shares as of the record date or a letter from the Broker confirming such ownership, and a form of personal identification. If you wish to vote your shares that are held by a Broker at the meeting, you must obtain a proxy from your Broker and bring such proxy to the meeting.
If you hold your shares through the TASE and you plan to attend the 2019 Annual Meeting, you must bring the proof of ownership certificate from the TASE’s Clearing House Member through which your shares are held, which certificate indicates that you were the beneficial owner of the shares as of the record date, as well as picture identification, such as a valid Israeli driver’s license or passport, for purposes of personal identification.
If I plan to attend the 2019 Annual Meeting, should I still vote by proxy?
Yes. Casting your vote in advance does not affect your right to attend the 2019 Annual Meeting. If you send in your proxy card and also attend the meeting, you do not need to vote again at the meeting unless you want to change your vote. Written ballots will be available at the 2019 Annual Meeting for shareholders of record.
How can I listen to the live audio webcast of the 2019 Annual Meeting?
You may listen to a live audio webcast of the 2019 Annual Meeting at www.iff.com. The webcast will allow you to listen to the Annual Meeting, but shareholders accessing the 2019 Annual Meeting through the webcast will not be considered present at the 2019 Annual Meeting and will not be able to vote their shares through the webcast or ask questions. If you plan to listen to the live audio webcast, then please submit your vote prior to the 2019 Annual Meeting using one of the methods described under “How do I vote?” above. An archived copy of the webcast will be available at www.iff.com following the 2019 Annual Meeting. Registration to listen to the webcast will be required. We have included our website address for reference only. The information contained on our website is not incorporated by reference into this Proxy Statement.
88IFF | 2019 PROXY STATEMENT
Other Matters
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports with the SEC relating to their common stock ownership and changes in such ownership, and to furnish us with copies of all Section 16(a) forms they file. Based on a review of our records and certain written representations received from our executive officers and directors, we believe that during the year ended December 31, 2015,2018, all Section 16(a) filing requirements applicable to directors, executive officers and greater than 10% shareholders were complied with on a timely basis, except (i) a Form 4 reporting a grant of RSUs to Richard O'Leary was not timely filed due to an administrative error, and (ii)for one Form 4 for each of Angelica Cantlon, Anne Chwat, Andreas Fibig, Nicolas Mirzayantz, and Richard O’Leary reporting the grant of stock equivalent units under the Company’s deferred compensation plan was not timely filed due to an administrative error.
Proxy Solicitation Costs
We will pay the entire cost of soliciting proxies. In addition to solicitation by mail, proxies may be solicited on our behalf by directors, officers or employees in person, by telephone, by facsimile or by electronic mail. We have retained Georgeson Inc. to assist in proxy solicitation for a fee of $8,500$9,000 plus expenses.We will reimburse banks, brokers and other custodians, nominees and fiduciaries for their costs in sending proxy materials to the beneficial owners of our common stock.
Shareholder Proposals
In order for a shareholder proposal or proposed director nomination to be considered for inclusion in our proxy materials for next year’s annual meeting of shareholders, the Secretary of our Company must receive the written proposal no later than November 17, 2016.19, 2019. Under Article I, Section 3 of ourBy-Laws, in order for a shareholder to submit a proposal or to nominate any director at next year’s annual meeting of shareholders, the shareholder must give written notice to the Secretary of our Company not less than 90 days nor more than 120 days prior to the anniversary date of this year’s annual meeting of shareholders provided next year’s annual meeting is called for on a date that is within 30 days before or after such anniversary date. Assuming that next year’s annual meeting is held on schedule, we must receive written notice of an intention to introduce a nomination or other item of business at that meeting between January 2, 20171, 2020 and February 1, 2017.January 31, 2020. The notice must also meet all other requirements contained in ourBy-Laws, including the requirement to contain specified information about the proposed business or the director nominee and the shareholder making the proposal.
As of the date of this proxy statement, we do not know of any matters to be presented at the 20162019 Annual Meeting other than those described in this proxy statement. If any other matters should properly come before the meeting, proxies in the enclosed form will be voted on those matters in accordance with the judgment of the person or persons voting the proxies, unless otherwise specified.
Shareholder Communications
Shareholders and other parties interested in communicating directly with the Lead Director, thenon-management directors as a group or all directors as a group may do so by writing to the Lead Director or thenon-management directors or the Board, of Directors, in each case, c/o General Counsel and Secretary, International Flavors & Fragrances Inc., 521 West 57th Street, New York, New York 10019. All communications should include the name, address, telephone number and email address (if any) of the person submitting the communication and indicate whether the person is a shareholder of our Company.
The Board has approved a process for handling correspondence received by our Company on behalf of the Lead Director, thenon-management directors as a group or all directors as a group. Under that process,
IFF | 2019 PROXY STATEMENT 89
OTHER MATTERS
the General Counsel reviews all such correspondence and maintains a log of, and forwards to the appropriate Board member, correspondence that is relevant to (i) the functions of the Board or committees thereof or (ii) other significant matters involving our Company. The General Counsel may screen frivolous or unlawful communications and commercial advertisements. Directors may review the log maintained by the General Counsel at any time.
Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of our internal auditor and handled in accordance with procedures established by the Audit Committee with respect to such matters.
Electronic Delivery
This year we again have elected to take advantage of the SEC’s rule that allows us to furnish proxy materials to you online. We believe electronic delivery will expedite shareholders’ receipt of materials, while lowering costs and reducing the environmental impact of our 20162019 Annual Meeting by reducing printing and mailing of full sets of materials. We mailed the Notice containing instructions on how to access our proxy statement and annual report online on or about March 17, 2016.18, 2019. If you would like to receive a paper copy of the proxy materials, the Notice contains instructions on how to receive a paper copy.
Householding
We have adopted a procedure approved by the SEC called “householding.” Under this procedure, shareholders of record who have the same address and last name will receive only one copy of our Notice, unless one or more of these shareholders notifies us that they wish to continue receiving individual copies. This procedure will reduce our printing costs and postage fees.
If you are eligible for householding, but you and other shareholders of record with whom you share an address currently receive multiple copies of the Notice, or if you hold stock in more than one account, and in either case you wish to receive only a single copy of the Notice for your household, please contact Broadridge Financial Solutions, by calling1-800-542-1061, or by forwarding a written request addressed to Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, New York 11717.
If you participate in householding and wish to receive a separate copy of the Notice, or if you do not wish to participate in householding and prefer to receive separate copies of the Notice in the future, please contact Broadridge Financial Solutions as indicated above. Beneficial shareholders can request information about householding from their nominee.
Available Information
We will furnish without charge to each person whose proxy is being solicited, upon request of any such person, a copy of the 20152019 Annual Report as filed with the SEC, including the financial statements and schedules thereto, but not the exhibits. In addition, such report is available, free of charge, through the Investor -— Financials & Filings -— SEC Filings link on our website at, www.iff.com.www.iff.com. A request for a copy of such report should be directed to International Flavors & Fragrances Inc., 521 West 57th Street, New York, NY 10019, Attention: Investor Relations. A copy of any exhibit to the Form10-K for the year ended December 31, 20152018 will be forwarded following receipt of a written request to Investor Relations.
90IFF | 2019 PROXY STATEMENT
Exhibit A
International Flavors and Fragrances Inc.
GAAP to Non-GAAP Reconciliations
(Amounts in thousands except per share amounts)
|
| | | | | | |
| REVENUE GROWTH |
| | | | | | | |
| | 2013 | | 2014 | | 2015 | |
| Total Company | | | | | | |
| Reported Sales Growth | 5% | | 5% | | -2% | |
| Currency Impact | 0% | | 0% | | 7% | |
| Currency Neutral Sales Growth | 5% | | 5% | | 5% | |
| | | | | | | |
| ADJUSTED OPERATING PROFIT |
| | | | | | | |
| (IN THOUSANDS U.S. $) | 2013 | | 2014 | | 2015 | |
| Total Company | | | | | | |
| As Reported Operating Profit | 516,339 | | 592,321 | | 588,347 | |
| Restructuring and Other Charges | 7,401 | | 6,398 | | 7,594 | |
| Operational Improvement Initiative Costs | 3,672 | | 2,541 | | 1,115 | |
| Spanish Tax Charges | 13,011 | | — | | — | |
| Accelerated Contingent Consideration | — | | — | | 7,192 | |
| Acquisition Related Costs | — | | — | | 18,342 | |
| Spanish Capital Tax Charge Reversal | — | | — | | (10,530) | |
| Adjusted Operating Profit | 540,423 | | 601,260 | | 612,060 | |
|
| | | | | | |
| ADJUSTED EARNINGS PER SHARE (EPS) |
| | | | | | | |
| (IN U.S. $) | 2013 | | 2014 | | 2015 | |
| Total Company | | | | | | |
| As Reported EPS | 4.29 | | 5.06 | | 5.16 | |
| Restructuring and Other Charges Tax Benefit | 0.06 | | 0.05 | | 0.07 | |
| Operational Improvement Initiative Costs | 0.03 | | 0.02 | | 0.01 | |
| Spanish Tax Charges | 0.19 | | (0.05) | | — | |
| Accelerated Contingent Consideration | — | | — | | 0.09 | |
| Acquisition Related Costs | — | | — | | 0.15 | |
| Tax Settlement | — | | — | | (0.13) | |
| Gain on Asset Sale | (0.10) | | — | | — | |
| Spanish Capital Tax Charge Reversal | — | | — | | (0.09) | |
| Adjusted EPS | 4.461 | | 5.08 | | 5.251 | |
| | | | | | | |
1 The sum of the 2013 and 2015 adjusted EPS does not foot due to rounding. |
The Company uses This proxy statement includes certainnon-GAAP financial measures, including: (1) adjusted operating profit and adjusted EPS, which exclude restructuring costs and other significant items of anon-recurring and/ornon-operational nature such as currency neutral sales (which eliminates the effects that result from translating its international sales in U.S. dollars) Adjusted Operating Profit and Adjusted EPS (which excludes the impactgains on sale of our restructuring and other charges,assets, operational improvement initiativeinitiatives, integration related costs, FDA mandated product recall costs, acquisition related costs, Frutarom acquisition related costs, and charges, accelerated contingent consideration, Spanish tax charge/reversal, tax settlements,U.S. Tax reform (often referred to as “Items Impacting Comparability); and (2) adjusted EPS ex amortization, which excludes Items Impacting Comparability and the amortization of acquisition related costs) as the Company believes that these intangible assets. Thesenon-GAAP financial measures are intended to provide investors with an overall perspective of the period-to-period performance ofadditional information regarding our core business.underlying operating results and comparable year-over-year performance. Such information is supplemental to information presented in accordance with GAAP and is not intended to represent a presentation in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures used by other companies.
| | | | | |
| | Year Ended December 31, 2018 |
Adjusted Operating Profit | | | | | |
Reported (GAAP) | | | | $ 583,882 | |
Operational Improvement Initiatives (a) | | | | 2,169 | |
Acquisition Related Costs (b) | | | | (1,289 | ) |
Integration Related Costs (c) | | | | 7,188 | |
Restructuring and Other Charges, net (d) | | | | 4,086 | |
Gain on Sale of Assets | | | | (1,177 | ) |
FDA Mandated Product Recall (e) | | | | (7,125 | ) |
Frutarom Acquisition Related Costs (g) | | | | 89,632 | |
| | | | | |
Adjusted(Non-GAAP) | | | | $ 677,366 | |
| | | | | | | | | | | | | | | | |
| | | Year ended December 31, 2018 | |
| | | Income
before
taxes | | | Taxes on
income | | | Net Income
Attributable
to IFF | | | Diluted
EPS | |
Adjusted Net Income/Diluted EPS | | | | | | | | | | | | | | | | |
Reported (GAAP) | | $ | 447,757 | | | $ | 107,976 | | | $ | 337,302 | | | $ | 3.79 | |
Operational Improvement Initiatives (a) | | | 2,169 | | | | 694 | | | | 1,475 | | | | 0.02 | |
Acquisition Related Costs (b) | | | (1,289) | | | | (311) | | | | (978) | | | | (0.01) | |
Integration Related Costs (c) | | | 7,188 | | | | 1,397 | | | | 5,791 | | | | 0.07 | |
Restructuring and Other Charges, net (d) | | | 4,086 | | | | 1,020 | | | | 3,066 | | | | 0.03 | |
Gains on Sale of Assets | | | (1,177) | | | | (352) | | | | (825) | | | | (0.01) | |
FDA Mandated Product Recall (e) | | | (7,125) | | | | (1,601) | | | | (5,524) | | | | (0.06) | |
U.S. Tax Reform (f) | | | — | | | | (25,345) | | | | 25,345 | | | | 0.29 | |
Frutarom Acquisition Related Costs (g) | | | 155,569 | | | | 28,490 | | | | 127,079 | | | | 1.44 | |
Redemption value adjustment to EPS (h) | | | — | | | | — | | | | — | | | | 0.03 | |
| | | | | | | | | | | | | | | | |
Adjusted(Non-GAAP) | | $ | 607,178 | | | $ | 111,968 | | | $ | 492,731 | | | $ | 5.58 | |
IFF | 2019 PROXY STATEMENT 91
EXHIBIT A- GAAP TONON-GAAP RECONCILIATIONS
| | | | | | | | |
| | Year ended
December 31, 2018 | |
Adjusted Net Income/EPS ex Amortization | | | | | | | | |
Adjusted(Non-GAAP) Net Income | | | | | | $ | 492,731 | |
Amortization of Acquisition related Intangible Assets | | | 75,879 | | | | | |
Tax impact on Amortization of Acquisition related Intangible Assets (i) | | | 13,962 | | | | | |
| | | | | | | | |
Amortization of Acquisition related Intangible Assets, net of tax (j) | | | | | | | 61,917 | |
| | | | | | | | |
Adjusted(Non-GAAP) Net Income ex. Amortization | | | | | | $ | 554,648 | |
| | |
Denominator | | | | | | | | |
Weighted average shares assuming dilution (diluted) | | | | | | | 88,121 | |
Adjusted(Non-GAAP) EPS ex. Amortization | | | | | | $ | 6.28 | |
| | | | | | | | |
| (a) | Represents accelerated depreciation related to a plant relocation in India and Taiwan asset write off. |
| (b) | Represents adjustments to the contingent consideration payable for PowderPure, and transaction costs related to Fragrance Resources and PowderPure within Selling and administrative expenses. |
| (c) | Represents costs related to the integration of the Frutarom acquisition. |
| (d) | Represents severance costs related to the 2017 Productivity Program and costs associated with the termination of agent relationships in a subsidiary. |
| (e) | Principally represents recoveries from the supplier for the third and fourth quarter, partially offset by final payments to the customer made for the effected product in the first quarter. |
| (f) | Represents additional expense incurred related to enactment of certain U.S. tax legislation based on updated repatriation plans requiring accruals for withholding taxes on deemed repatriation. |
| (g) | Represents transaction-related costs and expenses related to the acquisition of Frutarom. Amount primarily includes $23.5 million of amortization for inventory“step-up” costs, $39.4 million of bridge loan commitment fees included in Interest expense; $34.9 million make whole payment on the Senior Notes—2007 and $3.9 million realized loss on a fair value hedge included in Loss on extinguishment of debt; $12.5 million realized gain on a foreign currency derivative included in Other income; and $66.0 million of transaction costs included in Selling and administrative expenses. |
| (h) | Represents the adjustment to EPS related to the excess of the redemption value of certain redeemable noncontrolling interests over their existing carrying value. |
| (i) | Except for amortization, the income tax expense (benefit) onnon-GAAP adjustments is computed in accordance with ASC 740 using the same methodology as the GAAP provision of income taxes. Income tax effects ofnon-GAAP adjustments are calculated based on the applicable statutory tax rate for each jurisdiction in which such charges were incurred, except for those items which arenon-taxable for which the tax expense (benefit) was calculated at 0%. For fiscal year 2018, thesenon-GAAP adjustments were not subject to foreign tax credits or valuation allowances, but to the extent that such factors are applicable to any futurenon-GAAP adjustments we will take such factors into consideration in calculating the tax expense (benefit). For amortization, the tax benefit has been calculated based on the Company’s adjusted worldwide effective tax rate. |
| (j) | Represents all amortization of intangible assets acquired in connection with acquisitions, net of tax. |
92IFF | 2019 PROXY STATEMENT
| | |
INTERNATIONAL FLAVORS & FRAGRANCES INC. | | VOTE BY INTERNET - www.proxyvote.comUse the internet to transmit your voting instructions up until the date and time indicated on the reverse side. Have your proxy card in hand when you access the web site and follow the instructions. |
| ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS If you would like to reduce the costs incurred by International Flavors & Fragrances Inc., in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive shareholder communications electronically in future years. |
| VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until the date and time indicated on the reverse side. Have your proxy card in hand when you call and then follow the instructions. |
| VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717, by the date and time indicated on the reverse side. If you hold your shares through the Tel Aviv Stock Exchange (“TASE”), please sign and date your proxy card, and attach to it a proof of ownership certificate from the TASE Clearing House Member through which your shares are held (which you can obtain from your TASE broker), and return the proxy card, along with the proof of ownership certificate, to the Company, c/o Gornitzky & Co., via fax to +972-3-560-6555, Attention: Ari Fried, Adv., or by e-mail to:IFFproxy@Gornitzky.com |
| VOTE IN PERSON You may vote the shares in person by attending the Annual Meeting. |
|
| | | | |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | E03614-P76126 KEEP THIS PORTION FOR YOUR RECORDS |
| | | | |
| | | | |
DETACH AND RETURN THIS PORTION ONLY |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | INTERNATIONAL FLAVORS & FRAGRANCES INC. | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | The Board of Directors recommends you vote FOR all listed nominees, and FOR Proposals 1, 2 and 3. | | | | | | | | | | | | | | | | |
| | 1. Election of Directors
| | 1. | | Elect eleven members of the Board of Directors for aone-year term expiring at the 2020 Annual Meeting of Shareholders. | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | Nominees: | | | | For | | Against | | Abstain | | | | | | | | | | For | Against | Abstain
| |
| Against | | Abstain | 1a. | | | |
| | | | | | 1a. 1b. 1c. 1d. 1e. 1f. 1g. 1h. 1i. 1j. 1k. | | Marcello V. Bottoli Dr. Linda Buck Michael L. Ducker David R. Epstein Roger W. Ferguson, Jr. John F. Ferraro Andreas Fibig Christina Gold Katherine M. Hudson Dale F. Morrison Stephen Williamson | o | o | o | ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ | | ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ | | ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ | | | | 2. | To ratify | Ratify the selection of PricewaterhouseCoopers LLP as the Company’sour independent registered public accounting firm for 2016. | o | o | o | |
| the 2019 fiscal year. | | | 1b. | Dr. Linda Buck | o | o | o☐ | | ☐ | | | |
☐ | | | 1c. | Michael L. Ducker |
| o | o | o | 3. | Advisory vote to approve | | | | | | | | | | | | | | | |
| | | | | | | | | | 3. | | Approve, on an advisory basis, the compensation paid to the Company’sof our named executive officers in 2015. | o | o | o | |
| 2018. | | | 1d. | David R. Epstein | o | o | o☐ | | ☐ | | | |
☐ | | | 1e. | Roger W. Ferguson, Jr. | o | o | o | | |
| | | | |
| | | 1f. | John F. Ferraro | o | o | o | | | | | | |
| | | 1g. | Andreas Fibig | o | o | o | | | | | | |
| | | 1h. | Christina Gold |
| o | o | o | | | | | | | NOTE:Such other business as may properly come before the meeting or any adjournment or postponement thereof. | |
| | | 1i. | Henry W. Howell, Jr. | o | o | o | |
| | |
1j. | Katherine M. Hudson | o | o | o | | | | | | |
| | | 1k. | Dale F. Morrison | o | o | o | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | For address changes and/or comments, please check this box and write them on the back where indicated. | | | o | |
| | | | ☐ | | | | |
| | | | | | | | | | Please indicate if you plan to attend this meeting. | o | o | | |
☐ | | ☐ | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | Yes | | No | | |
| | | | |
| | | | Please sign exactly as your name(s) appear(s) hereon.appears hereon or, if you hold shares through TASE, as your name(s) appears in the proof of ownership certificate signed by your TASE Clearing House Member. When signing as attorney, executor, administrator, trustee or guardian, please add your title as such. When signing as joint tenants, all parties in the joint tenancy must sign. If signer is a corporation or partnership, please sign in full corporate or partnership name by duly authorized officer. | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Signature [PLEASE SIGN WITHIN BOX] | Date | | | Signature (Joint Owners) | | Date | | |
|
|
ADMISSION TICKET
INTERNATIONAL FLAVORS & FRAGRANCES INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 2016 AT 3:00 P.M. LOCAL TIME/9:00 A.M. EASTERN DAYLIGHT TIME
INTERNATIONAL FLAVORS & FRAGRANCES INC.
61 RUE DE VILLIERS
NEUILLY-SUR-SEINE, FRANCE
ADMITS ONE SHAREHOLDER
|
|
| | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement, Annual Report and Form 10-K are available at www.proxyvote.com.
|
| | |
| | |
|
| | | | | | | |
| | | | | E03615-P76126 |
| | INTERNATIONAL FLAVORS & FRAGRANCES INC.
THIS PROXY CARD/VOTING INSTRUCTION FORM IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 2016
The undersigned hereby appoint(s) each of Mr. Andreas Fibig, Ms. Alison A. Cornell and Ms. Anne Chwat as the attorney and proxy of the undersigned, with full power of substitution, to vote the number of shares of stock the undersigned is entitled to vote at the Annual Meeting of Shareholders of International Flavors & Fragrances Inc. to be held at 61 rue de Villiers, Neuilly-sur-Seine, France on Monday, May 2, 2016 at 3:00 P.M. Local Time/9:00 A.M. Eastern Daylight Time, and any adjournment(s) or postponement(s) thereof (the “Meeting”).
IF YOU ARE A SHAREHOLDER OF RECORD, THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED ON THE REVERSE SIDE. IF NO SUCH DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR, FOR ITEMS 2 AND 3 AND ACCORDING TO THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING. VOTING INSTRUCTIONS MUST BE RECEIVED BY 11:59 P.M. EASTERN DAYLIGHT TIME ON MAY 1, 2016.
If you are a participant in the International Flavors & Fragrances Inc. Retirement Investment Fund Plans (the “401(k) Plans”), this proxy covers all shares for which the undersigned has the right to give voting instructions to Vanguard Fiduciary Trust Company, the trustee of the 401(k) Plans. This proxy, when properly executed, will be voted as directed by the undersigned on the reverse side. Shares in the 401(k) Plans for which voting instructions are not received by 11:59 P.M. Eastern Daylight Time on April 28, 2016, or if no choice is specified, will be voted by the trustee in the same proportion as the shares for which voting instructions are received from other participants in the applicable 401(k) Plan.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD/VOTING INSTRUCTION FORM PROMPTLY USING THE
ENCLOSED REPLY ENVELOPE.
| |
| | Address Changes/Comments: | | | | | | |
| Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | Signature (Joint Owners) | | Date | | |
| | | | |
| | | | | |
| | ADMISSION TICKET INTERNATIONAL FLAVORS & FRAGRANCES INC. ANNUAL MEETING OF SHAREHOLDERS MAY 1, 2019 AT 10:00 A.M. EASTERN DAYLIGHT TIME Boston Consulting Group 10 Hudson Yards, 45th Floor New York, New York 10001 ADMITS ONE SHAREHOLDER | | |
| | | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available atwww.proxyvote.com.
E37702-P03441
INTERNATIONAL FLAVORS & FRAGRANCES INC.
THIS PROXY CARD/VOTING INSTRUCTION FORM IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
MAY 1, 2019
The undersigned hereby appoint(s) each of Mr. Andreas Fibig and Ms. Anne Chwat as the attorney and proxy of the undersigned, with full power of substitution, to vote the number of shares of stock the undersigned is entitled to vote at the Annual Meeting of Shareholders of International Flavors & Fragrances Inc. to be held at Boston Consulting Group, located at 10 Hudson Yards, New York, New York 10001, Wednesday, May 1, 2019 at 10:00 A.M. Eastern Daylight Time, and any adjournment(s) or postponement(s) thereof (the “Meeting”).
IF YOU ARE A SHAREHOLDER OF RECORD, THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED ON THE REVERSE SIDE. IF NO SUCH DIRECTION IS MADE, THIS PROXY WILL BE VOTED “FOR” THE ELECTION OF ALL NOMINEES FOR DIRECTOR, “FOR” PROPOSALS 2 AND 3 AND ACCORDING TO THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING. VOTING INSTRUCTIONS MUST BE RECEIVED BY 11:59 P.M. EASTERN DAYLIGHT TIME ON APRIL 30, 2019.
If you are a participant in the International Flavors & Fragrances Inc. Retirement Investment Fund Plans (the “401(k) Plans”), this proxy covers all shares for which the undersigned has the right to give voting instructions to Vanguard Fiduciary Trust Company, the trustee of the 401(k) Plans. This proxy, when properly executed, will be voted as directed by the undersigned on the reverse side. Shares in the 401(k) Plans for which voting instructions are not received by 11:59 P.M. Eastern Daylight Time on April 26, 2019, or if no choice is specified, will be voted by the trustee in the same proportion as the shares for which voting instructions are received from other participants in the applicable 401(k) Plan.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD/VOTING INSTRUCTION FORM PROMPTLY
USING THE ENCLOSED REPLY ENVELOPE.
| | | | | | |
| | | |
| | | Address Changes/Comments: | | | | |
| | (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) | |
| | | | |
| | | |
| | | | | | | | |
| CONTINUED AND TO BE SIGNED ON REVERSE SIDE | |
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
