Edgewell Personal Care Company and Arch Chemicals were both acquired in 2011 and are no longer publicly traded entities. Accordingly, data regarding them was not available in 2012 when making decisions relating to 2012 restricted stock awards, 2013 base salaries and 2013 annual incentive plan awards. For that reason the peer group used in 2012 consisted of the remaining 17 public companies plus Olin Corp. and Revlon, Inc., a chemical company and a beauty care and personal products company, respectively. These two additions to the peer group were selected because they each possess business and competitive profiles that are similar to the companies that were displaced from the peer group. The relevant financial characteristics of these companies that were added to the peer group also fell within an acceptable range in relation to Sensient’s own financial characteristics. Data regarding the same group of the remaining 17 public companies plus Olin Corp. and Revlon, Inc. was also considered when making Compensation Committee decisions in 2013 relating to 2013 restricted stock awards, 2013 performance stock unit awards, 2014 base salaries and 2014 annual incentive plan awards.In December 2014, the Compensation Committee reviewed and updated the peer group by removing Olin Corp. and Penford Corporation (announced sale in 2014) and by adding Rockwood Holdings, Inc., Kraton Performance Polymers Inc., OM Group Inc., OMNOVA Solutions Inc., Innophos Holdings Inc. and Innospec Inc. These additions to the peer group were selected to better balance the spread of revenue sizes in the peer group and decrease the median revenue size of the peer group. The relevant financial characteristics of these companies that were added to the peer group also fell within an acceptable range in relation to Sensient’s own financial characteristics. Data regarding the peer group of the following 23 public companies was considered when making Compensation Committee decisions in 2014 when making Compensation Committee decisions relating to 2014 performance stock unit awards, 2015 base salaries and 2015 annual incentive plan awards:
Aceto Corporation | FMC Corporation | McCormick & Company, Incorporated | Rockwood Holdings, Inc. | | | | | Albemarle Corporation | H.B. Fuller Company | Minerals Technologies Inc. | Revlon Inc. | | | | | Cabot Corporation | Innophos Holdings Inc. | Nu Skin Enterprises, Inc. | A. Schulman, Inc. | | | | | Cambrex Corporation | Innospec Inc. | OM Group Inc. | Sigma-Aldrich Corporation | | | | | Church & Dwight Co., Inc. | International Flavors & Fragrances Inc. | OMNOVA Solutions Inc. | Stepan CompanyUSANA Health Sciences, Inc. | | | | | Elizabeth Arden, Inc.Ferro Corporation | Kraton Performance PolymersKoppers Holdings Inc. | PolyOne Corporation | W. R. Grace & Co. |
This public company peer group is comparable to Sensient in complexity and market challenges. Sensient’s 2013 market capitalization, and operating income, were slightly aboveand revenue ranked at the median68th, 31st, and 56th percentiles of the peer companies, (ranking at the 54th and 55th percentiles, respectively).
As noted above, similar to the approach taken by the Compensation Committee in December 2013 with respect to Mr. Paul Manning’s compensation as Chief Executive Officer in 2014, the Compensation Committee has targeted Mr. Rolfs’ compensation as Chief Financial Officer in 2015 to be at the median level of our 2014 peer group and his total direct compensation will only exceed the median of our peer group if the Company performs well and above-target payouts are earned under the annual cash incentive awards and long-term equity incentive awards.respectively.
The Compensation Committee has the sole authority to retain and terminate a compensation consulting firm to assist it in the evaluation of compensation of the Chief Executive Officer and other executives and employees of the Company and the sole authority to approve the consultant’s fees and other retention terms. The Compensation Committee is directly responsible for the oversight of the work of any compensation consulting firm retained by the Compensation Committeeit to assist it byin compiling the Comparable Company Data. The Compensation Committee may select a compensation consultant only after taking into consideration all factors relevant to that person’s independence from management, including the following: (A) the provision of other services to the corporation or its affiliates by the person that employs the compensation consultant; (B) the amount of fees received from the corporation or its affiliates by the person that employs the compensation consultant, as a percentage of the total revenue of the person that employs the compensation consultant; (C) the policies and procedures of the person that employs the compensation consultant that are designed to prevent conflicts of interest; (D) any business or personal relationship of the compensation consultant with a member of the Committee; (E) any corporation stock owned by the compensation consultant; and (F) any business or personal relationship of the compensation consultant with an executive officer of the corporation. As part of the process to retain Towers Watson,Alvarez & Marsal, the Compensation Committee evaluated the independence of that firm and its advisers by considering the factors listed above (among other factors that the Committee considered relevant) (1) what other services Towers Watson has provided to Sensient, (2) the amount of fees Towers Watson has received for those services as a percentage of its total revenue, (3) the policies and procedures of Towers Watson that are designed to prevent conflicts of interest, (4) any business or personal relationships between Sensient’s advisers and members of the Committee or other directors or between Sensient executives and Towers Watson or its advisers, (5) the advisers’ holdings of Sensient stock, if any, and (6) the factors set forth in Rule 10C-1(b) of the Securities Exchange Act of 1934, as amended.. The Compensation Committee considered that the Company has alsonot used Towers WatsonAlvarez & Marsal for certainany other services and that the compensation to Towers Watson for these other services forin recent years has not exceeded $120,000 annually.years. On the basis of the Compensation Committee’s evaluation of the factors listed above, the Committee determined that the advisers’ relationships and other services did not create conflicts of interest and did not adversely affect Towers Watson’sAlvarez & Marsal’s independence and advice. In January 2018, Alvarez & Marsal informed Sensient of their decision to discontinue the Chicago practice group Sensient retained in 2017. Accordingly, Sensient will be engaging a new independent firm in 2018.
The Company’s Senior Vice President, Administration customarilymanagement assists the Compensation Committee in its determinations by helping compile and organize information, arranging meetings, and acting as Company support for the Compensation Committee’s work. He also serves as the Compensation Committee’s officer contact, butThe Company’s management has no decision-making authority on the Compensation Committee. In reviewing the performance and establishing the compensation levels of other elected officers, the Compensation Committee also takes into account the recommendations of the Company’s Chief Executive Officer.
Components of Executive Compensation and Benefits Programs
The following table summarizes the components of our executive compensation and benefits programs for named executive officers in 2015.officers. Each component is designed to align the interests of our named executive officers with the Company and our shareholders and is discussed in further detail below.
| Component | Type | | Objective | 1. | Base Salary | Fixed | - | Attract and retain talented executives by providing base pay at market levels | 2. | Annual Cash Incentive Plan Awards | Performance Based | - - | Drive Company and individual annual performance Focus on growing local currency adjusted earnings per share (50% weight of awards)(60% weight), adjusted gross profit as a percentage of revenue (30% weight of awards)(20% weight), and adjusted cash flow (20% weight of awards)weight) | | | | 3. | Long-Term Equity Incentive Awards | Performance Based (100% of 20142017 awards) | - -
| Align executive officers’ interests with those of the Company and its shareholders over a three-year vesting period | | | | - | Focus on Company’s operating performance in terms of local currencyadjusted EBIT Growthgrowth (70% weight) and Returnadjusted return on Invested Capitalinvested capital (30% weight) over a three-year performance period (January 1, 20152018 – December 31, 2017)2020) | 4. | Retirement Benefits | Fixed | - | Attract and retain talented executives by providing retirement benefits to executives that have contributed to the Company’s success over an extended period of time | 5. | Other Benefits | Fixed | - | Attract and retain talented executives by providing other benefits at market levels |
The performance measures for the Annual Cash Incentive Plan and Long-Term Equity Incentive Awards are defined by the Committee and may include adjustments to the Company’s financial results calculated in accordance with GAAP. The performance measures described above may be adjusted to remove the effect of foreign currency translation, restructuring costs, the impact of acquisitions, and other items as defined by the Committee. The Compensation Committee relied in part on a study of peer group performance in setting specific performance targets for both the annual cash incentive and the long-term equity incentive awards. 41
Base Salary
As with most companies, base salary is one of the key elements in attracting and retaining Sensient’s key officers. When determining the amount of base salary for a particular executive, the Committee considers prior salary (and the proposed percentage change in salary),; job responsibilities and changes in job responsibilities,responsibilities; individual experience and length of experience; demonstrated leadership performance potential,ability; Company and individual performance and potential performance; retention considerations,needs; years of service at Sensient,Sensient; years in the officer’s current position,position; market data (where available) regarding salary changes for similar positionspositions; and the increased responsibilities of officers operating in a lean corporate environment. These factors ordinarily are not specifically weighted or ranked; instead, they are considered in a holistic way.
For 2014,2017, the Committee began with market data (comprised of the Comparable Company Data) indicating that base salaries of executives at similar companies were generally expected to increase from 20132016 levels by approximately 3%, and then determined actual base salaries for Sensient’s executives after considering management’s recommendations. The Company continues to believe that the unique skills and qualifications of its executive officers are important to the ongoing growth and success of the Company. The annual salary increase for 20132016 to 20142017 given to most of the named executive officers was between 3% and 4.1%7.4%. In two instances larger increases were awarded because one executive’s 2013 base pay was significantly below the midpoint observed in the market and another executive had recently been promoted to a new position with increased responsibilities.
Annual Incentive Plan BonusesAwards
Sensient maintains annual management incentive plans for its elected officers.officers, business unit General Managers, and other senior leaders. Annual incentive compensation is intended to provide cash-based incentives based upon achieving overall Company, group, or groupdivisional financial goals and to place a significant part of each elected officer’s total compensation at risk depending upon achievement of those goals. In 2013, the Compensation Committee significantly modified the Company’s annual incentive plan to reduce the emphasis placed on consolidated earnings per share and assign more meaningful weight to other financial objectives used to calculate annual incentive awards. For annual incentive awards issued in 2012 and prior years, which were generally set in December of the year but based on performance during the following year, performance was measured primarily based on earnings per share with supplemental targets based on improvements in revenue, cash flow, return on invested capital, expense levels and gross profit as a percentage of revenue, subject to an overall maximum on the aggregate incentive compensation awarded. For some officers the Company also used a measure of group operating profit. In October 2013, we announced significant changes to our annual cash-based incentive plan to incorporate feedback received from shareholders during the 2013 proxy season. As a result of this feedback, we changed our annual incentive award to provide three operating targets upon which performance would be measured and to eliminate supplemental targets. This change reduced the emphasis placed on consolidated earnings per share and assigned more meaningful weight to other financial objectives, thereby enhancing the linkage between pay and performance.
In December 2014, Sensient issued annual cash incentive awards which are to be based on performance during 2015 and which are calculated using a weighted average of the Company’s achievement of three performance goals – local currency earnings per share (50% weight), gross profit as a percentage of revenue (30% weight) and cash flow (20% weight). The annual cash incentive bonuses are subject to a target level for each of the three performance goals, with bonuses for the executive officers in the range of 50% to 85% of annual base salary (depending on the officer’s position in the Company) paid if the target levels are achieved with respect to each performance goal. Performance in excess of the targeted levels allows for an increased award, but awards are capped at 200% of the bonus at the targeted levels. Performance below the targeted levels can result in a reduced award, or no award at all if none of the minimum threshold levels are achieved. The particular targets and financial goals used are those which the Compensation Committee determines best reflect or which are important to achieving increased shareholder value over the long term without undertaking unnecessary or excessive risks. The Compensation Committee generally sets target bonus award levels that keep Sensient’s levels at least competitive with its industry and provide meaningful incentives for superior performance. The Committee has discretion to reduce any award by up to 20% if the Committee determines a reduction to be appropriate, such as if the Committee determines that the executive caused the Company to take unreasonableunnecessary or unnecessaryexcessive risks.
For annual incentive awards issued in 2016 based upon the achievement of performance goals during 2017, performance was measured based on a weighted average of the Company’s achievement of three performance goals:
| · | local currency adjusted earnings per share (60% weight), |
| · | adjusted gross profit as a percentage of revenue (20% weight), and |
| · | adjusted cash flow (20% weight). |
These are non-GAAP financial measures. See the tables and their footnotes below for information regarding these measures and how they were calculated.
For some officers, including three of the named executive officers as discussed below, the Company also used a measure of group operating profit, group revenue, and group working capital levels. In light of the foregoing, the Company’s objective is to set incentive goals that are quantitative and measurable and that represent meaningful improvement from the prior year while still being capable of achievement at the “target” level. See page 44 for a detailed description of the current targets. Each of these targets is an objective measure of performance that we believe is widely accepted by investors. After the end of the year, the Company compares Sensient’s actual annual performance against the goals for each of the performance measures to determine the amount (if any) that it pays the eligible executive officersAwards earned under the annual incentive plan applicable for the year, subject to Committee discretion to reduce the awardsin 2017, based upon targets set in December 2016, were as described above. For example, in 2015 the Chief Executive Officer can earn an incentive payment equal to 85% of base salary under the annual incentive plan applicable to him if “target” performance is achieved for each of the local currency earnings per share, gross profit as a percentage of revenue and cash flow performance measures during the fiscal year. The other named executive officers currently would earn 65% of their base salaries in the case of “target” local currency earnings per share, gross profit as a percentage of revenue and cash flow performance. Performance in excess of the targeted level in any performance goal results in a payment of up to double the weighted amount of that performance goal if a specified “maximum” is achieved. For example, performance in excess of the targeted level of cash flow (which is given 20% weight in the formula) could result in a maximum of 40% (200% of the 20% weight) of the award being earned for the cash flow performance goal. Lower performance in one or more performance goals can result in a reduced award, subject to a specified “minimum” level for each of local currency earnings per share, gross profit as a percentage of revenue and cash flow. The Committee determined that these levels of annual incentive bonuses were appropriate based on analysis of the most recent Comparable Company Data. Nonetheless, the target percentage payout may vary from year to year. The amount Sensient pays will also increase or decrease from year to year in accordance with measuring actual performance against our target performance measures.
For awards made in 2013 to be based on performance during 2014, amounts paid under the bonus plan were based on the performance goals and specific targets described in the table below for Sensient as a consolidated whole, subject to adjustment for excluded items as provided in the plan.below:
Performance Goal | 2017 Target (1) and Percentage of Target Award Earned | | 2017 Calculation (2) | | | Percentage Weight of Award Formula | | | | | | | | | | Local currency adjusted earnings per share | $3.20 per share minimum, 30%; $3.43 per share target, 100%; $3.53 per share maximum, 200% | | $3.40 per share | | | | 60% | | | | | | | | | | | Adjusted gross profit as a percentage of revenue | 34.9% minimum, 0%; 35.4%, 30%; 35.65% target, 100%; 35.9% maximum, 200% | | | 35.2% | | | | 20% | | | | | | | | | | | | Adjusted cash flow | $192.4 million minimum, 0% $196.3 million, 30%; $202.1 million target, 100%; $205.9 million maximum, 200% | | $167.8 million | | | | 20% | |
Performance Goal | | 2014 Target(1) and Percentage of Target Bonus Earned | | 2014 Actual Results(2) | | Percentage Weight of Bonus Formula | | | | | | | | Consolidated earnings per share | | $2.72 per share minimum, 30%; | | $3.02 per | | 50% | | | $2.88 per share target, 100%; | | share | | | | | $2.96 per share maximum, 200% | | | | | | | | | | | | Gross profit as a percentage of revenue | | 32.7% minimum, 30%; | | 33.9% | | 30% | | | 32.8% target, 100%; | | | | | | | 32.9% maximum, 200% | | | | | | | | | | | | Cash flow | | $169.7 million minimum, 30%; | | $201.4 | | 20% | | | $173.0 million target, 100%; | | million | | | | | $176.3 million maximum, 200% | | | | |
| (1) | Each performance goal for 2014 was subject to aA minimum, target, and maximum payment level were set for each performance goal for purposes of determining any awards as shown above. 20142017 performance below the minimum level would have resulted in 0% of the target bonus paidno payment for that performance goal and 20142017 performance equal to or above the maximum level would have resulted in a payment of 200% of the target bonus paidaward for that performance goal. InterpolationWhen performance fell between various payment levels, interpolation was used to calculate the payout whenpayment level. Actual payments to our named executive officers earned based on 2017 performance fell between the minimum and target or betweenranged from 17.4% to 76.2% of the target award amounts and maximum levels. The 2014 consolidated earnings per share minimum, target and maximum amounts have been restated (by an increase of 2 cents to each amount) to removeare reflected in the impact of 2014 discontinued operations.Summary Compensation Table under “Non-Equity Incentive Plan Compensation.” |
| (2) | The Annual Plansannual incentive plans provide that in comparing actual performance against the targeted Performance Goals,performance goals, the Compensation Committee may exclude from the comparison any item that was not considered for the establishment of the Performance Goalsperformance goals and is related to an activity or event that is outside of the Company’s ordinary course of business as it deems appropriate, provided the exclusion does not cause the award to fail to constitute “performance-based compensation” under Section 162(m) of the Internal Revenue Code. The Committee setCompany’s local currency adjusted results exclude restructuring and other costs, the 2014 targets excluding any restructuring costsimpact of the Tax Cuts and Jobs Act (“2017 Tax Legislation”), and the impact of 2014 discontinued operations.foreign exchange rates. The exclusion made toCommittee set the 2017 targets excluding the results of the European Natural Ingredients business (which the Company sold in March 2017) and impact of any accounts receivable securitization transactions. These exclusions increased earnings per share pursuant to this provision for 2014 was $1.51. Cashby $1.37, increased adjusted gross profit by 30 basis points, and decreased adjusted cash flow was adjusted by $12.2$12.7 million for payments related to the restructuring activities.in 2017. |
OnIn December 4, 2014, the Compensation Committee set the performance goals under our2017, Sensient issued annual cash incentive plans for fiscal 2015. For awards madethat are contingent upon the achievement of performance goals during 2018. As in 2014 to be based on2017, performance during 2015, amounts paid under the bonus plan will be measured based onupon a weighted average of the Company’s achievement of three performance goals – local currency adjusted earnings per share (60% weight), adjusted gross profit as a percentage of revenue (20% weight) and specificadjusted cash flow (20% weight). The annual cash incentive awards are subject to a target level for each of the three performance goals, with awards for the named executive officers in the range of 65% to 100% of annual base salary (depending on the officer’s position in the Company) paid if the target levels are achieved for each performance goal. Performance in excess of the targeted levels allows for an increased award, but awards are capped at 200% of the award at the targeted levels. Performance below the targeted levels can result in a proportional award, or no award at all if none of the minimum threshold levels are achieved. These targets and financial goals are those that the Compensation Committee determines are important to achieving increased shareholder value over the long term without undertaking unnecessary or excessive risks. The Compensation Committee generally sets target award levels that keep Sensient’s levels at least competitive with its industry and provide meaningful incentives for superior performance.
Award targets under the annual incentive plan for 2018, based upon targets set on December 7, 2017, are as described in the table below. In setting the targets below, for Sensient as a consolidated whole, subjectthe Compensation Committee used peer company performance data in order to adjustment for excluded items as providedestablish targets that were challenging, yet achievable and also in line with past performance within the plan.peer group.
Performance Goal | 2018 Target (1) and Percentage of Target Award Earned | | 2017 Baseline (2) | | | Percentage Weight of Award Formula | | | | | | | | | | Local currency adjusted earnings per share | $3.40 per share minimum, 30%; $3.61 per share target, 100%; $3.74 per share maximum, 200% | | $3.42 per share | | | | 60% | | | | | | | | | | | Adjusted gross profit as a percentage of revenue | 35.2% minimum, 0%; 35.7%, 30%; 35.95% target, 100%; 36.2% maximum, 200% | | | 35.2% | | | | 20% | | | | | | | | | | | | Adjusted cash flow | $167.8 million minimum, 0% $171.2 million, 30%; $176.2 million target, 100%; $179.6 million maximum, 200% | | $167.8 million | | | | 20% | |
Performance Goal | | 2015 Target(1) and Percentage of Target Bonus Earned | | 2014 Actual Results(2) | | Percentage Weight of Bonus Formula | | | | | | | | Local currency consolidated earnings per share | | $2.95 per share minimum, 30%; | | $3.02 per | | 50% | | | $3.16 per share target, 100%; | | share | | | | | $3.24 per share maximum, 200% | | | | | | | | | | | | Gross profit as a percentage of revenue | | 34.0% minimum, 30%; | | 33.9% | | 30% | | | 34.1% target, 100%; | | | | | | | 34.2% maximum, 200% | | | | | | | | | | | | Cash flow | | $205.4 million minimum, 30%; | | $201.4 | | 20% | | | $209.4 million target, 100%; | | million | | | | | $213.4 million maximum, 200% | | | | |
| (1) | Each performance goal for 2015 is subject to a minimum,Minimum, target, and maximum payment levels are set for each performance goal for purposes of determining any awards, as shown above. 20152018 performance below the minimum level wouldwill result in 0% of the target bonus paidno payment for that performance goal and 2015goal; 2018 performance equal to or above the maximum level wouldwill result in a payment of 200% of the target bonus paidaward level for that performance goal. InterpolationShould performance fall between the various payment levels, interpolation will be used to calculate the payout if the performance falls between the minimum and target or between the target and maximum levels.payment level. |
| (2) | The 2014 Actual Results (adjusted for excluded items discussed earlier)2017 Baseline for each performance goal is provided solely for comparison against the 20152018 targeted Performance Goals.performance goals. The annual incentive plans provide that in comparing performance against the targeted performance goals, the Compensation Committee may exclude from the comparison any item that was not considered for the establishment of the performance goals and is related to an activity or event that is outside of the Company’s ordinary course of business as it deems appropriate, provided the exclusion does not cause the award to fail to constitute “performance-based compensation” under Section 162(m) of the Internal Revenue Code, to the extent applicable. The Company’s local currency adjusted results exclude restructuring and other costs, the impact of the 2017 Tax Legislation, and the impact of foreign exchange rates. The Committee set the 2018 targets excluding the results of the European Natural Ingredients business and the impact of any accounts receivable securitization transactions. The 2017 Baseline figures noted in the table above are adjusted for these amounts using the actual 2017 foreign exchange rates. |
For 2014The Company’s objective is to set incentive goals that are quantitative and 2015,measurable and that represent meaningful improvement from the namedprior year while still being capable of achievement at the “target” level. Each of these targets is an objective measure of performance that we believe is widely accepted by investors. After the end of the year, the Company compares Sensient’s performance against the goals for each of the performance measures to determine the amount (if any) that it pays the eligible executive officers except Mr. Geraghtyunder the applicable annual management incentive plan, subject to Committee discretion to reduce the awards as described above. The Committee determined that these levels of annual incentive awards were appropriate based on analysis of the most recent Comparable Company Data. Nonetheless, the target percentage payout may vary from year to year. The amount Sensient pays will also increase or decrease from year to year in accordance with measuring performance against our target performance measures.
Messrs. Manning (Chairman, President, and CEO) and Rolfs (CFO) received orand will receive incentive compensation opportunities based onupon the performance of the Company as a whole, rather than on the performance of any specific business unit of the Company. Mr. Geraghty’sThe incentive compensation was and will beof each of our Group Presidents is based 70% on theupon performance of the Colorapplicable Group and 30% on the performance of the Company as a whole.
In December 2011, Sensient adopted a new clawback policy, effective January 1, 2012, for the recovery of equity- based and other incentive compensation from the offending officer or officers if Sensient is required to prepare an accounting restatement due to Sensient’s material noncompliance with any financial reporting requirements under the securities laws as a result of misconduct from a current or former executive officer. Under the clawback policy, the Compensation Committee has discretion to recover any bonus or other incentive-based or equity-based compensation received by the offending officer during the 12-month period following the first public issuance or filing of the noncompliant financial document and any profits realized by the offending officer from the sale of Sensient securities during that 12-month period. Although it appears likely that a three-year clawback policy will be required under future SEC regulations and NYSE listing standards called for by the Dodd-Frank Act, those specific requirements have not yet been proposed or adopted. The Company decided to adopt a clawback policy even before the SEC requirements become effective in order to minimize any investor concerns in this regard.
Equity Awards
In recent years, Sensient has provided equity incentive compensation to its executive officers primarily through the Company’s 19982007 Stock Plan and, 2002beginning in 2017, the 2017 Stock Option PlansPlan. The Company’s 2017 Stock Plan was approved by the Company’s shareholders in 2017 and is substantially similar to the 2007 Stock Plan (collectively, the “Plans”).Plan. We believe that including a significant level of equity-based awards aligns the financial interests of our management with those of Sensient’s shareholders as well as with the long-term strategic objectives of the Company since the ultimate value of equity-based awards is tied to the value of Sensient’s stock over the long term and these awards provide executives with a further equity stake in the Company. This is especially true in light of the Company’s robust stock ownership and “hold-to-retirement” requirements for executives,the Chief Executive Officer, discussed below.
Sensient’s long-term equity incentive compensation for its principalnamed executive officers in recent years has been composed entirely of restrictedperformance stock awards,units, with no stock options.options or time-vested restricted stock. The 20072017 Stock Plan authorizes the Committee to make restricted stock grants that may include both time vesting and performance-based elements.
In December 2014,2017, the Compensation Committee awarded performance stock units that are calculated based on future performance over a three-year performance period and which are based on a weighted average of two performance metrics – local currencymetrics:
| · | adjusted EBIT growth (70% weight) and |
| · | adjusted return on invested capital (30% weight). |
These are non-GAAP financial measures. See the tables and return on invested capital (30% weight). In December 2014, the equity awards to the named executive officers consisted 100% of performance stock units. their footnotes below for information regarding these measures and how they were calculated. The performance stock units, ifto the extent earned, will vest (i.e., become freely transferable) after three years or, ifyears. If the individual’s employment terminates because of death, disability, or retirement after reaching retirement age, before the end of the three-year performance period, a prorated portion of the performance stock units (calculated by dividing the number of full months of the performance period that the individual worked for the Company by thirty-six), if earned, will vest onafter three years. The Compensation Committee, in its sole discretion, may vest some or all of the dateremaining performance stock units eligible for vesting. If a change of control occurs during the individual’s employment terminates. Forthree-year performance period, the Company will issue one share of stock per performance stock unit that could become vested assuming performance at 100% of target levels. Award targets under the performance stock unit awards granted in 2014 and based on our three-year performance during 2015-2017, the performance stock units2017 are based on a weighted average of the performance goals and specific targetsas described in the table below. In setting the targets below, for Sensient as a consolidated whole, subjectthe Compensation Committee used peer company performance data in order to adjustment for excluded items as providedestablish targets that were challenging, yet achievable and also in line with past performance within the applicable Plan.peer group. Three-Year Performance Goal | 2018-2020 Target (1) and Percentage of Performance Goal Earned | | 2017 Baseline (2) | | | Percentage Weight of PSU Award Formula | | | | | | | | | | Local currency adjusted EBIT growth | -5% Compound Annual Growth Rate (CAGR) on 2017 EBIT minimum, 0%; 0% CAGR on 2017 EBIT, 25%; 5% CAGR on 2017 EBIT target, 100%; 8% CAGR on 2017 EBIT maximum, 150% | | $215.7 million | | | | 70% | | | | | | | | | | | Adjusted return on invested capital | 25 basis points decrease on 2017 ROIC minimum, 0%; No change on 2017 ROIC, 25%; 25 basis points increase on 2017 ROIC target, 100%; 50 basis points increase on 2017 ROIC maximum, 150% | | | 10.9% | | | | 30% | |
Three Year Performance Goal | | 2015 Target(1) and Percentage of Performance Goal Earned | | 2014 Actual Results(2) | | Percentage Weight of PSU Award Formula | | | | | | | | Local currency EBIT growth | | -5% Compound Annual Growth Rate (CAGR) on | | $221.2 million | | 70% | | | 2014 actual EBIT minimum, 0%; | | | | | | | 0% CAGR on 2014 actual EBIT; 25% | | | | | | | 5% CAGR on 2014 actual EBIT target, 100%; | | | | | | | 7% CAGR on 2014 actual EBIT maximum, 150% | | | | | | | | | | | | Return on invested capital | | 50 basis points decrease on 2014 actual ROIC | | 10.2% | | 30% | | | minimum, 0%; | | | | | | | No change on 2014 actual ROIC target, 50%; | | | | | | | 50 basis points increase on 2014 actual ROIC maximum, 150% | | | | |
| (1) | Each three-year performance goal for 2015-20172018-2020 is subject to a minimum, target, and maximum level for purposes of determining any awards as shown above. Three-year performance below the minimum level would result in 0% of the target earnedno award for that performance goal and three-year performance equal to or above the maximum level would result in an award of 150% of the target earnedlevel for that performance goal. Interpolation will be used to calculate the payoutaward if the performance falls between the various levels. |
| (2) | The 2014 Actual ResultsCompany’s local currency adjusted results exclude restructuring and other costs, the impact of the 2017 Tax Legislation, and the impact of foreign exchange rates. The 2017 Baseline for each performance goal is provided solely for comparison and have been adjusted forexcludes the results of the European Natural Ingredients business and the impact of restructuring costs.any accounts receivable securitization transactions. |
For 2014all outstanding performance stock unit awards, any executive officer whose employment with the Company terminates because of death, disability, or retirement after reaching retirement age, prior to the end of the three yearthree-year performance period, will become vested in the full award determined pursuant to the formula multiplied by the number of full months elapsed since the beginning of the performance period divided by thirty-six, provided, however, that the Compensation Committee, in its sole discretion, may vest some or all of the remaining performance stock units eligible for vesting. UponIf a change of control occurs during the three-year performance period, the Company will issue one share of stock per performance stock unit that could become vested assuming performance at 100% of target levels.
For 2013Since 2014, Sensient has issued 100% performance stock unit awards anyto its executive officer that has reached retirement age, received performance stock unit awards and worked for the Company during any part of the performance period, before voluntarily terminating his or her employment with the Company, will become vested in the full award determined pursuant to the formula upon the expiration of the two-year performance period. The Compensation Committee, in its sole discretion, may vest some or all of the performance stock units eligible for vesting to any executive officer that voluntarily terminates his or her employment with the Company after the two-year performance period but before the end of the restricted period and before such officer has reached retirement age. Any executive officer whose employment with the Company terminates because of death or disability after the two-year performance period but prior to the end of the three year restricted period will become vested in the full award determined pursuant to the formula multiplied by the number of full months elapsed since the beginning of the restricted period divided by thirty-six, provided, however, that the Compensation Committee, in its sole discretion, may vest some or all of the remaining performance stock units eligible for vesting. Upon a change of control during the two-year performance period, the Company will issue one share of stock per performance stock unit that could become vested assuming performance at 100% of target levels.
The equity awards to the named executive officers between 2007 and 2012 were based on time-vesting and ordinarily would vest (i.e., become freely transferable) on the five year anniversary of the grant date or when the individual retires after attaining age 65 (if earlier). The equity awards to the named executive officers in 2013 consisted of (a) 50% time-vesting restricted stock that ordinarily would vest on the three year anniversary of the grant date or when the individual retires after attaining age 65 (if earlier) and (b) 50% performance stock units with a two-year performance period that ordinarily would vest on the on the three year anniversary of the grant date, when the individual retires after attaining age 65 (if earlier). Time-vesting awards to Messrs. Kenneth Manning, Hobbs and Hammond all vested immediately upon grant because each has attained age 65.
Beginning in 2007, Sensient switched from primarily issuing options to relying instead on restricted stock awards because accounting rule changes made options less efficient for the Company by requiring that stock options (like restricted stock awards) be expensed over the vesting period (or until age 65) whether or not the options were ever exercised by the executive. Although we have recently modified the performance and vesting criteria for our equity awards, inofficers. In future years, our Compensation Committee may further grant equity awards using the same performance criteria as for the non-equity based cash incentive plan discussed above, using entirely different criteria, providing for time vesting without regard to any performance criteria, or inusing any combination of these alternatives.
The following table shows the performance metrics and weighting that the Compensation Committee set for our 2014 performance stock units and our degree of attainment of these goals:
Three-Year Performance Goal | 2015-2017 Target (1) and Percentage of Performance Goal Earned | | 2015-2017 Calculation (2) | | Percentage Weight of PSU Award Formula | | | | | | | | | Local currency adjusted EBIT growth | -5% Compound Annual Growth Rate (CAGR) on 2014 EBIT minimum, 0%; 0% CAGR on 2014 EBIT, 25%; 5% CAGR on 2014 EBIT target, 100%; 7% CAGR on 2014 EBIT maximum, 150% | | $235.9 million (2.23% CAGR) | | | 70% | | | | | | | | | | Adjusted return on invested capital | 50 basis points decrease on 2014 ROIC minimum, 0%; No change on 2014 ROIC, 50%; 50 basis points increase on 2014 ROIC maximum, 150% | | 10.9% (70 bps increase) | | | 30% | |
| (1) | Each three-year performance goal for 2015-2017 is subject to a minimum, target, and maximum level for purposes of determining any awards as shown above. Three-year performance below the minimum level would result in no award for that performance goal and three-year performance equal to or above the maximum level would result in an award of 150% of the target level for that performance goal. Interpolation will be used to calculate the award if the performance falls between the various levels. |
| (2) | Our stock plans provide that in comparing performance against the targeted performance goals, the Compensation Committee shall adjust performance targets to mitigate the unbudgeted impact of material, unusual or nonrecurring gains and losses, accounting changes, the effect of foreign currency translation or other extraordinary events not foreseen at the time the targets were set unless the Committee provides otherwise at the time of establishing the targets. The Company’s local currency adjusted results exclude restructuring and other costs, the impact of the 2017 Tax Legislation, and the impact of foreign exchange rates. The Committee set the 2015-2017 targets excluding the results of the European Natural Ingredients business (which the Company sold in March 2017). This exclusion decreased local currency adjusted EBIT by $0.2 million and had no impact on adjusted return on invested capital. |
Based on 2015-2017 performance, each named executive officer (other than Mr. Grover) received 85.6% of the 2014 performance stock unit award. Mr. Paul Manning earned 28,762 performance stock units, Mr. Rolfs earned 13,011 performance stock units, Mr. Geraghty earned 6,762 performance stock units, and Mr. Wilkins earned 7,190 performance stock units. The performance stock units earned by each named executive officer (other than Mr. Grover) vested on February 8, 2018. Stock Ownership Guidelines
Even when the restrictions have lapsed on equity awards, Sensient has long had a written policypolicies that generally requiredrequire executive officers and employeesindependent directors to hold all of their Sensient stock throughoutuntil their employment. Until 2011retirement from Sensient. In 2017, the written policy indicatedCompensation Committee, partially based upon feedback from a number of third party advisors interviewed in 2017 for the role of compensation consultant (for which the Company ultimately engaged Alvarez & Marsal), modified the hold-to-retirement provisions of its stock ownership guidelines for elected officers so that they now apply to the Chief Executive Officer should own stock (excluding unexercised stock options but including restricted stock) with a value of at least four times his annual base salary and thatnot the other executive officers should ownofficers. The Company’s prior hold-to-retirement provisions were unusual in the market. The Company believes that the rigorous application of the hold-to-retire policy to all executives in combination with the Company’s 100% performance stock withgrants and other policies was even more unusual and could potentially harm the Company’s ability to attract and retain executive talent. The “hold-to-retirement” policy (as revised) applies to any additional net shares awarded by the Company to the Chief Executive Officer in the future and requires him to hold such shares until he retires or is no longer employed by the Company, except that he may: (1) exercise and sell shares from an option expiring within one year; (2) at age 60 or over, sell pursuant to a valueBoard-approved Rule 10b5-1 plan; and (3) sell up to 50% of at least two or three times their annual base salaries. In 2011shares upon the policy was amendedvesting of restricted stock to increase thepermit payment of related federal and state income and payroll taxes.
The Company’s stock ownership requirement to beguidelines for elected officers are applicable within three years from theiran officer’s date of election forand provide as follows:
| · | the Chief Executive Officer should own stock with a value of at least six times his annual base salary; |
| · | Senior Vice Presidents (currently Mr. Rolfs) should own stock with a value of at least four times their annual base salaries; and |
| · | other executive officers should own stock with a value of at least two times their annual base salaries |
(in each case ownership excludes unexercised stock options, but includes all restricted stock and performance stock units at the Chief Executive Officer to six times his annual base salary and to increase the requirement for Senior Vice Presidents (currently Messrs. Hammond and Rolfs) to four times their annual base salaries. “target” payment amount).
The policy also prohibits hedging transactions using Company stock, the use of Company stock as collateral in a margin account, and loans of Company stock for purposes of short selling.
The 2011 amendments also formalized Sensient’s “hold-to-retirement” policy for any additional net shares awarded by the Company in the future until the executive retires or is no longer employed by the Company, with the exceptions noted above for: (1) exercise and sales of shares from an option expiring within one year, (2) executives aged 60 or over who sell pursuant to a Board-approved Rule 10b5-1 plan and (3) sales of up to 50% of shares upon the vesting of restrictedCompany’s stock to permit payment of related federal and state income and payroll taxes. In December 2013 the policy was amended to include the new performance stock units at the “target” payment amount for determining the amount of stock held by an individual subject to the policy. The Company also amended its written policyownership guidelines for independent directors by increasingprovide that independent directors should own at least 1,000 shares of Common Stock (excluding unexercised stock options but including restricted stock) within a year following a director’s initial election to the stock ownership requirementBoard and addingshares with a “hold to retirementvalue of at least five times the annual retainer for directors after five years of service on the Board. This policy includes a “hold-to-retirement from the Board” requirement for at least 75% of any additional net shares awarded to them, with exceptions for the sale of shares from the exercise of options expiring within one year, or the sale of up to 50% of restricted shares upon vesting (to permit payment of related taxes). The minimum ownership component now requires that directors should own at least 1,000 shares of Sensient common stock (excluding unexercised stock options but including restricted stock) within a year following a director’s initial election to the Board and shares with a value of at least five times the annual retainer for directors after five years of service on the Board. This policy also prohibitsdirector guidelines similarly prohibit hedging transactions using Company stock, the use of Company stock as collateral in a margin account, and loans of Company stock for purposes of short selling.
All of the Company’s directors and named executive officers comply with these robust stock ownership requirements and the Company’s policies against hedging, short selling, and use of Company stock as collateral. As a result, the portion of an executive’s net worth invested in Sensient stock generally increases throughout the executive’s career, which createscreating a strong alignment with the interests of our shareholders. Based
Executive Compensation Clawback Policy
Sensient’s clawback policy became effective on publicly available information,January 1, 2012. The policy provides for the recovery of equity-based and other incentive compensation from the offending officer(s) if Sensient is required to prepare an accounting restatement due to Sensient’s material noncompliance with any financial reporting requirements under the securities laws as a result of misconduct from a current or former executive officer. Under the policy, the Compensation Committee has discretion to recover any bonus, or other incentive-based or equity-based compensation, received by the offending officer during the 12-month period following the first public issuance or filing of the noncompliant financial document and any profits realized by the offending officer from the sale of Sensient securities during that 12-month period. It is uncertain whether a three-year clawback policy will be required under future SEC regulations and NYSE listing standards called for by the Dodd-Frank Act. The Company decided to adopt a clawback policy even before the SEC requirements become effective in order to minimize any investor concerns in this regard. If new SEC or NYSE requirements become effective, we believe the combination ofwill amend our robust stock ownership requirements and hold-to-retirement policy (with limited exceptions) is unique within our peer group and should help assure that this will continue.as necessary to comply with those requirements. Retirement Benefits
See the description of Sensient’s supplemental retirement plan included in the compensation tables portion of this proxy statement.
Other Benefits
Sensient’s executive officers receive various other benefits in the same manner as other salaried employees. For example, the Company provides executive officers and salaried employees with health insurance, vacation, and sick pay. For key executives, Sensient has also provided other benefits, including automobiles, club memberships, financial planning, and sometimes relocation assistance or other benefits.
Chief Executive Officer’s Employment Agreement
Mr. Paul Manning is the only officer of the Company who currently has an employment agreement. A description of certain terms of Mr. Paul Manning’s employment agreement is provided below.
Compensation for Mr. Paul Manning
Mr. Paul Manning has an employment agreement with the Company that commenced on February 2, 2014.9, 2017. The initial term of employment is three years, commencing on the effective date, and the employment agreement is renewable by mutual agreement.date. The agreement provides for the payment of base salary (subject to annual adjustment by mutual agreement), plus bonus eligibility (with no guarantee that any bonus will be earned and paid), participation in incentive, savings, and retirement plans, and customary benefits. The agreement containsincorporates by reference a one-year non-competition covenant that will begin on the date Mr. Paul Manning ceases to serve as Chief Executive Officer.
For 2014,2015, 2016, and 2017, Sensient’s principal corporate goals and objectives relevant to Mr. Paul Manning’s compensation were to achieve excellent overall financial performance and increased shareholder value by executing Sensient’s strategic plans, including strengthening Sensient’s management organization.
For 2014,2015, 2016, and 2017, the Committee set Mr. Paul Manning’s base salary at $800,000$840,000, $875,000, and $910,000 per annum. Thisannum, respectively. Each amount was selected based on the evaluations described above and on Sensient’s overall financial performance and Mr. Paul Manning’s leadership role. In addition, for fiscal 2014,2015, and 2016, his potential annual bonus paymentcash incentive award was 85% of base salary at “target” performance, which was somewhat below potential bonusesawards of other companies based on the Comparable Company Data. For 2014fiscal 2017, his potential annual cash incentive award was 100% of base salary at “target” performance. For 2015, 2016, and 2017, the target bonusesawards were based on a weighted average of the Company’s achievement of three performance goals – local currency adjusted earnings per share, (50% weight),adjusted gross profit as a percentage of revenue, (30% weight) and adjusted cash flow (20% weight). See pages 43 and 44 for a further description of the specific targets for 2014 and 2015, respectively.flow.
Sensient granted Mr. Paul Manning 25,000 shares of time-based vesting restricted stock in 2012, 20,500 shares of time-based vesting restricted stock and 20,50035,400 performance stock units in 2013 and 33,6002015, 34,900 performance stock units in 2014.2016, and 39,100 performance stock units in 2017. The award for each year was based on Mr. Manning’s performance with respect to the year in which the award was granted in accordance with the evaluation described above. The criteria for equity compensation awards are discussed in the subsection above entitled “Equity Awards.”
For 20142017, Mr. Manning also participated in the Company benefit plans available to other executive officers, including the SERP, the supplemental benefit plan, and the deferred compensation plan. Mr. Manning’s participation in these retirement plans was on the same basis as other executive officers of the Company.
Sensient’s Chief Executive Officer typically receives a higher salary, a higher potential bonus, and larger equity awards than our other executive officers, which is typicalconsistent with the practices of the companies included in the Comparable Company Data. Expired Employment Agreement with Mr. Kenneth ManningData and most other public companies.
Mr. Kenneth Manning had anManning’s employment agreement with the Company that expired by its terms on February 1, 2014. The agreement providedincludes significant obligations upon early termination of employment (regardless of a change of control) without “cause” or for the payment“good reason” as defined therein and as described below under “Potential Payments Upon Termination or Change of base salary (subject to annual adjustment by mutual agreement), plus bonus eligibility (with no guarantee that any bonus will be earned and paid), participation in incentive, savings and retirement plans, and customary benefits. The agreement contained a one-year non-competition covenant that will begin on the date Mr. Kenneth Manning ceases to serve as Chairman of the Board.
For 2012, 2013 and 2014, the Committee set Mr. Kenneth Manning’s base salary at $1,035,400, $1,066,500 and $1,098,500 per annum, respectively. Each amount was selected based on the evaluations described above and on Sensient’s overall financial performance and Mr. Kenneth Manning’s leadership role. For fiscal 2012, 2013 and 2014, his potential annual bonus payment was 85% of base salary paid at “target” performance. For 2012 the target bonuses for all of the named executive officers (including Mr. Kenneth Manning) were based primarily on earnings per share, but also included additional targets based on improvements in cash flow, return on invested capital, revenue, and gross profit as a percentage of revenue (subject to an overall maximum on the aggregate incentive compensation awarded). For 2013 the target bonuses were again based primarily on earnings per share, with additional targets based on improvements in cash flow, return on invested capital, and gross profit as a percentage of revenue (subject to an overall maximum on the aggregate incentive compensation awarded). For 2014 the target bonuses were based on a weighted average of the Company’s achievement of three performance goals – earnings per share (50% weight), gross profit as a percentage of revenue (30% weight) and cash flow (20% weight). For 2014, Mr. Kenneth Manning was eligible to receive a bonus based on a percentage of his salary paid in 2014. See page 43 for a further description of the specific targets for 2014.
Sensient did not grant an equity award to Mr. Kenneth Manning in 2014 in connection with his employment agreement or retirement. Sensient granted Mr. Kenneth Manning 90,000 shares of time-based vesting restricted stock in 2012 and 33,500 shares of time-based vesting restricted stock and 33,500 performance stock units in 2013. The award for each year was based on Mr. Kenneth Manning’s performance with respect to the year in which the award was granted in accordance with the evaluation described above. The criteria for equity compensation awards are discussed in the subsection above entitled “Equity Awards.Control.”
Until his retirement on February 1, 2014, Mr. Kenneth Manning participated in the Company benefit plans available to other executive officers, including the SERP, the supplemental benefit plan and the deferred compensation plan, on the same basis as other executive officers of the Company.47
Change of Control Agreements
The Company maintains change of control agreements with all of its elected executive officers, including the named executive officers. These agreements are customary in Sensient’s industry and help to attract and retain key executives in the event of a change of control. These agreements are not employment agreements and have no effect unless there is a change of control. UnderFor these purposes, a “change of control” ordinarily occurs if a person acquired 30% or more of Sensient’s Common Stock, a majority of Sensient’s Board consists of persons other than those nominated by the Board, or Sensient is a party to a merger, consolidation, or sale of assets, or acquires the assets of another entity and Sensient’s owners have less than 50% of the Common Stock and voting power of the resulting entity.
Each of these agreements provides that in the event that there is an acquisition or otherof a change of control, of the Company, the Company will continue to employ the executive for a period of three years.years following the date of such change of control. During this period, the executive will receive as compensation a base salary, subject to annual adjustment, bonus awards in accordance with past practice, and all other customary benefits in effect as of the date of the change of control. Each agreement can be terminated upon 30 days’ notice by the Company in the event of the executive’s disability. The agreements can also be terminated by the Company for “cause” and by the executive for “good reason.” (See “Potential(See “Potential Payments Upon Termination or Change of Control” below for a description of “cause” and “good reason” as used in the agreement.) Until 2010, the agreements provided that a termination by the executive for any reason during the 30-day period immediately following the first anniversary of the change of control was deemed to be a termination for good reason, but they were amended in 2010 to delete that provision. If terminated by the Company other than for cause or disability, or by the executive for good reason, the Company will pay the executive an amount equal to the sum of (i) accrued unpaid deferred compensation and vacation pay and (ii) three times the sum of the executive’s base salary plus the greater of the highest annual bonus (x) for the last five years or (y) since reaching age 50. The executive will also be entitled to coverage under existing benefit plans and benefits for three years and a payment equal to the vested amounts plus a payment equal to three additional years of employer contributions under Sensient’s retirement and deferred compensation plans, which generally provide for full vesting if a change of control occurs. The circumstances under whichIf terminated for cause, the Company will pay the executive his annual base salary through termination. If the executive’s employment may cease generally are a terminationis terminated by reason of death or disability, the employee without cause within three years after an acquisitionCompany will pay certain accrued obligations and other customary death or an employee choosing to leave for a specified good reason within that period. disability benefits. See “Tax“Tax Aspects of Executive Compensation” below. The Compensation Committee believes that these change of control benefits as revised, are important for attracting and retaining executive talent, and help to ensure that executive officers can remain focused during periods of uncertainty, and that protecting the executives in this way serves Sensient’s long-term best interests.interests and the long-term best interests of all stakeholders. Sensient has established a so-called “Rabbi Trust” for the payments of the Company’s obligations in the event of a change of control. As noted above, the Company also has an employment agreement with Mr. Paul Manning that includes significant obligations upon early termination of employment (regardless of a change of control) without “cause” as defined therein. See “Potential Payments Upon Termination or Change of Control” for further information about these agreements.
Tax Aspects of Executive Compensation
Section 162(m) of the Internal Revenue Code generally limits the corporate tax deduction for compensation paid to certain executive officers that is not “performance based” to $1 million annually per executive officer. Prior to January 1, 2018, there was an exception to this limit for “performance-based” compensation and Sensient’s stock and incentive plans have beenwere designed so that outstanding stock option awards granted to the covered individuals meetmet the performance-based compensation exception to Section 162(m) requirements for performance-based compensation. .
However, the Company hasas previously noted, that there may behave been instances in which the Company determinesdetermined that it cannotcould not structure compensation to comply with these requirements and that, inthe Section 162(m) requirements. In those instances, the Compensation Committee may electhave elected to structure elements of compensation to accomplish business objectives that are in the best interests of the Company and its shareholders, even though doing so may reducehave reduced the amount of Sensient’s tax deduction for the compensation. In addition, as an executive approaches age 65, the compensation expense amortization of his restricted stock awards accelerates, potentially triggering the Section 162(m) limitation. The compensation of Mr. Kenneth Manning in 2012 and 2013, and the compensation of Mr. Hammond in 2012, exceeded the Section 162(m) limitation, primarily as a result of their restricted stock awards.
Other provisions of the Internal Revenue Code also can affect the decisions that Sensient makes. Under Section 280G of the Internal Revenue Code, a 20% excise tax is imposed upon executive officers who receive “excess” payments upon a change in control of a public corporation to the extent the payments received by them exceed an amount approximating three times their average annual compensation. The excise tax applies to all payments over annual compensation, determined by a five-year average. A company also loses its tax deduction for “excess” payments. Sensient’s change of control employment and severance agreements do not provide for tax gross-ups. See “Compensation“Compensation Objectives and Philosophy” above.
In addition, the Internal Revenue Code was recently amended to imposeimposes a surtax under Section 409A of the Internal Revenue Code under certain circumstances when deferred compensation is paid to current or former executive officers of publicly-held corporations. We have structured our benefit plans and agreements to comply with Section 409A of the Internal Revenue Code in order to avoid any adverse tax consequences on the Company or its executive officers as a result of the surtax under Section 409A. Executive Compensation Tables (2012, 2013(2015, 2016, and 2014)2017)
Summary
The tables below summarize compensation to the Company’s Chief Executive Officer, Chief Financial Officer, and the Company’s three Group Presidents, who were the next three most highly compensated executive officers who were serving in those positions at the end of 2014 and former Chief Executive Officer who served until his retirement on February 1, 2014.2017. SUMMARY COMPENSATION TABLE Name and Principal Position(1) | | Year | | Salary ($)(3) | | | Bonus ($) | | | Stock Awards ($)(4) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($)(5) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | | | All Other Compensation ($)(7)(8) | | | Total ($) | | Kenneth P. Manning(2) | | 2014 | | $ | 218,292 | | | $ | - | | | $ | 98,226 | | | $ | - | | | $ | 155,621 | | | $ | 218,000 | | | $ | 1,021,069 | | | $ | 1,711,208 | | Chairman | | 2013 | | | 1,066,500 | | | | - | | | | 3,252,850 | | | | - | | | | 1,813,050 | | | | - | | | | 197,372 | | | | 6,329,772 | | | | 2012 | | | 1,035,400 | | | | - | | | | 3,240,000 | | | | - | | | | 1,364,140 | | | | 630,000 | | | | 223,730 | | | | 6,493,270 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Paul Manning | | 2014 | | | 800,000 | | | | - | | | | 2,001,216 | | | | - | | | | 1,360,000 | | | | 3,751,000 | | | | 86,854 | | | | 7,999,070 | | President and Chief | | 2013 | | | 457,700 | | | | - | | | | 1,990,550 | | | | - | | | | 595,010 | | | | - | | | | 141,593 | | | | 3,184,853 | | Executive Officer | | 2012 | | | 362,548 | | | | - | | | | 900,000 | | | | - | | | | 389,608 | | | | 1,944,000 | | | | 58,922 | | | | 3,655,078 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Richard F. Hobbs | | 2014 | | | 554,000 | | | | - | | | 1,447,308 | | | | - | | | | 720,200 | | | | 775,000 | | | | 76,266 | | | | 3,572,774 | | Senior Vice President | | 2013 | | | 537,900 | | | | - | | | | 1,446,790 | | | | - | | | | 699,270 | | | | - | | | | 97,863 | | | | 2,781,823 | | and Chief Financial | | 2012 | | | 522,200 | | | | - | | | | 1,440,000 | | | | - | | | | 526,117 | | | | 227,000 | | | | 99,137 | | | | 2,814,454 | | Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | John L. Hammond | | 2014 | | | 395,400 | | | | - | | | | 1,101,860 | | | | - | | | | 514,020 | | | | 554,000 | | | | 58,405 | | | | 2,623,685 | | Senior Vice President, | | 2013 | | | 383,900 | | | | - | | | | 1,097,230 | | | | - | | | | 499,070 | | | | - | | | | 66,634 | | | | 2,046,834 | | General Counsel and | | 2012 | | | 372,700 | | | | - | | | | 1,080,000 | | | | - | | | | 375,495 | | | | 162,000 | | | | 73,334 | | | | 2,063,529 | | Secretary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stephen J. Rolfs | | 2014 | | | 381,300 | | | | - | | | | 905,312 | | | | - | | | | 495,690 | | | | 506,000 | | | | 59,568 | | | | 2,347,870 | | Senior Vice President, | | 2013 | | | 366,300 | | | | - | | | | 835,060 | | | | - | | | | 476,190 | | | | - | | | | 72,157 | | | | 1,749,707 | | Administration | | 2012 | | | 352,200 | | | | - | | | | 792,000 | | | | - | | | | 354,842 | | | | 400,000 | | | | 63,825 | | | | 1,962,867 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael C. Geraghty | | 2014 | | | 355,610 | | | | - | | | | 470,524 | | | | - | | | | 276,469 | | | | 1,575,000 | | | | 37,699 | | | | 2,715,302 | | President, Color | | 2013 | | | 325,740 | | | | - | | | | 466,080 | | | | - | | | | 230,726 | | | | - | | | | 41,666 | | | | 1,064,212 | | Group | | 2012 | | | 252,775 | | | | - | | | | 380,085 | | | | - | | | | 173,454 | | | | - | | | | 27,965 | | | | 834,279 | |
Name and Principal Position | Year | | Salary ($)(2) | | Bonus ($)(3) | | | Stock Awards ($)(4) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($)(5) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | | All Other Compensation ($)(7)(8) | | Total ($) | | Paul Manning | 2017 | | $ | 910,000 | | | $ | - | | | $ | 3,002,880 | | | $ | - | | | $ | 528,710 | | | $ | 653,000 | | | $ | 126,291 | | | $ | 5,220,881 | | Chairman, President and | 2016 | | | 875,000 | | | | - | | | | 2,703,354 | | | | - | | | | 1,144,245 | | | | 320,000 | | | | 100,937 | | | | 5,143,536 | | Chief Executive Officer | 2015 | | | 840,000 | | | | - | | | | 2,300,646 | | | | - | | | | 714,000 | | | | - | | | | 137,612 | | | | 3,992,258 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stephen J. Rolfs | 2017 | | | 457,600 | | | | - | | | | 898,560 | | | | - | | | | 172,813 | | | | 152,000 | | | | 63,935 | | | | 1,744,908 | | Senior Vice President | 2016 | | | 440,000 | | | | - | | | | 898,536 | | | | - | | | | 440,005 | | | | 178,000 | | | | 54,115 | | | | 2,010,656 | | and Chief Financial Officer | 2015 | | | 419,430 | | | | - | | | | 903,361 | | | | - | | | | 272,630 | | | | 119,000 | | | | 62,620 | | | | 1,777,041 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael C. Geraghty | 2017 | | | 397,500 | | | | - | | | | 599,040 | | | | - | | | | 193,216 | | | | 112,000 | | | | 51,925 | | | | 1,353,681 | | President, Color Group | 2016 | | | 373,390 | | | | - | | | | 596,442 | | | | - | | | | 353,972 | | | | 79,000 | | | | 42,578 | | | | 1,445,382 | | | 2015 | | | 373,390 | | | | - | | | | 454,930 | | | | - | | | | 92,140 | | | | 129,000 | | | | 48,724 | | | | 1,098,184 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gautam Grover | 2017 | | | 350,200 | | | | - | | | | 514,560 | | | | - | | | | 39,676 | | | | - | | | | 35,217 | | | | 939,653 | | President, Flavors Group | 2016 | | | 340,000 | | | | 60,750 | | | | 518,982 | | | | - | | | | 137,211 | | | | - | | | | 26,770 | | | | 1,083,713 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Robert Wilkins(1) | 2017 | | | 295,244 | | | | - | | | | 514,560 | | | | - | | | | 33,450 | | | | 234,000 | | | | 68,534 | | | | 1,145,788 | | President, Asia Pacific Group | 2016 | | | 266,705 | | | | - | | | | 518,982 | | | | - | | | | 156,648 | | | | - | | | | 62,506 | | | | 1,004,841 | | | 2015 | | | 287,516 | | | | - | | | | 402,938 | | | | - | | | | 127,657 | | | | 37,000 | | | | 70,502 | | | | 925,613 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | The positions listed in the table above are as of December 31, 2014. Mr. Kenneth Manning retired as Chief Executive Officer on February 1, 2014Wilkins is an Australia-based employee and the Board appointed Mr. Paul Manning as Presidentamounts listed above under the columns entitled “Salary,” “Non-Equity Incentive Plan Compensation,” and Chief Executive Officer“All Other Compensation” are delivered in Australian dollars. In calculating the U.S. dollar equivalent for items that are not denominated in U.S. dollars, the Company converts each payment into U.S. dollars based on February 2, 2014. Mr. Hobbs retired as Chief Financial Officer on February 6, 2015 andan average exchange rate for the Board appointed Mr. Rolfs as Senior Vice President and Chief Financial Officer on February 7, 2015.applicable year. |
(2) | Mr. Kenneth Manning’s 2014 total compensation includes $296,278 in director’s fees (annual retainer, meeting attendance and chairmanship fees) and $615,389 in advisory fees which, together with the Retirement Plan Benefits and Non-Retirement Plan Benefits described in footnotes (7) and (8) below, are reported under the column entitled “All Other Compensation” in the “Summary Compensation Table” above, and $98,226 in shares of restricted stock (awarded annually to each non-management director) which is reported in the column entitled “Stock Awards” in the “Summary Compensation Table” above. The Company generally pays director’s fees quarterly in advance. Mr. Manning received five quarterly payments of director’s fees and advisory fees during 2014, including a prorated payment of first quarter 2014 director’s fees and advisory fees paid on February 3, 2014 and an advance payment of first quarter 2015 director’s fees and advisory fees paid on December 18, 2014. |
(3) | Includes amounts paid to Mr. Kenneth ManningWilkins in 20142015 for accrued and unused vacation, and amounts paid to Mr. Michael Geraghty in each year for accrued and unused paid time off. |
(3) | Includes 50% of the sign-on bonus paid to Mr. Grover in 2016, the remaining 50% of which was paid to Mr. Grover upon the commencement of his employment with Sensient in 2015. |
(4) | The amounts in the table reflect the grant date fair value of stock awards to the named executive officer. Accounting Standards Codification (“ASC”) 718 requires recognition of compensation expense over the vesting period (or until retirement age) for stock awards granted to employees based on the estimated fair market value of the equity awards at the time of grant. The ultimate values of the stock awards to the executives generally will depend on the future market price of Sensient’s common stock,our Common Stock and achievement of performance conditions, which cannot be forecasted with reasonable accuracy. With respect to performance stock units, the amounts in the table assume the target level of performance conditions will be achieved. The values of the performance stock units at the grant date in 2017, 2016, and 2015, respectively, assuming the maximum level of performance conditions will be achieved are as follows: Mr. Paul Manning — $4,504,320, $4,055,031, and $3,450,969; Mr. Rolfs — $1,347,840, $1,347,804, and $1,355,042; Mr. Geraghty — $898,560, $894,663, and $682,395; Mr. Grover — $771,840 and $778,473; and Mr. Wilkins — $771,840, $778,473, and $604,407. |
(5) | Amounts shown represent the amounts earned under the Company’s annual management incentive plans with respect to the years indicated. The targets for each year were set in December of the preceding year. The amounts paid to these officers under the management incentive plans with respect to 20142017 and 2016 were based upon a weighted average of achievement of targeted levels of local currency earnings per share (60% weight), gross profit as a percentage of revenue (20% weight), and adjusted cash flow (20% weight). The amounts paid to these officers under the management incentive plans with respect to 2015 were based upon a weighted average of achievement of targeted levels of local currency earnings per share (50% weight), gross profit as a percentage of revenue (30% weight), and improvements inadjusted cash flow (20% weight) subject to a limit on aggregate. The amounts earned under the management incentive compensationplans are capped at 200% of the award at the targeted level for each executive. Amounts paid with respect to 2013 were based primarily upon achievement of a targeted level of earnings per share, and also supplementally included specified improvements in cash flow, return on invested capital and gross profit as a percentage of revenue, subject to a limit on aggregate incentive compensation for each executive. Amounts paid with respect to 2012 also supplementally included an increase in revenue. See “Components of Executive Compensation and Benefits Program — Annual Incentive Plan Bonuses” above and “Grants of Plan-Based Awards” below for more information about cash bonuses for 2014.above. |
(6) | Represents the increase in the actuarial present value of pension benefits during the specified fiscal year and the above market earnings on nonqualified deferred compensation. For the continuing participants collectively, most of the changechanges in pension valuesvalue for 20122015, 2016, and 2014 was2017 were a result of decreases in long-term federal interest rates. The change in pension values for 2012 and 2014 for Mr. Paul Manning was also a result of his first year of participation in 2012 and his promotion to President and Chief Executive Officer in 2014. The requirements for the calculation assume that vesting will occur and the calculation produces large numbers in the first year of participation and in a year with a significant increase in compensation even though he would not be eligible for any retirement benefit until 2030. The change in pension value for Mr. Geraghty was a result of his first year of participation in 2014. This benefit will not increase as a result of compensation increases after 2015 (after 2016 for Mr. Rolfs) because the SERP was frozen by the Board in 2014. See the “Pension Benefits” and “Nonqualified Deferred Compensation” tables below for further discussion regarding Sensient’s pension and deferred compensation plans. |
(7) | Includes Company contributions under certain benefit plans and other arrangements for the named executive officers. These contributions are set forth in the following table. The Company’s ESOP and Savings Plan are tax- qualified plans subject to government imposed annual limitations on contributions. The Company’s Supplemental Benefits Plan, which is a non-tax-qualifiednon-qualified plan, replaces benefits whichthat cannot be provided by the tax-qualifiedqualified ESOP and Savings Plan because of these annual limitations. The amounts shown in the table below as contributed to the ESOP and Savings Plan whichthat exceed the applicable annual limits were contributed to the Supplemental Benefits Plan. Non-U.S. employees (such as Mr. Wilkins) maintain the retirement benefits from their home country. The Company’s contribution to Mr. Wilkins’ superannuation fund, a portable defined contribution plan similar to an individual retirement account, is made in lieu of his participation in the ESOP and Savings Plan. The superannuation fund is not sponsored by the Company, however, the Company is required by Australian law to make an annual contribution in an amount equal to 9.5% of Mr. Wilkins’ annual base salary and his contribution to the superannuation fund. The amounts related to retirement plan benefits listed under the column entitled “All Other Compensation” in the “Summary Compensation Table” above are listed in the table below: |
Retirement Plan Benefits
Name | | Year | | ESOP | | | Savings Plan | | | Total | | Year | | ESOP | | | Savings Plan | | | Superannuation Fund | | | Total | | K. P. Manning | | 2014 | | $ | 19,363 | | | $ | 77,451 | | | $ | 96,814 | | | | | 2013 | | | 24,306 | | | | 97,226 | | | | 121,532 | | | | | 2012 | | | 27,279 | | | | 109,117 | | | | 136,396 | | | | | | | | | | | | | | | | | | | P. Manning | | 2014 | | | 13,950 | | | | 55,800 | | | | 69,750 | | 2017 | | $ | 20,542 | | | $ | 82,170 | | | $ | - | | | $ | 102,712 | | | | 2013 | | | 8,473 | | | | 33,892 | | | | 42,365 | | | | | 2012 | | | 7,681 | | | | 30,726 | | | | 38,407 | | | | | | | | | | | | | | | | | | | R. F. Hobbs | | 2014 | | | 12,533 | | | | 50,131 | | | | 62,664 | | | | | 2013 | | | 10,640 | | | | 42,561 | | | | 53,201 | | | | | 2012 | | | 11,749 | | | | 46,997 | | | | 58,746 | | | | | | | | | | | | | | | | | | | J. L. Hammond | | 2014 | | | 8,945 | | | | 35,779 | | | | 44,724 | | | | | 2013 | | | 7,594 | | | | 30,376 | | | | 37,970 | | 2016 | | | 15,890 | | | | 63,560 | | | | - | | | | 79,450 | | | | 2012 | | | 8,386 | | | | 33,545 | | | | 41,931 | | 2015 | | | 22,000 | | | | 88,000 | | | | - | | | | 110,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | S. J. Rolfs | | 2014 | | | 8,575 | | | | 34,300 | | | | 42,875 | | 2017 | | | 8,976 | | | | 35,904 | | | | - | | | | 44,880 | | | | 2013 | | | 7,211 | | | | 28,846 | | | | 36,057 | | 2016 | | | 7,126 | | | | 28,505 | | | | - | | | | 35,631 | | | | 2012 | | | 7,882 | | | | 31,529 | | | | 39,411 | | 2015 | | | 9,151 | | | | 36,605 | | | | - | | | | 45,756 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | M. C. Geraghty | | 2014 | | | 5,863 | | | | 23,453 | | | | 29,316 | | 2017 | | | 7,515 | | | | 30,059 | | | | - | | | | 37,574 | | | | 2013 | | | 4,992 | | | | 19,968 | | | | 24,960 | | 2016 | | | 4,655 | | | | 18,621 | | | | - | | | | 23,276 | | | | 2012 | | | 3,420 | | | | 10,093 | | | | 13,513 | | 2015 | | | 6,499 | | | | 25,994 | | | | - | | | | 32,493 | | | | | | | | | | | | | | | | | | | | | G. Grover | | 2017 | | | 4,874 | | | | 19,496 | | | | - | | | | 24,370 | | | | 2016 | | | 3,572 | | | | 14,288 | | | | - | | | | 17,860 | | | | | | | | | | | | | | | | | | | | | R. Wilkins | | 2017 | | | - | | | | - | | | | 30,206 | | | | 30,206 | | | | 2016 | | | - | | | | - | | | | 25,337 | | | | 25,337 | | | | 2015 | | | - | | | | - | | | | 32,944 | | | | 32,944 | | | | | | | | | | | | | | | | | | | | |
51 (8) | Includes non-retirement plan benefits. The non-retirement plan benefits include financial planning, personal use of Company automobiles, an executive physical, and reimbursement of club membership dues and expenses, and with respect to Mr. Paul Manning, executive relocation assistance.expenses. The named executive officers received tax gross-up payments for 2012 related to various other benefits, including the use of leased automobiles and financial planning services, in the amounts of $36,903, $9,541, $18,063, $14,073, $11,082 and $5,990, respectively. For 2013, the named executive officers received tax gross-ups related to various other benefits, including the use of leased automobiles and financial planning services, in the amounts of $36,541, $36,971, $22,923, $14,364, $16,999 and $8,178, respectively. For 2014, the named executive officers did not receive any tax gross-ups related to these various other benefits. Does not include health and welfare plan benefits that are generally available to all salaried employees and do not discriminate in scope, terms, or operation in favor of executive officers. The amounts listed under the column entitled “All Other Compensation” in the “Summary Compensation Table” related to non-retirement plan benefits are listed in the table below: |
Non-Retirement Plan Benefits
Name | | Year | | Financial Planning ($) | | | Automobile ($) | | | Executive Physical ($) | | | Relocation ($) | | | Club ($) | | | Tax Gross-Up Payments ($) | | | Total ($) | | Year | | Financial Planning ($) | | | Automobile ($) | | | Executive Physical ($) | | | Club ($) | | | Tax Gross-Up Payments ($) | | | Total ($) | | K. P. Manning | | 2014 | | $ | 6,025 | | | $ | 4,679 | | | $ | - | | | $ | - | | | $ | 1,884 | | | $ | - | | | $ | 12,588 | | | | | 2013 | | | 3,050 | | | | 28,082 | | | | 2,805 | | | | - | | | | 5,362 | | | | 36,541 | | | | 75,840 | | | | | 2012 | | | 16,100 | | | | 27,787 | | | | 440 | | | | - | | | | 6,104 | | | | 36,903 | | | | 87,334 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | P. Manning | | 2014 | | | 2,500 | | | | 14,604 | | | | - | | | | - | | | | - | | | | - | | | | 17,104 | | 2017 | | $ | 2,635 | | | $ | 15,704 | | | $ | 600 | | | $ | 4,640 | | | $ | - | | | $ | 23,579 | | | | 2013 | | | 537 | | | | 14,853 | | | | 2,379 | | | | 44,488 | | | | - | | | | 36,971 | | | | 99,228 | | | | | 2012 | | | - | | | | 10,974 | | | | - | | | | - | | | | - | | | | 9,541 | | | | 20,515 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | R. F. Hobbs | | 2014 | | | 2,575 | | | | 10,677 | | | | 350 | | | | - | | | | - | | | | - | | | | 13,602 | | | | | 2013 | | | 2,745 | | | | 18,524 | | | | 20 | | | | - | | | | 450 | | | | 22,923 | | | | 44,662 | | | | | 2012 | | | 2,464 | | | | 19,367 | | | | 497 | | | | - | | | | - | | | | 18,063 | | | | 40,391 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | J. L. Hammond | | 2014 | | | 2,190 | | | | 11,292 | | | | 199 | | | | - | | | | - | | | | - | | | | 13,681 | | | | | 2013 | | | 2,460 | | | | 11,217 | | | | 623 | | | | - | | | | - | | | | 14,364 | | | | 28,664 | | 2016 | | | 2,625 | | | | 14,222 | | | | - | | | | 4,640 | | | | - | | | | 21,487 | | | | 2012 | | | 6,005 | | | | 10,848 | | | | 477 | | | | - | | | | - | | | | 14,073 | | | | 31,403 | | 2015 | | | 2,525 | | | | 15,469 | | | | - | | | | 9,618 | | | | - | | | | 27,612 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | S. J. Rolfs | | 2014 | | | 3,325 | | | | 13,368 | | | | - | | | | - | | | | - | | | | - | | | | 16,693 | | 2017 | | | 4,250 | | | | 14,805 | | | | - | | | | - | | | | - | | | | 19,055 | | | | 2013 | | | 3,325 | | | | 13,274 | | | | 2,502 | | | | - | | | | - | | | | 16,999 | | | | 36,100 | | 2016 | | | 4,264 | | | | 13,574 | | | | 646 | | | | - | | | | - | | | | 18,484 | | | | 2012 | | | - | | | | 13,332 | | | | - | | | | - | | | | - | | | | 11,082 | | | | 24,414 | | 2015 | | | 3,325 | | | | 13,284 | | | | 255 | | | | - | | | | - | | | | 16,864 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | M. C. Geraghty | | 2014 | | | - | | | | 8,383 | | | | - | | | | - | | | | - | | | | - | | | | 8,383 | | 2017 | | | - | | | | 14,351 | | | | - | | | | - | | | | - | | | | 14,351 | | | | 2013 | | | - | | | | 8,528 | | | | - | | | | - | | | | - | | | | 8,178 | | | | 16,706 | | 2016 | | | 5,000 | | | | 14,302 | | | | - | | | | - | | | | - | | | | 19,302 | | | | 2012 | | | - | | | | 8,462 | | | | - | | | | - | | | | - | | | | 5,990 | | | | 14,452 | | 2015 | | | 2,520 | | | | 13,711 | | | | - | | | | - | | | | - | | | | 16,231 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | G. Grover | | 2017 | | | 740 | | | | 10,107 | | | | - | | | | - | | | | - | | | | 10,847 | | | | 2016 | | | 2,213 | | | | 6,697 | | | | - | | | | - | | | | - | | | | 8,910 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | R. Wilkins | | 2017 | | | - | | | | 38,328 | | | | - | | | | - | | | | - | | | | 38,328 | | | | 2016 | | | - | | | | 37,169 | | | | - | | | | - | | | | - | | | | 37,169 | | | | 2015 | | | - | | | | 37,558 | | | | - | | | | - | | | | - | | | | 37,558 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
52 Grants of Plan-Based Awards
As detailed above, Sensient provides incentive compensation to employees through its annual management incentive plans and its stock plans. The annual management incentive plans for elected officers (“Annual Plans”) provide annual cash payments to executives based upon achieving overall Company performance goals. The stock plans authorize the Compensation Committee to grant restricted stock and performance stock units to key employees. The Company has not granted stock options in recent years.since 2008. The Committee makes annual decisions, typically in December of each year, regarding appropriate equity-based awards for each executive primarily based upon the Company’s financial performance and the executives’ levelseach executive’s level of responsibilities.
The Annual Plans promote the Company’s executive compensation program by providing annual cash payments to executives based upon achieving overall Company, group or divisional financial goals. Awards under the Annual Plans are subject to a target, currently 50% to 85% of annual base salary depending on a participant’s position in the Company. The specific bonus opportunities described below were authorized by the Compensation Committee and are conditioned upon the achievement of specified performance goals in the year following the award. In response to concerns from the Company’s shareholders, the Compensation Committee has, starting with the awards in December 2013, revised the performance goals for awards granted by the Compensation Committee. For 2014, the goals are based upon a weighted average of the achievement of specified levels of earnings per share, gross profits and cash flow, with the award being calculated and paid based upon achieving the specified goals. Performance in excess of the specified goal or goals allows for a payment of up to 200% of the targeted award, subject to the limits in the Annual Plans. Performance below the specified goal or goals can result in a reduced award, or no award at all if the minimum threshold level is not achieved. Performance exceeding the targeted goal or goals can result in an increased award, which generally brings aggregate cash and incentive compensation above the median of our peer group. responsibility. See “Components“Components of Executive Compensation and Benefits Programs — Annual Incentive Plan Bonuses” above. There is no “minimum” or “guaranteed” payment, as the actual amounts earned (if any) depend upon actual performance. The Compensation Committee has discretion to reduce any award by up to 20% if the Committee determines a reduction to be appropriate, such as if the Committee determines that the executive caused the Company to take unreasonable or unnecessary risks.
See “Components of Executive CompensationAwards” and Benefits Programs — Annual Incentive Plan Bonuses” above for a discussion of the targets and awards that applied to Sensient’s named executive officers during 2014. For 2015, the amounts paid to the named executive officers will be based on a weighted average of achievement of targeted local currency earnings of $3.16 per share (50% weight), gross profit as a percentage of revenue (34.1% or greater, a 200 basis point improvement from 2014, excluding the effect of 2014 restructuring costs) (30% weight) and cash flow ($209.4 million or higher, a 4% improvement from 2014, excluding the effect of 2014 restructuring costs) (20% weight). These targets and improvements are subject to adjustment for excluded items as provided in the Annual Plans. None of the incentive amounts to be paid to the current named executive officers for 2015 will be based on group or divisional financial goals except Mr. Geraghty’s incentive compensation will be based 70% on the performance of the Color Group and 30% on the performance of the Company as a whole.
Granting of equity awards typically reward service and performance over a longer period of time than Sensient’s other methods of compensation and focus on the Company’s long-term strategic goals. The restricted stock awards and performance stock units were each granted at the December 4, 2014, meeting of the Compensation Committee. The Committee makes annual decisions regarding appropriate stock-based grants for each executive based on the following factors, which ordinarily are not weighed or ranked in any particular way. The Committee considers the Company’s financial performance, the executives’ levels of responsibilities, specialized skills, experience, length of service, recent management contributions and past awards. In determining the level of equity awards, the Compensation Committee also considers the predicted award values for similar positions at other companies included in the Comparable Company Data. This comparison is performed to confirm that Sensient’s pay practices are being reasonably applied and are competitive for purposes of attracting and retaining key executives. See “Components“Components of Executive Compensation and Benefits Programs — Equity Awards” above. Allabove for descriptions of the awards granted in 2014 provide for performance-based vesting. When Messrs. Kenneth Manning, Hobbsour annual management incentive plans and Hammond turned age 65, time vested awards that had been granted in the last 5 years fully vested on that date. Time-based awards granted to those individuals after age 65 vest upon granting and performance-based awards granted to those individuals after age 65 vest, if applicable, upon satisfaction of the actual performance criteria used to calculate the award (i.e., after the two-year or three-year performance period).stock plans.
INCENTIVE PLAN AWARDS
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units (3)(#) | | | All Other Option Awards: Number of Securities Underlying Options(#) | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards (4) | | | Name | Grant Date | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | | | | | | | | | Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards (3) | | K. P. Manning | 4/24/14 | | $ | - | | | $ | - | | | $ | - | | | | - | | | | - | | | | - | | | | 1,800 | | | | - | | | $ | - | | | $ | 98,226 | | | Name | | Grant Date | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards (3) | | 12/4/14 | | | 214,200 | | | | 714,000 | | | | 1,428,000 | | | | 0 | | | | 33,600 | | | | 50,400 | | | | - | | | | - | | | | - | | | | 2,001,216 | | $ | 170,100 | | | $ | 945,000 | | | $ | 1,890,000 | | | | 0 | | | | 39,100 | | | | 58,650 | R. F. Hobbs | 12/4/14 | | | 111,271 | | | | 370,903 | | | | 741,806 | | | | 0 | | | | 24,300 | | | | 36,450 | | | | - | | | | - | | | | - | | | | 1,447,308 | | | J. L. Hammond | 12/4/14 | | | 79,416 | | | | 264,720 | | | | 529,440 | | | | 0 | | | | 18,500 | | | | 27,750 | | | | - | | | | - | | | | - | | | | 1,101,860 | | | S. J. Rolfs | 12/4/14 | | | 81,789 | | | | 272,630 | | | | 545,259 | | | | 0 | | | | 15,200 | | | | 22,800 | | | | - | | | | - | | | | - | | | | 905,312 | | 12/7/17 | | | 55,575 | | | | 308,750 | | | | 617,500 | | | | 0 | | | | 11,700 | | | | 17,550 | | | | - | | | | - | | | | - | | | | 898,560 | | M. C. Geraghty | 12/4/14 | | | 71,437 | | | | 238,124 | | | | 476,249 | | | | 0 | | | | 7,900 | | | | 11,850 | | | | - | | | | - | | | | - | | | | 470,524 | | 12/7/17 | | | 49,140 | | | | 273,000 | | | | 546,000 | | | | 0 | | | | 7,800 | | | | 11,700 | | | | - | | | | - | | | | - | | | | 599,040 | | G. Grover | | 12/7/17 | | | 40,973 | | | | 227,630 | | | | 455,260 | | | | 0 | | | | 6,700 | | | | 10,050 | | | | - | | | | - | | | | - | | | | 514,560 | | R. Wilkins | | 12/7/17 | | | 34,543 | | | | 191,908 | | | | 383,817 | | | | 0 | | | | 6,700 | | | | 10,050 | | | | - | | | | - | | | | - | | | | 514,560 | |
| (1) | These are awards authorized by the Compensation Committee on December 4, 2014,7, 2017, under the annual cash-based management incentive plans, which provide for incentive payments conditioned upon the Company’s performance in 2015.2018. The annual management incentive plans provide annual cash payments to executives based upon a weighted average of achieving overall Company local currency adjusted earnings per share (50%(60% weight), adjusted gross profit as a percentage of revenue (30%(20% weight), and adjusted cash flow (20% weight) goals as described above. These threshold, target, and maximum amounts are all based on a percentage of 20152018 salary assuming each named executive officer continueswill continue to be employed by Sensient through December 31, 2015. As noted above, Mr. Hobbs retired as Chief Financial Officer on February 6, 2015; accordingly, his award will be a percentage of the actual amount of salary he received through such date.2018. |
| (2) | These are awards authorized by the Compensation Committee on December 4, 2014,7, 2017, under the Company’s 20072017 Stock Plan, which provide for incentive payments conditioned upon the Company’s performance over the 2015-20172018-2020 three-year period. These awards consist of performance stock units granted to the named executive officers, which become earned and vest after satisfaction of a weighted average of achieving two separate performance metrics consisting of (a) overall Company local currencyadjusted EBIT growth (70% weight) and (b) adjusted return on invested capital (30% weight). Each of these performance metrics is described in greater detail above. |
| (3) | The award to Mr. Kenneth Manning consisted of shares of restricted stock awarded to directors which vest in increments of one-third of the total grant on each of the first, second, and third anniversaries of the date of grant. |
| (4) | The grant date fair value of each portion of the equity-based awards equaledperformance stock units granted to the named executive officers equals the closing market price of our Common Stock on the December 4, 20147, 2017 grant date multiplied by (a) the number of shares of restricted stock, in the case of the time-based restricted stock awards or (b) the number of performance stock units (withawarded. Assuming target levels of performance, each suchperformance stock unit representingwould be converted into one share of Common Stock) which number of units being equal toStock after the number of shares of restricted stock issuable assuming achievement of the targetthree-year performance criteria underlying the award.period. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (2014)(2017)
| | | | Option Awards | | | Stock Awards (1) | | | | | | Option Awards(1) | | | Stock Awards(2) | | | | | | | | | | | | | | | | | | | | | Name | | Grant Date | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | | Option Exercise Price ($)(3) | | | Option Expiration Date(4) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Grant Date | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | | | | | | | | | | | | | | | | | | | | | | | K. P. Manning | | 12/5/13 | | | - | | | | - | | | | - | | | | - | | | | 33,500 | (5) | | $ | 2,021,390 | | | | | 4/24/14 | | | - | | | | - | | | | - | | | | - | | | | 1,800 | (6) | | | 108,612 | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,130,002 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | P. Manning | | 2/4/10 | | | - | | | | - | | | | - | | | | - | | | | 1,500 | | | $ | 90,510 | | 12/4/14 | | �� | - | | | | - | | | $ | - | | | | - | | | | 33,600 | (2)(3) | | $ | 2,457,840 | | | | 12/9/10 | | | - | | | | - | | | | - | | | | - | | | | 15,000 | | | | 905,100 | | 12/3/15 | | | - | | | | - | | | | - | | | | - | | | | 35,400 | (2) | | | 2,589,510 | | | | 12/8/11 | | | - | | | | - | | | | - | | | | - | | | | 18,000 | | | | 1,086,120 | | 12/1/16 | | | - | | | | - | | | | - | | | | - | | | | 34,900 | (2) | | | 2,552,935 | | | | 12/6/12 | | | - | | | | - | | | | - | | | | - | | | | 25,000 | | | | 1,508,500 | | 12/7/17 | | | - | | | | - | | | | - | | | | - | | | | 39,100 | (2) | | | 2,860,165 | | | | 12/5/13 | | | - | | | | - | | | | - | | | | - | | | | 41,000 | (7) | | | 2,473,940 | | | | | | | | | | | | | | | | | | | | | | | | $ | 10,460,450 | | | | 12/4/14 | | | - | | | | - | | | | - | | | | - | | | | 33,600 | (5) | | | 2,027,424 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 8,091,594 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | R. F. Hobbs | | 12/5/13 | | | - | | | | - | | | | - | | | | - | | | | 14,900 | (5) | | $ | 899,066 | | | | | 12/4/14 | | | - | | | | - | | | | - | | | | - | | | | 24,300 | (5) | | | 1,466,262 | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,365,328 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | J. L. Hammond | | 12/5/13 | | | - | | | | - | | | | - | | | | - | | | | 11,300 | (5) | | $ | 681,842 | | | | | 12/4/14 | | | - | | | | - | | | | - | | | | - | | | | 18,500 | (5) | | | 1,116,290 | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1,798,132 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | S. J. Rolfs | | 12/1/05 | | | 9,000 | | | | - | | | $ | 18.57 | | | 12/1/15 | | | | - | | | | - | | 12/4/14 | | | - | | | | - | | | | - | | | | - | | | | 15,200 | (2)(3) | | $ | 1,111,880 | | | | 12/7/06 | | | 2,125 | | | | - | | | $ | 24.15 | | | 12/7/16 | | | | - | | | | - | | | | | 12/9/10 | | | - | | | | - | | | | - | | | | - | | | | 14,000 | | | $ | 844,760 | | | | | 12/8/11 | | | - | | | | - | | | | - | | | | - | | | | 17,000 | | | | 1,025,780 | | | | | 12/6/12 | | | - | | | | - | | | | - | | | | - | | | | 22,000 | | | | 1,327,480 | | 12/3/15 | | | - | | | | - | | | | - | | | | - | | | | 13,900 | (2) | | | 1,016,785 | | | | 12/5/13 | | | - | | | | - | | | | - | | | | - | | | | 17,200 | (7) | | | 1,037,848 | | 12/1/16 | | | - | | | | - | | | | - | | | | - | | | | 11,600 | (2) | | | 848,540 | | | | 12/4/14 | | | - | | | | - | | | | - | | | | - | | | | 15,200 | (5) | | | 917,168 | | 12/7/17 | | | - | | | | - | | | | - | | | | - | | | | 11,700 | (2) | | | 855,855 | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 5,153,036 | | | | | | | | | | | | | | | | | | | | | | | | $ | 3,833,060 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | M. C. Geraghty | | 2/2/12 | | | - | | | | - | | | | - | | | | - | | | | 500 | | | $ | 30,170 | | 12/4/14 | | | - | | | | - | | | | - | | | | - | | | | 7,900 | (2)(3) | | $ | 577,885 | | | | 12/6/12 | | | - | | | | - | | | | - | | | | - | | | | 10,000 | | | | 603,400 | | 12/3/15 | | | - | | | | - | | | | - | | | | - | | | | 7,000 | (2) | | | 512,050 | | | | 12/5/13 | | | - | | | | - | | | | - | | | | - | | | | 9,600 | (7) | | | 579,264 | | 12/1/16 | | | - | | | | - | | | | - | | | | - | | | | 7,700 | (2) | | | 563,255 | | | | 12/4/14 | | | - | | | | - | | | | - | | | | - | | | | 7,900 | (5) | | | 476,686 | | 12/7/17 | | | - | | | | - | | | | - | | | | - | | | | 7,800 | (2) | | | 570,570 | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1,689,520 | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,223,760 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | G. Grover | | 12/3/15 | | | - | | | | - | | | | - | | | | - | | | | 7,000 | (2) | | $ | 512,050 | | | | 12/1/16 | | | - | | | | - | | | | - | | | | - | | | | 6,700 | (2) | | | 490,105 | | | | 12/7/17 | | | - | | | | - | | | | - | | | | - | | | | 6,700 | (2) | | | 490,105 | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1,492,260 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | R. Wilkins | | 12/4/14 | | | - | | | | - | | | | - | | | | - | | | | 8,400 | (2)(3) | | $ | 614,460 | | | | 12/3/15 | | | - | | | | - | | | | - | | | | - | | | | 6,200 | (2) | | | 453,530 | | | | 12/1/16 | | | - | | | | - | | | | - | | | | - | | | | 6,700 | (2) | | | 490,105 | | | | 12/7/17 | | | - | | | | - | | | | - | | | | - | | | | 6,700 | (2) | | | 490,105 | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,048,200 | |
| (1) | All outstanding options have an exercise price equal to the market price on the date of grant and vested in increments of one-third of the total grant on each of the first, second and third anniversaries of the date of grant. |
(2) | Except as described elsewhere in this proxy statement, restricted stock awarded before 2013 vests after completion of five years of service with the Company following the grant date and restricted stock awarded during 2013 vests after completion of three years of service with the Company following the grant date, or, in each case, earlier in the event of an executive’s retirement at age 65 or greater. The value indicated in the table of the restrictedperformance stock awards ownedunits (assuming target levels of performance) held at the end of the Company’s last fiscal year is based on the $60.34$73.15 per share closing price of a share of Sensient common stockCommon Stock on December 31, 2014. See footnote (5) below for a description of the performance stock units awarded on December 5, 2013 and December 4, 2014. |
(3) | The exercise price of options generally may be paid in cash or its equivalent, by delivering previously issued shares of Common Stock, or any combination thereof.29, 2017. |
(4) | Although(2) | These awards consisted of 100% performance stock units. These performance stock units are eligible to vest based upon the options expireCompany’s achievement of certain performance criteria based on EBIT growth and return on invested capital during a three-year performance period. The actual number of shares earned will be determined and vest following the dates indicated, by agreement any unexercised options will terminate three years after retirement (if earlier than the stated expiration date).three-year performance period. |
(5) | These awards consisted of(3) | On February 8, 2018, these performance stock units (assumingvested at 85.6% of the target levelsaward amount shown above based upon the Company's achievement of performance). The amount disclosed in the table with respect to the portion of such award consisting ofcertain performance criteria based on EBIT growth and return on invested capital during a two-year performance period. Based on 2015-2017 performance, Mr. Manning earned 28,762 performance stock units, is based upon the number of shares of Common Stock reflecting theMr. Rolfs earned 13,011 performance stock units, assuming achievement of the target performance criteria underlying the award with one share of Common Stock issued for each performance stock unit granted. |
(6) | These awards consisted of restricted stock awarded to Mr. Manning as a director that vest in increments of one-third of the total grant on each of the first, second, and third anniversaries of the date of grant. |
(7) | These awards consisted of 50% time-vesting restricted stock and 50%Geraghty earned 6,762 performance stock units, (assuming target levels of performance).and Mr. Wilkins earned 7,190 performance stock units. |
OPTION EXERCISES AND STOCK VESTED (2014)(2017)
| | Option Awards | | | Stock Awards | | | Option Awards | | | Stock Awards | | Name | | Number of Shares Acquired on Exercise (#)(1) | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting (#)(2) | | | Value Realized on Vesting ($)(2) | | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting (#) (1) | | | Value Realized on Vesting ($) (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | K. P. Manning | | | - | | | | - | | | | - | | | | - | | | P. Manning | | | - | | | | - | | | | - | | | | - | | | | - | | | $ | - | | | | 25,000 | | | $ | 1,904,000 | | R. F. Hobbs | | | - | | | | - | | | | - | | | | - | | | J. L. Hammond | | | - | | | | - | | | | - | | | | - | | | S. J. Rolfs | | | 10,000 | | | $ | 314,900 | | | | 10,000 | | | $ | 598,100 | | | | - | | | | - | | | | 22,000 | | | | 1,675,520 | | M. C. Geraghty | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 10,500 | | | | 799,640 | | G. Grover | | | | - | | | | - | | | | - | | | | - | | R. Wilkins | | | | - | | | | - | | | | 15,000 | | | | 1,142,400 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | The number of shares acquired on exercise relates to the exercise of stock options by the named executive officers. The value received upon exercise is based upon the difference between the value of Sensient’s Common Stock on the exercise date and the exercise price for the stock options. |
(2) | Except as described elsewhere in this proxy statement,Includes restricted stock vests after completion ofawarded in 2012 that vested five years of service with the Company, or earlier in the event of an executive’s retirement at age 65 or greater.after their grant date. The value realized on vesting of restricted stock is based on the value of Sensient’s Common Stock on the vesting date. |
Defined Benefit Plans
Sensient Technologies Pension Benefits Non-U.S. employees (such as Mr. Wilkins) maintain the retirement benefits in their home country. Sensient does not provide any defined benefit pension plans for the named executive officers other than the Supplemental Executive Retirement Plan described below. Supplemental Executive Retirement Plan (“SERP”) Historically, Sensient offered a SERP to selected Sensient officers and key employees whichemployees. The SERP provides a non-qualified supplemental executive retirement benefit. As described below, in 2014 Sensient closed the SERP to new participants and froze the benefits payable to existing participants.
Following the enactment of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the SERP was amended to comply with the Section 409A requirements and to permit the SERP to make payments to satisfy FICA and other tax obligations prior to retirement. Generally, participants contribute to the SERP, in each year until death or retirement, an amount equivalent to a term insurance premium applicable to a life insurance benefit of two times the participant’s base salary in effect on the date of acceptance into the plan, unless all amounts were previously paid under a predecessor plan. A pre-retirement survivor income benefit equal to between 30% and 45%35% of the sum of base salary and 100% (50% for certain officers) of the highest annual bonuscash incentive award paid since reaching a specified age for the participating named executive officers, payable for 20 years, is available to designated beneficiaries if the participant dies prior to retirement. Other than instances of death or disability, participants are not vested and are not eligible for any benefit until they reach a defined retirement age which is stated in terms of age and years of service. Generally, participants are not eligible for a full benefit until age 62 and no benefits are vested prior to age 55. At the time of retirement, the participating named executive officer may continue the survivor income benefit or receive a supplemental retirement income benefit equal to between 30% and 45% of the sum of base salary and 100% (50% for certain officers) of the highest annual bonus since reaching a specified age for the participating named executive officers, for 20 years, or an actuarially equivalent joint and survivor benefit. A participant may receive his retirement income benefit as a lump sum distribution by making an advance election. In the event of a change of control, lump sum distributions are required. The benefit obligations under the SERP are funded under Rabbi Trust B described below. All of the named executive officers, other than Mr. Grover who joined Sensient after the SERP was frozen and closed to new participants, now participate in the SERP. Mr. Paul Manning began participating in SERP on January 1, 2012. Under their respective agreements under the SERP, each of the participating named executive officers is entitled to 20 years of benefits, and the applicable percentages of pre-retirement survivor income benefits and supplemental retirement income benefits for the participating named executive officers are 45%35% for Mr. Kenneth Manning, 35% for Messrs. Hobbs, Hammond and Paul Manning and 30% for Messrs. Rolfs, Geraghty, and Geraghty.Wilkins. The named executive officers also participate in the supplemental benefit plans described under “Nonqualified Deferred Compensation” below. The supplemental benefit plans are non-qualified excess benefit and supplemental retirement plans as described in Sections 3(36) and 201(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The SERP was frozen effective December 31, 2016, with respect to Mr. Rolfs, and December 31, 2015, with respect to all other SERP participants, and, asparticipants. As a result, no further benefits will accrue under the SERP for any named executive officer after the applicable freeze date. Although no additional benefits accrue under the SERP for any compensation or service after the freeze date, the actuarial present value of these frozen future benefits will increase by a nominal amount each year primarily because the executive officer will be one year closer to retirement age. These future nominal increases in actuarial present value due to the passage of time will be listed under the column entitled “Change in Pension Value and Nonqualified Deferred Compensation Earnings” in the “Summary Compensation Table.”
PENSION BENEFITS (Year-end 2014)2017)
Name | | Plan Name | | Number of Years Credited Service (#) | | | Present Value of Accumulated Benefit ($)(1) | | | Payments During Last Fiscal Year ($) | | K. P. Manning | | SERP | | | 26 | | | $ | 0 | | | $ | 17,884,758 | | P. Manning | | SERP | | | 5 | | | | 5,690,000 | | | | - | | R. F. Hobbs | | SERP | | | 41 | | | | 6,671,000 | | | | 12,546 | | J. L. Hammond | | SERP | | | 17 | | | | 4,762,000 | | | | 8,940 | | S. J. Rolfs | | SERP | | | 17 | | | | 2,134,000 | | | | - | | M. C. Geraghty | | SERP | | | 3 | | | | 1,575,000 | | | | - | |
Name | Plan Name | | Number of Years Credited Service (#) | | | Present Value of Accumulated Benefit ($)(1) | | | Payments During Last Fiscal Year ($) | | P. Manning | SERP | | | 6 | | | $ | 6,417,000 | | | $ | - | | S. J. Rolfs | SERP | | | 19 | | | | 2,583,000 | | | | - | | M. C. Geraghty | SERP | | | 4 | | | | 1,895,000 | | | | - | | R. Wilkins | SERP | | | 12 | | | | 2,037,000 | | | | - | | | | | | | | | | | | | | | |
(1) | AllThe benefits for Messrs. Kenneth Manning, HobbsRolfs, Geraghty, and HammondWilkins had not yet vested at year end; benefits for Messrs. Paul Manning, Rolfs and Geraghty had not yet vested.end. |
Nonqualified Deferred Compensation
Eligible Company executives of the Company are entitled to defer up to 25% of their annual salary under the executive income deferral plan. Amounts deferred earn interest at the average interest rate on AAA rated corporate bonds and are payable upon retirement or over a 15 year15-year period, unless the executive elects to receive an actuarially equivalent joint and survivor benefit, reduced by up to 20% depending upon the executive’s age at retirement. The Company also has a supplemental benefit plan whichthat includes the supplemental ESOP benefit plan and the supplemental savings plan to replace benefits whichthat cannot be allocated to the executives in the tax-qualifiedqualified ESOP and savings plan because of government imposed annual limitations. Each of these plans are nonqualified excess benefit and supplemental retirement plans as described in Sections 3(36) and 201(2) of the ERISA. Information for each of the named executive officers is set forth below relating to nonqualified deferred compensation.
NONQUALIFIED 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 ($) | | | Executive Contributions in Last FY ($) | | | Registrant Contributions in Last FY ($)(1) | | Aggregate Earnings in Last FY ($) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at Last FYE ($) | | K. P. Manning | | $ | - | | | $ | 108,782 | | | $ | 22,715 | | | $ | 1,851,865 | | | $ | - | | | P. Manning | | | - | | | | 29,615 | | | | 7,747 | | | | - | | | | 83,992 | | | $ | - | | $ | 66,200 | | $ | 3,725 | | | $ | - | | | 326,266 | | R. F. Hobbs | | | - | | | | 40,451 | | | | 9,333 | | | | - | | | | 392,628 | | | J. L. Hammond | | | - | | | | 25,220 | | | | 20,282 | | | | - | | | | 253,186 | | | S. J. Rolfs | | | - | | | | 23,307 | | | | 17,376 | | | | - | | | | 197,800 | | | | - | | | 22,382 | | | 22,874 | | | | - | | | 340,018 | | M. C. Geraghty | | | - | | | | 12,210 | | | | 2,146 | | | | - | | | | 20,133 | | | | - | | | 10,027 | | | 10,288 | | | | - | | | 83,378 | | G. Grover | | | | - | | | 4,609 | | | 652 | | | | - | | | 5,262 | | R. Wilkins | | | | - | | | - | | | - | | | | - | | | - | |
(1) | The amount included in this column for each named executive officer is included in such named executive officer’s compensation set forth in the “Summary Compensation Table” above. |
The Company has established three so-called “Rabbi Trusts” by entering into trust agreements with a trustee to assure the satisfaction of the obligations of the Company under various plans and agreements to make deferred and other payments to certain of its past, present, and future executives and directors, including the named executive officers. Rabbi Trust A requires the Company to deposit assets into (“fund”) the Trust in the event of a “Potential Change of Control” (as defined therein) in an amount sufficient to satisfy the Company’s expenses and obligations to Mr. KennethPaul Manning, the other named executive officers, and other executive officers under thetheir Change of Control Employment and Severance Agreements with those individuals (except to the extent that those obligations consist of benefits covered by Rabbi Trust B). Rabbi Trust A is currently not funded except with a nominal amount of assets, and is currently revocable but will become irrevocable once it is funded. The Board may elect to fund Rabbi Trust A in whole or in part prior to the occurrence of a Potential Change of Control. Rabbi Trust B was created to fund the Company’s expenses and obligations under various employee benefit plans, including four plans in which the named executive officers may participate: the SERP, the supplemental benefits plan, and the executive and management income deferral plans. The Company makes annual contributions to Rabbi Trust B, which held approximately $56$54.6 million of assets as of December 31, 2014.2017. Rabbi Trust B is irrevocable.
Rabbi Trust C was created to assure that payments to non-employee directors under the director retirement and deferred compensation plans described under “Director Compensation and Benefits” will not be improperly withheld. Rabbi Trust C is currently funded with a nominal amount, and is also funded from time to time as payouts are made under these plans, although the Company may elect to fund it at any time. Rabbi Trust C is irrevocable.
Each of the Rabbi Trusts will terminate upon the earlier of the exhaustion of the trust corpus or the final payment to the directors or executives pursuant to the respective plans and agreements covered thereby, and any remaining assets will be paid to the Company.
Potential Payments Upon Termination or Change of Control
Employment Agreements.Agreement. As discussednoted above, Mr. Kenneth Manning retired from his position as Chief Executive Officer of the Company on February 1, 2014. As of December 31, 2013, the Company had an employment contract with Mr. Kenneth Manning (which agreement expired by its terms on February 1, 2014) and did not have as of December 31, 2013 employment contracts with any of its other executive officers (it does have contracts effective upon a change of control, as described below). Pursuant to the terms of Mr. Kenneth Manning’s former employment contract, the agreement with Mr. Kenneth Manning could be terminated by the Board with or without cause, and if Mr. Kenneth Manning was terminated by the Board without cause or Mr. Kenneth Manning resigned for good reason, certain termination benefits were payable to Mr. Kenneth Manning in an amount equal to three times the sum of his base salary then in effect plus the higher of his most recent annual bonus and his target bonus for the fiscal year in which such termination occurred. Mr. Kenneth Manning would also continue to receive benefits under the Company’s health and other benefit plans for three years as well as three additional years of service and age credit for purposes of the SERP. The agreement contained a one-year non-competition covenant. For purposes of the agreement, “cause” means conviction of an act of fraud, theft or embezzlement or of other acts of dishonesty, gross misconduct, willful disclosure of trade secrets, gross dereliction of duty or other grave misconduct which is substantially injurious to Sensient, and “good reason” for Mr. Kenneth Manning to resign would exist if Sensient reduced his base salary, assigned him inconsistent duties, reduced his powers or functions, transferred him outside of Milwaukee or otherwise materially breached the agreement.
Effective February 2, 2014, the Company entered intohas an employment agreement with Mr. Paul Manning, the Company’s Chief Executive Officer. Pursuant to the terms of this employment agreement, Mr. Paul Manning serves as the Company’s Chairman, President and Chief Executive Officer. The initialcurrent term of this employment agreement is for a period of three years, commencingending on the effective dateFebruary 9, 2020 (the “Term”), and shall be renewable by mutual agreement. This employment agreement may be terminated with or without cause, by the Company or by Mr. Paul Manning, subject to the rights and obligations contained therein. During the Term, Mr. Paul Manning will receive an initial annual base salary of $800,000$910,000 and such salary shall be reviewed annually by the Compensation Committee based on Mr. Paul Manning’s performance and the Company’s compensation policies. In addition, Mr. Paul Manning will be eligible for an annual incentive bonus, payable in cash and/or equity, based on criteria determined by the Compensation Committee and shall receive benefits consistent with those received by other executive officers of the Company. For purposes of the agreement, “cause” means conviction of an act of fraud, theft, or embezzlement or of other acts of dishonesty, gross misconduct, willful disclosure of trade secrets, gross dereliction of duty, or other grave misconduct which is substantially injurious to Sensient. “Good Reason” for Mr. Paul Manning to resign would exist if Sensient reduced his base salary, assigned him inconsistent duties, reduced his powers or functions, transferred him outside of Milwaukee, or otherwise materially breached the agreement.
The Company does not have employment contracts with its other executive officers (it does have contracts effective upon a change of control, as described above and below).
The following table describes the potential payments to Mr. Paul Manning upon a hypothetical termination without cause or by Mr. Manning for “Good Reason” on December 31, 2014.2017. The actual amounts that may be paid upon such a termination can only be determined if it actually occurs. Termination Benefits (3 x base salary & bonus) (1) | | Health and Other Benefit Plans (3 x annual benefits) | | SERP (3 years’ service & age credit) | | Total | | $ | 6,810,000 | | $ | 113,936 | | $ | 11,815,439 | | $ | 18,739,375 | |
Illustration of Employment Agreement Termination(1) | The severance amount is calculated as three times the sum of the executive’s base salary plus the highest annual bonus for the last five years or since reaching age 50, whichever is greater. |
| Termination Benefits (3 x base salary & bonus) | | | Health and Other Benefit Plans (3 x annual benefits) | | | SERP (3 years’ service & age credit) | | | Total | | | $ | 4,185,030 | | | $ | 111,320 | | | $ | 7,706,942 | | | $ | 12,003,292 | |
Change of Control Agreements. In the event of a change of control of the Company, Mr. Paul Manning’s employment contract would be superseded by a Change of Control Employment and Severance Agreement as described below. For these purposes, a “change of control” ordinarily occurs if a person acquired 30% or more of Sensient’s common stock, a majority of Sensient’s Board consists of persons other than those nominated by the Board, or Sensient is a party to a merger, consolidation or sale of assets, or acquires the assets of another entity and Sensient’s owners have less than 50% of the common stock and voting power of the resulting entity. above. The Company also has change of control agreements with certain of its executive officers (including each of the named executive officers other than Mr. Kenneth Manning whose Changeofficers). See “Change of Control Employment and Severance Agreement terminated as of February 1, 2014, in connection with his retirement). These are not employment agreements and have no effect unless there is a change of control. Each ofAgreements” above for further information about these agreements provides that in the event of a “Change of Control,” as defined in the respective agreement, the Company will continue to employ the executive for a period of three years following the date of such Change of Control. During this employment period, the executive will receive as compensation a base salary, subject to annual adjustment, bonus awards in accordance with past practice and all other customary benefits in effect as of the date of the Change of Control. Each agreement can be terminated upon 30 days’ notice by the Company in the event of the executive’s disability. The agreements can also be terminated by the Company for “cause” and by the executive for “good reason,” as those terms are explained above. If terminated by the Company other than for cause or disability, or by the executive for good reason, the Company will pay the executive an amount equal to the sum of (i) accrued unpaid deferred compensation and vacation pay and (ii) three times the sum of executive’s base salary plus the greater of the highest annual bonus (x) for the last five years or (y) since reaching age 50. The executive will also be entitled to coverage under existing benefit plans and benefits for three years and a payment equal to the vested amounts plus a payment equal to three additional years of employer contributions under the savings plan, ESOP, SERP and supplemental benefits plans. The savings plan, ESOP, SERP and supplemental benefits plans provide for full vesting of all accounts upon the occurrence of a Change of Control. In addition, payments under the Company’s SERP are calculated based on an adjusted final salary reflecting three additional years of salary increases consistent with past practice. If terminated for cause, the Company will pay the executive his annual base salary through termination. If the executive’s employment is terminated by reason of death or disability, the Company will pay certain accrued obligations and other customary death or disability benefits.agreements.
The following table describes the potential payments upon a hypothetical change of control of Sensient on December 31, 2014 (and accordingly the table below does not include Mr. Kenneth Manning due to his earlier retirement),2017, followed by a qualifying severance where applicable.(other than with respect to the vesting of performance stock units). The actual amounts that may be paid upon such a change of control can only be determined if it actually occurs.
Executive | | Severance Amount(1) | | | Pension Enhancement(2) | | | Value of Restricted Stock and/or Performance Stock Units That Vest Early(3) | | | Estimated Income Tax Gross-Up and Employee Benefits(4) | | | Estimated Excise Taxes, Grossed-Up For Other Taxes Thereon(4) | | | Total Estimated Payments | | P. Manning | | $ | 4,185,030 | | | $ | 7,834,037 | | | $ | 8,091,594 | | | $ | 111,320 | | | | - | | | $ | 20,221,981 | | R. F. Hobbs | | | 3,759,810 | | | | 176,238 | | | | 2,365,328 | | | | 115,529 | | | | - | | | | 6,416,905 | | J. L. Hammond | | | 2,683,410 | | | | 125,793 | | | | 1,798,132 | | | | 85,447 | | | | - | | | | 4,692,782 | | S. J. Rolfs | | | 2,572,470 | | | | 3,241,635 | | | | 5,153,036 | | | | 95,080 | | | | - | | | | 11,062,221 | | M. C. Geraghty | | | 1,738,878 | | | | 2,292,382 | | | | 1,689,520 | | | | 70,148 | | | | - | | | | 5,790,928 | |
Executive | | Severance Amount (1) | | | Pension Enhancement (2) | | | Value of Performance Stock Units That Vest Early (3) | | | Estimated Employee Benefits | | | Estimated Excise Taxes, Grossed-Up For Other Taxes Thereon (4) | | | Total Estimated Payments | | P. Manning | | $ | 6,810,000 | | | $ | 12,145,439 | | | $ | 10,460,450 | | | $ | 113,936 | | | $ | - | | | $ | 29,529,825 | | S. J. Rolfs | | | 2,475,657 | | | | 3,303,707 | | | | 3,833,060 | | | | 102,165 | | | | - | | | | 9,714,589 | | M. C. Geraghty | | | 2,231,916 | | | | 2,420,270 | | | | 2,223,760 | | | | 88,052 | | | | - | | | | 6,963,998 | | G. Grover | | | 1,462,233 | | | | 53,580 | | | | 1,492,260 | | | | 77,540 | | | | - | | | | 3,085,613 | | R. Wilkins | | | 1,904,297 | | | | 2,209,746 | | | | 2,048,200 | | | | 119,475 | | | | - | | | | 6,281,718 | |
(1) | The severance amount is calculated as three times the sum of the executive’s base salary plus the highest annual bonus for the last five years or since reaching age 50, whichever is greater. |
(2) | The pension enhancement is calculated based on the value of three additional years of employer contributions under Sensient’s benefit plans. TheFor the named executive officers other than Mr. Grover, the pension enhancement also includes calculation of the SERP benefits using the 2015 salary (2016 salary for Mr. Rolfs) and the highest bonus paid as of December 31, 2014.in February 2015. |
(3) | Performance stock units awarded in 20132015, 2016, and 2017 are subject to accelerated vesting at target performance levels upon a change of control, whether or not followed by a qualifying severance, during the two-year performance period and performance stock units awarded in 2014 are subject to accelerated vesting at target performance levels upon a change of control during thetheir respective three-year performance period. |
(4) | None of the Company’s change of control agreements provide for aany tax gross-up of the related benefits.gross-ups. |
Chief Executive Officer Pay Ratio
As a result of the recently adopted rules under the Dodd-Frank Act, the SEC requires disclosure of the Chief Executive Officer to median employee pay ratio. Our Chief Executive Officer to median employee pay ratio is a reasonable estimate calculated in accordance with Item 402(u) of Regulation S-K. We identified the median employee by examining the total cash compensation for all employees, excluding our Chief Executive Officer, as of November 13, 2017. We believe the use of total cash compensation is a consistently applied compensation measure because we do not widely distribute equity awards to employees. Approximately 2% of our employees received equity awards in 2017. We included all employees, whether employed on a full-time, part-time, seasonal, or temporary basis. We did not make any assumptions, adjustments, or estimates with respect to total cash compensation, and we did not annualize the compensation for any employee.
After identifying the median employee, we calculated the median employee’s 2017 compensation using the same methodology we use for our named executive officers as set forth in the 2017 Summary Compensation Table included in this proxy statement. We then added the value of health and welfare plan benefits to both the median employee’s 2017 compensation and Mr. Manning’s 2017 compensation (as reflected above in the Summary Compensation Table included in this proxy statement). Our median employee’s total compensation for 2017 was $58,463 (which included $10,769 in health insurance benefits, a $1,823 contribution by the Company to the employee’s 401(k) plan account, and a $456 contribution by the Company to the employee’s ESOP account) and Mr. Manning’s total compensation for 2017 was $5,244,900 (which included $10,769 in health insurance benefits paid by the Company, a $10,600 contribution by the Company to Mr. Manning’s 401(k) plan account, and a $2,650 contribution by the Company to Mr. Manning’s ESOP account). As a result, Mr. Manning’s total compensation for 2017 was approximately 90 times that of our median employee.
Given the different methodologies that various public companies will use to determine their CEO pay ratios, the CEO pay ratio reported above should not be used as a basis for comparison between companies.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of December 31, 2014,2017, with respect to compensation plans under which equity securities of the Company are authorized for issuance. 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 the Company’s shareholders | | | 415,661 | (1) | | $ | 30.07 | (2) | | | 1,958,025 | (3) | | | | | | | | | | | | | | Equity compensation plans not approved by the Company’s shareholders | | | - | | | | - | | | | - | | | | | | | | | | | | | | | Total | | | 415,661 | (1) | | $ | 30.07 | (2) | | | 1,958,025 | (3) |
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 the Company’s shareholders | | | 66,167 | (1) | | $ | 23.4944 | | | $ | 1,370,700 | (2) | | | | | | | | | | | | | | Equity compensation plans not approved by the Company’s shareholders | | | - | | | | - | | | | - | | | | | | | | | | | | | | | Total | | | 66,167 | (1) | | $ | 23.4944 | | | | 1,370,700 | (2) |
(1) | Includes 4,000 outstanding options issued under the 1999 Amended and Restated Directors Deferred Compensation Plan, 240,186 performance stock unit awards under the 2007 Stock Plan at their target values, and 80,300 performance stock unit awards under 2017 Stock Plan at their target values. The ultimate amount of performance stock units that could vest can range from 0 to 150% of target amount, or from 0 to 480,729 units. Excludes deferred shares, which have no exercise price. |
(2) | Calculated based on 4,000 outstanding options, as performance stock units do not have an exercise price. |
(3) | Includes the following as of December 31, 2014:2017: (i) up to 1,057,7001,679,550 shares of restricted stock and performance stock units that may be issued under the Company’s 20072017 Stock Plan;Plan (after reserving 120,450 shares of Common Stock, the maximum shares that could be earned under outstanding performance stock unit awards); and (ii) up to 200,000 shares of deferred stock issuable under the 1999 Amended and Restated Directors Deferred Compensation Plan; and (iii) up to 113,00078,475 shares that may be issued in the form of restricted stock under the Company’s 2012 Non-Employee Directors Stock Plan. The 2007 Stock Plan terminated by its terms on April 25, 2017. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and directors to file initial reports of beneficial ownership (on Form 3) and reports of changes in beneficial ownership (primarily on Form 4 or in limited instances on Form 5) with the SEC and the New York Stock Exchange. SEC regulations require officers and directors to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms furnished to the Company, and upon certifications from reporting persons who did not file year- endyear-end reports on Form 5 that no such reports were required, the Company believes that during the year ended December 31, 2014,2017, all of its officers and directors complied with the Section 16(a) filing requirements, except that on April 28, 2017, the Company filed one latea Form 34 on behalf of Mr. Samir Lteif.each of Drs. Carleone and Ferruzzi and Ms. McKeithan-Gebhardt that included information related to contributions to their deferred compensation plans made on March 31, 2017.
TRANSACTIONS WITH RELATED PERSONS
The Company’s Code of Conduct provides that, except with the prior knowledge and consent of the Company, directors and employees are not permitted to have a financial interest in a supplier, competitor, or customer of the Company because of the potential conflicts of interest raised by such transactions. There is a limited exception for ownership of securities of less than 5% of the stock of a private company or of a publicly traded corporation unless the investments are of a size asthat would allow the owner to have influence or control over the company or corporation. The Company’s policies include no minimum size for this restriction on potential conflict of interest transactions. Actual or potential conflict of interest transactions or relationships are to be reported either to the Company’s Senior Vice President, AdministrationGeneral Counsel or a member of the corporate legal department.Director, Internal Audit. Waivers or exceptions for executive officers or directors may be granted only in advance and under exceptional circumstances and only by the Board or an appropriate committee thereof. They are also subject to the Company’s disclosure controls and procedures to ensure compliance with applicable law and exchange requirements.
Mr. John J. Manning (the Company’s Vice President, General Counsel and Secretary) is the brother of Mr. Paul Manning (the Company’s Chairman, President and Chief Executive Officer) is. In 2017, Mr. John J. Manning received an annual salary of $290,000, an annual cash incentive award of $187,700 (based on the sonCompany’s performance in 2016), and an award of 4,900 performance stock units (with a grant date fair market value of $376,320 assuming target performance levels). In 2018, Mr. John J. Manning will receive an annual salary of $350,000, and received an annual cash incentive award of $109,518 (based on the Company’s performance in 2017). Also in 2018, 4,366 shares of Mr. Kenneth Manning (the Company’s ChairmanJohn J. Manning’s 2014 performance stock unit award vested (85.6% of the Board).target 2014 performance stock unit award), and Mr. Paul Manning receives the compensation described herein andreceived $14,575 in dividends accrued under his 2014 performance stock unit award. Mr. John J. Manning also participates in Sensient’s other executive and employee compensation programs on the same basis as other Company employees. In addition,The employment arrangement of Mr. John J. Manning (the Company’s Vice President and Assistant General Counsel) is also the son of Mr. Kenneth Manning and the brother of Mr. Paul Manning. The employment arrangements of both Mr. Paul Manning and Mr. John Manning werewas carefully considered and approved when he joined the Company and, again, when he was promoted to General Counsel in advance2016 by the Audit Committee as well as the full Board in accordance with the Code of Conduct. His pay is set and approved by the Compensation and Development Committee in the same manner as other executives of the Company.
There were no other transactions since the beginning of 2014,2017, and there are no proposed transactions, in which the Company was or is to be a participant and the amount involved exceeds $120,000 and in which (a) any director, executive officer, director nominee, or immediate family member of a director, executive officer, or nominee or (b) any holder of 5% or more of the Company’s common stockCommon Stock or their immediate family members, had a direct or indirect material interest.See “Corporate Governance — Director Independence” above for a description of transactions between the Company and Sealed Air Corporation, of which Messrs. Brown and Kenneth Manning are directors.
ITEM 2. ADVISORY (NONBINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION
Sensient’s compensation policies and procedures are centered on a pay-for-performance philosophy, and we believe that they are strongly aligned with the long-term interests of our shareholders. Our compensation program is designed to attract, motivate, and retain the key executives who drive our success. Compensation that measures and rewards performance, andas well as alignment of that compensation with the interests of long-term shareholders, are key principles of our compensation program design. Although we have made and will continue to make improvementsrefinements to our compensation program from time to time, these key principles have been unchanged for many years.
We support the principlebelieve that our corporate governance policies, including our executive compensation program, should be and are responsive to shareholder concerns. This principle is embodied in a non-binding, advisory vote that gives you as a shareholderour shareholders the opportunity to approve the compensation of our named executive officers as disclosed in this proxy statement, including, among other things, our executive compensation objectives, policies, and procedures. We currently hold these non-binding, advisory votes to approve executive compensation annually, so after the Meeting the next vote will occur at the 20162019 Annual Meeting of Shareholders. This vote is intended to provide an overall assessment of our executive compensation program rather than to focus on any specific item of compensation. The Compensation Committee, and the Board as a whole, value the opinions of our shareholders and intend to take the outcome of this vote into account when considering future executive compensation arrangements. For instance, our Compensation Committee and Board, as a whole, modified our current executive compensation arrangements during 2014 as a result of the vote outcome from the nonbinding advisory vote on executive compensation held with respect to the 2014 Annual Meeting of Shareholders. However, because the vote is advisory, it will not directly affect any existing compensation awards of any of our executive officers, including our named executive officers.
As discussed in the “Compensation Discussion and Analysis” section, above, our executive compensation program is designed:
to measure and reward performance from each of our executive officers and from the management team as a whole;
to align Sensient’s interests with the interests of executives and other employees through compensation programs that recognize individual contributions toward the achievement of corporate goals and objectives without encouraging unnecessary or unreasonableexcessive risks;
to further link executive and shareholder interests through equity-based compensation and long-term stock ownership arrangements; to recognize and reward an executive’s performance in the furtherance of Sensient’s goals and objectives without undertaking unnecessary or excessive risk; and
to attract and retain high caliber executive and employee talent.talent; and
to encourage management practices, controls, and oversight that prioritize ethical behavior and minimize the risks present in Sensient’s business.
The application of these principles and our executive compensation philosophy, policies and procedures have resulted in a corporate culture that recognizes and rewards individual and team performance without encouraging unnecessary or excessive risks.risk taking. We align the interests of shareholders and executives by linking a substantial portion of compensation to the Company’s performance. For example, approximately 76%70% of the average total 20142017 compensation disclosed in the Summary Compensation Table for our named executive officers (excluding the increasechange in thepension values and including performance stock units at grant date fair market value of retirement benefits and earnings on deferred compensation)assuming target performance levels) consisted of either incentivesincentive payments that were subject to pre-established performance criteria or performance stock equity awards that are subject to future performance criteria. We have made and will continue to make improvementsrefinements to our compensation program from time to time. The 2014 shareholder advisory vote showed lower shareholder support compared to As described in the prior year and less than majority shareholder support. We reached out directly to greater than a majority“2017 Highlights” section of our “Compensation Discussion and Analysis” section above, during 2017 diluted earnings per share from continuing operations decreased 25.9% to $2.03, and adjusted earnings per share2 increased 6.5% to $3.42. We increased our quarterly dividend to 33 cents per share in October 2017 and returned approximately $141 million of cash to our shareholders during 2017 through dividends and share repurchases. For the three years ended December 31, 2017, the Company grew its diluted earnings per share from continuing operations at an annualized growth rate of 6.7%, its adjusted earnings per share2 at an annualized growth rate of 4.2% (8.9% in local currency), and its total shareholder return (TSR) was 8.4%. Our 2017 performance drove incentive cash award earnings, and our 2015-2017 performance drove 2014 performance stock unit award earnings, to discuss their concerns and, in response to shareholder concerns,our named executive officers. In 2017, we awarded 100% performance stock equity awards under our annual equity award grants for executives (compared to 50% performance stock equity awards in 2013), refreshed the Board by adding two new independent directors, eliminated tax gross-up payments on perquisites paid to named executive officersexecutives. The 2017 shareholder advisory vote showed strong shareholder support for our compensation program and adopted numerous enhancements towe have continued our corporate governance andmarket leading executive compensation practices. Certain compensation decisions made during 2013 will result in maintaining 2014 pay levels at the prior year’s level with only a small, customary increase in base pay. Additionally, the management succession occasioned by the recent retirements of Messrs. Kenneth Manning and Hobbs and certain other compensation decisions made during 2013 and 2014 have resulted in lower compensation in 2014 pay levels, and will result in lower compensation in 2015 pay levels, compared to the prior year’s level.
As described in the “2014 Highlights” section of our “Compensation Discussion and Analysis” section above, during 2014 our stock price increased from $48.52 to $60.34 per share, earnings per share increased before restructuring costs by 10.6% to a record level of $3.02 and cash flow from operations increased by 23% to $189 million. During 2014 we also increased our quarterly dividend to 25 cents per share and returned $185 million of cash to our shareholders through share repurchases and dividends.
We encourage you to consider the detailed information provided in the “Compensation Discussion and Analysis” and in the Summary Compensation Table and the tables and other information that follow it. The Board and the Compensation Committee will review the advisory voting results and will take them into account in making future executive compensation decisions.
After reviewing the information provided above and in the other parts of this proxy statement, the Board asks you to approve the following advisory resolution:
RESOLVED, that Sensient’s shareholders hereby approve, on an advisory, nonbinding basis, the compensation paid to Sensient’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion in this proxy statement.
This advisory vote will be approved if it receives the affirmative votemore shares are voted in favor of a plurality of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote with respect toratification than are voted against this proposal. Abstentions and broker non-votes will not affect the outcome of this proposal. If no voting specification is made on a properly returnedexecuted and signedtransmitted proxy card (excluding broker non-votes), the proxies named on the proxy card will vote “For” this resolution.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL APPROVING THE COMPENSATION PAID TO SENSIENT’S NAMED EXECUTIVE OFFICERS AS DISCLOSED HEREIN. 65
2Adjusted earnings per share is a non-GAAP financial measure. See “Non-GAAP Financial Measures” under Item 7 of the Company’s Annual Report on Form 10-K for information regarding this measure and a reconciliation to the most directly comparable GAAP measure. ITEM 3. APPROVAL OF THE PROPOSED AMENDMENT TO THE COMPANY’S AMENDED AND RESTATED ARTICLES OF INCORPORATION TO PROVIDE FOR A MAJORITY VOTING STANDARD FOR UNCONTESTED ELECTIONS OF DIRECTORS
Under the Wisconsin Business Corporation Law, unless otherwise provided in a company’s articles of incorporation, directors are elected by a plurality of the votes cast by the shares entitled to vote at a meeting. In this context, “plurality” means that the individuals with the largest number of votes are elected as directors up to the maximum number of directors to be chosen at the election. The Company’s Amended and Restated Articles of Incorporation are currently silent as to the voting standard for election of directors. As a result, implementing a majority voting standard for director nominees running unopposed will require that the Board adopt, and the shareholders approve, the amendment to the Company’s Amended and Restated Articles of Incorporation.
Proposed Amendment
The Board has approved the adoption of amendments to the Company’s Amended and Restated Articles of Incorporation, Bylaws and Corporate Governance Guidelines to provide for a majority voting standard in uncontested elections of directors, subject to shareholder approval of the amendment to the Company’s Amended and Restated Articles of Incorporation. If such proposed amendment is approved by the shareholders a new Section 7.3 will be added to Article VII of the Company’s Amended and Restated Articles of Incorporation that reads as follows:
“SECTION 7.3 Election of Directors.
Each director shall be elected by a majority of the votes cast by the shares entitled to vote in the election of directors at a meeting at which a quorum is present except in a contested election of directors.”
We are now submitting this amendment for approval by the Company’s shareholders. If the amendment is approved by the shareholders, this amendment will become effective upon the filing of articles of amendment of the Company’s Amended and Restated Articles of Incorporation with the Wisconsin Department of Financial Institutions. The Company would make such a filing promptly after the annual meeting. If the proposed amendment is not approved, no amendment will be made to the Company’s Amended and Restated Articles of Incorporation, Bylaws or Corporate Governance Guidelines, and the existing plurality voting standard and director resignation policy will remain in place.
Vote Required
Assuming that a quorum is present, the amendment will be approved if more shares are voted in favor of approval than are voted against approval of the amendment. Under Wisconsin law, any shares not voted at the Meeting with respect to the amendment (whether as a result of abstention, broker non-vote or otherwise) will have no impact on the vote.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE COMPANY’S AMENDED AND RESTATED ARTICLES OF INCORPORATION. SHARES OF COMMON STOCK REPRESENTED AT THE MEETING BY EXECUTED BUT UNMARKED PROXIES WILL BE VOTED FOR APPROVAL OF THE AMENDMENT.
ITEM 4.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee, subject to shareholder ratification, has selected Ernst & Young LLP, certified public accountants, to audit the financial statements of the Company for the year ending December 31, 2015.2018.
Although not required by law to submit the appointment to a vote by shareholders, the Audit Committee and the Board consider it appropriate, as a matter of policy, to request that the shareholders ratify the appointment of Ernst & Young LLP as independent auditors for 2015.2018. Assuming that a quorum is present, the selection of Ernst & Young LLP will be deemed to have been ratified if more shares are voted in favor of ratification than are voted against ratification. Under Wisconsin law, any shares of Common Stock which are not voted on this matter at the Meeting (whether by abstention or otherwise) will have no effect on this matter. If the shareholders shoulddo not so ratify the appointment of Ernst & Young LLP, the Audit Committee will reconsider the appointment.
Representatives of Ernst & Young LLP are expected to be present at the Meeting and will have an opportunity to make a statement if they desire to do so and to respond to appropriate shareholder questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2015.2018. SHARES OF COMMON STOCK REPRESENTED AT THE MEETING BY EXECUTED BUT UNMARKED PROXIES WILL BE VOTED FOR THE RATIFICATION OF SUCH APPOINTMENT. ITEM 5.
OTHER MATTERS
Company management knows of no business which will be presented for action at the Meeting other than those items identified in the accompanying Notice of Annual Meeting. Pursuant to the Company’s Bylaws, written notice of any shareholder proposals to be presented at the Meeting must have been received by the Secretary no later than January 23, 2015.26, 2018. As no notice of any shareholder proposals was received, no business may be brought before the Meeting by any shareholders. If other matters are brought before the Meeting by the Board of Directors, it is intended that proxies will be voted at the Meeting in accordance with the judgment of the person or persons exercising the authority conferred by such proxies. FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS
The Company welcomes constructive comments or suggestions from its shareholders, both regarding its executive compensation program and regarding other corporate governance or business matters. In the event a shareholder desires to have a proposal formally considered at the 20162019 Annual Meeting of Shareholders, which is expected to be held on April 21, 2016,25, 2019, and included in the proxy statement for that meeting, the proposal must be in writing and received by the Secretary of the Company on or before November 13, 2015,9, 2018, and must otherwise comply with the applicable rules of the SEC. Under the Company’s Bylaws, appropriate shareholder proposals will be presented at the 2016 Annual Meeting of Shareholders without inclusion in the proxy materials if such proposals are received by the Company no later than January 22, 2016.
In addition, the Company’s Bylaws establish procedures for shareholder nominations for election of directors of the Company and bringing business before any annual meeting of shareholders of the Company. Among other things, to bring business before an annual meeting or to nominate a person for election as a director at an annual meeting, a shareholder must give written notice to the Secretary of the Company not less than 90 days (and, in the case of nominations, not more than 120 days) prior to the third Thursday after the first Friday in the month of April next following the last annual meeting held. The notice must contain certain information about the proposed business or the nominee and the shareholder making the proposal as specified in the Bylaws. Nominations for election of directors must include a completed D&O questionnaire from the nominee and specified written affirmations and other materials as described in the Bylaws.
Under the Company’s Bylaws, appropriate shareholder proposals, including shareholder nominations for election of directors of the Company, will be presented at the 2019 Annual Meeting of Shareholders without inclusion in the proxy materials if such proposals are received by the Company no later than January 25, 2019.
Any shareholder interested in making a nomination or proposal should request a copy of the applicable Bylaw provisions from the Secretary of the Company or obtain them from the Company’s website (www.sensient.com), and send any such nomination or proposal to the Secretary of the Company at the Company’s executive offices at 777 East Wisconsin Avenue, 11th Floor, Milwaukee, Wisconsin 53202.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS ARE REQUESTED TO DATE, SIGN AND RETURN THEVOTE ON A PHYSICAL PROXY CARD, OR VOTE BY PHONE, OR BY INTERNET ACCORDING TO THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE. IF YOUR SHARES ARE REGISTERED IN THE NAME OF A BROKER OR BANK, ONLY YOUR BROKER OR BANK CAN SUBMIT THE PROXY CARD ON YOUR BEHALF. PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR HER TO SUBMIT THE PROXY CARD ON YOUR BEHALF.
UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER, ADDRESSED TO THE SECRETARY OF THE COMPANY, THE COMPANY WILL PROVIDE TO SUCH SHAREHOLDER WITHOUT CHARGE A COPY OF THE COMPANY’S 20142017 ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.COMMISSION AND THE EXHIBITS TO THE 2017 ANNUAL REPORT.
| By Order of the Board of Directors | | | | | | John L HammondJ. Manning | | | Secretary |
Appendix A
SENSIENT TECHNOLOGIES CORPORATION DIRECTOR SELECTION CRITERIA
Business Background, Skills and Experience In order to be considered as a potential or continuing member of the Board of Directors of Sensient Technologies Corporation (the “Company”), candidates should have relevant business and industry skills and experience, including a background, demonstrated skills or experience in at least one of the following areas:
Substantial recent business experience at the senior management level, preferably as chief executive officer.
Recent leadership position in the administration of a major college or university.
Recent specialized expertise at the doctoral level in a science or discipline important to the Company’s business.
Recent prior senior level governmental or military service.
Financial expertise or risk assessment, risk management or employee benefit skills or experience.
In addition, international experience in geographic areas which are significant to the Company is highly desirable.
The Board will consider the desirability of the continued service of directors who change their primary employment. Such directors are expected to tender their resignations to assist the Board in evaluating such desirability on a timely basis.
Personal Candidates should possess strong personal attributes, including ability, unquestionable integrity and honesty, leadership, independence, interpersonal skills and strong moral values.
Candidates (other than the Chairman of the Board, and the President and Chief Executive Officer) should be independent of management and free of potential material conflicts with the Company’s interests.
NOTE: CANDIDATES ARE GENERALLY EXPECTED TO MEET THE INDEPENDENCE REQUIREMENTS RELATING TO DIRECTORS UNDER APPLICABLE LAWS AND REGULATIONS. NOMINEES ARE ALSO REQUIRED TO PROVIDE A WRITTEN AFFIRMATION THAT, AMONG OTHER THINGS, THE NOMINEE IS NOT AN EMPLOYEE, DIRECTOR OR AFFILIATE OF ANY COMPETITOR OF THE COMPANY.
Other In considering any particular candidate, the Board will consider the following additional factors:
The candidate’s ability to work constructively with other members of the Board and with management.
Whether the candidate brings an appropriate mix of skills and experience that will enhance the diversity and overall composition of the Board. Directors should be selected so that the Board is a diverse body, with diversity reflecting gender, race, ethnicity, national origin and professional experience.
Whether the candidate is able to devote the time necessary to properly discharge his or her responsibilities. The Board will consider the number of other boards on which the candidate serves, and the likelihood that such other service will interfere with the candidate’s ability to perform his or her responsibilities to the Company.
Candidates will be considered without discrimination because of their race, religion, color, sex, age, national origin, disability, veteran or military status or any other characteristic protected by state, federal or local law. | Shareowner Services
P.O. Box 64945
St. Paul, MN 55164-0945
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Address Change? Mark box, sign, and indicate changes below: ☐
| | | TO VOTE BY INTERNET OR
TELEPHONE, SEE REVERSE SIDE
OF THIS PROXY CARD.
|
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD. The Board03 Edward H. Cichurski ■ ■ ■ 08 Scott C. Morrison ■ ■ ■ 04 Mario Ferruzzi ■ ■ ■ 09 Elaine R. Wedral ■ ■ ■ 05 Donald W. Landry ■ ■ ■ 10 Essie Whitelaw ■ ■ ■ 2. Proposal to approve the compensation paid to Sensient’s named executive officers, as disclosed pursuant to Item 402 of Directors Recommends a Vote “FOR” all Nominees listedRegulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion in Item 1,
and “FOR” Items 2, 3 and 4.
1. Election of directors: | 01 Hank Brown | 06 Kenneth P. Manning | ☐ | Vote FOR | ☐ | Vote | | 02 Joseph Carleone | 07 Paul Manning | | all nominees | | WITHHELD | | 03 Edward H. Cichurski | 08 Deborah McKeithan-Gebhardt | | (except as marked) | | from all nominees) | | 04 Fergus M. Clydesdale | 09 Elaine R. Wedral | | | | | | 05 James A. D. Croft | 10 Essie Whitelaw | | | | |
Please fold here - Do not separate
(Instructions: To withhold authority to vote for any indicated nominee, write the number(s) of the nominee(s) in the box provided to the right.) | |
2. | Proposal to approve the compensation paid to Sensient’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion in the accompanying proxy statement. | the accompanying proxy statement. ■ For ■ Against ■ Abstain 3. Proposal to ratify the appointment of Ernst & Young LLP, certified public accountants, as the independent auditors of Sensient for 2018. ■ For ■ Against ■ Abstain In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. ☐ For | ☐ Against
| ☐ Abstain
| | | | | | 3. | Proposal to approve an amendment to Sensient’s Amended and Restated Articles of Incorporation to provide a majority voting standard for future uncontested elections of directors. | ☐ For
| ☐ Against
| ☐ Abstain
| | | | | | 4. | Proposal to ratify the appointment of Ernst & Young LLP, certified public accountants, as the independent auditors of Sensient for 2015. | ☐ For
| ☐ Against
| ☐ Abstain
| | | | | | 5. | In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. |
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED “FOR” ALL NOMINEES LISTED IN ITEM 1, AND “FOR” ITEMS 2 3 AND 4. 3. Date _____________________________________ Signature(s) in Box Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, adminis trators, etc., should include title and authority Corporations should provide full name of corporation and title of authorized officer signing the Proxy. Please fold here – Do not separate TO VOTE BY INTERNET OR TELEPHONE, SEE REVERSE SIDE OF THIS PROXY CARD. Address Change? Mark box, sign, and indicate changes below: ■ Shareowner Services P.O. Box 64945 St. Paul, MN 55164-0945 TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW, SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD. The Board of Directors Recommends a Vote “FOR” all Nominees listed in Item 1, and “FOR” Items 2 and 3. 1. Election of directors: FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN 01 Hank Brown ■ ■ ■ 06 Paul Manning ■ ■ ■ 02 Joseph Carleone ■ ■ ■ 07 Deborah McKeithan-Gebhardt■ ■ ■ | | Signature(s) in Box | | | Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, adminis trators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy. |
SENSIENT TECHNOLOGIES CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
To be held Thursday, April 23, 201526, 2018 2:00 p.m., Central Time
Trump International Hotel 401 North Wabash Avenue Chicago, Illinois
| Sensient Technologies Corporation 777 East Wisconsin Avenue Milwaukee, Wisconsin 53202 | proxy |
This proxy is solicited on behalf of the Board of Directors of Sensient Technologies Corporation.
The shares of stock you hold in your account or in a dividend reinvestment account will be voted as you specify on the reverse side. Shares held in the same registration will be combined into the same proxy card whenever possible. However, shares held with different registrations cannot be combined and therefore a shareholder may receive more than one proxy card. If you hold shares in multiple accounts with different registrations, you must vote each proxy card you received to ensure that all shares you own are votedvoted. If no choice is specified, the proxy will be voted "FOR"“FOR” all nominees listed in Item 1, and "FOR"“FOR” Items 2 3 and 4.3.
By signing this proxy, you revoke all prior proxies and constitute and appoint KENNETH P.PAUL MANNING and JOHN L. HAMMOND,J. MANNING, and each of them, with full power of substitution, your true and lawful Proxies, to represent and vote, as designated below, all shares of Common Stock of Sensient Technologies Corporation which you are entitled to vote at the Annual Meeting of Shareholders of such corporation to be held at the Trump International Hotel, 401 North Wabash Avenue, Chicago, Illinois on Thursday, April 23, 2015,26, 2018, 2:00 p.m., Central Time, and at any adjournment thereof.
This card also constitutes voting instructions to the trustees or administrators, as applicable, of certain of Sensient Technologies Corporation’s employee benefit plans to vote shares attributable to accounts the undersigned may hold under such plans as indicated on the reverse of this card. If no voting instructions are provided, the shares will be voted in accordance with the provisions of the respective plans.
Vote by Internet, Telephone or Mail 24 Hours a Day, 7 Days a Week
Your phone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. INTERNET | PHONE 1-866-883-3382 | MAIL Mark, sign and date your proxy | Use the Internet to vote your proxy until 12:00 p.m. (CT) on April 22, 2015.25, 2018. For shares held in Sensient’s employee benefit plans, the deadline is 12:00 p.m. (CT) on April 20, 2015. 23, 2018. | PHONE
1-866-883-3382
Use a touch-tone telephone to vote your proxy until 12:00 p.m. (CT) (CT) on April 22, 2015.25, 2018. For shares held
in Sensient’s employee benefit plans, the deadline is 12:00 p.m. (CT) on April 20, 2015. 23, 2018. | MAIL
Mark, sign and date your proxy
card and return it in the postage-paid envelope provided. |
If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card.
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