UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | | | Preliminary Proxy Statement |
☐ | | | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒ | | | Definitive Proxy Statement |
☐ | | | Definitive Additional Materials |
☐ | | | Soliciting Material under Section 240.14a-12 |
SENSIENT TECHNOLOGIES CORPORATION |
(Name of Registrant as Specified In Its Charter) |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
Payment of Filing Fee (Check the appropriate box)all boxes that apply):
☒ | | | No fee required |
| | | ||
☐ | | | Fee paid previously with preliminary materials |
| | | ||
☐ | | | Fee computed on table |
March 5, 2021
16, 2022
Dear Fellow Shareholder:
You are invited to attend the Annual Meeting of Shareholders of Sensient Technologies Corporation. The meeting will be held on Thursday, April 22, 2021,28, 2022, at 8:00 a.m., Central Time. In light ofTime, at the continuing public health situation due to COVID-19, the meeting will be held virtually only. You will not be able to attend the Annual Meeting in person.
Westin Milwaukee, 550 North Van Buren Street, Milwaukee, Wisconsin.
I hope that you will be able to join us for the virtual meeting: (i) to elect ten directors nominated by the Board of Directors of the Company as described in the Proxy Statement; (ii) to give an advisory vote on our executive compensation; (iii) to approve the Sensient Technologies Corporation 2017 Stock Plan, as amended and (iii)restated; and (iv) to ratify the appointment of Ernst & Young LLP, certified public accountants, as the independent auditors of the Company for 2021;2022; and to transact such other business as may properly come before the meeting or any adjournment thereof.
Whether or not you plan to attend the virtual meeting, it is important that you exercise your right to vote as a shareholder. Please indicate your vote by completing your proxy in one of three ways according to the instructions contained in the Notice of Internet Availability of Proxy Materials: (1) vote by telephone; (2) vote by Internet; or (3) complete a proxy card and return it using the envelope provided. Be assured that your votes are completely confidential.
We are also delivering our 20202021 Annual Report on Form 10-K by mail or over the Internet for your review.
On behalf of the officers and directors of the Company, thank you for your continued support and confidence.
Sincerely,
Paul Manning
Chairman, President and Chief Executive Officer
SENSIENT TECHNOLOGIES CORPORATION
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Notice of Annual Meeting to be held on April 22, 2021
28, 2022
To the Shareholders of Sensient Technologies Corporation:
NOTICE IS HEREBY GIVEN that the 20212022 Annual Meeting of Shareholders (“Meeting”) of Sensient Technologies Corporation, a Wisconsin corporation (“Company”), will be held onlineat the Westin Milwaukee, 550 North Van Buren Street, Milwaukee, Wisconsin, on Thursday, April 22, 2021,28, 2022, at 8:00 a.m., Central Time, for the following purposes:
| 1. | To elect ten directors nominated by the Board of Directors of the Company as described in the proxy statement; |
| 2. | To give an advisory vote to approve the compensation of the Company’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 proxy statement; |
| 3. | To approve the Sensient Technologies Corporation 2017 Stock Plan, as amended and restated; |
| 4. | To ratify the appointment of Ernst & Young LLP, certified public accountants, as the independent auditors of the Company for |
To transact such other business as may properly come before the Meeting or any adjournments thereof. Register
Important Notice Regarding the Internet Availability of Proxy Materials
for the Shareholder Meeting to attendbe held on April 28, 2022
The Proxy Statement and Notice of Annual Meeting and the Meeting at https://register.proxypush.com/sxt.2021 Annual Report on Form 10-K
are available on Sensient’s website at http://investor.sensient.com. |
The Board of Directors has fixed the close of business on February 26, 2021March 2, 2022 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Meeting and any adjournments thereof. Holders of a majority of the outstanding shares must be present at the Meeting online or by proxy in order for the Meeting to be held. As allowed under the Securities and Exchange Commission’s rules, we have elected to furnish our proxy materials over the Internet to most shareholders and deliver printed proxy materials to Sensient’s employee benefit plan participants that have not received notice of default electronic delivery and other shareholders who have requested paper copies. We have mailed a Notice of Internet Availability of Proxy Materials (the “Notice”) to those shareholders who will receive our proxy materials over the Internet. The Notice contains instructions on how to access this proxy statement and our Annual Report on Form 10-K via the Internet and how to vote.
Shareholders of record who wish to vote at the Meetingin person may do so by attendingat the Meeting online.Meeting. Whether or not you are able to attend the Meeting, to ensure that your shares are represented at the Meeting, please complete your proxy in one of three ways: (1) vote by telephone; (2) vote by Internet; or (3) complete a proxy card and return it using the envelope provided, each according to the instructions provided in this proxy statement or contained in the Notice. You may revoke your proxy at any time before it is actually voted by delivering a notice in writing to the undersigned (including by delivering a later-executed proxy or voting by telephone or by Internet) or by voting at the Meeting online.in person.
| | | On Behalf of the Board of Directors | |
| | | ||
| | | John J. Manning, Secretary | |
Milwaukee, Wisconsin | |||
March |
PROXY VOTING INSTRUCTIONS
If you are a record holder, you may cast your vote online duringin person at the 20212022 Annual Meeting of Shareholders (the “Meeting”) or by any one of the following ways:
BY TELEPHONE: You may call the toll-free number indicated in the Notice of Internet Availability of Proxy Materials (the “Notice”) or on your proxy card. Follow the simple instructions and use the personalized control number specified in the Notice or on your proxy card to vote your shares. You will be able to confirm that your vote has been properly recorded. Your telephone vote authorizes the named proxies to vote your shares in the same manner as if you had marked, signed, and returned a proxy card.
OVER THE INTERNET: You may visit the website indicated in the Notice or on your proxy card. Follow the simple instructions and use the personalized control number specified in the Notice or on your proxy card to vote your shares. You will be able to confirm that your vote has been properly recorded. Your Internet vote authorizes the named proxies to vote your shares in the same manner as if you had marked, signed, and returned a proxy card.
BY MAIL: You may mark, sign, and date a proxy card received by mail and return it in the postage-paid envelope provided.
If you are a participant in a Sensient employee benefit plan, you have the right to instruct the trustees and/or administrators of such plans to vote the shares allocated to your plan account. If no instructions are given, or if your voting instructions are not received by the deadline shown on the voting instruction form, the uninstructed shares will be voted in accordance with the provisions of the applicable plan.
If you are a beneficial holder, you may receive additional instructions from the bank or broker that holds shares for your benefit on how to vote your shares with these proxy materials or with the Notice. If a broker does not receive voting instructions from the beneficial owner on the election of directors, on the approval of our executive compensation, or on any matter relating to executive compensation,the approval of the Sensient Technologies Corporation 2017 Stock Plan, as amended and restated, the broker may not vote such shares and may return a proxy card with no vote on these matters, in which case such shares will have no effect in the outcome of such matters (except that such shares will be counted for purposes of determining whether a quorum is present at the Meeting).
Instructions on how to access Sensient’s proxy materials and our 20202021 Annual Report on Form 10-K via the Internet and how to vote can be found in the Notice made available to our shareholders of record and beneficial owners and on the proxy card.
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE WITH VOTING,
PLEASE CONTACT OUR PROXY SOLICITOR,
D.F. KING & CO., INC.,
TOLL FREE AT (800) 331-6359.(877) 674-6273.
SENSIENT TECHNOLOGIES CORPORATION
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(414) 271-6755
Proxy Statement
For the Annual Meeting of Shareholders
Shareholders to be held on April 22, 2021
GENERAL
This proxy statement and proxy are furnished to the shareholders of Sensient Technologies Corporation, a Wisconsin corporation (the “Company” or “Sensient”), in connection with the solicitation by the Board of Directors of the Company (“Board”(the “Board”) of proxies for use at the Company’s 20212022 Annual Meeting of Shareholders, and at any adjournments thereof (“Meeting”(the “Meeting”), for the purposes set forth in the Notice of Annual Meeting and in this proxy statement. The Meeting will be held virtuallyat the Westin Milwaukee, 550 North Van Buren Street, Milwaukee, Wisconsin, on Thursday, April 22, 2021,28, 2022, at 8:00 a.m., Central Time. Register
While we intend to attendhold the Meeting in person as scheduled, we are sensitive to public health and travel concerns and recommendations that public health officials may issue in light of the COVID-19 pandemic. The health and well-being of our employees and shareholders is our top priority. Accordingly, we continue to actively monitor ongoing COVID-19 developments and will follow the local health and safety protocols in effect at https:such time. In the event it is not possible to hold the Meeting in person, we will announce alternative arrangements for the Meeting as promptly as practicable. Please monitor our press releases at our website (http://register.proxypush.com/sxt.
investor.sensient.com) and Securities and Exchange Commission (“SEC”) filings for updated information. As always, we encourage you to submit a proxy to vote your shares prior to the Meeting so that your shares will be represented and voted at the Meeting whether or not you attend.
As permitted under Securities and Exchange CommissionSEC rules, the Company is once again making this proxy statement and other annual meeting materials available on the Internet instead of mailing a printed copy of these materials to each shareholder. Most shareholders will receive a Notice of Internet Availability of Proxy Materials (the “Notice”) by mail and will not receive a printed copy of these materials (other than Sensient’s benefit plan participants that have not received notice of default electronic delivery and other shareholders who request a printed copy as described below). Instead, the Notice contains instructions as to how shareholders may access and review all of the important information contained in Sensient’s proxy materials on the Internet, and how shareholders may submit proxies by mail, by telephone, or over the Internet. The Notice is being mailed to shareholders, and the proxy materials will be available on the Internet, beginning on or about March 5, 2021.
16, 2022.
If you would prefer to receive a printed copy of the Company’s proxy materials, please follow the instructions for requesting printed copies included in the Notice.
The form of proxy solicited by the Board for the Meeting, this proxy statement, the Notice of Annual Meeting, and the 20202021 Annual Report on Form 10-K (“20202021 Annual Report”), are available on our website at http://investor.sensient.com. The Company will provide copies of the exhibits to the 20202021 Annual Report to shareholders upon request. The 20202021 Annual Report and financial statements are neither a part of this proxy statement nor incorporated herein by reference.
Who can vote?
Only holders of record of the Company’s Common Stock, par value $0.10 per share (“Common Stock”), as of the close of business on February 26, 2021,March 2, 2022, are entitled to notice of, and to vote at, the Meeting. On that date, the Company had 42,352,38242,022,148 shares of Common Stock outstanding, each of which is entitled to one vote on each proposal submitted for shareholder consideration at the Meeting.
How will proxies be voted?
Subject to the applicable New York Stock Exchange regulations regarding discretionary voting by brokers as described below, a proxy that is (1) properly executed; (2) duly transmitted via mail, telephone, or Internet to the
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Company or its authorized representatives or agents; and (3) not revoked, will be voted in accordance with the shareholder’s instructions contained in the proxy. If no instructions are indicated on the executed proxy, the shares represented thereby will be voted as follows:
FOR the election of the Board’s ten nominees for director;
FOR approval of the compensation of our named executive officers, as disclosed herein pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion in this proxy statement;
FOR approval of the Sensient Technologies Corporation 2017 Stock Plan, as amended and restated (the “Amended and Restated 2017 Plan”);
FOR ratification of the Board’s appointment of Ernst & Young LLP as the Company’s independent auditors for 2021;2022; and
On such other matters that may properly come before the Meeting in accordance with the best judgment of the individual proxies named in the proxy.
How are Broker non-votes handled?
Brokers are not entitled to vote on the election of directors, on the advisory shareholder vote on our executive compensation, on the approval of the Amended and Restated 2017 Plan, or on any other matter relating to executive compensation unless they receive voting instructions from the beneficial owner, but they will be able to vote with respect to ratification of Ernst & Young LLP as our auditors for 2021.2022. If a broker does not receive voting instructions from the beneficial owner, the broker may return a proxy card with no vote on the matters that the broker is not entitled to vote on, which is generally referred to as a broker non-vote. The shares subject to a broker non-vote will be counted for purposes of determining whether a quorum is present at the Meeting if the shares are represented at the Meeting by proxy from the broker. A broker non-vote will have no effect with respect to the election of directors, the advisory shareholder vote on our executive compensation, the vote on the Amended and Restated 2017 Plan, or any other matter related to executive compensation.
What if I hold shares through multiple entities?
Shares held in the same registration (for example, shares held by an individual directly and through an employee benefit plan) will be combined onto 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 receive to ensure that all shares you own are voted in accordance with your directions.
What if I want to change or revoke my proxy?
Any record shareholder giving a proxy may revoke it at any time before it is exercised at the Meeting by delivering written notice thereof to the Secretary of the Company or by transmitting a later-executed proxy (including by telephone or by Internet). If you are a beneficial holder (that is, if your shares are held through your bank or broker), you must contact your bank or broker to determine how to revoke your voting instructions.
Can I vote duringat the virtual Meeting?
Any record shareholder attending the Meeting may vote through the virtual Meeting websitein person whether or not the shareholder has previously filed a proxy. Attending the virtual Meeting and voting during the Meetingin person revokes a previously filed proxy, but presence duringat the Meeting by a shareholder who has submitted a proxy does not in itself revoke the proxy.
If you are a beneficial holder and you would like to vote at the Meeting, please contact your bank, broker, or other nominee to request a legal proxy. Please note that you will not be able to vote your shares at the Meeting without a legal proxy. You will need to ask your bank, broker, or other nominee to furnish you with a legal proxy. Please send a copy of your legal proxy to EQSS-ProxyTabulation@equiniti.com.
Who is paying for the proxy process?
The cost of soliciting proxies will be borne by the Company. The Company will use the services of D.F. King & Co., Inc., New York, New York, to aid in the solicitation of proxies. The Company expects that it will pay
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D.F. King & Co., Inc., its customary fees, estimated not to exceed approximately $10,500 in the aggregate, plus reasonable out-of-pocket expenses incurred in the process of soliciting proxies. The Company will also reimburse brokerage houses and other custodians, nominees, and fiduciaries for their expenses in sending proxy materials to beneficial owners.
Will anyone be contacting me about my proxy vote?
Proxies may be solicited by directors, officers, or employees of the Company or D.F. King, in person, by telephone, or by Internet.
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| ITEM 1. | ELECTION OF DIRECTORS |
All directors are elected on an annual basis for one-year terms. The Board currently consists of eleven members. Due to his desire to retire, Mr. Cichurski is not seeking re-election to the Board. The Board has acted to approve a reduction in the size of the Board from eleven to ten members.members as of the date of the Meeting. Because of the Board’s action, the shareholders will elect ten directors at the Meeting, and the retirement of Mr. Cichurski will not result in any vacancy on the Board. The Board has re-nominated its other ten current directors: Messrs. Cichurski,Jain, Paul Manning, and Morrison; Drs. Carleone, Ferruzzi, Landry, and Wedral; and Mses. Jackson, McKeithan-Gebhardt, and Whitelaw.
The Company intends that the persons named as proxies on the proxy cards will vote FOR the election of the Board’s ten nominees if executed but unmarked proxies are returned (excluding broker non-votes). If any nominee should become unable to serve as a director prior to the Meeting, the shares represented by proxy cards that include directions to vote in favor of that nominee or that do not contain any other instructions (excluding broker non-votes) will be voted FOR the election of such other person as the Board may recommend.
Sensient’s Amended and Restated Articles of Incorporation provide that directors shall be elected by a majority of the votes cast by the shares entitled to vote at a meeting at which a quorum is present except in a contested election of directors. Any director who is not reelected by a majority of the votes cast in an uncontested election shall tender his or her resignation to the Board, and the Board will determine, with the recommendation of the Nominating and Corporate Governance Committee, whether to accept or reject the resignation.
Brokers do not have discretion to cast votes in the election of directors with respect to any shares for which they have not received voting directions from their beneficial owners. Broker non-votes and abstentions will not affect the outcome of this proposal.
Under the Company’s Amended and Restated By-Laws (“By-laws”), written notice of other qualifying nominations by shareholders for election to the Board, together with a completed Directors and Executive Officers Questionnaire, affirmation, consent, and certain other materials as specified in the Company’s By-laws, must have been received by the Secretary no later than 90 days before the Meeting, or January 22, 2021.21, 2022. As no notice of any other nominations was received, no other nominations for election to the Board may be made by shareholders at the Meeting.
Director Selection Criteria; Director Qualifications and Experience
The Company’s Director Selection Criteria are attached as Appendix A to this proxy statement and also available on the Company’s website. These criteria are periodically reviewed by the Nominating and Corporate Governance Committee. The criteria require independence and an absence of material conflicts of interest of all independent and non-management directors. The criteria also describe the personal attributes and the broad mix of skills and experience of directors sought by the Company in order to enhance the diversity of perspectives, professional experience, education, and other attributes, and the overall strength of the composition of the Board. The skills and experience that we consider most important for membership on the Board include a background in at least one of the following areas:
substantial recent business experience at the senior management level, preferably as chief executive officer;
a 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.
Below, we describe the particular skills, experience, qualifications, and other attributes that the Board believes qualify each of Sensient’s nominees to serve on the Board.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR ALL TEN NOMINEES DESCRIBED BELOW. SHARES OF COMMON STOCK REPRESENTED AT THE MEETING BY EXECUTED BUT UNMARKED PROXIES (EXCLUDING BROKER NON-VOTES) WILL BE VOTED FOR ALL TEN NOMINEES DESCRIBED BELOW.
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Overview of the BoardDirector Nominees
are veterans.
The table below summarizes the key skills and expertise that we consider important for our director nominees considering our business strategy. A mark indicates a specific area of focus or expertise on which the Board particularly relies. Not having a mark does not mean the director nominee does not possess that qualification or skill. The table below also summarizes certain background information with respect to each director nominee. Our director nominees’ biographies set forth below describe each director’s background and relevant experience in more detail.
| | Skills and Expertise | | | Carleone | | | Ferruzzi | | | Jackson | | | Jain | | | Landry | | | Manning | | | McKeithan Gebhardt | | | Morrison | | | Wedral | | | Whitelaw | |
| | CEO or senior officer of business, university, governmental, or military organization | | | • | | | | | • | | | | | • | | | • | | | • | | | • | | | • | | | • | | ||
| | International experience | | | • | | | • | | | • | | | • | | | | | • | | | | | • | | | • | | | | |||
| | Human capital management experience | | | • | | | | | • | | | • | | | | | • | | | | | • | | | • | | | • | | |||
| | Compensation program experience or expertise | | | • | | | | | • | | | | | | | • | | | | | • | | | • | | | • | | ||||
| | Risk assessment or risk management experience or expertise | | | • | | | | | • | | | • | | | | | • | | | • | | | • | | | • | | | • | | ||
| | Financial literacy | | | • | | | | | • | | | • | | | | | • | | | • | | | • | | | | | • | | |||
| | Chemistry or food science experience or expertise | | | | | • | | | | | | | • | | | • | | | | | | | • | | | | ||||||
| | Sustainability experience or expertise | | | | | | | • | | | | | | | | | | | • | | | | | | ||||||||
| | Corporate governance experience | | | • | | | | | • | | | • | | | | | • | | | • | | | • | | | • | | | • | | ||
| | Age/Tenure/Sex/Veteran | | | | | | | | | | | | | | | | | | | | | | ||||||||||
| | Age | | | 76 | | | 47 | | | 49 | | | 62 | | | 67 | | | 47 | | | 63 | | | 59 | | | 78 | | | 73 | |
| | Board Tenure | | | 8 | | | 7 | | | 3 | | | 1 | | | 7 | | | 10 | | | 8 | | | 6 | | | 16 | | | 29 | |
| | Sex | | | M | | | M | | | F | | | M | | | M | | | M | | | F | | | M | | | F | | | F | |
| | Veteran | | | | | | | | | | | | | • | | | | | | | | | | |||||||||
| | Race/Ethnicity/Nationality | | | | | | | | | | | | | | | | | | | | | | ||||||||||
| | African American/Black | | | | | | | | | | | | | | | | | | | | | • | | |||||||||
| | Asian/South Asian | | | | | | | | | • | | | | | | | | | | | | | | |||||||||
| | White/Caucasian | | | • | | | • | | | • | | | | | • | | | • | | | • | | | • | | | • | | | | ||
| | Hispanic/Latino | | | | | | | | | | | | | | | | | | | | | | ||||||||||
| | Native American | | | | | | | | | | | | | | | | | | | | | | ||||||||||
| | Born Outside of the U.S. | | | | | • | | | | | • | | | | | | | | | | | | | |
| Skills and Expertise | Carleone | Cichurski | Ferruzzi | Jackson | Landry | Manning | McKeithan Gebhardt | Morrison | Wedral | Whitelaw | |
| CEO or senior officer of business, university, governmental, or military organization | ● | ● | ● | ● | ● | ● | ● | ● | |||
| International experience | ● | ● | ● | ● | ● | ● | ● | ||||
| Human resource experience | ● | ● | ● | ● | ● | ||||||
| Compensation program experience or expertise | ● | ● | ● | ● | ● | ||||||
| Risk assessment or risk management experience or expertise | ● | ● | ● | ● | ● | ● | ● | ● | |||
| Financial literacy | ● | ● | ● | ● | ● | ● | ● | ||||
| Chemistry or food science experience or expertise | ● | ● | ● | ● | |||||||
| Age/Tenure/Sex/Veteran | |||||||||||
| Age | 75 | 79 | 46 | 48 | 66 | 46 | 62 | 58 | 77 | 72 | |
| Board Tenure | 7 | 8 | 6 | 2 | 6 | 9 | 7 | 5 | 15 | 28 | |
| Sex | M | M | M | F | M | M | F | M | F | F | |
| Veteran | ● | ● | |||||||||
| Race/Ethnicity/Nationality | |||||||||||
| African American/Black | ● | ||||||||||
| Asian/South Asian | |||||||||||
| White/Caucasian | ● | ● | ● | ● | ● | ● | ● | ● | ● | ||
| Hispanic/Latino | |||||||||||
| Native American | |||||||||||
| Born Outside of the U.S. | ● |
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  | | | Dr. Joseph Carleone Age 76 | | | Director Since 2014 Lead Director Audit Committee Executive Committee Scientific Advisory Committee |
| |
Professional Experience: • Senior | ||||
• Chairman of the Board (2015-2018) of AMPAC Fine Chemicals LLC, a leading manufacturer of pharmaceutical active ingredients |
• President and Chief Executive Officer (2010-2015), President and Chief Operating Officer (2006-2009), and Chairman of the Board (2013-2014) of American Pacific Corporation, a leading custom manufacturer of fine and specialty chemicals and propulsion products |
Other Recent Public Company Directorships: • American Pacific Corporation (2006-2015) |
• Non-executive Chairman, Avid Bioservices, Inc. (2017-present), a biopharmaceutical manufacturing company focused on mammalian cell technology to support the pharmaceutical industry |
Other Experience: • Drexel University, B.S., Mechanical Engineering |
• Drexel University, M.S., Applied Mechanics |
• Drexel University, Ph.D., Applied Mechanics |
Qualifications: • Operational, governance, management, and scientific experience, including as Chief Executive Officer and as Chairman of a public corporation with international operations in the fine and specialty chemical industries. |
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 |  | |
 | Dr. Mario Ferruzzi Age | | | Director Since 2015 Compensation and Development Committee Nominating and Corporate Governance Committee Scientific Advisory Committee |
| | | Professional Experience: • Director of the Arkansas Children’s Nutrition Center and Professor and Chief, Section of Developmental Nutrition in the Department of Pediatrics at the University of Arkansas for Medical Sciences (2021-present) • David H. Murdock Distinguished Professor | ||||
• Professor in the Department of Food Science at Purdue University (2004-2016) |
• Research Scientist positions in the Coffee and Tea Beverage Development group at Nestlé Research & Development Center, Marysville, Ohio, and the Nutrition & Health and Scientific & Nutritional Support Departments at the Nestlé Research Centre in Lausanne, Switzerland (2001-2004) |
Other Recent Public Company Directorships: • None |
Other Experience: • Duke University, B.S. in Chemistry |
• The Ohio State University, M.S. |
• Expertise in analytical chemistry and its applications to food and nutrition research and product development |
• Research consistently funded by federal agencies including the U.S. Department of Agriculture, the National Institutes of Health, and the United States Agency for International Development, as well as the food industry |
• Over |
• Recipient of numerous research awards from the Institute of Food Technologists (IFT) (2010 Samuel Cate Prescott Young Investigator Award), the American Society for Nutrition (ASN) (2011 Mary Rose Swartz Young Investigator Award), Purdue University (2012 Agricultural Research Award), the General Mills Bell Institute of Health and Nutrition (2018 Innovation Award), and IFT/ASN (2019 Gilbert A. Leveille Award and Lectorship) |
• Named a University Faculty Scholar by Purdue University in 2013 |
• Member of the Board of Trustees for the North America branch of the International Life Science Institute |
• Professional member of IFT, ASN, and the American Chemical Society (ACS) |
• Fellow of the Royal Society of Chemistry |
• Chair (2014) of the Food Science & Nutrition Solutions Taskforce, a joint working group between IFT-ASN-IFIC and the Academy of Nutrition and Dietetics (AND) |
• Serves on the editorial boards of Nutrition Research, Nutrition Today, and Critical Reviews in Food Science and Nutrition |
• Associate Editor for the Royal Society of Chemistry’s journal, Food & Function |
Qualifications:
• Expert in analytical chemistry and its application to food and nutrition; |
• Extensive industry and academic experience, including extensive experience with new product development and product commercialization; and |
• Extensive international research collaborations and experience in Europe, Asia, Africa, and Latin America. |
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 | | |||
 | Carol R. Jackson Age | | | Director Since 2019 Audit Committee Nominating and Corporate Governance Committee Scientific Advisory Committee |
| | | Professional Experience: • Chairman, President, and Chief Executive Officer (2017-present) and Corporate Officer, Senior Vice President, and General Manager (2014-2017) of HarbisonWalker International | ||||
• Corporate Officer, Vice President (GM), Carpenter Technology Corporation (2011-2013); Managing Director, Global Raw Materials Purchasing (2009-2011), General Manager Global Powder Coatings (2007-2009), Commercial Segment Manager Architectural Coatings (2005-2006), Global Sales Account Manager Automotive OEM Glass (2002-2005), Global Sales Account Manager Consumer Electronics Coatings (2001-2002), Market Development Manager (1999-2001) at PPG Industries |
Other Recent Public Company Directorships: • AZZ Inc. (2021-present), a global provider of metal coating solutions, welding solutions, specialty electrical equipment and highly engineered services |
Other Experience: • Duquesne University, B.S. in Business Administration |
• University of Pittsburgh, Juris Doctorate |
• Carnegie Mellon University, M.S. in Industrial Administration (M.B.A.) |
• Yale School of Management Executive Education Program |
• Certified Transformative Mediator |
• Director and Member of Governance Committee (2014-present), Junior Achievement of Western Pennsylvania |
• Licensed attorney (1999-present) Pennsylvania |
• Business Process Improvement Green Belt |
• Women’s Leadership Council and Impact Fund Committee, United Way |
Qualifications: • Extensive management experience in private and public enterprises, including public corporations with extensive manufacturing, international operations, and chemical businesses, and leadership experience as a Chief Executive Officer; and |
• Experience in business roles including management, sales, marketing, procurement, acquisitions, and business development. |
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 | | | Sharad P. Jain Age 62 | | | Director Since 2021 Audit Committee Scientific Advisory Committee |
| | | Professional Experience: • More than 33 years practicing as a certified public accountant with PricewaterhouseCoopers (retired in 2020) providing audit and advisory services to global companies engaged in consumer and industrial products businesses • Served as the Global and U.S. Automotive Assurance Sector Leader (2012-2015) and senior partner in the Governance Insights Center (2018-2020) with PricewaterhouseCoopers  Other Recent Public Company Directorships: • None Other Experience: • Certified Public Accountant (1987); Elijah Watt Sells Award recipient • Chartered Institute of Taxation, United Kingdom (1984) • Fellow of The Institute of Chartered Accountants in England and Wales (1983) • Hull College of Higher Education, United Kingdom (1979) Qualifications: • Accounting and auditing experience and expertise, including extensive experience auditing global companies as a certified public accountant; • Business experience, both at a senior leadership level and as an advisor to companies in a variety of consumer and industrial products businesses; and | ||||
| | | • Regulatory compliance and human capital management experience. | ||||
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 | | | Dr. Donald W. Landry Age | | | Director Since 2015 Compensation and Development Committee Nominating and Corporate Governance Committee (Chairman) Scientific Advisory Committee |
| | | Professional Experience: • Member of the faculty of Columbia University (1985-present) | ||||
• Professor and Chair of the Department of Medicine at Columbia University’s College of Physicians and Surgeons (2008-present) |
• Director of the Division of Experimental Therapeutics and Physician-in-Chief for the Medical Service at New York Presbyterian Hospital/Columbia Medical Center |
• Founding director of Tonix Pharmaceuticals, Inc., a wholly-owned subsidiary of Tonix Pharmaceuticals Holding Corp. (2007-2011) |
• Co-founder of Vela Pharmaceuticals, a private company that developed several drugs for central nervous system disorders, including very low dose (VLD) cyclobenzaprine for fibromyalgia syndrome |
• Co-founder of Tegrigen Therapeutics, LLC, a private company that developed novel therapeutics for inflammation, fibrosis, thrombosis, autoimmunity, and cancer based on pure orthosteric antagonists to specific integrins. • Co-founder of Omnitia Therapeutics Inc., a private company that developed novel therapeutics for neurodegenerative diseases based on small molecule antagonists to stress granule formation. Other Recent Public Company Directorships: • Tonix Pharmaceuticals Holding Corp. (2011-2019), a pharmaceutical company that develops next-generation medicines for common disorders of the central nervous system, including fibromyalgia, post-traumatic stress disorder, and episodic tension-type headache |
Other Experience: • Lafayette College, B.S. in chemistry (1975) |
• Harvard University, Ph.D. in organic chemistry (1979) |
• Columbia University’s College of Physicians and Surgeons, M.D. (1983) |
• Developed the first artificial enzyme to degrade cocaine and his report in Science was voted one of top 25 papers in the world for 1993 by the American Chemical Society |
• Discovered that vasopressin can be used to treat vasodilatory shock, which fundamentally changed intensive care |
| practice for this condition • Pioneered an embryo-sparing approach to the generation of human embryonic stem cells |
• Served as a member of the President’s Council on Bioethics during the George W. Bush administration |
• Awarded the Presidential Citizens Medal, the nation’s second-highest civilian award (2008) |
• Elected to the National Academy of Inventors (2016) |
• National Institutes of Health (NIH) Physician-Scientist, Columbia University (1985-1990) |
• Published 116 peer-reviewed articles, authored 33 review articles or book chapters, and |
Qualifications: • Expert in the medical and pharmaceutical fields and has unique experiences in the formation, operation, and public registration of a start-up pharmaceutical company; and |
• Experience as director of a public corporation; experience in commercialization of new products and in research and development; strong technical acumen in chemistry, medicine, and the pharmaceutical industry and other fields related to our business; and academic background. |
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 | | |||
 | Paul Manning Age | | | Director Since 2012 Executive Committee (Chairman) Finance Committee Scientific Advisory Committee |
| | | Professional Experience: • Chairman, President and Chief Executive Officer of Sensient Technologies Corporation (2016-present) | ||||
• Formerly President and Chief Executive Officer (2014-2016), President and Chief Operating Officer (2012-2014), President, Color Group (2010-2012), and General Manager, Food Colors North America (2009-2010) of Sensient Technologies Corporation |
• Mergers and Acquisitions Integration Manager of the Fluke Division of Danaher Corporation |
• Various supply chain and project manager positions with McMaster-Carr Supply Company |
Other Recent Public Company Directorships: • None |
Other Experience: • Stanford University, B.S. in Chemistry |
• Northwestern University, M.B.A. |
• Attended Stanford University on a Naval ROTC scholarship |
• Served in the U.S. Navy as a Surface Warfare Officer for four years |
Qualifications: • Responsible for articulating and executing the Company’s strategy, upgrading of sales force and general manager talent, and leading the Board of Directors; |
• Extraordinarily detailed knowledge of the Company’s operations enables him to keep the Board well informed regarding the Company’s performance and opportunities; |
• Strong background in chemistry allows him to direct product and technology research and development efforts; and |
• Prior experience in mergers and acquisitions and supply chain management. |
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 | | |||
 | Deborah McKeithan-Gebhardt Age | | | Director Since 2014 Finance Committee (Chairman) Nominating and Corporate Governance Committee Scientific Advisory Committee |
| | | Professional Experience: • Manager, Troika Ventures, LLC, a private limited liability company engaged in the management, purchase, and sale of oil and gas overriding royalty and royalty interests (2021-present). • Chief Executive Officer, President, and Chief Operating Officer of Tamarack Petroleum Company, Inc., a private company engaged in oil and gas exploration and operation | ||||
| (2019-2021) • Chief Executive Officer of Tamarack River Resources, LLC, a Delaware limited liability company of which Tamarack Petroleum |
| (2009-2021) • Previously President and Chief Operating Officer of Tamarack Petroleum Company, Inc. (2009-2019), and Vice President and General Counsel of Tamarack Petroleum Company, Inc. (1991-2009) |
Other Recent Public Company Directorships: • None |
Other Experience: • Cardinal Stritch University, B.S. in Business Administration (1980) |
• Marquette University Law School, Juris Doctor degree, summa cum laude (1987) |
• Marquette University Law School Advisory Board |
Qualifications: • As a former Chief Executive Officer, President, and Chief Operating Officer, and also previously as Vice President and General Counsel, |
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 | | |||
 | Scott C. Morrison Age | | | Director Since 2016 Audit Committee Compensation and Development Committee (Chairman) Scientific Advisory Committee |
| | Professional Experience: • Executive Vice President and Chief Financial Officer of Ball Corporation, a leading global supplier of innovative, sustainable packaging solutions for beverage, food, and household products customers | |||||
| (January 2021-present) • Senior Vice President and Chief Financial Officer of Ball Corporation (2010-2021) • Vice President and Treasurer of Ball Corporation |
| (2000-2010) • Various senior corporate banking roles at Bank One, First Chicago, and NBD Bank, Detroit |
Other Recent Public Company Directorships: • None |
Other Experience: • Indiana University, B.S. in Finance (1984) |
• Wayne State University, M.B.A. (1988) |
• Executive Committee Member of the Board for the National Association of Manufacturers |
• Past Community Chairman of the Denver Chapter of the Kelley School of Business Indiana University |
• Served as Chairman of the National Association of Corporate Treasurers |
• Expert testimony witness to the U.S. House of Representatives Agricultural Committee on Dodd-Frank legislation |
• Recognized as CFO of the Year by CFO Magazine and Institutional Investor |
Qualifications:
• Possesses a wealth of valuable leadership experience and financial expertise, gained through currently serving as Chief Financial Officer of a publicly traded multinational corporation and having served in various other executive management and senior corporate banking roles; |
• Significant experience in mergers and acquisitions and post-merger integration, including Ball Corporation’s $6.1 billion acquisition and integration of Rexam PLC, a metal beverage packaging manufacturer; and |
• Experience, expertise, and background in capital allocation, financial reporting, international, and compliance matters. |
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 | | |||
 | Dr. Elaine R. Wedral Age | | | Director Since 2006 Compensation and Development Committee Executive Committee Finance Committee Scientific Advisory Committee (Chairman) |
| | | Professional Experience: • Served in various capacities with the Nestle Company, including as President of Nestlé R&D Center, Inc., and director of Nestlé R&D Food Service Systems Worldwide (2000-2006), and as President of all Nestlé U.S. R&D Centers (1988-1999) | ||||
• Served as President of the International Life Sciences Institute-North America, a non-profit organization based in Washington, D.C., that provides a forum for academic, government, and industry scientists to identify important nutrition and food safety issues and works toward solutions for the benefit of the general public |
• Serves on the editorial board of Food Processing magazine, serves on the board of the Women’s Global Health Institute at Purdue University, and works with several industry groups and universities on food science issues in an advisory capacity |
Other Recent Public Company Directorships:
• Balchem Corporation (2003-2014), a developer, manufacturer, and marketer of specialty performance ingredients and products for the food, nutritional, feed, pharmaceutical, and medical sterilization industries |
Other Experience: • Purdue University, B.S. in Biochemistry |
• Cornell University, M.S. in Food Microbiology |
• Cornell University, Ph.D. in Food Biochemistry |
• Served as chair of the governance and nominating committee and a member of the compensation committee of Balchem Corporation |
• During her tenure with Nestle, gained extensive international experience, served on Nestle’s Executive Management Committee, managed Nestle’s various joint ventures, developed the strategy and accompanying R&D program for its foodservice systems, and was responsible for the reorganization and supervision of Nestle’s existing R&D facilities in North America with over 700 personnel |
• Recipient of awards from the Connecticut Technology Council (CTC) (Women of Innovation award), Women in Food (Woman of the Year), and Purdue University (Distinguished Agricultural Alumni) |
• Served as Lead Director (2014-2017) of Sensient and works closely with management on the Company’s Chemical Risk Reduction Strategy |
• Holds 40 U.S. and European patents in food science, chemistry, and food service systems to deliver foods and beverages, most related to food flavors and colors and food fortifications (e.g., adding bioavailable iron to fortify a product without discoloring it) |
Qualifications: • Combines food science and R&D expertise with substantial business and personnel management and leadership experience in developing innovative and commercially successful food and beverage products; and |
• Experience in successfully building and consolidating food and beverage research facilities within budget and managing and motivating large staffs of research scientists and engineers to work collaboratively and efficiently to serve customer needs, all while emphasizing the development of proprietary products and systems that meet the highest standards of food quality and safety. |
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 | | |||
 | Essie Whitelaw Age | | | Director Since 1993 Audit Committee Compensation and Development Committee Executive Committee Scientific Advisory Committee |
| | | Professional Experience: • Senior Vice President of Operations, Wisconsin Physician Services, a provider of health insurance and benefit plan administration (2001-2010) | ||||
• Served over 15 years in various executive positions, including as President and Chief Operating Officer (1992-1997) and Vice President of National Business Development, at Blue Cross Blue Shield of Wisconsin, a comprehensive health and dental insurer |
Other Recent Public Company Directorships: • None |
Other Experience: • Served on the board and on the audit, nominating, and retirement plan investment committees of WICOR Corporation, a Wisconsin energy utility, prior to its merger into another public utility in 2000 |
• Director (2016-current) of Network Health, a Wisconsin based private health insurer |
• Current nonprofit board service to the Wisconsin Lutheran High School Foundation, Inc., Kingdom Prep Lutheran School, and the Wisconsin Women’s Health Foundation, a non-profit organization dedicated to improving the health and lives of women and their families through education, outreach programs, and partnerships |
• Prior nonprofit board service to the Milwaukee Public Museum, Goodwill Industries, United Way of Greater Milwaukee, Blue Cross Blue Shield Foundation, Metropolitan Milwaukee Association of Commerce, Greater Milwaukee Committee, and Bradley Center Sports and Entertainment Corp. |
Qualifications: • Significant regulatory compliance and human resources experience, including developing and implementing compensation policies and designing incentive programs for sales and customer service employees to achieve business objectives while managing risk; and |
• Over twenty-five years of service on the Company’s Board provides exceptionally deep insights into the Company, its history, and operations. |
Except as noted, all nominees have held their current positions or otherwise have served in their respective positions with the listed organizations for more than five years. No director or nominee for director had any material interest, direct or indirect, in any business transaction of the Company or any subsidiary since the beginning of
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Corporate Governance
Board Role in Risk Oversight
The Board is responsible for exercising the corporate powers of the Company and overseeing the management of the business and affairs of the Company, including management’s establishment and implementation of key strategic priorities and initiatives. The Board reviews and approves the Company’s Strategy annually and conducts formal strategic reviews at each meeting. Long-term, sustainable value creation and preservation are possible only through the prudent assumption and management of both risks and potential rewards, and the Company’s Board takes a leading role in overseeing the Company’s overall risk tolerances as a part of the strategic planning process and in overseeing the Company’s management of strategic risks. The Board has delegated to the Audit Committee primary responsibility for overseeing management’s risk assessments and implementing appropriate risk management policies and guidelines, including those related to financial reporting and regulatory compliance. It has delegated to the Compensation and Development Committee primary oversight responsibility to ensure that compensation programs and practices do not encourage unnecessary or excessive risk-taking and that any risks are subject to appropriate controls. It has delegated to the Nominating and Corporate Governance Committee primary oversight responsibility to ensure that the Company’s governance standards establish effective systems for monitoring and accountability; the Committee also oversees the Company’s sustainability efforts and reviews and approves the Company’s Sustainability Report. The Board has delegated to the Finance Committee primary oversight responsibility with respect to the Company’s capital structure, insurance program, and foreign currency management. The Board has assumed direct responsibility for the Company’s Code of Conduct, Human Capital Management,product safety, personnel safety, physical security, human capital management, and cybersecuritycyber and intellectual property security programs.
Additionally, all directors, along with fourfive non-director members who are recognized food science or food safety experts, participate in the Scientific Advisory Committee, which monitors and reviews new product development programs, industry trends, and technical and regulatory issues related to the Company’s product lines. The Board and these committees receive periodic reports on these matters from management and the Company personnel in charge of the related risk management activities. Furthermore, the Board has direct access to all executive officers of the Company and routinely receives presentations from Group Presidents, General Managers of various business units, technical leaders, and product safety leaders.
The Board has updated and implemented a number of robust policies and compliance programs to address various areas of legal and regulatory risks, including the following:
Corporate Code of Conduct (available in all languages used within the Company), which includes:
Antitrust Compliance Manual
Anti-Bribery Policy
Company Confidential Information Policy
Cybersecurity principles
Insider Trading Policy
Supplier Code of Conduct
Securities Compliance Manual
Cybersecurity Policy
Sustainability Report
Export Compliance Policy
Food Safety/Recall Manual
Physical Security Policy
The Board has also implemented, formalized, and updated internal policies and compliance programs with respect to various regulatory matters, including Environmental, Health, and Safety (“EHS”) and intellectual property management.
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In addition to providing annual Company-wide training on the Code of Conduct, the Board has ensured that targeted training on each of the other compliance programs is conducted for all appropriate employees. The Code of Conduct includes, among many other rules, strict integrity, professionalism, safety, and personnel policies to prevent harassment, discrimination, and retaliation, as well as strong and routinely publicized violation reporting protocols. Additionally, the Audit Committee receives a quarterly update from the General Counsel on all reported Code of Conduct violations, which includes a summary of every investigation conducted of an alleged Code of Conduct violation and the disposition of each investigation. To ensure all employees understand the importance of the Code of Conduct, violations and dispositions are also reviewed with employees and the CEO publishes an internal blog to all employees explaining each violation and emphasizing the importance of adhering to the Code of Conduct.
The Board oversees a robust program related to product safety, including the following elements:
The Board receives a report on food and personnel safety related issues at each meeting.
All product safety issues are reported to the CEO, and the Company’s head of product safety and quality is a direct report of the CEO.
In 2021, the Board formalized an existing practice of the CEO reporting of product safety issues to the Board in a written policy, which sets forth specific reportable events and a timeline for required Board notification when a product safety issue occurs.
The Company has established guidelines for Good Manufacturing Practices (GMP) and Hazard Analysis and Critical Control Points (HACCP), and, since 1999, conducts comprehensive product safety audits, including GMP/HACCP audits, at all of its food ingredient manufacturing facilities.
Comprehensive and robust raw material approval processes are in place to ensure product safety.
Raw materials and finished goods are analyzed for compliance with specifications prior to use and shipment, respectively.
The Company conducts key vendor quality assurance inspections directly or by third-party accredited auditing organizations.
The Company develops and implements corrective action plans for all internal, customer, and third-party audit deficiencies.
The Company monitors industry violations and shares details of such violations with its customers.
The Board oversees the Company’s Human Capital Management program, including the following elements:
The Company seeks to benefit from the full spectrum of human talent, hiring the best talent and reflecting the needs of our customers and the communities in which we operate. To this end, the Company has a dedicated, internal Talent Acquisition team, which sources talent from a broad range of backgrounds and utilizes emerging technology, guided by a deep understanding of the Company’s business objectives and core values of integrity, professionalism, and safety.
The Company closely monitors and demands excellence in its on-boarding process, to ensure all new hires have the tools, training, Company knowledge, and management support necessary to succeed in the organization from day one.
The Company maintains and reviews annually its compensation and benefit programs, to confirm that it is providing market-competitive offerings designed to reward high performers and retain talent.
The Company conducts succession planning organization-wide on an annual basis to evaluate the pipeline for leadership roles and implement development plans for key talent.
The Company utilizes internal development programs such as the Sales Representative Trainee Program, the General Manager in TrainingManagement Development Program, the Flavorist Trainee Program, and the High Potential Program to provide a robust internal pipeline of talent for high impact roles in the organization.
The Company facilitates the development and progression of its workforce through goal setting, performance evaluations, individual development plans, leadership training, and ongoing individualized coaching and development.
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The Company regularly communicates and rigorously enforces its non-negotiable expectations of integrity, professionalism, and safety, which encompass an unwavering commitment to equal opportunity and non-discrimination, and which underpin the Company’s strategy to draw from the fullest set of talent possible.
| • | Under the Company’s Code of Conduct, a Company lawyer (or designated outside counsel outside the U.S.) must review and approve all employee terminations to ensure they are warranted and compliant with all applicable laws. |
The Board of Directors reviews the Company’s Human Capital Management program on an annual basis.
The Board oversees the Company’s Cybersecurity Program, including the following elements:
The Board has defined high-risk cybersecurity areas for the Company and implemented comprehensive programs to address these risks.
Management reports at least twice annually to the Board of Directors on cybersecurity progress and effectiveness.
The Company has formed an executive level steering committee (including the CEO, CFO, Group Presidents, General Counsel, VP, Human Resources, Controller/Chief Accounting Officer, and Chief Information Officer) that provides oversight and routinely discusses cybersecurity matters.
The Company has implemented an annual employee training program, quarterly cyber executive incident response simulations, and regular cyber and physical penetration testing.
The Company has made significant investments in its technical capabilities in all areas of security.
The Board, through the Audit Committee, oversees a number of activities undertaken by management to monitor financial reporting risks and internal controls. Those activities include regular audits of significant business units by the Company’s Internal Audit Department, annual audit and quarterly reviews by Ernst & Young LLP, an annual internal control audit by Ernst & Young LLP, and, when needed, special investigations directed by the Director, Internal Audit and General Counsel of any unusual or irregular activities.
The Board also oversees other Company programs in order to monitor and limit legal and regulatory risks, including:
Chemical Risk Reduction Strategy, led by the CEO and DirectorDirectors Drs. Wedral and Ferruzzi and SAC member Dr. Wedral,Eric Decker, which includes improved product warnings and enhanced safety protocols, as well as forward looking risk identification and product elimination;
A corporate physical security program led by a retired Secret Service Agent, who reports to the General Counsel;
A robust EHS program that is managed within the Legal Department;
A strong Regulatory Affairs department overseen by a newly appointed Vice President who reports to the General Counsel;
EHS audits at every manufacturing facility by an outside consulting firm;
In-house securities attorney;
In-house compliance attorney who is continually engaged with the business units on FDA, EPA, and OSHA regulatory matters;
and
Legal Department review of all contracts; and
contracts.
As noted above, the Board also has routine contact with all Company officers and periodically receives presentations from the Group Presidents and Vice Presidents as well as select General Managers.
Board Meetings and Meeting Attendance
The Company’s Corporate Governance Guidelines provide that all directors are expected to regularly attend meetings of the Board and the committees of which they are members and to attend the Annual Meeting of Shareholders. All Board members attended the 20202021 Annual Meeting of Shareholders, which was held virtually due to the
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COVID-19 pandemic. The Board met sixfive times during 2020, including five regular meetings and one unscheduled meeting to address various aspects of the COVID-19 pandemic.2021. Each director attended 100% of the meetings of the Board and the Board Committees on which he or she served that were held during 2020,2021, except Ms. Jackson whoMcKeithan-Gebhardt was unable to attend the unscheduled Boardone Nominating and Corporate Governance Committee meeting.
Committees of the Board
Executive Committee
The Executive Committee of the Board met twicefive times during 2020.2021. Messrs. Cichurski and Paul Manning (Chairman), Drs. Carleone and Wedral, and Ms. Whitelaw served on the Executive Committee in 20202021 and are its current members. This Committee has the power and authority of the Board in directing the management of the business and affairs of the Company in the intervals between Board meetings, except to the extent limited by law, and reports its actions at regular meetings of the Board.
Audit Committee
The Audit Committee of the Board met nine times during 2020.2021. Messrs. Cichurski (Chairman), Jain (joined in December), and Morrison, Dr. Carleone, and Mses. Jackson and Whitelaw served on the Audit Committee in 20202021 and are its current members. The Board has determined that Dr. Carleone, Messrs. Cichurski, Jain, and Morrison, and Ms. Jackson are each an “audit committee financial expert” in accordance with SEC rules. All members of the Audit Committee meet the independence and experience requirements of the New York Stock Exchange and the SEC applicable to directors generally, and to members of audit committees specifically. None of them serves on the audit committee of any other public company.
This Committee, among other things:
has sole responsibility to appoint, terminate, compensate, and oversee the independent auditors of the Company and to approve any audit and permitted non-audit work by the independent auditors;
reviews the adequacy and appropriateness of the Company’s internal control structure and recommends improvements thereto, including management’s assessment of internal controls and the internal audit function and risk management activities generally;
reviews with the independent auditors their reports on the consolidated financial statements of the Company and the adequacy of the financial reporting process, including the selection of accounting policies;
reviews and discusses with management the Company’s practices regarding earnings press releases and the provision of financial information and earnings guidance to analysts and ratings agencies;
reviews and discusses with the Chief Executive Officer and Chief Financial Officer the procedures undertaken in connection with the Chief Executive Officer and Chief Financial Officer certifications for Forms 10-K and 10-Q and other reports including their evaluation of the Company’s disclosure controls and procedures and internal controls;
obtains and reviews an annual report of the independent auditors covering the independent auditors’ independence, quality control, and any inquiry or investigation of the independent auditors by governmental or professional authorities within the past five years;
sets hiring policies for employees or former employees of the independent auditors;
establishes procedures for the receipt of complaints about accounting, internal accounting controls, auditing, and other compliance matters;
reviews and oversees management’s risk assessment and risk management policies and guidelines generally, including those related to financial reporting and regulatory compliance;
reviews and discusses with management the Company’s material litigation matters; and
reviews the adequacy and appropriateness of the various policies of the Company dealing with the principles governing performance of corporate activities. These policies, which are set forth in the Company’s Code of Conduct, include securities law and antitrust compliance, conflicts of interest, anti-bribery, and business ethics.
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The Board has adopted a written charter for the Audit Committee, which is included in the Company’s By-laws and posted on its website. The Audit Committee reviews and reassesses the adequacy of this charter at least annually.
Compensation and Development Committee
The Compensation and Development Committee of the Board met sevensix times during 2020.2021. Mr. Morrison (Chairman), Drs. Ferruzzi, Landry, and Wedral, and Ms. Whitelaw served on the Compensation and Development Committee in 20202021 and are its current members. Each member of the Committee has been determined by the Board to satisfy the independence requirements of the New York Stock Exchange and the SEC applicable to directors generally and to members of compensation committees.
Among the Committee’s responsibilities are:
to review and approve all compensation plans and programs (philosophy and guidelines) of the Company. In consultation with senior management and taking into consideration recent shareholder advisory votes and any other shareholder communications regarding executive compensation, the Committee oversees the development and implementation of the Company’s compensation program, including salary structure, base salary, short- and long- term incentive compensation (including the relationships between incentive compensation and risk-taking), and nonqualified benefit plans and programs, including fringe benefit programs;
to review and discuss with management the policies and practices of the Company and its subsidiaries for compensating their employees, including non-executive officers and employees, to ensure those policies do not encourage unnecessary or excessive risk-taking and that any risks are subject to appropriate controls;
to review and make recommendations to the Board with respect to all compensation arrangements and changes in the compensation of the officers appointed by the Board, including, without limitationlimitation: (i) base salary; (ii) short- and long-term incentive compensation plans and equity-based plans (including overseeing the administration of these plans and discharging any responsibilities imposed on the Committee by any of these plans); (iii) employment agreements, severance arrangements, and change of control agreements/provisions, in each case as, when, and if appropriate; and (iv) any special or supplemental benefits; and
at least annually, to review and approve corporate goals and objectives relevant to compensation of the Chief Executive Officer, evaluate the performance of the Chief Executive Officer in light of those goals and objectives, report the results of the evaluation to the Board, oversee and review (at least annually) the Chief Executive Officer succession plan, and set the Chief Executive Officer’s compensation level based on this evaluation.
Sensient designs its overall compensation programs and practices, including incentive compensation for both executives and non-executive employees, in a manner intended to support its strategic priorities and initiatives to enhance long-term sustainable value without encouraging unnecessary or excessive risk-taking. At the same time, the Company recognizes that its goals cannot be fully achieved while avoiding all risk. The Committee and management periodically review Sensient’s compensation programs and practices in the context of its risk profile, together with its other risk mitigation and risk management programs, to ensure that these programs and practices work together for the long-term benefit of the Company and its shareholders. Based on its recently completed review of Sensient’s compensation programs, the Committee and management concluded that Sensient’s incentive compensation policies for both executive and non-executive employees have not had a material adverse effect on Sensient in the recent past and are not likely to have a material adverse effect in the future. See “Compensation Discussion and Analysis” for an analysis of material compensation policies and procedures with respect to the Company’s named executive officers and “Compensation and Development Committee Report” for the Committee’s report on compensation matters.
Compensation and Development Committee Interlocks and Insider Participation
During the year ended December 31, 2020,2021, none of the members of the Compensation and Development Committee had at any time been an officer or employee of the Company or any of our subsidiaries. In addition, no member of the Compensation and Development Committee had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K adopted by the SEC. During the year ended December 31, 2020,2021, none of the executive officers of the Company served on the board of directors or on the compensation committee of any other entity that has or had executive officers serving as a member of the Board of Directors or Compensation and Development Committee of the Company.
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Finance Committee
The Finance Committee of the Board met threefour times during 2020.2021. Messrs. Cichurski and Paul Manning, Ms. McKeithan-Gebhardt (Chairman), and Dr. Wedral served on the Finance Committee in 20202021 and are its current members. Among other things, this Committee reviews and monitors the Company’s financial planning and structure to ensure conformity with the Company’s requirements for growth and fiscally sound operation, and also reviews and approves:
the Company’s annual capital budget, long-term financing plans, borrowings, notes and credit facilities, investments, and commercial and investment banking relationships;
existing insurance programs, foreign currency management, and the stock repurchase program;
the financial management and administrative operation of the Company’s qualified and nonqualified benefit plans; and
such other matters as may from time to time be delegated to the Committee by the Board or as provided in the By-laws.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee of the Board met threefour times during 2020.2021. Drs. Ferruzzi and Landry (Chairman), and Mses. Jackson and McKeithan-Gebhardt served on the Nominating and Corporate Governance Committee in 20202021 and are its current members. Each member of the Committee satisfies the independence requirements of the New York Stock Exchange and the SEC applicable to directors generally.
Among other functions, this Committee:
studies and makes recommendations concerning the composition of the Board and its committee structure, including the Company’s Director Selection Criteria, and reviews the compensation of Board and Committee members;
recommends persons to be nominated by the Board for election as directors of the Company and to serve as proxies at the Annual Meeting of Shareholders;
engages with shareholders regarding potential nominees and other governance issues;
considers any nominees recommended by shareholders;
assists the Board in its determination of the independence of each director;
develops corporate governance guidelines for the Company and reassesses these guidelines annually;
oversees and evaluates the system of corporate governance and responsibility program; and
oversees the Company’s sustainabilityEnvironmental, Social, and Governance efforts and reviews and approves the Company’s Sustainability Strategy and annual Sustainability Report.
The Committee identifies, interviews, and recommends candidates it determines are qualified and suitable to serve as a director. Recommendations for Board candidates may be made to the Committee by the Company’s Chief Executive Officer, other current Board members, and Company shareholders. Once appropriate candidates are identified, the Committee evaluates their qualifications to determine which candidate best meets the Company’s Director Selection Criteria, without regard to the source of the recommendation. In accordance with the Director Selection Criteria, the Committee seeks a variety of perspectives, professional experience, education, skills, and other individual qualities and attributes. A copy of the Company’s Director Selection Criteria is attached as Appendix A to this proxy statement. TheMembers of the Committee then interviewsinterview the candidate before making a recommendation to the Board.
Recommendations by shareholders for director nominees may be sent to the Secretary of the Company, who will relay such information to the Committee Chairman. The recommendations should identify the proposed nominee by name; should describe any arrangement or understanding between such person and the nominating shareholder with respect to the nomination, potential service as a director, or the Company’s securities; should describe how the nominee would contribute to the variety of perspectives, professional experience, education, skills, or other individual qualities and attributes sought by the Company’s Board; and should provide the questionnaire, nominee affirmations, and other materials specified in the By-laws, including the detailed information about the nominee required by SEC rules for
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the solicitation of proxies for election of directors. Shareholders should look to the information required under the Company’s By-laws for shareholder nominations and to the information included in this proxy statement regarding directors and nominees as a guide.
Shareholders also have the right to directly nominate a person for election as a director so long as the advance notice, nominee affirmations, and informational requirements contained in the By-laws and applicable law are satisfied. All nominees must affirm that they have truthfully completed a directors’ and officers’ questionnaire; that they meet the Company’s Director Selection Criteria; that they are not an employee, director, or affiliate of a competitor; that they will protect confidential information and serve the interests of the Company and its shareholders collectively; and that they will comply with applicable law and the Company’s Code of Conduct and other policies and guidelines. See “Future Shareholder Proposals and Nominations” below.
Scientific Advisory Committee
The Scientific Advisory Committee of the Board met twice during 2020.2021. This Committee currently consists of Drs. Carleone, Ferruzzi, Landry, and Wedral (Chairman), Messrs. Cichurski, Jain, Paul Manning, and Morrison, and Mses. Jackson, McKeithan-Gebhardt, and Whitelaw, and additional members that are not directors or officers of the Company. These additional members are Mr. Timothy J. Fink, a retired former Senior Director at PepsiCo, Inc.; Dr. John Floros, President, New Mexico State University; Dr. Eric Decker, Professor and Head of the Department of Food Science at the University of Massachusetts, Amherst; Dr. Joseph Hotchkiss, Senior Consultant, Packaging Scitech Associates; Dr. Monica Guisti, Professor in the Department of Food Science & Technology at theThe Ohio State University; and Carol Kellar, Principal at Kellar & Associates, LLC.
Among other functions, this Committee:
reviews the Company’s research and development programs with respect to the quality and scope of work undertaken;
advises the Company on maintaining product leadership through technological innovation;
reports on new technological trends and regulatory developments that would significantly affect the Company and suggests possible new emphases with respect to its research programs and new business opportunities; and
works directly with management on key innovation and product safety related projects.
Committee Charters, Code of Conduct, and Other Governance Documents
The Charters for the Audit, Compensation and Development, and Nominating and Corporate Governance Committees of the Company’s Board are included in the Company’s By-laws and are available free of charge on the Company’s website (https://www.sensient.com/about-us/corporate-governance). The Company is strongly committed to the highest standards of ethical conduct, and its Code of Conduct for all Company officers, directors, and employees is also posted on the Company’s website. If there are any amendments to the Code of Conduct, or if waivers from it are granted for executive officers or directors, those amendments or waivers also will be posted on the Company’s website.
Board Leadership Structure; Executive Sessions of Independent Directors; Combination of Chief Executive Officer and Chairman of the Board Roles
The Board’s leadership structure is driven by the needs of the Company at any point in time and has varied over time. The Company does not have a policy requiring a combination or separation of the Chief Executive Officer and Chairman of the Board roles and the Company’s governing documents do not mandate a particular structure. This allows the Board the flexibility to establish the most appropriate structure for the Company at any given time. The roles of Chief Executive Officer and Chairman of the Board are currently combined. We do not believe that combining these roles negatively impacts our operating performance or our ability to have effective corporate governance. In fact, “[t]here is little research support for requiring a separation of these roles. Most research finds that the independence status of the chairman is not a material indicator of firm performance or governance quality.” David F. Larcker and Brian Tayan, Chairman and CEO: The Controversy Over Board Leadership Structure (Stanford 2016) (summarizing research); see also David F. Larcker and Brian Tayan, Loosey-Goosey Governance: Four Misunderstood Terms in Corporate Governance (Stanford 2019) (concluding that “research shows no consistent benefit from requiring an independent chair” and “the independence status of the chairman has no relation to governance quality.”).
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In 2014, the Board created the position of Lead Director to facilitate the administration of Board functions and to enhance corporate governance practices. The Board elects a Lead Director from among the independent directors. Our current Lead Director is Dr. Carleone. The duties of our Lead Director are to:coordinates the activities of the independent directors and performs such other duties and responsibilities as the Board may determine, including the following:
The Company’s independent directors meet at regularly scheduled executive sessions without management at least three times per year. During 2020,2021, the independent directors held three executive sessions.
The use of executive sessions of the Board, the Board’s strong committee system, the substantial majority of independent directors (currently nineten out of ten)eleven), and the service of our Lead Director, allow the Board to maintain effective risk oversight and provide that independent directors oversee the Company’s financial statements, the executive compensation program, the selection and evaluation of directors, and the development and implementation of our corporate governance programs.
This proxy statement describes our philosophy, policies, and practices regarding corporate governance, risk management, and executive compensation. Interested parties who wish to make their views or concerns known regarding these or other matters may communicate with management, with our Lead Director or any of our other independent directors, or with the Board as a whole in writing addressed to the attention of the Company Secretary. The Company’s Corporate Governance Guidelines provide that all communications to Board members will be relayed by the Company Secretary to the appropriate Board members unless the content is obviously inappropriate for Board review.
Environmental, Social, and Governance Initiatives
We are committed to the principles of sound environmental stewardship and the responsible and sustainable use of energy and natural resources. All of our facilities are required to operate in compliance with applicable laws and regulations and in a manner to avoid harm to the environment, prevent pollution, and reduce waste. We have a strong record of environmental compliance in our facilities and our products generally have a low environmental impact. However, the environmentally friendly nature of our products and our compliance record will not be enough to meet future sustainability requirements.
Over the past several years, we have refined the way we envision sustainability. In order to increase the transparency of our climate-related disclosures, as of 2020, we prepare our annual Sustainability Report to align with topics and metrics from the Sustainability Accounting Standards Board (SASB) disclosure standards for the Chemicals industry. Additionally, we have aligned our annual Sustainability Report to begin to address the recommendations and supporting disclosures of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD).
We have proactively developed a new environmental Sustainability Strategy with practical, attainable goals and milestones that will sustain the growth and profitability of our business. The following four pillars are the focus of our sustainability efforts:
Reduce consumption of non-renewable energy and reduce emissions of greenhouse gases.
Improve water efficiencies and decrease water consumption, prioritizing sites in high-stress areas.
Reduce waste and apply the principles of a circular economy.
Build a sustainable supply chain that fully integrates ethical and environmentally responsible practices.
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Long-term, sustainable value creation and preservation are possible only though a strong governance structure and the Board has delegated to the Nominating and Corporate Governance Committee responsibility for oversight of our sustainability efforts and approval of our annual Sustainability Report.
In addition, we strive to conduct business in an ethical manner and to make a positive contribution to society through our product offerings and business activities. We have a comprehensive Code of Conduct that governs all of our employees worldwide to ensure a culture that promotes ethical behavior, respects and protects human rights, and requires compliance with all applicable laws. Our Code of Conduct also includes a comprehensive set of standards for our suppliers. We rigorously enforce our Code of Conduct.
We describe our environmental, social, and governance programs and performance in more detail in our Sustainability Report, which is posted on our website. The contents of our Sustainability Report and information on our website are not incorporated by reference into this definitive proxy statement or in any other report or document we file with the SEC.
Director Independence
The Company’s Corporate Governance Guidelines provide guidelines for determining whether a director is independent from management. For a director to be considered independent, the Board must make an affirmative determination that the director has no material relationship with the Company (either directly or as a partner, shareholder, or officer of an organization that has a relationship with the Company). The guidelines containalso incorporate the following specific criteria which reflectreflected in the currently applicable New York Stock Exchange rules to assist the Board in determining whether a director has a material relationship with the Company.
In addition, the guidelines state that no director shall be considered independent unless he or she meets the requirements for independence under applicable securities laws. Members of the Audit Committee and of the Compensation and Development Committee are subject to additional independence requirements. For purposes of determining independence, the “Company” includes any parent or subsidiary in a consolidated group with the Company.
Based on these criteria, the Board has affirmatively determined that Messrs. Cichurski, Jain, and Morrison, Drs. Carleone, Ferruzzi, Landry, and Wedral, and Mses. Jackson, McKeithan-Gebhardt, and Whitelaw (who constitute all of the director nominees and current members of the Board except Mr. Paul Manning) are independent under the applicable rules of the New York Stock Exchange and the SEC and the Company’s independence criteria. In making this determination, the Board reviewed information provided by each of the nominees to the Company.
Tenure
The Board considers length of director tenure when evaluating director independence, but it does not believe long tenure alone presumptively renders a Board member to be not independent. The Board recognizes the contributions experienced directors add to the Board. The Board has determined that its long-tenured directors have superior skills and experience, bring diverse perspectives, and provide tangible value to the Board and the Company. The Board has also determined that their length of tenure has allowed these directors to accumulate valuable knowledge and experience based upon their history with the Company. This knowledge and experience improves the ability of the Board to provide constructive guidance and informed oversight to management. Furthermore, in the Board’s opinion, the length of tenure of its members has not in any way impaired the willingness of any director to question and confront any issue or exercise independent and impartial oversight of the Company in any area. Finally, the Board believes that it currently has an appropriate mix of long- and short-tenured members that provides an appropriate and dynamic balance.
The Board does not believe that mandatory retirement ages or arbitrary term limits are appropriate because the Board benefits from the contributions of its experienced directors who have developed insight into the Company over the course of their service on the Board. The Company is committed to the ongoing refreshment of the Board of Directors as evidenced by the fact that seven new independent directors have joined the Board since 20132014 and the current average tenure for the ten candidates for election is approximately nine9.5 years. As a result of these efforts, the Board believes that it currently has an appropriate mix of long- and short-tenured directors that provides a beneficial and dynamic balance.
Director Self-Evaluation and Succession Planning
Each director completes an annual self-evaluation for evaluating the performance of the Board and its committees. As part of the annual self-evaluation process, the directors consider various topics relating to the Board’s and each Board committee’s role, structure, composition, relationship with management, access to information and resources,
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process, and responsibilities, as well as the overall mix of director experiences and skills. The Board and each of its committees then independently reviews and discusses the results of the annual self-evaluations and any other relevant issues related to the Board or the Company. Any issues arising from the evaluation process are discussed with both the Chairman and in Executive Session with the Lead Director. The Nominating and Corporate Governance Committee reviews and modifies as necessary the evaluation process on an annual basis. The Board’s succession planning considers the results of the Board’s self-evaluation, together with other information, including the overall mix of tenure, experience, and skills of the directors, upcoming retirements of individual directors, the experience and skills that would be desirable for future directors, and the needs of the Board and its committees at the time. Additionally, the Chairman of the Nominating and Corporate Governance Committee welcomes feedback from shareholders on Board composition as well as potential candidates.
Director Compensation and Benefits
The Nominating and Corporate Governance Committee determines the form and amount of director compensation, with review and approval by the Board. The objectives of our director compensation program are to fairly compensate directors for the time commitment required in fulfilling their duties and closely align director compensation with the interests of our shareholders. The Board believes that director stock awards and strong director stock ownership requirements further align the economic interests of directors and shareholders.
As of January 1, 2021,2022, directors who are not employees of the Company are entitled to receive an annual retainer of $91,600 (unchanged since 2018), an annual restricted stock award in a number of shares with a value of $90,000 (unchanged since 2017), and reimbursement of expenses related to meeting attendance. Each Committee chairman receives an annual chairman retainer (ranging from $8,000 to $25,500 depending on the Committee), while Committee members receive a lower committee retainer (ranging from $2,000 to $13,500 depending on the Committee). The amounts of Committee chairman and member retainers vary based upon the workloads and number of meetings for the respective committees. The Lead Director receives a $25,000 retainer for his service. The Board determined that director compensation is reasonable, consistent with peer group director pay levels, and meets the objectives of the director compensation program. These retainers all remain at the same levels as they were set in 2018.
Until June 30, 2014, the Company had an unfunded retirement plan for non-employee directors who had completed at least one year of service with the Company as a director. The plan provides a benefit equal to the base annual retainer for directors in effect as of June 30, 2014. This benefit, payable only during the lifetime of the participant, continues for a period equal to the amount of time the individual was an active, non-employee director. The plan was terminated effective as of June 30, 2014, but that termination did not impair the rights of currently active or past eligible directors to receive or continue to receive the payments to which the eligible director would have been entitled through the termination date.
The Company has a Directors’ Deferred Compensation Plan available to any director who is entitled to compensation as a Board member. Under this plan, a director may defer all or a portion of his or her total director pay. The plan provides that directors who defer all or part of their retainer receive an equivalent amount of Common Stock. Upon retirement, the shares accrued pursuant to this plan will be distributed either: (i) in a single distribution on January 31st of the calendar year following the year in which the director ceases to be a director, or on January 31st of any year thereafter; or (ii) in five equal consecutive annual installments commencing on January 31st of the first calendar year after the director ceases to serve as a director. In the event of death, the balance of shares in a director’s account will be distributed in a single distribution to a designated beneficiary or to the director’s estate.
The Company has a director stock plan for any director who is not an employee of the Company. For 2021, theThe director stock plan provides for an annual grant of restricted shares of the Company’s Common Stock in a number of shares with a value of $90,000 on the grant date to each non-employee director on the Annual Meeting date. The shares vest in increments of one-third of the total grant on each of the first, second, and third annual meetings of shareholders after the date of grant. Even after vesting, the shares are subject to Sensient’s stock ownership guidelines for non-employee directors, including a requirement that directors hold at least 75% of future awards (net of taxes and any exercise price) until separation from the Board, with limited exceptions for exercise and sale of shares from stock options expiring within one year and for sale of up to 50% of vesting restricted stock to permit payment of related taxes.
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Set forth below is a summary of the compensation paid to each non-employee director in fiscal 2020:2021:
Name | | | Fees Earned or Paid in Cash ($)(1) | | | Stock Awards ($)(2)(3)(4) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | | All Other Compensation ($) | | | Total ($) |
Dr. J. Carleone | | | $132,100 | | | $90,069 | | | $363,895 | | | — | | | $586,064 |
E. Cichurski | | | 123,600 | | | 90,069 | | | — | | | — | | | 213,669 |
Dr. M. Ferruzzi | | | 100,600 | | | 90,069 | | | 48,934 | | | — | | | 239,603 |
C. R. Jackson | | | 108,100 | | | 90,069 | | | — | | | — | | | 198,169 |
S. P. Jain | | | 9,321 | | | — | | | — | | | — | | | 9,321 |
Dr. D. W. Landry | | | 108,600 | | | 90,069 | | | — | | | — | | | 198,669 |
D. McKeithan-Gebhardt | | | 107,100 | | | 90,069 | | | 93,213 | | | — | | | 290,382 |
S. C. Morrison | | | 119,100 | | | 90,069 | | | — | | | — | | | 209,169 |
Dr. E. R. Wedral | | | 112,100 | | | 90,069 | | | — | | | — | | | 202,169 |
E. Whitelaw | | | 113,100 | | | 90,069 | | | 22,362 | | | — | | | 225,531 |
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||
| H. Brown (5) | $ | 45,033 | $ | - | $ | 33,491 | $ | - | $ | 78,524 | ||||||||||
| Dr. J. Carleone | 128,850 | 90,008 | 140,949 | - | 359,807 | |||||||||||||||
| E. Cichurski | 123,600 | 90,008 | - | - | 213,608 | |||||||||||||||
| Dr. M. Ferruzzi | 100,600 | 90,008 | 19,280 | - | 209,888 | |||||||||||||||
| C. R. Jackson | 103,975 | 90,008 | - | - | 193,983 | |||||||||||||||
| Dr. D. W. Landry | 108,600 | 90,008 | - | - | 198,608 | |||||||||||||||
| D. McKeithan-Gebhardt | 105,100 | 90,008 | 35,868 | - | 230,976 | |||||||||||||||
| S. C. Morrison | 118,725 | 90,008 | - | - | 208,733 | |||||||||||||||
| Dr. E. R. Wedral | 112,100 | 90,008 | 6,000 | - | 208,108 | |||||||||||||||
| E. Whitelaw | 113,350 | 90,008 | 30,536 | - | 233,894 | |||||||||||||||
| (1) | Includes annual board member, committee member, committee chair, and lead director retainers. |
| (2) | The amounts in the table reflect the grant date fair value of stock awards to the named director in |
| (3) | The shares of restricted stock awarded to directors vest in increments of one-third of the total grant on each of the first, second, and third annual meetings of shareholders after the date of grant. |
| (4) | Each non-employee director had the following equity awards outstanding as of the end of fiscal |
| | | Stock Awards | |
Name | | ||
| | Number of Shares of Stock That | ||
Dr. J. Carleone | | 2,892 | |
E. Cichurski | | 2,892 | |
Dr. M. Ferruzzi | | 2,892 | |
C. R. Jackson | | 2,465 | |
S. P. Jain | | | — |
Dr. D. W. Landry | | 2,892 | |
D. McKeithan-Gebhardt | | 2,892 | |
S. C. Morrison | | 2,892 | |
Dr. E. R. Wedral | | 2,892 | |
E. Whitelaw | | 2,892 |
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AUDIT COMMITTEE REPORT
The duties and responsibilities of the Audit Committee of the Board are set forth in a written charter adopted by the Board, as set forth in the Company’s By-laws and available free of charge on the Company’s website at https://www.sensient.com/about-us/corporate-governance. The Audit Committee reviews and reassesses this charter annually and recommends any changes to the Board for approval. In accordance with its charter, the Audit Committee assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing, and financial reporting practices of the Company. During 2020,2021, the Audit Committee met nine times. The Audit Committee discussed the financial information contained in each quarterly earnings announcement and in each of the Company’s Forms 10-Q and 10-K. These discussions included the Company’s Chairman, President, and Chief Executive Officer, its Senior Vice President and Chief Financial Officer, its Vice President, Controller, and Chief Accounting Officer, its Senior Vice President, General Counsel, and Secretary, and its independent auditors, and occurred prior to release of each earnings announcement and prior to filing the Company’s Forms 10-Q and 10-K with the Securities and Exchange Commission. During each fiscal quarter of 2020,2021, the Audit Committee reviewed the procedures undertaken in connection with the Chief Executive Officer and Chief Financial Officer certifications for Forms 10-Q and 10-K, including the Company’s disclosure controls and procedures and internal controls.
In discharging its oversight responsibility for the audit process, the Audit Committee obtained from the independent auditors a formal written statement describing all relationships between the auditors and the Company that might bear on the auditors’ independence and information required by applicable requirements of the Public Company Ac- countingAccounting Oversight Board regarding the independent auditors’ communications with the Audit Committee concerning independence. The Audit Committee also discussed with the auditors any relationships that may impact the auditors’ objectivity and independence. The Audit Committee also considered whether the provision of any non-audit services by the auditors was compatible with maintaining the auditors’ independence. The Audit Committee is satisfied that the auditors are independent. The Audit Committee likewise discussed with management, the Company’s Director, Internal Audit, and the independent auditors the quality and adequacy of the Company’s internal controls and the internal audit function’s organization, responsibilities, budget, and staffing. The Audit Committee reviewed the audit plans, audit scopes, and identification of audit risks with both the independent auditors and the Director, Internal Audit.
The Audit Committee discussed and reviewed with the independent auditors the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board. With and without management present, the Audit Committee discussed and reviewed the results of the independent auditors’ examination of the financial statements. The Audit Committee also discussed the results of the internal audit examinations and met separately with the Company’s Director, Internal Audit. The Audit Committee meets without management as part of every in-person Committee meeting.
Audit Fees
During the years ended December 31, 20202021 and 2019,2020, aggregate fees (including expenses) for the annual audit of the Company’s financial statements were approximately $2,924,600$2,938,200 and $2,923,500,$2,924,600, respectively. Audit fees include fees for the audit of the Company’s consolidated financial statements, fees for statutory audits of foreign entities, fees for quarterly review services, and fees related to the Company’s SEC filings.
Audit-Related Fees
During the years ended December 31, 20202021 and 2019,2020, aggregate fees (including expenses) for audit-related services provided by the independent auditors were approximately $2,710$4,170 and $7,000,$2,710, respectively. Audit-related fees include fees for access to an accounting related research tool.
Tax Fees
During the years ended December 31, 20202021 and 2019,2020, aggregate fees (including expenses) for tax services provided by the independent auditors were approximately $1,319,313$996,991 and $700,000,$1,319,313, respectively. Tax services include tax compliance, tax advice, and tax planning.
All Other Fees
No other fees were paid to the Company’s auditors in 20202021 or 2019.2020.
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The Audit Committee approved all of the services described above. At its February 20212022 meeting, the Audit Committee reviewed and approved resolutions continuing the Company’s Audit Committee Pre-Approval Policy for a new twelve-month period. This policy provides that the Audit Committee is required to pre-approve all audit and non-audit services performed by the independent auditors and specifies certain audit, audit-related, and tax services that have general pre-approval for the next twelve months, subject to specified dollar limits. Pursuant to the resolutions and the policy, the Chairman of the Audit Committee has the authority to grant pre-approval when necessary, provided that such pre-approval is reported to the Audit Committee at its next meeting.
The Audit Committee reviewed the audited financial statements of the Company as of and for the year ended December 31, 2020,2021, with management and the independent auditors. Management has the responsibility for the preparation of the Company’s financial statements and the independent auditors have the responsibility for the examination of those statements.
In performing all of the functions described above, the Audit Committee acts only in an oversight capacity. The Audit Committee does not complete its reviews of the matters described above prior to our public announcements of financial results. In its oversight role, the Audit Committee relies on the work and assurances of the Company’s management, which has the primary responsibility for our financial statements and related reports and internal control over financial reporting, and of the independent auditors, who, in their report, express an opinion on the conformity of the Company’s annual financial statements to GAAP and on the effectiveness of the Company’s internal controls over financial reporting.
Based on the review and discussions with management and the independent auditors described above, the Audit Committee recommended to the Board that the Company’s audited financial statements for the year ended December 31, 2020,2021, be included in its 20202021 Annual Report, for filing with the SEC. As further discussed in Item 3,4, “Ratification of Appointment of Independent Auditors,” the Audit Committee has appointed Ernst & Young LLP, subject to shareholder approval, to be the independent auditors for 2021.2022. The Board has recommended that the shareholders ratify that appointment.
Date: February 11, 202110, 2022
| | | Edward H. Cichurski, Chairman | |
| Dr. Joseph Carleone | |||
| Carol Jackson | |||
Sharad P. Jain | Scott C. Morrison | ||
Essie Whitelaw |
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PRINCIPAL SHAREHOLDERS
Management
The following table sets forth certain information as of February 12, 2021,11, 2022, except as otherwise indicated, regarding the beneficial ownership of Common Stock by each of the executive officers of the Company who is named in the Summary Compensation Table below (“named executive officers”), each director and nominee of the Company, and all of the current directors and executive officers of the Company as a group. Except as otherwise indicated, all shares listed are owned with sole voting and investment power.
Name of Beneficial Owner(1) | | | Amount and Nature of Beneficial Ownership and Percent of Class(2)(3)(4)(5) |
| Dr. Joseph Carleone | | 29,287 | |
Edward H. Cichurski | | 12,337 | |
Dr. Mario Ferruzzi | | 8,604 | |
Michael C. Geraghty | | 21,724 | |
Carol R. Jackson | | 2,925 | |
Sharad P. Jain | | | 1 |
Dr. Donald W. Landry | | 6,355 | |
John J. Manning | | 13,205 | |
Paul Manning | | 117,593 | |
Deborah McKeithan-Gebhardt | | 16,407 | |
E. Craig Mitchell | | 10,198 | |
Scott C. Morrison | | 6,636 | |
Stephen J. Rolfs | | 117,016 | |
Dr. Elaine R. Wedral | | 23,668 | |
Essie Whitelaw | | 20,461 | |
All current directors and executive officers as a group ( | | 420,292 |
| (1) | The address of all directors and executive officers is c/o Sensient Technologies Corporation, 777 East Wisconsin Avenue Milwaukee, Wisconsin 53202. |
| (2) | No director or named executive officer beneficially owns 1% or more of the Company’s Common Stock. The beneficial ownership of all current directors and executive officers as a group |
| (3) | Includes |
| (4) | Does not include the following performance stock units: Mr. Geraghty — |
| (5) | Shares owned through Sensient’s Savings Plan stock fund and Sensient’s ESOP are held on a unitized basis. The numbers of shares held through these plans have been estimated based on the closing stock price of |
| (6) |
Includes 40,569 shares of the Company’s Common Stock that are held by a trust for the benefit of Mr. Rolfs’ children and spouse and over which Mr. Rolfs disclaims beneficial ownership. |
Other Beneficial Owners
The following table sets forth information regarding beneficial ownership by those persons whom the Company believes to be beneficial owners of more than 5% of the Common Stock as of February 12, 202111, 2022 (except as indicated in the footnotes), based solely on review of filings made with the Securities and Exchange Commission pursuant to Section 13(d) or 13(g) of the Securities Exchange Act of 1934.
Name and Address of Beneficial Owner | | | Amount and Nature of Ownership | | | Percent of Class(1) | |
Winder Investment Pte Ltd. and related persons(2) | | | 5,058,736 shares | | | 12.0% | |
BlackRock, Inc.(3) | | | 4,781,689 shares | | | 11.4% | |
The Vanguard Group, Inc. | | | | | |||
Janus Henderson Group plc | | | |
| (1) | All percentages are based on 11, 2022. |
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| (2) | Winder Investment Pte Ltd., Freemont Capital Pte. Ltd., and Haldor Foundation filed a Schedule 13G dated March 23, 2021. Winder’s and Freemont’s address is #19-01A 6 Battery Road, Singapore 049909, and Haldor’s address is Zollstrasse 16, P.O. Box 845, FL-9494 Schaan, Liechtenstein. Their Amendment No. 3 to Schedule 13G, dated February 4, 2022, reported that as of December 31, 2021, they had shared power to vote 5,058,736 shares of Common Stock and shared dispositive power with respect to 5,058,736 shares of Common Stock. They stated that none of the shares were acquired with the purpose or effect of changing or influencing the control of the issuer. |
| (3) | BlackRock, Inc. filed a Schedule 13G dated January 21, 2011, with respect to itself and certain subsidiaries. BlackRock’s address is 55 East 52nd Street, New York, New York. Its Amendment No. |
The Vanguard Group, Inc. filed a Schedule 13G dated February 7, 2013, with respect to itself and certain subsidiaries. Vanguard’s address is 100 Vanguard Boulevard, Malvern, Pennsylvania. Its Amendment No. |
Janus Henderson Group plc filed a Schedule 13G dated February 13, 2018, with respect to itself and certain subsidiaries. Janus Henderson’s address is 201 Bishopsgate EC2M 3AE, United Kingdom. Its Amendment No. |
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COMPENSATION AND DEVELOPMENT COMMITTEE REPORT
The duties and responsibilities of the Compensation and Development Committee of the Board (the “Compensation Committee”) are set forth in a written charter adopted by the Board, as set forth in the Company’s By-laws and available free of charge on the Company’s website at https://www.sensient.com/about-us/corporate-governance. The Compensation Committee reviews and reassesses this charter annually and recommends any changes to the Board for approval.
As part of the exercise of its duties, the Compensation Committee has reviewed and discussed the following “Compensation Discussion and Analysis” contained in this proxy statement with management. Based upon that review and those discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be incorporated by reference in the Company’s 20202021 Annual Report and included in this proxy statement.
Scott Morrison, Chairman
Dr. Mario Ferruzzi
Dr. Donald W. Landry
Dr. Elaine R. Wedral
Essie Whitelaw
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Executive Summary
shareholders.
When we refer to our named executive officers, we are referring to the following individuals who were senior officers of the Company during 20202021 and whose 20202021 compensation is set forth below in the Summary Compensation Table and subsequent compensation tables:
Paul Manning, Chairman, President, and Chief Executive Officer;
Stephen J. Rolfs, Senior Vice President and Chief Financial Officer;
Michael C. Geraghty, President, Color Group;
E. Craig Mitchell, President, Flavors & Extracts Group; and
John J. Manning, Senior Vice President, General Counsel, and Secretary.
markets.
| • | The Flavors & Extracts Group had |
| • | The Color Group rebounded nicely in 2021, reporting revenue growth of |
| • | The Asia Pacific Group reported revenue growth of 11.6% and operating profit growth of 19.3%. The Group reported adjusted local currency revenue growth1 of 10.1% and adjusted local currency operating profit growth1 of 21.6% in 2021. |
Our stock price increased from $66.09$73.77 at the end of 2020 to $73.77 per share during 2020,$100.06 as of December 31, 2021, reflecting a year-over-year stock price appreciation of 12%35.6%, and a one-year total shareholder return of 15%38%, including the impact of our dividends,dividends. This return compares very favorably with the return experienced by the S&P Mid Cap 400 Index, which we continued to pay throughout the year.increased by 23.2% in 2021.
1 | Adjusted local currency revenue and adjusted local currency operating profit are non-GAAP financial measures. See “Non-GAAP Financial Measures” under Item 7 of the Company’s 2021 Annual Report for information regarding these measures and a reconciliation to the most directly comparable GAAP measures. |
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Strong Alignment Between Pay and Performance
For 2020,2021, our incentive-based compensation programs tracked performance over the 1- and 3-year periods. Achievement of financial targets in 20202021 under our incentive cash awards resulted in our named executive officers earning between 83.2%126.6% to 182.8%188.0% of the target award amounts, which waswere approved for payment on February 11, 2021.10, 2022. Achievement of financial targets during 2018-20202019-2021 under our 20172018 performance stock unit awards resulted in our named executive officers earning 0%36.4% of the target award amounts.
Realized CEO Pay: Cash Compensation Actually Paid in 2020
2021
A substantial portion of the compensation granted by the Compensation Committee to the CEO and reported in the Summary Compensation Table represents incentives for future performance, not current cash compensation. The Summary Compensation Table also includes changes in pension value, which are not current cash compensation. The table below sets forth the difference between pay as reported in the Summary Compensation Table and the actual pay realized by the CEO for 2020:2021:
Total Reported Compensation | | | Total Realized Compensation | | | % Difference in Realized Pay vs. Reported Pay |
$7,062,124 | | | $4,336,521 | | | -38.59% |
| Total Reported Compensation | Total Realized Compensation | % Difference in Realized Pay vs. Reported Pay |
| $7,304,550 | $2,388,484 | -67.30% |
Total Reported Compensation is the total compensation based on the current SEC reporting rules applicable to the Summary Compensation Table disclosed by the Company. Reported compensation includes the “grant date fair value” of equity awards (i.e., performance stock units), rather than the actual value ultimately received by the executive, and increases in the actuarial present value of pension benefits.
Total Realized Compensation is the total compensation earned by the CEO attributable to 2020,2021, including base salary, the annual management incentive amount earned for 20202021 (which is paid in February 2021)2022), long- termlong-term incentive (equity) plan payment amounts, and all other compensation amounts realized in 2020.2021. This excludes the value of newly awarded performance stock units, and other amounts that will not actually be received until a future date. No17,800 performance stock units vested to Mr. Paul Manning based on the Company’s performance for the three-year performance period that ended on December 31, 2020.
2021.
As illustrated by the table above, the actual compensation realized by Mr. Paul Manning for 20202021 is significantly less than the value reported in the Summary Compensation Table.
At the 20202021 Annual Meeting of Shareholders, we held our tentheleventh annual advisory vote to approve named executive officer compensation. Approximately 94.8%83.4% of the votes cast voted in favor of the executive compensation disclosed in our 20202021 Proxy Statement.
Members of our senior management regularly engage with stakeholders and solicit feedback on compensation and governance matters. This engagement takes the form of telephonic and face-to-face meetings with institutional shareholders, analysis of market practices, and advice from Willis Towers Watson, the Compensation Committee’s independent compensation consultant. The Compensation Committee further reviewed the results of our Say-on-Pay votes, feedback from institutional shareholders, advice from Willis Towers Watson, information from proxy advisory services, peer group analysis, and management recommendations based on Sensient’s strategic direction and market practices.
The Compensation Committee and the Board believe that the overwhelmingpositive shareholder support in the Company’s Say-on-Pay votes since 2015 has been a result of the linkage of pay and performance embedded in the design of the Company’s compensation programs and the Company’s strong corporate governance practices. Those practices include the following.
following:
Between 2014-2019, 100% of our long-term equity incentive awards were granted as performance stock unit awards with a three-year performance and vesting period. As explained above, inIn 2020, the Compensation Committee decided to reduce this amount from 100% to 60%, with 40% granted in the form of restricted stock with a three-year cliff vesting, period, in order to better align the Company’s compensation with general market practice and to strengthen the retention component of our long-term incentive program. However, at 60% of long-term incentive awards, the largest component of compensation for our named executive officers remains performance stock unit awards with a three-year performance and vesting period.
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Robust stock ownership guidelines for officers and directors.
Pro-rated vesting of equity awards to officers whose employment with the Company terminates because of death, disability, or retirement after reaching retirement age during the performance period.
Previously, we eliminated or restricted a number of compensation programs:
We closed our supplemental executive retirement plan to new participants on December 4, 2014, and froze the benefits payable to existing SERP participants effective as of December 31, 2015 (December 31, 2016 for Mr. Rolfs).
We eliminated a cash subaccount option from the Directors’ Deferred Compensation Plan, so that all future deferred directors’ fees will be held in Common Stock.
We terminated the Non-Employee Directors’ Retirement Plan effective June 30, 2014.
We eliminated all tax gross-ups on perquisites given to our named executive officers.
On-going Board refreshment efforts have resulted in the appointment of seven new independent directors since 2013: Mr. Cichurski in 2013,2014: Dr. Carleone and Ms. McKeithan-Gebhardt in 2014, Drs. Ferruzzi and Landry in 2015, Mr. Morrison in 2016, and Ms. Jackson in 2019.2019, and Mr. Jain in 2021. The current average tenure for the Board is approximately 99.5 years. We continue to welcome input from our shareholders regarding potential candidates for the Board of Directors.
In 2020,2021, we were proud to be named a “2020recognized by 50/50 Women on Boards Winning Company” for the ninthtenth year in a row in recognition offor the number of women on our Board. Forty percent of the Board’s ten director nominees for director are women.
We have a majority standard for the election of directors in non-contested elections combined with a director resignation policy.
We have strong independent Board leadership through a lead independent director.
Sensient’s Executive Compensation Program Highlights
Sensient’s executive compensation program features the following shareholder favorable “best practices”:
Compensation Program Feature | | | Description |
“Hold-to-retirement” policy | | | Independent directors are required to hold at least 75% of any additional net shares awarded to them until the director retires from the Board. |
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No equity short sales, hedging, or pledging | | | Since 2010, our stock ownership guidelines for officers and independent directors have explicitly prohibited short sales, hedging, and pledging transactions involving our securities. |
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Proactive engagement | | | In addition to our annual say-on-pay vote, our senior management engages directly with institutional shareholders and other key stakeholders throughout the year to gather feedback regarding our performance and executive compensation programs. |
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Performance measures | | | Performance measures for incentive compensation are closely linked to challenging strategic and near-term operating objectives, and are designed to create long-term shareholder value. |
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Compensation Committee consultant | | | Our Compensation Committee is composed entirely of independent, |
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Annual review and modification of executive compensation | | | Our Compensation Committee reviews and modifies executive compensation on an annual basis to achieve program objectives. |
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No discretionary or multi-year guaranteed bonuses | | | We have no discretionary bonuses and no multi-year guaranteed bonuses for any of our executive officers. |
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Compensation Program Feature | | | Description |
Proration of annual cash incentive awards | | | We prorate performance-based equity awards and annual cash incentive awards to executives who leave the Company due to retirement, death, or disability during the applicable performance period. |
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No tax gross-ups | | | We do not have any tax gross-ups in any of our change of control agreements with any of our executive officers, and we do not provide any tax gross-ups on perquisites to our named executive officers. |
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No equity repricing or exchange | | | Our equity incentive plans prohibit repricing or exchange of underwater stock options or stock appreciation rights. |
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Double-Triggers | | | Our change of control agreements have a “double-trigger” such that benefits payable under such agreements are not paid unless a change in control is also accompanied by a qualifying termination of employment within 36 months. |
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Clawbacks | | | In the event of certain financial restatements as a result of misconduct by any former or current executive officer, the Compensation Committee will seek to recover any bonus or other incentive-based or equity-based compensation received by the offending officer, and any profits realized by the offending officer from the sale of Sensient securities, during the 12-month period following the first public issuance or filing of the noncompliant financial document. |
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Stock ownership guidelines | | | Our Chief Executive Officer is required to hold shares of Common Stock equal to a multiple of six times his salary; any officer who is a direct report to the CEO is required to hold shares of Common Stock equal to a multiple of two times his or her salary; and each other officer is required to hold shares of Common Stock equal to a multiple of one times his or her salary, within five years from an officer’s date of election or appointment (in each such case, including restricted stock and performance stock units). Each independent director is required to hold |
Executive Compensation Flows Directly from Sensient’s Business Strategies; Investments Focus on Value Creation, Primarily Over the Long Term
Our approach to executive compensation flows directly from our approach to value creation for the Company and our shareholders. Although all timeframes are relevant, we focus primarily on long-term investments both in our employees and through acquisitions and strategic capital investments in state-of-the-art facilities and equipment designed to produce the highest quality innovative products efficiently and with product safety and regulatory compliance in mind. Our equity compensation program and our robust stock ownership guidelines are designed to align our executive compensation program with this long-term value creation focus. We believe that the annual components of our executive compensation program do not detract from our focus on long-term value creation through innovation, acquisitions, and strategic capital investments. We also believe that the three-year vesting of Performance Stock Units,performance stock units, which represent 60% of long-term incentive plan grants, together with time-based restricted stock awards, which represent the remaining 40% of grants and vest, if at all, after three years, and stock ownership requirements directly align named executive officer compensation and incentives to longer-term shareholder value.
Compensation Processes and Procedures
The pages below discuss the Compensation Committee and the processes and procedures used by the Compensation Committee in reviewing and determining executive compensation.
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The Compensation Committee
The Compensation Committee is composed entirely of independent, non-employee directors, as determined using New York Stock Exchange listing standards both for directors generally and for compensation committee members. The Committee oversees Sensient’s executive compensation programs and monitors incentives for risk-taking from compensation programs for all employees. See “Committees of the Board — Compensation and Development Committee” above for a description of the Committee’s responsibilities. This discussion and analysis is designed to assist your understanding of Sensient’s compensation objectives and philosophy, the Compensation Committee’s practices, and the elements of compensation for the named executive officers.
Compensation Objectives and Philosophy
Sensient’s compensation program is designed:
to measure and reward performance by each of its executive officers and by 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 the assumption of unnecessary or excessive risks;
to further link executive and shareholder interests through equity-based compensation and long-term stock ownership arrangements;
to attract and retain high caliber executive and employee talent; and
to encourage management practices, controls, and oversight that prioritize ethical behavior and minimize the risks present in Sensient’s business.
The Committee determines specific compensation levels for Sensient’s executive officers based on several factors, including:
achievement of strategic and financial plans, and specific financial and performance targets, without taking unnecessary or excessive risks;
each executive officer’s role and his or her experience and tenure in the position and with the Company;
the total salary and other compensation for the executive officer during the prior fiscal year;
an analysis of pay at peer group companies, industry pay survey data, and market compensation practices for executive officers; and
how the executive officer may contribute to Sensient’s future success.
In sum, the Committee intends that Sensient’s compensation programs both help the Company to attract and retain key executives and other employees, provide for effective succession planning, and give the executive officers and other employees appropriate and meaningful incentives to achieve superior corporate and individual performance without undertaking unnecessary or excessive risks.
The Committee determines the amounts and mixture of compensation for Sensient’s executives based on the compensation design and other factors described above, including the philosophy of measuring and rewarding performance and retaining key executives. Sensient reviews its compensation awards compared to compensation levels for comparable positions at Sensient’s peer group of competing public companies of similar size and complexity as well as published survey data, adjusted as described below (together, the Comparable Company Data), using regression analysis for the survey data because of differences in size between the comparable companies and the Company. This review is performed to ensure that Sensient’s compensation programs are reasonably applied, and also to ensure that they are competitive for purposes of attracting and retaining key executives. The selection of our peer group and each material element of compensation are discussed further below.
Key elements of the executive compensation program directly link executive compensation to the Company’s performance and success in meeting specified financial goals and objectives. The Committee also considers other compensation and amounts payable to executive officers, including potential payments in a situation involving a change of control of the Company.
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The Committee also recognizes that situations involving a potential change of control of a company can be very disruptive to all of its employees, including executive officers, because a change of control could affect the employees’ job security, authority, or compensation. To help address the inherent potential conflict of interest between executive officers’ personal interests and other interests of the Company and its shareholders, since 1988, we have provided key decision-making officers with agreements that will help mitigate their concerns about such personal matters in the case of a change of control, and thereby assure that management provides objective guidance to the Board and shareholders. As noted above, since 2010, these have been double-trigger agreements, requiring both change of control and loss of employment within three years. Change of control agreements can also help ensure that the management team stays intact before, during, and after a change of control, thereby protecting the interests of not only the Company’s shareholders but also those of any acquirer. We believe that these change of control agreements align the interests of executives with the interests of shareholders in maximizing the value of Sensient stock at the time of any change of control.
Finally, as with most companies, the Company provides various other benefits to its employees, including its executive officers. Many of these benefits, such as health insurance, are provided on the same basis to all salaried employees. In many respects, the types and amounts of those benefits have historically been driven by reference to the Company’s past practices. The Committee regularly reviews these and other benefits, including special benefits or “perks,” for executive officers. In 2014, the Committee and Board eliminated all tax gross-up payments on perks paid to named executive officers.
Compensation Committee Practices
Each year the Committee conducts a review of the Company’s executive compensation program. Since 2011, as required by Section 14A of the Securities Exchange Act of 1934, the Company has obtained formal shareholder advisory votes regarding executive compensation at every Annual Meeting of Shareholders. Based upon the shareholders’ approvalfrequency vote in 2017, we obtain shareholder advisory votes regarding executive compensation annually. The Committee considers the results of the recent shareholder advisory votes regarding executive compensation in determining its ongoing compensation policies and decisions.
To better understand the concerns of its shareholders and to give them an opportunity to make more specific recommendations, the Company initiated annual discussions of its compensation policies with some of its larger shareholders beginning in 2011.
As part of its annual review of the Company’s executive compensation program, the Committee retains a consultant who, among other things, prepares a report comparing Sensient’s executive compensation to the Comparable Company Data. The Comparable Company Data ordinarily includes information that is from the year prior through the date of the analysis.analysis, which generally occurs in October.
Establishing a stable and appropriate peer group for the Company remains challenging because Sensient has few direct competitors of similar size that are publicly traded in the United States. The colors and flavors industries are highly fragmented geographically and are diversified among product lines. In light of these challenges, Sensient has determined the appropriate peer group by considering:
public companies of comparable size (based primarily on most recently reported revenues ranging from approximately $540$597 million to $2.9$2.8 billion, with a median of $1.8$1.6 billion; market capitalizations with a median of $1.8$2.1 billion as of October 2020;2021; and most recently reported operating incomes with a median of $141$159 million);
public companies that operate in the specialty chemicals industry or an adjacent industry;
public companies with which it competes for business, resources, and talent;
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public companies with generally consistent financial performance or other business attributes (based primarily on gross, operating, and net profits; gross, operating, and net margins; full-time employees and total assets; and total shareholder return); and
public companies included in Sensient’s peer group by proxy advisors.
The peer group is reviewed annually and while companies are added or removed as circumstances warrant, the Compensation Committee believes it is beneficial to attempt to keep the peer group fairly stable from year to year for comparison purposes.
In October 2020,2021, the Compensation Committee reviewed and updated the Company’s peer group. As mentioned, establishingThe Compensation Committee replaced Avient Corporation with Ashland Global Holdings Inc. Avient Corporation was removed because its size has grown significantly through acquisition. Ashland Global Holdings Inc. was added because it is a peer group for the Company has always been a challenge, given its diverse product offeringsglobal specialty chemicals company with appropriately sized revenues and lack of comparable U.S. public company competitors. To research companies that could potentially be added to, or removed, from the peer group, the Committee’s consultant, Willis Towers Watson, reviewed U.S. public companies within the Company’s current 8-digit GICS code (15101050: Specialty Chemicals), the Company’s ISS peer group, and other companies that use the Company as a peer. While the consultant focused on potential peer companies in the Specialty Chemical industry, it also reviewed companies in Food and Beverage, Personal Products, Commodity Chemicals, and Household Products industries in which the Company primarily operates. The consultant reviewed companies with revenues between $529 million and $3,308 million (i.e., 0.4x to 2.5x that of the Company’s 2019 revenues of $1,323 million), which is consistent with the revenue range used by ISS in their development of peer groups. Based upon peer acquisitions and revenue growth, as well as the Company’s planned 2020 divestitures of its inks, yogurt fruit preparation, fragrance compounds, and aroma chemical businesses, the Committee decided to remove four peers used in its 2019 peer group. Two companies, Innophos Holdings and OMNOVA Solutions, were acquired as of February 7, 2020 and April 2, 2020, respectively, and compensation data is no longer available. Two companies, Albemarle and Cabot, have revenues more than 2.5 times that of the Company and were no longer deemed appropriate peers.
Company.
The Comparable Company Data included in the 20202021 analysis was considered by the Compensation Committee in making decisions for:
annual management incentive plan target awards authorized in February 2021, for performance during 2021;
2022;The Committee’s analysis was based in part on published survey data of a broad group of public and private companies and in part on an analysis of the proxy statements of a peer group of 18 public companies prepared by the Committee’s outside compensation consultant. As further described above, the peer group of 18 public companies included in 20202021 was:
| | | Hawkins, Inc. | | | Minerals Technologies Inc. | | | Stepan Company | |
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Balchem Corporation | | | Ingevity Corporation | | | Nu Skin Enterprises, Inc. | | | USANA Health Sciences, Inc. |
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Edgewell Personal Care Company | | | Innospec Inc. | | | Quaker Chemical Corporation | | | W. R. Grace & Co. |
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Ferro Corporation | | | Koppers Holdings Inc. | | | Rayonier Advanced Materials Inc. | | | |
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H.B. Fuller Company | | | Kraton Corporation | | | Revlon, Inc. | | |
This public company peer group is comparable to Sensient in complexity and market challenges. Sensient’s market capitalization, operating income, and revenue ranked at the 71st,80th, 57th, and 30th33rd percentiles of the peer companies, 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 it to assist in compiling the Comparable Company Data.
In selecting a consultant, the Committee considers all factors relevant to that person’s independence from management, including the following:
the provision of other services to the corporation or its affiliates by the person that employs the compensation consultant;
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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;
the policies and procedures of the person that employs the compensation consultant that are designed to prevent conflicts of interest;
any business or personal relationship of the compensation consultant with a member of the Committee;
any corporation stock owned by the compensation consultant; and
any business or personal relationship of the compensation consultant with an executive officer of the corporation.
As part of the process this year to retain Willis Towers Watson, 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). On the basis of the Compensation Committee’s evaluation of the factors listed above, the Committee determined that the advisers’ relationships did not create conflicts of interest and did not adversely affect Willis Towers Watson’s independence and advice.
The Company’s management assists the Compensation Committee in its determinations by helping compile and organize information, arranging meetings, and acting to support the Compensation Committee’s work. In reviewing the performance and establishing the compensation levels of other executive officers, the Compensation Committee also takes into account the recommendations of the Company’s Chief Executive Officer. The Company’s management has no decision-making authority on the Compensation Committee.
Components of 20202021 Executive Compensation and Benefits Programs
The following table summarizes the components of our executive compensation and benefits programs for named executive 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.
Base Salary | | | Fixed | | | - | | | Attract and retain talented executives by providing base pay at market levels | ||||||||||||||||||||||||||||||||||||||||||||||||
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2. | | | Annual Cash Incentive Plan Awards | | | Performance-Based | | | - | | | Drive Company and individual annual performance | |||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | - | | | Focus on growing 2021 adjusted EBITDA adjusted revenue adjusted cash flow | ||||||||||||||||||||||||||||||||||||||||||||||||
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3. | | | Long-Term Equity Incentive Awards | | | 60% Performance-Based and | | | - | | | ||||||||||||||||||||||||||||||||||||||||||||||
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| | | | | | | - | | | Performance-based awards focus on Company’s operating performance in terms of adjusted | ||||||||||||||||||||||||||||||||||||||||||||||||
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| | | | | | | - | | | Restricted stock awards that vest, if at all, after three years | ||||||||||||||||||||||||||||||||||||||||||||||||
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4. | | | Retirement Benefits | | | Fixed | | | - | | | Attract and retain talented executives by providing retirement benefits to executives who have contributed to the Company’s success over an extended period of | |||||||||||||||||||||||||||||||||||||||||||||
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5. | | | Other Benefits | | | Fixed | | | - | | | Attract and | |||||||||||||||||||||||||||||||||||||||||||||
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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, which are calculated in accordance with GAAP. The performance measures described above may be adjusted to remove the effect of foreign currency translation, 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 base salaries and specific performance targets for both the annual cash incentive and the long-term equity incentive awards.
Base Salary
As with most companies, base salary is one of the key elements in attracting and retaining Sensient’s key executives. 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; individual experience and length of experience; demonstrated leadership ability; Company and individual performance and potential performance; retention needs; years of service at Sensient; years in the officer’s current position; market data (where available) regarding salary levels and changes for similar positions; 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 2022 compensation decisions, which were made in December 2021, the Committee also weighed the Company’s strong 2021 financial performance and ongoing response to the COVID-19 pandemic, which included continuing to operate at a high-level and improving upon a successful 2020 despite the continued impact of COVID-19 on the global economy.
For 2021, the Committee began with market data (comprised of the Comparable Company Data), and then determined actual base salaries for Sensient’s executives after considering management’s recommendations. The Committee also considered the Company’s strong financial performance and response to the COVID-19 pandemic, which included avoiding any long-term plant shutdowns or material supply disruptions; continuing to grow the Company’s business through new commercial wins, regaining previously lost business, protecting existing business, and gaining market share at existing client accounts; maintaining strong on time delivery; and navigating three challenging divestitures despite shutdowns and travel restrictions. 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 2020 to 2021 given to the Chief Executive Officer was 5.8%. The salary increases for the other named executive officers were between 4.5% and 16.4%. The Committee has approved salary increases to named executive officers with reference to the 50th percentile of salaries in our peer group for their position as well as such officers’ experience and tenure.
Annual Incentive Plan Awards
Sensient maintains annual management incentive plans for its officers, business unit General Managers and senior leaders, and other key individuals. Historically, Sensient maintained separate incentive plans for Elected Officers, Group Presidents, Group/Division Management, and Corporate Management. In February 2021, the Board adopted a combined annual management incentive plan for these groups, which did not materially modify the terms of the plans that it replaced, and delegated authority to the CEO to establish an annual incentive plan for Business Unit Management.
Annual incentive compensation is intended to provide cash-based incentives based upon achieving overall Company, group, or divisional financial goals, while placing a significant part of each person’s total compensation at risk depending upon achievement of those goals. 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 unnecessary or excessive risks. The Committee also has discretion to make exclusions for items that were not considered at the time the performance goals were set and are related to an event that is outside of the Company’s ordinary course of business.
For 2021 annual incentive target awards approved in February 2021 for Messrs. Paul Manning, Stephen Rolfs, and John J. Manning, based upon the achievement of performance goals during 2021, performance was measured based on a weighted average of the Company’s achievement of three performance goals:
adjusted EBITDA (50% weight),
adjusted revenue (30% weight), and
adjusted cash flow (20% weight).
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These are non-GAAP financial measures. See the tables and their footnotes below for information regarding these measures and how they were calculated.
For 2021 annual incentive target awards approved in February 2021 for Messrs. Michael Geraghty and Craig Mitchell, based upon the achievement of performance goals during 2021, performance was split between Group (70%) and Corporate results (30%) and measured based on a weighted average of the Color and Flavor Groups’ respective achievement of two performance goals:
adjusted operating profit (70% weight), and
adjusted revenue (30% weight).
Additionally, Messrs. Geraghty and Mitchell were each eligible for a Working Capital Incentive with a target payout of $100,000 if certain goals (described below) were met. Mr. Mitchell’s Working Capital Incentive was based upon inventory reduction (70% weight) and Days Inventory on Hand (DIH) reduction (30% weight) within the Flavors & Extracts Group, and Mr. Geraghty’s Working Capital Incentive was based 100% on DIH reduction within the Color Group.
These are non-GAAP financial measures. See the tables and their footnotes below for information regarding these measures and how they were calculated.
Awards earned under the annual incentive plan in 2021, based upon targets set in February 2021, were as described in the tables below:
Corporate Performance Goals | | | 2021 Target(1) and Percentage of Target Award Earned | | | 2021 Calculation(2) | | | Percentage Weight of Award Formula |
Adjusted EBITDA | | | 6.4% decrease minimum, 10% 0% increase, 25%; 4.0% increase target, 100%; | | | $241.5 million (9.1% increase) | | | 50% |
| | | 6.0% increase maximum, 200% | | | | | |||
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Adjusted revenue | | | 6.9% decrease minimum, 10% | | | $1.3 billion | | | 30% |
| | 0% increase, 25%; | | | | | ||||
| | 3.5% increase target, 100%; | | | (8.5% increase) | | | |||
| | 5.0% increase maximum, 200% | | | | | ||||
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Adjusted cash flow | | | 6.4% decrease minimum, 10% | | | $135.4 million | | | 20% |
| | 0% increase, 25%; | | | | | ||||
| | 4.0% increase target, 100%; | | | (36.1% decrease) | | | |||
| | 7.0% increase maximum, 200% | | | | | ||||
Group Performance Goals | | | 2021 Target(1) and Percentage of Target Award Earned | | | 2021 Calculation(2) | | | Percentage Weight of Award Formula |
Color Group | | | | | | | |||
Adjusted operating profit | | | 5% decrease minimum, 10% | | | $104.2 million | | | 70% |
| | 0% increase, 25%; | | | | | ||||
| | 7.1% increase target, 100%; | | | (4.8% increase) | | | |||
| | 10.3% increase maximum, 200% | | | | | ||||
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Adjusted revenue | | | 5% decrease minimum, 10% | | | $543.2 million | | | 30% |
| | 0% increase, 25%; | | | | | ||||
| | 4.1% increase target, 100%; | | | (9.4% increase) | | | |||
| | 6.2% increase maximum, 200% | | | | | ||||
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Group Performance Goals | | | 2021 Target(1) and Percentage of Target Award Earned | | | 2021 Calculation(2) | | | Percentage Weight of Award Formula |
Flavors & Extracts Group | | | | | | | |||
Adjusted operating profit | | | 5% decrease minimum, 10% | | | $96.2 million | | | 70% |
| | 0% increase, 25%; | | | | | ||||
| | 7.7% increase target, 100%; | | | (14.9% increase) | | | |||
| | 11.0% increase maximum, 200% | | | | | ||||
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Adjusted revenue | | | 5% decrease minimum, 10% | | | $706.1 million | | | 30% |
| | 0% increase, 25%; | | | | | ||||
| | 4.1% increase target, 100%; | | | (8.4% increase) | | | |||
| | 6.2% increase maximum, 200% | | | | | ||||
