UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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International Flavors & Fragrances Inc.
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FINANCIAL REPORT 2016 Proxy Statement for 2017Notice of 2018 Annual Meeting of Shareholders
OUR PURPOSE We are the catalyst for discoveries that spark the senses and transform the everyday OUR STRATEGIC PILLARS Innovating Firsts We seek to strengthen our position and drive differentiation in priority R&D platforms. Winning Where We Compete Our ambition is to achieve a #1 or #2 market leadership position in key markets and categories and with specific customers. Becoming Our Customers’ Partner of Choice Our goal is to attain commercial excellence by providing our customers within-depth local consumer understanding, industry-leading innovation, outstanding service and the highest quality products. Strengthening and Expanding the Portfolio We actively pursue value-creation through partnerships, collaborations, and acquisitions within flavors, fragrances and adjacencies. OUR VALUES We are passionate We are creative We are experts at what we do We are empowered
Dear Fellow Shareholders:
Date and Time Wednesday, May 2, 2018 10:00 a.m. Eastern Daylight Time Place International Flavors & Fragrances Inc. 533 W. 57th Street, 9th Floor New York, New York 10019 Items to be Voted On
Record Date Only shareholders of record as of the close of business on March 7, 2018 may vote at the 2018 Annual Meeting. Sincerely,
Andreas Fibig Chairman and Chief Executive Officer
| Live Audio Webcast A live audio webcast of Proxy Voting It is important that your shares be represented at the 2018 Annual Meeting, regardless of the number of shares you may hold. Whether or not you plan to Advance Voting Methods
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Important Notice Regarding the Availability of Our Notice, Proxy Statement and 2017 Annual Report are available atwww.proxyvote.com.
PROXY STATEMENT SUMMARY
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 | We provide below highlights of certain information in this Proxy Statement. As it is only a summary, please refer to the complete Proxy Statement and 2017 Annual Report before you vote. | ||||||||
We Continued to Make Strategic and Financial Progress
In 2017, we made notable progress in both our strategic goals and financial performance, and achieved currency neutral growth in all of our key metrics. The recently-enacted Tax Cuts and Jobs Act impacted our reported results for 2017, as we recorded a provisional net charge of $139 million in the fourth quarter of 2017 due to the changes resulting from the Tax Act.
| 2017 Results (GAAP basis) | Change vs. Prior Year | |||
Net Sales
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$3.4 billion
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9%
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Operating Profit
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$581 million
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2%
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Diluted Net Earnings Per Share
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$3.72
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(26)%
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In 2017, our payouts to shareholders, made through a combination of dividends and share repurchases, totaled 56%, consistent with our targeted range of 50% to 60% of adjusted net income*. We increased our quarterly dividend by 8% and our Board extended our repurchase program through December 31, 2022, authorizing a total of $300 million for repurchases under the extended program.
* See reconciliation of GAAP toNon-GAAP financial measures in Exhibit A to this Proxy Statement.
IFF | 2018 PROXY STATEMENT i
Proxy Statement Summary SALES* ADJUSTED OPERATING PROFIT* ADJUSTED EPS* Currency Impact Net
PROXY STATEMENT SUMMARY
Proxy Statement Summary
 |
2016 Highlights
We Continued to Make Strategic and Financial Progress
In 2016, we continued to make strategic and financial progress. As shown below, while reported results were mixed, we achieved currency neutral growth in all of our key metrics.
| 2016 Financial Metric (GAAP) | (Dollars in Millions Except Earnings Per Share Amounts) | Change vs. Prior Year | ||
Net Sales
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$3,116
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3%
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Operating Profit
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$567
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(4)%
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Diluted Net Earnings Per Share
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$5.05
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(2)%
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We Returned an Increasing Payout to Our Shareholders
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* See reconciliation of GAAP toNon-GAAP financial measures in Exhibit A to this proxy statement.
IFF | 2017 PROXY STATEMENT i
PROXY STATEMENT SUMMARY
Vision 2020 Strategy
In 2015,2017, we announcedrefreshed our Vision 2020 strategy which focuses on building differentiation and accelerating profitable growth. During 2016, we continued to execute on the four pillars of thisthe strategy, withincluding the following achievements:
Pillar
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Innovating Firsts |
• Achieved growth in encapsulation-related sales • Achieved growth in sweetness and savory modulation portfolio sales
• Launched
• Commercialized
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Win Where We Compete |
•
•
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Become Our Customers’ Partner of Choice |
•
•
• Achieved EcoVadis “Gold” status for sustainable performance and CDP “A” • Joined FReSH, a project of the World Business Council on Sustainable Development, designed to accelerate transformational change in global food systems
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Strengthen and Expand Portfolio | •
• Acquired • Achieved growth in cosmetic active ingredients
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iiIFF | 2018 PROXY STATEMENT
PROXY STATEMENT SUMMARY
Corporate Governance Highlights
Our Corporate Governance Policies Reflect Best Practices
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Ø
| Ø Diverse Board Brings Balance of Skills, Professional Experience and Perspectives | |
Ø Independent Lead Director Facilitates and Strengthens the Board’s Independent Oversight | Ø Formal Board and Executive Succession Planning | |
Ø Annual Election of Directors
| Ø
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Ø Majority Voting and Director Resignation Policy in
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| Ø Prohibit Short Sales or Hedging of Our Stock By Our Employees, Officers and Directors | |
ØNo Exclusive Forum orFee-Shifting
| Ø | |
Ø | Ø | |
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ØNo Shareholder Rights Plan (“Poison Pill”)
| Ø Long Standing Commitment to Sustainability | |
Ø | ||
iiIFF | 20172018 PROXY STATEMENTiii
PROXY STATEMENT SUMMARY
Proposal 1
Election of 11 Director Nominees |   | The Board recommends a vote FOR the election of all Director Nominees
Our Nominating and Governance Committee and our Board have determined that each of the nominees possesses the skills and qualifications to collectively comprise a highly effective Board
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  | See “Proposal | |||
Director Nominees
Committee Membership
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Name and Primary Occupation
| Joined
| Age
| Indep.
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Audit
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Comp.
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Nom.& Gov.
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Marcello V. Bottoli Partner, Es Vedra Capital Advisors LLP
| 2007
| 55
| •
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Dr. Linda Buck Full Member, Fred Hutchinson Cancer Research Center
| 2007
| 70
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| •
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Michael L. Ducker President and CEO, FedEx Freight
| 2014
| 63
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| •
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David R. Epstein Executive Partner, Flagship Pioneering and Chairman of Rubius Therapeutics
| 2016
| 55
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Roger W. Ferguson, Jr. President and CEO, TIAA
| 2010
| 65
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John F. Ferraro Former Global COO, Ernst & Young
| 2015
| 61
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Andreas Fibig Chairman and CEO, IFF
| 2011
| 55
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Christina Gold Former CEO, The Western Union Company
| 2013
| 69
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| •
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Henry W. Howell, Jr. Retired J.P. Morgan Executive
| 2004
| 75
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Katherine M. Hudson Former CEO, Brady Corporation
| 2008
| 70
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Dale F. Morrison (Lead Director) Founding Partner of TriPointe Capital Partners
| 2011
| 68
| •
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Committee Chair Financial Expert
Committee Membership
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Name and Primary Occupation
| Joined
| Age
| Indep.
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Audit
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Comp.
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Nom.& Gov.
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Marcello V. Bottoli Partner, Es Vedra Capital Advisors LLP
| 2007
| 56
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Dr. Linda Buck Full Member, Fred Hutchinson Cancer
| 2007
| 71
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Michael L. Ducker President and CEO, FedEx Freight
| 2014
| 64
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David R. Epstein Executive Partner, Flagship Pioneering
| 2016
| 56
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Roger W. Ferguson, Jr. President and CEO, TIAA
| 2010
| 66
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John F. Ferraro Former Global COO, Ernst & Young
| 2015
| 62
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Andreas Fibig Chairman and CEO, IFF
| 2011
| 56
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Christina Gold Former CEO, The Western Union Company
| 2013
| 70
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Katherine M. Hudson Former CEO, Brady Corporation
| 2008
| 71
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Dale F. Morrison (Lead Director) Founding Partner of TriPointe Capital Partners
| 2011
| 69
| •
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| •
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Stephen Williamson Senior Vice President and CFO, Thermo Fisher Scientific
| 2017
| 51
| •
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Skills and Qualifications
Our Board continuously evaluates desired attributes in light of the Company’s strategy and needs. |   |
ivIFF | 20172018 PROXY STATEMENTiii
International and Emerging Markets M&A Operations R&D / Innovation Corporate Governance Sustainability Financial and Accounting Risk and Crisis Management Consumer Products Technology / IT Regulatory
PROXY STATEMENT SUMMARY
Proposal 2
Ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the
| | The Board recommends a vote FOR this proposal
Our Board recommends that shareholders vote “FOR” the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the
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| See “Proposal 2 — Ratification of Independent Registered Public Accounting Firm” beginning on page
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Proposal 3
Approve, on an advisory basis, the compensation of our named executive officers in
| | The Board recommends a vote FOR this proposal
Our Board recommends a vote “FOR” the advisory vote to approve executive compensation for the
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| See “Proposal 3 — Advisory Vote on Executive Compensation” on page
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ivIFF | 2017 PROXY STATEMENT
PROXY STATEMENT SUMMARY
Compensation Governance
Ourpay-for-performance compensation program is reflected in the strong compensation governance that we have adopted.
| What We Do |
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Variable compensation based on multiple performance metrics to encourage balanced incentives | |||
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Appropriate mix of fixed and variable compensation to reward company, business unit and individual performance | |||
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Majority of variable compensation awarded as equity-based awards | |||
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Executive clawback policies to recoup cash and equity compensation upon certain triggering events | |||
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Executives required to meet share retention guidelines | |||
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Independent compensation consultant | |||
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Annual risk assessment of compensation programs
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| What We Don’t Do |
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No taxgross-ups | ||
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No single-trigger vesting of cash or equity-based awards upon change in control | |||
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No short-sales, hedging or pledging of our stock by our employees, officers or directors | |||
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No fixed-duration employment agreements with executive officers | |||
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No stock option/SAR repricing or exchange of underwater options or SARs for cash without shareholder approval
|
IFF | 20172018 PROXY STATEMENT v
PROXY STATEMENT SUMMARY
| Proxy Statement Summary | i | |||
| Proposal 1 — Election of Directors | 1 | |||
| 1 | ||||
| 1 | ||||
| 4 | ||||
| Corporate Governance | 15 | |||
| 15 | ||||
| 15 | ||||
| 15 | ||||
| 16 | ||||
| 16 | ||||
| 17 | ||||
| 18 | ||||
Policy Regarding Derivatives, Short Sales, Hedging and Pledges | ||||
| Directors’ Compensation | ||||
| Securities Ownership | ||||
| Proposal | ||||
Selection of our Independent Registered Public Accounting Firm | ||||
Pre-Approval Policies and Procedures | ||||
| Compensation Discussion and Analysis | ||||
| Proposal 3 — Advisory Vote on Executive Compensation | ||||
| Executive Compensation | ||||
| 63 | ||||
| Information About The Meeting | ||||
| Other Matters | ||||
| Exhibit | ||||
viIFF | 20172018 PROXY STATEMENT
Our Board of Directors (“Board”) currently has eleventwelve members. Upon the recommendation of the Nominating and Governance Committee,Mr. Howell, who has served on our Board has nominated the following current directors for election at the 2017 Annual Meeting, each for aone-year term that expiressince 2004, will retire from our Board at the 2018 Annual Meeting:Meeting in accordance with our term limit policy. Following the 2018 Annual Meeting, the size of our Board will be reduced to eleven members.
Andreas Fibig (Chairman)
| Dale F. Morrison (Lead Director)
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Marcello V. Bottoli |
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Dr. Linda Buck |
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| John F. Ferraro |
Katherine M. Hudson | ||||
Michael L. Ducker | Christina Gold | Stephen Williamson | ||||
David R. Epstein
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Pursuant to our Corporate Governance Guidelines, a person that has previously served for twelve consecutive full annual terms on the Board cannot continue to serve as a director following the subsequent annual meeting of shareholders, unless such person is one of our employees or the Board has made a determination that the nomination of such person would be in the best interests of our Company and our shareholders. Mr. Howell’s twelfth consecutive annual term of service as a director will expire at the 2017 Annual Meeting. Pursuant toUpon the recommendation of the Nominating and Governance Committee, theour Board has determinednominated eleven of our current directors for election at the 2018 Annual Meeting, each for aone-year term that it is inexpires at the best interests of the Company and our shareholders tore-nominate Mr. Howell for an additional term in light of his extensive business development, finance and international management experience which serves us well in conjunction with his service on our Nominating and Governance and Audit Committees.2019 Annual Meeting.
Director and Nominee Experience and Qualifications
Board Membership Criteria and Selection
Our Certificate of Incorporation provides that we have at least six but not more than fifteen directors. To ensure independence and to provide the breadth of needed expertise and diversity of our Board, the Board periodically reviews its size and makes appropriate adjustments pursuant to ourBy-Laws. Our Nominating and Governance Committee, together with other Board members, from time to time, as appropriate, identifies the need for new Board members.
Board candidates are considered based on various criteria which may change over time and as the composition of the Board changes. At a minimum, our Nominating and Governance Committee considers the following factors as part of its review of all director candidates and in recommending potential director candidates:
IFF | 2017 PROXY STATEMENT 1
Proposal 1 — Election of Directors
PROPOSAL1 — ELECTION OF DIRECTORS
Proposed director candidates who satisfy the criteria and who otherwise qualify for membership on the Board are identified by the Nominating and Governance Committee. In identifying candidates, the Nominating and Governance Committee seeks input and participation from other Board members and other appropriate sources so that all points of view are considered and the best possible candidates identified. The Nominating and Governance Committee also has engaged a search firm to assist it in
IFF | 2018 PROXY STATEMENT 1
Proposal 1 – Election of Directors
PROPOSAL1 — ELECTION OF DIRECTORS
identifying potential candidates. Members of the Nominating and Governance Committee and other Board members, as appropriate, interview selected director candidates, evaluate the director candidates and determine which candidates are to be recommended by the Nominating and Governance Committee to the Board. Our Nominating and Governance Committee evaluates the suitability of potential candidates nominated by shareholders in the same manner as other candidates recommended to the Nominating and Governance Committee.
We believe that each of our nominees has the experience, skills and qualities to fully perform his or her duties as a director and to contribute to our success. Each of our nominees is being nominated because he or she adheres to the highest standards of personal integrity and possesses excellent interpersonal and communication skills, is highly accomplished in his or her field, has an understanding of the interests and issues that are important to our shareholders and is able to dedicate sufficient time to fulfilling his or her obligations as a director. Our nominees as a group complement each other and each other’s respective experiences, skills and qualities.
Diversity and Tenure
Diversity is one of the factors that the Nominating and Governance Committee considers in identifying and selecting director nominees. As part of this process, the Nominating and Governance Committee evaluates how a particular candidate would strengthen and increase the diversity of the Board in terms of how that candidate may contribute to the Board’s overall balance of perspectives, backgrounds, knowledge, experience, skill sets and expertise in substantive matters pertaining to our business. To maintain a balance of experience and new perspectives, our Corporate Governance Guidelines also sets guidance on the number of full annual terms that a director can serve on our Board.
We Strive for a Balanced and Diverse Board
| Tenure | Executive Leadership Experience | ||||
| < 4 Yrs | > 8 Yrs | |||||
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4 to 8 Yrs | ||||||
4 of our 11
|
8
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91% of our
Executive Leadership Experience | ||||
2 IFF | 20172018 PROXY STATEMENT
PROPOSAL1 — ELECTION OF DIRECTORS
Shareholder Nominations and Proxy Access
Under ourBy-Laws, if a shareholder wishes to submit a director candidate for consideration by the Nominating and Governance Committee, or wishes a director nomination to be included in the Company’s proxy statement for an annual meeting pursuant to our proxy accessby-law, the shareholder must deliver or mail notice of the request to the Company’s Corporate Secretary, in writing, so that it is received not less than 90 days nor more than 120 days prior to the anniversary date of the prior year’s annual meeting of shareholders. However, if the annual meeting is not within 30 days of the anniversary date of the prior year’s annual meeting, such notice must be received by the Corporate Secretary no later than 10 days following the mailing of notice of the annual meeting or public disclosure of the annual meeting date, whichever occurs first. The notice must be accompanied by the information concerning the director candidate and nominating shareholder described in Article I, Section 3 and Section 4 of ourBy-Laws. The Nominating and Governance Committee may also request any additional background or other information from any director candidate or recommending shareholder as it may deem appropriate. Our proxy accessby-law permits an eligible shareholder (or group of up to 20 eligible shareholders) who owns shares representing at least 3% of our outstanding shares, and has held the shares for at least 3 years, to nominate and include in our proxy materials for an annual meeting director candidates constituting up to 20% of our Board.
Continued Service
The Nominating and Governance Committee also annually reviews each current Board member’s suitability for continued service as a member of our Board and recommends to the Board whether such member should bere-nominated. In addition, each director is required to promptly tender his or her resignation to the Chair of the Nominating and Governance Committee if, during his or her tenure as a director, such director:
so that the Nominating and Governance Committee can review the change and make a recommendation to the full Board regarding the director’s continued service. Such resignation becomes effective only upon acceptance by the Board.
Ö
YOUR BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF
|
IFF | 20172018 PROXY STATEMENT 3
PROPOSAL1 — ELECTION OF DIRECTORS
Marcello V. Bottoli
Director Since: 2007
Committees: • Audit
Age:
|
Business Experience
An Italian national with extensive international experience, Mr. Bottoli is a Partner at Es Vedra Capital Advisors LLP, an advisory and investment firm dedicated to |
Public Board Memberships
• Pandora A/S, a designer, manufacturer and marketer of hand-finished and contemporary jewelry, from 2010 to 2014 • True Religion Apparel, Inc., a California-based fashion jeans, sportswear and accessory manufacturer and retailer, from 2009 to 2013 • Ratti S.p.A., an Italian manufacturer ofhigh-end fabrics and textiles for the fashion industry from 2003 to 2010
Additional Accomplishments and Memberships
• Chairman of the •
• Board of Pelostop S.A., a beauty services retailer based in Spain • Board of Il Bisonte S.p.A., a leather goods retailer based in Italy • Board of FaceGym Ltd., a beauty services retailer based in London • Advisory Board of
Qualifications
Mr. Bottoli brings to our Board his experience as a chief executive and as an investor, with an emphasis on consumer products, strategic insights and marketing. In addition, his experience with strategic transactions and M&A has enabled Mr. Bottoli to provide many insights and contributions to our Board. |
4 IFF | 20172018 PROXY STATEMENT
PROPOSAL1 — ELECTION OF DIRECTORS
Dr. Linda Buck
Director Since: 2007
Committees: • Nominating and Governance
Age:
|
Business Experience
Dr. Linda Buck has been a Full Member of the Fred Hutchinson Cancer Research Center since 2002. In addition, Dr. Buck has been an Affiliate Professor of Physiology and Biophysics at the University of Washington since 2003. She was previously Full Professor of Neurobiology at Harvard Medical School. Dr. Buck’s research has provided key insights into the mechanisms that underlie the sense of smell and she has been the recipient of numerous awards, including The Nobel Prize in Physiology or Medicine in 2004. |
Public Board Memberships
• DeCode Genetics Inc., a biotechnology company, from 2005 to 2009
Additional Accomplishments and Memberships
• Scientific Advisory Board of The Picower Institute for Learning and Memory at Massachusetts Institute of Technology • Member of the International Advisory Panel of the Knut and Alice Wallenberg Foundation, the largest private foundation promoting scientific research in Sweden • President’s Council of the New York Academy of Sciences • Elected Member of the National Academy of Sciences, the National Academy of Medicine, the American Academy of Arts & Sciences, the European Academy of Sciences, and the Royal Society, the United Kingdom’s national academy of science • Previous Member of the Medical Advisory Board of The Gairdner Foundation, a Canadiannon-profit organization devoted to the recognition of outstanding achievement in biomedical research worldwide
Qualifications
Dr. Buck’s scientific knowledge is important to our research and development efforts in both flavors and fragrances, as is her technical and advisory board experience in evaluating a host of issues that are relevant to our innovation and research and development activities. |
IFF | 20172018 PROXY STATEMENT 5
PROPOSAL1 — ELECTION OF DIRECTORS
Michael L. Ducker
Director Since: 2014
Committees: • Compensation
Age:
|
Business Experience
Mr. Ducker has been President and Chief Executive Officer of FedEx Freight since January 2015. In that role, he provides strategic direction for FedEx’s less-than-truckload (LTL) companies throughout North America and for FedEx Custom Critical, a leading carrier of time sensitive, critical shipments. Mr. Ducker was formerly the Chief Operating Officer and President of International for FedEx Express, where he led all customer-facing aspects of the company’s U.S. operations and its international business, spanning more than 220 countries and territories across the globe. Mr. Ducker also oversaw FedEx Trade Networks and FedEx Supply Chain. During his FedEx career, which began in 1975, Mr. Ducker has also served as president of FedEx Express Asia Pacific in Hong Kong and led the Southeast Asia and Middle East regions from Singapore, as well as Southern Europe from Milan, Italy. |
Additional Accomplishments and Memberships
• Chairman of the • Board of Amway Corporation • National Advisory Board of the Salvation Army • Executive Committee and Treasurer of the American Trucking Association • Board of the American Transportation Research Institute
Qualifications
Mr. Ducker’s significant senior executive and international experience coupled with his extensive expertise in complex operations and logistics complements the strength of our Board. Mr. Ducker’s current position as Chief Executive Officer of FedEx Freight provides him with knowledge of a number of important areas that assist our Board, including leadership, risk assessment and operational issues. |
6 IFF | 20172018 PROXY STATEMENT
PROPOSAL1 — ELECTION OF DIRECTORS
David R. Epstein
Director Since: 2016
Committees: •
Age:
|
Business Experience
Mr. Epstein is an Executive Partner at Flagship Pioneering, a venture capital firm focused on life sciences |
Additional Accomplishments and Memberships
• • Chairman of the Board of Axcella Health, Inc., a company focused on the development of products to treat multifactorial diseases • Board of Evelo Biosciences, a leading immuno-microbiome company •
• Named by FierceBiotech
Qualifications
Mr. Epstein’s extensive global business experience, deep understanding of life sciences and understanding of research and development initiatives provides valuable insights to our Board. We benefit from Mr. Epstein’s senior leadership experience and achievement in both business and the life sciences. |
IFF | 20172018 PROXY STATEMENT 7
PROPOSAL1 — ELECTION OF DIRECTORS
Roger W. Ferguson, Jr.
Director Since: 2010
Committees: • Compensation (Chair)
Age:
|
Business Experience
Mr. Ferguson has been the President and Chief Executive Officer of TIAA (formerly TIAA-CREF) |
Public Board Memberships
•General Mills, Inc., a manufacturer and marketer of branded consumer foods •Alphabet Inc., the parent holding company of Google Inc.
Additional Accomplishments and Memberships
• Boards of a number of charitable andnon-governmental organizations, including the Institute for Advanced Study, • Chairman of The Conference Board • • Member of the Council on Foreign Relations • Member of the Group of Thirty •
• •PreviousChairman and Executive Committee Member of the Business-Higher Education Forum
Qualifications
Mr. Ferguson brings to our Board his sound business judgment, extensive knowledge of the financial services industry and regulatory experience. We benefit from Mr. Ferguson’s service as Chief Executive Officer of TIAA and his experience as a member of other public company boards, which provides him an enhanced perspective on issues applicable to
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8 IFF | 20172018 PROXY STATEMENT
PROPOSAL1 — ELECTION OF DIRECTORS
John F. Ferraro
Director Since: 2015
Committees: • Audit (Chair)
Age:
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Business Experience
Mr. Ferraro was the |
Public Board Memberships
•Advance Auto Parts, Inc., an automotive aftermarket parts provider •ManpowerGroup Inc., a global workforce solution and service provider
Additional Accomplishments and Memberships
•Founded the Audit Committee Leadership Network in 2003 •Board of Trustees of Boston College High School and Marquette University •CPA and a member of the American Institute of Certified Public Accountants
Qualifications
Mr. Ferraro brings to our Board his extensive executive, auditing and accounting experience working with large and global corporations. We benefit from his extensive understanding of global business operations, markets and |
IFF | 20172018 PROXY STATEMENT 9
PROPOSAL1 — ELECTION OF DIRECTORS
Andreas Fibig
Director Since: 2011
Chairman of the Board
Age:
|
Business Experience
Mr. Fibig joined our Board in 2011 and has been our Chairman since December 2014 and Chief Executive Officer since September 2014. Previously, he served as President and Chairman of the Board of Management of Bayer HealthCare Pharmaceuticals, the pharmaceutical division of Bayer AG, from September 2008 to September 2014. Prior to that position, Mr. Fibig held a number of positions of increasing responsibility at Pfizer Inc., a research-based pharmaceutical company, including as Senior Vice President of the US Pharmaceutical Operations group from 2007 through 2008 and as President, Latin America, Africa and Middle East from 2006 through 2007. Mr. Fibig has been nominated for election to the Board of Novo Nordisk, a global healthcare company, for its March 2018 annual meeting. |
Public Board Memberships
• Board of Bunge Limited, a leading agribusiness and food company with integrated operations, until the Bunge Limited May 2018 annual meeting
Additional Accomplishments and Memberships
•
• German American Chamber of Commerce, Inc. • German Academy of New York
Qualifications
Mr. Fibig’s prior work experience with pharmaceutical companies has provided him with extensive experience in international business, product development and strategic planning, which are directly translatable to his work as our Chairman and CEO. |
10 IFF | 20172018 PROXY STATEMENT
PROPOSAL1 — ELECTION OF DIRECTORS
Christina Gold
Director Since: 2013
Committees: • Compensation • Nominating and Governance (Chair)
Age:
|
Business Experience
From September 2006 until September 2010, Ms. Gold was Chief Executive Officer, President and a director of The Western Union Company, a leader in global money movement and payment services. She was President of Western Union Financial Services, Inc. and Senior Executive Vice President of First Data Corporation, former parent company of The Western Union Company and provider of electronic commerce and payment solutions, from May 2002 to September 2006. Prior to that, Ms. Gold served as Vice Chairman and Chief Executive Officer of Excel Communications, Inc., a former telecommunications ande-commerce services provider, from October 1999 to May 2002. From 1998 to 1999, Ms. Gold served as President and CEO of Beaconsfield Group, Inc., a direct selling advisory firm that she founded. Prior to founding Beaconsfield Group, Ms. Gold spent 28 years (from 1970 to 1998) with Avon Products, Inc., a leading global beauty company, in a variety of positions, including as Executive Vice President, Global Direct Selling Development, Senior Vice President and later President of Avon North America, and Senior Vice President & CEO of Avon Canada. |
Public Board Memberships
•ITT Corporation, a manufacturer of highly engineered components and technology solutions for industrial markets •Korn/Ferry International, a leadership and talent management organization •Exelis, Inc., a diversified, global aerospace, defense and information solutions company, from October 2011 to May 2013
Additional Accomplishments and Memberships
•Board of New York Life Insurance, a private mutual life insurance company •Board of Safe Water Network, anon-profit organization working to develop locally owned, sustainable solutions to provide safe drinking water •Board of Governors of Carleton University in Ottawa, Canada
Qualifications
Ms. Gold brings a number of valuable characteristics to our Board, including her extensive international and domestic business experience, her familiarity with the Company’s customer base, her financial expertise and her prior experience as a chief executive officer. |
IFF | 20172018 PROXY STATEMENT 11
PROPOSAL1 — ELECTION OF DIRECTORS
Henry W. Howell, Jr.
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|
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12IFF | 2017 PROXY STATEMENT
PROPOSAL1 — ELECTION OF DIRECTORS
Katherine M. Hudson
Director Since: 2008
Committees: • Compensation
Age:
|
Business Experience
As Chairperson, President and Chief Executive Officer of Brady Corporation, a global manufacturer of identification solutions and specialty industrial products, from 1994 until 2004, Ms. Hudson oversaw a doubling of annual revenues. Her prior experience during 24 years with Eastman Kodak, an imaging technology products provider, covered various areas of responsibility, including systems analysis, supply chain, finance and information technology. Her general management experience spans both commercial and consumer product lines. |
Public Board Memberships
• Charming Shoppes, Inc., a woman’s specialty retailer from 2000 to 2012 • CNH Global NV, a manufacturer of agricultural and construction equipment, from 1999 to 2006. • Apple Computer Corporation, a designer and manufacturer of consumer electronics and software products, from 1994 to 1997
Qualifications
Ms. Hudson’s executive experience in supply chain, finance and information technology at Eastman Kodak and Brady Corporation and her governance leadership on other boards have translated to sound guidance to our Board on governance, supply chain, finance matters and information technology. |
12IFF | 20172018 PROXY STATEMENT13
PROPOSAL1 — ELECTION OF DIRECTORS
Dale F. Morrison
Director Since: 2011
Committees: • Audit • Compensation • Nominating and Governance
Lead Director
Age:
|
Business Experience
Mr. Morrison has been a founding partner of TriPointe Capital Partners, a private equity firm, since 2011. Prior to TriPointe, he served from 2004 until 2011 as the President and Chief Executive Officer of McCain Foods Limited, an international leader in the frozen food industry. A food industry veteran, his experience includes service as Chief Executive Officer and President of Campbell Soup Company, various roles at General Foods and PepsiCo and as an operating partner of Fenway Partners, a private equity firm. |
Public Board Memberships
• InterContinental Hotels Group, an international hotel company • Trane Inc. from 2005 to 2008
Additional Accomplishments and Memberships
• Non-Executive Chairman of the Center of Innovation at the University of North Dakota • Non-Executive Chairman of Young’s, a frozen foods company • Board of Harvest, a food distribution company
Qualifications
Mr. Morrison is a seasoned executive with strong consumer marketing, sales and international credentials and his knowledge of our customer base is very valuable to our Board. His experience in private equity and mergers and acquisitions is also an important asset for our Board. |
IFF | 2018 PROXY STATEMENT 13
PROPOSAL1 — ELECTION OF DIRECTORS
Stephen Williamson
Director Since: 2017 Committees: • Audit Age:51 | Business Experience Mr. Williamson currently serves as Senior Vice President and Chief Financial Officer at Thermo Fisher Scientific, a leader in life sciences and healthcare technologies. Appointed to this role in August 2015, Mr. Williamson is responsible for the company’s finance, tax, treasury and investor relations functions. He joined Thermo Fisher in 2001 as Vice President, European Financial Operations, based in the U.K., and oversaw its integration activities across Europe. In 2004, Mr. Williamson moved to the U.S. and held finance leadership roles for many of Thermo Fisher’s operating businesses. In 2008, he became Vice President of Financial Operations for the company and led the finance function supporting all businesses. Prior to Thermo Fisher, Mr. Williamson served as Vice President and Chief Financial Officer, Asia Pacific for Honeywell International (formerly AlliedSignal) in Singapore and held other finance roles in corporate development and operational finance. He began his career with Price Waterhouse in the transaction support group and the audit practice, working in both London and New York. | Additional Accomplishments and Memberships • Member of the Institute of Chartered Accountants of England and Wales Qualifications Mr. Williamson is an accomplished finance leader with extensive international senior management experience and he brings a deep understanding of the power of innovation and R&D as well as the value of M&A — core components of IFF’s strategy. His deep understanding of complex, global businesses, 20 years of M&A experience and extensive financial insight adds considerable guidance to our Board and Audit Committee. |
14 IFF | 20172018 PROXY STATEMENT
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) that applies to all of our employees, including our Chief Executive Officer (“CEO”), our Chief Financial Officer (“CFO”) and our Chief Accounting Officer (“CAO”).Officer. We also have adopted a Code of Conduct for Directors and a Code of Conduct for Executive Officers (together with the Code of Ethics, the “Codes”). The Codes are available through the Investor—Leadership & Governance—Governance link on our website, www.iff.com.
Only the Board or the Audit Committee may grant a waiver from any provision of our Codes in favor of a director or executive officer, and any such waiver and any amendments to the Codes will be publicly disclosed on our website, www.iff.com.
We regularly engage with our shareholders to better understand their perspectives on our Company, including our strategies, performance, matters of corporate governance and executive compensation. This dialogue has helped inform the Board’s decision-making and ensure our interests remain well-aligned with those of our shareholders. During 2016,2017, we interacted with our largest active shareholders, representing approximatelytwo-thirds of our outstanding shares. We believe that all of these engagements provide valuable feedback and this feedback is shared regularly with our Board and its relevant committees. As a result of the feedback we received from our shareholders in the past few years, we have, among other things, raised our annual dividend, executed our share purchaserepurchase program, pursued value-creating acquisitions, completed a perception study on capital allocation preferences, and increased our investor relations exposure with enhanced marketing in key European countries.
 | ||
Corporate Governance
IFF | 2017 PROXY STATEMENT 15
CORPORATE GOVERNANCE
In 2016, we were recognized by the CDP as a leader in carbon management by achieving the Climate “A” list, which puts usmarkets in the top 9% of companies participating in CDP’s climate change program worldwide. In addition, we achieved three pioneering firsts:
Through implementation of our sustainability vision and strategy, we will continue our efforts to further embed sustainability throughout our company. across continental Europe.
Corporate Governance Guidelines
Our Board is responsible for overseeing the management of our Company. The Board has adopted Corporate Governance Guidelines which set forth our governance principles relating to, among other things:
Pursuant to our Corporate Governance Guidelines, a person that has served for twelve consecutive, full annual terms on our Board cannot continue to serve as a director following the twelfth year of service, unless:
A director’s first full annual term begins on the date he or she is first elected at an annual meeting of shareholders and continues until the next annual meeting of shareholders. Unless a director is an employee of our Company, prior to the conclusion of the twelfth full annual term, the director shall submit his or her resignation as a director effective immediately prior to that year’s annual meeting of shareholders.
IFF | 2018 PROXY STATEMENT 15
Corporate Governance
CORPORATE GOVERNANCE
The Nominating and Governance Committee reviews our Corporate Governance Guidelines annually, and recommends changes to the Board as appropriate. A copy of our Corporate Governance Guidelines is available through the Investor—Leadership & Governance—Governance link on our website, www.iff.com.
Sustainability is an important part of how we do business. We have developed a sustainability strategy that is underpinned by the concept of a circular economy and guided by our vision to lead positive transformational changes toward a regenerative, healthy and abundant world. We aim to implement these principles in the way we design and manufacture our products, and in the way we treat our employees as well as the communities in which we operate.
In 2017, IFF was named by CDP to the Climate “A” list for the third consecutive year as a reflection of our leadership in carbon management. CDP also awarded IFF leadership status for our water management strategy. Additional achievements in 2017 included:
From the raw materials we source responsibly, to oureco-efficient manufacturing facilities and carefully designed products, we will continue our efforts to make a positive difference in the world.
Pursuant to our Corporate Governance Guidelines, the Board undertakes an annual review of director independence, which includes a review of each director’s responses to questionnaires asking about any relationships with us.the Company. This review is designed to identify and evaluate any transactions or relationships between a director or any member of his or her immediate family and the Company or members of our senior management.
16IFF | 2017 PROXY STATEMENT
CORPORATE GOVERNANCE
The Board has affirmatively determined that each of our current directors (other than Mr. Fibig, our CEO) meets our independence requirements and those of the NYSE’s corporate governance listing standards:
Independent Directors
| ||
| Marcello V. Bottoli | ||
| Dr. Linda Buck | ||
| Henry W. Howell, Jr. | ||
| Katherine M. Hudson | ||
David R. Epstein | Dale F. Morrison | |
| John F. Ferraro | Stephen Williamson | |
Roger W. Ferguson, Jr.
|
| |
16IFF | 2018 PROXY STATEMENT
CORPORATE GOVERNANCE
In the ordinary course of business, transactions may occur between the Company or members of our senior management and entities with which some of our directors are or have been affiliated. During 2016,2017, in connection with its evaluation of director independence, our Board reviewed transactions between the Company and any company that has any ofwhere our directors or their family members of our directors servingserve as executive officers. Specifically, (i) in the ordinary course of business, we utilize the services of FedEx Freight, of which Mr. Ducker serves as President and Chief Executive Officer, of FedEx Freight, a shipping company that provides services to the Company. We reviewed this commercial relationship and found that all transactions between the Company and FedEx were made(ii) in the ordinary course of business we purchase services from, and were negotiated at arm’s length. Assell products and services to Thermo Fisher Scientific, a result,life sciences and healthcare technology company, of which Mr. Williamson serves as Senior Vice President and Chief Financial Officer, and (iii) one of our executive officers has purchased an immaterial interest in aco-investment vehicle managed by Mr. Bottoli. The Board determined that this commercial relationship did not impair Mr. Ducker’s independence.none of these transactions impaired the independence of the respective director.
As stated in our Corporate Governance Guidelines, the Board does not have a policy that requires a separation of the Chairman of the Board (“Chairman”) and CEO positions. The Board believes that it is important to have the flexibility to make this determination from time to time based on the particular facts and circumstances then affecting our business.
Currently, we combine the positions of Chairman and CEO. We believe that the CEO, as the Company’s chief executive, is in the best position to fulfill the Chairman’s responsibilities, including those related to identifying emerging issues facing our Company, and communicating essential information to the Board about our performance and strategies. We also believe that the combined role of Chairman and CEO provides us with a distinct leader and allows us to present a single, uniform voice to our customers, business partners, shareholders and employees. If at any point in time the Board feels that its current leadership structure may be better served by separating the roles of Chairman and CEO, it may then determine to separate these positions.
In order to mitigate potential disadvantages of a combined Chairman and CEO, the Board has created the position of Lead Director to facilitate and strengthen the Board’s independent oversight of our performance, strategy and succession planning and to promote effective governance standards. The independent directors of the Board elect a Lead Director from among the independent directors. Our current Lead Director is Mr. Morrison.
IFF | 2017 PROXY STATEMENT 17
CORPORATE GOVERNANCE
Duties of our Lead Director
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Ø Presides at all meetings of the Board at which the Chairman and CEO is not present, including executive sessions of the independent directors, and provides prompt feedback regarding those meetings to the Chairman and CEO; |
Ø Approves and provides suggestions for Board meeting agendas, with the involvement of the Chairman and CEO and input from other directors; |
Ø Serves as liaison between the Chairman and CEO and the independent directors; |
Ø Monitors significant issues occurring between Board meetings and assures Board involvement when appropriate; and |
Ø Ensures, in consultation with the Chairman and CEO, the adequate and timely exchange of information between the management team and the Board.
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IFF | 2018 PROXY STATEMENT 17
CORPORATE GOVERNANCE
Our Board has an Audit Committee, a Compensation Committee and a Nominating and Governance Committee, each of which operates under a written charter adopted by the Board. Each Committee reviews its charter at least annually and recommends charter changes to the Board as appropriate. In December 2016,2017, each of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee reviewed its charter, and amended it where appropriate. Each Committee charter provides that the Committee will annually review its performance.performance, and each Committee reviewed and discussed its performance in 2017. A current copy of each of the Audit Committee, Compensation Committee and Nominating and Governance Committee charters is available through the Investor—Leadership & Governance—Governance link on our website, www.iff.com.
The table below provides the current and expected membership and chairperson for each of our Committees and identifies our current Lead Director.
| Name | Audit | Compensation | Nominating and Governance | Lead Director | ||||
Marcello V. Bottoli | ● | |||||||
Dr. Linda Buck | ● | |||||||
Michael L. Ducker | ● | |||||||
David R. Epstein | ● | |||||||
Roger W. Ferguson, Jr. |  | |||||||
John F. Ferraro | | |||||||
Christina Gold | ● | | ||||||
Henry W. Howell, Jr. | ●* | ●* | ||||||
Katherine M. Hudson | ● | |||||||
Dale F. Morrison | ● | ● | ● | ● | ||||
Stephen Williamson | ● | |||||||
= Committee Chair
18* IFF | 2017 PROXY STATEMENT= Effective as of the 2018 Annual Meeting, Mr. Howell will retire from the Board.
CORPORATE GOVERNANCE
Our Board held six meetings during 2016.2017. The Audit Committee held eightseven meetings, the Compensation Committee held five meetings and the Nominating and Governance Committee held fivesix meetings during 2016. During 2016, overall attendance was 100% of Board meetings and 93% of total Committee meetings.2017. All incumbent directors attended at least 75% of the total Board and Committee meetings on which he or she served during 2016.2017. All of our directors who were serving on the day of last year’s annual meeting of shareholders attended that meeting. Under our Corporate Governance Guidelines, unless there are mitigating circumstances, such as medical, family or business emergencies, Board members should endeavor to participate in all Board meetings and all Committee meetings of which the director is a member and to attend our annual meeting of shareholders. Ournon-employee directors, all of whom are currently independent, meet in executive session, without the presence of any corporate officer or member of management, in conjunction with regular meetings of the Board and Committees. During 2016, ournon-employee directors met in executive session as part of every regularly scheduled Board and Committee meeting.
18IFF | 20172018 PROXY STATEMENT19
CORPORATE GOVERNANCE
| Current Members: | Responsibilities | |
John F. Ferraro (Chair) Marcello V. Bottoli Henry W. Howell, Jr. Dale F. Morrison Stephen Williamson
Meetings in | The Audit Committee’s responsibilities include overseeing and reviewing:
• the financial reporting process and the integrity of our financial statements, capital structure and related financial information;
• our internal control environment, systems and performance;
• the audit process followed by our independent accountant and our internal
• the appointment, compensation, retention and oversight of our independent accountant and our internal
• our independent accountant’s and internal
• the procedures for monitoring compliance with laws and regulations and with our Code of Business Conduct and
• establishing, monitoring and reviewing procedures for the treatment of concerns regarding compliance, accounting, internal accounting controls and auditing matters; and
Delegation.Under its charter, the Audit Committee may, when it deems appropriate, delegate certain of its responsibilities to one or more Audit Committee members or subcommittees.
Independence and Financial Expertise
The Board reviewed the background, experience and independence of the current Audit Committee members and based on this review, the Board determined that each member of the Audit Committee:
• meets the independence requirements of the NYSE’s corporate governance listing standards;
• meets the enhanced independence standards for audit committee members required by the SEC;
• is financially literate, knowledgeable and qualified to review financial statements; and
• qualifies as an “audit committee financial expert” under the SEC rules. | |
20IFF | 20172018 PROXY STATEMENT19
CORPORATE GOVERNANCE
| Current Members: | Responsibilities | |
Roger W. Ferguson, Jr. (Chair) Michael Ducker Christina Gold Katherine M. Hudson Dale F. Morrison
Meetings in | The Compensation Committee’s responsibilities include:
• determining, subject to approval by the independent directors of the Board, the CEO’s compensation;
• reviewing and making determinations regarding compensation of executive officers (other than the CEO) and certain other members of senior management;
• reviewing, adopting and recommending to the Board, or shareholders as required, general compensation and benefits policies, plans and programs, and overseeing the administration of such policies, plans and programs;
• reviewing and discussing with management each year the Compensation Discussion and Analysis included in our annual proxy
• recommending to the Board any changes to the compensation and benefits ofnon-employee directors;
• conducting a risk assessment of our overall compensation policies and • reviewing succession planning for executive officers (other than the CEO) and certain members of senior management.
Authority and Delegation. Under its charter, the Compensation Committee is responsible for assisting the Board in ensuring that long-term and short-term compensation provide performance incentives to management, and that compensation plans are appropriate and competitive and reflect the goals and performance of management and our Company. As discussed in more detail in this proxy statement under the heading “Compensation Discussion and Analysis,” the Compensation Committee considers Company-wide performance against applicable annual and long-term performance goalspre-established by the Compensation Committee, taking into account economic and business conditions, and comparative compensation and benefit performance levels. If the Compensation Committee deems it appropriate, it may delegate certain of its responsibilities to one or more Compensation Committee members or subcommittees.
Independence
The Board reviewed the background, experience and independence of the Compensation Committee members and, based on this review, the Board determined that each member of the Compensation Committee:
• meets the independence requirements of the NYSE’s corporate governance listing standards;
• is an “outside director” pursuant to the criteria established by the Internal Revenue Service; and
• is a“non-employee” director within the meaning of Rule16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). | |
20IFF | 20172018 PROXY STATEMENT21
CORPORATE GOVERNANCE
Role of Compensation Consultant.The Compensation Committee has the sole authority to retain compensation consultants or advisors to assist it in fulfilling its responsibilities, including evaluating CEO, | ||
| Role of Management.Our Compensation Committee relies on management for legal, tax, compliance, finance and human resource recommendations, and data and analysis for the design and administration of the compensation, benefits and perquisite programs for our | ||
| Our CEO, our Executive Vice President, Chief Human Resources Officer (“CHRO”) and our Executive Vice President, General Counsel and Corporate Secretary (“General Counsel”) generally attend Compensation Committee meetings. CEO performance and compensation are discussed by the Compensation Committee in executive session, with advice and participation from the Compensation Committee’s independent compensation consultant as requested by the Compensation Committee. Our CEO and CHRO, without the presence of any other members of senior management, actively participate in the compensation discussions of our | ||
| Compensation Committee Interlocks and Insider Participation.None of the members of the Compensation Committee was at any time during | ||
22IFF | 20172018 PROXY STATEMENT21
CORPORATE GOVERNANCE
Nominating and Governance Committee
| Current Members: | Responsibilities | |
Christina Gold (Chair) Linda Buck David R. Epstein Henry W. Howell, Jr. Dale F. Morrison
Meetings in | The Nominating and Governance Committee’s responsibilities include:
• developing and reviewing criteria for the selection of directors, and making recommendations to the Board with respect thereto;
• identifying qualified individuals to serve on the Board, reviewing the qualifications of director candidates and recommending to the Board the nominees to be proposed by the Board for election as directors at the annual meeting of shareholders;
• reviewing the suitability of directors for continued service, including in case of a resignation tendered by a director following a change in employment or anticipated board memberships, and making recommendations to the Board with respect to their continued service;
• reviewing director candidates recommended by shareholders for election;
• establishing and reviewing policies pertaining to roles, responsibilities, tenure and removal of directors;
• overseeing CEO succession
• developing and reviewing the Board and Board committee evaluation process;
• overseeing the annual CEO evaluation
• reviewing and recommending changes to our Corporate Governance Guidelines and monitoring corporate governance issues; and
• reviewing and, if appropriate, approving transactions with related parties.
Delegation.The Nominating and Governance Committee may, when it deems appropriate, delegate certain of its responsibilities to one or more Nominating and Governance Committee members or subcommittees.
Independence
The Board reviewed the background, experience and independence of the Nominating and Governance Committee members, and based on this review, the Board determined that each member of the Nominating and Governance Committee meets the independence requirements of the NYSE’s corporate governance listing standards. | |
22IFF | 20172018 PROXY STATEMENT23
CORPORATE GOVERNANCE
Board and Committee Assessment Process
Each year, the Nominating & Governance Committee leads an evaluation of the effectiveness of the Board and each of its Committees.committees. Each member of the Board and each member of the Board committees responds to an anonymous survey regarding the effectiveness of the Board, its committees and their leadership, and the dynamics between the Board and management. In 2016, theThe Board supplementedsupplements this process through the use ofin-person director interviews. Theinterviews every other year during which the Lead Director and the Chair of the Nominating & Governance Committee interviewedinterviews each director to obtain his or her assessment of director performance, Board dynamics and the effectiveness of the Board and its committees. After consulting with each other, the Lead Director and Chair of the Nominating & Governance Committee summarizedsummarize and reviewedreview the results with the Board and each Board committee.
Our Board recognizes that one of its most important duties is to ensure excellence and continuity in our senior leadership by overseeing the development of executive talent and planning for the effective succession of our Chairman and CEO and other senior members of executive management. As part of this process, our CEO and members of our Executive Committeeexecutive officers are required to prepare a detailed development and succession plan for themselves and for their direct reports on an annual basis. The Board engages in detailed discussions with the CEO and CHRO regarding these plans, with a focus on key positions at the senior officer level, as well as the talent pipeline for specific critical roles. The Company’s executives regularly attend Board meetings and maintain an ongoing dialogue with Board members, which is critical to the Company’s succession planning. The Compensation Committee reviews, on an annual basis, potential successors for the Company’s executive officers and such other senior management employees as the Compensation Committee may determine. In addition, the Nominating and Governance Committee also agrees upon and recommends to the Board a succession plan for our CEO, including in emergency situations. Our Board is committed to being prepared for a planned or unplanned change in our leadership in order to ensure our stability.
Board Role in Overseeing Risk
Our Board is actively involved in the oversight of risks that could affect our Company and is responsible for overseeing and reviewing with management the Company’s enterprise-wide risks and the policies and practices established to manage such risks. It is the responsibility of the CEO and other senior management to manage the Company’sday-to-day business risks and its risk management process. We believe this division of responsibility is the most effective approach for addressing risk management.
Management maintains an enterprise risk management (“ERM”) program which is designed to identify and assess our global risks and to develop steps to mitigate and manage risks. As part of its risk management practices, the Company has established a management risk committee made up of key members of the Company’s management to integrate global risk activities (including cybersecurity, compliance, business and crisis management) and to ensure appropriate prioritization of resources and alignment across the Company. The Board receives regular reports on the ERM process.process and the Company’s risk mitigation activities. The full Board and the Audit Committee focusfocuses on operational risk, financial risk, regulatory risk, litigation risk, cybersecurity and information security risk, tax risk, credit risk, and liquidity risk, as well as our general risk management strategy, and how these risks are being managed. The Audit Committee is primarily responsible for assisting the Board in its responsibility to oversee and review with management our enterprise-widefinancial risks and the policies and practices established to manage such risks, in particular as they relate to financial risk.and also oversees and reviews procedures for monitoring compliance with laws and regulations and our Code of Business Conduct and Ethics. The Compensation Committee is primarily responsible for overseeing the management of risks associated with compensation policies and practice, our compensation plans (including equity compensation plans and programs), severance, change in control and other employment-related matters. The Nominating and Governance Committee monitors the Company’s governance risk and CEO succession risk.
IFF | 2018 PROXY STATEMENT 23
CORPORATE GOVERNANCE
Compensation Risks
In the fourth quarter of 2016,2017, the Compensation Committee, working with its independent compensation consultant, conducted a risk assessment of our executive compensation programs. The goal of this assessment was to determine whether the general structure of our executive compensation policies and
24IFF | 2017 PROXY STATEMENT
CORPORATE GOVERNANCE
programs, annual and long-term performance goals or the administration of the programs posed any material risks to our Company. In addition, with the input of our CHRO, the Compensation Committee reviewed compensation programs and policies below the executive level in a Company-wide risk assessment. The Compensation Committee shared the results of this review with our full Board.
The Compensation Committee determined, based on the reviews of its independent compensation consultant and management’s input and other factors, that the compensation policies and practices for the Company’s employees in 2016,2017, including the established performance goals and incentive plan structures, did not result in excessive risk taking or the implementation of inappropriate business decisions or strategies by the Company’s senior executives or employees generally, and that there are no risks arising from our compensation policies and practices for our employees that are reasonably likely to have a material adverse effect on the Company.
Related Person Transactions and Other Information
Transactions with Related Persons
In 2016,2017, there were no transactions and there are no currently proposed transactions in excess of $120,000 in which the Company was or will be a participant and in which any director or executive officer of the Company, any known 5% or greater shareholder of the Company or any immediate family member of any of the foregoing persons, had or will have a direct or indirect material interest as defined in Item 404(a) of RegulationS-K.
Related Person Transactions Policy
In accordance with SEC rules, our Board has adopted a written policy for the review and the approval of related person transactions. This policy is available through the Investor-Corporate GovernanceInvestor-Leadership & Governance-Governance link on our website, www.iff.com. Under the policy, a “related person” is specifically defined as an executive officer, a director, a director nominee, a beneficial owner of more than 5% of any class of voting securities, an immediate family member of any of the foregoing, or a controlled entity, which is defined as an entity owned or controlled by any of the foregoing or in which any such person serves as an officer or partner, or together with all of the foregoing persons, owns 5% or more equity interests. The policy defines a “related person transaction” as a transaction or series of transactions involving a related person and the Company, excluding employment arrangements involving an executive officer or other senior officer or employee of the Company and director compensation arrangements. The policy requires that any such transaction be approved or ratified by the Nominating and Governance Committee. If accounting issues are involved in the transaction, the Nominating and Governance Committee will consult with the Audit Committee if deemed appropriate.
Pursuant to the policy, a related person transaction will be approved or ratified only if the Nominating and Governance Committee determines that it is being entered into in good faith and on fair and reasonable terms which are in the best interest of our Company and our shareholders. In determining whether to approve or ratify a transaction, the Nominating and Governance Committee considers the following factors, to the extent relevant:
24IFF | 2018 PROXY STATEMENT
CORPORATE GOVERNANCE
IFF | 2017 PROXY STATEMENT 25
CORPORATE GOVERNANCE
No related person may participate in the review of a transaction in which he or she may have an interest. In addition, except fornon-discretionary contributions made pursuant to our matching contributions program, a charitable contribution by our Company to an organization in which a related person is known to be an officer, director or trustee, is subject to approval by the Nominating and Governance Committee. In 2017, there were no related person transactions presented under the policy.
Other Information
On August 5, 2008, the SEC approved a settlement with Ernst & Young LLP and two of its partners, including Mr. Ferraro, relating to auditor independence issues arising out of business relationships between Ernst & Young LLP and an individual who was also a member of the board of directors of three of its audit clients. The matter arose out of actions taken by Mr. Ferraro in 2002 in his role as Vice Chairman of Ernst & Young LLP. Ernst & Young LLP and Mr. Ferraro resolved that matter by way of a negotiated settlement in which the respondents neither admitted nor denied the underlying allegations and accepted an administrative cease and desist order. The negotiated resolution did not involve any suspension, fines or other sanctions against Mr. Ferraro. Mr. Ferraro thereafter remained a partner in good standing at Ernst & Young LLP throughuntil he retired in January 2015. Our Board took into consideration all factors regarding Mr. Ferraro’s character and experience and believes that he is a significant asset to the Board.
We encourage our executives and directors to own our common stock so that they share the same long-term investment risk as our shareholders. Our Share Retention Policy provides executives and directors flexibility in personal financial planning, yet requires them to maintain ongoing and substantial investment in our common stock.
Under our Share Retention Policy, each executive and director must retain shares of Company common stock at a targeted ownership level. There is no deadline by which an executive or director must meet his or her targeted ownership level. The targeted ownership level for directors is five times the cash portion of the annual retainer (not including any retainer for service as a committee chairperson or lead director). The targeted ownership levels for executives are:
If an executive or director does not meet the targeted ownership level, the executive or director may not sell or transfer any shares held in an equity, a deferred compensation or a retirement plan account managedprovided by us,the Company, and the executive or director must retain such shares in such accounts until the targeted ownership level is met. For executives, until theif their retention requirement is not met, the executive must alsois required to retain a portion (50%, in the case of our named executive officers) of any shares of common stock acquired from the exerciseas a result of aexercising any stock settled appreciation right (“SSAR”) or as a result of the vesting of restricted stock or a restricted stock unit (“RSU”) (after payment of any exercise price and taxes).
IFF | 2018 PROXY STATEMENT 25
CORPORATE GOVERNANCE
As of March 8, 2017,7, 2018, all of our named executive officers and directors were in compliance with their individual retention requirements.our Share Retention Policy. Additional detail regarding ownership of our common stock by our executivesexecutive officers and directors is included in this proxy statement under the heading “Securities Ownership of Management, Directors and Certain Other Persons.”
26IFF | 2017 PROXY STATEMENT
CORPORATE GOVERNANCE
The Compensation Committee has adopted an equity grant policyEquity Grant Policy with respect to the issuance of equity awards under our equity plans. Under the equity grant policy,Equity Grant Policy, the Compensation Committee approves all equity awards to our executives exceptother than our CEO, and our Board approves all equity awards to our CEO and to ournon-employee directors, which are approved by our Board.directors. The grant date for annual awards to all employees and for annual awards to ournon-employee directors is the date of the Company’s annual meeting of shareholders. The grant date for awards under our Long-Term Incentive Plan (“LTIP”) is the date that the Compensation Committee (or Board in the case of our CEO) approves the applicable LTIP metrics. In addition to the annual grants, equity awards may be granted“off-cycle” at other times during the year to new hires, employees receiving promotions, director appointments and in other special circumstances. The grant price of equity awards (other than LTIP awards) is the closing price of our common stock on the NYSE on the date of the grant or, if the grant date is not a business day, the closing price on the NYSE on the following business day. The grant price for LTIP awards is the20-day trailing average price of our common stock on the NYSE as of the first trading day of the applicable LTIP performance cycle.
Policy Regarding Derivatives, Short Sales, Hedging and Pledges
Under our insider trading policy, directors and all employees, including our executive officers and named executive officers, are prohibited from entering into transactions designed to hedge against economic risks associated with an investment in our common stock. These individuals may not trade in derivatives in our securities (such as put and call options), effect “short sales” of our common stock, or enter into monetization transactions or similar arrangements (such as prepaid variable forwards, equity swaps, collars or exchange funds) relating to our securities. These individuals are also prohibited from holding shares of our common stock in margin accounts or pledging shares of our common stock as collateral for a loan.
26IFF | 20172018 PROXY STATEMENT27
Annual Director Cash and Equity Compensation
Under ournon-employee director compensation program, for the service year from the 20162017 Annual Meeting of Shareholders (the “2016“2017 Annual Meeting”) to the 20172018 Annual Meeting, eachnon-employee director received an annual retainer of $225,000,$235,000, of which $112,500 was paid in cash in November 2016 and $112,500$122,500 was paid in RSUs issued under our 2015 Stock Award and Incentive Plan (“2015 SAIP”) on the date of the 20162017 Annual Meeting. These RSUs vest one year from the grant date and are subject to accelerated vesting upon a change in control. The 938882 RSUs granted to each director on the date of the 20162017 Annual Meeting was calculated using the closing market price of our common stock on the grant date. Any director who is an employee of our Company does not receive any additional compensation for his or her service as a director.
Compensation for our Lead Director and Committee Chairs
For the service year from the 20162017 Annual Meeting to the 20172018 Annual Meeting, the Lead Director received an additional annual cash retainer of $20,000, the Chair of each of the Audit Committee andreceived an additional annual cash retainer of $17,500, the Chair of the Compensation Committee received an additional annual cash retainer of $15,000 and the Chair of the Nominating and Governance Committee received an additional annual cash retainer of $10,000.$12,500.
Participation in our Deferred Compensation Plan
Non-employee directors are eligible to participate in our Deferred Compensation Plan (“DCP”). Anon- employee director may defer all or a portion of his or her cash compensation as well as any RSUs granted to him or her, subject to tax law requirements. Additional details regarding our DCP may be found in this proxy statement under the heading “ExecutiveCompensation—Non-Qualified Deferred Compensation.”Non-employee directors are not entitled to matching contributions or the 25% premium on deferrals into our common stock fund that are applicable to employees under the DCP.
Additional Benefits
We reimburse ournon-employee directors for travel and lodging expenses incurred in connection with their attendance at Board and Committee meetings, our shareholder meetings and other Company-related activities. In addition, our current directors are eligible to participate in our Matching Gift Program. Under this program, we match, on a dollar for dollar basis, contributions made by directors to qualifying charitable organizations up to a maximum of $10,000 per person per year.
Changes for 2017
In November 2016, our Board approved changes to ournon-employee director compensation program for the service year beginning with the 2017 Annual Meeting. Beginning in 2017, the annual retainer paid to ournon-employee directors will be increased to $235,000, of which $112,500 will be paid in cash and $122,500 will be paid in RSUs. In addition, the annual retainer for each of the Chair of the Audit Committee and Chair of the Nominating and Governance Committee will be increased to $17,500 and $12,500, respectively.
Directors’ Compensation
28IFF | 20172018 PROXY STATEMENT27
Director’s Compensation
DIRECTORS’ COMPENSATION
The following table details the compensation paid to or earned by ournon-employee directors for the year ended December 31, 2016.2017.
20162017 Directors’ Compensation
| Name | Fees Earned or Paid in Cash($)(1) | Stock Awards ($)(2)(3)(4) | All Other Compensation ($)(5) | Total ($) | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||
Marcello V. Bottoli | 112,618 | 110,290 | 5,000 | 227,908 | 112,500 | 120,217 | 10,000 | 242,717 | ||||||||||||||||||||
Dr. Linda Buck | 112,500 | 110,290 | — | 222,790 | 112,500 | 120,217 | — | 232,717 | ||||||||||||||||||||
Michael L. Ducker | 112,500 | 110,290 | — | 222,790 | 112,500 | 120,217 | — | 232,717 | ||||||||||||||||||||
David R. Epstein | 112,500 | 147,367 | 5,000 | 264,867 | 112,500 | 120,217 | 10,000 | 242,717 | ||||||||||||||||||||
Roger W. Ferguson, Jr. | 127,500 | 110,290 | — | 237,790 | 127,500 | 120,217 | — | 247,717 | ||||||||||||||||||||
John F. Ferraro | 127,500 | 110,290 | 10,000 | 247,790 | 130,000 | 120,217 | 10,000 | 260,217 | ||||||||||||||||||||
Christina Gold | 112,618 | 110,290 | 10,000 | 232,908 | 129,178 | 120,217 | 10,000 | 259,395 | ||||||||||||||||||||
Henry W. Howell, Jr. | 122,500 | 110,290 | 10,000 | 242,790 | 112,500 | 120,217 | 10,000 | 242,717 | ||||||||||||||||||||
Katherine M. Hudson | 112,500 | 110,290 | 8,000 | 230,790 | 112,500 | 120,217 | 10,000 | 242,717 | ||||||||||||||||||||
Dale F. Morrison | 132,500 | 110,290 | 10,000 | 252,790 | 132,500 | 120,217 | 10,000 | 262,717 | ||||||||||||||||||||
Stephen Williamson (6) | 84,760 | 90,021 | — | 174,781 | ||||||||||||||||||||||||
| (1) | The amounts in this column include (i) the annual cash retainer for service as anon-employee director, (ii) for certain directors, the annual cash retainer for service as Lead Director or as chairperson of a Board committee during |
| (2) | The amounts in this column represent the aggregate grant date fair value of equity awards granted during the fiscal year ended December 31, |
| (3) | Each director received a grant on May |
| (4) | As of December 31, |
| Director | RSUs | Deferred Stock | RSUs | Deferred Stock | ||||||||||||
Marcello V. Bottoli | 938 | 15,469 | 882 | 16,727 | ||||||||||||
Dr. Linda Buck | 938 | 16,647 | 882 | 17,929 | ||||||||||||
Michael L. Ducker | 938 | 3,215 | 882 | 4,226 | ||||||||||||
David R. Epstein | 1,257 | 583 | 882 | 1,865 | ||||||||||||
Roger W. Ferguson, Jr. | 938 | 8,922 | 882 | 10,048 | ||||||||||||
John F. Ferraro | 938 | 961 | 882 | 1,927 | ||||||||||||
Christina Gold | 938 | 1,307 | 882 | 1,333 | ||||||||||||
Henry W. Howell, Jr. | 938 | 43,813 | 882 | 43,638 | ||||||||||||
Katherine M. Hudson | 938 | 17,287 | 882 | 18,581 | ||||||||||||
Dale F. Morrison | 938 | 12,526 | 882 | 14,624 | ||||||||||||
Stephen Williamson | 669 | 575 | ||||||||||||||
28IFF | 20172018 PROXY STATEMENT29
DIRECTORS’ COMPENSATION
The deferred shares, which are held under the DCP, result from deferral of vested equity grants, voluntary deferral of retainer fees or the
crediting of additional share units as a result of reinvestment of dividend equivalents. Deferred shares will be settled by delivery of common stock upon the director’s separation from service on the Board, or as otherwise elected by the director. All of the deferred shares are included for each director in the Beneficial Ownership Table.
| (5) | The amounts in this column are contributions made by us under our Matching Gift Program to eligible charitable organizations matching contributions of the director to those charitable organizations during |
| (6) | Mr. Williamson joined our Board in August 2017. |
30IFF | 20172018 PROXY STATEMENT29
Directors and Executive Officers
The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 8, 2017,7, 2018, by each current director, each director nominee, the persons named in the Summary Compensation Table in this proxy statement and all current directors and executive officers as a group. To our knowledge, except as otherwise indicated, beneficial ownership includes sole voting and dispositive power with respect to all shares.
Name and Address of Beneficial Owner (1)
| Shares of Common Stock Beneficially Owned (2)(3)
| Percent of Class**
| Shares of Common Stock Beneficially Owned (2)(3)
| Percent of Class**
| ||||||||
Marcello V. Bottoli | 18,652 | (4) | * | 19,854 | (4) | * | ||||||
Dr. Linda Buck | 17,585 | (5) | * | 18,811 | (5) | * | ||||||
Anne Chwat | 57,458 | (6) | * | 48,340 | (6) | * | ||||||
Alison A. Cornell | 6,270 | (7) | * | |||||||||
Michael L. Ducker | 4,153 | (8) | * | 5,108 | (7) | * | ||||||
David R. Epstein | 1,840 | (9) | * | 2,747 | (8) | * | ||||||
Roger W. Ferguson, Jr. | 9,860 | (10) | * | 10,930 | (9) | * | ||||||
John F. Ferraro | 1,899 | (11) | * | 2,809 | (10) | * | ||||||
Andreas Fibig | 53,771 | (12) | * | 79,576 | (11) | * | ||||||
Christina Gold | 4,342 | (13) | * | 5,250 | (12) | * | ||||||
Matthias Haeni | 23,356 | (14) | * | 23,008 | (13) | * | ||||||
Henry W. Howell, Jr. | 43,976 | (15) | * | 45,718 | (14) | * | ||||||
Katherine M. Hudson | 20,725 | (16) | * | 21,963 | (15) | * | ||||||
Nicolas Mirzayantz | 59,102 | (17) | * | 49,027 | (16) | * | ||||||
Dale F. Morrison | 13,464 | (18) | * | 15,506 | (17) | * | ||||||
Richard O’ Leary | 20,557 | (19) | * | 21,263 | (18) | * | ||||||
All Directors and Executive Officers as a Group (18 persons) | 382,468 | (20) | * | |||||||||
Stephen Williamson | 575 | (19) | * | |||||||||
All Directors and Executive Officers as a Group (19 persons) | 392,783 | (20) | * | |||||||||
| * | Less than 1%. |
| ** | Based on |
| (1) | Except as otherwise indicated, the address of each person named in the table is c/o International Flavors & Fragrances Inc., 521 West 57th Street, New York, New York 10019. |
| (2) | This column includes (i) shares held by our executive officers in our 401(k) Retirement Investment Fund Plan and (ii) shares of Purchased Restricted Stock (“PRS”) held by our executive officers. Shares of PRS are subject to vesting and may be forfeited if the |
| (3) | In determining the number and percentage of shares beneficially owned by each person, shares that may be acquired by such person within 60 days after March |
| (4) | Includes (i) 1,100 shares held indirectly by a trust for which Mr. Bottoli is the settlor/grantor and Mr. Bottoli and two immediate family members are the beneficiaries, (ii) |
30IFF | 20172018 PROXY STATEMENT31
Securities Ownership
SECURITIES OWNERSHIP
| (5) | Represents (i) |
| (6) | Includes (i) |
| (7) |
| Represents (i) |
| (8) | Represents (i) 1,865 stock equivalent units held in the IFF Stock Fund under our DCP and (ii) 882 shares pursuant to RSUs that will vest within 60 days after March 7, 2018 which Mr. Epstein has elected to defer to our DCP. |
| (9) | Represents (i) |
| (10) | Represents (i) |
| (11) | Includes (i) 22,528 stock equivalent units held in the IFF Stock Fund under our DCP, (ii) 7,620 shares issuable pursuant to RSUs that vest within 60 days after March |
| (13) | Includes 3,006 shares earned under the completed |
| Includes (i) |
| (15) | Includes (i) |
| (16) | Includes (i) |
| (17) | Includes (i) |
| (18) | Includes (i) |
| (19) | Includes |
| (20) | Includes an aggregate of (i) |
32IFF | 20172018 PROXY STATEMENT31
SECURITIES OWNERSHIP
The following table sets forth information regarding each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, as of March 8, 2017 unless otherwise indicated,7, 2018, based on a review of filings with the SEC. Unless otherwise indicated, beneficial ownership is direct.
Name and Address of Beneficial Owner
| Number of Shares and Nature of Beneficial Ownership
| Percent of Class*
| Number of Shares and Nature of Beneficial Ownership
| Percent of Class*
| ||||||||||||
Winder Investment Pte Ltd #03-00 8 Robinson Road, ASO Building Singapore 048544
| 8,345,653 | (1) | 10.6% | 10,420,193 | (1) | 13.2 | % | |||||||||
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355
| 7,943,024 | (2) | 10.1% | 8,968,346 | (2) | 11.4 | % | |||||||||
Capital Research Global Investors 333 South Hope Street Los Angeles, CA 90071
| 5,988,445 | (3) | 7.6% | |||||||||||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055
| 4,850,104 | (4) | 6.1% | 5,289,706 | (3) | 6.7 | % | |||||||||
| * | Based on |
| (1) | This amount is based solely on Amendment No. |
| (2) | This amount is based solely on Amendment No. |
| (3) | This amount is based solely on Amendment No. |
32IFF | 20172018 PROXY STATEMENT33
Selection of our Independent Registered Public Accounting Firm
The Audit Committee of our Board is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. To execute this responsibility, the Audit Committee engages in a comprehensive annual evaluation of the independent registered public accounting firm’s qualifications, performance and independence to determine whether the independent registered public accounting firm should be rotated, and considers the advisability and potential impact of selecting a different independent registered public accounting firm.
The Audit Committee has selected PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for 2017,2018, and our Board has directed that our management submit that selection for ratification by our shareholders at the 20172018 Annual Meeting. PwC has been retained as our external auditor continuously since 1957. In connection with the selection of PwC, the Audit Committee annually reviews and negotiates the terms of the engagement letter entered into with PwC. This letter sets forth important terms regarding the scope of the engagement, associated fees, payment terms, responsibilities of each party and the election of the parties to be subject to binding arbitration in the case of any dispute.
In accordance with SEC rules and PwC policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide audit service to our Company. For lead and quality review audit partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of our lead audit partner pursuant to this rotation policy involves a meeting between the Chair of the Audit Committee and the candidate for the role, as well as discussion by the full Audit Committee and management.
The Audit Committee and the Board believe that the continued retention of PwC as our independent registered public accounting firm is in the best interest of the Company and our shareholders, and we are asking our shareholders to ratify the selection of PwC as our independent registered public accounting firm for 2017.2018. Although ratification is not required by ourBy-Laws or otherwise, we are submitting the selection of PwC to our shareholders for ratification because we value our shareholders’ views on our Company’s independent registered public accounting firm and as a matter of good corporate governance. The Audit Committee will consider the outcome of our shareholders’ vote in connection with the Audit Committee’s selection of our independent registered public accounting firm in the next fiscal year, but is not bound by the shareholders’ vote. Even if the selection is ratified, the Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time if it determines that a change would be in the best interests of our Company and our shareholders.
Representatives of PwC are expected to attend the 20172018 Annual Meeting, where they will be available to respond to questions and, if they desire, to make a statement.
IFF | 2018 PROXY STATEMENT 33
Proposal 2 —– Ratification of Independent Registered Public Accounting Firm
34IFF | 2017 PROXY STATEMENT
PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Principal Accountant Fees and Services
The following table provides detail about fees for professional services rendered by PwC for the years ended December 31, 20162017 and December 31, 2015.2016.
2016
| 2015
|
2017
|
2016
| |||||||||||||
Audit Fees (1)
| $
| 5,269,019
|
| $
| 4,674,019
|
| $
| 6,501,799
|
| $
| 5,269,019
|
| ||||
Audit-Related Fees (2)
| $
| 133,035
|
| $
| 60,006
|
|
$
|
69,140
|
|
$
|
133,035
|
| ||||
Tax Fees (3)
| ||||||||||||||||
Tax Compliance
| $
| 12,000
|
| $
| 554,447
|
| $
| —
|
|
$
|
12,000
|
| ||||
Other Tax Services
| $
| 500,000
|
| $
| 90,786
|
|
$
|
391,107
|
|
$
|
500,000
|
| ||||
All Other Fees (4)
| $
| 11,781
|
| $
| 67,849
|
|
$
|
9,015
|
|
$
|
11,781
|
| ||||
Total
| $
| 5,925,835
|
| $
| 5,447,107
|
|
$
|
6,971,061
|
|
$
|
5,925,835
|
| ||||
| (1) | Audit Fees were for professional services rendered for audits of our consolidated financial statements and statutory and subsidiary audits, consents and review of reports filed with the SEC and consultations concerning financial accounting and reporting standards. Audit Fees also included the fees associated with an annual audit of our internal control over financial reporting, as required by Section 404 of the |
| (2) | Audit-Related Fees were for services related to review of certain governance, risk and compliance procedures and other local statutory requirements. |
| (3) | Tax Compliance services consisted of fees related to the preparation of tax returns, assistance with tax audits and appeals, indirect taxes, expatriate tax compliance services and transfer pricing services. Other Tax Services consisted of tax planning and tax advisory services. |
| (4) | All Other Fees were for software licenses and other professional services. |
Pre-Approval Policies and Procedures for Audit and PermittedNon-Audit Services
Consistent with requirements of the SEC and the Public Company Accounting Oversight Board (PCAOB) regarding auditor independence, the Audit Committee has responsibility for:
In recognition of this responsibility, the Audit Committee has established policies and procedures topre-approve all audit andnon-audit services to be provided by the independent registered public accounting firm to our Company by category, including audit-related services, tax services and other permittednon-audit services. Under the policy, the Audit Committeepre-approves all services obtained from our independent registered public accounting firm by category of service, including a review of specific services to be performed, fees expected to be incurred within each category of service and the potential impact of such services on auditor independence. The term of anypre-approval is for the financial year, unless the Audit Committee specifically provides for a different period in thepre-approval.
34IFF | 2018 PROXY STATEMENT
PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
If it becomes necessary to engage the independent registered public accounting firm for additional
IFF | 2017 PROXY STATEMENT 35
PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
services not contemplated in the originalpre-approval, the Audit Committee requires separatepre-approval before engaging the independent registered public accounting firm. To facilitate the process, the policy delegatespre-approval authority to the Audit Committee chairperson topre-approve services up to $20,000, and the Audit Committee may also delegate authority to one or more of its members topre-approve services. The Audit Committee member to whom such authority is delegated must report, for informational purposes, anypre-approval decisions to the Audit Committee at its next scheduled meeting.
All services rendered by PwC to our Company are permissible under applicable laws and regulations. During 2016,2017, all services performed by PwC which were subject to the SEC’spre-approval requirements were approved by the Audit Committee in accordance with the Audit Committee’spre-approval policy in effect during 2016.2017.
The Audit Committee (“we,” “us” or the “Committee”) operates in accordance with a written charter, which was adopted by the Board. A copy of that charter is available through the Investor—Leadership & Governance—Governance link on the Company’s website at www.iff.com. The Committee comprisesis composed of five directors whom the Board has determined are “independent,” as required by the applicable listing standards of the NYSE and the rules of the SEC, and whom qualify as “audit committee financial experts” as defined by the rules of the SEC.
Management has the primary responsibility for the financial statements and the reporting process, including internal control over financial reporting and disclosure controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), is responsible for performing an integrated audit of the Company’s financial statements and internal control over financial reporting in accordance with the auditing standards of the Public Company Accounting Oversight Board (“PCAOB”).
The Committee oversees the Company’s financial reporting process and internal control structure on behalf of the Board. We met eightseven times during 2016,2017, including meeting regularly with PwC and the Company’s internal auditor, both privately and with management present. For 2016,2017, we have reviewed and discussed the Company’s audited financial statements with management. We have reviewed and discussed with management its process for preparing its report on its assessment of the Company’s internal control over financial reporting, and at regular intervals we received updates on the status of this process and actions taken by management to respond to issues and deficiencies identified. We discussed with PwC its audit of the financial statements and of the Company’s internal control over financial reporting. We discussed with PwC and the Company’s internal auditorsauditor the overall scope and plans for their respective audits.
We have discussed with PwC the matters required to be discussed by PCAOB Auditing Standard No. 1301, Communications with Audit Committees. We also received the written disclosures and the letter from PwC as required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and discussed with PwC its independence. We concluded that PwC’s independence was not adversely affected by thenon-audit services provided by PwC, the majority of which consisted of audit-related and tax compliance services.
Based on the reviews and discussions referred to above, we recommended to the Board (and the Board subsequently approved our recommendation) that the audited financial statements be included in the Annual Report on Form10-K for the fiscal year ended December 31, 2016 for filing2017 filed with the SEC.SEC on February 27, 2018.
36IFF | 20172018 PROXY STATEMENT35
PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
In determining whether to retain PwC as the Company’s independent registered public accounting firm for the 20172018 fiscal year, we took into consideration a number of factors, including:
Based on this evaluation, we believe that it is in the best interests of the Company and its shareholders to retain PwC as the Company’s independent registered public accounting firm for 2017,2018, which the shareholders will be asked to ratify at the 20172018 Annual Meeting of Shareholders.
Audit Committee
John F. Ferraro (Chair)
Marcello V. Bottoli
David R. Epstein
Henry W. Howell, Jr.
Dale F. Morrison
Stephen Williamson
Ö
YOUR BOARD RECOMMENDS A VOTE “FOR” RATIFICATION OF PWC AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
|
36IFF | 20172018 PROXY STATEMENT37
This Compensation Discussion and Analysis, or CD&A, describes and analyzes our executive compensation philosophy and program in the context of the compensation paid during the last fiscal year to our chief executive officer, our chief financial officer and each of our three most highly compensated executive officers during 2016, and our former chief financial officer2017 (collectively referred to as our NEOs). This CD&A is organized as follows:
Section | Page | |
Section | Page | |
| 55 | ||
| Compensation Setting Process | ||
| Peer Group and Benchmarking | ||
| Clawback Policy | ||
| Tax Deductibility | ||
| Non-GAAP Reconciliation |
As discussed in Proposal 3, we are conducting our annual Say on Pay vote that requests your approval of the compensation of our NEOs as described in this section and in the tables and accompanying narrative contained below under “Executive Compensation.” To assist you with this vote, please review our compensation philosophies, the design of our executive compensation programs and how, we believe, these programs have contributed to and are aligned with our performance.
Named Executive Officers
For 20162017 our NEOs were:
| Name | Title | |
Andreas Fibig | Chairman and CEO | |
Richard O’Leary | CFO | |
Nicolas Mirzayantz | Group President, Fragrances | |
Matthias Haeni | Group President, Flavors | |
Anne Chwat | General Counsel | |
|
Executive Officer Transition
In October 2016, Ms. Cornell, our former CFO, left us to pursue other opportunities and Mr. O’Leary was appointed EVP and CFO. Prior to his appointment, Mr. O’Leary served as our SVP, Controller and Chief Accounting Officer from July 2015 to October 2016. Ms. Cornell served as our CFO from July 2015 to October 2016. In connection with Mr. O’Leary’s appointment as EVP and CFO, the Compensation Committee (the “Committee”) approved a new compensation package for Mr. O’Leary, which is discussed below under “Employment Agreements or Arrangements”. In connection with her separation, Ms. Cornell entered into a separation agreement with us. For more information regarding Ms. Cornell’s separation agreement please see the section entitled Payments and Benefits Upon a Change in Control and Various Types of Terminations.
IFF | 2018 PROXY STATEMENT 37
Compensation Discussion and Analysis
38IFF | 2017 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
The core of our executive compensation philosophy is that our executives’ compensation should be linked to achievement of financial and operating performance metrics that build shareholder value over both the short- and long-term. As such, we consistently focus on the following key drivers of shareholder value maximization:
We designed our compensation program to focus on elements that we believe will contribute to these shareholder value drivers. Our compensation program:
38IFF | 20172018 PROXY STATEMENT39
Financial Results Acquisitions Dividends Share Repurchase Increase Shareholder Value Is Variable and Tied to Value Creating Performance Metrics Includes a Significant Equity Component Shareholder Value Reflects Each Executive’s Level of Responsibility Rewards Individual Performance and Contributions
COMPENSATION DISCUSSION AND ANALYSIS
The design of our executive compensation program reflects our belief that our executive compensation should be (1) aligned with the achievement of financial and operational metrics for both our company and the respective business function in which the executive serves and (2) tied to the total shareholder return delivered to our shareholders. The following illustrates how our 20162017 executive compensation program met these design objectives:objectives by tying a significant portion of our executives’ compensation to variable and long-term goals:
Our 20162017 NEO Compensation Reflects Our Overall 20162017 Performance
During 2016,2017, we achieved currency neutral growth in all of our financial results were affected by mix and manufacturing performance as well as increases in research, selling and administrative costs, including planned strategic investments.key metrics. For the year, on a currency neutral basis, we achieved 5%9% sales growth, 4%5% adjusted operating profit growth, and 6%9% adjusted earnings per share growth. In addition, we delivered a three-year Total Shareholder Return at approximately the 66th70th percentile relative to the S&P 500. As a result of our financial and operational results, (1) our AIPAnnual Incentive Plan (“AIP”) achievement levels were approximately 73%110% for those executive officers evaluated at the corporate level, 62%92% for our Group President, Fragrances and 80%123% for our Group President, Flavors and (2) our 2014-20162015-2017 LTIP payout was approximately 107.6%123% of target.
40IFF | 20172018 PROXY STATEMENT39
CEO Target Opportunity Mix Fixed vs. Variable Variable Short–Term v. Long-Term Long Term Cash v. Equity NEO Average (excluding CEO) Target Opportunity Mix Fixed vs. Variable Variable Short-Term v. Long-Term Long-Term Cash v. Equity
COMPENSATION DISCUSSION AND ANALYSIS
OurIn 2017, we refreshed our Vision 2020 strategy, which was adopted in 2015, focuses on four pillars to builddrive differentiation, accelerate profitable growth, and increase shareholder value.
Vision 2020 Refreshed Strategy
Innovating Firsts
| Win Where We Compete | Become Our Customers’ Partner of Choice | Strengthen and Expand the Portfolio | |||||||||
Ø Drive differentiation by leveraging existing expertise in key technologies and exploring prioritized innovation opportunity areas
Ø Develop responsible products to meet the future needs of our customers and consumers | ØLead in key markets
Ø ØStrengthen our position with multinational customers
Ø | Ø Actively support our customers’ success
Ø Achieve commercial excellence and service leadership Ø Become a marketing powerhouse | Ø
Ø Stretch into adjacencies by leveraging current acquisitions, while exploring new opportunities
Ø Pursue partnerships and collaborations to drive new offerings and solutions |
During 2016,2017, we made significant progress on our Vision 2020 strategic objectives including:
| • | Launching TastepointSM to serve our dynamicmid-tier flavor customers; |
40IFF | 2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
During 2016, we continued to make strategic and financial progress, despite a challenging global environment. Both the Flavors and Fragrances business units successfully delivered solid top and bottom-line growth. During 2016,2017, we paid $184.9$206 million in dividends to our shareholders, increased our quarterly dividend by 15%8% to $0.64$0.69 per share in August 20162017, and repurchased approximately 1.1 million459,000 shares of common stock for $127$58 million. The total payout ratio (total cash returned to shareholders in dividend payments and share repurchases compared to adjusted net income) was 71%56% of adjusted net income, exceedingconsistent with our target range of 50% to 60%.
IFF | 2017 PROXY STATEMENT 41
COMPENSATION DISCUSSION AND ANALYSIS
To ensure continued alignment of compensation with Company performance and the creation of shareholder value on a long term,long-term, sustainable basis, we maintain strong compensation-related corporate governance policies.
What We Do |
What We Don’t Do | |||||||
|
Pay for performance.A significant portion of the compensation for our NEOs is in the form ofat-risk variable compensation
|
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No taxgross-upsfor | |||||
| Base variable compensation onmultiple performance metrics to encourage balanced
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| No single-trigger vesting of cash or equity-based awards upon change in control | |||||
| Provideappropriate mix of fixed and variable compensation to reward company, business unit and individual performance
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| No short-sales, hedging or pledging of our stock by our employees, officers or directors | |||||
| Award a majority of variable compensationas equity-based awards
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| No fixed-duration employment agreementswith executive officers
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| No stock option/SAR repricing or exchangeof underwater options or SARs for cash | |||||
| Require our executives tomeet share retention guidelines
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| Engage anindependent compensation consultant
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| Engage in anannual risk assessment of our compensation programs
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42IFF | 20172018 PROXY STATEMENT41
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Elements and Targeted Mix
Our executive compensation program includes direct and indirect compensation elements.
We believe that direct compensation should be the principal form of compensation. The table below provides a brief description of the principal elements of direct compensation, whether such compensation is fixed or variable, and the compensation program objectives served by each element. From time to time, the Committee may also approve discretionary awards to executives in connection with their initial employment or for extraordinary individual performance, a significant contribution to the Company’s strategic objectives or retention purposes. In connection with his promotion to CFO, the Committee approved aone-time special retention RSU award to Mr. O’Leary equal in value to $1,000,000, which vests four years from the date of grant.
| Element | Fixed or Variable | Primary Objective | ||
Base Salary | Fixed Short-Term Cash | • To attract and retain executives by offering salary that is competitive with market opportunities and that recognizes each executive’s position, role, responsibility, experience and
| ||
AIP award | Variable Short-Term Cash | • To motivate and reward the achievement of our annual financial performance objectives, including currency neutral sales growth, operating profit, gross margin and working
| ||
LTIP award | Variable Long-Term Equity and Cash | • To motivate and reward efficient capital allocation and annual profitability performance, measured by annual economic profit, and long-term shareholder value creation, measured by the cumulative relative TSR performance over rolling three-year periods.
• To align executives’ interests with those of shareholders by paying 50% of the earned award in shares of our common stock (with the remaining 50% settled in cash) and including relative TSR as a key measure of long-term performance.
| ||
Program (“ECP”) award | Variable Long-Term Equity | • To align executives’ interests with the interests of shareholders through equity-based compensation.
• To encourage direct investment in our Company.
• To serve as an important retention tool.
• To recognize individual contributions.
| ||
The Committee periodically reviews the mix between variable and fixed and short-term and long-term incentive compensation opportunities and between cash and equitynon-cash opportunities based on (1) benchmarking and other external data provided by our independent compensation consultant, (2) recommendations from our independent compensation consultant and (3) recommendations from our CEO and CHRO.
Our indirect compensation elements consist of (1) our Deferred Compensation Program and 401(k) savings plan, (2) a perquisite program, (3) severance and other benefits under our Executive Severance Policy, (4) benefits under an Executive Death Benefit Plan and (5) long-term disability coverage. The Committee regularly reviews the costs and benefits of these programs.
42IFF | 20172018 PROXY STATEMENT43
COMPENSATION DISCUSSION AND ANALYSIS
The Committee reviews the salaries of our NEOs annually, and adjusts salaries periodically. In February 2016,2017, the Committee reviewed the base salaries of its NEOs after consultation with its independent compensation consultant. The base salaries of Messrs. Fibig, Mirzayantz and O’Leary and Ms. Chwat remained unchanged for 2017. Mr. Fibig’sHaeni’s base salary was increased by 8.3% pursuant4.8%, effective April 1, 2017, to the terms ofreward demonstrated performance in his offer letter. Mr. Haeni’srole and Ms. Chwat’s base salaries were increased by 5% and 2.2%, respectively, following a review of externalto reflect market data and based upon the recommendations of the CEO. The base salaries of Mr. Mirzayantz and Ms. Cornell remained unchanged. Mr. O’Leary, who was appointed EVP and CFO in October 2016, received a salary increase from $400,000 to $500,000 in connection with his promotion.adjustments.
During 2016,2017, our AIP continued to compensatecompensated our executive officers based on the achievement of certain levels of (1) Company financial performance and (2) individual performance, in each case againstpre-defined, challenging performance targets.performance. Financial performance metrics are measured (A) at the consolidated corporate level for our CEO, CFO, former CFO, and General Counsel and (B) at both the consolidated corporate level and the business unit level for the Group Presidents of Fragrances and Flavors. Individual performance is measured in
In February 2017, the key areas of leadership, succession planning and people development as we believe thatCommittee approved certain changes to the strength of our employees will be key to our ability to build differentiation and accelerate growth.
AIP for 2017. The 20162017 weightings for our NEOsperformance at both the consolidated corporate level and the business unit level remained unchanged and continuedwere adjusted to assign greater weight tobalance the weightings of currency neutral sales growth and operating profit than gross margin and working capital becauseto eliminate the individual performance metric for our executive officers. The Committee believes that these two performance metrics are the most relevant measures ofchanges better reflect our focus on overall annual Company performanceprofitability and are keyreduce complexity in the AIP for executive officers. In addition, if our company does not meet the corporate operating profit threshold, then no AIP payouts will be awarded to driving sustained long-term growth.any participant, including the NEOs.
The performance metrics for the 20162017 AIP and their assigned weightings were as follows:
Annual Incentive Program
Currency neutral sales growth | Operating profit | Gross Margin | Working Capital | Individual Performance Metric | Total Weighting | |||||||||||||||||||||||||||||||||
All NEOs Except Group Presidents Corporate Weighting | | 40% | 25% | 15% | 10% | 10% | 100% | |||||||||||||||||||||||||||||||
Currency neutral sales growth | Operating profit | Gross Margin | Working Capital | Individual Performance Metric | Total Weighting | |||||||||||||||||||||||||||||||||
Group Presidents Corporate Weighting | | 20% | 12.5% | 0% | 10% | 0% | 100% | |||||||||||||||||||||||||||||||
Group Presidents Business Unit Weighting | | 20% | 12.5% | 15% | 0% | 10% | ||||||||||||||||||||||||||||||||
Currency neutral sales growth | Operating profit | Gross Margin | Working Capital | Total Weighting | ||||||||||||||||||||||||
All NEOs Except Group Presidents Corporate Weighting | | 35% | 35% | 15% | 15% | 100% | ||||||||||||||||||||||
Currency neutral sales growth | Operating profit | Gross Margin | Working Capital | Total Weighting | ||||||||||||||||||||||||
Group Presidents Corporate Weighting | | 10% | 15% | 0% | 15% | 100% | ||||||||||||||||||||||
Group Presidents Business Unit Weighting | | 25% | 20% | 15% | 0% | |||||||||||||||||||||||
44IFF | 20172018 PROXY STATEMENT43
COMPENSATION DISCUSSION AND ANALYSIS
Each year the Committee sets an AIP target (stated as a percentage of base salary) for each NEO. For 2016,2017, the Committee maintained the AIP percentage targets at the same level as 2015.2016.
| 2016 Salary | Target AIP as % Base Salary | AIP Target | ||||||||
Andreas Fibig | $ | 1,300,000 | 120% | $ | 1,560,000 | |||||
Richard O’Leary (1) | $ | 422,131 | 58% | $ | 244,262 | |||||
Nicolas Mirzayantz | $ | 600,000 | 80% | $ | 480,000 | |||||
Matthias Haeni | $ | 525,000 | 80% | $ | 420,000 | |||||
Anne Chwat | $ | 475,000 | 60% | $ | 285,000 | |||||
Alison A. Cornell | $ | 560,000 | 80% | $ | 448,000 | |||||
| 2017 Salary | Target AIP as % Base Salary | AIP Target | ||||||||
Andreas Fibig | $ | 1,300,000 | 120% | $ | 1,560,000 | |||||
Richard O’Leary | $ | 500,000 | 80% | $ | 400,000 | |||||
Nicolas Mirzayantz | $ | 600,000 | 80% | $ | 480,000 | |||||
Matthias Haeni | $ | 550,000 | 80% | $ | 440,000 | |||||
Anne Chwat | $ | 475,000 | 60% | $ | 285,000 | |||||
Performance Metrics and Capped AIP Payouts: Based on a review of the annual and long-term financial goals, operational plans, strategic initiatives and the prior year’s actual results, the Committee annually sets the financial performance metrics for our Company and the respective business units that it will use to measure performance as well as the relative weighting that will be assigned to each metric. The Committee then approves threshold, target and maximum performance levels for each performance metric. Upon achievement of the relative performance level, an executive has the opportunity to earn threshold (25%), target (100%) and maximum (200%) amounts. The Committee seeks to establish corporate performance goals that are challenging yet attainable.
As discussed above, for 20162017 AIP awards, the Committee approved the following four financial performance metrics and the individual performance objectives for the reasons noted below:
| Reasons for Selection | ||||
Currency neutral sales growth | • Reflects both increases in market share and sales expansion, which drives increases in gross profit. By measuring achievement exclusive of currency fluctuations, this goal helps to ensure that we are rewarding actual incremental growth. | |||
| Operating profit | • An increase in operating profit (in dollar terms) encourages the management of gross profit dollars against operating expenses. Achieving this goal helps provide us with the funding to reinvest in the business to drive future growth. | |||
| Gross margin percentage | • Improvement in gross margin percentage is an important measure
• Gross margin also promotes greater focus on R&D and innovation. | |||
| Working capital percentage | • Reductions in working capital drive better operating cash flow generation. For this purpose, we define working capital as inventories and trade accounts receivable less trade accounts | |||
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sales. | ||
IFF | 2017 PROXY STATEMENT 45
COMPENSATION DISCUSSION AND ANALYSIS
Determination of 20162017 Performance Levels: In determining our 20162017 AIP performance threshold, target and maximum levels, the Committee considered our annual targets for 2016,2017, our 20152016 actual results and payout trends over the prior three-year and five-year periods. The performance target levels for the financial metrics were set in line with our 20162017 budget and above our 20152016 actual results.
44IFF | 2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
20162017 Corporate and Business Unit AIP Performance: Our actual performance against our 20162017 AIP corporate financial metrics is set forth in the tables below. In establishing AIP financial performance metrics and in determining actual achievement against performance metrics, we eliminated the net impact of certainnon-core expenses andnon-core gains in order to reflect our fundamental operating results. 20162017 LTIP and AIP target performance levels and actual achievement against the target performance levels excluded costs or income associated with (i) adjustments related to operational improvement initiative costs and restructuring charges, and reversal of certain severance accruals, (ii) tax adjustments related to imputed interest income received on amounts previously deposited for loss provision, (iii) acquisition related items, (iv)including integration costs, (iii) an increase in the loss provision related to the ZoomEssence litigation, and(iv) certain foreign currency gains related to the liquidation of a foreign entity, (v) costs associated with an FDA mandated recall, (vi) a charge related to NYC commercial rent tax related to prior years, (vii) with respect to the operating profit metric of the 20162017 AIP only, unbudgetedmark-to-market adjustments related to our Deferred Compensation Plan, (viii) charges for settlement losses related to a U.K. pension plan, (ix) for purposes of calculating economic profit under the LTIP, charges associated with recently-enacted U.S. tax legislation, and (x) costs incurred due to an interruption in supply chain for a key ingredient (together, the “2016“2017non-core items”). Similarly, we excluded the effects of incentive compensation provisions in calculating gross margin performance in order to better focus on the underlying operating performance of our product portfolio. The Committee believes that the necessary self-funding of incentive compensation payments is covered in the operating profit component of the AIP program.
Corporate Performance
The table below reflects the 20162017 AIP metrics, their respective targets and the payouts earned for each metric and overall by each of Messrs. Fibig and O’Leary and Mmes.Ms. Chwat, and Cornell, who were all evaluated solely on corporate performance.
Corporate Level
As indicated above, during 2016,2017, our corporate performance was between target and maximum for the currency neutral sales growth and operating profit performance metrics and was between threshold and target for each financialthe gross margin and working capital performance metric.metrics. The actual dollar amount earned by each NEO is set forth below under “2016“2017 Individual AIP Payouts.” With respect to the individual objectives component, the Committee reviewed each NEO’s performance in 2016 against his or her leadership and execution of strategic and organizational individual objectives established by the Committee. The Committee determined that each NEO had met his or her individual objectives for 2016.
46IFF | 20172018 PROXY STATEMENT45
Threshold Target Maximum Award Payout as a % of Target 5.4% 8.1% 10.8% Currency Neutral 45.4% Sales Growth Actual 8.9% $614M $646M $678M Operating Profit 47.7% Actual $657M 44.7% 46.2% 47.7% Gross Margin 9.0% Actual 44.8% 29.5% 28.0% 26.5% Working Capital 7.5% Actual 29.0% Overall Corporate Payout 109.6%
COMPENSATION DISCUSSION AND ANALYSIS
Fragrances Business Unit Performance
The table below reflects the 20162017 AIP metrics, their respective targets and the payouts earned for each metric and overall by Mr. Mirzayantz, our Group President, Fragrances.
Fragrances Business Unit
As indicated above, during 2016,2017, our Fragrances business unit performance was between target and maximum for the currency neutral sales growth business unit performance metric and was between threshold and target for each financialthe operating profit and gross margin business unit performance metric.metrics. The actual dollar amount earned by our Group President, Fragrances is set forth below under “2016“2017 Individual AIP Payouts.”
46IFF | 20172018 PROXY STATEMENT47
Threshold Target Maximum Award Payout as a % of Target 5.4% 8.1% 10.8% Currency Neutral Sales 30.6% Growth (Business Unit) Actual 8.7% 5.4% 8.1% 10.8% Currency Neutral Sales 13.0% Growth (Corporate) Actual 8.9% $327M $343M $368M Operating Profit 13.8% (Business Unit) Actual $336M $614M $646M $678M Operating Profit 20.5% (Corporate) Actual $657M 44.3% 45.8% 47.3% Gross Margin 6.3% (Business Unit) Actual 44.7% 29.5% 28.0% 26.5% Working Capital 7.5% (Corporate) Actual 29.0% Overall Payout for Group President, Fragrances 91.7%
COMPENSATION DISCUSSION AND ANALYSIS
Flavors Business Unit Performance
The table below reflects the 20162017 AIP metrics, their respective targets and the payouts earned for each metric and overall by Mr. Haeni, our Group President, Flavors.
Flavors Business Unit
During 2016,2017, our Flavors business unit performance was between target and maximum for the business unit component ofcurrency neutral sales growth, at maximum for operating profit and working capitalbusiness unit performance metrics and was between threshold and target for the currency neutral sales growth, the corporate component of operating profit and gross margin business unit performance metrics.metric. The actual dollar amount earned by our Group President, Flavors is set forth below under “2016“2017 Individual AIP Payouts.”
20162017 Individual AIP Payouts
The AIP payout for 20162017 for the NEOs, based on the actual achievement of each of the performance metrics, is included in the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table in this proxy statement. Based on the Corporate and Business Unit performance outlined in the tables above, 20162017 AIP payouts were as follows:
| 2016 AIP Target ($) | 2016 Payout | 2017 AIP Target ($) | 2017 Payout | |||||||||||||||||||||
Executive | As % of Target | Award ($) | As % of Target | Award ($) | ||||||||||||||||||||
Andreas Fibig | $ | 1,560,000 | 73% | $ | 1,134,120 | $ | 1,560,000 | 109.6% | $ | 1,709,760 | ||||||||||||||
Richard O’Leary | $ | 244,262 | 73% | $ | 177,579 | $ | 400,000 | 109.6% | $ | 438,400 | ||||||||||||||
Nicolas Mirzayantz | $ | 480,000 | 62% | $ | 297,600 | $ | 480,000 | 91.7% | $ | 440,160 | ||||||||||||||
Matthias Haeni | $ | 420,000 | 80% | $ | 336,840 | $ | 440,000 | 123.0% | $ | 553,753 | (1) | |||||||||||||
Anne Chwat | $ | 285,000 | 73% | $ | 207,195 | $ | 285,000 | 109.6% | $ | 312,360 | ||||||||||||||
Alison Cornell (2) | $ | 448,000 | 73% | $ | 253,616 | |||||||||||||||||||
| (1) | For Mr. Haeni, the AIP target reflects the US Dollar target approved by the Compensation Committee in early 2017. Effective November 1, 2017, Mr. Haeni relocated to Hilversum, Netherlands. His actual AIP payout was paid in Euros and converted into US Dollars based on the exchange rate of 1.188 Euros to US Dollars (the exchange rate as of December 29, 2017). |
48IFF | 20172018 PROXY STATEMENT47
Threshold Target Maximum Award Payout as a % of Target2.7% 5.4% 8.1% 16.1% 5.6% 8.3% 11.0% Currency Neutral Sales 33.3% Growth (Business Unit) Actual 4.7%2.5% 5.2% 7.9% 14.4%9.2% 5.4% 8.1% 10.8% Currency Neutral Sales 13.0% Growth (Corporate) Actual 4.2%$322M8.9% $337M $362M 13.8%$353M $379M Operating Profit 39.7% (Business Unit) Actual $339.5M$599M $631M $663M 9.4%$379M $614M $646M $678M Operating Profit 20.5% (Corporate) Actual $620M43.9% 45.4% 46.9% 10.5%$657M 43.6% 45.2% 46.6% Gross Margin 9.4% (Business Unit) Actual 44.8%26.6% 25.3% 24.0% 6.0%44.4% 29.5% 28.0% 26.5% Working Capital 7.5% (Corporate) Actual 24.7%100% 10.0% Individual Actual 100%
29.0% Overall Payout for Group President, Flavors 80.2%123.4%
COMPENSATION DISCUSSION AND ANALYSIS
We believe that LTIP awards reward our executive officers, including our NEOs, for financial results and align their interests with the interests of our shareholders. Annually, the Committee reviews the LTIP to determine (1) the metrics that should be used to encourage long-term success, (2) the weightings that should be applied to such metrics and (3) the annual and cumulative targets for such metrics. The Committee believes that commencing a new three-year LTIP cycle each year:
The Committee also annually sets a total LTIP target award for each NEO, which reflects the total LTIP award aan NEO has the opportunity to receive at the end of the three-year cycle if we meet all of our targets. Depending upon our actual performance relative to financial and relative total shareholder return goals, the actual payout to the NEO could be greater or less than the total LTIP target award.
Performance Segments.Given the difficulty in setting long-term goals in current volatile global economic environments, the Committee believes that the LTIP should continue to comprise four performance segments: Year 1, Year 2, Year 3 (each an “annual performance segment”) and cumulative performance over the three-year period (the “cumulative performance segment”).
Performance Metrics.For the 2014-2016 LTIP and the 2015-2017 LTIP, each annual performance segment is measured equally against Economic Profit (“EP”) (12.5%) and Relative Total Shareholder Return (“Relative TSR”) (12.5%). TheIn 2016, the Committee replaced the annual Relative TSR performance segments with a cumulative,3-year Relative TSR performance metric as the sole financial metric for the cumulative performance segment for LTIP awards beginning with the 2016-2018 LTIP. The Committee believes that thean LTIP consisting of annual performance segments based on EP and a cumulative3-year performance period for segment based on Relative TSR better aligns its compensation objectives with the interests of our shareholders and our focus on long-term growth initiatives. The tabletables below reflectsreflect the performance metrics for the outstanding LTIP cycles and their assigned weightings:
Long-Term Incentive ProgramPlan
| Segment | EP | Relative TSR | ||||||||||
2014-2016 and 2015-2017 LTIP performance cycles |
|
Year 1
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12.5%
|
12.5%
| ||||||||
Year 2
|
12.5%
|
12.5%
| ||||||||||
Year 3
|
12.5%
|
12.5%
| ||||||||||
Cumulative Segment
|
0%
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25%
| ||||||||||
Total
|
37.5%
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62.5%
|
100%
|
| Segment | EP | Relative TSR | ||||||||||
LTIP performance cycle only |  |
Year 1
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12.5%
|
12.5%
| ||||||||
Year 2
|
12.5%
|
12.5%
| ||||||||||
Year 3
|
12.5%
|
12.5%
| ||||||||||
Cumulative Segment
|
0%
|
25%
| ||||||||||
Total
|
37.5%
|
62.5%
|
100%
|
48IFF | 20172018 PROXY STATEMENT49
COMPENSATION DISCUSSION AND ANALYSIS
| Segment | EP | Relative TSR | ||||||||||
2016-2018 LTIP performance cycle |
|
Year 1
|
12.5%
|
0%
| ||||||||
Year 2
|
12.5%
|
0%
| ||||||||||
Year 3
|
12.5%
|
0%
| ||||||||||
Cumulative Segment
|
0%
|
62.5%
| ||||||||||
Total
|
37.5%
|
62.5%
|
100%
|
| Segment | EP | Relative TSR | ||||||||||
2016-2018 and 2017-2019 LTIP performance cycles
|
|
Year 1
|
12.5%
|
0%
| ||||||||
Year 2
|
12.5%
|
0%
| ||||||||||
Year 3
|
12.5%
|
0%
| ||||||||||
Cumulative Segment
|
0%
|
62.5%
| ||||||||||
Total
|
37.5%
|
62.5%
|
100%
|
We believe EP is a key factor in identifying the sources and drivers of value across our businesses and that EP growth is closely linked to the creation of long-term shareholder value. EP measures operating profitability after considering (1) all our revenues and operating costs, (2) income taxes and (3) a charge for the capital employed in the business. Capital employed primarily consists of working capital, property, plant and equipment, and intangible assets. The capital charge is determined by applying the estimated weighted average cost of capital (“WACC”) to the adjusted average invested capital employed (including changescharges and/or loss provisions associated withnon-operating events such as restructurings and tax or litigation settlements) during the relevant period. The estimated WACC rate is the weighted average cost of our debt and equity capital. In determining the EP target for the 2017 segments of the 2015-2017, 2016-2018 and 2017-2019 LTIP cycles, the Committee considered our annual targets for 2016,2017, our 20152016 actual results and payout trends over the prior three-year and five-year periods and thepro-forma impact of recent acquisitions.
The Committee believes that three-year Relative TSR, as compared to other public companies in which shareholders may choose to invest, is a good indicator of our overall long-term performance, and directly ties our executives’ compensation opportunity to our share price appreciation and dividend payments relative to a majorlarge-cap index. Relative TSR is calculated by measuring the change in the market price of stock plus dividends paid (assuming the dividends are reinvested) for our Company and the S&P 500 companies over the performance period. The market price for purposes of calculating the Relative TSR of our Company and the S&P 500 on eachcycle-end date is determined based on the average closing price per share of each company’s common stock over the period of 20 consecutive trading days preceding that date, as reported by S&P Capital IQ.
Our EP goal for the annual performance segments of each of our current LTIP cycles is set at the beginning of each annual performance segment. The Relative TSR goal for the annual performance segments of the 2014-2016 and 2015-2017 LTIP cycles is set at the beginning of each annual performance segment. The Relative TSR goal for the cumulative performance segment of each of our current LTIP cycles is set at the beginning of the three-year cycle. For the 2015-2017 LTIP cycle, the Relative TSR goal for the annual performance segments was set at the beginning of each annual performance segment.
At the end of each year, the Committee reviews our annual performance and cumulative performance for the newly completed three-year cycle. To the extent that our annual performance has met or exceeded the threshold annual EP goal and(and for LTIP performance cycles prior to the 2016-20182015-2017 LTIP cycle, the threshold annual Relative TSR goal,goal), the Committee approves “banking” the credit that will be applied to the payout at the end of the three-year cycle. For the completed three-year cycle, the Committee approves the total payout, taking into consideration the performance for each of the prior annual performance segments.
50IFF | 20172018 PROXY STATEMENT49
COMPENSATION DISCUSSION AND ANALYSIS
2016-20182017-2019 LTIP Target Awards
In early 2016,2017, the Committee approved the following total LTIP target awards to each of our NEOs for the 2016-20182017-2019 LTIP:
NEO |
| Total LTIP Target Award | |||||||
Andreas Fibig | $2,000,000 | ||||||||
Richard O’Leary | |||||||||
| $500,000 | ||||||||
Nicolas Mirzayantz |
| $500,000 | |||||||
| |||||||||
| $500,000 | ||||||||
Anne Chwat
| $285,000 |
The Committee set the cumulative three-year Relative TSR goal for the 2016-20182017-2019 LTIP cycle at the same level that had been set for the prior year’s LTIP cycle. For the 2016-20182017-2019 LTIP cycle, the Committee determined that 50% of the value of any payoutsthe awards would be denominated and paid in cash and 50% would be denominated and paid in shares, consistent with the 2014-2016 and 2015-2017prior LTIP cycles. The Committee believes that paying 50% of the LTIP value in shares creates a stronger alignment between executives and shareholders, and provides additional incentive for executives to achieve superior Company performance and to produce share price appreciation over the three-year performance cycle. The number of shares of our common stock for the 50% portion that would be paid in stock is determined based on the market price of the common stock at the beginning of the cycle. For the 20162017 cycle, it was based on $119.27$120.31 per share, the average closing market price for the twenty trading days prior to January 1, 2016,3, 2017, the first stock trading day of the cycle. At the conclusion of each of the first two annual performance segments, the dollar value and number of shares will be “banked” based on the performance of each such segment. When the final performance segment and the cumulative Relative TSR three-year cycle are concluded and the LTIP payouts are approved by the Committee, the cumulative dollar value and cumulative number of shares will beare paid to the executive.
20162017 LTIP Performance
For the 20162017 segment of each of the existing LTIP cycles, our EP of $247$260 million, as adjusted for 20162017non-core items, was between threshold andexceeded the target performance level. As a result, our NEOs earned approximately 77%146.6% of target based on the EP goal for the year. Our Relative TSR for 2016 was below threshold at2017 and for the 26th percentile versus the S&P 500,cumulative, three-year performance period exceeded target and, as a result, our NEOs did not earn any awardsearned approximately 179.0% of target based on the Relative TSR goal for 2017 and 173.1% of target based on the Relative TSR goal for the 2016 segments of the 2014-2016 andthree-year 2015-2017 LTIP cycles.cycle. The LTIP award earned and “banked” for the 2016 segment2017 segments of the 2015-20172016-2018 and 2016-20182017-2019 LTIP cycles was therefore equal to approximately 38.4%146.6% of target. As previously discussed, for the 2016-2018 and 2017-2019 LTIP grant cycle,cycles, the three annual Relative TSR performance segments were replaced with the cumulative,3-year Relative TSR segment.
50IFF | 20172018 PROXY STATEMENT51
COMPENSATION DISCUSSION AND ANALYSIS
20162017 LTIP Results
2014-20162015-2017 LTIP Payout
As noted above, our NEOs earned approximately 77%146.6% of target based on the EP goal for 2016, and our Relative TSR for 2016 was below threshold at the 26th percentile. As a result, our NEOs did not earn any award179.0% of target based on the Relative TSR goal for the 2016 segment.2017. Our cumulative, three year Relative TSR was positioned at approximately the 66th70th percentile versus the S&P 500, which equatesequated to a payout of 152.5%173.1% of target.
The overall payout for the 2014-20162015-2017 LTIP cycle was approximately 108%122.8% of target, based on the following EP and Relative TSR results against objectives, as determined by the Committee.
| Segment | Segment Weighted EP Result | Segment Weighted TSR Result |
Combined Segment | Segment Weighting | Overall Result | |||||||||||||||||||||||||
| 2014 | 133% | 112 | % | 122.4 | % | 25.00 | % | 30.6 | % | |||||||||||||||||||||
| 2015 | 34% | 200 | % | 117.0 | % | 25.00 | % | 29.2 | % | |||||||||||||||||||||
| 2016 | 77% | 0 | % | 38.4 | % | 25.00 | % | 9.6 | % | |||||||||||||||||||||
| Cumulative | — | 152.5 | % | 152.5 | % | 25.00 | % | 38.1 | % | |||||||||||||||||||||
| Total |
| 100.00
| %
|
| 107.60
| %
| ||||||||||||||||||||||||
| Segment | Segment Weighted EP Result | Segment Weighted TSR Result | Combined Segment Weighted Result | Segment Weighting | Overall Result | |||||||||||||||
| 2015 | 34.0% | 200.0 | % | 117.0 | % | 25.0 | % | 29.2 | % | |||||||||||
| 2016 | 76.7% | 0.0 | % | 38.4 | % | 25.0 | % | 9.6 | % | |||||||||||
| 2017 | 146.6% | 179.0 | % | 162.8 | % | 25.0 | % | 40.7 | % | |||||||||||
| Cumulative | — | 173.1 | % | 173.1 | % | 25.0 | % | 43.3 | % | |||||||||||
| Total |
| 100.0
| %
|
| 122.8
| %
| ||||||||||||||
The LTIP payout for the 2014-20162015-2017 performance cycle for the NEOs, based on the actual achievement of quantitative objectives, is discussed in greater detail following the Grants of Plan-Based Awards Table.
For the LTIP performance cycles that concluded in the five-year period from 20122013 to 2016,2017, the actual overall corporate percentage payout under the LTIP against those long-term cycle performance goals ranged from approximately 107.6%105.2% to 149.9%146.4%, with an average payout of 130.3%125.0%.
52IFF | 20172018 PROXY STATEMENT51
COMPENSATION DISCUSSION AND ANALYSIS
We believe that equityEquity is a key component of our long-term incentive compensation as it (1) provides participants with a meaningful stake in our Company, thereby aligning their interests more closely with shareholders, (2) encourages participants to focus on long-term success, (3) helps to attract and retain top talent and (4) recognizes individual contributions. We believe that our ECP is an effective vehicle to encourage ownership as it provides participants the flexibility to allocate their award among three types of equity.
Under the ECP, participants, including all of our NEOs, may choose from three types of equity award grants. For ECP awards in 2016,2017, these three types were (1) Purchased Restricted Stock Units (“PRSUs”), (2) stock settled appreciation rights (“SSARs”), and (3) Restricted Stock Units (“RSUs”). PRSUs are assigned an adjustment factor of 120% to provide incentive to participants to invest in and accumulate shares to promote retention and increase alignment of participants’ interests with those of our shareholders. Elections are made in 5% increments. Based on the participant’s election, a participant’s dollar award value is converted into PRSUs, SSARs or RSUs on the grant date based on the market price of our common stock on such date.
All ECP awards are generally subject to a vesting period of approximately three years. The Committee believes the ECP is an attractive tool for recruiting, motivating and retaining executive talent and encourages alignment with shareholders by reinforcing investment and ownership in our Company by our executives.
The table below sets forth each of the three types of equity awards offered and their adjustment factor. During 2016,2017, ECP participants, including all of our NEOs, made choices based on the different equity award types described below.
Types of Equity
| Description of Equity Type |
| ||||
PRSUs |
PRSUs are restricted stock units that are granted as a match against shares of Company stock purchased at full value by an ECP participant on the grant date. As an incentive to promote share accumulation and direct investment in our stock, there is a 20% adjustment upward of the award value if PRSUs are elected. If an ECP participant chooses PRSUs, then he or she must deliver funds (or shares with an equivalent value) equal to the dollar amount of the ECP award (including the 20% adjustment). Upon receipt of the funds by the Company, the ECP participant receives a matching number of PRSUs.
PRSU holders have no voting rights during the vesting period but accrue dividend equivalents on their PRSUs. PRSUs vest approximately three years from the date of grant. PRSUs are the most rapid way for participants to accumulate and build share ownership based on the participant’s direct investment in Company stock.
|
| ||||
SSARs |
SSARs are a contractual right to receive the value, in shares of Company stock, of the appreciation in stock price from the SSAR grant date to the date the SSAR is exercised by the participant. Participants receive a number of SSARs equivalent to
SSARs become exercisable on a stated vesting date, which is approximately three years from the grant date, and expire on the seventh anniversary of the grant date. SSARs do not require a financial investment by the SSAR grantee.
|
| ||||
RSUs |
RSUs are our promise to issue unrestricted shares of our stock on the stated vesting date, which is approximately three years from the grant date.
|
|
52IFF | 20172018 PROXY STATEMENT53
COMPENSATION DISCUSSION AND ANALYSIS
Our Committee annually determines the dollar range of ECP awards for each level of participating executive based on peer group and long-term incentive practices survey data, a review of the competitiveness of the combined value of the ECP awards and LTIP awards with market practices and other factors that it deems appropriate. For 2016, these ranges were as follows:
Lower Limit |
Upper Limit | |||||
CEO | $ | 1,000,000 | $ 3,500,000 | |||
Group Presidents and CFO | $ | 250,000 | $ 750,000 | |||
General Counsel | $ | 175,000 | $ 525,000 | |||
The Committee then approves the actual dollar award to be granted to each NEO other than the CEO, and recommends to the independent members of the Board for approval the actual dollar award for the CEO. All ECP awards are generally subject to a vesting period of approximately three years. The Committee believes the ECP is an attractive tool for recruiting, motivating and retaining executive talent and encourages alignment with shareholders by reinforcing investment and ownership in our Company by our executives.
As an example of the value that may be delivered by the ECP to the participant based on the three election types, the following table shows the number of shares and value to the participant at vesting for an ECP award of $500,000. For all three choices, vesting occurs approximately three years from the grant date:
Assumes a Common Share Value of $100.00 at Award (1) | ||||||||||||||||||||||||
Assumes a Common Share Value of $140.00 at Award (1) | Assumes a Common Share Value of $140.00 at Award (1) | |||||||||||||||||||||||
| PRSU (2) | RSUs | SSARs (3) | PRSU (2) | RSUs | SSARs (3) | |||||||||||||||||||
| Award Value | $ | 500,000 | $ | 500,000 | $ | 500,000 | $ | 500,000 | $ | 500,000 | $ | 500,000 | ||||||||||||
| Adjustment Factor | 1.2 | 1.0 | 1.0 | 1.2 | 1.0 | 1.0 | ||||||||||||||||||
| Post-Factor Value | $ | 600,000 | $ | 500,000 | $ | 500,000 | $ | 600,000 | $ | 500,000 | $ | 500,000 | ||||||||||||
| Participant Required Investment | $ | 600,000 | — | — | $ | 600,000 | — | — | ||||||||||||||||
| Award Shares/SSARs At Grant Date | 6,000 Shares | 5,000 Shares | 22,500 SSARs | 4,286 Shares | 3,571 Shares | 17,857 SSARs | ||||||||||||||||||
| Dollar Value of Award At Vesting/Exercise (Assuming 8% Compounded Annual Stock Price Increase) (2) | $ | 755,827 | $ | 629,856 | $ | 584,352 | $ | 755,827 | $ | 629,856 | $ | 649,280 | ||||||||||||
Dollar Value of Award At Vesting/Exercise (Assuming 8% Compounded Annual Stock Price Decrease)
| $
| 476,299
|
| $
| 396,916
|
|
| —
|
| $
| 476,299
|
| $
| 396,916
|
|
| —
|
| ||||||
(1) Dollar values of awards are used in this table for illustrative purposes only and are not intended as forecasts of future stock price performance. All values shown are before tax withholding.
| (1) | Dollar values of awards are used in this table for illustrative purposes only and are not intended as forecasts of future stock price performance. All values shown are before tax withholding. |
(2) PRSU values exclude dividend equivalents.
| (2) | PRSU values exclude dividend equivalents. |
(3) Participants may choose to hold their SSARs longer than the three-year vesting period (up to the full seven-year contractual term) and continue to participate in future stock price appreciation, if any.
| (3) | Participants may choose to hold their SSARs longer than the three-year vesting period (up to the full seven-year contractual term) and continue to participate in future stock price appreciation, if any. |
20162017 Equity Choice Program Awards
Our Committee annually determines the dollar range of ECP awards for each level of participating executive based on peer group and long-term incentive practices survey data, a review of the competitiveness of the combined value of the ECP awards and LTIP awards with market practices and other factors that it deems appropriate. For 2017, these ranges were as follows:
Lower Limit |
Upper Limit | |||||
CEO | $ | 1,000,000 | $ 3,500,000 | |||
Group Presidents and CFO | $ | 250,000 | $ 750,000 | |||
General Counsel | $ | 175,000 | $ 525,000 | |||
The Committee then approves the actual dollar award to be granted to each NEO other than the CEO, and recommends to the independent members of the Board for approval the actual dollar award for the CEO.
In February 2016,2017, the Committee approved the 20162017 ECP values awarded to each executive, including our NEOs, with an effective grant date of May 2, 2016.3, 2017. The period of time between approval of ECP values and the actual grant date gives ECP participants time to make their irrevocable ECP elections and to arrange for the purchase of shares from the Company if PRSUs are elected. The Committee determined that the 20162017 ECP grants would vest on April 2, 2019,3, 2020, which is slightly less than three years from the grant date, to enable participants to use shares vesting in 20192020 to acquire new shares in 20192020 if they elect PRSUs for their 20192020 ECP award.
54IFF | 2017 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
Similar to prior years, the actual amount of each ECP awarded to each NEO in 20162017 was based on an evaluation of the NEO’s individual performance, long-term potential, market factors and retention considerations. The actual value of these awards will depend on future stock price performance.
IFF | 2018 PROXY STATEMENT 53
COMPENSATION DISCUSSION AND ANALYSIS
The following table shows the ECP dollar award value approved by the Committee or Board for each NEO during 20162017 and the percentage and adjusted dollar value after application of the adjustment factor of each type of award elected by each NEO. None of the NEOs elected SSARs in 2016.2017.
PRSU Election |
RSU Election | |||||||||||||||||||
| 2016 Unadjusted ECP Award |
Percent Election | Adjusted Value | Percent Election | Adjusted Value | ||||||||||||||||
| Adjustment Factor | 120 % | 100% | ||||||||||||||||||
| Andreas Fibig | $ | 2,000,000 | 30% | $ | 720,000 | 70% | $ | 1,400,000 | ||||||||||||
| Richard O’Leary (1) | $ | 275,000 | 100% | $ | 330,000 | — | — | |||||||||||||
| Nicolas Mirzayantz | $ | 650,000 | 100% | $ | 780,000 | — | — | |||||||||||||
| Matthias Haeni | $ | 500,000 | 100% | $ | 600,000 | — | — | |||||||||||||
| Anne Chwat | $ | 525,000 | 100% | $ | 630,000 | — | — | |||||||||||||
| Alison Cornell | $ | 500,000 | 50% | $ | 300,000 | 50% | $ | 250,000 | ||||||||||||
PRSU Election |
RSU Election | |||||||||||||||||||
| 2017 Unadjusted ECP Award |
Percent Election | Adjusted Value | Percent Election | Adjusted Value | ||||||||||||||||
| Adjustment Factor | 120% | 100% | ||||||||||||||||||
| Andreas Fibig | $ | 2,000,000 | 50% | $ | 1,200,000 | 50% | $ | 1,000,000 | ||||||||||||
| Richard O’Leary | $ | 400,000 | 100% | $ | 480,000 | — | — | |||||||||||||
| Nicolas Mirzayantz | $ | 600,000 | 100% | $ | 720,000 | — | — | |||||||||||||
| Matthias Haeni | $ | 500,000 | — | $ | — | 100% | $ | 500,000 | ||||||||||||
| Anne Chwat | $ | 475,000 | 100% | $ | 570,000 | — | — | |||||||||||||
The actual equity award grants to each NEO, based on the above elections, are identified in the Grants of Plan-Based Awards Table. Information on prior ECP awards that were exercised or vested in 20162017 can be found in the Options Exercised and Stock Vested Table.
As part of our compensation program, we offer U.S.-based executives and other senior employees an opportunity to participate in our DCP. Pursuant to the terms of the DCP, we provide the same level of matching contributions to our executive officersexecutives that are available to other employees under our 401(k) savings plan. We also use the DCP to encourage executives to acquire shares of our common stock that are economically equivalent to ownership of our common stock but on atax-deferred basis. We do this to encourage executives to be long-term owners of a significant equity stake in our Company and to enhance the alignment between the interests of executives and those of our shareholders.
Our costs in offering the DCP consist of the time-value of money costs, the cost of the matching contribution that supplements the 401(k) savings plan, administrative costs and a 25% premium for amounts deferred into the IFF ShareStock Fund in an executive’s DCP account. The premium on amounts deferred into the IFF ShareStock Fund typically do not vest until approximately two years after the deferral is made, as the premium is contingent on the executive remaining employed by us (other than for retirement) for the full calendar year following the year when such deferral is made. If notional investments within the DCP increase in value, the amount of our payment obligation will increase. The time-value of money cost results from the delay in the time at which we can take tax deductions for compensation payable to a participating executive.
Additional information about the DCP and supplemental matching contributions and premiums on cash deferrals under the DCP made for NEOs may be found below under “2016“2017Non-Qualified Deferred Compensation.”
IFF | 2017 PROXY STATEMENT 55
COMPENSATION DISCUSSION AND ANALYSIS
The ESP provides severance and other benefits to executives, including NEOs, whose employment is terminated by the Company without cause or in the event of a termination by the executive for good reason in connection with a change in control of the Company. Additionally, the ESP provides severance and other benefits in the case of NEOs whose employment is terminated by the Company for good reason not in connection with a change in control.certain circumstances. This policy helps us in competing with other companies in recruiting and retaining qualified executives. When recruiting an executive from another company, the executive in most cases will seek contract terms that provide compensation if his or her employment is terminated by us in
54IFF | 2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
cases in which the executive has not engaged in misconduct. The level of severance pay under the ESP is based on a tier system and each executive’s assigned tier is based on the executive’s grade level. All of our NEOs are in Tier I. The specific severance pay by tier was developed with the assistance of our independent compensation consultant and determined by the Committee. We believe that the ESP provides a level of severance pay and benefits that is within a range of competitive practice ofwith our peer group companies.
A discussion of our ESP and the payments that each of our NEOs would have been eligible to receive had a covered termination occurred as of December 31, 20162017 is set forth below under “Potential Payments upon Termination or Change in Control.”
Perquisite Program
Our NEO perquisite program offersnon-monetary benefits that are within the range of market practice as determined through a market study conducted by our independent compensation consultant. The Committee reviews our perquisite program on abi-annual basis with its independent compensation consultant. Based on the committee’s last review, the Committee determined that the total value of our perquisite program is within the range of market practice. Additional details concerning perquisites are included in the footnotes to the All Other Compensation Table.
Under the perquisite program, our NEOs are generally eligible to receive certain benefits including:
We may provide additional or modified perquisites to our NEOs in connection with their employment arrangements. AsThrough October 2017, as part of the terms of his employment, Mr. Haeni is alsowas entitled to certain transitional assistance associated with his tax, housing and retirement savings for a limited period with sucharising from his relocation to New York. Effective November 1, 2017, Mr. Haeni relocated to Hilversum, Netherlands, and receives certain benefits declining annually.as required by local law. In addition, Mr. Fibig is provided a Company car and a Company driver, and an annual financial planning and tax preparation allowance of $25,000.
In August 2016, the Committee reviewed our perquisite program with its independent compensation consultant and determined that the total value of our perquisite program is within the range of market practice. Additional details concerning perquisites are included in the footnotes to the All Other Compensation Table.
56IFF | 2017 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
Supplemental Long Term Disability
We offer our U.S.-based employees Long Term Disability (“LTD”) coverage at Company expense, which provides a benefit, calculated as a percentage of base salary, in the case of full disability. Under our group plan, the maximum base salary is $300,000, and the maximum monthly benefit is $15,000. We also offer Supplemental LTD insurance to provide a maximum monthly benefit of $25,000 for U.S.-based employees, including our NEOs, who earn a base salary plus bonus in excess of the maximum base salary of $300,000 under our group plan. The Supplemental LTD insurance premium, like our basic group LTD policy, is fully paid by us and is taxable income to employees upon receipt of the benefit.
Executive Death Benefit Plan
Our Executive Death Benefit Plan provides participants, including each of the NEOs, with apre-retirement death benefit equal to twice the participant’s annual base salary less $50,000 (the death benefit provided by our basic group term life insurance plan for employees and retirees). The plan also provides a death benefit post-retirement, orpre-retirement after attaining age 70, equal to the
IFF | 2018 PROXY STATEMENT 55
COMPENSATION DISCUSSION AND ANALYSIS
participant’s base salary for the year in which the participant retires or reaches the age of 70, assuming the participant was an executive officer, less $12,500 of group coverage for retired participants and less $50,000 for senior participants (those who have attained the age of 70 and remain employed with us).
IFF | 2017 PROXY STATEMENT 57
COMPENSATION DISCUSSION AND ANALYSIS
Roles and Responsibilities
| ||||
| ||||
| ||||
Shareholder Advisory Vote
As part of its compensation setting process, the Committee also considers the results of the prior year’s shareholder advisory vote on our executive compensation. The Committee believes these voting results provide useful insight as to whether shareholders agree that the Committee is achieving its goal of designing and administering an executive compensation program that promotes the best interests of our Company and our shareholders by providing its executives with appropriate compensation and meaningful incentives to deliver strong financial performance and increase shareholder value. As part of its 2016 compensation setting process, the Committee reviewed the results of the 2015 shareholder advisory vote, in which 94.6% of the votes cast were voted in favor of our executive compensation program.
58IFF | 2017 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
On an annual basis, the Committee reviews and approves the compensation of our NEOs. We use a global grading structure for our NEOs, with compensation ranges for each grade. Our NEOs are placed in a particular grade based on internal factors (including scope of responsibilities and job complexity) and an external market evaluation. The external market evaluation is based on published third party general survey information and a review of similar positions within our selected peer groups described below. This process is referred to as “market benchmarking.”
Market Benchmarking
The Committee reviews its external market benchmarking and peer group data annually. The Committee’s goals are to position (1) target total cash compensation at median or slightly above and (2) target total direct compensation (salary, annual incentive compensation and long-term incentive compensation) between the median to 75th percentile of relevant market benchmarks. This philosophy reflects the Committee’s approach to setting stretch goals that require above median performance to generate target payouts. In August 2015, the Committee reviewed peer group data with our independent compensation consultant for purposes of determining the appropriate peer group for setting 2016 compensation levels and opportunities.
The Committee’s independent compensation consultant provides the 25th percentile, median and 75th percentile “market reference” data for each executive position based on the average of the two relevant compensation benchmarks, as further explained below under “Peer Groups—CEO, CFO and Group Presidents”. This data is used to analyze the external competitiveness of each NEO’s base salary, target total cash compensation and target total direct compensation. This analysis is reviewed with the Committee and, in the case of the compensation of NEOs other than the CEO, with the CEO as well. In determining target total direct compensation for each executive in 2016, the Committee considered the consultant’s market reference analysis. In addition, the Committee considered a number of other important factors, including each executive’s:
The Committee uses the market reference range in order to establish a starting point for the compensation levels that the Committee believes would provide our NEOs with competitive compensation. However, the actual target total direct compensation approved by the Committee may be above or below the market reference range based on the Committee’s review of market compensation levels, its desire to create internal pay equity among our executives and the individual factors set forth above.
For 2016, the Committee awarded target total direct compensation to Messrs. Fibig, Haeni, Mirzayantz and Mmes. Chwat and Cornell, and to Mr. O’Leary following his promotion, that was generally within the competitive range of the targeted median to 75th percentile. The total actual compensation paid for the year, as compared to target compensation approved at the beginning of the year, may differ depending on Company and individual performance. Consequently, the actual compensation received by a NEO may be higher or lower than his or her market reference range.
IFF | 2017 PROXY STATEMENT 59
COMPENSATION DISCUSSION AND ANALYSIS
Peer Groups—CEO, CFO and Group Presidents
For 2016 compensation decisions regarding (1) the CEO, (2) the current and former CFO (which was evaluated at the beginning of the year prior to her departure) and (3) each of the Group Presidents, the Committee benchmarked compensation against the average of the following two groups:
| ||||||
|
| |||||
| ||||||
|
| |||||
There were six companies in the Peer Group that did not meet all of the desired criteria-Clorox, Elizabeth Arden, Estee Lauder, Hershey, Hormel Foods and Jarden. Each of Clorox, Estee Lauder, Hershey, Hormel Foods and Jarden were slightly above either the revenue or market capitalization criteria, while Elizabeth Arden was slightly below the revenue and market capitalization criteria. The Committee decided to keep these companies in the Peer Group (1) based on the significant comparability of these businesses to one of our two business units and (2) to allow for year-over-year consistency in the peer group.
Changes to 2017 Peer Group
In August 2016, the Committee reviewed its Peer Group with FW Cook for purposes of its upcoming 2017 target compensation setting process and determined that, for 2017, Elizabeth Arden, Hormel Foods, Jarden Corporation and Newell Brands (formerly Newell Rubbermaid) would be removed from the Peer Group.
60IFF | 2017 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
Elizabeth Arden was removed because it entered into an agreement to be acquired by Revlon in June 2016. Hormel was removed because of differences in revenue size as well as relatively low comparability in terms of R&D focus and multinational presence compared to us. Jarden and Newell were removed because of their 2016 merger which resulted in a post-merger revenue size that was above the desired range.
The Committee also added four companies to the Peer Group for 2017. The Committee added Dr. Pepper Snapple Group, Inc., Hain Celestial Group and Mead Johnson Nutrition because they primarily manufacture and distribute food/beverage products and fall within desired revenue and market capitalization size ranges. In addition, the Committee added Spectrum Brands Holdings because it manufactures and distributes a range of consumer products and falls within the desired size range.
Peer Group—Other Executive Officers
Based on recommendations by its independent compensation consultant, the Committee determined that the Peer Group did not publicly disclose comparative data for the other executive officer positions that were reviewed by the Committee. Consequently, for all other executive officer positions, including the General Counsel, instead of using the Peer Group, the Committee used the aggregate data available from a select cut of the Towers Watson General Industry Survey that (1) identified themselves as belonging to the consumer products or the food and beverage industry and (2) had revenues between $1 billion and $7 billion (the “Consumer Products Select Cut”). The Committee averaged (1) the Consumer Products Select Cut and (2) the Towers Watson General Industry Survey to obtain the 25th percentile, median and 75th percentile target compensation for market reference data.
The companies included in the Consumer Products Select Cut in 2016 were as follows:
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IFF | 2017 PROXY STATEMENT 61
COMPENSATION DISCUSSION AND ANALYSIS
The triggers for recovery of compensation under our compensation recoupment and clawback policies include:
All compensation under our 2010 Stock Award and Incentive Plan and our 2015 Stock Award and Incentive Plan, including AIP, LTIP, ECP and other cash and equity awards, as well as payments made under our ESP, are subject to clawback.
We generally attempt to structure executive compensation to be tax deductible. However, the Committee also believes that under some circumstances, such as to attract or to retain key executives, to recognize outstanding performance or to take into account the external business environment, it may be important to compensate one or more key executives above tax deductible limits.
In November 2016, the Compensation Committee approved changes to our AIP applicable to our NEOs effective for the 2017 fiscal year, including (i) that in order to fund any payouts under the AIP, the new corporate operating profit threshold must be met and (ii) eliminating the 10% individual performance component for NEOs, and correspondingly increasing by 5% the weighting of each of the currency sales growth component and operating profit component. In the event the Company does not achieve the corporate operating profit threshold, no AIP payouts will be awarded to the participants, including the NEOs.
This Compensation Discussion and Analysis includes the followingnon-GAAP financial measures: currency neutral sales, adjusted operating profit and adjusted earnings per share. Please see Exhibit A of this proxy statement for a reconciliation of such metrics.
62IFF | 2017 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement. Based on those reviews and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement for filing with the Securities and Exchange Commission and incorporated by reference into our Annual Report on Form10-K for the fiscal year ended December 31, 2016.
Compensation Committee
Compensation Consultant
Management
Shareholder Advisory Vote
As part of its compensation setting process, the Committee also considers the results of the prior year’s shareholder advisory vote on our executive compensation. The Committee believes these voting results provide useful insight as to whether shareholders agree that the Committee is achieving its goal of designing and administering an executive compensation program that promotes the best interests of our Company and our shareholders by providing its executives with appropriate compensation and meaningful incentives to deliver strong financial performance and increase shareholder value. As part of
56IFF | 2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
its 2017 compensation setting process, the Committee reviewed the results of the 2016 shareholder advisory vote, in which 95.2% of the votes cast were voted in favor of our executive compensation program.
On an annual basis, the Committee reviews and approves the compensation of our NEOs. We use a global grading structure for our NEOs, with compensation ranges for each grade. Our NEOs are placed in a particular grade based on internal factors (including scope of responsibilities and job complexity) and an external market evaluation. The external market evaluation is based on published third-party general survey information and a review of similar positions within our selected peer groups described below. This process is referred to as “market benchmarking.”
Market Benchmarking
The Committee reviews its external market benchmarking and peer group data annually. The Committee’s goals are to position (1) target total cash compensation at median or slightly above and (2) target total direct compensation (salary, annual incentive compensation and long-term incentive compensation) between the median to 75th percentile of relevant market benchmarks. This philosophy reflects the Committee’s approach to setting stretch goals that require above median performance to generate target payouts. In August 2016, the Committee reviewed peer group data with our independent compensation consultant for purposes of determining the appropriate peer group for setting 2017 compensation levels and opportunities.
The Committee’s independent compensation consultant provides the 25th percentile, median and 75th percentile “market reference” data for each executive position based on the average of the three relevant compensation benchmarks, as further explained below. This data is used to analyze the external competitiveness of each NEO’s base salary, target total cash compensation and target total direct compensation. This analysis is reviewed with the Committee and, in the case of the compensation of NEOs other than the CEO, with the CEO as well. In determining target total direct compensation for each executive in 2017, the Committee considered the consultant’s market reference analysis. In addition, the Committee considered a number of other important factors, including each executive’s:
The Committee uses the market reference range in order to establish a starting point for the compensation levels that the Committee believes would provide our NEOs with competitive compensation. However, the actual target total direct compensation approved by the Committee may be above or below the market reference range based on the Committee’s review of market compensation levels, its desire to create internal pay equity among our executives and the individual factors set forth above.
For 2017, the Committee awarded target total direct compensation to our NEOs that was generally within the competitive range of the targeted median to 75th percentile or at the 75th percentile. The total actual compensation paid for the year, as compared to target compensation approved at the beginning of the year, may differ depending on Company and individual performance. Consequently, the actual compensation received by an NEO may be higher or lower than his or her market reference range.
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COMPENSATION DISCUSSION AND ANALYSIS
For 2017 compensation decisions regarding our NEOs, the Committee benchmarked compensation of our NEOs (other than our General Counsel) against our Peer Group and a size appropriate cut of the 2016 Towers Watson General Industry Survey and the compensation of our General Counsel against a size appropriate cut of the 2016 Towers Watson General Industry Survey and the 2016 Towers Watson Consumer Products / Food & Beverage Select Cut. Information about these benchmarking groups is set forth below.
| Peer Group | Selection Criteria | Ø U.S. publicly traded companies of comparable size with manufacturing operations (generally based on revenue of 0.4x to 2.5x and market capitalization of 0.25x to 4x compared to our company) Ø Strongin-house R&D activities Ø Global scope with significant international presence (international operations generally accounting for at least 25% of total revenues) Ø Growth orientation, with positive sales and earnings growth over the three years prior to the review and selection of the peer group Ø Companies that are included in the peer groups of at least 3 of the 16 companies that are within our current compensation peer group (“peers of current peers”) Ø Companies that include us in their compensation peer group | ||||
| Component Companies | Ø Church & Dwight Co, Inc. Ø The Clorox Company Ø Coty, Inc. Ø Dr Pepper Snapple Group, Inc. Ø Edgewell Personal Care Ø The Estée Lauder Companies Inc. Ø The Hain Celestial Group, Inc. Ø Herbalife Ltd. | Ø The Hershey Company Ø McCormick & Company, Inc. Ø Mead Johnson Nutrition Company Ø Nu Skin Enterprises, Inc. Ø Revlon, Inc. Ø Sensient Technologies Corporation Ø Spectrum Brands Holdings, Inc. Ø Tupperware Brands Corporation | ||||
| Position in Group | Ø Between the 25th percentile and median for revenue and at the 50th percentile of market capitalization as of 12/31/16 | |||||
Size Appropriate Cut of the Towers Watson General Industry Survey | Selection Criteria | Ø up to 157 companies (depending on the position) Ø $1 billion to $6 billion in reported revenues Ø Revenues interpolated to our 2016 trailing four-quarter revenue size: • $3.1 billion for corporate positions • $1.6 billion for Fragrances • $1.5 billion for Flavors | ||||
Towers Watson Consumer Products / Food & Beverage Select Cut | Selection Criteria | Ø 22 companies (including four companies that are also part of the 2016 Peer Group) Ø $1 billion to $7 billion in reported revenues, with median revenues of $3 billion | ||||
58IFF | 2018 PROXY STATEMENT
COMPENSATION DISCUSSION AND ANALYSIS
Changes to 2018 Peer Group
In August 2017, the Committee reviewed its Peer Group with its independent compensation consultant for purposes of its upcoming 2018 target compensation setting process. The Committee determined not to make any change to the peer group for 2018, as it allows for the use of a largely consistent peer group that is statistically reliable, provides familiar market information and facilitates managing the compensation program on a multi-year basis.
All compensation under our 2010 Stock Award and Incentive Plan and our 2015 Stock Award and Incentive Plan, including AIP, LTIP, ECP and other cash and equity awards, as well as payments made under our ESP, are subject to clawback.
The triggers for recovery of compensation under our compensation recoupment and clawback policies include:
For our 2017 compensation decisions, we generally attempted to structure executive compensation to be tax deductible. However the Committee also believes that under some circumstances, such as to attract or to retain key executives, to recognize outstanding performance or to take into account the external business environment, it may be important to compensate one or more key executives above tax deductible limits. In December 2017, the U.S. tax code was amended by the Tax Cuts and Jobs Act of 2017 (“Tax Act”), restricting the availability of tax deductibility for executive compensation paid to our NEOs. The Committee is continuing to assess the impact of the Tax Act on our compensation programs.
In early 2018, the Compensation Committee approved changes to our AIP applicable to our NEOs to adjust the weightings of certain components to align corporate and business unit metrics. Effective with the fiscal 2018 AIP, (1) for NEOs evaluated solely on corporate performance, the currency neutral sales growth component will be reduced to 30% of the weighting and the working capital component will increase to 20% of the weighting and (2) for NEOs evaluated on a combination of business unit and corporate performance, the corporate components will constitute 20% of the weighting (with the corporate currency neutral sales growth and working capital components each weighted at 5% and the corporate operating profit component weighted at 10%) and the business unit components will constitute 80% of the weighting (with the business unit currency neutral sales growth and operating profit components each weighted at 25% and the business unit gross margin and working capital components each weighted at 15%).
This Compensation Discussion and Analysis includes the followingnon-GAAP financial measures: currency neutral sales, adjusted operating profit and adjusted earnings per share. Please see Exhibit A of this proxy statement for a reconciliation of such metrics.
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COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement. Based on those reviews and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement for filing with the Securities and Exchange Commission and incorporated by reference into our Annual Report on Form10-K for the fiscal year ended December 31, 2017.
Compensation Committee
Roger W. Ferguson, Jr. (Chair)
Michael Ducker
Christina Gold
Katherine M. Hudson
Dale F. Morrison
60IFF | 2018 PROXY STATEMENT
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (known as the “Dodd-Frank Act”) requires us to provide our shareholders with the opportunity to approve, on a nonbinding, advisory basis, the compensation of our NEOs as disclosed in this proxy statement in accordance with the compensation disclosure rules of the SEC, often referred to as “Say on Pay.”
The core of our executive compensation philosophy is that our executives’ compensation should be linked to achievement of financial and operating performance metrics that build shareholder value over both the short- and long-term. We have designed our compensation program to focus on elements that we believe will contribute to these shareholder value drivers. As such, our compensation program:
In 2017, 95.2% of the votes cast on oursay-on-pay proposal relating to 2016 executive compensation voted for the proposal. In deciding how to cast your vote on this proposal, the Board requests that you consider the structure of the Company’s executive compensation program, which is more fully discussed in this proxy statement under the heading “Compensation Discussion and Analysis.”
This vote isnon-binding; however, we value the opinions of our shareholders and accordingly the Board and the Compensation Committee will consider the outcome of this advisory vote in connection with future executive compensation decisions.
For reasons set forth above, the Board recommends that you vote for the compensation paid to the NEOs in 2017.
Accordingly, we will ask our shareholders to vote on the following resolution at the 2018 Annual Meeting:
“RESOLVED, that, the compensation paid to the Company’s NEOs in 2017, as disclosed in this proxy statement for our 2018 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and related narrative disclosure, is hereby approved.”
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THE COMPENSATION PAID TO OUR NEOS IN 2017
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Proposal 3 – Advisory Vote on Executive Compensation
The following table sets forth the compensation for:
We refer to the executive officers included in the Summary Compensation Table as our NEOs. A detailed description of the plans and programs under which our NEOs received the following compensation can be found in this proxy statement under the heading “Compensation Discussion and Analysis.”
Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2)(3) | Non-Equity Incentive Plan Compensation ($)(4)(5) |
Change in Pension Value | All Other Compensation ($)(7) | Total ($) | |||||||||||||||||||||||
Andreas Fibig | 2017 | 1,300,000 | 3,042,803 | 2,916,010 | — | 488,636 | 7,747,449 | |||||||||||||||||||||||
Chairman and CEO | 2016 | 1,275,000 | 2,963,837 | 1,670,801 | — | 300,595 | 6,210,233 | |||||||||||||||||||||||
| 2015 | 1,200,000 | 3,173,165 | 1,702,478 | — | 133,099 | 6,208,742 | ||||||||||||||||||||||||
Richard O’Leary | 2017 | 500,000 | 680,887 | 584,579 | — | 130,331 | 1,895,797 | |||||||||||||||||||||||
CFO | 2016 | 422,131 | 1,346,578 | 227,620 | — | 112,537 | 2,108,866 | |||||||||||||||||||||||
| 2015 | 445,311 | 541,687 | 200,542 | — | 78,053 | 1,265,593 | ||||||||||||||||||||||||
Nicolas Mirzayantz | 2017 | 600,000 | 907,888 | 741,723 | 195,808 | 126,646 | 2,572,065 | |||||||||||||||||||||||
Group President, Fragrances | 2016 | 600,000 | 1,010,428 | 452,834 | 43,291 | 153,913 | 2,260,466 | |||||||||||||||||||||||
| 2015 | 585,000 | 1,088,973 | 506,351 | — | 169,083 | 2,349,407 | ||||||||||||||||||||||||
Matthias Haeni (8) | 2017 | 543,750 | 699,793 | 855,316 | — | 1,057,801 | 3,156,660 | |||||||||||||||||||||||
Group President, Flavors | 2016 | 518,750 | 830,353 | 492,074 | — | 1,537,189 | 3,378,366 | |||||||||||||||||||||||
| 2015 | 490,000 | 729,004 | 375,043 | — | 782,736 | 2,376,783 | ||||||||||||||||||||||||
Anne Chwat | 2017 | 475,000 | 668,346 | 481,731 | — | 175,383 | 1,800,460 | |||||||||||||||||||||||
General Counsel | 2016 | 472,500 | 761,326 | 293,960 | — | 183,826 | 1,711,612 | |||||||||||||||||||||||
| 2015 | 465,000 | 738,915 | 308,330 | — | 155,487 | 1,667,732 | ||||||||||||||||||||||||
| (1) | The 2017 amounts in this column include (i) the following amounts deferred under the DCP: Mr. Fibig — $117,000; Mr. O’Leary — $85,000; Mr. Mirzayantz — $48,000; and Ms. Chwat —$237,500; and (ii) the following amounts deferred under the Retirement Investment Fund Plan (401(k)): Mr. Fibig — $24,000; Mr. O’Leary — $24,000; Mr. Mirzayantz — $24,000 and Ms. Chwat —$19,000. |
Elect eleven members of the Board of Directors for aone-year term expiring at the 2019 Annual Meeting of Shareholders.
Ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2018 fiscal year.
Approve, on an advisory basis, the compensation of our named executive officers in 2017.
Transact such other business as may properly come before the 2018 Annual Meeting and any adjournment or postponement of the 2018 Annual Meeting.
Elect eleven members of the Board of Directors for a
Ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2017 fiscal year.
Approve, on an advisory basis, the compensation of our named executive officers in 2016.
Vote, on an advisory basis, on the frequency of votes on executive compensation.
Approve a French
Transact such other business as may properly come before the 2017 Annual Meeting and any adjournment or postponement of the 2017 Annual Meeting.
