INTERNATIONAL FLAVORS & FRAGRANCES INC.
2000 STOCK AWARD AND INCENTIVE PLAN,
AS AMENDED AND RESTATED
PERFORMANCE INCENTIVE AWARD AGREEMENT
1. GRANT OF PERFORMANCE INCENTIVE AWARD. This Performance Incentive Award
Agreement (the "Agreement") confirms the grant, effective August 1, 2002 (the
"Grant Date") by INTERNATIONAL FLAVORS & FRAGRANCES INC., a New York corporation
(the "Company" or "IFF"), to Richard A. Goldstein ("Employee") of a Performance
Incentive Award (the "Award"). The purpose of the Award is (i) to drive superior
long-term corporate performance and shareholder value on behalf of IFF's owners,
and (ii) to retain and reward the Chief Executive Officer for such performance
over the next five years. The Award constitutes a grant of 200,000 shares of
Restricted Stock (the "Restricted Stock") under Section 6(d) of the Company's
2000 Stock Award and Incentive Plan, as amended and restated (the "Plan"),
subject to performance conditions under Section 7(b) of the Plan and as
specified herein.
2. PERFORMANCE AND VESTING REQUIREMENTS.
(a) Earning and Vesting of Restricted Stock: The Restricted Stock will be
(i) earned based on the future performance of the Company, and (ii) vest based
on Employee's future service to the Company. If not both earned and vested, the
Restricted Stock will be forfeited as provided herein.
Restricted Stock will be earned at the specified Performance/Vesting Date
if the Total Shareholder Return ("TSR") (as defined below) of the Company,
measured from the Grant Date to the Performance/ Vesting Date, exceeds the 50th
percentile or the 75th percentile of the Comparison Group (as defined below), as
follows:
Number of Shares of Restricted Stock Earned Based on Performance
----------------------------------------------------------------
Performance/ IFF TSR Exceeds 50th IFF TSR Exceeds
Vesting Date Up to 75th Percentile 75th Percentile
------------ --------------------- ---------------
July 31, 2005 25,000 50,000
July 31, 2006 25,000 50,000
July 31, 2007 50,000 plus 50% of 100,000 plus all Unearned
Unearned Restricted Stock Restricted Stock
The foregoing notwithstanding, no Restricted Stock will be earned at any
Performance/Vesting Date if the Company's TSR is negative, unless otherwise
determined by the Committee. "Unearned Restricted Stock" means shares of
Restricted Stock that were potentially earnable at July 31, 2005 or July 31,
2006 but
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which were not earned based on the Company's TSR performance at those dates. For
example, if Company TSR performance placed it at the 40th Percentile on July 31,
2005, and at the 60th Percentile on each of July 31, 2006 and July 31, 2007, a
total of 75,000 shares of Unearned Restricted Stock would remain immediately
prior to July 31, 2007, at which date a total of 87,500 shares of Restricted
Stock would be earned (50,000 shares plus one-half of the 75,000 shares of
previously Unearned Restricted Stock). The earning of shares of Restricted Stock
at any Performance/Vesting Date shall be determined in the sole discretion of
the Committee, which shall record its determination in writing. Any shares of
Restricted Stock not earned by July 31, 2007 shall be forfeited.
Shares of Restricted Stock earned at a specified Performance/Vesting Date
will also vest at that date if Employee then remains employed by the Company or
a subsidiary. In the event of Employee's Termination of Employment (as defined
in Section 4 below), all shares of Restricted Stock not previously earned and
vested will be forfeited regardless of whether they otherwise would have been
earned at a subsequent Performance/Vesting Date; provided, however, that the
Committee may determine, in its discretion, that shares of Restricted Stock will
vest equal to the number of shares of Restricted Stock earned (which may include
earning of any then Unearned Restricted Stock, in the Committee's discretion)
treating the date of Termination as a Performance/Vesting Date, or at a
subsequent scheduled Performance/Vesting Date, or on such other basis at or
following Termination of Employment as the Committee may specify.
In the event of a Change in Control, all Restricted Stock not forfeited
prior to the Change in Control (including any then Unearned Restricted Stock)
will be deemed earned and vested in full at the date of the Change in Control,
except that the Company's Compensation Committee as constituted prior to the
Change in Control, acting prior to the Change in Control or, if the Company did
not receive at least 30 days' advance notice that the Change in Control was
likely to occur, acting not later than 30 days after the Company received such
notice, may determine that such accelerated earning and vesting of the
Restricted Stock shall not occur, or shall occur only in part, or shall be
subject to such other terms as the Committee may impose.
(b) TSR (Total Shareholder Return): TSR means the amount, expressed as a
percentage, of market price appreciation or depreciation of a share of common
stock plus dividends on a share of common stock, assuming dividend reinvestment
at the dividend payment date, measured from August 1, 2002 through a specified
Performance/Vesting Date. TSR will be calculated for the Company and for each
company in the Comparison Group, so that the ranking of the Company as a
percentile of the Comparison Group can be determined. The TSR of the Company
shall be calculated based on a market price of $30.59 at the Grant Date (subject
to adjustment), and the TSR of companies in the Comparison Group shall be
calculated based on the closing market price on July 31, 2002 (subject to
adjustment). The market price for purposes of calculating the TSR of the Company
and of companies in the Comparison Group on each Performance/Vesting Date shall
be 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 a reputable reporting
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service.
(c) Comparison Group: The Comparison Group shall be the group of companies
identified on Exhibit A hereto, provided that, in the event a merger,
acquisition, or other extraordinary corporate event involving the Company or any
company in the Comparison Group causes the common stock of a company included in
the Comparison Group to cease to be publicly traded, changes the business of the
company, or otherwise necessitates an adjustment to ensure continued
comparability of the TSR of such company for purposes of the Comparison Group,
the Committee shall make such adjustments as it deems appropriate in order to
maintain the comparability of the results of the Comparison Group, including
substitution of a new company; provided, however, that any substitution shall be
combined with the results of the removed company so that the performance of the
new company is reflected in the Comparison Group only for periods after the date
of removal of the removed company; and provided further, that if the Committee
determines it to be impractical to make such an adjustment or substitution, the
TSR of such company for any period after such discontinuance shall be deemed to
be the average TSR of all other continuing companies in the Comparison Group for
such period (to be combined with the company's actual TSR through the date of
such discontinuance), so that the aggregate number of companies in the
Comparison Group will not be reduced. Adjustments may be made by the Committee
in its discretion under this provision as a result of similar corporate events
affecting the Common Stock of the Company or changes to the business of the
Company, which may result in adjustments affecting the Comparison Group or
adjustments to other terms of the Award. The foregoing notwithstanding, no
adjustment shall be authorized hereunder if and to the extent that such
authorization or adjustment would cause the performance goals for the Award not
to meet the "performance goal requirement" set forth in Treasury Regulation
1.162-27(e)(2) under the Internal Revenue Code.
(d) Lapse of Restrictions on Restricted Stock: Upon the earning and vesting
of any Restricted Stock and satisfaction of all other conditions hereunder, the
Company shall promptly deliver to Employee one or more certificates representing
such shares (which shall no longer be deemed to be Restricted Stock), with any
legend referring to the restrictions under this Agreement removed from such
certificate(s), or shall cause such shares to be delivered to a broker or bank
which maintains an account for Employee or Employee's designee for deposit to
such account.
3 RESTRICTION ON TRANSFER OF RESTRICTED STOCK. Until such time as a share
of Restricted Stock has been earned and vested under Section 2 above, Employee
shall have no right to sell, transfer, assign, pledge, or otherwise encumber or
dispose of such Restricted Stock (except for forfeitures to the Company).
4. DIVIDENDS AND DISTRIBUTIONS AND ADJUSTMENTS.
(a) Dividends and Distributions. Employee shall be entitled to receive with
respect to the Restricted Stock all dividends and distributions payable on
Common Stock (including for this purpose any forward stock split) if and to the
extent that he is the record owner of such Restricted Stock on any record date
for such a dividend or
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distribution and he has not forfeited such Restricted Stock on or before the
payment date for such dividend or distribution, subject to the following terms
and conditions (except as provided in Section 4(b) below):
(i) In the event of a cash dividend or distribution on Common Stock,
such dividend or distribution shall be paid in cash to Employee and
shall be non-forfeitable;
(ii) In the event of any non-cash dividend or distribution in the form of
property other than Common Stock payable on Common Stock (including
shares of a subsidiary of the Company distributed in a spin-off),
the Company shall retain in its custody the property so distributed
in respect of Employee's Restricted Stock, which property thereafter
will become earned and vested if and to the same extent as the
original Restricted Stock with respect to which the property was
distributed becomes earned and vested and, to the greatest extent
practicable, shall be subject to all other terms and conditions as
applied to the original Restricted Stock, including in the event of
any dividends or distributions paid in respect of such property or
with respect to the placement of any legend on certificate(s) or
documents representing such property; provided, however, that any
dividend or distribution of rights that expire before the latest
Performance/Vesting Date will be unrestricted and exercisable by
Employee in accordance with their terms;
(iii) In the event of a dividend or distribution in the form of Common
Stock or split-up of shares, the Common Stock issued or delivered as
such dividend or distribution or resulting from such split-up will
be deemed to be additional Restricted Stock and will become earned
and vested if and to the same extent as the original Restricted
Stock with respect to which the dividend or distribution was payable
becomes earned and vested, and shall be subject to all other terms
and conditions as applied to the original Restricted Stock.
(b) Adjustments. The number and kind of shares of Restricted Stock, the
number of such shares to be earned and vested and specified Performance/Vesting
Dates under Section 2 hereof, and other terms and conditions of Restricted Stock
or otherwise contained in this Agreement shall be appropriately adjusted, in
order to prevent dilution or enlargement of Employee's rights hereunder, to
reflect any changes in the number of outstanding shares of Common Stock
resulting from any event referred to in Section 11(c) of the Plan, taking into
account any Restricted Stock or other amounts paid or credited to Employee in
connection with such event under Section 4(a) hereof, in the sole discretion of
the Committee. In addition, the Committee may vary the treatment of any dividend
or distribution as specified under Section 4(a)(ii) or (iii), in its discretion,
provided that such variance does not impair the tax deductibility of the
underlying Restricted Stock by the Company under Section 162(m) of the Code. The
Committee may determine how to treat or settle any fractional share resulting
under this Agreement.
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5. OTHER TERMS OF RESTRICTED STOCK.
(a) Voting and Other Shareholder Rights. Employee shall be entitled to vote
Restricted Stock on any matter submitted to a vote of holders of Common Stock,
and shall have all other rights of a shareholder of the Company except as
expressly limited by this Agreement.
(b) Consideration for Grant of Restricted Stock. Employee shall be required
to pay no cash consideration for the grant of the Restricted Stock, but
Employee's performance of services to the Company prior to the earning and
vesting of the Restricted Stock and otherwise during his employment by the
Company shall be deemed to be consideration for the Award. Employee's services
performed from the Grant Date to the date of issuance of the shares of
Restricted Stock is hereby determined to have a value equal to the aggregate par
value of the shares being newly issued in connection with the Award.
(c) Additional Forfeiture Provisions. Employee agrees that, by signing this
Agreement and accepting the grant of the Restricted Stock, the forfeiture
conditions set forth in Section 10 of the Plan shall apply to all Restricted
Stock hereunder and to gains realized upon the earning and vesting of the
Restricted Stock and dividends on the Restricted Stock.
(d) Employee Representations and Warranties Upon Earning and Vesting. As a
condition to the earning and vesting of Restricted Stock, the Company may
require Employee to make any representation or warranty to the Company as may be
required under any applicable law or regulation, and to make a representation
and warranty that no Forfeiture Event has occurred or is contemplated within the
meaning of Section 10 of the Plan.
(e) Insider Trading Policy Applicable. Employee acknowledges that sales of
shares resulting from Restricted Stock that has been earned and vested will be
subject to the Company's policies regulating trading by executive officers and
employees.
6. CERTIFICATES REPRESENTING RESTRICTED STOCK; STOCK POWERS.
(a) Certificates. Restricted Stock shall be evidenced by issuance of one or
more certificates in the name of Employee, bearing an appropriate legend
referring to the terms, conditions, and restrictions applicable hereunder, and
shall remain in the physical custody of the General Counsel of the Company or
his designee until such time as such shares of Restricted Stock have been earned
and vested and the restrictions hereunder have therefore lapsed. In addition,
Restricted Stock shall be subject to such stop-transfer orders and other
restrictive measures as the General Counsel of the Company shall deem advisable
under federal or state securities laws, rules and regulations thereunder, and
the rules of the New York Stock Exchange, or to implement the terms, conditions
and restrictions hereunder, and the General Counsel may cause a legend or
legends to be placed on any such certificates to make appropriate reference to
the terms, conditions and restrictions hereunder.
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(b) Stock Powers. Employee agrees to execute and deliver to the Company one
or more stock powers, in such form as may be specified by the General Counsel,
authorizing the transfer of the Restricted Stock to the Company, at the Date of
Grant of the Restricted Stock or upon request at any time thereafter.
7. INCORPORATION OF PLAN BY REFERENCE. The Award is subject to the terms
and conditions of the Plan, a copy of which previously has been delivered to
Employee. All of the applicable terms, conditions and other provisions of the
Plan are incorporated by reference herein. Capitalized terms used in this
Agreement but not defined herein shall have the same meanings as in the Plan. If
there is any conflict between the provisions of this Agreement and mandatory
provisions of the Plan, the provisions of the Plan govern. By accepting the
grant of the Award and resulting Restricted Stock, Employee agrees to be bound
by all of the terms and provisions of the Plan (as presently in effect or later
amended), the rules and regulations under the Plan adopted from time to time,
and the decisions and determinations of the Committee under the Plan made from
time to time thereunder.
8. MISCELLANEOUS.
(a) Definition of "Termination of Employment." "Termination of Employment"
means the event by which Employee ceases to be employed by the Company or any
subsidiary of the Company and, immediately thereafter, is not employed by the
Company or a subsidiary of the Company.
(b) Mandatory Tax Withholding. Unless Employee has made other arrangements
for the payment of mandatory withholding amounts satisfactory to the Company or
unless otherwise determined by the Committee, at the time of settlement the
Company will withhold from any Restricted Stock then earned and vested, in
accordance with Section 11(d) of the Plan, the number of shares having a value
nearest to, but not exceeding, the amount of income and employment taxes
required to be withheld under applicable local laws and regulations, and pay the
amount of such withholding taxes in cash to the appropriate taxing authorities.
Employee will be responsible for any withholding taxes not satisfied by means of
such mandatory withholding and for all taxes in excess of such withholding taxes
that may be due as a result of the vesting of any shares of Restricted Stock.
(c) Binding Agreement; Written Amendments. This Agreement shall be binding
upon the heirs, executors, administrators and successors of the parties. This
Agreement constitutes the entire agreement between the parties with respect to
the Award and the Restricted Stock, and supersedes any prior agreements or
documents with respect thereto. No amendment or alteration of this Agreement
which may impose any additional obligation upon the Company shall be valid
unless expressed in a written instrument duly executed in the name of the
Company, and no amendment, alteration, suspension or termination of this
Agreement which may materially impair the rights of Employee with respect to the
Restricted Stock shall be valid unless expressed in a written instrument
executed by Employee.
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(d) No Promise of Employment. The Award and resulting Restricted Stock and
the granting thereof shall not constitute or be evidence of any agreement or
understanding, express or implied, that Employee has a right to continue as an
officer or employee of the Company for any period of time, or at any particular
rate of compensation.
(e) Governing Law. THE VALIDITY, CONSTRUCTION, AND EFFECT OF THIS AGREEMENT
SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS (INCLUDING THOSE GOVERNING
CONTRACTS) OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS, AND APPLICABLE FEDERAL LAW.
(f) Notices. Any notice to be given the Company under this Agreement shall
be addressed to the Company at 521 West 57th Street, New York, NY 10019,
attention: Corporate Secretary, and any notice to the Employee shall be
addressed to the Employee at Employee's address as then appearing in the records
of the Company.
IN WITNESS WHEREOF, INTERNATIONAL FLAVORS & FRAGRANCES INC. has caused this
Agreement to be executed by its officer thereunto duly authorized, and Employee
has duly executed this Agreement, by which each has agreed to the terms of this
Agreement.
Employee INTERNATIONAL FLAVORS &
FRAGRANCES INC.
/S/ RICHARD A. GOLDSTEIN By: /S/ STEPHEN A. BLOCK
- ------------------------ --------------------
Richard A. Goldstein Stephen A. Block
Senior Vice President
General Counsel and
Secretary
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Exhibit A
COMPARISON GROUP FOR PERFORMANCE INCENTIVE AWARD
The following 21 companies comprise the Comparison Group for purposes of
the Performance Incentive Award granted by INTERNATIONAL FLAVORS & FRAGRANCES
INC., a New York corporation (the "Company" or "IFF"), to Richard A. Goldstein
("Employee"):
1. Alberto-Culver Co.
2. Allergan, Inc.
3. Avon Products, Inc.
4. Bausch & Lomb Inc.
5. Cabot Corporation
6. Church & Dwight Co., Inc.
7. The Clorox Company
8. The Dial Corporation
9. Ecolab Inc.
10. The Estee Lauder Cos. Inc.
11. Ferro Corporation
12. Hershey Foods Corporation
13. Hormel Foods Corp.
14. The Lubrizol Corporation
15. McCormick & Company, Inc.
16. PolyOne Corporation
17. Revlon, Inc.
18. RPM, Inc.
19. Sensient Technologies Corp.
20. Sigma-Aldrich Corporation
21. Wrigley (W.M.), Jr. Co.
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