SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
UNIVERSAL FOODS CORPORATION
(d/b/a Sensient Technologies Corporation)
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
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was paid previously. Identify the previous filing by registration statement
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[LOGO]
March 2001
Dear Fellow Shareholder:
You are invited to attend the Annual Meeting of Shareholders of Universal
Foods Corporation d/b/a Sensient Technologies Corporation. The meeting will be
held on Thursday, April 26, 2001, at 2:00 p.m. at the St. Regis Hotel, 2 East
55th Street at Fifth Avenue, New York, New York.
We hope that you will be able to join us at the meeting to review the year
and take a look at what the future holds for our company. In addition, the
business to be transacted is: (i) to elect four directors of the Company as
described in the accompanying Proxy Statement; (ii) to approve an amendment to
the Company's Articles of Incorporation to change the name of the Company from
Universal Foods Corporation to Sensient Technologies Corporation; and (iii) to
ratify the appointment of Deloitte & Touche LLP, certified public accountants,
as the independent auditors of the Company for 2001.
Whether or not you plan to attend, it is important that you exercise your
right to vote as a shareholder. Please indicate your vote on the enclosed proxy
card and return it promptly using the envelope provided or vote by telephone or
by Internet according to the instructions on the enclosed proxy card. Be assured
that your votes are completely confidential.
On behalf of the officers and directors of the Company, we want to thank
you for your continued support and confidence.
Sincerely,
/s/ Kenneth P. Manning
Kenneth P. Manning
Chairman, President and Chief Executive Officer
Enclosures
SENSIENT TECHNOLOGIES CORPORATION
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Notice of Annual Meeting
To Be Held April 26, 2001
To the Shareholders of
Universal Foods Corporation (d/b/a Sensient Technologies Corporation):
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Shareholders
("Meeting") of Universal Foods Corporation, a Wisconsin corporation d/b/a
Sensient Technologies Corporation ("Company"), will be held at the St. Regis
Hotel, 2 East 55th Street at Fifth Avenue, New York, New York, on Thursday,
April 26, 2001, at 2:00 p.m., New York City Time, for the following purposes:
1. To elect four directors of the Company as described in the accompanying
Proxy Statement.
2. To consider and act upon an amendment to the Company's Articles of
Incorporation to change the name of the Company from Universal Foods
Corporation to Sensient Technologies Corporation.
3. To ratify the appointment of Deloitte & Touche LLP, certified public
accountants, as the independent auditors of the Company for 2001.
4. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on March 9, 2001, as
the record date for the determination of shareholders entitled to notice of,
and to vote at, the Meeting and any adjournments thereof.
We encourage you to attend the Meeting and vote your shares in person.
However, whether or not you are able to attend the Meeting, please complete
the enclosed proxy and return it promptly using the envelope provided or vote
by telephone or by Internet according to the instructions on the enclosed
proxy card, so that your shares will be represented at the Meeting. You may
revoke your proxy at any time before it is actually voted by notice in writing
to the undersigned or by attending the Meeting and voting in person. Your
attention is directed to the attached proxy statement and accompanying proxy.
On Behalf of the Board of Directors
John L. Hammond
Secretary
Milwaukee, Wisconsin
March 28, 2001
UNIVERSAL FOODS CORPORATION
d/b/a SENSIENT TECHNOLOGIES CORPORATION
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(414) 271-6755
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
to be held on
April 26, 2001
---------------
GENERAL
This proxy statement and accompanying proxy are first being furnished to
the shareholders of Universal Foods Corporation, a Wisconsin corporation doing
business as Sensient Technologies Corporation ("Company"), beginning on or
about March 28, 2001, in connection with the solicitation by the Board of
Directors of the Company ("Board") of proxies for use at the Company's 2001
Annual Meeting of Shareholders to be held at the St. Regis Hotel,
2 East 55th Street at Fifth Avenue, New York, New York, on Thursday, April 26,
2001, at 2:00 p.m., New York City Time, and at any adjournments thereof
("Meeting"), for the purposes set forth in the attached Notice of Annual
Meeting of Shareholders and in this proxy statement.
Accompanying this proxy statement are a Notice of Annual Meeting of
Shareholders and a form of proxy solicited by the Board for the Meeting. The
Annual Report to Shareholders, which also accompanies this proxy statement,
contains financial statements for the three years ended December 31, 2000, and
certain other information concerning the Company. The Annual Report and
financial statements are neither a part of this proxy statement nor
incorporated herein by reference.
Only holders of record of the Company's Common Stock ("Common Stock") as of
the close of business on March 9, 2001, are entitled to notice of, and to vote
at, the Meeting. On that date, the Company had 48,157,952 shares of Common
Stock outstanding, each of which is entitled to one vote on each proposal
submitted for shareholder consideration at the Meeting.
A proxy, in the enclosed form, which is properly executed, duly returned to
the Company or its authorized representatives or agents and not revoked or
which has been properly voted by telephone or by Internet according to the
instructions on the enclosed proxy card and not revoked will be voted in
accordance with the shareholder's instructions contained in the proxy. If no
instructions are indicated on the proxy, the shares represented thereby will
be voted as follows:
. FOR the Board's four nominees for director;
. FOR approval of the change of the Company's name from Universal Foods
Corporation to Sensient Technologies Corporation;
. FOR ratification of the Board's appointment of Deloitte & Touche LLP as
the Company's independent auditors for 2001; and
. On such other matters that may properly come before the Meeting in
accordance with the best judgment of the individual proxies named in the
proxy.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice thereof to the Secretary. Any
shareholder attending the Meeting may vote in person whether or not the
shareholder has previously filed a proxy. Presence at the Meeting by a
shareholder who has signed a proxy does not in itself revoke the proxy. The
shares represented by all properly executed proxies received prior to the
Meeting will be voted as directed by the shareholders.
The cost of soliciting proxies will be borne by the Company. Proxies may be
solicited by directors, officers or employees of the Company in person, by
telephone or by telegram. The Company will use the services of D.F. King &
Co., Inc., New York, New York, to aid in the solicitation of proxies. Their
charges will be $7,500 plus reasonable expenses. The Company will also
reimburse brokerage houses and other custodians, nominees and fiduciaries for
their expenses in sending proxy materials to the beneficial owners.
ITEM 1.
ELECTION OF DIRECTORS
The Board of Directors consists of eleven members divided into three
classes of four, four and three directors each. One class is elected each year
to serve for a term of three years.
Four directors are to be elected at the Meeting. All of the nominees,
Messrs. Batten, Clydesdale and Croft and Ms. Whitelaw, are currently directors
of the Company and are being nominated for three-year terms expiring in 2004.
The remaining seven directors will continue to serve in accordance with their
previous elections.
It is intended that the persons named as proxies in the accompanying proxy
will vote FOR the election of the Board's four nominees. If any nominee should
become unable to serve as a director prior to the Meeting, the shares
represented by proxies otherwise voted in favor of the Board's four nominees
or which do not contain any instructions will be voted FOR the election of
such other person as the Board may recommend.
Under Wisconsin law, directors are elected by a plurality of the votes cast
by the shares entitled to vote in the election, assuming a quorum is present.
For this purpose, "plurality" means that the individuals receiving the largest
number of votes are elected as directors, up to the maximum number of
directors to be chosen at the election. Therefore, any shares of Common Stock
which are not voted on this matter at the Meeting (whether by abstention,
broker nonvote or otherwise) will have no effect on the election of directors
at the Meeting.
Pursuant to the Company's Bylaws, written notice of other qualifying
nominations by shareholders for election to the Board must have been received
by the Secretary no later than March 6, 2001. As no notice of any such other
nominations was received, no other nominations for election to the Board of
Directors may be made by shareholders at the Meeting.
Set forth below is certain information about the Board's nominees and the
seven continuing members.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ALL NOMINEES.
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SHARES OF COMMON STOCK REPRESENTED AT THE MEETING BY EXECUTED BUT
UNMARKED PROXIES WILL BE VOTED FOR ALL NOMINEES.
---
2
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Terms Expiring April, 2004
Year
First
Position with Company or Other Elected
Name and Age Occupation Director
------------ ------------------------------ --------
[PHOTO] Michael E. Batten 1980
F, N................... 60 Chairman of the Board and
Chief Executive
Officer of Twin Disc, Inc., a
manufacturer of transmission
components; Director of Briggs
& Stratton Corporation
[PHOTO] Dr. Fergus M. Clydesdale 1998
F, S................... 64 Professor and Head of the
Department of Food
Science at the University of
Massachusetts--Amherst
[PHOTO] James A.D. Croft 1997
A, C................... 63 Retired; Director of Richard
Ellis Holdings
Limited, Property and
Investment Consultants
to 1998; Chairman, Bartlodge,
Ltd. since 1998
[PHOTO] Essie Whitelaw 1993
C, N................... 53 Former President and Chief
Operating Officer
of Blue Cross & Blue Shield
United of Wisconsin, a
comprehensive health insurer
A--Audit Committee F--Finance Committee
C--Compensation and Development Committee N--Nominating Committee
E--Executive Committee S--Scientific Advisory Committee
3
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Terms Expiring April, 2002
Year
First
Position with Company or Elected
Name and Age Other Occupation Director
------------ ------------------------ --------
[PHOTO] Richard A. Abdoo 1999
A, N........................ 57 Chairman, President and
Chief Executive
Officer of Wisconsin
Energy Corp., a supplier
of electric, gas and real
estate development
services; Director of
Marshall & Ilsley Corp.
and United Wisconsin
Services, Inc.
[PHOTO] Alberto Fernandez 1999
A........................... 54 Chief Executive Officer
of Pyosa, S.A.
de C.V., a Mexican
chemical company
specializing in lead
oxides, fine chemicals
and dyes (1)
[PHOTO] James L. Forbes 1989
A, E, F..................... 68 Chairman, President and
Chief Executive
Officer of Badger Meter,
Inc., a manufacturer and
marketer of flow
measurement and control
products; Director of
Blue Cross & Blue Shield
United of Wisconsin,
United Wisconsin
Services, Inc. and
Journal Communications,
Inc.
[PHOTO] Dr. Carol I. Waslien Ghazaii 1981
F, S........................ 60 Professor, Public Health
Sciences-
Epidemiology,
John A. Burns School of
Medicine, University of
Hawaii
A--Audit Committee F--Finance Committee
C--Compensation and Development Committee N--Nominating Committee
E--Executive Committee S--Scientific Advisory Committee
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(1) In September, 1997, the Company acquired certain assets of the food color
business of Pyosa, S.A. de C.V., which is located in Monterrey, Mexico.
4
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Terms Expiring April, 2003
Year
First
Position with Company or Other Elected
Name and Age Occupation Director
------------ ------------------------------ --------
[PHOTO] John F. Bergstrom 1994
C, E, N........... 54 Chairman and Chief Executive Officer
of Bergstrom
Corporation, which owns automotive
dealerships and commercial real
estate; Director of Wisconsin Energy
Corporation, Wisconsin Electric Co.,
Kimberly-Clark Corporation, Midwest
Express Airlines and Banta Corp.
[PHOTO] William V. Hickey 1997
C, E, F........... 56 President, Chief Executive Officer
and Director of
Sealed Air Corporation, a leading
global manufacturer of a
complementary line of protective,
food and specialty packaging
materials and systems(1)
[PHOTO] Kenneth P. Manning 1989
E, S............. 59 Chairman of the Board, President and
Chief
Executive Officer of the Company;
Director of Badger Meter, Inc.(2)
A--Audit Committee F--Finance Committee
C--Compensation and Development Committee N--Nominating Committee
E--Executive Committee S--Scientific Advisory Committee
- --------
(1) Mr. Hickey served as President and Chief Operating Officer of Sealed Air
Corporation from 1996 to 2000 and as its Executive Vice President and Chief
Operating Officer from 1994 to 1996.
(2) Mr. Manning was elected Chief Executive Officer effective October 1, 1996,
and was elected Chairman effective April 30, 1997.
Except as noted, all nominees and directors continuing in office have held
their current positions or otherwise have served in their respective positions
with the listed organizations for more than five years. No director, nominee
for director or executive officer had any material interest, direct or
indirect, in any business transaction of the Company or any subsidiary during
2000, nor does any director, nominee or executive officer have any material
interest, direct or indirect, in any such proposed transaction.
The Board of Directors met five times during 2000, and each director
attended at least 75% of the meetings of the Board and the Board Committees on
which he or she served that were held during the period in which he or she was
a director.
5
Committees of The Board of Directors
The Executive Committee of the Board of Directors, which currently consists
of Messrs. Bergstrom, Forbes, Hickey and Manning, met four times in 2000. This
Committee has the power and authority of the Board of Directors in directing
the management of the business and affairs of the Company in the intervals
between Board of Directors meetings, except to the extent limited by law, and
reports its actions at regular meetings of the Board.
The Audit Committee of the Board of Directors met twice during 2000.
Messrs. Abdoo, Croft, Fernandez and Forbes are the current members of the
Audit Committee. All members of the Audit Committee are independent in
accordance with New York Stock Exchange rules. This Committee, among other
things: (i) recommends the engagement of the independent auditors of the
Company and approves their fee and the scope and timing of their audit
services; (ii) reviews the adequacy and appropriateness of the Company's
internal control structure and recommends improvements thereto, including
management's assessment of internal controls and the internal audit function;
(iii) reviews with the independent auditors their reports on the consolidated
financial statements of the Company and the adequacy of the financial
reporting process, including the selection of accounting policies; and (iv)
reviews the adequacy and appropriateness of the various policies of the
Company dealing with the principles governing performance of corporate
activities. These policies, which are set forth in the Company's Code of
Conduct, include antitrust compliance, conflict of interest and business
ethics. The Board of Directors has adopted a written charter for the Audit
Committee, which is incorporated in the Company's Bylaws. A copy of the
written charter is attached as Appendix A to this proxy statement.
The current members of the Compensation and Development Committee of the
Board of Directors, which held five meetings during 2000, are Messrs.
Bergstrom, Croft, Hickey and Ms. Whitelaw. This Committee, among other things:
(i) reviews and approves all compensation programs for senior management of
the Company, including salary structure, base salary and short-term and long-
term incentive compensation plans, including stock options and non-qualified
fringe benefit programs; (ii) prepares reports for the annual proxy statement;
(iii) reviews and approves annual changes in each elected officer's
compensation including base salary and short-term and long-term incentive
awards, and approves all executive employment contracts; (iv) annually
recommends to the Board of Directors the election of Company officers; and (v)
annually reviews the performance of the Chief Executive Officer and reviews
and approves the Chief Executive Officer's management development and
succession plans for the Company.
The Finance Committee of the Board of Directors, currently consisting of
Messrs. Batten, Forbes and Hickey and Drs. Clydesdale and Waslien Ghazaii,
held three meetings during 2000. Among other things, this Committee reviews
and monitors the Company's financial planning and structure to ensure
conformance with the Company's requirements for growth and fiscally sound
operation, and also reviews and approves: (i) the Company's annual capital
budget, long-term financing plans, existing credit facilities and investments
and commercial and investment banking relationships; (ii) existing insurance
programs, foreign currency management and the stock repurchase program; and
(iii) the financial management and administrative operation of the Company's
qualified and nonqualified benefit plans.
The Nominating Committee of the Board of Directors, which currently
consists of Messrs. Abdoo, Batten, Bergstrom, and Ms. Whitelaw, met once
during 2000. Among other functions, this Committee: (i) studies and makes
recommendations concerning the composition of the Board of Directors and its
committee structure and reviews the compensation of Board and Committee
members; (ii) recommends persons to be nominated by the Board of Directors for
election as directors of the Company and to serve as proxies at the annual
meeting of shareholders; and (iii) considers nominees recommended by
shareholders. Recommendations by shareholders should be forwarded to the
Secretary of the Company and should identify the nominee by name and provide
detailed information concerning his or her qualifications. The Company's
Bylaws require that shareholders give advance notice and furnish certain
information to the Company in order to nominate a person for election as a
director. See the discussion under "Future Shareholder Proposals and
Nominations" on page 22.
6
The Scientific Advisory Committee of the Board of Directors, which
currently consists of Dr. Clydesdale, Dr. Waslien Ghazaii and Mr. Manning, met
twice during 2000. Among other functions, this Committee: (i) reviews the
Company's research and development programs with respect to the quality and
scope of work undertaken; (ii) advises the Company on maintaining product
leadership through technological innovation; and (iii) reports on new
technological trends and regulatory developments that would significantly
affect the Company and suggests possible new emphases with respect to its
research programs and new business opportunities.
Director Compensation and Benefits
Directors who are not employees of the Company received during 2000 an
annual retainer of $24,000 and fees of $1,000 for each Board and Committee
meeting attended in addition to reimbursable expenses for such attendance.
Each Committee chairperson received an additional $3,500 annually for serving
in that capacity.
The Company has an unfunded retirement plan for non-employee directors who
have completed at least three years (one full term) of service with the
Company as a director. The plan provides a benefit equal to the annual
retainer fee for directors in effect at the time of the director's departure
from the Board. This benefit, payable only during the lifetime of the
participant, continues for a period equal to the amount of time the individual
was an active director. During the benefit period, the participant must be
available to the Chairman of the Board for consultation.
The Company has a Directors' Deferred Compensation Plan available to any
director who is entitled to compensation as a Board member. Under this plan,
the maximum amount that is eligible to be deferred is the total of all fees
paid to the director by reason of his or her membership on the Board or any
Committee thereof. The plan provides that directors may defer all or part of
their director fees and the deferral may be in cash or Common Stock. The fees
deferred in cash are credited to individual deferred compensation accounts
which bear interest at the rate of 8.0% per annum. The amounts deferred
pursuant to this plan will be paid either: (i) in a lump sum on January 31st
of the calendar year following the year in which the director ceases to be a
director or on January 31st of any year thereafter; or (ii) in five equal
consecutive annual installments commencing on January 31st of the first
calendar year after the director ceases to serve as a director. In the event
of death, the balance in a director's account will be paid in a lump sum to a
designated beneficiary or to the director's estate.
The Company has a Directors Stock Option Plan for any director who is not
an employee of the Company. The plan provides for each director to be granted
2,000 options every May 1. The options have an exercise price equal to the
market price of the Company's stock on the date of grant and vest in
increments of one-third of the total grant on each of the first, second, and
third anniversaries of the date of grant.
Audit Committee Report
In accordance with its written charter adopted by the Board of Directors
("Board"), the Audit Committee of the Board ("Committee") assists the Board in
fulfilling its responsibility for oversight of the quality and integrity of
the accounting, auditing and financial reporting practices of the Company.
During 2000, the Committee met two times, and the Committee chair, as
representative of the Committee, discussed the interim financial information
contained in each quarterly earnings announcement with the Company's Vice
President and Chief Financial Officer, Controller and independent auditors
prior to filing the Company's Form 10-Q with the Securities and Exchange
Commission.
In discharging its oversight responsibility as to the audit process, the
Audit Committee obtained from the independent auditors a formal written
statement describing all relationships between the auditors and the Company
that might bear on the auditors' independence consistent with Independence
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees" and discussed with the auditors any relationships that may impact
their objectivity and independence. The Committee has also considered whether
the provision of any non-audit services by the auditors is compatible with
maintaining the auditors' independence. The
7
Committee is satisfied as to the auditors' independence. The Committee also
discussed with management, the Company's internal auditors and the independent
auditors the quality and adequacy of the Company's internal controls and the
internal audit function's organization, responsibilities, budget and staffing
and concurred in the appointment of a new Director of Internal Audit. The
Committee reviewed with both the independent and the internal auditors their
audit plans, audit scope, and identification of audit risks.
The Committee discussed and reviewed with the independent auditors all
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, with and without management
present, discussed and reviewed the results of the independent auditors'
examination of the financial statements. The Committee also discussed the
results of the internal audit examinations.
Audit Fees
During the year ended December 31, 2000, aggregate fees (including
expenses) for the annual audit of the Company's financial statements were
approximately $729,000. This includes the audit of the December 31, 1999 and
1998 consolidated financial statements due to the change in the Company's
fiscal year.
All Other Fees
During the year ended December 31, 2000, aggregate fees (including
expenses) for non-audit services provided by the independent auditors,
including income tax services, were approximately $817,000.
The independent auditors did not provide any professional services related
to financial information system design and implementation.
The Committee reviewed the audited financial statements of the Company as
of and for the year ended December 31, 2000, with management and the
independent auditors. Management has the responsibility for the preparation of
the Company's financial statements and the independent auditors have the
responsibility for the examination of those statements.
Based on the above-mentioned review and discussions with management and the
independent auditors, the Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report on
Form 10-K for the year ended December 31, 2000, for filing with the Securities
and Exchange Commission. The Committee also recommended the reappointment,
subject to shareholder approval, of the independent auditors and the Board
concurred in such recommendation.
Date: February 15, 2001 James L. Forbes,
Chairman
Richard A. Abdoo
James A.D. Croft
Alberto Fernandez
8
PRINCIPAL SHAREHOLDERS
Management
The following table sets forth certain information as of February 28, 2001,
regarding the beneficial ownership of Common Stock by each of the executive
officers of the Company who is named in the Summary Compensation Table on page
13 ("named executive officers"), each director and nominee, and all of the
directors and executive officers of the Company as a group. Except as
otherwise indicated, all shares listed are owned with sole voting and
investment power.
Amount and Nature of
Beneficial Ownership and
Name of Beneficial Owner Percent of Class (1)(2)(3)
------------------------ --------------------------
Richard A. Abdoo................................ 2,199
Michael E. Batten............................... 4,774
John F. Bergstrom............................... 4,456
Dr. Fergus M. Clydesdale........................ 3,592
James A.D. Croft................................ 2,262
Michael duBois.................................. 33,123
Alberto Fernandez............................... 1,283
James L. Forbes................................. 4,324
Dr. Carol I. Waslien Ghazaii.................... 2,333
William V. Hickey............................... 3,462
Richard F. Hobbs................................ 231,690
Kenneth P. Manning.............................. 632,118
R. Steven Martin (4)............................ 102,503
John Mudd....................................... 11,492
Essie Whitelaw.................................. 2,746
All directors and executive officers as a group
(22 persons) (4)............................... 1,276,374
- --------
(1) Except for Mr. Manning, who beneficially owns 1.3% of the outstanding
Common Stock, no director or named executive officer beneficially owns 1%
or more of the Company's Common Stock. The beneficial ownership of all
directors and executive officers as a group represents 2.6% of the
outstanding Common Stock. In each case this percentage is based upon the
assumed exercise of that number of options which are included in the total
number of shares shown (see Note (2), below).
(2) Includes the following shares subject to stock options which are currently
exercisable or exercisable within 60 days of February 28, 2001: Mr.
duBois--23,666 shares; Mr. Hobbs--168,633 shares; Mr. Manning--
495,666 shares; Mr. Martin--79,024 shares; Mr. Mudd--0 shares; each
director (other than Mr. Manning)--666 shares and all directors and
executive officers as a group--932,686 shares.
(3) Includes the following deferred shares which have been granted pursuant to
the Directors' Deferred Compensation Plan: Mr. Abdoo--1,074 shares; Mr.
Fernandez--358 shares.
(4) Mr. Martin resigned from the Company in February, 2001. Share information
for all directors and executive officers as a group excludes shares
beneficially owned by Mr. Martin.
9
Other Beneficial Owners
The following table sets forth information regarding beneficial ownership
by those persons whom the Company believes to be beneficial owners of more
than 5% of the Common Stock of the Company as of February 28, 2001, based
solely on review of filings made with the Securities and Exchange Commission
(except as noted in (3) below).
Amount
and
Nature of Percent of
Name and Address of Beneficial Owner Ownership Class(1)
------------------------------------ --------- ----------
Principal Mutual Life Ins. Co.(2)....................... 3,118,316 6.5%
Fidelity Management Trust Company(3).................... 3,574,850 7.4%
- --------
(1) All percentages are based on 48,264,808 shares of Common Stock outstanding
as of February 28, 2001.
(2) Invista Capital Management, 699 Walnut, 1500 Hub Tower, Des Moines, IA
50309 ("Invista"), filed a Schedule 13G/A on February 15, 2000, which
reported on behalf of its parent holding company, Principal Mutual Life
Ins. Co., 711 High Street, Des Moines, IA 50392-0088 ("Principal"), that
Principal held shared voting power and shared dispositive power with
respect to 3,118,316 shares. According to the Schedule 13G/A, Invista is
an investment advisor registered under Section 203 of the Investment
Advisors Act of 1940.
(3) Fidelity Management Trust Company, 82 Devonshire Street, Boston,
Massachusetts 02109 ("Fidelity") is the Trustee of the Sensient
Technologies Corporation Retirement Employee Stock Ownership Plan
("ESOP"), which holds 2,280,678 shares, or 4.7% of the number of shares
outstanding at February 28, 2001, and is also the Trustee of the Sensient
Technologies Corporation Savings Plan ("Savings Plan"), which holds
1,294,172 shares of Common Stock, or 2.7% of the number of shares
outstanding at February 28, 2001. Fidelity has advised the Company that it
disclaims beneficial ownership of the ESOP and Savings Plan shares.
10
COMPENSATION AND DEVELOPMENT COMMITTEE REPORT
Introduction
This report describes the Company's executive compensation programs and the
basis on which 2000 compensation was determined with respect to the executive
officers of the Company. The Committee is composed entirely of independent
non-employee directors and met five times during 2000. A more complete
description of the Committee functions is set forth under the heading
"Committees of the Board of Directors" on page 6.
Compensation Policy and Objectives
The Company has developed an overall compensation policy and specific
compensation plans that tie a significant portion of executive compensation to
the Company's success in meeting specified financial goals ("Program"). The
overall objectives of the Program are to attract and retain the best possible
executive talent, to motivate these executives to successfully execute the
Company's business strategy, to link executive and shareholder interests
through equity-based plans and to provide a program that recognizes individual
contributions and achievement.
Each year the Committee conducts a review of the Program. This review
includes a meeting with an independent compensation consultant assessing the
effectiveness of the Program and comparing it to a group of corporations that
represent the Company's competition for executive talent. The Committee
approves the selection of comparator companies used for this analysis. The
Committee determines the compensation for the elected officers including the
five most highly compensated Company executives. In reviewing individual
performance, the Committee takes into account the recommendations of Mr.
Manning. Key elements of the Company's Program are base salary, short-term
(annual) incentives and long-term incentives.
Base Salaries
Base salaries are initially determined by evaluating the responsibilities
of the position, the experience of the individual and the competitive
marketplace for executive talent, including a comparison with base salaries
for comparator positions at other companies. The base salary levels of the
Company's executives are targeted at the 50th percentile of the range of base
pay levels of similarly positioned executives in other companies. Base pay
levels are determined using regression analysis because of the difference in
size between the comparator companies and the Company. The Committee annually
reviews each executive's base salary. Adjustments are determined by evaluating
the financial performance of the Company, the performance of each executive
officer against job specifications, any new responsibilities and average
percentage pay increases provided by the comparator companies for similar
positions. In the case of executive officers with responsibility for a
particular business unit, such unit's financial results are also considered.
As reflected in the Summary Compensation Table on page 13, Mr. Manning's
base salary was increased in 2000 by $60,000 (10.7%). In determining Mr.
Manning's base salary, the Committee weighed the aforementioned criteria
equally.
Annual Bonuses
The Management Incentive Plans for elected officers ("Annual Plans")
promote the Company's pay-for-performance policy by providing annual cash
payments to executives based upon achieving overall Company or divisional
financial goals. The Annual Plans are subject to a target of 45% to 85% of
annual base salary depending on a participant's position in the Company. The
award is based on the achievement of a targeted Earnings Per Share level, and
in certain cases division sales operating profit, for the year, with 100% of
the maximum award being paid upon achieving the targeted level. Performance in
excess of the targeted level allows for a payment of up to 175% of the maximum
award. Target bonus award levels approximate the 50th percentile
11
(adjusted for company size) of comparator companies' practices for each
executive position. For performance exceeding the targeted levels, the bonus
opportunities are tied to 75th percentile practices among comparator
companies. In 2000, Mr. Manning's bonus opportunity was 85% of his base
salary. As reflected in the Summary Compensation Table, his bonus award was
$320,000 or 51.5% of his base salary. Although the Company's earnings per
share did not meet the targeted level in 2000, the Committee determined to
award Mr. Manning this bonus in light of his performance and achievements
during the year.
Stock Awards and Long-Term Incentives
Under the Company's 1994 Employee Stock Plan and 1998 Stock Option Plan,
which were approved by the shareholders, restricted stock or stock options may
be granted to the Company's executive officers and other key employees. The
Committee makes annual decisions regarding appropriate stock-based grants for
each executive based on the following equally weighted factors. The Committee
considers the Company's financial performance, executives' levels of
responsibilities and predicted award values at the 50-75th percentile of long-
term incentive compensation practices for similar positions at other
companies. These factors determine the amount which may be represented by the
determined grant value of options and restricted stock. Generally, restricted
stock is only awarded to recognize a significant contribution to the Company's
performance. Restricted stock vests in five years. All outstanding options
have an exercise price equal to the market price on the date of grant and vest
in increments of one-third of the total grant on each of the first, second and
third anniversaries of the date of grant. This compensation approach is
designed to provide incentive to create shareholder value over the long-term,
since the full benefit of the compensation cannot be realized unless stock
price appreciation occurs over a number of years. In 2000, Mr. Manning
received options to purchase 150,000 shares at their fair market value on the
date of grant and received 15,000 shares of restricted stock.
Code Section 162(m)
Section 162(m) of the Internal Revenue Code limits the Company's income tax
deduction for compensation paid in any taxable year to certain executive
officers to $1,000,000 per individual, subject to several exceptions. The
Committee intends to continue to grant awards under the 1998 Stock Option Plan
that are designed to qualify for the performance-based compensation exception.
However, the Committee may grant such awards and the Company may enter into
compensation arrangements from time to time, which do not qualify for
deductibility under Section 162(m).
Compensation and Development Committee
John F. Bergstrom, Chairperson
James A.D. Croft
William V. Hickey
Essie Whitelaw
12
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information on the compensation of the Chief
Executive Officer and each of the other four most highly compensated executive
officers (collectively, the "named executive officers") of the Company as of
December 31, 2000.
Annual Long-term
Compensation(2) Compensation
----------------- ---------------------
Restricted Securities
Fiscal Base Stock Underlying All Other
Name and Principal Year Salary Bonus Awards Options Compensation
Position Ended(1) ($) ($)(3) ($)(4) (#) ($)(5)
------------------ -------- -------- -------- ---------- ---------- ------------
Kenneth P. Manning...... 12-31-00 $621,000 $320,000 $330,000 150,000 $128,129
Chairman, President and 9-30-99 561,000 600,831 332,812 75,000 111,458
Chief Executive Officer 9-30-98 501,000 532,313 323,436 73,000 84,505
Richard F. Hobbs........ 12-31-00 275,000 110,000 110,000 50,000 50,964
Vice President and 9-30-99 250,000 204,750 110,937 37,500 44,191
Chief Financial Officer 9-30-98 215,000 174,688 107,813 29,000 33,530
R. Steven Martin(6)..... 12-31-00 279,000 35,000 66,000 30,000 50,703
Executive Vice
President 9-30-99 265,000 217,035 88,750 30,000 43,481
9-30-98 209,000 169,813 107,813 32,000 31,753
Michael duBois(7)....... 12-31-00 260,000 141,080 66,000 25,000 43,750
President--Flavor 9-30-99 242,500 178,950 44,375 25,000 31,199
9-30-98 122,915 69,490 -- 23,000 9,792
John Mudd(8)............ 12-31-00 206,250 117,472 66,000 25,000 20,625
President--Color 9-30-99 -- -- -- -- --
9-30-98 -- -- -- -- --
- --------
(1) On September 7, 2000, the Company changed its fiscal year end from
September 30 to December 31. The information presented in this table
includes the fiscal year ended December 31, 2000 and the fiscal years
ended September 30, 1999 and September 30, 1998. The information for the
period October 1, 1999 to December 31, 1999 is in the table below.
Long-term
Annual Compensation Compensation
-------------------- ---------------------
Securities
Restricted Underlying All Other
Base Stock Options Compensation
Name Salary ($) Bonus ($) Awards ($) (#) ($)
- ---- ---------- --------- ---------- ---------- ------------
Kenneth P. Manning...... 155,250 197,944 -- -- 31,501
Richard F. Hobbs........ 68,750 67,031 -- -- 12,311
R. Steven Martin........ 69,750 68,006 -- -- 12,676
Michael duBois.......... 65,000 42,939 -- -- 10,938
John Mudd(8)............ -- -- -- -- --
- --------
(2) Includes amounts deferred at the election of the named executive officer
under the Company's Executive Income Deferral Plan (see "Employment
Agreements and Other Arrangements").
(3) Consists of awards under the Company's Management Incentive Plans.
(4) The amounts in the table reflect the market value on the date of award of
restricted shares of Common Stock ("Restricted Stock"). Total number and
value of shares of Restricted Stock held as of December 31, 2000 (based on
the $22.75 per share closing price of the Common Stock on December 31,
2000) for each named executive officer are: Kenneth P. Manning--51,000
shares/$1,160,250; Richard F. Hobbs--19,000
13
shares/$432,250; R. Steven Martin--16,000 shares/$364,000; Michael duBois--
5,000 shares/$113,750; and John Mudd--3,000 shares/$68,250. Dividends are
paid on Restricted Stock when paid on Common Stock.
(5) Consists of Company contributions under certain benefit plans and other
arrangements for the five named executive officers. These contributions
are set forth in the following table. The Company's Employee Stock
Ownership Plan ("ESOP") and Savings Plan are tax-qualified plans which are
subject to government imposed annual limitations on contributions. The
Company's Supplemental Benefits Plan, a non-tax-qualified plan, replaces
benefits which cannot be provided by the tax-qualified ESOP and Savings
Plan because of these annual limitations. The amounts shown in the table
below as contributed to the ESOP and Savings Plan which exceed the
applicable annual limits were contributed to the Supplemental Benefits
Plan. At the time the ESOP and Savings Plan were adopted to replace the
Company's former defined benefit pension plan, the Transition Retirement
Plan, also a tax-qualified plan, was adopted to assure that affected
employees would receive approximately the same level of benefits through
normal retirement age that they would have received under the former
defined benefit pension plan. The named executive officers do not
participate in the Transition Retirement Plan but a benefit equivalent to
what they would have received thereunder is contributed to the
Supplemental Benefits Plan.
Transition Plan
ESOP Savings Plan Benefit Equivalent
----------------------- ----------------------- --------------------
2000 1999 1998 2000 1999 1998 2000 1999 1998
------- ------- ------- ------- ------- ------- ------ ------ ------
Mr. Manning............. $75,601 $65,599 $49,427 $50,401 $43,732 $32,951 $2,127 $2,127 $2,127
Mr. Hobbs............... 29,545 25,481 19,085 19,697 16,987 12,723 1,722 1,722 1,722
Mr. Martin.............. 30,422 26,089 19,052 20,281 17,392 12,701 -- -- --
Mr. duBois.............. 26,250 18,719 5,875 17,500 12,480 3,917 -- -- --
Mr. Mudd................ 12,375 -- -- 8,250 -- -- -- -- --
- --------
(6) Mr. Martin resigned from the Company in February, 2001.
(7) Mr. duBois joined the Company in May, 1998.
(8) Mr. Mudd joined the Company in February, 2000.
Stock Options
The following table sets forth information concerning the grant of stock
options under the Company's 1998 Stock Option Plan during 2000 to the named
executive officers.
Number of Percentage Potential Realizable Value
Securities of Total at Assumed Annual Rates of
Underlying Options Stock Price Appreciation
Options Granted to Exercise or for Ten-Year Option Term(3)
Granted Employees Base Price Expiration ---------------------------
Name (#)(1) in 2000 ($/share)(2) Date 5% 10%
---- ---------- ---------- ------------ ---------- ------------ --------------
Kenneth P. Manning...... 150,000 21.7% $22.00 12/11/2010 $ 2,075,352 $ 5,259,350
Richard F. Hobbs........ 50,000 7.2% 22.00 12/11/2010 691,784 1,753,116
R. Steven Martin........ 30,000 4.3% 22.00 12/11/2010 415,070 1,051,870
Michael duBois.......... 25,000 3.6% 22.00 12/11/2010 345,892 876,558
John Mudd............... 25,000 3.6% 22.00 12/11/2010 345,892 876,558
All Shareholders(4)..... -- -- -- -- $671,748,071 $1,702,341,503
- --------
(1) The options reflected in the table were granted on December 11, 2000,
under the Company's 1998 Stock Option Plan (the "1998 Plan") and include
both incentive stock options under Section 422 of the Internal Revenue
Code and nonstatutory stock options. The exercise price of each option
granted was equal to 100% of the fair market value of the Common Stock on
the date of grant. The options granted vest in increments of one-third of
the total grant on each of the first, second and third anniversaries of
the grant date. The options are subject to early vesting in the event of
the individual's death, disability or retirement. Upon a
14
"Change of Control" of the Company (as defined in the 1998 Plan), all
options then outstanding will become immediately exercisable in full.
(2) The exercise price of options may be paid in cash or its equivalent, by
delivering previously issued shares of Common Stock, or any combination
thereof, or by electing to have the Company withhold shares of Common
Stock issuable upon exercise with a fair market value equal to the
exercise price.
(3) The option values presented were calculated based on a per-share price of
$22.00 on the date of grant at assumed 5% and 10% annualized rates of
appreciation for the term of the grant. The actual value, if any, that an
individual may realize upon exercise will depend on the excess of the
market price of the Common Stock over the option exercise price on the
date the option is exercised. There is no assurance that the actual value
realized by an individual upon the exercise of an option will be at or
near the value estimated under the model described above.
(4) The potential realizable value for "All Shareholders" is determined on the
assumption that the price of the Company's Common Stock appreciated over
the term of the options from the $22.00 per share market price as of the
date of grant at an annualized rate (i) of 5% (which would result in a
value on December 11, 2010, of $35.83 per share); and (ii) 10% (which
would result in a value on December 11, 2010, of $57.06 per share). The
"All Shareholders" information is calculated based on 48,551,859 shares of
the Company's Common Stock outstanding as of December 31, 2000. Thus, for
comparative purposes, the total value of such Common Stock as of December
11, 2000, the date on which the options were granted, would be
$1,068,140,898.
Aggregate Option Exercises in 2000 And Year-End Option Values
The following table sets forth information regarding the exercise of stock
options by each of the named executive officers during 2000 and the year-end
value of unexercised stock options held by such officers.
Number of Securities
Underlying Unexercised Value of Unexercised
Options at End of 2000 In-the-Money Options
Shares (#) at End of 2000(1) ($)
Acquired on Value ------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
Kenneth P. Manning(2)... -- -- 495,666 224,334 $2,565,653 $169,522
Richard F. Hobbs........ -- -- 168,633 84,667 783,877 63,042
R. Steven Martin(2)..... 22,173 $151,620 89,369 60,667 253,475 46,417
Michael duBois.......... -- -- 23,666 49,334 22,895 37,230
John Mudd............... -- -- -- 25,000 -- 18,750
- --------
(1) The dollar values were calculated by determining the difference between
the fair market value of the underlying shares of Common Stock and the
various applicable exercise prices of the named executive officers'
outstanding "in-the-money" options at the end of 2000. At the end of 2000,
all options previously granted to the named executive officers were "in-
the-money," which means that their exercise price was below fair market
value. As provided by the Company's 1990 Employee Stock Plan, 1994
Employee Stock Plan and the 1998 Plan, the fair market value of the
underlying shares of Common Stock on any date is equal to the price of the
Company's Common Stock as reported on the New York Stock Exchange. On
December 31, 2000, the closing price of the Common Stock as reported on
the New York Stock Exchange was $22.75 per share.
(2) During the transition period between September 30, 1999 and December 31,
1999, Mr. Manning exercised 3,000 options for a realized value of $4,875,
and Mr. Martin exercised 22,191 options for a realized value of $147,379.
15
EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS*
Employment Agreement. The Company has an employment contract with Mr.
Manning dated November 11, 1999. The term of the agreement is for three years,
which is automatically extended annually for additional one-year periods,
except that in no event will the term of his employment extend beyond the
calendar month in which his 65th birthday occurs or he becomes disabled or
dies. During this employment period, the agreement provides for the payment of
base salary (subject to annual adjustment), plus bonus and customary fringe
benefits. The agreement can be terminated by the Board of Directors with or
without cause. If terminated without cause by the Board or for good reason by
Mr. Manning (as defined therein), certain termination benefits are payable to
Mr. Manning in an amount equal to three times the sum of his base salary then
in effect and his target bonus for the fiscal year in which such termination
occurred. Mr. Manning would also continue to receive certain fringe benefits
for three years. In the event of a change of control of the Company, Mr.
Manning's employment contract would be superseded by a Change of Control
Employment and Severance Agreement as described below, except that he would be
entitled to retain certain retirement and disability benefits under his
employment contract.
Change of Control Employment and Severance Agreements. The Company also has
Change of Control Employment and Severance Agreements with each of its
executive officers (including the named executive officers) who are part of
the executive officer group. Each of these agreements provides that in the
event of a "Change of Control," as defined in the respective agreement, the
Company will continue to employ the executive for a period of three years
following the date of such Change of Control. During this employment period,
the executive will receive as compensation a base salary, subject to annual
adjustment, bonus awards in accordance with past practice and all other
customary fringe benefits in effect as of the date of the Change of Control.
The agreements can be terminated upon 30 days' notice by the Company in the
event of the executive's disability. The agreements can also be terminated by
the Company for "cause" and by the executive for "good reason." If terminated
by the Company other than for cause or disability, or by the executive for
good reason, the Company will pay the executive an amount equal to the sum of
(i) accrued unpaid deferred compensation and vacation pay and (ii) three times
the executive's base salary plus the highest annual bonus for the last three
fiscal years. The executive will also be entitled to coverage under existing
benefit plans for three years and a payment equal to the vested amounts plus a
payment equal to three additional years of employer contributions under the
Savings Plan, ESOP, and Supplemental Benefits Plan (including the Transition
Plan benefit equivalent described in footnote (5) to the Summary Compensation
Table). The Savings Plan, ESOP and Supplemental Benefits Plan provide for full
vesting of all accounts upon the occurrence of a Change of Control. In
addition, payments under the Company's Supplemental Executive Retirement Plan,
described below ("SERP"), are calculated based on an adjusted final salary
reflecting three additional years of salary increases consistent with past
practice. If terminated for cause, the Company will pay the executive his
annual base salary through termination. If the executive's employment is
terminated by reason of death or disability, the Company will pay certain
accrued obligations and other customary death or disability benefits. In all
cases, the Company will pay any excise taxes assessed against any payments
made to the executive.
SERP. The SERP provides a non-qualified supplemental executive retirement
benefit for selected officers and key employees. Generally, participants
contribute to the plan, in each year until death or retirement, an amount
equivalent to a term insurance premium applicable to a life insurance benefit
of three times the participant's base salary in effect on the date of
acceptance into the plan, unless all amounts were previously paid under a
predecessor plan. A pre-retirement survivor income benefit equal to 20%, 25%
or 30% of base salary payable for 15 or 20 years is available to designated
beneficiaries if the participant dies prior to retirement. At the time of
retirement, the participant may continue the survivor income benefit or elect
to receive a supplemental retirement income benefit equal to 20%, 25% or 30%
of base salary for 15 or 20 years or an actuarially equivalent joint and
survivor benefit. A participant may receive his retirement income benefit as a
lump sum distribution by making an advance election therefor or by accepting
an actuarially reduced benefit. In
- --------
* References to "named executive officers" in this section exclude Mr. Martin,
who resigned from the Company in February 2001.
16
the event of a Change of Control, lump sum distributions are required. The
benefit obligations under the SERP are funded under Rabbi Trust B described
below under "Funding Arrangements." The named executive officers, except Mr.
Mudd, participate in the SERP. Under their respective agreements under the
SERP, each of the participating named executive officers is entitled to 20
years of benefits, and the applicable percentages of pre-retirement survivor
income benefits and supplemental retirement income benefits for the
participating named executive officers are 30% for Messrs. Manning and Hobbs
and 25% for Mr. duBois.
Executive Income Deferral Plan. Under the Executive Income Deferral Plan,
executives of the Company (including the named executive officers) are
entitled to defer up to 25% of their annual salary. Amounts deferred earn
interest at a Company-guaranteed annual minimum rate and are payable upon
retirement over a 15 year period, unless the executive elects to receive an
actuarially equivalent joint and survivor benefit, reduced by up to 20%
depending upon the executive's age at retirement. The Company's obligations
under the Executive Income Deferral Plan are also funded by Rabbi Trust B.
Funding Arrangements. The Company has established three so-called "Rabbi
Trusts" by entering into trust agreements with a trustee to assure the
satisfaction of the obligations of the Company under various plans and
agreements to make deferred and other payments to certain of its past, present
and future executives and directors, including the named executive officers.
Rabbi Trust A requires the Company to deposit assets into ("fund") the Trust
in the event of a "Change of Control" (as defined therein) in an amount
sufficient to satisfy the Company's obligations to Mr. Manning, the other
named executive officers, and other executive officers under the Change of
Control Employment and Severance Agreements with those individuals (except to
the extent that those obligations consist of benefits covered by Rabbi Trust
B). Rabbi Trust A is currently not funded except with a nominal amount of
assets, and is currently revocable but will become irrevocable once it is
funded. The Board may elect to fund Rabbi Trust A in whole or in part prior to
the occurrence of a Change of Control. Rabbi Trust B was created to fund the
Company's obligations under various employee benefit plans, including three
plans in which the named executive officers participate: the SERP, the
Supplemental Benefits Plan, and the Executive Income Deferral Plan. The
Company makes annual contributions to Rabbi Trust B and it currently holds
approximately $16.5 million of assets. Rabbi Trust B is irrevocable. Rabbi
Trust C was created to assure that payments to non-employee directors under
the director retirement and Deferred Compensation plans described under
"Director Compensation and Benefits" will not be improperly withheld. Rabbi
Trust C is currently funded with a nominal amount, and is also funded from
time to time as payouts are made under these plans, although the Board may
elect to fund it at any time. Rabbi Trust C is irrevocable. Each of the Rabbi
Trusts will terminate upon the earlier of the exhaustion of the trust corpus
or the final payment to the directors or executives pursuant to the respective
plans and agreements covered thereby, and any remaining assets will be paid to
the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors to file initial reports of beneficial ownership (on
Form 3) and reports of changes in beneficial ownership (on either Form 4 or
Form 5) with the Securities and Exchange Commission ("SEC") and the New York
Stock Exchange. SEC regulations require officers and directors to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on a
review of the copies of such forms furnished to the Company, and upon
certifications from reporting persons who did not file year-end reports on
Form 5 that no such reports were required, the Company believes that during
the year ended December 31, 2000, all its officers and directors complied with
Section 16(a) filing requirements except as follows: two officers, Stephen J.
Rolfs and Jack Koberstine, who were elected to their positions and became
subject to the Section 16 reporting requirements during 2000, filed their
initial beneficial ownership reports on Form 3 approximately 2 weeks late.
17
COMPANY STOCK PERFORMANCE
The following graph compares the cumulative annual change since December
31, 1995 of the total shareholder return on the Common Stock with: (i) the
total return on the Standard & Poor's 500 Food Index (the "S&P Food Index");
and (ii) the total return on the Standard & Poor's 500 Composite Index (the
"S&P Composite Index"), assuming that $100 was invested in each of the Common
Stock, the stocks comprising the S&P Food Index and the stocks comprising the
S&P Composite Index on December 31, 1995 and assuming that all dividends were
reinvested at the end of the month in which they were paid.
Comparison Of Five-Year Total Return
Among Sensient Technologies Corporation, The S&P Food Index And The S&P
Composite Index
December 31,
-----------------------------
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
Sensient Technologies Corporation............. $100 $90 $111 $147 $112 $128
S&P Food Index................................ 100 118 169 182 144 181
S&P Composite Index........................... 100 123 163 210 253 230
18
ITEM 2.
APPROVAL OF CHANGE OF THE NAME OF THE COMPANY FROM UNIVERSAL FOODS CORPORATION
TO SENSIENT TECHNOLOGIES CORPORATION
The Board of Directors has approved and believes that it is advisable and
in the best interests of the Company to change the name of the Company from
Universal Foods Corporation to Sensient Technologies Corporation. The Company
believes that the new name better reflects the nature of the Company's
business and its expansion into non-food markets. Since November 6, 2000, the
Company has been doing business as Sensient Technologies Corporation to the
extent legally permissible, and its shares have been trading on the New York
Stock Exchange under the symbol "SXT". If this name change is approved, the
Company and its subsidiaries will cease using the Universal Foods Corporation
name and will use the Sensient Technologies Corporation name, beginning as
soon as practicable after the Meeting.
Under the Wisconsin Business Corporation Law, a change in the formal name
of a Wisconsin corporation requires both director and shareholder approval of
an amendment to the corporation's Articles of Incorporation to reflect the new
corporate name. The Board has adopted the following resolution to amend
Section 1.1 of the Company's Amended and Restated Articles of Incorporation to
reflect that the name of the Company shall be Sensient Technologies
Corporation:
RESOLVED, that the Amended and Restated Articles of Incorporation be
amended to change the name of the Company from Universal Foods Corporation
to Sensient Technologies Corporation, and for that purpose to amend Section
1.1 thereof to read in its entirety as follows:
"Section 1.1 Name
The name of the corporation is SENSIENT TECHNOLOGIES CORPORATION."
Under Wisconsin law, an amendment to a company's Articles of Incorporation
is adopted if a quorum of the shares entitled to vote is present and a
majority of those shares present are voted in favor of the amendment. Thus,
any shares that are present at the meeting for quorum purposes which are not
voted on this matter at the Meeting (whether by abstention, broker nonvote or
otherwise) will have the same effect as a vote against the amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RESOLUTION TO
CHANGE THE COMPANY'S NAME TO SENSIENT TECHNOLOGIES CORPORATION. SHARES OF
COMMON STOCK REPRESENTED AT THE MEETING BY EXECUTED BUT UNMARKED PROXIES WILL
BE VOTED FOR THE CHANGE OF THE COMPANY'S NAME.
19
ITEM 3.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board, subject to
shareholder ratification, has selected Deloitte & Touche LLP, certified public
accountants, to audit the financial statements of the Company for the year
ending December 31, 2001. Deloitte & Touche LLP has been the independent
auditor of the Company for many years and has advised the Company that neither
the firm nor any of its partners have any direct or indirect material
financial interest in the Company.
Although not required by law to submit the appointment to a vote by
shareholders, the Board believes it appropriate, as a matter of policy, to
request that the shareholders ratify the appointment of Deloitte & Touche LLP
as independent auditors for 2001. Assuming that a quorum is present, the
selection of Deloitte & Touche LLP will be deemed to have been ratified if
more shares are voted in favor of ratification than are voted against
ratification. Under Wisconsin law, any shares of Common Stock which are not
voted on this matter at the Meeting (whether by abstention, broker nonvote or
otherwise) will have no effect on this matter. If the shareholders should not
so ratify, the Board will reconsider the appointment.
Representatives of Deloitte & Touche LLP are expected to be present at the
Meeting and will have an opportunity to make a statement if they desire to do
so and to respond to appropriate shareholder questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDI-
TORS FOR THE YEAR ENDING DECEMBER 31, 2001. SHARES OF COMMON STOCK REPRE-
SENTED AT THE MEETING BY EXECUTED BUT UNMARKED PROXIES WILL BE VOTED FOR
THE RATIFICATION OF SUCH APPOINTMENT.
ITEM 4.
OTHER MATTERS
Company management knows of no business which will be presented for action
at the Meeting other than those items identified in the Notice of Annual
Meeting. Pursuant to the Company's Bylaws, written notice of any shareholder
proposals to be presented at the Meeting must have been received by the
Secretary no later than March 6, 2001. As no notice of any shareholder
proposals was received, no business may be brought before the Meeting by any
shareholders. If other matters are brought before the Meeting by the Board of
Directors, it is intended that proxies will be voted at the Meeting in
accordance with the judgment of the person or persons exercising the authority
conferred by such proxies.
20
FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS
The Company welcomes comments or suggestions from its shareholders. In the
event a shareholder desires to have a proposal formally considered at the
annual shareholders' meeting in April, 2002 and included in the proxy
statement for that meeting, the proposal must be in writing and received by
the Secretary of the Company on or before November 23, 2001 and must otherwise
comply with the applicable rules of the Securities and Exchange Commission.
Under the Company's Bylaws, appropriate shareholder proposals will be
presented at the 2002 annual meeting without inclusion in the proxy materials
if such proposals are received by the Company no later than March 6, 2002.
In addition, the Company's Bylaws establish procedures for shareholder
nominations for election of directors of the Company and bringing business
before any annual meeting of shareholders of the Company. Among other things,
to bring business before an annual meeting or to nominate a person for
election as a director at an annual meeting, a shareholder must give written
notice to the Secretary of the Company not less than 50 days (and, in the case
of nominations, not more than 90 days) prior to the third Thursday after the
first Friday in the month of April next following the last annual meeting
held. The notice must contain certain information about the proposed business
or the nominee and the shareholder making the proposal.
Any shareholder interested in making a nomination or proposal should
request a copy of the applicable Bylaw provisions from the Secretary of the
Company and send any such nomination or proposal to the Secretary of the
Company at the Company's executive offices at 777 East Wisconsin Avenue, 11th
Floor, Milwaukee, Wisconsin, 53202.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS ARE
REQUESTED TO DATE, SIGN AND RETURN THE PROXY CARD OR VOTE BY PHONE OR BY
INTERNET ACCORDING TO THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD AS SOON AS
POSSIBLE. IF YOUR SHARES ARE REGISTERED IN THE NAME OF A BROKER OR BANK, ONLY
YOUR BROKER OR BANK CAN SUBMIT THE PROXY CARD ON YOUR BEHALF. PLEASE CONTACT
THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR HER TO SUBMIT THE
PROXY CARD ON YOUR BEHALF.
UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER, ADDRESSED TO THE SECRETARY OF THE
COMPANY, THE COMPANY WILL PROVIDE TO SUCH SHAREHOLDER WITHOUT CHARGE A COPY OF
THE COMPANY'S 2000 ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
By Order of the Board of Directors
John L. Hammond
Secretary
March 28, 2001
21
Appendix A
Audit Committee Charter--Section 3.14 of Company Bylaws
3.14 Audit Committee. There shall be an Audit Committee of the Board of
Directors. The Committee shall have at least three (3) members. The members of
the Committee shall meet the independence and experience requirements of the
New York Stock Exchange. The Committee shall have the authority to conduct any
investigation appropriate to fulfilling its responsibilities and shall have
the authority to retain, at the Company's expense, legal, accounting or other
consultants it deems necessary in the performance of its duties. The Committee
shall have all of the responsibilities of a qualified audit committee under
New York Stock Exchange rules including without limitation the
responsibilities set forth below.
Review Procedures
1 Review and reassess the adequacy of this charter at least annually.
Submit the charter to the Board of Directors for approval and have the
document published at least every three years in accordance with
Securities and Exchange Commission regulations.
2. Review the Company's annual audited financial statements prior to filing
or distribution. Review should include discussion with management and
the independent auditors of significant issues regarding accounting
principles, practices, and judgments.
3. In consultation with management, the independent auditors, and the
internal auditors, consider the integrity of the Company's financial
reporting processes and controls. Discuss significant financial risk
exposures and the steps management has taken to monitor, control, and
report such exposures. Review significant findings prepared by the
independent auditors and the internal auditing department together with
management's responses.
4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to filing the Company's Form
10-Q with the Securities and Exchange Commission. Discuss any
significant changes to the Company's accounting principles and any items
required to be communicated by the independent auditors in accordance
with AICPA SAS 61. The Chair of the Committee may represent the entire
Audit Committee for purposes of this review.
Independent Auditors
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee and the Board
of Directors shall have the ultimate authority to select, evaluate the
performance of and, where appropriate, replace the independent auditors.
The Audit Committee shall annually recommend to the Board of Directors
the appointment or replacement of the independent auditors.
6. Approve the fees and any other significant compensation to be paid to
the independent auditors.
7. On an annual basis, the Committee shall obtain a formal written
statement from the independent auditors delineating all relationships
between the Company and its affiliates, including the written letter and
disclosure required by ISB Standard No. 1, as it may be supplemented.
8. From time to time, as appropriate, engage in a dialogue with the
independent auditors with respect to any disclosed relationships or
services that may impact the objectivity and independence of such
accountants and recommend to the Board of Directors appropriate action
in response to the outside auditors' report to satisfy itself of the
auditors' independence.
9. Review the independent auditors' audit plan--discuss scope, staffing,
locations, reliance upon management, and internal audit and general
audit approach.
A-1
10. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss with the independent
accountants the Company's internal controls and the matters required to
be communicated to audit committees in accordance with AICPA SAS 61.
Internal Audit Department and Legal Compliance
11. Review the budget, activities, organizational structure, qualifications
and performance of the internal audit department, as needed.
12. Review any reports covering issues which are material to the Company's
financial statements prepared by the internal audit department together
with management's response and follow-up to these reports.
13. On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with
applicable laws and regulations, and inquiries received from regulators
or governmental agencies.
Other Responsibilities
14. Annually prepare, based on the review and discussions referred to
above, a report to shareholders as required by Securities and Exchange
Commission rules and regulations. The report should be included in the
Company's annual proxy statement.
15. Review and update periodically the Company's Code of Conduct and ensure
that compliance with the Code of Conduct is adequately monitored by
management.
16. Perform any other activities consistent with this charter, the
Company's by-laws, and governing law, as the Committee or the Board
deems necessary or appropriate.
17. Periodically report to the Board of Directors on significant results of
the foregoing activities.
A-2
UNIVERSAL FOODS CORPORATION
d/b/a Sensient Technologies Corporation
ANNUAL MEETING OF SHAREHOLDERS
To be held Thursday, April 26, 2001
2:00 p.m. New York City Time
St. Regis Hotel, 2 East 55th Street, at Fifth Avenue
New York, New York
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[LOGO] SENSIENT Sensient Technologies Corporation
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202 proxy
- --------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors of Universal Foods
Corporation.
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify on the reverse side.
If no choice is specified, the proxy will be voted "FOR" all nominees listed in
Item 1 and "FOR" Items 2 and 3.
By signing this proxy, you revoke all prior proxies and constitute and appoint
KENNETH P. MANNING and JOHN L. HAMMOND, and each of them, with full power of
substitution, your true and lawful Proxies, to represent and vote, as designated
below, all shares of Common Stock of Universal Foods Corporation which you are
entitled to vote at the Annual Meeting of Shareholders of such corporation to be
held at the St. Regis Hotel, 2 East 55th Street at Fifth Avenue, New York, New
York, on Thursday, April 26, 2001, 2:00 p.m. New York City Time, and at any
adjournment thereof.
See reverse for voting instructions.
There are three ways to vote your Proxy
- ----------------------
| COMPANY # |
| CONTROL # |
- ----------------------
Your telephone or Internet vote authorizes the Named Proxies to vote
your shares in the same manner as if you marked, signed and returned
your proxy card.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EASY *** IMMEDIATE
. Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week,
until 12:00 p.m. (ET) on April 25, 2001.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
. Follow the simple instructions the voice provides you.
VOTE BY INTERNET - http://www.eproxy.com/sxt/ - QUICK *** EASY *** IMMEDIATE
. Use the Internet to vote your proxy 24 hours a day, 7 days a week, until 12:00
p.m. (CT) on April 25, 2001.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card appearing below, then fold this sheet along
the dotted line and return this sheet in the postage-paid envelope we've
provided or return to Universal Foods Corporation, c/o Shareowner Services, P.O.
Box 64873, St. Paul, MN 55164-0873.
If you vote by Phone or Internet, please do not mail your Proxy Card
The Board of Directors Recommends a Vote FOR all Nominees listed in Item 1 and
FOR Items 2 and 3.
1. Election of directors: 01 Michael E. Batten 03 James A. D. Croft
02 Dr. Fergus M. Clydesdale 04 Essie Whitelaw
[_] Vote FOR [_] Vote WITHHELD
all nominees from all nominees
(except as marked)
(Instructions: To withhold authority to vote ------------------------
for any Indicated nominee, write the number(s) of | |
the nominee(s) in the box provided to the right.) ------------------------
\/ Please fold here \/
- --------------------------------------------------------------------------------
2. Proposal to amend the Company's Articles of Incorporation to change the name
of the Company from Universal Foods Corporation to Sensient Technologies
Corporation.
[_] For [_] Against [_] Abstain
3. Proposal to ratify the appointment of Deloitte & Touche LLP, certified public
accountants, as the independent auditors of the Company for fiscal 2001.
[_] For [_] Against [_] Abstain
4. In their discretion, the Proxies are authorized to Vote upon such other
business as may properly come before the meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
"FOR" ALL NOMINEES LISTED IN ITEM 1 AND "FOR" ITEMS 2 AND 3.
Address Change? Mark Box [_] The undersigned acknowledges receipt of
Indicate changes below: the Notice of said Annual Meeting and
the accompanying Proxy Statement and
Annual Report.
Date
-----------------------------------
----------------------------------------
| |
| |
----------------------------------------
Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc. should
include title and authority.
Corporations should provide full name
of corporation and title of authorized
officer signing a proxy.
UNIVERSAL FOODS CORPORATION
d/b/a Sensient Technologies Corporation
ANNUAL MEETING OF SHAREHOLDERS
To be held Thursday, April 26, 2001
2:00 p.m. New York City Time
St. Regis Hotel, 2 East 55th Street, at Fifth Avenue
New York, New York
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[LOGO] SENSIENT Sensient Technologies Corporation
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202 proxy
- --------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors of Universal Foods
Corporation.
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify on the reverse side.
If no choice is specified, the proxy will be voted "FOR" all nominees listed in
Item 1 and "FOR" Items 2 and 3.
By signing this proxy, you revoke all prior proxies and constitute and appoint
KENNETH P. MANNING and JOHN L. HAMMOND, and each of them, with full power of
substitution, your true and lawful Proxies, to represent and vote, as designated
below, all shares of Common Stock of Universal Foods Corporation which you are
entitled to vote at the Annual Meeting of Shareholders of such corporation to be
held at the St. Regis Hotel, 2 East 55th Street at Fifth Avenue, New York, New
York, on Thursday, April 26, 2001, 2:00 p.m. New York City Time, and at any
adjournment thereof.
See reverse for voting instructions.
There are three ways to vote your Proxy
- ----------------------
| Company# |
| Control# |
- ----------------------
Your telephone or Internet vote authorizes the Named Proxies to vote your
shares in the same manner as if you marked, signed and returned your
proxy card.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EASY *** IMMEDIATE
. Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week,
until 12:00 p.m. (ET) on April 25, 2001.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
. Follow the simple instructions the voice provides you.
VOTE BY INTERNET - http://www.eproxy.com/sxt/ - QUICK *** EASY *** IMMEDIATE
. Use the Internet to vote your proxy 24 hours a day, 7 days a week, until
12:00 p.m. (CT) on April 25, 2001.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card appearing below, then fold this sheet along
the dotted line and return this sheet in the postage-paid envelope we've
provided or return it to Universal Foods Corporation, c/o Shareholder Services,
P.O. Box 64873, St. Paul, MN 55164-0873.
If you vote by Phone or Internet, please do not mail your Proxy Card
Savings Plan --401(K) or Employee Stock Ownership Plan-- "ESOP"
The Board of Directors Recommends a Vote FOR all Nominees listed in Item 1 and
FOR Items 2 and 3.
1. Election of directors: 01 Michael E. Batten 03 James A. D. Craft
02 Dr. Fergus M. Clydesdale 04 Essie Whitelaw
[_] Vote FOR [_] Vote WITHHELD
all nominees from all nominees
(except as marked)
(Instructions: To withhold authority to vote -----------------------
for any indicated nominee, write the number(s) of | |
the nominee(s) in the box provided to the right.) -----------------------
\/ Please fold here \/
- --------------------------------------------------------------------------------
2. Proposal to amend the Company's Articles of Incorporation to change the name
of the Company from Universal Foods Corporation to Sensient Technologies
Corporation.
[_] For [_] Against [_] Abstain
3. Proposal to rally the appointment of Delottie & Touche LLP, certified public
accountants, as the independent auditors of the Company for fiscal 2001.
[_] For [_] Against [_] Abstain
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjustment thereof.
[_] For [_] Against [_] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
"FOR" ALL NOMINEES LISTED IN ITEM 1 AND "FOR" ITEMS 2 AND 3.
Address Change? Mark Box [_] The undersigned acknowledges receipt of
Indicate Changes below: the Notice of said Annual Meeting and
the accompanying Proxy Statement and
Annual Report.
Date
-----------------------------------
----------------------------------------
| |
| |
----------------------------------------
Signature (s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc, should
include title and authority.
Corporations should provide full name of
corporation and title of authorized
officer signing the proxy.