SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Act of 1934
(Amendment No. )
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 ss.240.14a-11(c) or ss.240.14a-12
INTERNATIONAL FLAVORS & FRAGRANCES INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
I F F
INTERNATIONAL FLAVORS & FRAGRANCES INC.
521 WEST 57TH STREET
NEW YORK, N.Y. 10019
----------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 1995
The Annual Meeting of Shareholders of International Flavors & Fragrances
Inc., a New York corporation (hereinafter called the "Company"), will be held at
the office of the Company, 521 West 57th Street, New York, New York, on
Thursday, May 11, 1995, at 10 A.M., Eastern Daylight Saving Time, to elect 12
directors for the ensuing year, to act on a proposed amendment to the Company's
Management Incentive Compensation Plan, and to transact such other business as
may properly come before the meeting or any adjournments thereof.
Only shareholders of record at the close of business on March 24, 1995 will
be entitled to notice of and to vote at the meeting.
Admission to the meeting will be by ticket only. If you are a shareholder
of record and plan to attend, please complete and return the ticket request card
which is enclosed for such holders. If your shares are not registered in your
own name and you plan to attend, please request a ticket by writing to the
Office of the Secretary, International Flavors & Fragrances Inc., 521 West 57th
Street, New York, New York 10019. Evidence of your ownership, which you can
obtain from your bank or broker, must accompany your letter.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE REQUESTED TO
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED ADDRESSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors,
Stephen A. Block
Secretary
March 28, 1995
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Company's Board of Directors of proxies to be used at the Annual Meeting of
Shareholders of the Company to be held on May 11, 1995 at the principal
executive office of the Company, 521 West 57th Street, New York, New York 10019.
This proxy statement and the form of proxy will be sent to shareholders on or
about March 28, 1995. In addition to solicitation by mail, proxies may be
solicited personally, by telephone or by telegram. The Company has retained
Corporate Investor Communications, Inc. to assist in such solicitation for a fee
of $8,000. The cost of soliciting proxies will be borne by the Company.
Any shareholder who signs and returns the enclosed form of proxy may revoke
it at any time before it has been exercised, by a written instrument or by
personal attendance at the meeting.
The Company had outstanding at the close of business on December 31, 1994,
111,464,300 shares of Common Stock entitled to one vote per share. Only
shareholders of record at the close of business on March 24, 1995 will be
entitled to vote at the meeting.
ELECTION OF DIRECTORS
At the meeting 12 directors will be elected in accordance with the By-laws
of the Company, as amended, to serve for the ensuing year and until their
successors are elected and shall qualify. Except as stated below, the shares of
Common Stock represented by the proxies hereby solicited will be voted for the
election of the 12 nominees whose names are listed below, all of whom are
presently directors of the Company. Should any of such nominees be unable for
good cause to serve (which is not now anticipated), it is intended that such
shares will be voted for the balance of those named and for such substitute
nominees as the Board of Directors of the Company may recommend.
Where no qualifying note reference appears in the table below next to the
number of shares beneficially owned, as defined by Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the named
director has sole voting and investment power over all such shares.
INFORMATION ABOUT NOMINEES
<TABLE>
<CAPTION>
Shares of Per-
Company Stock centage
beneficially of
Principal Occupation During Year first owned as of Shares
last five years and became December 31, Out-
Name Age Other Directorships Held Director 1994 standing
---- --- ---------------------------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Margaret Hayes Adame ....... 55 President, Fashion Group 1993 3,000 (1)
International, an international
trade organization, since 1993;
Senior Vice-President, Saks
Fifth Avenue, retailing, prior
thereto; Director, North
American Watch Corporation
Robin Chandler Duke(6)(8) .. 71 Chairman, Population Action 1975 9,000(2) (1)
International; Director,
American Home Products Corp.,
Rockwell International
Corporation and River Bank
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Shares of Per
Company Stock centage
beneficially of
Principal Occupation During Year first owned as of Shares
last five years and became December 31, Out-
Name Age Other Directorships Held Director 1994 standing
---- --- ---------------------------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Richard M. Furlaud ........... 71 Chairman of the Board of 1990 8,250(2) (1)
Trustees, The Rockefeller
University; Retired President,
Bristol-Myers Squibb Company;
Director, American Express
Company
Eugene P. Grisanti(3)(4) ..... 65 Chairman of the Board and 1979 1,627,747(2)(5) 1.5%
President of the Company
Thomas H. Hoppel(3) .......... 64 Vice-President and Treasurer of 1993 46,446(2) (1)
the Company since January 1,
1992; Controller prior thereto
Hugh R. Kirkpatrick(3) ....... 58 Senior Vice-President of the 1991 69,300(2) (1)
Company since January 1, 1991;
Vice-President prior thereto
Herbert G. Reid(6)(7) ........ 68 Retired; formerly Executive 1978 9,000(2) (1)
Vice-President and Director,
Schlumberger Limited, oil field
services and electronics
George Rowe, Jr.(6)(8) ....... 73 Attorney; member of the law firm 1994 10,766,716(5) 9.7%
of Fulton, Duncombe & Rowe
Stanley M. Rumbough, Jr.(8)... 74 Investments and business 1964 21,000(2) (1)
development; Director, CUC
International Inc. and ABT
Family of Funds
Henry P. van Ameringen ....... 64 Retired; formerly Vice-President, 1961 2,538,091(2)(5) 2.3%
International Flavors &
Fragrances (Europe)
Hendrik C. van Baaren(3) ..... 55 Senior Vice-President of the 1991 67,181(2) (1)
Company
William D. Van Dyke, III (6)(8).63 Senior Vice-President, 1973 7,831,458(2)(9) 7.0%
Smith Barney Inc., investment
banking
-------------------------------------------------
</TABLE>
(1) Less than .1%.
(2) Pursuant to Rule 13d-3 under the Exchange Act the number of shares of
Common Stock of the Company beneficially owned by Messrs. Grisanti, Hoppel,
Kirkpatrick and van Baaren and by non-employee directors includes (where
applicable) shares which he or she has (or will have 60 days after such date)
the right to acquire under stock options granted by the Company. The respective
numbers of such shares are 76,921 for Mr. Grisanti, 21,000 for Mr. Hoppel,
38,200 for Mr. Kirkpatrick, 42,000 for Mr. van Baaren and 6,000 for each of Ms.
Duke and Messrs. Furlaud, Reid, Rumbough, van Ameringen and Van Dyke.
3
<PAGE>
(3) Employed by the Company for more than the last five years.
(4) Chairman of the Executive Committee.
(5) The numbers of shares of Common Stock of the Company beneficially owned
by Messrs. Rowe, Grisanti and van Ameringen listed above, and the numbers of
shares beneficially owned by Messrs. Rowe and Henry G. Walter, Jr. and Hedwig
van Ameringen listed in the table on page 13, include holdings of the following
trusts and foundations. Messrs. Rowe and Walter and Mrs. van Ameringen are the
trustees of five trusts established under the will of A. L. van Ameringen which
hold 7,134,716 shares. Messrs. Rowe and van Ameringen and Mrs. van Ameringen are
officers of the van Ameringen Foundation, Inc., a charitable foundation, which
owns 628,138 shares. Messrs. Rowe, Walter and van Ameringen and Mrs. van
Ameringen are four of the eight directors of that foundation. Mr. Rowe is an
officer of The Ambrose Monell Foundation, a charitable foundation, which owns
1,247,055 shares, and Mr. Rowe is an officer of another charitable foundation
which owns 20,559 shares and the executor of an estate holding 9,000 shares.
Messrs. Rowe, Grisanti and Walter are the directors of each of those two
foundations. Messrs. Rowe and Walter are also trustees of nine trusts holding an
aggregate of 805,164 shares. Messrs. Rowe and Walter are the trustees of one
trust and two of three trustees of another trust holding an aggregate of 50,391
shares for the benefit of certain family members of Mr. Walter. Mr. Walter is
one of two trustees of another trust for the benefit of a family member holding
3,744 shares. Mr. Walter is also one of two trustees of a charitable trust
holding 1,227 shares. Mr. Rowe is sole trustee of a trust holding 750 shares and
is one of three trustees of another trust holding 4,000 shares and Mr. Walter is
one of two trustees of another trust holding 2,907 shares. Messrs. Rowe and
Walter and Mrs. van Ameringen are trustees of three additional trusts each
holding 288,981 shares. Mr. van Ameringen is also a trustee of a charitable
trust holding 18,158 shares. The number of shares beneficially owned by Mr. van
Ameringen listed above includes 1,903,953 shares with respect to which he has
sole voting and investment power and, as described in this note, 628,138 shares
with respect to which he has shared voting and investment power. The number of
shares beneficially owned by Mr. Grisanti listed above includes 120,133 shares
with respect to which he has sole voting and investment power, 240,000 shares
with respect to which he has sole voting power and 1, 267,614 shares with
respect to which he has shared voting and investment power.
(6) Member of Executive Committee.
(7) The number of shares beneficially owned by Mr. Reid listed above
includes 6,000 shares with respect to which he has sole voting and investment
power and 3,000 shares over which he has shared voting and investment power.
(8) Has held this position for more than the last five years.
(9) The number of shares beneficially owned by Mr. Van Dyke listed above
includes 6,957 shares with respect to which he has sole voting and investment
power and 7,824,501 shares over which he has shared voting and investment power,
including the holdings of the trust referred to in footnote 2 on page 13, three
other trusts and a foundation. Such number does not include the beneficial
interest of Mr. Van Dyke's wife in 129,426 shares owned directly by her. Mr. Van
Dyke disclaims any beneficial interest in any such shares.
All of the above nominees were elected by the shareholders at the 1994
annual meeting. During 1994 the Board of Directors held six meetings. The
Company has an Audit Committee which held two meetings and a Stock Option and
Compensation Committee which held three meetings in 1994. The Audit Committee,
consisting of Messrs. Furlaud, Reid and Van Dyke, oversees the financial
operations of the Company and the Company's relationship with its independent
accountants. The Stock Option and Compensation Committee, consisting of Messrs.
Furlaud, Reid and Van Dyke, oversees the Company's various compensation
arrangements, determines the stock options to be granted to employees under the
Company's stock option plans and the executive bonuses to be granted under the
Company's executive bonus plans, and makes recommendations to the Board as to
the salaries to be paid to the executive officers of the Company. The Company
does not have a nominating committee.
4
<PAGE>
I. SUMMARY COMPENSATION
The following table sets forth information in respect of the compensation
of the Chairman and President and each of the other four most highly compensated
executive officers of the Company for 1992, 1993 and 1994.
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------
Annual Compensation Awards
---------------------------------- --------------------------
(a) (b) (c) (d) (e) (f) (g)
Restricted Securities All Other
Name and Stock Underlying Compen-
Principal Salary Bonus Award(s) Options sation
Position Year ($) ($)(1) ($)(2) (#) ($)(3)(4)
---------- ------ ------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Eugene P. Grisanti .......... 1994 770,000 385,000 -- 75,000 30,324
Chairman of the Board 1993 700,000 350,000 -- 75,000 26,878
and President 1992 600,000 300,000 10,625,000 -- 22,401
Hugh R. Kirkpatrick ......... 1994 410,338 200,000 -- 50,000 13,790
Senior Vice-President 1993 387,120 190,000 -- 60,000 12,398
and Director 1992 346,729 170,000 -- 30,000 11,409
Hendrik C. van Baaren ....... 1994 397,505 192,500 -- 50,000 12,839
Senior Vice-President 1993 372,849 180,000 -- 51,000 11,016
and Director 1992 346,430 167,500 -- 30,000 10,986
Ronald S. Fenn .............. 1994 302,453 125,375 -- 10,000 9,941
Vice-President 1993 283,695 92,400 -- 24,000 9,337
1992 251,957 125,000 -- 12,000 8,229
Rudolf Merz ................. 1994 297,000 120,000 -- 15,000 --
Vice-President 1993 264,518 105,000 -- 21,000 --
1992 266,720 124,621 -- 10,500 --
------------------
</TABLE>
(1) Under the Company's Management Incentive Compensation Plan.
(2) Under an employment contract dated as of January 1, 1992, Mr. Grisanti was
granted an award of 300,000 restricted shares of the Company's Common
Stock. Because the shares are "restricted," they may not be sold, pledged,
or otherwise transferred until the applicable restriction period on a given
installment of the award has elapsed. Restrictions on two-fifths of the
shares covered by the award have lapsed as of the date hereof. The
restriction period extends to December 31, 1995 with respect to another
one-fifth of such shares, and to December 31, 1996 with respect to the
remaining two-fifths of such shares. The shares are subject to forfeiture
under certain conditions, including the termination by either party, with
or without cause, of Mr. Grisanti's employment. Dividends are payable on
the restricted stock. At December 31, 1994, the 240,000 shares of
restricted stock still subject to restriction had a market value of
$11,100,000, based on the closing price of the Company's stock on that
date. The Company has made no other restricted stock awards to any named
executive officers.
(3) For the year 1994, the following amounts were paid or set aside in respect
of individual officers listed in the above compensation table under the
Company's Retirement Investment Fund Plan, a defined contribution plan, and
the Company's unfunded Supplemental Retirement Investment Plan: Mr.
Grisanti, $23,187, Mr. Kirkpatrick, $12,087, Mr. van Baaren, $11,637 and
Mr. Fenn, $8,937.
(4) For the year 1994, the following amounts were imputed under the tax law as
compensation to the executive officers listed in the above compensation
table in consideration of life insurance coverage of such persons under the
Company's Executive Death Benefit Program: Mr. Grisanti, $7,137, Mr.
Kirkpatrick, $1,703, Mr. van Baaren, $1,202 and Mr. Fenn, $1,004. No
participant in such Program has or will have any interest in the cash
surrender value of the underlying insurance policies.
5
<PAGE>
II. OPTION GRANTS IN 1994
The following table shows all grants of options in 1994 to the executive
officers named in the Summary Compensation table. The Company's option plans do
not provide for the grant of stock appreciation rights (SARs).
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
----------------------------------------------------------------------------------------- ------------------
(a) (b) (c) (d) (e) (f)
Number % of Total
of Shares Options
Underlying Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration Grant Date Present
Name (#) (1) Year ($/Sh)(2) Date Value ($)(3)
---- ----------- ---------- --------- ------ -----------------
<S> <C> <C> <C> <C> <C>
E. P. Grisanti .................. 75,000 9.8% 36.00 5/12/04 $805,500
H. R. Kirkpatrick ............... 50,000 6.5% 36.00 5/12/04 537,000
H. C. van Baaren ................ 50,000 6.5% 36.00 5/12/04 537,000
R. S. Fenn ...................... 10,000 1.3% 36.00 5/12/04 107,400
R. Merz ......................... 15,000 2.0% 36.00 5/12/04 161,100
-----------------------------------
<FN>
(1) All options were granted on May 12, 1994. Such options become exercisable
in three equal installments 24, 36 and 48 months, respectively, after the
date of grant.
(2) All options were granted at the market price on the date of grant.
(3) The Company used the Black-Scholes model of option valuation to determine
grant date present value. The actual value, if any, an executive may
realize will depend on the excess of the stock price over the exercise
price on the date the option is exercised, so that there is no assurance
the value realized by an executive will be at or near the value estimated
by the Black-Scholes model. The estimated values under that model are based
on arbitrary assumptions as to variables such as interest rates, stock
price volatility, future dividend yield and the time of exercise. For these
reasons, the Company does not agree that the Black-Scholes model can
properly determine the value of an option. The assumptions used by the
Company are as follows: a grant date stock price and an exercise price of
$36.00 per share; an option term of 10 years; a stock price volatility
based on the calendar year closing prices of the Company's Common Stock
(plus dividends) for the period December 31, 1984 through December 31,
1994; a dividend yield of 2.89% (the average dividend yield for the
12-month period ending May 31, 1994); and a risk-free interest rate of
7.58% (the yield on the date of grant on the U.S. Government Zero Coupon
Bond with a maturity closest to the option term).
</FN>
</TABLE>
III. OPTIONS EXERCISED IN 1994 and Option Values at December 31, 1994
The following table provides information as to options exercised in 1994 by
each of the executive officers named in the Summary Compensation table and the
value of options held by such executive officers at December 31, 1994 measured
in terms of the closing price of the Common Stock in consolidated trading on
December 31, 1994.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Value of Unexercised
Securities In-the-Money
Underlying Options at
Unexercised FY-End($)
Options at
FY-End (#)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable
---- ----------------- ------------ --------------- -----------------
<S> <C> <C> <C> <C>
E. P. Grisanti ...................... 5,181 93,621 51,921/150,000 $1,248,962/$1,521,750
H. R. Kirkpatrick ................... 16,700 257,638 10,700/137,500 130,212/1,486,100
H. C. van Baaren .................... 30,000 692,400 20,000/126,000 299,100/1,350,340
R. S. Fenn .......................... 3,000 81,200 34,000/45,000 871,460/481,941
R. Merz ............................. 9,000 228,250 32,400/46,500 797,297/510,490
</TABLE>
6
<PAGE>
DIRECTORS' COMPENSATION
Directors who are not employees of the Company receive an annual retainer
of $15,000 and a fee of $750 for each meeting of the Board or committee
attended, except that when a committee meeting is held on the date of a Board
meeting a fee of only $500 is paid. Through 1999, on the date of the annual
meeting of shareholders, such directors also receive automatic annual stock
option grants of 3,000 shares of Common Stock under the Company's 1990 Stock
Option Plan for Non-Employee Directors. On May 12, 1994, each non-employee
director received an option for 3,000 shares at $36.00 per share.
The Company has established a Directors' Deferred Compensation Plan under
which directors may defer all or a portion of their cash compensation until
retirement or another specified date. Deferred amounts credited to a director's
plan account earn interest at the interest rates applicable from time to time to
deferred compensation awards under the Company's Management Incentive
Compensation Plan.
On February 14, 1995, as part of its overall program of charitable
contributions, the Company established the Director Charitable Contribution
Program. Under the Program, the Company will purchase life insurance policies on
the lives of participating directors and will be the owner and sole beneficiary
of the policies. After the death of a covered director, the Company will donate
$500,000 to one or more qualifying charitable organizations designated by the
director and $500,000 to The IFF Foundation. Individual directors derive no
financial benefit from the Program since all deductions relating to the
contributions accrue solely to the Company. The Program should have no long-term
cost to the Company.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Grisanti is employed under a contract dated as of January 1, 1992, as
an executive, at a salary of $600,000 per annum unless the Company's Board of
Directors shall have fixed a higher salary, for the period (the "executive
period") which commenced on January 1, 1992 and which may be terminated at any
time thereafter, with or without cause, by either the Company or Mr. Grisanti on
written notice to the other. Effective as of January 1, 1995, the Board of
Directors fixed his annual salary at $850,000. If not so terminated on or before
December 31, 1996, continuation of the executive period after that date shall be
subject to further agreement between the Company and Mr. Grisanti as to the
terms and conditions of such employment. In the event that the Company shall
terminate such employment prior to December 31, 1996, Mr. Grisanti's salary
shall continue for a period of twelve months after such termination (but ending
not later than December 31, 1996) at the rate in effect prior to such
termination. Mr. Grisanti may share, as determined by the Board of Directors, in
any incentive compensation, bonus, stock option or other employee benefit plans,
programs or policies of the Company. Mr. Grisanti was granted a restricted stock
award under the contract. See the Summary Compensation Table and Note 2
thereunder for the amount and terms thereof. The contract provides that, after
termination of his executive employment, Mr. Grisanti shall serve part-time in a
consulting capacity for a period of years, not exceeding ten, equal to the
number of full years of executive service under both this contract and his prior
employment contract, during which period he will receive an annual fee equal to
$15,000 for every period of 12 months of such executive service, not exceeding
$150,000 per year.
The Company's Board of Directors approved, and the Company has entered into
agreements (the "Agreements") with 19 of its present executives, including the
executive officers listed in the above compensation table. The Agreements
provide that if, within three years of a "change of control", as defined below,
an Executive is involuntarily terminated from employment by the Company or
resigns following a substantial diminution in his duties, responsibilities or
status or change in workplace or a decrease in his compensation of 10% or more,
in each case which is not corrected following notice of objection by the
executive, the executive will be entitled to receive a
7
<PAGE>
lump sum payment in an amount equal to the sum of: (i) three times the higher of
(a) his previous compensation for the calendar year prior to the year in which
the change in control occurred or (b) the compensation for the calendar year
prior to the year of termination, in each case including awards under the
Company's Management Incentive Compensation Plan, provided that such payment
shall not exceed three times the Executive's "base amount" allocable to such
payment pursuant to Section 280G of the Internal Revenue Code, (ii) all unpaid
compensation under the Company's Management Incentive Compensation Plan or any
other compensation plan of the Company, payment of which shall have been
deferred including interest or other investment return thereon and (iii) for
each share of Common Stock of the Company subject to any option held by the
executive, whether or not such option is then exercisable, an amount equal to
the difference between the exercise price thereof and a price equal to the
highest of (a) the market price on the New York Stock Exchange at the close of
business on the effective day of termination, (b) the price contained in any
published tender offer made within one year before or after the date of change
in control, (c) the price contained in any merger or acquisition agreement
entered into by the Company and any third party within one year before or after
the date of change in control, or (d) the market price on the New York Stock
Exchange on the date of change in control, and, upon such payment, such option
shall be deemed cancelled and annulled. The Agreements also provide for a
three-year continuation of certain benefits under the Company's Pension Plan,
Retirement Investment Fund Plan and any supplemental pension provided by the
Company. However, if any payments to the executive, whether under the Agreement
or otherwise, would be subject to the "golden parachute" excise tax under
Section 4999 of the Internal Revenue Code, as amended, the payment to the
executive above will be reduced by the amount necessary to avoid the incurrence
of such excise tax. Under the Agreements a "change of control" means the earlier
to occur of the following events: (i) when any person, corporation, partnership,
association, trust or other entity, or any "group," as defined in Section
13(d)(3) of the Exchange Act, becomes the "beneficial owner," as defined in Rule
13d-3 thereunder, directly or indirectly, of securities of the Company
representing 40% or more of the combined voting power of the Company's then
outstanding securities; or (ii) when persons not nominated by the Board of
Directors in the Company's most recent proxy statement constitute a majority of
the members of the Board.
PENSION PLANS
All of the individuals named in the compensation table on page 5 except Mr.
Merz are participants in the Company's Pension Plan, a defined benefit plan,
under which the Company makes periodic payments computed on an actuarial basis
providing for fixed benefits for members in the event of retirement at age 65
(normal retirement date contemplated by the Plan). Mr. Merz is a participant in
the pension plan of the Company's Swiss subsidiary. Benefits under the Pension
Plan are calculated with respect to a five-year average of participating
employees' covered compensation (base salary or wage plus cash bonus), subject
to an offset for amounts received as Social Security benefits for service after
November 30, 1979. The table below indicates, for purposes of illustration, the
approximate amounts of annual retirement income (subject to the above Social
Security offset and without taking into account any limitations under the
Internal Revenue Code) that would have been payable upon retirement at December
1, 1994 on a straight life basis under various assumptions as to salary and
years of service to employees in higher salary classifications who participate
in the Pension Plan. Messrs. Grisanti, Kirkpatrick, van Baaren and Fenn have 34,
33, 18 and 25 years of service, respectively under the Pension Plan, which does
not include service with foreign subsidiaries. To the extent that the amounts of
annual retirement income exceed the maximum benefit limitations, including
limitations under Section 415 of the Internal Revenue Code, such amounts are
payable in the same form and manner under the Company's unfunded Supplemental
Retirement Plan adopted on October 29, 1986, effective January 1, 1987. Messrs.
van Baaren and Fenn, who have significant amounts of service with foreign
subsidiaries of the Company not covered by the Company's Pension Plan, also
participate in separate unfunded arrangements providing supplemental pension
benefits as follows: Mr. van Baaren, who is not a United States citizen,
participates in
8
<PAGE>
an arrangement under which certain employees who serve in foreign countries
other than the countries of which they are nationals receive at age 65
additional pension benefits to the extent that the aggregate of the amounts
payable by law or under the pension plans of the Company and its subsidiaries
are less than the amount payable under this arrangement. As of December 31,
1994, Mr. van Baaren is entitled to an annual benefit under this arrangement
currently estimated to be approximately $3,672. Mr. Fenn, who served for 15
years with the Company's British subsidiary, has an agreement with the Company
under which he will receive at age 65 additional pension benefits to the extent
that the aggregate of the amounts payable by law or under the pension plans of
the Company and its subsidiaries in respect of his British service are less than
the amount payable under this agreement. As of December 31, 1994, Mr. Fenn is
entitled to an annual benefit under this agreement currently estimated to be
approximately $37,811. No other named executive officer participates in either
of these arrangements.
<TABLE>
<CAPTION>
Estimated annual pension
for specified years of service
Average ------------------------------------------------------------------
Compensation 15 20 25 30 35 40
------------ -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
$ 400,000 .................... $104,652 $125,172 $145,692 $166,212 $186,732 $207,252
500,000 .................... 130,815 156,465 182,115 207,765 233,415 259,065
600,000 .................... 156,978 187,758 218,538 249,318 280,098 310,878
700,000 .................... 183,141 219,051 254,961 290,871 326,781 362,691
800,000 .................... 209,304 250,344 291,384 332,424 373,464 414,504
900,000 .................... 235,467 281,637 327,807 373,977 420,147 466,317
1,000,000 .................... 261,630 312,930 364,230 415,530 466,830 518,130
1,100,000 .................... 287,793 344,223 400,653 457,083 513,513 569,943
1,200,000 .................... 313,956 375,516 437,076 498,636 560,196 621,756
1,300,000 .................... 340,119 406,809 473,499 540,189 606,879 673,569
1,400,000 .................... 366,282 438,102 509,922 581,742 653,562 725,382
---------------------------------------------------------------------------------------------------
</TABLE>
REPORT OF THE
STOCK OPTION AND COMPENSATION COMMITTEE*
The Stock Option and Compensation Committee of the Board of Directors (the
"Committee") (all of the members of which are "disinterested persons" as that
term is defined in Rule 16b-3 under the Exchange Act) is responsible for setting
and administering the policies which govern the annual compensation paid to the
executive officers, including the chief executive officer.
The Committee recommends, for approval by the Board of Directors, the
annual salaries of such officers, makes awards under the Management Incentive
Compensation Plan, grants stock options under the Company's stock option plans
and determines the form and amount of compensation to be given to the President,
who is the chief executive officer.
----------------------
* The report of the Stock Option and Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 (the
"1933 Act") or under the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
9
<PAGE>
Compensation Policies
The Company's executive compensation policies are based on several criteria
including, but not limited to, the goals established by the Company, the
performance of the executive in accomplishing them, the performance of the
Company itself, and finally, the competitive realities relating to the
compensation required to secure the services and motivational commitment of the
executive involved. Among other factors, the Committee takes into consideration
the Company's sales and earnings, the return on equity and the performance of
the Company's stock. The Committee is generally familiar with and also takes
into consideration the sales, earnings and return on equity, as well as the
performance of the stock, of other comparable companies. Those companies include
companies which were selected on the basis of their lines of business set forth
on the Performance Graph on page 12, but they also include companies in other
lines of business as competition for executives extends beyond the Company's
line of business. Although the Company has not made a statistical analysis of
the compensation practices of other companies (which include non-public
companies with which the Company competes for executives) and although the forms
of compensation of the Company may differ from those of other companies making
objective comparisons difficult if not impossible, the Company believes that its
compensation practices are similar to the compensation practices of other
companies of similar size and profitability in both the type and amount of
compensation paid to executive officers.
The Committee and the Board have amended the Company's Management Incentive
Compensation Plan to meet the deductibility requirements of Section 162(m) of
the Internal Revenue Code. The Company, in general, intends to structure
executive compensation to be deductible under Section 162(m). The amended Plan
is being submitted for shareholder approval at the May 11, 1995 Annual Meeting
of Shareholders. The Company also believes, however, that, under some
circumstances, such as to attract or retain key executives or to recognize
outstanding performance, it may be in the best interests of the Company and its
shareholders to pay executive compensation in excess of that which may be
deductible.
The three basic components of the Company's executive compensation are
annual salaries, stock options and incentive compensation.
Salaries
The annual salaries for executive officers for the following fiscal year
are usually recommended by the Committee and approved by the Board in December.
Recommendations for the annual salaries for the officers other than the
President are made by the President to the Committee, based on his firsthand
knowledge of the contribution of each executive officer to his respective area
of concentration. The Committee also reviews financial and other data reflecting
the performance of the various executives' areas of responsibility and how such
areas of responsibility contributed to the Company's overall performance, but
there is no precise test or formula by which the recommended salary is related
to performance. Rather than follow such a rigid standard, the Committee believes
that the Company's interests are best served by having a flexible compensation
policy that gives the Committee the leeway to fix compensation after considering
the factors enumerated above and evaluating such factors as each situation
requires.
The annual salary recommendation for the President is determined separately
by the Committee after reviewing the overall results of the Company during the
prior year taking into account economic conditions. The President has an
employment contract with the Company under which he receives a salary of
$600,000 unless the Company's Board of Directors shall have fixed a higher
salary. It has been the Board's practice to have the Committee review all
executive officer's salaries, including the President's salary, on an annual
basis and make recommendations with
10
<PAGE>
respect to such salaries to the Board. Although consideration is given by the
Committee to previous compensation in past years, the determination of the
annual salary increase of the President as well as the other officers is based
primarily upon events occurring during the past year including the Company's
sales and earnings, the return on equity, the performance of the Company's
stock, inflation and cost of living factors. While again not employing an
objective test or measure with respect to the President's performance, the
Committee in granting in December 1993 the President's salary increase effective
January 1, 1994 took into account the factors stated above with respect to other
executive officers and found that such factors fully justified the President's
salary increase. In addition, the Committee noted that during the past five
years, as reflected on the Performance Graph below, the Company's Common Stock
has consistently outperformed both the S&P 500 and the Company's Peer Group,
which the Committee believes reflects the contribution of the President on
behalf of the Company.
Stock Options
Stock options have long been a significant part of the long-term incentives
awarded by the Company to its officers and its employees. Such plans have been
successful in motivating the officers consistently to promote long-term
shareholder value. Stock options, which return no monetary value to the
recipient unless the shareholders as a whole also benefit from an increase in
the stock price, have been a particularly effective means of promoting
shareholder value and of attracting and retaining the services of qualified
officers of the Company.
The selection of the executive officers of the Company other than the
President for participation in the plans as well as the timing, pricing and the
number of shares covered by individual options, are determined by the Committee,
after considering the recommendations of the President and applying the above
criteria, as well as taking into account options previously granted. As in the
case of salaries, the Committee does not use an objective test or measure of
corporate performance in determining either the timing or number of shares to be
granted. The granting of stock options to the President is considered separately
by the Committee applying the above policy guidelines taking into account
options and the restricted stock award previously granted. Recognizing the
President's contribution to the Company's overall performance in the past, the
Committee made the 1994 option grant to the President in order to motivate him
to continue in his efforts of improving the Company's performance. Without such
an improvement as reflected in increased shareholder value, the option will have
no value.
Incentive Compensation
Under the Company's Management Incentive Compensation Plan as currently in
effect, the amount of bonus paid to the executive officers of the Company has
been determined from year to year in the discretion of the Committee, again
following the criteria set forth above. All of the Company's executive officers
participate in the Plan. Under the Plan a portion of the compensation of those
selected for participation by the Committee for each year has been paid from an
incentive fund for such year equal to 10% of the amount by which the pretax
consolidated earnings of the Company for such year exceed the sum of (a) 20% of
net capital (defined as the average of the amounts of the Company's consolidated
capital and surplus at the beginning and end of such year) for such year and (b)
$12,000,000, provided that the fund shall not exceed for any year 10% of the
amount of cash dividends paid by the Company in such year. No award to any
participant may exceed 50% of his annual rate of salary. Under regulations
adopted by the Committee pursuant to the Plan, awards have been payable in cash
either currently in a lump sum or in installments that may be deferred in
various ways. Under the Plan the Committee, following the above criteria, and
after the year-end results have been certified by the Company's independent
accountants, allocated the fund, or such portion thereof as the Committee has
determined, to the participants and has designated the manner in which awards
11
<PAGE>
are to be paid. To date the Committee has not used an objective test in
determining the allocation of the fund to the executive officers including the
President. The Committee considered that the President's performance and the
results achieved by the Company in 1994 well supported the award for that year
given to the President under the Plan.
In summary, the Company has an appropriate and competitive compensation
program, which is designed to promote shareholder value and attract and retain
qualified executives. The Company's compensation soundly balances base salary,
bonus based on annual performance and the use of long-term incentives.
Richard M. Furlaud
Herbert G. Reid
William D. Van Dyke, III
Comparison of Five Year Cumulative Total Return*(1)
The Company, S&P 500 Composite and Peer Group (2)
(The following tabular information is a description, pursuant to Rule 304
of Regulation S-T, of a graph contained in the paper format of this Proxy
Statement being sent to Shareowners.)
S&P Peer
500 Company Group
------- ------- -------
1989 ........ $100.00 $100.00 $100.00
1990 ........ $ 96.89 $113.65 $102.44
1991 ........ $126.28 $161.41 $141.15
1992 ........ $135.88 $175.60 $142.81
1993 ........ $149.52 $188.81 $142.53
1994 ........ $151.55 $236.77 $142.71
(1) Total return assumes that the value of an investment in the Company's
common stock and each index was $100 on December 31, 1989 and that all
dividends were reinvested.
(2) The Peer Group consists of the following companies: Alberto Culver Company,
Avon Products, Inc., Block Drug Co., Inc., Borden, Inc., Church & Dwight
Co., Inc., Ecolab Inc., Ethyl Corp., W.R. Grace & Co., Helene Curtis
Industries, Inc., Hershey Foods Corp., McCormick & Company, Inc., Morton
International, Inc., NCH Corp., Nalco Chemical Company, The Quaker Oats
Company, Ralston Purina Company, Tambrands Inc., and Wm. Wrigley Jr.
Company. The performance of the Peer Group is weighted based on market
capitalization.
----------------------
* The Comparison of Five Year Cumulative Total Return shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the 1933 Act or under the Exchange
Act, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
12
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Stock Option and Compensation Committee of the Board of Directors
consists of Messrs. Furlaud, Reid and Van Dyke. Mr. Van Dyke is Senior
Vice-President of Smith Barney Inc. which has received commissions for brokerage
services performed in connection with securities transactions on behalf of the
Company and its retirement plans.
STOCK OWNERSHIP
The following is a tabulation as of December 31, 1994 of those shareholders
of the Company who own beneficially in excess of 5% of the Company's Common
Stock determined in accordance with Rule 13d-3 under the Exchange Act.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
---------------------------------------
Title Sole Voting Shared Voting Percent
of Name and Address and and of
Class of Beneficial Owner Investment Power Investment Power Class
----- ------------------- ---------------- ---------------- -----
<S> <C> <C> <C> <C>
Common George Rowe, Jr. ............. 9,750 shares 10,756,966 shares(1) 9.7%
Stock One Rockefeller Plaza
New York, N.Y. 10020
Common State Farm Mutual Automobile
Stock Insurance Company and
related entities ............ 6,911,700 shares 0 shares 6.2%
One State Farm Plaza
Bloomington, Ill. 61701
Common Hedwig van Ameringen ......... 678,633 shares 8,629,797 shares(1) 8.4%
Stock 509 Madison Avenue
New York, N.Y. 10022
Common Trust, c/o J.P. Morgan
Stock Florida, FSB ................ 0 shares 5,993,727 shares(2) 5.4%
109 Royal Palm Way
Palm Beach, Florida 33480
Common Henry G. Walter, Jr (3) ...... 351,552 shares 10,760,844 shares(1) 9.97%
Stock 509 Madison Avenue
New York, N.Y. 10022
-----------------------
<FN>
(1) See Note 5 on page 4.
(2) Held of record by CEDE & Co. as nominee for a trust of which Mr. and Mrs. William D. Van Dyke, III and
J. P. Morgan Florida, FSB are co-trustees, who should be considered the beneficial owners of such shares
with shared voting and investment power. Mrs. Van Dyke is also beneficial owner of 129,426 shares in
which she has sole voting and investment power and 1,231,104 shares over which she has shared voting and
investment power. See footnote 9 on page 4 for additional shares beneficially owned by Mr. Van Dyke.
(3) The number of shares beneficially owned by Mr. Walter listed above does not include the beneficial
interest of Mr. Walter's wife in 18,024 shares owned directly by her. Mr. Walter disclaims any
beneficial interest in any such shares.
</FN>
</TABLE>
13
<PAGE>
As of December 31, 1994 the officers and directors of the Company (25
persons) and Messrs. Fenn and Merz beneficially owned in the aggregate shares of
the Company's Common Stock as set forth below:
<TABLE>
<CAPTION>
Amount of Percent
Title of Class Name Beneficial Ownership(1)(2) of Class
-------------- ---- -------------------------- --------
<S> <C> <C> <C>
Common Stock ........ All directors and officers as a group ....... 21,481,409 19.3%
Common Stock ........ R.S. Fenn ................................... 54,600 (3)
Common Stock ........ R. Merz ..................................... 35,900 (3)
----------------
<FN>
(1) Includes 436,522 shares of Common Stock which the directors and officers of
the Company have (or will have as of 60 days after such date) the right to
acquire under stock options granted by the Company.
(2) Adjusted to eliminate duplicate holdings of the same shares by two or more
officers and directors. Except for the shares included in footnotes 5, 7
and 9 on page 4, the remaining shares listed as beneficially owned by all
directors and officers in the aggregate are subject to the sole voting and
investment power of the individual directors or officers whose shares are
included in such number.
(3) Less than .1%.
</FN>
</TABLE>
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the next Annual
Meeting of Shareholders must be received by the Company for inclusion in the
Company's Proxy Statement and form of proxy with respect to that meeting by
November 28, 1995.
ADDITIONAL INFORMATION
The Company has selected Price Waterhouse LLP to be its principal
independent accountants for 1995. Representatives of Price Waterhouse LLP are
expected to be present at the shareholders' meeting with the opportunity to make
a statement if they desire to do so and are expected to be available to respond
to appropriate questions.
The Company paid to Messrs. Fulton, Duncombe & Rowe, of which Mr. Rowe, a
director of the Company, is a member, $161,375 for legal services in 1994.
In 1994, Hendrik C. van Baaren, an officer of the Company, did not file on
a timely basis one report required by Section 16 of the Exchange Act relating to
a transaction in Company stock.
AMENDMENT OF THE MANAGEMENT INCENTIVE COMPENSATION PLAN
There will be presented to the meeting a proposal to amend the Company's
Management Incentive Compensation Plan (the "MICP" or the "Plan"). The MICP,
originally adopted by the shareholders in 1971, is proposed to be amended to
preserve for the Company the tax deduction for compensation paid thereunder, in
accordance with recently enacted changes to the Internal Revenue Code (the
"Code"). The amendment also modifies the formula for calculating the
preestablished performance goal of the Plan and changes the maximum award that
may be made to any Participant thereunder.
14
<PAGE>
The proposed MICP, as amended, is set forth in Exhibit A. The principal
terms of the Plan and the proposed amendment are set forth below.
The class of employees eligible to participate in the Plan is key employees
of the Company and its subsidiaries. The MICP is administered by the Stock
Option and Compensation Committee of the Board of Directors (the "Committee"),
which for each year selects the participants in the Plan from the class of
eligible employees. For 1995 there are 19 participants in the MICP.
Under the MICP as in effect prior to the proposed amendment, each year an
incentive fund (the "Fund") is established out of which annual incentive
compensation awards may be paid. As soon as practicable after the end of each
year, the amount of the Fund for that year is computed and certified to the
Committee by the Corporation's independent public accountants. The Fund is equal
to 10% of the amount by which "pretax consolidated earnings" (as defined in the
Plan) for such year exceeds the sums of (a) 20% of "net capital" (as defined in
the Plan) and (b) $12,000,000; provided that the Fund may not exceed for any
year 10% of the amount of cash dividends paid by the Company in such year.
The Committee allocates the Fund, or such portion of the Fund as the
Committee determines, to the participants. No award to any participant may
exceed 50% of his or her annual base salary. Any unused portion of the Fund for
any year may not be carried over to any succeeding year.
The MICP is being amended to conform to requirements under recent
amendments to the Code. The changes to the Plan will assure that awards under
the MICP will be deductible for federal income tax purposes. The amended Plan
provides that no participant in the MICP is eligible to receive more than 15% of
the Fund for any year. The amended Plan also updates the formula for calculating
the Fund by eliminating the $12,000,000 factor, which is no longer appropriate
considering the present net equity of the Company.
The MICP is also being amended to set at 100% of base salary the maximum
amount which may be awarded to any participant for any year. The Committee will
have the right to decrease or elect not to make an award to any participant.
This change in the maximum award level is the first in the almost quarter
century since the Plan's adoption and, in the opinion of management and the
Board of Directors, is necessary to continue to attract and retain the high
quality executives required to maintain the consistently strong performance that
the Company has achieved over the past decade.
The amended MICP provides for the payment of awards in cash. The Plan
permits the Committee to allow participants to elect to defer all or a portion
of their awards for any year on terms established by the Committee, provided
that those terms may not cause the deferred awards to fail to continue to be
deemed performance-based compensation under the Code.
The MICP may be terminated by the Board of Directors at any time. The Board
of Directors may amend the Plan at any time, provided both that such amendment
has been previously approved by the Committee and that no amendment changing any
material term of the MICP, including changing the Plan's preestablished
performance goal, increasing the amount of the Fund, or increasing the maximum
award for which any participant is eligible, may become effective without the
approval of the shareholders. No amendment may adversely affect any award
already made.
Had the amendments to the MICP been in effect for the year 1994, there
would have been no change in the amount of the Fund for that year, since the
amount of the Fund, whether under the Plan as currently in effect or as proposed
to be amended, would have been limited by the cash dividends paid in 1994.
Neither the annual cash MICP
15
<PAGE>
awards to be made in the future nor the benefits or amounts which would have
been received by or allocated to any person or group if the amendments to the
MICP had been in effect since the beginning of 1994 can be determined at this
time.
The Board of Directors recommends a vote FOR this proposal.
OTHER MATTERS
As of the date of this Proxy Statement the Board of Directors is not aware
that any matters other than those specified above are to be presented for action
at the meeting. If any other matters should come before the meeting, proxies in
the enclosed form will be voted on such matters in accordance with the judgment
of the person or persons voting the proxies, unless otherwise specified. Shares
of Common Stock represented by executed proxies received by the Company will be
counted for purposes of establishing a quorum at the meeting, regardless of how
or whether such shares are voted on any specific proposal. All executed proxies
will be voted in accordance with the instructions contained therein. In
accordance with the Board of Directors' recommendations, executed proxies
returned by shareholders will be voted, if no contrary instruction is indicated,
FOR the election of the 12 nominees described herein and FOR the proposal. With
respect to the required vote on any particular matter, abstentions and votes
withheld by nominee recordholders will not be treated as votes cast or as shares
present or represented.
The Company will on a request in writing provide without charge to each
person from whom proxies are being solicited for the Company's annual meeting a
copy of the Company's Annual Report on Form 10-K for the year ended December 31,
1994, including the financial statements and the schedules thereto, required to
be filed with the Securities and Exchange Commission pursuant to Rule 13a-1
under the Exchange Act. A request for the Company's Annual Report on Form 10-K
should be made to Stephen A. Block, Secretary, International Flavors &
Fragrances Inc., 521 West 57th Street, New York, N.Y. 10019.
The Board of Directors invites you to attend the meeting in person. If you
are unable to do so, please sign, date and return the enclosed proxy promptly in
the enclosed envelope, so that your shares will be represented at the meeting.
By Order of the Board of Directors,
STEPHEN A. BLOCK
Secretary
March 28, 1995
16
<PAGE>
EXHIBIT A
INTERNATIONAL FLAVORS & FRAGRANCES INC.
MANAGEMENT INCENTIVE COMPENSATION PLAN
As Amended By the Stock Option and Compensation
Committee and the Board of Directors
February 14, 1995
1. Name and Purpose. This Plan shall be known as the "Management Incentive
Compensation Plan" (hereinafter called the "Plan"). The purpose of the Plan is
to provide additional motivation to the Plan "Participants" (as hereinafter
defined) toward achieving preestablished objectives and to reward performance
with compensation that varies in relation to the success in reaching those
objectives.
2. Administration. The Plan shall be administered by the Stock Option and
Compensation Committee of, or any other committee appointed by, the Board of
Directors for such purpose (the "Committee"), all of the members of which shall
be "outside directors" (or shall be deemed to be "outside directors") of the
Corporation for purposes of Section 162(m) of the Internal Revenue Code, as
amended (the "Code"). The Committee shall have full authority to adopt and
change regulations for the administration of the Plan, to interpret the Plan and
to make all determinations necessary or advisable to administer the Plan, all
subject to its express terms and limitations.
3. Participants. The class of employees eligible to participate in the Plan
shall be key employees of the Corporation and its subsidiaries. For each year of
the Plan's operation, the Committee shall select the employees who will
participate in the Plan ("Participants") from such class of eligible employees.
4. The Fund. An incentive fund (hereinafter called the "Fund") shall be
available for awards under the Plan for each year. The amount of the Fund shall
be 10% of the amount by which the "pretax consolidated earnings" (as hereinafter
defined) for such year shall exceed 20% of "net capital" (as hereinafter
defined) for such year; provided that the Fund shall not exceed for any year 10%
of the amount of cash dividends paid by the Corporation in such year. As soon as
practicable after the end of each year the amount of the Fund for such year
shall be audited by the "Corporation's independent public accountants" (as
hereinafter defined) and shall be reported by them to the Committee.
The term "pretax consolidated earnings" for any year shall be the sum of
(i) the consolidated net earnings of the Corporation and its subsidiaries for
such year before (A) extraordinary items determined in accordance with generally
accepted accounting principles and (B) the cumulative effect of accounting
changes, as contained in the financial statements audited by the Corporation's
independent public accountants and reported by the Corporation in its annual
report to shareholders for such year, (ii) the provision for all taxes on income
for such year, as contained in the financial statements audited by the
Corporation's independent public accountants and reported by the Corporation in
its annual report to shareholders for such year, and (iii) the amount of the
Fund for such year, as audited by the Corporation's independent public
accountants and reported to the Committee as contemplated above. The term "net
capital" for any year shall mean the arithmetic average of the amounts of the
consolidated capital and surplus of the Corporation as at the beginning and the
end of such year before (A) and (B) above, as such consolidated capital and
surplus as of each such date is audited by the Corporation's independent public
accountants and reported by the Corporation in its annual report to shareholders
for the prior year (with respect to the consolidated capital and surplus as at
the beginning of such year) and for such year (with respect to the consolidated
capital and surplus as at the end of such year). The term "Corporation's
independent public accountants" for any year shall mean the independent public
A-1
<PAGE>
accountants who shall audit the consolidated financial statements of the
Corporation and its subsidiaries which are contained in the Corporation's annual
report to shareholders for such year.
5. Allocation of the Fund. As soon as practicable after the amount of the
Fund for any year shall have been audited by the Corporation's independent
public accountant and reported to the Committee, but not later than three months
thereafter, the Committee (a) shall certify that the performance goal
established pursuant to paragraph 4 has been satisfied; (b) shall determine that
the entire Fund, or such portion of the Fund as the Committee shall determine,
shall be reserved for awards to the Participants for such year, and (c) shall
allocate the Fund or the portion thereof so reserved for such year to the
Participants, provided, however, that the Committee may defer the allocation of
awards to Participants of the amount so reserved for such year to such future
time as the Committee deems in the best interests of the Corporation. The
Committee's determination of the portion of the Fund for any year to be reserved
for awards for such year and the amount of the award to any Participant for such
year shall be final. No award to any Participant for any year shall exceed the
lesser of 15% of the Fund or 100% of his or her annual rate of salary at the end
of such year. There shall be no carryover of any unreserved portion of the Fund
for any year to any succeeding year.
6. Manner of Payment. The Committee may provide for payment of incentive
compensation awarded to any Participant in a lump sum in cash or in deferred
payments in cash or securities. The Committee may make such arrangements as it
deems appropriate for the payment of interest on deferred amounts, may provide
for adjustment of deferred amounts to reflect changes in the value of and
dividends paid upon shares of the Corporation or of mutual funds or of other
amounts, and may impose restrictions and conditions upon the payment of deferred
amounts as it shall deem appropriate; provided, however, that no such
arrangement shall increase the amount of the deferred award to such an extent
that it would fail to be considered performance-based compensation under Section
162(m) of the Code.
7. Limitations. Although paragraphs 4 and 5 establish the maximum amount
which may be paid to a Participant for any given year, the Committee shall have
the right in its sole discretion to decrease the maximum award or make no award
to any Participant. No director, officer or employee of the Corporation or any
other person shall have the authority to enter into any agreement with any
person for the making or payment of an award or to make any representation or
warranty with respect thereto. Neither the action of the Corporation in
establishing the Plan nor any action taken by it or by the Committee under the
provisions of the Plan, nor any provision of the Plan, shall be construed as
giving to any employee of the Corporation or any of its subsidiaries the right
to be retained in the employ of the Corporation or any of its subsidiaries.
8. Amendment and Termination. The Board of Directors may terminate the Plan
at any time. The Board of Directors may amend the Plan at any time; provided,
however, that such amendment has been previously approved by the Committee; and
provided further, however, that, no amendment changing any material term of the
Plan, including changing the preestablished performance goal specified in
paragraph 4, increasing the amount of the Fund over the amount provided for in
paragraph 4, or increasing the maximum amount that may be awarded to any
Participant to more than the maximum amount provided in paragraph 5, shall be
effective without prior approval or subsequent ratification by the shareholders
of the Corporation. No amendment or termination of the Plan shall affect
adversely the right of any Participant to receive payment of an award to him or
her under the Plan prior to such amendement or termination.
9. Shareholder Approval. This amended Plan shall not be effective until
approved by the shareholders of the Corporation.
A-2
<PAGE>
[IFF LOGO]
PROXY
INTERNATIONAL FLAVORS & FRAGRANCES INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 11, 1995
The undersigned shareholder of INTERNATIONAL FLAVORS & FRAGRANCES INC.
(hereinafter called the Company) hereby appoints Messrs. Eugene P. Grisanti,
George Rowe, Jr. and Stephen A. Block, the attorneys and proxies, and each of
them the attorney and proxy, of the undersigned, with full power of
substitution, to act by a majority present, for and in the name, place and stead
of the undersigned, to attend the Annual Meeting of Shareholders to be held at
the headquarters of the Company, 521 West 57th Street, New York, New York, on
Thursday, May 11, 1995 at 10 A.M., and any adjournment or adjournments thereof,
and thereat to vote the number of votes or shares of stock the undersigned would
be entitled to vote if then and there personally present.
IFF
P.O. Box 11117
New York, N.Y. 10203-0117
Please indicate on the reverse side of this card how your shares of stock
are to be voted.
The shares represented by this Proxy will be voted as directed.
(Continued and to be signed on the other side)
1. Election of all Directors M. H. Adame, R. C. Duke, R. M. Furlaud, E. P.
Grisanti, T. H. Hoppel, H. R. Kirkpatrick, H. G. Reid, G. Rowe, Jr., S. M.
Rumbough, Jr., H. P. van Ameringen, H. C. van Baaren, W. D. Van Dyke, III
For [X} Withheld [X} Exceptions* [X}
*Exceptions
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To vote your shares for all Director nominees, mark the "For" box on
Item 1. To withhold voting for all nominees, mark the "Withhold" box.
If you do not wish your shares voted "For" a particular nominee, mark
the "Exceptions" box and enter the name(s) of the exception(s) in the
space provided.
2. Proposal to amend the Company's Management Incentive Compensation Plan.
For [X} Against [X} Abstain [X}
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
Change of address and/or Comments [X}
Please sign exactly as name or names appear on this proxy. If stock is held
jointly, each holder should sign. If signing as attorney, trustee, executor,
administrator, custodian, guardian, or corporate officer, please give full
title.
DATED _________________, 1995
SIGNED ___________________________________
__________________________________________
Votes MUST be indicated(x)in Black or Blue ink.[X}
(This Proxy will be voted FOR each of the above nominees as a director, FOR
Proposal 2, and in the discretion of the proxy committee on any other matter
properly before the meeting, unless otherwise specified)
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
