SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 6, 2007
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INTERNATIONAL FLAVORS & FRAGRANCES INC.
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(Exact Name of Registrant as Specified in Charter)
New York 1-4858 13-1432060
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
521 West 57th Street, New York, New York 10019
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 765-5500
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On March 6, 2007, the Compensation Committee of the Company's Board of
Directors determined to change the operating methodology of the Company's Long
Term Incentive Plan ("LTIP") under the Company's 2000 Stock Award and Incentive
Plan. Under the LTIP, each executive officer, including the Chief Executive
Officer, will have an award target for each three-year performance cycle and an
award target for each year during each such three-year performance cycle (with
each period being considered a "segment"), based on the achievement of specific
quantitative corporate performance goals. These goals will be determined by the
Compensation Committee during the first ninety days of the first year of each
performance cycle. For the 2007-2009 cycle, the Compensation Committee
determined that these goals will relate to improvements in earnings per share
and total shareholder return ("TSR") relative to the S&P 500. For this purpose,
TSR means the amount, expressed as a percentage, of market price appreciation or
depreciation of a share of common stock plus dividends on a share of common
stock, assuming dividend reinvestment at the dividend payment date, measured
from January 1, 2007 through a specified year-end or cycle-end date. TSR will be
calculated for the Company and for the S&P 500 so that the ranking of the
Company as a percentile of the S&P 500 can be determined. The market price for
purposes of calculating the TSR of the Company and the S&P 500 on each year-end
or cycle-end date will be determined based on the average closing price per
share of each company's common stock over the period of 20 consecutive trading
days preceding that date, as reported by a reputable reporting service.
For each three-year LTIP cycle each executive officer will have a range of
potential awards, both above and below target, which are specified at the
beginning of the cycle. Each executive's LTIP target is a percentage of his or
her annual base salary at April 1 of the first year of the 3 year LTIP cycle. As
determined by the Compensation Committee, if any LTIP payouts are to be made for
the 2007-2009 cycle and thereafter, subject to periodic review, 50% of the LTIP
payout would be paid in cash and 50% would be paid in Company stock. Previously,
for the 2006-2008 LTIP cycle, the number of shares of Company stock for the 50%
portion that would be paid in stock would not be determined until the end of the
LTIP cycle, based on the closing market price on the last stock trading day of
the cycle; however, as approved by the Compensation Committee at its March 6,
2007 meeting, for the 2007-2009 LTIP cycle, the number of shares of Company
stock for the 50% portion that would be paid in stock is determined at the
beginning of the cycle, based on $48.92 per share, the closing market price on
January 3, 2007, the first stock trading day of the cycle.
The Compensation Committee has determined that the 2007-2009 LTIP cycle
will consist of four segments, with each year during the cycle being a separate
segment and the entire three-year period being a fourth segment. Each segment
during the cycle will be weighted 25% of the executive's target. When the award
is first granted at the beginning of the LTIP cycle, 50% of the recipient's
target dollar value of the award is converted to a number of "notional" shares
of the Company's common stock based on the closing market price on the date the
grant is approved by the Committee. Depending on the extent to which the Company
achieves the corporate performance goals for each segment, a portion of the
executive's LTIP award may be credited on behalf of the executive, but any
"credited" portion will not be paid until the completion of the full LTIP cycle.
If a portion of the executive's LTIP award is credited for any segment during
the LTIP cycle, that portion would consist of both the 50% cash and the 50%
shares based on the person's target cash amount and target number of shares for
that segment and based on the Company's achievement of the corporate performance
goals for that segment.
Upon the completion of the LTIP cycle and all of its segments, the
aggregate of all credited portions of an award may be payable to each executive,
subject to the discretion of the Compensation Committee. At that time, the
executive would be paid the credited cash and would be issued the aggregate
number of shares of the Company's Common Stock equal to the credited number of
"notional" shares. Each executive forfeits the right to receive any "credited"
cash or shares if he or she separates from the employment by the Company (other
than due to retirement) during the LTIP cycle.
If the Company does not meet threshold performance for all four segments in
the LTIP cycle, based on the corporate performance goals, no LTIP award will be
paid for that cycle. The Compensation Committee may not increase LTIP awards to
any executive officer beyond those actually earned based on the pre-established
goals.
At its meeting held on March 6, 2006, the Compensation Committee, with the
assistance of its independent compensation consultant, established the
compensation (effective as of April 1, 2007) for its senior executives,
including its CEO and other executive officers who were named in the Company's
Proxy Statement for its 2006 Annual Meeting of Shareholders and who are still
employed by the Company (collectively, the "Named Executive Officers"). No Named
Executive Officer will receive an increase in salary over the prior year's
salary. In addition, the Annual Incentive Plan ("AIP") target percentage and the
LTIP target percentage of each Named Executive's Officer's salary will remain
the same for 2007 AIP and the 2007-2009 LTIP cycle as for the prior period.
Under the AIP and LTIP, each Named Executive Officer will be eligible to receive
his AIP and LTIP award target based on achievement against specific performance
goals.
At the same meeting, the Compensation Committee approved the total value of
each Named Executive Officer's equity awards to be granted under the Company's
Equity Choice Program (the "Equity Choice Program") under the Company's 2000
Stock Award and Incentive Plan ("2000 SAIP") as follows:
Value of Equity Awards under
Name Title Equity Choice Program
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Robert M. Amen Chairman and Chief Executive Officer $1,650,000
Douglas J. Wetmore Senior Vice President and Chief Financial $325,000
James H. Dunsdon Senior Vice President and Transition Leader $300,000
Nicolas Mirzayantz Group President, Fragrances $450,000
The Compensation Committee also approved the total value of equity awards under
the Equity Choice Program to Dennis M. Meany, Senior Vice President, General
Counsel and Secretary, and Hernan Vaisman, Group President, Flavors, in the
amounts of $325,000 and $450,000, respectively. Under the Company's Equity
Choice Program each Named Executive Officer will be eligible for a grant of
equity awards. Each executive will be entitled to choose from three alternative
types of equity awards and will be granted those equity awards under the 2000
SAIP up to his or her total dollar award value. Grants of equity awards under
the Equity Choice Program, based on each executive's election, are anticipated
to be made on the date of the Company's Annual Meeting of Shareholders.
At its meeting held on March 6, 2007, the Company's Board of Directors
determined, with the assistance of independent compensation consultants, to
change certain elements of the compensation for directors who are not employees
of the Company ("Non-Employee Directors"), with such changes to take effect on
the date of the Company's 2007 Annual Meeting of Shareholders, as described
below. The purpose of the changes is to simplify the structure of compensation
for Non-Employee Directors and to increase the longer term stock ownership by
the Non-Employee Directors. Specific changes made are:
(a) Non-Employee Directors will no longer receive cash fees for each Board
or Committee meeting attended. Currently, each non-employee director
receives a cash fee of $2,000 for each Board meeting attended, and
each Audit Committee, Compensation Committee and Nominating and
Governance Committee member receives a cash fee of $1,500 for each
Committee meeting attended.
(b) Currently Non-Employee Directors receive an annual grant, in October
of each year, of 1,000 shares of Common Stock of the Company from a
pool of shares authorized by the Board in September 2000, and are
required to defer this grant. Non-Employee Directors currently also
receive an annual grant, on the date of each Annual Meeting of
Shareholders, of 750 RSUs. Non-Employee Directors will no longer
receive these grants.
(c) Each Non-Employee Director will receive an annual retainer of
$175,000. Of this amount, $75,000 will be paid in cash, which
represents an increase from the $50,000 cash retainer each currently
receives, and $100,000 will be paid in Restricted Stock Units (RSUs)
issued under the Company's 2000 Stock Award and Incentive Plan. The
RSUs will be granted on the date of each Annual Meeting of
Shareholders and will cliff vest on the third anniversary of the grant
date. The number of RSUs to be issued will be based on the closing
market price of the Company's common stock on the grant date. Once the
RSUs vest, each Non-Employee Director will be required to defer all of
the vested RSUs under the Company's Deferred Compensation Plan until
he or she separates from service on the Company's Board of Directors.
Given that RSUs will be deferred until each director's separation from
service and each director's stock ownership will increase during his
or her term of service, the minimum share ownership requirements that
currently apply to directors will be eliminated.
(d) The Chairperson of the Audit Committee will continue to receive an
annual cash retainer of $15,000. The Chairpersons of the Compensation
Committee and Nominating and Governance Committee will each receive an
annual cash retainer of $10,000, an increase from the $7,500 each
currently receives.
(e) The Lead Director will receive an annual cash fee of $15,000, a
decrease from the $25,000 he currently receives.
(f) Non-Employee Directors will continue to be eligible to participate in
the Company's Deferred Compensation Plan. A Non-Employee Director may
defer all or a portion of his or her cash compensation, as well as any
RSUs, subject to Section 409A of the Internal Revenue Code.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
Dated: March 12, 2007 By: /S/ DENNIS M. MEANY
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Name: Dennis M. Meany
Title: Senior Vice President,
General Counsel and Secretary