INFORMATION REQUIRED IN PROXY STATEMENT
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
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
INTERNATIONAL FLAVORS & FRAGRANCES INC.
- ------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
INTERNATIONAL FLAVORS & FRAGRANCES INC.
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or Rule
14a-6(i)(2).
/ / $500 per each party per Exchange Act Rule 14a-6(i)(3), or Rule
14a-6(i)(2).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
IFF LOGO
INTERNATIONAL FLAVORS & FRAGRANCES INC.
521 WEST 57TH STREET
NEW YORK, N.Y. 10019
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 12, 1994
The Annual Meeting of Shareholders of International Flavors & Fragrances
Inc., a New York corporation (hereinafter called the "Company"), will be held
at the Pegasus Suite, 64th Floor, 30 Rockefeller Plaza, New York, New York, on
Thursday, May 12, 1994, at 10 A.M., Eastern Daylight Saving Time, to elect 12
directors for the ensuing year, 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 29, 1994
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
April 5, 1994
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 12, 1994 at the Pegasus
Suite, 64th Floor, 30 Rockefeller Plaza, New York, New York. This proxy
statement and the form of proxy will be sent to shareholders on or about April
5, 1994. 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
$7,000. 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 February 15,
1994, 111,932,370 shares of Common Stock (adjusted for a 3-for-1 stock split
distributed January 19, 1994) entitled to one vote per share. Only
shareholders of record at the close of business on March 29, 1994 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. The number
of shares shown as beneficially owned by each director has been adjusted for
the 3-for-1 stock split distributed January 19, 1994.
Information About Nominees
Shares of Per-
Company Stock centage
beneficially of
Principal Occupation During Year first owned as of Shares
last five years and became February 15, Out-
Name Age Other Directorships Held Director 1994 standing
------ ----- ------------------------------- --------- ----------- --------
Margaret Hayes Adame ........... 54 Executive Director, Fashion 1993 3,000 (3)
Group International, an
international trade
organization, since 1993;
Senior Vice-President, Saks
Fifth Avenue, retailing,
prior thereto; Director,
North American Watch
Corporation
Robin Chandler Duke(1)(2)....... 70 Chairman, Population Action 1975 6,000(7) (3)
International; Director,
American Home Products Corp.,
Rockwell International
Corporation and River Bank
2
Shares of Per-
Company Stock centage
beneficially of
Principal Occupation During Year first owned as of Shares
last five years and became February 15, Out-
Name Age Other Directorships Held Director 1994 standing
------ ----- ------------------------------- --------- ----------- --------
Richard M. Furlaud ............. 70 Chairman of the Board of 1990 5,250(7) (3)
Trustees, The Rockefeller
University; Retired
President,
Bristol-Myers Squibb Company;
Director, American Express
Company
Eugene P. Grisanti(5)(6)........ 64 Chairman of the Board and 1979 1,617,747(4)(7) 1.4%
President of the Company
Thomas H. Hoppel(5)............. 63 Vice-President and Treasurer 19933 4,446(7) (3)
of the Company since January
1, 1992; Controller prior
thereto
Hugh R. Kirkpatrick(5).......... 57 Senior Vice-President of the 1991 49,000(7) (3)
Company since January 1,
1991; Vice-President prior
thereto
Herbert G. Reid(1).............. 67 Retired; formerly Executive 1978 6,000(7) (3)
Vice- President and Director,
Schlumberger Limited, oil
field services and
electronics
George Rowe, Jr.(2)............. 72 Attorney; member of the law 1994 10,207,566(4) 9.1%
firm of Fulton, Duncombe &
Rowe
Stanley M. Rumbough, Jr.(2)..... 73 Investments and business 1964 18,000(7) (3)
development; Director, CUC
International Inc. and ABT
Family of Funds
Henry P. van Ameringen ......... 63 Retired; formerly 1961 2,597,091(4)(7) 2.3%
Vice-President, International
Flavors & Fragrances (Europe)
Hendrik C. van Baaren(5) ....... 54 Senior Vice-President of the 1991 50,000(7) (3)
Company since February 13,
1990; Vice-President prior
thereto
William D. Van Dyke, III(1)(2).. 62 Senior Vice-President, 1973 7,825,458(7)(8) 7.0%
Smith Barney Shearson Inc.,
investment banking
- ----------------------------------
(1) Member of Executive Committee.
(2) Has held this position for more than the last five years.
(3) Less than .1%.
3
(4) 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 7,177,716 shares. Mr. van Ameringen and Mrs. van
Ameringen are officers of the van Ameringen Foundation, Inc., a charitable
foundation, which owns 693,138 shares. Messrs. Walter and Henry P. van
Ameringen and Mrs. van Ameringen are three 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 10,188 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 824,364 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 600 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 291,981 shares. Mr. van
Ameringen is also a trustee of a charitable trust holding 7,974 shares. The
number of shares beneficially owned by Messrs. Grisanti and van Ameringen
listed above include 350,133 and 1,903,953 shares, respectively, with respect
to which they have sole voting and investment power and, as described in this
note, 1,267,614 and 693,138 shares respectively, with respect to which they
have shared voting and investment power.
(5) Employed by the Company for more than the last five years.
(6) Chairman of the Executive Committee.
(7) 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 57,102 for Mr. Grisanti, 14,250 for Mr.
Hoppel, 27,400 for Mr. Kirkpatrick, 50,000 for Mr. van Baaren and 3,000 for
each of Ms. Duke and Messrs. Furlaud, Reid, Rumbough, van Ameringen and Van
Dyke.
(8) The number of shares beneficially owned by Mr. Van Dyke listed above
includes 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 1993
annual meeting except for Ms. Adame and Mr. Hoppel, who were elected in
November 1993 and Mr. Rowe, who was elected in February 1994, in each case by
the Board of Directors. During 1993 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 1993. 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
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 1991, 1992 and 1993.
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)(5)
---------- ------ -------- -------- ---------- --------- ----------
Eugene P. Grisanti . . . . . . . . . . 1993 700,000 350,000 -- 75,000 26,878
Chairman of the Board 1992 600,000 300,000 10,625,000 -- 22,401
and President 1991 525,000 262,500 -- 17,100 (6)
Hugh R. Kirkpatrick . . . . . . . . . . 1993 387,120 190,000 -- 60,000 12,398
Senior Vice-President 1992 346,729 170,000 -- 30,000 11,409
and Director 1991 305,765 150,000 -- 22,500 (6)
Hendrik C. van Baaren . . . . . . . . . 1993 372,849 180,000 -- 51,000 11,016
Senior Vice-President 1992 346,430 167,500 -- 30,000 10,986
and Director 1991 324,247 157,500 -- 15,000 (6)
Ronald S. Fenn . . . . . . . . . . . . 1993 283,695 92,400 -- 24,000 9,337
Vice-President 1992 251,957 125,000 -- 12,000 8,229
1991 231,078 115,000 -- 9,000 (6)
Rudolf Merz . . . . . . . . . . . . . . 1993 264,518 105,000 -- 21,000 --
Vice-President 1992 266,720 124,621 -- 10,500 --
1991 250,808 124,250 -- 10,500 (6)
- ------------------
(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 (after adjustment for
the 3-for-1 stock split distributed January 19, 1994) 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
one-fifth of the shares covered by the award lapsed on December 31, 1993.
The restriction period extends to December 31, 1994 with respect to
another one-fifth of such shares, 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, 1993, the 240,000 shares
of restricted stock still subject to restriction had a market value of
$9,100,000, 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) Adjusted for the 3-for-1 stock split distributed January 19, 1994.
(4) For the year 1993, 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, $21,140, Mr. Kirkpatrick, $11,475, Mr. van
Baaren, $10,871 and Mr. Fenn, $8,455.
(5) For the year 1993, 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, $5,738, Mr. Kirkpatrick, $1,463, Mr. van Baaren, $1,045 and Mr.
Fenn, $852. No participant in such Program has or will have any interest
in the cash surrender value of the underlying insurance policies.
(6) Disclosure not required under transitional rules adopted by the
Securities and Exchange Commission.
5
II. Option Grants IN 1993
The following table shows all grants of options in 1993 to the executive
officers named in the Summary Compensation table. The Company's option plans
do not provide for the grant of stock appreciation rights (SARs).
Individual Grants Grant Date Value
- --------------------------------------------------------------------------- ------------------
(a) (b) (c) (d) (e) (f)
Number % of Total
of Shares Options
Underlying Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration Grant Date Present
Name (#) (1) Year ($/Sh)(2) Date Value ($)(3)
------ ---------- ---------- ---------- ---------- ------------------
E. P. Grisanti. . . . . . 75,000 9.9% 36.21 2/9/03 $794,160
H. R. Kirkpatrick . . . . 60,000 7.9% 36.21 2/9/03 635,328
H. C. van Baaren. . . . . 51,000 6.7% 36.21 2/9/03 540,029
R. S. Fenn. . . . . . . . 24,000 3.2% 36.21 2/9/03 254,131
R. Merz . . . . . . . . . 21,000 2.8% 36.21 2/9/03 222,365
- --------------
(1) All options were granted on February 9, 1993. Such options become
exercisable in three equal installments 24, 36 and 48 months,
respectively, after the date of grant. The numbers of shares and exercise
prices in this table have been adjusted for the 3-for-1 stock split
distributed January 19, 1994.
(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 (all of which reflect the 3-for-1 stock split distributed
January 19, 1994) are as follows: a grant date stock price and an
exercise price of $36.21 per share; an option term of 10 years; a stock
price volatility based on the calendar year closing prices of the
Company's Common Stock (plus dividends) for the period December 31, 1983
through December 31, 1993; a dividend yield of 2.59% (the average
dividend yield for the 12-month period ending February 28, 1993); and a
risk-free interest rate of 6.85% (the yield on the date of grant on the
U.S. Government Zero Coupon Bond with a maturity closest to the option
term).
III. Options Exercised in 1993 and Option Values at December 31, 1993
The following table provides information as to options exercised in 1993
by each of the executive officers named in the Summary Compensation table and
the value of options held by such executive officers at December 31, 1993
measured in terms of the closing price of the Common Stock in consolidated
trading on December 31, 1993. The number of shares in the table have been
adjusted for the 3-for-1 stock split distributed January 19, 1994.
(a) (b) (c) (d) (e)
Number of Value of Unexercised
Securities In-the-Money
Underlying Options at
Unexercised FY-End($)
Options at
FY-End (#)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable
------ --------------- -------------- --------------- -----------------
E. P. Grisanti. . . . . . -- -- 37,102/95,000 540,530/508,650
H. R. Kirkpatrick . . . . 8,100 125,547 4,900/110,000 51,691/445,750
H. C. van Baaren. . . . . -- -- 25,000/101,000 421,550/474,310
R. S. Fenn. . . . . . . . -- -- 27,000/45,000 507,090/196,920
R. Merz . . . . . . . . . 3,000 77,125 29,400/43,500 590,430/233,730
6
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 (as adjusted for the 3-for-1 stock split distributed
January 19, 1994) shares of Common Stock under the Company's 1990 Stock Option
Plan for Non-Employee Directors. On May 13, 1993, each non-employee director
received an option for 3,000 shares at $38.17 per share.
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, 1994, the Board of
Directors fixed his annual salary at $770,000. 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 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 280 G 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
7
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, 1993 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 33, 32, 17 and 24 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
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,
1993, Mr. van Baaren is entitled to an annual benefit under this arrangement
currently estimated to be approximately $6,900. 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,
1993, Mr. Fenn is entitled to an annual benefit under this agreement currently
estimated to be approximately $4,200. No other named executive officer
participates in either of these arrangements.
8
Estimated annual pension
for specified years of service
-----------------------------------------------------
Average
Compensation 15 20 25 30 35 40
- ------------ ---- ---- ---- ---- ---- ----
$ 350,000. . . . . . 89,057 107,012 124,967 142,922 160,877 178,832
400,000. . . . . . 101,779 122,299 142,819 163,339 183,859 204,379
450,000. . . . . . 114,502 137,587 160,672 183,757 206,842 229,927
500,000. . . . . . 127,224 152,874 178,524 204,174 229,824 255,474
550,000. . . . . . 139,946 168,161 196,376 224,591 252,806 281,021
600,000. . . . . . 152,669 183,449 214,229 245,009 275,789 306,569
650,000. . . . . . 165,391 198,736 232,081 265,426 298,771 332,116
700,000. . . . . . 178,114 214,024 249,934 285,844 321,754 357,664
750,000. . . . . . 190,836 229,311 267,786 306,261 344,736 383,211
800,000. . . . . . 203,558 244,598 285,638 326,678 367,718 408,758
850,000. . . . . . 216,281 259,886 303,491 347,096 390,701 434,306
900,000. . . . . . 229,003 275,173 321,343 367,513 413,683 459,853
950,000. . . . . . 241,726 290,461 339,196 387,931 436,666 485,401
1,000,000. . . . . . 254,448 305,748 357,048 408,348 459,648 510,948
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.
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
- ----------------------
* 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
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 in line with the compensation practices of
similarly situated companies.
Compensation paid to the Company's executives in 1993 was, and to be paid
during 1994 is expected to be, deductible by the Company for federal income
tax purposes under Section 162(m) of the Internal Revenue Code. As a result,
the Committee has not at this time adopted a policy as to compensation which
may not be deductible under that Section but will consider adopting such a
policy in the future if circumstances so warrant.
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. In recommending
the salaries for both the President and the other executive officers, the
Committee also considers the salaries paid other chief executive officers and
executive officers at other companies as well as 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 1992 the
President's salary increase effective January 1, 1993 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.
10
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.
Recognizing the President's contribution to the Company's overall performance
in the past, the Committee made the 1993 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
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. The Committee has authority to make
awards under the Company's Management Incentive Compensation Plan approved by
the shareholders in 1971. 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 is 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, allocates the fund, or such portion thereof as the Committee
determines, to the participants and designates the manner in which awards are
to be paid. The Committee does not use 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 1993 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
11
Comparison of Five Year Cumulative Total Return*(1)
The Company, S&P 500 Composite and Peer Group(2)
December 31 1988 1989 1990 1991 1992 1993
IFF 100.00 142.03 161.41 229.25 249.40 268.16
S&P 500 100.00 131.59 127.49 166.17 178.81 196.75
Peer Group 100.00 126.78 129.08 177.77 179.80 179.53
(This table appeared as a line chart in the printed proxy statement)
(1) Total return assumes that the value of an investment in the Company's
common stock and each index was $100 on December 31, 1988 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.
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 Shearson Inc. which has received commissions
for brokerage services performed in connection with securities transactions on
behalf of the Company and its retirement plans.
- ------------------
* 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
STOCK OWNERSHIP
The following is a tabulation as of February 15, 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.
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
- ------ -------------------- ---------------- ---------------- -----
Common George Rowe, Jr.. . . . . . . . . 10,188 shares 10,197,378 shares(1) 9.1%
Stock 30 Rockefeller Plaza
New York, N.Y. 10112
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 8,746,797 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 . . . . . . . 355,287 shares 10,897,044 shares(1) 10.1%
Stock 509 Madison Avenue
New York, N.Y. 10022
- ---------------------
(1) See Note 4 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 8 on page 4 for additional shares beneficially owned by Mr.
Van Dyke.
13
As of February 15, 1994 the officers and directors of the Company (26
persons) and Messrs. Fenn and Merz beneficially owned in the aggregate shares
of the Company's Common Stock as set forth below:
Amount of Percent
Title of Class Name Beneficial Ownership of Class
- -------------- ------ -------------------- --------
Common Stock . . . . All directors and officers as a group. . . .21,447,035(1)(2) 19.2%
Common Stock . . . . R.S. Fenn. . . . . . . . . . . . . . . . . . 43,600 (3)
Common Stock . . . . R. Merz. . . . . . . . . . . . . . . . . . . 41,400 (3)
- -----------------
(1) Includes 371,693 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
4 and 8 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%.
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
December 7, 1994.
Additional Information
The Company has selected Price Waterhouse to be its principal
independent accountants for 1994. Representatives of Price Waterhouse 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, $201,372 for legal services in
1993.
In 1993, Hugh R. Kirkpatrick and Stuart R. Maconochie, officers 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.
14
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. 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, 1993, 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
April 5, 1994
15
{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 12, 1994
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 substitu-
tion, 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 Pegasus Suite, 64th Floor, 30 Rockefeller Plaza, New York, N.Y., on
Thursday, May 12, 1994 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.
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 ................................................................
............................................................................
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. 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/
PROXY DEPARTMENT
NEW YORK, N.Y. 10203-0117
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 ....................., 1994
SIGNED ..........................
.................................
(This Proxy will be voted FOR each of the
above nominees as a director, 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 VOTES MUST BE INDICATED
PROMPTLY USING THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK. /X/
APPENDIX
(Pursuant to Rule 304 of Regulation S-T)
1. Page 12 contains a description in tabular form of a graph entitled
"Comparison of Five Year Cumulative Total Return" which represents the
comparison of the cumulative total return on the Company's common stock
against the cumulative total return of the Standard & Poor's 500 Stock
Index and the Peer Group (consisting of the companies listed on that
page) for the period of five years commencing December 31, 1988 and
ending December 31, 1993, which graph is contained in the paper format
of this Proxy Statement being sent to shareholders.
JH18:G5
