PROXY STATEMENT AND NOTICE OF 2020 ANNUAL MEETING OF SHAREHOLDERS

Notice of 2020 Annual Meeting of Shareholders

PROXY STATEMENT SUMMARY

2019 Highlights

We Continue to Position IFF for Significant Long-Term Growth

During 2019, we continued to execute on the integration of Frutarom and other strategic goals and delivered financial growth in each of our metrics. While we faced some challenges in 2019, including raw material cost increases and pressures on margins, we grew sales, increased operating profit, and delivered on our commitment to reduce our leverage.

* See reconciliation of GAAP to Non-GAAP financial measures in Exhibit A to this Proxy Statement.

In the fourth quarter of 2019, we announced our proposed combination with the DuPont Nutrition & Biosciences business, which we believe will create a global leader in high-value ingredients and solutions in the global food and beverage, home and personal care, and health and wellness markets. We expect that the companies’ complementary R&D expertise and product portfolios will give the combined company leadership positions across key taste, scent, nutrition, enzymes, cultures, soy proteins and probiotics categories. The transaction is subject to various closing conditions, but we expect the transaction to be completed in early 2021.

Looking forward to 2020, our priorities are clear: drive growth and profitability in our business, substantially complete the Frutarom integration and lay the groundwork for a successful combination with DuPont Nutrition & Biosciences business. With continued focus on execution, we will be well-positioned to become a global leader in innovative integrated solutions and create value for all of our stakeholders.

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PROXY STATEMENT SUMMARY

Vision 2021 Strategy

Following the Frutarom acquisition, we launched our Vision 2021 strategy in 2019. Vision 2021 places our customers as its central focus and comprises four pillars:

Our Corporate Governance Policies Reflect Best Practices

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 PROXY STATEMENT SUMMARY

Proposals and Board Recommendations

Proposal 1   Election of 11 Director Nominees				The Board recommends a vote FOR the election of all Director Nominees   Our Nominating and Governance Committee and our Board have determined that each of the nominees possesses the skills and qualifications to collectively comprise a highly effective Board.
				See “Proposal 1 — Election of Directors” beginning on page 1 of this Proxy Statement.

Director Nominees

Committee Membership

Name and Primary Occupation

Joined

Age

Indep.

Audit

Comp.

Nom.& Gov.

Marcello V. Bottoli Partner, Es Vedra Capital Advisors LLP

2007

58

•

Michael L. Ducker Former President and CEO, FedEx Freight

2014

66

•

•

David R. Epstein Executive Partner, Flagship Pioneering

2016

58

•

•

Roger W. Ferguson, Jr. President and CEO, TIAA

2010

68

•

John F. Ferraro Former Global COO, Ernst & Young

2015

64

•

Andreas Fibig Chairman and CEO, IFF

2011

58

Christina Gold Former CEO, The Western Union Company

2013

72

•

•

Katherine M. Hudson Former CEO, Brady Corporation

2008

73

•

•

Dale F. Morrison (Lead Director) Founding Partner of Twin Ridge Capital Management

2011

71

•

•

•

Dr. Li-Huei Tsai Professor and Director, Picower Institute for Learning and Memory

2019

60

•

•

Stephen Williamson Senior Vice President and CFO, Thermo Fisher Scientific

2017

53

•

Committee Chair     Financial Expert

Skills and Qualifications

Our Board continuously evaluates desired attributes in light of the Company’s strategy and needs. Key skills, qualifications and experience currently maintained on the Board include:

International and Emerging Markets M&A Operations R&D / Innovation Corporate Governance Sustainability Financial and Accounting Risk and Crisis Management Consumer Products Technology / IT Regulatory

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PROXY STATEMENT SUMMARY

Proposal 2   Ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2020 fiscal year				The Board recommends a vote FOR this proposal   Our Board recommends that shareholders vote “FOR” the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2020 fiscal year.
				See “Proposal 2 — Ratification of Independent Registered Public Accounting Firm” beginning on page 33 of this Proxy Statement.

Proposal 3   Approve, on an advisory basis, the compensation of our named executive officers in 2019				The Board recommends a vote FOR this proposal   Our Board recommends a vote “FOR” the advisory vote to approve executive compensation for the 2019 performance year.
				See “Proposal 3 — Advisory Vote on Executive Compensation” on page 60 of this Proxy Statement and “Compensation Discussion and Analysis” beginning on page 37 of this Proxy Statement.

Compensation Governance

Our pay-for-performance compensation program is reflected in the strong compensation governance that we have adopted.

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PROXY STATEMENT SUMMARY

TABLE OF CONTENTS

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Proposal 1 Election of Directors

Our Current Board

Our Board of Directors (“Board”) currently has twelve members. Dr. Buck, who has served on our Board since 2007, will retire from our Board at the 2020 Annual Meeting. Following the 2020 Annual Meeting, the size of our Board will be reduced to eleven members. Upon the recommendation of the Nominating and Governance Committee, our Board has nominated the following current directors for election at the 2020 Annual Meeting, each for a one-year term that expires at the 2021 Annual Meeting:

Director Nominee Experience and Qualifications

Board Membership Criteria and Selection

Our Certificate of Incorporation provides that we have at least six but not more than fifteen directors. To ensure independence and to provide the breadth of needed expertise and diversity of our Board, the Board periodically reviews its size and makes appropriate adjustments pursuant to our By-Laws. Our Nominating and Governance Committee, together with other Board members, from time to time, as appropriate, identifies the need for new Board members.

Board candidates are considered based on various criteria which may change over time as our business evolves and as the composition of the Board changes. At a minimum, our Nominating and Governance Committee considers the following factors as part of its review of all director candidates and in recommending potential director candidates:

Proposed director candidates who satisfy the criteria and who otherwise qualify for membership on the Board are identified by the Nominating and Governance Committee. In identifying candidates, the Nominating and Governance Committee seeks input and participation from other Board members and other appropriate sources so that all points of view are considered and the best possible candidates identified. The Nominating and Governance Committee also engages a search firm to assist it in identifying potential candidates. Members of the Nominating and Governance Committee and other Board members, as appropriate, interview selected director candidates, evaluate the director candidates

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 PROPOSAL 1 — ELECTION OF DIRECTORS 

and determine which candidates are to be recommended by the Nominating and Governance Committee to the Board. Our Nominating and Governance Committee evaluates the suitability of potential candidates nominated by shareholders in the same manner as other candidates recommended to the Nominating and Governance Committee.

We believe that each of our nominees has the experience, skills and qualities to fully perform his or her duties as a director and to contribute to our success. Each of our nominees is being nominated because he or she adheres to the highest standards of personal integrity and possesses excellent interpersonal and communication skills, is highly accomplished in his or her field, has an understanding of the interests and issues that are important to our shareholders and is able to dedicate sufficient time to fulfilling his or her obligations as a director. Our nominees as a group complement each other and each other’s respective experiences, skills and qualities.

Diversity and Tenure

Diversity is one of the factors that the Nominating and Governance Committee considers in identifying and selecting director nominees. As part of this process, the Nominating and Governance Committee evaluates how a particular candidate would strengthen and increase the diversity of the Board in terms of how that candidate may contribute to the Board’s overall balance of perspectives, backgrounds, knowledge, experience, skill sets and expertise in substantive matters pertaining to our business. In 2020, our Board made the determination to eliminate the restriction on the number of full annual terms that a director may serve, as the Board believes its annual review of director experience, skills and qualities, and the Board’s annual self-evaluation process, are better tools for ensuring Board refreshment.

We Strive for a Balanced and Diverse Board

Shareholder Nominations and Proxy Access

Under our By-Laws, if a shareholder wishes to submit a director candidate for consideration by the Nominating and Governance Committee, or wishes a director nomination to be included in the Company’s proxy statement for an annual meeting pursuant to our proxy access by-law, the shareholder must deliver or mail notice of the request to the Company’s Corporate Secretary, in writing, so that it is

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 PROPOSAL 1 — ELECTION OF DIRECTORS 

received not less than 90 days nor more than 120 days prior to the anniversary date of the prior year’s annual meeting of shareholders. However, if the annual meeting is not within 30 days of the anniversary date of the prior year’s annual meeting, such notice must be received by the Corporate Secretary no later than 10 days following the mailing of notice of the annual meeting or public disclosure of the annual meeting date, whichever occurs first. The notice must be accompanied by the information concerning the director candidate and nominating shareholder described in Article I, Section 3 and Section 4 of our By-Laws. The Nominating and Governance Committee may also request any additional background or other information from any director candidate or recommending shareholder as it may deem appropriate. Our proxy access by-law permits an eligible shareholder (or group of up to 20 eligible shareholders) who owns shares representing at least 3% of our outstanding shares, and has held the shares for at least 3 years, to nominate and include in our proxy materials for an annual meeting, director candidates constituting up to 20% of our Board.

Continued Service

The Nominating and Governance Committee annually reviews each current Board member’s suitability for continued service as a member of our Board and recommends to the Board whether such member should be re-nominated. In addition, each director is required to promptly tender his or her resignation to the Chair of the Nominating and Governance Committee if, during his or her tenure as a director, such director

so that the Nominating and Governance Committee can review the change and make a recommendation to the full Board regarding the director’s continued service. Such resignation becomes effective only upon acceptance by the Board.

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 PROPOSAL 1 — ELECTION OF DIRECTORS 

Nominees for Director

Marcello V. Bottoli

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 PROPOSAL 1 — ELECTION OF DIRECTORS 

Michael L. Ducker

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 PROPOSAL 1 — ELECTION OF DIRECTORS 

David R. Epstein

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 PROPOSAL 1 — ELECTION OF DIRECTORS 

Roger W. Ferguson, Jr.

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 PROPOSAL 1 — ELECTION OF DIRECTORS 

John F. Ferraro

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 PROPOSAL 1 — ELECTION OF DIRECTORS 

Andreas Fibig

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 PROPOSAL 1 — ELECTION OF DIRECTORS 

Christina Gold

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 PROPOSAL 1 — ELECTION OF DIRECTORS 

Katherine M. Hudson

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 PROPOSAL 1 — ELECTION OF DIRECTORS 

Dale F. Morrison

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 PROPOSAL 1 — ELECTION OF DIRECTORS 

Dr. Li-Huei Tsai

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 PROPOSAL 1 — ELECTION OF DIRECTORS 

Stephen Williamson

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Corporate Governance

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) that applies to all of our employees, including our Chief Executive Officer (“CEO”), our Chief Financial Officer (“CFO”) and our Chief Accounting Officer, as well as our Directors. Additionally, we have adopted a Code of Conduct for Directors and a Code of Conduct for Executive Officers (together with the Code of Ethics, the “Codes”). The Codes are available through the Investor—Leadership & Governance—Governance link on our website, www.iff.com.

Only the Board or the Audit Committee may grant a waiver from any provision of our Codes in favor of a director or executive officer, and any such waiver and any amendments to the Codes will be publicly disclosed on our website, www.iff.com.

Shareholder Engagement

We regularly engage with our shareholders to better understand their perspectives on our Company, including our strategies, performance, matters of corporate governance and executive compensation. This dialogue has helped inform the Board’s decision-making and ensure our interests remain well-aligned with those of our shareholders. During 2019, we interacted with our largest active shareholders, representing approximately two-thirds of our outstanding shares. We believe that these engagements provide valuable feedback and this feedback is shared regularly with our Board and its relevant committees. As a result of feedback we received from our shareholders in the past few years, we have, among other things, raised our annual dividend, executed our share repurchase program, pursued value-creating acquisitions, completed a perception study on capital allocation preferences, and increased our investor relations exposure with enhanced marketing in key markets in the United States and across continental Europe.

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines which set forth our governance principles relating to, among other things:

In 2020, the Board revised its Corporate Governance Guidelines to eliminate the requirement for non-employee directors to resign following his or her twelfth year of service, as the Board believes its annual review of director experience, skills and qualities, and the Board’s annual self-evaluation process, are better tools for ensuring Board refreshment.

The Nominating and Governance Committee reviews our Corporate Governance Guidelines annually, and recommends changes to the Board as appropriate. A copy of our Corporate Governance Guidelines is available through the Investor—Leadership & Governance—Governance link on our website, www.iff.com.

Environmental, Social and Governance Initiatives

Over the past several years, we have redefined the way we envision sustainability. Moving from the traditional “take-make-dispose” model, we have embraced the circular economy model—one that is restorative and regenerative by design, which we believe is key in safeguarding the wellbeing of our consumers, the health of our planet and the integrity of our business.

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 CORPORATE GOVERNANCE 

Customers and consumers want to know if the products they are purchasing are responsibly sourced and environmentally conscious. Our sustainability vision and strategy are designed to meet these global trends, and we are committed to making progress at every opportunity. Following the Frutarom acquisition, we are working on assessing our combined environmental footprint with the intent of identifying synergies, gaps and opportunities in our sustainability efforts and upgrading the legacy Frutarom operations to better align them with the legacy IFF sustainability practices.

In line with our Vision 2021 strategy and our goal of redefining how we live in and care for the resources of our world, our sustainability goals include:

In 2019, we were recognized for our sustainability efforts with the 2019 “Industry Mover” award from SAM, a subsidiary of RobecoSAM which specializes in providing environmental, social and governance (ESG) data, benchmarks and ratings. The award acknowledges the Company’s top-scoring performance in economic, social and environmental categories. We also reconfirmed our commitment to mitigate climate change by signing the “UN’s Business Ambition for 1.5°C: Our Only Future” pledge, committing to set science-based emissions targets to limit global temperature rise to 1.5 degrees Celsius. In addition, among other distinctions, we were named to Barron’s 100 Most Sustainable Companies List for the second consecutive year, recognizing our exceptional environmental, social and corporate governance performance.

We describe our environmental, social and governance programs and performance in more detail in our annual sustainability report, which is posted on our website for investors, customers and suppliers. More information on our governance program can also be found throughout this proxy statement.

Independence of Directors

The Board undertakes an annual review of director independence, which includes a review of each director’s relationships with the Company. This review is designed to identify and evaluate any transactions or relationships between a director or any member of his or her immediate family and the Company or members of our senior management.

The Board has affirmatively determined that each of our current directors (other than Mr. Fibig, our CEO) meets our independence requirements and those of the NYSE’s corporate governance listing standards:

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 CORPORATE GOVERNANCE 

In the ordinary course of business, transactions may occur between the Company or members of our senior management and entities with which some of our directors are or have been affiliated. In connection with its evaluation of director independence, our Board reviewed transactions between the Company and any company where our directors or their family members serve as executive officers. Specifically, (i) in the ordinary course of business we purchase services from, and sell products and services to Thermo Fisher Scientific, a life sciences and healthcare technology company, of which Mr. Williamson serves as Senior Vice President and Chief Financial Officer and (ii) one of our executive officers has purchased an immaterial interest in a co-investment vehicle managed by Mr.  Bottoli. The Board determined that these transactions did not impair the independence of the respective director.

Board Leadership Structure

As stated in our Corporate Governance Guidelines, the Board does not have a policy that requires a separation of the Chairman of the Board (“Chairman”) and CEO positions. The Board believes that it is important to have the flexibility to make this determination from time to time based on the particular facts and circumstances then affecting our business.

Currently, we combine the positions of Chairman and CEO. We believe that the CEO, as the Company’s chief executive, is in the best position to fulfill the Chairman’s responsibilities, including those related to identifying emerging issues facing our Company, and communicating essential information to the Board about our performance and strategies. We also believe that the combined role of Chairman and CEO provides us with a distinct leader and allows us to present a single, uniform voice to our customers, business partners, shareholders and employees. If at any point in time the Board feels that its current leadership structure may be better served by separating the roles of Chairman and CEO, it may then determine to separate these positions.

In order to mitigate potential disadvantages of a combined Chairman and CEO, the Board has created the position of Lead Director to facilitate and strengthen the Board’s independent oversight of our performance, strategy and succession planning and to promote effective governance standards. The independent directors of the Board elect a Lead Director from among the independent directors on an annual basis. Our current Lead Director is Mr. Morrison.

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 CORPORATE GOVERNANCE 

Board Committees

Our Board has an Audit Committee, a Compensation Committee and a Nominating and Governance Committee, each of which operates under a written charter adopted by the Board. Each Committee reviews its charter at least annually and recommends charter changes to the Board as appropriate. In 2019, each of the Audit Committee, Compensation Committee and Nominating and Governance Committee reviewed its charter, and amended it where appropriate. Each Committee charter provides that the Committee will annually review its performance, and each Committee reviewed and discussed its performance in 2019. A current copy of each of the Audit Committee, Compensation Committee and Nominating and Governance Committee charters is available through the Investor—Leadership & Governance—Governance link on our website, www.iff.com.

The table below provides the current membership and chairperson for each of our Committees and identifies our current Lead Director.

Name		Audit		Compensation		Nominating and Governance		Lead Director
Marcello V. Bottoli		●
Dr. Linda Buck						●*
Michael L. Ducker				●
David R. Epstein						●
Roger W. Ferguson, Jr.
John F. Ferraro
Christina Gold				●
Katherine M. Hudson				●
Dale F. Morrison		●		●		●		●
Dr. Li-Huei Tsai				●
Stephen Williamson		●

= Committee Chair

*= Effective as of the 2020 Annual Meeting, Dr. Buck will retire from the Board.

Board and Committee Meetings

Our Board held nine meetings during 2019. The Audit Committee held seven meetings, the Compensation Committee held six meetings and the Nominating and Governance Committee held five meetings during 2019. All incumbent directors attended at least 75% of the total Board and Committee meetings on which he or she served during 2019. Ten of our eleven directors who were serving on the day of last year’s annual meeting of shareholders attended that meeting. Under our Corporate Governance Guidelines, unless there are mitigating circumstances, such as medical, family or business emergencies, Board members endeavor to participate in all Board meetings and all Committee meetings of which the director is a member and to attend our annual meeting of shareholders. Our non-employee directors, all of whom are currently independent, meet in executive session, without the presence of any corporate officer or member of management, in conjunction with regular meetings of the Board and Committees.

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 CORPORATE GOVERNANCE 

Audit Committee

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 CORPORATE GOVERNANCE 

Compensation Committee

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 CORPORATE GOVERNANCE 

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 CORPORATE GOVERNANCE 

Nominating and Governance Committee

Board and Committee Assessment Process

Each year, the Nominating & Governance Committee leads an evaluation of the effectiveness of the Board and each of its committees. Each member of the Board responds to an anonymous survey regarding the effectiveness of the Board, its committees and their leadership, and the dynamics between the Board and management. The Board supplements this process through the use of in-person director interviews every

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 CORPORATE GOVERNANCE 

other year during which the Lead Director and the Chair of the Nominating & Governance Committee interviews each director to obtain his or her assessment of the effectiveness of the Board and its committees. After consulting with each other, the Lead Director and Chair of the Nominating & Governance Committee summarizes and reviews the results with the Board.

Succession Planning

Our Board recognizes that one of its most important duties is to ensure excellence and continuity in our senior leadership by overseeing the development of executive talent and planning for the effective succession of our Chairman and CEO and other senior members of executive management. As part of this process, our CEO and our executive officers are required to prepare a detailed development and succession plan for themselves and for their direct reports on an annual basis. The Company’s executives regularly attend Board meetings and maintain an ongoing dialogue with Board members, which is critical to the Company’s succession planning. The Compensation Committee reviews, on an annual basis, potential successors for the Company’s executive officers and such other senior management employees as the Compensation Committee may determine. In addition, the Nominating and Governance Committee also agrees upon and recommends to the Board a succession plan for our CEO, including in emergency situations. Our Board is committed to being prepared for a planned or unplanned change in our leadership in order to ensure our stability.

Risk Management Oversight

Board and Committee Roles in Overseeing Risk

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 CORPORATE GOVERNANCE 

Our Board is actively involved in the oversight of risks that could affect our Company and is responsible for overseeing and reviewing with management the Company’s enterprise-wide risks and the policies and practices established to manage such risks. It is the responsibility of the CEO and other senior management to manage the Company’s day-to-day business risks and its risk management process. We believe this division of responsibility is the most effective approach for addressing risk management.

The Board exercises its risk oversight function both at the Board level and through delegation to its committees. The Board and its committees focus on operational risk, financial risk, regulatory risk, litigation risk, cybersecurity and information security risk, tax risk, credit risk, liquidity risk, compliance risk as well as our general risk management strategy, and how these risks are being managed. The Board receives updates on the Company’s risk through management’s enterprise risk management (“ERM”) program report to the Board, which includes management’s approach to mitigating and managing such risks. The Board also receives updates on the Company’s risk from its committees. Each of the Audit, Nominating and Governance and Compensation Committee are responsible for the oversight of risks relevant to their function (as described above) and regularly report to the Board. The Board believes that its risk oversight structure allows for open communication between the Board, its committees and management.

Management

Management maintains an ERM program which is designed to identify and assess our global risks and to develop steps to mitigate and manage risks. As part of its risk management practices, the Company has established a management risk committee chaired by the CFO and General Counsel and made up of key members of the Company’s management to integrate global risk activities (including cybersecurity, compliance, business and crisis management) and to ensure appropriate prioritization of resources and alignment across the Company. The Board receives regular reports on the ERM process and the Company’s risk mitigation activities, including reports focused on information security and sustainability risks.

Compensation Risks

In the fourth quarter of 2019, the Compensation Committee, working with its independent compensation consultant, conducted a risk assessment of our executive compensation programs. The goal of this assessment was to determine whether the general structure of our executive compensation policies and programs, annual and long-term performance goals or the administration of the programs posed any material risks to our Company. In addition, with the input of our CHRO, the Compensation Committee reviewed compensation programs and policies below the executive level in a Company-wide risk assessment. The Compensation Committee shared the results of this review with our full Board.

The Compensation Committee determined, based on the reviews of its independent compensation consultant and management’s input and other factors, that the compensation policies and practices for the Company’s employees in 2019, including the established performance goals and incentive plan structures, did not result in excessive risk taking or the implementation of inappropriate business decisions or strategies by the Company’s executives or employees generally, and that there are no risks arising from our compensation policies and practices for our employees that are reasonably likely to have a material adverse effect on the Company.

Related Person Transactions and Other Information

Transactions with Related Persons

In 2019, there were no transactions and there are no currently proposed transactions in excess of $120,000 in which the Company was or will be a participant and in which any director or executive officer of the Company, any known 5% or greater shareholder of the Company or any immediate family member of any of the foregoing persons, had or will have a direct or indirect material interest as defined in Item 404(a) of Regulation S-K.

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 CORPORATE GOVERNANCE 

Related Person Transactions Policy

In accordance with SEC rules, our Board has adopted a written policy for the review and the approval of related person transactions. This policy is available through the Investor-Leadership & Governance-Governance link on our website, www.iff.com. Under the policy, a “related person” is specifically defined as an executive officer, a director, a director nominee, a beneficial owner of more than 5% of any class of voting securities, an immediate family member of any of the foregoing, or a controlled entity, which is defined as an entity owned or controlled by any of the foregoing or in which any such person serves as an officer or partner, or together with all of the foregoing persons, owns 5% or more equity interests. The policy defines a “related person transaction” as a transaction or series of transactions involving a related person and the Company, excluding employment arrangements involving an executive officer or other senior officer or employee of the Company and director compensation arrangements. The policy requires that any such transaction be approved or ratified by the Nominating and Governance Committee. If accounting issues are involved in the transaction, the Nominating and Governance Committee will consult with the Audit Committee if deemed appropriate.

Pursuant to the policy, a related person transaction will be approved or ratified only if the Nominating and Governance Committee determines that it is being entered into in good faith and on fair and reasonable terms which are in the best interest of our Company and our shareholders. In determining whether to approve or ratify a transaction, the Nominating and Governance Committee considers the following factors, to the extent relevant:

No related person may participate in the review of a transaction in which he or she may have an interest. In addition, except for non-discretionary contributions made pursuant to our matching contributions program, a charitable contribution by our Company to an organization in which a related person is known to be an officer, director or trustee, is subject to approval by the Nominating and Governance Committee. In 2019, there were no related person transactions presented under the policy.

Share Retention Policy

We encourage our executives and directors to own our common stock so that they share the same long-term investment risk as our shareholders. Our Share Retention Policy provides executives and directors flexibility in personal financial planning, yet requires them to maintain ongoing and substantial investment in our common stock. In 2019, the Compensation Committee reviewed our Share Retention Policy with input from management and FW Cook, and approved changes to the policy.

Under our revised Share Retention Policy, each executive and director must retain shares of Company common stock at a targeted ownership level. There is no deadline by which an executive or director must meet his or her targeted ownership level.    

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 CORPORATE GOVERNANCE 

If an executive or director does not meet the targeted ownership level, the executive or director may not sell or transfer any shares held in an equity, a deferred compensation or a retirement plan account provided by the Company, and the executive or director must retain such shares in such accounts until the targeted ownership level is met. For executives, if their retention requirement is not met, the executive is required to retain a portion of any shares of common stock acquired as a result of exercising any stock settled appreciation right (“SSAR”) or as a result of the vesting of restricted stock or a restricted stock unit (“RSU”) (after payment of any exercise price and taxes).

As of March 10, 2020, all of our named executive officers and directors were in compliance with our Share Retention Policy. Additional detail regarding ownership of our common stock by our executive officers and directors is included in this proxy statement under the heading “Securities Ownership of Management, Directors and Certain Other Persons.”

Equity Grant Policy

The Compensation Committee has adopted an Equity Grant Policy with respect to the issuance of equity awards under our equity plans. Under the Equity Grant Policy, the Compensation Committee approves all equity awards to our executive officers (other than our CEO) and certain other members of senior management, and our Board approves all equity awards to our CEO and to our non-employee directors. The grant date for annual awards to all employees and for annual awards to our non-employee directors is the date of the Company’s annual meeting of shareholders. The grant date for awards under our Long-Term Incentive Plan (“LTIP”) is the date that the Compensation Committee (or Board in the case of our CEO) approves the applicable LTIP metrics. In addition to the annual grants, equity awards may be granted “off-cycle” at other times during the year to new hires, for promotions, retention purposes, director appointments or other special circumstances. The grant price of equity awards (other than LTIP awards) is the closing price of our common stock on the NYSE on the date of the grant or, if the grant date is not a business day, the closing price on the NYSE on the following business day. The grant price for LTIP awards is the trailing twenty-day average closing price of our common stock on the NYSE as of the first trading day of the applicable LTIP performance.

Policy Regarding Derivatives, Short Sales, Hedging and Pledges

Under our insider trading policy, directors and all employees, including our named executive officers, are prohibited from entering into transactions designed to hedge against economic risks associated with an investment in our common stock. These individuals may not trade in derivatives in our securities (such as put and call options), effect “short sales” of our common stock, or enter into monetization transactions or similar arrangements (such as prepaid variable forwards, equity swaps, collars or exchange funds) relating to our securities. These individuals are also prohibited from holding shares of our common stock in margin accounts or pledging shares of our common stock as collateral for a loan.

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Directors Compensation

Director Compensation Program

Annual Director Cash and Equity Compensation

Under our non-employee director compensation program, for the service year from the 2019 Annual Meeting of Shareholders (the “2019 Annual Meeting”) to the 2020 Annual Meeting, each non-employee director received an annual retainer of $250,000, of which $112,500 was paid in cash and $137,500 was paid in RSUs issued under our 2015 Stock Award and Incentive Plan (“2015 SAIP”) on the date of the 2019 Annual Meeting. These RSUs vest one year from the grant date and are subject to accelerated vesting upon a change in control. The 997 RSUs granted to each director on the date of the 2019 Annual Meeting was calculated using the closing market price of our common stock on the grant date. Any director who is an employee of our Company does not receive any additional compensation for his or her service as a director.

Compensation for our Lead Director and Committee Chairs

For the service year from the 2019 Annual Meeting to the 2020 Annual Meeting, the Lead Director received an additional annual cash retainer of $25,000, the Chair of the Audit Committee received an additional annual cash retainer of $20,000, the Chair of the Compensation Committee received an additional annual cash retainer of $17,500 and the Chair of the Nominating and Governance Committee received an additional annual cash retainer of $15,000.

Participation in our Deferred Compensation Plan

Non-employee directors are eligible to participate in our Deferred Compensation Plan (“DCP”). A non-employee director may defer all or a portion of his or her cash compensation as well as any RSUs granted to him or her, subject to tax law requirements. Additional details regarding our DCP may be found in this proxy statement under the heading “Executive Compensation—Non-Qualified Deferred Compensation.” Non-employee directors are not entitled to matching contributions or the 25% premium on deferrals into our common stock fund that are applicable to employees under the DCP.

Additional Benefits

We reimburse our non-employee directors for travel and lodging expenses incurred in connection with their attendance at Board and Committee meetings, our shareholder meetings and other Company-related activities. In addition, our current directors are eligible to participate in our Matching Gift Program. Under this program, we match, on a dollar for dollar basis, contributions made by directors to qualifying charitable organizations up to a maximum of $10,000 per person per year.

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 DIRECTORS’ COMPENSATION 

The following table details the compensation paid to or earned by our non-employee directors for the year ended December  31, 2019.

2019 Directors’ Compensation

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 DIRECTORS’ COMPENSATION 

The deferred shares, which are held under the DCP, result from deferral of vested equity grants, voluntary deferral of retainer fees or the crediting of additional share units as a result of reinvestment of dividend equivalents. Deferred shares will be settled by delivery of common stock upon the director’s separation from service on the Board, or as otherwise elected by the director. All of the deferred shares are included for each director in the Beneficial Ownership Table.

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Securities Ownership

Directors and Executive Officers

The following table sets forth certain information regarding the beneficial ownership of our common stock as of February 29, 2020, by each current director, each director nominee, the persons named in the Summary Compensation Table in this proxy statement and all current directors and executive officers as a group. To our knowledge, except as otherwise indicated, beneficial ownership includes sole voting and dispositive power with respect to all shares.

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 SECURITIES OWNERSHIP 

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 SECURITIES OWNERSHIP 

5% Shareholders

The following table sets forth information regarding each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, as of February 29, 2020, based on a review of filings with the SEC. Unless otherwise indicated, beneficial ownership is direct.

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Proposal 2 Ratification of Independent Registered Public Accounting Firm

Selection of our Independent Registered Public Accounting Firm

The Audit Committee of our Board is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. To execute this responsibility, the Audit Committee engages in a comprehensive annual evaluation of the independent registered public accounting firm’s qualifications, performance and independence to determine whether the independent registered public accounting firm should be rotated, and considers the advisability and potential impact of selecting a different independent registered public accounting firm.

The Audit Committee has selected PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for 2020, and our Board has directed that our management submit that selection for ratification by our shareholders at the 2020 Annual Meeting. PwC has been retained as our external auditor continuously since 1957. In connection with the selection of PwC, the Audit Committee annually reviews and negotiates the terms of the engagement letter entered into with PwC. This letter sets forth important terms regarding the scope of the engagement, associated fees, payment terms, responsibilities of each party and the election of the parties to be subject to binding arbitration in the case of any dispute.

In accordance with SEC rules and PwC policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide audit service to our Company. For lead and quality review audit partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of our lead audit partner pursuant to this rotation policy involves a meeting between the Chair of the Audit Committee and the candidate for the role, as well as discussion by the full Audit Committee and management.

The Audit Committee and the Board believe that the continued retention of PwC as our independent registered public accounting firm is in the best interest of the Company and our shareholders, and we are asking our shareholders to ratify the selection of PwC as our independent registered public accounting firm for 2020. Although ratification is not required by our By-Laws or otherwise, we are submitting the selection of PwC to our shareholders for ratification because we value our shareholders’ views on our Company’s independent registered public accounting firm and as a matter of good corporate governance. The Audit Committee will consider the outcome of our shareholders’ vote in connection with the Audit Committee’s selection of our independent registered public accounting firm in the next fiscal year, but is not bound by the shareholders’ vote. Even if the selection is ratified, the Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time if it determines that a change would be in the best interests of our Company and our shareholders.

Representatives of PwC are expected to attend the 2020 Annual Meeting, where they will be available to respond to questions and, if they desire, to make a statement.

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 PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

Principal Accountant Fees and Services

The following table provides detail about fees for professional services rendered by PwC for the years ended December 31, 2019 and December 31, 2018.

Pre-Approval Policies and Procedures for Audit and Permitted Non-Audit Services

Consistent with requirements of the SEC and the Public Company Accounting Oversight Board (PCAOB) regarding auditor independence, the Audit Committee has responsibility for:

In recognition of this responsibility, the Audit Committee has established policies and procedures to pre-approve all audit and non-audit services to be provided by the independent registered public accounting firm to our Company by category, including audit-related services, tax services and other permitted non-audit services. Under the policy, the Audit Committee pre-approves all services obtained from our independent registered public accounting firm by category of service, including a review of specific services to be performed, fees expected to be incurred within each category of service and the potential impact of such services on auditor independence. The term of any pre-approval is for the

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 PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

financial year, unless the Audit Committee specifically provides for a different period in the pre-approval. If it becomes necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval, the Audit Committee requires separate pre-approval before engaging the independent registered public accounting firm. To facilitate the process, the policy delegates pre-approval authority to the Audit Committee chairperson to pre-approve services up to $50,000, and the Audit Committee may also delegate authority to one or more of its members to pre-approve services. The Audit Committee member to whom such authority is delegated must report, for informational purposes, any pre-approval decisions to the Audit Committee at its next scheduled meeting.

All services rendered by PwC to our Company are permissible under applicable laws and regulations. During 2019, all services performed by PwC which were subject to the SEC’s pre-approval requirements were approved by the Audit Committee in accordance with the Audit Committee’s pre-approval policy in effect during 2019.

Audit Committee Report

The Audit Committee (“we,” “us” or the “Committee”) operates in accordance with a written charter, which was adopted by the Board. A copy of that charter is available through the Investor—Leadership & Governance—Governance link on the Company’s website at www.iff.com. The Committee is composed of four directors whom the Board has determined are “independent,” as required by the applicable listing standards of the NYSE and the rules of the SEC, and whom qualify as “audit committee financial experts” as defined by the rules of the SEC.

Management has the primary responsibility for the financial statements and the reporting process, including internal control over financial reporting and disclosure controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), is responsible for performing an integrated audit of the Company’s financial statements and internal control over financial reporting in accordance with the auditing standards of the Public Company Accounting Oversight Board (“PCAOB”).

The Committee oversees the Company’s financial reporting process and internal control structure on behalf of the Board. We met seven times during 2019, including meeting regularly with PwC and the Company’s internal auditor, both privately and with management present. For 2019, we have reviewed and discussed the Company’s audited financial statements with management. We have reviewed and discussed with management its process for preparing its report on its assessment of the Company’s internal control over financial reporting, and at regular intervals we received updates on the status of this process and actions taken by management to respond to issues and deficiencies identified. We discussed with PwC its audit of the financial statements and of the Company’s internal control over financial reporting. We discussed with PwC and the Company’s internal auditor the overall scope and plans for their respective audits.

We have discussed with PwC the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. We also received the written disclosures and the letter from PwC as required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and discussed with PwC its independence. We concluded that PwC’s independence was not adversely affected by the non-audit services provided by PwC, the majority of which consisted of audit-related, tax compliance and other tax services arising from our acquisition of Frutarom.

Based on the reviews and discussions referred to above, we recommended to the Board (and the Board subsequently approved our recommendation) that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on March 3, 2020.

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 PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

In determining whether to retain PwC as the Company’s independent registered public accounting firm for the 2020 fiscal year, we took into consideration a number of factors, including:

Based on this evaluation, we believe that it is in the best interests of the Company and its shareholders to retain PwC as the Company’s independent registered public accounting firm for 2020, which the shareholders will be asked to ratify at the 2020 Annual Meeting of Shareholders.

Audit Committee

John F. Ferraro (Chair)

Marcello V. Bottoli

Dale F. Morrison

Stephen Williamson

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Compensation Discussion and Analysis

Reference Guide to our CD&A

This Compensation Discussion and Analysis, or CD&A, describes and analyzes our executive compensation philosophy and program in the context of the compensation paid during the last fiscal year to our chief executive officer, our chief financial officer and each of our three most highly compensated executive officers (collectively referred to as our NEOs). This CD&A is organized as follows:

As discussed in Proposal 3, we are conducting our annual Say on Pay vote that requests your approval of the compensation of our NEOs as described in this section and in the tables and accompanying narrative contained below under “Executive Compensation.” To assist you with this vote, please review our compensation philosophies, the design of our executive compensation programs and how, we believe, these programs have contributed to and are aligned with our performance.

2019 was a transformational year for IFF as we continued to take important steps to redefine our industry, including our integration of Frutarom and recently announced combination with DuPont Nutrition & Biosciences. We continued to achieve significant cost synergies from Frutarom well ahead of our year-one targets, and captured solid year one revenue synergies, demonstrating our broad operational strength. While we continued to execute on the integration of Frutarom and other strategic goals during 2019, our financial results reflected external challenges that we faced, including raw material cost increases and volume erosion with multinational customers. Consequently, while we believe we continue to be on pace to deliver on our long-term guidance to shareholders, the compensation paid to our NEOs for 2019 was significantly less than amounts paid during 2018.

Executive Summary

For 2019, our NEOs were:

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 COMPENSATION DISCUSSION AND ANALYSIS 

Compensation Philosophy

The core of our executive compensation philosophy is that our executives’ compensation should be linked to achievement of financial and operating performance metrics that build shareholder value over both the short- and long-term. As such, we consistently focus on the following key drivers of shareholder value maximization:

Acquisitions Financial Results Return of Capital Increase Shareholder Value

We designed our compensation program to focus on elements that we believe will contribute to these shareholder value drivers. Our compensation program:

Is Variable and Tied to Value Creating Performance Metrics Reflects Each Executive's Level of Responsibility Shareholder Value Includes a Significant Equity Component Rewards Individual Performance and Contributions

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 COMPENSATION DISCUSSION AND ANALYSIS 

The design of our executive compensation program reflects our belief that executive compensation should be (1) aligned with the achievement of financial and operational metrics for both our Company and the respective business function in which the executive serves and (2) tied to the total shareholder return delivered to our shareholders. The following illustrates how our CEO’s and other NEOs’ total direct compensation is designed to tie a significant portion of their compensation to variable and long-term goals:

CEO Target Opportunity Mix 85% Variable 79% Variable Long-Term 75% Long-Term Equity

NEO Average (excluding CEO) Target Opportunity Mix 71% Variable 70% Variable Long-Term 77% Long-Term Equity

Our 2019 NEO Compensation Reflects our 2019 Performance

While we increased sales and operating profit in 2019 on a dollar basis, we faced challenges that adversely affected the top-line growth for each of the Taste, Scent and Frutarom business units and our consolidated results. For example, while we delivered 3% currency neutral sales growth, on a consolidated basis, we did not achieve our threshold currency neutral sales growth performance levels for the Taste, Scent or Frutarom business units or on a consolidated basis and the AIP payout for our NEOs for the year reflected this miss. Our executives pursued a variety of solutions to address these top-line challenges, such as focusing on operating expenses and approaches to moderate the impact of increased raw material costs and pressures on margins. As a result of these efforts, our Scent business delivered above target performance in operating profit and gross margin while our Taste business delivered results between threshold and target for gross margin and above target for working capital.

Our AIP payouts reflected these different results. NEOs evaluated at the corporate level received AIP payouts of approximately 25.5% of their respective target opportunity (which includes all three business

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 COMPENSATION DISCUSSION AND ANALYSIS 

units), our Divisional CEO, Taste received an AIP payout of approximately 23.3% of his target opportunity and our Divisional CEO, Scent received an AIP payout of approximately 75.7% of his target opportunity.

With respect to our LTIP awards, our overall net income resulted in EP performance for 2019 below the threshold level established at the beginning of the three-year cycle and our Total Shareholder Return relative to the S&P 500 for the three-year period ending in 2019 was below the 35th percentile threshold. Consequently, none of our NEOs earned any amounts under the outstanding LTIP cycles for our 2019 performance.

Compensation Governance

To ensure continued alignment of compensation with Company performance and the creation of shareholder value on a long-term, sustainable basis, we maintain strong compensation-related corporate governance policies.

What We Do						What We Don’t Do
		Pay for performance. A significant portion of the compensation for our NEOs is in the form of at-risk variable compensation						No tax gross-ups for severance payments
		Base variable compensation on multiple performance metrics to encourage balanced focus						No single-trigger vesting of cash or equity-based awards upon change in control
		Use an appropriate mix of fixed and variable compensation to reward Company, business unit and individual performance						No short-sales, hedging or pledging of our stock by our employees, officers or directors
		Award a majority of variable compensation as equity-based awards						No fixed-duration employment agreements with executive officers
		Maintain executive clawback policies to recoup cash and equity compensation upon certain triggering events						No stock option/SAR repricing or exchange of underwater options or SARs for cash
		Require our executives to meet share retention guidelines						No guaranteed pay increases or equity awards for NEOs
		Engage an independent compensation consultant
		Conduct an annual risk assessment of our compensation programs

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 COMPENSATION DISCUSSION AND ANALYSIS 

Compensation Elements and Targeted Mix

Our executive compensation program includes direct and indirect compensation elements.

We believe that direct compensation should be the principal form of compensation. The table below provides a brief description of the principal elements of direct compensation, whether such compensation is fixed or variable, and the compensation program objectives served by each element. From time to time, the Committee may also approve discretionary awards to executives in connection with their initial employment or for extraordinary individual performance, a significant contribution to the Company’s strategic objectives or retention purposes.

The Committee periodically reviews the mix between variable and fixed and short-term and long-term incentive compensation opportunities and between cash and non-cash opportunities based on (1) benchmarking and other external data provided by our independent compensation consultant, (2) recommendations from our independent compensation consultant and (3) recommendations from our CEO and CHRO. When reviewing and setting compensation for our NEOs, the Committee considers individual performance that contributes to the Company’s success in achieving its strategic initiatives.

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 COMPENSATION DISCUSSION AND ANALYSIS 

Our indirect compensation and reward elements consist of (1) our Deferred Compensation Plan (“DCP”) and our Retirement Investment Fund Plan (the “401(k)”) savings plan, (2) our perquisite program, (3) our Executive Severance Policy (“ESP”), (4) our Executive Death Benefit Plan and (5) our supplemental long-term disability coverage. The Committee regularly reviews the costs and benefits of these programs.

2019 Compensation

Salaries

The Committee reviews the salaries of our NEOs annually, and adjusts salaries periodically. In February 2019, the Committee reviewed the base salaries of our NEOs after consultation with its independent compensation consultant. The Committee determined to maintain our NEOs salaries at the same level as 2018.

Annual Incentive Plan

During 2019, our AIP compensated our executive officers based on the achievement of certain levels of Company financial performance. Financial performance metrics are measured (1) at the consolidated corporate level for our CEO, CFO, and General Counsel and (2) at both the consolidated corporate level and the business unit level for the Divisional CEO, Scent and Divisional CEO, Taste.

In March 2019, the Committee approved certain changes to the AIP to better align business unit metrics for our Divisional CEOs and determined that no adjustments were needed with respect to the metrics for NEOs that are evaluated solely on corporate performance. The 2019 AIP weightings for our Divisional CEOs were adjusted so that the corporate components constitute 10% of the overall weighting and the business unit components constitute 90% of the overall weighting. The Committee believes that these changes reflect our focus on achieving profitable growth. As with the prior year, if our Company does not meet the corporate operating profit threshold, then no AIP payouts will be awarded to any participant, including the NEOs.

The performance metrics for the 2019 AIP and their assigned weightings were as follows:

Annual Incentive Program

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 COMPENSATION DISCUSSION AND ANALYSIS 

Each year the Committee sets an AIP target (stated as a percentage of base salary) for each NEO. For 2019, the Committee maintained the AIP percentage targets at the same level as 2018.

Performance Metrics and Capped AIP Payouts: Based on a review of the annual and long-term financial goals, operational plans, strategic initiatives and the prior year’s actual results, the Committee annually sets the financial performance metrics for our Company and the respective business units that it will use to measure performance as well as the relative weighting that will be assigned to each metric. The Committee then approves threshold, target and maximum performance levels for each performance metric. Upon achievement of the relative performance level, an executive has the opportunity to earn threshold (25%), target (100%) and maximum (200%) amounts with performance levels achievements in between calculated on a linear basis. The Committee seeks to establish corporate performance goals that are challenging yet attainable.

As discussed above, for 2019 AIP awards, the Committee approved the following four financial performance metrics for the reasons noted below:

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 COMPENSATION DISCUSSION AND ANALYSIS 

Determination of 2019 Performance Levels: In determining our 2019 AIP performance threshold, target and maximum levels, the Committee considered our annual targets for 2019, 2018 actual results and payout trends over the prior three-year and five-year periods. The performance target levels for the financial metrics were set in line with our 2019 budget.

2019 Corporate and Business Unit AIP Performance: Our actual performance against our 2019 AIP corporate financial metrics is set forth in the tables below. In establishing AIP financial performance metrics we took into consideration certain non-operational metrics known to us at the time. In determining actual achievement against those performance metrics, we eliminated the net impact of certain non-core expenses and non-core gains to reflect our fundamental operating results. 2019 LTIP and AIP target performance levels and actual achievement against the target performance levels excluded costs or income associated with (1) adjustments related to ongoing operational improvement initiatives and restructuring, (2) restructurings in connection with our finance transformation, Scent profit improvement project and consolidation of Frutarom sites, (3) Frutarom integration costs, acquisition-related costs and compliance review costs, (4) the DuPont N&B acquisition costs (5) an FDA mandated recall, (6) gains or losses on sales of assets, and (7) unbudgeted mark-to-market adjustments related to our Deferred Compensation Plan (together, the “2019 non-core items”). Similarly, we excluded the effects of incentive compensation provisions in calculating gross margin performance in order to better focus on the underlying operating performance of our product portfolio. The Committee believes that the necessary self-funding of incentive compensation payments is covered in the operating profit component of the AIP program.

Corporate Performance

The table below reflects the 2019 AIP metrics, their respective targets and the percentage payout earned for each metric and overall by each of Messrs. Fibig and O’Leary and Ms. Chwat, who were evaluated solely on corporate performance.

Corporate Level

Threshold Target Maximum Award Payout as a % of Target 4.7% 6.2% 7.7% Currency Neutral Sales Growth -% Actual 3.2% $776M $817M $858M Operating Profit 15.6% Actual $787M 40.1% 41.6% 43.1% Gross Margin 9.9% Actual 40.9% $145.7M $138.8M $132.1M Working Capital -% Actual $147.7M Overall Corporate Payout 25.5%

As indicated above, during 2019, our corporate performance was below threshold for both the currency neutral sales growth and working capital metrics, between threshold and target for the operating profit metric, and slightly above threshold for the gross margin metric. The actual dollar amount earned by each NEO is set forth below under “2019 Individual AIP Payouts.”

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 COMPENSATION DISCUSSION AND ANALYSIS 

Scent Business Unit Performance

The table below reflects the 2019 AIP metrics, their respective targets and the percentage payout earned for each metric and overall by Mr. Mirzayantz, our Divisional CEO, Scent.

Scent Business Unit

Threshold Target Maximum Award Payout as a % of Target 4.7% 6.2% 7.7% Currency Neutral Sales Growth (Business Unit) -% Actual 4.4% 4.7% 6.2% 8% Currency Neutral Sales Growth (Corporate) -% Actual 3.2% $300M $318M $347M Operating Profit (Business Unit) Actual $327M 39.0% $776M $817M $858M Operating Profit (Corporate) Actual $787M 2.2% 39.2% 40.7% 42% Gross Margin (Business Unit) Actual 41.8% 34.5% $229.5M $218.5M $208M Working Capital (Business Unit) -% Actual $231.4M Overall Payout for Divisional CEO, Scent 75.7%

As indicated above, during 2019, our Scent business unit performance was below threshold for the currency neutral sales growth and the working capital metrics, and was between target and maximum for the operating profit and gross margin metrics. The actual dollar amount earned by our Divisional CEO, Scent is set forth below under “2019 Individual AIP Payouts.”

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 COMPENSATION DISCUSSION AND ANALYSIS 

Taste Business Unit Performance

The table below reflects the 2019 AIP metrics, their respective targets and the percentage payout earned for each metric and overall by Mr. Haeni, our Divisional CEO, Taste.

Taste Business Unit

Threshold Target Maximum Award Payout as a % of Target 2.5% 4.0% 5.5% Currency Neutral Sales Growth (Business Unit) -% Actual 1.8% 4.7% 6.2% 7.7% Currency Neutral Sales Growth (Corporate) -% Actual 3.2% $386M $409M $447M Operating Profit (Business Unit) -% Actual $385M $776M $817M $858M Operating Profit (Corporate) 2.2% Actual $787M 43.5% 45.0% 46.5% Gross Margin (Business Unit) 5.6% Actual 43.6% $187.8M $178.9M $170.3M Working Capital (Business Unit) 15.5% Actual $178.6M Overall Payout for Divisional CEO, Taste 23.3%

During 2019, our Taste business unit performance was below threshold for the currency neutral sales growth and operating profit metrics, at threshold for the gross margin metric, and approximately at target for the working capital metric. The actual dollar amount earned by our Divisional CEO, Taste is set forth below under “2019 Individual AIP Payouts.”

2019 Individual AIP Payouts

The 2019 AIP payout to our NEOs based on the actual achievement of each of the performance metrics is included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table in this proxy statement. Based on the Corporate and Business Unit performance outlined in the tables above, 2019 AIP payouts were as follows:

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 COMPENSATION DISCUSSION AND ANALYSIS 

Long-Term Incentive Plan

We believe that LTIP awards reward our executive officers, including our NEOs, for financial results and align their interests with the interests of our shareholders. Annually, the Committee reviews the LTIP to determine (1) the metrics that should be used to encourage long-term success, (2) the weightings that should be applied to such metrics, (3) the length of the performance periods, and (4) the targets for such metrics. The Committee believes that commencing a new three-year LTIP cycle each year:

The Committee also annually sets a total LTIP target award for each NEO, which reflects the total LTIP award an NEO has the opportunity to receive at the end of the three-year cycle if we meet all of our targets. Depending upon our actual performance relative to financial and relative total shareholder return (“TSR”) goals, the actual payout to the NEO could be greater or less than the total LTIP target award.

Performance Segments.  As discussed below, in 2019, the Committee determined to modify the design of the 2019-2021 LTIP cycle to consist of two cumulative, three-year performance segments. The 2017-2019 and 2018-2020 LTIP cycles continue to comprise four performance segments: three one-year periods (each an “annual performance segment”) and one cumulative three-year period (the “cumulative performance segment”).

Performance Metrics.  In late 2018, the Committee, in consultation with management and FW Cook, evaluated potential LTIP performance metrics for the 2019-2021 cycle in light of our acquisition of Frutarom. While the Committee continues to believe that EP is an important metric, in light of the Frutarom acquisition and the company-wide focus on deleveraging by 2021, for the 2019-2021 LTIP cycle, the Committee decided to replace the three annual EP performance segments with a cumulative three-year performance metric of net debt to EBITDA ratio (the “Net Debt Ratio”) in addition to the cumulative, three-year relative TSR, with Net Debt Ratio and Relative TSR to be weighted equally.

Long-Term Incentive Plan (2019-2021 Cycle)

The Committee selected the Net Debt Ratio metric for the 2019-2021 LTIP cycle to incentivize management to achieve the Company’s deleveraging goal, and the Committee set threshold, target and maximum Net Debt Ratios for the cumulative three-year period based on that goal. Net Debt Ratio is defined as the ratio of the Company’s net debt to adjusted EBITDA (earnings before interest, tax, depreciation and amortization).

The Committee also believes that three-year Relative TSR is a good indicator of our overall long-term performance, and directly ties our executives’ compensation opportunity to our share price appreciation and dividend payments relative to a major large-cap index. Relative TSR is calculated by measuring the change in the market price of stock plus dividends paid (assuming the dividends are reinvested) for our

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 COMPENSATION DISCUSSION AND ANALYSIS 

Company and the S&P 500 companies over the three-year performance period. The market price for purposes of calculating the Relative TSR of our Company and the S&P 500 on each cycle-end date is determined based on the average closing price per share of each company’s stock over the period of 20 consecutive trading days preceding that date, as reported by S&P Capital IQ. The Relative TSR goal for the cumulative performance segment is set at the beginning of the three-year cycle.

Long-Term Incentive Plan (2017-2019 and 2018-2020 Cycles)