Filed by the Registrant
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x
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Filed by a Party other than the Registrant
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o
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o | Preliminary Proxy Statement |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
o | Definitive Proxy Statement |
x | Definitive Additional Materials |
o | Soliciting Material under Section 240.14a-12 |
x | No fee required |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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(4) | Proposed maximum aggregate value of transaction: |
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o | Fee paid previously with preliminary materials. |
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· | Investing in best-of-class talent and assets. The move of our US Flavors headquarters to a new state-of-the-art facility outside of Chicago was essential to enhance our ability to attract leading management and research talent and to improve our overall R&D capabilities. It also dramatically improved our access to customers which is critical to our success. |
· | Managing portfolio and mix. We have shifted our focus to provide value-added, differentiated products and innovative solutions by leveraging our technology platform. As we prune non-strategic product lines, we will continue to invest in the sales and technical resources necessary to improve our product mix and profitability. |
· | Optimizing operating footprint with selective plant rationalizations. On the heels of our highly successful restructuring actions begun in February 2013, we are in the process of implementing plans to reduce costs by $20 to $25 million by eliminating underperforming operations, consolidating manufacturing facilities and improving efficiencies across the business. |
7-year returns
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5-year returns
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3-year returns
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1-year return
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Sensient
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163%
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178%
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71%
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47%
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IFF
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129%
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262%
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65%
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25%
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Givaudan
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51%
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141%
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64%
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16%
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Symrise
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119%
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363%
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93%
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21%
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Russell 2000
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48%
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198%
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47%
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26%
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S&P Midcap Specialty Chemical Index
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121%
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402%
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83%
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25%
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FrontFour’s Statements and Analysis are Misleading Regarding:
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The Reality is:
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ROE and ROIC results
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FrontFour’s analysis includes one-time restructuring charges in 2013 to create a misleading comparison. When these charges are excluded, Sensient’s ROE and ROIC have improved over the period 2009 – 2013, not declined as FrontFour asserts.
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Operating performance
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FrontFour’s assessment of Sensient’s operating performance reflects its distortion of the facts and cherry-picking of the data in order to characterize Sensient’s performance as “abysmal.” The fact is that since 2008, Sensient’s EPS, excluding restructuring charges, has grown at an annual rate of 7.5% and its cash flow from operations has grown at an annual rate of 13.8% – hardly abysmal performance.
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Color operating margins
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At 21%, the Color Group margins are at the highest level in 10 years and well above the 13% margins generated by our closest competitor.
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Gross margin and cost structure
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FrontFour’s analysis of Sensient’s profitability and cost structure ignores the fact that Sensient’s EBIT margins are similar to its nearest competitors. This lack of knowledge and perspective on our industry leads FrontFour to reach incorrect conclusions about Sensient’s cost structure and the savings opportunities available. In criticizing Sensient’s cost structure, FrontFour’s analysis also conveniently ignores the fact that our SG&A as a % of revenue (excluding restructuring charges) is lower than that of IFF, Symrise and Givaudan.
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Despite their stated focus on helping our Flavors business, FrontFour chose three nominees with zero relevant industry experience.
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· Messrs. Loukas, Henderson and Hyman have no experience in the food and beverage industry
· None of these three nominees have experience in the flavors or chemicals industries
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FrontFour’s lone industry nominee was involved in a high-profile lawsuit over trade secrets with a major food and beverage company.
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· Mr. Redmond was sued by a major food and beverage company to prevent him from misappropriating its trade secrets; a Federal judge concluded that his “lack of forthrightness on some occasions, and out and out lies on others… leads the court to conclude that defendant Redmond could not be trusted…”ii
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Two of FrontFour’s nominees have led companies into at least four bankruptcies.
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· Messrs. Henderson and Redmond have been directly involved as CEO, Chairman or director at four companies that filed for bankruptcy protection on their watch
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FrontFour’s nominees have been associated with destruction of shareholder value.
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· In their roles as officer or directors, Messrs. Loukas and Henderson oversaw investment declines in excess of 60% at four separate companies
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FrontFour’s nominees have past associations with FrontFour, or with its progenitor Pirate Capital, sometimes in conflict with other shareholders.
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· Messrs. Loukas, Hyman and Redmond are all linked with the now-defunct Pirate Capital
· As CEO and Chairman of the Pirate-controlled Cornell Companies board, Mr. Hyman attempted to sell the company for a mere 2% premium, a move that was denounced and rejected by shareholders
o One media report noted that Pirate’s support for the deal “may have more to do with the state of Pirate Capital….overall returns were down sharply this year, and many of its most prominent traders have left. It also faces a Securities and Exchange Commission inquiry.”iii
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James A.D. Croft
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· Former senior partner in the London-based real estate consulting firm of Richard Ellis
o Established Richard Ellis’s international Hotels and Leisure division
o Extensive business-development and operational-expansion experience throughout Europe, the United States, and Latin America
o Provided senior executive leadership through Richard Ellis’s initial merger with California-based CB Commercial to create CB Richard Ellis
· Co-founder of SRAB Shipping AB, a publicly traded Swedish shipping company; provided executive leadership through SRAB Shipping AB’s initial public offering
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William V. Hickey
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· Operating Advisor at Ares Management, a global alternative-investment manager with $68 billion under management
· Former Chief Executive Officer of Sealed Air Corporation, a global manufacturer of protective, food, and specialty packaging materials and systems, for 13 years
· While Mr. Hickey was a senior executive at Sealed Air Corporation, the company grew its net sales from $78 million to over $7.5 billion
· In total, 23 years of executive experience in the food industry while at Sealed Air Corporation
· Former CFO of W.R. Grace & Company’s Pacific and Latin American operations
· Director and Finance Committee Chairman at Public Service Enterprise Group Incorporated, a diversified energy company traded on the New York Stock Exchange that is one of the 10 largest electric utility companies in the United States
· Graduate of the U.S. Naval Academy and Navy veteran
· CPA and “audit committee financial expert” under SEC regulations
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Kenneth P. Manning
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· Over 33 years of dedicated specialty-chemical and food-technology experience leading Sensient’s businesses as former CEO
· Transformed Sensient from a commodities food business into a global leader in specialty chemicals
· Total shareholder return of 800% during the 25 years Mr. Manning has been a Sensient director vs. nearly 575% return for the S&P 500 and approximately 700% for the Russell 2000
· Former President of several divisions while at W.R. Grace & Company, 1973-1987
· Former active-duty U.S. Navy officer, Rear Admiral in the U.S. Naval Reserve and recipient of the Legion of Merit
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Essie Whitelaw
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· Former Senior Vice President of Operations of Wisconsin Physician Services
· Senior executive at Blue Cross Blue Shield of Wisconsin
· Extensive operational experience regarding regulatory compliance and human resources, including development and implementation of compensation policies and design of incentive programs for sales and customer service employees to achieve business objectives while managing risk
· Former director of WICOR Corporation, a Wisconsin energy utility
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Your Vote Is Important, No Matter How Many Shares You Own.
If you have questions about how to vote your shares on the WHITE proxy card,
or need additional assistance, please contact the firm assisting us in the proxy solicitation:
D.F. King & Co., Inc.
Shareholders Call Toll-Free: 1-888-886-4425
Banks and Brokers Call Collect: 1-212-269-5550
Email: sxt@dfking.com
IMPORTANT
WE URGE YOU NOT TO SIGN ANY GREEN PROXY CARD SENT TO YOU BY FRONTFOUR.
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i
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Data based on company filings; peers include: Corbion, Croda, Givaudan, Tate & Lyle, IFF, Frutarom, Innophos, Symrise, DSM, Chr. Hansen, Kerry and McCormick.
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ii
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PepsiCo, Inc. v. William E. Redmond, Jr., 54 F.3d 1262, 1270 (7th Cir. 1995) (citing trial-court findings).
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iii
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Dow Jones, December 12, 2006
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iv
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Bloomberg News, February 2, 2007
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