EX-99.10(K) 6 0006.txt IFF VISION 2001 COMPENSATION PROGRAM [PEARL MYERS & PARTNERS] EXHIBIT 10(k) ------------- INTERNATIONAL FLAVORS & FRAGRANCES INC. ------------------------------------------------------------------------------- VISION2001 Compensation Program ------------------------------------------------------------------------------- Overview -------- As discussed at the October meeting, Committee and Board approval is being sought at this meeting of IFF's new compensation program, which has been updated and redesigned in support of management's strategy for the three to five-year turnaround/transformation of the Company. The purposes of the VISION2001 Compensation Program are to . Attract, motivate and reward key executives for the achievement of stringent goals required for future growth, improved financial efficiency, higher profitability and increased cash flow, - Align IFF pay opportunities with these annual and long term drivers of shareholder value. . Focus key employees to work together with common purpose as a unified IFF management group committed to accomplish Company-wide as well as team/individual goals, based on each employee's responsibility for financial, strategic and operational results, . Encourage retention of key employees and assist in the recruitment of needed new talent, . Increase stock ownership and facilitate wealth building, . Offer competitive compensation opportunities based on the realization of VISION2001, and . Provide pay plans that are simple to communicate, understand and administer. The VISION2001 Compensation Program is comprised of six remuneration plans - Salary Plan, Annual Incentive Plan/1/, Long Term Incentive Plan/1/, Stock Option/1/, Perquisites Plan and Deferred Compensation Plan. The Program has been geared to the current competitive marketplace with salary and perquisites positioned at median and total remuneration at the 60th to 65th percentiles for on-target results and over the 75th percentile for maximum achievement. The VISION2001 Compensation Program will provide IFF employees joining us from BBA with equivalent total remuneration opportunities through a modified mix of pay elements and other IFF participants with updated incentive and total remuneration opportunities based on real results. -------------------- /1/ Under the Company's 2000 Stock Award and Incentive Plan approved by shareholders at the 2000 annual meeting. [PEARL MEYER & PARTNERS] 1. Salary Plan ----------- A new salary matrix shown in the following Exhibit A has been developed comprised of 12 Grades. Over 500 employees have been assigned to Grades based on competitive marketplace pricing and internal value of their positions to the new IFF. Management to make salary adjustment effective January 1/st/ for those whose positions/responsibilities have changed materially in the restructuring and whose salaries fall below desired levels. On an ongoing basis, salaries will be reviewed periodically. Automatic annual merit increases will be discontinued. Raises will be determined by ongoing individual in-position performance. Assessments will be based on qualitative criteria such as personal and managerial effectiveness, teamwork, and people development as well as individual factors. Major distinctions between performance levels will be reflected in major distinctions in salary increase rates. Aside from "one time" adjustments for position/responsibility changes, salary increases will generally be effective April 1/st/. An exempt annualized salary budget of approximately 4% is planned for 2001. - 2 - [PEARL MEYER & PARTNERS] INTERNATIONAL FLAVORS & FRAGRANCES INC. -------------------------------------------------------------------------------- IFF Salary Grade Matrix -------------------------------------------------------------------------------- Salary Grade Range Estimated Salary ------------------- Typical No. of Grade Minimum Maximum Positions Participants ------ -------- -------- ----------------------------------- ------------ CEO $900,000 1 K $325,000 - $585,000 Executive Vice President 3 J $275,000 - $495,000 Corporate VP; Senior VP 5 I $200,000 - $360,000 VP, Global Category (Business Head) 15 H $160,000 - $300,000 Other Officer, VP (Regional Business 25 Head - Global Functions) G $130,000 - $250,000 Director (Senior); 45 VP (Regional Function) F $100,000 - $200,000 Research Fellow; Director 95 (Area - Affiliate Head) E $ 75,000 - $150,000 Manager (Senior); 125 Parfumer; Flavorist D $ 60,000 - $110,000 Manager; Project Leader; Sr. 200 Specialist; Principal Scientist; Individual Contributor C $ 50,000 - $ 90,000 Supervisor; Group Leader; -- Assistant Manager; Sr. Specialist B $ 40,000 - $ 65,000 Analyst; Specialist; Scientist -- A $ 30,000 - $ 50,000 Representative; Coordinator; -- Administrator; Associate; Trainee ----- 514 - 3 - [PEARL MEYER & PARTNERS] II. Annual Incentive Plan --------------------- Over 500 employees in Salary Grades D/1/ and above will be eligible to participate in the Annual Incentive Plan. Those in Grades A to C as well as non-exempt hourly employees will participate in local incentive plans with a corporate performance element. Annual Incentive Plan performance goals based on the approved business plan will be comprised of both Corporate and team/individual quantitative measures established and clearly communicated at the beginning of each year. The three Corporate measures which require Committee approval for 2001 are based on total IFF financial performance drivers, focused on growing the business after several years of flat revenues, maximizing profits from new and existing sources of revenue, and generating the cash required to satisfy the Company's debt obligations: . Revenue Growth . Gross Profit (Revenues less Cost of Sales) . Cash Flow from Operations (which embraces net profit from operations and working capital improvement) Individualized quantitative financial and strategic measures of team and/or person performance are to be focused on each participant's specific operational responsibilities for: . Driving achievement of annual global Corporate revenue, profit and cash flow goals for 2001, . Teamwork in achieving turnaround/transformation within the newly structured organization, . Integrating BBA's operation's smoothly and successfully within IFF's new structure, . Improving customer satisfaction (i.e., on-time delivery, quality, relationships, etc.), and . Realizing other stated goals determined by management as areas requiring significant action/improvement (i.e., product development, technical application, forecast reliability, etc.). The weighting of Corporate financial measures vs. team/individual measures is to be based on each participant's level/responsibilities, ranging from 100%/0% at the highest Corporate officer level to 20%/80% at the lowest participant levels. There will be less emphasis on overall Corporate results moving down the organization, with more focus on the achievement of specific individual goals which drive Company-wide results. Specific Corporate measures, performance goals and weightings for each year are to be determined by the Compensation Committee based on the recommendation of the Chief Executive Officer with target performance linked to the approved business plan. Proposal for 2001 ----------------- Performance Measures Weighting ------------------------- ----------- Revenue growth 40% Gross Profit 30% Cash Flow from Operations 30% ---- 100% -------------------- /1/ Minimum salary for Grade D is $60,000. - 4 - z [PEARL MEYER & PARTNERS] Progress toward meeting annual performance goals is to be tracked and communicated by management on a regular basis to plan participants. Plan funding will equal the sum of target awards with quarterly adjustment based on actual results achieved and projected full year results. Performance will be measured in constant dollars as of January 1st. Target incentive levels are to be determined by Grade based on position responsibilities and the new IFF compensation structure shown in Exhibit B. Annual incentive opportunities will range from 0% to 200% of target awards as shown below. Range of Performance Opportunity ----------- ----------- Minimum 0% Threshold 25% Target(Business Plan) 100% Maximum 200% For motivational purposes, thresholds are set to be set at achievable level at "start-up" of the turnaround with relatively challenging goals at target and stretch goals required to earn maximum awards. In the event of extraordinary 2001 results, individual/team and/or Corporate awards may be adjusted by a "kicker" of up to 50% of target awards to motivate and reward realization of turnaround goals. Team and individual goals are to flow on a direct line for bottom-up implementation of each major business plan driver. Results achieved are to be evaluated and amounts earned determined and paid in February following the end of the performance year. Payment will generally be made in cash with elective deferral in choice of investments including IFF stock under the new IFF Deferred Compensation Plan. Deferrals in IFF stock for a minimum of two years will be credited with a 25% premium subject to two-year cliff vesting based on continued employment. Preliminary corporate performance targets and associated costs will be presented at the Committee meeting. - 5 - [PEARL MEYER & PARTNERS] Exhibit B INTERNATIONAL FLAVORS AND FRAGRANCES INC. ------------------------------------------------------------------------------- IFF Compensation Structure Incentive Opportunity by Grade - Percent of Salary -------------------------------------------------------------------------------
Salary Grade Range ($000s) Annual Incentive (a) Annualized Long Term (b) Salary ------------------ ---------------------------------- ---------------------------------- Grade Minimum Maximum Threshold Target Maximum Threshold Target Maximum ------ ------- ------- --------- ------ ------- --------- ------ ------- CEO $900 15.0% 60.0% 120.0% 20.0% 80.0% 160.0% K $325 - $585 12.5% 50.0% 100.0% 12.5% 50.0% 100.0% J $275 - $495 12.5% 50.0% 100.0% 12.5% 50.0% 100.0% I $200 - $360 12.5% 50.0% 100.0% 12.5% 50.0% 100.0% H $160 - $300 10.0% 40.0% 80.0% 10.0% 40.0% 80.0% G $130 - $250 10.0% 40.0% 80.0% -- -- -- F $100 - $200 7.5% 30.0% 60.0% -- -- -- E $ 75 - $150 6.3% 25.0% 50.0% -- -- -- D $ 60 - $110 3.8% 15.0% 30.0% -- -- -- C $ 50 - $ 90 2.5% 10.0% (f) 20.0% -- -- -- B $ 40 - $ 65 1.5% 6.0% (f) 12.0% -- -- -- A $ 30 - $ 50 1.5% 6.0% (f) 12.0% -- -- -- Range of Opportunity ---------------------------------- -------------------------------- vs. Target 25% 100% 200% 25% 100% 200% ---------------------------------- --------------------------------
Salary Grade Range ($000s) Stock Options (c) Total Remuneration Salary ------------------ ---------------------------------- ---------------------------------- Grade Minimum Maximum Threshold Target Maximum Threshold Target Maximum ------ ------- ------- --------- ------ ------- --------- ------ ------- CEO $900 66.0% (d) 66.0% (d) 80.0% 201.0% 306.0% 460.0% K $325 - $585 42.5% 50.0% 60.0% 167.5% 250.0% 360.0% J $275 - $495 34.0% 40.0% 48.0% 159.0% 240.0% 348.0% I $200 - $360 34.0% 40.0% 48.0% 159.0% 240.0% 348.0% H $160 - $300 19.0% 22.5% 27.0% 139.0% 202.5% 287.0% G $130 - $250 15.0% 17.5% 21.0% 125.0% 157.5% 201.0% F $100 - $200 8.5% 10.0% 12.0% 116.0% 140.0% 172.0% E $ 75 - $150 6.5% 7.5% (e) 9.0% 112.8% 132.5% 159.0% D $ 60 - $110 3.5% 4.0% (e) 5.0% 107.3% 119.0% 135.0% C $ 50 - $ 90 2.6% 3.0% (e) 3.5% 105.1% 113.0% 123.5% B $ 40 - $ 65 -- -- 101.5% 106.0% 112.0% A $ 30 - $ 50 -- -- 101.5% 106.0% 112.0% Range of Opportunity ---------------------------------- vs. Target -15% 100% +20% ----------------------------------
-------------------- (a) "Kicker" of up to 50% of target for extraordinary performance. (b) Standard annualized opportunity shown; 2001 to 2003 start-up biennial cycle to equal 3x annualized long term opportunity and subsequent biennial cycles to equal 2x annualized long term opportunity. (c) Calculation based on IFF stock price of $17.9375 per share and IFF Black-Scholes value of 25.0% of grant value; option ranges to be finalized in May 2001. (d) CEO to receive annual option grants with minimum Black-Scholes value of $590,000 (66% of current salary); initial CEO option grant on 100,000 shares. (e) Participation by individuals in Grades C, D and E at discretion of CEO with an estimated level of participation equal to 50, 50 and 125 employees, respectively. (f) Covered by local incentive plans with a corporate performance element. [PEARL MEYER & PARTNERS] III. Long Term Incentive Plan ------------------------ Approximately 50 executives in Salary Grade H/1/ and above who impact the long term success of the company will be eligible to participate initially. Eligibility may be extended down in future years based on Plan effectiveness and marketplace practice. As shown in the following Exhibit C, performance cycles of three years are to commence every two years. The initial Cycle I is to cover the three- year performance period from January 2001 to December 2003 with opportunity targeted at 3x the annualized award level to "start up" the Plan. Cycle II is to cover the three-year performance period from January 2003 to December 2005 at the standard 2x the annualized award level. Subsequent three-year performance cycles may continue on a biennial basis or shift to annual cycles as the Company's turnaround strategy is realized and goals of the business evolve. Performance measures and goals based on global corporate quantitative financial results achieved by the executive group as a team will be established at the beginning of each cycle. Threshold goals are to be set at realistic, attainable levels to create "Early success" by the executive team with targets to be relatively challenging and maximum goals stretch. The initial Cycle I is to be based on the following measures (subject to Committee approval) which support IFF's three to five-year turnaround strategy of growing earnings and improving financial efficiency through positive programs such as inventory reduction: . Earnings per Share . Return on Net Tangible Assets The two Cycle I measures will be weighted equally to maintain balanced focus: Performance Measure Weightings ----------- ---------- EPS 50% RONTA 50% Performance measures, goals and weightings are to be reviewed and modified as appropriate for future cycles. At the beginning of each cycle, participants will be granted LTIP Units with a par value of $100 at target performance. The number of LTIP Units will be based on the participant's performance and Grade in the IFF compensation structure as shown in Exhibits D1 and D2. Plan funding will equal the sum of LTIP Units' value at target with quarterly adjustment based on actual results achieved and projected full year results. ------------------------- /1/ Minimum salary for Grade H is $160,000. - 7 - [PEARL MEYER & PARTNERS] Incentive opportunities based on results will range from 0% to 200% of target values as shown below: Range of Results Opportunity --------- ----------- Minimum 0% Threshold 25% Target 100% Maximum 200% LTIP Units will be valued at the end of each cycle at $0 for minimum performance and up to $200 for maximum achievement of stretch goals. If performance is deemed by the Committee to be "superior" vs. goals at the halfway point of the performance cycle, the Committee may provide early partial payout of up to one-third of the three-year target award. Results achieved and amounts earned are to be determined and paid in February following the end of the cycle. Payment will generally be made in cash with elective deferral in a choice of investment vehicles including IFF stock to be permitted under the new IFF Deferred Compensation Plan. Deferrals in IFF stock for a minimum of two years will be credited with a 25% premium subject to cliff vesting based on continued employment. Preliminary corporate performance targets and associated costs will be presented at the Committee meeting. - 8 - [PEARL MEYER & PARTNERS] Exhibit C
INTERNATIONAL FLAVORS AND FRAGRANCES INC. -------------------------------------------------------------------------------- Long Term Incentive Plan Biennial Cycles -------------------------------------------------------------------------------- Performance Period and Year Annualized ----------------------------------------------------- Cycle Opportunity 2001 2002 2003 2004 2005 2006 2007 2008 ---------- ----------- ---- ---- ---- ---- ---- ---- ---- ---- ------------------ I 1/01-12/03 / / 100% Cash and/or "Start Up" 3x Target / / -------------- 125% Deferred Stock / / ------------------ / / / Interim Payout for "Superior" Results ------------------ II 1/03-12/05 / / 100% Cash and/or Regular 2x Target / / ---------------- 125% Deferred Stock / / ------------------ / ------------------ / / / / / / ------------------
- 9 - [PEARL MEYER & PARTNERS] Exhibit D-1 INTERNATIONAL FLAVORS & FRAGRANCES INC. -------------------------------------------------------------------------------- IFF Compensation Structure Incentive Opportunity by Grade - Percent of Salary. --------------------------------------------------------------------------------
Salary Grade Range ($000s) Annual Incentive (a) Annualized Long Term (b) Salary ------------------ ---------------------------------- ---------------------------------- Grade Minimum Maximum Threshold Target Maximum Threshold Target Maximum ------ ------- ------- --------- ------ ------- --------- ------ ------- CEO $900 15.0% 60.0% 120.0% 20.0% 80.0% 160.0% K $325 - $585 12.5% 50.0% 100.0% 12.5% 50.0% 100.0% J $275 - $495 12.5% 50.0% 100.0% 12.5% 50.0% 100.0% I $200 - $360 12.5% 50.0% 100.0% 12.5% 50.0% 100.0% H $160 - $300 10.0% 40.0% 80.0% 10.0% 40.0% 80.0% G $130 - $250 10.0% 40.0% 80.0% -- -- -- F $100 - $200 7.5% 30.0% 60.0% -- -- -- E $ 75 - $150 6.3% 25.0% 50.0% -- -- -- D $ 60 - $110 3.8% 15.0% 30.0% -- -- -- C $ 50 - $ 90 2.5% 10.0% (f) 20.0% -- -- -- B $ 40 - $ 65 1.5% 6.0% (f) 12.0% -- -- -- A $ 30 - $ 50 1.5% 6.0% (f) 12.0% -- -- -- Range of Opportunity ---------------------------------- -------------------------------- vs. Target 25% 100% 200% 25% 100% 200% ---------------------------------- --------------------------------
Salary Grade Range ($000s) Stock Options (c) Total Remuneration Salary ------------------ ---------------------------------- ---------------------------------- Grade Minimum Maximum Threshold Target Maximum Threshold Target Maximum ------ ------- ------- --------- ------ ------- --------- ------ ------- CEO $900 66.0% (d) 66.0% (d) 80.0% 201.0% 306.0% 460.0% K $325 - $585 42.5% 50.0% 60.0% 167.5% 250.0% 360.0% J $275 - $495 34.0% 40.0% 48.0% 159.0% 240.0% 348.0% I $200 - $360 34.0% 40.0% 48.0% 159.0% 240.0% 348.0% H $160 - $300 19.0% 22.5% 27.0% 139.0% 202.5% 287.0% G $130 - $250 15.0% 17.5% 21.0% 125.0% 157.5% 201.0% F $100 - $200 8.5% 10.0% 12.0% 116.0% 140.0% 172.0% E $ 75 - $150 6.5% 7.5% (e) 9.0% 112.8% 132.5% 159.0% D $ 60 - $110 3.5% 4.0% (e) 5.0% 107.3% 119.0% 135.0% C $ 50 - $ 90 2.6% 3.0% (e) 3.5% 105.1% 113.0% 123.5% B $ 40 - $ 65 -- -- -- 101.5% 106.0% 112.0% A $ 30 - $ 50 -- -- -- 101.5% 106.0% 112.0% Range of Opportunity ---------------------------------- vs. Target -15% 100% +20% ----------------------------------
-------------------- (a) "Kicker" of up to 50% of target for extraordinary performance. (b) Standard annualized opportunity shown; 2001 to 2003 start-up biennial cycle to equal 3x annualized long term opportunity and subsequent biennial cycles to equal 2x annualized long term opportunity. (c) Calculation based on IFF stock price of $17.9375 per share and IFF Black-Scholes value of 25.0% of grant value; option ranges to be finalized in May 2001. (d) CEO to receive annual option grants with minimum Black-Scholes value of $590,000 (66% of current salary); initial CEO option grant on 100,000 shares. (e) Participation by individuals in Grades C, D and E at discretion of CEO with an estimated level of participation equal to 50, 50 and 125 employees, respectively. (f) Covered by local incentive plans with a corporate performance element. - 10 - [PEARL MEYER & PARTNERS] Exhibit D-2 INTERNATIONAL FLAVORS & FRAGRANCES INC. ------------------------------------------------------------------------------- IFF Compensation Structure Incentive Opportunity by Grade - Amounts by Individual ($000s) (a) -------------------------------------------------------------------------------
Salary Grade Range ($000s) Annual Incentive (c) Annualized Long Term (d) Salary ------------------ ----------------------------------- ----------------------------------- Grade Minimum Maximum Threshold Target Maximum Threshold Target Maximum ------ ------- ------- --------- ------ -------- --------- ------ -------- CEO $900 $135.0 $540.0 $1,080.0 $180.0 $720.0 $1,440.0 K $325 - $585 56.9 227.5 455.0 56.9 227.5 455.0 J $275 - $495 48.1 192.5 385.0 48.1 192.5 385.0 I $200 - $360 35.0 140.0 280.0 35.0 140.0 280.0 H $160 - $300 23.0 92.0 184.0 23.0 92.0 184.0 G $130 - $250 19.0 76.0 152.0 -- -- -- F $100 - $200 11.3 45.0 90.0 -- -- -- E $ 75 - $150 7.0 28.1 56.3 -- -- -- D $ 60 - $110 3.2 12.8 25.5 -- -- -- C $ 50 - $ 90 1.8 7.0 (g) 14.0 -- -- -- B $ 40 - $ 65 0.8 3.2 (g) 6.3 -- -- -- A $ 30 - $ 50 0.6 2.4 (g) 4.8 -- -- -- Range of Opportunity ----------------------------------- ---------------------------------- vs. Target 25% 100% 200% 25% 100% 200% ----------------------------------- ----------------------------------
Stock Options (b) Salary Grade --------------------------------------------------------------------------- Range ($000s) Amount No. of Shares Salary ------------------ --------------------------------- ---------------------------------- Grade Minimum Maximum Minimum Target Maximum Minimum Target Maximum ------ ------- ------- ------- ------ ------- ------- ------ ------- CEO $900 $590.0 (e) $590.0 (e) $720.0 130,000 (e) 130,000 (e) 155,000 K $325 - $585 193.4 227.5 273.0 42,500 50,000 60,000 J $275 - $495 130.9 154.0 184.8 30,000 35,000 42,000 I $200 - $360 95.2 112.0 134.4 21,500 25,000 30,000 H $160 - $300 43.7 51.8 62.1 10,000 12,000 14,500 G $130 - $250 28.5 33.3 39.9 6,000 7,000 8,400 F $100 - $200 12.8 15.0 18.0 2,600 3,000 3,600 E $ 75 - $150 7.3 8.4 10.1 1,700 2,000 (f) 2,400 D $ 60 - $110 3.0 3.4 4.3 650 750 (f) 900 C $ 50 - $ 90 1.8 2.1 2.5 425 500 (f) 600 B $ 40 - $ 65 -- -- -- -- -- -- A $ 30 - $ 50 -- -- -- -- -- -- Range of Opportunity ---------------------------------- -------------------------------- vs. Target -15% 100% +20% -15% 100% +20% ---------------------------------- --------------------------------
Salary Grade Range ($000s) Total Remuneration Salary ------------------ ----------------------------------- Grade Minimum Maximum Threshold Target Maximum ------ ------- ------- --------- -------- -------- CEO $900 $1,805.0 $2,750.0 $4,140.0 K $325 - $585 762.1 1,137.5 1,638.0 J $275 - $495 612.2 924.0 1,339.8 I $200 - $360 445.2 672.0 974.4 H $160 - $300 319.7 465.8 660.1 G $130 - $250 237.5 299.3 381.9 F $100 - $200 174.0 210.0 258.0 E $ 75 - $150 126.8 149.1 178.9 D $ 60 - $110 91.2 101.2 114.8 C $ 50 - $ 90 73.6 79.1 86.5 B $ 40 - $ 65 53.3 55.7 58.8 A $ 30 - $ 50 40.6 42.4 44.8 Range of Opportunity vs. Target
-------------------- (a) Calculated based on the midpoint of each Salary Grade. (b) Calculation based on IFF stock price of $17.9375 per share and IFF Black-Scholes value of 25.0% of grant value; option ranges to be finalized in May 2001. (c) "Kicker" of up to 50% of target for extraordinary performance. (d) Standard annualized opportunity shown; 2001 to 2003 start-up biennial cycle to equal 3x annualized long term opportunity and subsequent biennial cycles to equal 2x annualized long term opportunity. (e) CEO to receive annual option grants with minimum Black-Scholes value of $590,000 (66% of current salary); initial CEO option grant on 100,000 shares. (f) Participation by individuals in Grades C, D and E at discretion of CEO with an estimated level of participation equal to 50, 50 and 125 employees, respectively. (g) Covered by local incentive plans with a corporate performance element. - 11 - [PEARL MEYER & PARTNERS] IV. Stock Options ------------- As discussed in October, option grants to executive officers will continue to be made under the 2000 Stock Award and Incentive Plan and to other participants under the new 2000 Supplemental Stock Award Plan. Regular annual participants will include about 190 employees in Grades F/1/ and above with annual discretionary grants to about 225 selected employees in Grades C/2/, D and E. Based on current estimates, approximately 2 million shares or 2.11% of the 97 million shares currently outstanding would be granted annually at target performance with a range of 1.76 million up to 2.45 million shares (Exhibit E), which is within current market practice. Recommendations for Committee consideration with respect to 2001 option grant terms and timing are under development. ------------ /1/ Minimum salary for Grade F is $100,000. /2/ Minimum salary for Grade C is $50,000. - 12 - [PEARL MEYER & PARTNERS] Exhibit E INTERNATIONAL FLAVORS & FRAGRANCES INC. ------------------------------------------------------------------------------- IFF Compensation Structure Stock Option Opportunity by Grade -------------------------------------------------------------------------------
Stock Options (a)(b) ------------------------------------------------------------------------ Black-Scholes Value Salary Grade ------------------------------------------------------------------------ Range ($000s) Percent of Salary Amount ($000s) Salary ------------------ --------------------------------- -------------------------------- Grade Minimum Maximum Minimum Target Maximum Minimum Target Maximum ------ ------- ------- ------- ------ ------- ------- ------ ------- CEO $900 66.0% (c) 66.0% (c) 80.0% $590.0 (c) $590.0 (c) $720.0 K $325 - $585 42.5% 50.0% 60.0% 193.4 227.5 273.0 J $275 - $495 34.0% 40.0% 48.0% 130.9 154.0 184.8 I $200 - $360 34.0% 40.0% 48.0% 95.2 112.0 134.4 H $160 - $300 19.0% 22.5% 27.0% 43.7 51.8 62.1 G $130 - $250 15.0% 17.5% 21.0% 28.5 33.3 39.9 F $100 - $200 8.5% 10.0% 12.0% 12.8 15.0 18.0 E $ 75 - $150 6.5% 7.5% (d) 9.0% 7.3 8.4 (d) 10.1 D $ 60 - $110 3.5% 4.0% (d) 5.0% 3.0 3.4 (d) 4.3 C $ 50 - $ 90 2.6% 3.0% (d) 3.5% 1.8 2.1 (d) 2.5 B $ 40 - $ 65 -- -- -- -- -- -- A $ 30 - $ 50 -- -- -- -- -- -- Totals % of Outstanding (e) Range of Opportunity ----------------------------------- ---------------------------------- vs. Target -15% 100% +20% -15% 100% +20% ----------------------------------- ----------------------------------
Stock Options (a)(b) Salary Grade ---------------------------------------- Range ($000s) No. of Shares Salary ------------------ ---------------------------------------- Grade Minimum Maximum Minimum Target Maximum ------ ------- ------- --------- --------- --------- CEO $900 130,000 (c) 130,000 (c) 155,000 K $325 - $585 42,500 50,000 60,000 J $275 - $495 30,000 35,000 42,000 I $200 - $360 21,500 25,000 30,000 H $160 - $300 10,000 12,000 14,500 G $130 - $250 6,000 7,000 8,400 F $100 - $200 2,600 3,000 3,600 E $ 75 - $150 1,700 2,000 (d) 2,400 D $ 60 - $110 650 750 (d) 900 C $ 50 - $ 90 425 500 (d) 600 B $ 40 - $ 65 -- -- -- A $ 30 - $ 50 -- -- -- --------- --------- --------- Totals 1,763,250 2,042,500 2,452,500 % of Outstanding (e) 1.82% 2.11% 2.53% Range of Opportunity ---------------------------------------- vs. Target -15% 100% +20% ----------------------------------------
-------------------- (a) Calculated based on the midpoint of each Salary Grade. (b) Calculation based on IFF stock price of $17.9375 per share and IFF Black-Scholes value of 25.0% of grant value; option ranges to be finalized in May 2001. (c) CEO to receive annual option grants with minimum Black-Scholes value of $590,000 (66% of current salary); initial CEO option grant on 100,000 shares. (d) Participation by individuals in Grades C, D and E at discretion of CEO with an estimated level of participation equal to 50, 50 and 125 employees, respectively. (e) Based on 97 million shares outstanding. - 13 - [PEARL MEYER & PARTNERS] The following Exhibit F1 and F2 summarize opportunities available under the four pay plans of the VISION2001 program for IFF's eight executive officers - structurally as a percent of salary and by dollar amount. - 14 - [PEARL MEYER & PARTNERS] Exhibit F-1 INTERNATIONAL FLAVORS & FRAGRANCES INC. ------------------------------------------------------------------------------- IFF Compensation Structure Total Remuneration of Eight Executive Officers - Percent of Salary -------------------------------------------------------------------------------
Current Annual Incentive (a) Annualized Long Term (b) Salary Base ---------------------------------- ---------------------------------- Name Grade Salary Threshold Target Maximum Threshold Target Maximum --------------- ------ ------- --------- ------ ------- --------- ------ ------- Goldstein, R. A. CEO 100.0% 15.0% 60.0% 120.0% 20.0% 80.0% 160.0% Lobbosco, C. A. K 100.0% 12.5% 50.0% 100.0% 12.5% 50.0% 100.0% Boyden, J. K 100.0% 12.5% 50.0% 100.0% 12.5% 50.0% 100.0% Howard, D. W. K 100.0% 12.5% 50.0% 100.0% 12.5% 50.0% 100.0% Block, S. A. J 100.0% 12.5% 50.0% 100.0% 12.5% 50.0% 100.0% Wetmore, D. J. J 100.0% 12.5% 50.0% 100.0% 12.5% 50.0% 100.0% Brooks, C. D. J 100.0% 12.5% 50.0% 100.0% 12.5% 50.0% 100.0% Kane, W. S. J 100.0% 12.5% 50.0% 100.0% 12.5% 50.0% 100.0% Range of Opportunity ---------------------------------- -------------------------------- vs. Target 25% 100% 200% 25% 100% 200% ---------------------------------- --------------------------------
Current Stock Options (c) Total Remuneration Salary Base ---------------------------------- ---------------------------------- Name Grade Salary Threshold Target Maximum Threshold Target Maximum --------------- ------ ------- --------- ------ ------- --------- ------ ------- Goldstein, R. A. CEO 100.0% 66.0% (d) 66.0% (d) 80.0% 201.0% 306.0% 460.0% Lobbosco, C. A. K 100.0% 38.1% 44.8% 53.8% 163.1% 244.8% 353.8% Boyden, J. K 100.0% 40.1% 47.2% 56.6% 165.1% 247.2% 356.6% Howard, D. W. K 100.0% 50.8% 59.8% 71.8% 175.8% 259.8% 371.8% Block, S. A. J 100.0% 31.8% 37.4% 44.8% 156.8% 237.4% 344.8% Wetmore, D. J. J 100.0% 34.7% 40.8% 48.9% 159.7% 240.8% 348.9% Brooks, C. D. J 100.0% 38.1% 44.8% 53.8% 163.1% 244.8% 353.8% Kane, W. S. J 100.0% 52.0% 61.2% 73.4% 177.0% 261.2% 373.4% Range of Opportunity ---------------------------------- vs. Target -15% 100% +20% ----------------------------------
-------------------- (a) "Kicker" of up to 50% of target for extraordinary performance. (b) Standard annualized opportunity shown; 2001 to 2003 start-up biennial cycle to equal 3x annualized long term opportunity and subsequent biennial cycles to equal 2x annualized long term opportunity. (c) Calculation based on IFF stock price of $17.9375 per share and IFF Black-Scholes value of 25.0% of grant value; option ranges to be finalized in May 2001. (d) CEO to receive annual option grants with minimum Black-Scholes value of $590,000 (66% of current salary); initial CEO option grant on 100,000 shares. - 15 - [PEARL MEYER & PARTNERS] Exhibit F-2 INTERNATIONAL FLAVORS & FRAGRANCES INC. ------------------------------------------------------------------------------- IFF Compensation Structure Total Remuneration of Eight Executive Officers - Amounts (000s) -------------------------------------------------------------------------------
Current Annual Incentive (b) Annualized Long Term (c) Salary Base ---------------------------------- ---------------------------------- Name Grade Salary Threshold Target Maximum Threshold Target Maximum --------------- ------ ------- --------- ------ ------- --------- ------ ------- Goldstein, R. A. CEO $900 $135 $540 $1,080 $180 $720 $1,440 Lobbosco, C. A. K 500 63 250 500 63 250 500 Boyden, J. K Howard, D. W. K Block, S. A. J 360 45 180 360 45 180 360 Wetmore, D. J. J 330 41 165 330 41 165 330 Brooks, C. D. J Kane, W. S. J --------- ------ ------- --------- ------ ------- Totals $455 $1,820 $3,640 $500 $2,000 $4,000 % of Outstanding (e) Range of Opportunity ---------------------------------- -------------------------------- vs. Target 25% 100% 200% 25% 100% 200% ---------------------------------- --------------------------------
Stock Options (a) ---------------------------------------------------------------------------- Current Amount No. of Shares Salary Base ---------------------------------- ---------------------------------- Name Grade Salary Min. Target Max. Min. Target Max. --------------- ------ ------- --------- ------ ------- --------- ------ ------- Goldstein, R. A. CEO $900 $ 590 (d) $ 590 (d) $ 720 130.0 (d) 130.0 (d) 155.0 Lobbosco, C. A. K 500 191 224 269 42.5 50.0 60.0 Boyden, J. K Howard, D. W. K Block, S. A. J 360 114 135 161 25.5 30.0 36.0 Wetmore, D. J. J 330 114 135 161 25.5 30.0 36.0 Brooks, C. D. J Kane, W. S. J --------- ------ ------- --------- ------ ------- Totals $1,619 $1,801 $2,173 359.5 400.0 479.0 % of Outstanding (e) 0.37% 0.41% 0.49% Range of Opportunity ---------------------------------- -------------------------------- vs. Target -15% 100% +20% -15% 100% +20% ---------------------------------- --------------------------------
Current Total Remuneration Salary Base ---------------------------------- Name Grade Salary Min. Target Max. --------------- ------ ------- --------- ------ ------- Goldstein, R. A. CEO $900 $1,805 $2,750 $4,140 Lobbosco, C. A. K 500 816 1,224 1,769 Boyden, J. K Howard, D. W. K Block, S. A. J 360 564 855 1,241 Wetmore, D. J. J 330 527 795 1,151 Brooks, C. D. J Kane, W. S. J --------- ------ ------- Totals $6,034 $9,081 $13,273 % of Outstanding (e) -------------------- (a) Calculation based on IFF stock price of $17.9375 per share and IFF Black-Scholes value of 25.0% of grant value; option ranges to be finalized in May 2001. (b) "Kicker" of up to 50% of target for extraordinary performance. (c) Standard annualized opportunity shown; 2001 to 2003 start-up biennial cycle to equal 3x annualized long term opportunity and subsequent biennial cycles to equal 2x annualized long term opportunity. (d) CEO to receive annual option grants with minimum Black-Scholes value of $590,000 (66% of current salary); initial CEO option grant on 100,000 shares. (e) Based on 97 million shares outstanding. - 16 - [PEARL MEYER & PARTNERS] V. Perquisite Plan --------------- The IFF Perquisite Plan is positioned at marketplace median. Two items have been added to current practice - financial counseling & estate planning and health club membership. As shown in Exhibit G. perquisites provided vary based on position level as reflected in assigned Salary Grade. - 17 - [PEARL MEYER & PARTNERS] Exhibit G INTERNATIONAL FLAVORS & FRAGRANCES INC. -------------------------------------------------------------------------------- VISION2001 Compensation Program - Other Elements Perquisites Plan -------------------------------------------------------------------------------- Salary Annual Building Grade Car (a) Vacation Severance Physical Parking ------ ------- -------- ---------------- -------- -------- CEO Yes Per Board Per Contract (b) Yes Yes K Yes 4 Weeks Per Executive Yes Yes Severance Policy J Yes 4 Weeks Per Executive Yes Yes Severance Policy I Yes 4 Weeks Per Executive Yes Yes Severance Policy H Yes 4 Weeks 18 Months Yes Yes G No 4 Weeks 12 Months Yes No F No 3 Weeks Per Policy - No No 6 Months Min. E No 3 Weeks Per Policy - No No 6 Months Min. D No Per Policy Per Policy No No C No Per Policy Per Policy No No B No Per Policy Per Policy No No A No Per Policy Per Policy No No Financial Salary Air Transport Counseling & Health Grade Accommodations Estate Planning Club ------ ------------------- --------------- --------------- CEO First or Business Individual Yes (100%) K First or Business Individual Yes (100%) J First or Business Individual Yes (100%) I First or Business Individual Yes (100%) H First or Business Individual Yes (100%) G Coach or Business Small Group Partial Subsidy for 5 hours or more F Coach or Business Small Group Partial Subsidy for 5 hours or more E Coach or Business Seminar Partial Subsidy for 5 hours or more D Coach or Business Seminar Partial Subsidy for 5 hours or more C -- Seminar Partial Subsidy B -- Seminar Partial Subsidy A -- Seminar Partial Subsidy ------------------ (a) Nature of program is currently under review. (b) Covered under Executive Separation Policy except as provided in CEO letter agreement. - 18 - [PEARL MEYER & PARTNERS] VI. Deferred Compensation Plan -------------------------- Approximately 300 U.S. based management employees in Salary Grades E and above will be eligible to participate in the Plan whose purposes are to: . Increase key employee stock ownership by encouraging deferral and investment of IFF earnings (including option profits) in IFF shares. . Facilitate wealth building by permitting key employees to invest their IFF earnings on a tax-deferred basis. . Encourage executive retention by automatic payout and taxation of deferred amounts upon certain terminations, and . Offer a flexible and competitive program. Earnings eligible for deferral include salary in excess of the Social Security wage base plus Medicare tax/1/; annual and long term incentive awards; stock and stock unit awards; and profit shares resulting from stock-for-stock option exercise. Investment alternatives to be made available include, among others to be determined, IFF shares, selected equity and fixed income funds, and interest at specified rates. Deferral investment choices may be switched, except no switching out of IFF stock will be permitted to avoid Section 16 issues for insiders and accounting charges to the Company. Deferrals in IFF stock must be paid out in stock; all other deferrals may be paid out in cash, or at the Company's election, in the participant's elected investment. Deferral elections are to be filed on a timely basis as follows to avoid "constructive receipt" issues:
. Salary . Prior to commencement of fiscal quarter in which earned . Annual and long term incentive awards . At least six months prior to end of in cash or stock performance period . Mandatorily deferred incentive awards . One year prior to scheduled payment date . Option profit shares . At least six months prior to exercise . Stock units . At least six months prior to scheduled payment date . "Second-look" elections to extend . At least one year prior to payout or six deferral months prior to termination triggered payments
---------------- /1/ For 2001 wage base is $80,400 and Medicare withholding amounts to 1.45% of wages. - 19 - [PEARL MEYER & PARTNERS] Participants will have the flexibility to elect to receive their deferred amounts during employment or after termination due to retirement or disability, upon fixed date(s) or event(s), and in lump sum or in up to 10 installments. For retention purposes, a voluntary quit will trigger automatic payment and taxation. Deferrals will also be automatically paid out within one year after death and upon termination by the Company with Company right of offset in the event of a "for cause" termination. Automatically accelerated payout will occur within five business days of a Change in Control unless it would hinder a pooling transaction, or the participant waives acceleration. Early withdrawals will be permitted in the event of defined hardship with other withdrawals permitted subject to a 10% penalty. On the other hand, the Company may delay payment to avoid loss of tax deduction under IRC Section 162(m) or other Code provisions. The Plan may be implemented upon approval of the Committee and Board, with administration delegated to Company officers. Plan funding is under study. Based on recently expressed views of the SEC staff, the Plan will be registered on a Form S-8. - 20 -