EXHIBIT 10.1
INTERNATIONAL FLAVORS & FRAGRANCES INC.
Mr. Douglas D. Tough
On behalf of the
Board of Directors (the “Board”) of International
Flavors & Fragrances Inc. (the “Company”), I
am pleased to offer you employment with the Company on the
following terms under this agreement (“Agreement”):
1.
EFFECTIVE DATE; TERM : Your employment
with the Company will commence on October 1, 2009, or as soon
thereafter as you have fulfilled all employment obligations to your
current employer (the “Effective Date”); provided, this
Agreement shall be void ab initio if your employment does
not commence by April 1, 2010. Subject to the provisions
of this Agreement, your employment with the Company will be on an
“at will” basis.
2.
POSITION; PRINCIPAL PLACE OF EMPLOYMENT : You will be
employed as the Chief Executive Officer of the Company
(“CEO”) with all of the normal duties and authorities
of such position. Your principal place of employment
will be at the Company’s headquarters in New York, New
York.
3. BOARD
MEMBERSHIP; CHAIRMANSHIP : The Board shall take
such action as may be necessary to elect you as Chairman of the
Board as of the Effective Date. Thereafter, during your
employment with the Company, the Board shall nominate you for
re-election as a member of the Board at each expiration of your
then-current term as a director. You agree that on and
after the Effective Date you will serve without additional
compensation as a member of the Board and as an officer and
director of any of the Company’s subsidiaries. You
may, with the Board’s approval, serve on outside boards of
directors so long as your duties as a director on those other
boards do not interfere with your performance as Chairman and CEO
of the Company.
4. BASE
SALARY : You will be paid a minimum base salary
(the “Base Salary”) at an annual rate of one million
two hundred thousand dollars ($1,200,000), payable in accordance
with the regular payroll practices of the Company. Your
Base Salary shall be reviewed for increase annually by the Board
(or a committee thereof) beginning after the second anniversary of
the Effective Date and may be increased, but not decreased, from
time to time by the Board.
5.
ANNUAL BONUS : You will be eligible to
participate in the Company’s Annual Incentive Plan (the
“AIP”) at a level commensurate with your
position. You will have the
opportunity to earn a target annual AIP bonus
measured against objective criteria to be determined by the Board
(or a committee thereof) of one hundred twenty percent (120%) of
Base Salary (“Target AIP Bonus”) and a maximum annual
AIP bonus of two hundred forty percent (240%) of Base
Salary. To the extent that the Effective Date occurs
during the 2009 fiscal year, your 2009 annual AIP bonus shall be
based on the achievement of the applicable performance goals and
pro-rated based on the number of days that you are employed during
the fiscal year. Your 2009 AIP bonus shall be not less
than one-half of your pro-rated Target AIP Bonus.
6. LONG
TERM INCENTIVE : You will participate in the
Company’s current Long-Term Incentive (LTI) Plan Cycles as
follows:
(a) 2008
– 2010 Cycle : You will participate in the
cycle for the 2008 – 2010 fiscal years based on an LTI
target-level award of $2,000,000, pro-rated based on the number of
days you are employed during the cycle divided by
1095. Your LTI payout will be based on Company
performance during the cycle, with no guaranteed minimum.
(b) 2009
– 2011 Cycle : You will participate in the
cycle for the 2009 – 2011 fiscal years based on an LTI
target-level award of $2,000,000, pro-rated based on the number of
days you are employed during the cycle divided by
1095. Your LTI payout will be based on Company
performance during the cycle, with no guaranteed minimum.
7.
SIGN-ON EQUITY AWARD : On the Effective
Date, you will receive an initial Equity Choice Award with a face
value of $750,000 (“Sign-On Award”). You may
elect to receive your Sign-On Award as you may allocate, in
accordance with the Equity Choice Program, from among settled stock
appreciation rights (“SARs”), purchased restricted
stock and restricted stock units. The Sign-On Award will
cliff vest on the first anniversary of the Effective Date, provided
that you are employed on such anniversary for the Sign-On Award to
so vest (except as provided below).
8.
SPECIAL BONUS PAYMENT : In order to
compensate you for certain forfeited bonus opportunities at your
current employer and as an inducement for you to join the Company,
on July 1, 2010, you will be paid $500,000 if you are an active
employee on that date (the “Special Bonus”).
9.
FUTURE EQUITY GRANTS : Beginning in
2010, you will participate in all Company equity and LTI programs
at levels commensurate with your position.
10. EMPLOYEE
BENEFITS; PERQUISITES; VACATION : You will be entitled to
participate in all employee and executive 401(k) and welfare
benefit plans, programs and arrangements, and all employee and
executive perquisite arrangements, generally applicable to senior
executives, in accordance with Company policy, including, but not
limited to, (i) dues for a luncheon club in Manhattan, (ii) access
to a Company provided automobile, and (iii) a financial planning,
tax preparation and estate planning services allowance in the
amount of $25,000 per year. You will be entitled to
annual paid vacation in accordance with the Company’s
policy
applicable to senior executives, but in no
event less than four (4) weeks per calendar year (as prorated for
partial years).
11.
TERMINATION : Your employment may be
terminated by either the Company or you at any time: due
to your death or Disability, by the Company for Cause or without
Cause, or by you for Good Reason or without Good Reason
(Disability, Cause and Good Reason are each defined on
Attachment A). Any termination by you (other than
due to death or Disability) shall require thirty (30) days prior
written notice to the general counsel of the Company.
(a) DEATH
OR DISABILITY . In the event that your employment
terminates on account of your death or Disability, the Company
shall pay or provide you (or your designated beneficiary, or
if you have not designated a beneficiary, your estate) (i) any
unpaid Base Salary through the date of termination and any accrued
but unused vacation in accordance with Company policy;
(ii) any unpaid bonus earned with respect to any fiscal year
ending on or preceding the date of termination, whether calculated
at the date of termination or thereafter; (iii) reimbursement
for any unreimbursed expenses incurred in accordance with Company
policy through the date of termination; and (iv) all other
payments, benefits or perquisites to which you may be entitled
under the terms of any applicable compensation arrangement or
benefit, equity or perquisite plan or program or grant
(collectively, “Accrued Amounts”). In
addition, you (or your estate) will be paid a pro-rata AIP bonus
for the fiscal year in which your termination occurs, based on
actual performance and payable when bonuses are paid to other
senior executives. The balance of any unvested portion
of the Sign-On Equity Award will fully vest on the date of
termination of employment on account of your death or Disability,
and other long-term incentive awards shall vest pro rata in
accordance with the terms of the Company’s Executive
Separation Policy. If your death or Disability occurs
prior to July 1, 2010, you (or your estate) will be paid the
Special Bonus on July 1, 2010.
(b)
TERMINATION FOR CAUSE OR WITHOUT GOOD REASON . If
your employment is terminated (i) by the Company for Cause or
by you without Good Reason, the Company will pay you only the
Accrued Amounts (but not including any unpaid bonus described in
Section 11(a)(ii) above).
(c)
TERMINATION WITHOUT CAUSE OR FOR GOOD REASON . If
your employment is terminated by the Company without Cause (other
than a termination due to Disability) or by you for Good Reason,
the Company will pay or provide you with the Accrued Amounts and
severance benefits under the Company’s Executive Separation
Policy, as amended (“ESP”). The severance
benefits described in the preceding sentence shall in no event be
less than (or more than, in the case of amounts and benefits due
under clauses (ii) and (iii), if you have attained age 63 on the
date of termination) (i) a pro-rata AIP bonus for the fiscal
year in which your termination occurs, based on actual performance
and payable when bonuses are paid to other senior executives;
(ii) an amount equal to the product of (A) the sum of
(x) your then Base Salary and (y) your then Target AIP
Bonus multiplied by (B) two (2) (or one and one-half (1.5) if
you have attained age 63 and not age 64 on the date of termination
or one (1) if you have attained age 64 on the date of termination),
payable in substantially equal installments in accordance with the
Company’s regular payroll cycle over a period of 24 months
(or 18 months
or 12 months if the severance multiplier is
one and one-half (1.5) or one (1), respectively) (each payment
continuation period, as applicable, the “Severance
Period”) from your date of termination (with such payments
commencing on the earliest payroll date that does not result in
adverse tax consequences to you under Section 409A of the
Internal Revenue Code, and with the initial payment including any
payments that have been delayed because of Code Section 409A);
and (iii) subject to your continued co-payment of premiums,
continued participation for the applicable Severance Period in all
welfare benefit plans which cover you (and eligible dependents)
upon the same terms and conditions (except for the requirements of
your continued employment) in effect for active employees of the
Company, provided that if such benefits are not available to former
employees of the Company under the terms of the applicable benefit
plan or program, you will receive the value thereof to the extent
permitted by Code Section 409A. In the event you obtain
other employment that offers comparable benefits as to any
particular welfare benefit plan or program, the coverage by the
Company for such welfare plan or program under this subsection will
be reduced or eliminated, as the case may be, by such comparable
subsequent employer benefits, but in no event will you be required
to seek other employment. The continuation of health,
dental and vision benefits under this subsection shall be
coterminous with your rights to continue benefits under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”). In addition, if your employment
terminates under this Section prior to July 1, 2010, you will be
paid that Special Bonus described in Section 8 above on July 1,
2010. If your employment terminates under this Section
prior to the first anniversary of the Effective Date, your Sign-On
Equity Award will vest pro rata based on the number of days you are
employed prior to the first anniversary of the Effective
Date. All other equity and LTI awards will be treated in
accordance with the Company’s Executive Separation
Policy.
12. CONDITIONS
: Any payments or benefits made or provided pursuant to
Section 11 (other than Accrued Amounts) are subject to
your:
(a) compliance with
the restrictive covenant provisions of Section 14 hereof;
(b) delivery to the
Company of an executed Release (the “ Release”)
substantially in the form attached hereto as Attachment B
(with such changes therein or additions thereto as needed under
then applicable law to give effect to its intent and purpose)
within twenty-one (21) days of the date of termination of your
employment; and
(c) delivery to the
Company of a resignation from all offices, directorships and
fiduciary positions with the Company, its affiliates and employee
benefit plans.
(a) You will receive
Change in Control benefits under the ESP that are no less favorable
than those provided to senior executives generally; provided that,
in the event of a termination of your employment by the Company
without Cause or by you for Good Reason in contemplation of or
within two years after a Change in Control (as defined in
Attachment A), (I) the severance multiplier set forth in
Section 11(c)(ii)(B) above will be three (3) rather than two
(2) (or two (2) rather than one and one-half (1.5) or one and
five-tenths (1.5) rather than one (1)
as set forth therein upon attainment of age 63
or age 64, as the case may be), and (II) only for purposes of the
benefits continuation period set forth in Section 11(c)(iii)
above, the Severance Period will be 36 months for a severance
multiplier of three (3), 24 months for a severance multiplier of
two (2), and 18 months for a severance multiplier of one and
five-tenths (1.5).
(b) Any provision of
the ESP to the contrary notwithstanding, you will not be entitled
to any payment (including no tax gross-up) in respect of any
taxes you may owe pursuant to Section 4999 of the Internal Revenue
Code. In the event that any Change in Control benefits
or other benefits otherwise payable to you (i) constitute
“parachute payments” within the meaning of Section 280G
of the Code, and (ii) but for this Section 13(b), would be subject
to the excise tax imposed by Section 4999 of the Code, then your
Change in Control benefits and other benefits hereunder shall be
either (x) delivered in full, or (y) delivered as to such lesser
extent which would result in no portion of such benefits being
subject to excise tax under Section 4999 of the Code, whichever of
the foregoing amounts, taking into account the applicable federal,
state and local income and employment taxes and the excise tax
imposed by Section 4999 of the Code (and any equivalent state
or local excise taxes), results in the receipt by you on an
after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be
taxable under Section 4999 of the Code. Unless the
Company and you otherwise agree in writing, any determination
required under this Section 13(b) will be made in writing by
independent public accountants as the Company and you agree (the
“Accountants”), whose determination will be conclusive
and binding upon you and the Company for all
purposes. For purposes of making the calculations
required by this Section 13(b), the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code. The
Company and you agree to furnish to the Accountants such
information and documents as the Accountants may reasonably request
in order to make a determination under this
provision. The Company will bear all costs the
Accountants may reasonably incur in connection with any
calculations contemplated by this provision. Any
reduction in payments and/or benefits required by this provision
shall occur in the following order: (1) reduction of cash payments;
(2) reduction of vesting acceleration of equity awards; and (3)
reduction of other benefits paid or provided to you. In
the event that acceleration of vesting of equity awards is to be
reduced, such acceleration of vesting shall be cancelled in the
reverse order of the date of grant for your equity
awards. If two or more equity awards are granted on the
same date, each award will be reduced on a pro-rata basis.
14. RESTRICTIVE
COVENANTS .
(a)
NON-COMPETITION . During the Restricted Period
(defined below), you will not, acting alone or with others,
directly or indirectly, either as employee, employer, consultant,
advisor, or director, or as an owner, investor, partner, or
shareholder unless your interest is insubstantial, engage in or
become associated with a “Competitive
Activity.” For this purpose, (A) the
“Restricted Period” means the period of time during
which you are employed by the Company and two (2) years following a
termination of your employment for any reason (or one and one-half
(1.5) years if you have attained age 63 and not age 64 on
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