SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SENSIENT TECHNOLOGIES CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[LOGO]
March 2002
Dear Fellow Shareholder:
You are invited to attend the Annual Meeting of Shareholders of Sensient
Technologies Corporation. The meeting will be held on Thursday, April 25, 2002,
at 2:00 p.m., Central Time, at the Four Seasons Hotel, 120 East Delaware Place,
Chicago, Illinois.
We hope that you will be able to join us at the meeting to review the year
and take a look at what the future holds for our company. In addition, the
business to be transacted is: (i) to elect four directors of the Company as
described in the accompanying Proxy Statement; (ii) to consider and act upon a
proposal to approve the Sensient Technologies Corporation 2002 Stock Option
Plan; (iii) to ratify the appointment of Deloitte & Touche LLP, certified
public accountants, as the independent auditors of the Company for 2002, and
(iv) to transact such other business as may properly come before the meeting or
any adjournment thereof.
Whether or not you plan to attend, it is important that you exercise your
right to vote as a shareholder. Please indicate your vote on the enclosed proxy
card and return it promptly using the envelope provided or vote by telephone or
by Internet according to the instructions on the enclosed proxy card. Be
assured that your votes are completely confidential.
On behalf of the officers and directors of the Company, we want to thank you
for your continued support and confidence.
Sincerely,
/s/ Kenneth P. Manning
Kenneth P. Manning
Chairman, President and Chief Executive Officer
Enclosures
SENSIENT TECHNOLOGIES CORPORATION
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Notice of Annual Meeting
To Be Held April 25, 2002
To the Shareholders of
Sensient Technologies Corporation:
NOTICE IS HEREBY GIVEN that the 2002 Annual Meeting of Shareholders
("Meeting") of Sensient Technologies Corporation, a Wisconsin corporation
("Company"), will be held at the Four Seasons Hotel, 120 East Delaware Place,
Chicago, Illinois, on Thursday, April 25, 2002, at 2:00 p.m., Central Time, for
the following purposes:
1. To elect four directors of the Company as described in the accompanying
Proxy Statement.
2. To consider and act upon a proposal to approve the Sensient Technologies
Corporation 2002 Stock Option Plan.
3. To ratify the appointment of Deloitte & Touche LLP, certified public
accountants, as the independent auditors of the Company for 2002.
4. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on March 8, 2002 as
the record date for the determination of shareholders entitled to notice of,
and to vote at, the Meeting and any adjournments thereof.
We encourage you to attend the Meeting and vote your shares in person.
However, whether or not you are able to attend the Meeting, please complete the
enclosed proxy and return it promptly using the envelope provided or vote by
telephone or by Internet according to the instructions on the enclosed proxy
card, so that your shares will be represented at the Meeting. You may revoke
your proxy at any time before it is actually voted by notice in writing to the
undersigned or by attending the Meeting and voting in person. Your attention is
directed to the attached proxy statement and accompanying proxy.
On Behalf of the Board of Directors
John L. Hammond
Secretary
Milwaukee, Wisconsin
March 22, 2002
SENSIENT TECHNOLOGIES CORPORATION
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(414) 271-6755
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
to be held on
April 25, 2002
-----------------
GENERAL
This proxy statement and accompanying proxy are first being furnished to the
shareholders of Sensient Technologies Corporation, a Wisconsin corporation
("Company"), beginning on or about March 22, 2002, in connection with the
solicitation by the Board of Directors of the Company ("Board") of proxies for
use at the Company's 2002 Annual Meeting of Shareholders to be held at the Four
Seasons Hotel, 120 East Delaware Place, Chicago, Illinois, on Thursday, April
25, 2002, at 2:00 p.m., Central Time, and at any adjournments thereof
("Meeting"), for the purposes set forth in the attached Notice of Annual
Meeting of Shareholders and in this proxy statement.
Accompanying this proxy statement are a Notice of Annual Meeting of
Shareholders and a form of proxy solicited by the Board for the Meeting. The
Annual Report to Shareholders, which also accompanies this proxy statement,
contains financial statements for the three years ended December 31, 2001, and
certain other information concerning the Company. The Annual Report and
financial statements are neither a part of this proxy statement nor
incorporated herein by reference.
Only holders of record of the Company's Common Stock ("Common Stock") as of
the close of business on March 8, 2002, are entitled to notice of, and to vote
at, the Meeting. On that date, the Company had 47,544,720 shares of Common
Stock outstanding, each of which is entitled to one vote on each proposal
submitted for shareholder consideration at the Meeting.
A proxy, in the enclosed form, which is properly executed, duly returned to
the Company or its authorized representatives or agents and not revoked or
which has been properly voted by telephone or by Internet according to the
instructions on the enclosed proxy card and not revoked will be voted in
accordance with the shareholder's instructions contained in the proxy. If no
instructions are indicated on the proxy, the shares represented thereby will be
voted as follows:
. FOR the Board's four nominees for director;
. FOR approval of the Sensient Technologies Corporation 2002 Stock Option
Plan;
. FOR ratification of the Board's appointment of Deloitte & Touche LLP as
the Company's independent auditors for 2002; and
. On such other matters that may properly come before the Meeting in
accordance with the best judgment of the individual proxies named in the
proxy.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice thereof to the Secretary. Any
shareholder attending the Meeting may vote in person whether or not the
shareholder has previously filed a proxy. Presence at the Meeting by a
shareholder who has signed a proxy does not in itself revoke the proxy. The
shares represented by all properly executed proxies received prior to the
Meeting will be voted as directed by the shareholders.
The cost of soliciting proxies will be borne by the Company. Proxies may be
solicited by directors, officers or employees of the Company in person, by
telephone or by telegram. The Company will use the services of D.F. King & Co.,
Inc., New York, New York, to aid in the solicitation of proxies. Their charges
will be $7,500 plus reasonable expenses. The Company will also reimburse
brokerage houses and other custodians, nominees and fiduciaries for their
expenses in sending proxy materials to the beneficial owners.
ITEM 1.
ELECTION OF DIRECTORS
The Board of Directors consists of eleven members divided into three classes
of four, four and three directors each. One class is elected each year to serve
for a term of three years.
Four directors are to be elected at the Meeting. All of the nominees,
Messrs. Abdoo, Fernandez, Forbes and O'Toole, are currently directors of the
Company. Three of the nominees are being nominated for three-year terms
expiring in 2005. One of the nominees, Mr. Forbes, is being nominated for a
one-year term expiring in 2003, the time of his mandatory retirement pursuant
to the Company's Bylaws. The remaining seven directors will continue to serve
in accordance with their previous elections.
Effective October 16, 2001, Dr. Carol I. Waslien Ghazaii resigned from the
Board of Directors. At the February 14, 2002 Board meeting Mr. Robert J.
O'Toole was unanimously elected to replace Dr. Waslien Ghazaii.
It is intended that the persons named as proxies in the accompanying proxy
will vote FOR the election of the Board's four nominees. If any nominee should
become unable to serve as a director prior to the Meeting, the shares
represented by proxies otherwise voted in favor of the Board's four nominees or
which do not contain any instructions will be voted FOR the election of such
other person as the Board may recommend.
Under Wisconsin law, directors are elected by a plurality of the votes cast
by the shares entitled to vote in the election, assuming a quorum is present.
For this purpose, "plurality" means that the individuals receiving the largest
number of votes are elected as directors, up to the maximum number of directors
to be chosen at the election. Therefore, any shares of Common Stock which are
not voted on this matter at the Meeting (whether by abstention, broker nonvote
or otherwise) will have no effect on the election of directors at the Meeting.
Pursuant to the Company's Bylaws, written notice of other qualifying
nominations by shareholders for election to the Board must have been received
by the Secretary no later than March 5, 2002. As no notice of any such other
nominations was received, no other nominations for election to the Board of
Directors may be made by shareholders at the Meeting.
Set forth below is certain information about the Board's nominees and the
seven continuing members.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ALL NOMINEES. SHARES
OF COMMON STOCK REPRESENTED AT THE MEETING BY EXECUTED BUT UNMARKED PROXIES
WILL BE VOTED FOR ALL NOMINEES.
2
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Terms Expiring April, 2005(1)
Year
First
Elected
Name and Age Position with Company or Other Occupation Director
------------ ----------------------------------------- --------
[PHOTO] Richard A. Abdoo 58 Chairman, President and Chief Executive Officer of 1999
A, N............. Wisconsin Energy Corp., a supplier of electric, gas
Richard A. Abdoo and real estate development services; Director of
AK Steel Holding Corporation, Marshall & Ilsley
Corp. and Cobalt Corporation.
[PHOTO] Alberto Fernandez 55 Chief Executive Officer of Pyosa, S.A. de C.V., a 1999
A, S............. Mexican chemical company specializing in lead
Alberto Fernandez oxides, fine chemicals and dyes. (2)
[PHOTO] James L. Forbes 69 Chairman and Chief Executive Officer of Badger 1989
A, E, F.......... Meter, Inc., a manufacturer and marketer of flow
James L. Forbes measurement and control products since 1999;
President and Chief Executive Officer from 1987 to
1999; Director of Cobalt Corporation and Journal
Communications, Inc. (1)
[PHOTO] Robert J. O'Toole 61 Chairman, President and Chief Executive Officer of 2002
A. O. Smith Corporation, a manufacturer of electric
Robert O'Toole motors and water heaters; Director of Briggs &
Stratton Corporation and Factory Mutual Insurance
Company
A--Audit Committee F--Finance Committee
C--Compensation and Development Committee N--Nominating Committee
E--Executive Committee S--Scientific Advisory Committee
--------
(1) Mr. Forbes is being nominated for a one-year term expiring in April 2003,
the time of his mandatory retirement from the Board in accordance with the
Company's Bylaws.
(2) In September, 1997, the Company acquired certain assets of the food color
business of Pyosa, S.A. de C.V., which is located in Monterrey, Mexico.
3
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Terms Expiring April, 2003
Year
First
Elected
Name and Age Position with Company or Other Occupation Director
------------ ----------------------------------------- --------
[PHOTO] John F. Bergstrom 55 Chairman and Chief Executive Officer of Bergstrom 1994
C, E, N........... Corporation, which owns automotive dealerships
John F. Bergstrom and commercial real estate; Director of Wisconsin
Energy Corporation, Kimberly-Clark Corporation,
Midwest Express Holdings, Inc. and Banta
Corporation.
[PHOTO] William V. Hickey 57 President, Chief Executive Officer and Director of 1997
C, E, F........... Sealed Air Corporation, a leading global
William V. Hickey manufacturer of a complementary line of protective,
food and specialty packaging materials and systems;
Director of Public Service Enterprise Group
Incorporated. (1)
[PHOTO] Kenneth P. Manning 60 Chairman of the Board, President and Chief 1989
E, S.............. Executive Officer of the Company; Director of
Kenneth P. Manning Badger Meter, Inc. (2)
A--Audit Committee F--Finance Committee
C--Compensation and
Development Committee N--Nominating Committee
E--Executive Committee S--Scientific Advisory
Committee
--------
(1) Mr. Hickey served as President and Chief Operating Officer of Sealed Air
Corporation from 1996 to 2000 and as its Executive Vice President and Chief
Operating Officer from 1994 to 1996.
(2) Mr. Manning was elected Chief Executive Officer effective October 1, 1996,
and was elected Chairman effective April 30, 1997.
4
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Terms Expiring April, 2004
Year
First
Elected
Name and Age Position with Company or Other Occupation Director
------------ ----------------------------------------- --------
Michael E. Batten 61 Chairman of the Board and Chief Executive 1980
[PHOTO] F, N.................... Officer of Twin Disc, Inc., a manufacturer of
transmission components; Director of Briggs &
Michael E. Batten Stratton Corporation.
[PHOTO] Dr. Fergus M. Clydesdale 65 Professor and Head of the Department of Food 1998
F, S.................... Science at the University of Massachusetts--
Dr. Fergus M. Clydesdale Amherst.
[PHOTO] James A.D. Croft 64 Retired; Director of Richard Ellis Holdings 1997
A, C.................... Limited, Property and Investment Consultants
James A. D. Croft to 1998; Chairman, Bartlodge, Ltd. since 1998.
[PHOTO] Essie Whitelaw 54 Senior Vice President of Private Sector Claims 1993
C, N.................... Administration, Wisconsin Physician Services,
Essie Whitelaw since 2001; President and Chief Operating Officer
of Blue Cross & Blue Shield United of
Wisconsin, a comprehensive health insurer, to
2000.
A--Audit Committee F--Finance Committee
C--Compensation and
Development Committee N--Nominating Committee
E--Executive Committee S--Scientific Advisory
Committee
Except as noted, all nominees and directors continuing in office have held
their current positions or otherwise have served in their respective positions
with the listed organizations for more than five years. No director, nominee
for director or executive officer had any material interest, direct or
indirect, in any business transaction of the Company or any subsidiary during
2001, nor does any director, nominee or executive officer have any material
interest, direct or indirect, in any such proposed transaction.
The Board of Directors met five times during 2001, and each director
attended at least 75% of the meetings of the Board and the Board Committees on
which he or she served that were held during the period in which he or she was
a director.
5
Committees of The Board of Directors
The Executive Committee of the Board of Directors, which currently consists
of Messrs. Bergstrom, Forbes, Hickey and Manning, met once in 2001. This
Committee has the power and authority of the Board of Directors in directing
the management of the business and affairs of the Company in the intervals
between Board of Directors meetings, except to the extent limited by law, and
reports its actions at regular meetings of the Board.
The Audit Committee of the Board of Directors met twice during 2001. Messrs.
Abdoo, Croft, Fernandez and Forbes are the current members of the Audit
Committee. All members of the Audit Committee meet the independence and
experience requirements of the New York Stock Exchange rules. This Committee,
among other things: (i) recommends the engagement of the independent auditors
of the Company and approves their fee and the scope and timing of their audit
services; (ii) reviews the adequacy and appropriateness of the Company's
internal control structure and recommends improvements thereto, including
management's assessment of internal controls and the internal audit function;
(iii) reviews with the independent auditors their reports on the consolidated
financial statements of the Company and the adequacy of the financial reporting
process, including the selection of accounting policies; and (iv) reviews the
adequacy and appropriateness of the various policies of the Company dealing
with the principles governing performance of corporate activities. These
policies, which are set forth in the Company's Code of Conduct, include
antitrust compliance, conflict of interest and business ethics. The Board of
Directors has adopted a written charter for the Audit Committee, which is
incorporated in the Company's Bylaws. The Audit Committee reviews and
reassesses the adequacy of this charter at least annually. A copy of the
written charter is attached as Appendix A to this proxy statement.
The current members of the Compensation and Development Committee of the
Board of Directors, which held five meetings during 2001, are Messrs.
Bergstrom, Croft and Hickey and Ms. Whitelaw. This Committee, among other
things: (i) reviews and approves all compensation programs for senior
management of the Company, including salary structure, base salary and
short-term and long-term incentive compensation plans, including stock options
and non-qualified fringe benefit programs; (ii) prepares reports for the annual
proxy statement; (iii) reviews and approves annual changes in each elected
officer's compensation including base salary and short-term and long-term
incentive awards, and approves all executive employment contracts; (iv)
annually recommends to the Board of Directors the election of Company officers;
and (v) annually reviews the performance of the Chief Executive Officer and
reviews and approves the Chief Executive Officer's management development and
succession plans for the Company.
The Finance Committee of the Board of Directors, currently consisting of
Messrs. Batten, Forbes and Hickey and Dr. Clydesdale, held one meeting during
2001. Among other things, this Committee reviews and monitors the Company's
financial planning and structure to ensure conformance with the Company's
requirements for growth and fiscally sound operation, and also reviews and
approves: (i) the Company's annual capital budget, long-term financing plans,
existing credit facilities and investments and commercial and investment
banking relationships; (ii) existing insurance programs, foreign currency
management and the stock repurchase program; and (iii) the financial management
and administrative operation of the Company's qualified and non-qualified
benefit plans.
The Nominating Committee of the Board of Directors, which currently consists
of Messrs. Abdoo, Batten and Bergstrom and Ms. Whitelaw, met once during 2001.
Among other functions, this Committee: (i) studies and makes recommendations
concerning the composition of the Board of Directors and its committee
structure and reviews the compensation of Board and Committee members; (ii)
recommends persons to be nominated by the Board of Directors for election as
directors of the Company and to serve as proxies at the annual meeting of
shareholders; and (iii) considers nominees recommended by shareholders.
Recommendations by shareholders should be forwarded to the Secretary of the
Company and should identify the nominee by name and provide detailed
information concerning his or her qualifications. The Company's Bylaws require
that shareholders give advance notice and furnish certain information to the
Company in order to nominate a person for election as a director. See the
discussion under "Future Shareholder Proposals and Nominations" on page 27.
6
The Scientific Advisory Committee of the Board of Directors, which currently
consists of Dr. Clydesdale and Mr. Manning, met twice during 2001. Among other
functions, this Committee: (i) reviews the Company's research and development
programs with respect to the quality and scope of work undertaken; (ii) advises
the Company on maintaining product leadership through technological innovation;
and (iii) reports on new technological trends and regulatory developments that
would significantly affect the Company and suggests possible new emphases with
respect to its research programs and new business opportunities.
Director Compensation and Benefits
Directors who are not employees of the Company received during 2001 an
annual retainer of $24,000 and fees of $1,000 for each Board and Committee
meeting attended in addition to reimbursable expenses for such attendance. Each
Committee chairperson received an additional $3,500 annually for serving in
that capacity.
The Company has an unfunded retirement plan for non-employee directors who
have completed at least three years (one full term) of service with the Company
as a director. The plan provides a benefit equal to the annual retainer fee for
directors in effect at the time of the director's departure from the Board.
This benefit, payable only during the lifetime of the participant, continues
for a period equal to the amount of time the individual was an active director.
During the benefit period, the participant must be available to the Chairman of
the Board for consultation.
The Company has a Directors Deferred Compensation Plan available to any
director who is entitled to compensation as a Board member. Under this plan,
the maximum amount that is eligible to be deferred is the total of all fees
paid to the director by reason of his or her membership on the Board or any
Committee thereof. The plan provides that directors may defer all or part of
their director fees and the deferral may be in cash or Common Stock. The fees
deferred in cash are credited to individual deferred compensation accounts
which bear interest at the rate of 8.0% per annum. The amounts deferred
pursuant to this plan will be paid either: (i) in a lump sum on January 31st of
the calendar year following the year in which the director ceases to be a
director or on January 31st of any year thereafter; or (ii) in five equal
consecutive annual installments commencing on January 31st of the first
calendar year after the director ceases to serve as a director. In the event of
death, the balance in a director's account will be paid in a lump sum to a
designated beneficiary or to the director's estate.
The Company has a Directors Stock Option Plan for any director who is not an
employee of the Company. The plan provides for each director to be granted
2,000 options every May 1. The options have an exercise price equal to the
market price of the Company's stock on the date of grant and vest in increments
of one-third of the total grant on each of the first, second, and third
anniversaries of the date of grant.
On December 6, 2001, the Company established the Directors Stock Plan for
any director who is not an employee of the Company. This plan provides for an
annual grant of 300 shares of the Company's common stock to each non-employee
director on the Annual Meeting date. The shares vest in increments of one-third
of the total grant on each of the first, second and third anniversaries of the
date of grant.
7
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board of Directors
("Board"), the Audit Committee of the Board ("Committee") assists the Board in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing and financial reporting practices of the Company. During
2001, the Committee met two times, and the Committee chair, as representative
of the Committee, discussed the interim financial information contained in each
quarterly earnings announcement with the Company's Vice President, Chief
Financial Officer and Treasurer, Vice President, Controller and Chief
Accounting Officer and independent auditors prior to filing the Company's Form
10-Q with the Securities and Exchange Commission.
In discharging its oversight responsibility as to the audit process, the
Audit Committee obtained from the independent auditors a formal written
statement describing all relationships between the auditors and the Company
that might bear on the auditors' independence consistent with Independence
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees" and discussed with the auditors any relationships that may impact
their objectivity and independence. The Committee has also considered whether
the provision of any non-audit services by the auditors is compatible with
maintaining the auditors' independence. The Committee is satisfied as to the
auditors' independence. The Committee also discussed with management, the
Company's internal auditors and the independent auditors the quality and
adequacy of the Company's internal controls and the internal audit function's
organization, responsibilities, budget and staffing. The Committee reviewed
with both the independent and the internal auditors their audit plans, audit
scope, and identification of audit risks.
The Committee discussed and reviewed with the independent auditors all
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements. The Committee also discussed the results of the
internal audit examinations.
Audit Fees
During the year ended December 31, 2001, aggregate fees (including expenses)
for the annual audit of the Company's financial statements were approximately
$558,000.
All Other Fees
During the year ended December 31, 2001, aggregate fees (including expenses)
for services provided by the independent auditors, other than the services
described above under "Audit Fees," were approximately $1,291,000, including
audit related services of approximately $710,000 and non-audit services of
approximately $581,000. Audit related services generally include fees for
statutory audits of foreign entities, audits of the Company's employee benefit
plans, acquisition due diligence services and other services. Non-audit
services primarily include tax consultation and compliance services.
The independent auditors did not provide any professional services related
to financial information system design and implementation.
The Committee reviewed the audited financial statements of the Company as of
and for the year ended December 31, 2001, with management and the independent
auditors. Management has the responsibility for the preparation of the
Company's financial statements and the independent auditors have the
responsibility for the examination of those statements.
8
Based on the above-mentioned review and discussions with management and the
independent auditors, the Committee recommended to the Board that the Company's
audited financial statements be included in its Annual Report on Form 10-K for
the year ended December 31, 2001, for filing with the Securities and Exchange
Commission. The Committee also recommended the reappointment, subject to
shareholder approval, of the independent auditors and the Board concurred in
such recommendation.
Date: February 14, 2002
James L. Forbes,
Chairman
Richard A. Abdoo
James A.D. Croft
Alberto Fernandez
9
PRINCIPAL SHAREHOLDERS
Management
The following table sets forth certain information as of February 28, 2002,
regarding the beneficial ownership of Common Stock by each of the executive
officers of the Company who is named in the Summary Compensation Table on page
14 ("named executive officers"), each director and nominee, and all of the
directors and executive officers of the Company as a group. Except as otherwise
indicated, all shares listed are owned with sole voting and investment power.
Amount and Nature of
Beneficial Ownership and
Name of Beneficial Owner Percent of Class (1)(2)(3)
------------------------ --------------------------
Richard A. Abdoo............................................ 3,994
Michael E. Batten........................................... 5,441
John F. Bergstrom........................................... 5,123
Dr. Fergus M. Clydesdale.................................... 4,259
James A.D. Croft............................................ 2,929
Alberto Fernandez........................................... 2,441
James L. Forbes............................................. 4,991
John L. Hammond............................................. 58,718
William V. Hickey........................................... 4,129
Richard F. Hobbs............................................ 276,406
Kenneth P. Manning (4)...................................... 734,778
John Mudd................................................... 22,569
Robert J. O'Toole........................................... --
Ralph G. Pickles............................................ 37,132
Essie Whitelaw.............................................. 3,413
All directors and executive officers as a group (22 persons) 1,530,510
--------
(1) Except for Mr. Manning, who beneficially owns 1.5% of the outstanding
Common Stock, no director or named executive officer beneficially owns 1%
or more of the Company's Common Stock. The beneficial ownership of all
directors and executive officers as a group represents 3.2% of the
outstanding Common Stock. In each case this percentage is based upon the
assumed exercise of that number of options which are included in the total
number of shares shown (see Note (2), below).
(2) Includes the following shares subject to stock options which are currently
exercisable or exercisable within 60 days of February 28, 2002: Mr.
Hammond--32,999 shares; Mr. Hobbs--195,466 shares; Mr. Manning-- 556,100
shares; Mr. Mudd--8,333 shares; Mr. Pickles--34,132 shares; each director
(other than Messrs. Manning and O'Toole)--1,333 shares; and all directors
and executive officers as a group--1,125,556 shares.
(3) Includes the following deferred shares which have been granted pursuant to
the Directors' Deferred Compensation Plan: Mr. Abdoo--2,202 shares; Mr.
Fernandez--849 shares.
(4) Includes 100 shares held by Mr. Manning's daughter.
10
Other Beneficial Owners
The following table sets forth information regarding beneficial ownership by
those persons whom the Company believes to be beneficial owners of more than 5%
of the Common Stock of the Company as of February 28, 2002, based solely on
review of filings made with the Securities and Exchange Commission (except as
noted in (4) below).
Amount
and Nature Percent of
Name and Address of Beneficial Owner of Ownership Class (1)
------------------------------------ ------------ ----------
Gabelli Asset Management Inc. (2)..... 4,175,200 8.8%
Reich & Tang Asset Management, LLC (3) 3,951,000 8.4%
Fidelity Management Trust Company (4). 3,026,704 6.4%
--------
(1) All percentages are based on 47,541,704 shares of Common Stock outstanding
as of February 28, 2002.
(2) Gabelli Asset Management Inc. (GAMI), One Corporate Center, Rye, NY 10580
("GAM"), filed a Schedule 13D/A on November 20, 2001, amending the Schedule
13D which was originally filed on April 16, 2001, which reported on behalf
of Mario J. Gabelli, Marc J. Gabelli and various entities which either one
directly or indirectly controls or for which either one acts as chief
investment officer (collectively, the "Gabelli Investors"). As of the
November 20, 2001 filing, the Gabelli Investors held sole voting and
dispositive power with respect to 4,175,200 shares, except that one
affiliate does not have the authority to vote 116,500 of the reported
shares and in certain cases the proxy voting committee of a Gabelli
registered investment company may exercise voting power with respect to the
shares held by such fund. The Gabelli Investors do not admit that they
constitute a group. The ownership information contained herein is based in
its entirety on information set forth in the Schedule 13D, as amended
through November 20, 2001.
(3) Reich & Tang Asset Management, LLC, 600 Fifth Avenue, New York, New York
("Reich & Tang"), filed a Schedule 13G on February 15, 2002, which reported
Reich & Tang as the beneficial owner of 3,951,000 shares. Reich & Tang has
the shared power to vote and direct the vote and to dispose of or direct
the disposition of the 3,951,000 shares which it purchased on behalf of
certain accounts for which Reich & Tang provides investment advice on a
fully discretionary basis. The ownership information contained herein is
based in its entirety on information set forth in the Schedule 13G, as
filed on February 15, 2002.
(4) Fidelity Management Trust Company, 82 Devonshire Street, Boston,
Massachusetts 02109 ("Fidelity") is the Trustee of the Sensient
Technologies Corporation Retirement Employee Stock Ownership Plan ("ESOP"),
which holds 1,893,489 shares, or 4% of the number of shares outstanding at
February 28, 2002, and is also the Trustee of the Sensient Technologies
Corporation Savings Plan ("Savings Plan"), which holds 1,133,215 shares of
Common Stock, or 2.4% of the number of shares outstanding at February 28,
2002. Fidelity has advised the Company that it disclaims beneficial
ownership of the ESOP and Savings Plan shares.
11
COMPENSATION AND DEVELOPMENT COMMITTEE REPORT
Introduction
This report describes the Company's executive compensation programs and the
basis on which 2001 compensation was determined with respect to the executive
officers of the Company. The Committee is composed entirely of independent
non-employee directors and met five times during 2001. A more complete
description of the Committee functions is set forth under the heading
"Committees of the Board of Directors" on page 6.
Compensation Policy and Objectives
The Company has developed an overall compensation policy and specific
compensation plans that tie a significant portion of executive compensation to
the Company's success in meeting specified financial goals ("Program"). The
overall objectives of the Program are to attract and retain the best possible
executive talent, to motivate these executives to successfully execute the
Company's business strategy, to link executive and shareholder interests
through equity-based plans and to provide a program that recognizes individual
contributions and achievement.
Each year the Committee conducts a review of the Program. This review
includes a meeting with an independent compensation consultant assessing the
effectiveness of the Program and comparing it to a group of corporations that
represent the Company's competition for executive talent. The Committee
approves the selection of comparable companies used for this analysis. The
Committee determines the compensation for the elected officers including the
five most highly compensated Company executives. In reviewing individual
performance, the Committee takes into account the recommendations of Mr.
Manning. Key elements of the Company's Program are base salary, short-term
(annual) incentives and long-term incentives.
Base Salaries
Base salaries are initially determined by evaluating the responsibilities of
the position, the experience of the individual and the competitive marketplace
for executive talent, including a comparison with base salaries for comparable
positions at other companies. The base salary levels of the Company's
executives are targeted at the 50th percentile of the range of base pay levels
of similarly positioned executives in other companies. Base pay levels are
determined using regression analysis because of the difference in size between
the comparable companies and the Company. The Committee annually reviews each
executive's base salary. Adjustments are determined by evaluating the financial
performance of the Company, the performance of each executive officer against
job specifications, any new responsibilities and average percentage pay
increases provided by the comparable companies for similar positions. In the
case of executive officers with responsibility for a particular business unit,
such unit's financial results are also considered.
As reflected in the Summary Compensation Table on page 14, Mr. Manning's
base salary was increased in 2001 by $46,000 (7.4%). In determining Mr.
Manning's base salary, the Committee weighed the aforementioned criteria
equally.
Annual Bonuses
The Management Incentive Plans for elected officers ("Annual Plans") promote
the Company's pay-for-performance policy by providing annual cash payments to
executives based upon achieving overall Company, group or divisional financial
goals. The Annual Plans are subject to a target of 45% to 85% of annual base
salary depending on a participant's position in the Company. The award is based
on the achievement of a targeted Earnings Per Share level, and in certain cases
group or division sales operating profit, for the year, with 100% of the
maximum award being paid upon achieving the targeted level. Performance in
excess of the targeted level
12
allows for a payment of up to 200% of the maximum award. Target bonus award
levels approximate the 50th percentile (adjusted for company size) of
comparable companies' practices for each executive position. For performance
exceeding the targeted levels, the bonus opportunities are tied to 75th
percentile practices among comparable companies. In 2001, Mr. Manning's bonus
opportunity was 85% of his base salary. As reflected in the Summary
Compensation Table, his bonus award was $425,213 or 63.7% of his base salary.
Stock Awards and Long-Term Incentives
Under the Company's 1994 Employee Stock Plan and 1998 Stock Option Plan,
which were approved by the shareholders, restricted stock or stock options may
be granted to the Company's executive officers and other key employees. The
Committee makes annual decisions regarding appropriate stock-based grants for
each executive based on the following equally weighted factors. The Committee
considers the Company's financial performance, executives' levels of
responsibilities and predicted award values at the 50-75th percentile of
long-term incentive compensation practices for similar positions at other
companies. These factors determine the amount which may be represented by the
determined grant value of options and restricted stock. Generally, restricted
stock is only awarded to recognize a significant contribution to the Company's
performance. Restricted stock vests in five years. All outstanding options have
an exercise price equal to the market price on the date of grant and vest in
increments of one-third of the total grant on each of the first, second and
third anniversaries of the date of grant. This compensation approach is
designed to provide incentive to create shareholder value over the long-term,
since the full benefit of the compensation cannot be realized unless stock
price appreciation occurs over a number of years. In 2001, Mr. Manning received
options to purchase 150,000 shares at their fair market value on the date of
grant and received 40,000 shares of restricted stock, of which 25,000 shares
were a special one-time award for completion of the sale of the Red Star Yeast
and Products Division.
Code Section 162(m)
Section 162(m) of the Internal Revenue Code limits the Company's income tax
deduction for compensation paid in any taxable year to certain executive
officers to $1,000,000 per individual, subject to several exceptions. The
Committee intends to continue to grant bonuses under the Management Incentive
Program and awards under the 1998 Stock Option Plan and, after approval, the
2002 Stock Option Plan that are designed to qualify for the performance-based
compensation exception. However, the Committee may grant such bonuses and
awards and the Company may enter into compensation arrangements from time to
time, which do not qualify for deductibility under Section 162(m).
Compensation and Development Committee
John F. Bergstrom, Chairperson
James A.D. Croft
William V. Hickey
Essie Whitelaw
13
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information on the compensation of the Chief
Executive Officer and each of the other four most highly compensated executive
officers (collectively, the "named executive officers") of the Company as of
December 31, 2001.
Annual Long-term
Compensation(2) Compensation
------------------- ---------------------
Restricted Securities
Fiscal Stock Underlying All Other
Year Base Bonus(3) Awards(4) Options Compensation(5)
Name and Principal Position Ended(1) Salary ($) ($) ($) (#) ($)
--------------------------- -------- ---------- -------- ---------- ---------- ---------------
Kenneth P. Manning................. 12-31-01 $667,000 $425,213 $741,600 150,000 $ 81,087
Chairman, President and Chief 12-31-00 621,000 320,000 330,000 150,000 128,129
Executive Officer 9-30-99 561,000 600,831 332,812 75,000 111,458
Richard F. Hobbs................... 12-31-01 322,000 156,975 278,100 50,000 36,282
Vice President, Chief 12-31-00 275,000 110,000 110,000 50,000 50,964
Financial Officer and Treasurer 9-30-99 250,000 204,750 110,937 37,500 44,191
John L. Hammond.................... 12-31-01 218,000 106,275 185,400 25,000 23,040
Vice President, Secretary 12-31-00 203,000 70,000 88,000 25,000 31,794
& General Counsel 9-30-99 193,000 109,431 44,375 16,000 27,031
Ralph G. Pickles (6)............... 12-31-01 239,000 112,408 18,540 20,000 23,900
President--Asia Pacific 12-31-00 150,000 71,614 44,000 20,000 15,000
9-30-99 162,575 80,734 -- 8,500 16,275
John Mudd (7)...................... 12-31-01 245,000 74,029 37,080 20,000 28,997
President--Color 12-31-00 206,250 117,472 66,000 25,000 20,625
9-30-99 -- -- -- -- --
--------
(1) On September 7, 2000, the Company changed its fiscal year end from
September 30 to December 31. The information presented in this table
includes the fiscal years ended December 31, 2001 and December 31, 2000 and
the fiscal year ended September 30, 1999. The information for the period
October 1, 1999 to December 31, 1999 is in the table below.
Long-term
Annual Compensation Compensation
------------------- ---------------------
Restricted Securities
Base Stock Underlying All Other
Salary Bonus(4) Awards Options Compensation(5)
Name ($) ($) ($) (#) ($)
---- -------- -------- ---------- ---------- ---------------
Kenneth P. Manning....... $155,250 $197,944 -- -- $31,501
Richard F. Hobbs......... 68,750 67,031 -- -- 12,311
John L. Hammond.......... 50,750 34,256 -- -- 7,948
Ralph G. Pickles (6)..... 42,144 20,814 -- -- 4,214
John Mudd (7)............ -- -- -- -- --
___________
(2) Includes amounts deferred at the election of the named executive officer
under the Company's Executive Income Deferral Plan (see "Employment
Agreements and Other Arrangements").
(3) Consists of awards under the Company's Management Incentive Plans.
(4) The amounts in the table reflect the market value on the date of award of
restricted shares of Common Stock ("Restricted Stock"). Total number and
value of shares of Restricted Stock held as of December 31, 2001 (based on
the $20.81 per share closing price of the Common Stock on December 31,
2001) for each named
14
executive officer are: Kenneth P. Manning--91,000 shares/$1,893,710; Richard
F. Hobbs--34,000 shares/$707,540; John L. Hammond--16,000 shares/$332,960;
Ralph G. Pickles--3,000 shares/$62,430; and John Mudd--5,000
shares/$104,050. Dividends are paid on Restricted Stock when paid on Common
Stock. The awards in 2001 for Messrs. Manning, Hobbs and Hammond include
25,000 shares, 10,000 shares and 6,000 shares, respectively, as special
one-time awards for completion of the sale of the Red Star Yeast and
Products Division.
(5) Consists of Company contributions under certain benefit plans and other
arrangements for the five named executive officers. These contributions are
set forth in the following table. The Company's Employee Stock Ownership
Plan ("ESOP") and Savings Plan are tax-qualified plans which are subject to
government imposed annual limitations on contributions. The Company's
Supplemental Benefits Plan, a non-tax-qualified plan, replaces benefits
which cannot be provided by the tax-qualified ESOP and Savings Plan because
of these annual limitations. The amounts shown in the table below as
contributed to the ESOP and Savings Plan which exceed the applicable annual
limits were contributed to the Supplemental Benefits Plan. At the time the
ESOP and Savings Plan were adopted to replace the Company's former defined
benefit pension plan, the Transition Retirement Plan, also a tax-qualified
plan, was adopted to assure that affected employees would receive
approximately the same level of benefits through normal retirement age that
they would have received under the former defined benefit pension plan. The
named executive officers do not participate in the Transition Retirement
Plan but a benefit equivalent to what they would have received thereunder
is contributed to the Supplemental Benefits Plan. Non-U.S. employees
maintain the retirement benefits from their home country. The Sensient
Technologies Pension Plan is in lieu of the ESOP and Savings Plan.
Transition Plan Benefit Sensient Technologies
ESOP Savings Plan Equivalent Pension Plan
----------------------- ----------------------- ----------------------- -----------------------
2001 2000 1999 2001 2000 1999 2001 2000 1999 2001 2000 1999
------- ------- ------- ------- ------- ------- ------ ------ ------ ------- ------- -------
Mr. Manning $59,220 $75,601 $65,599 $39,480 $50,401 $43,732 $2,127 $2,127 $2,127 -- -- --
Mr. Hobbs.. 25,920 29,545 25,481 17,280 19,697 16,987 1,722 1,722 1,722 -- -- --
Mr. Hammond 17,280 19,076 16,219 11,520 12,718 10,812 -- -- -- -- -- --
Mr. Pickles -- -- -- -- -- -- -- -- -- $23,900 $15,000 $16,257
Mr. Mudd... 21,748 12,375 -- 14,499 8,250 -- -- -- -- -- -- --
--------
(6) Mr. Pickles joined the Company in May, 1995. Mr. Pickles' compensation was
paid in pounds sterling during the periods ended September 30, 1999 and
December 31, 1999. Those amounts have been converted into U.S. dollars at
the exchange rates in effect at the end of such period.
(7) Mr. Mudd joined the Company in February, 2000.
Stock Options
The following table sets forth information concerning the grant of stock
options under the Company's 1998 Stock Option Plan during 2001 to the named
executive officers.
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Ten-Year
Option Term(3)
-------------------------------
Number of Percentage
Securities of Total
Underlying Options
Options Granted to Exercise or
Granted Employees Base Price Expiration
Name (#)(1) in 2001 ($/share)(2) Date 5% 10%
---- ---------- ---------- ------------ ---------- ------------ --------------
Kenneth P. Manning....... 150,000 21.5% $18.54 12/10/2011 $ 1,749,000 $ 4,431,000
Richard F. Hobbs......... 50,000 7.2% 18.54 12/10/2011 583,000 1,477,000
John L. Hammond.......... 25,000 3.6% 18.54 12/10/2011 291,500 738,500
Ralph G. Pickles......... 20,000 2.9% 18.54 12/10/2011 233,200 590,800
John Mudd................ 20,000 2.9% 18.54 12/10/2011 233,200 590,800
All Shareholders (4)..... -- -- -- -- $558,798,203 $1,416,104,359
--------
15
(1) The options reflected in the table were granted on December 10, 2001, under
the Company's 1998 Stock Option Plan (the "1998 Plan") and include both
incentive stock options under Section 422 of the Internal Revenue Code and
nonstatutory stock options. The exercise price of each option granted was
equal to 100% of the fair market value of the Common Stock on the date of
grant. The options granted vest in increments of one-third of the total
grant on each of the first, second and third anniversaries of the grant
date. The options are subject to early vesting in the event of the
individual's death, disability or retirement. Upon a "Change of Control" of
the Company (as defined in the 1998 Plan), all options then outstanding
will become immediately exercisable in full.
(2) The exercise price of options may be paid in cash or its equivalent, by
delivering previously issued shares of Common Stock, or any combination
thereof, or by electing to have the Company withhold shares of Common Stock
issuable upon exercise with a fair market value equal to the exercise price.
(3) The option values presented were calculated based on a per-share price of
$18.54 on the date of grant at assumed 5% and 10% annualized rates of
appreciation for the term of the grant. The actual value, if any, that an
individual may realize upon exercise will depend on the excess of the
market price of the Common Stock over the option exercise price on the date
the option is exercised. There is no assurance that the actual value
realized by an individual upon the exercise of an option will be at or near
the value estimated under the model described above.
(4) The potential realizable value for "All Shareholders" is determined on the
assumption that the price of the Company's Common Stock appreciated over
the term of the options from the $18.54 per share market price as of the
date of grant at an annualized rate of (i) 5% (which would result in a
value on December 10, 2011, of $30.20 per share); and (ii) 10% (which would
result in a value on December 10, 2011, of $48.08 per share). The "All
Shareholders" information is calculated based on 47,925,581 shares of the
Company's Common Stock outstanding as of December 31, 2001. Thus, for
comparative purposes, the total value of such Common Stock as of December
10, 2001, the date on which the options were granted, would be $888,540,272.
Aggregate Option Exercises in 2001 and Year-End Option Values
The following table sets forth information regarding the exercise of stock
options by each of the named executive officers during 2001 and the year-end
value of unexercised stock options held by such officers.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at End of 2001 (#) at End of 2001(1) ($)
-------------------------- -------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
Kenneth P. Manning (2)..... 100 $194 556,100 275,000 $1,568,120 $340,500
Richard F. Hobbs (2)....... -- -- 195,467 95,833 455,526 113,500
John L. Hammond............ -- -- 32,999 47,001 -- 56,750
Ralph G. Pickles........... -- -- 29,632 40,668 41,668 59,199
John Mudd.................. -- -- 8,333 36,667 -- 45,400
--------
(1) The dollar values were calculated by determining the difference between the
fair market value of the underlying shares of Common Stock and the various
applicable exercise prices of the named executive officers' outstanding
"in-the-money" options at the end of 2001. As provided by the Company's
1990 Employee Stock Plan, 1994 Employee Stock Plan and the 1998 Stock
Option Plan, the fair market value of the underlying shares of Common Stock
on any date is equal to the price of the Company's Common Stock as reported
on the New York Stock Exchange. On December 31, 2001, the closing price of
the Common Stock as reported on the New York Stock Exchange was $20.81 per
share.
16
(2) On March 12, 2001, in lieu of exercising options that were about to expire,
Mr. Manning and Mr. Hobbs sold options to purchase 38,800 and 12,000 shares
of Common Stock to the Company, respectively, for an aggregate of $201,663
and $62,370, respectively, equal to the excess of the fair market value of
the underlying shares of Common Stock on the date of the sale ($23.26) over
the exercise price of the options ($18.0625).
EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
Employment Agreement. The Company has an employment contract with Mr.
Manning dated November 11, 1999. The term of the agreement is for three years,
which is automatically extended annually for additional one-year periods,
except that in no event will the term of his employment extend beyond the
calendar month in which his 65th birthday occurs or he becomes disabled or
dies. During this employment period, the agreement provides for the payment of
base salary (subject to annual adjustment), plus bonus and customary fringe
benefits. The agreement can be terminated by the Board of Directors with or
without cause. If terminated without cause by the Board or for good reason by
Mr. Manning (as defined therein), certain termination benefits are payable to
Mr. Manning in an amount equal to three times the sum of his base salary then
in effect and his target bonus for the fiscal year in which such termination
occurred. Mr. Manning would also continue to receive certain fringe benefits
for three years. In the event of a change of control of the Company, Mr.
Manning's employment contract would be superseded by a Change of Control
Employment and Severance Agreement as described below, except that he would be
entitled to retain certain retirement and disability benefits under his
employment contract.
Change of Control Employment and Severance Agreements. The Company also has
Change of Control Employment and Severance Agreements with each of its
executive officers (including the named executive officers) who are part of the
executive officer group. Each of these agreements provides that in the event of
a "Change of Control," as defined in the respective agreement, the Company will
continue to employ the executive for a period of three years following the date
of such Change of Control. During this employment period, the executive will
receive as compensation a base salary, subject to annual adjustment, bonus
awards in accordance with past practice and all other customary fringe benefits
in effect as of the date of the Change of Control. The agreements can be
terminated upon 30 days' notice by the Company in the event of the executive's
disability. The agreements can also be terminated by the Company for "cause"
and by the executive for "good reason." If terminated by the Company other than
for cause or disability, or by the executive for good reason, the Company will
pay the executive an amount equal to the sum of (i) accrued unpaid deferred
compensation and vacation pay and (ii) three times the executive's base salary
plus the highest annual bonus for the last five fiscal years. The executive
will also be entitled to coverage under existing benefit plans and fringe
benefits for three years and a payment equal to the vested amounts plus a
payment equal to three additional years of employer contributions under the
Savings Plan, ESOP, Pension Plan and Supplemental Benefits Plan (including the
Transition Plan benefit equivalent described in footnote (5) to the Summary
Compensation Table). The Savings Plan, ESOP, Pension Plan and Supplemental
Benefits Plan provide for full vesting of all accounts upon the occurrence of a
Change of Control. In addition, payments under the Company's Supplemental
Executive Retirement Plan, described below ("SERP"), are calculated based on an
adjusted final salary reflecting three additional years of salary increases
consistent with past practice. If terminated for cause, the Company will pay
the executive his annual base salary through termination. If the executive's
employment is terminated by reason of death or disability, the Company will pay
certain accrued obligations and other customary death or disability benefits.
In all cases, the Company will provide the executive with a tax gross-up
payment to reimburse the executive for any excise taxes assessed against any
payments made to the executive, as well as all taxes on the gross-up payment.
SERP. The SERP provides a non-qualified supplemental executive retirement
benefit for selected officers and key employees. Generally, participants
contribute to the plan, in each year until death or retirement, an amount
equivalent to a term insurance premium applicable to a life insurance benefit
of three times the participant's base salary in effect on the date of
acceptance into the plan, unless all amounts were previously paid under a
predecessor plan. A pre-retirement survivor income benefit equal to 20%, 25%,
30% or 40% of the sum of base salary and 50% (100% for the Company's Chief
Executive Officer, Chief Operating Officer and Chief Financial Officer) of the
highest annual bonus for the last five fiscal years for certain officers,
including four of
17
the named executive officers, payable for 15 or 20 years is available to
designated beneficiaries if the participant dies prior to retirement. At the
time of retirement, the participant may continue the survivor income benefit or
elect to receive a supplemental retirement income benefit equal to 20%, 25%,
30% or 40% of the sum of base salary and 50% (100% for the Company's Chief
Executive Officer, Chief Operating Officer and Chief Financial Officer) of the
highest annual bonus for the last five fiscal years for certain officers,
including four of the named executive officers, for 15 or 20 years or an
actuarially equivalent joint and survivor benefit. A participant may receive
his retirement income benefit as a lump sum distribution by making an advance
election therefor or by accepting an actuarially reduced benefit. In the event
of a Change of Control, lump sum distributions are required. The benefit
obligations under the SERP are funded under Rabbi Trust B described below under
"Funding Arrangements." Messrs. Manning, Hobbs, Hammond and Mudd participate in
the SERP. Under their respective agreements under the SERP, each of the
participating named executive officers is entitled to 20 years of benefits, and
the applicable percentages of pre-retirement survivor income benefits and
supplemental retirement income benefits for the participating named executive
officers are 40% for Mr. Manning, 30% for Messrs. Hobbs and Hammond and 25% for
Mr. Mudd.
Executive Income Deferral Plan. Under the Executive Income Deferral Plan,
executives of the Company (including the named executive officers) are entitled
to defer up to 25% of their annual salary. Amounts deferred earn interest at a
Company-guaranteed annual minimum rate and are payable upon retirement over a
15 year period, unless the executive elects to receive an actuarially
equivalent joint and survivor benefit, reduced by up to 20% depending upon the
executive's age at retirement. The Company's obligations under the Executive
Income Deferral Plan are also funded by Rabbi Trust B.
Funding Arrangements. The Company has established three so-called "Rabbi
Trusts" by entering into trust agreements with a trustee to assure the
satisfaction of the obligations of the Company under various plans and
agreements to make deferred and other payments to certain of its past, present
and future executives and directors, including the named executive officers.
Rabbi Trust A requires the Company to deposit assets into ("fund") the Trust in
the event of a "Change of Control" (as defined therein) in an amount sufficient
to satisfy the Company's obligations to Mr. Manning, the other named executive
officers, and other executive officers under the Change of Control Employment
and Severance Agreements with those individuals (except to the extent that
those obligations consist of benefits covered by Rabbi Trust B). Rabbi Trust A
is currently not funded except with a nominal amount of assets, and is
currently revocable but will become irrevocable once it is funded. The Board
may elect to fund Rabbi Trust A in whole or in part prior to the occurrence of
a Change of Control. Rabbi Trust B was created to fund the Company's
obligations under various employee benefit plans, including three plans in
which the named executive officers participate: the SERP, the Supplemental
Benefits Plan and the Executive Income Deferral Plan. The Company makes annual
contributions to Rabbi Trust B and it currently holds approximately $18.3
million of assets. Rabbi Trust B is irrevocable. Rabbi Trust C was created to
assure that payments to non-employee directors under the director retirement
and Deferred Compensation plans described under "Director Compensation and
Benefits" will not be improperly withheld. Rabbi Trust C is currently funded
with a nominal amount, and is also funded from time to time as payouts are made
under these plans, although the Board may elect to fund it at any time. Rabbi
Trust C is irrevocable. Each of the Rabbi Trusts will terminate upon the
earlier of the exhaustion of the trust corpus or the final payment to the
directors or executives pursuant to the respective plans and agreements covered
thereby, and any remaining assets will be paid to the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors to file initial reports of beneficial ownership (on Form
3) and reports of changes in beneficial ownership (on either Form 4 or Form 5)
with the Securities and Exchange Commission ("SEC") and the New York Stock
Exchange. SEC regulations require officers and directors to furnish the Company
with copies of all Section 16(a) forms they file. Based solely on a review of
the copies of such forms furnished to the Company, and upon certifications from
reporting persons who did not file year-end reports on Form 5 that no such
reports were required, the Company believes that during the year ended December
31, 2001, all its officers and directors complied with Section 16(a) filing
requirements.
18
COMPANY STOCK PERFORMANCE
The following graph compares the cumulative annual change since December 31,
1996 of the total shareholder return on the Common Stock with: (i) the total
return on the Standard & Poor's 500 Food Index (the "S&P Food Index"); and (ii)
the total return on the Standard & Poor's 500 Composite Index (the "S&P
Composite Index"), assuming that $100 was invested in each of the Common Stock,
the stocks comprising the S&P Food Index and the stocks comprising the S&P
Composite Index on December 31, 1996 and assuming that all dividends were
reinvested at the end of the month in which they were paid.
[CHART]
Sensient Technologies Corporation S&P Food Index S&P Composite Index
1996 100 100 100
1997 94 100 102
1998 116 128 128
1999 126 129 167
2000 105 90 182
2001 132 115 178
19
ITEM 2.
APPROVAL OF THE 2002 STOCK OPTION PLAN
The following summary of the Company's 2002 Stock Option Plan (the "2002
Plan") is qualified in its entirety by reference to the full text of the 2002
Plan which is attached to this Proxy Statement as Appendix B.
General
The purpose of the 2002 Plan is to advance the interests of the Company by
encouraging and providing for the acquisition of an equity interest in the
Company by officers and key employees, and by enabling the Company to attract
and retain the services of officers and key employees upon whose judgment,
interest and special effort the successful conduct of its operations largely
depends.
The 2002 Plan authorizes the granting of stock options and restricted stock
to eligible employees, as described more fully below. (In this Item 2, we
sometimes refer to stock options and/or restricted stock as simply "awards".)
Available Shares
Up to 2,400,000 shares of the Company's Common Stock will be available for
issuance under the 2002 Plan, of which:
. no more than 600,000 shares may be restricted stock;
. no more than 1,800,000 shares may be issued as "incentive stock options"
(which are described on page 22 of this Proxy Statement); and
. no more than 750,000 shares may be granted pursuant to stock options to
any one Participant.
The aggregate number of shares of Common Stock authorized for issuance is
subject to adjustment in the event of any stock dividend or split,
recapitalization, merger, consolidation, combination, spin-off, split-up,
exchange of shares or other similar corporate change which affects the total
number of shares outstanding. Moreover, in the event of any such corporate
change which affects the total number of shares outstanding, the Compensation
and Development Committee will make an appropriate adjustment to change the
number of options or the stated option price, or both, under each outstanding
award.
Administration
The 2002 Plan is administered by the Compensation and Development Committee
of the Board of Directors described on page 6 of this Proxy Statement (for ease
of reference in this Item 2, we will call the Compensation and Development
Committee of the Board of Directors simply the "Committee"). The Committee must
consist of not less than two directors who are "non-employee directors" (within
the meaning of Rule 16b-3 under the Securities Exchange Act of 1934) and who
are "outside directors" (within the meaning of Section 162(m)(4)(C) of the
Internal Revenue Code). If each member of the Committee does not so qualify,
the Committee must designate a subcommittee (each of the members of which does
so qualify) to approve an award to particular individuals, including each of
the named executive officers.
Among other functions, the Committee has the authority:
. to establish rules for the administration of the 2002 Plan;
. to determine the officers and employees of the Company and its
affiliates to whom stock options and/or restricted stock will be granted;
20
. to determine the types of awards to be granted and the number of shares
covered by such awards; and
. to set the terms and conditions of such awards (in the discretion of the
Committee, the terms of awards may differ from participant to
participant).
Subject to the express terms of the 2002 Plan, determinations and
interpretations with respect to the 2002 Plan will be in the sole discretion of
the Committee, whose determinations and interpretations will be binding on all
parties.
Eligibility
Participants in the 2002 Plan are selected by the Committee from among those
officers and key employees who are recommended for participation by the
Company's Chief Executive Officer and who, in the opinion of the Committee, are
in a position to contribute materially to the Company's continued growth and
development and to its long-term financial success. The Committee's designation
of any person to receive an award does not require the Committee to designate
such person to receive an award at any subsequent time. Approximately 100
officers and key employees are eligible for consideration to receive awards
under the 2002 Plan.
Effective Date
The 2002 Plan will become effective on the date it is approved by the
shareholders of the Company, which is expected to occur on the date of the
Meeting, April 25, 2002.
Stock Options
Options granted under the 2002 Plan may be either incentive stock options
that meet the requirements of Section 422 of the Internal Revenue Code
("incentive stock options") or stock options that do not meet those
requirements ("nonstatutory stock options").
Exercise Price. The exercise price per share of Common Stock underlying an
option granted under the 2002 Plan may not be less than the fair market value
of a share of Common Stock on the date of grant. For purposes of the 2002 Plan,
the "fair market value" of a share of Common Stock is generally the closing
price of a share of Common Stock on the New York Stock Exchange on the date in
question. There will be no consideration received by the Company from a
participant in exchange for the original grant of an option.
Term. The term of any option will be determined by the Committee, except
that the term of an incentive stock option may not exceed ten years from the
date of its grant.
When Exercisable. The Committee will determine when options will become
exercisable and may establish vesting provisions for each option, including
vesting provisions that require the participant to remain employed with the
Company over a period of time, the attainment of specified performance goals,
or otherwise. Any option granted to a participant who is subject to the
reporting requirements under Section 16 of the Securities Exchange Act of 1934
may not be exercised until at least six (6) months following the date of its
grant. Each of the named executive officers is subject to this requirement.
Manner of Exercise. Options may be exercised by payment as follows:
(a) in cash;
(b) in the discretion of the Committee, a full recourse promissory note
issued to the Company by the participant (any such note must (i) be
secured by the Common Stock issued; (ii) be for a term of not more than
10 years; (iii) bear interest at the market rate in effect on the date
the note is issued; and (iv) require at least annual payments of
principal and interest; the note may contain such other terms and
conditions as the Committee determines);
21
(c) tendering shares of Common Stock having a fair market value at the time
of exercise equal to the total exercise price of such option so long as
the shares tendered have been held for more than six months; or
(d) by any combination of (a) through (c), above.
Incentive Stock Options. All incentive stock options granted under the 2002
Plan will also be required to comply with all other terms of Section 422 of the
Internal Revenue Code. These terms generally include (a) the fair market value
(determined on the date of grant) of all shares of Common Stock with respect to
which incentive stock options are exercisable for the first time by a
participant during any calendar year may not exceed $100,000, (b) the exercise
price of an incentive stock must be at least equal to the fair market value of
the share underlying that option on the date of grant and (c) an incentive
stock option may only be exercisable during the ten year period following the
date it is granted.
Transferability. The Committee may, in its discretion, permit options to be
transferable by the participant:
(a) to the participant's spouse, or natural or adoptive children or
grandchildren;
(b) to a trust or trusts for the exclusive benefit of one or more of the
participant's spouse, or natural or adoptive children or grandchildren;
or
(c) to a partnership in which all partners are the participant's spouse, or
natural or adoptive children or grandchildren.
There may be no consideration for any such transfer, however, and the
transferee must be expressly prohibited from any further transfer of such
options other than by will or pursuant to the laws of descent and distribution.
It is intended that no option may be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated, other than by will or pursuant to the laws
of descent and distribution, and all options granted to a participant under the
2002 Plan will be exercisable during his lifetime only by such participant.
Forfeiture. Except as otherwise determined by the Committee, upon
termination of a participant's employment for any reason, any option which was
not exercisable immediately prior to such termination will be automatically
forfeited.
Substitute Options. If the Company at any time should succeed to the
business of another corporation through merger or consolidation, or through the
acquisition of stock or assets of such corporation, the Committee may grant
options under the 2002 Plan in substitution of options previously granted by
such corporation and which are outstanding at the date of the succession. The
Committee will have discretion to determine the terms and conditions upon which
such "Substitute Options" will be granted so as to preserve the economic
benefits to the optionees.
Restricted Stock
Shares of restricted stock granted to participants under the 2002 Plan will
be subject to such restrictions as the Committee may impose. The restrictions
imposed on the shares may lapse separately or in combination at such time or
times, or in such installments or otherwise, as the Committee may deem
appropriate. The Committee may condition the lapse of such restrictions on the
passage of time, the attainment of specified performance goals, or otherwise.
Such conditions may differ from participant to participant.
Forfeiture. Except as otherwise determined by the Committee, upon
termination of a participant's employment for any reason during the applicable
restriction period, all shares of restricted stock still subject to restriction
will be forfeited.
22
Maximum Number of Shares. No more than 600,000 shares of restricted stock
may be issued under the 2002 Plan (subject to adjustment).
Voting and Dividends. Prior to (and after) the lapse of the applicable
restrictions on the restricted stock, shares of restricted stock are entitled
to vote and receive dividends on the same basis as all other shares of
outstanding Common Stock.
Limits on Transferability. No restricted stock, other than restricted stock
on which the restrictions have lapsed, may be assigned, sold, transferred or
encumbered by any participant, otherwise than by will, by designation of a
beneficiary, or by the laws of descent and distribution.
Resale to Company. A participant, or in the case of his death his
beneficiary or estate, may require the Company to repurchase up to one-half of
the shares of restricted stock upon which any restrictions have lapsed within
sixty (60) days after the restrictions have lapsed. The price paid by the
Company will be equal to the fair market value determined as of the last
business day of the period of restriction of the shares of restricted stock to
be sold. Unless otherwise agreed between the Company and the participant, such
price will be payable in one lump sum payment.
Change of Control
In the event of a "change of control" of the Company:
(a) Each outstanding option will immediately become exercisable (regardless
of whether the option was previously exercisable). Each participant
holding options will have the right, within sixty (60) days after the
change of control, to receive, in exchange for the surrender of all or
any portion of an option, an amount of cash equal to the highest of: (i)
the difference between the fair market value of the Common Stock covered
by the option on the date of the change of control and the option's
exercise price; (ii) the difference between the fair market value of the
Common Stock covered by the option on the date of surrender and the
option's exercise price; or (iii) the difference between the highest
price per share of Common Stock paid in the transaction giving rise to
the change of control and the option's exercise price.
(b) Restricted stock that is not then vested will vest upon the date of the
change of control and each holder of restricted stock will have the
right, within sixty (60) days after the change of control, to receive,
in exchange for the surrender of such restricted stock, an amount of
cash equal to the highest of (i) the fair market value of such
restricted stock on the date of surrender; (ii) the highest price per
share of Common Stock paid in the transaction giving rise to the change
of control multiplied by the number of shares of restricted stock
surrendered; or (iii) the fair market value of such restricted stock on
the effective date of the change of control.
The 2002 Plan includes in the definition of a "change of control" the
following:
(a) certain acquisitions by individuals or groups of beneficial ownership of
20% or more of either (i) the then outstanding shares of Common Stock of
the Company or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors;
(b) persons who, on September 10, 1998, constituted the Board and any new
director whose appointment or election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at
least a majority of the directors then still in office who either were
directors on September 10, 1998, or whose appointment, election or
nomination for election was previously so approved, cease to constitute
a majority of the number of directors then serving;
(c) certain transactions in which the company is reorganized, merged or
consolidated or all or substantially all of the assets of the Company
are sold or otherwise disposed of;
23
(d) or the shareholders of the Company approve a complete liquidation or
dissolution of the Company.
Amendment, Modification and Termination
The Board may at any time amend, alter, suspend, discontinue or terminate
the 2002 Plan (subject to shareholder approval if required by or deemed by the
Board to be desirable under applicable law, regulation, or exchange listing
requirement). Termination of the 2002 Plan will not affect the rights of
participants with respect to awards previously granted to them under the 2002
Plan, and all unexpired awards will continue in force and effect after
termination of the 2002 Plan except as they may lapse or be terminated by their
own terms and conditions.
Withholding
The Company is entitled to withhold the amount of any tax attributable to
any amount payable or shares of Common Stock deliverable under the 2002 Plan,
and the Company may defer making any such payment or delivery if any such tax
may be pending, unless and until indemnified to its satisfaction. A participant
may elect to pay all or a portion of the federal, state and local withholding
taxes arising in connection with an award by electing to (i) have the Company
withhold shares of Common Stock, (ii) tender back shares of Common Stock
received in connection with such benefit, or (iii) deliver other previously
owned shares of Common Stock, in each case having a fair market value equal to
the amount to be withheld; provided, however, that the amount to be withheld
shall not exceed the Company's minimum statutory federal, state and local tax
obligations associated with the transaction.
Certain Federal Income Tax Consequences
Stock Options. The grant of a stock option under the 2002 Plan will create
no income tax consequences to the participant or the Company. A participant who
is granted a nonstatutory stock option will generally recognize ordinary income
at the time of exercise of the nonstatutory stock option in an amount equal to
the excess of the fair market value of the Common Stock at such time over the
exercise price. The Company will be entitled to a deduction in the same amount
and at the same time as ordinary income is recognized by the participant. A
subsequent disposition of the Common Stock by the participant will give rise to
capital gain or loss to the extent the amount realized from the sale differs
from the tax basis. This capital gain or loss will be a long-term capital gain
or loss if the Common Stock has been held for the required holding period under
the Internal Revenue Code.
In general, a participant will recognize no income or gain for income tax
purposes as a result of the grant or exercise of an incentive stock option
(except that the alternative minimum tax may apply and there may be employment
taxes due upon exercise). Except as described below, any gain or loss realized
by the participant on the disposition of the Common Stock acquired pursuant to
the exercise of an incentive stock option will be treated as a capital gain or
loss and no deduction will be allowed to the Company. The capital gain or loss
will be treated as long-term or short-term depending on the participant's
holding period. Further, if the participant fails to hold the shares of Common
Stock acquired pursuant to the exercise of an incentive stock option for at
least two years from the date of grant of the incentive stock option and one
year from the date of exercise (a "Disqualifying Disposition"), the participant
will recognize ordinary income at the time of the disposition equal to the
lesser of (a) the gain realized on the Disqualifying Disposition, or (b) the
excess of the fair market value of the shares of Common Stock on the date of
exercise over the exercise price. In the event of a Disqualifying Disposition,
the Company will be entitled to a deduction in the same amount and at the same
time as ordinary income is recognized by the participant. Any gain or loss
realized by the participant over the fair market value at the time of exercise
of the incentive stock option will be treated as a capital gain or loss. The
capital gain or loss will be a long-term capital gain if the Common Stock has
been held for the required holding period under the Internal Revenue Code.
24
Certain additional tax consequences may attach in the event a participant is
permitted to pay the exercise price of an option with an interest-bearing
promissory note, as described above; in particular, the Company may be required
to recognize taxable interest income with respect to any interest received on
such promissory note.
Restricted Stock. A participant will not recognize income at the time an
award of restricted stock is made under the 2002 Plan, unless the participant
makes the election described below. However, a participant who has not made the
election will recognize ordinary income at the time the restrictions on the
Common Stock lapse. The ordinary income recognized will be in an amount equal
to the fair market value of the restricted stock at such time. The Company will
be entitled to a corresponding deduction in the same amount and at the same
time as the participant recognizes income. Any otherwise taxable disposition of
the restricted stock after the time the restrictions lapse will result in
capital gain or loss (long-term or short-term depending on the length of time
the restricted stock is held after the time the restrictions lapse). Dividends
paid in cash and received by a participant prior to the time the restrictions
lapse will constitute ordinary income to the participant in the year paid. Any
dividends paid in Common Stock will be treated as an award of additional
restricted stock subject to the tax treatment just described.
A participant may, within 30 days after the date of the award of restricted
stock, elect to recognize ordinary income as of the date of the award in an
amount equal to the fair market value of such restricted stock on the date of
the award. The Company will be entitled to a corresponding deduction in the
same amount and at the same time as the participant recognizes income. If the
election is made, any cash dividends received with respect to the restricted
stock will be treated as dividend income to the participant in the year of
payment and will not be deductible by the Company. Any otherwise taxable
disposition of the restricted stock (other than by forfeiture) will result in
capital gain or loss (long-term or short-term depending on the holding period).
If the participant who has made an election subsequently forfeits the
restricted stock, the participant will not be entitled to deduct any loss. In
addition, the Company would then be required to include as ordinary income the
amount of the deduction it originally claimed with respect to such shares.
Vote Required
Assuming that a quorum is present, the 2002 Plan will be approved if more
shares are voted in favor of approval than are voted against approval. Under
Wisconsin law, any shares not voted at the Annual Meeting with respect to the
2002 Plan (whether as a result of abstention, broker nonvote or otherwise) will
have no impact on the vote.
THE BOARD RECOMMENDS A VOTE FOR THE 2002 PLAN. SHARES OF COMMON STOCK
REPRESENTED AT THE ANNUAL MEETING BY EXECUTED BUT UNMARKED
PROXIES WILL BE VOTED FOR THE 2002 PLAN.
25
ITEM 3.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board, subject to
shareholder ratification, has selected Deloitte & Touche LLP, certified public
accountants, to audit the financial statements of the Company for the year
ending December 31, 2002. Deloitte & Touche LLP has been the independent
auditor of the Company for many years and has advised the Company that neither
the firm nor any of its partners have any direct or indirect material financial
interest in the Company.
Although not required by law to submit the appointment to a vote by
shareholders, the Board believes it appropriate, as a matter of policy, to
request that the shareholders ratify the appointment of Deloitte & Touche LLP
as independent auditors for 2002. Assuming that a quorum is present, the
selection of Deloitte & Touche LLP will be deemed to have been ratified if more
shares are voted in favor of ratification than are voted against ratification.
Under Wisconsin law, any shares of Common Stock which are not voted on this
matter at the Meeting (whether by abstention, broker nonvote or otherwise) will
have no effect on this matter. If the shareholders should not so ratify, the
Board will reconsider the appointment.
Representatives of Deloitte & Touche LLP are expected to be present at the
Meeting and will have an opportunity to make a statement if they desire to do
so and to respond to appropriate shareholder questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2002.
SHARES OF COMMON STOCK REPRESENTED AT THE MEETING BY EXECUTED
BUT UNMARKED PROXIES WILL BE VOTED FOR THE RATIFICATION
OF SUCH APPOINTMENT.
ITEM 4.
OTHER MATTERS
Company management knows of no business which will be presented for action
at the Meeting other than those items identified in the Notice of Annual
Meeting. Pursuant to the Company's Bylaws, written notice of any shareholder
proposals to be presented at the Meeting must have been received by the
Secretary no later than March 5, 2002. As no notice of any shareholder
proposals was received, no business may be brought before the Meeting by any
shareholders. If other matters are brought before the Meeting by the Board of
Directors, it is intended that proxies will be voted at the Meeting in
accordance with the judgment of the person or persons exercising the authority
conferred by such proxies.
26
FUTURE SHAREHOLDER PROPOSALS AND NOMINATIONS
The Company welcomes comments or suggestions from its shareholders. In the
event a shareholder desires to have a proposal formally considered at the
annual shareholders' meeting in April, 2003 and included in the proxy statement
for that meeting, the proposal must be in writing and received by the Secretary
of the Company on or before November 22, 2002 and must otherwise comply with
the applicable rules of the Securities and Exchange Commission. Under the
Company's Bylaws, appropriate shareholder proposals will be presented at the
2003 annual meeting without inclusion in the proxy materials if such proposals
are received by the Company no later than March 5, 2003.
In addition, the Company's Bylaws establish procedures for shareholder
nominations for election of directors of the Company and bringing business
before any annual meeting of shareholders of the Company. Among other things,
to bring business before an annual meeting or to nominate a person for election
as a director at an annual meeting, a shareholder must give written notice to
the Secretary of the Company not less than 50 days (and, in the case of
nominations, not more than 90 days) prior to the third Thursday after the first
Friday in the month of April next following the last annual meeting held. The
notice must contain certain information about the proposed business or the
nominee and the shareholder making the proposal.
Any shareholder interested in making a nomination or proposal should request
a copy of the applicable Bylaw provisions from the Secretary of the Company and
send any such nomination or proposal to the Secretary of the Company at the
Company's executive offices at 777 East Wisconsin Avenue, 11th Floor,
Milwaukee, Wisconsin, 53202.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS ARE
REQUESTED TO DATE, SIGN AND RETURN THE PROXY CARD OR VOTE BY PHONE OR BY
INTERNET ACCORDING TO THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD AS SOON AS
POSSIBLE. IF YOUR SHARES ARE REGISTERED IN THE NAME OF A BROKER OR BANK, ONLY
YOUR BROKER OR BANK CAN SUBMIT THE PROXY CARD ON YOUR BEHALF. PLEASE CONTACT
THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR HER TO SUBMIT THE
PROXY CARD ON YOUR BEHALF.
UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER, ADDRESSED TO THE SECRETARY OF THE
COMPANY, THE COMPANY WILL PROVIDE TO SUCH SHAREHOLDER WITHOUT CHARGE A COPY OF
THE COMPANY'S 2001 ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
By Order of the Board of Directors
John L. Hammond
Secretary
March 22, 2002
27
Appendix A
Audit Committee Charter--Section 3.14 of Company Bylaws
3.14 Audit Committee. There shall be an Audit Committee of the Board of
Directors. The Committee shall have at least three (3) members. The members of
the Committee shall meet the independence and experience requirements of the
New York Stock Exchange. The Committee shall have the authority to conduct any
investigation appropriate to fulfilling its responsibilities and shall have the
authority to retain, at the Company's expense, legal, accounting or other
consultants it deems necessary in the performance of its duties. The Committee
shall have all of the responsibilities of a qualified audit committee under New
York Stock Exchange rules including without limitation the responsibilities set
forth below.
Review Procedures
1. Review and reassess the adequacy of this charter at least annually.
Submit the charter to the Board of Directors for approval and have the
document published at least every three years in accordance with
Securities and Exchange Commission regulations.
2. Review the Company's annual audited financial statements prior to filing
or distribution. Review should include discussion with management and
the independent auditors of significant issues regarding accounting
principles, practices, and judgments.
3. In consultation with management, the independent auditors, and the
internal auditors, consider the integrity of the Company's financial
reporting processes and controls. Discuss significant financial risk
exposures and the steps management has taken to monitor, control, and
report such exposures. Review significant findings prepared by the
independent auditors and the internal auditing department together with
management's responses.
4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to filing the Company's Form
10-Q with the Securities and Exchange Commission. Discuss any
significant changes to the Company's accounting principles and any items
required to be communicated by the independent auditors in accordance
with AICPA SAS 61. The Chair of the Committee may represent the entire
Audit Committee for purposes of this review.
Independent Auditors
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee and the Board
of Directors shall have the ultimate authority to select, evaluate the
performance of and, where appropriate, replace the independent auditors.
The Audit Committee shall annually recommend to the Board of Directors
the appointment or replacement of the independent auditors.
6. Approve the fees and any other significant compensation to be paid to
the independent auditors.
7. On an annual basis, the Committee shall obtain a formal written
statement from the independent auditors delineating all relationships
between the Company and its affiliates, including the written letter and
disclosure required by ISB Standard No. 1, as it may be supplemented.
8. From time to time, as appropriate, engage in a dialogue with the
independent auditors with respect to any disclosed relationships or
services that may impact the objectivity and independence of such
accountants and recommend to the Board of Directors appropriate action
in response to the outside auditors' report to satisfy itself of the
auditors' independence.
9. Review the independent auditors' audit plan--discuss scope, staffing,
locations, reliance upon management, and internal audit and general
audit approach.
10. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss with the independent
accountants the Company's internal controls and the matters required to
be communicated to audit committees in accordance with AICPA SAS 61.
A-1
Internal Audit Department and Legal Compliance
11. Review the budget, activities, organizational structure, qualifications
and performance of the internal audit department, as needed.
12. Review any reports covering issues which are material to the Company's
financial statements prepared by the internal audit department together
with management's response and follow-up to these reports.
13. On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the organization's
financial statements, the Company's compliance with applicable laws and
regulations, and inquiries received from regulators or governmental
agencies.
Other Responsibilities
14. Annually prepare, based on the review and discussions referred to above,
a report to shareholders as required by Securities and Exchange
Commission rules and regulations. The report should be included in the
Company's annual proxy statement.
15. Review and update periodically the Company's Code of Conduct and ensure
that compliance with the Code of Conduct is adequately monitored by
management.
16. Perform any other activities consistent with this charter, the Company's
Bylaws, and governing law, as the Committee or the Board deems necessary
or appropriate.
17. Periodically report to the Board of Directors on significant results of
the foregoing activities.
A-2
Appendix B
SENSIENT TECHNOLOGIES CORPORATION
2002 STOCK OPTION PLAN
Adopted by the Board of Directors on February 14, 2002
Section 1. Establishment, Purpose and Effective Date of Plan.
1.1 Establishment. Sensient Technologies Corporation, a Wisconsin
corporation (the "Company"), hereby establishes the "SENSIENT TECHNOLOGIES
CORPORATION 2002 STOCK OPTION PLAN" (the "Plan") for officers and key
employees. This Plan permits the grant of Options and Restricted Stock, each as
described herein.
1.2 Purpose. The purpose of this Plan is to advance the interests of the
Company by encouraging and providing for the acquisition of an equity interest
in the Company by its officers and key employees, and by enabling the Company
to attract and retain the services of officers and key employees upon whose
judgment, interest and special effort the successful conduct of its operations
is largely dependent.
1.3 Effective Date. This Plan shall become effective as of such date as
this Plan is approved by the shareholders of the Company at an annual meeting
or special meeting thereof by a simple majority of the number of shares
represented at such meeting in person or by proxy (the "Effective Date").
Section 2. Definitions.
2.1 Definitions. Capitalized terms used herein without definition shall
have the respective meanings set forth below:
(a) "Award" means any Option or Restricted Stock, or any other benefit
conferred under the terms hereof.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Compensation and Development Committee of the
Board.
(e) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(f) "Exercise Price" means the price payable in respect of an Option.
(g) "Fair Market Value" means, as of any date of determination, the
closing price of a share of Stock on the New York Stock Exchange (or
on such other recognized market or quotation system on which the
trading prices of Stock are traded or quoted at the relevant time) as
reported on the composite list used by The Wall Street Journal for
reporting stock prices, or if no such sale shall have been made on
that day, on the last preceding day on which there was such a sale.
(h) "Option" means the right to purchase Stock at a stated price for a
specified period of time. For purposes of this Plan an Option may be
either: (i) an "incentive stock option" within the meaning of Section
422(b) of the Code; or (ii) an option which is not intended to
qualify as an incentive stock option (a "nonstatutory stock option").
(i) "Participant" means any individual designated by the Committee to
participate in this Plan.
(j) "Period of Restriction" means the period during which the transfer of
shares of Restricted Stock is restricted pursuant to Section 8 hereof.
B-1
(k) "Restricted Stock" means Stock granted to a Participant pursuant to
Section 8 hereof.
(l) "Stock" means the Common Stock of the Company, par value of $0.10.
2.2 Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender when used in this Plan shall include the feminine
gender, the singular shall include the plural and the plural shall include the
singular.
Section 3. Eligibility and Participation. Participants in this Plan shall be
selected by the Committee from among those officers and key employees of the
Company and its subsidiaries, including subsidiaries which become such after
adoption hereof, who are recommended for participation by the Company's Chief
Executive Officer and who, in the opinion of the Committee, are in a position
to contribute materially to the Company's continued growth and development and
to its long-term financial success. The Committee's designation of any person
to receive an Award shall not require the Committee to designate such person to
receive an Award at any subsequent time.
Section 4. Administration.
4.1 Administration. This Plan shall be administered by the Committee.
4.2 Powers and Authority of the Committee. The Committee, by majority
action thereof, shall have complete and sole authority to:
(a) designate officers and key employees to receive Awards;
(b) determine the type of Awards to be granted to Participants;
(c) determine the number of shares of Stock to be covered by Awards
granted to Participants;
(d) determine the terms and conditions of any Award granted to any
Participant (which may, in the discretion of the Committee, differ
from Participant to Participant), including, without limitation,
provisions relating to the vesting of Options or Restricted Stock
rights over a period of time, upon the attainment of specified
performance goals, or otherwise;
(e) interpret this Plan and apply its provisions, and prescribe, amend
and rescind rules, regulations, procedures, and forms relating to
this Plan;
(f) authorize any person to execute, on behalf of the Company, any
instrument required to carry out the purposes of this Plan;
(g) amend any outstanding agreement relating to any Award, subject to
applicable legal restrictions and, to the extent such amendment may
adversely affect the Participant who entered into such agreement, to
the consent of such Participant;
(h) prescribe the consideration for the grant of each Award hereunder and
determine the sufficiency of such consideration; and
(i) make all other determinations and take all other actions deemed
necessary or advisable for the administration hereof and provide for
conditions and assurances deemed necessary or advisable to protect
the interests of the Company and its affiliates in connection
herewith;
but only to the extent that any of the foregoing are not contrary to the
express provisions hereof. No term of this Plan relating to incentive stock
options shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be so exercised, so as to disqualify the Plan
under Section 422 of the Code. Determinations, interpretations or other actions
made or taken by the Committee pursuant to the provisions hereof shall be
final, binding and conclusive for all purposes and upon all persons. The
Committee's decisions need not be uniform and may be made selectively among
Participants, whether or not they are similarly situated.
B-2
4.3 Composition of the Committee. The Committee shall consist of not less
than two directors. Each member of the Committee shall be both a "nonemployee
director" (within the meaning of Rule 16b-3 under the Exchange Act) and an
"outside director" (within the meaning of Section 162(m)(4)(C) of the Code);
provided, however, that in the event any Committee member does not satisfy both
conditions of the first clause of this sentence, then the Committee shall, with
respect to any Award to be made to any Participant who is subject to Section 16
of the Exchange Act ("Section 16 Participant") or who is subject to the
provisions of Section 162(m) of the Code, delegate its functions with respect
to such Award to a subcommittee (of not less than two directors) which consists
exclusively of members who meet both conditions of the first clause of this
sentence. Further, the Committee may delegate to one or more senior officers of
the Company any or all of the authority and responsibility of the Committee
with respect to this Plan, other than with respect to Section 16 Participants
or Participants who are subject to Section 162(m) of the Code. A majority of
the members of the Committee (or subcommittee, as the case may be) shall
constitute a quorum and all determinations of the Committee shall be made by a
majority of its members. Any determination of the Committee may be made without
notice or meeting of the Committee by a writing signed by a majority of the
Committee members.
Section 5. Stock Subject to Plan.
5.1 Number. The total number of shares of Stock reserved and available for
issuance under this Plan shall initially be 2,400,000. The number of shares of
Stock reserved and available for issuance hereunder shall be subject to
adjustment upon occurrence of any of the events indicated in Subsection 5.3
hereof. Of this total number, not more than 600,000 shares of Stock may at any
time be issued as Restricted Stock and not more than 1,800,000 shares of Stock
may at any time be issued under incentive stock options. No Participant may be
granted stock options under this Plan with respect to more than 750,000 shares
of Stock (subject to adjustment) during the term of this Plan. The shares to be
issued under this Plan may consist, in whole or in part, of authorized but
unissued Stock or treasury Stock, not reserved for any other purpose.
5.2 Unused Stock. In the event any shares of Stock that are subject to an
Award cease to be subject to such Award (whether due to expiration,
cancellation, termination, forfeiture, or otherwise) without such shares of
Stock being issued or cash being paid to the Participant or, in the case of
Restricted Stock, such Stock being forfeited back to the Company, then the
shares of Stock subject to such Award shall again become available for future
Awards hereunder.
5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock that occurs by reason of a Stock dividend or split,
recapitalization, merger, consolidation, combination, spin-off, split-up,
exchange of shares or other similar corporate change such that an adjustment is
required to preserve, or to prevent enlargement of, the benefits or potential
benefits made available under this Plan, then the aggregate number and type of
equity authorized for issuance hereunder as well as the number and type of
equity subject to each outstanding Award, and its stated Exercise Price or
other reference price (as applicable) shall be appropriately adjusted by the
Committee, whose determination shall be conclusive; provided, however, that
fractional shares shall be rounded to the nearest whole share. In such event,
the Committee shall also have the discretion to make appropriate adjustments in
the number of shares of Stock authorized for issuance hereunder and to make
such other adjustments as it deems necessary or appropriate so as to preserve,
or to prevent enlargement of, the benefits or potential benefits made available
under this Plan.
Section 6. Duration of Plan. This Plan shall remain in effect, subject to the
Board's right to earlier terminate this Plan pursuant to Section 12 hereof,
until all shares of Stock subject to it shall have been purchased or acquired
pursuant to the provisions hereof. Notwithstanding the foregoing, no Award may
be granted hereunder on or after the tenth (10th) anniversary of the Effective
Date.
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Section 7. Stock Options.
7.1 Grant of Options. Subject to the provisions of Sections 5 and 6
hereof, Options may be granted to Participants at any time and from time to
time as shall be determined by the Committee. The Committee shall have complete
discretion in determining the number of shares of Stock underlying Options
granted to each Participant. The Committee also shall determine whether an
Option is to be an incentive stock option within the meaning of Section 422(b)
of the Code or a nonstatutory stock option. An Option shall be a nonstatutory
option unless otherwise specified by the Committee at the time of grant.
Nothing in this Plan to the contrary, the terms and conditions of incentive
stock options shall be in compliance with Section 422 of the Code.
7.2 Incentive Stock Options. Incentive stock options shall be subject to
the limitation that the Fair Market Value (determined on the date of grant) of
all shares of Stock with respect to which incentive stock options are
exercisable for the first time by a Participant during any calendar year shall
not exceed $100,000. This limitation shall not apply to nonstatutory stock
options.
7.3 Option Agreement. Each Option shall be evidenced by a written
agreement ("Option Agreement") that shall specify the type of Option granted,
the Exercise Price, the duration of the Option, the number of shares of Stock
to which the Option pertains, and such other provisions as the Committee shall
determine. No Participant shall have any rights hereunder until an Option
Agreement has been executed.
7.4 Exercise Price. No Option granted pursuant hereto shall have an
Exercise Price per share of Stock underlying an Option that is less than the
Fair Market Value of a share of Stock on the date the Option is granted.
7.5 Duration of Options. Each Option shall expire at such time as the
Committee shall determine; provided, however, that no incentive stock option
shall be exercisable later than the tenth (10th) anniversary date of its grant.
7.6 Exercise of Options. Options granted hereunder shall be exercisable
at such times and be subject to such restrictions and conditions as the
Committee shall in each instance approve, which need not be the same for all
Participants.
7.7 Payment. The aggregate Exercise Price of any portion of an Option
being exercised shall be payable to the Company in full upon exercise:
(a) in cash or its equivalent, including, in the discretion of the
Committee, a full recourse promissory note issued to the Company by
the Participant (which note shall (i) be secured by the Stock issued;
(ii) be for a term of not more than ten (10) years; (iii) bear
interest at the market rate in effect on the date such promissory
note is issued; (iv) require at least annual payments of principal
and interest; and (v) contain such other terms and conditions as the
Committee determines);
(b) by tendering shares of Stock having a Fair Market Value at the time
of exercise equal to the aggregate Exercise Price of the portion of
the Option being exercised, so long as the shares tendered have been
held more than six months; or
(c) by a combination of cash or its equivalent (as defined in clause (a)
above) and shares of Stock.
The proceeds from such a payment shall be added to the general funds of the
Company and shall be used for general corporate purposes.
7.8 Restrictions on Stock Transferability. The Committee shall impose
such restrictions on any shares of Stock acquired pursuant to the exercise of
an Option as it may deem advisable, including, without limitation, restrictions
under applicable Federal securities laws, under the requirements of any stock
exchange upon which such shares of Stock are then listed, and under any blue
sky or state securities laws applicable to such shares.
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7.9 Transferability of Options. The Committee may, in its discretion, and
only by expressly so providing in the Option Agreement covering any Options
(which Option Agreement must be approved by the Committee), permit all or a
portion of Options to be granted to a Participant to be transferable by the
Participant: (a) to the Participant's spouse, or natural or adoptive children
or grandchildren ("Immediate Family Members"); (b) to a trust or trusts for the
exclusive benefit of one or more Immediate Family Members; or (c) to a
partnership in which all partners are Immediate Family Members; provided that
there may be no consideration for any such transfer and the transferee shall be
expressly prohibited from any further transfer of such Options other than by
will or pursuant to the laws of descent and distribution. Following such
transfer, any Options so transferred shall be subject to the same terms and
conditions as were applicable immediately prior to such transfer, provided that
for purposes of this Plan, the term "Participant" shall be deemed to include
such transferee. The circumstances under which any transferred Option may be
terminated, canceled, or forfeited (whether such circumstances are set forth in
this Plan or in the Option Agreement covering such Options) shall be applied
with respect to the transferor Participant to which the Option was originally
granted. Unless expressly so provided in the Option Agreement covering an
Option, no Option granted hereunder may be sold, transferred, pledged, assigned
or otherwise alienated or hypothecated, other than by will or pursuant to the
laws of descent and distribution, and all Options granted to a Participant
hereunder shall be exercisable during his lifetime only by such Participant.
7.10 Substitute Options. If the Company at any time should succeed to the
business of another corporation through merger or consolidation, or through the
acquisition of stock or assets of such corporation, Options may be granted
under this Plan ("Substitute Options") in substitution of options previously
granted by such corporation and which are outstanding at the date of the
succession ("Surrendered Options"). The Committee shall have discretion to
determine the extent to which such Substitute Options shall be granted, the
persons to receive such Substitute Options, the number of shares of Stock to be
subject to such Substitute Options, and the terms and conditions of such
Substitute Options. The Committee shall have the discretion to grant Substitute
Options with terms and conditions that vary from the terms and conditions of
the Plan (so long as such terms and conditions are equivalent to the terms and
conditions of the Surrendered Options). The Exercise Price of the Substitute
Option may be determined without regard to Section 7.4 hereof; provided
however, that the Exercise Price of each Substitute Option shall be an amount
such that, in the sole and absolute judgment of the Committee (and if the
Substitute Options are to be incentive stock options, in compliance with
Section 424(a) of the Code), the economic benefit provided by such Substitute
Option is not greater than the economic benefit represented by the Surrendered
Option as of the date of the succession.
7.11 Forfeiture. Except as otherwise determined by the Committee and set
forth in the Option Agreement, upon termination of employment of a Participant
due to death, disability, or for any other reason, all Options not exercisable
in accordance with the Option Agreement immediately prior to such termination
shall be immediately and automatically forfeited to the Company.
Section 8. Restricted Stock.
8.1 Grant of Restricted Stock. Subject to the provisions of Sections 5 and
6 hereof, the Committee, at any time and from time to time, may grant shares of
Restricted Stock hereunder to such Participants and in such amounts as it shall
determine. Each grant of Restricted Stock shall be evidenced by a written
agreement ("Restricted Stock Agreement").
8.2 Other Restrictions. The Committee shall, in the terms and conditions
of the Restricted Stock Agreement, impose such restrictions on any shares of
Restricted Stock granted pursuant to this Plan as it may deem advisable
(including, without limitation, restrictions under applicable Federal or state
securities laws), and may legend the certificates representing Restricted Stock
to give appropriate notice of such restrictions. Any Restricted Stock granted
to a Section 16 Participant may not be sold for at least six (6) months after
the date it is granted.
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8.3 Registration. Any Restricted Stock granted hereunder to a Participant
may be evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is issued in
respect of shares of Restricted Stock granted hereunder to a Participant, such
certificate shall be registered in the name of the Participant and shall bear
an appropriate legend (as determined by the Committee) referring to the terms,
conditions and restrictions applicable to such Restricted Stock. In the event
such Restricted Stock is issued in book-entry form, the depository and the
Company's transfer agent shall be provided with notice referring to the terms,
conditions and restrictions applicable to such Restricted Stock, together with
such stop-transfer instructions as the Committee deems appropriate.
8.4 Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment of a Participant due to death, disability, or for any
other reason, during the applicable period of restriction, all shares of
Restricted Stock still subject to restriction under the terms of the Restricted
Stock Agreement shall be immediately and automatically forfeited to the Company.
8.5 Voting Rights. During the Period of Restriction, Participants holding
shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those shares.
8.6 Dividends and Other Distributions. During the Period of Restriction,
Participants holding shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those shares while they are so held. If any such dividends or distributions are
paid in shares of Stock, the shares shall be subject to the same restrictions
on transferability as the shares of Restricted Stock with respect to which they
were paid.
8.7 Nontransferability of Restricted Stock. Except as provided in Section
8.8 hereof, no shares of Restricted Stock granted hereunder may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution, until the termination
of the applicable Period of Restriction. All rights with respect to the
Restricted Stock granted to a Participant hereunder shall be exercisable during
his lifetime only by such Participant.
8.8 Election to Sell Shares to the Company. A Participant, or in the case
of his death his beneficiary or estate, may elect to sell to the Company up to
one-half of the shares of Restricted Stock issued to him pursuant to this Plan
and upon which any restrictions set forth in the Restricted Stock Agreement
have lapsed. To the extent permitted by law, the Company shall purchase all
such shares of Restricted Stock. Each such sale must occur within sixty (60)
days after the last day of the Period of Restriction for such shares of
Restricted Stock and shall be for a price equal to the Fair Market Value
determined as of the last business day of the Period of Restriction of the
shares of Restricted Stock to be sold. Such price shall be payable in cash or
by check in one lump sum payment, unless provisions relating to payment for
such shares of Restricted Stock in installments are agreed to by the Committee
and the Participant (or his beneficiary or estate).
Section 9. Beneficiary Designation. Each Participant may, from time to time,
name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit hereunder is to be paid in case of his death
before he receives any or all of such benefit. Each designation will revoke all
prior designations by the same Participant, shall be in a form prescribed by
the Committee and will be effective only when filed by the Participant in
writing with the Committee during his lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to his estate.
Section 10. Rights of Employees. Nothing in this Plan shall interfere with or
limit in any way the right of the Company to terminate any Participant's
employment at any time nor confer upon any Participant any right to continue in
the employment of the Company.
B-6
Section 11. Change of Control.
11.1 In the event of a "Change of Control" (as hereinafter defined):
(a) each holder of an Option (i) shall have the right at any time thereafter
to exercise the Option in full whether or not the Option was
previously exercisable; and (ii) shall have the right, exercisable
by written notice to the Company within sixty (60) days after the
Change of Control, to receive, in exchange for the surrender of an
Option or any portion thereof to the extent the Option is then
exercisable in accordance with clause (i), the highest of (1) an
amount of cash equal to the difference between the Fair Market
Value of the Stock covered by the Option or portion thereof that is
so surrendered on the date of the Change of Control and the
Exercise Price; (2) an amount of cash equal to the difference
between the highest price per share of Stock paid in the
transaction giving rise to the Change of Control and the Exercise
Price multiplied by the number of shares of Stock covered by the
Option; or (3) an amount of cash equal to the difference between
the Fair Market Value of the Stock covered by the Option or portion
thereof that is so surrendered, calculated on the date of
surrender, and the Exercise Price; provided that the right
described in this clause (ii) shall be exercisable only if a
positive amount would be payable to the holder pursuant to the
formula specified in this clause (ii);
(b) Restricted Stock that is not then vested shall vest upon the date
of the Change of Control and each holder of such Restricted Stock
shall have the right, exercisable by written notice to the Company
within sixty (60) days after the Change of Control, to receive, in
exchange for the surrender of such Restricted Stock, an amount of
cash equal to the highest of (i) the Fair Market Value of such
Restricted Stock on the date of surrender; (ii) the highest price
per share of Stock paid in the transaction giving rise to the
Change of Control multiplied by the number of shares of Restricted
Stock surrendered; or (iii) the Fair Market Value of such
Restricted Stock on the effective date of the Change of Control.
11.2 A "Change of Control" of the Company means:
(a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either (i)
the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions
shall not constitute a Change of Control: (1) any acquisition
directly from the Company, (2) any acquisition by the Company, (3)
any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (4) any acquisition pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section; or
(b) individuals who, as of September 10, 1998, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least
a majority of the Board; provided, however, that any individual
becoming a director subsequent to September 10, 1998 whose
election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
B-7
(c) consummation by the Company of a reorganization, merger or
consolidation or sale or other disposition of all or substantially
all of the assets of the Company or the acquisition of assets of
another entity (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
business combination beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person
(excluding any employee benefit plan (or related trust) of the
Company or of such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of
the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement, or the
action of the Board, providing for such Business Combination; or
(d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
Section 12. Amendment, Modification and Termination of Plan.
12.1 Amendments and Termination. The Board may at any time amend, alter,
suspend, discontinue or terminate this Plan; provided, however, that
stockholder approval of any amendment of this Plan shall be obtained if
otherwise required by (a) the Code or any rules promulgated thereunder
(including in order to allow for incentive stock options to be granted
hereunder or to enable the Company to comply with the provisions of Section
162(m) of the Code so that the Company can deduct compensation in excess of the
limitation set forth therein), or (b) the listing requirements of the principal
securities exchange or market on which the Stock is then traded (including in
order to maintain the listing or quotation of the Stock thereon). An amendment
or termination of this Plan shall not adversely affect the rights of
Participants with respect to Awards previously granted to them, and all
unexpired Awards shall continue in force and effect after termination of this
Plan except as they may lapse or be terminated by their own terms and
conditions.
12.2 Waiver of Conditions. The Committee may, in whole or in part, waive
any conditions or other restrictions with respect to any Award granted
hereunder.
Section 13. Taxes. The Company shall be entitled to withhold the amount of
any tax attributable to any amount payable or shares of Stock deliverable under
this Plan after giving the person entitled to receive such amount or shares of
Stock notice as far in advance as practicable, and the Company may defer making
any such payment or delivery if any such tax may be pending unless and until
indemnified to its satisfaction. A Participant may by written election, elect
to pay all or a portion of the federal, state and local withholding taxes
arising in connection with (a) the exercise of a nonstatutory stock option; (b)
a disqualifying disposition of Stock received upon the exercise of an incentive
stock option; (c) the lapse of restrictions on Restricted Stock, by electing to
(i) have the Company withhold shares of Stock, (ii) tender back shares of Stock
received in connection with such benefit, or (iii) deliver other previously
owned shares of Stock, having a Fair Market Value equal to the amount
B-8
to be withheld; provided, however, that the amount to be withheld shall not
exceed the Company's minimum statutory federal, state and local tax withholding
obligations associated with the transaction. The written election must be made
on or before the date as of which the amount of tax to be withheld is
determined. The Fair Market Value of fractional shares of Stock remaining after
payment of the withholding taxes shall be paid to the Participant in cash.
Section 14. Indemnification. Each person who is or shall have been a member
of the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under this Plan
and against and from any and all amounts paid by him in settlement thereof,
with the Company's approval, or paid by him in satisfaction of any judgment in
any such action, suit or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his own behalf. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.
Section 15. Miscellaneous. Any Award may also be subject to other provisions
(whether or not applicable to any Award made to any other Participant) as the
Committee determines appropriate, including, without limitation, provisions
for: (a) restrictions on resale or other disposition of financed shares; and
(b) compliance with federal or state securities laws and stock exchange or
market requirements.
Section 16. Requirements of Law.
16.1 Requirements of Law. The Plan, the granting and exercising of Awards
thereunder, and the other obligations of the Company under the Plan, shall be
subject to all applicable foreign, Federal and State laws, rules, and
regulations, and to such approvals by any regulatory or governmental agency as
may be required, and to any rules or regulations of any exchange on which the
Stock is listed. The Company, in its discretion, may postpone the granting and
exercising of Awards, the issuance or delivery of Stock under any Award or any
other action permitted under the Plan to permit the Company, with reasonable
diligence, to complete such stock exchange listing or registration or
qualification of such Stock or other required action under any foreign, Federal
or State law, rule, or regulation and may require any Participant to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of Stock in compliance with applicable
laws, rules, and regulations. The Company shall not be obligated by virtue of
any provision of the Plan to recognize the exercise of any Award or to
otherwise sell or issue Stock in violation of any such laws, rules, or
regulations; and any postponement of the exercise or settlement of any Award
under this provision shall not extend the term of such Awards, and neither the
Company nor its directors or officers shall have any obligation or liability to
the Participant with respect to any Award (or Stock issuable thereunder) that
shall lapse because of such postponement.
16.2 Governing Law. This Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the internal laws of the State of
Wisconsin.
Section 17. No Limitation on Compensation; No Impact on Benefits. Nothing in
the Plan shall be construed to limit the right of the Company to establish
other plans or to pay compensation to its employees, in cash or property, in a
manner that is not expressly authorized under the Plan. Except as may otherwise
be specifically stated under any employee benefit plan, policy or program, no
amount payable in respect of any Award shall be treated as compensation for
purposes of calculating a Participant's right under any such plan, policy or
program. No person shall have a right to be selected as a Participant, or,
having been so selected, to receive any future Awards.
B-9
Section 18. No Constraint on Corporate Action. Nothing in this Plan shall be
construed (a) to limit, impair or otherwise affect the Company's right or power
to make adjustments, reclassifications, reorganizations or changes of its
capital or business structure, or to merge or consolidate, or dissolve,
liquidate, sell, or transfer all or any part of its business or assets or (b)
to limit the right or power of the Company, or any of its affiliates to take
any action which such entity deems to be necessary or appropriate.
Section 19. Stockholder Rights. A Participant shall have no rights as a
stockholder with respect to any shares of Stock covered by an Award until he or
she shall have become the holder of record of such share(s), and no adjustments
shall be made for dividends in cash or other property or distribution or other
rights in respect to any such shares, except as otherwise specifically provided
for in this Plan.
Section 20. Blue-Pencil. If any provision of this Plan is or becomes or is
deemed invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan, it
shall be stricken and the remainder of the Plan shall remain in full force and
effect.
Section 21. Unfunded Plan. This Plan is an unfunded Plan and participants in
the Plan shall have the status of unsecured creditors of the Company with
respect to the Plan.
Section 22. Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of
this Plan, and shall not be employed in the construction of this Plan.
B-10
SENSIENT TECHNOLOGIES CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
To be held Thursday, April 25, 2002
2:00 p.m. Central Time
Four Seasons Hotel, 120 East Delaware Place
Chicago, Illinois
[LOGO] SENSIENT Sensient Technologies Corporation
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202 proxy
-------------------------- -----
This proxy is solicited on behalf of the Board of Directors of Sensient
Technologies Corporation.
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify on the reverse side.
If no choice is specified, the proxy will be voted "FOR" all nominees listed in
Item 1 and "FOR" Items 2 and 3.
By signing this proxy, you revoke all prior proxies and constitute and appoint
KENNETH P. MANNING and JOHN L. HAMMOND, and each of them, with full power of
substitution, your true and lawful Proxies, to represent and vote, as designated
below, all shares of Common Stock of Sensient Technologies Corporation which you
are entitled to vote at the Annual Meeting of Shareholders of such corporation
to be held at the Four Seasons Hotel, 120 East Delaware Place, Chicago,
Illinois, on Thursday, April 25, 2002, 2:00 p.m. Central Time, and at any
adjournment thereof.
See reverse for voting instructions.
There are three ways to vote your Proxy
| Company# |
| Control# |
----------
Your telephone or Internet vote authorizes the Named Proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EASY *** IMMEDIATE
. Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 11 a.m. (CT) on April 24, 2002.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
. Follow the simple instructions the voice provides you.
VOTE BY INTERNET - http://www.eproxy.com/sxt/ - QUICK *** EASY *** IMMEDIATE
. Use the Internet to vote your proxy 24 hours a day, 7 days a week, until
12:00 p.m. (CT) on April 24, 2002.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card appearing below, then fold this sheet along
the dotted line and return this sheet in the postage-paid envelope we've
provided or return it to Sensient Technologies Corporation, c/o Shareowner
Services, P.O. Box 64873, St. Paul, MN 55164-0873.
If you vote by Phone or Internet, please do not mail your Proxy Card
Savings Plan --401(K) or Employee Stock Ownership Plan-- "ESOP"
The Board of Directors Recommends a Vote FOR all Nominees listed in Item 1 and
FOR Items 2 and 3.
1. Election of directors: 01 Richard A. Abdoo 03 James L. Forbes
02 Alberto Fernandez 04 Robert J. O'Toole
[_] Vote FOR [_] Vote WITHHELD
all nominees from all nominees
(except as marked)
(Instructions: To withhold authority to vote
for any indicated nominee, write the number(s) of | |
the nominee(s) in the box provided to the right.) - -
\/ Please fold here \/
----------------------
2. Proposal to approve the Sensient Technologies Corporation 2002 Stock Option
Plan.
[_] For [_] Against [_] Abstain
3. Proposal to ratify the appointment of Deloitte & Touche LLP, certified public
accountants, as the independent auditors of the Company for fiscal 2002.
[_] For [_] Against [_] Abstain
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
"FOR" ALL NOMINEES LISTED IN ITEM 1 AND "FOR" ITEMS 2 AND 3.
Address Change? Mark Box [_] The undersigned acknowledges receipt of
Indicate Changes below: the Notice of said Annual Meeting and
the accompanying Proxy Statement and
Annual Report.
Date
| |
| |
Signature(s) in Box
Please sign exactly as your
name(s) appear on Proxy. If
held in joint tenancy, all
persons must sign. Trustees,
administrators, etc., should
include title and authority.
Corporations should provide
full name of corporation and
title of authorized officer
signing the proxy.
SENSIENT TECHNOLOGIES CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
To be held Thursday, April 25, 2002
2:00 p.m. Central Time
Four Seasons Hotel, 120 East Delaware Place
Chicago, Illinois
[LOGO] SENSIENT Sensient Technologies Corporation
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202 proxy
-------------------------- -----
This proxy is solicited on behalf of the Board of Directors of Sensient
Technologies Corporation.
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify on the reverse side.
If no choice is specified, the proxy will be voted "FOR" all nominees listed in
Item 1 and "FOR" Items 2 and 3.
By signing this proxy, you revoke all prior proxies and constitute and appoint
KENNETH P. MANNING and JOHN L. HAMMOND, and each of them, with full power of
substitution, your true and lawful Proxies, to represent and vote, as designated
below, all shares of Common Stock of Sensient Technologies Corporation which you
are entitled to vote at the Annual Meeting of Shareholders of such corporation
to be held at the Four Seasons Hotel, 120 East Delaware Place, Chicago,
Illinois, on Thursday, April 25, 2002, 2:00 p.m. Central Time, and at any
adjournment thereof.
See reverse for voting instructions.
There are three ways to vote your Proxy
| Company # |
| Control # |
----------
Your telephone or Internet vote authorizes the Named Proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EASY *** IMMEDIATE
. Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 11 a.m. (CT) on April 24, 2002.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
. Follow the simple instructions the voice provides you.
VOTE BY INTERNET - http://www.eproxy.com/sxt/ - QUICK *** EASY *** IMMEDIATE
. Use the Internet to vote your proxy 24 hours a day, 7 days a week, until
12:00 p.m. (CT) on April 24, 2002.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create
an electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card appearing below, then fold this sheet along
the dotted line and return this sheet in the postage-paid envelope we've
provided or return it to Sensient Technologies Corporation, c/o Shareowner
Services, P.O. Box 64873, St. Paul, MN 55164-0873.
If you vote by Phone or Internet, please do not mail your Proxy Card
The Board of Directors Recommends a Vote FOR all Nominees listed in Item 1
and FOR Items 2 and 3.
1. Election of directors: 01 Richard A. Abdoo 03 James L. Forbes
02 Alberto Fernandez 04 Robert J. O'Toole
[_] Vote FOR [_] Vote WITHHELD
all nominees from all nominees
(except as marked)
(Instructions: To withhold authority to vote
for any indicated nominee, write the number(s) of | |
the nominee(s) in the box provided to the right.)
\/ Please fold here \/
----------------------
2. Proposal to approve the Sensient Technologies Corporation 2002 Stock Option
Plan.
[_] For [_] Against [_] Abstain
3. Proposal to ratify the appointment of Deloitte & Touche LLP, certified public
accountants, as the independent auditors of the Company for fiscal 2002.
[_] For [_] Against [_] Abstain
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
"FOR" ALL NOMINEES LISTED IN ITEM 1 AND "FOR" ITEMS 2 AND 3.
Address Change? Mark Box [_] The undersigned acknowledges receipt of
Indicate Changes below: the Notice of said Annual Meeting and
the accompanying Proxy Statement and
Annual Report.
Date
| |
| |
Signature (s) in Box
Please sign exactly as your
name(s) appear on Proxy. If
held in joint tenancy, all
persons must sign. Trustees,
administrators, etc., should
include title and authority.
Corporations should provide
full name of corporation and
title of authorized officer
signing the proxy.