EXHIBIT 10(b)
July 25, 2001
Xx. Xxxxxx X. Lobbosco
Avda Xxxxxx 1654, 0xx Xxxxx
0000 Xxxxxx Xxxxx
Xxxxxxxxx
Dear Xxxxxx,
This letter will outline the understandings you and International Flavors &
Fragrances Inc. ("IFF" or the "Company") have reached in respect of your
continuing employment with the Company through June 30, 2004 (the "Retirement
Date"), as well as the terms of your retirement. This letter supersedes the
letter agreement between you and IFF dated as of October 1, 1999.
We have agreed as follows:
1. You will continue to serve as Executive Vice President, Global
Business Development, through May 31, 2002 (the "Pre-Retirement
Date"), at your current annual salary of $550,000.
2. You will continue to participate for the years 2001, 2002 and 2003 in
the IFF Annual Incentive Plan (the "AIP") under the 2000 Stock Award
and Incentive Plan ("SAIP"). Your target AIP awards for each year will
be as follows:
Xx. Xxxxxx X. Lobbosco
July 25, 2001
Page 2 of 6 Pages
------------------------------------------- ------------------------------------------
Year AIP Target as a Percentage of Base Salary
------------------------------------------- ------------------------------------------
2001 50
------------------------------------------- ------------------------------------------
2002 37.5
------------------------------------------- ------------------------------------------
2003 25
------------------------------------------- ------------------------------------------
3. You will continue to participate in Cycle I of the IFF Long-Term
Incentive Plan under the SAIP. If no payment is made until after the
completion of Cycle I, your target award will be 75% of your weighted
average base salary during Cycle I. If pursuant to the terms of the
LTIP the Compensation Committee determines that the Company's
performance against the LTIP objectives through June 30, 2002 is
superior, and elects to make a partial payout of the Cycle I target
award, your target award for that partial payout will be 50% of your
weighted average base salary during the period January 1, 2001 through
June 30, 2002. Your target award for the remainder of Cycle I will be
50% of your weighted average base salary from July 1, 2002 through the
Retirement Date.
4. You will not receive any stock option grant in 2002 or in any
subsequent year. You will be entitled to exercise options under the
stock option grants previously made to you pursuant to the terms of
your outstanding Stock Option Agreements.
5. Until the Retirement Date you will continue to participate in the IFF
TCN Pension Plan (the "TCN Plan"). You have requested, and IFF has
agreed, that in lieu of any benefits to which you might otherwise be
entitled under the TCN Plan or any other IFF pension or retirement
plan or program, the Company will make to you upon your retirement
seven annual payments of $604,527 (the "Pension"). Except as set forth
below in this Section 5, the Pension will not be reduced by an offset
for Argentine Social
Xx. Xxxxxx X. Lobbosco
July 25, 2001
Page 3 of 6 Pages
Security,as is contemplated by the TCN Plan. You warrant and represent
to the Company that at age 65 based on your actual compensation to
date and the compensation contemplated by this Agreement through June
30, 2004, your Argentine Social Security benefit will be no greater
than Argentine Peso equivalent, at today's exchange rate, of $1,500
per month. You understand and agree that, in the event that the
Argentine Social Security benefit exceeds $1,500 per month, and/or
there are offsets contemplated by the TCN Plan that, including the
Argentine Social Security benefit, aggregate more than $1,500 per
month, such additional amounts will be used to offset the Pension,
which will be recalculated using the methodology then applicable under
the General Agreement on Tariffs and Trade.
The first annual installment of the Pension will be paid to you in
July 2004, and subsequent installments will be paid in July of each
subsequent year until all seven installments have been paid. The
Pension will be paid to you in your then country of residence (which
you anticipate to be either Argentina or Uruguay) in US Dollars, with
payments coming from IFF in either the United States or the United
Kingdom.
You acknowledge and agree that the payment of the Pension in seven
installments of $604,527 is and will be the only obligation of IFF to
pay you any pension benefit, and you waive any right to any other
pension benefit from IFF.
In the event that you die after the Retirement Date but prior to the
payment of all seven installments of the Pension, the remaining
installments will be paid in full to your surviving spouse or to your
or your spouse's estate, should your spouse not survive until all
seven installments are paid. We have further agreed that, in the event
you should die prior to the Retirement Date, IFF will make to your
surviving spouse seven annual payments of $302,263.50 each, commencing
in the month following your death and at 12-month intervals thereafter
(the "Survivor Pension"). If your spouse dies before the payment of
all seven installments of the Survivor Pension, the
Xx. Xxxxxx X. Lobbosco
July 25, 2001
Page 4 of 6 Pages
remaining payments will be made to her estate. Should you die prior to
the Retirement Date and should your spouse predecease you, you agree
and acknowledge that no Pension or Survivor Pension will be due to
your or your wife's estate.
In the event that for any reason the unfunded pension benefits of
other IFF executive officers are hereafter funded through a transfer
of assets to the Rabbi Trust evidenced by the Trust Agreement dated
October 4, 2000 between IFF and The First Union National Bank, as
Trustee (or to any successor Rabbi Trust), the Pension will also be
similarly funded.
6. From the Pre-Retirement Date through the Retirement Date, you will
remain an employee of IFF, based in Buenos Aires, Argentina and will
perform such services for IFF as I or the then Chief Executive Officer
of the Company may request. During this period your base salary will
be $550,000, and you will continue to participate in the TCN Plan.
7. Until the Retirement Date, (a) you will be covered for disability and
travel insurance under those programs maintained by IFF for its
employees in the United States; (b) you will be covered by life
insurance under IFF's basic and supplemental programs of not less than
US$1,000,000; (c) you and your family will continue to be covered by
the IFF Argentina medical scheme; and (d) you will also continue to be
included in the IFF global medical and dental program, currently
administered by CIGNA, and in the following benefit programs that IFF
maintains for its senior executives: financial counseling/advice from
Xxxxxxxx & Xxxxx and the IFF Executive Separation Policy ("ESP").
Notwithstanding the foregoing, between the Pre-Retirement Date and the
Retirement Date you will be covered by the ESP only for the payments
and benefits that would be due as a result of a "Change-in-Control,"
and for that purpose you will continue to be deemed a "Tier I"
participant in the ESP. After the Retirement Date, you will be
entitled to the benefits then granted by IFF to retired employees of
IFF Argentina.
Xx. Xxxxxx X. Lobbosco
July 25, 2001
Page 5 of 6 Pages
8. Until the Retirement Date, (a) IFF Argentina will also continue to pay
your annual membership fees, up to a maximum of the equivalent in
Argentine Pesos of US$9,000 per year (the "Club Fees"), in the
Argentine Club in Buenos Aires. Should you currently be a member of or
elect to join any other club, all fees and expenses of joining and/or
maintaining your membership in such club will be your sole
responsibility; and (b) you continue to use the automobile that is
currently provided to you by the Company (the "Company Car"). You will
not be entitled to purchase a new Company Car prior to the Retirement
Date, but at your election you may elect to purchase the Company Car
on the Retirement Date at its then value calculated in accordance with
IFF's normal valuation procedure.
9. In the event your employment with IFF is terminated by IFF for any
reason other than for "cause" prior to July 1, 2004, and in connection
with such termination you are not entitled to the benefits under the
ESP, you will retire from IFF employment as of the termination date,
which will be deemed the Retirement Date. In such event, you may elect
(a) to commence receiving the Pension immediately after the Retirement
Date, or (b) in lieu of commencing to receive the Pension at the
Retirement Date, to receive "Salary Continuation Payments" equal to
your monthly base salary at the Retirement Date, for the shorter of
(i) twenty-four (24) months or (ii) if the Retirement Date occurs on
or after July 1, 2002, the number of months between the Retirement
Date and July 1, 2004, after which the Pension will commence (with the
amount of the Pension--including the guaranteed minimum--computed
based on your years of service through the Retirement Date but with a
commencement date based on your age on the actual date on which the
Pension commences). "Cause" will have the same meaning in this
Agreement as in the ESP.
10. The terms of our agreement represent the complete understanding
between you and IFF and may not be changed orally but only in a
writing signed by both you and IFF.
Xx. Xxxxxx X. Lobbosco
July 25, 2001
Page 6 of 6 Pages
11. Our agreement is made and entered into, and will be subject to,
governed by, and interpreted in accordance with the laws of the State
of New York and will be enforceable in the courts of that state,
without regard to principles of conflict of laws.
Xxxxxx, if the terms set forth above accurately reflect our
understanding, please sign the extra copy of this letter and return it to Xxxxx
Xxxxx. If you have any questions, please feel free to contact Xxxxx or me.
Sincerely,
INTERNATIONAL FLAVORS &
FRAGRANCES INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxxxx
Chairman and
Chief Executive Officer
AGREED AND ACCEPTED:
/s/ Xxxxxx X. Lobbosco
----------------------------
Xxxxxx X. Lobbosco
