Notice of 2018 Annual Meeting of Shareholders

Date and Time   Wednesday, May 2, 2018 10:00 a.m. Eastern Daylight Time   Place   International Flavors & Fragrances Inc. 533 W. 57th Street, 9th Floor New York, New York 10019   Items to be Voted On      Elect eleven members of the Board of Directors for a one-year term expiring at the 2019 Annual Meeting of Shareholders.      Ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2018 fiscal year.      Approve, on an advisory basis, the compensation of our named executive officers in 2017.      Transact such other business as may properly come before the 2018 Annual Meeting and any adjournment or postponement of the 2018 Annual Meeting.   Record Date   Only shareholders of record as of the close of business on March 7, 2018 may vote at the 2018 Annual Meeting.   Sincerely,         Andreas Fibig Chairman and Chief Executive Officer March 19, 2018						Live Audio Webcast   A live audio webcast of our 2018 Annual Meeting will be available on our website, www.iff.com, starting at 10:00 a.m. Eastern Daylight Time and a replay will also be available on our website.   Proxy Voting   It is important that your shares be represented at the 2018 Annual Meeting, regardless of the number of shares you may hold. Whether or not you plan to attend, please vote using the Internet, by telephone or by mail, in each case by following the instructions in our proxy statement. Doing so will not prevent you from voting your shares in person if you are present.   Advance Voting Methods
						Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 2, 2018:   Our Notice, Proxy Statement and 2017 Annual Report are available at www.proxyvote.com.   We are making the Proxy Statement and the form of proxy first available on or about March 19, 2018.

PROXY STATEMENT SUMMARY

		We provide below highlights of certain information in this Proxy Statement. As it is only a summary, please refer to the complete Proxy Statement and 2017 Annual Report before you vote.

2017 Highlights

We Continued to Make Strategic and Financial Progress

In 2017, we made notable progress in both our strategic goals and financial performance, and achieved currency neutral growth in all of our key metrics. The recently-enacted Tax Cuts and Jobs Act impacted our reported results for 2017, as we recorded a provisional net charge of $139 million in the fourth quarter of 2017 due to the changes resulting from the Tax Act.

In 2017, our payouts to shareholders, made through a combination of dividends and share repurchases, totaled 56%, consistent with our targeted range of 50% to 60% of adjusted net income*. We increased our quarterly dividend by 8% and our Board extended our repurchase program through December 31, 2022, authorizing a total of $300 million for repurchases under the extended program.

* See reconciliation of GAAP to Non-GAAP financial measures in Exhibit A to this Proxy Statement.

IFF  |  2018 PROXY STATEMENT  i

Proxy Statement Summary SALES* ADJUSTED OPERATING PROFIT* ADJUSTED EPS* Currency Impact Net

PROXY STATEMENT SUMMARY

Vision 2020 Strategy

In 2017, we refreshed our Vision 2020 strategy and continued to execute on the four pillars of the strategy, including the following achievements:

ii  IFF  |  2018 PROXY STATEMENT

PROXY STATEMENT SUMMARY

Corporate Governance Highlights

IFF  |  2018 PROXY STATEMENT  iii

PROXY STATEMENT SUMMARY

Proposal 1       Election of 11     Director Nominees				The Board recommends a vote FOR the election of all Director Nominees   Our Nominating and Governance Committee and our Board have determined that each of the nominees possesses the skills and qualifications to collectively comprise a highly effective Board
				See “Proposal 1 — Election of Directors” beginning on page 1 of this Proxy Statement

Director Nominees

Committee Membership

Name and Primary Occupation

Joined

Age

Indep.

Audit

Comp.

Nom.& Gov.

Marcello V. Bottoli  Partner, Es Vedra Capital Advisors LLP

2007

56

•

Dr. Linda Buck  Full Member, Fred Hutchinson Cancer  Research Center

2007

71

•

•

Michael L. Ducker  President and CEO, FedEx Freight

2014

64

•

•

David R. Epstein  Executive Partner, Flagship Pioneering

2016

56

•

•

Roger W. Ferguson, Jr.  President and CEO, TIAA

2010

66

•

John F. Ferraro  Former Global COO, Ernst & Young

2015

62

•

Andreas Fibig  Chairman and CEO, IFF

2011

56

Christina Gold  Former CEO, The Western Union Company

2013

70

•

•

Katherine M. Hudson  Former CEO, Brady Corporation

2008

71

•

•

Dale F. Morrison (Lead Director)  Founding Partner of TriPointe Capital Partners

2011

69

•

•

•

Stephen Williamson  Senior Vice President and CFO, Thermo Fisher  Scientific

2017

51

•

Committee Chair     Financial Expert

Skills and Qualifications

Our Board continuously evaluates desired attributes in light of the Company’s strategy and needs. Key skills, qualifications and experience currently maintained on the Board include:

iv  IFF  |  2018 PROXY STATEMENT

International and Emerging Markets M&A Operations R&D / Innovation Corporate Governance Sustainability Financial and Accounting Risk and Crisis Management Consumer Products Technology / IT Regulatory

PROXY STATEMENT SUMMARY

Proposal 2   Ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2018 fiscal year				The Board recommends a vote FOR this proposal   Our Board recommends that shareholders vote “FOR” the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2018 fiscal year
				See “Proposal 2 — Ratification of Independent Registered Public Accounting Firm” beginning on page 33 of this Proxy Statement

Proposal 3   Approve, on an advisory basis, the compensation of our named executive officers  in 2017				The Board recommends a vote FOR this proposal   Our Board recommends a vote “FOR” the advisory vote to approve executive compensation for the 2017 performance year
				See “Proposal 3 — Advisory Vote on Executive Compensation” on page 61 of this Proxy Statement and “Compensation Discussion and Analysis” beginning on page 37 of this Proxy Statement

Compensation Governance

Our pay-for-performance compensation program is reflected in the strong compensation governance that we have adopted.

IFF  |  2018 PROXY STATEMENT  v

PROXY STATEMENT SUMMARY

TABLE OF CONTENTS

vi  IFF  |  2018 PROXY STATEMENT

Our Current Board

Our Board of Directors (“Board”) currently has twelve members. Mr. Howell, who has served on our Board since 2004, will retire from our Board at the 2018 Annual Meeting in accordance with our term limit policy. Following the 2018 Annual Meeting, the size of our Board will be reduced to eleven members.

Upon the recommendation of the Nominating and Governance Committee, our Board has nominated eleven of our current directors for election at the 2018 Annual Meeting, each for a one-year term that expires at the 2019 Annual Meeting.

Director Nominee Experience and Qualifications

Board Membership Criteria and Selection

Our Certificate of Incorporation provides that we have at least six but not more than fifteen directors. To ensure independence and to provide the breadth of needed expertise and diversity of our Board, the Board periodically reviews its size and makes appropriate adjustments pursuant to our By-Laws. Our Nominating and Governance Committee, together with other Board members, from time to time, as appropriate, identifies the need for new Board members.

Board candidates are considered based on various criteria which may change over time and as the composition of the Board changes. At a minimum, our Nominating and Governance Committee considers the following factors as part of its review of all director candidates and in recommending potential director candidates:

Proposed director candidates who satisfy the criteria and who otherwise qualify for membership on the Board are identified by the Nominating and Governance Committee. In identifying candidates, the Nominating and Governance Committee seeks input and participation from other Board members and other appropriate sources so that all points of view are considered and the best possible candidates identified. The Nominating and Governance Committee also has engaged a search firm to assist it in

IFF  |  2018 PROXY STATEMENT  1

Proposal 1 – Election of Directors

 PROPOSAL 1 — ELECTION OF DIRECTORS 

identifying potential candidates. Members of the Nominating and Governance Committee and other Board members, as appropriate, interview selected director candidates, evaluate the director candidates and determine which candidates are to be recommended by the Nominating and Governance Committee to the Board. Our Nominating and Governance Committee evaluates the suitability of potential candidates nominated by shareholders in the same manner as other candidates recommended to the Nominating and Governance Committee.

We believe that each of our nominees has the experience, skills and qualities to fully perform his or her duties as a director and to contribute to our success. Each of our nominees is being nominated because he or she adheres to the highest standards of personal integrity and possesses excellent interpersonal and communication skills, is highly accomplished in his or her field, has an understanding of the interests and issues that are important to our shareholders and is able to dedicate sufficient time to fulfilling his or her obligations as a director. Our nominees as a group complement each other and each other’s respective experiences, skills and qualities.

Diversity and Tenure

Diversity is one of the factors that the Nominating and Governance Committee considers in identifying and selecting director nominees. As part of this process, the Nominating and Governance Committee evaluates how a particular candidate would strengthen and increase the diversity of the Board in terms of how that candidate may contribute to the Board’s overall balance of perspectives, backgrounds, knowledge, experience, skill sets and expertise in substantive matters pertaining to our business. To maintain a balance of experience and new perspectives, our Corporate Governance Guidelines also sets guidance on the number of full annual terms that a director can serve on our Board.

We Strive for a Balanced and Diverse Board

2  IFF  |  2018 PROXY STATEMENT

 PROPOSAL 1 — ELECTION OF DIRECTORS 

Shareholder Nominations and Proxy Access

Under our By-Laws, if a shareholder wishes to submit a director candidate for consideration by the Nominating and Governance Committee, or wishes a director nomination to be included in the Company’s proxy statement for an annual meeting pursuant to our proxy access by-law, the shareholder must deliver or mail notice of the request to the Company’s Corporate Secretary, in writing, so that it is received not less than 90 days nor more than 120 days prior to the anniversary date of the prior year’s annual meeting of shareholders. However, if the annual meeting is not within 30 days of the anniversary date of the prior year’s annual meeting, such notice must be received by the Corporate Secretary no later than 10 days following the mailing of notice of the annual meeting or public disclosure of the annual meeting date, whichever occurs first. The notice must be accompanied by the information concerning the director candidate and nominating shareholder described in Article I, Section 3 and Section 4 of our By-Laws. The Nominating and Governance Committee may also request any additional background or other information from any director candidate or recommending shareholder as it may deem appropriate. Our proxy access by-law permits an eligible shareholder (or group of up to 20 eligible shareholders) who owns shares representing at least 3% of our outstanding shares, and has held the shares for at least 3 years, to nominate and include in our proxy materials for an annual meeting director candidates constituting up to 20% of our Board.

Continued Service

The Nominating and Governance Committee annually reviews each current Board member’s suitability for continued service as a member of our Board and recommends to the Board whether such member should be re-nominated. In addition, each director is required to promptly tender his or her resignation to the Chair of the Nominating and Governance Committee if, during his or her tenure as a director, such director:

so that the Nominating and Governance Committee can review the change and make a recommendation to the full Board regarding the director’s continued service. Such resignation becomes effective only upon acceptance by the Board.

IFF  |  2018 PROXY STATEMENT  3

 PROPOSAL 1 — ELECTION OF DIRECTORS 

Nominees for Director

Marcello V. Bottoli

4  IFF  |  2018 PROXY STATEMENT

 PROPOSAL 1 — ELECTION OF DIRECTORS 

Dr. Linda Buck

IFF  |  2018 PROXY STATEMENT  5

 PROPOSAL 1 — ELECTION OF DIRECTORS 

Michael L. Ducker

6  IFF  |  2018 PROXY STATEMENT

 PROPOSAL 1 — ELECTION OF DIRECTORS 

David R. Epstein

IFF  |  2018 PROXY STATEMENT  7

 PROPOSAL 1 — ELECTION OF DIRECTORS 

Roger W. Ferguson, Jr.

8  IFF  |  2018 PROXY STATEMENT

 PROPOSAL 1 — ELECTION OF DIRECTORS 

John F. Ferraro

IFF  |  2018 PROXY STATEMENT  9

 PROPOSAL 1 — ELECTION OF DIRECTORS 

Andreas Fibig

10  IFF  |  2018 PROXY STATEMENT

 PROPOSAL 1 — ELECTION OF DIRECTORS 

Christina Gold

IFF  |  2018 PROXY STATEMENT  11

 PROPOSAL 1 — ELECTION OF DIRECTORS 

Katherine M. Hudson

12  IFF  |  2018 PROXY STATEMENT

 PROPOSAL 1 — ELECTION OF DIRECTORS 

Dale F. Morrison

IFF  |  2018 PROXY STATEMENT  13

 PROPOSAL 1 — ELECTION OF DIRECTORS 

Stephen Williamson

14  IFF  |  2018 PROXY STATEMENT

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) that applies to all of our employees, including our Chief Executive Officer (“CEO”), our Chief Financial Officer (“CFO”) and our Chief Accounting Officer. We also have adopted a Code of Conduct for Directors and a Code of Conduct for Executive Officers (together with the Code of Ethics, the “Codes”). The Codes are available through the Investor—Leadership & Governance—Governance link on our website, www.iff.com.

Only the Board or the Audit Committee may grant a waiver from any provision of our Codes in favor of a director or executive officer, and any such waiver and any amendments to the Codes will be publicly disclosed on our website, www.iff.com.

Shareholder Engagement

We regularly engage with our shareholders to better understand their perspectives on our Company, including our strategies, performance, matters of corporate governance and executive compensation. This dialogue has helped inform the Board’s decision-making and ensure our interests remain well-aligned with those of our shareholders. During 2017, we interacted with our largest active shareholders, representing approximately two-thirds of our outstanding shares. We believe that all of these engagements provide valuable feedback and this feedback is shared regularly with our Board and its relevant committees. As a result of the feedback we received from our shareholders in the past few years, we have, among other things, raised our annual dividend, executed our share repurchase program, pursued value-creating acquisitions, completed a perception study on capital allocation preferences, and increased our investor relations exposure with enhanced marketing in key markets in the United States and across continental Europe.

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines which set forth our governance principles relating to, among other things:

Pursuant to our Corporate Governance Guidelines, a person that has served for twelve consecutive, full annual terms on our Board cannot continue to serve as a director following the twelfth year of service, unless:

A director’s first full annual term begins on the date he or she is first elected at an annual meeting of shareholders and continues until the next annual meeting of shareholders. Unless a director is an employee of our Company, prior to the conclusion of the twelfth full annual term, the director shall submit his or her resignation as a director effective immediately prior to that year’s annual meeting of shareholders.

IFF  |  2018 PROXY STATEMENT  15

Corporate Governance

 CORPORATE GOVERNANCE 

The Nominating and Governance Committee reviews our Corporate Governance Guidelines annually, and recommends changes to the Board as appropriate. A copy of our Corporate Governance Guidelines is available through the Investor—Leadership & Governance—Governance link on our website, www.iff.com.

Sustainability Initiatives

Sustainability is an important part of how we do business. We have developed a sustainability strategy that is underpinned by the concept of a circular economy and guided by our vision to lead positive transformational changes toward a regenerative, healthy and abundant world. We aim to implement these principles in the way we design and manufacture our products, and in the way we treat our employees as well as the communities in which we operate.

In 2017, IFF was named by CDP to the Climate “A” list for the third consecutive year as a reflection of our leadership in carbon management. CDP also awarded IFF leadership status for our water management strategy. Additional achievements in 2017 included:

From the raw materials we source responsibly, to our eco-efficient manufacturing facilities and carefully designed products, we will continue our efforts to make a positive difference in the world.

Independence of Directors

Pursuant to our Corporate Governance Guidelines, the Board undertakes an annual review of director independence, which includes a review of each director’s responses to questionnaires asking about any relationships with the Company. This review is designed to identify and evaluate any transactions or relationships between a director or any member of his or her immediate family and the Company or members of our senior management.

The Board has affirmatively determined that each of our current directors (other than Mr. Fibig, our CEO) meets our independence requirements and those of the NYSE’s corporate governance listing standards:

16  IFF  |  2018 PROXY STATEMENT

 CORPORATE GOVERNANCE 

In the ordinary course of business, transactions may occur between the Company or members of our senior management and entities with which some of our directors are or have been affiliated. During 2017, in connection with its evaluation of director independence, our Board reviewed transactions between the Company and any company where our directors or their family members serve as executive officers. Specifically, (i) in the ordinary course of business, we utilize the services of FedEx Freight, of which Mr. Ducker serves as President and Chief Executive Officer, (ii) in the ordinary course of business we purchase services from, and sell products and services to Thermo Fisher Scientific, a life sciences and healthcare technology company, of which Mr. Williamson serves as Senior Vice President and Chief Financial Officer, and (iii) one of our executive officers has purchased an immaterial interest in a co-investment vehicle managed by Mr. Bottoli. The Board determined that none of these transactions impaired the independence of the respective director.

Board Leadership Structure

As stated in our Corporate Governance Guidelines, the Board does not have a policy that requires a separation of the Chairman of the Board (“Chairman”) and CEO positions. The Board believes that it is important to have the flexibility to make this determination from time to time based on the particular facts and circumstances then affecting our business.

Currently, we combine the positions of Chairman and CEO. We believe that the CEO, as the Company’s chief executive, is in the best position to fulfill the Chairman’s responsibilities, including those related to identifying emerging issues facing our Company, and communicating essential information to the Board about our performance and strategies. We also believe that the combined role of Chairman and CEO provides us with a distinct leader and allows us to present a single, uniform voice to our customers, business partners, shareholders and employees. If at any point in time the Board feels that its current leadership structure may be better served by separating the roles of Chairman and CEO, it may then determine to separate these positions.

In order to mitigate potential disadvantages of a combined Chairman and CEO, the Board has created the position of Lead Director to facilitate and strengthen the Board’s independent oversight of our performance, strategy and succession planning and to promote effective governance standards. The independent directors of the Board elect a Lead Director from among the independent directors. Our current Lead Director is Mr. Morrison.

IFF  |  2018 PROXY STATEMENT  17

 CORPORATE GOVERNANCE 

Board Committees

Our Board has an Audit Committee, a Compensation Committee and a Nominating and Governance Committee, each of which operates under a written charter adopted by the Board. Each Committee reviews its charter at least annually and recommends charter changes to the Board as appropriate. In 2017, each of the Audit Committee, Compensation Committee and the Nominating and Governance Committee reviewed its charter, and amended it where appropriate. Each Committee charter provides that the Committee will annually review its performance, and each Committee reviewed and discussed its performance in 2017. A current copy of each of the Audit Committee, Compensation Committee and Nominating and Governance Committee charters is available through the Investor—Leadership & Governance—Governance link on our website, www.iff.com.

The table below provides the current membership and chairperson for each of our Committees and identifies our current Lead Director.

Name		Audit		Compensation		Nominating and Governance		Lead Director
Marcello V. Bottoli		●
Dr. Linda Buck						●
Michael L. Ducker				●
David R. Epstein						●
Roger W. Ferguson, Jr.
John F. Ferraro
Christina Gold				●
Henry W. Howell, Jr.		●*				●*
Katherine M. Hudson				●
Dale F. Morrison		●		●		●		●
Stephen Williamson		●

= Committee Chair

* = Effective as of the 2018 Annual Meeting, Mr. Howell will retire from the Board.

Board and Committee Meetings

Our Board held six meetings during 2017. The Audit Committee held seven meetings, the Compensation Committee held five meetings and the Nominating and Governance Committee held six meetings during 2017. All incumbent directors attended at least 75% of the total Board and Committee meetings on which he or she served during 2017. All of our directors who were serving on the day of last year’s annual meeting of shareholders attended that meeting. Under our Corporate Governance Guidelines, unless there are mitigating circumstances, such as medical, family or business emergencies, Board members should endeavor to participate in all Board meetings and all Committee meetings of which the director is a member and to attend our annual meeting of shareholders. Our non-employee directors, all of whom are currently independent, meet in executive session, without the presence of any corporate officer or member of management, in conjunction with regular meetings of the Board and Committees.

18  IFF  |  2018 PROXY STATEMENT

 CORPORATE GOVERNANCE 

Audit Committee

IFF  |  2018 PROXY STATEMENT  19

 CORPORATE GOVERNANCE 

Compensation Committee

20  IFF  |  2018 PROXY STATEMENT

 CORPORATE GOVERNANCE 

IFF  |  2018 PROXY STATEMENT  21

 CORPORATE GOVERNANCE 

Nominating and Governance Committee

22  IFF  |  2018 PROXY STATEMENT

 CORPORATE GOVERNANCE 

Board and Committee Assessment Process

Each year, the Nominating & Governance Committee leads an evaluation of the effectiveness of the Board and each of its committees. Each member of the Board and each member of the Board committees responds to an anonymous survey regarding the effectiveness of the Board, its committees and their leadership, and the dynamics between the Board and management. The Board supplements this process through the use of in-person director interviews every other year during which the Lead Director and the Chair of the Nominating & Governance Committee interviews each director to obtain his or her assessment of the effectiveness of the Board and its committees. After consulting with each other, the Lead Director and Chair of the Nominating & Governance Committee summarize and review the results with the Board and each Board committee.

Succession Planning

Our Board recognizes that one of its most important duties is to ensure excellence and continuity in our senior leadership by overseeing the development of executive talent and planning for the effective succession of our Chairman and CEO and other senior members of executive management. As part of this process, our CEO and our executive officers are required to prepare a detailed development and succession plan for themselves and for their direct reports on an annual basis. The Company’s executives regularly attend Board meetings and maintain an ongoing dialogue with Board members, which is critical to the Company’s succession planning. The Compensation Committee reviews, on an annual basis, potential successors for the Company’s executive officers and such other senior management employees as the Compensation Committee may determine. In addition, the Nominating and Governance Committee also agrees upon and recommends to the Board a succession plan for our CEO, including in emergency situations. Our Board is committed to being prepared for a planned or unplanned change in our leadership in order to ensure our stability.

Risk Management Oversight

Board Role in Overseeing Risk

Our Board is actively involved in the oversight of risks that could affect our Company and is responsible for overseeing and reviewing with management the Company’s enterprise-wide risks and the policies and practices established to manage such risks. It is the responsibility of the CEO and other senior management to manage the Company’s day-to-day business risks and its risk management process. We believe this division of responsibility is the most effective approach for addressing risk management.

Management maintains an enterprise risk management (“ERM”) program which is designed to identify and assess our global risks and to develop steps to mitigate and manage risks. As part of its risk management practices, the Company has established a management risk committee made up of key members of the Company’s management to integrate global risk activities (including cybersecurity, compliance, business and crisis management) and to ensure appropriate prioritization of resources and alignment across the Company. The Board receives regular reports on the ERM process and the Company’s risk mitigation activities. The full Board focuses on operational risk, financial risk, regulatory risk, litigation risk, cybersecurity and information security risk, tax risk, credit risk, and liquidity risk, as well as our general risk management strategy, and how these risks are being managed. The Audit Committee is primarily responsible for assisting the Board in its responsibility to oversee and review with management financial risks and the policies and practices established to manage such risks, and also oversees and reviews procedures for monitoring compliance with laws and regulations and our Code of Business Conduct and Ethics. The Compensation Committee is primarily responsible for overseeing the management of risks associated with compensation policies and practice, our compensation plans (including equity compensation plans and programs), severance, change in control and other employment-related matters. The Nominating and Governance Committee monitors the Company’s governance risk and CEO succession risk.

IFF  |  2018 PROXY STATEMENT  23

 CORPORATE GOVERNANCE 

Compensation Risks

In the fourth quarter of 2017, the Compensation Committee, working with its independent compensation consultant, conducted a risk assessment of our executive compensation programs. The goal of this assessment was to determine whether the general structure of our executive compensation policies and programs, annual and long-term performance goals or the administration of the programs posed any material risks to our Company. In addition, with the input of our CHRO, the Compensation Committee reviewed compensation programs and policies below the executive level in a Company-wide risk assessment. The Compensation Committee shared the results of this review with our full Board.

The Compensation Committee determined, based on the reviews of its independent compensation consultant and management’s input and other factors, that the compensation policies and practices for the Company’s employees in 2017, including the established performance goals and incentive plan structures, did not result in excessive risk taking or the implementation of inappropriate business decisions or strategies by the Company’s executives or employees generally, and that there are no risks arising from our compensation policies and practices for our employees that are reasonably likely to have a material adverse effect on the Company.

Related Person Transactions and Other Information

Transactions with Related Persons

In 2017, there were no transactions and there are no currently proposed transactions in excess of $120,000 in which the Company was or will be a participant and in which any director or executive officer of the Company, any known 5% or greater shareholder of the Company or any immediate family member of any of the foregoing persons, had or will have a direct or indirect material interest as defined in Item 404(a) of Regulation S-K.

Related Person Transactions Policy

In accordance with SEC rules, our Board has adopted a written policy for the review and the approval of related person transactions. This policy is available through the Investor-Leadership & Governance-Governance link on our website, www.iff.com. Under the policy, a “related person” is specifically defined as an executive officer, a director, a director nominee, a beneficial owner of more than 5% of any class of voting securities, an immediate family member of any of the foregoing, or a controlled entity, which is defined as an entity owned or controlled by any of the foregoing or in which any such person serves as an officer or partner, or together with all of the foregoing persons, owns 5% or more equity interests. The policy defines a “related person transaction” as a transaction or series of transactions involving a related person and the Company, excluding employment arrangements involving an executive officer or other senior officer or employee of the Company and director compensation arrangements. The policy requires that any such transaction be approved or ratified by the Nominating and Governance Committee. If accounting issues are involved in the transaction, the Nominating and Governance Committee will consult with the Audit Committee if deemed appropriate.

Pursuant to the policy, a related person transaction will be approved or ratified only if the Nominating and Governance Committee determines that it is being entered into in good faith and on fair and reasonable terms which are in the best interest of our Company and our shareholders. In determining whether to approve or ratify a transaction, the Nominating and Governance Committee considers the following factors, to the extent relevant:

24  IFF  |  2018 PROXY STATEMENT

 CORPORATE GOVERNANCE 

No related person may participate in the review of a transaction in which he or she may have an interest. In addition, except for non-discretionary contributions made pursuant to our matching contributions program, a charitable contribution by our Company to an organization in which a related person is known to be an officer, director or trustee, is subject to approval by the Nominating and Governance Committee. In 2017, there were no related person transactions presented under the policy.

Other Information

On August 5, 2008, the SEC approved a settlement with Ernst & Young LLP and two of its partners, including Mr. Ferraro, relating to auditor independence issues arising out of business relationships between Ernst & Young LLP and an individual who was also a member of the board of directors of three of its audit clients. The matter arose out of actions taken by Mr. Ferraro in 2002 in his role as Vice Chairman of Ernst & Young LLP. Ernst & Young LLP and Mr. Ferraro resolved that matter by way of a negotiated settlement in which the respondents neither admitted nor denied the underlying allegations and accepted an administrative cease and desist order. The negotiated resolution did not involve any suspension, fines or other sanctions against Mr. Ferraro. Mr. Ferraro thereafter remained a partner in good standing at Ernst & Young LLP until he retired in January 2015. Our Board took into consideration all factors regarding Mr. Ferraro’s character and experience and believes that he is a significant asset to the Board.

Share Retention Policy

We encourage our executives and directors to own our common stock so that they share the same long-term investment risk as our shareholders. Our Share Retention Policy provides executives and directors flexibility in personal financial planning, yet requires them to maintain ongoing and substantial investment in our common stock.

Under our Share Retention Policy, each executive and director must retain shares of Company common stock at a targeted ownership level. There is no deadline by which an executive or director must meet his or her targeted ownership level. The targeted ownership level for directors is five times the cash portion of the annual retainer (not including any retainer for service as a committee chairperson or lead director). The targeted ownership levels for executives are:

If an executive or director does not meet the targeted ownership level, the executive or director may not sell or transfer any shares held in an equity, a deferred compensation or a retirement plan account provided by the Company, and the executive or director must retain such shares in such accounts until the targeted ownership level is met. For executives, if their retention requirement is not met, the executive is required to retain a portion of any shares of common stock acquired as a result of exercising any stock settled appreciation right (“SSAR”) or as a result of the vesting of restricted stock or a restricted stock unit (“RSU”) (after payment of any exercise price and taxes).

IFF  |  2018 PROXY STATEMENT  25

 CORPORATE GOVERNANCE 

As of March 7, 2018, all of our named executive officers and directors were in compliance with our Share Retention Policy. Additional detail regarding ownership of our common stock by our executive officers and directors is included in this proxy statement under the heading “Securities Ownership of Management, Directors and Certain Other Persons.”

Equity Grant Policy

The Compensation Committee has adopted an Equity Grant Policy with respect to the issuance of equity awards under our equity plans. Under the Equity Grant Policy, the Compensation Committee approves all equity awards to our executives other than our CEO, and our Board approves all equity awards to our CEO and to our non-employee directors. The grant date for annual awards to all employees and for annual awards to our non-employee directors is the date of the Company’s annual meeting of shareholders. The grant date for awards under our Long-Term Incentive Plan (“LTIP”) is the date that the Compensation Committee (or Board in the case of our CEO) approves the applicable LTIP metrics. In addition to the annual grants, equity awards may be granted “off-cycle” at other times during the year to new hires, employees receiving promotions, director appointments and in other special circumstances. The grant price of equity awards (other than LTIP awards) is the closing price of our common stock on the NYSE on the date of the grant or, if the grant date is not a business day, the closing price on the NYSE on the following business day. The grant price for LTIP awards is the 20-day trailing average price of our common stock on the NYSE as of the first trading day of the applicable LTIP performance cycle.

Policy Regarding Derivatives, Short Sales, Hedging and Pledges

Under our insider trading policy, directors and all employees, including our named executive officers, are prohibited from entering into transactions designed to hedge against economic risks associated with an investment in our common stock. These individuals may not trade in derivatives in our securities (such as put and call options), effect “short sales” of our common stock, or enter into monetization transactions or similar arrangements (such as prepaid variable forwards, equity swaps, collars or exchange funds) relating to our securities. These individuals are also prohibited from holding shares of our common stock in margin accounts or pledging shares of our common stock as collateral for a loan.

26  IFF  |  2018 PROXY STATEMENT

Director Compensation Program

Annual Director Cash and Equity Compensation

Under our non-employee director compensation program, for the service year from the 2017 Annual Meeting of Shareholders (the “2017 Annual Meeting”) to the 2018 Annual Meeting, each non-employee director received an annual retainer of $235,000, of which $112,500 was paid in cash and $122,500 was paid in RSUs issued under our 2015 Stock Award and Incentive Plan (“2015 SAIP”) on the date of the 2017 Annual Meeting. These RSUs vest one year from the grant date and are subject to accelerated vesting upon a change in control. The 882 RSUs granted to each director on the date of the 2017 Annual Meeting was calculated using the closing market price of our common stock on the grant date. Any director who is an employee of our Company does not receive any additional compensation for his or her service as a director.

Compensation for our Lead Director and Committee Chairs

For the service year from the 2017 Annual Meeting to the 2018 Annual Meeting, the Lead Director received an additional annual cash retainer of $20,000, the Chair of the Audit Committee received an additional annual cash retainer of $17,500, the Chair of the Compensation Committee received an additional annual cash retainer of $15,000 and the Chair of the Nominating and Governance Committee received an additional annual cash retainer of $12,500.

Participation in our Deferred Compensation Plan

Non-employee directors are eligible to participate in our Deferred Compensation Plan (“DCP”). A non- employee director may defer all or a portion of his or her cash compensation as well as any RSUs granted to him or her, subject to tax law requirements. Additional details regarding our DCP may be found in this proxy statement under the heading “Executive Compensation—Non-Qualified Deferred Compensation.” Non-employee directors are not entitled to matching contributions or the 25% premium on deferrals into our common stock fund that are applicable to employees under the DCP.

Additional Benefits

We reimburse our non-employee directors for travel and lodging expenses incurred in connection with their attendance at Board and Committee meetings, our shareholder meetings and other Company-related activities. In addition, our current directors are eligible to participate in our Matching Gift Program. Under this program, we match, on a dollar for dollar basis, contributions made by directors to qualifying charitable organizations up to a maximum of $10,000 per person per year.

IFF  |  2018 PROXY STATEMENT  27

Director’s Compensation

 DIRECTORS’ COMPENSATION 

The following table details the compensation paid to or earned by our non-employee directors for the year ended December  31, 2017.

2017 Directors’ Compensation

28  IFF  |  2018 PROXY STATEMENT

 DIRECTORS’ COMPENSATION 

The deferred shares, which are held under the DCP, result from deferral of vested equity grants, voluntary deferral of retainer fees or the
crediting of additional share units as a result of reinvestment of dividend equivalents. Deferred shares will be settled by delivery of common stock upon the director’s separation from service on the Board, or as otherwise elected by the director. All of the deferred shares are included for each director in the Beneficial Ownership Table.

IFF  |  2018 PROXY STATEMENT  29

Directors and Executive Officers

The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 7, 2018, by each current director, each director nominee, the persons named in the Summary Compensation Table in this proxy statement and all current directors and executive officers as a group. To our knowledge, except as otherwise indicated, beneficial ownership includes sole voting and dispositive power with respect to all shares.

30  IFF  |  2018 PROXY STATEMENT

Securities Ownership

 SECURITIES OWNERSHIP 

IFF  |  2018 PROXY STATEMENT  31

 SECURITIES OWNERSHIP 

5% Shareholders

The following table sets forth information regarding each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, as of March 7, 2018, based on a review of filings with the SEC. Unless otherwise indicated, beneficial ownership is direct.

32  IFF  |  2018 PROXY STATEMENT

Selection of our Independent Registered Public Accounting Firm

The Audit Committee of our Board is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. To execute this responsibility, the Audit Committee engages in a comprehensive annual evaluation of the independent registered public accounting firm’s qualifications, performance and independence to determine whether the independent registered public accounting firm should be rotated, and considers the advisability and potential impact of selecting a different independent registered public accounting firm.

The Audit Committee has selected PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for 2018, and our Board has directed that our management submit that selection for ratification by our shareholders at the 2018 Annual Meeting. PwC has been retained as our external auditor continuously since 1957. In connection with the selection of PwC, the Audit Committee annually reviews and negotiates the terms of the engagement letter entered into with PwC. This letter sets forth important terms regarding the scope of the engagement, associated fees, payment terms, responsibilities of each party and the election of the parties to be subject to binding arbitration in the case of any dispute.

In accordance with SEC rules and PwC policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide audit service to our Company. For lead and quality review audit partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of our lead audit partner pursuant to this rotation policy involves a meeting between the Chair of the Audit Committee and the candidate for the role, as well as discussion by the full Audit Committee and management.

The Audit Committee and the Board believe that the continued retention of PwC as our independent registered public accounting firm is in the best interest of the Company and our shareholders, and we are asking our shareholders to ratify the selection of PwC as our independent registered public accounting firm for 2018. Although ratification is not required by our By-Laws or otherwise, we are submitting the selection of PwC to our shareholders for ratification because we value our shareholders’ views on our Company’s independent registered public accounting firm and as a matter of good corporate governance. The Audit Committee will consider the outcome of our shareholders’ vote in connection with the Audit Committee’s selection of our independent registered public accounting firm in the next fiscal year, but is not bound by the shareholders’ vote. Even if the selection is ratified, the Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time if it determines that a change would be in the best interests of our Company and our shareholders.

Representatives of PwC are expected to attend the 2018 Annual Meeting, where they will be available to respond to questions and, if they desire, to make a statement.

IFF  |  2018 PROXY STATEMENT  33

Proposal 2 – Ratification of Independent Registered Public Accounting Firm

 PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

Principal Accountant Fees and Services

The following table provides detail about fees for professional services rendered by PwC for the years ended December 31, 2017 and December 31, 2016.

Pre-Approval Policies and Procedures for Audit and Permitted Non-Audit Services

Consistent with requirements of the SEC and the Public Company Accounting Oversight Board (PCAOB) regarding auditor independence, the Audit Committee has responsibility for:

In recognition of this responsibility, the Audit Committee has established policies and procedures to pre-approve all audit and non-audit services to be provided by the independent registered public accounting firm to our Company by category, including audit-related services, tax services and other permitted non-audit services. Under the policy, the Audit Committee pre-approves all services obtained from our independent registered public accounting firm by category of service, including a review of specific services to be performed, fees expected to be incurred within each category of service and the potential impact of such services on auditor independence. The term of any pre-approval is for the financial year, unless the Audit Committee specifically provides for a different period in the pre-approval.

34  IFF  |  2018 PROXY STATEMENT

 PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

If it becomes necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval, the Audit Committee requires separate pre-approval before engaging the independent registered public accounting firm. To facilitate the process, the policy delegates pre-approval authority to the Audit Committee chairperson to pre-approve services up to $20,000, and the Audit Committee may also delegate authority to one or more of its members to pre-approve services. The Audit Committee member to whom such authority is delegated must report, for informational purposes, any pre-approval decisions to the Audit Committee at its next scheduled meeting.

All services rendered by PwC to our Company are permissible under applicable laws and regulations. During 2017, all services performed by PwC which were subject to the SEC’s pre-approval requirements were approved by the Audit Committee in accordance with the Audit Committee’s pre-approval policy in effect during 2017.

Audit Committee Report

The Audit Committee (“we,” “us” or the “Committee”) operates in accordance with a written charter, which was adopted by the Board. A copy of that charter is available through the Investor—Leadership & Governance—Governance link on the Company’s website at www.iff.com. The Committee is composed of five directors whom the Board has determined are “independent,” as required by the applicable listing standards of the NYSE and the rules of the SEC, and whom qualify as “audit committee financial experts” as defined by the rules of the SEC.

Management has the primary responsibility for the financial statements and the reporting process, including internal control over financial reporting and disclosure controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), is responsible for performing an integrated audit of the Company’s financial statements and internal control over financial reporting in accordance with the auditing standards of the Public Company Accounting Oversight Board (“PCAOB”).

The Committee oversees the Company’s financial reporting process and internal control structure on behalf of the Board. We met seven times during 2017, including meeting regularly with PwC and the Company’s internal auditor, both privately and with management present. For 2017, we have reviewed and discussed the Company’s audited financial statements with management. We have reviewed and discussed with management its process for preparing its report on its assessment of the Company’s internal control over financial reporting, and at regular intervals we received updates on the status of this process and actions taken by management to respond to issues and deficiencies identified. We discussed with PwC its audit of the financial statements and of the Company’s internal control over financial reporting. We discussed with PwC and the Company’s internal auditor the overall scope and plans for their respective audits.

We have discussed with PwC the matters required to be discussed by PCAOB Auditing Standard No. 1301, Communications with Audit Committees. We also received the written disclosures and the letter from PwC as required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and discussed with PwC its independence. We concluded that PwC’s independence was not adversely affected by the non-audit services provided by PwC, the majority of which consisted of audit-related and tax compliance services.

Based on the reviews and discussions referred to above, we recommended to the Board (and the Board subsequently approved our recommendation) that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC on February 27, 2018.

IFF  |  2018 PROXY STATEMENT  35

 PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

In determining whether to retain PwC as the Company’s independent registered public accounting firm for the 2018 fiscal year, we took into consideration a number of factors, including:

Based on this evaluation, we believe that it is in the best interests of the Company and its shareholders to retain PwC as the Company’s independent registered public accounting firm for 2018, which the shareholders will be asked to ratify at the 2018 Annual Meeting of Shareholders.

Audit Committee

John F. Ferraro (Chair)

Marcello V. Bottoli

Henry W. Howell, Jr.

Dale F. Morrison

Stephen Williamson

36  IFF  |  2018 PROXY STATEMENT

Reference Guide to our CD&A

This Compensation Discussion and Analysis, or CD&A, describes and analyzes our executive compensation philosophy and program in the context of the compensation paid during the last fiscal year to our chief executive officer, our chief financial officer and each of our three most highly compensated executive officers during 2017 (collectively referred to as our NEOs). This CD&A is organized as follows:

As discussed in Proposal 3, we are conducting our annual Say on Pay vote that requests your approval of the compensation of our NEOs as described in this section and in the tables and accompanying narrative contained below under “Executive Compensation.” To assist you with this vote, please review our compensation philosophies, the design of our executive compensation programs and how, we believe, these programs have contributed to and are aligned with our performance.

Executive Summary

For 2017 our NEOs were:

IFF  |  2018 PROXY STATEMENT  37

Compensation Discussion and Analysis

 COMPENSATION DISCUSSION AND ANALYSIS 

Compensation Philosophy

The core of our executive compensation philosophy is that our executives’ compensation should be linked to achievement of financial and operating performance metrics that build shareholder value over both the short- and long-term. As such, we consistently focus on the following key drivers of shareholder value maximization:

We designed our compensation program to focus on elements that we believe will contribute to these shareholder value drivers. Our compensation program:

38  IFF  |  2018 PROXY STATEMENT

Financial Results Acquisitions Dividends Share Repurchase Increase Shareholder Value Is Variable and Tied to Value Creating Performance Metrics Includes a Significant Equity Component Shareholder Value Reflects Each Executive’s Level of Responsibility Rewards Individual Performance and Contributions

 COMPENSATION DISCUSSION AND ANALYSIS 

The design of our executive compensation program reflects our belief that our executive compensation should be (1) aligned with the achievement of financial and operational metrics for both our company and the respective business function in which the executive serves and (2) tied to the total shareholder return delivered to our shareholders. The following illustrates how our 2017 executive compensation program met these design objectives by tying a significant portion of our executives’ compensation to variable and long-term goals:

Our 2017 NEO Compensation Reflects Our Overall 2017 Performance

During 2017, we achieved currency neutral growth in all of our key metrics. For the year, on a currency neutral basis, we achieved 9% sales growth, 5% adjusted operating profit growth, and 9% adjusted earnings per share growth. In addition, we delivered a three-year Total Shareholder Return at approximately the 70th percentile relative to the S&P 500. As a result of our financial and operational results, (1) our Annual Incentive Plan (“AIP”) achievement levels were approximately 110% for those executive officers evaluated at the corporate level, 92% for our Group President, Fragrances and 123% for our Group President, Flavors and (2) our 2015-2017 LTIP payout was approximately 123% of target.

IFF  |  2018 PROXY STATEMENT  39

CEO Target Opportunity Mix Fixed vs. Variable Variable Short–Term v. Long-Term Long Term Cash v. Equity NEO Average (excluding CEO) Target Opportunity Mix Fixed vs. Variable Variable Short-Term v. Long-Term Long-Term Cash v. Equity

 COMPENSATION DISCUSSION AND ANALYSIS 

In 2017, we refreshed our Vision 2020 strategy, which focuses on four pillars to drive differentiation, accelerate profitable growth, and increase shareholder value.

Vision 2020 Refreshed Strategy

During 2017, we made significant progress on our Vision 2020 strategic objectives including:

40  IFF  |  2018 PROXY STATEMENT

 COMPENSATION DISCUSSION AND ANALYSIS 

During 2017, we paid $206 million in dividends to our shareholders, increased our quarterly dividend by 8% to $0.69 per share in August 2017, and repurchased approximately 459,000 shares of common stock for $58 million. The total payout ratio (total cash returned to shareholders in dividend payments and share repurchases compared to adjusted net income) was 56% of adjusted net income, consistent with our target range of 50% to 60%.

Compensation Governance

To ensure continued alignment of compensation with Company performance and the creation of shareholder value on a long-term, sustainable basis, we maintain strong compensation-related corporate governance policies.

IFF  |  2018 PROXY STATEMENT  41

 COMPENSATION DISCUSSION AND ANALYSIS 

Compensation Elements and Targeted Mix

Our executive compensation program includes direct and indirect compensation elements.

We believe that direct compensation should be the principal form of compensation. The table below provides a brief description of the principal elements of direct compensation, whether such compensation is fixed or variable, and the compensation program objectives served by each element. From time to time, the Committee may also approve discretionary awards to executives in connection with their initial employment or for extraordinary individual performance, a significant contribution to the Company’s strategic objectives or retention purposes.

The Committee periodically reviews the mix between variable and fixed and short-term and long-term incentive compensation opportunities and between cash and non-cash opportunities based on (1) benchmarking and other external data provided by our independent compensation consultant, (2) recommendations from our independent compensation consultant and (3) recommendations from our CEO and CHRO.

Our indirect compensation elements consist of (1) our Deferred Compensation Program and 401(k) savings plan, (2) a perquisite program, (3) severance and other benefits under our Executive Severance Policy, (4) benefits under an Executive Death Benefit Plan and (5) long-term disability coverage. The Committee regularly reviews the costs and benefits of these programs.

42  IFF  |  2018 PROXY STATEMENT

 COMPENSATION DISCUSSION AND ANALYSIS 

2017 Compensation

Salaries

The Committee reviews the salaries of our NEOs annually, and adjusts salaries periodically. In February 2017, the Committee reviewed the base salaries of its NEOs after consultation with its independent compensation consultant. The base salaries of Messrs. Fibig, Mirzayantz and O’Leary and Ms. Chwat remained unchanged for 2017. Mr. Haeni’s base salary was increased by 4.8%, effective April 1, 2017, to reward demonstrated performance in his role and to reflect market adjustments.

Annual Incentive Plan

During 2017, our AIP compensated our executive officers based on the achievement of certain levels of Company financial performance. Financial performance metrics are measured (A) at the consolidated corporate level for our CEO, CFO, and General Counsel and (B) at both the consolidated corporate level and the business unit level for the Group Presidents of Fragrances and Flavors.

In February 2017, the Committee approved certain changes to the AIP for 2017. The 2017 weightings for performance at the consolidated corporate level and business unit level were adjusted to balance the weightings of currency neutral sales growth and operating profit and to eliminate the individual performance metric for our executive officers. The Committee believes that these changes better reflect our focus on overall annual profitability and reduce complexity in the AIP for executive officers. In addition, if our company does not meet the corporate operating profit threshold, then no AIP payouts will be awarded to any participant, including the NEOs.

The performance metrics for the 2017 AIP and their assigned weightings were as follows:

Annual Incentive Program

IFF  |  2018 PROXY STATEMENT  43

 COMPENSATION DISCUSSION AND ANALYSIS 

Each year the Committee sets an AIP target (stated as a percentage of base salary) for each NEO. For 2017, the Committee maintained the AIP percentage targets at the same level as 2016.

Performance Metrics and Capped AIP Payouts: Based on a review of the annual and long-term financial goals, operational plans, strategic initiatives and the prior year’s actual results, the Committee annually sets the financial performance metrics for our Company and the respective business units that it will use to measure performance as well as the relative weighting that will be assigned to each metric. The Committee then approves threshold, target and maximum performance levels for each performance metric. Upon achievement of the relative performance level, an executive has the opportunity to earn threshold (25%), target (100%) and maximum (200%) amounts. The Committee seeks to establish corporate performance goals that are challenging yet attainable.

As discussed above, for 2017 AIP awards, the Committee approved the following four financial performance metrics for the reasons noted below:

Determination of 2017 Performance Levels: In determining our 2017 AIP performance threshold, target and maximum levels, the Committee considered our annual targets for 2017, our 2016 actual results and payout trends over the prior three-year and five-year periods. The performance target levels for the financial metrics were set in line with our 2017 budget and above our 2016 actual results.

44  IFF  |  2018 PROXY STATEMENT

 COMPENSATION DISCUSSION AND ANALYSIS 

2017 Corporate and Business Unit AIP Performance: Our actual performance against our 2017 AIP corporate financial metrics is set forth in the tables below. In establishing AIP financial performance metrics and in determining actual achievement against performance metrics, we eliminated the net impact of certain non-core expenses and non-core gains in order to reflect our fundamental operating results. 2017 LTIP and AIP target performance levels and actual achievement against the target performance levels excluded costs or income associated with (i) adjustments related to operational improvement initiative costs and restructuring charges, (ii) acquisition related items, including integration costs, (iii) an increase in the loss provision related to the ZoomEssence litigation, (iv) certain foreign currency gains related to the liquidation of a foreign entity, (v) costs associated with an FDA mandated recall, (vi) a charge related to NYC commercial rent tax related to prior years, (vii) with respect to the operating profit metric of the 2017 AIP only, unbudgeted mark-to-market adjustments related to our Deferred Compensation Plan, (viii) charges for settlement losses related to a U.K. pension plan, (ix) for purposes of calculating economic profit under the LTIP, charges associated with recently-enacted U.S. tax legislation, and (x) costs incurred due to an interruption in supply chain for a key ingredient (together, the “2017 non-core items”). Similarly, we excluded the effects of incentive compensation provisions in calculating gross margin performance in order to better focus on the underlying operating performance of our product portfolio. The Committee believes that the necessary self-funding of incentive compensation payments is covered in the operating profit component of the AIP program.

Corporate Performance

The table below reflects the 2017 AIP metrics, their respective targets and the payouts earned for each metric and overall by each of Messrs. Fibig and O’Leary and Ms. Chwat, who were evaluated solely on corporate performance.

Corporate Level

As indicated above, during 2017, our corporate performance was between target and maximum for the currency neutral sales growth and operating profit performance metrics and was between threshold and target for the gross margin and working capital performance metrics. The actual dollar amount earned by each NEO is set forth below under “2017 Individual AIP Payouts.”

IFF  |  2018 PROXY STATEMENT  45

Threshold Target Maximum Award Payout as a % of Target 5.4% 8.1% 10.8% Currency Neutral 45.4% Sales Growth Actual 8.9% $614M $646M $678M Operating Profit 47.7% Actual $657M 44.7% 46.2% 47.7% Gross Margin 9.0% Actual 44.8% 29.5% 28.0% 26.5% Working Capital 7.5% Actual 29.0% Overall Corporate Payout 109.6%

 COMPENSATION DISCUSSION AND ANALYSIS 

Fragrances Business Unit Performance

The table below reflects the 2017 AIP metrics, their respective targets and the payouts earned for each metric and overall by Mr. Mirzayantz, our Group President, Fragrances.

Fragrances Business Unit

As indicated above, during 2017, our Fragrances business unit performance was between target and maximum for the currency neutral sales growth business unit performance metric and was between threshold and target for the operating profit and gross margin business unit performance metrics. The actual dollar amount earned by our Group President, Fragrances is set forth below under “2017 Individual AIP Payouts.”

46  IFF  |  2018 PROXY STATEMENT

Threshold Target Maximum Award Payout as a % of Target 5.4% 8.1% 10.8% Currency Neutral Sales 30.6% Growth (Business Unit) Actual 8.7% 5.4% 8.1% 10.8% Currency Neutral Sales 13.0% Growth (Corporate) Actual 8.9% $327M $343M $368M Operating Profit 13.8% (Business Unit) Actual $336M $614M $646M $678M Operating Profit 20.5% (Corporate) Actual $657M 44.3% 45.8% 47.3% Gross Margin 6.3% (Business Unit) Actual 44.7% 29.5% 28.0% 26.5% Working Capital 7.5% (Corporate) Actual 29.0% Overall Payout for Group President, Fragrances 91.7%

 COMPENSATION DISCUSSION AND ANALYSIS 

Flavors Business Unit Performance

The table below reflects the 2017 AIP metrics, their respective targets and the payouts earned for each metric and overall by Mr. Haeni, our Group President, Flavors.

Flavors Business Unit

During 2017, our Flavors business unit performance was between target and maximum for the currency neutral sales growth, at maximum for operating profit business unit performance metrics and was between threshold and target for the gross margin business unit performance metric. The actual dollar amount earned by our Group President, Flavors is set forth below under “2017 Individual AIP Payouts.”

2017 Individual AIP Payouts

The AIP payout for 2017 for the NEOs, based on the actual achievement of each of the performance metrics, is included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table in this proxy statement. Based on the Corporate and Business Unit performance outlined in the tables above, 2017 AIP payouts were as follows:

IFF  |  2018 PROXY STATEMENT  47

Threshold Target Maximum Award Payout as a % of Target 5.6% 8.3% 11.0% Currency Neutral Sales 33.3% Growth (Business Unit) Actual 9.2% 5.4% 8.1% 10.8% Currency Neutral Sales 13.0% Growth (Corporate) Actual 8.9% $337M $353M $379M Operating Profit 39.7% (Business Unit) Actual $379M $614M $646M $678M Operating Profit 20.5% (Corporate) Actual $657M 43.6% 45.2% 46.6% Gross Margin 9.4% (Business Unit) Actual 44.4% 29.5% 28.0% 26.5% Working Capital 7.5% (Corporate) Actual 29.0% Overall Payout for Group President, Flavors 123.4%

 COMPENSATION DISCUSSION AND ANALYSIS 

Long-Term Incentive Plan

We believe that LTIP awards reward our executive officers, including our NEOs, for financial results and align their interests with the interests of our shareholders. Annually, the Committee reviews the LTIP to determine (1) the metrics that should be used to encourage long-term success, (2) the weightings that should be applied to such metrics and (3) the annual and cumulative targets for such metrics. The Committee believes that commencing a new three-year LTIP cycle each year:

The Committee also annually sets a total LTIP target award for each NEO, which reflects the total LTIP award an NEO has the opportunity to receive at the end of the three-year cycle if we meet all of our targets. Depending upon our actual performance relative to financial and relative total shareholder return goals, the actual payout to the NEO could be greater or less than the total LTIP target award.

Performance Segments.  Given the difficulty in setting long-term goals in current volatile global economic environments, the Committee believes that the LTIP should continue to comprise four performance segments: Year 1, Year 2, Year 3 (each an “annual performance segment”) and cumulative performance over the three-year period (the “cumulative performance segment”).

Performance Metrics.  For the 2015-2017 LTIP, each annual performance segment is measured equally against Economic Profit (“EP”) (12.5%) and Relative Total Shareholder Return (“Relative TSR”) (12.5%). In 2016, the Committee replaced the annual Relative TSR performance segments with a cumulative, 3-year Relative TSR performance metric as the sole metric for the cumulative performance segment for LTIP awards beginning with the 2016-2018 LTIP. The Committee believes that an LTIP consisting of annual performance segments based on EP and a cumulative segment based on Relative TSR better aligns its compensation objectives with the interests of our shareholders and our focus on long-term growth initiatives. The tables below reflect the performance metrics for the outstanding LTIP cycles and their assigned weightings:

Long-Term Incentive Plan

				Segment		EP		Relative TSR
2015-2017     LTIP     performance     cycle only				Year 1		12.5%		12.5%
				Year 2		12.5%		12.5%
				Year 3		12.5%		12.5%
				Cumulative Segment		0%		25%
				Total		37.5%		62.5%				100%