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Stock Compensation Plans | 12 Months Ended
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Dec. 31, 2021
Share-based Payment Arrangement [Abstract] |
Stock Compensation Plans | STOCK COMPENSATION PLANS The Company has various equity plans under which its officers, senior management, other key employees and Board of Directors may be granted options to purchase IFF common stock or other forms of stock-based awards. Beginning in 2004, the Company granted Restricted Stock Units (“RSUs”) as the principal element of its equity compensation for all eligible U.S.-based employees and a majority of eligible overseas employees. Vesting of the RSUs is solely time based; the vesting period is primarily three years from date of grant. For a small group of employees, primarily overseas, the Company granted stock options prior to 2008. The cost of all employee stock-based awards are principally recognized on a straight-line attribution basis over their respective vesting periods, net of estimated forfeitures. Total stock-based compensation expense included in the Consolidated Statements of Income and Comprehensive Income (Loss) was as follows:
| December 31,
(DOLLARS IN MILLIONS) | 2021 |  | 2020 |  | 2019
Equity-based awards | $ | 54 |  |  | $ | 36 |  |  | $ | 34 |
Liability-based awards | 8 |  |  | 4 |  |  | 4 |
Total stock-based compensation | 62 |  |  | 40 |  |  | 38 |
Less tax benefit | (13) |  |  | (8) |  |  | (7) |
Total stock-based compensation, net of tax | $ | 49 |  |  | $ | 32 |  |  | $ | 31 |
The shareholders of the Company approved the Company’s 2021 Stock Award and Incentive Plan (the “2021 Plan”) on May 5, 2021. The 2021 Plan replaced the Company’s 2015 Stock Award and Incentive Plan (the “2015 Plan”) and the Company's 2010 Stock Award and Incentive Plan (the “2010 Plan”), and provides the source for future deferrals of cash into deferred stock under the Company’s Deferred Compensation Plan (with the Deferred Compensation Plan being deemed a subplan under the 2010 Plan for the sole purpose of funding deferrals under the IFF Share Fund). Under the 2021 Plan, a total of 2,290,000 shares are authorized for issuance. At December 31, 2021, 1,601,749 shares were subject to outstanding awards and 2,631,269 shares remained available for future awards under all of the Company’s equity award plans, including the 2015 Plan and 2010 Plan (excluding shares not yet issued under open cycles of the Company’s Long-Term Incentive Plan). The Company offers a Long-Term Incentive Plan (“LTIP”) for senior management. The targeted payout is 50% cash and 50% IFF common stock at the end of the three-year cycle. With regard to the 2019-2021 cycle, the LTIP awards are earned based upon the achievement of: (i) the Company's performance ranking of Total Shareholder Return as a percentile of the S&P 500 ("Relative TSR") (representing one-half of the award value), and (ii) the Company's achievement of a defined Leverage Ratio (representing one-half of the award value). For the 2020-2022 cycle, the LTIP awards are earned based on the achievement of: (i) an annual Leverage Ratio for 2020 (representing one-sixth of the award value), (ii) a 2-year cumulative Leverage Ratio for 2021-2022 (representing one-third of the award value), and (iii) Relative TSR targets (representing one-half of the award value). For the 2021-2023 cycle, the LTIP awards are earned based on the achievement of: (i) 3-year cumulative Leverage Ratio for 2021-2023 (representing one-half of the awards value), and (iii) Relative TSR targets (representing one-half of the award value). The Leverage Ratio measures Net debt as compared to a measure profitability. When the award is granted, 50% of the target dollar value of the award is converted to a number of “notional” shares based on the closing price at the beginning of the cycle. For those shares whose payout is based on Relative TSR, compensation expense is recognized using a graded-vesting attribution method, while compensation expense for the remainder of the performance shares (Leverage Ratio targets for the applicable cycle) is recognized on a straight-line basis over the vesting period based on the probable outcome of the performance condition. The 2017-2019 cycle concluded at the end of 2019 and an aggregate 14,579 shares of common stock were issued in March 2020. The 2018-2020 cycle concluded at the end of 2020 and an aggregate 7,484 shares of common stock were issued in March 2021. The 2019-2021 cycle concluded at the end of 2021 and no shares of common stock will be issued in March 2022. In 2006, the Board of Directors approved the Equity Choice Program (the “Program”) for senior management. This program continues under the 2015 Plan. Eligible employees can choose from among three equity alternatives and will be granted such equity awards up to certain dollar awards depending on the participant’s employment grade level. A participant may choose among (1) SSARs, (2) RSUs or (3) PRSUs. Transaction with Nutrition and Biosciences, Inc. In connection with the Merger, N&B employees’ outstanding (unvested and/or vested and unexercised) equity awards were converted into equity awards denominated in shares of the Company’s common stock based on a defined exchange ratio. N&B employees’ equity awards were converted into 335,347 IFF stock options, 258,572 IFF RSU awards and 5,816 IFF SAR awards. For converted RSU awards, the fair value of the equity award is based on the Closing Date market price of IFF stock. For converted stock options and SAR awards, the exercise price per share of the converted award is equal to the exercise price per share of the N&B award immediately prior to the Merger divided by the exchange ratio. The fair value of the IFF stock options and SAR awards that the Company issued in connection with the Merger was estimated using the Black Scholes model. The converted awards were generally issued with the same terms and conditions as were applicable prior to the Transaction. At the Closing Date, approximately $25 million of the fair value of the replacement awards granted to N&B employees was attributable to pre-combination service and was included in the purchase price. As of December 31, 2021, post-combination expense of approximately $3 million is expected to be recognized related to the replacement awards over the remaining post-combination service period, approximately up to three years. SSARs and Options SSARs are a contractual right to receive the value, in shares of Company stock, of the appreciation in our stock price from the grant date to the date the SSARs are exercised by the participant. SSARs granted become exercisable on the third anniversary of the grant date and have a maximum term of seven years. SSARs do not require a financial investment by the SSARs grantee. Stock options require the participant to pay the exercise price at the time they exercise their stock options. No stock options were granted in 2021, 2020 or 2019. SSARs and options activity was as follows:
(SHARE AMOUNTS IN THOUSANDS) | Shares Subject to SSARs/Options |  | Weighted Average Exercise Price |  | SSARs/ Options Exercisable
December 31, 2020 | 42 |  |  | $ | 135.01 |  |  | 1 |
Granted | 3 |  |  | 144.67 |  |  |
Exercised | (90) |  |  | 110.28 |  |  |
Canceled | (9) |  |  | 101.19 |  |  |
Assumed | 341 |  |  |  |  |
December 31, 2021 | 287 |  |  | $ | 107.48 |  |  | 235 |
Expected to Vest at December 31, 2021 | 44 |  |  | $ | 95.94 |  |  |
The weighted average exercise price of SSARs and options exercisable at December 31, 2021, 2020 and 2019 were $109.77, $118.10 and $118.10, respectively. SSARs and options outstanding at December 31, 2021 was as follows:
Price Range | Number Outstanding (in thousands) |  | Weighted Average Remaining Contractual Life (in years) |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value (in millions)
Over $65 | 287 |  |  | 5.04 |  | $ | 107.48 |  |  | $ | 12 |
SSARs and options exercisable as of December 31, 2021 was as follows:
Price Range | Number Exercisable (in thousands) |  | Weighted Average Remaining Contractual Life (in years) |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value (in millions)
Over $65 | 235 |  |  | 4.65 |  | $ | 109.77 |  |  | $ | 10 |
The total intrinsic value of options/SSARs exercised during 2021 was approximately $3 million and was not material for 2020 and 2019. As of December 31, 2021, the total unrecognized compensation cost related to non-vested SSARs granted was less than $1 million; such cost is expected to be recognized over a period of approximately two years. Restricted Stock Units The Company has granted RSUs to eligible employees and members of the Board of Directors. Such RSUs are subject to forfeiture if certain conditions are not met. RSUs principally vest 100% at the end of three years and contain no performance criteria provisions. An RSU’s fair value is calculated based on the market price of the Company's stock at date of grant, with an adjustment to reflect the fact that such awards do not participate in dividend rights. The aggregate fair value is amortized to expense ratably over the vesting period. RSU activity was as follows:
(SHARE AMOUNTS IN THOUSANDS) | Number of Shares |  | Weighted Average Grant Date Fair Value Per Share
December 31, 2020 | 525 |  |  | $ | 126.62 |
Granted | 344 |  |  | 136.71 |
Vested | (314) |  |  | 119.99 |
Forfeited | (37) |  | -37000 | 128.79 |
Assumed | 259 |  |  |
December 31, 2021 | 777 |  |  | $ | 126.20 |
The total fair value of RSUs that vested during the year ended December 31, 2021 was $44 million. As of December 31, 2021, there was $42 million of total unrecognized compensation cost related to non-vested RSUs granted under the equity incentive plans; such cost is expected to be recognized over a weighted average period of approximately two years. Purchased Restricted Stock and Purchased Restricted Stock Units In 2014, the grant of awards under the Equity Choice program provided for eligible employees to purchase restricted shares of IFF common stock and deposit them into an escrow account. For each share deposited in escrow by the eligible employee, the Company matched with a grant of a share of restricted stock or, for non-U.S. participants, a restricted stock unit. The shares of restricted stock and restricted stock units generally vest on the third anniversary of the grant date, are subject to continued employment and other specified conditions, and pay dividends if and when paid by the Company. Holders of restricted stock have, in most instances, all of the rights of stockholders, except that they may not sell, assign, pledge or otherwise encumber such shares. The PRSUs provide no such rights. During 2015, the Company modified the program so that all participants, including U.S. participants, began to receive a restricted stock unit instead of a share of restricted stock. Restricted stock units pay dividend equivalents and do not have voting rights. The following table summarizes the Company's PRSU activity for the years ended December 31, 2021, 2020 and 2019:
(DOLLARS IN MILLIONS) | Issued Shares |  |  |  | Aggregate Purchase Price |  |  |  | Covered Shares
2021 | 61,870 |  |  |  |  | $ | 9 |  |  |  |  | 30,935 |
2020 | 66,160 |  |  |  |  | $ | 9 |  |  |  |  | 33,080 |
2019 | 61,991 |  |  |  |  | $ | 9 |  |  |  |  | 30,996 |
PRSU activity was as follows:
(SHARE AMOUNTS IN THOUSANDS) | Number of Shares |  | Weighted Average Grant Date Fair Value Per Share
December 31, 2020 | 193 |  |  | $ | 136.37 |
Granted | 62 |  |  | 144.67 |
Vested | (95) |  |  | 138.41 |
Forfeited | (5) |  |  | 141.81 |
December 31, 2021 | 155 |  |  | $ | 138.36 |
The total fair value of PRSUs that vested during the year ended December 31, 2021 was $13 million. As of December 31, 2021, there was $5 million of total unrecognized compensation cost related to non-vested PRSUs granted under the equity incentive plans; such cost is expected to be recognized over a weighted average period of approximately two years. Liability Awards The Company has granted cash-settled RSUs ("Cash RSUs") to eligible employees that are paid out 100% in cash upon vesting. Such RSUs are subject to forfeiture if certain conditions are not met. Cash RSUs principally vest 100% at the end of three years and contain no performance criteria provisions. A Cash RSU's fair value is calculated based on the market price of the Company's stock at the date of the closing period and is accounted for as a liability award. The aggregate fair value is amortized to expense ratably over the vesting period. Cash RSU activity was as follows:
(SHARE AMOUNTS IN THOUSANDS) | Cash RSUs |  | Weighted Average Fair Value Per Share
December 31, 2020 | 111 |  |  | $ | 108.84 |
Granted | 51 |  |  | 150.65 |
Vested | (37) |  |  | 141.58 |
Forfeited | (9) |  |  | 140.43 |
December 31, 2021 | 116 |  |  | $ | 150.65 |
The total fair value of Cash RSUs that vested during the year ended December 31, 2021 was $5 million. As of December 31, 2021, there was $8 million of total unrecognized compensation cost related to non-vested Cash RSUs granted under the equity incentive plans; such cost is expected to be recognized over a weighted average period of approximately two years. The aggregate compensation cost will be adjusted based on changes in the Company’s stock price.

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