The ink manufacturer’s parent company has created an “enhanced linkage” of executive pay and company performance. 
MarketWatch reported on the follow-up to the recent reports of Sensient Technologies’ quarterly cash dividend by discussing the company’s announcement that its Board of Directors has approved changes to its “annual incentive compensation plan” for elected officials.
The company’s changes, made in response to shareholder feedback, are intended to “create an enhanced linkage of executive pay and company performance”, with the new plans allowing for 50 percent of equity grants to elected officers in 2013 to “consist of performance units”, the value of which “will be determined based on the achievement of pre-established performance goals”.
These goals, for 2013, will be determined “based on performance over a two year period”, and compared to the “weighted average” of EBIT (earnings before interest and taxes) growth (70 percent) and return on invested capital (30 percent). Previously, the equity grants have come from time-vested restricted shares.
Sensient added that it has also made “significant changes” to its annual cash incentive plan for elected corporate officers, with this plan, from 2014, being determined and paid “based on a weighted average” of the company’s achievement of three performance goals, including earnings per share (50 percent), gross profit as a percentage of revenue (30 percent) and cash flow (20 percent).
The shareholder feedback which influenced the changes came during meetings throughout this year held by the company, in which shareholders “indicated a desire” to see more impetus given to targets as opposed to earnings per share, as well as a preference to see a “portion” of Sensient’s equity awards “tied to achievement of pre-established performance goals”, so that in turn the “ultimate” compensation an executive would receive “is more closely tied to company performance”.