Exhibit 10.7
SENSIENT TECHNOLOGIES CORPORATION
MANAGEMENT INCENTIVE PLAN
FOR CORPORATE MANAGEMENT

I.   THE PLAN       The name of this Plan is the Sensient Technologies
Corporation Management Incentive Plan for Corporate Management. The purpose of
this Plan is to promote the interests of the shareholders and to provide
incentive to those corporate management employees who can contribute most to the
profitability of the Company. It is separate and distinct from other Company
incentive plans currently in effect.   II.   DEFINITIONS       In this Plan, the
terms used will have the following definitions:

  A.   “Board of Directors” means the Board of Directors of the Company.     B.
  “Bonus Award” means a lump-sum cash award paid no later than March 15th of the
Fiscal Year following the Fiscal Year during which the Bonus Award was earned.  
  C.   “Bonus Provision” means monies available for distribution as a Bonus
Award as the result of the operation of this Plan.     D.   “Company” means
Sensient Technologies Corporation.     E.   “Employee” means any employee
regularly employed by the Company, and paid on a salary basis.     F.   “Fiscal
Year” means each twelve (12) consecutive month period beginning on January 1 and
ending on December 31.     G.   “Fiscal Year Salary” means the base pay earned
by a participant during the relevant Fiscal Year, exclusive of any incentive
compensation or supplemental payments by the Company.     H.   “Independent
Auditors” means with respect to any Fiscal Year, the independent public
accountants appointed by the Board of Directors to certify to the Board of
Directors the financial statements of the Company.     I.   “Earnings per share”
is defined as net basis earnings per share, as shown in the Company’s Statement
of Consolidated Earnings as certified by the Company’s Independent Auditors.
Earnings per share shall be further adjusted for extraordinary items of income
or expense if, in the opinion of the Chairman and Chief Executive Officer, it is
appropriate to do so.

 

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  J.   “Plan” means this Sensient Technologies Corporation Management Incentive
Plan for Corporate Management.     K.   “Subsidiary” means with respect to any
year, any corporation in which the Company owns a stock interest of more than
50%, and the financial results of whose operations are consolidated with those
of the Company in the financial statements included in the annual report to
shareholders for that year.

III.   PLAN ADMINISTRATION       The Board of Directors of the Company has
delegated to the Chairman and Chief Executive Officer the authority to adopt
eligibility and other rules not inconsistent with the provisions of the Plan
(hereinafter referred to as the “Regulations” and attached hereto as
“Exhibit A”) for the administration thereof and to alter, amend, or revoke any
Regulations so adopted.   IV.   PLAN PARTICIPATION

  A.   At the beginning of the Fiscal Year, the Chairman and Chief Executive
Officer shall determine who should participate in the Plan for that Fiscal Year.
    B.   Not all management employees need be selected as participants, and
selection as a participant one year does not automatically ensure selection in
future years, if such Plans should be implemented.     C.   At the end of each
Fiscal Year, the Chairman and Chief Executive Officer shall determine the amount
of Bonus Award each participant in the Plan should receive for that Fiscal Year.
    D.   The Chairman and Chief Executive Officer’s selection of the Employees
to whom a Bonus Award shall be made and his determination of the amount of each
such Bonus Award shall be final.     E.   This Plan is not a part of the
Company’s regular compensation plan nor is it part of the Employee’s regular
compensation.

V.   BONUS AWARDS       The performance measurement upon which the Bonus Award
is based is determined in accordance with the Regulations for each Fiscal Year.
  VI.   SUCCESSORS AND ASSIGNS       If the Company sells, assigns or transfers
all or substantially all of its business and assets to any person, excluding
affiliates of the Company, or if the Company merges into or consolidates or
otherwise combines with any person which is a continuing or successor entity,
then the Company shall assign all of its right, title and interest in this Plan
as of the date of such event to the person which is either the acquiring or
successor corporation,

 

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    and such person(s) shall assume and perform from and after the date of such
assignment all of the terms, conditions and provisions imposed by this Plan upon
the Company.       In case of such assignment by the Company and of such
assumption and agreement by the Company and of such person(s), all further
rights as well as all other obligations of the Company under this Agreement
thenceforth shall cease and terminate and thereafter the expression “the
Company” wherever used herein shall be deemed to mean such person(s).

VII.   PLAN AMENDMENTS       The Chairman and Chief Executive Officer may
suspend or discontinue the Plan at any time.

 

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Exhibit A – Regulations
SENSIENT TECHNOLOGIES CORPORATION
MANAGEMENT INCENTIVE PLAN FOR CORPORATE MANAGEMENT
REGULATIONS Fiscal Year 2008
These Regulations apply to the Management Incentive Plan for Corporate
Management for the Fiscal Year January 1, 2008 through December 31, 2008.

1.   Participants will be notified of their selection and be provided with a
copy of the Plan with specific provisions related to their level of
participation.   2.   An Employee may be selected as a participant after the
beginning of a Fiscal Year and, if eligible, may receive a Bonus Award prorated
to reflect duration of Plan participation, paid at the same time as all other
Bonus Awards under the Plan.   3.   A participant may receive a Bonus Award
based on prorated participation in more than one plan if eligible to do so under
provisions of the plan(s).   4.   The Bonus Award granted to individual
participants shall be based upon achievement of defined EPS objectives.   5.  
The bonus award amount may, at the sole discretion of the Chairman and Chief
Executive Officer, be adjusted up or down by five to twenty percent (5% to 20%)
to recognize individual performance.   6.   If an Employee ceases to be a Plan
participant during the Fiscal Year, but remains in the Company’s service, the
Employee may, at the discretion of the Chairman and Chief Executive Officer,
receive a pro-rata Bonus Award based upon the number of months spent as a
participant, paid at the same time as all other Bonus Awards under the Plan.  
7.   The Bonus Award shall not be paid to participants who resigned or were
discharged for cause prior to their receiving the Bonus award unless the
Chairman and Chief Executive Officer decides otherwise.   8.   If an Employee
ceases to be a Plan participant during the Fiscal Year as a result of death,
disability, or retirement under the Company’s ESOP, the Employee or his/her
estate may, at the discretion of the Chairman and Chief Executive Officer,
receive a pro-rata Bonus Award based upon the number of months spent as a
participant, paid at the same time as all other Bonus Awards under the Plan.    
  In such cases, the Chairman and Chief Executive Officer may increase the Bonus
Award up to, but not in excess of, the amount that would have been earned for a
full year of participation.

 

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Exhibit B – Performance Measures
CORPORATE MANAGEMENT
SENSIENT TECHNOLOGIES CORPORATION
MANAGEMENT INCENTIVE PLAN FOR CORPORATE MANAGEMENT
PERFORMANCE MEASURES Fiscal Year 2008

     
NAME:
  TITLE:

Maximum Bonus Award as Percentage
of Fiscal Year Salary
 

         
TARGET
    %  
 
       
MAXIMUM
    %  

 

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Exhibit C – Performance Measures — Schedule
SENSIENT TECHNOLOGIES CORPORATION
MANAGEMENT INCENTIVE PLAN FOR CORPORATE MANAGEMENT
PERFORMANCE MEASURES-SCHEDULE Fiscal Year 2008
GUIDELINES
Upon the determination of the amount of the Bonus Provision for the Fiscal Year,
an amount may be awarded by the Chairman and Chief Executive Officer as a Bonus
Award to selected Plan participants according to the following guidelines:

  1.   Formula Award         The Fiscal Year 2008 objective is to attain a
Corporate Earnings Per Share of $1.73 (Target).

      Diluted Earnings Per Share     (EPS) Target   % of Formula Award Earned
1.56
  30%
1.57
  32%
1.58
  34%
1.59
  36%
1.60
  38%
1.61
  40%
1.62
  42%
1.63
  45%
1.64
  50%
1.65
  55%
1.66
  60%
1.67
  65%
1.68
  70%
1.69
  75%
1.70
  80%
1.71
  85%
1.72
  90%
1.73
  100%
1.74
  110%
1.75
  120%
1.76
  130%
1.77
  140%
1.78
  150%
1.79
  160%
1.80
  170%
1.81
  180%
1.82
  190%
1.83
  200%

 

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2.   Special Adjustments

Upon the recommendations of the Senior Corporate Officers, the Chairman and
Chief Executive Officer may approve special adjustments to Earnings Per Share
necessary to give consideration to unbudgeted and/or unplanned situations which
developed after finalization of the operating budget. Such adjustments will be
submitted for consideration only if required to correct major inequities.

 

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Exhibit D — Additional Incentive Components
SENSIENT TECHNOLOGIES CORPORATION
MANAGEMENT INCENTIVE PLAN FOR CORPORATE MANAGEMENT
ADDITIONAL INCENTIVE COMPONENTS — Fiscal Year 2008

I.   Background: The addition of four incentive components. There will be an
incremental 15% of a participant’s target given for each additional incentive
component if the established targets are achieved. This allows participants to
achieve an incremental incentive of 15% of target for each additional incentive
component.   II.   Definitions:

  A.   “Selling, General and Administrative (SGA)” means selling and
administrative costs as reported in the Company’s quarterly and annual SEC
filings.     B.   “Cash Flow” means net cash provided by operating activities as
reported in the Company’s quarterly and annual SEC filings.     C.   “Working
Capital” means the quarterly average of the sum of net trade accounts receivable
and inventories less the sum of trade accounts payable and other accrued
expenses as reported in the Company’s quarterly and annual SEC filings.     D.  
“Return on Invested Capital” means the operating income on an after-tax basis,
using actual effective tax rate for the year, divided by the sum of the
quarterly average of the total debt and equity balances for the year. For the
purposes of this calculation, debt will be net of any cash or marketable
securities.

III.   Additional Incentive Components include:

  •   SG&A Expense Reduction: If the Corporation achieves the approved minimum
SG&A threshold percentage (SG&A as a percentage of revenue), then Corporate
participants will receive the 15% addition to their Target.     •   Cash Flow
Improvement: If the Corporation achieves the approved Targeted Average Cash
Flow, then Corporate participants will receive the 15% addition to their Target.
    •   Working Capital: If the Corporation achieves the approved minimum
Working Capital amount, then Corporate participants will receive the 15%
addition to their Target.     •   Return on Invested Capital: If the Corporation
achieves the approved minimum Return on Invested Capital amount, then Corporate
participants will receive the 15% addition to their Target.

IV.   Each additional incentive component is an all or nothing arrangement. If
the additional incentive component is exceeded, then 15% is the maximum that is
awarded. A cumulative maximum payout for a participant is 200%.

 

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Exhibit D – Additional Incentive Components
SENSIENT TECHNOLOGIES CORPORATION
MANAGEMENT INCENTIVE PLAN FOR CORPORATE MANAGEMENT
ADDITIONAL INCENTIVE COMPONENTS — Fiscal Year 2008

                    V.    
Approved Group/Division/Business Unit/Unit
  Corporate        
Weighted Target Percentage
    100 %        
Targeted SG&A Threshold
    17.9 %        
Targeted Average Cash Flow
  $ 110,465,000          
Targeted Average Working Capital Threshold
    *          
Targeted Return on Invested Capital Threshold
    8.4 %

 

*   The increase in Average Working Capital over the prior year must be 150
basis points less than the percentage increase in sales over the prior year.
Prior year Sales and Average Working Capital balances are $1,184,778,000 and
$398,076,000, respectively.