Notice of Annual Meeting

and

Proxy Statement

2018

INNOPHOS HOLDINGS, INC.

INNOPHOS HOLDINGS, INC.

259 Prospect Plains Road, Building A, Cranbury, NJ 08512

April 11, 2018

Dear Fellow Stockholder:

You are cordially invited to attend the 2018 Annual Meeting of Stockholders (“Meeting”) of Innophos Holdings, Inc. The Meeting is scheduled to be held at 9:00 AM EDT on May 15, 2018 at the Crowne Plaza Hotel located at 900 Scudders Mill Road, Plainsboro Township, NJ 08536.

The accompanying Notice of Annual Meeting of Stockholders and Proxy Statement describe the items to be considered and acted upon by the stockholders at the Meeting.

Please note we are requiring identification as a stockholder to attend the Meeting. For more information on this matter, kindly refer to the accompanying Notice of Annual Meeting of Stockholders.

If you own shares of record, you will find enclosed a proxy card or cards and an envelope in which to return the card(s). Whether or not you plan to attend the Meeting, please sign, date and return your enclosed proxy card(s), or vote over the telephone or internet in accordance with the instructions on the proxy card, as soon as possible so that your shares can be represented and voted at the Meeting according to your instructions. If your shares are registered in the name of a broker/bank/trustee/nominee, your broker/bank/trustee/nominee will provide you with materials and instructions for voting your shares. You can revoke your proxy any time before the Meeting and issue a new proxy as you deem appropriate. You will find the procedures to follow if you wish to revoke your proxy under the “Frequently Asked Questions” section in the Proxy Statement.

Your vote is extremely important. Whether or not you intend to attend the Meeting, please vote your shares.

I look forward to seeing you at the Meeting.

INNOPHOS HOLDINGS, INC.

259 Prospect Plains Road, Building A, Cranbury, NJ 08512

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

Please take notice that the 2018 Annual Meeting of Stockholders (the “Meeting”) of Innophos Holdings, Inc., a Delaware corporation (“Innophos”), will take place as follows:

2018 ANNUAL MEETING OF STOCKHOLDERS

OF

INNOPHOS HOLDINGS, INC.

PROXY STATEMENT

TABLE OF CONTENTS

PROXY STATEMENT

2018 ANNUAL MEETING OF STOCKHOLDERS

OF

INNOPHOS HOLDINGS, INC.

This Proxy Statement, the accompanying proxy card and Annual Report to Stockholders (“Annual Report”) of Innophos Holdings, Inc., a Delaware corporation (the “Company” or “Innophos”), are being mailed on or about April 13, 2018 to the Company’s stockholders of record on March 20, 2018. The Board of Directors of the Company (the “Board”) is soliciting your proxy to vote your shares of Company common stock at the Company’s 2018 Annual Meeting of Stockholders (the “Meeting”) scheduled to be held on May 15, 2018.

The Board is soliciting your proxy to give all stockholders the opportunity to vote on matters that will be presented at the Meeting, regardless of whether they can be present in person. This Proxy Statement provides you with information on these matters to assist you in voting your shares.

Frequently Asked Questions

What is a proxy?

A proxy is your legal designation of another person as your agent (the person is sometimes referred to as a “proxy”) to vote on your behalf. By completing and returning the enclosed proxy card, you are giving each member of the Proxy Committee the authority to vote your shares in the manner you indicate on your card.

Who constitutes the Proxy Committee?

The Proxy Committee consists of three Company employees, Messrs. Mark Feuerbach, Joshua Horenstein and Michael Lestino, each appointed by the Board and named on the proxy card to vote shares at the Meeting as instructed by stockholders.

Why did I receive more than one proxy card?

You will receive multiple proxy cards if you hold your shares in different ways (for example, in joint tenancy, trusts, custodial accounts) or in multiple accounts. If your shares are held by a broker, trust, bank or other nominee (that is, in “street name”), you will receive, together with this Proxy Statement and Annual Report (or a notice how to access such materials), your voting information, such as a request for instructions, from your broker, trust, bank or other nominee, and you will return your voting instructions as directed by your broker, trust, bank or other nominee. If you hold shares in more than one form, you must vote separately for each notice, proxy card and/or voting instruction card you receive that has a unique control number to ensure that all shares you own are voted. It is not necessary to send more than one proxy card or voting instruction card for the same shares, no matter how they are held.

Who is qualified to vote?

You are qualified to receive notice of and to vote at the Meeting if you own shares of common stock of the Company at the close of business on our record date of March 20, 2018.

How many shares of common stock may vote at the Meeting?

As of March 20, 2018, there were 19,541,761 shares of common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote on each matter presented. The Company’s one class of common stock is the only security allowed to vote at the Meeting.

What is the difference between a “stockholder of record” and a “street name” holder?

These terms describe how your shares are held. If your shares are registered directly in your name with EQ Shareowner Services, our transfer agent for our common stock, you are a “stockholder of record.”

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If your shares are held in the name of a broker, bank, trust or other nominee as a custodian, the broker, bank, trust or other nominee is the stockholder of record and you are a “street name” holder.

How do I vote my shares?

If you are a stockholder of record, you have several choices to vote your shares. You can vote your shares:

To vote by telephone or over the internet, please refer to the specific instructions set forth on the enclosed proxy card. For security reasons, our electronic voting system has been designed to authenticate your identity as a stockholder.

If you hold your shares in street name, your broker/bank/trustee/nominee will provide you with materials and instructions for voting your shares; please follow those instructions to vote your shares held in street name.

Can I vote my shares in person at the Meeting?

Yes. But, if you hold your shares in street name, you must obtain a proxy from your broker, banker, trustee or nominee giving you the right to vote the shares at the Meeting.

What will stockholders be voting on at the Meeting?

1. To elect our directors for terms extending until the 2019 annual meeting;

2. To ratify the selection of PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for 2018;

3. To approve, on a non-binding advisory basis, the compensation of our Named Executives (as described in this Proxy Statement under “Executive Compensation”);

4. To approve our 2018 Long-Term Incentive Plan, a copy of which is attached to this Proxy Statement as Appendix A; and

5. To transact such other business as may properly come before the Meeting and any adjournment or postponement thereof.

Why are you being asked to ratify the selection of PricewaterhouseCoopers LLP?

Although stockholder approval of our Audit Committee’s selection of PwC as our independent registered public accounting firm is not required, we believe that it is advisable to give stockholders an opportunity to ratify this selection. If this proposal is not approved at the Annual Meeting, the Audit Committee has agreed to reconsider its selection of PwC, but will not be required to take any action. We expect representatives of PwC to be present at the Meeting with an opportunity to make a statement if they desire to do so and to be available to respond to appropriate questions.

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What are the Board’s recommendations on how I should vote my shares?

The Board recommends that you vote your shares as follows:

What are my choices when voting?

How will my shares be voted if I do not specify how they should be voted?

If you properly sign and return your proxy card without indicating how you want your shares to be voted, the Proxy Committee will cause your shares to be voted as follows:

If any other matters are properly presented at the Meeting, the persons named as proxies in the enclosed proxy card intend to vote or otherwise act in accordance with their judgment on the matter.

Can I change my vote after I have mailed in my proxy card?

Yes, you may revoke your proxy by doing one of the following:

If you hold your shares in street name, you should follow the instructions provided by your broker/bank/trustee/nominee to change your vote.

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What vote is required to approve each proposal?

What constitutes a quorum?

Under our by-laws, a quorum is a majority of the voting power of the outstanding shares of stock entitled to vote. The presence of a quorum, either present or represented by proxy, is necessary to transact business at the Meeting.

How are abstentions and broker non-votes treated?

Brokers, banks or other nominees that are member firms of the New York Stock Exchange and who hold shares in “street name” for customers have the discretion to vote those shares with respect to certain matters if they have not received instructions from the beneficial owners. Brokers, banks or other nominees will have this discretionary authority with respect to routine matters such as the ratification of the appointment of PwC as our independent registered public accounting firm for 2018; however, they will not have this discretionary authority with respect to non-routine matters, including the election of directors, the approval of the compensation of the Named Executives and the approval of our 2018 Long-Term Incentive Plan. With respect to non-routine matters, if street name holders do not provide voting instructions, these are called “broker non-votes.” Both broker non-votes and abstentions are counted as present for the purpose of determining the presence of a quorum. Broker non-votes will have no effect on calculating the requisite approval levels in Proposals 1, 3 or 4 (because they are not entitled to vote on these matters). Abstentions will have no effect on Proposal 1, as only votes cast “for” or “against” a nominee will affect the outcome of the election of a director in an uncontested election such as is taking place at the Meeting. Abstentions will have the same effect as a vote against Proposals 2, 3 and 4 (because an abstention represents a share entitled to vote). We encourage you to provide voting instructions to the organization that holds your shares.

Who will count the votes?

The votes will be counted by inspectors of election, persons required by Delaware law to oversee voting at a stockholders’ meeting. The inspectors will be present at the Meeting and will report the voting results. We expect that one or more representatives from EQ Shareowner Services, our transfer agent, will serve as inspectors of election.

Who pays the cost of this proxy solicitation?

The Company pays all costs of soliciting proxies. Upon request, the Company will reimburse brokers, dealers, banks and trustees, or their nominees, for reasonable expenses incurred by them in forwarding proxy materials to beneficial owners of shares of the Company’s common stock. In addition, the Company has retained MacKenzie Partners, Inc., or MacKenzie, to aid in the solicitation of proxies by mail, telephone, facsimile, e-mail and personal solicitation and will request brokerage houses and other nominees, fiduciaries and custodians to forward soliciting materials to beneficial owners of the Company’s common stock. For these services, the Company has agreed to pay MacKenzie a fee of $7,500, plus expenses.

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Is mailing this Proxy Statement the only way that proxies are being solicited?

No. As stated above, the Company has retained MacKenzie, a professional soliciting firm, to aid in the solicitation of proxy materials. In addition to mailing these proxy materials and the services of our proxy soliciting firm, directors, officers or employees of the Company may solicit proxies by telephone, facsimile, e-mail or personal contact; those persons will not be specifically compensated for doing so.

How will voting be conducted on other matters raised at the Meeting?

If any matters are presented at the meeting other than the proposals on the proxy card, the Proxy Committee will vote on them using their best judgment. Your signed proxy card gives them the authority to do this. Under our by-laws, notice of any matter to be presented by a stockholder for a vote at the Meeting must have been received by our Corporate Secretary no sooner than February 15, 2018 and no later than March 16, 2018, and it must have been accompanied by certain information about the stockholder presenting it. We have not received notice of any matter to be presented other than those proposals noted on the enclosed proxy card.

When must stockholder proposals be submitted for the 2019 annual meeting?

Stockholder proposals submitted for inclusion in our 2019 proxy statement must be received in writing by our Corporate Secretary no later than 5:00 p.m. Eastern Time on December 12, 2018. Our by-laws describe the procedures that must be used in order for proposals to be brought before an annual meeting by stockholders. Stockholder proposals that are not intended to be included in the proxy statement must be received not less than 60 days nor more than 90 days from the anniversary date of this year’s meeting, unless we announce the meeting date less than 70 days before the meeting, in which case proposals must be received not later than 10 days after we announce the meeting date. In each case, proposals must be accompanied by information required by our by-laws.

What is the deadline to nominate an individual for election as a director at the 2019 annual meeting?

Our by-laws describe the procedures that must be used in order for someone nominated by a stockholder of record to be eligible for election as a director. To nominate an individual for election as a director at the 2019 annual meeting, a stockholder must send a notice of intention to nominate to the Corporate Secretary, which must be received no sooner than February 14, 2019 and no later than March 16, 2019. If the meeting date is changed by more than 30 days from the anniversary date of this year’s meeting, the notice may be given not later than 10 days after the earlier of the announcement of the meeting or the date on which notice of the meeting is mailed. The notice must contain specified information about the nominee as specified in our bylaws, including his or her age, address, occupation and share ownership, as well as the name, address and share ownership of the stockholder giving the notice.

Where can you find the voting results?

Voting results will be reported in a Current Report on Form 8-K, which we will file with the United States Securities and Exchange Commission (the “SEC”) within four business days following the Meeting.

What is “householding” and how does it affect me?

Some brokers, banks and other nominee record holders may participate in the practice of “householding” proxy statements, annual reports and notices of availability of proxy materials. This means that only one copy of this Proxy Statement and our Annual Report may have been sent to multiple shareholders in your household. We will promptly deliver a separate copy of any such documents to you if call MacKenzie Partners, Inc. at 1-800-322-2885 or our Investor Relations Department at 1-609-366-1299.

If you want to receive separate copies of our Proxy Statement and Annual Report in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker, or other nominee record holder, or you may contact call MacKenzie Partners, Inc. at 1-800-322-2885 or our Investor Relations Department at 1-609-366-1299.

If you have any further questions about voting your shares or attending the Meeting, please call MacKenzie Partners, Inc. at 1-800-322-2885 or our Investor Relations Department at 1-609-366-1299.

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The Proposals

Proposal 1—Election of Directors

The Company’s certificate of incorporation and by-laws provide for the size of the Board to be determined by Board action taken from time to time. Our Board currently consists of seven directors whose terms will expire at the Meeting. Our current directors are: Kim Ann Mink; Gary Cappeline; Linda Myrick; Karen Osar; John Steitz; Peter Thomas; and Robert Zatta. Each of the current members of our Board will stand for re-election at the Meeting. Biographical information concerning each nominee for election as director is set forth in the section of this Proxy Statement entitled “Directors and Corporate Governance.”

As this election is an uncontested director election, director nominees are elected by a majority vote of the shares cast, meaning that each director nominee must receive a greater number of shares voted “for” such director than shares voted “against” such director. If an incumbent director does not receive a greater number of shares voted “for” such director than shares voted “against” such director, then such director must tender his or her resignation to the Board.

Our Board unanimously recommends a vote “FOR” each of the Board’s seven director nominees presented in Proposal 1.

Proposal 2—Approval of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm

PwC has served as the independent auditor (now referred to as the independent registered public accounting firm) of the Company since its creation in 2004. We believe that their knowledge of Innophos’ business and its organization gained through their prior service is valuable. Partners and employees of PwC assigned to the Innophos engagement are periodically rotated, thus giving us the benefit of new thinking and approaches in the audit area. We expect representatives of PwC to be present at the Meeting with an opportunity to make a statement if they desire to do so and to be available to respond to appropriate questions.

For the years 2017 and 2016, PwC performed professional services for Innophos and its subsidiaries in connection with audits of the financial statements and tax services. PwC has also reviewed quarterly reports and other filings with the SEC. For additional information regarding the Company’s relationship with PwC, please refer to “Information Regarding the Independence of the Independent Registered Public Accounting Firm” and “Audit Committee Report” appearing elsewhere in this Proxy Statement.

Based on their review of the performance of PwC and discussions with that firm and as set forth in its report under “Audit Committee Report” appearing elsewhere in this Proxy Statement, the Audit Committee selected PwC to serve as the Company’s independent registered public accounting firm for 2018. The stockholders are being asked to approve that selection.

Our Board unanimously recommends a vote “FOR” the approval of the selection of PwC as our independent registered public accounting firm for 2018.

Proposal 3—Advisory Vote on Executive Compensation

We are providing stockholders the opportunity to cast an advisory, non-binding vote, popularly known as a “say on pay,” regarding the compensation of our Named Executives, as disclosed in this Proxy Statement in accordance SEC rules. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or Dodd-Frank Act, which amended the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires a “say on pay” vote and another periodic advisory vote on the “frequency of say on pay.” At our 2017 annual meeting, a majority of votes cast on the frequency issue favored holding advisory votes regarding “say on pay” annually, a practice which has been adopted by the Board.

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This proposal consists of the following non-binding resolution to be presented to the Meeting:

RESOLVED, that the stockholders of Innophos Holdings, Inc. (the “Company”) hereby approve the compensation paid to the Company’s Named Executives, as disclosed pursuant to SEC rules under “Executive Compensation,” including the Compensation Discussion and Analysis and any related material disclosed in the Company’s Proxy Statement for the 2018 Annual Meeting.

Although this vote is not binding on the Company or the Board and will not change their fiduciary duties, it will provide information to us regarding investor sentiment about our executive compensation philosophy, policies and practices that the Compensation Committee intends to consider when determining executive compensation for the future. You should read the Compensation Discussion and Analysis, which discusses how our executive compensation policies and programs implement our compensation philosophy, and the compensation tables in the Executive Compensation section in this Proxy Statement. The vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executives and the philosophy, policies and practices described in this Proxy Statement that set compensation.

Our Board unanimously recommends a vote “FOR” the advisory vote approving the compensation of the Named Executives.

Proposal 4—Approval of 2018 Long-Term Incentive Plan

In March 2018, upon the recommendation of the Compensation Committee, our Board unanimously approved the 2018 Long-Term Incentive Plan, or 2018 Plan, subject to stockholder approval. The elements of the 2018 Plan are summarized below. Upon approval by stockholders, the 2018 Plan will replace our existing 2009 Long Term Incentive Plan with respect to any future equity-based awards.

We intend to reserve 550,000 shares for issuance pursuant to awards under the 2018 Plan, which is in addition to approximately 412,683 shares (as of April 11, 2018) which remain available for grant pursuant to the 2009 Long Term Incentive Plan. If our stockholders approve the 2018 Plan, these remaining shares from the 2009 Long Term Incentive Plan, plus any shares that would otherwise become available for issuance under the 2009 Long Term Incentive Plan as a result of forfeitures, expiration or cancellation of previously made awards, will become available for issuance under the 2018 Plan, and no additional grants will be made pursuant to the 2009 Long Term Incentive Plan. Any previously granted awards that are outstanding under the 2009 Long Term Incentive Plan will remain outstanding in accordance with their terms. As of April 11, 2018, an aggregate of 916,945 shares are unvested, of which 175,923 are unvested full value awards and 741,022 are unexercised stock options (with a weighted average exercise price of $37.55 per share, and a weighted average term of 6.26 years), under the 2009 Long Term Incentive Plan. See also “Compensation Discussion and Analysis” for additional information concerning our equity compensation plans. As of March 20, 2018, the record date, we had a total of 19,541,761 shares of common stock outstanding.

The 2018 Plan is intended to replace the 2009 Long Term Incentive Plan and is needed to continue our equity compensation program. Our equity compensation program is an important element to remain competitive in our industry in attracting and retaining experienced talent.

If the 2018 Plan is not approved by the stockholders, we will not be able to continue our equity-based long-term incentive program, and we may be required to increase significantly the cash component of our executive compensation program in order to remain competitive and adequately compensate our employees. The 2009 Long Term Incentive Plan would then remain in place until its expiration on March 31, 2019; however, as stated above, only 412,683 shares remain available for grant under the 2009 Long Term Incentive Plan.

The Company considers the 2018 Plan an essential element of total compensation and believes the 2018 Plan promotes its interests and the interests of its stockholders by: (i) attracting and retaining the services of key

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employees and directors; and (ii) encouraging the active interest of those persons in the development and financial success of the Company by granting awards designed to provide participants in the 2018 Plan with proprietary interest in the growth and performance of the Company.

Stockholder approval of the 2018 Plan will also constitute approval for purposes of satisfying the stockholder approval requirements under Section 422 of the Code so that the Compensation Committee may grant incentive stock options, or ISOs.

Best Practices

Independent Oversight. The Compensation Committee of our Board, referred to herein as the Committee, composed solely of independent directors, will approve all grants made under the 2018 Plan. Additionally, the Committee may delegate to any committee of the Board, to the Chief Executive Officer and to any of our other senior officers its duties under the 2018 Plan pursuant to such conditions or limitations as the Committee may establish; provided, however, that such delegation will not extend to the authority to make awards to participants who are subject to Section 16 of the Exchange Act.

No Repricing of Options or SARs. The 2018 Plan prohibits repricing, replacement and regranting of stock options or stock appreciation rights (“SARs”) at lower prices unless approved by our stockholders.

No Discounted Options or SARs. Stock options and SARs may not be granted with an exercise price below the closing price of our common stock on the date of grant.

No Dividends on Options or SARs. Dividends and dividend equivalents may not be paid or accrued on stock options or SARs.

Limited Terms for Options and SARs. Stock options and SARs granted under the 2018 Plan are generally limited to 10-year terms.

No Liberal Share Counting. Similar to the 2009 Long Term Incentive Plan, shares that are tendered by a participant or withheld (1) as full or partial payment of withholding taxes related to outstanding awards, or (2) as payment for the exercise price of options and SARs, and (3) shares repurchased in the open market with the proceeds of the payment of the option exercise price will not become available again for awards under the 2018 Plan.

Clawback or recoupment. All awards granted under the 2018 Plan will be subject to any clawback policy implemented by the Company.

No Transferability. Awards generally may not be transferred, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order, unless otherwise provided in the applicable award agreement.

No “Evergreen” Provision. Shares authorized for issuance under the 2018 Plan will not be replenished automatically. Any additional shares to be issued over and above the amount for which we are seeking authorization must be approved by our stockholders.

No Automatic Grants. There are no automatic grants to new participants or “reload” grants when outstanding awards are exercised, expire or are forfeited.

No Tax Gross-ups. Participants do not receive tax gross-ups under the 2018 Plan.

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Summary of the 2018 Plan

A description of the 2018 Plan appears below. Because the description of the 2018 Plan in this Proxy Statement is a summary, it may not contain all the information that may be important to you. The summary is qualified in its entirety by reference to the 2018 Plan, the full text of which is attached to this Proxy Statement as Appendix A. You should carefully read the 2018 Plan.

Eligibility

Persons eligible for Awards (as defined in the 2018 Plan) are (i) all employees of the Company and its subsidiaries and (ii) non-employee directors. As of the date of this Proxy Statement, six non-employee directors and approximately 1,500 employees would be eligible for grants of Awards under the 2018 Plan.

Shares Available for Awards

The 2018 Plan provides that up to 550,000 shares of common stock, plus the shares remaining available for awards under the 2009 Long Term Incentive Plan, may be issued, all of which may be issued as incentive stock options under Section 422 of the Code. The closing price per share of our common stock on April 6, 2018 was $40.35.

The number of shares of common stock that are the subject of Awards under the 2018 Plan or the 2009 Long Term Incentive Plan that are forfeited or terminated, expire unexercised, are settled in cash in lieu of common stock or are exchanged for Awards that do not involve common stock immediately become available for additional Awards under the 2018 Plan. However, similar to the 2009 Long Term Incentive Plan, the number of shares reserved for issuance under the 2018 Plan is not increased by (i) shares of common stock not issued or delivered as a result of the net settlement of stock-settled SARs or stock option, (ii) shares of common stock used to pay the exercise price or withholding taxes related to an outstanding Award, or (iii) shares of common stock repurchased on the open market with the proceeds of the option exercise price.

Administration

The Committee administers the 2018 Plan with respect to Awards to participants and has broad power to take actions thereunder, to interpret the 2018 Plan and to adopt rules, regulations and guidelines for carrying out its purposes. The Committee may, in its discretion, among other things, extend or accelerate the exercisability of, accelerate the vesting of or eliminate or make less restrictive any restrictions contained in any Award, waive any restrictions or other provision of the 2018 Plan or in any Award or otherwise amend or modify any Award in any manner that is either (a) not adverse to that participant holding the Award or (b) consented to by that participant.

Except in connection with a transaction involving the Company or its capitalization, the terms of outstanding Awards may not be amended without approval of the stockholders of the Company to (i) reduce the exercise price of outstanding options or SARs, (ii) cancel, exchange, substitute, buyout or surrender outstanding options or SARs in exchange for cash or other Awards, (iii) take any other action with respect to a stock option or SAR that would be treated as a repricing under the rules and regulations of the principal national securities exchange on which the shares of common stock are listed or (iv) permit the grant of any stock options or SARs that contain a so-called “reload” feature under which additional stock options, SARs or other Awards are granted automatically to the participant upon exercise of the original stock option or SAR.

The Committee also may delegate to the chief executive officer, other senior officers of the Company or to other committees of the Board its duties under the 2018 Plan to the extent allowed by applicable law and permitted by the 2018 Plan.

The Committee will determine the participants to receive Awards and the terms, conditions and limitations applicable to each such Award, which conditions may, but need not, include continuous service with the Company, achievement of specific business objectives, attainment of specified growth rates, increases in specified indices or other comparable measures of performance.

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Amendment; Termination

The Board may amend, modify, suspend or terminate the 2018 Plan for the purpose of addressing any changes in legal requirements or for any other lawful purpose, except that no amendment that would adversely affect the rights of any participant under any Award previously granted to such participant may be made without the consent of such participant and no amendment will be effective prior to its approval by the stockholders of the Company to the extent such approval is then required pursuant to Rule 16b-3 in order to preserve the applicability of any exemption provided by such rule to any Award then outstanding (unless the holder of such Award consents) or to the extent stockholder approval is otherwise required by applicable law. If approved at the Meeting, the 2018 Plan will expire on May 15, 2028, unless sooner terminated by the Board.

Adjustment

The Committee may make certain adjustments, including changes to the shares subject to outstanding Awards and shares available for grant under the 2018 Plan, in the event of any subdivision, split or consolidation of outstanding shares of common stock, any declaration of a stock dividend payable in shares of common stock, any recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, any adoption by the Company of any plan of exchange affecting the common stock or any distribution to holders of common stock of securities or property (other than normal cash dividends).

Change in Control

The consequences of a change in control (as defined in the 2018 Plan) on any outstanding Award shall be determined by the Committee and may be reflected in the applicable award agreement, or may be as provided in an individual severance or employment agreement to which a participant is a party. Additionally, pursuant to the 2018 Plan, upon a change in control, the Committee, in its discretion, may (i) provide for the substitution of Awards under the 2018 Plan, (ii) provide for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to any outstanding Award and in certain circumstance to provide for the termination of any portion of an Award that remains unexercised or (iii) provide for cancellation of an Award in exchange for such payment of such cash or property as shall be determined by the Committee in its sole discretion; provided, however, that no such adjustment shall increase the aggregate value of any outstanding Award.

Clawback

Awards under the 2018 Plan will be subject to the provisions of any clawback policy required by applicable law and implemented by the Company, which clawback policy may provide for forfeiture, repurchase and/or recoupment of Awards and amounts paid or payable pursuant to or with respect to Awards.

Awards

At the discretion of the Committee, employees or non-employee directors may be granted Awards under the 2018 Plan in the form of stock options, SARs, restricted stock awards, restricted stock units, cash awards or performance awards. Such Awards may be granted singly, in combination, or in tandem.

Options

Awards may be in the form of rights to purchase a specified number of shares of Common Stock at a specified price not less than that of the fair market value of a share of common stock on the date of grant (“Options”). An Option may be either an incentive stock option (“ISO”) that is intended to comply, or a nonqualified stock option (“NSO”) that is not intended to comply, with the requirements of Section 422 of the Code; provided that directors cannot be awarded ISOs. The Committee will determine the participants to receive Options and the terms, conditions and limitations applicable to each such Option. The term of each Option may

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not be longer than ten years from the date of grant; provided, however, if the term of a NSO expires when trading in the Common Stock is prohibited by applicable law or at a time in which there is a blackout period or restriction period under the Company’s insider trading policy or practices (as then in effect), then the term of such NSO shall expire on the 30th day after the expiration of such prohibition. The price at which shares may be purchased under an Option shall be paid in full at the time of exercise in cash or, if elected by the participant, by tendering Common Stock valued at fair market value on the date of exercise, or any combination thereof. The Committee in its discretion may provide for procedures to permit the exercise of an Option through “cashless” exercise.

Stock Appreciation Rights

Awards may also be in the form of SARs, which are rights to receive a payment, in cash or common stock, equal to the fair market value or other specified value of a number of shares of common stock on the rights exercise date over a specified strike price not less than the fair market value of a share of common stock on the date of grant. The term of each SAR may not be longer than ten years from the date of grant; provided, however, if the term of a SAR expires when trading in the common stock is prohibited by applicable law or at a time in which there is a blackout period or restriction period under the Company’s insider trading policy or practices (as then in effect), then the term of such SAR shall expire on the 30th day after the expiration of such prohibition.

Stock Awards

Awards may also be in the form of grants of Common Stock or units denominated in common stock, including restricted stock and restricted stock units (“Stock Awards”). The terms, conditions and limitations applicable to any Stock Award will be determined by the Committee. At the discretion of the Committee, the terms of a Stock Award may include rights to receive dividends or dividend equivalents prior to the vesting of the shares underlying the Stock Award.

Cash Awards

Awards may also be in the form of grants denominated in cash. The terms, conditions and limitations applicable to any cash awards granted pursuant to the 2018 Plan will be determined by the Committee.

Performance Awards

At the discretion of the Committee, any of the above-described Awards may be made in the form of a performance award (“Performance Awards”). A Performance Award shall be paid, vested or otherwise deliverable solely on account of the attainment of one or more performance goals, either individually or in any combination, established by the Committee. The amount of cash or shares payable or vested pursuant to Performance Awards may be adjusted upward or downward, either on a formula or discretionary basis or any combination, as the Committee determines.

General

Nothing in the 2018 Plan or in any award agreement shall interfere with or limit in any way the right of the Company to terminate any participant’s employment or other service relationship at any time.

The 2018 Plan shall be unfunded. The Company is not required to segregate any assets that may at any time be represented by cash, Common Stock or rights thereto.

The 2018 Plan shall be governed by and construed in accordance with the laws of the State of Delaware.

U.S. Federal Income Tax Consequences

The following is a summary of the general rules of current U.S. Federal income tax law relating to the tax treatment of award that may be issued under the 2018 Plan. The discussion is general in nature and does not take

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into account a number of considerations which may apply in light of the particular circumstances of a participant. This summary is not complete and does not attempt to describe any tax consequences arising in the context of the participant’s death or the income tax laws of any local, state or foreign country in which the participant’s income or gain may be taxable.

Stock Awards

Restricted Stock. A participant generally recognizes no taxable income at the time of an award of restricted stock. A participant may, however, make an election under Section 83(b) of the Code to have the grant taxed as compensation income at the date of receipt, with the result that any future appreciation or depreciation in the value of the shares of stock granted may be taxed as capital gain or loss on a subsequent sale of the shares. If the participant does not make a Section 83(b) election, the grant will be taxed as compensation income at the full fair market value on the date the restrictions imposed on the shares expire. In general, we will receive a corresponding deduction for U.S. Federal income tax purposes for any compensation income taxed to the participant. To the extent a participant realizes capital gains, as described above, we will not be entitled to any deduction for federal income tax purposes.

Restricted Stock Units. A participant who is granted restricted stock units will recognize no income upon grant of the restricted stock units. At the time the underlying shares of common stock (or cash in lieu thereof) are delivered to a participant, the participant will recognize compensation income equal to the full fair market value of the shares received. We will generally be entitled to a corresponding deduction for U.S. Federal income tax purposes that corresponds to the compensation income recognized by the participant.

Options; Stock Appreciation Rights

Options granted under the 2018 Plan may constitute ISOs within the meaning of Section 422 of the Code, while other options granted under the 2018 Plan may constitute NSOs. Grants of Options to non-employee directors are NSOs. The Code provides for tax treatment of Options qualifying as ISOs that may be more favorable to participants than the tax treatment accorded NSOs. Generally, upon the exercise of an ISO, the optionee will recognize no taxable income for U.S. Federal income tax purposes, although the difference between the exercise price of the ISO and the fair market value of the stock at the date of exercise is an addition to income in determining alternative minimum taxable income and such amount may be sufficient in amount to subject the optionee to the alternative minimum tax. On the sale of shares acquired by exercise of an ISO (assuming that the sale does not occur within two years of the grant date or within one year of the exercise date), any gain will be taxed to the optionee as long-term capital gain. Except with respect to death or disability, an optionee has three months after termination of employment in which to exercise an ISO and retain favorable tax treatment at exercise. No deduction is available to the Company upon the grant or exercise of an ISO (although a deduction may be available if the participant disposes of the shares so purchased before the applicable holding periods expire).

In contrast, upon the exercise of an NSO, the optionee recognizes ordinary taxable income on the exercise date (or date of disposition) in an amount equal to the excess of the fair market value of the shares purchased (or disposed of) over the exercise price. Upon the sale of such shares by the optionee, any difference between the fair market value at the date of sale and the fair market value at the date of exercise will be treated generally as capital gain or loss. Subject to the limitations discussed below, upon exercise of an NSO, the Company is entitled to a tax deduction in an amount equal to the ordinary taxable income recognized by the participant.

Participants do not recognize taxable income upon the grant of an SAR. Upon the exercise of an SAR, the participant will recognize ordinary income in an amount equal to the cash or fair market value of the shares of stock received at the date of exercise of the SAR. The participant’s tax basis in any shares of common stock received on the exercise of an SAR will generally equal the fair market value of such shares on the date of exercise. Subject to the limitations discussed below, the Company will be entitled to a deduction for U.S. Federal income tax purposes that corresponds as to timing and amount with the taxable income recognized by the participant under the foregoing rules.

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Deductibility; Excise Taxes

Code Section 162(m). In general, a U.S. Federal income tax deduction is allowed to the Company in an amount equal to the ordinary taxable income recognized by a participant with respect to Awards granted under the 2018 Plan, provided that such amount constitutes an ordinary and necessary business expense of the Company, that such amount is reasonable and that the Company satisfies any withholding obligations with respect to the participant’s ordinary taxable income. Following the enactment of the Tax Cuts and Jobs Act, beginning with the 2018 calendar year, the $1 million annual deduction limitation under Section 162(m) applies to compensation paid to any individual who serves as the Chief Executive Officer, Chief Financial Officer or qualifies as one of the other three most highly compensated executive officers in 2017 or any later calendar year. See also “Compensation Discussion and Analysis—Tax Implications—Deductibility of Executive Compensation” for additional discussion of Section 162(m) of the Internal Revenue Code.

Change in Control. The acceleration of the exercisability or the vesting of an award upon the occurrence of a change in control may result in an “excess parachute payment” within the meaning of Section 280G of the Code. A “parachute payment” occurs when an employee receives payments contingent upon a change in control that exceed an amount equal to three times his or her “base amount.” The term “base amount” generally means the average annual compensation paid to such employee during the five calendar years preceding calendar year in which the change in control occurs. An “excess parachute payment” is the excess of all parachute payments made to the employee on account of a change in control over the employee’s base amount. If any amount received by an employee is characterized as an excess parachute payment, the employee is subject to a 20% excise tax on the amount of the excess parachute payment, and the company is denied a tax deduction with respect to such excess.

Code Section 409A. Section 409A of the Code generally provides that any deferred compensation arrangement must satisfy specific requirements, both in operation and in form, regarding (i) the timing of payment, (ii) the advance election of deferrals, and (iii) restrictions on the acceleration of payment. Failure to comply with Section 409A of the Code may result in the early taxation (plus interest) to the participant of deferred compensation and the imposition of a 20% penalty on the participant on such deferred amounts included in the participant’s taxable income. The Company intends to structure Awards under the 2018 Plan in a manner that is designed to be exempt from or comply with Section 409A of the Code.

2018 Plan—New Plan Benefits

The allocation of some of the shares that would become available for issuance under the 2018 Plan is not currently determinable as such allocation depends on future decisions to be made by the Committee in its sole discretion, subject to applicable provisions of the 2018 Plan. No Awards have been granted that are contingent on the approval of the 2018 Plan. Therefore, it is not possible to determine the benefits that will be received in the future by participants in the 2018 Plan or the benefits that would have been received by such participants if the 2018 Plan had been in effect in the year ended December 31, 2017. Certain tables in this proxy statement set forth information with respect to prior awards granted to our Named Executives under the 2009 Long Term Incentive Plan currently in effect.

Similarly, no options have yet been granted under the 2018 Plan, and the amount of any such future option grants are not currently determinable.

Our Board believes that the approval of the 2018 Plan is in the best interest of the Company and its stockholders. Because approval of the 2018 Plan will increase the number of shares available for issuance to all directors and executive officers of the Company, each of the directors and executive officers of the Company has an interest and may benefit from the approval of the 2018 Plan.

Our Board unanimously recommends a vote “FOR” approval of the 2018 Plan.

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Directors and Corporate Governance

The Board of Directors and its Committees

Under our by-laws and the laws of Delaware, our state of incorporation, the business and affairs of the Company are managed under the direction of the Board. It is the duty of the Board to serve as a prudent fiduciary for stockholders and to oversee the management of the Company’s business.

Board Composition and Meetings

All of our current directors are serving terms that will expire at the Meeting. The following table presents biographical information regarding each of our current directors, each of whom has been nominated for re-election at the Meeting and has agreed to serve if re-elected.

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15

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Certain of our directors are also officers and/or directors of certain subsidiaries of Innophos Holdings, Inc. There are no family relationships among any of our directors or executive officers.

Among the factors considered by the Nominating & Corporate Governance Committee in recommending, and the Board in nominating, the above candidates for re-election at the Meeting were the following:

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Each of our directors, other than Kim Ann Mink, is independent under NASDAQ Stock Market Rules and SEC rules with respect to their service on our Board and the respective committees on which they serve.

During 2017, the Board had a total of six meetings, the Audit Committee had a total of seven meetings, the Compensation Committee had a total of five meetings and the Nominating & Corporate Governance Committee had a total of three meetings. In addition, our Strategic Advisory Committee, which is no longer a standing Board committee, had one meeting in 2017. Each director is expected to devote sufficient time, energy and attention to ensure diligent performance of his or her duties. This responsibility includes not only attending Board and committee meetings, but stockholders’ meetings as well. All current directors attended the 2017 annual meeting of stockholders.

Board Leadership Structure

The Board is dedicated to the principle that independent directors must play a determinative role in the overall governance of the Company, including an active role in the leadership structure of the Board and its committees.

Since February 2017, Dr. Mink has served as the Chairman of the Board. Other than Dr. Mink, all directors now serving on the Board are independent directors. To follow sound governance practices consistent with its principles and provide leadership and coordination among the independent majority of directors, in 2007, the Board created the office of “Lead Independent Director,” or LID, and formalized that determination in the corporate structure by amending the Company’s by-laws. Under the Company’s by-laws, whenever the Board elects a chairman who is not also an independent director under the regulatory standards then applicable to the Company, it must also elect from among the independent directors a LID. Apart from being a distinct corporate office recognized under the by-laws, the LID position is separately compensated from other directors in recognition of its importance and additional responsibilities.

The LID is to preside at all meetings of the stockholders and the Board in the absence of the chairman, to act as chair for meetings of the independent directors, and to have the duties prescribed by the by-laws and the Board. The Board has specified major roles for the LID that centrally involve that director in coordinating the independent director activities of the Board.

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Peter Thomas, an independent director, currently serves as the LID. Mr. Thomas currently serves on the Audit Committee and the Nominating & Corporate Governance Committee. He was elected as the LID effective April 2, 2018 to serve until the 2018 annual organizational meeting of the Board, subject to his reelection by stockholders at the Meeting.

Since the creation of the office of the LID, the Board has reviewed from time to time the governance issues and principles relating to the combination or separation of the offices of chief executive and chairman. The Board has concluded that the interests of the Company and its stockholders are currently best served by combining the offices of chief executive officer and chairman and maintaining the office of the LID and electing a qualified candidate to that office. Among factors that support that conclusion are the following: (i) the Board believes the existing combined structure and incumbent personnel involved would continue to work well for the benefit of the Company; (ii) there is no convincing evidence that the Company’s financial performance or other aspects of its business would be improved by splitting the roles; (iii) there is a concern that dividing the roles could weaken its ability to develop and implement critical strategies; (iv) as a matter of good governance, the Company already implements alternative measures to strengthen Board independence and oversight (for example, Board expansions, other than the addition of our current Chief Executive Officer, have been solely with independent directors, Board committees are all being chaired by independent directors, and at Board and committee meetings, time is allocated for independent directors to meet in executive session without management personnel present); and (v) potential benefits of splitting the roles can be achieved in other meaningful ways such as by using the LID function concentrated in one independent director who could work in tandem with a non-independent chairman.

The Board retains the right at any time to review the issues of separation or combination of the Board leadership and management leadership and the discretion and power to make changes in that regard should it conclude circumstances warrant them.

Board Effectiveness Review in 2017 and 2018

As the Company continues its transformation pursuant to its Vision 2022 growth plan, the Board engaged outside consultants, led by the Nominating and Corporate Governance Committee, and conducted a board effectiveness review as outlined below.

As a result of the effectiveness review, the Board implemented several changes in March 2018, including:

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The Board’s Role in Risk Oversight

The Company is exposed to a wide variety of risks in its business activities, including strategic risks, operational risks, financial risks, risks relating to general economic conditions and their effect on its industry, geo-political risks and risks relating to regulatory and legal compliance. The Company regularly discloses in its public filings material risks to its business and the steps it takes to identify and attempt to prevent or mitigate them.

One of the responsibilities of the Board is oversight of the Company’s risk management activities. In meeting that responsibility, the Board ensures that processes are in place to identify and evaluate the major risks faced by the Company and oversees and monitors the design and implementation of guidelines and programs to manage the Company’s response to those risks. The Board discharges its oversight function through a combination of its own efforts, those of its standing committees and the senior management structure of the Company. Senior executives manage material risks on a day-to-day basis and assist in managing risk in liaison with the Board and Board committees. The Company has an Enterprise Risk Management Policy, or ERMP, providing an overall methodology for dealing with various types of risk.

According to the ERMP, the accountabilities for risk management at the Company are as follows:

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Risk Analysis of Performance-Based Compensation Plans

The Compensation Committee has discussed and analyzed elsewhere in this Proxy Statement the various elements of compensation provided to those persons identified as our Named Executives in the “Executive Compensation” section of this Proxy Statement. The committee believes that, although the larger part of compensation value provided to our Named Executives and key employees could be regarded as performance-based, our compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company.

Our compensation programs encourage participants to remain focused on both short and long-term financial and other measures and to remain in Company service for extended periods of time. The bases for compensation under our programs have been broad, traditional measurements indicative of sound performance measured both internally and externally. For example, our performance share awards (under our long term incentive programs) are issued only at the end of three-year performance cycles, and award levels for each cycle are currently based on free cash flow and contribution margin as a percentage of sales. The fact that these awards are stock-based, together with the nature of stock option and restricted stock awards made separately under our programs (also with installment vesting), generally encourages participants to focus on sustained stock price appreciation over the long term.

Under our short term programs, awards paid in cash have been based on both Company financial achievement and fulfillment of individual goals (with Company financial achievement constituting 70% of the award). The financial goals are based on broadly accepted measurements, such as adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and AWC (Average Working Capital as a percentage of sales), in each case measured against targets related to annual budgets. Participants’ personal goals are harmonized with overall Company goals and depend to a significant degree on non-financial measurements that may extend to risk reduction areas like health, safety, environment, quality and customer service. The harmonization to broader goals discourages excessive risk taking by individuals. Moreover, awards are not paid out to executives on individual goals if, at a minimum, Company goals are not met. The Company also has stock ownership guidelines that require long-term equity ownership by senior executives, a structure that keeps their interests aligned with stockholders for the long-term and discourages excessive risk taking harmful to all investors.

For a more detailed discussion of these compensation programs, please see “Executive Compensation—Compensation Discussion and Analysis” included elsewhere in this Proxy Statement.

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Board Committees Overview

The Board currently has three standing committees: the Audit Committee, the Compensation Committee and the Nominating & Corporate Governance Committee, each of which currently has the membership shown in the table below.

A complete copy of the Company’s corporate governance documents and charters are available, free of charge, on the Company’s website (www.innophos.com) under the tab “Investor Relations”, and then by selecting “Corporate Governance”, followed by “Documents and Charters”. The following are posted on the website:

Under our by-laws and Delaware law, the Board has the power to form additional standing or special committees as it sees fit. Committee members are appointed by the Board and hold their offices until their successors are appointed and qualified, or until their earlier resignation or removal. All vacancies on committees are filled by the Board. The Board designates a member of each of the standing committees as Chair, and each committee keeps a separate book of minutes of its proceedings and actions.

The principal duties and responsibilities of our standing committees are discussed below.

Audit Committee

The Board has adopted a written charter that defines the duties and responsibilities of the Audit Committee. The principal purpose and responsibilities of the Audit Committee is to provide assistance to the Board in fulfilling its oversight responsibility to:

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The committee is required to consist of at least three members. Currently, there are four directors serving on the committee. The Board has determined that Robert Zatta, chair of the Committee, as well as Karen Osar and Peter Thomas, meet the SEC’s definition of “audit committee financial expert.” All committee members are “independent,” as that term is defined by the NASDAQ Stock Market rules and SEC rules, with respect to their service on the Audit Committee.

Nominating & Corporate Governance Committee

The Nominating & Corporate Governance Committee serves as the Company’s nominating committee. The Board has adopted a written charter that defines the duties and responsibilities of the Nominating & Corporate Governance Committee. The principal purpose and responsibility of the committee under its charter adopted by the Board is to:

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The Nominating & Corporate Governance Committee is required to consist of at least three members. The committee currently consists of four members, all of whom are independent under NASDAQ Stock Market rules.

The Company’s Corporate Governance Guidelines provide that the committee will also evaluate candidates for the Board recommended by stockholders. The committee gives the same consideration to candidates recommended by stockholders as those candidates recommended by members of our Board. Stockholders wishing to recommend a candidate may submit a timely recommendation in writing to the Secretary of the Company. That submission should include the information specified in our bylaws, including: (i) the candidate’s name, age, address, occupation and share ownership; (ii) other biographical information that will enable the committee to evaluate the candidate in light of the criteria; and (iii) information concerning any relationship between the candidate and the stockholder making the recommendation. No distinction is made by the committee in considering candidates properly nominated by stockholders from those who may be nominated by directors, management or other sources.

The committee is interested in recommending candidates (as needed subject to the size of the Board as determined by that body) who will make the strongest contributions toward the Board’s fulfillment of its overall responsibilities to manage the Company’s business in the best interests of the stockholders. Although we do not have a formal diversity “policy,” the committee recommends candidates based upon many factors, including the diversity of their business or professional experience, the diversity of their background and their array of talents and perspectives. We believe that the committee’s existing nominations process is designed to identify the best possible nominees for the Board, regardless of the nominee’s gender, racial background, religion or ethnicity.

Each year, the committee conducts an evaluation process covering the Board, each committee and each Board member. In addition, as noted above under “—Board Effectiveness Review in 2017 and 2018” the Board commissioned an effectiveness review in 2017-2018 utilizing outside consultants.

Following this evaluation process and effectiveness review, the committee recommended to the Board, and the Board approved, the inclusion of each of the seven director nominees in Proposal I of this Proxy Statement for nomination for re-election at the Meeting.

Compensation Committee

The Board has adopted a written charter that defines the duties and responsibilities of the Compensation Committee. The committee’s primary purpose and responsibilities are to:

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The committee is to consist of at least three members. The committee currently consists of four members, all of whom are independent under NASDAQ Stock Market rules with respect to their service on the committee. The committee may form one or more subcommittees consisting exclusively of one or more independent directors and each of which may take such actions as may be delegated by the committee.

The committee regularly consults with external, independent consultants and may consult with outside legal advisors that advise it on compensation issues. The committee has the final authority to retain and terminate compensation consultants and determines the terms and conditions of those relationships, including compensation. In their engagements, compensation consultants receive directions from, and consult with, the committee, as well as senior management. In the course of its duties, the committee discusses with the consultants executive compensation matters it deems appropriate outside the presence of management. Although the committee seeks and considers the information and advice provided by its consultants, decisions by the committee are ultimately the committee’s responsibility.

During 2017, the Compensation Committee engaged Mercer (USA), Inc. (“Mercer”) to provide compensation related services and advice relating to executives. Mercer reported directly to the Compensation Committee, and the nature and scope of the principal executive compensation services rendered for 2017 by it to the Compensation Committee and on its behalf can be summarized as follows: (i) guidance with respect to executive compensation, taking into account the Company’s business strategies, pay philosophy, stockholders’ interests, prevailing market practices, and relevant legal and regulatory mandates; (ii) assistance with the assessment and implementation of short-term and long-term incentive compensation programs; and (iii) advice with respect to best practices related to executive compensation and Compensation Committee activities.

For 2017, the Company incurred $172,403 of fees and expenses in respect of executive compensation services performed by Mercer, all of which were in support of the Committee’s functions. For 2017, the Company and its subsidiaries also expended approximately $230,000 for insurance brokerage and additional advisory services performed by an affiliate of Mercer. Those services were considered ordinary and necessary for the ongoing protection of corporate assets and personnel or in furtherance of strategic development and were not approved by the Board or any committee thereof. The insurance relationship with Mercer’s affiliate originated with the Company’s organization in 2004, was known at the time Mercer was first retained for executive compensation services, and is not considered by the Company to present a conflict of interest or adversely affect Mercer’s independence.

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The Compensation Committee assessed the independence of Mercer and all other outside advisors retained to advise it on compensation matters in 2017 and determined that there were no conflicts of interest. In compliance with its charter and in reaching these conclusions, the Committee considered Rule 10C-1(b)(4) of the Exchange Act, and the corresponding independence factors in Rule 5605(d)(3) of the NASDAQ Stock Market regarding compensation advisor independence and believes that its advisors were able to independently advise the Compensation Committee.

Compensation Committee Interlocks and Insider Participation

There are no relationships required to be disclosed under this section.

Policy on Communications from Security Holders and Interested Parties

Stockholders and other interested parties wishing to contact our Board, any director, any of the committee chairs or the independent directors as a group, may write to c/o Corporate Secretary, 259 Prospect Plains Road, Building A, Cranbury, New Jersey 08512. The Corporate Secretary will collect, organize and forward all communications, in that officer’s judgment, which are appropriate for consideration by the directors. Examples of communications that would not be considered appropriate for consideration by the directors include personal employment matters, solicitations for products or services and matters not relevant to the functioning of the Board, stockholder interests or the affairs of the Company. Communications addressed to directors may, at the direction of the directors, be shared with Innophos’ management.

In addition, any interested parties who have concerns that they wish to make known to the Company’s non-management directors may send any such communication directly to the Chair of the Nominating & Corporate Governance Committee in care of the Company’s executive offices at 259 Prospect Plains Road, Building A, Cranbury, New Jersey 08512. All such stockholder communication will be reviewed by the Chairman of the Nominating & Corporate Governance Committee and discussed with the committee, which will determine an appropriate response or course of action.

Employees may also report misconduct, raise issues or simply ask questions, including with respect to any questionable accounting, internal control or auditing matters concerning the Company, without fear of dismissal or retaliation of any kind. Reports may be made confidentially and/or anonymously through our whistleblower hotline, 1-800-461-9330 or by completing and submitting a web form available at www.mysafeworkplace.com.

Codes of Ethics, Environmental Sustainability and Safety Policy and Website

The Board sets high standards for the Company’s employees, officers and directors. Implicit in sound corporate governance is a philosophy of lawful conduct and ethical behavior toward the various interests affecting or forming part of the corporate landscape. To fulfill its responsibilities and to discharge its duties, our Board follows the procedures and standards that are set forth in guidelines, codes and charters adopted by the Board. These governing principles are subject to modification from time to time as our Board deems appropriate in the best interests of the Company or as required by applicable laws and regulations.

We have adopted a Code of Ethics that applies to all of our employees, officers and Board members. We have also adopted a supplemental Code of Ethics for Executive Officers and Principal Accounting Personnel that applies to our senior financial officers. We expect that any amendments to these codes, or any waivers of their requirements, will be disclosed on our website. In addition, we have adopted an Environmental Sustainability and Safety Policy, consistent with our commitment to protecting the natural environment and the communities in which we operate. We also adopt from time to time additional guidelines and policies designed to foster sound governance practices and compliance with applicable laws and regulations.

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Our General Code of Ethics, Code of Ethics for Executive Officers and Principal Accounting Personnel and our Environmental Sustainability and Safety Policy, as well as our annual, quarterly and other reports filed with the SEC and proxy statements are available on our website, www.innophos.com, and are also available in print to any stockholder who requests them.

By referring to these documents, we do not intend to incorporate the contents of the website into this Proxy Statement.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires directors, officers and persons who own beneficially more than 10% of our common stock to file initial reports and reports of changes in ownership of our common stock with the SEC within prescribed time periods. The Company’s directors, officers and stockholders first became subject to Section 16(a) in November 2006. As a practical matter, we try to assist our officers and directors in the reporting process by monitoring transactions and providing support for their filings. Based upon a review of filings with the SEC and written representations to us, we believe that during 2017 all of our directors and executive officers complied with the reporting requirements of Section  16(a).

Compensation of Directors

Our by-laws allow directors to be paid compensation, including allowances and attendance fees, as the Board may from time to time determine. Only non-employee directors are currently eligible for such compensation, and directors who are employees of the Company receive no additional compensation for their service on the Board.

The objective of our director compensation programs is to enable the Company to attract and retain as directors individuals of substantial accomplishment with demonstrated leadership capabilities. From time to time, our Compensation Committee reviews the levels, types and mix of compensation paid to directors, considers market conditions and prevailing practices with its consultants and makes recommendations to the Board for its consideration concerning director compensation. Our director compensation program is benchmarked to competitive levels. Consistent with those objectives and procedures, the compensation paid to our non-employee directors in 2017 was structured as follows:

The annual cash retainer is paid quarterly. In order to better align the interests of directors with those of the stockholders, we utilize an annual stock retainer referred to in the table above and reflected in the table below, pursuant to which our non-employee directors receive a portion of their annual fee (currently the equivalent of

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$90,000 in fair market value at time of issue) in fully vested actual shares of Company common stock following their successful election or re-election at annual meetings. Non-employee directors are subject to the Company’s Executive and Director Stock Ownership Policy, under which each such director is afforded until five years after first election to achieve and maintain a level of ownership of common stock equal in value to five times the amount of their annual cash retainer (currently $80,000). At the current level of cash retainer and an illustrative price per share of common stock of $40, compliance with the policy would require each director to own a minimum of 10,000 shares. As of December 31, 2017, based on the computational rules under our policy, all of our non-employee directors were in compliance with the requirements. Messrs. Zatta and Thomas, who joined the Company in 2016, have five years from the date they joined the Company to satisfy these requirements.

Director Compensation Table

For services rendered as directors in all Board and committee capacities in 2017, we provided our non-employee directors the following compensation:

Dr. Mink will not receive any additional compensation for serving on our Board. For a discussion of her compensation arrangement, see “Executive Compensation” appearing elsewhere in this Proxy Statement.

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Related Party Transactions and Policy With Respect To Related Person Transactions

Policies and Procedures for Related Party Transactions

The Board has a written policy that requires certain transactions with “related persons” to be approved or ratified by its Audit Committee. For purposes of this policy, related persons include (i) any person who is, or at any time since the beginning of the Company’s last fiscal year was, a director or executive officer of the Company or a nominee to become a director of the Company, (ii) any person who is the beneficial owner of more than 5 percent of any class of the Company’s voting securities; and (iii) any “immediate family member or affiliate” of any person described in (i) or (ii). The types of transactions that are subject to this policy are transactions, arrangements or relationships (or any series of similar transactions, arrangements or relationships) in which the Company, or any of its subsidiaries, was, is or will be a participant and in which any related person had, has or will have a direct or indirect material interest and the aggregate amount involved will or may be expected to exceed $100,000. Under the policy, certain transactions are deemed to be automatically pre-approved and do not need to be brought to the applicable committee for individual approval. The standards applied by the applicable committee when reviewing transactions with related persons would be expected to include (a) the benefits to the Company of the transaction; (b) the terms and conditions of the transaction and whether such terms and conditions are comparable to the terms available to an unrelated third party or to employees generally, and (c) the potential for the transaction to affect the independence or judgment of a director or executive officer of the Company.

Related Party Transactions

The following is a description of transactions since January 1, 2017 to which we have been a party, in which the amount involved exceeds $120,000, and in which any of our directors, executive officers or holders of more than 5% of our share capital, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest.

Director and Executive Officer Compensation and Related Agreements

See “Directors and Corporate Governance—Director Compensation” and “Executive Compensation” appearing elsewhere in this Proxy Statement for information regarding the compensation, including severance payments, that we have paid to our directors and Named Executives and the terms of the employment agreements and related agreements with our Named Executives.

Indemnification Agreements and Directors’ and Officers’ Liability Insurance

We have entered into an indemnification agreement or an employment agreement that provides indemnification rights with each of our directors and certain of our executive officers. Under those agreements, we have agreed generally to indemnify the executive officers and directors against liabilities, including advancing litigation expenses, incurred in connection with their service for our Company, its subsidiaries or other entities at our request. Our corporate charter also provides indemnification rights to our officers and directors. We also maintain directors’ and officers’ liability insurance for our directors and officers.

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Information Regarding the Independence of the Independent Registered Public Accounting Firm

Auditor Fees

The following table shows the fees paid to PwC for professional services for 2017 and 2016:

Pre-Approval Policy

The Audit Committee has the sole authority to pre-approve all audit engagement fees and terms as well as all non-audit engagements with PwC. In 2017 and 2016, all the above services were pre-approved by the Committee in accordance with a pre-approval policy.

Audit Committee Report

The Audit Committee has reviewed and discussed Innophos’ audited financial statements for the year ended December 31, 2017 with Company management. The Audit Committee discussed with the independent registered public accounting firm, PwC, the matters required to be discussed by the Public Company Accounting Oversight Board (the “PCAOB”) in accordance with Auditing Standard No. 16, “Communications with Audit Committee”.

The Audit Committee also discussed with Company management management’s assessment of Innophos’ disclosure controls and procedures as of December 31, 2017. The Audit Committee has received the written disclosures and the letter from PwC required by the applicable requirements of the PCAOB, and the Audit Committee has discussed with PwC its independence.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements for the Company be included in its Annual Report on Form 10-K for the year ended December 31, 2017 for filing with the Securities and Exchange Commission.

The Audit Committee

Robert Zatta (Chair)

Karen Osar

John Steitz

Peter Thomas

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Executive Compensation

Compensation Discussion and Analysis

In this section, we discuss our compensation policies and objectives, and the programs we have established to achieve these objectives. This discussion primarily focuses on our named executive officers, as defined under SEC rules and identified below under “Named Executives”. We refer to these officers as our “Named Executives”.

Named Executives

The table below identifies our Named Executives for 2017. Although Jean Marie Mainente’s employment with the Company was terminated on September 30, 2017, she qualified as a named executive officer under SEC rules for 2017 as a result of the inclusion of certain severance payments she received in her 2017 compensation as discussed more fully in this Executive Compensation section. In addition, as a result of the fact that Yasef Murat served as an executive officer for a portion of 2017, he qualified as a named executive officer under SEC rules notwithstanding the fact that he was not serving as an executive officer at the end of the year (he remains employed with Innophos in a non-executive role).

Historical compensation data for the Named Executives can be found below in the “Summary Compensation Table” and supporting tables in this Proxy Statement following this discussion. References to the “Committee” in this discussion mean the Board’s Compensation Committee. The Committee has primary responsibility for establishing, implementing and continually monitoring adherence to the Company’s compensation philosophy along with the other duties provided in the Committee’s charter.

Vision 2022 Growth Plan

In April 2017, we unveiled our five-year Vision 2022 growth plan. The purpose of our Vision 2022 growth plan is to transform the growth profile of our company, increase our presence in attractive Food, Health and Nutrition ingredient end-markets and develop innovative solutions that better serve our customers, all of which is expected to increase stockholder returns. Specifically, our Vision 2022 growth plan focuses on:

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Vision 2022 Achievements in 2017

In 2017, we made substantial achievements in connection with our Vision 2022 growth plan:

Executive Summary of Compensation Policies and Practices – Alignment of Pay and Performance

Our compensation policies and practices seek to tie executive compensation to performance and to align the interests of our executives with our stockholders:

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CEO Compensation Overview

A substantial portion of targeted pay for our Named Executives, including our Chief Executive Officer, is based on performance. Approximately 75% of Dr. Mink’s 2017 target compensation is performance based:

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The below table presents a summary of Dr. Mink’s base salary, short-term cash bonus and long-term equity compensation with respect to 2017 and 2016:

In 2017, Dr. Mink received a $50,000 increase in her 2017 base salary, her short-term cash bonus target was increased from 90% to 100% of her base salary and her long-term equity compensation target was increased from 170% to 200% of her base salary as a result of, among other achievements, her strong leadership in overcoming the challenges of the dynamic market environment, which resulted in a 90% stockholder return in 2016, Innophos’ best performance during the last ten years as a publicly traded company. Dr. Mink’s 2017 compensation was set at a level equal to approximately the 25th percentile of the peer group discussed below under “—Setting Compensation,” which is consistent with the Company’s targeted level at the 25th percentile of the peer group. In connection with our stockholder engagements described below under “—Impact of Prior “Say-on-Pay” Vote and Extensive Stockholder Outreach,” no stockholder expressed concerns regarding Dr. Mink’s compensation.

Among the factors that our Board of Directors considered in setting the 2017 individual performance factor component of our short-term cash incentive program for Dr. Mink (as described below, she received a score of 1.5) was her instrumental role in 2017 in developing, implementing and executing against our Vision 2022 growth plan. As noted above, in 2017, Innophos made significant advancements against each of the strategic excellence, commercial excellence and operational excellence pillars of its Vision 2022 growth plan. In particular, Innophos consummated two strategic acquisitions to strengthen its Food, Health and Nutrition portfolio. Dr. Mink led each of these two acquisitions. Dr. Mink’s individual performance factor also reflected her overall leadership of the Company. In addition, since Dr. Mink joined Innophos, for the two-year period ended December 31, 2017, Innophos experienced a total stockholder return of 77%.

Please see “—Summary Compensation Table” below for a description of Dr. Mink’s 2017 compensation (including footnote (1) thereto which provides greater clarity on the comparison between Dr. Mink’s 2017 and 2016 compensation as presented in the Summary Compensation Table as a result of certain of her 2016 short-term cash incentive compensation and long-term equity compensation being reported in her 2015 compensation).

Impact of Prior “Say-on-Pay” Vote and Extensive Stockholder Outreach

Say-on-Pay Vote

Every year, we provide our stockholders the opportunity to cast an advisory, non-binding vote, popularly known as a “say on pay,” regarding the compensation of our Named Executives. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or Dodd-Frank Act, which amended the Exchange Act, requires a “say on pay” vote. Proposal 3 in this Proxy Statement is this year’s “say on pay” vote. Although these votes are not binding on the Company or our Board and do not change their fiduciary duties, our Board has considered, and will continue to consider, these vote results in designing and implementing compensation policies and programs.

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The Dodd-Frank Act also requires that we propose an advisory vote on the issue of the frequency of “say on pay” advisory votes at least once every six calendar years. Our last such proposal was made at our 2017 annual stockholders meeting. At that meeting, a majority of shares present in person or represented by proxy at the meeting favored holding advisory votes regarding “say on pay” annually, a practice which was then adopted by the Board.

After careful consideration, including an evaluation of the results of last year’s “say on pay” vote (which received approximately 60% stockholder approval) and reviewing practices by our peers and other public companies, our Board has decided that the executive compensation advisory vote should continue to be held every year. Our Board wishes to continue to provide our stockholders with an opportunity to evaluate and provide feedback on the Company’s compensation policies and programs on an annual basis. The Company believes this annual feedback will best enable it to craft compensation policies and programs that are best aligned with stockholder value.

The results of the 2017 “say on pay” vote (approximately 60% stockholder approval) confirmed the shareholders’ approval of the compensation practices of the Company and represented an improvement of approximately 9% from the 2016 “say on pay” vote, which improvement we believe was the result of our responses, detailed below, to address 2016 stockholder feedback. We believe the margin of approval in 2017, although improved from 2016, reflects the leadership changes and business transformation experienced by the Company in 2015 and 2016.

2016 Stockholder Feedback

The primary concerns expressed by stockholders during our engagements in 2016 were (i) excess severance paid to our former chief executive officer in 2015 and (ii) lack of a performance-based component in our 2016 long-term incentive grants.

Innophos Response to Address 2016 Stockholder Feedback

To specifically address the foregoing concerns expressed by stockholders, Innophos adopted the following changes to our compensation policies and practices:

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Additional Changes to Compensation Policies and Procedures and Corporate Governance Updates

In addition to the foregoing changes, we have adopted the following changes to our compensation policies and practices and corporate governance profile to further align such policies, procedures and profile with our stockholders’ interests and stockholders’ feedback:

Innophos 2017 Stockholder Outreach

To address the concerns expressed by stockholders in 2016, as well as to ensure that our stockholders continue to have meaningful opportunities to provide ongoing feedback with respect to our executive compensation policies and practices, we maintained our aggressive stockholder outreach program through 2017. In 2017:

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In addition to the foregoing, Innophos hosted an investor day on April 5, 2017. We invited each of our stockholders to attend our investor day, and we engaged over 20 stockholders at our investor day. The purpose of the investor day was to ensure that we were addressing concerns previously expressed by stockholders, as well as to roll out our Vision 2022 growth plan.

In our 2017 stockholder engagements, stockholders provided positive feedback to the changes to our compensation policies and practices outlined above, including the re-introduction of performance shares as the third component of the 2017 long-term incentive grant coupled with the feature of an additional modifier based on TSR. For example, in connection with our extensive stockholder engagement relating to our 2017 annual stockholders meeting, stockholders holding over 27% of our outstanding shares of common stock (77% of the shares of common stock represented by such engaged stockholders) voted “FOR” our say-on-pay proposal at our 2017 annual meeting of stockholders.

Continued Stockholder Engagement

Our extensive stockholder engagement continued beyond our 2017 annual stockholders meeting and into 2018. We continue to solicit feedback from stockholders on our compensation policies and practices. We have received positive feedback with respect to the above-noted updates to our compensation policies and practices, particularly the inclusion of the performance-based component in our 2017 long-term incentive grants, as well as the inclusion of the TSR modifier. We continue to solicit feedback from stockholders during our ongoing stockholder engagements with respect to our compensation policies and practices, and based on the feedback we received from stockholders during our stockholder engagements in 2016 and 2017, as well as our 2018 year to date stockholder engagements, we are not aware of any additional policies or practices that our stockholders are currently seeking beyond the above-noted updates that we previously implemented to align our compensation policies and practices with our stockholders’ interests and feedback.

The Committee will continue to assess and, as needed, make changes and adjustments to programs from year to year based on its perception of business needs and the need to ensure that the programs continue to be effective in incentivizing performance and attracting and retaining talent under changing business conditions.

Overview of Compensation Program

The goal of our executive compensation program is to provide compensation and incentives that attract and retain top level executives and motivate them to increase stockholder value for the intermediate and long-term. In achieving our goal, we seek to be fair, reasonable and competitive to all constituencies involved. Our fundamental premise is that increased value for our stockholders means increased value for our executives.

Compensation Philosophy and Objectives

Philosophy. Our Committee follows an executive compensation strategy that embodies our compensation philosophy and whose elements we use to design and implement our compensation programs. This strategy is as follows:

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KEY PAY AND GOVERNANCE PRACTICES AND POLICIES

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Setting Compensation

Compensation programs are determined on an annual basis, but the Committee may revise, initiate or discontinue programs at any time. The Committee has also regularly engaged outside consultants to assist in making compensation related decisions. See “The Board of Directors and Corporate Governance—Committees of the Board—Compensation Committee” in this Proxy Statement.

The Committee’s consultant for 2017, Mercer LLC, or Mercer, completed a study to evaluate competitive levels of executive base pay, short-term bonus, long-term incentives and perquisites for Innophos’ senior executives, including all Named Executives. Mercer reviewed two sources for compensation data: the proxy statements of an industry peer group, which we refer to as the peer group; and published survey data. Competitive compensation information was aged forward through 2017 using 3% as the average annual executive wage change assumption, which Mercer considered appropriate.

The peer group is comprised of companies primarily in the specialty chemical and ingredients industry with financial statistics being reasonably comparable to Innophos (see below for list of companies in the peer group). Data from the peer group were used in comparing the compensation provided to Innophos’ Chief Executive Officer and Chief Financial Officer to the market. As Innophos’ revenues were in the bottom quartile relative to the revenues of peer group companies, the 25th percentiles of peer group compensation data were used in making comparisons.

For all Named Executives, Mercer also reviewed published survey data of comparable roles collected from similar sized companies in similar industries. The 50th percentiles of survey compensation data were used in making comparisons and setting compensation when the Committee deemed the proxy statement data insufficient or not appropriate.

The table below presents the financial statistics of the companies in the peer group:

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2017 Executive Compensation Components

For 2017, the principal components of compensation for Named Executives were:

A substantial portion of targeted total pay for each of our Named Executives is based on performance of the Company, including the trading price of the Company’s common stock.

Base Salary

The Company provides the Named Executives with base salary to compensate them for services rendered during the fiscal year. Base salary ranges are determined for each executive according to his or her position and responsibility, as well as the current market-competitive level for similar positions (based on a review of the peer group companies and published market survey data). Base salary ranges are designed so that salary opportunities for a given position will be approximately (within +/- 15% of) the 25^th percentile of the peer group (for our Chief Executive Officer and Chief Financial Officer) or the median of market survey data (for all other Named Executives) for such position. Base salaries are also periodically reviewed to determine if they require “market” adjustments.

Salary levels are typically considered annually as part of the Company’s performance review process as well as upon a promotion or other change in job responsibility. Increases to salaries of Named Executives made at that time may be “merit” based, depending on the Committee’s assessment of the individual’s performance taking into consideration the market competitive level of such increases.

The below table shows the respective 2017 base salaries of our Named Executives.

Short Term (Annual) Incentive Compensation

Certain short term incentive, or STI, awards granted through December 31, 2017 were provided as part of the 2010 Executive, Management and Sales Incentive Plan with targets established in a program for 2017, which we refer to as the 2017 STIP. The Named Executives participated in the 2017 STIP along with other Company employees worldwide and except as provided in individual employment agreements, participants must be employed by the Company to receive payment of an award (typically in March of the following fiscal year).

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Under the 2017 STIP, the Named Executives could receive individual, market-competitive bonuses measured as a percentage of base pay that would be earned if the executives and the Company achieved requisite performance goals. The following table shows the 2017 target bonus percentages for each Named Executive:

Ms. Mainente had a bonus opportunity in 2017; however, such opportunity was forfeited in connection with her termination. Ms. Mainente received severance payments based on her target 2017 STIP bonus percentage as part of her overall severance arrangement. See “—Summary Compensation Table” and “—Severance Arrangement with Jean Marie Mainente” below.

Typical of prior practice, Company-wide, or C Factor, and individual (or personal) performance, or P Factor, goals were used to determine the level of payout under the 2017 STIP as summarized below. For the Named Executives, the C Factor was weighted 70%, and the P Factor was weighted 30%. Threshold, target and maximum payout levels were set for goals under both the C and P Factors as well as the overall 2017 STIP calculation formula and are summarized below.

STIP Bonus Formula:

Base Salary x Target Bonus Percentage x Performance Factor

Performance Factor: ({70% x C Factor results} + {30% x P Factor results})

The purpose for having both a P Factor and a C Factor is to reward both individual accomplishments, as well as accomplishments that are instrumental to the overall success of the Company. In light of the fact that individual accomplishments should ultimately be evaluated in the context of overall Company performance, Company financial performance on C Factor performance goals below the threshold levels would result in no payout under the 2017 STIP, regardless of a participant’s individual performance on the P Factor goals.

C Factor Targets, Thresholds and Results for 2017

The C Factor for Named Executives was split between separate goals for adjusted earnings before taxes, interest, amortization and depreciation, or Adjusted EBITDA, and average working capital as a percentage of sales, or AWC. As noted above, we used these metrics because we determined these metrics would best align our short-term cash incentive compensation with stockholder interest in cash generation.                

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The 2017 C Factor goals and results are summarized below (the Adjusted EBITDA numbers are in millions):

The 2017 STIP Company performance calculations included adjustments for exclusion of certain unusual expenses or revenues, severance-related costs, non-cash stock compensation, merger and acquisition-related expenses, and currency translation effects.

P Factor Criteria for 2017

The P Factor for the Named Executives was based upon achieving individual performance objectives that typically include one or more of these five categories: (1) safety, quality, governance and compliance; (2) strategic actions; (3) revenue, business and/or margin growth; (4) cost reduction; and (5) other. As noted, target performance results on the P Factor will equal 100% payout and the maximum payout is capped at a 200% payout level, but in practice, P Factor scores above 150% have a very low probability of attainment (having occurred in one instance for the Named Executives (in 2017) in the previous five years).

Overall 2017 STIP Results

Based on the Company’s financial performance for 2017, the overall C Factor score applied to all Named Executives was 1.03, or 103% of target.

Based on the scoring process pertaining to their personal objectives for 2017, Dr. Mink, Mr. Kieftenbeld, Mr. Horenstein, Ms. Hartzell and Ms. Duff achieved 2017 P Factor scores of 1.5, 1, 1.6, 1.5 and 1.5, respectively. The Named Executives’ P Factor determinations for 2017 reflected the following individual achievements:

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Effective May 1, 2017, in connection with our appointing a new Senior Vice President of Manufacturing, Engineering and EH&S, Mr. Murat ceased serving as the company’s Senior Vice President, Global Manufacturing and began serving in a more limited, non-executive role as the company’s Senior Manufacturing Fellow. In connection with overall performance, Mr. Murat received a STI bonus for 2017 at half of his target STI bonus amount (equal to $66,658).

In addition, the Company also awarded an additional discretionary STI bonus to substantially all Company employees, including the Named Executives, in recognition of completing and integrating two significant acquisitions without disruption to the overall business, despite several pressures facing the Company in 2017. The Company determined that the extensive efforts of the Company’s employees in helping facilitate these acquisitions, and the extensive work in integrating these businesses, while at the same time achieving above target performance on our base business, justified additional compensation for all Company employees. This additional discretionary short-term bonus was based on the short-term award each employee would have received had the financial performance during the final months of 2017 from the Novel Ingredients and NutraGenesis acquisitions not been excluded from the calculation of the C Factor under the 2017 STIP. The total cost to the Company from this additional discretionary incentive to all employees, including the Named Executives, was approximately $350,000.

Taking into account the achievement of the applicable C Factors and P Factors, awards for the Named Executives under the 2017 STIP, as well as the discretionary bonus were as follows:

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Long-Term Incentive Compensation

Our principal tool for supporting a long-term incentive, or LTI, program is our 2009 Long Term Incentive Plan, which we refer to as the 2009 Plan. This 2009 Plan was re-approved at the 2015 annual meeting of stockholders. The 2009 Plan allows for grants of performance shares, restricted shares and stock options, and we regularly grant these forms of LTI awards to align the interests of executives with those of stockholders. These elements are generally summarized below.

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The Committee’s considerations regarding long-term incentives resulted in a grant to our Named Executives in April 2017, which we refer to as the 2017 LTI Grant, under the 2009 Plan. The 2017 LTI Grants were awarded to these Named Executives at levels which the Committee considered to be market-competitive and consistent with our established LTI guidelines. The 2017 LTI Grants were in the form of performance shares (30% of value), restricted stock shares (40% of value) and stock options (30% of value).

Historically, the LTI grants have consisted of performance shares, restricted stock shares and stock options. As previously disclosed, the modification of the composition of our long-term incentive grants in 2016 to exclude performance shares was based on unique conditions with respect to the management transitions that occurred in 2015 and 2016, as well as the Company’s overall restructuring during that period. Specifically, in 2016, Company management developed and began to implement various operational and commercial excellence programs and developed various long term strategic plans for the Company. As previously disclosed, the Committee believed that issuing performance share grants based on multi-year performance parameters under these circumstances would decrease the effectiveness of the LTI program for 2016. As such, the Committee provided a mix of 2016 LTI awards which was split evenly between restricted shares and stock option awards, but the Committee also previously noted that it expected to include performance share grants in future years. In 2017, the Committee followed through on its expectations and included a performance share component in the 2017 LTI Grants. The Committee further anticipates that future grants of LTI awards will continue to provide a mix of performance shares, restricted stock and stock options, and the 2018 LTI grants included performance shares at levels equal to the 2017 grant. As noted previously, the 2018 Long-Term Incentive Plan for which we are seeking stockholder approval in this Proxy Statement allows for a variety of different types of incentives, and future grants may include types and combinations differing from those awarded previously in order to address market conditions.    

The following table shows the value of 2017 LTI Awards as a percentage of the base salary for our Named Executives:

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2017 Grants. The portion of the 2017 LTI Grants allocated to performance shares uses two performance metrics, Free Cash Flow, or FCF, and Contribution Margin as a percentage of sales, or CM. FCF means cash from operations, adjusted for restructuring costs, plus cash used for capital expenditures (with capital expenditures being a deduction from cash from operations). CM means contribution margin dollars (net sales minus all variable costs) divided by net sales. FCF is weighted at 60% of overall Company performance and will be measured on a cumulative three-year target amount. CM is weighted at 40% of overall Company performance and will be targeted at an average percentage rate of Company sales over the three year period. In addition, to further align management’s interests with stockholders, the Committee also included a stockholder return “modifier” for the performance shares included in the 2017 LTI Grants. Specifically, overall payouts of performance shares will be modified based on the Company’s total stockholder return, or TSR, over the three-year performance cycle as compared to the TSR earned by the companies composing the Standard and Poor’s 500 Index, or S&P 500, during this same period. In the event that the Company’s TSR is below the 25^th percentile compared to the TSR for the S&P 500, the payout of performance shares will be reduced by 25% of the calculated amount. Similarly, in the event that the Company’s TSR is above the 75^th percentile compared to the TSR for the S&P 500, the payout of performance shares will be increased by 25% of the calculated amount. Please see the summary below for further illustration.

2015 Grants. The portion of the 2015 LTI grants allocated to performance shares uses two metrics, Contribution Margin Growth, or CMG, and Return on Invested Capital, or ROIC, which are each weighted at 50%, to determine the number of performance shares issued at the end of the applicable three year cycle. Performance for the performance share component of the LTI grants provided in 2015 is assessed independently in each of the three years of the performance period, with results summed to determine the total payout at the end of the cycle. Specifically, each year’s performance applicable to the calculation of performance shares awarded in the 2015 LTI grants is calculated individually (not averaged) and weighted to affect one third of the overall

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result. Consequently, no performance shares will be earned for the three year cycle only if performance were to fall below the threshold level applicable to all three individual years of that particular cycle.

CMG is calculated as the growth in total contribution margin generated, expressed as a percentage, for each of the applicable three years in the performance cycle.

The ROIC percentage for each year in the performance cycle is calculated as follows: