DEF 14A 1 llyb2021_def14a.htm LYONDELLBASELL INDUSTRIES N.V. - DEF 14A LYONDELLBASELL - DEF 14A V5

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

 

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Exchange Act of 1934 (Amendment No. __)

 

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DEAR FELLOW SHAREHOLDERS  

 

On behalf of our Board of Directors, we are pleased to provide you with our 2021 proxy statement.

 

For most of us around the world, 2020 was an extremely challenging year. Like many others, our Company swiftly adapted our business strategies to address the COVID-19 pandemic, associated recession, and low oil price environment. We are very proud of the work done to navigate 2020 while continuing to invest in our future and deliver on our commitment to sustainability.  

 

COVID-19 RESPONSE

 

At LyondellBasell, we prioritize safety each and every day. The COVID-19 pandemic required us to alter the way we operate, and our focus on safety drove quick action. We activated global and regional response teams and implemented new health and safety protocols. Essential employees at our manufacturing sites put social distancing and sanitizing measures in place, while a large number of our office-based employees adapted to remote work for extended periods of time. Together, our manufacturing sites and business functions worked to meet customer demand, including for the products needed to produce facemasks, disinfectants, and COVID-19 testing supplies.

 

We protected our greatest asset – our people – by avoiding large-scale workforce reductions, maintaining our 401(k) match and other benefits programs, and working to ensure our offices and sites do not contribute to the spread of the virus. We are proud to report zero instances of confirmed workplace transmission of the COVID-19 virus across our global operations to date, while maintaining a total recordable incident rate in the top decile of our industry.

 

Our Company has been equally nimble in responding to market challenges stemming from both the pandemic and low oil prices. Cost discipline is vital to our success through business cycles, and our lean cost structure underpinned the Company’s resilience during the sudden downturn. We aggressively managed inventory and deferred non-safety related capital expenditures. We proactively accessed the capital markets to strengthen our balance sheet, maximize liquidity, and protect the dividend. Ultimately, we funded both our dividend and capital investments with cash generated from operating activities.

 

CONTINUED INVESTMENT IN GROWTH

 

2020 was also a year of growth. We advanced two large projects with partners in China – an integrated ethylene and polyethylene joint venture with Bora Liaoning Enterprises which began operations in September 2020, and a new propylene oxide and styrene monomer joint venture with Sinopec, which is expected to commence start up activities before the end of 2021. We also expanded our core business in the U.S. by acquiring a 50% stake in an integrated ethylene and polyethylene joint venture with Sasol in Louisiana.

 

Delivering on our investments from prior years, we successfully started up the Hyperzone polyethylene plant on the U.S. Gulf Coast and completed the integration of A. Schulman into our Advanced Polymer Solutions segment.

 

SUSTAINABILITY COMMITMENT

 

We reaffirmed our commitment to sustainability in 2020 by focusing our sustainability strategy on the global challenges of eliminating plastic waste in the environment, addressing climate change, and supporting a thriving society. We announced an ambitious new goal to produce and market 2 million metric tons of recycled and renewable-based polymers annually by 2030; joined the United Nations Global Compact; appointed a Chief Talent & Diversity Officer; and established an employee Diversity Council. We also enhanced our sustainability reporting with GRI and SASB-aligned disclosures.

 

STRONG BOARD OVERSIGHT

 

Our directors are committed to providing strong, independent oversight of the Company’s strategy and risk management. In a year which asked more of everyone, our directors invested even more time and effort in the Company. The Board worked closely with management to monitor our response to the pandemic, including making adjustments to the Company’s operating strategy and capital spending plans, with continued focus on strengthening the balance sheet. Our directors also met frequently with management regarding strategic growth investments and financing transactions.

 

Collectively, the Board and its Finance Committee held seven meetings in the three months following acceleration of the pandemic in March 2020, in addition to numerous informal calls and discussions among the Board, its Committee Chairs, and Company leadership. Our directors also led an increased focus on environmental, social, and governance matters, with deep dives into the Company’s sustainability strategy at three of the Board’s five standing meetings in 2020. Our Board believes close partnership with management, combined with deep commitment to oversight, is vital to the Company’s continued success.  

 

We would like to thank Bella Goren, who is not standing for re-election in 2021, for her service over the last seven years and her contributions to our Board, and especially to our Audit and Compensation and Talent Development Committees. We are also pleased to nominate Tony Chase and Bob Dudley as new, highly-qualified director candidates for election to our Board. Mr. Chase is the Chairman, Chief Executive Officer, and founder of ChaseSource, a Houston-based staffing and real estate development firm. He has significant entrepreneurial experience and has served on numerous public company, civic, and philanthropic boards. Mr. Dudley is the recently retired group chief executive of BP, a position he rose to over the course of a 40-year career with the multinational oil and gas company. He brings extensive executive management and international business experience, as well as deep knowledge of the energy industry. He also chairs the international industry-led Oil & Gas Climate Initiative. We strongly believe the diverse perspectives and backgrounds of these two nominees will further enhance the functioning of our Board.

 

We and our fellow directors thank you for your continued support of LyondellBasell Industries.

 

    Very truly yours,
JACQUES AIGRAIN   BHAVESH (BOB) PATEL
Chair of the Board   CEO
   
 

 

FORWARD-LOOKING STATEMENTS

 

The statements in this proxy statement relating to matters that are not historical facts are forward-looking statements. These forward-looking statements are based upon assumptions of management of LyondellBasell which are believed to be reasonable at the time made and are subject to significant risks and uncertainties. When used in this proxy statement, the words “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Actual results could differ materially based on factors including, but not limited to, our ability to attract and retain a highly skilled and diverse workforce; actions taken by customers, suppliers, regulators, and others in response to increasing concerns about the environmental impact of plastic in the environment or other general sustainability initiatives; factors that could affect our ability to meet our stated goals with respect to reducing emissions, or that could impact our efforts to expand our goal to reflect our alignment with the Paris Agreement; water scarcity and quality; the pace of climate change and legal or regulatory responses thereto; and technological developments, and our ability to develop new products and process technologies. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the “Risk Factors” sections of our Form 10-K for the year ended December 31, 2020, which can be found at www.LyondellBasell.com on the Investor Relations page and on the Securities and Exchange Commission’s website at www.sec.gov. There is no assurance that any of the actions, events or results of the forward-looking statements will occur, or if any of them do, what impact they will have on our results of operations or financial condition. Forward-looking statements speak only as of the date they were made and are based on the estimates and opinions of management of LyondellBasell at the time the statements are made. LyondellBasell does not assume any obligation to update forward-looking statements should circumstances or management’s estimates or opinions change, except as required by law.

 

References to our website in this proxy statement are provided as a convenience, and the information on our website is not, and shall not be deemed to be a part of this proxy statement or incorporated into any other filings we make with the Securities and Exchange Commission.

 

 

NOTICE OF AND AGENDA FOR 2021
ANNUAL GENERAL MEETING OF SHAREHOLDERS

 

MEETING INFORMATION  
FRIDAY, MAY 28, 2021 LyondellBasell Industries
Delftseplein 27E
3:00 p.m. Local Time 3013 AA, Rotterdam, the Netherlands

 

ITEMS OF BUSINESS

 

1. Elect our Board of Directors (Voting Items);
2. Discharge our directors from liability in connection with the exercise of their duties during 2020 (Voting Item);
3. Adopt our 2020 Dutch statutory annual accounts (Voting Item);
4. Appoint the external auditor for our 2021 Dutch statutory annual accounts (Voting Item);
5. Ratify the appointment of our independent registered public accounting firm (Voting Item);
6. Provide an advisory vote on our executive compensation (say-on-pay) (Voting Item);
7. Authorize the repurchase of up to 10% of our issued share capital (Voting Item);
8. Approve the cancellation of all or a portion of the shares held in our treasury account (Voting Item);
9. Approve amendments to our Long Term Incentive Plan (Voting Item);
10. Approve amendments to our Employee Stock Purchase Plan (Voting Item); and
11. Discuss matters requested by shareholders (Discussion Item).

 

We will also discuss our corporate governance, dividend policy, and executive compensation program.

 

By order of the Board,

CHARITY R. KOHL

Corporate Secretary

April 12, 2021

 

HOW TO VOTE

 

Your vote is important. You are eligible to vote if you are a shareholder of record at the close of business on April 30, 2021.

 

ONLINE BY MOBILE DEVICE BY PHONE BY MAIL
Visit the website on your proxy card Scan this QR code to vote with your mobile device Call the telephone number on your proxy card Sign, date and return your proxy card in the enclosed envelope

 

If you are a registered shareholder, you may vote online at www.proxyvote.com, by telephone, or by mailing a proxy card. If you hold your shares through a bank, broker, or other institution, you may vote your shares through the method specified on the voting instruction form provided to you.

 

Due to the coronavirus (COVID-19) outbreak and related health and safety concerns, in person attendance at the 2021 annual general meeting may be unavailable or extremely limited. We are providing virtual access to shareholders through a live teleconference and will provide the opportunity for shareholders to discuss matters on the agenda and ask questions during and in advance of the meeting. Shares cannot be voted via teleconference and must be voted by proxy in advance. If you would like to attend the meeting via teleconference or in person (if possible), notice must be given to the Company on or before May 21, 2021. Additional information regarding in person attendance or access to the teleconference will be provided at that time. See pages 88-89 for more information.

 

Important Notice Regarding Availability of Proxy Materials for the 2021 Annual General Meeting

This proxy statement and our 2020 annual report to shareholders are available on our website at www.LyondellBasell.com by clicking “Investors,” then “Company Reports.” This proxy statement is first being mailed and delivered electronically to shareholders on or about April 16, 2021.

 

If you wish to receive future proxy statements and annual reports electronically rather than receiving paper copies in the mail, please see page 90 for instructions. This approach can provide information to you more conveniently, while reducing the environmental impact of our annual general meeting and helping to reduce our distribution costs.
 
TABLE OF CONTENTS

 

PROXY STATEMENT SUMMARY 7
ANNUAL GENERAL MEETING 7
AGENDA AND VOTING RECOMMENDATIONS 7
CORPORATE GOVERNANCE HIGHLIGHTS 7
2021 DIRECTOR NOMINEES 8
2020 PERFORMANCE OVERVIEW 9
2020 EXECUTIVE COMPENSATION HIGHLIGHTS 9
ITEM 1 – ELECTION OF DIRECTORS 10
OUR BOARD 10
DIRECTOR NOMINEES’ INDEPENDENCE, TENURE, AND DIVERSITY 10
DIRECTOR NOMINATIONS 12
2021 NOMINEES TO THE BOARD 12
CORPORATE GOVERNANCE 19
DIRECTOR INDEPENDENCE 19
BOARD LEADERSHIP STRUCTURE 19
EXECUTIVE SESSIONS 20
BOARD EVALUATIONS 20
DIRECTOR ONBOARDING, TRAINING, AND SITE VISITS 21
SHAREHOLDER ENGAGEMENT 21
COMMUNICATION WITH THE BOARD 22
CEO AND MANAGEMENT SUCCESSION PLANNING 22
HUMAN CAPITAL MANAGEMENT 23
BOARD OVERSIGHT OF RISK 24
APPROACH TO SUSTAINABILITY 26
BOARD AND COMMITTEE INFORMATION 30
OTHER GOVERNANCE MATTERS 33
DIRECTOR COMPENSATION 36
DIRECTOR COMPENSATION IN 2020 37
ITEM 2 – DISCHARGE OF DIRECTORS FROM LIABILITY 38
ITEM 3 – ADOPTION OF DUTCH STATUTORY ANNUAL ACCOUNTS 38
DISCUSSION OF DIVIDEND POLICY 38
ITEM 4 – APPOINTMENT OF PRICEWATERHOUSECOOPERS ACCOUNTANTS N.V. AS THE AUDITOR OF OUR DUTCH STATUTORY ANNUAL ACCOUNTS 39
ITEM 5 – RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 39
PROFESSIONAL SERVICES FEE INFORMATION 40
AUDIT COMMITTEE REPORT 41
   
ITEM 6 – ADVISORY VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY) 42
RESULTS OF LAST YEAR’S SAY-ON-PAY VOTE 42
PAY FOR PERFORMANCE IN 2020 42
2021 ADVISORY VOTE ON EXECUTIVE COMPENSATION 43
COMPENSATION DISCUSSION AND ANALYSIS 44
EXECUTIVE SUMMARY 45
WHAT GUIDES OUR PROGRAM 47
2020 EXECUTIVE COMPENSATION DECISIONS IN DETAIL 51
ADDITIONAL INFORMATION CONCERNING EXECUTIVE COMPENSATION 57
COMPENSATION COMMITTEE REPORT 59
COMPENSATION TABLES 60
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL 67
CEO PAY RATIO 70
ITEM 7 – AUTHORIZATION TO CONDUCT SHARE REPURCHASES 71
ITEM 8 – CANCELLATION OF SHARES 71
ITEM 9 – AMENDMENT OF LONG TERM INCENTIVE PLAN 72
BURN RATE AND DILUTION 72
PROPOSED AMENDMENTS TO THE LTIP 73
SHARES AVAILABLE AND OUTSTANDING 74
PLAN HIGHLIGHTS AND BEST PRACTICES 74
MATERIAL TERMS OF THE LTIP 75
EQUITY COMPENSATION PLAN INFORMATION 78
ITEM 10 – AMENDMENT OF EMPLOYEE STOCK PURCHASE PLAN 79
ITEM 11 – DISCUSSION OF MATTERS REQUESTED BY SHAREHOLDERS 82
CLIMATE CHANGE COMMITMENTS AND STRATEGY (DISCUSSION ONLY) 83
ADVISORY VOTE ON CLIMATE STRATEGY (DISCUSSION ONLY) 84
SECURITIES OWNERSHIP 85
SIGNIFICANT SHAREHOLDERS 85
BENEFICIAL OWNERSHIP 86
QUESTIONS AND ANSWERS ABOUT THE ANNUAL GENERAL MEETING 87
APPENDIX A – RECONCILIATION OF NON-GAAP FINANCIAL MEASURE A-1
APPENDIX B – AMENDED AND RESTATED LYONDELLBASELL INDUSTRIES LONG TERM INCENTIVE PLAN B-1
APPENDIX C – AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN C-1
 

PROXY STATEMENT SUMMARY

 

This summary highlights information contained elsewhere in this proxy statement. The summary does not include all of the information you should consider before voting your shares, and we encourage you to read the full proxy statement carefully.

 

ANNUAL GENERAL MEETING

 

 
DATE AND TIME PLACE RECORD DATE
FRIDAY, MAY 28, 2021,
3:00 P.M. LOCAL TIME
LYONDELLBASELL INDUSTRIES, DELFTSEPLEIN 27E
3013 AA, ROTTERDAM, THE NETHERLANDS
FRIDAY, APRIL 30, 2021

 

AGENDA AND VOTING RECOMMENDATIONS

 

Item Board Recommendation   Page
1 Election of 12 directors FOR all nominees   10
2 Discharge of directors from liability FOR   38
3 Adoption of Dutch statutory annual accounts FOR   38
4 Appointment of auditor of Dutch statutory annual accounts FOR   39
5 Ratification of independent registered public accounting firm FOR   39
6 Advisory vote on executive compensation (say-on-pay) FOR   42
7 Authorization to conduct share repurchases FOR   71
8 Cancellation of shares FOR   71
9 Amendment and restatement of Long Term Incentive Plan FOR   72
10 Amendment and restatement of Employee Stock Purchase Plan FOR   79
11 Discussion of matters requested by shareholders Discussion only   82

 

CORPORATE GOVERNANCE HIGHLIGHTS

 

Annual election of directors   Board diversity (women and minority directors comprise 50% of our nominees)
Independent Board (11 of 12 director nominees)   Code of Conduct supported by whistleblower helpline and robust compliance program
Independent Committees (100% of directors on each Board Committee are independent)   Board engagement on strategy, long range planning, and capital allocation
Independent Board Chair   Board oversight of enterprise risk management function and sustainability strategy
Executive sessions at each regularly scheduled Board and Committee meeting   Regular succession planning for executive management with focus on talent development
Annual self-assessments for the Board and each Committee   Board leadership of the Company’s response to the COVID-19 pandemic
Board refreshment supported by mandatory retirement age   Stock ownership guidelines for directors and executives and policy against hedging

 

LYONDELLBASELL  2021 PROXY STATEMENT    7

 

2021 DIRECTOR NOMINEES

 

Nominee   Age   Years of
Service
  Independent   Committee Memberships
Jacques Aigrain   66   10   YES  

•   Nominating & Governance

•   Finance

Lincoln Benet   57   6   YES  

•   Nominating & Governance

•   Finance (Chair)

Jagjeet (Jeet) Bindra   73   10   YES  

•   Audit

•   HSE&O (Chair)

Robin Buchanan   69   10   YES  

•   Compensation & Talent Development

•   Nominating & Governance

Anthony (Tony) Chase   66   Nominee   YES  

•   Audit (if elected)

•   Compensation & Talent Development (if elected)

Stephen Cooper   74   11   YES      HSE&O
Nance Dicciani   73   8   YES  

•   Compensation & Talent Development (Chair)

•   Finance

Robert (Bob) Dudley   65   Nominee   YES  

•   Finance (if elected)

•   HSE&O (if elected)

Claire Farley   62   7   YES  

•   Compensation & Talent Development

•   Nominating & Governance (Chair)

Michael Hanley   55   3   YES  

•   Audit (Chair)

•   HSE&O

Albert Manifold   58   2   YES  

•   Audit

•   HSE&O

•   Finance (until the Annual Meeting)

Bhavesh (Bob) Patel   54   3   NO   None

Board Chair and Committee Chairs are also members of the Executive Committee

 

Board Diversity   Board Refreshment (since 2018)
     
 

 

LYONDELLBASELL  2021 PROXY STATEMENT    8

 

2020 PERFORMANCE OVERVIEW

 

In 2020, the pandemic and market headwinds resulted in a challenging year, as lower demand impacted volumes and margins leading to significantly decreased EBITDA across nearly all parts of our business. Against that backdrop, however, the Company continued to operate efficiently and safely, and we capitalized on opportunities to grow and invest in our future.

 

$1.4B $3.9B $1.4B
NET INCOME EBITDA
EX. LCM & IMPAIRMENT*
DIVIDENDS PAID

 

* See Appendix A for information about our non-GAAP financial measures and a reconciliation of net income to EBITDA, including and excluding adjustments.

 

GROWTH Invested efficiently for long-term returns, advancing two new joint ventures in China and acquiring a 50% stake in a new integrated polyethylene joint venture in Louisiana   LIQUIDITY Increased liquidity through aggressive inventory reductions and an actively managed balance sheet
SAFETY Achieved top-decile safety performance while implementing new COVID-19 protocols and socially distanced operations   MARKET POSITION Maintained leading market positions through nimble reaction from commercial groups
COST DISCIPLINE Demonstrated cost discipline in day-to-day operations and by deferring non-safety-related capital expenditures   SUSTAINABILITY Progressed sustainability programs and goals, including new recycling targets, and joined the United Nations Global Compact

 

2020 EXECUTIVE COMPENSATION HIGHLIGHTS

 

We are committed to a pay for performance philosophy, and our compensation programs align executive and shareholder interests by tying a significant amount of compensation to our financial, business, and strategic goals. The compensation of our CEO and other Named Executive Officers is heavily weighted toward performance-based and variable compensation.

 

CEO   ALL OTHER NEOs
     
 

 

 

Due to the COVID-19 pandemic and difficult market environment in 2020, and resulting EBITDA performance, annual bonuses for our executives paid out below target. Similarly, total shareholder returns over recent years resulted in no payout for the 2018-2020 performance share units under our long term incentive program.

 

 

LYONDELLBASELL  2021 PROXY STATEMENT    9

 
ITEM 1ELECTION OF DIRECTORS

 

The Board recommends that you vote FOR the election of each of the nominees to our Board of Directors.

 

The Board of Directors of LyondellBasell Industries N.V. (“LyondellBasell” or the “Company”) recommends that each of the twelve director nominees introduced below be elected to our Board, in each case for a term ending at our 2022 annual general meeting of shareholders. The nominees include ten current directors who were elected by shareholders at the 2020 annual general meeting and two new director nominees, Tony Chase and Bob Dudley.

 

OUR BOARD

 

Our goal is to have a Board that provides effective oversight of the Company through the appropriate balance of experience, expertise, skills, specialized knowledge, and other qualifications and attributes. Director candidates also must be willing and able to devote the time and attention necessary to engage in relevant, informed discussion and decision-making. Our Nominating and Governance Committee focuses on Board succession planning and refreshment and is responsible for recruiting and recommending nominees to the full Board for election. The Committee considers the qualifications, contributions, and outside commitments of each current director in determining whether he or she should be nominated for reelection. Many of our directors serve on the boards and board committees of other companies, and the Committee believes this service provides additional experience and knowledge that improve the functioning of our own Board.

 

Our Board considers diversity a priority and seeks representation across a range of attributes, including race, ethnicity, nationality, and gender. Our Board is committed to increasing the representation of women in its membership. In accordance with our Corporate Governance Guidelines, the Committee and any outside consultants engaged to assist in identifying potential director candidates include women and minority candidates in each pool from which a director candidate is selected.

 

These recruitment efforts are evidenced by our current Board composition and the qualities and qualifications of each of our nominees.

 

DIRECTOR NOMINEES’ INDEPENDENCE, TENURE, AND DIVERSITY

 

Our director nominees provide the Board with a broad range of perspectives due to their diverse gender, age, ethnicity, nationality, and tenure profiles, as well as the qualifications and skills identified below. Each of the eleven non-executive directors nominated to our Board is independent.

 

 

Our Nominating and Governance Committee recognizes the importance of regular Board refreshment to provide new perspectives, skill sets, and diversity to its membership. Since 2018, the Board has nominated five new directors for election, elected a new independent Chair, appointed new Chairs of the Audit Committee and Compensation and Talent Development Committee (including promoting a second woman to a Board leadership position), and regularly rotated Committee member appointments.

 

LYONDELLBASELL  2021 PROXY STATEMENT    10

 
DIRECTOR EXPERIENCE AND EXPERTISE   Aigrain   Benet   Bindra   Buchanan   Chase   Cooper   Dicciani   Dudley   Farley   Hanley   Manifold   Patel
  INDUSTRY EXPERIENCE
Experience with and understanding of the chemicals and refining industries
                                 
  HSE EXPERIENCE
Experience with social responsibility issues related to health, safety, and the environment
                             
  STRATEGIC PLANNING
Knowledge of corporate strategy and strategic planning
                       
  MERGERS & ACQUISITIONS
Experience with mergers, acquisitions, and other strategic transactions
                       
  CORPORATE FINANCE
Financial expertise and experience with corporate finance
                         
  EXECUTIVE MANAGEMENT / CEO EXPERIENCE
Executive management experience with large or international organizations
                       
  CORPORATE GOVERNANCE
Knowledge of corporate governance issues applicable to companies listed on the NYSE
                       
  RISK MANAGEMENT
Experience identifying, managing, and mitigating key enterprise risks
                       
  PUBLIC COMPANY DIRECTOR
Service on the boards of other public companies
                       
DIVERSITY AND DEMOGRAPHICS
Race/Ethnicity
African American or Black                                              
Alaskan Native or American Indian                                                
Asian                                            
Caucasian or White                                
Hispanic or Latinx                                              
Native Hawaiian or Pacific Islander                                                
Gender
Male                            
Female                                            

 

LYONDELLBASELL  2021 PROXY STATEMENT    11

 

DIRECTOR NOMINATIONS

 

Although our Nominating and Governance Committee is responsible for recommending director candidates to the Board, candidates may also be proposed by other directors, management, and our shareholders.

 

Any shareholder who wishes to recommend a director candidate should submit a written recommendation to our Corporate Secretary by email or regular mail. The recommendation must include the name of the nominated individual, relevant biographical information, and the individual’s consent to nomination.

 

   

BY EMAIL

send an email to
CorporateSecretary@
LyondellBasell.com

BY MAIL

LyondellBasell Industries N.V.
c/o Corporate Secretary
4th Floor, One Vine Street
London W1J 0AH, United Kingdom

 

Our Nominating and Governance Committee uses the same process to evaluate shareholder nominees as it does in evaluating nominees identified by other sources. For our 2022 annual general meeting of shareholders, recommendations must be received by December 17, 2021 to be considered.

 

2021 NOMINEES TO THE BOARD

 

On the recommendation of the Nominating and Governance Committee, the Board has nominated ten continuing directors and two new director nominees, Tony Chase and Bob Dudley, for election to the Board. These twelve individuals have a high caliber and diverse array of expertise, experience, and leadership skills. Each of these nominees has consented to serve as a director if elected. Bella Goren is not standing for re-election following the completion of her current term at the 2021 annual general meeting (the “Annual Meeting”).

 

We introduce our twelve nominees below.

 

JACQUES AIGRAIN

 

Age 66

 

French-Swiss

 

Non-Executive
Director
since 2011;

Chair since 2018

 

INDEPENDENT

 

 

BIOGRAPHY

Mr. Aigrain is our Chair of the Board and a retired Senior Advisor and Partner of Warburg Pincus, a global private equity firm. Prior to joining Warburg Pincus in 2013, Mr. Aigrain served as Chief Executive Officer of Swiss Re, a publicly traded insurance company, and was Co-Global Head of M&A and Head of Financial Institutions at J.P. Morgan. He also has many years of experience as a director of public and multinational organizations including The London Stock Exchange Group plc and WPP plc, a multinational advertising and public relations company. Mr. Aigrain’s more than 30 years of financial services and management experience provide him with expertise in all areas of strategy, mergers and acquisitions, finance, and capital markets. Additionally, he brings substantial knowledge of board- and governance-related matters.

   
 

COMMITTEES

  Nominating and Governance Committee

  Finance Committee

  Executive Committee (Chair)

   
 

SKILLS AND QUALIFICATIONS

  Corporate Finance

  Risk Management

  Mergers & Acquisitions

  International Operations

  Corporate Governance

  Strategic Planning

  Capital Markets

  CEO Experience

  Public Company Director Experience

     
 

OTHER CURRENT PUBLIC DIRECTORSHIPS

  The London Stock Exchange Group plc (since 2013)

  WPP plc (since 2013)

 
       

 

LYONDELLBASELL  2021 PROXY STATEMENT    12

 
LINCOLN BENET

 

Age 57

 

American-British

Non-Executive

Director

since 2015

 

INDEPENDENT

 

 

BIOGRAPHY

Mr. Benet has served as Chief Executive Officer of Access Industries, a privately held industrial group with world-wide holdings, since 2006. Prior to joining Access, he spent 17 years at Morgan Stanley, including as Managing Director. Mr. Benet also has experience serving on the boards of several privately held and publicly traded companies, including those in the investment, music and publishing, oil and gas pipes and tubing, cement, sports media, and petrochemicals industries. As a result of this background, he brings to our board a working knowledge of global markets, mergers and acquisitions, executive management, strategic planning, and corporate strategy, as well as experience with international finance, including corporate finance matters such as treasury, insurance, and tax.

   
 

COMMITTEES

  Nominating and Governance Committee

  Finance Committee (Chair)

  Executive Committee

   
 

SKILLS AND QUALIFICATIONS

  Strategic Planning

  Mergers & Acquisitions

  International Operations

  Corporate Governance

  Corporate Finance

  Risk Management

  Capital Markets

  CEO Experience

     
 

OTHER CURRENT PUBLIC DIRECTORSHIPS

  Warner Music Group Corp. (public since 2020)

 
       

 

JAGJEET (JEET) BINDRA

 

Age 73

 

American

Non-Executive

Director

since 2011

 

INDEPENDENT

 

 

BIOGRAPHY

Mr. Bindra is a retired executive of Chevron, a multinational energy corporation, where he spent 32 years in senior leadership positions and retired as President of the company’s worldwide manufacturing operations. Mr. Bindra holds a degree in chemical engineering and started his career at Chevron as a research engineer before progressing to increasingly senior positions, including the roles of Manager of Strategic Planning and Group Manager of Projects & Engineering Technology. His education and background provide him with extensive knowledge of global manufacturing, capital project management, engineering technology, strategic business planning, and health, safety, and environmental and operations matters. Mr. Bindra has served as a director of multiple private and publicly traded companies, including Edison International and its subsidiary, Southern California Edison, WorleyParsons, and Transocean Ltd., and he has broad knowledge of board and governance matters. Mr. Bindra currently serves as a member of the board of HPCL-Mittal Energy Limited (India).

   
 

COMMITTEES

  Audit Committee

  HSE&O Committee (Chair)

  Executive Committee

   
 

SKILLS AND QUALIFICATIONS

  Industry Experience

  Capital Project Execution

  Executive Management

  Corporate Governance

  Mergers & Acquisitions

  HSE Experience

  Strategic Planning

  International Operations

  Risk Management

  Public Company Director Experience

     
 

FORMER PUBLIC DIRECTORSHIPS

  Edison International / Southern California Edison Co. (2010-2017)

  WorleyParsons (2015-2017)

 
       

LYONDELLBASELL  2021 PROXY STATEMENT    13

 
ROBIN BUCHANAN

 

Age 69

 

British

Non-Executive

Director

since 2011

 

INDEPENDENT

 

 

BIOGRAPHY

Mr. Buchanan has previously served as Dean and President of London Business School, the Chairman of PageGroup plc, a global specialist recruitment company, a director of Schroders plc, a global asset management firm, a director of Cicap Ltd, a global private equity firm, and a director of Bain & Company Inc., a global business consulting firm. As the former UK Senior Partner, he continues to serve in an advisory role to Bain. Mr. Buchanan also serves as an advisor to Access Industries and Non-Executive Chairman of its Advisory Board, which advises on portfolio strategy. Mr. Buchanan’s experience as a board member of publicly traded, private, and charitable companies, Dean of a leading Business School, and long tenure with Bain provide him with deep experience in strategy, leadership, board effectiveness, business development, and acquisitions across most industry sectors, including considerable involvement with chemicals and energy in Europe. He also brings a wealth of experience in board and governance matters, particularly as related to multi-national companies. Mr. Buchanan is a Chartered Accountant and a published author on strategy, acquisitions, leadership, board effectiveness, corporate governance, and compensation.

   
 

COMMITTEES

  Compensation and Talent Development Committee

  Nominating and Governance Committee

   
 

SKILLS AND QUALIFICATIONS

  Strategy Development

  Industry Experience

  Mergers & Acquisitions

  Corporate Finance

  Corporate Accounting

  International Operations

  Leadership Development

  Executive Management

  Risk Management

  Corporate Governance

  Public Company Director Experience

     
 

FORMER PUBLIC DIRECTORSHIPS

  Schroders plc (2010-2019)

 
       
ANTHONY (TONY) CHASE

 

Age 66

 

American

Non-Executive

Director Nominee

 

INDEPENDENT

 

 

BIOGRAPHY

Mr. Chase is the Chairman and Chief Executive Officer of ChaseSource, L.P., a Houston-based staffing, facilities management, and real estate development firm founded by him in 2006 and recognized as one of the nation’s largest minority-owned businesses by Black Enterprise Magazine. He currently serves as a director of Cullen/Frost Bankers, a financial holding company, Nabors Industries, an operator of drilling rig fleets and provider of offshore platform rigs, and Heritage-Crystal Clean, a provider of full-service parts cleaning, waste, and used oil collection services. Mr. Chase is also a tenured Professor of Law at the University of Houston Law Center and serves on the board of numerous Houston-based non-profits including the Houston Endowment, the Greater Houston Partnership, the M.D. Anderson Board of Visitors, and the Texas Medical Center. He previously served as Deputy Chairman of the Federal Reserve Bank of Dallas and Chairman of the Greater Houston Partnership. Mr. Chase has deep entrepreneurial experience as the founder of ChaseSource and three other successful ventures, as well as extensive experience serving on public company boards and in related governance matters.

   
 

COMMITTEES

  Audit Committee (effective as of Annual Meeting)

  Compensation and Talent Development Committee (effective as of Annual Meeting)

   
 

SKILLS AND QUALIFICATIONS

  CEO Experience

  Risk Management

  Mergers & Acquisitions

  HSE Experience

  Strategic Planning

  Corporate Governance

  Corporate Finance

  Public Company Director Experience

     
 

OTHER CURRENT PUBLIC DIRECTORSHIPS

  Nabors Industries Ltd. (since 2019)

  Cullen/Frost Bankers, Inc. (since 2020)

  Heritage-Crystal Clean, Inc. (since 2020)

FORMER PUBLIC DIRECTORSHIPS

  Anadarko Petroleum Corp. (2014-2019)

  Paragon Offshore plc (2014-2017)

       

LYONDELLBASELL  2021 PROXY STATEMENT    14

 
STEPHEN COOPER

 

Age 74

 

American

Non-Executive

Director

since 2010

 

INDEPENDENT

 

 

BIOGRAPHY

Mr. Cooper has served as Chief Executive Officer and Director of Warner Music Group Corp., a recorded music and music publishing business, since 2011. He has also been a Managing Partner of Cooper Investment Partners, a private equity firm specializing in underperforming companies, since 2008. In the course of a long career as a financial advisor and corporate turnaround specialist, Mr. Cooper has served as the top executive of a number of publicly traded companies, including as Chief Executive Officer of Metro-Goldwyn-Mayer, Inc., a media company focused on film and television, and Hawaiian Telecom, the dominant telecom services provider in Hawaii. Mr. Cooper has expansive knowledge and experience relating to all matters of executive management, finance, and strategy, and due to his role as a sitting CEO he has deep insight into day-to-day business, management, and strategy issues.

   
 

COMMITTEES

  HSE&O Committee

   
 

SKILLS AND QUALIFICATIONS

  Strategic Planning

  Risk Management

  Capital Markets

  Corporate Finance

  International Operations

  Corporate Governance

  Mergers & Acquisitions

  Industry Experience

  CEO Experience

  HSE Experience

  Public Company Director Experience

     
 

OTHER CURRENT PUBLIC DIRECTORSHIPS

  Warner Music Group Corp. (public since 2020)

 
       
NANCE DICCIANI

 

Age 73

 

American

Non-Executive

Director

since 2013

 

INDEPENDENT

 

 

BIOGRAPHY

Ms. Dicciani is a retired senior executive and chemical engineer. She spent her early career in research and development at Air Products and Chemicals, and then joined Rohm and Haas, a specialty chemicals manufacturer, as business director for the Petroleum Chemicals Division. After 10 years with Rohm and Haas in which she rose to the level of Senior Vice President, Ms. Dicciani became President and Chief Executive Officer of Honeywell Specialty Materials, also a chemicals manufacturer. Ms. Dicciani served on the Executive Committees of the American Chemistry Council and the Society of Chemical Industry and was appointed by George W. Bush to the President’s Council of Advisors on Science and Technology. Her background provides her with specific industry knowledge and an understanding of manufacturing, health, safety, and environmental matters; insight into the competitive landscape relevant to our industry; and a wealth of experience in all areas of executive management. Ms. Dicciani also has extensive experience in board and governance matters and has served as a director of several public companies, including Halliburton, an oilfield services company, and Linde, an industrial gases company.

   
 

COMMITTEES

  Compensation and Talent Development Committee (Chair)

  Finance Committee

  Executive Committee

   
 

SKILLS AND QUALIFICATIONS

  Industry Experience

  HSE Experience

  Capital Project Execution

  Mergers & Acquisitions

  Capital Markets

  Public Company Director Experience

  International Operations

  CEO Experience

  Strategic Planning

  Risk Management

  Corporate Finance

  Corporate Governance

     
 

OTHER CURRENT PUBLIC DIRECTORSHIPS

  Halliburton Company (since 2009)

  AgroFresh Solutions, Inc. (since 2015)

  Linde plc (since 2018)

FORMER PUBLIC DIRECTORSHIPS

  Praxair, Inc. (2008-2018)

       

LYONDELLBASELL  2021 PROXY STATEMENT    15

 
ROBERT (BOB) DUDLEY

 

Age 65

 

American-British

Non-Executive

Director Nominee

 

INDEPENDENT

 

 

BIOGRAPHY

Mr. Dudley is Chairman of the international industry-led Oil and Gas Climate Initiative and Chair of the Accenture Global Energy Board, and has dedicated his career to the service of the international energy industry. He served as the Group Chief Executive of BP plc, a global energy provider, from 2010 until his retirement in March 2020. He was appointed to the board of BP in 2009 with accountability for the Americas and Asia, and previous executive roles with BP include Alternative and Renewable Energy activities and responsibility for BP’s upstream business in Russia, the Caspian region, and Africa. Mr. Dudley is a chemical engineer and a Fellow of the Royal Academy of Engineering. As the former CEO of a multinational oil and gas company, he has acquired extensive executive management experience and knowledge of the energy industry. He also has significant experience in strategic planning, risk management, international operations, and health, safety, and environmental and operations matters.

   
 

COMMITTEES

  Finance Committee (effective as of Annual Meeting)

  HSE&O Committee (effective as of Annual Meeting)

   
 

SKILLS AND QUALIFICATIONS

  CEO Experience

  Risk Management

  HSE Experience

  Industry Experience

  Public Company Director Experience

  Strategic Planning

  International Operations

  Mergers & Acquisitions

  Corporate Finance

  Corporate Governance

     
 

OTHER CURRENT PUBLIC DIRECTORSHIPS

  Rosneft Oil Company (since 2013)

  Freeport-McMoRan Inc. (since 2021)

FORMER PUBLIC DIRECTORSHIPS

  BP plc (2009-2020)

 

       
CLAIRE FARLEY

 

Age 62

 

American

Non-Executive

Director

since 2014

 

INDEPENDENT

 

 

BIOGRAPHY

Ms. Farley is an advisor to KKR Energy Group and a retired executive in the oil and gas exploration and production industry. Ms. Farley has served in several roles with KKR Energy Group since 2011, including as Vice Chair from 2016 to 2017 and as a member of KKR Management LLC, the general partner of a global investment firm, from 2013 to 2015. Prior to joining KKR, Ms. Farley served as Chief Executive Officer of Randall & Dewey, an oil and gas asset transaction advisory firm. She became Co-President and then Senior Advisor at Jeffries & Company after Randall & Dewey became its oil and gas investment banking group, and then co-founded RPM Energy, a privately-owned oil and natural gas exploration and development company. Ms. Farley brings to the Board experience in business development, mergers, acquisitions, and divestitures, as well as knowledge of the chemical industry’s feedstocks and their markets. She also has experience in all matters of executive management and a deep understanding of public company and governance matters due to her current and prior service on the boards of companies including Anadarko Petroleum Corporation, Encana Corporation, and TechnipFMC.

   
 

COMMITTEES

  Compensation and Talent Development Committee

  Nominating and Governance Committee (Chair)

  Executive Committee

   
 

SKILLS AND QUALIFICATIONS

  CEO Experience

  Strategic Planning

  Risk Management

  Public Company Director Experience

  Capital Markets

  Corporate Governance

  HSE Experience

  Mergers & Acquisitions

  International Operations

     
 

OTHER CURRENT PUBLIC DIRECTORSHIPS

  TechnipFMC plc (since 2017)

FORMER PUBLIC DIRECTORSHIPS

  Anadarko Petroleum Corporation (2017-2019)

  FMC Technologies, Inc. (2009-2017)

       

LYONDELLBASELL  2021 PROXY STATEMENT    16

 
MICHAEL HANLEY

 

Age 55

 

Canadian

Non-Executive

Director

since 2018

 

INDEPENDENT

 

 

BIOGRAPHY

Mr. Hanley has more than 25 years of experience in senior management and finance roles, including as Chief Financial Officer of Alcan, a Canadian mining company and aluminum manufacturer, President and CEO of Alcan’s Global Bauxite and Alumina business group, and Senior Vice President, Operations & Strategy of the National Bank of Canada. He brings strong financial and operational experience, deep knowledge of capital-intensive and process industries, experience with U.S. and international accounting standards, and a broad understanding of international markets. Mr. Hanley also has significant experience on public company boards and in the role of audit committee chair, and an appreciation for corporate governance matters and the board’s role in financial oversight. He is currently a member of the Quebec Order of Chartered Professional Accountants.

   
 

COMMITTEES

  Audit Committee (Chair)

  HSE&O Committee

  Executive Committee

   
 

SKILLS AND QUALIFICATIONS

  Corporate Finance

  Strategic Planning

  Risk Management

  International Operations

  Public Company Director Experience

  Corporate Accounting

  Capital Markets

  Executive Management

  Corporate Governance

     
 

OTHER CURRENT PUBLIC DIRECTORSHIPS

  BRP, Inc. (since 2012)

  Nuvei Corporation (since 2020)

 

FORMER PUBLIC DIRECTORSHIPS

  Shawcor Ltd. (2015-2021) (until May 2021 annual meeting)

  Industrial Alliance Insurance & Financial Services (2015-2019)

  Groupe Jean Coutu (PJC), Inc. (2016-2018)

       

Our Board has considered Mr. Hanley’s concurrent service on the audit committees of three additional public companies beginning in late 2020 and has determined that such simultaneous service does not impair his ability to effectively serve as a member and Chair of our Audit Committee. Mr. Hanley will not stand for re-election to the board of directors of Shawcor, where he currently serves on the audit committee. Following his departure in May 2021, he will only serve on two public company audit committees in addition to LyondellBasell.

 

ALBERT MANIFOLD

 

Age 58

 

Irish

Non-Executive

Director

since 2019

 

INDEPENDENT

 

 

BIOGRAPHY

Mr. Manifold has been the Group Chief Executive and a director of CRH plc, an international group of diversified building materials businesses supplying the construction industry, since 2014. Mr. Manifold joined CRH in 1998 and advanced to increasingly senior roles, including Finance Director of the Europe Materials Division, Group Development Director, Managing Director of Europe Materials, and Chief Operating Officer (2009 to 2014). Prior to joining CRH, Mr. Manifold was Chief Operating Officer of Allen McGuire & Partners, a private equity group. As a sitting CEO with a background in other senior management roles, Mr. Manifold has acquired extensive leadership experience in competitive industries. In addition, he has significant knowledge of corporate finance, capital markets, strategic planning, and international operations. Mr. Manifold is also a Fellow of the Institute of Certified Public Accountants in Ireland.

   
 

COMMITTEES

  Audit Committee

  HSE&O Committee

  Finance Committee (until the Annual Meeting)

   
 

SKILLS AND QUALIFICATIONS

  Corporate Finance

  International Operations

  Corporate Accounting

  Risk Management

  Mergers & Acquisitions

  CEO Experience

  Capital Markets

  Strategic Planning

  Capital Project Execution

     
 

OTHER CURRENT PUBLIC DIRECTORSHIPS

  CRH plc (since 2009)

 
       

LYONDELLBASELL  2021 PROXY STATEMENT    17

 
BHAVESH (BOB) PATEL

 

Age 54

 

American

Executive

Director since

2018

 

 

BIOGRAPHY

Mr. Patel has served as our Chief Executive Officer since January 2015. From the time he joined the Company in 2010 until his appointment as CEO, he held the roles of Senior Vice President, Olefins and Polyolefins–Americas and Executive Vice President, Olefins and Polyolefins–Europe, Asia, International & Technology, with additional responsibility for all manufacturing operations outside of the Americas and the Company’s polypropylene compounding business. Taken together with his prior positions of increasing responsibility at Chevron Corp. and Chevron Phillips Chemical Company, Mr. Patel has more than 30 years’ experience in the chemicals, plastics, and refining industries, including extensive leadership experience on a global basis. This background gives him a detailed understanding of the Company’s industries and operations. Mr. Patel serves on the boards of the Houston Branch of the Federal Reserve Bank of Dallas, the Greater Houston Partnership, the Board of Visitors at the University of Texas MD Anderson Cancer Center, and is a member of the Business Council. He is also on the external advisory council of the College of Engineering at The Ohio State University and the Board of Visitors of the Fox School of Business at Temple University. Additionally, Mr. Patel serves as a director of Halliburton Company and previously served as a director of Union Pacific Corporation.

   
 

SKILLS AND QUALIFICATIONS

  Industry Experience

  HSE Experience

  CEO Experience

  Corporate Finance

  Corporate Governance

  Public Company Director Experience

  Strategic Planning

  Capital Project Execution

  International Operations

  International Business

  Mergers & Acquisitions

     
 

OTHER CURRENT PUBLIC DIRECTORSHIPS

  Halliburton Company (since 2021)

FORMER PUBLIC DIRECTORSHIPS

  Union Pacific Corporation (2017-2021) (until May 2021 annual meeting)

       

LYONDELLBASELL  2021 PROXY STATEMENT    18

 

CORPORATE GOVERNANCE

 

LyondellBasell recognizes the importance of good corporate governance as a driver of long-term stakeholder value. Our Board has adopted, and regularly reviews and strives to improve upon, LyondellBasell’s robust corporate governance policies, practices, and procedures with consideration given to regulatory developments and evolving U.S. and Dutch governance best practices.

 

Our governance guidelines and policies, including those listed below, are available on our website at www.LyondellBasell.com by clicking either (i) “Investors,” then “Corporate Governance” or (ii) “Sustainability,” then “Report and Policy Library.”

 

Corporate Governance Guidelines Rules for the Board of Directors
Articles of Association Board Committee Charters
Code of Conduct Financial Code of Ethics
Conflict Minerals Policy Human Rights Policy
Human Trafficking and Anti-Slavery Statement Supplier Code of Conduct

 

DIRECTOR INDEPENDENCE

 

Our Board annually reviews the independence of its members. In February 2021, the Board affirmatively determined that all of our non-executive directors and director nominees are independent under the rules of the New York Stock Exchange (the “NYSE”).

 

The Board has adopted categorical standards of independence that meet, and in some instances exceed, the requirements of the NYSE. In order to qualify as independent under our categorical standards, a director must be determined to have no material relationship with LyondellBasell other than as a director. The categorical standards include strict guidelines for non-executive directors and their immediate families regarding employment or affiliation with LyondellBasell and its independent registered public accounting firm. Our categorical independence standards are included in our Corporate Governance Guidelines.

 

The Board has determined that there are no relationships or transactions that prohibit any of our non-executive directors or nominees from being deemed independent under the categorical standards and that each of our non-executive directors and nominees is independent. In addition to the relationships and transactions that would bar an independence finding under the categorical standards, the Board considered all other known relationships and transactions in making its determination, including those set forth below under “–Other Governance Matters–Related Party Transactions.” In determining that no known transactions or relationships affect the independence of any of the non-executive directors, the Board considered that all of the identified transactions are ordinary course and none of the dollar amounts involved were material to the Company or the relevant counterparty.

 

BOARD LEADERSHIP STRUCTURE

 

Jacques Aigrain has led our Board as its independent Chair since 2018. The Chair’s responsibilities include:

 

| Leading Board meetings and executive sessions
| Reviewing and approving Board meeting agendas and schedules, and ensuring there is sufficient time for discussion of topics
| Convening additional Board meetings, as needed
| Facilitating information flow and communication among directors
| Serving as a liaison between the independent directors and the CEO and other members of management
| Together with the Compensation and Talent Development Committee, setting annual and long-term performance goals for the CEO and evaluating his performance
| Presiding at general meetings of shareholders
| Being available to meet with shareholders, when requested and as appropriate
| Supporting the Company’s strategic growth initiatives

 

LYONDELLBASELL  2021 PROXY STATEMENT    19

 

The Board regularly reviews LyondellBasell’s leadership structure and the responsibilities of its Chair, and may from time to time delegate additional duties to the role.

 

Under Dutch law, only a non-executive director may serve as Chair of our Board. Our Board believes that the separation of the positions of Chair and Chief Executive Officer that results from this governance structure promotes strong Board governance, independence, and oversight. The separation of the two roles additionally allows Mr. Aigrain to focus on managing Board matters while our CEO, Mr. Patel, focuses on managing our business.

 

EXECUTIVE SESSIONS

 

Executive sessions of our independent directors, with no members of management present, take place at every regular Board and committee meeting. During executive sessions, independent directors have an opportunity to meet with the Board’s outside consultants and independent accountants and review and discuss any matters they deem appropriate, such as the performance of the Chief Executive Officer and other members of management and the criteria against which performance is evaluated, including the impact of performance on compensation matters. Mr. Aigrain leads these executive sessions of the Board. If he is unavailable, the non-executive director with the longest tenure will preside. If two or more individuals have equal tenure, the eldest of them will chair.

 

BOARD EVALUATIONS

 

Our Board and its committees evaluate their own effectiveness by participating in a robust annual self-assessment process overseen by the Nominating and Governance Committee. Each year, directors respond to survey questions soliciting information used to improve the effectiveness of the Board and its committees and individual directors. Survey results are supplemented by one-on-one interviews conducted by either the Chair or third parties, and the Nominating and Governance Committee periodically engages independent outside consultants to facilitate and refresh the evaluation process.

 

For 2020, the Board conducted its evaluation process as described below.

 

Engagement of Independent Outside Consultant In early 2020, the Nominating and Governance Committee engaged an independent outside consultant to lead the self-assessment process and facilitate individual director interviews. The same consultant also administered the Company’s 2017 assessment cycle, allowing for continuity and observations regarding improvement in Board processes and effectiveness over recent years.
Development and Approval of Evaluation Process and Topics In September 2020, the Nominating and Governance Committee discussed and approved the overall process and timeline for the 2020 evaluation cycle, including one-on-one interviews with the consultant based on agreed interview and survey questions. The Chair of the Nominating and Governance Committee and the Company’s Chief Legal Officer worked with the consultant to develop suggested topics and questions for distribution to the individual Board members, which were approved by the Nominating and Governance Committee in November.
The Board member interviews included an evaluation of each individual director’s contributions to the Board and its committees, including his or her availability and time commitment, communication, understanding of relevant business and regulatory issues and ESG issues and trends, and functional expertise, as well as topics related to the functioning of the Board and its committees as a whole (Board meetings, director training and education, and Board refreshment).
Distribution of Surveys and Interview Process

In late 2020, Board members participated in one-on-one interviews with the consultant.  

 

In parallel, senior executives provided their views of Board effectiveness and interactions with management through confidential interviews with the consultant.

Reporting and Board Review of Results The independent consultant prepared a report with findings and suggestions to enhance Board effectiveness and best governance practices. The conclusions of that report, including feedback from senior executives, were discussed during the February 2021 Nominating and Governance Committee and Board meetings in executive sessions.
Response to Director Assessment Policies and practices were evaluated based on the self-assessment results. Feedback from the process will also be used to refresh the evaluation process and adjust areas of focus for surveys used in 2021 and future assessments. The Nominating and Governance Committee intends to continue engaging third parties periodically in order to bring an outside perspective to the evaluation process.

 

LYONDELLBASELL  2021 PROXY STATEMENT    20

 

DIRECTOR ONBOARDING, TRAINING, AND SITE VISITS

 

Our Board is committed to understanding its governance responsibilities, evolving best practices, and all aspects of our Company and business. The Company provides an extensive orientation program that enables each new director joining the Board to become familiar with LyondellBasell and to meet with key members of the Company’s management and functional leaders. Mr. Hanley and Mr. Manifold, who joined our Board in 2018 and 2019, respectively, completed our onboarding program and met with the Company’s Chief Executive Officer, Chief Financial Officer, Chief Legal Officer, Chief Compliance Officer, and additional executives to discuss our corporate structure, business strategy, operations, and segments, as well as tax, accounting, compliance, investor relations, human resources, and health, safety, and environment (HSE) matters, among other topics. Mr. Chase and Mr. Dudley will complete a similar orientation program prior to joining our Board.

 

All of our directors are encouraged to participate in industry and governance organizations and seek out training opportunities that will provide them with continuing education on key topics. The Company will reimburse directors for the costs of such continuing education. During Board meetings, our directors hear from management on a wide range of subjects, including regulatory developments, shareholder updates, and environmental, social, and corporate governance issues and trends. Our directors also have regular opportunities to visit the Company’s manufacturing and technology centers and meet with site management. In early 2020, the Chair of the HSE&O Committee visited two manufacturing facilities within our Advanced Polymer Solutions segment. Although a group site visit could not be arranged for 2020 given travel restrictions related to COVID-19, the Board has toured the Company’s Cincinnati Technology Center and Hyperzone plant construction site in recent years.

 

SHAREHOLDER ENGAGEMENT

 

We recognize the value of regular and consistent communication with our shareholders and engage with investors on strategy, risk management, sustainability, corporate governance, executive compensation, and other matters. We regularly review general governance trends and emerging best practices and invite feedback from our shareholders and other stakeholders, which is brought to our Board and part of its decision-making process. Engagement with shareholders occurs in one-on-one meetings and calls with shareholder representatives, at our annual general meeting of shareholders, and through our regular participation in industry conferences, investor road shows, and analyst meetings.

 

In 2020, we discussed the Company’s strategy and environmental, social, and governance profile with multiple investors and engaged their questions or concerns on these and other topics. Our independent Board Chair has made himself available for these discussions, and management updates the Board regularly on conversations with shareholders and feedback received. We are committed to remaining proactive in our engagement efforts and shareholder outreach.

 

LYONDELLBASELL  2021 PROXY STATEMENT    21

 

COMMUNICATION WITH THE BOARD

 

Shareholders and other interested parties may communicate with the Board or any individual director. Communications should be addressed to our Corporate Secretary by email or regular mail.

 

BY EMAIL
send an email to
CorporateSecretary@
LyondellBasell.com  
BY MAIL
LyondellBasell Industries N.V.
c/o Corporate Secretary
4th Floor, One Vine Street
London W1J 0AH, United Kingdom

 

Communications are distributed to the Board or to one or more individual directors, as appropriate, depending on the facts and circumstances outlined in the communication. Communications such as business solicitations or advertisements; junk mail and mass mailings; new product suggestions; product complaints; product inquiries; and resumes and other forms of job inquiries will not be relayed to the Board. In addition, material that is unduly hostile, threatening, illegal, or similarly unsuitable will be excluded. Any communication that is filtered out is made available to any director upon request.

 

CEO AND MANAGEMENT SUCCESSION PLANNING

 

One of the primary responsibilities of the Board is to ensure that we have a high-performing management team in place. On an annual basis, the Board conducts a detailed review of development and succession planning activities to maximize the pool of internal candidates who can assume executive officer positions without undue interruption. The Board reviews CEO and executive succession planning and ensures that executive officer reviews and evaluations are conducted at least annually, by either the Compensation and Talent Development Committee or the Board as a whole. The Board also reviews in-depth assessments of the Company’s bench strength, retention, progression, and succession readiness for all other senior level managers.

 

Monitoring the Company’s leadership development, talent management, and succession planning is also a key responsibility of our Compensation and Talent Development Committee, which devotes significant time to discussion and oversight of the Company’s human resources strategy.

 

In connection with the 2020 retirement of the Company’s Executive Vice President, Global Manufacturing, Projects, and Refining, the Company re-allocated significant responsibility to other members of its senior executive team in accordance with existing leadership development and succession plans.

 

LYONDELLBASELL  2021 PROXY STATEMENT    22

 

HUMAN CAPITAL MANAGEMENT

 

Our success as a company is tied to the passion, knowledge, and talent of our global team. To achieve our vision of being the best operated and most valued company in the industry, we must attract top performers and equip them with the tools needed to continuously grow and leverage their potential.

 

What We Do
We believe in integrity, diversity, and fairness
We focus on creating a work environment that is safe, respectful, and inspires employees to strive for excellence
We believe in the "power of many" and place a strong emphasis on teamwork
We reward performance based on personal, team, and company results
We engage in open and ongoing dialogue with employees and their representatives to ensure a proper balance between the best interests of the Company and its employees
We have a comprehensive Human Rights Policy, available on our website at www.LyondellBasell.com by clicking “Sustainability,” then “Report and Policy Library”


 

Key 2020 Focus Areas

 

In 2020, we continued our focus on building an engaged, talented workforce by developing skill sets, supporting diversity, and ensuring fair employment and work practices.

 

COVID-19

 

As cases of the COVID-19 virus spread across the globe, LyondellBasell continued to operate with three key objectives: protecting the health and safety of our people; ensuring the safety and security of our work locations; and maintaining business continuity with our customers and suppliers.

 

A globally coordinated, locally implemented plan to protect our workforce was quickly put in place at the beginning of the pandemic. Strict social distancing and facial coverage protocols were introduced, critical personal protective equipment was procured and provided to employees, and a number of initiatives to support our employees’ mental health were put into place. Processes and tools were implemented so employees could easily and confidentially report if they have symptoms of, or have tested positive for, COVID-19; all are contacted by medical personnel or human resources to ensure they have sufficient support.

 

In addition, the COVID-19 pandemic required our office-based workforce to quickly shift to remote working. To date, many employees continue to work from home for various pandemic-related reasons, including back-to-school and childcare challenges as well as personal or health-related reasons. We have also increased the availability of virtual learning and development opportunities.

 

DIVERSITY, EQUITY, AND INCLUSION

 

In July 2020, we accelerated our efforts in the area of diversity, equity, and inclusion (DEI) with the appointment of a Chief Talent & Diversity Officer, the establishment of a DEI Leadership Council, and the development of a multi-year DEI strategy. We are launching new employee initiatives focused on obtaining our employees’ perspectives on DEI, including formalized employee inclusion groups and a series of employee “listening circles,” and providing DEI training to all employees and senior managers.

 

HEALTH, WELLNESS, WELFARE, AND FAMILY RESOURCES

 

We provide competitive benefits and, at our large sites, access to health services at an on-site clinic on paid worktime. We have defined benefit pension plans that cover employees in the U.S. and various non-U.S. countries. In addition, we provide other post-employment benefits such as early retirement and deferred compensation severance benefits to employees of certain non-U.S. countries.

 

In 2020, new family-friendly policies were adopted that expanded the availability of paid parental leave, provided financial reimbursement for certain adoption expenses, and ensured all employees globally have a minimum of ten paid vacation or personal leave days. Our Employee Assistance Plan, which offers tools and provides referrals to financial and legal resources, was expanded and since January 2021 is available to all employees globally.

 

LYONDELLBASELL  2021 PROXY STATEMENT    23

 

BOARD OVERSIGHT OF RISK

 

While the Company’s CEO is responsible for assessing and managing the Company’s day-to-day risks and related control systems, the Board has broad oversight of the Company’s risk profile and risk management. In this oversight role, the Board is responsible for satisfying itself that the risk management processes designed and implemented by management, including the Company's Enterprise Risk Management (ERM) organization, are functioning and that necessary steps are taken to foster a culture of risk-adjusted decision-making throughout the organization. The Company believes that this division of responsibilities achieves sound risk management and that the Board’s involvement ensures effective oversight.

 

 

LYONDELLBASELL  2021 PROXY STATEMENT    24

 

Enterprise Risk Management Function

 

The Company has an Enterprise Risk Management (ERM) organization, with a group of employees dedicated to deploying the enterprise-wide risk management framework. The CEO and Chief Financial Officer are responsible for overseeing these risk management programs, including assessing risk tolerances, evaluating whether such tolerances are aligned with the Company’s strategic goals, and defining our overall risk profile. Each year, ERM leads a risk workshop with the CEO and his leadership team to refresh the Company’s risk profile. Together, the participants validate existing enterprise risks (both opportunities and threats), select new and emerging risks to add to the risk register, and ensure risk ownership is assigned to the appropriate leadership team executives and the Board and Board committees.

 

Examples of the Company’s enterprise risks include major health, safety, environment, and security events, cyber security, climate change, workforce planning, and political and regulatory uncertainty.

 

The CEO has delegated to an internal Risk Management Committee the authority to review and approve transactions, including hedging strategies, that are in accordance with the Company’s approved risk management policies and procedures. The standing members of the Risk Management Committee include the CEO, the Chief Financial Officer, and the Chief Legal Officer. Under the Committee's oversight, the Company's Financial Risk Management Group manages foreign exchange, interest rate, and other financial risks across the Company's global operations. Through a variety of policies and procedures, senior management and their leadership teams identify, monitor, mitigate, and report on risks and develop risk management plans aligned with the Company’s enterprise risk management framework.

 

The results of the risk management processes and updates on material risks are reported to the Board and its committees on a regular basis. The Audit Committee is responsible for ensuring that an effective risk assessment process is in place, and reports are made to the Audit Committee in accordance with NYSE requirements.

 

In recent years, members of the Board have participated in dedicated workshops, interviews, and surveys with the Company’s ERM organization and outside consultants. During these sessions, Board members and management identify and assess the Company’s primary risks. In 2020, in response to director feedback and requests, the ERM team conducted an accelerated evaluation of risks related to the Company’s operations and investments in China.

 

The direct line of communication between the Board and members of management facilitated at Board meetings and through these workshops allows the Board to further evaluate and assess the management of the Company’s day-to-day risks.

 

LYONDELLBASELL  2021 PROXY STATEMENT    25

 

APPROACH TO SUSTAINABILITY

 

LyondellBasell is taking action to help tackle the global challenges of eliminating plastic waste, addressing climate change, and supporting a thriving society. As one of the world’s largest producers of plastics and chemicals, we have the potential – and responsibility – to use our scale and reach to make a positive impact across value chains. In 2020, we further developed our sustainability strategy and identified five pillars that frame LyondellBasell’s response to these challenges.

 

GLOBAL CHALLENGES
 
PLASTIC WASTE CLIMATE CHANGE THRIVING SOCIETY
 
OUR PILLARS
         
End plastic waste
in the environment
Advance the circular
economy
Address climate
change
Grow sustainable
solutions
Enhance our
workplace, operations
and communities
         
         
We believe that ending plastic waste in the environment is a critical issue of our time. We are committed to helping eliminate plastic waste and are engaged in collaborative efforts across the value-chain to direct action where it is needed most. We believe that transitioning to a circular economy will reduce resource use and enable a more sustainable future. We are advancing technologies and innovations that will help conserve finite resources and retain their value for as long as possible. We believe that climate change is one of the most important global challenges both now and for future generations. We support the ambitions of the Paris Agreement and are reducing greenhouse gas emissions intensity from our operations to deliver solutions that help advance a low-carbon economy. We believe growing our portfolio of sustainable solutions will help address society’s most pressing challenges. By doing so, we will continue to reliably produce products and offer solutions that are critical to improving the quality of life for billions around the world. We believe the health and safety of our people and the communities where we operate are our highest priorities. We are committed to operating our company sustainably to deliver industry-leading performance, and enhancing our workplace and communities through the power of many.

 

2020 Actions and Milestones

 

In addition to defining our longer-term sustainability priorities, we are taking substantive action to achieve those goals.

 

RECYCLED AND RENEWABLE-BASED POLYMERS

 

In 2020, we announced our ambition to produce and market 2 million metric tons of recycled and renewable-based polymers annually by 2030.

 

Furthering this ambition, the Company’s mechanical recycling joint venture with SUEZ, Quality Circular Polymers, acquired additional recycling assets in December 2020, increasing its capacity for the production of recycled materials to approximately 55,000 tons per year. 2020 also marked the successful start-up of the Company’s MoReTec molecular recycling pilot plant in Ferrara, Italy. The plant uses our advanced recycling technology to return post-consumer plastic waste to its molecular form, for use as a feedstock for new plastic materials. Unlike traditional recycled plastics, these materials can be used in food packaging and healthcare items, which must meet strict regulatory requirements.

 

UNITED NATIONS GLOBAL COMPACT AND POLICY COMMITMENTS

 

In December 2020, LyondellBasell joined the United Nations Global Compact, the world’s largest corporate sustainability initiative, and committed to further align our operations and strategies with shared principles on human rights, labor, and anti-corruption. The Company also assessed the United Nations Sustainable Development Goals and identified the goals most material to our Company and aligned with our sustainability strategy, for future reporting.

 

The Company’s Supplier Code of Conduct, adopted in July 2020, establishes LyondellBasell’s expectations of suppliers and our commitment to support strong environmental, social, and governance (“ESG”) practices throughout our supply chain. LyondellBasell also adopted its first Human Rights Policy, which affirms and builds on existing Company policies and documents our commitment to respecting the human rights of our employees and all individuals, across our global operations.

 

LYONDELLBASELL  2021 PROXY STATEMENT    26

 

DIVERSITY, EQUITY, AND INCLUSION

 

In 2020, we appointed a Chief Talent & Diversity Officer and established an employee Diversity Council. Together with management and our Compensation and Talent Development Committee, they are evaluating our policies and practices to further emphasize diversity, equity, and inclusion (“DEI”) in our cultural and talent management programs. Also in 2020, our Nominating and Governance Committee amended our Corporate Governance Guidelines to explicitly require that the Committee and its outside consultants include women and minority candidates in each pool from which a director candidate is selected.

 

GRI AND SASB-ALIGNED REPORTING

 

The Company’s 2019 Sustainability Report, published in September 2020, aligned disclosures to the guidelines of the Global Reporting Initiative (“GRI”) and the Sustainability Accounting Standards Board (“SASB”). We are expanding our climate risk and opportunity assessment in the first half of 2021 and will include disclosures aligned with Task Force for Climate-Related Financial Disclosures (“TCFD”) reporting beginning in 2021.

 

Board and Management Oversight of ESG

 

Our Board leads our commitment to sustainability and maintains oversight of the Company’s ESG profile. Management reports on key topics and initiatives at each regularly scheduled Board meeting, and directors participate in a deep dive on sustainability strategy at least annually. In 2020, the Board focused on the Company’s ESG progress during dedicated sessions at three of its five regularly scheduled meetings.

 

The HSE&O, Compensation and Talent Development, Nominating and Governance, and Audit Committees also provide guidance regarding specific ESG issues in accordance with their charters and responsibilities. Specifically, the HSE&O Committee reviews program information and indicators on HSE performance at each meeting, and the Company’s Senior Vice President of R&D, Technology and Sustainability, who functions as the Chief Sustainability Officer, reports to the Committee regularly on sustainability initiatives and reporting. The HSE&O Committee reviews and approves the Company’s sustainability report each year.

 

The Nominating and Governance Committee oversees the Company’s corporate governance policies, and the Compensation and Talent Development Committee reviews our executive compensation, talent management, and DEI programs. The Chief Compliance Officer, who has a direct reporting line to the Audit Committee, presents information to that Committee regarding the Company’s compliance programs and EthicsPoint reporting helpline complaints at least quarterly. The Audit Committee also reviews the Company’s audit and internal controls.

 

BOARD OVERSIGHT OF ESG

 

 

 

LYONDELLBASELL  2021 PROXY STATEMENT    27

 

At the management level, our CEO oversees the Company’s ESG profile through regular reporting and discussion on key topics and initiatives with his direct reports.

 

MANAGEMENT OVERSIGHT OF ESG

 

 

SUSTAINABILITY STEERING COMMITTEE

 

The Sustainability Steering Committee, a subset of the CEO’s leadership team, meets monthly throughout the year and serves to align and embed the Company’s sustainability strategy within our corporate strategy, including by assessing progress toward the Company’s 2030 sustainability ambitions. The Committee is chaired by the Senior Vice President of R&D, Technology and Sustainability, who also functions as our Chief Sustainability Officer, and its membership includes the heads of each of the Company’s business segments as well as our finance, legal, public affairs, and HSE functions.

 

SUSTAINABILITY TEAM

 

The Chief Sustainability Officer is supported by a global group of employees, led by our Director, Global Sustainability, who is responsible for the management of sustainability programs. This group collaborates with leaders across the organization to bring together the functional expertise and skills needed to achieve our sustainability and ESG objectives.

 

LYONDELLBASELL  2021 PROXY STATEMENT    28

 

Commitments, Initiatives, and Partnerships

 

CLIMATE CHANGE PLASTIC WASTE THRIVING SOCIETY
     

Achieve a 15% reduction in CO2
emissions per ton of product
produced, compared with 2015

 

 

We are committed to developing our
climate ambition beyond our 2030 goal

 

Produce and market 2 million
metric tons of recycled and
renewable-based polymers annually
Continue to operate safely with a goal
of zero incidents, zero injuries
and zero accidents
       

 

Operation Clean Sweep

 

The Company is a member of Operation Clean Sweep® (OCS), the plastics industry initiative aimed at preventing pellet loss. Since 2017, we have been committed to Plastics Europe’s OCS program and, since 2018, we have participated in the American Chemistry Council’s OCS Blue program, which requires members to demonstrate an enhanced commitment to managing and reporting pellet loss. We have incorporated OCS best practice guidance into our Operational Excellence management system, requiring all sites to evaluate operations, reduce accidental releases, and report discharge, spillage, or escape of pellets.

 

In September 2020, we conducted a Company-wide, global “Sweep Week” as part of our commitment to eliminate plastic waste. Sweep Week was conducted at 80 plants and, in addition to tailored actions at each site with significant employee participation, also included awareness activities and actions to prevent recurrence.

Alliance to End Plastic Waste

 

 

 

LyondellBasell is a founding member in the Alliance to End Plastic Waste, and our CEO currently serves as its vice chairman. The Alliance is the first global, cross value chain organization to address the goal of ending plastic waste in the environment. Chemical and plastics manufacturers, converters, consumer goods companies, retailers, and waste management companies partner with the finance community, government, and environmental and economic development NGOs to find market-based solutions.

 

The Alliance has a special focus on supporting waste management infrastructure development in Southeast Asian countries, which account for a significant percentage of the world’s ocean pollution. For example, in Bali, the AEPW has partnered with Project STOP to develop and launch a new sustainable waste system to provide waste collection to 160,000 residents in Jembrana and Negara for the first time while creating new, permanent jobs.

Global Care Day

 

 

 

LyondellBasell hosted its 21st Annual Global Care Day in October 2020, with a focus on food security. More than 80 LyondellBasell manufacturing facilities and office sites participated in the global event, following the Company’s charitable contributions made earlier in the year to local food banks around the world. Projects included collecting and processing food donations, volunteering in soup kitchens and food banks, building micro food pantries, and organizing drive-through food banks for individuals in need. LyondellBasell event coordinators implemented a series of COVID-19 precautions, including ensuring volunteers could safely socially distance, eliminating the potential for congregating, and mandating the wearing of facial coverings.

MoReTec

 

 

Molecular recycling is an advanced recycling technique that uses technology to break down plastic waste into its component molecules, rather than cutting it into small pieces, for use as feedstock in new plastic materials that are suitable for food packaging and medical supplies.

 

LyondellBasell has partnered with Germany’s Karlsruhe Institute of Technology to prove the efficiency of our molecular recycling technology, MoReTec, at laboratory scale. In 2020, we successfully started up the molecular recycling pilot plant in Ferrara, Italy.

Quality Circular Polymers

 

 

 

Quality Circular Polymers (“QCP”) is a Netherlands-based joint venture between LyondellBasell and SUEZ, a world leader in environmental services. QCP uses mechanical recycling to transform post-consumer plastic waste into high-quality polymers that can be used to make new products. It is the first-ever collaboration between a leading waste company and a major global plastics producer, creating recycled plastics that help consumer brands contribute to the circular economy.

 

In 2020, QCP acquired TIVACO, a plastics recycling company located in Belgium, increasing QCP’s production capacity of recycled materials to approximately 55,000 tons per year, supporting our ambition to produce and market 2 million metric tons of recycled and renewable-based polymers by 2030.

 

LYONDELLBASELL  2021 PROXY STATEMENT    29

 

BOARD AND COMMITTEE INFORMATION

 

The Board currently has six standing committees, each consisting entirely of independent directors:

 

| Audit Committee
| Compensation and Talent Development Committee
| Nominating and Governance Committee
| HSE&O Committee
| Finance Committee
| Executive Committee

 

Our Compensation and Talent Development Committee, Nominating and Governance Committee, and HSE&O Committee meet in connection with each regularly scheduled Board meeting (other than the Board’s strategy session held in July) and hold additional meetings as needed, while other committees meet independently as the matters under their respective responsibilities require. Committees regularly receive reports from LyondellBasell management, report on committee actions to the Board, and may retain outside advisors.

 

In 2020, the Board held five regularly scheduled meetings and four special meetings. Our directors’ average attendance rate at Board and committee meetings was 95%, and each of our directors attended at least 85% of the meetings of the Board and committees of which he or she was a member. In addition, our Chair regularly attends meetings of the Audit Committee and the Compensation and Talent Development Committee. Although the Company does not maintain a policy regarding directors’ attendance at its general meetings of shareholders, both our Chair and CEO attend the Company’s annual general meeting each year and will attend the 2021 Annual Meeting.

 

The table below provides membership and meeting information for each of the Board’s committees as of the date of this proxy statement.

 

      Compensation & Nominating &      
Name   Audit Talent Development Governance HSE&O Finance Executive
Jacques Aigrain        
Lincoln Benet        
Jeet Bindra        
Robin Buchanan          
Tony Chase(1)          
Stephen Cooper            
Nance Dicciani        
Bob Dudley(1)          
Claire Farley        
Bella Goren(1)          
Michael Hanley        
Albert Manifold        
Bob Patel              
2020 MEETINGS   5 4 4 4 7 0(2)

 

 Chair    Member    As of Annual Meeting

 

(1) Mr. Chase’s and Mr. Dudley’s committee membership appointments will be effective upon their election to the Board at the Annual Meeting. Mr. Dudley will replace Mr. Manifold on the Finance Committee. Ms. Goren is not standing for re-election to the Board.
   
(2) The Executive Committee meets on an as-needed basis to discuss coordination among the Board and its committees, collaborate on meeting agendas, and discuss ad-hoc issues. The Committee did not hold any meetings in 2020.

 

Each of our committees has a written charter, approved by the Board. The charters can be found on our website at www.LyondellBasell.com by clicking on “Investors,” then “Corporate Governance,” then “Board of Directors.” Each committee annually reviews and recommends any changes to its charter and conducts an evaluation of committee performance with respect to delegated duties and responsibilities.

 

LYONDELLBASELL  2021 PROXY STATEMENT    30

 
AUDIT COMMITTEE

CHAIR:
MICHAEL HANLEY*

 

MEMBERS:

JEET BINDRA
BELLA GOREN*
ALBERT MANIFOLD*

 

*AUDIT COMMITTEE
FINANCIAL EXPERTS

 

INDEPENDENCE:
ALL MEMBERS

The Audit Committee is responsible for overseeing all matters relating to our financial statements and reporting, our internal audit function and independent auditors, and our compliance function. Listed below are the general responsibilities of the Audit Committee.

 

|

Independent Auditor – Engage external auditor, review performance, and approve compensation; review independence and establish policies relating to the hiring of auditor employees; and pre-approve audit and non-audit services;

|

Internal Audit – Review plans, staffing, and activities of the internal audit function and its effectiveness;

|

Financial Statements – Review financial statements and earnings releases; discuss and review accounting policies and practices and external auditor reviews; and discuss and review the effectiveness of internal controls; and

|

Compliance – Review plans, staffing, and activities of the compliance function and its effectiveness; establish and review procedures for complaints, including anonymous complaints regarding accounting, controls, and auditing; and review the Company’s Code of Conduct and system for monitoring compliance therewith.

   

Our Board has determined that all Audit Committee members are independent under the NYSE listing standards, our categorical independence standards, and the heightened independence requirements applicable to audit committee members under Securities and Exchange Commission (“SEC”) rules. Our Board has also determined that all Audit Committee members are financially literate in accordance with the NYSE listing standards and that Mr. Hanley, Ms. Goren, and Mr. Manifold qualify as audit committee financial experts under SEC rules.

 
COMPENSATION AND TALENT DEVELOPMENT COMMITTEE

CHAIR:

NANCE DICCIANI

 

MEMBERS:

ROBIN BUCHANAN

CLAIRE FARLEY

BELLA GOREN

 

INDEPENDENCE:

ALL MEMBERS

 

The Compensation and Talent Development Committee is responsible for overseeing our executive compensation and talent management programs and developing the Company’s compensation philosophy. In 2020, the Committee changed its name from the Compensation Committee to the Compensation and Talent Development Committee in recognition of its increased focus on diversity, equity and inclusion (DEI) matters.

 

In fulfilling its responsibility for the oversight of compensation matters, the Compensation and Talent Development Committee may delegate authority for day-to-day administration and interpretation of the Company’s compensation plans to Company employees, including responsibility for the selection of participants, determination of award levels within plan parameters, and approval of award documents. The Compensation and Talent Development Committee may not, however, delegate authority for matters affecting the compensation and benefits of the Company’s executive officers. The Compensation and Talent Development Committee’s responsibilities include the following:

 

|

Executive Compensation – Approve the compensation and benefits of executive officers; review executive compensation practices to ensure consistency with corporate objectives; review and approve CEO goals and objectives and evaluate CEO performance; and make recommendations to the Board regarding CEO and executive officer compensation;

|

Company Compensation and Benefits – Review the Company’s compensation philosophy, programs, and practices; review and approve pension and benefit arrangements as well as funding of pension and benefit plans; review gender pay equity for the Company; and make recommendations to the Board on these subjects; and

|

Talent Management – Review the Company’s organizational leadership structure and oversee leadership development, talent management, and succession and continuity planning for the CEO and other executive officers.

 

Our Board has determined that all Compensation and Talent Development Committee members are independent under the NYSE listing standards, our categorical independence standards, and other independence requirements applicable to compensation committee members under NYSE rules.

 

Compensation Committee Interlocks and Insider Participation – No member of the Compensation and Talent Development Committee serves or has served as an officer or employee of the Company or any of our subsidiaries and, during 2020, no executive officer served on the compensation committee or board of any entity that employed any member of our Compensation and Talent Development Committee or Board.

 

For additional information on the Compensation and Talent Development Committee, including information regarding compensation consultants engaged during 2020, see the “Compensation Discussion and Analysis” beginning on page 44.

 

LYONDELLBASELL  2021 PROXY STATEMENT    31

 
NOMINATING AND GOVERNANCE COMMITTEE

CHAIR:

CLAIRE FARLEY

 

MEMBERS:

JACQUES AIGRAIN

LINCOLN BENET

ROBIN BUCHANAN

 

INDEPENDENCE:

ALL MEMBERS

 

The Nominating and Governance Committee is primarily responsible for identifying nominees for election to the Board and overseeing matters regarding corporate governance.

 

To fulfill those duties, the Nominating and Governance Committee has the responsibilities summarized below:

 

|

Administrative – Coordinate evaluations by committees and the full Board;

|

Directors and Director Nominees – Identify and recommend candidates for membership on the Board and recommend committee memberships;

|

Director Compensation – Evaluate and recommend director compensation; and

|

Corporate Governance – Review the Company’s governance profile and make necessary recommendations; review and propose modifications to the Company’s governance documents and policies; and review and comment on shareholder proposals.

   
HEALTH, SAFETY, ENVIRONMENTAL AND OPERATIONS COMMITTEE

CHAIR:

JEET BINDRA

 

MEMBERS:

STEPHEN COOPER

MICHAEL HANLEY

ALBERT MANIFOLD

 

INDEPENDENCE:

ALL MEMBERS

 

The HSE&O Committee assists the Board in its oversight responsibilities by assessing the effectiveness of health, safety, and environmental programs and initiatives that support Company policies. The HSE&O Committee also reviews the Company’s material technologies and the risks relating to its technology portfolio, the physical security of the Company’s assets, and the Company’s performance in executing large capital projects and turnarounds.

 

The specific responsibilities of the HSE&O Committee are summarized below:

 

|

Administrative – Review the status of the Company’s health, safety, and environmental policies and performance, including processes to ensure compliance with applicable laws and regulations;

|

HSE Performance and Sustainability – Review and monitor the Company’s health, safety, and environmental performance results; provide oversight of the Company’s programs, initiatives, and activities in the areas of technology and sustainability; review with management environment, health, safety, product stewardship, and other sustainability issues that can have a material impact on the Company; and review the status of related policies, programs, and practices;

|

Audit – Review and approve the scope of the Company’s health, safety, and environmental audit program; regularly monitor audit program results; and review and approve the annual budget for the health, safety, and environmental audit program; and

|

Operational Performance – Assess the Company’s operational performance; review the scope of the Company’s operational excellence audit program and monitor program results; and review and monitor the Company’s progress on and results for capital projects and turnarounds.

   
FINANCE COMMITTEE

CHAIR:

LINCOLN BENET

 

MEMBERS:

JACQUES AIGRAIN

NANCE DICCIANI

ALBERT MANIFOLD

 

INDEPENDENCE:

ALL MEMBERS

 

The Finance Committee is responsible for monitoring and assessing such matters as the Company’s capital structure and allocation, strategic transactions, debt portfolio, and tax and derivative strategies. In 2020, in response to the COVID-19 pandemic and low oil price environment, the Finance Committee met seven times in order to focus on the Company’s liquidity, capital allocation planning, and capital markets transactions.

 

In fulfilling its duties, the Finance Committee has the responsibilities summarized below:

 

|

Strategy – Review analyses and provide guidance and advice regarding acquisitions and divestments and discuss and review the Company’s tax strategies, planning, and related structures;

|

Capital – Review the Company’s capital structure and capital allocation, including organic and inorganic investments; review and discuss the Company’s dividend policy; and review and discuss share repurchase activities and plans; and

|

Securities and Financing – Review and discuss the Company’s debt portfolio, credit facilities, compliance with financial covenants, commodity, interest rate, and currency derivative strategies, and proposed securities offerings.

 

LYONDELLBASELL  2021 PROXY STATEMENT    32

 
EXECUTIVE COMMITTEE

CHAIR:

JACQUES AIGRAIN

 

MEMBERS:

LINCOLN BENET

JEET BINDRA

NANCE DICCIANI

CLAIRE FARLEY

MICHAEL HANLEY

 

INDEPENDENCE:

ALL MEMBERS

The Executive Committee consists of the chairs of each of the other Board committees. The role of the Executive Committee is to facilitate and improve communication and coordination among members of the Board and its committees. It does so by, among other things, collaborating on agenda setting and discussing ad-hoc issues.

 

OTHER GOVERNANCE MATTERS

 

Retirement Policy and Term Limits

 

Our Corporate Governance Guidelines and Rules for the Board of Directors provide that directors will not be re-nominated for election to the Board after they reach the age of 75. While the Board does not believe there is a specific age after which directors should no longer serve on boards, it does believe mandatory retirement ages are useful for promoting board refreshment. Since 2018, the Board has nominated two new directors to fill vacancies created by director retirements after reaching our mandatory retirement age.

 

The Board has not adopted term limits for its members. The Nominating and Governance Committee and the full Board regularly discuss board succession and refreshment and strive to maintain a balance of directors with varying lengths of service and ages. While the Board recognizes that term limits could assist in this regard, they may have the unintended consequence of causing the Board and the Company to lose the contribution of directors who over time have developed enhanced knowledge and valuable insight into the Company and its operations. The Board believes that the mandatory retirement age and an annual evaluation process for deciding whether to re-nominate individuals for election are currently more effective means of ensuring board refreshment and renewal, while also allowing for continuity of service.

 

Code of Conduct

 

The Company has a Code of Conduct for all employees and directors and a Financial Code of Ethics specifically for our CEO, CFO, Chief Accounting Officer and persons performing similar functions. Copies of these codes can be found on our website at www.LyondellBasell.com by clicking on “Investors,” then “Corporate Governance.” Any waivers of the codes must be approved, in advance, by our Board, and any amendments to or waivers from the codes that apply to our executive officers and directors will be posted on the “Corporate Governance” section of our website.

 

We expect all employees to report possible violations or concerns regarding our Code of Conduct. We offer an independent whistleblower helpline and website, EthicsPoint, that enables employees and other stakeholders to report complaints anonymously. Our Chief Compliance Officer, who has a direct reporting line to the Audit Committee, provides regular reports to the Committee on compliance with the Company’s Code of Conduct, related training programs, and complaints received and investigated by the compliance function.

 

Public Policy & Political Engagement

 

We believe active participation in the political process is essential to our long-term success. LyondellBasell advances our public policy agenda through direct lobbying, involvement in various trade associations, and the LyondellBasell Political Action Committee (PAC). Transparency and accountability are embedded into our public policy, political spending and lobbying actions. The Company maintains policies and procedures consistent with our Code of Conduct that support continued compliance with applicable political laws and regulations. Our engagement, including public policy advocacy and management of the PAC, is subject to oversight by the PAC Board and CEO. In addition, all PAC spending is reviewed and approved by the PAC Board.

 

LyondellBasell generally does not make political contributions other than through the PAC, which is funded voluntarily by employees. Effective January 2021, the PAC Board has paused political contributions in order to review its policies and criteria for donating to candidates and ensure support continues to reflect our Company’s values.

 

LYONDELLBASELL  2021 PROXY STATEMENT    33

 

Our advocacy activities are directed toward advancing LyondellBasell’s business interests, to foster the protection and advancement of strong petrochemical and refining industries and not the personal political preferences of our executives or employees. Our strategy is grounded in safe and reliable operation of all assets. We support policies promoting reasonable regulations based on sound science; fair and equitable tax policies that promote economic investment, job creation and global competitiveness; and transportation infrastructure to meet the needs of our industry.

 

In all of the Company’s advocacy activities, we are committed to the highest standards in corporate responsibility, compliance, and transparency. The Company discloses its U.S. federal, state and local lobbying activity and expenditures as required by law. More information is available on our website at www.LyondellBasell.com by clicking “Sustainability,” then “Public Policy & Political Engagement.”

 

Dutch Corporate Governance Code

 

As a Dutch incorporated entity, we are subject to the Dutch Corporate Governance Code. The Code, most recently amended in 2016 and a copy of which can be found at www.mccg.nl/english, is a statement of principles and best practices for Dutch companies with an emphasis on integrity, transparency, and accountability as the primary means of achieving good governance. The Code’s compliance principle is “comply-or-explain,” which permits a Dutch company to comply with the best practices outlined in the Code or explain why the company has chosen to apply different practices.

 

The principles and practices prescribed by the Code are largely consistent with NYSE and SEC requirements and best practices for U.S. companies. In our Dutch Annual Report, which accompanies our 2020 Dutch Annual Accounts and can be found on our website at www.LyondellBasell.com by clicking “Investors,” then “Company Reports,” we disclose those instances where we have chosen to apply practices that differ from the Code. In general, these instances arise from our decision to apply practices that are more common or appropriate for NYSE traded companies than those called for by the Code. For example, although the Board’s categorical standards for director independence incorporate the standards of both the Code and the NYSE, our Board has chosen to apply the standards of the NYSE where the two conflict, including with respect to the independence classification of directors nominated by Access Industries, a greater than 10% shareholder. Our Board believes that application of the NYSE independence standards is more appropriate for LyondellBasell, which is listed only on the NYSE and not on any exchange in the Netherlands. Our Board further believes that the service of Access nominees on the Company’s key independent committees provides those committees with shareholder perspective and the significant skills, experience, and qualifications of these directors, to the benefit of the Board, the Company, and our stakeholders more generally.

 

Related Party Transactions

 

We have adopted a written Related Party Transaction Approval Policy, which requires the disinterested members of the Audit Committee to review and approve certain transactions that we may enter into with related parties, including members of the Board, executive officers, and certain shareholders. The policy applies to any transaction:

 

| in the ordinary course of business with an aggregate value of $25 million or more;
   
| not in the ordinary course of business, regardless of value; or
   
| with a value of $120,000 or more and in which an executive officer or non-executive director has a direct or indirect material interest.

 

Related party relationships are identified and disclosed on an ongoing basis, as well as through responses to annual questionnaires completed by all directors, director nominees, and executive officers.

 

The Audit Committee reviews all the relevant facts of each related party transaction, including the nature of the related person’s interest in the transaction, and determines whether to approve the transaction by considering, among other factors, (i) whether the terms of the transaction are fair to the Company and on the same basis as those which could be obtained from non-related parties, (ii) the business reasons for the Company to enter into the transaction, (iii) whether the related party transaction would impair the independence of any independent Board member, and (iv) whether the transaction would present an improper conflict of interest for any director or executive officer of the Company. No director votes on approval or, unless requested by the Audit Committee, participates in the discussion of a related party transaction in which he or she has an interest. The Audit Committee also conducts an annual review of all transactions with related parties, including those that do not meet the thresholds for related party transactions described above.

 

The following is a description of related party transactions in existence since the beginning of fiscal year 2020.

 

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ACCESS INDUSTRIES

 

In 2010, we entered into certain agreements with affiliates of Access Industries, including a registration rights agreement, which obligates us to register and bear the costs for the resale of equity securities owned by Access Industries or its affiliates, and a nomination agreement. Pursuant to the nomination agreement, Access Industries has the right to nominate individuals for appointment to the Board if certain ownership thresholds are met. Access Industries currently owns more than 18% of our outstanding shares and has nominated Messrs. Benet, Buchanan, and Cooper pursuant to the nomination agreement. The Company entered into these agreements with Access Industries before it became publicly traded and the Related Party Transaction Approval Policy was adopted. Amendments to the nomination agreement are approved by disinterested directors.

 

CALPINE CORPORATION

 

Calpine Corporation, the owner and operator of power plants across the United States and Canada, supplies power and steam to the Company’s Houston refinery and electricity to certain other U.S. sites and is owned by a group of investors including a minority investment by Access Industries. The Audit Committee has reviewed and approved, most recently in October 2020, the Company’s contracts with Calpine, which were determined to be on terms fair to the Company and more advantageous than those offered by other parties. In 2020, the Company purchased approximately $62 million of power, steam, and water from Calpine and sold approximately $13 million of excess gas and raw water to Calpine.

 

PLASTO-CARGAL GROUP

 

From time to time, the Company’s Advanced Polymer Solutions segment sells certain additives to Plasto-Cargal Group, a manufacturer of plastic container and film products, in which Access Industries holds an indirect minority investment. Sales are conducted in the ordinary course and no approval is required under the Company’s Related Party Transaction Approval Policy; however, the Audit Committee has reviewed and approved the continuation of such transactions, which totaled less than $0.5 million for 2020.

 

OTHER TRANSACTIONS & RELATIONSHIPS

 

The Board was also made aware of, and considered the fairness of, certain transactions and relationships between the Company and other organizations where our directors and director nominees have relationships. These transactions and relationships were also considered in evaluating the independence of the non-executive members of our Board and the outside commitments of our executive director, Mr. Patel.

 

Each commercial transaction described below was entered into on an arm’s-length basis in the ordinary course of business, and no director initiated or participated in negotiation of the relevant purchases or sales.

 

| Access: Mr. Benet is CEO of Access Industries and a director of Warner Music, a majority-owned investment of Access Industries; Mr. Buchanan is an adviser to Access Industries and Non-Executive Chairman of its Advisory Board, which advises on portfolio strategy; and Mr. Cooper is CEO and a director of Warner Music.
| Bindra: The Company licenses certain technology and engineering services to HPCL-Mittal Energy Limited, where Mr. Bindra is a director.
| Buchanan: The Company has engaged Bain & Company, where Mr. Buchanan was previously a partner and continues in a limited and unrelated advisory role, for certain consulting services.
| Chase: The Company sells certain intermediates and derivatives products to The Plaza Group, a petrochemical marketing company, where Mr. Chase is a director.
| Dicciani: The Company purchases industrial gases from, and sells crude hydrogen to, Linde plc, where Ms. Dicciani is a director, and Linde provides technical services to certain Company sites in Europe which license its technology. The Company sells temporary chemical diverters for well completion to Halliburton, where Ms. Dicciani is a director.
| Farley: The Company purchases measurement products and receives site engineering services from TechnipFMC, where Ms. Farley is a director.
| Hanley: The Company sells polymer products to Shawcor Ltd., where Mr. Hanley is currently a director. Mr. Hanley is not standing for re-election to Shawcor’s board of directors in 2021.
| Patel: The Company receives transportation services from Union Pacific Corporation, where Mr. Patel is currently a director. Mr. Patel is not standing for re-election to Union Pacific’s board of directors in 2021. The Company sells temporary chemical diverters for well completion to Halliburton, where Mr. Patel is a director.

 

Indemnification

 

We indemnify members of our Board to the fullest extent permitted by law so they will be free from undue concern about personal liability in connection with their service to the Company. Our Articles of Association establish this indemnification right, and we have also entered into agreements with each of our non-executive directors and our CEO contractually obligating us to indemnify them.

 

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DIRECTOR COMPENSATION

 

Our Nominating and Governance Committee reviews director compensation on an annual basis and recommends any changes in compensation determined advisable. The Board seeks to award compensation that fairly compensates directors for the work required by membership on our Board and aligns director interests with those of our shareholders. The Nominating and Governance Committee periodically receives advice from Pearl Meyer & Partners, LLC (“Pearl Meyer”), the Board’s independent compensation consultant, on director compensation practices and gives consideration to the qualifications and caliber of the Company’s directors and significant commitment required for service on our Board, including the additional time and effort required by overseas travel for a majority of our Board meetings.

 

Following its annual review in November 2020, the Nominating and Governance Committee recommended no changes to director compensation and approved the continuation of the existing director compensation policy as further described below. No increases to director pay have been approved since 2014, apart from an increase in the annual retainer for the Board Chair in connection with the election of Mr. Aigrain to the role in 2018 and the expansion of Chair duties (including in support of the Company’s strategic growth initiatives) and time commitment and travel required for the role. Excluding Chair, 7 years with no director pay increase

 

Our non-executive directors receive cash compensation and equity compensation, in the form of restricted stock units (“RSUs”), for their service on the Board and its committees. Members of the Board have the option to elect to receive all or a portion of the cash component of their compensation in Company shares. Our CEO does not receive any additional compensation for his service as a director.

 

Compensation    
Board Retainer Cash $115,000 ($325,000 for Chair)
  RSUs Valued at $170,000 ($325,000 for Chair)
Committee Retainers Members $10,000 ($15,000 for Audit Committee)
(excluding Executive Committee) Chairs $20,000 ($27,500 for Audit and Compensation and Talent Development Committee Chairs)

 

In addition to the retainers shown above, we provide members of the Board with a cash payment of $5,000 for each intercontinental trip taken in performing board service.

 

Share Ownership Guidelines

 

Members of our Board are subject to Share Ownership Guidelines. Under the Share Ownership Guidelines, non-executive directors are prohibited from selling any shares of the Company until they own shares that are valued at no less than six times their annual cash retainer for Board service, or $690,000 for all directors other than our Chair, whose ownership requirement is $1,950,000. Once a director has reached his or her required ownership level, he or she may not sell shares that would bring ownership below the threshold level.

 

Prohibition on Hedging and Pledging Shares

 

Pursuant to our Policy Prohibiting Insider Trading, directors are prohibited from purchasing, selling, or writing options on the Company’s shares, engaging in short sales, participating in other derivative or short-term purchase or sale transactions, or otherwise engaging in transactions that would enable them to hedge against any decrease in our share price. Directors are also prohibited from pledging Company shares as collateral for personal loans or other obligations, including holding shares in a brokerage margin account. These restrictions extend to directors’ immediate family members and certain related entities and are intended to keep the interests of our directors aligned with the long-term interests of the Company and our shareholders.

 

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DIRECTOR COMPENSATION IN 2020

 

   Fees Earned or       All Other     
   Paid in Cash    Stock Awards    Compensation    Total  
Name  ($)(3)    ($)(4)    ($)(5)    ($)  
Jacques Aigrain   345,235    325,027    5,000    675,262 
Lincoln Benet   145,099    170,016        315,115 
Jagjeet Bindra   150,102    170,016    12,040    332,158 
Robin Buchanan   135,092    170,016        305,108 
Stephen Cooper       292,884    2,040    294,924 
Nance Dicciani       323,273    2,040    325,313 
Claire Farley   145,099    170,016    2,040    317,155 
Isabella Goren(1)   140,095    170,016    7,040    317,151 
Michael Hanley   152,604    170,016    7,040    329,660 
Albert Manifold   140,095    170,016    —      310,111 
Rudy van der Meer(2)   55,051        2,040    57,091 
(1) Ms. Goren is not standing for re-election to the Board at the Annual Meeting.
(2) Mr. van der Meer retired from the Board on May 29, 2020.
(3) Includes retainers for services earned or paid through December 31, 2020. Mr. Cooper and Ms. Dicciani elected to receive the cash component of their 2020 compensation in the form of shares of our common stock.
(4) Represents annual grants of RSUs for all directors (other than Mr. van der Meer) and shares of stock issued in lieu of cash compensation for Mr. Cooper and Ms. Dicciani.
  The annual grants of RSUs are made in conjunction with the Board’s regularly scheduled meeting in May of each year. The terms of the RSUs provide for vesting one year from the date of grant and for cash dividend equivalent payments when dividends are paid on the Company’s shares. In 2020, the annual grant for each continuing director, other than Mr. Aigrain, was 2,640 units. Mr. Aigrain received 5,047 units. These awards are the only stock awards outstanding at 2020 fiscal year-end for the non-executive directors. In accordance with FASB Topic ASC 718, Compensation – Stock Compensation (“ASC 718”), the grant date fair value of the awards is the number of units granted times the fair market value of our shares on that date. See Note 15 to the Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2020 for a description accounting for equity-based compensation.
  The shares received in lieu of cash compensation are issued at the same time quarterly cash payments for retainers and travel fees are otherwise made. The number of shares issued is based on the average of the closing price of the Company’s shares over the quarter in which the compensation was earned. The shares issued in lieu of cash compensation in 2020 were as follows: Mr. Cooper – 1,788 shares and Ms. Dicciani – 2,249 shares.
(5) Includes $5,000 for each intercontinental trip taken for work performed for the Company, other than for Mr. Cooper and Ms. Dicciani, each of whom received shares as compensation for their travel fees. Also includes benefits in kind related to tax preparation and advice related to the directors’ UK and Dutch tax returns and payments. The Company provides these services, through a third party, to members of our Board because of our unique incorporation and tax domicile situation.

 

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ITEM 2DISCHARGE OF DIRECTORS FROM LIABILITY

 

The Board recommends that you vote FOR the discharge of our directors from liability for the performance of their duties in 2020.

 

Under Dutch law, shareholders may discharge the Company’s Board of Directors from liability in connection with the exercise of duties during the most recently completed fiscal year. The discharge does not affect any potential liability under the laws of The Netherlands relating to liability upon bankruptcy and does not extend to matters that have not been disclosed to shareholders. It is proposed that shareholders resolve to discharge the Company’s executive and non-executive directors in office in 2020 from liability in connection with the exercise of their respective duties during the year.

 

ITEM 3ADOPTION OF DUTCH STATUTORY ANNUAL ACCOUNTS

 

The Board recommends that you vote FOR the adoption of our 2020 Dutch statutory annual accounts.

 

At the Annual Meeting, you will be asked to adopt our Dutch statutory annual accounts for the year ended December 31, 2020, as required under Dutch law and our Articles of Association. Our Dutch statutory annual accounts are prepared in accordance with international financial reporting standards (“IFRS”) and Dutch law. A copy of the 2020 Dutch statutory annual accounts can be accessed through our website at www.LyondellBasell.com by clicking “Investors,” then “Company Reports,” and may be obtained free of charge by request to our Corporate Secretary at CorporateSecretary@LyondellBasell.com or LyondellBasell Industries, 4th Floor, One Vine Street, London W1J 0AH, United Kingdom, Attention: Corporate Secretary.

 

The Company paid an aggregate of $4.20 per share in dividends from its 2020 Dutch statutory annual accounts, for a total of approximately $1.4 billion. This includes interim dividends of $1.05 per share paid in each of the second, third and fourth quarters of 2020 and the first quarter of 2021.

 

DISCUSSION OF DIVIDEND POLICY

 

Pursuant to the Dutch Corporate Governance Code, we provide shareholders with an opportunity to discuss our dividend policy and any major changes in that policy each year at our annual general meeting.

 

Our dividend policy continues to be to pay a consistent quarterly dividend, with the goal of increasing the dividend over time. Through March 31, 2021, we have paid an aggregate of approximately $16.8 billion in dividends since we began our dividend program in 2011, increasing the dividend payments from $0.10 per share in the second quarter of 2011 to the current rate of $1.05 per share. The Company’s strong balance sheet and results of operations support the continuation of this dividend program.

 

Pursuant to our Articles of Association, the Board has determined the amount, if any, out of our annual profits to be allocated to reserves prior to the payment of dividends. The portion of our annual profits that remains after the reservation is available for dividend payments as approved by shareholders. The determination to pay any dividends will be made after a review of the Company’s expected earnings, the economic environment, financial position, and prospects of the Company, and any other considerations deemed relevant by the Board.

 

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ITEM 4  APPOINTMENT OF PRICEWATERHOUSECOOPERS ACCOUNTANTS N.V. AS THE AUDITOR OF OUR DUTCH STATUTORY ANNUAL ACCOUNTS

 

The Board recommends that you vote FOR the appointment of PricewaterhouseCoopers Accountants N.V. (“PwC N.V.”) as the auditor of our 2021 Dutch statutory annual accounts.

 

The Board has selected PwC N.V. to serve as the auditor of our Dutch statutory annual accounts to be prepared in accordance with IFRS for the year ending December 31, 2021, and, in accordance with our Articles of Association, we are requesting that shareholders appoint PwC N.V. as auditor of such annual accounts. PwC N.V. has acted as the auditor of our Dutch statutory annual accounts since 2010. Representatives of PwC N.V. will be present at the Annual Meeting either in person or by joining the teleconference and may be questioned by shareholders in relation to PwC N.V.’s report on the fairness of the financial statements.

 

ITEM 5 RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Board recommends that you vote FOR the ratification of PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for 2021.

 

The Board has selected PwC to serve as our independent registered public accounting firm for the year ending December 31, 2021. PwC has acted as our independent registered public accounting firm since 2010. The Audit Committee, which annually recommends selection of the Company’s independent accountants, reviews PwC’s performance and independence on an ongoing basis and believes the continued retention of PwC as the Company’s independent registered public accounting firm for 2021 is in the best interest of the Company and its stakeholders.

 

Although shareholder ratification of the selection of PwC is not required, our Board is submitting the selection to shareholders for ratification because we value our shareholders’ views on the Company’s auditors. If our shareholders fail to ratify the selection of PwC, it will be considered as notice to the Board and Audit Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit Committee, in its discretion, may recommend that the Board select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interest of the Company and its stakeholders.

 

Representatives of PwC are not expected to attend the Annual Meeting; however, representatives of PwC N.V., the auditor of the Company’s Dutch statutory annual accounts, will be present at the Annual Meeting either in person or by joining the webcast and will have the opportunity to respond to appropriate shareholder questions and make a statement if they desire to do so.

 

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PROFESSIONAL SERVICES FEE INFORMATION

 

Fees for professional services provided by PwC in each of the last two fiscal years, in each of the following categories, were as follows:

 

(in millions)  2020   2019 
Audit Fees  $10.0   $10.4 
Audit-Related Fees   1.1    0.4 
Tax Fees   0.5    0.8 
All Other Fees   —      —   
TOTAL  $11.6   $11.6 

 

Audit fees consist of the aggregate fees and expenses billed or expected to be billed for professional services rendered by PwC for the audit of our consolidated financial statements, the review of financial statements included in our Quarterly Reports on Form 10-Q, and services that are normally provided by an independent auditor in connection with statutory and regulatory filings or engagements, including comfort letters, statutory audits, attest services, and consents.

 

Audit-related fees consist of the aggregate fees billed for assurance and related services by PwC that are reasonably related to the performance of its audit or review of the Company’s financial statements and are not reported as audit fees herein. This category includes fees related to audits of benefit plans; agreed-upon or expanded audit procedures relating to accounting records required to respond to or comply with financial, accounting, or regulatory reporting requirements; and consultations as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards, or interpretations by regulatory or standard-setting bodies.

 

Tax fees consist of international tax compliance and corporate tax consulting.

 

The Audit Committee has adopted procedures for the approval of PwC’s services and related fees. Each year, the Audit Committee discusses the scope of the audit plan with PwC and all audit and audit-related services, tax services, and other services for the upcoming fiscal year are provided to the Audit Committee for pre-approval. The services, which may be provided in the upcoming twelve-month period, are grouped into significant categories substantially in the format shown above.

 

The Audit Committee is updated on the status of all PwC services and related fees on a periodic basis or more frequently as matters warrant. In 2020 and 2019, the Audit Committee pre-approved all audit, audit-related, tax and other services performed by PwC.

 

As set forth in the Audit Committee Report below, the Audit Committee has considered whether the provision of non-audit services by PwC is compatible with maintaining auditor independence and has determined in the affirmative with respect to the services provided in 2020.

 

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AUDIT COMMITTEE REPORT

 

The role of the Audit Committee is, among other things, to oversee the Company’s financial reporting process on behalf of the Board, to recommend to the Board whether the Company’s financial statements should be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the “Annual Report”), and to select the Company’s independent auditor for ratification by shareholders. Company management is responsible for the Company’s financial statements as well as for its financial reporting process, accounting principles, and internal controls. The Company’s independent auditor is responsible for performing an audit of the Company’s financial statements and expressing an opinion as to the conformity of such financial statements with accounting principles generally accepted in the United States.

 

The Audit Committee has reviewed and discussed the Company’s audited financial statements as of and for the year ended December 31, 2020 with management and PricewaterhouseCoopers LLP (“PwC”), the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2020. In addition, the Audit Committee has taken the following steps in making its recommendation that the Company’s financial statements be included in the Annual Report:

 

| First, the Audit Committee discussed with PwC those matters required to be discussed by Public Company Accounting Oversight Board (United States) Auditing Standard 1301 Communications with Audit Committees, including information regarding the scope and results of the audit. These communications and discussions are intended to assist the Audit Committee in overseeing the financial reporting and disclosure process.
| Second, the Audit Committee discussed with PwC its independence and received from PwC the written disclosures and the letter concerning PwC’s communications with the Audit Committee concerning independence as required under applicable independence standards for auditors of public companies. This discussion and disclosure helped the Audit Committee in evaluating such independence. The Audit Committee also considered whether, and concluded that, PwC’s provision of other non-audit services to the Company is compatible with the auditor’s independence.
| Third, the Audit Committee met periodically with members of management, including the head of the Company’s internal audit and internal controls functions, and PwC to review and discuss internal control over financial reporting. Further, the Audit Committee reviewed and discussed management’s report on internal control over financial reporting as of December 31, 2020, as well as PwC’s report regarding the effectiveness of internal control over financial reporting.
| Finally, the Audit Committee reviewed and discussed with the Company’s management and PwC the Company’s audited financial statements as of and for the year ended December 31, 2020, including the acceptability and appropriateness of the accounting principles applied, the reasonableness of significant judgments, and the clarity of the disclosure.

 

The Audit Committee also discussed with the head of the Company’s internal audit department and PwC the overall scope and plans of their respective audits. The Audit Committee meets periodically with both the head of the internal audit department and PwC, with and without management present, to discuss the results of their examinations and their respective evaluations of the Company’s internal control over financial reporting.

 

In the performance of their oversight function, the members of the Audit Committee necessarily relied upon the information, opinions, reports, and statements presented to them by Company management and by PwC as the Company’s independent registered public accounting firm.

 

Based on the reviews and discussions explained above (and without other independent verification), the Audit Committee recommended to the Board of Directors (and the Board of Directors approved) that the Company’s financial statements be included in the Annual Report. The Audit Committee has also approved the selection of PwC as the Company’s independent registered public accounting firm for fiscal year 2021.

 

The Audit Committee

 

Michael Hanley, Chair

Jagjeet Bindra

Bella Goren

Albert Manifold

 

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ITEM 6  ADVISORY VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY)

 

The Board recommends that you vote FOR the approval, on an advisory basis, of the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement.

 

We believe that LyondellBasell’s executive compensation program supports our executive compensation philosophy and goals, drives performance, encourages an appropriate sensitivity to risk, and increases shareholder value. Our philosophy, which is set by the Compensation and Talent Development Committee, is intended to align each executive’s compensation with the Company’s short-term and long-term performance and to provide the compensation and incentives needed to attract, motivate, and retain high-caliber executives who are crucial to our long-term success.

 

A significant portion of the total compensation opportunity for each of our executives is directly tied to the Company’s progress against our strategic and operating goals.

 

We implement our philosophy and achieve our program goals by following certain key principles, including:

 

| positioning total direct compensation and each individual element of executive compensation near the median of our peer group companies, with consideration given to the relative complexity of comparable executive roles;
| aligning short-term incentive awards with annual operating, financial, and strategic objectives, while taking into account the realities of a cyclical industry and rewarding differential performance rather than favorable or unfavorable market circumstances; and
| rewarding absolute and relative performance over time through long-term equity incentive awards.

 

RESULTS OF LAST YEAR’S SAY-ON-PAY VOTE

 

Our executive compensation program received substantial shareholder support and was approved, on an advisory basis, by approximately 97% of votes cast at the 2020 annual general meeting of shareholders. Our Compensation and Talent Development Committee and Board believe this level of approval of our executive compensation program demonstrates our shareholders’ strong support of our compensation philosophy and goals and the decisions made by the Compensation and Talent Development Committee. They also believe the consistently high level of shareholder support for our executive compensation is a result of our Compensation and Talent Development Committee’s commitment to compensating our executives in a manner that ensures a strong link between pay and performance and is reflective of our philosophy and goals, market best practices, and strong shareholder engagement.

 

PAY FOR PERFORMANCE IN 2020

 

The Compensation and Talent Development Committee believes that the compensation of our Named Executive Officers for 2020 is reasonable and appropriate, is supported by the Company’s performance, and works to ensure management’s interests align with increasing shareholder value. The Board requests that you consider the structure of our executive compensation program in connection with our 2020 performance, which is more fully discussed in the Compensation Discussion and Analysis (“CD&A”) section of this proxy statement that follows. The CD&A explains how we implement our compensation philosophy and goals and how we apply these principles to our compensation program.

 

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2021 ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

In accordance with Section 14A of the Securities Exchange Act of 1934, we are requesting that shareholders vote on an advisory basis to approve the compensation of our Named Executive Officers in 2020, as described in this proxy statement. Shareholders have the opportunity to share their opinion regarding our executive compensation program by voting for or against the following resolution:

 

“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the Named Executive Officers as disclosed in the Company’s proxy statement for the 2021 Annual General Meeting of Shareholders, including the Compensation Discussion and Analysis, the Summary Compensation Table and other related tables and disclosure.”

 

Although the advisory vote is non-binding, the Board values our shareholders’ opinions. The Compensation and Talent Development Committee will review the results of the vote and consider shareholders’ input when considering future decisions regarding our executive compensation programs. If you have concerns relating to our executive compensation programs, we encourage you to contact us. A vote against this proposal will not provide the Compensation and Talent Development Committee with information about shareholders’ specific concerns.

 

The Company provides for annual say-on-pay votes, and accordingly the next say-on-pay vote will occur at our 2022 annual general meeting of shareholders.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

TABLE OF CONTENTS  
EXECUTIVE SUMMARY 45
2020 Performance Highlights 45
Key Compensation Practices 46
Say-on-Pay and Shareholder Outreach 46
CEO Performance and Compensation Decisions 47
WHAT GUIDES OUR PROGRAM 47
Executive Compensation Philosophy 47
Components of Executive Compensation 48
Compensation Mix 48
The Decision-Making Process 49
Competitive Positioning and Our Peer Group 49
2020 EXECUTIVE COMPENSATION DECISIONS IN DETAIL 51
2020 Base Salaries 51
2020 Annual Bonus Payments 51
2020 Long-Term Incentives 55
ADDITIONAL INFORMATION CONCERNING EXECUTIVE COMPENSATION 57

 

This section explains the decisions made concerning the compensation of the Company’s Named Executive Officers (“NEOs”) for fiscal year 2020. It also describes the Company’s compensation philosophy, our executive compensation program, the process our Compensation and Talent Development Committee (the “Compensation Committee”) followed, and the factors the Compensation Committee considered in determining the amount of compensation awarded. The NEOs for 2020 and their current positions are provided below.

 

         
BOB PATEL
CHIEF EXECUTIVE
OFFICER

MICHAEL MCMURRAY
EVP AND CHIEF
FINANCIAL OFFICER

TORKEL RHENMAN
EVP – GLOBAL
INTERMEDIATES &
DERIVATIVES
AND REFINING
KEN LANE
EVP – GLOBAL
OLEFINS &
POLYOLEFINS
JEFF KAPLAN
EVP AND CHIEF
LEGAL OFFICER

 

Mr. Coombs, our former EVP, Global Manufacturing, Projects, and Refining, retired from his position effective August 1, 2020 and is also included as an NEO.

 

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EXECUTIVE SUMMARY

 

2020 Performance Highlights

 

In 2020, the pandemic and market headwinds created a challenging environment for our Company. Lower demand impacted volumes and margins across all parts of our business and especially in our refining and oxyfuels businesses. The Company demonstrated continued cost discipline and extended our track record of efficient cash generation, but reported overall EBITDA results below our original expectations for the year.

 

         
$1.4 B $3.3 B $4.24 $3.4 B $1.4 B
Net Income EBITDA Diluted EPS Cash from Operating
Activities
Paid in Dividends
         
$1.9 B $3.9 B $5.61    
Net Income
ex. LCM and impairment
EBITDA
ex. LCM and impairment
Diluted EPS
ex. LCM and impairment
   

 

Through the difficult market environment, the Company continued to operate efficiently and safely, maintaining our dividend and capitalizing on opportunities to grow and invest in our future.

 

|We maintained our commitment to GoalZERO and working together to reduce and eliminate incidents, reporting top-decile TRIR while continuing to produce materials needed for facemasks, disinfectants, and COVID-19 testing supplies. Our commitment to safety extends beyond operations, and in 2020 we rapidly implemented new COVID-19 health and social distancing protocols and transitioned a large number of office employees to remote work. To date, our measures have resulted in zero instances of confirmed workplace transmission across our global operations.

 

|We took action early in the COVID-19 pandemic to maximize liquidity through aggressive working capital management and proactive financings, and we supported liquidity through continuing cost discipline, both in our day-to-day operations and by deferring non-safety-related capital expenditures. We funded our dividend and capital investments through cash generated from operating activities.

 

|We continued our investment in growth, establishing a new integrated cracker joint venture with Bora in China; advancing our joint venture with Sinopec to manufacture propylene oxide and styrene monomer in China; and acquiring a 50% stake in a new Louisiana-based integrated polyethylene joint venture with Sasol. We successfully started up the Hyperzone polyethylene project and completed global integration of the businesses acquired from A. Schulman in late 2018.

 

Sustainability. Building on several years of increased focus on sustainability issues, including significant investments in mechanical and chemical recycling, 2020 saw the progression of our sustainability programs and goals. We defined our sustainability strategy and focus areas and announced a new target to produce and market 2 million metric tons of recycled and renewable-based polymers annually by 2030. We also aligned our annual Sustainability Report disclosures with the Global Reporting Initiative and Sustainability Accounting Standards Board frameworks and joined the United Nations Global Compact, the world’s largest corporate sustainability initiative. We recognize the extent and immediacy of the challenges facing our world, including eliminating plastic waste in the environment, addressing climate change, and supporting a thriving society, and we are taking action – today – to help address them.

 

Pay for Performance. As a result of our strong pay-for-performance culture, below target EBITDA resulted in an annual bonus payout for 2020 at 66% of target. There was no payout under the Company’s performance share units (“PSUs”) for the three-year performance period ended December 31, 2020 due to relative total shareholder return (“TSR”) performance. The performance metrics under the Company’s annual bonus program and PSUs are described under “2020 Executive Compensation Decisions in Detail.”

 

LYONDELLBASELL  2021 PROXY STATEMENT    45

 

Key Compensation Practices

 

Our executive compensation practices support our pay for performance philosophy, align our executives’ interests with those of our shareholders, and reflect best governance without encouraging unnecessary risk-taking. 

 

What We Do
Pay for performance. We tie a significant amount of compensation to our financial, business, and strategic goals.
Emphasize long-term performance. We balance long-term and short-term incentives and use long-term equity incentive awards, including PSUs, RSUs, and stock options, to reward sustained long-term performance.
Double-trigger vesting. We provide for “double-trigger” vesting in connection with any change-in-control event.
Clawbacks. We have adopted strong clawbacks so we can recover performance-based compensation in certain circumstances.
Share ownership guidelines. We restrict our executives’ and directors’ ability to sell shares unless they first meet robust share ownership guidelines.
Independent compensation consultant. We engage an independent consultant to advise on executive compensation matters, and our independent Compensation and Talent Development Committee meets regularly with the consultant in executive session.
Peer group benchmarking. We use appropriate peer groups when establishing compensation.
Annual say-on-pay. We hold an annual say-on-pay advisory vote.
   
What We Don’t Do
Excise tax gross-ups. We do not provide for excise tax gross-ups in connection with change-in-control events or terminations.
Hedging or pledging. We do not allow our officers and directors to hedge or pledge our stock.
Guaranteed bonuses. We do not pay guaranteed or multi-year bonuses.
Automatic compensation increases. We do not automatically increase executive base salaries each year or make lock-step changes in compensation based on peer group compensation levels or metrics.
Reprice or exchange underwater options. We do not permit option repricing or the buyout of underwater options without shareholder approval.

 

Say-on-Pay and Shareholder Outreach

 

Our executive compensation program has received substantial and consistent shareholder support over the past several years. At the 2020 annual general meeting of shareholders, approximately 97% of votes were cast in favor of our executive compensation program. Our Compensation and Talent Development Committee (the "Compensation Committee") and Board believe that this consistent high level of support from our shareholders is a result of our commitment to ensuring that our executives are compensated in a manner that provides a strong link between pay and performance.

 

The Compensation Committee and Board value our shareholders’ insights and are committed to ongoing, regular dialogue with shareholders regarding executive compensation, among other matters. We consider shareholder feedback, evolving business needs, and our desire to maintain a strong link between executive pay and performance when evaluating our compensation program.

 

Recent Shareholder Support for Say-on-Pay
95% 94% 97%
2018 2019 2020

 

LYONDELLBASELL  2021 PROXY STATEMENT    46

 

CEO Performance and Compensation Decisions

 

Each February, the Compensation Committee reviews CEO performance and compensation and approves our CEO’s annual bonus payout for the prior year as well as any changes to his base salary, target bonus, or the grant date value of long-term incentive ("LTI") awards. In setting target compensation, the Committee considers median compensation levels at our peer group companies, as well as the other factors described under “Competitive Positioning and Our Peer Group,” below. When evaluating compensation for our CEO, Mr. Patel, specifically, the Committee also takes into account the Company’s flat organization (with no Chief Operating Officer or President and the heads of each function or business reporting directly to the CEO) and Mr. Patel’s resulting expanded role and additional responsibilities.

 

The Compensation Committee approved a slight decrease to our CEO’s target compensation (base salary, target bonus, and grant date value of equity awards) for 2020, reducing LTI from 2019 and returning compensation to the same level as 2018.

 

In recognition of the central role Mr. Patel plays in shaping and executing on the Company’s strategy, the CEO’s overall performance is measured by considering the performance of the Company, as a whole, with respect to its financial, operational, and strategic goals. To assess Mr. Patel’s overall performance, the Compensation Committee considered the Company’s 2020 performance in:

 

|Navigating the COVID-19 pandemic, including safety, operational, and financial implications

 

|The COVID-19 response included swift actions to establish outbreak-related standards and protocols for social distancing and remote work, resulting in zero confirmed workplace COVID transmissions to date

 

|In addition, the Company proactively managed liquidity and maximized cash flow by reducing inventory and non-safety-related capex; monetized foreign exchange and interest rate swaps; and succeeded in funding dividends and capital expenditures through operating cash flow

 

|Continuing to make progress on talent management, including through the formation of a strategic executive committee, the appointment of a Chief Talent & Diversity Officer, and the establishment of a diversity, equity, and inclusion (DEI) leadership council and program

 

|Completing the integration of (former) A. Schulman businesses, now part of the Advanced Polymer Solutions segment

 

|Continuing to advance the Company’s sustainability initiatives and commitments, including announcement of a goal to produce and market 2 million metric tons of recycled and renewable-based polymers annually by 2030

 

|Continuing to return significant capital to shareholders through dividends and continued cost discipline across the Company, balanced with challenges in financial performance due to the global pandemic and prolonged lower oil price environment

 

In addition, the Board considered Mr. Patel's vision and leadership in delivering on LyondellBasell's value-driven growth strategy and advancing the Company's strategic objectives against the backdrop of the unprecedented pandemic, including:

 

|In China, completing the integrated ethylene and polyethylene joint venture with Bora Liaoning Enterprises and advancing a new propylene oxide and styrene monomer joint venture with Sinopec

 

|In the United States, acquiring a 50% stake in an integrated ethylene and polyethylene joint venture with Sasol in a transaction that was negotiated, signed, and closed during the ongoing pandemic

 

|Successfully starting up the Hyperzone project on the U.S. Gulf Coast, which translated the Company's new proprietary polyethylene technology from pilot plant to full-scale commercial operation and has now successfully produced all grades of high molecular weight film, pipe, small blow molding, and large container resins

 

In consideration of the Company’s achievements and financial results in 2020, including EBITDA that fell below the Company’s adjusted budget for the year, Mr. Patel was paid an annual bonus of $1,663,200 under the Company’s short-term incentive (STI) program. This payout reflects Company performance at 66% of target (as described in detail on pages 51-54). Mr. Patel received long-term incentive awards consisting of PSUs, RSUs, and stock options with an aggregate grant date value of $11,812,570.

 

WHAT GUIDES OUR PROGRAM

 

Executive Compensation Philosophy

 

Our executive compensation program is designed to:

 

|Take into account the realities of a cyclical, commodity industry and reward differential performance

 

|Align the interests of management with those of our shareholders

 

|Encourage both short-term and long-term results

 

|Attract, retain, and incentivize the highest caliber team possible

 

|Enable us to pay high achievers above-market median compensation based on individual performance, potential, and impact to the Company’s results

 

|Recognize and maintain the Company’s market-leading position in HSE performance, costs, and business performance

 

LYONDELLBASELL  2021 PROXY STATEMENT    47

 

Components of Executive Compensation

 

Our compensation program is structured to incorporate the following compensation components:

 

Component   Objective   Key Features   Performance-Based
Base Salaries   Provide a regular fixed income in recognition of job responsibilities   Determined when executives are hired or promoted into their position and reviewed annually   Individual performance is a key driver of any annual base salary adjustment. Increases are not guaranteed and must be approved by the Compensation Committee
Short-Term Incentives   Incentivize executives by aligning their compensation with key annual objectives and the results that are achieved   Target value of annual bonus is determined as a percentage of base salary. Executives earn from 0 to 200% of target based on Company results and (for executives other than the CEO) individual performance   Payout is determined by the Compensation Committee based on corporate performance and achievement of individual goals
Long-Term Incentives   Encourage executives to increase shareholder value over the long term and support talent retention  

Target value of LTI awards at grant is determined as a percentage of base salary

 

PSUs – three-year performance period, vest from 0 to 200% of target

 

RSUs – generally cliff vest after three years

 

Options – vest ratably over three years; expire ten years from grant; exercise price is fair market value at date of grant

 

Value of all LTI awards varies in relationship to changes in share price

 

PSUs pay out based on Company performance, as determined by the Compensation Committee. For PSUs granted in 2018, 2019, and 2020, performance is based solely on TSR relative to peers

 

Compensation Mix

 

Our executive compensation program emphasizes the alignment of pay with performance and shareholder value creation, and the mix of compensation components for our NEOs is heavily weighted toward performance-based and variable compensation. Our CEO’s compensation package emphasizes performance-based and variable compensation even more than those of the other NEOs to reflect the fact that the CEO’s actions have the greatest influence on the Company’s overall performance. For 2020, the Total Target Direct Compensation (“TTDC”) of our NEOs was as follows:

 

 

LYONDELLBASELL  2021 PROXY STATEMENT    48

 

The Decision-Making Process

 

The Compensation and Talent Development Committee (the "Compensation Committee") oversees our executive compensation program, working closely with its independent consultant to ensure the effectiveness of the program throughout the year. Details of the Compensation Committee’s authority and responsibilities are specified in its charter, which can be found on our website at www.LyondellBasell.com by clicking on “Investors,” then “Corporate Governance,” then “Board of Directors.”

 

THE ROLE OF THE COMPENSATION COMMITTEE

 

The Compensation Committee, comprising solely independent directors, is responsible for determining the compensation of our executive officers (including the NEOs) and designing our executive compensation program. With input from the Committee’s independent compensation consultant, the Committee annually conducts a comprehensive analysis and assessment of our executive compensation program, including an evaluation of each component of target compensation for our executive officers, and approves TTDC for the coming year. The Committee also approves performance metrics and target performance levels for the Company’s STI program and performance-based equity grants, after receiving input from management and from the HSE&O Committee regarding the design and payout for annual HSE performance metrics. Members of the Board review and provide input on the Compensation Committee’s decisions relating to the compensation of our executive officers.

 

THE ROLE OF THE CEO

 

Each year, Mr. Patel presents the Compensation Committee with recommendations regarding the compensation of each of the other executive officers (including the other NEOs). These recommendations are based on his assessment of each executive’s performance, the performance of the executive’s business unit or function, benchmark information, and retention risk. Mr. Patel also provides input on the overall executive compensation program design. The Committee reviews Mr. Patel’s recommendations and makes adjustments as it deems appropriate. Mr. Patel does not have any role in the Committee’s determination of his own compensation.

 

THE ROLE OF THE INDEPENDENT COMPENSATION CONSULTANT

 

The Compensation Committee has retained Pearl Meyer as its independent compensation consultant to provide advice regarding executive compensation matters. As required by SEC rules, the Committee engaged Pearl Meyer after assessing the firm’s independence and determining that the engagement of Pearl Meyer did not raise any conflict of interest or other concerns.

 

The services provided by Pearl Meyer generally include advising on the design of our executive compensation program and evolving industry practices, providing market data and analysis regarding the competitiveness of our executive compensation program, and evaluating proposed compensation decisions and program updates. Additionally, Pearl Meyer attends regularly-scheduled meetings of the Compensation Committee and telephone conferences with members of the Committee or its Chair throughout the year to assist with the review and discussion of executive compensation matters.

 

Competitive Positioning and Our Peer Group

 

Annually, the Compensation Committee reviews the TTDC for each of our executive officers, which includes base salaries, target bonuses, and the grant date value of long-term incentive awards. The Committee strives to set our NEOs’ TTDC and each individual component of executive compensation near the median compensation levels of our peer group companies, while considering other factors described below. A large portion of the TTDC opportunity for our NEOs is directly tied to the achievement of financial and operational metrics that measure our performance in both absolute terms and relative to peers.

 

The Committee reviews publicly available financial and compensation information reported by our peer group companies (described below) and general survey data. The survey data used to inform the Committee’s 2020 compensation decisions was collected from the 2019 Willis Towers Watson Executive Compensation Database. This survey data reflects a combination of general industry and chemical industry compensation for executives with responsibilities similar to those of our executives.

 

The Committee reviews the peer group and survey data to determine the median compensation for each executive’s position and then sets each executive’s base salary and compensation targets for the current year. This generally involves establishing an annual bonus target and the target value of LTI awards as a percentage of base salary. Median compensation is used as a reference point for pay recommendations. Actual pay and targets vary from median based on the executive’s industry experience; experience and performance in his or her role and at the Company; value of the role to the Company; internal pay parity among our executives; and any other factors the Committee deems relevant.

 

The compensation peer group is also used more generally when the Committee reviews our compensation program design, including the types of compensation awarded and the terms and conditions of compensation components.

 

LYONDELLBASELL  2021 PROXY STATEMENT    49

 

OUR 2020 PEER GROUP

 

The Compensation Committee conducts an annual review of the Company’s executive compensation peer group to determine if any changes are necessary. In choosing our peers, the Committee involves management and uses research and advice from the Committee’s independent compensation consultant to inform the following approach:

 

1)   Start with the list of current peers and identify any potential removals due to significant corporate transactions, for example, mergers, acquisitions or bankruptcies.

2)   Develop a pool of potential peer companies by considering:

|   Current peer companies;

|   Companies within comparable Global Industry Classification Standard (GICS) sectors;

|   Peers of peers;

|   Peers included in various institutional investor research reports regarding the Company;

|   Peers listed in shareholder advisor reports regarding the Company; and

|   Peers or sectors identified as potential competitors for business or talent.

3)   Screen out companies sourced in step 2 based on a combination of the following:

|   Public vs. private company status;

|   Company size, considering revenues, market capitalization or enterprise value, number of employees, and total assets; and

|   Financial, operating and business considerations, including chemicals, heavy industrials, and refining peers that are subject to similar market factors, global footprint, and stock price correlation.

 

Using this process, in November of 2019, the Committee approved the removal of two 2019 peers that were recently acquired (Andeavor (now a subsidiary of Marathon Petroleum Company) and Monsanto (now a subsidiary of Bayer AG)). In addition, the Committee expanded the peer group to add the six new peers listed below.

 

The new peer group includes 18 companies, with the Company between the 50th and 60th percentiles for (projected) 2019 revenues (measured at the time of approval) and between the 25th and 50th percentiles for enterprise value. The Committee believes the new peer group represents a reasonable balance in terms of industry mix and financial size while providing a robust set of data points for benchmarking executive pay. In addition, the Committee believes the new peer group will provide a robust and stable data set year-over-year going forward.

 

2020 COMPENSATION PEER GROUP COMPANIES

 

             
  Existing Peer Companies       New Peer Companies  
  3M Company   International Paper Company   Archer Daniels Midland Company  
  Caterpillar Inc.   Johnson Controls International plc   Dow, Inc.  
  Cummins Inc.   Marathon Petroleum Corporation   General Dynamics Corporation  
  Deere & Company   Phillips 66   HollyFrontier Corporation  
  DuPont de Nemours, Inc.   PPG Industries, Inc.   Linde plc  
  Honeywell International Inc.   Valero Energy Corporation   The Sherwin-Williams Company  
             

 

The 2020 peer group reported 2020 revenue that ranged from approximately $11 billion to $70 billion, with a median revenue of approximately $32 billion. In comparison, the Company’s 2020 revenue was approximately $28 billion. The 2020 peer group was used to develop the market data and benchmarking materials that were provided to the Compensation Committee to assist with the 2020 decision making process.

 

 

LYONDELLBASELL  2021 PROXY STATEMENT    50

 

2020 EXECUTIVE COMPENSATION DECISIONS IN DETAIL

 

The compensation of our executive officers, including our NEOs, is reviewed and approved by the Compensation Committee at the time of each executive’s hiring or promotion and annually during a regularly scheduled meeting held in February. Decisions are made based on the Company’s and each executive’s performance in the prior year, other than with respect to PSU payouts, for which decisions are based on Company performance over a three-year period.

 

February 2020 compensation decisions include the approval of 2020 base salaries; target values, criteria and metrics for the 2020 annual bonuses to be paid in 2021; and 2020 grants of annual long-term incentive awards, including PSUs, RSUs and stock options, as described on pages 55-57. In February 2021, the Committee approved payout of 2020 annual bonuses and the percentage earned for the PSUs granted in 2018 with a performance period that ended December 31, 2020.

 

2020 Base Salaries

 

The table below shows the base salaries for our NEOs in 2019 and 2020. Salary changes are generally approved at the Compensation Committee’s February meeting and effective on April 1. The Committee reviews market data and considers internal pay parity when making its decisions. The Committee also considers each executive’s performance during the prior year, any changes in responsibilities, and the executive’s time in his or her role. The 2020 salary increases for Messrs. Rhenman, Lane, and Kaplan, each effective April 1, 2020, were intended to recognize 2019 performance and maintain alignment with the salaries of similarly positioned executives in the Company’s peer group and the median of market generally.

 

Name  2019
Base Salary
   2020
Base Salary
   Increase 
Bob Patel  $    1,575,000   $    1,575,000    0.0% 
Michael McMurray  $800,000   $800,000    0.0% 
Torkel Rhenman  $750,000   $770,000    2.7% 
Ken Lane  $750,000   $770,000    2.7% 
Jeff Kaplan  $635,000   $667,000    5.0% 
Dan Coombs  $686,400   $686,400    0.0% 

 

2020 Annual Bonus Payments

 

The Company’s annual bonus program rewards participants for achieving the Company’s annual objectives. Under this short-term incentive, or STI, program, the Compensation Committee establishes metrics and target performance levels and sets a target bonus, determined as a percentage of base salary, for each executive. In 2020, our NEOs’ target bonuses were as follows:

 

Name  2020 Target Bonus
(% of salary)
 
Bob Patel   160% 
Michael McMurray   90% 
Torkel Rhenman   90% 
Ken Lane   85% 
Jeff Kaplan   85% 
Dan Coombs   90% 

 

LYONDELLBASELL  2021 PROXY STATEMENT    51

 

The amount of target bonus earned depends on the Compensation Committee’s determination of Company and individual performance under each of the STI program metrics. STI awards for 2020 were calculated as follows:

 

 

(1)Mr. Patel’s STI payout is based entirely on Company performance. There is no individual performance component.
(2)Overall payout under the STI program will not exceed 200% of an individual’s target bonus.

 

COMPANY PERFORMANCE – PAYOUT AT 66% OF TARGET

 

Payout for the Company performance component of the STI award is based on achievement of target performance levels for three metrics: business results, HSE performance, and costs, weighted as described below.

 

 

LYONDELLBASELL  2021 PROXY STATEMENT    52

 

BUSINESS RESULTS (60%)

 

WHY EBITDA?

We believe that EBITDA is the financial measure that best enables shareholders to gauge our profitability and assess our business results. We determine performance under this metric by comparing EBITDA to our annual EBITDA budget, after making certain non-discretionary adjustments at the end of the year to account for market tailwinds and headwinds. Our aim is to ensure that our compensation rewards differential rather than circumstantial performance. These adjustments are reviewed in detail with, and approved by, the Compensation Committee to ensure they are rigorous and support the alignment of pay and performance.

 

The Compensation Committee considers the Company’s EBITDA relative to the adjusted EBITDA budget. No payout was earned under the business results metric for 2020 due to EBITDA that fell below the Company’s adjusted EBITDA budget for the year, by 29%.

 

EBITDA BUDGET ADJUSTMENTS

 

Each year at its regularly scheduled November meeting, the Board reviews and approves the Company’s annual EBITDA budget for the coming year. After completion of the year, and in order to ensure that our executives are compensated on the basis of differential rather than circumstantial performance, the Company’s EBITDA budget may be adjusted in three primary ways. These adjustments can increase the EBITDA budget in an upcycle or lower the budget in a downturn, and are used as a tool to ensure the Committee pays for actual performance, not performance due to the volatility and cyclicality of the chemicals industry, which is heavily influenced by energy prices.

 

Specifically, these adjustments account for (i) differences between actual market margins or spreads and budget assumptions, (ii) movements in foreign-exchange rates, the mark-to-market of certain assets (e.g., precious metals), and the same fixed cost exclusions taken into account when measuring the Company’s cost performance, and (iii) the budget impact of significant unanticipated events. All adjustments are reviewed and approved by the Compensation Committee and are subject to certain thresholds before an adjustment will be considered.

 

Adjustments for actual market margins or spreads are calculated using independent third-party sources whenever available, including IHS Markit (IHS) and Phillip Townsend Associates (PTAI). No market adjustments are made for businesses that do not have market references, including our Advanced Polymer Solutions (APS) and Technology segments. In 2020, the impact of the COVID-19 pandemic caused non-adjusted businesses such as APS, which is heavily exposed to the automotive industry, to significantly underperform EBITDA budget assumptions. Similarly, while unfavorable margins customarily have a negative impact on realized sales volumes, no adjustments are made to the EBITDA budget to account for those impacts. The shortfall between anticipated and realized sales volumes for 2020 was significant, across all segments, due to the impact of the COVID-19 pandemic.

 

The table below summarizes the approved adjustments, both positive and negative, to the Company’s 2020 EBITDA budget by segment, which collectively reduced the EBITDA budget by 12%. To avoid disclosing competitively-sensitive information, we do not provide specific details on market impacts. 

 

Segment(s)   Description of EBITDA Budget Adjustments  
Olefins & Polyolefins – Americas   Ethylene cash margin (IHS), polyethylene spread (PTAI), and polypropylene spread (PTAI)  
Olefins & Polyolefins – Europe, Asia, International   Ethylene cash margin (IHS), polyethylene spread (PTAI), and polypropylene spread (PTAI)  
Intermediates & Derivatives   U.S. methanol variable margin (IHS), styrene raw material margin (IHS), and EU MTBE raw material margin (IHS)  
Refining   Maya 2-1-1 crack spread, net of RINs and co-product spread  
All   Foreign-exchange rate impacts, mark-to-market adjustments, and fixed cost exclusions  
NET EBITDA BUDGET IMPACT     12%

 

LYONDELLBASELL  2021 PROXY STATEMENT    53

 

We define EBITDA as Income from continuing operations before interest expense (net), provision for (benefit from) income taxes and depreciation and amortization. For a reconciliation of EBITDA to net income for the year ended December 31, 2020, please refer to Appendix A. At the Compensation Committee’s discretion, the Company’s annual EBITDA results may be adjusted for the impact of certain extraordinary events during the year. For 2020, approved EBITDA adjustments included the impacts of the U.S. Gulf Coast hurricanes and the Refinery impairment, as well as lower of cost or market adjustments.

 

HSE PERFORMANCE (20%)

 

WHY HSE PERFORMANCE?

Operating in a safe, reliable manner protects our employees, our assets, and the communities in which we operate. We believe our focus on HSE performance is the right thing to do, and it helps contain costs of operations and avoid operational upsets and reputational harm.

 

The Compensation Committee primarily considers the Company’s performance in personal safety (70%) and process safety (30%) and has discretion to adjust the resulting payout to account for environmental incidents and extraordinary trends and circumstances. Personal safety is measured by the Company’s total recordable incident rate (“TRIR”), calculated as the number of injuries per 200,000 hours worked. Process safety is measured by the Company’s process safety incident rate (“PSIR”), which represents the number of Tier 1 incidents, as measured by the American Chemistry Council, per 200,000 hours worked. Payout at 128% of target was based on strong TRIR performance in the top decile for the industry, with lower severity of injuries compared to prior years, offset by an increase in PSIR.

 

COSTS (20%)

 

WHY COSTS?

We believe maintaining controllable costs is vital to our success. We operate in an industry where a substantial portion of operating costs are market-driven and, in response, we drive a culture of cost discipline and strive to keep our fixed costs among the lowest in the industry.

 

The Compensation Committee considers the Company’s adjusted fixed costs as compared to our annual cost budget, adjusted downward by 0.8% for the impact of foreign exchange rates. 2020 adjustments to fixed costs (cumulative impact of approximately 0.4%), all of which were approved by the Compensation Committee and subject to de minimis thresholds, accounted for the positive and negative impacts of the true-up of current and prior year bonus payments, unbudgeted expenditures on strategic transaction activity, cost savings resulting from delayed corporate initiatives and capital projects, and the impacts of the U.S. Gulf Coast hurricanes. Payout at 200% of target recognized that the Company’s strong commitment to cost discipline during a challenging year resulted in adjusted fixed costs that were below budget, by 6%.

 

INDIVIDUAL PERFORMANCE

 

The payouts awarded for the individual performance component of the NEOs’ STI award reflect their individual contributions to achieving successful Company performance, whether they met or exceeded expectations for their respective roles, and any other significant factors during the year, such as special projects, challenges, or other performance issues. Individual performance ratings range from 0 to 200%. 

 

Name   Individual
Target
Bonus
  Company Performance
Component
  Individual Performance
Component
  STI
Payout
(as a % of
salary)
  STI
Payout
 
Bob Patel   160%   x 66%                   = 106%   $ 1,663,200  
Michael McMurray   90%   x ( (66% x 75%) + (66% x 120% x 25%) )   = 62%   $ 498,960  
Torkel Rhenman   90%   x ( (66% x 75%) + (66% x 150% x 25%) )   = 67%   $ 511,229  
Ken Lane   85%   x ( (66% x 75%) + (66% x 150% x 25%) )   = 63%   $ 482,828  
Jeff Kaplan   85%   x ( (66% x 75%) + (66% x 140% x 25%) )   = 62%   $ 406,696  
Dan Coombs   90%   x ( (66% x 75%) + (66% x 100% x 25%) )   = 59%   $ 237,281  

 

The Compensation Committee has determined that Mr. Patel’s payout under the STI program should be directly tied to, and determined by reference to, Company performance, which is described on page 47. There is no individual performance component to his annual STI award. The Committee’s evaluation of each other NEO’s individual performance is described below.

 

LYONDELLBASELL  2021 PROXY STATEMENT    54

 

Mr. McMurray’s individual performance rating of 120% is a result of his leadership of the treasury, accounting, finance, and tax teams through a challenging financial year, including skillfully managing the Company’s liquidity, navigating multiple banking and capital markets transactions, strong performance managing the accounting function, improving the investor relations function, and setting and achieving agreed investor relations KPIs.

 

Mr. Rhenman’s individual performance rating of 150% reflects his strong leadership of the Intermediates & Derivatives segment and delivery of results throughout a challenging year for the entire segment, which was disproportionately affected by pandemic-related mobility declines, his strategic work on the Refinery segment in the second half of 2020, and progress toward closing a joint venture with China Petroleum & Chemical Corporation (Sinopec).

 

Mr. Lane’s individual performance rating of 150% is based on his leadership of the Company’s Olefins & Polyolefins – Americas and Olefins & Polyolefins – Europe, Asia, International segments, including through inventory management, building customer relationships, and feedstock optimization, as well as the teamwork involved in closing the Company’s joint ventures with Liaoning Bora Enterprise Group and Sasol.

 

Mr. Kaplan’s individual performance rating of 140% is a result of key litigation outcomes, support of the finance function and capital markets transactions, joint venture negotiation and closing, and strategic risk management efforts, as well as his leadership roles with respect to environmental, social, and governance matters and the legal, public affairs, and real estate and facilities functions.

 

Mr. Coombs’s individual performance rating of 100% was agreed in connection with his retirement.

 

2020 Long-Term Incentives

 

2020 GRANTS OF AWARDS

 

The long-term incentive awards granted to the NEOs in 2020 included PSUs (50%), RSUs (25%), and stock options (25%). The allocation among these types of awards was determined by the Compensation Committee to be the most appropriate split between equity that is performance-based (PSUs) and time-based (RSUs and stock options). RSUs cliff vest after three years while stock options vest ratably over a three-year period, balancing executive retention with the ability to offer partial, near-term vesting to potential executive hires.

 

Performance-based awards that pay out at 0 to 200% of target based on the Company’s total shareholder return (“TSR”) over a three-year period. PSUs only reward our executives if our shareholder return over the performance period compares favorably to that of our peers.
Time-based awards that cliff vest after three years. RSUs provide retention value and encourage executives to consider the Company’s long-term success, strengthening the alignment between their interests and those of our shareholders.
Time-based awards that are intended to direct executives’ focus toward increasing the market value of our shares. Options vest ratably over three years, expire ten years from the date of grant, and only provide value to the executive if there is an appreciation of our stock price over time.

 

The value of long-term incentive awards granted to the NEOs is determined as a percentage of base salary. The Compensation Committee reviews the target awards annually and recommends changes based on the executive’s time and experience in the position, changes in job responsibilities, and market data. At the February 2020 Compensation Committee meeting, it was determined that Mr. Patel would receive a modest decrease in LTI target value. The 2020 LTI target values for Messrs. McMurray, Lane, and Rhenman were negotiated as part of each executive’s 2019 employment offer and maintained or increased based on each executive’s role and experience, internal parity, and the competitive marketplace. 

 

LYONDELLBASELL  2021 PROXY STATEMENT    55

 
Name  2019 Target
(% of base salary)
   Total Value of
2019 LTI Awards
   2020 Target
(% of base salary)
   Total Value of 2020
LTI Awards
 
Bob Patel(1)   N/A   $12,312,500    750%          $11,812,500 
Michael McMurray(2)   N/A        310%   $2,480,000 
Torkel Rhenman(3)   260%   $935,000    270%   $2,079,000 
Ken Lane(3)   240%   $838,500    250%   $1,925,000 
Jeff Kaplan   240%   $1,524,000    240%   $1,601,000 
Dan Coombs(4)   248%   $1,702,500    310%   $2,128,000 

 

(1) For 2019, Mr. Patel’s LTI target value was established as an absolute value of $12,312,500 rather than as a percentage of base salary.
(2) Mr. McMurray did not receive an annual LTI grant for 2019 as he joined the Company in the fourth quarter.
(3) In 2019, Mr. Lane and Mr. Rhenman each received a pro-rata annual award under the LTI program as a result of their partial year of service with the Company.
(4) Mr. Coombs’s 2019 LTI target value was adjusted to 80% of 2018 LTI target value as a result of his individual performance rating for 2018. The 2020 LTI target of 310% of base salary is a return to 2018 target levels.

 

For a description of the vesting and forfeiture of LTI awards upon termination, please see “Potential Payments Upon Termination or Change in Control” at pages 67-69.

 

2020 GRANTS OF PSUs WITH A PERFORMANCE PERIOD ENDING DECEMBER 31, 2022 (50%)

 

One-half of the value of our NEOs’ annual equity award in 2020 was granted in the form of PSUs. The number of units awarded was determined by dividing that dollar amount by the fair market value of our stock on the grant date. PSUs accrue dividend equivalents during the performance period, which will be converted to additional units using the closing stock price as of the end of the performance period on December 31, 2022. Each unit deemed earned on the basis of Company performance will pay out in one share of the Company’s common stock after the performance period concludes.

 

The number of 2020 PSUs earned will depend on the Company’s total shareholder return (“TSR”) over the performance period as compared to selected industry peers. We believe use of relative TSR as the metric for performance provides transparency for shareholders and our executives, rewards our executives if we out-perform our peers, and promotes executive accountability to and alignment with our shareholders. The Compensation Committee compares TSR for the entire three-year performance period, using a 20-day closing average stock price at the beginning and the end of the period and assuming all dividends are reinvested. As shown below, payout will range from 0 to 200%. There is no payout for TSR in the bottom quartile of the peer group.

 

PAYOUT BY COMPANY TSR RANK

 

   1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19
Positive TSR (% payout)  200  200  200  200  200  180  160  140  120  100  80  70  60  50         
Negative TSR (% payout)  100  100  100  100  100  95  90  85  80  75  70  60  50  40         

 

The companies that are used as comparators in determining our relative TSR performance (shown below) are eighteen of the Company’s primary competitors, either directly or for investment dollars, in the chemicals industry. Prior year grants of PSUs limited the peer group to companies in the S&P 500 Chemical Index. For 2020, however, the Compensation Committee approved use of an updated and expanded peer group focused on companies, both within and outside of the index, with business models most similar to that of the Company. The Compensation Committee has provided for adjustments to the peer group in the event of bankruptcies, acquisitions, or going-private transactions involving any of the peers during the performance period.

 

2020 PSUS - TSR PEER GROUP COMPANIES

 

Akzo Nobel
Albemarle Corporation
Asahi Kasei
BASF SE
Celanese Corporation
Covestro AG
Dow Inc.
DSM
DuPont de Nemours, Inc.
Eastman Chemical Company
FMC Corporation
Huntsman
Methanex
PPG Industries, Inc.
RPM International
SABIC
Shin Etsu
Westlake Chemical Corp

 

LYONDELLBASELL  2021 PROXY STATEMENT    56

 

2020 GRANTS OF RSUs (25%)

 

In 2020, each of our NEOs received a number of RSUs calculated by dividing 25% of the dollar amount of his LTI target by the fair market value of the Company’s shares on the date of grant. The 2020 RSU grants vest in full three years after the date of grant. Upon vesting, holders of RSUs receive one share of the Company’s common stock for each RSU. RSU holders also receive cash dividend equivalents on their units throughout the vesting period.

 

2020 GRANTS OF STOCK OPTIONS (25%)

 

The number of options granted to each NEO is determined by dividing 25% of the value of his annual LTI target by the Black-Scholes value of options for the Company as of the grant date. The options granted to the NEOs in 2020 vest in three equal installments beginning on the first anniversary of the grant date, and expire ten years after the grant date. The exercise price of the options is the fair market value of the Company’s shares on the grant date.

 

NO PAYOUT FOR 2018 PSUs WITH A PERFORMANCE PERIOD ENDED DECEMBER 31, 2020

 

Each of our NEOs employed by the Company in 2018 (Messrs. Patel, Coombs, and Kaplan) received a PSU award with a performance period that ended December 31, 2020. Payout of these PSUs is determined, as for the 2020 PSUs, based on the Company’s relative TSR over the performance period. Specifically, the Compensation Committee compared our three-year TSR against that of our peers using a 20-day closing average stock price at the beginning and the end of the performance period and adjusting for dividends. At its meeting in February 2021, the Compensation Committee determined that no payout had been earned under the 2018 PSUs, reflecting the fact that the Company’s negative TSR fell in the bottom half of our peers.

 

PAYOUT BY COMPANY TSR RANK

 

  1 2 3 4 5 6 7 8 9 10 11 12
Positive TSR 200% 200% 175% 150% 125% 100% 75% 50% 25%
Negative TSR 100% 100% 80% 60% 40% 20% No payout

 

The companies used as comparators in determining the Company’s relative TSR performance are shown below and represent the eleven companies that were included with LyondellBasell in the S&P 500 Chemicals Index at the time the PSUs were granted in February 2018, adjusted to reflect the merger of Dow Chemical and E.I. du Pont de Nemuors into the combined company DowDuPont and the subsequent acquisitions of Praxair and Monsanto.

 

2018 PSUS - TSR PEER GROUP COMPANIES

 

Air Products & Chemicals
Albemarle Corporation
CF Industries
DowDuPont
Eastman Chemical
Ecolab
FMC Corporation
International Flavors & Fragrances
Mosaic
PPG Industries
Sherwin-Williams

 

ADDITIONAL INFORMATION CONCERNING EXECUTIVE COMPENSATION

 

Share Ownership and Holding Requirements

 

The Company’s Share Ownership Guidelines require executives to achieve an ownership of Company shares that is valued at a percentage of their respective base salaries. Executives are expected to meet or exceed the guidelines within five years of their hiring or promotion into their role. They may not sell shares unless and until these ownership levels have been met and then only shares in excess of the required levels may be sold. Under the guidelines, shares beneficially owned and RSUs count towards meeting the ownership thresholds.

 

We determine compliance with our Share Ownership Guidelines annually in January. The number of shares held by each of our NEOs as a multiple of base salary as of January 15, 2021 is set forth below. Messrs. McMurray, Lane, and Rhenman are still within the five-year transition period for attaining their required ownership. Mr. Coombs is no longer subject to the Share Ownership Guidelines following his retirement on August 1, 2020.

 

LYONDELLBASELL  2021 PROXY STATEMENT    57

 
Name Required Ownership
as a Multiple of
Base Salary
Shares held
as a Multiple of
Base Salary
Complies or
Within 5-Year
Transition Period
Bob Patel 6x 16.4x
Michael McMurray 4x 2.4x
Torkel Rhenman 3x 2.2x
Ken Lane 3x 2.5x
Jeff Kaplan 3x 4.1x

 

Clawbacks

 

Under the Company’s clawback policy, the Compensation Committee can elect to recover annual bonus or equity compensation from any executive determined to have engaged in misconduct that increased the value of the compensation he or she received. Annual bonus compensation may be recovered if an executive engages in misconduct, including any act or failure to act causing a violation of law, Company policies, or GAAP, whether or not such misconduct affected the calculation of his or her bonus compensation.

 

Hedging and Pledging Policies

 

All of our executive officers, including our NEOs, are subject to our Policy Prohibiting Insider Trading. Under this policy, executives may not purchase, sell or write options on LyondellBasell shares, engage in short sales, or participate in any other derivative or short-term purchase or sale transactions that would enable them to hedge the economic risk of their share ownership. Additionally, our executives are prohibited from pledging LyondellBasell shares as collateral for personal loans or other obligations, including holding shares in a brokerage margin account. These restrictions extend to executives’ immediate family members and certain related entities and are intended to keep our executives’ interests aligned with the long-term interests of the Company and our shareholders.

 

NEO Departure

 

Mr. Coombs, our former Executive Vice President, Global Manufacturing, Projects, and Refining, retired from the Company on August 1, 2020. Mr. Coombs was deemed to have reached Retirement (as defined under the Company’s compensation plans and related policies), and his 2020 annual bonus and unvested equity awards were paid and vested pro rata on the terms described under “Potential Payments Upon Termination or Change in Control – Retirement” at page 68. Mr. Coombs also received $66,600, and remains eligible to receive up to an additional $84,665, in connection with certain project incentive awards, with the remaining amount paid upon completion of the related project and subject to the project award criteria.

 

Perquisites and Other Benefits

 

Our NEOs receive the same benefits generally provided to all of our employees, which include vacation allowances, Company matching under our 401(k) plan, Company contributions to our defined benefit pension plan, and health and welfare benefits. The perquisites received by our executives that are not offered to all employees include:

 

| Annual executive physical
| Financial, tax, and estate planning -The Company will reimburse up to $15,000 of expenses.
| Matching under the U.S. Deferral Plan - The Company makes contributions to the U.S. Deferral Plan for amounts that exceed the IRS base salary limits on matching under our 401(k) plan and contributions to our defined benefit pension plan. The value of the contributions is 11% for all base salary compensation in excess of the IRS limits.

 

From time to time, the Company provides other benefits to our executives that are intended for business purposes, including tax equalization payments, limited personal use of private aircraft or payment for spouse travel, relocation benefits, and the payment of business club memberships or dues.

 

LYONDELLBASELL  2021 PROXY STATEMENT    58

 

Tax equalization payments are designed to make executives whole if they incur income tax in jurisdictions other than their country and/or state of residence. For example, executives may travel to other jurisdictions on Company business and may be taxed based on days worked in those jurisdictions. If, and only to the extent, those additional taxes cannot be offset against the executive’s regular income tax liability (such as in the form of credits), the Company will reimburse an amount sufficient to make the executive’s tax liability equal to the full income tax for his jurisdiction of residence only.

 

The primary use of private aircraft is for business purposes and must be authorized by our CEO. From time to time and with CEO approval, spouses, family members or personal guests may accompany our executive officers on private aircraft. The Company may also pay or reimburse the cost of occasional spouse travel related to business trips. When approved travel of a family member or guest is imputed as income to the executive officer, we reimburse the additional income tax incurred.

 

Taxes

 

Section 162(m) of the U.S. Internal Revenue Code limits the deductibility of compensation paid to certain executives, including our CEO, CFO, and our three other most highly compensated officers, to $1 million annually. Prior to adoption of the Tax Cuts and Jobs Act of 2017 (the “TCJA”), the deduction limit did not apply to certain performance-based compensation. We historically took Section 162(m) and the deductibility of compensation, among other factors, into consideration in structuring our annual bonuses and long-term incentive awards (other than our RSUs) so that they would qualify as performance-based compensation and these amounts would be fully deductible for income tax purposes. Given the changes made by the TCJA, annual bonuses and long-term incentive awards granted by the Company are no longer exempt from the $1 million deduction limit.

 

The Compensation Committee will continue to consider tax implications (including the lack of deductibility under section 162(m)) among other relevant factors in designing and implementing our executive compensation programs. We will continue to monitor taxation, applicable incentives, standard practice in our industry, and other factors and adjust our executive compensation programs as needed.

 

COMPENSATION COMMITTEE REPORT

 

The Compensation and Talent Development Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

 

The Compensation and Talent Development Committee

 

Nance Dicciani, Chair

Robin Buchanan

Claire Farley

Bella Goren

 

LYONDELLBASELL  2021 PROXY STATEMENT    59

 

COMPENSATION TABLES

 

Summary Compensation Table

 

The following table sets forth information with respect to the compensation of our NEOs for the years ended December 31, 2020, 2019 and 2018.

 

Name and
Principal Position
  Year   Salary(2)
($)
  Bonus(3)
($)
  Stock
Awards(4)
($)
  Option
Awards(5)
($)
  Non-Equity
Incentive Plan
Compensation(6)
($)
  Change in
Pension
Value(7)
($)
  All Other
Compensation(8)
($)
  Total
($)

Bob Patel

Chief Executive Officer

  2020   1,635,577     8,859,438   2,953,132   1,663,200   17,552   441,614   15,570,513
  2019   1,575,000     9,234,533   3,078,125   1,600,000   20,332   435,323   15,943,313
  2018   1,573,558     8,859,526   2,953,136   4,536,001   13,212   271,364   18,206,797

Michael McMurray

Executive Vice President and Chief Financial Officer

  2020   830,769     1,860,122   620,004   498,960   13,218   100,289   3,923,362
  2019   104,615   750,000   2,250,026   1,500,003     4,751   211,639   4,821,034
                                   

Torkel Rhenman

Executive Vice President
Global Intermediates & Derivatives and Refining

  2020   794,077     1,559,312   519,757   511,229   13,652   100,348   3,498,375
  2019   340,385   350,000   1,351,322   233,745   240,053   13,010   236,838   2,765,353
                                   

Ken Lane

Executive Vice President Global Olefins & Polyolefins

  2020   794,077     1,443,789   481,253   482,828   13,062   101,348   3,316,357
  2019   331,731   750,000   2,078,897   209,595   461,869   12,405   238,826   4,083,323

Jeff Kaplan

Executive Vice President and Chief Legal Officer

  2020   683,792     1,200,657   400,209   406,696   16,089   91,258   2,798,701
  2019   629,936     1,143,155   381,011   415,921   20,482   72,212   2,662,717
  2018   601,110     1,363,080   354,318   1,013,805   12,864   70,285   3,415,461

Dan Coombs(1)

Former Executive Vice President Global Manufacturing, Projects, and Refining

  2020   475,200     1,595,986   531,969   237,281   15,824   47,782   2,904,042
  2019   686,400     1,276,790   425,569   415,598   16,395   80,877   2,901,629
  2018   679,292     1,763,003   531,973   881,138   14,596   79,057   3,949,060

 

(1) Mr. Coombs retired effective August 1, 2020.
(2) Mr. Patel’s employment agreement provides that he receives an annual base salary of no less than $1,500,000.
(3) Represents cash sign-on bonuses paid in connection with the 2019 appointments of Mr. McMurray, Mr. Lane, and Mr. Rhenman.
(4) Stock awards granted to NEOs in 2020 include RSUs and PSUs. The RSUs are granted under the LyondellBasell Industries Long Term Incentive Plan (the “LTIP”) and entitle the recipient to an equal number of shares of the Company’s stock when the RSUs vest on the third anniversary of the date of grant. RSUs receive cash dividend equivalents at the same time dividends are paid on the Company’s stock. Amounts included in the table are the aggregate grant date fair values of the awards calculated in accordance with ASC 718. The PSUs are also granted under the LTIP. The PSUs entitle the recipient to a number of shares of the Company’s common stock equal to the number of units, multiplied by an earned percentage that can range from 0 to 200% of the targeted number of units based on Company performance. The PSUs accrue dividend equivalents during the performance period in the form of additional units. See Note 15 to the Company’s Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Annual Report”) for a discussion of the calculation of the fair value of the awards.
Annual grants of RSUs and PSUs are made at the first regularly scheduled Compensation and Talent Development Committee (the “Compensation Committee”) meeting of the calendar year. Pursuant to his employment agreement, Mr. Patel is eligible to receive annual equity awards, including RSUs, PSUs and stock options as discussed under footnote 5 below, with an aggregate value of no less than 750% of his base salary. The following is the aggregate grant date fair value of the PSUs granted in 2020 if we assumed the maximum amounts (200% of target) will be earned: Bob Patel - $11,812,529; Michael McMurray - $2,480,163; Torkel Rhenman - $2,079,082; Ken Lane - $1,925,052; Jeff Kaplan - $1,600,820; Dan Coombs - $2,127,926.

 

LYONDELLBASELL  2021 PROXY STATEMENT    60

 
(5) Stock options are also granted under the LTIP and annual awards are made at the first regularly scheduled Compensation Committee meeting of the calendar year. The stock options vest ratably over a three-year period beginning with the first anniversary of the date of grant and expire after ten years. The amounts shown are the fair values of the stock options on the date of grant, in accordance with ASC 718. The fair values of stock options were calculated using the Black-Scholes option-pricing model. We use the Black-Scholes formula to calculate an assumed value of the options for compensation expense purposes; because the formula uses assumptions, the fair values calculated are not necessarily indicative of the actual values of the stock options.
The assumptions used for the 2020 annual grants were: a dividend yield of 5%; a risk-free interest rate of 1.404%; an expected life of 6 years; and stock price volatility of 28.34%. See Note 15 to the Company’s Consolidated Financial Statements in the 2020 Annual Report for a discussion of the calculation of the fair value of the awards.
(6) Amounts of Non-Equity Incentive Plan Compensation in 2020 are the annual bonuses paid out in March 2021 for performance during 2020. Mr. Patel’s employment agreement provides that he will be eligible for an annual bonus with a target amount of no less than 160% of his base salary.
(7) Amounts include increases during 2020 in the actuarial present values of benefits under the LyondellBasell Retirement Plan. The increases are calculated based on the difference between the total benefit actuarially reduced from age 65 to current age and the present value of the benefits under the plan. See the “Pension Benefits” table on page 66 for more information.
(8) Amounts included in “All Other Compensation” for 2020 in the table above include the following (amounts in dollars):

 

Name  Matching 401(k)
and Pension
Contributions(a)
($)
  Matching
Deferral Plan
Contributions(b)
($)
  Tax
Reimbursements(c)
($)
  Other(d)
($)
  Total
($)
Bob Patel(e)  31,350  148,563  233,353  28,348  441,614
Michael McMurray  31,350  60,035    8,904  100,289
Torkel Rhenman  31,350  55,998    13,000  100,348
Ken Lane  31,350  55,998    14,000  101,348
Jeff Kaplan  31,350  43,867    16,041  91,258
Dan Coombs  31,350      16,432  47,782

 

  (a) Includes Company matching contributions to each NEO’s 401(k) and the Company’s pension plan contributions.
  (b) Includes Company contributions under the Company’s U.S. Senior Management Deferral Plan. See the “Non-Qualified Deferred Compensation in 2019” table on page 66 for more information.
  (c) Includes Company reimbursement, and a gross-up on that reimbursement, of state taxes owed for work performed in those states on behalf of the Company.
  (d) Includes executive physicals; payment of professional fees for tax filings; payment of business club memberships and dues; and financial planning allowances, none of which individually exceeded the greater of $25,000 or 10% of the total amount of other compensation for the executive in 2020.
  (e) Under his employment agreement, Mr. Patel is eligible to participate in the benefit programs generally available to senior executives of the Company.

 

LYONDELLBASELL  2021 PROXY STATEMENT    61

 

Grants of Plan-Based Awards

 

    Estimated Possible
Payouts Under Non-Equity
Incentive Plan Awards(2)
  Estimated Future Payouts
Under Equity Incentive
Plan Awards(3)
All Other
Stock
Awards:
All Other
Option
Awards:
Exercise or Grant Date
Fair Value
              Number of Number of Base Price of Stock
              Shares of Securities of Option and Option
Name Grant Date(1) Target
($)
Max.
($)
  Target
(#)
Max.
(#)
Stock or
Units(4)
Underlying
Options(5)
Awards
($)
Awards
($)
Bob Patel 02/20/2020 2,520,000 5,040,000  
  02/20/2020   70,861 141,722 5,906,264
  02/20/2020   35,431 2,953,174
  02/20/2020   242,060 83.35 2,953,132
Michael McMurray 02/20/2020 720,000 1,440,000  
  02/20/2020   14,878 29,756 1,240,081
  02/20/2020   7,439 620,041
  02/20/2020   50,820 83.35 620,004
Torkel Rhenman 02/20/2020 693,000 1,386,000  
  02/20/2020   12,472 24,944 1,039,541
  02/20/2020   6,236 519,771
  02/20/2020   42,603 83.35 519,757
Ken Lane 02/20/2020 654,500 1,309,000  
  02/20/2020   11,548 23,096 962,526
  02/20/2020   5,774 481,263
  02/20/2020   39,447 83.35 481,253
Jeff Kaplan 02/20/2020 566,950 1,133,900  
  02/20/2020   9,603 19,206 800,410
  02/20/2020   4,802 400,247
  02/20/2020   32,804 83.35 400,209
Dan Coombs 02/20/2020 617,760 1,235,520  
  02/20/2020   12,765 25,530 1,063,963
  02/20/2020   6,383 532,023
  02/20/2020   43,604 83.35 531,969
(1) The grant date of February 20, 2020 is the date of the first regularly-scheduled Board meeting that follows the first regularly-scheduled Compensation Committee meeting of the calendar year when annual grants are made.
(2) The awards shown are the estimated possible payouts of the NEOs’ annual bonus payments for performance in 2020. Actual bonus (STI) payments for 2020 are shown in the Summary Compensation Table under the column “Non-Equity Incentive Plan Compensation.” The NEOs’ target bonuses are a percentage of base salary. The maximum shown in the table is the maximum amount that can be earned under the terms of the STI plan, which is 200% of target. Each performance measure is assessed and weighted, and payments can range from 0 – 200% of target.
(3) Represents PSUs. These awards, granted in 2020, are earned over a three-year performance period ending December 31, 2022, with payouts, if any, in the first quarter of 2023. The performance criterion for the PSUs is assessed, and payments can range from 0 – 200% of the target award, to be settled in shares. These awards accrue dividend equivalents during the performance period in the form of additional units.
(4) Represents RSUs. These awards made on February 20, 2020 will vest three years from the grant date. RSUs receive cash dividend equivalents.
(5) Represents annual stock option grants. The exercise price of all options is equal to the fair market value on the date of grant. All stock options included in the table vest in equal increments over a three-year period beginning on the first anniversary of the date of grant and expire ten years after the date of grant.

 

LYONDELLBASELL  2021 PROXY STATEMENT    62

 

Outstanding Equity Awards at December 31, 2020

 

  Option Awards   Stock Awards
                Equity Incentive Plan Awards
                  Market or
                  Payout Value
                Number of of Unearned
  Number of Number of       Number of Market Value Unearned Shares, Units,
  Securities Securities       Shares or Of Shares or Shares, Units, or Other
  Underlying Underlying Option     Units of   Units of Stock or Other Rights That
  Unexercised Unexercised Exercise Option   Stock That That Have Not Rights That Have Not
  Options Options Price Expiration   Have Not Vested(3) Have Not Vested(3)
Name Exercisable Unexercisable(1) ($) Date   Vested(2) ($) Vested(4) ($)
Bob Patel 2,418 85.80 02/20/2024   97,284 8,917,051 140,424 12,871,264
  227,058 76.15 01/12/2025          
  70,211 89.94 02/17/2025          
  101,108 77.93 02/16/2026          
  130,572 92.69 02/16/2027          
  91,104 45,552 109.09 02/21/2028          
  63,532 127,064 88.50 02/21/2029          
  242,060 83.35 02/20/2030          
Michael McMurray 34,436 68,870 97.37 11/05/2029   22,843 2,093,789 14,878 1,363,717
  50,820 83.35 02/20/2030          
Torkel Rhenman 5,333 10,666 85.88 07/15/2029   14,004 1,283,607 17,916 1,642,181
  42,603 83.35 02/20/2030          
Ken Lane 4,782 9,564 85.88 07/15/2029   19,471 1,784,712 16,429 1,505,882
  39,447 83.35 02/20/2030          
Jeff Kaplan 6,205 89.94 02/17/2025   15,107 1,384,708 18,214 1,669,495
  2,857 101.79 05/07/2025          
  12,675 77.93 02/16/2026          
  14,304 92.69 02/16/2027          
  10,931 5,465 109.09 02/21/2028          
  7,864 15,728 88.50 02/21/2029          
  32,804 83.35 02/20/2030          
Dan Coombs 4,871 101.10 05/29/2025   7,560 692,950
  16,427 77.93 07/31/2025          
  22,981 92.69 07/31/2025          
  23,250 109.09 07/31/2025          
  19,765 88.50 07/31/2025          
  13,325 83.35 07/31/2025          

 

LYONDELLBASELL  2021 PROXY STATEMENT    63

 
(1) The vesting schedules of the unexercisable stock options are shown below:

 

  Total Unvested Exercise Price      
Name Stock Options ($) 2021 Vesting Details 2022 Vesting Details 2023 Vesting Details
Bob Patel 45,552 109.09 45,552 vested on
February 21, 2021
   
  127,064 88.50 63,532 vested on
February 21, 2021
63,532 vesting on
February 21, 2022
 
  242,060 83.35 80,688 vested on
February 20, 2021
80,686 vesting on
February 20, 2022
80,686 vesting on
February 20, 2023
Michael McMurray 68,870 97.37 34,435 vesting on
November 5, 2021
34,435 vesting on
November 5, 2022
 
  50,820 83.35 16,940 vested on
February 20, 2021
16,940 vesting on
February 20, 2022
16,940 vesting on
February 20, 2023
Torkel Rhenman 10,666 85.88 5,333 vesting on
July 15, 2021
5,333 vesting on
July 15, 2022
 
  42,603 83.35 14,201 vested on
February 20, 2021
14,201 vesting on
February 20, 2022
14,201 vesting on
February 20, 2023
Ken Lane 9,564 85.88 4,782 vesting on
July 15, 2021
4,782 vesting on
July 15, 2022
 
  39,447 83.35 13,149 vested on
February 20, 2021
13,149 vesting on
February 20, 2022
13,149 vesting on
February 20, 2023
Jeff Kaplan 5,465 109.09 5,465 vested on
February 21, 2021
   
  15,728 88.50 7,864 vested on
February 21, 2021
7,864 vesting on
February 21, 2022
 
  32,804 83.35 10,936 vested on
February 20, 2021
10,934 vesting on
February 20, 2022
10,934 vesting on
February 20, 2023

 

(2) Includes RSUs for each of the NEOs, the vesting schedules for which are shown below:

 

Name Total Unvested RSUs Vesting Schedule
Bob Patel 97,284 27,071 vested on 2/21/2021
    34,782 vesting on 2/21/2022
    35,431 vesting on 2/20/2023
Michael McMurray 22,843 7,702 vesting on 11/5/2021
    7,702 vesting on 11/5/2022
    7,439 vesting on 2/20/2023
Torkel Rhenman 14,004 2,523 vesting on 7/15/2021
    5,245 vesting on 7/15/2022
    6,236 vesting on 2/20/2023
Ken Lane 19,471 5,628 vesting on 7/15/2021
    8,069 vesting on 7/15/2022
    5,774 vesting on 2/20/2023
Jeff Kaplan 15,107 5,999 vested on 2/21/2021
    4,306 vesting on 2/21/2022
    4,802 vesting on 2/20/2023

 

LYONDELLBASELL  2021 PROXY STATEMENT    64

 
(3) Dollar values are based on the closing price of $91.66 of the Company’s shares on the NYSE on December 31, 2020.
(4) Includes PSUs granted in 2019 and 2020 with three-year performance periods ending December 31, 2021 and December 31, 2022, respectively. We have included the target number of PSUs, although payouts on PSUs are made after the Company’s financial results for the performance period are reported and the Compensation Committee determines achievement of performance goals and corresponding vesting, typically in mid to late February of the following year. The PSUs for the 2018-2020 performance period are not included in the table as they are considered earned as of December 31, 2020 for proxy disclosure purposes; those PSUs did not pay out, and otherwise would be included in the “Option Exercises and Stock Vested” table below. The PSUs in the table above include those shown below. The PSUs for Mr. Coombs are prorated based on his retirement date.

 

  PSUs with Three-Year Performance
  Period Ending December 31,
Name 2021 2022
Bob Patel 69,563 70,861
Michael McMurray 14,878
Torkel Rhenman 5,444 12,472
Ken Lane 4,881 11,548
Jeff Kaplan 8,611 9,603
Dan Coombs 5,077 2,483

 

Option Exercises and Stock Vested

 

  Option Awards   Stock Awards(2)
Name Number of
Shares
Acquired on
Exercise
Value
Realized on
Exercise(1)
($)
  Number of
Shares Acquired
on Vesting
Value
Realized on
Vesting
($)
Bob Patel   53,981 4,620,271
Michael McMurray   7,704 571,714
Torkel Rhenman   2,523 173,784
Ken Lane   5,629 387,726
Jeff Kaplan 813 46,130   3,324 274,562
Dan Coombs   14,151 991,968
(1) The value realized on option exercise represents the difference between the option exercise price and the market price of the LyondellBasell shares when exercised.
(2) Includes RSUs that vested in 2020, including RSUs that vested pro-rata upon Mr. Coombs’ retirement on August 1, 2020. The Compensation Committee reviewed the achievement of performance goals for the PSUs granted in 2018 with a performance period ended December 31, 2020 in February 2021, and determined that no payout was earned. The number of shares acquired on vesting for RSUs is the gross number of shares for all NEOs, although we withhold shares in payment of minimum statutory withholding taxes when the awards vest. The value realized for RSUs is the number of gross shares vested multiplied by the market price on the date the restrictions lapsed.

 

LYONDELLBASELL  2021 PROXY STATEMENT    65

 

Pension Benefits

 

Name Plan Name Number of Years
Credited Service(1)
Present Value of
Accumulated Benefit(1)
($)
Payments During Last
Fiscal Year
($)
Bob Patel LyondellBasell Retirement Plan 11 150,025
Michael McMurray LyondellBasell Retirement Plan 1 17,969
Torkel Rhenman LyondellBasell Retirement Plan 1 26,662
Ken Lane LyondellBasell Retirement Plan 1 25,467
Jeff Kaplan LyondellBasell Retirement Plan 11 149,800
Dan Coombs LyondellBasell Retirement Plan 6 82,429
(1) The amounts shown in the table are the actuarial present value of each participant’s accumulated benefits as of December 31, 2020, calculated on the same basis as used in Note 14 to our Consolidated Financial Statements in the 2020 Annual Report, with the exception that each participant was assumed to continue to be actively employed by us until age 65 (earliest unreduced retirement age) and immediately commence his benefit at that time.

 

The LyondellBasell Retirement Plan is a U.S. qualified defined benefit pension plan that provides pension benefits under a cash balance formula that defines participants’ accrued benefits in terms of a notional cash account balance. Eligible employees become participants immediately upon employment and are fully vested upon the earliest of (i) three years of service, (ii) death, or (iii) reaching age 65. The notional account balance for each participant comprises a pay credit of 5% and interest credits, each of which are accumulated at the end of each quarter. Pay credits are based on quarterly base pay, as limited by the Internal Revenue Code, and interest credits are based on the 5th, 4th, and 3rd monthly-determined 30-year treasury rates before the start of that quarter. Benefits under the plan are payable upon separation from the Company.

 

Non-Qualified Deferred Compensation in 2020

 

Name Executive
Contributions in
Last Fiscal Year(1)
($)
Registrant
Contributions in
Last Fiscal Year(1)(2)
($)
Aggregate
Earnings in Last
Fiscal Year(3)
($)
Aggregate
Withdrawals/
Distributions(4)
($)
Aggregate
Balance at Last
Fiscal Year End(5)
($)
Bob Patel 148,563 151,845 1,192,888
Michael McMurray 60,035 63,112
Torkel Rhenman 55,998 1,032 63,673
Ken Lane 55,998 882 62,571
Jeff Kaplan 43,867 32,668 269,779
Dan Coombs 25,388 215,035
(1) The Company maintains a U.S. Senior Management Deferral Plan that allows executives to defer up to 50% of their base salary and up to 100% of their annual bonus and equity grants (“eligible pay”) for payment at a future date. Funds deferred under this plan are allocated into notional accounts that mirror selected investment funds in our 401(k) plans, though the deferred funds are not actually invested and the Company may use separate assets to fund the benefit.
(2) Company contributions to the executives’ Deferral Plan accounts are included in “All Other Compensation,” but not “Salary,” in the Summary Compensation Table. The Deferral Plan provides for Company contributions for that portion of pay that cannot be taken into account for matching contributions or accruals under the Company’s 401(k) plan and defined benefit pension plan due to IRS limits. The eligibility for Company contributions begins in the Deferral Plan once the employee’s salary has reached the IRS limits for those plans; actual contributions by the Company are made as of February 15 of the next calendar year. The Company’s contribution occurs regardless of whether the employee has contributed any amounts under the Deferral Plan or 401(k) plan. Eligible employees must be employed as of February 15 in order to receive the Company contribution.
(3) Earnings on these accounts are not included in any other amounts in the tables included in this proxy statement, as the amounts of the NEOs’ earnings represent the general market gains on investments and are not amounts or rates set by the Company for the benefit of the NEOs.
(4) Accounts are distributed as either a lump sum payment or in annual installments upon the later of (i) the date on which the employee reaches at least 55 years of age and has ten years of service or (ii) termination of employment. Special circumstances may allow for a modified distribution in the event of the employee’s death, an unforeseen emergency, or upon a change-in-control of the Company. In the event of death, distribution will be made to the designated beneficiary in the form previously elected by the executive. In the event of an unforeseen emergency, the plan administrator may allow an early payment in the amount required to satisfy the emergency. All participants are immediately 100% vested in all of their contributions, Company contributions, and gains and/or losses related to their notional investment choices.
(5) The balance as of the last year includes the Company contributions made in respect of the NEOs’ 2020 earnings, although amounts were not credited to the accounts for continuing NEOs until February 2021.

 

LYONDELLBASELL  2021 PROXY STATEMENT    66

 

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

 

Mr. Patel is party to an employment agreement and our other NEOs participate in our Executive Severance Program. Mr. Patel’s employment agreement and the Executive Severance Program provide for severance payments in the event of termination of employment, provided the executive executes a release in favor of the Company. Under the terms of the Company’s STI program, NEOs will receive pro-rata annual bonus payments in the event of termination of employment due to death or disability or termination without Cause (as defined below), payable following certification of payout under the STI program the following year. Additionally, under the terms of our LTIP and equity award agreements, our NEOs will receive accelerated or pro-rated vesting of their equity awards upon termination in certain circumstances.

 

In the event of a change-in-control of the Company, the vesting of equity awards will be accelerated or pro-rated, but only if the individual’s employment is terminated within one year of the change in control. The Company believes that this “double trigger” is appropriate because it ensures our executives do not have conflicts in the event of a change in control and also avoids windfalls for any employees whose employment with the Company or its successors continues following such an event. The treatment of the equity awards for the NEOs is the same as for all other employees who receive equity awards.

 

A summary of the treatment of equity awards in different scenarios under the terms of our LTIP and the award agreements is provided below. “Cause” and “Good Reason” are defined in the Company’s Executive Severance Plan as follows:

 

“Cause” means (i) the executive’s continued failure (except where due to physical or mental incapacity) to substantially perform his or her duties; (ii) the executive’s intentional misconduct or gross neglect in the performance of his or her duties; (iii) the executive’s conviction of, or plea of guilty or nolo contendere to, a felony; (iv) the commission by the executive of an act of fraud or embezzlement against the Company or any affiliate; (v) the executive’s breach of fiduciary duty, (vi) an executive’s violation of the Company’s Code of Conduct or (vii) the executive’s willful breach of any material provision of any employment or other written agreement between the executive and the Company or an affiliate (as determined in good faith by the Compensation and Talent Development Committee (the “Compensation Committee”)) which is not remedied within 15 days after written notice is received from the Company or affiliate specifying the breach. Any determination of whether Cause exists shall be made by the Compensation Committee in its sole discretion.

 

“Good Reason” means the occurrence, without the Participant’s express written consent, of (i) a material diminution in the executive’s duties, responsibilities or authority; (ii) any material diminution of the executive’s Base Salary; or (iii) the involuntary relocation of the executive’s principal place of employment by more than 50 miles from the executive’s principal place of employment immediately prior to the relocation. Any assertion by an executive of a termination of employment for “Good Reason” will not be effective unless certain conditions regarding notice and cure are satisfied.

 

Termination of Employment for Cause by the Company or without Good Reason by the Executive

 

| All unvested awards are forfeited. In the event of termination for Cause by the Company, unexercised stock options are also forfeited. In the event of resignation without Good Reason by the executive, previously vested options may be exercised for 90 days after termination of employment.
| If termination occurs prior to the second anniversary of their employment with the Company, Mr. Lane and Mr. Rhenman are required to repay the one-time cash payments received at the time of their hiring. If termination occurs prior to the second anniversary of the date of his employment with the Company, Mr. McMurray is required to pay 50% of the one-time cash payment received at the time of his hiring.

 

Termination of Employment without Cause by the Company

 

| Stock options, RSUs, and PSUs vest pro-rata
| Stock options: Stock options provide for vesting in equal installments on the first three anniversaries of the grant date. In the event of termination without Cause, pro-ration is determined for each unvested installment separately based on the number of months worked from the date of grant until termination divided by the number of months from the date of grant until the original vesting date for that installment. The options may be exercised for 90 days after termination of employment.
| RSUs and PSUs: Pro-ration is determined based on the number of months worked from the date of grant (for RSUs) or beginning of the relevant performance period (for PSUs) until termination divided by the number of months in the vesting or performance period, respectively. The number of units earned under the PSUs is based on performance over the applicable three-year performance period as determined by the Compensation Committee in the first quarter after the end of the performance period and can range from 0 to 200% of target.

 

LYONDELLBASELL  2021 PROXY STATEMENT    67

 

Termination of Employment with Good Reason by the Executive

 

| For all NEOs other than Mr. Patel, all unvested awards are forfeited and previously vested options may be exercised for 90 days after termination of employment.
| Pursuant to his employment agreement, Mr. Patel’s awards vest pro-rata, based on the same calculations as in the case of a termination without Cause.

 

Termination of Employment without Cause by the Company or with Good Reason by the Executive within 12 Months of a Change in Control

 

| Stock options and RSUs: All stock options and RSUs are immediately vested. Stock options remain exercisable for 90 days.
| PSUs: PSUs vest pro-rata based on the number of months worked from the beginning of the performance period until termination divided by the number of months in the performance period. The number of units earned under the PSUs is based on the Compensation Committee’s determination of performance results as of the last quarter prior to the change in control.

 

Retirement

 

| Under the Company’s award agreements, “Retirement” means an executive’s voluntarily initiated termination of service (i) on or after age 55 with 10 years of service or (ii) for awards granted prior to 2020 and all awards granted to Mr. Rhenman, on or after age 65. For awards granted to Messrs. Coombs, Kaplan, Lane, McMurray, and Rhenman in February 2020 and awards granted to all NEOs in February 2021, “Enhanced Retirement” means an executive’s voluntarily initiated termination of service on or after age 60 with at least 10 years of service. Mr. Coombs was deemed to have reached Retirement in connection with his departure from the Company on August 1, 2020. Based on their current ages, none of our other NEOs currently meet the requirements for Retirement or Enhanced Retirement.
| In the event of Retirement, all awards vest pro-rata, based on the same calculations as in the case of a termination without Cause. Stock options remain exercisable for five years or their original term, whichever is shorter. In the event of Enhanced Retirement, all awards vest in full on their original vesting schedule, subject to compliance with customary restrictive covenants. Stock options remain exercisable for their original term.

 

Death or Disability

 

| Stock Options and RSUs: Stock options and RSUs vest immediately. The stock options remain exercisable for one year.
| PSUs: PSUs vest pro-rata, based on the same calculations as in the case of a termination without Cause.

 

In accordance with SEC disclosure requirements, the tables below show, in dollars, the amounts our NEOs could receive in different circumstances if the termination events occurred as of December 31, 2020. We excluded any amounts for benefits or payments that are available to all salaried employees of the Company. The amounts shown are not the amounts the NEO would actually receive in a termination event, but are calculated as described below.

 

DEATH OR DISABILITY

 

  Accelerated
Option Awards(1)
Accelerated RSUs(2) Pro-rated PSUs(3) Cash Severance
Payment(4)
Total(5)
Bob Patel 2,413,041 8,917,051 6,415,925 17,746,017
Michael McMurray 422,314 2,799,938 454,634 3,676,886
Torkel Rhenman 415,680 1,283,607 713,848 2,413,135
Ken Lane 383,085 1,784,712 651,153 2,818,950
Jeff Kaplan 322,301 1,384,708 819,624 2,526,633

 

TERMINATION BY NEO FOR GOOD REASON

 

  Pro-rated
Option Awards
Pro-rated RSUs Pro-rated PSUs Cash Severance
Payment(4)
Total(5)
Bob Patel 1,447,505 5,441,763 6,415,925 6,142,501 19,447,694
Michael McMurray 1,520,000 1,520,000
Torkel Rhenman 1,463,000 1,463,000
Ken Lane 1,424,500 1,424,500
Jeff Kaplan 1,233,950 1,233,950

 

LYONDELLBASELL  2021 PROXY STATEMENT    68

 

RETIREMENT OR TERMINATION WITHOUT CAUSE

 

  Pro-rated
Option Awards(1)
Pro-rated RSUs(2) Pro-rated PSUs(3) Cash Severance
Payment(4)
Total(5)
Bob Patel 1,447,505 5,441,763 6,415,925 6,142,501 19,447,694
Michael McMurray 236,594 424,203 454,634 1,520,000 2,635,431
Torkel Rhenman 236,870 588,640 713,848 1,463,000 3,002,358
Ken Lane 218,196 918,525 651,153 1,424,500 3,212,374
Jeff Kaplan 192,417 921,458 819,624 1,233,950 3,167,449
Dan Coombs(6) 563,493 997,756 1,561,249

 

TERMINATION WITHOUT CAUSE OR BY NEO FOR GOOD REASON WITHIN 12 MONTHS OF A CHANGE IN CONTROL

 

  Accelerated
Option Awards(1)
Accelerated RSUs(2) Pro-rated PSUs(3) Cash Severance
Payment(4)
Total(5)
Bob Patel 2,413,041 8,917,051 6,415,925 10,237,501 27,983,518
Michael McMurray 422,314 2,799,938 454,634 1,520,000 5,196,886
Torkel Rhenman 415,680 1,283,607 713,848 1,463,000 3,876,135
Ken Lane 383,085 1,784,712 651,153 1,424,500 4,243,450
Jeff Kaplan 322,301 1,384,708 819,624 1,233,950 3,760,583
(1) The values for stock options included are calculated based on the number of options that would vest, multiplied by the difference between $91.66, the market value of our common stock as of December 31, 2020 (determined as the closing price of our common stock on the last preceding trading day), and the exercise price of the stock option. Amounts actually received by the NEO would depend on the fair market value of our shares when the options are exercised.
(2) The values of the RSUs are based on the number of RSUs that would vest multiplied by the fair market value of our stock on December 31, 2020, which may be different than the fair market value of our stock upon a termination event.
(3) PSUs accumulate dividend equivalents that are converted to additional units at the end of the performance period, subject to the same terms and conditions as the original award. The values of the PSUs are based on the number of units that would vest multiplied by the market value of our stock on December 31, 2020. The values above assume that the payout is at target, or 100%. The actual payout would be determined by the Compensation Committee after the performance period or, in the case of termination without Cause or by the NEO for Good Reason within twelve months of a change in control, as of the end of the last quarter prior to the change in control. Also, although the values are calculated as of December 31, the shares would not be issued until the first quarter after the end of the original performance period of the awards.
(4) No amounts are included for 2020 bonus payments under the STI program because the NEOs would be entitled to the same payment with or without a termination event. Cash severance is not payable in the event of Retirement.
(5) In addition (and not shown above), Mr. Patel would receive twelve months of continued coverage under the Company’s health plans for himself and his dependents, which is valued at approximately $22,500. Each of the other NEOs would receive a lump sum payment of approximately $34,000 for the cost of eighteen months of continuation coverage premiums for medical coverage for himself and his dependents in any termination event other than death and disability. All NEOs other than Mr. Patel would also receive Company-provided outplacement services, with a value of up to $20,000.
(6) Mr. Coombs retired from the Company on August 1, 2020 and was deemed to have reached “Retirement.” Mr. Coombs also received $66,600, and remains eligible to receive up to an additional $84,665, in connection with certain project incentive awards, with the remaining amount paid upon completion of the related project and subject to the project award criteria. Mr. Coombs’s unvested equity awards vested pro rata on the terms described above. The values for stock options, RSUs, and PSUs are calculated as described above but based on the market value of our stock on August 1, 2020 of $62.52.

 

LYONDELLBASELL  2021 PROXY STATEMENT    69

 

CEO PAY RATIO

 

Pursuant to SEC rules, we are required to provide the following information with respect to fiscal 2020:

 

| The annual total compensation of the global median employee of our company (other than Mr. Patel, our CEO), was $92,064;
| The annual total compensation of Mr. Patel, our Chief Executive Officer, was $15,570,513; and
| Based on this information, the ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of the global median employee is 169 to 1.

 

For fiscal year 2019, we identified a new global median employee due to a substantial increase in our employee population as a result of our acquisition of A. Schulman, Inc. in August 2018. We identified the 2019 global median employee by examining the total compensation for all regular full- and part-time employees who were actively employed by the Company on December 31, 2019 and students and interns who were hired for partial periods during 2019. For these employees, we calculated annual compensation using the following methodology and guidelines:

 

| To find the annual total compensation of all of our employees (other than our CEO), we considered all gross and net components of compensation (including short- and long-term incentives) received by each employee and documented in the year-end payroll records for 2019.
| Compensation for full- and part-time employees hired during 2019 and still active as of December 31, 2019 was annualized. Compensation for all students and interns hired for partial periods during 2019 was not annualized.
| Annual compensation for expatriate employees and employees involved in permanent cross-border transfers during 2019 was calculated using all relevant country payroll records.

 

Although there was no change in the Company’s employee population or compensation arrangements in 2020 that would result in a significant change to the Company’s pay ratio disclosure, we have used a different median employee this year because the previously identified median employee left the Company during the year. In accordance with SEC rules, the newly selected global median employee is an employee with substantially similar 2019 compensation to the prior global median employee. After identifying this 2020 global median employee, we calculated 2020 total compensation for the selected employee using the same methodology used for our NEOs as set forth in the Summary Compensation Table.

 

LYONDELLBASELL  2021 PROXY STATEMENT    70

 

ITEM 7 AUTHORIZATION TO CONDUCT SHARE REPURCHASES

 

The Board recommends that you vote FOR the proposal to grant authority to the Board to repurchase up to 10% of our issued share capital until November 28, 2022.

 

Under Dutch law and our Articles of Association, shareholder approval is necessary to authorize our Board to repurchase shares. At the annual general meeting of shareholders held on May 29, 2020, shareholders authorized the Board to repurchase up to 10% of our outstanding shares. LyondellBasell continues to prioritize our dividend and debt repayment over share repurchases and, as of April 1, 2021, has not repurchased any shares pursuant to this authorization.

 

Although we do not currently expect to repurchase shares in 2021, share repurchases have historically been an important capital allocation tool for the Company. Adoption of the current proposal will give us the flexibility to resume repurchasing shares if we believe it is an appropriate use of our liquidity. The number of shares repurchased, if any, and the timing and manner of any repurchases will be determined after taking into consideration prevailing market conditions, our available resources, and other factors that cannot now be predicted.

 

In order to provide us with sufficient flexibility, we propose that shareholders grant authority to the Board to repurchase up to 10% of our issued share capital as of the date of the Annual Meeting (or, based on the number of shares issued as of April 1, 2021, approximately 34,005,000 shares) on the open market, through privately negotiated repurchases, in self-tender offers, or through accelerated repurchase arrangements, at prices ranging from the nominal value of our shares up to 110% of the market price for our shares; provided that (i) for open market or privately negotiated repurchases, the market price shall be the price for our shares on the NYSE at the time of the transaction; (ii) for self-tender offers, the market price shall be the volume weighted average price (“VWAP”) for our shares on the NYSE during a period, determined by the Board, of no less than one and no greater than five consecutive trading days immediately prior to the expiration of the tender offer; and (iii) for accelerated repurchase arrangements, the market price shall be the VWAP for our shares on the NYSE over the term of the arrangement. The VWAP for any number of trading days shall be calculated as the arithmetic average of the daily VWAP on those trading days.

 

If approved, the authority will extend for 18 months from the date of the Annual Meeting, or until November 28, 2022, and will replace the current repurchase authorization of the Board which was approved by shareholders at the annual general meeting on May 29, 2020. Any shares repurchased under this authority may be cancelled pursuant to the authorization to cancel shares requested under Item 8 below.

 

ITEM 8 CANCELLATION OF SHARES

 

The Board recommends that you vote FOR the proposal to cancel all or a portion of the shares in our treasury account.

 

Under Dutch law and our Articles of Association, shareholder approval is necessary to cancel ordinary shares that are held in treasury by us, or that may in the future be held in treasury by us as a result of share repurchases. Also under Dutch law, the number of shares held by us, or our subsidiaries, may not exceed 50% of our issued share capital at any time.

 

As of April 1, 2021, we held approximately 5,732,000 shares in our treasury account, primarily as the result of share repurchases in 2019 and prior years. Treasury shares, if not cancelled, may be used for general corporate purposes, including for issuance under our equity compensation plans.

 

We are requesting that shareholders approve the cancellation of all or any portion of shares held in our treasury account or that may be repurchased pursuant to the authority requested under Item 7, above.

 

If this Item 8 is adopted, the cancellation of treasury shares may be executed in one or more tranches. The number of treasury shares that will be cancelled, if any, will be determined by the Board. If the Board determines it is appropriate to cancel our shares, we will follow the procedure set forth under Dutch law to cancel treasury shares from time to time. In accordance with Dutch statutory provisions, the cancellation of treasury shares will not be effective until two months after the resolution to cancel treasury shares has been filed with the Dutch Trade Register and announced in a Dutch national daily newspaper. Once the procedure is complete, the relevant treasury shares will be cancelled.

 

If this Item 8 is not approved, we will not cancel any treasury shares unless the general meeting of shareholders approves such cancellation at a later date.

 

LYONDELLBASELL  2021 PROXY STATEMENT    71

 
ITEM 9  AMENDMENT AND RESTATEMENT OF LONG TERM INCENTIVE PLAN
   
The Board recommends that you vote FOR the proposal to amend and restate the LyondellBasell Industries Long Term Incentive Plan.

 

The LyondellBasell Industries Long Term Incentive Plan (the “LTIP” or “Plan”) provides for the grant of awards to eligible employees and directors in the form of stock options, stock appreciation rights (“SARs”), restricted shares, RSUs, cash awards, and other stock-based awards. The purpose of the LTIP is to further the long-term interests of the Company and its stakeholders by offering incentives to employees and directors who can contribute materially to the success and profitability of the Company, to recognize and reward outstanding performance, to reinforce the commonality of interest between the Company’s shareholders and the participants in the LTIP, and to aid in attracting and retaining employees with outstanding abilities and specialized skills.

 

The LTIP was most recently approved by shareholders at the Company’s 2019 annual general meeting. At that time, shareholders approved extension of the Plan for as long as shares remain available for issuance, as well as certain amendments to explicitly provide for corporate governance and compensation best practices already being applied by the Company. As of April 1, 2021, 1,967,694 of the previously authorized shares remained available for new awards under the LTIP.

 

In February 2021, on the recommendation of the Compensation and Talent Development Committee (the “Compensation Committee”) following consultation with its independent consultant, Pearl Meyer, the Board approved amendment and restatement of the LTIP to increase the number of ordinary shares authorized for issuance thereunder by an additional 8,000,000 shares. In determining the number of additional shares to be requested, the Compensation Committee and Board reviewed both the historical burn rate under the LTIP and the potential dilution resulting from future share issuances under the Plan. After consideration, they determined that the potential dilution from the proposed LTIP restatement is reasonable in light of the benefits derived from the Company’s continuing ability to issue equity awards, primarily in employee recruitment and retention, and in aligning the interests of our directors, executives, and other employees with those of our shareholders.

 

BURN RATE AND DILUTION

 

We calculate burn rate as (i) the number of shares subject to equity awards granted in each fiscal year (assuming target-level performance under performance awards) divided by (ii) the weighted average number of shares outstanding during that year. Over the last three fiscal years, the Company’s average burn rate was approximately 0.4%.

 

    2018   2019   2020   Three-Year Average
Equity Awards   987,000   1,609,144   1,685,004   1,427,049
Average Shares Outstanding   388,889,145   353,017,327   333,758,938   358,555,137
Burn Rate   0.25%   0.46%   0.50%   0.40%

 

LYONDELLBASELL  2021 PROXY STATEMENT    72

 

The Compensation Committee and Board also considered the potential future dilution to shareholders based on our current shares outstanding and the request for an additional 8,000,000 million shares to be available for awards under the LTIP. The expected overhang under the amended Plan, if approved, would be approximately 4.4%.

 

(as of April 1, 2021)  
Shares Subject to Currently Outstanding Awards(1)  5,243,725
Shares Available for Issuance Under the Current Plan 1,967,694
New Share Request 8,000,000
Total Potential Outstanding Equity Awards 15,211,419
Shares Outstanding at April 1, 2021 334,313,220
Total Shares Outstanding Including Potential Outstanding Equity Awards 349,524,639
Potential Dilution as a Percentage of Shares Outstanding 4.35%
   
(1) Includes outstanding stock options, RSUs and PSUs, assuming maximum possible payout for unearned awards.

 

The Compensation Committee also recommended, and the Board approved, amendments to the Plan to increase transparency regarding (i) the treatment of performance awards in the event of a Change in Control and (ii) share usage and recycling in connection with appreciation awards (SARs and options), each as further described below. The amended and restated LTIP also eliminates certain outdated references to U.S. Internal Revenue Code Section 162(m), while retaining existing annual limits on the size of equity-based awards that may be granted to any employee in any single calendar year.

 

Amendment and restatement of the LTIP is subject to shareholder approval, which includes granting authority to the Board to issue the shares authorized for issuance under the LTIP and to exclude pre-emptive rights of shareholders in that regard, both for a period of five years from the date of the 2021 Annual Meeting. If shareholders do not approve the LTIP restatement, the current Plan will continue in effect until there are no longer shares available for issuance.

 

The following summary provides an overview of certain material terms of the LTIP, as proposed to be amended, and is subject in all respects to the full text of the LTIP, as set forth in Appendix B to this proxy statement.

 

PROPOSED AMENDMENTS TO THE LTIP

 

Additional Shares. The LTIP was initially approved in April 2010 in connection with the Company’s emergence from bankruptcy proceedings and provided for an initial share reserve of 22.0 million shares. As of April 1, 2021, there were approximately 2.0 million shares remaining available for issuance under the Plan and 5.2 million shares underlying outstanding awards. We are asking shareholders to approve the authorization of an additional 8.0 million shares for issuance under the Plan, for a total of approximately 15.2 million shares available for issuance pursuant to new or outstanding awards under the amended Plan. Additional information on our total shares available and outstanding is set forth below under the heading “Shares Available and Outstanding.”

 

Prohibition Against Liberal Share Recycling (Clarification). Amendments clarify that (i) shares bought using option proceeds, shares tendered or withheld to satisfy tax and withholding obligations, and shares tendered by a participant or withheld by the Company in payment of the grant price of an award do not revert to the share reserve (in each case consistent with how the Plan and share reserve are currently being administered), and (ii) in the event the Company issues SARs in the future, the gross number of SARs exercised will be counted against the authorized share reserve.

 

Treatment of Performance Awards upon Change in Control. Unless otherwise provided under an applicable award agreement, in the event of a Change in Control, performance awards will vest pro rata based on the portion of the performance period elapsed prior to the vesting event, with the award deemed earned based on performance achievement as of the close of the last quarter ending on or before the Change in Control event, as determined by the Compensation Committee in its sole discretion.

 

Removal of Code Section 162(m) References. The U.S. tax reform legislation that became law at the end of 2017 made significant changes to Section 162(m) of the Internal Revenue Code, including eliminating the performance-based compensation exception to the $1 million deduction limit. Amendments have been made to the LTIP to remove references to the performance-based compensation exception that no longer applies to awards to be granted under the Plan. However, the Plan retains existing annual limits on the size of equity-based awards that may be granted to any employee in any single calendar year. Similarly, the Company’s Articles of Association limit the aggregate of all fees that may be paid per annum to individual non-executive directors.

 

Clawback. Amendments provide that all awards granted under the LTIP will be subject to recovery or clawback by the Company under applicable legal requirements and any clawback policy adopted by the Company, whether before or after the date of grant of the award.

 

LYONDELLBASELL  2021 PROXY STATEMENT    73

 

SHARES AVAILABLE AND OUTSTANDING

 

The Company maintains two equity incentive plans, the LTIP and the LyondellBasell Industries N.V. Global Employee Stock Purchase Plan (the “ESPP”), which is further decribed in Item 10.

 

The table below summarizes the shares outstanding and available under each plan as of April 1, 2021.

 

(as of April 1, 2021)  
Total ordinary shares outstanding  334,313,220
Shares remaining available for future grant under the LTIP 1,967,694
Shares subject to outstanding full value awards under the LTIP(1) 2,566,501
Shares subject to outstanding stock options under the LTIP 2,677,224
Weighted average exercise price of outstanding options $ 91.46
Average remaining contractual term of options 7.45 years
Shares remaining available for future grant under the ESPP 525,230
   
(1) Includes outstanding RSUs and PSUs, assuming maximum possible payout for unearned awards.

 

On April 1, 2021, the closing price for the Company’s common stock as reported on the NYSE was $105.55.

 

PLAN HIGHLIGHTS AND BEST PRACTICES

 

Overall Share Limit. The Plan authorizes a fixed number of shares for issuance. The Plan does not contain an annual “evergreen” provision, and shareholder approval is required to authorize the issuance of additional shares.
No Liberal Share Recycling. Shares used or withheld to satisfy the exercise price or tax and withholding obligations on any