DEF 14A 1 d893694ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

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  Preliminary Proxy Statement
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  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

DuPont de Nemours, Inc.

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Table of Contents

 

 

 

LOGO

  

 

2020 ANNUAL MEETING

 

AND PROXY STATEMENT

 

 


Table of Contents

LOGO

NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS

Dear Stockholder:

At the 2020 Annual Meeting of Stockholders (the “2020 Meeting”), stockholders will vote on the following matters either by proxy or by voting online during the 2020 Meeting:

 

 

Date:

 

Wednesday, May 27, 2020

 

Time:

 

9:00 A.M. Eastern Time

 

Location*:

 

Online at www.virtualshareholdermeeting.com/DD2020

    

 

Agenda:

 

1.    Election of the 12 directors named in the Proxy Statement.

 

2.    Advisory resolution to approve executive compensation.

 

3.    Approval of the DuPont 2020 Equity and Incentive Plan.

 

4.    Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2020.

 

5–6.  Stockholder proposals.

 

7.    Transaction of any other business as may properly come before the 2020 Meeting.

 

How to Vote

Your vote is important. Whether or not you plan on attending the 2020 Meeting virtually, please vote your shares as soon as possible by internet, telephone or mail.

 

LOGO  

  BY INTERNET

 

  www.proxyvote.com

  LOGO  

BY PHONE

 

1-800-690-6903 or the

number provided on your

voting instructions

  LOGO  

  BY MAIL

 

  Use the postage-paid

  envelope provided

The Board of Directors (the “Board”) of DuPont de Nemours, Inc. (the “Company” or “DuPont”) has set the close of business on April 6, 2020 as the record date for determining stockholders who are entitled to receive notice of the 2020 Meeting and to vote.

As permitted by U.S. Securities and Exchange Commission (the “SEC”) rules, proxy materials were made available via the internet. Notice regarding availability of proxy materials and instructions on how to access those materials were mailed to certain stockholders of record on or about April 9, 2020 (the “Notice”). The instructions included how to vote online and how to request a paper copy of the proxy materials. This method of notice and access gives the Company a lower-cost way to furnish stockholders with their proxy materials.

Please see page 2 of the Proxy Statement for information on attending the 2020 Meeting virtually.

Thank you for your continued support and your interest in DuPont de Nemours, Inc.

 

LOGO

Peter W. Hennessey

VP, Associate General Counsel and Corporate Secretary

April 9, 2020

 

*

The 2020 Meeting will be online and a completely virtual meeting of stockholders due to the ongoing public health impact of the coronavirus (COVID-19) pandemic. This decision was made in light of the protocols that federal, state, and local governments have imposed or may impose in the near future and taking into account the health and safety of our stockholders, directors and members of management and is consistent with the Company’s safety and health core values.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE

STOCKHOLDER MEETING TO BE HELD ON MAY 27, 2020

The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.


Table of Contents

Cautionary Statement Regarding Forward Looking Statements

This proxy statement contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” and similar expressions and variations or negatives of these words.

On April 1, 2019, DuPont completed the separation of its materials science business into a separate and independent public company by way of a pro rata dividend-in-kind of all the then outstanding stock of Dow Inc. (the “Dow Spin-Off”). DuPont completed the separation of its agriculture business into a separate and independent public company on June 1, 2019, by way of a pro rata dividend-in-kind of all the then outstanding stock of Corteva, Inc. (the “Corteva Spin-Off”).

On December 15, 2019, DuPont and International Flavors & Fragrances Inc. (“IFF”) announced they had entered definitive agreements to combine DuPont’s Nutrition & Biosciences business with IFF in a transaction that would result in IFF issuing shares to DuPont shareholders, pending customary closing conditions, other approvals including regulatory and that of IFF’s shareholders.

Forward-looking statements address matters that are, to varying degrees, uncertain and subject to risks, uncertainties and assumptions, many of which that are beyond DuPont’s control, that could cause actual results to differ materially from those expressed in any forward-looking statements. Forward-looking statements are not guarantees of future results. Some of the important factors that could cause DuPont’s actual results to differ materially from those projected in any such forward-looking statements include, but are not limited to: (i) the parties’ ability to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction with IFF; changes in relevant tax and other laws, (ii) failure to obtain necessary regulatory approvals, approval of IFF’s shareholders, anticipated tax treatment or any required financing or to satisfy any of the other conditions to the proposed transaction with IFF, (iii) the possibility that unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies that could impact the value, timing or pursuit of the proposed transaction with IFF, (iv) risks and costs and pursuit and/or implementation of the separation of the N&B Business, including timing anticipated to complete the separation, any changes to the configuration of businesses included in the separation if implemented, (v) risks and costs related to the Dow Spin-Off and the Corteva Spin-Off (together, the “Distributions”) including (a) with respect to achieving all expected benefits from the Distributions; (b) the incurrence of significant costs in connection with the Distributions, including costs to service debt incurred by the Company to establish the relative credit profiles of Corteva, Dow and DuPont and increased costs related to supply, service and other arrangements that, prior to the Dow Spin-Off, were between entities under the common control of DuPont; (c) indemnification of certain legacy liabilities of E. I. du Pont de Nemours and Company (“Historical EID”) in connection with the Corteva Spin-Off; and (d) potential liability arising from fraudulent conveyance and similar laws in connection with the Distributions; (vi) failure to effectively manage acquisitions, divestitures, alliances, joint ventures and other portfolio changes, including meeting conditions under the Letter Agreement entered in connection with the Corteva Spin-Off, related to the transfer of certain levels of assets and businesses; (vii) uncertainty as to the long-term value of DuPont common stock; (viii) potential inability or reduced access to the capital markets or increased cost of borrowings, including as a result of a credit rating downgrade and (ix) other risks to DuPont’s business, operations and results of operations including from: failure to develop and market new products and optimally manage product life cycles; ability, cost and impact on business operations, including the supply chain, of responding to changes in market acceptance, rules, regulations and policies and failure to respond to such changes; outcome of significant litigation, environmental matters and other commitments and contingencies; failure to appropriately manage process safety and product stewardship issues; global economic and capital market conditions, including the continued availability of capital and financing, as well as inflation, interest and currency exchange rates; changes in political conditions, including tariffs, trade disputes and retaliatory actions; impairment of goodwill or intangible assets; the availability of and fluctuations in the cost of energy and raw materials; business or supply disruption, including in connection with the Distributions; ability to effectively manage costs as the company’s portfolio evolves; security threats, such as acts of sabotage, terrorism or war; natural disasters and weather events and patterns; public health issues, endemics and pandemics, including the novel coronavirus (COVID-19), or the fear of such events; and the inherent unpredictability, severity and duration of such events, which could or could continue to result in a significant operational event for DuPont, adversely impact demand or production; ability to discover, develop and protect new technologies and to protect and enforce DuPont’s intellectual property rights; unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as management’s response to any of the aforementioned factors. These risks are and will be more fully discussed in DuPont’s current, quarterly and annual reports and other filings made with the SEC, in each case, as may be amended from time to time in future filings with the SEC. While the list of factors presented here is considered representative, no such list should be considered a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on DuPont’s consolidated financial condition, results of operations, credit rating or liquidity. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. DuPont assumes no obligation to publicly provide revisions or updates to any forward-looking statements whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. A detailed discussion of some of the significant risks and uncertainties which may cause results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” (Part I, Item 1A) of DuPont’s 2019 Annual Report on Form 10-K as updated by DuPont’s subsequent periodic and current reports filed with the SEC.

 

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LOGO

PROXY STATEMENT SUMMARY

Annual Meeting of Stockholders

 

Date and Time      Place    Record Date       

May 27, 2020

9:00 A.M. Eastern Time

    

Online at

www.virtualshareholdermeeting.com/DD2020

   April 6, 2020           

Meeting Agenda and Voting Recommendations

 

    Agenda Item

 

  

Board Recommendation

 

  

Page  

 

 

   1:

 

  

 

ELECTION OF DIRECTORS

 

  

 

FOR EACH NOMINEE

 

   17

 

   2:   

ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION

 

  

FOR

 

   61

 

   3:   

RESOLUTION TO APPROVE THE DUPONT 2020 EQUITY AND INCENTIVE PLAN

 

  

 

FOR

  

 

62

   4:   

RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

   FOR    71
   5:   

STOCKHOLDER PROPOSAL – MODIFICATION OF THRESHOLD FOR CALLING SPECIAL STOCKHOLDER MEETINGS

 

   AGAINST    75
   6:   

STOCKHOLDER PROPOSAL  – EMPLOYEE BOARD ADVISORY POSITION

 

   AGAINST    77

This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all information that you should consider, and you should read the entire Proxy Statement carefully before voting.



 

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Table of Contents

PROXY STATEMENT SUMMARY (continued)

 

Executive Summary

Effective August 31, 2017, The Dow Chemical Company and its consolidated subsidiaries (“Historical Dow”) and E. I. du Pont de Nemours and Company and its consolidated subsidiaries (“Historical EID”) completed the previously announced merger of equals transaction contemplated by the Agreement and Plan of Merger dated as of December 11, 2015, as amended on March 31, 2017 (the “Merger Transaction”). The Merger Transaction resulted in each of Historical Dow and Historical EID surviving as subsidiaries of DowDuPont Inc. (“DowDuPont”).

In 2019, DowDuPont separated into three, independent, publicly traded companies – Corteva, Inc. (“Corteva”), Dow Inc. (“Dow”), and DuPont de Nemours, Inc. (formerly known as DowDuPont Inc., “DuPont” or the “Company”). The separation of Dow was completed on April 1, 2019 by way of a pro rata dividend-in-kind of all the then outstanding stock of Dow Inc. (the “Dow Spin-off”) and the separation of Corteva was completed on June 1, 2019 by way of a pro rata dividend-in-kind of all the then outstanding stock of Dow Inc. (the “Corteva Spin-off” and, together with the Dow Spin-off, the “Distributions”).

On December 15, 2019, DuPont entered into a definitive agreement for the merger of International Flavors & Fragrances Inc. (“IFF”) and DuPont’s Nutrition & Biosciences (“N&B”) business in a Reverse Morris Trust transaction (the “Proposed N&B Transaction”). The Proposed N&B Transaction is expected to close by the end of the first quarter of 2021, subject to approval by IFF stockholders and other customary closing conditions, including regulatory approvals and receipt by DuPont of an opinion of tax counsel.

2019 Performance Highlights

   

Full year 2019 pro forma GAAP EPS from continuing operations of $(0.74); pro forma adjusted EPS* of $3.80.

 
   

Full year 2019 pro forma operating EBITDA* margins up 10 bps more than offsetting 50 bps headwind from lower equity affiliate income.

 
   

More than $1.3 billion returned to shareholders during the second half of 2019, including $750 million of share repurchases.

 
   

Advanced active portfolio management strategy announcing the Proposed N&B Transaction to create a global leader in high-value ingredients and solutions in Food & Beverage, Home & Personal Care and Health & Wellness markets.

 

 

  *

See Appendix A for a reconciliation of non-GAAP measures to the most directly comparable U.S. GAAP financial measures.



 

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PROXY STATEMENT SUMMARY (continued)

 

Director Nominees

You are being asked to vote on the election of 12 directors. All directors are elected annually. Detailed information about each director’s background, skills and expertise can be found in Agenda Item 1 — Election of Directors.

 

(As of the date of the Proxy Statement)

Name

Age

Current Position

  Independent    

Audit

Committee

   

Nomination
and

Governance

Committee

   

People and
Compensation

Committee

   

Environment,

Health, Safety

& Sustainability

Committee

   

Other

Current

Public

Boards

 

Amy G. Brady

           

Age 53

Chief Information Officer &
Executive Vice President,
KeyCorp

    X       X           X    

Edward D. Breen

           

Age 64

Executive Chair and
Chief Executive Officer,
DuPont de Nemours, Inc.

                        2*  

Ruby R. Chandy

           

Age 58

Former President, Industrial Division

Pall Corporation

    X       X           CH                 2  

Franklin K. Clyburn, Jr.

           

Age 55

Executive Vice President,
Chief Commercial Officer,

Merck

    X         X       X      

Terrence R. Curtin

           

Age 51

Chief Executive Officer,

TE Connectivity

    X       X       X                     1  

Alexander M. Cutler

           

Age 68

Retired Chair and Chief
Executive Officer, Eaton

    X         CH       X                   1  

Eleuthère I. du Pont

           

Age 53

President, Longwood Foundation

    X       X       X                     1  

Rajiv L. Gupta

           

Age 74

Chairman of Aptiv, PLC

    X           CH       X                 3  

Luther C. Kissam

           

Age 55

Chair, President & Chief Executive Officer, Albemarle Corp.

    X       X       X                     1  

Frederick M. Lowery

           

Age 49

Senior Vice President, Thermo Fisher, President Life Sciences and Laboratory Products

Groups

    X           X       X    

Raymond J. Milchovich

           

Age 70

Former Chair and Chief Executive Officer, Foster
Wheeler AG

    X           X       X    

Steven M. Sterin

           

Age 48

Former Executive Vice President & Chief Financial

Officer, Andeavor

    X       CH                       X                 1  

CH = Chair

*

Mr. Breen currently serves as a director of Comcast Corporation and Corteva. Mr. Breen will not stand for re-election to the Corteva board of directors and his term as a director of Corteva will expire immediately following Corteva’s annual meeting of stockholders, which is expected to occur on April 28, 2020.



 

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PROXY STATEMENT SUMMARY (continued)

 

Corporate Governance Best Practices

As part of DuPont’s commitment to high ethical standards, the Board follows sound governance practices. These practices, which are summarized below, are described in more detail beginning on page 4 of the Proxy Statement.

 

Board

Independence
and Diversity

 

     

Director

Elections

 

     

Board

Practices

 

     

Stock Ownership
Requirements

 

     

Stockholder

Rights

 

11 of 12

director
nominees are

independent

 

Independent

Board Committees

 

2 of 12

directors are

women

   

Annual

Board elections

 

Directors are

elected by a

majority

of votes cast

 

Directors

not elected

by a majority of

votes cast are

subject to the
Company’s

resignation policy

   

Non-employee
directors meet in

executive session without

management at
each
regularly scheduled
Board meeting

 

Annual Board

and Committee

evaluations

 

Director

orientation
and
education

programs

 

Board retirement policy

 

   

Non-employee

directors are

required to comply

with stock ownership

guidelines

 

Directors are
required to hold
Company granted
shares until

retirement

 

Executives and
directors

prohibited from
hedging
or
pledging

Company stock

 

   

Stockholder right

to call special meetings

(with a 25%

ownership
threshold)

 

No super-majority

stockholder voting
requirements

 

Eligible
stockholders are
able to nominate
directors through

proxy
access

Company Leadership and Board Composition

Company Leadership

Mr. Breen served as the Chief Executive Officer of the Company from the closing of the Merger Transaction until the completion of the Corteva Spin-off. Following the Corteva Spin-off, Mr. Breen was appointed as the Executive Chair of the Company and C. Marc Doyle was appointed Chief Executive Officer of the Company. Upon the departure of Mr. Doyle effective February 17, 2020, Mr. Breen was appointed to also serve as the Chief Executive Officer. The Board believes that Mr. Breen’s service as both Executive Chair and Chief Executive Officer is appropriate because of Mr. Breen’s role in orchestrating the Merger Transaction, the Dow Spin-off and the Corteva Spin-off, as well as his proven track record of generating significant stockholder value. Because Mr. Breen serves in both the roles of Executive Chair and Chief Executive Officer, the Board has established a robust Lead Independent Director role and appointed Mr. Cutler to serve as Lead Independent Director. As Lead Independent Director, Mr. Cutler’s responsibilities include:

   

presiding at all meetings of the Board at which the Executive Chair is not present, including executive sessions of the Board’s independent directors;

   

serving as liaison between any non-independent directors (including the Executive Chair), on the one hand, and the independent directors, on the other hand;

   

reviewing and approving information sent to the Board;

   

reviewing meeting agendas and schedules and consulting with the Executive Chair regarding the same;



 

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PROXY STATEMENT SUMMARY (continued)

 

   

if requested by major stockholders, ensuring that he is available for consultation and direct communication;

   

serving as focal point for stockholder communications and requests for consultation that are, in each case, addressed to independent members of the Board;

   

reviewing and approving meeting schedules to assure that there is sufficient time for discussion of all agenda items;

   

calling meetings of the Board’s independent directors; and

   

seeking to promote a strong Board culture, including the participation of all directors in an environment of open dialogue, constructive feedback and effective communication across the Board’s committees and among the Executive Chair, the Board as a whole, the Board’s committees and with regard to senior management.

The directors collectively possess a variety of skills, professional experience, and diversity of backgrounds that allow them to effectively oversee the Company’s business, including leadership experience, international experience, operational experience in a variety of relevant fields and industries, public company board experience, board or other significant experience with philanthropic institutions and trade and industry organizations, and public policy experience.

Executive Compensation

In anticipation of the completion of the separation of DowDuPont into three separate publicly traded companies during 2019, the Board decided not to develop separate executive compensation programs at the DowDuPont level. Rather, the executive officers of DowDuPont continued to be employees of, and participants in, the compensation and benefit programs of Historical Dow and Historical EID, as applicable. Additionally, in light of the complexities associated with introducing long-term performance-based awards for a period in which the separations would occur, the Board determined that long-term incentive plan awards for 2019 would be made in the form of RSUs. The decision was also made that payouts under the 2019 short-term incentive plan would be tied solely to the achievement of pro forma Operating EBITDA to focus executive officers on promoting the delivery of earnings in a year of significant transition.

In anticipation and following completion of the separations in 2019, the People and Compensation Committee (the “Compensation Committee”) reviewed compensation for the Company’s executive officers to ensure competitiveness with market, focus on performance and alignment with stockholder interests. As a result, the Compensation Committee made the following changes for 2019:

   

Certain NEOs received increases to base salary and incentive target opportunities. The Compensation Committee considered these changes appropriate after careful review of the market data and the expectations of performance for newly appointed executive officers.

   

Target annual compensation for Mr. Breen was decreased to reflect his new role as Executive Chairman.

   

Adjustments were made to outstanding equity awards to reflect the conversion into awards denominated in DuPont, Corteva, or Dow common stock.

   

The Compensation Committee strongly believes that executive pay should be performance based and aligned with stockholder interests. In August 2019, certain NEOs were granted Transformation Awards in the form of PSUs and Stock Options to align the new executive team to the achievement of key financial performance measures of Adjusted ROIC and Adjusted Operating EBITDA, and to motivate for stock price improvement.

Building on the Company’s performance-based philosophy, the Compensation Committee approved changes to the Company’s 2020 short- and long-term incentive programs to continue to emphasize pay for performance:

   

The 2020 STIP will include a portfolio of metrics which the Company believes are critical indicators of performance: Adjusted EPS, Organic Revenue, Operating EBITDA, and Net Trade Working Capital. Additionally, the STIP opportunity for Business Unit Presidents will be aligned more closely to the results of their individual Business Units.

   

The 2020 Long-Term Incentive program for executives will be delivered through PSUs (weighted at 60%), Stock Options (weighted at 20%) and RSUs (weighted at 20%). The 2020 PSUs includes Adjusted ROIC



 

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PROXY STATEMENT SUMMARY (continued)

 

 

and Adjusted Corporate Net Income as equally weighted performance measures. The 2020 PSU design also incorporates relative Total Shareholder Return as a modifier of overall performance results.

Executive Compensation Governance Practices

Compensation of the executive officers of the Company, including that of the NEOs, is overseen by the Compensation Committee (or, in the case of both the Executive Chairman and the CEO, by the Compensation Committee and the independent members of the Board). The Board and the Compensation Committee were assisted in performance of their oversight duties by an independent compensation consultant.

The following summarizes key governance characteristics related to the executive compensation programs in which the NEOs participate:

 

 

Key Executive Compensation Practices

 

   

What We Do

 

 

What We Don’t Do

 

   Active stockholder engagement

 

   Strong links between executive compensation outcomes and company financial and market performance

 

   Each component of target pay benchmarked with respect to the peer group or the general market, as applicable

 

   Carefully structured peer group with annual Compensation Committee review

 

   Significant focus on performance-based pay

 

   Stock ownership requirements of six times base salary for the CEO and Executive Chairman and three times base salary for the other NEOs

 

   100% independent Compensation Committee

 

   Clawback policy covering both cash and equity

 

   Use of executive compensation statements (“tally sheets”)

 

   Independent compensation consultant reporting to the Compensation Committee

 

 

×   No single-trigger change in control agreements

 

×  No option repricing, reloads, exchanges or options granted below market value without stockholder approval

 

×   No excise tax gross ups

 

×   No plans that encourage excess risk taking

 

×   No hedging or pledging of Company’s securities

 

×   No liberal share counting

 

×   No excess dilution through careful monitoring of burn rate and overhang

 

×   No minimum payouts under the Long-Term Incentive Plan

 



 

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2020 Annual Meeting of Stockholders

DuPont de Nemours, Inc.

TABLE OF CONTENTS

 

NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS         
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS      i  
PROXY STATEMENT SUMMARY      ii  
VOTING AND ATTENDANCE PROCEDURES      1  
CORPORATE GOVERNANCE      4  
AGENDA ITEM 1: ELECTION OF DIRECTORS      17  

Director Nominees

     19  

Director Compensation

     25  
EXECUTIVE OFFICERS      28  
BENEFICIAL OWNERSHIP OF COMPANY STOCK      30  
COMPENSATION DISCUSSION & ANALYSIS      31  

EXECUTIVE SUMMARY

 

     33  

2019 Performance Highlights

     34  

Named Executive Officers

     34  

Program Structure and Alignment with Core Principles

     34  

Executive Compensation Governance Practices

     34  

COMPONENTS OF EXECUTIVE COMPENSATION AND BENEFITS

 

     36  

2019 NEO Targeted Total Direct Compensation Summary

     36  

Pay Mix

     36  

2019 Compensation Decisions

     37  

• Base Salary

     37  

• Annual Incentive Compensation

     37  

• Long-Term Incentive Compensation

     39  

Benefits and Perquisites

     42  

THE COMPENSATION PROCESS

 

     43  

Role of Company Management

     43  

Role of the Compensation Committee

     43  

Role of Independent Board Members

     43  

Role of the Independent Compensation Consultant

     43  

Peer Group and Benchmarking

     44  

OTHER CONSIDERATIONS

 

     45  

Consideration of Say on Pay Vote

     45  

Stock Ownership Guidelines

     45  

Anti-Hedging and Anti-Pledging Policies

     45  

Clawback Policy

     45  

Compensation and Risk Management

     45  

2019 Tax Considerations

     46  

COMPENSATION TABLES AND NARRATIVES

 

     47  

Summary Compensation Table

     47  

Grants of Plan-Based Awards

     50  

Outstanding Equity Awards

     51  

Option Exercises and Stock Vested

     53  

 

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BENEFITS

 

   53

Pension Benefits

   53

Defined-Benefit Retirement Plans

   53

Supplemental Retirement Plans

   55

Non-Qualified Deferred Compensation

   56

Other Retirement Benefits

   57

Potential Payments Upon Termination or Change in Control

   58

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

   60

COMPENSATION COMMITTEE REPORT

 

   60

CEO PAY RATIO

 

   60
AGENDA ITEM 2: ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION    61
AGENDA ITEM 3: RESOLUTION TO APPROVE THE DUPONT 2020 EQUITY AND INCENTIVE PLAN    62
AGENDA ITEM 4: RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    71
AUDIT COMMITTEE REPORT    74
AGENDA ITEM 5: STOCKHOLDER PROPOSAL – MODIFICATION OF THRESHOLD FOR CALLING SPECIAL STOCKHOLDER MEETINGS    75
AGENDA ITEM 6: STOCKHOLDER PROPOSAL – EMPLOYEE BOARD ADVISORY POSITION    77
ADDITIONAL INFORMATION    79
APPENDIX A – NON-GAAP RECONCILIATION    A-1
APPENDIX B – 2020 EQUITY AND INCENTIVE PLAN    B-1

 

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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE

STOCKHOLDER MEETING TO BE HELD ON MAY 27, 2020

The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.

Stockholders may request their proxy materials be delivered to them electronically in 2021 by visiting

https://enroll.icsdelivery.com/dd.

VOTING AND ATTENDANCE PROCEDURES

In this Proxy Statement, you will find information on the Board of Directors (the “Board”) of DuPont de Nemours, Inc., the candidates for election to the Board, and five other items to be voted upon at the 2020 Annual Meeting of Stockholders (the “2020 Meeting”) and any adjournment or postponement of the 2020 Meeting. The background information in this Proxy Statement has been supplied to you at the request of the Board to help you decide how to vote and to provide information on the Company’s corporate governance and compensation practices. This Proxy Statement is first being distributed to stockholders on or about April 9, 2020.

Vote Your Shares in Advance

You may vote your shares by internet, telephone or signing and returning the enclosed proxy or other voting instruction form. Your shares will be voted only if the proxy or voting instruction form is properly executed and received by the independent Inspectors of Election prior to the 2020 Meeting. Except as provided below with respect to shares held in employee savings plans, if no specific instructions are given by you when you execute your voting instruction form, as explained on the form, your shares will be voted as recommended by the Board.

You may revoke your proxy or voting instructions at any time before their use at the 2020 Meeting by sending a written revocation, by submitting another proxy or voting form on a later date, or by voting virtually at the 2020 Meeting. No matter which voting method you choose, however, you should not vote any single account more than once unless you wish to change your vote. Be sure to submit votes for each separate account in which you hold DuPont common stock.

Confidential Voting

The Company maintains vote confidentiality. Proxies and ballots of all stockholders are kept confidential from the Company’s management and Board unless disclosure is required by law and in other limited circumstances. The policy further provides that employees may confidentially vote their shares of Company stock held by employee savings plans and requires the appointment of an independent tabulator and Inspectors of Election for the 2020 Meeting.

Dividend Reinvestment Plan Shares and Employee Savings Plan Shares

If you are enrolled in the direct stock purchase and dividend reinvestment plan administered by Computershare Trust Company, N.A. (the “Computershare CIP”), the DuPont common stock owned on the record date by you directly in registered form, plus all shares of common stock held for you in the Computershare CIP, will appear together on a single proxy voting form. If no instructions are provided by you on an executed proxy voting form, your Computershare CIP shares will be voted as recommended by the Board.

Participants in various employee savings plans will receive a voting instruction form. Your executed form will provide voting instructions to the respective plan trustee. If no instructions are provided, the plan trustees and/or administrators for the relevant employee savings plan will vote the shares according to the provisions of the relevant employee savings plan. To allow sufficient time for voting, your voting instructions must be received by 11:59 P.M. Eastern Time on May 21, 2020. You may not vote your shares held in an employee savings plan virtually at the 2020 Meeting.

DuPont Shares Outstanding and Quorum

At the close of business on the record date, April 6, 2020, there were 733,794,951 shares of DuPont common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote. The holders of at least 50% of the issued and outstanding shares of common stock entitled to vote that are present in person or represented by proxy constitute a quorum for the transaction of business at the 2020 Meeting.

 

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VOTING AND ATTENDANCE PROCEDURES (continued)

 

 

For Agenda Item 1: Election of Directors, each nominee must receive more FOR votes than AGAINST votes in order to be elected. For all other Agenda Items to be presented for a vote at the 2020 Meeting (2 through 6), each such item must receive more FOR votes than AGAINST votes in order to be approved. Abstentions and broker non-votes will be included in determining the presence of a quorum at the 2020 Meeting, but will not be counted or have an effect on the outcome of any matter except as specified below with respect to Agenda Item 4.

Broker non-votes occur when a person holding shares through a bank or broker, meaning that their shares are held in a nominee name or beneficially through such bank or broker, does not provide instructions as to how to vote their shares and the bank or broker is not permitted to exercise voting discretion. Under New York Stock Exchange (“NYSE”) rules, your bank or broker may vote shares held in beneficial name only on Agenda Item 4: Ratification of the Appointment of the Independent Registered Public Accounting Firm, without instruction from you, but may not vote on any other matter to be voted on at the 2020 Meeting.

Proxy Solicitation on Behalf of the Board

The Board is soliciting proxies to provide an opportunity for all stockholders to vote, whether or not the stockholders are able to attend the 2020 Meeting or an adjournment or postponement thereof. Directors, officers and employees may solicit proxies on behalf of the Board in person, by mail, by telephone or by electronic communication. The proxy representatives of the Board will not be specially compensated for their services in this regard.

DuPont has retained Innisfree M&A Incorporated to aid in the solicitation of stockholders (primarily brokers, banks and other institutional investors) for an estimated fee of $25,000, plus reasonable expenses. Arrangements have been made with brokerage houses, nominees and other custodians and fiduciaries to send materials to their principals, and their reasonable expenses will be reimbursed by DuPont on request. The cost of solicitation will be borne by DuPont.

Attending the 2020 Meeting

The 2020 Meeting will be online and a completely virtual meeting of stockholders due to the ongoing public health impact of the coronavirus (COVID-19) pandemic. This decision was made in light of the protocols that federal, state, and local governments have imposed or may impose in the near future and taking into account the health and safety of our stockholders, directors and members of management and is consistent with the Company’s safety and health core values. Conducting a virtual meeting will also allow stockholders whose travel may be restricted due to COVID-19 to partake in the meeting.

To participate in the virtual meeting, visit www.virtualshareholdermeeting.com/DD2020 and enter the 16-digit control number included on your notice of Internet availability of the proxy materials, on your proxy card, or on the voting instructions that accompanied your proxy materials. You may begin to log into the meeting platform beginning at 8:30 a.m. EDT on May 27, 2020. The meeting will begin promptly at 9:00 a.m. EDT on May 27, 2020. A list of stockholders of record entitled to vote shall be open to any stockholder for any purpose relevant to the 2020 Meeting for ten days before the 2020 Meeting, during normal business hours, at the Office of the Corporate Secretary. A list of stockholders as of the close of business on the record date will also be available for examination by the stockholders during the whole time of the meeting at www.virtualshareholdermeeting.com/DD2020.

The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong Wi-Fi connection wherever they intend to participate in the meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the meeting.

We are committed to ensuring our stockholders have the same rights and opportunities to participate in the 2020 Meeting as if it been held in a physical location. If you wish to submit a question before the meeting, you may log into www.proxyvote.com and enter your 16-digit control number. Once past the login screen, click on “Question for Management,” type in your question, and click “Submit.” Alternatively, if you want to submit your question during the meeting, log into the virtual meeting platform at www.virtualshareholdermeeting.com/DD2020, type your question into the “Ask a Question” field, and click “Submit.”

 

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Questions pertinent to meeting matters will be answered during the meeting, subject to time constraints. Questions regarding personal matters, including those related to employment or product or service issues, are not pertinent to meeting matters and therefore will not be answered.

If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual Shareholder Meeting login page. Technical support will be available starting at 8:30 a.m. EDT on May 27, 2020 and through the conclusion of the meeting.

Other Matters

The Board does not intend to present any business at the 2020 Meeting that is not described in this Proxy Statement. The enclosed proxy or other voting instruction form confers upon the designated persons the discretion to vote the shares represented in accordance with their best judgment. Such discretionary authority extends to any other properly presented matter. The Board is not aware of any other matter that may properly be presented for action at the 2020 Meeting.

 

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CORPORATE GOVERNANCE

Strong corporate governance is an integral part of DuPont’s core values. Within this section, you will find information about the Board and its governance structure and processes.

DuPont Board Corporate Governance Guidelines

The Corporate Governance Guidelines form an important framework for the Board’s corporate governance practices and assist the Board in carrying out its responsibilities. The Board reviews these guidelines periodically to consider the need for amendments or enhancements. Among other things, these guidelines delineate the Board’s responsibilities, leadership structure, independence, qualifications, election, annual self-evaluation, and access to management and advisors.

We invite you to visit the Company’s website at https://www.investors.dupont.com/investors/dupont-investors/corporate-governance/default.aspx to review the following governance documents:

 

   

Director Code of Conduct

 

   

Employee Code of Conduct

 

   

Amended and Restated Certificate of Incorporation

 

   

Fourth Amended and Restated Bylaws

 

   

Corporate Governance Guidelines

 

   

Code of Financial Ethics

 

   

Board Committee Charters and Membership

 

   

Conflict Minerals and Human Rights Reports and Policies

Director Independence

The Board has assessed the independence of each director who is currently on the Board or who served on the Board during the last fiscal year in accordance with the standards of independence of the NYSE, SEC rules and as described in the Corporate Governance Guidelines. Based upon these standards, the Board has determined that all of the directors who are currently on the Board or who served on the Board during the last fiscal year other than Messrs. Breen and Doyle are independent. The current independent directors constitute a “substantial majority” of the Board, consistent with Board policy. In addition, the Board has determined that each of the nominees for director other than Mr. Breen is independent. The Nomination and Governance Committee, as well as the Board, will annually review relationships that directors may have with the Company and members of management to make a determination as to whether there are any material relationships that would preclude a director from being independent.

All members of the Audit, People and Compensation, and Nomination and Governance Committees are independent directors under the Corporate Governance Guidelines and applicable regulatory and listing standards.

Board Leadership Structure

The Board is responsible for broad corporate policy and overall performance of the Company through oversight of management and stewardship of the Company. Among other duties, the Board appoints the Company’s officers, assigns to them responsibility for management of the Company’s operations, and reviews their performance.

Mr. Breen served as the Chief Executive Officer of the Company from the closing of the Merger Transaction until the completion of the Corteva Spin-off. Following the Corteva Spin-off, Mr. Breen was appointed as the Executive Chair of the Company and C. Marc Doyle was appointed Chief Executive Officer of the Company. Upon the departure of Mr. Doyle effective February 17, 2020, Mr. Breen was appointed to also serve as the Chief Executive Officer. The Board believes that Mr. Breen’s service as both Executive Chair and Chief Executive Officer is appropriate because of Mr. Breen’s role in orchestrating the Merger Transaction, the Dow Spin-off and the Corteva Spin-off, as well as his proven track record of generating significant stockholder value. Because Mr. Breen serves in both the roles of

 

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Executive Chair and Chief Executive Officer, the Board has established a robust Lead Independent Director role and appointed Mr. Cutler to serve as Lead Independent Director. As Lead Independent Director, Mr. Cutler’s responsibilities include:

 

   

presiding at all meetings of the Board at which the Executive Chair is not present, including executive sessions of the Board’s independent directors;

 

   

serving as liaison between any non-independent directors (including the Executive Chair), on the one hand, and the independent directors, on the other hand;

 

   

reviewing and approving information sent to the Board;

 

   

reviewing meeting agendas and schedules and consult with the Executive Chair regarding the same;

 

   

if requested by major stockholders, ensuring that he is available for consultation and direct communication;

 

   

serving as focal point for stockholder communications and requests for consultation that are, in each case, addressed to independent members of the Board;

 

   

reviewing and approving meeting schedules to assure that there is sufficient time for discussion of all agenda items;

 

   

calling meetings of the Board’s independent directors; and

 

   

seeking to promote a strong Board culture, including the participation of all directors in an environment of open dialogue, constructive feedback and effective communication across the Board’s committees and among the Executive Chair, the Board as a whole, the Board’s committees and with regard to senior management.

Committees

Committees perform many important functions. The responsibilities of each Committee are stated in their respective Committee charters which are available at https://www.investors.dupont.com/investors/dupont-investors/corporate-governance/default.aspx. The Board, upon the recommendation of the Nomination and Governance Committee, elects members to each Committee and has the authority to change Committee chairs, memberships and the responsibilities of any Committee as set forth in the Bylaws.

The Board currently has four Committees: (i) Audit Committee; (ii) Nomination and Governance Committee; (iii) People and Compensation Committee; and the (iv) Environment, Health, Safety and Sustainability Committee (“EHS&S Committee”).

 

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CORPORATE GOVERNANCE (continued)

 

 

A brief description of the responsibilities of the Committees are as follows:

Committees

 

   

Audit Committee

 

All members of the Audit Committee are independent directors under the Board’s Corporate Governance Guidelines and applicable regulatory and listing standards.

 

Held seven meetings during 2019.

 

  Nominates, engages and replaces, as appropriate, the Company’s independent registered public accounting firm, subject to stockholder ratification, to audit the Company’s Consolidated Financial Statements.

 

  Reviews and approves the Audit Committee Pre-Approval Policy of audit and non-audit services provided by the Company’s independent registered public accounting firm (the “Pre-Approval Policy”).

 

  Provides oversight on the external reporting process and the adequacy of the Company’s internal controls.

 

  Reviews effectiveness of the Company’s systems, procedures and programs designed to promote and monitor compliance with applicable laws and regulations and receives prompt reports on compliance matters that could adversely impact the Company’s external reporting process or adequacy of internal controls.

 

  Reviews the scope of the audit activities of the independent registered public accounting firm and the Company’s internal auditors and appraises audit efforts of both.

 

  Reviews services provided by the Company’s independent registered public accounting firm and other disclosed relationships as they bear on the independence of the Company’s independent registered public accounting firm.

 

  Establishes procedures for the receipt, retention and resolution of complaints regarding accounting, internal controls or auditing matters.

 

A Summary of the Pre-Approval Policy is included as part of Agenda Item 4: Ratification of the Appointment of the Independent Registered Public Accounting Firm in this Proxy Statement.

 

   

Nomination and Governance Committee

 

All members of the Nomination and Governance Committee are independent directors under the Board’s Corporate Governance Guidelines and applicable regulatory and listing standards.

 

Held five meetings during 2019.

 

  Develops and recommends to the Board a set of corporate governance guidelines for the Company.

 

  Establishes the process for identifying and evaluating director nominees, determines the qualifications, qualities, skills and other expertise required to be a director, and recommends to the Board nominees for election to the Board.

 

  Monitors the functioning of Board Committees.

 

  Oversees the Board’s new director orientation program.

 

  Oversees the annual assessment of the Board and its Committees.

 

  Oversees the Company’s corporate governance practices, including reviewing and recommending to the Board for approval any changes to the Company’s Code of Conduct and Code of Financial Ethics, Certificate of Incorporation, Bylaws and Committee charters.

 

  Oversees the Company’s compliance programs, including the Code of Conduct and Code of Financial Ethics.

 

 

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People and Compensation Committee

 

All members of the People and Compensation Committee are independent directors under the Board’s Corporate Governance Guidelines and applicable regulatory and listing standards.

 

Held eight meetings during 2019.

 

    Retains any compensation consultants that the Committee, in its sole discretion, deems appropriate to fulfill its duties and responsibilities; the Committee sets the compensation and oversees the work of the consultants, including approval of an applicable executive compensation peer group.

 

    Assesses current and future senior leadership talent for Company officers.

 

    Assists the Board in the CEO succession planning process.

 

    Reviews and approves the Company’s programs for executive development, performance and skills evaluations.

 

    Conducts an annual review of the Company’s diversity talent and diversity representation on the slate for key positions.

 

    Oversees the Company’s human capital management.

 

    Reviews and approves the goals and objectives relevant to the CEO’s compensation, oversees the performance evaluation of the CEO based on such goals and objectives and, together with the other independent members of the Board, determines and approves the CEO’s compensation based on this evaluation.

 

    Reviews and approves all compensation and employment arrangements, including severance agreements, of the Company’s executive officers and named executive officers other than the CEO.

 

    Reviews the Company’s incentive compensation arrangements to determine whether they encourage excessive risk-taking, and evaluates compensation policies and practices that could mitigate any such risk.

 

    Works with management to develop the Compensation Discussion and Analysis and other compensation disclosures for inclusion in the Company’s Annual Report on Form 10-K, annual meeting Proxy Statement or any other filings with the SEC.

 

    Considers the voting results of any say-on-pay or related stockholder proposals.

 

    Recommends non-employee directors’ compensation to the Board.

 

   

Environment, Health, Safety & Sustainability Committee

 

Held five meetings during 2019.

 

    Assesses the effectiveness of, and advises the Board on, corporate responsibility programs and initiatives, including the Company’s public policy, environment, health, safety and sustainability (“EHS&S”) policies and programs and matters impacting the Company’s public reputation.

 

    Oversees and advises the Board on the Company’s corporate citizenship and corporate social responsibility programs and activities, including public policy management, advocacy priorities, philanthropic contributions, and corporate reputation management.

 

    Reviews the Company’s public policy positions, strategy regarding political engagement and corporate social responsibility initiatives.

 

    Assesses the Company’s EHS&S policies and performance and makes recommendations to the Board and the management of DuPont with regard to the same.

 

    Reviews and provides input to management regarding the management of current and emerging EHS&S issues and reports periodically to the Board on EHS&S matters affecting DuPont.

 

 

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Committee Membership

The following chart shows the current Committee membership:

 

  Committees
  Director Audit

Nomination and

Governance

People and

Compensation

EHS&S

Committee

  Amy G. Brady*

X

 

 

X

  Edward D. Breen

 

 

 

 

  Ruby R. Chandy*

X

 

 

CH

  Franklin K. Clyburn, Jr.*

 

X X

 

  Terrence R. Curtin*

X X

 

 

  Alexander M. Cutler*

 

CH X

 

  Eleuthère I. du Pont*

X X

 

 

  Rajiv L. Gupta*

 

 

CH X

  Luther C. Kissam*

X X

 

 

  Frederick M. Lowery*

 

 

X X

  Raymond J. Milchovich*

 

 

X X

  Steven M. Sterin*

CH

 

 

X

* = Independent    CH = Chair

Board’s Role in the Oversight of Risk Management

The Board is responsible for overseeing the overall risk management process for the Company. Risk management is considered a strategic activity within the Company and responsibility for managing risk rests with executive management while the Committees and the Board as a whole participate in the oversight of the process. Specifically, the Board as a whole has responsibility for overseeing the strategic planning process and reviewing and monitoring management’s execution of the corporate and business plan, and each Committee is responsible for oversight of specific risk areas relevant to their respective charters. This process includes an assessment of potential cyber-attacks and the ongoing review of the Company’s comprehensive cyber security program.

The Board, acting through its committee structure, is responsible for overseeing that management implements and follows this risk management process and for coordinating the outcome of reviews by Committees in their respective risk areas.

 

  Committee    Area(s) of Risk Management Oversight Responsibility

  Audit Committee

  

Management and effectiveness of accounting, auditing, external reporting, compliance and internal controls, and cyber security as it relates to financial reporting

  Nomination and Governance Committee

  

Director independence, potential conflicts of interest and other ethics and compliance

  People and Compensation Committee

  

The Company’s executive compensation practices, human capital management and leadership succession planning

  Environment, Health, Safety & Sustainability Committee

  

Emerging regulatory developments related to safety, health and environment and public policy management matters

Although each Committee is responsible for overseeing the management of certain risks as described above, the full Board is regularly informed by the Committees about these risks. This enables the Board and the Committees to coordinate risk oversight and the relationships among the various risks faced by the Company.

Succession Planning

The Board believes that one of its primary responsibilities is to oversee the development and retention of senior talent and to ensure that an appropriate succession plan is in place for the Chief Executive Officer and other

 

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members of senior management. The People and Compensation Committee, together with the Chief Executive Officer, regularly reviews senior management talent, including readiness to take on additional leadership roles and developmental opportunities needed to prepare senior leaders for greater responsibilities. In addition, the People and Compensation Committee regularly discusses recommendations and evaluations from the Chief Executive Officer as to potential successors to fill senior positions. The Chief Executive Officer also provides a regular review to the People and Compensation Committee assessing the members of the executive leadership team and his or her potential to succeed him. This review includes a discussion about development plans for senior leaders to help prepare them for future succession and contingency plans in the event the Chief Executive Officer is unable to serve for any reason (including death or disability). While the People and Compensation Committee has the primary responsibility to develop succession plans for the Chief Executive Officer position, it regularly reports to the Board and decisions are made at the Board level.

Stockholder Engagement

Throughout the year, the independent directors and members of the management team continued extensive outreach to stockholders. Through this outreach, the management team updated investors on a range of topics such as the Distributions following the Merger Transaction, the overall business strategy, current business conditions, corporate citizenship and sustainability, corporate governance practices and executive compensation, as well as gained an understanding of the perspectives and concerns of each investor. The Board and management team carefully consider the feedback from these meetings, as well as stockholder support, when reviewing the business, corporate governance and executive compensation profiles of the Company.

Communications with the Board and Directors

Stockholders and other parties interested in communicating directly with the Board, the Executive Chair, the Lead Independent Director or other independent directors, may do so by writing in care of the Office of the Corporate Secretary, 974 Centre Road, CRP Building 730, Wilmington, DE 19805. Pursuant to our Corporate Governance Guidelines, our Lead Independent Director is available for consultation and direct communication if requested by major stockholders.

The Board’s independent directors have approved procedures for handling correspondence received by the Company and addressed to the Board, the Executive Chair, the Lead Independent Director or other outside directors. Communications will be distributed to any or all directors as appropriate depending upon the individual communication. However, the directors have requested that communications that do not directly relate to their duties and responsibilities as directors of the Company be excluded from distribution and deleted from email that they access directly. Such excluded items include “spam”; advertisements; mass mailings; form letters and email campaigns that involve unduly large numbers of similar communications; solicitations for goods, services, employment or contributions; surveys; and individual product inquiries or complaints. Additionally, communications that appear to be unduly hostile, intimidating, threatening, illegal or similarly inappropriate will also be screened for omission by the Office of the Corporate Secretary. Any omitted or deleted communication will be made available to any director upon such director’s request. Concerns relating to accounting, internal controls, auditing or ethical matters are brought to the attention of the internal audit function and handled in accordance with procedures established by the Audit Committee with respect to such matters.

Board, Committees and Annual Meeting Attendance

During 2019, DuPont held 13 Board meetings and 25 Committee meetings. All of the incumbent directors attended more than 75% of the sum of the total number of Board meetings and the total number of meetings of the Committees on which the director served during the past year. All directors are encouraged to attend the Annual Meetings of Stockholders, and in 2019, ten directors then serving on the DuPont Board attended the Annual Meeting of Stockholders held on June 25, 2019.

Executive Sessions of Directors

The non-employee directors meet in executive session in connection with each regularly scheduled meeting of the Board, and at other times as they may determine appropriate. During 2019, there were thirteen executive sessions of the Board chaired by the Co-Lead Directors and/or the Lead Independent Director for the Board. The Committees typically meet in executive session in connection with every Committee meeting.

 

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Director Qualifications and Diversity

The Nomination and Governance Committee has adopted guidelines to be used in evaluating candidates for Board membership in order to ensure a diverse and highly qualified Board. Directors are selected for their integrity and character; sound, independent judgment; breadth of experience, insight and knowledge; and business acumen. Leadership skills, scientific or technology expertise, familiarity with issues affecting global businesses in diverse industries, prior government service, diversity, time availability in light of other commitments, dedication and conflicts of interest are among the relevant criteria, which will vary depending on the needs of the Board. In addition, the Board limits the number of other public company boards on which a director may serve. No director who is an executive officer of a public company may serve as a director of the Company if he or she serves on more than a total of three public company boards, including the Board and the board of the company with which the director is employed. If a director is not an executive officer of a public company, he or she may serve on a maximum of four public company boards, including the Board. Directors are required to advise the Executive Chair in advance of serving on another company’s board.

Guidelines for director qualifications are included in the Corporate Governance Guidelines. The guidelines for director qualifications provide that a commitment to diversity is a consideration in the identification and nomination of director candidates, and that candidates are evaluated to provide for a diverse and highly qualified Board. The Nomination and Governance Committee and the full Board implement and assess the effectiveness of these guidelines and the commitment to diversity by referring to these guidelines in the review and discussion of Board candidates when assessing the composition of the Board and by including questions regarding the diversity of the Board membership in the Board’s annual self-evaluations.

Identifying Director Candidates

Among the Nomination and Governance Committee’s most important functions is the selection of directors who are recommended to the Board as candidates for election. The Nomination and Governance Committee has adopted a process for identifying new director candidates. Recommendations may be received by the Nomination and Governance Committee from various sources, including current or former directors, a search firm retained by the Nomination and Governance Committee to assist in identifying and evaluating potential candidates, stockholders, Company executives, and by self-nomination. The Nomination and Governance Committee is open to accepting stockholders’ suggestions of candidates to consider as potential Board members as part of the Nomination and Governance Committee’s periodic review of the size and composition of the Board and its Committees. Such recommendations should be sent to the Nomination and Governance Committee through the Office of the Corporate Secretary. The Nomination and Governance Committee uses the same process to evaluate director nominees recommended by stockholders as it does to evaluate nominees identified by other sources.

Director Candidate Nominations through Proxy Access

The Bylaws set forth procedural and content requirements for director candidate nominations through proxy access. As more specifically provided in the Bylaws, a stockholder or group of up to twenty stockholders owning 3% or more of the Company’s outstanding shares of common stock continuously for at least three years, may nominate and include in the Company’s proxy materials director nominees constituting up to the greater of two individuals or 20% of the Board, provided that the stockholder(s) and the nominee(s) satisfy the requirements detailed in the Bylaws. Nominations should be sent to the Office of the Corporate Secretary in accordance with the procedural and content requirements set forth in the Bylaws, the full text of which is available at https://www.investors.dupont.com/investors/dupont-investors/corporate-governance/default.aspx.

Board Term and Director Retirement Policy

The Certificate of Incorporation provides that all directors stand for election at each Annual Meeting of Stockholders.

The Corporate Governance Guidelines provide that directors should not be nominated for election to the Board after reaching age 75, unless it is determined that it is in the best interests of the Company to extend the retirement date.

 

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CORPORATE GOVERNANCE (continued)

 

 

Code of Conduct

The Board has adopted a Code of Conduct for all directors of the Company and a Code of Financial Ethics applicable to the principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. In addition, the Company has a code of conduct applicable to all employees. The full text of Director Code of Conduct, Code of Financial Ethics and the Employee Code of Conduct are available at https://www.investors.dupont.com/investors/dupont-investors/corporate-governance/default.aspx. In addition, DuPont discloses on its website any waiver of or amendment to the Director Code of Conduct and the Code of Financial Ethics requiring disclosure under applicable rules.

Related Person Transactions

The Board adopted written policies and procedures relating to the approval or ratification of each “Related Person Transaction.” Under the policies and procedures, the Nomination and Governance Committee (or any other committee comprised of independent directors designated by the Board) reviews the relevant facts of all proposed Related Person Transactions and either approves, disapproves or ratifies the entry into a particular Related Person Transaction, by taking into account, among other factors it deems appropriate:

 

  (i)

the commercial reasonableness of the transaction;

 

  (ii)

the materiality of the Related Person’s direct or indirect interest in the transaction;

 

  (iii)

whether the transaction may involve a conflict of interest, or the appearance of one;

 

  (iv)

whether the transaction was in the ordinary course of business; and

 

  (v)

the impact of the transaction on the Related Person’s independence under the Corporate Governance Guidelines and applicable regulatory and listing standards.

No director may participate in any discussion or approval of a Related Person Transaction for which he/she or any of his/her immediate family members is the Related Person. Related Person Transactions are approved or ratified only if they are determined to be in the best interests of DuPont and its stockholders.

If a Related Person Transaction that has not been previously approved or previously ratified is discovered, the Related Person Transaction will be presented to the Nomination and Governance Committee for ratification. If the Nomination and Corporate Committee does not ratify the Related Person Transaction, then the Company either ensures all appropriate disclosures regarding the transaction are made or, if appropriate, takes all reasonable actions to attempt to terminate the Company’s participation in the transaction.

Under DuPont’s policies and procedures, a “Related Person Transaction” is generally any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships in which:

 

  (i)

DuPont was, is or will be a participant;

 

  (ii)

the aggregate amount involved exceeds $120,000 in any fiscal year; and

 

  (iii)

any Related Person had, has or will have a direct or indirect material interest.

A “Related Person” is generally any person who is, or at any time since the beginning of DuPont’s last fiscal year was:

 

  (i)

a director or an executive officer of DuPont or a nominee to become a director of DuPont;

 

  (ii)

any person who is known to be the beneficial owner of more than 5% of any class of DuPont’s outstanding common stock; or

 

  (iii)

any immediate family member of any of the persons mentioned above.

Certain Relationships and Related Transactions

DuPont and its subsidiaries purchase products and services from and/or sell products and services to companies of which certain of the directors and executive officers of DuPont, or their immediate family members, are employees. The Nomination and Governance Committee and the Board have reviewed such transactions and relationships and do not consider the amounts involved in such transactions material. Such purchases from and sales to each

 

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company involve less than either $1,000,000 or 2% of the consolidated gross revenues of each of the purchaser and the seller, and all such transactions are in the ordinary course of business. Some such transactions are continuing, and it is anticipated that similar transactions will occur from time to time.

Agreements with Dow and Corteva

In connection with the Dow Spin-off and the Corteva Spin-off, we entered into certain agreements to effect the separations, provide for the allocation of assets, employees, liabilities and obligations (including investments, property and employee benefits and tax-related assets and liabilities) among the Company, Dow, and Corteva, and provide a framework for our relationship with Dow and Corteva following the Distributions. Descriptions of these agreements are incorporated by reference to Item 1.01 of the Company’s Current Reports on Form 8-K filed with the SEC on April 2, 2019 and June 3, 2019. All descriptions therein and below are qualified in their entirety by the full text of such final, executed agreements filed therewith.

Separation and Distribution Agreement

The Company entered into a Separation and Distribution Agreement, effective as of April 1, 2019, with Dow and Corteva (collectively with the Company, the “Parties”) that sets forth, among other things, the agreements among the Parties regarding the principal transactions necessary to effect the distributions. It also sets forth other agreements that govern certain aspects of the Parties’ ongoing relationships after the completion of the distributions.

Tax Matters Agreement

The Parties entered into a Tax Matters Agreement, effective as of April 1, 2019, as amended on June 1, 2019, that governs their respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes.

Employee Matters Agreement

The Parties entered into an Employee Matters Agreement, effective as of April 1, 2019. The Employee Matters Agreement identifies employees and employee-related liabilities (and attributable assets) to be allocated (either retained, transferred and accepted, or assigned and assumed, as applicable) to the Parties as part of the Distributions and describes when and how the relevant transfers and assignments would occur.

Intellectual Property Cross-License Agreements

The Company entered into an Intellectual Property Cross-License Agreement with Dow, effective as of April 1, 2019 (the “DowDuPont-Dow IP Cross-License Agreement”). In addition, Dow and Corteva entered into an Intellectual Property Cross-License Agreement, effective as of April 1, 2019 (the “Dow-Corteva IP Cross-License Agreement”). The Intellectual Property Cross-License Agreements set forth the terms and conditions under which the applicable Parties may use in their respective businesses, following each of the Distributions, certain know-how (including trade secrets), copyrights, and software, and certain patents and standards, allocated to another Party pursuant to the Separation and Distribution Agreement.

The Company entered into an Intellectual Property Cross-License Agreement with Corteva, effective as of June 1, 2019 (the “Dupont-Corteva IP Cross-License Agreement”). The Dupont-Corteva IP Cross-License Agreement sets forth the terms and conditions under which the applicable parties may use in their respective businesses, following the Corteva Spin-off, certain know-how (including trade secrets), copyrights, and software, and certain patents and standards, allocated to another Party pursuant to the Separation and Distribution Agreement.

Letter Agreement

The Company entered into a letter agreement with Corteva effective as of June 1, 2019 (the “Letter Agreement”). The Letter Agreement sets forth certain additional terms and conditions related to the Corteva Spin-off that are

 

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effective on the Company and Corteva, including certain limitations on each party’s ability to transfer certain businesses and assets to third parties without assigning certain of such party’s indemnification obligations under the Separation Agreement to the other party to the transferee of such businesses and assets or meeting certain other alternative conditions.

Other Agreements

The Parties entered into several other licensing, services, support, software, supply and lease agreements in connection with the Dow Spin-off and the Corteva Spin-off.

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers and persons who own more than 10% of a registered class of the Company’s equity securities (“Reporting Persons”) to file with the SEC reports on Forms 3, 4 and 5 concerning their ownership of and transactions in the common stock and other equity securities of the Company, generally within two business days of a reportable transaction. As a practical matter, the Company seeks to assist its directors and executives by monitoring transactions and completing and filing reports on their behalf.

Based solely upon a review of SEC filings, all Reporting Persons complied with these reporting requirements during 2019, except for (i) a Form 4 for Lamberto Andreotti which was filed delinquently to reflect shares acquired and disposed of by his investment manager in a managed account without his knowledge and (ii) an amended Form 3 for each of Jacqueline K. Barton and Richard K. Davis, reflecting additional shares of DowDuPont stock not previously reported.

Sustainability Initiatives

A Purpose-Driven Company

Our purpose — to empower the world with the essential innovations to thrive — describes how we use our passion and proven expertise in science and innovation to create sustainable solutions for the complex challenges facing our world. Over the course of DuPont’s history, we have proven repeatedly that the most valuable and enduring business outcomes are the ones that are beneficial to society and keep the planet thriving. The Board believes that a continued focus on sustainability will help the Company deliver long-term stockholder value.

Guided by Our Core Values

Our core values reflect the longstanding commitments of our heritage companies, demonstrate our steadfast commitment to our people and the planet, and exemplify the way we operate.

 

LOGO

 

  

LOGO

 

  

LOGO

 

  

LOGO

 

Safety and health

        

 

  

Respect for people

        

 

  

Highest ethical behavior

        

 

  

Protecting the planet

        

 

We’re committed to protecting the safety and health of our employees, our contractors, our customers, and the people in the communities where we operate.    We treat our employees and all our partners with professionalism, dignity, and respect, fostering and environment where people can contribute, innovate, and excel.    We conduct ourselves in accordance with the highest ethical standards, and in compliance with all applicable laws, always striving to be a respected corporate citizen worldwide.    We find science-enabled, sustainable solutions for our customers, always managing our businesses to protect the environment and preserve the earth’s natural resources-for today and for future generations.

 

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Our Commitment to Sustainability

As a founding member of the World Business Council for Sustainable Development, DuPont has been a sustainability leader for decades and is committed to using a science-based approach to develop our innovations and achieving our goals. It is how we contribute to solving the world’s biggest challenges.

DuPont 2030 Sustainability Goals

In October 2019, DuPont announced its fifth-generation sustainability strategy — nine ambitious priorities that reflect our best opportunity to make a positive impact in the world. Over the course of the next decade, we pledge to work earnestly to make progress against these ambitions which we believe will have a meaningful impact on the sustainability of our business, our communities and our planet.

 

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LOGO     

    

 

    

 
  

 

Delivering solutions for global challenges

 

        Align 100% of the DuPont innovation portfolio to meaningfully advance the UN Sustainable Development Goals and create value for our customers
        
        
LOGO         
  

 

Enabling a circular economy

 

        Integrate circular economy principles into our business models considering lifecycle impacts in the markets we serve
        
        
LOGO         
  

 

Innovating safer by design

 

        Design 100% of our products and processes using sustainability criteria including the principles of green chemistry
        
        
LOGO         
  

Acting on climate

 

        Reduce Green House Gas (GHGs) emissions 30% including sourcing 60% of electricity from renewable energy
   
       Deliver carbon neutral operations by 2050
        
        
LOGO          Implement holistic water strategies across all facilities
  

 

Leading water stewardship

 

       

 

Enable millions of people access to clean water by advancing water technology and enacting strategic partnerships

      
        
LOGO         
   Delivering world-class health & safety performance         Further our commitment to zero injuries, occupational illnesses and incidents
        
        
LOGO         
  

 

Accelerating diversity & inclusion

 

        Become one of the world’s most inclusive companies, with diversity well ahead of industry benchmarks
        
        
LOGO         
  

 

Cultivating well-being & fulfillment

 

        Create a workplace where employees report high levels of well-being and fulfillment
        
        
LOGO         
  

 

Building thriving communities

 

        Improve over 100 million lives through targeted social impact programs
        

 

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CORPORATE GOVERNANCE (continued)

 

 

Sustainability Governance

Each DuPont business has a dedicated sustainability leader responsible for overseeing business and product-level sustainability efforts. These business sustainability leaders are part of a cross-business, cross-functional Sustainability Leadership Council, chaired by the VP of Corporate Sustainability. Executive responsibility for sustainability performance sits with the Chief Technology & Sustainability Officer (CTSO). The CTSO role was created specifically for DuPont to capitalize on the intrinsic link between sustainability and innovation in our operating model.

To ensure robust governance, the CTSO reports directly to the CEO and routinely engages the EHS&S Committee of the Board on matters of sustainability, product stewardship and community impact.

Communicating Our Progress

We will publish our progress against our goals in our annual sustainability report, available at www.dupont.com/sustainability. DuPont’s positions on Environmental, Social and Governance (ESG) topics such as Product Safety and Transparency, Climate Change, Human Rights, PFAS, and Environment, Health & Safety can be found at www.dupont.com/position-statements.html.

Human Capital Management

The Board understands that human capital management, including diversity and inclusion initiatives, are key to the Company’s success. Our employees drive innovation, and we rely on their talent to help the Company achieve its short and long-term objectives. The Company is an equal opportunity employer, and the Board is committed to making employment decisions without regard to race, color, religion, national or ethnic origin, sex, sexual orientation, gender identity or expression, age, disability, protected veteran status or other characteristics protected by law.

Our Board, through the Compensation Committee, prioritizes attraction and retention of employee talent. The Company seeks to attract and retain employees by offering competitive compensation and benefits structures, rewarding work, and opportunities for advancement. The Board regularly assesses talent within the Company, promotes accountability at all levels, and seeks to help management establish competitive compensation policies with the goal of empowering our employees and preserving job satisfaction.

 

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AGENDA ITEM 1: ELECTION OF DIRECTORS

Board Composition

The Board currently consists of twelve members, with Mr. Breen serving as Executive Chair and Chief Executive Officer and Mr. Cutler serving as Lead Independent Director.

Recommendations and Nominations for Director

In accordance with the recommendation of the Nomination and Governance Committee, the Board has nominated the individuals listed in the following table for election as directors, to serve for a one-year term that expires at the Annual Meeting in 2021 or until their successors are elected and qualified.

 

  (As of the date of the Proxy Statement)

  Name

  Age

  Current Position

  Independent  

Audit

Committee

  

Nomination
and

Governance

Committee

  

People and
Compensation

Committee

  Environment,
Health,
Safety &
Sustainability
Committee
  

Other

Current

Public

Boards

    

  Amy G. Brady

                

Age 53

Chief Information Officer & Executive Vice

President, KeyCorp

  X   X                 X     

  Edward D. Breen

                

Age 64

Executive Chair and Chief Executive

Officer, DuPont de Nemours, Inc.

                       2*  

  Ruby R. Chandy

                

Age 58

Former President, Industrial Division

Pall Corporation

  X   X                 CH            2  

  Franklin K. Clyburn, Jr.

                

Age 55

Executive Vice President, Chief

Commercial Officer, Merck

  X      X    X       

  Terrence R. Curtin

                

Age 51

Chief Executive Officer,

TE Connectivity

  X   X    X                 1  

  Alexander M. Cutler

                

Age 68

Retired Chair and Chief Executive Officer,

Eaton

  X      CH    X              1  

  Eleuthère I. du Pont

                

Age 53

President, Longwood Foundation

  X   X    X                 1  

  Rajiv L. Gupta

                

Age 74

Chairman of Aptiv, PLC

  X         CH           X            3  

  Luther C. Kissam

                

Age 55

Chair, President & Chief Executive Officer,

Albemarle Corp.

  X   X    X                 1  

  Frederick M. Lowery

                

Age 49

Senior Vice President, Thermo Fisher,

President Life Sciences and Laboratory

Products Groups

  X         X           X     

  Raymond J. Milchovich

                

Age 70

Former Chair and Chief Executive Officer,

Foster Wheeler AG

  X         X           X     

  Steven M. Sterin

                

Age 48

Former Executive Vice President & Chief

Financial Officer, Andeavor

  X   CH                     X            1    

CH = Chair

* Mr. Breen currently serves as a director of Comcast Corporation and Corteva. Mr. Breen will not stand for re-election to the Corteva board of directors and his term as a director of Corteva will expire immediately following Corteva’s annual meeting of stockholders which is expected to occur on April 28, 2020.

 

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The Board unanimously recommends a vote FOR the election of ALL of these nominees as directors.

The Company’s Bylaws prescribe the voting standard for election of directors as a majority of the votes cast in an uncontested election, such as this one, where the number of nominees does not exceed the number of directors to be elected. Under the Corporate Governance Guidelines, if a nominee who already serves as a director is not elected, that nominee shall offer to tender his or her resignation to the Board. The Nomination and Governance Committee will then recommend to the Board whether to accept or reject the resignation, or whether other action should be taken. Within ninety days of the certification of election results, the Board will publicly disclose its decision regarding whether to accept or reject the resignation. As explained on the accompanying proxy card or voting information, it is the intention of the persons named as proxies to vote executed proxies FOR the candidates nominated by the Board unless contrary voting instructions are provided. If something unanticipated should occur prior to the 2020 Meeting making it impossible for one or more of the candidates to serve as a director, votes will be cast in the best judgment of the persons authorized as proxies.

The NYSE rules do not permit brokers with discretionary authority to vote in the election of directors. Therefore, if you hold your shares beneficially and do not provide voting instructions to your bank or broker, your bank or broker will abstain from voting on your behalf and your shares will not be voted in the election of directors. We urge you to promptly provide voting instructions to your broker to ensure that your shares are voted on this matter. Please follow the instructions set forth in the voting information provided by your bank or broker.

 

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DIRECTOR NOMINEES

Information in the biographies summarizes key qualifications and diversity attributes as they apply to the individual directors to support the conclusion that these individuals are highly qualified to serve on the Board. The information is current as of the date of this Proxy Statement. Each nominee has consented to serve if elected.

 

 

      AMY G. BRADY

 

 

Executive Vice President and Chief Information Officer, KeyCorp

 

 

        LOGO

       Age 53

 

Ms. Brady is Chief Information Officer (CIO), Executive Vice President at KeyCorp, a bank-based financial services company. In this role, Ms. Brady leads the company’s shared services for technology, operations, data, client and account servicing, security services (including cybersecurity), and procurement. Prior to joining KeyCorp in 2012, Ms. Brady spent 25 years with Bank of America, including as CIO, Enterprise Technology and Operations, where she was responsible for technology and operations delivery for critical enterprise functions including Finance, Risk, Human Resources, Marketing, Legal and Audit. Ms. Brady joined the DuPont Board of Directors in October 2019. Ms. Brady was recommended for nomination to our Board by one of our non-employee directors.

 

 

Skills and Expertise

Ms. Brady’s technology, operations and cybersecurity expertise is a strong asset to the Board. Ms. Brady also has extensive management experience.

 

 

 

      EDWARD D. BREEN

 

 

Executive Chair and Chief Executive Officer, DuPont de Nemours, Inc.

 

 

        LOGO

 

       Age 64

 

Mr. Breen has served as the Executive Chair of the Board of Directors of DuPont since June 1, 2019 and as Chief Executive Officer since February 18, 2020. Prior to his current role, Mr. Breen served as the Chief Executive Officer of DowDuPont from September 1, 2017 to May 31, 2019. Mr. Breen was named Interim Chairman of the Historical EID Board and Chief Executive Officer on October 16, 2015, and assumed those roles permanently on November 9, 2015. He served as Chairman, from July 2002 to March 2016, and Chief Executive Officer, from July 2002 to September 2012, of Tyco International, plc, a leading global provider of security products and services, fire detection and suppression products and services and life safety products. Prior to joining Tyco, Mr. Breen held senior management positions at Motorola, including as President and Chief Operating Officer, and General Instrument Corporation, including as Chairman, President and Chief Executive Officer. Mr. Breen is a director of Comcast Corporation (since 2014 and 2005 to 2011). Mr. Breen has also served as a director of Corteva since June 1, 2019 but will not stand for re-election in 2020. Mr. Breen is a member of the Advisory Board of New Mountain Capital LLC, a private equity firm. Mr. Breen served as a director of Historical EID from February 2015 to September 2017, a director of DowDuPont from September 2017 to June 2019, and a director of DuPont since June 2019.

 

 

Skills and Expertise

Mr. Breen’s experience leading numerous global companies makes him well suited to lead DuPont during this transformative time and to help enhance the Board’s ability to consider, evaluate and maintain oversight over business strategies and risk management efforts.

 

 

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AGENDA ITEM 1: ELECTION OF DIRECTORS (continued)

 

 

 

      RUBY R. CHANDY

 

 

Former President of the Industrial Division of Pall Corporation

 

 

        LOGO

       Age 58

 

Ms. Chandy was the President of the Industrial Division of Pall Corporation, a leading supplier of filtration, separation, and purification technologies, from April 2012 to November 2015. Prior to her time at Pall, Ms. Chandy held leadership positions with several major, global companies including The Dow Chemical Company, Rohm and Haas Corporation, Thermo Fisher Scientific Corporation and Boston Scientific Corporation. Ms. Chandy currently serves on the boards of Ametek Inc. and Flowserve Corporation. She also sits on the Executive Advisory Board of Gryphon Investors, a private equity investment firm and is an executive board member of MIT Sloan. Ms. Chandy joined the Specialty Products Advisory Committee in April 2018 and served as an ex-officio member of the DowDuPont Board from April 2018 to June 2019. Ms. Chandy joined the DuPont Board of Directors in June 2019.

 

 

Skills and Expertise

Ms. Chandy has experience in industrial, medical, life science, specialty materials and microelectronics companies. She is a proven executive with experience in international growth and innovation. Her financial, management, environmental and global expertise brings value to the Board.

 

 

 

      FRANKLIN K. CLYBURN, JR.

 

 

Executive Vice President and Chief Commercial Officer, Merck

 

 

        LOGO

       Age 55

 

Mr. Clyburn has served as the Executive Vice President and Chief Commercial Officer of Merck since 2019. Mr. Clyburn also serves as a member of Merck’s Executive Committee. In his roles at Merck, a publicly traded global pharmaceutical company, Mr. Clyburn is responsible for all operations and P&L across the human health commercial portfolio globally. He previously held various senior leadership positions within the company, most recently serving as President of Global Oncology from 2013 to 2018. He joined Merck in 2008 following eight years as Vice President of various business units at Sanofi-Aventis S. A. (now Sanofi). Earlier in his career, Mr. Clyburn served in a wide range of commercial roles of increasing responsibility at Hoechst Marion Roussel Inc. (now part of Sanofi) from 1994 to 2000. Mr. Clyburn serves as a member of the Executive Leadership Council and is on the board of Trustees of Thomas Edison State University. Mr. Clyburn joined the DuPont Board of Directors in June 2019.

 

 

Skills and Expertise

Mr. Clyburn’s tenure at Merck has provided him with vast experience in research and development operations, the regulatory environment, and marketing and sales. He is globally focused and has great depth in sales and marketing of complex, science-based products. Mr. Clyburn also has extensive management experience.

 

 

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AGENDA ITEM 1: ELECTION OF DIRECTORS (continued)

 

 

 

      TERRENCE R. CURTIN

 

 

Chief Executive Officer and Board Member, TE Connectivity

 

 

        LOGO

       Age 51

 

Mr. Curtin assumed the role of CEO at TE Connectivity, a global technology leader in connectivity and sensor solutions, in March 2017. Prior to the CEO role, Mr. Curtin served as TE’s President, where he was responsible for all of the company’s businesses and mergers and acquisitions activities. Mr. Curtin previously led TE’s Industrial Solutions business segment and also served as TE’s Chief Financial Officer. Prior to his time with TE Connectivity, Mr. Curtin spent eleven years at Arthur Andersen LLP in positions of increasing responsibility. Mr. Curtin has served on the board of directors of TE Connectivity since March 2016. He is also a member of the board of directors of the US-China Business Council. Mr. Curtin joined the DuPont Board of Directors in June 2019.

 

 

Skills and Expertise

Mr. Curtin’s experience as the Chief Executive Officer of a global technology company provides him with expertise as a global-minded leader with strong corporate governance skills, M&A experience and technology. He also brings a depth of experience in finance and accounting.

 

 

 

      ALEXANDER M. CUTLER

 

 

Former Chairman and Chief Executive Officer, Eaton

 

 

        LOGO

       Age 68

 

Mr. Cutler served as the Chairman and Chief Executive Officer of Eaton, a global, diversified industrial manufacturer, from 2000 to 2016. Mr. Cutler formerly served as Eaton’s President and Chief Operating Officer, Executive Vice President and Chief Operating Officer-Controls and Executive Vice President-Operations. He serves on the boards of KeyCorp, United Way Services of Greater Cleveland, and the Musical Arts Association. Mr. Cutler served as a director of Historical EID from 2008 until September 2017, he served as a director of DowDuPont from September 2017 to June 2019, and joined the DuPont Board of Directors in June 2019.

 

Skills and Expertise

Mr. Cutler has a wealth of global business management, finance, investor relations, marketing and supply chain and logistics experience as former Chairman and Chief Executive Officer of Eaton. As Lead Independent Director and Chair of the Nomination and Governance Committee, he provides the Board with important insights in the areas of corporate governance and government relations based on his past position as Chair of The Business Roundtable Corporate Governance Committee as well as his various board positions.

 

 

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AGENDA ITEM 1: ELECTION OF DIRECTORS (continued)

 

 

 

      ELEUTHÈRE I. DU PONT

 

 

President, Longwood Foundation

 

 

        LOGO

       Age 53

 

Mr. du Pont has served as President of the Longwood Foundation, a private foundation principally supporting charitable organizations, since 2008. He previously served as senior vice president, operations and chief financial officer of drugstore.com from 2007 to 2008. Prior to that time, Mr. du Pont served as president and chief financial officer of Wawa, Inc. Mr. du Pont serves on the boards of WSFS Financial Corporation and Burris Logistics. Mr. du Pont served on the Historical EID board of directors from 2006 until the effective date of the Merger Transaction. In September 2017, Mr. du Pont joined the Specialty Products Advisory Committee and served as an ex-officio member of the DowDuPont Board until June 2019. Mr. du Pont joined the DuPont Board of Directors in June 2019.

 

Skills and Expertise

From his experiences as president, chief financial officer and corporate director, Mr. du Pont brings to the Board expertise on corporate governance, accounting, finance, human resources, information technology, investment management, investor relations and procurement. He also brings a unique perspective from his roles leading safety, supply chain and operations.

 

 

 

      RAJIV L. GUPTA

 

 

Chairman of Aptiv, PLC

 

 

        LOGO

       Age 74

 

Mr. Gupta has served as Chairman of Aptiv, a global technology company that develops safer, greener and more connected solutions enabling the future of mobility, since March of 2015. Prior to Aptiv, Mr. Gupta spent the majority of his career at Rohm and Haas. He served as its Chairman and Chief Executive Officer from 1999 to 2009. He joined Rohm and Haas in 1971 and held numerous leadership roles throughout his tenure. Mr. Gupta also serves on the board of directors of Arconic Inc. and Avantor Inc., where he is also the Chairman of the board of directors. Mr. Gupta is a Senior Advisor to New Mountain Capital LLC, a private equity firm. Mr. Gupta is a past chairman of the American Chemistry Council and the Society of Chemical Industry, America Section. Mr. Gupta joined the Specialty Products Advisory Committee in June 2018 and served as an ex-officio member of the DowDuPont Board from June 2018 to June 2019. Mr. Gupta joined the DuPont Board of Directors in June 2019.

 

Skills and Expertise

Mr. Gupta’s professional experience, including as Chairman and CEO of a global public company and other board positions, enables him to contribute his expertise in corporate leadership, public company governance, strategic analysis, operations, and executive compensation matters.

 

 

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AGENDA ITEM 1: ELECTION OF DIRECTORS (continued)

 

 

 

      LUTHER C. KISSAM

 

 

Chair, President and Chief Executive Officer, Albemarle Corporation

 

 

        LOGO

       Age 55

 

Mr. Kissam was elected Chief Executive Officer of Albemarle Corporation, a global specialty chemicals company with leading positions in lithium, bromine and refining catalysts, effective September 2011. He was elected to Albermarle’s board of directors in 2011 and named Chairman of the board in 2016. Mr. Kissam joined Albermarle in 2003 as Vice President, General Counsel and Corporate Secretary and served as Senior Vice President, Manufacturing and Law, and Corporate Secretary from January 2008 until his promotion to President in March 2010. Prior to joining Albermarle, Mr. Kissam served as President, General Counsel and Secretary of Merisant company, a manufacturer of artificial sweeteners. Mr. Kissam is a current director of the Citadel Foundation, serves as a director for the Albemarle Foundation, and serves on the board of the Charlotte Sports Foundation. Mr. Kissam joined the Specialty Products Advisory Committee in April 2018 and served as an ex-officio member of the DowDuPont Board from April 2018 to June 2019. Mr. Kissam joined the DuPont Board of Directors in June 2019.

 

 

Skills and Expertise

As the CEO of a global company, Mr. Kissam has developed extensive knowledge in the areas of leadership, global business, corporate finance, safety, risk oversight, mergers and acquisitions, management and corporate governance.

 

 

 

      FREDERICK M. LOWERY

 

 

Senior Vice President and President, Life Sciences Solutions and Laboratory Products, Thermo Fisher Scientific Inc.

 

 

        LOGO

       Age 49

 

Mr. Lowery has served as Senior Vice President and President, Life Sciences Solutions and Laboratory Products of Thermo Fisher Scientific Inc., a publicly traded provider of products and services for life sciences, healthcare and applied markets since 2017. In his role, Mr. Lowery leads the BioProduction, Laboratory Products and Laboratory Chemicals businesses, as well as several functions within Life Sciences Solutions. Since joining Thermo Fisher in 2005, he has held a number of senior leadership positions across businesses. Prior to his time at Thermo Fisher, Mr. Lowery was with Maytag Corporation from 1999 to 2005 and began his career as an engineer at General Motors Company. Mr. Lowery is a member of the Boston Renaissance Charter Public School Board of Trustees and a member of the Tennessee Tech University Foundation Board. Mr. Lowery joined the DuPont Board of Directors in June 2019.

 

 

Skills and Expertise

With his engineering and science backgrounds, Mr. Lowery brings science and technology perspective combined with senior management capabilities to the Board. Mr. Lowery has a wealth of global experience and has developed operating teams, launched innovative new products and acquired businesses. Additionally, he brings strong manufacturing knowledge and experience.

 

 

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AGENDA ITEM 1: ELECTION OF DIRECTORS (continued)

 

 

 

      RAYMOND J. MILCHOVICH

 

 

Former Chairman and Chief Executive Officer, Foster Wheeler AG

 

 

        LOGO

       Age 70

 

Mr. Milchovich served as Chief Executive Officer from 2001 to 2010 and Non-Executive Chairman of the Board and Consultant from 2010 to November 2011 of Foster Wheeler AG, a company that engineered and constructed facilities for oil and gas, liquid natural gas, refining, chemical, pharmaceutical and power industries. He also served as a director of Nucor Corporation from 2002 to 2007 and 2012 to May 2017 and Lead Director from September 2013 to February 2017. Mr. Milchovich served as a director of Historical Dow from 2015 until the effective date of the Merger Transaction when he became a director of DowDuPont. Mr. Milchovich resigned from the DowDuPont board of directors as of June 30, 2018, at which time he joined the Specialty Products Advisory Committee and then served as an ex-officio member of the DowDuPont board of directors. Mr. Milchovich joined the DuPont Board of Directors in June 2019.

 

 

Skills and Expertise

Mr. Milchovich brings global business and leadership experience as former Lead Director of Nucor Corporation and former Chief Executive Officer of Foster Wheeler AG. He also possesses finance and accounting expertise including experience with, and direct involvement in and supervision of, the preparation of financial statements and risk management. His additional public company board experience provides additional corporate governance and compensation experience and financial expertise.

 

 

 

      STEVEN M. STERIN

 

 

Former Executive Vice President and Chief Financial Officer, Andeavor

 

 

        LOGO

       Age 48

 

Mr. Sterin served as an executive with Andeavor from 2014 until the merger of Andeavor with Marathon Petroleum Company in October 2018. He also served as President, Chief Financial Officer and a member of the board of directors for Andeavor Logistics GP, LLC from 2014 to 2018. From 2007 to 2014, Mr. Sterin was the Senior Vice President and Chief Financial Officer of Celanese Corporation, a global technology and specialty material company. He previously served as Corporate Controller and Principal Accounting Officer of Celanese. Mr. Sterin also spent six years with Reichhold, Inc., a global chemical company, in a variety of financial positions, including director of tax and treasury in the Netherlands, Global Treasurer and Vice President of Finance. Mr. Sterin’s career started with Price Waterhouse. Mr. Sterin currently serves as a Senior External Advisor to McKinsey & Company. He has served on the board of directors of Kosmos Energy since July 2019. Mr. Sterin joined the Specialty Products Advisory Committee in December 2017 and served as an ex-officio member of the DowDuPont Board until June 2019. Mr. Sterin joined the DuPont Board of Directors in June 2019.

 

 

Skills and Expertise

Mr. Sterin has over 10 years of large public company CFO experience and has led financial functions including investor relations, business planning and analysis, capital markets and treasury, accounting and controlling, customer credit, internal audit, enterprise risk management, and tax. Mr. Sterin also has experience with information technology and cyber security services.

 

 

 

 

 

 

 

 

AGENDA ITEM 1: ELECTION OF DIRECTORS

The Board of Directors recommends that you vote FOR all 12 director nominees.

 

 

 

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DIRECTOR COMPENSATION

DuPont compares its non-employee director compensation programs, designs and compensation elements to the same peer group used for executive compensation, as described in the “Peer Group and Benchmarking” section of the Compensation Discussion and Analysis. DuPont targets the median compensation of the peer group for all director compensation elements. The following tables provide information concerning the compensation provided to DuPont’s non-employee directors in 2019. For a description of compensation paid to Mr. Breen as Executive Chair, see the Compensation Discussion & Analysis and Summary Compensation Table in this Proxy Statement.

Non-Employee Directors’ Fees

2019 directors’ fees as stated below are paid only to directors who are not employees of the Company. An overview of the 2019 compensation elements for non-employee directors is below.

 

   Compensation Element

 

        

($)

 

 

  Cash Retainer

     

 

115,000

 

  Equity Retainer

     

 

170,000

 

  Total Retainer

     

 

285,000

 

     
     

 

Audit

  

 

 

 

35,000

 

 

  Annual Committee Chair Fees

      Compensation      25,000  
     

All Other

 

    

 

20,000

 

 

 

 

  Lead Independent Director Fees

 

 

    

 

  

 

 

 

 

 

50,000

 

 

 

 

 

 

Director Compensation for 2019

 

   Name    Fees Earned or
Paid in Cash ($)(a)
     Stock
Awards ($)(b)
    

Change in
Pension Value and

Non-Qualified Deferred

Compensation Earnings ($)(c)

       All Other
Compensation ($)(d)
     Total ($)  

  Lamberto Andreotti

     38,333        -        -          125        38,458  

  Ajay Banga

     28,750        -        -          -        28,750  

  Jacqueline Barton

     33,750        -        -          -        33,750  

  James A. Bell

     37,500        -        -          -        37,500  

  Amy G. Brady

     38,333        99,159        -          75        137,568  

  Robert A. Brown

     38,333        -        -          125        38,458  

  Ruby R. Chandy

     105,833        170,464        -          300        276,597  

  Franklin K. Clyburn, Jr.

     57,500        170,464        -          175        228,139  

  Terrence R. Curtin

     57,500        170,464        -          175        228,139  

  Alexander M. Cutler

     154,167        170,464        -          20,784        345,415  

  Richard Davis

     28,750        -        -          -        28,750  

  Eleuthère I. du Pont

     95,833        170,464        -          13,007        279,304  

  Jeff M. Fettig

     108,750        -        -          -        108,750  

  Rajiv L. Gupta

     108,333        170,464        -          1,157        279,954  

  Marillyn A. Hewson

     28,750        -        -          125        28,875  

  Lois D. Juliber

     46,667        -        -          125        46,792  

  Luther C. Kissam IV

     95,833        170,464        -          300        266,597  

  Frederick M. Lowery

     57,500        170,464        -          175        228,139  

  Raymond J. Milchovich

     95,833        170,464        -          300        266,597  

  Paul Polman

     28,750        -        -          -        28,750  

  James M. Ringler

     28,750        -        -          -        28,750  

  Ruth G. Shaw

     35,000        -        -          -        35,000  

  Steven M. Sterin

     113,333        170,464        -          300        284,097  

  Lee M. Thomas

     38,333        -        -          125        38,458  

  Patrick J. Ward

     50,000        -        -          125        50,125  

 

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DIRECTOR COMPENSATION (continued)

 

 

(a)

For Messrs. Banga, Bell, Davis, Fettig, Polman, and Ringler and Mses. Barton and Shaw, who no longer serve on the Board, these figures represent fees paid prior to the Dow Spin-off on April 1, 2019. For Ms. Hewson, who no longer serves on the Board, these figures represent fees paid prior to her retirement on March 31, 2019. For Messrs. Andreotti, Brown, Thomas and Ward and Ms. Juliber, who no longer serve on the Board, these figures represent fees paid prior to the Corteva Spin-off on May 31, 2019. For Messrs. Clyburn, Curtin, and Lowery, these figures represent fees paid for the period from June 1, 2019 through December 31, 2019. For Ms. Brady, these figures represent fees paid for the period from October 9, 2019 through December 31, 2019. In addition to the annual retainer, the amount in this column includes lead independent director and committee chair fees.

 

(b)

The full grant date fair value of Restricted Stock Units granted on June 3, 2019 is based on $76.10 per share with a total value of $170,464 in accordance with the same standard applied for financial accounting purposes, Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. For Ms. Brady, the full grant date fair value of Restricted Stock Units granted on October 9, 2019 is based on $64.81 per share with a total value of $99,159 in accordance with the same standard applied for financial accounting purposes, FASB ASC Topic 718.

 

(c)

Historical EID maintained a discontinued Retirement Income Plan for Non-Employee Directors. This plan was assumed by Corteva at the time of the Corteva Spin-off and no new pension plan was implemented at DuPont. No above-market earnings were accrued under the Non-Qualified Deferred Compensation plan maintained for non-employee directors.

 

(d)

Includes Historical EID and DuPont-paid accidental death and disability insurance premiums, along with Imputed income for Mr. Gupta’s spouse’s travel, and accruals made in 2019 for non-employee directors under Historical EID and DuPont’s discontinued directors’ charitable gift plans.

Non-Employee Directors Stock Grant

In June 2019, each acting non-employee director received a grant of 2,240 Restricted Stock Units (“RSUs”), with provisions limiting transfer until retirement or termination of service to the Company.

In October 2019, Ms. Brady, upon being named to the Board, received a prorated grant of 1,530 RSUs, with provisions limiting transfer until retirement or termination of service to the Company.

Non-Employee Directors’ Stock Ownership Guidelines

Equity, in the form of Restricted Stock, RSUs or Deferred Stock, is a key component of director compensation. Directors are generally required to hold all equity awards until retirement. This requirement applies with respect to equity awards granted since 2011 in the case of Messrs. Cutler and du Pont, who were directors of Historical EID. Legacy Historical Dow directors who left the Board on March 31, 2019 were subject to a Stock Ownership Guideline rather than a mandatory holding requirement.

Non-Employee Directors Deferred Compensation Plan

Non-employee directors may choose, prior to the beginning of each year, to have all or part of their fees credited to deferred compensation accounts.

For legacy Historical Dow directors, at the election of the director, fees are deferred into one of several hypothetical investment accounts that accrue investment returns according to the account selected. Investment choices include a fund with an interest rate equal to the sum of the 60-month rolling average of ten-year U.S. Treasury Note yield plus the current five-year Historical Dow credit spread, a phantom Historical Dow stock account tracking the market value of DowDuPont common stock with market dividends paid and reinvested, as well as funds tracking the performance of several mutual funds. These funds are identical to funds offered as part of the Elective Deferral Plan for management level employees. Such deferred amounts will be paid in installments as elected by the Director at the time of deferral commencing in July following the director’s retirement or termination of service to the Company, in the following July or in July of the calendar year following the director’s 72nd birthday. If the director elects to receive payment in July following his or her 72nd birthday and if he or she remains on the Board beyond his or her 72nd birthday, payments shall start in the July following retirement or termination of service to the Company.

A director may defer all or part of the Board retainer and Committee Chair fees in cash or stock units until retirement as a director or until a specified year after retirement. Interest accrues on deferred cash payments and dividend equivalents accrue on deferred stock units. As part of the retention requirements, equity grants will be held until retirement. However, a director may defer payments beyond retirement.

Business Travel Accident Insurance for Non-Employee Directors

DuPont maintains a rider on its Business Travel Accident insurance policies covering each non-employee director, which will cover accidental death and dismemberment if the director is traveling on DuPont business.

 

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DIRECTOR COMPENSATION (continued)

 

 

Directors’ Charitable Gift Plan

In October 2008, DuPont discontinued its legacy DuPont charitable gift plan with respect to future directors. After the death of a director, DuPont donated five consecutive annual installments of up to $200,000 each to tax-exempt educational institutions or charitable organizations recommended by the director and approved by DuPont.

A director was fully vested in the plan after five years of service as a director or upon death or disability. The plan is unfunded. DuPont does not purchase insurance policies to satisfy its obligations under the plan. The directors do not receive any personal financial or tax benefit from this program because any charitable, tax-deductible donations accrue solely to the benefit of DuPont. Employee directors were able to participate in the plan if they made a required annual contribution.

Equity Compensation Plan Information

The tables below show the Equity Compensation Plan Information as of December 31, 2019.

 

     (1)      (2)      (3)  
  Plan Category   

# of securities to

be issued upon

exercise of outstanding

options, warrants, rights

    

Weighted-average exercise

price of outstanding

options, warrants, rights ($)

    

# of securities

remaining available

for future issuance

under equity

compensation plans

(excluding securities

reflected in column (1))

 

  Equity Compensation Plans Approved by

  Security Holders

     10,314,986        66.49        13,507,005  

 

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EXECUTIVE OFFICERS

The following table provides information regarding our executive officers as of March 31, 2020:

 

   Name                        Age      Position

  Edward D. Breen

     64      Executive Chair and Chief Executive Officer

  Lori D. Koch

     45      Executive Vice President and Chief Financial Officer

  Darrell Ford

     55      Senior Vice President and Chief Human Resources Officer

  Erik T. Hoover

     46      Senior Vice President and General Counsel

  Steve Larrabee

     58      Senior Vice President and Chief Information Officer

  Raj Ratnakar

     52      Senior Vice President and Chief Strategy Officer

  Matthias Heinzel

     53      President, Nutrition & Biosciences

  Jon Kemp

     44      President, Electronics & Imaging

  Rose Lee

     54      President, Safety & Construction

  Randy Stone

     53      President, Transportation & Industrial

Edward D. Breen has served as our Chief Executive Officer since February 2020 and has been Executive Chair of our Board of Directors since 2019. Mr. Breen’s biographical details are contained under “Agenda Item 1: Election of Directors”.

Lori D. Koch has served as our Executive Vice President and Chief Financial Officer since February 2020. Prior to that Ms. Koch served as the Company’s Vice President, Investor Relations and Corporate Financial Planning & Analysis since June 2019. Ms. Koch previously served as the Director of Investor Relations of Historical EID from July 2016 to May 2019; Global Finance Director of Historical EID’s Performance Materials business from November 2015 to July 2016; and the Global Finance Manager for various Historical EID businesses from April 2008 to November 2015. Ms. Koch currently serves as a director of Aceto Corporation, a leading global virtual manufacturer of life sciences materials and technology. Ms. Koch holds an M.S. in Accounting from Babson College and a B.S. in Finance and International Business from Pennsylvania State University.

Darrell Ford has served as our Senior Vice President and Chief Human Resources Officer since June 2019. From November 2018 to June 2019, Mr. Ford served as Chief Human Resources Officer to the Specialty Products Division of DowDuPont. Prior to joining DowDuPont, Mr. Ford served as the Executive Vice President and Chief Human Resources Officer of Xerox Corporation from 2015 to 2018. Mr. Ford holds an M.B.A. from Rutgers University’s Graduate School of Management, a J.D. from Rutgers University School of Law, and a B.S. in psychology from Rutgers University.

Erik T. Hoover has served as our Senior Vice President and General Counsel since June 2019. From June 2019 to October 2019, he also served as Corporate Secretary. In his previous role as General Counsel for the Specialty Products Division of DowDuPont, Mr. Hoover oversaw all legal matters for that division. From 2017 to 2019, he also served as Assistant Corporate Secretary for DowDuPont and Chief Compliance Officer for Historical EID. Prior to the Merger Transaction in 2017, Mr. Hoover was Secretary and Associate General Counsel for Historical EID. Before joining Historical EID, he was an associate at Blank Rome LLP in Philadelphia. Mr. Hoover earned a B.S. in accounting from Lehigh University and a J.D. degree from Rutgers School of Law at Camden.

Steve Larrabee has served as our Senior Vice President and Chief Information Officer since June 2019. Prior to that role, Mr. Larrabee served as Chief Information Officer for the Specialty Products Division of DowDuPont from June 2017 to June 2019. From March 2016 to May 2017, Mr. Larrabee consulted through At Last Business Solutions. Mr. Larrabee held the role of CIO for Mars, Incorporated from 2009, extending it in 2011 to become the President, Mars Global Services until 2016. Mr. Larrabee earned an MBA from Seton Hall University and a B.S. in Computer Science & Applied Mathematics from the State University of New York at Albany.

Raj Ratnakar has served as our Senior Vice President and Chief Strategy Officer since June 2019. Mr. Ratnakar joined DuPont in May 2019 immediately prior to the Corteva Spin-off. Prior to joining DuPont, Mr. Ratnakar served as Chief Strategy Officer for Fortive, a publicly traded spin-off of Danaher from 2015 to June 2019. Mr. Ratnakar’s previous experience also includes senior strategy roles at both Danaher and TE Connectivity. He holds an M.B.A. from The Wharton School, University of Pennsylvania, an M.S. in Mechanical Engineering from the University of Maryland and a B. Eng., Manufacturing Engineering from Bangalore University.

 

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EXECUTIVE OFFICERS (continued)

 

 

Matthias Heinzel has served as the President of Nutrition and Biosciences since June 2019. Mr. Heinzel previously served as the President of the Nutrition and Health business. Since joining Historical EID in 2003, Mr. Heinzel has held a variety of roles within the organization. Prior to joining Historical EID, Mr. Heinzel was a Senior Management Consultant with McKinsey where he served international clients in the technology, telecommunications and process industry. He then held several leadership roles in marketing, strategy and business development in the telecommunications industry. Mr. Heinzel holds a master degree in electrical engineering and business administration (Dipl.-Wirtschaftsing.) and a Ph.D. in business administration.

Jon Kemp has served as President, Non-Core segment since June 2019. Mr. Kemp was also named President, Electronics & Imaging in August 2019. Prior to the President role, he served as Head of Strategy for the Specialty Products Division of DowDuPont from October 2017 to June 2019. Mr. Kemp served as President, DuPont Electronics & Communications from 2015 through 2017. Prior to that, Mr. Kemp held various roles at Historical EID. Prior to joining Historical EID, he was an economist and business development manager for the Utah Department of Community and Economic Development. Mr. Kemp earned a B.A. in economics from the University of Utah and a M.B.A. from the Darden School of Business at the University of Virginia.

Rose Lee has served as President, Safety & Construction since June 2019. Prior to such role, Ms. Lee served as President, Safety & Construction for the Specialty Products Division of DowDuPont from September 2017 to June 2019. Ms. Lee joined Historical EID in January 2015 as Global Business Director, DuPont Kevlar® and Aramid Intermediates. In 2016, she assumed the role of President, DuPont Protection Solutions. Prior to joining Historical EID, Ms. Lee served in a series of roles with increasing responsibility at Saint-Gobain, Booz-Allen consultancy and United Technologies. Ms. Lee is a board member of Crown Holdings, Inc. Ms. Lee earned a B.S. in aerospace engineering from Cornell University, a M.S. in mechanical engineering from Rensselaer Polytechnic Institute, and an M.B.A. from Massachusetts Institute of Technology.

Randy Stone has served as President, Transportation and Industrial since June 2019. Prior to this role, he served as President, Transportation and Advanced Polymers for the Specialty Products Division of DowDuPont from 2017 to June 2019. From 2016 to 2017, Mr. Stone served as President, DuPont Performance Materials. Mr. Stone began his career at Historical EID in 2007, serving in progressive leadership roles for the DuPont Dow Elastomers joint venture and the DuPont Performance Elastomers business, the latter while located in Shanghai, China. Prior to joining Historical EID, Mr. Stone served as a business director at Arkema and in various commercial roles at The Dow Chemical Company. Mr. Stone earned a Bachelor’s of Science degree in economics from South Dakota State University and an M.B.A. from Lehigh University.

 

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BENEFICIAL OWNERSHIP OF COMPANY STOCK

The following table presents the beneficial ownership of DuPont’s Common Stock as of March 31, 2020, except as noted, for (i) each director of the Company, (ii) each nominee for director (iii) each of our named executive officers listed in the Summary Compensation Table, (iv) all directors and executive officers as a group, and (v) each person beneficially owning more than 5% of the outstanding shares of DuPont’s Common Stock. As of March 31, 2020, there were 733,793,781 shares of DuPont’s Common Stock outstanding.

 

  Name   

Current Shares

Beneficially Owned(a)

   

Rights to Acquire

Beneficial

Ownership of

Shares(b)

     Total     

Percent of Shares

Beneficially Owned(c)

 

  Amy G. Brady

     50.0       15,551.0        15,601.0        *  

  Edward D. Breen

     143,790.0       492,703.0        636,493.0        *  

  Ruby R. Chandy

     0.0       3,216.0        3,216.0        *  

  Franklin K. Clyburn, Jr.

     0.0       2,279.0        2,279.0        *  

  Terrence R. Curtin

     0.0       2,950.0        2,950.0        *  

  Alexander M. Cutler

     2,136.7       34,611.0        36,747.7        *  

  Jeanmarie F. Desmond

     21,126.2       35,429.0        56,555.2        *  

  C. Marc Doyle

     104,383.0       151,409.0        255,792.0        *  

  Eleuthère I. du Pont

     909.7       18,142.0        19,051.7        *  

  Rajiv L. Gupta

     12,302.0       3,030.0        15,332.0        *  

  Matthias Heinzel

     22,598.0       30,331.0        52,929.0        *  

  Luther C. Kissam

     0.0       3,216.0        3,216.0        *  

  Rose Lee

     17,904.0       47,621.0        65,525.0        *  

  Frederick M. Lowery

     0.0       3,828.0        3,828.0        *  

  Raymond J. Milchovich

     5,724.2       2,279.0        8,003.2        *  

  Raj Ratnakar

     0.0       48,404.0        48,404.0        *  

  Steven M. Sterin

     0.0       3,572.0        3,572.0        *  

  Howard I. Ungerleider

     52,327.9       59,652.0        111,979.9        *  
          

  All Directors and Executive Officers as a Group

  (21 persons)

     253,064.8       809,091.0        1,062,155.8        *  
          

  Certain Other Owners:

          

  The Vanguard Group

     60,008,218.0 (d)            8.18%  

  BlackRock, Inc.

     50,765,002.0 (e)            6.92%  

  State Street Corporation

     38,665,435.0 (f)            5.27%  

 

(a)

Except as otherwise noted and for shares held by a spouse and other members of the person’s immediate family who share a household with the named person, the named persons have or share voting and investment power over the indicated number of shares. This column also includes all shares held in a trust over which the person has or shares voting or investment power and shares, or shares held in trust for the benefit of the named party in The Dow Chemical Company Employees’ Savings Plan or the DuPont Retirement Savings Plan. Beneficial ownership of some or all of the shares listed may be disclaimed.

 

(b)

This column includes any shares that the person could acquire through May 30, 2020, by (1) exercise of an option granted by Historical Dow or Historical EID; or (2) performance shares granted by Historical Dow or Historical EID to be delivered prior to May 30, 2020. To the extent that these shares have not been issued as of the record date, they cannot be voted at the 2020 Meeting.

 

(c)

The percentage of shares beneficially owned is calculated based on the number of shares of common stock outstanding as of March 31, 2020.

 

(d)

Based on an Amendment No. 2 to Schedule 13G filed by The Vanguard Group on February 12, 2020 with the SEC reporting beneficial ownership as of December 31, 2019. The Vanguard Group has sole voting power over 1,102,203 shares, shared voting power over 202,934 shares, sole dispositive power over 58,769,695 shares and shared dispositive power over 1,238,523 shares. The Vanguard Group‘s address is 100 Vanguard Boulevard, Malvern, PA 19355.

 

(e)

Based on a Schedule 13G filed by BlackRock, Inc. on February 5, 2020 with the SEC reporting beneficial ownership as of December 31, 2019. BlackRock, Inc. has sole voting power over 43,780,738 shares, shared voting power over 0 shares, sole dispositive power over 50,765,002 shares and shared dispositive power over 0 shares. BlackRock, Inc.’s address is 55 East 52nd Street, New York, NY 10055.

 

(f)

Based on a Schedule 13G filed by State Street Corporation on February 14, 2020 with the SEC reporting beneficial ownership as of December 31, 2019. State Street Corporation has shared voting power over 27,004,812 shares and shared dispositive power over 38,658,703 shares. State Street Corporation’s address is State Street Financial Center, One Lincoln Street, Boston, MA 02111.

 

*

Less than 1% of the total shares of DuPont common stock outstanding.

 

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Table of Contents

      

 

 

COMPENSATION DISCUSSION & ANALYSIS

In the Compensation Discussion and Analysis, the details of the executive compensation programs applicable to the Named Executive Officers are described.

CD&A Table of Contents

 

     Page  

EXECUTIVE SUMMARY

     33  

2019 Performance Highlights

     34  

Named Executive Officers

     34  

Program Structure and Alignment with Core Principles

     34  

Executive Compensation Governance Practices

     34  

COMPONENTS OF EXECUTIVE COMPENSATION AND BENEFITS

     36  

2019 NEO Targeted Total Direct Compensation Summary

     36  

Pay Mix

     36  

2019 Compensation Decisions

     37  

Base Salary

     37  

Annual Incentive Compensation

     37  

Long-Term Incentive Compensation

     39  

Benefits and Perquisites

     42  

THE COMPENSATION PROCESS

     43  

Role of Company Management

     43  

Role of the Compensation Committee

     43  

Role of Independent Board Members

     43  

Role of the Independent Compensation Consultant

     43  

Peer Group and Benchmarking

     44  

OTHER CONSIDERATIONS

     45  

Consideration of Say on Pay Vote

     45  

Stock Ownership Guidelines

     45  

Anti-Hedging and Anti-Pledging Policies

     45  

Clawback Policy

     45  

Compensation and Risk Management

     45  

2019 Tax Considerations

     46  

COMPENSATION TABLES AND NARRATIVES

     47  

Summary Compensation Table

     47  

Grants of Plan-Based Awards

     50  

Outstanding Equity Awards

     51  

Option Exercises and Stock Vested

     53  

BENEFITS

     53  

Pension Benefits

     53  

Defined-Benefit Retirement Plans

     53  

Supplemental Retirement Plans

     55  

Non-Qualified Deferred Compensation

     56  

Other Retirement Benefits

     57  

Potential Payments upon Termination or Change in Control

     58  

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     60  

COMPENSATION COMMITTEE REPORT

     60  

CEO PAY RATIO

     60  

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

Defined Terms

CD&A – Compensation Discussion & Analysis

CEO – Chief Executive Officer

EPS – Earnings Per Share

GAAP – Generally Accepted Accounting Principles

IRC – U.S. Internal Revenue Code, as amended

LTI – Long-Term Incentive

NEO – Named Executive Officer

PSU – Performance Share Unit

RSU – Restricted Stock Unit

SEC – U.S. Securities & Exchange Commission

STIP – Short-Term Incentive Program

Adjusted Corporate Net Income – Net (loss) income from continuing operations available for DuPont common stockholders excluding after-tax significant items, after-tax impact of amortization expense associated with intangibles acquired as part of the Merger Transaction and the after-tax impact of non-operating pension/other post-employment benefits/(“OPEB”)/charges. The Business Units that make up the Non-Core segment will be excluded.

Adjusted Operating EBITDA – Earnings (“income from continuing operations before income taxes”) before interest, depreciation, amortization, non-operating pension / OPEB benefits / charges and foreign exchange gains (losses), adjusted to exclude significant items and earnings associated with the Non-Core business.

Adjusted EPS – Earnings per common share from continuing operations-diluted, excluding the after-tax impact of significant items, after-tax impact of amortization expense associated with intangibles acquired as part of the Merger Transaction and the after-tax impact of non-operating pension/ OPEB benefits/charges.

Pro Forma Adjusted EPS – Earnings per common share from continuing operations – diluted excluding the after-tax impact of significant items, the after-tax impact of amortization expense associated with intangibles acquired as part of the Merger Transaction, the after-tax impact of non-operating pension / OPEB benefits / charges and the after-tax impact of costs

historically allocated to the materials science and agriculture businesses that did not meet the criteria to be recorded as discontinued operations.

Adjusted ROIC – Adjusted Net Operating Profit After Tax (“NOPAT”), defined as income from continuing operations after taxes, excluding after-tax significant items, after-tax amortization expense and after-tax interest expense / (debt + equity – goodwill – intangibles). The Business Units that make up the Non-Core segment will be excluded.

Net Trade Working Capital: Accounts and Notes Receivable – Trade plus Inventory less Accounts Payable – Trade.

Operating EBITDA – Earnings (“Income from continuing operations before income taxes”) before Interest, Depreciation, Amortization, non-operating pension / OPEB benefits / charges, and foreign exchange gains / losses, adjusted to exclude significant items.

Pro forma Operating EBITDA – Earnings (i.e. pro forma income (loss) from continuing operations before income taxes) before interest, depreciation, amortization, non-operating pension / OPEB benefits / charges, and foreign exchange gains / losses, excluding the impact of costs historically allocated to the materials science and agriculture businesses that did not meet the criteria to be recorded as discontinued operations and adjusted to exclude significant items.

Organic Revenue – Net sales excluding the impacts of currency and portfolio.

Pro Forma – Prepared in accordance with Article 11 of Regulation S-X. See Appendix A for further information.

Total Shareholder Return – Total return on a company’s stock to an investor defined as the adjusted close price at the end of the performance period divided by the adjusted close price at the beginning of the performance period. Adjusted close price incorporates re-invested dividends, stock splits and new offerings. Beginning close price is based on average closing price over 20 trading days immediately prior to the first day of the performance period. Ending close price is based on average closing price over the last 20 trading days of the performance period.

See Appendix A for further information, including a reconciliation of non-GAAP measures to the most directly comparable U.S. GAAP financial measures.

 

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

EXECUTIVE SUMMARY

Effective August 31, 2017, The Dow Chemical Company and its consolidated subsidiaries (“Historical Dow”) and E. I. du Pont de Nemours and Company and its consolidated subsidiaries (“Historical EID”) completed the previously announced merger of equals transaction contemplated by the Agreement and Plan of Merger dated as of December 11, 2015, as amended on March 31, 2017 (the “Merger Transaction”). The Merger Transaction resulted in each of Historical Dow and Historical DuPont surviving as subsidiaries of DowDuPont Inc. (“DowDuPont”).

In 2019, DowDuPont separated into three independent, publicly traded companies: Corteva Inc. (“Corteva”), Dow Inc. (“Dow”), and DuPont de Nemours, Inc. (formerly known as DowDuPont Inc., “DuPont” or the “Company”). The separation of Dow was completed on April 1, 2019 (the “Dow Spin-off”) and the separation of Corteva was completed on June 1, 2019 (the “Corteva Spin-off”).

On December 15, 2019, DuPont entered into a definitive agreement for the merger of International Flavors & Fragrances Inc. (“IFF”) and DuPont’s Nutrition & Biosciences (“N&B”) business in a Reverse Morris Trust transaction (the “Proposed N&B Transaction”). The Proposed N&B Transaction is expected to close by the end of the first quarter of 2021, subject to approval by IFF stockholders and other customary closing conditions, including regulatory approvals and receipt by DuPont of an opinion of tax counsel.

In anticipation of the completion of the separation of DowDuPont into three separate publicly traded companies during 2019, the DowDuPont Board of Directors decided not to develop separate executive compensation programs at the DowDuPont level. Rather, the executive officers of DowDuPont continued to be employees of, and participants in, the compensation and benefit programs of Historical Dow and Historical EID, as applicable. Additionally, in light of the complexities associated with introducing long-term performance-based awards for a period in which the separations would occur, the DowDuPont Board of Directors determined that long-term incentive plan awards for 2019 would be made in the form of RSUs. The decision was also made that payouts under the 2019 STIP would be tied solely to the achievement of DuPont pro forma Operating EBITDA to focus executive officers on promoting the delivery of earnings in a year of significant transition.

In anticipation and following completion of the separations in 2019, the DuPont People and Compensation Committee (the “Compensation Committee”) reviewed compensation for the Company’s executive officers to ensure competitiveness with market, focus on performance and alignment with stockholder interests. As a result, the Compensation Committee made the following changes for 2019:

 

   

Certain NEOs received increases to base salary and incentive target opportunities. The Compensation Committee considered these changes appropriate after careful review of the market data and the expectations of performance for newly appointed executive officers.

   

Target annual compensation for Mr. Breen was decreased to reflect his new role as Executive Chairman.

   

Adjustments were made to outstanding equity awards to reflect the conversion into awards denominated in DuPont, Corteva, or Dow common stock.

   

The Compensation Committee strongly believes that executive pay should be performance based and aligned with stockholder interests. In August 2019, certain NEOs were granted Transformation Awards in the form of PSUs and Stock Options to align the new executive team to the achievement of key financial performance measures of Adjusted ROIC and Adjusted EBITDA, and to motivate for stock price improvement.

Building on the Company’s performance-based philosophy, the Compensation Committee approved changes to the Company’s 2020 short- and long-term incentive programs to continue to emphasize pay for performance:

 

   

The 2020 STIP will include a portfolio of metrics which the Company believes are critical indicators of performance: Adjusted EPS, Organic Revenue, Operating EBITDA, and Net Trade Working Capital. Additionally, the STIP opportunity for Business Unit Presidents will be aligned more closely to the results of their individual Business Units.

   

The 2020 Long-Term Incentive program for executives will be delivered through PSUs (weighted at 60%), Stock Options (weighted at 20%) and RSUs (weighted at 20%). The 2020 PSUs includes Adjusted ROIC

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

 

and Adjusted Corporate Net Income as equally weighted performance measures. The 2020 PSU design also incorporates relative Total Shareholder Return as a modifier of overall performance results.

2019 Performance Highlights

 

   

Full year 2019 pro forma GAAP EPS from continuing operations of $(0.74); pro forma adjusted EPS* of $3.80.

   

Full year 2019 pro forma operating EBITDA* margins up 10 bps more than offsetting 50 bps headwind from lower equity affiliate income.

   

More than $1.3 billion returned to shareholders during the second half of 2019, including $750 million of share repurchases.

   

Advanced active portfolio management strategy announcing the Proposed N&B Transaction to create a global leader in high-value ingredients and solutions in Food & Beverage, Home & Personal Care and Health & Wellness markets.

 

  *

See Appendix A for a reconciliation of non-GAAP measures to the most directly comparable U.S. GAAP financial measures.

Named Executive Officers

This CD&A discusses the compensation of the 2019 DuPont NEOs listed in the table below.

 

Named Executive

Officer

  Title

  Edward D. Breen(a)

  Executive Chairman

  C. Marc Doyle(b)

  Former Chief Executive Officer

  Jeanmarie F. Desmond(c)

  Former Chief Financial Officer

  Matthias Heinzel

  President, Nutrition and Biosciences

  Rose Lee

  President, Safety and Construction

  Raj Ratnakar(d)

  Senior Vice President, Chief Strategy Officer

  Howard I. Ungerleider(e)

  Former Chief Financial Officer

 

(a)

Mr. Breen served as Chief Executive Officer through March 31, 2019, and Chairman and Chief Executive Officer through May 31, 2019. Mr. Breen became Executive Chairman on June 1, 2019. Mr. Breen also became Chief Executive Officer of the Company on February 17, 2020.

 

(b)

Mr. Doyle became Chief Executive Officer on June 1, 2019 and left the Company on February 17, 2020.

 

(c)

Ms. Desmond became Chief Financial Officer on April 1, 2019 and left the Company on February 17, 2020.

 

(d)

Mr. Ratnakar joined the Company on May 1, 2019.

 

(e)

Mr. Ungerleider left the Company in connection with the Dow Spin-off on April 1, 2019 and became the President and CFO of Dow.

Program Structure and Alignment with Core Principles

DuPont’s executive compensation programs are designed to attract, motivate, reward and retain the high-quality executives necessary to successfully execute the strategy of the Company and to deliver both short- and long-term business results that are aligned with the stockholder interests.

The DuPont compensation programs are designed and administered to follow these core principles:

 

   

Establish a strong link between pay and performance.

   

Align executives’ interests with stockholders’ interests, particularly over the longer term.

   

Reinforce business strategies and drive long-term sustained stockholder value.

Executive Compensation Governance Practices

Compensation of the executive officers of DuPont, including that of the NEOs, is overseen by the Compensation Committee (or, in the case of both the Executive Chairman and the CEO, by the Compensation Committee and the independent members of the Board). The Board and the Compensation Committee were assisted in performance of their oversight duties by an independent compensation consultant.

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

The following table summarizes key governance characteristics related to the executive compensation programs in which the NEOs participate:

 

 

Key Executive Compensation Practices

 

   

      What We Do

 

 

         What We Don’t Do

 

   

      Active stockholder engagement

 

      Strong links between executive compensation outcomes and company financial and market performance

 

      Each component of target pay benchmarked with respect to the peer group or the general market, as applicable

 

      Carefully structured peer group with annual Compensation Committee review

 

      Significant focus on performance-based pay

 

      Stock ownership requirements of six times base salary for the CEO and Executive Chairman and three times base salary for the other NEOs

 

      100% independent Compensation Committee

 

      Clawback policy covering both cash and equity

 

      Use of executive compensation statements (“tally sheets”)

 

      Independent compensation consultant reporting to the Compensation Committee

 

 

      No single-trigger change in control agreements

 

      No option repricing, reloads, exchanges or options granted below market value without stockholder approval

 

      No excise tax gross ups

 

      No plans that encourage excess risk taking

 

      No hedging or pledging of Company’s securities

 

      No liberal share counting

 

      No excess dilution through careful monitoring of burn rate and overhang

 

      No minimum payouts under the Long-Term Incentive Plan

 

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

COMPONENTS OF EXECUTIVE COMPENSATION AND BENEFITS

Executives receive a mix of variable and fixed components of compensation which are aligned with the core principles as highlighted in the chart below:

 

Component

  

Purpose

Base Salary   

 

Provides a regular source of income for NEOs and acts as a foundation for other pay components (e.g., annual incentive targets for NEOs are expressed as a percentage of base salary).

 

   

Annual
Incentive

  

Rewards employees for achieving critical financial and operational goals.

 

   
Long-Term
Incentive
  

Aligns the interests of executives with stockholders by linking pay and performance with the goal of accelerating growth, profitability and stockholder value.

 

Aids the Company in retaining its NEOs and other key employees.

 

   

Benefits
and
Perquisites

  

Executives participate in the same benefit programs that are offered to other salaried employees.

 

  

 

Limited perquisites are provided to executives to facilitate strong performance on the job and enhanced productivity.

2019 NEO Targeted Total Direct Compensation Summary

In addition to the Summary Compensation Table, the following table is provided to aid with understanding the target annual compensation of the NEOs. The table below lists the targeted annual total direct compensation for each NEO other than Mr. Ungerleider who left the Company in connection with the Dow Spin-off on April 1, 2019. Mr. Ungerleider’s salary was paid at the 2018 level through March 31, 2019. DuPont did not make any determinations with respect to Mr. Ungerleider’s 2019 annual incentive target nor did he receive any grants in 2019 prior to the Dow Spin-off on April 1, 2019.

 

  Name    2019 Base Salary ($)    2019 Target
Annual Incentive ($)
  2019 Target
Long-Term Incentive ($)
  Targeted Total Direct
Compensation ($)

  Edward D. Breen

  

1,000,000

  

3,185,820(a)

 

9,000,000(b)

 

13,185,820

  C. Marc Doyle

  

1,200,000

  

1,800,000

 

8,000,000(b)

 

11,000,000

  Jeanmarie F. Desmond

  

700,000

  

700,000

 

2,500,000(b)

 

3,900,000

  Matthias Heinzel(c)

  

816,104

  

816,104

 

1,400,000(b)

 

3,032,208

  Rose Lee

  

625,000

  

625,000

 

1,250,000(b)

 

2,500,000

  Raj Ratnakar

  

475,000

  

332,500

 

700,000

 

1,507,500

 

(a)

Mr. Breen’s employment agreement provides that the 2019 STIP target dollar amount be maintained at the value it was when he was CEO ($3,185,820).

 

(b)

Reflects adjustments to target made subsequent to the February 2019 annual grant that the Committee made as they reviewed executive officers’ compensation in anticipation and following completion of the Distributions.

 

(c)

Mr. Heinzel is a German employee and his salary and bonus are paid in Euros. U.S. Dollar amounts in this Proxy Statement with respect to Mr. Heinzel have been converted from Euros at a rate of 1.11 Dollars to one Euro. The exchange rate used was calculated by averaging exchange rates for each day in December 2019.

Pay Mix

Executive compensation is linked strongly to the financial and operational performance of the business. On average, approximately 91% of the Executive Chairman’s and the CEO’s target annual total compensation for 2019 was at risk, while over 76% of the other NEOs’ target compensation, on average, for 2019 was at risk.

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

Executive Chairman and CEO Target Annual Total Compensation for 2019 (Average)    Other NEO Target Annual Total Compensation for 2019 (Average)

 

LOGO

  

 

LOGO

2019 Compensation Decisions

Certain NEOs received increases to base salary and incentive target opportunities. The Compensation Committee considered these changes appropriate after careful review of the market data and the expectations of performance for newly appointed executive officers.

Base Salary

Base salary is a fixed portion of compensation based primarily on an individual’s skills, job responsibilities and experience, as well as more subjective factors such as the assessment by the Compensation Committee of individual NEO performance. Base salaries for executives are benchmarked against similar jobs at other companies, and as appropriate versus the respective peer group and general industry information.

Base salaries for the NEOs as of December 31, 2019 and December 31, 2018, respectively, are shown in the table below. The decrease for Mr. Breen represents his change in role from CEO to Executive Chairman.

 

  Name   

2018

Base Salary ($)

    

2019

Base Salary ($)

     Percent/
Change in
Base Salary

  Edward D. Breen

    

 

1,930,800

      

 

1,000,000

      

 

-48

%    

  C. Marc Doyle

    

 

800,000  

      

 

1,200,000

      

 

50

%    

  Jeanmarie F. Desmond

    

 

640,000  

      

 

700,000  

      

 

9

%    

  Matthias Heinzel

    

 

732,600  

      

 

816,104  

      

 

11

%    

  Rose Lee

    

 

510,000  

      

 

625,000  

      

 

23

%    

  Raj Ratnakar

    

 

      

 

475,000  

      

 

  Howard I. Ungerleider(a)

    

 

1,110,261  

      

 

—  

      

 

 

(a)

Mr. Ungerleider left the Company in connection with the Dow Spin-off on April 1, 2019 and became the President and CFO of Dow. DuPont did not make any determinations with respect to Mr. Ungerleider’s 2019 compensation prior to his departure. Mr. Ungerleider’s salary was paid at the 2018 level through March 31, 2019.

Annual Incentive Compensation

Annual incentives are designed to reward executives for the achievement of annual financial and performance goals and are an important component of the Company’s overall compensation program. The Compensation Committee reviews the target annual cash incentive award opportunities (which are expressed as a percentage of annual base salary) for executive officers each year as part of its annual executive compensation review.

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

Annual incentive opportunity for the NEOs as of December 31, 2019 and December 31, 2018, respectively, are shown in the table below.

 

  Name    2018
Target STIP ($)
     2019
Target STIP ($)
     Percent/
Change in
Target

  Edward D. Breen(a)

    

 

3,185,820

      

 

3,185,820

      

 

0

%    

  C. Marc Doyle

    

 

800,000  

      

 

1,800,000

      

 

125

%    

  Jeanmarie F. Desmond

    

 

384,000  

      

 

700,000  

      

 

82

%    

  Matthias Heinzel

    

 

512,820  

      

 

816,104  

      

 

59

%    

  Rose Lee

    

 

357,000  

      

 

625,000  

      

 

75

%    

  Raj Ratnakar

    

 

      

 

332,500  

      

 

  Howard I. Ungerleider(b)

    

 

1,332,313

      

 

      

 

 

(a)

Mr. Breen’s employment agreement provides that 2019 STIP target dollar amount be maintained at the value it was when he was CEO ($3,185,820).

 

(b)

Mr. Ungerleider left the Company in connection with the Dow Spin-off on April 1, 2019 and became the President and CFO of Dow. DuPont did not make any determinations with respect to Mr. Ungerleider’s 2019 annual incentive target prior to his departure.

Payouts under the 2019 STIP were tied solely to the achievement of pro forma Operating EBITDA for the Company to focus executive officers on promoting the delivery of earnings in a year of significant transition. Additionally, the Committee can modify an executive’s STIP award using an individual performance factor ranging from 0% to 150% to reflect personal performance and contributions to the Company’s success. All awards are capped at a maximum payout of 200%. The following targets and payout calculations apply to all NEOs with the exception of Mr. Ungerleider. Mr. Ungerleider’s short-term incentive target for 2019 was set by the Dow Compensation Committee after the Dow Spin-off on April 1, 2019 and was aligned to performance of Dow.

For 2019, the Compensation Committee set threshold, target and maximum performance at the following levels:

 

Metric Threshold
($mm)
Target
($mm)
Maximum
($mm)

  Pro Forma Operating EBITDA*

 

5,035

 

5,923

 

6,811

* See Appendix A for a reconciliation of non-GAAP measures to the most directly comparable U.S. GAAP financial measures.

Performance threshold and maximum were set at 85% and 115% of target, respectively. The Compensation Committee believed the target level of performance was a challenging goal for 2019.

Based on performance, payouts can range as follows: 0% for below threshold performance, 50% for performance at threshold, and 200% for maximum performance. Payouts for performance between, respectively, threshold and target performance and target and maximum performance will be interpolated on a linear basis. As such, participants have 3.3 percentage points in payout deducted for each one percent change in performance below target, and receive 6.6 percentage points in payout for each percent change above target. Performance threshold was set at 85% for all metrics and 115% for maximum.

The table below highlights the 2019 results relative to the business performance:

 

Metric  

Target

($mm)

(100%)

   

2019

Actual

($mm)

    Payout
Percentage

  Pro Forma Operating EBITDA*

 

 

5,923

 

 

 

5,640

 

 

84.4%

* See Appendix A for a reconciliation of non-GAAP measures to the most directly comparable U.S. GAAP financial measures.

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

The Compensation Committee exercised discretion to exclude income, related directly and indirectly to the settlement of certain contract obligations, attributable to the Hemlock Semi-Conductor (“HSC”) joint venture and the Company’s trichlorosilane business (“TCS”) from the target and actual results due to non-operating performance. The table below highlights the adjusted 2019 results and the payout percentage for each NEO:

 

Metric  

Adjusted
Target

($mm)

(100%)

   

Adjusted

2019

Actual

($mm)

    Adjusted
Payout
Percentage

  Pro Forma Operating EBITDA*

 

 

5,585

 

 

 

5,268

 

 

81.1%

* See Appendix A for a reconciliation of non-GAAP measures to the most directly comparable U.S. GAAP financial measures.

The 2019 STIP payment for all NEOs, excluding Mr. Ungerleider, was based solely on the financial payout result of 81.1%. The Compensation Committee did not use the individual performance factor to modify payout results. Mr. Ungerleider left the Company in connection with the Dow Spin-off on April 1, 2019 and became the President and CFO of Dow. DuPont did not make any determinations with respect to Mr. Ungerleider’s 2019 annual incentive target prior to his departure. Mr. Ungerleider’s short-term incentive target for 2019 was set by the Dow Compensation Committee after the Dow Spin-off and was aligned to performance of Dow.

 

Name    Year End
Base Salary ($)
   STIP Target
Percent
  STIP Target
Amount ($)
  Payout
Percentage
   Total
STIP
Payout
Amount ($)

Edward D. Breen

  

1,000,000

    

 

100

%

 

3,185,820(a)

   

 

81.1%

 

    

 

2,583,700

 

C. Marc Doyle

  

1,200,000

    

 

150

%

 

1,800,000

   

 

81.1%

 

    

 

1,459,800

 

Jeanmarie F. Desmond

  

700,000

    

 

100

%

 

700,000

   

 

81.1%

 

    

 

567,700  

 

Matthias Heinzel

  

816,104

    

 

100

%

 

816,104

   

 

81.1%

 

    

 

661,860  

 

Rose Lee

  

625,000

    

 

100

%

 

625,000

   

 

81.1%

 

    

 

506,875  

 

Raj Ratnakar

  

475,000

    

 

70

%

 

332,500(b)

   

 

81.1%

 

    

 

269,658  

 

 

(a)

Mr. Breen’s employment agreement provides that 2019 STIP target dollar amount be maintained at the value it was when he was CEO ($3,185,820).

 

(b)

Mr. Ratnakar’s offer letter provides that he receive a non-prorated STIP payout for 2019.

Long-Term Incentive Compensation

The Compensation Committee views long-term compensation as a critical executive compensation program element that aligns executives’ interests with those of stockholders. Long-term incentives represent a significant portion of an executives’ overall compensation package. The Compensation Committee reviews the target LTI award opportunities for executive officers each year as part of its annual executive compensation review.

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

The table below details the LTI awards granted to NEOs in 2019:

 

Named Executive Officer   

2019 Annual
Awards

Grant Date
Value ($)(a)

 

Transformation
Awards

Grant Date
Value ($)(a)(b)

    

Special
Awards

Grant Date
Value ($)(a)

 

Total Awards

Grant Date
Value ($)(a)

 

Edward D. Breen

  

12,700,000

 

 

3,000,000

 

  

 

 

15,700,000

 

C. Marc Doyle

  

5,500,000(c)

 

 

3,000,000

 

  

 

 

8,500,000

 

Jeanmarie Desmond

  

2,000,000

 

 

2,000,000

 

  

 

 

4,000,000

 

Matthias Heinzel

  

1,000,000

 

 

1,500,000

 

  

3,500,000(d)

 

 

6,000,000

 

Rose Lee

  

1,000,000

 

 

1,500,000

 

  

 

 

2,500,000

 

Raj Ratnakar

  

 

 

1,500,000

 

  

3,800,000(e)

 

 

5,300,000

 

Howard I. Ungerleider(f)

  

 

 

 

  

 

 

 

 

(a)

Actual values shown in the Grants of Plan Based Awards table will vary slightly from the amount shown above as DuPont only issues awards in whole shares.

 

(b)

Messrs. Breen and Doyle received 100% of their Transformation Award in PSUs. Mr. Heinzel and Mses. Desmond and Lee received 60% of their Transformation Award in PSUs and 40% of their value in Stock Options.

 

(c)

2019 annual grant value for Mr. Doyle was increased in line with the market for his role.

 

(d)

Mr. Heinzel’s special one-time RSU grant is described in further detail in the “M. Heinzel Special Compensation” section.

 

(e)

Mr. Ratnakar received a new hire grant.

 

(f)

Mr. Ungerleider did not receive any grants in 2019 prior to the Dow Spin-off on April 1, 2019, at which time he left the Company and became the President and CFO of Dow.

Considering the timing of DowDuPont’s separation into three independent, publicly-traded companies, the Compensation Committee determined that PSUs were not an appropriate form of award for the annual grant, particularly given the three-year measurement convention utilized previously at Historical EID. As a result, in February 2019, the Compensation Committee determined that the 2019 annual grant for all DuPont executive officers would be made in the form of RSUs.

After the separation of Dow and Corteva, DuPont granted Transformation Awards in the form of 100% PSUs for the Executive Chairman and CEO and a split of 60% PSUs and 40% Stock Options for other NEOs and key leaders vital to the transformation of DuPont. The Transformation Awards align the new executive team to the achievement of key financial performance measures, Adjusted ROIC and Adjusted Operating EBITDA, and incentivize stock price appreciation.

Transformation PSUs

Transformation PSUs are earned and vest based on the achievement of Adjusted ROIC and Adjusted Operating EBITDA goals. Each measure is weighted equally at 50%.

 

            Performance and Payout Range  
  Metric    Weighting      Threshold
50% Payout
     Target
100% Payout
     Maximum
200% Payout
 

  Adjusted ROIC Growth(a)

  

 

50%

 

  

 

50 Basis Points

 

  

 

250 Basis Points

 

  

 

500 Basis Points

 

  Adjusted Operating EBITDA Growth(b)

  

 

50%

 

  

 

3%

 

  

 

6%

 

  

 

9%

 

 

(a)

Threshold, Target, and Maximum amounts reflected above are the basis point increases in Adjusted ROIC Growth measured as a point-to-point comparison between July 1, 2019 and December 31, 2021 to achieve the corresponding payout.

 

(b)

Adjusted Operating EBITDA Growth is measured on the basis of growth over the prior period with three discrete periods: (1) Adjusted and re-stated 2nd half 2018 versus 2nd half 2019 (20%), (2) Year-end 2019 versus Year-end 2020 (40%), (3) Year-end 2020 versus Year-end 2021 (40%). The resulting two-and-a-half-year performance percentage is the weighted average percent growth for the three discreet periods.

Transformation Stock Options

Stock Options closely align to stockholder interests as they only have value if the stock price increases after the grant date. The exercise price for the Transformation Stock Options equals the closing price on the grant date. Transformation Stock Options cliff vest on December 31, 2021 and expire after ten years.

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

DowDuPont Synergy and Speed to Spin Incentives

In December 2017 following the Merger Transaction, DowDuPont awarded PSUs (the “Synergy Grants”) to certain senior management, including Messrs. Breen and Doyle, as well as cash-based performance awards in 2018 to other leaders, including Mr. Heinzel and Mses. Desmond and Lee, (the “Incentive Awards”) to incentivize:

 

   

Targeted cost synergies of $3 billion on a run-rate basis; and

 

   

The completion of the spin-offs of Dow and Corteva.

The parameters of the DowDuPont Synergy Grants and Incentive Awards and the final results are outlined below. The Synergy Grants reflect a determination of the DowDuPont Compensation Committee following the Merger Transaction and prior to the Distributions. The Incentive Awards for Mr. Heinzel and Ms. Lee were fully aligned to the Specialty Products Division (“SpecCo”) Synergy Capture metric while Ms. Desmond was aligned to a combination of SpecCo Synergy Capture (66%) and completion of the Distributions (34%).

 

  Metric

 

  

Weighting

 

   

Business Performance and Payout Ranges (a)(b)

 

    

Actual

 

    

Payout

 

 
 

Threshold

 

    

Target

 

    

Maximum

 

 
 

(Synergy: 50%
Payout

Spin: 25% Payout)

 

    

 

(100%
Payout)

 

    

 

(200%
Payout)

 

 

  Synergy Capture

  

 

66

 

$

2.94 B

 

  

$

3.0 B

 

  

$

3.45 B

 

  

>$

3.45 B

 

  

 

200

  Dow Spin-off

  

 

17

 

 

22 months

 

  

 

19 months

 

  

 

16 months

 

  

 

19 months

 

  

 

100

  Corteva Spin-off

  

 

17

 

 

24 months

 

  

 

21 months

 

  

 

18 months

 

  

 

21 months

 

  

 

100

                                       

 

Total

 

  

 

166

  SpecCo Synergy Capture

          

$

784MM

 

  

$

800MM

 

  

$

920MM

 

  

>$

920MM

 

  

 

200

 

(a)

Payouts were interpolated on a linear basis for performance between, respectively, threshold and target performance and target and maximum performance.

 

(b)

All dates measured from August 31, 2017, the closing date of the Merger Transaction.

M. Heinzel Special Compensation

As President of the N&B business, Mr. Heinzel played an important leadership role throughout 2019. During the first half of the year, Mr. Heinzel oversaw the successful integration of DuPont’s Nutrition & Health and Industrial Biosciences businesses into the combined N&B business segment. On December 15, 2019, the Company then entered into an agreement to enter into the Proposed N&B Transaction. Mr. Heinzel was critical in the negotiation of this transaction and continues to play an essential role in managing the N&B business while preparing for the closing of the Proposed N&B Transaction, which is expected to occur in the first quarter of 2021, subject to approval by IFF stockholders and other customary closing conditions. Considering these factors, the Compensation Committee made a series of cash- and equity-based retention payments to Mr. Heinzel in 2019.

Mr. Heinzel was awarded retention bonuses in the amount of $1,665,000 payable in equal parts in May 2020 and May 2021, $1,632,208 payable in April 2021, and a cash incentive in the amount of $816,104 payable at the successful closing of the Proposed N&B Transaction. He also received an RSU award on December 17, 2019 in the amount of $3,500,000 which vests 75% in March 2021 and 25% on the third anniversary of the grant, December 17, 2022.

Treatment of Equity Awards Outstanding at the Time of the Dow and Corteva Spin-offs

Employer Method

DowDuPont stock options and restricted stock units, other than those granted to employees on February 15, 2018 and awards granted to certain non-Dow executives, were generally adjusted using the “employer method” as follows:

   

At the time of the Dow Spin-off, all DowDuPont equity awards held by individuals who remained with DowDuPont remained awards of DowDuPont, with an appropriate adjustment to account for the spin-off of Dow.

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

   

At the time of the Corteva Spin-off, all DowDuPont equity awards held by employees who remained with DuPont remained awards of DuPont (except that awards held by certain employees with no defined future role were converted into awards covering both Corteva and DuPont), with appropriate adjustments to account for the spin-off of Corteva and the Reverse Stock Split (as defined below).

Shareholder Method

DowDuPont (i) stock options and restricted stock units granted on February 15, 2018, (ii) outstanding performance stock unit awards and restricted stock awards and (iii) awards held by non-employee directors of DowDuPont were generally adjusted using the “shareholder method” as follows:

   

At the time of the Dow Spin-off, all such equity awards were converted into awards of each of Dow and DowDuPont and adjusted based on the Dow Spin-off ratio and the relative closing share prices of Dow and DowDuPont common stock upon the spin-off.

   

At the time of the Corteva Spin-off, the DowDuPont awards were converted into awards of each of DuPont and Corteva and adjusted based on the Corteva Spin-off ratio and the relative closing share prices of Corteva and DuPont common stock upon such spin-off, as well as the Reverse Stock Split.

Reverse Stock Split

Immediately following the distribution of Corteva common stock on June 1, 2019, the Company completed a 1-for-3 reverse stock split (the “Reverse Stock Split”) and, as a result, DuPont stockholders held one share of common stock of DuPont for every three shares of DowDuPont common stock held prior to the Reverse Stock Split. All outstanding Company equity awards were adjusted to give effect to the Reverse Stock Split.

Benefits and Perquisites

Benefits

DuPont provides benefits (including retirement benefits) to eligible employees, including the eligible NEOs, through a combination of qualified and non-qualified plans. The majority of these plans were assumed by Corteva at the time of the Corteva Spin-off, with DuPont creating mirror plans in which employees, including eligible NEOs, continued to participate. For details on each of the following retirement plans, see “Benefits” in the “Compensation Tables and Narratives” section of the Proxy Statement.

 

   

Defined-Benefit Retirement Plans (if applicable)

   

Supplemental Retirement Plans

   

401(k) Plans

   

Supplemental Savings Plans

   

Other Retirement Benefits

Perquisites

DuPont offers perquisites that the Compensation Committee believes are reasonable, yet competitive, in attracting and retaining the executive team. Perquisites provided to NEOs are regularly reviewed by the Compensation Committee as part of their overall review of executive compensation. Additional information on perquisites can be found in footnote (o) to the All Other Compensation column of the Summary Compensation Table in this Proxy Statement. The following outlines the limited perquisites provided to executives:

 

   

Financial planning support

   

Personal travel on corporate aircraft and related travel expenses for the Executive Chairman and the CEO

   

Company car for Mr. Heinzel

   

Commuter benefits for Mr. Heinzel

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

THE COMPENSATION PROCESS

The Compensation Committee, with the support of an independent compensation consultant and Company management, develops and executes the executive compensation program. The Compensation Committee is responsible for recommending for approval by the independent directors the compensation of the Executive Chairman and CEO, and for approving the compensation of all other NEOs and executive officers. The Compensation Committee annually reviews and evaluates the executive compensation program to ensure that the program is aligned with the Company’s compensation philosophy and appropriately rewards performance.

The Compensation Committee reviews the following factors to determine executive compensation:

 

   

Competitive analysis: Median levels of compensation for similar jobs and job levels in the market, taking into account revenue relative to the peer group.

   

Company performance: Measured against financial metrics and operational targets approved by the Compensation Committee.

   

Market landscape: Business climate, economic conditions and other factors.

   

Individual roles: Each executive’s experience, knowledge, skills and personal contributions.

Role of Company Management

In 2019, the Executive Chairman and CEO made recommendations to the Compensation Committee regarding compensation for senior executives after reviewing the Company’s overall performance, each executive’s personal contributions and relevant compensation market data from the peer group for similar jobs and job levels.

Role of the Compensation Committee

The Compensation Committee is responsible for establishing DuPont’s executive compensation philosophy and for approving NEO compensation, other than for the Executive Chairman and CEO, and has broad discretion when setting compensation types and amounts for such NEOs. As part of the process, Company management and the Compensation Committee also review summary total compensation scenarios for such NEOs. Additionally, the Compensation Committee annually reviews the corporate goals and objectives relevant to the compensation of the Executive Chairman and CEO. The Compensation Committee evaluates the Executive Chairman’s and the CEO’s performance against their respective objectives and makes recommendations to the independent directors regarding each of their compensation levels based on that evaluation.

Role of Independent Board Members

The independent members of the Board of Directors are responsible for assessing the performance of the Executive Chairman and CEO based on the recommendation of the Compensation Committee. They are also responsible for approving the compensation types and amounts for the Executive Chairman and CEO.

Role of the Independent Compensation Consultant

The Compensation Committee has retained Frederic W. Cook & Co., Inc. (“F.W. Cook”) as the independent compensation consultant on executive and director compensation matters. F.W. Cook reported directly to the Compensation Committee and did not provide services to DuPont other than those provided to the Compensation Committee.

F.W. Cook’s responsibilities included:

 

   

Advising the Compensation Committee on trends and issues in executive compensation.

   

Reviewing and advising on the group of companies in the peer group.

   

Consulting on the competitiveness of the compensation structure and levels of DuPont’s executive officers and non-employee directors.

 

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Providing advice and recommendations related to the compensation and design of DuPont’s compensation programs.

   

Reviewing and advising on materials provided to the Compensation Committee for discussion and approval.

   

Participating in Compensation Committee meetings as requested and communicating with the Chair of the Compensation Committee between meetings.

F.W. Cook has multiple safeguards and procedures in place to maintain the independence of the consultants in their executive compensation consulting practice, and the Compensation Committee has determined that the compensation consultant’s work has not raised any conflicts of interest. The Compensation Committee has considered factors relevant to F.W. Cook’s independence from management under SEC rules and has determined that F.W. Cook is independent from management.

Peer Group and Benchmarking

The Compensation Committee, with the support of the management team and F.W. Cook, created a DuPont peer group that has been utilized throughout the year, including when making 2019 compensation decisions. The criteria reviewed when setting the peer group, that became the basis of the DuPont peer group, were as follows:

 

   

Revenues (1/3 to 3 times DuPont FY 2018 revenues)

   

Market Capitalization (1/3 to 3 times DuPont market capitalization as of 6/10/2019)

   

Industry (Industrials, Specialty Chemicals, Agriculture, Construction and Materials)

   

Global presence

   

Capital Intensity

   

Profit Margin

   

Competitor for talent

Following the Dow and Corteva Spin-offs, the Committee re-evaluated the peer group and concluded that several peers no longer fit the criteria for inclusion; these include AbbVie Inc., Archer-Daniels-Midland Company, Bunge Limited, Gilead Sciences, Inc. and LyondellBasell Industries N.V. Additionally, the Committee added Lockheed Martin Corporation, Medtronic plc, The Sherwin-Williams Corporation and United Technologies Corporation. The following companies comprise the peer group that was used for market comparisons, benchmarking, and setting executive compensation:

 

    3M Company

  

Ecolab Inc.

  

Johnson Controls International plc

    Air Products and Chemicals, Inc.

  

Emerson Electric Co.

  

Lockheed Martin Corporation

    Caterpillar, Inc.

  

Honeywell International Inc.

  

Medtronic plc

    Celanese Corporation

  

Illinois Tool Works Inc.

  

PPG Industries, Inc.

    Corning Incorporated

  

Ingredion Incorporated

  

The Sherwin-Williams Company

    Danaher Corporation

  

International Paper Company

  

United Technologies Corporation

 

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

OTHER CONSIDERATIONS

Consideration of Say on Pay Vote

The Company conducts an annual “say on pay” vote to approve executive compensation. At the 2019 annual meeting of stockholders, approximately 93.6% of shares voted were in support of the compensation provided to our NEOs. Although the vote is advisory and non-binding on the Board, the Compensation Committee regularly considers the results of the “say on pay” vote in evaluating the Company’s executive compensation programs, including for 2019 executive compensation. In light of the feedback from our stockholders and the Compensation Committee’s evaluation, the Compensation Committee concluded that the Company provides competitive executive compensation programs that effectively attract, motivate, reward and retain executives in a manner aligned with stockholder interests.

Stock Ownership Guidelines

The Company requires that NEOs accumulate and hold shares of DuPont common stock with a value equal to a specified multiple of base pay.

Stock ownership guidelines include a retention ratio requirement. Under the policy, until the required ownership is reached, executives are required to retain 75% of net shares acquired upon any future vesting of stock units or exercise of stock options, after deducting shares used to pay applicable taxes and/or exercise price.

The multiples for specific executive levels are shown below. As of December 31, 2019, each NEO either met or exceeded their ownership goal or was a new officer and has five years to meet the guidelines.

 

Multiple of Salary

  

Target

  

Actual

Executive Chairman

  

6x

  

10x

CEO

  

6x

  

9x

Other NEOs average(a)

  

3x

  

4x

 

(a)

Includes only NEOs who were employed on December 31, 2019.

For purposes of meeting the stock ownership guidelines, direct ownership of shares, unvested RSUs, and stock units owned via qualified and non-qualified employee plans are included in actual ownership totals. Stock Options and PSUs are not included in determining whether an executive has achieved the ownership levels.

Anti-Hedging and Anti-Pledging Policies

Our directors and officers are prohibited from engaging in hedging transactions (such as prepaid variable forwards, equity swaps, collars and exchange funds) with respect to the Company’s securities. They also are prohibited from holding the Company’s securities in a margin account or otherwise pledging the Company’s securities as collateral for a loan. Employees, other than officers, are generally permitted to, but discouraged from, engaging in transactions designed to hedge or offset market risk.

Clawback Policy

Under the DuPont de Nemours, Inc. Incentive Compensation Clawback Policy, the Company may recover incentive compensation that was based on achievement of quantitative performance targets if an executive officer engaged in grossly negligent conduct or intentional misconduct that resulted in a financial restatement or in any increase in his or her incentive income. Incentive income includes income related to annual bonuses and long-term incentives.

Compensation and Risk Management

The Compensation Committee periodically reviews the Company’s compensation policies and practices and has determined that the incentive compensation programs do not create risks that are reasonably likely to have a

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

material adverse effect on the Company. In conducting the review in 2019, the Company completed an inventory of its incentive compensation plans and policies. The evaluation covered a wide range of practices and policies including: the balanced mix between pay elements, the balanced mix between short-term and long-term programs, caps on incentive payouts, governance controls in place to establish, review and approve goals, use of multiple performance measures, discretion on individual awards, use of stock ownership guidelines, provisions in severance/change in control policies, use of a clawback policy, and Compensation Committee oversight of compensation programs.

2019 Tax Considerations

The Internal Revenue Code generally imposes a $1 million limit on the amount that a public company may deduct for compensation paid to the Company’s applicable executives. Prior to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) this limitation generally did not apply to compensation that met the tax code requirements for “qualifying performance-based” compensation. Following enactment of the Tax Act, the Company generally expects that compensation paid to applicable NEOs in excess of $1 million will not be deductible, subject to an exception for compensation provided pursuant to a binding written contract in effect as of November 2, 2017.

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

COMPENSATION TABLES AND NARRATIVES

Summary Compensation Table

The following table summarizes the compensation of the NEOs for the fiscal year ended December 31, 2019.

 

Name and Principal
Position
   Year   

Salary

($)

 

Bonus

($)

 

Stock

Awards

($)(a)

  

Option

Awards

($)(b)

  

Non Equity
Incentive Plan
Compensation

($)(c)

  

Change in
Pension
Value &
Nonqualified
Deferred
Compensation
Earnings

($)(d)

  

All Other
Compensation

($)(e)(o)

  

Total

($)

 

Edward D. Breen(f)

Executive Chairman

   2019    1,387,833     15,700,061       2,583,700       601,156      20,272,750  
   2018    1,930,800        12,700,004    3,300,510       743,988      18,675,301  
   2017    643,600(g)     10,000,044    1,600,006    1,472,686       75,666      13,792,002  

C. Marc Doyle(h)

Former Chief Executive Officer

   2019    1,116,667     8,500,070       1,459,800    415,677    168,420      11,660,634  
   2018    787,500        3,500,005    868,000    713,290    168,750      6,037,545  
                        

Jeanmarie Desmond(i)

Former Chief Financial Officer

   2019    680,000     3,200,073    800,005    1,729,700    164,939    87,880      6,662,597  
                        
                        

Matthias Heinzel(j)

President, Nutrition and Biosciences

   2019    727,632   62,777(k)   5,400,004    600,001    2,008,798    286,864    48,121      9,134,197  
                        
                        

Rose Lee

President, Safety and Construction

   2019    586,667     1,900,014    600,001    1,906,875       86,206      5,079,763  
                        
                        

Raj Ratnakar(l)

Senior Vice President, Chief Strategy Officer

   2019    316,667   200,000(m)   2,800,013    2,500,008    269,658       27,225      6,113,570  
                        
                        

Howard l. Ungerleider(n)

Former Chief Financial Officer

   2019    253,225                 54,523      307,747  
   2018    1,103,144     5,000,007    4,150,005    1,310,996    330,919    99,625      11,994,697  
   2017    1,062,377     6,964,140    1,245,017    1,675,641       18,842,394      29,789,568  

Totals in the above table might not equal the summation of the columns due to rounding amounts to the nearest dollar.

 

(a)

Amounts represent the aggregate grant date fair value of awards in the year of grant in accordance with the same standard applied for financial accounting purposes, FASB ASC Topic 718. Value of the Performance Share program, shown at Target, if valued assuming a maximum payout, the value of the awards would be: Mr. Breen, $18,700,110; Mr. Doyle, $11,500,119; Ms. Desmond, $4,400,119; Mr. Heinzel, $6,300,005; Ms. Lee, $2,800,015 and Mr. Ratnakar, $3,700,014. A discussion of the assumptions used in calculating these values can be found in Note 21 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

 

(b)

DuPont’s valuation for financial accounting purposes uses the widely accepted Black-Scholes option valuation model. Options awarded on May 1, 2019 had a grant date fair value of $7.29 per option and an exercise price of $37.31, and options awarded on August 5, 2019 had a grant date fair value of $11.85 per option and an exercise price of $66.06. A discussion of the assumptions used in calculating these values can be found in Note 21 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

 

(c)

Individual Annual Incentive Compensation results are detailed in the “Annual Incentive Compensation” section of the CD&A and reflect income paid in 2020 for performance achieved in 2019. In addition, Non-Equity Incentive Plan Compensation for Mr. Heinzel, Mses. Desmond and Lee include the Synergy award described in the “DowDuPont Synergy and Speed to Spin Incentives” section of the CD&A.

 

(d)

The Change in Pension Value for 2019 is shown as zero for Mr. Ungerleider as no defined benefit pension will be payable by DuPont. Messrs. Breen and Ratnakar and Ms. Lee were not participants in the Historical EID pension or DuPont’s Pension Restoration Plan. Amounts shown for Messrs. Doyle and Heinzel and Ms. Desmond represent the change in pension value. DuPont does not credit participants in the non-qualified plans with above-market earnings; therefore, no such amounts are reflected here.

 

(e)

Amounts shown for 2017 All Other Compensation for Mr. Ungerleider include the Executives’ Supplemental Retirement Plan (“ESRP”) and Elective Deferral Plan (“EDP”) distributions of previously earned but deferred compensation and non-qualified benefit payments were triggered by a change in control as a result of the Merger Transaction. Detailed information regarding the obligation to make distributions due to change in control provisions under the terms of these non-qualified plans were provided on pages 60 and 61 of the 2018 Proxy Statement, the joint proxy statement/prospectus, included in the registration statement on Form S-4 filed by DowDuPont with the SEC on March 1, 2016 (File No. 333-209869), as last amended on June 7, 2016, and declared effective by the SEC on June 9, 2016 (the “Registration Statement”). In addition to the Registration Statement, such change in control distributions were also described on the Form 8K-12B filed by DowDuPont with the SEC on September 1, 2017, as well as the Company’s 2018 report on Form 10-K.

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

  

Upon closing of the Merger Transaction, participants could elect to (i) receive a lump-sum payment or (ii) direct Historical Dow to purchase an annuity on their behalf using the after-tax proceeds of the lump sum (the “ESRP Choice Annuity”). The ESRP Choice Annuity option was designed and offered to allow participants to select an annuity option identical to what they would have received in the absence of a change in control an accelerated lump sum payment. The ESRP Choice Annuity was not intended to confer any additional benefit beyond the original annuity option. Structuring requirements resulted in a distribution and tax reimbursement in order to provide this equivalent option consistent with the intended ESRP design.

 

  

The distributions triggered by the Merger Transaction are separate and distinct from change in control and severance arrangements. Post-merger, Mr. Ungerleider continued to accrue these non-qualified benefits.

i. Mr. Ungerleider: ESRP ($14,995,603), ESRP Choice Annuity program tax reimbursement ($2,646,883), and EDP ($1,141,503)

 

(f)

Mr. Breen served as Chief Executive Officer through March 31, 2019, and Chairman and Chief Executive Officer through May 31, 2019. Mr. Breen became Executive Chairman on June 1, 2019. Mr. Breen also became Chief Executive Officer of the Company on February 17, 2020.

 

(g)

Amount shown for 2017 compensation for Mr. Breen only represents salary earned from September 1, 2017 through December 31, 2017. As Historical Dow was determined to be the accounting acquirer, 2017 compensation for Mr. Breen is only shown for the portion of the year reflecting service to the Company post-merger.

 

(h)

Mr. Doyle became Chief Executive Officer on June 1, 2019 and left the Company on February 17, 2020.

 

(i)

Ms. Desmond became Chief Financial Officer on April 1, 2019 and left the Company on February 17, 2020.

 

(j)

Mr. Heinzel is a German employee and his salary, bonus, and other non-equity related compensation items are paid in Euros. U.S. Dollar amounts in this Proxy statement with respect to Mr. Heinzel have been converted from Euros at a rate of 1.11 Dollars to one Euro. The exchange rate used was calculated by averaging exchange rates for each day in December 2019.

 

(k)

Mr. Heinzel received a “13th Month” Payment equal to one month of his base salary.

 

(l)

Mr. Ratnakar joined the Company on May 1, 2019.

 

(m)

Mr. Ratnakar’s offer letter provided a sign-on bonus in the amount of $200,000.

 

(n)

Mr. Ungerleider left the Company in connection with the Dow Spin-off on April 1, 2019 and became the President and CFO of Dow.

 

(o)

All Other Compensation includes; perquisites and other personal benefits; and employer contributions; to both qualified and non-qualified defined contribution plans, as applicable.

The following table details these amounts:

 

   Name   

Perquisites and

Other Personal Benefits ($)(1)

  

Contributions to Defined

Contribution Plans ($)

Edward D. Breen

   188,905    412,251

C. Marc Doyle

      168,420

Jeanmarie Desmond

   41    87,839

Matthias Heinzel(2)

   45,622    2,499

Rose Lee

   9,265    76,941

Raj Ratnakar

      27,225

Howard I. Ungerleider

   10,249    44,274

 

  (1)

The following other compensation items exceeded $10,000 in value:

i. Mr. Breen: Personal use of company aircraft ($188,905) as required by Company policy for security and immediate availability purposes

ii. Mr. Ungerleider: Financial and tax planning

iii. Mr. Heinzel: Company provided automobile, financial and tax planning, hotel expenses related to his commuter assignment

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

   

Perquisites and other personal benefits include: personal use of aircraft (as required by the Company for security and immediate availability reasons) and related travel expenses, company car, tax reimbursements, financial planning support, and expenses related to Mr. Heinzel’s commuter assignment: hotel expenses and tax equalization (no reportable equalization for 2019). Personal use of aircraft includes use of corporate aircraft for travel to outside board meetings. The incremental cost to the Company of personal use of Company aircraft is calculated based on published industry rates by Conklin & de Decker Associates, Inc. for the variable operating costs to the Company including fuel, landing, catering, handling, aircraft maintenance and pilot travel costs. Fixed costs, which do not change based upon usage, such as pilot salaries or depreciation of the aircraft or maintenance costs not related to personal travel, are excluded. NEOs also are provided a tax reimbursement for taxes incurred when a spouse travels for business purposes as it is sometimes necessary for spouses to accompany NEOs to business functions. These taxes are incurred because of the Internal Revenue Service’s rules governing business travel by spouses and the Company reimburses the associated taxes. No NEO is provided a tax reimbursement for personal use of aircraft. Tax reimbursements may also be provided for certain Company provided or reimbursed relocation expenses, if applicable.

 

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Table of Contents

COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

Grants of Plan-Based Awards

The following table provides additional information about plan-based compensation disclosed in the Summary Compensation Table. This table includes both equity and non-equity awards. All equity awards are based on the actual units and values on the original grant date and have not been converted to reflect the Dow or Corteva Spin-off adjustments or Reverse Stock Split as described in the “Treatment of Equity Awards Outstanding at the Time of the Dow and Corteva Spin-offs” section of the CD&A.

 

Name

Grant

Date

Date of

Action

by the

Compensation

Committee

Estimated Future Payouts

Under Non-Equity Incentive

Plan Awards

Estimated Future Payouts
Under Equity Incentive Plan
Awards

All

Other
Stock
Awards:
Number

of

Shares

of Stock
or

Units

(#)(a)

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(b)
Exercise
or Base
Price of
Option
Awards
($/Sh)

Grant

    Date Fair    
Value of

Stock

and

Option
Awards

(#)(c)

 

Threshold

($)

Target

($)

Maximum

($)

Threshold

(#)

Target

(#)

Maximum

(#)

Edward D. Breen 2/14/2019 2/14/2019 3,185,820(d) 6,371,640
2/14/2019 2/14/2019 241,170   12,700,012  
8/5/2019 8/5/2019 22,707 45,414 90,828 3,000,049
C. Marc Doyle 2/14/2019 2/14/2019 1,800,000 3,600,000
2/14/2019 2/14/2019 104,444 5,500,021
8/5/2019 8/5/2019 22,707 45,414 90,828 3,000,049
Jeanmarie Desmond 2/14/2019 2/14/2019 700,000 1,400,000
2/14/2019 2/14/2019 37,980 2,000,027
8/5/2019 8/5/2019 9,083 18,166 36,332 1,200,046
8/5/2019 8/5/2019 67,511 66.06 800,005
Matthias Heinzel 2/14/2019 2/14/2019 816,104 1,632,208
2/14/2019 2/14/2019 18,990 1,000,013
8/5/2019 8/5/2019 6,812 13,624 27,248 900,001
8/5/2019 8/5/2019 50,633 66.06 600,001
12/17/2019 10/25/2019 54,500 3,499,990
Rose Lee 2/14/2019 2/14/2019 625,000 1,250,000
2/14/2019 2/14/2019 18,990 1,000,013
8/5/2019 8/5/2019 6,812 13,624 27,248 900,001
8/5/2019 8/5/2019 50,633 66.06 600,001
Raj Ratnakar 5/1/2019 5/1/2019 332,500 665,000
5/1/2019 (e) 50,925 1,900,012
5/1/2019 (e) 260,632 37.31 1,900,007
8/5/2019 8/5/2019 6,812 13,624 27,248 900,001
8/5/2019 8/5/2019 50,633 66.06 600,001
Howard I. Ungerleider(f)

 

(a)

Restricted Stock Unit awards as described in the “Long-Term Incentive Compensation” section of the CD&A.

 

(b)

Stock Option awards as described in the “Long-Term Incentive Compensation” section of the CD&A.

 

(c)

Amounts represent the aggregate grant date fair value of awards in the year of grant in accordance with the same standard applied for financial accounting purposes consistent with the values shown in the Summary Compensation Table, FASB ASC Topic 178.

 

(d)

Amounts include the full, contractually agreed upon values for 2019 as noted in the tables in the “Annual Incentive Compensation” section of the CD&A.

 

(e)

Grant was issued under delegation from the Compensation Committee in relation to his hire. Mr. Ratnakar became an executive officer of the Company on June 1, 2019 following the Corteva Spin-off.

 

(f)

Mr. Ungerleider left the Company in connection with the Dow Spin-off on April 1, 2019 and became the President and CFO of Dow. DuPont did not make any determinations with respect to Mr. Ungerleider’s 2019 compensation prior to his departure.

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

Outstanding Equity Awards

The following table lists outstanding equity grants for each NEO as of December 31, 2019. The table includes outstanding equity grants from past years as well as the current year and include awards denominated in Dow or Corteva common stock as described in the “Treatment of Equity Awards Outstanding at the Time of the Dow and Corteva Spin-offs” section of the CD&A and have been adjusted to reflect the Reverse Stock Split.

 

            Option Awards   Stock Awards
Name   Grant Date  

Stock

Ticker

  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(a)
  Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(a)
 

Option

Exercise

Price

($)

 

Option

Expiration

Date

 

Number
of Shares
or Units of
Stock That
Have Not
Vested

(#)(b)

 

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested

($)(b)(c)

 

Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested

(#)(d)

 

Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights

That Have

Not Vested

($)(c)(d)

Edward D. Breen   05/13/2015   DD           928   59,578    
  06/05/2015   DD           142   9,116    
  11/06/2015   DD   170,933     74.48   11/05/2022        
  02/02/2017   DD   75,970   37,985   85.81   02/01/2027        
  11/06/2017   DD   23,926   11,964   101.44   11/05/2027        
  02/15/2018   DD   91,275   182,550   103.76   02/14/2028        
  02/14/2019   DD           82,022   5,265,812    
  08/05/2019   DD               45,414   2,915,579
  05/13/2015   CTVA           928   27,432    
  06/05/2015   CTVA           142   4,198    
  11/06/2015   CTVA   170,933     30.10   11/05/2022        
  02/02/2017   CTVA   75,970   37,985   34.68   02/01/2027        
  11/06/2017   CTVA   23,926   11,964   41.00   11/05/2027        
  02/15/2018   CTVA   91,275   182,550   41.94   02/14/2028        
  02/14/2019   CTVA           82,044   2,425,221    
  05/13/2015   DOW           954   52,212    
  06/05/2015   DOW           146   7,991    
  11/06/2015   DOW   170,933     52.24   11/05/2022        
  02/02/2017   DOW   75,970   37,985   60.19   02/01/2027        
  11/06/2017   DOW   23,927   11,963   71.15   11/05/2027        
  02/15/2018   DOW   91,275   182,550   72.78   02/14/2028        
  02/14/2019   DOW           84,337   4,615,764    
C. Marc Doyle   02/05/2014   DD   2,806     67.22   02/04/2021        
  02/04/2015   DD   15,883     80.07   02/03/2022        
  07/29/2015   DD           53,008   3,403,144    
  02/03/2016   DD   39,754     66.21   02/02/2026        
  02/02/2017   DD   28,438   14,220   85.81   02/01/2027        
  02/15/2018   DD   25,154   50,309   103.76   02/14/2028        
  02/14/2019   DD           73,799   4,737,904    
  08/05/2019   DD               45,414   2,915,579
  02/15/2018   CTVA   25,154   50,309   41.94   02/14/2028        
  02/15/2018   DOW   25,155   50,308   72.78   02/14/2028        
Jeanmarie Desmond   02/04/2015   DD   9,529     80.07   02/03/2022        
  02/03/2016   DD   8,745     66.21   02/02/2026        
  02/02/2017   DD   5,687   2,844   85.81   02/01/2027        
  02/15/2018   DD   4,312   8,624   103.76   02/14/2028        
  02/14/2019   DD           26,837   1,722,904    
  08/05/2019   DD     67,511   66.06   08/04/2029       18,166   1,166,257
  02/15/2018   CTVA   4,312   8,624   41.94   02/14/2028        
  02/15/2018   DOW   4,312   8,624   72.78   02/14/2028        
Matthias Heinzel   02/04/2015   DD   1,984     80.07   02/03/2022        
  02/03/2016   DD   6,183     66.21   02/02/2026        
  02/02/2017   DD   7,110   3,555   85.81   02/01/2027        
  02/15/2018   DD   5,749   11,499   103.76   02/14/2028        
  07/27/2018   DD           20,935   1,344,033    
  02/14/2019   DD           13,419   861,484    
  08/05/2019   DD     50,633   66.06   08/04/2029       13,624   874,661
  12/17/2019   DD           54,500   3,498,900    
  02/15/2018   CTVA   5,749   11,500   41.94   02/14/2028        
  02/15/2018   DOW   5,750   11,499   72.78   02/14/2028        

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

            Option Awards   Stock Awards
Name   Grant Date  

Stock

Ticker

  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(a)
  Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(a)
 

Option

Exercise

Price

($)

 

Option

Expiration

Date

 

Number
of Shares
or Units of
Stock That
Have Not
Vested

(#)(b)

 

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested

($)(b)(c)

 

Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested

(#)(d)

 

Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights

That Have

Not Vested

($)(c)(d)

Rose Lee

  02/04/2015   DD   7,941     80.07   02/03/2022        
  02/03/2016   DD   13,251     66.21   02/02/2026        
  02/02/2017   DD   9,953   4,977   85.81   02/01/2027        
  02/15/2018   DD   5,749   11,500   103.76   02/14/2028        
  02/14/2019   DD           13,419   861,484    
  08/05/2019   DD     50,633   66.06   08/04/2029       13,624   874,661
  02/15/2018   CTVA   5,749   11,500   41.94   02/14/2028        
  02/15/2018   DOW   5,750   11,500   72.78   02/14/2028        

Raj Ratnakar

  05/01/2019   DD     121,128   80.29   04/30/2029   23,875   1,532,748    
  08/05/2019   DD     50,633   66.06   08/04/2029       13,624   874,661
Howard l. Ungerleider(e)   02/15/2018   DD   29,826   59,652   103.73   02/14/2028        

 

  (a)

Stock Option award grants vest in three equal installments on the first, second and third anniversaries of the grant date shown in the table. Awards granted in August 2019 to Messrs. Heinzel and Ratnakar and Mses. Desmond and Lee fully vest on December 31, 2021.

 

  (b)

RSU award grants vest in three equal installments on the first, second, and third anniversaries of the grant date shown in the table. Awards granted to Mr. Breen in 2015 in his capacity as a non-employee director (prior to his being named CEO of Historical EID) must be held until his retirement from service on the Board. Award granted to Mr. Heinzel in July 2018 will fully vest on the third anniversary of the grant date shown in the table. Award granted to Mr. Heinzel in December 2019 will have 75% of units vest March 31, 2021 and the remaining units vest December 17, 2022. Award granted to Mr. Doyle in July 2015 will fully vest in 2020.

 

  (c)

Market values based on the December 31, 2019 closing stock price of $64.20 per share of DuPont common stock, $29.56 per share of Corteva common stock, and $54.73 per share of Dow common stock.

 

  (d)

PSUs granted August 5, 2019 are shown at the target level of performance. The total actual number of shares to be delivered will be determined at the end of the performance period.

 

  (e)

Mr. Ungerleider left the Company in connection with the Dow Spin-off on April 1, 2019 and became the President and CFO of Dow.

 

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COMPENSATION DISCUSSION & ANALYSIS (continued)

 

 

Option Exercises and Stock Vested

The following table summarizes the value received from stock option exercises and stock grants vested during 2019.

 

     Option Awards