DEF 14A 1 nc10012072x1_def14a.htm DEF 14A

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.       )

 

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o Preliminary Proxy Statement

 

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x Definitive Proxy Statement

 

o Definitive Additional Materials

 

o Soliciting Material Pursuant § 240.14a-12

 

TECHNIPFMC PLC
(Name of Registrant as Specified In Its Charter)

 

 
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

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2021

Notice of Annual General
Meeting of Shareholders
and Proxy Statement

 

Driving change in energy


 

 

TechnipFMC Proxy Statement 2021

 

 

 

Notice of 2021 Annual General Meeting of Shareholders

 

TechnipFMC plc

 

(a public limited company having its registered office at One St. Paul’s Churchyard, London EC4M 8AP, United Kingdom and incorporated in England and Wales with company number 09909709)

 

May 20, 2021

 

10:00 a.m., London time

 

Pitreavie Business Park, Queensferry Road, Dunfermline KY11 8UD, United Kingdom

 

Proposal  Description
Ordinary Resolutions
1(a)-1(i) Election of Directors: To elect each of our nine director nominees for a term expiring at the Company’s 2022 Annual General Meeting of Shareholders:
 

a. Douglas J. Pferdehirt

b. Eleazar de Carvalho Filho

c. Claire S. Farley

d. Peter Mellbye

e. John O’Leary

f. Margareth Øvrum

g. Kay G. Priestly

h. John Yearwood

i. Sophie Zurquiyah

2 2020 U.S. Say-on-Pay for Named Executive Officers: To approve, as a non-binding advisory resolution, the Company’s named executive officer compensation for the year ended December 31, 2020, as reported in the Company’s Proxy Statement
3 2020 U.K. Directors’ Remuneration Report: To approve, as a non-binding advisory resolution, the Company’s directors’ remuneration report for the year ended December 31, 2020, as reported in the Company’s U.K. Annual Report and Accounts
4 Prospective Directors’ Remuneration Policy: To approve the Company’s prospective directors’ remuneration policy for the three years ending December 2024, in the form presented in the Company’s directors’ remuneration report for the year ended December 31, 2020 of the Company’s U.K. Annual Report and Accounts, such policy to take effect immediately after the conclusion of the 2021 Annual General Meeting of Shareholders
5 Receipt of U.K. Annual Report and Accounts: To receive the Company’s audited U.K. accounts for the year ended December 31, 2020, including the reports of the directors and the auditor thereon

 

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6 Ratification of PwC as U.S. Auditor: To ratify the appointment of PricewaterhouseCoopers LLP (“PwC”) as the Company’s U.S. independent registered public accounting firm for the year ending December 31, 2021
7 Reappointment of PwC as U.K. Statutory Auditor: To reappoint PwC as the Company’s U.K. statutory auditor under the U.K. Companies Act 2006, to hold office from the conclusion of the 2021 Annual General Meeting of Shareholders until the next annual general meeting of shareholders at which accounts are laid
8 Approval of U.K. Statutory Auditor Fees: To authorize the Board and/or the Audit Committee to determine the remuneration of PwC, in its capacity as the Company’s U.K. statutory auditor for the year ending December 31, 2021
9 Approval of Share Repurchase Contracts and Counterparties: To approve the forms of share repurchase contracts and repurchase counterparties in accordance with specific procedures for “off-market purchases” of Ordinary Shares through the NYSE or Euronext Paris
10 Authority to Allot Equity Securities: To authorize the Board to allot equity securities in the Company
Special Resolution
11 Authority to Allot Equity Securities without Pre-emptive Rights: Pursuant to the authority contemplated by the resolution in Proposal 10, to authorize the Board to allot equity securities without pre-emptive rights

 

These items are more fully described in the Proxy Statement attached, which forms a part of this Notice of Annual Meeting. As of the date of the Proxy Statement, TechnipFMC does not know of any other matters to be raised at the 2021 Annual General Meeting of Shareholders.

 

Your vote is very important. Whether or not you plan to attend the 2021 Annual General Meeting of Shareholders in person, please (i) promptly return the enclosed proxy card in the enclosed envelope, or (ii) grant a proxy and give voting instructions by telephone or internet, so that you may be represented at the meeting. Voting instructions are provided on your proxy card or on the voting instruction form provided by your broker.

 

April 9, 2021

 

On behalf of the Board of Directors,

 

 

Victoria Lazar

Executive Vice President, Chief Legal Officer, and Secretary

 

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TechnipFMC Proxy Statement 2021

 

Proxy Statement for the 2021 Annual General Meeting of Shareholders

 

This Proxy Statement relates to the solicitation of votes or proxies by the Board of Directors (the “Board”) of TechnipFMC plc (the “Company,” “TechnipFMC,” “us,” or “we”) for use at our 2021 Annual General Meeting of Shareholders and at any adjournment or postponement of such meeting (the “Annual Meeting”).

 

The Notice of Internet Availability of Proxy Materials (the “Notice of Materials”) and related Proxy Materials (as defined below) were first made available to shareholders on or about April 9, 2021 at www.proxyvote.com. You may also request a printed copy of this Proxy Statement and the form of proxy by any of the following methods:

 

A

 

Internet at
www.proxyvote.com

 

  B

 

Telephone at
1-800-579-1639

 

  or C

 

Email at
sendmaterial@proxyvote.com

 

 

Our Annual Report on Form 10-K, including consolidated financial statements, for the year ended December 31, 2020 (our “Form 10-K”) and our U.K. Annual Report and Accounts are being made available at the same time and by the same methods.

 

Our registered office is located at One St. Paul’s Churchyard, London EC4M 8AP, United Kingdom. Our telephone number in our London office is +44 20 3429 3950. Information regarding the Annual Meeting, including the information required by Section 311A of the U.K. Companies Act 2006 (the “Companies Act”), can be found at www.technipfmc.com. Information contained on our website is not to be considered as part of the proxy solicitation material and is not incorporated into this Proxy Statement.

 

TechnipFMC is a public limited company incorporated under the laws of England and Wales, and our ordinary shares (the “Ordinary Shares”) trade on the New York Stock Exchange in the United States (the “NYSE”) and the Euronext Paris exchange (“Euronext”) under the symbol “FTI.” As a result, the Company is governed by the Companies Act, U.S. securities laws and regulations, E.U. securities regulations, and the listing standards of the NYSE and Euronext.

 

The Proxy Materials contain “forward-looking statements” as defined in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical or current facts, including statements regarding our environmental and other ESG plans and goals, made in this document are forward-looking. We use words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “may,” “estimate,” “outlook” and similar expressions, including the negative thereof. The absence of these words, however, does not mean that the statements are not forward-looking. All of our forward-looking statements involve risks and uncertainties (some of which are significant or beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause actual results to differ materially from those contemplated in the forward-looking statements include those set forth in our 2020 Annual Report on Form 10-K. Website references throughout the Proxy Materials are provided for convenience only, and the content on the referenced websites is not incorporated by reference into the Proxy Materials.

 

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
2021 ANNUAL GENERAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 20, 2021

 

The Notice of Annual Meeting and Proxy Statement, Annual Report on Form 10-K,
and U.K. Annual Report and Accounts are available at www.proxyvote.com

 

 

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TechnipFMC Proxy Statement 2021

 

Contents

 

2021 Proxy Summary 1
Annual Meeting Information 1
Voting Matters and Board Recommendations 2
Core Values and Foundational Beliefs 3
Governance Highlights 4
2020-2021 Shareholder Engagement Program 5
Director Nominees 6
2020 At-a-Glance 7
Executive Compensation 10
Corporate Responsibility and Sustainability 14
Core Values and Foundational Beliefs 14
Code of Business Conduct 15
Corporate Responsibility and Sustainability 2018-2020 16
Supporting Communities 18
Advancing Gender Diversity 24
Respecting the Environment 28
Corporate Responsibility and Sustainability 2021-2023 36
Corporate Governance 38
Governance Guidelines and Key Board Practices 38
Shareholder Engagement 39
Leadership Structure of the Board 43
Board Composition and Criteria for Board Membership 45
Enterprise Risk Management 49
Committees of the Board of Directors 50
Board Meetings and Attendance 53
Director Independence 53
Compensation Committee Interlocks and Insider Participation in Compensation Decisions 55
Communications with Directors 55
Director Compensation 56
Non-executive Director Compensation 56

 

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Executive Compensation Discussion and Analysis 60
Named Executive Officers 63
2020 Performance and Impact on Executive Compensation 64
Compensation Governance 76
Elements of 2020 Executive Compensation 80
Other Compensation, Benefits, and Considerations 102
Summary Compensation Table for the Year Ended December 31, 2020 106
Grants of Plan-Based Awards Table 108
Outstanding Equity Awards at Fiscal Year-End Table 109
Option Exercises and Stock Vested Table 110
Pension Benefits Table 111
Non-Qualified Deferred Compensation Table 113
Potential Payments upon Termination 114
CEO Pay Ratio 117
Compensation Committee Report 118
Audit Committee Report 119
Proposals 1(a)-1(i) - Election of Directors 120
Director Nominees 122
Proposal 2 - 2020 Say-on-Pay for NEOs 131
Proposal 3 - 2020 Directors’ Remuneration Report 132
Proposal 4 - Prospective Directors’ Remuneration Policy 133
Proposal 5 - Receipt of U.K. Annual Report and Accounts 134
Proposal 6 - Ratification of U.S. Auditor 135
Proposal 7 - Reappointment of U.K. Statutory Auditor 137
Proposal 8 - Approval of U.K. Statutory Auditor Fees 138
Proposal 10 - Authority to Allot Equity Securities 141
Proposal 11 - Authority to Allot Equity Securities without Pre-emptive Rights 143 Transactions with Related Persons 143
Security Ownership of Certain Beneficial Owners and Management 146
Section 16(a) Beneficial Ownership Reporting Compliance 148
Proposals for the 2022 Annual General Meeting of Shareholders 149
Shareholders Sharing an Address 150
General Information about the Annual Meeting 151
Appendix A - Form of Share Purchase Contract 159
Appendix B - Form of Rule 10b-5 Share Repurchase Contract 162

 

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2021 Proxy Summary

 

Along with the Notice of Annual Meeting, we are providing this Proxy Statement, the U.K. Annual Report and Accounts, and our Form 10-K in connection with the Annual Meeting (collectively, the “Proxy Materials”).

 

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all the information that you should consider regarding each of the proposals to be voted on at the Annual Meeting. Please read the entire Proxy Statement carefully before voting. For further information regarding our 2020 financial performance, please review our Form 10-K and our U.K. Annual Report and Accounts.

 

Annual Meeting Information

 

     
     

Time and Date

 

May 20, 2021 at 10:00 a.m., London time

 

Place

 

Pitreavie Business Park, Queensferry Road, Dunfermline KY11 8UD, United Kingdom

 

Record Date

 

March 24, 2021, 5:00 p.m., New York time

 

     
     

Admission

 

Admission ticket and valid photo identification required. Please see “General Information about the Annual Meeting-Who can attend the Annual Meeting?” for more information.

 

Voting

 

Each Ordinary Share is entitled to one vote for each of the proposals to be voted on.

 

Voting Deadlines

 

New York Stock Exchange shares: 11:59 PM, New York time, on May 19, 2021

 

Euronext Paris Exchange shares: Direct or indirect nominative form (au nominatif pur ou administré): 11:59 PM, New York time, on May 19, 2021

 

Anonymous/bearer form (au porteur): Return voting card to your bank, broker, or financial intermediary before May 17, 2021

 

Please follow the voting instructions on your proxy card and/or your voting instruction form as different voting deadlines may be applicable across markets. Please also review “How do I vote?” in the section entitled “General Information about the Annual Meeting.”
 

 

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TechnipFMC Proxy Statement 2021

 

Voting Matters and Board Recommendations

 

The full text of each resolution to be voted on at the Annual Meeting is set out in the Notice of Annual Meeting.

 

Proposal to be Voted Upon Board Recommendation Where You Can Find
More Information
Ordinary Resolutions
1(a) - 1(i): Election of Directors FOR
Each Director Nominee
Page 120
2: 2020 U.S. Say-on-Pay Proposal for Named Executive Officers FOR Page 131
3: 2020 U.K. Directors’ Remuneration Report FOR Page 132
4: Prospective Directors’ Remuneration Policy FOR Page 133
5: Receipt of U.K. Annual Report and Accounts FOR Page 134
6: Ratification of PwC as U.S. Auditor FOR Page 135
7: Reappointment of PwC as U.K. Statutory Auditor FOR Page 137
8: Approval of U.K. Statutory Auditor Fees FOR Page 138
9: Approval of Share Repurchase Contracts and Counterparties FOR Page 139
10: Authority to Allot Equity Securities FOR Page 141
Special Resolution
11: Authority to Allot Equity Securities without Pre-emptive Rights FOR Page 143

 

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TechnipFMC Proxy Statement 2021

 

Core Values and Foundational Beliefs

 

Our decisions regarding corporate responsibility, governance, and sustainability are founded on the principles that guide our Company. Our core values provide the framework for all of our decision making and are based on our foundational beliefs (“Foundational Beliefs”).

 

Our core values

 

     
Realizing possibilities Achieving together Building trust
The heart of everything we do

► We strive for ever better

 

► We take initiative

 

► We learn from success and failure

► We work as one team

 

► We share knowledge

 

► We embrace diversity of thought

► We listen to improve

 

► We partner constructively

 

► We seek to outperform

 

Our Foundational Beliefs are the cornerstone of our values that describe how we fundamentally do business and what we never compromise on, no matter the circumstances.

 

 

For additional details on the Company’s core values, Foundational Beliefs, and our sustainability program, please see the section entitled Corporate Responsibility and Sustainability.

 

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TechnipFMC Proxy Statement 2021

 

Governance Highlights

 

Board and Governance Best Practices

 

Independent Board Oversight  
Robust Lead Independent Director role to serve as an effective counterbalance to the role of the Chairman and CEO
All directors are independent except the Chairman and CEO
Fully independent Board committees
Regular executive sessions of independent directors

 

Governance Best Practices  
Annual election of directors under majority vote standard
Engaged Board with deep expertise, skills, and experience that are closely tied to business strategy
Annual shareholder engagement program to solicit feedback on Company practices
Ongoing Board refreshment efforts informed by a comprehensive annual Board and committee self-evaluation process, reflected by two new directors in 2019 and one new director in each of 2020 and 2021
Board oversight of risk management structures
Review of the mix of experience, qualifications, and skills in the boardroom to meet evolving needs of the business, coupled with new director orientation and continuing education
Code of Business Conduct applicable to directors
Governance Guidelines with director retirement policy
Director share ownership requirements

 

For additional details on the Company’s corporate governance practices, please see the section entitled Corporate Governance:”

 

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TechnipFMC Proxy Statement 2021

 

2020-2021 Shareholder Engagement Program

 

Our relationship and ongoing dialogue with our shareholders is an important part of our Board’s corporate governance commitment. Members of our Board and senior management routinely engage with shareholders on a variety of topics and report to our Board regarding our shareholders’ feedback and input on topics such as strategic and financial performance, executive compensation, Board composition and governance, as well as important environmental and social issues. The constructive feedback and ideas exchanged during these engagements help our Board and management evaluate and assess key initiatives for the Company’s programs.

 

For our 2020-2021 engagement, we contacted proxy advisory firms and our top shareholders representing approximately 42% of our Ordinary Shares outstanding. Management, and in some instances, our Environmental, Social, and Governance (“ESG”) Committee Chair, held meetings with proxy advisory firms and shareholders representing approximately 18% of our Ordinary Shares outstanding. Some shareholders did not require a meeting as they either supported, or indicated they had no questions related to, our compensation and governance practices.

 

Our 2020-2021 shareholder engagement program allowed us to understand our shareholders’ priorities and perspectives, which prompted us to make several changes to our compensation program and to our disclosure philosophy.

 

For detailed descriptions of key shareholder feedback received, and our responses to such feedback, please see the section entitled Corporate Governance-Shareholder Engagement.”

 

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TechnipFMC Proxy Statement 2021

 

Director Nominees

 

 

Douglas J. Pferdehirt

Chairman and CEO

Age: 57

Committees: None

 

 

 

Eleazar de Carvalho Filho

Independent

Age: 63

Committees: Audit

 

         

Claire S. Farley

Lead Independent Director

Age: 62

Committees: Compensation

 

 

Peter Mellbye

Independent

Age: 71

Committees: ESG (Chair)

 

         

John O’Leary

Independent

Age: 65

Committees: Compensation

 

 
 

Margareth Øvrum

Independent

Age: 62

Committees: ESG

 

         

Kay G. Priestly

Independent

Age: 65

Committees: Audit (Chair)

 

 
 

John Yearwood

Independent

Age: 61

Committees: Compensation, ESG

 

         

Sophie Zurquiyah

Independent

Age: 54

Committees: Audit

 

     

 

Detailed biographies for each of our director nominees are disclosed in the section Proposals 1(a) - 1(i) -Election of Directors-Director Nominees.

 

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TechnipFMC Proxy Statement 2021

 

2020 At-a-Glance

 

Response to a Difficult Operating Environment and COVID-19

 

Beginning in the first quarter of 2020, we faced global challenges due to the COVID-19 pandemic and the unprecedented drop in demand for oil and gas. Supply chain disruptions, logistics constraints, and productivity declines all impacted our operations across the globe. Throughout our responses to these challenges, our top priority remained the physical and mental well-being of the women and men of TechnipFMC and the communities in which we work. The Company established a global Incident Management Team sponsored by our executive officers and including representatives from HSE, Security, People & Culture, Legal, Communications, Finance, Medical, and major projects teams to assist in regularly updating our Board on COVID-19 impacts. Working together, we found solutions that allowed us to move projects forward safely while also earning recognition from our customers for the way in which we conducted business in such an unpredictable operating environment.

 

Beyond operations, we took strategic actions focused on cash and liquidity preservation to bolster profitability and cash flow. We reduced capital outlays in the year through revisions to our dividend policy and high-grading of our capital expenditures on value-enhancing opportunities. We achieved more than $350 million in annualized run-rate cost savings. Finally, we revised executive compensation, effective May 1, 2020, to reflect a 30% reduction to the Chairman and CEO’s salary and the Board of Directors’ retainer and a 20% reduction to our other executive officers’ salaries.

 

Strategic Transaction

Completed the separation of TechnipFMC into two industry-leading, pure-play companies through the Spin-off of Technip Energies on February 16, 2021 (the “Spin-off”)

TechnipFMC Technip Energies

 Primarily comprising Subsea and Surface Technologies segments

Listings: NYSE, Euronext Paris

HQ: Houston, Texas and Paris, France

Domicile: United Kingdom

Employees: ~20,000

Primarily comprising the Technip Energies segment

Listing: Euronext Paris with Level 1 American depositary receipts (“ADRs”)

HQ: Paris, France

Domicile: Netherlands

Employees: ~15,000

 

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TechnipFMC Proxy Statement 2021

 

ESG      
Appointed Margareth Øvrum and Sophie Zurquiyah to the Board  

Reduced the size of the Board from 15 to 10 directors upon the completion of the Spin-off, which will be further reduced to nine directors at the Annual Meeting

 

Formed our ESG Committee to reflect expanded oversight duties and commitment to ESG matters and reporting

 

Achieved all of our 2018-2020 ESG objectives, and announced our 2021-2023 ESG commitments and scorecard, including a “50 by 30” objective to reduce CO2 emissions by 50% by 2030

 

Enhanced commitment to Inclusion and Diversity across the organization

 

For 2021, included an ESG metric in our annual cash incentive plan, to directly link our compensation program to our ESG commitments and objectives

 

 

 

  Compensation

 

 

The COVID-19 impact on the Company triggered a need to adjust our compensation program, as we strived to achieve appropriate results in an exceptional year, and to reinforce the link between pay and performance alignment with the long-term interests of our shareholders.
   
Reduced Chairman and CEO’s salary by 30% and other executives’ salaries by 20% for the remainder of 2020, effective May 1, 2020

Reduced directors’ annual cash retainers by 30% for the remainder of 2020, effective May 1, 2020

Adjusted 2020 annual incentive metrics for Q2-Q4 2020 to address strategic priorities due to the COVID-19 pandemic and business downturn and capped payout for business performance indicators at target (100%)
Continued to include sustainability measures in the individual performance portion of our annual cash incentive plan to reinforce the Company’s commitment to our Foundational Beliefs while responding to the challenging business environment

 

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TechnipFMC Proxy Statement 2021

 

2020 Financials1    

Subsea

Technip Energies

Surface Technologies

 

Results

Results Results

 Inbound orders of $4 billion, supported by higher mix of service and small project activity

 

Additional integrated awards all from repeat iEPCI™ customers

 

Backlog of $6.9 billion

Second consecutive year of revenue growth, driven by LNG and downstream projects

 

Approximately 60% of total order backlog linked to energy transition, including LNG

 

Backlog of $14.1 billion

International revenue more than 60% of total segment, with increased revenue in technology- driven businesses

 

Significant decline in North America market activity partially mitigated by aggressive cost reduction

 

Backlog of $0.4 billion 

 

(1) Reported financial results for the twelve months ended December 31, 2020 and inbound and backlog as of December 31, 2020 are as reported in our Form 10-K.

 

The record inbound orders and solid execution of 2019 gave us strong momentum into the new year, but 2020 abruptly shifted to a year of unprecedented global challenges due to the COVID-19 pandemic and the sharp drop in demand for oil and natural gas.

 

Revenue decreased by $358.5 million in 2020 compared to 2019, primarily driven by decreased project activity in Subsea and sharply lower demand in North America for Surface Technologies. The decrease was partially offset by the increased activity in Technip Energies, including the continued ramp-up of Arctic LNG 2.

 

Operating results in the year were largely impacted by significant impairment and other non-recurring charges totaling $3,501.3 million, most of which were included in Subsea and Surface Technologies. Results were also impacted by a reduced contribution from Yamal LNG and lower margin realization on early stage projects in Technip Energies versus the prior year. Results included the benefits of our accelerated cost reduction actions initiated in the first quarter of 2020.

 

The significant decline in commodity prices, due in part to the lower demand resulting from COVID-19, contributed to the decrease in the inbound orders during 2020. The decline in backlog was more modest, with our significant backlog providing solid revenue visibility in future periods.

 

For additional details regarding the Company’s 2020 financial performance, please see the section entitled Executive Compensation Discussion and Analysis-2020 Performance and Impact on Executive Compensation.”

 

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TechnipFMC Proxy Statement 2021

 

Executive Compensation

Our named executive officers (“NEOs”) for 2020 are:

 

Douglas J. Pferdehirt

Age: 57

Position Held in 2020:

Chairman and Chief Executive Officer

 

Maryann T. Mannen

Age: 58

Position Held in 2020:

Executive Vice President and Chief Financial Officer

 

 

Justin Rounce

Age: 54

Position Held in 2020:

Executive Vice President and Chief Technology Officer

 

Arnaud Pieton

Age: 47

Positions Held in 2020:

President of Subsea from

January 1 through October 2, 2020

 

President and CEO-elect of

Technip Energies from October 2,

2020 through December 31, 2020

 

Barry Glickman

Age: 52

Position Held in 2020:

President of Surface

 

 

Catherine MacGregor

Age: 48

Position Held in 2020:

President of Technip Energies from

January 1 through October 2, 2020

 

Departed from TechnipFMC

on October 31, 2020

 

Nello Uccelletti

Age: 67

Position Held in 2020:

Advisor to the CEO from January 1 through February 29, 2020

Retired from TechnipFMC

on February 29, 2020

 

 

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TechnipFMC Proxy Statement 2021

 

2020 Compensation Program Changes

 

  

  In 2020, we took the following actions in response to the COVID-19 pandemic and the resulting oil price decline:

 

Reduced the annual base salary for our Chairman and CEO by 30% and for other executive officers by 20% for the remainder of 2020, effective May 1, 2020.

       
  Reduced annual cash retainers for our Board of Directors by 30% for the remainder of 2020, effective May 1, 2020.
    Updated our annual cash incentive plan measures effective April 1, 2020, and applied a cap on payout:
  Due to the COVID-19 pandemic and business downturn, the Company’s strategic priorities shifted to a significantly greater focus on cash flow, liquidity, and business sustainability. To better align our executives’ compensation with these critical priorities, the financial measures for the 2020 annual cash incentive plan were changed from EBITDA, EBITDA as a Percentage of Revenue, and Working Capital Days to Incremental Cost Savings (37.5% weighting) and Free Cash Flow Conversion (37.5%), for the last three quarters of 2020. The Incremental Cost Savings metric measures our performance against our publicly disclosed Cost Reduction Program. The Free Cash Flow Conversion metric (ratio of Free Cash Flow to Adjusted Net Income) measures the quality of our earnings and is important for liquidity.
  25% of our 2020 annual cash incentive plan continued to be based on individual performance indicators that included specific objectives regarding sustainability in our business performance, further reinforcing the Company’s commitment to our Foundational Beliefs while we focused on responding to the challenging business environment.
  Due to the volatility in the oil and gas market, the annual incentive plan targets set at the beginning of 2020 were no longer considered applicable. As such, performance and payout for the Q1 2020 business performance indicators was set at 0% by our Compensation Committee.
  In addition to updating our Q2-Q4 2020 performance metrics in order to swiftly respond to changing short-term business priorities, we also capped the payout for the business performance indicators under the 2020 annual cash incentive plan at target (100%), with no upside for above-target performance. Limiting payouts at target (compared to 200% in prior years) in a volatile business environment helps align with shareholder interests.
  No changes were made to the annual equity awards previously granted and not vested.
       

 

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In 2020, we took the following actions in response to shareholder feedback:

 

Discontinued the use of stock options, based on feedback from shareholders that stock options are not performance-based. A majority of our long-term equity plan continued to be performance-based, consisting of 70% Performance Share Unit awards (“PSUs”) and 30% Restricted Stock Unit awards (“RSUs”).
     
In 2019, the long-term equity award grant was based on two performance measures, Return on Invested Capital (“ROIC”) and relative Total Shareholder Return (“TSR”). However, for 2020, the volatility in the oil and gas business environment, as well as our Spin-off, made it challenging to set meaningful ROIC targets, and as a result, a single performance measure, relative TSR, was selected. We believe that this measure is strongly aligned with shareholder interests and is a meaningful measure of our long-term performance.
     
Continued to base a portion of our CEO’s annual cash incentive on certain sustainability measures to further reinforce the Company’s commitment to our Foundational Beliefs. For 2021, we have included an ESG metric (25% weighting) in our annual cash incentive plan to drive accountability and strengthen the link between our compensation program and our ESG commitments and objectives.
     
Updated our Compensation Peer Group and Relative TSR Peer Group to reflect changes in our business environment.
     
Enhanced disclosures in our Compensation Discussion and Analysis, including descriptions of the individual performance component of our annual cash incentive plan, our PSU plan performance, our target-setting process, and our peer group selection rationale.
     

 

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Executive Compensation Practices

Our compensation practices are designed to align with shareholder interests and incorporate strong governance practices that support the guiding principles of our executive compensation program, which include the following:

 

Attract talented individuals by providing market competitive levels of compensation

 

Retain our leaders by incentivizing them to deliver on our vision

 

Link the interests of our executive officers with the interests of the Company and shareholders

 

Align executive officers’ interests with our long-term financial and strategic objectives

 

Maintain flexibility to better respond to the cyclical energy industry

 

Encourage prudent risk-taking by our executives

 

What We Do:   What We Don’t Do

Pay for performance by aligning performance measures with our strategy and shareholder interests

 

Provide the majority of NEO compensation as performance-based, “at-risk” compensation

 

Maintain a clawback policy in the event of malfeasance or fraud

 

Require robust executive and director share ownership requirements

 

Engage an independent, external compensation consultant

 

Benchmark compensation against relevant global and industry peer groups

 

Cap PSU payout at target when relative TSR exceeds peers’ TSR but absolute TSR is negative

 

 

► No single-trigger vesting upon a change-in-control

 

► No guaranteed bonuses

 

► No uncapped incentives

 

► No tax gross-ups on any severance payments

 

► No excessive perquisites, benefits, or pension payments

 

► No discounting, reloading, or repricing of stock options

 

► No hedging and pledging of Company securities

 

 

For additional details regarding our executive compensation program, please see the section entitled “Executive Compensation Discussion and Analysis.

 

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Corporate Responsibility and Sustainability

 

TechnipFMC is a leading technology provider to the traditional and new energy industries, delivering fully integrated projects, products, and services. Our vision to enhance the performance of the world’s energy industry is supported by a relentless drive of every individual at TechnipFMC.

 

Our decisions regarding corporate responsibility, governance, and sustainability are founded on the principles that guide our Company. Our core values provide the framework for all of our decision making and are based on our Foundational Beliefs.

 

In 2020, to better reflect our focus on corporate responsibility and sustainability at the Board level, the Nominating and Corporate Governance Committee’s charter was substantially expanded to include oversight of the Company’s policies, programs, and strategies related to environmental stewardship, responsible investment, corporate citizenship, human rights, human capital management, ESG risk management, and other ESG matters, as well as other social and public matters of significance to the Company. This committee, now renamed our ESG Committee, also reviews and monitors the development and implementation of ESG targets, standards, metrics or methodologies, and reviews the Company’s public disclosures with respect to ESG matters.

 

Core Values and Foundational Beliefs

 

Our core values are the drivers that guide how we act in a distinctly TechnipFMC way so we can deliver on our purpose and achieve our vision. We bring our values to life through our behaviors-specific, observable, and measurable actions.

 

Our core values

 

Realizing possibilities 

Achieving together

Building trust

 

The heart of everything we do

 

We strive for ever better We work as one team We listen to improve
We take initiative We share knowledge We partner constructively
We learn from success and failure We embrace diversity of thought We seek to outperform

 

Our Foundational Beliefs are the cornerstone of our values that describe how we fundamentally do business and what we never compromise on, no matter the circumstances.

 

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Code of Business Conduct

 

Our Code of Business Conduct is built on our Foundational Beliefs and gives our directors, officers, and employees a common language and playbook for decisions and actions that help us live our core values. We are committed to establishing and maintaining an effective compliance program that is intended to increase the likelihood of preventing, detecting, and correcting violations of Company policy and the law. Moreover, we have a hotline in place for employees, officers, directors, and external parties to anonymously report violations of our Code of Business Conduct or complaints regarding accounting and auditing practices. Reports of possible violations of financial or accounting policies are reported to our Audit Committee.

 

We will disclose amendments to, or waivers of, our Code of Business Conduct that are required to be disclosed under the U.S. Securities and Exchange Commission (“SEC”) and NYSE rules or any other applicable laws, rules, and regulations. Any waiver of our Code of Business Conduct for our officers and directors must be approved by the Board or a relevant Board committee. We have not made any such waivers, and do not anticipate making any such waiver.

 

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Corporate Responsibility and Sustainability 2018-2020

 

We believe corporate responsibility and sustainability is a key element of our Company’s long-term success and is, therefore, one of our Foundational Beliefs. To ensure that the Company is collectively focused on making meaningful and tangible changes, we focused our sustainability efforts under three pillars for the years 2018-2020.

 

Corporate Responsibility and Sustainability Pillars

 

 

Supporting communities

Advancing gender diversity

 

Respecting the environment

 

Main objectives

 

We make a long-term positive

impact in the communities where

we live and work through active engagement in health, education,

and local employment

We create an environment

that encourages everyone

to reach their full potential

We develop solutions and

operations to minimize

carbon intensity and the

impact on the planet

   Go beyond our commercial obligations to create in-country value through initiatives in health, education, and local employment

 

   Enable employees to volunteer and support initiatives

 

   Support and develop Science, Technology, Engineering, and Math (STEM) initiatives

 

   Ensure gender pay equity everywhere we operate

 

   Improve gender balance in the organization, across all functions and levels

 

   Promote women fairly and equally through the career development process

 

   Reduce the carbon footprint of our facilities, products, and solutions

 

   Provide the carbon footprint of all our deliverables to clients through conceptual studies

 

   Set up an internal carbon price for the entire Company, projects, and operations to impact investment decisions

 

 

Over the last three years, we have set key performance targets for each of these pillars and measure our performance against these targets. In addition to these annual objectives, which are described further below, the Company demonstrates its commitment in other ways as it relates to climate change, energy efficiency, renewable resources, water management, material and waste management, and air emissions, all of which are described further within the Strategic Report of our U.K. Annual Report.

 

For instance, in 2020, TechnipFMC reaffirmed its support of the Ten Principles of the United Nations (“UN”) Global Compact in the areas of Human Rights, Labor, Environment, and Anti-Corruption. The UN Global Compact requires an annual Communication on Progress, which is submitted and made publicly available on the UN Global Compact website.

 

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The UN Global Compact is also a call for action to achieve its 17 Sustainable Development Goals (“SDGs”). These societal goals are at the heart of the UN’s 2030 Agenda for Sustainable Development and are aimed at ending poverty, protecting the planet, and ensuring that all people enjoy peace and prosperity by 2030.

 

After evaluation, we have selected certain UN SDGs for which we believe we can achieve the greatest positive impact, given their relevance to our business and sustainability strategy. The application of these SDGs throughout this section are identified by the SDG icon labels.

 

 

Additionally, our Code of Business Conduct requires that we, among other things:

 

Design sustainable development initiatives with a focus on long-term added value;

 

Engage with local communities impacted by our activities in close coordination with our clients and contribute to social and economic self-sustainability;

 

Anticipate and minimize potential disruptions to the community;

 

Mitigate any negative impacts to local communities from our activities;

 

Contribute to local employment growth by fostering training and transfer of skills and technology; and

 

Respect local cultures and be aware of local practices and traditions, legislation, and cultural factors that may impact behaviors and decisions.

 

Our Code of Business Conduct also covers many sustainability issues, from fair employment practices and equal opportunity to Health, Safety, and Environment (“HSE”), human rights, and community involvement. We also have a Quality, Health, Safety, Environment, and Security (“QHSES”) program aimed at preventing accidents and incidents, ensuring personal and corporate accountability, and simplifying practices and processes across our Company. Backed by our Foundational Beliefs, our QHSES teams create a culture of engagement to develop the leadership behaviors that deliver enhanced performance and business results. Regarding human rights, the Company is specifically advancing compliance in recruitment, working conditions, and supply chain practices. Since 2018, we have been a proud member of Building Responsibly, an industry-led initiative enabling construction and engineering companies to collaborate around their shared values, advance their compliance programs, and agree on common approaches regarding worker welfare and human rights.

 

In addition, we have three specific networking groups involving subject matter experts from all of our business units: the Sustainability Network, the Inclusion & Diversity Network, and the Environmental Working Group (“EWG”). These groups implement our sustainability strategy, share knowledge and best practices, develop global and local initiatives and report on results.

 

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Supporting Communities

 

 

Supporting Communities is our first sustainability pillar. Our Code of Business Conduct encourages employees to engage with local communities where we live and work, to contribute to their social and economic self-sustainability, and to ensure that TechnipFMC is a responsible corporate citizen in our communities. It is the foundation of that responsibility that forges our commitment to local communities.

 

Supporting Communities – Objectives

 

TechnipFMC supports and encourages its employees to volunteer and support their community development programs in line with our Code of Business Conduct and our Supporting Communities pillar. Objectives of the pillar included the following:

 

 Go beyond our commercial obligations to create in-country value through initiatives in health, education, and local employment ► Support and develop initiatives related to Science, Technology, Engineering, and Mathematics (STEM) ► Enable employees to volunteer and support initiatives

 

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Go beyond our commercial obligations to create in-country value

 

Keeping our initiatives and commitment
to support local communities

 

 

In 2020, 340 volunteer initiatives were organized in 33 countries where TechnipFMC operates, compared to 346 initiatives in 33 countries in 2019. Employees spent approximately 27,700 volunteer hours in 2020, versus 26,500 in 2019, creating in-country value through actions in health, education, STEM, local employment, environment, gender diversity, and other relevant and impactful local issues. Despite the impact of the COVID-19 pandemic and lockdown in many countries where we operate, our teams were creative and resilient, even designing remote volunteering initiatives, and committed to our continuous support of local communities.

 

In the resource-strained environment around COVID-19, our teams donated personal protection equipment, facemasks, sanitizers, cleaning products, food, medical supplies, and other products to local hospitals, local communities around our facilities, and other charitable organizations. In the United Kingdom, Brazil, and Norway, we also used internal resources to develop and print face shields that were donated to hospitals and medical facilities. In total, we organized more than 100 initiatives in 19 countries and donated more than 100,000 facemasks from our employees and through partnerships with our clients and suppliers.

 

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Support and develop STEM initiatives

 

 

In 2020, we continued to focus on holding at least one STEM initiative in each Company entity with more than 300 employees. Initiatives developed in 2019 and 2020 can be grouped into three main areas: working with schools and/ or organizations to promote STEM for children, promoting STEM careers for students and young professionals, and promoting STEM for employees’ children. Although 2020 brought unique challenges to our traditional STEM format, our employees’ innovative ideas allowed us to offer STEM initiatives that met necessary health protocols and further advanced the Company’s emphasis on STEM topics. For 2020, 73 STEM initiatives were organized in 15 countries.

 

Enable employees to volunteer and support initiatives

 

 

In 2020, we continued our global volunteering program, iVolunteer, which we launched in 2019. iVolunteer enables employees to support initiatives in the communities where they live and work to promote positive, tangible, and collective impact on these communities. Globally, in 2020, our employees participated in local initiatives and spent approximately 27,700 hours volunteering, demonstrating their commitment to our communities despite the COVID-19 pandemic.

 

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Below are some examples of our community outreach in 2020:

 

United States

 

 

In February 2020, TechnipFMC hosted the third annual STEM Day in Houston, Texas. The initiative is part of our active engagement in the education of our community. The event presented 270 students an exciting, hands-on experience related to STEM projects, including experiments and stations related to our industry. We also participate regularly in numerous charitable events, including Women’s Initiative Day of Caring, Target Hunger Day of Caring, and the Veterans’ Program.

 

Other initiatives included being part of the Houston Heart Walk, an annual fundraising event dedicated to spreading awareness about cardiovascular health. Approximately 850 employees participated in a Virtual Heart Walk in 2020.

 

United Kingdom

 

 

Our team in Newcastle promoted volunteering month, putting together a suite of eleven virtual volunteering activities. For every Newcastle-based employee who took part, a donation was made to NHS Charities Together. Our teams from Dunfermline, Westhill, and vessels also organized several virtual volunteering initiatives.

France

 

 

 

Our team in France supports the non-profit organization, Elles Bougent (Girls on the Move). Elles Bougent promotes gender diversity in STEM, as well as making technical and industrial careers accessible for young female students. Our team in Sens also organized 19 volunteering initiatives to support its community and organized a STEM Day, meeting approximately 700 students in two high schools close to our site.

Brazil

 

 

 

In Brazil, we sponsor social and environmental programs for underprivileged children and young students from neighboring communities to help them develop and have equal opportunities, like the “Música Encantada” project where we have sponsored music classes for 250 children in the local community. Also, in 2020, our volunteers organized a beach cleaning activity in Macaé and Vitória, where 360 kg of waste was collected, and a Christmas campaign to donate food and toys to underprivileged communities.

 

Colombia

 

 

 

In Colombia, we implemented a new virtual volunteering initiative to enable our employees to use their knowledge to create courses for colleagues and their families.

 

Italy

 

 

TechnipFMC in Italy, in collaboration with Technical School Enrico Fermi based in Rome, is involved in the Alternanza Scuola-Lavoro (Education-Work Rotation) project. This collaboration enriches school programs with energy sector experience focused on oil and gas, enabling students to better understand the added value offered by working in our industry and at TechnipFMC.

 

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Azerbaijan

 

TechnipFMC is promoting opportunities for students who aspire to work in the energy sector and who have a particular interest in our industry or related sectors through the Baku Master Program organized in collaboration with Heydar Aliyev Foundation. More than 53 students attending Baku Higher Oil School and Azerbaijan State Oil and Industrial University have enrolled and benefitted from the Baku Master Program, which is structured in seven industry modules and managed by our experts.

India

 

In India, our impact-driven sustainable initiative, Seed of Hope, has benefited more than 90,000 people over the years. It has enabled STEM education for girls, provided development workshops for youths, sponsored school fees for underprivileged children, supported communities after natural disasters, and promoted livelihood opportunities, clean energy, and a circular economy.

Malaysia

 

In Malaysia, our Go Success Program is a year-long holistic program that encompasses all branches of knowledge in education, including power motivation, technical education, soft skills, entrepreneurship, and public speaking. The program targets students but also teachers and parents as part of the students’ overall development. In Johor, our employees built a "recycled park” at a school near our site as part of our iVolunteer program.

Australia

 

In Australia, we have been developing a Reconciliation Action Plan and indigenous engagement activities. Since 2018, we have joined more than 1,000 government, corporate, and not-for-profit organizations in committing to build higher trust, lower prejudice, and increased pride in Aboriginal and Torres Strait Islander people and culture.

Ghana

 

TechnipFMC in Ghana handed over a 150-bed capacity Female Hostel to the Ellembelle District and the Charlotte Dolphyne Training Institute, located in the Western region of Ghana, fulfilling a need to provide adequate and safe accommodations for female students and improve their attendance in classes.

 

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TechnipFMC Relief and Development Fund (“TRDF”)

The TRDF is a Company endowment fund created in 2011 to support social and charitable initiatives. Its main goals are to reinforce our corporate social responsibility and our local presence in the countries where we operate and to support not-for-profit social or general interest projects.

 

Every year, we select certain social projects, proposed and carried out by an association or a non-governmental organization, in a country where TechnipFMC has a long-term presence. In 2020, the TRDF helped:

 

  Asedeme in Senegal to purchase a new school bus to transport children with mental disabilities to specialized daycare centers.
   
  Asmae-Sister Emmanuelle to deliver aid related to COVID-19 in Egypt and the Philippines. We also supported a program on inclusive education for children and young adults with disabilities in Egypt.
   
  Essor in Mozambique to improve the employability of the most vulnerable youth from Pemba, Cabo Delgado Province.
   
  Inter Aide in Mozambique to improve maternal and child health in the rural populations of Monapo and Memba districts, Napula province.
   
►  Samu Social International in Angola to provide medical and psychological assistance to homeless youth in Luanda.

 

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Advancing Gender Diversity

 

 

Advancing Gender Diversity is our second sustainability pillar, and we believe it is not only a matter of responsibility, but also a business imperative for our success. We do not tolerate unlawful discrimination related to employment, and our Code of Business Conduct requires that employment decisions related to recruitment, selection, evaluation, compensation, and development, among others, are not influenced by race, color, religion, gender, age, ethnic origin, nationality, sexual orientation, marital status, or disability. We also ensure that our suppliers, customers, and business partners are aware of our goal of creating a diverse and tolerant workforce.

 

Our global framework and key performance indicators for 2018 through 2020 and beyond aim to promote and accelerate the development of women in all functions of our global organization.

 

Advancing Gender Diversity – Objectives

 

Our Advancing Gender Diversity objectives included the following:
Ensure gender pay equity everywhere we operate and review all jobs to ensure gender pay equity and monitor them through a full review every three years Improve gender balance in the organization, across all functions and levels ► Promote women fairly and equally through the career development process

 

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Ensure gender pay equity

 

 

In 2018, we reviewed 100% of our Company job functions to ensure pay equity. We identified areas for improvement and completed all necessary salary adjustments in 2019 to ensure fair compensation for all of our employees.

 

For 2020 and beyond, we will continuously monitor our compensation programs with respect to pay equity. During our annual salary review process, we review average salary adjustments by gender, taking into account performance ranking and salary market competitiveness, in order to identify and address any discrepancies by gender. We perform similar analyses for the annual individual performance payout under the annual cash incentive plan, as well as long-term equity grants. For long-term equity grants, we aim for the gender distribution to reflect the gender distribution in the Company.

 

As part of our commitment to inclusion and diversity, employee well-being, and work-life balance, we announced a Global Parental Leave Policy in 2020 that became effective in 2021. Our core values and Foundational Beliefs support an atmosphere where employees can thrive professionally without sacrificing essential family obligations and well-being. For parents, we recognize and support the need to care for and bond with a newborn or newly adopted child. Through our Global Parental Leave Policy, our aim is that our employees experience an inclusive working environment and feel welcome and comfortable working at TechnipFMC as a parent.

 

Guidelines in the Global Parental Leave Policy include minimum levels of caregiver leave for birth/adoption, compensation, benefits and career development during caregiver leave, job protection during leave, working schedule and workplace adaptation, support of breastfeeding mothers, and time off for infant care. The policy is designed with gender equity and same-sex parents in mind and is defined using the terms “primary caregiver” and “secondary caregiver” in lieu of more traditional definitions. We recognize that every family is different and believe that our policies should apply consistently, whoever the primary caregiver is in a given family.

 

The policy provides global principles aimed at helping the countries design their own local parental leave policies, compliant with local legislation. The policy sets a minimum standard across the Company, and where local guidelines require additional benefits, the local guidelines are implemented.

 

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Improve gender balance

 

 

In 2019, to foster a diverse and inclusive culture, we launched our “Diversity & Inclusion - it Matters!” e-learning module with an aim to raise awareness of our differences and help our employees improve as people and professionals.

This e-learning module was added to New Hire Orientation in 2020 to promote our commitment to advancing gender diversity and an inclusive culture where all employees can reach their full potential. We also continued to improve gender balance in 2020 with a focus on increasing the representation of women hired as new graduates. In 2020, 40% of all graduates hired globally were women, surpassing our goal of 30%.

 

 

TechnipFMC has developed a culture that is based on the values of trust, mutual respect, and dialogue. In accordance with local legislation, regular meetings with trade union-appointed and/or works council representatives are organized for information and/or consultation. The European Works Council (“EWC”) meets at least twice a year and all of our European entities had joined the EWC by the end of 2019 with the EWC agreement signed by participants’ representatives by the end of 2019. In the first quarter of 2020, the EWC elected its new member and held two meetings in 2020, the first in May and the second in December.

 

The Company also fosters Employee Resource Groups (“ERGs”), which are voluntary, employee-led focus groups dedicated to a diverse and inclusive work environment. We currently have seven active ERGs with approximately 1,800 members in the United States, the United Kingdom, and Australia, covering IDEA - Inclusion, Development, and Equality for All; Parents Network; Supporting TechnipFMC to Reach Its Vision of Equity; Black Organization for Leadership & Development; Young Professionals Group; Military Veterans & Friends Network; and Organization of Networking Employees. ERGs discuss and promote topics related to inclusion and diversity, develop and organize events internally and externally, support local initiatives, and propose actions to improve accessibility and inclusivity for all at the workplace. TechnipFMC provides executive support to our ERGs to help strengthen employee relations and improve the well-being of our people.

 

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In 2020, our Chairman and CEO made the pledge to CEO Action for Diversity and Inclusion™, committing to create a trusting environment where all ideas are welcome and employees feel comfortable and empowered to draw on their unique experiences and backgrounds. CEO Action for Diversity & Inclusion™ is the largest CEO-driven business commitment to advance diversity and inclusion in the workplace.

 

As of December 31, 2020, TechnipFMC had the following number of employees:

 

  Male
Employees

Female

Employees

Total

% of Female
Employees
  2019 2020 2019 2020 2019 2020 2019 2020
Executive officers 7 5 4 3 11 8 36% 38%
Senior managers 84 92 24 19 108 111 22% 19%
Employees on payroll (overall) 28,760 26,948 8,407 8,135 37,167 35,083 23% 23%

 

Promote women fairly and equally


 

Continuous discussions around improving representation of women in the organization helps us promote women fairly and equally throughout their career development process within our Company. In 2020, our People and Culture team reviewed all senior management succession plans to ensure that female candidates were considered and included. As a result, 76% of our succession plans in 2020 included at least one woman, which exceeded our 2020 objective to increase representation of women in succession plans by 5%.

 

The representation of women executives in 2020 increased by 2% compared to 2019. The representation of women in senior managers dropped from 22% to 19% in 2020 compared to 2019, respectively. We are committed to improving this dimension and took necessary steps in strengthening our succession plans and graduate intake in 2020. We have also developed an inclusive leadership curriculum, which, along with our executives’ commitment and systemic changes to policy and talent standards, should help improve female representation in senior manager roles in the medium to long term.

 

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Respecting the Environment

 

 

Respecting the Environment is the third of our three sustainability pillars. We believe our environmental responsibility requires us to operate in a manner that minimizes the impact of our operations on the environment, develop sustainable solutions to reduce carbon emissions within our overall environmental footprint, and avoid any environmental incidents in our operations and activities.

 

Environmental Governance

Sustainability is one our Foundational Beliefs. Respecting the Environment is one of the three pillars of our sustainability strategy, described above.

 

As defined in our global QHSES policy, QHSES is managed as an integral part of our business, based on a genuine care and concern for people and the environment. We do not compromise on quality, safety, health, security, or environmental sustainability to achieve our financial, project, service, and manufacturing objectives. Our overall objectives regarding environmental responsibility are (i) to operate in a manner that minimizes the impact of our operations on the environment and develop sustainable solutions to reduce carbon emissions and our overall environmental footprint, and (ii) to avoid causing any environmental incidents.

 

We continue to commit resources and expertise to eliminate hazards, reduce risks, and prevent injury, ill health, and environmental pollution related to our activities through design, process improvement, and technologies.

 

A key element of our environmental management is our Global Environmental Management Standard, applicable to all our locations and projects globally. The standard and linked guidelines are an integral part of our global HSE management system. The standard and guidelines describe the minimum requirements and set the baseline for identifying potential environmental risk and opportunities, managing the environmental impact of our activities and projects during our business development, and improving our environmental performance. As part of our risk management process, environmental risks are regularly identified, monitored, and mitigated at every business level. The Company operates in a manner that minimizes the environmental impact of, and risks associated with, our activities, through effective environmental management standards that are implemented in an extended lifecycle context and perspective, fully in line with the latest ISO 14001 requirements and in compliance with all applicable marine environmental regulations. We seek to prevent and reduce our impact on the environment in accordance with legal requirements, ISO 14001 requirements, and international and internal standards. Environmental performance, including environmental incidents, rates, and risks, are consolidated monthly and reported to senior management.

 

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Responsibility and Organization

The Company is committed to operating in compliance with all applicable environmental regulations, laws, and international codes and standards in the countries in which we operate. As such, environmental management is the responsibility of everyone at TechnipFMC, starting with our Board of Directors and ESG Committee. Our ESG Committee advises and recommends to the Board appropriate ESG practices and initiatives and oversees the Company’s progress in implementing its ESG practices and programs. The effective implementation of environmental policy depends upon management’s commitment, the accountability of every entity, an ongoing dialog with key stakeholders, and a chain of responsibility that extends to the workforce of the Company.

 

All entities and projects within the Company are managed by dedicated QHSES managers and directors, with a team of QHSES engineers and supervisors responsible for the application of the environmental rules in their respective areas to ensure that our environmental requirements are well implemented. Our Code of Business Conduct requires managers to inform employees, contractors, and suppliers of applicable environmental rules, procedures, and expected behaviors, and that people reporting to them receive the required environmental training.

 

A specific EWG reports to the Corporate QHSES team and coordinates a network of environmental specialists from all regions and business units. The EWG sets environmental programs, supports the enhancement of environmental performance, and develops global environmental initiatives involving all our regions and projects.

 

Respecting the Environment - Objectives

 

Our Respecting the Environment objectives included the following:
Reduce the carbon footprint of our facilities, products, and solutions and reduce our greenhouse gas emissions Provide the carbon footprint of all our deliverables to clients Establish an internal carbon price for the entire Company, including projects and operations, to inform and impact investment decisions

 

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Reduce our carbon footprint

We have focused on reducing our greenhouse gas (“GHG”) emissions, with an objective of reducing our Scope 1 and Scope 2 emissions by 5% each year since 2017. In addition, we have set clear ambitions to enhance our technological and service skills to serve our clients and to encourage them to make carbon-conscious choices and to drive our capital expenditure and operating expenditure decisions with a structured internal carbon price mechanism.

 

 

TechnipFMC is committed to reducing carbon emissions and its overall environmental footprint by developing new, innovative, and sustainable solutions in the oil and gas market. In 2018, the Company adopted a Global Greenhouse Gas Management standard to enhance the Company’s capabilities in GHG reduction in the Company’s business with focus on Scope 3 GHG emissions.

 

By December 31, 2020, approximately 80 carbon footprint studies had been completed, covering a review of Scope 1, Scope 2, and Scope 3 emissions in our supply chains in key countries.

 

Since 2018, total GHG emissions have decreased in line with Company objectives. In 2020, the total GHG Scope 1 and Scope 2 emissions were 427,003 tonnes of CO2 equivalent versus 469,955 tonnes of CO2 equivalent reported in 2019, representing a 9% annual reduction and a 37% overall reduction compared to our baseline year of 2017. The reduction in GHG is mainly linked to trends in our business activities and to our Energy Transition program.

 

In addition to our efforts in reducing our carbon emissions within our operations, TechnipFMC is also working to ensure our next generation of products are less carbon intensive. For example, our Subsea 2.0TM design included a lifecycle GHG analysis that demonstrated how our innovations for the production of trees may allow up to a 46% reduction in our carbon footprint as compared to the previous design.

 

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Finally, the Carbon Footprint Training Program launched by the Company’s QHSES department for all business levels and projects in 2019 continued in 2020. By December 31, 2020, more than 40 training sessions for engineers and managers had been delivered in locations where we have a material presence. This program is focused on extending knowledge transfer, from the lifecycle perspective, and carbon footprint concepts to empower engineers in the implementation of a complete GHG analysis for all business lines and to increase managers’ competencies on the reduction of our carbon footprint across the organization.

 

GHG Emissions

The table below describes the annual quantity of GHG emissions resulting from activities the Company is responsible for and has operational control over (including the combustion of fuel and the operation of any facility), measured in tonnes of CO2 equivalent:

 

  2018 2019 2020
Total GHG Emissions Direct Indirect Direct Indirect Direct Indirect
(in metric tonnes CO2 emissions emissions emissions emissions emissions emissions
equivalent) Scope 1 Scope 2 Scope 1 Scope 2 Scope 1 Scope 2
Our Assets 254,535 60,401 283,545 39,932 278,628 35,583
Industrial sites 10,968 40,778 9,701 21,375 10,641 15,712
Fleet 242,117 21 272292 0 266,471
Offices 1,450 19,602 1,551 18,558 1,516 19,871
Our Projects 319,523 9,010 132,572 13,906 68,188 44,604
including Construction sites and Yards/Bases:            
Onshore/Offshore 284,055 3,898 51,780 9,128 24,491 42,110
Subsea 29,658 2,840 76,023 2,873 37,477 1,736
Other 5,810 2,272 4,769 1,905 6,220 759
GHG Emissions by Scope 574,058 69,411 416,117 53,838 346,816 80,187
Total GHG Emissions 643,469 469,955 427,003

 

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2% of the Company’s annual GHG emissions resulting from activities the Company is responsible for and has operational control over (including the combustion of fuel and the operation of any facility) for the year ended December 31, 2020 related to energy consumed in the United Kingdom and offshore area.

 

To ease yearly comparison and trend analysis, industrial sites, offices, and fleet are presented under Our Assets, as they are TechnipFMC’s permanent sites fully owned and operationally managed. Construction sites and Yards/Bases are aggregated under Our Projects and presented separately as they are usually temporary sites that are not owned by TechnipFMC but operationally managed during the construction phase. They are subject to variations from year to year, depending on the number and type of ongoing projects and the type of construction activities (e.g., early site work, civil work, construction, pre-commissioning, commissioning, or start-up).

 

Within Our Projects, Scope 1, direct emissions, and Scope 2, indirect emissions, decreased by 23% compared to 2019 due to reduced onshore and offshore construction and yard activities dedicated to major engineering, procurement, and construction (“EPC”) activities.

 

For Company assets, our Energy Transition program in place in different countries contributed to saving 4,661 tonnes of CO2 equivalent by using renewable energy in offices and manufacturing areas.

 

The annual quantity of emissions from the purchase of electricity, heat, steam, or cooling by the Company for its own use is described in the table below:

 

Total GHG emissions from the purchase of electricity, heat,
steam, or cooling by the Company for its own use
(in metric tonnes CO
2 equivalent):
2018 2019 2020
Electricity 69,304 53,725 80,059
Heat 87 0 0
Steam 0 0 0
Cooling 20 113 128
Total Emissions 69,411 53,838 80,187

 

5% of the Company’s annual GHG emissions of electricity, heat, steam, or cooling by the Company for its own use for the year ended December 31, 2020 related to energy consumed in the United Kingdom and offshore area.

 

GHG Emissions Intensity

The Company’s GHG emissions intensity factor is calculated by dividing total Scope 1 and Scope 2 emissions by the environmental hours worked (corresponding to sites that contributed to environmental data reporting). Hours worked has been acknowledged as being most representative of the Company’s overall activity and is frequently used in HSE standards in the industry.

 

(in kg eq. CO2/hours worked) 2018 2019 2020
Total GHG Emissions Intensity 4.07 2.99 2.40

 

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Energy Consumption

The aggregate of (i) the annual energy consumed from activities for which the Company is responsible (including the combustion of fuel and the operation of any facility) and (ii) the annual quantity of energy consumed resulting from the purchase of electricity, heat, steam, or cooling by the Company for its own use for the year ended December 31, 2020 was 1,624 GwH, of which 2% related to energy consumed in the United Kingdom and offshore area.

 

Methodology

Environmental data is collected through our QHSES reporting system, Synergi, a global, integrated software solution. Each of the Company’s reporting entities is required to consolidate and record its environmental data in Synergi every month. This data reflects the environmental performance of entities involved in the offices, construction sites, yards and spoolbases, manufacturing, and fleet operations when we own or manage the site in question and when we are responsible for managing the work.

 

Environmental data is aggregated for the analysis in Asset and Projects categories: industrial sites, fleet, and offices are consolidated as Our Assets since these three categories represent TechnipFMC’s permanent sites (owned or leased) under full operational control, while the EPC Construction sites and Yards/Bases are not all owned sites but are all under the operational control and responsibility of the Company for short- to medium-term periods (less than five years).

 

The reporting period is the financial year ending December 31, 2020. Figures for environmental indicators have been extracted from the Company reporting tool.

 

To calculate Scope 1 and Scope 2 GHG emissions, sites’ registered electricity consumption and fuel consumption are converted using emission factors from the IPCC Guidelines for National Greenhouse Gas Inventories, 2006 and from CAIT v8.0, 2011. Emission factors differ depending on fuel type, method of generating electricity, and country. The reporting tool calculates the resulting CO2 emissions.

 

 

Provide the carbon footprint to our clients

Our second Respecting the Environment objective aims to provide the carbon footprint of all our deliverables to clients through conceptual studies to help introduce our clients to new, low-carbon options in the early stages of projects and highlight the carbon footprint differences between each concept as early as possible. In 2019, carbon footprint calculation modules were developed and were implemented in our Technip Energies and Subsea conceptual studies.

 

In 2020, we launched proprietary Carbon Assessment Tools to enable the business to better understand how much carbon a facility or operation might produce. Our consultants offer proprietary Carbon Assessment Tools that provide a comparative carbon footprint of various design alternatives to support concept selection. In 2020, nine carbon footprint studies were performed in conceptual phase providing carbon-conscious solutions to our clients.

 

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Internal carbon price

 

 

In 2019, TechnipFMC began developing a mechanism to establish an internal carbon price for the Company, focused on our assets, which should be implemented as part of the future Company’s investment decisions for capital expenditures. We followed the highest international standards on this topic, and, in 2019, we formed a business-integrated Internal Carbon Price Workgroup with the participation of our QHSES, EWG, Strategy, Finance, and Sustainability experts.

 

The purpose of the workgroup was to assess the potential impact of an internal carbon price on TechnipFMC’s capital expenditures. A case study was performed and several internal carbon price methodologies were applied. The case study emphasized the improvement of the Company’s cumulative cash flow, internal rate of return, and the reduction of the payback period, and valorized the most sustainable solutions in terms of carbon emission reduction.

 

As a result, in 2020, we further progressed with the development of a process to assess which capital investments take into account our internal carbon price, and we have also established a financial model for obtaining capital investment metrics. We defined an Internal Carbon Price and added related elements into our investment decision policy.

 

2020 Other Environmental Initiatives

 

Single-Use Plastics Elimination

TechnipFMC has also joined global initiatives for the protection of the oceans from plastics pollution. Plastics are recognized as valuable resources, and the Company is committed to reducing its use of single-use plastics in day- to-day working activities. A Single-Use Plastics Elimination (“SUPE”) project was launched in 2018 in 52 locations, comprising 28% of Company locations, and in the fleet with the aim of eliminating single-use plastics or substituting them with more sustainable and reusable items.

 

 

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In 2018, the SUPE project saved approximately 167,000 plastic bottles and 2.3 million plastic cups.

 

In 2019, the SUPE project was extended to more than 40 countries. Approximately 139 locations, comprising 76% of the Company, and more than 30 vessels and projects completed the elimination of single-use plastic bottles and cups in 2019.

 

In 2020, we reduced plastics in our assets from 1,500 tonnes to 700 tonnes, with more than 86% of the Company participating in the SUPE project, encompassing approximately 159 locations.

 

 

Single-Use Plastics Elimination Project

 

 

Environmental Certifications

 

 

Despite operating in a complex industry, we are committed to successfully managing our environmental impacts. We measure our environmental performance and seek to operate through effective environmental management standards that are implemented in an extended lifecycle context and perspective.

 

The Company maintains a policy of seeking to implement environmental certification ISO 14001 where practicable. To meet this commitment, TechnipFMC has implemented an environmental management framework. By December 31, 2020, 74 entities were ISO 14001 certified, including all head offices and managed projects, industrial sites, and the Company fleet. For each of these entities, the environmental management system was verified and certified by an independent third party.

 

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Corporate Responsibility and Sustainability 2021-2023

 

Environmental, Social, and Governance

The industry as a whole is focused on ESG issues. For TechnipFMC, our approach to ESG will be measured and will have one clear goal: To drive real and sustainable change that favorably impacts our Company, our industry, and our communities.

 

These are some of the actions we are undertaking:

 

In June 2020, the Company expanded its commitment to diversity across our organization. As a result, we adopted an Inclusion and Diversity objective, which includes not only gender but also underrepresented minorities, including those differentiated by religion, sexual orientation, and disability. This focus empowers our people to be the difference through inclusion and embracing the value of diversity.

 

In November 2020, we made our 50 by 30 commitment. This is our roadmap to reduce CO2 emissions under Scopes 1 and 2 by 50% by 2030.

 

At the same time, we defined our ESG Strategy for 2021-2023 and the way we will track our performance using a three-year scorecard, which will be updated annually. This improved transparency and accountability will help us deliver tangible results in the short term.

 

2021-2023 ESG Strategy

 

Environment: We will play our role in reducing carbon footprint from the upstream oil and gas industry.

 

       
           
  Our carbon footprint   Our clients’ carbon footprint   Waste management
 

Targeting 50% reduction of CO2 by 2030 (Scope 1 and 2)

 

Establish Scope 3 reduction targets

 

 

33% of order intake linked to lower carbon intensity offerings

 

Establish target reduction in carbon intensity for our clients’ offerings-establish baseline in 2020

 

 

10% of waste from our assets and projects is recycled and reused

 

10% reduction of water consumption

 

 

50 by 30 sets out our Scope 1 and 2 CO2 reduction targets (covering fuel combustion, Company vehicles, fugitive emissions, as well as purchased electricity, heat, and steam). By 2023, we will establish our Scope 3 targets (covering purchased goods and services, business travel, employee commuting, waste disposal, use of sold products, transportation and distribution, investments, and leased assets and franchises).

 

We will help reduce our clients’ carbon footprint. We want 33% of our orders to be linked to lower carbon intensity offerings and will establish carbon reduction targets for our clients, baselined to 2020.

 

We will waste less. We will cut water consumption by 10% and reduce waste from our assets and projects by 10%, with a focus on recycling and reuse.

 

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Social: We will drive sustainable change in the communities where we live and work.

 

       
           
  Awareness and culture   Fair representation   Community
 

100% of all senior managers trained in inclusive leadership learning

 

Inclusion & Diversity lens applied to employee benefits and policies

 

 

45% of graduates hired are women

 

20% improvement in under-represented populations in senior management

 

 

Increase the number of global STEM initiatives by 20%

 

Increase the number of employees engaged globally in volunteering by 20%

 

 

All senior managers will go through inclusive leadership learning, and we will apply an inclusion and diversity lens to our employee benefits and policies.

 

We will underline the importance of fair representation. We will increase the number of people from underrepresented populations in senior management by 20%, while women will make up 45% of graduates hired.

 

Governance: How we do business is as important as why we do business.

 

       
           
  Leadership in HSE   Responsible business behavior   Responsible business behavior
 

Continued implementation of SIF prevention projects, with goal of reaching 400 projects

 

Industry advocate for IOGP Lifesaving Rules

 

 

Implement third-party risk management program, with focus on human rights due diligence and audits, on 100% of high-risk suppliers

 

Yearly ethics and compliance training for all managerial levels

 

 

Define remuneration of leadership and senior managers to include linkage to net carbon footprint

 

Governance model established and reviewed with Board ESG committee

 

 

We never compromise on safety and we are committed to raising the bar on workers’ welfare.

 

We will implement 400 SIF (Serious Injuries and Fatalities) Prevention projects. We will also be an industry advocate for the International Association of Oil & Gas Producers Lifesaving Rules.

 

Our decisions have ethical dimensions. Managers will continue to receive yearly ethics and compliance training, and we will audit high-risk suppliers for their human rights practices.

 

Our leaders and senior managers’ compensation will be linked to our net carbon footprint, and our governance model will be reviewed by the Board’s ESG Committee.

 

Beyond the scorecard

 

Beyond the defined the ESG scorecard, we will continue to make a difference in the communities where we live and work and to support their efforts through initiatives such as iVolunteer.

 

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Corporate Governance

 

The Board believes that the purpose of corporate governance is to facilitate effective oversight and management of the Company to maximize shareholder value in a manner consistent with our vision statement, purpose, core values, Foundational Beliefs, Code of Business Conduct, and all applicable legal requirements.

 

The Board provides accountability, objectivity, perspective, judgment, and, in some cases, specific industry or technical knowledge or experience. In carrying out its responsibilities to our shareholders, the fundamental role of the Board is to ensure continuity of leadership; the implementation, understanding, and pursuit of a sound strategy for the success of our Company; and the availability of financial and management resources and the implementation of control systems to carry out that strategy.

 

Governance Guidelines and Key Board Practices

 

Our Corporate Governance Guidelines (“Governance Guidelines”) contain general principles and practices regarding the function of the Board and its committees. The Governance Guidelines establish a framework to guide the Board in its oversight responsibilities in a manner that is independent of management and aligned with the interests of our shareholders. The Board reviews these governance practices, the laws of England and Wales under which we are incorporated, the U.K. Disclosure Guidance and Transparency Rules, the regulations, directives, and decisions of the European Union, the rules and listing standards of the NYSE and Euronext, and the regulations of the SEC, as well as best practices recognized by governance authorities, to benchmark the standards under which it operates.

 

Key Elements and Practices

 

 

  Composition of the Board. Our Board seeks to attract professionals who are not only qualified under the governance rules pertinent to our Company but also bring diversity of thought and experience. Our ESG Committee considers multiple factors when determining whether a candidate is qualified to serve on our Board in order to achieve a balance between fresh perspectives and the deep knowledge and experience of our more tenured directors. As such, our ESG Committee often considers a candidate’s:

 

  (a) Experience in corporate management, as a board member of another publicly held company, and in finance and accounting and/or compensation practices
  (b) Professional and academic experience relevant to our industry
  (c) Leadership skills
  (d) Cultural perspective and diversity of thought
  (e) Ability to commit the time required for service on our Board

 

Board and Committee Evaluations. Each year our directors complete a self-evaluation to determine whether the Board and its committees are functioning effectively. Additionally, each of the Audit, Compensation, and ESG Committees conducts a separate evaluation of its own performance and the adequacy of its charter. These evaluations include an assessment of the diversity of talents, expertise, and occupational and personal backgrounds of the Board members. The ESG Committee receives comments from all directors and reports the results of the evaluations annually to the Board, as well as recommendations for improvements in the overall performance of the Board and its committees.

 

New Director Orientation and Continuing Education. An orientation program has been developed for new non-executive directors, which includes written materials and meetings with our executive officers. The orientation

 

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program is designed to provide general information about our Board and its committees; a review of director duties and responsibilities; and comprehensive information about our industry, operations, strategies, and challenges.

The Board believes that ongoing education is important for maintaining an effective Board. Accordingly, our Board encourages directors to participate in ongoing education, and reimburses directors for expenses incurred in connection with such education programs.

 

Retirement Policy. As further described in our Governance Guidelines, a non-executive director whose birth date occurs prior to July 1st must retire at the annual general meeting of shareholders of the Company during the year of such director’s 72nd birthday, and a non-executive director whose birth date occurs on or after July 1st must retire at the annual general meeting of shareholders of the Company the year following such director’s 72nd birthday. Our Board may waive this policy on a case-by-case basis on the recommendation of the ESG Committee if it deems a waiver to be in the best interests of the Company and its shareholders.

 

Director Share Ownership Requirements. Within five years following initial election to the Board, directors are required to own Ordinary Shares with a value equal to or more than five times the Company’s annual cash retainer paid to directors.

 

Shareholder Engagement

The Company annually seeks feedback through engagement with shareholders, and we continued this practice in 2020. Our relationship and ongoing dialogue with our shareholders is an important part of our Board’s corporate governance commitment. For our 2020-2021 engagement, we contacted proxy advisory firms and our top shareholders representing approximately 42% of our Ordinary Shares outstanding. Management, and in some instances, our ESG Committee Chair, held meetings with proxy advisory firms and shareholders representing approximately 18% of our Ordinary Shares outstanding.

 

Through these engagements, the Company received feedback on our strategic and financial performance, including our Spin-off of Technip Energies, executive compensation, Board composition and governance topics, as well as important environmental and social issues. Some shareholders did not require a meeting as they either indicated their support for our compensation and governance practices or did not have questions regarding our compensation or governance practices.

 

We are pleased that we received high support on all of our 2020 proposals. Importantly, the 86% approval for our 2019 executive compensation program was a marked increase over the prior year results. As executive compensation programs evolve, the Board remains committed to continuing the dialogue with shareholders regarding our compensation philosophies and practices.

 

Furthermore, in early 2020, we also engaged our shareholders in order to discuss more broadly our announced Spin-off transaction, which was completed on February 16, 2021, Board leadership structure, general Board practices, our executive compensation program, and our sustainability efforts. We welcomed our shareholders’ feedback and suggestions in maintaining the balance between strengthening the link between pay and performance, retaining and motivating our executives, and appropriately compensating our executives for outperformance, while increasing long-term shareholder value.

 

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Board Alignment with Shareholder Feedback

 

What We Heard 

What We Did 

Reinforce the link between annual incentive measures and business strategy and market conditions

   We began 2020 with annual incentive plan measures identical to those in 2019 - EBITDA, EBITDA as a Percentage of Revenue, and Working Capital Days - to reflect business performance aligned with shareholder interests and priorities at the beginning of the year.

 

►    As a result of the COVID-19 pandemic and oil and gas market decline, generating cash flow and delivering cost reduction became urgent. As a result, we adopted Free Cash Flow Conversion and Incremental Cost Savings as our two annual incentive plan measures for Q2 through Q4 2020, and our compensation committee set the Q1 2020 payout metrics to payout at 0%.

 

►    25% of our 2020 annual cash incentive plan continued to be based on individual performance indicators that included specific objectives regarding sustainability in our business performance, further reinforcing the Company’s commitment to our Foundational Beliefs while we focused on responding to the challenging business environment.

 

►    70% of our long-term equity incentive plan awards pay out based on Company performance, which is determined based on relative TSR performance measured against a peer group. Payout under the plan is capped at 100% if the Company’s absolute TSR is negative.

 

►    In 2021, we have introduced an ESG metric in our annual cash incentive plan (25% weighting) to directly link our compensation program to our ESG objectives. We will continue to include EBITDA as a Percentage of Revenue and Free Cash Flow from Operations as measures in the annual cash incentive plan, with an objective to increase our operating profitability, leverage cost efficiencies, maintain the financial health and liquidity of the Company, and drive shareholder value creation.

 

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What We Heard What We Did

Reinforce the link between annual incentive measures and business strategy and market conditions

►    We began 2020 with annual incentive plan measures identical to those in 2019 - EBITDA, EBITDA as a Percentage of Revenue, and Working Capital Days - to reflect business performance aligned with shareholder interests and priorities at the beginning of the year.

 

►    As a result of the COVID-19 pandemic and oil and gas market decline, generating cash flow and delivering cost reduction became urgent. As a result, we adopted Free Cash Flow Conversion and Incremental Cost Savings as our two annual incentive plan measures for Q2 through Q4 2020, and we set the Q1 2020 payout metrics to payout at 0%.

 

►    25% of our 2020 annual cash incentive plan continued to be based on individual performance indicators that included specific objectives regarding sustainability in our business performance, further reinforcing the Company’s commitment to our Foundational Beliefs while we focused on responding to the challenging business environment.

 

►    70% of our long-term equity incentive plan awards pay out based on Company performance, which is determined based on relative TSR performance measured against a peer group. Payout under the plan is capped at 100% if the Company’s absolute TSR is negative.

 

►    In 2021, we have introduced an ESG metric in our annual cash incentive plan (25% weighting) to directly link our compensation program to our ESG objectives. We will continue to include EBITDA as a Percentage of Revenue and Free Cash Flow from Operations as measures in the annual cash incentive plan, with an objective to increase our operating profitability, leverage cost efficiencies, maintain the financial health and liquidity of the Company, and drive shareholder value creation.

Consider increasing the at-risk portion of executive compensation

 

►   Some shareholders do not consider stock options as at-risk as they believe time-based stock options do not include performance conditions despite their intrinsic performance threshold

For 2020, we discontinued the use of stock options, and ensured that performance-based equity now represents 70% of annual equity awards.

 

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What We Heard What We Did

Improve transparency on outcomes under annual incentive plan and vesting of PSUs

 

  Some shareholders requested clarity regarding PSU payouts during periods of declining performance

 

This Proxy Statement provides details of performance and vesting for the 2018 PSU grant that vested in 2020, as well as the payout scale for the 2020 PSU grant.
Effective Board size and importance of
balanced Board leadership
Upon the completion of our Spin-off, we reduced the size of our Board from 15 to 10 directors, which will be further reduced to nine directors at our Annual Meeting. We continue to balance our Board leadership between our Executive Chairman and Independent Lead Director.
Disclosing shareholder feedback from shareholder engagement program and Company response We continued our practice of providing transparent and comprehensive disclosure of our shareholder engagement program, including this list of feedback received, and our response to shareholder concerns.

 

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Leadership Structure of the Board

The Board believes that our shareholders are best served by a Board that has the flexibility to adjust our leadership structure to the evolving needs of the Company. In 2019, with the completion of the post-merger integration, the Board determined that combining the roles of Chairman and CEO, paired with a strong Lead Independent Director, would be in the best interests of our shareholders. Pascal Colombani served as our Lead Independent Director until the closing of our Spin-off, at which time Claire S. Farley was appointed as the Board’s Lead Independent Director.

 

Each of the Chairman’s and Independent Lead Director’s specific responsibilities are listed below:

 

 

 Executive and Board Leadership 

 
Douglas J. Pferdehirt  
Chairman of the Board and CEO  
   
Key Responsibilities  
►    All strategic and operational aspects of the Company

►    Managing all executives of the Company

►    Serving as the principal external spokesperson for the Company with analysts, investors, media, and clients

►    Leading the Board

►    High-level government and client engagement

   

 

 Independent Leadership 

 

 

Claire S. Farley  
Lead Independent Director  
   
Key Responsibilities  
► Approving Board meeting schedules and agendas ►    Acting as the liaison between the independent directors and the Chairman and CEO

► Presiding over all meetings of the Board at which the Chairman and CEO is not present

►    Monitoring and reporting to the Board any conflicts of interests of directors

► Calling meetings of the Board, as necessary

 

► Presiding over executive sessions of the independent directors

►    Participating in the Company’s shareholder engagement program, when required

 

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Our Board believes that a combined Chairman and CEO leads to a more effective Board that remains balanced and independent due to the presence of a strong Lead Independent Director, while also creating a unified approach on corporate strategy development and execution and streamlining accountability for our performance.

 

    Balanced, Independent, and Effective Board - The Board believes that a combined Chairman and CEO leadership structure is balanced by the oversight of the remaining members of our Board, each of whom is an independent director, and ensures that the Board functions independently. Moreover, only independent directors serve on our Audit Committee, Compensation Committee, and ESG Committee. In addition, the Board nominated Ms. Farley to serve as Lead Independent Director, who has the ability to call meetings of the Board and presides over executive sessions of the Board. For transparency and alignment, our Compensation Committee consults all independent directors in setting our CEO’s compensation, but the authority to approve our CEO’s compensation remains with the fully independent Compensation Committee. In addition, our CEO’s annual performance objectives are reported and evaluated by both the Compensation Committee and the ESG Committee to ensure a comprehensive, inclusive, and diverse analysis and evaluation of our CEO’s annual performance. Finally, the Board believes that the Company’s Governance Guidelines, and the quality, stature, and substantive business knowledge of the Board, as well as the Board’s culture of open communication and transparency with the CEO and senior management, are conducive to Board effectiveness with a combined Chairman and CEO position.
     
    Unified Approach on Corporate Strategy Development and Execution - Mr. Pferdehirt is the individual with primary responsibility for managing the Company’s day-to-day operations and is best positioned to chair regular Board meetings as the Board discusses key business and strategic issues and to focus the Board’s attention on strategies and opportunities of greatest importance to the Company and its shareholders. This was proven to be particularly important during and after the Company’s Spin-off of Technip Energies. This leadership structure also allows the Board to benefit from Mr. Pferdehirt’s knowledge of the Company’s business, market opportunities, and risks, and facilitates communications and relations with other members of senior management.
     
    Streamline Accountability - Combining the roles of Chairman and CEO creates a clear line of authority that promotes decisive and effective leadership, both within and outside the Company.

 

As our Company evolves, the Board will regularly evaluate the Board leadership structure to ensure it continues to meet the needs of the Company, and to ensure that it provides strong, independent oversight for our shareholders. In particular, as part of this evaluation, the Board will consider the outcomes of the annual Board and committee self-evaluation process and feedback received from shareholders, in addition to other factors, including the current state of the Company’s strategy and operations, recent Company performance, market and industry factors, and peer company practices.

 

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Board Composition and Criteria for Board Membership

Our Board seeks directors whose complementary and diverse knowledge, experience, and skills provide a broad range of perspectives and leadership expertise in areas critical to the Company. These include expertise in the energy and engineering industry, strategic planning and business development, business operations, sustainability and emerging technologies, finance and audit, corporate governance, and other areas important to the Company’s strategy and oversight. Our Board also assesses director age, tenure, and Board continuity and strives to achieve a balance between the perspectives of new directors and those of longer-serving directors with institutional insights.

 

Criteria for Board Membership in Governance Guidelines

Our Governance Guidelines state that candidates for our Board, in order to be nominated by our ESG Committee, must be qualified and eligible to serve under applicable law, our articles of association (“Articles”), and the NYSE and Euronext rules, and should have:

 

  A high level of personal and professional integrity
  Strong ethics and values
  The ability to make mature business judgments

 

In addition, the Governance Guidelines provide that the ESG Committee may consider additional factors when determining whether a candidate is qualified to serve on our Board, including the candidate’s:

 

  Experience in corporate management, as a board member of another publicly held company, and in finance and accounting and/or compensation practices
  Professional and academic experience relevant to our industry
  Leadership skills
  Cultural perspective and diversity of thought
  Ability to commit the time required for service on our Board

 

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Board Composition, Refreshment, and Succession Planning

The ESG Committee regularly evaluates the composition of our Board and considers whether the Board has the right set of backgrounds, experience, skills, diversity, and qualifications to effectively oversee our Company’s strategy and our executives’ execution of that strategy. One of the key goals of our Board composition is to ensure we have the right skills and experience on our Board to execute our strategic goals successfully and efficiently. As such, the Board actively considers diversity of backgrounds, experience, skills, geography, and perspectives, including gender and cultural diversity, in the recruitment and nomination of directors. Our current directors possess a diversity of such skills, experience, and expertise that are relevant to our business, such as the following:

 

  Executive leadership
  Industry experience
  Corporate governance and legal
  Strategy and risk management
  Cultural and gender diversity
  Sustainability and emerging technologies
  Outside public company board service
  Finance and audit
  Acquisition, divestment, and investment portfolio management

 

In 2019 and 2020, our ESG Committee, with the assistance of Spencer Stuart, a nationally recognized director search firm, identified, screened, and assessed the capabilities of potential new director candidates. This resulted in the Company identifying and appointing new Board members in 2019, 2020, and 2021: Mr. Yearwood and Mses. Øvrum and Zurquiyah, respectively, as part of our ongoing Board refreshment focus.

 

In addition to evaluating directors’ skills and experience that tie directly to our business strategy, the ESG Committee also regularly considers any changes in the professional status, independence, outside commitments, and other public company directorships of our directors to assess the potential impact of these changes on the Board’s effectiveness.

 

As further described in our Governance Guidelines, a non-executive director whose birth date occurs prior to July 1st must retire at the annual general meeting of shareholders of the Company during the year of such director’s 72nd birthday, and a non-executive director whose birth date occurs on or after July 1st must retire at the annual general meeting of shareholders of the Company the year following such director’s 72nd birthday. Our Board may waive this policy on a case-by-case basis on the recommendation of the ESG Committee if it deems a waiver to be in the best interests of the Company and its shareholders.

 

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Board and Committee Evaluations

The Board believes that a rigorous evaluation process is an essential component of strong corporate governance practices. The ESG Committee reviews regularly the Board’s composition, including the key skills and experience represented on the Board, to ensure it meets the changing needs of the business, also taking into consideration the outcomes of the annual Board and committee self-evaluation process, feedback received from shareholders, and evolving market best practices with respect to governance.

 

The ESG Committee’s annual evaluation process to evaluate Board effectiveness includes a full Board evaluation and committee evaluations.

 

Process is Initiated Evaluation Distributed Analysis Presentation of Results
The ESG Committee reviews and approves the process to evaluate the performance of the Board of Directors and its three committees.

Questionnaires are distributed through a third-party web-based platform. The process encourages candid responses from our directors and promotes productive discussions.

 

Questionnaires solicit
feedback on issues,
including:

 

►    Board/Committee operations

 

►    Succession planning

 

►    Committee composition, processes, and effectiveness

 

►    Board dynamics

 

►    Director preparation, participation, and contribution

 

►    Management preparation and communications

Completed questionnaires are analyzed and summarized by Company management and reported to the ESG Committee Chair. The ESG Committee Chair reviews the results of the evaluations with the full Board and each committee to determine areas of opportunity.

 

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Board Commitments

In conjunction with our Board and committee evaluations, our ESG Committee is responsible for ensuring that our directors possess and demonstrate a willingness to devote the required time and attention to Board duties and to otherwise fulfill the responsibilities required of directors. During our 2020-2021 shareholder engagement, certain institutional investors and proxy advisory firms raised concerns about potential overboarding.

 

 

Number of Other Public Company Boards              
               
0   2
Douglas J. Pferdehirt, John O’Leary Kay G. Priestly, Margareth Øvrum, Sophie Zurquiyah
   
               
1   4
Peter Mellbye, Claire S. Farley, John Yearwood Eleazar de Carvalho Filho

 

As noted above, a majority of our directors serve on no more than two other public company boards of directors. Our ESG Committee and our Board believe that each of our directors has demonstrated, and will continue to demonstrate, her or his expertise and ability to dedicate sufficient time to carry out Board duties effectively and diligently. Our directors’ outside board service or other commitments did not limit their ability to devote the required time and attention to their duties as directors of the Company as evidenced by the 100% attendance rate at our 2020 Board meetings for all but one director.

 

In assessing our directors’ ability to devote the required time to his or her Board duties, the ESG Committee reviews the nature of the other companies on which they serve, including whether any board service is with a company that is either affiliated with their employer or affiliated with one of their other directorships. The Committee also discusses with each director the time commitments and expectations of his or her other board duties to ensure that he or she can continue to serve the Company and its shareholders effectively.

 

Mr. Carvalho Filho’s duties as a director of Companhia Brasileira de Distribuicão (Grupo Pão de Açúcar) (“GPA”) include serving on the board of a GPA affiliate, Cnova N.V. GPA has a 34% ownership interest in Cnova N.V. and three out of nine directors on Cnova N.V.’s board of directors are appointed by GPA. As such, Mr. Carvalho Filho’s role and time commitment at these two companies differs from serving on two traditional, unrelated publicly traded companies. Notably, Mr. Carvalho Filho has attended 100% of all Board meetings since the formation of TechnipFMC. His preparedness for meetings and active engagement with our Board and management continues to demonstrate his commitment to our Company and its shareholders.

 

Shareholder Recommendations for Future Candidates

Shareholders may submit recommendations for future candidates for election to the Board for consideration by the ESG Committee by writing to us at One St. Paul’s Churchyard, London EC4M 8AP, United Kingdom, Attention: Corporate Secretary. All recommendations from shareholders will be reviewed by the ESG Committee. The ESG Committee evaluates nominees recommended by shareholders in the same manner in which it evaluates other nominees. Please see “Criteria for Board Membership in Governance Guidelines" above.

 

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Enterprise Risk Management

Executive management is responsible for the day-to-day management of the risks the Company faces, while our Board, as a whole and through its various committees, has responsibility for the oversight of risk management for the Company. The Company has an Enterprise Risk Management (“ERM”) process and framework to identify and evaluate varying levels of risk and their potential impact on the Company, as well as steps to further mitigate those risks. As part of the ERM framework, our senior management, led by our CEO, undertakes a process that identifies, categorizes, and analyzes the relative severity and likelihood of the various risks to which the Company is or may be subject. In addition, our Board and its committees receive periodic reports from senior management that identify and assess significant enterprise-related risks and address mitigation strategies and plans implemented or proposed for each key risk.

 

In addition, while the Board has ultimate responsibility for overall risk management oversight, it has designated each of its three Board committees with oversight of certain risks within their own areas of responsibility, as indicated in the table below.

 

Audit Compensation ESG

► Legal and regulatory compliance related to financial statements and disclosures

 

► Financial reporting and internal controls

 

► Liquidity

 

► Contract management

 

► Cybersecurity

 

► Other risks, such as taxes and foreign exchange

 

► Insurance

► Legal and regulatory compliance related to compensation and benefits

 

► Compensation policies and practices (including employee benefit plans and administration of equity plans)

 

► Legal and regulatory compliance related to corporate governance

 

►  Director succession

 

►  Crisis management preparedness

 

► Emergency procedures for management succession

 

►  Environmental, sustainability, and governance

 

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Committees of the Board of Directors

In 2020, to better reflect our focus on corporate responsibility and sustainability at the Board level, the Nominating and Corporate Governance Committee’s charter was substantially expanded to include oversight of the Company’s policies, programs, and strategies related to environmental stewardship, responsible investment, corporate citizenship, human rights, human capital management, ESG risk management, and other ESG matters, as well as other social and public matters of significance to the Company. This committee, now renamed our ESG Committee, also reviews and monitors the development and implementation of ESG targets, standards, metrics or methodologies, and reviews the Company’s public disclosures with respect to ESG matters.

 

Accordingly, our Board currently has an Audit Committee, a Compensation Committee, and an ESG Committee, each of which comprises a minimum of three directors selected by the Board upon recommendation of the ESG Committee. Each member of our Audit Committee, Compensation Committee, and ESG Committee, which includes all members of our Board other than our Chairman and CEO, meets the independence standards as defined under the NYSE’s listing standards and SEC rules, as applicable. Additionally, each member of our Audit Committee qualifies as an “audit committee financial expert,” as defined by SEC rules.

 

The Board receives regular updates from its committees on individual categories of risk, including strategy, financial/operations, cybersecurity, people, technology, investment, legal/compliance, political/legislative/regulatory, and corporate responsibility and sustainability. Each of these committees operates pursuant to a written charter setting out the functions and responsibilities of the committee, which is reviewed annually, and may be viewed on our website at www.technipfmc.com under the heading “About us > Governance:”

 

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Audit Committee

 

2020 Meetings: 6
Current Members   Primary Responsibilities

Kay G. Priestly (Chair)

 

Eleazar de

Carvalho Filho

 

Sophie Zurquiyah

 

  ►  Oversight of the financial management and control of the Company, as well as oversight of the Company’s independent registered public accounting firm
  ►  Monitoring the Company’s financial reporting process
  ►  Reviewing the Company’s consolidated financial statements and internal controls with management and the independent auditor
  ►  Monitoring the Company’s compliance with its internal accounting and control policies, as well as legal and regulatory requirements to the extent such compliance relates to the consolidated financial statements and financial disclosures
  ►  Selecting, subject to shareholder approval, the Company’s independent auditor, and reviewing the qualifications, independence, performance, and remuneration of such independent auditor
  ►  Reviewing the effectiveness and performance of the Company’s internal audit function
  ►  Considers risks relating to cybersecurity and receives regular reports on the Company’s cyber readiness, adversary assessment, risk profile status, and any countermeasures being undertaken or considered by the Company
  ►  Reviewing the effectiveness of processes for reviewing and escalating financial-related allegations reported through the Company’s allegation hotline

 

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Compensation Committee

 

2020 Meetings: 5
Current Members   Primary Responsibilities

James M. Ringler (Chair)

John O’Leary
(Chair-elect)1

Claire S. Farley

John Yearwood

 

  ►  Reviewing, evaluating, and approving the agreements, plans, policies, and programs of the Company to compensate its independent directors, the Chairman and CEO, and other officers
  ►  Consistent with equity plans approved by the Company’s shareholders, reviewing, evaluating, and approving all equity awards by the Company to executive officers and approving the number of equity securities or equity derivatives that the CEO is authorized to allocate to all other employees at his discretion
  ►  Reviewing the compensation disclosures in the Company’s U.K. annual report and proxy statement for the Company’s annual general meeting of shareholders
  ►  Producing the Compensation Committee Report to be included in the Company’s proxy statement
  ►  Reviewing, evaluating, and approving the directors’ remuneration policy and the directors’ remuneration report
  ►  Otherwise discharging the Board’s responsibilities related to compensation of the Company’s executive officers and directors

 

(1) Mr. Ringler, the Company’s current Compensation Committee Chair will not stand for re-election at the Annual Meeting. Mr. O’Leary will be appointed as Compensation Committee Chair, contingent upon his re-election, effective May 20, 2021.

 

ESG Committee

 

2020 Meetings: 6
Current Members   Primary Responsibilities

Peter Mellbye (Chair)

Margareth Øvrum

John Yearwood

 

  ►  Advising and making recommendations to the Board regarding corporate governance and ESG practices and initiatives aznd overseeing the Company’s progress in implementing its practices and programs
  ►  Monitoring the development and implementation of the Company’s compliance program (including procedures for allegation reporting, investigation, and remediation) to ensure that the Company operates in compliance with the principles of ethical conduct and good governance
  ►  Identifying individuals qualified to become Board members, consistent with the criteria approved by the Board, and recommending director nominees to the Board for election at the annual general meeting of shareholders or for appointment to fill vacancies on the Board
  ►  Recommending directors to serve on each committee of the Board and recommending the Lead Independent Director
    ►  Leading the Board in the annual performance evaluation of the Board and its committees

 

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Board Meetings and Attendance

Our Board met in person or by telephone conference six times in 2020.

 

 

All directors attended 100% of our Board meetings and 100% of their committee meetings in 2020, except for Mr. Caudoux. Mr. Caudoux recused himself from two meetings of the Board and one Audit Committee meeting related to the negotiation and approval of the Share Purchase Agreement and Relationship Agreement between the Company and Bpifrance Participations SA, where he serves as Deputy Chief Executive Officer. As such, he attended 80% of our Board meetings and 83% of Audit Committee meetings in 2020.

 

We encourage our directors to attend the annual general meeting of shareholders. Due to the COVID-19 travel restrictions and precautions, none of our directors was able to attend our 2020 Annual Meeting.

 

Director Independence

 

Annual Review of Independence

The ESG Committee conducts an annual review of the independence of Board members and reports its findings to the full Board, which then makes a determination as to the independence of each director, as defined under the standards adopted by the NYSE. These standards specify certain relationships that are prohibited in order for a director to be deemed independent. In addition to these objective standards, our Board makes a subjective determination of independence by evaluating all relevant facts and circumstances. In particular, when assessing the materiality of a director’s relationship with the Company, the Board considers the issue not merely from the standpoint of the director, but also from the standpoint of persons or organizations with whom the director has an affiliation.

 

The Board has not adopted a policy that deems a director to be non-independent after a certain tenure on the Board as we believe our retirement policy and natural turnover will achieve the appropriate balance between long-term directors with deep institutional knowledge and new directors who bring fresh perspectives and diversity to our Board. Our Board reviews director tenure in connection with its director independence determinations. If all of our director nominees are elected at the Annual Meeting, the average tenure of our independent directors will be three years as the Board believes prior service on our legacy companies differed in breadth and scope from current service on our Board.

 

The Board’s independence determinations included a review of all 2020 commercial transactions, relationships, and arrangements between us and our subsidiaries, affiliates, and executive officers with entities associated with our directors or members of their immediate family. Such transactions, relationships, and arrangements are summarized below.

 

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The Board considered that Mses. Farley, Øvrum, and Priestly, and Messrs. Houssin, Mellbye, O’Leary, and Ringler each served as directors or executive officers at companies that have had commercial business relationships with the Company in 2020, all of which were ordinary course commercial transactions.

 

 

Claire S. Farley - In 2019, after a robust due diligence and evaluation process, the Company selected KKR & Co. (“KKR”) to be its recommended provider for our Subsea clients seeking alternative financing arrangements.

The arrangement expired on March 21, 2020. Ms. Farley is a Senior Advisor of KKR and was not involved in the preparation of KKR’s presentation to the Company, which was submitted by a separate group at KKR than the group managed by Ms. Farley. When providing these financing arrangements, KKR contracted directly with the Company’s clients with no direct involvement of the Company, and Ms. Farley, in her role at KKR, had no involvement with any such contracts. Ms. Farley did not receive any direct compensation or direct financial benefit from the selection of KKR by the Company.

 

 

Margareth Øvrum - Ms. Øvrum is a member of the Board of Directors of FMC Corporation, our former parent company. We and FMC Corporation are parties to a separation and distribution agreement and a joint litigation defense agreement that relate to the separation of the companies’ businesses that occurred in 2001.

 

  James M. Ringler - Mr. Ringler is a director of John Bean Technologies Corporation (“JBT”). FMC Technologies and JBT are parties to a separation and distribution agreement and a tax sharing agreement that relate to the Spin-off of FMC Technologies’ FoodTech and Airport Systems businesses (acquired by JBT) that occurred in July 2008.

 

Independence Determination

In determining that none of the relationships noted above affected the independence of any of the interested directors, the ESG Committee considered the nature of the transactions, the dollar amounts involved, and the respective director’s role, if any, in the transaction.

 

Based on the report and recommendation of the ESG Committee, the Board has affirmatively determined that each of our non-executive directors is “independent” as defined under the NYSE listing standards. As such, following our Annual Meeting, eight of our nine directors will be non-executive, independent directors. In addition, the Board has affirmatively determined that all of the members of the Audit Committee and Compensation Committee satisfy the enhanced independence criteria required for such members under regulations adopted by the SEC and NYSE listing standards.

 

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Compensation Committee Interlocks and Insider Participation in Compensation Decisions

In 2020, the members of the Compensation Committee of the Board were Claire S. Farley, John O’Leary, Joseph Rinaldi, James M. Ringler, and John Yearwood, none of whom has ever been an officer or employee of the Company or any of our subsidiaries or had any relationships requiring disclosure with us or any of our subsidiaries. None of our executive officers has ever served on the board of directors or the compensation committee of any other entity that has had any executive officer serving as a member of our Board or Compensation Committee.

 

Communications with Directors

To provide our shareholders and other interested parties with a direct and open line of communication to our Board, a process has been established for communications with any member of the Board, including our Lead Independent Director, the Chair of any of our committees, or with our non-employee directors as a group, by sending such written communication to c/o Lead Independent Director, TechnipFMC plc, One St. Paul’s Churchyard, London EC4M 8AP, United Kingdom. Please visit our website at www.technipfmc.com for any changes to our principal headquarters address. All communications will be received, processed, and then directed to the appropriate member(s) of our Board, other than, at the Board’s request, certain items unrelated to the Board’s duties, such as spam, junk mail, solicitations, employment inquires, and similar items.

 

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Director Compensation

 

This section describes the Company’s compensation programs that apply to our non-executive directors. The compensation of our Chairman and CEO, Douglas Pferdehirt, is included in the Executive Compensation Discussion and Analysis” section below because he is a NEO under SEC rules.

 

Non-executive Director Compensation

Compensation for our non-executive directors was developed by the Compensation Committee with the assistance of its compensation consultant, Willis Towers Watson, and approved by the Board. The program, which comprises cash compensation and RSU awards, is designed to reflect the practices of both U.S. and European companies as determined by reference to the peer groups discussed in Executive Compensation Discussion and Analysis.”

 

The directors’ compensation program is intended to provide a competitive package that enables the Company to attract and retain highly skilled individuals with relevant experience and the necessary time and ability to serve on the board of a company of our size, complexity, and geographical breadth. The program balances the practices within our market norms in our core geographies, and the varied expectations of our diverse shareholder base. Given the global talent pool that our directors represent, the program is also designed to provide sufficient flexibility in the form of compensation delivered to meet the needs of individuals who are located in different countries and the travel that is often required to attend meetings, while ensuring that a substantial portion of directors’ compensation is linked to the long-term success of the Company.

 

Key Non-executive Director Compensation Practices
TechnipFMC uses an independent consulting firm, Willis Towers Watson, to recommend changes in compensation for non-executive directors.
Any changes to our director compensation program are reviewed and approved by our Compensation Committee, comprising independent directors.
Any changes to our director compensation program recommended by our Compensation Committee must be ratified by a vote of our full Board.
Our Directors’ Remuneration Policy reflects sector and geographic (U.S. and European) peer groups to reflect the global nature of the Company, and both U.S. and European compensation practices given the global nature of the Company, our dual NYSE and Euronext Paris listings, and our U.K. incorporation.
Our Directors’ Remuneration Policy provides for an annual cap on total remuneration (i.e., cash and equity awards) of $500,000.
Each non-executive director is subject to a share ownership requirement of 5x the annual cash retainer.

 

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Components of Non-executive Director Compensation

The following table describes the components of the Company’s non-executive director compensation program for 2020 pursuant to our Directors’ Remuneration Policy, which was approved at our 2018 Annual Meeting.

 

In April 2020, as a result of the global COVID-19 pandemic, sharp decline in oil prices, and the resulting impact on our business, the annual cash retainer for our Board of Directors was reduced by 30% for the remainder of 2020, effective May 1, 2020.

 

Compensation Element Compensation
Annual Cash Retainer $100,000 from January to April 2020
$70,000 from May 2020 to December 2020
Annual Equity Grant

$175,000 in RSUs, vesting after one year of service, and starting with the 2020 award, settled in Ordinary Shares on a date elected by the non-executive director that is either (a) after a period of one to 10 years from the grant date or (b) upon their separation from Board service. The elections are made prior to the beginning of the grant year and are irrevocable after December 31st of the year prior to grant.

 

RSUs granted prior to 2020 vested after one year of service and will be settled upon separation from Board service.

Annual Chair Fee

$20,000 for Audit Committee

 

$15,000 for Compensation Committee

 

$10,000 for ESG Committee

 

$10,000 for Strategy Committee

Annual Lead Independent Director Fee $50,000
Committee Meeting Fee $2,500 per committee meeting
Other Benefits

Reimbursement of travel and other related expenses incurred in connection with attending Board and committee meetings

 

Assistance for the annual individual U.K. tax return

 

 

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Non-executive Director Compensation Table

The following table details the total compensation for our non-executive directors for the year ended December 31, 2020. Our Chairman and CEO, Mr. Pferdehirt, is not included in the table below as he was an employee during 2020 and did not receive any additional compensation for his service as a director.

 

Name Fees Earned or Paid in Cash ($) Stock Awards
($)3
All Other
Compensation
($)4
Total($)
Annual Cash
Retainer ($)1
Additional Fees
($)2
Arnaud Caudoux5 0 0 0 0 0
Eleazar de Carvalho Filho 80,000 10,000 174,996 3,638 268,634
Pascal Colombani 80,000 67,500 174,996 3,638 326,134
Marie-Ange Debon 80,000 30,000 174,996 3,638 288,634
Claire S. Farley 80,000 17,500 174,996 0 272,496
Didier Houssin 80,000 17,500 174,996 3,638 276,134
Peter Mellbye 80,000 27,500 174,996 4,207 286,703
John O’Leary 80,000 10,000 174,996 3,638 268,634
Margareth Øvrum6 17,500 2,500 0 0 20,000
Olivier Piou7 80,000 17,500 306,245 2,037 405,782
Kay G. Priestly 80,000 10,000 174,996 3,638 268,634
Joseph Rinaldi 80,000 20,000 174,996 3,638 278,634
James M. Ringler 80,000 25,000 174,996 3,638 283,634
John Yearwood7 80,000 20,000 306,245 1,859 408,104

 

(1) Includes temporary 30% reduction in annual cash retainer from May 1, 2020 to December 31, 2020.
(2) Includes the amount of fees paid for attendance at committee meetings and additional fees paid to the Chair of each Board committee and to the Lead Independent Director.
(3) Restricted stock unit grants were made on March 9, 2020, valued at $9.29 per share, the closing price on the NYSE of the Company’s Ordinary Shares on such date. The aggregate value for all of the Company’s non-executive directors was $2,362,447 as of the grant date and was computed in accordance with the SEC proxy disclosure rules and Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The annual RSU grant vests after one year of service but is settled in Ordinary Shares on a date elected by the non-executive director that is either (a) after a period of 1 to 10 years from the grant date or (b) upon their separation from Board service. RSUs granted prior to 2020 vested after one year of service and will be settled upon separation from Board service. The RSUs are forfeited if a director ceases service on the Board prior to the vesting date of the RSUs, except in the event of death or disability. Unvested RSUs will be settled and are payable in Ordinary Shares upon the death or disability of a director or in the event of a change in control of the Company. The aggregate outstanding RSUs held by each of the Company’s non-executive directors, other than Ms. Øvrum and Messrs. Piou and Yearwood on December 31, 2020 was 38,033 RSUs (19,196 of which were vested but not yet settled in Ordinary Shares as of December 31, 2020). Messrs. Piou and Yearwood held 32,965 RSUs as of December 31, 2020, which were unvested. Ms. Øvrum joined the Board of Directors on October 1, 2020. She will receive a pro-rated grant of RSUs for her service in 2020 as part of her annual grant in 2021. Dividend equivalents will accumulate on the RSUs to the extent the Company pays dividends on its Ordinary Shares.
(4) Includes assistance for annual individual U.K. tax return.
(5) Mr. Caudoux waived his cash and equity remuneration because of the policies of his employer, Bpifrance.
(6) Ms. Øvrum joined the Board of Directors on October 1, 2020. She will receive a pro-rated grant of RSUs for her service in 2020 as part of her annual grant in 2021.
(7) Messrs. Piou and Yearwood joined the Board of Directors of the Company on June 1, 2019. They each received a pro-rated grant of RSUs for their service in 2019 as part of their annual grant in 2020.

 

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Other Benefits

Each non-executive director receives reimbursement for travel and other related expenses incurred in connection with attending Board and committee meetings.

 

Director Share Ownership Requirements

 

To further align the interests of non-executive directors with the interests of the Company’s shareholders, each non-executive director is subject to a share ownership requirement.
Ownership Requirement 5x the annual cash retainer
Covered Share Interests Ordinary Shares and RSUs that the Director owns and/or has a beneficial interest in
Time for Achievement Five years from initial appointment

 

All of our Directors met their pro-rated share ownership requirements as of December 31, 2020.

 

Mses. Øvrum and Zurquiyah joined the Board in October 2020 and April 2021, respectively, and therefore, did not hold any equity awards as of December 31, 2020. Mr. Caudoux waived his annual cash and equity remuneration because of the policies of his employer, Bpifrance, and accordingly, he was not subject to any share ownership requirements.

 

Impact of Spin-off on Director Stock Awards

On February 16, 2021, TechnipFMC separated into two independent, publicly traded companies, TechnipFMC and Technip Energies. Upon the completion of the Spin-off, Ms. Debon and Messrs. Caudoux, Colombani, Houssin, and Rinaldi resigned from our Board and joined the Board of Directors of Technip Energies. Mr Piou also resigned from our Board, effective February 16, 2021.

 

For Ms. Debon and Messrs. Colombani, Houssin, and Rinaldi, vesting for their RSUs granted on March 9, 2020 was accelerated to a date two weeks prior to the Spin-off date (February 2, 2021). All of their vested equity awards were distributed to them on February 2, 2021, upon separation from service from our Board.

 

For our current Board, their RSUs granted on March 9, 2020 were adjusted using an adjustment ratio, calculated as the ratio of the closing price of TechnipFMC on the NYSE on the date immediately prior to the Spin-off to the closing price of TechnipFMC on the NYSE on the date immediately after the Spin-off. The vesting date of March 9, 2021 remained the same. Our current directors’ vested 2017, 2018, and 2019 RSUs were also adjusted using the adjustment ratio.

 

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Executive Compensation Discussion and Analysis

 

2020 Compensation Program Updates

Our Compensation Committee values shareholder feedback, carefully reflecting on the results of shareholder advisory votes and input received during shareholder engagement. At our 2020 Annual Meeting, 85.8% of votes cast approved our 2019 executive compensation program as disclosed in our 2020 Proxy Statement.

 

Our Board and executive leadership were pleased with this increase in support of our executive compensation program and will continue a dialogue with our shareholders to receive valuable input within the context of our pay-for- performance philosophy, business, and strategies.

 

Impact of the COVID-19 Pandemic and Oil Price Decline on Our Executive Compensation Program

 

In the first quarter of 2020, the global COVID-19 pandemic, sharp decline in oil prices, and equity market volatility materially changed the business environment and outlook for TechnipFMC. Our Board and management took decisive action at the outset of the pandemic - first and foremost to protect, support, and ensure the health, safety, and wellbeing of our people - and to continue to serve our clients at the highest level while focusing on business continuity and executing our strategic priorities.

 

In March 2020, we announced that while the rationale for the Spin-off of Technip Energies remained unchanged, we would delay the Spin-off until markets sufficiently recovered. We also decided to accelerate our cost reduction and efficiency efforts worldwide to continue to focus on operating profitability through the downturn.

 

In addition, our Compensation Committee took swift and decisive actions in response to the unprecedented global health and economic crisis and made changes to our executive compensation program, including the following:

 

Reduced the annual base salary for our Chairman and CEO by 30% and for other executive officers by 20% for the remainder of 2020, effective May 1, 2020.

 

Reduced annual cash retainers for our Board of Directors by 30% for the remainder of 2020, effective May 1, 2020.

 

Updated our annual cash incentive plan measures effective April 1, 2020, and applied a cap on payout:

 

Due to the COVID-19 pandemic and business downturn, the Company’s strategic priorities shifted to a significantly greater focus on cash flow, liquidity, and business sustainability. To better align our executives’ compensation with these critical priorities, the financial measures for the 2020 annual cash incentive plan were changed from EBITDA, EBITDA as a Percentage of Revenue, and Working Capital Days to Incremental Cost Savings (37.5% weighting) and Free Cash Flow Conversion (37.5%), for the last three quarters of 2020. The Incremental Cost Savings metric measures our performance against our publicly disclosed Cost Reduction Program. The Free Cash Flow Conversion metric (ratio of Free Cash Flow to Adjusted Net Income) measures the quality of our earnings and is important for liquidity.

 

Due to the volatility in the oil and gas market, the annual incentive plan targets set at the beginning of 2020 were no longer considered applicable. Accordingly, performance and payout for the Q1 2020 business performance indicators were set at 0% by the Compensation Committee.

 

25% of our 2020 annual cash incentive plan continued to be based on individual performance indicators that included specific objectives regarding sustainability in our business performance, further reinforcing the

 

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Company’s commitment to our Foundational Beliefs while we focused on responding to the challenging business environment.

 

In addition to updating our Q2-Q4 2020 performance metrics to swiftly respond to changing short-term business priorities, we also capped the payout for the business performance indicators under the 2020 annual cash incentive plan at target (100%), with no upside for above-target performance. Limiting payouts at target (compared to 200% in prior years) in a volatile business environment helps align with shareholder interests.

 

No changes were made to the annual equity awards previously granted and not vested.

 

In addition to the changes to executive compensation above, the cost reduction program completed by the Company in 2020 also included the following changes to global, broad-based employee compensation and benefits programs:

 

Significant reduction in global headcount;

 

Furlough programs instituted in certain locations and businesses;

 

A global salary freeze for all employees, other than salary increases mandated by union agreements or local regulations; and

 

Changes to the annual cash incentive plan for eligible employees mirrored the changes for our executives, namely: changing the annual cash incentive plan’s business performance indicators for Q2-Q4 2020 to Incremental Cost Savings and Free Cash Flow Conversion, as well as capping payout for business performance indicators at target (100%).

 

Changes to Our Executive Compensation Program in Response to Shareholder Feedback

 

Listed below are the key changes made to our executive compensation program in 2020 and 2021, both as part of our annual review process, as well as in response to shareholder feedback:

 

Discontinued the use of stock options based on feedback from shareholders that stock options are not performancebased. A majority of our long-term equity plan continues to be performance-based, consisting of 70% PSUs and 30% RSUs.

 

In 2019, the long-term equity award grant was based on two performance measures, ROIC and relative TSR. However, for 2020, the volatility in the oil and gas business environment, as well as our Spin-off, made it challenging to set meaningful ROIC targets, and as a result, a single performance measure, relative TSR, was selected. We believe that this measure is strongly aligned with shareholder interests and is a meaningful measure of our long-term performance.

 

Continued to base a portion of our CEO’s annual cash incentive on certain sustainability measures to further reinforce the Company’s commitment to our Foundational Beliefs. For 2021, we have included an ESG metric (25% weighting) in our annual cash incentive plan to drive accountability and strengthen the link between our compensation program and our ESG commitments and objectives. More information is provided below and in Elements of Executive Compensation-2021 Annual Cash Incentive Plan.”

 

Updated our Compensation Peer Group and Relative TSR Peer Group to reflect changes in our business environment.

 

Enhanced disclosures in our Compensation Discussion and Analysis, including descriptions of the individual performance component of our annual cash incentive plan, our PSU plan performance, our target-setting process, and our peer group selection rationale.

 

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TechnipFMC Proxy Statement 2021

 

Looking Ahead - 2021 Changes to Our Executive Compensation Program

In January 2021, due to increased clarity in market outlook, coupled with a demonstrated ability to successfully execute projects during a unique and challenging year, we announced the resumption of activities towards separation into two industry-leading, independent, publicly traded companies, TechnipFMC and Technip Energies, which was completed on February 16, 2021. Each of the two separated companies, TechnipFMC and Technip Energies will set their respective executive compensation programs, practices, and compensation levels based on their respective business objectives and as approved by the Compensation Committee of the Board of Directors for each company.

 

The Compensation Committee anticipates certain changes to the TechnipFMC executive compensation program in 2021, based on continued feedback from shareholders, as well as a review of our business and competitive strategy, following the Spin-off.

 

2021 Long-Term Equity Mix 2021 Annual Incentive Plan Performance Measures
   

  

We anticipate a review of our 2021 Compensation Peer Group and Relative TSR Peer Group, to reflect our post Spin-off business strategy and competitive landscape as a fully integrated technology and services provider.

 

Our 2021 annual cash incentive plan will include the following performance measures: EBITDA as a Percentage of Revenue (25%), Free Cash Flow from Operations (25%), ESG Performance (25%), and individual annual performance indicators (25%).

 

In 2020, we provided a comprehensive overview of our ESG efforts to our investors including new initiatives to be realized through 2023 and a commitment to deliver a 50 percent reduction in Scope 1 and 2 equivalent GHG emissions by 2030. In order to directly link our compensation program to our ESG commitments and objectives, we will include an ESG measure in our 2021 annual cash incentive plan at 25% weighting. Performance for this measure will be based on an ESG scorecard that includes environmental (carbon footprint, waste recycling), social (fair representation, awareness and culture, community initiatives), and governance (HSE leadership, human rights due diligence, ethics and compliance) measures.

 

We will continue to include EBITDA as a Percentage of Revenue and Free Cash Flow from Operations as measures in the annual cash incentive plan, with an objective to increase our operating profitability, leverage cost efficiencies, maintain the financial health and liquidity of the Company, and drive shareholder value creation.

 

Our annual long-term equity incentive award will continue to comprise 70% PSUs (payout based on relative TSR performance) and 30% RSUs, as we believe a higher weighting of performance-based equity aligns more closely with shareholder interests.

 

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Named Executive Officers

 

Douglas J. Pferdehirt

 

Age: 57

 

Position Held in 2020:

 

Chairman and Chief Executive Officer

   

Maryann T. Mannen

 

Age: 58

 

Position Held in 2020:

 

Executive Vice President and Chief Financial Officer

   

Justin Rounce

 

Age: 54

 

Position Held in 2020:

 

Executive Vice President and Chief Technology Officer

   

Arnaud Pieton

 

Age: 47

 

Positions Held in 2020:

 

President of Subsea from

January 1 through October 2, 2020

President and CEO-elect of Technip Energies from October 2, 2020 through December 31, 2020

 

Barry Glickman

 

Age: 52

 

Position Held in 2020:

 

President of Surface

   

Catherine MacGregor

 

Age: 48

 

Position Held in 2020:

 

President of Technip Energies from

January 1 through October 2, 2020

Departed from TechnipFMC on October 31, 2020  

Nello Uccelletti

 

Age: 67

 

Position Held in 2020:

 

Advisor to the CEO from January 1 through February 29, 2020

Retired from TechnipFMC on February 29, 2020  

 

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TechnipFMC Proxy Statement 2021

 

2020 Performance and Impact
on Executive Compensation

 

Company Overview

TechnipFMC plc, a public limited company incorporated and organized under the laws of England and Wales, with registered number 09909709, and with its registered office at One St. Paul’s Churchyard, London EC4M 8AP, United Kingdom, is a leading technology provider to the traditional and new energy industries, delivering fully integrated projects, products, and services.

 

With our proprietary technologies and comprehensive solutions, we are transforming our clients’ project economics, helping them unlock new possibilities to develop energy resources while reducing carbon intensity and supporting their energy transition ambitions.

 

Organized in two business segments - Subsea and Surface Technologies - we will continue to advance the industry with our pioneering integrated ecosystems (such as iEPCI™, iFEED™ and iComplete™), technology leadership and digital innovation.

 

Each of our approximately 20,000 employees is driven by a commitment to our clients’ success, and a culture of strong execution, purposeful innovation, and challenging industry conventions.

 

Executive Compensation Highlights

Our vision to enhance the performance of the world’s energy industry is supported by the relentless drive of every individual at TechnipFMC. We are united by one single purpose: to bring together the scope, knowledge, and determination to transform our clients’ project economics. Our executive compensation is designed to help us achieve our vision by:

 

Motivating our executive officers to achieve and exceed our short-term and long-term goals and objectives

 

Aligning the interest of our executive officers with the interests of our shareholders by focusing our executive compensation program on drivers of sustainable shareholder value and by ensuring a majority of executive compensation is at-risk

 

Providing market competitive levels of compensation to help us retain and attract exceptionally talented individuals who can deliver on our vision

 

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What We Do:   What We Don’t Do

► Pay for performance by aligning performance measures with our strategy and shareholder interests

 

► Majority of NEO compensation is performance-based, “at-risk” long-term compensation

 

► Maintain a clawback policy in the event of malfeasance or fraud

 

► Require robust executive and director share ownership wrequirements

 

► Engage an independent, external compensation consultant

 

► Benchmark compensation against relevant global and industry peer groups

 

► Cap PSU payout at target when relative TSR exceeds peers’ TSR but absolute TSR is negative

 

► No single-trigger vesting upon a change-in-control

 

► No guaranteed bonuses

 

► No uncapped incentives

 

► No tax gross-ups on any severance payments

 

► No excessive perquisites, benefits, or pension payments

 

► No discounting, reloading, or repricing of stock options

 

► No hedging and pledging of Company securities

 

 

As intended by our pay-for-performance program, and as outlined in the sections below, our 2020 executive compensation was directly impacted by our performance against key financial, operational, and individual measures.

 

Emphasize Pay-for-Performance

 

 

(1) Excludes Ms. MacGregor and Mr. Uccelletti as they left the Company during 2020.
(2) Base salary includes the pay reduction from May 1, 2020 to December 31, 2020 in response to the COVID-19 pandemic and associated industry downturn.
(3) RSUs are included in variable pay because their delivered value is based on share price at vesting.

 

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Total target compensation is made up of salary, an annual cash incentive, and long-term equity incentives.

 

Our compensation program is strongly linked to performance, and a majority of our NEOs’ pay is variable, at-risk compensation.

 

Total target compensation is benchmarked relative to appropriate peer groups by our independent compensation consultant and is targeted at market median.

 

Annual cash incentive is based on financial performance (75%) and individual performance in areas of strategic significance (25%).

 

Payouts for the financial portion are based on quantifiable performance. There is no payout if Company performance is below a minimum level of performance due to our emphasis on paying for performance. Payouts increase with increasing levels of performance and there is a cap on payout at maximum performance. Notably, for the 2020 annual cash incentive plan, this cap for financial performance was further reduced to a cap of 100% payout at target performance. Performance targets and goals are predetermined, communicated in advance, and disclosed publicly.

 

Payout for the individual performance indicators are based on rigorous, individual goal setting and year-end evaluation of performance.

 

PSUs comprise the majority of long-term equity incentives (70%) with vesting contingent on relative TSR performance, measured over three years.

 

Payouts for the PSU plan are based on performance. There is no payout if Company performance is below a minimum level of performance, and there is a cap on payout at maximum performance. In addition, in the case of negative absolute TSR performance, payouts are capped at target, even if our TSR performance relative to our Relative TSR Peer Group (as defined below) is above target. Performance targets and goals are pre-determined, communicated in advance, and disclosed publicly.

 

The remainder of the long-term equity incentives are delivered in the form of RSUs. The delivered value of RSUs to NEOs is also based on share price performance.

 

In 2020, stock options were removed from our executive compensation program, based on feedback from shareholders that stock options are not performance-based.

 

All long-term equity incentive awards vest at the end of three years, providing a significant retention incentive to NEOs.

 

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TechnipFMC 2020 Performance

The record inbound orders and solid execution of 2019 gave us strong momentum into the new year, but 2020 abruptly shifted to a year of unprecedented global challenges due to the COVID-19 pandemic and the sharp drop in demand for oil and natural gas. Throughout this period, the health and well-being of our people and those of the communities in which we work remained our top priority. Still, there were many notable accomplishments in 2020 as a result of the tireless efforts and unwavering commitment of the women and men of TechnipFMC. Through their determination, innovation, and resilience, we also protected our backlog and remained focused on project execution, enabling us to deliver strong performance and achieve our financial guidance across all segments.

 

Through collaboration, we found solutions that allowed us to move projects forward safely, earning recognition from clients, and others in the industry. Our solutions add value to some of the largest capital investments in the world. With the introduction of our Subsea integrated engineering, procurement, construction, and installation (“iEPCI™”) business model, we are changing the way projects are conceived and executed by lowering project costs and accelerating the delivery of initial hydrocarbon production.

 

The integrated business model is unlocking incremental opportunities and materially expanding the deepwater opportunity set. Since the first iEPCI™ project was awarded in 2016, market adoption of the business model has grown, and in 2019, we secured more than 70% of the industry’s integrated project awards. We received additional integrated awards in 2020, all of which came from repeat iEPCI™ customers.

 

Our Subsea front-end engineering teams remained very active, with an acceleration in front-end studies as we progressed through the second half of the year. More than 50% of these studies today are utilizing an integrated approach, leveraging the benefits of our digital Subsea Studio™ offering and positioning us well for future iEPCI™ awards.

 

 

In November, we provided a comprehensive overview of our ESG efforts, including new initiatives to be realized through 2023 and a bold commitment to deliver a 50 percent reduction in Scope 1 and 2 equivalent GHG emissions by 2030. As part of our efforts to drive sustainable change, we introduced key elements of our digital transformation, including Subsea Studio™ and iComplete™, both of which will improve project economics, enhance performance, and reduce emissions.

 

TechnipFMC is well-positioned for the Energy Transition, with significant offshore opportunities in Subsea including novel wind, wave energy, carbon storage, and green hydrogen. Deep Purple™ is one such initiative, where we are leveraging our core capabilities: iEPCI™, proprietary technologies, and partner alliances. Additionally, we see future opportunities driven by our investments in early phase projects and solutions that accelerate the role of our technologies in the Energy Transition as we continue to redefine offshore energy.

 

Throughout 2020, we continued our work to separate TechnipFMC into two industry-leading, pure-play companies, with the transaction now completed through the Spin-off of Technip Energies on February 16, 2021.

 

TechnipFMC shareholders received, as a dividend, one ordinary share of Technip Energies N.V. for every five ordinary shares of TechnipFMC held at the close of business on the record date. Technip Energies is now an independent public company. Its ordinary shares are traded under the ticker symbol “TE” on the Euronext Paris Exchange and its Level 1 ADRs trade over-the-counter in the United States.

 

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TechnipFMC is a leading technology provider to the traditional and new energy industries, delivering fully integrated projects, products, and services.

 

With our proprietary technologies and comprehensive solutions, we are transforming our clients’ project economics, helping them unlock new possibilities to develop energy resources while reducing carbon intensity and supporting their energy transition ambitions.

 

TechnipFMC will continue to advance the industry with our pioneering integrated ecosystems (such as iEPCI™, iFEED™ and iComplete™), technology leadership, and digital innovation.

 

Technip Energies is a leading engineering and technology company, with leadership positions in LNG, hydrogen, and ethylene, as well as growing market positions in blue and green hydrogen, sustainable chemistry, and CO2 management.

 

The company benefits from its robust project delivery model supported by an extensive technology, products, and services offering.

 

The new company includes Genesis - a leader in advisory services and front-end engineering.

 

 

 

Creating Two Industry Leaders

 

Creating Two Industry Leaders
       
Distinct and expanding market opportunities and specific customer bases Robust backlogs supporting future revenue
       
       
Enhanced focus of management, resources and capital Compelling and distinct investment profiles
       
Continuing to reshape the energy industry and create value for all stakeholders

 

The executive compensation programs for these two companies will continue to emphasize performance and will be tailored to each company’s business and strategy.

 

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Key Strategic Achievements in 2020

We have summarized some of our key 2020 results and achievements below.

 

Subsea    

► Inbound orders of $4 billion, supported by higher mix of service and small project activity

 

► Additional integrated awards all from repeat iEPCI™ customers

     
Technip Energies    
 

► Second consecutive year of revenue growth, driven by LNG and downstream projects

 

► Approximately 60% of total order backlog linked to energy transition, including LNG

     
Surface Technologies    

► International revenue more than 60% of total segment, with increased revenue in technology-driven businesses

 

► Significant decline in North America market activity partially mitigated by aggressive cost reduction

   
(1) Reported financial results for the twelve months ended December 31, 2020 and inbound and backlog as of December 31, 2020 are as reported in our Form 10-K.

 

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Market Leadership

 

Subsea  

► Achieved inbound orders of $4 billion, including contract awards for:

 

► ExxonMobil Payara project in Guyana

 

► Libra Consortium’s Mero 2 project in Brazil

 

BP Platina iEPCI™ project in Angola

 

► Introduced Subsea Studio™, a digital front-end design offering that will be extended to incorporate the execution and field management phases of a project

 

► Identified opportunity set for all-electric subsea production solution that may exceed $8 billion through 2030, benefiting from reduced infrastructure requirements while generating incremental tieback opportunities with a lower carbon footprint

 

► In collaboration with Halliburton, introduced Odassea™, the first distributed acoustic sensing solution for subsea wells, enabling operators to reduce total cost ownership while improving reservoir knowledge

 

► Introduced Deep Purple™, a collaboration with clients and partners to integrate offshore renewable electricity and subsea hydrogen storage to provide power to subsea infrastructure and clean energy to consumers when at scale

 

Technip Energies  

Inbound orders more than doubled versus the prior-year driven by EPC contract awards for:

 

Sempra LNG’s and IEnova’s Energía Costa Azul LNG Facility in Mexico

 

Assiut National Oil Processing Company project for a new hydrocracking complex in Egypt

 

Shell’s Moerdijk Plant in the Netherlands to modernize ethylene furnaces and reduce total site emissions

 

► Strong momentum in sustainable chemistry across our three core areas:

 

Biofuels: Further strengthening of existing alliance with Neste for Future NEXBTL™ technology based projects

 

Bio-chemicals: Partnership with Carbios to build demonstration plant for depolymerization of waste PET plastics to monomers

 

Circular economy: Extended alliance with BP to include Infinia technology for difficult-to- recycle plastic waste

 

► Announced a strategic partnership and investment with McPhy to accelerate the development of large scale and competitive green hydrogen solutions

 

► Introduced Genesis’ new and expanded scope. which includes advisory services in both the upstream and downstream domains

 

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Surface Technologies

► International contract award highlights:

 

New 5-year frame agreement with Petrogas Rima in the Middle East

 

Award for high-pressure gas equipment and in-country services in Kuwait

 

Orders for high-specification, clad equipment onshore and annular safety valves offshore in the United Arab Emirates

 

Contracted to supply wellheads, tree systems, and controls for a re-development project in Norway

 

Orders for 20,000 psi pressure control flowlines and well service pumps in China

 

► North America business highlights:

 

Commercialization of iComplete™ ecosystem as we secured awards from operators in all major U.S. basins

 

Installation of our first iProduction™ system with a leading operator in the Permian basin

 

Continued transformation of our North America operations through client collaboration to drive wellsite operational efficiencies and lower GHG emissions

 

Response to a difficult operating environment

Reduced capital outlays for 2020:

 

► Dividend distribution reduced 75% versus the prior year to $59 million

 

► Capital expenditures reduced 36% versus the prior year to $292 million

Implemented cost reduction plan:

 

► Achieved annualized run-rate cost savings of more than $350 million

 

► Included $100+ million in annualized cost reductions for Surface Technologies and $30 million in Corporate expenses

Revised compensation for 2020:

 

► 30% reduction to both the Chairman and CEO salary and in the Board of Directors’ retainer

 

► 20% reduction to our other executive officers’ salaries

 

 

We also took aggressive actions to mitigate the impacts of the COVID-19 virus on our business. The health, safety, and well-being of our employees remained our top priority as we focused on maintaining business continuity and adopting leading-edge safety practices. The Company activated a COVID-19 Incident Management Team in order to administer a consistent response throughout our global operations and provide coordinated support to localized events. Our COVID-19 management response was recognized by customers including Shell and BP as “best in class” to emulate. Specific actions included the following:

 

Established a thorough Business Continuity Planning process, which included a work from home initiative, when practical, to support continuity of operations;

 

Adopted enhanced sanitation practices across all offices and facilities, implemented measures to restrict non-essential business travel, and restricted non-essential visitors from visiting our offices and facilities;

 

Provided personal protective equipment and performed proactive health screening and testing of offshore personnel; required employees to self-quarantine when they may have been exposed to, or shown any symptoms of, COVID-19;

 

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Collaborated more closely with clients to mitigate COVID-19 impacts in order to advance projects and meet customer requirements, albeit at reduced productivity in some instances;

 

Engaged with critical vendors regarding their own pandemic preparedness plans to minimize the impact to our business operations;

 

Implemented global initiatives on mental health, including a mental health month in October, mental health and well-being webinars on our learning portal, mental health campaign of “it’s OK not to be OK,” and reinforcement of employee assistance programs and flex work policies; and

 

Established a global Incident Management Team sponsored by our executive officers and including representatives from HSE, Security, People & Culture, Legal, Communications, Finance, Medical, and major projects teams to assist in regularly updating our Board on COVID-19 impacts.

 

TechnipFMC TSR Performance

70% of our long-term equity incentive plan is based on relative TSR performance versus the Relative TSR Peer Group for the year of grant. As such, the figures below indicate the Company’s TSR performance against our Relative TSR Peer Group and against the Philadelphia Oil Service Sector (OSX) index. Note that the OSX index is not used for plan payout, but provided as a reference point to demonstrate TSR performance for the oil service industry as a whole during this period.

 

For the 2017-2020 performance period our TSR performance has been above the median for the OSX index. For the same period, our TSR performance has been above the median of our Relative TSR Peer Group for the 2017-2019 period, and below the median of our Relative TSR Peer Group in 2020.

 

This TSR performance is reflected in the payout under the relative TSR component of our PSU awards.

 

Although our 2017-2019 relative TSR performance was above median, the payout for the relative TSR component was capped at 100% due to negative absolute TSR performance. Payout for the ROIC component was at 0%, and therefore, the overall payout for PSU awards was 50%.

 

Our 2018-2020 relative TSR performance was at the 25th percentile of the Relative TSR Peer Group, and the resulting payout for the relative TSR component was 50%. Payout for the ROIC component was at 0%, and therefore, the overall payout for PSU awards was 25%.

 

 

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For detailed information regarding our 2020 results, please see our Form 10-K, which reports our results using U.S. generally accepted accounting principles (“GAAP”), and our U.K. Annual Report and Accounts, which reports our results using international financial reporting standards (as adopted by the European Union).

 

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2020 Performance Impact on Compensation

 

The table below outlines the elements of our compensation program that are directly tied to Company performance, along with 2020 performance and resulting payouts. For additional details, including calculations and payout scales, please see the sections -Elements of 2020 Executive Compensation-Annual Cash Incentive” and “-Elements of 2020 Executive Compensation-Long-Term Equity Incentives-Vesting of 2018 PSU Awards.”

 

Compensation Element Objective 2020 Measures   2020 Performance   2020 Payout

Long-Term Equity

 

(70% PSUs and 30% RSUs)

 

To drive and reward the achievement of long-term results and align interests of NEOs with shareholders’ interests

50% PSUs:

3-year Relative TSR

 

>  2018-2020 performance of 25th percentile1 >  50% of target1

50% PSUs:

3-Year ROIC

>  2018-2020 performance of 3.3%1 >  0% of target1
  30% of the long-term equity incentive was delivered in the form of RSUs, the delivered value of which will also depend on share price appreciation, and thus is aligned with shareholder interests.

Annual Cash Incentive

 

To drive and reward the achievement of short-term Company strategic goals and individual contributions

 

1Q 2020        
EBITDA 25% >  N/A2 >  0% of target
EBITDA as a Percentage of Revenue 25% >  N/A2 >  0% of target
Working Capital Days 25% >  N/A2 >  0% of target
Annual Individual Performance 25% >  Ranging from 100% to 175% performance >  100% to 175% of target
2Q-4Q 2020
Q2 - Q4 Incremental Cost Savings 37.5% >  Exceeded $400 million - Exceeded maximum performance >  100% of target3
Q2 - Q4 Free Cash Flow Conversion Ratio 37.5% >  Exceeded 75% - Exceeded maximum performance >  100% of target3
Annual Individual Performance 25% >  Ranging from 100% to 175% performance >  100% to 175% of target

 

(1) Payout for the 2018 grant has been provided instead of payout for the 2020 grant, since payout for the latter is not yet determined based on a 2020-2022 performance period.
(2) Due to the COVID-19 pandemic and the volatility in the oil and gas market, the Compensation Committee set the payout for the Q1 targets at 0%
(3) Payout for business performance indicators was capped at a maximum of target (100%) for 2020.

 

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Our pay-for-performance program aims to motivate our executive officers to achieve and exceed both our short-term and long-term goals and objectives by including an appropriate mix of long-term equity compensation and annual cash incentive compensation. As intended by our program, our NEO compensation was directly impacted by our performance.

 

2020 Performance Impact on Long-Term Equity

The majority of our executives’ variable compensation is in the form of long-term equity compensation, comprising 85% and 75% of 2020 total target variable compensation for our CEO and other NEOs, respectively. Our NEOs achieved a payout of 25% of target on their 2018 performance-based, long-term equity incentive awards, based on the following:

 

For the three-year relative TSR measure, we achieved 25th percentile performance for relative TSR for the 2018-2020 performance period based on our performance relative to our 2018 Relative TSR Peer Group, and as a result, the relative TSR component of the 2018 PSU awards paid out at 50%.

 

For the ROIC measure, we did not meet the threshold performance for the 2018-2020 performance period, and as a result, the ROIC component of the 2018 PSU awards paid out at 0%.

 

2020 Performance Impact on Annual Cash Incentive

The annual cash incentive comprises 15% and 25% of 2020 total target variable compensation for our CEO and other NEOs, respectively. Our NEOs achieved a payout ranging from 81% to 100% of target for the annual cash incentive, based on the following:

 

The payout for the business performance indicators (which makes up 75% of the annual cash incentive plan) was 75%.

 

For Q1 2020, our performance for EBITDA, EBITDA as a Percentage of Revenue, and Working Capital Days was set at 0% by the Compensation Committee.

 

In Q2-Q4 2020, our performance far exceeded the maximum of the performance range for the Incremental Cost Savings and Free Cash Flow Conversion measures. Therefore, payout for the business performance indicators was 100% for Q2-Q4 (payouts were capped at 100% for Q2 through Q4, even for above target performance).

 

The payout for the individual annual performance indicators (which makes up 25% of the annual incentive plan) ranged from 100% to 175%.

 

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Compensation Governance

 

Role of the Compensation Committee

 

Our Compensation Committee comprising independent non-executive directors oversees our executive compensation program and determines the compensation for our executive officers on behalf of the Board. The Compensation Committee is responsible for, among other things, reviewing, evaluating, and approving:

 

The agreements, plans, policies, and programs of the Company to compensate its independent directors, Chairman and CEO, and other officers, as applicable; and

 

All awards of equity securities or equity derivatives to executive officers of the Company, as well as the total number of equity securities or equity derivatives to be allocated to all other employees at the discretion of the CEO, consistent with equity plans approved by the Company’s shareholders.

 

The Compensation Committee also reviews the Company’s incentive compensation arrangements to ensure that they do not incentivize excessive risk-taking and evaluates compensation policies and practices that could mitigate any such risk.

 

Additional information on the roles and responsibilities of the Compensation Committee is provided in the section Corporate Governance-Committees of the Board of Directors-Compensation Committee, and the charter of the Compensation Committee may be viewed on our website at www.technipfmc.com under the heading Who we are > Governance.”

 

Role of the Compensation Committee’s Independent Consultant

Under its charter, the Compensation Committee has the sole authority to retain and terminate any compensation consultant, outside counsel, or any other advisors engaged to assist in the evaluation of compensation of directors or executive officers, including the sole authority to approve the consultant’s fees and its terms. The Compensation Committee considers appropriate standards in selecting its compensation consultants consistent with NYSE rules, SEC rules, and requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).

 

In 2020, the Compensation Committee retained Willis Towers Watson as its principal compensation consultant to provide information and advice to the Compensation Committee on executive and director compensation and related governance matters. This included evaluating our director and executive compensation programs against general market and peer data and providing updates on current executive compensation trends and applicable legislative and governance activity. In 2020, Willis Towers Watson was paid approximately $313,000 in fees related to executive compensation services. In addition, Willis Towers Watson provided non-executive compensation services in 2020 totaling $1,694,000 in fees, which included retirement benefit consultant services, health and group benefits consulting services, and corporate risk and broking services to management.

 

In February 2021, the Compensation Committee considered the independence of Willis Towers Watson pursuant to the SEC rules and NYSE listing standards. At the request of the Compensation Committee, Willis Towers Watson prepared a letter providing data on the following factors relevant to assessing independence: (a) other services provided to the Company by Willis Towers Watson; (b) fees paid by the Company as a percentage of Willis Towers Watson’s total revenue; (c) policies and procedures maintained by Willis Towers Watson that are designed to prevent a conflict of interest; (d) any business or personal relationships between the individual consultants involved in the engagement and a member of the Compensation Committee; (e) any Ordinary Shares owned by the individual consultants involved in the engagement or their immediate family members; and (f) any business or personal relationships between our executive officers and Willis Towers Watson or the individual consultants involved in the engagement. The Compensation Committee also considered that the Willis Towers Watson consultants advising the Compensation Committee derived no economic benefit from the fees paid for the non-executive compensation services. The Compensation Committee discussed these considerations and concluded that the work of Willis Towers Watson and the consultants involved in the engagement did not raise any conflict of interest.

 

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The Annual Process

Each year the Compensation Committee approves an annual calendar which sets out the key activities in accordance with its charter. The key activities of the committee in 2020 were as follows:

 

Q1 Q2-Q3 Q4

Approve compensation decisions and equity awards for directors and officers

 

Approve Company performance achievements for prior year in relation to annual and long-term incentive plans

 

Review and discuss executive compensation strategy, structure, and programs

 

Approve annual compensation disclosures in Company proxy statement and U.K. annual report

Review executive officer share ownership guidelines and compliance 

 

Discuss shareholder engagement outcomes and review annual meeting vote results

 

Review internal governance policies (e.g., clawback, insider trading policy, anti-hedging, pledging) and compliance

 

Approve equity programs, annual equity budget for non-executives, and impact on shareholder dilution

 

Review of peer compensation practices

 

Compensation Decisions

 

Compensation Peer Groups

In making decisions about target compensation levels, the Compensation Committee reviews data from two distinct peer groups. We believe that it is important to consider both global companies of similar size, complexity, and capital-intensive nature, as well as companies within the same industry with significant U.S. operations, for a comprehensive view of who we compete with for talent.

 

These two peer groups are combined to provide a holistic view of the market for compensation benchmarking, but the Compensation Committee also looks at each peer group separately in order to gain insight into variations between the two groups.

 

The Global Peer Group comprises a broadly equal weighting of U.S. and European headquartered companies, of similar size to the Company (in terms of revenue) who compete for executive talent in capital intensive industries similar to the Company, including the oil and gas industry, construction and engineering, and industrial manufacturing.

 

The Industry Peer Group is focused more closely on our sub-industry and is drawn from companies in the oilfield services and oil exploration and production sectors, as well as heavy engineering organizations with greater (but not exclusive) focus on North America.

 

The Compensation Committee does not place a specific weight on the data from either peer group, but considers the data in light of all the circumstances relevant to each executive under review, as well as the Company’s compensation philosophy.

 

For both sets of peers, we use a range of selection criteria that include, among other factors, financial indicators such as revenue and market capitalization, number of employees, company size, industry, end markets, complexity, geographic footprint, and headquarters location.

 

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TechnipFMC Proxy Statement 2021

 

Peer Group Purpose
Global Peer Group Similarly sized, complex, and capital-intensive global companies, including those based outside the United States
Industry Peer Group Companies within the same industry, with a greater (but not exclusive) emphasis on oilfield services companies in North America.

 

The Compensation Committee reviewed our 2019 Compensation Peer Group as defined in our 2020 Proxy Statement, and the following companies were removed from the Peer Group: Chicago Bridge & Iron Company N.V. (due to merger/ acquisition activity), Anadarko Petroleum Corporation (due to acquisition), and Weatherford International plc (due to Chapter 11 bankruptcy).

 

Accordingly, the companies below comprised the 2020 Compensation Peer Group, including both global and industry peers.

 

2020 Combined Compensation Peer Group Constituents
Air Liquide S.A Ingersoll-Rand plc
Alstom S.A. Jacobs Engineering Group Inc.
Apache Corporation John Wood Group plc
Baker Hughes Company McDermott International, Inc.
Caterpillar Inc. National Oilwell Varco, Inc.
ConocoPhillips Petrofac Limited
Cummins Inc. Repsol, S.A.
Devon Energy Corporation Saipem S.p.A.
Dover Corporation Schlumberger Limited
Enbridge, Inc. Subsea 7 S.A.
Fluor Corporation Transocean Ltd.
Halliburton Company VINCI S.A.

 

Companies in blue bold comprise the Industry Peer Group.

 

For 2020 compensation decisions, McDermott International, Inc. was included; however, we anticipate that it will be removed from our peer groups for 2021 compensation decisions due to its Chapter 11 bankruptcy filing in January 2020.

 

When 2020 compensation decisions were made, the median revenue and median market capitalization for each of the peer groups used and the Company’s relative ranking are provided below:

 

Peer Group Median Revenue

TechnipFMC

Revenue Ranking

Median Market Capitalization TechnipFMC Market Capitalization
Ranking
Global Peer Group $18.4 billion 44th percentile $14.3 billion 31st percentile
Industry Peer Group $10.1 billion 63rd percentile $9.8 billion 40th percentile

 

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Accordingly, the Compensation Committee agreed that this group of companies was reasonable in terms of size for market median comparisons. Where possible, the Compensation Committee’s consultant size-adjusts data to account for differences in size between the Company and the Compensation Peer Group.

 

In 2021, following the completed separation of TechnipFMC and Technip Energies, the Compensation Committee anticipates a review of TechnipFMC’s peer group based on its industry peers as a standalone, fully integrated technology and services provider.

 

Setting Target Executive Compensation

In determining the target compensation package for each NEO, the Compensation Committee compares each element and combined total of an NEO’s compensation to data for relevant roles within the Compensation Peer Group. To provide additional perspectives, the Compensation Committee also considers internal relativities between the CEO and the NEOs.

 

In setting target compensation, the Compensation Committee also considers market median data, as well as other factors including the experience, tenure, role criticality, and performance of the incumbent NEOs. In addition, any changes to the CEO’s target compensation are in accordance with the shareholder-approved Directors’ Remuneration Policy.

 

No executive participates in any discussion that relates to his or her own compensation.

 

The Compensation Committee, in partnership with its independent advisor, determines and approves any changes to compensation for the Chairman and CEO, who is not present during these discussions.

 

The CEO recommends changes to compensation for the other NEOs without them present, which are approved by the Compensation Committee with input from its independent compensation consultant.

 

Use of Compensation Tally Sheets

The Compensation Committee uses tally sheets to ensure they receive the information necessary to evaluate the total compensation of an NEO. Tally sheets list each component of an executive’s compensation throughout a range of alternative scenarios (e.g., termination, change-in-control transaction, etc.). The compensatory amounts include cash compensation, accumulated deferred compensation balances, outstanding equity awards, benefits, perquisites, and any other item, as well as projected values of equity awards under various performance and termination scenarios, realized stock option and stock gains, and total wealth accumulation.

 

Establishing Performance Measures and Goals

In setting performance goals, the Compensation Committee considers the Company’s annual financial plans, strategic initiatives, and projections, which are impacted by the following factors:

 

  The overall business climate and the cyclical nature of our business
     
  Underlying market conditions for our products and services
     
  Volatility in commodity prices
     
  Our competitors’ performance
     
  Anticipated changes in customer activity
     
  Our prior-year performance

 

These inputs inform discussions regarding both the targets and the ranges around the targets to ensure the goals are sufficiently difficult without incentivizing inappropriate risk taking.

 

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Elements of 2020 Executive Compensation

Our executive compensation program comprises three primary elements of base salary, annual cash incentive, and longterm equity awards, along with the provision of market competitive benefits and perquisites.

 

In the first quarter of 2020, the global COVID-19 pandemic, sharp decline in oil prices, and equity market volatility materially changed the business environment and outlook for TechnipFMC. In March 2020, we announced that while the rationale for the Spin-off remained unchanged, we would delay the Spin-off until markets sufficiently recovered. We also decided to accelerate our cost reduction and efficiency efforts worldwide to reinforce the Company through the downturn.

 

The Compensation Committee took swift and decisive actions in response to these events, and made changes to our executive compensation program, including the following:

 

  Reduced the annual base salary for the Chairman and CEO by 30% and for other executive officers by 20% for the remainder of 2020, effective May 1, 2020.
     
  Reduced annual cash retainers for the Board of Directors by 30% for the remainder of 2020, effective May 1, 2020.
     
  Due to the COVID-19 pandemic and business downturn and shift in the Company’s strategic priorities, updated our annual cash incentive plan measures effective April 1, 2020 and applied a cap on payout under the plan.
     
  No changes were made to the annual equity awards previously granted and not vested.

 

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The table below summarizes these elements, along with their purpose and key characteristics. However, a more detailed explanation is available in further sections.

 

Element Purpose Key Characteristics
Base Salary

To provide market competitive

compensation for

the role

Fixed cash compensation

Reflects major responsibilities of an NEO’s role

Set with reference to market median, based on responsibility, experience, and performance

Effective May 1, 2020 to the end of the year, base pay was reduced by 30% for our Chairman and CEO and 20% for our other executives.

Annual Cash Incentive

To drive and reward

the achievement of short-term

Company strategic

goals and individual contributions

Variable cash compensation

Target value based on role, set with reference to market median

Paid based on achievement of business performance targets (75%) and achievement of individual performance targets (25%)

2020 business performance targets modified effective Q2 2020 due to the COVID-19 business impact:

For Q1 2020:

EBITDA

EBITDA as a Percentage of Revenue

Working Capital Days

Measures are equally weighted

Actual payout can range from 0% to 200% of target

For Q2-Q4 2020:

2020 business performance targets modified effective Q2 2020 due to the COVID-19 business impact:

For Q1 2020:

EBITDA

EBITDA as a Percentage of Revenue

Working Capital Days

Measures are equally weighted

Actual payout can range from 0% to 200% of target

For Q2-Q4 2020:

Incremental Cost Savings

Free Cash Flow Conversion

Measures are equally weighted

Actual payout can range from 0% to 100% of target;payout capped at target to limit payouts in a volatile business environment

 

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Element Purpose Key Characteristics
Long-Term Equity Incentives

To drive and reward

the achievement of long-term results

and shareholder

value creation while encouraging retention

► Granted as combination of two vehicles: PSUs (70%) and RSUs (30%)

 

► Target value based on role, set with reference to market median

 

► PSUs (70% of total long-term equity grant) subject to one performance condition measured over three years: relative TSR

 

► 50% of after-tax RSUs must be retained for at least one year following vesting

 

► All long-term incentive awards are subject to three-year cliff vesting

Health and Welfare Benefits, Retirement Benefits, and Perquisites

To facilitate the performance of the

role and ensure a market competitive total compensation package

► Health and welfare benefits, the same as benefits offered to other employees of the Company in the respective countries

 

► Retirement savings offered through participation in our 401(k) and non-qualified defined contribution plans for eligible U.S. NEOs, similar to plans offered to other U.S. employees

 

► Limited perquisites including financial planning, tax assistance, use of company cars, club memberships, executive physicals, and security services where necessary

 

► Limited participation in other programs dependent on geography and tenure (non-U.S.-based NEO)

 

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Base Salary

We provide our NEOs with a market competitive base salary to compensate them for services performed during the year. We set base salary by referencing market median total target compensation. When setting an individual NEO’s base salary, we consider factors such as individual performance, experience, and contributions to the business, while staying within an appropriate range of the market median for the role.

 

The Compensation Committee reviews base salary for NEOs on an annual basis. For the CEO, the Compensation Committee determines and approves any changes, with input from the committee’s independent compensation consultant. For the other NEOs, the CEO recommends changes to the Compensation Committee with the support of the committee’s compensation consultant, and the Compensation Committee approves the changes. The NEOs do not participate in discussions or decisions relating to their own or the other NEOs’ compensation.

 

In 2020, in response to the change in business environment due to the COVID-19 pandemic and sharp decline in oil prices, the Compensation Committee reduced the annual base salary for the Chairman and CEO by 30% and for other executive officers by 20% for the remainder of 2020, effective May 1, 2020.

 

Changes in salary are shown in the table below:

 

Named Executive Officer

Base Salary

(December 31, 2019)

Base Salary

(December 31, 2020)

Change1
Douglas J. Pferdehirt $1,236,000 $865,200 -30%
Maryann T. Mannen2 $803,000 $642,400 -20%
Justin Rounce $600,000 $480,000 -20%
Arnaud Pieton3 $515,000 $642,464 +24.8%
Barry Glickman $536,000 $428,800 -20%
Catherine MacGregor4 €685,000 €548,000 -20%
Nello Uccelletti5 €506,000 N/A N/A

 

(1) The temporary salary reduction ended on January 1, 2021.
(2) Ms. Mannen left the Company, effective January 25, 2021.
(3) Mr. Pieton’s position changed to President, Technip Energies, effective October 1, 2020. The salary provided at December 31, 2020 includes the pay increase related to this transition and also includes the 20% temporary reduction.
(4) Ms. MacGregor left the Company, effective October 31, 2020. The salary provided in the December 31, 2020 column reflects her base salary on October 31, 2020.
(5) Mr. Uccelletti retired from the Company on February 29, 2020.

 

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Annual Cash Incentive

 

2020 Annual Cash Incentive Targets

We provide our NEOs with an annual cash incentive in order to drive and reward the achievement of short-term Company strategic goals and individual contributions. Each NEO has an annual cash incentive target, set as a percentage of base salary. Each NEO can earn 0% to 200% of their annual cash incentive target, depending on Company and individual performance. However, in 2020, in response to the COVID-19 pandemic and business downturn, the payout for the business performance indicators, which make up 75% of the annual cash incentive, was capped at 100%. Limiting payouts at target (compared to 200% in prior years) in a volatile business environment helps align with shareholder interests.

 

The Compensation Committee reviews and approves target annual cash incentive percentages for the NEOs annually, based on a review of market median total compensation data for our peers. The targets are set at appropriate levels to incentivize executive officers to achieve the short-term financial and operational goals for the Company, as well as to provide executive officers with market-competitive levels of total compensation.

 

The following were the 2020 annual cash incentive targets for our NEOs:

 

Named Executive Officer 2019 2020 Increase
Douglas J. Pferdehirt 135% 135% 0%
Maryann T. Mannen 100% 100% 0%
Justin Rounce 100% 100% 0%
Arnaud Pieton 100% 100% 0%
Barry Glickman 100% 100% 0%
Catherine MacGregor 100% 100% 0%
Nello Uccelletti1 100% N/A N/A

 

(1)  Mr. Uccelletti retired from the Company on February 29, 2020.

 

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Annual Cash Incentive Performance Indicators

75% of the annual cash incentive is based on business performance indicators (“BPI”), and 25% is based on individual annual performance indicators (“API”).

 

 

75% BPI

 

Assessment of overall Company performance based on business performance indicators 

 

 

+

 

25% API

 

Assessment of individual performance based

on qualitative factors reflected in the executive directors’ annual performance objectives

 

 

BPI Component - 75% of Annual Cash Incentive

The Compensation Committee annually establishes BPI targets and reviews the performance measures at its February meeting.

 

For the first quarter of 2020, EBITDA, EBITDA as a Percentage of Revenue, and Working Capital Days were the BPI measures for our annual cash incentive plan. These measures were designed to focus our executive officers on operating profitability and efficiency of using operating capital.

 

Due to the COVID-19 pandemic and business downturn, the Company’s strategic priorities shifted to a significantly greater focus on cash flow, liquidity, and business sustainability. To better align the NEOs’ compensation with these critical priorities, the financial measures for the 2020 annual cash incentive plan were changed to Incremental Cost Savings (37.5% weighting) and Free Cash Flow Conversion (37.5%), for the remainder of 2020. The Incremental Cost Savings metric measures our performance against our publicly stated Cost Reduction program. The Free Cash Flow Conversion metric (ratio of Free Cash Flow to Adjusted Net Income), measures the quality of our earnings and is important for liquidity. 25% of the annual cash incentive plan continued to be based on API measures, including specific objectives regarding sustainability in our business performance, further reinforcing the Company’s commitment to our Foundational Beliefs. Finally, payout for the 2020 annual cash incentive plan was capped at target payout.

 

Target Setting for BPI Measures

Performance targets related to our annual cash incentive are set at “stretch” targets that are considered difficult and challenging but achievable with superior execution based on our long-range plans. Given the cyclical nature of our industry sector, as well as the variability in some of our metrics caused by the lifecycle progression of a few very large projects, our targets can vary in absolute terms when compared to prior year targets but are set to ensure that achievement will require the same or improved execution to achieve the targets.

 

In setting performance goals, the Compensation Committee considers the Company’s annual financial plans, strategic initiatives, and projections, which are impacted by the following factors:

 

The overall business climate and the cyclical nature of our business

 

Underlying market conditions for our products and services

 

Volatility in commodity prices

 

Our competitors’ performance

 

Anticipated changes in customer activity

 

Our prior-year performance

 

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These inputs inform discussions regarding both the targets and the ranges around the target to ensure the goals are sufficiently difficult without incentivizing inappropriate risk taking.

 

Q1 Target Setting and Result

Targets were set for the EBITDA, EBITDA as a Percentage of Revenue, and Working Capital Days metrics in Q1 2020, considering the market outlook for each of our business segments and for the Company as a whole at the time the targets were set.

 

In April 2020, due to the volatility in the oil and gas market caused by the COVID-19 pandemic and oil price decline, the targets previously set were no longer considered applicable, and the Compensation Committee set the payout for Q1 2020 BPI at 0%.

 

Q2-Q4 Target Setting and Result

As described above, as a result of the COVID-19 pandemic, worsening oil and gas macro outlook, and cutbacks in customer activity, there was an urgent and critical need to focus on cash flow and liquidity, as well as cost reduction. Accordingly, our BPI metrics for Q2-Q4 2020 were changed to Incremental Cost Savings and Free Cash Flow Conversion. The targets for these measures were set at a level needed to manage the business through the downturn and to achieve the appropriate cost structure to drive shareholder value.

 

In Q2-Q4 2020, our performance exceeded the maximum of the performance range for our Incremental Cost Savings and Free Cash Flow Conversion metrics.

 

The Incremental Cost Savings achievement was supported by decisive actions to reduce the Company cost structure by eliminating underperforming business lines, reducing structural overcapacity, and right-sizing the business for the future.

 

Free Cash Flow Conversion was achieved through disciplined management of capital expenditures within targeted reductions, preservation of cash by deferral of non-essential spending, and effective working capital management.

 

Although our performance exceeded the maximum of the performance range, payout was capped at 100% to support the Company and align with shareholder interests in a volatile business environment.

 

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Full-Year Result

With Q1 2020 payout percentage at 0% and Q2-Q4 2020 payout percentage at 100%, our weighted overall BPI result for 2020 was 75%.

 

Q1 2020 (January - March)

BPI

Measure

Weighting 2020 Goal
(Annual)
Definition Why It Matters
EBITDA ($M) 25% $1,639 million Earnings before interest, taxes, depreciation, and amortization

Indicative of our operating profitability and a driver of shareholder value creation; facilitates comparisons with peer companies by excluding the effect of different capital structures and financing decisions

EBITDA as a Percentage of Revenue 25% 10.3% Earnings before interest, taxes, depreciation, and amortization, calculated as a percentage of revenue

Reflects the performance and sustainability of the business, leveraging cost efficiencies and driving profitability improvement

Working Capital Days

25% (78) Average number of days to convert working capital into revenue

Measures our efficiency of using operating capital to operate the business; our contract arrangements typically result in negative working capital due to advance payments and milestone payments

Q2-Q4 2020 (April - December)

BPI

Measure

Weighting 2020 Goal
(Annual)
Definition Why It Matters
Incremental Cost Savings 37.5% $350 million

Cost savings targets established in response to COVID-19 and commodity price impacts on operations

Measures our performance against our disclosed Cost Reduction Program, with targeted savings of more than $350 million

Free Cash Flow Conversion

 

37.5% 52.5%

Ratio of free cash flow divided by adjusted net income. Free cash flow is defined as cash provided by operating activities less capital expenditures. Adjusted net income is defined as net income, excluding charges and credits.

Measures the quality of our earnings and is important for liquidity

 

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The 2020 performance goals and the 2020 results achieved are outlined below. Although the payouts apply to the quarter(s), goals and results are annual.

 

BPI Measure 2020 Goals 2020 Performance
Threshold Performance Target Performance Maximum Performance

Performance

%

Payout %1
Q1 2020 (January - March)
EBITDA ($M)2 $1,366 $1,639 $1,831 N/A3 0%
EBITDA as a Percentage of Revenue2 8.3% 10.3% 12.3% N/A3 0%
Working Capital Days (71) (78) (82) N/A3 0%
Payout Percentage 0% 100% 200%    
Final BPI Payout Percentage for Q1 2020 (25% Weighting) 0%
Q2-Q4 2020 (April - December)
Free Cash Flow Conversion2

30%

52.5%

75%

Greater than

75%

 

100%

Incremental Cost

Savings

$300 million $350 million $400 million Greater than $400 million 100%
Payout Percentage 0% 100% 100%4    
Final BPI Payout Percentage for Q2-Q4 2020 (75% Weighting)     100%
Final Weighted Payout Percentage (BPI)       75%

 

(1) Payout for performance between the threshold, target, and maximum payouts are interpolated on a straight-line basis. The final weighted payout percentage for BPI is rounded to the nearest whole percent for calculating the annual cash incentive payout.
(2) Financial targets and actual performance based on EBITDA exclude non-recurring charges and credits, such as impairments, restructuring costs, integration costs, as well as other items identified in TechnipFMC’s quarterly and annual financial statements. Free Cash Flow Conversion is defined as the ratio of free cash flow to adjusted net income. Free cash flow is defined as cash provided by operating activities less capital expenditures. Adjusted net income is defined as net income, excluding charges and credits. Please refer to “Non-GAAP Measures” beginning on page 60 of our Form 10-K and “Liquidity and Capital Resources” beginning on page 65 for a reconciliation of EBITDA, free cash flow, and adjusted net income to the most directly comparable GAAP measures.
(3) Due to the COVID-19 pandemic and the resulting volatility in the oil and gas market, the Compensation Committee set the payout for the Q1 targets at 0%.
(4) Although our performance exceeded the maximum of the performance range, payout was capped at 100% (compared to 200% in prior years) to support the Company and align with shareholder interests in a volatile business environment.

 

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In accordance with established guidelines, the goals are adjusted for the cumulative effect of changes in accounting principles, significant acquisitions and divestitures, and foreign exchange movements. These changes are intended to ensure that performance is measured on a like-for-like basis relative to the goals that were set.

 

API Component - 25% of Annual Cash Incentive

Each February the individual performance goals are established for each NEO.

 

These objectives are set at “stretch” levels (i.e., objectives that are difficult and challenging but should be achievable with superior execution) and are set using a rigorous evaluation process. If an NEO failed to achieve any of his or her objectives, the API multiple would likely be 0%, absent any mitigating factors. If the NEO met some, but not all of the objectives, the API multiple would fall between the range of 0% to 200%, depending upon the number of objectives accomplished, their relative importance and difficulty as determined by the Compensation Committee, and any factors that may have prevented achievement of certain objectives.

 

For 2020, the NEOs received API ratings ranging from 100% to 175% for the year, with an average rating of 147%.

 

In determining the 2020 API rating for our CEO, the Compensation Committee took into account a comprehensive view of his performance and contributions, including performance on key objectives and results, in light of the unprecedented global health and ecpnomic crisis caused by the COVID-19 pandemic. In addition to individual goals related to Company strategy, profitable growth, and safety, his objectives also included the three pillars of our corporate responsibility and sustainability efforts to ensure that the Company makes meaningful and tangible achievements in this area. The Compensation Committee considered the CEO’s overall performance relative to the achievement of his key objectives, the importance of each objective, as well as the challenging market conditions that impacted our industry.

 

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Objectives Key Achievements Performance Assessment
Below Expectations Meets Expectations Exceeds Expectations
Mr. Pferdehirt    

Strategy & Growth

 

Spin-off of Technip Energies

 

ESG objectives

 

Digital - commercialize Subsea Studio™

 

Technology - qualify Flexibles 2.0 (HFP) and commercialize Gemini

 

Foster strategic alliances and relationships

Technip Energies Spin-off completed in Q1 2021



2021-2023 ESG objectives and scorecard delivered in November 2020

   

Commercialized Subsea Studio™: +50% of all Subsea FEED studies utilized Subsea Studio™

   

Flexibles 2.0: qualification on-track

 

 

Gemini: successful commercialization and technology introduction

   

Key strategic alliances: enhanced and expanded


 

Execute on Key Deliverables

 

Cost Reduction Program objectives

 

Expand LNG market

 

Strengthen market position in Surface Technologies

Exceeded Cost Reduction Program objectives



Secured two LNG awards

     

Expanded international market presence

     

Team & Company Culture

 

External leadership

 

Succession planning

 

Engagement & culture

Board member for Advancing Women Executives in Energy, CEO Action for Diversity & Inclusion™, American Heart Association, United Way, Energy Workforce Transformation


 

Engagement re-focus on well-being and mental health in line with the pandemic environment, all Company well-being survey with actionable results, Company-wide mental health support program implemented

   

 

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Objectives Key Achievements Performance Assessment
Below Expectations Meets Expectations Exceeds Expectations
Mr. Pferdehirt

ESG & Foundational Beliefs

 

 Focus on gender diversity, community engagement, and environment

 

 Expand QHSES transformation

 

 Zero fatalities

 Promoted gender diversity through Company programs and key external recruitment



 Promoted Company Energy Transition position

   

 Zero fatalities not achieved - one fatality

   
Overall Rating for Mr. Pferdehirt 175%

 

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Individual performance assessments for the other NEOs are summarized below. Ms. MacGregor and Mr. Uccelletti are excluded because they did not participate in the annual cash incentive plan in 2020.

 

NEO Summary of 2020 Objectives and Key Achievements

Maryann Mannen

Executive Vice  

President and Chief

Financial Officer

 

Ms. Mannen’s 2020 individual performance objectives reflected her responsibilities as our Executive Vice President and Chief Financial Officer in leading our finance function. Ms. Mannen’s 2020 objectives and achievements included stewardship of a cost reduction program, maintaining disciplined capital and cash flow management, and securing a revolving credit facility and successful bond offering post Spin-off.

Justin Rounce

Executive Vice President and Chief Technology Officer

 

Mr. Rounce’s 2020 individual performance objectives reflected his responsibilities as our Executive Vice President and Chief Technology Officer in leading our research and innovation, product engineering, procurement and sourcing, manufacturing, quality, safety, security, IT, digital, corporate development, mergers and acquisitions, and external technology engagement functions. Mr. Rounce’s 2020 objectives and achievements included advancing the Company’s manufacturing performance, developing a long-term manufacturing strategy, leading new product development projects and processes, supporting the development of business process changes including digital transformation, development of a long-term energy outlook for the Company, and co-leading the execution of the Spin-off of Technip Energies, which was completed in February 2021.

Arnaud Pieton

President of Subsea (January 1 to October 2)

 

President and CEO-elect of Technip Energies (October 2 to December 31)

Mr. Pieton’s 2020 individual performance objectives reflected his responsibilities as President of Subsea from January 1 through October 2, 2020, and as President and CEO-elect of Technip Energies from October 2, 2020 through December 31, 2020. Mr. Pieton’s 2020 objectives and achievements included delivery on Subsea segment revenue and EBITDA targets, completion of a key strategic alliance, maintaining execution quality and backlog in a pandemic environment with no major cancellations, leading the development and deployment of Subsea Studio™, and playing a leading role in the Spin-off of Technip Energies, which was completed in February 2021.

Barry Glickman

President of Surface

Mr. Glickman’s 2020 individual performance objectives reflected his responsibilities as President of Surface. Mr. Glickman’s 2020 objectives and achievements included improving overall safety and quality performance, commercializing new technologies (including iComplete™ and iProduction™), increasing market share in key growth markets, implementing cost reduction in response to the significant drop in market activity, and delivering significant free cash flow for the year.

 

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Determination of 2020 Payouts under the Annual Cash Incentive Plan

Each executive’s target annual cash bonus is a percentage of his or her base salary for the year. For example, assuming an NEO has a base salary of $600,000, a 100% target bonus, a BPI rating of 75%, and an API rating of 100%, the executive’s annual cash bonus would be calculated as follows:

 

Component Base Salary Weighting Target Bonus % Rating Payout
BPI: $600,000 x 75% x 100% x 75% = $337,500
API: $600,000 x 25% x 100% x100% = $150,000
Total Cash Incentive Compensation       $487,500

 

Long-Term Equity Incentives

Long-term equity incentive awards, granted in the form of TechnipFMC equity, represent the largest component of each NEO’s annual target compensation opportunity, grounded in our compensation philosophy of paying for performance and aligning executives’ interests with those of our shareholders. Awards are made in the form of two complementary vehicles, PSU awards and RSU awards, providing a balanced focus on performance, sustainable long-term value creation, and retention.

 

In 2020, we discontinued the use of stock option awards in our long-term equity incentive plan, based on feedback from shareholders that stock options are not performance-based.

 

Long-Term Equity Mix

 

 

The Compensation Committee reviews and approves equity awards for the NEOs on an annual basis. The awards are based on market competitiveness on total target compensation and aim to provide appropriate levels of retention and incentives for achieving the Company’s long-term goals.

 

For 2020, the Compensation Committee set the target value of equity awards for each NEO with reference to market median total compensation data.

 

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Named Executive Officer 2020 Long-Term Incentive Target Value
Douglas J. Pferdehirt $9,700,000
Maryann T. Mannen $3,100,000
Justin Rounce $1,800,000
Arnaud Pieton $1,300,000
Barry Glickman $1,300,000
Catherine MacGregor1 $1,900,000
Nello Uccelletti2 NA

 

(1)   Ms. MacGregor’s 2020 long-term incentive grant was forfeited since she left the Company on October 31, 2020.
(2)   Mr. Uccelletti did not receive a 2020 long-term incentive grant.

 

2020 Performance Stock Unit Awards (70% of Equity Award)

The Compensation Committee sets the performance targets associated with PSU awards prior to the beginning of each three-year performance period. For awards in 2020, PSU awards comprised 70% of the total long-term equity award and payout will be based on relative TSR performance for the three-year period.

 

In 2019, the long-term equity award grant was based on two performance measures, ROIC and relative TSR. For 2020, the volatility in the oil and gas business environment, as well as our Spin-off, made it challenging to set meaningful ROIC targets. Therefore, in 2020, a single performance measure, relative TSR, was selected.

 

We believe that relative TSR is a meaningful measure of our long-term performance and motivates our executive officers to achieve superior share price compared to our key competitors, thus aligning their interests with shareholder interests. We further reinforce this by requiring a minimum threshold of relative TSR performance for payout and capping payout at 100% if the Company’s absolute TSR is negative.

 

PSU Measure Weighting Definition Why It Matters
Relative TSR 70% of total longterm equity Cumulative three- year increase in volume-weighted average price and reinvested dividends relative to peers Assesses our overall performance in the eyes of our shareholders and the broader stock market, relative to companies with whom we compete for customers and investors that are subject to similar macroeconomic factors

 

The relative TSR performance for our 2020 PSU awards will be measured against a group of 10 companies (“Relative TSR Peer Group”) that the Compensation Committee believes best reflects the companies that we compete with for both investments and customers. The financial and operational performance of these companies is therefore most directly relevant to TechnipFMC, and we are all subject to similar macro-economic factors.

 

The Compensation Committee reviewed our 2019 Relative TSR Peer Group as defined in our 2020 Proxy Statement, and the following companies were removed from our Relative TSR Peer Group: Chicago Bridge & Iron Company N.V. (due to merger/acquisition activity), McDermott International, Inc. (due to Chapter 11 bankruptcy filing), and Weatherford International plc (due to Chapter 11 bankruptcy filing).

 

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TechnipFMC Proxy Statement 2021

 

Accordingly, for awards made in 2020, the Relative TSR Peer Group comprised the following:

 

2020 Relative TSR Peer Group
Baker Hughes Company National Oilwell Varco, Inc. Schlumberger Limited
Fluor Corporation Oceaneering International, Inc. Saipem S.p.A.
Halliburton Company Oil States International, Inc. Subsea 7 S.A.
John Wood Group plc    

 

The vesting date for these PSU awards is March 9, 2023, with a performance period of January 1, 2020 through December 31, 2022.

 

The Compensation Committee approved the following targets in relation to the 2020 PSU awards:

 

Performance Achievement Relative TSR Performance Payout (% of earned PSUs)
Below Threshold Below 25th percentile 0%
Threshold 25th percentile 50%
Target 42nd percentile 100%
Maximum or above 75th percentile or greater 200%

 

Note: If the Company’s absolute TSR is negative for the performance period, the payout in respect of the TSR element will be capped at target, regardless of our relative performance.

 

For performance achievement between the levels identified above, payout percentage will be interpolated on a straightline basis.

 

2020 Time-Based RSU Awards (30% of Equity Award)

Time-based RSU awards further align NEOs’ interests with the interests of our shareholders by incentivizing them to increase share price, while reinforcing the retention impact of our compensation program.

 

RSUs are subject to three-year cliff vesting terms, with no phased vesting, meaning the NEO must remain employed through the vesting date of March 9, 2023, with exceptions only for retirement, death, and disability. Once vested, the executive receives ownership and the voting rights of the underlying Ordinary Shares.

 

The number of RSUs granted to each of the NEOs was determined by dividing the target value set for each executive officer by the closing price of the Company’s Ordinary Shares on the NYSE on the grant date.

 

On vesting, 50% of the after-tax number of RSUs must be held for a period of at least one year to incentivize NEOs to retain the shares and increase share price, further aligning NEOs’ interests with those of our shareholders.

 

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