DEF 14A 1 d874827ddef14a.htm DEF 14A DEF 14A
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

(Amendment No.     )

 

 

Filed by the Registrant                  Filed by a Party other than the Registrant  

Check the appropriate box:

 

 

Preliminary Proxy Statement

  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

Dow Inc.

(Name of Registrant as Specified In Its Charter)

N/A

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

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


Table of Contents

LOGO


Table of Contents

LOGO

 

Dear Dow Inc. Stockholder,

You are invited to attend a business-only meeting of stockholders. At the 2020 Annual Meeting of Stockholders of Dow Inc. (the “2020 Meeting”), stockholders will vote on the following matters either by proxy or in person:

 

Agenda:

    

1)

 

Election of the Directors named in the Proxy Statement

2)

 

Advisory resolution to approve executive compensation

3)

 

Advisory resolution on the frequency of future advisory votes to approve executive compensation

4)

 

Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2020

5)

 

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

 

           
         2020 Annual Meeting of Stockholders         
  Meeting Date:   Thursday, April 9, 2020                        Record Date:   Wednesday, February 12, 2020  
  Meeting Place:  

The H Hotel

111 W. Main Street

Midland, Michigan, 48640

    Meeting Time:   8:00 A.M. Eastern Time  
           

How to Vote

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

 

                     
 

LOGO

  www.proxyvote.com    
 

 

LOGO

  1-800-690-6903 or the number provided on your voting instructions    
 

 

LOGO

  Use the postage-paid envelope provided    
       

The Board of Directors of Dow Inc. (the “Board”) has set the close of business on February 12, 2020, as the record date for determining stockholders who are entitled to receive notice of and to vote at the 2020 Meeting and any adjournment or postponement thereof.

 

i   2020 PROXY STATEMENT   


Table of Contents

LOGO

 

As permitted by the U.S. Securities and Exchange Commission rules, proxy materials were made available via the internet. Notice regarding availability of proxy materials and instructions on how to access those materials were mailed to certain stockholders of record on or about February 28, 2020 (the “Notice”). The instructions included how to vote online and how to request a paper copy of the proxy materials. This method of notice and access gives the Company a lower-cost way to furnish stockholders with their proxy materials.

Proof of stock ownership is necessary to attend the 2020 Meeting. Since seating is limited, the Board has established the rule that only stockholders or one person holding a proxy for any stockholder or account (in addition to those named as Board proxies on the proxy forms) may attend. Please see page xvii of the Proxy Statement for information on attending the 2020 Meeting.

If you are unable to attend the 2020 Meeting in person, please listen to the webcast on the Company’s website at www.dow.com/investors.

Thank you for your continued support and your interest in Dow.

 

LOGO

Amy E. Wilson

General Counsel and Corporate Secretary

February 28, 2020

 

                 
 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDERS MEETING TO BE HELD ON APRIL 9, 2020

 

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

 
   

 

  LOGO   ii


Table of Contents

LOGO

 

Cautionary Statement about Forward-Looking Statements

This communication may contain “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance, financial condition, and other matters, and often contain words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “opportunity,” “outlook,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “will be,” “will continue,” “will likely result,” “would” and similar expressions, and variations or negatives of these words. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements.

Forward-looking statements include, but are not limited to, expectations as to future sales of Dow’s products; the ability to protect Dow’s intellectual property in the United States and abroad; estimates regarding Dow’s capital requirements and need for and availability of financing; estimates of Dow’s expenses, future revenues and profitability; estimates of the size of the markets for Dow’s products and services and Dow’s ability to compete in such markets; expectations related to the rate and degree of market acceptance of Dow’s products; the outcome of certain Dow contingencies, such as litigation and environmental matters; estimates of the success of competing technologies that may become available and expectations regarding the benefits and costs associated with each of the foregoing.

Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Forward-looking statements are based on certain assumptions and expectations of future events which may not be realized and speak only as of the date the statements were made. In addition, forward-looking statements also involve risks, uncertainties and other factors that are beyond Dow’s control that could cause Dow’s actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. These factors include, but are not limited to: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product life cycles; significant litigation and environmental matters; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, market uncertainty, interest and currency exchange rates, and equity and commodity prices; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war; weather events and natural disasters; ability to protect, defend and enforce Dow’s intellectual property rights; increased competition; changes in relationships with Dow’s significant customers and suppliers; unanticipated expenses such as litigation or legal settlement expenses; unanticipated business disruptions; Dow’s ability to predict, identify and interpret changes in consumer preferences and demand; Dow’s ability to complete proposed divestitures or acquisitions; Dow’s ability to realize the expected benefits of acquisitions if they are completed; the availability of financing to Dow in the future and the terms and conditions of such financing; and disruptions in Dow’s information technology networks and systems. Additionally, there may be other risks and uncertainties that Dow is unable to identify at this time or that Dow does not currently expect to have a material impact on its business.

Risks related to achieving the anticipated benefits of the Separation from DowDuPont Inc. include, but are not limited to, a number of conditions including risks outside the control of Dow including risks related to (i) Dow’s inability to achieve some or all of the benefits that it expects to receive from the Separation from DowDuPont, (ii) certain tax risks associated with the Separation, (iii) Dow’s inability to make necessary changes to operate as a stand-alone company, (iv) the failure of Dow’s pro forma financial information to be a reliable indicator of Dow’s future results, (v) Dow’s inability to enjoy the same benefits of diversity, leverage and market reputation that it enjoyed as a combined company, (vi) Dow’s inability to receive third-party consents required under the separation agreement, (vii) Dow’s customers, suppliers and others’ perception of Dow’s financial stability on a stand-alone basis, (viii) non-compete restrictions under the separation agreement, (ix) receipt of less favorable terms in the commercial agreements Dow entered into with DuPont de Nemours, Inc. (“DuPont”) and Corteva, Inc. (“Corteva”), including restrictions under intellectual property cross-license agreements, than Dow would have received from an unaffiliated third party; and (x) Dow’s obligation to indemnify DuPont and/or Corteva for certain liabilities.

Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. For a more detailed discussion of Dow’s risks and uncertainties, see the section titled “Risk Factors” contained in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Dow assumes no obligation to update or revise publicly any forward-looking statements whether because of new information, future events or otherwise, except as required by securities and other applicable laws.

 

iii   2020 PROXY STATEMENT   


Table of Contents

LOGO

 

About Dow

Dow combines global breadth, asset integration and scale, focused innovation and leading business positions to achieve profitable growth. The Company’s ambition is to become the most innovative, customer centric, inclusive and sustainable materials science company. Dow’s portfolio of plastics, industrial intermediates, coatings and silicones businesses delivers a broad range of differentiated science-based products and solutions for its customers in high-growth market segments, such as packaging, infrastructure and consumer care. Dow operates 109 manufacturing sites in 31 countries and employs approximately 36,500 people. Dow delivered sales of approximately $43 billion in 2019, and, for the first time in its 120-year history, was added to the Dow Jones Industrial Average. References to Dow or the Company mean Dow Inc. and its subsidiaries.

 

 

LOGO

The Separation

On April 1, 2019, DowDuPont Inc. (“DowDuPont” and effective June 3, 2019, n/k/a DuPont de Nemours, Inc. or “DuPont”) completed the separation of its materials science business and Dow Inc. became the direct parent company of The Dow Chemical Company (“TDCC”), owning all of the outstanding common shares of TDCC (the “Separation”). Dow Inc. is now an independent, publicly traded company and Dow Inc. common stock is listed on the New York Stock Exchange under the symbol “DOW.” Dow Inc. common stock began regular-way trading on April 2, 2019.

The Separation was contemplated by the merger of equals transaction effective August 31, 2017, under the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017. TDCC and E. I. du Pont de Nemours and Company (“Historical DuPont”) each merged with subsidiaries of DowDuPont and, as a result, TDCC and Historical DuPont became subsidiaries of DowDuPont (the “Merger”). Subsequent to the Merger, TDCC and Historical DuPont engaged in a series of internal reorganization and realignment steps to realign their businesses into three subgroups: agriculture, materials science and specialty products. Dow Inc. was formed as a wholly owned subsidiary of DowDuPont to serve as the holding company for the materials science business.

In connection with the Separation, Dow Inc. entered into certain agreements with DuPont and Corteva, Inc. (“Corteva”) to effect the Separation and provide a framework for Dow’s relationship with DuPont and Corteva following the Separation. For more information, see the section titled “Agreements with Dow, DuPont and Corteva” in the Appendix.

DowDuPont equity awards outstanding at the distribution were adjusted at the time of the Separation, and then again at the time of the separation of Corteva from DowDuPont. For more information, see the section titled “Treatment of Equity Awards Outstanding at the Time of Separation” in the Appendix.

 

  LOGO   iv


Table of Contents

LOGO

 

                         
  2020 Annual Meeting Information  
  Meeting Date:   Thursday, April 9, 2020                        Record Date:   Wednesday, February 12, 2020  
  Meeting Place:  

The H Hotel

111 W. Main Street

Midland, Michigan, 48640

    Meeting Time:   8:00 A.M. Eastern Time  
           

Agenda and Voting Recommendations

 

Agenda Item

        Board Vote
Recommendation
   Page
Reference

1)

 

Election of Directors

   FOR    10

2)

 

Advisory resolution to approve executive compensation

   FOR    50

3)

 

Advisory resolution on the frequency of future advisory votes to approve executive compensation

   ONE YEAR    51

4)

 

Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2020

   FOR    52

A Compelling Investment

Dow presents a compelling investment opportunity. The Company’s ultimate goal is maximizing long-term value for stockholders through operating and financial discipline; lower-risk, faster payback growth projects; and returns-focused metrics. Dow is positioned to drive value for its stockholders through its focused, streamlined and resilient portfolio with significant earnings growth drivers in place.

 

LOGO

 

v   2020 PROXY STATEMENT   


Table of Contents

LOGO

 

                     2019 Company Highlights

 

LOGO

 

   

RENUVA is a trademark of The Dow Chemical Company or an affiliated company. All other trademarks on this page are the property of their respective owners.

 

  LOGO    vi


Table of Contents

LOGO

 

Sustainability

Dow’s ambition is to be the most innovative, customer-centric, inclusive and sustainable materials science company in the world. Sustainability is more than an important ambition for Dow. It is key to how we apply science to drive growth, improve our operations and help solve some of the world’s most complex challenges.

To achieve our ambition, we are focused on three areas where we have the most impact and the most opportunity to create shared value for Dow and society.

 

 

LOGO

Dow’s full annual disclosure of sustainability performance can be found on the Company’s website at www.dow.com/sustainability.

Dow reports in accordance with the Global Reporting Initiative (GRI) Standards Comprehensive option, requiring reporting all of the General Disclosures described in the GRI Standards as well as all of the Specific Disclosures related to topics material to the Company. The report also serves as Dow’s Communication on Progress for its commitment to the United Nations Global Compact. Dow is also committed to implementation of the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) over the next three years.

Dow’s public policies on topics including Chemical Management, Responsible Care, Energy and Climate Change, Sustainability, and Environment, Health & Safety can be found on the Company’s website at www.dow.com/about.

Dow’s sustainability reporting referenced in this Proxy Statement and the information on, or accessible through, Dow’s websites are not part of or incorporated by reference into this Proxy Statement.

 

vii   2020 PROXY STATEMENT   


Table of Contents

LOGO

 

             

 

LOGO

 

Circular Economy:

 

Dow is collaborating to close resource loops in key markets, such as helping to make all stages of the plastic lifecycle work more effectively and ending plastic waste in the environment.

   

•    Dow is a founding member of the Alliance to End Plastic Waste, an initiative to accelerate efforts to drive innovation, provide much-needed resources, and take decisive action to put an end to plastic waste in the environment.

 

 

•    Dow is a pledged partner in the American Chemistry Council’s Operation Clean Sweep. Dow will begin reporting pellet losses of greater than one pound in its annual Sustainability Report in 2020.

 

 

•    Dow’s partnership in Europe with Fuenix Ecogy Group for the supply of a new feedstock made from recycled plastic waste will help produce new Dow polymers. The project is an example of how Dow is working across the value chain to innovate and identify new approaches to accelerate recycling opportunities.

 

 
             
   

 

LOGO

 

Climate Protection:

 

Dow is seeking to accelerate climate action within its own operations and across the wider value chains supported by Dow.

   

•    ENGAGE PV Polyolefin Elastomers technology, selected in 2019 as an Edison Award and R&D 100 Award winner, helps customers to develop encapsulant films that protect solar cells from degradation, making renewable energy increasingly affordable.

 

 

•    Dow plans to retrofit mixed-feed crackers in Plaquemine, Louisiana with proprietary fluidized catalytic dehydrogenation (“FCDh”) technology. FCDh can reduce energy costs by up to 20 percent, thereby reducing emissions. Dow’s FCDh technology won R&D 100 and ICIS Process Technology Innovation Awards in 2017.

 

 

•    Dow has committed to obtain 750 MW of its power demand from renewable sources by 2025. In 2019, Dow had 539 MW of renewable power, as well as 244 MW of renewable steam under contract.

 

                
   

 

LOGO

 

Safer and More

Sustainable Materials:

 

Dow is seeking to innovate more sustainable materials; advance open and transparent chemistry with value chain partners, customers and the public; collaborate with diverse stakeholders across the globe; and share product safety information.

   

•    Dow is committed to bringing sustainable alternatives to market. An example is ECOFAST Pure, which helps the textile industry tackle sustainability challenges by reducing water and dye use by up to 50 percent, and enables highly efficient use of process chemicals used to dye cotton fabric, which combined can help reduce the likelihood of pollution in wastewater streams.

 

 

•    An industry-leading initiative, Dow’s Product Stewardship Academy provides hands-on training, support and mentoring to increase product safety knowledge and safe material handling practices to support responsible market growth in developing countries including Ghana, Nigeria, Kenya, Ethiopia, Egypt and the United Arab Emirates.

 

 

 

•    Dow is an active member of the Green Chemistry and Commerce Council (“GC3”). In 2019, Dow was awarded the Sustainability Champion Award from GC3 for its leadership in value chain outreach, leading discussions on product safety and transparency, and overall efforts to advance the development of sustainable materials.

 

 
             

 

  LOGO    viii


Table of Contents

LOGO

 

Corporate Governance Best Practices

As part of Dow’s commitment to high ethical standards, the Board follows sound governance practices. Effective governance protects the long-term interests of our stockholders and strengthens management accountability. The Board and management regularly review its corporate governance practices to reflect evolving corporate governance principles. Dow’s corporate governance practices are described in more detail beginning on page 1 of the Proxy Statement and on the Company’s website at www.dow.com/investors.

 

 

LOGO

Director Nominees

The Board nominated eleven individuals for election at the 2020 Annual Meeting on recommendation of the Corporate Governance Committee. Ruth G. Shaw is not standing for re-election and will retire in accordance with the Company’s Director tenure requirements, effective April 9, 2020. The information set forth below and described in more detail beginning on page 10 of the Proxy Statement supports the conclusion that these individuals are highly qualified to serve on the Board.

 

Name

   Age(a)   Director  Since(b)   Principal Occupation   Independent

Samuel R. Allen

   66   2019   Chairman and Former CEO, Deere & Company  

Ajay Banga

   60   2013   President and CEO, Mastercard Incorporated  

Jacqueline K. Barton

   67   1993   Professor of Chemistry, California Institute of Technology  

James A. Bell

   71   2005   Former CFO, The Boeing Company  

Wesley G. Bush

   58   2018   Former Chairman and CEO, Northrop Grumman Corporation  

Richard K. Davis

   62   2015   President and CEO, Make-A-Wish America  

Jeff M. Fettig

   63   2003   Former Chairman and CEO, Whirlpool Corporation  

Jim Fitterling

   58   2018   CEO, Dow Inc.    

Jacqueline C. Hinman

   58   2018   Former Chairman and CEO, CH2M HILL  

Jill S. Wyant

   48     Executive Vice President and President, Ecolab Inc.  

Daniel W. Yohannes

   67   2018   Former U.S. Ambassador to the Organisation for Economic Cooperation and Development  

 

(a)

As of February 28, 2020.

 

(b)

Reflects cumulative years served as: a Dow Inc. Director, a TDCC-designated Director to serve as a DowDuPont Director, a member of the DowDuPont Materials Advisory Committee, or a TDCC Director.

 

ix   2020 PROXY STATEMENT   


Table of Contents

LOGO

 

Director Nominee Composition and Qualifications

The Director nominees bring a balance of relevant skills to the boardroom, as well as an effective mix of diversity and experience. The following graphics depict a summary of the composition of the eleven Director nominees:

 

 

LOGO

 

(1)

Reflects cumulative years served as: a Dow Inc. director, a TDCC-designated director to serve as a DowDuPont director, a member of the DowDuPont Materials Advisory Committee, or a TDCC director.

Qualifications

The Corporate Governance Committee and the Board believe that the qualifications, skills, experience and attributes set forth in this Proxy Statement for all individuals nominated for election support the conclusion that these individuals are qualified to serve as Directors of the Company and collectively possess a variety of skills, professional experience, and diversity of backgrounds allowing them to effectively oversee the Company’s business. The Director nominees have a diverse combination of the following backgrounds and qualifications:

 

 

LOGO

 

  LOGO    x


Table of Contents

LOGO

 

Each of these experiences provides a balance of perspectives that contribute to the Board’s effectiveness in overseeing the business and strategy of the Company. Each of the nominees possess skills and experiences that align with the current needs of the Company. The Corporate Governance Committee and Board have determined that the individuals nominated for election are qualified to serve as Directors of the Company.

Board Leadership and Committees

The Board’s leadership structure is regularly reviewed and it is recognized that the combination or separation of the CEO and Chairman roles are driven by the needs of the Company at a particular time. Currently the roles are separate with Jeff M. Fettig serving as the Non-Executive Chairman. The Board has announced its intention to appoint Jim Fitterling as Chairman in addition to his role as CEO following the 2020 Meeting. In lieu of a Non-Executive Chairman, the independent Directors will select an independent Lead Director who has served for at least one full year on the Board and who will have significant responsibility. For additional details, see the section titled “Board Leadership Structure” on page 2 of the Proxy Statement.

The Board actively engages with management for oversight and stewardship of the Company’s strategy, risk management and overall performance. Committees assist the Board in carrying out its responsibilities. The role and responsibilities of the Committees are described in more detail beginning on page 3 of the Proxy Statement. Committee membership as of the date of this Proxy Statement is set forth below.

 

Director

     Audit
Committee
       Compensation
and Leadership
Development
Committee
       Corporate
Governance
Committee
       Environment,
Health, Safety
& Technology
Committee
 

Samuel R. Allen

                  X          X             

Ajay Banga

                  X          X             

Jacqueline K. Barton

                                        C  

James A. Bell

       C                     X             

Wesley G. Bush

       X                                X  

Richard K. Davis

       X                     X             

Jeff M. Fettig

                  X          C             

Jim Fitterling

                                           

Jacqueline C. Hinman

       X                                X  

Ruth G. Shaw(a)

                  C                     X  

Daniel W. Yohannes

       X                                X  

 

C=Chair

 

(a)

Ruth G. Shaw is not standing for re-election and will retire in accordance with the Company’s Director tenure requirements, effective April 9, 2020.

 

xi   2020 PROXY STATEMENT   


Table of Contents

LOGO

 

Executive Compensation

The objectives of Dow’s compensation program are set by the Compensation and Leadership Development Committee and align executive compensation with Dow’s financial and operational performance. The programs are designed to attract, retain and motivate key executives critical to achieving Dow’s vision and strategy, and reward key executives for delivering desired business results and stockholder value. The compensation programs are described in more detail in the CD&A section beginning on page 27 of the Proxy Statement. The following table summarizes the Company’s key executive compensation practices:

 

Key Executive Compensation Practices

 Active stockholder engagement

 Strong pay for performance links between executive compensation outcomes, individual performance, and Company financial and market performance

 Compensation program structure designed to discourage excessive risk taking

 Significant focus on performance-based pay

 Each component of target pay benchmarked to median of either the Peer Group or of the general market, as applicable

 Carefully structured Peer Group with regular Compensation and Leadership Development Committee review

 Stock ownership requirements of six times base salary for the CEO and four times base salary for the other NEOs

 100 percent independent Compensation and Leadership Development Committee

 Clawback policy

 Anti-hedging/Anti-pledging policies applicable to Directors and executive officers

 Independent compensation consultant reporting to the Compensation and Leadership Development Committee

 No change-in-control agreements

 No excise tax gross-ups

 Modest perquisites

 Stock incentive plans prohibit option repricing, reloads, exchanges or options granted below market value without stockholder approval

 Regular review of the Compensation and Leadership Development Committee charter to ensure best practices and priorities

Stockholder Engagement

Throughout the year, the Board and members of the management team continued extensive outreach to stockholders, engaging with investors who collectively held over 50% of outstanding shares of common stock of the Company. Through this outreach, the management team updated investors on a range of topics, including the Separation, the overall business strategy, current business conditions, corporate citizenship and sustainability, corporate governance practices and executive compensation, as well as gained an understanding of the perspectives and concerns of each investor. The Board and management team carefully considers the feedback from these meetings when reviewing the business, corporate governance and executive compensation profiles.

 

  LOGO    xii


Table of Contents

LOGO

 

 

Proxy Summary

     v  
Notice of Annual Meeting of Stockholders      i  
Cautionary Statement about Forward-Looking Statements      iii  
About Dow      iv  
2019 Company Highlights      vi  
Sustainability      vii  
Corporate Governance Best Practices      ix  
Table of Contents      xiii  
Defined Terms      xiv  
Voting and Attendance Procedures      xv  
Additional Information      xviii  
Corporate Governance      1  
Corporate Governance Guidelines      1  
Director Independence      1  
Board Leadership Structure      2  
Board Committees      3  
Board’s Role in the Oversight of Risk Management      5  
Stockholder Engagement      6  
Communications with the Board and Directors      6  
Board, Committees and Annual Meeting Attendance      6  
Executive Sessions of Directors      6  
Director Qualifications and Diversity      6  
Director Orientation and Engagement      7  
Identifying Director Candidates      7  
Director Candidate Nominations through Proxy Access      7  
Board Term      8  
Code of Conduct      8  

Political Engagement and Disclosure

     8  

Certain Relationships and Related Transactions

     8  

Related Person Transactions

     9  

Delinquent Section 16(a) Reports

     9  

 

Board of Directors

     10  
Agenda Item 1: Election of Directors      10  
Director Nominees Composition and Qualifications       11  
Director Nominees for Election       12  
Director Compensation      18  
Beneficial Ownership of Company Stock      20  

 

 

 

 

  Compensation Discussion & Analysis  

 

     21  
    Executive Summary        23  
    Executive Compensation and Benefits        27  
    The Compensation Process        33  
    Other Considerations        35  
    Compensation Tables and Narratives        36  
    Benefits        43  
    Compensation Committee Matters        49  

 

 

 

Other Management Proposals

     50  
Agenda Item 2: Advisory Resolution to Approve Executive Compensation      50  
Agenda Item 3: Advisory Resolution on the Frequency of Future Advisory Votes to Approve Executive Compensation      51  
Audit Committee Matters      52  
Agenda Item 4: Ratification of the Appointment of the Independent Registered Public Accounting Firm      52  
Audit Committee Report      54  
Appendix      A-1  
Agreements with Dow, DuPont and Corteva      A-1  
Treatment of Equity Awards Outstanding at the Time of the Separation      A-17  
Select Financial Information      A-20  
 

 

xiii   2020 PROXY STATEMENT   


Table of Contents

LOGO

 

Defined Terms

Capitalized terms, not otherwise defined in this Proxy Statement, have the meaning ascribed below:

 

   
2020 Meeting    2020 Annual Meeting of Stockholders of Dow Inc.
Board    Board of Directors of Dow Inc.
CD&A    Compensation Discussion & Analysis
CEO    Chief Executive Officer
CFO    Chief Financial Officer
Committee    In the CD&A section, Compensation and Leadership Development Committee
Company    Dow Inc. and its subsidiaries
Dow    Dow Inc. and its subsidiaries
EBIT    Earnings before interest and taxes
LTI    Long-term incentive
Mercer    Dow’s independent compensation consultant
NEO    Named Executive Officer
NYSE    New York Stock Exchange
Operating EBIT    Earnings (i.e., “income (loss) from continuing operations before income taxes”) before interest, excluding the impact of significant items; 2019 is on a pro forma basis
Operating ROC    Net operating profit after tax (excluding significant items) divided by total average capital; 2019 is on a pro forma basis
Pro Forma Operating EBITDA    Earnings (i.e., “income (loss) from continuing operations before taxes”) before interest, depreciation and amortization, plus pro forma adjustments, excluding the impact of significant items
PSU    Performance share unit
Relative TSR    Percentile ranking against the S&P 500 Index peer group of stock price appreciation plus dividends paid
ROC    Return on capital
RSU    Restricted stock unit
SEC    U.S. Securities and Exchange Commission
TDCC    The Dow Chemical Company
TSR    Total shareholder return

 

  LOGO    xiv


Table of Contents

LOGO

 

In this Proxy Statement, you will find information on the Board, the candidates for election to the Board, and other items to be voted upon at the 2020 Meeting and any adjournment or postponement of the 2020 Meeting. The background information in this Proxy Statement has been supplied to you at the request of the Board to help you decide how to vote and to provide information on the Company’s corporate governance and compensation practices. This Proxy Statement is first being distributed to stockholders on or about February 28, 2020.

Vote Your Shares in Advance

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

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

Confidential Voting

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

Plan Shares

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

Participants in The Dow Chemical Company Employees’ Savings Plan (the “Plan”) will receive a voting instruction form. Your executed form will provide voting instructions to the Plan Trustee (Fidelity Management Trust Company). If no instructions are provided to the Plan Trustee, the Plan Trustee and/or administrators of the Plan will vote the shares held pursuant to the Plan according to the provisions of the Plan. To allow sufficient time for voting, you may not vote your Plan shares in person at the 2020 Meeting. Your voting instructions must be received by 11:59 P.M. Eastern Time on April 6, 2020.

 

xv   2020 PROXY STATEMENT   


Table of Contents

LOGO

 

Dow Shares Outstanding and Quorum

At the close of business on the record date, February 12, 2020, there were 742,679,825 shares of Dow common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote. The holders of at least 50% of the issued and outstanding shares of common stock entitled to vote that are present in person or represented by proxy constitute a quorum for the transaction of business at the 2020 Meeting.

 

   

Agenda Item 1: Election of Directors

Each nominee must receive more FOR votes than AGAINST votes in order to be elected.

 

   

Agenda Item 2: Advisory resolution to approve executive compensation

 

Agenda Item 2 must receive more FOR votes than AGAINST votes in order to be approved.

 

   

Agenda Item 3: Advisory resolution on the frequency of future advisory votes to approve executive compensation

The frequency (one year, two years or three years) that receives the most FOR votes will be approved.

 

   

Agenda Item 4: Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2020

Agenda Item 4 must receive more FOR votes than AGAINST votes in order to be approved.

Abstentions and broker non-votes will be included in determining the presence of a quorum at the 2020 Meeting, but will not be counted or have an effect on the outcome of any matter except as specified below with respect to Agenda Item 4.

Broker non-votes occur when a person holding shares through a bank or broker, meaning that their shares are held in a nominee name or beneficially through such bank or broker, does not provide instructions as to how to vote their shares and the bank or broker is not permitted to exercise voting discretion. Under NYSE rules, even though your bank or broker is not permitted to exercise voting discretion, it may vote shares held in beneficial name only on Agenda Item 4: Ratification of the Appointment of the Independent Registered Public Accounting Firm, without instruction from you, but may not vote on any other matter to be voted on at the 2020 Meeting. A list of stockholders of record entitled to vote shall be open to any stockholder for any purpose relevant to the 2020 Meeting for ten days before the 2020 Meeting, during normal business hours, at the Office of the Corporate Secretary.

Proxy Solicitation on Behalf of the Board

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

Dow has retained D. F. King & Co., Inc., to aid in the solicitation of stockholders (primarily brokers, banks and other institutional investors) for an estimated fee of $15,000, plus reasonable expenses. Arrangements have been made with brokerage houses, nominees and other custodians and fiduciaries to send materials to their principals, and their reasonable expenses will be reimbursed by Dow on request. The cost of solicitation will be borne by the Company.

 

  LOGO    xvi


Table of Contents

LOGO

 

Attending the 2020 Meeting

The Board does not intend to present any business at the 2020 Meeting that is not described in this Proxy Statement. An approved form of proof of stock ownership is necessary to attend the business-only meeting. If you hold your shares through a bank or broker, you will need proof of record date ownership for admission to the 2020 Meeting, such as a letter from the bank or broker. In addition, such holders who wish to vote in person at the 2020 Meeting must obtain a “legal proxy” from the bank, broker or other holder of record that holds their shares in order to be entitled to vote at the 2020 Meeting.

Since seating is limited, the Board has established the rule that only stockholders or one person holding a proxy for any stockholder or account (in addition to those named as Board proxies on the proxy forms) may attend.

All stockholders and proxy holders wishing to attend the 2020 Meeting should bring and present valid government issued photo identification for admittance. Proxy holders will also be asked to present credentials for admittance.

Please note that cameras, sound or video recording equipment, or other similar equipment, electronic devices, large bags or packages may not be permitted in the 2020 Meeting.

If you are unable to attend the 2020 Meeting in person, please listen to the webcast on the Company’s website at www.dow.com/investors.

Other Matters

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

 

xvii   2020 PROXY STATEMENT   


Table of Contents

LOGO

 

Future Stockholder Proposals

If you satisfy the requirements of the rules and regulations of the SEC and wish to submit a proposal to be considered for inclusion in the Company’s proxy materials for the 2021 Annual Meeting of Stockholders of Dow Inc. (“2021 Meeting”), pursuant to Rule 14a-8, please send it to the Office of the Corporate Secretary at 2211 H.H. Dow Way, Midland, Michigan 48674. Under SEC Exchange Act Rule 14a-8, these proposals must be received no later than the close of business on October 31, 2020.

Future Annual Meeting Business

Under the Company’s Bylaws, if you wish to raise items of proper business directly at an annual meeting (including Director nominations outside of the proxy access process) other than stockholder proposals presented under Rule 14a-8 for inclusion in the Company’s proxy materials, you must give advance written notification to the Office of the Corporate Secretary at 2211 H.H. Dow Way, Midland, Michigan 48674. For the 2021 Meeting, written notice must be received by the Office of the Corporate Secretary between the close of business on October 31, 2020, and the close of business on November 30, 2020. However, as provided in the Bylaws, different deadlines apply if the 2021 Meeting is called for a date that is not within thirty days before or after the anniversary of the 2020 Meeting; in that event, written notice must be received by the Office of the Corporate Secretary no earlier than the close of business on the 120th day prior to the 2021 Meeting and no later than the close of business on the later of the ninetieth day prior to the 2021 Meeting or the 10th day following the date on which public disclosure of the date of such meeting is first made by the Company. Such notices must comply with the procedural and content requirements of the Bylaws. If notice of a matter is not received within the applicable deadlines or does not comply with the Bylaws, the chairman of the annual meeting may refuse to introduce such matter. If a stockholder does not meet these deadlines, or does not satisfy the requirements of Rule 14a-4 of the Exchange Act, the persons named as proxies will be allowed to use their discretionary voting authority when and if the matter is raised at the annual meeting. The full text of the Bylaws is available on the Company’s website at www.dow.com/investors.

Future Director Nominees through Proxy Access

Under the Company’s Bylaws, if you wish to nominate a director through proxy access, you must give advance written notification to the Office of the Corporate Secretary at 2211 H.H. Dow Way, Midland, Michigan 48674. For the 2021 Meeting, written notice must be received by the Office of the Corporate Secretary between the close of business on October 1, 2020, and the close of business on October 31, 2020. Such notices must comply with the procedural and content requirements of the Bylaws. The full text of the Bylaws is available on the Company’s website at www.dow.com/investors.

Multiple Stockholders with the Same Address

In accordance with a notice sent previously to stockholders with the same surname who share a single address, only one notice or set of proxy materials will be sent to an address unless contrary instructions were received from any stockholder at that address. This practice, known as “householding,” is designed to reduce printing and postage costs. If you did not respond that you did not want to participate in householding, you were deemed to have consented to the practice. If you are a registered stockholder, you may revoke your consent at any time by sending your name and your holder identification number to the Office of the Corporate Secretary at 2211 H.H. Dow Way, Midland, Michigan 48674. If you hold your stock with a bank or broker, you may revoke your consent to householding at any time by contacting Broadridge Financial Solutions Inc., 51 Mercedes Way, Edgewood, New York 11717, or by calling 1-866-540-7095.

 

  LOGO    xviii


Table of Contents

LOGO

 

If you are a registered stockholder receiving multiple copies at the same address or if you have a number of accounts at a single brokerage firm, you may submit a request to receive a single copy in the future by contacting the Office of the Corporate Secretary at 2211 H.H. Dow Way, Midland, Michigan 48674. If you hold your stock with a bank or broker, contact Broadridge Financial Solutions Inc. at the address and telephone number provided above. The Company will promptly deliver to a stockholder who received one copy of proxy materials as the result of householding, a copy of the materials upon the stockholder’s written or oral request to the Office of the Corporate Secretary at 2211 H.H. Dow Way, Midland, Michigan 48674.

Electronic Delivery of Proxy Materials

Stockholders may request proxy materials be delivered to them electronically in 2021 by enrolling at https://enroll.icsdelivery.com/dow. This results in faster delivery of the documents and significant savings to the Company by reducing printing and mailing costs.

Copies of Proxy Materials and Annual Report

The Notice and Proxy Statement and Annual Report are posted on the Company’s website at www.dow.com/investors and at www.proxyvote.com.

Copies of Corporate Governance Documents

The Certificate of Incorporation, Bylaws, Corporate Governance Guidelines, Code of Conduct, Code of Financial Ethics, Committee charters and other governance documents are posted on the Company’s website at www.dow.com/investors. Stockholders may receive printed copies of each of these documents without charge by contacting the Office of the Corporate Secretary at 2211 H.H. Dow Way, Midland, Michigan 48674.

 

xix   2020 PROXY STATEMENT   


Table of Contents

LOGO

 

Dow is committed to applying sound corporate governance and leadership principles and practices. The Board has adopted a number of policies to support the Company’s values and good corporate governance, which are important to the success of the Company’s business and in advancing stockholder interests.

Corporate Governance Guidelines

The Board adopted corporate governance guidelines designed to assist Dow and the Board in implementing effective corporate governance practices. The governance guidelines are reviewed regularly by the Corporate Governance Committee in order to continue serving the best interests of Dow and its stockholders. Among other things, these guidelines delineate the Board’s responsibilities, independence, leadership structure, qualifications, election, annual self-evaluation, and access to management and advisors.

The Company’s corporate governance guidelines, practices and policies are available on the Company’s website at www.dow.com/investors, including the following documents:

 

 

 Corporate Governance Guidelines

 Bylaws

 Certificate of Incorporation

 Director Independence Standards

 Board Committee Charters and Membership

 Code of Conduct

 Code of Financial Ethics

 Responsible Sourcing: Conflict Minerals and Human Rights Reports and Policies

 U.S. Public Policy and Political Engagement Reports and Policies

Director Independence

The Board has assessed the independence of each non-employee Director in accordance with the standards of independence of the NYSE, SEC rules and as described in the Corporate Governance Guidelines. Based upon these standards, the Board has determined that the following members of the Board are independent Directors: Samuel R. Allen, Ajay Banga, Jacqueline K. Barton, James A. Bell, Wesley G. Bush, Richard K. Davis, Jeff M. Fettig, Jacqueline C. Hinman, and Daniel W. Yohannes. The Board has also determined that Director nominee Jill S. Wyant is independent. These independent Directors constitute a “substantial majority” of the Board, consistent with the Corporate Governance Guidelines. The Corporate Governance Committee, as well as the Board, will annually review relationships that Directors may have with the Company and members of management to make a determination as to whether there are any material relationships that would preclude a Director from being independent.

All members of the Audit, Compensation and Leadership Development, and Corporate Governance Committees are independent Directors under the Corporate Governance Guidelines and applicable regulatory and listing standards. The Board has also determined, in accordance with applicable requirements of the NYSE, that the simultaneous service of Mr. Bell on the audit committees of more than three public companies does not impair his ability to effectively serve on the Audit Committee.

The Board has also determined that Ruth G. Shaw who serves as a Director until the 2020 Meeting is an independent Director. Dr. Shaw is not standing for re-election and will retire in accordance with the Company’s Director tenure requirements, effective April 9, 2020.

 

  2020 PROXY STATEMENT    1


Table of Contents

LOGO

 

Board Leadership Structure

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

The Board recognizes that the leadership structure and combination or separation of the CEO and Chairman roles are driven by the needs of the Company. As a result, no policy exists requiring combination or separation of leadership roles. Currently, the roles of Chairman and CEO are separate. Jeff M. Fettig serves as the Non-Executive Chairman of the Board (“Chairman”). The Chairman has the lead responsibility for managing the Board and such other powers and may perform such other duties as may be assigned by the Board from time to time.

The Board has announced its intention to appoint Mr. Fitterling as Chairman in addition to his role as CEO following the 2020 Meeting. At that time, in lieu of a Non-Executive Chairman, the independent Directors will also elect a Director (who has served at least one full year on the Board) from among their membership as a Lead Director. In accordance with best practices, the Lead Director will retain significant responsibilities including:

 

   

leadership of executive sessions of the independent Directors or other meetings at which the Chairman is not present

 

   

authority to call meetings of the independent Directors

 

   

coordinating with the Chairman to call Board meetings

 

   

serving as a liaison between the Chairman and the independent Directors as required

 

   

coordinating with the Chairman to set and approve the Board schedule and agenda to assure sufficient time for discussion of all agenda items

 

   

determining the appropriate materials to be provided to the Board

 

   

serving as focal point for shareholder communications with the independent Directors and requests for consultation addressed to independent members of the Board

 

   

the ability to retain outside professionals on behalf of the Board as the Board may determine is necessary or appropriate

 

   

such other functions as the Board may direct from time to time

Following the 2020 Meeting, the Company’s Corporate Governance Guidelines will be revised to reflect the responsibilities of the Lead Director.

 

2   LOGO   


Table of Contents

LOGO

 

Board Committees

Committees perform many important functions. The responsibilities of each Committee are stated in the Bylaws and in their respective Committee charters. The Board, upon the recommendation of the Corporate Governance Committee, elects members to each Committee and has the authority to change Committee chairs, memberships and the responsibilities of any Committee as set forth in the Bylaws.

The Board currently has four Committees (individually a “Committee” and collectively the “Committees”). A brief description of the Committees, their responsibilities and Committee member assignments as of the date of this Proxy Statement are provided below.

Dr. Shaw is not standing for re-election and will retire in accordance with the Company’s Director tenure requirements, effective April 9, 2020. The Board will announce Committee assignments following the 2020 Meeting.

 

        

 

Chair:    James A. Bell

 

Members:  Wesley G. Bush

        Richard K. Davis

        Jacqueline C. Hinman

        Daniel W. Yohannes

 

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

 

Financial Expertise: The Board has determined that all members of the Audit Committee are “audit committee financial experts” within the meaning of applicable SEC rules.

 

 

      

 

        

 

AUDIT COMMITTEE

 

Responsibilities:

   Nominates, engages and replaces, as appropriate, the Company’s independent registered public accounting firm, subject to stockholder ratification, to audit the Company’s consolidated financial statements.

   Meets periodically with management to discuss current and, if any, proposed, guidelines and policies governing the processes used to assess, monitor and control the Company’s major risk exposures, including financial or cyber risk exposures, as well as, if any, actual major risk exposures.

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

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

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

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

   Preapproves all services and fees performed by the Company’s independent registered public accounting firm.

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

   In conjunction with the Corporate Governance Committee, regularly reviews and recommends to the Board for approval, any changes to the Company’s Code of Conduct and Code of Financial Ethics (and any waivers as may be granted in accordance with such codes).

 

A Summary of the Audit Committee Policy on Preapproval of Services Performed by the Independent Registered Public Accounting Firm is included as part of Agenda Item 4: Ratification of Independent Registered Public Accounting Firm in this Proxy Statement.

 

  2020 PROXY STATEMENT    3


Table of Contents

LOGO

 

      

 

 

Chair:    Ruth G. Shaw

 

Members:  Samuel R. Allen

        Ajay Banga

        Jeff M. Fettig

 

Independence: All members of the Compensation and Leadership Development Committee are independent Directors under the Board’s Corporate Governance Guidelines and applicable regulatory and listing standards.

 

 

      

 

        

 

COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE

 

Responsibilities:

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

   Assesses current and future senior leadership talent for Company officers.

   Reviews and monitors the Company’s work environment and culture including diversity and inclusion philosophy, commitment and results.

   Assists the Board in succession planning for the roles of Chairman and CEO.

   Evaluates the performance of the Chairman and the CEO in light of the goals and objectives set by the Compensation Committee and, together with the other independent members of the Board, determines and approves the compensation of both the Chairman and the CEO based on this evaluation.

   Recommends and approves the principles guiding the Company’s executive officer compensation and benefits plans as well as other compensation and benefits plans.

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

   Reviews perquisites or other personal benefits provided to the Company’s executive officers and directors and recommends any changes to the Board.

   To the extent it deems necessary, reviews and approves the terms of any compensation “clawback” or similar policy or agreement between the Company and the Company’s executive officers or senior leadership.

   Works with management to develop the CD&A and the Compensation Committee Report for inclusion in the Company’s Annual Report on Form 10-K or annual meeting Proxy Statement.

   Considers the voting results of any proposal submitted to the Company’s stockholders related to the compensation of the Company’s executive officers.

 

 

        

 

Chair:    Jeff M. Fettig

 

Members:  Samuel R. Allen

        Ajay Banga

        James A. Bell

        Richard K. Davis

 

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

 

      

 

        

 

CORPORATE GOVERNANCE COMMITTEE

 

Responsibilities:

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

   Monitors the functioning of Board Committees and oversees the annual assessment of the Board and its Committees.

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

   In conjunction with the Audit Committee, reviews and recommends to the Board for approval any changes to the Company’s Code of Conduct and Code of Financial Ethics (and any waivers as may be granted in accordance with such codes).

   Reviews and approves any transaction between the Company and any related person in accordance with the Company’s related person transaction approval policy.

   Oversees the Company’s orientation program for new directors and a continuing education program for current directors.

 

4   LOGO   


Table of Contents

LOGO

 

        

 

Chair:    Jacqueline K. Barton

 

Members:  Wesley G. Bush

        Jacqueline C.  Hinman

        Ruth G. Shaw

        Daniel W.  Yohannes

 

Independence: All members of the EHS&T Committee are independent Directors consistent with governance best practices.

 

      

 

        

 

ENVIRONMENT, HEALTH, SAFETY & TECHNOLOGY (EHS&T) COMMITTEE

 

Responsibilities:

   Assesses current aspects of the Company’s environment, health and safety policies and performance and makes recommendations to the Board and the management of the Company with regard to promoting and maintaining superior standards of performance, including processes to ensure compliance with applicable laws and regulations and programs to manage risk.

   Oversees and advises the Board on matters impacting corporate social responsibility, public policy, philanthropy and the Company’s public reputation.

   Oversees and advises the Board on the Company’s sustainability efforts.

   Oversees the assessment of all aspects of the Company’s science and technology capabilities in all phases of its activities in relation to its strategies and plans and makes recommendations to the Board and the management of the Company with the goal of continually enhancing the Company’s science and technology capabilities.

   Oversees the Company’s policies on political contributions and lobbying expenses and reviews an annual report on the Company’s political contributions and lobbying expenses.

Board’s Role in the Oversight of Risk Management

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

The oversight responsibility of the Board and Committees is enabled by an enterprise risk management model and process implemented by management that is designed to identify, assess, manage and mitigate risks. The Audit Committee is responsible for overseeing that management implements and follows this risk management process and for coordinating the outcome of reviews by the other Committees in their respective risk areas.

 

Committee

   Area(s) of Risk Management Oversight Responsibility

Audit Committee

   Management and effectiveness of accounting, auditing, external reporting, compliance and internal controls, and cyber security

Compensation and Leadership Development Committee

   The Company’s executive compensation practices

Corporate Governance Committee

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

Environment, Health, Safety & Technology Committee

   Emerging regulatory developments related to safety, health and environment

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

 

  2020 PROXY STATEMENT    5


Table of Contents

LOGO

 

Stockholder Engagement

Throughout the year, the Board and members of the management team continued extensive outreach to stockholders, engaging with investors who collectively held over 50% of outstanding shares of common stock of the Company. Through this outreach, the management team updated investors on a range of topics, including the spin-off transaction, the overall business strategy, current business conditions, corporate citizenship and sustainability, corporate governance practices and executive compensation, as well as gained an understanding of the perspectives and concerns of each investor. The Board and management team carefully consider the feedback from these meetings when reviewing the business, corporate governance and executive compensation profiles.

Communications with the Board and Directors

Stockholders and other parties interested in communicating directly with the full Board, the Chairman, or the independent Directors as a group or individually, may do so by mail addressed to Dow Inc. in care of the Office of the Corporate Secretary, 2211 H.H. Dow Way, Midland, Michigan 48674.

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

Board, Committee and Annual Meeting Attendance

Dow held five Board meetings and twenty Committee meetings in 2019. All of the Directors attended more than 75% of the sum of the total number of Board meetings and the total number of meetings of the Committees on which the Director served since the Separation. The Directors are encouraged to attend the 2020 Annual Meeting, the first annual meeting for the Company.

Executive Sessions of Directors

The non-employee Directors meet in executive session in connection with each regularly scheduled meeting of the Board, and at other times as they may determine appropriate. During 2019, there were five executive sessions of the Dow Board led by Mr. Fettig, the Chairman. The Committees typically meet in executive session in connection with every Committee meeting.

Director Qualifications and Diversity

There are certain minimum qualifications for Board membership that Director candidates should possess, including strong values and discipline, high ethical standards, a commitment to full participation on the Board and its Committees, and relevant career experience. The Corporate Governance Committee has adopted guidelines to be used in evaluating candidates for Board membership in order to ensure a diverse and highly qualified Board. In addition to the characteristics mentioned above, the guidelines provide that candidates should possess individual skills, experience and

 

6   LOGO   


Table of Contents

LOGO

 

demonstrated abilities that help meet the current needs of the Board and provide for diversity of membership, such as experience or expertise in some of the following areas: the specific industries in which the Company operates, global business, science and technology, finance and/or economics, corporate governance, public affairs, government affairs and prior government service, and experience as chief executive officer, chief operating officer or chief financial officer of a major company. Other factors that are considered include independence of thought, willingness to comply with Director stock ownership guidelines, meeting applicable Director independence standards (where independence is desired) and absence of conflicts of interest. The Corporate Governance Committee may modify the minimum qualifications and evaluation guidelines from time to time as it deems appropriate.

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

Director Orientation and Engagement

Directors are active and engaged starting with onboarding. All new Directors participate in a robust orientation, to familiarize Directors with the Company’s plans, its significant financial, accounting and risk management issues, its policies and compliance processes including the Code of Conduct and its strategic priorities. On an ongoing basis, Directors receive materials or briefing sessions regarding the operations of the Company, key initiatives and risks. Each regularly scheduled Board meeting includes a key business spotlight where senior management presents details of their business including updates on financial results, geographic footprint, human capital and key innovations.

Further, site and facility tours are frequently arranged. Outside experts, including in the areas of the environment, social and governance matters and country risk are invited to make in-depth presentations to Directors during the Board’s regular meeting cycle.

Identifying Director Candidates

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

Director Candidate Nominations through Proxy Access

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

 

  2020 PROXY STATEMENT    7


Table of Contents

LOGO

 

Board Term

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

The Corporate Governance Guidelines provide that Directors should not be nominated for election to the Board after reaching age 72, unless it is determined that it is in the best interests of the Company to extend the retirement date.

Code of Conduct

The Board has adopted a Code of Conduct and a Code of Financial Ethics. The full text of the Codes are available on the Company’s website at www.dow.com/investors. In addition, Dow discloses on its website any waiver of or amendment to the Code of Conduct requiring disclosure under applicable rules.

Political Engagement and Disclosure

Government policy is one of the most powerful external forces affecting Dow today. New laws and changes to existing laws can fundamentally impact the Company’s operations and the markets where it does business—and in turn, the Company’s bottom line, thereby affecting Dow and its subsidiaries, employees, retirees, suppliers, customers, communities and stockholders.

Because the impact of government policy is so critical to the Company’s survival and success, Dow actively participates in both policymaking and political processes, through legally allowed advocacy efforts and by making political contributions to candidates, parties and causes. Dow is committed to the highest standard of ethical conduct in its involvement in policymaking and political process. As part of Dow’s commitment to transparency, materials on political policy and engagement are available on the Company’s website at www.dow.com/investors.

Certain Relationships and Related Transactions

Dow and its subsidiaries purchase products and services from and/or sell products and services to companies of which certain of the Directors and executive officers of Dow, or their immediate family members, are employees. The Corporate Governance Committee and the Board have reviewed such transactions and relationships and do not consider the amounts involved in such transactions material. Such purchases from and sales to each company involve less than either $1,000,000 or 2% of the consolidated gross revenues of each of the purchaser and the seller, and all such transactions are in the ordinary course of business. Some such transactions are continuing and it is anticipated that similar transactions will occur from time to time. The Company may have employees who are related to Dow executive officers and Directors from time to time.

Agreements with Dow, DuPont and Corteva

In connection with the Separation, Dow entered into certain agreements to effect the separation of DowDuPont’s agriculture, materials science and specialty products businesses, including by providing for the allocation among Dow, DuPont and Corteva of DowDuPont’s assets, employees, liabilities and obligations (including its investments, property and employee benefits and tax-related assets and liabilities), and provide a framework for Dow’s relationship with DuPont and Corteva following the Separation. A summary of the terms of certain of the agreements that Dow entered into with DuPont and Corteva prior to the Separation is provided in the section titled “Agreements with Dow, DuPont and Corteva” in the Appendix.

 

8   LOGO   


Table of Contents

LOGO

 

Related Person Transactions

The Board has adopted written policies and procedures relating to the approval or ratification of each “Related Person Transaction.” Under Dow’s policies and procedures, a “Related Person Transaction” is generally any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships, which meet certain criteria.

Under the policies and procedures, the Corporate Governance Committee (or its Chair, under some circumstances) reviews the relevant facts of all proposed Related Person Transactions and either approves or disapproves of the entry into a particular Related Person Transaction, by taking into account, among other factors it deems appropriate: (i) the commercial reasonableness of the transaction; (ii) the materiality of the Related Person’s direct or indirect interest in the transaction; (iii) whether the transaction may involve a conflict of interest, or the appearance of one; (iv) whether the transaction was in the ordinary course of business; and (v) the impact of the transaction on the Related Person’s independence under the Corporate Governance Guidelines and applicable regulatory and listing standards.

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

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

Delinquent Section 16(a) Reports

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

Based solely upon a review of SEC filings furnished to the Company and written representations that no other reports were required, all Reporting Persons complied with these reporting requirements during fiscal year 2019, except for Forms 4 for Messrs. Edmonds, Holicki and Sreeram and Ms. Wilson to disclose the conversion of equity awards at the Separation that were not filed on a timely basis due to an administrative delay; these Forms 4 received a next-day filing date.

 

  2020 PROXY STATEMENT    9


Table of Contents

LOGO

 

Election of Directors

In accordance with the recommendation of the Corporate Governance Committee, the Board has nominated the following individuals for election as Directors. A biography is included for each nominee beginning on page 12 of the Proxy Statement. Directors are elected annually by a majority of votes cast.

 

 

LOGO

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES.

Voting Standard and Resignation Policy

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

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

 

10   LOGO   


Table of Contents

LOGO

 

Director Nominee Composition and Qualifications

The Director nominees bring a balance of relevant skills to the boardroom, as well as an effective mix of diversity and experience. The following graphics depict a summary of the composition of the eleven Director nominees:

 

 

LOGO

 

(1)

Reflects cumulative years served as a Dow Inc. Director, a TDCC-designated Director to serve as a DowDuPont Director, a member of the DowDuPont Materials Advisory Committee, or as a TDCC Director.

Qualifications

The Corporate Governance Committee and the Board believe that the qualifications, skills, experience and attributes set forth in this Proxy Statement for all individuals nominated for election support the conclusion that these individuals are qualified to serve as Directors of the Company and collectively possess a variety of skills, professional experience, and diversity of backgrounds allowing them to effectively oversee the Company’s business. The Director nominees have a diverse combination of the following backgrounds and qualifications:

 

 

LOGO

 

  2020 PROXY STATEMENT    11


Table of Contents

LOGO

 

Each of these experiences provides a balance of perspectives that contribute to the Board’s effectiveness in overseeing the business and strategy of the Company. Each of the nominees possesses skills and experiences that align with the current needs of the Company. The Corporate Governance Committee and Board have determined that the individuals nominated for election are qualified to serve as Directors of the Company.

Director Nominees for Election

The Board presents eleven nominees for election as Directors at the 2020 Meeting. The information set forth below supports the conclusion that these individuals are highly qualified to serve on the Board.

Each of the Director nominees consented to being named as a nominee in the proxy materials and to serve if elected. Each Director elected at the 2020 Meeting will serve until the 2021 Annual Meeting of Stockholders or until a successor is duly elected and qualified.

Each nominee, except Ms. Wyant, currently serves as a Director on the Board. Directors Banga, Barton, Bell, Bush, Davis, Fettig, Fitterling, Hinman and Yohannes were appointed to the Board as part of actions taken at the time of the Separation. Mr. Allen joined the Board upon appointment to serve as Director effective August 1, 2019. Ms. Wyant was recommended for nomination as Director by the Board with the support of the Corporate Governance Committee. Dr. Shaw is retiring from the Board and not standing for re-election at the 2020 Annual Meeting; the Board thanks her for her exemplary service to Dow.

The information below is current as of the date of this Proxy Statement.

 

        

 

 

LOGO

 

Age: 66

 

Director since: 2019

 

Committees:

•  Compensation

•  Governance

                     

SAMUEL R. ALLEN

CHAIRMAN AND RETIRED CHIEF EXECUTIVE OFFICER, DEERE & COMPANY

 

Experience:

Mr. Allen is the Chairman of Deere & Company, a world-leading provider of products and services for agriculture, construction, road-building, forestry, and turf care. He has held the position of Chairman at Deere since February 2010. Mr. Allen previously served as Chief Executive Officer, a role from which he retired in November 2019. Mr. Allen joined Deere in 1975 and held various executive positions until assuming the role of Chairman and Chief Executive Officer.

 

Qualifications:

Mr. Allen brings global business and leadership expertise as the Chairman and former Chief Executive Officer of Deere. He has extensive experience and knowledge of international business operations, manufacturing, marketing and sales, which is particularly important given the global presence and nature of the operations of the Company. Mr. Allen has public company board expertise resulting in corporate governance and compensation experience, as well as board leadership experience.

 

Other Public Company Directorships:

  Deere & Company (since 2009)

  Whirlpool Corporation (since 2010)

 

12   LOGO   


Table of Contents

LOGO

 

        

 

LOGO

 

Age: 60

 

Director since: 2013

 

Committees:

•  Compensation

•  Governance

                     

AJAY BANGA

PRESIDENT AND CHIEF EXECUTIVE OFFICER, MASTERCARD INCORPORATED

 

Experience:

Mr. Banga is the President and Chief Executive Officer of Mastercard Incorporated, a technology company in the global payments industry. Mr. Banga joined Mastercard in 2009 as President and Chief Operating Officer, and assumed his current role in July 2010. Prior to Mastercard, Mr. Banga spent 13 years at Citigroup in various global leadership roles, including as the head of the International Consumer Business and as the Chief Executive Officer for Citibank’s Asia Pacific business, and held leadership roles at PepsiCo and Nestle. Mr. Banga served as a Director of TDCC from 2013 until the effective date of the Merger Transaction when he became a member of the DowDuPont Materials Advisory Committee and then, in January 2019, a director of DowDuPont. Mr. Banga resigned from the DowDuPont Board upon Separation.

 

Qualifications:

Mr. Banga has extensive global payments experience, as well as a deep focus on innovation and information security. Mr. Banga provides valuable perspective on engaging and partnering with regulators, due to his experience as Mastercard Chief Executive Officer and as a member of multiple business advocacy organizations and government sponsored committees. He adds strong consumer insight from his brand marketing experience at several global food and beverage companies and is experienced in economics and financing.

 

Other Public Company Directorships:

  Mastercard Incorporated (since 2010)

 

        

 

 

LOGO

 

Age: 67

 

Director since: 1993

 

Committees:

•  EHS&T, Chair

                     

JACQUELINE K. BARTON

JOHN G. KIRKWOOD AND ARTHUR A. NOYES PROFESSOR OF CHEMISTRY,

CALIFORNIA INSTITUTE OF TECHNOLOGY

 

Experience:

Dr. Barton is the John G. Kirkwood and Arthur A. Noyes Professor of Chemistry in the Division of Chemistry and Chemical Engineering at the California Institute of Technology, where she has been a member of the faculty since 1989. Dr. Barton served as chair of the Division from 2009 to 2019, and has held the John G. Kirkwood and Arthur A. Noyes Professorship since 2016. Dr. Barton also previously held the Arthur and Marian Hanisch Memorial Professorship from 1997 to 2016. Dr. Barton served as a Director of TDCC from 1993 until the effective date of the Merger Transaction when she became a member of the DowDuPont Materials Advisory Committee and then, in July 2018, a director of DowDuPont. Dr. Barton resigned from the DowDuPont Board upon Separation.

 

Qualifications:

Dr. Barton possesses strong leadership, research and teaching experience, as well as extensive knowledge in the chemicals industry to support the Company’s research and innovation focus. Demonstrated by her nationally recognized leadership in the medical and chemical fields as well as active involvement with major science and technology organizations, Dr. Barton has developed broad science expertise which has equipped her to advise the Board. Furthermore, Dr. Barton has received numerous awards and honors for her research as noted above and has been a notable contributor to the chemical community.

 

Other Public Company Directorships:

  Gilead Sciences, Inc. (since 2018)

 

  2020 PROXY STATEMENT    13


Table of Contents

LOGO

 

        

 

 

LOGO

 

Age: 71

 

Director since: 2005

 

Committees:

•  Audit, Chair

•  Governance

                     

JAMES A. BELL

FORMER EXECUTIVE VICE PRESIDENT, CORPORATE PRESIDENT AND CHIEF FINANCIAL OFFICER,

THE BOEING COMPANY

 

Experience:

Mr. Bell was the Executive Vice President, Corporate President and Chief Financial Officer of The Boeing Company, an aerospace company and manufacturer of commercial jetliners and military aircraft, from 2008 to 2012. Mr. Bell joined Rockwell International, a predecessor of The Boeing Company, in 1972, and subsequently held various executive positions. Mr. Bell served as a Director of TDCC from 2005 until the effective date of the Merger Transaction when he became a director of DowDuPont. Mr. Bell resigned from the DowDuPont Board upon Separation.

 

Qualifications:

Mr. Bell possesses global business and leadership experience in industrials and in a highly regulated industry as the former Chief Financial Officer of The Boeing Company. Mr. Bell also has a strong expertise in finance, accounting, risk management and controls. Additionally, his experience on other public company boards provides him with strong knowledge in corporate governance. Mr. Bell is experienced in strategic planning, technology, regulatory issues and has developed significant expertise in manufacturing.

 

Other Public Company Directorships:

  Apple, Inc. (since 2015)

  CDW Corporation (since 2015)

  JPMorgan Chase & Co. (since 2011)

 

        

 

 

LOGO

 

Age: 58

 

Director since: 2018

 

Committees:

•  Audit

•  EHS&T

                     

WESLEY G. BUSH

FORMER CHAIRMAN AND CHIEF EXECUTIVE OFFICER, NORTHROP GRUMMAN CORPORATION

 

Experience:

Mr. Bush was the Chairman and Chief Executive Officer of Northrop Grumman Corporation, a global aerospace and defense technology company, until 2019. Mr. Bush served as Northrop Grumman’s Chairman from 2011 to July 2019, Director from 2009 to July 2019 and Chief Executive Officer from 2010 to 2018. Previously, Mr. Bush served as the company’s Chief Financial Officer and also as president of its Space Technology Business. Prior to the acquisition of TRW by Northrop Grumman in 2002, Mr. Bush served as President and Chief Executive Officer for TRW’s UK-based global Aeronautical Systems. Prior to joining TRW in 1987, he held engineering positions with both the Aerospace Corporation and Comsat Labs. Mr. Bush was named to the DowDuPont Materials Advisory Committee in August 2018 and served until the Separation.

 

Qualifications:

Mr. Bush brings significant leadership experience, including as a public company Chief Executive Officer, with a strong background in the industrials sector and in engineering. Mr. Bush is also a proven operator as a former Chief Operating Officer and is also experienced in finance and accounting, environmental and safety issues, governance, governmental and stakeholder relations, human resources, information technology, strategic planning and transportation.

 

Other Public Company Directorships:

  Cisco Systems Inc. (since 2019)

  General Motors Co. (since 2019)

 

 

14   LOGO   


Table of Contents

LOGO

 

        

 

 

LOGO

 

Age: 62

 

Director since: 2015

 

Committees:

•  Audit

•  Governance

                     

RICHARD K. DAVIS

PRESIDENT AND CHIEF EXECUTIVE OFFICER,

MAKE-A-WISH AMERICA

 

Experience:

Mr. Davis is the President and Chief Executive Officer of Make-A-Wish America. Mr. Davis was the Executive Chairman and Chief Executive Officer of U.S. Bancorp, parent company of U.S. Bank, the fifth largest commercial bank in the United States. He served as Executive Chairman from December 2007 to April 2018, Chief Executive Officer from December 2006 to April 2017, and held various other executive positions at U.S. Bancorp prior to becoming the Chief Executive Officer, including President and Chief Operating Officer. Mr. Davis was an Executive Vice President at Bank of America and Security Pacific Bank prior to joining Star Banc Corporation, which was one of U.S. Bancorp’s legacy companies. Mr. Davis served as a Director of TDCC from 2015 until the effective date of the Merger Transaction when he became a member of the DowDuPont Materials Advisory Committee and then, in July 2018, a director of DowDuPont. Mr. Davis resigned from the DowDuPont Board upon Separation.

 

Qualifications:

Mr. Davis brings global business and leadership experience as a former Chairman and Chief Executive Officer of a public company, particularly in industries subject to extensive regulation. He has extensive experience and knowledge of international business operations, financial services and capital allocation, which is particularly important given the global presence and financial aspects of the Company. Mr. Davis has additional public company board experience across the financial services and medical industries resulting in additional corporate governance and compensation experience, financial expertise and board leadership experience.

 

Other Public Company Directorships:

  Mastercard Incorporated (since 2018)

  Xcel Energy Inc. (since 2006)

 

        

 

 

LOGO

 

Age: 63

 

Director since: 2003

 

Committees:

•  Compensation

•  Governance, Chair

                     

JEFF M. FETTIG

NON-EXECUTIVE CHAIRMAN, DOW INC.

FORMER CHAIRMAN AND CHIEF EXECUTIVE OFFICER, WHIRLPOOL CORPORATION

 

Experience:

Mr. Fettig is the former Chairman and Chief Executive Officer of Whirlpool Corporation, a manufacturer of home appliances. He served as Chairman from 2004 to December 2018, and Chief Executive Officer from 2004 to October 2017. Mr. Fettig joined Whirlpool Corporation in 1981 and held various executive positions until assuming the role of Chairman and Chief Executive Officer. Mr. Fettig served as a Director of TDCC from 2003 until the effective date of the Merger Transaction when he became a Director of DowDuPont. Mr. Fettig resigned from the DowDuPont Board upon Separation.

 

Qualifications:

Mr. Fettig brings global business and leadership experience as the former Chairman and Chief Executive Officer of Whirlpool Corporation. He has extensive experience and knowledge of corporate governance, international business operations, manufacturing, marketing, sales and distribution which is particularly important given the global presence and nature of the operations of the company. Mr. Fettig also has extensive experience and knowledge of consumer dynamics, branded consumer products, and end-user markets and servicing relevant to the business operations and focus of the company.

 

Other Public Company Directorships:

  Sherwin-Williams Co. (since 2019)

 

  2020 PROXY STATEMENT    15


Table of Contents

LOGO

 

        

 

 

LOGO

 

Age: 58

 

Director since: 2018

 

                     

JIM FITTERLING

CHIEF EXECUTIVE OFFICER, DOW

 

Experience:

Mr. Fitterling is the Chief Executive Officer of Dow. Mr. Fitterling has been the Chief Executive Officer of TDCC since July 2018, Dow since August 2018 and the Chief Operating Officer of DowDuPont’s Materials Science Division from September 2017 until April 2019. Mr. Fitterling first joined Dow in 1984 and has held various other executive positions, including President, Chief Operating Officer, Vice Chairman of Business Operations, Senior Vice President of Corporate Development, and President of the Plastics and Hydrocarbons businesses. Mr. Fitterling was a member of the board of directors of Chemical Financial Corporation until July 2019.

 

Qualifications:

Mr. Fitterling played a key role in the Company’s transformation, from lower-margin, commodity businesses to one more deeply focused on higher-growth, consumer demand-driven markets that value innovation—with the goal of creating the most innovative, customer-centric, inclusive and sustainable materials science company in the world. During his 35-year career at Dow, Mr. Fitterling has held leadership positions in many of the Company’s business units, in corporate development and in business operations. In addition, he served as the business lead in Dow’s successful launch of its next-generation sustainability goals. At his direction, in January 2019, Dow became a founding member of the Alliance to End Plastic Waste, an initiative to accelerate efforts to drive innovation, provide much-needed resources, and take decisive action to put an end to plastic waste in the environment.

 

Other Public Company Directorships:

  None

 

        

 

 

LOGO

 

Age: 58

 

Director since: 2018

 

Committees:

•  Audit

•  EHS&T

                     

JACQUELINE C. HINMAN

FORMER CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, CH2M HILL

 

Experience:

Ms. Hinman was the Chairman, President and Chief Executive Officer of CH2M HILL, an engineering and consulting firm focused on delivering infrastructure, energy, environmental and industrial solutions for clients and communities around the world. Ms. Hinman joined the board of directors of CH2M in 2008, and was elected Chairman and Chief Executive Officer of CH2M in 2014 in order to execute a turnaround of the firm, ultimately leading to the company’s successful merger with Jacobs Engineering in December 2017. Ms. Hinman was named to the DowDuPont Materials Advisory Committee in July 2018 and served until the Separation.

 

Qualifications:

Ms. Hinman brings senior management and leadership capabilities having served as Chairman, President, and Chief Executive Officer of CH2M HILL Companies, including deep experience with global manufacturing companies. Ms. Hinman’s experience in a global engineering consulting business provides her with a unique knowledge of environmental and sustainability issues globally. Ms. Hinman also brings international operations, strategic planning, finance, accounting, supply chain, technology, marketing and inclusion expertise to the Board.

 

Other Public Company Directorships:

  International Paper, Inc. (since 2017)

  AECOM (since 2019)

 

16   LOGO   


Table of Contents

LOGO

 

        

 

 

LOGO

 

Age: 48

 

Director Nominee

                     

JILL S. WYANT

EXECUTIVE VICE PRESIDENT AND PRESIDENT OF GLOBAL REGIONS, ECOLAB INC.

 

Experience:

Ms. Wyant is the Executive Vice President and President of Global Regions of Ecolab Inc., a global leader in water, hygiene and energy technologies and services, a role she has held since December 2017. Previously, Ms. Wyant was Executive Vice President and President of Ecolab’s Global Food & Beverage, Global Healthcare and Global Life Sciences businesses. Other leadership roles held at Ecolab include Executive Vice President and President of the Global Food & Beverage sector, Senior Vice President and General Manager of Food & Beverage in North America and Latin America, and leading Food & Beverage in Asia Pacific. Before joining Ecolab in 2009, Ms. Wyant held multiple leadership positions at General Electric.

 

Qualifications:

Ms. Wyant is a senior strategy and operating executive with over 25 years of experience leading Fortune 500 businesses in the industrial and healthcare sectors. Ms. Wyant’s career reflects a track record of driving innovative strategies to capture new growth and profit, spearheading breakthrough innovation, driving manufacturing excellence and operational efficiency, and leading transformational M&A. She also brings deep industry knowledge, broad perspective on international business and global expansion, experience driving enterprise-wide digital transformations and sustainability expertise.

 

Other Public Company Directorships:

  None

 

        

 

 

LOGO

 

Age: 67

 

Director since: 2018

 

Committees:

•  Audit

•  EHS&T

                     

DANIEL W. YOHANNES

FORMER U.S. AMBASSADOR TO THE ORGANISATION FOR ECONOMIC COOPERATION AND DEVELOPMENT

 

Experience:

Mr. Yohannes served as the U.S. Ambassador to the Organisation for Economic Cooperation and Development (the “OECD”), an international forum promoting economic growth, sustainable development and energy security, from 2014 to 2017. Prior to joining the OECD, Mr. Yohannes served as Vice Chairman of U.S. Bancorp, the Chief Executive Officer of the Millennium Challenge Corporation, and President and Chief Executive Officer of Colorado National Bank. Mr. Yohannes was named to the DowDuPont Materials Advisory Committee in July 2018 and served until the Separation.

 

Qualifications:

Mr. Yohannes has a successful record of operation execution and corporate transformation as a Chief Executive Officer and an entrepreneur. He provides the Board valuable strategic insight into international trade and economic development from prior affiliations. Additionally, Mr. Yohannes is passionate about protecting the environment and provides experience in effectively addressing environmental issues.

 

Other Public Company Directorships:

  Xcel Energy Inc. (since 2017)

 

  2020 PROXY STATEMENT    17


Table of Contents

LOGO

 

Director compensation is determined by the Board with the assistance of its Compensation and Leadership Development Committee and its Corporate Governance Committee. Dow compares its non-employee Director compensation programs, designs and compensation elements to the same Peer Group used for executive compensation, as described in the section titled “Peer Group and Benchmarking” of the CD&A. Dow targets the median compensation of the Peer Group for all Director compensation elements. The table below reflects the current annual rate by compensation element after adjustment in April 2019 as part of the Separation:

 

Compensation Element

   Annual
Rate
 

Retainer

   $ 125,000  

Audit Committee Chair Retainer

   $ 35,000  

All Other Committee Chairs Retainer

   $ 20,000  

Non-Executive Chairman Retainer

   $ 250,000  

Equity Grant

   $ 185,000  

Before the Separation, TDCC paid compensation to TDCC-designated Directors serving as a DowDuPont director or a member of the DowDuPont Materials Advisory Committee according to annual rates set by the DowDuPont Board of Directors as follows: retainer $115,000, Audit Committee chair $35,000, Compensation Committee chair $25,000, all other Committee chairs $20,000, Non-Executive Chair $250,000, and Lead Director $50,000.

Dow does not provide directors who are also Dow employees any additional compensation for serving as a Director.

Director Compensation for 2019

The following table provides the compensation paid to Dow’s non-employee Directors in 2019:

 

Name

 

Fees Earned or
Paid in Cash

($)(a)

   

Stock

Awards

($)(b)

   

Option
Awards

($)

   

Non-Equity
Incentive Plan
Compensation

($)

   

Change in Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings

($)(c)

   

All Other
Compensation

($)

   

Total

($)

 
               

Samuel R. Allen

    62,500       123,305                               185,805  
               

Ajay Banga

    122,500       185,528                               308,028  
               

Jacqueline K. Barton

    142,500       185,528                               328,028  
               

James A. Bell

    157,500       185,528                   811             343,839  
               

Wesley G. Bush

    122,500       185,528                               308,028  
               

Richard K. Davis

    122,500       185,528                               308,028  
               

Jeff M. Fettig

    405,000       185,528                               590,528  
               

Jacqueline C. Hinman

    122,500       185,528                               308,028  
               

Ruth G. Shaw

    143,750       185,528                   345             329,623  
               

Daniel W. Yohannes

    122,500       185,528                               308,028  

 

(a)

Compensation is pro rated for Mr. Allen who joined the Board effective August 1, 2019.

 

(b)

The 3,380 RSUs granted on April 11, 2019 at a grant price of $54.89 for a total value of $185,528, will vest on the second anniversary of the grant date and will settle in actual shares of Dow common stock following retirement or termination of service. The award is pro rated for Mr. Allen who joined the Board effective August 1, 2019.

 

(c)

Consists exclusively of above-market non-qualified deferred compensation earnings.

 

18   LOGO   


Table of Contents

LOGO

 

Non-Employee Directors Equity Grant

Equity is a key component of Director compensation. On April 11, 2019, each non-employee Director received a grant of 3,380 RSUs, with provisions limiting transfer until retirement, or after separation of service from the Company. However, a Director may defer settlement beyond retirement, or after separation of service.

Non-Employee Directors’ Stock Ownership Guidelines

Directors are subject to minimum stock ownership guidelines. As a guideline, non-employee Directors shall own common stock of the Company equal in value to at least five times the amount of the annual cash retainer. Shares used to determine whether the guidelines are satisfied include those held personally or beneficially owned, and RSUs subject solely to service-based vesting.

Directors have five years from the date they become subject to the guidelines to meet the ownership requirement. It is expected all Directors will be compliant within the required timeframe.

Non-Employee Directors Deferred Compensation Plan

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

Business Travel Accident Insurance for Non-Employee Directors

Dow maintains a rider on its business travel accident insurance policies covering accidental death and dismemberment of a non-employee Director if the Director is traveling on Dow business.

 

  2020 PROXY STATEMENT    19


Table of Contents

LOGO

 

The following table presents the beneficial ownership of Dow’s common stock as of February 1, 2020, except as noted, for (i) each Director of the Company, (ii) each executive officer of the Company listed in the Summary Compensation Table, (iii) all Directors and executive officers as a group, and (iv) each person beneficially owning more than 5% of the outstanding shares of Dow’s common stock:

 

Name

Current Shares

Beneficially Owned(a)

 

Rights to Acquire

Beneficial

Ownership of

Shares(b)

Total

Percent of Shares

Beneficially Owned(c)

         

Samuel R. Allen

  1,329.3     1,329.3   *
         

Ajay Banga

  5,831.0     5,831.0   *
         

Jacqueline K. Barton

  17,344.0     17,344.0   *
         

James A. Bell

  7,374.0     7,374.0   *
         

Wesley G. Bush

  5,643.0     5,643.0   *
         

Richard K. Davis

  9,917.0     9,917.0   *
         

Jeff M. Fettig

  45,336.0     45,336.0   *
         

Jim Fitterling

  93,824.0   775,935.0   869,759.0   *
         

Jacqueline C. Hinman

  723.0     723.0   *
         

Peter Holicki

  39,011.0   231,193.0   270,204.0   *
         

Ruth G. Shaw

  15,022.0     15,022.0   *
         

A. N. Sreeram

  48,817.4   139,433.0   188,250.4   *
         

Howard Ungerleider

  64,709.8   769,539.0   834,248.8   *
         

Amy E. Wilson

  3,144.5   67,294.0   70,438.5   *
         

Jill S. Wyant

       
         

Daniel W. Yohannes

  1,723.0     1,723.0   *
         

Group Total

  359,749.0   1,983,394.0   2,343,143.0   0.32 %
         

Total of All Directors and Executive Officers as a Group (18 persons)

  379,613.2   2,234,298.0   2,613,911.2   0.35 %
         

Certain Other Owners:

         

BlackRock, Inc.

  46,548,062.0 (d)      46,548,062.0   6.28 %
         

The Vanguard Group

  60,482,569.0 (e)      60,482,569.0   8.15 %
         

Capital International Investors

  37,601,579.0 (f)      37,601,579.0   5.07 %

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

 

*

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

 

(a)

Except as otherwise noted and for shares held by a spouse and other members of the person’s immediate family who share a household with the named person, the named persons have sole voting and investment power over the indicated number of Dow shares. This column also includes all Dow shares held in a trust over which the person has or shares voting or investment power, or shares held in The Dow Chemical Company Employees’ Savings Plan as of December 31, 2019. Beneficial ownership of some or all of the shares listed may be disclaimed.

 

(b)

This column includes any shares that the person could acquire through April 1, 2020, by (1) exercise of outstanding Stock Options; or (2) delivery of RSUs or PSUs.

 

(c)

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

 

(d)

Based on a Schedule 13G filed by BlackRock, Inc. on February 7, 2020 with the SEC reporting beneficial ownership of Dow common stock as of December 31, 2019. BlackRock, Inc. has sole voting power over 39,322,675 shares of Dow common stock and sole dispositive power over 46,548,062 shares of Dow common stock. BlackRock, Inc.’s address is 55 East 52nd Street, New York, New York 10055.

 

(e)

Based on a Schedule 13G filed by The Vanguard Group on February 11, 2020 with the SEC reporting beneficial ownership of Dow common stock as of December 31, 2019. The Vanguard Group has sole voting power over 1,102,689 shares of Dow common stock, shared voting power over 204,395 shares of Dow common stock, sole dispositive power over 59,239,670 shares of Dow common stock and shared dispositive power over 60,482,569 shares of Dow common stock. The Vanguard Group’s address is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.

 

(f)

Based on a Schedule 13G filed by Capital International Investors, a division of Capital Research and Management Company, on February 14, 2020 with the SEC reporting beneficial ownership of Dow common stock as of December 31, 2019. Capital International Investors has sole voting power over 37,552,075 shares of Dow common stock and sole dispositive power over 37,601,579 shares of Dow common stock. Capital International Investors’ address is 11100 Santa Monica Boulevard, 16th Floor, Los Angeles, California 90025.

 

20   LOGO   


Table of Contents

LOGO

 

Table of Contents

 

 

Executive Summary

     23  
About Dow      23  
The Separation      23  
2019 Company Highlights      24  
Named Executive Officers      25  
Objectives of Dow’s Executive Compensation Program      25  
Executive Compensation Governance Practices      25  
Stockholder Engagement      26  
Executive Compensation and Benefits      27  
Components of Executive Compensation and Benefits      27  
2019 NEO Targeted Total Direct Compensation Summary      27  
Pay Mix      28  
2019 Compensation Decisions      28  

Base Salary

     28  

Annual Performance Award

     29  

Long-Term Incentive Compensation

     30  
Benefits and Perquisites      32  
The Compensation Process      33  
Role of Company Management      33  
Role of the Compensation and Leadership Development Committee      33  
Role of Independent Board Members      33  
Role of the Independent Compensation Consultant      33  
Peer Group and Benchmarking      34  
Other Considerations      35  
Stock Ownership Guidelines      35  
Speculative Stock Transactions; Anti-Hedging and Anti-Pledging Policy      35  
Executive Compensation Recovery (Clawback) Policy      35  
Compensation and Risk Management      35  

 

Compensation Tables and Narratives

     36  
Summary Compensation Table      36  
Grants of Plan-Based Awards      38  
Outstanding Equity Awards      39  
Option Exercises and Stock Vested      40  
2019 Stock Incentive Plan      40  

Equity Compensation Plan Information

     41  
CEO Pay Ratio      41  
Benefits      43  
Pension Benefits      43  
Defined-Benefit Retirement Plans      43  

Dow Employees’ Pension Plan

     43  

Betriebliche Versorgungsregelungen 1993 (BVR 1993)

     44  

Executives’ Supplemental Retirement Plan

     44  

Dow Employees’ Savings Plan

     44  
Non-Qualified Deferred Compensation      44  
Dow Elective Deferral Plan      44  
Other Retirement Benefits and Impact at Departure      45  

Retirement, Death or Disability

     46  

Involuntary Termination with Cause

     46  

Involuntary Termination without Cause

     46  
Potential Payments Upon Involuntary Termination or Change in Control      47  

Involuntary Termination or Change in Control Values

     48  
Compensation Committee Matters      49  
Interlocks and Insider Participation      49  
Compensation Committee Report      49  
 

 

  2020 PROXY STATEMENT    21


Table of Contents

LOGO

 

Defined Terms

Capitalized terms, not otherwise defined in this Proxy Statement, have the meaning ascribed below:

 

   
2020 Meeting    2020 Annual Meeting of Stockholders of Dow Inc.
Board    Board of Directors of Dow Inc.
CD&A    Compensation Discussion & Analysis
CEO    Chief Executive Officer
CFO    Chief Financial Officer
Committee    In the CD&A section, Compensation and Leadership Development Committee
Company    Dow Inc. and its subsidiaries
Dow    Dow Inc. and its subsidiaries
EBIT    Earnings before interest and taxes
LTI    Long-term incentive
Mercer    Dow’s independent compensation consultant
NEO    Named Executive Officer
NYSE    New York Stock Exchange
Operating EBIT    Earnings (i.e., “income (loss) from continuing operations before income taxes”) before interest, excluding the impact of significant items; 2019 is on a pro forma basis
Operating ROC    Net operating profit after tax (excluding significant items) divided by total average capital; 2019 is on a pro forma basis
Pro Forma Operating EBITDA    Earnings (i.e., “income (loss) from continuing operations before taxes”) before interest, depreciation and amortization, plus pro forma adjustments, excluding the impact of significant items
PSU    Performance share unit
Relative TSR    Percentile ranking against the S&P 500 Index peer group of stock price appreciation plus dividends paid
ROC    Return on capital
RSU    Restricted stock unit
SEC    U.S. Securities and Exchange Commission
TDCC    The Dow Chemical Company
TSR    Total shareholder return

 

22   LOGO   


Table of Contents

LOGO

 

About Dow

Dow combines global breadth, asset integration and scale, focused innovation and leading business positions to achieve profitable growth. The Company’s ambition is to become the most innovative, customer centric, inclusive and sustainable materials science company. Dow’s portfolio of plastics, industrial intermediates, coatings and silicones businesses delivers a broad range of differentiated science-based products and solutions for its customers in high-growth market segments, such as packaging, infrastructure and consumer care. Dow operates 109 manufacturing sites in 31 countries and employs approximately 36,500 people. Dow delivered sales of approximately $43 billion in 2019, and, for the first time in its 120-year history, was added to the Dow Jones Industrial Average. References to Dow or the Company mean Dow Inc. and its subsidiaries.

 

 

LOGO

The Separation

On April 1, 2019, DowDuPont Inc. (“DowDuPont” and effective June 3, 2019, n/k/a DuPont de Nemours, Inc. or “DuPont”) completed the separation of its materials science business and Dow Inc. became the direct parent company of TDCC, owning all of the outstanding common shares of TDCC (the “Separation”). Dow Inc. is now an independent, publicly traded company and Dow Inc. common stock is listed on the New York Stock Exchange under the symbol “DOW.” Dow Inc. common stock began regular-way trading on April 2, 2019.

The Separation was contemplated by the merger of equals transaction effective August 31, 2017, under the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017. TDCC and E. I. du Pont de Nemours and Company (“Historical DuPont”) each merged with subsidiaries of DowDuPont and, as a result, TDCC and Historical DuPont became subsidiaries of DowDuPont (the “Merger”). Subsequent to the Merger, TDCC and Historical DuPont engaged in a series of internal reorganization and realignment steps to realign their businesses into three subgroups: agriculture, materials science and specialty products. Dow Inc. was formed as a wholly owned subsidiary of DowDuPont to serve as the holding company for the materials science business.

In connection with the Separation, Dow Inc. entered into certain agreements with DuPont and or Corteva, Inc. (“Corteva”) to effect the Separation and provide a framework for Dow’s relationship with DuPont and Corteva following the Separation. For more information, see the section titled “Agreements with Dow, DuPont and Corteva” in the Appendix.

DowDuPont equity awards outstanding at the distribution were adjusted at the time of the Separation, and then again at the time of the separation of Corteva from DowDuPont. For more information, see the section titled “Treatment of Equity Awards Outstanding at the Time of Separation” in the Appendix.

 

  2020 PROXY STATEMENT    23


Table of Contents

LOGO

 

                     2019 Company Highlights

 

LOGO

 

   

RENUVA is a trademark of The Dow Chemical Company or an affiliated company. All other trademarks on this page are the property of their respective owners.

 

24   LOGO   


Table of Contents

LOGO

 

Named Executive Officers

This CD&A discusses the compensation of the following NEOs:

 

NEO

   Title

Jim Fitterling

   Chief Executive Officer

Howard Ungerleider

   President and Chief Financial Officer

Peter Holicki

   Senior Vice President, Operations - Manufacturing & Engineering and Environment, Health and Safety Operations

A. N. Sreeram

   Senior Vice President, Research and Development and Chief Technology Officer

Amy E. Wilson

   General Counsel and Corporate Secretary

Objectives of Dow’s Executive Compensation Program

The objectives of Dow’s compensation program are set by the Compensation and Leadership Development Committee (“Committee”). The following table describes the primary objectives of Dow’s executive compensation program and how each is achieved:

 

LOGO

Executive Compensation Governance Practices

Compensation of the executive officers of Dow, including that of the NEOs, is overseen by the Committee (or, in the case of the CEO, by the Committee and the independent members of the Board) with the support of Mercer. The Board and the Committee are assisted in performance of their oversight duties by the independent compensation consultant and management. The Committee regularly reviews best practices in governance and executive compensation to ensure that the compensation programs align with Dow’s core principles.

 

  2020 PROXY STATEMENT    25


Table of Contents

LOGO

 

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

 

Key Executive Compensation Practices

 Active stockholder engagement

 Strong pay for performance links between executive compensation outcomes, individual performance and Company financial and market performance

 Compensation program structure designed to discourage excessive risk taking

 Significant focus on performance-based pay

 Each component of target pay benchmarked to median of either the Peer Group or of the general market, as applicable

 Carefully structured Peer Group with regular Compensation and Leadership Development Committee review

 Stock ownership requirements of six times base salary for the CEO and four times base salary for the other NEOs

 100% independent Compensation and Leadership Development Committee

 Clawback policy

 Anti-hedging/Anti-pledging policies applicable to Directors and executive officers

 Independent compensation consultant reporting to the Compensation and Leadership Development Committee

 No change-in-control agreements

 No excise tax gross-ups

 Modest perquisites

 Stock incentive plans prohibit option repricing, reloads, exchanges or options granted below market value without stockholder approval

 Regular review of the Compensation and Leadership Development Committee charter to ensure best practices and priorities

Stockholder Engagement

Throughout the year, the Board and members of the management team continued extensive outreach to stockholders, engaging with investors who collectively held over 50% of outstanding shares of common stock of the Company. Through this outreach, the management team updated investors on a range of topics, including the Separation, the overall business strategy, current business conditions, corporate citizenship and sustainability, corporate governance practices and executive compensation, as well as gained an understanding of the perspectives and concerns of each investor. The Board and management team carefully considers the feedback from these meetings when reviewing the business, corporate governance and executive compensation profiles.

 

26   LOGO   


Table of Contents

LOGO

 

Components of Executive Compensation and Benefits

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

 

LOGO

2019 NEO Targeted Total Direct Compensation Summary

In addition to and separate from the Summary Compensation Table, the following table is provided to aid with understanding the annual compensation of the NEOs. The following table lists the targeted total direct compensation for each NEO for the full calendar year ending December 31, 2019:

 

Name

 

2019
Base Salary
($)

   

2019
Target Annual
Incentive

   

2019
Target Annual
Incentive

($)

   

2019 LTI

($)

   

Targeted
Total Direct
Compensation

($)

 
         

Jim Fitterling

    1,450,008       150     2,175,012       10,500,000       14,125,020  
         

Howard Ungerleider

    1,143,564       120     1,372,277       4,150,000       6,665,841  
         

Peter Holicki

    680,796       90     612,716       1,950,000       3,243,512  
         

A. N. Sreeram

    811,188       95     770,629       2,600,000       4,181,817  
         

Amy E. Wilson

    609,012       100     609,012       2,250,000       3,468,024  

 

  2020 PROXY STATEMENT    27


Table of Contents

LOGO

 

Pay Mix

Executive compensation is linked strongly to the financial and operational performance of the business. On average, approximately 79% of the CEO’s target annual total compensation is at risk and approximately 68% of the other NEOs’ compensation, on average, is at risk.

 

LOGO

NEO incentive compensation is based on clearly disclosed and measurable goals linked to Company performance. The Dow compensation program is targeted to deliver compensation at approximately the median of the Peer Group. Factors such as executive tenure, experience and stockholder value-enhancing achievement of measurable goals can attribute to an individual NEO’s compensation that falls above or below the median.

2019 Compensation Decisions

The following information relates to Dow’s 2019 compensation program as applicable to the NEOs.

Base Salary

Base salary is a fixed portion of compensation based primarily on an individual’s skills, job responsibilities and experience, as well as more subjective factors such as the assessment of individual performance by the Committee. Base salaries for executives are benchmarked against similar jobs at other companies and are targeted at the median of the Peer Group, after adjusting for each company’s revenue size.

 

28   LOGO   


Table of Contents

LOGO

 

2019 Base Salary Decisions

The table below shows the annual base salaries for the NEOs as of December 31, 2018 and their respective increases for the year 2019. This information may be different from the base salary provided in the Summary Compensation Table, which reflects actual base pay received for 2019. Salary adjustments of 3% were consistent with the salary adjustments provided to Dow’s salaried employee population. Mr. Fitterling received an additional adjustment based upon the Committee’s review of base salaries for CEOs and acknowledgement of Mr. Fitterling’s first full year as CEO. Mr. Holicki and Ms. Wilson received an additional adjustment based upon the Committee’s review of base salaries for comparable positions within the Peer Group.

 

Name

2018 Base Salary

($)

2019 Base Salary

($)

Percent change
in Base Salary

       

Jim Fitterling

1,185,717 1,450,008 22%
       

Howard Ungerleider

1,110,261 1,143,564   3%
       

Peter Holicki

   630,365    680,796   8%
       

A. N. Sreeram

   787,551    811,188   3%
       

Amy E. Wilson

   580,008    609,012   5%

Annual Performance Award

Meeting or exceeding annual business and financial goals is important to executing long-term business strategy and delivering long-term value to stockholders. The Performance Award is an annual cash incentive program that Dow uses to reward employees for achieving a critical annual Company goal measured by Operating EBIT. Dow links the Performance Award to this metric because it (1) reflects operating strength, efficiency and profitability, and (2) balances revenue growth with margin expansion. Actual award payouts are determined following the completion of the plan year by measuring the performance against each award component.

2019 Performance Award Design and Metrics

As depicted below, the amount earned under the 2019 Performance Award is equal to a participant’s target award times Operating EBIT, and adjusted by the individual performance factor assessment, which includes safety performance. The payout based on the results of the formula can range from 0% to 200% of target. Even when including the impact of the individual performance factor, the 2019 Performance Award is capped at a maximum payout of 200%.

 

LOGO

The metric used in the 2019 Performance Award is a non-GAAP measure and is defined as follows:

 

   

Operating EBIT: earnings (i.e., “income from continuing operations before income taxes”) before interest, excluding the impact of significant items, 2019 is on a pro forma basis.

The 2019 Performance Award target goals and results of the Company component are shown below:

 

Metric

    Threshold    
($MM)

(50%)

    Target    

($MM)

(100%)

    Maximum    

($MM)

(200%)

    Weight    

2019

    Actual    
($MM)

Metric
    Payout    

Total
    Payout    

         

Operating EBIT

5,360 6,700 8,040 100% 4,352 0% 0%

As detailed in the table above, the results related to the Company component were below the threshold of the Operating EBIT targets set by the Committee for the 2019 Performance Award. As a result of our strong emphasis on pay for performance, below target performance resulted in none of the NEOs receiving an annual award payout.

 

  2020 PROXY STATEMENT    29


Table of Contents

LOGO

 

Long-Term Incentive Compensation

Each year the Company grants equity-based LTI awards to leaders and other key employees who demonstrate high performance. Dow chooses this component of compensation to motivate and reward employees for long-term stockholder value creation and the attainment of Company performance goals, retain top talent and create an ownership alignment with stockholders. As with Dow’s approach for all elements of compensation, LTI grant levels are targeted at the median of the Peer Group for comparable positions. Company performance and stock price determine the actual payout of LTI grants.

2019 LTI Award Decisions

In April 2019, the Committee approved the LTI grant for each NEO as shown in the Summary Compensation Table based upon the Peer Group median LTI values and reflective of the mix of equity vehicles described in the table below. The Committee also approved the 2019-2021 Performance Share Program design and metrics.

 

LTI Vehicle

 

 

2019 LTI
Award Mix          

 

    

Vesting Terms and Other Conditions

 

     

PSUs

    65%                

 

PSUs can be earned at between 0% and 200% of the target award opportunity after a three year performance period based the following metrics:

 

•   Operating ROC

 

•   Relative TSR

 

Accumulated dividend equivalents are paid only on earned shares after the three-year performance period has ended.

     

Stock Options

    20%                 The exercise price equals the closing price on the grant date. Options generally vest, pro rata, in one to three year periods and expire after ten years.
     

RSUs

    15%                 RSUs vest after three years. During the vesting period, holders of outstanding RSU grants receive quarterly payments equal to the dividend paid on the equivalent shares of Dow common stock.

Performance Share Program

The 2019-2021 Performance Share Program is based on Operating ROC as the key metric and Relative TSR as a modifier. See the graphics below for the overall design and target, max and threshold values:

 

LOGO

 

    

Operating ROC

    Relative TSR  
    

Goal

   

Payout

    Goal  

Payout

 
         
Max     14.8%       200%     > 75th Pctl.     125%  
         
Target     12.3%       100%     25th £  Target £ 75th     100%  
         
Threshold     9.8%       35%     < 25th Pctl.     75%  

 

30   LOGO   


Table of Contents

LOGO

 

Operating Return on Capital (ROC)

Operating ROC measures how effectively a company has utilized the money invested in its operations and is calculated as net operating profit after tax (excluding significant items) divided by total average capital. Net operating profit after tax (excluding significant items) is a net income measure the Company uses in presentations to investors that excludes net income attributable to noncontrolling interests, and interest expense, exclusive of the significant items identified in the Appendix, and as presented in the reconciliations available on the Company’s website at www.dow.com/investors.

The target goal represents the expected level of Operating ROC over the three-year performance period while the threshold goal represents the minimum level of performance that would warrant any payout and the maximum goal represents stretch performance that would warrant a maximum payout.

Relative Total Shareholder Return (TSR)

TSR is defined as stock price appreciation plus dividends paid. The peer group used for Relative TSR is the S&P 500 Index, as the Committee believes this represents the broadest and most reliable measurement to assess TSR. For Dow and each company in this peer group, a beginning price using a thirty trading day averaging period at the beginning of the performance period and an ending price using a thirty trading day averaging period at the end of the performance period are calculated and used to create a percentile ranking to develop a relative performance metric for purposes of compensation.

Relative TSR is utilized as a modifier with a 75% factor for performance in the bottom quartile and a 125% factor for performance in the top quartile. The max payout is capped at 200%, even when considering the Relative TSR modifier.

DowDuPont Synergy and Speed to Spin Incentives

In December 2017 following the Merger, DowDuPont awarded grants of PSUs (the “Synergy Grants”) to certain senior management, including Messrs. Fitterling, Ungerleider, Holicki and Sreeram, as well as cash-based performance awards to other leaders, including Ms. Wilson, (the “Incentive Awards”) to incentivize:

 

   

Targeted cost synergies of $3 billion on a run-rate basis (DowDuPont performed above target and delivered run-rate cost synergies of $3.6 billion); and

 

   

Timely completion of the distributions of Dow and Corteva.

The parameters of the DowDuPont Synergy Grants and Incentive Awards and final results are outlined below. The Synergy Grants do not reflect a determination by Dow Inc. or the Committee, but rather the determination of the DowDuPont Compensation Committee following the Merger and prior to the Separation.

 

           

Business Performance and
Payout Ranges
(a)(b)

               
Metric   Weighting     Threshold
($)
(Synergy:
50%
Payout
Spin: 25%
Payout)
    Target
($)
(100%
Payout)
   

Maximum
($)

(200%
Payout)

    Actual     Payout  
             
Synergy Capture     66%       2.94 billion       3.0 billion       3.45 billion     >$ 3.45 billion       200%  
             
Dow Spin     17%       22 months       19 months       16 months       19 Months       100%  
             
Corteva Spin     17%       24 months       21 months       18 months       21 Months       100%  
     
        Total       166%  

 

(a)

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

 

(b)

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

 

  2020 PROXY STATEMENT    31


Table of Contents

LOGO

 

Benefits and Perquisites

Benefits

Dow provides benefits (including retirement benefits) to eligible employees, including the eligible NEOs, through a combination of qualified and non-qualified plans such as the following:

 

   

Defined-Benefit Retirement Plans (if applicable)

 

   

Supplemental Retirement Plans

 

   

Pension Plans

 

   

Savings Plans

 

   

Supplemental Savings Plans

The NEOs are entitled to participate in the same plans as most other salaried employees. In addition, because highly compensated employees are subject to U.S. tax limitations on contributions to some retirement plans, Dow created non-qualified retirement programs intended to provide these employees with the same benefits they would have received under the qualified plans without the tax limits. The NEOs are eligible to participate in the same non-qualified retirement plans as all other highly compensated salaried employees.

Perquisites

Dow offers perquisites that the Committee believes are reasonable yet competitive in attracting and retaining the executive team.

The Committee, with input from Mercer, regularly reviews the perquisites provided to the respective NEOs as part of its overall review of executive compensation. The following outlines the modest perquisites that may be provided to executives:

 

   

Financial and Tax Planning Support

 

   

Executive Physical Examination and Related Travel Expenses

 

   

Executive Excess Umbrella Liability Insurance

 

   

Home Security Alarm System

 

   

Personal Travel on Corporate Aircraft and Related Travel Expenses for CEO, who is required by the Board for security and immediate availability reasons to use corporate aircraft for business and personal travel, and for other NEOs as may be approved under limited circumstances.

For information regarding the perquisites that the NEOs received for the fiscal year ended December 31, 2019, see the column titled “All Other Compensation” of the Summary Compensation Table and the accompanying narrative.

 

32   LOGO   


Table of Contents

LOGO

 

The Committee, with the support of Mercer and management, develops and executes the executive compensation program. The Committee is responsible for recommending compensation for the CEO for approval by the independent Directors and for approving the compensation of all of the other NEOs and executive officers. The Committee annually reviews and evaluates the executive compensation program to ensure that the program is aligned with Dow’s compensation philosophy and with expected performance.

The Committee reviews the following factors, among others, to determine executive and non-employee Director compensation:

 

   

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

 

   

Company performance: Measured against financial metrics and operational targets approved by the Committee, along with Relative TSR against the S&P 500

 

   

Market landscape: Business climate, economic conditions and other factors

 

   

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

Role of Company Management

The CEO makes recommendations to the Committee regarding compensation for senior executives after reviewing Dow’s overall performance, each executive’s personal contributions and relevant compensation market data from the Peer Group for similar jobs and job levels.

Role of the Compensation and Leadership Development Committee

The Committee is responsible for establishing Dow’s executive compensation philosophy. The Committee is responsible for approving compensation for the NEOs and executive officers, and has broad discretion when setting compensation types and amounts. As part of the review, management and the Committee also review summary total compensation scenarios for the NEOs. Additionally, the Committee annually reviews the corporate goals and objectives relevant to the compensation of the CEO. The Committee evaluates the CEO’s performance against the CEO’s objectives and makes recommendations to the independent Directors regarding compensation levels based on that evaluation. The Committee considers compensation market data from the Peer Group when setting compensation types and amounts for the CEO.

Role of Independent Board Members

The independent members of the Board are responsible for assessing the performance of the CEO. They also aid in approving the compensation types and amounts for the CEO.

Role of the Independent Compensation Consultant

The Committee retained Mercer for executive compensation matters.

Mercer’s responsibilities include:

 

   

Advising the Committee on trends and issues in executive compensation

 

   

Reviewing and advising the group of companies in the Peer Group

 

   

Consulting on the competitiveness of the compensation structure and levels of Dow’s executive officers and non-employee Directors

 

   

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

 

   

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

 

   

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

 

  2020 PROXY STATEMENT    33


Table of Contents

LOGO

 

Mercer has safeguards and procedures in place to maintain independence in its executive compensation consulting practice, and the Committee determines whether the compensation consultant’s work has raised any conflicts of interest. These safeguards include a rigidly enforced code of conduct, a policy against investing in client organizations and separation between Mercer’s executive compensation consulting and their other administrative and consulting business units from a leadership, performance measurement and compensation perspective. In 2019, Mercer and its affiliates provided approximately $2.2 million in human resources consulting services to Dow unrelated to executive and Director compensation consulting services. The decision to engage Mercer to provide these services was made by management and was reported to the Committee. In 2019, Mercer’s aggregate fees for executive and Director compensation consulting services were $267,587. The Committee has considered factors relevant to Mercer’s independence from management under SEC rules and has determined that Mercer is independent from management.

Peer Group and Benchmarking

Dow competes with a wide variety of both industry and non-industry specific companies for executive talent and investor assets. In order to ensure the executive pay program is competitive and has a strong link to stock price performance, Dow maintains an executive compensation peer group for market comparisons, benchmarking and setting executive and non-employee director compensation (the “Peer Group”). Market compensation data for the selected Peer Group is gathered through compensation surveys conducted by Mercer. Dow targets the median of the Peer Group for all compensation elements in order to attract, motivate, and retain top level executive talent. Annual performance award targets and LTI grants reflect market median values while actual payouts are dependent on Company and individual performance.

Below is Dow’s Peer Group selected for 2019 and a chart that provides a comparison of revenue.

 

LOGO

  

LOGO

(a)    Reflects last twelve months as of December 31, 2019.

        Source: S&P Capital IQ

 

The Peer Group is periodically evaluated by the Committee, with support of management and Mercer, in consideration of a range of factors, including, but not limited to, industry, size, market capitalization and other factors, and then updated periodically to ensure the companies in the group remain relevant. The 2020 Peer Group has already been reviewed and approved, which includes the 2019 Peer Group, plus Linde PLC and LyondellBasell Industries NV.

 

34   LOGO   


Table of Contents

LOGO

 

Stock Ownership Guidelines

The Committee believes that Dow’s executives will more effectively align with stockholders’ long-term interests if they hold a minimum number of shares of Dow common stock. Shares used to determine whether the guidelines are met include those held personally or beneficially owned, and RSUs subject solely to service-based vesting. Unvested PSUs and Stock Options, whether vested or unvested, do not count towards an executive’s minimum ownership.

 

Multiple of Salary

2019 Target

2019 Actual

     
CEO 6X 6X
     
Other NEOs Average 4X 5X

Executives have five years from the date they become subject to the guidelines to satisfy the ownership requirement. Executives are subject to a retention ratio. If, as of the fifth year, an executive has not met their requirement, he or she is required to hold 75% of the shares (net of taxes) received upon the vesting of RSUs and PSUs and upon the exercise of a Stock Option. Currently each NEO has met the relevant minimum ownership requirement with the exception of Ms. Wilson, who is expected to be compliant within the requisite five-year window.

Speculative Stock Transactions; Anti-Hedging and Anti-Pledging Policy

It is against Dow policy for Directors and executive officers to engage in derivative or speculative transactions in Dow securities. As such, it is against Dow policy for Directors and executive officers to trade in puts or calls in Dow securities, or sell Dow securities short. In addition, it is against Dow policy for Directors and executive officers to pledge Dow securities, or hold Dow securities in margin accounts.

Executive Compensation Recovery (Clawback) Policy

As part of its overall corporate governance structure, Dow maintains an executive compensation recovery policy for its executive officers. This policy allows Dow to recover incentive income if an executive officer either knowingly engaged in or was grossly negligent in the event of circumstances that resulted in a financial restatement or other material non-compliance. Under the policy, Dow may recover incentive income based on achievement of quantitative performance targets if an executive officer engaged in grossly negligent conduct or intentional misconduct that resulted in a financial restatement or in any increase in his or her incentive income. Incentive income includes income related to annual bonuses and LTI.

Compensation and Risk Management

The Committee periodically reviews Dow’s compensation policies and practices to determine whether the incentive compensation programs create risks that are reasonably likely to have a material adverse effect on Dow. The evaluation covers a wide range of practices and policies including: the balanced mix between pay elements, the balanced mix between short and long-term programs, caps on incentive payouts, governance processes in place to establish, review and approve goals, use of multiple performance measures, discretion on individual awards, use of stock ownership guidelines, provisions in severance/change in control policies, use of a compensation recovery policy, and Committee oversight of compensation programs.

 

  2020 PROXY STATEMENT    35


Table of Contents

LOGO

 

Summary Compensation Table

The following table summarizes the compensation of the Company’s CEO, CFO, and the three other most highly compensated executive officers for the fiscal year ended December 31, 2019:

 

Name and

Principal
Position

  Year    

Salary

($)

   

Bonus

($)

   

Stock
Awards

($)(a)

   

Option
Awards

($)(b)

   

Non-Equity
Incentive Plan
Compensation

(c)

   

 

Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings

($)(d)

   

All Other
Compensation

($)(e)

   

Total

($)

    Total
Without
Change
in
Pension
 
                     

Jim Fitterling

Chief Executive Officer

   

2019

2018

 

 

   
1,369,348
1,178,116
 
 
   
-
-
 
 
   
8,734,840
-
 
 
   
2,100,012
4,750,008
 
 
   
-
1,458,432
 
 
   
3,402,151
893,865
 
 
   
272,288
190,917
 
 
   
15,878,639
8,471,338
 
 
   
12,476,488
7,577,473
 
 
                     

Howard Ungerleider

President and

Chief Financial Officer

   

2019

2018

 

 

   
1,088,906
1,103,144
 
 
   
-
-
 
 
   
3,453,059
5,000,007
 
 
   
830,001
4,150,005
 
 
   
-
1,310,996
 
 
   
769,594
330,919
 
 
   
87,704
99,625
 
 
   
6,229,264
11,994,697
 
 
   
5,459,670
11,663,778
 
 
                     

Peter Holicki

SVP Operations - Manufacturing &

Engineering and EHS

   

2019

2018

 

 

   
642,489
627,305
 
 
   
-
-
 
 
   
1,622,662
-
 
 
   
390,072
1,700,136
 
 
   

-

465,209

 

 

   
1,446,566
258,940
 
 
   
55,264
17,721
 
 
   
4,157,053
3,069,312
 
 
   
2,710,487
2,810,372
 
 
                     

A. N. Sreeram

SVP R&D and Chief Technology Officer

   

2019

2018

 

 

   
772,959
782,503
 
 
   
-
-
 
 
   
3,163,251
-
 
 
   
520,069
2,600,063
 
 
   

-

705,528

 

 

   
587,785
318,358
 
 
   
65,418
69,984
 
 
   
5,109,483
4,476,435
 
 
   
4,521,698
4,158,077
 
 
                     

Amy E. Wilson

General Counsel and Secretary

   

2019

2018

 

 

   
577,780
417,733
 
 
   
-
-
 
 
   
1,872,081
195,432
 
 
   
450,077
2,055,178
 
 
   

-

523,167

 

 

   

1,287,925

566,127

 

 

   

343,902

29,089

 

 

   

4,531,765

3,786,726

 

 

   

3,243,840

3,220,599

 

 

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

Note: In order to show the effect that the year-over-year change in pension value had on total compensation as determined under applicable SEC rules, an additional column is included to show total compensation minus the change in pension value. The amounts reported in the Total Without Change in Pension column may differ substantially from the amounts reported in the Total column required under SEC rules and are not a substitute for total compensation. Total without Change in Pension represents total compensation, as determined under applicable SEC rules, minus the change in pension value reported in the Change in Pension and Non-Qualified Deferred Compensation Earnings column. The changes in pension value result from many external variables, such as shifting interest rates, that are not related to Company performance. Therefore, Dow does not believe a year-over-year change in pension value is helpful in evaluating compensation for comparative purposes.

 

(a)

Amounts represent the aggregate grant date fair value of awards in the year of grant in accordance with the same standard applied for financial accounting purposes, Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. If valued assuming a maximum payout on the Performance Share Program, the value of the awards would be: Fitterling $14,318,994; Ungerleider $5,660,114; Holicki $2,660,196; Sreeram $3,545,776; Wilson $3,069,014. A discussion of the assumptions used in calculating these values can be found in Note 22 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

 

(b)

Dow’s valuation for financial accounting purposes uses the widely accepted Black-Scholes option valuation model and is otherwise computed in accordance with FASB ASC Topic 718. The option value calculated for the NEOs’ grants on April 11, 2019 was $7.99 with exercise price of $54.89 based on the closing share price of Dow Inc. stock on the grant date. A discussion of the assumptions used in calculating these values can be found in Note 22 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

 

(c)

Individual results for Non-Equity Incentive Plan Compensation are detailed in the section titled “2019 Compensation Decisions—Annual Performance Award” of the CD&A and reflect amounts paid in 2020 under Dow’s annual Performance Award program for performance achieved in 2019.

 

36   LOGO   


Table of Contents

LOGO

 

(d)

Reflects the aggregate change in the actuarial present value of accumulated pension benefits at age 65 using the actuarial assumptions included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The amounts recorded in this column vary with a number of factors, including the discount rate applied to determine the value of future payment streams. An analysis of the Change in Pension Value for 2019 is shown in the table below. As a result of a decrease in prevailing interest rates in the credit markets in 2019, the discount rate used pursuant to pension accounting rules to calculate the present value of future payments decreased from 4.41% for fiscal year 2018 to 3.44% for fiscal year 2019. The decrease in pension value resulting from the change in interest rates does not result in any decrease to the underlying benefits payable to participants under the plan.

Change in Pension Value for 2019

 

Name  

Change in
Discount Rate

($)

   

 

Change in Deferral
Period, Benefits,
and Other

($)

   

Total Change

($)

 
       
Jim Fitterling     719,741       2,682,371       3,402,112  
       
Howard Ungerleider     289,781       479,813       769,594  
       
Peter Holicki     1,172,604       273,962       1,446,566  
       
A. N. Sreeram     216,265       371,520       587,785  
       
Amy E. Wilson     348,700       939,225       1,287,925  

 

(e)

“All Other Compensation” includes perquisites, other personal benefits and the company contributions to both qualified and non-qualified defined company contribution plans. Perquisites and personal benefits include: personal use of aircraft (as required by the company for security and immediate availability reasons) and related travel expenses, certain tax reimbursements to the NEOs, financial and tax planning support, home security, executive physical examinations and related travel expenses, personal excess liability insurance premiums, limited use of assistant for personal matters, access to secured parking at the corporate headquarters, and receipt of items at Dow-sponsored customer events. Personal use of aircraft includes use of corporate aircraft for travel to certain outside board meetings and to company sponsored executive physicals. The incremental cost to Dow of personal use of Dow aircraft is calculated based on published industry rates by Conklin & de Decker Associates, Inc. for the variable operating costs to Dow including fuel, landing, catering, handling, aircraft maintenance and pilot travel costs. Fixed costs, which do not change based upon usage, such as pilot salaries or depreciation of the aircraft or maintenance costs not related to personal travel, are excluded. The Dow NEOs also are provided a tax reimbursement for taxes incurred when a spouse travels for business purposes as it is sometimes necessary for spouses to accompany NEOs to business functions. These taxes are incurred because of the Internal Revenue Service’s rules governing business travel by spouses and Dow reimburses the associated taxes. No NEO is provided a tax reimbursement for personal use of aircraft. Tax reimbursements may be provided to NEOs for certain company provided or reimbursed relocation expenses, if applicable.

The following are additional details associated with other compensation items for 2019:

 

  I.

Mr. Fitterling: Personal use of company aircraft as required by company policy for security and immediate availability purposes ($177,606), Company contributions to savings plans ($54,118), and financial and tax planning ($35,572)

 

  II.

Mr. Ungerleider: Company contributions to savings plans ($51,348) and financial and tax planning ($33,308)

 

  III.

Mr. Holicki: Financial and tax planning ($36,890)

 

  IV.

Mr. Sreeram: Personal use of company aircraft for non-Dow board travel and executive health physical ($35,345) and Company contributions to savings plans ($20,757)

 

  V.

Ms. Wilson: Synergy and Speed to Spin cash-based performance award ($293,820) and Company contributions to savings plans ($26,029)

 

  2020 PROXY STATEMENT    37


Table of Contents

LOGO

 

Grants of Plan-Based Awards

The following table provides additional information about plan-based compensation disclosed in the Summary Compensation Table:

 

Name           Grant
  Date  
   

Date

of Action

by the

Compensation
Committee

   

 

Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
(a)

   

 

Estimated Future Payouts
Under Equity Incentive Plan
Awards
(b)

   

 

All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or Units

(#)(c)

   

All Other
Option
Awards:
Number of
Securities
Underlying
Options

(#)(d)

   

Exercise
or Base
Price of
Option
Awards

($/Sh)

   

Grant
Date
Fair
Value of
Stock
and

Option
Awards

($)(e)

 
 

 

Threshold

($)

   

 

Target

($)

   

 

Maximum

($)

   

 

Threshold

(#)

   

 

Target

(#)

   

 

Maximum

(#)

 
                         

 

Jim Fitterling

    2/13/2019       2/13/2019       -       2,175,012       4,350,024                  
    4/11/2019       4/11/2019             -       124,340       248,680             7,159,497  
    4/11/2019       4/11/2019                   28,700           1,575,343  
    4/11/2019       4/11/2019                     262,830       54.89       2,100,012  
                         
Howard Ungerleider      2/13/2019       2/13/2019       -       1,372,277       2,744,554                  
    4/11/2019       4/11/2019             -       49,150       98,300             2,830,057  
    4/11/2019       4/11/2019                   11,350           623,002  
    4/11/2019       4/11/2019                                                               103,880       54.89       830,001  
                         
Peter Holicki     2/13/2019       2/13/2019       -       612,716       1,225,432                  
    4/11/2019       4/11/2019             -       23,100       46,200             1,330,098  
    4/11/2019       4/11/2019                   5,330           292,564  
    4/11/2019       4/11/2019                                                               48,820       54.89       390,072  
                         
A. N. Sreeram     2/13/2019       2/13/2019       -       770,629       1,541,258                  
    2/13/2019       2/13/2019                   18,820           1,000,095  
    4/11/2019       4/11/2019             -       30,790       61,580             1,772,888  
    4/11/2019       4/11/2019                   7,110           390,268  
    4/11/2019       4/11/2019                                                               65,090       54.89       520,069  
                         
Amy E. Wilson     2/13/2019       2/13/2019       -       609,012       1,218,024                  
    4/11/2019       4/11/2019             -       26,650       53,300             1,534,507  
    4/11/2019       4/11/2019                   6,150           337,574  
    4/11/2019       4/11/2019                                                               56,330       54.89       450,077  

 

(a)

Performance Award program as described in the section titled “Annual Performance Award” of the CD&A.

 

(b)

PSUs as described in the section titled “2019 LTI Award Decisions” of the CD&A.

 

(c)

RSUs as described in the section titled “2019 LTI Award Decisions” of the CD&A.

 

(d)

Stock Option awards as described in the section titled “2019 LTI Award Decisions” of the CD&A.

 

(e)

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

 

38   LOGO   


Table of Contents

LOGO

 

Outstanding Equity Awards

The following table lists outstanding equity grants for each NEO as of December 31, 2019, including outstanding equity grants from past years. For a description of the treatment of these awards in connection with the Separation, see the section titled “Treatment of Equity Awards Outstanding at the Time of the Separation” in the Appendix.

 

Name   Grant Date    

 

Option Awards

   

 

Stock Awards

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

Option
Exercise
Price

($)

    Option
Expiration
Date
   

Number
of
Shares
or Units
of
Stock
That
Have
Not

Vested

(#)(b)

   

Market
Value of
Shares

or Units
of Stock
That
Have Not
Vested

($)(b)(c)

   

Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or

Other
Rights
That
Have Not
Vested

(#)(d)

   

 

Equity
Incentive
Plan
Awards:
Market or
Payout
Value

of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested

($)(c)(d)

 
                   

 

Jim Fitterling

 

   

02/11/2011


02/15/2013

02/14/2014

02/13/2015

02/12/2016

02/10/2017

02/15/2018

04/11/2019

 

 

 

 

 

 

 

 

   

116,590

175,946

94,998

94,395

128,487

64,956

34,138

-

 

 

 

 

 

 

 

 

   

-

-

-

-

-

32,480

68,277

262,830

 

 

 

 

 

 

 

 

   

38.87

32.57

47.31

50.07

46.60

61.97

72.77

54.89

 

 

 

 

 

 

 

 

   

02/11/2021

02/15/2023

02/14/2024

02/13/2025

02/12/2026

02/10/2027

02/15/2028

02/11/2029

 

 

 

 

 

 

 

 

   

n/a

n/a

n/a

n/a

n/a

66,425

-

28,700

 

 

 

 

 

 

 

 

   

n/a

n/a

n/a

n/a

n/a

3,635,440

-

1,570,751

 

 

 

 

 

 

 

 

   

n/a

n/a

n/a

n/a

n/a

-

-

124,340

 

 

 

 

 

 

 

 

   

n/a

n/a

n/a

n/a

n/a

-

-

6,805,128

 

 

 

 

 

 

 

 

                   

Howard Ungerleider

 

   

02/12/2010

02/11/2011

02/10/2012

02/15/2013

02/14/2014

02/13/2015

02/12/2016

02/10/2017

02/15/2018

03/12/2018

04/11/2019

 

 

 

 

 

 

 

 

 

 

 

   

22,115

18,363

81,373

208,201

94,998

94,395

105,493

56,748

29,826

-

-

 

 

 

 

 

 

 

 

 

 

 

   

-

-

-

-

-

-

-

28,377

59,652

-

103,880

 

 

 

 

 

 

 

 

 

 

 

   

28.14

38.87

34.43

32.57

47.31

50.07

46.60

61.97

72.77

-

54.89

 

 

 

 

 

 

 

 

 

 

 

   

02/12/2020

02/11/2021

02/10/2022

02/15/2023

02/14/2024

02/13/2025

02/12/2026

02/10/2027

02/15/2028

-

02/11/2029

 

 

 

 

 

 

 

 

 

 

 

   

n/a

n/a

n/a

n/a

n/a

n/a

n/a

58,027

-

69,197

11,350

 

 

 

 

 

 

 

 

 

 

 

   

n/a

n/a

n/a

n/a

n/a

n/a

n/a

3,175,818

-

3,787,152

621,186

 

 

 

 

 

 

 

 

 

 

 

   

n/a

n/a

n/a

n/a

n/a

n/a

n/a

-

-

-

49,150

 

 

 

 

 

 

 

 

 

 

 

   

n/a

n/a

n/a

n/a

n/a

n/a

n/a

-

-

-

2,689,980

 

 

 

 

 

 

 

 

 

 

 

                   

Peter Holicki

 

   

02/11/2011

02/10/2012

02/15/2013

02/14/2014

02/13/2015

02/12/2016

02/10/2017

02/15/2018

04/11/2019

 

 

 

 

 

 

 

 

 

   

13,920

21,187

29,915

28,078

38,267

40,578

23,246

12,218

-

 

 

 

 

 

 

 

 

 

   

-

-

-

-

-

-

11,625

24,438

48,820

 

 

 

 

 

 

 

 

 

   

38.87

34.43

32.57

47.31

50.07

46.60

61.97

72.77

54.89

 

 

 

 

 

 

 

 

 

   

02/11/2021

02/10/2022

02/15/2023

02/14/2024

02/13/2025

02/12/2026

02/10/2027

02/15/2028

02/11/2029

 

 

 

 

 

 

 

 

 

   

n/a

n/a

n/a

n/a

n/a

n/a

23,784

-

5,330

 

 

 

 

 

 

 

 

 

   

n/a

n/a

n/a

n/a

n/a

n/a

1,301,698

-

291,711

 

 

 

 

 

 

 

 

 

   

n/a

n/a

n/a

n/a

n/a

n/a

-

-

23,100

 

 

 

 

 

 

 

 

 

   

n/a

n/a

n/a

n/a

n/a

n/a

-

-

1,264,263

 

 

 

 

 

 

 

 

 

                   

A. N. Sreeram

 

   

02/13/2015

02/12/2016

02/10/2017

02/15/2018

02/13/2019

04/11/2019

 

 

 

 

 

 

   

15,311

33,510

35,554

18,686

-

-

 

 

 

 

 

 

   

-

-

17,779

37,374

-

65,090

 

 

 

 

 

 

   

50.70

46.60

61.97

72.77

-

54.89

 

 

 

 

 

 

   

02/13/2025

02/12/2026

02/10/2027

02/15/2028

-

02/11/2029

 

 

 

 

 

 

   

n/a

n/a

36,372

-

18,581

7,110

 

 

 

 

 

 

   

n/a

n/a

1,990,640

-

1,016,938

389,130

 

 

 

 

 

 

   

n/a

n/a

-

-

-

30,790

 

 

 

 

 

 

   

n/a

n/a

-

-

-

1,685,137

 

 

 

 

 

 

                   

Amy E. Wilson

 

   

02/13/2015

02/12/2016

02/10/2017

02/15/2018

10/10/2018

04/11/2019

 

 

 

 

 

 

   

5,874

6,229

3,144

1,402

47,416

-

 

 

 

 

 

 

   

-

-

1,575

2,804

94,834

56,330

 

 

 

 

 

 

   

50.07

46.60

61.97

72.77

60.08

54.89

 

 

 

 

 

 

   

02/13/2025

02/12/2026

02/10/2027

02/15/2028

10/10/2028

02/11/2029

 

 

 

 

 

 

   

n/a

n/a

3,229

907

-

6,150

 

 

 

 

 

 

   

n/a

n/a

176,723

49,640

-

336,590

 

 

 

 

 

 

   

n/a

n/a

-

-

-

26,650

 

 

 

 

 

 

   

n/a

n/a

-

-

-

1,458,555

 

 

 

 

 

 

 

(a)

Stock Option awards vest in three equal installments on the first, second and third anniversaries of the grant date shown in the table. Stock Options with a grant date of February 15, 2018 reflect the Dow portion of the award following the conversion upon Separation. As of February 15, 2018, awards for an equal number of DuPont and Corteva Stock Options are also outstanding as a result of the Separation.

 

(b)

RSUs generally vest and are delivered three years after the grant date.

 

(c)

Market values based on the December 31, 2019 closing stock price of $54.73 per share of Dow Inc. common stock.

 

(d)

PSUs granted April 11, 2019 will vest and be delivered in February 2022, after the performance period. These shares are shown at the target level of performance. The actual number of shares to be delivered will be determined at the end of the three-year performance period.

 

  2020 PROXY STATEMENT    39


Table of Contents

LOGO

 

Option Exercises and Stock Vested

The following table summarizes the value received by the NEOs from Stock Options exercised and stock grants vested during 2019:

 

Name   Option Awards     Stock Awards  
  Number of
Shares
Acquired
on  Exercise
(#)
    Value
Realized
on Exercise
($)
   

Number of
Shares
Acquired
on Vesting

(#)(a) (b)

   

Value
Realized
on Vesting

($)

 
         
Jim Fitterling     -       -       103,855       5,467,754  
         
Howard Ungerleider     2,753       121,585       89,458       4,664,529  
         
Peter Holicki     12,341       295,937       41,003       2,069,915