DEF 14A 1 d865428ddef14a.htm DEF 14A DEF 14A
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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

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

ARCHER-DANIELS-MIDLAND COMPANY

 

(Name of Registrant as Specified In Its Charter)

 

 

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

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No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

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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.

 

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ARCHER-DANIELS-MIDLAND COMPANY

77 West Wacker Drive, Suite 4600, Chicago, Illinois 60601

 

 

NOTICE OF ANNUAL MEETING

 

To All Stockholders:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Archer-Daniels-Midland Company, a Delaware corporation, will be held on Thursday, May 7, 2020, commencing at 8:30 A.M. Central Daylight Time. Due to concerns about the coronavirus (COVID-19), this year the annual meeting will be a completely virtual meeting of stockholders. You may attend the online meeting, submit questions, and vote your shares electronically during the meeting via the internet by visiting www.virtualshareholdermeeting.com/ADM2020. To enter the annual meeting you will need the 16-digit control number that is printed in the box marked by the arrow on your Notice of Internet Availability of Proxy Materials. We recommend that you log in at least 15 minutes before the meeting to ensure that you are logged in when the meeting starts. Online check-in will start shortly before the meeting on May 7, 2020. At the annual meeting, you will be asked to consider and vote on the following matters:

 

(1)

To elect directors to hold office until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified;

 

(2)

To ratify the appointment by the Board of Directors of Ernst & Young LLP as independent auditors to audit the accounts of our company for the fiscal year ending December 31, 2020;

 

(3)

To consider an advisory vote on the compensation of our named executive officers;

 

(4)

To approve the 2020 Incentive Compensation Plan; and

 

(5)

To transact such other business as may properly come before the meeting.

 

By Order of the Board of Directors
LOGO
D. C. FINDLAY, SECRETARY

March 25, 2020

 

 

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE

STOCKHOLDER MEETING TO BE HELD ON MAY 7, 2020: THE 2020 LETTER TO STOCKHOLDERS, PROXY STATEMENT, AND 2019 FORM 10-K ARE AVAILABLE AT

https://www.proxy-direct.com/MeetingDocuments/31175/ARCHER-DANIELS-MIDLAND.pdf

 

 


Table of Contents

 

Table of Contents

 

PROXY SUMMARY

  1

GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

  5

PROPOSAL NO. 1 — ELECTION OF DIRECTORS FOR A ONE-YEAR TERM

  7

Director Nominees

  8

Director Experiences, Qualifications, Attributes, and Skills; Board Diversity

  11

Director Nominations from Stockholders

  11

BOARD LEADERSHIP AND OVERSIGHT

  12

Board Leadership Structure

  12

Board Role in Risk Oversight

  13

Sustainability and Corporate Responsibility

  14

Board Role in Overseeing Political Activities

  15

DIRECTOR EVALUATIONS

  16

Board, Committee, and Director Evaluations

  16

INDEPENDENCE OF DIRECTORS

  17

NYSE Independence

  18

Bylaw Independence

  18

Corporate Governance Guidelines

  19

Independent Executive Sessions

  19

INFORMATION CONCERNING COMMITTEES AND MEETINGS

  20

Board Meetings and Attendance at Annual Meeting of Stockholders

  20

Audit Committee

  20

Compensation/Succession Committee

  21

Nominating/Corporate Governance Committee

  22

Sustainability and Corporate Responsibility Committee

  22

Executive Committee

  22

STOCKHOLDER OUTREACH AND ENGAGEMENT; CODE OF CONDUCT

  23

Communications with Directors

  23

Code of Conduct

  23

EXECUTIVE STOCK OWNERSHIP

  24

Executive Officer Stock Ownership

  24

COMPENSATION DISCUSSION AND ANALYSIS

  25

Executive Summary

  26

How Executive Compensation is Determined

  29

Components of Executive Compensation

  30

2019 Executive Compensation Decisions

  32

Peer Group

  39

Changes to Incentive Compensation Plans Beginning in 2020

  40

Benefits

  40

Compensation Policies and Governance

  41

Employment Agreements, Severance, and Change in Control Benefits

  42

Compensation/Succession Committee Report

  43

Compensation/Succession Committee Interlocks and Insider Participation

  43

 

ADM Proxy Statement 2020       i


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EXECUTIVE COMPENSATION

  44

Summary Compensation Table

  44

Grants of Plan-Based Awards During Fiscal Year 2019

  45

Outstanding Equity Awards at Fiscal Year 2019 Year-End

  47

Option Exercises and Stock Vested During Fiscal Year 2019

  48

Pension Benefits

  49

Qualified Retirement Plan

  49

Supplemental Retirement Plan

  50

Nonqualified Deferred Compensation

  51

Termination of Employment and Change in Control Arrangements

  52

CEO Pay Ratio

  55

DIRECTOR COMPENSATION

  56

Director Compensation

  56

Director Stock Ownership Guidelines

  57

EQUITY COMPENSATION PLAN INFORMATION; RELATED TRANSACTIONS

  58

Equity Compensation Plan Information at December  31, 2019

  58

Review and Approval of Certain Relationships and Related Transactions

  58

Certain Relationships and Related Transactions

  59

REPORT OF THE AUDIT COMMITTEE

  60

PROPOSAL NO. 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  62

Fees Paid to Independent Auditors

  62

Audit Committee Pre-Approval Policies

  62

PROPOSAL NO. 3 — ADVISORY VOTE ON EXECUTIVE COMPENSATION

  63

PROPOSAL NO. 4 — APPROVAL OF THE 2020 INCENTIVE COMPENSATION PLAN

  64

SUBMISSION OF STOCKHOLDER PROPOSALS AND OTHER MATTERS

  72

Stockholders with the Same Address

  72

Other Matters

  72

ANNEX A: DEFINITION AND RECONCILIATION OF NON-GAAP MEASURES

  A-1

ANNEX B: ADM INCENTIVE COMPENSATION PLAN

  B-1

 

 

ii       ADM Proxy Statement 2020


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PROXY SUMMARY

 

 

The following is a summary of certain key disclosures in this proxy statement. This is only a summary, and it may not contain all of the information that is important to you. For more complete information, please review this proxy statement in its entirety as well as our 2019 Annual Report on Form 10-K. As used in this proxy statement, ADM or the Company refers to Archer-Daniels-Midland Company. The information contained on adm.com or any other website referred to in this proxy statement is provided for reference only and is not incorporated by reference into this proxy statement.

 

 

 

General Information

See pages 5–6

Meeting: Annual Meeting of Stockholders

Date: Thursday, May 7, 2020

Time: 8:30 A.M. Central Daylight Time

Location: The completely virtual annual meeting will be held at www.virtualshareholdermeeting.com/ADM2020.

Record Date: March 16, 2020

Stock Symbol: ADM

Exchange: NYSE

Common Stock Outstanding: 557,207,815 as of March 16, 2020

Registrar & Transfer Agent: Hickory Point Bank and Trust, fsb

State of Incorporation: Delaware

Corporate Headquarters and Principal Executive Office: 77 West Wacker Drive, Suite 4600,

Chicago, Illinois 60601

Corporate Website: www.adm.com

 

 

Executive Compensation

See pages 44–55

CEO: Juan R. Luciano

CEO 2019 Total Direct Compensation:

• Salary: $1,383,338

Non-Equity Incentive Plan Compensation: $2,898,000

• Long-Term Incentives: $13,641,916

CEO Employment Agreement: No

Change in Control Agreement: No

Stock Ownership Guidelines: Yes

Hedging Policy: Yes

 

Items to Be Voted On

Election of Directors for a One-Year Term

(See pages 7–11)

Ratification of Appointment of Independent Registered Public Accounting Firm (Ernst & Young LLP)

(See page 62)

Advisory Vote on Executive Compensation

(See page 63)

Approval of the 2020 Incentive Compensation Plan

(See page 64)

 

Corporate Governance

See pages 7–23

Director Nominees: 11

• Michael S. Burke (Independent)

• Terrell K. Crews (Independent)

• Pierre Dufour (Independent)

• Donald E. Felsinger (Independent)

• Suzan F. Harrison (Independent)

• Juan R. Luciano

• Patrick J. Moore (Independent)

• Francisco J. Sanchez (Independent)

• Debra A. Sandler (Independent)

• Lei Z. Schlitz (Independent)

• Kelvin R. Westbrook (Independent)

Director Term: One year

Director Election Standard: Majority voting standard for uncontested elections

Board Meetings in 2019: 6

Board Committee Meetings in 2019:

• Audit – 9

• Compensation/Succession – 4

• Nominating/Corporate Governance – 4

• Sustainability and Corporate Responsibility – 3

Supermajority Voting Requirements: No

Stockholder Rights Plan: No

 

 

ADM Proxy Statement 2020       1


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Proxy Summary

Governance Highlights

 

 

Governance Highlights

The Board of Directors views itself as the long-term stewards of ADM. The Board is committed to enhancing the success and value of our company for its stockholders, as well as for other stakeholders such as employees, business partners, and communities. The Board recognizes the importance of good corporate governance and understands that transparent disclosure of its governance practices helps stockholders assess the quality of our company and its management and the value of their investment decisions.

ADM’s corporate governance practices are intended to ensure independence, transparency, management accountability, effective decision making, and appropriate monitoring of compliance and performance. We believe that these strong corporate governance practices, together with our enduring corporate values and ethics, are critical to providing lasting value to the stockholders of our company.

 

 

We use majority voting for uncontested director elections.

 

      

 

10 of our 11 current directors are independent and only
independent directors serve on the Audit, Compensation/
Succession, Nominating/Corporate Governance, and Sustainability and Corporate Responsibility Committees.

 

 

We have an independent Lead Director, selected by the independent directors. The Lead Director provides the Board with independent leadership, facilitates the Board’s independence from management, and has broad powers as described on page 12.

 

      

 

Our independent directors meet in executive session at each regular in-person board meeting.

 

 

We have a policy prohibiting directors and officers from trading in derivative securities of our company, and no NEOs or directors have pledged any company stock.

 

      

 

Significant stock ownership requirements are in place for directors and executive officers.

 

 

The Board and each standing committee annually conduct evaluations of their performance. Directors annually evaluate each other, and these evaluations are used to assess future re-nominations to the Board.

 

      

 

Individuals cannot stand for election as a director once they reach age 75, and our Corporate Governance Guidelines set limits on the number of public company boards on which a director can serve.

 

 

Holders of 10% or more of our common stock have the ability to call a special meeting of stockholders.

 

      

 

Our bylaws include a “proxy access” provision under which a small group of stockholders who has owned at least 3% of our common stock for at least 3 years may submit nominees for up to 20% of the board seats for inclusion in our proxy statement.

 

 

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Proxy Summary

Voting Matters and Board Recommendations

 

 

Voting Matters and Board Recommendations

 

Proposal

Board Voting
    Recommendation    

Page

        Reference        

     

Proposal No. 1 — Election of Directors

FOR 7
     

Proposal No. 2 — Ratification of Appointment of Independent Registered Public Accounting Firm

FOR 62
     

Proposal No. 3 — Advisory Vote on Executive Compensation

FOR 63
     

Proposal No. 4 — Approval of the 2020 Incentive Compensation Plan

FOR 64

 

 

Director Nominee Qualifications and Experience

The following chart provides summary information about each of our director nominees’ qualifications and experiences. More detailed information is provided in each director nominee’s biography beginning on page 8.

 

                 
  Current
or
Recent
CEO
Non-U.S.
Business
Risk
Management
M&A

Government/

Public Policy

Agriculture,
Food, or
Retail
Consumer
Business
Corporate
Governance

Sustainability/

Environmental

                 

Michael S. Burke

🌑 🌑 🌑     🌑      🌑 🌑
                 

Terrell K. Crews

🌑 🌑 🌑 🌑 🌑
                 

Pierre Dufour

🌑 🌑 🌑 🌑 🌑
                 

Donald E. Felsinger

🌑 🌑 🌑 🌑 🌑 🌑 🌑
                 

Suzan F. Harrison

🌑 🌑 🌑 🌑
                 

Juan R. Luciano

🌑 🌑 🌑 🌑 🌑 🌑 🌑
                 

Patrick J. Moore

🌑 🌑 🌑 🌑 🌑 🌑 🌑
                 

Francisco J. Sanchez

🌑 🌑 🌑
                 

Debra A. Sandler

🌑 🌑 🌑 🌑
                 

Lei Z. Schlitz

🌑 🌑 🌑
                 

Kelvin R. Westbrook

🌑 🌑 🌑 🌑 🌑 🌑

 

ADM Proxy Statement 2020       3


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Proxy Summary

Director Nominee Diversity, Age, Tenure, and Independence

 

 

Director Nominee Diversity, Age, Tenure, and Independence

The following charts provide summary information about our director nominees’ personal characteristics, including race/ethnicity, gender, and age, as well as tenure and independence, to illustrate the diversity of perspectives of our director nominees. More detailed information is provided in each director nominee’s biography beginning on page 8.

 

 

LOGO

Diversity 55% Overall Diversity Independence Independent 10 of 11 91% Independent 5 are African American, Asian, or Hispanic Average Age 1 70+ 7 60-69 3 Under 60 62 Years 3 are female Average Tenure 7 Years 3 10+ 2 6-10 5 0-5.

 

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General Information About the Annual Meeting and Voting

 

 

Proxy Statement

GENERAL MATTERS

The Board of Directors asks that you complete the accompanying proxy for the annual stockholders’ meeting. Due to concerns about the coronavirus (COVID-19), this year the meeting will be completely virtual and will be held at the time and web address mentioned in the Notice of Annual Meeting included in these materials. We will be using the “Notice and Access” method of providing proxy materials to stockholders via the internet. We will mail to our stockholders (other than those described below) a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy statement and the 2019 Annual Report on Form 10-K and how to vote electronically via the internet. This notice will also contain instructions on how to request a paper copy of the proxy materials. Stockholders holding shares through the ADM 401(k) and Employee Stock Ownership Plan for Salaried Employees (the “401(k) and ESOP”) and those stockholders who previously have opted out of participation in notice and access procedures will receive a paper copy of the proxy materials by mail or an electronic copy of the proxy materials by email. We are first providing our stockholders with notice and access to, or first mailing or emailing, this proxy statement and a proxy form around March 25, 2020.

We pay the costs of soliciting proxies from our stockholders. We have retained Georgeson LLC to help us solicit proxies. We will pay Georgeson LLC a base shareholder meeting services fee of approximately $24,000 plus reasonable project management fees and expenses for its services. Our employees or employees of Georgeson LLC may also solicit proxies in person or by telephone, mail, or the internet at a cost which we expect will be nominal. We will reimburse brokerage firms and other securities custodians for their reasonable fees and expenses in forwarding proxy materials to their principals.

We have a policy of keeping confidential all proxies, ballots, and voting tabulations that identify individual stockholders. Such documents are available for examination only by the inspectors of election, our transfer agent, and certain employees associated with processing proxy cards and tabulating the vote. We will not disclose any stockholder’s vote except in a contested proxy solicitation or as may be necessary to meet legal requirements.

Our common stockholders of record at the close of business on March 16, 2020, are the only people entitled to notice of the annual meeting and to vote at the meeting. At the close of business on March 16, 2020, we had 557,207,815 outstanding shares of common stock, each share being entitled to one vote on each of the director nominees and on each of the other matters to be voted on at the meeting. Our stockholders and advisors to our company are the only people entitled to attend the annual meeting. We reserve the right to direct stockholder representatives with the proper documentation to an alternative room to observe the meeting.

The annual meeting this year will be a completely virtual meeting of stockholders. Hosting a virtual meeting provides expanded access, improved communication, and cost savings for our stockholders and us and enables participation from any location around the world. Stockholders may submit questions during the annual meeting at www.virtualshareholdermeeting.com/ADM2020, and management will respond to questions in the same way as it would if the company held an in-person meeting. If you have questions during the meeting, you may type them in the dialog box provided at any point during the meeting until the floor is closed to questions.

If you properly execute the enclosed proxy form, your shares will be voted at the meeting. You may revoke your proxy form at any time prior to voting by:

 

(1)

delivering written notice of revocation to our Secretary;

 

(2)

delivering to our Secretary a new proxy form bearing a date later than your previous proxy; or

 

(3)

attending the annual meeting online and voting again (attendance at the online meeting will not, by itself, revoke a proxy).

Under our bylaws, stockholders elect our directors by a majority vote in an uncontested election (one in which the number of nominees is the same as the number of directors to be elected) and by a plurality vote in a contested election (one in which the number of nominees exceeds the number of directors to be elected). Because this year’s election is an uncontested election, each director

 

ADM Proxy Statement 2020       5


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General Information About the Annual Meeting and Voting

Principal Holders of Voting Securities

 

nominee receiving a majority of votes cast will be elected (the number of shares voted “for” a director nominee must exceed the number of shares voted “against” that nominee). Approval of each other proposal presented in the proxy statement requires the affirmative vote of the holders of a majority of the outstanding shares of common stock present, online or by proxy at the meeting and entitled to vote on that matter. Shares not present at the meeting and shares voting “abstain” have no effect on the election of directors. For the other proposals to be voted on at the meeting, abstentions are treated as shares present or represented and voting, and therefore have the same effect as negative votes. Broker non-votes (shares held by brokers who do not have discretionary authority to vote on the matter and have not received voting instructions from their clients) are counted toward a quorum, but are not counted for any purpose in determining whether a matter has been approved.

 

 

Principal Holders of Voting Securities

Based upon filings with the Securities and Exchange Commission (“SEC”), we believe that the following stockholders are beneficial owners of more than 5% of our outstanding common stock shares:

 

Name and Address of Beneficial Owner

                        Amount                                          Percent  Of Class                
     

 

State Farm Mutual Automobile Insurance

Company and related entities

One State Farm Plaza, Bloomington, IL 61710

 

 

51,455,676(1)

 

 

9.23

 

     

 

The Vanguard Group

100 Vanguard Blvd., Malvern, PA 19355

 

 

44,946,621(2)

 

 

8.06

 

     

 

BlackRock, Inc.

55 East 52nd Street, New York, NY 10055

 

 

38,454,597(3)

 

 

6.90

 

     

 

Corporation

One Lincoln Street, Boston, MA 02111

 

 

37,082,871 (4)

 

 

6.66

 

(1) Based on a Schedule 13G filed with the SEC on January 27, 2020, State Farm Mutual Automobile Insurance Company and related entities have sole voting and dispositive power with respect to 51,214,613 shares and shared voting and dispositive power with respect to 241,063 shares.

(2) Based on a Schedule 13G/A filed with the SEC on February 12, 2020, The Vanguard Group has sole voting power with respect to 821,863 shares, sole dispositive power with respect to 43,993,781 shares, shared voting power with respect to 174,423 shares, and shared dispositive power with respect to 952,840 shares.

(3) Based on a Schedule 13G/A filed with the SEC on February 5, 2020, BlackRock, Inc. has sole voting power with respect to 32,389,168 shares and sole dispositive power with respect to 38,454,597 shares.

(4) Based on a Schedule 13G filed with the SEC on February 13, 2020, State Street Corporation has shared voting power with respect to 33,876,563 shares and shared dispositive power with respect to 37,048,786 shares.

 

6       ADM Proxy Statement 2020


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Proposal No. 1

 

 

Proposal No. 1 — Election of Directors for a One-Year Term

The Board of Directors has fixed the size of the current board at eleven. All eleven nominees proposed for election to the Board of Directors are currently members of the Board and have been elected previously by our stockholders. Unless you provide different directions, we intend for board-solicited proxies (like this one) to be voted for the nominees named below.

If elected, the nominees would hold office until the next annual stockholders’ meeting and until their successors are elected and qualified. If any nominee for director becomes unable to serve as a director, the persons named as proxies may vote for a substitute who will be designated by the Board of Directors. Alternatively, the Board of Directors could reduce the size of the board. The Board has no reason to believe that any nominee will be unable to serve as a director.

Our bylaws require that each director be elected by a majority of votes cast with respect to that director in an uncontested election (where the number of nominees is the same as the number of directors to be elected). In a contested election (where the number of nominees exceeds the number of directors to be elected), the plurality voting standard governs the election of directors. Under the plurality standard, the number of nominees equal to the number of directors to be elected who receive more votes than the other nominees are elected to the Board, regardless of whether they receive a majority of the votes cast. Whether an election is contested or not is determined as of the day before we first mail our meeting notice to stockholders. This year’s election was determined to be an uncontested election, and the majority vote standard will apply. If a nominee who is serving as a director is not elected at the annual meeting, Delaware law provides that the director would continue to serve on the Board as a “holdover director.” However, under our Corporate Governance Guidelines, each director annually submits an advance, contingent, irrevocable resignation that the Board may accept if the director fails to be elected through a majority vote in an uncontested election. In that situation, the Nominating/Corporate Governance Committee would make a recommendation to the Board about whether to accept or reject the resignation. The Board will act on the Nominating/Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days after the date the election results are certified. The Board will nominate for election or re-election as director, and will elect as directors to fill vacancies and new directorships, only candidates who agree to tender the form of resignation described above. If a nominee who was not already serving as a director fails to receive a majority of votes cast at the annual meeting, Delaware law provides that the nominee does not serve on the Board as a “holdover director.”

The information below describes the nominees, their ages, positions with our company, principal occupations, current directorships of other publicly owned companies, directorships of other publicly owned companies held within the past five years, the year in which each first was elected as a director, and the number of shares of common stock beneficially owned as of March 16, 2020, directly or indirectly. Unless otherwise indicated, and subject to community property laws where applicable, we believe that each nominee named in the table below has sole voting and investment power with respect to the shares indicated as beneficially owned. Unless otherwise indicated, all of the nominees have been executive officers of their respective companies or employed as otherwise specified below for at least the last five years.

The Board of Directors recommends a vote FOR the election of the eleven nominees named below as directors. Proxies solicited by the Board will be so voted unless stockholders specify a different choice.

 

ADM Proxy Statement 2020       7


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Proposal No. 1 — Election of Directors for a One-Year Term

Director Nominees

 

DIRECTOR NOMINEES

 

Michael S. Burke

 

LOGO  

Age: 56

Director since: 2018

Common stock owned: 6,862(1)

Percent of class: *

Principal Occupation or Position: Chairman and Chief Executive Officer of AECOM (a global infrastructure firm) since March 2015; Chief

Executive Officer of AECOM from March 2014 to March 2015; President of AECOM from 2011 to March 2014.

Directorships of Other Publicly-Owned Companies: Chairman of AECOM.

Qualifications and Career Highlights: Mr. Burke is currently Chief Executive Officer and Chairman of the Board of AECOM, an infrastructure firm that designs, builds, finances, and operates infrastructure assets in more than 150 countries. Mr. Burke joined AECOM in October 2005 and has held several leadership positions, including Senior Vice President, Corporate Strategy, Chief Corporate Officer, and Chief Financial Officer. Prior to joining AECOM, Mr. Burke was with the accounting firm KPMG LLP, serving in various leadership positions. Mr. Burke brings to the Board of Directors his deep expertise in accounting and finance, his experience as a CEO, and his involvement in projects throughout the world.

Pierre Dufour

 

LOGO  

Age: 64

Director since: 2010

Common stock owned: 30,285(3)

Percent of class: *

Former Principal Occupation or Position: Senior Executive Vice President of Air Liquide Group (a leading provider of gases for industry, health, and

the environment) from 2007 – July 2017.

Directorships of Other Publicly-Owned Companies: Director of Air Liquide S.A. Director of National Grid plc. within the past five years.

 

 

 

Qualifications and Career Highlights: Prior to retiring in July 2017, Mr. Dufour served as Senior Executive Vice President of Air Liquide Group, the world leader in gases for industry, health, and the environment. Having joined Air Liquide in 1997, Mr. Dufour was named Senior Executive Vice President in 2007. Mr. Dufour’s tenure with Air Liquide Group included supervision of operations in the Americas, Africa-Middle East, and Asia-Pacific zones, and he also was responsible for Air Liquide’s industrial World Business Lines, Engineering and Construction. Mr. Dufour was elected to the board of Air Liquide S.A. in May 2012. Mr. Dufour’s qualifications to serve as a director of our company include his substantial leadership, engineering, operations management, and international business experience.

 

 

Terrell K. Crews

 

LOGO  

Age: 64

Director since: 2011

Common stock owned: 35,608(2)

Percent of class: *

Former Principal Occupation or Position: Executive Vice President, Chief Financial Officer and Vegetable Business Chief Executive Officer of

Monsanto Company (an agricultural company) from 2007 – 2009.

Directorships of Other Publicly-Owned Companies: Director of WestRock Company and Hormel Foods Corporation.

 

Qualifications and Career Highlights: Mr. Crews retired from Monsanto Company in 2009. He served as Executive Vice President, Chief Financial Officer and Vegetable Business CEO for Monsanto Company from 2007 to 2009, and Executive Vice President and Chief Financial Officer from 2000 to 2007. Mr. Crews brings to the Board of Directors extensive expertise in finance and related functions, as well as significant knowledge of corporate development, agri-business, and international operations.

Donald E. Felsinger

 

LOGO  

Age: 72

Director since: 2009

Common stock owned: 126,676(4)

Percent of class: *

Former Principal Occupation or Position: Executive Chairman of Sempra Energy (an energy services company) from 2011 – December 2012.

Directorships of Other Publicly-Owned Companies: Lead Director of Northrop Grumman Corporation. Director of Gannett Co., Inc. within the past five years.

Qualifications and Career Highlights: Mr. Felsinger brings extensive experience as a board member, chair and CEO with Fortune 500 companies. Mr. Felsinger retired as Executive Chairman of Sempra Energy in December 2012. His leadership roles at Sempra Energy and other companies have allowed him to provide the Board of Directors with his expertise in mergers and acquisitions, environmental matters, corporate governance, strategic planning, engineering, finance, human resources, compliance, risk management, international business, and public affairs.

 

 

8       ADM Proxy Statement 2020


Table of Contents

Proposal No. 1 — Election of Directors for a One-Year Term

Director Nominees

 

Suzan F. Harrison

 

LOGO  

Age: 62

Director since: 2017

Common stock owned: 10,893(1)

Percent of class: *

Former Principal Occupation or Position: President of Global Oral Care at Colgate-Palmolive Company (a global household and consumer

products company) from 2011 – 2019; President of Hill’s Pet Nutrition Inc. North America from 2009 – 2011; Vice President, Marketing for Colgate U.S. from 2006 – 2009.

Directorships of Other Publicly-Owned Companies: Director of WestRock Company.

Qualifications and Career Highlights: Ms. Harrison retired in 2019 as the President of Global Oral Care at Colgate-Palmolive Company, a worldwide consumer products company focused on the production, distribution, and provision of household, health care, and personal products. She was previously President of Hill’s Pet Nutrition Inc. North America, a position she held from 2009 to 2011. Additionally, she served as Vice President, Marketing for Colgate U.S. from 2006 to 2009, and Vice President and General Manager of Colgate Oral Pharmaceuticals, North America and Europe from 2005 to 2006. Previously, Ms. Harrison held a number of leadership roles at Colgate commencing in 1983. Ms. Harrison’s qualifications to serve as a director of our company include her extensive leadership, management, operations, marketing, and international experience.

Patrick J. Moore

 

LOGO  

Age: 65

Director since: 2003

Common stock owned: 64,497(1)

Percent of class: *

Principal Occupation or Position: President and Chief Executive Officer of PJM Advisors, LLC (an investment and advisory firm) since 2011; Chief

Executive Officer of Smurfit-Stone Container Corporation from
2010 – 2011(6).

Directorships of Other Publicly-Owned Companies: Chairman of Energizer Holdings, Inc.

 

Qualifications and Career Highlights: Mr. Moore retired as Chief Executive Officer of Smurfit-Stone Container Corporation in 2011, and held positions of increasing importance at Smurfit-Stone and related companies since 1987. Prior to 1987, Mr. Moore served 12 years at Continental Bank in various corporate lending, international banking, and administrative positions. Mr. Moore brings to the Board of Directors his substantial experience in leadership, banking and finance, strategy development, sustainability, and operations management.

 

 

Juan R. Luciano

 

LOGO  

Age: 58

Director since: 2014

Common stock owned: 2,777,280 (5)

Percent of class: *

Principal Occupation or Position: Chairman of the Board, Chief Executive Officer and President since January 2016; Chief Executive Officer and

President from January 2015 - January 2016; President and Chief Operating Officer from February 2014 – December 2014; Executive Vice President and Chief Operating Officer from 2011 – February 2014.

Directorships of Other Publicly-Owned Companies: Director of Eli Lilly and Company.

Qualifications and Career Highlights: Mr. Luciano joined ADM in 2011 as executive vice president and chief operating officer, was named president in February 2014, was named Chief Executive Officer in January 2015, and was named Chairman of the Board in January 2016. Mr. Luciano has overseen the commercial and production activities of ADM’s Corn, Oilseeds, and Agricultural Services businesses, as well as its research, project management, procurement, and risk management functions. He also has overseen the company’s operational excellence initiatives, which seek to improve productivity and efficiency companywide. He has led the company’s efforts to improve its capital, cost, and cash positions. Previously, Mr. Luciano was with The Dow Chemical Company, where he last served as executive vice president and president of the performance division.

Francisco J. Sanchez

 

LOGO  

Age: 60

Director since: 2014

Common stock owned: 25,587(7)

Percent of class: *

Principal Occupation or Position: Senior Managing Director of Pt. Capital (a private equity firm) and Chairman of CNS Global Advisors (an

international trade and investment consulting firm) since November 2013; Under Secretary for International Trade, U.S. Department of Commerce from 2010 – November 2013.

Directorships of Other Publicly-Owned Companies: Director of Good Resources Holdings Ltd. within the past five years.

Qualifications and Career Highlights: Mr. Sanchez is the founder and chairman of the board of CNS Global Advisors, a firm focused on international trade and investment. In addition, he is a Senior Managing Director at Pt. Capital, a private equity firm focused on responsible investments in the Pan Arctic. In 2009, President Obama nominated Mr. Sanchez to be the Under Secretary for International Trade at the U.S. Department of Commerce. He was later unanimously confirmed by the U.S. Senate. Mr. Sanchez served in that role until November 2013. There he was responsible for strengthening the competitiveness of U.S. industry, promoting trade and investment, enforcing trade laws and agreements, and implementing the President’s National Export Initiative. Mr. Sanchez brings to the Board of Directors substantial experience in public policy, international trade, and international investment.

 

 

ADM Proxy Statement 2020       9


Table of Contents

Proposal No. 1 — Election of Directors for a One-Year Term

Director Nominees

 

Debra A. Sandler

 

LOGO  

Age: 60

Director since: 2016

Common stock owned: 14,681(1)

Percent of class: *

Principal Occupation or Position: President of LaGrenade Group, LLC (a marketing consulting firm) since October 2015; Chief Health and

Wellbeing Officer of Mars, Inc. from July 2014 – July 2015; President, Chocolate, North America of Mars, Inc. from April 2012 – July 2014; Chief Consumer Officer of Mars Chocolate North America from 2009 – March 2012.

Directorships of Other Publicly-Owned Companies: Director of Gannett Co., Inc.

Qualifications and Career Highlights: Ms. Sandler is currently President of LaGrenade Group, LLC, a marketing consultancy she founded to advise consumer packaged goods companies operating in the Health and Wellness space. She was previously Chief Health and Wellbeing Officer of Mars, Inc., a position she held from July 2014 to July 2015. Additionally, she served as President, Chocolate, North America from April 2012 to July 2014, and Chief Consumer Officer, Mars Chocolate North America from November 2009 to March 2012. Prior to joining Mars, Ms. Sandler spent 10 years with Johnson & Johnson in a variety of leadership roles. She currently serves on the board of Gannett Co., Inc. Ms. Sandler has strong marketing and operating experience and a proven record of creating, building, enhancing, and leading well-known consumer brands as a result of the leadership positions she has held with Mars, Johnson & Johnson, and PepsiCo.

Kelvin R. Westbrook

 

LOGO  

Age: 64

Director since: 2003

Common stock owned: 47,641(1)

Percent of class: *

Principal Occupation or Position: President and Chief Executive Officer of KRW Advisors, LLC (a consulting and advisory firm) since 2007;

Chairman and Chief Strategic Officer of Millennium Digital Media Systems, L.L.C. (a broadband services company) (“MDM”)(8) from 2006 – 2007.

Directorships of Other Publicly-Owned Companies: Director of T-Mobile USA, Inc. and Mosaic Company; Lead Independent Trust Manager of Camden Property Trust. Director of Stifel Financial Corp. within the past five years.

Qualifications and Career Highlights: Mr. Westbrook brings legal, media, and marketing expertise to the Board of Directors. He is a former partner of a national law firm, was the President, Chief Executive Officer, and co-founder of two large cable television and broadband companies, and was or is a member of the board of several high-profile companies, including T-Mobile USA, Inc. and the National Cable Satellite Corporation, better known as C-SPAN. Mr. Westbrook also previously served on the board of a multi-billion-dollar not-for-profit healthcare services company.

 

 

Lei Z. Schlitz

 

LOGO  

Age: 53

Director since: 2019

Common stock owned: 3,137(1)

Percent of class: *

Principal Occupation or Position: Executive Vice President, Automotive OEM at Illinois Tool Works Inc. (a global multi-industrial manufacturer) since

January 2020; Executive Vice President, Food Equipment at Illinois Tool Works from September 2015 – January 2020; Group President, Worldwide Ware-Wash, Refrigeration, and Weigh/Wrap Businesses at Illinois Tool Works from 2011 – December 2015; Vice President, Research & Development, and Head of ITW Technology Center at Illinois Tool Works from 2008 – 2011.

Qualifications and Career Highlights: Dr. Schlitz is currently Executive Vice President of the Automotive OEM segment at Illinois Tool Works Inc., a publicly held, global multi-industrial manufacturer. She oversees a global business involving the design and manufacture of fasteners, interior and exterior components, and powertrain and braking systems for automotive OEMs and their top-tier suppliers around the world. Previously, she has served in leadership roles at Illinois Tool Works, serving as Executive Vice President of the Food Equipment segment, a global commercial food equipment business, serving institutional, industrial, restaurant, and retail customers around the world, and the group president of various food equipment businesses and leading research and development efforts. Dr. Schlitz brings extensive leadership experience in strategy development, growth initiatives, and operational excellence.

 

 

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Table of Contents

Proposal No. 1 — Election of Directors for a One-Year Term

Director Experiences, Qualifications, Attributes, and Skills; Board Diversity

 

 

* Less than 1% of outstanding shares

(1) Consists of stock units allocated under our Stock Unit Plan that are deemed to be the equivalent of outstanding shares of common stock for valuation purposes.

(2) Includes 34,848 stock units allocated under our Stock Unit Plan.

(3) Includes 22,585 stock units allocated under our Stock Unit Plan.

(4) Includes 66,676 stock units allocated under our Stock Unit Plan and 60,000 shares held in trust.

(5) Includes 440,574 shares held in trust, 238 shares held by a family-owned limited liability company, and 1,766,494 shares that are unissued but are subject to stock options exercisable within 60 days.

(6) Smurfit-Stone Container Corporation and its U.S. and Canadian subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in January 2009.

(7) Includes 21,217 stock units allocated under our Stock Unit Plan.

(8) Broadstripe, LLC (formerly MDM) and certain of its affiliates filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in January 2009, approximately fifteen months after Mr. Westbrook resigned from MDM.

 

 

DIRECTOR EXPERIENCES, QUALIFICATIONS, ATTRIBUTES, AND SKILLS; BOARD DIVERSITY

In assessing an individual’s qualifications to become a member of the Board, the Nominating/Corporate Governance Committee may consider various factors including education, experience, judgment, independence, integrity, availability, and other factors that the Committee deems appropriate. The Nominating/Corporate Governance Committee strives to recommend candidates that complement the current board members and other proposed nominees so as to further the objective of having a board that reflects a diversity of background and experience with the necessary skills to effectively perform the functions of the Board and its committees. In addition, the Committee considers personal characteristics of nominees and current board members, including race, gender, and geographic origin, in an effort to obtain a diversity of perspectives on the Board.

The specific experience, qualifications, attributes, and skills that qualify each of our directors to serve on the Board are described in the biographies above and in the Proxy Summary under “Director Nominee Qualifications and Experience” on page 3 and “Director Nominee Diversity, Age, Tenure, and Independence” on page 4.

DIRECTOR NOMINATIONS FROM STOCKHOLDERS

The Nominating/Corporate Governance Committee will consider nominees recommended by a stockholder, provided that the stockholder submits the nominee’s name in a written notice delivered to our Secretary at our principal executive offices not less than 60 nor more than 90 days prior to the anniversary date of the immediately preceding annual stockholders’ meeting. However, if the annual meeting is called for a date that is not within 30 days before or after such anniversary date, the notice must be received at our principal executive offices not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made (whichever first occurs). Different notice delivery requirements may apply if the number of directors to be elected at an annual meeting is being increased, and we do not make a public announcement naming all of the nominees or specifying the size of the increased board at least 100 days prior to the first anniversary of the preceding year’s annual meeting. Any notice of a stockholder nomination must set forth the information required by Section 1.4(c) of our bylaws, and must be accompanied by a written consent from the proposed nominee to being named as a nominee and to serve as a director if elected, a written representation and agreement from the proposed nominee attesting to certain facts set forth in Section 1.4(c)(2) of our bylaws, and a written statement from the proposed nominee as to whether he or she intends, if elected, to tender the advance, contingent, irrevocable resignation that would become effective should the individual fail to receive the required vote for re-election at the next meeting of stockholders. Stockholders may also have the opportunity to include nominees in our proxy statement by complying with the requirements set forth in Section 1.15 of our bylaws. All candidates, regardless of the source of their recommendation, are evaluated using the same criteria.

 

 

ADM Proxy Statement 2020       11


Table of Contents

Board Leadership and Oversight

 

 

Board Leadership Structure

Our company’s Board of Directors does not have a current requirement that the roles of Chief Executive Officer and Chairman of the Board be either combined or separated, because the Board believes it is in the best interest of our company to make this determination based on the position and direction of the company and the constitution of the Board and management team. The Board regularly evaluates whether the roles of Chief Executive Officer and Chairman of the Board should be combined or separated. The Board’s implementation of a careful and seamless succession plan over the past several years demonstrates that the Board takes seriously its responsibilities under the Corporate Governance Guidelines to determine who should serve as Chairman at any point in time in light of the specific circumstances facing our company. After careful consideration, the Board has determined that having Mr. Luciano, our company’s Chief Executive Officer, serve as Chairman is in the best interest of our stockholders at this time. The Chief Executive Officer is responsible for the day-to-day management of our company and the development and implementation of our company’s strategy, and has access to the people, information, and resources necessary to facilitate board function. Therefore, the Board believes at this time that combining the roles of Chief Executive Officer and Chairman contributes to an efficient and effective board.

The independent directors elect a Lead Director at the Board’s annual meeting. Mr. Felsinger is currently serving as Lead Director. The Board believes that having an independent Lead Director provides the Board with independent leadership and facilitates the independence of the Board from management. The Nominating/Corporate Governance Committee regularly evaluates the responsibilities of the Lead Director and considers current trends regarding independent board leadership. In the last few years, the Board has enhanced the Lead Director’s responsibilities, as set forth in the Corporate Governance Guidelines, in connection with determining performance criteria for evaluating the Chief Executive Officer, evaluating the Board, committees, and individual directors, and planning for management succession. In accordance with our Corporate Governance Guidelines, the Lead Director: (i) presides at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors, and regularly meets with the Chairman and Chief Executive Officer for discussion of appropriate matters arising from these sessions; (ii) coordinates the activities of the other independent directors and serves as liaison between the Chairman and the independent directors; (iii) consults with the Chairman and approves all meeting agendas, schedules, and information provided to the Board, and may, from time to time, invite corporate officers, other employees, and advisors to attend Board or committee meetings whenever deemed appropriate; (iv) interviews, along with the Chairman and the Chair and members of the Nominating/Corporate Governance Committee, all director candidates and makes recommendations to the Nominating/Corporate Governance Committee; (v) advises the Nominating/Corporate Governance Committee on the selection of members of the board committees; (vi) advises the board committees on the selection of committee chairs; (vii) works with the Chairman and Chief Executive Officer to propose a schedule of major discussion items for the Board; (viii) guides the Board’s governance processes; (ix) provides leadership to the Board if circumstances arise in which the role of the Chairman or Chief Executive Officer may be, or may be perceived to be, in conflict; (x) has the authority to call meetings of the independent directors; (xi) if requested by major stockholders, ensures that he or she is available for consultation and direct communication; (xii) leads the non-management directors in determining performance criteria for evaluating the Chief Executive Officer and coordinates the annual performance review of the Chief Executive Officer; (xiii) works with the Chair of the Compensation/Succession Committee to guide the Board’s discussion of management succession plans; (xiv) works with the Chair and members of the Nominating/Corporate Governance Committee to facilitate the evaluation of the performance of the Board, committees, and individual directors; (xv) works with the Chair and members of the Sustainability and Corporate Responsibility Committee to set sustainability and corporate responsibility objectives; and (xvi) performs such other duties and responsibilities as the Board may determine.

In addition to electing a Lead Director, our independent directors facilitate the Board’s independence by meeting frequently as a group and fostering a climate of transparent communication. The high level of contact between our Lead Director and our Chairman between board meetings and the specificity contained in the Board’s delegation of authority parameters also serve to foster effective board leadership.

 

12       ADM Proxy Statement 2020


Table of Contents

Board Leadership and Oversight

Board Role in Risk Oversight

 

 

Board Role in Risk Oversight

Management is responsible for day-to-day risk assessment and mitigation activities, and our company’s Board of Directors is responsible for risk oversight, focusing on our company’s overall risk management strategy, our company’s degree of tolerance for risk, and the steps management is taking to manage our company’s risks. While the Board as a whole maintains the ultimate oversight responsibility for risk management, the committees of the Board can be assigned responsibility for risk management oversight of specific areas. The Audit Committee currently maintains responsibility for overseeing our company’s enterprise risk management process and regularly discusses our company’s major risk exposures, the steps management has taken to monitor and control such exposures, and guidelines and policies to govern our company’s risk assessment and risk management processes. The Audit Committee periodically reports to the Board of Directors regarding significant matters identified with respect to the foregoing.

Management has established an Enterprise Risk Management Committee consisting of a Chief Risk Officer and personnel representing multiple functional and regional areas within our company, with broad oversight of the risk management process.

 

 

BOARD OF DIRECTORS

 

                                      
                                       

Audit Committee

 

•  assists the Board in fulfilling its oversight responsibility to the stockholders relating to the company’s major risk exposures

 

•  oversees the company’s enterprise risk management process

 

•  regularly discusses the steps management has taken to monitor and control risk exposure

 

•  regularly reports to the Board regarding significant matters identified

   

Nominating/Corporate

Governance Committee

 

•  assigns oversight of specific areas of risk to other committees

 

•  recommends director nominees who it believes will capably assess and monitor risk

   

Compensation/ Succession Committee

 

•  assesses potential risks associated with compensation decisions

 

•  engages an independent outside consultant every other year to review the company’s compensation programs and evaluate the risks in such programs; the consultant attends all committee meetings to advise the committee

   

Sustainability and

Corporate

Responsibility

Committee

 

•  has oversight responsibility for sustainability and corporate responsibility matters, including workplace safety, process safety, environmental, social well-being, diversity and inclusion, corporate giving, community relations, compliance with sustainability and corporate responsibility laws and regulations, and ADM’s performance relating to sustainability and corporate responsibility goals and industry benchmarks

 

 

 

SENIOR MANAGEMENT

 

                    
                                          
Enterprise Risk Management Committee

 

•  ensures implementation and maintenance of a process to identify, evaluate, and prioritize risks to our company’s objectives

 

•  ensures congruence of risk decisions with our company’s values, policies, procedures, measurements, and incentives or disincentives

 

•  supports the integration of risk assessment and controls into mainstream business processes, planning, and decision-making

    

 

•  identifies roles and responsibilities across our company in regard to risk assessment and control functions

 

•  promotes consistency and standardization in risk identification, reporting, and controls across our company

 

•  ensures sufficient information capabilities and information flow to support risk identification and controls and alignment of technology assets

    

 

•  regularly evaluates the overall design and operation of the risk assessment and control process, including development of relevant metrics and indicators

 

•  reports regularly to senior management and the Board regarding the above-described processes and the most significant risks to our company’s objectives

 

ADM Proxy Statement 2020       13


Table of Contents

Board Leadership and Oversight

Sustainability and Corporate Responsibility

 

 

Sustainability and Corporate Responsibility

Our commitment to change and growth goes beyond our products and services. At ADM, sustainable practices and a focus on environmental responsibility are not separate from our primary business: they are integral to the work we do every day to serve customers and create value for stockholders. We have aligned our efforts with the United Nations (UN) Sustainable Development Goals which serve as a road map to achieve a better future for all. Specifically, we are focusing our efforts toward Zero Hunger, Clean Water and Sanitation, Climate Action, and Life On Land.

Our sustainability efforts are led by our Chief Sustainability Officer, who is supported by regional sustainability teams. Sustainability-related risks are reviewed quarterly through the Enterprise Risk Management process. In 2019, our company’s Board of Directors created a Sustainability and Corporate Responsibility Committee. This committee has oversight of sustainability and corporate responsibility matters. Sustainability topics are also presented to the full Board.

See the table below for additional information and highlights related to our sustainability efforts.

 

SUSTAINABILITY HIGHLIGHTS
Climate Action    Clean Water and Sanitation

•  We address climate change through three main pathways:

 

•  renewable product and process innovations, such as our carbon sequestration project in Decatur, Illinois,

 

•  supply chain commitments, such as our Commitment to No-Deforestation, and

 

•  a strategic approach to operational excellence which emphasizes enhancing the efficiency of our production plants throughout our global operations, including through a centralized energy management team that enables us to identify and share successful programs across business or geographic regions.

 

•  See the charts below illustrating our progress toward our greenhouse gas emissions and energy intensity goals:

 

LOGO

  

•  We aim to conserve water and improve water quality through:

 

•  supply chain projects specifically focusing on water conservation and improving water quality,

 

•  water-reduction efforts and efficiency improvement projects in our own operations, which have resulted in a reduction of 2.6 billion gallons of water per year, and

 

•  the Ceres and World Wildlife Fund AgWater Challenge, through which we have set measurable, time-bound commitments to mitigate water risks, reduce water impacts associated with key commodities, and provide support and education to growers about water stewardship practices.

 

•  See the chart below illustrating our progress toward our water-reduction goals:

 

LOGO

 

14       ADM Proxy Statement 2020


Table of Contents

Board Leadership and Oversight

Board Role in Overseeing Political Activities

 

Zero Hunger    Life On Land

•  We support the UN efforts to eliminate world hunger by connecting the harvest to the home:

 

•  with a vast and diverse global value chain that includes approximately 480 crop procurement locations, approximately 350 ingredient manufacturing facilities, approximately 55 innovation centers, and the world’s premier crop transportation network,

 

•  through our corporate social investment program, ADM Cares, which supports food security and hunger relief projects globally,

 

•  through sustainable sourcing, certification and sustainable agriculture programs across the globe, and

 

•  in 2019, through an ADM Cares grant, we committed $1M to help create and implement an 18-month program to fight hunger for 50,000 people in Ethiopia and Kenya with a focus on women and children.

  

•  We are a responsible steward to our natural resources:

 

•  In 2015, we committed to no deforestation, no planting on peat, and no exploitation (No DPE) in our palm and South American soy supply chains through our Commitment to No-Deforestation.

 

•  In Brazil, we remain committed to the Amazon Soy Moratorium, and in the Brazilian Cerrado, we have digitally mapped 100% of our direct supply chain in the 25 municipalities at the greatest risk for land conversion.

 

•  We report our progress with respect to our No DPE efforts to the public at www.adm.com/progresstracker.

 

•  Over 800,000 acres of our supply chain is involved in sustainable agriculture initiatives.

 

•  In Illinois, ADM supported the S.T.A.R. program for growers which tripled its enrollment goal in 2019.

 

•  We require all ADM colleagues and suppliers to comply with ADM’s Human Rights Policy.

 

•  In 2019, we completed a human rights risk assessment for our global commodity supply chains.

For more information, please review our Corporate Sustainability Report, found at www.adm.com/sustainability.

 

 

Board Role in Overseeing Political Activities

 

The Board of Directors believes that participation in the political process is important to our business. We and our political action committee (ADMPAC) therefore support candidates for political office and organizations that share our pro-growth vision, our aspirations for the future of global agriculture, and our commitment to the people who depend on it for their lives and livelihoods. Decisions to support particular candidates and/or organizations are subject to fixed policies and determined by the company’s best interests, not the personal political preferences of our company’s executives. ADMPAC submits to the Federal Election Commission (FEC) regular, detailed reports on all federal political contributions, which reports are available to the public on the FEC’s website. Similarly, contributions to state candidates are disclosed to relevant state authorities and typically disclosed on individual states’ websites.

In addition to our contributions to individual candidates for public office and candidate committees, we also support a small number of so-called “527” groups, including the Democratic Governors Association, the Republican Governors Association, Ag America, and the Republican State Leadership Committee. We have not supported independent political expenditures or 501(c)(4) organizations. Finally, we have memberships in several industry, trade, and business associations representing agriculture and the business community. If a trade association engages in political activity, the amount of dues associated with this political advocacy is reported in our quarterly LD2 filings.

We engage in a centralized, deliberative process when making decisions about the company’s political participation to ensure that it complies with all applicable laws and makes appropriate disclosures. Contributions of greater than $1,000 typically require the approval of the board of directors of ADMPAC, a political action committee funded by our employees’ voluntary contributions. The ADMPAC board of directors is chaired by the vice president of state government relations and composed of employees who represent various areas of the company. Contributions of less than $1,000 may be authorized by the company’s vice president of government relations and vice president of state government relations.

The Board of Directors provides oversight of ADMPAC’s and the company’s political activities, political contributions, and compliance with relevant laws. At each quarterly board meeting, ADM management provides the Board of Directors with a detailed report on our political contributions in the previous quarter. Any member of the Board may obtain further detailed information concerning political contributions, trade associations, compliance with federal and state laws, or any other related topic.

For more information on ADM’s political policies and activities, please see https://www.adm.com/our-company/us-political-contributions.

 

 

ADM Proxy Statement 2020       15


Table of Contents

Director Evaluations

 

 

Board, Committee, and Director Evaluations

The Board believes that a robust annual evaluation process is a critical part of its governance practices. Accordingly, the Nominating/Corporate Governance Committee oversees an annual evaluation of the performance of the Board of Directors, each committee of the Board, and each individual director. The Nominating/Corporate Governance Committee approves written evaluation questionnaires which are distributed to each director. The results of each written evaluation are provided to, and compiled by, an outside firm. Individual directors are evaluated by their peers in a confidential process. Our Lead Director works with the Chair and members of the Nominating/Corporate Governance Committee to facilitate the evaluation of the performance of the Board, committees, and individual directors, and delivers and discusses individual evaluation results with each director. The Chair of the Nominating/Corporate Governance Committee delivers and discusses the Lead Director’s individual evaluation with him or her. Results of the performance evaluations of the committees and the Board are discussed at appropriate committee meetings and with the full board.

The Board utilizes the results of these evaluations in making decisions on board agendas, board structure, committee responsibilities and agendas, and continued service of individual directors on the board.

 

LOGO

Evaluation questionnaires are distributed Outside firm collects results Results are delivered and discussed with each director Other evaluations are discussed at committee meetings and with the full board

 

16       ADM Proxy Statement 2020


Table of Contents

Independence of Directors

 

 

Independence of Directors

The Board of Directors has reviewed business and charitable relationships between our company and each non-employee director and director nominee to determine compliance with the NYSE standards and our bylaw standards, each described below, and to evaluate whether there are any other facts or circumstances that might impair a director’s or nominee’s independence. Based on that review, the Board has determined that ten of its eleven current members, Messrs. Burke, Crews, Dufour, Felsinger, Moore, Sanchez, and Westbrook, Ms. Harrison, Ms. Sandler, and Dr. Schlitz are independent. Mr. Luciano is not independent under the NYSE or bylaw standards because of his employment with us.

In determining that Mr. Burke is independent, the Board considered that, in the ordinary course of business, AECOM, of which Mr. Burke is Chairman and Chief Executive Officer, sold certain services to our company and purchased various products from our company on an arm’s-length basis during the fiscal year ended December 31, 2019. The Board determined that this arrangement did not exceed the NYSE’s threshold of 2.0% of AECOM’s consolidated gross revenues, that Mr. Burke does not have a direct or indirect material interest in such transactions, and that such transactions do not impair Mr. Burke’s independence.

In determining that Mr. Crews is independent, the Board considered that, in the ordinary course of business, WestRock Company, of which Mr. Crews is a director, purchased various products from our company and sold various products to our company and that Hormel Foods Corporation, of which Mr. Crews is a director, purchased certain commodity products from our company, all on an arm’s-length basis during the fiscal year ended December 31, 2019. The Board determined that these arrangements did not exceed the NYSE’s threshold of 2.0% of WestRock Company’s or Hormel Foods Corporation’s consolidated gross revenues, respectively, that Mr. Crews does not have a direct or indirect material interest in such transactions, and that such transactions do not impair Mr. Crews’ independence.

In determining that Mr. Dufour is independent, the Board considered that, in the ordinary course of business, Air Liquide Group, of which Mr. Dufour is a director, sold certain chemicals to our company on an arm’s-length basis during the fiscal year ended December 31, 2019. The Board determined that this arrangement did not exceed the NYSE’s threshold of 2.0% of Air Liquide Group’s consolidated gross revenues, that Mr. Dufour does not have a direct or indirect material interest in such transactions, and that such transactions do not impair Mr. Dufour’s independence.

In determining that Ms. Harrison is independent, the Board considered that, in the ordinary course of business, WestRock Company, of which Ms. Harrison is a director, purchased various products from our company and sold various products to our company, and that Colgate-Palmolive Company, of which Ms. Harrison was President of Global Oral Care until her retirement in 2019, purchased certain products from our company, all on an arm’s-length basis during the fiscal year ended December 31, 2019. The Board determined that these arrangements did not exceed the NYSE’s threshold of 2.0% of WestRock Company’s or Colgate-Palmolive Company’s consolidated gross revenues, that Ms. Harrison does not have a direct or indirect material interest in such transactions, and that such transactions do not impair Ms. Harrison’s independence.

In determining that Ms. Sandler is independent, the Board considered that, in the ordinary course of business, Gannett Co. Inc., of which Ms. Sandler is a director, sold certain products to our company on an arm’s-length basis during the fiscal year ended December 31, 2019. The Board determined that this arrangement did not exceed the NYSE’s threshold of 2.0% of Gannett Co. Inc.’s consolidated gross revenues, that Ms. Sandler does not have a direct or indirect material interest in such transactions, and that such transactions do not impair Ms. Sandler’s independence.

In determining that Dr. Schlitz is independent, the Board considered that, in the ordinary course of business, Illinois Tool Works Inc., of which Dr. Schlitz is Executive Vice President, Automotive OEM, sold certain equipment and services to our company on an arm’s-length basis during the fiscal year ended December 31, 2019. The Board determined that this arrangement did not exceed the NYSE’s threshold of 2.0% of Illinois Tool Works Inc.’s consolidated gross revenues, that Dr. Schlitz does not have a direct or indirect material interest in such transactions, and that such transactions do not impair Dr. Schlitz’s independence.

In determining that Mr. Westbrook is independent, the Board considered that, in the ordinary course of business, Mosaic Company, of which Mr. Westbrook is a director, sold fertilizer products to our company and purchased certain logistics and other services from our company and that T-Mobile US, Inc., of which Mr. Westbrook is a director, sold various products to our company, all on an

 

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Table of Contents

Independence of Directors

Independence of Directors

 

arm’s-length basis during the fiscal year ended December 31, 2019. The Board determined that these arrangements did not exceed the NYSE’s threshold of 2.0% of Mosaic Company’s or T-Mobile US, Inc.’s consolidated gross revenues, respectively, that Mr. Westbrook does not have a direct or indirect material interest in such transactions, and that such transactions do not impair Mr. Westbrook’s independence.

 

 

  NYSE Independence

 

The listing standards of the New York Stock Exchange, or NYSE, require companies listed on the NYSE to have a majority of “independent” directors. Subject to certain exceptions and transition provisions, the NYSE standards generally provide that a director will qualify as “independent” if the Board affirmatively determines that he or she has no material relationship with our company other than as a director, and will not be considered independent if:

 

1.

the director or a member of the director’s immediate family is, or in the past three years has been, one of our executive officers or, in the case of the director, one of our employees;

 

2.

the director or a member of the director’s immediate family has received during any 12-month period within the last three years more than $120,000 per year in direct compensation from us other than for service as a director, provided that compensation received by an immediate family member for service as a non-executive officer employee is not considered in determining independence;

 

3.

the director or an immediate family member is a current partner of one of our independent auditors, the director is employed by one of our independent auditors, a member of the director’s immediate family is employed by one of our independent auditors and personally works on our audits, or the director or a member of the director’s immediate family was within the last three years an employee of one of our independent auditors and personally worked on one of our audits;

 

4.

the director or a member of the director’s immediate family is, or in the past three years has been, employed as an executive officer of a company where one of our executive officers at the same time serves or served on the compensation committee; or

 

5.

the director is a current employee of, or a member of the director’s immediate family is an executive officer of, a company that makes payments to, or receives payments from, us in an amount which, in any of the of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues.

 

 

  Bylaw Independence

 

Section 2.8 of our bylaws also provides that a majority of the Board of Directors be comprised of independent directors. Under our bylaws, an “independent director” means a director who:

 

1.

is not a current employee or a former member of our senior management or the senior management of one of our affiliates;

 

2.

is not employed by one of our professional services providers;

 

3.

does not have any business relationship with us, either personally or through a company of which the director is an officer or a controlling shareholder, that is material to us or to the director;

 

4.

does not have a close family relationship, by blood, marriage, or otherwise, with any member of our senior management or the senior management of one of our affiliates;

 

5.

is not an officer of a company of which our Chairman or Chief Executive Officer is also a board member;

 

6.

is not personally receiving compensation from us in any capacity other than as a director; and

 

7.

does not personally receive or is not an employee of a foundation, university, or other institution that receives grants or endowments from us, that are material to us, the recipient, or the foundation, university, or institution.

 

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Independence of Directors

Corporate Governance Guidelines

 

 

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines that govern the structure and functioning of the Board and set forth the Board’s policies on governance issues. The guidelines, along with the written charters of each of the committees of the Board and our bylaws, are posted on our website, https://www.adm.com/investors/corporate-governance, and are available free of charge upon written request to ADM, Attention: Secretary, 77 West Wacker Drive, Suite 4600, Chicago, Illinois 60601.

 

 

Independent Executive Sessions

In accordance with our Corporate Governance Guidelines, the non-management directors meet in executive session at least quarterly. If the non-management directors include any directors who are not independent pursuant to the Board’s determination of independence, at least one executive session each year includes only independent directors. The Lead Director, or in his or her absence, the chairman of the Nominating/Corporate Governance Committee, presides at such meetings of independent directors. The non-management directors met in independent executive session four times during fiscal year 2019.

 

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Table of Contents

Information Concerning Committees and Meetings

 

 

Board Meetings and Attendance at Annual Meetings of Stockholders

During the last fiscal year, the Board of Directors held six meetings. All incumbent directors attended 75% or more of the combined total meetings of the Board and the committees on which they served during such period. Our Corporate Governance Guidelines provide that all directors standing for election are expected to attend the annual meeting of stockholders. All director nominees standing for election at our last annual stockholders’ meeting held on May 1, 2019, attended that meeting, other than Mr. Alan Boeckmann and Mr. Dufour.

 

 

Information Concerning Committees and Meetings

The Board’s standing committees for the year ended December 31, 2019, consisted of the Audit, Compensation/Succession, Nominating/Corporate Governance, Sustainability and Corporate Responsibility, and Executive Committees. Each committee operates pursuant to a written charter adopted by the Board, available on our website, www.adm.com.

 

 Audit Committee

The Audit Committee consists of Mr. Crews (Chairman), Mr. Dufour, Mr. Moore, Mr. Sanchez, Ms. Sandler, and Ms. Schlitz. The Audit Committee met nine times during the most recent fiscal year. All of the members of the Audit Committee were determined by the Board to be independent directors, as that term is defined in our bylaws, in the NYSE listing standards, and in Section 10A of the Exchange Act. No director may serve as a member of the Audit Committee if such director serves on the audit committees of more than two other public companies unless the Board determines that such service would not impair such director’s ability to serve effectively on the Audit Committee.

The Audit Committee reviews:

 

1. the overall plan of the annual independent audit;

 

2. financial statements;

 

3. the scope of audit procedures;

 

4. the performance of our independent auditors and internal auditors;

 

5. the auditors’ evaluation of internal controls;

 

6. the company’s oversight of risk and the enterprise risk management program;

  

7. matters of legal and regulatory compliance;

 

8. the performance of our company’s compliance function;

 

9. business and charitable relationships and transactions between us and each non-employee director, director nominee, and executive officer to assess potential conflicts of interest and impairment of independence; and

 

10. the company’s earnings press releases and information provided to analysts and investors

For additional information with respect to the Audit Committee, see the sections of this proxy statement entitled “Report of the Audit Committee” and “Audit Committee Pre-Approval Policies.”

 

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Information Concerning Committees and Meetings

Information Concerning Committees and Meetings

 

 

  Compensation/Succession Committee

The Compensation/Succession Committee consists of Mr. Westbrook (Chairman), Mr. Burke, and Ms. Harrison. The Compensation/Succession Committee met four times during the most recent fiscal year. All of the members of the Compensation/Succession Committee were determined by the Board to be independent directors, as that term is defined in our bylaws and in the NYSE listing standards, including the NYSE listing standards specifically applicable to compensation committee members.

The Compensation/Succession Committee:

 

1. establishes and administers a compensation policy for senior management;

 

2. reviews and approves the compensation policy for all of our employees and our subsidiaries other than senior management;

 

3. approves all compensation elements with respect to our directors, executive officers, and all employees with a base salary of $500,000 or more;

 

4. reviews and monitors our financial performance as it affects our compensation policies or the administration of those policies;

 

5. establishes and reviews a compensation policy for non-employee directors;

  

6. reviews and monitors our succession plans;

 

7. approves awards to employees pursuant to our incentive compensation plans;

 

8. approves major modifications in the employee benefit plans with respect to the benefits that salaried employees receive under such plans; and

 

9. ensures succession processes are in place to aid business
continuity.

The Compensation/Succession Committee provides reports to the Board of Directors and, where appropriate, submits actions to the Board of Directors for ratification. Members of management attend meetings of the committee and make recommendations to the committee regarding compensation for officers other than the Chief Executive Officer. In determining the Chief Executive Officer’s compensation, the committee considers the evaluation prepared by the non-management directors.

In accordance with the General Corporation Law of Delaware, the committee may delegate to one or more officers the authority to grant stock options to other officers and employees who are not directors or executive officers, provided that the resolution authorizing this delegation specifies the total number of options that the officer or officers can award. The charter for the Compensation/Succession Committee also provides that the committee may form subcommittees and delegate tasks to them.

For additional information on the responsibilities and activities of the Compensation/Succession Committee, including the committee’s processes for determining executive compensation, see the section of this proxy statement entitled “Compensation Discussion and Analysis.”

 

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Table of Contents

Information Concerning Committees and Meetings

Information Concerning Committees and Meetings

 

  Nominating/Corporate Governance Committee

The Nominating/Corporate Governance Committee consists of Mr. Moore (Chairman), Mr. Burke, Mr. Crews, Ms. Sandler, and Mr. Westbrook. The Nominating/Corporate Governance Committee met four times during the most recent fiscal year. All of the members of the Nominating/Corporate Governance Committee were determined by the Board to be independent directors, as that term is defined in our bylaws and in the NYSE listing standards.

The Nominating/Corporate Governance Committee:

 

1. identifies individuals qualified to become members of the Board, including evaluating individuals appropriately suggested by stockholders in accordance with our bylaws;

 

2. recommends individuals to the Board for nomination as members of the Board and board committees;

 

3. develops and recommends to the Board a set of corporate governance principles applicable to the company;

  

4. assigns oversight of particular risk areas to other committees of the board;

 

5. leads the evaluation of the directors, the Board, and board committees; and

 

6. has oversight responsibility for certain of the company’s corporate objectives and policies.

 

  Sustainability and Corporate Responsibility Committee

The Sustainability and Corporate Responsibility Committee consists of Ms. Harrison (Chairman), Mr. Dufour, Mr. Sanchez, and Ms. Schlitz. The Sustainability and Corporate Responsibility Committee met three times during the most recent fiscal year. All of the members of the Sustainability and Corporate Responsibility Committee were determined by the Board to be independent directors, as that term is defined in our bylaws and in the NYSE listing standards. For more information on the company’s sustainability and corporate responsibility efforts, see the section of this proxy statement entitled “Sustainability and Corporate Responsibility.”

The Sustainability and Corporate Responsibility Committee:

 

1. oversees objectives, goals, strategies, and activities relating to sustainability and corporate responsibility;

 

2. receives and reviews reports from management regarding strategies, activities, compliance, and regulations regarding sustainability and corporate responsibility;

  

3. has authority to obtain advice and assistance from internal or external advisors; and

 

4. leads the evaluation of the company’s performance related to sustainability and corporate responsibility.

 

  Executive Committee

The Executive Committee consists of Mr. Luciano (Chairman), Mr. Felsinger (Lead Director), Mr. Crews (Chair of the Audit Committee), Ms. Harrison (Chair of the Sustainability and Corporate Responsibility Committee), Mr. Moore (Chair of the Nominating/Corporate Governance Committee), and Mr. Westbrook (Chair of the Compensation/Succession Committee). The Executive Committee did not meet during the most recent fiscal year. The Executive Committee acts on behalf of the Board to determine matters which, in the judgment of the Chairman of the Board, do not warrant convening a special board meeting but should not be postponed until the next scheduled board meeting. The Executive Committee exercises all the power and authority of the Board in the management and direction of our business and affairs except for matters which are expressly delegated to another board committee and matters that cannot be delegated by the Board under applicable law, our certificate of incorporation, or our bylaws.

 

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Table of Contents

Stockholder Outreach and Engagement; Code of Conduct

 

 

Stockholder Outreach and Engagement

As part of our commitment to effective corporate governance practices, in 2019 we reached out to many of our largest institutional stockholders to hold formal discussions with them to help us better understand the views of our investors on key topics. Our Lead Director (who, as provided in the Corporate Governance Guidelines, ensures that he is available for consultation and direct communication with major stockholders) and senior management participated in these meetings to discuss and obtain feedback on corporate governance, executive compensation, and other related issues important to our stockholders. We share stockholder feedback with the Board and its committees to enhance both our governance practices and transparency of these practices to our stockholders. We review the voting results of our most recent annual meeting of stockholders, the stockholder feedback received through our engagement process, the governance practices of our peers and other large companies, and current trends in governance as we consider enhancements to our governance practices and disclosure. We value our dialogue with our stockholders and believe our outreach efforts, which are in addition to our other communication channels available to our stockholders and interested parties, help ensure our corporate governance, compensation, and other related practices continue to evolve and reflect the insights and perspectives of our many stakeholders. We welcome suggestions from our stockholders on how the Board and management can enhance this dialogue in the future.

COMMUNICATIONS WITH DIRECTORS

We have approved procedures for stockholders and other interested parties to send communications to individual directors or the non-employee directors as a group. You should send any such communications in writing addressed to the applicable director or directors in care of the Secretary, ADM, 77 West Wacker Drive, Suite 4600, Chicago, Illinois 60601. All correspondence will be forwarded to the intended recipients.

CODE OF CONDUCT

The Board has adopted a Code of Conduct that sets forth standards regarding matters such as honest and ethical conduct, compliance with law, and full, fair, accurate, and timely disclosure in reports and documents that we file with the SEC and in other public communications. The Code of Conduct applies to all of our directors, employees, and officers, including our principal executive officer, principal financial officer, and principal accounting officer. The Code of Conduct is available at our website, https://www.adm.com/our-company/the-adm-way/code-of-conduct, and is available free of charge upon written request to ADM, Attention: Secretary, 77 West Wacker Drive, Suite 4600, Chicago, Illinois 60601. Any amendments to certain provisions of the Code of Conduct or waivers of such provisions granted to certain executive officers will be disclosed promptly on our website.

 

ADM Proxy Statement 2020       23


Table of Contents

Executive Stock Ownership

 

 

Executive Officer Stock Ownership

The following table shows the number of shares of our common stock beneficially owned as of March 16, 2020, directly or indirectly, by each of the named executive officers.

 

Executive

  Common Stock
Beneficially Owned(1)
 

Options Exercisable

Within 60 Days

  Percent of Class
       

J. R. LUCIANO

  2,777,280(2)   1,766,494   *
       

R. G. YOUNG

  1,312,542(3)   912,636   *
       

V. F. MACCIOCCHI

  226,920   74,488   *
       

G. A. MORRIS

  315,246(4)   130,299   *
       

J. D. TAETS

  540,601(5)   319,113   *

* Less than 1% of outstanding shares

(1) Includes for each director the following:

 

    

Unvested RSUs         

 

RSUs that vest within 60 days       

     

J. R. Luciano

 

490,092         

 

0        

     

R. G. Young

 

171,913         

 

0        

     

V. F. Macciocchi

 

114,716         

 

0        

     

G. A. Morris

 

117,257         

 

0        

     

J. D. Taets

 

113,179         

 

0        

(2) Includes 440,574 shares held in trust, 238 shares held by a family-owned limited liability company, and stock options exercisable within 60 days.

(3) Includes 4,298 shares held in our Dividend Reinvestment Plan and stock options exercisable within 60 days.

(4) Includes 617 shares held in the 401(k) and ESOP and stock options exercisable within 60 days.

(5) Includes 934 shares held in the 401(k) and ESOP and stock options exercisable within 60 days.

Common stock beneficially owned as of March 16, 2020, by all directors, director nominees, and executive officers as a group, numbering 19 persons including those listed above, is 7,121,648 shares representing 1.27% of the outstanding shares, of which 293,037 shares represent stock units allocated under our Stock Unit Plan for Nonemployee Directors, 5,055 shares are held in the 401(k) and ESOP, 4,298 shares are held in our Dividend Reinvestment Plan, 4,124,510 shares are unissued but are subject to stock options exercisable within 60 days, and no shares are subject to pledge.

 

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Table of Contents

Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes the compensation of the following named executive officers, or NEOs:

 

Name

  Title   Time with ADM
(as of March 2020)
     

Juan R. Luciano

  Chairman, Chief Executive Officer and President   8 years, 11 mos.
     

Ray G. Young

  Executive Vice President and Chief Financial Officer   9 years, 4 mos.
     

Vincent F. Macciocchi

  Senior Vice President, President, Nutrition, and Chief Sales and Marketing Officer   7 years, 9 mos.*
     

Greg A. Morris

  Senior Vice President and President, Ag Services and Oilseeds   25 years, 2 mos.
     

Joseph D. Taets

  Senior Vice President and President, Global Business Readiness and Global Procurement   31 years, 10 mos.

* includes tenure at a predecessor company that ADM acquired in 2014.

Table of Contents

 

Section

  Page

Executive Summary

  26

How Executive Compensation is Determined

  29

Components of Executive Compensation

  30

2019 Executive Compensation Decisions

  32

Peer Group

  39

Changes to Incentive Compensation Plans Beginning in 2020

  40

Benefits

  40

Compensation Policies and Governance

  41

Employment Agreements, Severance, and Change in Control Benefits

  42

 

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Table of Contents

Compensation Discussion and Analysis

Executive Summary

 

 

Executive Summary

 

OUR COMPENSATION PHILOSOPHY AND OBJECTIVES

ADM unlocks the power of nature to provide access to nutrition worldwide. ADM is a global leader in human and animal nutrition and one of the world’s premier agricultural origination and processing companies. In order to do this, we must attract, engage, and retain highly talented individuals who are committed to our core values of integrity, excellence, and respect for others. Our compensation programs are designed to help us achieve these goals while balancing the long-term interests of our shareholders. Our compensation and benefit programs are based on the following objectives:

 

  We reinforce a high-performance culture by linking both long- and short-term compensation with individual and company performance while discouraging excessive risk-taking;

 

  We structure executive compensation packages to include a significant percentage of variable equity awards to ensure executives remain focused on company performance and shareholder returns;

 

  We reward senior executives for creating value for our stockholders, demonstrating excellence in leadership, and successfully implementing our business strategy;

 

  We provide market-competitive compensation that reflects the level of job impact and responsibilities and helps us attract and retain high quality executive talent; and

 

  We structure our compensation and benefit programs to have consistent features for employees and executives across the organization to encourage and reward everyone who contributes to ADM’s success.

When designing our executive compensation programs, management and the Compensation/Succession Committee consider shareholder feedback received during our annual say-on-pay vote and regular engagement process.

2019 PERFORMANCE HIGHLIGHTS

In 2019, ADM managed effectively through a difficult operating environment including trade disruptions and unusual weather events in the United States. Despite the external environment,

we kept our focus on strong execution, continued improvement efforts, and delivering winning solutions for our customers. Here are some things ADM achieved in 2019:

 

  We grew the Nutrition segment operating profit by 23% year-over-year.

 

  We created a global leader in animal nutrition with the addition of Neovia in January 2019 and we are ahead of our synergy targets by the end of 2019.

 

  We continued to expand our leadership position in fast-growing consumer trend areas, such as alternative proteins.

 

  We expanded our unparalleled array of products and solutions by adding citrus leaders Florida Chemical and Ziegler, as well as signing a deal to acquire the botanical capabilities of Yerbalatina.

 

  We crushed record level global oilseeds volumes in 2019 as we capitalized on strong global demand and benefited from other efficiencies and expanded footprint.

 

  We executed improvements in targeted businesses and the enterprise, including a significant turnaround of our Golden Peanut and Tree Nut subsidiary.

 

  We turned in a year of record profitability in our refined oils business.

 

  We met ambitious Readiness goals for the year, including training for 31,000 employees on Ability to Execute.

Although adjusted earnings per share declined from 2018, we delivered adjusted return on invested capital (Adjusted ROIC) over weighted average cost of capital (WACC) and generated positive economic value added. Highlights of our 2019 financial performance include:

 

  adjusted earnings per share of $3.24;

 

  trailing four-quarter average adjusted return on invested capital (Adjusted ROIC) of 7.5%, 75 basis points above our 2019 weighted average cost of capital (WACC) of 6.75%;

 

  Generated positive economic value add of $213 million; and

 

  Adjusted EBITDA of $3.509 billion.1
 

 

1 Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization, adjusted to exclude the impact of certain items) and Adjusted ROIC (return on invested capital, adjusted to exclude the impact of certain items) are financial measures that have not been calculated in accordance with generally accepted accounting principles (“GAAP”). Annex A to this Proxy Statement offers more detailed definitions of these terms, a reconciliation of each to the most directly comparable GAAP financial measure, and related disclosures about the use of these non-GAAP financial measures. In May 2019, our Reserve, Louisiana facility suffered a shipping accident caused by a third party. This accident resulted in property damage and forced us to cease operations at the facility until repairs are completed. We expect to collect reimbursement for our losses, estimated at $27 million for 2019. In calculating Adjusted EBITDA for 2019, the Compensation/Succession Committee chose to recognize this $27 million. This amount will be deducted from any calculation performed in connection with the 2020 annual cash incentive awards so as not to double-count the effects of such adjustment.

 

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Table of Contents

Compensation Discussion and Analysis

Executive Summary

 

We also continued executing the most sweeping portfolio transformation in the 117-year history of the company. Since 2014, we have acquired, invested in, or partnered with approximately 30 companies and divested 11 businesses to expand and focus our product portfolio. We accomplished this transformation while taking billions of dollars in run-rate costs out of the business, including delivering $250 million in accrued net benefits from our Readiness program in 2019. We also have returned $9.5 billion to shareholders since 2014 — with $940 million of that going to shareholders in 2019 alone.

OVERVIEW OF OUR COMPENSATION PROGRAM

Total direct compensation for ADM executives is delivered through a mix of cash and equity awards that emphasize multiple performance factors tied to stockholder value creation over near-, mid- and longer-term time horizons. The three key elements of our compensation program are base salary, annual cash incentive awards, and long-term equity incentive (LTI) awards.

We believe our salaries and performance-based annual cash incentive awards encourage and reward current business results, with a significant emphasis on strategic goals. In contrast, our LTI awards reward sustained performance against critical metrics. Our executive stock ownership guidelines (discussed below under “Compensation Policies and Governance — Executive Stock Ownership”), which require executives to own meaningful amounts of ADM common stock, enhance our executives’ interest in attaining sustainable long-term results.

SIGNIFICANT 2019 COMPENSATION ACTIONS

In 2019, we granted a mix of performance stock units (PSUs) and time-based restricted stock units (RSUs) to the NEOs. The PSUs will vest, or

not, based on ADM’s performance against specific goals over a three-year performance period that will end on December 31, 2021. The RSUs generally will vest on the same day if the recipient remains employed by ADM. For details, see “2019 Compensation Decisions — Equity-Based Long-Term Incentives.”

The Compensation/Succession Committee expanded the performance metrics for annual cash incentive awards granted in 2019. In the past, these awards were based solely on Adjusted EBITDA and Adjusted ROIC. Since 2017, we have retained those metrics, but each year we also have added specific and relevant strategic goals in order to drive participant engagement and positive outcomes. Strong results for these strategic goals can have a significant impact on annual bonuses. For details on the three strategic goals prescribed for the 2019 annual bonuses, see “2019 Executive Compensation Decisions — 2019 Annual Cash Incentives.”

Base salary increases for four of the NEOs in 2019 ranged from 3% to 7.7%. One NEO’s base salary was unchanged. For details, see “2019 Executive Compensation Decisions — Individual Compensation Decisions.” None of the NEOs received base salary increases in 2018, and only one (Mr. Luciano) has received a base salary increase in the past three years.

In 2019, the NEOs received, on average, 88% of their total target direct compensation in variable pay, and 71% of their total target direct compensation in equity awards. For these purposes, we consider the base salary paid in 2019, the annual cash incentive earned in 2019 (paid in early 2020), and the target award value of equity (the dollar amount of such awards as approved by the Compensation/Succession Committee) granted early in 2019 for the 2019-2021 performance period.

 

 

The charts below present the mix of total target direct compensation awarded or paid to the NEOs in 2019.

 

 

LOGO

AVERAGE CEO PAY MIX 8.1% Base 16.7% Annual Incentive Bonus 75.2% Equity Award at Target 91.9% TOTAL VARIABLE PAY AVERAGE NEO PAY MIX 15.2% Base 17.2% Annual Incentive Bonus 67.6% Equity Award at Target 84.8% TOTAL VARIABLE PAY

 

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Table of Contents

Compensation Discussion and Analysis

Executive Summary

 

EXECUTIVE COMPENSATION BEST PRACTICES

We annually review all elements of NEO pay and, where appropriate for our business and talent objectives and our stockholders, may make changes to incorporate and update current best practices. The following table summarizes our current practices.

 

What We Do    What We Don’t Do

 

  Pay-for-performance: We tie compensation to performance by setting clear and challenging company financial goals and individual goals and having a majority of target total direct compensation consist of performance-based components.

 

  

 

XNo guaranteed base salary increases: Base salary levels are reviewed every year, but there is no expectation of annual increases.

 

 

  Multiple performance metrics: Payouts of our annual cash incentives and long-term incentives are determined based on the weighted results for several financial performance measures over both the short and the long term to dissuade executives from focusing on particular metrics and disregarding others.

 

  

 

X No dividends paid on unvested performance awards: We do not pay dividends or credit dividend-equivalents on unvested performance-based awards.

 

 

  Aggressive stock ownership and retention requirements: Our NEOs and directors must comply with rigorous stock ownership and retention requirements, and they may not sell any company securities until those guidelines are satisfied.

 

  

 

X No hedging: We prohibit NEOs from engaging in hedging transactions with ADM securities.

 

 

  Compensation-related risk review: The Compensation/Succession Committee regularly reviews compensation-related risks, often with the assistance of independent consultants, to confirm that any such risks are not reasonably likely to have a material adverse effect on the company.

 

  

 

X No stock options: We have not granted stock options since 2016 and do not intend to resume granting them.

 

 

  Clawback policy: The company has a policy to enable us to recover previously paid cash and equity-based incentive compensation from executives in the event of a financial restatement, ethical misconduct, or other specified circumstances.

 

  

 

X No gross up of excise tax payments: We do not assist executives with taxes owed as a result of their compensation.

 

 

  Use of independent compensation consultants: The Compensation/Succession Committee retains two independent compensation consulting firms — one for customary compensation advice and one for assistance with a risk assessment — that perform no other consulting services for the company and have no conflicts of interest.

 

  

 

X No excessive executive perks: With the exception of certain benefits provided under our expatriate program, executive perquisites are restricted to executive physicals, company-provided life insurance, and (for the Chairman and CEO) limited personal use of company aircraft.

 

 

  Regular review of proxy advisor policies and corporate governance best practices: The Compensation/Succession Committee regularly considers the perspectives of outside authorities as they relate to our executive compensation programs.

 

  

 

X No excessive pledging: We prohibit executives from pledging company securities if they have not met stock ownership guidelines, and then we require advance approval of any pledging transaction from our General Counsel.

 

 

  Performance-based equity awards: Half of the NEOs’ annual LTI award opportunity is delivered in PSUs that may be earned only if the company achieves prescribed financial goals over a prospective three-year measurement period.

 

  

 

X No employment contracts: We do not have an employment contract with any executive officer.

 

 

  Double trigger requirement: Equity awards do not automatically vest in the event of a change in control. Instead, we impose a “double trigger” requirement to accelerate vesting.

 

  

 

  Peer group: We use the S&P 100 Industrials as a peer group to recognize that ADM has no direct competitor (in terms of size or focus) in the U.S. public markets and we recruit talent from a wide spectrum of organizations and industries.

 

 

  

 

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Compensation Discussion and Analysis

How Executive Compensation is Determined

 

ADVISORY “SAY ON PAY” VOTE

At the 2019 Annual Meeting of Stockholders, approximately 86% of the votes in the advisory vote on executive compensation were favorable. The Compensation/Succession Committee believes that this strong level of support, and the similarly strong levels of support shown in prior years, affirms broad stockholder agreement with our pay-for-performance approach to executive compensation. Nevertheless, the committee made several substantive changes in the executive compensation programs for 2020. As more fully discussed below under “Changes to Compensation Plans Beginning in 2020,” the annual incentive plan will have a different payout formula, including a metric that reflects five business-critical strategic goals. The long-term

incentive plan will replace the Adjusted EBITDA performance metric with a new metric — growth in operating profit in our Nutrition segment — and will use a more focused peer group for the relative TSR metric.

We routinely conduct extensive proactive outreach to significant institutional shareholders to understand and address issues of interest and to foster long-term cooperative relationships. The Compensation/
Succession Committee will continue to consider stockholder feedback and the results from advisory votes on executive compensation when approving compensation programs. For more information, see “Stockholder Outreach and Engagement.”

 

 

 

How Executive Compensation is Determined

 

THE ROLE OF THE COMPENSATION/SUCCESSION COMMITTEE

The Compensation/Succession Committee, which is composed solely of independent directors, is responsible for establishing ADM’s compensation philosophy and developing and administering compensation policies and programs consistent with this philosophy. When making compensation decisions, the Compensation/Succession Committee considers the company’s executive compensation objectives, described below.

Align executive and stockholder interests. We believe that a substantial portion of total compensation should be delivered in the form of equity in order to align the interests of our NEOs with the interests of our stockholders. Our RSU awards typically vest three years from the date of grant. Our PSU awards typically have a three-year performance period and vest only if certain performance goals are achieved.

We also protect our stockholders’ interest by including a clawback provision in agreements for long-term incentive awards to enable the company to recover awards if the recipient engages in any of a broad range of prohibited conduct, including violation of post-vesting non-competition and non-solicitation restrictions.

Enable the company to attract and retain top executive talent. Stockholders are best served when we can attract, retain, and motivate talented executives with compensation packages that are competitive and fair. As a large, global company engaged in multiple lines of business, our competition for talent — like our competition for business and investment — is broad. The company’s compensation program for NEOs delivers a mix of salary, annual cash incentives, and long-term incentives targeted to be market-competitive.

Reflect the company’s results. Our executive compensation program emphasizes variable, performance-based pay. The Compensation/Succession Committee assesses executive compensation packages in the aggregate, and considers each individual component as well. Base salary is reviewed annually. Annual cash incentives are paid if, and to the extent that, specified corporate goals and individual goals are attained. Performance-based equity compensation is assessed in a similar manner and is designed to reward measurable long-term results.

Internal equity. The Compensation/Succession Committee takes into account internal equity when determining the pay of the CEO and other NEOs. We provide the Committee with data on the compensation of other ADM non-executive employees in other pay grades and/or salary ranges and the Committee reviews such data when setting CEO and NEO pay.

THE ROLE OF THE BOARD

The Board approves the company’s business plan, which is one of the factors used to set financial and business objectives for incentive compensation. The independent directors establish and approve all performance criteria for evaluating the Chairman and CEO, annually evaluate the performance of the Chairman and CEO based on these criteria, and ratify his compensation. The board also may provide input and ratification on any additional compensation-related issues at the Compensation/Succession Committee’s request. The Board conducts an annual review of the company’s performance, which informs the calculation of performance-based incentives and decisions regarding compensation packages generally.

 

 

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Table of Contents

Compensation Discussion and Analysis

Components of Executive Compensation

 

THE ROLE OF THE INDEPENDENT COMPENSATION CONSULTANT

The Compensation/Succession Committee retained Pay Governance LLC as its independent executive compensation consultant. Pay Governance provides no other services to the company. The independent compensation consultant reports directly to the Compensation/
Succession Committee, and provides objective and expert analyses and independent advice on executive and director compensation and other matters in support of the committee’s responsibilities. Each Compensation/Succession Committee meeting includes an executive session where the committee meets exclusively with the independent consultant, without company management. Outside of these sessions, the independent consultant interacts with management solely on behalf of the Compensation/Succession Committee.

The Compensation/Succession Committee will only retain consultants that it believes will provide independent advice. The committee has assessed the independence of Pay Governance pursuant to the SEC’s and NYSE’s rules, and concluded that the work Pay Governance has performed and is expected to perform in the future does not raise any conflict of interest.

THE ROLE OF EXECUTIVES

Our Chairman and CEO assists the Compensation/Succession Committee in determining compensation for the NEOs other than himself. To

that end, the Chairman and CEO assesses the performance of each of the other NEOs, both in terms of individual execution and with respect to the functions or business units they oversee. The Chairman and CEO also recommends to the Compensation/Succession Committee, but does not vote on, annual base salary adjustments, individual and group performance factors, and short- and long-term incentive award target levels for the other NEOs.

The company’s Senior Vice President of Human Resources oversees all employee compensation and administers our benefits programs under the oversight and direction of the Compensation/Succession Committee. The individual in that role prepares most of the materials for the Compensation/
Succession Committee meetings and provides analyses that assist the committee with its decisions, such as summaries of competitive market practices, summaries of the company’s succession-planning actions, and reports regarding the company’s performance. In addition, throughout the year, the Senior Vice President of Human Resources facilitates meetings with management to help the Compensation/Succession Committee gain a better understanding of company performance, and ensures that the committee receives a rigorous assessment of year-to-date performance at each of its meetings. The company’s executives leave meetings during discussions of individual compensation actions affecting them personally and during all executive sessions, unless requested to remain by the Compensation/Succession Committee.

 

 

 

Components of Executive Compensation

 

The company’s executive compensation program is built on a structure that emphasizes both short- and long-term performance. We believe our salaries and performance-based annual cash incentive awards encourage and reward current business results, while our LTI awards reward sustained performance, particularly when coupled with our stock ownership requirements.

When setting compensation levels, the Compensation/Succession Committee refers to data regarding compensation for comparable executives at large public companies with which ADM competes for executive talent. As described in greater detail below under the heading “Peer Group,” the Compensation/Succession Committee chose a broad external market peer group in the S&P 100 Industrials in order to

capture a wide spectrum of compensation levels. In addition, the Compensation/Succession Committee considers company-wide internal equity when determining pay packages for the NEOs.

The following chart summarizes the direct compensation components and associated objectives of our fixed and performance-based pay for executives in 2019. Although the Compensation/Succession Committee has not adopted a policy for allocating the various elements of total direct compensation, the company places greater emphasis on variable pay for executives with more significant responsibilities because they have a greater capacity to affect the company’s performance and results.

 

 

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Compensation Discussion and Analysis

Components of Executive Compensation

 

Components of Executive Compensation

 

     Pay Element    Objective    Performance Rewarded
FIXED    Annual    Base Salary    Recognize an individual’s role and responsibilities   

 

Reviewed annually and set based on competitiveness versus the external market, individual performance, and internal equity

 

 

VARIABLE OR

  PERFORMANCE  

BASED

   Annual    Annual Cash
Incentive
  

 

Achieve annual goals measured in terms of financial, strategic, and individual performance linked to creation of stockholder value

 

  

Adjusted EBITDA, Adjusted ROIC, Individual Performance Factor, Accretion in Growth Investments, Improvements in Targeted Businesses, Readiness Performance

 

  

Long-Term

 

   Restricted
Stock Units
(“RSUs”)

50%

 

   Align NEOs’ interests with stockholders’ interests and retain executive talent   

Achievement of key drivers of stockholder value as evidenced in our share price

 

        Performance
Share Units
(“PSUs”)

50%

   Align long-term performance with interests of stockholders and retain executive talent   

Achievement of key drivers of company performance and stockholder value as evidenced by cumulative Adjusted EBITDA, average Adjusted ROIC, and relative total shareholder return (TSR)

 

 

SALARY

The Compensation/Succession Committee sets base salaries based on an executive’s position, skills, performance, experience, tenure, and responsibilities. The Compensation/Succession Committee annually assesses the competitiveness of base salary levels relative to salaries within the marketplace for similar executive positions, typically using the market median as a starting point. When assessing any salary adjustments for executives, the Compensation/Succession Committee also considers factors such as changes in responsibilities and corresponding changes in competitive marketplace levels. Base salaries are not expected to change every year. None of the NEOs received base salary increases in 2018, and, until this year, only one (Mr. Luciano) had received a base salary increase in the past three years.

ANNUAL CASH INCENTIVE

We pay an annual cash incentive only if ADM meets specified performance goals. The annual cash incentive program emphasizes company-wide performance objectives to encourage executives to focus on overall company success and leadership to generate the most value

across the organization. Our assessment of company performance is directly tied to stockholder expectations: we require meaningful results for forward-looking metrics before any awards may be earned.

The 2019 annual cash incentive program was based on two key measures of financial performance — Adjusted EBITDA and Adjusted ROIC relative to annual WACC — with final awards also reflecting the Compensation/
Succession Committee’s informed judgment regarding individual performance, accretion in growth investments, improvements in targeted businesses, and Readiness performance. Cash incentive awards for 2019 were paid in the first quarter of 2020.

LTI AWARDS

Our long-term equity awards are based on company and market factors, including relative total stockholder return and achievement of financial milestones. The LTI awards granted in 2019 are part performance-based and part time-based, with an equal mix of PSUs and RSUs, to ensure that NEOs’ interests are aligned with the interests of our stockholders. LTI awards were granted to the NEOs in February 2019.

 

 

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Compensation Discussion and Analysis

2019 Executive Compensation Decisions

 

 

2019 Executive Compensation Decisions

INDIVIDUAL COMPENSATION DECISIONS

The following tables summarize compensation decisions made by the Compensation/Succession Committee with respect to each of the NEOs for 2019. Details regarding the specific compensation elements and related payouts follow the individual summaries.

The award values shown below for LTI grants represent the dollar amount of such awards, at target, as approved by the Compensation/Succession Committee. These amounts differ from the grant date fair values of such awards as shown in the Grants of Plan-Based Awards Table and the Summary Compensation Table for two reasons: There is a lag between the equity award approval date and the grant date, and the valuation methodology the Compensation/Succession Committee uses in making its decisions differs from the valuation methodology required by the SEC for the compensation tables.

 

 

MR. LUCIANO

Chairman and CEO

LOGO

  

Base salary

   Increased from $1,300,008 to $1,400,004
  

Target annual cash incentive

   200% of base salary, or $2,800,000
  

Actual annual cash incentive

   $2,898,000, or 207% of base salary
  

Long-term incentives

   $13,000,000, divided equally between PSUs and RSUs

 

Significant accomplishments:

 

•   Executed key elements of our strategy, including Readiness efforts focused on continued process improvements across the organization, including significant progress with 1ADM.

 

•   Optimized the organizational structure to drive effectiveness and customer experience.

 

•   Drove continued transformation of the business portfolio by executing key M&A plans while divesting non-strategic assets.

 

•   Continued year-over-year safety improvements and advanced our Corporate Responsibility and Sustainability efforts, including advancement against our Diversity and Inclusion goals.

 

MR. YOUNG

Executive Vice President and CFO

LOGO

  

Base salary

   Increased from $825,048 to $850,008
  

Target annual cash incentive

   132% of base salary, or $1,125,000
  

Actual annual cash incentive

   $1,164,375, or approximately 137% of base salary
  

Long-term incentives

   $4,500,000, divided equally between PSUs and RSUs

 

Significant accomplishments:

 

•   Executed balanced capital allocation framework, which included funding significant acquisitions closed in 2019, while maintaining a solid balance sheet.

 

•   Implemented strong cost controls on corporate staff with continued advancement on centralization, simplification and process improvements initiatives, including 1ADM.

 

•   Led the corporate/enterprise workstream in Readiness, exceeding the targeted benefits.

 

•   Executive champion of targeted business improvements and supported enterprise intervention actions to help mitigate headwinds experienced in the year.

 

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2019 Executive Compensation Decisions

 

MR. MACCIOCCHI

Senior Vice President, President, Nutrition, and Chief Sales and Marketing Officer

 

LOGO

  

Base salary

   Increased from $640,008 to $675,000
  

Target annual cash incentive

   100% of base salary, or $675,000
  

Actual annual cash incentive

   $664,875, or 98.5% of base salary
  

Long-term incentives

   $2,800,000, divided equally between PSUs and RSUs

 

Significant accomplishments:

 

•   Achieved 50% revenue growth and 23% adjusted operating profit growth, demonstrating our unparalleled value proposition to our customers; built a robust pipeline for future customer wins.

 

•   Closed on Neovia, creating a global animal nutrition business; integration completed and synergy opportunities ahead of schedule.

 

•   Expanded our production footprint with the opening of two animal nutrition centers in Decatur, IL and in Hoa Mac, Vietnam; also expanded our Beijing, China flavor facility.

 

•   Enhanced our capabilities with two citrus company acquisitions, Florida Chemical Company and Ziegler; signed a deal to acquire Yerbalitina, a leader in botanical extracts; expanded our position in plant-based proteins with a partnership with Marfrig, a Brazilian leader in protein; and commissioned ADM’s new pea protein facility.

 

 

MR. MORRIS

Senior Vice President and President, Agricultural Services and Oilseeds

 

LOGO

  

Base salary

   Increased from $650,004 to $675,000
  

Target annual cash incentive

   100% of base salary, or $675,000
  

Actual annual cash incentive

   $664,875, or 98.5% of base salary
  

Long-term incentives

   $2,800,000, divided equally between PSUs and RSUs

 

Significant accomplishments:

 

•   Consolidated the Origination business unit and Oilseeds business unit to create Ag Services and Oilseeds to drive synergy opportunities, and implemented harmonized risk management approach on the combined businesses.

 

•   Continued to simplify our business model and drive ROIC by deploying technology tools focused on margin expansion, expanding services to our suppliers and customers, extending our destination marketing capabilities and driving capital reduction of $300 million by monetizing non-core assets.

 

•   Achieved record level performance in Refined Products and Other, including biodiesel and Golden Peanut and Tree Nut.

 

•   Drove our Diversity and Inclusion goals.

 

 

MR. TAETS

Senior Vice President and President, Global Business Readiness and Global Procurement

 

LOGO

  

Base salary

   Unchanged at $700,008
  

Target annual cash incentive

   100% of base salary, or $700,000
  

Actual annual cash incentive

   $794,500, or 113.5% of base salary
  

Long-term incentives

   $2,800,000, divided equally between PSUs and RSUs

 

Significant accomplishments:

 

•   Spearheaded our Readiness program and delivered $250 million in accrued net benefits from 435 completed projects; trained 31,000 employees on Ability to Execute.

 

•   Achieved significant progress towards attaining our 2020 Readiness goal of $1.2 billion of run rate benefits.

 

•   Globalized and centralized global procurement to drive cost savings and efficiency in the organization.

 

•   Established and implemented strong processes for services procurement, travel & entertainment procurement and capital equipment procurement, allowing for significant savings in 2019 and beyond.

 

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Compensation Discussion and Analysis

2019 Executive Compensation Decisions

 

2019 ANNUAL CASH INCENTIVES

The annual cash incentive program aligns rewards with business results measured against specific strategic goals. At the start of each fiscal year, the Compensation/Succession Committee approves target annual cash incentive levels, expressed as a percentage of salary, for each NEO. Actual awards paid are based on both company performance (75% weight) and individual and business unit performance (25% weight).

COMPANY PERFORMANCE COMPONENTS AND BONUS POOL FUNDING

The size of the bonus pool is determined by ADM’s Adjusted EBITDA, our results on a set of strategic initiatives, and the relationship between our return on invested capital (ROIC) and our weighted average cost of capital (WACC).2

Adjusted EBITDA

As a threshold matter, Adjusted EBITDA must exceed $1.4 billion — the cash flows required to fund dividends and interest for the year. If Adjusted EBITDA for 2019 had been less than $1.4 billion, ADM would not have paid any annual incentives to the NEOs. If Adjusted EBITDA for 2019 had been between $1.4 billion and $3.31 billion, the Compensation/Succession Committee would have had discretion to determine whether to fund the bonus pool, and by how much.

Any surplus amount of Adjusted EBITDA above $1.4 billion (“Surplus Adjusted EBITDA”) is multiplied by a factor ranging from 1.1% to 3.5%, as shown below, to create the initial bonus pool.

 

Surplus Adjusted EBITDA

(Adjusted EBITDA less $1.4 billion)

  

Percentage of Surplus Adjusted EBITDA

to fund the bonus pool

   

$3.1B & Above

   3.5%
   

$2.9B - $3.09B

   3.1%
   

$2.7B - $2.89B

   2.6%
   

$2.5B - $2.69B

   2.3%
   

$2.3B - $2.49B

   1.8%
   

$2.1B - $2.29B

   1.5%
   

$1.91B - $2.09B

   1.1%

Strategic Initiatives

The initial funding amount determined by Adjusted EBITDA results may be adjusted upward based on the company’s achievements for three equally-weighted strategic goals:

Harvest Growth Investments. ADM must realize an increase in year-on-year operating profit from a specific list of recent acquisitions and major projects.3

Improve. ADM must realize operating profit improvements in key target businesses.4

Readiness. Readiness is a re-invention of our business from the bottom up. It provides a structure for ongoing continuous improvement that will give us the tools to deliver an excellent customer experience at the lowest cost. Readiness incorporates digitization, automation, and simplification into our day-to-day operations, and is best reflected by run-rate benefits and accrued in-year benefits.

The targets for each of these goals, and the increases in bonus pool funding that would result from reaching those targets, are shown below. “Level 1” targets are the most ambitious, and “Level 3” targets are what we consider threshold performance. If results are below the Level 3 target

 

2 Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization, adjusted to exclude the impact of certain items) and Adjusted ROIC (return on invested capital, adjusted to exclude the impact of certain items) are financial measures that have not been calculated in accordance with generally accepted accounting principles (“GAAP”), and are referred to as non-GAAP financial measures. Annex A to this Proxy Statement provides more detailed definitions of these terms, a reconciliation of each to the most directly comparable GAAP financial measure, and related disclosures about the use of these non-GAAP financial measures.

3 The businesses in this calculation include Neovia, Protexin, Crosswind, Harvest Innovations, Eatem, Rodelle, our China premix facilities, Algar Agro, Eaststarch Turkey expansion, Aston Foods, Enid flour mill, and NA Fertilizer distribution.

4 For 2019, these businesses include Amino Acids, Campo Grande, Tianjin Fibersol, Polyols, Decatur Nutrition, Corn Milling – Asia, GPTN, AOR, El Transito, Romania, and Indonesia.

 

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Compensation Discussion and Analysis

2019 Executive Compensation Decisions

 

for any strategic goal, there will be no adjustment to the bonus pool funding attributable to that goal. Conversely, if we attain Level 1 targets for all three strategic goals, the bonus pool will be funded with an additional 1.35% of Surplus Adjusted EBITDA, or a maximum of 4.85% total.

 

Strategic goal    

  Level 3   Extra funding   Level 2   Extra funding   Level 1   Extra funding
             

Harvest Growth Investments (operating profit)

  $70 million   0.15%   $85 million   0.3%   $100 million   0.45%
             

Improve
(operating profit)

  $70 million   0.15%   $85 million   0.3%   $100 million   0.45%
             

Readiness

 

(Gross benefits)    

 

(each component weighted 50%)

 

Accrued in-year benefits: $475 million

 

Run-rate benefits: $790 million

  0.15%  

Accrued in-year benefits: $580 million

 

Run-rate benefits: $960 million

  0.3%  

Accrued in-year benefits: $682 million

 

Run-rate benefits: $1.13 billion

  0.45%

ROIC/WACC Multiplier

ROIC measures how effectively we are using invested capital. Comparing Adjusted ROIC against WACC tells us if our invested capital is being used effectively to create value for our shareholders.

As the last step in our bonus pool funding calculation, we consider whether ROIC exceeds WACC (which means we used invested capital very effectively during the year), or whether ROIC is even with or lags WACC. That review leads to a multiplier. In essence, the multiplier boosts the size of the bonus pool in years that our return on capital exceeds our cost of capital, and reduces the size of the bonus pool if the inverse is true.

In 2019, WACC was 6.75%. The ROIC/WACC multiplier is determined as follows:

 

ROIC

    Multiplier*     Effect of multiplier on
bonus pool  funding
     

8.75%

1.1 10% increase
     

6.75% (equal to Annual WACC)

1.0 No change
     

4.75%

.9 10% decrease

* For ROIC results between specific goals, the multiplier will be determined by linear interpolation.

2019 Bonus Pool Calculation

For 2019, ADM attained the results shown below, leading to a bonus pool of $52.5 million.

Adjusted EBITDA: $3.509 billion.

Surplus Adjusted EBITDA: $2.109 billion

Initial funding percentage: 1.5%

Harvest Growth Investments: $42 million

Improvements in Targeted Businesses: $148 million

Gross Cumulative Accrued Benefits: $746 million

Gross Run-Rate Benefits: $1.26 billion

Final funding percentage: 2.4%

$2.109 billion (Surplus Adjusted EBITDA) x 2.4% (funding percentage) = $50.62 million

Adjusted ROIC: 7.5%

ROIC/WACC multiplier: 1.0375

$50.62 million x 1.0375 multiplier = $52.5 million bonus pool

 

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Compensation Discussion and Analysis

2019 Executive Compensation Decisions

 

INDIVIDUAL PERFORMANCE COMPONENTS

Individual performance determines 25% of the annual cash bonus.

Our leaders are responsible for driving performance company-wide; their respective individual performance ratings are a result of their performance against goals for the year, including goals for the business units they run. The target individual performance percentage is 25%. However, for any NEO, the Compensation/Succession Committee has discretion to adjust this target percentage by +/- 5% increments based on the committee’s assessment of the NEO’s performance and contribution to the company’s success. As a result, individual payouts can range from 0% to 50%.

Based on business results, the economic environment for 2019 performance, and the individual achievements summarized above under “Individual Compensation Decisions,” the Compensation/Succession Committee elected to award the following individual performance percentages to the NEOs:

 

   

Mr. Luciano

    30%    

   

Mr. Young

    30%    

   

Mr. Macciocchi

    25%    

   

Mr. Morris

    25%    

   

Mr. Taets

    40%    

The Compensation/Succession Committee considered the full board’s assessment of the Chairman and CEO’s performance and full company performance when approving Mr. Luciano’s individual performance percentage.

CALCULATION OF AWARD AMOUNTS

The formula used to calculate an annual cash incentive payout for the NEOs can be expressed as follows:

 

LOGO

$52.5M Bonus Pool / $53.6M Sum of All Participant Bonuses at Target = 98% Company Performance Factor 73.5% Company Payout + 0% - 50% Individual Payouts = 73.5% - 123.5% Overall Cash Bonus Payouts 98% Company Performance Factor x 75% Weighting Individual Performance Factor Company Payout + Individual Payout

THE RESULTING ANNUAL CASH INCENTIVE FOR EACH NEO

Based on the determination of the company and individual performance factors as described above, the NEOs received the payouts set forth below.

 

Executive

Target Cash
Incentive
Opportunity
(% of Salary)
Target Cash
Incentive
Opportunity ($)
Cash Bonus
Payout
Percentage
Actual FY2019
Cash Award
         

J. R. Luciano

200% $2,800,000 103.5% $2,898,000
         

R. G. Young

132% $1,125,000 103.5% $1,164,375
         

V. F. Macciocchi

100% $675,000 98.5% $664,875
         

G. A. Morris

100% $675,000 98.5% $664,875
         

J. D. Taets

100% $700,000 113.5% $794,500

 

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EQUITY-BASED LONG-TERM INCENTIVES 

ADM’s LTI program aligns the interests of executives with those of our stockholders by rewarding the creation of long-term stockholder value, supporting stock ownership, and encouraging long-term service with the company. Our performance-based LTI awards are based on the results of forward-looking metrics measured over a three-year performance period. In 2019, we divided LTI awards equally between performance share units (PSUs) and restricted stock units (RSUs) with three-year vesting. We believe this forward-looking LTI program aligns our equity compensation with market practice and strengthens our executives’ focus on growth and future value creation for shareholders.

The February 2019 grants in the target amounts approved by the Compensation/Succession Committee are shown below. The listed values represent the dollar amount of such awards, at target, as approved by the Compensation/Succession Committee. These amounts differ from the grant date fair values of such awards as shown in the Grants of Plan-Based Awards Table and the Summary Compensation Table for two reasons: There is a lag between the equity award approval date and the grant date, and the valuation methodology the Compensation/Succession Committee uses in making its decisions differs from the valuation methodology required by the SEC for the compensation tables.

 

Executive

Target
Equity Award
   

J. R. Luciano

$13,000,000
   

R. G. Young

$4,500,000
   

V. F. Macciocchi

$2,800,000
   

G. A. Morris

$2,800,000
   

J. D. Taets

$2,800,000

The terms of these equity awards are described below.

PSU VESTING

PSUs will vest in three years upon the Compensation/Succession Committee’s determination of the company’s achievements, if any, against certain performance goals over a three-year performance period (2019–2021). Payouts can range from 0% to 200%, and the value of those payouts will depend upon the price of ADM’s common stock at the end of the performance period. Vested PSUs will be settled in shares of ADM common stock in an amount based on fair market value.

PSU PERFORMANCE METRICS

The performance metrics for the 2019 PSU awards are:

 

   

Relative TSR as compared to the other companies in the S&P 100 Industrials Index,

 

   

Average Adjusted ROIC over the three-year performance period,5 and

 

   

Adjusted EBITDA for the three-year performance period.6

ROIC and EBITDA both appear as metrics in both our short- and long-term incentive compensation plans, but they serve different purposes and have different weights in the two plans. For example, one-year Adjusted ROIC demonstrates our short-term performance, while three-year Average Adjusted ROIC better reflects long-term results with an emphasis on growth and consistent return of our capital investments over time. Adjusted ROIC has a more significant influence on long-term PSUs than it does on annual bonuses, which are influenced more by results on strategic goals.

The goals and associated payouts for these metrics are shown below. If results for any metric fall between specific goals, the associated payout will be determined by linear interpolation.

 

 

5 “Adjusted ROIC” for the performance period means the average of the annual percentage obtained by dividing the Adjusted ROIC Earnings for each fiscal year during the Performance Period by Adjusted Invested Capital for the same fiscal year. For this purpose, Adjusted Invested Capital is the average of quarter-end amounts for the trailing four quarters, with each such quarter-end amount being equal to the sum of ADM’s stockholders’ equity (excluding non-controlling interests), interest-bearing liabilities, the after-tax effect of the LIFO reserve, and other specified adjustments as determined by the Compensation/Succession Committee to be appropriate.

6 “Adjusted EBITDA” means ADM’s cumulative EBITDA for the performance period, adjusted for special items determined by the Compensation/Succession Committee, in its sole discretion, to be appropriate in order to reflect the impact of significant unusual or nonrecurring events.

 

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Table of Contents

Compensation Discussion and Analysis

2019 Executive Compensation Decisions

 

                 

Performance  

metric

 

Weighting

 

No payout

 

50% payout

 

75% payout

 

100% payout

 

150% payout

 

175% payout

 

200% payout

 

                 

Adjusted ROIC    

25%

Below 6.5%

6.5%

n/a

7.0%

7.5%

8.0%

8.5%

                 

Adjusted EBITDA

50%

Below $9.0 billion

$9.0 billion

n/a

$10.0 billion

$10.75 billion

n/a

$11.25 billion

                 

Relative TSR

25%

Below 30th percentile

30th percentile

Between 30th percentile and median

Median

Between median and top quartile

n/a

Top quartile

Regardless of the results on these metrics, the PSUs will not pay out at all if the company’s cumulative Adjusted EBITDA for the performance period does not reach $7.0 billion. In addition, in establishing and measuring achievements against the goals shown above, the Compensation/Succession Committee retains discretion to make changes to reflect “material portfolio adjustments,” which are events that are unusual and infrequent, like significant acquisitions and divestitures.

RSU VESTING

Except in cases that trigger accelerated vesting (described below), RSUs vest three years after the grant date so long as the recipient is still employed by the company. During the vesting period, participants are paid dividend equivalents on their unvested RSUs. Vested RSUs will be settled in shares of ADM common stock at fair market value.

CONDITIONS LEADING TO ACCELERATED VESTING

RSUs and PSUs will continue to vest as scheduled if an executive leaves the company because of disability or retirement (at age 55 or older with 10 or more years of service, or 65 years of age). Upon the death of an executive, the executive’s RSUs will vest immediately. The executive’s PSUs will vest in an amount equal to: (i) the number of PSUs determined by the Compensation/Succession Committee actually earned during the truncated performance period, plus (ii) the target number of PSUs multiplied by a fraction, the numerator of which is the number of fiscal years in the original performance period that were not included in the truncated performance period, and the denominator of which is three. A detailed description of change in control provisions that may lead to accelerated vesting appears under the header “Employment Agreements, Severance, and Change in Control Benefits” below.

EQUITY AWARDS GRANTED IN 2017 WITH A PERFORMANCE PERIOD THAT ENDED IN 2020

In 2017, ADM granted PSUs to our then-NEOs with a three-year performance period that ended December 31, 2019. The 2017 PSUs contained an initial performance metric requiring our cumulative adjusted EBITDA for the performance period to reach $10.5 billion before any awards could vest. We did not achieve the threshold EBITDA amount, so none of the 2017 PSUs were earned. All of the RSUs granted in 2017 vested on February 16, 2020.

 

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Table of Contents

Compensation Discussion and Analysis

Peer Group

 

 

Peer Group

The Compensation/Succession Committee utilizes the S&P 100 Industrial Index as a peer group to evaluate whether executive officer pay levels are aligned with performance on a relative basis and to assess relative total stockholder return for the PSUs. We believe the large peer group is relevant for ADM because we compete for talent and investments across a wide range of industries. Moreover, our diverse business encompasses aspects of several industries; we do not have a direct competitor — in terms of size or focus — in the public markets. As a result, the Compensation/Succession Committee believes it is appropriate to consider a broad spectrum of compensation levels and investment returns to arrive at our NEO compensation.

 

Company Name

3M Company

Abbott Laboratories

AbbVie Inc.

Accenture plc

Alphabet Inc.*

Amazon.com, Inc.

American Airlines Group Inc.

American Express Company

American International Group, Inc.

AmerisourceBergen Corporation

Anthem, Inc.

Apple Inc.

Archer-Daniels-Midland Company

AT&T Inc.

Bank of America Corporation

Berkshire Hathaway Inc.

Best Buy Co., Inc.

Cardinal Health, Inc.

Caterpillar Inc.

Centene Corporation

Charter Communications, Inc.

Chevron Corporation

Chubb Limited

Cigna Corporation

Cisco Systems, Inc.

Citigroup Inc.

Comcast Corporation

ConocoPhillips

Costco Wholesale Corporation

CVS Health Corporation

Deere & Company

Delta Air Lines, Inc.

Dollar General Corporation

Dow, Inc

DuPont de Nemours, Inc

Exelon Corporation

Exxon Mobil Corporation

Facebook, Inc.

FedEx Corporation

Ford Motor Company

General Dynamics Corporation

General Electric Company

General Motors Company

HCA Healthcare, Inc.

Hewlett Packard Enterprise Company

Honeywell International Inc.

HP Inc.

Humana Inc.

Intel Corporation

International Business Machines Corporation

Company Name

Johnson & Johnson

JPMorgan Chase & Co.

Linde plc

Lockheed Martin Corporation

Lowe’s Companies, Inc.

LyondellBasell Industries N.V.

Marathon Petroleum Corporation

McKesson Corporation

Medtronic plc

Merck & Co., Inc.

MetLife, Inc.

Microsoft Corporation

Morgan Stanley

NIKE, Inc.

Northrop Grumman Corporation

Oracle Corporation

PACCAR Inc

Pepsico, Inc.

Pfizer Inc.

Philip Morris International Inc.

Phillips 66

Prudential Financial, Inc.

Raytheon Company

Schlumberger Limited

Starbucks Corporation

Sysco Corporation

T-Mobile US, Inc

Target Corporation

The Allstate Corporation

The Boeing Company

The Coca-Cola Company

The Goldman Sachs Group, Inc.

The Home Depot, Inc.

The Kroger Co.

The Procter & Gamble Company

The Progressive Corporation

The TJX Companies, Inc.

The Travelers Companies, Inc.

The Walt Disney Company

Tyson Foods, Inc.

United Airlines Holding, Inc

United Parcel Service, Inc.

United Technologies Corporation

UnitedHealth Group Incorporated

Valero Energy Corporation

Verizon Communications Inc.

Walgreens Boots Alliance, Inc.

Wal-Mart Stores, Inc.

WellCare Health Plans, Inc

Wells Fargo & Company

 

 

ADM Proxy Statement 2020       39


Table of Contents

Compensation Discussion and Analysis

Changes to Incentive Compensation Plans Beginning in 2020

 

 

Changes to Incentive Compensation Plans Beginning in 2020

The Compensation/Succession Committee made changes to the short-term and long-term incentive compensation plans for performance periods beginning in 2020. Some of these changes were designed to emphasize our focus on the Nutrition segment of our business. Other changes were made to simplify our incentive plans.

For instance, changes to the 2020 annual cash incentive bonus include no separate calculation for bonus pool funding and that the company portion of the payout is based on results for Adjusted EBITDA, five strategic goals, and Adjusted ROIC. Changes to the 2020 PSU includes increasing the Adjusted ROIC metric to 50%, introducing a new 50% metric of operating profit growth in the Nutrition segment, and using Relative TSR modifier as a +/- 10%. The Committee expects to consider the effect of a global pandemic and other economic and environmental pressures negatively impacting results.

 

 

Benefits

In addition to the direct elements of pay described above, ADM offers benefits to our NEOs to provide for basic health, welfare, and income security needs and to ensure that our compensation packages are competitive. With few exceptions, such as supplemental benefits provided to employees whose benefits under broad-based plans are limited under applicable tax laws, our policy is to offer the same benefits to all U.S. salaried employees as are offered to the NEOs.

 

Retirement Program   Eligibility   Description

401(k) and ESOP

  All salaried employees  

 

Qualified defined contribution plan where employees may defer up to 75% of eligible pay, or up to $19,000 for 2019. The company provides a 1% non-elective employer contribution and a match of 4% on the first 6% contributed by an employee. The employee contribution can be made pre-tax (401(k)) or after-tax (Roth 401(k)). Employees also may defer traditional after-tax contributions into the plan for a total $55,750 savings opportunity including all contribution types (pre-tax, Roth, and after tax) plus any ADM matching and 1% non-elective contributions. Employees who are 50 years of age or older can elect to make additional contributions of up to $6,000 for 2019.

 

ADM

Retirement Plan

  All salaried employees  

 

Newly-hired eligible employees and those who had less than 5 years of service as of January 1, 2009, participate in a qualified cash balance pension formula where the benefit is based on an accrual of benefit at a stated percentage of the participant’s base compensation each year. Those employees who had 5 or more years of service as of January 1, 2009, participate in a qualified traditional defined benefit formula where the benefit is based on number of years of service and final average earnings. (Final average earnings is the average of monthly compensation over a 60 consecutive month period within the employee’s last 180-month period of employment that produces the highest average.) Effective January 1, 2022, participants in the traditional defined benefit pension will begin to accrue benefits under the cash balance pension formula.

 

Deferred

Compensation Plan

 

Employees with salaries

above $175,000

 

 

Eligible participants may defer up to 75% of their annual base salary and up to 100% of their annual cash incentive until designated future dates. Earning credits are added to the deferred compensation account balances based upon hypothetical investment elections available under these plans and chosen by the participant. These hypothetical investment options correspond with the investment options (other than company common stock) available under the 401(k) and ESOP.

 

Supplemental

Retirement Plan

  Employees whose retirement benefit is limited by applicable IRS limits  

 

Non-qualified deferred compensation plan that ensures participants in the Retirement Plan receive the same retirement benefit they would have received if not for certain limitations under applicable tax law.

 

 

Healthcare and Other Benefits. NEOs receive the same healthcare benefits as other employees, except that we provide executive physicals and related services to our senior executives who serve on the Executive Council. We provide a benefits package for employees (including NEOs) and their dependents, portions of which may be paid for by the employee. Benefits include life, accidental death and dismemberment, health (including prescription drug), dental, vision, and disability insurance; dependent and healthcare reimbursement accounts; tuition reimbursement; paid time off; holidays; and a matching gifts program for charitable contributions.

 

 

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Table of Contents

Compensation Discussion and Analysis

Compensation Policies and Governance

 

Perquisites. Consistent with our pay-for-performance philosophy, we limit executive perquisites. Any NEO who receives a perquisite is individually responsible for any associated taxes.

The Compensation/Succession Committee allows our Chairman and CEO to have access to company aircraft for personal use for security and efficiency reasons. See the notes to the Summary Compensation Table for a description of other perquisites provided to the NEOs.

 

 

Compensation Policies and Governance

EXECUTIVE STOCK OWNERSHIP

The Board of Directors believes it is important for each member of senior management to maintain a significant ownership position in shares of ADM’s common stock to further align their interests with the interests of our stockholders. Accordingly, we require each member of senior management to own shares of common stock with a fair market value ranging from one to six times the individual’s base salary. Executives may not sell any company securities until the applicable guideline is met. As shown below, each of our NEOs exceeds the applicable ownership guideline by a comfortable margin.

 

Executive

  

Ownership Guideline

as a Multiple of Salary

   Actual Ownership
as of March 16, 2020
     

J. R. Luciano

   6.0x    23.6x
     

R. G. Young

   3.0x    15.4x
     

V. F. Macciocchi

   3.0x    7.4x
     

G. A. Morris

   3.0x    9.0x
     

J. D. Taets

   3.0x    10.3x

 

TIMING OF GRANTS

The Compensation/Succession Committee approves all equity awards to NEOs at a meeting during the first quarter of each fiscal year, and awards are issued promptly thereafter. There is no attempt to time these grants in relation to the release of material, non-public information. Under the 2009 Incentive Compensation Plan, fair market value is the closing market price of ADM’s common stock on the last trading day prior to the date of grant. In addition to annual awards, NEOs may receive awards when they join the company or change their job status, including promotions.

CLAWBACK PROVISIONS

We include clawback provisions in the company’s long-term incentive award agreements that provide us with the ability to recover this compensation for a broad range of reasons. Specifically, this policy provides for the recoupment of any cash or equity incentive awards made to NEOs and certain other members of senior management for a period of three years from the vesting date in the event of a financial restatement or ethical misconduct. In 2015 and in 2017, we added language to our equity awards to incorporate post-vesting non-competition and non-solicitation restrictions. Any violation of these provisions could be cause for the company to initiate a clawback

proceeding. Our aggressive approach to recoupment of long-term incentive compensation reflects the company’s commitment to protecting stockholder value.

PROHIBITION ON INSIDER TRADING AND HEDGING

Pursuant to ADM’s Insider Trading Policy, employees and directors may not engage in short selling, speculative trading, or hedging transactions involving the company’s stock, including writing or trading in options, warrants, puts and calls, prepaid variable forward contracts, or equity swaps or collars; or enter into other transactions that are designed to hedge or offset decreases in the price of the company’s securities. In addition, employees and directors are required to review any pledge of company securities with ADM’s General Counsel before committing to a pledge transaction.

Our Insider Trading Policy also provides that all transactions in ADM securities by directors, NEOs, and certain other officers and employees must be pre-cleared by the law department.

SECTION 162(M) OF THE INTERNAL REVENUE CODE EFFECTS ON THE COMPANY

Section 162(m) of the Internal Revenue Code precludes the company from taking a federal income tax deduction for compensation paid in

 

 

ADM Proxy Statement 2020       41


Table of Contents

Compensation Discussion and Analysis

Employment Agreements, Severance, and Change in Control Benefits

 

excess of $1 million to our “covered employees” (which, as of 2018, includes the CEO, CFO, and our three other most highly compensated executive officers). Prior to 2018, this deduction limitation did not apply to qualified “performance-based” compensation or to the compensation of a CFO.

Despite these new limits on the deductibility of performance-based compensation, the Compensation/Succession Committee continues to believe that a significant portion of our executives’ compensation should be tied to the company’s performance and that shareholder interests are best served if its discretion and flexibility in structuring and awarding compensation is not restricted. The Compensation/Succession Committee also believes that the amount of any expected loss of a tax deduction under Section 162(m) will be insignificant to the company’s overall tax position. Therefore, we do not anticipate that the changes to Section 162(m) will significantly impact the design of our compensation program going forward.

EVALUATION OF RISK IN OUR COMPENSATION PROGRAMS

On an ongoing basis, the Compensation/Succession Committee, with input from management, assesses potential risks associated with compensation decisions and discusses them with our board of directors if warranted. To date, we have not identified any incentive compensation features that encourage inappropriate risk-taking. To ensure we are considering all possibilities objectively, we engage an outside consultant every other year to review the company’s programs and independently assess the risk in them.

In 2019, the company engaged an outside consultant, The Korn Ferry Hay Group (“Hay”), to assist the Compensation/Succession Committee

in evaluating the risk in our compensation programs. As part of its independent assessment, Hay reviewed all of the company’s incentive compensation programs and determined that none encourages inappropriate risk-taking or the manipulation of earnings. The detailed findings of this review were discussed with management and presented to the Compensation/Succession Committee in November 2019.

Another independent review of the company’s incentive programs will be conducted during 2021 and reported to the Compensation/Succession Committee.

LIABILITIES ASSOCIATED WITH RETIREMENT PROGRAMS

The Compensation/Succession Committee is mindful that our non-qualified deferred compensation and supplemental retirement plans create financial statement liabilities. We generally do not set amounts aside in a “rabbi” trust for the benefit of participants in these plans. However, the deferred compensation plans have “rabbi” trust funding triggers in the event of a change in control of the company. These triggers provide some measure of assurance to employees that amounts they have chosen to defer from their current compensation will be held for their benefit, although still subject to creditor claims as required under the applicable tax law.

The company is required to fund its qualified pension plans in a manner consistent with the minimum funding requirements of the Internal Revenue Code and the Employee Retirement Income Security Act. Historically, the company has made contributions in excess of the minimum to maintain plans at or near a full funding level relative to the accrued benefit obligation.

 

 

 

Employment Agreements, Severance, and Change in Control Benefits

 

NO EMPLOYMENT CONTRACTS

None of our NEOs has an employment contract or separation agreement. Consistent with our approach of rewarding performance, employment is not guaranteed, and either ADM or any NEO may terminate the employment relationship at any time.

ADM maintains a severance program that serves as a guideline for severance benefits that may be provided to various levels of employees, including the NEOs, upon termination of their employment without cause, but the program does not give anyone a contractual right to receive any severance benefits. The Compensation/Succession Committee generally requires a terminated employee to enter into a non-competition and/or non-solicitation agreement in exchange for receiving severance.

CHANGE IN CONTROL PROVISIONS

Upon a change in control of the company, NEOs may receive certain protections related to their LTI awards (as described below), and other compensation detailed in the sections titled “Pension Benefits,” “Nonqualified Deferred Compensation,” and “Termination of Employment and Change in Control Arrangements.” NEOs are not eligible to receive any other cash severance, continued health and welfare benefits, tax gross ups, or other change in control benefits.

The Archer-Daniels-Midland Company 2009 Incentive Compensation Plan provides non-employee directors and all employees, including executive officers, change in control protections for their LTI awards. For awards granted in 2017 and later, if a change in control occurs with respect to the company, the RSUs held by executive officers generally will vest immediately, and the PSUs will vest on a modified pro rata

 

 

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Table of Contents

Compensation Discussion and Analysis

Employment Agreements, Severance, and Change in Control Benefits

 

basis, if the equity award is not assumed or replaced. The same accelerated vesting provisions will apply if an award is assumed or replaced, but the executive officer’s employment is terminated for reasons other than for cause or good reason within 24 months of the change in control (referred to as “double trigger” vesting). We adopted double trigger accelerated vesting to provide our executives with some assurance that

they will not be disadvantaged with respect to their equity awards in the event of a change in control of the company. This assurance increases the value of these awards to the executives (which in turn enhances retention) and makes it easier for our executives to focus on the potential benefits of a change in control for our shareholders without conflicting concerns about their own financial situations.

 

 

 

COMPENSATION/SUCCESSION COMMITTEE REPORT

The Compensation/Succession Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based upon this review and discussion, the Compensation/Succession Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

K. R. Westbrook, Chairman

M. S. Burke

S. F. Harrison

COMPENSATION/SUCCESSION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the members of the Compensation/Succession Committee is or has been an employee of the company or any of the company’s subsidiaries. There are no interlocking relationships between the company and other entities that might affect the determination of the compensation of the company’s executive officers.

 

 

ADM Proxy Statement 2020       43


Table of Contents

 

 

Executive Compensation

SUMMARY COMPENSATION TABLE

The following table summarizes the compensation for the fiscal years noted in the table of our named executive officers.

 

Name and

Principal Position

    Year       Salary ($)     Bonus ($)  

Stock

    Awards    

($)(1)

Option

    Awards    

($)(2)

Non-Equity

Incentive Plan

 Compensation 

($)(3)

Change

in Pension

Value and

Nonqualified

Deferred

 Compensation 

Earnings ($)(4)

All Other

 Compensation 

($)(5)

Total

($)

J. R. LUCIANO

Chairman, CEO and
President

2019 1,383,338 —   13,641,916 —   2,898,000 93,298 123,869 18,140,421
2018 1,300,008 —   13,204,353 —   5,020,600 33,918 78,655 19,637,534
2017 1,300,008 —   12,166,416 —   2,251,600 76,179 80,852 15,875,055

R. G. YOUNG

Executive Vice

President and CFO

2019 845,848 —   4,722,182 —   1,164,375 61,783 30,879 6,825,067
2018 825,048 4,456,512 —   2,172,375 19,233 24,204 7,497,372
2017 825,048 —   4,153,349 —   921,856 53,260 25,454 5,978,967

V. F. MACCIOCCHI

Senior Vice President,

2019 669,168 —   2,938,269 —   664,875 29,335 23,071 4,324,718

President, Nutrition, and Chief Sales and Marketing Officer(6)

G. A. MORRIS

Senior Vice President and President, Ag Services and Oilseeds

2019 670,834 —   2,938,269 —   664,875 818,206 26,145 5,118,329
2018 650,004 —   3,081,073 —   1,255,150 27,574 21,082 5,034,883
2017 650,004 —   2,327,537 —   530,400 393,998 21,132 3,923,071

J. D. TAETS

Senior Vice President and President, Global Business Readiness and Global Procurement

2019

 

701,804 —   2,938,269 —    794,500 857,911 23,478 5,315,962

2018

 

700,008 —   3,081,073 —   1,351,700 (194,918) 1,654,244 6,592,107

2017

700,008 —   2,962,263 —   571,200 561,951 27,743 4,823,165

(1) Stock awards in 2019 consisted of RSU awards and PSU awards. The amounts reported in this column represent the aggregate grant date fair value of the RSU awards for fiscal years 2019, 2018, and 2017 and of the target level of the PSU awards for fiscal years 2018 and 2019. We calculated these amounts in accordance with the provisions of FASB ASC Topic 718 utilizing the assumptions discussed in Note 11 to our financial statements for the fiscal years ended December 31, 2019, December 31, 2018, and December 31, 2017. The grant date fair value of the 2019 RSUs and the grant date fair value of the 2019 PSUs if target performance and maximum performance is achieved are as follows:

 

        

PSUs                 

Name

 

RSUs                 

 

Target                 

 

Maximum                

       

J. R. Luciano

 

$6,907,299                

 

        $6,734,617                     

 

    $13,469,233                   

       

R. G. Young

 

$2,390,978                

 

        $2,331,204                     

 

$4,662,408                

       

V. F. Macciocchi

 

$1,487,731                

 

        $1,450,538                     

 

$2,901,076                

       

G. A. Morris

 

$1,487,731                

 

        $1,450,538                     

 

$2,901,076                

       

J. D. Taets

 

$1,487,731                

 

        $1,450,538                     

 

$2,901,076                

(2) No options were issued in 2017, 2018 or 2019.

(3) The amounts reported in this column represent amounts earned under our annual incentive plan during each of the respective fiscal periods shown. In each case, the amounts were paid shortly after the close of the applicable fiscal period.

(4) The amounts reported in this column for 2019 represents the aggregate change in actuarial present value of each NEO’s accumulated benefit under all defined benefit and actuarial pension plans from December 31, 2018 to December 31, 2019, using the same assumptions used for financial reporting purposes except that retirement age is assumed to be the normal retirement age (65) specified in the plans. No NEO received above market or preferential earnings on deferred compensation. To derive the change in pension value for financial reporting purposes, the assumptions used to value pension liabilities on December 31, 2019 were an interest rate of 3.44% for the ADM Retirement Plan, an interest rate of 3.19% for the ADM Supplemental Retirement Plan, and mortality was determined using the PRI-2012 mortality table, with a white collar adjustment, projected generationally using Scale MP-2019. The assumptions used to value pension liabilities on December 31, 2018 were an interest rate of 4.44% for the ADM Retirement Plan, an interest rate of 4.27% for the ADM Supplemental Retirement Plan, and mortality was determined using the RP2014 mortality table, with a white collar adjustment, projected generationally using Scale MP-2018.

(5) The amounts reported in this column for 2019 include costs for use of company aircraft, value of company-provided life insurance, imputed value of company-provided life insurance, costs for executive healthcare services, spousal travel and lodging, company contributions under the 401(k) and ESOP and charitable gifts pursuant to the company’s matching charitable gift program which is available to substantially all full-time employees and non-employee directors. Specific perquisites and other items applicable to each NEO listed are identified below by an “X”. Where a perquisite or benefit exceeded $10,000 for an individual, the dollar amount is given.

 

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Table of Contents

Executive Compensation

Grants of Plan-Based Awards During Fiscal Year 2019

 

NEO

Personal

Aircraft Use

Imputed

Income

Life
Insurance

Company
Paid
Premiums

Executive
Healthcare

Services

Spousal
Travel &
Lodging
Matching
Charitable Gifts
             

J. R. Luciano

$94,400 X X X X X
             

R. G. Young

X X X X
             

V. F. Macciocchi(6)

X X X X
             

G. A. Morris

X X X X X
             

J. D. Taets

X X X X X

(6) Mr. Macciocchi first became an NEO in 2019.

Aggregate incremental cost to our company of perquisites and personal benefits is determined as follows. In the case of payment of expenses related to items such as executive healthcare services and relocation expenses, incremental cost is determined by the amounts paid to third-party providers. In the case of personal use of company-owned aircraft, incremental cost is based solely on the cost per hour to the company to operate the aircraft, and does not include fixed costs that do not change based on usage, such as purchase costs of the aircraft and non-trip-related hangar expenses. Our direct operating cost per hour of an aircraft is based on the actual costs of fuel, on-board catering, aircraft maintenance, landing fees, trip-related hangar and parking costs, and smaller variable costs, divided by the number of hours the aircraft was operated during the year.

GRANTS OF PLAN-BASED AWARDS DURING FISCAL YEAR 2019

The following table summarizes the grants of plan-based awards made to our named executive officers during the fiscal year ended December 31, 2019.

 

        

Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards

 

Estimated Future Payouts Under
Equity Incentive Plan Awards

  All Other
Stock
Awards:
Number of
Shares of
  Grant
Date
Fair
Value of
Stock
and
Option

Name

  Grant
Date
  Threshold
($)
  Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
  Stock or
Units(#)
  Awards
($)(1)

J. R. LUCIANO

                                   

Annual Cash Incentive Plan Award

      2,800,000   5,600,000            

Performance Share Unit Award

  2/14/19         0   162,908   325,816     6,734,617

Restricted Stock Unit Award

  2/14/19                           162,908   6,907,299

R. G. YOUNG

                   

Annual Cash Incentive Plan Award

      1,125,000   2,250,000            

Performance Share Unit Award

  2/14/19         0   56,391   112,782     2,331,204

Restricted Stock Unit Award

  2/14/19                           56,391   2,390,978

V. F. MACCIOCCHI

                   

Annual Cash Incentive Plan Award

      675,000   1,350,000            

Performance Share Unit Award

  2/14/19         0   35,088   70,176     1,450,538

Restricted Stock Unit Award

  2/14/19                           35,088   1,487,731

G. A. MORRIS

                   

Annual Cash Incentive Plan Award

      675,000   1,350,000            

Performance Share Unit Award

  2/14/19         0   35,088   70,176     1,450,538

Restricted Stock Unit Award

  2/14/19                           35,088   1,487,731

J. D. TAETS

                   

Annual Cash Incentive Plan Award

      700,000   1,400,000            

Performance Share Unit Award

  2/14/19         0   35,088   70,176     1,450,538

Restricted Stock Unit Award

  2/14/19                           35,088   1,487,731

(1) The grant date fair value is generally the amount the company would expense in its financial statements over the award’s service period under FASB ASC Topic 718. With respect to the PSUs the value represents the probable outcome of the performance condition using target payout levels. See Footnote 1 to the Summary Compensation Table for additional detail.

 

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Table of Contents

Executive Compensation

Grants of Plan-Based Awards During Fiscal Year 2019

 

All of the awards in the table above were granted under our 2009 Incentive Compensation Plan. The awards shown in the columns designated “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” were made pursuant to our annual cash incentive plan. The amounts actually paid with respect to these awards are reflected in the Summary Compensation Table in the “Non-Equity Incentive Plan Compensation” column. See “Compensation Discussion and Analysis — 2019 Executive Compensation Decisions — 2019 Annual Cash Incentives” for more information about our annual cash incentive plan.

The awards shown in the column designated “Estimated Future Payouts Under Equity Incentive Plan Awards” in the table above are PSU awards and vest in three years if the company achieves certain performance goals over a three-year performance period (2019 – 2021). The 2019 PSU metrics are: (i) the company’s relative TSR as compared to the companies in the S&P 100 Industrials Index (25% weighting), (ii) the degree to which the company achieves specified Adjusted ROIC goals (25% weighting), and (iii) the degree to which the company’s Adjusted EBITDA for 2019 – 2021 exceeds its specified cumulative Adjusted EBITDA goals for the same period (50% weighting). Before the PSU can pay out, the company’s cumulative EBITDA must exceed a certain threshold. If this does not occur, there will be no payout for the other metrics.

All of the awards shown in the “All Other Stock Awards” column in the table above are RSUs awards and vest in full three years after the date of the grant. Under the terms of the RSU award agreements, the recipient of the award may receive cash dividend equivalents on RSUs prior to their vesting date, but may not transfer or pledge the units in any manner prior to vesting. Dividend equivalents on RSUs are paid at the same rate as dividends to our stockholders generally.

The 2019 RSU and PSU awards are subject to double trigger accelerated vesting and payout upon a change in control only if the award recipient’s employment is terminated without cause or if the award recipient resigns for good reason, in each case, within 24 months after the change in control, or if the surviving entity in the change in control transaction refuses to continue, assume, or replace the awards. In such instance the 2019 RSU awards will vest in full immediately, and the 2019 PSU awards will vest based on actual performance during the truncated performance period and on a pro rata basis based on a target number of units for any year(s) remaining in the original performance period. Upon the death of an award recipient, vesting of the RSU awards will accelerate in full while the vesting of the PSU awards will accelerate in the manner described in the preceding sentence. If an award recipient’s employment ends as a result of disability or retirement, both the RSU and PSU awards will continue to vest in accordance with the original vesting schedule. If an award recipient’s employment ends for any other reason, unvested RSU and PSU awards will be forfeited. With respect to each of the RSU and PSU awards described above, if an award recipient’s employment is terminated for cause, or if the recipient breaches a non-competition, non-solicitation, or confidentiality restriction or participates in an activity deemed by us to be detrimental to our company, the recipient’s unvested units will be forfeited, and any shares issued in settlement of units that have already vested must be returned to us or the recipient must pay us the amount of the shares’ fair market value as of the date they were issued.

The impact of a termination of employment or change in control of our company on RSU and PSU awards held by our named executive officers is quantified in the “Termination of Employment and Change in Control Arrangements” section below.

 

46       ADM Proxy Statement 2020


Table of Contents

Executive Compensation

Outstanding Equity Awards at Fiscal Year 2019 Year-End

 

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR 2019 YEAR-END

The following table summarizes information regarding unexercised stock options and unvested restricted stock awards for the named executive officers as of December 31, 2019.

 

   

                                      OPTION AWARDS                                    

                                     STOCK AWARDS                                     

Name

Grant 

Date 

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable(1)

Option

Exercise

Price ($)

Option 

Expiration 

Date 

Number of

Shares or

Units of

Stock That

Have Not

Vested (#)(2)

Market Value

of Shares

or Units of

Stock that

Have Not

Vested ($)(3)

Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(4)
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested($)(3)

J. R. LUCIANO

2-11-2016  558,659 372,440 33.18 2-11-2026 
2-12-2015  259,856 64,965 46.92 2-12-2025 
2-13-2014  234,531 40.65 2-13-2024 
2-21-2013  51,664 32.50 2-21-2023 
8-16-2012  216,585 26.25 8-16-2022 
8-11-2011  194,014 26.17 8-11-2021  452,744 20,984,684 315,348 14,616,380

R. G. YOUNG

2-11-2016  208,144 138,764 33.18 2-11-2026 
2-12-2015  171,868 42,968 46.92 2-12-2025 
2-13-2014  184,631 40.65 2-13-2024 
2-21-2013  31,503 32.50 2-21-2023 
8-16-2012  123,763 26.25 8-16-2022 
8-11-2011  80,377 26.17 8-11-2021  154,744 7,172,384 107,840 4,998,384

V. F. MACCIOCCHI

2-11-2016  55,866 37,244 33.18 2-11-2026  88,428 4,098,638 68,117 3,157,223

G. A. MORRIS

2-11-2016  67,039 44,693 33.18 2-11-2026 
2-12-2015  22,436 5,610 46.92 2-12-2025 
8-16-2012  5,263 26.25 8-16-2022 
8-11-2011  4,491 26.17 8-11-2021 
8-19-2010  3,114 30.71 8-19-2020  96,943 4,493,308 70,658 3,274,998

J. D. TAETS

2-11-2016  83,799 55,866 33.18 2-11-2026 
2-12-2015  60,594 15,149 46.92 2-12-2025 
2-13-2014  70,285 40.65 2-13-2024 
2-21-2013  13,861 32.50 2-21-2023 
8-16-2012  47,492 26.25 8-16-2022  104,111 4,825,545 70,658 3,274,998

(1) Stock option awards vest at a rate of 20% of the subject shares per year on each of the first five anniversaries of the grant date.

(2) The RSUs reported in this column vest on the dates and in the amounts set forth below.

 

  Restricted Stock Units Vesting On:

Name

  2/16/20        2/15/21          2/14/22       
       

J. R. Luciano

137,396     152,440     162,908    
       

R. G. Young

46,904     51,449     56,391    
       

V.F. Macciocchi

20,311     33,029     35,088    
       

G. A. Morris

26,285     35,570     35,088    
       

J. D. Taets

33,453     35,570     35,088    

(3) Based on the closing market price of a share of our common stock on the New York Stock Exchange on December 31, 2019, which was $46.35.

 

 

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Executive Compensation

Option Exercises and Stock Vested During Fiscal Year 2019

 

(4) The PSUs reported in this column represent 2018 and 2019 PSU awards that each will vest at the end of the three-year performance period. The number of PSUs that the executive officer will receive is dependent upon the achievement of certain financial metrics approved by the Compensation/Succession Committee measuring relative TSR, Adjusted EBITDA, and Adjusted ROIC. The amount of PSU units shown is the target number of units that could be earned and paid out in shares. The company did not assign a threshold unit amount to the 2018 or 2019 PSU awards.

 

  Performance Stock Units:

Name

Performance Period        

1/1/18 to 12/31/20        

Performance Period        

1/1/19 to 12/31/21        

     

J. R. Luciano

152,440         162,908        
     

R. G. Young

51,449         56,391        
     

V.F. Macciocchi

33,029         35,088        
     

G. A. Morris

35,570         35,088        
     

J. D. Taets

35,570         35,088        

OPTION EXERCISES AND STOCK VESTED DURING FISCAL YEAR 2019

The following table summarizes information regarding stock options exercised by the named executive officers during the fiscal year ended December 31, 2019 and restricted stock unit awards to the named executive officers that vested during that same period.

 

  OPTION AWARDS STOCK AWARDS

Name

Number of Shares

     Acquired on Exercise (#)     

Value Realized

     on Exercise ($)(1)     

Number of Shares

     Acquired On Vesting (#)(2)     

Value Realized

     on Vesting ($)(3)     

         

J. R. LUCIANO

160,103 6,685,901
         

R. G. YOUNG

59,651 2,491,026
         

V. F. MACCIOCCHI

16,011 668,619
         

G. A. MORRIS(4)

2,279 23,428 19,213 802,335
         

J. D. TAETS(5)

25,503 473,995 24,016 1,002,908

(1) Represents the difference between the market value of the shares acquired upon exercise (calculated using the sale price of the shares on the NYSE on the date preceding the exercise date) and the aggregate exercise price of the shares acquired.

(2) Reflects vesting of the 2016 RSUs. The 2017 PSUs did not achieve the threshold performance metric, so they were forfeited in their entirety and are not reflected in this table.

(3) Represents the market value of the shares issued in settlement of 2016 RSU awards on the date the awards vested, calculated using the closing sale price reported on the NYSE on the trading date immediately prior to the vesting date, before shares were withheld for taxes.

(4) On June 4, 2019, Mr. Morris exercised 2,279 options at a strike price of $28.70.

(5) On December 17, 2019, Mr. Taets exercised 13,305 options at a strike price of $26.17, 6,781 options at a strike price of $30.71, and 5,417 options at a strike price of $26.25.

 

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Table of Contents

Executive Compensation

Pension Benefits

 

PENSION BENEFITS

The following table summarizes information regarding the participation of each of the named executive officers in our defined benefit retirement plans as of the pension plan measurement date for the fiscal year ended December 31, 2019.

 

Name

Plan Name

Number of Years

Credited Service (#)(1)

Present Value

of Accumulated

Benefit ($)(2)

Payments During Last

Fiscal Year ($)

         

J. R. LUCIANO

    ADM Retirement Plan 9 91,244 0
    ADM Supplemental Retirement Plan 9 306,007 0
         

R. G. YOUNG

    ADM Retirement Plan 9 95,433 0
    ADM Supplemental Retirement Plan 9 194,468 0
         

V. F. MACCIOCCHI

    ADM Retirement Plan 5 42,948 0
    ADM Supplemental Retirement Plan 5 58,717 0
         

G. A. MORRIS

    ADM Retirement Plan 25 831,003 0
    ADM Supplemental Retirement Plan 25 1,433,182 0
         

J. D. TAETS

    ADM Retirement Plan 32 1,270,305 0
    ADM Supplemental Retirement Plan 32 2,453,443 0

(1) The number of years of credited service was calculated as of the pension plan measurement date used for financial statement reporting purposes, which was December 31, 2019. For each of the named executive officers, the number of years of credited service is equal to the number of actual years of service with our company.

(2) The assumptions used to value pension liabilities as of December 31, 2019 were an interest rate of 3.44% for the ADM Retirement Plan and 3.19% for the ADM Supplemental Retirement Plan and mortality was determined under the PRI-2012 mortality table, with a white collar adjustment, projected generationally using scale MP-2019. Mr. Morris and Mr. Taets participate in the final average pay formula under the ADM Retirement Plan and the ADM Supplemental Retirement Plan, while Mr. Luciano, Mr. Young and Mr. Macciocchi participate in the cash balance formula under those plans. The amounts reported for Mr. Luciano, Mr. Young and Mr. Macciocchi are the present value of their respective projected normal retirement benefit under the Retirement and Supplemental Plans at December 31, 2019. The amounts reported are calculated by projecting the balance in the accounts forward to age 65 by applying a 2.19% interest rate, converting to a single-life annuity as of age 65, and then discounting back to December 31, 2019 using the assumptions specified above. The total account balance for Mr. Luciano at December 31, 2019 under the Retirement and Supplemental Plans was $304,780.26, the total account balance for Mr. Young at December 31, 2019 under the Retirement and Supplemental Plans was $224,360.15 and the total account balance for Mr. Macciocchi at December 31, 2019 under the Retirement and Supplemental Plans was $82,543.87, which are the amounts that would have been distributable if such individuals had terminated employment on that date.

 

QUALIFIED RETIREMENT PLAN

We sponsor the ADM Retirement Plan (the “Retirement Plan”), which is a qualified defined benefit plan under Section 401(a) of the Internal Revenue Code. The Retirement Plan covers eligible salaried employees of our company and its participating affiliates.

Effective January 1, 2009, the Retirement Plan was amended to provide benefits determined under a cash balance formula. The cash balance formula applies to any participant entering or re-entering the plan on or after January 1, 2009 and to any participant who had less than five years of service prior to January 1, 2009. For a participant with an accrued benefit and five years of service or more prior to January 1, 2009, an account was established on January 1, 2009 with an opening balance equal to the present value of his or her accrued benefit determined under the final average pay formula. The accrued benefits of all other participants to whom the cash balance formula does not apply continue to be determined under the traditional final average pay formula. Messrs. Luciano, Young, and Macciocchi, participate in the cash balance formula, while Messrs. Morris and Taets participate in the final average pay formula.

A participant whose accrued benefit is determined under the cash balance formula has an individual hypothetical account established

under the Retirement Plan. Pay and interest credits are made on an annual basis to the participant’s account. Pay credits are equal to a percentage of the participant’s earnings for the year based on the sum of the participant’s age and years of service at the end of the year under the schedule to the right.

 

AGE + SERVICE

        PAY         
   

Less than 40

2.00%
   

at least 40 but less than 50

2.25%
   

at least 50 but less than 60

2.50%
   

at least 60 but less than 70

3.00%
   

at least 70 but less than 80

3.50%
   

80 or more

4.00%

Interest credits are made at the end of the year and are calculated on the balance of the participant’s account as of the first day of the plan year, using an interest rate based upon the yield on 30-year Treasury bonds, subject to a minimum annual interest rate of 1.95%. The participant’s pension benefit will be the amount of the balance in the participant’s account at the time that the pension becomes payable under the Retirement Plan. The pension payable to a participant whose

 

 

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Table of Contents

Executive Compensation

Supplemental Retirement Plan

 

accrued benefit under the final average pay formula was converted to the cash balance formula at January 1, 2009, if paid in annuity form, will be increased to reflect any additional benefit which the participant would have received in that form under the traditional formula, but only with respect to the benefit accrued by the participant prior to January 1, 2009. A participant under the cash balance formula becomes vested in a benefit under the Retirement Plan after three years of service. There are no special early retirement benefits under the cash balance formula.

For a participant whose accrued benefit is determined under the final average pay formula, the formula calculates a life annuity payable at a normal retirement age of 65 based upon a participant’s highest average earnings over 60 consecutive months during the last 15 years of employment. The final average pay formula provides a benefit of 36.0% of a participant’s final average earnings, plus 16.5% of the participant’s final average earnings in excess of Social Security “covered compensation.” This benefit accrues ratably over 30 years of service. A participant accrues an additional benefit of 0.5% of final average earnings for years of service in excess of 30. Early retirement is available at age 55 with 10 years of service. The life annuity payable at early retirement is subsidized relative to the normal retirement benefit. The payment amount in life annuity form is 97% of the full benefit amount at age 64, and 50% at age 55, with adjustments between those two ages. All participants under the final average pay formula are vested in their benefits under the Retirement Plan, based on five years of service.

Earnings for purposes of the cash balance and the final average pay formulas generally include amounts reflected as pay on Form W-2, increased by 401(k) Plan pre-tax deferrals and elective “cafeteria plan” contributions, and decreased by bonuses, expense allowances/reimbursements, severance pay, income from stock option and restricted stock awards or cash payments in lieu thereof, merchandise or service discounts, amounts paid in a form other than cash, and other fringe benefits. Annual earnings are limited as required under Section 401(a)(17) of the Internal Revenue Code.

When a participant is eligible for a pension, the participant has a choice of a life annuity, a joint and 50% survivor annuity, a joint and 75% survivor annuity, or a joint and 100% survivor annuity. Each joint and survivor annuity form is the actuarial equivalent of the life annuity payable at the same age, with actuarial equivalence determined using

the IRS prescribed mortality table under Section 417(e) of the Internal Revenue Code and an interest rate assumption of 6%. Cash balance participants may also elect a lump-sum payment option.

In December 2017, the Retirement Plan was amended to freeze final average pay formula benefit accruals as of December 31, 2021 for all active final average pay formula participants in the Retirement Plan on that date. Final average pay accrued benefits would be calculated as if the participant terminated employment on the earlier of their actual termination date or December 31, 2021. The final average pay benefit will not be converted to a cash balance benefit, but will remain subject to the final average pay benefit rules. As of January 1, 2022, all Retirement Plan participants will accrue future benefits under the cash balance formula, based on their age and total years of service.

SUPPLEMENTAL RETIREMENT PLAN

We also sponsor the ADM Supplemental Retirement Plan (the “Supplemental Plan”), which is a nonqualified deferred compensation plan under Section 409A of the Internal Revenue Code. The Supplemental Plan covers participants in the Retirement Plan whose benefit under such plan is limited by the benefit limits of Section 415 or the compensation limit of Section 401(a)(17) of the Internal Revenue Code. The Supplemental Plan also covers any employee whose Retirement Plan benefit is reduced by participation in the ADM Deferred Compensation Plan. Participation by those employees who otherwise qualify for coverage is at the discretion of the Board, the Compensation/Succession Committee or, in the case of employees other than executive officers, the Chief Executive Officer. The Supplemental Plan provides the additional benefit that would have been provided under the Retirement Plan but for the limits of Section 415 or 401(a)(17) of the Internal Revenue Code, and but for the fact that elective contributions made by the participant under the ADM Deferred Compensation Plan are not included in the compensation base for the Retirement Plan. A participant is not vested in a benefit under the Supplemental Plan unless and until the participant is vested in a benefit under the Retirement Plan, which requires three years of service for a cash balance formula participant and five years of service for a final average pay formula participant for vesting. A separate payment form election is required with respect to the Supplemental Plan benefit from among the same options available under the Retirement Plan, subject to the limitations of Section 409A of the Internal Revenue Code.

 

 

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Table of Contents

Executive Compensation

Nonqualified Deferred Compensation

 

NONQUALIFIED DEFERRED COMPENSATION

The following table summarizes information with respect to the participation of the named executive officers in the ADM Deferred Compensation Plan for Selected Management Employees I and II, which are non-qualified deferred compensation plans, for the fiscal year ended December 31, 2019.

 

Name

Executive Contributions

in Last Fiscal Year ($)

Aggregate Earnings

in Last Fiscal Year ($)(1)

Aggregate Withdrawals/

Distributions in Last
Fiscal Year ($)

Aggregate Balance

at 12/31/19 ($)(2)

         

J. R. LUCIANO

0

0

0

0

         

R. G. YOUNG

0

0

0

0

         

V. F. MACCIOCCHI

0

0

0

0

         

G. A. MORRIS

0

0

0

0

         

J. D. TAETS

0

51,168

106,174

324,367

(1) The amount reported in this column was not reported in the Summary Compensation Table as part of Mr. Taets’ compensation for the fiscal year ended December 31, 2019 because none of the earnings is considered to be “above market”.

(2) Of the amount shown in this column, $709,977 was previously reported as compensation to Mr. Taets in the Summary Compensation Table in previous years, not all of which is reflected in this column due in part to previous distributions to Mr. Taets, including $106,174 in 2019.

 

We sponsor two nonqualified deferred compensation plans — the ADM Deferred Compensation Plan for Selected Management Employees I and II (referred to as “Deferred Comp Plan I” and “Deferred Comp Plan II”, respectively). Deferred Comp Plan I was frozen as to new participants and new deferrals effective January 1, 2005, and is maintained as a separate “grandfathered” plan under Section 409A of the Internal Revenue Code. Deferred Comp Plan II is structured to comply with Section 409A. Deferred Comp Plan II covers salaried employees of our company and its affiliates whose annualized base salary is $175,000 or more. Participation by those employees who otherwise qualify for coverage is at the discretion of the Board, the Compensation/Succession Committee or, in the case of employees other than executive officers, the Chief Executive Officer.

A participant in Deferred Comp Plan II can defer up to 75% of his or her base salary and up to 100% of his or her bonus. Earnings credits are added based upon hypothetical investment elections made by participants. A participant can elect each year when to be paid the base salary or bonus amounts deferred for that year, by electing to be paid upon a specified future date prior to separation from service or following retirement, in the form of a lump sum or in installments over a period of two to twenty years. If a participant separates from service prior to the elected payment date (or prior to qualifying for retirement), the payment will be made in a lump sum after separation from service, subject to the six month “specified employee” payment delay required by Section 409A. Withdrawals are allowed upon a showing of “hardship” by the participant in accordance with Section 409A. Small account balances of $10,000 or less are paid in a lump sum only.

Deferred Comp Plan II provides for “make-whole” company credits to the extent that a participant’s election to defer under the Deferred Comp Plan II causes a loss of company contributions under the 401(k)

and ESOP. No “make-whole” company credits were made on behalf of the named executive officers for fiscal year 2019.

A participant with an account balance remaining under Deferred Comp Plan I continues to receive earnings credits on such account based upon hypothetical investment elections made by the participant. A participant can establish up to two “scheduled distribution accounts” that are payable upon dates specified by the participant in either a lump sum or installments over a period of two to four years. A participant also can take unscheduled withdrawals of up to 25% of the balance of his or her accounts, subject to a withdrawal penalty of 10% of the withdrawn amount. Only one such unscheduled withdrawal is allowed in any year. Withdrawals also are allowed upon a showing of “hardship” by the participant. A participant’s account under Deferred Comp Plan I is paid following termination of employment. Payment following termination of employment is in a lump sum, except that a participant can elect to have installments paid over a period of two to 20 years if termination of employment occurs after retirement eligibility or due to disability.

Deferred Comp Plan I balances are fully-vested. A participant becomes vested in his or her company credits to Deferred Comp Plan II after two years of service. Unpaid amounts at death are paid to designated beneficiaries.

The hypothetical investment options available under Deferred Comp Plans I and II are determined by us and correspond with the investment options (other than our company’s common stock) that are made available to participants in the qualified 401(k) and ESOP. These investment options are listed below, and the plan earnings credited to each participant’s account in these plans correspond to the earnings performance of the investment selected. Participants in the Deferred Comp Plans I and II may reallocate the amount of new deferrals and existing account

 

 

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Executive Compensation

Termination of Employment and Change in Control Arrangements

 

balances among these investment options at any time. We do not set assets aside for the benefit of plan participants, but the Deferred Comp

Plans I and II provide for full funding of all benefits upon a change in control or potential change in control, as defined in the plans.

 

In fiscal year 2019, the investment options available under Deferred Comp Plans I and II and their respective notional rates of return were as follows:

 

Deemed Investment Option

Fiscal Year 2019 Cumulative Return
(1/1/19 to 12/31/19)
   

Dodge & Cox Stock

24.83%
   

Aristotle Small Cap Equity Collective Trust Class B

23.96%
   

PIMCO Total Return — Instl Class

8.26%
   

T. Rowe Price Institutional Mid-Cap Equity Growth

33.09%
   

T. Rowe Price Institutional Large-Cap Growth

28.49%
   

Vanguard Wellington — Admiral Shares

22.61%
   

Vanguard International Growth — Admiral Shares

31.48%
   

Vanguard Institutional 500 Index Trust

N/A
   

Vanguard Target Retirement 2015 Trust I

14.91%
   

Vanguard Target Retirement 2020 Trust I

17.73%
   

Vanguard Target Retirement 2025 Trust I

19.78%
   

Vanguard Target Retirement 2030 Trust I

21.18%
   

Vanguard Target Retirement 2035 Trust I

22.58%
   

Vanguard Target Retirement 2040 Trust I

23.97%
   

Vanguard Target Retirement 2045 Trust I

25.10%
   

Vanguard Target Retirement 2050 Trust I

25.07%
   

Vanguard Target Retirement 2055 Trust I

25.09%
   

Vanguard Target Retirement 2060 Trust I

25.07%
   

Vanguard Target Retirement 2065 Trust I

25.10%
   

Vanguard Target Retirement Income Trust I

13.27%

 

TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS

We have entered into certain agreements and maintain certain plans that will require us to provide compensation to our named executive officers in the event of a termination of employment or a change in control of our company. See the tabular disclosure and narrative description under the “Pension Benefits” and “Nonqualified Deferred Compensation” sections above for detail regarding payments that would result from a termination of employment or change in control of our company under our pension and nonqualified deferred compensation plans.

Under the terms of our stock option agreements, vesting and exercisability accelerate upon the death of the recipient or change in control of our company, and continue in accordance with the original vesting schedule if employment ends as a result of disability or retirement. If employment ends for reasons other than death, disability, retirement,

or cause, a recipient forfeits any interest in the unvested portion of any option but retains the right to exercise the previously vested portion of any option for a period of three months. In addition, if an award recipient’s employment is terminated for cause, or if the recipient breaches a non-competition or confidentiality restriction or participates in an activity deemed by us to be detrimental to our company, the recipient’s right to exercise any unexercised options will terminate, the recipient’s right to receive option shares will terminate, and any shares already issued upon exercise of the option must be returned to us in exchange for the lesser of the shares’ then-current fair market value or the price paid for the shares, or the recipient must pay us cash in the amount of the gain realized by the recipient from the exercise of the option.

Under the terms of our 2017, 2018, and 2019 RSU award agreements, vesting accelerates upon a change in control of the company only if the award recipient’s employment is terminated without cause or if the award recipient resigns for good reason, in each case, within 24 months

 

 

52       ADM Proxy Statement 2020


Table of Contents

Executive Compensation

Termination of Employment and Change in Control Arrangements

 

after the change in control, or if the surviving entity in the change in control transaction refuses to continue, assume, or replace the awards. Under all of our RSU award agreements, vesting accelerates upon death and continues in accordance with the original vesting schedule if employment ends as a result of disability or retirement. If employment ends for other reasons, the unvested portion of each award is forfeited. In addition, if an award recipient’s employment is terminated for cause, or if the recipient breaches a non-competition or confidentiality restriction or participates in an activity deemed by us to be detrimental to our company, the recipient’s unvested awards will be forfeited, and any award shares that have already been issued in settlement must be returned to us or the recipient must pay us the amount of the shares’ fair market value as of the date the award vested.

Under the terms of our PSU award agreements, vesting accelerates upon the death of the award recipient or upon a change in control of our company only if the award recipient’s employment is terminated without cause or if the award recipient resigns for good reason, in each

case, within 24 months after the change in control, or if the surviving entity in the change in control transaction refuses to continue, assume, or replace the awards. In all such instances, the PSU awards will vest based on actual performance during the truncated performance period and on a pro rata basis based on a target number of units for the performance period year(s) following the truncated performance period, if any. If employment ends as a result of disability or retirement, vesting will continue in accordance with the original vesting schedule. If employment ends for other reasons, the unvested portion of each award is forfeited. In addition, if an award recipient’s employment is terminated for cause, or if the recipient breaches a non-competition or confidentiality restriction or participates in an activity deemed by us to be detrimental to our company, the recipient’s unvested awards will be forfeited, and any award shares that have already been issued in settlement must be returned to us or the recipient must pay us the amount of the shares’ fair market value as of the date the award vested.

 

 

ADM Proxy Statement 2020       53


Table of Contents

Executive Compensation

Termination of Employment and Change in Control Arrangements

 

The amount of compensation payable to each named executive officer in various termination and change in control scenarios is listed in the table below. These payments and benefits are provided under the terms of agreements involving equity compensation awards. Unless otherwise indicated, the amounts listed are calculated based on the assumption that the named executive officer’s employment was terminated or that a change in control occurred on December 31, 2019.

 

Name

      Voluntary
Termination
($)
  Involuntary
Termination
without Cause
($)
  Termination
for Cause
($)
  Death
($)(1)
  Disability 
($)
  Change in 
Control
($)(3)
 

Change in

Control

(Non-

Assumption of
Awards or
Involuntary
Termination
Without Cause
or  Termination
for Good
Reason) ($)(4)

  Retirement
($)

J. R. Luciano

 

Vesting of nonvested stock options

 

0

 

0

 

0

 

4,905,035

 

(2)

 

4,905,035

 

4,905,035

 

(5)

   

Vesting of nonvested RSU awards

 

0

 

0

 

0

 

20,984,684

 

(2)

 

0

 

20,984,684

 

(5)

   

Vesting of nonvested PSU awards

 

0

 

0

 

0

 

14,616,380

 

(2)

 

0

 

14,616,380

 

(5)

R. G. Young

 

Vesting of nonvested stock options

 

0

 

0

 

0

 

1,827,522

 

(2)

 

1,827,522

 

1,827,522

 

(5)

   

Vesting of nonvested RSU awards

 

0

 

0

 

0

 

7,172,384

 

(2)

 

0

 

7,172,384

 

(5)

   

Vesting of nonvested PSU awards

 

0

 

0

 

0

 

4,998,384

 

(2)

 

0

 

4,998,384

 

(5)

V. F. Macciocchi

 

Vesting of nonvested stock options

 

0

 

0

 

0

 

490,503

 

(2)

 

490,503

 

490,503

 

(5)

   

Vesting of nonvested RSU awards

 

0

 

0

 

0

 

4,098,638

 

(2)

 

0

 

4,098,638

 

(5)

   

Vesting of nonvested PSU awards

 

0

 

0

 

0

 

3,157,223

 

(2)

 

0

 

3,157,223

 

(5)

G. A. Morris

 

Vesting of nonvested stock options

 

0

 

0

 

0

 

588,607

 

(2)

 

588,607

 

588,607

 

(5)

   

Vesting of nonvested RSU awards

 

0

 

0

 

0

 

4,493,308

 

(2)

 

0

 

4,493,308

 

(5)

   

Vesting of nonvested PSU awards

 

0

 

0

 

0

 

3,274,998

 

(2)

 

0

 

3,274,998

 

(5)

J. D. Taets

 

Vesting of nonvested stock options

 

0

 

0

 

0

 

735,755

 

(2)

 

735,755

 

735,755

 

(5)

   

Vesting of nonvested RSU awards

 

0

 

0

 

0

 

4,825,545

 

(2)

 

0

 

4,825,545

 

(5)

   

Vesting of nonvested PSU awards

 

0

 

0

 

0

 

3,274,998

 

(2)

 

0

 

3,274,998

 

(5)

 

(1) Pursuant to the terms of the stock option and RSU awards issued under the 2009 Incentive Compensation Plan, vesting and exercisability of these equity awards are accelerated in full upon death. The amount shown with respect to RSU awards was calculated by multiplying the number of units as to which accelerated vesting and settlement occurs by $46.35, the closing sale price of a share of our common stock on the NYSE on December 31, 2019. The amounts shown with respect to stock options were calculated with respect to options that were “in the money” as of December 31, 2019 and were determined by multiplying the number of shares subject to each option as to which accelerated vesting occurs by the difference between $46.35, the closing sale price of a share of our common stock on the NYSE on December 31, 2019, and the exercise price of the applicable stock option.

Pursuant to the terms of the PSU awards issued under the 2009 Incentive Compensation Plan, vesting of the PSU awards will accelerate upon death in an amount equal to the sum of (i) the number of units deemed to have been earned and entitled to vest during the truncated performance period based on the company’s actual performance and (ii) the

target number of units multiplied by a fraction whose numerator is the number of fiscal years not included in the original performance period that were not included in the truncated performance period and whose denominator is three. The amount shown with respect to 2018 and 2019 PSU awards, assuming that the Relative TSR as well as the levels of both Adjusted ROIC and Adjusted EBITDA achieved for applicable portion of the performance period equate to a 100% payout of the total number of target shares, was calculated (1) with respect to the 2019 PSUs, by (i) deeming 33% of the target number of shares earned and entitled to vest and (ii) multiplying the target number of shares by 66% of the remaining target share amount and finally (iii) multiplying the sum of (i) and (ii) by $46.35, and (2) with respect to the 2018 PSUs, by (i) deeming 66% of the target number of shares earned and entitled to vest and (ii) multiplying the target number of shares by 33% of the remaining target share amount and finally (iii) multiplying the sum of (i) and (ii) by $46.35.

(2) Pursuant to the terms of the stock option, RSU award and PSU award agreements issued under the 2009 Incentive Compensation Plan, vesting of these equity awards generally continues on the same schedule after retirement or termination of employment due to disability.

 

 

54       ADM Proxy Statement 2020


Table of Contents

Executive Compensation

CEO Pay Ratio

 

(3) Pursuant to the terms of the stock option issued prior to 2017 under the 2009 Incentive Compensation Plan, vesting and exercisability of these equity awards are accelerated in full upon a change in control. All currently outstanding RSUs and PSUS are subject to a double trigger vesting and payout mechanism upon a change in control, meaning that only if (i) within 24 months after the change in control, one of our executive officer’s employment is terminated without cause or he or she resigns for good reason or (ii) the surviving entity in the change of control does not continue, assume, or replace the awards, the RSU awards will accelerate in full and the PSU awards will accelerate on a pro rata basis as described in footnote 1 above. Therefore, this column excludes all outstanding RSUs and PSUs. The amounts shown with respect to stock options were calculated with respect to options that were “in the money” as of December 31, 2019 and were determined by multiplying the number of shares subject to each unvested option as to which accelerated vesting occurs upon a change in control by the difference between $46.35, the closing sale price of a share of our common stock on the NYSE on December 31, 2019, and the exercise price of the applicable stock option.

(4) Pursuant to the terms of the stock option issued prior to 2017 under the 2009 Incentive Compensation Plan, vesting and exercisability of these equity awards are accelerated in full upon a change in control. However, beginning in 2017, the company made the RSU awards as well as the PSU awards subject to a double trigger vesting and payout mechanism upon a

change in control, meaning that only if (i) within 24 months after the change in control, one of our executive officer’s employment is terminated without cause or he or she resigns for good reason or (ii) the surviving entity in the change of control does not continue, assume, or replace the awards, the RSU awards will accelerate in full and the PSU awards will accelerate on a pro rata basis as described in footnote 1 above. Therefore, this column includes (i) all unexercisable options, (ii) all unvested RSU awards, and (iii) a portion of the unvested PSU awards (calculated in the manner set forth in footnote 1). The amounts shown with respect to stock options were calculated with respect to options that were “in the money” as of December 31, 2019 and were determined by multiplying the number of shares subject to each option as to which accelerated vesting occurs by the difference between $46.35, the closing sale price of a share of our common stock on the NYSE on December 31, 2019, and the exercise price of the applicable stock option. The amounts shown with respect to RSU and PSU awards was calculated by multiplying the number of units as to which accelerated vesting and settlement occurs by $46.35, the closing sale price of a share of our common stock on the NYSE on December 31, 2019.

(5) Because this named executive officer is not yet eligible for retirement under the terms of the ADM Retirement Plan, no current termination of employment would be considered “retirement” under any of the applicable equity-based compensation plans.

 

 

CEO PAY RATIO

For our fiscal year 2019 pay ratio analysis, we determined that due to changes in our employee population caused by acquisitions we completed in 2019, including but not limited to Neovia, that we reasonably believe would significantly impact our fiscal year 2019 pay ratio, we could not use the same median employee that we identified for the years ended December 31, 2017 and December 31, 2018.

Our median employee’s annual total compensation for fiscal year 2019 was $63,981. The annual total compensation of our Chairman and CEO for fiscal year 2019 was $18,174,409. The ratio between the Chairman and CEO’s annual total compensation to the annual total compensation of our median employee is 285:1.

We determined our median employee for fiscal year 2019 by using a consistently applied compensation measure of total cash compensation paid to our global employee population (including full-time, part-time, temporary, and seasonal employees) other than our Chairman and CEO, as of December 31, 2019, which included 39,223 individuals, with 40% of these individuals located in the United States. We define “total cash compensation” as base salary for salaried colleagues, base hourly compensation and overtime for hourly permanent employees, actual compensation for seasonal or temporary colleagues, sales commission (if applicable), and any annual cash incentive compensation for the year ending on December 31, 2019. For purposes of the pay ratio, their compensation is converted to U.S. dollars as of December 31, 2019 exchange rate to determine the median employee.

With respect to our median employee, we then identified and calculated the elements of the employee’s annual total compensation for 2019 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K and also included $17,393 as the estimated value of the median employee’s 2019 employer-paid health care and basic life and short-term disability insurance premiums. With respect to the annual total compensation of our Chairman and CEO, we used the amount reported in the Summary Compensation Table and also included $19,674 as the estimated value of our Chairman and CEO’s 2019 employer-paid health care and basic life and short-term disability insurance premiums.

Supplemental Pay Ratio

Our global footprint drives the median pay level at ADM. 60% of our workforce is employed outside the United States. We aim to provide competitive pay and benefits for each employee’s role in every business segment and geography. To be consistent with our compensation philosophy, all global colleagues are paid based upon their local market as reviewed on an annual basis to ensure they are paid competitively. We believe this information is useful to put the SEC-required pay ratio provided above into context.

In addition, we are also providing a supplemental pay ratio that includes our domestic employees only. We identified the median employee for purposes of the supplemental pay ratio using the same methodology as the required pay ratio. Applying this methodology to our employees located in the United States only (other than our Chairman and CEO), we determined that our median employee in fiscal year 2019 had annual total compensation in the amount of $83,793.

As a result, the fiscal year 2019 ratio of the total annual compensation of our Chairman and CEO to the total annual compensation of our median employee in the United States, each as calculated above to include 2019 employer-paid health care and basic life and short-term disability insurance premiums, is 217:1. This supplemental pay ratio is not a substitute for the required CEO pay ratio, but we believe it is helpful in fully evaluating the ratio of our Chairman and CEO’s annual total compensation to that of our median employee.

 

ADM Proxy Statement 2020       55


Table of Contents

Director Compensation

 

 

Director Compensation

For fiscal year 2019, our standard compensation for non-employee directors consists of an annual retainer in the amount of $300,000. With respect to the $300,000 annual retainer, $175,000 must be paid in stock units pursuant to our Stock Unit Plan for Non-Employee Directors. The remaining portion of the annual retainer may be paid in cash, stock units, or a combination of both, at the election of each non-employee director. Each stock unit is deemed for valuation and bookkeeping purposes to be the equivalent of a share of our common stock. In addition to the annual retainer, our Lead Director received a stipend in the amount of $30,000, the Chair of the Audit Committee received a stipend in the amount of $25,000, the Chair of the Compensation/Succession Committee received a stipend in the amount of $20,000, the Chair of the Nominating/Corporate Governance Committee received a stipend in the amount of $15,000, and the Chair of the Sustainability and Corporate Responsibility Committee received a stipend in the amount of $10,000. All such stipends are paid in cash. We do not pay fees for attendance at board and committee meetings. Directors are reimbursed for out-of-pocket traveling expenses incurred in attending board and committee meetings. Directors may also be provided with certain perquisites from time to time.

Stock units are credited to the account of each non-employee director on a quarterly basis in an amount determined by dividing the quarterly amount of the retainer to be paid in stock units by the fair market value of a share of our common stock on the last business day of that quarter, and are fully-vested at all times. As of any date on which cash dividends are paid on our common stock, each director’s stock unit account is also credited with stock units in an amount determined by dividing the dollar value of the dividends that would have been paid on the stock units in that director’s account had those units been actual shares by the fair market value of a share of our stock on the dividend payment date. For purposes of this plan, the “fair market value” of a share of our common stock on any date is the average of the high and low reported sales prices for our stock on the NYSE on that date. Each stock unit is paid out in cash on the first business day following the earlier of (i) five years after the end of the calendar year that includes the quarter for which that stock unit was credited to the director’s account, and (ii) when the director ceases to be a member of the Board. The amount to be paid will equal the number of stock units credited to a director’s account multiplied by the fair market value of a share of our stock on the payout date. A director may elect to defer the receipt of these payments in accordance with the plan.

The following table summarizes compensation provided to each non-employee director for services provided during fiscal year 2019.

 

Name

Fees Earned or      

    Paid in Cash          

($)(1)      

Stock      
Awards ($)(2)      

All Other      
  Compensation         

($)(3)      

Total ($)
         

A. L. BOECKMANN(4)

30,978       225,000       —           255,978    
         

M. S. BURKE

125,000       175,000       —       300,000
         

T. K. CREWS

150,000       175,000       —       325,000
         

P. DUFOUR

125,000       175,000       —       300,000
         

D. E. FELSINGER

30,000       300,000       5,000       335,000
         

S. F. HARRISON(5)

131,675       175,000       —       306,675
         

P. J. MOORE

140,000       175,000       5,000       320,000
         

F. J. SANCHEZ

125,000       175,000       —       300,000
         

D. A. SANDLER

125,000       175,000       —       300,000
         

L. Z. SCHLITZ(6)

83,448       131,250       —       214,698
         

D. T. SHIH(7)

56,800       43,750       —       100,550
         

K. R. WESTBROOK

145,000       175,000       —       320,000

 

56       ADM Proxy Statement 2020


Table of Contents

Director Compensation

Director Stock Ownership Guidelines

 

(1) As described above, $175,000 of the annual retainer of $300,000 is paid in stock units, which are reported in the “Stock Awards” column. In addition, our directors may elect to receive the remaining portion of the annual retainer in the form of cash, stock units, or a combination of both. For fiscal year 2019, each of Mr. Boeckmann and Mr. Felsinger elected to receive his entire annual retainer in the form of stock units.

(2) The amounts set forth in this column represent the grant date fair value of stock unit grants to each of the listed directors computed in accordance with the provisions of FASB ASC Topic 718. Each of the listed directors is a non-employee director and the fair value of services provided by each director has been used to calculate the number of stock units credited to each director by dividing the quarterly fair value of the services provided by the fair market value of a share of our company’s common stock on the last business day of the quarter. For purposes of this plan, the “fair market value” of a share of our common stock on any date is the average of the high and low reported sales prices for our stock on the NYSE on that date. The fair value of services provided by each of the directors has been determined to be $75,000 per quarter. The aggregate number of stock units credited to the account of each non-employee director as of December 31, 2019 (including mandatory stock unit grants, voluntary elections to receive stock units, and the deemed reinvestment of dividends) was as follows:

Name

Number of Stock Units at 12/31/19

M. S. Burke

5,850

T. K. Crews

33,576

P. Dufour

24,927

D. E. Felsinger

64,431

S. F. Harrison

9,844

P. J. Moore

62,949

F. J. Sanchez

21,456

D. A. Sandler

13,597

L. Z. Schlitz

2,161

K. R. Westbrook

50,446

(3) Consists of charitable gifts pursuant to the company’s matching charitable gift program which is available to substantially all employees and non-employee directors.

(4) Mr. Boeckmann resigned from the Board of Directors effective November 7, 2019, and his annual non-employee director compensation was prorated to reflect his period of service during 2019.

(5) Ms. Harrison’s compensation includes a pro-rated stipend to reflect her period of service as the Chair of Sustainability and Corporate Responsibility Committee in 2019.

(6) Ms. Schlitz was elected to the Board of Directors at our 2019 Annual Meeting of Stockholders on May 1, 2019, and her annual non-employee director compensation was prorated to reflect her period of service during 2019.

(7) Mr. Shih did not stand for reelection at our 2019 Annual Meeting of Stockholders on May 1, 2019, and his annual non-employee director compensation was prorated to reflect his period of service during 2019.

 

 

 

Director Stock Ownership Guidelines

Our company has guidelines regarding ownership of shares of our common stock by our non-employee directors. These guidelines call for non-employee directors to own shares of common stock (including stock units issued pursuant to the Stock Unit Plan for Non-Employee Directors) over time with a fair market value of not less than five times the amount of the maximum cash portion of the annual retainer. Application of these guidelines will consider the time each director has served on the Board of Directors, as well as stock price fluctuations that may impact the achievement of the five times cash retainer ownership guidelines.

We prohibit non-employee directors from pledging company securities if they have not met stock ownership guidelines, and we require our non-employee directors to obtain approval from our General Counsel before pledging company securities.

 

ADM Proxy Statement 2020       57


Table of Contents

Equity Compensation Plan Information; Related Transactions

 

 

EQUITY COMPENSATION PLAN INFORMATION AT DECEMBER 31, 2019

 

Plan Category

Number of
Securities

to be Issued
Upon Exercise

of Outstanding
Options,

Warrants, and
Rights(a)

Weighted-
Average
Exercise Price
of Outstanding
Options,

Warrants and
Rights(b)

 

Number of
Securities
Remaining
Available for
Future Issuance
Under  Equity
Compensation
Plans (Excluding
Securities
Reflected in
Column (a))(c)

       

Equity Compensation Plans Approved by Security Holders

14,768,827(1)

$35.20(2)

5,234,839(3)

       

Equity Compensation Plans Not Approved by Security Holders

       

Total

14,768,827(1)

$35.20(2)

5,234,839(3)

 

(1) Consists of 4,840,843 shares to be issued upon vest of outstanding restricted stock units, 1,880,597* shares to be issued upon vest of outstanding Performance Units, and 8,047,387 shares to be issued upon exercise of outstanding options pursuant to the company’s 2009 Incentive Compensation Plan all as of December 31, 2019.

(2) Weighted-average exercise price for outstanding stock options.

(3) Consists of shares available for issuance pursuant to the Company’s 2009 Incentive Compensation Plan, as of December 31, 2019. Benefits which may be granted under the 2009 Incentive Compensation Plan are options, stock appreciation rights, restricted stock and restricted stock units, performance shares, performance units and cash-based awards. However, only 2,107,032 of these shares are eligible for granting of full value shares.

*Based on Target Share Amounts for PSUs. Number of PSUs issued would be 2,471,866 under the maximum payout conditions.

 

 

As of March 16, 2020, our company does not have any equity compensation plans that have not been approved by our stockholders.

REVIEW AND APPROVAL OF CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Various policies and procedures of our company, including our Code of Conduct, our bylaws, the charter of the Nominating/Corporate Governance Committee, and annual questionnaires completed by all of our directors and executive officers, require the directors and executive officers to disclose and otherwise identify to the company the transactions or relationships that may constitute conflicts of interest or otherwise require disclosure under applicable SEC rules as “related person transactions” between our company or its subsidiaries and related persons. For these purposes, a related person is a director, executive officer, nominee for director, or 5% stockholder of the company since the beginning of the last fiscal year and their immediate family members.

Although the company’s processes vary with the particular transaction or relationship, in accordance with our Code of Conduct, directors, executive officers, and other company employees are directed to inform appropriate supervisory personnel as to the existence or potential existence of such a transaction or relationship. To the extent a related person is involved in the relationship or has a material interest in the transaction, the company’s practice, although not part of a written policy, is to refer consideration of the matter to the Board or the Audit Committee. The transaction or relationship will be evaluated by the Board or the Audit Committee, which will approve or ratify it if it is determined that the transaction or relationship is fair and in the best interests of the company. Generally, transactions and series of related transactions of less than $120,000 are approved or ratified by appropriate company supervisory personnel and are not approved or ratified by the Board or a committee thereof.

 

58       ADM Proxy Statement 2020


Table of Contents

Equity Compensation Plan Information; Related Transactions

Certain Relationships and Related Transactions

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the fiscal year ended December 31, 2019, the brother of Christopher Cuddy, one of our executive officers, was employed by our company as a vice president of our Golden Peanut and Tree Nut business. Such relationship was considered by the Audit Committee and found to be fair and in the best interests of our company.

 

ADM Proxy Statement 2020       59


Table of Contents

Report of the Audit Committee

 

 

Report of the Audit Committee

The Audit Committee provides assistance to the Board of Directors in fulfilling its oversight responsibility to the stockholders relating to the Company’s (i) financial statements and the financial reporting process, (ii) preparation of the financial reports and other financial information provided by the Company to any governmental or regulatory body, (iii) systems of internal accounting and financial controls, (iv) internal audit functions, (v) annual independent audit of the Company’s financial statements, (vi) major risk exposures, (vii) legal compliance and ethics programs as established by management and the Board, (viii) related-party transactions, and (ix) performance of the compliance function.

The Audit Committee assures that the corporate information gathering, analysis and reporting systems developed by management represent a good faith attempt to provide senior management and the Board of Directors with information regarding material acts, events, and conditions within the Company. In addition, the Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent auditor. The Audit Committee ensures that the Company establishes, resources, and maintains a professional internal auditing function and that there are no unjustified restrictions or limitations imposed on such function. The Audit Committee reviews the effectiveness of the internal audit function and reviews and approves the actions relating to the Company’s General Auditor, including performance appraisals and related base and incentive compensation. The Audit Committee is comprised of six independent directors, all of whom are financially literate and one of whom (T. K. Crews, the Chairman) has been determined by the Board of Directors to be an “audit committee financial expert” as defined by the Securities and Exchange Commission (“SEC”).

Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the audited financial statements in the annual report with management, including a discussion of the quality — not just the acceptability — of the accounting principles, the reasonableness of significant judgments, the development and selection of the critical accounting estimates, and the clarity of disclosures in the financial statements. Also, the Audit Committee discussed with management education regarding compliance with the policies and procedures of the Company as well as federal and state laws.

The Audit Committee reviewed and discussed with the independent auditor, who is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, the effectiveness of the Company’s internal control over financial reporting, and the matters required to be discussed by the applicable Public Company Accounting Oversight Board (“PCAOB”) standards including their judgment as to the quality — not just the acceptability — of the Company’s accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. In addition, the Audit Committee received the written disclosures and the letter from the independent auditor required by applicable requirements of the PCAOB regarding the independent auditor’s communications with the Audit Committee concerning independence and has discussed with the independent auditor the auditor’s independence from management and the Company. The Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy and considered the compatibility of non-audit services with the independent auditor’s independence. The Audit Committee recommended to the Board of Directors (and the Board of Directors approved) a hiring policy related to current and former employees of the independent auditor.

The Committee discussed the Company’s major risk exposures, the steps management has taken to monitor and control such exposures, and guidelines and policies to govern the Company’s risk assessment and risk management processes.

The meetings of the Audit Committee are designed to facilitate and encourage communication among the Audit Committee, the Company, the Company’s internal audit function and the Company’s independent auditor. The Audit Committee discussed with the internal and independent auditors the overall scope and plans for their respective audits. The Audit Committee met with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the accounting and financial controls, and the overall quality of the Company’s financial reporting. The Audit Committee met individually with members of management in executive session. The Audit Committee held nine meetings during fiscal year 2019.

The Audit Committee recognizes the importance of maintaining the independence of the Company’s independent auditor, both in fact and appearance. Each year, the Audit Committee evaluates the qualifications, performance, tenure and independence of the

 

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Report of the Audit Committee

Report of the Audit Committee

 

Company’s independent auditor and determines whether to re-engage the current independent auditor. In doing so, the Audit Committee considers the quality and efficiency of the services provided by the auditors, the auditors’ global capabilities and the auditors’ technical expertise and knowledge of the Company’s operations and industry. Based on this evaluation, the Audit Committee has appointed Ernst & Young LLP as independent auditor for the fiscal year ending December 31, 2020. The members of the Audit Committee and the Board believe that, due to Ernst & Young LLP’s knowledge of the Company and of the industries in which the Company operates, it is in the best interests of the Company and its stockholders to continue retention of Ernst & Young LLP to serve as the Company’s independent auditor. Although the Audit Committee has the sole authority to appoint the independent auditors, the Board is submitting the selection of Ernst & Young LLP to our stockholders for ratification as a matter of good corporate practice.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board of Directors approved) that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2019 for filing with the SEC.

T. K. Crews, Chairman

P. Dufour

P. J. Moore

F. J. Sanchez

D. A. Sandler

L. Z. Schlitz

 

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Proposal No. 2

 

 

Proposal No. 2 — Ratification of Appointment of Independent Registered Public Accounting Firm

The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm retained to audit the company’s financial statements. The Audit Committee has appointed Ernst & Young LLP as our company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. Ernst & Young LLP, or its predecessor firms, has served as our independent registered public accounting firm for more than 85 years.

The Audit Committee is responsible for the audit fee negotiations associated with our company’s retention of Ernst & Young LLP. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be regular rotation of the independent registered public accounting firm. In conjunction with the required rotation of Ernst & Young LLP’s lead engagement partner, the Audit Committee and its Chairman are directly involved in the selection of Ernst & Young LLP’s new lead engagement partner.

We are asking our stockholders to ratify the selection of Ernst & Young LLP as our independent registered public accounting firm. Although ratification is not required by our bylaws or otherwise, the Board is submitting the selection of Ernst & Young LLP to our stockholders as a matter of good corporate practice. The members of the Audit Committee, and the Board of Directors, believe that the continued retention of Ernst & Young LLP to serve as the company’s independent registered public accounting firm is in the best interests of our company and its stockholders. Representatives of Ernst & Young LLP will be present at the virtual meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.

The Board of Directors recommends a vote FOR ratification of the appointment of Ernst & Young LLP as our company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. Proxies solicited by the Board will be so voted unless stockholders specify a different choice.

FEES PAID TO INDEPENDENT AUDITORS

The following table shows the aggregate fees paid to Ernst & Young LLP by us for the services it rendered during the fiscal years ended December 31, 2019, and December 31, 2018.

 

Description of Fees

                    2019                                           2018                    
     

Audit Fees(1)

$17,153,000

$16,512,000

     

Audit-Related Fees(2)

2,567,000

2,462,000

     

Tax Fees(3)

2,447,000

1,646,000

     

All Other Fees(4)

318,000

     

Total

$22,485,000

$20,620,000

(1) Includes fees for audit of annual financial statements, reviews of the related quarterly financial statements, audit of the effectiveness of our company’s internal control over financial reporting, and certain statutory audits.

(2) Includes fees for accounting and reporting assistance for newly adopted accounting standards (Leases), due diligence for mergers and acquisitions, and audit-related work in connection with employee benefit plans of our company.

(3) Includes fees related to tax planning advice and tax compliance.

(4) Includes fees for advisory services related to strategic transactions or divestitures.

AUDIT COMMITTEE PRE-APPROVAL POLICIES

The Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy. This policy provides that audit services engagement terms and fees, and any changes in such terms or fees, are subject to the specific pre-approval of the Audit Committee. The policy further provides that all other audit services, audit-related services, tax services, and permitted non-audit services are subject to pre-approval by the Audit Committee. All of the services Ernst & Young LLP performed for us during fiscal years 2019 and 2018 were pre-approved by the Audit Committee.

 

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Proposal No. 3

 

 

Proposal No. 3 — Advisory Vote on Executive Compensation

Pursuant to Section 14A of the Exchange Act, the following proposal provides our stockholders with an opportunity to vote to approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this proxy statement. In considering your vote, you may wish to review the “Compensation Discussion and Analysis” discussion herein, which provides details as to our compensation policies, procedures, and decisions regarding the named executive officers, as well as the Summary Compensation Table and other related compensation tables, notes, and narrative disclosures in this proxy statement. This vote is not intended to address any specific element of our executive compensation program, but rather the overall compensation program for our named executive officers.

The Compensation/Succession Committee, which is comprised entirely of independent directors, and the Board of Directors believe that the executive compensation policies, procedures, and decisions made with respect to our named executive officers are competitive, are based on our pay-for-performance philosophy, and are focused on achieving our company’s goals and enhancing stockholder value.

Accordingly, for the reasons discussed above and in the “Compensation Discussion and Analysis” section of this proxy statement, the Board asks our stockholders to vote FOR the adoption of the following resolution to be presented at the Annual Meeting of Stockholders in 2020:

RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Compensation Discussion and Analysis section, the compensation tables, and the related narrative disclosure in this Proxy Statement.

Although this advisory vote is not binding on the Board of Directors, the Board and the Compensation/Succession Committee will review and expect to take into account the outcome of the vote when considering future executive compensation decisions.

The Board of Directors recommends that you vote FOR the approval of the advisory resolution on the compensation of our company’s named executive officers, as disclosed in this proxy statement. Proxies solicited by the Board will be so voted unless stockholders specify a different choice.

 

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Proposal No. 4

 

 

Proposal No. 4 — Approval of the 2020 Incentive Compensation Plan

Introduction

We are seeking stockholder approval of the ADM 2020 Incentive Compensation Plan (the “2020 Plan”), which was approved by our Board on February 5, 2020, subject to stockholder approval. Upon approval of the 2020 Plan by our stockholders, no further awards will be made under our current plan, the Archer-Daniels-Midland Company Amended and Restated 2009 Incentive Compensation Plan (the “2009 Plan”).

As of March 16, 2020, the 2009 Plan had approximately 3,150,181 shares remaining available for issuance. Additional shares are being requested to help ensure the Company has sufficient shares to meet our anticipated needs to grant equity awards to incentivize and retain employees in future years.

The 2020 Plan authorizes 16,200,000 shares for awards, together with those shares of common stock remaining available for future grants under the 2009 Plan on the date the 2020 Plan obtains stockholder approval. We believe that given our current grant practices, the authorized share amount under the 2020 Plan should allow us to make equity compensation awards through February 2026, prior to the 2026 annual meeting of stockholders.

Awards outstanding under the 2009 Plan as of the date the 2020 Plan becomes effective will continue to be subject to the terms of the 2009 Plan, but if those awards subsequently expire, are forfeited, canceled, or terminated, or are settled in cash, the shares subject to those awards will become available for awards under the 2020 Plan.

Stockholder approval of the 2020 Plan is being sought in order to satisfy the stockholder approval requirements of (i) the New York Stock Exchange and (ii) Section 422 of the Internal Revenue Code (“Code”) to enable options granted under the 2020 Plan to qualify as incentive stock options. If the 2020 Plan is not approved by our stockholders, the 2009 Plan will remain in effect and we will remain subject to its existing share reserve.

Factors Considered in Setting Size of Requested Share Amount

As of March 16, 2020, there were 557,207,815 shares of our common stock issued and outstanding. The closing sale price of a share of our common stock on the New York Stock Exchange on that date was $32.68.

In setting the proposed number of shares reserved and issuable under the 2020 Plan, the Compensation/Succession Committee and our Board considered a number of factors as described below.