UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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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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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 at the JAMES R. RANDALL RESEARCH CENTER located at 1001 Brush College Road, Decatur, Illinois, on Thursday, May 4, 2017,7, 2020, commencing at 8:30 A.M., for Central Daylight Time. Due to concerns about the following purposes:
(1)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 elect directors to hold office untilenter the next Annual Meeting of Stockholders and until their successors are duly elected and qualified;
(2) To ratifyannual meeting you will need the appointment16-digit control number that is printed in the box marked by the Boardarrow on your Notice of DirectorsInternet Availability of Ernst & Young LLP as independent auditorsProxy Materials. We recommend that you log in at least 15 minutes before the meeting to auditensure that you are logged in when the accounts of our company formeeting starts. Online check-in will start shortly before the fiscal year ending December 31, 2017;
(3) Tomeeting on May 7, 2020. At the annual meeting, you will be asked to consider an advisoryand vote on the compensation of our named executive officers;following matters:
(4) To consider an advisory vote on the frequency of the advisory vote on the compensation of our named executive officers; and
(1) | To elect directors to hold office until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified; |
(5)
(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 |
D. C. FINDLAY, SECRETARY |
March 24, 201725, 2020
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY
https://www.proxy-direct.com/MeetingDocuments/31175/ARCHER-DANIELS-MIDLAND.pdf |
TABLE OF CONTENTSTable of Contents
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Director Experiences, Qualifications, Attributes, and | |||||
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DIRECTOR | 16 | ||||
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Board Meetings and Attendance at Annual Meeting of Stockholders | |||||
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STOCKHOLDER OUTREACH AND | |||||
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Changes to Incentive Compensation Plans Beginning in | |||||
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Employment Agreements, Severance, and | |||||
Compensation/Succession Committee Interlocks and Insider Participation |
ADM Proxy Statement 2020 | i |
Table of Contents
Option Exercises and Stock Vested During Fiscal Year | |||||
Termination of Employment and |
55 | ||||||
Director Compensation | 56 | |||||
Equity Compensation Plan Information at December 31, | ||||||
Review and Approval of Certain Relationships and Related Transactions | ||||||
PROPOSAL NO. 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 62 | |||||
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64 |
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B-1 |
ii | ADM Proxy Statement 2020 |
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 20162019 Annual Report on Form10-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 4–55–6
Meeting: Annual Meeting of Stockholders
Date:Thursday, May 4, 20177, 2020
Time: 8:30 A.M. Central Daylight Time
Location: JAMES R. RANDALL RESEARCH CENTER
1001 Brush College Road, Decatur, IllinoisThe completely virtual annual meeting will be held at www.virtualshareholdermeeting.com/ADM2020.
Record Date: March 13, 201716, 2020
Stock Symbol: ADM
Exchange: NYSE
Common Stock Outstanding: 570,666,438557,207,815 as of March 13, 201716, 2020
Registrar & Transfer Agent: Hickory Point Bank and Trust, fsb
State of Incorporation: Delaware
Corporate Headquarters:Headquarters and Principal Executive Office: 77 West Wacker Drive, Suite 4600,
Chicago, Illinois 60601
Corporate Website: www.adm.com
Executive Compensation
See pages 42–5144–55
CEO: Juan R. Luciano
CEO 2016 TOTAL DIRECT COMPENSATION:2019 Total Direct Compensation:
• Salary: $1,283,340$1,383,338
•Non-Equity Incentive Plan Compensation: $1,939,600$2,898,000
• Long-Term Incentives: $10,591,549$13,641,916
CEO Employment Agreement: No
Change-in-ControlChange in Control Agreement: No
Stock Ownership Guidelines: Yes
Hedging Policy: Yes
Other Items to Be Voted On
Election of Directors for aOne-Year Term
(See pages 57–597–11)
Ratification of Appointment of Independent Registered Public Accounting Firm (Ernst & Young LLP)
(See page 62)
Advisory Vote on Executive Compensation
Advisory Vote on Frequency(See page 63)
Approval of Advisory Vote on Executivethe 2020 Incentive Compensation Plan
(See page 64)
Corporate Governance
See pages 13–7–23
Director Nominees: 11
• Alan L. BoeckmannMichael 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)
• Daniel T. ShihLei Z. Schlitz (Independent)
• Kelvin R. Westbrook (Independent)
Director Term: One year
Director Election Standard: Majority voting standard for uncontested elections
Board Meetings in 2016:2019: 96
Standing Board Committees (MeetingsCommittee Meetings in 2016):2019:
• Audit (9)– 9
• Compensation/Succession (6)– 4
• Nominating/Corporate Governance (6)– 4
• Sustainability and Corporate Responsibility – 3
Supermajority Voting Requirements: No
Stockholder Rights Plan: No
ADM Proxy Statement | 1 |
PROXY SUMMARYProxy Summary
Governance Highlights
GOVERNANCE HIGHLIGHTSGovernance Highlights
Our boardThe Board of directorsDirectors views itself as the long-term stewards of ADM. The boardBoard 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 others.communities. The boardBoard 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 | |||
We have an independent Lead Director, selected by the independent directors. The Lead Director provides the | Our independent directors meet in executive session at each regularin-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 | Individuals cannot stand for election as a director once they reach age 75, and our Corporate Governance Guidelines set | |||
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. |
2 | ADM Proxy Statement 2020 |
Proxy Summary
Voting Matters and Board Recommendations
DIRECTOR NOMINEE QUALIFICATIONS AND EXPERIENCEVoting 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’ skillsqualifications and experiences. More detailed information is provided in each director nominee’s biography beginning on page 7.8.
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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 | |||||||||||||||||||||||||||||||||||||
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Patrick J. Moore
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Francisco J. Sanchez |
PROXY SUMMARY
VOTING MATTERS AND BOARD RECOMMENDATIONS
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ADM Proxy Statement | 3 |
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTINGProxy Summary
Director Nominee Diversity, Age, Tenure, and Independence
PROXY STATEMENTDirector 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.
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.
4 | ADM Proxy Statement 2020 |
General MattersInformation About the Annual Meeting and Voting
Our board
Proxy Statement
GENERAL MATTERS
The Board of directorsDirectors asks that you complete the accompanying proxy for the annual stockholders’ meeting. TheDue to concerns about the coronavirus (COVID-19), this year the meeting will be completely virtual and will be held at the time place, and locationweb address mentioned in the Notice of Annual Meeting included in these materials. This year, weWe 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 20162019 Annual Report onForm 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. ThoseStockholders 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 previously 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 24, 2017.25, 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 13, 2017,16, 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 13, 2017,16, 2020, we had 570,666,483557,207,815 outstanding shares of common stock, each share being entitled to one vote on each of the eleven 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.
AllThe 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 will need a form of photo identification to attendand 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 are a stockholder of record and plan to attend, please detach the admission ticket from the top of your proxy card and bring it with you to the meeting. The number of people we will admit tohave questions during the meeting, will be determined by howyou may type them in the shares are registered, as indicated on the admission ticket. If you are a stockholder whose shares are held by a broker, bank, or other nominee, please request an admission ticket by writing to our officedialog box provided at Archer-Daniels-Midland Company, Investor Relations, 4666 Faries Parkway, Decatur, Illinois 62526-5666. Your letter to our office must include evidence of your stock ownership. You can obtain evidence of ownership from your broker, bank, or nominee. The number of tickets that we send will be determined by the manner in which shares are registered. If your request is received by April 20, 2017, an admission ticket will be mailed to you. Entities such as a corporation or limited liability company that are stockholders may send one representative to the annual meeting, and the representative should have apre-existing relationship with the entity represented. All other admission tickets can be obtained at the registration table located at the James R. Randall Research Center lobby beginning at 7:30 A.M. on the day of the meeting. Stockholders who do notpre-register will be admitted toany point during the meeting only upon verification of stock ownership.
The use of cameras, video or audio recorders or other recording devices inuntil the James R. Randall Research Centerfloor is prohibited. The display of posters, signs, banners or any other type of signage by any stockholder in the James R. Randall Research Center is also prohibited. Firearms are also prohibited in the James R. Randall Research Center.
Any requestclosed to deviate from the admittance guidelines described above must be in writing, addressed to our office at Archer-Daniels-Midland Company, Secretary, 77 West Wacker Drive, Suite 4600, Chicago, Illinois 60601 and received by us by April 20, 2017. We will also have personnel in the lobby of the James R. Randall Research Center beginning at 7:30 A.M. on the day of the meeting to consider special requests.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 meeting and voting in person (attendance at the meeting will not, by itself, revoke a proxy).
(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 |
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
(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 |
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). Stockholders are asked to provide an advisory vote on whether the advisory vote on the compensation of our named executive officers should be held every one, two or three years. The option among these choices that receives the affirmative vote of the holders of a plurality of the shares present in person or represented by proxy and entitled to vote on the matter will be deemed to have received the advisory approval of stockholders. 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, in persononline 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. Brokernon-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 SECURITIESPrincipal Holders of Voting Securities
Based upon filings with the Securities and Exchange Commission (“SEC”), we knowbelieve 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 23, 2017,27, 2020, State Farm Mutual Automobile Insurance Company and related entities have sole voting and dispositive power with respect to 56,294,74251,214,613 shares and shared voting and dispositive power with respect to 281,000241,063 shares.
(2) Based on a Schedule 13G/A filed with the SEC on February 9, 2017,12, 2020, The Vanguard Group has sole voting power with respect to 905,282821,863 shares, sole dispositive power with respect to 40,714,93643,993,781 shares, shared voting power with respect to 106,153174,423 shares, and shared dispositive power with respect to 1,010,286952,840 shares.
(3) Based on a Schedule 13G/A filed with the SEC on January 19, 2017,February 5, 2020, BlackRock, Inc. has sole voting power with respect to 32,231,34232,389,168 shares and sole dispositive power with respect to 39,497,60038,454,597 shares.
(4) Based on a Schedule 13G filed with the SEC on February 9, 2017,13, 2020, State Street Corporation has shared voting power with respect to 33,876,563 shares and shared dispositive power with respect to 34,270,74737,048,786 shares.
6 | ADM Proxy Statement |
PROPOSAL NO.Proposal No. 1 — ELECTION OF DIRECTORS FOR AElection of Directors for aONE-YEAROne-Year TERMTerm
Our boardThe Board of directorsDirectors has fixed the size of the current board at twelve. Ms. Carter and Mr. Maciel, both current members of our board of directors, have determined not to stand forre-election. As of March 13, 2017, Ms. Carter beneficially owned 11,581,132 shares of our common stock, consisting of 2,432,349 shares held in a family foundation or owned by or in trust for members of Ms. Carter’s family, 74,003 shares held in an individual retirement account, 8,918,000 shares held in a limited partnership and 156,780 stock units allocated under our Stock Unit Plan for Nonemployee Directors, which are deemed to be the equivalent of outstanding shares of common stock, and Mr. Maciel beneficially owned 25,382 shares of our common stock, all of which consisted of stock units allocated under our Stock Unit Plan for Nonemployee Directors. Upon the recommendation of the Nominating/Corporate Governance Committee, the board of directors has determined at this time not to fill one of the vacancies that will occur as a result of Ms. Carter’s and Mr. Maciel’s departures and has, accordingly, fixed the number of director nominees at eleven.
Ten of the All eleven nominees proposed for election to our boardthe Board of directorsDirectors are currently members of our boardthe Board and have previously been elected previously by our stockholders. The new nominee for election is Suzan F. Harrison. Ms. Harrison was identified by the Nominating/Corporate Governance Committee as a potential nominee and was recommended by the Nominating/Corporate Governance Committee after it completed its interview and vetting process. Unless you provide different directions, we intend forboard-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 in the proxyas proxies may vote for a substitute who will be designated by the boardBoard of directors.Directors. Alternatively, the boardBoard of directorsDirectors could reduce the size of the board. The boardBoard 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,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 boardBoard as a “holdover director.” However, under our Corporate Governance Guidelines, each director annually submits an advance, contingent, irrevocable resignation that the boardBoard 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 boardBoard about whether to accept or reject the resignation. The boardBoard 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 boardBoard will nominate for election orre-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 boardBoard as a “holdover director.”
The information below describes the nominees, their ages, positions with our company, principal occupations, current directorships of other publicly-ownedpublicly owned companies, directorships of other publicly-ownedpublicly 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 13, 2017,16, 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.
PROPOSAL NO.Proposal No. 1 — Election of Directors for a One-Year Term
Director Nominees
DIRECTOR NOMINEES
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Age: 56 Director since: 2018 Common stock owned:6,862(1) Percent of class: *
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Executive Officer of Fluor CorporationAECOM from 2002 – 2011.March 2014 to March 2015; President of AECOM from 2011 to March 2014.
Directorships of Other Publicly-Owned Companies: DirectorChairman of Sempra Energy and BP p.l.c.AECOM.
Qualifications and Career Highlights:
Prior to retiring in February 2012, Mr. Boeckmann served in a variety of engineeringBurke is currently Chief Executive Officer and executive management positions during his35-plus year career with Fluor Corporation, includingnon-executive Chairman of the Board from 2011of 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 February 2012, Chairman ofjoining 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 Chief Executive Officer from 2002 to 2011, and President and Chief Operating Officer from 2001 to 2002. His tenure with Fluor Corporation included responsibility for global operations and multiple international assignments. Mr. Boeckmann currently servesfinance, his experience as a director of Sempra EnergyCEO, and BP p.l.c. He has previously served onhis involvement in projects throughout the boards of BHP Billiton and Burlington-Northern Santa Fe. Mr. Boeckmann has been an outspoken business leader in promoting international standards for business ethics. His extensive board and executive management experience, coupled with his commitment to ethical conduct in international business activities, makes him a valuable addition to our board of directors.world.
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Age: 61
Director since: 2011
Common stock owned: 21,256(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; Director of Rock-Tenn Company within the past five years.
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 our board of directors extensive expertise in finance and related functions, as well as significant knowledge of corporate development, agri-business and international operations.
PROPOSAL NO. 1 —ELECTION OF DIRECTORS
Age: 64
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 |
Age: 61
Director since: 2010
Common stock owned: 28,668(3)
Percent of class: *
Principal Occupation or Position: Senior Executive Vice President of Air Liquide Group (a leading provider of gases for industry, health and the environment) since 2007.from 2007 – July 2017.
Directorships of Other Publicly-Owned Companies: Director of Air Liquide S.A. andDirector of National Grid plc. within the past five years.
Qualifications and Career Highlights:
Prior to retiring in July 2017, Mr. Dufour isserved 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. Since 2010, he has supervisedMr. Dufour’s tenure with Air Liquide’sLiquide Group included supervision of operations in the Americas, Africa-Middle East, and Asia-Pacific zones, whileand he also overseeing, globally,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
|
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 |
Age: 69
Director since: 2010
Common stock owned: 40,989(1)
Percent of class: *
Former Principal Occupation or Position: Executive Chairman of Sempra EnergyMonsanto Company (an energy servicesagricultural company) from 20112007 – December 2012.2009.
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 |
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 andCorporation. 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 our boardthe Board of directorsDirectors 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 |
PROPOSAL NO.Proposal No. 1 —ELECTION OF DIRECTORS
Director Nominees
Suzan F. Harrison |
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 |
Age: 59
Director since: –
Common stock owned: 0
Percent of class: *
Principal Occupation or Position: President of Global Oral Care at Colgate-Palmolive Company (a global household and consumer products company) since 2011;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; Vice President and General Manager2009.
Directorships of Colgate Oral Pharmaceuticals, North America and Europe from 2005 – 2006.Other Publicly-Owned Companies:Director of WestRock Company.
Qualifications and Career Highlights:
Ms. Harrison is currentlyretired 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
|
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 |
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 |
Age: 55
Director since:President from January 2015
Common stock owned: 1,510,138(4)
Percent of class: *
Principal Occupation or Position: Chairman of the Board, Chief Executive Officer and President since - January 2016; Chief Executive Officer and President since January 2015; 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 and Wilmar International Limited.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 effectivein January 2015, and was named Chairman of the Board effectivein 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 also 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
|
PROPOSAL NO. 1 —ELECTION OF DIRECTORS
Age: 60
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 |
Age: 62
Director since: 2003
Common stock owned: 47,279(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 ofSmurfit-Stone Container Corporation from 2010 – 2011(5).
Directorships of Other Publicly-Owned Companies:Director of Energizer Holdings, Inc.; Director of Rentech Inc., Exelis, Inc. and Ralcorp Holdings, Inc. within the past five years.
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 our board of directors his substantial experience in leadership, banking and finance, strategy development, sustainability and operations management.
|
Age: 57
Director since: 2014
Common stock owned: 12,444(6)
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 our boardthe Board of directorsDirectors substantial experience in public policy, international trade, and international investment.
PROPOSAL NO.Proposal No. 1 —ELECTION OF DIRECTORS Election of Directors for a One-Year Term
Director Nominees
Debra A. Sandler
|
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 |
Age: 57
Director since: 2016
Common stock owned: 2,279(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;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.
|
Age: 65
Director since: 2012
Common stock owned: 15,033(1)
Percent of class: *
Former Principal Occupation or Position: Deputy Chairman, Executive Director and Chief Strategy Officer of Stella International Holdings Limited (a developer and manufacturer of footwear) from 2008 – August 2013.
Qualifications and Career Highlights:
Mr. Shih served as Deputy Chairman, Executive Director and Chief Strategy Officer of Stella International Holdings Limited, a company listed on the Main Board of the Hong Kong Stock Exchange, from 2008 to August 2013. He previously held executive positions with PepsiCo (China) Investment Ltd. and Motorola (China) Electronic Ltd. Mr. Shih’s qualifications to serve as a director of the company include his extensive business experience in Asia and his expertise in business strategy, leadership development, joint ventures and mergers and acquisitions.
PROPOSAL NO. 1 —ELECTION OF DIRECTORS
Kelvin R. Westbrook
|
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; |
Age: 61
Director since: 2003
Common stock owned: 45,930(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”)(7)(8) from 2006 – 2007; President and Chief Executive Officer of Millennium Digital Media, L.L.C. from 1997 – 2006.2007.
Directorships of Other Publicly-Owned Companies:Director of Stifel Financial Corp.,T-Mobile USA, Inc. and Mosaic Company andCompany; 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 boardBoard of directors.Directors. He is a former partner of a national law firm, was the President, Chief Executive Officer, andco-founder of two large cable television and broadband companies, and was or is a member of the board of numerousseveral high-profile companies, includingT-Mobile USA, Inc. and the National Cable Satellite Corporation, better known asC-SPAN. Mr. Westbrook currently servesalso previously served on the boardsboard of four other public companies and a multi-billion dollarmulti-billion-dollar not-for-profit healthcare services company.
Lei Z. Schlitz |
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 theirtop-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.
10 | ADM Proxy Statement 2020 |
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 for Nonemployee Directors that are deemed to be the equivalent of outstanding shares of common stock for valuation purposes.
(2) Includes 20,49634,848 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 for Nonemployee Directors.and 60,000 shares held in trust.
(3)(5) Includes 20,968 stock units allocated under our Stock Unit Plan for Nonemployee Directors.
(4) Includes 275,059440,574 shares held in trust, 238 shares held by afamily-owned limited liability company, and 865,4781,766,494 shares that are unissued but are subject to stock options exercisable within 60 days.
(5)(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.
(6)(7) Includes 9,44421,217 stock units allocated under our Stock Unit Plan for Nonemployee Directors.Plan.
(7)(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, and Board DiversityDIRECTOR EXPERIENCES, QUALIFICATIONS, ATTRIBUTES, AND SKILLS; BOARD DIVERSITY
In assessing an individual’s qualifications to become a member of the board,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 boardBoard 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.Board.
The specific experience, qualifications, attributes, and skills that qualify each of our directors to serve on our boardthe Board are described in the biographies above.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 StockholdersDIRECTOR 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 forre-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.
BOARD LEADERSHIP AND OVERSIGHTBoard Leadership and Oversight
BOARD LEADERSHIP STRUCTUREBoard Leadership Structure
Our company’s boardBoard of directorsDirectors 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 boardBoard 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 boardBoard and management team. The boardBoard regularly evaluates whether the roles of Chief Executive Officer and Chairman of the Board should be combined or separated. The board’s recentBoard’s implementation of a careful and seamless succession plan over the past several years demonstrates that the boardBoard 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 effective January 1, 2016, is in the best interest of our stockholders at this time. The Chief Executive Officer is responsible for theday-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 boardBoard believes at this time that combining the roles of Chief Executive Officer and Chairman contributes to an efficient and effective board.
Thenon-management independent directors elect a Lead Director at the board’sBoard’s annual meeting. Mr. Felsinger is currently serving as Lead Director. The boardBoard believes that having an independent Lead Director provides the boardBoard with independent leadership and facilitates the independence of the boardBoard 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 boardBoard 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;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;Board; (viii) guides the board’sBoard’s governance processes; (ix) provides leadership to the boardBoard 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 thenon-management directors in determining performance criteria for evaluating the Chief Executive Officer and coordinates the annual performance review of the chief executive officer;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 (xiii)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 boardBoard may determine.
In addition to electing a Lead Director, ournon-management independent directors facilitate the board’sBoard’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’sBoard’s delegation of authority parameters also serve to foster effective board leadership.
12 | ADM Proxy Statement 2020 |
Board Leadership and Oversight
Board Role in Risk Oversight
BOARD ROLE IN RISK OVERSIGHTBoard Role in Risk Oversight
Management is responsible forday-to-day risk assessment and mitigation activities, and our company’s boardBoard of directorsDirectors 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 boardBoard as a whole maintains the ultimate oversight responsibility for risk management, the committees of the boardBoard 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 our boardthe Board of directorsDirectors regarding significant matters identified with respect to the foregoing.
BOARD LEADERSHIP AND OVERSIGHT
Management has established an IntegratedEnterprise 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
• 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 |
Governance Committee
•
• recommends director nominees who it believes will capably assess and monitor risk |
• 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 | 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
| ||||||||||||||||||
• ensures implementation and maintenance of a process to identify, evaluate, and prioritize risks to
• 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 |
ADM Proxy Statement 2020 | 13 |
Board Leadership and Oversight
Sustainability and Corporate Responsibility
BOARD ROLE IN OVERSEEING POLITICAL ACTIVITIESSustainability 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 toNo-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: | • 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: |
14 | ADM Proxy Statement 2020 |
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 an18-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 toNo-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. ADMWe and itsour political action committee (ADMPAC) therefore support candidates for political office and organizations that share ourpro-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 ADMour 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 ADM’sour contributions to individual candidates for public office and candidate committees, ADMwe also supportssupport a small number ofso-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, ADM haswe 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 ADM’sour quarterly LD2 filings.
ADM engagesWe 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.
BOARD LEADERSHIP AND OVERSIGHT
ADM’sThe Board of Directors provides oversight of ADMPAC’s and the Company’scompany’s political activities, political contributions, and compliance with relevant laws. At each quarterly Boardboard 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 seehttps://www.adm.com/en-US/company/Pages/USPoliticalContributions.aspx.our-company/us-political-contributions.
ADM Proxy Statement | 15 |
DIRECTOR EVALUATIONS; SECTION 16(a) REPORTING COMPLIANCEDirector Evaluations
BOARD, COMMITTEE AND DIRECTOR EVALUATIONSBoard, Committee, and Director Evaluations
The boardBoard 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 boardBoard of directors,Directors, each committee of the board,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 and the chairdirector. 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 boardBoard are discussed at appropriate committee meetings and with the full board.
Our boardThe 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires our directorsEvaluation questionnaires are distributed Outside firm collects results Results are delivered and executive officers to file reports of ownershipdiscussed with each director Other evaluations are discussed at committee meetings and changes in ownership on Forms 3, 4 and 5 with the SEC. Based on our review of Forms 3, 4 and 5 that we have received from, or have filed on behalf of, our directors and executive officers, and on written representations from those persons that they were not required to file a Form 5, we believe that, during the fiscal year ended December 31, 2016, our directors and executive officers complied with all Section 16(a) filing requirements.full board
16 | ADM Proxy Statement |
INDEPENDENCE OF DIRECTORSIndependence of Directors
Independence of Directors
INDEPENDENCE OF DIRECTORSThe Board of Directors has reviewed business and charitable relationships between our company and eachnon-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 anarm’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 anarm’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 anarm’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 anarm’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 anarm’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 anarm’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 thatT-Mobile US, Inc., of which Mr. Westbrook is a director, sold various products to our company, all on an
ADM Proxy Statement 2020 | 17 |
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 orT-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.
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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 boardBoard 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 any12-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 anon-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. |
The board of directors has reviewed business and charitable relationships between us and eachnon-employee director and director nominee to determine compliance with the NYSE standards described above and our bylaw standards 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 eleven of its twelve current members, Messrs. Boeckmann, Crews, Dufour, Felsinger, Maciel, Moore, Sanchez, Shih and Westbrook, Ms. Carter and Ms. Sandler, are independent and that Ms. Harrison, a director nominee, is also
independent. Mr. Luciano is not independent under the NYSE or bylaw standards because of his employment with us.
In determining that Mr. Boeckmann is independent, the board considered that, in the ordinary course of business, Sempra Energy sold utility services to our company and BP p.l.c. sold natural gas and fuel to our company, all on anarm’s-length basis during the fiscal year ended December 31, 2016. Mr. Boeckmann is a director of Sempra Energy and BP. The board determined that Mr. Boeckmann does not have a direct or indirect material interest in such transactions and that such transactions do not impair Mr. Boeckmann’s independence.
In determining that Ms. Carter is independent, the board considered that, during the fiscal year ended December 31, 2016, the company purchased utility services from Westar Energy Inc. in the ordinary course of business and on anarm’s-length basis. Ms. Carter is a director of Westar Energy Inc. The board determined that Ms. Carter does not have a direct or indirect material interest in such utility transactions, and that such utility transactions do not impair Ms. Carter’s independence. The board further considered that, Norvell Company, of which Ms. Carter’s brother is majority owner, sold certain equipment having an aggregate purchase price less than $1.0 million, to our company, in the ordinary course of business, and on anarm’s-length basis. The board determined that Ms. Carter does not have a direct or indirect material interest in such transactions and that such transactions do not impair Ms. Carter’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, sold certain supplies to our company and that Hormel Foods Corporation, of which Mr. Crews is a director, purchased certain commodity products from our company, all on anarm’s-length basis during the fiscal year ended December 31, 2016. The board determined 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 Senior Executive Vice President and a director, sold certain supplies and commodity products to our company on anarm’s-length basis during the fiscal year ended December 31, 2016. 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 Mr. Maciel is independent, the board considered that, in the ordinary course of business, Marfrig Frigorificos, of which Mr. Maciel is a director, purchased various products from our
INDEPENDENCE OF DIRECTORS
company, all on anarm’s-length basis during the fiscal year ended December 31, 2016. The board determined that Mr. Maciel does not have a direct or indirect material interest in such transactions and that such transactions do not impair Mr. Maciel’s independence.
In determining that Mr. Sanchez is independent, the board considered that, during the fiscal year ended December 31, 2016, the company made a charitable contribution to H. L. Moffitt Cancer Center and Research Institute, of which Mr. Sanchez is a director. The board determined that Mr. Sanchez does not have a direct or indirect material interest in the transaction and that such transaction does not impair Mr. Sanchez’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 various products to our company on anarm’s-length basis during the fiscal year ended December 31, 2016. The board determined 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.
In determining that Ms. Harrison is independent, the board considered that, in the ordinary course of business, Colgate-Palmolive Company, of which Ms. Harrison is President of Global Oral Care, purchased various products from our company on anarm’s-length basis during the fiscal year ended December 31, 2016. The board determined that this arrangement did not exceed the NYSE’s threshold of 2.0% of 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.
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Section 2.8 of our bylaws also provides that a majority of the boardBoard of directorsDirectors 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 |
18 | ADM Proxy Statement 2020 |
Independence of Directors
Corporate Governance Guidelines
Corporate Governance Guidelines
The boardBoard has adopted corporate governance guidelinesCorporate Governance Guidelines that govern the structure and functioning of the boardBoard and set forth the board’sBoard’s policies on governance issues. The guidelines, along with the written charters of each of the committees of the boardBoard and our bylaws, are posted on our website, www.adm.com,https://www.adm.com/investors/corporate-governance, and are available free of charge onupon written request to theADM, Attention: Secretary, Archer-Daniels-Midland Company, 77 West Wacker Drive, Suite 4600, Chicago, Illinois 60601.
Independent Executive Sessions
In accordance with our corporate governance guidelines,Corporate Governance Guidelines, thenon-management directors meet in independent executive session at least quarterly. If thenon-management directors include any directors who are not independent pursuant to the board’sBoard’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.meetings of independent directors. Thenon-management directors met in independent executive session four times during fiscal year 2016.2019.
INFORMATION CONCERNING COMMITTEES AND MEETINGSInformation Concerning Committees and Meetings
BOARD MEETINGS AND ATTENDANCE AT ANNUAL MEETINGS OF STOCKHOLDERSBoard Meetings and Attendance at Annual Meetings of Stockholders
During the last fiscal year, our boardthe Board of directorsDirectors held ninesix meetings. All incumbent directors attended 75% or more of the combined total meetings of the boardBoard 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 5, 2016,1, 2019, attended that meeting.
INFORMATION CONCERNING COMMITTEES AND MEETINGSmeeting, other than Mr. Alan Boeckmann and Mr. Dufour.
INFORMATION CONCERNING COMMITTEES AND MEETINGS
Information Concerning Committees and Meetings
The board’sBoard’s standing committees arefor 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,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. Sandler.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 boardBoard 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 boardBoard 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; |
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 eachnon-employee director, director nominee, and executive officer to assess potential conflicts of interest and impairment of 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 CommitteePre-Approval Policies”.Policies.”
20 | ADM Proxy Statement 2020 |
Information Concerning Committees and Meetings
Information Concerning Committees and Meetings
Compensation/Succession Committee |
The Compensation/Succession Committee consists of Mr. Westbrook (Chairman), Mr. Boeckmann,Burke, and Ms. Carter, Mr. Maciel and Mr. Shih.Harrison. The Compensation/Succession Committee met sixfour times during the most recent fiscal year. All of the members of the Compensation/Succession Committee were determined by the boardBoard 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 fornon-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 boardBoard of directorsDirectors and, where appropriate, submits actions to the boardBoard of directorsDirectors 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 thenon-management directors.
INFORMATION CONCERNING COMMITTEES AND MEETINGS
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”.Analysis.”
ADM Proxy Statement 2020 | 21 |
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. Boeckmann,Burke, Mr. Crews, Ms. Carter, Mr. Maciel, Mr. Shih,Sandler, and Mr. Westbrook. The Nominating/Corporate Governance Committee met sixfour times during the most recent fiscal year. All of the members of the Nominating/Corporate Governance Committee were determined by the boardBoard 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 |
2. | recommends individuals to the |
3. | develops and recommends to the |
4. | assigns oversight of particular risk areas to other committees of the board; 5.leads the evaluation of the directors, the 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), and the chairs of our three standing committees, 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.Westbrook (Chair of the Compensation/Succession Committee). The Executive Committee met one timedid not meet during the most recent fiscal year. The Executive Committee acts on behalf of the boardBoard 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 boardBoard 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 boardBoard under applicable law, our certificate of incorporation, or our bylaws.
22 | ADM Proxy Statement |
STOCKHOLDER OUTREACH AND ENGAGEMENTStockholder Outreach and Engagement; Code of Conduct
STOCKHOLDER OUTREACH AND ENGAGEMENTStockholder Outreach and Engagement
As part of our commitment to effective corporate governance practices, in 20162019 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 some of 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 ourthe 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 boardBoard and management can enhance this dialogue in the future.
Communications with DirectorsCOMMUNICATIONS WITH DIRECTORS
We have approved procedures for stockholders and other interested parties to send communications to individual directors or thenon-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, Archer-Daniels-Midland Company,ADM, 77 West Wacker Drive, Suite 4600, Chicago, Illinois 60601. All correspondence will be forwarded to the intended recipients.
The boardBoard 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, officers, and directors,officers, including our principal executive officer, principal financial officer, and principal accounting officer. The Code of Conduct is available at our website, www.adm.comhttps://www.adm.com/our-company/the-adm-way/code-of-conduct, and is available free of charge onupon written request to theADM, Attention: Secretary, Archer-Daniels-Midland Company, 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.
EXECUTIVE STOCK OWNERSHIPExecutive Stock Ownership
Executive Stock Ownership Policy
The board of directors believes that it is important for each member of our senior management to acquire and maintain a significant ownership position in shares of our common stock to further align the interests of senior management with the stockholders’ interests. Accordingly, we have adopted a policy regarding ownership of shares of our common stock by senior management. The policy calls for members of senior management to own shares of common stock with a fair market value within a range of one to five times that individual’s base salary, depending on each individual’s level of responsibility with our company. The stock ownership guidelines applicable to the named executive officers (as defined herein) are set forth below.
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Executive Officer Stock Ownership
The following table shows the number of shares of our common stock beneficially owned as of March 13, 2017,16, 2020, directly or indirectly, by each of the named executive officers.
Executive | Common Stock Beneficially Owned | Options Exercisable Within 60 Days | Percent of Class | Common Stock Beneficially Owned(1) | Options Exercisable Within 60 Days | Percent of Class | ||||||
J. R. LUCIANO | 1,510,138(1) | 865,478 | * | 2,777,280(2) | 1,766,494 | * | ||||||
R. G. YOUNG | 740,695(2) | 470,682 | * | 1,312,542(3) | 912,636 | * | ||||||
D. C. FINDLAY | 375,210(3) | 216,645 | * | |||||||||
V. F. MACCIOCCHI | 226,920 | 74,488 | * | |||||||||
G. A. MORRIS | 134,566(4) | 47,658 | * | 315,246(4) | 130,299 | * | ||||||
J. D. TAETS | 330,959(5) | 179,526 | * | 540,601(5) | 319,113 | * |
* Less than 1% of outstanding shares
(1) Includes 275,059for 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 afamily-owned limited liability company, and stock options exercisable within 60 days.
(2)(3) Includes stock options exercisable within 60 days.
(3) Includes4,298 shares held in our Dividend Reinvestment Plan and stock options exercisable within 60 days.
(4) Includes 557617 shares held in ourthe 401(k) and Employee Stock Ownership PlanESOP and stock options exercisable within 60 daysdays.
(5) Includes 843934 shares held in ourthe 401(k) and Employee Stock Ownership PlanESOP and stock options exercisable within 60 daysdays.
Common stock beneficially owned as of March 13, 2017,16, 2020, by all directors, director nominees, and executive officers as a group, numbering 2119 persons including those listed above, is 15,633,5017,121,648 shares representing 2.7%1.27% of the outstanding shares, of which 420,274293,037 shares represent stock units allocated under our Stock Unit Plan for Nonemployee Directors, 2,113,6775,055 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.
24 | ADM Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
COMPENSATION DISCUSSION AND ANALYSIS
IntroductionCompensation Discussion and Analysis
This Compensation Discussion and Analysis explainsdescribes the process thatcompensation of the Compensation/Succession Committee uses to determine compensation and benefits for the company’s principal executive officer, principal financial officer, and our three other most highly compensatedfollowing named executive officers, who were serving as executive officers on December 31, 2016 (collectively, the “named executive officers” or “NEOs”) and provides a detailed description of those programs.
This discussion focuses on the compensation provided to the company’s NEOs during 2016, who were:NEOs:
Name | Title | Time with ADM (as of March 2020) | ||
| Chairman, Chief Executive Officer and President | 8 years, 11 mos. | ||
| Executive Vice President and Chief Financial Officer | 9 years, 4 mos. | ||
| Senior Vice President, | 7 years, 9 mos.* | ||
| Senior Vice President and President, Ag Services and Oilseeds | 25 years, 2 mos. | ||
| Senior Vice President and President, Global | 31 years, 10 mos. |
TABLE OF CONTENTS* includes tenure at a predecessor company that ADM acquired in 2014.
Philosophy.The company’s business strategy and objectives are the foundation for our compensation programs. We believe, and our compensation programs support, that as an employee’s level in the organization or levelTable of responsibility increases, so should the proportion of his or her compensation that is based on the company’s performance. As such, the executive compensation programs closely tie pay to performance and will only deliver competitive levels of compensation if we achieve our goals and enhance stockholder value.
Our compensation philosophy is founded on the principle that we reward executives for creating value for our stockholders. We link a significant portion of compensation to multiple performance metrics, as described in Sections 6 and 7. We implement our compensation practices within the framework ofpay-for-performance. We do so in a manner that helps us attract and retain the highest quality talent to our executive ranks by rewarding excellence in leadership and success in the implementation of our business strategy.
In 2016, the three key elements of our pay program continued to be base salary, annual cash incentive awards and long-term incentive (LTI) awards. We refer to the combination of these three elements as “total direct compensation.” This summary discusses compensation highlights for 2016. We also note in this summary an overview of our recent financial and operating performance, how that performance impacted NEO compensation for 2016, and decisions we have made that affect the 2017 compensation of our NEOs which are relevant to an understanding of 2016 pay.Contents
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ADM Proxy Statement | 25 |
COMPENSATION DISCUSSION AND ANALYSISCompensation Discussion and Analysis
Executive Summary
2016 Financial and Operating Performance(1)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:
When designing our executive compensation programs, management and the Compensation/Succession Committee consider shareholder feedback received during our annualsay-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:
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 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 both“non-GAAP” financial measures that are defined and reconciledhave 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 amounts reported under GAAP in Annex A, “Definition and Reconciliation ofNon-GAAP financial measure, and related disclosures about the use of thesenon-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.
Balanced Total
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Compensation DeliveryDiscussion and Analysis
ADM executive totalExecutive Summary
We also continued executing the most sweeping portfolio transformation in the117-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 inrun-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.
NEO The three key elements of our compensation program are base salary, annual cash incentives are based 75% on company performanceincentive awards, and 25% on individual performance. In 2016, we achieved Adjusted EBITDA of $3.0 billion versuslong-term equity incentive (LTI) awards.
We believe our target of $3.4 billionsalaries and Adjusted ROIC of 5.9%, 70 basis points below ourperformance-based annual weighted average cost of capital (“WACC”) of 6.6%, resulting in company performance at 72.8% of target. Final payouts also reflect the Compensation/Succession Committee’s review of each NEO’s individual performance, where the 25% individual performance percentage would indicate target. Based on its review ofcash 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 the economic environment for 2016, the Compensation/Succession Committee electedGovernance — Executive Stock Ownership”), which require executives to award the Chairmanown 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 CEO an individual performance percentage of 20% (or 80% of target) for his individual performance. The Compensation/Succession Committee incorporated its and the full board’s assessment of the Chairman and CEO’s individual performance as well as overall company performance when approving Mr. Luciano’s individual performance percentage. Duetime-based restricted stock units (RSUs) to the NEOs. The PSUs will vest, or
not, based on ADM’s performance against business targets, all NEOs received less than target performance individual performance percentages. Mr. Findlay, Mr. Young, and Mr. Morris received individual performance percentages of 20% and Mr. Taets received an individual performance percentage of 15% based on performance against companyspecific goals and an assessment of their individual performance. We reduced the individual performance percentages for the NEOs to recognize the role that they played as leaders to drive company performance. Details on individual performance are discussed in Section 6.
In February 2016, the Compensation/Succession Committee granted LTI awards at the base award level based on a review of the company’s historicthree-year TSR performance versus the S&P 100 Industrials, and portfolio management and strategic plan accomplishments described above.
Compensation Program Changes for 2017
As more fully discussed in Section 7 below, for 2017, the Compensation/Succession Committee approved a number of changes which include:
COMPENSATION DISCUSSION AND ANALYSIS
Results of 2016 Advisory Vote on Executive Compensation
At the 2016 Annual Meeting of Stockholders, we held the company’s sixth advisory vote on executive compensation. Approximately 94% of the votes cast were in favor of this advisory proposal. The Compensation/Succession Committee believes that this strong levelexpanded 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 support,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 similarly strong levelstarget award value of support manifested in prior periods, affirm broad stockholder agreement with the alignmentequity (the dollar amount of existing executive compensation programs with stockholder interests andsuch awards as approved by the Compensation/Succession Committee’s approach. Committee) granted early in 2019 for the 2019-2021 performance period.
The Committee considered this outcome in determining that no substantive changes in executivecharts below present the mix of total target direct compensation programs would occur for 2016. In order to continue to align with stockholder interests, significant changes were madeawarded or paid to the 2017 compensation programs as detailedNEOs in Section 7. At the Annual Meeting of Stockholders to be held in May 2017, we will again hold an advisory vote on executive compensation. The Compensation/Succession Committee will continue to consider stockholder feedback and the results from this year’s and future advisory votes on executive compensation.2019.
SECTION 2 — COMPENSATION OBJECTIVES
The objectives of the company’s executive compensation program are to:
SECTION 3 — COMPONENTS OF EXECUTIVE COMPENSATION
The company’s executive compensation program is built on a structure that balances short and long term performance:
COMPENSATION DISCUSSION AND ANALYSIS
The following chart summarizes the components and associated objectives of our executive compensation program:
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We pay an annual cash incentive only if the company meets certain specified performance goals. The company’s annual cash incentive program emphasizes company-wide performance objectives to encourage the executives to focus on overall company success and leadership to generate the most value across the entire company. Our assessment of company performance is directly tied to stockholder expectations by ensuring the delivery of threshold levels of Adjusted EBITDA and Adjusted ROIC before awards may be earned. Adjusted EBITDA for 2016 was calculated by taking reported EBITDA and excluding the impact ofone-time gains, impairment, restructuring, litigation, settlement and debt extinguishment charges as well as a small LIFO credit. Individual performance and the Compensation/Succession Committee’s informed judgment are incorporated to ensure actual awards appropriately reflect the company’s operating environment and individual executive contributions.
The company’s LTI program is designed to reward sustained performance and to attract and retain talented executives and employees. Historically, the Compensation/Succession Committee has reviewed company performance incorporating perspectives on company and market factors, including relative and absolute stockholder return and strategic, operating, and financial milestones. Typically, this assessment focuses principally on the company’s relative three-year TSR performance compared to that of the S&P 100 Industrials.
In addition to these direct elements of pay, the company provides benefits to our NEOs to provide for basic health, welfare and income security needs and to support the attraction, retention and motivation of these employees. With few exceptions, such as supplemental benefits provided to employees whose benefits under broad-based plans are limited under applicable tax laws, the company’s philosophy is to offer the same benefits to all U.S. salaried employees as are offered to the company’s NEOs.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
ADM Proxy Statement | 27 |
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
SECTION 4 — 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 maintainupdate current best practices. The following table provides a summary of “what we do” and “what we don’t do”.summarizes our current practices.
What We Do | What We Don’t Do | |
✓ |
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X No
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XNo | |
✓Aggressivestock 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 Nohedging:We prohibit NEOs from engaging in hedging transactions with
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XNo
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✓Clawback
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X No
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✓ Use of
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✓Regularreview 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 | |
✓Performance-basedequity 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 Noemployment contracts:We do not have an employment contract with any executive officer. | |
✓Doubletrigger 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.
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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 ourCOMPENSATION DISCUSSION AND ANALYSISpay-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.”
SECTION 5 — OVERSIGHTHow Executive Compensation is Determined
THE ROLE OF EXECUTIVE COMPENSATION
What is the Role of the Compensation/Succession Committee?THE COMPENSATION/SUCCESSION COMMITTEE
The Compensation/Succession Committee, which is composed solely of independent directors, and is responsible to the board of directors and the company’s stockholders for establishing the company’sADM’s compensation philosophy and establishingdeveloping and administering the company’s 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 andnon-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’s responsibilitiesCommittee assesses executive compensation packages in the aggregate, and considers each individual component as well. Base salary is reviewed annually. Annual cash incentives are set forthpaid if, and to the extent that, specified corporate goals and individual goals are attained. Performance-based equity compensation is assessed in its charter, whicha similar manner and is availabledesigned 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 investor relations sectioncompensation of other ADMnon-executive employees in other pay grades and/or salary ranges and the company’s website. Additional information regarding the Compensation/Succession Committee’s authority to determine compensation can be found under the caption “Compensation/Succession Committee” elsewhere in this proxy.Committee reviews such data when setting CEO and NEO pay.
What is the Role of the Board?THE ROLE OF THE BOARD
The boardBoard approves the company’s business plan, which is one of the factors used to set financial and business objectives for the annual cash incentive plan.compensation. The independent directors establish and approve all performance criteria for evaluating the Chairman and CEO, and annually evaluate the performance of the Chairman and CEO based on these criteria. Thenon-management directors alsocriteria, and ratify the Chairman and CEO’shis compensation. The board can also may provide input and ratification on any additional compensation-related issues.issues at the Compensation/Succession Committee’s request. The board alsoBoard conducts an annual review of the company’s performance.performance, which informs the calculation of performance-based incentives and decisions regarding compensation packages generally.
ADM Proxy Statement 2020 | 29 |
What is the Role
Compensation Discussion and Analysis
Components of the Compensation/Succession Committee Consultant?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 the Compensation/Succession Committee with objective and expert analyses and independent advice on executive and director compensation and other matters in support of the Compensation/Succession Committee’s responsibilities under its charter.committee’s responsibilities. Each Compensation/Succession Committee meeting includes an executive session where the Compensation/Succession Committeecommittee meets exclusively with the independent consultant;consultant, without company management is not included in these sessions.management. Outside of these sessions, the independent consultant interacts with the company’s management team solely on behalf of the Compensation/Succession Committee to assist the Compensation/Succession Committee in fulfilling its duties and responsibilities. Committee.
The Compensation/Succession Committee will only retain consultants that it believes will provide independent advice. The Compensation/Succession Committeecommittee 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.
What are the Roles of Executives?THE ROLE OF EXECUTIVES
To assistOur Chairman and CEO assists the Compensation/Succession Committee in determining compensation for the NEOs other NEOs,than himself. To
that end, the company’s Chairman and CEO participates in discussions withassesses the Compensation/Succession Committee regarding the other officers’ performance and compensation. The Chairman and CEO provides the Compensation/Succession Committee with an assessmentof each of the other NEOs’ performance,NEOs, both as individualsin 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 shortshort- and long-term incentive award target levels that should be paid tofor the other NEOs.
The company’s Senior Vice President of Human Resources oversees all employee compensation and the administration ofadministers our benefits programs under the oversight and direction of the Compensation/Succession Committee. HeThe individual in that role prepares the majoritymost of the materials for the Compensation/
Succession Committee meetings and provides analyses that assist the Compensation/Succession Committeecommittee with its decisions, such as summaries of competitive market practices, summaries of the company’s succession planningsuccession-planning actions, and reports regarding the company’s performance. In addition, throughout the year, hethe Senior Vice President of Human Resources facilitates meetings with management to help the Compensation/Succession Committee gain a better understanding of company performance. Heperformance, and ensures that the Compensation/Succession Committee is providedcommittee receives a rigorous assessment ofyear-to-date performance at each of its meetings. At the direction of the Chairman of the Compensation/Succession Committee, the company’s Senior Vice President of Human Resources involves other members of management in portions of the Compensation/Succession Committee meetings to participate in discussions related to company and individual performance and the company’s compensation and benefit programs. The company’s executives leave meetings during discussions of individual compensation actions affecting them personally and during all executive sessions, unless requested to attendremain by the Compensation/Succession Committee.
COMPENSATION DISCUSSION AND ANALYSIS
How Do the Committee’s Decisions Incorporate the Company’s Executive Compensation Objectives?
COMPENSATION DISCUSSION AND ANALYSIS
SECTION 6 — 2016 EXECUTIVE COMPENSATIONComponents of Executive Compensation
Of the total direct
The company’s executive compensation program is built on a structure that we consider attributable to 2016 performance, the company’s NEOs received, on average, approximately 84% in variable payemphasizes both short- and approximately 70% in equity awards, exclusive of the additional cash award paid to Mr. Morris in March of 2017. For these purposes, we consider the base salary paid in 2016, thelong-term performance. We believe our salaries and performance-based annual cash incentive earned in 2016 (and paid early in 2017)awards encourage and the award value of equity granted early in 2017 to be attributable to 2016 performance. Although, as noted elsewhere, the 2017 equityreward current business results, while our LTI awards were no longer expressly tied to a historical review of the Company’sthree-year relative TSRreward sustained performance, the award decisions were influenced by 2016 performance. The equity award value represents the dollar amount of such awards as approved byparticularly when coupled with our stock ownership requirements.
When setting compensation levels, the Compensation/Succession Committee and differs fromrefers 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 grant date fair value of such awards as shownheading “Peer Group,” the Compensation/Succession Committee chose a broad external market peer group in the Summary Compensation TableS&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 the Grantsassociated objectives of Plan-Based Awards Table because of timing differencesour fixed and performance-based pay for executives in the valuation methodologies used.
2019. Although the Compensation/Succession Committee has not adopted a policy for allocating the various elements of total direct compensation, we do placethe company places greater emphasis on variable pay for executives with more significant responsibilities reflecting theirbecause they have a greater capacity to affect the company’s performance and results. The charts below present the mix
30 | ADM Proxy Statement 2020 |
Compensation Discussion and Analysis
Components of total direct compensation attributable to 2016 performance.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) |
Individual Compensation DecisionsSALARY
The Compensation/Succession Committee reviewssets base salaries based on an executive’s position, skills, performance, experience, tenure, and responsibilities. The Compensation/Succession Committee annually assesses the total compensationcompetitiveness of our NEOs annually. Any changes to base salary short-term incentiveslevels 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 incentivesequity awards are based on competitiveness versuscompany 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 external market, individual performance, internal equityinterests of our stockholders. LTI awards were granted to the NEOs in February 2019.
ADM Proxy Statement 2020 | 31 |
Compensation Discussion and the Committee’s informed judgment as described in “Oversight ofAnalysis
2019 Executive Compensation” in Section 5.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.NEOs for 2019. Details regarding ourthe specific compensation programselements and related decisions may be found followingpayouts follow the summaries for the executives. Due to the timing of the company’s salary adjustments, base salaries presented in the Summary Compensation Table may differ slightly from how we consider annualized salary levels.individual summaries.
COMPENSATION DISCUSSION AND ANALYSIS
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(1) The award value ofvalues shown below for LTI representsgrants represent the dollar amount of such awards, at target, as approved by the Compensation/Succession Committee, and differsCommittee. These amounts differ from the grant date fair valuevalues of such awards as shown in the Grants of Plan-Based Awards Table and the Summary Compensation Table because of timing differences infor two reasons: There is a lag between the equity award approval date and the grant date, and the valuation methodologies used.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 | ||||
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 divestingnon-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 | ||||
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. |
32 | ADM Proxy Statement 2020 |
Compensation Discussion and Analysis
2019 Executive Compensation Decisions
MR. MACCIOCCHI Senior Vice President, President, Nutrition, and Chief Sales and Marketing Officer | ||||
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 | ||||
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 monetizingnon-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 | ||||
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. |
ADM Proxy Statement 2020 | 33 |
Compensation Discussion and Analysis
2019 Executive Compensation Decisions
BASE SALARY
How are Base Salaries Determined?
The Compensation/Succession Committee establishes base salaries based on an NEO’s position, skills, performance, experience, tenure and responsibilities. The Committee annually assesses the competitiveness of base salary levels relative to salaries within the marketplace for similar executive positions. The Committee also considers factors such as individual performance, changes in responsibilities, and/or changes in competitive marketplace levels.
2019 ANNUAL CASH INCENTIVES
How Do We Calculate 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).
Our annual incentive plan design remained unchanged for FY2016, with the exceptionCOMPANY PERFORMANCE COMPONENTSAND BONUS POOL FUNDING
The size of the inclusionbonus pool is determined by ADM’s Adjusted EBITDA, our results on a set of three performance goalsstrategic 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 percentagebonus pool, and by how much.
Any surplus amount of Adjusted EBITDA in excess ofabove $1.4 billion (“Surplus Adjusted EBITDA”) is multiplied by a thresholdfactor 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 that fundsdetermined by Adjusted EBITDA results may be adjusted upward based on the overall award pool. Thecompany’s achievements for three performance goals for 2016 include the following: (i) achieve $275 million in run rate cost savings; (ii) monetize $500 million in invested capital through specific transactions not in the normal course of business that enhances asset turnover or frees up capital to redeploy for improved returns or accretion; and (iii)equally-weighted strategic goals:
Harvest Growth Investments. ADM must realize $700 millionan increase inyear-on-year revenueoperating profit from a specific list of recent acquisitions and major projects (includes WILD, SCI, Eatem Foods,projects.3
Improve.ADM must realize operating profit improvements in key target businesses.4
Readiness. Readiness is are-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 ourday-to-day operations, and is best reflected byrun-rate benefits and accruedin-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 asnon-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 thesenon-GAAP financial measures.
3 The businesses in this calculation include Neovia, Protexin, Crosswind, Harvest Innovations, Tianjin Fibersol,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 HFCS, EastStarch, & AOR).
The percentage of adjusted EBITDA above threshold EBITDA of $1.3 billion that would be in the annual incentive pool could range from 1.8% to 2.4% based upon achievement of the additional performance goals. In 2016, NEO annual cash incentives were based 75% on company performanceFibersol, Polyols, Decatur Nutrition, Corn Milling – Asia, GPTN, AOR, El Transito, Romania, and 25% individual performance. Under this program design, executives cannot earn awards if we do not achieve a threshold level of Adjusted EBITDA, at least equal to the amount of the company’s dividend payments on a pretax basis and pretax interestIndonesia.
34 | ADM Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSISCompensation Discussion and Analysis
2019 Executive Compensation Decisions
expenses for any strategic goal, there will be no adjustment to the year set at $1.3 billionbonus pool funding attributable to that goal. Conversely, if we attain Level 1 targets for 2016. Adjustments include LIFO, gain on sale or revaluationall three strategic goals, the bonus pool will be funded with an additional 1.35% of assets, asset impairments and restructurings, and department extinguishment/pension settlement. Under our 2016 annual cash incentive program, once the threshold level ofSurplus Adjusted EBITDA, was earned, 2.2%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 | $70 million | 0.15% | $85 million | 0.3% | $100 million | 0.45% | ||||||
Readiness
(Gross benefits)
(each component weighted 50%) | Accruedin-year benefits: $475 million
Run-rate benefits: $790 million | 0.15% | Accruedin-year benefits: $580 million
Run-rate benefits: $960 million | 0.3% | Accruedin-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 EBITDAabove that $1.3 billion level was allocatedROIC against WACC tells us if our invested capital is being used effectively to fundcreate value for our shareholders.
As the annual incentive pool. This was based uponlast step in our bonus pool funding calculation, we consider whether ROIC exceeds WACC (which means we used invested capital very effectively during the achievement of two out of threeyear), or whether ROIC is even with or lags WACC. That review leads to a multiplier. In essence, the multiplier boosts the size of the performance goals identified above. This value was then subject to adjustment basedbonus pool in years that our return on Adjusted ROIC performance;capital exceeds our cost of capital, and reduces the size of the bonus pool if the company’s Adjusted ROIC was more than 200 basis points below the company’s WACC, the pool was to be reduced by 10%, and if it was more than 200 basis points above the company’s WACC, the pool was to be increased by 10%. WACCinverse is set for compensation purposes at the beginning of the year. For 2016,true.
In 2019, WACC was set at 6.6%6.75%. The individual performance percentage for NEOs canROIC/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 adjusted from 0% to 50% of their cash bonus at target, and is assessed by the Compensation/Succession Committee incorporating elements such as safety, compliance with law, regulation and company policies, and other individual and group factors, including company financial performance, and performance towards the company’s business strategy and objectives.
Annual cash incentives are determined by linear interpolation.
2019 Bonus Pool Calculation
For 2019, ADM attained the degreeresults shown below, leading to which company financiala 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
GrossRun-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
ADM Proxy Statement 2020 | 35 |
Compensation Discussion and Analysis
2019 Executive Compensation Decisions
INDIVIDUAL PERFORMANCE COMPONENTS
Individual performance expectations are achieved and the Compensation/Succession Committee’s independent assessment of the company’s performance as well as the individual performance of the NEO, which makes updetermines 25% of the annual cash bonus target.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 individual portion of the annual cash incentive may be reduced to 0% or increased to 50% of an individual’s target bonus opportunity based on the Compensation/Succession Committee’s assessment of individual and group performance. The formula used to calculate an annual cash incentive payout for NEOs can be expressed as follows:
Company Performance Payout Percentage (75%) + Individual Performance Percentage (25%) = Overall Payout Percentage
(1) Total Challenge Award Level is defined as full bonus payments at target.
(2) For illustrative purposes, a 25% individual performance percentage is used. Individual performance vary by25%. However, for any NEO, the Compensation/Succession Committee has discretion to adjust this target percentage by +/- 25%5% increments based on the Compensation/Succession Committee’scommittee’s assessment of individualthe NEO’s performance and contribution to the company’s success. As a result, individual payouts can range from 0% to 50%.
How is the Individual Performance Component Determined?
For FY2016, basedBased on business results, and the economic environment for 20162019 performance, and the individual achievements summarized above under “Individual Compensation Decisions,” the Compensation/Succession Committee elected to award the Chairman and CEO a 20%following individual performance percentage. percentages to the NEOs:
Mr. Luciano | 30% | |
Mr. Young | 30% | |
Mr. Macciocchi | 25% | |
Mr. Morris | 25% | |
Mr. Taets | 40% |
The Compensation/Succession Committee incorporated its andconsidered the full board’s assessment of the Chairman and CEO’s performance and full company performance when approving Mr. Luciano’s individual performance percentage. Mr. Findlay, Mr. Young, and Mr. Morris received an individual performance percentage of 20% and Mr. Taets an individual performance percentage of 15%, in recognition of their performance against individual and company goals. The 25% individual performance percentage is used for target performance. Our leaders are responsible for driving performance companywide. In a year that was below target performance, our NEOs received less than the target award of 25% for their individual performance. Our trailing four-quarter average Adjusted ROIC was 5.9%, 70 basis points below our 6.6% WACC.
COMPENSATION DISCUSSION AND ANALYSIS
What is the Resulting Annual Cash Incentive for Each NEO?CALCULATIONOF AWARD AMOUNTS
The purpose of theformula used to calculate an annual cash incentive program is to reward performance based onpayout for the achievement of company, business and individual objectives. At the start of each fiscal year, the Compensation/Succession Committee approves minimum, target, and maximum annual cash incentive levels for each NEO. Target annual cash incentive levels areNEOs can be expressed as a percentagefollows:
$52.5M Bonus Pool / $53.6M Sum of salary. Based on company and individual performance, annual cash incentive payouts can range betweenAll Participant Bonuses at Target = 98% Company Performance Factor 73.5% Company Payout + 0% and 200% of the target annual cash incentive. - 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 INCENTIVEFOR EACH NEO
Based on the determination of the company and individual performance factors as described above, each NEO, excluding Mr. Taets,the NEOs received an annual cash incentive for 2016, payable in 2017, equal to 74.6% (72.8% company performance making up 75% of the total annual cash incentive award plus individual award amounts of 20%) of his or her target annual cash incentive. Mr. Taets received an annual cash incentive equal to 69.6% of his total target based upon 15% individual performance.payouts set forth below.
Executive | Target Cash Incentive Opportunity (% of Salary) | Minimum Cash Incentive Opportunity | Target Cash Incentive Opportunity | Maximum Cash Incentive Opportunity | Actual FY2016 Cash Award | |||||
J.R. Luciano | 200% | $0 | $2,600,000 | $5,200,000 | $1,939,600 | |||||
R.G. Young | 129% | $0 | $1,064,498 | $2,128,996 | $794,116 | |||||
D.C. Findlay | 100% | $0 | $700,000 | $1,400,000 | $522,200 | |||||
J.D. Taets | 100% | $0 | $700,000 | $1,400,000 | $487,200 | |||||
G.A. Morris(1) | 100% | $0 | $650,000 | $1,300,000 | $484,900 |
Executive | Target Cash Incentive Opportunity (% of Salary) | Target Cash Incentive Opportunity ($) | 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 |
(1) In March 2017, Mr. Morris received an additional cash award of $640,000 for his role in the WFSI integration through December 31, 2016. Payment is not included in the annual incentive cash award as shown above.
36 | ADM Proxy Statement 2020 |
Additional Awards Paid
Compensation Discussion and Analysis
Mr. Morris received an additional cash award of $640,000 paid in March of 2017 to recognize his efforts in connection with the integration of WFSI during 2015 and 2016.2019 Executive Compensation Decisions
Equity-Based Long-Term Incentives
The company’sEQUITY-BASED LONG-TERM INCENTIVES
ADM’s LTI Programprogram aligns the interests of executives with those of our stockholders by rewarding the achievementcreation of long-term stockholder value, supporting stock ownership, and encouraging long-term service with the company.
In terms of grant size and grant form, the company’s Our performance-based LTI awards in 2016 and prior years were generally determined based upon the Compensation/Succession Committee’s assessment of performance during the prior three fiscal years. For example, equity grants made in February 2016 reflected the Compensation/Succession Committee’s assessment of performance from January 1, 2013 through December 31, 2015. This concept of making grantsare based on the assessmentresults of priorforward-looking metrics measured over a three-year performance is similar in approach to the company’s annual cash incentive plan. As such, the company’s equity-based long-term incentive grants are performance-based. The Compensation/Succession Committee’s assessment ofperiod. In 2019, we divided LTI awards equally between performance considered the company’s TSR performance relative to the S&P 100 Industrials as well as multiple other performance factorsshare units (PSUs) and economic conditions,restricted stock units (RSUs) with three-year vesting. We believe this forward-looking LTI program aligns our equity compensation with market practice and was not strictly formulaic. strengthens our executives’ focus on growth and future value creation for shareholders.
The February 20162019 grants appear in the Grants of Plan-Based Awards table and are reflected in the Summary Compensation Table information for FY2016 because the SEC requires companies to report equity-based LTI awards for the fiscal year during which they were granted, even if they are based on performance during earlier fiscal years.
At the start of FY2016,target amounts approved by the Compensation/Succession Committee establishedare shown below. The listed values represent the base, challenge and premium LTI award values for each NEO. Under this structure, NEOs earn competitive grants only if the company’s relative TSR over the 2013-2015 performance period isdollar amount of such awards, at or above median of the applicable market comparisons reviewed by the Compensation/Succession Committee. The Compensation/Succession Committee may grant “base” awards to maintain the appropriate alignment between management and stockholders through the opportunity to realize future equity value and to provide for necessary retention of the company’s key executive talent.
Challenge awards are intended to result in competitive total direct compensation levels when combined with base salaries and annual target, cash incentives. The Compensation/Succession Committee also considers the company’sone-year, three-year and five-year relative TSR compared to the S&P 100 Industrials.
COMPENSATION DISCUSSION AND ANALYSIS
How Did We Determine LTI Awards Granted in February 2016? (Reflecting 2013-2015 Performance)
LTI awards were granted in February 2016 at the base award level and awarded in February 2016. In determining the award level, the Compensation/Succession Committee reviewed the company’s relative three-year (2013-2015) TSR performance of 43.1% which was below the median versus the S&P 100 Industrials, and portfolio management and strategic plan accomplishments as described in Section 1. The total value of the awards were delivered 50% in stock options and 50% in restricted stock units to support our objectives of aligning with stockholders while providing a strong retention device for our executives.
Long-Term Incentive (Granted in February 2016) | ||||||||||
Executive | Minimum Award | Base Award | Challenge Award | Premium Award | February 2016 Award Value(1) | |||||
J.R. Luciano | $0 | $10,000,000 | $11,500,000 | $13,500,000 | $10,000,000 | |||||
R.G. Young | $0 | $3,725,783 | $3,925,783 | $4,625,783 | $3,725,783 | |||||
D.C. Findlay | $0 | $2,100,000 | $2,300,000 | $3,000,000 | $2,100,000 | |||||
J.D. Taets | $0 | $1,500,000 | $1,560,256 | $1,694,156 | $1,500,000 | |||||
G.A. Morris | $0 | $1,200,000 | $1,254,000 | $1,374,000 | $1,200,000 |
(1) Dollar value of the awards as approved by the Compensation/Succession Committee, whichCommittee. These amounts differ from the grant date fair values of such awards as discussed previously.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.
Terms
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 equity awards granted in February 2016 generally are as follows:
PSU PERFORMANCE METRICS
The performance metrics for the 2009 Incentive Compensation Plan. The options typically vest incrementally over five years and can be exercised during aten-year period following2019 PSU awards are:
Relative TSR as compared to the date of grant.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 datetwo 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 grant.
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 LTI Program vest immediately if controlperformance period means the average of the company changes or uponannual percentage obtained by dividing the deathAdjusted 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 ofquarter-end amounts for the trailing four quarters, with each suchquarter-end amount being equal to the sum of ADM’s stockholders’ equity (excludingnon-controlling interests), interest-bearing liabilities, theafter-tax effect of the executive. Awards continue to vest ifLIFO reserve, and other specified adjustments as determined by the executive leaves the company because of disability or retirement (age 55 or greater with 10 or more years of service). For grants with respect to FY2012 and beyond, award agreements include forfeiture and clawback provisions as described in Section 8.
Does the Company Have a Policy for When Grants are Made?
The Compensation/Succession Committee grants all equity awards to NEOs, and no attempt is made to timebe appropriate.
6 “Adjusted EBITDA” means ADM’s cumulative EBITDA for the granting of these awards in relation toperformance period, adjusted for special items determined by the release of material,non-public information. The exercise price of all stock options is set at fair market value on the grant date. Under the 2009 Incentive Compensation Plan, fair market value is the closing market price of the company’s common stock on the last trading day prior to the date of grant. The Compensation/Succession Committee, meets duringin its sole discretion, to be appropriate in order to reflect the first fiscal quarterimpact of each fiscal year and determines the annual equity awards granted to NEOs. These awards are issued promptly following the date of the Compensation/Succession Committee’s meeting and approval. In addition to annual awards, the NEOs may receive awards when they join the companysignificant unusual or change their status, including promotions.nonrecurring events.
ADM Proxy Statement | 37 |
COMPENSATION DISCUSSION AND ANALYSISCompensation 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 LEADINGTO 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 GRANTEDIN 2017WITHA PERFORMANCE PERIODTHAT ENDEDIN 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.
38 | ADM Proxy Statement 2020 |
Compensation Discussion and Analysis
Peer Group
BENEFITS
What Retirement Benefits are Provided?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 |
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 providesportion of the following programspayout 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.
In addition to the direct elements of pay described above, ADM offers benefits to our NEOs to support the attraction, retentionprovide for basic health, welfare, and motivation of these employees.income security needs and to ensure that our compensation packages are competitive. With few exceptions, the company’s philosophysuch 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 isare offered to the company’s NEOs.
Retirement Program | Eligibility | Description | ||||
401(k)
| All salaried employees |
Qualified defined contribution plan where employees may defer up to 75% of eligible pay, or up to
| ||||
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
| ||||
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
| ||||
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
|
WhatHealthcare and Other Benefits are ProvidedBenefits. NEOs receive the same healthcare benefits as other employees, except that we provide executive physicals and related services to NEOs?
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:include life, accidental death and dismemberment, health (including prescription drug), dental, vision, and disability insurance; dependent and healthcare reimbursement accounts; tuition reimbursement; paidtime-off; time off; holidays; and a matching gifts program for charitable contributions. NEOs have the same benefits package as other employees.
What Perquisites are Provided to NEOs?
Perquisites are an additional form of income to the NEOs, as shown in the Summary
40 | ADM Proxy Statement 2020 |
Compensation Table,Discussion and the NEOs areAnalysis
Compensation Policies and Governance
Perquisites. Consistent with ourpay-for-performance philosophy, we limit executive perquisites. Any NEO who receives a perquisite is individually responsible for any taxes related to this income. We provideassociated taxes.
The Compensation/Succession Committee allows our Chairman and CEO and the other NEOs, as approved by the company’s Chairman and CEO, with limited personal use of company-owned aircraft. The Compensation/Succession Committee requires that our Chairman and CEOto have access to thecompany 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 DISCUSSION AND ANALYSIS
SECTION 7 — CHANGES IN OUR COMPENSATION PROGRAM FOR 2017Compensation Policies and Governance
To betterEXECUTIVE 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 company performance, the annual cash bonus program was revised for 2017interests of our stockholders. Accordingly, we require each member of senior management to include a variable percentageown shares of Adjusted EBITDA for Adjusted EBITDA achieved and the achievement of specific strategic goals. The range of percentage EBITDA above threshold EBITDA of $1.3 billion will be 0.8% to 3.4% based upon EBITDA achieved. The Adjusted EBITDA percentage can be increased if we meet our 2017 strategic goals as follows: (i) achieve $225 million in run rate savings, (ii) monetize $300 million in invested capital through specific transactions not in the normal course of business that enhance asset turnover or free up capital to redeploy for improved returns or accretion, and (iii) realize $500 million increase inyear-on-year revenue from recent acquisitions and major projects. Each strategic goal can increase the Adjusted EBITDA percentage by 0.2%, making the total range of Adjusted EBITDA 0.8% to 4.0%. With this revised formula, with higher performance comes greater rewards and lower performance comes lower rewards.
To strengthen the performance-orientation of the LTI program, for 2017 the company will discontinue its prior approach to granting LTI awards based on a historical review of the company’s three-year relative TSR in comparison to the S&P 100 industrials and instead grant market competitive LTI awards that consist of performance share units (PSUs) whose vesting will be dependent on the degree to which the company achieved specified performance goals over a three year performance period (2017-2019) and restrictedcommon stock units (RSUs) with a three year cliff vest. The overall LTI awardfair market value will be allocated 50%ranging from one to PSUs and 50% to RSUs. The transition tosix times the forward-looking LTI program was made to better align our equity program with market practice and strengthenindividual’s base salary. Executives may not sell any company securities until the focusapplicable guideline is met. As shown below, each of our equity program on growth and future value creation for shareholders. The 2017 PSU metrics are: (i)NEOs exceeds the company’s relative total shareholder return as compared to the companies in the S&P 100 Industrials Index (25% weighting), (ii) the degree to which the company achieves specified return on capital levels (37.5% weighting), and (iii) the degree to which the company’s EBITDA exceeds its EBITDA during fiscal years 2014-2016 (37.5% weighting). Before the PSU can pay out, the company’s EBITDA must exceed its EBITDA during fiscal years 2014-2016. If this does not occur, there will be no payout for the other metrics.
The 2017 LTI awards are also different from prior years as they will not be subject to single trigger accelerated vesting uponapplicable ownership guideline by a change in control. Rather, the 2017 awards contain a double trigger and will be subject to accelerated vesting and payout only if the company’s executive officer’s employment is terminated without cause, or if the company’s executive officer resigns for good reason, 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. This transition to double trigger accelerated vesting has been made because it addresses the retention goals that motivatedcomfortable margin.
the single trigger approach, but at the same time avoids providing accelerated benefits to individuals whose employment and awards continue after a change in control.
The 2017 LTI awards also reflect an expansion of the award forfeiture and recovery provisions as compared to prior years. These provisions generally provide that an award will be forfeited and any shares already issued pursuant to the award (or the value thereof at the vesting date) will be recoverable by the company if an NEO is terminated for cause, or if an NEO violates any restrictive covenants (such asnon-competition,non-solicitation and confidentiality) during the NEO’s employment and for atwo-year period after the award vests.
SECTION 8 — EMPLOYMENT AGREEMENTS, SEVERANCE, ANDCHANGE-IN-CONTROL BENEFITS
What Employment Agreements are in Place?
None.
What Other Agreements are in Place for NEOs?
While Mr. Findlay does not have an employment agreement, we did commit to certain initial compensation terms at hire. At the time of his hire, we awarded Mr. Findlay equity awards to compensate him for his forfeiture of equity awards at his previous employer, designed to retain his services into the future, and to align his compensation with stockholders. These equity awards are subject to accelerated vesting in the event of death or termination of employment for reasons other than “gross misconduct” or for “good reason” as those terms are defined in the offer letter.
What Other Severance Benefits are Provided to NEOs?
In 2014, the Compensation/Succession Committee revised the company’s severance program to align with market practices and eliminate accelerated vesting of equity or payout of unvested equity at termination. This program serves as a guideline for the severance benefits that may be provided to various levels of employees upon termination of their employment without cause or their resignation with good reason, but the program does not create a contractual right to receive any severance benefits on the part of the employee. The guidelines contained in the program for executive officers include the following termination benefits, subject, in all cases, to the discretion of the Compensation/Succession Committee to increase or decrease these benefits:
In addition, the Compensation/Succession Committee generally requires each executive to enter into anon-competition andnon-solicitation agreement in exchange for receiving severance under the program.
| 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 |
COMPENSATION DISCUSSION AND ANALYSIS
WhatChange-in-Control BenefitsTIMING 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 Provided?
If achange-in-control occurs with respectissued promptly thereafter. There is no attempt to time these grants in relation to the company,release of material,non-public information. Under the equity grants held by2009 Incentive Compensation Plan, fair market value is the company’s executive officers generally will vest immediately pursuantclosing market price of ADM’s common stock on the last trading day prior to the termsdate of these awards. The single trigger accelerated vesting had been adoptedgrant. In addition to provide the executives with some assurance thatannual awards, NEOs may receive awards when they will not be disadvantaged with respect to their equity awards in the event of achange-in-control of the company. This assurance increases the value of these awards to the executives, which in turn enhances retention.
For awards granted in February 2017 and beyond,join the company has implemented a double triggeror change in control approach, as discussed in Section 7 above.their job status, including promotions.
SECTION 9 — ADDITIONAL EXECUTIVE COMPENSATION POLICIES AND PRACTICES
Does the Company Have a Clawback Policy?CLAWBACK PROVISIONS
We have includedinclude clawback provisions in the company’s long-term incentive award agreements that provide us with the ability to recover long-term incentivethis compensation for a broad range of reasons. ThisSpecifically, 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-vestingnon-competition andnon-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.
For awards granted in August 2012 and beyond, we have implemented an additional clawback policy for all cash and equity-based long-term incentive awards. Specifically, this policy provides for the recoupment of any cash or equity incentive awards for a period of three years from the date of award. We have the right to clawback incentive payments made to NEOs and certain other members of senior management in the event of a financial restatement or ethical misconduct. In 2015 and in 2017, additional language was added to equity awards which includes post-vestingnon-competition andnon-solicitation restrictions prohibiting competitive activity and solicitation of ADM customers and employees. As regulatory requirements regarding recoupment of executive compensation continue to evolve, we will review and update the company’s policies to, at the very least, be compliant with all current requirements.
Are There Policies in Place That Restrict Transactions Involving the Company’s Stock?PROHIBITION ON INSIDER TRADING AND HEDGING
Pursuant to the company’sADM’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,collars; or enteringenter 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 pledgingpledge of company securities with the company’sADM’s General Counsel priorbefore committing to engaging in such activity.a pledge transaction.
The company’sOur Insider Trading Policy also provides that all transactions in our company’sADM securities by the company’s directors, the NEOs, and certain other officers and employees must bepre-cleared by the company’s law department.
What Role Does Section 162(m) of the Internal Revenue Code Have in the Design of Executive Compensation Programs?SECTION 162(M) OF THE INTERNAL REVENUE CODE EFFECTS ON THE COMPANY
Section 162(m) of the Internal Revenue Code generally disallowsprecludes the company from taking a federal income tax deduction to public corporations for compensation paid in
ADM Proxy Statement 2020 | 41 |
Compensation Discussion and Analysis
Employment Agreements, Severance, and Change in Control Benefits
excess of $1 million annually to our “covered employees” (which, as of 2018, includes the ChairmanCEO, CFO, and CEO and theour three other most highly-compensatedhighly compensated executive officers, other than the CFO, unlessofficers). Prior to 2018, this deduction limitation did not apply to qualified “performance-based” compensation or to the compensation in excess of $1 million qualifies as “performance-based” compensation. Performance-baseda CFO.
Despite these new limits on the deductibility of performance-based compensation, for these purposes generally does not include salaries, incentivethe Compensation/Succession Committee continues to believe that a significant portion of our executives’ compensation for whichshould be tied to the company’s stockholders have not approved the business criteria upon which applicable performance goalsand that shareholder interests are based,best served if its discretion and incentiveflexibility in structuring and awarding compensation (other than stock options and stock appreciation rights) the payment of which is not based on the satisfaction of objectivepre-established performance goals or as to which a compensation committee has discretion to increase the amount of the payout.restricted. The Compensation/Succession Committee retains the discretion to provide compensation that may not be tax deductible if it feels these actions are in the best interests of the company and its stockholders. The Compensation/Succession Committeealso 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.
Has the Company Evaluated Its Compensation Programs as They Relate to Risk?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 programsfeatures that encourage inappropriate risk taking. We have established a policy under whichrisk-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.
During FY2015, ADMIn 2019, the company engaged an outside consultant, The Korn Ferry Hay Group (“Hay”), to assist the Compensation/Succession Committee
in evaluating the risk in the company’sour compensation programs. In conducting anAs part of its independent assessment, Hay reviewed all of the company’s incentive compensation programs and determined there were no compensation programs that encouragenone 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 February 2016. November 2019.
Another independent review of the company’s incentive programs will be conducted during FY20172021 and reported to the Compensation/Succession Committee.
COMPENSATION DISCUSSION AND ANALYSIS
How Does the Company Address Liabilities Associated With Retirement Programs?LIABILITIES ASSOCIATED WITH RETIREMENT PROGRAMS
The Compensation/Succession Committee is mindful that theournon-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 the deferred compensation or supplemental retirementthese plans. However, the deferred compensation plans have “rabbi” trust funding triggers in the event of a potential change in control of the company. This trigger providesThese 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. In maintaining thenon-qualified plans, the Compensation/Succession Committee has duly considered that the federal income tax deduction available to the company occurs at the same time that participants are paid benefits from the applicable plan.
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 its 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 Reportgenerally requires a terminated employee to enter into anon-competition and/ornon-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 providesnon-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
42 | ADM Proxy Statement 2020 |
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.K. R. Westbrook, Chairman
A.L. BoeckmannM. S. Burke
M.H. CarterS. F. Harrison
A. Maciel
D. Shih
Compensation/Succession Committee Interlocks and Insider ParticipationCOMPENSATION/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 |
Summary Compensation TableSUMMARY 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 ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($) | |||||||||
J. R. LUCIANO Chairman, CEO and President | 2016 | 1,283,340 | 5,312,218 | 5,279,331 | 1,939,600 | 49,419 | 148,708 | 14,012,616 | ||||||||||
2015 | 1,200,000 | — | 3,371,859 | 3,342,408 | 1,428,420 | 32,426 | 53,837 | 9,428,950 | ||||||||||
2014 | 990,840 | — | 2,496,804 | 3,001,997 | 2,113,884 | 48,527 | 529,596 | 9,181,648 | ||||||||||
R. G. YOUNG Executive Vice President and CFO | 2016 | 825,048 | 1,979,220 | 1,966,968 | 794,116 | 32,419 | 23,152 | 5,620,923 | ||||||||||
2015 | 820,874 | — | 2,230,155 | 2,210,662 | 838,399 | 21,167 | 21,390 | 6,142,647 | ||||||||||
2014 | 795,837 | — | 1,965,590 | 2,363,277 | 1,374,943 | 41,708 | 360,993 | 6,902,348 | ||||||||||
D. C. FINDLAY Senior Vice President, | 2016 | 700,000 | 1,115,578 | 1,108,661 | 522,200 | 26,853 | 18,059 | 3,491,351 | ||||||||||
General Counsel and | 2015 | 700,000 | — | 1,426,415 | 1,413,959 | 501,200 | 20,140 | 21,737 | 4,083,451 | |||||||||
Secretary | 2014 | 700,000 | — | 1,115,599 | 1,341,325 | 777,000 | 21,116 | 78,547 | 4,033,587 | |||||||||
G. A. MORRIS(5) Senior Vice President and President Ag Services | 2016 | 650,004 | 640,000(5) | 637,487 | 633,520 | 484,900 | 284,727 | 15,360 | 3,345,998 | |||||||||
J. D. TAETS Senior Vice President and President Global Oilseeds | 2016 | 700,008 | 796,851 | 791,901 | 487,200 | 480,578 | 523,219 | 3,779,757 | ||||||||||
2015 | 666,264 | — | 1,423,728 | 779,395 | 374,110 | 260,756 | 1,292,006 | 4,796,259 | ||||||||||
2014 | 650,004 | — | 748,245 | 899,648 | 638,250 | 744,215 | 1,066,697 | 4,747,059 |
Name and Principal Position | Year | Salary ($) | 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 | 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 shown for stock and option awardsreported in this column represent the aggregate grant date fair value of the RSU awards for fiscal years 2016, 20152019, 2018, and 2014, respectively.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, 2016,2019, December 31, 2015,2018, and December 31, 2014.2017. 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) RepresentsNo 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.
(3) Each amount shown(4) The amounts reported in this column for 20162019 represents the aggregate change in actuarial present value of theeach NEO’s accumulated benefit under all defined benefit and actuarial pension plans from December 31, 20152018 to December 31, 2016,2019, 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, 20162019 were an interest rate of 4.10%3.44% for the ADM Retirement Plan, an interest rate of 3.90%3.19% for the ADM Supplemental Retirement Plan, and mortality was determined using thePRI-2012 mortality table, with a white collar adjustment, projected generationally using ScaleMP-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 ScaleMP-2016, and the assumptions used to value pension liabilities on December 31, 2015 were interest rate of 4.30% for the ADM Retirement Plan, interest rate of 4.05% for the ADM Supplemental Retirement Plan and mortality determined using the RP2014 mortality table, with a white collar adjustment, projected generationally using ScaleMP-2015.MP-2018.
(4)(5) The amounts shownreported in this column for 20162019 include costs for personal use of company aircraft, relocation expenses,value of company-provided life insurance, imputed value of company-provided life insurance, costs for executive healthhealthcare services, spousal travel and lodging, company contributions under ourthe 401(k) and Employee Stock Ownership Plan,ESOP and for Mr. Taets, expenses relatedcharitable gifts pursuant to his overseas assignment.the company’s matching charitable gift program which is available to substantially all full-time employees andnon-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.
NEO | Personal Aircraft Use | Relocation Expenses | Imputed Value of Life Insurance | Executive Health Services | 401(k) Company Contributions | Expatriate Expenses | ||||||
J. R. Luciano | $128,519 | X | X | $13,250 | ||||||||
R. G. Young | X | X | X | $13,250 | ||||||||
D. C. Findlay | X | X | $13,250 | |||||||||
G. A. Morris | X | X | $13,250 | |||||||||
J. D. Taets | $77,011 | X | X | $13,250 | $429,797 |
44 | ADM Proxy Statement 2020 |
Executive Compensation
Grants of Plan-Based Awards During Fiscal Year 2019
NEO | Personal Aircraft Use | Imputed Income | Life Company | Executive 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. Taets’ expenses related to his overseas assignment included $14,581 for net payment of certain foreign taxes; $146,186 related to certain tax gross ups; and $269,030 payable pursuant to our expatriate policy, which included housing assistance ($125,703), cost of living allowance ($77,593), home leave ($54,832), and other items such as company-owned vehicle, utilities, and tax preparation ($10,902).
(5) Mr. MorrisMacciocchi first became a named executive officeran NEO in 2016. The additional cash award of $640,000 paid in March of 2017 was in recognition of his efforts in connection with the integration of WFSI during 2015 and 2016.2019.
Aggregate incremental cost to our company of perquisites and personal benefits is determined as follows. In the case of payment of expenses related to items such as tax preparation services, utilities, education assistance, home leave, housing assistance, executive healthcare services and relocation expenses, incremental cost is determined by the amounts paid to third-party providers. Relocation expenses may also include aone-time lump sum payment related to differences in cost of living and loss on sale of a former residence. In the case of personal use of company-owned aircraft, incremental cost is based solely on the cost per hour to the company to operate the aircraft, and does not include fixed costs that do not change based on usage, such as purchase costs of the aircraft andnon-trip-related hangar expenses. Our direct operating cost per hour of an aircraft is based on the actual costs of fuel,on-board catering, aircraft maintenance, landing fees, trip-related hangar and parking costs, and smaller variable costs, divided by the number of hours the aircraft was operated during the year.
EXECUTIVE COMPENSATION
Grants of Plan-Based Awards During Fiscal Year 2016GRANTS OF PLAN-BASED AWARDS DURING FISCAL YEAR 2019
The following table summarizes the grants of plan-based awards made to our named executive officers during the fiscal year ended December 31, 2016.2019.
Estimated Future Payment Under | All Other Stock Awards: Number of Shares of Stock or Units(#) | All Other Option Awards: Number of Securities Underlying Options(#) | Exercise or Base Price of Option Awards ($/Sh) (1) | Grant Date Fair Value of Stock and Option Awards ($) (2) | Estimated Future Payouts Under | Estimated Future Payouts Under | All Other Stock Awards: Number of Shares of | Grant Date Fair Value of Stock and Option | ||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Stock or Units(#) | Awards ($)(1) | |||||||||||||||||||||
J. LUCIANO | 0 | 2,600,000 | 5,200,000 | |||||||||||||||||||||||||||||||
2/11/16 | 160,103 | 5,312,218 | ||||||||||||||||||||||||||||||||
2/11/16 | 931,099 | 33.18 | 5,279,331 | |||||||||||||||||||||||||||||||
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 | 0 | 1,064,498 | 2,128,996 | |||||||||||||||||||||||||||||||
2/11/16 | 59,651 | 1,979,220 | ||||||||||||||||||||||||||||||||
2/11/16 | 346,908 | 33.18 | 1,966,968 | |||||||||||||||||||||||||||||||
D. C. FINDLAY | 0 | 700,000 | 1,400,000 | |||||||||||||||||||||||||||||||
2/11/16 | 33,622 | 1,115,578 | ||||||||||||||||||||||||||||||||
2/11/16 | 195,531 | 33.18 | 1,108,661 | |||||||||||||||||||||||||||||||
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 | 0 | 650,000 | 1,300,000 | |||||||||||||||||||||||||||||||
2/11/16 | 19,213 | 637,487 | ||||||||||||||||||||||||||||||||
2/11/16 | 111,732 | 33.18 | 633,520 | |||||||||||||||||||||||||||||||
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 | 0 | 700,000 | 1,400,000 | |||||||||||||||||||||||||||||||
2/11/16 | 24,016 | 796,851 | ||||||||||||||||||||||||||||||||
2/11/16 | 139,665 | 33.18 | 791,901 | |||||||||||||||||||||||||||||||
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) Exercise price was determined by using the closing market price of a share of our common stock on the New York Stock Exchange on the trading day immediately prior to the grant date.
(2) 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.
ADM Proxy Statement 2020 | 45 |
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 UnderNon-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”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 restricted stock unit (“RSU”)RSUs awards and vest in full three years after the date of the grant. Under the terms of the RSU award agreement pertaining to each of these awards,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. Vesting
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 accelerateswill accelerate in full uponwhile the deathvesting of the PSU awards will accelerate in the manner described in the preceding sentence. If an award recipient or achange-in-control of our company, and continues in accordance with the original vesting schedule ifrecipient’s employment ends as a result of disability or retirement.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 reasons,reason, unvested RSUs are forfeited (except as otherwise described below in “Termination of EmploymentRSU andChange-in-Control Arrangements”). 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 anon-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.
All of the awards shown in the “All Other Option Awards” column in the table above arenon-qualified stock option awards, vest and become exercisable in five equal annual installments commencing on the first anniversary of the grant date, and must be exercised within ten years after the grant date. The exercise price may be paid in cash or by delivering shares of our common stock that are already owned by the award recipient. Under the terms of the stock option agreement pertaining to each of these awards, vesting and exercisability accelerate in full upon the death of the recipient orchange-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 other reasons, a recipient forfeits any interest in the unvested portion of any option (except as otherwise described below in “Termination of Employment andChange-in-Control Arrangements”), 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 anon-competition or confidentiality restriction or
EXECUTIVE COMPENSATION
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.
The impact of a termination of employment orchange-in-control change in control of our company on restricted stock unit, performance share unitRSU and stock optionPSU awards held by our named executive officers is quantified in the “Termination of Employment andChange-in-Control Change in Control Arrangements” section below.
ADM Proxy Statement |
Executive Compensation
EXECUTIVE COMPENSATION
Outstanding Equity Awards at Fiscal Year20162019 Year-End
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR 2019YEAR-END
The following table summarizes information regarding unexercised stock options and unvested restricted stock awards for the named executive officers as of December 31, 2016.2019.
OPTION AWARDS | STOCK AWARDS | OPTION AWARDS | STOCK AWARDS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that have not Vested (#) | Market Value of Shares or Units of Stock that have not Vested ($)(7) | 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 | — | 931,099(1) | 33.18 | 2-11-2026 | 2-11-2016 | 558,659 | 372,440 | 33.18 | 2-11-2026 | |||||||||||||||||||||||||||||||||||||||||||||||||
2-12-2015 | 64,964 | 259,857(1) | 46.92 | 2-12-2025 | 2-12-2015 | 259,856 | 64,965 | 46.92 | 2-12-2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2-13-2014 | 93,812 | 140,719(1) | 40.65 | 2-13-2024 | 2-13-2014 | 234,531 | — | 40.65 | 2-13-2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2-21-2013 | 30,998 | 20,666(1) | 32.50 | 2-21-2023 | 2-21-2013 | 51,664 | — | 32.50 | 2-21-2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||
8-16-2012 | 173,268 | 43,317(1) | 26.25 | 8-16-2022 | 8-16-2012 | 216,585 | — | 26.25 | 8-16-2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
8-11-2011 | 194,014 | — | 26.17 | 8-11-2021 | 293,389(2) | 13,393,208 | 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 | — | 346,908(1) | 33.18 | 2-11-2026 | 2-11-2016 | 208,144 | 138,764 | 33.18 | 2-11-2026 | |||||||||||||||||||||||||||||||||||||||||||||||||
2-12-2015 | 42,967 | 171,869(1) | 46.92 | 2-12-2025 | 2-12-2015 | 171,868 | 42,968 | 46.92 | 2-12-2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2-13-2014 | 73,852 | 110,779(1) | 40.65 | 2-13-2024 | 2-13-2014 | 184,631 | — | 40.65 | 2-13-2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2-21-2013 | 18,902 | 12,601(1) | 32.50 | 2-21-2023 | 2-21-2013 | 31,503 | — | 32.50 | 2-21-2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||
8-16-2012 | 99,010 | 24,753(1) | 26.25 | 8-16-2022 | 8-16-2012 | 123,763 | — | 26.25 | 8-16-2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
8-11-2011 | 80,377 | — | 26.17 | 8-11-2021 | 155,536(3) | 7,100,218 | 8-11-2011 | 80,377 | — | 26.17 | 8-11-2021 | 154,744 | 7,172,384 | 107,840 | 4,998,384 | ||||||||||||||||||||||||||||||||||||||||||||
D. C. FINDLAY | 2-11-2016 | — | 195,531(1) | 33.18 | 2-11-2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2-12-2015 | 27,482 | 109,929(1) | 46.92 | 2-12-2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2-13-2014 | 41,916 | 62,875(1) | 40.65 | 2-13-2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
7-22-2013 | 59,702 | 39,801(1) | 36.68 | 7-22-2023 | 91,467(4) | 4,175,469 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
G. A. MORRIS | 2-11-2016 | — | 111,732 | 33.18 | 2-11-2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2-11-2016 | 55,866 | 37,244 | 33.18 | 2-11-2026 | 88,428 | 4,098,638 | 68,117 | 3,157,223 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2-12-2015 | 5,609 | 22,437 | 46.92 | 2-12-2025 | 2-11-2016 | 67,039 | 44,693 | 33.18 | 2-11-2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
8-16-2012 | 4,210 | 1,053 | 26.25 | 8-16-2022 | 2-12-2015 | 22,436 | 5,610 | 46.92 | 2-12-2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
8-11-2011 | 4,491 | — | 26.17 | 8-11-2021 | 8-16-2012 | 5,263 | — | 26.25 | 8-16-2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||
8-19-2010 | 3,114 | — | 30.71 | 8-19-2020 | 8-11-2011 | 4,491 | — | 26.17 | 8-11-2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
G. A. MORRIS | 9-10-2009 | 2,279 | — | 28.70 | 9-10-2019 | 47,955(5) | 2,189,146 | 8-19-2010 | 3,114 | — | 30.71 | 8-19-2020 | 96,943 | 4,493,308 | 70,658 | 3,274,998 | |||||||||||||||||||||||||||||||||||||||||||
2-11-2016 | — | 139,665(1) | 33.18 | 2-11-2026 | 2-11-2016 | 83,799 | 55,866 | 33.18 | 2-11-2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2-12-2015 | 15,149 | 60,594(1) | 46.92 | 2-12-2025 | 2-12-2015 | 60,594 | 15,149 | 46.92 | 2-12-2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2-13-2014 | 28,114 | 42,171(1) | 40.65 | 2-13-2024 | 2-13-2014 | 70,285 | — | 40.65 | 2-13-2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2-21-2013 | 8,317 | 5,544(1) | 32.50 | 2-21-2023 | 2-21-2013 | 13,861 | — | 32.50 | 2-21-2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||
8-16-2012 | 42,327 | 10,582(1) | 26.25 | 8-16-2022 | 8-16-2012 | 47,492 | — | 26.25 | 8-16-2022 | 104,111 | 4,825,545 | 70,658 | 3,274,998 | ||||||||||||||||||||||||||||||||||||||||||||||
J. D. TAETS | 13,305 | — | 26.17 | 8-11-2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,781 | — | 30.71 | 8-19-2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,624 | — | 28.70 | 9-10-2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,319 | — | 34.37 | 8-3-2017 | 73,359(6) | 3,348,838 |
(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) Restricted stock unit awardsThe RSUs reported in this column vest as to 61,422 units on February 13, 2017, 71,864 units on February 12, 2018the dates and 160,103 units on February 11, 2019.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) Restricted stock unit awards vest as to 48,354 unitsBased on February 13, 2017, 47,531 units on February 12, 2018 and 59,651 units on February 11, 2019.
(4) Restricted stock unit awards vest as to 27,444 units on February 13, 2017, 30,401 units on February 12, 2018 and 33,622 units on February 11, 2019.
(5) Restricted stock unit awards vest as to 8,359 units on February 13, 2017, 6,205 units on February 12, 2018, 14,178 units on October 15, 2018 and 19,213 units on February 11, 2019.
(6) Restricted stock unit awards vest as to 18,407 units on February 13, 2017, 16,758 units on February 12, 2018, 14,178 units on October 15, 2018 and 24,016 units on February 11, 2019.
(7) Calculated by multiplying the closing market price of a share of our common stock on the New York Stock Exchange on December 30, 2016,31, 2019, which was $45.65, by the number of shares or units that have not vested.$46.35.
ADM Proxy Statement |
EXECUTIVE COMPENSATION
Option Exercises and Stock Vested During Fiscal Year 20162019
(4) The PSUs reported in this column represent 2018 and 2019 PSU awards that each will vest at the end of the three-year performance period. The number of PSUs that the executive officer will receive is dependent upon the achievement of certain financial metrics approved by the Compensation/Succession Committee measuring relative TSR, Adjusted EBITDA, and Adjusted ROIC. The amount of PSU units shown is the target number of units that could be earned and paid out in shares. The company did not assign a threshold unit amount to the 2018 or 2019 PSU awards.
Performance Stock Units: | ||||||||||
Name | Performance Period 1/1/18 to 12/31/20 | Performance Period 1/1/19 to 12/31/21 | ||||||||
J. R. Luciano | 152,440 | 162,908 | ||||||||
R. G. Young | 51,449 | 56,391 | ||||||||
V.F. Macciocchi | 33,029 | 35,088 | ||||||||
G. A. Morris | 35,570 | 35,088 | ||||||||
J. D. Taets | 35,570 | 35,088 |
OPTION EXERCISES AND STOCK VESTED DURING FISCAL YEAR 2019
The following table summarizes information regarding stock options exercised by the named executive officers during the fiscal year ended December 31, 2016,2019 and restricted stock unit awards to the named executive officers that vested during that same period.
OPTION AWARDS | �� | STOCK AWARDS | OPTION AWARDS | STOCK AWARDS | ||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired Upon Vesting (#) | Value Realized on Vesting ($)(2) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired On Vesting (#)(2) | Value Realized on Vesting ($)(3) | ||||||||||||||||||||
J. R. LUCIANO | 33,508 | 1,094,036 | 160,103 | 6,685,901 | ||||||||||||||||||||||||
R. G. YOUNG | 20,432 | 667,105 | 59,651 | 2,491,026 | ||||||||||||||||||||||||
D. C. FINDLAY | 86,907 | 3,770,895 | ||||||||||||||||||||||||||
G. A. MORRIS | 4,904 | 160,116 | ||||||||||||||||||||||||||
J. D. TAETS | 3,867 | 4,602 | 8,990 | 293,524 | ||||||||||||||||||||||||
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 New York Stock ExchangeNYSE 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 restricted stock unit2016 RSU awards on the date the awards vested, calculated using the closing sale price reported on the New York Stock ExchangeNYSE on the trading date immediately prior to the vesting date.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 $26.25.
48 | ADM Proxy Statement 2020 |
Executive Compensation
Pension Benefits
Pension BenefitsPENSION BENEFITS
The following table summarizes information regarding the participation of each of the named executive officers in our defined benefit retirement plans as of the pension plan measurement date for the fiscal year ended December 31, 2016.2019.
Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Period ($) | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year ($) | |||||||||||||||||
J. R. LUCIANO | ADM Retirement Plan | 6 | 48,489 | 0 | ADM Retirement Plan | 9 | 91,244 | 0 | |||||||||||||||||
ADM Supplemental Retirement Plan | 6 | 145,367 | 0 | ADM Supplemental Retirement Plan | 9 | 306,007 | 0 | ||||||||||||||||||
R. G. YOUNG | ADM Retirement Plan | 6 | 51,994 | 0 | ADM Retirement Plan | 9 | 95,433 | 0 | |||||||||||||||||
ADM Supplemental Retirement Plan | 6 | 103,631 | 0 | ADM Supplemental Retirement Plan | 9 | 194,468 | 0 | ||||||||||||||||||
D. C. FINDLAY | ADM Retirement Plan | 4 | 33,347 | 0 | |||||||||||||||||||||
ADM Supplemental Retirement Plan | 4 | 43,254 | 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 | 22 | 535,227 | 0 | ADM Retirement Plan | 25 | 831,003 | 0 | |||||||||||||||||
ADM Supplemental Retirement Plan | 22 | 489,180 | 0 | ADM Supplemental Retirement Plan | 25 | 1,433,182 | 0 | ||||||||||||||||||
J. D. TAETS | ADM Retirement Plan | 29 | 902,721 | 0 | ADM Retirement Plan | 32 | 1,270,305 | 0 | |||||||||||||||||
ADM Supplemental Retirement Plan | 29 | 1,596,083 | 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, 2016.2019. 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, 20162019 were an interest rate of 4.10%3.44% for the ADM Retirement Plan and 3.90%3.19% for the ADM Supplemental Retirement Plan and mortality was determined under the RP2014PRI-2012 mortality table, with a white collar adjustment, projected generationally using scaleMP-2016.MP-2019. Mr. Morris and Mr. TeatsTaets 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. FindlayMacciocchi participate in the cash balance formula under those plans. The amounts reported for Mr. Luciano, Mr. Young and Mr. FindlayMacciocchi are the present value of their respective projected normal retirement benefit under the Retirement and Supplemental Plans at December 31, 2016.2019. The amounts reported are calculated by projecting the balance in the accounts forward to age 65 by applying a 2.50%2.19% interest rate, converting to a single-life annuity as of age 65, and then discounting back to December 31, 20162019 using the assumptions specified above. The total account balance for Mr. Luciano at December 31, 20162019 under the Retirement and Supplemental Plans was $166,566,$304,780.26, the total account balance for Mr. Young at December 31, 20162019 under the Retirement and Supplemental Plans was $138,353,$224,360.15 and the total account balance for Mr. FindlayMacciocchi at December 31, 20162019 under the Retirement and Supplemental Plans was $64,566,$82,543.87, which are the amounts that would have been distributable if such individuals had terminated employment on that date.
EXECUTIVE COMPENSATION
Qualified Retirement PlanQUALIFIED 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 orre-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 but less thanand 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. Mr.Messrs. Luciano, Mr. Young, and Mr. FindlayMacciocchi, participate in the cash balance formula, while Mr.Messrs. Morris and Mr. 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