Raymond J. Milchovich Dennis H. Reilley(Co-Chair)
| | 16,901.8 | | | | 0.0 | | | | 16,901.8 | | | | | * | | | | | | Steven M. Sterin | | | 0.0 | | | | 3,790.0 | | | | 3,790.0 | | | | | * | | | | | | Lee M. Thomas | | | 15,544.0 | | | | 22,517.0 | | | | 38,061.0 | | | | | * | | | | | | Howard I. Ungerleider | | | 154,540.9 | | | | 779,936.0 | | | | 934,476.9 | | | | | * | | | | | | Patrick J. Ward | | | 5.0 | | | | 16,251.0 | | | | 16,256.0 | | | | | * | | | | | | Group Total | | | 2,261,356.0 | | | | 8,219,038.0 | | | | 10,480,394.0 | | | | | * | | | | | | All Directors and Executive Officers as a Group (11 persons) | | | 475,308.0 | | | | 2,036,003.0 | | | | 2,511,311.0 | | | | | * | | | | | | Certain Other Owners: | | | | | | | | | | | | | | | | | | | | | | BlackRock, Inc. | | | 144,573,722.0 | (d) | | | | | | | | | | | | | |  | | | | 67 | | | | | | | |
AGENDA ITEM 2: ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION
As required by Section 14A of the Exchange Act, the Company is asking stockholders to approve an advisory resolution on the Company’s executive compensation as reported in this Proxy Statement. As described in the Compensation Discussion and Analysis section of this Proxy Statement, executive compensation programs are designed to attract and retain talent through the alignment of pay and financial interests of the executives with stockholder value creation, particularly as DowDuPont seeks to realize Merger Transaction synergies and complete the spin into three separate public companies.
As described in the Compensation Discussion and Analysis section, the Compensation Committee believes the executive compensation programs create incentives for strong operational performance and for the long-term benefit of the Company.
Beginning in 2011, a “say on pay” advisory vote to approve executive compensation has been required for all U.S. public companies under Section 14A of the Exchange Act. Therefore, in accordance with the Exchange Act, and as a matter of good corporate governance, the Company is asking stockholders to approve the followingnon-binding advisory resolution at the 2018 Annual Meeting of Stockholders:
RESOLVED, that the stockholders of DowDuPont Inc. (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables and narrative in the Proxy Statement for the Company’s 2018 Annual Meeting of Stockholders.
This advisory resolution isnon-binding on the Board. Althoughnon-binding, the Board and the Compensation Committee will review and carefully consider the voting results when evaluating the executive compensation programs.
Unless the Board modifies its policy on the frequency of holding “say on pay” advisory votes, the next “say on pay” advisory vote will occur at the Company’s 2019 Annual Meeting of Stockholders.
The Board of Directors unanimously recommends a vote FOR the approval of the Advisory Resolution to Approve Executive Compensation.
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| | AGENDA ITEM 2: ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION
The Board of Directors recommends that you vote FOR this resolution.
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| | | | | | | | | 68 | | | | | | | | | | | | | 6.44 | % | | | | | | The Vanguard Group | | | 182,534,694.0 | (e) | | | | | | | | | | | 8.13 | % | | | | | | Capital World Investors | | | 140,071,804.0 | (f) | | | | | | | | | | | 6.24 | % |
| (a) | Except as otherwise noted and for shares held by a spouse and other members of the person’s immediate family who share a household with the named person, the named persons have or share voting and |
| investment power over the indicated number of shares. This column also includes all shares held in a trust over which the person has or shares voting or investment power and shares, or shares held in trust for the benefit of the named party in The Dow Chemical Company Employees’ Savings Plan or the DuPont Retirement Savings Plan. Beneficial ownership of some or all of the shares listed may be disclaimed. |
| (b) | This column includes any shares that the person could acquire through 05/30/2019, by (1) exercise of an option granted by Dow or DuPont; or (2) performance shares granted by Dow or DuPont to be delivered prior to 05/30/2019. To the extent that these shares have not been issued as of the record date, they cannot be voted at the Meeting. |
| (c) | The percentage of shares beneficially owned is calculated based on the number of shares of common stock outstanding as of 03/31/2019. |
| (d) | Based on a Schedule 13G filed by BlackRock, Inc. on 02/11/2019 with the SEC reporting beneficial ownership as of 12/31/2018. BlackRock, Inc. has sole voting power over 124,093,394 shares, shared voting power over 0 shares, sole dispositive power over 144,573,722 shares and shared dispositive power over 0 shares. BlackRock, Inc.’s address is 55 East 52nd Street, New York, NY 10055. |
| (e) | Based on a Schedule 13G filed by The Vanguard Group on 02/11/2019 with the SEC reporting beneficial ownership as of 12/31/2018. The Vanguard Group has sole voting power over 2,672,944 shares, shared voting power over 502,039 shares, sole dispositive power over 179,417,753 shares and shared dispositive power over 3,116,941 shares. The Vanguard Group‘s address is 100 Vanguard Boulevard, Malvern, PA 19355. |
| (f) | Based on a Schedule 13G filed by Capital World Investors on 02/14/2019 with the SEC reporting beneficial ownership as of 12/31/2018. Capital World Investors has sole voting power over 140,044,208 shares and sole dispositive power over 140,071,804 shares. Capital World Investors’ address is 333 South Hope Street, Los Angeles, CA 90071. |
| * | Less than 1% of the total shares of DowDuPont common stock outstanding as of 03/31/2019. |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This communication contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” and similar expressions and variations or negatives of these words. Forward-looking statements by their nature address matters that are, to varying degrees, uncertain, including statements about the Corteva Distribution. Forward-looking statements, including those related to DowDuPont’s ability to complete, or to make any filing or take any other action required to be taken to complete, the Corteva Distribution, are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Forward-looking statements also involve risks and uncertainties, many of which that are beyond DowDuPont’s control. Some of the important factors that could cause DowDuPont’s actual results to differ materially from those projected in any such forward-looking statements include, but are not limited to: (i) ability and costs to achieve all the expected benefits from the Corteva Distribution and the April 1, 2019 distribution by DowDuPont of all of the shares of common stock of Dow on a pro rata basis to the holders of DowDuPont common stock (the “Dow Distribution”); (ii) restrictions under intellectual property cross license agreements entered into or to be entered into in connection with the Corteva Distribution and the Dow Distribution; (iii) ability to receive third-party consents required under the Separation Agreement entered into in connection with the Corteva Distribution and the Dow Distribution; (iv) non-compete restrictions under the Separation Agreement entered into in connection with the Corteva Distribution and the Dow Distribution; (v) the incurrence of significant costs in connection with the Corteva Distribution and the Dow Distribution , including increased costs from supply, service and other arrangements that, prior to the Dow Distribution, were between entities under the common control of DowDuPont; (vi) risks outside the control of DowDuPont which could impact the decision of the DowDuPont Board of Directors to proceed with the Corteva Distribution, including, among others, global economic conditions, instability in credit markets, declining consumer and business confidence, fluctuating commodity prices and interest rates, volatile foreign currency exchange rates, tax considerations, other challenges that could affect the global economy, specific market conditions in one or more of the industries of the businesses proposed to be separated, and changes in the regulatory or legal environment and the requirement to redeem $12.7 billion of DowDuPont notes if the Corteva Distribution is abandoned or delayed beyond May 1, 2020; (vii) potential liability arising from fraudulent conveyance and similar laws in connection with the Corteva Distribution and/or the Dow Distribution; (viii) disruptions or business uncertainty, including from the Corteva Distribution, could adversely impact DowDuPont’s business or financial performance and its ability to retain and hire key personnel; (ix) uncertainty as to the long-term value of DowDuPont common stock; (x) potential inability to access the capital markets; and (xi) risks to DowDuPont’s business, operations and results of operations from: the availability of and fluctuations in the cost of feedstocks and energy; balance of supply and demand and the impact of balance on prices; failure to develop and market new products and optimally manage product life cycles; ability, cost and impact on business operations, including the supply chain, of responding to changes in market acceptance, rules, regulations and policies and failure to respond to such changes; outcome of significant litigation, environmental matters and other commitments and contingencies; failure to appropriately manage process safety and product stewardship issues; global economic and capital market conditions, including the continued availability of capital and financing, as well as inflation, interest and currency exchange rates; changes in political conditions, including trade disputes and retaliatory actions; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, natural disasters and weather events and patterns which could result in a significant operational event for DowDuPont, adversely impact demand or production; ability to discover, develop and protect new technologies and to protect and enforce DowDuPont’s intellectual property rights; failure to effectively manage acquisitions, divestitures, alliances, joint ventures and other portfolio changes; unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as management’s response to any of the aforementioned factors. These risks are and will be more fully discussed in DowDuPont’s current, quarterly and annual reports and other filings made with the SEC, in each case, as may be amended from time to time in future filings with the SEC. While the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on DowDuPont’s or Corteva’s consolidated financial condition, results of operations, credit rating or liquidity. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. DowDuPont assumes no obligation to publicly provide revisions or updates to any forward-looking statements whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. A detailed discussion of some of the significant risks and uncertainties which may cause results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” (Part I, Item 1A) of DowDuPont’s 2018 Annual Report onForm 10-K as may be modified by DowDuPont’s 2019 quarterly reports on Form 10-Q and current reports on Form 8-K. STOCKHOLDER PROPOSALS FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS Whether or not the amendments to our Amended and Restated Certificate of Incorporation are approved, we will hold our regular annual meeting of stockholders in 2019. As disclosed in our Current Report on Form8-K, filed with the SEC on April 2, 2019, the Board has established June 25, 2019 as the date of the Company’s 2019 annual meeting of stockholders (the “2019 Annual Meeting”). This date represents a change of more than 30 days from the anniversary date of the Company’s 2018 annual meeting of stockholders held on April 25, 2018 (the “2018 Annual Meeting”). Any stockholder desiring to present a proposal for inclusion in DowDuPont’s proxy statement for the 2019 Annual Meeting must deliver the proposal to the Office of the Corporate Secretary at the address below not later than the close of business on April 12, 2019. Only those proposals that comply with the requirements of Rule14a-8 under the Exchange Act will be included in DowDuPont’s proxy statement for the 2019 Annual Meeting. In order for proposals of stockholders made outside of Rule14a-8 under the Exchange Act to be considered “timely” within the meaning of Rule14a-4(c) under the Exchange Act, such proposals must have been received by the Office of the Corporate Secretary at the address below by the close of business on April 12, 2019. Stockholders may present proposals that are proper subjects for consideration at an annual meeting. To do so, the stockholder must comply with the procedures specified in DowDuPont’s Bylaws. The Bylaws, which are available upon request from the Office of the Corporate Secretary, require all stockholders who intend to make proposals at an annual meeting of stockholders to submit their proposals to the Office of the Corporate Secretary not fewer than 90 and not more than 120 days before the anniversary date on which the Company first distributed its proxy materials for the previous year’s annual meeting of stockholders. The Bylaws also provide that nominations for director may only be made by or at the direction of the Board or, unless made under the proxy access provisions of the Bylaws described below, by a stockholder of record entitled to vote who sends notice to the Office of the Corporate Secretary not fewer than 90 nor more than 120 days before the anniversary date on which the Company first distributed its proxy materials for the previous year’s annual meeting of stockholders. Any such nomination by a stockholder must comply with the procedures specified in DowDuPont’s Bylaws. However, if the Company holds its annual meeting on a date that is not within 30 days before or after the anniversary date of the previous year’s annual meeting of stockholders, the Company must receive the notice of proposals or nominations not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of (A) the ninetieth (90th) day prior to such annual meeting and (B) the tenth (10th) day following the date on which public disclosure of the date of the annual meeting is first made by the Company. Therefore, to be eligible for consideration at the 2019 Annual Meeting, proposals (other than under Rule14a-8) and any nominations for director (other than those under the proxy access provisions of the Bylaws) must have been received by the Office of the Corporate Secretary by April 12, 2019. In addition, DowDuPont’s Bylaws provide that, under certain circumstances, a stockholder or group of stockholders may include director candidates that they have nominated in our annual meeting proxy materials. The proxy access provisions of the Bylaws provide, among other things, that a stockholder or group of up to 20 stockholders seeking to include director candidates in our annual meeting proxy materials must own 3% or more of DowDuPont’s outstanding common stock continuously for at least the previous three years. The number of stockholder-nominated candidates appearing in any annual meeting proxy statement cannot exceed the greater of two or 20% of the number of directors in office as of the last day on which a stockholder must deliver notice of a nomination to the Company. If the 20% calculation does not result in a whole number, the maximum number of stockholder nominees included in our proxy statement would be the closest whole number below 20%. If the number of stockholder nominated candidates exceeds the greater of two or 20%, each nominating stockholder or group of stockholders may select one nominee for inclusion in our proxy materials until the maximum number is reached. The order of selection would be determined by the amount (largest to smallest) of shares of our common stock held by each nominating stockholder or group of stockholders. The nominating stockholder or group of stockholders also must deliver the information required by DowDuPont’s Bylaws and comply with the procedures specified therein, and each nominee must meet the qualifications required by the Bylaws. Requests to include stockholder-nominated candidates in our proxy materials for the 2019 Annual Meeting must be received by the Office of the Corporate Secretary no later than the close of business on April 12, 2019. All submissions to the Office of the Corporate Secretary should be made to: DowDuPont Inc. 974 Centre Road Wilmington, Delaware 19805 Attention: Stacy L. Fox, General Counsel and Corporate Secretary IMPORTANT NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS In accordance with a notice sent previously to stockholders with the same surname who share a single address, only one notice or set of proxy materials will be sent to an address unless contrary instructions were received from any stockholder at that address. This practice, known as “householding,” is designed to reduce printing and postage costs. If you did not respond that you did not want to participate in householding, you were deemed to have consented to the practice. If you are a registered stockholder, you may revoke your consent at any time by sending your name and your holder identification number to the Office of the Corporate Secretary. If you hold your stock with a bank or broker, you may revoke your consent to householding at any time by contacting Broadridge Financial Solutions Inc., 51 Mercedes Way, Edgewood, NY 11717, or by calling1-866-540-7095. If you are a registered stockholder receiving multiple copies at the same address or if you have a number of accounts at a single brokerage firm, you may submit a request to receive a single copy in the future by contacting the Office of the Corporate Secretary. If you hold your stock with a bank or broker, contact Broadridge Financial Solutions Inc. at the address and telephone number provided above. The Company will promptly deliver to a stockholder who received one copy of proxy materials as the result of householding, a copy of the materials upon the stockholder’s written or oral request to the Office of the Corporate Secretary. OTHER MATTERS No matters, other than the reverse stock split proposal and the adjournment proposal, will be presented for action at the Special Meeting. ANNEX A CERTIFICATE OF AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF DOWDUPONT INC. Pursuant to Sections 228 and 242 of the General Corporation Law of the State of Delaware DOWDUPONT INC., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “Company”), does hereby certify as follows: FIRST: Upon the filing and effectiveness (the “Effective Time”) pursuant to the General Corporation Law of the State of Delaware (the “DGCL”) of this Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, each [●]1 shares of the Company’s Common Stock, par value $0.01 per share, issued and outstanding immediately prior to the Effective Time shall automatically be combined into [●]2 validly issued, fully paid andnon-assessable share of Common Stock without any further action by the Company or the holder thereof, subject to the treatment of fractional share interests as described below (the “Reverse Stock Split”). No fractional shares shall be issued at the Effective Time and, in lieu thereof, the Company’s transfer agent shall aggregate all fractional shares and sell them as soon as practicable after the Effective Time at the then-prevailing prices on the open market, on behalf of those stockholders who would otherwise be entitled to receive a fractional share, and after the transfer agent’s completion of such sale, stockholders shall receive a cash payment (without interest or deduction) from the transfer agent in an amount equal to their respective pro rata shares of the total net proceeds of that sale. SECOND: Upon the Effective Time, the paragraph (A) of Article IV of the Company’s Amended and Restated Certificate of Incorporation, relating to the capital structure of the Company, is hereby amended to read in its entirety as set forth below: | 1 | To reflect the final ratio determined by the Board of Directors within the range approved by the Company’s stockholders. |
| 2 | To reflect the final ratio determined by the Board of Directors within the range approved by the Company’s stockholders. |
Classes of Stock. The total number of shares of stock of all classes of capital stock that the Company is authorized to issue is5,250,000,000 [●]3 shares. The authorized capital stock is divided into 250,000,000 shares of preferred stock having a par value of $0.01 per share (hereinafter, the “Preferred Stock”) and5,000,000,000 [●]4 shares of common stock having a par value of $0.01 per share (hereinafter, the “Common Stock”). THIRD: This Certificate of Amendment shall become effective as of June 1, 2019 at 12:02 a.m. FOURTH: This Certificate of Amendment was duly adopted in accordance with Section 242 of the DGCL. The Board of Directors duly adopted resolutions by unanimous written consent in lieu of a meeting, in accordance with the provisions of Section 141(f) of the DGCL, setting forth and declaring advisable this Certificate of Amendment and directed that the proposed amendments be considered by the stockholders of the Company. A special meeting of stockholders was duly called upon notice in accordance with Section 222 of the DGCL and held on May 23, 2019, at which meeting the necessary number of shares were voted in favor of the proposed amendments. The stockholders of the Company duly adopted this Certificate of Amendment. [Signature Page Follows] | 3 | To be equal to the sum of 250,000,000 plus theas-reduced number of authorized shares of common stock set forth in the next sentence. |
| 4 | To be reduced proportionately from 5,000,000,000 to reflect the final ratio determined by the Board of Directors within the range approved by the Company’s stockholders. |
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate of Amendment. | | | | DOWDUPONT INC. | | By: | | Name: | | | | Title: | | |
| | | | | | | DOWDUPONT INC. ATTN: OFFICE OF THE CORPORATE SECRETARY 974 CENTRE ROAD WILMINGTON, DE 19805 | | | | VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on May 22, 2019 for shares held directly and by 11:59 p.m. Eastern Time on May 20, 2019 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. AGENDA ITEM 3: ADVISORY RESOLUTION ON THE FREQUENCYELECTRONIC DELIVERY OF FUTURE ADVISORY VOTES TO APPROVE EXECUTIVE COMPENSATION
Section 14A of the Exchange Act provides stockholders the opportunity to indicate how frequently the Company should hold future advisory votes to approve the compensation of the named executive officers. Stockholders may indicate whether they would prefer to have future advisory votes to approve executive compensation every one year, every two years, every three years or abstain from voting.
After careful consideration, the Board recommends that future advisory votes to approve compensation of the named executive officers be held annually. The Board believes that holding a vote every year is the most appropriate option because (i) it would enable the stockholders to provide us with input regarding the compensation of the named executive officers on a timely basis; and (ii) it is consistent with the Company’s practice of engaging with stockholders, and obtaining their input, on corporate governance matters and executive compensation philosophy, policies and practices. Stockholders are not voting to approve or disapprove the Board’s recommendation. Rather, stockholders may indicate their preference on the frequency of Advisory Compensation Votes by voting for one of the following options:
That future Advisory Compensation Votes be held every one year;
That future Advisory Compensation Votes be held every two years; or
That future Advisory Compensation Votes be held every three years.
For the reasons discussed above, the Company is asking stockholders to vote to hold an advisory vote to approve executive compensation every one year.
The Board unanimously recommends a vote to hold future advisory votes to approve executive compensation “EVERY ONE YEAR”.
This advisory resolution isnon-binding on the Board. Althoughnon-binding, the Board and the Compensation Committee will review and carefully consider the voting results when establishing its policy on the frequency of holding future advisory votes to approve executive compensation.
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| | AGENDA ITEM 3: ADVISORY RESOLUTION ON THE FREQUENCY OF FUTURE ADVISORY
VOTES TO APPROVE EXECUTIVE COMPENSATION
The Board of Directors recommends that you vote for EVERY ONE YEAR.
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AGENDA ITEM 4: RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
RESOLVED, that the appointment of Deloitte & Touche LLP to serve as the Company’s independent registered public accounting firm for 2018, made by the Audit Committee with the concurrence of the Board, is hereby ratified.
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm. The Company Bylaws provide that the selection of the independent registered public accounting firm must be presented for stockholder ratification or rejection at each Annual Meeting. The Audit Committee has appointed, and the Board has concurred subject to your ratification, Deloitte & Touche LLP to serve as the Company’s independent registered public accounting firm for 2018. Deloitte & Touche LLP served as Dow’s independent registered public accounting firm for 2017. Deloitte & Touche LLP has offices at or near most of the locations where DowDuPont operates in the United States and other countries. The members of the Audit Committee and the Board believe that the continued retention of Deloitte & Touche LLP is in the best interests of the Company and its investors.
Before making its determination on appointment, the Audit Committee carefully considers the qualifications and competence of candidates for the independent registered public accounting firm. For Deloitte & Touche LLP, this has included a review of its performance in prior years, its independence and processes for maintaining independence, the results of the most recent internal quality control review or Public Company Accounting Oversight Board inspection, the key members of the audit engagement team, the firm’s approach to resolving significant accounting and auditing matters including consultation with the firm’s national office, as well as its reputation for integrity and competence in the fields of accounting and auditing. The Audit Committee is responsible for the audit fee negotiations with Deloitte & Touche LLP and the Audit Committee is directly involved in the selection of the lead engagement partner in conjunction with the mandated rotation of this position. Additional information may be found in the Audit Committee Report on page 72 of the Proxy Statement and Audit Committee charter available on the Company’s website atwww.dow-dupont.com/investors/corporate-governance.
The Audit Committee has expressed its satisfaction with Deloitte & Touche LLP. In October 2017, Deloitte & Touche LLP advised the Audit Committee that, like all other major accounting firms, it has been named as a defendant in a number of civil lawsuits, most of which are premised on allegations that financial statements issued by clients and reported on by the firm were incorrect. Deloitte & Touche LLP has further advised the Audit Committee that based on the firm’s historical experience and understanding of the circumstances giving rise to such lawsuits, the firm does not believe that they will have a significant impact on the firm’s ability to serve as the independent registered public accounting firm for the Company. The Audit Committee has concluded that the ability of Deloitte & Touche LLP to perform services for the Company is not adversely affected by such litigation.
Representatives of Deloitte & Touche LLP will attend the 2018 Meeting and may make a statement if they wish. They will be available to answer stockholder questions at the 2018 Meeting.
In the event that the selection of Deloitte & Touche LLP is not ratified by stockholders, the Audit Committee will take that into account in connection with any future decisions as to the selection of a firm to serve as the Company’s auditors, although by law the Audit Committee has final authority over the determination of whether to retain Deloitte & Touche LLP or another firm at any time.
The Board unanimously recommends that stockholders vote FOR the resolution to ratify the selection of Deloitte & Touche LLP as the independent registered public accounting firm for DowDuPont for 2018.
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AGENDA ITEM 4: RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued)
Independent Registered Public Accounting Firm Fees
For the years ended December 31, 2017 and 2016, professional services were performed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu Limited, and their respective affiliates. Total fees for the years ended December 31, 2017 and 2016, for the independent registered public accounting firm were:
| | | | | | | | | | | | | | | | Type of Fees $ in thousands | | DowDuPont 2017(e) | | Dow 2017(f) | | Dow 2016 | Audit Fees(a) | | | | $3,520 | | | | | $25,792 | | | | | $24,686 | | Audit-Related Fees(b) | | | | 105 | | | | | 8,062 | | | | | 12,012 | | Tax Fees(c) | | | | 29 | | | | | 1,729 | | | | | 4,237 | | All Other Fees(d) | | | | 5,631 | | | | | 0 | | | | | 0 | | TOTAL | | | | $9,285 | | | | | $35,583 | | | | | $40,935 | |
(a) | The aggregate fees billed for the integrated audit of the Company’s annual financial statements and internal control over financial reporting, the reviews of the financial statements in quarterly reports on Form10-Q, comfort letters, consents, statutory audits, and other regulatory filings. |
(b) | The aggregate fees billed primarily for audits ofcarve-out financial statements, assessment of controls relating to outsourced services, audits and reviews supporting divestiture activities, and agreed-upon procedures engagements. |
(c) | The aggregate fees billed primarily for preparation of expatriate employees’ tax returns and related compliance services. |
(d) | The aggregate fees billed are for consulting work completed at DuPont. |
(e) | Represents fees from September 1, 2017 through December 31, 2017. There were no fees in 2016. |
(f) | Represents fees from January 1, 2017 through December 31, 2017. |
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| | AGENDA ITEM 4: RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors recommends that you vote FOR this resolution.
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AUDIT COMMITTEE REPORT
The Audit Committee operates pursuant to a charter that is available atwww.dow-dupont.com/investors/corporate-governance. All references to Committee in this report refer to the Audit Committee.
The Audit Committee of the Board is comprised entirely of independent Directors who meet the independence, experience and other qualification requirements of the New York Stock Exchange (“NYSE”) and the Company. The Board has determined that Committee members James A. Bell, Robert A. Brown, James M. Ringler and Patrick J. Ward are financially literate and are audit committee financial experts as defined by the applicable standards.
From January 1, 2017 through the Merger Transaction closing on August 31, 2017, Dow held six Committee meetings. From September 1, 2017 through December 31, 2017, DowDuPont held three Committee meetings. Five meetings were regularly scheduled meetings (three as Dow, two as DowDuPont) that included separate executive sessions of the Committee with the lead client service partner of the independent registered public accounting firm, the internal auditor, the general counsel, management and among the Committee members themselves. Four meetings were conference calls related to the Company’s earnings announcements and periodic filings (two as Dow, two as DowDuPont). Numerous other informal meetings and communications among theco-chairs, various Committee members, the independent registered public accounting firm, the internal auditor and/or members of the Company’s management also occurred.
On behalf of the Board, the Committee oversees the Company’s financial reporting process and its internal control over financial reporting, areas for which management has the primary responsibility. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of the Company’s audited financial statements with accounting principles generally accepted in the United States and for issuing its report on the Company’s internal control over financial reporting.
In this context, the Committee has reviewed and discussed with management and the independent registered public accounting firm the audited financial statements and the quarterly unaudited financial statements, matters relating to the Company’s internal control over financial reporting and the processes that support certifications of the financial statements by the Company’s Chief Executive Officer and Chief Financial Officer.
Among other items, the Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the standards of the Public Company Accounting Oversight Board. The Committee has received from the independent registered public accounting firm the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and discussed with them their independence from the Company and its management. In addition, the Committee has received written materials addressing Deloitte & Touche LLP‘s internal quality control procedures and other matters as required by the NYSE listing standards.
Further, the Committeepre-approves and reviews audit, audit-related and permittednon-audit services provided by the independent registered public accounting firm to the Company and the related fees for such services. The Committee haspre-approved all services provided and fees charged by the independent registered public accounting firm to the Company, and has concluded that such services are compatible with the auditors’ independence. The Committee’s charter allows delegation of the authority topre-approve audit, audit-related and permittednon-audit services by the independent registered public accounting firm to a subcommittee consisting of one or more Committee members, provided that such subcommittee decisions be presented to the full Committee at its next scheduled meeting.
Relying on the reviews and discussions referred to above, the Committee recommended to the Board, and the Board approved, that the audited financial statements and management’s report on internal control over financial reporting be included in the Company’s Annual Report on Form10-K for the year ended December 31, 2017, for filing with the U.S. Securities and Exchange Commission. The Committee has also selected Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the Company and its subsidiaries for 2018. The Board has concurred with that selection and has presented the matter to the stockholders of the Company for ratification.
This report is submitted by the Audit Committee.
James A. Bell(Co-Chair)
Robert A. Brown
James M. Ringler
Patrick J. Ward(Co-Chair)
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AGENDA ITEM 5: STOCKHOLDER PROPOSAL —
ELIMINATION OF SUPERMAJORITY VOTING THRESHOLDS
A stockholder has stated that its representative intends to present the following proposal at the Annual Meeting. The Company will promptly provide the name and address of the stockholder and the number of shares owned upon request directed to the Office of the Corporate Secretary. The Company is not responsible for the contents of the proposal. If properly presented at the Annual Meeting,the Board unanimously recommends a vote AGAINST this proposal.
Proposal 5 – Simple Majority Vote
RESOLVED, Shareholders request that our board take each step necessary so that each voting requirement in our charter and bylaws that calls for a greater than simple majority vote be eliminated, and replaced by a requirement for a majority of the votes cast for and against applicable proposals, or a simple majority in compliance with applicable laws. If necessary this means the closest standard to a majority of the votes cast for and against such proposals consistent with applicable laws. It is important that our company take each step necessary to adopt this proposal topic completely.
Shareowners are willing to pay a premium for shares of companies that have excellent corporate governance. Supermajority voting requirements have been found to be one of 6 entrenching mechanisms that are negatively related to company performance according to “What Matters in Corporate Governance” by Lucien Bebchuk, Alma Cohen and Allen Ferrell of the Harvard Law School. Supermajority requirements are used to block initiatives supported by most shareowners but opposed by a status quo management.
This proposal topic won from 74% to 88% support at Weyerhaeuser, Alcoa, Waste Management, Goldman Sachs, FirstEnergy, McGraw-Hill and Macy’s. The proponents of these proposals included Ray T. Chevedden and William Steiner.
Currently a 1%-minority can frustrate the will of our 66%-shareholder majority. In other words a 1%-minority could have the power to prevent shareholders from improving management accoutability. Currently the role of DowDuPont shareholders is diminished because management can declare as worthless and useless a 66%-vote of shareholders on certain issues.
Please vote to improve management accountability:
Simple Majority Vote – Proposal 5
Company’s Statement and Recommendation
The Board recommends a vote AGAINST this proposal.
The Board believes that the supermajority provisions in the Company’s Bylaws are necessary and appropriate given the current facts and circumstances. A simple majority of the stockholders have the power to amend, alter, change, adopt and repeal the Bylaws at any annual or special meeting subject to certain limited exceptions. An affirmative vote of at least 66 2/3% of the holders of all shares of capital stock of DowDuPont entitled to vote on such matters (a “Supermajority Vote”) are required to amend, alter, change adopt or repeal Article IX (Governance Provisions), Section 5.6 (detailing selection and role of the Executive Chairman), Section 5.7 (detailing the selection and role of CEO) and Section 8.1 (provisions requiring the method for amendment) of the Bylaws. When the merger between Dow and DuPont was proposed, both companies were concerned about ensuring a balance in governance as a way to maintain equality in the combined company. Accordingly, this requirement was included in the draft bylaws included in the joint proxy statement/prospectus issued by Dow and DuPont on June 10, 2016, and in the Bylaws adopted by the Board at the time of the closing of the Merger Transaction on August 31, 2017.
DowDuPont is pursuing the intended separation of its Agriculture Division, Materials Science Division and Specialty Products Division into three independent, publicly traded companies. Article IX of the Bylaws sets forth the governance provisions, including board composition, the function, composition and capabilities of the Advisory Committees which have been established to generally oversee the business and affairs of each division in preparation for the intended business separations. A more
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AGENDA ITEM 5: STOCKHOLDER PROPOSAL — ELIMINATION OF SUPERMAJORITY VOTING THRESHOLDS (continued)
detailed description of the Advisory Committees and the composition thereof can be found beginning on page 4 of the Proxy Statement. Under Article IX of the Bylaws, the ability of the Board, Executive Chairman and CEO, to carry out the steps to separate the three separate divisions is critical to the success of the Company and justifies input from more than a simple majority of stockholders. As such, this balanced and carefully considered approach is reasonable and necessary to ensure effective oversight of the intended business separations.
The Board strongly believes that extraordinary transactions and fundamental changes to corporate governance should have the broad support of DowDuPont’s stockholders rather than a simple majority. The Board also believes that the existing vote requirements protect stockholders against the potentially self-interested actions of short-term investors. Without requiring a Supermajority Vote in these key, limited circumstances, it would be possible for a group of short-term stockholders to approve a change in DowDuPont’s fundamental strategy that is not in the Company’s best interest as it drives towards the intended business separations.
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| | AGENDA ITEM 5: STOCKHOLDER PROPOSAL — ELIMINATION OF SUPERMAJORITY VOTING THRESHOLDS
The Board of Directors recommends that you vote AGAINST this proposal.
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AGENDA ITEM 6: STOCKHOLDER PROPOSAL — PREPARATION OF AN EXECUTIVE COMPENSATION REPORT
A stockholder has stated that its representative intends to present the following proposal at the Annual Meeting. The Company will promptly provide the name and address of the stockholder and the number of shares owned upon request directed to the Office of the Corporate Secretary. The Company is not responsible for the contents of the proposal. If properly presented at the Annual Meeting,the Board unanimously recommends a vote AGAINST this proposal.
Resolved: That the shareholders of DowDupont, assembled in annual meeting in person and by proxy, hereby recommend the following nonbinding proposal: that the Board of Directors prepare a report, to be made available to shareholders four months after the 2018 Annual Meeting, that shall review the compensation packages provided to senior executives of the Company and address the following.
1. Comparison of compensation packages for senior executives with that provided to the lowest paid Company employees.
2. Whether there should be a ceiling on compensation provided to senior executives to prevent the possibility of excessive compensation.
3. Whether compensation of senior executives should be adjusted in a situation where there is a stated need for employees to be laid off from work.
Shareholders’ Statement
DowDupont Board of Directors Corporate Governance Guidelines and its Amended Bylaws provide for the Board of Directors to determine the compensation of the members of the Board as they deem appropriate – in effect, they determine their own compensation!
The amount of their compensation for the past year is not known as of the writing of this proposal. However, as guidance, the Dow and the Dupont 2017 proxy statements reflect annual compensation ranging from a minimum of $265,000 to over $350,000.
Given this extraordinarily generous compensation provided to the members of the Board, is it any surprise that these same members have approved extraordinarily generous compensation for senior executives who are also members of the Board? Can we just view this back and forth between the Board and these senior executives as simply that of “one hand washing the other”?
Not surprisingly, virtually nothing is said either in the 2017 Dow or the Dupont proxy statement, or in any of the DowDupont SEC filings, regarding how itsnon-executive employees are compensated. This failure is to be expected given that, over the past several years, employees have received the most minimal of wage increases. In fact, at the Richmond factory, with over 1,000 employees, there was no increase at all last year. Nothing.
This proposal seeks to have the Board address these issues of compensation, issues involving not just the compensation of executives, but also how executives are compensated in relation to how its other employees are compensated.PROXY MATERIALS
If you AGREE with this proposal, please mark your proxy FOR this resolution. Company’s Statement and Recommendation
The Board recommends a vote AGAINST this proposal.
The Board shareswould like to reduce the underlying objective for the Company’s compensation policy and programs to be linked to business and individual performance and shareholder value. The Company’s compensation programs for all employees reflect competitive positioning, internal equity, and the value the individual brings to the position. The Board believes that the objective of this proposal is addressed through the engaged oversight and work of the Compensation Committee as describedcosts incurred by our company in greater detail in the Compensation Discussion and Analysis (“CD&A”) beginning on page 30 of the Proxy Statement.
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AGENDA ITEM 6: STOCKHOLDER PROPOSAL — PREPARATION OF AN EXECUTIVE COMPENSATION REPORT (continued)
Compensation of the executive officers of DowDuPont, including that of the NEOs, is governed by the Compensation Committee (or, in the case of both the Executive Chairman and the CEO, by the Board). In addition, the executive compensation programs of Dow and DuPont in which the NEOs participate are also under the purview of the Dow Compensation Subcommittee and DuPont Compensation Subcommittee, respectively. The Board, the Compensation Committee and the respective Subcommittees are assisted in performance of their oversight duties by both independent compensation consultants and management.
At this time, the Compensation Committee is focused on ensuring the DowDuPont management team delivers value to stockholders through:
Enhanced EBITDA and cash flow generation
Delivering committedrun-rate cost synergies of approximately $3.3 billion (against the original target of $3 billion) and at least $1 billion in growth synergies
Quickly standing up and separating into three intended companies
To that end, the Compensation Committee’s executive compensation program is designed to align with these goals. More information about executive compensation can be found in the CD&A beginning on page 30 of the Proxy Statement
The U.S. Securities and Exchange Commission has adopted extensive rules that provide for expanded disclosure of compensation-related information and additional transparency, including the new CEO pay ratio disclosure requirement. In complying with these rules, the Company has fully disclosed the relevant details of its executive compensation practices in the CD&A so that stockholders may evaluate those practices. The Board’s executive compensation practices are the result of the comprehensive process outlined in the CD&A above. That process requires the Compensation Committee to make many interrelated decisions and consider numerous competing interests. The Compensation Committee illustrates its pay for performance approach to executive compensation beginning on page 38 of the CD&A. Additionally, this year the Company has disclosed information regarding the ratio of CEO pay to median employee pay on page 57 of the CD&A.
Finally, stockholders have the right to vote, on an advisory basis, on the executive compensation disclosed in this Proxy Statement. Last year, stockholders who voted approved the compensation of the NEOs of the respective legacy companies. Dow and DuPont have historic, strong cultures of corporate governance. Fourteen of the sixteen Board members and all Standing Committee members are independent under the Corporate Governance Guidelines and applicable regulatory and listing standards.
For the foregoing reasons, the Board believes that the report requested by the proposal is not necessary.
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| | AGENDA ITEM 6: STOCKHOLDER PROPOSAL — PREPARATION OF AN EXECUTIVE COMPENSATION REPORT
The Board of Directors recommends that you vote AGAINST this proposal.
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AGENDA ITEM 7: STOCKHOLDER PROPOSAL — PREPARATION OF A REPORT ON SUSTAINABILITY METRICS IN PERFORMANCE-BASED PAY
A stockholder has stated that its representative intends to present the following proposal at the Annual Meeting. The Company will promptly provide the name and address of the stockholder and the number of shares owned upon request directed to the Office of the Corporate Secretary. The Company is not responsible for the contents of the proposal. If properly presented at the Annual Meeting,the Board unanimously recommends a vote AGAINST this proposal.
WHEREAS: Numerous studies suggest that companies that integrate environmental, social, and governance (ESG) factors into business strategy reduce reputational, legal, and regulatory risks and improve long-term performance.
A large, diverse group of companies has integrated sustainability metrics into executive pay incentive plans, among them Unilever, Walmart, and Mead Johnson. Guidance issued by the United Nations Principles for Responsible Investment (2012) stated that including ESG factors in executive incentive schemes can help protect long-term shareholder value.
As a result of the DowDuPont merger, there are new opportunities from the perspective of long-term value creation to consider establishing a more transparent and consistent relationship between sustainability, company reputation and executive bonuses.
The company is certainly trying to improve its reputation, despite a lasting shadow cast by the 1984 Bhopal chemical disaster, the marketing of napalm in the Vietnam War, and the continued production and marketing of controversial pesticides such as chlorpyrifos.
In the Harvard Business Review, Dow Chemical CEO Andrew Liveris asserted that this is “no longer the company that gave you napalm during the Vietnam War.” He discussed how the company is trying to transform itself through environmental initiatives and a commitment to sustainability, for instance, substituting more environmentally friendly materials for petrochemicals:
And our new goals have us delivering two billion dollars of new value through 2025 by managing inputs for less outputs, by managing ourselves on emissions and on waste so we impact the environment less. These sorts of metrics, which we now track for ourselves, we can articulate to the investment community.
The denominator goals actually became the simplest to talk about to investors and to the financial community, which is look, there’s a license to operate, there’s a regulatory environment that comes through either federal or state or even local authorities, and those regulatory environments are born from inputs that are garnered from everywhere, and we need to be one of those that provide that input.
Although some executives within the company may have performance awards that include elements of sustainability, and sets performance goals for the CEO and Chairman, there is as yet no clearly articulated company policy that applies sustainability metrics to senior executive bonuses across the board.
RESOLVED: Shareholders request the Board Compensation Committee prepare a report to shareholders, at reasonable expense and excluding proprietary information, assessing the feasibility of integrating the company’s sustainability metrics consistently to performance based pay incentives for senior executive staff under the Company’s compensation incentive plans. For the purposes of this proposal, “sustainability” is defined as how environmental and social considerations, and related financial, performance and reputation metrics, are integrated into long-term corporate strategy.
Supporting statement:
Examples of potential metrics to integrate to senior executive compensation could include: reductions in the total volume of persistentbio-accumulative toxic substances sold by the company annually, number of new products introduced, objective metrics of company reputation among community stakeholders, effective resolution of legacy issues, and metrics regarding the company’s reputation for reducing its environmental and social impact.
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AGENDA ITEM 7: STOCKHOLDER PROPOSAL — PREPARATION OF A REPORT ON SUSTAINABILITY METRICS IN PERFORMANCE-BASED PAY (continued)
Company’s Statement and Recommendation
The Board recommends a vote AGAINST this proposal.
The Board agrees that the interests of stockholders are best served by companies that operate their businesses in a sustainable manner while focusing on long-term value creation. Since the 1980s, both Dow and DuPont have demonstrated industry leadership in sustainability. That commitment resulted in DowDuPont being named to the 2017 Dow Jones Sustainability World Index, recognizing DowDuPont’s continuing sustainability performance to be in the top 10% of the industry.
Both Dow and DuPont have displayed a proven, decades-long track record of consistently integrating industry-leading sustainability, environmental, and social metrics into company strategy and using those metrics to drive company performance.
In 2015, Dow launched its third set of industry-leading, aspirational 2025 Sustainability Goals, which link sustainability metrics directly to company strategy in every business unit, function and geography. Dow’s emphasis on integrating sustainability metrics into the everyday plans of the company has been key to its economic, environmental, and social metric successes over the past two decades.
In 2015, DuPont continued its sustainability leadership effort by announcing a set of 2020 Sustainability Goals that integrate sustainability with its innovation process, further improve its operational footprint and continue its efforts to enhance global food security.
More information about the Company’s commitments to sustainability and achievements are described in the “Sustainability Initiatives” section beginning on page 12 of the Proxy Statement. More information about Dow’s and DuPont’s legacy sustainability programs, goals, and reports can be found online atwww.dow-dupont.com/about-dow-dupont/sustainability.
Additionally, DowDuPont intends to create three strong independent, industry leading companies in Agriculture, Materials Science, and Specialty Products, and each of these new intended companies will have independent sustainability strategies appropriate to their unique markets and business models.
Finally, the incentive compensation program is structured around financial and operational performance measures that the Compensation Committee believes are most important in driving the responsible, long-term growth of the business. Achievement of these performance measures is enhanced by accomplishing the Company’s sustainability goals, which include world-leading operations performance, providing customers with products that help solve sustainability challenges, and helping develop societal blueprints to accomplish the United Nations Sustainable Development Goals. Given that sustainability performance is inherent in the Company’s approach, making sustainability an explicit performance measure is not necessary.
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| | AGENDA ITEM 7: STOCKHOLDER PROPOSAL — PREPARATION OF A REPORT ON SUSTAINABILITY METRICS IN PERFORMANCE-BASED PAY
The Board of Directors recommends that you vote AGAINST this proposal.
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AGENDA ITEM 8: STOCKHOLDER PROPOSAL — PREPARATION OF A REPORT ON INVESTMENT IN INDIA
A stockholder has stated that its representative intends to present the following proposal at the Annual Meeting. The Company will promptly provide the name and address of the stockholder and the number of shares owned upon request directed to the Office of the Corporate Secretary. The Company is not responsible for the contents of the proposal. If properly presented at the Annual Meeting,the Board unanimously recommends a vote AGAINST this proposal.
Whereas,
On December 2, 1984, a Union Carbide plant in Bhopal, India, released a gas cloud killing approximately 7,000 people within days and at least 15,000 more in the years following. Records show that the plant stored bulk quantities ofultra-hazardous methyl isocyanate but US parent company UCC did not equip the plant with some crucial safety features. In 1988, an Indian court upheld the liability of UCC to pay damages. Criminal charges were also brought against UCC for culpable homicide not amounting to murder.
Of 573,588 official victims, thousands were left with chronic illnesses. Recent research finds ongoing morbidity and mortality at ten times normal rates and also damage to survivors’ DNA, increasing the likelihood of suffering extending through future generations. Studies have found organic contaminants and heavy metals in soil at the former plant site and in local groundwater.
Bhopal exemplifies a failure of national and international law to ensure corporate liability and accountability for human and environmental harms. Responding to widespread public criticism, India reopened a civil claim in 2010, seeking additional compensation of over $1 billion. This year an Indian criminal court emailed Dow a ‘notice to appear’ in proceedings within which UCC is named an ‘absconder’. The Indian Law Ministry previously concluded that, “irrespective of the manner in which UCC has merged or has been acquired... if there is any legal liability, it would have to be borne by Dow...”
Dow Chemical CEO Andrew Liveris told McKinsey: “You’ve got to be agile, go to growth areas, and then stick with them.” India’s economy grows between7-9% annually, with its chemical sector predicted to reach $403 billion by 2025, but Dow’s growth in India is being challenged. Bhopal-related issues were cited in the cancellation of a proposed joint venture with GACL, causing Dow losses and missed revenues totalling $300 million between 2008 and 2016.
DowDuPont’s growth in India can be reasonably expected to face serious, continuing obstacles while legal and moral liability for Bhopal remains unresolved. According to Motley Fool, “Dow’s refusal to take responsibility for Bhopal has hit the company’s bottom line.... and even limited its ability to invest overseas.”
Resolved, shareholders request that the Board of Directors prepare a report to shareholders by October 2018, at reasonable cost and excluding confidential or legally privileged information, providing objective, quantitative metrics and analysis regarding how the public’s association of the company with the Bhopal tragedy may be relevant to plans for investment in India until 2025.
Supporting Statement
Such report should, as a minimum, discuss any standing court orders or legal developments that create a risk to direct investment in India. The proponents believe that metrics should also include at a minimum, for Dow Chemical and DuPont, for at least the last five years:
Quantified incidence of discussion of the unresolved Bhopal legacy in the course of an investment, expansion or licensing process;
Relevant reputation metrics
Company’s Statement and Recommendation
The Board recommends a vote AGAINST this proposal.
The proposal asks Dow management to issue a report assessing the financial, reputational and operational impact the legacy Bhopal issue may have on Dow’s business in India and worldwide. It is important to note that Dow never owned or operated
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AGENDA ITEM 8: STOCKHOLDER PROPOSAL — PREPARATION OF A REPORT ON INVESTMENT IN INDIA (continued)
the plant, which today is under the control of the Madhya Pradesh state government. Dow acquired the shares of Union Carbide Corporation (“UCC”) more than 16 years after the tragedy. We do not believe the Bhopal tragedy or related legal proceedings have had, or will have a significant financial, operational or reputational impact on Dow’s business in India or worldwide. Such a report is unnecessary and would consume valuable Company resources with no benefit to stockholders.
The 1984 gas leak in Bhopal, India, was one of the most tragic incidents in the history of the chemical industry.
By the time Dow acquired UCC’s stock in 2001, UCC had sold its interest in Union Carbide India Limited (“UCIL”), the entity which operated the plant at Bhopal. Most importantly, UCC and UCIL settled all liability claims related to the gas release under a legally-binding settlement with the Union of India approved by the Supreme Court of India in 1989, some 12 years before UCC’s transaction with Dow. The Court has reviewed the adequacy of the agreement and upheld the validity of the agreement in 1991 and again in 2007. In the settlement, UCC preserved its defense that it is not responsible for the gas release. No court has ever ruled on UCC’s liability for the gas release.
As to the matter of remediation of the site, responsibility for theclean-up of the Bhopal site lies with the Madhya Pradesh State government. In 1998, the Madhya Pradesh State Government, which owned and had been leasing the property to Union Carbide India Limited (UCIL), took over the facility and assumed all accountability for the site, including the completion of any additional remediation. Furthermore, rulings in 2005 and 2012 by both the High Court at Jabalpur and Supreme Court of India have confirmed that the responsibility of remediation lies with the State Government of Madhya Pradesh.
Further, in June 2013, in a case addressing the corporate liability of UCC for acts of UCIL, the U.S. Court of Appeals for the Second Circuit ruled that UCC is not liable for any environmental remediation or related site environmental consequences at the Bhopal plant site in India. The Court stated, “[M]any others living near the Bhopal [India] plant may well have suffered terrible and lasting injuries from a wholly preventable disaster for which someone is responsible. After nine years of contentious litigation and discovery, however, all that the evidence in this case demonstrates is that UCC is not that entity.”
Dow’s presence in India began in 1957 with the Polychem Limited joint venture. More than 50 years later, Dow’s affiliated companies continue to thrive with over 900 employees in India and a strong presence. Dow Chemical International Private Limited (“Dow India”) has two established Centers of Excellence in the areas of Engineering (Chennai) and Business Process Services and Expertise (Mumbai), three manufacturing sites, customer application centers and a variety of commercial offices. Providing market-leading products and solutions in industries as diverse as paints & coatings, water, pharmaceuticals, automotive, alternative energies, construction and agriculture, Dow is committed to consistent growth in India through its expertise as a science and technology leader, its experience as a leading chemical company, and its engagement with the communities in which it operates. As a responsible corporate citizen, Dow India provides free artificial limbs and technology development for the ‘Jaipur Foot’ initiative; continues to build homes through the ‘Habitat for Humanity’ project, trains and supports rural women entrepreneurs with the Mann Deshi Foundation and equips teachers to deliver environment education in their classes. More information on Dow’s business in India can be found at www.in.dow.com.
The Bhopal tragedy has not impacted Dow’s business in India or worldwide. In fact, Dow’s affiliated companies continue to experience double-digit growth in India. Our Board believes that the resources required to issue a report assessing the financial, reputational, and operational impact of the Bhopal issue would be unnecessary and would not provide stockholders with any additional value.
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| | AGENDA ITEM 8: STOCKHOLDER PROPOSAL — PREPARATION OF A REPORT ON INVESTMENT IN INDIA
The Board of Directors recommends that you vote AGAINST this proposal.
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AGENDA ITEM 9: STOCKHOLDER PROPOSAL — MODIFICATION OF THRESHOLD FOR CALLING SPECIAL STOCKHOLDER MEETINGS
A stockholder has stated that its representative intends to present the following proposal at the Annual Meeting. The Company will promptly provide the name and address of the stockholder and the number of shares owned upon request directed to the Office of the Corporate Secretary. The Company is not responsible for the contents of the proposal. If properly presented at the Annual Meeting,the Board unanimously recommends a vote AGAINST this proposal.
RESOLVED: Shareowners request that the Board of DowDuPont Inc. (“Company”) take the steps necessary to amend Company bylaws and appropriate governing documents to give holders of 10% of outstanding common stock the power to call a special shareowners meeting. To the fullest extent permitted by law, such bylaw text in regard to calling a special meeting shall not contain exceptions or excluding conditions that apply only to shareowners but not to management or the Board.
SUPPORTING STATEMENT
Under DowDuPont’s certificate of incorporation, a special shareholder meeting can only be called by 25% of shareowners. This impossibly high threshold – which could require $39.4 billion in stock – is unreasonable and out of line with Company peers.
This Proposal would grant 10% of shareowners the ability to convene a meeting to consider important matters. The Proposal does not alter the Board’s power to call special meetings; rather, it grants shareowners the reasonable right to call for consideration of important matters that may arise – and have arisen – between normally-scheduled annual meetings.
It appears that management has mishandled a variety of issues in ways that have increased both cost and liability for shareowners – sometimes significantly.
When Dow Chemical acquired Union Carbide in 2001, it acquired significant legal, financial, and reputational liabilities that stemmed from the 1984 Bhopal gas disaster, and other pollution of the lands and water of communities around the former Union Carbide Bhopal plant.
For over twenty-five years Union Carbide has been declared an “absconder” from Indian criminal proceedings – making itself subject to an Asset Attachment Order designed to compel a court appearance. Parent company Dow acquired this escalating legal risk from the same case, having just this year received formal notice to appear from the same Indian court. Dow now confronts the prospect of becoming subject to a national Asset Attachment Order.
Following intense public pressure, India filed a Supreme Court petition to reopen civil litigation that seeks compensation of over $1 billion. A number of parties have filed briefs in the case to request a Mareva Order – which would freeze assets of the Company. This is the equivalent to having a senior-level claim or lien on the Company, which would allow seizure of DowDuPont assets worldwide.
India’s economy has grown between7-9% annually and its chemical sector is expected to reach $403 billion by 2025. This emerging legal threat to the Company’s Indian assets may block or diminish participation in this growth, a risk that would significantly deprive shareowners.
However, despite having a legal duty to do so, DowDuPont has failed to disclose these risks in public filings or statements to shareowners. It has instead issued inadequate or misleading reports – a possible dereliction of Directors’ fiduciary duty.
For these reasons, shareowners need a reasonable 10% threshold to call a special meeting.
THEREFORE: Please vote FOR this common-sense governance enhancement that offers shareowners a critical right which DowDuPont’s 25% threshold places out of reach.
Company’s Statement and Recommendation
The Board recommends a vote AGAINST this proposal.
The Company’s Bylaws currently provide that special meetings of stockholders may be called either by the Board or by the Secretary at the request in writing of the holder of record of at least 25% of the outstanding stock of the Company entitled to
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AGENDA ITEM 9: STOCKHOLDER PROPOSAL — MODIFICATION OF THRESHOLD FOR CALLING SPECIAL STOCKHOLDER MEETINGS (continued)
vote. The Board believes that the current threshold for calling a special stockholders’ meeting is appropriate for the Company and that the lower threshold called for by the proponents’one-size-fits-all approach would be detrimental to the Company’s stockholders as a whole.
Special meetings are an important protection for all stockholders, and should be used appropriately to represent the interest of many rather than to benefit few. At 10%, two stockholders could call a special meeting. Lowering the threshold on the right to call special meetings would enable a small number of stockholders to call a special meeting on a subject which may be of little or no interest to most stockholders, and preparing for the special meeting would consume valuable Company resources that would be better spent elsewhere. The costs of decreasing the special meeting threshold outweigh its benefits.
More importantly, perhaps, the rationale for special stockholder meetings is not supported by lowering the threshold from 25% to 10%. Special stockholder meetings should be reserved for those matters of such importance that they cannot, and should not, wait until the next Annual Meeting of Stockholders. Matters of such utmost importance and urgency would necessarily be supported by 25% of stockholders. Lowering the threshold would not advance the purpose of special meetings, and if used improperly, would be costly, time-consuming, and disruptive to the Company.
The Board, which has a long combined history of successful corporate governance through its legacy boards, may, in furtherance of its fiduciary obligations, call special meetings of the stockholders, which is an added measure of confidence for stockholders that special meetings, when in the best interests of stockholders as a whole, will be convened.
The Board also believes that stockholders already have an extremely effective means of communicating with the Board on all issues. As discussed on page 9 of the Proxy Statement under the heading “Communications with the Board and Directors,” stockholders and other interested parties may communicate directly with the Board, the Executive Chairman, theCo-Lead Independent Directors or other outside Director by writing to such parties in care of the Office of the Corporate Secretary.
The Board believes that the current Bylaws strike the proper balance between the interest of stockholders to call special meetings to address critical issues on an expedited basis and the potential for additional cost and disruption that is associated with such meetings.
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| | AGENDA ITEM 9: STOCKHOLDER PROPOSAL — MODIFICATION OF THRESHOLD FOR CALLING SPECIAL STOCKHOLDER MEETINGS
The Board of Directors recommends that you vote AGAINST this proposal.
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ADDITIONAL INFORMATION
Future Stockholder Proposals
If you satisfy the requirements of the rules and regulations of the SEC and wish to submit a proposal to be considered for inclusion in the Company’s proxy materials for the 2019 Annual Meeting of Stockholders of DowDuPont Inc. (“2019 Meeting”), pursuant to Rule14a-8, please send it to the Office of the Corporate Secretary. Under SEC Exchange Act Rule14a-8, these proposals must be received no later than the close of business on November 16, 2018.
Future Annual Meeting Business
Under the Company’s Bylaws, if you wish to raise items of proper business directly at an annual meeting, including Director nominations outside of the proxy access process, other than stockholder proposals presented underRule 14a-8 for inclusion in the Company’smailing proxy materials, you must give advance written notificationcan consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Office ofInternet. To sign up for electronic delivery, please follow the Corporate Secretary. Forinstructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on May 22, 2019 Meeting, written noticefor shares held directly and by 11:59 p.m. Eastern Time on May 20, 2019 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Votes must be received by the Office of the Corporate Secretary between the close of business on November 16, 2018, and the close of business on December 16, 2018. However, as provided in the Bylaws, different deadlines apply if the 2019 Meeting is called for acut-off date that is not within 30 days before or after the anniversary of the 2018 Meeting; in that event, written notice must be received by the Office of the Corporate Secretary no earlier than the close of business on the 120th day prior to the 2019 Meeting and no later than the close of business on the later of the 90th day prior to the 2019 Meeting or the 10th day following the date on which public disclosure of the date of such meeting is first made by the Company. Such notices must comply with the procedural and content requirements of the Bylaws. If notice of a matter is not received within the applicable deadlines or does not comply with the Bylaws, the chairman of the annual meeting may refuse to introduce such matter. If a stockholder does not meet these deadlines or, does not satisfy the requirements of Rule14a-4 of the Exchange Act, the persons named as proxies will be allowed to use their discretionary voting authority when and if the matter is raised at the annual meeting. The full text of the Bylaws is available atwww.dow-dupont.com/investors/corporate-governance. Future Director Nominees through Proxy Access
Under the Company’s Bylaws, if you wish to nominate a director through proxy access, you must give advance written notification to the Office of the Corporate Secretary. For the 2019 Meeting, written notice must be received by the Office of the Corporate Secretary between the close of business on October 17, 2018, and the close of business on November 16, 2018. Such notices must comply with the procedural and content requirements of the Bylaws. The full text of the Bylaws is available atwww.dow-dupont.com/investors/corporate-governance.
Multiple Stockholders with the Same Address
In accordance with a notice sent previously to stockholders with the same surname who share a single address, only one notice or set of proxy materials will be sent to an address unless contrary instructions were received from any stockholder at that address. This practice, known as “householding,” is designed to reduce printing and postage costs. If you did not respond that you did not want to participate in householding, you were deemed to have consented to the practice. If you are a registered stockholder, you may revoke your consent at any time by sending your name and your holder identification number to the Office of the Corporate Secretary. If you hold your stock with a bank or broker, you may revoke your consent to householding at any time by contacting Broadridge Financial Solutions Inc., 51 Mercedes Way, Edgewood, NY 11717, or by calling1-866-540-7095. If you are a registered stockholder receiving multiple copies at the same address or if you have a number of accounts at a single brokerage firm, you may submit a request to receive a single copy in the future by contacting the Office of the Corporate Secretary. If you hold your stock with a bank or broker, contact Broadridge Financial Solutions Inc. at the address and telephone number provided above. The Company will promptly deliver to a stockholder who received one copy of proxy materials as the result of householding, a copy of the materials upon the stockholder’s written or oral request to the Office of the Corporate Secretary.
Electronic Delivery of Proxy Materials
Stockholders may request proxy materials be delivered to them electronically in 2019 by visiting https://enroll.icsdelivery.com/dwdp. This results in faster delivery of the documents and significant savings to the Company by reducing printing and mailing costs.(see reverse side).
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PROOF OF STOCK OWNERSHIP IS REQUIRED TO ATTEND THE SPECIAL MEETING OF STOCKHOLDERS. SEE REVERSE SIDE. | |
ADDITIONAL INFORMATION (continued)
Copies of Proxy Materials and Annual Report
The Notice and Proxy Statement and Annual Report are posted on DowDuPont’s websiteat www.dow-dupont.com/investors and at www.proxyvote.com.
Copies of Corporate Governance Documents
The Certificate of Incorporation, Bylaws, Corporate Governance Guidelines, Code of Conduct, Code of Financial Ethics, charters and other governance documents are posted on DowDuPont’s website atwww.dow-dupont.com/investors/corporate-governance. Stockholders may receive printed copies of each of these documents without charge by contacting the Office of the Corporate Secretary, 974 Centre Road, Wilmington, DE 19805.
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APPENDIX
Significant Items Impacting Results(1)
| | | | | | | | | | | | | | | | | | | | | | | | | In millions, except per share amounts (Unaudited) | | Pretax Impact(2) | | | Net Income(3) | | | EPS – Diluted(4) | | TWELVE MONTHS ENDED DECEMBER 31 | | 2017 | | | 2016 | | | 2017 | | | 2016 | | | 2017 | | | 2016 | | Reported pro forma results | | $ | 2,310 | | | $ | 6,083 | | | $ | 2,753 | | | $ | 5,347 | | | $ | 1.17 | | | $ | 2.37 | | – Significant Items: | | | | | | | | | | | | | | | | | | | | | | | | | Asbestos-related charge | | | — | | | | (1,113 | ) | | | — | | | | (701 | ) | | | — | | | | (0.31 | ) | Charge for the termination of a terminal use agreement | | | — | | | | (117 | ) | | | — | | | | (74 | ) | | | — | | | | (0.03 | ) | Customer claims adjustment/recovery | | | — | | | | 53 | | | | — | | | | 34 | | | | — | | | | 0.02 | | Environmental charges | | | — | | | | (295 | ) | | | — | | | | (205 | ) | | | — | | | | (0.09 | ) | Gains on sales of businesses/entities | | | 1,031 | | | | 375 | | | | 645 | | | | 220 | | | | 0.28 | | | | 0.09 | | Impact of Dow Corning ownership restructure | | | — | | | | 2,106 | | | | — | | | | 2,350 | | | | — | | | | 1.05 | | Integration and separation costs | | | (1,499 | ) | | | (476 | ) | | | (1,028 | ) | | | (367 | ) | | | (0.44 | ) | | | (0.16 | ) | Merger-related inventorystep-up amortization | | | (1,483 | ) | | | — | | | | (1,231 | ) | | | — | | | | (0.53 | ) | | | — | | Litigation related charges, awards and adjustments | | | (332 | ) | | | (1,208 | ) | | | (215 | ) | | | (761 | ) | | | (0.08 | ) | | | (0.34 | ) | Restructuring, goodwill impairment and asset related charges – net | | | (3,594 | ) | | | (1,176 | ) | | | (3,161 | ) | | | (782 | ) | | | (1.34 | ) | | | (0.35 | ) | Settlement and curtailment items | | | (892 | ) | | | 382 | | | | (594 | ) | | | 254 | | | | (0.25 | ) | | | 0.11 | | Transaction costs and productivity actions | | | (58 | ) | | | (195 | ) | | | (37 | ) | | | (159 | ) | | | (0.02 | ) | | | (0.08 | ) | Income tax items | | | — | | | | — | | | | 1,151 | | | | (13 | ) | | | 0.48 | | | | — | | Total significant items | | $ | (6,827 | ) | | $ | (1,664 | ) | | $ | (4,470 | ) | | $ | (204 | ) | | $ | (1.90 | ) | | $ | (0.09 | ) | - DuPont amortization of intangibles | | | (1,119 | ) | | | (1,080 | ) | | | (766 | ) | | | (730 | ) | | | (0.33 | ) | | | (0.33 | ) | = Pro forma adjusted results(Non-GAAP) | | $ | 10,256 | | | $ | 8,827 | | | $ | 7,989 | | | $ | 6,281 | | | $ | 3.40 | | | $ | 2.79 | |
Pro forma adjusted measures of income arenon-GAAP measures. The Company’s management believes these measures provide useful information to investors by offering an additional way of viewing DowDuPont’s results that helps investors identify the underlying earnings of the Company as compared to prior and future periods and its peers. Although amortization of DuPont’s intangible assets is excluded from thesenon-GAAP measures, management believes it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in amortization of additional intangible assets. Pro forma adjusted measures are financial measures not recognized in accordance with U.S. GAAP and should not be viewed as an alternative to U.S. GAAP financial measures of performance.
(1) | See Note 24 to the Consolidated Financial Statements contained in the Company’s 2017 Annual Report on Form10-K for additional information related to significant items impacting results. |
(2) | Pro forma “Income from continuing operations before income taxes.” |
(3) | Pro forma “Net income available for DowDuPont Inc. common stockholders.” The income tax effect on significant items is calculated based upon the enacted tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlyingnon-GAAP adjustment. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: (4) | Pro forma “Earnings per common share from continuing operations – diluted.” |
| | | | | | | | | | | E77092-S84754 | | KEEP THIS PORTION FOR YOUR RECORDS | | — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — | | | | | | | | | | A-1 | | | | | | | |
APPENDIX (continued)
Common Shares – Diluted
The following tables present U.S. GAAP and Operating share counts for the twelve-month periods ended December 31, 2017, and December 31, 2016.
U.S. GAAP Share Count
| | | | | | | | | In millions (Unaudited) | | | | | | | TWELVE MONTHS ENDED DECEMBER 31 | | 2017 | | | 2016 | | Weighted average common shares – basic(5, 6) | | | 1,579.8 | | | | 1,108.1 | | Plus dilutive effect of equity compensation plans(5) | | | 18.3 | | | | 15.1 | | Weighted average common shares – diluted | | | 1,598.1 | | | | 1,123.2 | |
(5) | As a result of the Merger Transaction, share amounts for the year ended December 31, 2017, reflect a weighted averaging effect of Dow shares outstanding prior to August 31, 2017, and DowDuPont shares outstanding on or after August 31, 2017. |
(6) | On December 31, 2016, Dow converted 4 million shares of Dow Preferred Stock into 96.8 million shares of Dow’s common stock. As a result of this conversion, 0.5 million shares of Dow common stock are included in “Weighted-average common shares – basic” for the year ended December 31, 2016. |
Pro Forma Common Shares Outstanding
| | | | | | | | | In millions (Unaudited) | | | | | | | TWELVE MONTHS ENDED DECEMBER 31 | | 2017 | | | 2016 | | Dow common shares outstanding – basic(7) | | | 808.1 | | | | 1,108.1 | | DuPont common shares outstanding – basic(8) | | | 744.1 | | | | 1,113.2 | | DowDuPont common shares outstanding – basic(9) | | | 771.7 | | | | — | | Total DowDuPont common shares outstanding – basic | | | 2,323.9 | | | | 2,221.3 | | Dilutive impact of Dow equity-based awards(7) | | | 12.2 | | | | 15.1 | | Dilutive impact of DuPont equity-based awards(10) | | | 3.9 | | | | 5.7 | | Dilutive impact of DowDuPont equity-based awards(9) | | | 6.1 | | | | — | | Total DowDuPont common shares outstanding – diluted | | | 2,346.1 | | | | 2,242.1 | |
(7) | The share amount in the twelve-month period ended December 31, 2017, reflects a weighted averaging effect of Dow shares outstanding prior to August 31, 2017. The share amounts for the twelve-month period ended December 31, 2016 as reported by Dow in its Annual Report on Form10-K. On December 30, 2016, Dow converted 4 million shares of Preferred Stock into 96.8 million shares of Dow common stock. In accordance with U.S. GAAP, the basic share count for the twelve-month period ended December 31, 2016 reflects atwo-day averaging effect related to this conversion, or 0.5 million shares for the twelve-month period ended December 31, 2016. |
(8) | DuPont common shares outstanding – basic for both periods presented reflects DuPont’s common stock issued and outstanding at August 31, 2017, multiplied by the Merger Agreement conversion ratio of 1.2820. The share amount shown in the twelve-month period ended December 31, 2017, also reflects a weighted averaging effect of DuPont shares outstanding prior to August 31, 2017. |
(9) | The DowDuPont share amount for the twelve-month period ended December 31, 2017, reflects a weighted averaging effect of DowDuPont shares outstanding after August 31, 2017. |
(10) | Reflects share amounts as reported by DuPont in its Annual Report on Form10-K multiplied by the Merger Agreement conversion ratio of 1.2820. The share amount shown in the twelve-month period ended December 31, 2017, also reflects a weighted averaging effect of DuPont shares outstanding prior to August 31, 2017. |
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APPENDIX (continued)
Reconciliation of Pro Forma Earnings Per Common Share from Continuing Operations –Diluted to Pro Forma Adjusted Earnings Per Common Share from Continuing Operations – Diluted(11)
| | | | | | | | | Dollars per share (Unaudited) | | | | | | | TWELVE MONTHS ENDED DECEMBER 31 | | 2017 | | | 2016 | | Pro forma earnings per common share from continuing operations – diluted | | $ | 1.17 | | | $ | 2.37 | | – Impact of pro forma significant items,after-tax(12) | | | (1.90 | ) | | | (0.09 | ) | – Impact of pro forma amortization of DuPont’s intangible assets,after-tax | | | (0.33 | ) | | | (0.33 | ) | Pro forma adjusted earnings per common share from continuing operations – diluted(Non-GAAP)(11, 13) | | $ | 3.40 | | | $ | 2.79 | |
(11) | Pro forma adjusted earnings per share (“Pro Forma Adjusted EPS”) is anon-GAAP measure. |
(12) | Refer to the Significant Items Impacting Results section in this Appendix for additional information on the impact of significant items. |
(13) | For the twelve-month periods ended December 31, 2017 and 2016, Pro Forma Adjusted EPS is calculated as “Pro forma earnings per common share from continuing operations – diluted,” excluding theafter-tax impact of pro forma significant items and theafter-tax impact of pro forma amortization expense associated with DuPont’s intangible assets. |
The Company uses Pro Forma Operating EBITDA as its measure of profit/loss for segment reporting. The Company defines Pro Forma Operating EBITDA as pro forma earnings (i.e., pro forma “Income (loss) from continuing operations before income taxes”) before interest, depreciation, amortization and foreign exchange gains (losses), excluding the impact of adjusted significant items.
Reconciliation of “Pro forma income from continuing operations, net of tax” to “Pro forma Operating EBITDA”
| | | | | | | | | In millions (Unaudited) | | | | | | | TWELVE MONTHS ENDED DECEMBER 31 | | 2017 | | | 2016 | | Pro forma income from continuing operations, net of tax | | $ | 2,912 | | | $ | 5,795 | | + Provision (Credit) from income taxes on continuing operations | | | (602 | ) | | | 288 | | Pro forma income from continuing operations before income taxes | | $ | 2,310 | | | $ | 6,083 | | + Depreciation and amortization | | | 5,546 | | | | 5,236 | | - Interest income(14) | | | 230 | | | | 209 | | + Interest expense and amortization of debt discount | | | 1,256 | | | | 1,108 | | - Foreign exchange gains (losses), net(14) | | | (457 | ) | | | (232 | ) | Pro forma EBITDA | | $ | 9,339 | | | $ | 12,450 | | - Adjusted Significant Items(15) | | | (6,827 | ) | | | (1,664 | ) | Pro forma Operating EBITDA | | $ | 16,166 | | | $ | 14,114 | |
(14) | Included in “Sundry income (expense) – net.” |
(15) | Adjusted significant items, excluding the impact ofone-time transaction costs directly attributable to the Merger Transaction and reflected in the pro forma adjustments. |
Pro forma Operating EBITDA Margins Calculation
| | | | | | | | | In millions (Unaudited) | | | | | | | TWELVE MONTHS ENDED DECEMBER 31 | | 2017 | | | 2016 | | Pro forma Net Sales | | $ | 79,535 | | | $ | 70,894 | | Pro forma Operating EBITDA | | $ | 16,166 | | | $ | 14,114 | | Pro forma Operating EBITDA Margin | | | 20.3% | | | | 19.9% | |
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DowDuPont Inc.
2018 Annual Meeting of Stockholders
Wednesday, April 25, 2018 at 12:00 P.M. Central Time
The Ritz-Carlton Hotel
160 E Pearson St, Chicago, IL 60611
Corporate Headquarters Global Dow Center 2211 H.H.Dow Way Midland, MI 48674 974 Centre Road Wilmington, DE 19805 USA www.Dow-dupont.com
| | | 
DOWDUPONT INC.
ATTN: OFFICE OF THE CORPORATE SECRETARY
974 CENTRE ROAD
WILMINGTON, DE 19805
| | VOTE BY INTERNET -www.proxyvote.com | | Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on thecut-off date (see reverse side). Have your proxy card in hand when you access the website and follow the instructions to cast your vote.
| | ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS | | If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | | VOTE BY PHONE -1-800-690-6903
| | Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on thecut-off date (see reverse side). Have your proxy card in hand when you call and then follow the instructions. | | VOTE BY MAIL
| | Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Votes must be received by thecut-off date (see reverse side). | | | PROOF OF STOCK OWNERSHIP IS REQUIRED TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS. SEE REVERSE SIDE.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
| | | | | | | E36910-P01246-Z71653 | | KEEP THIS PORTION FOR YOUR RECORDS | | | | | DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | DOWDUPONT INC.
| | | | | | | | | | DATED. | | DETACH AND RETURN THIS PORTION ONLY |
| | | | | | | | | | | | | | | | | | | DOWDUPONT INC. | | | | | | | | | | | |  | | | | | | | | | | | The Board of Directors recommends that you vote FOR Agenda Item 1 and FOR Agenda Item 2. | | For | | Against | | Abstain | | | | | | | | | | | 1. A proposal, which we refer to as the reverse stock split proposal, to adopt and approve an amendment to our Amended and Restated Certificate of Incorporation to effect (a) a reverse stock split of our outstanding shares of common stock, at a reverse stock split ratio of not less than 2-for-5 and not greater than 1-for-3, with an exact ratio as may be determined by our Board of Directors at a later date, and (b) a reduction in the number of our authorized shares of common stock by a corresponding ratio. | | ☐ | | ☐ | | ☐ | | | | | | | | | | | 2. A proposal, which we refer to as the adjournment proposal, to approve, if necessary, the adjournment of the Special Meeting to solicit additional proxies in favor of the reverse stock split proposal. | | ☐ | | ☐ | | ☐ | | | | | | | | | | | NOTE: The undersigned authorizes the proxies to vote in their discretion on such other matters as may properly come before the meeting or any adjournment thereof. | | | | | | | | | | | | | | | | | The Board of Directors recommends that you voteFOR all director nominees in Agenda Item 1,FOR Agenda Items 2 and 4, andONE YEAR for Agenda Item 3. | | | | | | | | | | | | | 1. | | Election of Directors | | | | For
| | Against
| | Abstain
| | | | | | | | | | | | | | | | | | | | | | | Nominees:
| | | | | | | | | | | | | | | | Nominees Cont’d: | | | | For
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| | | | | | 1a. Lamberto Andreotti
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| | | | | | | | 1o. Lee M. Thomas
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| | | | | 1b. James A. Bell
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| | | | | | | | 1p. Patrick J. Ward
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| | | | | | | 1c. Edward D. Breen
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| | | | | | 2. Advisory Resolution to Approve Executive Compensation
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| | | | | | | 1d. Robert A. Brown
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| | Two Years | | Three Years | | Abstain | | | | | | | 1e. Alexander M. Cutler
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| | | | | | 3. Advisory Resolution on the Frequency of Future Advisory Votes to Approve Executive Compensation
| | ☐ | | ☐ | | ☐ | | ☐ | | | | | | | 1f. Jeff M. Fettig
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| | | | | | 1g. Marillyn A. Hewson
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| | | | | | 4. Ratification of the Appointment of the Independent Registered Public Accounting Firm
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| | | | | | | 1h. Lois D. Juliber
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| | | | | | | | | | | | | | | | | | | | 1i. Andrew N. Liveris
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| | | | | | The Board of Directors recommends that you voteAGAINST the following Stockholder Proposals:
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| | | | | | | | | | | | | | | 1j. Raymond J. Milchovich
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| | | | | | | | | | | | | | | 1k. Paul Polman
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| | | | | | 5. Elimination of Supermajority Voting Thresholds
| | ☐ | | ☐ | | ☐ | | | | | | | 1l. Dennis H. Reilley
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| | | | | | 6. Preparation of an Executive Compensation Report
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| | | | | | | 1m. James M. Ringler
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| | | | | | 7. Preparation of a Report on Sustainability Metrics in Performance-based Pay
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| | | | | | | 1n. Ruth G. Shaw
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| | | | | | 8. Preparation of a Report on Investment in India
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| | | | | | | | | | | | | | | | | | | 9. Modification of Threshold for Calling Special Stockholder Meetings
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| | | | | Please sign exactly as name appears hereon. Joint owners should each sign personally. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. All holders must sign. If a corporation, sign the full corporate name by authorized officer. | | | | | | NOTE:The undersigned authorizes the proxies to vote in their discretion on such other matters as may properly come before the meeting or any adjournment thereof.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | | Date
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | Signature (Joint Owners) | | Date | | | | | | |
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting of Stockholders to be held May 23, 2019: The Notice and Proxy Statement is available at www.proxyvote.com. YOUR VOTE IS IMPORTANT. PLEASE VOTE THE SHARES AS SOON AS POSSIBLE. Bring this top portion and valid government issued photo identification with you to attend the Special Meeting of Stockholders. Please check the proxy materials for additional requirements for meeting attendance. IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, q DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — E77093-S84754 | | | | | | | DOWDUPONT INC. Special Meeting of Stockholders May 23, 2019, 9:00 AM ET 974 Centre Road Building 730 Wilmington, DE 19805 This Proxy is Solicited on Behalf of the Board of Directors. | | | | | The undersigned hereby appoints Edward D. Breen, Jeanmarie F. Desmond, Stacy L. Fox and Erik T. Hoover or any of them, each with power of substitution, as proxies for the Annual undersigned to vote all shares of Common Stock of said Company which the undersigned is entitled to vote at the Special Meeting of Stockholders to be held April 25, 2018:on May 23, 2019, and any adjournment or postponement thereof, as hereinafter specified and, in their discretion, upon such other matters as may properly come before the Meeting. The undersigned hereby revokes all proxies previously given.
| | | | | The NoticeSuch proxies are directed to vote as specified on the reverse side, or if no specification is made,FOR Agenda Item 1 and Proxy StatementFOR Agenda Item 2, and Annual Reportto vote in accordance with their discretion on such other matters as may properly come before the Meeting and at any adjournment or postponement of the Meeting. To vote in accordance with the DowDuPont Board of Directors’ recommendations, just sign and date on the reverse side; no voting boxes need to be checked.
NOTICE TO PARTICIPANTS IN EMPLOYEES’ SAVINGS PLANS | | | | | If you are available at www.proxyvote.com. YOUR VOTE IS IMPORTANT. PLEASE VOTE THE SHARES AS SOON AS POSSIBLE.
Bring this top portiona participant in certain employee savings plans, a trustee for the relevant employee savings plan may vote, as directed by the plan fiduciary or by an independent fiduciary selected by the plan fiduciary, all shares held in the plan for which no voting instructions are received. Other shares owned by you will be voted only if you sign and valid government issued photo identification with you toreturn a proxy card, vote by Internet or telephone, or attend the
Annual Meeting of Stockholders.
Please check the proxy materials meeting and vote by ballot. The cut-off date for additional requirementsshares held in employee savings plans is May 20, 2019. The cut-off date for meeting attendance.all other shares is May 22, 2019.
IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION,
q DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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E36911-P01246-Z71653
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| | | | | | | | | | | | | | | DOWDUPONT INC.
Annual Meeting of Stockholders
April 25, 2018, 12:00 PM CT
The Ritz-Carlton Hotel
160 E. Pearson Street
Chicago, IL 60611
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints A. M. Cutler and J. M. Fettig or any of them, each with power of substitution, as proxies for the undersigned to vote all shares of Common Stock of said Company which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on April 25, 2018, and any adjournment or postponement thereof, as hereinafter specified and, in their discretion, upon such other matters as may properly come before the Meeting. The undersigned hereby revokes all proxies previously given.
Such proxies are directed to vote as specified on the reverse side, or if no specification is made,FOR all director nominees in Agenda Item 1, FOR Agenda Items 2 and 4,ONE YEAR for Agenda Item 3, andAGAINST Stockholder Proposals5-9, and to vote in accordance with their discretion on such other matters as may properly come before the Meeting and at any adjournment or postponement of the Meeting. To vote in accordance with the DowDuPont Board of Directors’ recommendations, just sign and date on the reverse side; no voting boxes need to be checked.
NOTICE TO PARTICIPANTS IN EMPLOYEES’ SAVINGS PLANS
This card also constitutes voting instructions for participants in The Dow Chemical Company Employees’ Savings Plan and the DuPont Retirement Savings Plan (the “Plans”). Your signature on the reverse side of this form will direct the respective Trustees to vote all shares of Common Stock credited to the account at the Meeting and at any adjournment or postponement thereof. According to its Confidential Voting Policy, DowDuPont has instructed the Trustees and their agents not to disclose to the DowDuPont Board or management how individuals in the Plans have voted. Thecut-off date for voting shares held in these Plans is April 20, 2018, or, if you are voting by Internet or by phone, by 11:59 p.m., Eastern Time on April 22, 2018.
Thecut-off date for all other shares owned by you is April 24, 2018 and will be voted only if you sign and return a proxy card, vote by Internet or telephone, unless you attend the meeting and vote by ballot.
Continued and to be signed on reverse side
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