UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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

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Filed by a Party other than the Registrant ☐

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☐	Preliminary Proxy Statement

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☑	Definitive Proxy Statement

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☐	Soliciting Material Pursuant to §240.14a-12

ARCHER-DANIELS-MIDLAND COMPANY

 

(Name of Registrant as Specified In Its Charter)

 

 

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

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

 

ARCHER-DANIELS-MIDLAND COMPANY

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

 

 

NOTICE OF ANNUAL MEETING

 

To All Stockholders:

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

 

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

 

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

 

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

 

(4)	To approve the 2020 Incentive Compensation Plan; and

 

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

 

March 25, 2020

 

 

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 7, 2020: THE 2020 LETTER TO STOCKHOLDERS, PROXY STATEMENT, AND 2019 FORM 10-K ARE AVAILABLE AT https://www.proxy-direct.com/MeetingDocuments/31175/ARCHER-DANIELS-MIDLAND.pdf

 

 

Table of Contents

 

PROXY SUMMARY				1
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING				5
PROPOSAL NO. 1 — ELECTION OF DIRECTORS FOR A ONE-YEAR TERM				7
Director Nominees				8
Director Experiences, Qualifications, Attributes, and Skills; Board Diversity				11
Director Nominations from Stockholders				11
BOARD LEADERSHIP AND OVERSIGHT				12
Board Leadership Structure				12
Board Role in Risk Oversight				13
Sustainability and Corporate Responsibility				14
Board Role in Overseeing Political Activities				15
DIRECTOR EVALUATIONS				16
Board, Committee, and Director Evaluations				16
INDEPENDENCE OF DIRECTORS				17
NYSE Independence				18
Bylaw Independence				18
Corporate Governance Guidelines				19
Independent Executive Sessions				19
INFORMATION CONCERNING COMMITTEES AND MEETINGS				20
Board Meetings and Attendance at Annual Meeting of Stockholders				20
Audit Committee				20
Compensation/Succession Committee				21
Nominating/Corporate Governance Committee				22
Sustainability and Corporate Responsibility Committee				22
Executive Committee				22
STOCKHOLDER OUTREACH AND ENGAGEMENT; CODE OF CONDUCT				23
Communications with Directors				23
Code of Conduct				23
EXECUTIVE STOCK OWNERSHIP				24
Executive Officer Stock Ownership				24
COMPENSATION DISCUSSION AND ANALYSIS				25
Executive Summary				26
How Executive Compensation is Determined				29
Components of Executive Compensation				30
2019 Executive Compensation Decisions				32
Peer Group				39
Changes to Incentive Compensation Plans Beginning in 2020				40
Benefits				40
Compensation Policies and Governance				41
Employment Agreements, Severance, and Change in Control Benefits				42
Compensation/Succession Committee Report				43
Compensation/Succession Committee Interlocks and Insider Participation				43

 

ADM Proxy Statement 2020		i

Table of Contents

 

 

EXECUTIVE COMPENSATION				44
Summary Compensation Table				44
Grants of Plan-Based Awards During Fiscal Year 2019				45
Outstanding Equity Awards at Fiscal Year 2019 Year-End				47
Option Exercises and Stock Vested During Fiscal Year 2019				48
Pension Benefits				49
Qualified Retirement Plan				49
Supplemental Retirement Plan				50
Nonqualified Deferred Compensation				51
Termination of Employment and Change in Control Arrangements				52
CEO Pay Ratio				55
DIRECTOR COMPENSATION				56
Director Compensation				56
Director Stock Ownership Guidelines				57
EQUITY COMPENSATION PLAN INFORMATION; RELATED TRANSACTIONS				58
Equity Compensation Plan Information at December  31, 2019				58
Review and Approval of Certain Relationships and Related Transactions				58
Certain Relationships and Related Transactions				59
REPORT OF THE AUDIT COMMITTEE				60
PROPOSAL NO. 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM				62
Fees Paid to Independent Auditors				62
Audit Committee Pre-Approval Policies				62
PROPOSAL NO. 3 — ADVISORY VOTE ON EXECUTIVE COMPENSATION				63
PROPOSAL NO. 4 — APPROVAL OF THE 2020 INCENTIVE COMPENSATION PLAN				64
SUBMISSION OF STOCKHOLDER PROPOSALS AND OTHER MATTERS				72
Stockholders with the Same Address				72
Other Matters				72
ANNEX A: DEFINITION AND RECONCILIATION OF NON-GAAP MEASURES				A-1
ANNEX B: ADM INCENTIVE COMPENSATION PLAN				B-1

 

 

ii		ADM Proxy Statement 2020

PROXY SUMMARY

 

 

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

 

 

 

ADM Proxy Statement 2020		1

Proxy Summary

Governance Highlights

 

 

Governance Highlights

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

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

 

We use majority voting for uncontested director elections.				10 of our 11 current directors are independent and only independent directors serve on the Audit, Compensation/ Succession, Nominating/Corporate Governance, and Sustainability and Corporate Responsibility Committees.
We have an independent Lead Director, selected by the independent directors. The Lead Director provides the Board with independent leadership, facilitates the Board’s independence from management, and has broad powers as described on page 12.				Our independent directors meet in executive session at each regular in-person board meeting.
We have a policy prohibiting directors and officers from trading in derivative securities of our company, and no NEOs or directors have pledged any company stock.				Significant stock ownership requirements are in place for directors and executive officers.
The Board and each standing committee annually conduct evaluations of their performance. Directors annually evaluate each other, and these evaluations are used to assess future re-nominations to the Board.				Individuals cannot stand for election as a director once they reach age 75, and our Corporate Governance Guidelines set limits on the number of public company boards on which a director can serve.
Holders of 10% or more of our common stock have the ability to call a special meeting of stockholders.				Our bylaws include a “proxy access” provision under which a small group of stockholders who has owned at least 3% of our common stock for at least 3 years may submit nominees for up to 20% of the board seats for inclusion in our proxy statement.

 

2		ADM Proxy Statement 2020

Proxy Summary

Voting Matters and Board Recommendations

 

 

Voting Matters and Board Recommendations

 

Proposal		Board Voting     Recommendation		Page         Reference
Proposal No. 1 — Election of Directors		FOR		7
Proposal No. 2 — Ratification of Appointment of Independent Registered Public Accounting Firm		FOR		62
Proposal No. 3 — Advisory Vote on Executive Compensation		FOR		63
Proposal No. 4 — Approval of the 2020 Incentive Compensation Plan		FOR		64

 

 

Director Nominee Qualifications and Experience

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

 

Current or Recent CEO

Non-U.S. Business

Risk Management

M&A

Government/ Public Policy

Agriculture, Food, or Retail Consumer Business

Corporate Governance

Sustainability/ Environmental

Michael S. Burke

🌑

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🌑

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Terrell K. Crews

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Pierre Dufour

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Donald E. Felsinger

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🌑

🌑

🌑

🌑

🌑

🌑

Suzan F. Harrison

🌑

🌑

🌑

🌑

Juan R. Luciano

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🌑

🌑

🌑

🌑

🌑

🌑

Patrick J. Moore

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🌑

🌑

🌑

🌑

🌑

🌑

Francisco J. Sanchez

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🌑

🌑

Debra A. Sandler

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🌑

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Lei Z. Schlitz

🌑

🌑

🌑

Kelvin R. Westbrook

🌑

🌑

🌑

🌑

🌑

🌑

 

ADM Proxy Statement 2020		3

Proxy Summary

Director Nominee Diversity, Age, Tenure, and Independence

 

 

Director Nominee Diversity, Age, Tenure, and Independence

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

 

 

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

 

4		ADM Proxy Statement 2020

General Information About the Annual Meeting and Voting

 

 

Proxy Statement

GENERAL MATTERS

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

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

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

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

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

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

 

(1)	delivering written notice of revocation to our Secretary;

 

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

 

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

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

 

ADM Proxy Statement 2020		5

General Information About the Annual Meeting and Voting

Principal Holders of Voting Securities

 

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

 

 

Principal Holders of Voting Securities

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

 

Name and Address of Beneficial Owner		Amount		Percent  Of Class
State Farm Mutual Automobile Insurance Company and related entities One State Farm Plaza, Bloomington, IL 61710		51,455,676(1)		9.23
The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355		44,946,621(2)		8.06
BlackRock, Inc. 55 East 52nd Street, New York, NY 10055		38,454,597(3)		6.90
Corporation One Lincoln Street, Boston, MA 02111		37,082,871 (4)		6.66

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

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

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

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

 

6		ADM Proxy Statement 2020

Proposal No. 1

 

 

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

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

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

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

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

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

 

ADM Proxy Statement 2020		7

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

Director Nominees

 

DIRECTOR NOMINEES

 

 

 

8		ADM Proxy Statement 2020

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

Director Nominees

 

 

 

ADM Proxy Statement 2020		9

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

Director Nominees

 

 

 

10		ADM Proxy Statement 2020

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

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

 

 

 

 

ADM Proxy Statement 2020		11

Board Leadership and Oversight

 

 

Board Leadership Structure

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

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

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

 

12		ADM Proxy Statement 2020

Board Leadership and Oversight

Board Role in Risk Oversight

 

 

Board Role in Risk Oversight

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

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

 

BOARD OF DIRECTORS

Audit Committee   •  assists the Board in fulfilling its oversight responsibility to the stockholders relating to the company’s major risk exposures   •  oversees the company’s enterprise risk management process   •  regularly discusses the steps management has taken to monitor and control risk exposure   •  regularly reports to the Board regarding significant matters identified

Nominating/Corporate Governance Committee   •  assigns oversight of specific areas of risk to other committees   •  recommends director nominees who it believes will capably assess and monitor risk

Compensation/ Succession Committee   •  assesses potential risks associated with compensation decisions   •  engages an independent outside consultant every other year to review the company’s compensation programs and evaluate the risks in such programs; the consultant attends all committee meetings to advise the committee

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

 

SENIOR MANAGEMENT

Enterprise Risk Management Committee

•  ensures implementation and maintenance of a process to identify, evaluate, and prioritize risks to our company’s objectives   •  ensures congruence of risk decisions with our company’s values, policies, procedures, measurements, and incentives or disincentives   •  supports the integration of risk assessment and controls into mainstream business processes, planning, and decision-making

•  identifies roles and responsibilities across our company in regard to risk assessment and control functions   •  promotes consistency and standardization in risk identification, reporting, and controls across our company   •  ensures sufficient information capabilities and information flow to support risk identification and controls and alignment of technology assets

•  regularly evaluates the overall design and operation of the risk assessment and control process, including development of relevant metrics and indicators   •  reports regularly to senior management and the Board regarding the above-described processes and the most significant risks to our company’s objectives

 

ADM Proxy Statement 2020		13

Board Leadership and Oversight

Sustainability and Corporate Responsibility

 

 

Sustainability and Corporate Responsibility

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

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

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

 

SUSTAINABILITY HIGHLIGHTS
Climate Action		Clean Water and Sanitation
•  We address climate change through three main pathways:   •  renewable product and process innovations, such as our carbon sequestration project in Decatur, Illinois,   •  supply chain commitments, such as our Commitment to No-Deforestation, and   •  a strategic approach to operational excellence which emphasizes enhancing the efficiency of our production plants throughout our global operations, including through a centralized energy management team that enables us to identify and share successful programs across business or geographic regions.   •  See the charts below illustrating our progress toward our greenhouse gas emissions and energy intensity goals:		•  We aim to conserve water and improve water quality through:   •  supply chain projects specifically focusing on water conservation and improving water quality,   •  water-reduction efforts and efficiency improvement projects in our own operations, which have resulted in a reduction of 2.6 billion gallons of water per year, and   •  the Ceres and World Wildlife Fund AgWater Challenge, through which we have set measurable, time-bound commitments to mitigate water risks, reduce water impacts associated with key commodities, and provide support and education to growers about water stewardship practices.   •  See the chart below illustrating our progress toward our water-reduction goals:

 

14		ADM Proxy Statement 2020

Board Leadership and Oversight

Board Role in Overseeing Political Activities

 

Zero Hunger		Life On Land
•  We support the UN efforts to eliminate world hunger by connecting the harvest to the home:   •  with a vast and diverse global value chain that includes approximately 480 crop procurement locations, approximately 350 ingredient manufacturing facilities, approximately 55 innovation centers, and the world’s premier crop transportation network,   •  through our corporate social investment program, ADM Cares, which supports food security and hunger relief projects globally,   •  through sustainable sourcing, certification and sustainable agriculture programs across the globe, and   •  in 2019, through an ADM Cares grant, we committed $1M to help create and implement an 18-month program to fight hunger for 50,000 people in Ethiopia and Kenya with a focus on women and children.		•  We are a responsible steward to our natural resources:   •  In 2015, we committed to no deforestation, no planting on peat, and no exploitation (No DPE) in our palm and South American soy supply chains through our Commitment to No-Deforestation.   •  In Brazil, we remain committed to the Amazon Soy Moratorium, and in the Brazilian Cerrado, we have digitally mapped 100% of our direct supply chain in the 25 municipalities at the greatest risk for land conversion.   •  We report our progress with respect to our No DPE efforts to the public at www.adm.com/progresstracker.   •  Over 800,000 acres of our supply chain is involved in sustainable agriculture initiatives.   •  In Illinois, ADM supported the S.T.A.R. program for growers which tripled its enrollment goal in 2019.   •  We require all ADM colleagues and suppliers to comply with ADM’s Human Rights Policy.   •  In 2019, we completed a human rights risk assessment for our global commodity supply chains.
For more information, please review our Corporate Sustainability Report, found at www.adm.com/sustainability.

 

 

Board Role in Overseeing Political Activities

 

 

ADM Proxy Statement 2020		15

Director Evaluations

 

 

Board, Committee, and Director Evaluations

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

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

 

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

 

16		ADM Proxy Statement 2020

Independence of Directors

 

 

Independence of Directors

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

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

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

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

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

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

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

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

 

ADM Proxy Statement 2020		17

Independence of Directors

Independence of Directors

 

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

 

NYSE Independence

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

 

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

 

2.

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

 

3.

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

 

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

 

5.

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

 

Bylaw Independence

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

 

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

 

2.	is not employed by one of our professional services providers;

 

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

 

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

 

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

 

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

 

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

 

18		ADM Proxy Statement 2020

Independence of Directors

Corporate Governance Guidelines

 

 

Corporate Governance Guidelines

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

 

 

Independent Executive Sessions

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

 

ADM Proxy Statement 2020		19

Information Concerning Committees and Meetings

 

 

Board Meetings and Attendance at Annual Meetings of Stockholders

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

 

 

Information Concerning Committees and Meetings

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

 

Audit Committee

 

20		ADM Proxy Statement 2020

Information Concerning Committees and Meetings

Information Concerning Committees and Meetings

 

 

Compensation/Succession Committee

 

ADM Proxy Statement 2020		21

Information Concerning Committees and Meetings

Information Concerning Committees and Meetings

 

Nominating/Corporate Governance Committee

 

Sustainability and Corporate Responsibility Committee

 

Executive Committee

 

22		ADM Proxy Statement 2020

Stockholder Outreach and Engagement; Code of Conduct

 

 

Stockholder Outreach and Engagement

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

COMMUNICATIONS WITH DIRECTORS

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

CODE OF CONDUCT

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

 

ADM Proxy Statement 2020		23

Executive Stock Ownership

 

 

Executive Officer Stock Ownership

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

 

Executive		Common Stock Beneficially Owned(1)		Options Exercisable Within 60 Days		Percent of Class
J. R. LUCIANO		2,777,280(2)		1,766,494		*
R. G. YOUNG		1,312,542(3)		912,636		*
V. F. MACCIOCCHI		226,920		74,488		*
G. A. MORRIS		315,246(4)		130,299		*
J. D. TAETS		540,601(5)		319,113		*

* Less than 1% of outstanding shares

(1) Includes for each director the following:

 

		Unvested RSUs					RSUs that vest within 60 days
J. R. Luciano		490,092					0
R. G. Young		171,913					0
V. F. Macciocchi		114,716					0
G. A. Morris		117,257					0
J. D. Taets		113,179					0

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

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

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

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

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

 

24		ADM Proxy Statement 2020

Compensation Discussion and Analysis

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

 

Name		Title		Time with ADM (as of March 2020)
Juan R. Luciano		Chairman, Chief Executive Officer and President		8 years, 11 mos.
Ray G. Young		Executive Vice President and Chief Financial Officer		9 years, 4 mos.
Vincent F. Macciocchi		Senior Vice President, President, Nutrition, and Chief Sales and Marketing Officer		7 years, 9 mos.*
Greg A. Morris		Senior Vice President and President, Ag Services and Oilseeds		25 years, 2 mos.
Joseph D. Taets		Senior Vice President and President, Global Business Readiness and Global Procurement		31 years, 10 mos.

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

Table of Contents

 

Section		Page
Executive Summary		26
How Executive Compensation is Determined		29
Components of Executive Compensation		30
2019 Executive Compensation Decisions		32
Peer Group		39
Changes to Incentive Compensation Plans Beginning in 2020		40
Benefits		40
Compensation Policies and Governance		41
Employment Agreements, Severance, and Change in Control Benefits		42

 

ADM Proxy Statement 2020		25

Compensation Discussion and Analysis

Executive Summary

 

 

Executive Summary

 

 

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

 

26		ADM Proxy Statement 2020

Compensation Discussion and Analysis

Executive Summary

 

 

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

 

 

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

 

ADM Proxy Statement 2020		27

Compensation Discussion and Analysis

Executive Summary

 

EXECUTIVE COMPENSATION BEST PRACTICES

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

 

What We Do		What We Don’t Do
✓  Pay-for-performance: We tie compensation to performance by setting clear and challenging company financial goals and individual goals and having a majority of target total direct compensation consist of performance-based components.		X No guaranteed base salary increases: Base salary levels are reviewed every year, but there is no expectation of annual increases.
✓  Multiple performance metrics: Payouts of our annual cash incentives and long-term incentives are determined based on the weighted results for several financial performance measures over both the short and the long term to dissuade executives from focusing on particular metrics and disregarding others.		X No dividends paid on unvested performance awards: We do not pay dividends or credit dividend-equivalents on unvested performance-based awards.
✓  Aggressive stock ownership and retention requirements: Our NEOs and directors must comply with rigorous stock ownership and retention requirements, and they may not sell any company securities until those guidelines are satisfied.		X No hedging: We prohibit NEOs from engaging in hedging transactions with ADM securities.
✓  Compensation-related risk review: The Compensation/Succession Committee regularly reviews compensation-related risks, often with the assistance of independent consultants, to confirm that any such risks are not reasonably likely to have a material adverse effect on the company.		X No stock options: We have not granted stock options since 2016 and do not intend to resume granting them.
✓  Clawback policy: The company has a policy to enable us to recover previously paid cash and equity-based incentive compensation from executives in the event of a financial restatement, ethical misconduct, or other specified circumstances.		X No gross up of excise tax payments: We do not assist executives with taxes owed as a result of their compensation.
✓  Use of independent compensation consultants: The Compensation/Succession Committee retains two independent compensation consulting firms — one for customary compensation advice and one for assistance with a risk assessment — that perform no other consulting services for the company and have no conflicts of interest.		X No excessive executive perks: With the exception of certain benefits provided under our expatriate program, executive perquisites are restricted to executive physicals, company-provided life insurance, and (for the Chairman and CEO) limited personal use of company aircraft.
✓  Regular review of proxy advisor policies and corporate governance best practices: The Compensation/Succession Committee regularly considers the perspectives of outside authorities as they relate to our executive compensation programs.		X No excessive pledging: We prohibit executives from pledging company securities if they have not met stock ownership guidelines, and then we require advance approval of any pledging transaction from our General Counsel.
✓  Performance-based equity awards: Half of the NEOs’ annual LTI award opportunity is delivered in PSUs that may be earned only if the company achieves prescribed financial goals over a prospective three-year measurement period.		X No employment contracts: We do not have an employment contract with any executive officer.
✓  Double trigger requirement: Equity awards do not automatically vest in the event of a change in control. Instead, we impose a “double trigger” requirement to accelerate vesting.
✓  Peer group: We use the S&P 100 Industrials as a peer group to recognize that ADM has no direct competitor (in terms of size or focus) in the U.S. public markets and we recruit talent from a wide spectrum of organizations and industries.

 

28		ADM Proxy Statement 2020

Compensation Discussion and Analysis

How Executive Compensation is Determined

 

 

 

How Executive Compensation is Determined

 

 

ADM Proxy Statement 2020		29

Compensation Discussion and Analysis

Components of Executive Compensation

 

 

 

Components of Executive Compensation

 

 

30		ADM Proxy Statement 2020

Compensation Discussion and Analysis

Components of Executive Compensation

 

Components of Executive Compensation

 

		Pay Element				Objective		Performance Rewarded
FIXED		Annual		Base Salary		Recognize an individual’s role and responsibilities		Reviewed annually and set based on competitiveness versus the external market, individual performance, and internal equity
VARIABLE OR   PERFORMANCE   BASED		Annual		Annual Cash Incentive		Achieve annual goals measured in terms of financial, strategic, and individual performance linked to creation of stockholder value		Adjusted EBITDA, Adjusted ROIC, Individual Performance Factor, Accretion in Growth Investments, Improvements in Targeted Businesses, Readiness Performance
		Long-Term		Restricted Stock Units (“RSUs”) 50%		Align NEOs’ interests with stockholders’ interests and retain executive talent		Achievement of key drivers of stockholder value as evidenced in our share price
				Performance Share Units (“PSUs”) 50%		Align long-term performance with interests of stockholders and retain executive talent		Achievement of key drivers of company performance and stockholder value as evidenced by cumulative Adjusted EBITDA, average Adjusted ROIC, and relative total shareholder return (TSR)

 

 

ADM Proxy Statement 2020		31

Compensation Discussion and Analysis

2019 Executive Compensation Decisions

 

 

2019 Executive Compensation Decisions

INDIVIDUAL COMPENSATION DECISIONS

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

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

 

MR. LUCIANO Chairman and CEO
		Base salary		Increased from $1,300,008 to $1,400,004
		Target annual cash incentive		200% of base salary, or $2,800,000
		Actual annual cash incentive		$2,898,000, or 207% of base salary
		Long-term incentives		$13,000,000, divided equally between PSUs and RSUs
Significant accomplishments:   •   Executed key elements of our strategy, including Readiness efforts focused on continued process improvements across the organization, including significant progress with 1ADM.   •   Optimized the organizational structure to drive effectiveness and customer experience.   •   Drove continued transformation of the business portfolio by executing key M&A plans while divesting non-strategic assets.   •   Continued year-over-year safety improvements and advanced our Corporate Responsibility and Sustainability efforts, including advancement against our Diversity and Inclusion goals.

 

MR. YOUNG Executive Vice President and CFO
		Base salary		Increased from $825,048 to $850,008
		Target annual cash incentive		132% of base salary, or $1,125,000
		Actual annual cash incentive		$1,164,375, or approximately 137% of base salary
		Long-term incentives		$4,500,000, divided equally between PSUs and RSUs
Significant accomplishments:   •   Executed balanced capital allocation framework, which included funding significant acquisitions closed in 2019, while maintaining a solid balance sheet.   •   Implemented strong cost controls on corporate staff with continued advancement on centralization, simplification and process improvements initiatives, including 1ADM.   •   Led the corporate/enterprise workstream in Readiness, exceeding the targeted benefits.   •   Executive champion of targeted business improvements and supported enterprise intervention actions to help mitigate headwinds experienced in the year.

 

32		ADM Proxy Statement 2020

Compensation Discussion and Analysis

2019 Executive Compensation Decisions

 

MR. MACCIOCCHI Senior Vice President, President, Nutrition, and Chief Sales and Marketing Officer
		Base salary		Increased from $640,008 to $675,000
		Target annual cash incentive		100% of base salary, or $675,000
		Actual annual cash incentive		$664,875, or 98.5% of base salary
		Long-term incentives		$2,800,000, divided equally between PSUs and RSUs
Significant accomplishments:   •   Achieved 50% revenue growth and 23% adjusted operating profit growth, demonstrating our unparalleled value proposition to our customers; built a robust pipeline for future customer wins.   •   Closed on Neovia, creating a global animal nutrition business; integration completed and synergy opportunities ahead of schedule.   •   Expanded our production footprint with the opening of two animal nutrition centers in Decatur, IL and in Hoa Mac, Vietnam; also expanded our Beijing, China flavor facility.   •   Enhanced our capabilities with two citrus company acquisitions, Florida Chemical Company and Ziegler; signed a deal to acquire Yerbalitina, a leader in botanical extracts; expanded our position in plant-based proteins with a partnership with Marfrig, a Brazilian leader in protein; and commissioned ADM’s new pea protein facility.

 

MR. MORRIS Senior Vice President and President, Agricultural Services and Oilseeds
		Base salary		Increased from $650,004 to $675,000
		Target annual cash incentive		100% of base salary, or $675,000
		Actual annual cash incentive		$664,875, or 98.5% of base salary
		Long-term incentives		$2,800,000, divided equally between PSUs and RSUs
Significant accomplishments:   •   Consolidated the Origination business unit and Oilseeds business unit to create Ag Services and Oilseeds to drive synergy opportunities, and implemented harmonized risk management approach on the combined businesses.   •   Continued to simplify our business model and drive ROIC by deploying technology tools focused on margin expansion, expanding services to our suppliers and customers, extending our destination marketing capabilities and driving capital reduction of $300 million by monetizing non-core assets.   •   Achieved record level performance in Refined Products and Other, including biodiesel and Golden Peanut and Tree Nut.   •   Drove our Diversity and Inclusion goals.

 

MR. TAETS Senior Vice President and President, Global Business Readiness and Global Procurement
		Base salary		Unchanged at $700,008
		Target annual cash incentive		100% of base salary, or $700,000
		Actual annual cash incentive		$794,500, or 113.5% of base salary
		Long-term incentives		$2,800,000, divided equally between PSUs and RSUs
Significant accomplishments:   •   Spearheaded our Readiness program and delivered $250 million in accrued net benefits from 435 completed projects; trained 31,000 employees on Ability to Execute.   •   Achieved significant progress towards attaining our 2020 Readiness goal of $1.2 billion of run rate benefits.   •   Globalized and centralized global procurement to drive cost savings and efficiency in the organization.   •   Established and implemented strong processes for services procurement, travel & entertainment procurement and capital equipment procurement, allowing for significant savings in 2019 and beyond.

 

ADM Proxy Statement 2020		33

Compensation Discussion and Analysis

2019 Executive Compensation Decisions

 

2019 ANNUAL CASH INCENTIVES

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

COMPANY PERFORMANCE COMPONENTS AND BONUS POOL FUNDING

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

Adjusted EBITDA

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

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

 

Surplus Adjusted EBITDA (Adjusted EBITDA less $1.4 billion)		Percentage of Surplus Adjusted EBITDA to fund the bonus pool
$3.1B & Above		3.5%
$2.9B - $3.09B		3.1%
$2.7B - $2.89B		2.6%
$2.5B - $2.69B		2.3%
$2.3B - $2.49B		1.8%
$2.1B - $2.29B		1.5%
$1.91B - $2.09B		1.1%

Strategic Initiatives

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

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

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

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

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

 

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

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

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

 

34		ADM Proxy Statement 2020

Compensation Discussion and Analysis

2019 Executive Compensation Decisions

 

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

 

Strategic goal

Level 3

Extra funding

Level 2

Extra funding

Level 1

Extra funding

Harvest Growth Investments (operating profit)

$70 million

0.15%

$85 million

0.3%

$100 million

0.45%

Improve (operating profit)

$70 million

0.15%

$85 million

0.3%

$100 million

0.45%

Readiness   (Gross benefits)       (each component weighted 50%)

Accrued in-year benefits: $475 million   Run-rate benefits: $790 million

0.15%

Accrued in-year benefits: $580 million   Run-rate benefits: $960 million

0.3%

Accrued in-year benefits: $682 million   Run-rate benefits: $1.13 billion

0.45%

ROIC/WACC Multiplier

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

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

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

 

ROIC		Multiplier*					Effect of multiplier on bonus pool  funding
8.75%		1.1					10% increase
6.75% (equal to Annual WACC)		1.0					No change
4.75%		.9					10% decrease

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

2019 Bonus Pool Calculation

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

Adjusted EBITDA: $3.509 billion.

Surplus Adjusted EBITDA: $2.109 billion

Initial funding percentage: 1.5%

Harvest Growth Investments: $42 million

Improvements in Targeted Businesses: $148 million

Gross Cumulative Accrued Benefits: $746 million

Gross Run-Rate Benefits: $1.26 billion

Final funding percentage: 2.4%

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

Adjusted ROIC: 7.5%

ROIC/WACC multiplier: 1.0375

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

 

ADM Proxy Statement 2020		35

Compensation Discussion and Analysis

2019 Executive Compensation Decisions

 

INDIVIDUAL PERFORMANCE COMPONENTS

Individual performance determines 25% of the annual cash bonus.

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

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

 

Mr. Luciano		30%
Mr. Young		30%
Mr. Macciocchi		25%
Mr. Morris		25%
Mr. Taets		40%

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

CALCULATION OF AWARD AMOUNTS

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

 

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

THE RESULTING ANNUAL CASH INCENTIVE FOR EACH NEO

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

 

Executive		Target Cash Incentive Opportunity (% of Salary)					Target Cash Incentive Opportunity ($)					Cash Bonus Payout Percentage					Actual FY2019 Cash Award
J. R. Luciano		200%					$2,800,000					103.5%					$2,898,000
R. G. Young		132%					$1,125,000					103.5%					$1,164,375
V. F. Macciocchi		100%					$675,000					98.5%					$664,875
G. A. Morris		100%					$675,000					98.5%					$664,875
J. D. Taets		100%					$700,000					113.5%					$794,500

 

36		ADM Proxy Statement 2020

Compensation Discussion and Analysis

2019 Executive Compensation Decisions

 

EQUITY-BASED LONG-TERM INCENTIVES 

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

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

 

Executive		Target Equity Award
J. R. Luciano		$13,000,000
R. G. Young		$4,500,000
V. F. Macciocchi		$2,800,000
G. A. Morris		$2,800,000
J. D. Taets		$2,800,000

The terms of these equity awards are described below.

PSU VESTING

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

PSU PERFORMANCE METRICS

The performance metrics for the 2019 PSU awards are:

 

•

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

 

•

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

 

•

Adjusted EBITDA for the three-year performance period.6

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

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

 

 

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

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

 

ADM Proxy Statement 2020		37

Compensation Discussion and Analysis

2019 Executive Compensation Decisions

 

Performance   metric

Weighting

No payout

50% payout

75% payout

100% payout

150% payout

175% payout

200% payout

Adjusted ROIC

25%

Below 6.5%

6.5%

n/a

7.0%

7.5%

8.0%

8.5%

Adjusted EBITDA

50%

Below $9.0 billion

$9.0 billion

n/a

$10.0 billion

$10.75 billion

n/a

$11.25 billion

Relative TSR

25%

Below 30th percentile

30th percentile

Between 30th percentile and median

Median

Between median and top quartile

n/a

Top quartile

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

RSU VESTING

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

CONDITIONS LEADING TO ACCELERATED VESTING

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

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

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

 

38		ADM Proxy Statement 2020

Compensation Discussion and Analysis

Peer Group

 

 

Peer Group

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

 

 

ADM Proxy Statement 2020		39

Compensation Discussion and Analysis

Changes to Incentive Compensation Plans Beginning in 2020

 

 

Changes to Incentive Compensation Plans Beginning in 2020

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

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

 

 

Benefits

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

 

Retirement Program		Eligibility		Description
401(k) and ESOP		All salaried employees		Qualified defined contribution plan where employees may defer up to 75% of eligible pay, or up to $19,000 for 2019. The company provides a 1% non-elective employer contribution and a match of 4% on the first 6% contributed by an employee. The employee contribution can be made pre-tax (401(k)) or after-tax (Roth 401(k)). Employees also may defer traditional after-tax contributions into the plan for a total $55,750 savings opportunity including all contribution types (pre-tax, Roth, and after tax) plus any ADM matching and 1% non-elective contributions. Employees who are 50 years of age or older can elect to make additional contributions of up to $6,000 for 2019.
ADM Retirement Plan		All salaried employees		Newly-hired eligible employees and those who had less than 5 years of service as of January 1, 2009, participate in a qualified cash balance pension formula where the benefit is based on an accrual of benefit at a stated percentage of the participant’s base compensation each year. Those employees who had 5 or more years of service as of January 1, 2009, participate in a qualified traditional defined benefit formula where the benefit is based on number of years of service and final average earnings. (Final average earnings is the average of monthly compensation over a 60 consecutive month period within the employee’s last 180-month period of employment that produces the highest average.) Effective January 1, 2022, participants in the traditional defined benefit pension will begin to accrue benefits under the cash balance pension formula.
Deferred Compensation Plan		Employees with salaries above $175,000		Eligible participants may defer up to 75% of their annual base salary and up to 100% of their annual cash incentive until designated future dates. Earning credits are added to the deferred compensation account balances based upon hypothetical investment elections available under these plans and chosen by the participant. These hypothetical investment options correspond with the investment options (other than company common stock) available under the 401(k) and ESOP.
Supplemental Retirement Plan		Employees whose retirement benefit is limited by applicable IRS limits		Non-qualified deferred compensation plan that ensures participants in the Retirement Plan receive the same retirement benefit they would have received if not for certain limitations under applicable tax law.

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

 

 

40		ADM Proxy Statement 2020

Compensation Discussion and Analysis

Compensation Policies and Governance

 

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

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

 

 

Compensation Policies and Governance

EXECUTIVE STOCK OWNERSHIP

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

 

Executive		Ownership Guideline as a Multiple of Salary		Actual Ownership as of March 16, 2020
J. R. Luciano		6.0x		23.6x
R. G. Young		3.0x		15.4x
V. F. Macciocchi		3.0x		7.4x
G. A. Morris		3.0x		9.0x
J. D. Taets		3.0x		10.3x

 

 

ADM Proxy Statement 2020		41

Compensation Discussion and Analysis

Employment Agreements, Severance, and Change in Control Benefits

 

 

 

Employment Agreements, Severance, and Change in Control Benefits

 

 

42		ADM Proxy Statement 2020

Compensation Discussion and Analysis

Employment Agreements, Severance, and Change in Control Benefits

 

 

 

 

ADM Proxy Statement 2020		43

 

 

Executive Compensation

SUMMARY COMPENSATION TABLE

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

 

Name and Principal Position		Year		Salary ($)		Bonus ($)		Stock     Awards     ($)(1)		Option     Awards     ($)(2)		Non-Equity Incentive Plan  Compensation  ($)(3)		Change in Pension Value and Nonqualified Deferred  Compensation  Earnings ($)(4)		All Other  Compensation  ($)(5)		Total ($)
J. R. LUCIANO Chairman, CEO and President		2019		1,383,338		—		13,641,916		—		2,898,000		93,298		123,869		18,140,421
		2018		1,300,008		—		13,204,353		—		5,020,600		33,918		78,655		19,637,534
		2017		1,300,008		—		12,166,416		—		2,251,600		76,179		80,852		15,875,055
R. G. YOUNG Executive Vice President and CFO		2019		845,848		—		4,722,182		—		1,164,375		61,783		30,879		6,825,067
		2018		825,048				4,456,512		—		2,172,375		19,233		24,204		7,497,372
		2017		825,048		—		4,153,349		—		921,856		53,260		25,454		5,978,967
V. F. MACCIOCCHI Senior Vice President,		2019		669,168		—		2,938,269		—		664,875		29,335		23,071		4,324,718
President, Nutrition, and Chief Sales and Marketing Officer(6)
G. A. MORRIS Senior Vice President and President, Ag Services and Oilseeds		2019		670,834		—		2,938,269		—		664,875		818,206		26,145		5,118,329
		2018		650,004		—		3,081,073		—		1,255,150		27,574		21,082		5,034,883
		2017		650,004		—		2,327,537		—		530,400		393,998		21,132		3,923,071
J. D. TAETS Senior Vice President and President, Global Business Readiness and Global Procurement		2019		701,804		—		2,938,269		—		794,500		857,911		23,478		5,315,962
		2018		700,008		—		3,081,073		—		1,351,700		(194,918)		1,654,244		6,592,107
		2017		700,008		—		2,962,263		—		571,200		561,951		27,743		4,823,165

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

 

				PSUs
Name		RSUs		Target		Maximum
J. R. Luciano		$6,907,299		$6,734,617		$13,469,233
R. G. Young		$2,390,978		$2,331,204		$4,662,408
V. F. Macciocchi		$1,487,731		$1,450,538		$2,901,076
G. A. Morris		$1,487,731		$1,450,538		$2,901,076
J. D. Taets		$1,487,731		$1,450,538		$2,901,076

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

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

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

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

 

44		ADM Proxy Statement 2020