UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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

Filed by the Registrant ☑

Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

☐	Preliminary Proxy Statement

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

☑	Definitive Proxy Statement

☐	Definitive Additional Materials

☐	Soliciting Material Pursuant to §240.14a-12

ARCHER-DANIELS-MIDLAND COMPANY

 

(Name of Registrant as Specified In Its Charter)

 

 

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

Payment of Filing Fee (Check the appropriate box):

 

☑	No fee required.

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

 

 

☐	Fee paid previously with preliminary materials.

 

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

 

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 6, 2021, commencing at 8:30 A.M. Central Daylight Time. Due to ongoing concerns about the coronavirus (COVID-19), this year the annual meeting will once again 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/ADM2021. 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 6, 2021. 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, 2021;

 

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

 

(4)	To consider and act upon the Stockholder Proposal Regarding Shareholder Aggregation for Proxy Access set forth in the accompanying proxy statement; and

 

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

 

March 26, 2021

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 6, 2021: THE 2021 LETTER TO STOCKHOLDERS, PROXY STATEMENT, AND 2020 FORM 10-K ARE AVAILABLE AT www.proxyvote.com

 

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				17
DIRECTOR EVALUATIONS				18
Board, Committee, and Director Evaluations				18
INDEPENDENCE OF DIRECTORS				19
NYSE Independence				20
Bylaw Independence				20
Corporate Governance Guidelines				21
Independent Executive Sessions				21
INFORMATION CONCERNING COMMITTEES AND MEETINGS				22
Board Meetings and Attendance at Annual Meeting of Stockholders				22
Audit Committee				22
Compensation/Succession Committee				23
Nominating/Corporate Governance Committee				24
Sustainability and Corporate Responsibility Committee				24
Executive Committee				24
STOCKHOLDER OUTREACH AND ENGAGEMENT; CODE OF CONDUCT				25
Communications with Directors				25
Code of Conduct				25
DIRECTOR COMPENSATION				26
Director Compensation				26
Director Stock Ownership Guidelines				27
EXECUTIVE STOCK OWNERSHIP				28
Executive Officer Stock Ownership				28

 

ADM Proxy Statement 2021		i

Table of Contents

 

 

COMPENSATION DISCUSSION AND ANALYSIS				29
Executive Summary				30
How Executive Compensation is Determined				33
Components of Executive Compensation				34
2020 Executive Compensation Decisions				36
Peer Group				45
Benefits				46
Compensation Policies and Governance				47
Employment Agreements, Severance, and Change in Control Benefits				48
Compensation/Succession Committee Report				49
Compensation/Succession Committee Interlocks and Insider Participation				49
EXECUTIVE COMPENSATION				50
Summary Compensation Table				50
Grants of Plan-Based Awards During Fiscal Year 2020				51
Outstanding Equity Awards at Fiscal Year 2020 Year-End				53
Option Exercises and Stock Vested During Fiscal Year 2020				54
Pension Benefits				55
Qualified Retirement Plan				55
Supplemental Retirement Plan				56
Nonqualified Deferred Compensation				57
Termination of Employment and Change in Control Arrangements				58
CEO Pay Ratio				61
EQUITY COMPENSATION PLAN INFORMATION; RELATED TRANSACTIONS				62
Equity Compensation Plan Information at December  31, 2020				62
Review and Approval of Certain Relationships and Related Transactions				62
Certain Relationships and Related Transactions				62
REPORT OF THE AUDIT COMMITTEE				63
PROPOSAL NO. 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM				65
Fees Paid to Independent Auditors				65
Audit Committee Pre-Approval Policies				65
PROPOSAL NO. 3 — ADVISORY VOTE ON EXECUTIVE COMPENSATION				66
PROPOSAL NO. 4 — STOCKHOLDER PROPOSAL REGARDING SHAREHOLDER AGGREGATION FOR PROXY ACCESS				67
SUBMISSION OF STOCKHOLDER PROPOSALS AND OTHER MATTERS				69
Stockholders with the Same Address				69
Other Matters				69
ANNEX A: DEFINITION AND RECONCILIATION OF NON-GAAP MEASURES				A-1

 

ii		ADM Proxy Statement 2021

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 2020 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 2021		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.				11 of 12 of our director nominees 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 policies prohibiting directors and officers from trading in derivative securities of our company and from pledging 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 stockholder or group of up to 20 stockholders that 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 2021

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		65
Proposal No. 3 — Advisory Vote on Executive Compensation		FOR		66
Proposal No. 4 — Stockholder Proposal Regarding Shareholder Aggregation for Proxy Access		AGAINST		67

 

 

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 Prior CEO

Non-U.S. Business

Risk Management

M&A

Government/ Public Policy

Agriculture, Food, or Retail Consumer Business

Corporate Governance

Sustainability/ Environmental

Operations, Supply Chain, or Logistics

M. S. Burke

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T. Colbert

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T. K. Crews

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P. Dufour

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D. E. Felsinger

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S. F. Harrison

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J. R. Luciano

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P. J. Moore

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F. J. Sanchez

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D. A. Sandler

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L. Z. Schlitz

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K. R. Westbrook

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ADM Proxy Statement 2021		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.

 

 

 

4		ADM Proxy Statement 2021

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 ongoing concerns about the coronavirus (COVID-19), the meeting will once again 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 2020 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 26, 2021.

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 $15,000 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 15, 2021, are the only people entitled to notice of the annual meeting and to vote at the meeting. At the close of business on March 15, 2021, we had 558,500,563 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. 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/ADM2021, 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 nominee receiving a majority of votes cast will be elected (the number of shares voted “for” a director nominee must exceed the

 

ADM Proxy Statement 2021		5

General Information About the Annual Meeting and Voting

Principal Holders of Voting Securities

 

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
The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355		52,451,107(1)		9.39
State Farm Mutual Automobile Insurance Company and related entities One State Farm Plaza, Bloomington, IL 61710		51,460,463(2)		9.21
BlackRock, Inc. 55 East 52nd Street, New York, NY 10055		37,675,225(3)		6.75
State Street Corporation One Lincoln Street, Boston, MA 02111		31,852,864 (4)		5.70

(1) Based on a Schedule 13G/A filed with the SEC on February 10, 2021, The Vanguard Group has sole dispositive power with respect to 50,012,908 shares, shared voting power with respect to 897,820 shares, and shared dispositive power with respect to 2,438,199 shares.

(2) Based on a Schedule 13G/A filed with the SEC on February 9, 2021, 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 245,850 shares.

(3) Based on a Schedule 13G/A filed with the SEC on January 29, 2021, BlackRock, Inc. has sole voting power with respect to 32,316,377 shares and sole dispositive power with respect to 37,675,225 shares.

(4) Based on a Schedule 13G filed with the SEC on February 5, 2021, State Street Corporation has shared voting power with respect to 28,771,783 shares and shared dispositive power with respect to 31,816,235 shares.

 

6		ADM Proxy Statement 2021

Proposal No. 1

 

 

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

The Board of Directors currently consists of eleven members. The Board of Directors, acting on the recommendation of the Nominating/Corporate Governance Committee, has nominated each of the current directors for re-election at the annual meeting, and has also nominated a new nominee for election at the annual meeting. The new nominee for election is Theodore Colbert. Mr. Colbert was identified by the Nominating/Corporate Governance Committee as a potential nominee following his referral by one of our current independent directors, and was recommended by the Nominating/Corporate Governance Committee after it completed its interview and vetting process. Unless you provide different directions, we intend for board-solicited proxies (like this one) to be voted for the nominees named below.

The Board of Directors, acting on the recommendation of the Nominating/Governance Committee, has approved an increase in the size of the Board of Directors from eleven members to twelve members, to be effective as of the election of directors at the annual meeting. Proxies cannot be voted for a greater number of persons than twelve, which is the number of nominees named in this proxy statement.

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 that 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 15, 2021, 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 twelve nominees named below as directors. Proxies solicited by the Board will be so voted unless stockholders specify a different choice.

 

ADM Proxy Statement 2021		7

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

Director Nominees

 

DIRECTOR NOMINEES

 

 

 

8		ADM Proxy Statement 2021

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

Director Nominees

 

 

 

ADM Proxy Statement 2021		9

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

Director Nominees

 

 

 

10		ADM Proxy Statement 2021

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

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

 

 

 

ADM Proxy Statement 2021		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 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, continue to 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 prior 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:

(1) 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;

(2) coordinates the activities of the other independent directors and serves as liaison between the Chairman and the independent directors;

(3) 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;

(4) 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;

(5) advises the Nominating/Corporate Governance Committee on the selection of members of the board committees;

(6) advises the board committees on the selection of committee chairs;

(7) works with the Chairman and Chief Executive Officer to propose a schedule of major discussion items for the Board;

(8) guides the Board’s governance processes;

(9) 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;

(10) has the authority to call meetings of the independent directors;

(11) if requested by major stockholders, ensures that he or she is available for consultation and direct communication;

(12) 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;

(13) works with the Chair of the Compensation/Succession Committee to guide the Board’s discussion of management succession plans;

 

12		ADM Proxy Statement 2021

Board Leadership and Oversight

Board Role in Risk Oversight

 

(14) 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;

(15) works with the Chair and members of the Sustainability and Corporate Responsibility Committee to set sustainability and corporate responsibility objectives; and

(16) 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.

 

 

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 other personnel that represent 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 the company’s objectives, goals, strategies, and activities relating to sustainability and corporate responsibility matters, including workplace safety, process safety, environmental, social well-being, diversity and inclusion, corporate giving, and community relations   •  oversees the company’s compliance with sustainability and corporate responsibility laws and regulations   •  assesses the company’s performance relating to sustainability and corporate responsibility goals and industry benchmarks

 

ADM Proxy Statement 2021		13

Board Leadership and Oversight

Sustainability and Corporate Responsibility

 

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

 

 

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.

Our disclosure for sustainability topics, including climate change, follow the Taskforce on Climate-Related Financial Disclosures (TCFD) framework: Governance, Strategy, Risk Management, and Metrics & KPIs.

Governance: Our sustainability efforts are overseen by our Board of Directors, in particular a dedicated Sustainability and Corporate Responsibility Committee, and led by our Chief Sustainability Officer, who is supported by regional sustainability teams.

Strategy: In 2019, ADM assembled a Carbon Reduction Task Force to identify and assess technologies and process changes to enable meaningful Scope 1 and Scope 2 reductions. We engaged WSP Global to review the findings of the Task Force and to conduct an in-depth feasibility study to help shape an ambitious new set of goals to further reduce our environmental footprint.

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.

Our No-Deforestation program is focused on four key pillars:

 

•

Supply chain traceability

 

•

Supplier engagement

 

•

Monitoring & verification

 

•

Reporting

Risk Management: Sustainability risk management, including climate change and deforestation, is integrated into the multi-disciplinary company-wide enterprise risk management (ERM) process.

Each quarter, the ERM Sustainability subgroup reviews the risk matrix. Previously identified risks are discussed to ensure proper focus and time is spent discussing and assessing emerging risks. The risk matrix includes quantitative review of impact, mitigation, and residual risk as well as qualitative information about risk categories, warning periods, mitigation strategies and effectiveness.

 

14		ADM Proxy Statement 2021

Board Leadership and Oversight

Sustainability and Corporate Responsibility

 

Various risk types are included in the analysis including current and emerging regulation, technology, legal, market, reputation, acute physical and chronic physical risks.

 

		Relevance & inclusion		Explanation
Current regulation		Relevant, sometimes included		Risks associated with current regulation have typically already been assessed and mitigated where possible. Current regulation risks are relevant when assessing facility expansions or acquisitions, or when assessing new product streams. For example, as more entities establish carbon taxes or trading schemes, we must analyze the applicability to our facilities and assess the financial risks.
Emerging regulation		Relevant, always included		Emerging regulation, such as carbon taxes or emissions limitations, could have a direct impact on our operations, and are therefore relevant and always included in our assessments.
Technology		Relevant, always included		As technology changes, demand for existing products could be affected or more efficient processing techniques may be discovered. Technology also represents a significant mitigation strategy - for example, digital satellite monitoring is evolving and making it easier to detect deforestation to ensure we do not source from farmers violating our policies. Emerging technology is always relevant and included in risk assessments.
Legal		Relevant, always included		Legal impacts pose a relevant risk to the company and are always assessed. For example, palm from Indonesia/Malaysia and soy from Brazil are at risk of being sourced from growers who are in violation of labor laws or deforestation regulations.
Market		Relevant, always included		Market demand has a direct effect on production as well as directing sustainable sourcing initiatives. Staying informed on market changes is a necessary part of risk assessment and always included.
Reputation		Relevant, always included		Reputational damage could pose a risk to the company. For example, deforestation linked to our supply chain could cause brand or company reputation damage. Monitoring our reputation, as well as the reputations of suppliers, competitors, and customers is an important and relevant part of our risk assessments and always included.
Acute physical		Relevant, always included		Acute physical risks, such as droughts, cyclones, floods, and fires pose risks and are always included in our risk assessments.
Chronic physical		Relevant, sometimes included		Chronic physical risks, such as the shifting of growing zones, are included in our risk assessments; however, because these tend to be longer-term risks, they are not always assessed quarterly.

Risk 1: Direct Operations – Acute physical risk, increased severity and frequency of extreme weather events such as cyclones and floods could lead to increased direct costs in the short term.

The Company’s operations rely on dependable and efficient transportation services, the disruption of which could result in difficulties supplying materials to the Company’s facilities and impairment of the Company’s ability to deliver products to its customers in a timely manner. The Company relies on access to navigable rivers and waterways in order to fulfill its transportation obligations more effectively. Any major lack of available water for use in certain of the Company’s processing operations could have a material adverse impact on operating results.

The availability and prices of the agricultural commodities and agricultural commodity products the Company procures, transports, stores, processes, and merchandises can be affected by climate change, weather conditions, disease, government programs, competition, and various other factors beyond the Company’s control and could adversely affect the Company’s operating results. Reduced supply of agricultural commodities could adversely affect the Company’s profitability by increasing the cost of raw materials and/or limiting the Company’s ability to procure, transport, store, process, and merchandise agricultural commodities in an efficient manner.

Risk 2: Upstream supply chain - Acute physical risk, increased severity and frequency of extreme weather events such as cyclones and floods could lead to increased sourcing costs in the short term. A reduction in agricultural commodities would directly impact ADM’s ability to produce goods which would directly affect sales and revenue. The ERM team estimates a potential financial risk of $10-70M based on increased price of commodities, increased transportation costs, loss in revenue if facilities are unable to acquire enough raw material to operate.

The availability and prices of agricultural commodities are subject to wide fluctuations, including impacts from factors outside the Company’s control such as changes in weather and climate. Reduced supply of agricultural commodities could adversely affect the Company’s profitability by increasing the cost of raw materials and/or limiting the Company’s ability to procure, transport, store, process, and merchandise agricultural commodities in an efficient manner.

 

ADM Proxy Statement 2021		15

Board Leadership and Oversight

Sustainability and Corporate Responsibility

 

Risk 3: Direct operations – Emerging regulation and carbon pricing mechanisms could result in increased operational costs in the short to medium term. Financial implications are dependent upon the environmental regulations but vary from increased operating costs (additional monitoring and testing requirements) to capital costs (equipment upgrades/installation). A carbon tax could also potentially increase direct costs.

The Company’s business could be affected in the future by additional global, regional, national, and local regulation, pricing of greenhouse gas emissions or other climate change legislation, regulation or agreements. It is difficult at this time to estimate the likelihood of passage, or predict the potential impact, of any additional legislation, regulations or agreements. Potential consequences of new obligations could include increased energy, transportation, raw material, and administrative costs, and may require the Company to make additional investments in its facilities and equipment.

After a carbon reduction feasibility study, ADM has set a new, ambitious GHG reduction target. As we reduce absolute emissions, the total potential cost of a carbon tax or trading scheme goes down.

Opportunity 1: Direct operations – Development and expansion of low emissions goods and services could lead to increased revenues resulting from increased demand for products and services. As various renewable fuel standards are implemented around the world, ADM has an opportunity to capitalize through the production and sale of ethanol and biodiesel.

ADM’s strategy to realize this opportunity is to remain active in trade associations and in public policy activities related to renewable fuels standards. The cost of this strategy is included in day-to-day business operational costs.

Opportunity 2: Direct operations – Development of new products or services through R&D and innovations could lead to increased revenues through access to new and emerging markets. More businesses and consumers are looking to renewable products.

The Company is continuing to invest in research to develop a broad range of sustainable materials with an objective to produce key intermediate materials that serve as a platform for producing a variety of sustainable packaging products. Conversion technologies include utilizing expertise in both fermentation and catalysis.

Metrics & KPIs:

We have aligned our sustainability efforts with the United Nations 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.

Below are highlights of some of our activities that support our commitment to these SDGs, as well as some of our other company goals, metrics, and KPIs.

After meeting our 15x20 environmental goals ahead of schedule, and based on the results of a carbon reduction feasibility study, we have announced an ambitious new set of goals we call Strive35 to further reduce our environmental footprint.

 

 

16		ADM Proxy Statement 2021

Board Leadership and Oversight

Board Role in Overseeing Political Activities

 

We disclose key performance indicators aligned with the Global Reporting Initiative (GRI) Framework. Below are key metrics from calendar years 2018 and 2019.

 

GRI 305-1, 305-2, 305-5		Year Ended December 31
GHG Emissions, million metric tons*				2018			2019
Global Scope 1 GHG Emissions				14.52			14.80
Global Scope 2 GHG Emissions				2.84			3.01
GHG Intensity Reduction over 2010 baseline				15.1	%		15.1%

 

GRI 303-1		Year Ended December 31
Water Withdrawal (locations >100,000 m3/year) in million m3*		2018					2019
Groundwater		42.2					43.1
Municipal		41.5					41.1
Rain		1.1					0.9
Surface		31.0					31.0

 

GRI 302-1		Year Ended December 31
Energy consumption within the organization in million MWh*		2018					2019
Total non-renewable fuel consumption		57.3					59.9
Total renewable fuel consumption		5.2					4.7

* Data provided in these tables have been assessed by a third-party which has issued limited assurance statements.

 

 

Board Role in Overseeing Political Activities

 

 

ADM Proxy Statement 2021		17

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.

 

 

 

18		ADM Proxy Statement 2021

Independence of Directors

 

 

Independence of Directors

The Board of Directors has reviewed business, familial, 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, and that Mr. Colbert, the director nominee, is also independent. Mr. Luciano is not independent under the NYSE or bylaw standards because of his employment with us.

In determining that each director and nominee is independent (other than Mr. Luciano), the Board reviewed the following transactions, relationships, or arrangements. The Board of Directors determined that any amounts or relationships involved in all of the following matters fall below applicable thresholds or outside the NYSE or bylaw independence standards, that none of the directors or nominee had a direct or material interest in the matters described below, and that such matters do not impair the independence of any director or nominee.

 

Name		Matters Considered
M. Burke		Ordinary course business with AECOM (sales to ADM of certain services on an arm’s length basis).
T. Crews		Ordinary course business with WestRock Company (purchases from ADM of various products and sales to ADM of various products, all on an arm’s length basis).   Ordinary course business with Hormel Foods Corporation (purchases from ADM of various products and sales to ADM of various products, all on an arm’s length basis).
P. Dufour		Ordinary course business with Air Liquide Group (sales to ADM of certain products on an arm’s length basis).
D. Felsinger		Stepson-in-law is employed by ADM as Director, New Product Development, which is not an executive officer or senior management position, at a compensation level and on terms determined on a basis consistent with the Company’s policies for non-executive officers.
S. Harrison		Ordinary course business with WestRock Company (purchases from ADM of various products and sales to ADM of various products, all on an arm’s length basis).
D. Sandler		Ordinary course business with Pharmavite (purchases from ADM of certain products on an arm’s length basis).   Ordinary course business with Keurig Dr Pepper Inc. (purchases from ADM of certain products on an arm’s length basis).
L. Schlitz		Ordinary course business with Illinois Tool Works Inc. (sales to ADM of certain equipment and services on an arm’s length basis).
K. Westbrook		Ordinary course business with Mosaic Company (sales to ADM of certain products and purchases from ADM of certain services, all on an arm’s length basis).   Ordinary course business with T-Mobile US, Inc. (sales to ADM of various products and purchases from ADM of certain products, all on an arm’s length basis).

 

ADM Proxy Statement 2021		19

Independence of Directors

Independence of Directors

 

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 stockholder, 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.

 

20		ADM Proxy Statement 2021

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 chair 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 2020.

 

ADM Proxy Statement 2021		21

Information Concerning Committees and Meetings

 

 

Board Meetings and Attendance at Annual Meetings of Stockholders

During the last fiscal year, the Board of Directors held eight 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 7, 2020, virtually attended that meeting.

 

 

Information Concerning Committees and Meetings

The Board’s standing committees for the year ended December 31, 2020, 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

 

22		ADM Proxy Statement 2021

Information Concerning Committees and Meetings

Information Concerning Committees and Meetings

 

Compensation/Succession Committee

 

ADM Proxy Statement 2021		23

Information Concerning Committees and Meetings

Information Concerning Committees and Meetings

 

Nominating/Corporate Governance Committee

 

Sustainability and Corporate Responsibility Committee

 

Executive Committee

 

24		ADM Proxy Statement 2021

Stockholder Outreach and Engagement; Code of Conduct

 

 

Stockholder Outreach and Engagement

As part of our commitment to effective corporate governance practices, in 2020-21 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 2021		25

Director Compensation

 

 

Director Compensation

For fiscal year 2020, our standard compensation for non-employee directors consists of an annual retainer in the amount of $300,000. With respect to the $300,000 annual retainer, $175,000 must be paid in stock units pursuant to our Stock Unit Plan for Non-Employee Directors. The remaining portion of the annual retainer may be paid in cash, stock units, or a combination of both, at the election of each non-employee director. Each stock unit is deemed for valuation and bookkeeping purposes to be the equivalent of a share of our common stock. In addition to the annual retainer, our Lead Director received a stipend in the amount of $30,000, the Chair of the Audit Committee received a stipend in the amount of $25,000, the Chair of the Compensation/Succession Committee received a stipend in the amount of $20,000, the Chair of the Nominating/Corporate Governance Committee received a stipend in the amount of $15,000, and the Chair of the Sustainability and Corporate Responsibility Committee received a stipend in the amount of $10,000. All such stipends were paid in cash in 2020, but will be paid in stock units in 2021. We do not pay fees for attendance at board and committee meetings. Directors are reimbursed for out-of-pocket traveling expenses incurred in attending board and committee meetings. Directors may also be provided with certain perquisites from time to time.

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

The following table summarizes compensation provided to each non-employee director for services provided during fiscal year 2020.

 

Name		Fees Earned or           Paid in Cash           ($)(1)		Stock       Awards ($)(2)		All Other         Compensation          ($)(3)		Total ($)
M. S. BURKE		125,000		175,000		—		300,000
T. K. CREWS		150,000		175,000		—		325,000
P. DUFOUR		125,000		175,000		—		300,000
D. E. FELSINGER		30,000		300,000		—		330,000
S. F. HARRISON		135,000		175,000		—		310,000
P. J. MOORE		140,000		175,000		5,000		320,000
F. J. SANCHEZ		125,000		175,000		—		300,000
D. A. SANDLER		125,000		175,000		—		300,000
L. Z. SCHLITZ		125,000		175,000		—		300,000
K. R. WESTBROOK		145,000		175,000				320,000

 

26		ADM Proxy Statement 2021

Director Compensation

Director Stock Ownership Guidelines

 

 

 

Director Stock Ownership Guidelines

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

We prohibit directors from hedging or pledging company securities.

 

ADM Proxy Statement 2021		27

Executive Stock Ownership

 

 

Executive Officer Stock Ownership

The following table shows the number of shares of our common stock beneficially owned as of March 15, 2021, 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		3,001,703(2)		1,758,700		*
R. G. YOUNG		1,376,319(3)		901,641		*
V. F. MACCIOCCHI		294,102		93,110		*
G. A. MORRIS		334,127(4)		117,839		*
J. D. TAETS		499,405(5)		261,154		*

* Less than 1% of outstanding shares

(1) Includes for each named executive officer stock options exercisable within 60 days and the following:

 

		Unvested RSUs		RSUs that vest within 60 days
J. R. Luciano		483,994		0
R. G. Young		164,367		0
V. F. Macciocchi		110,956		0
G. A. Morris		110,956		0
J. D. Taets		104,927		0

(2) Includes 758,771 shares held in trust, 238 shares held by a family-owned limited liability company.

(3) Includes 4,430 shares held in our Dividend Reinvestment Plan.

(4) Includes 635 shares held in the 401(k) and ESOP.

(5) Includes 962 shares held in the 401(k) and ESOP.

Common stock beneficially owned as of March 15, 2021, by all directors, director nominees, and executive officers as a group, numbering 20 persons including those listed above, is 7,132,019 shares representing 1.3% of the outstanding shares, of which 334,732 shares represent stock units allocated under our Stock Unit Plan for Nonemployee Directors, 4,659 shares are held in the 401(k) and ESOP, 4,430 shares are held in our Dividend Reinvestment Plan, 3,784,269 shares are unissued but are subject to stock options exercisable within 60 days, and no shares are subject to pledge.

 

28		ADM Proxy Statement 2021

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 2021)
Juan R. Luciano		Chairman, Chief Executive Officer and President		9 years, 11 mos.
Ray G. Young		Executive Vice President and Chief Financial Officer		10 years, 4 mos.
Vincent F. Macciocchi		Senior Vice President and President, Nutrition, and Chief Sales and Marketing Officer		8 years, 9 mos.*
Greg A. Morris		Senior Vice President and President, Agricultural Services and Oilseeds		26 years, 2 mos.
Joseph D. Taets		Senior Vice President and President, Global Business Readiness and Procurement		32 years, 10 mos.

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

Table of Contents

 

Section		Page
Executive Summary		30
How Executive Compensation is Determined		33
Components of Executive Compensation		34
2020 Executive Compensation Decisions		36
Peer Group		45
Benefits		46
Compensation Policies and Governance		47
Employment Agreements, Severance, and Change in Control Benefits		48

 

ADM Proxy Statement 2021		29

Compensation Discussion and Analysis

Executive Summary

 

 

Executive Summary

 

 

¹ Revenue on a constant currency basis (revenue adjusted for the impact of fluctuations in foreign currency exchange rates), adjusted earnings per share (earnings per share, adjusted to exclude the impact of certain items), 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 2019, the Compensation/Succession Committee chose to recognize $27 million in Adjusted EBITDA due to our anticipated collection of reimbursement for our losses caused by a third party shipping accident at our Reserve, Louisiana facility. While we expected to collect this reimbursement in 2020 and deduct this amount from any calculation performed in connection with our 2020 annual cash incentive, the collection did not occur in 2020. We expect to collect this reimbursement in 2021. This amount will be deducted from any calculation performed in connection with the 2021 annual cash incentive awards so as not to double-count the effects of such adjustment.

 

30		ADM Proxy Statement 2021

Compensation Discussion and Analysis

Executive Summary

 

 

The charts below present the mix of total target direct compensation awarded to the NEOs in 2020.

 

 

 

ADM Proxy Statement 2021		31

Compensation Discussion and Analysis

Executive Summary

 

EXECUTIVE COMPENSATION BEST PRACTICES

We annually evaluate all elements of NEO pay to ensure alignment with performance objectives, market best practices and stockholder interests. In addition, ADM’s lead director, our CEO, and other members of management annually engage with the company’s largest institutional stockholders to receive their feedback on the structure and performance focus of our executive compensation programs. 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 and periodically adjusted based on market competitiveness and internal equity.
✓  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 and structured to balance accountability for driving annual results with sustainable long-term performance.		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 requirements, and they may not sell any company securities until these guidelines are satisfied.		X No hedging: We prohibit executives from engaging in hedging transactions with ADM securities.
✓  Compensation-related risk review: The Compensation/Succession Committee regularly reviews compensation-related risks, with the assistance of independent consultants, to confirm that any such risks are not likely to have a material adverse effect on the company.		X No gross up of excise tax payments: We do not assist executives with taxes owed as a result of their compensation.
✓  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 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 chartered aircraft.
✓  Regular review of proxy advisor policies, stockholder feedback 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 pledging: We prohibit executives from pledging ADM securities.
✓  Performance-based equity awards: Half of the NEOs’ annual LTI award opportunity is delivered in PSUs that may be earned only if the company achieves prescribed financial goals over a prospective three-year measurement period.		X No employment contracts: We do not have an employment contract with any executive officer.
✓  Double-trigger requirement: Equity awards do not automatically vest in the event of a change in control. Instead, we impose a “double-trigger” requirement to accelerate vesting.
✓  Peer group: We use the S&P 100 Industrials as a peer group to recognize that ADM has no direct competitor (in terms of size or focus) in the U.S. public markets and we recruit talent from a wide spectrum of organizations and industries.

 

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Compensation Discussion and Analysis

How Executive Compensation is Determined

 

 

 

How Executive Compensation is Determined

 

 

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Compensation Discussion and Analysis

Components of Executive Compensation

 

 

 

Components of Executive Compensation

 

 

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Compensation Discussion and Analysis

Components of Executive Compensation

 

Components of Executive Compensation

 

		Element and Form				Link to Stockholder Value		Key Characteristics
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
ANNUAL INCENTIVE AWARDS		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, Nutrition Adjusted Operating Profit Growth, Capital Efficiency, Portfolio Optimization, 1ADM Performance, Readiness Performance
LONG-TERM     INCENTIVE   AWARDS		Long-Term		Restricted Stock Units (“RSUs”) 50%		Align NEOs’ interests with stockholders’ interests, retain executive talent, and promote stock ownership		RSUs are granted pursuant to the company’s long-term equity plan and cliff vest on the third anniversary of the grant date
				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 average Adjusted ROIC, average Nutrition Adjusted Operating Profit Growth, and relative total stockholder return (TSR)

 

 

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Compensation Discussion and Analysis

2020 Executive Compensation Decisions

 

 

2020 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 2020. 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 due to the valuation methodology the Compensation/Succession Committee uses in making its decisions differing from the valuation methodology required by the SEC for the compensation tables.

 

MR. LUCIANO Chairman, CEO and President
		Base salary		Unchanged at $1,400,004
		Target annual cash incentive		200% of base salary, or $2,800,000
		Actual annual cash incentive		$4,507,300 or approximately 322% of base salary
		Long-term incentives		$15,000,000, 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, customer experience, and operational excellence.   •   Delivered strong financial results in the face of extraordinary challenges, all while maintaining a safe working environment with strong business continuity.   •   Advanced our Corporate Responsibility and Sustainability efforts, including the launch of Strive 35, an ambitious plan to reduce greenhouse gas emissions, energy, water, and waste by 2035.

 

MR. YOUNG Executive Vice President and CFO
		Base salary		Unchanged at $850,008
		Target annual cash incentive		132% of base salary, or $1,125,000
		Actual annual cash incentive		$1,754,719 or approximately 206% of base salary
		Long-term incentives		$5,500,000, divided equally between PSUs and RSUs
Significant accomplishments:   •   Drove enterprise earnings algorithm and performance reviews to help deliver strong financial results.   •   Fortified liquidity and balance sheet in environment of credit market disruptions in the first half of the year and rising commodity prices in the back half of the year.   •   Managed controllable corporate costs effectively, including reductions in net interest expense and subsidiary capital structure net funding costs.   •   Exceeded the targets for Corporate Enterprise and G&A Readiness workstreams, and helped advance key enabling Readiness projects that improve business processes.

 

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Compensation Discussion and Analysis

2020 Executive Compensation Decisions

 

MR. MACCIOCCHI Senior Vice President, President, Nutrition, and Chief Sales and Marketing Officer
		Base salary		Unchanged at $675,000
		Target annual cash incentive		100% of base salary, or $675,000
		Actual annual cash incentive		$1,086,581 or approximately 161% of base salary
		Long-term incentives		$4,000,000, divided equally between PSUs and RSUs
Significant accomplishments:   •   Grew full-year Nutrition operating profits by 37% over 2019, while growing Nutrition revenue 5 percent on a constant currency basis2 and continuing to expand EBITDA margins.   •   Exceeded synergy targets related to our Neovia acquisition and delivered them ahead of schedule.   •   Continued to harvest recent investments to deliver accretion and returns, to lead in consumer growth trend areas, and to partner with customers to bring innovative new products and solutions to market in 2020.   •   Enhanced our specialty protein capabilities with the launch of PlantPlus Foods joint venture.

 

MR. MORRIS Senior Vice President and President, Agricultural Services and Oilseeds
		Base salary		Unchanged at $675,000
		Target annual cash incentive		100% of base salary, or $675,000
		Actual annual cash incentive		$1,086,581 or approximately 161% of base salary
		Long-term incentives		$4,000,000, divided equally between PSUs and RSUs
Significant accomplishments:   •   Achieved highest operating profit for the new combined segment in 12 years, second best ever recorded in ADM history.   •   Achieved record volumes of Oilseeds processed.   •   Delivered exceptional risk management in a year of significant market volatility.   •   Advanced progress in strategic initiatives including Precision EVA, which delivered more than $300 million in capital reduction benefits.

 

MR. TAETS Senior Vice President and President, Global Business Readiness and Procurement
		Base salary		Unchanged at $700,008
		Target annual cash incentive		100% of base salary, or $700,000
		Actual annual cash incentive		$1,091,825 or approximately 156% of base salary
		Long-term incentives		$3,650,000, divided equally between PSUs and RSUs
Significant accomplishments:   •   Continued to drive company’s Readiness transformation, spearheading cost, improvement and enabling projects.   •   Surpassed our 2020 Readiness stretch goal of more than $1.3 billion of net run rate benefits.   •   Continued global realignment and centralization of Procurement function, leading the group to its best overall savings results.   •   As executive Quality Champion, drove strategy and actions that resulted in overall global quality improvements.

 

² Revenue on a constant currency basis is a financial measure that has not been calculated in accordance with generally accepted accounting principles (“GAAP”). Annex A to this Proxy Statement offers a more detailed definition of this term, a reconciliation to the most directly comparable GAAP financial measure, and related disclosure about the use of this non-GAAP financial measure.

 

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Compensation Discussion and Analysis

2020 Executive Compensation Decisions

 

CHANGES TO 2020 INCENTIVE COMPENSATION PLANS

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 to significantly grow the Nutrition segment of our business. Other changes were made to simplify our incentive plans.

Changes to the 2020 annual cash incentive bonus included eliminating the separate calculation for bonus pool funding and providing that the company portion of the payout is based on results for adjusted EBITDA, five strategic goals, and adjusted ROIC. Payout opportunities mirror the past three years with slightly lower rewards for strategic goals.

Changes to the 2020 PSU awards included increasing the adjusted ROIC metric to 50%, introducing a new 50% metric of adjusted operating profit growth in the Nutrition segment, and using relative TSR modifier as a +/- 10%.

The Committee may consider the effects of a global pandemic and other economic and environmental pressures negatively impacting results.

2020 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 performance (25% weight).

COMPANY PERFORMANCE COMPONENTS

Company performance payout is determined by ADM’s adjusted EBITDA, our results on a set of strategic initiatives, and our adjusted return on invested capital (ROIC).³

Adjusted EBITDA

As a threshold matter, adjusted EBITDA must exceed $2.0 billion for payout to occur. If adjusted EBITDA for 2020 had been less than $2.0 billion, ADM would not have paid any annual incentives to the NEOs. If adjusted EBITDA for 2020 had been between $2.0 billion and $3.013 billion, the Compensation/Succession Committee would have had discretion to determine whether any payouts under the annual incentive plan would occur, and if so, the amounts of such payouts.

If adjusted EBITDA for 2020 was above $3.013 billion, then an initial payout opportunity amount would be determined based on actual adjusted EBITDA results. The adjusted EBITDA goals and associated payout opportunity levels are shown below. Payout opportunity levels are interpolated for results that fall between specific goal amounts.

 

Adjusted EBITDA Achieved		Payout Opportunity
$4.078B & Above (+15% Above Plan)		200%
$3.901B (+10% Above Plan)		165%
$3.723B (+5% Above Plan)		130%
$3.546B (Plan Adjusted EBITDA)		100%
$3.369B (-5% Below Plan)		75%
$3.191B (-10% Below Plan)		55%
$3.014B (-15% Below Plan)		40%

 

³ 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.

 

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Compensation Discussion and Analysis

2020 Executive Compensation Decisions

 

Strategic Initiatives

Under the company performance component of our 2020 annual cash incentive program, the initial payout amount determined by actual adjusted EBITDA results as described above could be adjusted upward based on the company’s achievements of five equally-weighted strategic goals, each adding 7% to the initial payout amount if achieved:

Nutrition Adjusted Operating Profit Growth. ADM must realize an increase of 20% in year-on-year adjusted operating profit of the Nutrition reporting segment.

Capital Efficiency. ADM must unlock $300 million of capital through monetization.

Portfolio Optimization. 50% of this goal is focused on achieving Neovia business synergies of €50 million and the other 50% of this goal is focused on the successful sale or spin-off of our ethanol dry mills.

1ADM. ADM must achieve successful deployment of four applications.

Readiness. Readiness, which is a program that helps drive continuous improvement in our company particularly in execution, must achieve its bankable plan of $1.8 billion of gross benefits.

Adjusted ROIC Multiplier

ROIC measures how effectively we are using invested capital.

As the last step in the company performance payout component of our 2020 annual cash incentive program, actual adjusted ROIC for 2020 is compared against the 7.0% adjusted ROIC target that was set for 2020, which represents the Company’s long term weighted average cost of capital. The result of that comparison leads to a multiplier of +/- 10%. In essence, the multiplier boosts the payout potential in years that our adjusted ROIC exceeds our target, and reduces the payout potential if adjusted ROIC falls below target expectations.

The adjusted ROIC multiplier is determined as follows:

 

Adjusted ROIC Achieved		Multiplier*					Effect of multiplier on payout
8.0%		1.1					10% increase
7.0% (Target)		1.0					No change
6.0%		.9					10% decrease

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

2020 Company Performance Payout Component Calculation

The committee did not exercise its discretion to adjust any of the company performance results for the impacts of the COVID-19 pandemic. For 2020, ADM attained the results shown below, leading to a company performance payout of 161.3% of target.

Our 2020 Adjusted EBITDA of $3.660 billion represented 119.3% of our goal.

 

 

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Compensation Discussion and Analysis

2020 Executive Compensation Decisions

 

In addition, 31.5% was added to the company performance portion of the payout as a result of the achievement of the strategic goals at the following levels:

 

1.	Achieving a >20% year-over-year increase in Nutrition adjusted operating profit. (+7%)

 

2.	Unlocking more than $300 million of capital. (+7%)

 

3.

Capturing more than €50 million in Neovia business synergies. (+3.5%). The other 50% of this goal involved monetizing of our ethanol dry mills as part of our portfolio optimization efforts through the sale or spin-off of our ethanol dry mills. As this effort was not completed in 2020, the remaining +3.5% potential credit for this goal was not achieved.

 

4.	Deploying four 1ADM applications during the calendar year. (+7%)

 

5.	Surpassing our Readiness bankable plan of $1.8 billion in gross run-rate benefits. (+7%)

Further, Adjusted ROIC for 2020 was 7.7%, resulting in a multiplier of 1.07.

 

 

 

Total company portion of annual cash bonus payout:

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%. For any NEO, however, 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 in 2020, 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		40%
Mr. Young		35%
Mr. Macciocchi		40%
Mr. Morris		40%
Mr. Taets		35%

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.

 

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Compensation Discussion and Analysis

2020 Executive Compensation Decisions

 

CALCULATION OF AWARD AMOUNTS

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

 

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 FY2020 Cash Award
J. R. Luciano		200%					$2,800,000					160.975%					$4,507,300
R. G. Young		132%					$1,125,000					155.975%					$1,754,719
V. F. Macciocchi		100%					$675,000					160.975%					$1,086,581
G. A. Morris		100%					$675,000					160.975%					$1,086,581
J. D. Taets		100%					$700,000					155.975%					$1,091,825

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 motivating retention of our senior executives. Our performance-based LTI awards are based on the results of forward-looking metrics measured over a three-year performance period. In 2020, we divided LTI awards equally between performance share units (PSUs) and restricted stock units (RSUs) with three-year cliff 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 stockholders.

The February 2020 grants in the target amounts approved by the Compensation/Succession Committee are shown below. The 2020 grants reflect the Compensation/Succession Committee’s decision to provide a one-time increase in the target award amounts for retention purposes, which will be re-evaluated each year.    

 

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Compensation Discussion and Analysis

2020 Executive Compensation Decisions

 

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 due to the valuation methodology the Compensation/Succession Committee uses in making its decisions differing from the valuation methodology required by the SEC for the compensation tables.

 

Executive		Target Equity Award
J. R. Luciano		$15,000,000
R. G. Young		$5,500,000
V. F. Macciocchi		$4,000,000
G. A. Morris		$4,000,000
J. D. Taets		$3,650,000

The terms of these equity awards are described below.

PSU VESTING

The 2020 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 (2020–2022). 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.

PSU PERFORMANCE METRICS

The performance metrics for the 2020 PSU awards are:

 

•

Average adjusted ROIC over the three-year performance period,4

 

•

Average Nutrition adjusted Operating Profit (“OP”) Growth over the three-year performance period, and

 

•

Relative TSR as compared to a defined peer group over the three-year performance period.

ROIC appears as a metric in both our short- and long-term incentive compensation plans, but it serves different purposes and has different weights in the two plans. One-year adjusted ROIC in our annual cash incentive plan demonstrates our short-term performance, while three-year average adjusted ROIC in the PSU award better reflects long-term results with an emphasis on growth and consistent return of our capital investments over time.

The defined peer group against which TSR is compared is more focused for the 2020 PSU awards than it was in prior years. This more focused peer group includes: Symrise AG, International Flavors & Fragrances, Inc., Olam International Limited, Bunge Limited, Ingredion Incorporated, The Andersons, Inc., and Green Plains Inc.

 

⁴ “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.

 

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Compensation Discussion and Analysis

2020 Executive Compensation Decisions

 

The goals and associated payouts for these metrics are shown below. If results for average adjusted ROIC and average Nutrition adjusted OP Growth fall between specific goals, the associated payout will be determined by linear interpolation.

 

Performance metric

Weighting

No payout

50% payout

100% payout

150% payout

175% payout

200% payout

Average Adjusted ROIC

50%

Below 5.75%

6.5%

7.0%

7.5%

8.0%

9.0% or above

Average Nutrition Adjusted OP Growth

50%

Below 6% Growth

8% Growth

10% Growth

15% Growth

n/a

20% Growth

Relative TSR Modifier

+/- 10%

Based on ranking that compares ADM’s 3-year TSR against defined peer group   1st Rank – 1.1 Modifier 2nd Rank – 1.067 Modifier 3rd Rank – 1.033 Modifier 4th & 5th Rank – 1.0 Modifier 6th Rank – 0.967 Modifier 7th Rank – 0.933 Modifier 8th Rank – 0.9 Modifier

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. Absolute negative stock price will cap the modifier at 1.0, which equals to no change in payout.

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.

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 and the executive’s PSUs will vest immediately at the target level. 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 2018 WITH A PERFORMANCE PERIOD THAT ENDED IN 2020

In 2018, ADM granted PSUs to our then-NEOs with a three-year performance period (2018-2020). The 2018 PSUs provided that if our cumulative adjusted EBITDA for the performance period was less than $7.0 billion, no PSUs would be earned or vest. ADM’s cumulative adjusted EBITDA for 2018-2020 was $10.680 billion, and therefore, the threshold requirement was met.

The performance metrics for the 2018 PSU awards were:

 

•

Relative TSR performance as compared to the companies in the S&P 100 Industrials Index over the three-year performance period,

 

•

Average adjusted ROIC over the three-year performance period, and

 

•

Cumulative adjusted EBITDA over the three-year performance period.

 

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Compensation Discussion and Analysis

2020 Executive Compensation Decisions

 

The weighting, goals, and associated payout factors for these metrics are shown below. For average adjusted ROIC and cumulative adjusted EBITDA, if results were to fall between specific goals, the associated payout would be determined by linear interpolation.

 

Performance metric

Weighting

No payout

50% payout

75% payout

100% payout

150% payout

175% payout

200% payout

Relative TSR

25%

Below 30th percentile

30th percentile

Between 30th percentile and median

Median

Between median and top quartile

n/a

Top quartile

Adjusted ROIC

25%

Below 6.5%

6.5%

n/a

7.0%

7.5%

8.0%

8.5% and above

Adjusted EBITDA

50%

Below $8.0 billion

$8.0 billion

n/a

$9.45 billion

$9.925 billion

n/a

$10.5 billion

On February 3, 2021, the Compensation/Succession Committee determined the degree to which the performance metrics under the 2018 PSUs were attained, and the resulting payout level relative to the target amount for each metric. For the performance period of 2018-2020:

 

•

Relative TSR was at the 62nd percentile, falling between median and top quartile, and therefore the resulting payout factor relative to the target amount for that metric was 150%,

 

•

Average adjusted ROIC was 7.7%, and therefore the resulting payout factor was 160%, and

 

•

Cumulative adjusted EBITDA was $10.680 billion, and therefore the resulting payout factor relative to the target amount for that metric was 200%.5

The weightings applicable to each of the metrics were then applied to the percentage payout level for each metric, resulting in a weighted payout percentage of 177.5% of the target number of PSUs. Based on these determinations, the Compensation/Succession Committee approved the following number of PSUs earned for each NEO pursuant to the 2018 PSUs:

 

Executive		Target Number     of 2018 PSUs		Actual Number of   2018 PSUs   Earned
J. R. Luciano		152,440		270,581
R. G. Young		51,449		91,322
V. F. Macciocchi		33,029		58,627
G. A. Morris		35,570		63,137
J. D. Taets		35,570		63,137

All of the earned PSUs shown in the table above vested on February 15, 2021.

 

⁵ 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.

 

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