PROXY STATEMENT
About the Annual Meeting
Who is soliciting my vote?
The Supervisory Board of Directors is soliciting your vote at the 2014 Annual General Meeting of LyondellBasell Industries
shareholders.
How does the Board recommend that I vote my shares?
The Supervisory Board recommends voting FOR all of the items presented in this proxy statement.
Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the Supervisory Board of Directors.
Why are these matters being submitted for voting?
In accordance with Dutch law and the rules and regulations of the New York Stock Exchange (the NYSE) and the U.S. Securities and Exchange Commission (the SEC), we are required to
submit certain items for the approval of our shareholders. Under Dutch law, several matters that are within the authority of the directors under most U.S. state corporate laws require shareholder approval. Additionally, Dutch governance provisions
require certain discussion topics for annual general meetings of shareholders that are not voted on.
The adoption of our annual accounts, the
discharge from liability of members of our Management and Supervisory Boards, the appointment of PwC to audit our Dutch annual accounts, the approval of dividends, the authorization to repurchase shares and to cancel treasury shares all are items
that we are required to submit to shareholders by reason of our being incorporated under Dutch law.
Who is entitled to vote?
You may vote if you are the record owner of LyondellBasell ordinary shares as of the close of business on March 19, 2014. Each
ordinary share is entitled to one vote. As of March 3, 2014, we had 542,974,679 ordinary shares outstanding and entitled to vote.
How many votes must be present to hold the meeting?
Your shares are counted as present at the Annual Meeting if you attend the meeting and vote in person or if you properly return a proxy by Internet, telephone or mail. There are no quorum requirements
under Dutch law. As a result, we may hold our meeting regardless of the number of shares that are present in person or by proxy at the meeting.
How many votes are needed to approve each of the proposals?
Each of the director nominees and all proposals submitted require a majority of the votes cast to vote FOR the proposal in order to be approved.
How do I vote?
You can vote either
in person
at the meeting or
by proxy
without attending the meeting.
To vote by proxy, you must do one of the following:
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Vote over the
Internet
(instructions are on the proxy card);
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Vote by
telephone
(instructions are on the proxy card); or
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Fill out the enclosed
proxy card
, date and sign it, and return it in the enclosed postage-paid envelope.
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If you hold your LyondellBasell shares in a brokerage account (that is, in street name), your ability to vote by telephone or over the
Internet depends on your brokers voting process. Please follow the directions on your proxy card or voter instruction form carefully.
Even if you plan to attend the meeting, we encourage you to vote your shares by proxy. If you plan to vote in person at the Annual Meeting and you hold
your LyondellBasell shares in street name, you must obtain a proxy from your broker and bring that proxy to the meeting.
Can I change
my vote?
Yes. You can change or revoke your vote at any time before the polls close at the Annual Meeting. You can do this by:
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Voting again by telephone or over the Internet prior to 12:00 p.m. Eastern Time on April 15, 2014;
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Signing another proxy card with a later date and returning it to us prior to the meeting;
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Sending us a written document revoking your earlier proxy; or
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Voting again at the meeting.
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Who counts the votes?
We have hired Broadridge Financial Solutions, Inc. to count
the votes represented by proxies and cast by ballot.
What is a broker non-vote?
If a broker does not have discretion to vote shares held in street name on a particular proposal and does not receive instructions from the beneficial
owner on how to vote those shares, the broker may return the proxy card without voting on that proposal. This is known as a
broker non-vote.
Broker non-votes will have no effect on the vote for any matter properly introduced at the meeting.
Will my shares be voted if I dont provide my proxy and dont attend the Annual Meeting?
If you do not provide a proxy or vote your shares held in your name, your shares will not be voted.
If you hold your shares in street name, your broker may be able to vote your shares for certain routine matters even if you do not provide
the broker with voting instructions. We believe that, pursuant to NYSE rules, only the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2014 is considered to be a routine matter.
If you do not give your broker instructions on how to vote your shares the broker will return the proxy card
without
voting on proposals that are
considered not routine. This is a broker non-vote. Without instructions from you, the broker may not vote on any proposals other than the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for
2014.
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How are votes counted?
For all proposals, you may vote FOR, AGAINST, or ABSTAIN. Additionally, for the election of Supervisory Directors and Managing Directors, you may WITHHOLD
your vote. Abstentions and withhold votes do not count as votes cast, and therefore will not have any effect on the outcome of matters.
What if I return my proxy but dont vote for some of the matters listed on my proxy card?
If you return a signed proxy card without indicating your vote, your shares will be voted FOR all matters for which you did not vote.
Could other matters be decided at the Annual Meeting?
We are not aware of any other matters to be presented at the meeting. If any matters are properly brought before the Annual Meeting, the persons named in your proxies will vote in accordance with their
best judgment. Discretionary authority to vote on other matters is included in the proxy.
Who can attend the meeting?
The Annual Meeting is open to all LyondellBasell shareholders. However, if you would like to attend the meeting, you must inform us in
writing of your intention of doing so prior to April 9, 2014. The notice may be emailed to investors@lyondellbasell.com. Admittance of shareholders will be governed by Dutch law.
What is the cost of this proxy solicitation?
Our Supervisory Board of Directors
has sent you this proxy statement. Our directors, officers and employees may solicit proxies by mail, by email, by telephone or in person. Those persons will receive no additional compensation for any solicitation activities. We will request banking
institutions, brokerage firms, custodians, trustees, nominees and fiduciaries to forward solicitation materials to the beneficial owners of common stock held of record by those entities, and we will, upon the request of those record holders,
reimburse reasonable forwarding expenses. We will pay the costs of preparing, printing, assembling and mailing the proxy materials used in the solicitation of proxies. We have retained Alliance Advisors, LLC to assist in the solicitation of proxies
for a fee of $14,000, plus reasonable expenses.
Why did my household receive a single set of proxy materials?
SEC rules permit us to deliver a single copy of an annual report and proxy statement to any household at which two or more shareholders reside, if we
believe the shareholders are members of the same family. This benefits both you and the Company, as it eliminates duplicate mailings that shareholders living at the same address receive and it reduces our printing and mailing costs. This rule
applies to any annual reports, proxy statements, proxy statements combined with a prospectus or information statements. Each shareholder will continue to receive a separate proxy card or voting instruction card. Your household may have received a
single set of proxy materials this year.
If you prefer to receive your own copy now or in future years, please request a duplicate set by
phone at (800) 542-1061, or by writing to Broadridge, c/o Householding Department, 51 Mercedes Way, Edgewood, NY 11717. If a broker or other nominee holds your shares, you may continue to receive some duplicate mailings. Certain brokers will
eliminate duplicate account mailings by allowing shareholders to consent to such elimination, or through implied consent if a shareholder does not request continuation of duplicate mailings. Since not all brokers and nominees may offer shareholders
the opportunity this year to eliminate duplicate mailings, you may need to contact your broker or nominee directly to discontinue duplicate mailings to your household.
3
SUPERVISORY BOARD OF DIRECTORS
Corporate Governance Matters and Communications with the Supervisory Board
The Nominating & Governance Committee and our Supervisory Board review the Companys governance structure to take into
account changes in Dutch law, SEC and NYSE rules, as well as current best practices.
Our Corporate Governance Guidelines and
our Code of Conduct are posted on the Companys Internet site under the Corporate Governance caption of the Investor Relations tab and available in print upon request. The Guidelines address the following matters, among
others: director qualifications, director responsibilities, Supervisory Board committees, director access to officers, employees and independent advisors, director compensation, Supervisory Board performance evaluations, director orientation and
continuing education, and Chief Executive Officer (CEO) evaluation and succession planning.
Our Supervisory Board is
divided into three classes, each consisting of approximately one-third of the total number of the members of the Supervisory Board. Messrs. Bindra, Carroll and van der Meer are each Class I directors, whose terms expire at the Annual Meeting. Our
Supervisory Board has nominated each of them for re-election. Additionally, in September 2013, our Supervisory Board appointed Nance K. Dicciani as a Class III director and in February 2014 appointed Claire S. Farley and Isabella (Bella)
D. Goren as Class I and Class II directors, respectively. Pursuant to our Articles of Association, any individuals appointed by the Supervisory Board must stand for election at the next annual general meeting of shareholders. The Supervisory Board
has nominated Ms. Dicciani, Ms. Farley and Ms. Goren for election by shareholders pursuant to this provision.
The Supervisory Board maintains a process for shareholders and interested parties to communicate with the Board. Shareholders and interested parties may write or call our Supervisory Board by contacting
our Corporate Secretary, Craig B. Glidden, as provided below:
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Mailing Address:
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Corporate Secretary
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LyondellBasell Industries
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1221 McKinney Street, Suite 300
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Houston, Texas 77010
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Phone Number:
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(713) 309 7200
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Communications are distributed to the Supervisory Board or to any individual director or directors, as
appropriate, depending on the facts and circumstances outlined in the communication. In that regard certain items that are unrelated to the duties and responsibilities of the Supervisory Board are excluded, such as: business solicitations or
advertisements; junk mail and mass mailings; new product suggestions; product complaints; product inquiries; resumes and other forms of job inquiries; spam; and surveys. In addition, material that is unduly hostile, threatening, illegal or similarly
unsuitable will be excluded. Any communication that is filtered out is made available to any Supervisory Director upon request.
Board
Leadership Structure
We have a two-tiered board, consisting of a Management Board, responsible for the management of
the Company, and a Supervisory Board, responsible for the general oversight of the Management Board. The Management Board may consist only of directors who are executive officers of the Company and the Supervisory Board may consist only of
non-employee directors.
James L. Gallogly, our Chief Executive Officer, currently is the sole member of our Management Board
and is not a member of the Supervisory Board. At the Annual Meeting, we are requesting shareholders to elect five additional individuals to our Management Board. These individuals include:
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Karyn F. Ovelmen, Executive Vice President and Chief Financial Officer,
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Craig B. Glidden, Executive Vice President and Chief Legal Officer,
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Bhavesh V. (Bob) Patel, Executive Vice President of Olefins & Polyolefins Europe, Asia & International and
Technology,
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Timothy D. Roberts, Executive Vice President Olefins & Polyolefins Americas, and
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Patrick D. Quarles, Senior Vice President Intermediates & Derivatives.
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More information about the expansion of the Management Board and these individuals may be found under Election of Managing
Directors on page 22 of this Proxy Statement.
The principal responsibility of members of the Management Board is to
manage the Company, which means, among other things, that the Management Board is responsible for implementing LyondellBasells aims and strategy, managing the Companys associated risk profile, operating the business and addressing
corporate responsibility issues relevant to the enterprise.
The Supervisory Board oversees the policies of the Management
Board and the general course of business and related business enterprises. Robert G. Gwin is the Chairman of the Supervisory Board.
Our two-tier board structure allows our CEO to focus on managing our day-to-day business, including achieving our aims, strategy and risk profile, and results of operations. It also allows Mr. Gwin,
as non-executive Chairman of the Supervisory Board, to lead the Supervisory Board in its fundamental role of supervising the policies of the Management Board. We believe this separation of responsibilities is appropriate for LyondellBasell because
of the scope and complexity of the Companys operations. We also believe the separation of CEO and Chairman of the Supervisory Board that results from our two-tiered board structure generally demonstrates our commitment to corporate governance
best practices.
Role in Risk Oversight
While the Companys management is responsible for the day-to-day management of risks to the Company, the Supervisory Board has broad
oversight responsibility for the Companys risk management programs. In this oversight role, the Supervisory Board is responsible for satisfying itself that the risk management processes designed and implemented by the Companys management
are functioning well and that necessary steps are taken to foster a culture of risk-adjusted decision-making throughout the organization. The primary means by which our Supervisory Board oversees our risk management structures and policies is
through its regular communications with management. The Company believes that its leadership structure is conducive to sound risk management, and that the Supervisory Boards involvement is appropriate to ensure effective oversight.
At each of the Supervisory Board meetings, executive officers are asked to report to the Supervisory Board and, when appropriate,
specific committees. Additionally, other members of management and employees periodically are requested to attend meetings and present information. One of the purposes of these presentations is to provide direct communication between members of the
Supervisory Board and members of management. The presentations provide members of the Supervisory Board with the information necessary to understand the risk profile of the Company, including information regarding the specific risk environment,
exposures affecting the Companys operations and the Companys plans to address such risks. In addition to information regarding general updates to the Companys operational and financial condition, management reports to the
Supervisory Board about the Companys outlook and forecasts, and any impediments to meeting those or its pre-defined strategies generally. These direct communications between management and the Supervisory Board allow the Supervisory Board to
assess managements evaluation and management of the day-to-day risks of the Company.
In carrying out its oversight
responsibility, the Supervisory Board has delegated to individual Board committees certain elements of its oversight function. The Audit Committee provides oversight of the integrity of the Companys financial statements; the Companys
independent accountants qualifications and independence; the performance of the Companys internal audit function, independent accountants and the Companys compliance program; and the Companys system of disclosure and
internal controls. The Compensation
5
Committee monitors the Companys compensation structure to discourage risks inconsistent with the interests of our stakeholders. The Nominating & Governance Committee reviews
policies and practices in the areas of corporate governance; considers the overall relationship of the Supervisory Board to the Companys management; and develops, reviews and recommends governance guidelines applicable to the Company.
The Health, Safety and Environmental (HSE) Committee reviews and monitors compliance with health, safety and
environmental matters affecting the Company. As a petrochemical company, we operate large scale, complex industrial manufacturing facilities. These facilities engage in operations and produce products that, by themselves, or depending on their use
or handling, can be hazardous. As a result, HSE issues are one of the biggest risks we face as a Company. Our HSE Committee discusses the Companys HSE and Operational Excellence programs, reviewing audits of operations; safety and
environmental incidents and statistics; as well as action plans and initiatives to improve HSE results.
The Company has an
enterprise risk management function, which comprises a small group of employees fully dedicated to enterprise-wide risk management activities led by the Vice President of Enterprise Wide Risk Management, and overseen by a Risk Management Committee.
The standing members of the Risk Management Committee include the Companys CEO, Chief Financial Officer, Chief Legal Officer and Vice President of HSE & Operational Excellence. Through a variety of policies and procedures, business
leaders are required to identify, monitor, mitigate and report on risks under the supervision of the Risk Management Committee, which requires risk management plans from each business segment and function. The Committee sets the Companys
various risk tolerances, evaluating whether they are aligned with the Companys strategic goals, and defines the risk profile of the Company.
The results of the risk management processes, and the decisions made by the Risk Management Committee, are reported to the Audit Committee of the Supervisory Board, which is responsible for overseeing the
design of the risk assessment process. Regular updates are given to the Supervisory Board on material risks. In addition, the Audit Committee is responsible for ensuring that an effective risk assessment process is in place, and quarterly reports
are made to the Audit Committee in accordance with NYSE requirements.
Independence of Supervisory Board Members
The Supervisory Board has determined that each of the following directors and director nominees is independent in
accordance with the NYSE listing standards and the Dutch Corporate Governance Code:
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Jacques Aigrain
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Jagjeet S. Bindra
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Milton Carroll
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Nance K. Dicciani
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Robert G. Gwin
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Bruce A. Smith
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Claire S. Farley
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Rudy van der Meer
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Isabella D. Goren
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To assist in determining independence, the Supervisory Board adopted categorical standards of director
independence, which meet or exceed the requirements of both the NYSE and the Dutch Corporate Governance Code. These standards specify certain relationships that must be avoided to allow for a finding of independence.
The categorical standards our Supervisory Board uses in determining independence are included in our Corporate Governance Guidelines,
which can be found on our website at
www.lyondellbasell.com
. The Supervisory Board has determined that there are no relationships or transactions under the categorical standards that would prohibit any of the nine directors listed above from
being deemed independent. The Supervisory Board considered certain additional transactions in determining that each of Messrs. Gwin and Carroll and Ms. Dicciani and Ms. Farley are independent. Specifically, certain of the Companys
subsidiaries:
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purchase natural gas liquids from a subsidiary of Anadarko Petroleum, where Mr. Gwin serves as Executive Vice President and Chief Financial
Officer;
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purchase electricity from a subsidiary of CenterPoint Energy, where Mr. Carroll serves as chairman;
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purchase industrial gases, including hydrogen and nitrogen, from Praxair, on whose board of directors Ms. Dicciani sits; and
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purchase measurement products from a subsidiary of FMC Technologies, where Ms. Farley is a director.
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In determining that none of these relationships affected the independence of any of the interested directors, the Supervisory Board
considered the nature of the transactions, all of which are ordinary course and the dollar amounts involved, none of which were material to either the Company or the counterparty. Additionally, the only instances of any negotiated long term
contracts are through the purchases of industrial gases from Praxair and those agreements were entered into several years before Ms. Dicciani joined the Supervisory Board.
Meetings and Board Committees
The
Supervisory Board held four meetings in 2013 as well as a board retreat, where planning for different aspects of the Supervisory Boards responsibilities, including operations, succession planning and other matters, are reviewed and discussed
over a two-day period. Each of the Supervisory Directors attended at least 75% of the meetings of the Supervisory Board and of each committee of which he was a member. The Company does not maintain a policy regarding Supervisory Board members
attendance at its annual general meetings. The Supervisory Board and its Committees regularly hold executive sessions, where members of management are not present. All executive sessions of the Supervisory Board, including executive sessions with
only independent directors, are chaired by Robert G. Gwin, Chairman of the Supervisory Board. All executive Committee sessions are chaired by the respective Chairmen of those Committees.
The Supervisory Board has four standing committees to assist it in the execution of its responsibilities. The committees are the Audit
Committee, the Nominating & Governance Committee, the Compensation Committee and the HSE Committee. The charter of each committee states that it will be composed of a minimum of three members of the Supervisory Board. Each committee
functions under a charter adopted by the Supervisory Board as described below.
Audit Committee
The current members of the Audit Committee are Mr. Smith (Chairman), Mr. Aigrain, Ms. Dicciani and Ms. Goren, who was
appointed in February 2014. The Supervisory Board has determined that each of the members of the Audit Committee is financially literate and that each member of the Audit Committee is a financial expert for purposes of the SECs rules. The
determination was based on a thorough review of our Audit Committee members education and financial and public company experience. The Supervisory Board also determined that each member of the Audit Committee has satisfied the heightened
independence requirements of Section 10A(m)(3) of the Exchange Act in addition to our categorical standards.
Mr. Smith serves on one public company audit committee in addition to ours; Mr. Aigrain serves on two public company audit
committees in addition to ours; Ms. Dicciani serves on two public company audit committees in addition to ours; and Ms. Goren serves on one public company audit committee in addition to ours.
The Audit Committee met six times during 2013, including a Company specific educational session on Audit Committee matters. The Audit
Committee generally is responsible for overseeing all matters relating to our financial statements and reporting; internal audit function and independent auditors; and our compliance function. As part of its function, the Audit Committee reports the
results of its activities to the full Supervisory Board. Listed below are the general responsibilities of the Audit Committee. In addition to its oversight role of risk management as described above under Role in Risk Oversight, the
Audit Committees duties are set forth in a written charter that was approved by the Supervisory Board. A copy of the charter can be found on our website at
www.lyondellbasell.com
. The Audit Committees responsibilities include the
following:
Administrative Responsibilities
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Perform an annual self-assessment
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Independent Auditor
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Engage external auditor and approve compensation
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Review independence and establish policies relating to hiring of auditor employees
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Pre-approval of all services
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Internal Audit
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Review plans, staffing and activities as well as effectiveness
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Financial Statements
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Review financial statements and earnings releases
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Discuss and review accounting policies and practices and external auditor reviews
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Discuss and review effectiveness of controls
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Compliance
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Review plans, staffing and function of Compliance function
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Establish and review procedures for complaints, including anonymous complaints regarding accounting, controls and auditing
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Review Code of Conduct and system for monitoring compliance therewith
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Audit Committee Report
As required by its
charter, the Audit Committee reviews and reassesses the charter annually and recommends any changes to the Supervisory Board for approval. The role of the Audit Committee is, among other things, to oversee the Companys financial reporting
process on behalf of the Supervisory Board, to recommend to the Supervisory Board whether the Companys financial statements should be included in the Companys Annual Report on Form 10-K and to select and nominate the independent auditor
for appointment by shareholders. Company management is responsible for the Companys financial statements as well as for its financial reporting process, accounting principles and internal controls. The Companys independent auditors are
responsible for performing an audit of the Companys financial statements and expressing an opinion as to the conformity of such financial statements with generally accepted accounting principles.
The Audit Committee has reviewed and discussed the Companys audited financial statements as of December 31, 2013 and for the
12 month period then ended with management and PricewaterhouseCoopers (PwC), the independent registered public accounting firm, and has taken the following steps in making its recommendation that the Companys financial statements
be included in its annual report:
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Discussed with PwC, the Companys independent registered public accounting firm for period ended December 31, 2013, those matters required to
be discussed by Statement on Auditing Standards No. 61, including information regarding the scope and results of the audit. These communications and discussions are intended to assist the Audit Committee in overseeing the financial reporting
and disclosure process.
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Discussed with PwC its independence, including communications PwC is required to provide us under applicable Public Company Accounting Oversight Board
requirements. This discussion and disclosure helped the Audit Committee in evaluating such independence.
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Met periodically with members of management, the internal auditors and PwC to review and discuss internal controls over financial reporting.
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Reviewed and discussed, with the Companys management and PwC, the Companys audited consolidated balance sheet as of December 31, 2013,
and consolidated statements of income, cash flows and changes in stockholders equity for the 12 month period ended December 31, 2013, including the quality, not just the acceptability, of the accounting principles, the reasonableness of
significant judgments and the clarity of the disclosure.
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The Committee has also discussed with the
Companys internal auditors and independent registered public accounting firm the overall scope and plans of their respective audits. The Committee meets periodically with both the internal auditors and independent registered public accounting
firm, with and without management present, to discuss the results of their examinations and their evaluations of the Companys internal controls.
The members of the Audit Committee are not engaged in the accounting or auditing profession and, consequently, are not experts in matters involving auditing or accounting. In the performance of their
oversight function, the members of the Audit Committee necessarily relied upon the information, opinions, reports and statements presented to them by Company management and by the independent registered public accounting firm.
Based on the reviews and discussions explained above (and without other independent verification), the Audit Committee recommended to the
Supervisory Board (and the Supervisory Board approved) that the Companys financial statements be included in its annual report for its fiscal year ended December 31, 2013. The Committee has also approved the selection of PwC as the
Companys independent registered public accounting firm for fiscal year 2014.
The Audit Committee of the Supervisory
Board
Bruce A. Smith,
Chairman
Jacques Aigrain
Nance K. Dicciani
Compensation Committee
The current members of the Compensation Committee are Messrs. Aigrain (Chairman), Carroll and van der Meer and Ms. Goren, who was appointed in February 2014. Each member is independent in
accordance with the NYSEs heightened independence requirements for members of compensation committees.
The
Compensation Committee met five times in 2013. The Compensation Committee is responsible for overseeing all of our executive compensation and developing the Companys compensation philosophy generally. The Compensation Committees written
charter, which was approved by the Supervisory Board, can be found on our website at
www.lyondellbasell.com
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In
overseeing compensation matters, the Compensation Committee may delegate authority for day-to-day administration and interpretation of the Companys plans, including selection of participants, determination of award levels within plan
parameters, and approval of award documents, to Company employees. However, the Compensation Committee may not delegate any authority under those plans for matters affecting the compensation and benefits of the executive officers. The Compensation
Committees responsibilities include the following:
Administrative
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Perform annual self-evaluations
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Company Compensation & Benefits
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Establish and review compensation philosophy, programs and practices
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Review and approve pension and benefit arrangements as well as funding of pension and benefit plans
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Director Compensation
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Name
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Fees Earned
or Paid in
Cash ($)(1)
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Stock
Awards
($)(2)(3)
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All Other
Compensation
($)(4)
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Total
($)(5)
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Robert G. Gwin, Chairman
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137,238
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152,397
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2,008
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291,644
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Jacques Aigrain
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112,548
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135,000
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2,008
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249,556
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Jagjeet S. Bindra
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131,548
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135,000
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2,008
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268,556
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Robin Buchanan
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95,000
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135,000
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2,008
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232,008
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Milton Carroll
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128,452
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135,000
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2,008
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265,460
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Stephen F. Cooper
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110,000
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135,000
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2,008
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247,008
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Nance K. Dicciani
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44,364
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93,945
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138,309
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Joshua J. Harris(6)(7)
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19,233
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135,000
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2,008
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156,241
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Scott Kleinman(6)(7)
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91,192
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135,000
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2,008
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228,200
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Marvin O. Schlanger(7)
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88,000
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160,000
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2,008
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250,008
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Bruce A. Smith
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125,000
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135,000
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2,008
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262,008
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Rudy M. J. van der Meer
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120,000
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135,000
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255,000
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(1)
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Includes retainers for services earned or paid through December 31, 2013.
|
(2)
|
Represents 2,075 restricted stock units for all directors, other than: (i) Mr. Gwin, whose amount represents 2,075 restricted stock units and an additional
246 restricted stock units he was granted when he became Chairman of the Board; (ii) Mr. Schlanger, who received 2,459 restricted stock units for his role as Chairman of the Supervisory Board until September 2013; and
(iii) Ms. Dicciani, who received 1,326 restricted stock units as pro-rated payment based on her joining the Supervisory Board in September 2013. In accordance with FASB Topic ASC 718,
Compensation Stock Compensation
, the
grant date fair value of the awards generally is the number of shares issued times the market value of our shares on that date. See Note 17 to our Consolidated Financial Statement included in our Form 10-K for the year ended December 31, 2013
for a description accounting for equity-based compensation.
|
(3)
|
The aggregate number of stock awards outstanding at fiscal year-end includes:
|
|
|
|
|
|
Class I Directors:
|
|
|
|
|
Jagjeet S. Bindra
|
|
|
8,323
|
|
Milton Carroll
|
|
|
8,323
|
|
Rudy M. J. van der Meer
|
|
|
8,323
|
|
Class II Directors:
|
|
|
|
|
Robert G. Gwin, Chairman
|
|
|
5,688
|
|
Robin Buchanan
|
|
|
5,442
|
|
Stephen F. Cooper.
|
|
|
5,442
|
|
Class III Directors:
|
|
|
|
|
Jacques Aigrain
|
|
|
2,075
|
|
Nance K. Dicciani.
|
|
|
1,326
|
|
Bruce A. Smith
|
|
|
2,075
|
|
Former Directors:
|
|
|
|
|
Joshua J. Harris
|
|
|
|
|
Scott Kleinman
|
|
|
|
|
Marvin O. Schlanger
|
|
|
|
|
(4)
|
Includes $2,008 of imputed income for each director other than Mr. van der Meer and Ms. Dicciani for professional services related to tax filings.
|
(5)
|
The terms of the restricted stock unit awards granted to directors entitle them to dividend equivalent payments when and if dividends are paid on the Companys
shares generally. Therefore, directors holding restricted stock units received dividend equivalent payments in 2013. The dividend equivalent payments are not included in the table above. These payments included $15,816 to Messrs. Carroll, Bindra and
van der Meer; $10,054 to Messrs. Cooper and Buchanan; $4,821 to Mr. Schlanger; $9,847 to Mr. Harris; $12,685 to Mr. Kleinman; $13,930 to Mr. Smith; $8,943 to Mr. Aigrain; $10,324 to Mr. Gwin; and $1,459 to
Ms. Dicciani.
|
16
(6)
|
Each of Messrs. Harris and Kleinman received these securities as a nominee for the sole benefit of an affiliate of Apollo. Such affiliate has all economic, pecuniary
and voting rights, if any, in respect of such securities. Accordingly, Messrs. Harris and Kleinman each disclaim beneficial ownership of these securities.
|
(7)
|
Each of Messrs. Harris, Kleinman and Schlanger resigned from the Supervisory Board during 2013. Each of them was nominated to the Supervisory Board by Apollo pursuant
to its Nomination Agreement. Pursuant to the Nomination Agreement, once Apollos share ownership fell below certain threshold levels, it caused its designated directors to resign from the Supervisory Board.
|
ELECTION OF SUPERVISORY BOARD DIRECTORS
The Supervisory Board currently consists of eleven directors, and is divided into three classes. Directors are generally elected for
three-year terms on a staggered term basis, so that each year the term of office of one class will expire and the terms of office of the other classes will extend for additional periods of one and two years, as applicable. The term of office for
current Class I directors expires at the Annual Meeting. The terms of office for Class II and Class III directors will expire at the 2015 and 2016 annual general meeting, respectively.
The Supervisory Board is proposing the re-election of Messrs. Bindra, Carroll and van der Meer, whose terms are expiring as of the date
of the Annual Meeting and the election of Ms. Farley, as Class I directors. It also is proposing the election of Ms. Goren to serve as a Class II director and Ms. Dicciani to serve as a Class III director.
Each of the directors and director nominees listed below has served as a director of one or more public and/or international companies
and on a variety of board committees. As such, each has executive management and director oversight experience in most, if not all, of the following areas which are critical to the conduct of the Companys business, including: strategy
development and implementation, risk assessment and management, financial accounting and reporting, internal controls, corporate finance, capital project evaluation, the evaluation, compensation, motivation and retention of senior executive talent,
public policies as they affect global industrial corporations, compliance, corporate governance, productivity management, safety management, project management, and, in most cases, global operations. Many of the directors and director nominees also
bring substantial experience and particular insights into the petrochemical and energy industries. These individuals collectively provide a range of perspectives, experiences and competencies well-suited to providing advice and counsel to management
and to overseeing the Companys business and operations.
We have provided information regarding the nationality, age,
term of office on our Supervisory Board and experience within the last five years of each of the nominees for director. This information is as of March 3, 2014. Required information relating to the share ownership of our Supervisory Directors
and nominees may be found in the Director Compensation Table above and under the Director, Director Nominee and Management Share Ownership section on page 25.
ELECTION OF SUPERVISORY BOARD DIRECTORS
(Item 1 on the Proxy Card)
The first proposal on the agenda is to
elect Messrs. Bindra, Carroll and van der Meer and Ms. Farley as Class I directors until the annual meeting in 2017; Ms. Goren as a Class II director until the annual meeting in 2015; and Ms. Dicciani as a Class III director until the
annual meeting in 2016.
17
Class I Directors
|
Jagjeet S. Bindra, American, 66,
Class I Supervisory Director since May 2011
|
|
Director of Edison International, a generator and distributor of electric power, and its subsidiary, Southern California Edison Co., an
electric utility company, since April 2010.
Director of Transocean Ltd.,
an offshore drilling contractor and the provider of drilling management services, since 2011.
Director of Larsen & Toubro, a technology, engineering, construction and manufacturing company, from 2009 to 2012.
Director and Deputy Chairman of Transfield Services, a global provider of operations, maintenance and asset and project management services, from 2009 to
2012.
President, Chevron Global Manufacturing, Chevron Corp.s
worldwide manufacturing division, from 2004 to 2009.
Director of Advisory
Board of Hart Energy Consulting, an energy industry publisher, from 2009 to 2010.
Director of GS Caltex, a South Korean oil refiner, from 2003 to 2009.
Director of Sriya Innovations, an alternative energy firm, from 2009 to 2010.
Through his senior management experience at Chevron and his other public company board service, Mr. Bindra has expertise in nearly all areas for which the Supervisory Board seeks experienced
individuals, including finance, general management, senior management, mergers and acquisitions, strategic planning, government and regulatory affairs, risk and asset management, capital markets, corporate governance and general public company
oversight.
|
|
Milton Carroll, American, 63,
Class I Supervisory Director since July 2010
|
|
Chairman of CenterPoint Energy, a public utility holding company, since October 2002.
Director of Halliburton, an oilfield services company, since December
2006.
Chairman of Health Care Service Corporation, a health benefits
company, since 2002 and director since November 1998.
Director of Western
Gas Holdings, LLC, the general partner of Western Gas Partners, LP, an owner, operator and developer of midstream energy assets, since April 2008.
Director of LRR Energy, L.P., from 2011 to January 2014.
As an experienced director of several public companies, Mr. Carroll brings with him expertise in most areas for which the Supervisory Board seeks
experienced individuals, including finance, general management, senior management, mergers and acquisitions, strategic planning, government and regulatory affairs, risk and asset management, corporate governance and general public company
oversight.
|
Claire S. Farley, American, 55,
Class I Supervisory Director since February 2014
|
|
Member of KKR Management LLC, the general partner of KKR & Co. L.P., a global investment firm, since January 2013.
Managing Director of KKR Energy Group from November 2011 to January 2012.
Co - Chief Executive Officer of RPM Energy, a privately-owned oil and gas exploration
and development company, from September 2010 to November 2011.
Director of
FMC Technologies, Inc., a global provider of technology solutions for the energy industry, since May 2009.
Director of Samson Resources Corporation, an exploration and development company, since 2009.
Director of Encana Corporation, a North American energy provider, since April 2008.
As a former oil and gas executive and executive of oil and gas industry and
transaction advisors, as well as her current public company experience, Ms. Farley brings with her knowledge and expertise in many of the areas the Supervisory Board seeks experienced individuals, including mergers and acquisitions, strategic
planning, finance, general management, senior management, risk and asset management, capital markets, corporate governance and general public company oversight.
|
18
|
Rudy van der Meer, Dutch, 69,
Class I Supervisory Director since July 2010
|
|
Chairman of the Supervisory Board of Coöperatie VGZ U.A., a health insurer, since 2011.
Supervisory Director of James Hardie Industries S.E., an industrial fibre cement
products and systems manufacturer, since 2007.
Chairman of Supervisory
Board of Imtech N.V., a technical services provider, from 2005 to 2013.
Chairman of Supervisory Board of Energie Beheer Nederland B.V., a Dutch state owned natural gas exploration, production, transportation and sale company,
from 2006 to 2013.
Chairman of Supervisory Board of Gazelle Holding B.V.,
a bicycle manufacturing company, from 2005 to 2011.
Supervisory Director
of ING Nederland N.V, retail banking and insurance subsidiaries, respectively, of ING Groep N.V., from 2004 to 2011.
Mr. van der Meers career history includes three decades at AkzoNobel, a leading global paints and coatings company and a major producer of specialty chemicals, headquartered in The Netherlands.
Mr. van der Meer brings with him several of the skills and knowledge our Supervisory Board seeks, including those related to general management, senior management, mergers and acquisitions, government and regulatory affairs, risk and asset
management and corporate governance and public company experience, particularly as they relate to Dutch multinational companies.
|
Class II Director
|
Isabella D. Goren, American, 53,
Class II Supervisory Director since February 2014
|
Director of Gap Inc., a multinational apparel retail company with a
portfolio of brands, since August 2011.
Senior Vice President and Chief
Financial Officer of AMR Corporation, a commercial aviation company and the parent holding company of several airlines, including American Airlines, Inc., a global airline, where she also served as Senior Vice President and Chief Financial Officer,
from July 2010 to December 2013.
1
Senior Vice President of Customer Relationship Marketing of American Airlines, Inc.
from 2006 to 2010.
Ms. Goren has extensive experience in executive
management of capital intensive and highly competitive businesses, complex international operations and global operating strategies. She brings with her skills and expertise in financial matters, senior executive leadership, general management,
strategic planning, and public company governance, all of which are skills the Supervisory Board seeks in a candidate.
|
1
AMR Corporation and American Airlines, Inc. successfully completed a reorganization under Chapter 11 of the U.S.
Bankruptcy Code in December 2013, for which a voluntary petition was filed in November 2011.
Class III Director
|
Nance K. Dicciani, American, 66,
Class III Supervisory Director since September 2013
|
Director of Halliburton, an oilfield services company, since
September 2009.
Director of Praxair, an industrial gases company, since
September 2008.
Director of Rockwood Holdings, a specialty chemicals and
advanced materials company, since May 2008.
Ms. Diccianis
career history includes executive roles at both Honeywell Specialty Materials and Rohm and Haas, both specialty chemical companies that give her unique insight into the operations and issues of a petrochemical company like the Company. Through her
executive roles and her current roles as a director of other public companies, Ms. Dicciani brings with her expertise in financial, senior management, general management, strategic planning, risk and asset management, corporate governance and
public company matters, all of which are areas of expertise the Supervisory Board looks for when choosing candidates.
|
19
The affirmative vote of a majority of the votes cast at the Annual Meeting for each individual is required
to elect each of the director nominees.
Our Management Board and Supervisory Board recommend shareholders vote FOR the
election of each of the named candidates.
Supervisory Directors not Standing for Election
at this
Meeting
Information, as of March 3, 2014, with respect to the Supervisory Directors who are not up for election
is as follows:
|
Jacques Aigrain, French-Swiss, 59,
Class III Supervisory Director since May 2011
|
|
Chairman of LCH Clearnet Group, Limited, a clearinghouse group, since March 2010.
Director of Lufthansa German Airlines, since September 2007.
Senior Advisor, Warburg Pincus, a global private equity firm, since June
2013.
Director of The London Stock Exchange Group Plc, a diversified
international stock exchange, since May 2013.
Director of WPP plc, a
multinational advertising and public relations company, since May 2013.
Chief Executive Officer of SwissRe, a global reinsurance company, from 2006 to 2009.
Director of Resolution Ltd., a financial services company that acquires businesses in
the insurance industry, from February 2010 to March 2013.
|
|
Director of Qatar Financial Centre Authority, the commercial arm of the Qatar Financial Centre, since April 2012.
Mr. Aigrain has extensive operational and management expertise, as well as
considerable experience with international companies and board service, among other skills.
|
Robin Buchanan, British, 61,
Class II Supervisory Director since May 2011
|
|
Chairman of Michael Page International plc, a specialist recruitment company, since December 2011 and director since August
2011.
Senior Advisor to Bain & Company, a global business
consulting firm, since 2007.
Dean and then President of the London
Business School, from 2007 to 2009.
Director of Schroders plc, a global
asset management company, since March 2010.
|
|
Mr. Buchanan has extensive knowledge and experience relating to strategy, leadership, business management and corporate governance
and extensive experience in serving on corporate boards and consulting for companies in an array of industries, including the industrial sector.
|
Stephen F. Cooper, American, 67,
Class II Supervisory Director since July 2010
|
|
Chief Executive Officer and Director of Warner Music Group Corp., a recorded music and music publishing business, since August
2011.
Managing Partner of Cooper Investment Partners, a private equity
firm specializing in underperforming companies, since July 2008.
Director
of Ventech Engineers, Inc., an engineering and procurement services firm, since September 2011.
Vice Chairman and Chairman of the Restructuring Committee of LyondellBasell Industries AF S.C.A., the Companys predecessor, from March 2009 to April 2010.
Chief Executive Officer and Vice Chairman of Metro-Goldwyn-Mayer, a privately held
motion picture and theatrical production and distribution company, from August 2009 to December 2010.
|
20
|
|
Mr. Cooper has considerable experience as a financial and executive and advisor to companies facing operational and performance issues. He has substantial and expansive
experience in various industries that provides him with significant expertise in all aspects of supervising management of large, complex companies.
|
|
Robert G. Gwin, American, 50,
Class II Supervisory Director since May 2011
|
|
Executive Vice President, Finance and Chief Financial Officer of Anadarko Petroleum Corporation, an oil and gas exploration and
production company, since March 2009.
Senior Vice President of Anadarko
Petroleum from February 2008 to March 2009.
Chairman of Western Gas
Holdings, LLC, the general partner of Western Gas Partners, LP, an owner, operator and developer of midstream energy assets, since October 2009 and director since August 2007.
Chairman of Western Gas Equity Holdings, LLC, the general partner of Western Gas
Equity Partners, LP since November 2012.
Chief Executive Officer of
Western Gas Holdings from August 2007 to January 2010.
President of
Western Gas Holdings from August 2007 to September 2009.
|
|
Mr. Gwin has expansive experience relating to the oil and gas industry, finance, public company board experience and executive
management expertise, among other skills.
|
Bruce A. Smith, American, 70,
Class III Supervisory Director since July 2010
|
|
Chief Executive Officer of One Cypress Energy LLC, a petroleum products provider, since
December 2011.
Chairman of Tesoro Corporation, a manufacturer and marketer
of petroleum products, from 1996 to April 2010. President and Chief Executive Officer of Tesoro from 1995 April 2010.
Director of GEVO, Inc., a renewable chemicals and advanced biofuels company, since June 2010.
Director of Ventech Engineers, Inc., an engineering and procurement services company, since January 2012.
|
|
Mr. Smith has extensive senior leadership experience in the refining and marketing industry, substantial management background in publicly traded companies and previous
experience serving as a director and chairman of the audit and compensation committees of publicly traded companies.
|
INFORMATION ABOUT THE MANAGEMENT BOARD
The management of the Company is entrusted to the Management Board. Our Articles of Association provide that the Supervisory Board shall
determine the number of members of the Management Board. The Supervisory Board has determined that the number of members of the Management Board shall be increased to six. James L. Gallogly, our Chief Executive Officer, has served as the sole member
and Chairman of our Management Board since April 2010, and is serving for a term of five years.
The Supervisory Board has
determined that it is in the best interest of the Company to increase the size of the Management Board to six members. The role of the additional members of the Management Board will be to assist Mr. Gallogly, as CEO and Chairman of the
Management Board, with the deployment of the Companys strategy and policies, and the achievement of its objectives and results. As managing directors, the individuals nominated for election will continue to have specific day-to-day
responsibility for their respective areas of management of the Company as outlined below. However, the Management Board as a body is vested with the authority to manage the Company, which includes, among other things:
|
|
|
the setting and achievement of the Companys objectives;
|
21
|
|
|
the Companys strategy, its policies, and the ensuing delivery of results, the risks inherent in its business activities and the financing of the
Company;
|
|
|
|
the structure and operation of the internal risk management and control systems;
|
|
|
|
the financial reporting process and the establishment and maintenance of the internal controls over financial reporting;
|
|
|
|
the disclosure of information on matters that may substantially influence the price of the Companys listed securities;
|
|
|
|
compliance with all legislation and regulations applicable to the Company;
|
|
|
|
the relation between the Company and its stakeholders, including shareholders;
|
|
|
|
the corporate social responsibilities of the Company; and
|
|
|
|
the Companys corporate structure.
|
The Management Board is accountable for the performance of its duties to the Supervisory Board and the shareholders. Some of its responsibilities are without prejudice to the obligations of, for example,
the CEO and the CFO under applicable law and regulations, such as required certifications and affirmations of those individuals. However, the individuals elected as managing directors generally will share authority for the overall management of the
Company.
The Supervisory Board believes that the addition of the five nominees named below to the Management Board will
enhance the current governance of the Company by increasing the diversity of skills, experience and background of managing directors. This diversity, the Supervisory Board believes, should result not only in a more effective Management Board, but
should also give each of its members greater insight to Company-wide matters and issues, which will result in their ability to more effectively carry out their individual responsibilities.
ELECTION OF MANAGING DIRECTORS
(Item 2 on the Proxy Card)
As provided in the Dutch Corporate
Governance Code and set forth in our Articles of Association, other than the initial term of the initial member of the Management Board, managing directors are elected for a four-year term. The Supervisory Board is asking shareholders to elect the
following nominees for a four-year term ending on the date of our annual general meeting of shareholders in 2018. Information is as of March 3, 2014.
|
Karyn F. Ovelmen, American, 50,
Executive Vice President and Chief Financial Officer since November 2011
|
|
Ms. Ovelmen currently is responsible for the Companys Finance and IT functions and, as Chief Financial Officer, has general
oversight responsibility for all aspects of the Companys tax, treasury, accounting and controlling functions.
Ms. Ovelmen has been EVP and CFO since November 2011. Before that, she served as Executive Vice President and Chief Financial Officer of Petroplus Holdings AG, an independent oil refiner, from May
2006 until September 2010.
|
Craig B. Glidden, American, 56,
Executive Vice President and Chief Legal Officer since August 2009
|
In his current role, Mr. Glidden has responsibility for the
Companys legal affairs generally as well as the Companys Public Affairs and Corporate Communications.
Mr. Glidden has been EVP and Chief Legal Officer since August 2009. From April 2004 to August 2009, Mr. Glidden served as Senior Vice President of Legal & Public Affairs of Chevron
Phillips Chemical Co. LLC.
|
22
|
Bhavesh (Bob) V. Patel, American, 47,
Executive Vice President, O&P EAI and Technology since October 2013
|
Mr. Patel leads our olefins and polyolefins businesses and
oversees the Companys manufacturing operations in Europe, Asia and other jurisdictions outside of the Americas. He also is responsible for the Companys Technology business, which encompasses licensing and catalyst businesses and support
of our technology. Mr. Patel was the Senior Vice President of O&P EAI and Technology from November 2010 until October 2013 when he was promoted to Executive Vice President and given responsibility for the Companys manufacturing
operations in addition to his other responsibilities.
From March 2010
until August 2011, Mr. Patel was SVP, O&P Americas, where he was responsible for leading our olefins and polyolefins business throughout the Americas. Prior to joining the Company, Mr. Patel was General Manager of
Olefins & NGL for Chevron Phillips Chemical Co. LLC from June 2009 to March 2010 and General Manager of their Asia Pacific Region from April 2008 to June 2009.
|
|
Patrick D. Quarles, American, 46,
Senior Vice President, I&D since September 2009
|
Mr. Quarles leads the Companys Intermediates and Derivatives business and is responsible for the global chemicals portfolio
downstream of olefins production.
Before becoming the SVP of I&D,
Mr. Quarles was Divisional Senior Vice President, PO & Derivatives for the Companys predecessor from January 2009 until September 2009.
|
Timothy D. Roberts, American, 52,
Executive Vice President, O&P Americas since October 2013
|
Mr. Roberts leads our olefins and polyolefins businesses
throughout the Americas. Mr. Roberts was Senior Vice President, O&P Americas from June 2011 until September 2013 when he was promoted to Executive Vice President and given responsibility for the Companys manufacturing operations in
the Americas in addition to his other responsibilities.
From February 2011
until May 2011, Mr. Roberts served as Vice President of Strategic and Corporate Planning for Chevron Phillips Chemical Co. LLC. Before that, he served as Chief Executive Officer of Americas Styrenics LLC from May 2008 until January
2011.
|
Information about these individuals share ownership can be found in the Director, Director Nominee and Management Share Ownership section on page 25.
The Dutch Corporate Governance Code recommends that the main elements of contracts of employment of all members of and nominees for
election to the Management Board be described for shareholders. Additionally, the Code recommends that the Supervisory Board report its compensation policy, as adopted by the general meeting, for managing directors and also report detailed
information about the components of managing directors compensation. SEC rules, on the other hand, require us to disclose compensation information for our named executive officers and to file with the SEC employment agreements with
those individuals. For SEC purposes, named executive officers include the CEO, the CFO and the next three most highly paid executives. Under SEC rules, we also ask shareholders to approve our executive compensation in an advisory vote.
Members of the Management Board do not and will not receive additional compensation as managing directors. The compensation
decisions for these individuals are made on the basis of their roles as executive officers.
Our compliance with SEC
requirements has satisfied the disclosure provisions of the Code because the policies with respect to, and the specific components of, the compensation of Mr. Gallogly as a member of the Management Board and as CEO have been fully described in
the Compensation Discussion & Analysis in our proxy statements. However, it is possible that in future years, the members of the Management Board for whom the Code recommends disclosures will not be the same individuals that are
named executive officers for SEC required disclosure purposes. As a general rule, the policies and decisions made with respect to named executives
23
are the same as those for all other executive officers. Therefore, in future years we intend to include in our Compensation Discussion & Analysis a broader discussion of
compensation matters to ensure that both the SEC requirements and the Code recommendations have been satisfied.
Mr. Quarles is currently the only nominee for the Management Board whose terms of employment and compensation has not been, and is
not in this proxy statement, described. Mr. Quarles is not party to a contract of employment with the Company. Mr. Quarles is entitled to participate in all compensation plans and benefits available to executive officers generally, which
includes a base salary; an annual incentive bonus paid in cash; a medium-term incentive payment paid after a three-year performance period paid in shares of the Company; and equity awards including restricted stock units and stock options. In the
event of termination, Mr. Quarles is eligible for severance benefits under the Companys severance policy for employees generally, which would, depending on the circumstances of his termination, pay out at two weeks of base pay for every
year of service (currently, 48 weeks) and provide him with 18 months of subsidized health and welfare benefits and outplacement assistance, subject to him executing a release in favor of the Company.
Additional information about the compensation of Mr. Gallogly as CEO and the sole member of the Management Board and Messrs.
Glidden, Patel and Roberts and Ms. Ovelmen as named executive officers and nominees to the Management Board can be found in our description of executive compensation in Compensation Discussion & Analysis on page 27 of this
proxy statement.
The affirmative vote of a majority of the votes cast at the Annual Meeting for each individual is required
to elect each of the managing director nominees.
Our Supervisory Board recommends shareholders vote FOR the election of each of the named
candidates.
As discussed above, Mr. Gallogly currently serves as the sole member and the Chairman of the Management Board and his
term expires in 2015. Information with respect to Mr. Galloglys nationality, age, term of office and background as of March 3, 2014 is shown below.
|
James L. Gallogly, American, 61,
Chief Executive Officer since May 2009 and Chairman of the Management Board since May 2010
|
Mr. Gallogly is responsible for the overall management of the
Company, the deployment of its strategy and policies, and the achievement of its objectives and results.
Before joining the Company, Mr. Gallogly was Executive Vice President of Exploration and Production of ConocoPhillips from October 2008 to May 2009. Prior to that, he served as Executive Vice
President of Refining, Marketing & Transportation at ConocoPhillips from April 1, 2006 to October 2008.
|
24
DIRECTOR, DIRECTOR NOMINEE AND MANAGEMENT SHARE OWNERSHIP
Under SEC rules, we are required to include, in tabular format, information relating to the beneficial ownership of our
shares by each (i) director, (ii) director nominee, and (iii) executive officer named in the Summary Compensation Table on page 50. We also are required to include information with respect to all of these individuals, and all other
executive officers, as a group. For purposes of this table, shares are considered to be beneficially owned if the person, directly or indirectly, has sole or shared voting or investment power with respect to such shares. In addition, a
person is deemed to beneficially own shares if that person has the right to acquire such shares within 60 days of March 3, 2014.
Our directors, director nominees and executive officers, individually and in the aggregate, beneficially own less than 1% of our outstanding shares as of March 3, 2014.
Ordinary Share Ownership Table
|
|
|
|
|
Name
|
|
Ordinary
Shares
Owned
|
|
Jacques Aigrain
|
|
|
2,793
|
|
Jagjeet S. Bindra(1)
|
|
|
9,800
|
|
Robin Buchanan
|
|
|
20,453
|
|
Milton Carroll
|
|
|
5,541
|
|
Stephen F. Cooper
|
|
|
8,422
|
|
Nance K. Dicciani
|
|
|
2,536
|
|
Claire S. Farley
|
|
|
|
|
Robert G. Gwin
|
|
|
2,524
|
|
Isabella D. Goren
|
|
|
|
|
Bruce A. Smith
|
|
|
15,802
|
|
Rudy M.J. van der Meer
|
|
|
2,749
|
|
James L. Gallogly(2)
|
|
|
3,946,137
|
|
Karyn F. Ovelmen(2)
|
|
|
76,246
|
|
Craig B. Glidden(2)
|
|
|
128,884
|
|
Timothy D. Roberts(2)
|
|
|
18,277
|
|
Bhavesh V. (Bob) Patel(2)
|
|
|
63,240
|
|
All directors, nominees and executive officers as a group (26 persons)(2)(3)
|
|
|
4,754,305
|
|
(1)
|
Includes 9,200 shares owned by the Bindra Family Revocable Trust. Mr. Bindra disclaims beneficial ownership of such shares except to the extent of any pecuniary
interest therein.
|
(2)
|
Includes beneficial ownership of shares that may be acquired upon exercise of options within 60 days of March 3, 2014 and shares that are issuable under restricted
stock units within 60 days of March 3, 2014. For Mr. Gallogly, the numbers presented include 2,883,412 stock options. The numbers presented for Ms. Ovelmen include 75,717 stock options; the numbers for Mr. Glidden include 118,888
stock options and 6,049 restricted stock units; the numbers for Mr. Roberts include 12,637 stock options; and the numbers for Mr. Patel include 58,532 stock options and 2,978 restricted stock units. The numbers for all directors, nominees
and executive officers as a group include 3,522,003 stock options and 22,499 restricted stock units.
|
(3)
|
Patrick D. Quarles is one of the executive officers included in the 26 persons disclosed. His information is not separately disclosed in the table above, as SEC rules
require separate disclosure only for named executive officers as that term is defined by the SEC. Mr. Quarles is, however, a nominee to the Management Board, and under Dutch requirements, we must separately disclose his equity
interests in the Company. Mr. Quarles owns an aggregate of 66,818 ordinary shares, including 3,060 shares issuable under restricted stock units and 60,144 stock options that vest or are exercisable, respectively, within 60 days of March 3,
2014.
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25
PERSONS OWNING MORE THAN 5% OF LYONDELLBASELL SHARES
The table below shows information for shareholders known to us to beneficially own more than 5% of our ordinary shares,
based on their filings with the SEC through February 14, 2014.
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Shares Beneficially Owned
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Name and Address
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Number
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Percentage(1)
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Certain affiliates of Access Industries, LLC(2)
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88,943,366
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16.4%
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730 Fifth Ave., 20th Floor
New York, NY 10019
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FMR LLC (3)
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31,679,837
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5.8%
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82 Devonshire Street
Boston, MA 02109
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(1)
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All percentages are based on 542,974,679 shares outstanding as of March 3, 2014.
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(2)
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Access Industries is a privately-held U.S. industrial group which controls directly or indirectly AI International Chemicals S.à r.l. and certain other entities
that are recordholders of our outstanding ordinary shares (collectively, the Access Recordholders). Len Blavatnik controls Access Industries and may be deemed to beneficially own the shares held by one or more of the Access
Recordholders. Access Industries and each of its affiliated entities and the officers, partners, members and managers thereof (including, without limitation, Mr. Blavatnik), other than the applicable Access Recordholder, disclaim beneficial
ownership of any ordinary shares owned by the Access Recordholders.
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(3)
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Information is based on a Schedule 13G/A filed with the SEC on February 14, 2014 by FMR LLC (FMR) and Edward C. Johnson 3d (Johnson)
reporting beneficial ownership of the Companys stock as of December 31, 2013, on behalf of its direct and indirect subsidiaries including Fidelity Management & Research Company, Strategic Advisers, Inc., Fidelity SelectCo, LLC,
Fidelity Management Trust Company, Pyramis Global Advisors, LLC, Pyramis Global Advisors Trust Company, Crosby Advisors LLC and FIL Limited.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our Supervisory Directors, executive officers and persons who own more than 10% of our common shares to file initial reports of ownership and reports of
changes in ownership of common shares (Forms 3, 4 and 5) with the SEC and the NYSE. All such persons are required by SEC regulation to furnish us with copies of all such forms that they file.
Based solely on a review of the reports furnished to the Company, or written representations from reporting persons that all reportable
transactions were reported, we believe that during the fiscal year ended December 31, 2013, our Supervisory Directors, executive officers and greater than 10% shareholders timely filed all reports they were required to file under
Section 16(a) other than two separate transactions by Mr. Gallogly that were filed one business day and three business days late, respectively, due solely to an inadvertent administrative error.
26
COMPENSATION DISCUSSION & ANALYSIS
Executive Summary
LyondellBasells compensation philosophy is set by the Compensation Committee. Our philosophy, which has remained constant over the
last three years, is to align each executives compensation with the Companys short-term and long-term performance and to provide the compensation and incentives we believe will attract, motivate and retain key executives who are
necessary to LyondellBasells long-term success.
2013 Performance Overview
The graph below shows our cumulative total shareholder return from April 30, 2010, the first date on which our shares were publicly
traded, to December 31, 2013. The comparison assumes $100 was invested on April 30, 2010 in LyondellBasell shares, in the S&P 500 Index and in the S&P 500 Chemical Index and that all dividends were reinvested.
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Six Months Ending
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4/30/10
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6/30/10
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12/31/10
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6/30/11
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12/31/11
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6/30/12
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12/31/12
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6/30/13
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12/31/13
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LyondellBasell Industries N.V.
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$
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100.00
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$
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72.42
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$
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154.26
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$
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173.13
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$
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168.22
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$
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211.83
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$
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321.94
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$
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379.02
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$
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465.95
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S&P 500 Index
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$
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100.00
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$
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87.20
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$
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107.49
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$
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113.96
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$
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109.76
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$
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120.17
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$
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127.32
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$
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144.92
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$
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168.56
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S&P 500 Chemicals Index
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$
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100.00
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$
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83.42
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$
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117.58
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$
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128.20
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$
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116.10
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$
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132.96
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$
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143.51
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$
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155.27
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$
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189.15
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The highlights of our performance in the metrics we use to judge our performance, which include health,
safety and environmental matters, business performance and cost controls, are shown below. Our success in achieving the performance metrics shown below has directly benefitted our shareholders and all our stakeholders generally. By ensuring safe and
reliable operations, our manufacturing facilities were able to perform above industry averages and at times when product margins were favorable. Our constant focus on improving our operations and doing so in a cost-effective manner resulted in
substantial cash to the Company, which we distributed to shareholders in the form of increased dividend payments and share repurchases. In 2013, dividend and share repurchase payments totaled $3.1 billion.
27
Health, Safety and Environmental Performance
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Achieved top decile performance for recordable incident rate for the second year in a row.
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Environmental incidents fell for the third consecutive year, with 2013 representing a 9% improvement over 2012.
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Had a slight increase in process safety incidents, with 2013 results in second decile as compared to industry.
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EBITDA*
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Delivered third consecutive year of record EBITDA.
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2013 Company EBITDA of $6.3 billion represents an increase of 8% over 2012 record results.
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Outperformance of peers in nearly all of the Companys business segments, showing strong relative performance in addition to absolute performance.
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*
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EBITDA is a non-GAAP measure. We calculate EBITDA, as used for financial reporting purposes and compensation purposes as income from continuing operations plus interest
expense (net), provision for (benefit from) income taxes, and depreciation & amortization.
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Costs
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Have held costs flat for third consecutive year.
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Cost-cutting measures have outpaced inflation.
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Executed on plans to continuously rationalize organization, improve efficiencies of individual plants, and allocate resources in most profitable
manner.
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Elements of Executive Compensation
In addition to base salaries, our 2013 compensation program for executives includes an annual incentive award, a three-year performance based incentive award and equity grants. The following description
gives an overview of the compensation programs generally. The actual awards granted to, and payments earned by, our named executive officers are described under the Compensation of Named Executive Officers in 2013, beginning on
page 31.
Our annual cash bonus (which we call our short-term incentive program or STI) is earned
based on our absolute and relative performance to peers in the metrics shown below. Our three-year performance based incentive awards (called the medium-term incentive program or MTI) is earned based on our relative
performance to peers as shown below. Awards earned under the MTI currently are paid in cash; however, beginning with the 2012 grant to executives, the awards will be paid, if earned, in shares of the Company. As a result, the MTI amounts executives
earned as of year-end 2013 that are reported in this proxy statement are cash awards, but grants in 2012 and 2013, and their corresponding payouts beginning in 2015, will be reported as equity compensation.
These incentive compensation components deliver value to our executives based on the Companys performance against our strategic
goals and operating plans, our performance against our peers, and our performance in light of industry and economic conditions. Shown below is a summary of the 2013 executive compensation programs available to executives generally.
28
STI Annual Cash Bonus
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Executives can earn from 0 300% of their targeted bonus, depending on results, measured by:
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Company HSE, EBITDA and Cost performance, measured against Company goals and plans and as compared to peers
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Business unit or staff performance
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MTI Three-Year Performance Incentive
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Executives can earn from 0 200% of the targeted payout, depending on Company performance after a three-year period, relative to peers, measured
by:
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Return on Assets (67%); and
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Amounts earned in 2013 for the 2011-2013 performance period are paid in cash
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Amounts earned (if any) for the 2013-2015 performance period will be paid in shares
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LTI Equity Awards
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Stock Options vest ratably over three-year period
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Restricted Stock Units cliff vest after five years
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Our programs are designed to offer executives a higher proportion of incentive compensation as compared to the fixed amounts received through base salaries. We believe a higher percentage of total
targeted compensation should be incentive-based because it helps drive a high performing culture. Putting a high percentage of the executives compensation at risk ensures that they focus on meeting our strategic goals and operating plans.
Additionally, it ensures that we only pay when performance is achieved. Below, we show the percentages of our named executives 2013 targeted cash compensation that came from base salary, annual cash bonus and MTI.
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CEO 2013 Target Cash Compensation
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All Other Named Executives 2013 Target Cash Compensation
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Executives that were employed by the Company when our shares first became publicly traded in 2010
received front-end loaded grants of stock options and restricted stock units in that year (Mr. Galloglys 2010 grant included restricted stock as opposed to restricted stock units). The grants were designed to retain the executives
over a five-year period and to give them the ability to share in the success of the Company over that period, if achieved. Of our named executive officers, Mr. Gallogly, Mr. Glidden and Mr. Patel received these grants in 2010. As a
result, they have not received annual grants of stock options and restricted stock units since that time. Ms. Ovelmen and Mr. Roberts both joined the Company in 2011 and have received annual grants of both stock options and restricted
stock units.
29
Beginning in 2012, we replaced grants to executive officers that otherwise would have been
made under the cash-based MTI program with qualified performance awards, which are equity-based awards whose shares are issued under the Companys 2012 Amended and Restated Long Term Incentive Plan, our equity compensation plan approved by
shareholders. Those awards, if earned, are paid in shares and are considered equity compensation. Each of our named executives has received a three-year performance, share-based, award in 2012 and 2013.
Given the Companys performance since 2010, the realized and realizable pay of our named executive officers as a result of their
equity grants has been significant. Realized and realizable pay are terms that refer generally to (i) actual amounts received by individuals through equity compensation awards based on the price of shares at the time of exercise or vesting and
(ii) amounts that may be received through equity compensation awards based on the changes in a companys share price since the date of grant.
The amounts our named executives have actually received based on the exercise or vesting of equity compensation awards, their realized compensation, are shown in the Option Exercises and
Stock Vested table on page 53. The value of awards not yet exercised or vested has increased substantially since the original dates of grant. A substantial portion of our executives overall possible compensation is based on the
performance of our share price through stock option and RSU grants. We grant these equity awards as a retention tool and also to align our executives interests with the interests of our shareholders.
Recent Changes to Compensation Practices
The Compensation Committee has taken steps over the last few years to ensure that our compensation programs are appropriate for our Company and its structure, and consistently reviews those programs to
ensure we are implementing practices that adequately balance risks and rewards. Consistent with these reviews, the Compensation Committee has taken the following recent actions:
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Action
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Reasons for Change
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Adopted Claw-Back Policy
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The SEC has yet to adopt final rules with respect to claw-backs, as required under Dodd-Frank. The Committee determined that it was appropriate to adopt a Company policy rather
than wait until final regulations are adopted. The Companys claw-back policy applies to all executives and generally allows for the Company to recoup any amounts paid pursuant to awards granted after the adoption of the policy to executives if
there was misconduct on the part of the executive that led to a higher payment to that executive than otherwise would have been made.
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Changed Peer Group Composition
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As disclosed further under Administration of Compensation Programs Benchmarking, the Committee determined to replace five of the existing peer group companies
to ensure that the companies comprising the peer group are truly representative of companies that the Company competes with for talent, and represent a true comparison for our size and complexity. These changes generally are effective for 2014
executive compensation decisions.
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Changed the MTI/LTI Award Structure
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In 2012, the Committee changed the MTI awards such that executives receive Company shares issued under our shareholder approved 2012 Amended and Restated Long Term Incentive Plan
instead of any cash payment otherwise payable under the cash-based awards under the MTI program. As the Committee continues to review the Companys equity awards, and prepares for new, annual grants to begin to be made for individuals that
received front-end loaded grants in 2010, it decided that the total basket of equity awards made to executives beginning in
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30
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2014 (for those that are eligible) will be divided between stock options, restricted stock units (RSUs) and performance share units (PSUs). Additionally,
the Committee determined that RSUs under the new program will vest after three-years, as opposed to the five-year vesting performance period for previously granted RSUs. The PSUs under the new program are the same awards as the share-based awards
previously granted to executives in place of cash-based MTI awards, including a three-year performance period and metrics of Return on Assets and Costs. The allocation of equity awards for executives beginning in 2014 will be: 50% PSUs; 25% stock
options; and 25% RSUs.
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Entered into New Agreement with CEO
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|
The initial term of Mr. Galloglys current employment agreement expires on April 30, 2015. The compensation arrangements included in that agreement that were intended to
ensure retention of Mr. Gallogly either have fully vested, or will vest in May 2014. The Committee determined it was in the Companys best interests to negotiate a new agreement with Mr. Gallogly to provide for the terms and conditions of his
employment and compensation after May 2014.
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Consideration of the Companys 2013 Shareholder Vote on Executive Compensation
At our May 2013 annual general meeting, our shareholders voted to approve our fiscal 2012 executive compensation program. Approximately
97% of the votes cast at the meeting supported the measure. In light of the strong support, the Compensation Committee concluded that no specific revisions were necessary to our executive officer compensation programs other than those changes it
decided to make that are noted above.
The Company values the insights we gain through dialogue with our investors, and will
continue to consider shareholder views about our core principles and objectives when determining executive compensation.
Compensation
Philosophy
Our overriding philosophy with respect to compensation is to pay for performance. More specifically, our
compensation is designed to:
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Support a high performing culture that attracts and retains highly qualified executive talent;
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Tie annual incentives to the achievement of measurable Company objectives on both an absolute basis, and relative to the industry and peers, as well as
individual performance objectives; and
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Align executives incentives with the creation of shareholder value through both short and long-term incentive plans.
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One of the fundamental elements of our compensation programs is to target compensation at the median of our
peers. Another is to reward employees for differential performance. By setting target compensation at the median, but offering the potential for substantial upside to the extent the Company, an individual business unit or function, or an individual
employee is able to differentiate performance as compared to peers, we are able to attract and retain those individuals that support a high performing culture.
Compensation of Named Executive Officers in 2013
This Compensation
Discussion & Analysis, or CD&A, describes our compensation practices and decisions with respect to our named executive officers. In 2013, the individuals that constitute named executives included:
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|
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James L. Gallogly, Chief Executive Officer and sole member and Chairman of the Management Board;
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Karyn F. Ovelmen, Executive Vice President and Chief Financial Officer;
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31
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|
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Craig B. Glidden, Executive Vice President and Chief Legal Officer;
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|
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Bhavesh (Bob) V. Patel, Executive Vice President O&P EAI and Technology; and
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Timothy D. Roberts, Executive Vice President O&P Americas.
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Our 2013 executive compensation program consisted of four principal components:
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|
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Annual cash incentive compensation;
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|
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Three-year incentive compensation; and
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Equity-based incentive compensation.
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The following highlights the Compensation Committees decisions for our named executive officers in 2013. These decisions were made with the advice of the Committees independent consultant,
Frederic W. Cook & Co. and with input by our CEO with respect to the other named executives. For more information about the executive compensation decision making process, see Administration of Compensation Programs, below.
Details about the 2013 compensation of the named executives, and the factors that were considered in making the decisions, can be found in Evaluation of 2013 Performance for Compensation Decisions as well as the Executive
Compensation Tables section beginning on page 49.
CEO Compensation
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|
|
At the request of the CEO, there was no increase to his base salary, which remained at $1.5 million for 2013;
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|
|
|
The earned percentage of Mr. Galloglys annual cash bonus was 225% of target, but capped at 200% of target pursuant to his employeement
agreement, resulting in a payment of $3.0 million;
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|
|
|
The earned percentage of his target of the three-year cash incentive award with the performance period ending at year end 2013 was 175%, paying out at
$2.625 million; and
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|
|
|
Mr. Gallogly was granted a three-year, performance based equity award with a performance period ending at year end 2015, valued at $1.5 million as
of the date of grant.
|
In 2013, a total of 83% of our CEOs compensation was tied to Company
performance. The factors that went into the decisions for his compensation are set forth under Evaluation of 2013 Performance for Compensation Decisions, beginning on page 36.
Other Named Executive Officers
The following shows the other named
executive officers compensation paid or earned in 2013. The amounts shown for the MTI grant are at target.
|
|
|
Ovelmen
|
|
Glidden
|
|
|
Base salary of $740 thousand
STI payment of $928 thousand
MTI cash payment of $429 thousand
MTI grant valued at $433 thousand
LTI grants valued at $1.3 million
|
|
Base salary of $634 thousand
STI payment of $1.042 million
MTI cash payment of $536 thousand
MTI grant valued at $340 thousand
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|
|
Patel
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|
Roberts
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|
|
Base salary of $562 thousand
STI payment of $889 thousand
MTI cash payment of $233 thousand
MTI grant valued at $160 thousand
|
|
Base salary of $518 thousand
STI payment of $723 thousand
MTI cash payment of $276 thousand
MTI grant valued at $166 thousand
LTI grants valued at $546 thousand
|
32
Overall, in 2013, an aggregate of 77% of the targeted compensation awarded to or earned by
our named executive officers other than Mr. Gallogly was tied to Company performance. This includes stock options and restricted stock units granted to Ms. Ovelmen and Mr. Roberts, as the ultimate value of those equity awards, if any,
is dependent on the Companys share price when they become exercisable or vest.
Administration of Compensation Programs
The following provides an overview of the responsibilities of the different parties in the administration of the
Companys executive compensation programs. It also highlights certain practices used by the Company and the Compensation Committee in making compensation decisions.
Compensation Committee
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|
|
Determines program principles and philosophies
|
|
|
|
Approves incentive design, performance metrics and goals
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|
|
Determines compensation for all executive officers, including the CEO and the other named executives
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|
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|
Approves the structure for delivering compensation opportunities, including forms of awards and terms and conditions as well as performance measures of
awards
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|
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Considers all other arrangements, policies and practices related to our executive compensation programs
|
Cook & Co. (Independent Committee Consultant)
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|
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Provides advice, research and analytical services on subjects such as trends in executive compensation, executive compensation program design and peer
group benchmarking
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Performs any other work as requested by the Committee
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|
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Participates in Committee meetings
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Provides no other services to the Company, other than periodic advice and research on director compensation
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Management
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Our CEO provides input to the Committee on the strategy, design and performance under incentive programs
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The CEO provides a self-assessment and performance evaluations and assessments of all of the named executive officers
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The CEO and the Senior Vice President - Strategic Planning & Transactions provide the Committee with analyses of Company performance as
compared to peers, including industry and Company specific information necessary for relative performance evaluations
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The Senior Vice President - Human Resources provides calculations, comparator group data and general recommendations for pay practice and plan design
recommendations generally
|
In addition to services related to executive compensation, Cook & Co.
also provides the Nominating & Governance Committee, when requested, with information and advice regarding the compensation of the members of the Supervisory Board. Cook & Co. has no other business relationships with the Company and
members of the Supervisory Board. The Compensation Committee adopted a written policy in 2011 to ensure the independence of any compensation consultants it uses for executive compensation matters. The Compensation
33
Committee has considered the independence of Cook & Co. in light of SEC rules and New York Stock Exchange listing standards. In connection with this process, the Compensation Committee
has reviewed, among other items, a letter from Cook & Co. addressing the independence of Cook & Co. and the members of the consulting team serving the Compensation Committee, including the following factors: (i) other services
provided to us by Cook & Co., (ii) fees paid by us as a percentage of Cook & Co.s total revenue, (iii) policies or procedures of Cook & Co. that are designed to prevent conflicts of interest, (iv) any
business or personal relationships between the senior advisor of the consulting team with a member of the Compensation Committee, (v) any Company stock owned by the senior advisor or any member of his immediate family, and (vi) any
business or personal relationships between our executive officers and the senior advisor. The Compensation Committee discussed these considerations and concluded that the work performed by Cook & Co. and its senior advisor involved in the
engagement did not raise any conflict of interest.
Benchmarking
The Company and the Compensation Committee use a national, general industry survey (the Towers Watson Executive Compensation Survey Report
U.S. (the Towers Survey)) for general compensation related data. An analysis of the information included in the Towers Survey establishes market levels of compensation for the positions of named executive officers based on the
revenue size of the company and the individuals responsibilities within the organization.
In addition to the Towers
Survey, in 2011 the Compensation Committee developed, with the assistance of management and Cook & Co., an executive compensation peer group comprised of 14 publicly traded similarly sized companies (Executive Peer Group). The
Executive Peer Group serves as a supplemental reference point for executive compensation data.
The Executive Peer Group
primarily is used for comparing executive compensation programs and practices generally and benchmarking the Companys equity compensation plans and programs. The use of the Executive Peer Group allows the Compensation Committee to compare
current pay and practices to those companies with which we compete for talent, customers and investor capital.
The table
below shows the companies included in our Executive Peer Group until September 2013, when the peer group was changed. The change in the peer group did not affect named executives 2013 compensation, other than the increases in pay for Messrs.
Patel and Roberts in connection with their promotions, as described under Evaluation of 2013 Performance for Compensation Decisions Base Salaries on page 36.
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2013 Executive Peer Group
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Air Products and Chemicals
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|
Dow Chemical
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|
Monsanto
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Alcoa
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DuPont
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|
PPG Industries
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Archer Daniels Midland
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|
Hess Corporation
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|
Praxair
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Bunge Limited
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International Paper
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Tesoro
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Marathon Petroleum
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Valero Energy
|
The selection process for the Executive Peer Group includes identifying companies in the chemical and oil
industries with similar revenues and market capitalization as the Company. Additionally, companies in related industries with similar worldwide operations, cyclicality, cost structures and business models are identified. Companies with these
characteristics are chosen because the Compensation Committee believes that it is appropriate to compare our executives compensation with executives that have similar responsibilities and challenges at other companies.
In September 2013, management, with the input of Cook & Co., provided a comprehensive review of the Executive Peer Group that
resulted in the recommendation to replace five of the fourteen companies previously used. The recommendations were based on the fact that the Company, given its growth over the last three years, has outgrown several of its peers. Also, there was a
desire to concentrate less on pure refining companies, which give too much weight to our refining operations. Finally, the Company reviewed peer companies that proxy
34
advisory firms are using for their compensation analyses. Based on a review of companies revenues and enterprise value, as well as peer companies of our peer group companies, the Committee
determined to remove and add the following companies from its Executive Peer Group:
|
|
|
Peer Companies Removed
|
|
Peer Companies Added
|
+ Archer Daniels Midland
|
|
3M
|
+ Bunge Limited
|
|
Honeywell
|
+ Tesoro
|
|
Johnson Controls
|
+ Hess Corporation
|
|
Caterpillar
|
+ Marathon Petroleum
|
|
Phillips 66
|
Pre-established Performance Goals
Before considering the performance metrics and the targets and goals within those metrics discussed below, the Compensation Committee considers whether certain pre-established performance goals were met.
The pre-established performance goals provide that no executive officer may receive payout of any annual cash bonus or qualified performance award granted in 2013 unless the Company achieves positive EBITDA in at least one calendar quarter that
commences on or after the grant date of the award (and during the performance cycle). If this performance goal is achieved, the Committee may determine that payouts have been earned under each of the STI and the MTI at the maximum amounts payable
under each such award, subject to any reductions of the maximum payout, as discussed below.
Performance Metrics and Targets
We use performance metrics for our STI and our MTI. The metrics used are those that we believe will produce the most
benefit to shareholders generally if we are successful in achieving targets within those metrics. Additionally, we use metrics, goals and targets that are objectively measurable, which allows us greater ability to gauge performance.
Our performance can be significantly affected, both positively and negatively, by industry-wide factors or general economic conditions
over which our executives may have little control. Therefore, we have set targets and goals within our different metrics that require high performance, but are not formulaic. The metrics and the considerations considered within those metrics are
described below.
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|
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|
STI Metrics
|
|
|
|
HSE Performance
: Continuously improving performance in all aspects of health,
safety and environmental industry measures. Ensures the safety of our people and the integrity of our assets, which increases our bottom line.
|
|
|
|
|
EBITDA
: Meeting or exceeding our forecasted EBITDA with references to market conditions
and competitive performance drives executives to continuously seek ways to improve their businesses and ensure all decisions are made in a manner designed to increase financial performance.
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|
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|
Costs
: Ensuring normalized fixed costs are always flat to falling means that we operate
efficiently, always looking for ways to rationalize our operations and otherwise ensure profitability.
|
MTI Metrics
|
|
|
|
Return on Assets
: Defined as operating EBITDA/operating assets, evaluating the
change in our Return on Assets from the beginning of the three-year performance period to the end of the performance period as compared to peers gives an indication as to how efficiently the Company has used its assets to generate revenue, as
compared to its peers.
|
|
|
|
|
Costs
: Measuring the Companys ability to control
costs as compared to its peers over a three-year period gives the Compensation Committee a means to judge the Companys discipline over a cycle.
|
35
Our Compensation Committee judges performance based on an analysis of all relevant
considerations, which we believe provides a more meaningful determination of actual performance. We do not believe that using solely formulaic targets allows the Committee to adequately take into account all of the factors that may affect the
Companys performance, both negatively and positively and ensure we truly pay for performance.
Evaluation of 2013 Performance for
Compensation Decisions
Base Salaries
- We pay base salaries to our named executives to provide them with
sufficient, regularly paid income for performing day-to-day responsibilities. As executives assume more responsibilities within the Company, a smaller percentage of their total potential compensation will be from base salary.
Each of our named executive officers other than Mr. Gallogly received a 2013 merit increase, effective April 1, 2013.
Mr. Gallogly requested that his base salary remain the same as in prior years.
The 2013 annual merit increases for
Ms. Ovelmen and Messrs. Glidden, Patel and Roberts were 3.5%, 3.5%, 5% and 5%, respectively. The Companys average targeted merit increase for employees generally was 3.5% in 2013. Actual merit increases are evaluated based on
individuals personal performance rating used for STI purposes and calibrated based on where their base salaries falls in relation to the median for their positions. As a result, to the extent a named executives base salary is higher than
the market median salary for his position, he may receive a lower merit increase than similarly performing peers, given our attempt to pay at the median of market.
Each of Mr. Patel and Mr. Roberts was promoted, effective October 1, 2013, from Senior Vice President to Executive Vice President. These promotions were in recognition of their significant
contributions to the Companys performance and achievements relating to its strategic and operational goals. Additionally, each of Messrs. Patel and Roberts were given direct supervisory authority for all manufacturing operations in their
respective geographic areas of responsibility. The Compensation Committee believes that these promotions and the increased level of responsibility is an important part of the Companys overall executive succession planning.
In connection with the promotions, Mr. Patel and Mr. Roberts each were given a raise. Mr. Patel was given a base salary
increase of 7.5%, raising his base salary to $600,000. Mr. Roberts was given a base salary increase of 20%, increasing his base salary to $600,000. These amounts were chosen for each executive to reflect their increased responsibilities in
managing their respective operations and was based on internal equity among our executives and benchmarking data for executives in their positions. Using the Executive Peer Group as revised in 2013, these increases result in each of Messrs. Patel
and Roberts increased base salaries representing the median base salaries for similarly situated executives at the new Executive Peer Group.
Annual Bonuses (STI)
- Annual cash bonus awards are earned for achieving the Companys goals that are measurable over the current fiscal year.
Our named executives bonuses are targeted at a percentage of base salary. The target percentages were
determined based on the targeted amounts deemed necessary to recruit those individuals when they joined the Company, with the Companys aim to use targets at around the 50
th
percentile for similar positions at other companies.
Upon satisfaction of the pre-established performance goals described above, actual payments earned under the STI can range from zero to
300% of the targeted payout. The actual payments earned are based on achievement of goals under the Company performance metrics and personal performance. Mr. Gallogly, however, is limited to an STI payment of 200% of his annual base salary
pursuant to the terms of his current employment agreement. Structuring the bonuses to allow for payment of a multiple percentage of target supports our philosophy of targeting compensation at the median, but offering the possibility of increased
actual pay if performance is achieved.
36
For 2013, bonus targets and maximum bonus payouts, each as a percentage of base salary, for
the named executive officers are shown below.
|
|
|
|
|
|
|
|
|
Named Executive
|
|
Target Bonus
|
|
|
Maximum Bonus
|
|
|
|
(as a percentage of base salary)
|
|
Mr. Gallogly
|
|
|
100
|
%
|
|
|
200
|
%
|
Ms. Ovelmen
|
|
|
75
|
%
|
|
|
225
|
%
|
Mr. Glidden
|
|
|
80
|
%
|
|
|
240
|
%
|
Mr. Patel
|
|
|
80
|
%
|
|
|
240
|
%
|
Mr. Roberts
|
|
|
75
|
%
|
|
|
225
|
%
|
The 2013 bonuses for our named executive officers are based on three components:
|
|
|
Award Units ratings; and
|
|
|
|
Individual performance ratings.
|
The calculation of the three components to determine the total percentage of the targeted bonus that can be earned is as follows:
Company Scorecard
The following shows the calculation of the 2013 Company Scorecard:
37
The Compensation Committee reviewed the Companys performance for each of HSE
Performance, EBITDA and Costs, and made the determinations described below, resulting in a Company Scorecard Result of 155% of the total targeted earned payout.
HSE Performance
The Compensation Committee reviewed the Companys
performance in achieving health, safety and environmental excellence. Specifically, it looked for continuous improvement, as well as where the Companys performance currently lies as compared to peers and the industry. Finally, the Committee
considered the severity of any incidents and the Company and managements overall ability to train and emphasize the importance of these matters to all of its constituents, as shown not only by the actual results, but also key internal
measurements such as results of HSE audits in the Company. The tables below show the Companys progress in and achievement of providing safe and environmentally sound operations. Considering the continued performance, which is already
considered top decile as compared to peers and the industry, the Committee determined to pay 140% of the target for HSE performance.
|
|
|
|
|
TRIR*
|
|
Environmental Incidents*
|
|
Process Safety Incidents*
|
|
*
|
The tables show the Companys metrics using 2011s results as the baseline. TRIR is total recordable incident rate, and is a measure of recordable
events per 200,000 work hours. Environmental incidents include releases or discharges in excess of permitted or authorized amounts. Process safety incidents include any fire, explosion or loss of primary containment such as an unintended release or
spill above a threshold amount.
|
Business Performance (EBITDA)
The Companys business results in 2013 were outstanding, delivering the third consecutive year of record EBITDA, as shown in the
table below.
The Compensation Committee considered the continued improvement in performance of the Company,
but also economic conditions and the performance of the industry as a whole. The Committee recognized that the Company continued to benefit from the lower natural gas and natural gas liquids costs, which allowed lower costs for ethylene production
in the U.S. However, even with this advantage, much of the Companys success was due to the Companys high operating rates and reliability of its facilities which, at times during 2013, ran at above nameplate. The Committee also considered
the improved performance in our European olefins and
38
polyolefins business as a result of running manufacturing facilities using less expensive raw materials and the continued execution of gap closure plans to improve performance. With respect to
other businesses, the Committee considered the revenue enhancements and cost reductions in our intermediates and derivatives business that allowed it to outperform its peers. The Committee also considered the Refining segments results in 2013
as compared to peers, and how it performed relative to similarly situated Gulf Coast refiners. Considerations relating to the Refining segment included high costs related to biofuel requirements and weak worldwide market crack spreads. Taking into
account the different drivers that affected our businesses, and our performance that, overall, was stronger than our relevant peers, the Committee determined to pay 170% of the target for EBITDA.
Costs
The Committee
discussed the Companys continued focus on cost improvement initiatives and maintaining its fixed cost structure, particularly given the significant cost savings achieved over the prior three years. The chart below shows the statistical
information reviewed by Committee. With respect to the Companys performance related to costs, the Committee considers foreign exchange rates, accruals for STI in excess of target and in some cases, restructuring costs.
As the chart shows, the Company has held its normalized fixed costs essentially flat over the last three years, and below the
inflationary trend generally. The Committee reviewed and discussed headcount reductions, reorganizations and other efforts the Company has made to determine whether the continued cost controls should be rewarded. In considering the Companys
performance in controlling costs, the Committee also discussed the Companys performance as compared to other companies generally, including its peers. The Committee determined that the Companys ability to hold its costs flat,
particularly when it is growing its business and in light of inflationary pressures, should result in a payment of 140% of the target for Cost.
Award Units -
Award units are the units of business and operations or functional groups
that are assigned to each executive for responsibility. In 2013, we had 61 award units, each of which is categorized as either Business, Manufacturing, or Services. The charts below show the metrics used for
performance of the different types of award units:
39
The weighting of the different performance metrics for the different types of award
units is based on the functions of the award units. Business award units represent commercial operations; Manufacturing award units represent the actual plants operations; and Services award units represent functional and administrative groups
within the Company, such as Finance, Legal and Supply Chain. HSE performance has a higher weighting for Manufacturing award units, as it is at our sites and facilities where there is the greatest possibility of an HSE incident. EBITDA has a greater
weighting for Business award units, as they can have a bigger impact on our financial results through feedstock purchases, contracts with customers, and similar decisions. The Services award units are not profit centers and, as a result, are not
measured based on EBITDA. Their performance is measured by their HSE performance, their cost controls and a customer satisfaction process through which they are judged by senior managers throughout the organization on their service to the Company
and the achievement of their annual goals.
The following table shows the award units attributed to each of the named
executives other than Mr. Gallogly. The weighting of each award unit as shown in the table was determined by such items as relative production capacities of businesses, number of employees at sites and the significance of the award unit to the
strategic goals of the Company. Additionally, there was a consideration of the complexity of each award unit to determine the amount of the executives time and energy that is spent managing that award unit.
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive
|
|
Type of Award Unit
|
|
Name of Award Units
|
|
Weighting
|
|
|
Award Unit
Earned
Percentage
|
|
Karyn F. Ovelmen
|
|
Services
|
|
Finance
|
|
|
60
|
%
|
|
|
155
|
%
|
|
|
|
|
IT
|
|
|
40
|
%
|
|
|
139
|
%
|
Craig B. Glidden
|
|
Services
|
|
Legal
|
|
|
80
|
%
|
|
|
167
|
%
|
|
|
|
|
Public Affairs
|
|
|
20
|
%
|
|
|
139
|
%
|
Bob V. Patel
|
|
Businesses
|
|
EAI Olefins
|
|
|
20
|
%
|
|
|
149
|
%
|
|
|
|
|
Global PCMA
|
|
|
15
|
%
|
|
|
161
|
%
|
|
|
|
|
PP & Catalloy Europe
|
|
|
12.5
|
%
|
|
|
143
|
%
|
|
|
|
|
PE Europe and PB-1
|
|
|
12.5
|
%
|
|
|
147
|
%
|
|
|
|
|
Catalysts
|
|
|
10
|
%
|
|
|
144
|
%
|
|
|
|
|
Licensing & Technology Services
|
|
|
10
|
%
|
|
|
158
|
%
|
|
|
|
|
Australia PP
|
|
|
1
|
%
|
|
|
141
|
%
|
|
|
|
|
AFMEI & Asia Polyolefins
|
|
|
8
|
%
|
|
|
139
|
%
|
|
|
Manufacturing
|
|
Australia: Geelong & Clyde
|
|
|
1
|
%
|
|
|
122
|
%
|
|
|
Services
|
|
Supply Chain EAI
|
|
|
10
|
%
|
|
|
146
|
%
|
Timothy D. Roberts
|
|
Businesses
|
|
Olefins Americas
|
|
|
55
|
%
|
|
|
163
|
%
|
|
|
|
|
PE Americas
|
|
|
20
|
%
|
|
|
159
|
%
|
|
|
|
|
PP & Catalloy Americas
|
|
|
10
|
%
|
|
|
131
|
%
|
|
|
|
|
PP Argentina
|
|
|
5
|
%
|
|
|
100
|
%
|
|
|
Services
|
|
Supply Chain Americas
|
|
|
10
|
%
|
|
|
154
|
%
|
Mr. Gallogly, as CEO and sole member and Chairman of the Management Board, has supervisory
responsibility for all award units within the Company. As a result, his award unit calculation is the average of all 61 award units within the Company, which was 146% of the total targeted payout.
The following is a discussion of the factors considered in determining the award unit payouts, based on the metrics of HSE performance,
Costs, EBITDA and Customer Satisfaction as described. Senior management of the Company, led by the CEO, goes through an intensive process of reviewing the results of each award unit within the Company. The results of these reviews are presented to
the Compensation Committee for its review and approval.
HSE Performance for Award Units
- The health, safety and
environmental performance targets for award units is continuous improvement. Each award unit receives an earned percentage of between 0% and 200% of its
40
respective target for HSE performance (10% for Business; 15% for Manufacturing; and 10% for Services). The earned percentages are based on the number (or absence) of injuries, process safety
incidents and environmental incidents. The severity of any such events within each award unit that contributed to the Companys overall HSE performance was also considered. In reviewing the number of any incidents at an award unit, the degree
of difficulty in achieving our Goal Zero target also was considered, such as safety incidents in office locations compared to manufacturing locations. Finally, the extent to which performance was improved over prior years and any trends in safety
performance were factored into the considerations. The earned percentages for the safety metrics in the award units ranged from 40% to 200%, with an average of 146%.
Costs Metric for Award Units
- To determine the performance in the Cost metric for each award unit, management reviewed the award units operating, selling, general & administrative
and other expenses within the year, as applicable. Consideration was given to those factors that management deemed important in judging the units success in controlling or cutting costs, including whether the particular award unit met its
budget for the year. The Committee reviewed the specific actions taken by the award units to drive cost reductions or containments. Any process improvements, reorganizations, and other factors that may have long-term beneficial impact
notwithstanding short-term costs were considered, as were award units ability to absorb unexpected costs. The impact of certain external factors such as exchange rates, labor markets, and political issues generally was excluded. Individual
award unit earned percentages ranged from between 90% and 180%, with an average of 136%.
Business Results for Award
Units
- To determine the payouts for the business results measures for the Business and Manufacturing award units, management reviewed the particular operations EBITDA within the year, primarily as compared to the prior year, taking into
account any positive or negative Company specific, industry, or general economic conditions. Consideration was given to specific actions taken by the award unit to increase EBITDA, including process improvements, reorganizations, contract
negotiations, business development efforts and margin improvements. Additionally, the reliability of the Manufacturing award units facilities and any specific outperformance of industry conditions by award units generally were considered. The
impact of certain external factors such as exchange rates generally was excluded. The earned percentages for the Business and Manufacturing award units Business Results ranged between 70% and 200%, with an average of 152%.
Customer Satisfaction for Award Units
- The customer service ratings for Services award units were based on ratings given by
executive officers and other senior leaders of the Company for each of the Companys functional and administrative award units. As shown in the table above, the Services award units for Ms. Ovelmen and Messrs. Glidden, Patel and Roberts
included Finance, IT, Legal, Public Affairs and Supply Chain services. Mr. Galloglys award unit performance is based on all award units within the Company, and include such additional Services award units as HR, Strategic
Planning & Transactions, R&D, Procurement, Global Projects, Global Engineering Services and HSE and Operational Excellence. The ratings for Services award units were influenced by the internal Company clients satisfaction with the
services provided, as well as the success of each department in meeting its top goals for the year. The considerations for the ratings included specific action items by the departments to further the interests of the Company and to meet
clients expectations. The earned percentages for Customer Satisfaction for the Companys Services award units ranged between 120% and 200%, with an average of 152%.
Individual Performance Ratings
The individual performance ratings for named executive officers can range from 0 to 1.5. These ratings are used as a multiplier to the aggregate of the
Company Scorecard and Award Units results for each named executive. The individual modifier can therefore cause the Company Scorecard and Award Units calculation to pay out at anywhere from 0 to 150% of the actual calculation that is based on the
determination of the achievement of goals under the metrics for those components.
We use the individual modifier because our
business and financial results can be significantly impacted by economic factors outside the control of the Company and management. Mitigation of the impact of adverse conditions, the continuous improvement of our organization and driving growth are
expectations of our named
41
executives. Employing the individual modifier further drives our goal to pay for performance by making sure that named executives are properly rewarded for their personal performance and
individual contributions to the Companys success.
The Compensation Committee reviews the individual modifiers
recommended for executives by Mr. Gallogly based on his performance assessments of each individual, based primarily on their individual performance goals. The Compensation Committee also considers its own observations and analyses based on the
Supervisory Boards oversight of each of the named executives areas of responsibility. In determining Mr. Galloglys individual modifier, the Committee considered Mr. Galloglys own self-assessment, with respect to
achieving his personal goals specific to his function as CEO. These goals include items that are meant to achieve performance for the award unit ratings, but also include such matters as personnel and staffing issues, department initiatives,
business process improvements, responses to economic factors and others.
Based on the reviews and evaluations the named
executives performance in 2013, the Committee approved the multipliers shown in the table below.
|
|
|
|
|
Named Executive
|
|
Individual
Modifier
|
|
Mr. Gallogly
|
|
|
1.5
|
*
|
Ms. Ovelmen
|
|
|
1.1
|
|
Mr. Glidden
|
|
|
1.3
|
|
Mr. Patel
|
|
|
1.3
|
|
Mr. Roberts
|
|
|
1.2
|
|
*
|
Mr. Gallogly was given a performance rating, or individual modifier, of 1.5. As shown in the table below, his individual modifier, along with the Company Scorecard and
Award Unit earned amounts would result in his STI payout being at 225% of his target bonus percentage of 100% of base salary. However, as discussed elsewhere in this CD&A, Mr. Galloglys employment agreement limits his STI payout to
200% of his base salary.
|
Total 2013 Annual Cash Incentive Payments for Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive
|
|
(Company
Scorecard
|
|
|
+
|
|
Average of Award
Unit(s))
|
|
|
x
|
|
Individual
Modifier
|
|
|
=
|
|
Total Payout as a
Percentage of
Target Bonus
|
|
Mr. Gallogly
|
|
|
77.5
|
|
|
+
|
|
|
73.0
|
|
|
x
|
|
|
1.5
|
|
|
=
|
|
|
225
|
%*
|
Ms. Ovelmen
|
|
|
77.5
|
|
|
+
|
|
|
74.5
|
|
|
x
|
|
|
1.1
|
|
|
=
|
|
|
167
|
%
|
Mr. Glidden
|
|
|
77.5
|
|
|
+
|
|
|
80.5
|
|
|
x
|
|
|
1.3
|
|
|
=
|
|
|
205
|
%
|
Mr. Patel
|
|
|
77.5
|
|
|
+
|
|
|
74.5
|
|
|
x
|
|
|
1.3
|
|
|
=
|
|
|
198
|
%
|
Mr. Roberts
|
|
|
77.5
|
|
|
+
|
|
|
77.5
|
|
|
x
|
|
|
1.2
|
|
|
=
|
|
|
186
|
%
|
*
|
As discussed elsewhere in this CD&A, Mr. Galloglys employment agreement limits his STI payout at 200% of his base salary. Although his individual
modifier, along with the Company Scorecard and Award Unit earned amounts would result in his payout STI payout being at 225% of his target bonus percentage of 100% of base salary as shown in the table above, his actual payout was capped at 200% of
base salary.
|
42
Medium-Term Incentive Compensation
Under our MTI, we grant performance based incentive awards that may be earned based on the achievement of certain Company financial
results after a three-year performance period. Target awards are based on a specified cash dollar amount that is a percentage of base salary. Our named executives can earn from 0 - 200% of target, depending on the Companys performance as
compared to peers, as determined by the Compensation Committee. The metrics used and the relative weighting of metrics for MTI awards are shown below:
In determining the performance by the Company on the metrics shown above, Company results are compared
to a group of comparative companies. In this regard, the performance evaluation for MTI purposes is relative, and performance is only achieved if the Company has differentiated itself from its peers.
The companies whose performance we review to assist in making these determinations are listed below. These companies were chosen because
they are the companies with whose performance we measure our self generally to determine relative performance as compared to the industry.
|
|
|
|
|
Chemical Companies (Weighted 80%)
|
|
Refining Companies (Weighted 20%)
|
BASF
|
|
Westlake Corp.
|
|
Valero Energy Corp.
|
Dow Chemical
|
|
ExxonMobil Chemical Segment
|
|
Tesoro Corp.
|
Huntsman Corp.
|
|
Ineos
|
|
Western Refining Inc.
|
Celanese Corp.
|
|
CP Chemical Co.
|
|
ALON USA Energy Inc.
|
Eastman Chemical Corp.
|
|
Borealis
|
|
Holly Frontier Corporation
|
|
|
Nova
|
|
|
Amounts Earned under 2011 MTI Grants (2011-2013 performance period)
The three-year performance period for the MTI awards granted in 2011 ended as of December 31, 2013. The Committee determined that the
Company had earned 175% of the target MTI. This resulted in cash payments to our named executive officers as follows:
|
|
|
|
|
Named Executive
|
|
Payout of 2011 MTI Award with
Performance Period ended
December 31, 2013
|
|
Mr. Gallogly
|
|
$
|
2,625,000
|
|
Ms. Ovelmen
|
|
$
|
428,750
|
|
Mr. Glidden
|
|
$
|
536,186
|
|
Mr. Patel
|
|
$
|
233,125
|
|
Mr. Roberts
|
|
$
|
275,625
|
|
These payments are reflected in the Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table on page 50 of this proxy statement.
In determining that the Company had earned 175% of the target
payout for the 2011 MTI grant, the Compensation Committee reviewed the results of the Company in Return on Assets and Costs as compared to the Comparative Peer Group shown above. Specific considerations by the Committee in making this determination
are discussed below.
43
Return on Assets
The Companys increase in Return on Assets as compared to the chemical companies in the Comparative Group exceeded all but one of those companies. The strong performance emphasized the Companys
success in achieving profitability from its assets. In considering the Companys chemicals businesses performance in relation to the comparative peers, it looked at the objective performance (second in improvement of the 12 companies) as
well as the factors that influenced that performance. For example, certain of the comparative peers have more significant Middle Eastern operations, with feedstock advantaged positions, which should result in their outperformance. However, the
Company was able to outperform those peers on this metric.
When considering the Companys performance relative to the
refining company peers, the Committee specifically analyzed certain factors such as the Maya 2-1-1 and the portfolio of assets of the comparative peers. The Companys performance as compared to the refining peers for Return on Assets was, on an
absolute basis, lower than the comparative companies. In discussing these results, the Committee considered that the Companys operations include only one refinery, in the Gulf Coast, which negatively influenced results as compared to peers,
because it was disadvantaged in relation to mid-continent crude. The Committee also considered lost profit opportunities as a result of operational upsets at the Companys refinery, which negatively impacted the Company as compared to the
comparison peers.
Costs
The Committee reviewed the Companys 2011 to 2013 performance in cost controls as compared to the comparative peers. In evaluating the comparative performance, the Committee considered the trending
information for the comparative peers as compared to the Company. Additionally, the Committee discussed third party benchmarking data regarding the cost curves for the Companys individual plants, which show that the plants have increased, as
compared to peers generally, over the three-year performance period. Finally, the Committee considered the Companys ability to hold costs below inflation.
2013 Grants of MTI Awards
In 2013, each of our named executive officers
was granted a share-based MTI award, or qualified performance award. The 2013 grants will be settled in the first quarter of 2016 based on the Companys achievement of Return on Assets and Costs improvement as compared to peers over
the three-year period ending December 31, 2015.
The table below shows the percentage of base salary of each of the named
executive officers 2013 grant. The dollar amount that is equal to the percentage of base salary shown below was divided by the fair market value of our shares on the date of grant to determine the target number of share units granted. As
described in this CD&A, the actual earned amounts can range from 0 200% of the target, depending on the Companys satisfaction of the pre-established performance goals and performance in the Return on Assets and Costs metrics as
compared to peers. The percentages of base salaries as shown in the table that were used to determine the target awards were based on negotiations with the individuals when they were recruited, with the Company attempting to target the median for
similar awards of individuals in similar positions at peer companies.
|
|
|
|
|
|
|
|
|
Named Executive
|
|
Target 2013 MTI
Award
(Percentage of Base Salary)
|
|
|
Number of Share
Units
|
|
Mr. Gallogly
|
|
|
100
|
%
|
|
|
24,790
|
|
Ms. Ovelmen
|
|
|
60
|
%
|
|
|
7,150
|
|
Mr. Glidden
|
|
|
55
|
%
|
|
|
5,615
|
|
Mr. Patel
|
|
|
30
|
%
|
|
|
2,637
|
|
Mr. Roberts
|
|
|
35
|
%
|
|
|
2,747
|
|
44
Long-Term Equity-Based Incentive Compensation
For executive officers that joined the Company in 2011 and later, the Company grants annual awards consisting of stock options and
restricted stock units, or RSUs. Ms. Ovelmen and Mr. Roberts are the only named executives who have received annual grants of these awards. Annual grants are made at the first, regularly scheduled meeting of the Compensation Committee each
year, which normally occurs in February. Any other grants, such as for new hires and promotions, are made either at the next scheduled meeting of the Compensation Committee after the event.
Stock Options
Stock options are included as a component of the equity
compensation awarded to our named executive officers in order to direct focus on increasing the market value of our shares. The number of options granted to the named executive officers is based on a target, based on a percentage of base salary.
That dollar amount is divided by the Black Scholes value of options for the Company as of the date of grant, resulting in a number of stock options granted. The stock options granted to Ms. Ovelmen and Mr. Roberts in 2013 vest ratably over
a three year period beginning on the first anniversary of the date of grant. The exercise price of the options is the fair market value of our shares on the date of grant, and the options have a term of 10 years.
Restricted Stock Units
RSUs support our compensation philosophy because they provide retention value through service-based vesting and alignment with
shareholders because the ultimate value is tied to the Companys share price. Upon vesting, holders of RSUs receive one share for each unit. The number of RSUs granted to our named executives is determined based on a targeted percentage of base
salary. That amount is divided by the fair market value of our shares on the date of grant, resulting in the number of RSUs granted. RSUs granted in 2013 vest in full five years from the date of grant, subject to general vesting and forfeiture
provisions. Recipients receive dividend equivalents on unvested units throughout the vesting period, but they do not have the right to vote their restricted stock units. Restricted stock units are not considered performance-based under
Section 162(m) of the Internal Revenue Code.
As a general matter, the value of the equity awards, which is equal to a
target percentage of base salary, was determined when each of the named executives was recruited to join the Company. The negotiations by the Company included targeting awards at the median for similarly positioned executives at peer companies. The
value of Ms. Ovelmen and Mr. Roberts 2013 annual stock option and RSU grants are shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive
|
|
Value of Equity Awards
at Date of
Grant
|
|
|
Percentage of
Base Salary
|
|
|
|
Options
|
|
|
RSUs
|
|
|
Total
|
|
|
|
|
Karyn F. Ovelmen
|
|
$
|
889,246
|
|
|
$
|
444,627
|
|
|
$
|
1,333,873
|
|
|
|
185
|
%
|
Timothy D. Roberts
|
|
$
|
363,985
|
|
|
$
|
182,014
|
|
|
$
|
545,999
|
|
|
|
115
|
%
|
Other Benefits
Effective January 1, 2013, the Compensation Committee approved an amendment to the Companys U.S. Senior Management Deferral Plan to include a restoration feature. The restoration feature of the
Deferral Plan provides for Company contributions on pay in excess of certain IRS limits at the same rates credited under the LyondellBasell Savings Plan (a defined contribution and 401(k) plan) and the LyondellBasell Retirement Plan (a defined
benefit cash balance retirement plan), which are 6% and 5%, respectively. Benefits contributed by the Company are unfunded and unsecured. Upon retirement eligibility, individuals receiving the contributions commence benefits, subject to any delays
required under Section 409A of the Internal Revenue Code.
We provide our named executive officers with up to $15,000 per
year in financial planning assistance. We also provide them with benefits available to our employees generally. Those benefits are 401(k) plan matching contributions; life and disability benefits; vacation pay; eligibility to participate in health
and other welfare
45
benefit plans; and pension plans. Additionally, we at times make expatriation payments to employees to make them whole when a requested relocation would adversely affect their compensation due to
increased costs of living and different tax regimes. We have made these expat payments to Mr. Patel, as disclosed in the Summary Compensation Table on page 50. The payments to Mr. Patel are to compensate him as part of his expatriation
package as a result of his relocation from Houston, Texas to The Netherlands.
In order to remain competitive and if unusual
or special circumstances arise, we may determine to provide certain perquisites to our named executive officers in the future.
Severance and Change in Control Payments
We entered into employment agreements with Messrs. Gallogly, Glidden, Patel and Roberts when they joined the Company. The agreements were based on competitive market practices and were entered into to
provide a form of protection for the Company through restrictive covenant provisions and to ensure fair treatment to executives for joining a Company that either was not yet publicly traded, or had only just become publicly traded. The benefits and
protections provided by the agreements were deemed necessary for recruitment purposes as well as incentive purposes, given the uncertain future of the Company in the 2009 2011 time period. In the third quarter of 2011, based in part on the
Companys performance and industry conditions generally, the Compensation Committee made the determination to cease entering into employment agreements with U.S. employees, including executive officers.
The Company adopted an executive severance program in late 2011pursuant to which the Compensation Committee may determine to offer
members of senior management certain severance benefits in excess of that which is offered to employees generally if the Committee deems it appropriate based on the facts and circumstances of the individuals level of responsibility and
circumstances. Ms. Ovelmen participates in the severance program, which will provide her with a lump sum cash payment of 1x base salary
Generally, the severance arrangements included in the named executive officers employment agreements provide for a severance payment determined by reference to one years base salary and target
bonus in the event of termination without cause or for good reason by the named executive. Mr. Galloglys current agreement provides for severance payments in the event of death, disability or mutual consent. For more details regarding
potential payments upon termination of employment, see -Potential Payments upon Termination of Employment or Change in Control beginning on page 57 of this proxy statement.
We believe change in control protections can ensure impartiality and objectivity for our executives and enhance the interest of our
stockholders.
Awards granted under the LTI, unless otherwise provided in an applicable award or employment agreement, have a
double-trigger change in control provision. This means the awards will vest in the event of a change in control of the Company that is followed by constructive termination or involuntary termination without cause within one year.
Mr. Galloglys employment agreement has a single-trigger provision that provides for immediate vesting upon a change in control, regardless of a change in his employment status. Mr. Galloglys current employment
agreement contains the only single-trigger provision in our equity compensation programs. This provision was deemed necessary to recruit Mr. Gallogly from his previous position and was approved by the bankruptcy court. These provisions will
terminate when Mr. Galloglys new employment agreement becomes into effect in May 2014.
Claw-Back Provisions
In May 2013, the Compensation Committee adopted a Claw-Back Policy applicable to all executive officers, including the named executives.
Pursuant to the policy, for any awards granted after the date of the policy, if the Committee determines that any named executive has engaged in or benefitted from misconduct that materially increased the compensation he has received, the Committee
shall recover any and all affected payments.
46
Share Ownership Guidelines
The Companys Share Ownership Guidelines provide that executive officers are prohibited from selling more than 50% of the net shares received upon vesting or exercise after the payment of exercise
prices and withholding taxes, as applicable, until certain levels of share ownership are reached. The share ownership levels are based on a percentage of base salary. For purposes of the Guidelines, shares owned directly or beneficially, restricted
stock units, and deferred restricted stock units are all counted toward ownership levels. Unvested and unexercised stock options and stock appreciation rights are not counted towards meeting the Guidelines.
As of January 2014, when we determine whether executives have met their ownership requirements to determine whether they are allowed to
divest of shares, each of our named executive officers other than Ms. Ovelmen and Mr. Roberts, both of whom joined the Company in 2011, had exceeded the ownership guidelines applicable to his or her job level.
The table below shows the required ownership levels for our officers, based on title.
|
|
|
|
|
Level
|
|
Ownership Guideline
|
|
Chief Executive Officer
|
|
|
6 x Base Salary
|
|
Executive Vice President
|
|
|
4 x Base Salary
|
|
Senior Vice President
|
|
|
3 x Base Salary
|
|
Vice President
|
|
|
2 x Base Salary
|
|
Prohibition on Insider Trading and Hedging
The Company maintains an insider trading policy that prohibits the named executive officers from engaging in most transactions involving
the Companys shares during periods, determined by the Company, that those executives are most likely to be aware of material inside information. Named executive officers must clear all of their transactions in our shares with the
Companys Corporate Secretarys office to ensure they are not transacting in our securities during a time that they may have material, nonpublic information.
Additionally, as a general matter, it is our policy that no transactions that reduce or cancel the risk of an investment in our shares, such as puts, calls and other exchange traded derivatives, or
hedging activities that allow a holder to own a covered security without the full risks and rewards of ownership, will be approved. We consider it inappropriate for our executive officers to engage in short-term speculation in our securities based
on fluctuations in the market or to engage in other transactions in our securities that may lead to inadvertent violations of the insider trading laws. Accordingly, individuals subject to our Policy Prohibiting Insider Trading, which is applicable
to all executive officers, are prohibited from purchasing, selling or writing options on our securities or engaging in transactions in other third-party derivative securities with respect to our securities, including puts, calls, short sales,
collars, forward sale contracts, and other short-term purchase or sale transactions. Transactions involving both the purchase and sale of our securities in the open market within a one week period are presumed to be prohibited short-term
purchase or sale transactions.
Tax Matters
Our Compensation Committee believes it is appropriate to structure compensation of our executive officers in a manner that is in the best interests of the Company and its stakeholders. This means such
compensation programs will be designed, in accordance with our compensation philosophy, to attract and retain highly qualified individuals and instill a performance culture throughout the organization. As a result, compensation of our executive
officers may or may not be designed to be fully deductible in accordance with Section 162(m), as described below, depending on what the Committee determines to be in the best interests of the Company and our shareholders.
Section 162(m) of the Internal Revenue Code denies a compensation deduction for federal income tax purposes for annual compensation
in excess of $1 million paid to our CEO and the three other most highly compensated officers other than the CFO unless the compensation is performance based under the rules and regulations of the Internal Revenue Service.
47
Changes to CEO Compensation as a Result of New Employment Agreement
As we have disclosed, in September 2013, we entered into a new employment agreement with our CEO, effective as of May 14, 2014. The
new agreement provides for certain changes in his compensation, as shown below:
|
|
|
|
|
Element of Compensation
|
|
New Compensation
|
|
Change from Current Compensation
|
Base Salary
|
|
$1,650,000
|
|
Increase of 10%
|
|
|
|
Target Annual Bonus
|
|
150% of base salary
|
|
Increase of 50%
|
|
|
|
Target Performance Share Unit Award
|
|
125% of base salary
|
|
Increase of 25%
|
|
|
|
Stock Options
|
|
Valued at 300% of base salary
|
|
Mr. Gallogly has not received a stock option grant since our shares became publicly traded in 2010. Stock options will vest in three equal annual installments beginning on the
first anniversary of the date of grant.
|
|
|
|
Restricted Stock Units
|
|
Valued at 300% of base salary
|
|
Mr. Gallogly has not received annual grants of RSUs or restricted shares since his 2010 grant when our shares became publicly traded. The RSUs will vest in full three years from
the date of grant, subject to standard forfeiture provisions.
|
48
Executive Compensation Tables
We are required to present compensation information in the tabular formats prescribed by the SEC. This format, including the tables
column headings, may be different from the way we describe or consider elements and components of our compensation internally.
We believe the following information may be useful to an understanding of the tables presented in this section. The CD&A contains a
discussion that should be read in conjunction with the compensation tables included in this section to gain a complete understanding of our executive compensation philosophy, programs and decisions.
Annual Cash Incentive Awards
- Our annual cash bonuses are earned and paid under our STI based on the achievement of performance
goals. As a result, for SEC disclosure purposes they are included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table, rather than the Bonus column.
In March 2014, we made annual incentive award payments under the STI to the named executives, as disclosed in the Summary Compensation
Table. Notwithstanding that the awards have been earned and paid, we are required to include the threshold, target and maximum dollar amounts that could have been paid for 2013 performance in the Estimated Possible Payouts Under Non-Equity
Incentive Plan Awards, in the Grant of Plan-Based Awards in 2013 table. This disclosure enables readers to compare the amounts actually earned, as disclosed in the Summary Compensation Table, to the named executives possible
payments, as disclosed in the Grant of Plan-Based Awards in 2013 table.
Equity Awards
- The value of the
equity awards included in the tables is the aggregate fair value of the awards on the date of grant, calculated pursuant to U.S. GAAP. SEC disclosure rules require us to include the aggregate grant date fair value, which is effectively the
accounting value of the award over the entire time period that it is earned. This amount is required to be disclosed, notwithstanding that the executives are not entitled to the awards until they vest and for financial reporting purposes, we
recognize compensation expense over the life of the awards as they are earned.
The values of stock awards included in the
tables are neither guarantees of performance by the Company nor the actual compensation that may be earned by or paid to the executives. Instead, as described, the amounts represent the fair value of the awards for financial reporting purposes.
Although we consider all of our equity awards to be a form of incentive compensation because their value will increase as the
market value of our shares increases, only awards with performance criteria are considered equity incentive plan awards for SEC disclosure purposes. As a result, only the share-based MTI awards have been included as Equity
Incentive Plan Awards in the Outstanding Equity Awards at December 31, 2013 table. Restricted and stock options are disclosed in other tables, as applicable.
49
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal
Position (1)
|
|
Year
|
|
|
Salary
|
|
|
Bonus (2)
|
|
|
Stock
Awards (3)
|
|
|
Option
Awards (4)
|
|
|
Non-Equity
Incentive Plan
Compensation
(5)
|
|
|
Change in
Pension
Value
(6)
|
|
|
All
Other
Compensation
(7)
|
|
|
Total
|
|
James L. Gallogly
|
|
|
2013
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
1,500,043
|
|
|
|
|
|
|
|
5,625,000
|
|
|
|
14,113
|
|
|
|
501,217
|
|
|
|
9,140,373
|
|
Chief Executive Officer
|
|
|
2012
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
7,796,721
|
|
|
|
|
|
|
|
5,700,000
|
|
|
|
13,284
|
|
|
|
6,232,922
|
|
|
|
21,242,927
|
|
|
|
2011
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
11,063,757
|
|
|
|
3,000,000
|
|
|
|
12,680
|
|
|
|
7,909,325
|
|
|
|
23,485,762
|
|
|
|
|
|
|
|
|
|
|
|
Karyn F. Ovelmen
|
|
|
2013
|
|
|
|
739,926
|
|
|
|
|
|
|
|
877,274
|
|
|
|
889,246
|
|
|
|
1,356,725
|
|
|
|
11,826
|
|
|
|
83,648
|
|
|
|
3,958,645
|
|
Executive Vice President & Chief Financial Officer
|
|
|
2012
|
|
|
|
715,750
|
|
|
|
|
|
|
|
1,135,092
|
|
|
|
863,335
|
|
|
|
943,352
|
|
|
|
11,039
|
|
|
|
188,625
|
|
|
|
3,857,193
|
|
|
|
2011
|
|
|
|
148,076
|
|
|
|
296,154
|
|
|
|
245,000
|
|
|
|
456,300
|
|
|
|
|
|
|
|
2,624
|
|
|
|
118,723
|
|
|
|
1,266,877
|
|
|
|
|
|
|
|
|
|
|
|
Craig B. Glidden
|
|
|
2013
|
|
|
|
633,899
|
|
|
|
|
|
|
|
339,764
|
|
|
|
|
|
|
|
1,577,930
|
|
|
|
13,417
|
|
|
|
73,063
|
|
|
|
2,638,123
|
|
Executive Vice President &
Chief Legal Officer
|
|
|
2012
|
|
|
|
610,332
|
|
|
|
|
|
|
|
997,796
|
|
|
|
|
|
|
|
1,596,856
|
|
|
|
12,654
|
|
|
|
355,829
|
|
|
|
3,573,467
|
|
|
|
2011
|
|
|
|
580,593
|
|
|
|
|
|
|
|
|
|
|
|
738,299
|
|
|
|
1,058,978
|
|
|
|
12,073
|
|
|
|
6,893
|
|
|
|
2,396,836
|
|
|
|
|
|
|
|
|
|
|
|
Bob V. Patel
|
|
|
2013
|
|
|
|
562,065
|
|
|
|
|
|
|
|
159,565
|
|
|
|
|
|
|
|
1,111,916
|
|
|
|
11,962
|
|
|
|
670,377
|
|
|
|
2,515,885
|
|
Executive Vice President
O&PEAI and Technology
|
|
|
2012
|
|
|
|
524,172
|
|
|
|
|
|
|
|
481,915
|
|
|
|
|
|
|
|
1,252,843
|
|
|
|
11,291
|
|
|
|
463,336
|
|
|
|
2,733,557
|
|
|
|
2011
|
|
|
|
494,950
|
|
|
|
|
|
|
|
|
|
|
|
187,975
|
|
|
|
843,550
|
|
|
|
10,693
|
|
|
|
491,094
|
|
|
|
2,028,262
|
|
|
|
|
|
|
|
|
|
|
|
Timothy D. Roberts
|
|
|
2013
|
|
|
|
517,541
|
|
|
|
|
|
|
|
348,235
|
|
|
|
363,985
|
|
|
|
998,543
|
|
|
|
12,145
|
|
|
|
42,467
|
|
|
|
2,282,916
|
|
Executive Vice President
O&PAmericas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr. Roberts was not a named executive officer in either of 2011 or 2012 and therefore, only 2013 information is shown for him.
|
(2)
|
Amount includes a guaranteed bonus for Ms. Ovelmen. In connection with her hiring, Ms. Ovelmen was guaranteed a payment of the greater of $229,500 and 200% of
her base salary for days worked in 2011. The guaranteed payment was in recognition of the scope of Ms. Ovelmens responsibilities and the challenges of her position, with the acknowledgement that the commencement of her employment in the
third quarter would make an analysis of her 2011 performance difficult to judge.
|
(3)
|
The 2013 stock awards include qualified performance awards for Messrs. Gallogly, Glidden and Patel and qualified performance awards and restricted stock units for
Ms. Ovelmen and Mr. Roberts. The restricted stock units, granted pursuant to the LTI, entitle the recipient to an equal number of shares upon vesting. Restricted stock units receive dividend equivalents. Amounts included in the table are
the aggregate grant date fair values of the awards calculated in accordance with ASC 718. The qualified performance awards are MTI awards, granted under the 2012 Amended and Restated LTI equity compensation plan. They entitle the recipient to a
number of shares equal to the granted share units, multiplied by an earned percentage, which can range from 0 200% of the targeted number of units. See Note 17 to the Companys Consolidated Financial Statements in our Annual Report on
Form 10-K for the year ended December 31, 2013 for a discussion of the calculation of the fair value of the awards.
|
The following table shows the aggregate grant date fair value of the qualified performance awards granted in 2013 if we assumed the maximum amounts (200% of target) will be earned.
|
|
|
|
|
Named Executive
|
|
Aggregate Grant Date Fair Value of
Award Assuming Highest Level
of
Performance Achieved ($)
|
|
Mr. Gallogly
|
|
|
3,000,086
|
|
Ms. Ovelmen
|
|
|
865,293
|
|
Mr. Glidden
|
|
|
679,527
|
|
Mr. Patel
|
|
|
319,130
|
|
Mr. Roberts
|
|
|
332,442
|
|
(4)
|
The amounts of Ms. Ovelmen and Mr. Roberts awards are the fair value on the date of grant of their stock option awards granted in
February 2013, calculated in accordance with ASC 718. The fair values of stock options were estimated using the Black-Scholes option-pricing model. We use the Black-Scholes formula to
|
50
|
calculate an assumed value of the options for compensation expense purposes; because the formula uses assumptions, the fair values calculated are not necessarily indicative of the actual values
of the stock options.
|
The assumptions used for the grant were a dividend yield of 3%; a risk-free interest rate
of 1.117%; an expected life of 6 years; and a stock price volatility of 51%. See Note 17 to the Companys Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of the
calculation of the fair value of the awards.
(5)
|
Amounts in 2013 include annual bonuses paid out in March 2014 under our STI for service during 2013 and the cash payments of the 2011 grants of MTI awards, the
performance period for which ended December 31, 2013.
|
(6)
|
Amounts include increases during 2013 in the actuarial present values of benefits under the LyondellBasell Retirement Plan. The increases are calculated based on the
difference between the total benefit actuarially reduced from age 65 to current age and the present value of the benefits under the plan. See the Pension Benefits table on page 54 for more information.
|
(7)
|
Amounts included in All Other Compensation for 2013 in the table above include the following:
|
|
(A)
|
Matching 401(k) contributions in 2013 for Gallogly, Ovelmen, Glidden, Patel and Roberts of $15,300, $15,306, $12,880, $15,555 and $13,587, respectively, which may
include true-up matches for 2012 contributions.
|
|
(B)
|
401(k) Savings Plan and Retirement Plan contributions under the restoration feature of our Deferral Plan in 2013 for Gallogly, Ovelmen, Glidden, Patel and Roberts of
$136,950, $53,342, $41,679, $33,777 and $28,880, respectively.
|
|
(C)
|
Payments to each of Mr. Gallogly, Ms. Ovelmen and Mr. Glidden of $15,000 for use in financial and tax planning services.
|
|
(D)
|
Expatriate payments to Mr. Patel of $250,375. The Company from time to time makes expatriate payments for certain of its executives when they are asked
to relocate to other jurisdictions. These payments, which include primarily housing, transportation and cost-of-living allowances, are intended to ensure that the executive does not suffer losses from his intended targeted compensation as a result
of the relocation to another jurisdiction. Also included in the Companys expatriate package is a tax equalization component, pursuant to which the Company pays foreign income taxes for the expatriated executive so that his ultimate actual
personal tax liability will be equal to his stay at home tax liability with respect to his compensation. In 2013, expatriate payments to Mr. Patel included $91,675 for housing costs; $22,646 for transportation costs; a
cost-of-living allowance of $44,863; an expatriate premium of $37,767; school tuition costs of $28,927; and a home-leave allowance of $15,050.
|
|
(E)
|
Tax gross-up payments of $370,670 for Mr. Patel related to the taxable expatriate benefits and payments described above in (D).
|
|
(F)
|
Reimbursements and tax gross-up payments of $193,868 and $140,099, respectively, to Mr. Gallogly and reimbursements and tax gross-up payments of $2,034 and $1,470,
respectively, to Mr. Glidden. The reimbursements were for state taxes owed by each of them to the State of New York for LyondellBasell work performed in that state in 2011 and 2012 and the tax-gross-up payments were to offset the increased tax
liability to them as a result of the reimbursements. Each of Mr. Gallogly and Mr. Glidden is resident in the State of Texas, which has no state income tax. Therefore, the income tax liability they incurred to the State of New York for
travelling there on Company business was not able to be offset against their home state taxes. The Compensation Committee made the determination that these executives should not be financially penalized as a result of taxation by the State of New
York on non-residents in determining to make these reimbursements and gross-up payments.
|
51
Grant of Plan-Based Awards in 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
(1)
|
|
|
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards (2)
|
|
|
Estimated Future
Payouts
Under Equity
Incentive
Plan Awards (3)
|
|
|
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(4)
(#)
|
|
|
All Other
Option
Awards:
Number
of
Securities
Underlying
Options
(5)(#)
|
|
|
Exercise
or Base
Price of
Option
Awards
($)
|
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
Mr. Gallogly
|
|
|
2/12/2013
|
|
|
|
1,500,000
|
|
|
|
3,000,000
|
|
|
|
1,500,043
|
|
|
|
3,000,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Ovelmen
|
|
|
2/12/2013
|
|
|
|
540,750
|
|
|
|
1,622,250
|
|
|
|
432,647
|
|
|
|
865,293
|
|
|
|
7,348
|
|
|
|
40,201
|
|
|
$
|
60.51
|
|
Mr. Glidden
|
|
|
2/12/2013
|
|
|
|
494,148
|
|
|
|
1,482,444
|
|
|
|
339,764
|
|
|
|
679,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Patel
|
|
|
2/12/2013
|
|
|
|
425,357
|
|
|
|
1,276,071
|
|
|
|
159,565
|
|
|
|
319,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Roberts
|
|
|
2/12/2013
|
|
|
|
356,062
|
|
|
|
1,068,187
|
|
|
|
166,221
|
|
|
|
332,442
|
|
|
|
3,008
|
|
|
|
16,455
|
|
|
$
|
60.51
|
|
(1)
|
The grant date is the date that our Compensation Committee approved the targets for the STI and MTI awards and awarded Ms. Ovelmen and Mr. Roberts stock
options and RSUs.
|
(2)
|
The awards shown are the estimated possible payouts of the named executives annual incentive awards under the STI for performance in 2013. Actual payouts of the
annual incentive awards for 2013 are shown in the Summary Compensation Table under the column Non-Equity Incentive Plan Compensation. The named executives target incentive awards are a percentage of base salary. The maximum shown
in the table is the maximum amount that can be earned under the terms of the STI, which is 300% of target, other than for Mr. Gallogly, whose current employment agreement limits his maximum award to 200% of his salary. As described in the
CD&A section of this proxy statement, there is no minimum performance requirement for a threshold payment. Instead, each performance criteria is assessed and weighted, which can result in a payment of zero with respect to any particular
performance criterion.
|
(3)
|
Represents qualified performance awards. These awards, granted in 2013, are earned over a three-year performance period ending December 31, 2015, with payouts, if
any, in the first quarter of 2016. As described in the CD&A, there are no minimum performance requirements for a threshold payment. Each performance criteria is assessed and weighted, which can result in a payment of 0 to 200% of the target
award, which is settled in shares. These awards do not receive dividend equivalent payments.
|
(4)
|
Represents restricted stock units granted to Ms. Ovelmen and Mr. Roberts in February 2013 as part of their annual LTI grants. RSUs receive dividend
equivalents. The vesting the RSUs will occur five years from the date of grant, or February 12, 2018.
|
(5)
|
Represents stock options granted to Ms. Ovelmen and Mr. Roberts. The exercise price is equal to the fair market value on the date of grant. The options vest
in equal increments over a three-year period beginning February 12, 2013 and expire ten years after the date of grant.
|
Outstanding Equity Awards at December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Equity Incentive Plan Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)(1)
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units of Stock
That Have
Not Vested
(#)(2)
|
|
|
Market Value of
Shares or Units
of Stock
That
Have Not Vested
($)(3)
|
|
|
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not
Vested
(#)(4)
|
|
|
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That
Have Not
Vested
($)(3)
|
|
Mr. Gallogly
|
|
|
1,127,804
|
|
|
|
|
|
|
|
17.61
|
|
|
|
04/30/2017
|
|
|
|
57,381
|
|
|
|
4,606,547
|
|
|
|
60,616
|
|
|
|
4,866,252
|
|
|
|
|
1,755,608
|
|
|
|
1,127,804
|
|
|
|
13.11
|
|
|
|
04/30/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Ovelmen
|
|
|
26,522
|
|
|
|
13,260
|
|
|
|
23.74
|
|
|
|
10/17/2021
|
|
|
|
28,667
|
|
|
|
2,301,387
|
|
|
|
17,182
|
|
|
|
1,379,371
|
|
|
|
|
17,898
|
|
|
|
35,792
|
|
|
|
44.00
|
|
|
|
02/28/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,201
|
|
|
|
60.51
|
|
|
|
02/12/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Glidden
|
|
|
|
|
|
|
118,888
|
|
|
|
13.11
|
|
|
|
04/30/2020
|
|
|
|
207,765
|
|
|
|
16,679,374
|
|
|
|
13,344
|
|
|
|
1,071,256
|
|
Mr. Patel
|
|
|
|
|
|
|
58,532
|
|
|
|
13.11
|
|
|
|
04/30/2020
|
|
|
|
102,288
|
|
|
|
8,211,681
|
|
|
|
6,232
|
|
|
|
500,305
|
|
Mr. Roberts
|
|
|
|
|
|
|
6,075
|
|
|
|
37.20
|
|
|
|
06/02/2021
|
|
|
|
12,103
|
|
|
|
971,629
|
|
|
|
6,510
|
|
|
|
522,623
|
|
|
|
|
|
|
|
|
14,304
|
|
|
|
44.00
|
|
|
|
02/28/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,455
|
|
|
|
60.51
|
|
|
|
02/12/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The vesting schedules of the options are shown below:
|
52
|
|
|
Name
|
|
Vesting Dates of Stock Options
|
J. Gallogly
|
|
1,127,804 vest 5/14/2014
|
K. Ovelmen
|
|
13,401 vested 2/12/2014; 17,896 vested 2/28/2014; 13,260 vest 10/17/2014; 13,400 vest 2/12/2015; 17,896 vest 2/28/2015; and 13,400 vest 2/12/2016
|
C. Glidden
|
|
118,888 vest 4/30/2014
|
B. Patel
|
|
58,532 vest 4/30/2014
|
T. Roberts
|
|
5,485 vested 2/12/2014; 7,152 vested 2/28/2014; 6,075 vest 6/02/2014; 5,485 vest 2/12/2015; 7,152 vest 2/28/2015; and 5,845 vest 2/12/2016
|
(2)
|
Includes restricted stock units for each of the named executives, which vest as follows:
|
|
|
|
Name
|
|
Vesting Dates of RSUs
|
J. Gallogly
|
|
57,831 vest 5/14/2014
|
K. Ovelmen
|
|
910 vest 2/28/2014; 1,012 vest 10/17/14; 910 vest 2/28/2015; 8,676 vest 10/17/2016; 9,811 vest 2/28/2017; and 7,348 vested on 2/12/2018
|
C. Glidden
|
|
6,049 vest 4/30/2014 and 201,716 vest 4/30/2015
|
B. Patel
|
|
2,978 vest 4/30/2014 and 99,310 vest 4/30/2015
|
T. Roberts
|
|
364 vested 2/28/2014; 309 vest 6/2/2014; 364 vest 2/28/2015; 4,137 vest 6/2/2016; 3,921 vest 2/28/2017; and 3,008 vest 2/12/2018
|
(3)
|
Dollar values are based on the closing price of $80.28 of the Companys shares on the NYSE on December 31, 2013.
|
(4)
|
Represents the target number of qualified performance awards. These awards granted in 2013 are earned over a three-year performance period ending December 31,
2015, with payouts, if any, in the first quarter of 2016. As described in the CD&A, there are no minimum performance requirements for a threshold payment. Each performance criteria is assessed and weighted, which can result in a payment of 0 to
200% of the target award, which is settled in shares. These awards do not receive dividend equivalent payments.
|
Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards (2)
|
Name
|
|
Number of
Shares Acquired
on Exercise (#)
|
|
|
Value
Realized on
Exercise ($)(1)
|
|
|
Number of
Shares Acquired on
Vesting (#)
|
|
Value
Realized on
Vesting ($)
|
Mr. Gallogly
|
|
|
500,000
|
|
|
|
24,205,093
|
|
|
1,104,077
|
|
72,805,174
|
Ms. Ovelmen
|
|
|
|
|
|
|
|
|
|
1,925
|
|
132,040
|
Mr. Glidden
|
|
|
118,888
|
|
|
|
7,357,978
|
|
|
6,050
|
|
367,235
|
Mr. Patel
|
|
|
58,532
|
|
|
|
3,798,141
|
|
|
2,979
|
|
180,825
|
Mr. Roberts
|
|
|
19,303
|
|
|
|
551,690
|
|
|
674
|
|
41,999
|
(1)
|
The value realized on option awards represents the difference between the option exercise price and the market price of LyondellBasell shares when exercised.
|
(2)
|
Represents vesting of restricted stock units for all named executives as well as vesting of restricted stock for Mr. Gallogly. Restrictions on
Mr. Galloglys restricted shares were to lapse in May 2014, subject to earlier vesting in the event of sales of shares by certain of the Companys more than 10% shareholders. Restrictions lapsed for the shares in the table above
pursuant to this provision as a result of sales by Apollo Management of shares in February, June, September and November 2013.
|
53
The number of shares acquired on vesting is the gross number of shares for all named
executives. The value realized is the number of gross shares times the market price on the date the restrictions lapsed.
Pension Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
|
Number of
Years Credited
Service (#)
|
|
|
Present Value of
Accumulated
Benefit ($)
|
|
|
Payments
During Last
Fiscal Year ($)
|
|
Mr. Gallogly
|
|
|
LyondellBasell Retirement Plan
|
|
|
|
4
|
|
|
|
57,740
|
|
|
|
|
|
Ms. Ovelmen
|
|
|
LyondellBasell Retirement Plan
|
|
|
|
2
|
|
|
|
25,489
|
|
|
|
|
|
Mr. Glidden
|
|
|
LyondellBasell Retirement Plan
|
|
|
|
4
|
|
|
|
54,984
|
|
|
|
|
|
Mr. Patel
|
|
|
LyondellBasell Retirement Plan
|
|
|
|
4
|
|
|
|
42,315
|
|
|
|
|
|
Mr. Roberts
|
|
|
LyondellBasell Retirement Plan
|
|
|
|
2
|
|
|
|
29,854
|
|
|
|
|
|
(1)
|
The amounts shown in the table are the actuarial present value of each participants accumulated benefits as of December 31, 2013, calculated on the same
basis as used in Note 16 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2013, with the exception that each participant was assumed to continue to be actively employed by us until age
65 (earliest unreduced retirement age) and immediately commence his benefit at that time.
|
The LyondellBasell Retirement Plan is a U.S. qualified defined benefit pension plan that provides pension benefits
under a cash balance formula that defines participants accrued benefits in terms of a notional cash account balance. Eligible employees become participants immediately upon employment and are fully vested upon the earliest of (i) three
years of service, (ii) death, or (iii) reaching age 65. The notional account balance for each participant comprises a pay credit of 5% and interest credits, each of which are accumulated at the end of each quarter. Pay credits are based on
quarterly base pay, as limited by the Internal Revenue Code, and interest credits are based on the 5
th
, 4
th
and
3
rd
monthly-determined 30 year treasury rates before the
start of that quarter. Benefits under the plan are payable upon separation from the Company.
Non-Qualified Deferred
Compensation in 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Executive
Contributions in
Last Fiscal Year
($)(1)
|
|
|
Registrant
Contributions
in Last Fiscal
Year ($)(1)(2)
|
|
|
Aggregate
Earnings
in Last Fiscal
Year ($)(3)
|
|
|
Aggregate
Withdrawls/
Distributions
($)(4)
|
|
|
Aggregate
Balance at
End of
Last Fiscal
Year ($)
|
|
Mr. Gallogly
|
|
|
|
|
|
$
|
136,950
|
|
|
|
|
|
|
|
|
|
|
$
|
136,950
|
|
Ms. Ovelmen
|
|
|
|
|
|
$
|
53,342
|
|
|
|
|
|
|
|
|
|
|
$
|
53,342
|
|
Mr. Glidden
|
|
|
|
|
|
$
|
41,679
|
|
|
|
|
|
|
|
|
|
|
$
|
41,679
|
|
Mr. Patel
|
|
|
|
|
|
$
|
33,777
|
|
|
|
|
|
|
|
|
|
|
$
|
33,777
|
|
Mr. Roberts
|
|
|
|
|
|
$
|
28,880
|
|
|
|
|
|
|
|
|
|
|
$
|
28,880
|
|
(1)
|
The Company maintains a U.S. Senior Management Deferral Plan that allows executives to defer up to 50% of their base salary and up to 100% of their annual bonus and
certain equity grants (eligible pay) for payment at a future date. The Deferral Plan provides for Company contributions for that portion of pay that cannot be matched or contributed in the Companys Savings Plan and Retirement Plan
due to IRS limits. Company contributions begin in the Deferral Plan once the employees salary has reached the IRS limits in the Savings Plan and the Retirement Plan. Funds deferred under this plan are allocated into accounts that mirror
selected investment funds in our Savings and Retirement Plans, although the funds deferred are not actually invested in the funds. None of our named executive officers has chosen to voluntarily defer any amounts of their eligible pay, but the
Company has contributed amounts to the Deferral Plan pursuant to the restoration feature on their behalf.
|
(2)
|
Company contributions to the executives Deferral Plan accounts are included in All Other Compensation, but not Salary, in the Summary
Compensation Table.
|
(3)
|
Amounts were credited in February 2014 and therefore had no earnings in 2013.
|
54
(4)
|
Accounts are distributed as either a lump sum payment or in annual installments (i) when the employee has reached at least 65 years of age or (ii) at a
future date that occurs after termination of employment. Special circumstances may allow for a modified distribution in the event of the employees death, an unforeseen emergency, or upon a change-in-control of the Company. In the event of
death, distribution will be made to the designated beneficiary in the form previously elected by the executive. In the event of an unforeseen emergency, the plan administrator may allow an early payment in the amount required to satisfy the
emergency. All participants are immediately 100% vested in all of their contributions, Company contributions, and gains and/or losses related to their notional investment choices.
|
Potential Payments upon Termination or Change in Control
The Companys compensation plans and programs contain general provisions for payments to participants upon termination of employment or in the event of a change in control. Under the STI,
participants receive a pro-rated payment of earned awards for termination not for cause or because of death, disability or retirement. Under the MTI, participants receive pro-rated payments of their earned awards in the event of termination of
employment not for cause, because of a death, disability or retirement and in the event of a change in control. Under the LTI, vesting provisions are covered in award agreements. Unless otherwise provided in an award agreement, the LTI provides that
participants vest in a pro-rated portion of their awards in the event of termination of employment not for cause or because of a death or disability; and, in the event of a change in control followed within one year of involuntary termination not
for cause or constructive termination, participants in the LTI will receive immediate and full vesting of their awards. Mr. Galloglys current employment agreement provides for different provisions upon changes in control.
The Company has entered into employment agreements with each of the named executive officers, other than Ms. Ovelmen. These
agreements contain provisions regarding severance amounts payable to the executives upon termination of employment that are in addition to the payments made to employees generally under Company policies or the STI, MTI or LTI. Each of the agreements
also contains post-termination restrictive covenants, including non-solicitation and non-interference covenants, which last for one year after termination. Effective January 1, 2012, Ms. Ovelmen became eligible for participation in the
Companys executive severance program, which provides a lump sum cash payment of one times base salary, subsidized life and medical coverage for 18 months following termination and outplacement assistance in the event of a termination not for
cause. Ms. Ovelmen will be subject to restrictive covenants and be required to execute a release in favor of the Company in order to receive these severance benefits.
To the extent not addressed in the employment agreements, payments to the named executive upon termination of employment or in the event
of a change in control will be in accordance with the plans and policies applicable to employees generally. We do not provide gross-up payments for any taxes that may be due under Section 4999 of the Internal Revenue Code.
The terms Cause, Good Reason, and Change in control as used in the table below are defined in the
executives employment agreements and have the meanings generally described below. You should refer to the individual agreements for the actual definitions.
Cause generally means the executive has:
|
|
|
continuously failed to substantially perform his duties that results in a material deterioration in the financial condition of the Company;
|
|
|
|
engaged in fraud or embezzlement against the Company;
|
|
|
|
engaged in willful malfeasance or gross negligence in the performance of his duties that results in material harm to the Company;
|
|
|
|
been convicted of a felony involving moral turpitude;
|
55
|
|
|
intentionally and materially harmed the Company; or
|
|
|
|
breached the covenants contained in his agreement.
|
Good Reason generally means that, without the executives consent:
|
|
|
his duties or responsibilities have been substantially diminished;
|
|
|
|
any material reduction in the minimum compensation set forth in his agreement;
|
|
|
|
the Company has breached his employment agreement; or
|
|
|
|
he has been reassigned to a location more than twenty-five (25) miles away (for Mr. Gallogly and Mr. Gliddens employment
agreements only).
|
Change in control generally means that:
|
|
|
at least fifty percent (50%) of the Companys capital stock or voting power has been acquired by one person or persons acting as a group that
was not or were not the holder of ten percent (10%) thereof at April 30, 2010;
|
|
|
|
the majority of the Supervisory Board consists of individuals other than those (i) who were serving as of April 30, 2010 or (ii) who
were nominated or elected with the approval of the majority of those directors that served as of April 30, 2010 and were still directors at the time of such nomination or election;
|
|
|
|
there has been a merger of the Company that resulted in a person or persons acting as a group (that was not a holder of at least ten percent
(10%) at April 30, 2010) acquiring fifty percent (50%) or more of the Companys voting securities; or
|
|
|
|
the Company sells all or substantially all of its assets.
|
The following tables represent potential payouts to our named executives upon termination of employment pursuant to the terms of their employment agreements, or our executive severance program in the case
of Ms. Ovelmen, if they were terminated as of December 31, 2013. As discussed above, under the terms of our STI, MTI and LTI, employees that have received grants under those awards receive pro-rated payments in the case of terminations not
for cause, death, disability and retirement unless otherwise provided in an employment agreement. Additionally, the LTI contains a double-trigger acceleration for terminations within one year of a change in control, although the terms of
Mr. Galloglys current employment agreement, which control over the general provisions of our plans, state that his option awards will not be subject to the double-trigger. These plan benefits are applicable to all participating employees
and therefore have not been included in the tables below, which include only the special arrangements we have with our named executive officers.
These payouts are determined for SEC disclosure purposes and are not necessarily indicative of the actual amounts the executive would receive. The payout for continuation of benefits and perquisites is an
estimate of the cost the Company would incur to continue those benefits. Each of Messrs. Glidden, Patel and Roberts and Ms. Ovelmen would be required to execute a release in favor of the Company in order to receive their payments.
56
Potential Consideration upon Termination of Employment or Change in Control:
James L. Gallogly
|
|
|
|
|
|
|
Death or Disability
|
|
|
|
|
|
|
|
|
Accrued but unpaid base salary and bonus
|
|
|
|
|
|
|
Full maximum bonus, pro-rated to date of termination, paid in a lump sum
|
|
|
3,000,000
|
|
|
|
Accelerated vesting of restricted stock (1)
|
|
|
|
|
|
|
Accelerated vesting of stock options (2)
|
|
|
75,754,595
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
78,754,595
|
|
|
|
|
|
|
|
|
Termination Without Cause by the Company or For Good Reason by the Employee
|
|
|
|
|
|
|
|
|
Accrued but unpaid base salary and bonus
|
|
|
|
|
|
|
One years base salary
plus
full maximum bonus, paid in a lump sum
|
|
|
4,500,000
|
|
|
|
Continued coverage under health and welfare benefit plans for twelve (12) months
|
|
|
13,488
|
|
|
|
Accelerated vesting of restricted stock (1)
|
|
|
|
|
|
|
Accelerated vesting of stock options (2)
|
|
|
75,754,595
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
80,268,083
|
|
|
|
|
|
|
|
|
Termination by Mutual Consent
|
|
|
|
|
|
|
|
|
Accrued but unpaid base salary and bonus
|
|
|
|
|
|
|
Continued coverage under health and welfare benefit plans for twelve (12) months
|
|
|
13,488
|
|
|
|
Continued vesting of pro-rated portion of restricted stock (1)
|
|
|
|
|
|
|
Accelerated vesting of pro-rated portion of next installment of stock options (2)
|
|
|
48,150,882
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
48,164,370
|
|
|
|
|
|
|
|
|
Change in Control
|
|
|
|
|
|
|
|
|
Accelerated vesting of restricted stock (1)
|
|
|
|
|
|
|
Accelerated vesting of stock options (2)
|
|
|
75,754,595
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
75,754,595
|
|
|
|
|
|
|
|
|
(1)
|
All of Mr. Galloglys restricted stock had vested as of December 31, 2013.
|
(2)
|
The accelerated vesting of stock options is calculated based on the difference between the exercise price of the stock options and $80.28, the closing price of our
shares on the NYSE on December 31, 2013, multiplied by the number of shares. As a result, the amount included in the table is the spread on the options that vest, assuming Mr. Gallogly exercised them all on December 31,
2013.
|
There can be no assurances as to what the trading price of the Companys shares would be at any possible date of
termination of Mr. Galloglys employment. Further, as described, the calculations assume immediate and full exercise of any stock options at the market price of our shares on December 31, 2013. For these reasons, as described above,
the calculations are not necessarily indicative of what Mr. Gallogly may ultimately receive if his employment were terminated.
57
Each of the named executives listed in the table below only receive payments different than
those afforded to employees generally in the case of the termination of their employment without cause by the Company, or for good reason by the named executive. Listed below are the elements and amounts of compensation they would receive in such
circumstance:
Karyn F. Ovelmen
|
|
|
|
|
|
|
|
|
Accrued but unpaid base salary and bonus
|
|
|
|
|
|
|
Outplacement services
|
|
|
20,000
|
|
|
|
Eighteen months of subsidized health and welfare plan coverage
|
|
|
26,712
|
|
|
|
One years base salary, paid in a lump sum
|
|
|
746,235
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
792,947
|
|
|
|
|
|
|
|
|
Craig B. Glidden
|
|
|
|
|
|
|
|
|
Accrued but unpaid base salary and bonus
|
|
|
|
|
|
|
One years base salary plus target bonus, paid in a lump sum
|
|
|
1,150,747
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,150,747
|
|
|
|
|
|
|
|
|
Bob V. Patel
|
|
|
|
|
|
|
|
|
Accrued but unpaid base salary and bonus
|
|
|
|
|
|
|
One years base salary plus target bonus, paid in a lump sum
|
|
|
1,080,000
|
|
|
|
Cash payment equal to twelve (12) months COBRA
|
|
|
21,285
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,101,285
|
|
|
|
|
|
|
|
|
Timothy D. Roberts
|
|
|
|
|
|
|
|
|
Accrued but unpaid base salary and bonus
|
|
|
|
|
|
|
One years base salary plus target bonus, paid in a lump sum
|
|
|
1,050,000
|
|
|
|
Cash payment equal to twelve (12) months COBRA
|
|
|
22,705
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,072,705
|
|
|
|
|
|
|
|
|
ADOPTION OF DUTCH STATUTORY ANNUAL ACCOUNTS FOR 2013
(Item 3 on the Proxy Card)
At the Annual Meeting, you will be asked to adopt our Dutch statutory annual accounts for the year ended December 31, 2013 (the Annual Accounts), as required under Dutch law and our
Articles of Association.
Our Annual Accounts are prepared in accordance with international financial reporting standards
(IFRS) and Dutch law. The Annual Accounts contain certain disclosures not required under generally accepted accounting principles in the United States (US GAAP) and there are difference between IFRS and US GAAP.
A copy of the Annual Accounts can be accessed through our website,
www.lyondellbasell.com
, and may be obtained free of charge by
request to our administrative offices c/o Lyondell Chemical Company, 1221 McKinney St., Suite 700, Houston, TX 77010 Attn: Corporate Secretary.
The affirmative vote of a majority of the votes cast at the Annual Meeting is required to adopt our Annual Accounts.
Our Management Board and Supervisory Board recommend that you vote FOR the adoption of our Annual Accounts.
58
DISCHARGE FROM LIABILITY OF SOLE MEMBER OF THE MANAGEMENT BOARD
(Item 4 on the Proxy Card)
Under Dutch law, at the Annual Meeting
shareholders may discharge the members of the Management Board from liability to the Company in respect of the exercise of their management duties during the financial year concerned. During 2013, the sole member of the Management Board was James L.
Gallogly. The discharge does not affect any potential liability pursuant to the provisions of the law of The Netherlands relating to liability upon bankruptcy and does not extend to matters that have not been disclosed to shareholders.
It is proposed that the shareholders resolve to discharge Mr. Gallogly, the sole member of the Management Board, from liability in
respect of the exercise of his management duties during 2013.
The affirmative vote of a majority of the votes cast at the
Annual Meeting is required to discharge the Management Board.
Our Management Board and Supervisory Board recommend that
you vote FOR the discharge from liability of the sole member of the Management Board from liability for 2013.
DISCHARGE FROM LIABILITY OF MEMBERS OF THE SUPERVISORY BOARD
(Item 5 on the Proxy Card)
Under Dutch law, at the Annual Meeting shareholders may discharge the members of the Supervisory Board from liability to the Company in respect of the exercise of their supervisory duties during the
financial year concerned. This discharge also does not affect any potential liability under the provisions of the law of The Netherlands relating to liability upon bankruptcy and does not extend to matters not disclosed to shareholders.
It is proposed that the shareholders resolve to discharge the members of the Supervisory Board from liability in respect of the exercise
of their supervisory duties during 2013.
The affirmative vote of a majority of the votes cast at the Annual Meeting is
required to discharge the Supervisory Board.
Our Management Board and Supervisory Board recommend that you vote FOR the
discharge from liability of the members of the Supervisory Board from liability for 2013.
RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
(Item 6 on the Proxy Card)
The Audit Committee of the Supervisory
Board has selected PricewaterhouseCoopers LLP (PwC) to serve as our independent registered public accounting firm for the year ending December 31, 2014. PwC has acted as our independent registered public accounting firm since our
emergence in 2010 and acted as the independent registered public accounting firm of our predecessor before that. Representatives of PwC are expected to be present at the Annual Meeting. They will have an opportunity to make a statement, if they
desire, and are expected to be available to respond to appropriate questions.
The ratification of the selection of PwC is not
required, but our Supervisory Board is submitting the selection to shareholders for ratification because we value our shareholders views on the Companys auditors. If
59
our shareholders fail to ratify the selection, it will be considered as notice to the Supervisory Board and Audit Committee to consider the selection of a different firm. Even if the selection is
ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interest of the Company and its stakeholders.
The affirmative vote of a majority of the votes cast at the Annual Meeting is required to ratify PwC as our independent
registered public accounting firm who will audit our accounts for the year ending December 31, 2014.
Our Management
Board and Supervisory Board recommend that you vote FOR the ratification of PricewaterhouseCoopers as our independent registered public accounting firm for the year ending December 31, 2014.
Independent Registered Public Accounting Firm Fee Information
Fees for professional services provided by our independent registered public accounting firm in each of the last two fiscal years, in
each of the following categories, were as follows:
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|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(in millions)
|
|
Audit Fees
|
|
$
|
8.8
|
|
|
$
|
9.5
|
|
Audit-Related Fees
|
|
|
0.6
|
|
|
|
0.8
|
|
Tax Fees
|
|
|
0.1
|
|
|
|
0.1
|
|
All Other Fees
|
|
|
0.3
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
9.8
|
|
|
$
|
10.5
|
|
Audit fees consist of the aggregate fees and expenses billed or expected to be billed for
professional services rendered by PwC for the audit of our consolidated financial statements, the review of financial statements included in our Form 10-Qs and for services that are normally provided by the independent auditor in connection with
statutory and regulatory filings or engagements for those fiscal years, including comfort letters, statutory audits, attest services and consents.
Audit-related fees consist of the aggregate fees billed for assurance and related services by PwC that are reasonably related to the performance of the audit or review of the financial statements and are
not reported as audit fees herein. This category includes fees related to: the performance of audits of benefit plans; agreed-upon or expanded audit procedures relating to accounting records required to respond to or comply with financial,
accounting or regulatory reporting matters; and consultations as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by regulatory or
standard setting bodies.
Tax fees consist of international tax compliance and corporate tax consulting.
The Audit Committee has adopted procedures for the approval of PwCs services and related fees. Each year, all audit and
audit-related services, tax services and other services, including related fee estimates for each category for the upcoming year are provided to the Audit Committee for approval. The services, which may be provided in the upcoming twelve-month
period, are grouped into significant categories and provided to the Audit Committee substantially in the format shown above.
The Audit Committee is updated on the status of all services and related fees on a periodic basis or as matters warrant. In 2013 and
2012, the Audit Committee pre-approved all audit, audit-related, tax and other services performed by PwC.
As set forth
in the Audit Committee Report on page 8 of this proxy statement, the Audit Committee has considered whether the provision of these non-audit services is compatible with maintaining auditor independence and has determined that they are.
60
APPOINTMENT OF PRICEWATERHOUSECOOPERS ACCOUNTANTS N.V. AS OUR
AUDITOR FOR THE DUTCH STATUTORY ANNUAL ACCOUNTS FOR THE YEAR
ENDING
DECEMBER 31, 2014
(Item 7 on the Proxy Card)
The Audit Committee has selected PricewaterhouseCoopers Accountants N.V. to serve as our auditor who will audit the Dutch Annual Accounts
to be prepared in accordance with the International Financial Reporting Standards, as adopted by the European Union (IFRS), for the year ending December 31, 2014. As required by Dutch law, shareholder approval must be obtained for the selection
of PricewaterhouseCoopers Accountants N.V. to serve as our auditor to audit the Dutch Annual Accounts.
Representatives of
PricewaterhouseCoopers Accountants N.V. will be present at the Annual Meeting to answer appropriate questions. They will also have the opportunity to make a statement if they desire to do so.
The affirmative vote of a majority of the votes cast at the Annual Meeting is required to appoint PricewaterhouseCoopers Accountants N.V.
as our auditor who will audit our Dutch Annual Accounts for the year ending December 31, 2014.
Our Management Board
and Supervisory Board recommend that you vote FOR the appointment of PricewaterhouseCoopers Accountants N.V. as our auditor for the Dutch Annual Accounts for the year ending December 31, 2014.
RATIFICATION AND APPROVAL OF DIVIDENDS IN RESPECT OF THE 2013 FISCAL YEAR
(Item 8 on the Proxy Card)
The Company has paid an aggregate of $2.20 per share from its 2013 annual accounts. This includes interim dividends of $0.50 per share paid in each of the second and third quarters of 2013 and an interim
dividend of $0.60 per share paid in the fourth quarter of 2013. The Company also paid a dividend in the amount of $0.60 per share on March 17, 2014 to shareholders of record as of March 3, 2014, which dividend also was paid out of the 2013 annual
accounts.
The affirmative vote of a majority of the votes cast at the Annual Meeting is required to approve the dividend
payments.
Our Management Board and Supervisory Board recommend that shareholders vote FOR the proposal to ratify and
approve the payment of dividends in respect of fiscal 2013.
DISCUSSION OF DIVIDEND POLICY
Under the Dutch Corporate Governance Code, we are required to provide shareholders with an opportunity at our Annual
Meeting to discuss our dividend policy and any major changes in that policy.
Our dividend policy continues to be to pay a
consistent quarterly dividend, with the goal of increasing the dividend over time.
LyondellBasell has paid an aggregate of
$6.4 billion in dividends since we began paying dividends in 2011, increasing from $0.10 per share in the second quarter of 2011 to $0.60 per share in the fourth quarter 2013. The Supervisory Board believes that, given the Companys strong
capital and results of operation, it is appropriate to continue returning capital to shareholders.
61
Pursuant to our Articles of Association, the Management Board, with the approval of the
Supervisory Board, may determine that an amount shall be reserved out of our annual profits for the payment of dividends. The portion of our annual profits that remains after the reservation is at the disposal of the general meeting of shareholders.
The determination to pay any dividends will be made after a review of the Companys expected earnings, the economic environment, the financial position and prospects of the Company, and any other considerations deemed relevant.
ADVISORY (NON-BINDING) VOTE APPROVING EXECUTIVE COMPENSATION
(Item 9 on the Proxy Card)
Our Supervisory Board proposes that shareholders provide advisory (non-binding) approval of the compensation of our named executive officers, as disclosed in this proxy statement. We recognize the
interest our shareholders have in the compensation of our executives and we are providing this advisory proposal in recognition of that interest and as required by SEC rules. We currently conduct shareholder advisory votes on executive compensation
annually and, therefore, the next vote will be in connection with our annual meeting in 2015.
As described in detail under
the heading Compensation Discussion &Analysis, our named executive officer compensation program is designed to attract, motivate, and retain our named executive officers, who are critical to our success, and ensure alignment of those
persons with shareholders. Our named executive officers are rewarded for their service to the Company, the achievement of performance goals and the realization of increased shareholder value. The Compensation Committee regularly reviews the
compensation programs for our named executive officers to ensure the fulfillment of our compensation philosophy and goals.
Please read the Compensation Discussion & Analysis, beginning on page 27, and the Executive Compensation
Tables, beginning on page 49, for additional details about our named executive officer compensation program.
We are
asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our
named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we will ask our shareholders to vote FOR the following resolution at the Annual Meeting:
RESOLVED, that the Companys shareholders approve, on an advisory basis, the compensation of the named executive officers, as
disclosed in the Companys Proxy Statement for the 2014 Annual General Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion & Analysis,
the Summary Compensation Table and the other related tables and disclosure.
The say-on-pay vote is advisory, and
therefore not binding on the Company, the Compensation Committee or the Supervisory Board. We value the opinions of our shareholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in
this proxy statement, the Compensation Committee will evaluate whether any actions are necessary.
Advisory votes against the
named executive officer compensation will not necessarily communicate to the Company, the Supervisory Board or the Compensation Committee the concerns that caused the negative votes. We would like to consider our shareholders concerns, if any,
on these matters and therefore give shareholders the opportunity to communicate with us regarding their views on the Companys executive compensation programs, among other matters, as described on page 4 of this proxy statement.
62
The affirmative vote of a majority of the votes cast at the Annual Meeting is required to
approve the executive officer compensation on an advisory basis.
Our Management Board and Supervisory Board recommend that
shareholders vote FOR the resolution to approve the compensation of the Companys named executive officers on an advisory basis.
APPROVAL OF THE AUTHORITY OF THE MANAGEMENT BOARD TO
REPURCHASE UP TO 10% OF OUR ISSUED SHARE CAPITAL UNTIL
OCTOBER 16, 2015
(Item 10 on the Proxy Card)
Under Dutch law and our Articles of Association, the Management Board may, with the prior approval of the Supervisory Board, and subject
to certain Dutch statutory provisions, be authorized to repurchase issued shares on our behalf in an amount, at prices and in the manner authorized by the general meeting of shareholders. At the annual meeting in May 2013, shareholders authorized
the repurchase of up to 10% of our then issued share capital, representing approximately 57 million shares. As of March 3, 2014, we have repurchased an aggregate of approximately 33.3 million shares pursuant to this authorization.
Adoption of the current proposal will allow us to continue to repurchase shares, which we believe is an appropriate use
of our excess cash.
The number of shares repurchased, if any, and the timing and manner of any repurchases will be determined
by the Management Board, with the prior approval of the Supervisory Board, in light of prevailing market conditions, our available resources and other factors that cannot now be predicted. Under Dutch law, the number of shares held by us, or our
subsidiaries, may generally never exceed 50% of the total number of our issued and outstanding shares.
In order to provide us
with sufficient flexibility, the Management Board proposes that the general meeting of shareholders grant authority for the repurchase of up to 10% of our issued share capital (or, based on the number of shares currently outstanding, approximately
fifty-four million shares) on the open market, through privately negotiated repurchases, in self-tender offers, or through accelerated repurchase arrangements, at prices ranging up to 110% of the market price at the time of the transaction. Such
authority would extend for 18 months from the date of the Annual Meeting, or October 16, 2015.
The affirmative vote
of a majority of the votes cast at the Annual Meeting is required to adopt the share repurchase proposal.
Our Management
Board and Supervisory Board recommend that you vote FOR the proposal to grant authority to the Management Board to repurchase up to 10% of our issued share capital until October 16, 2015.
63
APPROVAL TO CANCEL UP TO 10% OF OUR ISSUED SHARE CAPITAL IF
REPURCHASED UNDER THE AUTHORITY THAT MAY BE GRANTED UNDER
ITEM 10 ON THE
PROXY CARD
(Item 11 on the Proxy Card)
As permitted under Dutch law, we are asking you to give us approval to cancel ordinary shares that are held in our treasury account, or
that may in the future be held in our treasury account as a result of our repurchases. Under Dutch law and our Articles of Association, we need shareholder approval to cancel treasury shares.
Under Dutch law, we and our subsidiaries can hold no more than 50% of our issued share capital at any time. The Management Board believes
it may be advisable and in the best interests of our shareholders to cancel shares we hold in treasury depending on our share repurchase activity. At the annual meeting in 2013, shareholders authorized our cancellation of up to 10% of our treasury
shares that are repurchased under the 2013 authorization for share repurchases. As of March 3, 2014, we held approximately 35.5 million shares in our treasury account, and have not cancelled any shares. Treasury shares, if not cancelled, may be
used for general corporate purposes, including for issuance under our equity compensation plans.
If this proposal is
approved, and we determine it is appropriate to reduce the number of treasury shares we hold, then we will follow the procedure set forth under Dutch law to cancel treasury shares from time to time, including the publication of notices in the Dutch
trade registry and a Dutch daily newspaper and a two-month waiting period before cancellation to allow any creditors who wish to do so to oppose the cancellation. Once the procedure is complete, if no creditors oppose the cancellation, we will
cancel the treasury shares, which will become authorized but unissued ordinary shares. If either this Proposal 11 or Proposal 10 above is not approved, then we will not cancel any treasury shares in excess of the 10% that was approved at the 2013
annual meeting.
The affirmative vote of a majority of the votes cast at the Annual Meeting is required to adopt the proposal.
Our Management Board and Supervisory Board recommend that you vote FOR the proposal to grant authority to cancel any
shares repurchased by the Company pursuant to the authorization in Item 10.
64
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2013 about the number of shares to be issued upon vesting or exercise of
equity awards and the number of shares remaining available for issuance under our Long-Term Incentive Plan (the LTIP).
The LTIP originally provided for the issuance of up to an aggregate of 22 million ordinary shares pursuant to stock options, stock awards and stock appreciation rights. No awards may be granted after
ten years of the effective date of the plan. The LTIP was approved by the Bankruptcy Court and became effective upon our emergence from bankruptcy. The LTIP, as amended and restated, was approved by our shareholders at our 2012 Annual Meeting.
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number
of
Securities
to be Issued
Upon Exercise of
Outstanding
Options,
Warrants and
Rights(1)
|
|
|
Weighted-Average
Exercise Price
of
Outstanding Options,
Warrants and
Rights(2)
|
|
|
Number of
Securities
Remaining
Available
for Future
Issuance
Under Equity
Compensation
Plans(1)
|
|
Equity compensation plans approved by security holders
|
|
|
7,232,915
|
|
|
$
|
15.62
|
|
|
|
9,083,629
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,232,915
|
|
|
$
|
15.62
|
|
|
|
9,083,629
|
|
(1)
|
Includes 5,214,467 stock options and 1,668,923 restricted stock units. Also includes grants of qualified performance awards (QPAs) at target, representing
349,525 shares that may be issued under the LTIP. Each QPA reflects a target number of shares that may be issued to the award recipient. The Compensation Committee of the Supervisory Board determines the actual number of shares the recipient
receives at the end of a three-year performance period which may range from 0% to 200% of the target number of shares. Because two times the target number of shares may ultimately be issued, we have reduced the number of securities remaining
available for issuance by 699,049 shares, representing the aggregate amount of shares that potentially could be issued under the QPAs.
|
(2)
|
Includes only the weighted-average exercise price of the outstanding stock options. Does not include the restricted stock units or QPAs, as those awards have no
exercise price associated with them.
|
65
|
|
|
LYONDELLBASELL INDUSTRIES N.V.
4TH
FLOOR,
ONE
VINE
STREET
LONDON
W1J
0AH
THE
UNITED
KINGDOM
|
|
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 12:00 p.m. Eastern Time the day before the meeting
date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would
like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone
to transmit your voting instructions up until 12:00 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes
Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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M69348-P49070
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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LYONDELLBASELL INDUSTRIES N.V.
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The
Management
Board
and
Supervisory
Board
of
Directors
recommend
you
vote
FOR
all
of
the
nominees:
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1. To elect six supervisory
directors:
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For
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Against
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Withhold
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1a. Jagjeet S. Bindra, Class I director,
to serve until the annual general meeting in 2017
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1b. Milton Carroll, Class I director, to serve
until the annual general meeting in 2017
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The
Management
Board
and
Supervisory
Board
of
Directors
recommend
you
vote
FOR
the
following
proposals:
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For
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Against
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Abstain
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1c. Claire S. Farley, Class I director, to
serve until the annual general meeting in 2017
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3. Adoption of Annual Accounts for 2013
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1d. Rudy van der Meer, Class I director, to
serve until the annual general meeting in 2017
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4. Discharge from Liability of Sole Member of the Management Board
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1e. Isabella D. Goren, Class II director,
to serve until the annual general meeting in 2015
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5. Discharge from Liability of Members of the Supervisory Board
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1f. Nance K. Dicciani, Class III director,
to serve until the annual general meeting in 2016
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6. Ratification of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm
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2. To elect five managing directors
to serve a four-year term:
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7. Appointment of PricewaterhouseCoopers Accountants N.V. as our Auditor for the Dutch Annual
Accounts
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2a. Karyn F. Ovelmen
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8. Ratification and Approval of Dividends in Respect of the 2013 Fiscal Year
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2b. Craig B. Glidden
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9. Advisory (Non-Binding) Vote Approving Executive Compensation
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2c. Bhavesh V. Patel
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10. Approval to Repurchase up to 10% of Issued Share Capital
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2d. Patrick D. Quarles
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11. Approval to Cancel up to 10% of Issued Share Capital Held in Treasury
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2e. Timothy D. Roberts
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Annual General Meeting of Shareholders of
LyondellBasell Industries N.V.
Wednesday April 16, 2014, 11:30 a.m., local time
Stationsplein 45
3013 AK
Rotterdam
The Netherlands
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting:
Notice and Proxy Statement/Annual Report including 10-K are available at
www.proxyvote.com
.
M69349-P49070