The following Compensation Discussion &
Analysis describes the philosophy, objectives, process structure and additional aspects of our 2021 executive compensation program.
This section is intended to be read in conjunction with the tables which immediately follow, which provide further historical compensation
information for our named executive officers (“NEOs”) as identified below.
Quick CD&A Reference Guide
Executive Summary
Financial Highlights
FMC posted solid results in 2021, despite
numerous supply chain challenges and significant cost headwinds related to the COVID-19 pandemic. FMC grew revenue by 9% in 2021
as compared to 2020, and grew 8% organically excluding the impact of foreign currency. FMC’s long-term fundamentals remain
solid, driven by our balanced geographic and crop exposure, as well as a technologically advantaged portfolio.
2021 highlights include, as compared to
2020 results:
• |
Revenue of $5 billion, representing a 9% increase and 8% organic growth. On a regional
basis, sales in Asia increased 13% (+10% organically), sales in Europe, Middle East and Africa decreased by 1% (-4% organically),
sales in Latin America increased by 12% (+14% organically), and sales in North America increased 8%. |
• |
GAAP net income of $734 million, representing a 33% increase |
• |
Adjusted EBITDA of $1.324 billion, representing a 6% increase |
• |
GAAP earnings of $5.70 per diluted share, representing a 35% increase |
• |
Adjusted earnings per diluted share of $6.93, representing a 12% increase |
• |
GAAP cash flow from operations of $899 million, representing a 22% increase |
• |
Free cash flow of $713 million, representing a 31% increase |
All of the aforementioned achievements are
reflective of our culture, our people and our accomplishment of strategic business goals. Further, we believe our executive team
has been properly motivated through our executive compensation program to focus on the achievement of these goals, both in the
short term and long term. We realize that an intense focus on the long-term health and direction of the Company is essential. As
such, our executive compensation program has been carefully constructed to appropriately motivate executives to accomplish short-term
objectives that are part of our strategy and to create long-term, sustainable stockholder value, and it predominantly rewards executives
for the achievement of various goals. In fact, we link a significant portion of compensation, including approximately 85% of our
CEO’s compensation, directly to key measures of our corporate performance – including adjusted earnings, operating
cash flow and share price performance (both absolute and relative).
As an important input to our process, our
Compensation Committee and management have also continued to engage in broad stockholder engagement and dialogue regarding our
corporate governance, including executive compensation.
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 28
In the process, we have established critical feedback channels
to ensure that we receive and consider such input. Incorporating stockholder feedback continues to be a vibrant and consistent
part of the compensation design process.
For a discussion of certain non-GAAP financial measures referred
to in this proxy statement, including Adjusted Earnings, Adjusted EBITDA, Adjusted earnings per share, free cash flow, and Three-Year
Cumulative Operating Cash Flow, see “Components of Executive Compensation” below. For a discussion of other non-GAAP
financial measures referred to in this proxy statement, including organic revenue change, as well as a reconciliation of these
items to the most directly comparable financial measures calculated and presented in accordance with GAAP, reference is made to
the sections captioned “Results of Operations - 2021, 2020 and 2019 – Organic Revenue Growth Reconciliation”
on p. 26 and “Liquidity and Capital Resources – Free Cash Flow” on p. 36, in each case of our Form 10-K for the
year ended December 31, 2021, filed with the SEC on February 25, 2022. We believe that organic revenue growth, a non-GAAP
measure, is helpful to management and investors as measures of operating performance because it excludes various items that do
not relate to or are not indicative of operating performance. Organic revenue growth should not be considered as a substitute for
revenue reported in accordance with GAAP.
Leadership Transitions
Pierre Brondeau, our Executive Chairman since June 2020, retired
from the Company as an executive officer and was elected non-executive Chairman of the Board effective April 27, 2021. Assuming
that Mr. Brondeau is reelected as a director at the 2022 Annual Meeting, Mr. Brondeau will continue to serve as non-executive Chairman
of the Board. See the discussion above under “Corporate Governance-Board Leadership Structure,” for more information
about the Board’s determination to maintain a governance structure that includes a non-executive, non-independent Chairman
and a separate Lead Director, which is intended to ensure continuity and strong and effective leadership at this time.
Key Aspects of Our 2021 Executive Compensation
Program
Base Salaries
Mr. Douglas, our President and CEO, received a base salary increase
of 5.0%. Also, as part of the continuation of the gradual, multi-year transition to bring the base salaries of Messrs. Sandifer
and Reilly into alignment with the market median for their positions, their base salaries were increased 10.0% and 8.0% respectively.
Mr. Pereira and Dr. Shelton first became executive officers on December 16, 2021.
Annual Incentive Opportunity
|
Company-wide performance accounted for 70% of the annual incentive performance goals;
individual performance goals accounted for the other 30%. |
|
Adjusted Earnings was maintained as the sole Company-wide metric for Messrs. Douglas, Sandifer
and Reilly, with Free Cash Flow added in 2020 as a modifier. |
|
The Compensation Committee set the Adjusted Earnings target at a level that it considered rigorous
and challenging to achieve. The target was set meaningfully (5%) above the prior year levels. |
|
The Adjusted Earnings goal had a threshold performance level of approximately 90% of target, which
must be exceeded in order for any payout to be earned. |
|
Adjusted EBITDA was set as a Company-wide metric for Mr. Pereira and Dr. Shelton, and was set
at a demanding level and with the same Free Cash Flow modifier as was used in conjunction with the Adjusted Earnings metric.
Regional operating profitability was set as the other metric for Mr. Pereira, with a corresponding cash flow modifier. |
The target opportunity percentages for Messrs.
Douglas, Sandifer and Reilly were increased to 125% from 110%, to 85% from 80%, and to 70% from 65%, respectively, as part of the
continuation of the multi-year program to bring them each closer to the market median for their positions. The target opportunity
percentages for Mr. Pereira and Dr. Shelton were 70% and 60%, respectively.
Adjusted Earnings were $895 million, compared
to a target of $847 million, a target set above the prior year level. Free Cash Flow was $713 million, above the maximum performance
level of $620 million which resulted an additional 10% increase in the final rating. Adjusted EBITDA was $1,324 million, compared
to a target of $1,288 million, and the corresponding rating was subject to the same Free Cash Flow Modifier and corresponding 10%
increase in the final rating.
Long-Term Incentive Awards
|
The primary (70%) performance metric for the performance-based RSUs remained TSR relative
to a custom peer group using the S&P 1500 Composite Chemical Index plus select additional companies. |
|
The secondary (30%) performance metric, three-year cumulative operating cash flow, remained. |
|
Performance-based RSUs again represented 50% of the long-term equity granted to Mr. Douglas, 40%
of the long-term equity granted to Messrs. Sandifer and Reilly, and 33.3% for Mr. Pereira and Dr. Shelton. |
|
Time-based RSUs represented 20% of the total long-term equity grants to Mr. Douglas, 30% of the
grants to Messrs. Sandifer and Reilly, and 33.3% of the grants to Mr. Pereira and Dr. Shelton. |
|
Stock options again represented 30% of the total long-term equity grants to Mr. Douglas, 30% of
the grants to Messrs. Sandifer and Reilly, and 33.3% of the grants to Mr. Pereira and Dr. Shelton. |
• |
2019-2021 Performance-Based RSUs Payout. The performance-based RSUs granted
in 2019 were the first to include both the relative TSR primary metric and the three-year cumulative operating cash flow secondary
metric. The Company generated a -5.93% 2021 annual and 66.21% cumulative TSR from 2019 to 2021, and its relative percentile
ranking for these performance periods were 15.2% and 52.2%, respectively. Based on this performance, the NEOs earned a total
of 117% of the target number of performance-based RSUs that had relative TSR as the metric. The Company also produced three-year
cumulative operating cash flow of $3,635 million, relative to a target of $3,335 million. Based on this performance, the NEOs
earned a total of 172% of the target number of performance-based RSUs that had operating cash flow as the metric. |
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 29
2021 Say on Pay Vote and Stockholder Engagement
At our 2021 annual meeting of stockholders,
our stockholders approved, on an advisory basis, the compensation of our NEOs, with approximately 93% of the votes cast on the
matter “For” such approval. The Committee viewed the approval by stockholders of the executive compensation program
at such a strong level as evidence that a substantial majority of stockholders are aligned with our executive compensation program.
The Compensation Committee and management
continue to engage regularly in dialogue with a broad spectrum of the Company’s stockholders. In early 2022, we reached out
to our top 90 stockholders, representing 75% of our common shares outstanding. We held calls with 20 stockholders, representing
35%, and a member of our Compensation and Sustainability Committees and members of our management participated in these discussions
in order to demonstrate our commitment to strong corporate governance and our effort to gather input from our stockholders, which
we believe enables us to better understand their perspectives. We discussed executive compensation, ESG topics and human capital
management, among other things. We also reached out to the research teams at proxy advisory firms Institutional Shareholder Services
Inc. and Glass Lewis & Co.; Glass Lewis accepted our offer and we engaged on similar topics.
How Our Pay Program Works
We believe that the design and structure
of our pay program, and in particular our incentive plans, support FMC’s business strategy. Our program reflects our pay
for performance approach and our objective to align executive officer focus and interest with that of stockholders. Our annual
incentive plan reflects a focus on income statement metrics, while our long-term performance awards were based 70% on relative
TSR performance to align with stockholder value and 30% on three-year cumulative operating cash flow, a key strategic priority
and value driver. All elements have been carefully chosen and utilized; the value received and realizable for FMC executives is
aligned with corporate performance.
Elements of Pay
Our compensation program is designed to
reward executives for achievement of our Company’s short-term and long-term goals. In doing so, we have also constructed
the pay program to attract and retain world-class talent and to align executive compensation pay opportunities with the interests
of stockholders. The Compensation Committee has selected the following framework to achieve these objectives:
Target Total Direct Compensation Mix
Consistent with our objectives as stated
above, and our overarching focus on pay and performance alignment, the pay mix was set as follows:
• |
The largest portion of compensation is variable, at-risk pay,
in the form of annual and long-term incentives (including annual incentive, performance-based RSUs (“PRSUs”),
options and time-based RSUs) |
• |
Our program provides a balance between long-term and short-term awards, and
the performance objectives are consistent with our business strategy |
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 30
Percentage of total direct compensation
(“TDC”) as shown in the above charts is based on the 2021 base salary, the 2021 annual incentive compensation opportunity
(assuming achievement at the target level), the grant date fair value of the performance-based RSUs (assuming vesting at the target
achievement level) and the grant date fair value of the time-based stock options and RSU awards. Each compensation element is outlined
in more detail in the 2021 Summary Compensation Table below.
For the CEO Pay Mix, the proportions were
derived from the annualized target TDC of our President and CEO, Mark Douglas. For the Other NEO Pay Mix, the proportions represent
the average of Messrs. Sandifer, Pereira and Reilly and Dr. Shelton.
Compensation Program Governance
Our Compensation Committee is responsible
for oversight of the Company’s compensation program and values. A significant part of this is aligning management interests
with the Company’s business strategies and goals, as well as the interest of our stockholders, while also mitigating excessive
risk taking. To that end, FMC has committed to numerous governance practices and safeguards to ensure the compensation program
does not misalign those interests.
What We Do |
|
What We Don’t Do |
Use equity for long-term incentive awards |
|
No highly leveraged incentive plans that encourage excessive risk taking |
Determine performance-based RSUs based on relative TSR and operating cash flow |
|
No excessive perquisites |
Provide change in control benefits under double-trigger circumstances only |
|
No guaranteed bonuses |
Benchmark against peers whose profile, operations, and business markets share similarities with the Company |
|
No discounted stock options |
Maintain an executive share ownership policy |
|
No repricing without stockholder approval or backdating of stock options |
Apply anti-pledging and anti-hedging policy for Company shares |
|
No immediate vesting of stock options or restricted stock units except for certain change-in-control with termination
and retirement-eligible situations |
Maintain a clawback policy designed to recoup incentive compensation paid to executive officers based on erroneously prepared financial
statements |
|
No excise tax gross-ups under our executive officer compensation program |
Engage independent advisors |
|
|
Maintain an appropriate balance between short-term and long-term compensation which discourages short-term risk taking
at the expense of long-term results |
|
|
Cap annual incentive plan payouts and number of PRSUs that may be earned under long-term incentive plan |
|
|
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 31
Objectives and Philosophy
The Company’s executive compensation
program is designed to attract, motivate and retain top talent, to pay for performance and to align the financial interests of
the NEOs with those of the Company’s stockholders. In designing compensation arrangements for NEOs, the Compensation Committee
has considered the importance of:
• |
Balancing variable compensation components so that appropriate focus is put on achieving both short-term
and long-term operating and strategic objectives; |
• |
Motivating NEOs to achieve desired financial and operational results using sound business judgment and without inappropriate
risk taking; and |
• |
Ensuring that the achievement of key financial goals and strategic objectives is financially rewarding for NEOs. |
In general, we believe it is critical to
pay executives at a competitive level relative to our peer group in order to attract and retain the talent we need to deliver high
performance. In addition to looking at our peer group, we make individual pay decisions based on a variety of factors such as Company,
business unit and individual performance, scope of responsibility, critical needs and skills, experience, time in the role, leadership
potential and succession planning.
The Compensation Committee believes that
subjecting a significant percentage of TDC to performance conditions helps focus the executive on achieving key objectives that
are important to executing our strategy and delivering the performance expected by stockholders.
Compensation Determination Process
Role of Compensation and Organization Committee
and of CEO
The Compensation Committee establishes our
compensation philosophy and objectives, determines the structure, components and other elements of executive compensation, and
reviews and approves the compensation of the NEOs or recommends it for approval by the Board. The Compensation Committee structures
the executive compensation program to accomplish its articulated compensation objectives in light of the compensation philosophy
described above.
The Compensation Committee recognizes its
responsibility to maintain a competitive executive compensation program that will support the Company’s ability to attract,
motivate and retain top talent while at the same time aligning the financial interests of the executives with those of stockholders.
Pay for performance and market-based compensation are important elements of the Company’s compensation philosophy. The Company
considers several measures of corporate performance, job performance and labor market dynamics, as well as stockholder feedback,
in the design and administration of the NEO compensation arrangements described later in this section.
The Compensation Committee establishes total
compensation for the CEO annually at its February meeting. The Compensation Committee reviews and evaluates the performance of
the CEO and develops base salary and incentive opportunity recommendations for the review and approval of the full Board of Directors.
The CEO does not participate in Compensation Committee or Board discussions regarding his own compensation.
The Compensation Committee, with the input
of the CEO, also establishes compensation for the other NEOs. Specifically, the CEO evaluates the performance of the other NEOs
annually and makes recommendations to the Compensation Committee each February regarding the compensation of those other NEOs.
The CEO’s input is particularly important in connection with base salary adjustments and the determination of the Individual
Measures ratings (Annual Performance Incentive (“API”)) as part of our Annual Incentive program. In each of these instances,
the process starts with the CEO’s recommendation, and that recommendation is afforded great weight by the Compensation Committee.
The CEO participates in Compensation Committee discussions regarding other NEOs’ compensation. The Compensation Committee
views the CEO’s significant role in the compensation process for other NEOs, and the deference afforded to his recommendations,
as appropriate in light of his greater familiarity with the day-to-day performance of his direct reports and the importance of
incentive compensation in driving the execution of managerial initiatives developed and led by the CEO. That said, the Compensation
Committee makes the ultimate determination regarding the compensation of each of the NEOs.
Role of Compensation Consultant
The Compensation Committee recognizes that
there is value in procuring independent, objective expertise and counsel in connection with fulfilling its duties and has the authority
to retain an independent compensation consultant to assist it in carrying out its responsibilities.
The Compensation Committee retained Aon
as its independent compensation consultant for 2021 compensation decisions. Aon reported directly to the Compensation Committee,
and the Compensation Committee has the sole authority to retain, terminate and obtain the advice of Aon at the Company’s
expense.
Aon’s advice was taken into consideration
for all aspects of 2021 compensation as delineated in the Summary Compensation Table.
For 2021, Aon provided the Compensation
Committee with advice and counsel on a broad range of executive compensation matters. The scope of Aon’s services included,
but was not limited to, the following:
• |
Apprising the Compensation Committee of compensation-related trends and developments in the marketplace; |
• |
Informing the Compensation Committee of regulatory developments relating to executive compensation practices; |
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 32
• |
Advising the Compensation Committee on appropriate peer companies for compensation
pay levels and design practices, as well as relative performance comparisons; |
• |
Providing the Compensation Committee with an assessment of the market competitiveness of the
Company’s executive compensation; |
• |
Assessing the executive compensation structure to confirm that no design elements encourage
excessive risk taking; |
• |
Assessing the relationship between executive compensation and corporate performance; and |
• |
Recommending changes to the executive compensation program to maintain competitiveness and
ensure consistency with business strategies, good governance practices and alignment with stockholder interests. |
At the time that FMC engaged Aon as its
executive compensation advisor, the Compensation Committee was aware of the types and general magnitude of the fees for other services
that Aon provided to FMC. Aon was selected because the Compensation Committee is confident that the team advising on executive
compensation issues was both highly qualified and would be independent.
For 2021, in determining the independence
of Aon, the Compensation Committee considered independence in light of the six independence factors set forth in the SEC rules
and NYSE listing standards. In total, fees paid to Aon during 2021 for services not related to Aon’s work with the Compensation
Committee, such as global pension, investment and consulting services and risk brokerage services, were approximately $1,513,294.
Fees paid to Aon during 2021 for services related to recommending the amount and form of executive and director compensation were
approximately $170,234. Aon had been providing services in areas other than executive compensation consulting to FMC prior to the
Compensation Committee’s selection of Aon for executive compensation consulting services.
In terms of assessing independence, the
Compensation Committee also gave credit to the safeguards that Aon’s executive compensation practice has put in place to
maintain its independence. The Compensation Committee also considered that no business or personal relationships exist between
any members of the consultants’ teams advising the Company on the one hand, and the Company, any members of the Compensation
Committee or any executive officers on the other hand, other than in connection with the services provided. Therefore, the Compensation
Committee has concluded that Aon is independent, as no conflict of interest exists between Aon and the Company.
Peer Group
The Compensation Committee believes that
obtaining relevant market and benchmark data is very important in making determinations about executive compensation. Such information
provides a solid reference point for making decisions and very helpful context, even though, relative to other companies, there
are differences and unique aspects of the Company.
The Company relies on both industry surveys
and analysis of proxy statements from peer companies (the “Market”) prepared by its compensation consultant to assess
the market competitiveness of the components of its NEO compensation and to validate the appropriateness of TDC, including the
appropriate mix of cash and equity, as well as NEO benefits and perquisites. Proxy statement data may not be available for all
jobs that are direct comparisons to jobs held by the Company’s NEOs. In such cases, the Company relies more on the broader
survey data to assess acceptable ranges for the elements of executive compensation. The Company also believes that internal equity
is an important and necessary consideration in valuing jobs. The Company may, as a matter of policy, adjust individual components
of TDC to align with the Market or with its general executive pay philosophy as described in the preceding section. However, the
Company does not adjust components of TDC based on the amount of compensation earned by an NEO in any prior period.
In connection with determining 2021 executive
compensation, the Company reviewed a market study of executive compensation at peer companies. The peer group is reviewed periodically
for appropriateness, comparability in market segment and to account for merger and acquisition activity affecting the companies.
Guidelines used for developing the peer group include similar industry representation and revenue and market capitalization generally
within the range of one-third to three times that of FMC.
Albemarle Corporation |
|
Huntsman Corporation |
Ashland Global Holdings, Inc. |
|
Ingredion Incorporated |
Avient Corporation (formerly PolyOne Corporation) |
|
International Flavors and Fragrances, Inc. |
Axalta Coating Systems Ltd. |
|
The Mosaic Company |
Cabot Corporation |
|
Nutrien Ltd. |
Celanese Corporation |
|
Olin Corporation |
CF Industries Holdings, Inc. |
|
PPG Industries, Inc. |
Corteva, Inc. |
|
RPM International, Inc. |
The Chemours Company |
|
The Scotts Miracle-Gro Company |
Eastman Chemical Company |
|
Westlake Chemical Corporation |
|
|
W. R. Grace & Co. |
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 33
| |
Market Cap
($mm) | |
2019 Revenue ($mm) |
2020 Peers | |
| | |
| |
25th percentile | |
$ | 4,333 | |
$ | 3,589 |
Median | |
$ | 7,028 | |
$ | 5,526 |
75th percentile | |
$ | 10,862 | |
$ | 8,118 |
FMC Corporation | |
$ | 13,872 | |
$ | 4,610 |
Rank | |
| 85% | |
| 35% |
Note: Revenue amounts for the year ended
December 31, 2019. Market capitalization amounts were as of October 9, 2020.
Components of Executive Compensation
The NEO compensation program consists of
three primary elements: base salary, an annual incentive and a long-term incentive. The Compensation Committee regularly reviews
all components of the program in order to verify that each executive officer’s total compensation is consistent with its
compensation philosophy and objectives and that the component is serving a purpose in supporting the execution of our strategy.
The value of, and allocation to, each of these elements is commensurate with the level of responsibility and impact of our results
for each executive.
Base Salary
Salary ranges for NEOs are established based
on similar positions in other companies of comparable market capitalization, revenue, size and complexity included in the Market.
Performance levels from “does not meet expectations” to “exceeds expectations” provide guidance for the
administration of salaries.
Starting salaries are based on the NEO’s
skills, experience, expertise and expected job performance. Subsequent salary adjustments for the NEOs (except the CEO) are based
on job performance as assessed by the CEO, who recommends the appropriate base salary to the Compensation Committee for their approval.
The Compensation Committee itself determines any salary adjustment for the CEO. Base salary reviews are part of the broader compensation
review that occurs at the February meeting of the Compensation Committee and focus on the performance of the NEOs in their respective
major responsibility areas. These include but are not limited to, financial management, customer relations, strategic planning
and business development, operational excellence, safety performance, staffing and talent management, performance management, and
litigation management.
In 2021, Mr. Douglas, our President and
CEO, received a base salary increase of 5.0%. Also, as part of the continuation of the gradual, multi-year transition to bring
the base salaries of Messrs. Sandifer and Reilly into alignment with the market median, their base salaries were increased 10.0%
and 8.0%, respectively. The table below shows the change in base salary for the continuing NEOs in 2021. For Mr. Pereira and Dr.
Shelton, newly appointed executive officers in late 2021, the table below shows 2021 base salary rates.
NEO | |
Annualized 2020 Base Salary | |
Annualized 2021 Base Salary | |
% Change | |
Mark Douglas | |
$ | 1,050,000 | |
$ | 1,102,500 | |
| 5.0% | |
Andrew Sandifer | |
$ | 541,000 | |
$ | 595,100 | |
| 10.0% | |
Ronaldo Pereira | |
$ | N/A | |
$ | 432,600 | |
| N/A | |
Michael Reilly | |
$ | 473,000 | |
$ | 510,840 | |
| 8.0% | |
Kathleen Shelton | |
$ | N/A | |
$ | 372,960 | |
| N/A | |
Annual Incentive
The annual incentive plan for executive
officers is a cash plan that rewards NEOs for the achievement of key short-term objectives. Its structure aligns our NEOs’
interests with those of our stockholders by providing incentives to the NEOs to achieve certain short-term financial and operational
results that the Compensation Committee views as critical to the execution of our business strategy.
The amount of the annual incentive wopportunity
and payout for the NEOs is determined as follows:
Target Opportunities
The Compensation Committee determines a
target cash incentive opportunity by taking the individual’s base salary and multiplying it by the individual’s target
incentive percentage. The target incentive percentages are determined with reference to the peer company percentages of salary
and the proportion of TDC represented by the annual incentive, among other factors.
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 34
The target opportunity percentages for Messrs.
Douglas, Sandifer and Reilly were increased to 125% from 110%, to 85% from 80%, and to 70% from 65%, respectively, as part of the
continuation of the multi-year program to bring them each closer to the market median for their positions. The target opportunity
percentages for Mr. Pereira and Dr. Shelton were set early in the year at 70% and 60%, respectively, prior to their appointments
as executive officers.
|
|
2021
Target Level
Opportunity
(as % of Applicable Base Salary) |
Mark Douglas |
|
125% |
Andrew Sandifer |
|
85% |
Ronaldo Pereira |
|
70% |
Michael Reilly |
|
70% |
Kathleen Shelton |
|
60% |
Performance Measures
To determine payouts earned, the annual incentive
plan has two categories of performance measures: a Company Measure and Individual Measures.
Company Measure and Modifier
for Messrs. Douglas, Sandifer and Reilly
The Company Measure (“Business Performance
Incentives,” or “BPI”), which represents 70% of the annual incentive opportunity for Messrs. Douglas, Sandifer
and Reilly, is:
Adjusted Earnings
As it has for several years, the Compensation
Committee determined to make Adjusted Earnings the Company-wide metric for Messrs. Douglas, Sandifer and Reilly, in order to focus
those executive officers on what the Compensation Committee believes is the most critical strategic priority of profitability.
|
|
Adjusted Earnings is defined as net income (loss) attributable to FMC stockholders
(a GAAP measure) plus the sum of discontinued operations attributable to FMC Stockholders, net of income taxes and the after-tax
effect of Corporate special charges (income) and Non-GAAP Tax adjustments. |
|
|
Adjusted Earnings amounts in the annual incentive plan might differ from the amounts reported
in our financial statements because the amounts shown for these performance measures have been adjusted to exclude gains or
losses attributable to (i) certain extraordinary and/or non-recurring events (such as business acquisitions or dispositions
or business restructuring charges), and (ii) certain other items not reflective of operating performance (such as the impact
of changes in accounting principles). In 2021, however, these adjustments did not materially affect the amount of any NEO’s
annual incentive award. |
The Compensation Committee defined a payout
curve for the Adjusted Earnings metric which sets out the amount to be paid depending on actual performance. In order to motivate
performance and underscore the centrality of achieving target, the Compensation Committee set the payout for achieving the threshold
level of performance at 0%, with the payout increasing through various bend points to 100% of the target opportunity for achieving
target performance, and through additional bend points to 200% of the target opportunity for maximum performance or above.
The Compensation Committee used Adjusted Earnings,
a non-GAAP measure, as a performance metric in structuring our annual incentive program for Messrs. Douglas, Sandifer and Reilly.
We believe that this non-GAAP measure is helpful to management and investors as a measure of operating performance because it excludes
various items that do not relate to or are not indicative of operating performance. Adjusted Earnings should not be considered
as a substitute for net income (loss) or other measures of performance or liquidity reported in accordance with GAAP. For a reconciliation
of Adjusted Earnings to the most directly comparable financial measures calculated and presented in accordance with GAAP, reference
is made to the section captioned “Results of Operations - 2021, 2020 and 2019 – Adjusted Earnings Reconciliation”
on p. 25 of our Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022.
Free Cash Flow
The Compensation Committee also included again
in 2021 a modifier in the design of the Annual Incentive for Messrs. Douglas, Sandifer and Reilly. The Compensation Committee views
the achievement of target performance with respect to free cash flow as critical, as the ability of the Company to generate cash
is vital to funding operations and returning capital to shareholders, and it is something that is more directly within management’s
control. In addition to serving as a part of the annual incentive for the NEOs, the annual incentive program for a larger group
of our senior leaders used the same or similar metrics, so that the full management team is aligned. The Compensation Committee
added this modifier in part to motivate all of the members of this larger group to achieve the Free Cash Flow goal, and believes
it was effective in doing so. Because of how critical it is to achieve cash flow performance within the target range, the modifier
only applies if cash flow is either above a maximum level or below a threshold level. If cash flow achievement is either higher
than the maximum or lower than the threshold, then the Committee applies a performance modifier factor of +10% or -10%, respectively,
to the Company’s Adjusted Earnings Company Measure Rating. The modifier does not apply when cash flow is at or above the
threshold level but does not exceed the maximum amount.
We believe that Free Cash Flow, a non-GAAP
measure, is helpful to management and investors as a measure of operating performance because it excludes various items that do
not relate to or are not indicative of operating performance. Free Cash Flow should not be considered as a substitute for cash
flows from continuing operations or other measures of performance or liquidity reported in accordance with GAAP. For the definitions
of Free Cash Flow and a reconciliation of this item to the most directly comparable financial measure calculated and presented
in accordance with GAAP, reference is made to the section captioned
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 35
“Liquidity and Capital Resources–
Statement of Cash Flows” on p. 34 of our Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25,
2022.
Performance Goals for
Company Measure for Messrs. Douglas, Sandifer and Reilly
Target
The Compensation Committee obtains input from
executive officers regarding the annual operating plan, expected financial results, and related risks. Based on this information,
the Compensation Committee establishes the targets for the annual incentive plan. For each metric, the Committee sets appropriate
threshold and maximum levels of performance designed to motivate achievement without incentivizing excessive risk-taking.
In setting the target for the Company Measure,
the Compensation Committee set it at a level that it considered rigorous and challenging, which took into account the relevant
risks and opportunities. The target was set meaningfully (5%) above the prior year level of actual performance. It then reviewed
the relevant financial objectives set as a result of the detailed budgeting process, and assessed various factors related to the
achievability of the budget target.
These factors include:
• |
Risks associated with achieving specific actions which underpin the budget target, such as achieving manufacturing targets, launching new products, completing capital investments on-schedule, and obtaining cost savings; |
• |
The implied performance relative to peers; |
• |
The implied performance relative to prior years; and |
• |
Market conditions. |
Threshold; Maximum
Having set the targets, the Compensation Committee
also set the threshold and maximum performance levels. For 2021, the Committee set the threshold level at a relatively high-performance
level that equates to approximately 90% of the target for Adjusted Earnings. The Committee set the maximum level at a performance
level that equates to approximately 109% of target for Adjusted Earnings, a level that presented a significant challenge requiring
exceptionally strong performance.
The Compensation Committee assesses performance
achievement against the performance metrics and determines the rating on each one, and then, based on the weighting given to each
metric, determines the weighted average of the results, which yields an overall BPI rating for this metric. The Company Measures
(BPI) rating may range from 0 (at or below threshold) to 1.0 (target) to 2.0 (maximum).
| |
2021 Company Measures |
Performance
Metric | |
Below Threshold
($ in millions) | |
Threshold
($ in millions) | |
Target
($ in millions) | |
Maximum
($ in millions) | |
Actual
Results(1) ($ in millions) | |
% Achievement(1)(2) | |
Equivalent
Company Measures (BPI) Rating |
Adjusted Earnings(2) | |
Less than 760 | |
760 | |
847 | |
921 | |
895 | |
106% | |
1.56 |
| |
Less than ~90% | |
~90% | |
100% | |
~109% | |
| |
| |
|
Payout Percentage | |
0% | |
0% | |
100% | |
200% | |
| |
| |
|
Cash Flow Modifier | |
Less than 530 | |
530 | |
Between 530 and 620 | |
More than 620 | |
713 | |
10% | |
.16 |
BPI Rating Percentage | |
(10)% | |
0% | |
0% | |
10% | |
| |
| |
|
Final Company Measure (BPI) Rating | |
| |
| |
| |
| |
| |
| |
1.72 |
(1) |
The amounts shown for the performance measure may differ from the amount reported
in our financial statements because it has been adjusted to exclude gains or losses attributable to (i) certain extraordinary
and/or non-recurring events (such as business acquisitions or dispositions or business restructuring charges), and (ii) certain
other items not reflective of operating performance (such as the impact of changes in accounting principles). In 2021, however,
these adjustments did not materially affect the amount of any NEO’s annual incentive award. |
(2) |
Adjusted Earnings: Payouts for performance over the applicable payout range between threshold
and target and between target and maximum are determined based on a payout curve, as described in the section above entitled
“Adjusted Earnings”. No additional payout is made for Adjusted Earnings achievement in excess of $921 million. |
Company Measures for
Dr. Shelton (Sole) and Mr. Pereira (Primary)
The Company Measure (BPI), which represents
the entire (100% of 70%, or 70% total) annual incentive opportunity for Dr. Shelton, our Chief Technology Officer, and half (50%
of 70%, or 35% total) of the annual incentive opportunity for Mr. Pereira, our Executive Vice President and President, FMC Americas,
is the following:
Adjusted EBITDA
Adjusted EBITDA is defined as Net income (loss)
(a GAAP measure) plus the sum of discontinued operations, net of income taxes, Corporate special charges (income), interest expense,
net, provision (benefit) for income taxes and depreciation and amortization.
The Compensation Committee defined a payout
curve for the Adjusted EBITDA metric which sets out the amount to be paid depending on actual performance; the curve is similar
to the curve for Adjusted Earnings, with a threshold level of performance at 0% and the payout increasing through various bend
points up to 100% of the target opportunity for achieving target performance, and through various bend points up to 200% for maximum
performance or above.
The Compensation Committee used Adjusted EBITDA,
a non-GAAP measure, as a performance metric in structuring the annual incentive for Dr. Shelton and Mr. Pereira. We believe that
this non-GAAP measure is helpful to management and investors as a measure of operating performance because it excludes various
items that do not relate to or
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 36
are not indicative of operating performance.
Adjusted EBITDA should not be considered as a substitute for net income (loss) or other measures of performance or liquidity reported
in accordance with GAAP. For a reconciliation of Adjusted EBITDA to the most directly comparable financial measures calculated
and presented in accordance with GAAP, reference is made to the section captioned “Results of Operations -2021, 2020 and
2019 – Adjusted Earnings Reconciliation” on p. 25 of our Form 10-K for the year ended December 31, 2021, filed with
the SEC on February 25, 2022.
Free Cash Flow
The Compensation Committee included the same
modifier to the Adjusted EBITDA metric for Dr. Shelton and Mr. Pereira as was used with respect to the Adjusted Earnings metric
for Messrs. Douglas, Sandifer and Reilly: Free Cash Flow.
Performance Goal for
Company Measure for Dr. Shelton and Mr. Pereira
Target
In setting the target for this Company Measure,
Adjusted EBITDA, the Compensation Committee set it at a level that it considered rigorous and challenging, which took into account
the relevant risks and opportunities. The target was set at a 3% increase above the prior year level of actual performance, which
was at the high end of the range of 2021 market growth forecasts.
Threshold; Maximum
Having set the target, the Compensation Committee
also set the threshold and maximum performance levels. For 2021, the Committee set the threshold level at a relatively high-performance
level that equates to approximately 92% of the target for Adjusted EBITDA. The Committee set the maximum level at a performance
level that equates to approximately 107% of target for Adjusted EBITDA, a level that presented a significant challenge requiring
exceptionally strong performance.
The Compensation Committee assesses performance
achievement against the performance metric and determines the rating, including the effect of the modifier, which yields an overall
BPI rating for this metric.
|
|
2021
Company Measure: Dr. Shelton and Mr. Pereira |
Performance
Metric |
|
Below
Threshold
($ in millions) |
|
Threshold
($ in millions) |
|
Target
($ in millions) |
|
Maximum
($ in millions) |
|
Actual
Results(1)
($ in millions) |
|
%
Achievement(1)(2) |
|
Equivalent
Company
Measure (BPI)
Rating |
Adjusted
EBITDA(2) |
|
Less than 1,188 |
|
1,188 |
|
1,288 |
|
1,374 |
|
1,324 |
|
103% |
|
1.37 |
|
|
Less than ~92% |
|
~92% |
|
100% |
|
~107% |
|
|
|
|
|
|
Payout
Percentage |
|
0% |
|
0% |
|
100% |
|
200% |
|
|
|
|
|
|
Cash
Flow Modifier |
|
Less than 530 |
|
530 |
|
Between 530 and 620 |
|
More than 620 |
|
713 |
|
10% |
|
.14 |
BPI
Rating Percentage |
|
(10)% |
|
(10)% |
|
0% |
|
10% |
|
|
|
|
|
|
Final
Company Measure (BPI) Rating for Dr. Shelton and Mr. Pereira |
|
|
|
|
|
|
|
|
|
|
|
|
|
1.51 |
(1) |
The amounts shown for the performance measure may differ from the amount reported
in our financial statements. Adjusted EBITDA is defined as Net income (loss) (a GAAP measure) plus the sum of discontinued
operations, net of income taxes, Corporate special charges (income), interest expense, net, provision (benefit) for income
taxes and depreciation and amortization. In 2021, however, these adjustments did not materially affect the amount of any NEO’s
annual incentive award. |
(2) |
Adjusted EBITDA: Payouts for performance over the applicable payout range between threshold and
target and between target and maximum are determined based on a payout curve, as described in the section above entitled “Adjusted
EBITDA”. No additional payout is made for Adjusted EBITDA achievement in excess of $1,374 million. |
Additional Company Measure
for Mr. Pereira
In addition to Adjusted EBITDA, the other half
of the Company Measure (35% of the total) for Mr. Pereira is represented by operating profitability for the geographic regions
he oversees. The Compensation Committee utilized this measure in order to align the incentive for Mr. Pereira with his area of
responsibility. This measure gives him a clear line of sight and sufficient control over the performance toward the goal to effectively
motivate him to achieve our business objectives. (We do not publicly disclose the regional targets because of the potential for
competitive harm from such disclosure, as they would provide our competitors with information about our strategy and profitability
in subsets of our business that is not otherwise public, the revelation of which would be harmful to us.) The Compensation Committee
believes that it has set the performance goal at a rigorous and challenging level so as to require significant effort and achievement
to be attained. The Compensation Committee assesses Mr. Pereira’s achievement against this performance metric and determines
the rating. Like the other Company Measures, there are cash flow modifiers associated with the measure, similarly designed to motivate
target cash flow achievement and to reward or penalize achievement outside the target range. The Committee then determined the
weighted average of the rating on this measure, which has an aggregate 35% weighting (50% of 70%) and the rating given to the Adjusted
EBITDA metric (35% weighting). Based on achievement on Adjusted EBITDA, very strong performance relative to the demanding regional
operating profitability measure and the cash flow modifiers, the Compensation Committee determined an overall BPI rating for Mr.
Pereira of 1.805.
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 37
Individual Measures
The Compensation Committee also considers Individual Measures (“Annual
Performance Incentive,” or “API”), which represent 30% of the annual incentive target opportunity. The Individual
Measures generally consist of non-financial objectives specific to each NEO, but may include financial measures at the discretion
of the CEO. In early 2021, the Board met with Mr. Douglas in his capacity as President and CEO, and Mr. Douglas met with the NEOs
to discuss the specific items, and expectations of achievement, constituting the Individual Measures portion of the annual incentive
for such individual executive officer.
The CEO’s 2021 Individual Measures and performance with respect
thereto resulting in the API rating set forth in the table below include the following:
|
|
Individual
Measures |
|
Performance |
Mark
Douglas |
|
• Safety:
Drive OII rate to <0.05 on the journey to zero injuries; continue work on addressing process safety priorities
|
|
• Results
came in at 0.06 TRIR, a record low for the Company with only six recordable injuries
• Process
safety plans and inspections continued as planned |
|
|
• Strategy:
Ensure smooth regional transitions in EMEA and APAC; continue to evolve plant health strategy
with a focus on Biologicals growth; continue to build out the FMC Ventures investment portfolio
in conjunction with R&D and Plant Health; implement enhanced Cyber security for the enterprise;
new Sustainability org in place and delivering on new metrics and goals; deliver post-SAP implementation
savings targets of $15.4mm in 2021; implement diamide strategy actions as per plan |
|
• EMEA
and Asia leadership transitions occurred according to plan
• Plant
Health strategy was enhanced with rapid market expansion as well as reinforced spend on research and development, record
revenue and profitability for the business was achieved
• FMC
Ventures had a very successful year with investments in two biological companies utilizing new technologies as well as
an investment in an Indian precision ag company focused on mechanical weeding and target spraying
• Cyber
security was enhanced by new processes and investments in technology as well as a robust internal communication campaign
• Post-SAP
implementation program delivered on the targets of $15.4 million in the year |
|
|
• Executive
Transitions/People: Continue to build out robust succession plans for Operating Committee
and down to Operating Committee minus 2; 2021 Development/people plan completed; mission
critical roles worked and fully staffed |
|
• Full
talent reviews conducted and succession plans in place for all operating committee members
with most recent executive moves all working as planned |
|
|
• Diversity
and Inclusion: Take actions to support the Company’s 2021 goal to increase
global female and US African American/ Black employees in the workforce to 33% and 10%
respectively, through leading staff recruiting and retention in a manner aligned with
that goal and also supporting all business and functional groups in retention and recruitment
of women and African-American/Black employees by means such as communications, training
and mentoring |
|
• Considerable
progress was made on inclusion as well as diversity metrics despite the company managing through hiring restrictions due
to COVID costs. Although the Company fell short of the female and African American/Black representation target because
of this issue, the Company improved representation over all
• The
Company has formed numerous working groups focused on retention and hiring of minority talent that will drive results
in 2022
• FMC
Employee Resource Groups have been expanded both in scope and geography |
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 38
In addition, Mr. Douglas as President and CEO established 2021 Individual
Measures unique to each officer who serves on the Company’s Operating Committee, including those NEOs set forth below, which
is set forth together with their performance against such measures:
|
|
Individual
Measures |
|
Performance |
Andrew Sandifer |
|
• Safety:
Support delivery of <0.05 OII rate and journey to zero injuries
|
|
• Set
tone at the top with high expectation for safety awareness. Extra emphasis on return-to-office
safety protocols. No safety recordable incidents in CFO organization in 2021 |
|
|
• Diversity
and Inclusion: Take actions to support the Company’s 2021 goal to increase global female
and US African American employees in the workforce to 33% and 10% respectively, through focused
recruiting, retention, and development efforts. Expand use of diverse service providers |
|
• Insured
diverse candidate and interview slates for all roles recruited in 2021
• Increased
female representation on CFO leadership team to 2 out of 12
• Completed
comprehensive review and development planning for CFO-2 level female leaders, resulting in numerous promotions to expanded
leadership roles
• Implemented
shift to Black-owned accounting firm for audits of Benefit Plans |
|
|
• Strategy:
Transition from hypercare to business-as-usual following final go-live of SAP S/4 HANA.
Drive improvement in forecasting and management of free cash flow. Ensure Corporate Business
Development efforts drive broad-based business value. Build more proactive cybersecurity
capabilities and gain personal training/education on cybersecurity management and governance |
|
• Seamless
transition to business-as-usual operation with new SAP system, delivering synergies as committed without any business disruption
• Formalized
cross-functional cash flow management team, greatly increasing forecasting and management capabilities, and delivering
well in excess of targeted free cash flow for the year
• Strong
progress with both FMC Ventures and Precision Ag closely aligning development efforts with long-term business value
• Implemented
new Security Operations Center to proactively manage cybersecurity threats, completed NACD’s Cybersecurity Oversight
certification program |
|
|
• Organizational
development |
|
• Refreshed
succession plans for all direct reports |
|
|
Individual
Measures |
|
Performance |
Ronaldo
Pereira |
|
• Safety:
Drive OII rate to <0.05 on the journey to zero injuries. Continue work on addressing
safety priorities |
|
• Only
one recordable in the Americas without any lost working days. Safety continues to be
a priority and even with increased field activity the Company’s safety performance
continues to improve |
|
|
• Diversity
and Inclusion: Drive to increase global female representation to 33% and Black/African
American representation in the U.S. to 10% in 2021; continue to drive people leaders
to embrace diversity and inclusion actions and to avoid/eliminate unconscious bias |
|
• Led
the Race Equity task force, promoting employee engagement and implementing initiatives to prevent bias on the hiring process
• A
new onboarding process was put in place to enhance the chances of success of Black/African American employees
• Strong
progress in female representation in Latin America, increasing diversity in the field team
• Black/African
Americans in the US increased from 9.0% to 9.4%
• A
closer collaboration between the Race Equity task force and the Employee Resource Groups established
• The
Company held listening sessions with Black growers and adjusted its field organization to better serve this minority group,
helping to ensure equitable treatment and opportunities |
|
|
• Strategy:
Assess and adjust (if and where needed) the Company’s go-to-market strategy, programs
and partnerships; Ensure successful product introduction (Xyway™ and Kalida™
fungicides, Elevest™ insect control); materially improve the Company’s capacity
to generate demand; plan in place to phase out highly hazardous pesticides (short term)
and carbosulfan (mid-term) in the Americas |
|
• Re-designed
the rebate programs in the US and Brazil and enhanced field presence to focus on demand generation
• Sales
of FMC products grew faster from the distributor to the field than from FMC to distributors, helping to decrease field
inventory
• Xyway™
fungicide sales were higher than initially expected and Elevest™ insect control continues to grow in the US
• Highly
hazardous pesticides were phased-out in Americas |
|
|
• People
Development and Staffing: Continue to build out robust succession plans for Operating
Committee-Level 1 and OC-Level 2 leaders; ensure mission critical roles are worked and
fully staffed |
|
• All
mission critical roles are filled and succession plans have been developed / implemented
• Performance
and development discussions were held with all direct reports
• Talent
discussions held on a quarterly basis, ensuring development and succession plans are in place for critical roles, minority
groups and young talent |
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 39
|
|
Individual
Measures |
|
Performance |
Michael Reilly |
|
• Core
Values: Compliance & Ethics, Safety: Lead overall compliance efforts in the Company;
demonstrate leadership in support of driving OII rate to <0.05 |
|
• Company’s
Ethics and Compliance program expansion with increased Ambassadors (now 150) raising awareness; training programs and
processes continued despite the pandemic, with Law Department conducting live training sessions for 8000+ people-hours
• No
safety recordables on the legal team |
|
|
• Diversity
and Inclusion: Take actions to support the Company’s 2021 goal to increase global female and US African American
employees in the workforce to 33% and 10% respectively, through leading Law Department staff recruiting and retention
in a manner aligned with that goal and also supporting other business and functional groups in retention and recruitment
of women and African-American/Black employees by means such as communications, training and mentoring |
|
• Law
Department is a diverse team, with a very strong cadre of female leaders all around the world, and an overall female representation
of 70+%; during 2021, several female attorneys promoted to new leadership roles
• Executive
sponsor of employee resource group and sponsor of several female or ethnically diverse employees
• Drove
new initiatives to improve female and ethnic/racial diversity in leading outside law firms |
|
|
• Strategy:
Drive effective and efficient legal enforcement of diamides IP; drive successful and
effective legal support of regulatory and commercial components of diamides strategy;
drive successful and effective legal support of Precision Ag, FMC Ventures and Sustainability |
|
• Many
successful litigation and other legal-driven accomplishments re: diamides enforcement throughout 2021, in countries including
India, China, Brazil and Mexico
• New
or amended important diamide commercial agreements achieved with key partners
• Law
Department 2021 projects have delivered more effective legal support on Precision Ag and Data Privacy, and also greater
use of legal systems and processes to enhance efficiency |
|
|
• People
Development and Staffing: Develop and implement succession and talent development programs for my direct reports and
their direct reports; ensure Law Department is fully staffed to meet the growing needs of the business, including timely
and effective support to regional needs |
|
• Development
plans implemented for department leaders, and smooth succession implemented for two leaders who left during 2021
• Department
has met all needs despite challenges of the pandemic |
|
|
Individual
Measures |
|
Performance |
Kathleen Shelton |
|
• Safety:
Drive a strong safety performance and commitment to all Core Values as a world class
research organization |
|
• No
recordable injuries in global R&D in 2021
• Increased
use of data analysis to identify and address areas of improvement for our R&D safety programs
• Sustainability
initiatives underway to reduce our environmental footprint at our global research headquarters in Newark, Delaware |
|
|
• Strategy:
Drive advancement of the pipeline with discipline including discovery, development, chemistry
and plant health |
|
• Development
pipeline molecules continue to advance and launch globally
• Discovery
pipeline continues to advance through our new product introduction stage gate process
• Engagement
with Ventures and Plant Health identified and assessed external opportunities, such as Novozymes collaboration, for investment
and collaboration |
|
|
• Diversity
and Inclusion: Take actions to support the Company’s 2021 goal to increase
global female and US African American employees in the workforce to 33% and 10% respectively,
through leading the R&D organization in recruiting and retention |
|
• Co-Leader
of FMC’s Gender Diversity subteam on retention working to retain talent across FMC
• Collaborations
with Delaware State University (HBCU) - continue with the R&D organization supporting programs at the College of Agriculture
and with participation on Delaware State University Foundation Board of Directors
• Executive
Co-Sponsor of Women’s Initiative Network - employee resource group focused on supporting women’s careers and
development
• Drove
new initiative with local universities to recruit and hire diverse talent |
|
|
• Strategy:
Improve efficient generation and effective use of research data |
|
• Developed
5-year capital plan to enable accurate forecasting and effective use of funding to support R&D infrastructure and
equipment needs
• Invested
in additional data tools to assure that data is captured, validated and effective in being utilized for decision making |
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 40
For Individual Measures, the Compensation Committee assesses performance
achievement against goals and determines the individual performance rating on each individual objective, and then, based on the
weighting given to each goal, determines the weighted average of the results, which yields an overall individual rating. The Individual
Measures rating may range from 0 to 2.0. The Compensation Committee determined that for 2021, Mr. Douglas received a 1.6 rating,
Mr. Sandifer received a 1.5 rating, Mr. Pereira received a 1.65 rating, Mr. Reilly received a 1.3 rating and Dr. Shelton received
a 1.4 rating.
Payout Calculation
Finally, the Compensation Committee takes 70% of the target cash incentive
opportunity of each executive officer for the Company Measures component and multiplies it by the applicable Company Measures ratings
for the applicable performance metrics to determine the Company Measures amount to be paid. Similarly, the Compensation Committee
takes 30% of the target cash incentive opportunity of each executive officer for the Individual Measures component and multiplies
it by the applicable Individual Measures rating to determine the Individual Measures amount to be paid.
The Compensation Committee then adds the amounts for the Company Measures
component and the Individual Measures components to determine the total 2021 annual incentive payout for each NEO. The Compensation
Committee then presents the determination of incentive payout amounts to the Board for its review and approval.
NEO | |
Target Incentive | | |
Company Measures (BPI): 70% of Target Incentive | | |
Company Measures Rating | | |
Company Measures Incentive Payout Amount | | |
Individual Measures (API) 30% of Target | | |
Individual Measures (API) Rating | | |
Individual Measures Incentive Payout Amount | | |
Total 2021 Incentive Payout Amount |
Mark Douglas | |
$ | 1,378,125 | | |
$ | 964,688 | | |
| 1.72 | | |
$ | 1,659,263 | | |
$ | 413,437 | | |
| 1.6 | | |
$ | 661,500 | | |
$ | 2,320,763 |
Andrew Sandifer | |
$ | 505,835 | | |
$ | 354,085 | | |
| 1.72 | | |
$ | 609,026 | | |
$ | 151,751 | | |
| 1.5 | | |
$ | 227,627 | | |
$ | 836,653 |
Ronaldo Pereira | |
$ | 302,820 | | |
$ | 211,974 | | |
| 1.805 | | |
$ | 382,615 | | |
$ | 90,846 | | |
| 1.65 | | |
$ | 149,896 | | |
$ | 532,511 |
Michael Reilly | |
$ | 357,588 | | |
$ | 250,312 | | |
| 1.72 | | |
$ | 430,537 | | |
$ | 107,276 | | |
| 1.3 | | |
$ | 139,459 | | |
$ | 569,996 |
Kathleen Shelton | |
$ | 223,776 | | |
$ | 156,643 | | |
| 1.51 | | |
$ | 236,531 | | |
$ | 67,133 | | |
| 1.4 | | |
$ | 93,986 | | |
$ | 330,517 |
Sustainability-Related Individual Measures for
2022
The Company has had a longstanding practice of including in the Individual
Measures of the CEO and other NEOs various objectives that align with various aspects of our Sustainability objectives. This practice
will continue. We recognize the growing interest of stockholders in understanding the Company’s current commitment to its
Sustainability goals and how management is being incentivized to address such goals.
We provide the following information regarding 2022 API goals relating
to Sustainability which the Compensation Committee has established for the NEOs. Each individual NEO’s goals may be tailored
to the particular role of that NEO. These goals, in turn, are cascaded as appropriate to all senior leaders in the Company. We
are not publicly disclosing our specific business performance-related Individual Measures at this time because of the potential
for competitive harm from such disclosure.
2022
API Sustainability Goals |
Safety |
• |
Total
Recordable Injury Rate (“TRIR”) <0.05% on the way to zero injuries |
|
• |
Process
Safety: Continue all Process Hazard Assessments in all plants |
People/Diversity
and Inclusion |
• |
Take
action to create opportunities and remove barriers for a more inclusive workplace and show incremental progress toward the
goals of 14% U.S. Black/ African American and 50% women globally |
|
•
|
Accelerate
Task Force recommendations on retention and recruitment |
General
Sustainability |
• |
Stay
on track regarding SBTi process for Net Zero strategy and targets |
|
• |
Enhance
external ESG communication |
|
• |
Develop
new Net Zero goals for 2030 |
Long-Term Incentives
The third and largest main component of the executive compensation program
is long-term equity incentives. The Compensation Committee has designed the long-term incentive opportunity to motivate and reward
executive officers to achieve multiyear strategic goals and deliver sustained long-term value to stockholders.
In 2021, long-term incentives (“LTI”) were granted to executives
via three different vehicles: performance-based restricted stock unit awards, stock options and time-based restricted stock unit
awards.
The Compensation Committee believes that LTI awards should compensate
NEOs, in a meaningful way, for delivering sustainable long-term value to stockholders. LTI awards for the NEOs, except for the
CEO, are recommended by the CEO and approved by the Compensation Committee. The LTI awards for the CEO are recommended by the Compensation
Committee and approved by the full Board of Directors. All LTI awards are approved during the February meetings of the Compensation
Committee and the Board.
Generally, LTI grants vest based on Company performance and/or the NEO’s
continued service over a three-year period, except that NEO grants vest sooner in certain retirement-eligible situations. Unvested
LTI grants are generally forfeited upon a cessation of service, but in certain scenarios, awards may vest upon or following a termination,
as further described in the “Potential Payments Upon Termination or Change in Control” section of this proxy statement.
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 41
2021 LTI Vehicle Mix
Equity
Vehicle |
|
2021
Allocation |
|
Performance
Metric;
How Payouts Are
Determined |
|
Performance
Period; Vesting
Period |
|
Rationale
for Use |
Performance-Based
Restricted Stock Units (PRSUs) |
|
50%
(CEO); 40% (Continuing NEOs); 33.3% (R. Pereira and K. Shelton in 2021 prior to appointment as executive officers) |
|
• 70%:
Relative TSR |
|
• 25%
three-year period,
• 25%
each individual 1-year period
|
|
• Links
with stockholder value creation
• Aligns
with stockholders
• Filters
out macroeconomic and other factors not within management’s control
|
|
|
• 30%:
three-year cumulative operating cash flow |
|
• Three-year
period |
|
• Aligns
with operational focus on returning cash to stockholders
• Aligns
with role of cash flow as a key driver of long-term value
• Gives
management more direct control over outcome
|
Stock
Options |
|
30%
(CEO & Continuing NEOs); 33.3% (R. Pereira, K. Shelton in 2021) |
|
• Share
price appreciation |
|
• Three-year
cliff vesting
• Exercise
price: closing price on grant date
• 10-year
term
|
|
• Prioritizes
increasing stockholder value
• Promotes
long-term focus
|
Time-Based
Restricted Stock Units (RSUs) |
|
20%
(CEO); 30% (Continuing NEOs); 33.3% (R. Pereira and K. Shelton in 2021) |
|
• Value
of stock |
|
• Three-year
cliff vesting |
|
• Aligns
with stockholders
• Promotes
retention and reinforces ownership culture
• Provides
value even during stock price or market underperformance
|
The target values for the annual LTI awards granted in February of 2021
were as follows:
NEO |
|
PRSUs
($) |
|
Options
($) |
|
RSUs
($) |
|
Total
($) |
Mark Douglas |
|
2,600,000 |
|
1,560,000 |
|
1,040,000 |
|
5,200,000 |
Andrew Sandifer |
|
477,840 |
|
358,380 |
|
358,380 |
|
1,194,600 |
Ronaldo Pereira |
|
170,200 |
|
170,200 |
|
170,200 |
|
510,600 |
Michael Reilly |
|
266,240 |
|
199,680 |
|
199,680 |
|
665,600 |
Kathleen Shelton |
|
122,133 |
|
122,133 |
|
122,133 |
|
366,400 |
Performance-Based Restricted Stock Unit Awards
Performance-based awards are granted in the form of performance-based
restricted stock units. The Compensation Committee believes that having share-based performance awards closely aligns pay with
performance in the interests of the stockholders.
The number of performance-based restricted stock units earned is based
on our achievement against two performance metrics, Relative TSR and three-year cumulative operating cash flow. The Compensation
Committee utilized these two in order to focus executive officers on the critical strategic priorities of generating superior stockholder
returns and generating long-term cash flow. Relative TSR represents 70% of overall performance, and three-year cumulative operating
cash flow represents 30%. The Compensation Committee considers both metrics as building blocks to achieve our key strategic goals.
Relative TSR
The Compensation Committee has selected relative TSR because it ties
executive officer compensation to the creation of stockholder value and aligns the interests of executive officers with those of
our stockholders.
By measuring our stock performance relative to peers, it mitigates the
impact of macroeconomic factors, both positive and negative, that affect the industry and/or stock price performance and are beyond
the control of management, and it provides rewards that are more directly aligned with performance through different economic cycles.
With respect to the relative TSR portion, following the same approach
as last year and in an effort to maintain a consistent and robust peer group of relevant performance peers, the 2021-2023 peer
group reflects all companies included in the S&P 1500 Composite Chemical Index plus select additional chemical company peers,
including companies not included in the index but a part of the Company’s compensation peer group, as described above. The
2021-2023 peer group differs from the 2020-2022 peer group due to changes in the companies included in the S&P 1500 Composite
Chemical Index and a change in the companies included in the FMC compensation peer group, as described above.
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 42
AdvanSix Inc. |
|
Ingredion Incorporated |
Air Products and Chemicals, Inc. |
|
Innospec Inc. |
Akzo Nobel N.V. |
|
International Flavors & Fragrances, Inc. |
Albemarle Corporation |
|
Koppers Holdings, Inc. |
American Vanguard Corporation |
|
Kraton Corporation |
Ashland Global Holdings Inc. |
|
Linde plc |
Avient Corporation (formerly PolyOne Corporation) |
|
Livent Corporation |
Axalta Coatings Systems Ltd. |
|
LyondellBasell Industries N.V. |
Balchem Corporation |
|
Minerals Technologies, Inc. |
BASF SE |
|
The Mosaic Company |
Cabot Corporation |
|
NewMarket Corporation |
Celanese Corporation |
|
Nutrien Ltd. |
CF Industries Holdings, Inc. |
|
Olin Corporation |
The Chemours Company |
|
PPG Industries, Inc. |
Dow Inc. |
|
Quaker Chemical Company |
DuPont de Nemours, Inc. |
|
Rayonier Advanced Materials, Inc. |
Eastman Chemical Company |
|
RPM International, Inc. |
Ecolab, Inc. |
|
The Scotts Miracle-Gro Company |
Ferro Corporation |
|
Sensient Technologies Corporation |
GCP Applied Technologies Inc. |
|
The Sherwin-Williams Company |
H. B. Fuller Company |
|
Stepan Company |
FutureFuel Corp. |
|
Tredegar Corporation |
W. R. Grace & Co. |
|
Trinseo S.A. |
Hawkins, Inc. |
|
Valhi, Inc. |
Huntsman Corporation |
|
Valvoline |
Ingevity Corporation |
|
Westlake Chemical Corporation |
In 2021, the Compensation Committee again selected relative TSR to incent
management to achieve long-term stockholder returns and to reflect relative performance, not merely broad stock market moves. This
metric also directly aligns management with stockholder interests. Relative TSR performance is calculated as four point-to-point
measurements from 2021 to 2023. TSR performance is calculated for each of the three calendar years, as well as for the three-year
period as a whole. Each of these four measurement periods carries a weight of 25% in calculating the final number of shares due.
When the performance measure has been met for a particular calendar year during the three-year period of the award, that portion
of units is “banked”, but is not considered “earned” and shares will not be delivered unless and until
the executive remains in service for the three-year performance period (except in certain circumstances as described below under
the heading entitled “Potential Payments Upon Termination or Change in Control”) and the performance is approved by
the Compensation Committee. In addition, if cash dividends were paid to the Company’s stockholders during the applicable
measurement period, dividend equivalent units are credited with respect to the banked units and are delivered to the executive
if and when the banked units are delivered.
Any value earned by executives for these awards is based on the Company
achieving a relative performance measure of TSR at or above the 35th percentile (the threshold), and units will be banked
as set forth in the table below.
Level |
|
Percentile
Ranking of Company’s Total Stockholder Return
Versus Peer Group Total Stockholder Return |
|
Percentage
of the Target Units Banked |
Below Threshold |
|
|
Below
the 35th Percentile |
|
0% |
|
Threshold |
|
|
35th
Percentile |
|
50% |
|
Target |
|
|
50th Percentile |
|
100% |
|
Maximum |
|
|
80th
Percentile or higher |
|
200% |
|
If the cumulative three-year TSR performance for the period is negative,
that portion (25%) of the payout is capped at 100% (target). For example, in the event of a broad and protracted market downturn,
if the Company’s cumulative three-year TSR performance is negative, but still superior to most of the peer group, the payout
for the three-year measurement period will be limited to target (even though performance in that scenario would have exceeded target).
The Compensation Committee believes it is appropriate to limit the payout in such circumstances, notwithstanding relative outperformance.
The Compensation Committee believes that the increasing cyclicality
of the Company’s business, particularly because, following the separation of its Lithium business in 2019, it is now a 100%
agricultural sciences company, and the difficulty of finding peers with the same type of industry exposure, necessitate both a
payment for performance beginning at the 35% TSR percentile, and a system for banking payouts based in part on one year periods.
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 43
Cumulative Three-Year Operating Cash Flow
Beginning in 2019, the Compensation Committee added Three-Year Cumulative
Operating Cash Flow as a performance metric, representing 30% of the performance-based RSUs. This metric was added because it is
highly aligned with our strategy for creating stockholder value, including our operational focus on returning cash to stockholders,
it is something over which management has substantial control, and it unites management toward a common goal.
Operating Cash Flow is calculated as Adjusted EBITDA plus or minus the
change in working capital, with Adjusted EBITDA defined as net income (loss) before corporate special charges (income); discontinued
operations, net of income taxes; interest expense, net; depreciation and amortization; and the provision (benefit) for income taxes.
The change in working capital is defined as the sum of (a) trade receivables (net), (b) guarantees of vendor financing, (c) inventories,
(d) accounts payable (trade and other), (e) advance payments from customers, and (f) accrued customer rebates, each as reported
in the Company’s consolidated statements of cash flow for the relevant year. Three-Year Operating Cash Flow will be the sum
of Operating Cash Flow of each individual year in the three-year period. The performance period for the 2021 award runs from January
1, 2021 through December 31, 2023.
We do not publicly disclose our specific performance measure targets
and the corresponding minimums and maximums before the conclusion of the three-year performance period, because of the potential
for competitive harm from such disclosure. This measure is competitively sensitive and would reveal information about our view
of our anticipated trajectory, which is not otherwise public. The Compensation Committee believes that it has set the performance
goal at a rigorous and challenging level so as to require significant effort and achievement by our executive officers to be attained,
and that such goal has been established in light of the macroeconomic and industry environments, as well as our internal forecast.
After the end of the performance period, the targets and achievement relative to such targets will be disclosed.
The Compensation Committee granted the following number of performance-based
restricted stock units to the NEOs in early 2021:
NEO |
|
PRSUs
(#) |
Mark
Douglas |
|
22,707 |
Andrew
Sandifer |
|
4,176 |
Ronaldo
Pereira |
|
1,491 |
Michael
Reilly |
|
2,326 |
Kathleen
Shelton |
|
1,069 |
Performance Periods Completed as of 2021 Year
End
Below are the performance results for performance-based RSU performance
periods that closed on or before December 31, 2021.
2019-2021 Performance-Based RSU Awards
For the 2019-2021 performance periods, the Company’s relative
TSR performance was as follows, resulting in a payout at 117% of target:
| |
TSR | | |
Peer Group† | | |
Target | | |
TSR |
Measurement
Periods | |
Performance | | |
Percentile | | |
0.0 | | |
1.0 | | |
2.0 | | |
Rating |
2019-2021 Grant Year 1 (2019 TSR) | |
| 49.59 | % | |
| 88.6 | % | |
| 35 | % | |
| 50 | % | |
| 80 | % | |
| 2.00 |
2019-2021 Grant Year 2 (2020 TSR) | |
| 16.00 | % | |
| 70.8 | % | |
| 35 | % | |
| 50 | % | |
| 80 | % | |
| 1.60 |
2019-2021 Grant Year 3 (2021 TSR) | |
| (5.93 | )% | |
| 15.2 | % | |
| 35 | % | |
| 50 | % | |
| 80 | % | |
| 0.00 |
3 Year TSR 2019-2021 | |
| 66.21 | % | |
| 52.2 | % | |
| 35 | % | |
| 50 | % | |
| 80 | % | |
| 1.07 |
Total | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 1.17 |
† |
As described above, peer group composition
varies by grant year. |
For the 2019-2021 performance period, the Company’s cumulative
operating cash flow performance was as follows, resulting in a payout at 172% of target:
|
|
2019-2021
Measurement Period |
Performance
Metric | |
Below
Threshold
($ in millions) | | |
Threshold
($ in millions) | | |
Target
($ in millions) | | |
Maximum
($ in millions) | | |
Actual
Results
($ in millions) | | |
%
Achievement | | |
Rating |
Cumulative
Three Year Operating Cash Flow(1) | |
| Less than 2,799 | | |
| 2,799 | | |
| 3,335 | | |
| 3,752 | | |
| 3,635 | | |
| 172 | % | |
| 1.72 |
Percentage
of Units Earned(2) | |
| 0 | % | |
| 25 | % | |
| 100 | % | |
| 200 | % | |
| | | |
| | | |
| |
(1) |
Operating Cash Flow is calculated as Adjusted EBITDA plus or minus
the change in working capital, with Adjusted EBITDA defined as net income (loss) before corporate special charges (income);
discontinued operations, net of income taxes; interest expense, net; depreciation and amortization; and the provision (benefit)
for income taxes. The change in working capital is defined as the sum of (a) trade receivables (net), (b) guarantees of vendor
financing, (c) inventories, (d) accounts payable (trade and other), (e) advance payments from customers, and (f) accrued customer
rebates, each as reported in the Company’s consolidated statements of cash flow for the relevant year. Three-Year Operating
Cash Flow will be the sum of Operating Cash Flow of each individual year in the three-year period. |
(2) |
Payouts for performance between the levels set forth above will be ratably
interpolated. No additional payout is made for Cumulative Operating Cash Flow achievement in excess of $3,752 million. |
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 44
2020-2022 Performance-Based RSU Awards
For the performance periods of 2020 and 2021, the Company’s relative
TSR performance was as follows:
| |
TSR | | |
Peer Group† | | |
Target | | |
|
Measurement
Periods | |
Performance | | |
Percentile | | |
0.0 | | |
1.0 | | |
2.0 | | |
TSR Rating |
2020-2022
Grant Year 1 (2020 TSR) | |
| 16.00 | % | |
| 66.0 | % | |
| 35 | % | |
| 50 | % | |
| 80 | % | |
| 1.53 |
2020-2022
Grant Year 2 (2021 TSR) | |
| (5.93 | )% | |
| 13.5 | % | |
| 35 | % | |
| 50 | % | |
| 80 | % | |
| 0.00 |
† |
As described above, peer group composition varies by grant year. |
Thus, no amount was banked with respect to Year 2 of this award.
2021-2023 Performance-Based RSU Awards
For the 2021 performance period, the Company’s relative TSR performance
was as follows:
| |
TSR | | |
Peer Group† | | |
Target | | |
|
Measurement
Periods | |
Performance | | |
Percentile | | |
0.0 | | |
1.0 | | |
2.0 | | |
TSR Rating |
2021-2023
Grant Year 1 (2021 TSR) | |
| (5.93 | )% | |
| 13.5 | % | |
| 35 | % | |
| 50 | % | |
| 80 | % | |
| 0.00 |
† |
As described above, peer group composition
varies by grant year. |
Thus, no amount was banked with respect to Year 1 of this award.
Stock Option Awards and Time-Based Restricted Stock Unit Awards
In addition to motivating performance through the performance-based
restricted stock units, the Committee structured the balance of the equity vehicles and the relative weight assigned to each type
(1) to motivate stock price appreciation over the long term through stock options, which deliver value only if the stock price
increases, and (2) to ensure some amount of value delivery through time-based restricted stock units, which are complementary because
they have upside potential but deliver some value even if the stock price does not go up, while also reinforcing an ownership culture
and commitment to us.
Stock options cliff-vest after three years, which reinforces the creation
of sustainable long-term stockholder value and promotes retention.
In determining the number of options required to meet the compensation
level approved for an NEO, the Company divides that portion of the Compensation Committee-approved LTI award value related to stock
options by the fair value of the option based on a Black-Scholes pricing model calculation using a 30-day average stock price for
the period immediately preceding the February meeting of the Compensation Committee.
The exercise price of all stock option awards to NEOs is equal to the
closing price of the Company’s stock on the date of the grant.
Time-based restricted stock units also cliff-vest after three
years.
In determining the amount of restricted stock units required to meet
the compensation level approved for an NEO, the Company divides that portion of the LTI award value related to restricted stock
units for that year by a 30-day average stock price for the period immediately preceding the February meeting of the Compensation
Committee. During the vesting period, if cash dividends are paid to the Company’s stockholders, the NEO will generally receive
a special cash payment equal to the amount he or she would have received had he or she been the record holder of the shares underlying
the RSUs when the dividend was declared and paid.
Generally, once the vesting condition is satisfied, the shares, less
any shares used to satisfy statutory tax withholding obligations, are issued to the NEO.
One-Time Grant Prior to Appointment as Executive Officer
The Compensation Committee does not generally intend to provide one-time
grants except in a very judicious and limited manner in rare circumstances as warranted by the situation. The Compensation Committee
views any such grants to the NEOs as a special and exceptional nonrecurring event to meet the Company’s needs during a specific
period or for a specific purpose. The Compensation Committee continues to prudently and carefully evaluate our compensation program
to ensure that it aligns the interests of executive officers and stockholders and links their pay to the Company’s performance.
In 2021, the Compensation Committee did not approve any one-time grants
to any NEOs, other than a grant that was made to Mr. Pereira in early 2021 prior to his appointment as an executive officer. In
recognition of his outstanding performance in 2020 in his role as Executive Vice President and President, FMC Americas, in early
2021, the CEO recommended and the Compensation Committee approved a one-time grant with a target value of $250,000 worth of time-based
restricted stock units to Mr. Pereira. The RSUs vest over four years.
FMC CORPORATION - Notice of Annual Meeting of Stockholders and Proxy Statement 45
Additional Compensation Policies and Practices
Executive Stock Ownership Policy
The Company has established guidelines setting expectations for the
ownership of Common Stock by executive officers. The ownership targets are as follows:
Position |
|
Required
Salary Multiple |
Chief
Executive Officer |
|
6x
base salary |
Chief
Financial Officer |
|
3x
base salary |
All
other NEOs |
|
2x
base salary |
These ownership guidelines are reviewed against our peer company practices
and, if necessary, adjusted every other year in conjunction with the formal market study of executive compensation. NEOs have a
period of up to five years from the date of their appointment to meet the guidelines. Only restricted stock units, vested stock
in the Company’s Savings and Investment Plans and personal holdings of FMC shares may be counted for purposes of compliance.
Unexercised stock options, including vested in-the-money options, may not be counted for purposes of compliance. In addition, the
Company does not permit the sale of shares acquired upon the exercise of options or upon the vesting of time-based or performance-based
restricted stock unit awards in an amount greater than 50% of the grant if the ownership targets have not been met.
Mr. Pereira and Dr. Shelton have five years from the date of their appointment
as executive officers to meet the guidelines. All other NEOs are in compliance with the Executive Stock Ownership Policy.
Anti-Hedging and Anti-Pledging Policies
The Company considers it inappropriate for directors and officers to
engage in certain transactions related to the securities of the Company which could result in their interests no longer being aligned
with the interests of other stockholders of the Company. Therefore, its securities trading policy and Anti-Hedging Policy restrict
these persons from hedging and pledging the Company’s Common Stock.
The restrictions apply to all of the Company’s directors and executive
officers and to immediate family members residing in their households (the “insiders”), to trusts maintained for the
principal benefit of an insider, and to other entities (such as partnerships or corporations) which are effectively controlled
by an insider.
Hedging
Certain hedging and monetization transactions, such as zero-cost collars
and forward sale contracts, allow an investor to lock in much of the value of the investor’s stock holdings and provide protection
from decreases in the value of the stock and also limit or eliminate the investor’s ability to profit from an increase in
the value of the stock. These transactions can therefore cause an investor’s interests to be misaligned with other stockholders
of the Company. Accordingly, the Company prohibits insiders from engaging in any hedging transactions, including short sales and
monetization transactions involving options, puts, calls, prepaid variable forward contracts, equity swaps, collars and exchange
funds or other derivatives, that are designed to hedge or speculate on any change in the market value of Common Stock. The Company
further prohibits any transaction that would directly or indirectly reduce the risk of holding Common Stock.
Pledging
The Company prohibits insiders from pledging or creating a security
interest in the Common Stock, including by purchasing Common Stock on margin or holding Common Stock in a margin account.
Clawback Policy
The Company has adopted a clawback policy designed to recoup incentive
compensation paid to executive officers based on erroneously prepared financial statements. If an accounting restatement is required
because of material non-compliance with any financial reporting requirement, all incentive compensation paid or credited to each
current or former executive officer for the restated period (up to three years) will be recalculated based on restated results.
To the extent the recalculated incentive compensation is less than the incentive compensation actually paid or credited to such
executive officer for that period, the excess amount must be forfeited or returned to the Company. Alternatively, the Company is
authorized to offset the forfeitable amount from compensation owed currently or in the future to such executive officer. The Compensation
Committee is authorized to interpret this policy and make all determinations necessary for the policy’s operation.
Risk Assessment
The Compensation Committee has determined, based in part on an assessment
of the Company’s executive compensation programs by its consultant, that its compensation policies and programs do not give
rise to inappropriate risk taking or risks that are reasonably likely to have a material adverse effect on the Company.
Tax Deductibility of Executive Compensation
Generally, a public company cannot deduct compensation in excess of
$1 million paid in any year to a Company’s chief executive officer, chief financial officer and the three other most highly
compensated officers. Traditionally, certain “qualified performance-based compensation” was not subject to this $1
million limitation. 2017 tax reform, however, eliminated the “qualified performance-based compensation” exemption.
Nevertheless, our Compensation Committee continues to view pay for performance as an important part of our executive compensation
policy. The Compensation Committee, after considering the potential impact of the application of this Section 162(m) of the Code,
may provide compensation to executive officers that may not be tax deductible if it believes that providing that compensation is
in the best interests of the Company and its stockholders.
FMC CORPORATION - Notice
of Annual Meeting of Stockholders and Proxy Statement 46
Potential Benefits Related to Change in Control
or NEO Termination
The Compensation Committee believes that the long-term interests of
stockholders are best served by providing reasonable income protection for NEOs to address potential change in control situations
in which they may otherwise be distracted by their potential loss of employment in the event of a successful transaction. The Company
has entered into an executive severance agreement with each NEO that provides certain financial benefits in the event of a change
in control. These are “double trigger” arrangements –i.e., severance benefits under these arrangements are only
triggered by a qualifying event (see section of this proxy statement entitled “Potential Payments Upon Termination or Change
in Control”) that also results in the executive’s termination of employment under certain specified circumstances within
24 months following the event. Likewise, unless the Board decides otherwise, upon a change in control, the vesting of otherwise
unvested LTI awards will accelerate only upon the occurrence of a termination of employment in connection with the change in control.
The Compensation Committee also determined that, beginning in 2010, the Company would not enter into any agreements to pay an additional
cash amount to cover any excise or similar tax under Section 4999 of the IRC (an “excise tax gross-up”) in respect
of any of the benefits subject to such excise taxes for any individual newly eligible for a change-in-control agreement. None of
the NEOs have an entitlement to an excise tax gross-up. In addition, the Compensation Committee has approved benefit guidelines
applicable to the NEOs in the event of the termination of their employment unrelated to a change in control, which are intended
to provide reasonable transition assistance. The details of all of the above-described benefits are set forth in the section of
this proxy statement entitled “Potential Payments Upon Termination or Change in Control”.
Pension Benefits
Only Mr. Reilly is eligible for retirement benefits under (i) a qualified
defined benefit plan (the “Qualified Plan”) available on a non-discriminatory basis to all U.S.-based employees hired
before July 2007 who meet the service criteria; and (ii) a nonqualified defined benefit plan (the “Nonqualified Plan”),
which is designed to restore the benefits that would have been earned under the Qualified Plan, absent the limits placed by the
Internal Revenue Code. The details of these defined benefit plans are set forth in the 2021 Pension Benefits Table and the narrative
that follows it.
Perquisites and Other Personal Benefits
We do not generally provide our executive officers, including the NEOs,
with perquisites or other personal benefits, except for financial planning, reserved parking, tax preparation and related gross-up
for one NEO that localized to the U.S. and, in the case of the CEO, use of corporate aircraft and a club membership. We do provide
benefits to our employees who relocate internationally, including tax preparation and support services. The goal of these benefits
is that the employee not be financially advantaged or disadvantaged as a result of relocating to another country and incurring
associated taxes. These items are provided because we believe that they support our executive officers, serve a necessary business
purpose and enable us to be competitive, and because the related amounts of compensation are not material to the overall executive
compensation program. The incremental costs of these items are reported in the Summary Compensation Table.