COMPENSATION DISCUSSION AND ANALYSIS
Change in Control and Executive Severance Benefits
To ensure that executives remain focused on Company business during a period of uncertainty that may arise in the case of a potential change in control, and to maintain
the competitiveness of our overall executive compensation and benefit offerings, in 2019 Corteva adopted the Change in Control and Executive Severance Plan, which replaced any benefits our NEOs were eligible for under similar historical plans. Each
of the NEOs is a participant in the plan. For any benefits to be earned under the plan in association with a change in control, a change in control must occur and the executives employment must be terminated within two years following the
change in control event, either by the Company without cause or by the executive for good reason (often called a double trigger).
Under the plan, the
Committee removed historical tax gross-ups that were previously permitted under the Historical DuPont plan (adopted by DowDuPont in association with the Merger) in order to align the Companys severance and change-in-control programs with best
practices. The plan requires a release of claims as a condition to the payment of benefits and includes one-year non-competition and non-solicitation provisions and additional non-disparagement and confidentiality provisions. For additional
information about benefits under the Change in Control and Executive Severance Plan see Potential Payments Upon Termination or Change in Control.
HOW WE MANAGE COMPENSATION RISK
The Committee regularly monitors our compensation programs to assess whether those programs are motivating the desired
behaviors while delivering on Cortevas performance objectives and encouraging appropriate levels of risk-taking. In 2019, the Committee requested, Cook to test whether the Companys compensation programs encourage the appropriate levels
of risk-taking given the Companys risk profile. Cooks review encompassed an assessment of risk pertaining to a broad range of design elements, such as mix of pay, performance metrics, goal-setting and payout curves, and payment timing
and adjustments, as well as other mitigating program attributes noted below. Cooks analysis determined, and the Committee concurred, that our compensation programs do not encourage behaviors that would create undue material risk for Corteva.
Payout Limitations or Caps
Payout limitations, or caps,
play a vital role in risk mitigation, and all metrics in the PRP and PSU programs are capped at 200% to protect against excessive payouts.
Stock Ownership
Guidelines
The Company requires that NEOs accumulate and hold shares of Corteva Common Stock with a value equal to a specified multiple of base pay. These
targets are 6, 4, and 3 times base salary for Cortevas CEO, executive vice presidents, and senior vice presidents, respectively.
Stock ownership guidelines
also include a retention ratio requirement. Under the guidelines, until the required ownership is reached, executives are required to retain 75% of net shares acquired upon any future vesting of stock units or exercise of stock options, after
deducting shares used to pay applicable withholding taxes and/or exercise price, as applicable.
For purposes of the stock ownership guidelines, we include direct
ownership of shares and stock units held in employee plans. Stock options and PSUs are not included in determining whether an executive has achieved the ownership levels. While NEOs are generally expected to reach these targets in five years,
Messrs. Collins and Glenn have met their ownership guideline.
Compensation Recovery Policy (Clawback)
The Company has instituted a compensation recovery policy that covers each current and former employee of Corteva or an affiliated company who is, or was, the recipient
of incentive-based compensation (Grantee) awarded following the adoption of the policy, including each of our NEOs. Under our policy, if a Grantee engages in misconduct, then at the discretion of the Committee:
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He/she may forfeit any right to receive any future awards or other equity-based incentive compensation; and/or
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The Company may demand repayment of any awards or cash payments already received by a Grantee.
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Misconduct for purposes of our policy means any of the following:
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The Grantees employment or service is terminated for cause;
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Corteva 2020 Proxy
Statement | 33