UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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CHECK THE APPROPRIATE BOX:
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under Rule 14a-12
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Linde plc
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
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No fee required.
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Fee paid previously with preliminary materials:
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Fee computed on table in exhibit required by Item 25(b) per
Exchange Act Rules 14a-6(i)(1) and 0-11
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Making our world more productive Sustainable Growth Notice of 2022
Annual General Meeting of Shareholders and Proxy Statement
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A Message from
Our Chairman
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Dear
fellow shareholders,
On behalf of Linde’s entire Board of Directors, I am honored to
write to you as the new Chairman of Linde plc (“Linde”
or the “Company”). During the past year, there have been
several corporate governance and leadership developments that
culminated on March 1, 2022, which was effectively the third
anniversary of the merger between Praxair and Linde AG.
Senior Executive Leadership Changes
In October 2021, the Board appointed me to succeed Wolfgang Reitzle
as the new Chairman, and Sanjiv Lamba to become Linde’s new CEO,
each effective March 1, 2022. Sanjiv previously served as the Chief
Operating Officer since January 2021. This senior leadership
transition was the result of a successful CEO succession planning
process that the Board undertook starting in early 2020. I look
forward to working with Sanjiv as he builds on the foundation of
Linde’s success to drive results for all our stakeholders.
Director Retirements; New Director Recruitment
and Committee Changes
Director Retirements. Effective March 1, 2022,
the following five Linde directors retired from the Board as
required by the Board’s Director Retirement Policy: Wolfgang
Reitzle (the former Chairman of the Board), Clemens Borsig (the
former Chairman of the Audit Committee), Nance K. Dicciani, Franz
Fehrenbach and Larry D. McVay. I want to thank these directors for
their outstanding contributions to Linde’s success, and
particularly to Wolfgang Reitzle for his leadership of the Board as
the former Chairman.
New Directors. Beginning in 2020, the
Governance and Nomination Committee began a comprehensive process
to plan for the anticipated 2022 director retirements and to
refresh the Board through the recruitment of new directors. This
resulted in Linde adding two highly experienced directors who
joined the Board effective November 1, 2021: Joe Kaeser, the former
CEO and CFO of Siemens, AG, and Alberto Weisser, the former CEO and
CFO of Bunge Limited.
Committee Changes. In connection with the
director retirements, the Board reviewed and rotated committee
assignments and appointed new committee Chairpersons as disclosed
in the proxy statement. In addition, the Board added a new
Sustainability Committee to focus on environmental
matters
and clean energy initiatives.
Board Oversight of Environmental, Social and
Governance Matters
The
Board and its committees are actively involved in providing
oversight and counsel to management regarding Environmental, Social
and Governance (“ESG”) matters as discussed in the “Environmental,
Social and Governance Highlights” section of the proxy statement.
During 2021, the Board conducted a
comprehensive review of its oversight of Linde’s ESG programs and
practices and implemented several constructive enhancements,
including (1) creating the new Sustainability Committee, (2)
expanding the scope of and renaming the “Compensation Committee” to
the “Human Capital Committee” and (3) revising the charters of certain committees to specify
their oversight of ESG factors more clearly.
Other Key Board Actions
The Board and its committees undertook the other following key
actions during the past year:
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Exercised oversight of the Company’s
capital allocation strategy, with a focus on investment for future
growth and appropriate shareholder distribution levels. This
included a 10% increase in the 2022 cash dividend and a new $10
billion stock repurchase program (each approved in February 2022),
and the approval of large capital projects that will provide future
revenue streams.
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Conducted the annual enterprise risk
assessment and multiple strategic business reviews throughout the
year.
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Undertook talent reviews and senior
management succession planning, and appointed Sanjiv Lamba as the
Company’s new Chief Executive Officer.
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2022 AGM
I am pleased to invite you to the 2022 Annual General Meeting of
Shareholders (“AGM”) of Linde plc. Due to health and safety
considerations arising from the Covid-19 pandemic, we held the 2020
and 2021 AGMs primarily through an electronic online format.
However, as many Covid-19 restrictions have eased, we are hopeful
to return to an in-person meeting in London this year. We will
continue to actively monitor ongoing developments, and health and
safety protocols. Therefore, we may need to change the date, time
and location of the 2022 AGM, including again holding the AGM
primarily through electronic means. The accompanying Notice of the
AGM and the proxy statement provide more details regarding
potential contingencies and alternatives for the in-person AGM in
London.
The Board thanks you for your continuing support and confidence in
Linde.
Regards,
Stephen F. Angel
Table of Contents
Notice of 2022
Annual General Meeting of Shareholders
Dear Shareholder:
The Annual General Meeting (“AGM”) of Shareholders of Linde plc
(“Linde” or the “Company”) will be held at 1:00 PM United Kingdom
time (8:00 AM Eastern Daylight Time in the U.S.) on Monday, July
25, 2022, at the Corinthia Hotel, Whitehall Place, Westminster,
London, SW1A 2BD, U.K., for the following purposes: (please see the notice below regarding possible changes to the meeting
as a result of the COVID-19 pandemic)
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1.
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By separate
resolutions, to re-appoint the ten director nominees described in
the proxy statement.
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2.
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To (a) ratify, on an
advisory and non-binding basis, the appointment of
PricewaterhouseCoopers (“PwC”) as independent auditor of the
Company and (b) to authorize the Board, acting through the Audit
Committee, to determine PwC’s remuneration.
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3.
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To approve, on an
advisory and non-binding basis, the compensation of the Company’s
named executive officers, as required under applicable U.S. law and
U.S. Securities and Exchange Commission rules.
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4.
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To approve, on an
advisory and non-binding basis, the Directors’ Remuneration Report
(excluding the Directors’ Remuneration Policy) as set forth in the
Company’s IFRS Annual Report for the financial year ended December
31, 2021, as required under Irish law
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5.
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To determine the price
range at which the Company can re-allot shares that it acquires as
treasury shares under Irish law.
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6.
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To consider and vote on
a shareholder proposal regarding supermajority voting requirements
in Linde’s Irish Constitution.
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7.
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To conduct such other
business as may properly come before the meeting.
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Potential Impact of the COVID-19 Pandemic on the Annual General
Meeting
Linde is monitoring coronavirus (COVID-19) developments and the
related recommendations and protocols issued by public health
authorities and governments. The health and well-being of Linde’s
shareholders is a high priority. If the Company determines that it
is not possible or advisable to hold the Annual General Meeting in
person, Linde will announce alternative arrangements for the
meeting, which may include a change in the date or time of the
meeting, a change in the meeting location and/or holding the
meeting primarily by means of remote electronic communication.
Linde will announce any such change and the details on how to
participate by press release, which will be available on Linde’s
website at https://www.linde.com/news-media/press-releases and
filed with the Securities and Exchange Commission as additional
proxy materials. If you are planning to attend the meeting, please
check the website prior to the meeting date.
Linde plc | 1
Shareholders may, by technological means, participate in the 2022
Annual General Meeting in Ireland in accordance with the section
176 of the Irish Companies Act 2014 by attending the offices of
Arthur Cox LLP, Ten Earlsfort Terrace, Dublin 2, DO2 T380, Ireland
at the time of the meeting.
This Proxy Statement and a form of proxy are being distributed to
shareholders on or about April 29, 2022. Only holders of
record of Linde ordinary shares at the close of business on April
28, 2022, will be entitled to notice of the meeting or any
adjournment or postponement thereof. Pursuant to section
1105(2) of the Irish Companies Act 2014, only holders of record of
Linde ordinary shares at 1:00 p.m. Irish time on July 23,
2022, will be entitled to attend, speak, ask questions and vote at
the meeting in respect of the number of shares registered in their
name at that time.
It is important that your shares be represented and voted at the
meeting. Any shareholder entitled to attend, speak, ask
questions and vote at the meeting, may exercise his or her right to
vote by appointing a proxy or proxies to attend and vote on his or
her behalf. A shareholder may appoint the persons named
in the proxy card provided or another person, who need not be a
shareholder of the Company, as a proxy, by electronic means or in
writing, to vote some or all of their
shares. Appointment of a proxy does not preclude members
from attending, speaking and asking questions at the meeting should
they subsequently wish to do so. Please note that
proxies may be required to provide identification to attend the
meeting.
Whether or not you expect to attend the AGM in person, please
promptly provide your proxy either online or by telephone, as
further explained in the accompanying proxy statement, or by
filling in, signing, dating and promptly mailing a proxy
card. We recommend that you review the further
information on the process for, and deadlines applicable to,
voting, attending the meeting and appointing a proxy under
“Information About the Annual General Meeting and Voting” on page
92 of the proxy statement.
Please be aware that, if you own shares in a brokerage account, you
must instruct your broker on how to vote your
shares. Without your instructions, New York Stock
Exchange rules do not allow your broker to vote your shares on any
of the proposals except those identified herein. Please
exercise your right as a shareholder to vote on all proposals,
including the re-appointment of the director nominees, by
instructing your broker by proxy.
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By Order of The Board of Directors
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Stephen F. Angel
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Chairman of the Board
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April 29, 2022
2 | Linde plc
Proxy Statement Highlights
Proxy
Statement Highlights
This summary highlights selected information in this Proxy
Statement. Please review the entire document before
voting.
Annual General Meeting of Shareholders of Linde plc
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Date
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Time
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Location
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Admission
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Monday, July 25, 2022
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1:00 PM UK time
(8:00 AM Eastern Daylight Time in the U.S.)
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Corinthia Hotel
Whitehall Place
Westminster
London,
SW1A 2BD
United Kingdom
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See “Attending the Annual General Meeting” on page 93 for
instructions.
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Please see the notice above regarding a potential change to the
in-person meeting place and/or the cancellation of holding the
in-person meeting format as a result of the COVID-19 pandemic.
Shareholders may, by technological means, participate in the 2022
Annual General Meeting in Ireland in accordance with the section
176 of the Irish Companies Act 2014 by attending the offices of
Arthur Cox LLP, Ten Earlsfort Terrace, Dublin 2, DO2 T380, Ireland
at the time of the meeting.
Proposals
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Proposal
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Board Voting
Recommendation
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Explanation of Proposal and Reason(s) for Board Recommendations
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Further
Information
(page)
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1.
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By separate resolutions, to appoint the ten director nominees
described in the proxy statement
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FOR each
nominee
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Directors must be elected to the Board annually. Linde’s nominees
are seasoned leaders who bring a mix of skills and qualifications
to the Board.
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40
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2.
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(a) To ratify, on an advisory and non-binding basis, the
appointment of PwC as the independent auditor of the Company and
(b) to authorize the Board, acting through the Audit Committee, to
determine PwC’s remuneration
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FOR
FOR
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Based on its recent evaluation, Linde’s Audit Committee believes
that the retention of PricewaterhouseCoopers as the Auditor for
2022 is in the best interests of the Company and its
shareholders. The Company requests shareholders’
non-binding ratification of the Auditor’s retention and the
authorization for the Audit Committee to determine the Auditor’s
remuneration.
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45
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3.
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To approve, on an advisory and non-binding basis, the compensation
of the Company’s named executive officers as required under
applicable U.S. law and SEC rules
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FOR
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Shareholders must vote annually on whether to approve the
compensation paid to Linde’s five most highly compensated executive
officers (“Say-On-Pay” vote). Linde’s executive
compensation program reflects its commitment to paying for
performance. This vote is required under applicable U.S. law and
SEC rules.
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4.
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To approve, on an advisory and non-binding basis, the Directors’
Remuneration Report for the financial year ended December 31, 2021,
as required under Irish law
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FOR
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In accordance with European Union law as implemented in Ireland,
Shareholders’ must vote annually on the Directors’ Remuneration
Report. Linde’s Directors’ Remuneration Report for the
year ended December 31, 2021, is included in the 2021 IFRS Annual
Report and in Appendix 1 to this Proxy Statement. This vote is
required under Irish law. As this Report applies to Linde Directors
only, it is distinguished from our non-binding advisory vote in
respect of the compensation for the Company’s named executive
officers in voting item 3 as required under U.S. laws and SEC
rules.
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Linde plc | 3
Proxy Statement Highlights
Proposals
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5.
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To determine the price range at which the Company can re-allot
shares that it acquires as treasury shares under Irish law
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FOR
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The Board has authorized the Company’s share repurchase programs
and believes that such programs enhance shareholder value as a
means of returning capital to shareholders. Repurchased shares are
held as treasury shares until they are either cancelled or used to
fund employee and Director stock compensation
awards. Irish law requires periodic shareholder approval
of the price range at which treasury shares may be re-allotted for
these purposes.
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83
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6.
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Shareholder Proposal regarding eliminating supermajority
shareholder votes.
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AGAINST
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The proposal requests that the Board take steps to amend Linde’s
Irish Constitution so that any shareholder vote requirement is a
simple majority of the votes cast at a shareholder meeting and that
any greater vote requirement (a “supermajority vote”) be reduced to
a simple majority. The Board has considered the proposal and has
concluded that it is not in shareholders’ best interest because of
the 10 supermajority vote requirements in the Constitution: (1)
five are mandated by Irish law and cannot be reduced, and (2) the
other five provide shareholders with various protections under
Irish law and the supermajority vote of four of these provisions
simply reflect the default voting requirements provided under Irish
law.
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How to Vote
Your vote is important. You are eligible to vote if you are a
shareholder of record at 1:00 p.m. United Kingdom time on July
23, 2022. Even if you plan to attend the meeting, please
vote as soon as possible using one of the following methods. In all
cases, you should have your proxy card in hand.
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Your Vote is Important
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Online
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By Phone
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By Mail
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In person
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www.proxyvote.com
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1-800-690-6903
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Fill out your proxy card and submit via mail
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Attend in person at the above time and location. Please
bring a photo ID.
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4 | Linde plc
Proxy Statement Highlights
2021 Business Performance Highlights
2021
Business
Performance Highlights
2021 Year in Review
Linde employees once again demonstrated their steadfast commitment
to supply products and services safely and reliably to millions of
customers around the globe. With our dense network and
high-performance culture, the company supplied critical industrial
gases and engineering for world scale projects.
In 2020, Linde demonstrated the resiliency of the operating model
and this year it proved its ability to leverage the economic
recovery. Sales grew 13% to $31 billion, earnings per
share grew 30% to $10.69, operating cash flow increased 31% to $9.7
billion and after-tax return on capital rose 430 basis points to
17.7%. Pricing actions coupled with productivity efforts
globally enabled operating margins to expand 200 basis points, or
270 basis points excluding the effects of contractual energy cost
pass through. Linde increased its dividend by another
10%, representing the 28th consecutive year of dividend increase.
These results are a testament to Linde’s ability to outperform in
any macro-economic environment.
Financial
highlights
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Operating margin
expanded by 200 basis points to 23.3%(a)
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Earnings per share
increased by 30%, following a 13% increase in 2020(a)
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After-tax return on
capital increased by 430 basis points to 17.7%(a)
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Operating cash flow
increased 31% to $9.7 billion
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Business
highlights
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Record backlog
providing a strong growth foundation for the next several
years
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Strong pipeline of new
opportunities in Clean Energy, tracking approximately 300 projects
with an estimated value of $5B
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Reduced greenhouse gas
intensity by 24%; on track to meet overall 35% reduction goal by
2028(b)(c)
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Announced more
ambitious medium and long-term greenhouse gas emission targets,
including 35% absolute emissions reduction by 2035 and climate
neutrality by 2050(c)
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Included in the Dow
Jones Sustainability World Index for 19th consecutive
year
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Awarded by CDP ‘A’
rating for Water Stewardship
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Continued to prioritize
diversity and inclusivity; at 28% gender diversity, on track to
exceed gender diversity goal of 30% professional female employees
by 2030
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Maintained best in
class safety performance, despite challenging
environment
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(a)
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Adjusted operating margin, earnings per share and after-tax return
on capital are non-GAAP measures. Adjusted operating margin
and earnings per share amounts are reconciled to reported amounts
in the “Non-GAAP Financial Measures” Section in Item 7 of the Linde
plc 2021 Form 10-K. For definition of after-tax return on
capital and reconciliation to GAAP please see the “Non-GAAP
Measures and Reconciliations” set forth in the financial tables
that are included as an appendix to the 4th
quarter and full year 2021 earnings press release that was
furnished in the Linde plc Form 8-K filed on February 10, 2022.
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(b)
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Million tons of
Co2
equivalent divided by adjusted EBITDA
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(c)
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GHG emission reduction
targets relate to Linde’s Scope 1 and 2 emissions.
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Linde plc | 5
Proxy Statement Highlights
2021 Business Performance Highlights
Returned $6.8 billion to
shareholders
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Dividend increased by
10%
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Share repurchases, net
of issuances, in the amount of $4.6 billion
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Total shareholder
return for 2021 was 33.4%
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The graph below compares
the most recent five-year cumulative returns of the common stock of
Praxair, the Company's predecessor, through October 31, 2018 (the
date of the closing of the Praxair-Linde AG Business Combination)
and Linde's ordinary shares from October 31, 2018
through December 31, 2021 with those of the
Standard & Poor’s 500 Index ("SPX") and the S5 Materials
Index ("S5MATR") which covers 28 companies, including Linde. The
figures assume an initial investment of $100 on December 31,
2016 and that all dividends
have been reinvested.
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2016
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2017
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2018
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2019
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2020
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2021
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LIN
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$100
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$135
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$139
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$194
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$244
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$325
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SPX
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$100
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$122
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$117
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$153
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$181
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$233
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S5MATR
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$100
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$124
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$106
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$132
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$159
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$202
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6 | Linde plc
Proxy Statement Highlights
Board and Governance Highlights
Board and
Governance Highlights
Corporate Governance Highlights
Linde plc has a strong corporate governance structure that compares
favorably to that of other large public companies and to the
standards of recognized governance organizations. A
summary of the key aspects of Linde plc’s corporate governance
structure is set forth below, followed by a more detailed
discussion of certain governance matters.
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Board and Governance Information
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Size of Board
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10
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Annual Board and Committee Evaluations
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Yes
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Number of Independent Directors
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8
80%
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Limits service on other Boards for Directors
(4 other public company Boards)
Limits service on other Boards for CEO
(2 other public company Boards)
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Yes
Yes
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Split Chairman and CEO
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Yes
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Succession Planning Process
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Yes
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Lead Independent Director
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Yes
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Board Committees (Audit, Human Capital, Nomination and Governance,
Sustainability and Executive)
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5
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Board Risk Oversight
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Yes
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Board Meetings
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5
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Code of Conduct for Directors, Officers and Employees
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Yes
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Annual Election of Directors
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Yes
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Stock Ownership Guidelines for Directors and Executive Officers
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Yes
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Mandatory Retirement Age
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72
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Anti-Hedging and Pledging Policies
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Yes
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Board Diversity – two women, one African American Director
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Yes
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Clawback Policy
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Yes
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Average Director Age
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63.2
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Rights Agreement (Poison Pill)
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No
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Average Director Tenure (Years)
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2.6
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Board Sustainability Oversight
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Yes
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Majority Voting in Director Elections
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Yes
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Shareholders May Call Special Meetings
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Yes
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Proxy Access
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Yes
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Public Company Legal and Regulatory Framework
Linde plc is incorporated in Ireland and is subject to Irish
corporate law pursuant to the Irish Companies Act
2014. In addition, Linde plc ordinary shares are listed
and trade on the New York Stock Exchange (“NYSE”) and the Frankfurt
Stock Exchange (“FSE”). Linde plc’s primary governance
obligations arise from its designation as a domestic issuer for
NYSE purposes and, as such, the Company is subject to the corporate
governance rules of the NYSE, requiring it to adopt certain
governance policies (which the Company has complied with), and to
the reporting and other rules of the United States Securities and
Exchange Commission (the “SEC”) requiring it to file Forms 10-K,
10-Q, 8-K, proxy statements and other public company
reports. The Company is also subject to applicable laws
of the European Union.
Linde plc | 7
Proxy Statement Highlights
Board and Governance Highlights
Board of Directors and Nominees
The following ten persons currently serve on the Board of Directors
and have been nominated for re‑appointment to serve until the 2023
annual general meeting of shareholders and the election and
qualification of their successors.
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Name
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Age
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Director
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Background
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Independent
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Current
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Other Current Public
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Since
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Yes
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No
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Committee
Memberships (1)
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Company Boards
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Stephen F. Angel
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66
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2018
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Chairman of the Board of Linde plc; former Chief Executive Officer
of Linde plc; former Chief Executive Officer and Chairman of the
Board of Praxair, Inc.
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X
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EX
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• General Electric Company
• PPG Industries, Inc.
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Sanjiv Lamba
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57
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2022
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Chief Executive Officer of Linde plc; former Chief Operating
Officer of Linde plc
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X
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EX
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Prof. DDr. Ann-Kristin Achleitner
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56
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2018
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Scientific Co-Director, Center for Entrepreneurial and Finance
Studies, Technical University Munich, Germany
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X
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HC, SC
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• Lazard
Ltd.
• Münchener
Rückversicherungs-Gesellschaft AG
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Dr. Thomas Enders
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63
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2018
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Former Chief Executive Officer & Member of Executive Committee,
Airbus SE
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X
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Chair of SC, AC, EX
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• Knorr-Bremse
AG
• Lilium
B.V.
• Lufthansa
Group
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Edward G. Galante
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71
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2018
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Former Senior Vice President and a member of the Management
Committee of ExxonMobil Corporation
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X
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Chair of HC, NG
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• Celanese
Corporation
• Clean Harbors,
Inc.
• Marathon
Petroleum
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Joe Kaeser
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64
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2021
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Former President and Chief Executive Officer of Siemens AG
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X
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Chair of NG, HC
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• Daimler Truck
Holding AG
• NXP
Semiconductors B.V. (until June 1, 2022)
• Siemens
Energy AG
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Dr. Victoria E. Ossadnik
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53
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2018
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Management Board member and Chief Operating Officer – Digital-
E. ON SE
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X
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AC, NG
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• E.ON SE
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Prof. Dr. Martin H. Richenhagen
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69
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2018
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Former Chief Executive Officer, President and Chairman of the Board
of AGCO Corporation
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X
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Chair of AC, HC
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• AXIOS Sustainable
Growth Acquisition Corporation
• Daimler Truck
Holding AG
• PPG Industries,
Inc.
|
|
Alberto Weisser
|
66
|
2021
|
Former Chairman and Chief Executive Officer of Bunge Limited
|
X
|
|
AC, SC
|
• Bayer
AG
• PepsiCo
|
|
Robert L. Wood
|
68
|
2018
|
Lead Independent Director of Linde Plc; Partner, The McChrystal
Group; Former Chairman, President & Chief Executive Officer of
Chemtura Corporation
|
X
|
|
HC, SC, EX
|
• MRC Global
Inc.
• Univar
Inc.
|
|
(1)
|
Committees: AC
means Audit Committee; HC means Human Capital Committee; EX means
Executive Committee; NG means Nomination and Governance
Committee; SC means Sustainability Committee
|
8 | Linde plc
Proxy Statement Highlights
Compensation Highlights
Compensation
Highlights
Alignment
of Executive Compensation Programs with Linde Business
Objectives
The
Human Capital Committee seeks to achieve its executive compensation
objectives by aligning the design of the Company’s executive
compensation programs with the Company’s business objectives
ensuring a balance between financial and strategic non-financial
goals.
FINANCIAL BUSINESS OBJECTIVES: Achieve
sustained profitable growth and shareholder return resulting in a
robust cash flow to fund capital investment growth opportunities,
dividend payments and share repurchases.
|
|
•
|
Annual
performance-based variable compensation earned by meeting or
exceeding pre-established financial goals.
|
|
|
•
|
Annual grants of
performance share units that vest based upon performance results
over three years.
|
|
|
•
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Annual grants of stock
options, the value of which is directly linked to the growth in the
Company’s stock price.
|
|
|
•
|
Annual grants of
restricted stock units with three-year cliff vesting and value
based on the Company’s stock price.
|
STRATEGIC
BUSINESS OBJECTIVES: Maintain
world-class standards in
safety, environmental responsibility, global compliance, strategic
positioning, productivity, talent management, and financial
controls.
|
|
•
|
Annual payout of
variable compensation is impacted by performance in these strategic
and non-financial objectives.
|
Attract and retain executives who thrive in a sustainable
performance-driven culture.
|
|
•
|
A competitive
compensation and benefits program regularly benchmarked against
peer companies of similar size in market capitalization, revenue
and other financial metrics and business attributes.
|
|
|
•
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Realized compensation
that varies with Company performance, with downside risk and upside
opportunity.
|
Annual
Performance-Based Variable Compensation Program Design
In
January 2022, in recognition of the importance of the Company’s
standards for, and impacts from environmental, social and
governance (ESG) considerations, the Human Capital Committee
approved changes to the non-financial component of the annual
variable compensation program, which will continue to be weighted
25% of the total payout.
The
non-financial component will now be comprised of three pillars,
each with their own weights: 1) reduction in absolute greenhouse
gas emissions (weighted 20% of non-financial component), 2) ESG
values: safety, health & environment; sustainability (excluding
greenhouse gas emissions), compliance & integrity; and human
capital (weighted 60%), and 3) the Company’s relative performance
and strategic positioning (weighted 20%).
Linde plc | 9
Proxy Statement Highlights
Compensation Highlights
Best Practices Supporting Executive Compensation Objectives
|
What We Do:
✓Link
a substantial portion of total compensation to Company
performance:
✓Annual variable
compensation awards based principally upon performance against
objective, pre-established financial goals
✓Equity grants
consisting largely of PSUs and stock options, focused on longer
term shareholder value creation
✓Set compensation
within competitive market ranges
✓Require substantial
stock ownership and retention requirements for officers
✓Limit perquisites
and personal benefits
✓Have a clawback
(“recapture”) policy that applies to performance-based cash awards
and equity grants, including gains realized through exercise or
sale of equity securities
|
|
What We Do Not Do:
X Guarantee bonuses for
executive officers
X Allow pledging or hedging
of Company stock held by officers
X Pay tax “gross-ups” on
perquisites and personal benefits unless related to international
assignment benefits that are available to employees
generally
X Include the same metrics
in the short and long-term incentive programs
X Allow backdating or
repricing of stock option awards
X Pay or accrue dividends or
dividend equivalents on unvested PSU and RSU awards
X Include an excise tax
“gross-up” provision in the event of a change-in-control
X Accelerate equity award vesting
upon change-in-control
|
10 | Linde plc
Proxy Statement Highlights
Environmental, Social and Governance Highlights
Environmental,
Social and Governance Highlights
Commitment to Environmental, Social and Governance (“ESG”)
Matters
Our core values – Safety, Inclusion, Accountability, Integrity and
Community – combined with our mission of Making our World more Productive,
underpin our commitment to the environment and social
responsibility. From the oversight exercised by Linde’s Board of
Directors to the culture of sustainability driven by our mission
statement, our commitment to ESG matters is embedded in our company
culture and operating rhythm.
Linde’s System of ESG management is focused on four priority
pillars: Climate Change; Safety, Health & Environment; People
& Community; and Integrity & Compliance. Details on these
pillars are provided in our annual Sustainability Report which also
describes our approach to ESG, including materiality assessment,
determination of priorities, target setting, performance
measurement, and continued surveillance and
improvement.
Linde has two sets of targets, which coexist: SD 2028 Targets,
which cover the period from 2018-2028, and recently announced
targets for absolute GHG reduction by 2035 and climate neutrality
ambition by 2050. We regularly review key actions and
continue to report on progress toward the SD 2028
targets annually. Going forward we will include reporting on
progress against the most recent climate change
commitments.
The Sustainable Development Report and other ESG information are
available on our website https://www.linde.com/sustainable-development.
While we continue to work towards meeting or exceeding the goals
across these priority pillars set forth in our Sustainable
Development Report, the following are key actions undertaken in
2021:
|
|
•
|
We announced our new
absolute greenhouse gas reduction target of 35% by 2035 and our
ambition to achieve climate neutrality by 2050.
|
|
|
•
|
We reaffirmed Linde’s
commitment to global human rights through the release of our global
human rights policy.
|
Linde plc | 11
Proxy Statement Highlights
Environmental, Social and Governance Highlights
|
|
•
|
We released Linde’s
water position statement, confirming our commitment to water
stewardship across the globe.
|
|
|
•
|
The Board of Directors
performed a comprehensive review of and realigned and enhanced its
oversight of ESG (see “Board Oversight of ESG Matters”
below).
|
|
|
•
|
We incorporated a
greenhouse gas reduction metrics as part of the non-financial
factors considered in our Short-Term Incentive Plan compensation,
with ESG factors comprising 20% of the payout.
|
Our leadership and performance on sustainability and ESG received
widespread external recognition in 2020-2021. These are
listed on our website at https://www.linde.com/sustainable-development/awards-and-recognition. Examples
include: :
|
|
|
|
|
|
Selected to Dow
Jones
Sustainability World Index
For the 19th consecutive year
|
|
Included in S&P Global’s
Sustainability Yearbook
in recognition of strong
sustainability track record
|
|
Included as a FTSE4Good
Index Series Constituent
|
|
|
|
|
|
|
|
Recognized as one of the
2021 World’s Most Ethical
Companies by Ethisphere
|
|
Received ‘A’ rating
for Water
Stewardship and ‘A-’ rating
for climate change from the
Carbon Disclosure Project
|
|
Recognized as a Best Employer
by Forbes and a Noteworthy
Company by DiversityInc
|
Board Oversight of ESG
Matters
Overview; 2021 ESG
Review and Changes to Board Structure
The Board’s oversight of ESG risks and opportunities is integral to
our business strategy. The
Board and its committees actively oversee Linde’s ESG strategy,
programs and policies, which in turn are managed on a day-to-day
basis by senior executives including the CEO and his direct
reports.
In 2021, the Board, through the Nomination and Governance
Committee, conducted a comprehensive review of its oversight of
Linde’s ESG programs and practices to ensure that the Board or one
of its committees has appropriate oversight
responsibility. As a result of this review, the Board
(1) created the new Sustainability Committee to focus on
environmental matters, including climate change, decarbonization
solutions, greenhouse gas emission reduction, and other key
programs and initiatives; (2) expanded the scope of and renamed the
“Compensation Committee” to the “Human Capital Committee” to
reflect that committee's
enhanced oversight of policies, practices and goals related to
Linde's workforce generally, including diversity and inclusion,
safety and community engagement; and (3) revised the charters of certain committees
to more clearly specify the ESG programs and practices overseen by
these committees. The Nominating and Governance Committee actively
monitors the changing ESG landscape and recommends changes to
Linde’s governance programs and practices. Below is a summary of
the Board’s, its committees’ and senior management’s oversight of
key ESG matters
12 | Linde plc
Proxy Statement Highlights
Environmental, Social and Governance Highlights
Linde plc | 13
Corporate Governance and Board Matters
Linde’s Corporate Governance Framework
Corporate
Governance and Board Matters
Linde’s
Corporate Governance Framework
Linde
operates under Corporate Governance Guidelines which are posted at
Linde’s public website, www.linde.com in the About
Linde/Corporate Governance section. Consistent with
those guidelines, the charters of the various Board committees and
Linde’s Constitution, the Board has adopted the following policies
and practices, among others:
Director Independence
The
Board has adopted independence standards for service on Linde’s
Board of Directors which are posted at Linde’s public website
referenced above. The Board has applied these standards
to all the directors and has determined that each qualifies as
independent except for Mr. Angel, the Company’s Chairman of the
Board and former Chief Executive Officer, and Mr. Lamba, the
Company’s current Chief Executive Officer. The Board is
not otherwise aware of any relationship with the Company or its
management that could potentially impair the independent judgment
of these directors. See also related information in this
Proxy Statement under the caption “Certain Relationships and
Transactions.”
Board
Leadership
In
General
Linde’s Corporate Governance Guidelines provide the Board with
flexibility to determine the appropriate Board leadership structure
from time to time. The Nomination and Governance
Committee (consisting entirely of
independent directors) regularly reviews the leadership
structure, and considers many factors, including the specific needs
of Linde and its businesses, corporate governance best practices,
shareholder feedback and succession planning, as different
structures may be appropriate in different circumstances. The
Corporate Governance Guidelines also provide that the Board: (a)
shall select a Chairman of the Board and determine his/her duties
and responsibilities; and (b) If the Chairman of the Board has not been
determined to be independent in accordance with the Board’s
independence standards and those of the New York Stock Exchange and
applicable law, then the Board may appoint a Lead Independent
Director who has been determined to be independent under such
standards and determine his/her responsibilities.
Given the recent leadership transition discussed below, the Board
believes that the best leadership model for Linde at this time is
that the position of the Chairman of the Board should continue to
be separate from that of the Chief Executive Officer. In
addition to assure effective independence in the Board’s oversight,
advice and counsel of management, the Board believes that the
appointment of a Lead Independent Director is
appropriate.
2022
Leadership Transition and New Structure
Effective March 1, 2022, after the Board’s thorough and thoughtful
Chief Executive Officer succession planning process, Sanjiv Lamba
was appointed Linde’s new Chief Executive Officer (having served as
the Chief Operating Officer since January 2021) and a member of the
Board, succeeding Stephen F. Angel who served as CEO since 2018.
The Board also elected Mr. Angel as the new Chairman of the Board
to succeed Wolfgang Reitzle who retired from the Board. In
addition, the Board appointed Robert L. Wood as the Lead
Independent Director. The Board believes this new leadership
structure is effective and appropriate and in the best interests of
Linde and its shareholders. With Mr. Angel as Chairman of the
Board, Linde continues to leverage his significant industry
expertise, prior CEO experience and effective working relationship
with the Board to lead the Board and focus its attention on
strategic matters and facilitate effective communication between
the Board and management. As the Lead Independent Director
14 | Linde plc
Corporate Governance and Board Matters
Linde’s Corporate Governance Framework
with clearly defined responsibilities, Mr. Wood ensures robust
independent oversight of the Company by the Board.
Chairman
of the Board Responsibilities
The Board believes that while the Chairman and CEO roles should be
separate at this time, the Chairman should work collaboratively
with the CEO who has the day-to-day familiarity with the business
issues confronting the Company and an understanding of the specific
areas in which management seeks advice and counsel from the
Board. The designated responsibilities of the Chairman
are set forth in the Board’s Corporate Governance Guidelines and
include, among others:
|
|
•
|
Serving as chairman of the meetings
of the Board (other than meetings solely of the independent
directors);
|
|
|
•
|
Having the authority to call meetings
of the Board;
|
|
|
•
|
Serving as a liaison between the
Board and the CEO;
|
|
|
•
|
Being available to consult with the
CEO about the concerns of the Board;
|
|
|
•
|
Approving the Board meeting agendas
and related information sent to the Board;
|
|
|
•
|
Approving the Board meeting schedules
to assure that there is sufficient time for discussion of all
agenda items;
|
|
|
•
|
Being available for consultation and
direct communication with major shareholders if requested;
and
|
|
|
•
|
Coordinating an annual performance
review of the CEO with input from the Human Capital Committee and
the Independent Directors.
|
Lead
Independent Director Responsibilities
The roles and responsibilities of the Lead Independent Director
will be determined by the Board periodically and reviewed at least
annually. It is the Board’s current policy that such duties
include, among others, the following:
|
|
•
|
Providing advice
and assistance to the Chairman, as requested;
|
|
|
•
|
Consulting on and
approving, in consultation with the Chairman, the agendas for and
the scheduling of meetings of the Board;
|
|
|
•
|
Chairing meetings
of the Board in the absence of the Chairman;
|
|
|
•
|
Serving as a
liaison between the Chairman and the Independent
Directors;
|
|
|
•
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Calling and
chairing executive sessions of the Independent Directors if
required;
|
|
|
•
|
Reviewing in
consultation with the Chairman, the quality, quantity,
appropriateness, and timeliness of information provided to the
Board; and
|
|
|
•
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Communicating
with shareholders and other stakeholders in consultation with the
Chairman and Chief Executive Officer
|
Linde plc | 15
Corporate Governance and Board Matters
Linde’s Corporate Governance Framework
Board
Role in Risk Oversight
At
least annually, the Board reviews the Company’s risk
identification, assessment and management processes and the
guidelines and policies by which key risks are
managed. As part of that review, the Board discusses (1)
the key enterprise risks that management has identified, (2)
management accountability for managing or mitigating each risk, (3)
the steps being taken to manage each risk, and (4) which Board
Committees will oversee each risk area on an ongoing basis.
The risk factors disclosed in Item 1A of the Company’s Form 10-K
and Annual Report illustrate the range of the risks faced by a
global industrial company and help explain the need for strong
Board Committee oversight of the management of risks in specific
subject areas. Each Committee’s calendar of recurring
meeting agenda topics addresses risk areas pertinent to the
Committee’s subject-matter responsibilities. These areas
include: financing and currency exchange risks (Audit Committee);
compensation risks, and executive development and retention (Human
Capital Committee); regular
review
of the Board’s governance practices (Nomination and Governance
Committee); internal controls, investigations, and integrity
standards compliance (Audit Committee); and risks related to
climate change (Sustainability Committee). Other risk areas are
regularly reviewed by the full Board. These include:
safety (covered at each Board meeting), economic, market and
competitive risk (part of business operating reports at each Board
meeting, and the annual operating and strategic reviews),
geopolitical risks, cyber security, and global compliance risks
(supplementing reporting within the Audit Committee). In
addition, risk identification and assessment is integrated into
Board decision-making with respect to capital projects and
acquisitions, entry into new markets, financings, and cash flow
analysis, among other matters. In Committee meetings and
full Board deliberations, each director brings his or her
particular operating, financial, management development, and other
experiences and expertise to bear in assessing management’s
response to specific risks and in providing advice and counsel with
respect to risk mitigation and management.
Board
Oversight of Business Strategy
Each
year, the Board conducts a comprehensive long-term strategic review
of the Company’s outlook and business plans and provides advice and
counsel to management regarding the Company’s strategic
issues. This process involves engagement by all Board
members and senior management. The Board performs a
detailed review of management’s proposed strategy for each of the
key business units, which is designed to drive profitable growth
over the near-and long-term independent of the macro environment
and drive long-term shareholder value creation.
Board
Effectiveness Assessment
The
Board assesses its effectiveness annually under a process
determined by the Nomination and Governance
Committee. Typically, this assessment includes each
non-management director completing written questionnaires that are
used to evaluate the Board’s effectiveness in the areas of
Performance of Core Responsibilities, Decision-Making Support, the
Quality of Deliberations, Director Performance, and Committee
Functions, as well as consideration of additional Board practices
and policies recommended as best practices by recognized governance
authorities. Similarly, each Committee annually assesses
its effectiveness in meeting its oversight responsibilities under
its charter from the Board. The Nomination and
Governance Committee reviews the results of the written
assessments, provides the results to all Board members, and the
Chairman may conduct a discussion of the results in an executive
session of the non-management directors. Subsequently, the
Nomination and Governance Committee may recommend certain actions
be taken to enhance the operations and effectiveness of the Board
and its committees.
16 | Linde plc
Corporate Governance and Board Matters
Linde’s Corporate Governance Framework
The
Nomination and Governance Committee conducted the assessment
process in 2021. The results were very favorable, and the Committee
concluded that the Board and its committees are functioning
properly and efficiently and are performing the core
responsibilities of the Board generally and that the committees are
meeting their key charter
responsibilities.
Governance
Practices Review
In
addition to leading the annual Board and Committee effectiveness
assessment referred to above, the Nomination and Governance
Committee annually reviews the Company’s governance practices
(which may include an outside expert) and updates those practices
as it deems appropriate. The Committee considers, among
other things, the results of the Board and Committee effectiveness
assessments, developments in Irish company law, federal laws and
regulations promulgated by the SEC, applicable public company and
related standards of the European Union (“EU”), and the views and
standards of recognized governance authorities and institutional
investors.
Succession
Planning and Personnel Development
In
addition to periodic senior management talent and succession
reviews conducted by the Board, the
Human Capital Committee conducts an annual Succession Planning and
Personnel Development session to which all Board members are
invited and at which executives are evaluated with respect to their
potential for promotion into senior leadership positions, including
that of the CEO. In addition, a variety of executives
are introduced to the Board by way of Board and Committee
presentations, and directors have unrestricted access to a broad
cross-section of managers and high potential employees.
During 2021, the Board completed a thorough CEO succession planning
process that resulted in the selection of Sanjiv Lamba as the
Company’s new CEO to replace Stephen F. Angel upon his retirement
as CEO effective March 1, 2022.
Mandatory
Director Retirement
The
Board’s policy is that a director who has attained the age of 72
may not stand for re-election at the next annual shareholders’
meeting. However, for the three-year period following
the closing of the Praxair-Linde AG business
combination on October 31, 2018 (the “Integration Phase”), this
retirement requirement did not apply to the directors (including
their replacements) who began to serve on the Board in October 2018
to ensure continuity.
As
required by this policy, the following five directors retired from
the Board of Directors in 2022: Prof. Dr. Wolfgang Reitzle, Prof.
Dr. Clemens Börsig, Dr. Nance K. Dicciani, Franz Fehrenbach and
Larry D. McVay. Therefore, beginning in 2020, the Board, through
the Nomination and Governance Committee, began a comprehensive
review and planning process for such retirements and commenced new
director recruitment (See “Director & Nominee Selection
Criteria-Director Retirement and Recruitment” below). This resulted
in the appointment of Joe Kaeser and Alberto Weisser as new
directors, effective November 1, 2021.
Limits
to Service on Other Boards
The
Board’s policy is that a non-management director may not serve on
more than four additional public company boards, and the CEO may
not serve on more than two additional public company boards.
Also,
a member of the Audit Committee may not serve on more than two
additional public company audit committees unless the Board
determines that such simultaneous service would not impair the
ability of such member to effectively serve on the Audit
Committee. If the Board so determines, it will disclose
such determination in the Company’s annual proxy statement.
Linde plc | 17
Corporate Governance and Board Matters
Linde’s Corporate Governance Framework
Shareholder
Outreach and Communications with the Board
The
Company has a robust shareholder outreach program which ensures
that the Board and management remain responsive to shareholder
concerns. This includes ongoing interaction between
Investor Relations and major institutional investors, as well as an
extensive shareholder outreach program that is conducted annually.
In addition, the Board has established procedures to enable a
shareholder or other interested party to direct a communication to
the Board of Directors. Such communications may be
confidential or anonymous and may be communicated by mail, e-mail,
or telephone. Information on how to submit
communications, and how they will be handled, is included at
www.linde.com in
the About Linde/ Corporate Governance section.
Director
Attendance at Board and Committee Meetings and the Annual
Shareholders Meeting
Absent
extenuating circumstances, each member of the Board is expected to
attend all meetings of the Board, all meetings of each Committee of
which he or she is a member, and the Annual General Meeting of
Shareholders. Director meeting attendance is one of the
factors that the Nomination and Governance Committee considers in
determining whether to re-nominate an incumbent director for
election at the Annual General Meeting.
All members of the Board attended the 2021 AGM.
Business
Integrity and Ethics
Linde’s
Board of Directors has adopted a Code of Business Integrity that is
posted on Linde’s public website, www.linde.com, in the About
Linde/Corporate Governance section and is available in print to any
shareholder who requests it. This Code of Business
Integrity applies to Linde’s directors and to all employees,
including Linde’s CEO, CFO, Chief Accounting Officer and other
officers.
Director
Election by Majority Vote and Resignation Policy
Linde’s
Constitution requires directors to be elected annually and that a
director nominee must receive a majority of the votes cast at an
annual general meeting in order to be elected (meaning a greater
number of “for” votes than “against” votes) in an uncontested
election of directors. The Board’s Tenure and
Resignation Policy requires that any director nominee who is then
serving as a director must tender his or her resignation if he or
she fails to receive this majority vote. The Nomination
and Governance Committee of the Board would then consider the
resignation offer and recommend to the Board whether to accept or
reject the resignation, or whether other action should be
taken. The Board would take action on the Committee’s
recommendation within 90 days following certification of the vote,
and promptly thereafter publicly disclose its decision and the
reasons therefor.
Proxy
Access
Linde’s
Constitution provides that a shareholder, or a group of up to 20
shareholders, who have owned at least 3% of the Company’s
outstanding ordinary shares continually for at least three years,
may nominate persons for election as directors and have these
nominees included in the Company’s proxy statement. The
shareholders or group must meet the requirements in the Company’s
Constitution. The number of nominees is generally
limited to the greater of two persons or 20% of the number of
directors serving on the Board.
18 | Linde plc
Corporate Governance and Board Matters
Linde’s Corporate Governance Framework
Shareholder
Rights Agreements
The
Company does not have a Shareholder Protection Rights Agreement
(sometimes referred to as a “Poison Pill”). It is
possible for Linde plc to adopt a shareholder rights agreement in
certain circumstances. As Linde plc is an Irish public
company with securities admitted to trading on NYSE and the
Frankfurt Stock Exchange, it is subject to the Irish Takeover Panel
Act, 1997 Takeover Rules 2013, which govern certain aspects of the
manner in which a takeover offer can be made for shares in Linde
plc. If an offer has been made or is deemed to be
imminent, Linde plc is prevented from engaging in frustrating
action. The adoption of a shareholder rights agreement
would constitute frustrating action, meaning that it could only be
adopted on a “clear day” where no such offer is anticipated.
Extraordinary General Meetings of Shareholders
Shareholders of the Company holding not less than 5% of the paid up
share capital of the Company may call an extraordinary general
meeting of shareholders in accordance with the provisions set forth
in Linde’s Constitution.
Director Stock Ownership Guidelines
The
Board’s policy is that non-management directors must acquire and
hold the Company’s ordinary shares equal in value to at least five
times the annual base compensation retainer awarded in the form of
equity or equity-based awards. Directors have five years
from their initial election to meet this guideline. All
non-management directors have met this guideline or are within the
five-year transition period afforded to them to do
so. See the section titled “Information on Share
Ownership” in this Proxy Statement.
Executive
Stock Ownership and Shareholding Policy
The
Board believes that it is important for executive officers to
acquire a substantial ownership position in Linde. In
this way, their interests are more closely aligned with those of
shareholders. Significant stock ownership ensures that
executives manage Linde as equity owners.
Accordingly, a stock ownership and shareholding policy has been
established for the Company’s executive officers that requires them
to own a minimum number of ordinary shares equal or greater in
value to a multiple of their base salary, as set forth
below. Individuals must meet the applicable ownership
level within five years after first becoming subject to the
guidelines by acquiring at least 20% of the required level of stock
ownership each year. Until the stock ownership
requirement is met, executive officers (i) may not sell, transfer
or otherwise dispose of any of their Linde ordinary shares and (ii)
must retain and hold all Linde ordinary shares acquired from all
equity incentive awards, net of shares withheld for taxes and
option exercise prices, including performance share unit awards,
restricted stock unit awards and stock options.
Set
forth below is the stock ownership required by the policy expressed
as a multiple of base salary for each executive officer
position. As of the date of this Proxy Statement, all
covered individuals are in compliance with this
policy. Stock ownership of the Named Executive Officers
can be found in the table presented under the section titled
“Information on Share Ownership.”
|
|
|
Share ownership as a multiple of base salary
|
|
Chief Executive Officer
|
|
6X
|
|
Chief Financial Officer
|
|
3X
|
|
Other Executive Officers
|
|
3X
|
Linde plc | 19
Corporate Governance and Board Matters
Linde’s Corporate Governance Framework
Hedging,
Pledging and Similar Transactions Prohibited. The purpose of the Director and Executive Stock
Ownership Policies is to ensure that directors and executive
leaders will have a meaningful ownership stake in Linde so that
their interests will be aligned with shareholder interests. Any
investment activities intended to reduce or eliminate the economic
risk that ordinarily accompanies such ownership would defeat this
purpose. Therefore, directors and executive leaders may not engage
in hedging transactions related to Linde’s stock that would have
the effect of reducing the economic risk of their holding Linde
stock. This prohibition applies to any Linde stock that a director
or executive leader beneficially owns, regardless of whether he/she
has fulfilled all or any part of the total stock ownership
requirement as set forth above. For example, a director
or executive leader may not purchase a “put option” on Linde stock
or on certain derivative market instruments of which Linde is a
significant component (more than 5%).
Directors and executive leaders also may not pledge or otherwise
encumber Linde stock that they own.
Review,
Approval or Ratification of Transactions with Related Persons
The
Company’s Code of Business Integrity (“Ethics Policy”) prohibits
employees, officers and Board members from having a personal,
financial or family interest that could in any way prevent the
individual from acting in the best interests of the Company (a
“conflict of interest”) and provides that any conflict of interest
waiver relating to Board members or executive officers may be made
only after review and approval by the Board upon the recommendation
of its Audit Committee. In addition, the Board’s
Corporate Governance Guidelines require that any “related party
transaction” by an executive officer or director be pre-approved by
a committee of independent and disinterested
directors. For this purpose, a “related party
transaction” means any transaction or relationship that is
reportable under Regulation S-K, Item 404, of the Securities and
Exchange Commission (“SEC”) or that, in the case of a
non-management director, would violate the Board’s independence
standards.
Reporting and review procedures. To implement
the foregoing policies, the Audit Committee has adopted a written
procedure for the Handling of Potential Conflicts of Interests
which specifies a process for the referral of potential conflicts
of interests to the Board and standards for the Board’s evaluation
of those matters. This policy applies to any transaction
or relationship involving an executive officer, a member of the
Board of Directors, a nominee for election as a director of the
Company, or a family member of any of the foregoing which (1) could
violate the Company’s Ethics Policy provisions regarding conflicts
of interest, (2) would be reportable under the SEC’s disclosure
rules, or (3) in the case of a non-management director, would
violate the Board’s independence standards.
Under this procedure, potential conflicts of interest are reported
to the Corporate Secretary for preliminary analysis to determine
whether referral to the Audit Committee is
appropriate. Potential conflicts of interest can be
self-identified by the director or executive officer or may arise
from internal audits, the integrity hotline or other referrals, or
through periodic due diligence conducted by the Corporate
Secretary’s office. The Audit Committee then examines
the facts and circumstances of each matter referred to it and makes
a final determination as to (1) whether the transaction or
relationship would (or does) constitute a violation of the
conflicts of interest provisions of the Company’s Ethics Policy,
and (2) whether the transaction or relationship should be approved
or ratified and the conditions, if any, of such approval or
ratification. In determining whether a transaction or
relationship constitutes a violation of the conflicts of interest
provisions of the Company’s Ethics Policy, the Audit Committee
considers, among other factors, the materiality of the transaction
or relationship to the individual’s personal interest, whether the
individual’s personal interest is materially adverse to or
competitive with the interests of the Company, and whether the
transaction or relationship materially interferes with the proper
performance of the individual’s duties or loyalty to the
Company. In determining whether to approve or ratify a
transaction or relationship, the Audit Committee considers, among
other factors, whether the matter would constitute a violation of
the conflicts of interest provisions of the Company’s Ethics
Policy, whether the matter would violate the NYSE listing
standards, the expected practical impact of the transaction or
relationship on the individual’s
20 I Linde Inc.
Corporate Governance and Board Matters
Linde’s Corporate Governance Framework
independence
of judgment or ability to act in the best interests of the Company,
the availability, practicality and effectiveness of mitigating
controls or safeguards such as recusal, restricted access to
information, reassignment etc., and the best interests of the
Company and its shareholders generally.
Application
of Policies & Procedures. During 2021, no actual or potential conflicts of
interest were identified with respect to the executive officers and
directors of the Company.
Certain
Relationships and Transactions
When
determining whether any director or nominee is independent, the
Board considers all facts and circumstances and any relationships
that a director or nominee may have with the Company, directly or
indirectly, other than in the capacity of serving as a
director. To assist the Board in making independence
determinations, it also applies the independence standards which
are posted at Linde’s public website, www.linde.com in the About
Linde/Corporate Governance section. In February 2022,
the Board considered the following circumstances and relationships
of those directors and nominees who then had any direct or indirect
relationship with the Company. In the ordinary course of
its business, Linde sells industrial gases to, and purchases
certain goods or services from E. ON SE, of which Dr. Victoria
Ossadnik is an executive officer; The 2021 consolidated revenues
for each of Linde and E.ON SE were $31 billion and
€77.4 billion, respectively. For the 2019, 2020 and 2021
fiscal years, the dollar value of Linde’s sales to, or purchases
from, E.ON SE were $2.3 million, $0.1 million and $0.2 million in
sales, respectively and $1.4 million, $2.0 million and $1.0 million
of purchases, respectively. Such sale and purchase
transactions were well below the limits set forth in the Board’s
independence standards and were significantly less than 1% of the
consolidated revenues of Linde or E.ON SE. Therefore,
the Board has determined that such ordinary course business
relationships are not material and do not otherwise impair the
ability of Dr. Ossadnik to exercise independent judgment as a director.
Delinquent
Section 16(a) Reports
Based
solely upon a review of SEC Forms 3, 4 and 5 furnished to the
Company and written representations from the Company’s executive
officers and directors, the Company believes that those persons
complied with all Section 16(a) filing requirements during 2021
with respect to transactions in the Company’s stock.
Director
& Nominee Selection Criteria
The
Nomination and Governance Committee will consider any candidate for
election to the Board who is timely recommended by a shareholder
and whose recommendation otherwise complies with the requirements
under Linde’s Constitution. Recommendations should be
sent to the Corporate Secretary of Linde and should include the
candidate’s name and qualifications and a statement from the
candidate that he or she consents to being named in the proxy
statement and will serve as a director if elected. In
order for any candidate to be considered by the Nomination and
Governance Committee and, if nominated, to be included in the proxy
statement, such recommendations must be received by the Corporate
Secretary on or before the date specified in this Proxy Statement
under the caption “Shareholder Proposals, Director Nominations and
Other Business for the 2023 Annual General Meeting.”
The qualities and skills sought in director nominees are governed
by the projected needs of the Board at the time the Nomination and
Governance Committee considers adding a new director or
renominating incumbent directors. Consistent with the Board’s
Corporate Governance Guidelines, the Committee seeks to build and
maintain a Board that contains a range of experiences,
competencies, and perspectives that is well-suited for advice and
counsel to, and oversight of, the Company’s business and
operations. In doing so, the Committee takes into
account a variety of factors, including:
|
(1)
|
the Company’s strategies and its market, geographic and regulatory
environments, both current and projected,
|
|
(2)
|
the mix of experiences, competencies, and perspectives (including
gender, ethnic and
|
Linde plc | 21
Corporate Governance and Board Matters
Linde’s Corporate Governance Framework
|
cultural diversity) currently represented on the Board,
|
|
(3)
|
the
results of the Board’s annual self-assessment process,
|
|
(4)
|
the CEO’s views as to areas in which management would like to have
additional advice and counsel from the Board, and
|
|
(5)
|
with respect to the incumbent directors, meeting attendance,
participation and contribution, and the director’s current
independence status.
|
The Committee also seeks in each director candidate a breadth of
experience and background that (a) will allow the director to
contribute to the full range of issues confronting a global
industrial company and (b) will qualify the director to serve on,
and contribute to, any of the Board’s standing
committees. In addition, the Nomination and Governance
Committee believes that every director nominee should demonstrate
a
strong record of integrity and ethical conduct, an absence of
conflicts that might interfere with the exercise of his or her
independent judgment, and a willingness and ability to represent
all shareholders of the Company.
When the need to recruit a director arises, the Nomination and
Governance Committee will consult the Chairman and other directors,
as well as the CEO, and may engage third party recruiting firms to
identify potential candidates. The candidate evaluation
process may include inquiries as to the candidate’s reputation and
background, examination of the candidate’s experiences and skills
in relation to the Board’s needs at the time, consideration of the
candidate’s independence as measured by the Board’s independence
standards, and other considerations that the Nomination and
Governance Committee deems appropriate at the
time. Prior to formal consideration by the Nomination
and Governance Committee, any candidate who passes such screening
would be interviewed by the Nomination and Governance Committee or
its Chairman and by the Chairman of the Board and the CEO.
Additional
information about the specific skills, qualifications and
backgrounds of each of the director nominees is set forth in this
Proxy Statement under the caption “Director Nominees.”
Proxy Access Nominees. The foregoing description applies only to the
Nomination and Governance Committee’s consideration of director nominees who
may be nominated by the Committee itself. It does not
apply to persons nominated by eligible shareholders under the
Company’s Proxy Access structure which has separate requirements
that are set forth in Linde’s Constitution.
Director Retirement and Recruitment. Under the Board’s Director Retirement Policy, the
following five directors retired from the Board effective March 1,
2022: Prof. Dr. Wolfgang Reitzle, Prof. Dr. Clemens Börsig, Dr.
Nance K. Dicciani, Franz Fehrenbach and Larry D. McVay. Therefore,
during 2020, the Governance and Nomination Committee began a
comprehensive process to review the director retirements and to
plan for Board refreshment by recruiting new directors to join the
Board. The Committee engaged the services of reputable
international recruitment firm and directed the search to include
the key elements of Board diversity discussed above. This resulted
in the recruitment and appointment of Alberto Weisser and Joe
Kaeser as new directors, effective November 1, 2021. The
Committee may continue the recruitment process to recruit
additional directors if it is desirable.
22 | Linde plc
Corporate Governance and Board Matters
Board Committees
Board Committees
The Board currently has five standing committees as described below
and each is comprised of only independent directors except for the
Executive Committee of which the Chairman of the Board and the CEO
are members. The Charters for each of these committees
may be found on Linde’s public website, www.linde.com, in the About
Linde/Corporate Governance section.
|
Board Director
|
|
Audit
Committee
|
|
Human Capital
Committee
|
|
Executive
Committee
|
|
Nomination
and
Governance
Committee
|
|
Sustainability Committee
|
|
Stephen F. Angel (Chairman)
|
|
|
|
|
|
Chair
|
|
|
|
|
|
Sanjiv Lamba (Chief Executive Officer)
|
|
|
|
|
|
•
|
|
|
|
|
|
Prof. DDr. Ann-Kristin Achleitner
|
|
|
|
•
|
|
|
|
|
|
•
|
|
Dr. Thomas Enders
|
|
•
|
|
|
|
•
|
|
|
|
Chair
|
|
Edward G. Galante
|
|
|
|
Chair
|
|
|
|
•
|
|
|
|
Dr. Victoria E. Ossadnik
|
|
•
|
|
|
|
|
|
•
|
|
|
|
Joe Kaeser
|
|
|
|
•
|
|
|
|
Chair
|
|
|
|
Prof. Dr. Martin H. Richenhagen
|
|
Chair
|
|
•
|
|
|
|
|
|
|
|
Alberto Weisser
|
|
•
|
|
|
|
|
|
|
|
•
|
|
Robert L. Wood
|
|
|
|
•
|
|
•
|
|
|
|
•
|
Description of Key Committee Functions
|
|
|
|
|
Audit Committee
|
|
Committee Chair
Prof. Dr. Martin H.
Richenhagen
Current Members:
Dr. Thomas Enders
Dr. Victoria E. Ossadnik
Alberto Weisser
Meetings in 2021
6
|
|
|
The Audit Committee assists the Board in its oversight of (a) the
independence, qualifications and performance of Linde’s independent
auditor, (b) the integrity of Linde’s financial statements, (c) the
performance of Linde’s internal audit function, and (d) Linde’s
compliance with legal and regulatory requirements. In
furtherance of these responsibilities, the Audit Committee, among
other duties:
(1) appoints the independent auditor to audit Linde’s
financial statements, approves the fees and terms of such
engagement, approves any non-audit engagements of the independent
auditor, and meets regularly with, and receives various reports
from, the independent auditor. The independent auditor
reports directly to the Audit Committee;
(2) reviews Linde’s principal policies for accounting
and financial reporting and its disclosure controls and processes,
and reviews with management and the independent auditor Linde’s
financial statements prior to their publication;
(3) reviews assessments of Linde’s internal controls,
the performance of the Internal Audit function, the performance
evaluations of the General Auditor and the Chief Compliance
Officer, and the guidelines and policies by which Linde undertakes
risk assessment and risk management; and
(4) reviews the effectiveness of Linde’s compliance with
laws, business conduct, integrity and ethics programs.
|
|
|
Linde plc | 23
Corporate Governance and Board Matters
Board Committees
|
|
|
|
|
Human Capital Committee
|
|
Committee Chair
Edward G. Galante
Current Members:
Prof. DDr. Ann-Kristin
Achleitner
Joe Kaeser
Prof. Dr. Martin H.
Richenhagen
Robert L. Wood
Meetings in 2021
4
|
|
|
The Human Capital Committee assists the Board in its oversight of
(a) Linde’s compensation and incentive policies and programs, and
(b) management development and succession, in both cases
particularly as they apply to Linde’s executive
officers. In furtherance of these responsibilities, the
Human Capital Committee, among other duties:
(1) determines Linde’s policies relating to the
compensation of executive officers and assesses the competitiveness
and appropriateness of their compensation and benefits;
(2) determines the salaries, performance-based variable
compensation, equity awards, terms of employment, retirement or
severance, benefits, and perquisites of executive officers;
(3) establishes the corporate goals relevant to the
CEO’s compensation, evaluates the CEO’s performance in light of
these goals and sets the CEO’s compensation accordingly;
(4) reviews management’s long-range planning for
executive development and succession, and develops a CEO succession
plan;
(5) assesses the design, administration and risk
associated with Linde’s management incentive compensation and
equity compensation plans; and
(6) evaluates periodically the Company’s diversity
policies and objectives, and programs to achieve those
objectives.
|
|
|
|
|
|
Certain Committee Processes for Determining Executive
Compensation
Delegation
and CEO Involvement.
Except under limited circumstances,
the Human Capital Committee may not delegate its executive
compensation authority to any other persons. With
respect to the allocation of compensation and awards to employees
other than the executive officers, the Human Capital Committee may,
and has, delegated authority to the CEO, subject to guidelines
established by the Human Capital Committee. The CEO does
not determine the compensation of any of the executive officers,
but he does offer for the Human Capital Committee’s consideration
his views on relevant matters, as described in more detail in this
Proxy Statement in the CD&A section.
Compensation
Risk Analysis.
The Human Capital Committee considers
whether the Company’s compensation policies and practices create
incentives for risk-taking that could have a material adverse
effect on the Company. Each year, the Human Capital
Committee examines management’s review of the Company’s incentive
compensation programs applicable to all employees, including
executive officers, in order to evaluate whether they encourage
excessive risk-taking through either the design of the executive
and management incentive programs, or operational decision-making
that could affect compensation payouts. The Human
Capital Committee determines if (1) there exists sufficient
operational controls, checks and balances that prevent or constrain
compensation-driven decision-making that is inappropriate or
excessively risky including, among others, frequent risk
discussions with the Board, particularly in connection with capital
project or acquisition proposals, (2) the Company uses highly
leveraged short-term incentives that would tend to drive high
short-term risk decisions or unsustainable gains, and (3) the
Company’s executive stock ownership policy and the “recapture”
policy described in the CD&A also serve as disincentives for
unacceptable risk-taking.
24 | Linde plc
Corporate Governance and Board Matters
Board Committees
A more detailed description of how the Human Capital Committee
considers and determines executive compensation is described in
this Proxy Statement in the CD&A section.
|
|
|
|
|
Executive Committee
|
|
Committee Chair
Stephen F. Angel
Current Members:
Sanjiv Lamba
Dr. Thomas Enders
Robert L. Wood
|
|
|
The purpose of the Executive Committee is primarily to act on
behalf of the entire Board with respect to certain matters that may
arise in between regularly scheduled Board meetings, and act on
certain other matters from time to time. In particular,
the Executive Committee duties include, among others:
(1) evaluating and approving any investments,
acquisitions, partnerships or divestments requiring Board approval,
that are within value thresholds specified by the Board;
(2) evaluating and approving any financing or other
capital markets transactions requiring Board approval, that are
within value thresholds specified by the Board; and
(3) acting upon any other such matters within the
competencies of the Board, that are not reserved solely to the
Board, that are within value thresholds specified by the Board and,
in the opinion of the Chairman of the Board, should not be
postponed until the next regularly scheduled Board meeting.
|
|
|
|
|
|
|
|
|
|
|
Nomination and Governance Committee
|
|
Committee Chair
Joe Kaeser
Current Members:
Edward G. Galante
Dr.Victoria E.Ossadnik
Meetings in 2021
5
|
|
|
The Nomination and Governance Committee assists the Board in its
oversight of (a) the selection, qualifications, compensation and
performance of Linde’s directors, (b) Linde’s governance, including
the practices and effectiveness of the Board, and (c) various
important public policy concerns that affect the
Company. In furtherance of these responsibilities, the
Nomination and Governance Committee, among other duties:
(1) recommends to the Board nominees for election as
directors, and periodically reviews potential candidates, including
incumbent directors;
(2) reviews policies with respect to the composition,
compensation, organization and practices of the Board, and
developments in corporate governance matters generally; and
(3) reviews Linde’s policies and responses to broad
public policy issues such as social responsibility, corporate
citizenship, charitable contributions, legislative issues, and
important shareholder issues, including management and shareholder
proposals offered for shareholder approval.
|
|
|
|
|
|
Linde plc | 25
Corporate Governance and Board Matters
Board Committees
|
|
|
|
|
Sustainability Committee
|
|
Committee Chair
Dr. Thomas Enders
Current Members:
Prof. DDr. Ann-Kristin
Achleitner
Alberto Weisser
Robert L. Wood
Meetings in 2021
0
(Committee created in November 2021)
|
|
|
The Sustainability Committee assists the Board with its oversight
of the Company’s programs, policies, practices and strategies
related to environmental matters generally, including:
(1) the Company’s decarbonization efforts, including
those related to the reduction of greenhouse gas emissions from
operations;
(2) the Company’s clean energy efforts, including those
related to clean hydrogen as well as technology and innovation for
decarbonization solutions;
(3) sustainable productivity, water conservation and
management, energy consumption, product stewardship and zero waste
sites; and
(4) The Company’s environmental sustainability goals,
including those related to climate change and greenhouse gas
emissions, and the Company’s Sustainability Report.
|
|
|
|
|
|
26 | Linde plc
Corporate Governance and Board Matters
Director Compensation
Director
Compensation
Director
Compensation Program
The Board adopted the initial Director Compensation Program based
in part on an extensive director compensation study and analysis
performed in 2018 by F. W. Cook, a recognized expert compensation
consultant. This study was updated and refreshed by F.
W. Cook in 2021. These reports included data, analysis and advice,
a report on director compensation trends and benchmarking of
director compensation against groups of large U.S. and European
public companies.
The Company paid the amounts reported in the 2021 Director
Compensation table below pursuant to its Director Compensation
Program in effect for 2021. The Company does not pay any
director who is a Company employee (Mr. Angel in 2021 or Mr. Lamba
in 2022) for serving as a member of the Board of Directors or any
committee of the Board of Directors. The Nomination and
Governance Committee of the Board determines non-management
director compensation consistent with the Directors’ Compensation
principles set forth in the Corporate Governance
Guidelines. The Director Compensation Program in effect
for 2021 is described below but was amended in February 2022 for
2022 compensation as described below.
Cash Compensation
Cash compensation comprises 60% of the entire annual Board
compensation, as follows:
|
|
•
|
A $450,000 annual
retainer paid quarterly to the Chairman of the Board.
|
|
|
•
|
A $180,000 annual
retainer paid quarterly to all other directors.
|
|
|
•
|
An additional $100,000
annual retainer paid quarterly to the Chairman of the Audit
Committee.
|
|
|
•
|
An additional $50,000
annual retainer paid quarterly to each chairman of the Human
Capital Committee, the Nomination and Governance Committee and the
Sustainability Committee.
|
The two directors, Messrs. Kaeser and Weisser, who joined the Board
effective November 1, 2021, were paid for their service on a pro
rata basis for the months of November and December.
Equity
Compensation
In addition to the cash compensation set forth above, each
non-management Director receives an annual equity stock
compensation grant equal to 40% of the value of the entire annual
Board compensation. In 2021, an equity grant valued at
$300,000 was made to the Chairman of the Board, and an equity grant
valued at $120,000 was made to each other director for their
services in 2021.
The number of restricted stock units granted to deliver the
$300,000 and $120,000 values, respectively, as of the February 22,
2021 grant date was based upon the average of the closing prices of
the Company’s Ordinary Shares for the 200 trading days before
February 10, 2021. Because the closing price of the
Company’s Ordinary Shares on February 22, 2021 was higher than this
200-day average, the full grant date fair market value of the
restricted stock units granted on February 22,2021 and reported in
the 2021 Director Compensation Table below was $320,868 for the
Chairman of the Board, and $128,297 for each other director.
The Nomination and Governance Committee selected restricted stock
units as the sole form of equity for the 2021 grant. The
restricted stock units are fully vested (non-forfeitable) after
one-year from the date of grant, but a prorated portion will be
paid out if a director’s service on the Board terminates before the
one year anniversary of the grant unless the director is removed by
the shareholders or is removed for cause, in which case the grant
will be forfeited. Restricted stock units will be paid
out as soon as practicable after the vesting in Linde plc ordinary
shares on a one-for-one basis.
Expenses
The Company pays or reimburses directors for travel, lodging and
related expenses incurred in connection with attending board and
committee meetings, the Annual General Meeting and other Company
business-related events (including the expenses related to the
attendance of spouses if they are specifically invited for
appropriate business purposes) and may provide use of Company
chartered aircraft. From time to time, the Company may
reimburse a director’s expenses for his or her participation in
third party-supplied continuing education related to the director’s
board or committee service.
Linde plc | 27
Corporate Governance and Board Matters
Director Compensation
2022 Director Compensation Program Amendment
In
February 2022, the Nomination and Governance Committee reviewed and
considered the updated 2021 F.W. Cook director compensation study.
In order to continue to maintain the Director Compensation Program
to be competitive with the peer group of benchmark companies, the
Board amended the Director Compensation Program for 2022 to: (1)
increase the annual base retainer paid to all directors (except the
Chairman of the Board) to $325,000, and (2) to enhance the Board’s
alignment with the interests of shareholders, the mix of
compensation was changed to 40% cash and 60% equity from the prior
mix of 60% cash and 40% equity. The compensation of the Chairman of
the Board and the additional compensation of all committee
chairpersons did not change. In addition, the Director Compensation
Program was amended to provide for an additional $35,000 annual
retainer paid quarterly to the Lead Independent Director.
The
table below shows the fees that the Company’s non-management
directors earned in 2021.
2021
Director Compensation Table
|
Name
|
|
Fees Earned
or
Paid in Cash
($)
|
|
|
Stock
Awards
($)(1)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
($)(2)
|
|
|
Total
($)
|
|
|
|
|
Prof. Dr. Wolfgang H. Reitzle (3)
|
|
|
450,000
|
|
|
|
320,868
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
770,868
|
|
|
Prof. DDr. Ann-Kristin Achleitner
|
|
|
180,000
|
|
|
|
128,297
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
308,297
|
|
|
Prof. Dr. Clemens A. H. Börsig (3)
|
|
|
280,000
|
|
|
|
128,297
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
20,000
|
|
|
|
428,297
|
|
|
Dr. Nance K. Dicciani (3)
|
|
|
180,000
|
|
|
|
128,297
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
15,000
|
|
|
|
323,297
|
|
|
Dr. Thomas Enders
|
|
|
180,000
|
|
|
|
128,297
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
308,297
|
|
|
Franz Fehrenbach (3)
|
|
|
180,000
|
|
|
|
128,297
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
308,297
|
|
|
Edward G. Galante
|
|
|
230,000
|
|
|
|
128,297
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
358,297
|
|
|
Josef Kaeser
|
|
|
30,165
|
|
(4)
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
30,165
|
|
|
Larry D. McVay (3)
|
|
|
180,000
|
|
|
|
128,297
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
308,297
|
|
|
Dr. Victoria E. Ossadnik
|
|
|
180,000
|
|
|
|
128,297
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
308,297
|
|
|
Prof. Dr. Martin H. Richenhagen
|
|
|
180,000
|
|
|
|
128,297
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
308,297
|
|
|
Alberto Weisser
|
|
|
30,165
|
|
(4)
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
30,165
|
|
|
Robert L. Wood
|
|
|
230,000
|
|
|
|
128,297
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
358,297
|
|
|
(1)
|
Full grant date fair value of restricted stock units granted to
each director on February 22, 2021 as determined under accounting
standards related to share-based compensation.
|
|
(2)
|
Amounts in this column represent benefits provided to the directors
that exceed $10,000 per director. These amounts are the value of
the following benefits provided to the directors by the Company:
(a) $15,000 for Ms. Dicciani and Prof. Dr. Börsig as 2021 matching
contributions for their eligible personal charitable contributions
pursuant to the Company's charitable matching gift program that is
available to Company employees and non-management directors on the
same basis and that matches personal donations to eligible
charitable institutions up to a $15,000 maximum per year per donor,
and (b) $5,000 for Prof. Dr. Börsig for fees paid by the Company
for the preparation and filing of director's personal tax returns
in the United Kingdom with respect to the taxation of directors'
compensation in the United Kingdom.
|
(3) Retired from the Board effective March 1, 2022
(4) Fees paid to Messrs. Kaeser and Weisser for the period November
1-December 31, 2021, as they joined the Board effective November 1,
2021.
28 | Linde plc
Corporate Governance and Board Matters
Director Nominees
Director
Nominees
Experience
and Qualifications of
All Nominees
Ten persons have been nominated for election to the Board to serve
for a one-year term concluding on the later of (a) the 2023 annual
general meeting of shareholders and (b) the election and
qualification of his or her successor. The Nomination
and Governance Committee has nominated each current director of the
Board for reelection at the Annual General Meeting. The
Nomination and Governance Committee believes that each director
nominee has an established record of accomplishment in areas
relevant to Linde’s business and objectives and possesses the
characteristics identified in Linde’s Corporate Governance
Guidelines as essential to a well-functioning and deliberative
governing body, including integrity, independence and
commitment.
Each of the director nominees listed below has experience as a
senior executive of a public company or comparable business
organization. Each nominee also is serving or has served
as a director of one or more public companies and on a variety of
board committees. As such, each has executive management
and director oversight experience in most, if not all, of the
following areas which are critical to the conduct of the Company’s
business, including: strategy development and implementation, risk
assessment and management, financial accounting and reporting,
internal controls, corporate finance, capital project evaluation,
the evaluation, compensation, motivation and retention of senior
executive talent, public policies as they affect global industrial
corporations, compliance, corporate governance, productivity
management, safety management, project management, sustainable
development and, in most cases, global operations. Many
of the nominees also bring particular insights into specific
end-markets and foreign markets that are important to the
Company. These nominees collectively provide a range of
perspectives, experiences and competencies well-suited to providing
advice and counsel to management and to overseeing the Company’s
business and operations. In addition to these
qualifications that are shared by all of the nominees, more
specific information about each of their individual experience and
qualifications is included below.
The following pages include information about those persons
currently serving on Linde’s Board of Directors who have been
nominated for reelection to serve for a one-year term concluding on
the later of (a) the 2023 annual general meeting of shareholders or
(b) the election and qualification of his or her
successor. The graph below shows the number of directors
who have certain of the skills, qualifications and experience in
key areas that are important for the Board’s oversight of the
Company’s business.
Director Meeting Attendance
During 2021, the Board held five meetings. The nominees
for reelection to the Board collectively attended 100% of all Board
meetings and meetings of committees of which they are members.
Linde plc | 29
Corporate Governance and Board Matters
Director Nominees
|
|
Stephen F. Angel
|
|
Chairman of the Board of Linde plc
|
|
|
|
|
|
|
|
Age
Director Since
Other Public Company
Directorships
|
|
66
2018
General Electric Company
PPG Industries, Inc.
|
|
Qualification Highlights
• Industry
• Linde
End-Markets
• Linde Foreign
Markets
• Operations
• International
Business
• Technology
• Risk
Management
• Public Company
Board
|
Biography
Mr. Stephen Angel became the Chairman of the Board of Linde plc as
of March 1, 2022. Prior to that, he served as the Chief Executive
Officer of Linde plc from October 2018 to February
2022. Mr. Angel was Chairman, President and Chief
Executive Officer of Praxair, Inc. from 2007 to
2018. Mr. Angel joined Praxair in 2001 as an Executive
Vice President and was named President and Chief Operating Officer
in February 2006. Prior to joining Praxair, Mr. Angel
spent 22 years in a variety of management positions with General
Electric.
Mr. Angel serves on the board of directors of General Electric
Company. He also serves on the board of directors of PPG
Industries, where he chairs the Human Capital Management and
Compensation Committee and serves on the Nominating and Governance
Committee. He also serves on the board of the Hydrogen
Council and is a member of The Business Council.
Experience and Qualifications
As the former Chief Executive Officer of Linde, the former Chairman
and Chief Executive Officer of Praxair, and as a former senior
operating executive at General Electric, a global diversified
manufacturing company, Mr. Angel brings the senior executive
experience and skills described above. He also has a
deep insight into the industrial gases industry and the needs,
challenges and global opportunities of Linde in
particular. He has deep operating experience and
knowledge of the industry and the Company, all of which provide him
the skills and background necessary to lead Linde’s Board of
Directors.
30 | Linde plc
Corporate Governance and Board Matters
Director Nominees
|
|
Sanjiv Lamba
|
|
Chief Executive Officer of Linde plc
|
|
|
|
|
|
|
|
Age
Director Since
Other Public Company
Directorships
|
|
57
2022
|
|
Qualification Highlights
• Industry
• Linde
End-Markets
• Linde Foreign
Markets
• Operations
• International
Business
• Technology
• Risk
Management
|
Biography
Sanjiv Lamba became Chief Executive Officer of Linde plc as of
March 1, 2022. Prior to that, Mr. Lamba served as Chief Operating
Officer for Linde plc from January 2021 to February 2022. Before
his appointment as COO, Mr. Lamba was Executive Vice President,
APAC since 2018.
Mr. Lamba started his career in 1989 with BOC India in Finance, was
appointed Director of Finance and subsequently Managing Director
for the India business in 2001. He has worked in a number of
geographies for Linde including India, UK, Singapore and Germany
where he served as member of the Executive Board of Linde AG.
Experience and Qualifications
Mr. Lamba brings the senior executive experience and skills
described above by virtue of serving as Linde’s Chief Executive
Officer, his prior service as the Chief Operating Officer, and his
many years of leading Linde’s APAC segment as an Executive Vice
President. He has substantial knowledge of the industrial gases and
engineering industries. In collaboration with the Chairman, Mr.
Lamba facilitates Board discussions and keeps the Board apprised of
significant developments in the Company’s business and industry
Linde plc | 31
Corporate Governance and Board Matters
Director Nominees
|
|
Prof. DDr. Ann-Kristin Achleitner
|
|
Professor at the Technical University Munich (TUM)
|
|
|
|
Age
Director Since
Other Public Company
Directorships
|
|
56
2018
Lazard Ltd.
Münchener Rückversicherungs-Gesellschaft AG
|
|
Qualification Highlights
• Linde Foreign
Markets
• International
Business
• Financial
Expertise
• Risk
Management
• Public Company
Board
|
Biography
Prof. DDr. Ann-Kristin Achleitner has served as Scientific
Co-Director of the Center for Entrepreneurial and Financial Studies
since 2003 and has been Holder of Chair for Entrepreneurial Finance
from 2001 to 2020 at Technical University Munich, Germany. She
began her career with MS Management Service AG in St. Gallen,
Switzerland in 1991. In 1992, she began as a university
lecturer in Finance and External Auditing at the University of St.
Gallen (HSG) in Switzerland. In 1994, she became a
consultant at McKinsey & Company, Inc, in Frankfurt,
Germany. In 1995, she was appointed Holder of the
Endowed Chair for Banking and Finance and Chair of the Board of the
Institute for Financial Management at the European Business School
(International University Schloß Reichartshausen) in
Oestrich-Winkel, Germany.
Prof. DDr. Achleitner is a member of the Board of Directors of
Lazard Ltd., where she is a member of the Audit Committee and the
Nominating & Governance Committee. She is also a member of the
Supervisory Board of Münchener Rückversicherungs-Gesellschaft
(Munich Re) AG in Munich, Germany, where she is the Chairperson of
the Compensation Committee and a member of the Audit and Nomination
Committees. Prof. DDr. Achleitner is a member of the Advisory Board
of Luxembourg Investment 261 S.à.r.L. (Techem GmbH), where she is
the Chairperson of the Nomination & Compensation Committee and
a member of the Audit Committee.
Prof. DDr. Achleitner was a member of the Supervisory Board of
Deutsche Börse AG in Frankfurt am Main, Germany, until May 2019 and
a member of the Board of Directors of ENGIE SA in Paris, France,
until May 2019. She was a member of the Supervisory Board of Linde
AG from 2011-2019 where she was also member of the Audit Committee
and the Nomination Committee. She also served as a
member of the Supervisory Board of Metro AG in Düsseldorf, Germany,
until February 2017, and as a member of the Board of Directors of
Vontobel Holding AG and Vontobel Bank AG in Zurich, Switzerland
until April 2013.
Experience and Qualifications
Prof. DDr. Achleitner is a Doctor of Business Administration and a
Doctor of Law. Her educational background, along with
her research and studies in the area of entrepreneurial finance,
provides the Board with substantial financial
expertise. She brings experience in international public
company boards, audit, ethics, environment and sustainable
development committees. Her years as a member of the
Supervisory Board of Linde AG and service on the audit and
nomination committees of Linde AG provides her with substantial
experience and insight into the business segments of Linde and the
financial performance of the Company.
32 | Linde plc
Corporate Governance and Board Matters
Director Nominees
|
|
Dr. Thomas Enders
|
|
Former Chief Executive Officer of Airbus SE
|
|
|
|
Age
Director Since
Other Public Company
Directorships
|
|
63
2018
Knorr-Bremse AG
Lilium B.V.
Lufthansa Group
|
|
Qualification Highlights
• Linde
End-Markets
• Linde Foreign
Markets
• Operations
• International
Business
• Technology
• Risk
Management
• Public Company
Board
|
Biography
Dr. Thomas Enders served on the Executive Committee and the Board
of Directors of EADS NV and its successor Airbus SE in various
functions from 2000 to 2019. Between 2005 and 2019 he served as
Chief Executive Officer of EADS/Airbus.
He joined the aerospace industry in 1991. Before that he worked in
the German Bundestag, the German Ministry of Defense and in various
foreign policy think tanks.
Dr. Enders is a member of the Supervisory Board of Knorr-Bremse AG
since June 2020. In September 2021, he became the Chairman of the
Board of Directors of Lilium N.V. and was previously a member of
the Advisory Board of Lilium GmbH in Weßling, Germany from January
2021 to September 2021. Dr. Enders also serves on the Supervisory
Board of Lufthansa Group since May 2020, where he is a member of
the Presidium and the Nomination Committee. Dr. Enders was a member
of the Supervisory Board of Linde AG from 2017 until 2019, where he
was a member of the Standing Committee. He is also President
(non-executive) of the German Council on Foreign Relations (DGAP)
in Berlin.
Experience and Qualifications
As the former Chief Executive Officer and member of the Executive
Committee of Airbus SE, one of the largest aerospace companies in
the world and a large international manufacturer, Dr. Enders
contributes the senior executive experience and skills described
above. In particular, his background includes extensive
international, operational and manufacturing
experience. As Airbus SE operates in many of the foreign
markets in which the Company operates, Dr. Enders also brings his
understanding of these large markets where the Company has a
significant presence.
Linde plc | 33
Corporate Governance and Board Matters
Director Nominees
|
|
Edward G. Galante
|
|
Former Senior Vice President of ExxonMobil Corporation
|
|
|
|
Age
Director Since
Other Public Company
Directorships
|
|
71
2018
Celanese Corporation
Clean Harbors, Inc.
Marathon Petroleum
|
|
Qualification Highlights
• Linde
End-Markets
• Linde Foreign
Markets
• Operations
• International
Business
• Technology
• Risk
Management
• Public Company
Board
|
Biography
Mr. Edward Galante is a former Senior Vice President and was member
of the Management Committee of ExxonMobil Corporation from 2001
until his retirement in 2006. His principal
responsibilities included the worldwide downstream business:
refining & supply, fuels marketing, lubricants and specialties,
and research and engineering. Immediately prior to that,
Mr. Galante was Executive Vice President of ExxonMobil Chemical
Company.
Mr. Galante is a director of Celanese Corporation, where he serves
as Chairman of the Compensation and Management Development
Committee and is a member of the Environmental, Health, Safety,
Quality and Public Policy Committee. He is also a director of Clean
Harbors, Inc., where he is Chairman of the Environmental, Safety
and Health Committee and serves on the Governance Committee and the
Compensation Committee. He is also a director of
Marathon Petroleum Corporation, where he Chairs the Compensation
and Organizational Committee and is a member of the Sustainability
Committee.
During the past five years, Mr. Galante served as a director of
Praxair, Inc. from 2007 until the Business Combination of Praxair,
Inc. and Linde AG in October 2018. Immediately prior to
the Business Combination he was the Chairman of the Compensation
& Management Development Committee of the Board of Directors of
Praxair, Inc. Mr. Galante was also a director of Foster
Wheeler Ltd., where he served on the Audit Committee and was the
Chairman of the Compensation and Executive Development
Committee. He was a member of the Board of Directors of
Andeavor Corporation (formerly Tesoro Corporation), where he served
on the Compensation Committee and the Environmental, Health and
Safety Committee until the company merged into Marathon Petroleum
in October 2018.
Mr. Galante sits on the Board of Artis-Naples, the United Way
Foundation of Metropolitan Dallas, and is the Vice Chairman of the
Board of Trustees of Northeastern University.
Experience and Qualifications
As a former senior operating executive at ExxonMobil, one of the
largest global energy companies, Mr. Galante brings the senior
executive experience and skills described above and has significant
experience in the operations and management of a large, global
business. He has substantial experience in the oil, gas,
refining and chemical sectors of the energy industry, all of which
are important end-markets for the Company. He also has
an in-depth understanding of engineering management, operations and
technology, which are important in the execution of many of the
Company’s large capital projects.
34 | Linde plc
Corporate Governance and Board Matters
Director Nominees
|
|
Joe Kaeser
|
|
Former Chief Executive Officer of Siemens AG
|
|
|
|
Age
Director Since
Other Public Company
Directorships
|
|
64
2021
Daimler Truck Holding AG
NXP Semiconductors N.V. (Until June 1,
2022)
Siemens Energy AG
|
|
Qualification Highlights
• Linde
End-Markets
• Linde Foreign
Markets
• Operations
• International
Business
• Technology
• Financial
Expertise
• Risk
Management
• Public Company
Board
|
Biography
Joe Kaeser was the Chief Executive Officer of Siemens AG from
August 2013 until February 2021. From May 2006 to August 2013, he
was Chief Financial Officer of Siemens AG. Prior to this, Mr.
Kaeser served as Chief Strategy Officer for Siemens AG from 2004 to
2006 and as the Chief Financial Officer for the mobile
communications group from 2001 to 2004. Mr. Kaeser additionally
held various positions within the Siemens group since he joined
Siemens in 1980.
Mr. Kaeser is the Chairman of the Supervisory Board of Daimler
Truck Holding AG, where he also chairs the Presidential Committee
and the Nomination Committee. He is Vice Chairman of the Board of
NXP Semiconductors N.V. and a member of its Nominating and
Governance Committee when he will retire from the NXP
Semiconductors Board. Mr. Kaeser is the Chairman of the Supervisory
Board of Siemens Energy AG. He also served as a member of the
Supervisory Board of Daimler AG until October 1, 2021.
Experience and Qualifications
As the former Chief Executive Officer of Siemens AG, a large global
industrial manufacturing, technology and services company, Mr.
Kaeser contributes the senior executive experience and skills
described above. He has substantial operating experience and
knowledge of numerous end markets and industries that are important
to Linde’s business. Having also served as the Chief Financial
Officer at Siemens, Mr. Kaeser also brings substantial financial
expertise to Linde’s Board.
Linde plc | 35
Corporate Governance and Board Matters
Director Nominees
|
|
Dr. Victoria E. Ossadnik
|
|
Management Board Member of E.ON SE
|
|
|
|
Age
Director Since
Other Public Company Directorships
|
|
53
2018
E.ON SE
|
|
Qualification Highlights
• Linde Foreign
Markets
• Operations
• International
Business
• Technology
• Risk
Management
• Public Company
Board
|
Biography
Dr. Victoria Ossadnik became a Member of the Board of Management of
E.ON SE and Chief Operating Officer - Digital of E.ON SE in Essen,
Germany effective April 1, 2021. Prior to that, she served as Chief
Executive Officer of E.ON Energie Deutschland GmbH and E.ON Energie
Deutschland Holding GmbH from April 2018 – April
2021. Prior to this, in 2011, she joined Microsoft
Deutschland GmbH and was appointed as a member of the Board of
Management from 2011 to 2016. She served as Vice President,
Enterprise Services Delivery from 2016 to 2018.
Dr. Ossadnik began her career with SCANLAB GmbH, Germany, in
1996. From 1999 to 2003, she served as CEO of the CSC
Ploenzke AG, Germany, joint venture CSC/Dachser. In
2003, she joined Oracle Deutschland GmbH, serving as Head of
Technology Consulting (Northern Europe) and, in 2007, was appointed
a member of the Board of Management.
Dr. Ossadnik served as a member of the Supervisory Board of
Commerzbank AG until May 2021 where she served on the Committee for
Digitalization and Technology. She was a member of the Supervisory
Board of Linde AG from 2016 until 2019. From 2019 until 2020, she
was also a member of Supervisory Board of innogy SE.
Experience and Qualifications
As a member of the Management Board of E.ON SE, one of the world's
largest investor-owned electric utility service providers and as
the former Chief Executive Officer of E.ON Energie, the largest electricity supply company in
Germany, Dr. Ossadnik brings the senior executive experience and
skills described above. In addition, given her substantial senior
management experience as the Chief Operating Officer – Digital at
E.ON SE and previously at both Microsoft and Oracle in Germany, she
contributes key insights and counsel as to Linde’s use of
technology and further development of digitization in its business
operations.
36 | Linde plc
Corporate Governance and Board Matters
Director Nominees
|
|
Prof. Dr. Martin H. Richenhagen
|
|
Former Chairman, President and Chief Executive Officer of AGCO
Corporation
|
|
|
|
Age
Director Since
Other Public Company
Directorships
|
|
69
2018
AXIOS Sustainable Growth Acquisition Corporation
Daimler Truck Holding AG
PPG Industries, Inc.
|
|
Qualification Highlights
• Linde
End-Markets
• Linde Foreign
Markets
• Operations
• International
Business
• Risk
Management
• Public Company
Board
|
Biography
Prof. Dr. Martin Richenhagen served as the Chairman, President and
Chief Executive Officer of AGCO Corporation, a global manufacturer
and distributor of agricultural equipment, from 2004 until his
retirement in 2020. From 2003 until 2004, Prof. Dr.
Richenhagen was Executive Vice President of Forbo International SA,
a flooring material company headquartered in
Switzerland. He also served as Group President for CLAAS
KGaA mbH, a global agricultural equipment manufacturer and
distributor headquartered in Germany, from 1998 until
2002. Prof. Dr. Richenhagen was the Senior Executive
Vice President for Schindler Deutschland Holdings GmbH, Germany, a
worldwide manufacturer and distributor of elevators and escalators,
from 1995 until 1998.
Prof. Dr. Richenhagen is the Chairman of the Board of AXIOS
Sustainable Growth Acquisition Corporation. He also serves as a
member of the Supervisory Board of Daimler Truck Holding AG. Prof.
Dr. Richenhagen is also a director of PPG Industries, where he
serves on the Human Capital Management and Compensation Committee
as well as on the Sustainability and Innovation Committee. He is a
member of the Advisory Board of Stihl Holding AG and Co.KG. Prof.
Dr. Richenhagen was Chairman of AGCO Corporation until his
retirement in 2020. He also served as a director of Praxair, Inc.
from 2015 until 2018.
Prof. Dr. Richenhagen was the Chairman of the German American
Chambers of Commerce of the United States, and he was a member of
the U.S. Chamber of Commerce Board of Directors. He also served as
Chairman of the Board of the Association of Equipment Manufacturers
(AEM) and is a Life Honorary Director of AEM. He is currently
Chairman of the Board of Trustees of the American Institute for
Contemporary German Studies at Johns Hopkins University
(AICGS).
Experience and Qualifications
As the former Chairman, President and Chief Executive Officer of
AGCO Corporation, a large international manufacturer and
distributor of agricultural equipment, Prof. Dr. Richenhagen brings
the senior executive experience and skills described
above. In particular, his background includes extensive
international, operational and manufacturing
experience. In addition, AGCO Corporation operates in
many of the markets in which Linde operates, including Europe and
South America, and Prof. Dr. Richenhagen adds his understanding of
these large markets where the Company has a significant
presence.
Linde plc | 37
Corporate Governance and Board Matters
Director Nominees
|
|
Alberto Weisser
|
|
Former Chairman and Chief Executive Officer of Bunge Limited
|
|
|
|
Age
Director Since
Other Public Company Directorships
|
|
66
2021
Bayer AG
PepsiCo
|
|
Qualification Highlights
• Linde
End-Markets
• Linde Foreign
Markets
• Operations
• International
Business
• Financial
Expertise
• Risk
Management
• Public Company
Board
|
Biography
Alberto Weisser served as Chairman and Chief Executive Officer of
Bunge Limited, a global food, commodity and agribusiness company,
from 1999 until June 2013, and as Executive Chairman until December
2013. Mr. Weisser previously served as Bunge’s Chief Financial
Officer from 1993 to 1999. Prior to his tenure at Bunge, Mr.
Weisser worked at BASF Group, a chemical company, in various
finance-related positions. He also served as a Senior Advisor at
Lazard Ltd. from 2015 until August 2018.
Mr. Weisser serves as a member of the Supervisory Board of Bayer
AG. He is also a member of the Board of Directors of PepsiCo, where
he has been a member of the Audit Committee since 2011 and Chairman
of the Audit Committee since 2016. He also serves on the Americas
Advisory Panel of Temasek International Pte. Ltd., a
Singapore-based investment company.
Experience and Qualifications
As the former Chief Executive Officer of Bunge Limited, a global
food, commodity and agribusiness company, Mr. Weisser contributes
the senior executive experience and skills described above. He has
substantial operating experience and knowledge of numerous end
markets where Linde operates. Having also served as the
Chief Financial Officer at Bunge, Mr. Weisser also brings
substantial financial expertise to Linde’s Board and to the Audit
Committee.
38 | Linde plc
Corporate Governance and Board Matters
Director Nominees
|
|
Robert L. Wood
|
|
Lead Independent Director, Linde plc
Former Chairman, President & Chief Executive Officer of
Chemtura Corporation
|
|
|
|
Age
Director Since
Other Public Company
Directorships
|
|
68
2018
MRC Global Inc.
Univar Inc.
|
|
Qualification Highlights
• Industry
• Linde
End-Markets
• Operations
• Risk
Management
• Public Company
Board
|
Biography
Robert Wood is a Partner in the consulting firm The McChrystal
Group, specializing in leadership development for business
organizations. He was the Chairman, President &
Chief Executive Officer of Chemtura Corporation, a specialty
chemicals company, from 2004 until 2008. Prior to
joining Chemtura, Mr. Wood served in various senior management
positions at Dow Chemical Company, most recently as business group
president for Thermosets and Dow Automotive from November 2000.
Mr. Wood is Linde’s Lead Independent Director. He is also a
director of MRC Global Inc., where he is Chairman of the
Compensation Committee and a member of the Governance Committee. He
is a director of Univar Inc., where he chairs the Compensation
Committee and sits on the Audit Committee. Mr. Wood was
a director of Praxair, Inc. from 2004 until 2018 and was the Lead
Director and the Chairman of the Nomination and Governance
Committee. He also was a director of Jarden Corporation,
where he was a member of the Nominating and Policies Committee and
Chairman of the Audit Committee.
Mr. Wood was Chairman of the American Plastics Council and the
American Chemistry Council and is a member of the United States
Olympic Committee.
Experience and Qualifications
As a former Chief Executive Officer of Chemtura Corporation, a
global specialty chemicals company, and a former senior executive
of Dow, a global chemicals company, Mr. Wood brings the senior
executive experience and skills described above. He also
has a deep understanding of the specific challenges and
opportunities facing a global basic materials
company. Mr. Wood’s knowledge of the chemicals industry,
an important end-market for the Company, provides valuable insight
to the Board and management.
Linde plc | 39
Proposal 1: Appointment of Directors
Proposal
1: Appointment
of Directors
Ten director nominees have been nominated for appointment to serve
for a one-year term concluding on the later of (a) the 2023 annual
general meeting of shareholders and (b) the election and
qualification of their respective successors. The Nomination and Governance Committee has
recommended to the Board, and the Board has approved and
recommends, that Stephen F. Angel, Sanjiv Lamba, Prof. DDr.
Ann-Kristin Achleitner, Dr. Thomas Enders, Edward G. Galante, Joe
Kaeser, Dr. Victoria E. Ossadnik, Prof. Dr. Martin H. Richenhagen,
Alberto Weisser and Robert L. Wood, each be appointed to
serve for a one-year term concluding on the later of (a) the 2023
annual general meeting of shareholders and (b) the election and
qualification of their respective successors. Each
nominee has agreed to be named in this Proxy Statement and to serve
if elected. Qualifications and biographical data for
each of these nominees is presented above. If one or
more of the nominees becomes unavailable for election or service as
a director, the proxy holders will vote your shares for one or more
substitutes designated by the Board of Directors, or the size of
the Board of Directors will be reduced.
As required under Irish law, the resolution in respect of Proposal
1 is an ordinary resolution that requires the affirmative vote of a
simple majority of the votes cast with respect to each director
nominee (meaning that the number of shares voted “FOR” a nominee
must exceed the number of shares voted “AGAINST” such nominee).
The text of the resolution in respect of Proposal 1 is as
follows:
“By separate resolutions, to appoint the following ten directors:
Stephen F. Angel, Sanjiv Lamba, Prof. DDr. Ann-Kristin Achleitner,
Dr. Thomas Enders, Edward G. Galante, Joe Kaeser, Dr. Victoria E.
Ossadnik, Prof. Dr. Martin H. Richenhagen, Alberto Weisser and
Robert L. Wood,”
|
|
|
|
|
The Board recommends you vote “FOR” the re-appointment of each of
the Board’s director nominees listed above.
|
40 | Linde plc
Audit Matters
Oversight of Independent Auditors
Audit Matters
Oversight
of Independent
Auditors
The Audit Committee is directly responsible for the appointment,
compensation (including approval of audit and non-audit fees),
retention and oversight of the independent registered public
accounting firm that audits Linde plc’s financial statements and
its internal control over financial reporting. The Audit
Committee has selected PricewaterhouseCoopers (“PwC”) as Linde
plc’s independent auditor for 2022. PwC has served as
Linde plc’s independent auditor since
2019. Representatives of PwC are expected to be present
at the Annual General Meeting to be available to respond to
appropriate questions and to make a statement if they desire.
During 2019, the Audit Committee conducted a comprehensive,
competitive formal tender process to consider, and ultimately to
recommend to the Board, the selection of an independent auditor for
the Company in accordance with applicable rules of the European
Union. The Audit Committee considered and evaluated
internationally recognized independent registered public accounting
firms, including PwC, based upon a thorough set of criteria that
the Audit Committee adopted. After conducting this
process, the Audit Committee selected PwC as the independent
auditor.
The Audit Committee will annually review the independence and
performance of any potential independent auditor in deciding
whether to select any given firm as the independent
auditor. The Audit Committee considers, among other
things, a firm’s:
|
• Recent performance on the Linde
audit, if applicable;
• Capability and expertise in
providing audit and related services to companies with the breadth
and complexity of Linde’s worldwide operations;
• An analysis of the firm’s known
legal risks and any significant legal or regulatory proceedings in
which it is involved;
• External data on audit quality and
performance, including recent Public Company Accounting Oversight
Board (“PCAOB”) reports on the firm and its peer firms;
|
• The appropriateness of the firm’s
proposed fees for audit and non-audit services;
• the firm’s independence (discussed
below); and
• if applicable, the firm’s tenure as
Linde’s independent auditor, including the benefits of having a
tenured auditor and controls and processes that help ensure the
firm’s independence.
|
Linde plc | 41
Audit Matters
Auditor Independence
Auditor
Independence
As noted in the Audit Committee Charter and in the Audit Committee
Report presented below, the independent auditor reports directly to
the Audit Committee and the Audit Committee is charged with
evaluating its independence. The Audit Committee has
adopted the policies and procedures discussed below that are
designed to ensure that PwC is independent.
Based on this evaluation and representations from PwC, the Audit
Committee believes that PwC is independent and that it is in the
best interest of Linde and its shareholders to have PwC as the
Company’s independent auditor for 2022.
Non-Audit Engagement Services Pre-Approval Policy
The
Audit Committee has utilized PwC (along with other accounting
firms) to provide non-audit services in 2021. Linde
understands the need for PwC to maintain objectivity and
independence as the auditor of the Company’s financial statements
and its internal control over financial
reporting. Accordingly, the Audit Committee has
established a policy whereby all non-audit fees of the independent
auditor must be approved in advance by the Audit Committee or its
Chairman, and has adopted a guideline that, absent special
circumstances, the aggregate cost of non-audit engagements in a
year should not exceed the audit fees for that year. The
non-audit fees that are incurred are typically far less than this
limit and, as noted below in the report on independent auditor
fees, such non-audit fees were approximately 2% of total fees in
2021. All the Audit-Related Fees, Tax Fees and All Other
Fees disclosed below were approved by the Audit Committee.
Audit Partner and Audit Firm Rotation
The
Audit Committee’s policy and applicable regulations require that
the lead audit engagement partner of the independent auditor must
rotate off the Company’s account at least every five
years. Under Irish and EU law, as a “public interest
entity,” Linde plc is required to replace its audit firm at least
once every ten years and is required to conduct an audit tender
procedure in accordance with such applicable laws to identify the
replacement auditor and submit its choice to shareholders at a
general meeting. Apart from these requirements, the
Audit Committee believes that it is inappropriate to establish a
fixed limit on the tenure of the independent
auditor. Continuity and the resulting in-depth knowledge
of the Company strengthens the audit. Moreover, the
mandatory partner rotation policy expressed above, normal turnover
of audit personnel, the Audit Committee’s policy regarding the
hiring of auditor personnel as described below, and the Audit
Committee’s practices restricting non-audit engagements of the
independent auditor as described above, all mitigate against any
loss of objectivity that theoretically could arise from a long-term
relationship. As provided in the Audit Committee’s
Charter and as further described above, the Audit Committee
continuously evaluates the independence and effectiveness of the
independent auditor and its personnel, and the cost and quality of
its audit services in order to ensure that the Audit Committee and
the Company’s shareholders are receiving the best audit services
available.
Hiring
Policy – Auditor Employees
The Audit Committee has established a policy whereby no former
employee of the independent auditor may be elected or appointed as
an officer of the Company earlier than two years after termination
of the engagement or employment.
42 | Linde plc
Audit Matters
Fees Paid to the Independent Auditor
Fees
Paid to the Independent Auditor
The
Audit Committee authorizes and oversees the fees paid to PwC for
audit and non-audit services. The aggregate fees billed
by PwC in 2021 and 2020 for its services are set forth in the table
below, followed by a description of the fees.
Types of Fees
|
|
|
Audit
|
|
Audit - Related
|
|
Tax
|
|
All Other
|
|
Total
|
|
|
2021
|
|
|
19,810,000
|
|
|
|
|
190,000
|
|
|
|
|
120,000
|
|
|
|
|
20,000
|
|
|
|
|
20,140,000
|
|
|
|
|
2020
|
|
|
24,400,000
|
|
|
|
|
60,000
|
|
|
|
|
740,000
|
|
|
|
|
10,000
|
|
|
|
|
25,210,000
|
|
|
|
Audit
Fees. These are fees paid for the audit of
Linde plc’s annual U.S. GAAP and IFRS financial statements, the
reviews of the financial statements included in Linde plc’s reports
on Form 10-Q, the half-year IFRS report, the opinion regarding
Linde plc’s internal controls over financial reporting as required
by §404 of the Sarbanes-Oxley Act of 2002, and services that are
normally provided by the independent auditor in connection with
statutory audits in foreign jurisdictions and regulatory filings or
engagements for those fiscal years.
Audit-Related Fees. These are fees paid for assurance and
related services rendered that are reasonably related to the
performance of the audit or review of Linde plc’s financial
statements other than the fees disclosed in the foregoing
paragraph
Tax
Fees. These are fees paid
for professional services rendered primarily for preparation of
expatriate employee tax returns, preparation of tax returns in
non-U.S. jurisdictions and assistance with tax audits.
All Other Fees. These are
fees paid for services rendered other than those described in the
foregoing paragraphs. These services related primarily
to online research tools and subscriptions.
Linde plc | 43
Audit Matters
Audit Committee Report
Audit Committee
Report
As
set forth in the Audit Committee’s Charter, the management of the
Company is responsible for: (1) the preparation, presentation and
integrity of the Company’s financial statements; (2) the Company’s
accounting and financial reporting principles; and (3) internal
controls and procedures designed to ensure compliance with
applicable laws, regulations, and standards, including internal
control over financial reporting. The independent
auditor is responsible for auditing the Company’s financial
statements and expressing an opinion as to their conformity with
generally accepted accounting principles and expressing an opinion
on the effectiveness of the Company’s internal control over
financial reporting.
A principal role of the Audit Committee is to assist the Board of
Directors in its oversight of the Company’s financial reporting
process. In the performance of its oversight function,
the Audit Committee has considered and discussed the audited
financial statements with management and the independent
auditor. The Audit Committee has also discussed with the
independent auditor the matters that are required to be discussed
in accordance with Public Company Accounting Oversight Board
(PCAOB) standards relating to communications with audit
committees.
The Audit Committee has discussed with the independent auditor its
independence from the Company and its management. The
Audit Committee has received the written disclosures and the
letters from the independent auditor required by applicable
requirements of the PCAOB. The Audit Committee has also
received written communications from management with respect to
non-audit services provided to the Company by the independent
auditor in calendar year 2021 and those planned for
2022. The Audit Committee has further considered whether
the provision of such non-audit services is compatible with
maintaining PricewaterhouseCoopers’ independence.
In
its oversight role for these matters, the Audit Committee relies on
the information and representations made by management and the
independent auditor. Accordingly, the Audit Committee’s
oversight does not provide an independent basis to certify that the
audit of the Company’s financial statements has been carried out in
accordance with generally accepted auditing standards, that the
financial statements are presented in accordance with generally
accepted accounting principles or that the Company’s independent
auditor is, in fact, independent.
Based upon the review and discussions described in this report, and
subject to the limitations on the role and responsibilities of the
Audit Committee referred to above and in the Charter, the Audit
Committee recommended to the Board that the audited financial
statements be included in the Company’s Form 10-K and Annual Report
for the year ended December 31, 2021 filed with the SEC.
The Audit Committee
Martin H. Richenhagen, Chairman
Dr. Thomas Enders
Dr. Victoria E. Ossadnik
Alberto Weisser
44 | Linde plc
Proposal 2a: Non-Binding Ratification of the Appointment of the
Independent Auditor
Proposal 2b: Authorization of the Board to Determine the Auditor’s
Remuneration
Proposal 2a:
Non-Binding Ratification of the Appointment of the Independent
Auditor
Proposal 2b:
Authorization of the Board to Determine the Auditor’s
Remuneration
Under
New York Stock Exchange (“NYSE”) and SEC rules, selection of the
Company’s independent auditor is the direct responsibility of the
Audit Committee. The Board has determined, however, to
seek shareholder ratification of that selection as a good practice
in order to provide shareholders an avenue to express their views
on this important matter. If shareholders fail to ratify
the selection, the Audit Committee may reconsider the
appointment. Even if the current selection is ratified
by shareholders, the Audit Committee reserves the right to appoint
a different independent auditor at any time during the year if the
Audit Committee determines that such change would be in the best
interests of the Company and its shareholders.
Information concerning the independent auditor may be found under
the caption “Audit Matters” above. The Audit Committee
believes the selection of PwC as the Company’s independent auditor
for 2022 is in the best interest of the Company and its
shareholders.
In addition, Irish law provides that the remuneration of the
Company’s statutory auditor may be determined by shareholders at
the AGM. At its February 2022 meeting, the Audit
Committee approved PwC’s remuneration, subject to receiving the
necessary shareholder approval at the 2022 AGM.
As
required under Irish law, the resolutions in respect of Proposals
2a and 2b are ordinary resolutions that require the affirmative
vote of a simple majority of the votes cast.
The text of the resolution in respect of Proposal 2a is as
follows:
“To ratify, in a non-binding vote, the appointment of
PricewaterhouseCoopers as independent auditor of the Company.”
The text of the resolution in respect of Proposal 2b is as
follows:
“To authorize, in a binding vote, the Board, acting through the
Audit Committee, to determine the remuneration of
PricewaterhouseCoopers.”
|
|
The
Board recommends that you vote “FOR” the ratification, on an
advisory and non-binding basis, of the appointment of
PricewaterhouseCoopers as independent auditor and “FOR” the
authorization of the Board, acting through the Audit Committee, to
determine the remuneration of PricewaterhouseCoopers.
|
Linde plc | 45
Executive Compensation Matters
Compensation Discussion and Analysis
Executive
Compensation Matters
Report
of the Human
Capital Committee
The Company’s Human Capital Committee (“HC Committee”) reviewed and
discussed with management the “Compensation Discussion and
Analysis” and recommended to the Board that it be included
herein. The HC Committee has represented to management
that, to the extent that the “Compensation Discussion and Analysis”
discloses the HC Committee’s deliberations and thinking in making
executive compensation policies and decisions, it is accurate and
materially complete.
The Human Capital Committee
Edward G. Galante, Chairman
Prof. DDr. Ann-Kristin Achleitner
Joe Kaeser
Prof. Dr. Martin H. Richenhagen
Robert L. Wood
Compensation
Discussion
and Analysis
This
Compensation Discussion and Analysis (“CD&A”) provides context
for the policies and decisions underlying the 2021 compensation
reported in the executive compensation tables included herein for
the Company’s Chief Executive Officer (“CEO”), Chief Financial
Officer (“CFO”) and the three other executive officers who had the
highest total compensation for 2021, as set forth in the “Summary
Compensation Table” (these five executive officers are collectively
referred to as the “Named Executive Officers” or the
“NEOs”). The HC Committee is responsible for policies
and decisions regarding the compensation and benefits for the
Company’s NEOs.
Executive Summary
2021 Company Performance Highlights
In
2021, Linde achieved strong financial results and, through the
efforts of its employees, supplied products and services to its
customers on a reliable and cost-effective basis. The
Company grew revenue by 13% year-over-year to $30.8 billion, and
achieved adjusted operating profit of $7.2 billion, 24% above
2020.(a) Linde
delivered value to its shareholders by distributing $6.8 billion in
the form of dividends and stock repurchases, while growing adjusted
diluted earnings per share to $10.69, up 30% versus
2020. Furthermore, the Company ended 2021 with a record
backlog in contractually secured projects and has committed almost
$500 million to clean energy initiatives in order to ensure robust
and sustainable performance into the future.
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|
(a)
|
Adjusted operating margin, earnings per
share and after-tax return on capital are non-GAAP measures.
Adjusted operating margin and earnings per share amounts are
reconciled to reported amounts in the “Non-GAAP Financial Measures”
Section in Item 7 of the Linde plc 2021 Form 10-K. For
definition of after-tax return on capital and reconciliation to
GAAP please see the “Non-GAAP Measures and Reconciliations” set
forth in the financial tables that are included as an appendix to
the 4th
quarter and full year 2021 earnings press release that was
furnished in the Linde plc Form 8-K filed on February 10,
2022.
|
46 | Linde plc
Executive Compensation Matters
Compensation Discussion and Analysis
Year-Over-Year
Performance in Key Financial Measures
Comparison of Cumulative Total Shareholder Return Since Merger
($100 Initial Investment)
2021 Compensation Highlights
As
a result of the Company’s strong performance, the annual variable
compensation program’s 2021 Corporate payout factor was 185% of
target. The performance share units (PSUs) granted in
2019 under the Company’s long-term incentive program also achieved
above-target payouts against the challenging goals that were
established at the beginning of their three-year performance
period. The Company exceeded the maximum performance
levels that were established for both the Return on Capital (ROC)
and relative Total Shareholder Return (TSR) PSUs, resulting in a
payout of 200% of target for each award.
Alignment of Executive Compensation with Company Performance
The
HC Committee seeks to achieve its executive compensation objectives
by aligning the design of the Company’s executive compensation
programs with the Company’s business objectives, ensuring a balance
between financial and strategic non-financial goals.
FINANCIAL BUSINESS OBJECTIVES: Achieve
sustained growth in profitability and shareholder return resulting
in a robust cash flow to fund capital investment growth
opportunities, dividend payments and share repurchases.
|
|
•
|
Annual
performance-based variable compensation earned by meeting or
exceeding pre-established financial goals.
|
|
|
•
|
Annual grants of PSUs that vest based
upon performance results over three years.
|
|
|
•
|
Annual grants of stock options, the
value of which is directly linked to the growth in the Company’s
stock price.
|
47 | Linde plc
Executive Compensation Matters
Compensation Discussion and Analysis
|
|
•
|
Annual
grants of restricted stock units (RSUs) with
three-year cliff vesting and value based on the Company’s stock
price.
|
STRATEGIC BUSINESS OBJECTIVES: Maintain
world-class standards in
safety, environmental responsibility, global compliance, strategic
positioning, productivity, talent management, and financial
controls.
|
|
•
|
Annual payout of variable compensation
is impacted by performance in these strategic and non-financial
objectives.
|
Attract
and retain executives who thrive in a sustainable
performance-driven culture.
|
|
•
|
A competitive compensation and
benefits program regularly benchmarked against peer companies of
similar size in market cap, revenue and other financial metrics and
business attributes.
|
|
|
•
|
Realized compensation that varies with
Company performance, with downside risk and upside
opportunity.
|
Overview of Executive Compensation Program
Executive Compensation Philosophy
The
HC Committee established its compensation philosophy to serve as
the basis for designing executive compensation programs.
Key Objectives
|
|
•
|
Attract and retain
talented executives.
|
|
|
•
|
Motivate executives
to deliver strong business results in line with shareholder
expectations.
|
|
|
•
|
Build and support a
performance-driven culture.
|
|
|
•
|
Encourage executives
to earn and own Company stock, aligning their interests with those
of shareholders.
|
Other Main Principles
|
|
•
|
Comparator groups
should reflect talent markets, customer segments, and investment
markets, and will be adjusted to meet changes in these
elements.
|
|
|
•
|
Target total direct
compensation will include a fixed base pay component plus variable
short- and long-term incentives.
|
|
|
•
|
Total
target direct compensation will be focused at the median (50th
percentile) of the competitive market.
|
|
|
•
|
Challenging but
achievable performance goals to be established with performance
levels defined as “maximum” representing truly exceptional,
outstanding performance and a carefully and objectively established
threshold level of performance, below which no incentives will be
earned.
|
|
|
•
|
Long-term incentives
should mainly be in the form of equity, which focuses executives on
total Company performance in the eyes of shareholders and rewards
executives when shareholders are rewarded.
|
48 | Linde plc
Executive Compensation Matters
Compensation Discussion and Analysis
Best Practices Supporting Executive Compensation Objectives
|
What We Do:
✓Link
a substantial portion of total compensation to Company
performance:
✓Annual variable
compensation awards based principally upon performance against
objective, pre-established financial goals
✓Equity grants
consisting largely of PSUs and stock options, focused on longer
term shareholder value creation
✓Set compensation
within competitive market ranges
✓Require substantial
stock ownership and stock retention requirements for
officers
✓Limit perquisites
and personal benefits
✓Have a clawback
(“recapture”) policy that applies to performance-based cash awards
and equity grants, including gains realized through exercise or
sale of equity securities
|
|
What We Do Not Do:
X Guarantee bonuses for
executive officers
X Allow pledging or hedging
of Company stock held by officers
X Pay tax “gross-ups” on
perquisites and personal benefits unless related to international
assignment benefits that are available to employees
generally
X Include the same metrics
in the short- and long-term incentive programs
X Allow backdating or
repricing of stock option awards
X Pay or accrue dividends or
dividend equivalents on unvested PSU and RSU awards
X Include an excise tax
“gross-up” provision in the event of a change-in-control
X Accelerate equity award
vesting upon change-in-control
|
Elements of Executive Compensation
Linde plc | 49
Executive Compensation Matters
Compensation Discussion and Analysis
The following table describes the elements of our executive
compensation program and the form of each element.
|
Element
|
Form
|
|
Base Salary
|
• Cash (salary
increases, if applicable, are typically made effective on April
1st of
each year).
|
|
Annual Variable Compensation
|
• Cash (based on
achievement against financial, strategic non-financial, and
individual objectives during the year).
|
|
Equity Awards
|
• Stock Options
(each representing the right to purchase a share of Company stock
at an exercise price equal to the closing market price on the date
of grant).
• PSUs (each
representing one share of Company stock which vests only if
threshold achievement against pre-established goals is met or
exceeded).
• RSUs (each
representing one share of Company stock with a time-based vesting
requirement).
|
Perquisites
and Personal Benefits
In addition to the compensation elements described above, the
Company offers certain perquisites and personal benefits to the
NEOs on a limited basis. For 2021, the HC Committee
reviewed and approved items that could be construed as perquisites
or personal benefits for each NEO to ensure they are consistent
with local country market practice or otherwise are provided for
limited and specifically defined business purposes. Some
items that must be classified as perquisites relate to support
provided to certain NEOs while on international
assignment. The international assignment benefits are
fundamentally the same as available to other employees who are on
similar international assignments. International
assignment compensation is tax equalized and no “tax gross-up” is
permitted for any executive officer unless such gross-up is
available to employees generally.
Pay
Mix
For 2021, between 73% and 79% of the NEOs’ target total direct
compensation opportunity was in the form of performance-based
variable compensation and equity grants, motivating them to deliver
strong business performance and drive shareholder
value.
The performance-based compensation is “at risk” and dependent upon
the Company’s achievement of pre-established financial and other
business goals set by the HC Committee and, for equity incentives,
also the Company’s stock price performance. The annual
variable compensation payout and the ultimate value of the
performance-based equity compensation awards could be zero if the
Company does not perform.
Performance-based equity compensation is valued at the “grant-date
fair value” of each award as determined under accounting standards
related to share-based compensation.
50 I Linde Inc.
Executive Compensation Matters
Compensation Discussion and Analysis
How
Compensation Decisions Are Made
Shareholder Engagement
The
Company maintains a robust outreach program whereby management
regularly discusses executive compensation design and other
relevant matters with shareholders.
At the July 2021 Annual General Meeting of Shareholders,
approximately 93.1% of the votes cast were in favor of the
Company’s Advisory Vote on NEO Compensation. When making
compensation program decisions, the HC Committee considered these
results as well as shareholder feedback received during outreach
sessions.
Role of the Human Capital Committee
The HC Committee reviews and approves the corporate goals and
objectives relevant to the CEO’s compensation, evaluates the CEO’s
performance relative to those goals, and determines and approves
the CEO’s compensation. The HC Committee also reviews the
performance of the other NEOs against the goals and objectives
relevant to their compensation, and reviews and approves the
compensation of the other NEOs.
Role of the Compensation Consultant
The HC Committee engages a third-party compensation consultant to
assist in analysis to inform and support the HC Committee’s
decisions on executive compensation. For its
consideration of 2021 executive compensation, the HC Committee
engaged Pearl Meyer LLC (“Pearl Meyer”) as its compensation
consultant.
In February 2021, as part of the HC Committee’s standard practice
to conduct such a review on an annual basis, the HC Committee
assessed the independence of the compensation consultant. After
considering the six independence factors specified in the NYSE
listing standards, the HC Committee determined that Pearl Meyer met
the criteria for independence.
The
scope of Pearl Meyer’s engagement includes:
|
|
•
|
Review of compensation programs
and preparation and presentation to the HC Committee of reports on
executive compensation trends and other various
materials.
|
|
|
•
|
Review of the peer group analysis
and compensation benchmarking studies prepared by management and
review of other independent compensation data.
|
|
|
•
|
Advice on the determination of
NEO’s compensation, the consultant’s view of the CEO’s
recommendations for other NEO compensation, as well as input on the
CEO’s compensation.
|
|
|
•
|
Review of and advice on
compensation program design proposals presented by management for
the HC Committee’s consideration.
|
Compensation Peer Group
The HC Committee established a Compensation Peer Group to be used
to assess competitive market compensation ranges for its top
officers. Elements considered by the HC Committee when
choosing companies for peers included market capitalization,
revenue, net income, industry, global operations, location of
headquarters, and stock markets where publicly
traded. The HC Committee reviews the peer group on an
annual basis, though will only make changes when appropriate as it
values year-over-year consistency. Below are the
companies comprising the Compensation Peer Group that was used for
making pay decisions for calendar year 2021.
Linde plc | 51
Executive Compensation Matters
Compensation Discussion and Analysis
Risk Considerations
The
HC Committee reviews the design of the Company’s incentive
compensation plans on an annual basis to confirm that the incentive
programs do not encourage excessive risk taking. During
the HC Committee’s review in January 2021, sufficient controls to
incentive plan design were identified including payout caps, a
blend of multiple financial and non-financial factors, and the
significant weight given to rewarding long-term performance through
equity awards.
Based on this review, management and the HC Committee do not
believe that the Company’s incentive compensation plans create
risks that are reasonably likely to have a material adverse effect
on the Company.
52 | Linde plc
Executive Compensation Matters
Compensation Discussion and Analysis
2021
Executive
Compensation Design and Decisions
Aggregate Compensation
In
establishing the 2021 compensation for each NEO, the HC Committee
considered whether the value of each NEO’s aggregate compensation
package was consistent with its objectives for Linde’s executive
compensation program. It evaluated the following factors
when determining compensation levels for NEOs:
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•
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market median data
of international companies traded on the U.S. stock
exchanges.
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•
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expected
contribution to results, and exhibition of values, competencies and
behaviors critical to the success of the Company.
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•
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internal equity:
respective role, responsibilities and reporting
relationships.
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•
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experience and time
in similar roles.
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The HC Committee did not have a set formula for determining target
compensation opportunity; however, it referred to the median
benchmark data during its review. Additionally, the HC
Committee acknowledged that its general practice will be to
establish compensation levels toward the lower end of a competitive
market range for an executive officer who is newer to his or her
role. Conversely, a longer tenured executive officer
with a history of strong performance will have target compensation
levels set higher in the competitive range.
Direct Compensation for Executive Officers
Salary
The
salary level for each NEO was established by the HC Committee after
its consideration of multiple factors including positioning to
market, CEO input (other than for himself) and advice from Pearl
Meyer. Salary adjustments, if any, are typically effective April 1
of each year. Williams
Thermo Fisher United Technologies
Annual Performance-Based Variable Compensation
The HC Committee established an annual performance-based variable
compensation program for the 2021 calendar year that focuses
executives on the key objectives that position Linde for sustained
growth and the creation of shareholder value without compromising
long-term business objectives or encouraging excessive
risk-taking. The HC Committee decided not to make any
changes to the general design of the annual variable compensation
program for the 2021 calendar year compared to 2020.
The
annual variable compensation program is comprised of three main
components: financial performance, strategic and non-financial
performance and individual performance. This program is
designed to deliver pay commensurate with performance wherein
results that are greater than target goals are rewarded with above
target payout levels and performance not meeting minimum threshold
expectations reduces the payout to zero.
Linde plc | 53
Executive Compensation Matters
Compensation Discussion and Analysis
Financial
Performance Goals
Awards
under the annual variable compensation program are determined based
on Company performance against challenging, pre-established
financial goals. This component is weighted 75% of the
total financial and non-financial payout and payouts related to
this component can range from zero to 200% of target variable
compensation (for up to 150 percentage points). Top line
sales growth is important to the Company and 25% of the financial
performance goal is based on sales. Recognizing the
importance of profitability and cash flow to the Company, 50% of
the financial performance goal is based on net income, and the
remaining 25% on operating cash flow.
To establish the goals related to the financial component of the
program, the HC Committee considers many factors including the
degree of control senior management may have over certain factors
that affect financial performance. Goals are established
with the expectation that executives will be rewarded with higher
payouts if actual performance exceeds targets. Factors
considered in setting the threshold, target and maximum financial
performance goals for each financial measure include:
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•
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management’s
operating plan, including expected year-over-year challenges in
performance,
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•
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macro-economic
trends and outlooks in each of the countries in which the Company
operates,
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•
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foreign exchange
rate trends and outlook,
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•
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expected industrial
gases industry peer performance and that of the broader S&P 500
and leading European companies,
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•
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shifts in key
customer markets, and
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•
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expected
contribution from contracts already awarded and decisions or
actions already made or taken.
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Strategic and Non-Financial Performance Goals
In alignment with the Company’s compensation philosophy, the design
of the annual variable compensation program balances the need for
management to deliver annual results with the desire to meet
multi-year growth expectations. Selected key strategic
and non-financial performance objectives are included to recognize
these critical measures of the Company’s health and potential for
future success.
When establishing the 2021 program design, the HC Committee
identified the strategic and non-financial elements that were
considered most important to long-term sustainable success and
established annual goals with respect to those
elements. Most of the strategic and non-financial goals
are linked to quantitative and measurable objectives, although the
HC Committee uses its judgment when determining the value awarded
for goal achievement after a rigorous review of the
results. This component is weighted 25% of the total
financial and non-financial payout, and payouts related to this
component can range from zero to 200% of target variable
compensation (for up to 50 percentage points). The 2021 strategic
and non-financial performance goals are as follows:
54 | Linde plc
Executive Compensation Matters
Compensation Discussion and Analysis
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GOAL
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ADDITIONAL DETAIL
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Values: Safety, Compliance, Sustainability and Inclusion
• Zero
fatalities with fatality potential event reduction
• No
significant process safety or environmental events
• Best
in class recordable injury, lost workday case and vehicle accident
rates
• Continue
to manage COVID-19 risks and protocols
• Achieve
world class performance in sustainability and continue progress
toward greenhouse gas intensity reduction goals
• A
strong global compliance program and culture focusing on policies,
procedures, training, reporting, accountability and verification
via audit
• Strengthen
leadership pipeline, including globally diverse talent, through a
single succession planning and performance management approach
across the enterprise
|
• Providing
employees with a safe operating environment through investing in
state of the art technology and by driving a culture in which
safety is a top priority
• Rigorous
processes and procedures to ensure compliance with all applicable
environmental regulations, to meet sustainable development
performance targets and to continuously reduce the environmental
impact of the Company’s operations in the communities in which it
operates
• Create
and maintain a strong ethical culture in every country where Linde
operates
• All
employees accountable for ensuring that business results are
achieved in compliance with local laws and regulations and the
Company’s Code of Business Integrity
• Attraction,
retention and development of a diverse and engaged workforce
through a robust succession planning process
• Employee
value proposition includes providing strong, dynamic leadership, a
challenging work environment, industry-leading performance,
competitive pay and benefits, and rewards and recognition for
outstanding performance
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Strategy:
• Position
the business for long-term performance
• Operationalize
the decarbonization strategy
• Deliver
profitable growth by commercializing new applications, new end-use
markets and new business models.
• Ensure
robust backlog execution and positioning for mega
projects
• Leverage
digitalization to support growth, productivity, and automation with
demonstrable bottom line impact.
• Enhance
organizational capabilities in productivity tools, processes and
practices
|
• Deliver
excellent results in the short-term and over a longer, sustainable
period of time
• Rigorously
assess the quality and future impact of actions taken, as benefits
may not be recognized for several years
• Monitor
the “health” of the organization through pulse surveys
• Focus
on meeting schedules and cost estimates, starting-up plants
reliably and efficiently, and supporting plant
availability
• Deliver
value through continuous innovation to help Linde’s customers
enhance their product quality, service, reliability, productivity,
safety, and environmental performance
• Work
across disciplines, industries and sectors, with employees,
customers, suppliers and a range of other stakeholders to get more
output utilizing fewer resources and with less environmental
impact
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Relative Performance:
• Strong
performance relative to peer companies
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• Continue
to be the best performing industrial gases company in the
world
• Assess
how well we anticipate and manage adversity to optimize
results
• Determine
if management’s actions appear more or less effective than those of
Linde’s peers
• Appropriately
respond to macroeconomic or other external factors unknown at the
time financial goals were established
|
Individual
Performance
To
reinforce a culture where pay is directly linked to performance and
to recognize the contributions of individuals to overall Company
results, an individual performance component is included in the
annual variable compensation design. Excluding the CEO,
the HC Committee may make a positive, negative, or no adjustment to
each NEO’s performance-based variable compensation based on its
evaluation of his individual performance. For the CEO,
the HC Committee may make a negative or no adjustment to his annual
variable compensation payment to reflect his performance.
In evaluating if an individual performance adjustment was
appropriate, the HC
Committee will consider various qualitative factors, such as the
NEO’s:
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•
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performance
in his principal area of responsibility,
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•
|
degree of
success in leading the Company to meet its strategic objectives,
and
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•
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driving the
Company’s key values (including sustainable development, safety,
health & environment, diversity & inclusion, community
engagement, and integrity & compliance) and competencies that
are important to the success of the Company.
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Linde plc | 55
Executive Compensation Matters
Compensation Discussion and Analysis
Annual
Performance-Based Variable Compensation Opportunity for 2021
The
HC
Committee established the 2021 variable compensation target for
each NEO (expressed as a percent of salary that would be earned for
100% achievement of the performance goals). The target
level for each NEO ranged from 85% to
180% of base salary.
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2022 ANNUAL VARIABLE COMPENSATION DESIGN: In January
2022, the HC Committee approved
the design and goals
for the Company’s annual
performance-based variable compensation program in
2022.
In recognition of the importance of net income to shareholders, the
HC Committee approved adjustments to the weights within the
financial component of the program, to 20% for sales (from 25%) and
55% for net income (from 50%), while maintaining the 25% weighting
for operating cash flow.
In recognition of the importance of the Company’s standards for,
and impacts from, environmental, social, and governance (ESG)
considerations, the HC Committee also approved changes to the
non-financial component of the program, which continues to be
weighted 25% of the total financial and non-financial
payout. The non-financial component will now be
comprised of three pillars, each with their own weights: 1)
reduction in absolute greenhouse gas emissions (weighted 20% of
non-financial component), 2) ESG values: safety, health &
environment; sustainability (excluding greenhouse gas emissions),
compliance & integrity; and human capital (weighted 60%), and
3) the Company’s relative performance and strategic positioning
(weighted 20%).
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2021 Annual
Performance-Based Variable Compensation Results and Payout
Financial Business Results
As
noted above, financial goals are set considering multiple factors
with the recognition that there are some items that cannot be
easily predicted and over which management has less control, such
as foreign exchange rates and certain raw materials price
changes. As part of the variable compensation plan
design, certain pre-determined adjustments may be made by the HC
Committee to actual financial results in order to account for these
elements. The HC Committee may also conclude that
additional adjustments are appropriate based upon unforeseen
factors it deems extraordinary, non-recurring, or otherwise
material.
The chart below shows for each financial performance measure, the
2021 Corporate financial targets set by the HC Committee and the
actual performance achieved. The overall Corporate payout factor
for financial performance was 200% of target variable
compensation.
The
payouts for Messrs. Angel, Lamba and White are based on Linde plc
Corporate results. However, the financial payout factors for
Messrs. Durbin and Panikar are based on a blend of the business
segment results for their respective business segment (weighted
75%) and Corporate results (weighted 25%). The overall weighted
average payout factors for financial performance for Messrs. Durbin
and Panikar were 200% and 192.9%, respectively.
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Financial
Measure
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Target
($ millions)
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Actual
($ millions)
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Weight
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Achievement
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Payout
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Sales*
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27,654
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|
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29,978
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25%
|
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200%
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50%
|
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Net Income*
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4,775
|
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5,537
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50%
|
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200%
|
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100%
|
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Operating Cash Flow
|
|
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7,671
|
|
|
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9,725
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25%
|
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200%
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50%
|
|
* For the annual variable compensation program, sales and net
income are measured in accordance with GAAP subject to certain
adjustments that the HC Committee approves.
56 | Linde plc
Executive Compensation Matters
Compensation Discussion and Analysis
STRATEGIC
NON-FINANCIAL BUSINESS RESULTS