The Committee determines
compensation for our NEOs and other executive officers and recommends CEO compensation to the independent Board members for their approval. The NEOs are the Companys Chair and CEO, the Chief Financial Officer, and the three next most highly
compensated executive officers.
In 2016, the Committee again retained Frederic W. Cook & Co., Inc. (Cook) as its independent compensation
consultant on executive compensation matters. Cook performs work at the direction and under the supervision of the Committee, and provides no services to DuPont other than those for the Committee.
In addition to Company performance, the Committee considers a broad array of facts and circumstances in finalizing executive officer pay
decisions, including competitive analysis, pay equity multiples and tally sheets.
To ensure a complete and robust picture of
the overall compensation environment and consistent comparisons for the CEO and other NEOs, compensation is assessed primarily against published compensation surveys. These surveys represent large companies with median revenue comparable to
DuPonts market, such as those published by Willis Towers Watson.
Because of the smaller number of companies in our peer group, we periodically
find volatility in compensation levels year over year. Therefore, we use market survey information as the primary source of competitive data. Peer group compensation data is used only for the CEO and only as a secondary data point as described
above.
The peer group reflects the diverse industries in which we operate, represents the multiple markets in which we compete including markets for
executive talent, customers and capital and comprises large companies with a strong scientific focus and/or research intensity and a significant international presence.
To help guide the selection process in an objective manner, the Committee established the following criteria for peer group companies:
The Committee reviewed the selection criteria and Peer Group for 2016
in October of 2015 and approved the following changes to the Peer Group for 2016:
The Committee reviewed the current peer group in December of 2016 and no changes were made for 2017. Therefore, February 2017 annual
long-term incentive grants were made using DuPonts current equity pay mix, design and peer group.
For each NEO, the Committee annually reviews tally sheets that include all aspects of total compensation and the benefits associated with various termination scenarios.
Tally sheets provide the Committee with information on all elements of actual and potential future compensation of the NEOs, as well as data on wealth accumulation. This helps the Committee confirm that there are no unintended consequences of its
actions.
The components of our
executive compensation program align with our compensation philosophy.
To reinforce our
pay-for-performance philosophy, at least 80% of targeted TDC is at risk and fluctuates with our financial results and share price. We believe this approach motivates executives to consider the impact of their decisions on stockholder value.
In support of our pay for performance philosophy, 100% of the 2016 equity grants were performance-based and included:
The chart below represents the pay at risk in 2016 for our NEOs excluding the CEO.
Because we use only compensation practices that support our guiding principles, we do
NOT
offer our executives:
To ensure that executives remain focused on Company business during a period of uncertainty, in 2013, DuPont adopted the Senior Executive Severance Plan. Each
of the currently employed NEOs is a participant in the plan. For any benefits to be earned under the plan, a change in control must occur and the executives employment must be terminated within two years following the change in control, either
by the Company without cause or the executive for good reason (often called a double trigger).
Covered executives are
also entitled to reimbursement of any expenses incurred in enforcing their rights under the plan and, effective in December 2015, if any payments or benefits payable to the executive (whether under the plan or otherwise) are subject to the excise
tax imposed under Section 4999 of the Code, an additional reimbursement payment will be made such that, on a net after-tax basis, the executive would be in the same position as if no such excise tax had been imposed. The Company determined,
particularly in light of the contemplated merger of equals with Dow and Intended Business Separations, that such a reimbursement payment is appropriate for participants in the Senior Executive Severance Plan: (i) to provide reasonable assurance
that the participants, especially those with a short tenure or a newly enhanced role at the Company, realize the benefit the Company intended to provide under the plan and (ii) during this time of uncertainty, to incentivize those executives to
remain objective, avoid conflicts of interest and stay focused on executing the merger and Intended Business Separations to maximize stockholder value.
The plan
requires a release of claims as a condition to the payment of benefits and includes 12-month non-competition and non-solicitation provisions (18 months for the CEO) and additional non-disparagement and confidentiality provisions.
For additional information about benefits under the Senior Executive Severance Plan see
Potential Payments Upon Termination or Change in Control
.
The Committee regularly monitors our
compensation programs to assess whether those programs are motivating the desired behaviors while delivering on DuPonts performance objectives and encouraging appropriate levels of risk-taking. In 2016, the Committee asked Cook to test whether
the Companys compensation programs encourage the appropriate levels of risk-taking given the Companys risk profile. Cooks review encompassed an assessment of risk pertaining to a broad range of design elements, such as mix of pay,
performance metrics, goal-setting and payout curves, payment timing and adjustments, and the presence of maximum payments, as well as other mitigating program attributes. Cooks analysis determined, and the Committee concurred, that our
compensation programs do not encourage behaviors that would create undue material risk for DuPont.
Payout limitations, or caps, play a vital role in risk mitigation, and all metrics in the STIP and PSU programs are capped at 200% to protect against
excessive payouts. Our performance/payout leverage is in line with competitive practice. Clawback provisions, stock ownership guidelines and insider trading policies that prohibit executives from entering into derivative transactions also protect
against excessive risk in the Companys incentive programs.
The Company requires that NEOs accumulate and hold shares of DuPont Common Stock with a value equal to a specified multiple of base pay.
Stock ownership guidelines include a retention ratio requirement. Under the policy, until the required ownership is reached, executives are required to retain 75% of
net shares acquired upon any future vesting of stock units or exercise of stock options, after deducting shares used to pay applicable taxes and/or exercise price.
The multiples for specific executive levels are shown below. Each NEO exceeded their ownership goal with the exception of the CEO. Due to his limited tenure,
Mr. Breen has not yet reached the ownership requirement.
For purposes of the stock ownership guidelines, we include direct ownership of shares and stock units held in employee plans. Stock
options and PSUs are not included in determining whether an executive has achieved the ownership levels.
Awards granted prior to March 2, 2011, are subject to the clawback provisions that were in effect at the time of the grant, as disclosed in prior years proxy
statements.
In setting 2016 NEO salaries, the Committee took a
wide range of facts and circumstances into consideration. These included a corporate base salary merit budget of 3.0%, business results, market competitiveness, peer group competitiveness (CEO only), internal relationships, tally sheets and
individual performance. Facing another challenging year with uncertain macroeconomic conditions, officers did not receive a 2016 merit increase.
The table below
shows the base salary rate as of December 31, 2016. This information may be different from the base salary provided in the 2016 Summary Compensation Table (SCT), which reflects the actual base pay received for the year.
Our
annual incentive plan design ensures that our executives maintain a strong focus on those financial metrics (e.g., revenue growth and earnings growth) that have been shown to be closely linked to stockholder value creation over time. For 2016, STIP
awards were based on the following formula, measures and weightings. The Committee approves these factors at the beginning of each fiscal year. Each element is discussed in greater detail below.
Our STIP targets are set as a
percentage of base salary, consistent with market practice. The target STIP percentage for each level is reviewed regularly against the market and approved annually by the Committee (or in the case of the CEO, by the Board). The actual calculation
of the 2016 target STIP amount for the NEOs is detailed in the table below.
The weighted average
payout factor for the STIP is based on actual performance on each measure and the weighting of that performance measure.
For 2016 we raised the performance threshold for Business Unit Operating Earnings from 70% to 80%, which supports the increased focus on
this metric and our pay-for-performance philosophy. In addition, we have reduced the number of metrics to drive focus on revenue and earnings and simplify the plan.
For 2017, for the CEO and other NEOs, the DuPont STIP program will remain unchanged.
Corporate and
business unit performances are converted to a corresponding payout factor based on the concept of leverage, i.e., the relationship between performance for a given metric and its payout factor. The leverage in our plan is consistent with
competitive practice. For example, Operating EPS, business unit operating earnings,
and business unit revenue leverage is 2:1 below target and 5:1 above target. So, participants have two percentage points in payout deducted for each one percent change
in performance below target, and receive five percentage points in payout for each one percent change in performance above target. In 2016 we raised the threshold performance requirement from 70% to 80% for operating earnings. All metrics are capped
at 200% payout.
The following table shows each of these
performance measures, their weighting, target metrics, the actual result and payout result.
Corporate Performance was measured using the actual percentage of target for: Operating EPS versus an internal target the organization set.
Business unit
performance was measured as a percentage of aggregate actual performance per metric versus aggregate target.
The Committee and Board made no adjustments to
the earned STIP awards for individual performance. STIP payouts were based solely on corporate and business unit performance. Corporate Performance of 74.6% and Business Unit Performance of 48.7%, result in an overall payout factor of 123.3%.
As illustrated in the table below, the final 2016 STIP
payout is determined by multiplying the target STIP amount by the final total payout factor of 123.3%.
The 2016 STIP awards to Section 16 officers are limited to
0.25% of adjusted net income of the Company for the CEO and 0.15% for other executive officers.
The Committee made no design changes to our LTI programs with respect to the CEO and other NEOs for 2017.
Annual awards to employees, including
NEOs, are made at a pre-established Committee meeting in early February. This allows sufficient time for the market to absorb announcement of annual earnings, which is typically made during the fourth week of January. We do not time equity awards in
coordination with the release of material nonpublic information. The grant price is the closing price on the date of grant.
Any occasional special awards to
employees who are not executive officers are approved by the Special Stock Performance Committee (consisting of the Chairs of the Board and the Committee), to which the Board of Directors has delegated the authority to approve special equity grants.
Awards are effective on the date of approval by the Special Stock Performance Committee.
Each year the Committee establishes target LTI values based on a number of
factors including market practices, internal equity, and cost. In general, we target long-term stock compensation in the median range of market long-term compensation based on position.
The actual number of shares earned
for the PSUs granted in 2016 will be based on DuPonts relative TSR to the peer group for the three-year performance period of 2016 through 2018, as shown in the table below.
PERFORMANCE TARGETS (2016 2018 PERFORMANCE PERIOD)
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DuPont TSR Relative to the
Peer Group
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% of Target
Shares Earned
(Payout %)
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TSR PAYOUT %
X
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Below 25th percentile*
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0%
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TARGET AWARD
=
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At 25th percentile*
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25%
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FINAL AWARD
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At 50th percentile*
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100%
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At or above 75th percentile*
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200%
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*Interimpoints are interpolated
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20142016 PSU PROGRAM (PAYABLE IN 2017)
The three-year performance period for PSUs awarded in 2014 ended on December 31, 2016. The final number of shares earned was based on revenue growth and TSR
relative to the peer group over the three-year performance period. The final payout determination was made in March of 2017 after a review of the Companys and peer groups performance. Revenue growth was at the 18
th
percentile of the peer group. TSR was at the 71
st
percentile of the peer group. This resulted in an overall payout at 91% of target. TSR (stock
price appreciation plus dividends) for the 2014 PSU program was calculated based on a practice predominant among our peer group members for compensation purposes and in accordance with the terms of the plan. The underlying TSR was calculated using a
20-day closing average stock price immediately prior to the beginning of the three-year performance period and the average closing stock price over the last 20 days of that performance period.
Further details are provided in the 2016 Option Exercises and Stock Vested Table.
Target units and year-end values for PSUs awarded in 2015 and 2016 are included in the Outstanding Equity Awards Table.
Deductibility of Performance-Based Compensation
IRC Section 162(m)
generally precludes a public corporation from taking a deduction for compensation in excess of $1,000,000 for its CEO or any of its three next-highest-paid executive officers (other than the Chief Financial Officer), unless certain specific and
detailed criteria are satisfied. This limitation does not apply to qualified performance-based compensation.
We review all compensation programs and payments to
determine the tax impact on the Company as well as on the executive officers. In addition, we review the impact of our programs against other considerations, such as accounting impact, stockholder alignment, market competitiveness, effectiveness and
perceived value to employees. Because many different factors influence a well-rounded, comprehensive executive compensation program, some compensation might not, on some occasions, be deductible under IRC Section 162(m).
The stockholder-approved EIP is designed to allow the Company to issue awards that qualify as performance-based compensation under IRC Section 162(m).
We will continue to monitor developments and assess alternatives for preserving the deductibility of compensation payments and benefits to the extent reasonably
practicable consistent with our compensation policies and as determined to be in the best interests of DuPont and its stockholders.
2016 NEO TOTAL COMPENSATION
SUMMARY
Total 2016 NEO Compensation
The Company and individual
performance outlined above resulted in total NEO compensation for 2016 as shown in the table that follows. This table is not intended to be a substitute for the SCT or GPBAT. Base salary is shown as of December 31, 2016. STIP awards and LTI
awards for 2016 are reflected in the SCT and GPBAT. The value of LTI awards reflected in this table differs from the value of equity awards shown in the SCT and GPBAT
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46
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Proxy Statement for 2017 Annual Meeting of Stockholders
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Compensation Discussion and Analysis
"
2016 Compensation Decisions
because those tables reflect the probable outcome of the performance conditions for PSUs. The LTI amounts shown in this table value PSUs at the closing price of DuPont
Common Stock on the date of grant, and reflect the value the Committee considered when making LTI awards for 2016.
Each of our NEOs saw significant increases
in TDC primarily driven by the increase in STIP performance from 40% in 2015 to 123% in 2016. Mr. Doyle also saw a base salary increase due to his promotion to Executive Vice President.
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Name
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2016
Base Salary
|
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2016
Final STIP
|
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2016
LTI
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TDC
|
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2016 TDC
vs
2015 TDC
(% change)
|
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E. D. Breen*
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$
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1,500,000
|
|
|
$
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2,959,200
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$
|
11,100,000
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|
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$
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15,559,200
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N. C. Fanandakis
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780,000
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962,000
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2,845,000
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|
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4,587,000
|
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|
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21%
|
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J. C. Collins
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700,000
|
|
|
|
864,000
|
|
|
|
2,000,000
|
|
|
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3,564,000
|
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33%
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C. M. Doyle
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625,000
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771,000
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1,500,000
|
|
|
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2,896,000
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92%
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S. L. Fox
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664,000
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696,000
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2,060,000
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|
|
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3,420,000
|
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22%
|
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*
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Effective with his appointment as Chair and CEO, Mr. Breen was granted $4,440,000 of non-qualified stock options effective November 6, 2015, which represents the stock option portion of his 2016 long-term
incentive grant. The amount reflected above includes this grant.
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Proxy Statement for 2017 Annual Meeting of
Stockholders
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47
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COMPENSATION OF EXECUTIVE OFFICERS
2016 SUMMARY COMPENSATION TABLE
The following table summarizes the
compensation of the NEOs for the fiscal year ending December 31, 2016. The NEOs are DuPonts CEO and Chief Financial Officer (CFO), and the next three most highly compensated executive officers ranked by their total
compensation (reduced by the amount of change in pension value and nonqualified deferred compensation earnings) in the 2016 Summary Compensation Table.
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Name and Principal Position
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Year
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Salary
(1)
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Stock
Award
(2)
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Option
Awards
(3)
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Non-Equity
Incentive Plan
Compensation
(4)
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Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
(5)
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All Other
Compensation
(6)
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Total ($)
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E. D. Breen
Chair & Chief Executive Officer
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2016
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$
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1,500,000
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$
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6,355,142
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|
|
$
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2,959,200
|
|
|
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$192,302
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$11,006,644
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2015
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5,521,000
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$
|
4,440,000
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244,975
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(7)
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10,205,975
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N. C. Fanandakis
Executive Vice President &
Chief Financial Officer
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2016
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780,000
|
|
|
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1,628,890
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|
|
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1,138,008
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|
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962,000
|
|
|
$
|
995,901
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|
|
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96,600
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|
|
|
5,601,399
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2015
|
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|
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772,500
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|
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2,216,415
|
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|
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712,186
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315,000
|
|
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107,505
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|
|
4,123,606
|
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2014
|
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|
758,333
|
|
|
|
2,057,062
|
|
|
|
625,012
|
|
|
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422,000
|
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|
|
180,600
|
|
|
|
117,030
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|
|
|
4,160,037
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J. C. Collins
Executive Vice President
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2016
|
|
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|
700,000
|
|
|
|
1,145,118
|
|
|
|
800,007
|
|
|
|
864,000
|
|
|
|
1,452,701
|
|
|
|
86,720
|
|
|
|
5,048,546
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|
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2015
|
|
|
|
670,833
|
|
|
|
4,395,579
|
|
|
|
446,028
|
|
|
|
283,000
|
|
|
|
474,963
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|
|
|
88,275
|
|
|
|
6,358,678
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|
C. M. Doyle
Executive Vice President
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|
|
2016
|
|
|
|
625,000
|
|
|
|
858,824
|
|
|
|
600,012
|
|
|
|
771,000
|
|
|
|
819,219
|
|
|
|
70,888
|
|
|
|
3,744,943
|
|
|
|
2015
|
|
|
|
453,333
|
|
|
|
3,656,855
|
|
|
|
207,496
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|
|
|
180,000
|
|
|
|
223,565
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|
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59,772
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|
|
|
4,781,021
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|
S. L. Fox
Senior Vice President &
General Counsel
|
|
|
2016
|
|
|
|
664,000
|
|
|
|
1,179,432
|
|
|
|
824,006
|
|
|
|
696,000
|
|
|
|
|
|
|
|
41,000
|
|
|
|
3,404,438
|
|
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(1)
|
Includes compensation that may have been deferred at the executives election. Such amounts are also included in the Nonqualified Deferred Compensation table Executive Contributions in 2016
column.
|
(2)
|
Represents the aggregate grant date fair value of time-vested RSUs and PSUs computed in accordance with FASB ASC Topic 718. Those values are detailed in the 2016 Grants of Plan-Based Awards table. For PSUs, the grant
date fair value is based upon the probable outcome of the performance conditions. This amount is consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC
Topic 718, excluding the effect of estimated forfeitures. The grant date fair values of the PSUs assuming that the highest level of performance conditions will be achieved are as follows: E. D. Breen ($12,710,284), N. C. Fanandakis
($3,257,780), J. C. Collins (2,290,236), C. M. Doyle ($1,717,648), and S. L. Fox ($2,358,864). No RSUs were awarded in 2016 to our NEOs.
|
(3)
|
Represents the aggregate grant date fair value of stock options computed in accordance with FASB ASC Topic 718. Assumptions used in determining values for 2016 can be found under 2016 Grants of Plan-Based Awards
Grant Date Fair Value of Stock Option Awards.
|
(4)
|
Represents payouts under the cash-based award component (STIP) of the Equity and Incentive Plan (EIP) for services performed during 2016. This column includes compensation which may have been deferred at the
NEOs election. Any such amounts will be included in the Executive Contributions column of the 2017 Nonqualified Deferred Compensation table.
|
(5)
|
This column reports the estimated change in the actuarial present value of an NEOs accumulated pension benefits and any above-market earnings on nonqualified deferred compensation balances. DuPont does not credit
participants in the nonqualified plans with above-market earnings; therefore, no such amounts are reflected here.
|
(6)
|
Amounts shown include Company contributions to qualified defined contribution plans and Company contributions to nonqualified defined contribution plans. The amounts also reflect perquisites and personal benefits
including financial counseling, personal use of Company automobile and aircraft for Mr. Breen. For a detailed discussion of the items and amounts reported in this column, including a discussion of how the value of personal use of Company
aircraft is calculated, refer to the All Other Compensation section of the narrative discussion following this footnote.
|
(7)
|
Includes $233,156 of compensation received by Mr. Breen in 2015 as a non-employee director consisting of $82,500 of fees paid in cash, time-vested RSUs with a grant date fair value of $150,381, and Company-paid
accidental death and disability insurance premiums of $275.
|
Narrative Discussion of Summary Compensation Table
Salary
Amounts shown in the Salary column of the table
above represent base salary earned during 2016. Due to another challenging year with uncertain macroeconomic conditions, NEOs did not receive a 2016 merit increase.
Mr. Breen became Chair and CEO on November 9, 2015 and did not receive a base salary in 2015.
Mr. Doyle received a base salary increase effective January 1, 2016, to recognize his promotion to Executive Vice President and the increase in his scope of
responsibilities.
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|
48
|
|
Proxy Statement for 2017 Annual Meeting of Stockholders
|
|
Compensation of Executive Officers
"
2016 Summary Compensation Table
Base salary for 2016 represented 10% of TDC (base salary, STIP awards and LTI awards) for the CEO, and, on average, 19% of TDC for the other NEOs, which is consistent
with the Committees goal of placing emphasis on at risk compensation.
Stock Awards
Amounts shown in the Stock Awards column of the table above represent the aggregate grant date fair value of RSUs and PSUs computed in accordance with FASB
ASC Topic 718. For PSUs, the grant date fair value is based upon the probable outcome of the performance conditions. This amount is consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of
the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. Refer to
2016 Grants of Plan-Based Awards Grant Date Fair Value of Stock and Option Awards
for a detailed discussion of the grant date fair
value of stock awards. No RSUs were awarded in 2016, RSUs have been removed as a component of our LTI award program for NEOs.
Option Awards
Amounts shown in the Option Awards column of the table above represent the aggregate grant date fair value of stock options computed in accordance with FASB
ASC Topic 718. Refer to
2016 Grants of Plan-Based Awards Grant Date Fair Value of Stock and Option Awards
for a detailed discussion of the grant date fair value of option awards.
Non-Equity Incentive Plan Compensation
Amounts shown in this column
of the table above represent cash-based short-term incentive, or STIP, awards paid for a given year.
Change in Pension Value and Nonqualified Deferred
Compensation Earnings
Amounts shown in this column of the table above represent the estimated change in the actuarial present value of accumulated benefits
for each of the NEOs at the earlier of either age 65 or the age at which the NEO is eligible for an unreduced pension. Key actuarial assumptions for the present value of accumulated benefit calculation can be found in Note 17 (Long-Term
Employee Benefits) to the Consolidated Financial Statements in DuPonts Annual Report on Form 10-K for the year ended December 31, 2016. Assumptions are further described in the narrative discussion following the Pension Benefits
table.
There were no above-market or preferential earnings during 2016 on nonqualified deferred compensation. Generally, earnings on nonqualified deferred
compensation include returns on investments in seven core investment alternatives, interest accruals on cash balances, DuPont Common Stock returns and dividend reinvestments. Interest is accrued on cash balances based on a rate that is traditionally
less than 120% of the applicable federal rate, and dividend equivalents are accrued at a non-preferential rate. In addition, the other core investment alternatives are a subset of the investment alternatives available to all employees under the
Companys RSP plan. Accordingly, these amounts are not considered above-market or preferential earnings for purposes of, and are not included in, the 2016 Summary Compensation Table.
Accordingly, all amounts shown in this column reflect the change in the pension value under the Pension Plan and Pension Restoration Plan. The change in pension value
represents the change from 2015 to 2016 in the present value of an NEOs accumulated benefit as of the applicable pension measurement date.
|
|
|
|
|
|
|
|
|
|
|
Proxy Statement for 2017 Annual Meeting of
Stockholders
|
|
49
|
Compensation of Executive Officers
"
2016 Summary Compensation Table
All Other Compensation
Amounts shown in the All Other
Compensation column of the table above include perquisites and personal benefits (if greater than or equal to $10,000); registrant (Company) contributions to qualified defined contribution plans; and registrant (Company) contributions to
nonqualified defined contribution plans. The following table details those amounts.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Perquisites
and Other
Personal
Benefits
(a)
|
|
|
Registrant
Contributions
to
Qualified
Defined
Contribution
Plans
(b)
|
|
|
Registrant
Contributions
to
Nonqualified
Defined
Contribution
Plans
(c)
|
E. D. Breen
|
|
|
$61,052
|
|
|
$
|
23,850
|
|
|
$107,400
|
N. C. Fanandakis
|
|
|
|
|
|
|
23,850
|
|
|
72,750
|
J. C. Collins
|
|
|
|
|
|
|
23,850
|
|
|
62,870
|
C. M. Doyle
|
|
|
|
|
|
|
23,850
|
|
|
47,038
|
S. L. Fox
|
|
|
|
|
|
|
23,850
|
|
|
17,150
|
(a)
|
For Mr. Breen, includes personal use of Company automobile ($2,031) and personal use of Company aircraft ($59,021). Consistent with DuPonts policy, the CEO travels on Company aircraft for business and
personal travel. Commercial travel is permitted when the security risk is considered minimal and the Office of the Director of Corporate Security approves it. The amount reflected in this column represents the aggregate incremental cost to DuPont of
all personal travel by the CEO on Company aircraft. Incremental cost is calculated based on the variable operating costs to the Company, including fuel, mileage, trip-related maintenance, weather-monitoring costs, crew travel expenses, on-board
catering, landing/ramp fees, and other variable costs, which include an allocation of the overall maintenance costs and costs with respect to deadhead flights flights with no passengers that are associated with the CEOs
personal use. Fixed costs that do not change based on usage, such as pilot salaries and the cost of maintenance not related to trips, are excluded.
|
|
The benefit associated with personal use of Company aircraft is imputed as income to the CEO at Standard Industry Fare Level (SIFL) rates. SIFL rates are determined by the U.S. Department of Transportation.
They are used to compute the value of nonbusiness transportation aboard employer-provided aircraft as required by the Internal Revenue Service. SIFL rates are used in the calculation of the income imputed to executives in the event of personal
travel on Company aircraft. The CEO does not receive any gross-up for payment of taxes associated with the described benefit.
|
(b)
|
Amounts represent DuPonts match to the RSP on the same basis as provided to U.S. parent company employees. For 2016, the RSP provided a Company match of 100% of the first 6% of the employees contribution.
Amounts also include an additional Company contribution of 3%.
|
(c)
|
Amounts represent DuPonts match to the Retirement Savings Restoration Plan (RSRP) on the same basis as provided to U.S. parent company employees who fall above the applicable Internal Revenue Code
(IRC) limits. For 2016, the RSRP provided a Company match of 100% of the first 6% of the employees eligible contributions. Amounts also include an additional Company contribution of 3% of eligible contributions.
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Proxy Statement for 2017 Annual Meeting of Stockholders
|
|
Compensation of Executive Officers
"
2016 Grants of
Plan-Based
Awards
2016 GRANTS OF PLAN-BASED AWARDS
The following table provides information on
STIP awards, stock options and PSUs granted in 2016 to each of our NEOs. For a complete understanding of the table, refer to the narrative discussion that follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future
Payouts
Under Non-Equity
Incentive Plan Awards
|
|
|
Estimated Future
Payouts
Under Equity
Incentive Plan Awards
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(#)
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options(#)
|
|
|
Exercise or
Base Price
of Option
Awards
($/Share)
|
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
|
Name
|
|
Grant
Date
|
|
|
Thres-
hold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Thres-
hold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
|
E. D. Breen
|
|
|
2/3/16
|
|
|
|
|
|
|
$
|
2,400,000
|
|
|
$
|
4,800,000
|
|
|
|
|
|
|
|
113,343
|
|
|
|
226,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$6,355,142
|
N. C. Fanandakis
|
|
|
2/3/16
|
|
|
|
|
|
|
|
780,000
|
|
|
|
1,560,000
|
|
|
|
|
|
|
|
29,051
|
|
|
|
58,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,628,890
|
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84,926
|
|
|
|
$58.76
|
|
|
1,138,008
|
J. C. Collins
|
|
|
2/3/16
|
|
|
|
|
|
|
|
700,000
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
20,423
|
|
|
|
40,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,145,118
|
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,702
|
|
|
|
58.76
|
|
|
800,007
|
C. M. Doyle
|
|
|
2/3/16
|
|
|
|
|
|
|
|
625,000
|
|
|
|
1,250,000
|
|
|
|
|
|
|
|
15,317
|
|
|
|
30,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
858,824
|
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,777
|
|
|
|
58.76
|
|
|
600,012
|
S. L. Fox
|
|
|
2/3/16
|
|
|
|
|
|
|
|
564,400
|
|
|
|
1,128,800
|
|
|
|
|
|
|
|
21,035
|
|
|
|
42,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,179,432
|
|
|
2/3/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,493
|
|
|
|
58.76
|
|
|
824,006
|
Narrative Discussion of Grants of Plan-Based Awards Table
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
Amounts shown in this column of the table above represent STIP award opportunities for 2016 under the EIP. A target STIP award is established for each NEO at the
beginning of the relevant fiscal year based on a percentage of the NEOs base salary. The actual STIP payout for NEOs, which can range from 0% to 200% of target, is based on corporate and total business unit performance and individual
performance. Refer to
Compensation Discussion and Analysis 2016 Compensation Decisions Our Annual Compensation Program Annual Short-Term Incentives
for more details.
Estimated Future Payouts Under Equity Incentive Plan Awards
Amounts
shown in this column of the table above represent the potential payout range of PSUs granted in 2016. Vesting is based upon relative TSR in relation to the predefined peer group. At the conclusion of the three-year performance period, the actual
award, delivered as DuPont Common Stock, can range from 0% to 200% of the original grant. Dividend equivalents are applied after the final performance determination.
For a discussion of the impact on PSUs of any termination, see
Potential Payments Upon Termination or Change in Control
.
All Other Stock Awards: Number of Shares of Stock or Units
Amounts
shown in this column of the table above typically represent RSUs granted that are paid out in shares of DuPont Common Stock. No RSUs were granted to NEOs in 2016.
All Other Option Awards: Number of Securities Underlying Options
Amounts shown in this column of the table above represent nonqualified stock options granted in 2016 with a ten-year term and ratable vesting over a three-year period,
one-third on each anniversary date. The exercise price of options granted, as shown in the table above, is based on the closing price of DuPont Common Stock on the date of grant.
For a discussion of the impact on options of any termination, see
Potential Payments Upon Termination or Change in Control
.
Grant Date Fair Value of Stock and Option Awards
Except with respect
to PSUs, amounts shown in this column of the table above reflect the grant date fair value of the equity award computed in accordance with FASB ASC Topic 718. For PSUs, the grant date fair value is based upon the probable outcome of the performance
conditions. This amount is consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. The grant date
fair value of the PSUs was $56.07, estimated using a Monte Carlo simulation.
|
|
|
|
|
|
|
|
|
|
|
Proxy Statement for 2017 Annual Meeting of
Stockholders
|
|
51
|
Compensation of Executive Officers
"
2016 Grants of
Plan-Based
Awards
For purposes of determining the fair value of stock option awards, we use the Black-Scholes option pricing model and the assumptions set forth in the table below. The
grant date fair value of options granted on February 3, 2016, was $13.40. The Company determines the dividend yield by dividing the current annual dividend on the DuPont Common Stock by the option exercise price. A historical daily measurement
of volatility is determined based on the expected life of the option granted. The risk-free interest rate is determined by reference to the yield on an outstanding U.S. Treasury Note with a term equal to the expected life of the option granted.
Expected life is determined by reference to the Companys historical experience.
|
|
|
|
|
|
|
February 3, 2016
|
|
Dividend yield
|
|
|
2.6%
|
|
Volatility
|
|
|
28.28%
|
|
Risk-free interest rate
|
|
|
1.8%
|
|
Expected life (years)
|
|
|
7.2
|
|
|
|
|
|
|
|
|
|
|
|
52
|
|
Proxy Statement for 2017 Annual Meeting of Stockholders
|
|
Compensation of Executive Officers
"
Outstanding Equity Awards
OUTSTANDING EQUITY AWARDS
The following table shows the number of shares
underlying exercisable and unexercisable options and unvested RSUs and, as applicable, unearned PSUs held by our NEOs at December 31, 2016. Market or payout values in the table below are based on the closing price of DuPont Common Stock as of
that date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(1)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock Held
That Have
Not Vested
(#)(2)
|
|
Market Value
of Shares or
Units of
Stock Held
That Have
Not Vested
($)
|
|
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (#)(3)
|
|
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($)(4)
|
E. D. Breen
(5)
|
|
133,334
|
|
266,666
|
|
$66.11
|
|
11/5/22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,348
|
|
$172,367
|
|
113,343
|
|
$8,319,376
|
N. C. Fanandakis
|
|
44,920
|
|
|
|
49.97
|
|
2/1/18
|
|
|
|
|
|
|
|
|
|
|
49,487
|
|
|
|
49.90
|
|
2/5/19
|
|
|
|
|
|
|
|
|
|
|
57,312
|
|
|
|
45.72
|
|
2/5/20
|
|
|
|
|
|
|
|
|
|
|
31,605
|
|
15,802
|
|
59.65
|
|
2/4/21
|
|
|
|
|
|
|
|
|
|
|
20,127
|
|
40,253
|
|
71.06
|
|
2/3/22
|
|
|
|
|
|
|
|
|
|
|
|
|
84,926
|
|
58.76
|
|
2/2/26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,417
|
|
764,584
|
|
48,049
|
|
3,526,797
|
J. C. Collins
|
|
|
|
9,482
|
|
59.65
|
|
2/4/21
|
|
|
|
|
|
|
|
|
|
|
12,673
|
|
25,344
|
|
71.06
|
|
2/3/22
|
|
|
|
|
|
|
|
|
|
|
|
|
59,702
|
|
58.76
|
|
2/2/26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,974
|
|
7,925,260
|
|
32,384
|
|
2,376,986
|
C. M. Doyle
|
|
|
|
3,161
|
|
59.65
|
|
2/4/21
|
|
|
|
|
|
|
|
|
|
|
5,964
|
|
11,927
|
|
71.06
|
|
2/3/22
|
|
|
|
|
|
|
|
|
|
|
|
|
44,777
|
|
58.76
|
|
2/2/26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81,517
|
|
5,983,383
|
|
20,947
|
|
1,537,510
|
S. L. Fox
|
|
14,164
|
|
28,326
|
|
71.06
|
|
2/3/22
|
|
|
|
|
|
|
|
|
|
|
|
|
61,493
|
|
58.76
|
|
2/2/26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,942
|
|
2,638,160
|
|
34,405
|
|
2,525,327
|
(1)
|
The following table provides an overview of stock options with outstanding vesting dates as of December 31, 2016:
|
|
|
|
Stock Option
Expiration Date
|
|
Outstanding Vesting Dates
|
2/4/2021
|
|
Balance vests on February 5, 2017
|
2/3/2022
|
|
Vests equally on February 4, 2017 and 2018
|
11/5/2022
|
|
Vests equally on November 6, 2017 and 2018
|
2/2/2026
|
|
Vests equally on February 3, 2017, 2018 and 2019
|
(2)
|
The following table provides an overview of RSUs, including dividend-equivalent units, with outstanding vesting dates as of December 31, 2016:
|
|
|
|
Grant Date
|
|
Outstanding Vesting Dates
|
8/6/2013
|
|
Balance vests on August 6, 2017
|
2/5/2014
|
|
Balance vests on February 5, 2017
|
10/6/2014
|
|
30% vests on October 6, 2017, and 70% vests on October 6, 2018
|
2/4/2015
|
|
Vests equally on February 4, 2017 and 2018
|
7/29/2015
|
|
Balance vests on July 29, 2020
|
|
|
|
|
|
|
|
|
|
|
|
Proxy Statement for 2017 Annual Meeting of
Stockholders
|
|
53
|
Compensation of Executive Officers
"
Outstanding Equity Awards
(3)
|
The following table provides an overview of PSUs with outstanding vesting dates as of December 31, 2016:
|
|
|
|
Grant Date
|
|
Outstanding Vesting Dates
|
2/4/2015
|
|
Performance period ends December 31, 2017
|
2/3/2016
|
|
Performance period ends December 31, 2018
|
|
Because the 2014 PSU award payout was less than target (91%), the amount required to be shown in this column represents the target number of PSUs payable under outstanding awards (100% of the original grant).
|
|
The final number of shares earned, if any, will be based on performance on the companys Operating Earnings Growth and TSR in relation to the predefined peer group (at the time of award) for the 2015 award and only
TSR for the 2016 award.
|
|
The plan provides for a payout range of 0% to 200% and dividend-equivalent units are applied subsequently to the final performance determination.
|
(4)
|
Represents the payout value of outstanding PSUs based on a target (100%) payout. See footnote (3) above.
|
(5)
|
Includes RSUs granted to Mr. Breen in his capacity as a non-employee director.
|
|
|
|
|
|
|
|
|
|
|
54
|
|
Proxy Statement for 2017 Annual Meeting of Stockholders
|
|
Compensation of Executive Officers
"
2016 Option Exercises and Stock Vested
2016 OPTION EXERCISES AND STOCK VESTED
The table below shows the number of
shares of DuPont Common Stock acquired upon the exercise of stock options and the vesting of RSUs and PSUs during 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
(1)
|
|
|
Stock Awards
(2)
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise (#)
|
|
|
Value
Realized
Upon
Exercise ($)
|
|
|
Number of
Shares
Acquired on
Vesting (#)
|
|
|
Value
Realized
Upon
Vesting ($)
|
|
E. D. Breen
|
|
|
|
|
|
|
|
|
|
|
16,784
|
|
|
|
$869,411
|
|
N. C. Fanandakis
|
|
|
|
|
|
|
|
|
|
|
61,297
|
|
|
|
4,045,687
|
|
J. C. Collins
|
|
|
50,316
|
|
|
$
|
914,098
|
|
|
|
17,977
|
|
|
|
1,316,729
|
|
C. M. Doyle
|
|
|
5,422
|
|
|
|
85,069
|
|
|
|
6,355
|
|
|
|
460,364
|
|
S. L. Fox
|
|
|
|
|
|
|
|
|
|
|
2,288
|
|
|
|
135,170
|
|
(1)
|
Represents the number of stock options exercised in 2016. The value realized upon exercise is computed by determining the difference between the market price at exercise and the exercise price of the options.
|
(2)
|
Represents the number of RSUs vested in 2016. The value realized upon vesting is computed by multiplying the number of units by the value of the underlying shares on the vesting date. Also shows PSUs granted in 2014,
which vested on December 31, 2016, and were paid out in March 2017. The value realized upon vesting is computed by multiplying the number of PSUs by the value of the underlying shares on March 1, 2017.
|
PENSION BENEFITS
(AS OF THE FISCAL YEAR ENDED DECEMBER 31, 2016)
The
table below shows the present value of accumulated benefits for the NEOs under the Pension Plan and the Pension Restoration Plan, as of December 31, 2016. For a complete understanding of the table, refer to the narrative discussion that
follows.
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of
Years of
Credited
Service (#)
|
|
Present
Value of
Accumulated
Benefit ($)
(1)
|
E. D.
Breen
(2)
|
|
Pension Plan
|
|
|
|
|
|
|
Pension Restoration Plan
|
|
|
|
|
N. C. Fanandakis
|
|
Pension Plan
|
|
38
|
|
$1,766,336
|
|
|
Pension Restoration Plan
|
|
38
|
|
7,455,860
|
J. C. Collins
|
|
Pension Plan
|
|
32
|
|
1,292,581
|
|
|
Pension Restoration Plan
|
|
32
|
|
3,994,720
|
C. M. Doyle
|
|
Pension Plan
|
|
21
|
|
588,437
|
|
|
Pension Restoration Plan
|
|
21
|
|
1,264,788
|
S. L.
Fox
(2)
|
|
Pension Plan
|
|
|
|
|
|
|
Pension Restoration Plan
|
|
|
|
|
(1)
|
The value that an executive will actually receive under these benefit plans will differ to the extent that facts and circumstances vary from the assumptions on which these amounts are based.
|
(2)
|
Mr. Breen and Ms. Fox were hired after December 31, 2006, and are not eligible to participate in the Companys Pension or Pension Restoration Plans.
|
Narrative Discussion of Pension Benefits
The NEOs participate in the Pension
Plan, a tax-qualified defined benefit pension plan that covers a majority of our U.S. employees, except those hired or rehired after December 31, 2006. The Pension Plan currently provides employees with a lifetime retirement income based on
years of service and the employees final average pay near retirement.
In November 2016, the Company announced changes to the U.S. pension plans. The Company
will freeze the pay and service amounts used to calculate pension benefits for active employees who participate in the U.S.
|
|
|
|
|
|
|
|
|
|
|
Proxy Statement for 2017 Annual Meeting of
Stockholders
|
|
55
|
Compensation of Executive Officers
"
Pension Benefits
pension plans at the earlier of the effective date of the first of the Intended Business Separations or November 30, 2018 (the Effective Date). See
Note 2 to the Consolidated Financial Statements in DuPonts Annual Report on Form 10-K for the year ended December 31, 2016, for further discussion of the Intended Business Separations.
The normal form of benefit for married individuals is a 50% qualified joint and survivor annuity. The normal form of benefit for unmarried individuals is a single life
annuity, which is actuarially equivalent to the normal form for married individuals. Normal retirement age under the Pension Plan is generally age 65, and benefits are vested after five years of service. Under the provisions of the Pension Plan,
employees are eligible for unreduced pensions when they meet one of the following conditions:
|
|
Age 65 or older with at least five years of service
|
|
|
Age 58 with age plus service equal to or greater than 85
|
An employee who is not eligible for retirement with an
unreduced pension is eligible for retirement with a reduced pension if he is at least age 50 with at least 15 years of service. His pension is reduced by the greater of 5% for every year that his age plus service is less than 85 or 5% for every year
that his age is less than 58. In no event will the reduction exceed 50%. As of December 31, 2016, Mr. Fanandakis is eligible for an unreduced pension, and Mr. Collins is eligible for a reduced pension. Mr. Breen and Ms. Fox
were hired after December 31, 2006, and are not eligible to participate in the Companys Pension or Pension Restoration Plans.
The primary pension
formula that applies to the NEOs provides a monthly retirement benefit equal to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
|
1.5% of Average
Monthly
Compensation
|
|
x
|
|
Years of
Service through
12/31/07
|
|
)
|
|
-
|
|
[
|
|
50% of Monthly
Primary Social
Security Benefit
|
|
x
|
|
(
|
|
Years of
Service through
12/31/07
|
|
/
|
|
Total
Years of Service through the
Effective Date
|
|
)]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PLUS
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
|
0.5% of Average
Monthly
Compensation
|
|
x
|
|
Years of
Service from 1/1/2008
through the Effective Date
|
|
)
|
|
-
|
|
[
|
|
16.67% of Monthly Primary Social Security Benefit
|
|
x
|
|
(
|
|
Years of
Service from
1/1/2008 through the Effective Date
|
|
/
|
|
Total
Years of
Service
through the
Effective Date
|
|
)]
|
Average monthly compensation is based on the employees three highest-paid years or, if greater, the 36 consecutive highest-paid
months. Compensation for a given month includes regular compensation plus one-twelfth of an individuals STIP award for the relevant year. Other bonuses are not included in the calculation of average monthly compensation. Compensation for
service after the Effective Date is disregarded in determining the average monthly compensation.
If benefits provided under the Pension Plan exceed the applicable
IRC compensation or benefit limits, the excess benefit is paid under the Pension Restoration Plan, an unfunded nonqualified plan. Effective January 1, 2007, the form of benefit under the Pension Restoration Plan for participants not already in
pay status is a lump sum. The mortality tables and interest rates used to determine lump sum payments are the Applicable Mortality Table and the Applicable Interest Rate prescribed by the Secretary of the Treasury in IRC Section 417(e)(3).
The Company does not grant any extra years of credited service for pension benefit purposes.
Key actuarial assumptions for the present value of accumulated benefit calculation can be found in Note 17 (Long-Term Employee Benefits) to the Consolidated
Financial Statements in DuPonts Annual Report on Form 10-K for the year ended December 31, 2016. All other assumptions are consistent with those used in the Long-Term Employee Benefits Note, except that the present value of
accumulated benefit uses a retirement age at which the NEO may retire with an unreduced benefit under the Pension Plan. The valuation method used for determining the present value of the accumulated benefit is the traditional unit credit cost
method.
|
|
|
|
|
|
|
|
|
|
56
|
|
Proxy Statement for 2017 Annual Meeting of Stockholders
|
|
Compensation of Executive Officers
"
Nonqualified Deferred Compensation
NONQUALIFIED DEFERRED COMPENSATION
The following table provides information
on DuPonts defined contribution or other plans that provide for deferrals of compensation on a basis that is not tax-qualified. For a complete understanding of the table, refer to the narrative discussion that follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Contributions
in 2016
(1)
|
|
|
Registrant
Contributions
in 2016
(2)
|
|
|
Aggregate
Earnings
in 2016
(3)
|
|
|
Aggregate
Withdrawals /
Distributions
in 2016
|
|
|
Aggregate
Balance as of
12/31/2016
(4)
|
|
E. D. Breen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSRP
|
|
$
|
74,100
|
|
|
$
|
107,400
|
|
|
$
|
9,863
|
|
|
|
|
|
|
$
|
191,363
|
|
Deferred STIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred LTI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N. C. Fanandakis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSRP
|
|
|
49,800
|
|
|
|
72,750
|
|
|
|
23,853
|
|
|
|
|
|
|
|
1,212,067
|
|
Deferred STIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred LTI
|
|
|
|
|
|
|
|
|
|
|
7,594
|
|
|
|
|
|
|
|
63,010
|
|
Management Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. C. Collins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSRP
|
|
|
43,080
|
|
|
|
62,870
|
|
|
|
16,070
|
|
|
|
|
|
|
|
699,043
|
|
Deferred STIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred LTI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. M. Doyle
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSRP
|
|
|
32,400
|
|
|
|
47,038
|
|
|
|
5,608
|
|
|
|
|
|
|
|
157,722
|
|
Deferred STIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred LTI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S. L. Fox
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSRP
|
|
|
|
|
|
|
17,150
|
|
|
|
2,106
|
|
|
|
|
|
|
|
33,442
|
|
Deferred STIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred LTI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Base salary deferred under the RSRP and Management Deferred Compensation Plan (MDCP) for each of the NEOs is reported as 2016 compensation to such NEOs in the 2016 Summary Compensation Table. Those amounts
are: E. D. Breen, $67,500; N. C. Fanandakis, $39,000; J. C. Collins, $35,000; C. M. Doyle, $31,250 and S. L. Fox, $0.
|
(2)
|
The amounts in this column represent company contributions made under the RSRP, which are also included in the 2016 Summary Compensation Table.
|
(3)
|
Earnings represent returns on investments in seven core investment alternatives, interest accruals on cash balances, DuPont Common Stock returns, and dividend reinvestments. Interest is accrued on cash balances based on
a rate that is traditionally less than 120% of the applicable federal rate, and dividend equivalents are accrued at a non-preferential rate. In addition, the other core investment alternatives are a subset of the investment alternatives available to
all employees under the RSP. Accordingly, these amounts are not considered above-market or preferential earnings for purposes of, and are not included in, the 2016 Summary Compensation Table.
|
(4)
|
The table below reflects amounts reported in the aggregate balance at last fiscal year-end that were previously reported as compensation to the NEO in DuPonts Summary Compensation Table for previous years.
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
RSRP
|
|
Deferred
STIP
|
|
Deferred
LTI
|
|
MDCP
|
|
TOTAL
|
E. J. Breen
|
|
|
|
|
|
|
|
|
|
|
N. C. Fanandakis
|
|
$950,674
|
|
|
|
|
|
|
|
$950,674
|
J. C. Collins
|
|
107,375
|
|
|
|
|
|
|
|
107,375
|
C. M. Doyle
|
|
59,870
|
|
|
|
|
|
|
|
59,870
|
S. L. Fox
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proxy Statement for 2017 Annual Meeting of
Stockholders
|
|
57
|
Compensation of Executive Officers
"
Nonqualified Deferred Compensation
Narrative Discussion of the Nonqualified Deferred Compensation Table
DuPont
offers several nonqualified deferred compensation programs under which participants voluntarily elect to defer some portion of base salary, STIP, or LTI awards until a future date. Deferrals are credited to an account and earnings are calculated
thereon in accordance with the applicable investment option or interest rate. With the exception of the RSRP, there are no Company contributions or matches. The RSRP was adopted to restore Company contributions that would be lost due to IRC limits
on compensation that can be taken into account under DuPonts tax-qualified savings plan. Amounts shown in the Nonqualified Deferred Compensation Table as Deferred STIP or Deferred LTI represent deferrals of short- and long-term awards prior to
the adoption of the MDCP in May 2008.
The following provides an overview of the various deferral options as of December 31, 2016.
Base Salary
Under the RSRP, an NEO can elect to defer eligible
compensation (generally, base salary plus STIP) that exceeds the regulatory limits ($265,000 in 2016) in increments of 1% up to 6%. DuPont matches participant contributions on a dollar-for-dollar basis up to 6% of eligible pay. DuPont also makes an
additional contribution of 3% of eligible compensation. Participant investment options under the RSRP mirror the options available under the qualified plan. Distributions may be made in the form of a lump sum or annual installments after separation
from service.
Under the MDCP, an NEO can elect to defer the receipt of up to 60% of his/her base salary. DuPont does not match base salary deferrals under the
MDCP. Participants may select from among seven core investment options under the MDCP for base salary deferrals, including DuPont Common Stock units with dividend equivalents credited as additional stock units. In general, distributions may be made
in the form of a lump sum at a specified future date prior to separation from service or a lump sum or annual installments after separation from service.
STIP
Under the RSRP, an NEO can elect to defer eligible compensation (generally, base salary plus STIP) that exceeds the regulatory limits ($265,000 in 2016) in
increments of 1% up to 6%. DuPont matches participant contributions on a dollar-for-dollar basis up to 6% of eligible pay. DuPont also makes an additional contribution of 3% percent of eligible compensation. Participant investment options under the
RSRP mirror the options available under the qualified plan. Distributions may be made in the form of a lump sum or annual installments after separation from service.
Under the MDCP, an NEO can elect to defer the receipt of up to 60% of his/her STIP award. DuPont does not match STIP deferrals under the MDCP. Participants may select
from among seven core investment options under the MDCP for STIP deferrals, including DuPont Common Stock units with dividend equivalents credited as additional stock units. In general, distributions may be made in the form of a lump sum at a
specified future date prior to separation from service or a lump sum or annual installments after separation from service.
LTI
Under the MDCP, an NEO can elect to defer the receipt of 100% of his/her LTI awards (RSUs and/or PSUs). DuPont does not match LTI deferrals under the MDCP. LTI
deferrals under the MDCP are in the form of DuPont Common Stock units with dividend equivalents credited as additional stock units.
|
|
|
|
|
|
|
|
|
|
58
|
|
Proxy Statement for 2017 Annual Meeting of Stockholders
|
|
Compensation of Executive Officers
"
Potential Payments Upon Termination or Change in Control
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
As described in the
CD&A, the Company adopted a Senior Executive Severance Plan in 2013. For a description of the plan, see
Components of Our Executive Compensation Program Change in Control Severance Benefits
. Potential payments under the plan
are reflected in the table that follows. The table also includes potential payments under the EIP. The treatment of benefits under each plan on termination or change in control is detailed in the footnotes to the table.
The following information does not quantify payments under plans that are generally available to all salaried employees, similarly situated to the NEOs in age, years of
service, date of hire, etc., and that do not discriminate in scope, terms, or operation in favor of executive officers. For example, all participating employees who terminated on December 31, 2016, are entitled to receive any STIP awards under
the EIP for 2016. See also the Pension Benefits and Nonqualified Deferred Compensation tables and accompanying narrative discussions for benefits or balances, as the case may be, under those plans as of December 31, 2016.
Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be
different. Factors that could affect those amounts include the timing during the year of any such event, DuPonts stock price and the executives age.
If
an individual engages in misconduct, we may demand that he/she repay any long-term or short-term incentive award, or cash payments received as a result of such an award, within 10 days following written demand by DuPont. See the discussion
How We
Manage Compensation Risk Compensation Recovery Policy (Clawbacks).
|
|
|
|
|
|
|
|
|
|
|
Proxy Statement for 2017 Annual Meeting of
Stockholders
|
|
59
|
Compensation of Executive Officers
"
Potential Payments Upon Termination or Change in Control
For the CEO and other NEOs, the benefits that would become payable upon termination of employment, death, disability, or change in control as of December 31, 2016,
are outlined below, based on DuPonts closing stock price of $73.40 (as reported on the New York Stock Exchange) on that date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Form of
Compensation
(1)
|
|
Voluntary
or For
Cause
(2)
|
|
|
Termination
Due to Lack
of Work
(3)
|
|
|
Retirement
(4)
|
|
|
Death
(5)
|
|
|
Disability
(3)
|
|
|
Change in
Control
(6)
|
|
E. D. Breen
|
|
Base/STIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11,700,000
|
|
|
|
Options
(7)
|
|
|
|
|
|
$
|
1,943,995
|
|
|
$
|
1,943,995
|
|
|
$
|
1,943,995
|
|
|
$
|
1,943,995
|
|
|
|
1,943,995
|
|
|
|
RSU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSU
|
|
|
|
|
|
|
2,542,032
|
|
|
|
2,542,032
|
|
|
|
2,542,032
|
|
|
|
2,542,032
|
|
|
|
8,319,376
|
|
E.D. Breen Total
|
|
|
|
|
|
|
|
|
4,486,027
|
|
|
|
4,486,027
|
|
|
|
4,486,027
|
|
|
|
4,486,027
|
|
|
|
21,963,371
|
|
E. D. Breen Tax Reimbursement
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,646,129
|
|
N. C. Fanandakis
|
|
Base/STIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,120,000
|
|
|
|
Options
|
|
|
|
|
|
$
|
678,646
|
|
|
|
1,554,522
|
|
|
|
1,554,522
|
|
|
|
678,646
|
|
|
|
1,554,522
|
|
|
|
RSU
|
|
|
|
|
|
|
764,584
|
|
|
|
764,584
|
|
|
|
764,584
|
|
|
|
764,584
|
|
|
|
764,584
|
|
|
|
PSU
|
|
|
|
|
|
|
1,542,450
|
|
|
|
1,542,450
|
|
|
|
1,542,450
|
|
|
|
1,542,450
|
|
|
|
3,526,797
|
|
N. C. Fanandakis Total
|
|
|
|
|
|
|
|
|
2,985,680
|
|
|
|
3,861,556
|
|
|
|
3,861,556
|
|
|
|
2,985,680
|
|
|
|
8,965,903
|
|
J. C. Collins
|
|
Base/STIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,800,000
|
|
|
|
Options
|
|
|
|
|
|
|
451,275
|
|
|
|
N/A
|
|
|
|
1,063,556
|
|
|
|
451,275
|
|
|
|
1,063,556
|
|
|
|
RSU
|
|
|
|
|
|
|
4,587,980
|
|
|
|
N/A
|
|
|
|
7,925,260
|
|
|
|
7,925,260
|
|
|
|
7,925,260
|
|
|
|
PSU
|
|
|
|
|
|
|
1,018,947
|
|
|
|
N/A
|
|
|
|
1,018,947
|
|
|
|
1,018,947
|
|
|
|
2,376,986
|
|
J. C. Collins Total
|
|
|
|
|
|
|
|
|
6,058,202
|
|
|
|
N/A
|
|
|
|
10,007,763
|
|
|
|
9,395,482
|
|
|
|
14,165,802
|
|
J. C. Collins Tax Reimbursement
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,821,659
|
|
C. M. Doyle
|
|
Base/STIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500,000
|
|
|
|
Options
|
|
|
|
|
|
|
275,889
|
|
|
|
N/A
|
|
|
|
726,837
|
|
|
|
275,889
|
|
|
|
726,837
|
|
|
|
RSU
|
|
|
|
|
|
|
4,314,705
|
|
|
|
N/A
|
|
|
|
5,983,383
|
|
|
|
5,983,383
|
|
|
|
5,983,383
|
|
|
|
PSU
|
|
|
|
|
|
|
607,542
|
|
|
|
N/A
|
|
|
|
607,542
|
|
|
|
607,542
|
|
|
|
1,537,510
|
|
C. M. Doyle Total
|
|
|
|
|
|
|
|
|
5,198,136
|
|
|
|
N/A
|
|
|
|
7,317,762
|
|
|
|
6,866,814
|
|
|
|
10,747,730
|
|
C. M. Doyle Tax Reimbursement
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,428,851
|
|
S. Fox
|
|
Base/STIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,456,800
|
|
|
|
Options
|
|
|
|
|
|
|
333,161
|
|
|
|
N/A
|
|
|
|
966,403
|
|
|
|
333,161
|
|
|
|
966,403
|
|
|
|
RSU
|
|
|
|
|
|
|
2,638,160
|
|
|
|
N/A
|
|
|
|
2,638,160
|
|
|
|
2,638,160
|
|
|
|
2,638,160
|
|
|
|
PSU
|
|
|
|
|
|
|
1,098,747
|
|
|
|
N/A
|
|
|
|
1,098,747
|
|
|
|
1,098,747
|
|
|
|
2,525,327
|
|
S. Fox Total
|
|
|
|
|
|
|
|
|
4,070,068
|
|
|
|
N/A
|
|
|
|
4,703,310
|
|
|
|
4,070,068
|
|
|
|
8,586,690
|
|
S. Fox Tax Reimbursement
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,048,436
|
|
(1)
|
Since 2012, the award agreements for stock options, RSUs and PSUs contain restrictive covenants that may result in forfeiture of unvested stock options, RSUs and PSUs upon a breach of confidentiality, nonsolicitation
and noncompetition obligations during employment and after termination of employment (for a period of one year for nonsolicitation and noncompetition).
|
(2)
|
Upon voluntary termination or termination for cause, the various Company plans and programs provide for forfeiture of all unvested stock options, RSUs and PSUs. To the extent that an NEO is retirement-eligible, unvested
stock options, RSUs and/or PSUs are treated as if the NEO has retired.
|
(3)
|
Upon termination for lack of work or disability:
|
|
|
|
Vested options may be exercised during the one-year period following termination. During the one-year period, options continue to become exercisable in accordance with the three-year vesting schedule, as if the employee
had not separated from service. Amount shown represents the in-the-money value of those options that would vest within the one-year period following December 31, 2016.
|
|
|
|
RSUs that are awarded as part of the annual award to eligible employees are automatically vested and paid out. Special or one time awards are forfeited upon a termination for lack of work. Upon disability, special or
one time RSU awards are automatically vested and paid out. Amount shown for termination due to lack of work represents the value of regular annual RSUs as of December 31, 2016. Amount shown for disability represents the value of all RSUs as of
December 31, 2016.
|
|
|
|
PSUs remain subject to original performance period, prorated for the number of months of service completed during the performance period. Amount shown represents the prorated target value of PSUs as of December 31,
2016.
|
|
To the extent that an NEO is retirement-eligible, unvested stock options, RSUs and/or PSUs are treated as if the NEO has retired.
|
|
|
|
|
|
|
|
|
|
|
60
|
|
Proxy Statement for 2017 Annual Meeting of Stockholders
|
|
Compensation of Executive Officers
"
Potential Payments Upon Termination or Change in Control
(4)
|
Upon retirement, NEOs are treated as if they had not separated from service and:
|
|
|
|
Options continue vesting in accordance with the three-year vesting schedule. Amount shown represents the in-the-money value of unvested options as of December 31, 2016.
|
|
|
|
Restrictions on the regular annual RSUs lapse on the original schedule. Special or one time RSU awards are forfeited. Amount shown represents the value of regular annual RSUs as of December 31, 2016.
|
|
|
|
PSUs are subject to the original performance period, prorated for the number of months of service completed during the performance period. Amount shown represents the prorated target value of PSUs as of
December 31, 2016.
|
|
|
|
As of December 31, 2016, Messrs. Collins & Doyle and Ms. Fox were not retirement eligible under the EIP.
|
|
Regardless of the above, any retirement within six months of the grant date results in forfeiture of the award.
|
|
|
|
Options are fully vested and exercisable and expire two years following death or at the end of the original term, whichever is shorter. Amount shown represents the in-the-money value of unvested options as of
December 31, 2016.
|
|
|
|
All RSUs are automatically vested and paid out. Amount shown represents the value of all RSUs as of December 31, 2016.
|
|
|
|
PSUs remain subject to the original performance period, prorated for the number of months of service completed during the performance period. Amount shown represents the prorated target value as of December 31,
2016.
|
(6)
|
Upon change in control:
|
|
|
|
For awards granted between 2008 and 2011, treatment is as follows:
|
|
|
|
Stock options become fully vested and exercisable. Amount shown represents the in-the-money value of unvested options as of December 31, 2016.
|
|
|
|
Restrictions on all RSUs lapse. Amount shown represents the value of all RSUs as of December 31, 2016.
|
|
|
|
PSUs are paid at target, prorated for the number of months of service completed during the performance period. Amount shown represents the prorated target value as of December 31, 2016.
|
|
|
|
Treatment for awards made in 2012 and after varies depending on whether the Company is the surviving entity and, if not, whether the awards are assumed by an acquiring entity. Values shown in the table above assume that
the Company is not the surviving entity and the acquiring entity does not assume or otherwise provide for continuation of the awards.
|
|
|
|
Options are immediately vested and cancelled in exchange for payment in an amount equal to (i) the excess of the fair market value per share of the stock subject to the award immediately prior to the change in
control over the exercise or base price per share of stock subject to the award multiplied by (ii) the number of shares granted. Amount shown represents the in-the-money value of unvested options as of December 31, 2016.
|
|
|
|
RSUs are immediately vested and all restrictions lapse. Awards cancelled in exchange for a payment equal to the fair market value per share of the stock subject to the award immediately prior to the change in control
multiplied by the number of shares granted. Amount shown represents the value of all RSUs as of December 31, 2016.
|
|
|
|
PSUs are converted into time-vested RSUs at target, without proration and treated consistently with time-vested awards as described above. Amount shown represents the target value as of December 31, 2016.
|
|
In the event that the company is the surviving entity, or the acquiring entity assumes or otherwise provides for continuation of the awards, all stock options and RSUs remain in place or substitute awards are issued.
PSUs are converted into time-vested RSUs at target, without proration and treated consistently with time-vested awards.
|
|
Upon termination without cause or termination for good reason within two years after a change in control, all awards vest in full. Options remain exercisable for two years, or the original expiration date, whichever
first occurs.
|
|
Regardless of the foregoing, any termination within six months of the grant date results in forfeiture of the award.
|
|
Under the Senior Executive Severance Plan, a change in control must occur and the executives employment must be terminated within two years following the change in control, either by the Company without cause or
the executive for good reason (often called a double trigger). Benefits provided under the plan include: (i) lump sum cash payment equal to two times (three times for the CEO) the sum of the executives base salary and target
annual bonus; (ii) a lump sum cash payment equal to the pro-rated portion of the executives target annual bonus for the year of termination; and (iii) continued health and dental benefits, financial counseling, tax preparation
services and outplacement services for two years (three years for the CEO) following the date of termination.
|
(7)
|
The terms of the options granted to Mr. Breen in November of 2015 provide that as long as he remains employed for six months following the grant that his options will continue vesting in the case of a mutually
agreed upon retirement date and transition plan or accelerate vesting in the event of death, disability or lack of work.
|
(8)
|
Upon a change in control, if applicable, the tax reimbursement represents a payment in respect of amounts subject to the excise tax under Section 4999 of the Code such that, on a net after-tax basis, the executive
would be in the same position as if no such excise tax had been imposed.
|
|
|
|
|
|
|
|
|
|
|
|
Proxy Statement for 2017 Annual Meeting of
Stockholders
|
|
61
|
Proposal
MANAGEMENT PROPOSAL TO APPROVE, BY ADVISORY VOTE, EXECUTIVE COMPENSATION
Congress adopted
Section 14A of the Securities Exchange Act of 1934, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Under this regulation, the Board is giving our stockholders an annual opportunity to approve on an advisory,
or non-binding, basis, the compensation of our named executive officers, as disclosed in this Proxy Statement. The Board of Directors recommends that you vote FOR this proposal.
DuPonts executive compensation programs are discussed in detail in the CD&A. Our executive compensation programs are designed to attract, motivate, reward and
retain the high-quality executives necessary for Company leadership and accomplishment of our strategies. The following principles guide the design and administration of those compensation programs:
There should be a strong link between pay and performance.
Executives interests should be aligned with stockholders interests.
Programs should reinforce business strategies and drive long-term sustained
stockholder value.
Our executive programs are structured so that at least 80% of targeted TDC is at risk, and fluctuates with our financial results and share
price. We believe this motivates executives to consider the impact of their decisions on stockholder value.
Our annual incentive plan is structured to create a
strong link to our financial and operational performance by rewarding annual performance on EPS, operating earnings and revenue growth.
The long-term incentive
program included performance measures such as long-term revenue growth and TSR to assure executive alignment with stockholders.
In 2016, our compensation actions
closely paralleled our Companys performance, as shown in the table below and in the CD&A.
|
Short-Term Performance vs.
Short-Term Incentive Payments
|
GAAP EPS increased
36%, Operating EPS
(1)
increased 21%
|
Revenue was down
2%
|
Our performance
resulted in an 83-point increase in the NEO average short-term (annual) incentive payout factor (40% of target in 2015 to 123% of target in 2016)
|
|
Long-Term Performance vs.
Long-Term Performance based Payments (PSU)
|
18
th
percentile rank of the peer group for revenue growth
|
71
st
percentile rank of the peer group for TSR
(2)
|
Our performance in
revenue growth and TSR over three-year performance period resulted in PSU payouts at 91% of target
|
(1)
|
See Appendix B for additional information regarding this and other non-GAAP financial measures.
|
(2)
|
TSR (stock price appreciation plus dividends) for the 2014 PSU program was calculated based on a practice predominant among our peer group members for compensation purposes and in accordance with the terms of the plan.
The underlying TSR was calculated using a 20-day closing average stock price immediately prior to the beginning of the three-year performance period and the average closing stock price over the last 20 days of that performance period.
|
The Boards executive compensation practices are the result of the comprehensive process outlined in the CD&A. The Committee considers a
broad number of facts and circumstances in finalizing NEO pay decisions, including business results, market competitiveness, peer group competitiveness, pay equity multiples, tally sheets, experience and individual performance.
The Committee also regularly reviews DuPonts compensation programs to assess whether those programs are motivating the desired behaviors while driving
DuPonts performance and encouraging the appropriate levels of risk-taking.
Because they do not support our guiding principles, we do NOT offer our executive
officers the following: employment agreements (except for newly hired executives when there is a demonstrated business need); tax reimbursements (other than in connection with relocation benefits) and, effective in December 2015 and in limited
circumstances, in connection with a qualifying termination in connection with a change in control (for
|
|
|
|
|
|
|
|
|
|
62
|
|
Proxy Statement for 2017 Annual Meeting of Stockholders
|
|
Proposal
3
"
Management Proposal to Approve, by Advisory Vote, Executive Compensation
additional information, see
Compensation Discussion and Analysis Components of Our Executive Compensation Program Change in Control Severance
Benefits
); supplemental executive retirement plans; additional years of credited service in pension plans; stock option repricing or repurchase of underwater stock options for cash.
With the exception of 2016, in every year that our stockholders have had the opportunity to approve on an advisory, or non-binding, basis, the compensation of our named
executive officers, at least 94% of our stockholders have voted to approve our executive compensation. In 2016, about 63% of our stockholders voted to approve our executive compensation. This decrease in stockholder approval resulted from the
addition of an excise tax reimbursement to the Senior Executive Severance Plan in 2015 to incentivize newly hired or elected NEOs, each of whom would be disproportionately adversely impacted should he/she lose his/her job following a change in
control. DuPont determined, particularly in light of the contemplated merger of equals with Dow and Intended Business Separations, that changes were appropriate: (i) to provide reasonable assurance that the participants, especially those with a
short tenure or a newly enhanced role at the Company, realize the benefit the Company intended to provide under the plan and (ii) during this time of uncertainty, to incentivize those executives to remain objective, avoid conflicts of interest
and stay focused on executing the merger and Intended Business Separations to maximize stockholder value.
|
|
|
|
|
PROPOSAL 3:
MANAGEMENT PROPOSAL TO APPROVE, BY ADVISORY VOTE, EXECUTIVE COMPENSATION
|
|
|
|
The Board of Directors Recommends that you vote FOR the following resolution:
RESOLVED that the stockholders approve, on an advisory basis, the NEO compensation disclosed in
this Proxy Statement in accordance with Securities and Exchange Commissions rules on compensation disclosure, including the CD&A, the compensation tables and any related material disclosed in this Proxy Statement.
This vote is advisory in nature, which means that it is not binding on the Company, its Board of
Directors or the Human Resources and Compensation Committee. However, the Human Resources and Compensation Committee fully intends to give meaningful and careful consideration to the vote results and is committed to take any actions it deems
necessary or appropriate in light of those results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proxy Statement for 2017 Annual Meeting of
Stockholders
|
|
63
|
Proposal
MANAGEMENT PROPOSAL TO RECOMMEND, BY ADVISORY VOTE, FREQUENCY OF ADVISORY VOTES ON EXECUTIVE COMPENSATION
As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Congress adopted Section 14A of the Securities Exchange Act of 1934, pursuant to
which the Board is giving our stockholders this opportunity to approve on an advisory, or non-binding basis, the compensation of our named executive officers, as disclosed in this Proxy Statement. Section 14A also allows stockholders to vote,
at least once every six years, on the frequency with which such vote should occur, the options being once every one, two or three years. The Board of Directors recommends that the vote occur every year.
After careful consideration, our Board of Directors recommends that the stockholder say on executive pay vote occur annually. The Board of Directors
believes that an annual vote is in the best interests of our stockholders because it allows stockholders to provide direct, ongoing input on our compensation philosophy, policies and practices, as disclosed in our proxy statement each year. An
annual advisory vote also provides the Human Resources and Compensation Committee with the opportunity to evaluate its compensation decisions taking into account the timely feedback provided by stockholders. In addition, the Board of Directors
recognizes that an annual advisory vote to approve executive compensation is consistent with the Companys policy of facilitating communications of stockholders with the Board of Directors and its various committees, including the Human
Resources and Compensation Committee.
Stockholders may cast a vote on the preferred voting frequency by selecting the option of one, two or three years (or
abstain) when voting in response to the resolution set forth below.
|
|
|
|
|
PROPOSAL 4:
MANAGEMENT PROPOSAL TO RECOMMEND, BY ADVISORY VOTE, FREQUENCY OF ADVISORY VOTES ON EXECUTIVE COMPENSATION
|
|
|
|
The Board of Directors Recommends that you vote ONE YEAR on the following
resolution:
RESOLVED that the stockholders determine, on an advisory basis,
whether the preferred frequency of the stockholder advisory vote to approve the named executive officer compensation disclosed in this Proxy Statement should be every one, two or three years.
This vote is advisory in nature, which means that it is not binding on the Company, its Board of
Directors or the Human Resources and Compensation Committee. However, the Human Resources and Compensation Committee fully intends to give meaningful and careful consideration to the vote results and is committed to take any actions it deems
necessary or appropriate in light of those results.
|
|
|
ONE YEAR
|
|
|
|
|
|
|
|
|
|
|
|
|
64
|
|
Proxy Statement for 2017 Annual Meeting of Stockholders
|
|
|
|
|
STOCKHOLDER
PROPOSALS
|
|
The Board welcomes
open dialogue on the topic presented in the following stockholder proposal. This proposal may contain inaccurate assertions or other errors, which the Board has not attempted to correct. However, the Board has thoroughly considered the proposal and
recommends a vote as set forth below.
|
PROPOSAL
STOCKHOLDER PROPOSAL ON EXECUTIVE COMPENSATION REPORT
The International Brotherhood of DuPont Workers,
P.O. Box 10, Waynesboro, VA 22980, owner of 60 shares of DuPont Common Stock, has given notice that it will introduce the following resolution and statement in support thereof:
RESOLVED: That the stockholders of E. I. du Pont de Nemours and Company, assembled in annual meeting in person and by proxy, hereby recommend the following
nonbinding proposal: that the Board of Directors prepare a report, to be made available to shareholders four months after the 2017 Annual Meeting, that shall review the compensation packages provided to senior executives of the Company and address
the following:
|
1.
|
Comparison of compensation packages for senior executives with that provided to the lowest paid Company employees.
|
|
2.
|
Whether there should be a ceiling on compensation provided to senior executives so as to prevent the possibility of excessive compensation.
|
|
3.
|
Whether compensation of senior executives should be adjusted in a situation where there is a stated need for employees to be laid off from work.
|
Stockholders Statement
Pay for senior executives of
DuPont is determined by its Board of Directors. According to the March 2016 proxy statement, members of the Board receive annual compensation ranging from $305,000 to $330,000 for their service on the Board.
Yet it does not appear that these members of the Board are required to attend any meetings or even participate in conference calls. Nor is it clear
precisely what work, if any, is performed by any individual member of the Board.
Given this extraordinarily generous compensation provided to the
members of the Board, is it any surprise that these same members have approved extraordinarily generous compensation for senior executives of DuPont? Can we just view this back and forth between the Board and senior executives as simply that of
one hand washing the other?
Not surprisingly, virtually nothing is said in the proxy statement regarding how the employees of DuPont
those who are not executives are compensated. This failure is no surprise given that over the past several years employees have been granted the most minimal of wage increases averaging about 2% and have experienced the
gutting of their pension plan.
This proposal seeks to have the Board address these issues of compensation, issues involving not just the
compensation of executives, but also how executives are compensated in relation to how non- executive employees of this company are compensated.
If you
AGREE
with this proposal, please mark your proxy
FOR
this resolution.
|
|
|
|
|
|
|
|
|
|
|
Proxy Statement for 2017 Annual Meeting of
Stockholders
|
|
65
|
Proposal 5 Stockholder Proposal on Executive Compensation Report
"
Position of the Board of Directors
|
POSITION OF THE BOARD OF
DIRECTORS
The Board of Directors
recommends that you vote AGAINST this proposal
The Board of Directors shares the underlying objective for the Companys compensation policy and programs is to be linked to business and
individual performance and shareholder value. Our compensation programs for all employees reflect competitive positioning, internal equity, and the value the individual brings to the position. The Board believes that the objective of this proposal
is being addressed through the engaged oversight and work of the Human Resources and Compensation Committee as described in the Compensation Discussion and Analysis (CD&A) set forth on pages 31-47 of this Proxy Statement.
The Securities and Exchange Commission has adopted extensive rules that provide
for expanded disclosure of compensation-related information and additional transparency. In complying with these rules, the Company has fully disclosed the relevant details of its executive compensation practices in this Proxy Statement so that
stockholders may evaluate those practices. The Boards executive compensation practices are the result of the comprehensive process outlined in the CD&A above. That process requires the Committee to make many interrelated decisions and
consider numerous competing interests. The Committee goes to great lengths to illustrate its pay for performance approach to executive compensation on pages 36-40 of the CD&A. In addition, stockholders have the right to vote, on an advisory
basis, on the executive compensation disclosed in this Proxy Statement.
Last year, shareholders who voted approved the compensation of our NEOs. The support is not only a reflection of our executive compensation
disclosure and transparency, but also our strong culture of corporate governance. Ten of the eleven Board members, and all committee members, are independent under the Boards Corporate Governance Guidelines and applicable regulatory and
listing standards. In 2016, 12 meetings of the Board were held. Each director attended at least 89% of the aggregate number of meetings of the Board and the committees of the Board on which the director served. Attendance at these meetings averaged
97% among all directors in 2016.
For the foregoing reasons, the Board
believes that the report requested by the proposal is not necessary.
|
|
|
|
PROPOSAL 5.
|
|
The Board of Directors recommends that you vote AGAINST this proposal.
|
STOCKHOLDER PROPOSAL ON EXECUTIVE COMPENSATION
REPORT
|
|
AGAINST
|
|
|
|
|
|
|
|
|
|
|
|
66
|
|
Proxy Statement for 2017 Annual Meeting of Stockholders
|
|
|
|
|
STOCKHOLDER PROPOSALS
|
|
The Board welcomes
open dialogue on the topic presented in the following stockholder proposal. This proposal may contain inaccurate assertions or other errors, which the Board has not attempted to correct. However, the Board has thoroughly considered the proposal and
recommends a vote as set forth below.
|
PROPOSAL
STOCKHOLDER PROPOSAL ON ACCIDENT RISK REDUCTION REPORT
The United
Steelworkers, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW), Five Gateway Center, Pittsburgh, PA owner of 80 shares of DuPont common stock, has given notice that it will introduce
the following resolution and statement in support thereof:
RESOLVED: Shareholders of E. I. Du Pont de Nemours and Company (DuPont) urge the Board of Directors to
report by the 2018 annual meeting, at reasonable cost and excluding proprietary and personal information, on the steps DuPont has taken to reduce the risk of accidents. The report should describe the Boards oversight of Process Safety
Management, staffing levels, inspection and maintenance of facilities and other equipment.
Stockholders Statement
On November 14, 2014, the DuPont Crop Protection unit in LaPorte, TX had an accidental leak of 24,000 pounds of the toxic gas methyl mercaptan that claimed the
lives of four DuPont employees. In 2010, one worker was killed when a steel hose carrying phosgene gas burst in Belle, WV and later that year, a welder perished in an explosion at the Buffalo, NY facility.
The financial fallout from these accidents was also significant. DuPont had initial fines totaling $372,000 issued by OSHA for the LaPorte accident. The Company also
was initially fined $43,000 in the Belle fatality and $61,500 for the fatality in Buffalo (this fine was eventually reduced to $49,000).
From January 2010 through
June 2015, DuPont has had nearly $850,000 in initial OSHA fines for 97 violations most categorized as Serious, with a number listed as Willful and Repeat. In July 2015, DuPont LaPorte was placed in the
severe violator enforcement program by OSHA where it will remain for the next three years.
An important segment of DuPonts revenue is its
workplace safety consulting business DuPont Sustainable Solutions. Therefore, it is troubling from a reputational standpoint when an OSHA assistant director stated,
DuPont promotes itself as having
a
world-class
safety culture and even markets its safety expertise to other employers, but these four preventable workplace deaths and the very serious hazards we uncovered at this facility are evidence of
a
failed safety program.
In its September 2015 interim investigation report on the LaPorte fatalities, the Chemical Safety and Hazard Investigation Board (CSB) recommended the Company address
several key Health and Safety issues:
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Inherently Safer Design Review
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Ensure Manufacturing Building is Safe for Workers
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Ensure Relief System Design is Safe for Workers and the Public
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Perform More Robust Process Hazard Analysis
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Ensure Active Workforce Participation
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Public Transparency and Accountability
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The CSB safety recommendations especially regarding public transparency
and accountability are critical for DuPonts shareholders. Our company currently challenges shareholders to a wide-ranging search of reports and websites to find some of the relevant material requested by Proponents. We believe our approach to
public reporting simplifies this matter to the benefit of all shareholders.
While DuPont frequently assures shareholders that safety is a Core Value,
the recent fatal accidents, coupled with many other violations indicate an alarming pattern that must be altered. The threat of another catastrophic event is a significant and material risk for shareholders, which requires a higher level of
transparency than currently exists.
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Proxy Statement for 2017 Annual Meeting of
Stockholders
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67
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Proposal 6 Stockholder Proposal on Accident Risk Reduction Report
"
Position of the Board of Directors
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POSITION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that you vote
AGAINST this proposal
DuPont agrees that the safety
of its operations is critical to its employees, community and the Company. DuPonts business operations are subject to extensive federal and state safety laws and regulations, and the Company currently has in place extensive systems and
procedures designed to ensure continuous improvement in the Companys safety performance. The Board of Directors therefore believes that the concerns raised in the proposal are already being addressed.
Safety and health are core values for DuPont, and the Company is committed to
continuously improving its practices in these areas. For example, DuPont participates in the American Chemistry Councils Responsible Care program. This program is a comprehensive health, safety, security and environmental performance
improvement initiative. As a part of this program, Responsible Care companies commit to systematic, continuous improvement in process safety. DuPont undergoes certification by an independent, accredited auditor to assure the Responsible Care
structure and system are in place to measure, manage and verify performance.
The Board of Directors, including the Chief Executive Officer, is informed about pertinent safety and health issues. The Companys safety
systems and policies are in place and actions are taken to implement these policies. The Environmental Policy and Safety Committee assists the Board of Directors in fulfilling its oversight responsibilities by assessing the effectiveness of programs
and initiatives that support the Safety, Health and Environment, Product Stewardship, and Sustainability programs of the Company.
Safety is intrinsic to the Companys operations. The Company already makes safety and health data available in several different contexts. The
Company publicly reports worker safety and process safety data via the Responsible Care website. Safety and health performance data is also provided in the Companys Global Reporting Initiative Report, which is available on its website at
dupont.com. Corporate and site level safety and health statistics are also shared with Company employees. The Company must balance transparency on safety and health matters with the need to safeguard proprietary information that is central to the
Companys operations. Public reporting of information regarding process safety management oversight, inspection and maintenance of Company facilities, and staffing levels, as is suggested by the proposal, could provide an advantage to the
Companys competitors.
For the foregoing reasons, the Board believes
that the report requested by the proposal is not necessary.
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PROPOSAL 6:
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The Board of Directors recommends that you vote AGAINST this proposal.
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STOCKHOLDER
PROPOSAL
ON
ACCIDENT RISK
REDUCTION
REPORT
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AGAINST
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Other Matters.
The Board of Directors knows of no other proposals that may properly be presented for consideration at the
meeting but, if other matters do properly come before the meeting, the persons named in the proxy will vote your shares according to their best judgment.
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68
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Proxy Statement for 2017 Annual Meeting of Stockholders
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Proxy
Statement
"
Forward Looking Statements
FORWARD LOOKING STATEMENTS
This proxy statement contains
forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context,
forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as expect, anticipate, intend, plan,
believe, seek, see, will, would, target, similar expressions, and variations or negatives of these words.
Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the consummation of the proposed merger
of equals transaction with The Dow Chemical Company (the DowDuPont Merger) and the proposed transaction with FMC Corporation (FMC) in which, among other things, FMC will acquire a portion of DuPonts crop protection
business (the Divested Ag Business) and DuPont will acquire substantially all of FMCs Health and Nutrition business (the Acquired H&N Business) and the anticipated benefits thereof. These and other forward-looking
statements, including the failure to consummate the DowDuPont Merger or the proposed transaction or to make or take any filing or other action required to consummate such transactions in a timely manner or at all, are not guarantees of future
results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Forward-looking statements are not guarantees of future performance and are
based on certain assumptions and expectations of future events which may not be realized. Forward-looking statements also involve risks and uncertainties, many of which are beyond the companys control. Some of the important factors that could
cause the companys actual results to differ materially from those projected in any such forward-looking statements are: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product
life cycles; ability to respond to market acceptance, rules, regulations and policies affecting products based on biotechnology and, in general, for products for the agriculture industry; outcome of significant litigation and environmental matters,
including realization of associated indemnification assets, if any; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets
conditions, such as inflation, interest and currency exchange rates; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, natural disasters and weather events and patterns which could affect demand as well as
availability of products for the agriculture industry; ability to protect and enforce the companys intellectual property rights; successful integration of acquired businesses and separation of underperforming or non-strategic assets or
businesses; and risks related to the DowDuPont Merger Transaction and the proposed transaction. These risks include, but are not limited to, (i) the completion of the DowDuPont Merger and the proposed transaction on anticipated terms and
timing, including obtaining regulatory approvals, anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future
prospects, business and management strategies for the management, expansion and growth of the new combined companys or the Acquired H&N Business and other conditions to the completion of the DowDuPont Merger and the proposed transaction,
(ii) the possibility that the DowDuPont Merger and the proposed transaction may not close, including because the various approvals, authorizations and declarations of non-objections from certain regulatory and governmental authorities with
respect to either the DowDuPont Merger or the proposed transaction may not be obtained, on a timely basis or otherwise, including that these regulatory or governmental authorities may not approve of FMC as an acceptable purchaser of the Divested Ag
Business in connection with the proposed transaction or may impose conditions on the granting of the various approvals, authorizations and declarations of non-objections, including requiring the respective Dow, DuPont and FMC businesses, including
the Acquired H&N Business (in the case of DuPont) and the Divested Ag Business (in the case of FMC), to divest certain assets if necessary to obtain certain regulatory approvals or otherwise limiting the ability of the combined company to
integrate parts of the Dow and DuPont businesses and/or the DuPont and Health and Nutrition businesses, (iii) the ability of DuPont to integrate the Acquired H&N Business successfully and to achieve anticipated synergies,
(iv) potential litigation or regulatory actions relating to the DowDuPont Merger or the proposed transaction that could be instituted against DuPont or its directors, (v) the risk that disruptions from the DowDuPont Merger or the proposed
transaction will harm DuPonts business, including current plans and operations, (vi) the ability of DuPont to retain and hire key personnel, (vii) potential adverse reactions or changes to business relationships resulting from the
announcement or completion of the DowDuPont Merger or the
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Proxy Statement for 2017 Annual Meeting of
Stockholders
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69
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Proxy
Statement
"
Forward Looking Statements
proposed transaction, (viii) uncertainty as to the long-term value of DowDuPont common stock, (ix) continued availability of capital and financing and rating
agency actions, (x) legislative, regulatory and economic developments, (xi) potential business uncertainty, including changes to existing business relationships, during the pendency of the DowDuPont Merger or the proposed transaction that
could affect DuPonts financial performance, (xii) certain restrictions during the pendency of the DowDuPont Merger or the proposed transaction that may impact DuPonts ability to pursue certain business opportunities or strategic
transactions and (xiii) unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as managements response to any of the aforementioned factors. These
risks, as well as other risks associated with the DowDuPont Merger or the proposed transaction, are or will be more fully discussed in (1) DuPonts most recently filed Form 10-K, 10-Q and 8-K reports, (2) DuPonts subsequently
filed Form 10-K and 10-Q reports and (3) the joint proxy statement/prospectus included in the Registration Statement filed with the SEC in connection with the DowDuPont Merger. Unlisted factors may present significant additional obstacles to
the realization of forward looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems,
financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on DuPonts consolidated financial condition, results of operations, credit rating or liquidity. DuPont assumes no obligation
to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.
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70
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Proxy Statement for 2017 Annual Meeting of Stockholders
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APPENDIX A TO 2017 PROXY STATEMENT
DIRECTOR NOMINATION PROCESS
The purpose and responsibilities of the
Corporate Governance Committee, described in the Committees Charter (available on our website at
www.dupont.com
), include recommending to the Board nominees for election as directors. The Committees members are independent under
the Boards Corporate Governance Guidelines and the NYSE standard.
The Committee considers potential candidates suggested by Board members, as well as
management, stockholders and others. The Committee has engaged a director recruitment firm to assist in identifying and evaluating potential candidates.
The
Boards Corporate Governance Guidelines describe qualifications for directors. Directors are selected based on their integrity and character; sound, independent judgment; breadth of experience, insight and knowledge; business acumen; and
significant professional accomplishment. Leadership skills, scientific or technology expertise, familiarity with issues affecting global businesses in diverse industries, prior government service, and diversity are among the relevant criteria, which
will vary over time depending on the needs of the Board. Additionally, directors are expected to be willing and able to devote the necessary time, energy and attention to assure diligent performance of their responsibility.
When considering candidates for nomination, the Committee takes into account these factors to assure that new directors have the highest personal and professional
integrity, have demonstrated exceptional ability and judgment and will be most effective, in conjunction with other directors, in serving the long-term interest of all stockholders. The Committee will not nominate for election as a director a
partner, member, managing director, executive officer or principal of any entity that provides accounting, consulting, legal, investment banking or financial advisory services to DuPont.
The Committee will consider candidates for director suggested by stockholders, applying the factors for potential candidates described above and taking into account the
additional information described below. Stockholders wishing to suggest a candidate for director should write to the Corporate Secretary and include:
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A statement that the writer is a stockholder of record (or providing appropriate support of ownership of DuPont stock);
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The name of and contact information for the candidate;
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A statement of the candidates business and educational experience;
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Information regarding each of the factors described above in sufficient detail to enable the Committee to evaluate the candidate;
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A statement detailing any relationship between the candidate and any customer, supplier or competitor of DuPont or any other information that bears on potential conflicts of interest, legal considerations or a
determination of the candidates independence;
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Information concerning service as an employee, officer or member of a board of any charitable, educational, commercial or professional entity;
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Detailed information about any relationship or understanding between the proposing stockholder and the potential candidate; and
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A statement by the potential candidate that s/he is willing to be considered and to serve as a director if nominated and elected.
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Once the Committee has identified a prospective candidate, the Committee makes an initial determination as to whether to conduct a full evaluation of the candidate.
This initial determination is based on whatever information is provided to the Committee with the recommendation of the prospective candidate, as well as the Committees own knowledge of the prospective candidate. This may be supplemented by
inquiries to the person making the recommendation or others. The preliminary determination is based primarily on the likelihood that the prospective nominee can satisfy the factors described above. If the Committee determines, in consultation with
the Chair of the Board and other Board members as appropriate, that further consideration is warranted, it may gather additional information about the prospective nominees background and experience.
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Proxy Statement for 2017 Annual Meeting of
Stockholders
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A-1
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The Committee also considers other relevant factors as it deems appropriate, including the current composition of the
Board and specific needs of the Board to assure its effectiveness. In connection with this evaluation, the Committee determines whether to interview the prospective nominee. One or more members of the Committee and other directors, as appropriate,
may interview the prospective nominee in person or by telephone. After completing this evaluation, the Committee concludes whether to make a recommendation to the full Board for its consideration.
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A-2
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Proxy Statement for 2017 Annual Meeting of Stockholders
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APPENDIX B TO 2017 PROXY STATEMENT
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Dollars in millions, except
per share amounts)
The 2017 Proxy Statement includes information that does not conform to U.S. generally accepted accounting principles (GAAP) and are
considered non-GAAP measures. These measures include the companys consolidated results and earnings per share on an operating earnings basis, which excludes significant items and non-operating pension and other postemployment employee
benefit costs (operating earnings and operating EPS), total segment pre-tax operating earnings and business unit operating earnings. Management uses these measures internally for planning, forecasting and evaluating the performance of the
companys segments, including allocating resources and evaluating incentive compensation. From a liquidity perspective, management uses free cash flow, which is defined as cash provided/used by operating activities less purchases of
property, plant and equipment. Free cash flow is useful to investors and management to evaluate the companys cash flow and financial performance, and is an integral financial measure used in the companys financial planning
process. Management believes that these non-GAAP measures are meaningful to investors as they provide insight with respect to the ongoing operating results of the company and provide a more useful comparison of year-over-year
results. These non-GAAP measures supplement our GAAP disclosures and should not be viewed as an alternative to GAAP measures of performance. Reconciliations of non-GAAP measures to GAAP are provided below.
Reconciliation of Operating Earnings
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Year ended December 31,
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2016
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Income from continuing operations before income taxes (GAAP)
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$
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3,265
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Add: Significant items charge
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519
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Add: Non-operating pension and other postretirement employee benefit
(OPEB) costs
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40
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Operating Earnings before income taxes (Non-GAAP)
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$
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3,824
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Add: Corporate expenses
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340
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Add: Interest expense
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370
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Less: Net exchange losses
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106
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Segment Operating Earnings
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$
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4,640
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Add: Net operating losses - Pharma/Nonaligned businesses
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78
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Add: Other adjustment
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16
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Business Unit Operating Earnings (Non-GAAP)
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$
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4,734
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Reconciliation of Operating EPS
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Year ended December 31,
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2016
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2015
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2014
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EPS from continuing operations (GAAP)
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$2.85
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$
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2.09
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$
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3.39
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Add: Significant items charge (benefit) included in EPS
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0.48
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0.39
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(0.12
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Add: Non-operating pension and OPEB costs included in EPS
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0.02
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0.29
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0.09
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Operating EPS (Non-GAAP)
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$
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3.35
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2.77
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3.36
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Reconciliation of Free Cash Flow
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Year ended December 31,
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2016
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Cash provided by operating activities (GAAP)
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2,316
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Less: Purchases of Property, Plant and Equipment
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1,019
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(1,629
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Free Cash Flow (Non-GAAP)
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$
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2,281
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$
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687
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Proxy Statement for 2017 Annual Meeting of
Stockholders
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B-1
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E. I. DU PONT DE NEMOURS AND
COMPANY
ATTN: STOCKHOLDER RELATIONS
974 CENTRE ROAD
WILMINGTON, DE 19805
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VOTE BY INTERNET -
www.proxyvote.com
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Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Daylight Time on
the
cut-off
date (see reverse). Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
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ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
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If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via
e-mail
or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
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VOTE BY PHONE -
1-800-690-6903
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Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Daylight Time on the
cut-off
date (see reverse). Have your proxy card in hand when you call and
then follow the instructions.
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VOTE BY MAIL
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Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Votes must be received by the
cut-off
date (see reverse).
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AN ADMISSION TICKET IS REQUIRED TO ATTEND THE ANNUAL STOCKHOLDER
MEETING. SEE REVERSE SIDE.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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E22516-P89440-Z69633
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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E. I. DU PONT DE NEMOURS AND COMPANY
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A
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The Board of Directors recommends that you vote
FOR
all the nominees in Proposal 1 and
FOR
Proposals 2 and 3.
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1.
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Election of Directors
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Nominees:
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For
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Against
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Abstain
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1a. Lamberto Andreotti
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☐
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☐
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☐
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For
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Against
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Abstain
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1b. Edward D. Breen
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☐
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2. To Ratify Appointment of Independent
Registered Public Accounting Firm
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☐
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☐
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☐
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1c. Robert A. Brown
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1d. Alexander M. Cutler
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☐
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☐
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3. To Approve, by Advisory Vote, Executive
Compensation
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☐
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☐
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☐
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1e. Eleuthère I. du Pont
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☐
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☐
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☐
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1f. James L. Gallogly
1g. Marillyn A. Hewson
1h. Lois D. Juliber
1i. Lee M. Thomas
1j. Patrick J. Ward
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☐
☐
☐
☐
☐
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☐
☐
☐
☐
☐
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☐
☐
☐
☐
☐
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The Board of Directors recommends you vote
ONE YEAR
on the following proposal:
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One
Year
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Two Years
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Three Years
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Abstain
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4. To Recommend, by Advisory Vote, the Frequency of Advisory Votes on Executive
Compensation
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B
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The Board of Directors recommends that you vote
AGAINST
the following Proposals:
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For
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Against
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Abstain
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5. To Prepare a Report on Executive Compensation
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6. To Prepare a Report on Accident Risk Reduction
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☐
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C
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Authorized SignaturesThis section must be completed for your vote to be counted. Sign and Date Below:
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For address changes and/or comments, please check this box and write them on the back where indicated.
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☐
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Please sign the Proxy Card exactly as name appears hereon.
When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If the signer is a corporation, sign the full corporate name by duly authorized
officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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V.1.1
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
PLEASE VOTE, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE.
ADMISSION TICKET
Bring
this ticket and photo ID with you if you plan on attending the meeting.
Please check the meeting materials for any special
requirements for meeting attendance.
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION,
q
DETATCH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
E22517-P89440-Z69633
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E. I. DU PONT DE NEMOURS AND COMPANY
Annual Meeting of Stockholders
May 24, 2017, 10:30 AM
974 Centre Rd
Chestnut
Run Plaza, Building 730
Wilmington, DE 19805
This Proxy is Solicited on Behalf of the Board of Directors
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The undersigned hereby appoints E. D. Breen, L. D.
Juliber, and P. J. Ward or any of them, each with power of substitution, as proxies for the undersigned to vote all shares of Common Stock of said Company which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on
May 24, 2017, and any adjournment or postponement thereof, as hereinafter specified and, in their discretion, upon such other matters as may properly come before the meeting. The undersigned hereby revokes all proxies previously given.
As described on page 4 of the proxy statement, this proxy also provides voting
instructions for shares held for the account of the undersigned in certain employee savings plans. A trustee for each plan will vote these shares as directed provided your voting instruction is received by the
cut-off
date.
A trustee for an employee
savings plan may vote as directed by the plan fiduciary or by an independent fiduciary selected by the plan fiduciary all shares held in the plan for which no voting instructions are received. Other shares owned by you will be voted only if you sign
and return a proxy card, vote by Internet or telephone, or attend the meeting and vote by ballot. The
cut-off
date for shares held in certain employee savings plans is May 19, 2017, or, if you are voting
by Internet or by phone, by 11:59 p.m., EDT on May 21, 2017. The
cut-off
date for all other shares is May 23, 2017.
On matters for which you do not specify a choice, the shares will be voted in accordance with the recommendation of the Board of Directors.
When properly executed this proxy will be voted in the manner directed herein. If no
direction is made, this proxy will be voted
FOR
all director nominees in Proposal 1,
FOR
Proposals 2 and 3,
ONE YEAR
for Proposal 4, and
AGAINST
Proposals
5-6.
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Address Changes/Comments:
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side
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V.1.1
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