AGM 2021

Apr 28, 2021

Good afternoon and thank you for joining us today. I am Ed Breen, Executive Chairman and Chief Executive Officer of DuPont. I will chair and conduct the meeting and now call this annual meeting of stockholders to order. Please be advised that the polls are now open for voting. Joining me this afternoon is Peter Hennessy, Vice President, Associate General Counsel and Corporate Secretary for DuPont, who will lead the procedural portion of the meeting. I would also like to welcome our Board members, certain members of our management team and a representative from PricewaterhouseCoopers who are also joining us today. Before Peter takes us through today's agenda, let me recap the significant progress we've made in transforming DuPont into a premier multi industrial company and outline our priorities for managing the current environment to ensure DuPont can remain strong and continue to deliver shareholder value now and into the future. First, let me acknowledge the tremendous dedication and determination of our teams around the world as we continue to manage the extraordinary circumstances of this pandemic. The health and well-being of our people remains our top priority. The principles and protocols we've implemented globally and locally have helped to protect our people and ensure business continuity as countries face multiple waves of infection and lockdowns. As an innovation led company, we believe in science and we're encouraging all employees to get vaccinated. And where possible, we're working with public health authorities to facilitate access and distribution. In some countries such as China, our employees are already back to the workplace and in other countries teams are actively planning for the next normal. The pandemic accelerated trends in technology, connectivity and flexible work practices. As we emerge from the pandemic, we'll continue to lean into these shifts that are bringing value to our customers and employees, driving productivity and reducing the financial, environmental and physical costs of business travel. Over the past 2 years, we further sharpened DuPont's portfolio and today we are focused on 3 strategic segments with robust end markets aligned to secular growth trends and clear return driven and sustainable innovation opportunities. Our businesses are primed to grow organically and when the right opportunities arise, we'll continue to pursue targeted acquisitions that strengthen our market positions and ability to deliver innovation to our customers. We recently announced plans to acquire Laird Performance Materials, a leading provider of electromagnetic shielding and thermal management solutions. Their product portfolio and application capabilities complement our Electronics and Industrial Business and will enhance our ability to address customers' complex challenges through integrated design and multifunctional solutions. We expect to close the transaction in the second half of this year. And in February, we concluded the strategic review of our non core segment. Since June of 2019, we have divested or have signed agreements to divest 9 businesses. Exiting these businesses removes a significant of cyclicality and earnings volatility from our portfolio while generating over $2,000,000,000 in gross proceeds. Another significant portfolio action was the merger of our Nutrition and Biosciences business with IFF on February 1, which positions IFF as an industry leading company in the food and beverage, home and personal care and health and wellness markets. This transaction unlocks significant value for the company and our shareholders. DuPont received a cash payment of $7,300,000,000 of which about $5,000,000,000 is being used to strengthen our balance sheet by paying down debt, enabling us to maintain our strong BBB plus credit rating. In addition, we executed the separation of N and B through an exchange offer, which resulted in the retirement of 197,000,000 DuPont shares. This combined with our strong dividend policy and commitment to share repurchases demonstrates our ability to drive shareholder returns. Over the past year, we have intensified our operating discipline and build a solid track record of delivering value for our stakeholders. We see further opportunities to hone our operating model as we invest in digital technologies and implement leverage playbooks to drive gross margin improvement, manufacturing productivity and customer satisfaction. Diversity, Equity, Inclusion and other ESG factors are fundamental to our long term strategy. We have a strong and diverse Board of Directors and management team. Together, we are committed to fostering an inclusive culture. Our 2,030 sustainability goals are ambitious, holistic, integrated and value creating. And starting this year, progress against our goals will become a component of our short term incentive and I am proud to say that the 23,000 DuPonters around the world have risen to the challenge. We remain in this together with our customers, communities and shareholders. Now let me turn it over to Peter to take us through today's business items. Thanks, Ed. The procedures we follow are simple and designed to ensure that we have a fair and orderly meeting. As we move through our agenda, we will present the items for business today. Following the presentation of 4 management proposals and 3 stockholder proposals, we will have a question and answer period. The questions will be strictly limited to the business at hand. Please see the rules and procedures of conduct for additional information. We received questions from stockholders in advance of today's meeting. To the extent these questions relate to the business at hand, I will read the question and answer during the question and answer session later in the meeting. If you wish to ask a question now relating to one of the proposals, please type your question into the question field on our meeting portal. I will read relevant questions for the audience, then it will be answered by the appropriate company representative. Discussion on any matter will be limited to repetitive. Due to time constraints, we may not be able to respond to every question. Questions or comments unrelated to the agenda items or of individual concern rather than of concern to stockholders generally will not be permitted during the meeting. Recording of the meeting is also not permitted. Consistent with the company's values, we expect our stockholders to be respectful of other participants in the meeting. Notice of the annual meeting was distributed to all of our common stockholders of record as of March 8, 2021. Proof of notice will be incorporated into the minutes of this meeting. The Board appointed James Rait of American Election Services LLC to act as the Inspector of Election for the meeting. We are informed by our Inspector that a quorum is present for the purposes of conducting the business of the meeting. As noted by Ed at the outset of the meeting, the polls are open for voting on all matters on the agenda. Any stockholder who has previously voted a proxy through the Internet by mail or by telephone does not need to submit anything further at this meeting. Your vote has already been tabulated. However, if you have not yet voted or wish to change or revoke your vote, please use your 16 digit control number and submit your vote through the website at this time. We'll now review the matters to be voted on. Under the company's bylaws, the only matters properly before our stockholders today are those set forth in the notice of annual meeting and proxy statement. The first item on the agenda is the election of directors. The nominees for director are Amy Brady, Edward Breen, Ruby Shandy, Franklin Clyburn, Jr, Terrence Curtin, Alexander Cutler, Eliezer DuPont, Luther Kissam, Frederick Lowery, Raymond Milcovic, Deanna Mulligan and Stephen Stearin. Your Board recommends about 4 of these nominees. The next items on the agenda are the management proposals. Agenda items 2, 3 and 4 are as follows. Agenda item 2 gives stockholders the opportunity to approve on an advisory basis executive compensation. Agenda Item 3 concerns the ratification of the selection of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the current year. Agenda Item 4 concerns the amendment and restatement of the company's certificate of incorporation to decrease the ownership threshold for stockholders to call a special meeting. Your board recommends about 4 agenda items 2, 3 and 4. Next on the agenda are the stockholder proposals. We will provide each of the stockholders who made proposals 5, 6 and 7 with 3 minutes to present their proposal and make a brief statement about their proposal. Agenda Item 5 is a stockholder proposal agenda item 5 is a stockholder proposal requesting the right for stockholders to act by written consent. I understand John Chevedden is on the line to present the proposal. Mr. Chevedden, will you please make your statement? Hello. This is John Chevedden. Can you hear me okay? Yes, I can. This is Proposal 5, adopt a mainstream shareholder right written consent sponsored by Kenneth Steiner. Charles requested our Board of Directors take the necessary steps to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize an action item meeting at which all shareholders entitled to vote thereon were present and voting. This proposal topic won 95% support at Dover Corporation and 88% supported AT and T. A shareholder write act by written consent still affords DuPont Management strong deference for any lingering status quo management mentality during the current rapid changing business environment. Any action taken by written consent would still need 70% approval from the shares that normally have balance at the DuPont Annual Shareholder Meeting to equal a majority from the DuPont shares outstanding. The right for shareholders to act by written dissent is gaining acceptance as a more important right than the right to call a special meeting. The directors at Intel apparently thought they could divert shareholder attention away from written consent by making it less difficult for shareholders to call a special meeting. However, Intel shareholders responded with greater support for written consent in 2019 compared to 2018. And it takes 35% of the shares that typically vote at DuPont to call a special shareholder meeting. The year 2020 marked the near extinction of in person shareholder meetings. With the new style of tightly controlled online shareholder meetings, everything is optional. For instance, management reporting on the state of the company is optional. Also management answers to shareholder questions are optional even if management asks for questions. For instance, Goodyear management hit the mute button right in the middle of a formal shareholder proposal presentation at a 2020 shareholder meeting and AT and T management would not allow any shareholders to speak at the 2020 AT and T online shareholder meeting. Now more than never shareholders need to have the option to take action outside of a shareholder meeting and send a wake up call to management if need be, since the tightly controlled online shareholder meetings are shareholder engagement wasteland. Written consent allows shows to vote on important matters such as electing new directors that can arise between annual meetings. Please vote yes, adopt a mainstream shareholder rights written consent proposal 5. Thank you, Mr. Chibetin, for your interest in DuPont and for your statement. For the reasons set forth in the proxy statement, your Board recommends a vote against this proposal. Agenda Item 6 is a stockholder proposal requesting annual disclosure of the company's EEO-one data. I understand Emily Law is on the line to present the proposal. Ms. Law, will you please make your statement? Good afternoon, Mr. Chairman, members of the Board and fellow shareholders. My name is Emily Law, and I am presenting proposal Item 6 on behalf of the New York City Controller, Scott Stringer and 3 of the 5 New York City Pension Funds, which are substantial long term shareholders with roughly 945,000 shares of DuPont valued at over 72,000,000 dollars Proposal Item Number 6 asked the Board to adopt a policy requiring the company to disclose on its website the company consolidated EV01 report, which is a comprehensive breakdown of its workforce by race, ethnicity and gender that the company is required to submit annually to the U. S. EEOC. In the wake of George Floyd's murder, many companies, including DuPont, publicized their commitment to racial equity and diversity. Mr. Chairman, as you tweeted on June 2, We must value diversity and allow everyone to be their best without fear or prejudice. I command to point on its commitment to Basel Equity and Diversity. Absent Robert's comparable disclosure of its workforce demographics, Shareholders have no way to benchmark the company's diversity performance and hold it accountable for its commitment. Unlike the EE-one report, the information that DuPont now discloses is neither comparable nor comprehensive. We believe the best way to evaluate the effective implementation of your diversity goals and programs is to examine the DE-one report. Your company peers such as 3 ms and Medtronic already disclosed or have committed to disclose their DE-one report along with a substantial majority of S and P 100 Companies. In fact, Mr. Chairman, you sit on the Board of 1 company that has already committed to disclose and Director Clyburn is employed by another. EE-one report disclosure is a cost effective means for DuPont to demonstrate its diversity performance since the company already collects the data for submission to the EEOC under federal law. In its opposition statement, the Board argues that the EEOC mandated job categories fail to account for company or industry specific roles. However, it is perfectly appropriate for the company to supplement its ED-one reporting along with the data that management believes reflect the company organizational structure or demonstrate its diversity. We understand that DuPont intends to enhance its diversity disclosure with disaggregated rates and as mixed study data to match the destination in the EEO-one report and also disclose understandable data in this global workforce. Many investors may question why management does not simply disclose the EE-one report that is already collected and any additional information necessary about the global operations. We appreciate our engagement with company this year, but urge you to take your own trademark of being solution maker and grow further to provide shareholders with necessary transparency. I urge shareholders to vote for proposal item number 6. Thank you. Thank you, Ms. Law for your interest in DuPont and for your statement. For the reasons set forth in the proxy statement, your Board recommends a vote against this proposal. Agenda Item 7 is a stockholder proposal requesting an annual report on plastic pollution. I understand Kelly McBee is on the line to present the proposal. Ms. McBee, will you please make your statement? Thank you, and good afternoon. I'm pleased to move proposal 7 on the proxy, which asked the Board of Directors to issue an annual report to shareholders on plastic pellet pollution. Most plastic products begin their life as plastic pellets and plastic pollution resulting from plastic products and pellets have emerged as a global crisis. An estimated 11,000,000 metric tons of plastics leak into oceans annually and this figure is expected to grow to 24,000,000 metric tons by 2,040. State Ponds is a leading producer of transportation and industrial plastics, plastics that are initially made into plastic pellets and then often transported elsewhere for processing. During manufacturing and transportation, these plastic pellets are routinely spilled, causing plastic pellets to be estimated as the 2nd largest direct source of microplastic pollution to the ocean by weight, with an estimated 10,000,000,000,000 pellets built around the globe each year. Pellets are similar in size and shape to fish eggs and are often mistaken by marine animals for food, contributing to injury and death caused by plastic pollution to more than 800 marine species. Plastic pellets can absorb toxins from water and transfer them to the marine food web and potentially to humans through consumption of seafood. Pellet spills create financial risk. Petrochemical and plastics companies have recently paid substantial fines for pellet releases, with the largest fine reaching $50,000,000 Plastic pellet spills contribute to more than $13,000,000,000 in damage done by plastic pollution to marine ecosystems annually. To get more reliable estimates of the size and nature of pellet spills and better assess the associated risks to our company, investors need producers to formally report on their actions. DuPont is a member of Operation Clean Sweep, an industry program that encourages best practices to reduce pellet loss, but which provides no public reporting nor accountability on spill incidents. Given the severe biodiversity and economic impact of plastic pollution, there is an urgent need to increase reporting on pellet spills and remediation practices. 6 of DuPont's largest peers are already executing the action requested in this proposal, including Dow, Chevron Philips and ExxonMobil. DuPont should match the transparency and accountability of its peers. In closing, please support Proposal 7 to send a message to management to provide public reporting of pellet bills and the disclosure of company policies and practices to prevent future spills. Such reporting is a necessary first step to the company realizing its 2,030 goal to integrate circular economy principles into our business models considering lifecycle impacts in the markets we serve. Thank you. Thank you, Ms. McPhee for your interest in DuPont and for your statement. For the reasons set forth in the proxy statement, your Board recommends a vote against this proposal. At this point, we are taking questions regarding proposals 1 through 7. As a reminder, we will limit questions if they become repetitive or if they are not related to proposals 1 through 7. We received several questions in advance of the meeting, and I will read responses to those questions now. After I complete reading responses to those questions, I will address questions submitted during the meeting. We received several questions regarding the company's opposition to agenda item 7, the proposal requesting an annual report on plastic pollution. In addition to asking why the Board opposed the proposal, stockholders asked whether they would be able to monitor progress the company makes on reporting in the coming year. Reducing plastic waste is consistent with DuPont's sustainability strategy and is protecting the planet core value. We are members of Operation Clean Sweep and are implementing its programs across our sites. Specifically, we are taking action to avoid pellet spills, increase plastic recycling and prevent plastic waste from entering the environment. We believe these actions adjust the concerns and accomplish the objective of the proposal. Annual reporting is unnecessary and would take up time and resources that are best spent executing on our programs to address plastic pollution and support other business sustainability initiatives. We've heard from many of our investors who are encouraging us to start reporting on plastic pollution. After the annual meeting, we will review the results on agenda item 7 with our Board and determine the appropriate path forward. Investors can monitor our progress in reporting on environmental matters by reviewing our sustainability report. We also received a question regarding gender representation on our Board. The question asks, how will the Board of Directors achieve fifty-fifty gender representation its members by 2025? Will the Board institute a quota system to increase the number of candidates and the number of female candidates considered for each director position? DuPont is committed to advancing diversity both on the board and throughout our organization. We've published guidelines for director qualification in our corporate governance guidelines. The corporate governance guidelines provide that diversity is among the qualifications that will be considered in evaluating director candidate. We have included disclosure in the proxy statement for this annual meeting regarding the diversity of our Board. However, we have not made any commitment to achieve fifty-fifty gender representation on our Board or to implement a quota system with respect to directors or director candidates. We received a question during the meeting regarding the use of discretion under our short term incentive plan. The question asks, Mr. Chairman, the Carpenter Pension Funds collectively hold 342,300 shares of the company's stock. Due to the pandemic's impact on the company's operations, the compensation committee exercised discretion in determining the amount of payout under the short term incentive plan. Compensation plans are typically very formulaic with little need for committee discretionary decision making. Could the Chair of the Compensation Committee discuss the committee's process with regards to the STIP awards and comment on whether the experience might suggest the committee discretion has a potentially important and larger role in executive compensation decision making. So we included disclosure in our proxy statement with respect to the Annual Meeting regarding the committee's exercise of discretion with respect to the short term incentive plan, and I can provide some more information here. The People and Compensation Committee determined that formulaic STIP results were not a fair representation of the Agile strong performance and resulting financial outcomes delivered despite the pandemic. The People and Compensation Committee discussed the impact of COVID-nineteen on DuPont's 2020 SPIP over 5 meetings. In considering the use of discretion, the People and Compensation Committee sought to balance the interest of employees and stockholders using a holistic assessment of key results, actions and deliverables throughout the year. The People and Compensation Committee determined that the use of a single discretionary factor was appropriate in a year that required significant collective efforts and unique contributions to respond to the varying impact that the pandemic presented. At this time, it does not appear that there are any additional questions related to matters items of business at the meeting. Thank you. I've confirmed no additional questions. So we will be closing the polls momentarily. Each of these proposals is deemed to have been properly brought before the meeting. The need for a second has been made by the company. The polls have now been closed. The Inspector of Election will now tabulate all of the votes. The Inspector has provided me with the preliminary results of voting. Subject to the final tabulation, we report the following preliminary results. All of the nominees for Director have been reelected. The stockholders have approved the advisory resolution on the company's executive compensation. The appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for 2021 has been ratified. The amendment and restatement of the company's certificate of incorporation to decrease the ownership threshold for stockholders to call a special meeting has been approved. Stockholder proposal 5, right to act by written consent has failed stockholder proposal 6, annual disclosure of EEO-one data has been approved and stockholder proposal number 7, annual report on plastic pollution has been approved. The final voting results will become part of the record of the meeting and will be reported in a Form 8 ks to be filed in connection with the matters voted upon at the meeting. All items of business now have been completed. Thank you to our stockholders for joining us today. The meeting is now adjourned.