Jim Fitterling
DOWAbout Jim Fitterling
Chair and CEO of Dow; Director since 2018; CEO since August 2018 and Chair since April 2020. Age 63. Over 40 years at Dow across business and corporate roles, leading the company’s “Decarbonize & Grow” strategy and sustainability disclosures. 2024 performance: ~$43B net sales, ~$2.6B Operating EBIT, $1.2B net income, $2.9B cash from operations; returned ~$2.5B to shareholders and began construction on the net-zero Fort Saskatchewan cracker; 2024 say‑on‑pay support was 92% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Dow | Chief Operating Officer, President, Vice Chair of Business Operations, SVP Corporate Development; President, Plastics & Hydrocarbons | 1984–2018 | Led portfolio shift toward higher‑growth, customer‑centric markets and launched next‑gen sustainability goals . |
| DowDuPont (Materials Science Division) | Chief Operating Officer | 2017–2019 | Orchestrated transition to stand‑alone Dow and operating model setup . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| 3M Company | Director (public company) | Since 2021 | Outside board service; Dow covers tax for spouse travel to some non‑Dow board meetings as a perquisite context . |
| Chemical Financial Corporation | Director (public company) | 2010–2019 | Prior public board experience . |
| American Chemistry Council | Board Chair | 2021 | Industry leadership . |
| National Association of Manufacturers | Board Chair | 2022–2023 | Policy engagement . |
Fixed Compensation
| Component | 2024 Amount | Notes |
|---|---|---|
| Base Salary | $1,695,200 | No increase in 2024 . |
| Perquisites (select items) | $210,261 | Personal use of company aircraft (required for security/availability) . |
| Company Savings/Deferral Contributions | $230,905 | Company contributions to Savings Plan and Elective Deferral Plan . |
| Deferred Compensation – Exec Contributions | $84,760 | 2024 executive deferral; aggregate balance $4,856,471 . |
| Pension – Present Value (Qualified) | $2,037,473 | Dow Employees’ Pension Plan (DEPP) . |
| Pension – Present Value (Nonqualified) | $12,826,193 | Executives’ Supplemental Retirement Plan (ESRP) . |
Additional structure:
- Pay mix: ~80% of CEO target annual compensation is at‑risk (incentive/equity) .
- Independent compensation consultant: Mercer; 2024 consultant fees $326,474; Dow paid ~$3.36MM for unrelated HR services .
Performance Compensation
Annual Performance Award (cash) – Design and 2024 Outcome:
- Metrics: Operating EBIT; Free Cash Flow; Ambition (customer experience, safety/health/environment/transport, inclusion) .
- Company component payout: 45% (Committee applied discretion to align leaders and employees) .
- CEO individual factor: 90%; total payout = 41% of target; paid $1,201,473 .
| Annual Incentive Detail (2024) | Target % of Salary | Target ($) | Company Component | Individual Factor | Payout % of Target | Paid ($) |
|---|---|---|---|---|---|---|
| CEO (Jim Fitterling) | 175% | $2,966,600 | 45% | 90% | 41% | $1,201,473 |
Long‑Term Incentive (LTI) – Structure and Metrics:
- Award mix: PSUs 65%; Stock Options 20%; RSUs 15% .
- PSU metrics: Operating ROC; Cumulative Cash from Operations; Relative TSR (modifier); Carbon Emissions Reduction (Ambition) .
- 2022–2024 PSU program payout: 40% of target (below‑target financial/Ambition outcomes) .
| 2024 LTI Grants (Awarded 2/15/2024) | Quantity | Key Terms |
|---|---|---|
| PSUs (target) | 174,960 | 3‑yr performance; metrics above; cap 200% combined financial + modifiers . |
| RSUs | 40,380 | Vest at 3 years; dividend equivalents during vesting . |
| Stock Options | 271,490 | Exercise $55.17; 3‑yr ratable vest; 10‑yr term (exp. 2/15/2034) . |
Historical realizations:
- 2024 realized: options exercised 222,882 ($1,657,723 value); vested stock 319,584 shares ($17,770,668) .
Equity Ownership & Alignment
Policy alignment:
- Stock ownership guideline: 6x base salary (CEO). Status: 11x (exceeds requirement) .
- Anti‑hedging and anti‑pledging policies apply to directors and executive officers .
- Clawback policy (global) adopted Dec 1, 2023; applies to executive officers and misconduct events .
Beneficial ownership:
| Measure | Shares/Units |
|---|---|
| Current shares beneficially owned | 265,513 |
| Rights to acquire (options, RSUs/PSUs vesting by 4/8/2025) | 1,526,995 |
| Total beneficial ownership | 1,792,508; <1% of shares outstanding |
Vesting and potential selling pressure (scheduled events):
- RSUs: 31,885 (granted 2/10/2022) vest 2025; 33,878 (2/9/2023) vest 2026; 39,039 (2/15/2024) vest 2027 .
- PSUs at target: 142,910 (2022 grant; deliver 2025 subject to performance); 151,830 (2023; deliver 2026); 174,960 (2024; deliver 2027) .
- Options outstanding include multiple vintages (e.g., 2017–2024) with expirations through 2034; 2024 grant 271,490 @ $55.17, vest 2025–2027 .
- Note: RSUs/PSUs and option exercises can create episodic liquidity events around vest/delivery dates; hedging/pledging is prohibited, and ownership guidelines/retention ratios apply if not at guideline levels .
Employment Terms
| Topic | Key Terms |
|---|---|
| Agreements | No separate change‑in‑control agreements; equity has double‑trigger acceleration (CIC + involuntary termination without cause within 24 months) . |
| Severance (inv. without cause) | U.S. Severance Plan: 2 weeks per year of service (up to 18 months) + 6 months base via Executive Severance Supplement; $30,000 outplacement/financial planning; 18 months health/welfare at active rates if eligible . |
| CIC Illustrative Values (12/31/2024) | Double‑trigger LTI acceleration (PSUs at target) $23,054,765; pension PV increase $715,250; severance $3,390,400; benefits and services ~$43,617 . |
| Clawback | Mandatory for restatements (3 years) and misconduct; adopted 12/1/2023 . |
| Anti‑hedging/pledging | Prohibited for directors and exec officers . |
| Director pay | Employee directors receive no additional director compensation . |
Board Service, Governance, and Dual‑Role Considerations
- Role: Chair & CEO; Director since 2018; not independent. Board designates an Independent Lead Director (Richard K. Davis) with robust responsibilities: executive sessions, agenda/materials, liaison, ability to call meetings and retain advisors .
- Committees: Fitterling serves on no board committees; all committees are composed of independent directors .
- Meeting cadence/attendance: 2024—6 regular board meetings, 2 specials; all directors attended >75% of meetings; all directors attended all six regular meetings; six executive sessions of independent directors; overall attendance >99% .
- Implication: Combined Chair/CEO mitigated by strong lead independent director, executive sessions, independent committees, annual leadership structure review .
Performance & Track Record
- 2024 achievements cited in setting incentives: Operating EBIT ~$2.6B with five consecutive quarters of YoY volume growth; $2.9B cash from operations; ~$2.5B capital returns; inaugural green bonds ($1.25B) with “greenium;” up to $3B proceeds from minority stake sale of Gulf Coast infrastructure; progress on Fort Saskatchewan Path2Zero; industry safety milestones; strong workplace recognition .
- Pay‑versus‑performance context: 2022–2024 PSU program paid 40% of target; 2024 annual company component at 45% with CEO individual factor 90% (total 41% of target) .
- Say‑on‑pay: 92% support at 2024 meeting .
Compensation Structure Analysis
- Alignment: Majority at‑risk; explicit links to Operating EBIT, Free Cash Flow, Operating ROC, cash generation, TSR, and quantifiable ESG (carbon reduction; safety/health/environment; inclusion) .
- Mix shift: Continued use of PSUs (65%) vs. options (20%) and RSUs (15%); option terms prohibit repricing/exchanges without shareholder approval .
- Governance features: No excise tax gross‑ups; no CIC agreements; anti‑hedging/anti‑pledging; strong clawback; independent committee and consultant; target at median of peer group .
- Peer group: Defined and reviewed annually; 2025 adjustments disclosed (adds BMY, Ecolab, PPG, Sherwin‑Williams; removes Eli Lilly, J&J, PepsiCo, P&G) .
Risk Indicators & Red Flags
- Hedging/pledging: Prohibited (mitigates misalignment risk) .
- Clawback: Comprehensive (restatement and misconduct) .
- Option repricing: Prohibited without shareholder approval .
- Related‑party transactions: Board reviewed; amounts immaterial/ordinary course .
- Say‑on‑pay: Strong support (92%) .
Director Compensation (context)
- Employee CEO receives no director fees; non‑employee director retainer $135k; annual RSUs $195k (vest 2 years; settle post‑service) . Not applicable to Fitterling.
Investment Implications
- Pay‑for‑performance linkage is clear and increasingly stringent (caps on Ambition payout if financials miss; PSU caps when absolute TSR is negative), which should contain windfalls in weak macro cycles and strengthen alignment to ROC and cash generation .
- Near‑term vesting pipeline (2025–2027) includes sizeable PSUs/RSUs that could create episodic selling pressure around delivery dates; however, anti‑pledging and ownership guidelines (CEO at 11x) signal strong ongoing alignment and reduce leverage‑related selling risk .
- Governance mitigants (independent Lead Director, all‑independent committees, frequent executive sessions) help balance the combined Chair/CEO structure, limiting governance discount risk .
- Execution risk remains tied to cyclical end markets and delivery of Path2Zero and circularity initiatives; the 40% payout on 2022–2024 PSUs evidences discipline in outcomes when targets are not met, supporting investor confidence in incentive rigor .