DEFA14A: Dow Urges Stockholders to Vote Against Shareholder Proposals on Written Consent and Single-Use Plastics Report

Dow Inc. is urging its stockholders to vote against shareholder proposals regarding a Shareholder Right to Act by Written Consent and a Single-Use Plastics Report at the upcoming 2024 Annual Meeting.

Summary

• Dow Inc. has distributed proxy materials for its 2024 Annual Meeting of Stockholders, scheduled for April 11, 2024.
• The company is requesting stockholders to vote against Agenda Items 4 and 5, which concern a Shareholder Right to Act by Written Consent and a Single-Use Plastics Report, respectively.
• Dow's Board believes that allowing stockholders to act by written consent could lead to abuse and disenfranchisement, while also causing confusion and disruption.
• The company argues that its existing corporate governance practices, including the ability for stockholders holding 25% of outstanding shares to call special meetings, provide sufficient stockholder rights.
• Regarding the Single-Use Plastics Report, the Board believes it is unnecessary and not a good use of company resources.
• Dow states that it will not be materially impacted by single-use plastics bans, as these bans primarily target plastics that Dow does not directly produce.
• The company estimates that even if all considered plastics bans were enacted, the impact would be less than 2% of Dow's total sales based on 2023 revenue.
• Dow is focused on plastics recycling and circularity, aiming to transform three million metric tons of plastic waste into circular and renewable solutions annually by 2030.
• By 2030, Dow aims for more than half of its plastics production capacity to produce products that are scope 1 and 2 emissions-free or made from circular or bio-based feedstocks.
• Stockholders are encouraged to review the proposals and management's statements in opposition in the 2024 Proxy Statement.

Sentiment

Score: 7

Explanation: The document presents a confident outlook on Dow's ability to navigate potential challenges related to single-use plastics bans and highlights the company's investments in sustainable solutions. While urging against shareholder proposals, the tone is professional and focused on the company's strategic direction.

Positives

• Dow is actively investing in circular economy initiatives and renewable solutions.
• The company is focused on transforming plastic waste into commercialized circular solutions.
• Dow is decarbonizing its assets and enabling its value chains to advance their sustainability agendas.
• Global polyethylene demand is expected to grow at approximately 1.2-1.4x of gross domestic product.

Negatives

• The Board believes that stockholder action by written consent has the potential for abuse and disenfranchisement of a large group of stockholders while creating substantial confusion and disruption.
• The Board has considered this proposal and deems it unnecessary to complete the proposal recommendations as it is not a good use of Company resources and consequently not in the best interests of its stockholders.

Risks

• The written consent process may not require advance communication to be provided to all stockholders, may not provide sufficient time for proper consideration, and could allow a small group of stockholders engaging in short-term speculation to solicit the fewest possible votes required to act.
• There is a risk that the company's investments in circular solutions and low-carbon emissions plastics may not meet the anticipated demand shift.

Future Outlook

Dow anticipates a shift in polyethylene demand toward circular, low-carbon emissions products, driven by regulations and consumer preferences. The company is investing to grow its capacity to produce low-carbon emissions plastics.

Management Comments

• Jim Fitterling, Chair and Chief Executive Officer, encourages stockholders to vote against Agenda Items 4 and 5.
• The Board believes that stockholder action by written consent has the potential for abuse and disenfranchisement of a large group of stockholders while creating substantial confusion and disruption.
• The Board has considered this proposal and deems it unnecessary to complete the proposal recommendations as it is not a good use of Company resources and consequently not in the best interests of its stockholders.

Industry Context

The announcement reflects the increasing pressure on companies to address environmental concerns related to plastics and to adopt more sustainable practices. Dow's focus on circularity and low-carbon emissions plastics aligns with broader industry trends and regulatory pressures.

Comparison to Industry Standards

• Dow's commitment to transforming 3 million metric tons of plastic waste annually by 2030 is comparable to targets set by other major chemical companies like BASF and LyondellBasell, who are also investing heavily in chemical recycling technologies.
• The goal of having over half of plastics production capacity be emissions-free or use circular/bio-based feedstocks by 2030 aligns with industry-wide efforts to reduce Scope 1 and 2 emissions, similar to commitments made by companies like SABIC and Covestro.
• Dow's estimated impact of less than 2% of total sales from potential single-use plastic bans is relatively low compared to companies more heavily reliant on the production of targeted plastics like polystyrene, polypropylene, and polyester.

Stakeholder Impact

• Stockholders are being asked to vote on key proposals that could impact the company's governance and sustainability efforts.
• The company's focus on circular solutions and low-carbon emissions plastics could benefit customers and the environment.

Next Steps

• Stockholders are encouraged to vote on the proxy materials before the 2024 Annual Meeting on April 11, 2024.

Key Dates

Keywords

proxy statement, stockholder proposals, written consent, single-use plastics, circular economy, corporate governance, Dow