DEF 14A: Westlake Corporation Announces Annual Meeting of Stockholders and Details Executive Compensation

Westlake Corporation's proxy statement details the agenda for the annual stockholder meeting on May 9, 2024, including director elections, auditor ratification, and a proposal on plastic pollution, while also providing an in-depth analysis of executive compensation.

Summary

• Westlake Corporation will hold its annual meeting of stockholders on May 9, 2024, in Houston, Texas.
• The meeting will address the election of four Class II directors, ratification of PricewaterhouseCoopers LLP as the independent auditor, and a stockholder proposal concerning a report on reducing plastic pollution of the oceans.
• The Board of Directors recommends voting for the director nominees, for the auditor ratification, and against the stockholder proposal.
• As of March 12, 2024, there were 128,511,358 shares of common stock outstanding, with TTWF LP owning 72.2% of the outstanding shares.
• The proxy statement includes detailed information on director independence, board committees, corporate governance, and executive compensation.
• Executive compensation includes base salary, annual incentive plan (AIP), quarterly incentive plan (QIP), and long-term incentives (LTI) in the form of stock options, restricted stock units (RSUs), and performance stock units (PSUs).
• The Compensation Committee uses a peer group of companies from the chemicals and building products industries to benchmark executive compensation.
• The CEO pay ratio for 2023 is 143.9, with the CEO's annual total compensation at $11,349,486 and the median employee's annual total compensation at $78,850.
• The company's policy requires executives and directors to retain vested stock until reaching a multiple of their base salary or retainer.
• The Board recommends against a stockholder proposal requesting a report on shifting from virgin to recycled polymer production, citing existing sustainability initiatives.

Sentiment

Score: 7

Explanation: The document is primarily informational, but the Board's recommendation to vote against the stockholder proposal suggests a potential area of concern regarding sustainability, balancing the positive aspects of the company's existing initiatives.

Positives

• The company has a comprehensive approach to cybersecurity and data protection.
• Westlake is committed to acting in a safe, ethical, environmentallyand socially-responsible manner.
• The company has a Code of Ethics and a Code of Conduct.
• The company has a policy for recovering erroneously awarded compensation, or clawback policy, applicable to executive officers.
• The company is actively engaging with customers to address their sustainability needs and reduce plastic waste.
• Westlake is incorporating renewable power and bio-based feedstock into its products.

Negatives

• The company is considered to be controlled by its principal stockholder, TTWF LP, which limits the independence requirements for the Board of Directors.
• The company faces potential risks from cybersecurity threats and attempted breaches.
• A stockholder proposal highlights concerns about the company's lack of a substantial commitment to recycled polymers.

Risks

• Failure to adequately protect critical data and technology systems could materially affect operations.
• The company faces potential risks from cybersecurity threats and attempted breaches.
• The company's reliance on TTWF LP for control could lead to decisions that benefit the controlling stockholder at the expense of minority stockholders.
• The company faces a growing risk from a lack of substantial commitment to recycled polymers, as highlighted by a stockholder proposal.

Future Outlook

The company will continue to make changes in the Peer Group as warranted to reflect changes in the size, business profile and publicly-listed status of the companies to help ensure that companies comparable in size and business profile are included and continue to be appropriate for the compensation decision-making process.

Management Comments

• Our mission is to serve our customers by safely and reliably providing quality and sustainable products and services that enhance peoples lives every day.
• The Board understands that plastic waste is a global environmental issue and believes that the chemicals industry, among others, should develop policies and practices to address that issue.
• We believe the essential objective of the shareholder resolution is for Westlake to address the risks and opportunities presented in the manufacturing of durable plastics to benefit society while minimizing plastic wastes in the society, which the Company acknowledges needs to be addressed.

Industry Context

The document highlights the increasing pressure on chemical companies to address plastic pollution and transition to more sustainable practices, as evidenced by the stockholder proposal and the actions of competitors like Dow Inc. and ExxonMobil.

Comparison to Industry Standards

• The document mentions that competitor Dow Inc. has committed to produce 3 million tons of feedstock from recycled and renewable sources annually by 2030.
• ExxonMobil has pledged capacity to process 450,000 tons of plastic waste for recycling by 2026.
• The Compensation Committee uses a peer group of companies from the chemicals and building products industries to benchmark executive compensation, including Builders FirstSource, Inc., Huntsman Corporation, Celanese Corporation, Masco Corporation, Corteva, Inc., The Mosaic Company, The Chemours Company, Olin Corporation, DuPont de Nemours, Inc., Owens Corning, Eastman Chemical Company, PPG Industries, Inc., Fortune Brands Innovations, Inc., and RPM International Inc.

Related Party Transactions

• The office space for our principal executive offices in Houston, Texas is leased, at market rates, from GUIC Post Oak Center, Ltd., an affiliate of our principal stockholder and of Tanglewood Property Group, under a lease that expires on December 31, 2032, with a five-year extension option at the expiration of the lease.
• The Company and/or its affiliates purchase industrial gases and utilities and lease cylinders from various affiliates of American Air Liquide, Inc. and its subsidiaries (collectively, Air Liquide), of which Mr. Graff serves as Chairman and Chief Executive Officer.

Stakeholder Impact

• Stockholders are asked to vote on key issues affecting the company's direction and governance.
• Employees are impacted by the company's compensation policies and practices.
• Customers benefit from the company's commitment to providing quality and sustainable products and services.
• The company's actions on environmental issues impact the broader community and the environment.

Next Steps

• Stockholders are requested to vote their proxy by Internet, telephone, or mail.
• The company will hold its annual meeting of stockholders on May 9, 2024.
• The company will continue to monitor and update its corporate governance policies and practices.
• The company will continue to assess and manage risks related to its compensation program.
• The company will continue to implement and update its cybersecurity strategy, controls, and processes.
• The company will continue to voluntarily disclose certain ESG matters and metrics in its annual ESG Report.

Key Dates

Keywords

executive compensation, annual meeting, proxy statement, corporate governance, board of directors, stockholder proposal, plastic pollution, sustainability, related party transactions, cybersecurity, Westlake Corporation