Pay equity (GRI 102-38, 102-39, 405-2)

Global pay disparity studies have been conducted at Dow for over 20 years to assess fair treatment and ensure our pay practices are being implemented as intended. The historical pay equity studies compared like for like jobs (equal pay for equal work) for base pay, short-term incentives (STI), and long-term incentives (LTI) between genders and between U.S. ethnic minorities and non-minorities.

In alignment with our ambition to become the most innovative, customer-centric, inclusive and sustainable materials science company in the world, we transitioned to assessing the pay gap in 2020, comparing pay regardless of the work performed. We believe this to be a more holistic view for assessing potential pay disparity as the pay gap additionally takes into consideration the distribution of employees across all jobs. Gender is evaluated globally and showed that women are paid 98% of what men are paid (includes base pay, STI and LTI). Ethnicity is evaluated in the United States and showed that U.S. ethnic minorities are paid 97% of what non-minorities are paid (includes base pay, STI and LTI).

Global Female Pay to Male Pay Ratio
Base Pay Only 0.98:1.00
Base Pay and STI 0.98:1.00
Base Pay, STI and LTI 0.98:1.00
U.S. Ethnic Minority Pay to Non-Minority Pay Ratio
Base Pay Only 0.98:1.00
Base Pay and STI 0.98:1.00
Base Pay, STI and LTI 0.97:1.00

1 Base pay is calculated as the average base pay salary.

2 Short-term Incentive award is calculated based on the actual value granted.

3 Long-term Incentive (LTI) analysis includes those eligible and excludes other roles. LTI is calculated based on the actual value granted.

Closing the gender pay gap is a part of our commitment to inclusion, diversity and equity. As such, we will continue to conduct annual pay gap studies and actively engage with an external partner to develop and apply best practices including further executing pay disparity closure actions.

Annual total compensation ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, Dow is providing the following information.

For 2020:

  • The annual total compensation for the median employee was $157,943.
  • The annual total compensation of Chairman and CEO Jim Fitterling was $22,211,255, as reported in the Summary Compensation Table of the 2021 Proxy Statement filed with the SEC on March 5, 2021.

Based upon the calculation for both the CEO and median employee, the ratio of the CEO pay to median employee pay for 2020 was approximately 141:1.

Percentage increase in annual total compensation ratio

For 2020:

  • Base salary adjustments of 3% were provided to Dow’s salaried employee population in 2020, including Chairman and CEO Mr. Fitterling and the median employee reported in Disclosure 102-38.
  • The target total direct compensation of Mr. Fitterling, as reported in the Targeted Total Direct Compensation Summary Table in Dow’s 2020 and 2021 Proxy Statements, increased 13.6% year-over-year.
  • As detailed in the 2021 Proxy Statement, Mr. Fitterling received a 13.3% increase to his target short-term incentive percent and an increase of 14.3% to his long-term incentive target, based upon the Compensation and Leadership Development Committee’s review of comparable positions within the compensation peer group.

The pay ratio presented above is a reasonable estimate. To determine the median annual total compensation for all employees other than the CEO, a median employee was identified from the population of all employees worldwide as of November 30, 2020, using base pay and annual incentive at target as the consistently applied compensation measure. The company calculated annual base pay based on a reasonable estimate of hours worked during 2020 for hourly workers, and upon salary levels for the remaining employees. The company used a statistical sampling methodology to identify all employees whom the company expected to be paid within a 0.1% range of the median. The company selected the representative employee from that group for purposes of calculating the ratio of CEO pay to median employee pay. Because SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, the pay ratio may not be comparable to the pay ratio reported by other companies.

Benefits (GRI 401-2)

Regular full-time and less-than-full-time employees are provided a wide variety of benefits. Dow’s benefit plans are designed to meet the needs of our employees, while remaining competitive with the market and aligned with our company strategy. They are also designed to build on the social security benefits provided in each country, and as a result, vary by country. In all primary Dow locations, we offer the following benefits to regular employees:

  • Pension plans – either defined benefit or defined contribution plans
  • Medical plans – often including prescription drug coverage and dental
  • Life insurance
  • Disability protection
  • Accident insurance
  • Paid vacation, holiday and leave programs
  • Business travel accident insurance

*Note that in all Latin American countries, there is no difference in benefits packages offered to regular and temporary employees. Colombia only offers a savings plan (no pension), and Costa Rica, Peru and Chile do not have pension or savings plans.

Defined benefit plan obligations and other retirement plans (GRI 201-3)

The company has both funded and unfunded defined benefit pension plans that cover employees in the United States and a number of other countries. As a result of the company’s separation from DowDuPont, the number of significant defined benefit pension plans administered by the company decreased from 45 plans to 35 plans, with approximately $270 million of net unfunded pension liabilities transferred to DowDuPont. Plans administered by other subsidiaries of DowDuPont that were transferred to the company were not significant. There were no changes in the number of significant other post-retirement benefit plans administered by the company as a result of the separation. Existing company plans that were significantly impacted by the transfer of active plan participants to DowDuPont were remeasured, resulting in curtailment gains and losses and recognition of special termination benefits.

In 2020, 2019 and 2018, the company contributed $299 million, $261 million and $1,651 million to its continuing operations pension plans respectively, including contributions to fund benefit payments for its non-qualified pension plans ($299 million, $266 million and $1,656 million, including contributions to plans of discontinued operations). In the third quarter of 2018, the company made a $1,100 million discretionary contribution to its principal U.S. pension plan, which is included in the 2018 contribution amount above. The discretionary contribution was primarily based on the company’s funding policy, which permits contributions to defined benefit pension plans when economics encourage funding, and reflected considerations relating to tax deductibility and capital structure.

Parental leave (GRI 401-3)

Dow’s Global Parental Leave Policy is intended to provide greater flexibility and work-life balance for mothers and fathers. Birthing parents have a minimum 12 weeks of paid leave, and the non-birthing parent has two weeks of paid leave, which can be taken during the 12 months following the birth of a child.