DuPont A Market-Driven Science Company. Leveraging Good Governance and Strategic Vision to Build a Sustainable Future

Transcription

1 DuPont A Market-Driven Science Company Leveraging Good Governance and Strategic Vision to Build a Sustainable Future

2 Regulation G The attached charts include company information that does not conform with generally accepted accounting principles (GAAP). Management believes the use of these non GAAP measures are meaningful to investors because they provide insight with respect to operating results of the company and additional metrics for use in comparison to competitors. These measures should not be viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures used by other companies. This data should be read in conjunction with previously published company reports on Forms 10 K, 10 Q, and 8 K. These reports, are available on the Investor Center of Reconciliations of non GAAP measures to GAAP are also included with this presentation. Forward Looking Statements This document contains forward looking statements which may be identified by their use of words like plans, expects, will, believes, intends, estimates, anticipates or other words of similar meaning. All statements that address expectations or projections about the future, including statements about the company's strategy for growth, product development, regulatory approval, market position, anticipated benefits of recent acquisitions, timing of anticipated benefits from restructuring actions, outcome of contingencies, such as litigation and environmental matters, expenditures and financial results, are forward looking statements. Forward looking statements are not guarantees of future performance and are based on certain assumptions and expectations of future events which may not be realized. Forward looking statements also involve risks and uncertainties, many of which are beyond the company s control. Some of the important factors that could cause the company s actual results to differ materially from those projected in any such forward looking statements are: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product life cycles; significant litigation and environmental matters; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, interest and currency exchange rates; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, weather events and natural disasters; ability to protect and enforce the company's intellectual property rights; successful integration of acquired businesses and separation of underperforming or non strategic assets or businesses and successful completion of the proposed spinoff of the Performance Chemicals segment including ability to fully realize the expected benefits of the proposed spinoff. The company undertakes no duty to update any forward looking statements as a result of future developments or new information. Developing Markets Total developing markets is comprised of Developing Asia, Developing Europe, Middle East & Africa, and Latin America. A detailed list of all developing countries is available on the Earnings News Release link on the Investor Center website at 12

3 DuPont s Transformation to a Higher Growth, Higher Value Company Growth Driven by Scientific Innovation & Portfolio Enhancements Achieved major steps forward against our strategic priorities in Continue to increase value through the combination of integrated strategic and operational priorities Tremendous value and opportunity for shareholders through product pipeline Strong Business Performance and Return to Shareholders Major discovery and growth across key portfolio segments Disciplined and rigorous process to measure and increase our return on R&D TSR 220% (12/31/08 6/30/14) vs. S&P %; Proxy Peers 126% Effective Board Composition and Independent Leadership Cross section of backgrounds, tenure and expertise on the Board Four new directors in the last three years; most recently October 2014 Lead director providing effective, independent leadership in the boardroom Sound Corporate Governance, Compensation and Sustainability Practices Governance practices promoting shareholder rights and board accountability Strong pay for performance philosophy, strongly supported by shareholders Thought leader in environmental and sustainability practices 3

4 Growth Driver: DuPont s Broad Science And Innovation Capabilities Create Large Opportunities World Class Integrated Science Coupled With Compelling Market Insights To Solve World Scale Challenges Particle & Dispersion Science Catalysis Precision Patterning Fiber Science & Engineering Fluoro Chemical & Polymer Synthesis Polymer Synthesis Surface & Colloidal Science Film Fabrication Inorganic / Organic Synthesis Rheology Control Inorganic- Organic Composites Polymer Processing Biochemistry Fermentation Engineering Formulation Science Nanoscience Metabolic Engineering Nutrition Science Molecular Biology Chemical Engineering Agronomy Plant Physiology/ Disease Microbiology Conventional Breeding Gene Recombination & Regulation Cell / Tissue Culture Protein Engineering Molecular Breeding Genomics Bioinformatics Entomology Plant Genetics Integration of scientific capabilities Food Energy Engineering Materials Science Chemistry Biological Sciences Protection Unrivaled Capability Integrating Biology, Chemistry, Materials Science & Engineering 4

5 Major Steps Forward Against Our Priorities Operational Actions CREATED a leading position in Ag REDUCED costs and working capital INCREASED penetration in emerging markets Strategic Actions DIVESTED Performance Coatings and GLS/Vinyls ANNOUNCED SEPARATION of Performance Chemicals ACQUIRED Danisco, full ownership of Solae and Pannar and other seed companies IMPROVED adjusted segment operating margins by 69% (1) Results ACHIEVED Operating EPS CAGR of 29% (2) REDUCED adjusted net leverage (3) RETURNED $10B+ of capital to shareholders The Current Board and Management Team Have Been Active and Effective (1) Adjusted segment operating margins exclude non operating pension and OPEB costs and credits and significant items; calculations include certain corporate expenses and exclude Performance Chemicals, Pharma, and Other; see appendix for reconciliation of non GAAP measures (2) Excludes Performance Chemicals, Pharma and non operating pension and OPEB costs; see appendix for reconciliation of non GAAP measures (3) Adjusted net leverage is short term debt plus long term debt, net of cash in excess of $1B, plus unfunded after tax pensions and OPEBs (assuming a 35% tax rate) 52

6 Path to Future Growth DuPont s Strategy To Build Higher Growth, Higher Value Agriculture & Nutrition Extend our leadership across the high value, science driven segments of the Agriculture and Food value chain Bio Based Industrials Develop world leading industrial biotechnology capabilities to create transformational new bio based businesses Advanced Materials Strengthen and grow our leading position in differentiated high value materials and leverage new sciences Seeds Agricultural Chemicals Specialty Food Ingredients Enzymes Biofuels Biomaterials Advanced Polymers Protective Materials Electronic Materials Alternative Energy These Three Strategic Priorities Position DuPont For The Next Wave Of Innovation And Growth 6

7 Path to Future Growth Our Operational Priorities Advance Our Strategic Priorities Operational Priorities Innovation Global Reach Execution Leveraging Multi disciplinary Science And Technology Platform Delivering Renewal, Breakthrough and Transformational New Products Strengthening Our Pipeline Using Our 13 Global Innovation Centers Driving Penetration In Fastgrowing, Developing Markets Combining Local Market Knowledge With Leading Science To Deliver Superior Solutions Developing Globally Diverse, Talented Employees Delivering Ongoing Productivity Enhancements Improving Customer Experience Ensuring Management Accountability 2 7

8 This Leadership Team Has a Record of Outperformance and a Strategy That Is Driving Growth and Value Outperformed peer firms in total shareholder return, Operating EPS growth, and capital returned to shareholders both dividends and share repurchases Exceeded Management s financial targets Adjusted segment operating earnings (1) grew 20% CAGR Adjusted segment operating margins (1) have improved by 650 basis points Achieved operational and cost productivity objectives Maintained balance sheet strength and financial flexibility Rebalanced portfolio of businesses towards higher growth business driven by secular trends where our science can make a difference Successfully integrated Danisco into our Nutrition & Health and Industrial Biosciences segments Our Efforts to Accelerate Growth, Improve Margins and Increase Return to Shareholders are Ongoing (1) Adjusted segment operating earnings and margins exclude non-operating pension and OPEB costs and credits and significant items; calculations include certain corporate expenses and exclude Performance Chemicals, Pharma, and Other; see appendix for reconciliation of non-gaap measures 3 8

9 Effective Governance Practices Promote Shareholder Rights Effective Board Leadership and Independent Oversight 12 of 13 directors are independent 4 new directors added in the last three years Robust lead independent director role Executive sessions of independent directors at every board meeting No director sits on more than 2 other public company boards Continually Enhanced Shareholder Rights Annual election of directors Majority vote standard Shareholder ability to call special meetings (25%) or act by written consent Simple majority vote standard for bylaw/charter and M&A No poison pill in place Sustainability Efforts and Shareholder Engagement Comprehensive sustainability program and annual reporting Strong track record of shareholder dialogue Responsive to shareholder feedback DuPont Has Actively Supported and Adopted Best Practices in Corporate Governance Note: Data includes Ulf M. Schneider who will join the board in October

10 Skills-Based Assessment for DuPont Board Membership Governance Committee Oversees evaluation of Board & its effectiveness Monitors and assesses mix of skills & experience Recommends nominees for election Identifies New Talent Builds Board with Diverse Skills Government Affairs Environmental Management Innovation in Science and Technology Human Resources Corporate Governance Investor Relations International and Emerging Markets New Business Development and Marketing Supply Chain and Logistics Finance, Internal Audit & Accounting Portfolio Assessment/Business Transformation/ M&A Executive Leadership NGOs Investment Management Capital Markets Ulf M. Mark Schneider added to the Board effective October 22, 2014 CEO of Fresenius SE & Co. KGaA, formerly CFO of Fresenius Medical Care Governance Committee sought: Sitting CEO from publicly traded company Substantial international experience, ideally in emerging markets Valued skills include: finance, M&A marketing and governance 10

11 DuPont Benefits From a Board with a Diverse Composition of Experience, Perspective and Tenure Director Tenure > 9 years Gender Diversity 3 Directors 4-8 years Female 23% 6 Directors 3 years 4 Directors Male 77% Nearly One-Fourth of the Board is Female, Including the CEO DuPont Average Tenure = 7.4 Years S&P 500 Average Tenure = 8.6 Years Board Independence Director Age Non-Independent Independent 92% of the Board is Independent Note: Data includes Ulf M. Schneider who will join the board in October 2014 DuPont Average Age = 60.5 Years S&P 500 Average Age = 62.9 Years DuPont Director Retirement Age = 72 11

12 DuPont s Rigorous Compensation Practices and Procedures Strong Shareholder Support for SOP 97% 95% 95% Pay for Performance Philosophy 11% 98% 89% = Base Salary 2014 CEO Target Pay 22% 78% Other NEOs Target Pay = Performance-Based (STIP + LTIP) Effective Executive Compensation Best Practices What we do What we don t do Use performance metrics to align pay with performance Enter into employment agreements Sign severance agreements except in the event of a change in control (double trigger) or in certain situations for newly hired executives Allow compensation practices that encourage excessively risky business decisions Use of tally sheets Regular review of Human Resources and Compensation Committee charter to ensure best practices and priorities Allow short sales, hedging, margin accounts or securities pledging of company stock Reload, reprice or backdate options Tax gross-ups on benefits and perquisites Caps on incentive compensation Rigorous stock ownership requirements for NEOs Compensation recovery policy (clawbacks) 12

13 A Long History as a Leader of Sustainability Efforts A Focus on Sustainable Goals Has Delivered Results Thought leader on sustainability for > 20 years. Exceeded our goals in magnitude and timing Reduced greenhouse gas emissions 72% during (1990 baseline) 25% during (2004 baseline) Reduced water use 12% during (2004 baseline) Saved $6 billion reducing energy usage/lb. 6% from while volume produce increased 47%. Set new, first-in-industry, market-facing sustainability goals for: Sales from products made with renewable resources New products that help customers reduce their greenhouse gas emissions Percentage of R&D spend dedicated developing more sustainable products Sustainability is a Critical Element of the Strategic Plan for Each of Our Businesses 13

14 Reconciliation of Non-GAAP Measures 14

15 E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED) (dollars in millions) SEGMENT SALES Year Year Year Total Segment Sales (a) 36,046 34,087 26,499 Less: Performance Chemicals (b) 6,932 8,055 6,245 Less: Other Total Segment Sales (excluding Performance Chemicals and Other) 29,108 25,992 20,094 (a) Segment sales includes transfers. SEGMENT ADJUSTED OPERATING EARNINGS Segment Pre-tax Operating Income (PTOI) (GAAP) (c) 5,369 5,881 3,373 Less: Performance Chemicals PTOI (b) 941 2, Less: Other/Pharma PTOI (340) (55) 839 Less: Corporate Expenses (d) Add: Significant Items (e) Segment Adjusted Operating Earnings (excluding Performance Chemicals and Other/Pharma) (f) (Non-GAAP) 4,650 3,661 1,902 (b) Prior periods reflect the reclassifications of Viton fluoroelastomers from Performance Materials to Performance Chemicals. (c) Segment PTOI is defined as income (loss) from continuing operations before income taxes excluding non-operating pension and other postretirement employee benefit costs, exchange gains (losses), corporate expenses and interest. (d) Represents total corporate expenses excluding significant items, an estimate of DuPont Performance Coatings residual costs and an estimate for an amount that would be allocated to Performance Chemicals. (e) Represents significant items included in Segment PTOI, excluding those related to Performance Chemicals and Other/Pharma. (f) Segment adjusted operating margin (non-gaap) is based on total segment sales and segment adjusted operating earnings, excluding Performance Chemicals and Other/Pharma. 15 5

16 E. I. DU PONT DE NEMOURS AND COMPANY AND CONSOLIDATED SUBSIDIARIES ADJUSTED OPERATING EARNINGS AFTER INCOME TAXES RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED) (dollars in millions, except per share) Year Year Income From Continuing Operations After Income Taxes (GAAP) 2,863 2,083 Add: Significant Items Charge - After-tax Add: Non-Operating Pension & OPEB Costs / (Credit) - After-tax 360 (250) Less: Net Income Attributable to Noncontrolling Interests 14 4 Less: Pharma Operating Earnings - After-tax (a) Less: Performance Chemicals Operating Earnings - After-tax (b), (c) Adjusted Operating Earnings - After-tax (excluding Performance Chemicals and Pharma) (Non-GAAP) 2,807 1,004 RECONCILIATION OF DILUTED EPS GAAP EPS from continuing operations Less: Performance Chemicals (b),(c) Less: Pharma (a) Add: Non-Operating Pension & OPEB Costs / (Credits) 0.39 (0.28) EPS (excluding Pharma and Non-Operating Pension & OPEB Costs) (Non-GAAP) (a) Pharma operating earnings assumes a 35% tax rate. (b) Performance Chemicals operating earnings assumes a base income tax rate from continuing operations of 20.8% and 20.4% for 2013 and 2008, respectively. (c) Prior periods reflect the reclassifications of Viton fluoroelastomers from Performance Materials to Performance Chemicals. 7

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