年 次 株 主 総 会 招 集 ご 通 知
ザ・ダウ・ケミカル・カンパニー●アメリカ合衆国 48674 ミシガン州ミッドランド市
株主各位
2008 年 5 月 15 日開催の
年次株主総会招集ご通知
謹啓
益々ご清栄のこととお慶び申しあげます。
さて、ザ・ダウ・ケミカル・カンパニー（以下「当社」または「ダウ」と表示します。
）の年次株主総会を、来
る 2008 年 5 月 15 日（木曜日）午前 10 時（東部夏時間）より、アメリカ合衆国ミシガン州ミッドランド市ウエス
ト・セント・アンドリュース 1801 番のミッドランド・センター・フォー・ジ・アーツにおいて開催し、下記の案
件を付議致しますので、その旨ご案内申しあげます。
会議の目的事項
第 1 号議案
取締役選任の件
第 2 号議案
2008 年度当社独立公認会計事務所としてデロイト・アンド・トウシュ LLP 選任の承認を求める件
第 3 号議案
呼吸困難に関する株主提案
第 4 号議案
環境修復に関する株主提案
第 5 号議案
遺伝子組み換え種子に関する株主提案
第 6 号議案
経営幹部の報酬に関する株主提案
取締役会は 2008 年 3 月 17 日（営業終了時）をもって、本総会の通知を受領し、かつ本総会において議決権を
行使すべき株主を確定する基準日と定めました。
2008 年 3 月 28 日
業務執行副社長、法務・政府業務、法務担当役兼コーポレート
秘書役
チャールズ・J・カリル
株式会社証券保管振替機構からのお願い
日本における外国株券振替決済制度においては、株主の権利は、上記基準日により確定された同制度に基づく
実質株主のご指示により当社が行使しますので、同封の議決権代理行使に係る参考資料を検討され、同封の議決
権代理行使指図書に、議案に対する賛否等を表示して、株主印をご捺印のうえ、折り返しご送付賜りますよう、
お願い申しあげます。
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ザ・ダウ・ケミカル・カンパニー
議決権代理行使に係る参考資料
同封の委任状による議決権の代理行使に係る勧誘は、2008 年 5 月 15 日（木曜日）に開催されるザ・ダウ・ケミ
カル・カンパニーの年次株主総会（以下「年次株主総会」または「本総会」と表示します。
）において行使すべき
議決権について、ザ・ダウ・ケミカル・カンパニーの取締役会がこれを行うものです。
委任状による議決権の代理行使は、当該委任状が適正に署名捺印され、本総会開催日前に独立した投票管理員
に返送・受領された場合に有効となります。格別の指示がない場合、当該委任状に基づく議決権は取締役会の勧
めに従って行使されます。
本総会において議決権を行使できる発行済普通株式の総数は、基準日である 2008 年 3 月 17 日の営業終了時現
在で 930,679,770 株です。各株主は登録上の所有株式 1 株につき 1 票の議決権を有します。発行済優先株式はあり
ません。自らまたは代理人により出席している発行済普通株式数の過半数保有の株主をもって本総会における決
議の定足数とします。棄権およびブローカー不投票（broker non-votes）は本総会の定足数を満たすかを決定する際
には含まれます。ブローカー不投票は、ストリートネームで、すなわち証券会社を通して株式を保有する者が、
その投票方法について指示をしない場合に生じます。
議案に関する参考事項
第 1 号議案
取締役選任の件
取締役会
1995 年に取締役に就任した J・ペドロ・ラインハルトの取締役 1 名が、2007 年に取締役会を退任しました。2007
年 8 月 17 日にデニス・H・レイリーが選任され、取締役 1 名が 2007 年に取締役会に加わりました。
取締役の任期
ダウの改定基本定款の規程により、全ての取締役は各年次株主総会で行われる選挙に立候補します。
取締役候補者
統治委員会の勧告に従って、取締役会はアーノルド・A・アレマン、ジャクリーン・K・バートン、ジェイムズ・
A・ベル、ジェフ・M・フェティグ、バーバラ・ハックマン・フランクリン、ジョン・B・ヘス、アンドリュー・
N・リバリス、ジェフリー・E・マーツァイ、デニス・H・レイリー、ジェイムズ・M・リングラー、ルース・G・
ショー、ポール・G・スターンを取締役候補者として指名しました。その任期は 2009 年の年次株主総会までの 1
年間で後任者が選出され任命されるまでとします。
各候補者は現在取締役を務めており、新しい任期を務めることに同意しています。取締役デニス・H・レイリー
は 2007 年の年次株主総会後から取締役会に加わりました。その他の全ての候補者は当社株主によってすでに取締
役に選任されております。後述の略歴は 2008 年 2 月 19 日現在のものです。
取締役会は全会一致で、これらの候補者全ての取締役選任に賛成票を投じられることをお勧めします。
取締役の選任には、実際の投票数の過半数が必要です。保留票は候補者が当選票数を得ているか否かに影響せ
ず、またブローカー不投票は当該選挙結果には影響を及ぼすものではありません。株主の皆様は、第 1 号議案に
おいて特定の候補者に対する賛成を保留される場合には、その候補者名を委任状用紙の所定の欄にご記入下さい。
また、全ての候補者に対する賛成を保留される場合には「保留」欄に○印でご表示下さい。
選任候補者
アーノルド・A・アレマン
65 歳、1996 年当社取締役に就任。
1965 年～2008 年当社従業員。1992～1993 年ダウ・ベネルクス N.V.製造部門担当ゼネラル・マネージャー、1993
年ダウ・ベネルクス N.V.製造部門・総務部門担当地域副社長、1993～1995 年ダウ・ヨーロッパ GmbH 製造部門担
当副社長、1996～1997 年当社副社長兼製造・技術部門担当取締役、1997～2000 年当社製造担当副社長、2000～2004
年当社業務執行副社長、2004～2008 年当社上級顧問。技術部門少数民族全国実行委員会、ミシガン分子学会、マ
イテック・プラス、ミシガン野球推進財団および中部ミシガン・イノベーション・センターの各取締役会構成役
員。製造業者協会理事。サギノー・バリー州立大学理事会、カンザス州立大学および工科大学諮問委員会、サム・
ヒューストン州立大学プレジデント・サークル、米国化学学会および PRM ベンチャーズ各会員。
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ジャクリーン・K・バートン 55 歳、カリフォルニア工科大学アーサー・アンド・マリアン・ハニッシュ記念化
学教授。1993 年当社取締役に就任。
1980～1982 年ニューヨーク市立大学、ハンター大学の化学・生化学助教授、1983～1985 年コロンビア大学助教授、
1985～1986 年同大学準教授、1986～1989 年同大学化学・生物学教授、1989 年から現在までカリフォルニア工科大
学化学教授。1997 年から現在まで同大学アーサー・アンド・マリアン・ハニッシュ記念化学教授。1991 年マッカ
ーサー財団研究員、1991 年米国芸術科学アカデミー研究員、2000 年米国哲学協会研究員および 2002 年全米科学
アカデミー会員に任命される。2006 年優秀取締役交流会より優秀取締役に任命、2006 年ウィラード・ギブス賞受
賞、2003 年米国化学学会（ACS）ブレスロー賞受賞、1997 年 ACS ウィリアム・H・ニコルズ・メダル受賞、1992
年コロンビア大学優秀メダル受賞、1992 年 ACS ガーバン・メダル受賞、1988 年ニューヨーク市長科学技術賞受
賞、1988 年 ACS 純粋化学賞受賞、1985 年全米科学財団アラン・T・ウォーターマン賞受賞。ジリード科学諮問理
事会会員。2001～2005 年ジェネオーム・サイエンシズ・インク取締役。
ジェイムズ・A・ベル
59 歳、ボーイング・カンパニー財務担当業務執行副社長兼最高財務責任者。2005
年当社取締役に就任。
2003 年から現在までボーイング・カンパニーの財務担当業務執行副社長兼最高財務責任者。2000～2003 年同社財
務担当上級副社長兼コーポレート・コントローラー。現勤務先以前には 1996～2000 年ボーイング・スペース・ア
ンド・コミュニケーションズの契約およびプライシング担当副社長。1992～1996 年ボーイング・カンパニー・ロ
ケットダイン部の宇宙ステーション電力システム事業経営担当取締役。ジョフリー・バレー、シカゴ・アーバン・
リーグおよびニューリーダーズ・フォー・ニュースクールズの各取締役会構成役員。ワールド・ビジネス・シカ
ゴ、シカゴ経済クラブおよびシカゴ商業クラブの各会員。
ジェフ・M・フェティグ
50 歳、ワールプール・コーポレーション会長兼最高経営責任者。2003 年当社取締役
に就任。
2004 年から現在までワールプール・コーポレーション会長兼最高経営責任者、1999～2004 年同社社長兼最高執行
責任者、1994～1999 年同社業務執行副社長、1994～1999 年ワールプール・ヨーロッパ・アンド・アジア社長、1992
～1994 年ノースアメリカ家電グループのグループマーケティング・販売担当副社長、1990～1992 年ワールプール・
ヨーロッパ B.V.のフィリップス・ワールプール家電グループマーケティング部門担当副社長、1989～1990 年キッ
チンエイド家電グループマーケティング部門担当副社長、1988～1989 年同社製品開発担当取締役。ワールプール・
コーポレーション取締役。
バーバラ・ハックマン・フランクリン
67 歳、バーバラ・フランクリン・エンタープライズ社長兼最高経営責任
者、元米国商務長官。1980～1992 年および 1993 年から現在まで当社取締
役。
1995 年から現在まで、非公開の経営コンサルティング・投資会社であるバーバラ・フランクリン・エンタープラ
イズの社長兼最高経営責任者。1993～1995 年ビジネス・コンサルタント。1992～1993 年米国商務長官。1984～1992
年フランクリン・アソシエイツの社長兼最高経営責任者。1979～1988 年ペンシルベニア大学ウォートン・スクー
ル行政・ビジネスプログラム上級研究員および理事。1973～1979 年米国消費者製品安全性委員会委員。1971～1973
年米国大統領スタッフ・アシスタント。1969～1971 年シティバンク副社長補佐。1964～1970 年シンガー・カンパ
ニー経営企画担当マネージャー。1982～1986 年および 1989～1992 年大統領貿易政策交渉諮問委員会委員。2007
年ディレクターシップ 100（コーポレート・ガバナンスの最有力者）受賞。2003 年優秀取締役交流会（ODX）よ
り優秀取締役賞受賞。全米企業取締役協会の 2000 年ディレクター・オブ・ザ・イヤー受賞。優れた監査への貢献
に対する 1992 年ジョン・J・マクロイ賞受賞。ニューヨーク経済クラブ理事および名誉会長、全米企業取締役協
会、米中関係委員会、大西洋協議会の理事および米中事業審議会前副議長。公開企業会計監視委員会委員。エト
ナ・インク取締役、投資信託のアメリカン・ファンズにおける 3 ファンドの取締役または理事、JP モルガン・バ
リュー・オポチュニティー・ファンド・インク取締役。
ジョン・B・ヘス
53 歳、ヘス・コーポレーション会長兼最高経営責任者。2006 年当社取締役に就任。
1977 年ヘス・コーポレーション入社。1978 年から現在まで同社取締役。1995 年から現在まで同社会長兼最高経営
責任者。JP モルガン・チェース全米諮問機関取締役。事業審議会、全米石油審議会、外交問題評議委員会、ハー
バード・ビジネススクール学部長表彰者相談役会、マウント・シナイ病院評議会、ニューヨーク動物園・野生動
物保護協会、全米脳性麻痺研究教育財団の各会員。リンカーン・センター・フォー・ザ・パフォーミング・アー
ツ取締役会構成役員。米国エネルギー省長官諮問委員会の前会員。
アンドリュー・N・リバリス
53 歳、当社社長、最高経営責任者兼会長。2004 年当社取締役に就任。
1976 年当社入社。1989～1992 年当社タイ事業担当ゼネラル・マネージャー。1992～1993 年エマルジョン・ポリマ
ーおよび新規事業担当グループ業務取締役。1993～1994 年当社環境業務新設事業担当ゼネラル・マネージャー。
1994～1995 年当社環境業務新設事業担当副社長。1995～1998 年ダウ・ケミカル・パシフィック・リミテッド社長。
- 3 -
1998～2000 年スペシャルティ・ケミカルズ副社長。2000～2003 年機能化学品事業グループ社長。2003～2004 年社
長兼最高執行責任者。2004 年から現在まで社長兼最高経営責任者。2006 年から現在まで会長。シティグループ・
インク、米国気候アクション・パートナーシップの取締役。米国化学評議会の名誉会長。化学協会国際協議会会
長。アメリカン・オーストラリア人協会、事業審議会、事業円卓会議会、デトロイト経済クラブ、ニューヨーク
経済クラブ、国際事業審議会、全米石油審議会、化学産業協会（Société de Chimie Industrielle）、米中事業審議会およ
び持続可能な開発のための世界経済人会議の各会員。タフツ大学およびハーバート・H・アンド・グレース・A・ダ
ウ財団理事会会員。
ジェフリー・E・マーツァイ
56 歳、当社業務執行副社長兼最高財務責任者。2005 年当社取締役に就任。
1977～2001 年および 2005 年から当社従業員。1977～1980 年当社中東・アフリカ調査担当マネージャー、1980 年
～1982 年当社アジア太平洋調査担当マネージャー、1982～1983 年当社アジア太平洋財務・調査担当マネージャー。
1983～1986 年当社ドイツ・東欧担当財務管理本部長。1986～1988 年当社外国為替担当マネージャー、1988～1991
年当社アジア太平洋財務担当取締役、1991～1996 年ダウ・ヨーロッパ財務担当取締役兼財務管理本部長。1996～
2001 年当社副社長兼財務管理本部長。2001～2005 年アルキャン・インクの業務執行副社長兼最高財務責任者。2005
年から現在まで当社業務執行副社長兼最高財務責任者。ダウ・コーニング・コーポレーション、ダウ・クレジッ
ト・コーポレーション、ダウ・フィナンシャル・サービシズ・インク、マイコゲン・コーポレーションおよびオ
ーマン・ペトロケミカル・インダストリーズ・カンパニーLLC の各取締役会構成役員。ドリンコ・リインシュア
ランス・カンパニー、ダウ・インターナショナル・ホールディングス S.A.およびリアナ・リミテッドの各会長。
ケミカル・フィナンシャル・コーポレーションの取締役会構成役員。財務担当協議委員会理事会会長。国際ビジネ
ス米国協議会理事および執行委員。
デニス・H・レイリー
54 歳、コビディアン・エルティーディー非業務執行会長。2007 年当社取締役に就任。
2007 年 4 月から現在までコビディアン・エルティーディー非業務執行会長および取締役会構成役員。2000 年 12
月～2007 年 4 月プラクスエア・インク会長、2000～2006 年同社社長兼最高経営責任者。1999 年 5 月～2000 年イ
ー・アイ・デュポン・ドゥ・ヌムール・アンド・カンパニー業務執行副社長および最高執行責任者、1997～1999
年同社業務執行副社長、1996~1997 年同社ライクラ事業担当副社長兼ゼネラル・マネージャー、1994～1995 年同
社特殊化学製品事業担当副社長兼ゼネラル・マネージャー、1990～1994 年同社二酸化チタン事業担当副社長兼ゼ
ネラル・マネージャー。1989 年前には、コノコの上級管理職を歴任。H.J.ハインズ・カンパニー、マラソン・オイ
ル・カンパニーおよびコンサベーション・ファンドの各取締役。米国化学評議会元会長。
ジェイムズ・M・リングラー
62 歳、テラデータ・コーポレーション会長。2001 年当社取締役に就任。
2007 年 10 月から現在までテラデータ・コーポレーション会長。2005~2007 年 NCR コーポレーション取締役兼会
長。1996～2001 年ユニオン・カーバイド・コーポレーション取締役。1999～2004 年イリノイ・ツール・ワークス・
インク（プリマーク・インターナショナル・インクとの合併後）副会長。1997～1999 年プリマーク・インターナ
ショナル・インク会長、1990～1999 年同社取締役、1996～1999 年同社最高経営責任者、1992～1996 年同社社長兼
最高執行責任者、1990～1992 年同社業務執行副社長。1982～1986 年タッパン・カンパニーの社長兼最高執行責任
者、1986～1990 年ホワイト・コンソリデイテッド・インダストリーズの主要家電グループ社長（両社ともエレク
トロラックス AB の子会社）。オートリブ・インク、コーン・プロダクツ・インターナショナル・インクおよび FMC
テクノロジーズ・インクの各取締役。シカゴ・リリック・オペラ理事。
ルース・G・ショー
60 歳、デューク・エネルギー・コーポレーション常任顧問。2005 年当社取締役に就任。
2006 年 10 月から現在までデューク・エネルギー・コーポレーションの常任顧問、2006 年 4 月～10 月公共政策担
当責任者兼デューク・ニュークリア社長、2003～2006 年デューク・パワー・カンパニー社長兼最高経営責任者、
1997～2003 年同社業務執行副社長兼最高総務責任者、1994～2003 年デューク・エネルギー・ファンデーション社
長、1994～1997 年同社企業資源担当上級副社長、1992～1994 年同社企業広報担当副社長。1986～1992 年ノールカ
ロライナ州シャーロット、セントラル・ピードモント・コミュニティ・カレッジ理事長、1984～1986 年テキサス
州ダラス、エルセントロ大学学長。ワコビア・コーポレーションおよび DTE エネルギーの各取締役。ノースカロ
ライナ大学シャーロット校理事会理事長、カロライナ・スレッド・トレイル運営委員会会長。デューク大学ニコ
ラス・スクール環境・地球科学科視察委員。エネルギー・ワークフォース・ディベロップメント国立研究所理事
長。
ポール・G・スターン
69 歳、クラリス・キャピタル会長。1992 年当社取締役に就任。2006 年 5 月当社議長職取
締役に就任。
2004 年から現在までクラリス・キャピタル会長。1999 年アーリントン・キャピタル・パートナーズの共同経営者
兼無限責任パートナー、1995 年サイヤー・キャピタル・パートナーズの共同経営者。1993～1995 年フォルストマ
ン・リトル・アンド・カンパニーの有限責任パートナー。1990～1993 年ノーザン・テレコム・リミテッド取締役
会会長、1990～1993 年同社最高経営責任者、1989～1990 年同社副会長兼最高経営責任者、1988～1993 年同社取締
役。1982～1987 年ユニシス・コーポレーション（前バーローズ・コーポレーション）社長。ワールプール・コー
- 4 -
ポレーション取締役。国防関連企業幹部理事会会員。クラリス・ホールディング LLC および外交問題評議委員会
の非業務執行会長。ポトマック・オフィサーズ・クラブ会員。
第 2 号議案
独立公認会計士事務所選任の承認を求める件
「本総会は、ザ・ダウ・ケミカル・カンパニーおよびその子会社に係る 2008 事業年度の連結財務書類および関
連ある財務報告に対する内部統制を監査する監査人として、取締役会の同意を得て監査委員会が選任したデロイ
ト・アンド・トウシュ LLP をここに承認することを決議致します。」
当社附属定款は、選定された独立公認会計士事務所の認否を年次株主総会の付議事項に定めております。取締
役会は、当社およびその子会社に係る 2008 事業年度の連結財務書類および関連ある財務報告に対する内部統制に
ついて監査を実施し報告する監査人として、監査委員会が選定した監査法人デロイト・アンド・トウシュ LLP（以
下「同監査法人」と表示します。
）を是認し、その承認を求める決議案を上程致します。同監査法人は、2007 事業
年度も当社の独立公認会計事務所として務めました。同監査法人は、米国内外で当社が営業を行っているほとん
どの地域ないしその近辺に事務所を有しております。
監査委員会は、監査人の選任に先立ち、独立公認会計士事務所候補の質および適性につき慎重に検討致しまし
た。同監査法人については、過去の実績、その独立性および独立性の維持方法、最新の内部品質管理体制の検討
結果または公開企業会計監視委員会の検査結果、監査実行班の主要メンバー、国内官庁との協議を含む重要な会
計・監査問題の解決方法、ならびにその万全性や会計・監査分野での力量に関する評判等を精査致しました。
当社監査委員会は同監査法人が適任である旨申し述べております。2008 年 2 月、同監査法人は当社監査委員会
に対し、同監査法人は他の全ての大手会計士事務所と同様に数多くの民事訴訟の被告となりましたが、当該民事
訴訟の多くは、クライアントが公表し、同監査法人が報告した財務書類が不正確であったという主張を前提とし
ている旨を伝えてきました。さらに、同監査法人は、当社監査委員会に対して、同監査法人の長年にわたる経験
と当該訴訟の原因となった状況の把握を基に、当該訴訟が当社の独立公認会計士事務所としての職務遂行能力に
重大な影響を与えることはないと考えている旨を報告しました。監査委員会はこれを受け、同監査法人の職務遂
行能力はそれらの訴訟により悪影響を受けないと判断致しました。
同監査法人の代表は本総会に出席し、必要に応じてその所見を述べる機会を持ち、また株主の質疑に対して席
上で応答することができます。
同監査法人選任の承認を求める本議案の可決には実際の投票数の過半数を要します。投票数には、賛成および
反対票のみが含まれ、棄権票およびブローカー不投票（broker-non-votes）は含まれません。同監査法人の選任が株
主により承認されない場合、監査委員会は法律により何時でも同監査法人を維持するか、または別の事務所を選
任するかを決定する最終権限を有していますが、監査委員会は当社の監査人を務める事務所を選定する今後の決
定に関してこれを考慮します。
取締役会は全会一致で、2008 年度の当社およびその子会社の独立公認会計士事務所としてデロイト・アンド・
トウシュ LLP 選任を承認する本議案につき、株主各位が賛成の投票をされるよう勧誘致します。
第 3 号議案
喘息および他の呼吸困難に関連あるダウ・ケミカルの化学品についての報告に関する株主提案
当社株主から、その代理人が本総会において以下の提案を行う予定である旨の意思表示がありました。当社は、
コーポレート秘書役に対して要求があった場合、当該株主の氏名および住所ならびに当該株主が保有する株式数
を速やかにお教え致します。当社は提案内容について責任を負いません。以下の提案が本総会において適式に提
出された場合、取締役会は全会一致で、以下の提案に対して反対票を投じられるよう勧誘致します。
株主の決議案
前
文
・ ダウの最終使用される農薬製品の約半数（149 品中 73 品）は、活性もしくは不活性成分または代謝産物による
喘息および他の呼吸困難に関連している可能性があります。呼吸困難に関連する成分を含んだダウの一般的な
農薬製品には、フルタイム、ダーズバン、ローズバン、グリフォマックス、トーデン、テロン、スターレイン、
ダイセン、ワイドマッチ、バイケーン／プロフューム等があります。
・ 疾病対策予防センター（以下「CDC」と表示します。）によると、米国において 1,600 万人が喘息を患っていま
す。1980 年代の中頃から、喘息にかかる人の割合が急増しています。
・ CDC によると学齢児童のうち約 8 人に 1 人は喘息にかかっており、慢性的な疾患であるため不登校の主因とな
っています。子供は大人よりも喘息にかかりやすいと言えます。というのも、8 歳までは肺が十分に発達して
- 5 -
おらず、喘息につながる農薬やその他の汚染物質に弱いためです。喘息が原因で死亡する子供の数は、1979 年
から 1996 年までの間にほぼ 3 倍に増加しました。小児喘息治療の年間予算の概算は 32 億円であります。
（Environmental Health Perspectives）の 2004 年の研究によると、農薬は喘息の引き金でもあり
・ 「環境衛生展望」
根本的原因でもあるとしています。研究者は、除草剤に触れた子供は、5 歳になる前に 4.5 倍以上喘息であると
診断される可能性が高く、殺虫剤に触れた幼児は、2 倍以上喘息になる可能性が高いということを発見しまし
た。
・ 小売りおよび卸売りの農薬製品に加えて、ダウは最終的には他の企業が販売する農薬に含まれる多数の活性成
分を製造しています。例えば、ダウは米国において 2, 4-D の唯一の製造者であり、クロルピリホスの世界最大
の製造者のうちの 1 社ですが、当該成分は両方とも喘息に関連があります。
・ CDC の「2005 年環境化学物質への人間の被爆に関する全米報告書」（2005 National Report on Human Exposure to
Environmental Chemicals）からのデータによると、76％のアメリカ人がクロルピリホスの代謝物を体内に保有し
ていることがわかりました。6 歳から 11 歳の子供は、環境保護庁（以下「EPA」と表示します。）が許容範囲で
あると考える長期被爆水準の 4 倍も接しています。さらに、25％以上のアメリカ人は 2, 4-D を体内に保有して
おり、6 歳から 11 歳の子供の体内からも最高濃度の 2,4-D が発見されました。提案者は CDC のデータが被爆と
病気との相関関係を示すのに役立ち、ダウの法的責任を増大させる可能性があると考えています。
決議事項
我々株主は、妥当な費用かつ機密情報を除いた形で、ダウの製品が喘息を引き起こす、または悪化させる範囲を
分析し、当該影響に関連する物質を排除または制限する公共政策の提唱ならびにダウの政策および活動を説明す
る報告を発表するため、2009 年 5 月までに取締役会は利益相反を抑制する独立した委員会を設置することを要求
する。
株主の補足説明
提案者は、論文審査のある学術専門誌に掲載されているダウの製品の中で、最終使用農薬（ならびにそれらの
不活性成分および代謝産物）、農薬活性成分および他の化学物質を含む、喘息の引き金となる、または嘆息を引き
起こす可能性のあるすべての製品を報告に含むべきであると考えています。
当社提案および推薦
取締役会は全会一致で、本提案に対して反対票を投じられるよう勧誘致します。
ダウは、これまでの開示と公開されている範囲を考慮して、本提案で要求されている報告は不必要であり、当
社の資産を投じても株主各位の利益となることはないと考えております。
農薬は世界の食糧生産を向上させ、有害で病気を媒介する昆虫および農作物病害から人々や家庭を守っていま
す。米国や他の国々で販売を行う前に、当該製品は人々の健康と環境を保護する責任を担う政府規制当局により
登録されなければなりません。
広範囲に及ぶ科学的情報を調査して初めて、米国監督機関による承認が与えられます。いったん製品が登録さ
れると、当該製品は継続的な監視を受けることになります。監督機関は、新しい情報を受けて、追加の研究を要
請し、使用を制限し、または製品の登録を取り消す権限を有します。当該決定およびその根拠については公表さ
れ、農薬検査を担う他国の監督機関も利用できます。
農薬が喘息の重大な原因または引き金であるという科学的な、または規制上の合意はどこにもありません。環
境保護庁、米国立環境衛生科学研究所、疾病予防対策センターは、チリダニ、カビ、たばこの煙、ゴキブリおよ
びその他の様々な物が喘息の一般的な原因や引き金になっているという立場をとっています。論評の対象となる
記事のなかには、農薬と呼吸状態には関連があると考えるものもありますが、前述の機関は、農薬が喘息の重大
な原因であるとは結論づけていません。
提案で言及された薬品であるクロルピリホスおよび 2,4-D は両方とも米国および欧州連合の規制当局が実施す
る徹底的な科学的基礎に基づいた検査を受けています。製品登録を維持する間、公表された科学文献に掲載され
ている研究記事の調査を含む、監督機関による当該薬品およびその他の農薬製品の審査は引き続き通常通り発生
します。
クロルピリホスおよび 2,4-D についてのさらなる健康および安全に関する情報は www.chlorpyrifos.com および
www.24d.org で入手できます。ダウは当該製品および当社の他の製品に強力な製品管理プログラムで対応しています。
ダウの製品管理についてのさらなる情報は www.dowagro.com/rc/index.htm および www.dowproductsafety.com で入手でき
ます。
本決議で要求されている行為はすでに実施されている独立した、確かな、透明性および科学的根拠のある規制手続
きに重複します。米国および他の多くの国々では、既存の規制手続きによってすでに一般国民が再調査し、意見を述
- 6 -
べる機会が与えられており、当該機会がこの提案の提案者がその懸念を述べるのによりふさわしい場であると言えま
す。
これらの理由から、本報告は当社および当社株主の最良の利益とはならないと思われます。したがって、取締
役会は全会一致で、本提案に対して反対票を投じられるよう勧誘致します。
規定投票数
決議の承認には、本議案に対する実際の投票数の過半数が必要です。投票数には、賛成および反対票のみが含
まれ、棄権票およびブローカー不投票（broker-non-votes）は含まれません。
第 4 号議案
ミッドランド地域の環境修復についての報告に関する株主提案
当社株主 1 名から、その代理人が本総会において以下の提案を行う予定である旨の意思表示がありました。当
社は、コーポレート秘書役に対して要求があった場合、当該株主の氏名および住所ならびに当該株主が保有する
株式数を速やかにお教え致します。当社は提案内容について責任を負いません。以下の提案が本総会において適
式に提出された場合、取締役会は全会一致で、以下の提案に対して反対票を投じられるよう勧誘致します。
株主の決議案
前
文
ダウ・ケミカルのミッドランド工場沿いのサギノー川下流において、ダイオキシン濃度が、五大湖の中で一番
高い 1,600,000ppt 以上であると計測されました。居住に適した浄化基準は、90ppt です。EPA は、下流水路の浄化
が遅れているダウの責任を問い、当社の作業計画に重大な不備を見つけました。2007 年に、EPA は最も高い濃度
を示している特定地域から有害堆積物を取り除く緊急措置を求める同意指令を交付しました。
ダウの汚染は、サギノー湾へ注ぐ 2 つの川を通って 50 マイル以上に拡大し、ヒューロン湖へ流れ込み、国内最
大の汚染現場となっています。2007 年 8 月、EPA はヒューロン湖へと汚染が下流移動していることに関して一定
の対応策をとるようダウに要求しました。
ダウが出資して行った調査では、ダウ付近の汚染された氾濫原に住む居住者の血中ダイオキシン濃度の中央値
は比較群より 28％高く、血液中のダイオキシン濃度は増加していることが確認されました。
ミシガン州環境基準省（以下「MDEQ」と表示します。
）はティタバワシー地域の住民に対して、定期的に河川
からの魚類を摂取することにより、ダイオキシン被爆は急増する可能性があると警告しており、ティタバワシー
川の釣魚を 1 ヵ月のうち 7 回摂取するとダイオキシン被爆は 3,900％増加するとしています。
ダウ・ケミカルはティタバワシー川沿いおよび氾濫原に住む 2,000 人の住民を代表する個人から、ミッドランド
工場からのダイオキシンにより住民の健康が脅かされ、資産価値を低下させているとして訴えられています。当
該集団代表訴訟により、合計 1 億ドルの損害賠償を請求する可能性があります。
全米科学アカデミーの調査では、ダイオキシンの毒性は周知のヒト発癌性物質であることを再確認しました。
報告書によると、「ダイオキシンの発癌効果に安全な『閾値』はないように思われます。蓄積された証拠によると、
（中略）ダイオキシンは低水準であっても子供の発達障害、子供および大人の免疫学的問題、大人の生殖障害お
よび糖尿病などその他多数の健康問題も引き起こします。」としています。ダイオキシンは、その子供に対する影
響に基本機能の障害が含まれることがあり、被爆が広範囲にわたっているため、「第二の鉛」と呼ばれています。
提案者は、ダウのミッドランド施設近辺におけるダイオキシン被爆について、徹底した特性の解析および修復
を遅らせ続けることにより、長期間にわたって責任が増大し、ダウの評判を傷つけることになると考えています。
決議事項
我々株主は、妥当な費用かつ機密情報を除いた形で、ダウがミッドランド本社の近辺およびその下流地域で行っ
ている環境修復措置の速度および効果について要約した報告を、取締役会が株主に 2009 年 4 月までに発表するこ
とを要求する。
株主の補足説明
提案者は、ダウ・ケミカルが原因とされる汚染された土壌および堆積物に含まれるダイオキシンの全体量と、
一年ごとを基準として今後 12 年間にわたり毎年除去または修復される分量、修復方法ならびに水路、氾濫原およ
び食物連鎖からダイオキシンを除去する当該方法の有効性といった総体的な公衆被爆および環境目標を報告に含
むべきであると考えています。
- 7 -
当社提案および推薦
取締役会は全会一致で、本提案に対して反対票を投じられるよう勧誘致します。
本提案は、ダウがミッドランド本社の近辺およびその下流地域で行っている環境修復措置の速度および効果に
ついて要約した新たな報告の発表に、賛成票を投じるよう株主に要求するものであります。
上記株主提案において、提案者は不正確な、不当な、根拠のないまたは理解を欠いた多数の議論に基づいて新
たな報告を要求しています。
提案者は、ミシガン大学の調査により、汚染された氾濫原に住む居住者の血中ダイオキシン濃度の増加が確認
されたとしています。当該結論は重大な文脈を欠いており、不当なものであります。ミシガン大学の研究者は、
ダイオキシン、フランおよび PCB の結果を一つに結合し、結合されたダイオキシン、フランおよび PCB の血中濃
度に寄与する最も重要な要因は、当該地域に居住する人々が対照群の人々に比べて高齢であり体重が重いことで
あると結論づけました。食物中のダイオキシン、フランおよび PCB 濃度が歴史的に高く、身体のダイオキシン、
フランおよび PCB の除去方法が原因となって、年齢および体重の両方が一般的な米国住民のダイオキシン濃度を
上昇させる原因であるというのはよく知られています。ミシガン大学の結果に年齢および体重を加味すれば、当
該地域に居住する人々の血中ダイオキシン濃度がダイオキシン汚染の発生源がない地域に住む人々のものよりも
高いということはありません。さらに、ミシガン州公衆衛生局（以下「MDCH」と表示します。）が最近実施した
「試験的被爆研究（”Pilot Exposure Study”）」から、「被験者の血清検体で測定された DLC（ダイオキシン類）濃度
は、バックグラウンド暴露を超えるダイオキシンおよびフラン被爆がないとされる人々についての事前に予想し
た基礎濃度の範囲内であることも判明しました。
河川の魚類摂取に関する MDEQ のティタバワシー地域住民に対する警告についての提案者の発言は、全く理解
を欠いており、さらなる調査が必要とされます。圧倒的に、ティタバワシー川で食材として好まれるのはウォー
ルアイです。最新の MDCH による魚類摂取勧告では、ウォールアイを「家族全員にとって安全な魚」として掲げ
ており、大人は「22 インチ以下のウォールアイを無制限に摂取」してもよいとしています。MDEQ の警告は、消
費について標準的な実際の社会状況を反映していない極端な仮定を使用したモデルに広く基づいています。さら
に、ミシガン大学のダイオキシン被爆研究は、
「魚を食べることは、それが釣魚であるか市販のものであるかまた
はレストランであるかにかかわらず、人々の血液中の高いダイオキシン濃度と関係している。このことは、ミッ
ドランド／サギノーにおける汚染地域の魚および汚染地域以外の魚の両方に当てはまる。」と結論づけています。
たとえそうであるとしても、MDCH およびミシガン大学は、現地住民の人々の血清検体で測定されたダイオキシ
ン類濃度は、バックグラウンド暴露を超えるダイオキシンおよびフラン被爆がないとされる人々についての事前
に予想した基礎濃度の範囲内であると報告しているのです。従って、MDEQ および提案者は現地で捕れた魚を消
費したことによる被爆推定値を著しく誇張しているのです。
EPA のダイオキシン再評価草案に関する全米科学アカデミー（以下「NAS」と表示します。）の報告書中の調査
結果についての記載は不当であり、全く不正確である部分もあります。NAS はダイオキシン被爆に関連ある健康
リスクについて批評しており、「長期間にわたって低水準の TCDD、その他のダイオキシンおよびダイオキシン様
化合物に一般の人々がさらされることから起こりうる副作用は、直接目に見えるものではなく、まだ議論の余地
があります。」としています。さらに、「報告書によると、ダイオキシンの発癌効果に安全な閾値はないように思
われます。」という提案者の主張と異なり、NAS は、EPA がリスクを判断する際に非閾値モデルのみに依拠してい
ることは「科学的裏付けが十分ではない」と実際に指摘しました。
また、完全な修復の実現が遅れる可能性と当社に対して長期間にわたり悪影響を及ぼす可能性に関する提案者
の懸念も根拠のないものです。現地の状況を打開するために行われる取り組みを管理する必要な規定手続きの一
部として、作業計画の各要素を完了させるために必要な事業計画、実施手続き、具体的活動およびスケジュール
の概要を説明した詳細な修復調査作業計画（以下「作業計画」と表示します。）が提出され、かなりの具体的作業
が実施されました。現在提案されている作業計画では、中部ミシガンにおけるフランおよびダイオキシンの難局
解決の完了日として 2010 年を目標に定めています。当該作業計画は、インターネットで公表されています。
たとえ提案者の提言にあるこれらの誤った主張が正しいとしても、ダウの取締役会は環境修復措置の速度およ
び効果について要約した新たな報告を発表するという提案者の要求は、情報提供と利害関係者の関与について規
定された手続き要求と同じであり、いずれにしても時期尚早であると考えます。
さらに、ダウと MDEQ は合同で、できる限り透明性のある方法で工場および調査・修復措置の実施状況を地域
社会の人々に知らせるという明白な目標のため、四半期毎の一般交流会を予定しています。
かかる交流は、一般の人々および利害関係株主に、ダウの修復措置における進捗状況を知らせるのに最適です。
修復調査が完了し、見込みのある修復作業それぞれについてその実現可能性を検討し、最終的な修復が実施され、
かかる修復の効果が確認されるまで、環境修復措置の有効性の評価をある程度の信頼性を持って行うことはでき
ません。また、前述の作業が完了し、MEDQ が修復計画を承認するまで、修復に関係する土壌や粉塵の量を見積
もることも不可能です。
- 8 -
これらの理由から、当社は当該提案は不必要であり、当社の資産を投じても株主の利益となることはないと考
えております。したがって、取締役会は全会一致で、本提案に対して反対票を投じられるよう勧誘致します。
規定投票数
決議の承認には、本議案に対する実際の投票数の過半数が必要です。投票数には、賛成および反対票のみが含
まれ、棄権票およびブローカー不投票（broker-non-votes）は含まれません。
第 5 号議案
遺伝子組み換え種子についての報告に関する株主提案
当社株主から、その代理人が本総会において以下の提案を行う予定である旨の意思表示がありました。当社は、
コーポレート秘書役に対して要求があった場合、当該株主の氏名および住所ならびに当該株主が保有する株式数
を速やかにお教え致します。当社は提案内容について責任を負いません。以下の提案が本総会において適式に提
出された場合、取締役会は全会一致で、以下の提案に対して反対票を投じられるよう勧誘致します。
株主の決議案
前
文
重要な情報の開示は資本市場における基本理念であります。投資家は、企業会計への信頼が揺らぐと、長期的
に株主の価値に影響を及ぼす可能性のある、人の健康や環境に有害な活動に関連するリスクといった、その他生
じうる「オフバランス」債務を精査し始めます。
証券取引委員会の報告要件には、環境責任ならびに収益に重大な影響を及ぼすと企業が合理的に予測する動向
および不確定要素の開示が含まれています。企業の取締役および役員は、収益に悪影響を及ぼす可能性のある動
向および不確定要素については積極的に確認および評価を行い、株主にその情報を公開しなければなりません。
株式公開会社は現在、証券取引委員会への提出に際して公開を要求される財務情報が時宜を得て記録および報告
されていることを保証する管理および手続きシステムを構築することが求められています。
決議事項
我々株主は、下記の内容を含む遺伝子組み換え生体に関連して生じ得る悪影響についてダウの内部統制を 2008 年
11 月までに精査し、株主に報告するよう取締役会に要求する。
・ 現行の市場流通後監視システムの妥当性
・ 状況に応じて遺伝子組み換え種子を生態系から排除する計画の妥当性
・ ダウのすべての種子製品の信頼に生じうる影響
・ 異なる環境および農業制度用に設けられたリスク管理制度の有効性
株主の補足説明
ダウの種子生産への投資の著しい増加：
・ モンサント社とのトウモロコシ種子のライセンス契約（2007 年 9 月 14 日）
・ ブラジルの大手種子会社であるアグロメン・テクノロジア社のトウモロコシ部門の買収（ガゼタ・メルカンテ
ィル、2007 年 8 月 2 日）
・ オランダに拠点を置くデュオ・メイズ社を買収（2007 年 8 月 30 日）
・ オーストリアに拠点を置くトウモロコシ種子会社である、メイズ・テクノロジーズ・インターナショナル（MTI）
のオーストリア関連会社の買収（2007 年 5 月 1 日）
遺伝子組み換え種子の生産者は、食品医薬品局と安全性について自発的に協議を行うよう推奨されているにす
ぎません。食品医薬品局は当該製品の安全性について保証はしていません。
「遺伝子組み換え食品の安全性―予期せぬ健康への影響を評価する取り組み（Safety of Genetically Engineered
Foods: Approaches to Assessing Unintended Health Effects）」（全米科学アカデミー（NAS）、2004 年 7 月）によると、「（前
略）人の健康に対する（遺伝子組み換え生物の）予期せぬ悪影響を（中略）識別する我々の能力には依然として
相当な欠落があります。」としています。
遺伝子組み換え食品の消費から生じる予期せぬ健康への悪影響や遺伝子組み換え作物の生産による環境への影
響に関する商品化前審査の結果を検証する商品化後の調査は一切要求されていません。（NAS、2004 年 7 月）
- 9 -
）によると、遺
「ゴーン・トゥー・シード（Gone to seed）」（憂慮する科学者同盟（Union of Concerned Scientists）
伝子組み換えされた DNA はトウモロコシや大豆、菜種等の米国在来種に悪影響を及ぼし、
（中略）抑制しなければ
農産物取引を阻害し、自然食品産業に不公正な負担をかけ、有害な物質を食糧供給に紛れ込ませてしまうおそれがあ
ります。
遺伝子組み換え作物に対する米国農務省による監視の妥当性を問題視する 3 件の裁判所の判決：
・ 連邦地方裁判所ブレイアー裁判官は、遺伝子組み換えアルファルファの環境への潜在的影響について、米国農務
省は適切に評価しなかったという判決を下しました（2007 年 2 月 13 日）。
・ 米国のヘンリー・ケネディー裁判官は、遺伝子組み換え作物用の畑に関するの裁判の申請書をより徹底的に審
査するよう米国農務省に対し命じました（2007 年 2 月 5 日）。
・ 連邦地方裁判所は、米国農務省がハワイでの薬品生産遺伝子組み換え作物の栽培を許可したことは、絶滅の危
機に瀕する種の保存に関する法律及び国家環境政策法に違反するという判決を下しました（2006 年 8 月 10 日）。
当社提案および推薦
取締役会は全会一致で、本提案に対して反対票を投じられるよう勧誘致します。
バイオテクノロジー分野におけるダウの事業活動には、遺伝子組み換えのトウモロコシ、大豆、綿花、アルフ
ァルファおよびカノーラがあります。ダウはこのような製品はきちんと規制されており、地域社会に経済面、社
会面および環境面で非常にプラスの貢献をしていると考えます。
世界中の農家の人々が作物バイオテクノロジーを広く導入し、その利益を実証しています。2007 年には当該作
物は 23 カ国、2 億 8,000 万エーカーで、1 千 2 百万人以上の人々により栽培されました。（C. James.、国際アグリ
バイオ事業団、2007 年）。
新しいバイオテクノロジー製品は、規制当局の認可を受ける前に広範囲に及ぶ審査ならびに厳格な健康、安全
および環境検査を受けることになっています。ここ 10 年ほどの間、健康や環境を害することなく、当該製品は米
国で大きく成長し、消費されています。ダウは、このこと自体が当該製品の安全性と製品の許可および監督を行
う規制制度の有効性を実証していると考えています。
ダウのすべての農業バイオテクノロジー製品は、米国の適正な監督官庁による検査を無事に終了したものであ
ります。米国食品医薬品局は食品の安全性を保証するため当該製品について監督を行っています。米国農務省は、
（EPA との連帯責任で）実地調査を含む環境保護ならびに輸送および輸入に関して、当該製品の取り締まりを行
っています。EPA は、人および環境への安全性のため、除草剤耐性を有するバイオテクノロジー製品について、
実地調査、適正使用および管理を含む規制を行っています。人の健康および環境について要求される全ての調査
を完了し、当該製品の調査、開発および商品化にわたる規定検査を無事完了して初めて当社の製品に対する最終
的な許可が与えられます。さらに、商品化された後も、ダウは特定の環境効果について引き続き監視しています。
米国における規定検査に加え、作物バイオテクノロジー製品は輸入国も詳細な科学的検査と監督を導入前に行
います。検査および農業バイオテクノロジー製品の承認の規定手続きは、オーストラリア、アルゼンチン、ブラ
ジル、ブルキナファソ、カナダ、中国、コロンビア、欧州連合諸国、ホンジュラス、インドネシア、インド、日
本、韓国、メキシコ、ニュージーランド、パラグアイ、フィリピン、シンガポール、南アフリカ、スイス、台湾、
タイおよびウルグアイを含む、多数の国ですでに整備されており、その他の国でも急速に進められています。当
該製品の商品化後、人の健康または環境への悪影響が世界のどこかで指摘された場合、ダウは米国監督官庁へ報
告することが法律により義務付けられています。
レスポンシブル・ケア（※Responsible Care®）および当社内向けのバイオテクノロジーの基本原則（Guiding
Principles for Biotechnology）に従って、ダウは健康、安全および環境保護が、当社の全製品の企画、生産、販売お
よび流通において不可欠な要素となるよう取り組んでおります。各製品は商品化に先立って社内向けリスク評価
を受け、当社の手続きは、十分な管理を確保する仕組みになっています。また、ダウは業界全体が世界的に管理
プログラムをより強化するための取り組みを主導し、新しいバイオテクノロジー製品の市場への商品化を円滑に
するために作成されたバイオテクノロジー産業協会の商品発送管理方針に従っています。
ダウは、種子純度を監視し、適用される政府基準および規制の遵守を促進するための品質管理システムを設け
ています。かかるシステムに重点をおくことにより予防をはかっており、これは積極的かつ持続的な利害関係者
の支援、コミュニケーションおよび教育により支えられています。また、広範囲に及ぶ有効な現場監視システム
を通して、ダウは不要物質を分離および除去することにより、商品化後に起こりうる問題を特定し、管理する準
備ができています。当該管理実務および原則が、当社のバイオテクノロジー事業を成功させる不可欠な基礎とな
っております。
しっかりとした科学的根拠のある規制と、各製品にかかる適切な使用と管理条件の優れた規定に加えて、当社
は顧客、科学者、政治家およびその他の利害関係者との積極的な対話に従事しています。メキシコなど規制制度
- 10 -
を構築中の国において、ダウは商品化の承認を求めるのに先立って、当社製品の安全性を評価した関連ある調査
を政府当局に提供しています。製品の健全性、消費者の信頼および高い管理水準の遵守を確保するために、当社
は、前述の調査と監督機関により要求される以上の調査をしばしば実施します。
米国の規制当局により一般に提供される広範囲に及ぶ情報の増加に伴い、ダウはすでに、製品使用および安全
性に関する仕様書、害虫抵抗性の管理および穀物販売のガイドラインを含む当社の農業バイオテクノロジー製品
について、情報提供を幅広く行っています。当該情報はインターネット、公開紙面ならびに顧客および他の関係
者への直接の対話を通じて入手できます。さらに、当社は第三者または業界団体が主催する多数の教育プログラ
ムを積極的に先導・支援しています。当該プログラムは、有効な穀物販売戦略および管理を通じて、農業バイオ
テクノロジーの有益性を伝え、その有効かつ責任ある利用を促進し、市場の健全性を維持することを意図してい
ます。
これらの理由から、本提案は当社および当社株主の最良の利益とはならないと思われます。したがって、取締
役会は全会一致で、本提案に対して反対票を投じられるよう勧誘致します。
規定投票数
決議の承認には、本議案に対する実際の投票数の過半数が必要です。投票数には、賛成および反対票のみが含
まれ、棄権票およびブローカー不投票（broker-non-votes）は含まれません。
※®Responsible Care は、米国のアメリカ化学協議会のサービス・マークです。
第 6 号議案
経営幹部の報酬に関する株主提案
当社株主 1 名から、その代理人が本総会において以下の提案を行う予定である旨の意思表示がありました。当
社は、コーポレート秘書役に対して要求があった場合、当該株主の氏名および住所ならびに当該株主が保有する
株式数を速やかにお教え致します。当社は提案内容について責任を負いません。以下の提案が本総会において適
式に提出された場合、取締役会は全会一致で、以下の提案に対して反対票を投じられるよう勧誘致します。
株主の決議案
優秀実績給原則案
決議事項
ザ・ダウ・ケミカル・カンパニー（以下「当社」と表示する。）の株主は、以下の事項を実施する上級経営幹部に
対する経営幹部報酬制度（以下「制度」と表示する。）を確立し、優秀実績給原則案を取締役会の経営幹部報酬委
員会が承認することを要求する。
・ 当該制度の年間および長期奨励金給付部分の報酬の目安を同業者グループ平均またはそれ以下に設定する。
・ 当該制度の対象となる長期報酬の大半を、単純に時間にだけによらず実績による株式報酬として交付する。
・当該制度の年間および実績による長期奨励部分に使われる財務および非財務実績の指標または基準の戦略的根
拠および相対的な比重を示す。
・ 当社の同業者の業績と比較して各制度の財務指標の実績目標を設定する。
・年間および実績による長期奨励部分に基づく給付を特定財務業績基準における当社の業績が同業者グループの
業績の平均を超えた場合に制限する。
株主の補足説明
我々は、長期的企業価値を高めるために上級経営幹部に対する経営幹部報酬制度を考案し実施するべきである
と考えます。十分に練られた経営幹部報酬制度の決定的な特徴として給付水準と企業実績水準との間に密接な相
関関係があります。実績に対して報酬を与えるという考え方は大きな注目を集めています。しかし経営幹部への
給付制度の多くは、同等の実績に比べて平均又は平均以下の実績に対しても寛大な報酬を付与しています。経営
幹部報酬と優れた企業業績とを結びつけて考えなければ、経営幹部報酬の上昇は助長され、長期的に企業価値を
向上する目標から反れてしまうと考えます。退職金制度および役員補足年金から経営幹部に付与される退職給付
金は、この問題を悪化させます。
我々は、優秀実績給原則案は、当社の制度においてより厳しい実績給の確立を支える上級経営幹部の奨励給の
明確な定式化を提起するもであると考えます。合理的な奨励給の目標給付水準が確立されることにより、給付と
実績との強い結びつきが生まれます。それは、同業者実績と比較して戦略的特定財務基準に基づく厳しい実績目
標を設定し、奨励給は同等実績の平均を超えた場合にのみ与えられるというものです。
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我々は、当社の制度には優秀実績給原則を推進することができない重要な点があると考えます。我々の分析に
より当社の経営幹部報酬制度が優秀実績給原則案を推進することができない以下の特徴が明らかになりました。
・年間ボーナスは、経済的収益目標が 75％を占めますが、当社は給付に必要となる目安水準を開示していません。
・ 実績株は、長期奨励制度のわずか 25％を占めるだけです。残りは固定価格のストックオプションが 50％、時間
ベースの繰延発行株式が 25％を占めます。
・実績株報奨は同業者グループ実績に関連したものですが、目標給付は平均実績にも与えられます。
我々は、同業者と比較して優れた企業実績に対して報酬を与えるよう意図された制度は、経営幹部の報酬を適
度なものにし、上級経営幹部が持続可能な長期的企業価値を構築することに専念する支えになると考えます。
当社提案および推薦
取締役会は全会一致で、本提案に対して反対票を投じられるよう勧誘致します。
当社は、実績給を支持し、基本給よりも実績に基づく報奨および株式に基づく報酬に重点を置いた経営幹部報
酬プログラムを承認しました。当社の報酬プログラムは、最も有能な経営幹部を引き付け、やる気を起こさせ、
維持すること、株主配当金、財務実績その他経営において当社の成功を達成した場合に報酬を与えることを意図
しています。当社の報酬プログラムは、定期的に 20 の同業者グループに鑑みて基準を定め、かかるグループの長
期にわたる平均値で報酬を与えるように作成されています。当該プログラムに基づく実際の給付は当社および個
人の実績に基づいた平均値を上回るまたは下回る可能性があります。当社の最高経営幹部の給付の 80％以上は特
定の結果を達成したことに基づき「不確定」と判断されています。本提案は以下の実績に基づく報奨について具
体的に提起しています。
・長期株式報奨（以下「LTI」と表示します。）：LTI 報酬は、ダウの経営幹部持株制度ガイドラインに従い、長期
実績を報奨し、才能ある人材を維持し、持株制度を推進することを意図しています。LTI プログラムの 3 つ要素
は全て実績に基づくものです。
・実績株は、当社が事前に設定した実績基準を突破しない限り価値を有しません。
・ストックオプションは、オプションが付与された後ダウの株価が上昇しない限り価値を有しません。
・繰延発行株式は、3 年間にわたり付与され付与日後に株価が下がった場合は価値を失います。
取締役会の報酬委員会（以下「委員会」と表示します。）は、現在のストックオプション、繰延発行株式および
実績株の組合せは、ダウがこれらの目的を全て達成する助けとなると感じています。
・実績報奨：実績報奨の 50％は、当社経済的収益に基づいています。本提案が指摘するとおり当社は経済的利潤
の目標を公開しておりません。なぜならば、経済的利潤の目標を開示することにより、競合他社、顧客および
供給者が重大な財務指標の１つを正確に予想することを可能するからです。実績報奨基準は、委員会によって
設定されます。
委員会は独立した取締役のみで構成され、当社経営幹部の報酬方針およびプログラムが優秀な人材を求めて争
う市場内で競争力を有し、当社株主の長期的な投資利益を反映するものであることを保証する責任を有していま
す。委員会は上級経営幹部の報酬案、報酬水準および給付プログラムを検討し、承認します。当社は、委員会が
達成を目指す目的に基づき実績に基づいた報酬を与える経営幹部報酬プラグラムを実施することが、当社株主に
とって最良の利益になると考えています。当社の現在の構成により、委員会は同業者に比べて短期的な利益は得
られなくともダウにとって有益な長期的、戦略的意思決定に対して報酬を与えることができます。一方、本提案
は、委員会が長期的、戦略的意思決定に対して適度な報酬金額を換算し調整することを制限してしまいます。ま
た、委員会は、ダウは様々な戦略や目標を持ち、独自の挑戦やまたとない機会を提供する比類なき会社であり、
同業者の中でもさまざまな地理的区域で営業されていると考えます。上述のとおり、本提案は、単純に当社が同
業者グループの業績の平均を上回ったか否かに基づいて経営幹部に報酬を与えるものであり、委員会が適当な裁
量および判断を行使して長期的実績に対して報酬を与えることができません。
これらの理由から、本提案は当社および当社株主の最良の利益とはならないと思われます。したがって、取締
役会は全会一致で、本提案に対して反対票を投じられるよう勧誘致します。
規定投票数
決議の承認には、本議案に対する実際の投票数の過半数が必要です。投票数には、賛成および反対票のみが含
まれ、棄権票およびブローカー不投票（broker-non-votes）は含まれません。
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投票に関する参考事項
同封の委任状により、株主各位は前記の提案につき、それぞれ賛否もしくは棄権の意思表示を指定できるよう
になっております。同委任状に基づく議決権の行使は、株主の指図に従いこれを実行致しますが、格別の指示が
ない場合は、委任状に指定された代理人は、第 1 号議案および第 2 号議案に対して賛成の投票を、また第 3 号議
案、第 4 号議案、第 5 号議案および第 6 号議案に対して反対の投票を致します。
参考資料および年次報告書の入手に関する事項
当社の議決権代理行使に係る参考資料、および様式 10-K に基づく年次報告書は、当社のウェブサイト
（www.DowGovernance.com/proxy.）にてご覧いただけます。これら各資料の印刷製本版は、当社インベスター・
リレーションズ・オフィス（Investor Relations Office）宛（800-422-8193 もしくは 989-636-1463、または 2030 Dow Center,
Midland, MI 48674）にご連絡いただいた株主の方に、無料でお送り致します（なお、以上の資料は全て英文です。）。
その他の事項
取締役会は本総会において、上記 6 議案以外の議案を付議することを予定しておりませんが、この議決権代理
行使に係る参考資料作成の時点で経営陣に関知し得なかったような事項が総会に提出され、これを適法に付議さ
れた場合は、委任状中に記載されている代理人の最善の判断に従って議決権の代理行使を行うことと致しますの
で、この旨ご了承の程お願い申しあげます。
ミシガン州ミッドランド市
2008 年 3 月 28 日
業務執行副社長
法務・政府業務
法務担当役兼コーポレート秘書役
チャールズ・J・カリル
- 13 -
（追
記）
当議決権代理行使に係る参考資料は、原文（英文）を抄訳、編集したものです。原文には、議決権行使の参考
として下記の項目に関する記述がありますが、当日本語版ではこれを割愛させていただいております。原文をご
覧になりたい株主の方は、株式事務代行機関であるみずほ信託銀行株式会社において、またはザ・ダウ・ケミカ
ル・カンパニーのウェブサイト（www.DowGovernance.com）にて、これを閲覧して下さい。
記
主な省略項目
報酬委員会報告／報酬審議および分析／報酬額表および説明／株式報酬制度の情報／当社株式実質所有者一覧表
／独立公認会計士事務所に対する報酬／監査委員会報告／付属書類 A
以
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上
The Dow Chemical Company
Midland, Michigan 48674
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 15, 2008 AT 10:00 A.M. EDT
March 28, 2008
Dear Stockholder of The Dow Chemical Company:
We are pleased to invite you to the Annual Meeting of Stockholders of The Dow Chemical Company to be held on Thursday,
May 15, 2008, at 10 a.m. Eastern Daylight Time, at the Midland Center for the Arts, 1801 West St. Andrews, Midland,
Michigan. A map is printed on the back page of this Proxy Statement and is also included on your admittance ticket. At the
Meeting, stockholders will vote on the following matters either by proxy or in person:
•
Election of Directors.
•
Ratification of the appointment of Deloitte & Touche LLP as independent registered public accounting firm for
2008.
•
Four proposals submitted by stockholders, if properly presented.
•
Transaction of any other business as may properly come before the Meeting.
Your vote is important. Whether or not you plan on attending the Meeting, please vote your shares as soon as possible on the
Internet, by telephone or by mail. Your Board of Directors has set the close of business on March 17, 2008, as the record date
for determining stockholders who are entitled to receive notice of the Annual Meeting and any adjournment, and who are
entitled to vote. A list of stockholders entitled to vote shall be open to any stockholder for any purpose relevant to the
Meeting for ten days before the Meeting, during normal business hours, at the Office of the Corporate Secretary, 2030 Dow
Center, Midland, Michigan.
A ticket of admission or proof of stock ownership is necessary to attend the Meeting. A ticket is included with your proxy
material. Stockholders with registered accounts or who are in the Dividend Reinvestment Program or employees’ savings
plans should check the box on the voting form if attending in person. Other stockholders holding stock in nominee name or
beneficially through a bank or broker (in “street name”) need only bring their ticket of admission. Street name holders
without tickets will need proof of record date ownership for admission to the Annual Meeting, such as a March 2008
brokerage statement or letter from the bank or broker. Questions may be directed to 877-227-3294 (a toll-free telephone
number in the United States and Canada) or 989-636-1792, or faxed to 989-638-1740.
Since seating is limited, the Board has established the rule that only stockholders may attend or one person holding a proxy
for any stockholder or account (in addition to those named as Board proxies on the proxy forms). Proxy holders are asked to
present their credentials in the lobby before the Annual Meeting begins. If you are unable to attend the Meeting, please listen
to the live audio webcast at the time of the Meeting, or the audio replay after the event, at www.DowGovernance.com.
Thank you for your continued support and your interest in The Dow Chemical Company.
Charles J. Kalil
Executive Vice President,
Law and Government Affairs,
General Counsel and Corporate Secretary
®
™ Trademark of The Dow Chemical Company
2008 ANNUAL MEETING OF STOCKHOLDERS
THE DOW CHEMICAL COMPANY
Notice of the Annual Meeting and Proxy Statement
Notice of the Annual Meeting ..............................................................................................
Voting Procedures ................................................................................................................
Corporate Governance.........................................................................................................
Agenda Item 1: Candidates for Election as Director.........................................................
Compensation Committee Report.......................................................................................
Compensation Information
Compensation Discussion and Analysis .....................................................................
Compensation Tables and Narrative ...........................................................................
Equity Compensation Plan Information
Beneficial Ownership of Company Stock
Agenda Item 2: Ratification of the Appointment of the Independent Registered
Public Accounting Firm .......................................................................................................
Agenda Item 3: Stockholder Proposal on Respiratory Problems.....................................
Agenda Item 4: Stockholder Proposal on Environmental Remediation..........................
Agenda Item 5: Stockholder Proposal on Genetically Engineered Seed..........................
Agenda Item 6: Stockholder Proposal on an Executive Compensation Plan ..................
Audit Committee Report......................................................................................................
Other Governance Matters..................................................................................................
Appendix A – Director Independence.................................................................................
Map to Annual Meeting of Stockholders
This Proxy Statement is issued in connection with the 2008 Annual Meeting of Stockholders of
The Dow Chemical Company to be held on May 15, 2008.
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2008 DOW PROXY STATEMENT
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF
PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON
THURSDAY, MAY 15, 2008 AT 10:00 A.M. EDT
The 2008 Proxy Statement, 2007 Form 10-K and Stockholder Summary and
the 2007 Corporate Report are available at www.DowGovernance.com/proxy
VOTING PROCEDURES
In the following pages of this Proxy Statement, you will find information on your Board of Directors, the candidates for
election to the Board, and five other agenda items to be voted upon at the Annual Meeting of Stockholders and any
adjournment or postponement of that Meeting. The background information in this Proxy Statement has been supplied to you
at the request of the Board of Directors to help you decide how to vote and to provide information on the Company’s
corporate governance and compensation practices. References in this document to the Company and Dow mean The Dow
Chemical Company. This Proxy Statement is first being distributed to stockholders on or about March 28, 2008.
Vote Your Shares in Advance
The enclosed voting form will help you cast your vote on the Internet, by telephone or by mail. Your shares will be voted if
the voting form is properly executed and received by the independent Inspector of Election prior to the Meeting. If no
specific choices are made by you when you execute your voting form, as explained on the form, your shares will be
voted as recommended by your Board of Directors.
You may revoke your voting proxy at any time before its use at the Meeting by sending a written revocation, by submitting
another proxy on a later date, or by attending the Meeting and voting in person. No matter which voting method you choose,
however, you should not vote any single account more than once unless you wish to change your vote. Be sure to submit
votes for each separate account in which you hold Dow shares.
Confidential Voting
The Company has a long-standing policy of vote confidentiality. Proxies and ballots of all stockholders are kept confidential
from the Company’s management and Board unless disclosure is required by law and in other limited circumstances. The
policy further provides that employees may confidentially vote their shares of Company stock held by the Company’s
employees’ savings plans, and requires the appointment of an independent tabulator and inspector of election for the
Meeting.
Dividend Reinvestment Program Shares and Employees’ Savings Plans Shares
If you are enrolled in the Dividend Reinvestment Program (“DRP”), the shares of common stock owned on the record date by
you directly, plus all shares of common stock held for you in the DRP, will appear together on a single voting form. The DRP
administrator, The Bank of New York, will vote all shares of stock held in your DRP account as directed by you only if you
return your proxy form. If no specific instruction is given on an executed proxy form, the DRP administrator will vote as
recommended by your Board of Directors.
Participants in various employees’ savings plans, including The Dow Chemical Company Employees’ Savings Plan, The
Dow Chemical Company Employee Stock Ownership Plan, the DH Compounding Savings and Retirement Plan and the
Mycogen Corporation Deferred Savings Plan (the “Plan” or “Plans”), will receive, as appropriate, a separate confidential
voting instruction form, in addition to voting forms for any shares held in registered and street name. Your executed form
will provide voting instructions to the respective Plan Trustee. If no instructions are provided, the Trustees will vote the
respective Plan shares according to the provisions of each Plan.
Dow Shares Outstanding and Quorum
At the close of business on the record date, March 17, 2008, there were 930,679,770 shares of Dow Common Stock
outstanding and entitled to vote. Each share of common stock is entitled to one vote. There are no shares of preferred stock
outstanding. A majority of the outstanding shares of common stock present in person or represented by proxy constitutes a
quorum for the transaction of business at the Meeting. Abstentions and broker non-votes will be included in determining the
2008 DOW PROXY STATEMENT
5
presence of a quorum at the Annual Meeting. Broker non-votes occur when a person holding shares in street name, meaning
through a brokerage firm, does not provide instructions as to how to vote their shares.
Proxies on Behalf of the Dow Board
The enclosed voting form is being solicited by your Board of Directors to provide an opportunity to all stockholders of record
to vote on agenda items, whether or not the stockholders are able to attend the Meeting or an adjournment or postponement
thereof. Proxies on behalf of the Board may be solicited in person, by mail, by telephone or by electronic communication by
Dow officers and employees. The proxy representatives of the Board of Directors will not be specially compensated for their
services in this regard.
Dow has retained D. F. King & Co., Inc. to aid in the solicitation of stockholders (primarily brokers, banks and other
institutional investors) for an estimated fee of $16,000, plus out-of-pocket expenses. Arrangements have been made with
brokerage houses, nominees and other custodians and fiduciaries to send materials to their principals, and their reasonable
expenses will be reimbursed on request. The cost of solicitation will be borne by the Company.
CORPORATE GOVERNANCE
Corporate Governance Guidelines
The Company has adopted Corporate Governance Guidelines which are available at www.DowGovernance.com.
Stockholders may receive a printed copy of the Corporate Governance Guidelines without charge by contacting the Office of
the Corporate Secretary.* These Guidelines were adopted by the Board of Directors in order to set forth key areas of
importance in Dow corporate governance.
The Board of Directors
The ultimate authority to oversee the business of The Dow Chemical Company rests with the Board of Directors. The role of
the Board is to effectively govern the affairs of the Company for the benefit of its stockholders and, to the extent appropriate
under Delaware corporation law, other constituencies including employees, customers, suppliers and communities in which it
does business. Among other duties, the Board appoints the Company’s officers, assigns to them responsibility for
management of the Company’s operations, and reviews their performance.
One Director left the Board in 2007: J. Pedro Reinhard, a Director since 1995. One Director joined the Board in 2007: Dennis
H. Reilley was elected on August 17, 2007.
Director Independence
The Board has assessed the independence of each non-employee Director based upon the Company’s Director independence
standards listed on the Company’s corporate governance website (www.DowGovernance.com) and attached to this Proxy
Statement as Appendix A. These standards incorporate the criteria in the listing standards of the New York Stock Exchange,
as currently in effect, as well as additional, more stringent criteria established by the Board. Based upon these standards, the
Board has determined that the following nine members of the Board are independent: Directors Barton, Bell, Fettig, Franklin,
Hess, Reilley, Ringler, Shaw and Stern. These independent Directors constitute a substantial majority of the Board, consistent
with Board policy. No independent Director left the Board in 2007.
When assessing independence, the Governance Committee and the Board consider all relationships between the Directors
and the Company, including commercial, industrial, banking, consulting, legal, accounting, charitable and familial
relationships, among others. The Company screens for such relationships using an annual Directors and Officers
Questionnaire that requires disclosure of any transactions with the Company in which the Director or executive officer, or
any member of his or her immediate family, has a direct or indirect material interest. Given the large size of our Company
and its diverse commercial and geographic markets, there are times when Dow sells products to, or purchases products or
services from, other companies for which Dow Directors serve as executive officers or directors. The Governance Committee
and the Board took into account the fact that Messrs. Fettig and Hess and Ms. Shaw served as executive officers during each
of the past three years of entities with which Dow made purchases or sales. All such purchases and sales were made at
arms-length, commercial terms, and the Directors did not personally benefit from such transactions. In all instances, the
extent of business represented less than 2% of Dow’s and the other entity’s revenues.
6
2008 DOW PROXY STATEMENT
Presiding Director
The independent Directors on the Board elect a Presiding Director from among their own members. Paul G. Stern was
elected as Presiding Director to serve until the 2009 Annual Meeting. Among other responsibilities, the Presiding Director
works with the Chairman to set the Board agenda and to determine the appropriate materials to be provided to the Directors.
He leads executive sessions of the Board, serves as a member of the Executive Committee, facilitates communication
between the Board and management, and serves as focal point for stockholder communications addressed to independent
Directors. The Presiding Director may retain outside professionals on behalf of the Board as the Board may determine is
necessary and appropriate. Contact information for the Presiding Director is shown on page 7.
*Office of the Corporate Secretary, The Dow Chemical Company, 2030 Dow Center, Midland, MI 48674, 989-636-1792
(telephone), 989-638-1740 (fax).
Communication with Directors
Stockholders and other interested parties may communicate directly with the full Board, the Presiding Director, the
non-management Directors as a group, or with specified individual Directors by any of several methods. These include mail
addressed to The Dow Chemical Company, 2030 Dow Center, Midland, MI 48674, and the “Contact Us” feature of Dow’s
corporate governance website at www.DowGovernance.com. The Presiding Director and other non-management Directors
may also be contacted by email addressed to [email protected]. Please specify the intended recipient(s) of your
letter or electronic message.
Communications will be distributed to any or all Directors as appropriate depending upon the individual communication.
However, the Directors have requested that communications that do not directly relate to their duties and responsibilities as
Directors of the Company be excluded from distribution and deleted from email that they access directly. Such excluded
items include “spam;” advertisements; mass mailings; form letters and email campaigns that involve unduly large numbers of
similar communications; solicitations for goods, services, employment or contributions; surveys; and individual product
inquiries or complaints. Additionally, communications that appear to be unduly hostile, intimidating, threatening, illegal or
similarly inappropriate will also be screened for omission. Any omitted or deleted communication will be made available to
any Director upon request.
Board and Committee Meetings; Annual Meeting Attendance
The Federal securities laws require companies to report whether any Director attended fewer than 75% of the sum of the total
number of Board meetings and the total number of Board committee meetings that each such respective Director was eligible
to attend during the past year. There were nine Board meetings in 2007 and 22 formal Board committee meetings. All of the
Directors exceeded the attendance threshold, and seven had 100% attendance at all Board and Board committee meetings
they were eligible to attend. All but one of the Directors attended every Board meeting. The Directors are encouraged to
attend all Annual Meetings of Stockholders, and in 2007, eleven of the twelve Directors then serving attended.
Executive Sessions of Directors
The non-management Directors meet in executive session in connection with each regularly scheduled meeting of the Board,
and at other times as they may determine appropriate. The Audit, Compensation, and Governance Committees of the Board
typically meet in executive session in connection with every Committee meeting.
Board Committees
Board committees perform many important functions. The responsibilities of each Committee are stated in the Bylaws and in
their respective committee charters, which are available at www.DowGovernance.com. Stockholders may receive a printed
copy of the committee charters without charge by contacting the Office of the Corporate Secretary.* The Board, upon the
recommendation of the Governance Committee, elects members to each committee and has the authority to change
committee chairs, memberships and the responsibilities of any committee. A brief description of the current standing Board
committees follows, with memberships listed as of March 17, 2008, the record date for the Annual Meeting. The Audit,
Compensation, and Governance Committees are comprised entirely of independent Directors who meet the independence
requirements of the New York Stock Exchange, the U.S. Securities and Exchange Commission and the Company as set forth
in Appendix A of this Proxy Statement.
2008 DOW PROXY STATEMENT
Standing Committee and Function
Audit Committee
Oversees the quality and integrity of the financial statements of
the Company; the qualifications, independence and performance
of the independent auditors; and the Company’s system of
disclosure controls and procedures and system of internal control
over financial reporting. Has oversight responsibility for the
performance of the Company’s internal audit function and
compliance with legal and regulatory requirements. A more
complete description of the duties of the Committee is contained
in the Audit Committee charter available at
www.DowGovernance.com.
Compensation Committee
Assists the Board in meeting its responsibilities relating to the
compensation of the Company’s Chief Executive Officer and
other senior executives in a manner consistent with and in
support of the business objectives of the Company, competitive
practice and applicable standards. A more complete description
of the duties of the Committee is contained in the Compensation
Committee charter available at www.DowGovernance.com.
Environment, Health and Safety Committee
Assists the Board in fulfilling its oversight responsibilities by
assessing the effectiveness of environment, health and safety
programs and initiatives that support the environment, health and
safety policy of the Company, and by advising the Board on
matters impacting corporate citizenship and Dow’s public
reputation. A more complete description of the duties of the
Committee is contained in the Environment, Health and Safety
Committee charter available at www.DowGovernance.com.
Executive Committee
Exercises the powers of the Board in the management and
direction of the business and affairs of the Company between
meetings of the full Board of Directors.
Governance Committee
Assists the Board on all matters relating to the selection,
qualification, and compensation of members of the Board, as
well as any other matters relating to the duties of Board
members. Acts as a nominating committee with respect to
candidates for Directors and makes recommendations to the
Board concerning the size, structure and committees of the
Board. Assists the Board with oversight of governance matters.
A more complete description of the duties of the Committee is
contained in the Governance Committee charter available at
www.DowGovernance.com.
Chair and Members
B. H. Franklin, Chair
J. A. Bell
D. H. Reilley
J. M. Fettig
P. G. Stern
J. M Ringler, Chair
J. K. Barton
R. G. Shaw
J. B. Hess
J. K. Barton, Chair
D. H. Reilley
A. A. Allemang
J. M. Ringler
A. N. Liveris
R. G. Shaw
G. E. Merszei
A. N. Liveris, Chair
B. H. Franklin
P. G. Stern
G. E. Merszei
P. G. Stern, Chair
J. A. Bell
J. M. Fettig
7
Meetings
in 2007
9
5
3
2
5
B. H. Franklin
8
2008 DOW PROXY STATEMENT
Board of Directors’ Terms
Dow’s Restated Certificate of Incorporation provides that all Directors stand for election at each Annual Meeting of
Stockholders.
Director Qualifications
There are certain minimum qualifications for Board membership that Director candidates should possess, including strong
values and discipline, high ethical standards, a commitment to full participation on the Board and its committees, relevant
career experience, and a commitment to ethnic, racial and gender diversity. The Governance Committee has adopted
guidelines to be used in evaluating candidates for Board membership. In addition to the characteristics mentioned above, the
guidelines provide that candidates should possess individual skills, experience and demonstrated abilities that help meet the
current needs of the Board, such as experience or expertise in some of the following areas: the chemical industry, global
business, science and technology, finance and/or economics, competitive positioning, corporate governance, public affairs,
and experience as chief executive officer, chief operating officer or chief financial officer of a major company. Other factors
that are considered include independence of thought, willingness to comply with Director stock ownership guidelines,
meeting applicable Director independence standards (where independence is desired) and absence of conflicts of interest. The
Governance Committee may modify the minimum qualifications and evaluation guidelines from time to time as it deems
appropriate. These Director Qualifications are posted in Dow’s Corporate Governance Guidelines, available at
www.DowGovernance.com, and any modifications to the Director Qualifications would be described in the Guidelines.
Nominations for Director
Among the Governance Committee’s most important functions is the selection of Directors. The Committee has a
long-standing practice of accepting stockholders’ suggestions of candidates to consider as potential Board members, as part
of the Committee’s periodic review of the size and composition of the Board and its committees. Such recommendations
should be sent to the Governance Committee through the Corporate Secretary.*
Under the Company’s Bylaws, stockholders wishing to formally nominate a person for election as a Director at the next
Annual Meeting must notify the Corporate Secretary* between November 28, 2008, and January 27, 2009. Such notices must
comply with the provisions set forth in the Bylaws. A copy of the Bylaws may be found on the Company’s website at
www.DowGovernance.com. Alternatively a copy of the Bylaws will be provided without charge to any stockholder who
requests it in writing. Such requests should be addressed to the Corporate Secretary.*
The Governance Committee has adopted a process for identifying new Director candidates. Recommendations may be
received by the Committee from various sources, including current or former Directors, a search firm retained by the
Committee, stockholders, Company executives, and by self-nomination. The Governance Committee uses the same process
to evaluate Director nominees recommended by stockholders as it does to evaluate nominees identified by other sources. In
2007, a search firm was retained by the Committee to identify independent director candidates that possess the skills and
experience described above. Dow’s most recent independent director addition, Dennis H. Reilley, was recommended by
Dow’s Chief Executive Officer and non-management Directors.
The evaluation of Director candidates involves several steps, not necessarily in any particular order. A preliminary analysis
of a nominee involves securing a resume and other background data and comparing this data to the Director attributes
mentioned above, as well as to the current needs of the Board for new members. References are checked and analyses are
performed to identify potential conflicts of interest and appropriate independence from the Company. Candidate information
is provided to all Governance Committee members for purposes of discussion and evaluation. If the Committee decides to
further evaluate a candidate, interviews are conducted. Other steps may include requesting additional data from the candidate,
providing Company background information to the candidate, and determining the candidate’s schedule compatibility with
Dow Board and Committee meeting dates.
Code of Business Conduct
All Directors, officers and employees of Dow are expected to be familiar with the Company’s Code of Business Conduct,
and to apply it in the daily performance of their Dow responsibilities. The Code of Business Conduct is intended to focus
employees, officers and Directors on areas of ethical risk, help them recognize and make informed decisions on ethical issues,
help create a culture of the highest ethical and business standards, and provide mechanisms to report unethical conduct. The
2008 DOW PROXY STATEMENT
9
full text of Dow’s Code of Business Conduct is available at www.Dow.com, by clicking on “Ethics.” Stockholders may
receive a printed copy of the Code of Business Conduct without charge by contacting the Office of the Corporate Secretary.*
Compensation Committee Interlocks
No member of Dow’s Compensation Committee has served as a Dow officer or employee at any time. None of Dow’s
executive officers serves as a member of the compensation committee of any other company that has an executive officer
serving as a member of Dow’s Board of Directors. None of Dow’s executive officers serves as a member of the board of
directors of any other company that has an executive officer serving as a member of Dow’s Board’s Compensation
Committee.
Related Person Transaction Policy
The Federal securities laws require public companies to describe any transaction, since the beginning of the last fiscal year,
or any currently proposed transaction, in which the Company was or is to be a participant and the amount involved exceeds
$120,000, and in which any related person had or will have a direct or indirect material interest. Related persons are directors
and executive officers, nominees for director and any immediate family members of directors, executive officers or nominees
for director and greater than 5% holders of Dow Common Stock. Companies are also required to describe their policies and
procedures for the review, approval or ratification of any related person transaction.
Pursuant to Dow’s Code of Business Conduct, and annual review of Director independence, the Company has had procedures
in place to monitor related person transactions for several years. Upon the recommendation of the Governance Committee,
the Board of Directors adopted a formal written policy (the “Policy”) on related person transactions on February 15, 2007.
The Governance Committee is responsible for reviewing the material facts of all transactions that could potentially be
“transactions with related persons.” The Policy covers any transaction, arrangement or relationship or series of similar
transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which (1) the
aggregate amount involved will or may be expected to exceed $100,000 in any calendar year, (2) the Company is a
participant, and (3) any related person has or will have a direct or indirect interest (other than solely as a result of being a
director or a less than 10% beneficial owner of another entity). The Governance Committee is responsible to either approve
or disapprove of the entry into the transaction, subject to the exceptions listed below. If advance Committee approval of the
transaction is not feasible, then the transaction shall be considered and, if the Committee determines it to be appropriate,
ratified at the Committee’s next regularly scheduled meeting.
The Governance Committee has determined that certain types of transactions shall be deemed to be preapproved by the
Committee even if the amount involved will exceed $100,000, including: (a) employment of executive officers where the
officer’s compensation is either reported in the Proxy Statement or would have been reported in the Proxy Statement if the
officer was a “named executive officer,” and the Compensation Committee approved such compensation; (b) Director
compensation where such compensation is reported in the Proxy Statement; (c) certain transactions with other companies
where the related person’s only relationship with the other company is as a director, employee or beneficial owner of less
than 10% of that company’s shares, and the aggregate amount involved does not exceed the greater of $1 million or 2% of
that company’s total annual revenues; (d) certain Company charitable contributions where the related person’s only
relationship is as an employee or director of the charitable entity and where the aggregate amount does not exceed the greater
of $1 million or 2% of the charitable entity’s total annual receipts; (e) transactions where all stockholders receive
proportional benefits; (f) transactions involving competitive bids; and (g) regulated transactions.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the Company’s Directors
and executive officers and persons who own more than 10% of a registered class of the Company’s equity securities (the
“Reporting Persons”) to file with the U.S. Securities and Exchange Commission (“SEC”) reports on Forms 3, 4 and 5
concerning their ownership of and transactions in the common stock and other equity securities of the Company, generally
within two business days of a reportable transaction. As a practical matter, the Company seeks to assist its Directors and
executives by monitoring transactions and completing and filing reports on their behalf.
Based solely upon a review of SEC filings furnished to the Company and written representations that no other reports were
required, we believe that all Reporting Persons complied with these reporting requirements during fiscal 2007.
10
*
2008 DOW PROXY STATEMENT
Office of the Corporate Secretary, The Dow Chemical Company, 2030 Dow Center, Midland, MI 48674,
989-636-1792 (telephone), 989-638-1740 (fax).
Agenda Item 1
CANDIDATES FOR ELECTION AS DIRECTOR
In accordance with the recommendation of the Governance Committee, the Board of Directors has nominated Arnold A.
Allemang, Jacqueline K. Barton, James A. Bell, Jeff M. Fettig, Barbara Hackman Franklin, John B. Hess, Andrew N. Liveris,
Geoffery E. Merszei, Dennis H. Reilley, James M. Ringler, Ruth G. Shaw and Paul G. Stern for election as Directors, to
serve for a one-year term that expires at the Annual Meeting in 2009, and until their successors are elected and qualified.
Each nominee is currently serving as a Director and each has consented to serve for the new term. Director Reilley joined the
Board following the 2007 Annual Meeting. All other nominees have previously been elected as Directors by the Company’s
stockholders. Information in the biographies below is current as of February 19, 2008.
The Board of Directors unanimously recommends a vote FOR the election of ALL of these nominees as Directors.
The election of Directors requires a plurality of the votes actually cast. Withheld votes do not affect whether a nominee has
received sufficient votes to be elected, and broker non-votes will have no effect on the outcome of this matter. As explained
on the accompanying proxy, it is the intention of the persons named as proxies to vote in favor of the candidates nominated
by the Board unless such authority is withheld. If something unanticipated should occur prior to the Annual Meeting making
it impossible for one or more of the candidates to serve as a Director, votes will be cast in the best judgment of the persons
authorized as proxies.
Arnold A. Allemang, 65. Director since 1996.
Employee of Dow 1965-2008. Manufacturing General Manager, Dow Benelux N.V.* 1992-93.
Regional Vice President, Manufacturing and Administration, Dow Benelux N.V.* 1993. Vice
President, Manufacturing Operations, Dow Europe GmbH* 1993-95. Dow Vice President and
Director of Manufacturing and Engineering 1996-97. Dow Vice President, Operations 1997-2000.
Executive Vice President 2000-04. Senior Advisor 2004-08. Member of the Boards of Directors of
National Action Counsel for Minorities in Engineering; Michigan Molecular Institute; MiTECH+;
Michigan Baseball Foundation; and MidMichigan Innovation Center. Trustee of The Manufacturing
Institute. Board of Fellows for Saginaw Valley State University; Advisory Board for Kansas State
University, College of Engineering; President’s Circle of Sam Houston State University; American
Chemical Society; and RPM Ventures.
Jacqueline K. Barton, 55. Arthur and Marian Hanisch Memorial Professor of Chemistry,
California Institute of Technology. Director since 1993.
Assistant Professor of Chemistry and Biochemistry, Hunter College, City University of New York
1980-82. Columbia University: Assistant Professor 1983-85, Associate Professor 1985-86, Professor
of Chemistry and Biological Sciences 1986-89. California Institute of Technology: Professor of
Chemistry 1989 to date, Arthur and Marian Hanisch Memorial Professor of Chemistry 1997 to date.
Named a MacArthur Foundation Fellow 1991, the American Academy of Arts and Sciences Fellow
1991, the American Philosophical Society Fellow 2000 and National Academy of Sciences member
2002. Named Outstanding Director 2006 by the Outstanding Director Exchange, Recipient of the
Willard Gibbs Award 2006, Recipient of the American Chemical Society (“ACS”) Breslow Award
2003, ACS William H. Nichols Medal Award 1997, Columbia University Medal of Excellence 1992,
ACS Garvan Medal 1992, Mayor of New York’s Award in Science and Technology 1988, ACS
Award in Pure Chemistry 1988 and the Alan T. Waterman Award of the National Science Foundation
1985. Member of the Gilead Sciences Scientific Advisory Board. Director, GeneOhm Sciences Inc.
2001-05.
2008 DOW PROXY STATEMENT
11
James A. Bell, 59. Executive Vice President, Finance; Chief Financial Officer, The Boeing
Company. Director since 2005.
The Boeing Company - Executive Vice President, Finance and Chief Financial Officer, 2003 to date;
Senior Vice President of Finance and Corporate Controller, 2000-03. Previous positions include Vice
President of Contracts and Pricing for Boeing Space and Communications, 1996-2000; Director of
Business Management of the Space Station Electric Power System at Boeing Rocketdyne unit,
1992-96. Member of the Boards of Directors of Joffrey Ballet, The Chicago Urban League, and New
Leaders for New Schools. Member of the World Business Chicago, the Chicago Economic Club, and
the Commercial Club of Chicago.
Jeff M. Fettig, 50. Chairman and Chief Executive Officer, Whirlpool Corporation. Director
since 2003.
Whirlpool Corporation - Chairman and Chief Executive Officer 2004 to date; President and Chief
Operating Officer 1999-2004; Executive Vice President 1994-99; President, Whirlpool Europe and
Asia 1994-99; Vice President, Group Marketing and Sales, North American Appliance Group
1992-94; Vice President, Marketing, Philips Whirlpool Appliance Group of Whirlpool Europe B.V.
1990-92; Vice President, Marketing, KitchenAid Appliance Group 1989-90; Director, Product
Development 1988-89. Director of Whirlpool Corporation.
Barbara Hackman Franklin, 67. President and CEO of Barbara Franklin Enterprises and
Former U.S. Secretary of Commerce. Director 1980-92 and 1993 to date.
President and CEO, Barbara Franklin Enterprises, private investment and management consulting
firm, 1995 to date. Business consultant 1993-95. U.S. Secretary of Commerce 1992-93. President and
CEO, Franklin Associates 1984-92. Senior Fellow and Director of Government and Business
Program, Wharton School, University of Pennsylvania 1979-88. Commissioner, U.S. Consumer
Product Safety Commission 1973-79. Staff Assistant to the President of the United States 1971-73.
Asst. Vice President, Citibank 1969-71 and manager in corporate planning, the Singer Company
1964-70. President’s Advisory Council for Trade Policy and Negotiations 1982-86, 1989-92.
Directorship 100, (the most influential people in corporate governance) 2007. Outstanding Director,
2003, Outstanding Directors Exchange (ODX). Director of the Year, National Association of
Corporate Directors 2000. John J. McCloy Award for contributions to auditing excellence 1992.
Trustee and Chairman Emerita of the Economic Club of New York, member of the board of the
National Association of Corporate Directors, the National Committee on U.S.-China Relations, the
Atlantic Council, and Past Vice Chair of the U.S.-China Business Council. Member of the Public
Company Accounting Oversight Board Advisory Council. Director of Aetna, Inc. Director or trustee
of three funds in the American Funds family of mutual funds; Director of JP Morgan Value
Opportunities Fund, Inc.
John B. Hess, 53. Chairman and Chief Executive Officer, Hess Corporation. Director since
2006.
Hess Corporation - Employee since 1977; Director 1978 to date; Chairman and Chief Executive
Officer 1995 to date. Director of National Advisory Board of J.P. Morgan Chase & Co. Member of
The Business Council, The National Petroleum Council, The Council of Foreign Relations, Dean’s
Advisors of Harvard Business School, Board of Trustees for the Mount Sinai Hospital, Wildlife
Conservation Society/NY Zoo, United Cerebral Palsy Research and Educational Foundation. Member
of the Board of Directors of Lincoln Center for the Performing Arts. Former member of the Secretary
of Energy Advisory Board.
12
2008 DOW PROXY STATEMENT
Andrew N. Liveris, 53. Dow President, Chief Executive Officer & Chairman. Director since
2004.
Employee of Dow since 1976. General manager of Dow’s Thailand operations 1989-92. Group
business director for Emulsion Polymers and New Ventures 1992-93. General manager of Dow’s
start-up businesses in Environmental Services 1993-94. Vice President of Dow’s start-up businesses
in Environmental Services 1994-95. President of Dow Chemical Pacific Limited* 1995-98. Vice
President of Specialty Chemicals 1998-2000. Business Group President for Performance Chemicals
2000-03. President and Chief Operating Officer 2003-04. President and Chief Executive Officer 2004
to date and Chairman 2006 to date. Director of Citigroup, Inc. and the United States Climate Action
Partnership. Chairman Emeritus of the American Chemistry Council. Chairman of the Board of the
International Council of Chemical Associations. Member of the American Australian Association,
The Business Council, the Business Roundtable, The Detroit Economic Club, the New York
Economic Club, the International Business Council, the National Petroleum Council, the Société de
Chimie Industrielle, the U.S.-China Business Council and the World Business Council for Sustainable
Development. Member of the Board of Trustees of Tufts University and the Herbert H. and Grace A.
Dow Foundation.
*
A number of Company entities are referenced in the biographies and are defined as follows. (Some of these entities
have had various names over the years. The names and relationships to the Company, unless otherwise indicated, are
stated in this footnote as they existed as of February 19, 2007.) Dow Corning Corporation - a company ultimately
50 percent owned by Dow. Dorinco Reinsurance Company, Dow Benelux N.V., Dow Chemical Pacific Limited, Dow
Credit Corporation, Dow Europe GmbH, Dow Financial Holdings Inc., Dow Financial Services Inc., Liana Limited,
Mycogen Corporation, Oman Petrochemical Industries Company LLC and Union Carbide Corporation - all ultimately
wholly owned subsidiaries of Dow. Ownership by Dow described above may be either direct or indirect.
Geoffery E. Merszei, 56. Dow Executive Vice President and Chief Financial Officer. Director
since 2005.
Employee of Dow 1977-2001 and since 2005. Dow Middle East/Africa Credit Manager 1977-80.
Dow Asia Pacific Credit Manager 1980-82. Dow Asia Pacific Finance and Credit Manager 1982-83.
Dow Germany and Eastern Europe Treasurer 1983-86. Dow Foreign Exchange Manager 1986-88.
Director of Finance for Dow Asia Pacific 1988-91. Director of Finance/Treasurer for Dow Europe
1991-96. Dow Vice President and Treasurer 1996-2001. Alcan, Inc. Executive Vice President and
Chief Financial Officer 2001-05. Dow Executive Vice President and Chief Financial Officer 2005 to
date. Board member of Dow Corning Corporation*, Dow Credit Corporation*, Dow Financial
Services Inc.*, Mycogen Corporation*, and Oman Petrochemical Industries Company LLC*.
Chairman of Dorinco Reinsurance Company*, Dow International Holdings, S.A.* and Liana
Limited*. Board member of Chemical Financial Corporation. Chairman of the Conference Board’s
Council of Financial Executives. Trustee and Executive Committee Member of the United States
Council for International Business.
Dennis H. Reilley, 54. Non Executive Chairman, Covidien, Ltd. Director since 2007.
Covidien, Ltd.: Non Executive Chairman and Board member, April 2007 to present. Praxair, Inc.:
Chairman, December 2000 to April 2007; President and Chief Executive Officer, 2000-06. E.I.
DuPont de Nemours and Company: Executive Vice President and Chief Operating Officer, May
1999-2000; Executive Vice President, 1997-99; Vice President and general manager, Lycra
business, 1996-97; Vice President and general manager, specialty chemicals business, 1994-95;
Vice President and general manager, titanium dioxide business, 1990-94. Prior to 1989, held various
senior executive positions with Conoco. Director of H.J. Heinz Company, Marathon Oil Company
and the Conservation Fund. Former Chairman of the American Chemistry Council.
2008 DOW PROXY STATEMENT
13
James M. Ringler, 62. Chairman of Teradata Corporation. Director since 2001.
Teradata Corporation: Chairman, October 2007 to present. NCR Corporation: Director and
Chairman, 2005-07. Union Carbide Corporation*: Director, 1996-2001. Illinois Tool Works, Inc.:
(following its merger with Premark International, Inc.), Vice Chairman, 1999-2004. Premark
International, Inc.: Chairman, 1997-99; Director, 1990-99; Chief Executive Officer, 1996-99;
President and Chief Operating Officer, 1992-96; Executive Vice-President, 1990-92. Tappan
Company: President and Chief Operating Officer, 1982-86; White Consolidated Industries’ Major
Appliance Group: President, 1986-90 (both companies are subsidiaries of Electrolux AB). Director
of Autoliv Inc., Corn Products International, Inc., and FMC Technologies, Inc. Director of the Lyric
Opera of Chicago.
Ruth G. Shaw, 60. Executive Advisor of Duke Energy Corporation. Director since 2005.
Duke Energy Corporation: Executive Advisor, October 2006 to present; Group Executive, Public
Policy and President, Duke Nuclear, April 2006 to October 2006; President and Chief Executive
Officer, Duke Power Company, 2003-06; Executive Vice President and Chief Administrative
Officer, 1997-2003; President of The Duke Energy Foundation, 1994-2003; Senior Vice President,
Corporate Resources, 1994-97; Vice President, Corporate Communications, 1992-94. President,
Central Piedmont Community College, Charlotte, NC 1986-92. President, El Centro College, Dallas,
TX 1984-86. Director of Wachovia Corporation and DTE Energy. Chair, Board of Trustees for the
University of North Carolina at Charlotte; Chair, Carolina Thread Trail Governing Board. Board of
Visitors at the Duke University Nicholas School of the Environment and Earth Sciences. Board
Chair, National Center for Energy Workforce Development.
Paul G. Stern, 69. Chairman of Claris Capital. Director since 1992. Presiding Director since
May 2006.
Chairman of Claris Capital, 2004 to date. Co-founder and General Partner of Arlington Capital
Partners in 1999 and co-founder of Thayer Capital Partners in 1995. Special partner at Forstmann
Little & Co. 1993-95. Northern Telecom Limited, Chairman of the Board 1990-93, Chief Executive
Officer 1990-93, Vice Chairman and Chief Executive Officer 1989-90, Director 1988-93. President,
Unisys Corporation (formerly Burroughs Corporation) 1982-87. Director of Whirlpool Corporation.
Board member, Business Executives for National Security. Non-Executive Chairman, Claris
Holdings LLC, and Council on Foreign Relations. Member of the Potomac Officers Club.
*
A number of Company entities are referenced in the biographies and are defined as follows. (Some of these entities
have had various names over the years. The names and relationships to the Company, unless otherwise indicated, are
stated in this footnote as they existed as of February 19, 2008.) Dow Corning Corporation – a company ultimately
50 percent owned by Dow. Dorinco Reinsurance Company, Dow Benelux N.V., Dow Chemical Pacific Limited, Dow
Credit Corporation, Dow Europe GmbH, Dow Financial Services Inc., Dow International Holdings, S.A., Liana Limited,
Mycogen Corporation, Oman Petrochemical Industries Company LLC and Union Carbide Corporation – all ultimately
wholly owned subsidiaries of Dow. Ownership by Dow described above may be either direct or indirect.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors reviewed and discussed the Compensation Discussion and Analysis
(“CD&A”) with Company management. Based on this review and discussion, the Compensation Committee recommended to
the Board of Directors that the CD&A be included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2007, as incorporated by reference from this Proxy Statement.
The Compensation Committee has retained an independent compensation consultant from Hewitt Associates, a compensation
advisory firm. The consultant reports directly to the Compensation Committee and does not provide services to Company
management. The consultant supports the Compensation Committee by providing guidance on the reasonableness of the peer
group the Company is benchmarked against, survey data and analysis on the peer group, advice and recommendation on
proposed compensation and design of compensation programs, and information on trends in executive compensation.
14
2008 DOW PROXY STATEMENT
The charter of the Compensation Committee can be found at www.DowGovernance.com.
J. M. Ringler, Chair
J. K. Barton
J. B. Hess
R. G. Shaw
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
The following provides an overview of our compensation philosophy and programs as detailed in the “Compensation
Discussion and Analysis.”
•
The Dow Chemical Company (“Dow” or the “Company”) believes in pay-for-performance, which is why over 80% of
the compensation of our Named Executive Officers (“NEOs”) is linked to a combination of personal and Company goals
and stock price performance.
•
The following elements comprise the total compensation awarded to our NEOs: base salary, cash-based short-term
incentive award (“Performance Award”), and equity-based long-term incentive (“LTI”) awards consisting of
Performance Shares, Stock Options, and Deferred Stock.
•
LTI awards are used to align executive actions with long-term management and stockholder goals, providing rewards
consistent with the creation of stockholder value. They also help retain executives over time and help executives meet
their stock ownership guidelines.
•
We target all elements of our compensation programs to provide compensation opportunity at the median of our peer
group. Actual payouts under these programs can be above or below the median based on Company and personal
performance.
•
Our annual Performance Award is linked directly to short-term Company goals and performance, in line with our
“pay-for-performance” philosophy.
•
Our executives participate in the same group benefit programs, on substantially the same terms as other salaried
employees.
•
Our executives are allowed limited perquisites, such as financial planning services and executive physical examinations,
which are granted to facilitate strong, focused performance on their jobs.
•
Our compensation programs are designed to attract, motivate, reward, and retain the most talented executives.
•
The NEOs who appear in the compensation tables of this 2008 Proxy Statement are:
•
Andrew N. Liveris, President, Chief Executive Officer (“CEO”) and Chairman
•
Geoffery E. Merszei, Executive Vice President and Chief Financial Officer (“CFO”)
•
Michael R. Gambrell, Executive Vice President, Basic Plastics and Chemicals, Manufacturing and Engineering
•
William F. Banholzer, Executive Vice President and Chief Technology Officer
•
David E. Kepler, Executive Vice President, Chief Sustainability Officer, Chief Information Officer, and
Corporate Director of Shared Services
2008 DOW PROXY STATEMENT
15
Introduction
With annual sales of $54 billion and 46,000 employees worldwide, Dow is a diversified chemical company that combines the
power of science and technology with the “Human Element” to constantly improve what is essential to human progress. The
Company delivers a broad range of products and services to customers in around 160 countries, connecting chemistry and
innovation with the principles of sustainability to help provide everything from fresh water, food and pharmaceuticals to
paints, packaging and personal care products.
One of the fundamental components of our success in this competitive industry is the Human Element. At Dow, we
understand the value of people and know that without our valued employees, we would not be the leading chemical company
in the world today. In order to maintain the competitive advantage our employees give us, we must be able to attract,
motivate, reward, and retain individuals who can successfully lead and contribute to our Company. Having responsible and
competitive compensation programs help ensures we are able to do this.
Compensation Objectives
The compensation programs at Dow are designed to support the realization of Dow’s vision of being the largest, most
profitable and most respected chemical company in the world, while promoting the interests of our stockholders and other
stakeholders. These principles have enabled the Company to deliver strong stockholder value over time, and have helped the
Company develop and retain top talent.
The objectives of Dow’s compensation programs are:
•
Attract, motivate, reward, and retain the most talented people by providing competitive total compensation.
•
Motivate and reward employees for the achievement of Dow’s measures of success:
•
Stockholder return, as measured by stock price appreciation plus dividends on a reinvested basis.
•
Company financial performance.
•
Individual performance on specific financial and operational measures.
Additionally, the following principles apply to the design and implementation of our executive compensation practices:
•
Drive Company results. The program emphasizes variable, at-risk incentive award opportunities which are payable
only if specified goals are achieved and/or Dow’s stock price appreciates. The largest part of NEO compensation is
focused on long-term performance based on Dow’s return to stockholders. These at-risk incentives represent at least 80%
of the NEOs direct compensation.
•
Be cost effective and aligned with stockholder value creation. Incentive awards are earned only if specified financial
goals are achieved and when Dow’s stock price appreciates. Higher compensation is paid when goals are exceeded and
reduced compensation is paid when goals are not met.
•
Emphasize stock ownership. Long-term incentive awards are delivered as equity-based awards to senior executives.
These executives are required to maintain a minimum level of stock ownership to encourage managing from an owner’s
perspective and to better align their financial interests with those of Dow stockholders. NEOs are expected to own Dow
securities with a value equal to between four and six times their annual base salary. For further information, please refer
to the Executive Stock Ownership Guidelines section.
The Role of the Compensation Committee
The Compensation Committee (the “Committee”) of the Board of Directors, which is comprised entirely of independent
Directors, is responsible for ensuring the Company’s executive compensation policies and programs are competitive within
the markets in which Dow competes for talent and reflect the long-term investment interests of our stockholders. The
Committee reviews and approves the compensation design, compensation levels and benefits programs for the NEOs and
other senior leaders.
16
2008 DOW PROXY STATEMENT
With respect to the CEO, the Committee annually reviews and approves the corporate goals and objectives relevant to the
CEO’s compensation, evaluates the CEO’s performance against those objectives, and makes recommendations to the Board
of Directors regarding the CEO’s compensation level based on that evaluation. The Board of Directors is responsible for
approving the CEO’s compensation types and amounts. The CEO makes recommendations to the Committee regarding
compensation for the NEOs and other senior executives. The Committee is responsible for approving NEO compensation and
has broad discretion when setting compensation types and amounts.
The Compensation Committee has retained an independent compensation consultant from Hewitt Associates. The consultant,
Mr. Michael Powers, reports directly to the Committee. He advises the Committee on trends and issues in executive
compensation and the reasonableness of the group of companies used for benchmarking (the “Survey Group”). He consults
on the competitiveness of the compensation structure and levels of Dow’s executive officers and provides advice and
recommendations related to proposed compensation and the design of compensation programs. The Committee has the sole
authority to retain and oversee the work of Mr. Powers.
Dow’s Executive Compensation Department provides additional analysis and counsel as requested by the Committee related
to:
•
Gathering the compensation data of the Survey Group.
•
Benchmarking compensation components (base salary, Performance Award, LTI awards) against the Survey Group.
•
Making preliminary recommendations of base salary structure, target award levels for the Performance Award, and
design and award levels for LTI awards.
You can learn more about the Committee’s purpose, responsibilities, structure and other details by reading the Committee’s
charter which can be found in the Corporate Governance section of the Company’s website at www.DowGovernance.com.
Establishing NEO Compensation
Compensation for the NEOs and other executive officers is evaluated and set annually by the Compensation Committee
based on the latest available Survey Group and Company performance data. An individual executive’s compensation is
established after considering the following factors:
•
Median compensation for similar jobs in the market.
•
The Company’s performance against financial measures including earnings per share, EBIT (earnings before interest,
income taxes and minority interests), total stockholder return, economic profit, cash flow management and cost
management discipline.
•
The Company’s performance relative to goals approved by the Committee.
•
Individual performance versus personal goals and contributions to Company performance.
•
Business climate, economic conditions and other factors.
When establishing compensation levels, Company management and the Committee also review summary total compensation
tables or “tally sheets” for the NEOs. The tally sheets model all aspects of compensation under various scenarios, such as
stock price sensitivity and business performance. The tally sheets present the estimated dollar value of compensation
components provided to the NEOs during the most recent fiscal year. They are used as an annual reference point to assist the
Committee’s overall understanding of NEO compensation.
After an analysis of these factors and other relevant data, the Committee develops compensation recommendations for the
CEO to be considered by the Board of Directors. The CEO develops compensation recommendations for the other NEOs and
presents them to the Committee. The Committee sets NEO compensation after considering the recommendations of the CEO,
as well as other data. The CEO receives assistance with compensation administration from Dow’s Executive Compensation
Department. The Executive Compensation Department has retained the compensation consultant services of Towers Perrin.
Towers Perrin provides the following assistance to the Executive Compensation Department:
2008 DOW PROXY STATEMENT
•
Survey Group compensation information for executives and non-employee Directors.
•
Benchmarking of key compensation practices and trends in executive compensation.
17
Market Benchmarking
Dow benchmarks its executive compensation programs, designs, and compensation elements against a Survey Group of
20 companies with which Dow competes for executive talent. Market pay data for the Survey Group is gathered through
compensation surveys conducted by Towers Perrin.
Dow targets the median of the Survey Group for all compensation elements in order to increase its ability to attract, motivate,
develop and retain top level executive talent.
The Survey Group is periodically evaluated and updated to ensure the companies in the group remain relevant. The
20 companies, which are comparable to Dow in annual revenue (median of $38 billion) and market capitalization (median of
$59 billion) as of the latest measurement date in the fourth quarter of 2007, are listed below:
•
•
•
•
•
•
•
•
•
•
3M Company
Alcoa Inc.
The Boeing Company
Caterpillar, Inc.
E. I. du Pont de Nemours and Company
Eli Lilly and Company
Emerson Electric Co.
General Electric Co.
Hewlett-Packard Company
Honeywell International, Inc.
•
•
•
•
•
•
•
•
•
•
IBM Corporation
Johnson & Johnson
Kraft Foods, Inc.
Monsanto Co.
Motorola, Inc.
PepsiCo, Inc.
Pfizer Inc.
PPG Industries, Inc.
The Proctor & Gamble Company
United Technologies Corporation
Compensation Elements
The key components of compensation for all NEOs are shown below. The chart outlines the size, in percentage terms, of each
element of compensation. The striped sections of the charts reflect the “at-risk,” or performance-based components of
compensation.
NEO Compensation
To focus executives on both the short-term and long-term success of the Company, greater than 80% of NEO compensation
is considered at-risk because the value is based upon the achievement of specified results. If specific financial and operational
goals are not met, then at-risk compensation will decrease. If goals are exceeded, then at-risk compensation will increase.
18
2008 DOW PROXY STATEMENT
Base Salary
Base salary is a fixed portion of compensation based on an individual’s skills, responsibilities, experience and sustained
performance. Dow chooses to provide base salary in exchange for the employee’s services. This component is paid on a
monthly basis for use in meeting ongoing monthly financial obligations.
Base salaries for executives are benchmarked against similar jobs at other companies and are targeted at the median of the
Survey Group. In 2007 there were no material differences between Dow’s executive salary structure and the market. Actual
salaries vary by individual and are based on sustained performance toward the achievement of Dow’s strategy and goals.
Changes in base salary for the NEOs, as well as for all Dow salaried employees, depend on projected salary changes in the
external market for similar jobs, the individual’s current salary compared to the market, and the employee’s contributions to
Dow’s performance.
Performance Award
The Performance Award is an annual cash incentive program. Dow chooses this component of compensation to reward
employees for achieving critical Company and individual goals. For 2007, there were three parts to the Performance Award
Program consisting of two Company components and an individual component:
•
•
Company components:
•
Economic Profit is defined as Net Operating Profit after Tax minus a Capital Charge (Net Operating Profit
excludes certain items and the cumulative effect of changes in accounting principles). Capital Charge is defined as
total capital multiplied by the planned cost of capital. This element comprises 50% of the Performance Award
potential.
•
Cost management is a measure of fiscal discipline and responsibility measured against expense budgets. This
element comprises 25% of the Performance Award potential.
Individual component: The achievement of individual goals, as linked to Dow’s strategy. This element comprises 25%
of the award potential. Meeting goals would result in a target payout and greatly exceeding goals would result in a
payout higher than target. In 2007, the Compensation Committee exercised discretion on the individual component of the
Award. NEO goals are established at the beginning of each year and are reviewed and approved by the Committee.
Goals for 2007 centered around the Company’s four strategic themes:
1.
Drive Financial Discipline and Low Cost-to-Serve
2.
Set the Standard for Sustainability
3.
Build a People-Centric Performance Culture
4.
Invest for Strategic Growth
Individual award opportunities vary by job level and are targeted at the median of the annual bonus practices of the Survey
Group. In 2007 there were no material differences between Dow’s Performance Award structure and the market. Actual
award payouts are determined each February following completion of the plan year. Actual awards can range from 0% to
225% of the target award opportunity based on performance relative to goals as determined by the Committee. The Company
does not assign specific probabilities of achievement to the target award levels. Over the length of an industry cycle the
expectation is that, on average, incentive payouts would be close to target. The potential award payouts under the 2007
Performance Award Program are shown in the Grants of Plan-Based Awards table. Actual payouts to the NEOs are shown in
the Summary Compensation table in the column labeled “Non-Equity Incentive Plan Compensation.”
The Committee determined that the Company component of the Performance Award would not be paid to any employee in
the event the Company fails to report annual earnings greater than or equal to the sum of the dividends declared for the year.
For the NEOs, an additional minimum performance goal of $700 million of net income, as defined in the 1994 Executive
Performance Plan, had to be met in order for any payout to occur. This latter requirement is part of Dow’s strategy for
2008 DOW PROXY STATEMENT
19
complying with U.S. Internal Revenue Code Section 162(m) (see Tax Deductibility of Executive Compensation section for
additional information).
In addition to the annual Performance Award, a special award was given to all salaried employees in March 2007 as
recognition for outstanding efforts in achieving consecutive years of sustained earnings performance. The special award
amount was calculated for all employees as the greater of 25% of monthly base salary or 10% of the target Performance
Award. Actual payouts to the NEOs are shown in the Summary Compensation Table in the column labeled “Bonus.”
Long-Term Incentive Awards
Each year the Company grants equity-based LTI awards to leaders and other key employees who demonstrate high
performance, as measured by management performance assessments. Dow chooses this component of compensation to
motivate and reward employees for long-term stockholder value creation. It is also intended to help retain talented
executives.
As with Dow’s approach for all elements of compensation, LTI awards are targeted to be competitive with the market median
of the Survey Group for comparable positions. The size of the grant received by each NEO depends upon his or her job level
and performance.
The three components that make up an LTI award are:
1.
Stock Options: 50% of the total LTI value granted
2.
Deferred Stock: 25% of the total LTI value granted
3.
Performance Shares: 25% of the total LTI value granted
LTI grants are approved by the Committee and administered by Dow’s Executive Compensation Department. The annual
grant date for all employees is traditionally the Friday following the Committee’s February meeting – held on the second
Wednesday of February each year. The 2007 grant date was February 16, 2007.
LTI awards are granted under The Dow Chemical Company 1988 Award and Option Plan, Dow’s omnibus
stockholder-approved plan for equity awards to employees. Dow calculates the accounting cost of equity-based long-term
incentive awards under revised Statement of Financial Accounting Standards No. 123 (“SFAS 123R”), Share-Based Payment.
As such, the grant date accounting fair value, which is fixed at the date of the grant, is expensed over the vesting period.
Consistent with the U.S. Securities and Exchange Commission regulations, the 2007 compensation expense associated with
any outstanding equity grants for the NEOs is presented in the Summary Compensation Table. Total outstanding unexercised
or unvested LTI grants are shown in the Outstanding Equity Awards at Fiscal Year-End table. Each award type is discussed
below:
Stock Options
Stock Options are granted in order to provide incentive for long-term creation of stockholder value. Stock Options only have
value to the extent the price of Dow Common Stock appreciates relative to the exercise price. The exercise price equals the
closing price on the date of grant. Options vest in three equal annual installments and expire after 10 years. The Company
does not grant discounted options, backdate options, or re-price outstanding options.
Deferred Stock
Deferred Stock is granted in order to help the Company retain its NEOs and other key employees. Deferred Stock grants vest
after three years. During the vesting period, holders of outstanding Deferred Stock grants receive quarterly payments equal to
the dividend paid on equivalent shares of Dow Common Stock.
Performance Shares
Performance Shares are granted to motivate employees and to reward the achievement of specified financial goals.
Performance Shares are Deferred Stock which is earned only if the Company’s performance over a three-year period exceeds
pre-established goals. The 2007 Performance Shares can be earned based on Dow’s 2007-2009 Return on Capital (“ROC”)
20
2008 DOW PROXY STATEMENT
relative to pre-established goals and can range from 0% to 250% of the target award amount. ROC measures how effectively
a company has utilized the money invested in its operations and is calculated as Net Operating Profit after Tax (Net
Operating Profit excludes certain items and the cumulative effect of changes in accounting principles) divided by total
average capital.
To achieve a target payout, Dow’s ROC must equal or exceed pre-established ROC goals for the same period. Dow’s
Performance Share ROC target is 10% across the industry cycle, which would produce a target payout of 100%.
Performance Shares accrue amounts equal to the dividend paid on equivalent shares of Dow Common Stock. The dividend
equivalents are paid at the time the shares are delivered. All Performance Shares earned are delivered in the year following
the performance period. Instead of receiving the Performance Share Award in the form of Dow Common Stock, the NEOs
and certain other participants may elect to receive a cash payment equal to the value of the stock award on the date of
delivery. Participants may only make this cash election if they meet or exceed the Executive Stock Ownership guideline for
their job level.
Benefits
The Company provides a comprehensive set of benefits to most employees. These include medical, dental, life, disability,
accident, retiree medical and life, pension, and savings plans. The NEOs are eligible to participate in the same plans as most
other salaried employees. In addition, because highly compensated employees are subject to U.S. tax limitations on
contributions to some retirement plans, the Company has created non-qualified retirement programs intended to provide these
employees with the same benefits they would have received under the qualified plans without the tax limits. The NEOs are
eligible to participate in the same non-qualified retirement plans as all other highly compensated salaried employees.
Perquisites
As part of a comprehensive executive compensation program, the Company provides the NEOs and other selected executives
the following perquisites:
•
Company car.
•
Financial planning support (the greater of 3% of annual base salary or $5,000).
•
Executive physical examination.
•
Personal use of corporate aircraft (the CEO is the only employee permitted to use corporate aircraft for personal use, and
is required to do so by the Board of Directors for security and immediate availability reasons).
•
Executive Excess Umbrella Liability Insurance.
•
Home security alarm system.
The Compensation Committee reviews the perquisites provided to the NEOs annually as part of their overall review of
executive compensation. The Committee has determined that the perquisites are within an appropriate range of competitive
compensation practices. Details about the NEOs perquisites, including the cost to the Company, are shown in the Summary
Compensation Table under the “All Other Compensation” column and the accompanying narrative.
2008 DOW PROXY STATEMENT
21
NEO Responsibilities and 2007 Accomplishments
Andrew Liveris: Mr. Liveris serves as President, Chief Executive Officer and Chairman. Mr. Liveris’ compensation for
2007 reflects his contributions to the strong earnings performance of Dow, executing Dow’s strategy, and his strong
commitment to improving the public image of the Company through support of the Human Element campaign and the Blue
Planet Run, an around-the-world relay to raise awareness and funds to address the issue of one billion plus people without
ready access to safe drinking water. The Committee also considered Mr. Liveris’ efforts in implementing key initiatives
throughout the Company to improve both efficiency and employee morale, especially in his pursuit of profitable and
mutually beneficial joint ventures supporting Dow’s “Asset Light” strategy and market-facing businesses. Externally,
Mr. Liveris participated on the American Chemistry Council, the International Council of Chemistry Associations, and the
U.S. Climate Action Partnership, and was named America’s top chemicals/commodity CEO for the second consecutive year
in a survey of more than 1,000 investment professionals conducted by Institutional Investor magazine.
Geoffery Merszei: Mr. Merszei serves as Executive Vice President and Chief Financial Officer. He also has geographic
oversight responsibility for the European region. Mr. Merszei’s compensation for 2007 reflects his contributions to the
financial strength of the Company, through his leadership in driving financial discipline. Also reflected in his compensation
for 2007 was his leadership in successfully running Dow’s Business Operating Committee, and his positive leadership in his
oversight role for the growing European region.
Michael Gambrell: Mr. Gambrell serves as Executive Vice President, Basic Plastics and Chemicals, Manufacturing and
Engineering. He also has geographical oversight responsibility for the India, Middle East, and Africa region. Mr. Gambrell’s
compensation for 2007 reflects his contributions to the continued growth and advancement of the Company, particularly his
effective assumption of responsibility for the manufacturing and engineering functions and his efforts in implementing and
advancing Dow’s “Asset Light” strategy, including numerous joint ventures which are transforming the Company. The
Committee also considered Mr. Gambrell’s outside participation in the U.S.-India Business Council, the World Chlorine
Council, and the National Association of Manufacturers.
William Banholzer: Dr. Banholzer serves as Executive Vice President and Chief Technology Officer. Dr. Banholzer’s
compensation for 2007 reflects the progress he has made in advancing innovation and creating bottom line impact for Dow.
In acknowledgement of this effort, Dow was recognized externally as one of the top ten R&D organizations in the world.
Dr. Banholzer has been elected to a three-year term on the governing council of the National Academy of Engineering,
making him the only employee in Dow history to be recognized with this distinction.
David Kepler: Mr. Kepler serves as Executive Vice President, Chief Sustainability Officer, Chief Information Officer, and
Corporate Director of Shared Services. He also has geographic oversight responsibility for the Canadian region. Mr. Kepler’s
compensation for 2007 reflects the advancement of a recognized World-Class Supply Chain, putting the Company at the
forefront of industry with Dow’s sustainability programs such as sustainable energy, world-class environmental, health, and
safety performance, and global water management. Dow and Mr. Kepler’s continued global recognition in leadership in
Information Technology, which was recognized by selection into the top 20 on Ziff Davis Media’s “Top 100 CIOs,” and
selection into the CIO Hall of Fame, was also an important factor in determining his compensation.
Compensation and Awards made by the Compensation Committee
The Committee approved the following compensation and awards for the NEOs for 2007:
Name
Andrew Liveris
Geoffery Merszei
Michael Gambrell
William Banholzer
David Kepler
Base
Salary ($)
1,600,000
824,304
733,548
624,372
570,348
Performance
Award ($)
3,240,000
1,075,717
990,290
679,005
620,253
Stock
Awards ($)
5,230,800
2,196,936
2,196,936
1,281,546
1,281,546
Option
Awards ($)
4,512,600
1,922,760
1,922,760
1,152,675
1,152,675
Total ($)
14,583,400
6,019,717
5,843,534
3,737,598
3,624,822
Base salary amounts presented above differ from the amounts disclosed in the Summary Compensation Table because
increases in base salary become effective in March. Therefore, the amounts reported in the Summary Compensation Table
reflect two months at the 2006 base salary rate and ten months at the 2007 rate.
22
2008 DOW PROXY STATEMENT
The 2007 Performance Award resulted in payouts averaging 134% of the target award opportunity for all employees,
including the NEOs. This was calculated under the terms of the plan as described in the Compensation Elements section.
As shown in the following table, the amounts in columns (a) and (c) reflect the value of the actual awards granted in 2007;
the amounts in columns (b) and (d) reflect the 2007 expense taken for grants made in 2007, as well as grants made in
2003-2006, which were previously reported and are not fully vested.
(a)
Name
Andrew Liveris
Geoffery Merszei
Michael Gambrell
William Banholzer
David Kepler
2007 Stock
Award ($)
5,230,800
2,196,936
2,196,936
1,281,546
1,281,546
(b)
Value of
Stock Awards
shown in the
Summary
Compensation
Table ($)
7,723,496
3,064,233
2,639,263
2,507,267
2,043,243
(c)
Difference:
column (b)
minus column
(a) ($)
2,492,696
867,297
442,327
1,225,721
761,697
2007
Option
Award ($)
(d)
Value of
Option Awards
shown in the
Summary
Compensation
Table ($)
4,512,600
1,922,760
1,922,760
1,152,675
1,152,675
5,188,756
2,815,491
2,084,953
1,406,854
1,316,376
Difference:
column (d)
minus column
(c) ($)
676,156
892,731
162,193
254,179
163,701
The values for the 2007 actual stock awards and option awards differ from the values disclosed in the Summary
Compensation Table due to the fact the Summary Compensation Table was prepared in accordance with U.S. Securities and
Exchange Commission regulations issued in December 2006. These rules require the disclosure of the value of the equity
award based principally on the treatment of the accounting expense in the income statement of the employer under the
applicable accounting rule, SFAS 123R. Accordingly, the amounts shown in the Summary Compensation Table include
amortization expense for prior year awards.
Executive Stock Ownership Guidelines
Dow has had minimum stock ownership guidelines for its NEOs and other senior executives since 1998. The guidelines are
stated as a fixed number of shares of Dow Common Stock, which increase with job level and are reviewed periodically to
ensure relevance. Specific stock ownership requirements vary by job level, but all executives must own shares of stock with a
market value of the designated multiple of their base salary. The CEO is required to own stock with a value of six times base
salary, while the other NEOs are required to own stock with a value of four times base salary. The executives are given four
years to achieve the initial ownership guideline for their job level following promotion to that level. They are given one
additional year to achieve compliance with a higher level guideline upon being promoted to that level. For purposes of these
guidelines, stock ownership includes Dow Common Stock beneficially owned (including stock owned by immediate family
members), Deferred Stock not yet delivered, Performance Shares vested but not yet delivered, and stock held beneficially
through the Company’s 401(k) plan.
The following chart shows the stock ownership guidelines and respective holdings of the NEOs.
EXECUTIVE STOCK OWNERSHIP GUIDELINES FOR 2007
Name
Andrew Liveris
Geoffery Merszei
Michael Gambrell
William Banholzer
David Kepler
Ownership
Guideline
220,000
70,000
70,000
60,000
60,000
2007
Holdings
301,692
85,541
125,872
74,480
118,488
Difference
81,692
15,541
55,872
14,480
58,488
Multiple of
Base Salary
6x
4x
4x
4x
4x
Change-in-Control and Severance Arrangements
In 2007, the Committee adopted a market competitive change-in-control arrangement for its senior executives in order to
align the executives’ goals with the Company’s transformational strategy to become an earnings-growth company. Under this
arrangement, an executive must be involuntarily terminated within two years of a change-in-control in order to receive
benefits. The Company believes this practice is in the best interest of stockholders as it does not pay any benefits to an
2008 DOW PROXY STATEMENT
23
executive unless he or she is negatively impacted by a change-in-control event that is in the best interest of Dow
stockholders.
If a change-in-control event occurs the following benefits and provisions would apply to eligible executives:
•
A severance payment equal to two times the executive’s base salary and target Performance Award (2.99 times for the
CEO).
•
An additional two years of credited service and age for purposes of calculating retirement benefits (three years for the
CEO).
•
A financial, tax, and outplacement allowance of $50,000.
•
Eighteen months of health and welfare benefits at employee rates.
•
Tax gross-up protection in the event severance benefits exceed statutory thresholds and become subject to an excise tax.
•
LTI awards in the form of Performance Shares and Deferred Stock will vest and be delivered as soon as possible after
the change-in-control event. Stock Options will vest immediately.
A change-in-control event is defined as: (i) the acquisition of 20% or more of the Company’s outstanding voting securities;
(ii) changes to the membership of the Board of Directors that result in less than 50% of the current directors being re-elected
to the Board; (iii) approval by the stockholders of the Company of the merger or consolidation of the Company with another
entity in which the Company is not the surviving company, or where the other entity owns more than 50% of the Company’s
outstanding voting securities; or (iv) the complete liquidation of, or the sale of all or substantially all assets of, the Company.
Executive Compensation Recovery Policy
The Committee has adopted an executive compensation recovery policy for executive officers. Under this policy, the
Company may recover incentive income that was based on achievement of quantitative performance targets if an executive
officer engaged in grossly negligent conduct or intentional misconduct resulting in a financial restatement or in any increase
in his or her incentive income. Incentive income includes income related to the annual Performance Award and LTI awards.
The Company will also recover any awards made to an executive during the prior three years should the executive engage in
activity that competes with, or is otherwise harmful to the Company or its affiliated companies.
Tax Deductibility of Executive Compensation
Section 162(m) of the U.S. Internal Revenue Code generally limits the tax deductibility of compensation paid by a public
company to its CEO and certain other highly compensated executive officers to $1 million in the year the compensation
becomes taxable to the executive. There is an exception to the limit on deductibility for performance-based compensation
meeting certain requirements. Although the Company does consider the impact of the above rule when making compensation
decisions, Dow policy does not require all executive compensation to be tax-deductible. In the interest of flexibility and
overall benefit for the Company’s stockholders, the Committee will continue to facilitate the awarding of responsible but
adequate executive compensation while taking advantage of Section 162(m) whenever feasible. Amounts paid under the
compensation program, including base salary and grants of Deferred Stock (Restricted Stock and Restricted Stock Units),
may not qualify as performance-based compensation excluded from the limitation on deductibility.
COMPENSATION TABLES AND NARRATIVES
The following table summarizes the compensation of the principal executive officer (CEO), principal financial officer (CFO),
and the Company’s three most highly compensated officers for the fiscal year ended December 31, 2007. The amounts shown
in the stock and option awards columns in the table below reflect the expense reported for grants made in 2007 and for grants
made in 2003-2006, which were previously reported.
24
2008 DOW PROXY STATEMENT
SUMMARY COMPENSATION TABLE FOR 2007
Name and Principal Position
Andrew Liveris, CEO & Chairman
Geoffery Merszei, CFO & Exec.
VP
Michael Gambrell, Exec. VP
William Banholzer, Exec. VP
David Kepler, Exec. VP
Year
Option
Awards
($) (b) (c)
Non-Equity
Incentive Plan
Compensation
($) (d)
Change in
Pension Value
and
Non-qualified
Deferred
Compensation
Earnings
($) (e)
216,000 7,723,496 5,188,756
— 7,811,118 5,117,892
3,240,000
2,207,250
1,811
119,916
146,704 18,100,100
149,710 16,839,219
812,360 607,520(g) 3,064,233 2,815,491
746,902 533,334(g) 2,316,950 2,283,034
721,346
66,019 2,639,263 2,084,953
648,220
— 2,308,827 1,669,497
616,990
46,828 2,507,267 1,406,854
570,066
— 1,977,001
971,373
562,310
42,776 2,043,243 1,316,376
511,128
— 2,144,940 1,134,127
1,075,717
739,000
990,290
648,000
679,005
475,000
620,253
427,000
363,163
450,804
88
102,912
3,421
330,563
429
50,716
53,387
152,468
163,676
137,970
26,115
38,475
87,440
83,308
Salary ($)
2007 1,583,333
2006 1,433,333
2007
2006
2007
2006
2007
2006
2007
2006
Bonus
($) (a)
Stock
Awards
($) (b)
All Other
Compensation
($) (f)
Total ($)
8,791,871
7,222,492
6,665,635
5,515,426
5,286,480
4,362,478
4,672,827
4,351,219
(a)
On March 1, 2007, a special award was given to all salaried employees as recognition for outstanding efforts in achieving consecutive years of
sustained earnings performance.
(b)
Amounts recognized for financial statement reporting purposes for the fiscal year ended December 31, 2007, in accordance with SFAS 123R for
awards pursuant to the Company’s award and option plans and may include amounts from awards granted in and prior to 2007. Assumptions used in
the calculation of amounts related to equity awards are included in Note N of the Company’s audited financial statements for the fiscal year ended
December 31, 2007, which are included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission
on February 19, 2008. Assumptions used in the calculation of these programs related to grants awarded prior to 2004 are included in Note O of the
Company’s audited financial statements for the fiscal year ended December 31, 2004 which are included in the Company’s Annual Report on
Form 10-K filed with the U.S. Securities and Exchange Commission on February 18, 2005.
(c)
Dow’s SFAS 123R valuation uses the widely accepted lattice-binomial model which calculated an option value of $9.81 (grant date of
February 16, 2007). The exercise price is the average of the high and low Dow stock price on the date of grant. The exercise price was $43.59 for
2007 grants.
(d)
Annual Performance Award as described in the Compensation Elements section of the Compensation Discussion and Analysis
(e)
2007 above-market non-qualified deferred compensation earnings: Liveris $1,811, Merszei $0, Gambrell $88, Banholzer $3,421, Kepler $429. 2006
above-market non-qualified deferred compensation earnings: Liveris $2,950, Merszei $0, Gambrell $97, Banholzer $5,458, Kepler $567. The actual
change in pension value for 2007 was negative for Messrs. Liveris, Gambrell, Banholzer and Kepler due to a change in the discount rate used in
determining the present value of accumulated benefits. This is included as zero in the Summary Compensation Table.
(f)
Details related to all other compensation can be found in the All Other Compensation table.
(g)
In order to replace forfeited incentive compensation that Mr. Merszei would have received from his previous employer, Mr. Merszei was granted a
new hire cash award of $1,600,000 in 2005, payable in three installments on his anniversary date in 2006, 2007, and 2008.
The following table provides additional details for the compensation information found in the Summary Compensation Table
under the All Other Compensation column.
2008 DOW PROXY STATEMENT
25
ALL OTHER COMPENSATION FOR 2007
Name
Andrew Liveris
Geoffery Merszei
Michael Gambrell
William Banholzer
David Kepler
Year
2007
2006
2007
2006
2007
2006
2007
2006
2007
2006
Life
Insurance
($) (a)
3,012
2,676
—
—
112,985
99,525
—
—
55,406
47,996
Relocation
($)
—
—
—
114,872(g)
—
—
—
—
—
—
Savings Plans
Company
Contributions
($) (c)
17,250
17,200
9,000
8,800
17,250
17,200
9,000
17,200
17,250
17,200
Aviation
($) (b)
60,620
71,500
—
—
5,120
—
—
—
—
—
Financial
Planning
($) (d)
53,204
39,445
6,275
19,394
16,078
10,996
12,000
12,000
10,059
9,511
Home
Security
($) (e)
1,242
787
20,890
577
668
1,365
575
575
990
1,172
Other
Perquisites
($) (f)
11,376
18,102
17,222
8,825
11,575
8,884
4,540
8,700
3,735
7,429
Total ($)
146,704
149,710
53,387
152,468
163,676
137,970
26,115
38,475
87,440
83,308
(a)
Tax gross-up payment for unanticipated tax liabilities resulting from participation in the Key Employee Insurance Program and the Company’s
termination of the Executive Split Dollar Life Insurance Plan.
(b)
Mr. Liveris is required by the Board of Directors to use the Company aircraft for personal use for security and immediate availability purposes.
Incremental cost to the Company of personal use of Company aircraft is calculated based on the variable operating costs to the Company including
fuel, landing, catering, handling, aircraft maintenance, and pilot travel costs. Fixed costs, which do not change based upon usage, such as pilot
salaries or depreciation of the aircraft or maintenance costs not related to personal travel, are excluded.
(c)
Employee Savings Plan company match, ESOP contribution, and Non-qualified Deferred Compensation Plan company contribution.
(d)
Reimbursement of costs paid for financial and tax planning support.
(e)
Reimbursement of costs paid for home security.
(f)
Market value of automobile lease, executive physical examinations, and Executive Excess Umbrella Liability Insurance.
(g)
Costs associated with Mr. Merszei’s relocation to Midland, MI.
The following table provides additional information about plan-based compensation disclosed in the Summary Compensation
Table. This table includes both equity and non-equity awards.
GRANTS OF PLAN-BASED AWARDS FOR 2007
Name
Andrew Liveris
Geoffery Merszei
Michael Gambrell
William Banholzer
David Kepler
Grant
Date
2/14/2007
2/16/2007
2/16/2007
2/16/2007
2/14/2007
2/16/2007
2/16/2007
2/16/2007
2/14/2007
2/16/2007
2/16/2007
2/16/2007
2/14/2007
2/16/2007
2/16/2007
2/16/2007
2/14/2007
2/16/2007
2/16/2007
2/16/2007
Date of
Action by the
Compensation
Committee
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
2/14/2007
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
Threshold
Target
Maximum
($) (a)
($) (a)
($) (a)
0
2,160,000
4,860,000
Estimated Future Payouts Under
Equity Incentive Plan Awards
Threshold
Target
Maximum
(#) (b)
(#) (b)
(#) (b)
0
60,000
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)
(c)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) (d)
Exercise
or Base
Price of
Option
Awards
($/Sh)
150,000
43.59
2,615,400
2,615,400
4,512,600
43.59
1,098,468
1,098,468
1,922,760
196,000
43.59
1,098,468
1,098,468
1,922,760
117,500
43.59
640,773
640,773
1,152,675
117,500
43.59
640,773
640,773
1,152,675
60,000
460,000
0
741,874
1,669,216
0
25,200
63,000
25,200
196,000
0
660,193
1,485,435
0
25,200
63,000
25,200
0
468,279
1,053,628
0
14,700
36,750
14,700
0
427,761
Grant Date
Fair Value
of Stock
and Option
Awards ($)
962,462
0
14,700
36,750
(a)
Performance Award as described in the Compensation Elements section of the Compensation Discussion and Analysis.
(b)
Performance Shares as described in the Compensation Elements section of the Compensation Discussion and Analysis.
(c)
Deferred Stock awards as described in the Compensation Elements section of the Compensation Discussion and Analysis.
14,700
26
(d)
2008 DOW PROXY STATEMENT
Stock Option awards as described in the Compensation Elements section of the Compensation Discussion and Analysis.
The following table lists outstanding equity grants for each NEO as of December 31, 2007. The table includes outstanding
equity grants from past years as well as the current year.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Option Awards
Name
Andrew Liveris (e)
Geoffery Merszei
Michael Gambrell (e)
William Banholzer
David Kepler (e)
Grant Date
02/16/2000
03/02/2001
02/15/2002
02/14/2003
02/13/2004
02/18/2005
03/01/2006
02/16/2007
07/01/2005
07/01/2005
03/01/2006
02/16/2007
02/16/2000
03/02/2001
02/15/2002
02/14/2003
02/13/2004
02/18/2005
03/01/2006
02/16/2007
07/14/2005
07/14/2005
03/01/2006
02/16/2007
02/16/2000
03/02/2001
02/15/2002
02/14/2003
02/13/2004
02/18/2005
03/01/2006
02/16/2007
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(a)
66,000
31,700
38,300
62,500
90,000
120,000
133,333
—
207,559
n/a
44,950
—
9,000
13,300
13,300
21,000
33,340
27,780
44,950
—
36,666
5,500
26,970
—
48,000
21,700
27,500
46,250
36,670
27,780
26,970
—
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(a)
—
—
—
—
—
60,000
266,667
460,000
103,781
n/a
89,900
196,000
—
—
—
—
—
13,890
89,900
196,000
18,334
2,750
53,940
117,500
—
—
—
—
—
13,890
53,940
117,500
Option
Exercise
Price ($)
36.02
33.94
30.43
27.40
43.49
53.53
43.68
43.59
44.74
n/a
43.68
43.59
36.02
33.94
30.43
27.40
43.49
53.53
43.68
43.59
47.00
47.00
43.68
43.59
36.02
33.94
30.43
27.40
43.49
53.53
43.68
43.59
Option
Expiration
Date
02/16/2010
03/02/2011
02/15/2012
02/14/2013
02/13/2014
02/18/2015
03/01/2016
02/16/2017
07/01/2015
n/a
03/01/2016
02/16/2017
02/16/2010
03/02/2011
02/15/2012
02/14/2013
02/13/2014
02/18/2015
03/01/2016
02/16/2017
07/14/2015
07/14/2015
03/01/2016
02/16/2017
02/16/2010
03/02/2011
02/15/2012
02/14/2013
02/13/2014
02/18/2015
03/01/2016
02/16/2017
Number of
Shares or
Units of
Stock
That Have
Not Vested
(#) (c)
n/a
n/a
n/a
n/a
30,000
55,000
50,000
60,000
16,580
30,000
16,380
25,200
n/a
n/a
n/a
n/a
11,120
10,940
16,380
25,200
87,500
n/a
9,830
14,700
n/a
n/a
n/a
n/a
12,230
10,940
9,830
14,700
Stock Awards
Equity
Incentive
Plan
Awards:
Number of
Unearned
Market
Shares,
Value of
Units or
Shares or
Other
Units of
Rights
Stock That
That Have
Have Not
Vested ($) Not Vested
(#) (d)
(b) (c)
n/a
n/a
n/a
n/a
1,182,600
2,168,100
1,971,000
2,365,200
653,584
1,182,600
645,700
993,384
n/a
n/a
n/a
n/a
438,350
431,255
645,700
993,384
3,449,250
n/a
387,499
579,474
n/a
n/a
n/a
n/a
482,107
431,255
387,499
579,474
n/a
n/a
19,687
59,938
20,183
71,700
50,000
60,000
23,766
n/a
16,380
25,200
n/a
n/a
6,837
20,139
7,477
15,698
16,380
25,200
3,346
n/a
9,830
14,700
n/a
n/a
14,135
44,354
8,226
15,678
9,830
14,700
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)
(b) (d)
n/a
n/a
776,062
2,362,756
795,614
2,826,414
1,971,000
2,365,200
936,856
n/a
645,700
993,384
n/a
n/a
269,515
793,879
294,743
618,815
645,700
993,384
131,899
n/a
387,499
579,474
n/a
n/a
557,202
1,748,435
324,269
618,027
387,499
579,474
(a)
Stock Option award grants vest in three equal installments on the first, second and third anniversaries of the grant
date shown in the table.
(b)
Market values based on the 12/31/2007 closing stock price of $39.42 per share.
(c)
Deferred Shares vest and are delivered three years after the grant date. Prior to January 1, 2008, Deferred Shares
vested over a five-year period. Mr. Merszei’s grant of 16,580 deferred shares on 7/1/2005 will vest on 7/1/2010 and
his grant of 30,000 deferred shares granted on 7/1/2005 will vest on 8/29/2008.
2008 DOW PROXY STATEMENT
27
(d)
Performance Shares granted on 2/15/2002 and 2/13/2004 will vest and be delivered on 4/16/2008. Performance
Shares granted 2/14/2003, 2/18/2005, 3/1/2006 and 2/16/2007 will vest and be delivered April 16 or 17 of the year
following the end of the performance period. Mr. Merszei’s grant of 24,860 Performance Shares granted 7/1/2005
will vest and be delivered on 4/17/2008. Performance Shares granted in 2006-2007 are shown at the target level of
performance. The actual number of shares to be delivered will be determined at the end of the three-year
performance period.
(e)
In addition to the equity grants described above, Mr. Liveris, Mr. Gambrell, and Mr. Kepler received dividend unit
grants on 3/9/1988 of 846 shares, 1,125 shares and 846 shares, respectively, which generate a quarterly payment
equal to the dividend paid on equivalent shares of Dow Common Stock. These grants will expire on 3/9/2013.
The following table summarizes the value received from stock option exercises and stock grants vested during 2007.
OPTION EXERCISES AND STOCK VESTED FOR 2007
Name
Andrew Liveris
Geoffery Merszei
Michael Gambrell
William Banholzer
David Kepler
(a)
Option Awards
Number of Shares
Value Realized
Acquired on
on Exercise
Exercise (#)
($)
n/a
n/a
30,000
n/a
28,200
Stock Awards
Number of Shares
Acquired on
Value Realized
Vesting (#)
on Vesting ($)
n/a
n/a
299,676
n/a
332,218
77,207
n/a
28,023
n/a
41,699
3,531,123(a)
n/a
1,281,631(a)
n/a
1,907,538(a)
Performance Shares from grants on: 3/21/2001, 2/15/2002, 2/13/2004, and 5/24/2004.
The following table lists the pension program participation and actuarial present value of each NEOs defined benefit pension
at December 31, 2007.
PENSION BENEFITS AS OF 12/31/07
Name
Number of
Years
Credited
Service (#)
Plan Name
Andrew Liveris
Dow Employees’ Pension Plan
Dow Executives’ Supplemental Retirement Plan (b)
Geoffery Merszei
Dow Employees’ Pension Plan
Dow Executives’ Supplemental Retirement Plan (c)
Michael Gambrell
Dow Employees’ Pension Plan
Dow Executives’ Supplemental Retirement Plan (d)
William Banholzer
Dow Employees’ Pension Plan
Dow Executives’ Supplemental Retirement Plan (e)
David Kepler
Dow Employees’ Pension Plan
Dow Executives’ Supplemental Retirement Plan (d)
12
32
Total
3
30
Total
32
32
Total
3
25
Total
33
33
Total
Present
Value of
Accumulated
Benefit ($) (a)
549,502
7,535,041
8,084,543
102,794
4,238,036
4,340,830
1,075,928
2,527,373
3,603,301
111,439
2,027,029
2,138,468
1,093,512
2,886,752
3,980,264
(a)
Unless otherwise noted, all present values reflect accrued age 65 benefits. The form of payment, discount rate
(6.8%) and mortality (UP94G) are based upon SFAS 87 assumptions as reflected in the Company’s 2007 audited
financial statements.
(b)
The present value for Mr. Liveris reflects benefits payable at the unreduced retirement date of 12/31/2007. It also
reflects an offset for his Australian Superannuation Fund (“Australian Fund”) account of $829,624 USD
($943,397 AUD converted using 12/31/2007 internal Dow exchange rate of $1 AUD = $.8794 USD) for 2007 and
28
2008 DOW PROXY STATEMENT
$710,466 USD ($898,869 AUD converted using 12/31/2006 internal Dow exchange rate of $1 AUD = $.7904 USD)
for 2006. Mr. Liveris was asked by the Company to permanently transfer to the United States in 1995 and, at that
time, began participation in the Dow Employees’ Pension Plan (“DEPP”) and ceased contributions to the Australian
Fund. In order to equitably determine a retirement benefit bridging the two plans, Mr. Liveris’ retirement benefit
will be determined by the following formula: at the time of retirement, the pension amount would equal the amount
payable under the DEPP formula, with the benefit being paid from the DEPP and the Executives’ Supplemental
Retirement Plan (“ESRP”) (based on Mr. Liveris’ highest consecutive three-year average compensation (“HC3A”)
and Mr. Liveris’ years of credited service as if a U.S. employee his entire Dow career) less the value of the accrued
benefit in the Australian Fund. If legally permissible, Mr. Liveris will be required to waive any retirement benefits
payable from the Australian Fund. If not legally permissible, the value of any retirement benefits received from the
Australian Fund shall be deducted from any ESRP benefit due.
(c)
The present value for Mr. Merszei reflects benefits payable at the unreduced retirement date of 01/31/2009.
Mr. Merszei was a participant in the Dow Personalvorsorgestiftung Schweiz (“Swiss Plan”) from 1978 through 2001
and received a portable benefit upon his termination from Dow Europe. Under the terms of his employment contract,
Mr. Merszei will have his final benefit prorated under the formulas of the defined benefit plans in which he
participated for the period of time spent under each plan using pensionable pay and service. As a U.S. employee,
Mr. Merszei is now a participant in the DEPP and ESRP. Mr. Merszei will get credit for the years of service he spent
at his previous employer in the ESRP, with the amount of such previous employer’s benefit and his previously paid
portable benefit carved out of the ultimate benefit.
(d)
The present value for Messrs. Gambrell and Kepler reflect benefits payable at the unreduced retirement date of
12/31/2007. ESRP benefits will be offset by benefits obtained under the Key Employee Insurance Program
(“KEIP”).
(e)
Under the terms of his employment contract, Dr. Banholzer will get credit for the years of service he spent at his
previous employer in the ESRP. The present value for Dr. Banholzer reflects an offset for the age 65 benefit from
his previous employer of $63,217.
The NEOs participate in one or more of the following retirement plans:
The Dow Employees’ Pension Plan
The Company provides the Dow Employees’ Pension Plan (“DEPP”) for its employees and for employees of some of its
wholly owned U.S. subsidiaries. DEPP has two active formulas: the DEPP formula, for employees hired prior to January 1,
2008, and the Personal Pension Account formula for employees hired January 1, 2008 and beyond. Upon retirement, a
participant receives an annual pension under the DEPP formula subject to a statutory limitation. The benefit is paid in the
form of a monthly annuity and is calculated based on the sum of the employee’s yearly basic and supplemental accruals up to
a maximum of 425% for basic accruals and 120% for supplemental accruals. Basic accruals equal the employee’s highest
consecutive three-year compensation (“HC3A”) multiplied by a percentage ranging from 4% to 18% dependent on the
employee’s age in the years earned. Supplemental accruals are for compensation in excess of a rolling 36-month average of
the Social Security wage base. Supplemental accruals range from 1% to 4%, based on the age of the employee in the years
earned. The sum of the basic and supplemental accruals is divided by a conversion factor to calculate an immediate monthly
benefit. If the employee terminates employment before age 65 and defers payment of the benefit, the account balance
calculated under this formula will be credited with interest. This benefit is known as the DEPP formula benefit.
Certain U.S. plan participants who were hired prior to January 1996 may have a greater benefit calculated under the previous
pension plan formula which was frozen as of December 31, 2005. This benefit is equal to 1.6% of the employee’s HC3A as
of December 31, 2005, multiplied by the employee’s years of credited service as of December 31, 2005, using full credited
service up to 35 years, and half of the years of credited service in excess of 35 years. No actuarial reductions are taken if the
employee is at least age 50 and has combined age and years of service equal to 85 or greater. This formula also contains a
provision for an offset of the employee’s estimated primary Social Security benefit, calculated using the method specified in
the Tax Reform Act of 1986. Employees may receive either the DEPP formula benefit or the 1.6 formula benefit.
2008 DOW PROXY STATEMENT
29
The Executives’ Supplemental Retirement Plan
Because the U.S. Internal Revenue Code limits the benefits otherwise provided by DEPP, the Board of Directors adopted the
Executives’ Supplemental Retirement Plan (“ESRP”) in 1992 to provide certain management employees who participate in
the DEPP with supplemental benefits. The benefits are calculated under the same formulas described above.
The Key Employee Insurance Program
Messrs. Gambrell and Kepler elected to have their ESRP benefit secured by enrolling in the Key Employee Insurance
Program (“KEIP”) in 1999 and 1998, respectively. KEIP is a life insurance program which secured benefits otherwise
available under ESRP, offered to certain management employees as an alternative to the ESRP. Dow has not offered KEIP to
employees since 1999. The Company has no plans to reinstate this program for new participants.
Dow Savings Plan – 401(k)
The Company provides all U.S. salaried employees the opportunity to participate in a 401(k) plan (The Dow Chemical
Company Employees’ Savings Plan). In 2007, if employees contributed 6% of annual salary, Dow provided a maximum
matching contribution of 3% of salary and an additional automatic ESOP contribution of 1% of salary. Under the revised
401(k) plan which is effective for 2008 and beyond, for salaried employees who contribute 2% of annual salary, Dow
provides a matching contribution of 100% of the employee’s contribution. For salaried employees who contribute up to an
additional 4%, Dow provides a 50% match. The NEOs participate in the 401(k) plan on the same terms as other eligible
employees.
The following table provides information on compensation the NEOs have elected to defer as described in the narrative that
follows.
NON-QUALIFIED DEFERRED COMPENSATION FOR 2007
Name
Andrew Liveris
Geoffery Merszei
Michael Gambrell
William Banholzer
David Kepler
Executive
Contributions
in Last Fiscal
Year ($)(a)
79,167
—
36,067
—
28,116
Company
Contributions
in Last Fiscal
Year ($)
8,278
—
7,757
7,757
7,757
Aggregate
Earnings
in Last
Fiscal
Year ($)
72,320
—
5,295
96,133
13,968
Aggregate
Withdrawals /
Distributions ($)
—
—
—
—
—
Aggregate
Balance at
Last Fiscal
Year-End
($)(b)
1,163,963
—
110,072
1,613,120
291,824
(a)
Non-Qualified Deferred Compensation contributions are also reported as salary for 2007 in the Summary
Compensation Table.
(b)
Includes employee contributions reported as salary for 2006 in the Summary Compensation Table: Liveris $71,667,
Gambrell $32,411, Banholzer $28,503, Kepler $25,556.
In order to further assist certain U.S. salaried employees in saving for retirement, Dow provides an Elective Deferral Plan.
This plan allows participants to voluntarily defer the receipt of base salary (maximum deferral of 50%) and Performance
Award (maximum deferral of 85%).
Each Participant enrolled in the plan will receive a matching contribution using the same formula authorized for salaried
participants under the 401(k) plan for employer matching contributions. The current formula provides for a matching
contribution on the first 6% of base pay deferred. For purposes of calculating the match under the Elective Deferral Plan, the
Company will assume each Participant is contributing the maximum allowable amount to the 401(k) plan and receiving a
match thereon. The assumed match from the 401(k) plan will be offset from the matching contribution calculated under the
Elective Deferral Plan. The sum of the matching contribution under the Elective Deferral Plan plus the employer matching
contributions under the 401(k) plan may not exceed $15,000 per year.
30
2008 DOW PROXY STATEMENT
Investment choices include an account with interest equivalent to 125% of the 120-month rolling average of ten-year U.S.
Treasury Notes, a phantom Dow stock account tracking the market value of Dow Common Stock with market dividends paid
and reinvested, as well as accounts tracking the performance of several mutual funds.
The Elective Deferral Plan allows for distributions to commence on the January 31 after retirement or after a specific future
year that can be later or earlier than the retirement date. Retirement under the Plan is defined as termination from
employment with The Dow Chemical Company or any of its wholly owned subsidiaries participating in the Elective Deferral
Plan on or after age 65, or on or after age 50 with at least 10 years of Company service. Distributions may be paid either in a
lump sum or in equal monthly, quarterly or annual installments up to 15 years based on the employee’s initial election as to
the time and form of payment. If installments were elected, the unpaid balance will continue to accumulate gains and losses
based on the employee’s investment selections.
The NEOs balances consist primarily of voluntary deferrals (and related earnings), not contributions made by the Company.
Potential Payments Upon Termination or Change-in-Control
All NEOs are currently retirement eligible, and entitled to benefits similar to most other salaried employees upon separation
from the Company. They are also entitled to additional benefits in the case of an involuntary termination without cause or a
change-in-control event. All benefits and payments are subject to the terms of the applicable program documents, contracts,
and other agreements. The summary below shows the impact of various types of separation events upon the different
compensation elements the NEOs receive.
Retirement, Death, or Disability
•
Base Salary: Paid through date of separation on the normal schedule.
•
Performance Award: Prorated for the portion of the year worked and paid on the normal schedule.
•
Benefits: All NEOs except Dr. Banholzer are eligible for retiree medical and life insurance coverage similar to many
other salaried U.S. employees.
•
Retirement Plans: Participants have access, in accordance with elections and plan features, to the following retirement
plan benefits:
•
•
Elective Deferral Plan benefits as shown in the Non-qualified Deferred Compensation table and accompanying
narrative.
•
Pension benefits as shown in the Pension Benefits Table and described in the accompanying narrative.
Participants in DEPP and ESRP are paid a monthly annuity. Participants in KEIP have additional lump-sum
features available.
•
Employee Savings Plan (Defined Contribution 401(k) plan).
Outstanding Long-Term Incentive Awards
•
Stock Options: Outstanding grants are retained in full. Vesting period remains unchanged; expiration periods are
shortened to the earlier of the existing expiration date or five years.
•
Deferred Stock: Current year grants are prorated for the portion of year worked. Other grants are retained in full.
Vesting and delivery dates remain unchanged.
•
Performance Shares: Current year grants are prorated for the portion of year worked. Other grants are retained in
full. Vesting periods and delivery dates remain unchanged.
2008 DOW PROXY STATEMENT
31
Involuntary Termination With Cause
Because all NEOs are currently retirement eligible, they generally will receive the same benefits under an Involuntary
Termination with Cause as under retirement with the exception of incentive income, which may be recovered by the
Company as described in the Executive Compensation Recovery Policy. In addition, there may be other bases for forfeiture
or alternative treatment under the applicable programs for an Involuntary Termination With Cause, based on the particular
program terms or other legal bases.
Involuntary Termination Without Cause
In addition to the benefits received due to retirement, as described above, the NEOs will receive the following benefits if
involuntarily terminated without cause:
•
A lump-sum severance payment of two weeks per year-of-service (up to a maximum of eighteen months) under the U.S.
Severance Plan, plus six months base salary under the Executive Severance Supplement. The U.S. Severance Plan covers
most salaried employees in the United States.
•
Outplacement Counseling and Financial/Tax Planning with a value of $30,300.
•
Eighteen months of health and welfare benefits at employee rates.
Change-in-Control
In addition to benefits received due to retirement, as described above, the NEOs will receive the following benefits if
separated due to a Change-in-Control event as defined in the Compensation Discussion and Analysis:
•
A severance payment equal to two times the executive’s base salary and target Performance Award (2.99 times for the
CEO).
•
An additional two years of credited service and age for purposes of calculating retirement benefits (three years for the
CEO).
•
A financial, tax, and outplacement allowance of $50,000.
•
Eighteen months of health and welfare benefits at employee rates.
•
Tax gross-up protection in the event severance exceeds statutory thresholds and becomes subject to an excise tax.
•
LTI awards in the form of Performance Shares and Deferred Stock will vest and be delivered as soon as possible after
the Change-in-Control event. Stock Options will vest immediately.
The following table summarizes the value of the incremental benefits to be received due to an Involuntary Termination
(without cause) or a Change-in-Control event:
32
2008 DOW PROXY STATEMENT
INVOLUNTARY TERMINATION OR CHANGE-IN-CONTROL VALUES
Name
Involuntary
Termination
Without Cause ($)
Type of Benefit
Andrew Liveris
Geoffery Merszei
Michael Gambrell
William Banholzer
David Kepler
Severance
Increase in Present Value of Pension
Health & Welfare Benefits
Outplacement & Financial Planning
Total:
Severance
Increase in Present Value of Pension
Health & Welfare Benefits
Outplacement & Financial Planning
Total:
Severance
Increase in Present Value of Pension
Health & Welfare Benefits
Outplacement & Financial Planning
Total:
Severance
Increase in Present Value of Pension
Health & Welfare Benefits
Outplacement & Financial Planning
Total:
Severance
Increase in Present Value of Pension
Health & Welfare Benefits
Outplacement & Financial Planning
Total:
Change-in-Control ($)
2,769,231
n/a
7,128
30,300
2,806,659
1,363,272
n/a
9,456
30,300
1,403,028
1,261,138
n/a
7,128
30,300
1,298,566
910,142
n/a
15,405
30,300
955,847
998,109
n/a
7,128
30,300
1,035,537
11,242,400
10,675,117
7,128
50,000
21,974,645
3,132,355
2,215,261
9,456
50,000
5,407,072
2,787,482
2,529,912
7,128
50,000
5,374,522
2,185,302
2,236,211
15,405
50,000
4,486,918
1,996,218
864,015
7,128
50,000
2,917,361
Director Compensation
The following table lists the compensation provided to Dow’s non-employee Directors in 2007.
DIRECTOR COMPENSATION FOR 2007
Name
Jacqueline K. Barton
James A. Bell
Jeff M. Fettig
Barbara H. Franklin
John B. Hess
Dennis H. Reilley (e)
James M. Ringler
Ruth G. Shaw
Paul G. Stern
(a)
Fees
Earned or
Paid in
Cash ($)
125,000
130,000
130,000
145,000
115,000
105,757
125,000
115,000
161,250
Stock
Awards ($)
(a) (b)
48,266
48,266
48,266
48,266
48,266
—
48,266
48,266
48,266
Option
Awards ($)
(b) (c)
65,228
48,910
65,228
65,228
48,910
—
65,228
48,910
65,228
Change in
Pension Value
and
Non-qualified
Deferred
Compensation
Earnings ($)
(d)
1,054
20
—
—
—
—
575
53
786
Total ($)
239,548
227,196
243,494
258,494
212,176
105,757
239,069
212,229
275,530
The March 5, 2007 grant date accounting fair value of Restricted Stock granted is $41.97 per share with a total value
of $48,266 for each Director. Aggregate unvested Restricted Stock holdings at December 31, 2007 were:
2008 DOW PROXY STATEMENT
33
Barton 12,220; Bell 5,070; Fettig 11,070; Franklin 7,720; Hess 3,970; Reilley 2,820; Ringler 12,991; Shaw 5,070;
and Stern 12,220.
(b)
The amounts reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year
ended December 31, 2007, in accordance with SFAS 123R for awards granted pursuant to the Company’s award and
option plans. Assumptions used in the calculation of amounts related to equity awards are included in Note N of the
Company’s audited financial statements for the fiscal year ended December 31, 2007 included in the Company’s
Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 19, 2008.
(c)
The March 5, 2007 grant date accounting fair value of Stock Options granted is $9.83 per share with a total value of
$59,472 for each Director. Aggregate historical vested and unvested option awards at December 31, 2007 were:
Barton 37,400 vested, 6,050 unvested; Bell 4,900 vested, 6,050 unvested; Fettig 13,600 vested, 6,050 unvested;
Franklin 37,400 vested, 6,050 unvested; Hess 6,050 unvested; Ringler 33,116 vested, 6,050 unvested; Shaw 4,900
vested, 6,050 unvested; Stern 37,400 vested, 6,050 unvested.
(d)
Consists exclusively of above-market non-qualified deferred compensation earnings.
(e)
Mr. Reilley was elected on August 17, 2007, and received a cash payment of $44,507 upon election to the Board in
lieu of the current year stock award.
Directors’ fees as stated below are paid only to Directors who are not employees of the Company.
Fees paid in 2007
Annual Retainer Fee:
Meeting Retainer Fee:
Audit Committee Chairmanship:
All Other Committee Chairmanships:
Audit Committee Membership:
Presiding Director Service:
$70,000 annually
$45,000 annually
$15,000 annually
$10,000 annually
$15,000 annually
$21,250 annually
Fees to be paid in 2008
$70,000 annually
$45,000 annually
$15,000 annually
$10,000 annually
$15,000 annually
$25,000 annually
The Presiding Director Service fee increased from $20,000 per year to $25,000 per year in December 2007. For 2007, the
Presiding Director received three quarterly fee installments at the prior rate and one installment at the increased rate, for a
total fee of $21,250.
2003 Non-Employee Directors’ Stock Incentive Plan
The 2003 Non-Employee Directors’ Stock Incentive Plan provides for an annual grant of Restricted Stock and Stock Options
to each non-employee Director on March 5 of each year, and allows for occasional additional individual grants of Stock
Options, Restricted Stock, Deferred Stock or some combination thereof, at the discretion of the Board of Directors. There
were no additional grants in 2007. In 2007, each non-employee Director received 1,150 shares of Restricted Stock, with
provisions limiting transfer while serving as a Director of the Company, and, at a minimum, two years from the date of grant.
In 2007, each non-employee Director serving on the Board as of the grant date received 6,050 ten-year options with an
exercise price of $41.97. The options vest one year following the date of grant.
As a guideline, non-employee Directors should own common stock of the Company equal in value to at least four times the
amount of the annual Board retainer fee, with a four-year time period after first election to achieve this level.
Non-employee Directors who join the Board of Directors after the March 5 annual grants of Stock Options and Restricted
Stock for that year and prior to December 31 of that year are eligible to receive a one-time cash payment (“New Director
Retainer”) within 30 days of the effective date of their election as a Director. The intent of this New Director Retainer is to
encourage a new Director to make an initial investment in the stock of the Company. The amount of the New Director
Retainer is calculated from the net present value of the cash equivalent of that year’s Stock Option grant and Restricted Stock
grant, awarded under the 2003 Non-Employee Directors’ Stock Incentive Plan, with stock values based on the then current
price of Company stock. It is based on months of Board service for the first year, and is therefore pro-rated for the number of
months remaining in the calendar year.
34
2008 DOW PROXY STATEMENT
Non-Employee Director Deferred Compensation Plan
Non-employee Directors may choose prior to the beginning of each year to have all or part of their fees credited to a deferred
compensation account as participants in The Dow Chemical Company Voluntary Deferred Compensation Plan for Outside
Directors As Amended and Restated on February 12, 1998, or The Dow Chemical Company Voluntary Deferred
Compensation Plan for Non-Employee Directors effective January 1, 2005. At the election of the Director, fees are deferred
into one of several hypothetical investment accounts that accrue investment returns according to the account selected.
Investment choices include an account with interest equivalent to 125% of the 120-month rolling average of ten-year U.S.
Treasury Notes, a phantom Dow stock account tracking the market value of Dow Common Stock with market dividends paid
and reinvested, as well as accounts tracking the performance of several mutual funds. These funds are identical to funds
offered as part of the Elective Deferral Plan for management level employees. Such deferred amounts will be paid in
installments as elected by the Director at the time of deferral commencing on the July 15 following the Director’s termination
of Board service, on the following July 15 or on July 15 of the calendar year following the Director’s 70th birthday. In The
Dow Chemical Company Voluntary Deferred Compensation Plan for Outside Directors As Amended and Restated on
February 12, 1998, if the Director elects to receive payment on the July 15 following his or her 70th birthday and if he or she
remains on the Board beyond his or her 70th birthday, payments shall start on the July 15 following termination of Board
service.
Compensation of Non-Management Employee Directors
Employee Directors, who leave executive management, but remain as active employees and as Directors of the Company, are
paid according to a fixed formula determined in advance by the Board of Directors pursuant to the Retirement Policy for
Employee Directors (“RPED”). This fixed compensation for such Directors is designed to enhance effective Board service by
providing independence from current management. As active employees, participants in the RPED are eligible for certain
standard employee benefits, but are not eligible to participate in the Performance Award program, receive new LTI grants, or
participate in the Employees’ Stock Purchase Plan. Employee Directors are not eligible for any non-employee Director
compensation described above. Mr. Arnold Allemang was a participant in the RPED and received $736,205 in compensation
in 2007. Mr. J. Pedro Reinhard was a participant in the RPED and received $343,847 in 2007.
In the event of a Change-in-Control, employee Directors participating in RPED will receive a lump sum payment in an
amount equal to the net present value of the remaining benefit.
Business Travel Accident Insurance for Non-Employee Directors
Dow has a rider on its Business Travel Accident insurance policy covering each non-employee Director for $300,000 which
will cover accidental death and dismemberment if the Director is traveling on Dow business.
Equity Compensation Plan Table
EQUITY COMPENSATION PLAN INFORMATION
Plan Category
Equity Compensation Plans
Approved by Security Holders
Equity Compensation Plans Not
Approved by Security Holders
Total (c)
(1)
(2)
# of securities to be
issued upon exercise
of outstanding options,
warrants, rights
Weighted-average exercise
price of outstanding options,
warrants, rights ($)
(3)
# of securities remaining
available for future issuance
under equity compensation
plans (excluding securities in
column (1))
56,666,882
40.41(a)
88,499,783(b)
217,150
56,884,032
34.30
39.77
—
88,499,783
As of December 31, 2007
(a)
Calculation does not include outstanding Performance Shares that have no exercise price.
2008 DOW PROXY STATEMENT
35
(b)
The 1988 Award and Option Plan provides that the number of shares available for grant in any calendar year is
equal to 1.5% of the total shares of common stock outstanding on the first day of the year, plus 50% of the shares
available for grant but not granted under the plan in each of the previous three years, plus up to 50% of the
subsequent year’s allocation. As a result of this formula, 50% of the shares first allocated but not granted in a year
cease to be available for grant in the following year, and the remaining 50% cease to be available for grant after an
additional two years. Shares available for grant under other stockholder-approved plans are also included.
(c)
Does not include options to acquire 4,214,867 shares of stock with a weighted-average exercise price of $31.43 that
were assumed in connection with the Union Carbide Corporation merger in 2001.
BENEFICIAL OWNERSHIP OF COMPANY STOCK
The following table presents the beneficial ownership of Dow’s Common Stock as of February 19, 2008, except as noted, for
(i) each Director of the Company, (ii) each executive officer of the Company listed in the Summary Compensation Table,
(iii) all Directors and executive officers as a group, and (iv) each person beneficially owning more than 5% of the outstanding
shares of Dow’s Common Stock.
Name
A. A. Allemang
W. F. Banholzer
J. K. Barton
J. A. Bell
J. M. Fettig
B. H. Franklin
M. R. Gambrell (c)
J. B. Hess
D. E. Kepler
A. N. Liveris
G. E. Merszei
D. H. Reilley
J. M. Ringler
R. G. Shaw
P. G. Stern
Group Total
All Directors and Executive Officers as a
Group (21 persons)
Certain Other Owners:
AXA
Dodge & Cox
Current Shares
Beneficially
Owned (a)
Rights to Acquire
Beneficial
Ownership of
Shares (b)
Total
Percent of Shares
Beneficially Owned
349,161.4
3,550.2
16,010.0
5,570.0
11,070.0
18,154.2
91,030.4
51,370.0
92,316.0
185,786.7
30,683.1
8,420.0
15,080.9
6,690.0
23,660.0
908,552.9
127,500.0
135,272.0
38,566.0
10,950.0
19,650.0
39,850.0
286,843.0
6,050.0
314,896.0
888,499.0
362,792.0
0.0
39,166.0
10,950.0
39,850.0
2,320,834.0
476,661.4
138,822.2
54,576.0
16,520.0
30,720.0
58,004.2
377,873.4
57,420.0
407,212.0
1,074,285.7
393,475.1
8,420.0
54,246.9
17,640.0
63,510.0
3,229,386.9
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
0.33%
1,172,629.3
2,912,450.0
4,085,079.3
0.42%
66,763,997.0(d)
58,454,402.0(e)
—
—
66,763,997.0
58,454,402.0
7.07%
6.19%
(a)
In addition to shares held in sole name, this column includes all shares held by a spouse and other members of the
person’s immediate family who share a household with the named person. This column also includes all shares held
in trust for the benefit of the named party in The Dow Chemical Company Employees’ Savings Plan. Beneficial
ownership of some or all of the shares listed may be disclaimed.
(b)
This column includes any shares that the person could acquire through 4/19/2008, by (1) exercise of an option
granted by Dow; (2) Performance Shares granted by Dow to be delivered prior to 4/19/2008; or (3) payment of any
balance due under a subscription in The Dow Chemical Company 2003-2013 Employees’ Stock Purchase Plan. To
the extent that these shares have not been issued as of the record date, they cannot be voted at the Meeting.
(c)
Mr. Gambrell has 10,000 shares of Dow Common Stock in a margin account. There is an outstanding extension of
credit against this account.
36
2008 DOW PROXY STATEMENT
(d)
Based on a Schedule 13G filed by AXA Financial, Inc., AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie
Mutuelle, AXA Courtage Assurance Mutuelle (collectively, “AXA”) on February 14, 2008 with the U.S. Securities
and Exchange Commission reporting beneficial ownership as of December 31, 2007. AXA has sole voting power
over 50,893,431 shares, shared voting power with respect to 6,789,714 shares, sole dispositive power with respect to
66,763,936 shares and shared dispositive power with respect to 61 shares. AXA’s address is 1290 Avenue of the
Americas, New York, NY 10104.
(e)
Based on a Schedule 13G filed by Dodge & Cox on February 13, 2008 with the U.S. Securities and Exchange
Commission reporting beneficial ownership as of December 31, 2007. Dodge & Cox has sole voting power over
55,507,627 shares, shared voting power with respect to 118,828 shares and sole dispositive power with respect to all
such shares. Dodge & Cox’s address is 555 California Street, 40th Floor, San Francisco, CA 94104.
*
Less than 0.11% of the total shares of Dow Common Stock issued and outstanding.
Agenda Item 2
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
RESOLVED, that the appointment of Deloitte & Touche LLP to audit the 2008 consolidated financial statements and
related internal control over financial reporting of The Dow Chemical Company and its subsidiaries, made by the
Audit Committee with the concurrence of the Board of Directors, is hereby ratified.
The Company Bylaws provide that the selection of the independent registered public accounting firm must be presented for
stockholder ratification or rejection at the Annual Meeting. The Audit Committee has appointed, and the Board has concurred
subject to your ratification, Deloitte & Touche LLP to audit and report on the consolidated financial statements and related
internal control over financial reporting of Dow and its subsidiaries for 2008. Deloitte & Touche LLP served as Dow’s
independent registered public accounting firm for 2007. Deloitte & Touche LLP has offices at or near most of the locations
where Dow operates in the United States and other countries.
Before making its determination on appointment, the Audit Committee carefully considers the qualifications and competence
of candidates for the independent registered public accounting firm. For Deloitte & Touche LLP, this has included a review of
its performance in prior years, its independence and processes for maintaining independence, the results of the most recent
internal quality control review or Public Company Accounting Oversight Board inspection, the key members of the audit
engagement team, the firm’s approach to resolving significant accounting and auditing matters including consultation with
the firm’s national office, as well as its reputation for integrity and competence in the fields of accounting and auditing.
Additional information may be found in the Audit Committee Report on page 46 and Audit Committee charter available on
the Company’s corporate governance website at www.DowGovernance.com.
The Audit Committee has expressed its satisfaction with Deloitte & Touche LLP. In February 2008, Deloitte & Touche LLP
advised the Audit Committee that, like all other major accounting firms, it has been named as a defendant in a number of
civil lawsuits, most of which are premised on allegations that financial statements issued by clients and reported on by the
firm were incorrect. Deloitte & Touche LLP has further advised the Audit Committee that based on the firm’s historical
experience and understanding of the circumstances giving rise to such lawsuits, the firm does not believe that they will have a
significant impact on the firm’s ability to serve as the independent registered public accounting firm for the Company. The
Audit Committee has concluded that the ability of Deloitte & Touche LLP to perform services for the Company is not
adversely affected by such litigation.
Representatives of Deloitte & Touche LLP will attend the Annual Meeting and may make a statement if they wish. They will
be available to answer stockholder questions at the Meeting.
Approval of this proposal to ratify the appointment of Deloitte & Touche LLP requires a majority of votes actually cast on the
matter. For purposes of determining the number of votes cast on the matter, only those cast “for” or “against” are included.
Abstentions and broker non-votes are not included. In the event that the selection of Deloitte & Touche LLP is not ratified by
stockholders, the Audit Committee will take that into account in connection with any future decisions as to the selection of a
2008 DOW PROXY STATEMENT
37
firm to serve as the Company’s auditors, although by law the Audit Committee has final authority over the determination of
whether to retain Deloitte & Touche LLP or another firm at any time.
The Board of Directors unanimously recommends that stockholders vote FOR the proposal to ratify the selection of
Deloitte & Touche LLP as the independent registered public accounting firm for Dow and its subsidiaries for 2008.
FEES PAID TO THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
For the years ended December 31, 2007 and 2006, professional services were performed by Deloitte & Touche LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates. Audit and audit-related fees aggregated
$22,816,000 and $19,869,000 for the years ended December 31, 2007 and 2006, respectively. Total fees paid to the
independent registered public accounting firm were:
Type of Fees
Audit Fees (a)
Audit-Related Fees (b)
Tax Fees (c)
All Other Fees
TOTAL
2007
2006
$ in thousands
(a)
The aggregate fees billed for the integrated audit of the
Company’s annual financial statements and audit of
internal control over financial reporting, the reviews of
the financial statements in quarterly reports on
Form 10-Q, comfort letters, consents, statutory audits
and other regulatory filings.
(b)
Primarily for audits of employee benefit plans’ financial
statements, due diligence procedures for acquired
businesses, audits and reviews of divested businesses,
and agreed-upon procedures engagements. Amount for
2006 revised to conform to current year presentation.
(c)
For preparation of expatriate employees’ tax returns and
related compliance services – $5,584,000 in 2007 and
$3,663,000 in 2006; international tax
compliance – $170,000 in 2007 and $256,000 in 2006;
corporate tax consulting – $64,000 in 2007 and $104,000
in 2006; and tax return preparation compliance
software – $0 in 2007 and $103,000 in 2006.
$20,840 $18,783
1,976
1,086
5,818
4,126
0
0
$28,634 $23,995
38
2008 DOW PROXY STATEMENT
Agenda Item 3
STOCKHOLDER PROPOSAL FOR REPORT ON CHEMICALS FROM DOW CHEMICAL
WITH KNOWN LINKS TO ASTHMA AND OTHER RESPIRATORY PROBLEMS
Stockholders have stated that their representative intends to present the following proposal at the Annual Meeting. The
Company will promptly provide the names and addresses of the stockholders and the number of shares owned upon request
directed to the Corporate Secretary. Dow is not responsible for the contents of the proposal. If properly presented at the
Annual Meeting, your Board unanimously recommends a vote AGAINST the following proposal.
Stockholder Resolution
Whereas:
•
Approximately half of Dow’s end-use pesticide products (73 of 149) may be linked to asthma and other respiratory
problems through active or inert ingredients or metabolites. Common Dow pesticide products with ingredients linked to
respiratory problems include: FulTime, Dursban, Lorsban, Glyphomax, Tordon, Telone, Starane, Dithane, Widematch,
Vikane/Profume and more.
•
According to the Centers for Disease Control and Prevention (CDC), 16 million people in the U.S. suffer from asthma.
Since the mid-1980s, asthma rates have reached epidemic levels.
•
CDC states that nearly 1 in 8 school-aged children have asthma, the leading cause of school absenteeism due to chronic
illness. Children are more susceptible than adults to asthma; lungs do not fully develop until at least the eighth year after
birth, making a child vulnerable to pesticides and other pollutants linked to asthma. The number of children dying from
asthma increased almost threefold from 1979 to 1996. The estimated annual cost of treating childhood asthma is
$3.2 billion.
•
According to a 2004 study in Environmental Health Perspectives, pesticides are both a trigger and root cause of asthma.
Researchers discovered that children exposed to herbicides are four and a half times more likely to be diagnosed with
asthma before age five; toddlers exposed to insecticides are over two times more likely to get asthma.
•
In addition to its retail and wholesale pesticide products, Dow produces many active ingredients in pesticides ultimately
sold by other companies. For example, Dow is the sole US producer of 2,4-D, and one of the world’s largest producers
of chlorpyrifos, both of which are linked to asthma.
•
Data from CDC’s 2005 National Report on Human Exposure to Environmental Chemicals found 76% of Americans
have chlorpyrifos metabolites in their bodies. Children ages 6-11 have exposure at four times the level EPA considers
acceptable for long-term exposure. Additionally, more than 25% of Americans have 2,4-D in their bodies, with highest
concentrations also found in children ages 6-11. Proponents believe that CDC’s data may aid in correlation of exposures
to disease, which could in turn increase legal liabilities for Dow.
RESOLVED: Shareholders request that the Board establish an independent panel, controlling for conflict of interest, to
publish by May 2009, at reasonable cost and excluding proprietary information, a report analyzing the extent to which Dow
products may cause or exacerbate asthma, and describing public policy initiatives, and Dow policies and activities, to phase
out or restrict materials linked with such effects.
SUPPORTING STATEMENT: Proponents believe the report should include any and all Dow product found in
peer-reviewed literature to potentially cause and/or trigger asthma, including end-use pesticides (and their inert ingredients
and metabolites), pesticide active ingredients and other chemicals.
Company’s Statement and Recommendation
Your Board of Directors unanimously recommends a vote AGAINST this proposal.
In light of existing disclosures and public outreach, Dow believes that the report called for by this proposal is unnecessary
and would divert Company resources without benefit to our stockholders.
2008 DOW PROXY STATEMENT
39
Pesticides improve the world’s food production and protect people and homes from destructive and disease-carrying insects
and crop diseases. Before being sold in the United States and other countries, these products must be registered by
government regulators charged with the protection of human health and the environment.
Approvals are granted by U.S. regulators only after review of extensive scientific information. Once products are registered,
they are subjected to ongoing scrutiny. In response to new information, regulators have authority to require additional studies,
limit uses or cancel product registrations. These decisions and the rationale behind them are published and are available to
regulators in other nations charged with pesticide reviews.
There is no scientific or regulatory consensus that pesticides are a significant cause or trigger of asthma. The Environmental
Protection Agency, the National Institute for Environmental Health Sciences, and the Centers for Disease Control and
Prevention have taken the position that dust mites, molds, tobacco smoke, cockroaches and a variety of other materials are
common causes or triggers of asthma. While some peer-reviewed articles have found that there is an association between
pesticides and respiratory conditions, the foregoing agencies have not concluded that pesticides are a significant cause of
asthma.
Chlorpyrifos and 2,4-D, chemicals referenced in the proposal, have both undergone thorough science-based reviews by U.S.
and European Union regulatory authorities. Continued evaluation by regulators of these and other pesticide
products – including review of research articles in the open scientific literature – occurs normally in the course of
maintaining product registrations.
Additional health and safety information on chlorpyrifos and 2,4-D is available at www.chlorpyrifos.com and www.24d.org.
Dow supports these and our other products with a strong product stewardship program. Additional information on Dow
product stewardship is available at www.dowagro.com/rc/index.htm and www.dowproductsafety.com.
The actions requested in this resolution would duplicate independent, credible, transparent, science-based regulatory
processes that are already in place. In the United States and many other nations, existing regulatory processes already provide
opportunities for public review and comment; these venues would be a more appropriate forum for proponents of this
proposal to express their concerns.
For all of these reasons, your Board believes that this proposal is not in the best interests of Dow or its stockholders.
Accordingly, your Board unanimously recommends a vote AGAINST this proposal.
Vote Required
Approval of the resolution requires a majority of votes actually cast on the matter. For purposes of determining the number of
votes cast on the matter, only those cast “for” and “against” are included, while abstentions and broker non-votes are not
included.
Agenda Item 4
STOCKHOLDER PROPOSAL FOR REPORT ON ENVIRONMENTAL
REMEDIATION IN MIDLAND AREA
A stockholder has stated that its representative intends to present the following proposal at the Annual Meeting. The
Company will promptly provide the name and address of the stockholder and the number of shares owned upon request
directed to the Corporate Secretary. Dow is not responsible for the contents of the proposal. If properly presented at the
Annual Meeting, your Board unanimously recommends a vote AGAINST the following proposal.
Stockholder Resolution
Whereas:
In the Saginaw River downstream of Dow Chemical’s Midland plant, dioxin levels have been measured above 1.6 million
parts per trillion, the highest levels in the Great Lakes. The residential cleanup standard is 90 ppt. The Environmental
Protection Agency (EPA) has charged Dow with delaying cleanup of downstream waterways and found significant
40
2008 DOW PROXY STATEMENT
deficiencies in the company’s work plans; in 2007 EPA issued consent orders requiring immediate action to remove
hazardous sediments from certain areas with some of the highest concentrations.
Dow’s contamination stretches more than 50 miles through two river systems to the Saginaw Bay, which empties to Lake
Huron, making it one of the largest contamination sites in the country. In August 2007, EPA also required Dow to take
certain actions regarding the downstream migration of contaminants to Lake Huron.
A Dow-funded study confirmed increased levels of dioxin in the blood of residents living in the contaminated floodplain near
Dow, with median levels of dioxin in their blood 28 percent higher than a comparison group.
The Michigan Department of Environmental Quality (MDEQ) has warned Tittabawassee-area residents that regularly eating
fish and game from the river can dramatically increase dioxin exposure; eating seven monthly meals of sport fish from the
Tittabawassee River would increase exposure to dioxin by 3,900 percent.
Dow Chemical is being sued by individuals representing 2,000 residents living along the Tittabawassee River and flood plain,
alleging that dioxin from the Midland plant threatened their health and lowered property values. The class-action lawsuit
seeks damages possibly totaling $100 million dollars.
A National Academy of Science review reaffirmed dioxin’s toxicity as a known human carcinogen. According to the report,
“There does not appear be a safe ‘threshold’ for dioxin’s carcinogenic effects. Evidence has accumulated...that dioxin also
causes many other health problems even at low levels, such as developmental problems in children, immunologic problems
in children and adults, reproductive problems in adults, and diabetes.” Dioxin has been called the ‘new lead’ because its
effects on children can include impairments in basic functions, and because exposure is widespread.
Proponents believe that continued delays in thorough characterization and remediation of dioxin exposures near Dow’s
Midland facilities may lead to increased long term liabilities and reputational damage for Dow.
Resolved: Shareholders request that the Board of Directors issue a report to shareholders by April 2009, at reasonable cost
and excluding confidential information, summarizing the pace and effectiveness of the environmental remediation process
being undertaken by Dow in the vicinity of and downstream from its Midland headquarters.
Supporting Statement
Proponents believe that such report should include overall public exposure and environmental goals; estimates of the overall
volume of dioxin contaminated soil and sediment alleged to be caused or affected by Dow Chemical and the portion that will
have been removed or remediated on a year by year basis, for each of the next twelve years; methods of remediation; and
effectiveness of those methods at removing dioxin from waterways, floodplains and the food chain.
Company’s Statement and Recommendation
Your Board of Directors unanimously recommends a vote AGAINST this proposal.
This proposal asks stockholders to vote in support of the publication of a new report summarizing the pace and effectiveness
of the environmental remediation process being undertaken by Dow in the vicinity of and downstream from its Midland
headquarters.
In their proposal above, the proponents base their request for a new report on numerous arguments that are inaccurate,
misleading, out of context or ill-informed.
Proponents state that the University of Michigan’s study confirmed increased levels of dioxin in the blood of residents living
in the contaminated floodplain. This conclusion lacks important context and is misleading. University of Michigan
researchers combined the results of dioxin, furans and PCBs together and concluded that the most significant factors
contributing to combined dioxin, furan and PCB blood levels were that people living in this area tend to be older and heavier
than people in the control group. Both age and body weight are well-known contributors to higher levels of dioxins in the
general U.S. population, due to historically higher levels of dioxin, furans and PCBs in food and the way the body eliminates
dioxin, furans and PCBs. When the University of Michigan results take into account age and weight, blood levels of dioxin
and furans are not elevated above the levels found in people living elsewhere in the absence of any known source of dioxin
2008 DOW PROXY STATEMENT
41
contamination. In addition, a recent “Pilot Exposure Study” conducted by the Michigan Department of Community Health
(“MDCH”) also found, “The levels of DLCs (dioxin-like compounds) measured in participants’ blood serum samples fell
within the range of preliminary estimated background levels for people with no known exposure to dioxins and furans
beyond background.”
The proponents’ statement about Michigan Department of Environmental Quality (“MDEQ”) warnings to Tittabawassee-area
residents regarding consumption of fish and game from the river is similarly ill-informed, and it, too, requires further scrutiny.
Overwhelmingly, the preferred species for consumption from the Tittabawasee River is walleye. The current MDCH fish
consumption advisory lists walleye as a “safe fish for families” and allows “unlimited consumption of walleye under 22
inches” for adults. The MDEQ warning is largely based on models using extreme assumptions about consumption that do not
reflect typical real world conditions. In addition, the University of Michigan dioxin exposure study determined that “eating
fish, no matter whether it is sport-caught, store-bought or from a restaurant, is related to higher levels of dioxins in people’s
blood. This applies to fish both from the contaminated area in Midland/Saginaw and from outside the contaminated area.”
Even so, the MDCH and the University of Michigan report that the levels of dioxin-like compounds measured in local
people’s blood serum samples fall within the range of preliminary estimated background levels for people with no known
exposure to dioxins and furans beyond background. Consequently, MDEQ and proponents grossly exaggerate exposure
estimates due to consuming locally caught fish.
Statements about the findings of the National Academy of Sciences (“NAS”) report on the U.S. Environmental Protection
Agency’s (“EPA”) Draft Dioxin Risk Reassessment are misleading and in some cases entirely inaccurate. Commenting on
the relative human health risk of dioxin exposure, the NAS said, “The potential adverse effects of TCDD, other dioxins, and
dioxin-like compounds from long-term, low-level exposures to the general public are not directly observable and remain
controversial.” And, contrary to proponents’ statements that, “According to the report there does not appear to be a safe
threshold for dioxin’s carcinogenic effects,” the NAS actually noted that EPA’s sole reliance on non-threshold models for
determining risk “lacked adequate scientific support.”
Proponents’ concerns about possible delays in achieving thorough remediation, and the potential for long-term adverse
impact on the Company, are also ill-founded. As part of the required regulatory process governing the approach to be taken to
resolve the local situation, a detailed Remedial Investigation Work Plan (“Work Plan”) outlining required projects,
implementation protocol, specific activities and a schedule for completion of each component of the Work Plan, has been
submitted and significant portions of the detailed work have been implemented. Our current proposed Work Plans target a
2010 completion date for resolving the mid-Michigan furan and dioxin situation. The Work Plan is publically available on
the Internet.
Even if the misstatements in proponents’ proposal were corrected, Dow’s Board of Directors believes the proponents’ request
to issue a new report summarizing the pace and effectiveness of the environmental remediation process is both duplicative of
the regulatory process requirements for communication and stakeholder engagement, and is in any event, premature.
In addition, quarterly public communication meetings are scheduled jointly by Dow and MDEQ for the explicit purpose of
keeping the community aware of plans and progress toward completing the investigation and remediation processes in the
most transparent manner possible.
These communications are adequate to apprise the public and interested stockholders of Dow’s progress in the process. There
is no way to develop, with any degree of confidence, an assessment of the effectiveness of the environmental remediation
process before the Remedial Investigation has been completed, before feasibility studies for each potential remedy have been
conducted, and before final remedies have been implemented and the effectiveness of these remedies has been validated. Nor
will it be possible to estimate volumes of soil and sediment that might be involved in the remediation until and after the
abovementioned work has been completed and MDEQ approves a plan for remediation.
For these reasons Dow believes this proposal is unnecessary, that it would divert Company resources and deliver no benefit
to stockholders. Accordingly, your Board unanimously recommends a vote AGAINST this proposal.
Vote Required
Approval of the resolution requires a majority of votes actually cast on the matter. For purposes of determining the number of
votes cast on the matter, only those cast “for” and “against” are included, while abstentions and broker non-votes are not
included.
42
2008 DOW PROXY STATEMENT
Agenda Item 5
STOCKHOLDER PROPOSAL FOR REPORT ON GENETICALLY ENGINEERED SEED
Stockholders have stated that their representative intends to present the following proposal at the Annual Meeting. The
Company will promptly provide the names and addresses of the stockholders and the number of shares owned upon request
directed to the Corporate Secretary. Dow is not responsible for the contents of the proposal. If properly presented at the
Annual Meeting, your Board unanimously recommends a vote AGAINST the following proposal.
Stockholder Resolution
Whereas: Disclosure of material information is a fundamental principle of our capital markets. Investors, their confidence in
corporate bookkeeping shaken, are starting to scrutinize other possible “off-balance sheet” liabilities, such as risks associated
with activities harmful to human health and the environment, that can impact long-term shareholder value.
SEC reporting requirements include disclosure of environmental liabilities and of trends and uncertainties that the company
reasonably expects will have a material impact on revenues. Company directors and officers must proactively identify and
assess trends or uncertainties that may adversely impact their revenues and disclose the information to shareholders. Public
companies are now required to establish a system of controls and procedures designed to ensure that financial information
required to be disclosed in SEC filings is recorded and reported in a timely manner.
Resolved: That shareholders request the board of directors to review and report to shareholders by November 2008, on the
company’s internal controls related to potential adverse impacts associated with genetically engineered organisms, including:
•
adequacy of current post-marketing monitoring systems;
•
adequacy of plans for removing GE seed from the ecosystem should circumstances so require;
•
possible impact on all Dow seed product integrity;
•
effectiveness of established risk management processes for different environments and agricultural systems.
Supporting Statement
Dow’s seed producing investment significantly increased with:
•
corn seed licensing pact with Monsanto (9/14/07);
•
acquisition of the corn division of Agromen Tecnologia Ltda, a large Brazilian seed company (Gazeta mercantil, 8/2/07);
•
acquisition of Netherlands-based Duo Maize. (8/30/07);
•
acquisition of the Austrian affiliate of Maize Technologies International (MTI) an Austrian based corn seed company, as
well as ownership of MTI’s French affiliate and other related assets. (5/1/07)
Producers of GE-seeds are merely encouraged to have voluntary safety consultations with the FDA. The FDA does not issue
assurances as to the safety of these products.
According to Safety of Genetically Engineered Foods: Approaches to Assessing Unintended Health Effects (National
Academy of Sciences [NAS] 7/2004: “...there remain sizable gaps in our ability to identify... unintended adverse effects on
human health [of genetically modified organisms].”
No post-marketing surveillance is required to verify results of pre-market screening for unanticipated adverse health
consequences from the consumption of GE food (NAS 7/2004) or environmental impacts from the production of GE crops.
2008 DOW PROXY STATEMENT
43
Gone to Seed (Union of Concerned Scientists) reports that GE-DNA is contaminating U.S. traditional seed stocks, of corn,
soybeans and canola...left unchecked could disrupt agricultural trade, unfairly burden the organic foods industry, and allow
hazardous materials in the food supply.
Three court rulings question the adequacy of USDA’s oversight of GE crops:
•
Judge Breyer, Federal Dist. Court, ruled USDA failed to adequately assess potential environmental impact of GE alfalfa
(2/13/07)
•
US Judge Henry Kennedy ordered USDA to more thoroughly review applications for GE field trials. (2/5/07)
•
Federal District Court ruled that USDA’s permitting of drug-producing GE crops in Hawaii violated the Endangered
Species Act and the National Environmental Policy Act. (8/10/06)
Company’s Statement and Recommendation
Your Board of Directors unanimously recommends a vote AGAINST this proposal.
Dow’s commercial ventures in biotechnology include transgenic corn, soybean, cotton, alfalfa and canola. Dow believes
these products are well-regulated and generate significant positive economic, social and environmental contributions to our
society.
The benefits of crop biotechnology are demonstrated by its broad adoption by farmers around the world. In 2007, these crops
were planted by more than twelve million farmers on more than 280 million acres in 23 countries. (C. James, ISAAA, 2007.)
Novel biotech products are subject to extensive review and rigorous health, safety and environmental testing prior to
regulatory approval. Throughout the past decade, these products have been widely grown and consumed in the United States
without harm to health or the environment. Dow believes this is in itself a demonstration of their safety and of the
effectiveness of the regulatory system that permits and oversees the products.
All of Dow’s agricultural biotech products have been successfully reviewed by the appropriate U.S. regulatory agencies. The
U.S. Food and Drug Administration oversees these products to ensure food safety. The U.S. Department of Agriculture
regulates them in terms of environmental safety, including field testing (a joint responsibility with the Environmental
Protection Agency (“EPA”)), and transportation and importation. The EPA regulates pesticide-active biotech products for
human and environmental safety including field testing, proper use and stewardship. Final authorizations for the Company’s
products have been granted only following completion of all required human health and environmental studies and after
successful conclusion of regulatory reviews encompassing the research, development and commercialization of these
products. Also, following commercialization, Dow continues to monitor its products for specific environmental effects.
In addition to regulatory review in the United States, products of crop biotechnology are subjected to detailed scientific
scrutiny and oversight by importing nations, prior to their introduction. Regulatory processes for review and approval of
agricultural biotechnology products are already in place in many countries, including Australia, Argentina, Brazil, Burkina
Faso, Canada, China, Colombia, the countries of the European Union, Honduras, Indonesia, India, Japan, Korea, Mexico,
New Zealand, Paraguay, the Philippines, Singapore, South Africa, Switzerland, Taiwan, Thailand and Uruguay, and are
rapidly being developed in other nations. After these products have been commercialized, Dow is required by law to report
any adverse human health or environmental effects noted anywhere in the world to U.S. regulatory authorities.
Consistent with Responsible Care® and our internal Guiding Principles for Biotechnology, Dow is committed to making
health, safety and environmental protection an integral part of the design, production, marketing and distribution of all our
products. Each product receives an internal risk assessment prior to commercialization, and the Company’s processes are
designed to ensure good stewardship. Also, Dow is leading industry-wide efforts to further enhance stewardship programs
globally and follows the Biotechnology Industry Organization’s Product Launch Stewardship Policy developed to facilitate
the introduction of novel biotech products to the marketplace.
Dow has quality management systems in place to monitor seed purity and to facilitate compliance with applicable
governmental standards and regulations. The primary focus of these systems is on prevention, supported by proactive and
sustained stakeholder outreach, communications and education. Through an extensive and effective in-field monitoring
system, Dow is also well prepared to identify and manage potential issues after product commercialization through isolation
44
2008 DOW PROXY STATEMENT
and elimination of any unwanted material. These practices and principles represent an essential foundation for any successful
biotechnology business.
In support of robust science-based regulations, and to better define proper use and stewardship requirements for each product,
the Company engages in proactive dialogue with customers, scientists, policymakers and other stakeholders. In countries
with evolving regulatory systems, such as Mexico, Dow provides government authorities with relevant studies assessing the
safety of its products prior to seeking approvals for commercialization. Studies above and beyond those required by
regulators are often performed by the Company to ensure product integrity, consumer confidence and adherence to high
standards of stewardship.
As an augment to the extensive information offered to the public by U.S. regulatory authorities, Dow already provides a wide
range of communications on its agricultural biotechnology products, including specifics on product use and safety, insect
resistance management and grain marketing guidelines. This information is available on the Internet, through published
papers and through direct communications to customers and other interested parties. Additionally, the Company actively
leads or supports a number of educational programs initiated by third-party or industry groups. These programs are designed
to communicate the benefits of agricultural biotechnology, promote its effective and responsible use, and maintain the
integrity of markets through effective grain marketing and stewardship.
For all of these reasons, your Board believes that this proposal is not in the best interests of Dow or its stockholders.
Accordingly, your Board unanimously recommends a vote AGAINST this proposal.
Vote Required
Approval of the resolution requires a majority of votes actually cast on the matter. For purposes of determining the number of
votes cast on the matter, only those cast “for” and “against” are included, while abstentions and broker non-votes are not
included.
®
Responsible Care is a service mark of the American Chemistry Council in the United States.
Agenda Item 6
STOCKHOLDER PROPOSAL ON AN EXECUTIVE COMPENSATION PLAN
A stockholder has stated that its representative intends to present the following proposal at the Annual Meeting. The
Company will promptly provide the name and address of the stockholder and the number of shares owned upon request
directed to the Corporate Secretary. Dow is not responsible for the contents of the proposal. If properly presented at the
Annual Meeting, your Board unanimously recommends a vote AGAINST the following proposal.
Stockholder Resolution
Pay-for-Superior-Performance Principle Proposal
Resolved: That the shareholders of The Dow Chemical Company (“Company”) request that the Board of Director’s
Executive Compensation Committee adopt a pay-for-superior-performance principle by establishing an executive
compensation plan for senior executives (“Plan”) that does the following:
•
Sets compensation targets for the Plan’s annual and long-term incentive pay components at or below the peer group
median;
•
Delivers a majority of the Plan’s target long-term compensation through performance-vested, not simply time-vested,
equity awards;
•
Provides the strategic rationale and relative weightings of the financial and non-financial performance metrics or criteria
used in the annual and performance-vested long-term incentive components of the Plan;
•
Establishes performance targets for each Plan financial metric relative to the performance of the Company’s peer
companies; and
2008 DOW PROXY STATEMENT
•
45
Limits payment under the annual and performance-vested long-term incentive components of the Plan to when the
Company’s performance on its selected financial performance metrics exceeds peer group median performance.
Supporting Statement: We feel it is imperative that executive compensation plans for senior executives be designed and
implemented to promote long-term corporate value. A critical design feature of a well-conceived executive compensation
plan is a close correlation between the level of pay and the level of corporate performance. The pay-for-performance concept
has received considerable attention, yet all too often executive pay plans provide generous compensation for average or
below average performance when measured against peer performance. We believe the failure to tie executive compensation
to superior corporate performance has fueled the escalation of executive compensation and detracted from the goal of
enhancing long-term corporate value. Post-employment benefits provided to executives from severance plans and
supplemental executive pensions exacerbate the problem.
We believe that the pay-for-superior-performance principle presents a straightforward formulation for senior executive
incentive compensation that will help establish more rigorous pay for performance features in the Company’s Plan. A strong
pay and performance nexus will be established when reasonable incentive compensation target pay levels are established;
demanding performance goals related to strategically selected financial performance metrics are set in comparison to peer
company performance; and incentive payments are awarded only when median peer performance is exceeded.
We believe the Company’s Plan fails to promote the pay-for-superior-performance principal in several important ways. Our
analysis of the Company’s executive compensation plan reveals the following features that do not promote the
pay-for-superior-performance principle:
•
The annual bonus is based 75% on a Company Economic Profit goal, but the company does not disclose the target level
required for payout.
•
Performance shares make up only 25% of the long-term incentive plan. The remainder is made up of 50% fixed-price
stock options and 25% time-based deferred stock.
•
Performance share awards are peer group related; however, target payout is awarded for median performance.
We believe a plan designed to reward superior corporate performance relative to peer companies will help moderate
executive compensation and focus senior executives on building sustainable long-term corporate value.
Company’s Statement and Recommendation
Your Board of Directors unanimously recommends a vote AGAINST this proposal.
The Company supports pay-for-performance and has adopted executive compensation programs that place less emphasis on
base salary than on performance-based awards and equity-based compensation. Our compensation programs are designed to
attract, motivate, and retain the most talented executives and to reward them when achieving Company success in
stockholder return, financial performance, and other operational measures. Our compensation programs are regularly
benchmarked against a group of 20 peer companies, and are designed to compensate at the median of this group over the
long-term. Actual payouts under these programs may be above or below the median based upon Company and personal
performance. Greater than 80% of the Company’s top executives’ pay is considered “at-risk” based upon the achievement of
specified results. The proposal specifically addresses the following performance-based programs:
•
Long-term Incentive Equity Awards (“LTI”): LTI awards, along with Dow’s executive stock ownership guidelines, are
designed to reward long-term performance, retain top talent, and promote stock ownership. All three components of the
LTI program are performance-based:
•
Performance Shares have no value unless the Company exceeds predefined performance measures.
•
Stock Options have no value to executives unless the price of Dow stock appreciates after the options are granted.
•
Deferred Stock vests over three years and will lose value if the stock price depreciates after the grant date.
The Compensation Committee of the Board of Directors (the “Committee”) feels that the current mix of Stock Options,
Deferred Stock, and Performance Shares helps Dow meet all of these objectives.
46
•
2008 DOW PROXY STATEMENT
Performance Award: 50% of the Performance Award is based upon Company Economic Profit. The proposal correctly
points out that the Company does not publicly disclose Economic Profit Goals. This is because disclosure of Economic
Profit goals could enable competitors, customers, and suppliers to accurately estimate one of the critical financial metrics
that drive business decisions. Performance Award targets are set by the Committee.
The Committee, which is comprised entirely of independent Directors, is responsible for ensuring the Company’s executive
compensation policies and programs are competitive within the markets in which Dow competes for talent, and reflect the
long-term investment interests of our stockholders. The Committee reviews and approves the compensation design,
compensation levels, and benefits programs for all senior executives. We believe it is in the best interest of our stockholders
that the Committee is able to implement an executive compensation program that rewards executives for their performance,
based on the objectives it seeks to achieve. Our current structure allows the Committee to reward long-term, strategic
decisions that are beneficial to Dow even though they may not result in short-term returns versus our peer companies. By
contrast, this proposal would limit the Committee’s ability to calibrate and tailor the appropriate amount of compensation to
reward these long-term, strategic decisions. The Committee also believes that Dow is a unique company with different
strategies and goals, unique challenges and opportunities, and operates in different geographic areas than some of our peer
companies. The proposal, as written, would compensate executives simply based on whether or not the Company exceeds the
median performance of the peer group and would not allow for the exercise of the appropriate discretion and judgment
needed by the Committee to reward long-term performance.
For all of these reasons, your Board believes that this proposal is not in the best interests of Dow or its stockholders.
Accordingly, your Board unanimously recommends a vote AGAINST this proposal.
Vote Required
Approval of the resolution requires a majority of votes actually cast on the matter. For purposes of determining the number of
votes cast on the matter, only those cast “for” and “against” are included, while abstentions and broker non-votes are not
included.
AUDIT COMMITTEE REPORT
The Audit Committee (the “Committee”) of the Board of Directors is comprised entirely of independent Directors who meet
the independence, experience and other qualification requirements of the New York Stock Exchange (“NYSE”) and the
Company that are available on the Company’s corporate governance website at www.DowGovernance.com, and are attached
to this Proxy Statement as Appendix A. The Committee operates pursuant to a charter that is also available at
www.DowGovernance.com.
The Board has determined that all of the Committee members are financially literate and are audit committee financial
experts as defined by the applicable standards.
The Committee had nine meetings during 2007, four of which were in-person meetings that included separate executive
sessions of the Committee with the lead client service partner of the independent registered public accounting firm, the
internal auditor, management and among the Committee members themselves. Four of the meetings were conference calls
related to the Company’s earnings announcements and periodic filings. Numerous other informal meetings and
communications among the Chair, various Committee members, the independent registered public accounting firm, the
internal auditor and/or members of the Company’s management also occurred.
On behalf of the Board of Directors, the Committee oversees the Company’s financial reporting process and its internal
control over financial reporting, areas for which management has the primary responsibility. The independent registered
public accounting firm is responsible for expressing an opinion on the conformity of the Company’s audited financial
statements with accounting principles generally accepted in the United States and for issuing its report on the Company’s
internal control over financial reporting.
In this context, the Committee has reviewed and discussed with management and the independent registered public
accounting firm the audited financial statements and the quarterly unaudited financial statements, matters relating to the
Company’s internal control over financial reporting and the processes that support certifications of the financial statements
by the Company’s Chief Executive Officer and Chief Financial Officer.
2008 DOW PROXY STATEMENT
47
Among other items, the Committee has discussed with the independent registered public accounting firm the matters required
to be discussed by the standards of the Public Company Accounting Oversight Board. The Committee has received from the
independent registered public accounting firm the written disclosures required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and discussed with them their independence from the Company
and its management. In addition, the Committee has received written materials addressing Deloitte & Touche LLP’s internal
quality control procedures and other matters as required by the NYSE listing standards.
Further, the Committee has pre-approved all audit, audit-related and permitted non-audit services provided by the
independent registered public accounting firm to the Company and the related fees for such services, and has concluded that
such services are compatible with the auditors’ independence. The Committee’s charter allows delegation of the authority to
pre-approve audit, audit-related and permitted non-audit services by the independent registered public accounting firm to a
subcommittee consisting of one or more Committee members, provided that such subcommittee decisions be presented to the
full Committee at its next scheduled meeting.
Relying on the reviews and discussions referred to above, the Committee recommended to the Board of Directors, and the
Board approved, that the audited financial statements and management’s assertion on internal control over financial reporting
be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, for filing with the U.S.
Securities and Exchange Commission. The Committee has also selected Deloitte & Touche LLP as the Company’s
independent registered public accounting firm for the Company and its subsidiaries for 2008. The Board of Directors has
concurred on that selection and has presented the matter to the stockholders of the Company for ratification.
Audit Committee
Barbara H. Franklin, Chair
James A. Bell
Jeff M. Fettig
Dennis H. Reilley
Paul G. Stern
OTHER GOVERNANCE MATTERS
Future Stockholder Proposals
If you satisfy the requirements of the U.S. Securities and Exchange Commission (the “Commission”) and wish to submit a
proposal to be considered for inclusion in the Company’s proxy material for the 2009 Annual Meeting, please send it to the
Corporate Secretary.* Under the rules of the Commission, proposals must be received no later than November 28, 2008.
Future Annual Meeting Business
Under the Company’s Bylaws, if you wish to raise items of proper business at an Annual Meeting you must give advance
written notification to the Corporate Secretary.* For the 2009 Annual Meeting, written notice must be given between
November 28, 2008, and January 27, 2009. Such notices must comply with the Bylaws provisions and include your name and
address, representation that you are a holder of common stock entitled to vote at such Meeting and intend to appear in person
or by proxy at the Meeting, disclosure of any material interest in such business, description of the business proposed, and the
reasons for conducting such business. A copy of the Bylaws may be found on the Company’s website at
www.DowGovernance.com. Alternatively one will be sent without charge to any stockholder who sends a written request to
the Corporate Secretary.*
Multiple Stockholders with the Same Address
In accordance with a notice sent previously to stockholders with the same surname who share a single address, only one
Proxy Statement and accompanying Annual Meeting materials will be sent to an address unless contrary instructions were
received from any stockholder at that address. This practice, known as “householding,” is designed to reduce printing and
postage costs. If you did not respond that you did not want to participate in householding, you were deemed to have
consented to the practice. If you are a registered stockholder, you may revoke your consent at any time by sending your name
and your account number to Dow’s stock transfer agent, The Bank of New York (“BNY”), P.O. Box 11023, New York, NY
10286-1023. You may also call BNY toll-free at 800-369-5606 in the United States and Canada to revoke your consent. If
you hold your stock in street name, you may revoke your consent to householding at any time by sending your name, the
name of your brokerage firm, and your account number to Householding Department, Broadridge, 51 Mercedes Way,
Edgewood, NY 11717. If you are a registered stockholder receiving multiple copies of these materials at the same address or
48
2008 DOW PROXY STATEMENT
if you have a number of accounts at a single brokerage firm, you may submit a request at the foregoing addresses to receive a
single copy of materials in the future.
Copies of Proxy Material and Form 10-K
Dow’s Proxy Statement and Annual Report on Form 10-K are posted on Dow’s website at www.DowGovernance.com/proxy.
Stockholders may receive printed copies of each of these documents without charge by contacting the Company’s Investor
Relations Office at 800-422-8193 or 989-636-1463, or 2030 Dow Center, Midland, MI 48674.
Internet Delivery of Proxy Materials
Stockholders may consent to receive their Proxy Statement and other Annual Meeting materials in electronic form rather than
in printed form. This results in faster delivery of the documents and significant savings to the Company by reducing printing
and mailing costs. Registered stockholders may provide their consent for electronic delivery at www.proxyconsent.com/dow
or when they vote their shares on the Internet at https://www.proxypush.com/dow. Most holders in street name may provide
their consent for electronic delivery while voting on the Internet at www.proxyvote.com. If you previously consented to
electronic delivery, but have since changed your email address, please re-register at www.proxyconsent.com/dow.
Corporate Governance Documents
The Company’s Code of Business Conduct, Board Committee charters and Corporate Governance Guidelines are available at
www.DowGovernance.com. Stockholders may obtain a printed copy of these materials upon request by contacting the Office
of the Corporate Secretary.*
*
Office of the Corporate Secretary, The Dow Chemical Company, 2030 Dow Center, Midland, MI 48674,
989-636-1792 (telephone), 989-638-1740 (fax).
Other Matters
The Board does not intend to present any business at the Meeting not described in this Proxy Statement. The enclosed proxy
voting form confers upon the persons designated to vote the shares represented the discretionary authority to vote such shares
in accordance with their best judgment. Such discretionary authority is with respect to all matters that may come before the
Meeting in addition to the scheduled items of business, including matters incident to the conduct of the Meeting and any
stockholder proposal omitted from the Proxy Statement and form of proxy. At the time that this Proxy Statement went to
press, the Board of Directors was not aware of any other matter that may properly be presented for action at the Meeting, but
the enclosed proxy form confers the same discretionary authority with respect to any such other matter.
Charles J. Kalil
Executive Vice President,
Law and Government Affairs,
General Counsel and Corporate Secretary
Midland, Michigan
March 28, 2008
2008 DOW PROXY STATEMENT
49
Appendix A
DIRECTOR INDEPENDENCE
An “independent” Director is a Director whom the Board of Directors has determined has no material relationship with The
Dow Chemical Company, or any of its consolidated subsidiaries (collectively, the “Company”), either directly, or as a partner,
stockholder or officer of an organization that has a relationship with the Company. For purposes of this definition, the Board
has determined that a Director is not independent if:
1.
The Director is, or has been within the last three years, an employee of the Company, or an immediate family
member of the Director is, or has been within the last three years, an executive officer of the Company;
2.
The Director has received, or has an immediate family member who has received, during any 12-month period
during the last three years, more than $100,000 in direct compensation from the Company (other than Board and
committee fees, and pension or other forms of deferred compensation for prior service). Compensation received by
an immediate family member for service as an employee (other than an executive officer) of the Company is not
considered for purposes of this standard;
3.
(a) The Director, or an immediate family member of the Director, is a current partner of the Company’s external
auditor; (b) the Director is a current employee of the Company’s external auditor; (c) an immediate family member
of the Director is a current employee of the Company’s external auditor who participates in the firm’s audit,
assurance or tax compliance (but not tax planning) practice; or (d) the Director, or an immediate family member of
the Director, was within the last three years (but is no longer) a partner or employee of the Company’s internal or
external auditor and personally worked on the Company’s audit within that time;
4.
The Director, or an immediate family member of the Director, is a current employee of, or has any business
relationship with, the Company’s internal audit function;
5.
The Director, or an immediate family member of the Director, is, or has been within the last three years, employed
as an executive officer of another company where any of the Company’s present executive officers serve or served
at the same time on that company’s compensation committee;
6.
The Director is a current executive officer or employee, or an immediate family member of the Director is a current
executive officer, of another entity that has made payments to, or received payments from, the Company for
property or services in an amount that, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of
the consolidated gross revenues of the Company or the other entity; or
7.
The Director is an executive officer of a charitable or non-profit organization to which the Company has made
contributions that, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of the charitable or
non-profit organization’s consolidated gross revenues.
An “immediate family” member includes a Director’s spouse, parents, children, siblings, mother and father-in-law, sons and
daughters-in-law, brothers and sisters-in-law, and anyone (other than a domestic employee) who shares the Director’s home.
50
2008 DOW PROXY STATEMENT
2008 ANNUAL MEETING OF STOCKHOLDERS
Thursday, May 15, 2008 at 10:00 a.m. EDT
Midland Center for the Arts
1801 West St. Andrews, Midland, Michigan
Parking and Attendance
Complimentary self-parking is available at the Midland Center for the Arts, 1801 West St. Andrews, Midland, Michigan.
Seating is limited. Tickets of admission or proof of stock ownership are necessary to attend the Meeting as explained on
page 1 of this Proxy Statement. Only stockholders may attend or one person holding a proxy for any stockholder or account
(in addition to those named as Board proxies on the proxy forms). Proxy holders are asked to present their credentials in the
lobby before the Annual Meeting begins. If you are unable to attend the Meeting, please listen to the live audio webcast at the
time of the Meeting or the audio replay after the event, at www.DowGovernance.com.
About Dow
With annual sales of $54 billion and 46,000 employees worldwide, Dow is a diversified chemical company that combines the
power of science and technology with the “Human Element” to constantly improve what is essential to human progress. The
Company delivers a broad range of products and services to customers in around 160 countries, connecting chemistry and
innovation with the principles of sustainability to help provide everything from fresh water, food and pharmaceuticals to
paints, packaging and personal care products. References to “Dow” or the “Company” mean The Dow Chemical Company.
More information about Dow can be found at www.dow.com
®
™ Trademark of The Dow Chemical Company
Printed on recycled paper
Form No. 161-00692

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