2017-Annual-Report 032917.Pdf
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ARCHER-DANIELS-MIDLAND COMPANY 77 West Wacker Drive, Suite 4600, Chicago, Illinois 60601 AMENDMENT NO. 1 TO ARCHER-DANIELS-MIDLAND COMPANY PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD THURSDAY, MAY 3, 2018 EXPLANATORY NOTE This Amendment No. 1 to Schedule 14A (“Amendment No. 1”) is being filed to amend Archer-Daniels-Midland Company’s definitive proxy statement for its Annual Meeting of Stockholders to be held on Thursday, May 3, 2018 (the “Proxy Statement”), which was filed with the Securities and Exchange Commission on March 23, 2018, in order to correct an error to Juan R. Luciano’s compensation set forth in the “Proxy Summary” section on page 1 of the Proxy Statement. All other items of the Proxy Statement are incorporated herein by reference without changes. Except as specifically discussed in this Explanatory Note, this Amendment No. 1 does not otherwise modify or update any other disclosures presented in the Proxy Statement. In addition, this Amendment No. 1 does not reflect events occurring after the date of the Proxy Statement or modify or update disclosures that may have been affected by subsequent events. CHANGE TO PROXY STATEMENT The “Executive Compensation” subsection of the “Proxy Summary” section on page 1 of the Proxy Statement is amended as follows: Executive Compensation See pages 37–47 CEO: Juan R. Luciano CEO 2017 TOTAL DIRECT COMPENSATION: • Salary: $1,300,008 • Non-Equity Incentive Plan Compensation: $2,251,600 • Long-Term Incentives: $12,166,416 CEO Employment Agreement: No Change-in-Control Agreement: No Stock Ownership Guidelines: Yes Hedging Policy: Yes IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 3, 2018: THIS AMENDMENT NO. 1, THE PROXY STATEMENT AND ANNUAL REPORT TO STOCKHOLDERS ARE AVAILABLE AT https://www.proxy-direct.com/MeetingDocuments/29653/ARCHER-DANIELS-MIDLAND.pdf. ARCHER DANIELS MIDLAND COMPANY 2018 Letter to Stockholders Proxy Statement 2017 Form 10-K Dear Stockholders, ADM works to grow earnings and returns by anticipating and meeting trends in demand for basic foods, ingredients, food solutions that promote health and wellness, and renewable fuels and chemicals. Our three-part strategy for achieving those goals — enhancing our core; advancing Readiness, the evolution of our operational excellence efforts; and growing strategically, particularly in the areas of our value chain that are closer to the end customer — continues to drive the company’s long-term vision and our ability to deliver strong results for share- holders. In 2017, ADM delivered adjusted earnings of $2.43 per share, compared with $2.16 in the prior year — a 12.5 percent increase. We also improved our trailing four-quarter average adjusted return on invested capital (ROIC) to 6.4 percent — 40 basis points above our annual weighted average cost of capital (WACC) of 6.0 percent. This performance enabled us to generate positive economic value added, or EVA, of almost $100 million on a four-quarter trailing average basis during the year. At the same time, we returned $1.5 billion to shareholders in 2017 as part of a bal- anced capital-allocation framework that also provides for investments in long-term value creation. Much of that amount came in the form of shareholder dividends. The fourth quarter of 2017 was our 345th consecutive quarterly payment, or 86 uninterrupted years of dividends. Following are highlights of the year’s key strategic accomplishments: • Enhancing our core. Our work to optimize our portfolio of existing businesses resulted in significant volume growth in our specialty oils business; operating profit growth of more than 25 percent in our WILD Flavors business; and year-over-year volume growth of more than 20 percent for our destination-marketing business. We also continued to manage our asset portfolio to maximize returns, including the sale of our Crop Risk Services business and the agreement to sell our oilseeds crushing operations in Bolivia. • Improving our cost structure through Readiness. Readiness is a multiyear initiative combining lean manufactur- ing, process standardization and digital design. Its objectives are to lower costs and enable consistently great customer experiences. In 2017, we achieved $285 million in run-rate cost savings, and we will continue improving efficiency and reducing costs by leveraging technology to help save hundreds of millions of additional dollars. • Growing strategically by building out our integrated value chain in EMEA. Our acquisitions of Chamtor — a French company that produces sweeteners from wheat — and Biopolis, the Valencia, Spain-based probiotics manu- facturer, have increased our participation in the regional markets for sweeteners, starches and bioactives. We grew our destination marketing business in the Middle East with the acquisition of a majority stake in Israel’s Industries Centers, and in early 2018, we announced the formation of a joint venture with Cargill to provide soybean meal and oil for customers in Egypt. We also continued using the increased flex-crush capacity at our German oilseeds facilities to crush non-GMO soy- beans to meet the region’s growing demand. And in March of this year, we announced an agreement to acquire a 50 percent equity stake in the sweeteners and starches business of Russia-based Aston Foods and Food Ingredients, a move that will allow us to address the Russian food and beverage industry’s growing ingredient needs. We are also investing to move closer to customers to help them lead in fast-growing market segments, including natural flavors and colors, plant-based proteins, ancient grains and soluble fiber. 2018 outlook As we did last year, we are pulling the levers under our control in 2018 to drive results, even as “green shoots” of improv- ing business conditions continue to emerge in various segments. Our emphasis is on optimizing our existing businesses, and on reducing run-rate costs by an additional $200 million through Readiness. We will accelerate Readiness in 2018, with initiatives including: • The continued rollout of 1ADM, our business transformation project that is helping standardize processes and sys- tems, improve decision-making, and control costs. • Driving energy-efficiency projects with high-efficiency motors, low-energy evaporation technologies and low-energy mixing technology. • Broadening our Performance Excellence initiative — a rigorous program that is empowering, engaging and enabling front-line colleagues to help improve and standardize processes throughout the business. We also will benefit from several of our largest recent investments — including our Campo Grande, Brazil, specialty pro- teins complex — ramping up production in 2018. Leading with a clear purpose As a premier global agribusiness and food-ingredient provider, ADM plays a critical role in feeding a protein-hungry world whose population will surpass 9.5 billion by the middle of this century. At the same time, our mission has evolved to include providing better nutrition for consumers worldwide, which has a positive impact on people’s quality of life. To fulfill these commitments to our customers, their consumers and society at-large, we will pursue growth in five key plat- forms that we believe hold great potential to drive stronger earnings and returns. They are: • Taste: We’ve already seen tremendous growth in the WILD Flavors business we acquired in 2014. Going forward, we will advance our product-innovation work, broaden our foodservice and private-label customer base, and work to replicate our regional strengths — such as the culinary capabilities we’ve built in North America following our 2015 acquisition of Eatem Foods — on a global scale. We also plan to continue expanding our network of innovation cen- ters, which enable us to collaborate with customers on new-product development and reformulations. We opened one facility in Sydney in 2017 and another in Singapore in January 2018, following on the Cranbury, New Jersey, center we opened in 2016. • Nutrition: In addition to accelerating sales from the Campo Grande specialty proteins complex, we see opportunities to leverage our existing strengths in proteins, fibers, edible beans and other food ingredients to develop new products and services that help our customers respond effectively to changing consumer preferences. • Animal Nutrition: As global meat consumption continues to increase, we will serve as a leading provider of high- quality animal nutrition products for livestock and aquaculture producers, as well as for companion-animal owners. With that goal in mind, last year we acquired the pet-treat manufacturer Crosswind Industries, Inc., completed our latest feed-premix facility in Zhangzhou, China, and announced plans to construct another premix plant in Xiangtan, China. We also added aquaculture feed production lines at our existing Nanjing, China, complex. • Bioactives: Science’s understanding of the human and animal gut microbiomes continues to deepen, which provides ADM with an opportunity to build a portfolio of prebiotics and probiotics, personalized nutrition solutions and animal-health enzymes that address fast-growing demand across the food and beverage, personal care, infant care and pharmaceutical segments. Last year’s acquisition of Biopolis gave us a strong presence in this sector, and our subsequent announcement of a joint research partnership with the Mayo Clinic centered on weight loss could result in findings with broad implications for human health and wellness.