Dow Chemical Agrees to $1.75 Million Penalty and Independent Consultant for Failing to Disclose Perquisites

ADMINISTRATIVE PROCEEDING

File No. 3-18570

July 2, 2018 — The Securities and Exchange Commission today announced that The Dow Chemical Company agreed to settle charges related to the company’s inadequate perquisites disclosure in Commission filings by paying a civil penalty in the amount of $1.75 million, hiring an independent consultant to evaluate and recommend changes to the company’s policies and procedures relating to perquisites disclosure, and implementing such changes.

The SEC’s order finds that from 2011-2015, Dow failed to ensure that approximately $3 million in perquisites provided to its chief executive officer (“CEO”) were adequately identified and disclosed as other compensation in Dow’s 2013-2016 proxy statements. These authorized but undisclosed perquisites included the CEO’s personal use of Dow aircraft and other expenses. Specifically, Dow failed to apply the Commission’s perquisite test – which requires disclosure of personal benefits not widely available and not integrally and directly related to an executive’s job duties. Instead, Dow used a business purpose test, which the Commission considered, but ultimately decided not to adopt when it issued new disclosures rules in 2006.

Pursuant to the order, Dow has agreed to cease and desist from violating proxy disclosure and reporting rules. Dow has further agreed to hire an independent consultant to help it implement improved policies and procedures to ensure that perquisites are accurately reported in the future.

The SEC’s investigation was conducted by Mary S. Brady, Adam S. Ross, Michael F. D’Angelo, and Jaqueline M. Moessner.

See also: Order