STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2020

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Common Stock

Dow Inc.

Dow Inc. was incorporated in 2018 with 100 authorized and issued shares of common stock, par value $0.01 per share, owned solely by its parent company, DowDuPont. In the first quarter of 2019, in connection with the separation and distribution of DowDuPont’s materials science business, the number of authorized shares of common stock was increased to 5,000,000,000 shares, par value $0.01 per share, and Dow Inc.'s 100 shares of issued common stock were recapitalized into 748,771,240 shares of common stock. Dow Inc.'s common stock was solely owned by DowDuPont through March 31, 2019, and on April 1, 2019, Dow Inc. became an independent, publicly traded company. Dow Inc. common stock is listed on the NYSE under the symbol “DOW.” See Note 3 for additional information.

The Company may issue shares of Dow Inc. common stock out of treasury stock or as new shares of common stock for options exercised and for the release of restricted stock units ("RSUs"), performance stock units ("PSUs") and restricted stock. Common stock shares issued to employees and non-employee directors was approximately 4.8 million in 2020. Subsequent to the separation from DowDuPont, the number of new Dow Inc. common stock shares issued to employees and non-employee directors was approximately 2.5 million in 2019. See Note 21 for additional information on the Company's equity awards.

TDCC

Effective with the Merger and through March 31, 2019, TDCC had 100 authorized and issued shares of common stock, par value $0.01 per share, owned solely by DowDuPont. Effective with the separation from DowDuPont, TDCC became a wholly owned subsidiary of Dow Inc., which now holds all 100 authorized and issued shares of common stock of TDCC. See Note 3 for additional information.

Retained Earnings

Dow Inc.

There are no significant restrictions limiting Dow Inc.’s ability to pay dividends. Dow Inc. declared dividends of $2.80 per share in 2020 ($2.10 per share in 2019, subsequent to the separation from DowDuPont).

Undistributed earnings of nonconsolidated affiliates included in retained earnings were $716 million at December 31, 2020 and $852 million at December 31, 2019.

TDCC

Effective with the Merger, TDCC no longer had publicly traded common stock. TDCC's common shares were owned solely by DowDuPont, prior to the separation on April 1, 2019, and TDCC's Board determined whether or not there would be a dividend distribution to DowDuPont. Effective with the separation from DowDuPont on April 1, 2019, TDCC became a wholly owned subsidiary of Dow Inc. and TDCC's Board determines whether or not there will be a dividend distribution to Dow Inc. In 2020 and 2019, TDCC declared and paid dividends to Dow Inc. of $2,233 million and $201 million, respectively. In 2019 and 2018, TDCC declared and paid dividends to DowDuPont of $535 million and $3,711 million, respectively.

Employee Stock Ownership Plan

The Dow Employee Stock Ownership Plan (the “ESOP”) is an integral part of The Dow Chemical Company Employees’ Savings Plan (the “Savings Plan”). A significant majority of full-time employees in the United States are eligible to participate in the Savings Plan. The Company uses the ESOP to provide its matching contribution in the form of stock to Plan participants. Effective with the Merger, shares of TDCC Common Stock held by the ESOP were converted into shares of DowDuPont Common Stock at a ratio of 1:1. Effective with the separation from DowDuPont, the DowDuPont Common Stock held by the ESOP received a Dow Inc. Common Stock share dividend at a ratio of 3:1, resulting in the ESOP holding both DowDuPont and Dow Inc. shares. Subsequent to the separation from DowDuPont, the ESOP independent fiduciary sold the DowDuPont shares and purchased additional Dow Inc. shares with the proceeds.

In connection with the acquisition of Rohm and Haas on April 1, 2009, the Rohm and Haas Employee Stock Ownership Plan (the "Rohm and Haas ESOP") was merged into the Savings Plan, and the Company assumed the $78 million balance of debt at 9.8 percent interest with final maturity in 2020 that was used to finance share purchases by the Rohm and Haas ESOP in 1990. The debt was fully repaid in 2020 which resulted in an outstanding balance of zero at December 31, 2020 ($3 million at December 31, 2019).

Dividends on unallocated shares held by the ESOP are used by the ESOP to make debt service payments and to purchase additional shares if dividends exceed the debt service payments. Dividends on allocated shares are used by the ESOP to make debt service payments to the extent needed; otherwise, they are paid to the Savings Plan participants. Shares are released for allocation to participants based on the ratio of the current year’s debt service to the sum of the principal and interest payments over the life of the loan. The shares are allocated to Plan participants in accordance with the terms of the Savings Plan. The unallocated shares are excluded from the Company's earnings per share calculation.

Compensation expense for allocated shares is recorded at the fair value of the shares on the date of allocation. Compensation expense reflected in income from continuing operations for ESOP shares was $72 million in 2020, $77 million in 2019 and $144 million in 2018. At December 31, 2020, 4.4 million shares out of a total 6.1 million shares held by the ESOP had been allocated to participants’ accounts and 1.7 million shares, at a fair value of $93 million, were considered unearned.

Treasury Stock

Dow Inc.

On April 1, 2019, Dow Inc.'s Board ratified the share repurchase program originally approved on March 15, 2019, authorizing up to $3 billion to be spent on the repurchase of the Company's common stock, with no expiration date. In 2020, Dow Inc. repurchased $125 million of Dow Inc. common stock ($500 million in 2019). At December 31, 2020, $2.4 billion of the share repurchase program authorization remained available for repurchases.

The Company may issue shares of Dow Inc. common stock out of treasury stock or as new shares of common stock for options exercised and for the release of RSUs, PSUs and restricted stock. The Company did not issue any treasury shares to employees and non-employee directors under its stock-based compensation programs for the years ended December 31, 2020 and 2019. See Note 21 for additional information on changes to the Company's equity awards in connection with the separation from DowDuPont.

The following table provides a reconciliation of Dow Inc. common stock activity for the years ended December 31, 2020 and 2019:

Shares of Dow Inc. Common Stock	Issued	Held in Treasury
Balance at Jan 1, 2019	100	—
Impact of recapitalization	748,771,140	—
Issued 1	2,457,404	—
Repurchased	—	9,729,834
Balance at Jan 1, 2020	751,228,644	9,729,834
Issued 1	4,764,554	—
Repurchased	—	3,073,469
Balance at Dec 31, 2020	755,993,198	12,803,303

1.Shares issued to employees and non-employee directors under the Company's equity compensation plans.

Accumulated Other Comprehensive Loss

The changes in each component of AOCL for the years ended December 31, 2020, 2019 and 2018 were as follows:

Accumulated Other Comprehensive Loss	2020		2019		2018
In millions
Unrealized Gains (Losses) on Investments
Beginning balance	$	64	$	(51)	$	17
Unrealized gains (losses) on investments	104		178		(93)
Less: Tax (expense) benefit	(23)		(38)		19
Net unrealized gains (losses) on investments	81		140		(74)
(Gains) losses reclassified from AOCL to net income 1	(54)		(33)		9
Less: Tax expense (benefit) 2	13		8		(2)
Net (gains) losses reclassified from AOCL to net income	(41)		(25)		7
Other comprehensive income (loss), net of tax	40		115		(67)
Reclassification of stranded tax effects 3	—		—		(1)
Ending balance	$	104	$	64	$	(51)
Cumulative Translation Adjustment
Beginning balance	$	(1,135)	$	(1,813)	$	(1,481)
Gains (losses) on foreign currency translation	227		59		(215)
Less: Tax (expense) benefit	25		(2)		(6)
Net gains (losses) on foreign currency translation	252		57		(221)
(Gains) losses reclassified from AOCL to net income 4	(47)		(89)		(4)
Other comprehensive income (loss), net of tax	205		(32)		(225)
Impact of common control transaction 5	—		710		—
Reclassification of stranded tax effects 3	—		—		(107)
Ending balance	$	(930)	$	(1,135)	$	(1,813)
Pension and Other Postretirement Benefits
Beginning balance	$	(8,781)	$	(7,965)	$	(6,998)
Gains (losses) arising during the period	(1,769)		(1,699)		(625)
Less: Tax (expense) benefit	411		413		130
Net gains (losses) arising during the period	(1,358)		(1,286)		(495)
Amortization and recognition of net loss and prior service credits 6	753		504		594
Less: Tax expense (benefit) 2	(173)		(117)		(139)
Net loss and prior service credits reclassified from AOCL to net income	580		387		455
Other comprehensive income (loss), net of tax	(778)		(899)		(40)
Impact of common control transaction 5	—		83		—
Reclassification of stranded tax effects 3	—		—		(927)
Ending balance	$	(9,559)	$	(8,781)	$	(7,965)
Derivative Instruments
Beginning balance	$	(394)	$	(56)	$	(109)
Gains (losses) on derivative instruments	(96)		(470)		6
Less: Tax (expense) benefit	(1)		101		(2)
Net gains (losses) on derivative instruments	(97)		(369)		4
(Gains) losses reclassified from AOCL to net income 7	30		44		89
Less: Tax expense (benefit) 2	(9)		(13)		(18)
Net (gains) losses reclassified from AOCL to net income	21		31		71
Other comprehensive income (loss), net of tax	(76)		(338)		75
Reclassification of stranded tax effects 3	—		—		(22)
Ending balance	$	(470)	$	(394)	$	(56)
Total AOCL ending balance	$	(10,855)	$	(10,246)	$	(9,885)

1.Reclassified to "Net sales" and "Sundry income (expense) - net."

2.Reclassified to "Provision for income taxes on continuing operations."

3.Amounts reclassified to "Retained earnings" as a result of the adoption of ASU 2018-02.

4.Reclassified to "Sundry income (expense) - net."

5.Reclassified to "Retained earnings" as a result of the separation from DowDuPont on April 1, 2019. See Note 3 for additional information.

6.These AOCL components are included in the computation of net periodic benefit cost of the Company's defined benefit pension and other postretirement benefit plans. See Note 20 for additional information.

7.Reclassified to "Cost of sales," "Sundry income (expense) - net" and "Interest expense and amortization of debt discount."