At DuPont’s last annual meeting, focus on lost jobs, safety

May 25--The DuPont Co. and Dow Chemical Co. expect final approval from U.S. regulators in time to complete their merger by August and begin splitting into three smaller companies, DuPont CEO Edward Breen told investors Wednesday morning at what may be the 214-year-old chemical giant's final annual meeting.

The companies plan to split into a pesticide company, based in Delaware but with most operations in the Midwest; another unit formed mainly of Dow's materials businesses based at Dow offices in Michigan; and a third including mostly ex-DuPont businesses from nutrition to electronics in Delaware.

Hedge funds that supported the Dow-DuPont merger scheme are seeking a realignment of the planned Dow and DuPont rump companies into businesses more focused on petrochemicals and business sectors, so they can be more easily re-sold at a profit, according to recent Wall Street Journal reports attributed to unidentified investor sources.

The companies have agreed to review spin-off plans. But at DuPont's first-quarter earnings call last month, Breen called big changes in the composition of the successor companies unlikely, noting that realignment would require the support of two-thirds of the companies' directors, not to mention the prospect of more regulatory delay.

Shareholders reelected Breen and other members of his unopposed board, while rejecting proposals by two unions representing DuPont workers who fear that the company's relentless cost-cutting will leave laid-off and early-retired workers without health insurance and remaining employees with less safety protection.

DuPont factory workers who have spent decades there now face the prospect of cost-cutting layoffs, shutdowns, and early retirement at an age when no one will hire them, said Kenneth Henley, a leader of the International Brotherhood of DuPont Workers, which represents workers at plants in Virginia, Kentucky, Tennessee, and other states.

While Breen, Dow boss Andrew Liveris, and other leaders who close facilities and cut costs are "enriched" by stock awards worth millions, their wage workers face "dramatic changes that severely cut" their compensation, Henley added. Last year the companies said Breen would collect around $27 million, and Liveris twice that, when the merger goes through.

"The company has eliminated [accrual] contributions to its defined-benefit pension plan," and has "eliminated health care" for employees under age 50 who accept retirement packages or are laid off, Henley said. He called those cost-cutting moves "frightening to employees."

"The board does not believe the proposal is necessary," Breen said of the brotherhood's proposal that the board consider to set a "ceiling" for executive pay and tie it to workers' pay. He noted that shareholders have approved the company's executive pay packages.

James Rowe, a retired leader of the United Steelworkers union at the Chambers Works in Salem County, urged DuPont to follow the lead of Marathon Oil Co. and other firms now providing more data on workplace accidents even if they don't cause deaths or expensive injuries.

DuPont's current safety-reporting practice "fails to provide investors with [detailed information about] the risks of future accidents or injuries," Rowe told Breen and the directors, in support of a steelworkers' proposal for DuPont to expand accident reporting.

Rowe cited "worker fatigue" at plants such as Chambers, where he says DuPont has extended overtime, pushing some workers' take-home pay above $100,000 a year, rather than hiring more workers to safely handle the work.

Rowe warned that overworking understaffed crews could lead to more sudden, deadly accidents such as the 2014 gas leak that killed four workers at DuPont's former La Porte, Texas, works.

The La Porte disaster triggered a federal Occupational Safety and Health Administration review that slammed DuPont's safety record -- especially in light of the company's attempts to sell its worker-safety model to other companies -- and was followed by DuPont's costly shutdown of the plant.

"Safety and health are very core values at DuPont" and are undergoing "continuous improvement," Breen responded, recommending investors vote against the steelworkers' proposal.

UPDATE: Breen added that DuPont has made "significant improvements in safety performance," for employees and contractors, and that "specific action plans" have led to "record" DuPont safety performance (I've asked for details of how that's measured, and will add or link.) Breen also said a Global Safety Perception Survey of 30,000 DuPonters "will help us target areas for additional improvements."

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