Dow Chemical 2012 Annual Report Download - page 155

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Restricted Stock
Under the 2012 Plan, the Company may grant shares (including options, stock appreciation rights, stock units and restricted
stock) to non-employee directors over the 10-year duration of the program, subject to the plan's aggregate limit as well as
annual individual limits. No shares were issued under this plan during 2012.
Under the 2003 Non-Employee Directors’ Stock Incentive Plan (the "2003 Plan"), a plan approved by stockholders, the
Company may grant up to 1.5 million shares (including options, restricted stock and deferred stock) to non-employee directors
over the 10-year duration of the program, subject to an annual aggregate award limit of 25,000 shares for each individual
director. In 2012, 34,650 shares of restricted stock with a weighted-average fair value of $33.69 per share were issued under
this plan. The restricted stock issued under this plan cannot be sold, assigned, pledged or otherwise transferred by the non-
employee director, until the director is no longer a member of the Board. The 2003 Plan was superseded by the 2012 Plan on
May 10, 2012. No additional grants will be made under the 2003 Plan.
NOTE 21 – STOCKHOLDERS’ EQUITY
Cumulative Convertible Perpetual Preferred Stock, Series A
Equity securities in the form of Cumulative Convertible Perpetual Preferred Stock, Series A (“preferred series A”) were issued
on April 1, 2009 to Berkshire Hathaway Inc. in the amount of $3 billion (3 million shares) and the Kuwait Investment Authority
in the amount of $1 billion (1 million shares). The Company will pay cumulative dividends on preferred series A at a rate of
8.5 percent per annum in either cash, shares of common stock, or any combination thereof, at the option of the Company.
Dividends may be deferred indefinitely, at the Company’s option. If deferred, common stock dividends must also be deferred.
Any past due and unpaid dividends will accrue additional dividends at a rate of 10 percent per annum, compounded quarterly. If
dividends are deferred for any six quarters, the preferred series A shareholders may elect two directors to the Company’s Board
of Directors until all past due dividends are paid. Ongoing dividends related to preferred series A are $85 million per quarter;
no dividends had been deferred at December 31, 2012.
Shareholders of preferred series A may convert all or any portion of their shares, at their option, at any time, into shares of
the Company’s common stock at an initial conversion rate of 24.2010 shares of common stock for each share of preferred
series A. Under certain circumstances, the Company will be required to adjust the conversion rate. On or after the fifth
anniversary of the issuance date, if the common stock price exceeds $53.72 per share for any 20 trading days in a consecutive
30-day window, the Company may, at its option, at any time, in whole or in part, convert preferred series A into common stock
at the then applicable conversion rate. Upon conversion, accrued and unpaid dividends will be payable, at the option of the
Company, in either cash, shares of common stock, or any combination thereof.
Common Stock
The Company may issue common stock shares out of treasury stock or as new common stock shares for purchases under the
Employees’ Stock Purchase Plan, for options exercised and for the release of deferred and restricted stock. The number of new
common stock shares issued to employees and non-employee directors under the Company's stock-based compensation
programs was 18.7 million in 2012, 12.2 million in 2011 and 10.0 million in 2010.
Retained Earnings
There are no significant restrictions limiting the Company’s ability to pay dividends.
Undistributed earnings of nonconsolidated affiliates included in retained earnings were $2,332 million at December 31,
2012 and $2,373 million at December 31, 2011.
Employee Stock Ownership Plan
The Company has the Dow Employee Stock Ownership Plan (the “ESOP”), which is an integral part of The Dow Chemical
Company Employees’ Savings Plan (the “Plan”). A significant majority of full-time employees in the United States are eligible
to participate in the Plan. The Company uses the ESOP to provide the Company’s matching contribution in the form of the
Company’s stock to Plan participants.
In connection with the acquisition of Rohm and Haas on April 1, 2009 the Rohm and Haas Employee Stock Ownership
Plan (the "Rohm and Hass ESOP") was merged into the 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 outstanding balance of the debt was $51 million at December 31, 2012 and $57 million at December 31, 2011.