UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.       )

 

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Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant § 240.14a-12

 

TECHNIPFMC PLC
(Name of Registrant as Specified In Its Charter)

 

 
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

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The energy
architects

2022

Notice of Annual General
Meeting of Shareholders
and Proxy Statement 

 

 

TechnipFMC Proxy Statement 2022

 

 

Notice of 2022 Annual General Meeting of Shareholders

 

TechnipFMC plc

 

(a public limited company having its registered office at Hadrian House, Wincomblee Road, Newcastle upon Tyne, NE6 3PL, United Kingdom and incorporated in England and Wales with company number 09909709)

 

April 29, 2022

 

10:00 a.m., London time

 

Hadrian House, Wincomblee Road, Newcastle upon Tyne, NE6 3PL, United Kingdom

 

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TechnipFMC Proxy Statement 2022

 

Proposal  Description
Ordinary Resolutions
1(a) – 1(i) Election of Directors: To elect each of our nine director nominees for a term expiring at the Company’s 2023 Annual General Meeting of Shareholders:
 

a. Douglas J. Pferdehirt

b. Eleazar de Carvalho Filho

c. Claire S. Farley

d. Peter Mellbye

e. John O’Leary

f. Margareth Øvrum

g. Kay G. Priestly

h. John Yearwood

i. Sophie Zurquiyah

2 2021 U.S. Say-on-Pay for Named Executive Officers: To approve, as a non-binding advisory resolution, the Company’s named executive officer compensation for the year ended December 31, 2021, as reported in the Company’s Proxy Statement
3 2021 U.K. Directors’ Remuneration Report: To approve, as a non-binding advisory resolution, the Company’s directors’ remuneration report for the year ended December 31, 2021, as reported in the Company’s U.K. Annual Report and Accounts
4 Receipt of U.K. Annual Report and Accounts: To receive the Company’s audited U.K. accounts for the year ended December 31, 2021, including the reports of the directors and the auditor thereon
5 Ratification of PwC as U.S. Auditor: To ratify the appointment of PricewaterhouseCoopers LLP (“PwC”) as the Company’s U.S. independent registered public accounting firm for the year ending December 31, 2022
6 Reappointment of PwC as U.K. Statutory Auditor: To reappoint PwC as the Company’s U.K. statutory auditor under the U.K. Companies Act 2006, to hold office from the conclusion of the 2022 Annual General Meeting of Shareholders until the next annual general meeting of shareholders at which accounts are laid
7 Approval of U.K. Statutory Auditor Fees: To authorize the Board and/or the Audit Committee to determine the remuneration of PwC, in its capacity as the Company’s U.K. statutory auditor for the year ending December 31, 2022
8 Approval of Incentive Award Plan: To authorize the adoption of the TechnipFMC plc 2022 Incentive Award Plan
9 Authority to Allot Equity Securities: To authorize the Board to allot equity securities in the Company
Special Resolution
10 Authority to Allot Equity Securities without Pre-emptive Rights: Pursuant to the authority contemplated by the resolution in Proposal 9, to authorize the Board to allot equity securities without pre-emptive rights

 

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TechnipFMC Proxy Statement 2022

 

These items are more fully described in the Proxy Statement attached, which forms a part of this Notice of Annual Meeting. As of the date of the Proxy Statement, TechnipFMC does not know of any other matters to be raised at the 2022 Annual General Meeting of Shareholders.

 

Your vote is very important. Please ensure you (i) promptly return the enclosed proxy card in the enclosed envelope, or (ii) grant a proxy and give voting instructions by telephone or internet, so that you may be represented at the meeting. Voting instructions are provided on your proxy card or on the voting instruction form provided by your broker.

 

March 18, 2022

 

On behalf of the Board of Directors,

 

 

Victoria Lazar

Executive Vice President, Chief Legal Officer, and Secretary

 

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Proxy Statement for the 2022 Annual General Meeting of Shareholders

 

This Proxy Statement relates to the solicitation of votes or proxies by the Board of Directors (the “Board”) of TechnipFMC plc (the “Company,” “TechnipFMC,” “us,” or “we”) for use at our 2022 Annual General Meeting of Shareholders and at any adjournment or postponement of such meeting (the “Annual Meeting”).

 

The Notice of Internet Availability of Proxy Materials (the “Notice of Materials”) and related Proxy Materials (as defined below) were first made available to shareholders on or about March 18, 2022 at www.proxyvote.com. You may also request a printed copy of this Proxy Statement and the form of proxy by any of the following methods:

 

A

 

Internet at
www.proxyvote.com

 

  B

 

Telephone at
1-800-579-1639

 

  or C

 

Email at
sendmaterial@proxyvote.com

 

 

Our Annual Report on Form 10-K, including consolidated financial statements, for the year ended December 31, 2021 (our “Form 10-K”) and our U.K. Annual Report and Accounts are being made available at the same time and by the same methods.

 

Our registered office is located at Hadrian House, Wincomblee Road, Newcastle upon Tyne, NE6 3PL, United Kingdom. Our telephone number in our Newcastle office is +44 191 295 0303. Information regarding the Annual Meeting, including the information required by Section 311A of the U.K. Companies Act 2006 (the “Companies Act”), can be found at www.technipfmc.com. Information contained on our website is not to be considered as part of the proxy solicitation material and is not incorporated into this Proxy Statement.

 

TechnipFMC is a public limited company incorporated under the laws of England and Wales, and our ordinary shares (the “Ordinary Shares”) trade on the New York Stock Exchange in the United States (the “NYSE”) under the symbol “FTI.” As a result, the Company is governed by the Companies Act, U.S. securities laws and regulations, and the listing standards of the NYSE.

 

The Proxy Materials contain “forward-looking statements” as defined in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical or current facts, including statements regarding our environmental and other ESG plans and goals, made in this document are forward-looking. We use words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “commit,” “foresee,” “should,” “would,” “could,” “may,” “estimate,” “outlook” and similar expressions, including the negative thereof. The absence of these words, however, does not mean that the statements are not forward-looking. All of our forward-looking statements involve risks and uncertainties (some of which are significant or beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. These forward-looking statements are based on our current expectations, beliefs and assumptions concerning future developments and business conditions and their potential effect on us. While management believes these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. Known material factors that could cause actual results to differ materially from those contemplated in the forward-looking statements include unpredictable trends in the demand for and price of crude oil and natural gas; competition and unanticipated changes relating to competitive factors in our industry, including ongoing industry consolidation; the COVID-19 pandemic, its impact on the demand for our products and services and global shipping and logistics challenges caused by it; our inability to develop, implement and

 

 

protect new technologies and services, including new technologies and services for our new energy ventures; the cumulative loss of major contracts, customers or alliances and unfavorable credit and commercial terms of certain contracts; the refusal of DTC to act as depository agency for our shares; disruptions in the political, regulatory, economic and social conditions of the countries in which we conduct business; the United Kingdom’s withdrawal from the European Union; the impact of our existing and future indebtedness and the restrictions on our operations by terms of the agreements governing our existing indebtedness; the risks caused by our acquisition and divestiture activities; our inability to address increasing attention to ESG matters; certainties related to our investments in new energy industries; the risks caused by fixed-price contracts; any delays and cost overruns of new capital asset construction projects for vessels and manufacturing facilities; our failure to deliver our backlog; our reliance on subcontractors, suppliers and our joint venture partners; a failure or breach of our IT infrastructure or that of our subcontractors, suppliers or joint venture partners, including as a result of cyber-attacks; risks of pirates endangering our maritime employees and assets; potential liabilities inherent in the industries in which we operate or have operated; our failure to comply with numerous laws and regulations, including those related to environmental protection, climate change, health and safety, labor and employment, import/export controls, currency exchange, bribery and corruption, taxation, privacy, data protection and data security; the additional restrictions on dividend payouts or share repurchases as an English public limited company; uninsured claims and litigation against us, including intellectual property litigation; tax laws, treaties and regulations and any unfavorable findings by relevant tax authorities; potential departure of our key managers and employees; adverse seasonal and weather conditions and unfavorable currency exchange rates; and risk in connection with our defined benefit pension plan commitments, as well as the risk factors discussed in our filings with the U.S. Securities and Exchange Commission, including our annual reports on Form 10-K and quarterly reports on Form 10-Q. In addition, historical, current, and forward-looking ESG-related statements may be based on standards for measuring progress that are still developing, and internal controls and processes that continue to evolve. Forward-looking and other statements in the Proxy Materials may also address our corporate responsibility and sustainability progress, plans, and goals, and the inclusion of such statements is not an indication that these contents are necessarily material for the purposes of complying with or reporting pursuant to the U.S. federal securities laws and regulations, even if we use the word “material” or “materiality” in this document. With respect to ESG information that pertains to our third-party vendors, suppliers and partners, we often rely on such third-parties’ data and do not independently verify or audit, or commit to independently verifying or auditing, their information. We caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except to the extent required by law.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
2022 ANNUAL GENERAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 29, 2022

 

The Notice of Annual Meeting and Proxy Statement, Annual Report on Form 10-K,
and U.K. Annual Report and Accounts are available at www.proxyvote.com

 

 

TechnipFMC Proxy Statement 2022

 

Contents  
   
2022 Proxy Summary 1
Annual Meeting Information 1
Voting Matters and Board Recommendations 2
Core Values and Foundational Beliefs 3
Governance Highlights 4
2021-2022 Shareholder Engagement Program 5
Director Nominees 6
2021 At-a-Glance 7
Executive Compensation 12
Environmental, Social, and Governance 16
Core Values and Foundational Beliefs 18
Environmental 19
Social 28
Governance 32
Our Compliance Program 33
Corporate Governance 37
Governance Guidelines and Key Board Practices 37
Shareholder Engagement 38
Leadership Structure of the Board 40
Board Composition and Criteria for Board Membership 41
Enterprise Risk Management 46
Committees of the Board of Directors 47
Board Meetings and Attendance 51
Director Independence 51
Compensation Committee Interlocks and Insider Participation in Compensation Decisions 52
Communications with Directors 52
Director Compensation 53
Non-executive Director Compensation 53
Executive Compensation Discussion and Analysis 58
Named Executive Officers 60
2021 Performance and Impact on Executive Compensation 60
Good Governance and Compensation Practices Aligned with Shareholders 69
Compensation Governance 70
Elements of 2021 Executive Compensation 74
Other Compensation, Benefits, and Considerations 92

 

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TechnipFMC Proxy Statement 2022

 

Summary Compensation Table for the Year Ended December 31, 2021 96
Grants of Plan-Based Awards Table 98
Outstanding Equity Awards at Fiscal Year-End Table 100
Option Exercises and Stock Vested Table 101
Pension Benefits Table 102
Non-Qualified Deferred Compensation Table 104
Potential Payments upon Termination 105
CEO Pay Ratio 108
Compensation and Talent Committee Report 109
Audit Committee Report 110
Proposals 1(a) - 1(i) — Election of Directors 111
Director Nominees 113
Proposal 2 — 2021 Say-on-Pay for NEOs 122
Proposal 3 — 2021 Directors’ Remuneration Report 123
Proposal 4 — Receipt of U.K. Annual Report and Accounts 124
Proposal 5 — Ratification of U.S. Auditor 125
Proposal 6 — Reappointment of U.K. Statutory Auditor 127
Proposal 7 — Approval of U.K. Statutory Auditor Fees 128
Proposal 8 — Approval of the TechnipFMC plc 2022 Incentive Award Plan 129
Proposal 9 — Authority to Allot Equity Securities 137
Proposal 10 — Authority to Allot Equity Securities without Pre-emptive Rights 139
Transactions with Related Persons 141
Security Ownership of Certain Beneficial Owners and Management 142
Section 16(a) Beneficial Ownership Reporting Compliance 144
Delinquent Section 16(a) Reports 144
Proposals for the 2023 Annual General Meeting of Shareholders 145
Shareholders Sharing an Address 146
General Information about the Annual Meeting 147
Appendix A — TechnipFMC plc 2022 Incentive Award Plan 154

 

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TechnipFMC Proxy Statement 2022

 

2022 Proxy Summary

 

Along with the Notice of Annual Meeting, we are providing this Proxy Statement, the U.K. Annual Report and Accounts, and our Form 10-K in connection with the Annual Meeting (collectively, the “Proxy Materials”).

 

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all the information that you should consider regarding each of the proposals to be voted on at the Annual Meeting. Please read the entire Proxy Statement carefully before voting. For further information regarding our 2021 financial performance, please review our Form 10-K and our U.K. Annual Report and Accounts.

 

Annual Meeting Information

 

Time and Date

April 29, 2022 at 10:00 a.m., London time
 
Place

Hadrian House, Wincomblee Road, Newcastle upon Tyne, NE6 3PL, United Kingdom
 
Record Date

March 11, 2022, 5:00 p.m., New York time
 
Admission

Admission ticket and valid photo identification required. Please see “General Information about the Annual Meeting—Who can attend the Annual Meeting?” for more information.
 
Voting

Each Ordinary Share is entitled to one vote for each of the proposals to be voted on.
 
Voting Deadline

11:59 p.m., New York time, on April 28, 2022
 
Please follow the voting instructions on your proxy card and/or your voting instruction form as different voting deadlines may be applicable across markets. Please also review “How do I vote?” in the section entitled “General Information about the Annual Meeting.

 

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TechnipFMC Proxy Statement 2022

 

Voting Matters and Board Recommendations

 

The full text of each resolution to be voted on at the Annual Meeting is set out in the Notice of Annual Meeting.

 

Proposal to be Voted Upon Board
Recommendation
Where You Can Find
More Information
Ordinary Resolutions    
1(a) – 1(i): Election of Directors FOR
Each Director Nominee
Page 111
2: 2021 U.S. Say-on-Pay Proposal for Named Executive Officers FOR Page 122
3: 2021 U.K. Directors’ Remuneration Report FOR Page 123
4: Receipt of U.K. Annual Report and Accounts FOR Page 124
5: Ratification of PwC as U.S. Auditor FOR Page 125
6: Reappointment of PwC as U.K. Statutory Auditor FOR Page 127
7: Approval of U.K. Statutory Auditor Fees FOR Page 128
8: Approval of TechnipFMC plc 2022 Incentive Award Plan FOR Page 129
9: Authority to Allot Equity Securities FOR Page 137
Special Resolution    
10: Authority to Allot Equity Securities without Pre-emptive Rights FOR Page 139

 

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TechnipFMC Proxy Statement 2022

 

Core Values and Foundational Beliefs

 

Our decisions regarding corporate responsibility, governance, and sustainability are founded on the principles that guide our Company. Our core values provide the framework for all of our decision making and are based on our foundational beliefs (“Foundational Beliefs”).

 

  Our core values  
     

Realizing possibilities

Achieving together

Building trust

     
The heart of everything we do
     

► We strive for ever better

► We take initiative

► We learn from success and failure

► We work as one team

► We share knowledge

► We embrace diversity of thought

► We listen to improve

► We partner constructively

► We seek to outperform

 

Our Foundational Beliefs are the cornerstone of our values that describe how we fundamentally do business and what we never compromise on, no matter the circumstances.

 

Safety   Respect   Integrity   Sustainability   Quality
       
We will not compromise on health, safety, and security.   We treat everyone honestly, fairly, and courteously.   We hold ourselves to the highest moral and ethical principles.   We act responsibly, always considering our impact on the planet, people, and communities in which we operate.   We deliver the highest quality in everything we do.

 

For additional details on the Company’s core values, Foundational Beliefs, and our environmental, social and, governance program, please see the section entitled “Environmental, Social, and Governance.

 

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TechnipFMC Proxy Statement 2022

 

Governance Highlights

 

Board and Governance Best Practices

 

Independent Board Oversight
Robust Lead Independent Director role to serve as an effective counterbalance to the role of the Chair and CEO
All directors are independent except the Chair and CEO
Fully independent Board committees
Regular executive sessions of independent directors
 
Governance Best Practices
Board oversight of ESG matters through ESG Committee on broader ESG affairs, Audit Committee on cybersecurity plus metrics and reporting on certain health, safety, and environmental matters, and Compensation and Talent Committee on inclusion and diversity
ESG Performance as a performance measure in our Annual Incentive Plan
Annual election of directors under majority vote standard
Engaged Board with deep expertise, skills, and experience that are closely tied to business strategy
Annual shareholder engagement program to solicit feedback on Company practices
Ongoing Board refreshment efforts informed by a comprehensive annual Board and committee self-evaluation process, reflected by two new directors in 2019 and one new director in each of 2020 and 2021
Board oversight of risk management structures
Review of the mix of experience, qualifications, and skills in the boardroom to meet evolving needs of the business, coupled with new director orientation and continuing education
Code of Business Conduct applicable to directors
Governance Guidelines with director retirement policy
Director share ownership requirements

 

For additional details on the Company’s corporate governance practices, please see the section entitled “Corporate Governance.

 

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TechnipFMC Proxy Statement 2022

 

2021-2022 Shareholder Engagement Program

Our relationship and ongoing dialogue with our shareholders is an important part of our Board’s corporate governance commitment. Members of our Board and senior management routinely engage with shareholders on a variety of topics and report to our Board regarding our shareholders’ feedback and input on topics such as strategic and financial performance, executive compensation, Board composition and governance, as well as important environmental and social issues. The constructive feedback and ideas exchanged during these engagements help our Board and management evaluate and assess key initiatives for the Company’s programs.

 

For our 2021-2022 engagement, we contacted proxy advisory firms and our top shareholders representing approximately 46% of our Ordinary Shares outstanding. Management, and in some instances, our Environmental, Social, and Governance (“ESG”) Committee Chair, held meetings with proxy advisory firms and shareholders representing approximately 16% of our Ordinary Shares outstanding. Some shareholders did not require a meeting as they either supported, or indicated they had no questions related to, our ESG, compensation, and governance practices.

 

Our 2021-2022 shareholder engagement program allowed us to understand our shareholders’ priorities and perspectives, which prompted us to make several changes to our compensation program and to our disclosure philosophy.

 

For detailed descriptions of key shareholder feedback received, and our responses to such feedback, please see the section entitled “Corporate Governance — Shareholder Engagement.

 

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TechnipFMC Proxy Statement 2022

 

Director Nominees

 

Key Board Statistics after Annual Meeting

 

8 of 9 63 44%
Independent Directors Average Age Female Directors

 

Douglas J. Pferdehirt

Chair and CEO
Age: 58
Committees: None

Eleazar de Carvalho Filho

Independent
Age: 64

Committees: Audit

Claire S. Farley

Lead Independent Director
Age: 63

Committees: Compensation and Talent

Peter Mellbye

Independent
Age: 72

Committees: ESG (Chair)

John O’Leary

Independent
Age: 66

Committees: Compensation and Talent (Chair)

Margareth Øvrum

Independent
Age: 63
Committees: ESG

Kay G. Priestly

Independent
Age: 66

Committees: Audit (Chair)

John Yearwood

Independent
Age: 62

Committees: Compensation and
Talent, ESG

Sophie Zurquiyah

Independent
Age: 55

Committees: Audit

   

 

Detailed biographies for each of our director nominees are disclosed in the section “Proposals 1(a) – 1(i) — Election of Directors — Director Nominees.

 

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TechnipFMC Proxy Statement 2022

 

2021 At-a-Glance

Strategic Transactions  
Completed the separation of TechnipFMC into two industry-leading, pure-play companies through the spin-off of Technip Energies on February 16, 2021 (the “Spin-off”).

During 2021, we sold approximately 75% of the original ownership stake in Technip Energies for proceeds of $900.9 million. As of December 31, 2021, we retained 12.2% ownership of Technip Energies’ issued and outstanding share capital. In January 2022, we sold an additional 9 million Technip Energies shares for total proceeds of $135.1 million. Upon completion of the January sale, we retained a direct stake of 12.9 million shares, representing 7.1% of Technip Energies’ issued and outstanding share capital. As of March 4, 2022 the value of our investment in Technip Energies was $155.3 million.

 

On January 10, 2022, we announced that following a comprehensive review of the Company’s strategic objectives, we were proceeding with the voluntary delisting of our shares from Euronext Paris. The delisting was completed on February 18, 2022.

 

ESG  

Appointed Sophie Zurquiyah to the Board

 

Announced our aim to reduce our Scope 1 and Scope 2 greenhouse gas (“GHG”) emissions by 50% by 2030

Included an ESG metric in our annual cash incentive plan, to directly link our compensation program to our ESG commitments and objectives

Enhanced our commitment to diversity and inclusion across the organization

 

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TechnipFMC Proxy Statement 2022

 

Market Leadership  

 
Subsea

 
Surface Technologies

Achieved inbound orders of $5 billion, including contract awards for:

ExxonMobil Yellowtail project in Guyana

Petrobras Búzios 6-9 fields project in Brazil

Tullow Jubilee South East project in Ghana

Achieved inbound orders of $1.8 billion driven by increased international award activity

International business highlights:

Awarded largest-ever Surface Technologies contract for wellheads, trees, and associated services by ADNOC, underscoring our relationship of over four decades

Successful expansion of our manufacturing capabilities in Saudi Arabia, furthering our partnership with Saudi Aramco

North America business highlights:

Further market adoption of iComplete™ ecosystem, enabling significant cost savings versus traditional work scope

Continued digital transformation to monitor, measure, and reduce the carbon footprint of oil and gas operations through our E-Mission™ solution

 

Energy Transition  
Since our inception as an integrated company in 2017, we have been pursuing innovation that improves project economics while reducing emissions within the conventional energy space. We have also been exploring ways to position TechnipFMC for the energy transition with differentiated solutions that leverage our core competencies and existing resources. With our introduction of New Energy Ventures, we will accelerate and grow our contribution to this rapidly evolving market through three main pillars of greenhouse gas removal, offshore floating renewables, and hydrogen. We will leverage our subsea and surface expertise in project integration to approach these new opportunities with a new execution model, integrated Offshore Novel Energies (“iONE™”). We are making solid and tangible progress in establishing a clear path for TechnipFMC in the energy transition.

 

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TechnipFMC Proxy Statement 2022

 

2021 Compensation Highlights  

Our executive compensation programs are designed to directly link our executives’ pay to their performance and the achievement of TechnipFMC’s overall performance and business strategies to create and preserve value for our shareholders.

 

In 2021, our Executive Officers led the successful completion of the Spin-off of Technip Energies and the emergence of TechnipFMC as an industry-leading, fully integrated technology and services provider, unlocking significant long-term growth potential and shareholder value. The ability to focus on our distinct and expanding market opportunities and customer base and our compelling and distinct investment profile has poised us for significant growth and positioned us to capitalize on the energy transition.

 

During the year, we continued our successful transformation of the subsea industry through our integrated model, expanded our strategic alliances and partnerships, transformed our operating model through industrialization and standardization; and advanced technology and innovation through digital integration. We introduced New Energy Ventures, where we will accelerate and grow our contribution to the energy transition. We also continued our commitment to ESG with our three-year ESG scorecard and our 50 by 30 commitment – targeting a 50% reduction in Scope 1 and 2 CO2 equivalent emissions by 2030.

 

Against this backdrop, the Compensation and Talent Committee took several actions in 2021 to align with the Company’s business objectives and shareholder interests, align with our ESG goals, and position the business for future success.

 

Compensation Actions in 2021 that Supported Key Business Strategies

Introduced ESG Performance as a performance measure in our 2021 Annual Incentive Plan

 

In 2021, we directly linked our three-year strategic objectives around our ESG scorecard to the Annual Incentive Plan. The scorecard includes specific, measurable and challenging goals to reduce our environmental impact, to support the communities where we live and operate, to improve and respect diversity and inclusion in our Company, to reinforce our health and safety culture, and to reaffirm our commitments to respecting human rights and to corporate governance.

 

25% of the Annual Incentive Plan payout will be based on performance relative to this scorecard, thus creating a meaningful link between ESG results and executive compensation.

 

Our ESG scorecard provides transparency, and linking the results to compensation ensures accountability.

 

Aligned Annual Incentives to Financial Strategic Priorities

We included Adjusted EBITDA as a Percentage of Revenue and Free Cash Flow from Operations as performance measures in our Annual Incentive Plan, each component weighted at 25%.

 

Adjusted EBITDA as a Percentage of Revenue reflects profitability and sustainability of our business and drives us to leverage cost efficiencies. Free Cash Flow from Operations is a key priority to maintain financial health and liquidity, generate returns to shareholders, and provide us with capital to make strategic investments in the future.

 

Continued overleaf >

 

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TechnipFMC Proxy Statement 2022

 

Continued to align Long-Term Incentive Compensation with Shareholder Returns

70% of the 2021 Long-Term Incentive grant is performance-based and based on achievement of 2021 - 2023 relative total shareholder return (“TSR”) targets.

 

A higher weighting of performance-based equity compared to market prevalence strengthens the alignment of our program with shareholder interests.

 

Ended Temporary Reduction in Compensation

In May 2020, in response to the business downturn during the COVID-19 pandemic, the Compensation and Talent Committee temporarily reduced the base salary for our Chair and CEO by 30% and for other executive officers by 20%. The previous salaries were reinstated on January 1, 2021. Other than this reinstatement no increases in base salaries or incentive targets were awarded to the NEOs in 2021.

 

Incentivized executive officers to ensure stability and continuity to execute on our strategy post Spin-off

Our executive officers are critical to our future success as they provide deep company and industry expertise. These executives have been responsible for our transformation into a fully integrated leader in technology and innovation and the successful completion of the Spin-off, and have well positioned the Company for future growth and the energy transition.

 

One of the key priorities for the Compensation and Talent Committee was retention, motivation and continuity of the executive team to achieve ambitious organizational transformation and strategic growth, against a backdrop of significant volatility and uncertainty in the energy industry. While there were no changes to base salary or incentive targets, the Compensation and Talent Committee awarded a one-time enhancement to the Long-Term Incentive grants for Mr. Pferdehirt and Mr. Rounce to enhance the retention provided from unvested long-term incentives and recognize their contributions to the Spin-off transaction.

 

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TechnipFMC Proxy Statement 2022

 

2021 Financials1  
Total Company Subsea Surface Technologies
Results Results Results

Inbound orders of $6.8 billion, driven by early stages of broad market demand recovery

 

Strong focus on cash generation helps drive full-year cash flow2 of $523.3 million

 

Introduction of New Energy Ventures business to accelerate and grow opportunities in energy transition

Inbound orders increased 24% year-over-year, including award of first iEPCI™ project in Brazil

 

Strong industry adoption of iEPCI™ expanded our number of alliances and partnerships

 

Extended Subsea 2.0™ across portfolio to include all system level components and all-electric system

Inbound orders increased 69% year-over-year, with a multi-year contract from ADNOC, the segment’s largest ever award

 

International revenue increased to 69% of segment, led by higher activity in the Middle East

 

Advanced digital transformation with the introduction of E-Mission™ solution for removal of greenhouse gas emissions

 

(1) Reported financial results for the 12 months ended December 31, 2021 and inbound and backlog as of December 31, 2021 are as reported in our Form 10-K.
(2) Cash flow from operations minus capital expenditures.

 

2021 total Company inbound orders of $6.8 billion increased 33% compared to 2020. The significant increase resulted in part from the improved outlook for energy demand as global activity responded to pandemic mitigation and economic stimulus efforts. Subsea inbound orders improved 24% and reflected continued strength in South America, particularly Brazil and Guyana. We also experienced further adoption of integrated Engineering, Procurement, Construction, and Installation (“iEPCI™”), with increased geographic expansion. Surface Technologies inbound orders increased 69% versus the prior year and included the largest-ever contract for the segment, a multi-year award from Abu Dhabi National Oil Company (ADNOC).

 

Revenue of $6.4 billion was down modestly compared to 2020, decreasing by $127.1 million. Subsea revenue decreased 3% due to lower project activity, partially offset by increased activity in Surface Technologies where international revenue accounted for 69% of the segment.

 

Operating results in 2021 of $183.4 million improved when compared to the prior year primarily due to the significant reduction in non-cash impairment charges and lower restructuring and other charges. Results also benefited from the mitigation of COVID-19 impacts, cost reduction initiatives, and increased installation and services activity.

 

Backlog increased 5% compared to 2020. Subsea backlog ended 2021 at $6,533 million, with more than $3,160 million scheduled for execution beyond 2022. Backlog for Surface Technologies increased 172% to $1,125 million. Our significant backlog provides solid revenue visibility in future periods.

 

For additional details regarding the Company’s 2021 financial performance, please see the section entitled “Executive Compensation Discussion and Analysis — 2021 Performance and Impact on Executive Compensation.

 

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TechnipFMC Proxy Statement 2022

Executive Compensation

Named Executive Officers

Our named executive officers ("NEOs") for 2021 are:

 

Douglas J. Pferdehirt

Age: 58

Position Held in 2021:

Chair and Chief Executive Officer

 

Alf Melin

Age: 52

Position Held in 2021:

Executive Vice President and Chief Financial Officer from January 25, 2021 to December 31, 2021

Justin Rounce

Age: 55

Position Held in 2021:

Executive Vice President and Chief Technology Officer

 

Barry Glickman

Age: 53

Position Held in 2021:

President, Surface

 

Jonathan Landes

Age: 49

Position Held in 2021:

President, Subsea

 

Maryann T. Mannen

Age: 59

Position Held in 2021:

Executive Vice President and Chief Financial Officer from January 1, 2021 to January 24, 2021, departed from TechnipFMC on January 24, 2021

 

Executive Compensation Overview  

Our vision to enhance the performance of the world’s energy industry is supported by the relentless drive of every individual at TechnipFMC. We are united by one single purpose: to bring together the scope, knowledge, and determination to transform our clients’ project economics.

Our executive compensation is designed to help us achieve our vision by:

►    Motivating our executive officers to achieve and exceed our short-term and long-term goals and objectives

   Aligning the interests of our executive officers with the interests of our shareholders by focusing our executive compensation program on drivers of sustainable shareholder value and by ensuring a majority of executive compensation is at-risk

   Providing market competitive levels of compensation to help us retain and attract exceptionally talented individuals who can deliver on our vision

    Paying for performance by aligning performance objectives with our strategy and shareholder interests and rewarding executives when superior performance is achieved

 

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TechnipFMC Proxy Statement 2022

 

Changes to our Executive Compensation Program Based on Shareholder Feedback

Our Compensation and Talent Committee values shareholder feedback, carefully reflecting on the results of shareholder advisory votes and input received during shareholder engagement. At our 2021 annual general meeting of shareholders, 84.6% of votes cast approved our 2020 executive compensation program as disclosed in our 2021 Proxy Statement.

Our Board and executive leadership were pleased with the support of our executive compensation program and continued to engage with our shareholders to receive valuable input on our program.

Listed below are key changes to our executive compensation programs in 2022, both as part of our annual review process as well as in response to shareholder feedback:

Include Return On Invested Capital (“ROIC”) in Performance Based Long-Term Incentive Plan

We will reintroduce ROIC as a performance measure for the 2022 long-term incentive award grant, in addition to relative TSR (each weighted at 50% of our performance based Long-Term Incentive Plan).

 ROIC will be calculated based on a three-year average net operating profit after tax divided by a three-year average invested capital, and will assess our profitability and how effectively the Company uses capital over the three-year period to generate income.

 The relative TSR metric is based on equity returns, both share price performance and dividend distributions relative to an external peer group.

We believe an equal weighting of ROIC and relative TSR provides clear line of sight for our executive officers to long-term financial performance and shareholder value creation, and is strongly supported by our shareholders.

Increase the rigor of the Relative TSR payout scale in our Long-Term Incentive Plan

We will increase the rigor of the relative TSR payout scale in our long-term incentive plan. For the 2022-2024 plan, the relative TSR component of the plan will pay at target when achieving a 50th percentile position versus our relative TSR Peer Group (our current plan pays out at target when achieving a 42nd percentile position versus our relative TSR Peer Group). This change will more closely align payouts with equity returns experienced by shareholders.

Executive Compensation Practices

Our compensation practices are designed to align with shareholder interests and incorporate strong governance practices that support the guiding principles of our executive compensation program, which include the following:

Attract talented individuals by providing market competitive levels of compensation
Retain our leaders by incentivizing them to deliver on our vision
Align to our pay-for-performance philosophy
Link the interests of our executive officers with the interests of the Company and shareholders
Align executive officers’ interests with our long-term financial and strategic objectives
Maintain flexibility to better respond to energy industry cycles
Encourage prudent risk-taking by our executives

 

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TechnipFMC Proxy Statement 2022

What We Do:   What We Don’t Do

 Pay for performance by aligning performance measures with our strategy and shareholder interests

 Provide the majority of NEO compensation as performance-based, “at-risk” compensation

 Maintain a claw-back policy in the event of malfeasance or fraud

 Require robust executive and director share ownership requirements

 Engage an independent, external compensation consultant

 Benchmark compensation against relevant global and industry peer groups

 Cap PSU payout at target when relative TSR exceeds peers’ TSR but absolute TSR is negative

 

 No single-trigger vesting upon a change-in-control

 No guaranteed bonuses

 No uncapped incentives

 No tax gross-ups on any severance payments

 No excessive perquisites, benefits, or pension payments

 No discounting, reloading, or repricing of stock options

 No hedging and pledging of Company securities

For additional details regarding our executive compensation program, please see the section entitled “Executive Compensation Discussion and Analysis.

Executive pay programs aligned with shareholders

The industry downturn due to the COVID-19 pandemic had a meaningful impact on the Company’s financial and stock price performance over the past several years. Our Chair and CEO’s three-year average realizable compensation is projected to be approximately $3.2 million less than target compensation (or 24% below target) for compensation granted in 2019 and 2021.

Declines in stock price have a direct impact on the value of Long-Term Incentives held by the executive. TSR is down approximately 56% between January 1, 2019 and December 31, 2021 and the executive’s LTI granted between 2019 and 2021 is worth approximately 37% less than the original target value as of the applicable grant date.


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TechnipFMC Proxy Statement 2022

 

Target compensation reflects the average of fiscal 2019, 2020, and 2021 base salary rate, target bonus, and target value of long-term incentives granted.

Realizable compensation reflects the average of fiscal 2010, 2020, and 2021 base salary rate, actual bonus, in the-money value of stock options based on the Company’s December 31, 2021 closing stock price of $5.92, value of restricted stock units based on the Company’s December 31, 2021 closing price, and value of performance share units based on the Company’s December 31, 2021 stock price and assuming target performance.

Shareholders have provided support for say-on-pay

We received more than 84% of shareholder support for our say-on-pay proposal at our 2021 Annual General Meeting of shareholders and have averaged more than 78% shareholder support over the past four years. The Compensation and Talent Committee strongly values the opinions of our shareholders as expressed in the say-on-pay vote and believes that the support received in 2021 and over the past five years demonstrates a strong alignment of our compensation program with our shareholders’ interests.

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TechnipFMC Proxy Statement 2022

Environmental, Social, and Governance

Our actions and goals in Environmental, Social, and Governance (“ESG”) derive from our foundational beliefs, with a close tie to Sustainability: We act responsibly, always considering our impact on the planet, people, and communities in which we operate.

Our decisions regarding corporate responsibility, governance, and sustainability are founded on the principles that guide our Company. Our core values provide the framework for all of our decision making and are based on our Foundational Beliefs. Each of the three pillars of ESG – Environmental, Social, and Governance – support us in being responsible corporate citizens and drive our ambitions to be more sustainable. In 2020, we formalized our ESG ambitions in our 2021-2023 ESG scorecard (“the scorecard”), with clear metrics designed to drive performance and accountability. As such, we have renamed the Corporate Responsibility and Sustainability section of the Report to Environmental, Social, and Governance.

While the scorecard measures specific achievements in ESG, our activities are not limited to those that are measured on our scorecard, or to actions and monitoring required by law. Our achievements in ESG, including achievements under each pillar of the ESG scorecard, and activities are presented over the following pages, including activities which are not reflected in the scorecard.

To better reflect our focus on corporate responsibility and sustainability at the Board level, the ESG Committee’s charter includes oversight of the Company’s policies, programs, and strategies related to environmental stewardship, responsible investment, corporate citizenship, human rights, and ESG risk management. This committee also reviews and monitors the development and implementation of ESG targets, standards, metrics, or methodologies, and reviews the Company’s public disclosures with respect to ESG matters.

Through ESG, we will promote a sustainable future for our Company in which TechnipFMC remains an inclusive and diverse workplace where our people are respected, valued, and inspired.

TechnipFMC follows the Ten Principles of the United Nations (“UN”) Global Compact in the areas of Human Rights, Labor, Environment, and Anti-Corruption. The UN Global Compact is also a call for action to achieve its 17 Sustainable Development Goals (“SDGs”). These societal goals are at the heart of the UN’s 2030 Agenda for Sustainable Development and are aimed at ending poverty, protecting the planet, and ensuring that all people enjoy peace and prosperity by 2030.

After evaluation, we have aligned our targets with the UN SDGs for which we believe we can achieve the greatest positive impact, given their relevance to our business and sustainability strategy. The application of these SDGs throughout this section are identified by the SDG icon labels.

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TechnipFMC Proxy Statement 2022

A snapshot of our 2021 progress towards our ESG goals in our 2021-2023 scorecard is set out below. Based upon our overall performance we believe we achieved 120% of our requirements for this year’s ESG targets and initiatives. Detailed explanation of our progress is set out in the respective Environmental, Social, and Governance sections below. 

 

Board Oversight of Environmental, Social, and Governance topics

Our Environmental, Social, and Governance Committee (the “ESG Committee”) reviews and monitors the development and implementation of ESG targets, standards, metrics, or methodologies, and reviews the Company’s public disclosures with respect to ESG matters. Our Board of Directors receives regular updates and recommendations from our ESG Committee.

Areas of oversight include:

Review policies, programs, and strategies related to environmental stewardship, responsible investment, corporate citizenship, human rights, and ESG risk management.
Review and monitor the development and implementation of targets, standards, metrics, or methodologies that the Company may establish from time to time to assess and track the ESG performance of the Company, including any environmental, social, or community projects undertaken by the Company and any related actions with respect to its employees, communities, and other stakeholders, taking into account the impact of such performance and actions on the reputation of the Company and their consistency with the Company’s ESG strategy.

 

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TechnipFMC Proxy Statement 2022

Review the Company’s public disclosures with respect to ESG matters, including any ESG disclosures for inclusion in the Company’s Annual Report and other documents which are intended to be disclosed to the public and/or the Company’s shareholders, and the Company’s engagement with shareholders, including any proposals, concerns, and other ESG issues that shareholders wish to bring to the Company.

Core Values and Foundational Beliefs

Our core values are the drivers that guide how we act in a distinctly TechnipFMC way so we can deliver on our purpose and achieve our vision. We bring our values to life through our behaviors – specific, observable, and measurable actions.

 

Our core values

 

 

Realizing possibilities 

 

Achieving together

 

Building trust

 

The heart of everything we do

 

We strive for ever better We work as one team We listen to improve
We take initiative We share knowledge We partner constructively
We learn from success and failure We embrace diversity of thought We seek to outperform

 

Our Foundational Beliefs are the cornerstone of our values that describe how we fundamentally do business and what we never compromise on, no matter the circumstances.

Safety



We will not compromise on health, safety, and security.

 

Respect



We treat everyone honestly, fairly, and courteously.

 

Integrity



We hold ourselves to the highest moral and ethical principles.

 

Sustainability



We act responsibly, always considering our impact on the planet, people, and communities in which we operate.

 

Quality



We deliver the highest quality in everything we do.

 

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TechnipFMC Proxy Statement 2022

Environmental

Each of the three pillars of our ESG strategy is rooted in Sustainability, one of our Foundational Beliefs, which simply states: We act responsibly, always considering our impact on the planet, people, and communities in which we operate.

It is our policy that we will not compromise on safety, health, security, or the environment to achieve our financial, project, service, and manufacturing objectives. Through this, we are committing our resources and expertise to continually assess and mitigate potential pollution related to environmental impacts from our activities, through better design, process improvement, and efficient technologies. We operate our business in a manner that minimizes the impact of our operations on the environment and develops sustainable solutions to reduce carbon emissions and our overall environmental footprint.

Our environmental program at TechnipFMC is directed to protecting the environment where we operate, identifying and evaluating environmental risks to mitigate and prevent pollution by implementing controls, including identification of and compliance with applicable environmental regulations, and by using natural resources efficiently.

We measure our success and promote the continued improvement of our environmental management system through the reduction of environmental incidents and our environmental footprint through clear and meaningful key performance indicators to enhance our environmental performance.

This Environmental section details our efforts to mitigate the impact we have on our planet. The scorecard contains metrics related to our environmental performance, and demonstrates how we are taking greater responsibility in playing our part in the journey to a net zero-carbon society.

The scorecard, which is published annually and tied to bonus schemes throughout the Company to encourage positive behaviors, covers three distinct areas of our environmental efforts: Scope 1 and Scope 2 Greenhouse Gases (“GHG”) emissions, waste, and water management.

Our environmental actions and commitments are not limited to those covered by the scorecard. We have set other indicators that measure our environmental footprint and potential risks.

Our scorecard Commitments

Our carbon footprint: Scope 1, Scope 2, and Scope 3 emissions

Our 50 by 30 target – to reduce our Scope 1 and Scope 2 GHG emissions by 50% by 2030 was announced in November 2020 and has been adopted into our ESG scorecard. It covers CO2 equivalent (“CO2e”) emissions from fuel combustion as well as emissions from the purchase of electricity, heat, cooling, and steam by the Company for its own use.

The Spin-off of Technip Energies had a significant
impact on the size and nature of our operations. To promote fair and relevant reporting, a recalculation of the 2017 base year was required to deduct Technip Energies’ emissions. Following our GHG Management Methodology, and in alignment with the GHG Protocol Corporate Accounting and Reporting Standard, TechnipFMC has completed this recalculation and the scorecard and 50 by 30 targets now reflect this adjusted base value and the company we are today. We are constantly striving to achieve these targets, taking into account the evolving market, and the availability of renewable energy sources which play an important role in meeting the new targets.
 

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TechnipFMC Proxy Statement 2022

 

To meet our target, we are currently working on several initiatives. Our vessel management team, OneFleet, has conducted an evaluation on the efforts needed to reduce Scope 1 emissions from fuel consumption and identified initiatives such as the upgrade of vessels and use of alternative fuel, in alignment with commercial and regulatory factors. Under Scope 2, some workplaces are evaluating the installation of solar panels to provide energy to the facility as well as evaluating the availability of renewable sources in the current energy source.

In 2021, we implemented a Scope 3 GHG Management standard that defines the methodology to account for the GHG emissions from our value chain. We also conducted a review of Scope 3 and agreed on the categories on which the Company will report in 2022. Scope 3 covers CO2e emissions from purchased goods and services, business travel, treatment of waste generated at our workplaces, transportation and distribution, and leased assets when these are not considered within Scope 1 and Scope 2. These emissions will be reported in the Corporate HSE reporting system. The Company has selected 2019 as its base year for Scope 3 because it is the year that best represents our value chain relationship before the challenges posed by COVID-19. TechnipFMC estimated Scope 3 GHG emissions from some of the categories for 2019 (e.g., business travel, purchased goods) within the boundaries established.

TechnipFMC calculates Scope 1 and 2 GHG emissions in alignment with the GHG Protocol Corporate Accounting and Reporting Standard. The inventory includes GHG emissions from the workplaces where TechnipFMC has operational control. Activity data from fuel purchased and energy consumption is collected and reported on a periodic basis and published emission factors are used to calculate the Scope 1 and 2 GHG emissions. Scope 2 emissions are calculated following the location-based method. After evaluating the data available and assessing the appropriate level of detail to influence Scope 3 GHG emissions in the supply chain, it was decided that TechnipFMC will gather direct consumption data from its largest suppliers, who represent approximately 85% of TechnipFMC’s weight of goods procured (about 10% of suppliers by count). Scope 3 GHG emissions for the remainder of the supply chain will be estimated based on the country of supply and goods procured. Scope 3 GHG emissions associated with the transportation of goods will be calculated based on weight, distance, and mode of transportation in most instances when dedicated transportation is hired by TechnipFMC, in which case emissions will be calculated based on fuel consumption. Our Global Travel team worked with our main vendors to obtain data for 2019 to calculate Scope 3 GHG emission for business-related travel, based on employee population distributions correlated to travel volumes and spend. Data from 2019 provides a more accurate reflection of business travel than data from 2020, which was affected by the COVID-19 pandemic. Scope 3 GHG emissions from business travel from 2019 through 2021 will be calculated based on Spend Method and use Distance Method thereafter. Per the boundaries set for business travel, the mode of transport included in the baseline calculations and targets are air, rail, and use of rental cars for business purposes. Air travel data will be received by our global, primary Travel Management Company and will consider origin and destination only. Car mileage will be received by our two primary global suppliers, capturing more than 80% of known volume.

As described above, our 50 by 30 target has been adjusted to the 2017 baseline which changed from 677 Ktonnes CO2e to 312 Ktonnes CO2e. Our performance is now assessed against a lower recalculated target of 156 Ktonnes CO2e. Our commitment remains unchanged in reducing 50% of our Scope 1 and 2 GHG emissions by 2030. As of the end of 2021, the total Scope 1 and Scope 2 GHG emissions were 279 Ktonnes of CO2e versus 338 Ktonnes of CO2e reported in 2020.

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TechnipFMC Proxy Statement 2022

 

 

* Results reflect adjusted 2017 baseline. 

The reduction in GHG emissions is mainly linked to operational initiatives. Our OneFleet team has implemented measures to increase energy efficiencies in our vessels, and one of the vessels underwent an upgrade by installing a hybrid battery system in 2021. This system reduces the number of engines running in operational mode, reducing fuel consumption and, thus, the Scope 1 GHG Emissions. It also brings savings on maintenance, cost of third party service and spare parts.

We continue engaging with our business units, functions and workplaces to identify opportunities to reduce our consumption of fuel and energy and increase our efficiency, and identify key workplaces with higher GHG emissions to focus on reduction opportunities.

The table below describes the annual quantity of Scope 1 and 2 GHG emissions resulting from activities the Company is responsible for and has operational control over, reported in tonnes of CO2e, reflecting the adjusted 2017 baseline. The Scope 2 GHG emissions are calculated following the location based method, which reflects the average emissions intensity of the grids that supply the energy to our workplaces.

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TechnipFMC Proxy Statement 2022

 

Total GHG
Emissions
(in
Tonnes CO2
equivalent)
2019* 2020* 2021*
Scope 1 Scope 2 Scope 1 Scope 2 Scope 1 Scope 2
Offices 478 7,719 317 9,107 2,015 3,662
Manufacturing/ Services/Fleet 255,949 34,993 291,539 37,046 236,083 37,163
GHG Emissions
by Scope
256,427 42,712 291,856 46,152 238,098 40,825
TOTAL GHG
Emissions
299,139 338,008 278,923

 

* Results reflect adjusted 2017 baseline. 

Our fleet management team is implementing a plan to reduce its GHG emissions by 50% by 2030 taking into consideration energy efficiencies, vessels upgrade, and renewable fuels, as they become available in appropriate markets.

Scope 1 and 2 GHG emissions from workplaces of the Company in the United Kingdom represent 3% from the Scope 1 and 2 GHG emissions for the total Company.

GHG Emissions Intensity

Our 50 by 30 target is based on an absolute value of Scope 1 and 2 GHG emissions. Due to the nature of our business, it is also important to assess our emissions based on our activity to understand our emissions when project activity increases. Currently, the GHG emissions intensity factor is calculated by dividing the total Scope 1 and Scope 2 GHG emissions by the hours worked. Hours worked has been acknowledged as being most representative of the Company’s overall activity and is frequently used in HSE standards in the industry.

 

GHG Emissions Intensity
(CO2e/workhours)
2019 2020 2021
4.78 5.90 5.61

Energy Consumption

The aggregate of (i) the annual energy consumed from activities for which the Company is responsible including the combustion of fuel and the operation of any facility) and (ii) the annual quantity of energy consumed resulting from the purchase of electricity, heat, steam, or cooling by the Company for its own use for the year ended December 31, 2021 was 1,063,845 MWh. 7% of this energy consumed came from renewable sources. Our workplaces are working to increase this percentage. There is a reduction of 17% of the energy consumed in 2021, in comparison from the energy consumed in 2020.

Energy consumed by the Company in the United Kingdom represents 4% of the total energy consumed by the Company.

The energy consumed by workplaces of the Company in the United Kingdom is 4% of the total energy consumed by the Company worldwide.

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TechnipFMC Proxy Statement 2022

 

2021 Total Company % Energy Consumed in the UK
Energy Consumed 1,063,845,000 kWh 4%
Energy Consumed from purchase
of electricity, heat, steam, or
cooling
130,770,957 kWh 11%

 

Our clients’ carbon footprint

We aim to help reduce our clients’ carbon footprint. In the scorecard, we target 33% of our orders to be linked to lower carbon intensity offerings. We will also establish carbon reduction targets for our clients, baselined to 2020. In 2021, we exceeded our expectations by reducing our client’s carbon footprint by 22% against our 2023 target of 33%.

We have lower-carbon solutions for the energy industry. In Subsea, our Subsea 2.0™ products and all-electric offering result in lower carbon footprints. In Surface, iProduction™, E-Mission™, electrification, and methane guiding principles have helped to reduce emissions. As of the end of 2021, lower-carbon solutions such as these made up 20% of our order book.

Water and waste management

We are working towards meeting the 2023 targets of a 10% reduction in water consumption and a 10% increase in the amount of waste generated at our workplaces that goes for recycling or re-use.

At TechnipFMC, we prioritize water conservation and circular water management. We have internal requirements for wastewater management and we promote wastewater treatment and water reuse in our workplaces.

For 2021, the first year of the scorecard, we exceeded our expectations on water consumption by reducing consumption by 9% against a three-year 10% target.

* Results reflect adjusted 2017 baseline.

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TechnipFMC Proxy Statement 2022

 

Reducing material waste and promoting recycling is a key part of our environmental management system and operating strategy. We strive for circularity in our business and operations by reducing material use at source, minimizing waste generation, and increasing waste recycling and reuse. Workplaces worked diligently to look at areas of opportunities to implement initiatives to reduce waste generation and increase waste recycling and material reuse.

The Company has targets to increase the recycling and reuse rate at our workplaces as part of our ESG scorecard. In this area, the first course of action is to reduce waste generation. As of the end of 2021, waste generation was reduced by 22% in comparison with 2020. The recycling rate slightly reduced to 46% in 2021.

 

* Results reflect adjusted 2017 baseline.

The Company is creating a Global Water Management program and a Global Waste Management program to continue enhancing performance in these areas by implementing an assessment at each workplace and a hierarchy of decision making for water consumption and reuse as well as waste minimization, which will include the identification of recycling and reuse opportunities.

Beyond the scorecard

Our efforts under the Environment pillar go beyond those detailed in the scorecard, as we demonstrate in the following pages.

Climate Change

We created TechnipFMC with the vision to drive real change in the energy industry. Our corporate strategy has always been focused on the successful delivery of this vision, while our Foundational Beliefs represent our fundamental view that how we do business is as important as why we do business. Together, our strategy and our beliefs drive our ESG practices to reshape the industry for a sustainable future.

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TechnipFMC Proxy Statement 2022

 

Our Environmental focus is built upon reducing the carbon footprint of both TechnipFMC and our clients, as well as a focus on waste management. In our business activities and projects, we give priority to renewable energies and sustainable materials and we promote water reuse and encourage recycling.


 

Since 2011, our Dunfermline site in the UK has generated its own power from a wind turbine


 

In Brazil, seven of our eight sites operate with 100% electricity from hydro and renewables


 

In Singapore, we’re generating electricity and reducing CO2 emissions with 6,000 solar cells

Renewable Resources

We are already using certain renewable resources for our own energy consumption. Since 2011, we have generated electricity using a wind turbine to power our manufacturing operations in Dunfermline, Scotland. Our facilities in Brazil began with changing to lower energy light bulbs and currently seven of TechnipFMC’s eight operating facilities in Brazil operate with electricity that is 100% from the country’s vast hydro-based resources and other renewable sources.

During 2021, solar panels have been installed in a number of our workplaces and our facility in Singapore installed more than 6,000 solar cells that generates more than 2,945,000 kWh of electricity each year which represents 30% of the electrical power used at the site and reduce CO2e emissions by 1,260 tons each year. In addition, 80% of the shop floor lighting has been replaced with lower energy LED bulbs, reducing electricity consumption by 62%. Our facility in Hyderabad, India, installed solar panels generating up to 10,000 KWh of solar energy per month and providing up to 15% of the electrical power for the plant.

As more resources become available, we will look to utilize hybrid battery and biofuel solutions as transportation fuel, with the potential for significant conversion of our offshore fleet.

Air Emissions

As part of our environmental management approach, in addition to GHG, we monitor other air emissions on a monthly basis, including:

Sulphur oxides (SOx);
Nitrogen oxides (NOx); and

We monitor air emissions from our workplaces in line with our commitment to manage and minimize the impact of our operations on local air quality.

Governance

In addition to our ESG Committee, TechnipFMC has a non-Board level structure in place to oversee the governance of our ESG strategy. The structure consists of an ESG Steering Committee, an Environmental Operating Committee, and an Environmental Working Group (“EWG”).

The ESG Steering Committee is composed of members from our Executive Leadership Team, which reports to our Board of Directors, as well as from operational and functional management. The main responsibility of this committee is to provide focus on corporate responsibility and sustainability, direction and long-term strategy toward our plans of reduction of GHG emissions, to ensure we have proper policies, programs, and strategies related to environmental stewardship, responsible investment, corporate citizenship, human rights, and ESG risk management. This committee also reviews and monitors the development and implementation of ESG targets, standards, metrics, or methodologies, and drafts the Company’s external communications with respect to ESG matters.

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TechnipFMC Proxy Statement 2022

 

The Environmental Operating Committee is composed of members from our business units and functions that meet to clarify workstream objectives, determine goals, KPIs and milestones; decide on organization and processes related to the environment as part of our ESG strategy; define mitigations and elevate risks and concerns as well as opportunities to the ESG Steering Committee; review and agree on standards, scopes, and products; align their functions in the strategy; and facilitate the implementation of plans to achieve goals and enable targets to be met.

The final part of the structure is the EWG. The EWG reports to the Health, Safety, Environment, and Security (“HSES”) team at corporate level and coordinates a network of HSES specialists from all regions and business units. EWG responsibilities include the setting of environmental programs, supporting the enhancement of environmental performance, and developing global environmental initiatives involving all our regions and projects to reduce our environmental footprint. From the EWG, several working groups are formed to deal with specific topics, such as one created to review the GHG training materials, and one formed to review the tool used to calculate GHG emissions for projects and products.

As part of the environmental governance framework, environmental data is collected on a monthly basis through our Quality, Health, Safety, Environment, and Security (“QHSES”) reporting system from each workplace where TechnipFMC has operational control for both, whether owned or leased workplaces. This data reflects the environmental performance of entities involved (e.g., offices, manufacturing, yards and spoolbases, and fleet operations). A monthly report is distributed to our business units and functions leadership to inform on current conditions and identify opportunities for improvement in managing our environmental footprint in the areas of GHG emissions, energy consumption, waste generation, water consumption, and environmental incidents. These monthly reports are discussed in the EWG meetings to improve reporting metrics, identify opportunities for improvement, and promote data quality and completeness.

Management Systems and Standards

All workplaces and projects within the Company are managed by dedicated QHSES managers and directors, with a team of QHSES professionals responsible for the application of the environmental rules in their respective areas to enable our environmental requirements to be well implemented. Our Code of Business Conduct requires managers to inform employees, contractors, and suppliers of applicable environmental rules, procedures, and expected behaviors, and that people reporting to them receive the required environmental training. Our Code of Conduct is discussed further in the section entitled “Our Compliance Program.

A key element of the Company’s environmental program is our Global Environmental Management Standard, applicable to all our workplaces. The standard details the minimum requirements for identifying any potential environmental risk of our activities, products, and services, and opportunities to manage the related impacts by identifying and implementing appropriate controls, improving as a consequence our environmental performance. This process allows us to identify, monitor, and mitigate environmental risks at every business level. The standard is fully in line with the ISO 14001 requirements and in compliance with all applicable environmental regulations.

In 2018, TechnipFMC adopted a Global Greenhouse Gas Management standard to promote a responsible and consistent approach to GHG management across the Company and enhance the capabilities in GHG reduction in our business. During 2021, the standard was revised to update and clarify the boundaries of GHG accountability reporting; specify sources of the GHG emissions and provide resources for data collection; and specify responsibilities, among other criteria. The standard sets the methodology to calculate Scope 1 and 2 GHG emissions from fuel and electricity consumption. The revised standard also added the reporting requirement on refrigerants within Scope 1. It further specifies the source for the use of emission factors to align with industry databases appropriate for the activity being reported. Emission factors used are from databases such as the Department for Environment, Food, & Rural Affairs, the Environmental Protection Agency, and the IPCC Guidelines for National Greenhouse Gas Inventories.

The Company established the Scope 3 GHG Management standard in 2021 to promote completeness and consistency in the accounting for and reporting on Scope 3 GHG emissions from the Company’s value chain. It describes the

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methodology that is followed to select the categories the Company considers in the Scope 3 GHG emissions inventory, their reporting boundaries, and how these emissions are calculated and reported.

In addition to reducing emissions in our business through our product offering, we have also implemented standards for our workplace to manage and reduce our environmental and carbon footprint. Our GHG Mitigation Hierarchy of Control was established in 2021 to provide the Company with the process to determine the best actions to reduce GHG emissions at our workplaces. It describes the carbon management hierarchy to avoid, reduce, replace or, as a final option, offset, the Company’s carbon emissions. Our Green Office program was revised during 2021. This program guides offices across the organizations to identify and implement initiatives to manage their environmental footprint including lowering GHG emissions, reducing water consumption and waste generation, and increasing waste recycling and material reuse. It is the objective of this program that offices continuously assess and improve their environmental footprint.

We continue to commit resources and expertise to eliminate hazards, reduce risks, and prevent injury, ill health, and environmental pollution related to our activities through design, process improvement, and technologies. As such, 37 entities had an active ISO 14001 certification during 2021. The management system used to certify these entities is the same used across the organization. As with the environmental performance data, data on ISO certified workplaces is shown after the Spin-off from Technip Energies.

Environmental Events

We have a consistent procedure for recording, reporting, and investigating environmental incidents, using our QHSES incident management and analysis tool. In case of an unexpected environmental event, containment and mitigation measures are immediately initiated. Incidents are immediately recorded and assigned an “actual” and “potential” impact rating. We formally investigate any potential or actual event then implement corrective actions to prevent reoccurrence. Events deemed as having high-level consequences are notified to the management team through a “first alert” process and all high-potential consequence incidents are subject to in-depth investigation.

In order to manage our environmental incidents effectively, we also monitor our total environmental incident rate (“TEIR”) (by reference to 200,000 worked hours) and our total relevant incidents rate (“REIR”) (by reference to 200,000 worked hours). The total REIR captures all significant environmental incidents within our responsibility. This indicator enables us to understand the effectiveness of our incident management system. The REIR also assists us in monitoring our actual risk in terms of environmental incident management. It covers all incidents of a certain environmental impact, triggering management attention, including incidents which:

(a) involve a discharge/release above regulatory or client limits;
(b) reach warning levels provided by regulatory agencies;
(c) may cause public concern.
(d) impact work; and
(e) require external support for containment or clean-up.

The REIR for 2021 is 0.01 versus 0.09 in 2020. The Company did not have any significant incidents with an adverse impact on the environment in 2021.

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Social

The second pillar of our ESG strategy is Social. Its roots are also in Sustainability, one of our Foundational Beliefs, with particular reference to our impact on people and the communities where we operate. Our Social actions are also closely linked to two of our other Foundational Beliefs, Integrity and Respect. Our actions seek to empower our people to be the difference, while helping TechnipFMC exhibit the power of inclusion by exercising the value of diversity.

There are three Social commitments on our ESG scorecard which drive intentional actions in support of our inclusion and diversity journey – Awareness & Culture, Fair Representation, and Community.

Our Social actions and commitments are not limited to those covered by the scorecard. The scorecard goals and our ongoing progress are detailed below.

Our Scorecard Commitments

Fair Representation

TechnipFMC is committed to improving the recruitment of female graduates and the proportion of underrepresented populations in senior management. As at the end of 2021, our global graduate program consisted of 47% female participants – exceeding our scorecard target of 45% by the end of 2023.

Under our 2021-2023 scorecard, we also aim to increase underrepresented populations in senior management: our target is to increase the percentage of females in senior management to 26% by the end of 2023. As at the end of 2021, we exceeded our targets, with female representation in senior management standing at 21%. We further aim to increase the percentage of underrepresented nationalities (nationalities outside North American and European countries) and U.S. minorities in senior management to 20%, and as at 2021 we have already met our target, with 20%. The protection of personal information varies widely from country to country thereby making it difficult to track certain characteristics. Instead, we link to nationality and U.S. minorities, encouraging the development of local talent around the globe. Given the evolving nature of this population, we will continue to keep leadership succession high on the agenda to maintain or further improve fair representation.

A goal to designate a minimum of one female to each Leadership Succession Plan and resulting efforts to identify internal talent early has translated into an increase in depth and representation of females and underrepresented nationalities and U.S. minorities. We have increased representation of females on our Executive Leadership Team by the promotion of our Executive Vice President People & Culture and Executive Vice President of New Energy Ventures to the team in 2021.

Awareness & Culture

In February 2021, our Inclusive Leadership Learning journey began for all managers. The launch of this curriculum

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focused on the development of inclusive behaviors, the importance of allyship, and eliminating unconscious biases. This initiative was recognized by employees by winning the Company’s internal 2021 Driving Change Awards in the Employee Development and Engagement category.

As part of the scorecard, our goal is for 100% completion of this e-learning by managers by 2023. In 2021, we exceeded our expectations with 100% of senior managers and 54% of managers completing the e-learning, against our 2023 target of 100%.

Community

TechnipFMC is focused on making a long-term, positive impact in the communities where we live and work. We encourage our employees to actively engage in ‘giving back’ through active engagement in health, education, and local employment. Initiatives include our iVolunteer global volunteering program, which encourages employees to perform four hours of volunteering each year at the Company’s expense, and promoting science, technology, engineering and mathematics (“STEM”) careers.

We are working towards participating in 800 volunteering initiatives and 150 STEM initiatives by 2023. As at the end of 2021, we had achieved 136 volunteering and 68 STEM initiatives, being 17% and 45%, respectively, towards our 2023 ESG scorecard goal. These levels of participation occurred in an environment that remained largely impacted by COVID-19’s effects on in-person contact and events, which limited traditional volunteering opportunities and STEM events. However, our employees still responded with their typical dedication and generosity. In 2022, we will introduce a global solution that will provide endless opportunities and flexibility in engaging our employees and building our philanthropic story.

Beyond the Scorecard

There are many initiatives that we do not measure in the scorecard, such as our people’s charitable initiatives and activities, and more formal schemes such as career development. We explore some of those areas over the following pages.

Community Highlights

 

COVID-19 Relief Support in India

Employees in our Hyderabad, India, location donated 5,000 three layered reusable face masks and 1,500 face shields to Rachakonda Police Department.

   
 

Ghana’s Pink Volunteers - Breast Cancer Walk and Run

In October 2021 our Ghana employees volunteered and raised funds to promote Breast Cancer Awareness and alleviate the cost of treatment for cancer patients who cannot afford the cost of treatment.


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TechFest’s STEM Next

TechnipFMC sponsored TechFest’s STEM Next essay competition in Scotland for students aged 16 to 18 which aims to explore the future of STEM research and encourage young people to enter into STEM careers.

   
 

STEM Day goes BOLD-ly into the virtual world

TechnipFMC’s BOLD employee resource group held its 4th Annual STEM Day and transformed the in-person event into a virtual experience for nearly 400 students across the Greater Houston area.

   
 

DIY Face Shield Project

TechnipFMC’s Asiaflex Products team in Malaysia made 1,500 face shields for front-line staff at a COVID-19 quarantine center.

   
 

Making a difference together

TechnipFMC’s Measurement Solutions document controllers collected garbage in the walking paths around various neighborhoods in Kongsberg.

 

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STEM Lectures in Brazil

TechnipFMC’s engineers volunteered with the Project Enterprising Trail and young apprentices in Brazil on STEM topics that focused on LEAN and women in STEM.

 

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Governance

 

The third pillar of our ESG strategy is Governance, which is touched by all of our Foundational Beliefs: Safety, Quality, Sustainability, Integrity and Respect.

 

Each of the commitments covered in our ESG scorecard is tied closely to making a positive impact on our people and the communities where we operate – leadership in HSES, human rights due diligence, and ethics and compliance training – but also links to the aspirations of our other Foundational Beliefs, because how we do business is as important as why we do business.

 

Our Governance actions and commitments are not limited to those covered by the scorecard. Our progress towards our scorecard commitments are detailed below.

 

Our Scorecard Commitments

 

Leadership in HSE
At TechnipFMC, we are committed to upholding a strong safety culture by rolling out Serious Incidents and Fatalities Prevention (“SIFP”) programs. For 2021, the first year of the scorecard, we exceeded our expectations by 30%, with 244 SIF projects suggested out of a three-year target of 400.

 

Our SIFP program is a cornerstone of our prevention mindset. It is a proactive, high-impact risk prevention program which aims to shift the organization’s focus from reactive to proactive risk reduction. The objectives are to prevent serious injuries, to proactively reduce our overall risk profile by putting mitigation strategies in place, and to bring visibility to critical issues requiring the support of leadership.

 

Our further actions in HSE are discussed in greater detail in the Health, Safety, and Environment section of this report in the following pages.

 

Human rights due diligence
We are raising the bar on workers’ welfare through human rights audits in high-risk countries. Under our ESG objectives, we have undertaken a commitment to complete 100% of the human rights audits scheduled each year on our 100 most significant suppliers in countries where there are high risks of human rights abuses. In 2021, we laid the groundwork for all of the audits (developing questionnaires, selecting suppliers, creating an audit toolbox, etc.) and completed the first phase of the audits.

 

As at the end of 2021, we met our expectations for the first year of our scorecard by completing 33% of the audit of our most significant suppliers. The audit consists of three stages, of which we have completed the first: we issued our Self-Assessment Questionnaire (that was developed based on industry standard best practices) and received a 100% response rate from suppliers. Based on these questionnaire responses, and with the use of due diligence tools, we then completed a due diligence review of all 100 suppliers, and met our 2021 goal of completing the first round of desk audits for selected suppliers. Our goal is to complete the second and third stages of the audit during the years 2022-2023, comprising desk audits and on-site/virtual audits for the selected suppliers. In addition, an annual review will be conducted each year going forward to update the selected supplier list as needed.

 

Ethics and compliance
Our Code of Business Conduct helps us recognize and address the ethical dimensions of our everyday decisions. It provides practical guidance about what is expected of all of us. Board oversight of our ESG strategy and executive remuneration further ensures fairness. This commitment targets 100% completion of our Ethics and Compliance e-learning by all managers every year. We systematically roll out the program and are measuring completion rates of the courses.

 

For 2021, the first year of the scorecard, we met our expectations 100%, with all managers taking required ethics and integrity courses this year.

 

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Beyond the Scorecard

 

Our efforts under the Governance pillar go beyond those detailed in the scorecard, as we demonstrate in the following pages.

 

Our Compliance Program

How TechnipFMC conducts its business across the world is as important as why TechnipFMC does business. We act in accordance with our core values and our Foundational Beliefs in all that we do. We aspire to develop business relationships with like-minded partners who are guided by a similar set of principles of business conduct. Integrity is one of the most critical cornerstones of the way we conduct business, and we hold ourselves to the highest integrity principles, which drive our compliance program.

Our Code of Business Conduct is built on our Foundational Beliefs of safety, integrity, quality, respect, and sustainability, and gives us a common language and playbook for decisions and actions that help us live our core values. Available in 13 languages, our Code of Business Conduct helps us recognize and address the ethical dimensions to our everyday decisions. In addition to our Code of Business Conduct, we maintain a world-class compliance program that is designed on a risk-based approach and focuses on the following priorities:

  Anti-bribery and corruption: our standards and processes provide a clear and comprehensive framework for our business in all of the countries in which we operate, in compliance with all applicable laws.
  Human rights: the protection of human rights is an essential business principle we promote for our employees in the workplace and across our supply chain.
  Trade controls and foreign boycotts: we implement policies and procedures pertaining to international trade laws and regulations imposed by applicable authorities.
  Data privacy: we implement appropriate security and access measures to protect personal data stored in information systems.

Our compliance program is supported by a global team of professionals embedded across our organization, who are responsible for the provision of advice, counsel and training, as well as auditing of our program and its controls. This is designed to mitigate and monitor compliance risk in support of our operations. Our program is led by a Chief Compliance Officer, who reports dually to our Executive Vice President and Chief Legal Officer, and to the Chair of the Board of Directors’ Environmental, Social, and Governance Committee. Our Chief Compliance Officer regularly reports compliance matters to management and formally reports to the Committee quarterly. These reports include continuous enhancements to our compliance program and allegations regarding potential non-compliance with our Code of Business Conduct.

We believe it is up to all of us to uphold the principles in our Code of Business Conduct. We encourage employees and others to raise questions and concerns to ensure that we are leading by example. Suspected breaches of our Code of Business Conduct can be reported through various means, including through an independent third party via the dedicated reporting helpline. TechnipFMC has a zero-tolerance policy on retaliation against employees for reporting suspected violations of our policies or Code of Business Conduct.

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Anti-Corruption and Anti-Bribery Compliance Controls

 

The Company is committed to conducting business across the world ethically, lawfully, and in accordance with our core values and our Foundational Beliefs. Therefore, all employees, as well as our business partners and supply chain, are expected to conduct their activities in an ethical and lawful manner on a day-to-day basis.

 

All acts of fraud and corruption (including bribes, kickbacks, and self-dealing) are strictly forbidden. We compete fairly on the strength of our technology, service, and execution excellence. We do not tolerate corruption in any form and do not make or accept improper payments to obtain or retain business with those in government or the private sector, or as a reward for awarding subcontractor or supplier contracts. We are committed to complying with all international and national legislation against illegal payments, including prohibitions on facilitation payments (to expedite routine and administrative government action) except in extraordinary circumstances where the safety or security of an employee is in immediate danger.

 

We conduct due diligence of potential business partners before entering into a relationship to better enable us to identify partners that share our commitment to ethical business practices and partners whose other relationships do not create the appearance of a potential conflict of interest. Our Code of Business Conduct highlights our commitment to integrity, and in conjunction with our standards and procedures, we have implemented a variety of anti-bribery and corruptionrelated operational standards that translate our general principles into concrete operating procedures.

 

We have also developed an Anti-Bribery and Corruption Standard, which applies to all our directors, officers, employees, and contracted personnel, aimed at providing a clear and comprehensive operational framework for the conduct of our business in all of the countries in which we operate. The Anti-Bribery and Corruption Standard sets out the Company’s principles for strict compliance with applicable anti-bribery and corruption laws.

 

The Company pays particular attention to indicators that could cast doubt on the honesty and integrity of third parties involved in our business. We have developed a Business Partner Standard, which applies to all our directors, officers, employees, and contracted personnel. It establishes the due diligence requirements and procedures for third-party government intermediaries and joint ventures/consortia partners, and enables us to assess and manage bribery and corruption risks while conducting business globally.

 

We have a Gifts, Hospitality, and Travel Standard, which applies to all our directors, officers, employees, and contracted personnel, setting forth our rules related to the receipt or provision of gifts, hospitality, or travel, and establishing procedures for the approval, reporting, and accounting of such. The Gifts, Hospitality, and Travel Standard serves to assist employees in ensuring that gifts and hospitality, whether given or received as part of a usual courtesy of business, are not and cannot be considered as bribes.

 

We also have a Social Donations, Sponsorships, and Charitable Contributions Standard, which applies to all our directors, officers, employees, and contracted personnel, setting forth our rules relating to making contributions to our communities. As a responsible corporate citizen, TechnipFMC believes in contributing to the communities where we conduct business around the world by supporting worthy causes, donations, and activities. Under appropriate circumstances, social donations, sponsorships, and charitable contributions provide an important way for TechnipFMC to play a constructive role in the societies and communities in which we live, work, and conduct business. This standard, which applies to all our directors, officers, employees, and contracted personnel, sets forth our rules associated with these activities so that our contributions are not misused for improper purposes, such as to disguise illegal payments to government officials.

 

Our Code of Business Conduct and its related standards are applicable to all directors, employees, business partners, and supply chain members, as well as all of our business transactions, and all of our majority-owned or controlled subsidiaries. We will also use our best efforts to induce our joint venture and consortium members to adopt the standards or agree to abide by an equivalent set of standards. In sum, our compliance program is designed to effectively mitigate and monitor risks relevant to our enterprise to enable us to preserve the interests of our stakeholders in accordance with our core values and Foundational Beliefs. 

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Code of Business Conduct

 

Our Code of Business Conduct is built on our Foundational Beliefs and gives our directors, officers, and employees a common language and playbook for decisions and actions that help us live our core values. We are committed to establishing and maintaining an effective compliance program that is intended to increase the likelihood of preventing, detecting, and correcting violations of Company policy and the law. Moreover, we have a helpline in place for employees, officers, directors, and external parties to anonymously report violations of our Code of Business Conduct or complaints regarding accounting and auditing practices. Reports of possible violations of financial or accounting policies are reported to our Audit Committee.

 

We will disclose amendments to, or waivers of, our Code of Business Conduct that are required to be disclosed under the U.S. Securities and Exchange Commission (“SEC”) and NYSE rules or any other applicable laws, rules, and regulations. Any waiver of our Code of Business Conduct for our officers and directors must be approved by the Board or a relevant Board committee. We have not made any such waivers, and do not anticipate making any such waiver.

Human Rights

 

Respect is one of our Foundational Beliefs. It guides how we fundamentally do business and what we never compromise on, no matter the circumstances. We believe that everyone is entitled to honest, fair, and courteous treatment. We do not tolerate any form of modern slavery and we express a strong commitment for respecting human rights and are against the use of child, forced, indentured, or involuntary labor, regardless of where we conduct business.

 

Our Code of Business Conduct reflects our commitment to acting ethically and lawfully and recognizing human rights on a global basis. It is our policy that our Code of Business Conduct be shared and discussed with our clients, suppliers, and business partners to better explain our rules of conduct and reinforce our culture of accountability. We aim to develop business relationships with like-minded subcontractors, suppliers, and business partners who are guided by a similar set of principles of business conduct, and aspire to only do business with counterparties who respect human rights and uphold labor laws.

 

TechnipFMC has published its statement on slavery and human trafficking for the financial year ending December 31, 2020 in accordance with section 54 of the U.K. Modern Slavery Act 2015. This document is available on our website at www.technipfmc.com under the heading “About us > Ethics and Compliance > Slavery and Human Trafficking Statement.” Our statement addressing 2021 shall be published later this year on our website.

 

Our employees are encouraged and expected to report violations or suspected violations of our Code of Business Conduct. Various channels are available, including the option to report concerns to their managers, to anyone in the corporate compliance or legal department, the employee’s human resources representative, or an independent third party via a dedicated reporting helpline and website.

 

We treat all reports of suspected violations of our Code of Business Conduct confidentially and will share the information only with those who have the responsibility and authority to investigate and properly resolve the issue. In addition, we have a zero-tolerance policy on retaliation against employees for reporting suspected violations of our policies or Code of Business Conduct or for cooperating with an investigation. We encourage employees and others to raise questions and concerns to ensure that we are leading by example.

 

The Company endeavors to ensure compliance with human rights regulations and principles within the scope of our operations and in accordance with the following international human rights regulations and principles:

 

  The United Nations Guiding Principles on Business and Human Rights
  The 1948 Universal Declaration of Human Rights
  The International Labour Organization’s Fundamental Conventions regarding the freedom of association, the eradication of discrimination and forced labor and the abolition of child labor

 

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The Company also remains a member of the United Nations Global Compact.

 

The Company also adopted a Human Rights Standard setting forth recognized human rights principles so that our operations are executed in compliance with the same and so that everyone with whom we work is treated with respect and dignity. Our Standard codifies the Worker Welfare Principles developed by Building Responsibly. The Company remains a proud member of this group of leading engineering and construction companies that are working together to promote the rights and welfare of workers across the industry, representing more than 580,000 employees and operating in over 100 countries. We continue working on our human rights strategy to embed respect for human rights in our operations and business relationships and to promote the protection of human rights for our employees in the workplace and across our supply chain as a foundational business practice. We have created an internal Human Rights Working Group, bringing together our support functions and operations to foster and promote a better working environment for our employees and our suppliers. The group conducted an internal human rights risk assessment to assess our processes against international standards, Building Responsibly principles, and our clients’ human rights expectations. The assessment also looked at the standardization of our processes across the Company and at our human rights expectations towards our suppliers. For example, we have developed Suppliers and Subcontractors Integrity expectations including commitment to human rights principles and have started deploying these expectations with our partners, requiring adherence to the same in the execution of their operations. Also, we continue to assess how our company-wide due diligence processes and monitoring processes could be reinforced in this area.

 

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Corporate Governance

 

The Board believes that the purpose of corporate governance is to facilitate effective oversight and management of the Company to maximize shareholder value in a manner consistent with our vision statement, purpose, core values, Foundational Beliefs, Code of Business Conduct, and all applicable legal requirements.

 

The Board provides accountability, objectivity, perspective, judgment, and, in some cases, specific industry or technical knowledge or experience. In carrying out its responsibilities to our shareholders, the fundamental role of the Board is to ensure continuity of leadership; the implementation, understanding, and pursuit of a sound strategy for the success of our Company; and the availability of financial and management resources and the implementation of control systems to carry out that strategy.

 

Governance Guidelines and Key Board Practices

 

Our Corporate Governance Guidelines (“Governance Guidelines”) contain general principles and practices regarding the function of the Board and its committees. The Governance Guidelines establish a framework to guide the Board in its oversight responsibilities in a manner that is independent of management and aligned with the interests of our shareholders. The Board reviews these governance practices, the laws of England and Wales under which we are incorporated, the regulations, directives, and decisions of the European Union, the rules and listing standards of the NYSE, and the regulations of the SEC, as well as best practices recognized by governance authorities, to benchmark the standards under which it operates.

 

Key Elements and Practices

 

 

  Composition of the Board. Our Board seeks to attract professionals who are not only qualified under the governance rules pertinent to our Company but also bring diversity of thought and experience. Our ESG Committee considers multiple factors when determining whether a candidate is qualified to serve on our Board in order to achieve a balance between fresh perspectives and the deep knowledge and experience of our more tenured directors. As such, our ESG Committee often considers a candidate’s:

 

 

Experience in corporate management, as a board member of another publicly held company, and in finance and accounting and/or compensation practices

  Professional and academic experience relevant to our industry
  Leadership skills
  Cultural perspective and diversity of thought
  Ability to commit the time required for service on our Board

 

Board and Committee Evaluations. Each year our directors complete a self-evaluation to determine whether the Board and its committees are functioning effectively. Additionally, each of the Audit, Compensation and Talent, and ESG Committees conducts a separate evaluation of its own performance and the adequacy of its charter. These evaluations include an assessment of the diversity of talents, expertise, and occupational and personal backgrounds of the Board members. The ESG Committee receives comments from all directors and reports the results of the evaluations annually to the Board, as well as recommendations for improvements in the overall performance of the Board and its committees.

 

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New Director Orientation and Continuing Education. An orientation program has been developed for new nonexecutive directors, which includes written materials and meetings with our executive officers. The orientation program is designed to provide general information about our Board and its committees; a review of director duties and responsibilities; and comprehensive information about our industry, operations, strategies, and challenges. The Board believes that ongoing education is important for maintaining an effective Board. Accordingly, our Board encourages directors to participate in ongoing education, and reimburses directors for expenses incurred in connection with such education programs.

 

Retirement Policy. As further described in our Governance Guidelines, a non-executive director whose birth date occurs prior to July 1 must retire at the annual general meeting of shareholders of the Company during the year of such director’s 72nd birthday, and a non-executive director whose birth date occurs on or after July 1 must retire at the annual general meeting of shareholders of the Company the year following such director’s 72nd birthday. Our Board may waive this policy on a case-by-case basis on the recommendation of the ESG Committee if it deems a waiver to be in the best interests of the Company and its shareholders.

 

Director Share Ownership Requirements. Within five years following initial election to the Board, directors are required to own Ordinary Shares with a value equal to or more than five times the Company’s annual cash retainer paid to directors.

 

Shareholder Engagement

 

The Company annually seeks feedback through engagement with shareholders, and we continued this practice in 2021. Our relationship and ongoing dialogue with our shareholders is an important part of our Board’s corporate governance commitment. For our 2021-2022 engagement, we contacted proxy advisory firms and our top shareholders representing approximately 46% of our Ordinary Shares outstanding. Management, and in some instances, our ESG Committee Chair, held meetings with proxy advisory firms and shareholders representing approximately 16% of our Ordinary Shares outstanding.

 

Through these engagements, the Company received feedback on our strategic and financial performance, executive compensation, Board composition, and governance topics, as well as important environmental and social issues. Some shareholders did not require a meeting as they either indicated their support for our ESG, compensation, and governance practices or did not have questions regarding our ESG, compensation, or governance practices.

 

Furthermore, in early 2022, we also engaged our shareholders in order to discuss more broadly our Board leadership structure and diversity, general Board practices, our executive compensation program, and our sustainability efforts. We welcomed our shareholders’ feedback and suggestions in maintaining the balance between strengthening the link between pay and performance, retaining and motivating our executives, and appropriately compensating our executives for outperformance, while increasing long-term shareholder value.

 

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Board Alignment with Shareholder Feedback 

What We Heard 

What We Did 

Reinforce the link between incentive measures and business strategy and market conditions

   The majority of our long-term equity plan for our executive officers continues to be performance-based, consisting of 70% Performance Share Unit awards (“PSUs”) and 30% Restricted Stock Unit awards (“RSUs”).

 

►    We updated our Compensation Peer Group and Relative TSR Peer Group to reflect changes in our business environment.

 

►    We introduced ESG Performance as a measure in our annual cash incentive plan, in order to drive accountability and strengthen the link between our compensation program and our ESG commitments and objectives. This measure will make up 25% of our annual cash incentive plan and will pay out based on the achievement of our ESG 2021-2023 scorecard objectives.

 

►    We will continue to include Adjusted EBITDA as a Percentage of Revenue and Free Cash Flow from Operations as measures in the annual cash incentive plan, with an objective to increase our operating profitability, leverage cost efficiencies, maintain the financial health and liquidity of the Company, and drive shareholder value creation.

 

►    In 2022, we will reintroduce Return On Invested Capital (“ROIC”) as a performance measure in addition to relative TSR in the annual long-term incentive award grant. We believe that ROIC, combined with relative TSR, strongly align with shareholder interests and are meaningful ways to drive long-term performance.

 

►    We adjusted the 2022-2024 relative TSR payout scale to pay at target when achieving a 50th percentile position versus our TSR Peer Group. This change will more closely align payouts with equity returns experienced by shareholders.

Increased focus on sustainability and business impact of climate change

►    In 2021, we announced our 50 by 30 initiative which is our commitment to reduce emissions from our own operations, with a target of 50% reduction of CO2 equivalent emissions by 2030 (Scopes 1 and 2). Our Scope 3 target is currently being defined.

 

►    We are transitioning our business toward the energy transition, evolving with our client-base, with the establishment of New Energy Ventures which will primarily focus on greenhouse gas removal, offshore floating renewables, and hydrogen.

Creation of Shareholder value

►    We completed the Spin-off of Technip Energies in 2021, occurring by way of a pro-rata dividend to the Company’s shareholders of 50.1% of Technip Energies shares. Each of the Company’s shareholders received one Technip Energies share for every five shares of the Company.

Effective Board size and importance of balanced Board leadership

►    Upon completion of the Spin-off, we reduced the size of our Board from 15 to 10 directors, which was further reduced to 9 at last year’s Annual Meeting. We continue to balance our Board leadership between our Executive Chair and Lead Independent Director.

 

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Leadership Structure of the Board

 

The Board believes that our shareholders are best served by a Board that has the flexibility to adjust our leadership structure to the evolving needs of the Company. In 2019, with the completion of the post-merger integration, the Board determined that combining the roles of Chair and CEO, paired with a strong Lead Independent Director, would be in the best interests of our shareholders. Pascal Colombani served as our Lead Independent Director until the closing of our Spin-off, at which time Claire S. Farley was appointed as the Board’s Lead Independent Director.

 

Each of the Chair’s and Lead Independent Director’s specific responsibilities are listed below:

 

 Executive and Board Leadership 

 

Douglas J. Pferdehirt

Chair of the Board and CEO
Key Responsibilities
All strategic and operational aspects of the Company
Serving as the principal external spokesperson for the Company with analysts, investors, media, and clients
Managing all executives of the Company
Leading the Board
High-level government and client engagement
 

 

 Independent Leadership 

 


Claire S. Farley

Lead Independent Director

 
Key Responsibilities
► Approving Board meeting schedules and agendas

► Presiding over all meetings of the Board at which the Chair and CEO is not present

► Calling meetings of the Board, as necessary

 

► Presiding over executive sessions of the independent directors

► Acting as the liaison between the independent directors and the Chair and CEO

 

► Monitoring and reporting to the Board any conflicts of interests of directors

► Participating in the Company’s shareholder engagement program, when required

 

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Our Board believes that a combined Chair and CEO leads to a more decisive and effective leadership, both within and outside the Company. The CEO is the individual with primary responsibility for managing the Company’s day-to-day operations and is best positioned to chair regular Board meetings as the Board discusses key business and strategic issues for the benefit of the Company and its shareholders.

 

This leadership structure is balanced by the oversight of the remaining members of our Board, each of whom is an independent director, and ensures that the Board functions independently. Moreover, only independent directors serve on our Audit Committee, Compensation and Talent Committee, and ESG Committee. In addition, the Board nominated Ms. Farley to continue to serve as Lead Independent Director, who has the ability to call meetings of the Board and presides over executive sessions of the Board.

 

For transparency and alignment, our Compensation and Talent Committee consults all independent directors in setting our CEO’s compensation, but the authority to approve our CEO’s compensation remains with the fully independent Compensation and Talent Committee. In addition, our CEO’s annual performance objectives are reported and evaluated by both the Compensation and Talent Committee and the ESG Committee to ensure a comprehensive, inclusive, and diverse analysis and evaluation of our CEO’s annual performance.

 

Finally, the Board believes that the Company’s Governance Guidelines, and the quality, stature, and substantive business knowledge of the Board, as well as the Board’s culture of open communication and transparency with the CEO and senior management, are conducive to Board effectiveness with a combined Chair and CEO position.

 

As our Company evolves, the Board will regularly evaluate the Board leadership structure to ensure it continues to meet the needs of the Company, and to ensure that it provides strong, independent oversight for our shareholders. In particular, as part of this evaluation, the Board will consider the outcomes of the annual Board and committee selfevaluation process and feedback received from shareholders, in addition to other factors, including the current state of the Company’s strategy and operations, recent Company performance, market and industry factors, and peer company practices.

 

Board Composition and Criteria for Board Membership

Our Board seeks directors whose complementary and diverse knowledge, experience, and skills provide a broad range of perspectives and leadership expertise in areas critical to the Company. These include expertise in the energy and engineering industry, strategic planning and business development, business operations, sustainability and emerging technologies, finance and audit, corporate governance, and other areas important to the Company’s strategy and oversight. Our Board also assesses director age, tenure, and Board continuity and strives to achieve a balance between the perspectives of new directors and those of longer-serving directors with institutional insights.

 

Criteria for Board Membership in Governance Guidelines

Our Governance Guidelines state that candidates for our Board, in order to be nominated by our ESG Committee, must be qualified and eligible to serve under applicable law, our articles of association (“Articles”), and the NYSE rules, and should have:

 

  A high level of personal and professional integrity
  Strong ethics and values
  The ability to make mature business judgments

 

In addition, the Governance Guidelines provide that the ESG Committee may consider additional factors when determining whether a candidate is qualified to serve on our Board, including the candidate’s:

 

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  Experience in corporate management, as a board member of another publicly held company, and in finance and accounting and/or compensation practices
  Professional and academic experience relevant to our industry
  Leadership skills
  Cultural perspective and diversity of thought
  Ability to commit the time required for service on our Board

 

Board Composition, Refreshment, and Succession Planning

The ESG Committee regularly evaluates the composition of our Board and considers whether the Board has the right set of backgrounds, experience, skills, diversity, and qualifications to effectively oversee our Company’s strategy and our executives’ execution of that strategy. One of the key goals of our Board composition is to ensure we have the right skills and experience on our Board to execute our strategic goals successfully and efficiently. As such, the Board actively considers diversity of backgrounds, experience, skills, geography, and perspectives, including gender and cultural diversity, in the recruitment and nomination of directors. Our current directors possess a diversity of such skills, experience, and expertise that are relevant to our business, such as the following:

 

  Executive leadership
  Industry experience
  Corporate governance and legal
  Strategy and risk management
  Cultural and gender diversity
  Sustainability and emerging technologies
  Outside public company board service
  Finance and audit
  Acquisition, divestment, and investment portfolio management

 

From 2019 through 2021, our ESG Committee, with the assistance of Spencer Stuart, a nationally recognized director search firm, identified, screened, and assessed the capabilities of potential new director candidates. This resulted in the Company identifying and appointing new Board members in 2019, 2020, and 2021: Mr. Yearwood and Mses. Øvrum and Zurquiyah, respectively, as part of our ongoing Board refreshment focus.

 

In addition to evaluating directors’ skills and experience that tie directly to our business strategy, the ESG Committee also regularly considers any changes in the professional status, independence, outside commitments, and other public company directorships of our directors to assess the potential impact of these changes on the Board’s effectiveness.

 

As further described in our Governance Guidelines, a non-executive director whose birth date occurs prior to July 1 must retire at the annual general meeting of shareholders of the Company during the year of such director’s 72nd birthday, and a non-executive director whose birth date occurs on or after July 1 must retire at the annual general meeting of shareholders of the Company the year following such director’s 72nd birthday. Our Board may waive this policy on a case-by-case basis on the recommendation of the ESG Committee if it deems a waiver to be in the best interests of the Company and its shareholders.

 

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Board and Committee Evaluations

The Board believes that a rigorous evaluation process is an essential component of strong corporate governance practices. The ESG Committee reviews regularly the Board’s composition, including the key skills and experience represented on the Board, to ensure it meets the changing needs of the business, also taking into consideration the outcomes of the annual Board and committee self-evaluation process, feedback received from shareholders, and evolving market best practices with respect to governance.

 

The ESG Committee’s annual evaluation process to evaluate Board effectiveness includes a full Board evaluation and committee evaluations.

 

Process is Initiated Evaluation Distributed Analysis Presentation of Results
The ESG Committee reviews and approves the process to evaluate the performance of the Board of Directors and its three committees.

Questionnaires are distributed through a third-party web-based platform. The process encourages candid responses from our directors and promotes productive discussions.

 

Questionnaires solicit feedback on issues, including:

 

►    Board/Committee operations

 

►    Succession planning

 

►    Committee composition, processes, and effectiveness

 

►    Board dynamics

 

►    Director preparation, participation, and contribution

 

►    Management preparation and communications

Completed questionnaires are analyzed and summarized by Company management and reported to the ESG Committee Chair. The ESG Committee Chair reviews the results of the evaluations with the full Board and each committee to determine areas of opportunity.

 

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Board Commitments

In conjunction with our Board and committee evaluations, our ESG Committee is responsible for ensuring that our directors possess and demonstrate a willingness to devote the required time and attention to Board duties and to otherwise fulfill the responsibilities required of directors.

 

As noted above, a majority of our directors serve on no more than two other public company boards of directors. Our ESG Committee and our Board believe that each of our directors has demonstrated, and will continue to demonstrate, her or his expertise and ability to dedicate sufficient time to carry out Board duties effectively and diligently. Our directors’ outside board service or other commitments did not limit their ability to devote the required time and attention to their duties as directors of the Company as evidenced by the 100% attendance rate at our 2021 Board meetings for all our current directors.

 

In assessing our directors’ ability to devote the required time to his or her Board duties, the ESG Committee reviews the nature of the other companies on which they serve, including whether any board service is with a company that is either affiliated with their employer or affiliated with one of their other directorships. The Committee also discusses with each director the time commitments and expectations of his or her other board duties to ensure that he or she can continue to serve the Company and its shareholders effectively.

 

Mr. Carvalho Filho’s duties as a director of Companhia Brasileira de Distribuicão (Grupo Pão de Açúcar) (“GPA”) include serving on the board of a GPA affiliate, Cnova N.V. GPA has a 34% ownership interest in Cnova N.V. and three out of nine directors on Cnova N.V.’s board of directors are appointed by GPA. As such, Mr. Carvalho Filho’s role and time commitment at these two companies differs from serving on two traditional, unrelated publicly traded companies. Notably, Mr. Carvalho Filho has attended 100% of all Board meetings since the formation of TechnipFMC. His preparedness for meetings and active engagement with our Board and management continues to demonstrate his commitment to our Company and its shareholders.

 

Ms. Zurquiyah currently serves on the boards of directors of two other public companies: CGG S.A., for which she also serves as the chief executive officer, and Safran S.A. As a diverse director, Ms. Zurquiyah contributes her unique global background and leadership experience, oil and gas industry expertise, and experience in sustainability and technology, to our Company. Ms. Zurquiyah has demonstrated commitment to our Company and its shareholders since her election and has attended all Board and Committee meetings. In addition, in line with guidelines of certain institutional investors, Ms. Zurquiyah has informed the Company that she intends to resign from the board of directors of Safran S.A. before the end of 2022.

 

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Shareholder Recommendations for Future Candidates

Shareholders may submit recommendations for future candidates for election to the Board for consideration by the ESG Committee by writing to us at Hadrian House, Wincomblee Road, Newcastle upon Tyne, NE6 3PL, United Kingdom, Attention: Corporate Secretary. All recommendations from shareholders will be reviewed by the ESG Committee. The ESG Committee evaluates nominees recommended by shareholders in the same manner in which it evaluates other nominees. Please see “Criteria for Board Membership in Governance Guidelines” above.

 

Board Diversity

Our Board of Directors demonstrates a broad range of diversity, across gender and race or ethnicity, in addition to their diversity of skills and experiences. The following charts show the composition of our Board by gender and racial or ethnic diversity.

 

 

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Enterprise Risk Management

Executive management is responsible for the day-to-day management of the risks the Company faces, while our Board, as a whole and through its various committees, has responsibility for the oversight of risk management for the Company. The Company has an Enterprise Risk Management (“ERM”) process and framework to identify and evaluate varying levels of risk and their potential impact on the Company, as well as steps to further mitigate those risks. As part of the ERM framework, our senior management, led by our CEO, undertakes a process that identifies, categorizes, and analyzes the relative severity and likelihood of the various risks to which the Company is or may be subject. In addition, our Board and its committees receive periodic reports from senior management that identify and assess significant enterpriserelated risks and address mitigation strategies and plans implemented or proposed for each key risk.

 

In addition, while the Board has ultimate responsibility for overall risk management oversight, it has designated each of its three Board committees with oversight of certain risks within their own areas of responsibility, as indicated in the table below.

 

Audit Compensation and Talent ESG

► Legal and regulatory compliance related to financial statements and disclosures

 

► Financial reporting and internal controls

 

► Liquidity

 

► Contract management

 

► Cybersecurity

 

► Other risks, such as taxes and foreign exchange

 

► Insurance

► Legal and regulatory compliance related to compensation and benefits

 

► Compensation policies and practices (including employee benefit plans and administration of equity plans)

 

► Procedures for management succession

 

► Diversity and inclusion

 

► Legal and regulatory compliance related to corporate governance

 

►  Director succession

 

►  Crisis management preparedness

 

► Environmental, social, and governance

 

Health, Safety, and Environment (“HSE”) risks and mitigating actions are reported to the Board of Directors by our Chair and CEO for consideration and advice. HSE is one of the core risk areas for our Company and therefore the Board of Directors has determined that the responsibility for this area is shouldered by our Chair and CEO.

 

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Committees of the Board of Directors

In 2020, to better reflect our focus on corporate responsibility and sustainability at the Board level, the originally named Nominating and Corporate Governance Committee’s charter was substantially expanded to include oversight of the Company’s policies, programs, and strategies related to environmental stewardship, responsible investment, corporate citizenship, human rights, and ESG risk management. The charter of this committee, now our ESG Committee, was amended to refine its focus on ESG matters, with responsibility for reviewing and monitoring the development and implementation of ESG targets, standards, metrics, or methodologies, and reviewing the Company’s public disclosures with respect to ESG matters.

 

This year, to enhance our commitment to our employees, we changed the name of our Compensation Committee to the Compensation and Talent Committee, and the Committee’s charter was expanded to include oversight of succession planning of executive officers and senior management, with an enhanced focus on training and development and diversity and inclusion across TechnipFMC.

 

We also amended the charter of our Audit Committee to include responsibility for reviewing the metrics of certain health, safety, and environmental matters. Oversight for health, safety, environmental, and security matters remains with the full Board.

 

Accordingly, our Board currently has an Audit Committee, a Compensation and Talent Committee, and an ESG Committee, each of which comprises a minimum of three directors selected by the Board upon recommendation of the ESG Committee. Each member of our Audit Committee, Compensation and Talent Committee, and ESG Committee, which includes all members of our Board other than our Chair and CEO, meets the independence standards as defined under the NYSE’s listing standards and SEC rules, as applicable. Additionally, each member of our Audit Committee qualifies as an “audit committee financial expert,” as defined by SEC rules. 

 

The Board receives regular updates from its committees on individual categories of risk, including strategy, financial/ operations, cybersecurity, people, technology, investment, legal/compliance, political/legislative/regulatory, and corporate responsibility and sustainability. Each of these committees operates pursuant to a written charter setting out the functions and responsibilities of the committee, which is reviewed annually, and may be viewed on our website at www.technipfmc.com under the heading “About us > ESG.”

 

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Audit Committee

2021 Meetings: 6
Current Members   Primary Responsibilities

Kay G. Priestly (Chair)

Eleazar de Carvalho Filho

Sophie Zurquiyah

 

  ►  Oversight of the financial management and control of the Company, as well as oversight of the Company’s independent registered public accounting firm
  ►  Monitoring the Company’s financial reporting process
  ►  Reviewing the Company’s consolidated financial statements and internal controls with management and the independent auditor
  ►  Monitoring the Company’s compliance with its internal accounting and control policies, as well as legal and regulatory requirements to the extent such compliance relates to the consolidated financial statements and financial disclosures
  ►  Selecting, subject to shareholder approval, the Company’s independent auditor, and reviewing the qualifications, independence, performance, and remuneration of such independent auditor
  ►  Reviewing the effectiveness and performance of the Company’s internal audit function
  ►  Considers risks relating to cybersecurity and receives regular reports on the Company’s cyber readiness, adversary assessment, risk profile status, and any countermeasures being undertaken or considered by the Company
  ►  Reviewing the effectiveness of processes for reviewing and escalating financialrelated allegations reported through the Company’s allegation hotline
  ►  Reviewing certain Company metrics on health, safety, and environmental matters

 

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Compensation and Talent Committee 

2021 Meetings: 5
Current Members   Primary Responsibilities

John O’Leary (Chair)1

Claire S. Farley

John Yearwood

 

  ►  Reviewing, evaluating, and approving the agreements, plans, policies, and programs of the Company to compensate its independent directors, the Chair and CEO, and other officers
  ►  Consistent with equity plans approved by the Company’s shareholders, reviewing, evaluating, and approving all equity awards by the Company to executive officers and approving the number of equity securities or equity derivatives that the CEO is authorized to allocate to all other employees at his discretion
  ►  Reviewing the compensation disclosures in the Company’s U.K. annual report and proxy statement for the Company’s annual general meeting of shareholders
  ►  Producing the Compensation and Talent Committee Report to be included in the Company’s proxy statement
  ►  Reviewing, evaluating, and approving the directors’ remuneration policy and the directors’ remuneration report
  ►  Reviewing and evaluating potential successors for executive officers and others in senior management
    ►  Reviewing and evaluating global strategy on diversity and inclusion
    ►  Otherwise discharging the Board’s responsibilities related to compensation of the Company’s executive officers and directors

 

(1) Mr. O’Leary was appointed as Compensation and Talent Committee Chair effective May 20, 2021.

 

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ESG Committee

2021 Meetings: 4
Current Members   Primary Responsibilities

Peter Mellbye (Chair)

Margareth Øvrum

John Yearwood

 

  ►  Advising and making recommendations to the Board regarding corporate governance and ESG practices and initiatives and overseeing the Company’s progress in implementing its practices and programs
  ►  Monitoring the development and implementation of the Company’s compliance program (including procedures for allegation reporting, investigation, and remediation) to ensure that the Company operates in compliance with the principles of ethical conduct and good governance
  ►  Identifying individuals qualified to become Board members, consistent with the criteria approved by the Board, and recommending director nominees to the Board for election at the annual general meeting of shareholders or for appointment to fill vacancies on the Board
  ►  Recommending directors to serve on each committee of the Board and recommending the Lead Independent Director
    ►  Leading the Board in the annual performance evaluation of the Board and its committees

 

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Board Meetings and Attendance

Our Board met in person or by telephone conference six times in 2021.

 

 

* Post February 16, 2021.

 

From January 1, 2021, prior to the Spin-off on February 16, 2021, the Company held one Board meeting, which all directors attended except for Arnaud Caudoux, who excused himself. James Ringler attended all Board meetings in 2021 for which he was a director of the Company.

 

All remaining directors attended 100% of our Board meetings and 100% of their committee meetings in 2021.

 

We encourage our directors to attend the annual general meeting of shareholders. Due to the COVID-19 travel restrictions and precautions, none of our directors was able to attend our 2021 Annual Meeting.

 

Director Independence

 

Annual Review of Independence

The ESG Committee conducts an annual review of the independence of Board members and reports its findings to the full Board, which then makes a determination as to the independence of each director, as defined under the standards adopted by the NYSE. These standards specify certain relationships that are prohibited in order for a director to be deemed independent. In addition to these objective standards, our Board makes a subjective determination of independence by evaluating all relevant facts and circumstances. In particular, when assessing the materiality of a director’s relationship with the Company, the Board considers the issue not merely from the standpoint of the director, but also from the standpoint of persons or organizations with whom the director has an affiliation.

 

The Board has not adopted a policy that deems a director to be non-independent after a certain tenure on the Board as we believe our retirement policy and natural turnover will achieve the appropriate balance between long-term directors with deep institutional knowledge and new directors who bring fresh perspectives and diversity to our Board. Our Board reviews director tenure in connection with its director independence determinations. If all of our director nominees are elected at the Annual Meeting, the average tenure of our independent directors will be three years as the Board believes prior service on our legacy companies differed in breadth and scope from current service on our Board.

 

The Board’s independence determinations included a review of all 2021 commercial transactions, relationships, and arrangements between us and our subsidiaries, affiliates, and executive officers with entities associated with our directors or members of their immediate family. Such transactions, relationships, and arrangements are summarized below.

 

 

The Board considered that Mses. Farley, Øvrum, and Priestly, and Messrs. Mellbye, O’Leary, and, Yearwood, each served as directors or executive officers at companies that have had commercial business relationships with the Company in 2021, all of which were ordinary course commercial transactions.

 

 

Margareth Øvrum – Ms. Øvrum is a member of the Board of Directors of FMC Corporation, our former parent 

 

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company. Our Company and FMC Corporation are parties to a separation and distribution agreement and a joint litigation defense agreement that relate to the separation of the companies’ businesses that occurred in 2001.

 

Independence Determination

In determining that none of the relationships noted above affected the independence of any of the interested directors, the ESG Committee considered the nature of the transactions, the dollar amounts involved, and the respective director’s role, if any, in the transaction.

 

Based on the report and recommendation of the ESG Committee, the Board has affirmatively determined that each of our non-executive directors is “independent” as defined under the NYSE listing standards. As such, following our Annual Meeting, eight of our nine directors will be non-executive, independent directors. In addition, the Board has affirmatively determined that all of the members of the Audit Committee and Compensation and Talent Committee satisfy the enhanced independence criteria required for such members under regulations adopted by the SEC and NYSE listing standards.

 

Compensation Committee Interlocks and Insider Participation in Compensation Decisions

From January 1, 2021, the members of the Compensation and Talent Committee of the Board were Claire S. Farley, John O’Leary, Joseph Rinaldi, James M. Ringler, and John Yearwood, and from February 16, 2021 the members of the Compensation and Talent Committee of the Board were Claire S. Farley, John O’Leary, and John Yearwood. None of these persons has ever been an officer or employee of the Company or any of our subsidiaries or had any relationships requiring disclosure with us or any of our subsidiaries. None of our executive officers has ever served on the board of directors or the compensation committee (or board committee performing equivalent functions) of any other entity that has had any executive officer serving as a member of our Board or Compensation and Talent Committee.

 

Communications with Directors

To provide our shareholders and other interested parties with a direct and open line of communication to our Board, a process has been established for communications with any member of the Board, including our Lead Independent Director, the Chair of any of our committees, or with our non-employee directors as a group, by sending such written communication to c/o Lead Independent Director, TechnipFMC plc, Hadrian House, Wincomblee Road, Newcastle upon Tyne, NE6 3PL, United Kingdom. Please visit our website at www.technipfmc.com for any changes to our principal headquarters address. All communications will be received, processed, and then directed to the appropriate member(s) of our Board, other than, at the Board’s request, certain items unrelated to the Board’s duties, such as spam, junk mail, solicitations, employment inquires, and similar items.

 

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Director Compensation

 

This section describes the Company’s compensation programs that apply to our non-executive directors. The compensation of our Chair and CEO, Douglas Pferdehirt, is included in the “Executive Compensation Discussion and Analysis” section below because he is a named executive officer (“NEO”) under U.S. Securities and Exchange Commission (“SEC”) rules.

 

Non-executive Director Compensation

Compensation for our non-executive directors was developed by the Compensation and Talent Committee with the assistance of its compensation consultant as of February 2021, Willis Towers Watson, and approved by the Board. The program, which comprises cash compensation and Restricted Stock Units (“RSU”) awards, is designed to reflect the practices of both U.S. and European companies as determined by reference to the peer groups discussed in “Executive Compensation Discussion and Analysis.”

 

The directors’ compensation program is intended to provide a competitive package that enables the Company to attract and retain highly skilled individuals with relevant experience and the necessary time and ability to serve on the board of a company of our size, complexity, and geographical breadth. The program balances the practices within our market norms in our core geographies, and the varied expectations of our diverse shareholder base. Given the global talent pool that our directors represent, the program is also designed to provide sufficient flexibility in the form of compensation delivered to meet the needs of individuals who are located in different countries and the travel that is often required to attend meetings, while ensuring that a substantial portion of directors’ compensation is linked to the long-term success of the Company.

 

Key Non-executive Director Compensation Practices
TechnipFMC uses an independent consulting firm to recommend changes in compensation for nonexecutive directors.
Any changes to our director compensation program are reviewed and approved by our Compensation and Talent Committee, comprising independent directors.
Any changes to our director compensation program recommended by our Compensation and Talent Committee must be ratified by a vote of our full Board.
Our Directors’ Remuneration Policy reflects sector and geographic (U.S. and European) peer groups as well as both U.S. and European compensation practices, given the global nature of the Company, our NYSE listing, and our U.K. incorporation.
Our Directors’ Remuneration Policy provides for an annual cap on total remuneration (i.e., cash and equity awards) of $500,000.
Each non-executive director is subject to a share ownership requirement of 5x the annual cash retainer.

 

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Components of Non-executive Director Compensation

The following table describes the components of the Company’s non-executive director compensation program for 2021 pursuant to our Directors’ Remuneration Policy, which was approved at last year’s Annual Meeting.

 

Compensation Element Compensation
Annual Cash Retainer $100,000
Annual Equity Grant

$175,000 in RSUs, vesting after one year of service and settled in Ordinary Shares on a date elected by the non-executive director that is either (a) after a period of one to 10 years from the grant date or (b) upon their separation from Board service. The elections are made prior to the beginning of the grant year and are irrevocable after December 31 of the year prior to grant.

Annual Chair Fee

$20,000 for Audit Committee

 

$15,000 for Compensation and Talent Committee

 

$10,000 for ESG Committee

Annual Lead Independent Director Fee $50,000
Committee Meeting Fee $2,500 per committee meeting
Other Benefits

Reimbursement of travel and other related expenses incurred in connection with attending Board and committee meetings Assistance with the annual individual U.K. tax return 

 

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Non-executive Director Compensation Table

The following table details the total compensation for our current and former non-executive directors for the year ended December 31, 2021. Our Chair and CEO, Mr. Pferdehirt, is not included in the table below as he was an employee during 2021 and did not receive any additional compensation for his service as a director.

 

Current Members of the Board of Directors

Name Fees Earned or Paid in Cash ($) Stock Awards
($)2
All Other
Compensation
($)3
Total($)
Annual Cash
Retainer ($)
Additional Fees
($)1
Eleazar de Carvalho Filho 100,000 7,500 175,000 446 282,946
Claire S. Farley 100,000 53,539 175,000 - 328,539
Peter Mellbye 100,000 17,500 175,000 - 292,500
John O’Leary 100,000 16,500 175,000 446 291,946
Margaret Øvrum4 100,000 7,500 247,924 875 356,299
Kay G. Priestly 100,000 27,500 175,000 2,523 305,023
John Yearwood 100,000 15,000 175,000 284 290,284
Sophie Zurquiyah5 75,000 5,000 175,000 1,410 256,410

 

(1) Includes the amount of fees paid for attendance at committee meetings and additional fees paid to the Chair of each Board committee and to the Lead Independent Director.
(2) RSU grants were valued using the closing price on the NYSE of the Company’s Ordinary Shares on April 1, 2021 of $7.98 per share, in accordance with the SEC proxy disclosure rules and Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The annual RSU grant vests after one year of service but is settled in Ordinary Shares. Subject to Company blackout rules, the non-executive director selects a settlement date that is either (a) after a period of 1 to 10 years from the grant date or (b) upon their separation from Board service. The RSUs are forfeited if a director ceases service on the Board prior to the vesting date of the RSUs, except in the event of death or disability. Unvested RSUs will be settled and are payable in Ordinary Shares upon the death or disability of a director or in the event of a change in control of the Company. The aggregate outstanding RSUs held by each of the Company’s non-executive directors on December 31, 2021 was 581,383 (184,570 of which were vested but not yet settled in Ordinary Shares as of December 31, 2021). Dividend equivalents will accumulate on the RSUs to the extent the Company pays dividends on its Ordinary Shares.
(3) Includes assistance for annual individual U.K. tax preparation.
(4) Ms. Øvrum joined the Board of Directors on October 1, 2020. She received a prorated grant of RSUs for her service in 2020 as part of her annual grant in 2021.
(5) Ms. Zurquiyah joined the Board of Directors on April 1, 2021.

 

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Former Members of the Board of Directors

On February 16, 2021, TechnipFMC separated into two independent, publicly traded companies, TechnipFMC and Technip Energies. Upon the completion of the Spin-off, Ms. Debon and Messrs. Caudoux, Colombani, Houssin, and Rinaldi resigned from our Board and joined the Board of Directors of Technip Energies.

 

Mr. Piou resigned from the Board, effective February 16, 2021. Mr. Ringler retired from the Board on May 20, 2021.

 

Name Fees Earned or Paid in Cash ($) Stock Awards
($)
All Other
Compensation
($)24
Total($)
Annual Cash
Retainer ($)
Additional Fees
($)1
Arnaud Caudoux3 - - - - -
Pascal Colombani 12,778 14,722 - 2,750 30,250
Marie-Ange Debon 12,778 2,556 - 2,239 17,572
Didier Houssin 12,778 - - 2,239 15,017
Olivier Piou4, 12,500 - - 352,182 364,682
Joseph Rinaldi 12,778 - - 2,985 15,762
James M. Ringler 25,000 6,250 - 446 31,696

 

(1) Includes annual cash retainer, prorated for days of service in 2021.
(2) Includes the amount of fees paid for attendance at committee meetings and additional fees (prorated for days of services in 2021 paid to the Chair of each Board committee and to the Lead Independent Director.
(3) Mr. Caudoux waived his cash and equity remuneration because of the policies of his employer, Bpifrance.
(4) All other compensation includes fees assistance for annual individual U.K. tax for all the former directors with the exception of Mr. Caudoux. For Mr. Piou, the value includes assistance for U.K. tax return and a cash settlement in connection to his resignation from the Board on February 15, 2021 related to RSUs that were originally granted on March 9, 2020 and due to vest on March 9, 2021.

 

Other Benefits

Each non-executive director receives reimbursement for travel and other related expenses incurred in connection with attending Board and committee meetings.

 

Director Share Ownership Requirements

 

To further align the interests of non-executive directors with the interests of the Company’s shareholders, each nonexecutive director is subject to a share ownership requirement.
Ownership Requirement 5x the annual cash retainer
Covered Share Interests Ordinary Shares and RSUs that the director owns and/or has a beneficial interest in
Time for Achievement Five years from initial appointment

 

All of our directors met their pro-rated share ownership requirements as of December 31, 2021.

 

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Impact of Spin-off on Director Stock Awards

For Ms. Debon and Messrs. Colombani, Houssin, and Rinaldi, vesting for their RSUs granted on March 9, 2020 was accelerated to a date two weeks prior to the Spin-off date (February 2, 2021). All of their vested equity awards were distributed to them on February 2, 2021, upon separation from service from our Board.

 

Mr. Piou resigned from the Board of Directors on February 15, 2021. In recognition of his contribution to the Spin-off transaction, he was paid a cash settlement in lieu of vesting of his RSUs granted on March 9, 2020, which would have vested on March 9, 2021.

 

For our current Board, their RSUs granted on March 9, 2020 were adjusted using an adjustment ratio, calculated as the ratio of the closing price of TechnipFMC Ordinary Shares on the NYSE on the date immediately prior to the Spin-off to the closing price of TechnipFMC Ordinary Shares on the NYSE on the date immediately after the Spin-off. The vesting date of March 9, 2021 remained the same. Our current directors’ vested but undistributed 2017, 2018, and 2019 RSUs were also adjusted using the adjustment ratio.

 

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Executive Compensation Discussion and Analysis

 

Our executive compensation programs are designed to directly link our executives’ pay to their performance and the achievement of TechnipFMC’s overall performance and business strategies to create and preserve value for our shareholders.

 

In 2021, our Executive Officers led the successful completion of the Spin-off of Technip Energies and the emergence of TechnipFMC as an industry-leading, fully integrated technology and services provider, unlocking significant long-term growth potential and shareholder value. The ability to focus on our distinct and expanding market opportunities and customer base and our compelling and distinct investment profile has poised us for significant growth opportunities and positioned us to capitalize on the energy transition.

 

During the year, we continued our successful transformation of the subsea industry through our integrated model, expanded our strategic alliances and partnerships, transformed our operating model through industrialization and standardization and advanced technology and innovation through digital integration. We introduced New Energy Ventures, where we will accelerate and grow our contribution to the energy transition. We also continued our commitment to ESG with our three-year ESG scorecard and our 50 by 30 commitment – targeting a 50% reduction in Scope 1 and 2 CO2 equivalent emissions by 2030.

 

The Compensation and Talent Committee took several actions in 2021 to align with the Company’s business objectives and shareholder interests, align with our ESG goals, and position the business for future success.

 

Compensation Actions in 2021 That Supported Key Business Strategies

 

Introduced ESG Performance as a performance measure in our 2021 Annual Incentive Plan

In 2021, we directly linked our three-year strategic objectives around our ESG scorecard to the Annual Incentive Plan. The scorecard includes specific, measurable and challenging goals to reduce our environmental impact, to support the communities where we live and operate, to improve and respect diversity and inclusion in our Company, to reinforce our health and safety culture, and to reaffirm our commitments to respecting human rights and to corporate governance.

25% of the Annual Incentive Plan payout will be based on performance relative to this scorecard, thus creating a meaningful link between ESG results and executive compensation.

Our ESG scorecard provides transparency, and linking the results to compensation ensures accountability.

 

Aligned Annual Incentives to Financial Strategic Priorities

We included Adjusted EBITDA as a Percentage of Revenue and Free Cash Flow as performance measures in our Annual Incentive Plan, each component weighted at 25%

Adjusted EBITDA as a Percentage of Revenue reflects profitability and sustainability of our business and drives us to leverage cost efficiencies. Generation of cash is a key priority to maintain our financial health and liquidity of the Company, generate returns to shareholders and provide us with capital to make strategic investments in the future.

 

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Continued to align Long-Term Incentive Compensation with Shareholder Returns

70% of the 2021 Long-Term Incentive Grant is performance-based and based on achievement of 2021-2023 relative TSR targets.

A higher weighting of performance-based equity compared to market prevalence strengthens the alignment of our program with shareholder interests.

 

Ended Temporary Reduction in Compensation

In May 2020, in response to the business downturn during the COVID-19 pandemic, the Compensation and Talent Committee temporarily reduced the base salary for our Chair and CEO by 30% and for other executive officers by 20%. The previous salaries were reinstated on January 1, 2021. Other than this reinstatement, no increases in base salaries or incentive targets were awarded to the NEOs in 2021.

 

Incentivized executive officers to ensure stability and continuity to execute on our strategy post Spin-off

Our executive officers are critical to our future success as they provide deep company and industry expertise. These executives have been responsible for our transformation into a fully integrated leader in technology and innovation and the successful completion of the Spin-off and have well positioned the Company for future growth and the energy transition.

One of the key priorities for the Compensation and Talent Committee was retention, motivation and continuity of the executive team to achieve ambitious organizational transformation and strategic growth, in a backdrop of significant volatility and uncertainty in the energy industry. While there were no changes to base salary or incentive targets, the Compensation and Talent Committee awarded a one-time enhancement to the Long-Term Incentive grants for Mr. Pferdehirt and Mr. Rounce to enhance the retention provided from unvested long-term incentives and recognize their contributions to the Spin-off transaction.

 

2022 Changes to our Executive Compensation Program Based on Shareholder Feedback

 

Our Compensation and Talent Committee values shareholder feedback and carefully considers the results of shareholder advisory votes and input received during shareholder engagement. At our 2021 annual general meeting, 84.6% of votes cast approved our 2020 executive compensation program as disclosed in our 2021 Proxy Statement. Our Board and executive leadership were pleased with the support of our executive compensation program and continued to engage with our shareholders to receive valuable input on our program.

 

Listed below are key changes to our executive compensation program in 2022, both as part of our annual review process as well as in response to shareholder feedback:

 

Include Return On Invested Capital (“ROIC”) in our Performance Based Long-Term Incentive Plan

We will reintroduce ROIC as a performance measure for the 2022 long-term incentive award grant, in addition to relative TSR (each weighted at 50% of our performance based Long-Term Incentive Plan).

ROIC will be calculated based on a three-year average net operating profit after tax divided by a three-year average invested capital, and will assess our profitability and how effectively the Company uses capital over the three-year period to generate income.

The relative TSR metric is based on equity returns, both share price performance and dividend distributions relative to an external peer group.

We believe an equal weighting of ROIC and relative TSR provides clear line of sight for our executive officers to long-term financial performance and shareholder value creation, and is strongly supported by our shareholders.

 

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Increase the rigor of the Relative TSR payout scale in our Long-Term Incentive Plan

We will increase the rigor of the relative TSR payout scale in our long-term incentive plan. For the 2022-2024 plan, the relative TSR component of the plan will pay at target when achieving a 50th percentile position versus our relative TSR Peer Group (our current plan pays out at target when achieving a 42nd percentile position versus our relative TSR Peer Group). This change will more closely align payouts with equity returns experienced by shareholders.

 

Named Executive Officers 

Douglas J. Pferdehirt

Age: 58

Position Held in 2021:

Chair and Chief Executive Officer

 

Alf Melin

Age: 52

Position Held in 2021:

Executive Vice President and Chief Financial Officer from January 25, 2021 to December 31, 2021

Justin Rounce

Age: 55

Position Held in 2021:

Executive Vice President and Chief Technology Officer

 

Barry Glickman

Age: 53

Position Held in 2021:

President, Surface

 

Jonathan Landes

Age: 49

Position Held in 2021:

President, Subsea

 

Maryann T. Mannen

Age: 59

Position Held in 2021:

Executive Vice President and Chief Financial Officer from January 1, 2021 to January 24, 2021, departed from TechnipFMC on January 24, 2021

2021 Performance and Impact on Executive Compensation 

 

Executive Compensation Highlights

Our vision to enhance the performance of the world’s energy industry is supported by the relentless drive of every individual at TechnipFMC. We are united by one single purpose: to bring together the scope, knowledge, and determination to transform our clients’ project economics. Our executive compensation is designed to help us achieve our vision by:

 

Motivating our executive officers to achieve and exceed our short-term and long-term goals and objectives.

Aligning the interest of our executive officers with the interests of our shareholders by focusing our executive compensation program on drivers of sustainable shareholder value and by ensuring a majority of executive compensation is at-risk.

 

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Providing market competitive levels of compensation to help us retain and attract exceptionally talented individuals who can deliver on our vision.

 

What We Do:   What We Don’t Do

► Pay for performance by aligning performance measures with our strategy and shareholder interests

 

► Majority of NEO compensation is performance-based, “at-risk” long-term compensation

 

► Maintain a clawback policy in the event of malfeasance or fraud

 

► Require robust executive and director share ownership requirements

 

► Engage an independent, external compensation consultant

 

► Benchmark compensation against relevant global and industry peer groups

 

► Cap PSU payout at target when relative TSR exceeds peers’ TSR but absolute TSR is negative

 

► No single-trigger vesting upon a change-in-control

 

► No guaranteed bonuses

 

► No uncapped incentives

 

► No tax gross-ups on any severance payments

 

► No excessive perquisites, benefits, or pension payments

 

► No discounting, reloading, or repricing of stock options

 

► No hedging and pledging of Company securities 

 

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2021 Pay Programs Emphasize Pay-for-Performance

Our executive compensation incentive mix is intended to create a balance between achieving both short-term and long-term interests of the business through short-term and long-term compensation and link the interests of our NEOs with shareholders through significant at-risk-compensation.

 

 

(1) Data excludes Maryann Mannen as she resigned from the company in January 2021.
(2) RSUs are included in variable pay because their delivered value is based on share price at vesting.

 

 

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As intended by our pay-for-performance program, our 2021 executive compensation was directly impacted by our performance against key financial, operational, ESG, and individual measures.

 

Total target compensation is made up of salary, an annual cash incentive, and long-term equity incentives.

 

Our compensation program is strongly linked to performance, and a majority of our NEOs’ pay is variable, at-risk compensation.

 

Total target compensation is benchmarked relative to appropriate peer groups by our independent compensation consultant, FW Cook. Our consultant considers market median data, as well as other factors including the experience, tenure, role criticality, and performance of the incumbent NEOs.

 

The 2021 Annual cash incentive was based on Adjusted EBITDA as a Percentage of Revenue (25%), Free Cash Flow from Operations (25%), ESG scorecard measures (25%) and individual performance in areas of strategic significance (25%).

 

Payouts for the financial portion are based on quantifiable performance. There is no payout if Company performance is below a minimum level of performance due to our emphasis on paying for performance. Payouts increase with increasing levels of performance and there is a cap on payout at maximum performance. Performance targets and goals are predetermined, communicated in advance, and disclosed publicly.

 

Payout for the individual performance indicators are based on rigorous, individual goal setting and year-end evaluation of performance.

 

PSUs comprise the majority of the 2021 long-term equity incentive grant (70%) with vesting contingent on relative TSR performance, measured over the three-year (2021-2023) performance period.

 

Payouts for the 2021 PSU plan are based on performance. There is no payout if Company performance is below a minimum level of performance, and there is a cap on payout at maximum performance. In addition, in the case of negative absolute TSR performance, payouts are capped at target, even if our TSR performance relative to our Relative TSR Peer Group (as defined below) is above target. Performance targets and goals are pre-determined, communicated in advance, and disclosed publicly.

 

The remainder (30%) of the 2021 long-term equity incentive grant is delivered in the form of RSUs. The delivered value of RSUs to NEOs is also based on share price performance.

 

All long-term equity incentive awards vest at the end of three years, providing a significant retention incentive to NEOs. 50% of after-tax RSUs must be retained for at least one year following vesting.

 

Executive Pay Programs aligned with Shareholders

 

Realizable pay aligned with shareholder experience

The industry downturn due to the COVID-19 pandemic had a meaningful impact on the Company’s financial and stock price performance over the past few years. Our Chair and CEO’s three-year average realizable compensation is projected to be approximately $3.2 million less than target compensation (or 24% below target) for compensation granted in 2019 and 2021.

 

Declines in stock price have a direct impact on the value of Long-Term Incentives (“LTI”) held by our executives. TSR is down approximately 56% between January 1, 2019 and December 31, 2021 and our Chair and CEO’s LTI granted between 2019 and 2021 is worth approximately 37% less than the original target value as of the applicable grant date.

 

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Target compensation reflects the average of fiscal 2019, 2020, and 2021 base salary rate, target bonus, and target value of long-term incentives granted.

 

Realizable compensation reflects the average of fiscal 2019, 2020, and 2021 base salary rate, actual bonus, in the-money value of stock options based on the Company’s December 31, 2021 closing stock price of $5.92, value of restricted stock units based on the Company’s December 31, 2021 closing stock price, and value of performance share units based on the Company’s December 31, 2021 closing stock price and assuming target performance.

 

TechnipFMC 2021 Performance

2021 marked the beginning of what we believe will be a multi-year upcycle for energy demand. We anticipate a strong inbound order cycle through at least 2025, which follows the solid inbound order growth of 24% experienced in the year. While oil and gas will remain an important part of the energy mix for an extended period of time, we also recognize that we are in the early stages of energy transition. To address these evolving markets, we have taken actions across multiple platforms and technologies to leverage our unique capabilities in technology development, integrated project delivery and life of project services. We are confident that as the transition accelerates, so too will the opportunity set for TechnipFMC.

 

In February, we completed the Spin-off of Technip Energies, creating two industry-leading, pure-play companies. The separation uniquely positioned TechnipFMC as a leading technology provider to the traditional and new energy industries. Our ability to drive real change in the energy industry will be driven by our core competencies of innovation, integration and collaboration.

 

TechnipFMC has transformed the subsea industry with our Subsea integrated Engineering, Procurement, Construction, and Installation (“iEPCI™”) business model. iEPCI™ improves project economics, enhances project performance, and reduces emissions, adding value to some of the largest capital investments in the world. We have experienced swift adoption of the model through a very diverse customer mix, with half of this group already becoming repeat clients of the integrated approach. The strong industry adoption has expanded our subsea alliances and partnerships, and we fully expect this trend to continue.

 

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TechnipFMC has accounted for approximately 70% of all announced iEPCI™ projects since we introduced the integrated model in 2016, demonstrating our leadership and success in this innovative offering. We were awarded additional iEPCI™ projects in 2021, with several significant milestones being achieved. We were awarded our first integrated project in Brazil for the Karoon Patola development. We also had two clients each for the first time award us integrated contracts, PETRONAS’ Limbayong project in Malaysia and Tullow’s Jubilee South East development offshore Ghana.

 

Subsea 2.0™, our innovative product platform that combines seamlessly with iEPCI™, received strong client acceptance throughout the year. Essentially all major operators that we have pursued have either adopted the new platform or are in the final stages of approval. Looking ahead, we expect more than 50% of our tree orders will utilize this platform over the next two years.

 

Market adoption of Subsea 2.0™ provides the volume paradigm that has enabled our successful implementation of Configure-to-Order, a proven operating model that has never been applied to the subsea industry. With this operating model we can leverage the efficiencies of standardization while still addressing the unique requirements of individual projects, all of which can be selected from a product catalog that enables efficient manufacturing and servicing of our equipment.

 

Looking beyond Configure-to-Order, we continue to focus on the introduction of new subsea technologies. We believe the electrification of subsea systems is an important milestone for the subsea market. Electrification offers advantages to all subsea wells and is particularly well suited for the development of long tie-backs, gas fields, water injection, and carbon transportation and storage. Our Subsea 2.0™ system already contains most of the products required for electrification and extends into our complete integrated field offering, e2.0™. This integrated offering extends across multiple technology frontiers and provides cost and efficiency benefits while also reducing the carbon footprint of traditional energy developments.

 

We are advancing technology and innovation through digital integration, where we can drive clients’ sustainable growth with sustainable solutions. In Surface Technologies, our E-Mission™ solution is the next level of optimization for production facilities. Using process automation and data, the system provides constant monitoring and adjustments in real time to minimize flaring by up to 50%, while maximizing oil production. In Subsea, our GEMINI® ROV system is transforming the industry through technology differentiation and optimized services through the integration of remotely operated vehicles, manipulators and tooling that enables a transition to highly-automated subsea robotics.

 

We recently completed the acquisition of the remaining shares of Magma Global to accelerate the development of breakthrough composite pipe technologies for both traditional and new energy industries. The technology acquired is a key enabler for offshore energy transition developments, such as transportation of green hydrogen, as pioneered by TechnipFMC’s Deep Purple™ offshore energy system, and transportation of CO2 utilizing an integrated carbon transportation and storage solution.

 

In November, we hosted the Company’s Analyst Day, where we highlighted several of our key strategic initiatives, including our ability to leverage our subsea expertise to the development of novel offshore energies as well as carbon transportation and storage. With the introduction of our New Energy Ventures, we will accelerate and grow our contribution to the energy transition through three main pillars: greenhouse gas removal, offshore floating renewables, and hydrogen. We will leverage our extensive experience in project integration to approach these new opportunities in renewable energies with a new execution model, iONE™. We are making solid and tangible progress in establishing a clear path for TechnipFMC in the energy transition.

 

Prior to year-end, we were awarded our largest-ever Surface Technologies contract by Abu Dhabi National Oil Company, a 10-year framework agreement for wellheads, trees and associated services. The longevity of the agreement demonstrated the client’s confidence in our ability to comprehensively broaden our capabilities in-country, positioning us well for future work in this important and growing region.

 

Lastly, our continued focus on cash generation resulted in $523 million of free cash flow in 2021. Over the course of the

 

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year, we also monetized a significant portion of our ownership stake in Technip Energies for proceeds of approximately $900 million, with an additional $135 million sold in January 2022. Strong cash generation and an improved capital structure will ultimately provide us with the flexibility needed for both sustainable shareholder distributions as well as the strategic investments we may pursue to ensure TechnipFMC remains a market leader today and in the energy future of tomorrow.

 

Key Strategic Achievements in 2021

We have summarized some of our key 2021 results and achievements below.

 

Subsea1    

► Inbound orders increased 24% year-over- year, including award of first iEPCI™ project in Brazil

 

► Strong industry adoption of iEPCI™ expanded our number of alliances and partnerships

 

► Extended Subsea 2.0™ across portfolio to include all system level components and all-electric system

     
Surface Technologies1    

► Inbound orders increased 69% year-over- year, with a multi-year contract from ADNOC, the segment’s largestever award

 

► International revenue increased to 69% of segment, led by higher activity in the Middle East

 

► Advanced digital transformation with the introduction of E-Mission™ solution for reduction of greenhouse gas emissions

   
(1) Reported financial results for the 12 months ended December 31, 2021 and inbound and backlog as of December 31, 2021 are as reported in our Form 10-K.

 

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Market Leadership

Subsea  

► Achieved inbound orders of $5 billion, including contract awards for:

 

► ExxonMobil Yellowtail project in Guyana

 

► Petrobras Búzios 6-9 fields project in Brazil

 

Tullow Jubilee South East project in Ghana

 

► Awarded three frame agreements by Petrobras for the multi-year manufacture of flexible pipe and related services

 

► Entered into global commercial agreement with Saipem to expand the potential market for iEPCI™ opportunities, while delivering on our commitment to an asset-light model

 

► Awarded first iEPCI™ project in Brazil for the Karoon Patola field

 

► Successful implementation of Configure-to-Order, a revolutionary operating model to the subsea industry, enabled by strong market adoption of Subsea 2.0™ product platform

 

► Achieved significant milestone of manufacturing and delivering 700 trees in Brazil and 1,300 trees in Scotland

 

► Joined partnership to develop a concept study for green hydrogen production from offshore wind power, called BEHYOND project, leveraging our Deep Purple™ system

 

Surface Technologies

► Achieved inbound orders of $1.8 billion driven by increased international award activity

 

► International business highlights:

 

Awarded largest-ever Surface Technologies contract for wellheads, trees and associated services by ADNOC, underscoring our relationship of over four decades

 

Successful expansion of our manufacturing capabilities in Saudi Arabia, furthering our partnership with Saudi Aramco

 

► North America business highlights:

 

Further market adoption of iComplete™ ecosystem, enabling significant cost savings versus traditional work scope

 

Continued digital transformation to monitor, measure and reduce the carbon footprint of oil and gas operations through our E-Mission™ solution

 

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Performance Impact on Annual Cash Incentive

The annual cash incentive comprises 13% and 21% of 2021 total target variable compensation for our CEO and other NEOs, respectively. Our NEOs achieved a payout ranging from 149% to 162% of target for the annual cash incentive, based on the following:

 

The total payout for the business performance indicators (which make up 75% of the annual cash incentive plan) was set at 162% by the Compensation and Talent Committee:

 

Performance for Adjusted EBITDA as a Percentage of Revenue was set at 167%.

 

Performance on Free Cash Flow Conversion measures was set at 200%.

 

2021 performance towards our 2021-2023 ESG objectives was set at 120%.

 

The payout for the individual annual performance indicators (which makes up 25% of the annual incentive plan) ranged from 110% to 160%.

 

2019 and 2020 Long-Term Incentives

Pursuant to the Spin-off, all applicable outstanding 2019 and 2020 TechnipFMC PSU and RSU awards for the NEOs were adjusted based on the ratio of the closing price of TechnipFMC Ordinary Shares on the NYSE on the date immediately prior to the Spin-off to the closing price of TechnipFMC Ordinary Shares on the NYSE on the date immediately after the Spin-off. In addition, the 2019 and 2020 TechnipFMC PSU awards were converted to RSUs (at target) subject to continued service on the original vesting dates, as measurement of performance against the set goals was not possible following the Spin-off. The vesting dates and payment conditions for the 2019 and 2020 awards otherwise remained the same.

 

For detailed information regarding our 2021 results, please see our Form 10-K, which reports our results using U.S. generally accepted accounting principles (“GAAP”), and our U.K. Annual Report and Accounts, which reports our results using international financial reporting standards (as adopted by the United Kingdom).

 

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Good Governance and Compensation Practices Aligned with Shareholders

 

Our compensation practices are designed to align with shareholder interests and incorporate strong governance practices that support the guiding principles of our executive compensation program, which include the following:

 

Attract talented individuals by providing market competitive levels of compensation

 

Retain our leaders by incentivizing them to deliver on our vision

 

Support our pay-for-performance philosophy

 

Link the interests of our executive officers with the interests of the Company and shareholders

 

Align executive officers’ interests with our long-term financial and strategic objectives

 

Maintain flexibility to better respond to the cyclical energy industry

 

Encourage prudent risk-taking by our executives

 

What We Do:   What We Don’t Do

► Pay for performance by aligning performance measures with our strategy and shareholder interests

 

► Majority of NEO compensation is performance-based, ”at-risk“ long-term compensation

 

► Maintain a clawback policy in the event of malfeasance or fraud

 

► Require robust executive and director share ownership requirements

 

► Engage an independent, external compensation consultant

 

► Benchmark compensation against relevant global and industry peer groups

 

► Cap PSU payout at target when relative TSR exceeds peers’ TSR but absolute TSR is negative

 

► No single-trigger vesting upon a change-in-control

 

► No guaranteed bonuses

 

► No uncapped incentives

 

► No tax gross-ups on any severance payments

 

► No excessive perquisites, benefits, or pension payments

 

► No discounting, reloading, or repricing of stock options

 

► No hedging and pledging of Company securities 

 

Shareholders have provided support for say-on-pay

We received more than 84% of shareholder support for our say-on-pay proposal at our 2021 annual general meeting of shareholders and have averaged more than 78% shareholder support over the past four years. The Compensation and Talent Committee strongly values the opinions of our shareholders as expressed in the say-on-pay vote and believes that the support received in 2021 and over the past five years demonstrates a strong alignment of our compensation program with our shareholders’ interests.

 

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Compensation Governance

 

Role of the Compensation and Talent Committee

 

Our Compensation and Talent Committee, comprising of independent non-executive directors, oversees our executive compensation program and determines the compensation for our executive officers on behalf of the Board. The Compensation and Talent Committee is responsible for, among other things, reviewing, evaluating, and approving:

 

The agreements, plans, policies, and programs of the Company to compensate its independent directors, Chair and CEO, and other officers, as applicable;

All awards of equity securities or equity derivatives to executive officers of the Company, as well as the total number of equity securities or equity derivatives to be allocated to all other employees at the discretion of the CEO, consistent with equity plans approved by the Company’s shareholders; and

The Company’s global strategy and initiatives related to executive succession planning for designated senior leadership roles and inclusion and diversity efforts.

 

The Compensation and Talent Committee also reviews the Company’s incentive compensation arrangements to ensure that they do not incentivize excessive risk-taking and evaluates compensation policies and practices that could mitigate any such risk.

 

Additional information on the roles and responsibilities of the Compensation and Talent Committee is provided in the section “Corporate Governance — Committees of the Board of Directors — Compensation and Talent Committee,” and the charter of the Compensation and Talent Committee may be viewed on our website at www.technipfmc.com under the heading “About us > ESG.”

 

Role of the Compensation and Talent Committee’s Independent Consultant

Under its charter, the Compensation and Talent Committee has the sole authority to retain and terminate any compensation consultant, outside counsel, or any other advisors engaged to assist in the evaluation of compensation of directors or executive officers, including the sole authority to approve the consultant’s fees and its terms. The Compensation and Talent Committee considers appropriate standards in selecting its compensation consultants consistent with NYSE rules, SEC rules, and requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).

 

Following the 2017 merger of Technip and FMC Technologies through February 2021, the Committee retained Willis Towers Watson as its executive compensation consultant. Willis Towers Watson provided information and advice to the Compensation and Talent Committee on 2021 executive and director compensation and related governance matters. This included evaluating our 2021 director and executive compensation programs against general market and peer data, providing updates on current executive compensation trends and applicable legislative and governance activity, and where appropriate, assisted with the design of elements of 2021 compensation programs. In 2021, Willis Towers Watson was paid $124,500 in fees related to executive compensation services.

 

In February 2021, the Compensation and Talent Committee considered the independence of Willis Towers Watson pursuant to the SEC rules and NYSE listing standards. At the request of the Compensation and Talent Committee, Willis Towers Watson prepared a letter providing data on the following factors relevant to assessing independence: (a) other services provided to the Company by Willis Towers Watson; (b) fees paid by the Company as a percentage of Willis Towers Watson’s total revenue; (c) policies and procedures maintained by Willis Towers Watson that are designed to prevent a conflict of interest; (d) any business or personal relationships between the individual consultants involved in the engagement and a member of the Compensation and Talent Committee; (e) any Ordinary Shares owned by the individual consultants involved in the engagement or their immediate family members; and (f) any business or personal

 

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relationships between our executive officers and Willis Towers Watson or the individual consultants involved in the engagement. The Compensation and Talent Committee also considered that the Willis Towers Watson consultants advising the Compensation and Talent Committee derived no economic benefit from the fees paid for the non-executive compensation services. The Compensation and Talent Committee discussed these considerations and concluded in February 2021 that the work of Willis Towers Watson and the consultants involved in the engagement did not raise any conflict of interest.

 

In late 2020, the Compensation and Talent Committee conducted a search of leading compensation consulting firms, including in-depth interviews with management and members of the Compensation and Talent Committee. As an outcome of this search, the Committee engaged FW Cook as its executive compensation consultant effective March 2021. During 2021, FW Cook provided advice to the Compensation and Talent Committee on a new Compensation Peer Group to establish the market value of executive jobs and inform pay practices post Spin-off. In addition, FW Cook advised the Committee on 2022 director and executive compensation matters, updates on current executive compensation trends and applicable legislative and governance activity. In 2021, FW Cook was paid approximately $171,000 in fees related to executive compensation services. In accordance with its annual practice and pursuant to the SEC rules and NYSE listing standards, the Committee will review and consider the independence of FW Cook in 2022.

 

The Annual Process

Each year the Compensation and Talent Committee approves an annual calendar which sets out the key activities in accordance with its charter. The key activities of the committee in 2021 were as follows:

 

Q1 Q2-Q3 Q4

Approve compensation decisions and equity awards for directors and officers

 

Approve Company performance achievements for prior year in relation to annual and long-term incentive plans

 

Review and discuss executive compensation strategy, structure, and programs

 

Approve annual compensation disclosures in Company proxy statement and U.K. annual report

Review executive officer share ownership guidelines and compliance 

 

Discuss shareholder engagement outcomes and review annual meeting vote results

 

Review internal governance policies (e.g., claw-back, insider trading policy, anti-hedging, pledging) and compliance

 

Approve equity programs, annual equity budget for non-executives, and impact on shareholder dilution

 

Review of peer compensation practices

 

Provide feedback on potential framework for annual and longterm incentive plans for the upcoming fiscal year 

 

Compensation Decisions

 

2021 Compensation Peer Groups Pre-Spin-off

We compete with energy industry companies, as well as with other industries and professions, for executive-level talent. In making decisions about target compensation levels, the Compensation and Talent Committee reviews data from peer group proxy statements as well as general industry and industry-specific market surveys.

 

In making decisions about 2021 target compensation levels, the Compensation and Talent Committee reviewed data from two distinct peer groups:

 

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The Global Peer Group comprises a broadly equal weighting of U.S. and European headquartered companies, of similar size to the Company (in terms of revenue) who compete for executive talent in capital intensive industries similar to the Company, including the oil and gas industry, construction and engineering, and industrial manufacturing.

The Industry Peer Group is focused more closely on our sub-industry and is drawn from companies in the oilfield services and oil exploration and production sectors, as well as heavy engineering organizations with greater (but not exclusive) focus on North America.

 

The Compensation and Talent Committee did not place a specific weight on the data from either peer group, but considered the data in light of all the circumstances relevant to each executive under review, as well as the Company’s compensation philosophy.

 

For both sets of peers, we used a range of selection criteria that include, among other factors, financial measures such as revenue and market capitalization, number of employees, company size, industry, end markets, complexity, geographic footprint, and headquarters location.

 

Accordingly, the companies below comprised the 2021 Compensation Peer Group, including both global and industry peers.  

 

Pre-Spin-off Compensation Peer Group Constituents
Air Liquide S.A. Ingersoll-Rand plc
Alstom S.A. Jacobs Engineering Group Inc.
Apache Corporation John Wood Group plc
Baker Hughes Company National Oilwell Varco, Inc.
Caterpillar Inc. Petrofac Limited
ConocoPhillips Repsol, S.A.
Cummins Inc. Saipem S.p.A.
Devon Energy Corporation Schlumberger Limited
Dover Corporation Subsea 7 S.A.
Enbridge, Inc. Transocean Ltd.
Fluor Corporation VINCI S.A.
Halliburton Company  

 

Companies in bold comprise the Industry Group.

 

Post-Spin-off Compensation Peer Group

Following the separation of TechnipFMC and Technip Energies, the Compensation and Talent Committee reviewed its approach to setting the Compensation Peer Group based on its industry peers as a standalone, fully integrated technology. In looking for potential peer companies, our Compensation and Talent Committee focused on companies with reasonably similar business characteristics, which included:

 

Applicable Industry Focus – Prioritize public companies with energy or engineering and construction elements that trade on major U.S. stock exchanges

Relevant Size Range – Revenue between 1/3 to 3x TechnipFMC’s projected 2021 revenue, market capitalization, and assets following the Spin-off

 

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Global Sprawl and Complexity – Non-US revenue greater than 33% of total revenue and total employees between 1/3 to 3x TechnipFMC’s projected employees following the Spin-off

Comparable Business Characteristics – Similar margin profile, sales per full-time employee, and asset intensity

Comparable Qualitative Characteristics – Prioritized companies that are logistically and technically complex, mature stage businesses, and business-to-business focused

 

Following our review, we selected the following companies, which were used to benchmark executive compensation following the Spin-off and during the first quarter of 2022.

 

Post Spin-off Compensation Peer Group Constituents
AECOM National Oilwell Varco, Inc.
APA Corp. Oceaneering International
Baker Hughes Quanta Services, Inc.
ChampionX Corp. Schlumberger Limited
Chart Industries, Inc. Transocean Ltd.
Devon Energy Corporation Valmont Industries
Dover Corporation Weatherford International plc
Fluor Corporation  
Halliburton Company  
Jacobs Engineering Group Inc.
KBR, Inc.  

 

Companies in blue bold comprise new post Spin-off peers. ConocoPhillips, Cummins, John Wood, McDermott International, Saipem SpA, and Subsea 7 S.A. were peers and were removed from the list due to the aforementioned analysis.

 

Setting Target Executive Compensation

In determining the target compensation package for each NEO, the Compensation and Talent Committee compares each element and combined total of an NEO’s compensation to data for relevant roles within the Compensation Peer Group. To provide additional perspectives, the Compensation and Talent Committee also considers internal relativities between the CEO and the NEOs.

 

In setting target compensation, the Compensation and Talent Committee also considers market median data, as well as other factors including the experience, tenure, role criticality, and performance of the incumbent NEOs. In addition, any changes to the CEO’s target compensation are in accordance with the shareholder-approved Directors’ Remuneration Policy.

 

No executive participates in any discussion that relates to his or her own compensation.

 

The Compensation and Talent Committee, in partnership with its independent advisor, determines and approves any changes to compensation for the Chair and CEO, who is not present during these discussions.

The CEO recommends changes to compensation for the other NEOs without them present, which are approved by the Compensation and Talent Committee with input from its independent compensation consultant.

 

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Use of Compensation Tally Sheets

The Compensation and Talent Committee uses tally sheets to ensure they receive the information necessary to evaluate the total compensation of an NEO. Tally sheets list each component of an executive’s compensation throughout a range of alternative scenarios (e.g., termination, change-in-control transaction, etc.). The compensatory amounts include cash compensation, accumulated deferred compensation balances, outstanding equity awards, benefits, perquisites, and any other item, as well as projected values of equity awards under various performance and termination scenarios, realized stock option and stock gains, and total wealth accumulation.

 

Establishing Performance Measures and Goals

In setting performance goals, the Compensation and Talent Committee considers the Company’s annual financial plans, strategic initiatives, and projections, which are impacted by the following factors:

 

  The overall business climate and the cyclical nature of our business
     
  Underlying market conditions for our products and services
     
  Volatility in commodity prices
     
  Our competitors’ performance
     
  Anticipated changes in customer activity
     
  Our prior-year performance

 

These inputs inform discussions regarding both the targets and the ranges around the targets to ensure the goals are sufficiently difficult without incentivizing inappropriate risk taking.

 

Elements of 2021 Executive Compensation

Our executive compensation program is comprised of short-term and long-term components that link executives’ pay to their performance and their advancement of TechnipFMC annual and long-term performance and business strategies. In addition, the programs also align the executives’ interests with those of shareholders and encourage retention of high-performing executives.

 

The table below summarizes these elements, along with their purpose and key characteristics.

 

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Element Purpose Key Characteristics
Base Salary

To provide market competitive compensation for the role

Fixed cash compensation

Reflects major responsibilities of an NEO’s role

Set with reference to market median, based on responsibility, experience, and performance

Annual Cash Incentive

To drive and reward the achievement of short-term Company strategic goals and individual contributions

Variable cash compensation

Target value based on role, set with reference to market median

Paid based on achievement of business performance targets (75%) and individual performance targets (25%)

2021 business performance targets were Adjusted EBITDA as a Percentage of Revenue (25%), Free Cash Flow from Operations (25%), ESG scorecard measures (25%), and individual performance measures (25%)

Actual payout can range from 0% to 200% of target

Performance Share Units (“PSUs”)

To drive and reward the achievement of longterm results and align interests of NEOs with shareholders’ interests

Payout linked to the achievement of TechnipFMC relative TSR for the 2021 to 2023 performance period 

Realized value based in part on post-grant share price appreciation 

Actual payout can range from 0% to 200% of target

Restricted Stock Units (“RSUs”) Further align NEOs’ interests with the interests of our shareholders by incentivizing them to increase share price, while reinforcing the retention impact of our compensation program

Realized value based in part on post-grant share price appreciation

50% of after-tax RSUs must be retained for at least one year following vesting 

Three-year cliff vesting period

Health and Welfare Benefits, Retirement Benefits, and Perquisites To facilitate the performance of the role and ensure a market competitive total compensation package

Health and welfare benefits, the same as benefits offered to other employees of the Company in the respective countries 

Retirement savings offered through participation in our 401(k) and non-qualified defined contribution plans for eligible U.S. NEOs, similar to plans offered to other U.S. employees

Limited perquisites including financial planning, tax assistance, use of company cars, club memberships, executive physicals, and security services where necessary

Limited participation in other programs dependent on geography and tenure (non-U.S.-based NEO)

 

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Base Salary

We provide our NEOs with a market competitive base salary to compensate them for services performed during the year. We set base salary by referencing market median total target compensation. When setting an individual NEO’s base salary, we consider factors such as individual performance, experience, and contributions to the business, while staying within an appropriate range of the market median for the role.

 

The Compensation and Talent Committee reviews base salary for NEOs on an annual basis. For the CEO, the Compensation and Talent Committee determines and approves any changes, with input from the committee’s independent compensation consultant. For the other NEOs, the CEO recommends changes to the Compensation and Talent Committee with the support of the committee’s compensation consultant, and the Compensation and Talent Committee approves the changes. The NEOs do not participate in discussions or decisions relating to their own or the other NEOs’ compensation.

 

In May 2020, we temporarily reduced the annual base salary for the CEO by 30% and other executive officers by 20% in response to the change in business environment due to the COVID-19 pandemic and sharp decline in oil prices. The temporary reduction ended on January 1, 2021 and salaries were reinstated to pre-May 2020 levels, with the exception of Mr. Melin who received an adjustment on January 25, 2021 in relation to his appointment to Executive Vice President and Chief Financial Officer. The Compensation and Talent Committee elected to make no other increases to base salaries in light of challenging industry conditions and continued market uncertainty caused by the COVID-19 pandemic.

 

The table below provides the annualized base salaries for each NEO (with the exception of Ms. Mannen, who resigned on January 24, 2021), with the effective dates noted below:

 

Named Executive Officer

January 1, 2020

January 1, 2021

% Change
Douglas J. Pferdehirt $1,236,000 $1,236,000 0%
Alf Melin1 $410,000 $650,000 59%
Justin Rounce $600,000 $600,000 0%
Jonathan Landes $475,000 $475,000 0%
Barry Glickman $536,000 $536,000 0%

 

(1) Mr. Melin’s salary as of January 1, 2021 was $410,000 and was increased to $650,000 following his promotion to Chief Financial Officer, effective January 25, 2021.

 

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Annual Cash Incentive

 

2021 Annual Cash Incentive Targets

We provide our NEOs with an annual cash incentive to drive and reward the achievement of short-term Company strategic goals and individual contributions. Each NEO has an annual cash incentive target, set as a percentage of base salary. Each NEO can earn 0% to 200% of their annual cash incentive target, depending on Company and individual performance.

 

The Compensation and Talent Committee reviews and approves target annual cash incentive percentages for the NEOs annually, based on a review of market median total compensation data for our peers. The targets are set at appropriate levels to incentivize executive officers to achieve the short-term financial, ESG goals for the Company, as well as individual goals. The annual cash incentive also ensures that we provide executive officers with market-competitive levels of total compensation.

 

The following were the 2020 and 2021 annual cash incentive targets for our NEOs, with the exception of Ms. Mannen, who left the Company on January 24, 2021. Mr. Melin’s target bonus percentage was increased upon his promotion to CFO. The Compensation and Talent Committee elected to make no other increases to target bonus percentages in light of challenging industry conditions and continued market uncertainty caused by the COVID-19 pandemic.

 

Named Executive Officer 2020 2021 Increase
Douglas J. Pferdehirt 135% 135% 0%
Alf Melin1 50% 100% 50%
Justin Rounce 100% 100% 0%
Barry Glickman 100% 100% 0%
Jonathan Landes 100% 100% 0%

 

(1)  Mr. Melin was promoted to Chief Financial Officer, effective January 25, 2021 and received an increase in his Annual Cash Incentive target as a result.

 

Annual Cash Incentive Performance Indicators

75% of the annual cash incentive is based on business performance indicators (“BPI”), and 25% is based on individual annual performance indicators (“API”).

 

 

75% BPI

Assessment of overall Company performance based on business performance indicators 

 

 

+

 

25% API

Assessment of individual performance based

on qualitative factors reflected in the executive director's annual performance objectives

 

 

BPI Component – 75% of Annual Cash Incentive

The BPI components are intended to drive the achievement of key financials and ESG objectives. Each component is assessed independently from the other components and has a maximum possible payout of 200% of target. Furthermore, if performance with respect to any BPI fails to meet the threshold level the payout is 0%.

 

Target Setting for BPI Measures

Performance targets related to our annual cash incentive are set at “stretch” targets that are considered difficult and

 

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challenging but achievable with superior execution based on our long-range plans. Given the cyclical nature of our industry sector, as well as the variability in some of our metrics caused by the lifecycle progression of a few very large projects, our targets can vary in absolute terms when compared to prior year targets but are set to ensure that achievement will require the same or improved execution to achieve the targets.

 

In setting performance goals, the Compensation and Talent Committee considers the Company’s annual financial plans, strategic initiatives, and projections, which are impacted by the following factors:

 

The overall business climate and the cyclical nature of our business

Underlying market conditions for our products and services

Volatility in commodity prices

Our competitors’ performance

Anticipated changes in customer activity

Our prior-year performance

 

These inputs inform discussions regarding both the targets and the ranges around the target to ensure the goals are sufficiently difficult without incentivizing inappropriate risk taking.

 

2021 Measures and Results

The 2021 BPI measures for the annual cash incentive are outlined below:  

 

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BPI Measure 

% Weighting 

2021 Goal 

Definition 

Why it matters 

Adjusted EBITDA as a Percentage of Revenue % 

25% Weighting

 

7.8% Adjusted earnings before interest, taxes, depreciation, and amortization, calculated as a percentage of revenue Reflects our performance in leveraging cost efficiencies, and driving profitability improvement, which help create a sustainable business

Free Cash Flow 

25% Weighting

 

$100 million Cash provided by operating activities, less capital expenditures Measures our ability to generate cash as an indicator of the financial health and liquidity of the Company

ESG Performance 

25% Weighting

 

Year 1 progress towards 3-year ESG objectives Performance relative to the TechnipFMC ESG scorecard Directly links our compensation program to our ESG commitments and objectives, including our 2021-2023 ESG scorecard

 

The 2021 BPI goals and the 2021 results for Adjusted EBITDA as a Percentage of Revenue and Free Cash Flow are outlined below.

 

2021 BPI
Measure
2021 Goals1 2021 Performance2
     Threshold
Performance
         Target
Performance 
    Maximum
Performance 
Performance % Payout %
Adjusted EBITDA as a Percentage of Revenue %
25% Weighting
6.3% 7.8% 9.3% 8.8% 167%
Free Cash Flow
25% Weighting
$— $100 million $200 million $523 million 200%

(1) Financial targets and actual performance based on Adjusted EBITDA exclude non-recurring charges and credits, such as impairments, restructuring costs, integration costs, foreign exchange impact, as well as other items identified in TechnipFMC’s quarterly and annual financial statements. Free cash flow is defined as cash provided by operating activities less capital expenditures. For the calculation of adjusted EBITDA, please refer to “Non-GAAP Measures” beginning on page 47 of our Form 10-K, which amount is further reduced by $15.8 million to adjust for foreign exchange gains that are excluded from our calculation of adjusted EBITDA performance for compensation purposes. For the calculation of free cash flow, please refer to “Liquidity and Capital Resources” beginning on page 51 of our Form 10-K.

 

(2) Payout for performance between the threshold, target, and maximum payouts are interpolated on a straight-line basis. The final weighted payout percentage for BPI is rounded to the nearest whole percent for calculating the annual cash incentive payout.

 

In accordance with established guidelines, the goals are adjusted for the cumulative effect of changes in accounting principles, significant acquisitions and divestitures, and foreign exchange movements. These changes are intended to ensure that performance is measured on a like-for-like basis relative to the goals that were set.


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2021 results for the ESG scorecard 

The ESG Committee carefully reviewed the Company’s progress during 2021 towards the achievement of its 2021-2023 ESG scorecard objectives and assessed the Company has exceeded expectations for 2021 in making progress towards its 2023 targets. Based upon this assessment, the Compensation and Talent Committee recommended a payout of 120% for the ESG component of the 2021 Annual Cash Incentive. For further information on the results of the first year of our 2021-2023 scorecard, please see the section entitled “Environmental, Social, and Governance.

 

API Component – 25% of Annual Cash Incentive 

Each February, the individual performance goals are established for each NEO.

 

These objectives are set at “stretch” levels (i.e., objectives that are difficult and challenging but should be achievable with superior execution) and are set using a rigorous evaluation process. If an NEO failed to achieve any of his or her objectives, the API multiple would likely be 0%, absent any mitigating factors. If the NEO met some, but not all, of the objectives, the API multiple would fall between the range of 0% to 200%, depending upon the number of objectives accomplished, their relative importance and difficulty as determined by the Compensation and Talent Committee, and any factors that may have prevented achievement of certain objectives.

 

For 2021, the NEOs received API ratings ranging from 110% to 160% for the year, with an average rating of 143%.

 

In determining the 2021 API rating for our Chair and CEO, the Compensation and Talent Committee took into account a comprehensive view of his performance and contributions, including performance on key objectives and results. This includes leading the successful completion of the Spin-off of Technip Energies and the emergence of TechnipFMC as an industry-leading, fully integrated technology and services provider, unlocking significant long-term growth potential and shareholder value. In addition to this achievement, Mr. Pferdehirt expanded our strategic alliances and partnerships, introduced New Energy Ventures, generated strong Adjusted EBITDA as a Percentage of Revenue performance and free cash flow, and committed to our ESG goals with our three-year ESG scorecard. 


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Objectives

Key Achievements

Performance Assessment
Below
Expectations
Meets
Expectations
Exceeds
Expectations
Mr. Pferdehirt

Strategy & Growth (35%) 

Implement strategy for energy transition 

Establish strategic partnerships 

Advance technology

 

Completed Spin-off of Technip Energies 

Established six strategic alliances to enable growth of NEV 

Identified NEV Leader and added role to the Executive Leadership Team 

Launched integrated offering: iONE™ 

Continued to advance Technology Leadership with Subsea 2.0™, GEMINI® ROV, introduction of E-Mission™ solution, acquisition of Magma Global to accelerate development of composite pipe technologies. 

   

 

Execute on Key Deliverables (20%) 

Subsea: growth

►  Meet inbound revenue targets 

►  Develop strategy to significantly increase Subsea Services revenue

Surface: strengthen market position

►   Secure key alliances and contracts 

Exceeded inbound targets for Subsea business 

Developed strategy to significantly increase Subsea Services revenue 

Secured three alliances for Surface 

Secured 12 digital / ESG contracts (iComplete™ and iProduction™)

   

 

Personal Development (10%)

External presence – active leadership in Gender and Racial Equity

 

Elevated from Regional Advisory Board to Global Board of Advancing Women in Energy 

Actively engaged and sponsored TechnipFMC Fellow in CEO Action for Racial Equity

 

 

 

 

Continued overleaf >

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Objectives

Key Achievements 

Performance Assessment
Below
Expectations
Meets
Expectations
Exceeds
Expectations
Mr. Pferdehirt

Top Team and Company Culture (15%)

►  Succession planning:  

 ELT positions 

► Implement ELT team-performance program and metrics

►  Culture – Implement engagement survey and

      action plan

Promoted a diverse set of leaders to ELT positions 

Initiated ELT team performance programs and metrics with new ELT members 

Completed engagement survey, identified focus areas, and implemented action plan 

 

 

 

Promoting Foundational Beliefs 

Integrity – ensure highest level of compliance and response 

  Sustainability – achieve metrics; equity, community engagement and environment 

QHSES – Fully implement and expand Pulse (HSES) and Impact Quality (Quality) transformation programs 

Actively contributed to advancements in gender and racial equity in EWiE and CEO Action Advisory Boards 

Actively led TechnipFMC as a top contributor to both United Way and American Heart Association 

Promoted energy transition through active industry

     engagement 

Achieved Zero Fatalities in 2021 and a 45%

     reduction in Serious Injuries 

Increased client satisfaction rating in 2021 

   

 

Overall Rating for Mr. Pferdehirt     160%  

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Individual performance assessments for the other NEOs are summarized below. Ms. Mannen is excluded because she did not participate in the annual cash incentive plan in 2021.

NEO Summary of 2021 Objectives and Key Achievements

Alf Melin

Chief Financial Officer

 

Mr. Melin’s 2021 individual performance objectives reflected his responsibilities as our new Executive Vice President and Chief Financial Officer effective January 25, 2021. Mr. Melin’s 2021 achievements included co-leading the completion of the Spin-off of Technip Energies, guiding the Company’s financial strategy post-Spin-off to a significant reduction in the Company’s net debt position, and the achievement of our 2021 Adjusted EBITDA as a Percentage of Revenue and free cash flow targets. 

Justin Rounce
Executive Vice President and Chief Technology Officer
Mr. Rounce’s 2021 individual performance objectives reflected his responsibilities as our Executive Vice President and Chief Technology Officer in leading our research and innovation, product engineering, procurement and sourcing, manufacturing, quality, safety, security, IT, digital, and corporate development. Mr. Rounce’s 2021 objectives and achievements included co-leading the execution of the Spin-off of Technip Energies, advancing the Company’s industrialization and transformation activities, ensuring manufacturing performance, leading new product development projects and processes, supporting the development of business process changes including digital transformation, and growing strategic alliances to support the energy transition.

Barry Glickman 

President, Surface

 

Mr. Glickman’s 2021 individual performance objectives reflected his responsibilities as President of Surface. Mr. Glickman’s 2021 achievements included leading the recovery of our Surface business following the 2020 downturn, exceeding inbound, profit, and cash flow targets, and accelerating adoption of new technologies and solutions.

Jonathan Landes 

President, Subsea

 

Mr. Landes’s 2021 individual performance objectives reflected his responsibilities as President of Subsea. Mr. Landes’ 2021 objectives and achievements included the establishment of new customer and strategic alliances, winning and renewing several key long-term contracts that will enable continued growth, delivery on Subsea segment cash flow, inbound and EBITDA targets, rollout of programs that reduced serious injuries and improved safety, and establishing key strategic partnerships to expand our growth into the energy transition. 


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Determination of 2021 Payouts under the Annual Cash Incentive Plan 

Each executive’s target annual cash bonus is a percentage of his or her base salary for the year. For example, assuming an NEO has a base salary of $600,000, a 100% target bonus, a BPI rating of 162%, and an API rating of 125%, the executive’s annual cash bonus would be calculated as follows:

 

Component Base Salary Weighting Target Bonus % Rating Payout
BPI: $600,000 x 75% x 100% x 162% = $729,000
API: $600,000 x 25% x 100% x 125% = $187,500
Total Cash Incentive Compensation       $916,500

 

Long-Term Equity Incentives 

Annual long-term equity incentive awards, granted in the form of TechnipFMC equity, represent the largest component of each NEO’s annual target compensation opportunity, grounded in our compensation philosophy of paying for performance and aligning executives’ interests with those of our shareholders. Awards are made in the form of two complementary vehicles, PSU awards and RSU awards, providing a balanced focus on performance, sustainable long-term value creation, and retention.

 

Chart above does not include the additional one-time long-term incentive grant made to the CEO in 2021.

 

The Compensation and Talent Committee reviews and approves equity awards for the NEOs on an annual basis. The awards are based on market competitiveness on total target compensation and aim to provide appropriate levels of retention and incentives for achieving the Company’s long-term goals.

 

For 2021, the Compensation and Talent Committee set the target value of equity awards for each NEO with reference to market median total compensation data.


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Named Executive Officer 2021 LTI Target (% of Base) 2021 LTI Target Value
Douglas J. Pferdehirt 785% $9,700,0001
Alf Melin 300% $1,950,000
Justin Rounce 300% $2,550,0002
Barry Glickman 250% $1,340,000
Jonathan Landes 250% $1,187,500

(1) Excludes one-time long-term incentive grant of $2,910,000.

(2) Excludes one-time long-term incentive grant of $750,000.

 

Additional One-Time Long-Term Incentive Grants: 

Our executive officers are critical to our future success as they provide deep Company and industry expertise. These executives have been responsible for our transformation into a fully integrated leader in technology and innovation, successful completion of the Spin-off, and have well positioned the Company for future growth and the energy transition.

 

One of the key priorities for the Committee was retention and continuity of the executive team during a period of significant volatility and uncertainty in the energy industry. While there were no changes to base salary or incentive targets, the Committee awarded a one-time enhancement to the long-term incentive grants for Mr. Pferdehirt and Mr. Rounce to enhance the retention provided from unvested long-term incentives and recognize their contributions to the Spin-off transaction.

 

The additional 2021 grant for Mr. Pferdehirt had a grant date fair value of $2,910,000, which represents 30% of his regular annual target award, and was comprised of the following awards:

 

   ► $776,000 in PSUs tied to 2021-2023 Relative TSR Performance; and

   ► $2,134,000 in four-year cliff vesting RSUs, 50% of which he is required to retain for at least one year following vesting.

 

The additional one-time grant was structured such that (1) a majority of the award vests after four years (one year longer than the vesting period of the annual grant), thus enhancing the retentive value of the program and (2) including the one-time additional award, at least 60% of Mr. Pferdehirt’s long-term incentive grant for the 2021 is performance-based.

 

The additional 2021 grant for Mr. Rounce had a grant date fair value of $750,000 and was comprised of the following awards:

 

   ► $525,000 in PSUs tied to 2021-2023 Relative TSR Performance; and

   ► $225,000 in three-year cliff vesting RSUs, 50% of which he is required to retain for at least one year following vesting.

 

2021 Performance Stock Unit Awards (70% of Equity Award) 

The Compensation and Talent Committee sets the performance targets associated with PSU awards prior to the beginning of each three-year performance period. For awards in 2021, PSU awards comprised 70% of the total long-term equity award and payout will be based on relative TSR performance for the three-year period.

 

The volatility in the oil and gas business environment, as well as our Spin-off, made it challenging to set meaningful financial targets. Therefore, in 2021, relative TSR, was selected as a single performance measure.

 

We believe that relative TSR is a meaningful measure of our long-term performance and motivates our NEOs to achieve superior share price compared to our key competitors, thus aligning their interests with shareholder interests. We further reinforce this by requiring a minimum threshold of relative performance for payout and by capping payout in the case of negative TSR. 


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PSU Measure Weighting Definition Why It Matters
Relative TSR 70% of total long- term equity

Relative TSR: Cumulative three-year increase in volume-weighted-average price and reinvested dividends relative to peers 

Assesses our overall performance in the eyes of our shareholders and the broader stock market, relative to companies with which we compete for customers and investors that are subject to similar macro-economic factors

 

The relative TSR performance for our 2021 PSU awards will be measured against a group of 10 companies (“Relative TSR Peer Group”) that the Compensation and Talent Committee believes best reflects the companies that we compete with for both investments and customers. The financial and operational performance of these companies is therefore most directly relevant to TechnipFMC, and we are all subject to similar macro-economic factors.

 

2021 Relative TSR Peer Group

Aker Solutions ASA

Baker Hughes

Forum Energy Technologies, Inc.

Halliburton Company 

National Oilwell Varco, Inc.

Oceaneering International, Inc.

Oil States International, Inc.

Schlumberger Limited

Subsea 7 S.A. Weir Group PLC

In comparison to our prior Relative TSR Peer Group, the following companies were removed due to no longer being comparable peers post-Spin-off: Saipem Spa, Fluor Corporation, and John Wood Group plc. Aker Solutions ASA, Forum Technologies, Inc., and Weir Group PLC were added.

The vesting date for the 2021 PSU awards is March 1, 2024, with a performance period of February 16, 2021, being the date of the Spin-off, through December 31, 2023.

 

The Compensation and Talent Committee approved the following targets in relation to the 2021 PSU awards:

 

Performance Achievement

Relative TSR Performance

Payout
(% of earned PSUs)
Below Threshold Below 25th percentile 0%
Threshold 25th percentile 50%
Target 42nd percentile 100%
Maximum or above 75th percentile or greater 200%

Note: If the Company’s absolute TSR is negative for the performance period, the payout in respect of the TSR element will be capped at target, regardless of our relative performance.

 

For performance achievement between the levels identified above, payout percentage will be interpolated on a straight- line basis.


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2021 Time-Based RSU Awards (30% of Equity Award) 

Time-based RSU awards further align NEOs’ interests with the interests of our shareholders by incentivizing them to increase share price, while reinforcing the retention impact of our compensation program.

 

RSUs are subject to three-year cliff vesting terms, with no phased vesting, meaning the NEO must remain employed through the vesting date of March 1, 2024, with exceptions only for retirement, death, and disability. Once vested, the executive receives ownership and the voting rights of the underlying Ordinary Shares.

 

The number of RSUs granted to each of the NEOs was determined by dividing the target value set for each executive officer by the closing price of the Company’s Ordinary Shares on the NYSE on the grant date.

 

On vesting, 50% of the after-tax number of RSUs must be held for a period of at least one year to incentivize NEOs to retain the shares and increase share price, further aligning NEOs’ interests with those of our shareholders.

 

Treatment of Outstanding 2019 and 2020 Long-Term Equity Incentives at Spin-off

On February 16, 2021, TechnipFMC completed its Spin-off and separated into two independent, publicly traded companies, TechnipFMC and Technip Energies.

 

Pursuant to the Spin-off, all applicable outstanding 2019 and 2020 TechnipFMC PSU and RSU awards for the NEOs were adjusted based on the ratio of the closing price of TechnipFMC Ordinary Shares on the NYSE on the date immediately prior to the Spin-off to the closing price of TechnipFMC Ordinary Shares on the NYSE on the date immediately after the Spin-off. In addition, the 2019 and 2020 TechnipFMC PSU awards were converted to RSUs (at target) subject to continued service on the original vesting dates as measurement of performance against the set goals was not possible following the Spin-off. The vesting dates and payment conditions for the 2019 and 2020 awards otherwise remained the same.


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TechnipFMC Proxy Statement 2022

Looking Ahead – 2022 Incentive Plans

2022 Annual Cash Incentive Plan
Our 2022 annual cash incentive plan will be based on the measures outlined in the table below.

Performance
Measure
Weighting Definition Why It Matters
Adjusted EBITDA as a Percentage of Revenue 25% Adjusted earnings before interest, taxes, depreciation, and amortization, calculated as a percentage of revenue Reflects the performance and sustainability of the business, leveraging cost efficiencies, and driving profitability improvement
Free Cash Flow from Operations 25% Cash provided by operating activities, less capital expenditures Measures our ability to generate cash as an indicator of the financial health and liquidity of the Company
ESG Performance 25% Performance relative to the TechnipFMC ESG scorecard Directly links our compensation program to our ESG commitments and objectives, including our 2021-2023 ESG scorecard
Individual API Metrics 25% Performance relative to individual performance goals established at the beginning of the year Objectives are set at “stretch” levels and are focused on key strategic projects and objectives, as well as self-development goals

In 2021, we provided a comprehensive overview of our ESG efforts to our investors, including new initiatives to be realized through 2023 and a commitment to deliver a 50% reduction in Scope 1 and 2 equivalent GHG emissions by 2030. In order to directly link our compensation program to our ESG commitments and objectives, we will continue to include an ESG measure in our 2022 annual cash incentive plan at 25% weighting.

Performance for this measure will be based on a scorecard that measures our performance against our 2021-2023 ESG objectives. These objectives include the following:

Environmental – our carbon footprint (including scope 3 reduction target and carbon intensity reduction target), our clients’ carbon footprint, recycled and reused waste targets

 

Social – fair representation by gender and nationality, awareness and culture, inclusive leadership training, and community/STEM initiatives

 

Governance – HSE leadership, human rights due diligence, and ethics and compliance training

We will continue to include Adjusted EBITDA as a Percentage of Revenue and Free Cash Flow from Operations as measures in the annual cash incentive plan, with an objective to increase our operating profitability, leverage cost efficiencies, maintain the financial health and liquidity of the Company, and drive shareholder value creation.

We will continue to use individual API metrics in order to incentivize executives to focus on key strategic projects and objectives, as well as personal development goals.

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TechnipFMC Proxy Statement 2022

2022 Long-Term Equity Incentive Plan
Our 2022 Long-Term Equity grant will be based on the measures outlined in the table below.

Long-Term
Equity
Weighting Vesting Performance Measure Why It Matters
Performance Stock Units 70% of total long-term equity Three-year cliff vesting Relative TSR (50%):

ROIC (50%)

Performance is measured over a three-year period and subject to three-year cliff vesting
TSR assesses our overall performance in the eyes of our shareholders and the broader stock market, relative to companies with which we compete for customers and investors that are subject to similar macro-economic factors

ROIC Measures our profitability as well as our effective utilization of capital
Restricted Stock Units 30% of total long-term equity Three-year cliff vesting N/A Further align NEOs’ interests with the interests of our shareholders by incentivizing them to increase share price, while reinforcing the retention impact of our compensation program

We believe that both ROIC and relative TSR closely align with value creation and are meaningful measures of our longterm performance and motivate our NEOs to generate returns and achieve superior share price performance compared to our key competitors, thus aligning their interests with shareholder interests. We further reinforce this by requiring a minimum threshold of relative performance for payout and by capping payout in the case of negative TSR.

The relative TSR performance for our 2022 PSU awards will be measured against a Relative TSR Peer Group that the Compensation and Talent Committee believes best reflects the companies that we compete with for both investments and customers. The financial and operational performance of these companies are most directly relevant to TechnipFMC, and we are all subject to similar macro-economic factors.

The following are the targets in relation to the 2022 PSU awards:

Relative TSR Performance
Performance Achievement Relative TSR Performance Payout
(% of earned PSUs)
Below Threshold Below 25th percentile 0%
Threshold 25th percentile 50%
Target 50th percentile 100%
Maximum or above 75th percentile or greater 200%

Note: If the Company’s absolute TSR is negative for the performance period, the payout in respect of the TSR element will be capped at target, regardless of our relative performance.

For performance achievement between the levels identified above, payout percentage will be interpolated on a straightline basis.

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TechnipFMC Proxy Statement 2022

Return On Invested Capital
The targets for the Return On Invested Capital measure will be disclosed at the end of the performance period.

Indirect Compensation
The final element of our compensation comprises market-aligned benefits and perquisites. These are intended to both facilitate the performance of our NEOs in their roles while ensuring we are market competitive in what we provide.

Retirement Benefits
Eligibility for retirement savings plan participation depends on an NEO’s tenure and the country in which he or she is based. The majority of our NEOs participate in the U.S. Qualified and Non-Qualified Savings Plans on the same terms as other eligible employees.

Plan Eligibility Features
U.S. Qualified Savings Plan

U.S. employees working more than 30 hours a week

All U.S. NEOs are eligible

 

 

 

Employees can contribute between 1% and 75% of eligible compensation (salary and eligible incentives) on a pre- and after-tax basis up to statutory limits for tax qualified plans

 

► Company matches 100% of the first 5% of eligible contributions Participants are 100% vested in their contributions and matching contributions

 

► Employees receive an additional 2% non-elective Company contribution that vests after three years of service

 

► For annual compensation that exceeds the limit required for the plan to be qualified, the Company contributes 5% of such excess to the employee’s non-qualified savings plan (see below)

U.S. Non-Qualified Savings Plan

U.S. executives and other eligible senior employees

All U.S. NEOs are eligible

 

 

 

The Company contributes an amount equal to any missed Company contribution under the U.S. Qualified Savings Plan on annual compensation that exceeds the maximum limit required for the plan to be qualified

 

► Intent of the plan is to ensure eligible employees receive the same contribution as a percentage of eligible earnings from the Company regardless of their compensation level

 

► Terms mirror those of the U.S. Qualified Savings Plan

 

► Participants can contribute up to 75% of their eligible compensation (salary and eligible incentives) on a pre-tax basis

 

► Company matches 100% of the first 5% of eligible contributions

 

► Participants are 100% vested in their contributions and matching contributions

 

► Employees receive an additional 2% non-elective Company contribution that vests after three years of service

 

► All vested funds must be distributed upon an employee’s separation from service with the Company; provided, however, that there is a six-month delay for key employees

Continued overleaf >

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TechnipFMC Proxy Statement 2022

Plan Eligibility Features
U.S. Pension Plan

U.S. employees of FMC Technologies with five years of service prior to January 1, 2010

Ms. Mannen and Mr. Melin are the only eligible NEOs

► A tax-qualified defined benefit plan

 

► Pension based on final average pay, calculated as the highest 60 consecutive months of pay (base salary and annual cash incentive) in the final 120 months of service

 

► Benefit accruals frozen for non-union employees effective December 31, 2017

U.S. NonQualified Pension Plan

U.S. executives and other eligible senior employees of FMC Technologies with five years of service prior to January 1, 2010

Ms. Mannen and Mr. Melin are the only eligible NEOs

► A non-qualified defined benefit pension plan

 

► Pension based on final average pay, calculated as the highest 60 consecutive months of pay (base salary, annual cash incentive, and employee contributions made to the U.S. Non-Qualified Savings Plan) in the final 120 months of service up to statutory limits for tax qualified plans

 

► Benefit accruals frozen for non-union employees effective December 31, 2017


Perquisites
The Company also provides limited perquisites to NEOs, facilitating the performance of their roles and to ensure a competitive total compensation package. The perquisites we provide to our executives may include financial planning and personal tax assistance, personal use of Company automobiles, dining club memberships and country club memberships, car allowances, executive physicals and other minor expenses associated with their business responsibilities. The value of perquisites deemed to be personal is imputed as income to an executive officer, and we do not gross up for the taxes due on such imputed income. Additional allowances or benefits may be granted to NEOs, if considered appropriate and reasonable.

Reflecting the safety concerns associated with their roles, the Company provides a security program for our executive officers. The Compensation and Talent Committee believes this is in the best interests of shareholders as the personal safety and security of our executive officers is critical to the stability of the Company. The security program was developed based on a risk assessment determined to be appropriate by our security team and an external consultant. We do not consider the security measures provided to our executive officers to be a personal benefit, but rather reasonable and necessary expenses for the benefit of the Company. However, in accordance with SEC disclosure rules, the aggregate incremental cost of these services is reported in the Summary Compensation Table.

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TechnipFMC Proxy Statement 2022

Other Compensation, Benefits, and Considerations

Executive Severance Benefits
It is our policy to offer severance benefits to our executive officers because we believe that severance benefits provide important financial protection to executive officers in the event of involuntary job loss, are consistent with the practices of peer companies, and are appropriate for the retention of executive talent.

Our executive officers, including our NEOs, are entitled to severance benefits outside of a change-in-control context, the material terms of which are described in the chart below. Our general executive severance arrangements are consistent with the market practice of large public companies surveyed by our compensation consultant. Change-in-control severance benefits, as described below, and general severance benefits are exclusive of one another, and in no circumstance would any NEO receive benefits under both a change-in-control severance agreement and our general executive severance benefits.

Each of our NEOs is party to an Executive Severance Agreement, pursuant to which he or she is entitled to enhanced severance in the event of a qualifying termination in connection with a change-in-control event. We entered into the Executive Severance Agreements to ensure executives are incentivized to continue to work in the Company’s best interests during the period of time when a change-in-control transaction is taking place and in order to ensure we have the ability to maintain continuity of management. The Compensation and Talent Committee believes it is appropriate to provide executives with the assurance that they will not be adversely affected by a change-in-control transaction without fair compensation, except in the case of termination for cause. The material terms of the Executive Severance Agreements are described in the chart below.

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TechnipFMC Proxy Statement 2022

Separation
Scenario
Provisions under TechnipFMC Executive Severance Agreement or Relevant Equity Award Agreements
Termination without cause

► Cash severance equal to 18 months of base salary and target annual cash incentive

 

► Pro-rated target annual cash incentive for the year of termination

 

► 18 months of medical and dental benefits continuation

 

► Outplacement assistance as appropriate

 

► Financial planning and tax preparation assistance for the final calendar year of employment

 

► Severance benefits subject to compliance with non-disclosure, non-compete, and nonsolicitation covenants

 

► Equity treated pursuant to the terms of the applicable plan

 

► No tax gross-ups on any payments

Retirement

► Outstanding equity settled on the originally scheduled date

 

► Outstanding PSUs will remain subject to the original performance conditions, measured at the originally scheduled date

Death or disability ► Accelerated vesting of all granted and outstanding equity awards, with outstanding PSUs vesting at target
Qualifying termination without cause or resignation for good reason following a change-in-control event

► Double trigger requirements, meaning a change-in-control event must occur, followed by a qualifying termination within 24 months

 

► “Qualifying termination” defined as termination by the Company without cause, or if the executive terminates employment for good reason (e.g., material change in responsibilities, material reduction in salary and/or benefits, significant change in location of employment)

 

► Cash severance equal to two to three times the greater of the executive’s annual base salary on the date of the agreement or the date of termination and two to three times the greater of his or her average actual annual cash incentive paid in the three years prior to termination or his or her target annual cash incentive for the year the executive is terminated

 

► Pro-rated target annual cash incentive for the year of termination

 

► Amount equal to the premiums payable for health and welfare coverage for 24 to 36 months

 

► Up to $50,000 in outplacement assistance

 

► Accelerated vesting of all granted and outstanding equity awards, with outstanding PSUs vesting at target

 

► “Best-after-tax” cutback for 280G excise tax calculations, with no tax gross-ups on any payments


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TechnipFMC Proxy Statement 2022

Compensation Risk
As part of a robust approach to risk mitigation, the Company operates a number of policies that apply to our NEOs, and in many instances to broader employee populations. These policies are intended to align our NEOs with the long-term interests of our shareholders and encourage them to make decisions that expose the Company to an appropriate level of risk within our agreed framework.

Claw-back Policy
The Company has adopted a compensation recovery claw-back policy that enables us to recoup and/or cancel previously awarded compensation in defined situations.

Covered Employees

► Executive officers subject to the reporting requirements of Section 16 of the Exchange Act

 

► By definition, this includes all NEOs

Covered Compensation

► Cash incentive compensation

 

► Equity awards

Triggering Events

► Illegal acts including fraud, material theft of Company assets, bribery, and corruption

 

► Gross negligence

 

► Willful misconduct, including conduct that requires the Company to materially restate its quarterly or annual financial or operating results

Compensation and Talent Committee Authority

► Determine whether a triggering event has occurred

 

► Cancel previously granted compensation in part or in whole, whether vested or deferred Clawback previously earned compensation by requiring the executive officer to repay the Company any gain realized or payment received

 

► Reduce or offset future incentive compensation


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TechnipFMC Proxy Statement 2022

Share Ownership and Retention Requirements
The Compensation and Talent Committee oversees the operation of share ownership guidelines that apply to our executive officers. All executive officers, including all NEOs, met their pro-rata ownership and retention requirements under the Company’s policy in 2021.

Share Ownership Requirements

► CEO: 6x base salary

► CFO: 5x base salary

► Other executive officers: 3x base salary

Qualifying Share Interests

► Ordinary shares owned outright

► PSU awards where the performance period is final and approved

► Unvested RSUs

Time for Achievement

► Five years from the effective date of appointment

► Pro-rata requirement of 20% per year applies within the first five years

Consequences for Non-achievement At the discretion of the Board of Directors
Retention Requirement

► 50% of the after-tax RSUs must be retained for at least one year following vesting

► Applies regardless of whether an executive has met the ownership requirement


Insider Trading and Speculation in Company Stock
Our officers, directors, and employees are prohibited from engaging in discretionary transactions involving our securities while in possession of material, non-public information or otherwise using such information in any manner that would violate applicable laws and regulations. All such individuals are also prohibited from directly or indirectly speculating in Ordinary Shares, including derivative transactions, hedging and pledging activities, short selling, selling or purchasing options in Ordinary Shares, and borrowing against Ordinary Shares. Our Insider Trading Policy aims to align management’s economic ownership risk with those of shareholders.

Tax Considerations
Although the Compensation and Talent Committee considers the accounting and tax treatment of the various forms of compensation, the accounting treatment and tax deductibility of compensation have not had and will not have a material impact on the Company’s executive compensation program. Our Compensation and Talent Committee will continue to structure our compensation program in the best long-term interests of our shareholders.

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TechnipFMC Proxy Statement 2022

Summary Compensation Table for the Year Ended December 31, 2021

The following table summarizes the compensation earned by each of the NEOs from all sources for services rendered in all of their capacities to the Company during the fiscal year ended December 31, 2021.

Name and Principal Position
as of 12/31/2021
Year

Salary

($)1

Stock Awards

($)2

Option Awards

($)3

Non-Equity

IncentivePlan

Compensation

($)4

Change in

Pension
Value and
Nonqualified
Deferred

Compensation
Earnings ($)
5

All Other
Compensation

($)
6
Total
($)
Total
Excluding
Accounting
Charge
($)
7
  2021 1,236,000 17,629,477 2,694,789 0 373,416 21,933,683 20,251,576

Douglas J. Pferdehirt

Chair and CEO

2020 988,800 9,966,772 1,668,600 0 296,429 12,920,601 12,920,601
  2019 1,236,000 8,877,924 1,939,995 2,903,364 0 393,923 15,351,206 15,351,206

Alf Melin

Chief Financial Officer

2021 650,000 2,589,929 988,915 (8,626) 56,783 4,277,001 4,239,168
2020
2019

Justin Rounce

Executive Vice President and Chief Technology Officer

2021 600,000 3,649,495 969,000 111,776 5,330,270 5,018,136
2020 520,000 1,849,497 600,000 115,910