DEF 14A of Zoetis Inc.
Filed Apr 10, 2024 · FY20230001104659-24-045571
Director Nominees Skills, Experience and Demographic Information
Director Nominees Skills, Experience and Demographic Information We believe that effective oversight comes from a Board that consists of highly-qualified, experienced and diverse directors with relevant expertise for overseeing our strategy, capital allocation, performance, succession planning and risk. The Board considers diversity of skills, experience, race, ethnicity, gender, cultural background and thought among directors when evaluating director nominees; this diversity information is set forth below. Additional information about our directors can be found under “Information About Directors” on pages 13 to 22.
Director Nominees Skills, Experience and Demographic Information
| Skill / Experience | | Definition | | Academia | | Experience working in a university or other community concerned with the pursuit of research, education and scholarship | | Animal Health | | Experience working at an organization (including for profit, non-profit, academic, or otherwise) engaged in the production, care and/or maintenance of animals | | Consumer Products | | Experience working at an organization (including for profit, non-profit, academic, or otherwise) engaged in the development, manufacture or commercialization of products which are sold directly to individuals and households | | Digital & Technology | | A significant background working in technology, resulting in knowledge of how to anticipate technological trends, generate disruptive innovation, and extend or create new business models | | Global Businesses | | Experience driving business success in markets around the world, with an understanding of diverse business environments, economic conditions, cultures, and regulatory frameworks, and a broad perspective on global market opportunities | | Human Capital Management | | Experience working for a significant enterprise in talent development and succession planning, along with a practical understanding of organizations, processes, workforce planning, and talent risk management | | Life Sciences | | Experience working at an organization (including for profit, non-profit, academic, or otherwise) engaged in the discovery, development, manufacture or commercialization of products or services focused on improving organism life | | Manufacturing & Supply | | Experience directly managing an organization or business function responsible for the manufacturing and/or supply of physical goods | | Marketing & Sales | | Experience developing strategies to grow sales and market share, build brand awareness and equity, and enhance enterprise reputation | | Mergers & Acquisitions | | A history of leading growth through acquisitions and other business combinations, with the ability to assess “build or buy” decisions, analyze the fit of a target with a company’s strategy and culture, accurately value transactions, and evaluate operational integration plans | | Research & Development | | Experience directly managing an organization or business function responsible for the discovery and/or development of products or services | | Public Company Skill / Experience | | Definition | | Other Public Company Board Member | | Experience serving on the board of directors of a public company | | Public Company CEO | | Experience as a chief executive officer of a public company | | Public Company CFO; or Finance and Accounting | | Experience as a chief financial officer or principal accounting officer of a public company, or a member of the internal function(s) responsible for managing a public company’s finance or accounting operations | | Public Company GC; Compliance; or Corporate Governance | | Experience as a general counsel of a public company, or a member of the internal function(s) responsible for managing a public company’s corporate compliance and/or corporate governance |
Director Nominees Skills, Experience and Demographic Information
| | | Paul M. Bisaro | Vanessa Broadhurst | Frank A. D’Amelio | Gavin D.K. Hattersley | Sanjay Khosla | Antoinette R. Leatherberry | Michael B. McCallister | Gregory Norden | Louise M. Parent | Kristin C. Peck | Willie M. Reed | Robert W. Scully | | Skill / Experience | | | | | | | | | | | | | | | Academia | | | | | | ✓ | ✓ | | | | | ✓ | | | Animal Health | | | | ✓ | | ✓ | | | ✓ | | ✓ | ✓ | | | Consumer Products | | ✓ | ✓ | ✓ | ✓ | ✓ | | ✓ | ✓ | ✓ | | | | | Digital & Technology | | | ✓ | ✓ | | | ✓ | ✓ | | | | | | | Global Businesses | | ✓ | ✓ | ✓ | ✓ | ✓ | | | ✓ | ✓ | ✓ | | ✓ | | Human Capital Management | | | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Life Sciences | | ✓ | ✓ | ✓ | | | | ✓ | ✓ | | ✓ | ✓ | | | Manufacturing & Supply | | ✓ | | ✓ | ✓ | ✓ | | | | | ✓ | | | | Marketing & Sales | | ✓ | ✓ | | ✓ | ✓ | | ✓ | | | ✓ | ✓ | ✓ | | Mergers & Acquisitions | | ✓ | ✓ | ✓ | ✓ | ✓ | | ✓ | ✓ | ✓ | ✓ | | ✓ | | Research & Development | | | ✓ | | | ✓ | | ✓ | | | | ✓ | | | Other Public Company Board Member | | ✓ | | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | ✓ | | Public Company CEO | | ✓ | | | ✓ | | | ✓ | | | ✓ | | | | Public Company CFO; or Finance and Accounting | | | | ✓ | ✓ | | | | ✓ | | | | | | Public Company GC; Compliance; or Corporate Governance | | ✓ | | | | | | ✓ | | ✓ | | | | | Independent Director | | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | ✓ | ✓ |
Director Nominees Skills, Experience and Demographic Information
Note: Pursuant to the requirement under our Corporate Governance Principles that a director must retire from the Board effective immediately before the Company’s annual meeting following his or her 75th birthday, Dr. Linda Rhodes is not standing for re-election but will continue to serve until the 2024 Annual Meeting of Shareholders.
Director Nominees Skills, Experience and Demographic Information
| | Paul M. Bisaro | Vanessa Broadhurst | Frank A. D’Amelio | Gavin D.K. Hattersley | Sanjay Khosla | Antoinette R. Leatherberry | Michael B. McCallister | Gregory Norden | Louise M. Parent | Kristin C. Peck | Willie M. Reed | Robert W. Scully | | Demographic Background | | | | | | | | | | | | | | Age and Tenure | | | | | | | | | | | | | | Age (as of March 15, 2024) | 63 | 55 | 66 | 61 | 72 | 62 | 71 | 66 | 73 | 52 | 69 | 74 | | Board Tenure (full years) | 8 | 1 | 11 | 0 | 10 | 3 | 11 | 11 | 10 | 4 | 10 | 10 | | Other Public Boards | | | | | | | | | | | | | | Number | 2 | 0 | 3 | 1 | 1 | 1 | 2 | 3 | 1 | 1 | 0 | 2 | | LGBTQIA+ (optional reporting) | | | | | | | | | | | | | | Identify as LGBTQIA+ | | | | | | | | | | | | | | Race / Ethnicity* (optional reporting) | | | | | | | | | | | | | | Black or African American | | ✓ | | | | ✓ | | | | | ✓ | | | American Indian or Alaska Native | | | | | | | | | | | | | | Asian | | | | | ✓ | | | | | | | | | Hispanic or Latino | | | | | | | | | | | | | | Native Hawaiian or Other Pacific Islander | | | | | | | | | | | | | | White | ✓ | | ✓ | ✓ | | | ✓ | ✓ | ✓ | ✓ | | ✓ | | Other | | | | | | | | | | | | | | Born or Raised Outside the US (optional reporting) | | | | | | | | | | | | | | Born or Raised Outside the US | | | | ✓ | ✓ | | | | | | | | | Gender | Male | Female | Male | Male | Male | Female | Male | Male | Female | Female | Male | Male |
Director Nominees Skills, Experience and Demographic Information
| * Based on U.S. Census Bureau designations |
Director Nominees Skills, Experience and Demographic Information
| Item 1 | Election of Directors |
Director Nominees Skills, Experience and Demographic Information
Our Board currently consists of thirteen directors. Prior to our 2022 Annual Meeting of Shareholders, the directors were divided into three classes and held office for staggered terms of three years and until their successors were elected and qualified, or until their earlier death, resignation or removal. At our 2022 Annual Meeting of Shareholders, an amendment to our restated certificate of incorporation was approved by our shareholders, and subsequently filed and became effective, to declassify our Board. Beginning with the 2022 Annual Meeting of Shareholders, each class of directors is now elected to a one-year term rather than a three-year term upon the expiration of such class’s existing term, resulting in a fully declassified Board beginning with the 2024 Annual Meeting of Shareholders. The directors whose terms expire at the 2024 Annual Meeting of Shareholders are:
Director Nominees Skills, Experience and Demographic Information
| • Paul M. Bisaro | • Michael B. McCallister | | • Vanessa Broadhurst | • Gregory Norden | | • Frank A. D’Amelio | • Louise M. Parent | | • Gavin D.K. Hattersley | • Kristin C. Peck | | • Sanjay Khosla | • Willie M. Reed | | • Antoinette R. Leatherberry | • Robert W. Scully |
Director Nominees Skills, Experience and Demographic Information
The term of Linda Rhodes will expire at the 2024 Annual Meeting of Shareholders as well. However, pursuant to the requirement under our Corporate Governance Principles that a director must retire from the Board effective immediately before the Company’s annual meeting following his or her 75th birthday, Dr. Rhodes is not standing for re-election but will continue to serve until the 2024 Annual Meeting of Shareholders. We thank Dr. Rhodes for her dedicated service as a director and wish her continued success in the future. Each of the above directors has been nominated by the Board, upon the recommendation of its Corporate Governance and Sustainability Committee, to stand for election for a one-year term expiring at the 2025 Annual Meeting of Shareholders. The Corporate Governance and Sustainability Committee considers a number of factors and principles in determining the slate of director nominees for election to the Board, as discussed in the section titled “Director Nominations” below. The Corporate Governance and Sustainability Committee and the Board have evaluated each of these directors against the factors and principles Zoetis uses to select director nominees. Based on this evaluation, the Corporate Governance and Sustainability Committee and the Board have concluded that it is in the best interests of Zoetis and its shareholders for each of these directors to continue to serve as a director of Zoetis. Our Board has appointed Heidi C. Chen and Salvatore J. Gagliardi as proxies to vote your shares on your behalf. The proxies intend to vote for the election of each of the above-named directors unless you indicate otherwise on your proxy card, voting instruction form or when you vote by telephone or online. Each candidate has consented to being named in this proxy statement and serving as a director if elected. However, if any nominee is not able to serve, the Board can either designate a substitute nominee to serve in his or her place as a director or reduce the size of the Board. If the Board nominates another individual, the person named as a proxy may vote for such substitute nominee. In order to be elected, a nominee must receive more votes cast “For” than “Against” his or her election. Abstentions and broker non-votes will have no effect on the outcome of the vote. See “Corporate Governance Principles and Practices — Majority Voting Standard for Director Elections” for more information about our procedures if a nominee fails to receive a majority of the votes in an uncontested election. Our Board recommends that you vote “For” the election of each of the Board’s nominees for election — Mr. Bisaro, Ms. Broadhurst, Mr. D’Amelio, Mr. Hattersley, Mr. Khosla, Dr. Leatherberry, Mr. McCallister, Mr. Norden, Ms. Parent, Ms. Peck, Dr. Reed and Mr. Scully — to serve as directors of Zoetis until our 2025 Annual Meeting and until their successors are elected and qualified, or until their earlier death, resignation or removal. The Board believes that each of these nominees has a strong track record of being a responsible steward of shareholders’ interests and of bringing valuable insight, perspective and expertise to the Board. In each individual’s biography set forth on pages 13 to 22, we highlight specific experience, qualifications and skills that led the Board to conclude that each individual should continue to serve as a director of Zoetis.
Director Nominees Skills, Experience and Demographic Information
| Item 1 Recommendation: Our Board unanimously recommends that you vote FOR the election of Mr. Bisaro, Ms. Broadhurst, Mr. D’Amelio, Mr. Hattersley, Mr. Khosla, Dr. Leatherberry, Mr. McCallister, Mr. Norden, Ms. Parent, Ms. Peck, Dr. Reed and Mr. Scully as directors. |
Information About Directors
Information About Directors
Our Director Nominees
Our Director Nominees
Our Director Nominees
| | Paul M. Bisaro Age 63 Director since May 2015 | Specific qualifications: • Senior management experience, including as former CEO of Actavis plc (formerly Watson Pharmaceuticals) and Impax Laboratories, Inc. • Experience in global healthcare and pharmaceutical industries • Expertise in mergers and acquisitions • Public company director experience |
Our Director Nominees
Paul M. Bisaro, is the former Executive Chairman of Amneal Pharmaceuticals, Inc., a global specialty pharmaceutical company, from May 2018 to August 2019. Amneal was formed by the merger of Amneal Pharmaceuticals LLC and Impax Laboratories, Inc., which Mr. Bisaro led during his tenure as President and Chief Executive Officer from March 2017 to May 2018, during which he oversaw, among others, all marketing and sales activities. Mr. Bisaro was previously the Executive Chairman of the Board of Directors of Allergan plc (formerly Actavis plc) from July 2014 to October 2016, where he played a leading role in growing the company through M&A activity. Until June 2014, Mr. Bisaro served as Board Chairman, President and Chief Executive Officer of Actavis (formerly Watson Pharmaceuticals), a global pharmaceutical company. He was appointed President, Chief Executive Officer and a member of the Board of Directors of Watson in September 2007 and was later appointed Board Chairman in October 2013. Prior to Watson, Mr. Bisaro was President, Chief Operating Officer and member of the Board of Directors of Barr Pharmaceuticals, Inc., a global specialty and generic drug manufacturer where he was responsible for global manufacturing operations. Mr. Bisaro served as Barr’s General Counsel from 1992 to 1999, and from 1997 to 1999 he served in various additional capacities including Senior Vice President — Strategic Business Development. Mr. Bisaro brings nearly 30 years of experience in various legal and executive leadership positions in the pharmaceutical industry. In addition to his service on the Zoetis Board, Mr. Bisaro serves as Chair of the Board of Mallinckrodt plc (since February 2024, and previously from June 2022 – November 2023) and on the Board of Directors of Myriad Genetics, Inc. (since October 2022). Mr. Bisaro previously served on the Boards of Directors of Allergan plc (and its predecessor companies), Zimmer Biomet Holdings, Inc., Amneal Pharmaceuticals (and its predecessor Impax) and TherapeuticsMD, Inc. Mr. Bisaro holds an undergraduate degree in General Studies from the University of Michigan and a Juris Doctor from The Catholic University of America in Washington, D.C. Mr. Bisaro’s global business, management and leadership experience, his understanding of the pharmaceutical industry, and his public company board experience make him a valuable member of our Board.
Our Director Nominees
| | Vanessa Broadhurst Age 55 Director since July 2022 | Specific qualifications: • Experience in business leadership and senior management, including as Executive Vice President, Global Corporate Affairs at Johnson & Johnson • Expertise in consumer healthcare marketing and digital communications • Global pharmaceutical business experience • Direct-to-consumer advertising experience |
Our Director Nominees
Vanessa Broadhurst currently serves as the Executive Vice President, Global Corporate Affairs, at Johnson & Johnson, a global company focused on products related to human health and well-being, where she is also a member of the company’s Executive Committee. At Johnson & Johnson, Ms. Broadhurst leads the company’s corporate marketing, global communications, Health & Wellness Solutions, global public health and philanthropy functions. In this role, Ms. Broadhurst’s responsibilities include leading human capital management for a significant number of employees. Previous to the consumer separation of Kenvue from Johnson & Johnson in 2023, she additionally led consumer communications, design, including packaging, and product design. Prior to her current role at Johnson & Johnson, Ms. Broadhurst served as Company Group Chairman, Global Commercial Strategy for Pharmaceuticals from 2019 to December 2021 and President, Cardiovascular and Metabolism from 2017 to 2018. Prior to Johnson & Johnson, Ms. Broadhurst was General Manager, Cardiovascular and Bone Business Units at Amgen (2014 – 2017), in these roles she had a leadership position in M&A activity, pipeline development and new product launch strategy. Previously she served as General Manager, Inflammation and Cardiovascular Business Units at Amgen (2013 – 2014). From 2005 to 2013 Ms. Broadhurst served in various senior leadership roles at Johnson & Johnson. Prior to 2005 Ms. Broadhurst was Head, Global Gastroenterology Marketing at Novartis (2003 – 2005) and served in various roles of increasing responsibility at Abbott Laboratories (1994 – 2003). Ms. Broadhurst serves as a member of The Executive Leadership Council (ELC) and as a Board member of the Ad Council. She received a Master of Business Administration from the Ross School of Business at the University of Michigan, where she was a Consortium Fellow, and a Bachelor of Arts degree from the University of Colorado, Boulder. Ms. Broadhurst’s consumer healthcare marketing and digital communications expertise, as well as her business experience with the global pharmaceutical industry, make her a valuable member of our Board.
Our Director Nominees
| | Frank A. D’Amelio Age 66 Director since July 2012 | Specific qualifications: • Experience in finance and accounting and senior management, including as former CFO of Pfizer • Expertise in mergers and acquisitions • Global business experience • Public company director experience |
Our Director Nominees
Frank A. D’Amelio is the former Executive Vice President and Chief Financial Officer of Pfizer Inc., a global pharmaceutical company (June 2020 to May 2022), and a member of Pfizer’s Senior Executive Leadership Team. Mr. D’Amelio currently serves as a CFO in residence at the Deloitte CFO Academy. From June 2020 through December 2021, Mr. D’Amelio also served as Pfizer’s Executive Vice President, Global Supply and Business Operations. Mr. D’Amelio previously served as Pfizer’s Executive Vice President, Business Operations and Global Supply and Chief Financial Officer from October 2018 until June 2020 and Executive Vice President, Business Operations and Chief Financial Officer from December 2010 to September 2018. He joined Pfizer in September 2007 and held various positions, including Senior Vice President and Chief Financial Officer. During Mr. D’Amelio’s tenure at Pfizer, he led many acquisitions and partnerships valued at nearly $200 billion, including numerous transformative transactions, such as the acquisition of Wyeth as well as the divestitures of the animal health, consumer health and mature products businesses, and oversaw the company’s information technology function and global supply chain. From November 2006 to August 2007, Mr. D’Amelio was the Senior Executive Vice President of Integration and Chief Administrative Officer at Alcatel-Lucent, S.A., a global telecommunications equipment company. From January 2006 to November 2006, Mr. D’Amelio was the Chief Operating Officer of Lucent Technologies, with responsibility for leading business operations, including sales, the product groups, the services business, the supply chain, information technology operations, human resources and labor relations. From May 2001 until January 2006, he was appointed Executive Vice President, Administration, and Chief Financial Officer of Lucent. In addition to his service on the Zoetis Board of Directors, Mr. D’Amelio currently serves as a member of the Board of Directors of Humana Inc. (since September 2003), Hewlett Packard Enterprise (since January 2023), and Catalent Inc. (since August 2023). He also formerly served as a member of the National Advisory Board of JPMorgan Chase & Co. Mr. D’Amelio earned his bachelor’s degree in Accounting from St. Peter’s College and his MBA in Finance from St. John’s University. Mr. D’Amelio’s global senior management experience, finance and operational expertise, and knowledge of the pharmaceuticals industry, along with his public company board experience, make him a valuable member of our Board.
Our Director Nominees
| | Gavin D.K. Hattersley Age 61 Director since April 2024 | Specific qualifications: • Senior management experience, including as current President and Chief Executive Officer and former Chief Financial Officer at Molson Coors • International business experience • Public company board experience • Expertise in consumer products |
Our Director Nominees
Gavin D.K. Hattersley currently serves as the President and Chief Executive Officer at Molson Coors Beverage Company, a global brewing beverage company (since September 2019). Prior to his current position, Mr. Hattersley served as chief executive officer of MillerCoors, the U.S. division of Molson Coors, since September 2015. Prior to joining MillerCoors, Mr. Hattersley served as chief financial officer of Molson Coors from June 2012 to September 2015. From July 2008 to June 2012, Mr. Hattersley served as executive vice president and chief financial officer of MillerCoors. He also served as senior vice president of finance for Miller Brewing Company from October 2002 to July 2008. Prior to joining Miller Brewing Company Mr. Hattersley held several financial management positions with SAB Limited of Johannesburg, South Africa, before becoming chief financial officer in 1999. Prior to joining SAB Limited in 1997, Mr. Hattersley spent almost 10 years with Barloworld Limited in various finance positions. In addition to his service on the Zoetis Board of Directors, Mr. Hattersley currently serves as a member of the Board of Directors of Molson Coors Beverage Company. Mr. Hattersley holds an honors degree in accounting science and a bachelor’s degree from the University of South Africa. Mr. Hattersley’s senior management experience, including as a current chief executive officer and former chief financial officer, along with his international business and public company board experience, make him a valuable member of our Board.
Our Director Nominees
| | Sanjay Khosla Age 72 Director since June 2013 | Specific qualifications: • International business and management experience, including as EVP and President, Developing Markets of Kraft Foods (now Mondelēz International) • Global operational experience, including in developing markets • Experience in animal health industry • Academic experience • Public company director experience |
Our Director Nominees
Sanjay Khosla is the former Executive Vice President and President, Developing Markets of Mondelēz International, Inc., a global food, beverage and snack company (January 2007 to March 2013) and is currently a senior fellow and adjunct professor at the Kellogg School of Management, Northwestern University (since June 2013) and a Senior Advisor for the Boston Consulting Group (since April 2013). Mr. Khosla is also the CEO of Bunnik LLC, a management consulting firm (since 2013). As President, Developing Markets of Kraft Foods (now Mondelēz International), Mr. Khosla transformed the $5 billion business into a $16 billion business, and gained leadership experience in manufacturing and supply, marketing and sales and M&A. Mr. Khosla brings more than 35 years of international business experience from his career with food, beverage and consumer product leaders such as Mondelēz, Kraft, Fonterra and Unilever, where he managed various business units, particularly in developing markets, oversaw human capital management functions and was responsible for R&D and innovation in a number of roles. He also has animal health experience from his two-year tenure, from 2004 to 2006, as Managing Director of Fonterra Brands and Food Service, a multinational dairy cooperative based in New Zealand. In addition to his service on the Zoetis Board of Directors, Mr. Khosla currently serves as a member of the Board of Directors of Igniting Consumer Growth Acquisition Company Limited (since September 2021) and also serves on a number of private company Boards of Directors, including the Board of Directors of Qualsights (since November 2022). Mr. Khosla formerly served on the Boards of Directors of Best Buy, Inc., NIIT, Ltd. and Iconix Brand Group, Inc. Mr. Khosla holds a bachelor’s degree in Electrical Engineering from the Indian Institute of Technology in New Delhi. Mr. Khosla also completed the Advance Management Program at Harvard Business School. Mr. Khosla’s international business and management experience and consumer products marketing and sales expertise, along with his public company board experience, make him a valuable member of our Board.
Our Director Nominees
| | Antoinette R. Leatherberry Age 62 Director since December 2020 | Specific qualifications: • Extensive experience with complex technology transformations during her Deloitte career advising Fortune 500 companies • Strategic digital technology experience • Diversity and inclusion leadership |
Our Director Nominees
Antoinette R. Leatherberry is a former Principal at Deloitte. Dr. Leatherberry retired from Deloitte, an industry-leading consulting, audit, tax, and advisory services company, in October 2020 after culminating a 30-year career of working with Fortune 500 companies on complex information technology transformations, strategy and implementation, data analytics, data strategy, and operational issues. At Deloitte, she most recently served as Board Relations Leader for the Risk and Financial Advisory practice from September 2017 to October 2022 and before September 2017, she served as a Principal (equity owner) in Technology Strategy since August 1991. During her tenure at Deloitte Dr. Leatherberry was responsible for leading global teams, recruiting strategies and hiring and workforce planning. Dr. Leatherberry also served as President of the Deloitte Foundation from June 2016 to October 2020. She has authored numerous articles and publications on information technology and governance and was named to the National Association of Corporate Directors (NACD) Directorship 100 in 2019 and 2020. In addition to her service on the Zoetis Board of Directors, Dr. Leatherberry currently serves as a member of the Board of Directors of Digital Direct Holdings (since February 2022). Dr. Leatherberry also sits on several private company Boards of Directors, including STRIVE (since January 2022) and the American Family Insurance Mutual Holding Company (since December 2020), the Widener University Board of Trustees, the Boston University Board of Trustees and the advisory board of the Ellig Group (since November 2022). She holds a bachelor’s degree in Mechanical Engineering from Boston University, an MBA in Operations Management and Supervision from Northeastern University and recently received her EdD in education from Widener University. Dr. Leatherberry’s extensive experience with complex technology transformations, her strategic digital technology experience, her corporate governance expertise, and her diversity and inclusion leadership make her a valuable member of our Board.
Our Director Nominees
| | Michael B. McCallister Age 71 Director since January 2013 Board Chair since June 2013 | Specific qualifications: • Senior management experience, including as former CEO of Humana • Accounting background • Board chair experience • Public company director experience |
Our Director Nominees
Michael B. McCallister is the former Chairman of the Board and CEO of Humana Inc. Mr. McCallister joined Humana, a health care company offering insurance products and health and welfare services, including insurance products sold directly to consumers, in 1974 and served as its Chief Executive Officer from February 2000 until his retirement in December 2012. During his tenure as CEO Mr. McCallister led numerous M&A transactions, had significant oversight responsibility for the company’s compliance, human capital management and marketing and sales functions and gained research and development experience through oversight of the company’s development of insurance products for governments, individuals and companies. Mr. McCallister also served as Chairman of the Board of Humana from August 2010 to December 2013. In addition to his service on the Zoetis Board of Directors, Mr. McCallister currently serves as a member of the Boards of Directors of AT&T (since February 2013) and Fifth Third Bank (since November 2011). Mr. McCallister formerly served on the Board of Directors of National City Corp. Mr. McCallister also served for many years on the Board of the Business Roundtable and was Chairman of its Health and Retirement Task Force. Mr. McCallister holds a bachelor’s degree in Accounting from Louisiana Tech University and an MBA from Pepperdine University. Mr. McCallister’s senior management experience in the healthcare industry and operational expertise, along with his public company board experience, make him a valuable member of our Board.
Our Director Nominees
| | Gregory Norden Age 66 Director since January 2013 | Specific qualifications: • Corporate finance experience, including as former CFO of Wyeth • Experience in global healthcare and pharmaceutical industries • Accounting background, including as an audit manager at a major accounting firm • Public company director experience |
Our Director Nominees
Gregory Norden is the former Chief Financial Officer of Wyeth, a global pharmaceutical and health care products company, where he had various responsibilities, including driving the company’s M&A strategy. Prior to his role as Chief Financial Officer of Wyeth, Mr. Norden held various senior positions with Wyeth Pharmaceuticals, formerly American Home Products (from 1989 to October 2009), including experience working with Fort Dodge Animal Health, a manufacturer of animal health products, that was part of Wyeth. Mr. Norden is currently the Managing Director of G9 Capital Group LLC (since January 2010), which invests in early-stage ventures and provides corporate finance advisory services. Prior to his affiliation with Wyeth, Mr. Norden served as Audit Manager at Arthur Andersen & Co, working primarily with multinational companies in the life sciences, consumer goods and financial services industries. Mr. Norden has over 20 years of leadership and financial management experience in global healthcare and pharmaceuticals. In addition to his service on the Zoetis Board of Directors, Mr. Norden currently serves as a member of the Board of Directors of NanoString Technologies (since July 2012), Praxis (since March 2019), and Royalty Pharma (since June 2020). Mr. Norden formerly served on the Boards of Directors of Human Genome Sciences, Welch Allyn, Univision and Entasis. Mr. Norden’s experience as a senior executive in the global healthcare and pharmaceutical industries, and his finance and consumer products expertise, along with his public company board experience, make him a valuable member of our Board.
Our Director Nominees
| | Louise M. Parent Age 73 Director since August 2013 | Specific qualifications: • Legal, operations, senior management and global business experience as former General Counsel and executive of American Express • Experience in corporate governance, board matters, compliance and risk management • Global business and regulatory relations experience • Public company director experience |
Our Director Nominees
Louise M. Parent is the former Executive Vice President and General Counsel of American Express Company, a global services company that provides consumer charge and credit card products and travel-related services, from 2004 to 2013. From 2014 through December 2021, Ms. Parent served as Of Counsel at the law firm of Cleary Gottlieb Steen & Hamilton LLP. Ms. Parent brings deep experience in corporate governance and board matters, and in human capital management, compliance and risk management, gained during her tenure with American Express, where she worked extensively with the Audit, Compensation, and Nomination and Governance committees in her role as General Counsel. In addition, while at American Express, Ms. Parent led a number of M&A transactions and oversaw the legal function responsible for executing M&A transactions globally. Ms. Parent also served on the Operating Committee and global management team of American Express from 2003 through 2013, was a member of the Board of American Express Centurion Bank through 2013 and served on the Supervisory Board of Deutsche Bank AG from 2014 to 2018. In addition to her service on the Zoetis Board of Directors, Ms. Parent currently serves as a member of the Board of Directors of Fidelity National Information Services Inc. (since November 2017). Ms. Parent holds a bachelor’s degree from Smith College and a law degree from Georgetown University Law Center. Ms. Parent’s experience and expertise in corporate governance, compliance, risk management and global management, along with her public company board experience and financial literacy, make her a valuable member of our Board.
Our Director Nominees
| | Kristin C. Peck Age 52 Director since October 2019 | Specific qualifications: • Knowledge and leadership of Zoetis as our current CEO • Experience in animal health and pharmaceutical industries • Senior management and global business experience • Public company director experience |
Our Director Nominees
Kristin C. Peck currently serves as Zoetis’ Chief Executive Officer, a role she has held since January 2020, and as member of the Board of Directors since October 2019. Prior to becoming CEO at Zoetis, the global leader in the animal health industry, Ms. Peck was Executive Vice President and Group President, U.S. Operations, Business Development and Strategy at Zoetis from March 2018 to December 2019. Ms. Peck previously served as our Executive Vice President and President, U.S. Operations from May 2015 to February 2018 and Executive Vice President and Group President from October 2012 through April 2015, where she had oversight for our business development, global manufacturing and supply and marketing and sales functions. In these roles, Ms. Peck helped usher Zoetis through its Initial Public Offering in 2013 and has been a driving force of change in areas including Global Manufacturing and Supply, Global Poultry, Global Diagnostics, Corporate Development, and New Product Marketing and Global Market Research. Before joining Zoetis, Ms. Peck served as Executive Vice President, Worldwide Business Development and Innovation at Pfizer Inc. (February 2004 – October 2012) and as a member of Pfizer’s Executive Leadership Team, where she gained human capital management experience. Prior to joining Pfizer, Ms. Peck held roles at The Boston Consulting Group (BCG) (1999 – 2004) as well as in private equity and real estate finance at The Prudential Realty Group, The O’Connor Group and J.P. Morgan. In addition to her service on the Zoetis Board of Directors, Ms. Peck currently serves as a member of the Board of Directors of BlackRock (since September 2021), the Board of Trustees of Mayo Clinic and of the Board of Directors of Catalyst, a global non-profit that helps companies accelerate women into leadership, and she formerly served on the Board of Directors of Thomson Reuters. Ms. Peck is a member of the Business Roundtable, The Business Council and is also a member of the Columbia Business School Board of Directors. Ms. Peck holds a bachelor’s degree from Georgetown University and an MBA from Columbia Business School. Ms. Peck’s knowledge and leadership of the Company as our current CEO, her animal health and pharmaceutical industry experience, and her global operational expertise, along with her public company board experience, make her a valuable member of our Board.
Our Director Nominees
| | Willie M. Reed Age 69 Director since March 2014 | Specific qualifications: • Thought leadership in the animal health community, including as Dean of the College of Veterinary Medicine at Purdue University • Experience in developing programs for increasing diversity in the veterinary profession • Expertise in infectious diseases, avian pathology, poultry veterinary medicines, diagnostics and vaccines, animal care and welfare • Senior management experience • Experience working with various government agencies |
Our Director Nominees
Dr. Willie M. Reed currently serves as the Dean of the College of Veterinary Medicine at Purdue University, a role he has held since January 2007. Prior to his current role Dr. Reed served as Professor of Veterinary Pathology, Chairperson of the Department of Diagnostic Investigation (1997 – December 2006) and Director of the Diagnostic Center for Population and Animal Health (1990 – December 2006) at Michigan State University. Previously Dr. Reed served as chief of Purdue’s Avian Diseases Diagnostic Service (1985 – 1990), assistant professor of veterinary pathology (1982 – 1987) and associate professor of veterinary pathology (1987 – 1990). Dr. Reed has more than 40 years of experience in animal health and veterinary medicine, including marketing of diagnostic services for diagnostic laboratories, gained during his tenure at Purdue University and Michigan State University, and as a Diplomate of the American College of Veterinary Pathologists and Charter Diplomate of the American College of Poultry Veterinarians. Dr. Reed has served as President of the Association of American Veterinary Medical Colleges, President of the American Association of Veterinary Laboratory Diagnosticians, President of the American Association of Avian Pathologists and Chair of the American Veterinary Medical Association Council on Research. He has served on a number of committees for the National Institutes of Health and the United States Department of Agriculture. Dr. Reed has a DVM from Tuskegee University and a Ph.D. in Veterinary Pathology from Purdue University. Dr. Reed’s experience and expertise in veterinary medicines, diagnostics and vaccines and his thought leadership in the animal health community make him a valuable member of our Board.
Our Director Nominees
| | Robert W. Scully Age 74 Director since June 2013 | Specific qualifications: • Experience in financial services and global management, including as a member of the Office of the Chairman of Morgan Stanley • Public company experience in risk management, audit and financial reporting • Mergers and acquisitions expertise • Public company director experience |
Our Director Nominees
Robert W. Scully is a former member of the Office of the Chairman of Morgan Stanley, a role in which he served from 2007 until January 2009. Prior to his service as a member of the Office of the Chairman of Morgan Stanley, he served as Co-President responsible for Asset Management, Discover Credit Cards from 2006 to 2007, where several global business units reported directly to him, and he was responsible for marketing and sales. Prior to assuming the position of Co-President at Morgan Stanley, he served as Chairman of Global Capital Markets from 2004 to 2006, Vice Chairman of Investment Banking from 1999 to 2006, and Managing Director from 1996 to 2009, where he gained human capital management experience. Prior to joining Morgan Stanley in 1996, Mr. Scully served as Managing Director at Lehman Brothers from 1993 to 1996, as Managing Director at Scully Brothers Foss & Wight from 1989 to 1993 and as Managing Director at Salomon Brothers in Investment Banking and Capital Markets from 1984 to 1989. Mr. Scully has over 30 years of leadership experience in the global financial services industry, particularly in providing strategic advice to global enterprises regarding M&A transactions. In addition to his service on the Zoetis Board of Directors, Mr. Scully currently serves as a member of the Board of Directors of KKR & Co. Inc. (since July 2010) and Chubb Limited (since May 2014). Previously, he served as a member of the Boards of Directors of UBS Group AG, Bank of America Corporation, GMAC Financial Services and MSCI Inc., and as a Public Governor of FINRA, Inc., the Financial Industry Regulatory Authority. Mr. Scully holds a bachelor’s degree from Princeton University and an MBA from Harvard Business School, where he previously served on its Board of Dean’s Advisors. Mr. Scully’s global management experience, financial acumen, M&A expertise and investor insights, along with his public company board experience, make him a valuable member of our Board.
Key Corporate Governance Features
Key Corporate Governance Features
Key Corporate Governance Features
| Topic | Zoetis Key Corporate Governance Feature | | Board Quality and Independence | • Board consists of highly-qualified, experienced and diverse directors with relevant expertise for overseeing our strategy, capital allocation, performance, succession planning and risk • All directors are independent other than our current CEO | | Independent Board Chair | • Current Board Chair is an independent director and is elected by the Board annually • If the roles of CEO and Board Chair are combined, independent directors will annually elect a lead independent director | | Board Committees | • All four Board Committees — Audit, Human Resources, Corporate Governance and Sustainability, and Quality and Innovation — are composed entirely of independent directors | | Executive Sessions | • Directors hold regularly scheduled executive sessions where directors can discuss matters without management presence • Independent Board Chair, or, if applicable, the lead independent director, presides over all executive sessions of the Board | | Board Oversight of Risk | • Risk oversight by full Board and Committees, including oversight of the Enterprise Risk Management program, financial reporting, information security and audit risk assessments | | Proxy Access | • Our shareholders may nominate directors through proxy access | | Board Oversight of Management Succession | • Board regularly reviews and discusses succession plans for CEO and other key executives | | Board Self-Evaluation | • Board conducts an annual evaluation of itself and each of its Committees • Written responses to evaluations are periodically supplemented with individual one-on-one interviews | | Accountability | • In uncontested director elections, our directors are elected by a majority of votes cast • All of our directors are elected annually • Each share of common stock is entitled to one vote • Our Code of Conduct fosters a culture of honesty and accountability • Anti-hedging and anti-pledging policies covering directors and colleagues • Claw-back policy covering incentive compensation paid to executives • Shareholders owning a combined 25% of Zoetis’ outstanding shares have the right to call a special meeting | | Director Stock Ownership | • Each non-employee director is required to hold Zoetis stock worth at least $500,000 (including share equivalent units), to be acquired within five years of joining our Board | | Open Lines of Communication | • Processes in place to facilitate communication with shareholders and other stakeholders • Board promotes open and frank discussions with management and there is ongoing communication between our Board (including the Board and Committee Chairs) and management • Our directors have access to all members of management and other colleagues and are authorized to hire outside advisors at the Company’s expense | | Board Refreshment | • Led by the Corporate Governance and Sustainability Committee, the Board regularly reviews the Board’s composition with a focus on identifying and evaluating potential board candidates • Mandatory Retirement Policy at age 75, absent special circumstances | | Director Orientation and Continuing Education | • Comprehensive orientation for new directors • Continuing education consisting of in-house presentations, presentations by industry and subject matter experts, third-party director courses and site and customer visits | | Board Diversity | • Diverse board with female and racial/ethnic representation • Board considers diversity of skills, experience, race, ethnicity, gender, cultural background and thought among directors when evaluating director nominees • The Corporate Governance and Sustainability Committee considers, and asks search firms to include in candidate lists, diverse director candidates who meet applicable search criteria | | Corporate Responsibility & Sustainability | • The Board exercises ultimate oversight over the Company’s sustainability strategy and program, and monitors the Company’s overall sustainability progress • The Board’s Committees oversee the Company’s sustainability practices, including animal welfare, human capital management, DE&I, pay equity, compliance, environmental, health and safety and manufacturing quality matters, public policy issues and corporate governance • In June 2023, Zoetis published its 2022 Sustainability Progress Update and 2022 ESG and SASB Index, which take into account the disclosure frameworks and guidance of leading sustainability organizations, such as the Sustainability Accounting Standards Board, the Task Force on Climate-Related Financial Disclosures, and the United Nations Sustainable Development Goals • Zoetis has participated in the CDP climate change survey, a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts, since 2021 and submitted for scoring in 2022 and 2023. In addition, Zoetis has participated in the CDP water security survey since 2022 and submitted for scoring in 2023. |
Compensation of Directors
Compensation of Directors We provide competitive compensation to our non-employee directors that enables us to attract and retain high-quality directors, provides them with compensation at a level that is consistent with our compensation objectives, and encourages their ownership of our stock to further align their interests with those of our shareholders. A director who is also a full-time employee of the Company receives no additional compensation for service as a member of our Board. Compensation for non-employee directors is reviewed at least biennially by the Corporate Governance and Sustainability Committee. In 2023, our non-employee directors’ compensation consisted of: • an annual cash retainer of $100,000, paid quarterly; • an additional annual cash retainer of $150,000, paid quarterly, for the Chair of the Board and an additional annual cash retainer of $25,000 for any Committee Chair; and • an equity retainer credited to each non-employee director upon his or her first election as such and annually thereafter with a value of $240,000 on the date of grant, based upon the closing price of shares of Zoetis common stock on that date. Non-employee directors may defer the receipt of up to 100% of their applicable cash retainer under the Zoetis Amended and Restated Non-Employee Director Deferred Compensation Plan (the “Director Deferral Plan”). Any deferrals under the Director Deferral Plan are credited as phantom stock units in the Zoetis stock fund or an alternate investment fund, with each phantom stock unit representing one share of Zoetis common stock. Phantom stock units in the Zoetis stock fund receive dividend equivalent rights but do not receive voting rights and are settled in cash upon the director’s separation from service. The equity retainer is granted in the form of restricted stock units that vest on the first anniversary of the date of grant. Non-employee directors may defer the settlement of 100% of their restricted stock unit awards under the Director Deferral Plan. Deferred restricted stock unit awards are settled in stock upon the director’s separation from service. In 2023, we granted equity retainers in the form of restricted stock units, valued at $240,000 in the aggregate for each non-employee director on the date of grant, as follows: • On February 8, 2023, each of Mses. Broadhurst and Parent, Drs. Leatherberry, Reed and Rhodes and Messrs. Bisaro, D’Amelio, Khosla, Norden, McCallister and Scully received 1,480 restricted stock units valued at $162.07 per share. Each restricted stock unit earns dividend equivalents which are credited as additional restricted stock units. Each non-employee director has a right to receive the shares of Zoetis common stock underlying the restricted stock units, if such restricted stock units are not deferred, on the first anniversary of the date of grant of the restricted stock units (or in the case of dividend equivalents, on the first anniversary of the date of grant of the underlying restricted stock units), subject to the director’s continued service through such vesting date and subject to earlier vesting and settlement upon certain specific events. Deferred restricted stock unit awards are settled in stock upon the director’s separation from service. All directors are also eligible to participate in the Zoetis Foundation’s Matching Gift program. Under the Matching Gift program the Zoetis Foundation will match each director’s charitable donations, dollar for dollar, up to $5,000 per calendar year. The Zoetis Foundation is a charitable organization established by Zoetis Inc. and is a separate legal entity from Zoetis Inc. with distinct legal restrictions. Only eligible 501(c)(3) tax-exempt organizations may receive a matching donation from the Zoetis Foundation. The following table summarizes the total compensation earned in 2023 by each of our directors who served as a non-employee director during 2023.
Compensation of Directors
| Name | Fees Earned or Paid in Cash($) | Stock Awards ($)(1)(2) | All Other Compensation ($)(3) | Total ($) | | Paul M. Bisaro(4) | $100,000 | $240,000 | — | $340,000 | | Vanessa Broadhurst(5) | $100,000 | $240,000 | $1,000 | $341,000 | | Frank A. D’Amelio(6) | $100,000 | $240,000 | $500 | $340,500 | | Sanjay Khosla(4) | $100,000 | $240,000 | — | $340,000 | | Antoinette R. Leatherberry(4) | $100,000 | $240,000 | — | $340,000 | | Michael B. McCallister(7) | $250,000 | $240,000 | — | $490,000 | | Gregory Norden(8) | $125,000 | $240,000 | — | $365,000 | | Louise M. Parent(9) | $125,000 | $240,000 | $5,000 | $370,000 | | Willie M. Reed(10) | $125,000 | $240,000 | $5,000 | $370,000 | | Linda Rhodes(11) | $100,000 | $240,000 | $5,000 | $345,000 | | Robert W. Scully(12) | $125,000 | $240,000 | — | $365,000 |
Compensation of Directors
(1) The amounts in the Stock Awards column for all directors reflect the aggregate grant date value of restricted stock units granted to non-employee directors in 2022 calculated in accordance with FASB ASC Topic 718. The grant date fair value of each restricted stock unit granted to each of Mses. Broadhurst and Parent, Drs. Leatherberry, Reed and Rhodes and Messrs. Bisaro, D’Amelio, Khosla, Norden, McCallister and Scully on February 8, 2023 was $162.07. Restricted stock units accrue dividend equivalents, which are credited as additional restricted stock units subject to the same terms and conditions as the underlying restricted stock units. Restricted stock units vest and are settled in shares of Zoetis common stock on the first anniversary of the date of grant, subject to the director’s continued service through such vesting date and subject to earlier vesting and settlement upon certain specified events. As of December 31, 2023, the aggregate number of restricted stock units (including dividend equivalents) held by each current non-employee director was as follows: Mr. Bisaro, 4,159; Ms. Broadhurst 2,875; Mr. D’Amelio, 4,159; Mr. Khosla, 4,159; Dr. Leatherberry, 4,159; Mr. McCallister, 4,269; Mr. Norden, 4,159; Ms. Parent, 4,159; Dr. Reed, 4,159; Dr. Rhodes, 4,159; and Mr. Scully, 4,159. (2) As of December 31, 2023, Mr. D’Amelio, Mr. Khosla and Mr. Scully each have 2,712 deferred stock units issued pursuant to the Zoetis Inc. Amended and Restated Non-Employee Director Deferred Compensation Plan, which provides a voluntary election, that became applicable for restricted stock units issued in 2019, for directors to defer receipt of their shares upon the vesting of their restricted stock units. These deferred stock units are fully vested and will be paid in a single lump payment within 30 business days following the earlier to occur of (i) a termination event, or (ii) a change in control that constitutes a “change in ownership or control” for purposes of Section 409A in accordance with the terms of the Plan. Prior to 2015, each non-employee director was granted an equity retainer in the form of deferred stock units upon his or her election to the Board and annually thereafter. Deferred stock units vest fully on the date of grant, accrue dividend equivalents that are credited as additional restricted stock units, and are settled in Zoetis common stock only upon the director’s separation from service with the Company. As of December 31, 2023, the aggregate number of deferred stock units (including dividend equivalents) held by each current non-employee director was as follows: Mr. D’Amelio, 9,867; Mr. Khosla, 9,867; Mr. McCallister, 10,666; Mr. Norden, 10,666; Ms. Parent, 9,867; Dr. Reed, 4,853; and Mr. Scully, 9,867. (Mr. Bisaro, Ms. Broadhurst, Dr. Rhodes and Dr. Leatherberry were not directors prior to 2015 and do not hold any deferred stock units). (3) The amounts shown reflect matching contributions made by the Zoetis Foundation under the Matching Gift program described above. (4) Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2023 and (b) an equity retainer of 1,480 restricted stock units granted on February 8, 2023 with a grant date fair value of $240,000. (5) Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2023, (b) an equity retainer of 1,480 restricted stock units granted on February 8, 2023 with a grant date fair value of $240,000 and (c) a matching contribution of $1,000 made by the Zoetis Foundation. (6) Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2023, (b) an equity retainer of 1,480 restricted stock units granted on February 8, 2023 with a grant date fair value of $240,000 and (c) a matching contribution of $500 made by the Zoetis Foundation. (7) Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2023, (b) a cash retainer of $150,000 for service as Chair of the Board during 2023, and (c) an equity retainer of 1,480 restricted stock units granted on February 8, 2023 with a grant date fair value of $240,000. (8) Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2023, (b) a cash retainer of $25,000 for service as Chair of the Audit Committee during 2023 and (c) an equity retainer of 1,480 restricted stock units granted on February 8, 2023 with a grant date fair value of $240,000. Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2023, (b) a cash retainer of $25,000 for service as Chair of the Corporate Governance and Sustainability Committee during 2023, (c) an equity retainer of 1,480 restricted stock units granted on February 8, 2023 with a grant date fair value of $240,000 and (d) a matching contribution of $5,000 made by the Zoetis Foundation. (10) Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2023, (b) a cash retainer of $25,000 for service as Chair of the Quality and Innovation Committee during 2023 (c) an equity retainer of 1,480 restricted stock units granted on February 8, 2023 with a grant date fair value of $240,000 and (d) a matching contribution of $5,000 made by the Zoetis Foundation. (11) Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2023, (b) an equity retainer of 1,480 restricted stock units granted on February 8, 2023 with a grant date fair value of $240,000 and (c) a matching contribution of $5,000 made by the Zoetis Foundation. (12) Represents (a) a cash retainer of $100,000 for service to the Board as a non-employee director during 2023, (b) a cash retainer of $25,000 for service as Chair of the Human Resources Committee during 2023 and (c) an equity retainer of 1,480 restricted stock units granted on February 8, 2023 with a grant date fair value of $240,000.
2023 Compensation Highlights
2023 Compensation Highlights Our financial and other performance achievements were directly and indirectly reflected in the outcomes of our incentives. Annual Incentive Plan (“AIP”) payouts for NEOs averaged 117% of target. Performance-vesting restricted stock units (“performance award units”) for the 2021-2023 cycle vested at 97.7% of target, reflecting relative total shareholder return (“Relative TSR”) performance at the 49th percentile of the S&P 500 Group. In October 2023, following a recommendation from the Human Resources Committee, the full Board adopted and approved a compensation recovery policy that aligns with SEC rules and complies with the listing standards of the New York Stock Exchange (“NYSE”) related to the recovery of erroneously awarded compensation.
Base Salary and Annual Incentive
Base Salary and Annual Incentive Ms. Peck’s 2023 base salary was $1,200,000 and her target annual incentive opportunity was 150% of her base salary, providing for an annual target total cash compensation of $3,000,000. On February 6, 2024, the Human Resources Committee recommended, and the Board approved, an annual incentive payment for 2023 of $2,106,000 (117% of the annual incentive target) for Ms. Peck based on Zoetis’ 2023 financial results and her individual performance, providing for an annual actual total cash compensation of $3,306,000 for 2023.
Long-Term Incentive
Long-Term Incentive On February 8, 2023, Ms. Peck received a long-term equity incentive grant with a total grant date fair value of $11,700,000 consisting of 50% performance award units, 25% restricted stock units (“RSUs”) and 25% stock options. Accordingly, she received 24,555 performance award units, 18,047 RSUs and 67,148 stock options. Performance award units are subject to a three-year cliff vesting schedule (vests 100% on the third anniversary of the grant date), while RSUs and stock options are subject to a three-year graded vesting schedule (one-third vests each year on the anniversary of the grant date). These awards are generally subject to Ms. Peck’s continued employment through the vesting date and, in the case of performance award units, the Company’s results against its three-year Relative TSR goals.
CEO Pay Ratio
CEO Pay Ratio Item 402(u) of Regulation S-K (the “SEC Regulation”), which was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, requires disclosure of the ratio of the annual total compensation of our CEO to our median employee’s annual total compensation. The ratio disclosed below is a reasonable estimate calculated in a manner consistent with the SEC Regulation. To identify our median employee, we chose “annual base pay” as our globally consistent definition of pay. We calculated annual base pay as of October 12, 2023, using a methodology that reasonably reflects the annual compensation of employees, which included reasonable estimates of hours worked for hourly workers and annualized base pay for newly hired employees. We chose not to exclude any employees and used a valid statistical sampling approach to estimate the median annual base pay of our global workforce. We then selected an individual whose annual base pay was at or near that value. For 2023, our median employee’s annual total compensation (determined in a manner consistent with that of Ms. Peck in the Summary Compensation Table) was $74,848. Ms. Peck’s total annual compensation for the year ended December 31, 2023, as disclosed in the Summary Compensation Table, was $15,237,853. Therefore, the ratio of Ms. Peck’s pay to our median employee’s pay was 204 to 1.
Compensation Philosophy
| Compensation Philosophy | Objectives | | Pay for Performance | Foster a pay-for-performance culture by tying a large portion of our executives’ pay to performance against pre-established annual Company financial and operational metrics, as well as pre-established annual individual goals for each executive. | | Align Management Interests with Shareholders | Align the interests of management with results delivered to our shareholders through the use of long-term incentive programs that are designed to reward executives for increasing the value of our shareholders’ investment. | | Pay Mix | Provide competitive compensation opportunities over the short term (base salary and annual incentives) and long term (equity-based long-term incentive awards) which are intended to retain our experienced management team, enable us to attract new qualified executives when needed and remain externally aligned with the compensation practices of our peer group, with the majority of pay at-risk and tied to long-term performance. |
Basic Principles of our Executive Compensation Program
| WHAT WE DON’T DO: | | | ✘ | Maintain employment agreements with our executives, including our NEOs (other than agreements that are required or customary for executives outside of the U.S., and short-term agreements for specific purposes). | | ✘ | Allow repricing of stock options without shareholder approval. | | ✘ | Provide tax “gross ups” to any of our executives, including our NEOs (except with respect to certain international assignment or relocation expenses, consistent with our policies and available to all eligible colleagues on the same basis). | | ✘ | Provide for “single-trigger” equity award vesting or other “single-trigger” payments or benefits upon a change in control. |
Elements of 2023 Compensation
| Element | Description and Purpose | Comments | | Cash Compensation: | | | | Base Salary | • Fixed cash compensation that reflects fulfillment of day-to-day responsibilities, skills and experience. • Addresses colleague cash-flow needs and retention objectives. | • Reviewed annually considering changes in market practice, performance and individual responsibility. | | Annual Incentive Plan | • Annual cash incentive that rewards achievement of our financial and strategic/operational goals, as well as the individual performance of the NEO and, along with base salary, provides a market-competitive annual cash compensation opportunity. • For 2023, the AIP pool was funded based on Zoetis’ performance against revenue, adjusted diluted EPS and free cash flow goals. | • Amount of payout is based on the extent of achievement of the Company and individual goals set and approved by the Human Resources Committee in the first quarter of each year. • The Human Resources Committee may exercise discretion in considering performance results in the context of other strategic and operational objectives. | | Long-Term Incentives: | | | | Performance Award Units | • Equity awards that give the recipient the right to receive shares of Zoetis stock on a specified future date, subject to vesting and the Company’s performance against its three-year Relative TSR goals and generally subject to continued employment through the vesting date. • Align NEO and shareholder interests, as the value NEOs realize from their performance award units depends on the value of the shareholders’ investment relative to other similar investment opportunities over the same time period. | • In 2023, the target number of performance award units represented 50% of each NEO’s annual long-term incentive opportunity based on the grant date fair value of the awards. • Three-year cliff vesting: units earned based on Relative TSR, the Company’s TSR results over the three-year performance period relative to the TSR results of the S&P 500 Group (as described below under “Long-Term Incentives”), vest 100% on the third anniversary of the date of grant, subject to the NEO’s continued employment through such date (with vesting on certain earlier terminations, such as retirement, death, restructuring, change in control, etc., that are generally aligned with market practice). • Paid out in shares of Company common stock upon vesting, with the payout ranging from 0% to 200% of target (including dividend equivalents), depending on the extent to which the pre-determined performance goals have been achieved. • Dividend equivalents are accrued over the vesting period and paid when and if the performance award units vest (subject to the same vesting conditions as the underlying performance award units). |
Elements of 2023 Compensation
| Element | Description and Purpose | Comments | | Long-Term Incentives: (Continued) | | | | Stock Options | • Equity awards that provide value based on growth in our stock price, subject to vesting generally upon recipient’s continued employment through the vesting date. • Intended to focus NEOs on increasing the Company’s stock price. • Reward NEOs for increases in the stock price over a period of up to ten years. | • In 2023, stock options represented 25% of each NEO’s annual long-term incentive opportunity based on the grant date fair value of the awards. • Exercise price equals 100% of the stock price on the date of grant. • Ten-year term. • Three-year graded vesting: vests one-third each year, on the anniversary of the grant date, subject to the NEO’s continued employment through such date (with vesting on certain earlier terminations, such as retirement, death, restructuring, change in control, etc., that are generally aligned with market practice). | | Restricted Stock Units | • Equity awards that give the recipient the right to receive shares of Zoetis stock on a specified future date, subject to vesting generally based upon recipient’s continued employment through the vesting date. • Align NEO and shareholder interests, as NEOs’ RSUs increase in value as the stock price increases. | • In 2023, RSUs represented 25% of each NEO’s annual long-term incentive opportunity based on the grant date fair value of the awards. • Three-year graded vesting: vests one-third each year, on the anniversary of the grant date, subject to the NEO’s continued employment through such date (with vesting on certain earlier terminations, such as retirement, death, restructuring, change in control, etc., that are generally aligned with market practice). • Paid out in shares of Company common stock upon vesting. • Dividend equivalents are accrued over the vesting period and paid when and if the RSUs vest (subject to the same vesting conditions as the underlying RSUs). | | Retirement: | | | | U.S. Savings Plan (“Savings Plan”) | • A tax-qualified 401(k)/profit sharing plan that allows U.S. participants to defer a portion of their compensation, up to U.S. Internal Revenue Code (“IRC”) and other limitations, and receive a Company matching contribution. • A discretionary profit sharing contribution of up to 8% of an eligible colleague’s eligible pay (generally, base salary plus bonuses), within IRC limitations and based on Company performance. | • We provide a matching contribution of 100% on the first 5% of a colleague’s eligible pay contributed to the Savings Plan, up to IRC limitations. • For 2023, we made a profit sharing contribution of 4% of eligible pay (within IRC limitations) to all eligible U.S. colleagues. | | Supplemental Savings Plan | • A non-qualified deferred compensation plan that allows eligible colleagues, including our NEOs, to defer up to 30% of their salary and AIP to make up for amounts that would otherwise have been contributed to the Savings Plan (by the colleague or as matching or profit sharing contributions by the Company) but could not be contributed due to IRC limitations. • Also allows NEOs and certain other executives to defer up to an additional 60% of the amount of their AIP payment that is over the IRC 401(a)(17) limit and that is not matched by the Company. | • Matching and profit sharing contributions are notionally credited as Company stock and settled in cash after the colleague’s separation from the Company, based upon the terms of the Supplemental Savings Plan and in compliance with applicable IRC regulations. |
Elements of 2023 Compensation
| Element | Description and Purpose | Comments | | Severance: | | | | Executive Severance Plan | • Severance benefits provided to NEOs and certain other executives (currently 11 colleagues, including the NEOs) upon an involuntary termination of employment without cause (whether before or after a change in control), or upon a “good reason” termination of employment upon or within 24 months following a change in control. • Facilitates recruitment and retention of NEOs and certain other executives by providing income security in the event of involuntary job loss. | • Provides the CEO with: o 1.5 times base salary and target annual incentive upon an involuntary termination of employment without cause (unrelated to a change in control); and o 2.5 times base salary and target annual incentive upon an involuntary termination of employment without cause or a “good reason” termination following a change in control. • Provides other executives, including the NEOs, other than the CEO with: o 1 times base salary and target annual incentive upon an involuntary termination of employment without cause (unrelated to a change in control); and o 2 times base salary and target annual incentive upon an involuntary termination of employment without cause or a “good reason” termination following a change in control. |
The Human Resource Committee’s Process
The Human Resource Committee’s Process Pursuant to its charter, the Human Resources Committee is responsible for, among other duties: • Reviewing and approving the Company’s overall compensation philosophy; • Overseeing the administration of related compensation and benefit programs, policies and practices; • Reviewing and approving the Company’s peer companies and data sources for purposes of evaluating the Company’s compensation competitiveness; • Establishing the appropriate competitive positioning of the levels and mix of compensation elements; • Evaluating the performance of the CEO against performance goals and objectives approved by the Board in the first quarter of the year; • Reviewing and approving the Company and individual performance goals in the first quarter of the year, evaluating the performance of each executive against these performance goals and approving the compensation of the Company’s executive officers; and • Overseeing the Company’s programs and policies regarding talent development, colleague engagement and DE&I. At the beginning of each year, the Human Resources Committee meets and approves strategic, financial and operational objectives for the CEO, the other NEOs and the other members of the Zoetis Executive Team (“ZET”) for the upcoming year, and evaluates the performance of the CEO, the other NEOs and the other ZET members for the previous year. The CEO does not play any role in the Human Resources Committee’s recommendation regarding her own compensation. For the other NEOs and ZET members, the CEO presents the Human Resources Committee with recommendations for each element of compensation. The CEO bases these recommendations upon her assessment of each individual’s performance, the performance of the relevant functions overseen by the individual, benchmark information and retention risk. The Human Resources Committee then reviews the CEO’s recommendations, makes appropriate adjustments and approves compensation changes at its discretion.
Role of the Compensation Consultant
Role of the Compensation Consultant The Human Resources Committee engaged Pearl Meyer to serve as its executive compensation consultant for 2023. While Pearl Meyer may make recommendations on the form and amount of compensation, the Human Resources Committee continues to make all decisions regarding the compensation of our NEOs, subject to the review (and approval in the case of the CEO’s compensation) of the other independent directors. In 2023, Pearl Meyer served the Human Resources Committee in a variety of activities, including: • Reviewing and advising the Human Resources Committee on evolving trends in executive compensation and as to materials presented by management to the Human Resources Committee; • Attending all 2023 Human Resources Committee meetings and communicating with the Committee Chair between meetings as necessary; • Providing the Human Resources Committee with advice, pay-for-performance analytics and benchmarking norms related to the compensation of the CEO, the other NEOs and the other ZET members; • Reviewing our compensation peer group and recommending changes; Reviewing our annual incentive and long-term incentive plan design; Reviewing recommendations for stock ownership guidelines for the ZET; • Reviewing and assessing our incentive and other compensation programs to ensure they do not create undue risk for the Company; and • Reviewing this CD&A and the related Executive Compensation Tables.
Peer Group and Compensation Benchmarking
Peer Group and Compensation Benchmarking Each year, the Human Resources Committee, in consultation with the executive compensation consultant, conducts a review of Zoetis’ compensation peer group of publicly-traded companies that is used for purposes of benchmarking pay levels and pay practices for our CEO, our other NEOs and the other ZET members, to determine if any changes are necessary or appropriate. Our peer group selection looks beyond our animal health competitors to a broader list of companies in the pharmaceutical, biotechnology, life sciences and healthcare equipment industries. Additionally, companies with similar revenue and market capitalization, as well as similarities to Zoetis in the nature of their businesses, and the availability of relevant comparative compensation data, are also considered. The compensation peer group used by the Human Resources Committee in determining 2023 executive compensation was comprised of the 15 companies listed in the table below:
Peer Group and Compensation Benchmarking
| Agilent Technologies, Inc. | Illumina, Inc. | | Baxter International Inc. | Intuitive Surgical, Inc. | | Becton, Dickinson and Company | IQVIA Holdings Inc. | | Biogen Inc. | Mettler-Toledo International Inc. | | Boston Scientific Corporation | Stryker Corporation | | Elanco Animal Health Incorporated | Thermo Fisher Scientific Inc. | | Gilead Sciences, Inc. | Zimmer Biomet Holdings, Inc. | | IDEXX Laboratories, Inc. | |
Peer Group and Compensation Benchmarking
Zoetis ranked in the 45th percentile in revenue and 80th percentile in total market capitalization among the companies in the above peer group. In determining the elements of 2023 compensation for our NEOs, we used the following benchmarks: • Proxy statement data for the peer group as disclosed in each company’s prior year CD&A and executive compensation tables. • Willis Towers Watson’s executive compensation survey data from our peer companies and, to ensure robust data for benchmarking purposes, from similarly sized companies in life sciences and other industries. While the Human Resources Committee does not set a specific compensation level relative to the peer group or survey data, this information is considered by the Human Resources Committee as it applies its judgment to compensation decisions. In 2023, as part of its annual review of the compensation peer group, the Human Resources Committee reviewed the above companies and decided not to make any changes. The Human Resources Committee believes this group continues to provide a robust number of peer companies and a good balance of companies of similar size and scope across the various industries in which Zoetis competes for talent. This same 15-company peer group will be used by the Human Resources Committee in making 2024 executive compensation decisions. The Human Resources Committee will continue to review our compensation peer group on an annual basis and will make any adjustments that are deemed to be appropriate for purposes of benchmarking pay levels and pay practices for our CEO, our other NEOs, and the other ZET members.
Compensation Structure
Compensation Structure The compensation structure for our executives, including our NEOs, reflects our overall compensation philosophy of emphasizing pay-for-performance and aligning the interests of our executive officers and shareholders. The structure is designed to emphasize incentive compensation over fixed compensation and equity compensation over cash compensation. For all our NEOs, long-term incentive compensation is entirely equity-based and makes up the largest portion of their pay mix. In 2023, 92% of the TTDC of Ms. Peck was incentive-based pay, either subject to achievement of performance goals or with value directly tied to the price of our common stock. For each of our NEOs other than Ms. Peck, on average 76% of TTDC was incentive-based pay. The table and charts below show the mix of TTDC for our NEOs for 2023. The TTDC for our NEOs reflects their base salaries and target annual incentive opportunities as of the end of the year. The numbers in this table differ from those shown in the 2023 Summary Compensation Table (included later in this proxy statement).The Summary Compensation Table reflects actual base salary and annual incentives earned during 2023 (rather than target amounts), while the table below does not include all compensation information required to be presented in the Summary Compensation Table under the rules of the SEC.
2023 NEO Compensation Structure*
| | | | | | Pay Mix | | | | NEO | Base Salary | Target Annual Cash Incentive | Long-Term Equity Incentive | Target Total Direct Compensation | Base Salary | Target Annual Incentive | Long- Term Incentive | | Kristin C. Peck | $1,200,000 | $1,800,000 | $11,700,000 | $14,700,000 | 8% | 12% | 80% | | Wetteny Joseph | $725,000 | $652,500 | $2,650,000 | $4,027,500 | 18% | 16% | 66% | | Wafaa Mamilli | $650,000 | $520,000 | $1,330,000 | $2,500,000 | 26% | 21% | 53% | | Heidi C. Chen | $635,000 | $444,500 | $1,365,000 | $2,444,500 | 26% | 18% | 56% | | Robert J. Polzer | $575,000 | $460,000 | $1,265,000 | $2,300,000 | 25% | 20% | 55% |
Annual Incentive Plan
Annual Incentive Plan Our AIP is our annual cash incentive plan, which is intended to reward all AIP-eligible colleagues, including our NEOs, for achievement of Company financial and strategic/operational goals, as well as achievement of their own individual performance goals as determined by the Human Resources Committee and, in the case of the CEO, the Zoetis Board.
Annual Incentive Plan
| Our AIP utilizes a funded pool approach. An overall target AIP pool for the year is determined by adding together the target AIP payouts for each eligible colleague, including the NEOs. The actual amount of the AIP pool for 2023 was determined by the Human Resources Committee based on the Company’s attainment of the revenue, adjusted diluted EPS and free cash flow goals (weighted 40%, 40% and 20%, respectively) approved by the Human Resources Committee in the first quarter of the year. | |
Annual Incentive Plan
The three measures (revenue, adjusted diluted EPS and free cash flow) were selected because they reflect the successful execution of our business strategy, support the achievement of the Company’s annual operating plan, and are metrics that shareholders use to track our performance; more specifically: • Revenue measures our growth; • Adjusted diluted EPS3 measures our profitability; and • Free cash flow4 measures our efficient management of working capital and discipline in capital expenditures. The threshold, target and maximum performance levels for AIP pool funding for 2023 were established by the Human Resources Committee in early 2023. The Human Resources Committee seeks to set goals that are rigorous but attainable. Generally, we seek to set AIP goals that require higher performance as compared to the prior year’s target goals and results. However, an exception was made for our free cash flow goal in 2023, which was set slightly below the prior year’s target goal and results. This adjustment was made to reflect a significant increase in strategic capital expenditure investments in 2023. We note that our 2023 goals for revenue and adjusted diluted EPS were set above the prior year’s target goals and results for each metric, consistent with our historical approach. AIP payouts to ZET members also reflect our strategic/operational goals, which are incorporated in both ZET shared objectives and individual objectives, and are established at the beginning of the year. Goals are organized under the Company’s six strategic pillars: (1) lead through innovation; (2) deliver an exceptional experience to delight our customers; (3) power our business through digital solutions and data insights; (4) support a workplace where colleagues can thrive; (5) advance sustainability for a healthier future; and (6) perform with excellence and agility. Among these non-financial goals are goals that fall within the Environmental, Social and Governance (ESG) framework, such as sustain industry leadership and performance in sustainability and ESG disclosures and continue to make progress towards our Driven to Care aspirations. 3 Adjusted diluted EPS (a non-GAAP financial measure) is defined as reported diluted EPS, excluding purchase accounting adjustments, acquisition-related costs and certain significant items. Pages 43 to 44 of our 2023 Annual Report on Form 10-K, filed with the SEC on February 13, 2024, contain a reconciliation of this non-GAAP financial measure to reported results under GAAP for 2023. Free cash flow is defined as (i) net cash provided by operations ($2,353 million in 2023), minus (ii) capital expenditures ($732 million in 2023). Both net cash provided by operations and capital expenditures are GAAP financial measures and can be found in “Consolidated Statements of Cash Flows” on page 61 of our 2023 Annual Report on Form 10-K, filed with the SEC on February 13, 2024.
Company 2023 Performance
| | 2023 Reported Results | Adjustments** | 2023 AIP Results | 2023 AIP Target | AIP Results as a Percent of Target | | Revenue* | $8,544 | $84 | $8,628 | $8,551 | 101% | | Adjusted Diluted EPS | $5.32 | $0.04 | $5.36 | $5.29 | 101% | | Free Cash Flow* | $1,621 | $(24) | $1,597 | $1,379 | 116% |
NEO AIP Decisions
NEO AIP Decisions In February 2024, the Human Resources Committee (and, as related to the CEO’s compensation, the Board) determined the amount of annual incentive earned by each of our NEOs and approved the final payouts to each NEO for 2023. The NEOs’ 2023 annual incentive awards were based on a holistic assessment of: • The financial performance of Zoetis (measured against targets for revenue, adjusted diluted EPS and free cash flow); • The financial performance of their respective region/business unit/function measured by annual budgets for revenue and income before adjustments (as applicable); • The achievement of approved strategic and operational goals for their respective region/business unit/ function; and • An assessment of each NEO’s individual performance including an assessment of whether such performance was in alignment with our Core Beliefs, which define the values and behaviors that we expect all Zoetis colleagues, including our NEOs, to exhibit in carrying out their responsibilities. The 2023 AIP awards for our NEOs reflecting the Human Resources Committee’s assessment of their performance in 2023 (and, in the case of our CEO, the Board’s assessment of her performance in 2023) are shown in the table below:
NEO AIP Decisions
| NEO | AIP Target Amount | AIP Award % of Target | AIP Award Paid | | Kristin C. Peck | $1,800,000 | 117% | $2,106,000 | | Wetteny Joseph | $652,500 | 117% | $763,425 | | Wafaa Mamilli | $520,000 | 117% | $608,400 | | Heidi C. Chen | $444,500 | 116% | $513,398 | | Robert J. Polzer | $460,000 | 117% | $538,200 |
Long-Term Incentives (“LTI”)
Long-Term Incentives (“LTI”) The Zoetis Inc. 2013 Equity and Incentive Plan Amended and Restated as of May 19, 2022 (the “Equity Plan”) is a comprehensive long-term incentive compensation plan that permits us to grant equity-based long-term compensation awards to colleagues and directors. The Human Resources Committee believes that equity-based long-term incentive awards align the interests of management with our shareholders and focus management on our long-term growth. In addition, the Human Resources Committee believes that equity-based awards are essential to attract and retain the talented professionals and managers needed for our continued success. In determining the size of equity-based grants, the Human Resources Committee considers the number of shares available under the Equity Plan, the potential dilutive impact of such grants on our shareholders, the individual’s position with us, the appropriate allocation of such grants based on past and projected individual and corporate performance and the level of grants awarded by our peers to similarly situated executives. Accordingly, over 53% of each NEO’s target total compensation opportunity for 2023 (and 80% in the case of the CEO) came in the form of LTI awards. Our performance award units use relative total shareholder return (“Relative TSR”) as the metric for assessing performance over a three-year performance period. TSR is the appreciation of share price, including dividends, during the performance period. Relative TSR is Zoetis’ TSR as compared to the TSR over the performance period of the “S&P 500 Group”, which we define as the companies comprising the S&P 500 stock market index as of the beginning of the performance period, excluding companies that during the performance period are acquired or no longer publicly traded. Relative TSR was selected because we believe it best aligns the interests of our NEOs with those of our shareholders over the performance period. Our RSUs and stock option awards issued in 2023 vest on a graded basis over three years (one-third of the award vests on each of the first, second and third anniversaries of the date of grant), assuming continued employment through the vesting date(s). Our performance award units vest in full on the third anniversary of the date of grant, assuming continued employment through the vesting date and subject to the Company’s Relative TSR over the three-year performance period. For all LTI awards, earlier vesting may occur in connection with certain termination conditions, such as retirement, death, disability, restructuring, change in control, etc., that are generally aligned with market practice. Long-term incentive awards granted to the Company’s senior leaders (approximately 300 colleagues, including the NEOs) are delivered with 50% of the value in performance award units, 25% in RSUs and 25% in stock options. We believe the greater emphasis on achievement of the Relative TSR goal in our performance award units aligns the interests of the NEOs with the interests of our shareholders and further enhances the link between pay and performance in our compensation program.
Long-Term Incentives (“LTI”)
| In 2023, long-term incentive awards were delivered through a mix of 50% performance award units and 25% each of stock options and RSUs, to approximately 300 of our senior leaders, including the NEOs. We believe that the mix of stock options (which have value only if there is an increase in the value of our stock), RSUs (which focus our executives on sustained growth) and performance award units (which reward the Company’s executives in alignment with the relative return in our shareholders’ investment in the Company over the three-year performance period) that was delivered in 2023 supports our pay-for-performance objective by tying executive awards to shareholder value accretion. Long-term incentive awards were delivered to other eligible Zoetis colleagues generally through RSUs. | |
Long-Term Incentives (“LTI”)
The three forms of LTI awards granted to our senior leaders, including the NEOs, are described below:
Long-Term Incentives (“LTI”)
| Performance Award Units | Objectives | | We award performance award units to enhance the alignment of executive pay with the value created for our shareholders. Performance award units provide executives with the right to receive shares of our stock after the end of the three-year performance vesting period. The number of shares paid, if any, is generally subject to continued employment (with exceptions for certain terminations of employment) and the Company’s Relative TSR over the performance period. Dividend equivalents are credited as additional performance award units to outstanding performance award units and are paid out in shares of our stock at the same time the associated performance award units are paid. | • Align the interests of executives with those of shareholders over the performance vesting period. • Retain executive talent, as performance awards provide an opportunity for higher rewards when the Company’s total shareholder return results exceed the median of the S&P 500 Group. • Encourage stock ownership by delivering shares upon settlement in accordance with the Company’s Relative TSR results. | | The performance award unit vesting schedule is as follows: | | | If the Relative TSR for the 2023-2025 performance period is: | The number of shares of stock that will vest is: | | Below the 25th percentile of the S&P 500 Group | Zero | | At the 25th percentile of the S&P 500 Group | 50% of the target number of units | | At the 50th percentile of the S&P 500 Group | 100% of the target number of units | | At or above the 75th percentile of the S&P 500 Group | 200% of the target number of units | | The number of shares that vest and are paid is determined by linear interpolation when the Relative TSR is between the 25th and 50th or between the 50th and 75th percentiles of the S&P 500 Group. | |
Long-Term Incentives (“LTI”)
| Stock Options | Objectives | | We view stock options as a form of long-term incentive that focuses and rewards executives for increasing our stock price. If the stock price does not increase from the level at the date of the grant, the stock options will have no value to the executives. Stock options have a three-year graded vesting period (one-third of the award vests on each anniversary of the grant date). | • Encourage our executives to focus on decisions that will lead to increases in the stock price for the long term • Retain executive talent, since executives generally must remain with the Company during the vesting period before they can exercise the stock options (with exceptions for certain terminations of employment), and the options have a ten-year term from the date of the grant, generally subject to continued employment with the Company (with exceptions for certain terminations of employment) |
Long-Term Incentives (“LTI”)
| Restricted Stock Units | Objectives | | RSUs provide executives with the right to receive shares of our stock over a three-year graded vesting period (one-third vests on each anniversary of the grant date), generally subject to continued employment (with exceptions for certain terminations of employment). Dividend equivalents are credited as additional RSUs to outstanding RSUs and are paid out in shares of our stock at the same time the associated RSUs are paid out. | • Align the interests of executives with those of shareholders over the vesting period • Retain executive talent • Encourage stock ownership by delivering shares upon settlement |
NEO LTI Decisions
NEO LTI Decisions Our NEOs typically receive equity-based grants as part of our annual grant of long-term incentive awards which occurs during the first quarter of each year. The following table sets forth the long-term incentive awards delivered to our NEOs in 2023. In determining the number of shares underlying each applicable award, the value of RSUs is divided by the grant date closing price of Zoetis common stock, the stock option value is divided by the Black-Scholes value as of the grant date and the performance award unit value is divided by the Monte Carlo simulation value as of the grant date (in each case, the number of underlying shares is rounded down to the nearest whole number).
NEO LTI Decisions
| | | Value of Equity Awards: | | | Number of Shares Underlying Awards: | | | | NEO | Total LTI Value | Stock Options | RSUs | Performance Award Units | Stock Options | RSUs | Performance Award Units | | Kristin C. Peck | $11,700,000 | $2,925,000 | $2,925,000 | $5,850,000 | 67,148 | 18,047 | 24,555 | | Wetteny Joseph | $2,650,000 | $662,500 | $662,500 | $1,325,000 | 15,208 | 4,087 | 5,561 | | Wafaa Mamilli | $1,330,000 | $332,500 | $332,500 | $665,000 | 7,633 | 2,051 | 2,791 | | Heidi C. Chen | $1,365,000 | $341,250 | $341,250 | $682,500 | 7,834 | 2,105 | 2,864 | | Robert J. Polzer | $1,265,000 | $316,250 | $316,250 | $632,500 | 7,260 | 1,951 | 2,654 |
NEO LTI Decisions
In February 2024, the Human Resources Committee certified that for the 2021-2023 performance cycle, our Relative TSR was at the 49th percentile of the 481 companies remaining in the S&P 500 Group as of December 31, 2023. Based on this Relative TSR achievement, in accordance with the vesting matrix established at the beginning of the performance period, each 2021-2023 performance award unit vested at 97.7% of the established target amount.
Retirement Benefits
Retirement Benefits Our U.S.-paid NEOs receive retirement benefits through Zoetis’ U.S. Savings Plan. The Savings Plan is a tax-qualified 401(k) savings plan available to all eligible U.S. colleagues. Participants may elect to contribute up to 60% of their salary and annual incentive payment to the Savings Plan, subject to IRC limitations. We match 100% of the colleague contribution, up to 5% of each colleague’s eligible pay (generally, base salary plus bonuses). We may also contribute a discretionary profit-sharing amount of up to 8% of each colleague’s eligible pay (subject to IRC limitations). For 2023, we contributed 4% of each colleague’s eligible pay (including the NEOs) as a profit-sharing contribution. To the extent the IRC limitations are exceeded, our Zoetis Supplemental Savings Plan is a non-qualified deferred compensation plan that makes up for amounts that would otherwise have been contributed to the Savings Plan but could not be contributed due to IRC limitations on the amount of compensation that may be taken into account under a tax-qualified plan ($330,000 for 2023). Eligible colleagues, including our NEOs, may elect to defer up to 30% of the amount by which their salary and annual incentive payment exceeds this compensation limit. We match these deferrals at the same rate as under the Savings Plan, i.e., 100% match up to 5% of eligible pay. In addition, our NEOs and certain other executives may elect to defer up to an additional 60% of the amount of their annual incentive payment that is over the IRC 401(a)(17) limit. We do not match these additional deferrals. If a colleague’s profit sharing contribution to the Savings Plan is limited by the compensation or contribution limit, the portion that the colleague was not able to receive in the Savings Plan is credited to the colleague’s account in the Zoetis Supplemental Savings Plan. Accounts are credited with earnings and losses based on the investment performance (positive or negative) of the investment options selected by colleagues. Generally, Zoetis Supplemental Savings Plan accounts are settled in cash after the participant’s separation from the Company.
Severance
Severance The Zoetis Executive Severance Plan covers our NEOs and certain other executives (currently 11 colleagues, including the NEOs). We do not maintain individual employment agreements with our executives (other than agreements that are required or customary for executives outside of the United States). Consistent with market practices and those of our peer companies, the plan provides for payment of severance benefits in the event of an involuntary termination of employment (other than for “Cause”5) that is not in connection with a “Change of Control”5, and a higher level of benefits in the event of an involuntary termination of employment (other than for Cause) or a termination for “Good Reason”5 that occurs upon or within 24 months following a Change of Control. The amounts payable under the plan are shown below:
Severance
| | Severance (Base Salary) | Continued Health and Life Insurance (at active colleague cost) | Annual Incentive | | Non-Change of Control Severance: | | | | | CEO | 18 months | 12 months | 1.5x target | | Other Participants | 12 months | 12 months | 1x target | | Change of Control Severance: | | | | | CEO | 30 months | 18 months | 2.5x target | | Other Participants | 24 months | 18 months | 2x target |
Severance
The salary payments are made as salary continuation in the case of a non-Change of Control severance, and in a lump sum in the case of a Change of Control severance. The annual incentive payments are made in a lump sum under both circumstances. In addition to the benefits reflected in the table, we provide outplacement services to plan participants. All benefits under the plan are subject to the participant’s execution and nonrevocation of a general release of all claims against the Company.
Compensation Risk Assessment
Compensation Risk Assessment In 2023, the Human Resources Committee considered whether the Company’s compensation policies and practices for its colleagues, including the NEOs, create risks that are reasonably likely to have a material adverse effect on the Company. In evaluating a compensation risk assessment that was conducted by Willis Towers Watson, and reviewed by Pearl Meyer, the Human Resources Committee’s independent executive compensation consultant, the Human Resources Committee considered the following: The mix of cash and equity compensation, which is balanced with a strong emphasis on long-term awards; • Goals and objectives of the Company’s compensation programs, reflecting both quantitative and qualitative performance measures and avoiding excessive weight on a single performance measure; • The design of the Company’s sales incentive plans, to ensure the mix of fixed and variable compensation promotes appropriate behaviors among participants; • Equity compensation granted in the form of stock options, RSUs and performance award units to provide greater incentive to create and preserve long-term shareholder value; • Regular review of comparative compensation data to maintain competitive compensation levels in light of the Company’s industry, size and performance; • The Company’s minimum stock ownership guidelines, which ensure that executive officers have a meaningful direct ownership stake in the Company and align executive officers with long-term shareholder interests; • The Company’s restrictions on engaging in hedging transactions in the Company’s securities; and • The Company’s clawback policy and NYSE-compliant compensation recovery policy. Based on its evaluation in 2023, the Human Resources Committee has determined, in its reasonable business judgment, that the Company’s compensation policies and practices as generally applicable to its executive officers and colleagues do not create risks that are reasonably likely to have a material adverse impact on the Company and instead promote behaviors that support a long-term focus and shareholder value creation.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Option Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | All Other Compensation(4) ($) | Total ($) | | Kristin C. Peck Chief Executive Officer | 2023 | 1,200,000 | | 8,774,860 | 2,924,967 | 2,106,000 | 232,026 | 15,237,853 | | | 2022 | 1,200,000 | | 8,399,841 | 2,799,966 | 1,314,000 | 289,733 | 14,003,540 | | | 2021 | 1,200,000 | | 6,929,797 | 2,309,970 | 2,340,000 | 318,724 | 13,098,491 | | Wetteny Joseph Executive Vice President (“EVP”) and Chief Financial Officer | 2023 | 725,000 | | 1,987,233 | 662,460 | 763,425 | 109,654 | 4,247,772 | | | 2022 | 700,000 | | 1,724,722 | 574,967 | 459,900 | 95,448 | 3,555,037 | | | 2021 | 393,750 | 2,000,000 | 5,099,927 | — | 472,500 | 43,641 | 8,009,818 | | Wafaa Mamilli EVP, Chief Digital and Technology Officer and Group President for China, Brazil and Precision Animal Health | 2023 | 650,000 | | 997,334 | 332,493 | 608,400 | 98,267 | 2,686,494 | | | 2022 | 608,333 | | 824,915 | 274,980 | 355,267 | 114,561 | 2,178,056 | | | 2021 | 600,000 | | 712,230 | 237,472 | 727,200 | 195,773 | 2,472,675 | | Heidi C. Chen EVP, General Counsel and Corporate Secretary; Business Lead of Human Health Diagnostics | 2023 | 635,000 | | 1,023,476 | 341,249 | 513,398 | 91,865 | 2,604,988 | | | 2022 | 615,000 | | 993,421 | 331,234 | 314,265 | 106,682 | 2,360,602 | | | 2021 | 615,000 | | 993,543 | 331,228 | 645,750 | 133,861 | 2,719,382 | | Robert J. Polzer EVP and President of Research and Development | 2023 | 575,000 | | 948,488 | 316,246 | 538,200 | 62,539 | 2,440,473 |
Summary Compensation Table
(1) The amounts shown in the “Stock Awards” column represent the aggregate grant date fair values for the Restricted Stock Units (“RSUs”) and the performance award units granted by Zoetis in 2023, 2022, and 2021, determined in accordance with FASB ASC Topic 718 based on the assumptions and methodologies set forth in Note 15 to Zoetis’ 2023 Annual Report on Form 10-K, filed with the SEC on February 13, 2024 (the “2023 10-K”). Further information regarding the 2023 awards is included in the 2023 Grants of Plan-Based Awards Table and the Outstanding Equity Awards at 2023 Fiscal Year-End Table. With respect to the performance award units granted by Zoetis in 2023, 2022, and 2021, the amounts included in the “Stock Awards” column of the Summary Compensation Table above represent the target payout at the grant date based upon the probable outcome of the performance conditions. The table below shows the amount of the target payout value at the grant date and the maximum value at the grant date assuming that the highest performance conditions would be achieved for each of the performance award units granted in 2023.
Summary Compensation Table
| | Performance Award Units Granted in 2023 | | | Name | Grant Date Target Payout $ | Maximum Value at Grant Date $ | | Kristin C. Peck | 5,849,983 | 11,699,966 | | Wetteny Joseph | 1,324,853 | 2,649,706 | | Wafaa Mamilli | 664,928 | 1,329,856 | | Heidi C. Chen | 682,319 | 1,364,638 | | Robert J. Polzer | 632,289 | 1,264,578 |
Summary Compensation Table
(2) The amounts shown in the “Option Awards” column represent the aggregate grant date fair values of long-term incentive awards granted to the NEOs by Zoetis in 2023, 2022, and 2021, determined in accordance with FASB ASC Topic 718 based on the assumptions and methodologies set forth in Note 15 to the 2023 10-K. Further information regarding the 2023 awards is included in the 2023 Grants of Plan-Based Awards Table and the Outstanding Equity Awards at 2023 Fiscal Year-End Table. The amounts shown in the “Non-Equity Incentive Plan Compensation” column represent annual cash incentive awards earned by the NEOs under the Zoetis Annual Incentive Plan for 2023, 2022, and 2021. The following table sets forth the component amounts presented in the “All Other Compensation” column above for the year ended December 31, 2023:
Summary Compensation Table
| Name | Company Contributions to Defined Contribution Plan (i)($) | Company Contributions Under the Zoetis Supplemental Savings Plan (ii)($) | Other (iii)($) | Total ($) | | Kristin C. Peck | 29,700 | 196,560 | 5,766 | 232,026 | | Wetteny Joseph | 29,700 | 76,855 | 3,099 | 109,654 | | Wafaa Mamilli | 29,700 | 60,774 | 7,793 | 98,267 | | Heidi C. Chen | 29,700 | 55,665 | 6,500 | 91,865 | | Robert J. Polzer | 13,200 | 45,774 | 3,565 | 62,539 |
Summary Compensation Table
(i) The amounts shown in this column for the NEOs represent the sum of profit sharing and matching contributions under the Zoetis Savings Plan (“ZSP”), a tax-qualified retirement savings plan. Under the terms of the ZSP, the Company will match up to 5% of eligible compensation contributed by each employee, subject to limitations under the Internal Revenue Code of 1986, as amended (“IRC”). (ii) The amounts shown in this column represent the sum of profit sharing and matching contributions under the Zoetis Supplemental Savings Plan (“ZSSP”). The ZSSP is discussed in more detail in the 2023 Non-Qualified Deferred Compensation Table. (iii) The amounts shown in this column include the imputed income related to Zoetis’ group term life insurance coverage in excess of $50,000 as well as, for Ms. Peck, $275, and for Ms. Mamilli, $1,000 of matching contributions made by the Zoetis Foundation under the Zoetis Matching Gifts Program.
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards The following table provides additional information about non-equity incentive awards and equity incentive awards granted to our NEOs during the fiscal year ended December 31, 2023. All stock options, RSUs and performance award units granted to our NEOs in 2023 were granted under the Equity Plan and the applicable award agreements. See the discussion under the heading “Long-Term Incentives” in the CD&A for further information about these stock options, RSUs and performance award units.
2023 Grants of Plan-Based Awards
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards(3) ($/Sh) | Grant Date Fair Value of Stock and Option Awards(4) ($) | | Name | Award | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Kristin C. Peck | Annual Incentive | | 0 | 1,800,000 | 3,600,000 | | | | | | | | | | Stock Options(5) | 2/8/2023 | | | | | | | | 67,148 | 162.07 | 2,924,967 | | | Restricted Stock Units(5) | 2/8/2023 | | | | | | | 18,047 | | | 2,924,877 | | | Performance Award Units(6) | 2/8/2023 | | | | 0 | 24,555 | 49,110 | | | | 5,849,983 | | Wetteny Joseph | Annual Incentive | | 0 | 652,500 | 1,305,000 | | | | | | | | | | Stock Options(5) | 2/8/2023 | | | | | | | | 15,208 | 162.07 | 662,460 | | | Restricted Stock Units(5) | 2/8/2023 | | | | | | | 4,087 | | | 662,380 | | | Performance Award Units(6) | 2/8/2023 | | | | 0 | 5,561 | 11,122 | | | | 1,324,853 | | Wafaa Mamilli | Annual Incentive | | 0 | 520,000 | 1,040,000 | | | | | | | | | | Stock Options(5) | 2/8/2023 | | | | | | | | 7,633 | 162.07 | 332,493 | | | Restricted Stock Units(5) | 2/8/2023 | | | | | | | 2,051 | | | 332,406 | | | Performance Award Units(6) | 2/8/2023 | | | | 0 | 2,791 | 5,582 | | | | 664,928 | | Heidi C. Chen | Annual Incentive | | 0 | 444,500 | 889,000 | | | | | | | | | | Stock Options(5) | 2/8/2023 | | | | | | | | 7,834 | 162.07 | 341,249 | | | Restricted Stock Units(5) | 2/8/2023 | | | | | | | 2,105 | | | 341,157 | | | Performance Award Units(6) | 2/8/2023 | | | | 0 | 2,864 | 5,728 | | | | 682,319 | | Robert J. Polzer | Annual Incentive | | 0 | 460,000 | 920,000 | | | | | | | | | | Stock Options(5) | 2/8/2023 | | | | | | | | 7,260 | 162.07 | 316,246 | | | Restricted Stock Units(5) | 2/8/2023 | | | | | | | 1,951 | | | 316,199 | | | Performance Award Units(6) | 2/8/2023 | | | | 0 | 2,654 | 5,308 | | | | 632,289 |
2023 Grants of Plan-Based Awards
(1) The amounts represent the threshold, target and maximum non-equity incentive plan awards under the Zoetis Annual Incentive Plan (AIP) for 2023. The payment for below threshold is 0%. Additional information on the AIP is included in the “Company 2023 Performance” section of the CD&A. (2) These amounts represent the threshold, target and maximum share payouts under our performance award unit program for the performance period beginning January 1, 2023 and ending December 31, 2025. The payment for below 25th percentile Relative TSR performance is 0%. The target payout is equal to 100% of the granted units and represents the number of performance award units that may be earned for achieving 50th Relative TSR percentile performance. The maximum payout is 200% of the target number of performance award units and represents the number of performance award units that may be earned for achieving 75th or better Relative TSR percentile performance. Dividend equivalent units are accrued through the payout date and increase the target number of performance award units. (3) The exercise price of the stock options is the closing price of the Company’s stock on the grant date. The amounts shown in this column represent the award values as of the grant date, computed in accordance with FASB ASC Topic 718 based on the assumptions and methodologies set forth in Note 15 to the 2023 10-K. For awards granted on February 8, 2023, the stock options are shown using a Black-Scholes-Merton value of $43.56 on the grant date, the RSUs are shown using the Company’s grant date closing stock price of $162.07, and the performance award units granted are shown using a Monte Carlo simulation model value of $238.24 on the grant date of February 8, 2023. For each NEO, the target grant date values were intended to be distributed with 50% of the total value in performance award unit awards and 25% of the total value each in RSUs and stock option grants; however, there are slight differences in intended value due to rounding down upon the conversion from dollar values to a number of options or units using the grant date values. These Zoetis stock option and RSU awards are subject to three-year graded vesting whereby one-third of the award vests on each of the first, second and third anniversaries of the grant date. RSUs accrue dividend equivalent units through the payout date, which are credited as additional RSUs. These performance award units are subject to three-year cliff vesting (100% vests on the third anniversary of the grant date) and are earned based on achievement of a performance goal measured over a three-year performance period beginning January 1, 2023 and ending December 31, 2025. The performance goal is the Company’s Relative TSR. The number of shares paid under these performance award units, if any, ranges from 0% to 200% of the target number of shares (including accrued dividend equivalent units) and depends upon the extent to which the performance goal is achieved, as determined by the Human Resources Committee after the end of the performance period.
Outstanding Equity Awards at 2023 Fiscal Year-end Table
Outstanding Equity Awards at 2023 Fiscal Year-end Table The following table summarizes the Zoetis equity-based long-term incentive awards made to our NEOs that were outstanding as of December 31, 2023.
Outstanding Equity Awards at 2023 Fiscal Year-end Table
| | | Option Awards | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that That Have Not Vested (#)(1)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | | Kristin C. Peck | 2/27/2015 | 13,382 | — | 46.09 | 2/26/2025 | — | — | — | — | | | 2/19/2016 | 20,000 | — | 41.83 | 2/18/2026 | — | — | — | — | | | 2/14/2017 | 32,634 | — | 55.02 | 2/13/2027 | — | — | — | — | | | 2/13/2018 | 24,642 | — | 73.24 | 2/12/2028 | — | — | — | — | | | 2/12/2019 | 20,661 | — | 87.51 | 2/11/2029 | — | — | — | — | | | 2/11/2020 | 55,866 | — | 144.03 | 2/10/2030 | — | — | — | — | | | 2/10/2021(4) | — | 61,078 | 160.62 | 2/9/2031 | 36,730(5) | 7,249,411 | — | — | | | 2/8/2022(4) | — | 54,751 | 201.30 | 2/8/2032 | 14,114 | 2,785,680 | 24,127 | 4,761,946 | | | 2/8/2023(6) | — | 67,148 | 162.07 | 2/8/2033 | 18,167 | 3,585,621 | 24,718 | 4,878,592 | | Wetteny Joseph | 6/30/2021(4) | — | — | — | — | 27,880(5) | 5,502,676 | — | — | | | 2/8/2022(4) | — | 11,243 | 201.30 | 2/8/2032 | 2,898 | 571,978 | 4,954 | 977,771 | | | 2/8/2023(6) | — | 15,208 | 162.07 | 2/8/2033 | 4,114 | 811,980 | 5,598 | 1,104,877 | | Wafaa Mamilli | 2/11/2020(4) | 16,951 | — | 144.03 | 2/10/2030 | — | — | — | — | | | 2/10/2021(4) | — | 6,279 | 160.62 | 2/9/2031 | 3,775(5) | 745,046 | — | — | | | 2/8/2022(4) | — | 5,377 | 201.30 | 2/8/2032 | 1,386 | 273,555 | 2,369 | 467,570 | | | 2/8/2023(6) | — | 7,633 | 162.07 | 2/8/2033 | 2,065 | 407,569 | 2,810 | 554,610 | | Heidi C. Chen | 2/12/2019 | 14,921 | — | 87.51 | 2/11/2029 | — | — | — | — | | | 2/11/2020 | 9,581 | — | 144.03 | 2/10/2030 | — | — | — | — | | | 2/10/2021(4) | — | 8,758 | 160.62 | 02/09/31 | 5,266(5) | 1,039,330 | — | — | | | 2/8/2022(4) | — | 6,477 | 201.30 | 2/8/2032 | 1,669 | 329,411 | 2,853 | 563,097 | | | 2/8/2023(6) | — | 7,834 | 162.07 | 2/8/2033 | 2,119 | 418,227 | 2,883 | 569,018 | | Robert J. Polzer | 2/10/2021(4) | — | 1,057 | 160.62 | 2/9/2031 | 636(5) | 125,536 | — | — | | | 2/8/2022(4) | — | 5,455 | 201.30 | 2/8/2032 | 1,405 | 277,305 | 2,404 | 474,477 | | | 2/8/2023(6) | — | 7,260 | 162.07 | 2/8/2033 | 1,964 | 387,635 | 2,672 | 527,373 |
Outstanding Equity Awards at 2023 Fiscal Year-end Table
(1) These amounts are rounded to the nearest whole unit and include accrued dividend equivalent units applied after the grant date. (2) Based on Zoetis’ closing stock price on December 29, 2023, of $197.37. (3) These performance award units are subject to three-year cliff vesting and are earned, subject to achievement of a performance goal over a three-year performance period beginning January 1st of the year of grant and ending on December 31st of the third calendar year thereafter. Each performance goal is the Company’s relative TSR results as compared to the TSR results of the companies in the S&P 500 Group, measured over the performance period. The number of shares paid under these performance award units, if any, ranges from 0% to 200% of the target number of shares and depends upon the extent to which the performance goal is achieved, as determined by the Human Resources Committee after the end of the performance period. These Zoetis stock options, RSUs and performance award units are subject to a three-year cliff vesting schedule and vest 100% on the third anniversary of the grant date, and performance award units are earned based on achievement of a performance goal measured over a three-year performance period. These amounts are the aggregate of Zoetis RSUs that remained unvested as of December 31, 2023, plus, the performance award units for which the performance period ended on December 31, 2023 and the level of performance has been determined to be 97.71% of the target amount. The table below shows these amounts for each NEO as of December 31, 2023.
Outstanding Equity Awards at 2023 Fiscal Year-end Table
| Name | RSU Awards | Earned Performance Award Units | Total Number of Units that Have Not Vested | | Kristin C. Peck | 14,673 | 22,057 | 36,730 | | Wetteny Joseph | 27,880 | — | 27,880 | | Wafaa Mamilli | 1,508 | 2,267 | 3,775 | | Heidi C. Chen | 2,104 | 3,162 | 5,266 | | Robert J. Polzer | 254 | 382 | 636 |
Outstanding Equity Awards at 2023 Fiscal Year-end Table
These Zoetis stock options and RSUs are subject to a three-year graded vesting schedule and vest one-third each year on the third anniversary of the grant date. Performance award units are subject to a three-year cliff vesting schedule and vest 100% on the third anniversary of the grant date, and performance award units are earned based on achievement of a performance goal measured over a three-year performance period.
2023 Option Exercises and Stock Vested Table
2023 Option Exercises and Stock Vested Table The following table provides information about the number and value of shares acquired upon vesting of RSUs and performance award units, and the stock options exercised by our NEOs during 2023.
2023 Option Exercises and Stock Vested Table
| | Option Awards | | RSU Awards | | Performance Award Units(1) | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(2) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(3) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(3) | | Kristin C. Peck | 39,000 | 5,201,209 | 13,410 | 2,123,206 | 16,574 | 2,624,161 | | Wetteny Joseph(4) | — | — | — | — | — | — | | Wafaa Mamilli | — | — | 4,067 | 643,929 | 1,749 | 276,919 | | Heidi C. Chen | — | — | 2,299 | 364,000 | 2,841 | 449,815 | | Robert J. Polzer | 1,179 | 54,128 | 282 | 44,649 | 349 | 55,258 |
2023 Option Exercises and Stock Vested Table
(1) The performance award units were earned at 93.3% of the established target amount, determined based on Relative TSR performance over the 2020-2022 performance period, and paid as of February 11, 2023. (2) The value realized when the stock options were exercised represents the excess of the fair market value of the shares at the time of exercise over the exercise price of the stock options. (3) The RSUs and performance award units for all NEOs were granted on February 11, 2020 and vested on February 11, 2023. The value realized on vesting is based on the closing price of our common stock of $158.33 on February 10, 2023. Mr. Joseph joined Zoetis on June 1, 2021 and did not have any RSUs or performance award units vest or stock option exercises in 2023.
2023 Non-Qualified Deferred Compensation Table
2023 Non-Qualified Deferred Compensation Table The following table summarizes activity during 2023 and account balances as of December 31, 2023, in the Zoetis Supplemental Savings Plan (“ZSSP”). The key features of the ZSSP are described in the CD&A section, “Retirement Benefits”. Amounts for our NEOs who were Pfizer employees at the time of the IPO (Ms. Peck and Ms. Chen) include prior non-qualified Supplemental Savings Plan balances held when they served as employees of Pfizer and transferred to the ZSSP.
2023 Non-Qualified Deferred Compensation Table
| Name | Plan | Aggregate Balance at January 1, 2023(1) ($) | Executive Contributions in 2023(2) ($) | Company Contributions in 2023(3) ($) | Aggregate Earnings in 2023(4) ($) | Aggregate Balance as of December 31, 2023(5) ($) | | Kristin C. Peck | Zoetis Supplemental Savings Plan | 4,100,489 | 109,200 | 196,560 | 821,040 | 5,227,290 | | Wetteny Joseph | Zoetis Supplemental Savings Plan | 1,159,232 | 184,206 | 76,855 | 65,245 | 1,485,538 | | Wafaa Mamilli | Zoetis Supplemental Savings Plan | 1,391,391 | 135,053 | 60,774 | 272,044 | 1,859,262 | | Heidi C. Chen | Zoetis Supplemental Savings Plan | 2,633,157 | 88,708 | 55,665 | 768,563 | 3,546,092 | | Robert J. Polzer | Zoetis Supplemental Savings Plan | 382,019 | 29,848 | 45,774 | 128,980 | 586,621 |
2023 Non-Qualified Deferred Compensation Table
(1) Amounts in this column that were reported in the Summary Compensation Table for the years 2021 and 2022 (combined) are as follows: Ms. Peck: $822,777, Mr. Joseph: $1,144,773, Ms. Mamilli: $1,207,850 and Ms. Chen: $634,142. (2) Executive contributions to the ZSSP shown in this column are included in the Summary Compensation Table for the year 2023. (3) Company contribution amounts shown in this column include profit sharing and Company matching contributions and are reflected in the “All Other Compensation” column of the Summary Compensation Table. Company contribution amounts under the tax-qualified ZSP are also reflected in the “All Other Compensation” column of the Summary Compensation Table but not in the table above. (4) Aggregate earnings are not reflected in the Summary Compensation Table because the earnings are not “above-market”. These amounts include dividends, interest and change in market value. None of the NEOs took a withdrawal or distribution from the ZSSP in 2023.
Potential Payments Upon Employment Termination Table
Potential Payments Upon Employment Termination Table The NEOs are eligible to receive benefits under the Zoetis Executive Severance Plan which provides for payment of severance benefits in the event of an involuntary termination of employment (other than for “Cause”) that is not in connection with a change in control of the Company (“CIC”) and a higher level of benefits in the event of an involuntary termination of employment (other than for “Cause”) or a termination for “good reason” that is in connection with, or within 24 months after, a CIC. The amounts payable under the Zoetis Executive Severance Plan are summarized in the CD&A under Severance. Treatment of long-term incentive awards upon termination of employment is in accordance with the terms of the Equity Plan and the long-term incentive award agreements. The following table shows the estimated benefits payable upon a hypothetical termination of employment under the Zoetis Executive Severance Plan and the Equity Plan under various termination scenarios, assuming the applicable termination occurred on December 31, 2023. Payment of severance benefits is contingent upon the execution and non-revocation of a release agreement. Further, the Zoetis Executive Severance Plan provides that severance payments or benefits will cease and/or be subject to repayment, as applicable, if a participant violates or breaches the provisions of the release agreement or any other applicable post-employment covenants and restrictions, including, but not limited to, any non-compete, non-disclosure, non-solicitation and/or non-disparagement covenants.
Potential Payments Upon Employment Termination Table
| Name* | Description | Without Cause: Apart from a Restructuring Event or CIC ($) | Without Cause: Restructuring Event ($) | Without Cause or for Good Reason Upon or Within 24 Months Following a CIC ($) | Death or Disability ($) | Voluntary Termination/ Retirement ($) | | Kristin C. Peck | Severance | 4,500,000(1) | 4,500,000(1) | 7,500,000(6) | — | — | | | Benefits Continuation | 16,327(2) | 16,327(2) | 24,490(7) | — | — | | | Outplacement Services | 18,375(3) | 18,375(3) | 18,375(3) | — | — | | | Equity Acceleration | —(4) | 17,119,744(5) | 27,876,139(8) | 27,876,139(9) | — | | | Total | 4,534,702 | 21,654,446 | 35,419,004 | 27,876,139 | — | | Wetteny Joseph | Severance Amount | 1,377,500(1) | 1,377,500(1) | 2,755,000(6) | — | — | | | Benefits Continuation | 27,253(2) | 27,253(2) | 40,879(7) | — | — | | | Outplacement Services | 18,375(3) | 18,375(3) | 18,375(3) | — | — | | | Equity Acceleration | 1,510,518(4) | 6,546,732(5) | 9,506,224(8) | 9,506,224(9) | 1,510,518(10) | | | Total | 2,933,646 | 7,969,860 | 12,320,478 | 9,506,224 | 1,510,518 | | Wafaa Mamilli | Severance Amount | 1,170,000(1) | 1,170,000(1) | 2,340,000(6) | — | — | | | Benefits Continuation | 27,439(2) | 27,439(2) | 41,158(7) | — | — | | | Outplacement Services | 18,375(3) | 18,375(3) | 18,375(3) | — | — | | | Equity Acceleration | —(4) | 1,772,901(5) | 2,948,509(8) | 2,948,509(9) | — | | | Total | 1,215,814 | 2,988,715 | 5,348,042 | 2,948,509 | — | | Heidi C. Chen | Severance | 1,079,500(1) | 1,079,500(1) | 2,159,000(6) | — | — | | | Benefits Continuation | 26,587(2) | 26,587(2) | 39,880(7) | — | — | | | Outplacement Services | 18,375(3) | 18,375(3) | 18,375(3) | — | — | | | Equity Acceleration | 1,885,086(4) | 2,455,281(5) | 3,517,645(8) | 3,517,645(9) | 1,885,086(10) | | | Total | 3,009,548 | 3,579,743 | 5,734,900 | 3,517,645 | 1,885,086 | | Robert J. Polzer | Severance Amount | 1,035,000(1) | 1,035,000(1) | 2,070,000(6) | — | — | | | Benefits Continuation | 18,135(2) | 18,135(2) | 27,202(7) | — | — | | | Outplacement Services | 18,375(3) | 18,375(3) | 18,375(3) | — | — | | | Equity Acceleration | —(4) | 980,573(5) | 2,087,388(8) | 2,087,388(9) | — | | | Total | 1,071,510 | 2,052,083 | 4,202,965 | 2,087,388 | — |
Potential Payments Upon Employment Termination Table
These amounts represent severance payable under the Zoetis Executive Severance Plan, equal to 18 months of base salary and target annual incentive for the year of termination for the CEO and equal to 12 months of base salary and target annual incentive for the year of termination for the other NEOs, in each case, in the event of the executive’s involuntary termination of employment without Cause. (2) These amounts represent the cost of 12 months of active health and life insurance coverage at the levels provided to the applicable NEO as of the date of termination of employment and assumes no increase in the cost of coverage. (3) These amounts represent the program fee for outplacement services for 12 months. (4) These amounts represent the value of Zoetis long-term incentive awards that vest on the executive’s involuntary termination of employment without Cause, apart from a CIC or a restructuring event, using Zoetis’ closing stock price of $197.37 on December 29, 2023. Executives that are not retirement-eligible upon termination of employment forfeit their unvested stock options, RSUs and performance award units. Executives that are retirement-eligible at the time of termination of employment receive equity acceleration treatment described in the footnote to the “Retirement” column (Ms. Chen was retirement-eligible on December 31, 2023). The amount shown for Mr. Joseph, who is not retirement-eligible, represents the value of his non-forfeitable sign-on RSU award that will fully vest upon termination of employment for any reason other than for Cause. (5) These amounts represent the value of Zoetis long-term incentive awards that vest on the executive’s involuntary termination of employment without Cause due to a restructuring event, using Zoetis’ closing stock price of $197.37 on December 29, 2023. In the event of the executive’s termination of employment due to a restructuring, unvested RSUs and performance award units will vest on a pro-rata basis, with payout of performance award units being subject to achievement of pre-established performance goals and determined after the end of the performance period. For executives that are not retirement-eligible upon termination of employment (Ms. Peck, Mr. Joseph, Ms. Mamilli and Mr. Polzer are not retirement-eligible), unvested stock options granted in 2022 and 2023 will immediately pro-rata vest and unvested stock options granted in 2021 will immediately fully vest, and will have a three-month term to exercise for all grant years. For executives that are retirement-eligible (Ms. Chen is retirement-eligible), unvested stock options held for at least one year will continue to vest under the original vesting schedule and will have the remaining option term to exercise, and unvested stock options held for less than one year (granted in 2023) will immediately pro-rata vest and will have a three-month term to exercise. The amount shown for Mr. Joseph, who is not retirement-eligible, includes the value of non-forfeitable sign-on RSU awards granted June 30, 2021, that will fully vest upon termination of employment for any reason other than for Cause (Mr. Joseph’s remaining RSUs follow the same terms and conditions of awards issued to other executives). (6) These amounts represent severance payable under the Zoetis Executive Severance Plan, equal to 30 months of base salary and target annual incentive for the year of termination for the CEO and equal to 24 months of base salary and target annual incentive for the year of termination for the other NEOs, in each case, in the event of the executive’s involuntary termination without Cause or for Good Reason upon or within 24 months after a CIC. (7) These amounts represent the cost of 18 months of active health and life insurance coverage at the levels provided to the applicable NEO as of the date of termination of employment and assumes no increase in the cost of coverage. (8) These amounts represent the value of Zoetis long-term incentive awards that vest upon a qualifying termination following a CIC using Zoetis’ closing stock price of $197.37 on December 29, 2023. In the event of the executive’s involuntary termination of employment without Cause or for Good Reason upon, or within 24 months after, a CIC, all unvested awards will fully vest (performance award units vest at the target level). (9) These amounts represent the value of Zoetis long-term incentive awards that vest on termination of employment due to death or disability using Zoetis’ closing stock price of $197.37 on December 29, 2023. In the event of the executive’s termination of employment due to death or disability, all unvested awards will fully vest (performance award units vest at the target level). These amounts represent the value of Zoetis long-term incentive awards that vest upon termination of employment due to retirement (Ms. Chen is retirement-eligible) using Zoetis’ closing stock price of $197.37 on December 29, 2023 (and, with respect to performance award units, assuming achievement of performance goals at the target level). In the event of the executive’s termination of employment due to retirement, unvested stock options held for at least one year will continue to vest under the original vesting schedule and will have the remaining option term to exercise, while RSUs and performance award units will vest on a pro-rata basis, with payout of performance award units being subject to achievement of pre-established performance goals and determined after the end of the performance period. Any awards held prior to the first anniversary of the date of grant will be forfeited in the event of a termination of employment due to retirement. The amount shown for Mr. Joseph, who is not retirement-eligible, represents the value of his non-forfeitable sign-on RSU awards granted on June 30, 2021, that will fully vest upon termination of employment for any reason other than for Cause.
Pay Versus Performance
Pay Versus Performance The following tables and charts provide additional compensation information regarding our NEOs, prepared in accordance with the SEC’s pay versus performance disclosure regulations for fiscal years 2023, 2022, 2021 and 2020.
Pay Versus Performance (PVP) Table
Pay Versus Performance (PVP) Table
Pay Versus Performance (PVP) Table
| | Summary Compensation Table (SCT) Total for CEO(1) ($) | Compensation Actually Paid (CAP) to CEO(1)(2) ($) | Average SCT Total for Other NEOs(1) ($) | Average CAP to Other NEOs(1)(2) ($) | Value of Initial Fixed $100 Investment Based On: | | Net Income ($ in millions) | Revenue (Company Selected Measure) ($ in millions) | | Year | | | | | Zoetis TSR ($) | S&P 500 Pharmaceuticals Index TSR ($) | | | | 2023 | 15,237,853 | 26,369,229 | 2,994,932 | 4,592,358 | 153.30 | 147.14 | 2,344 | 8,544 | | 2022 | 14,003,540 | (15,709,790) | 2,931,816 | (3,076,052) | 112.80 | 146.65 | 2,114 | 8,080 | | 2021 | 13,098,491 | 33,519,679 | 4,455,516 | 10,261,897 | 186.46 | 135.22 | 2,037 | 7,776 | | 2020 | 10,374,312 | 15,564,796 | 3,756,846 | 6,519,899 | 125.76 | 107.52 | 1,638 | 6,675 |
Pay Versus Performance (PVP) Table
(1) In all years shown Kristin C. Peck was our Chief Executive Officer. The other named executive officers (NEO) represent the following individuals: for 2023, Wetteny Joseph, Heidi C. Chen, Wafaa Mamilli and Robert J. Polzer; for 2022, Wetteny Joseph, Glenn C. David, Heidi C. Chen, and Wafaa Mamilli; for 2021, Wetteny Joseph, Glenn C. David, Catherine A. Knupp, Roman Trawicki and Heidi C. Chen; and for 2020, Glenn C. David, Catherine A. Knupp, Roman Trawicki and Wafaa Mamilli. (2) To calculate Compensation Actually Paid (CAP) the following amounts were deducted from and added to the Summary Compensation Table (SCT) total compensation: CEO SCT Total to CAP Reconcillation:
Pay Versus Performance (PVP) Table
| Year | SCT Total ($) | Deductions from SCT Total(i) | | Additions to SCT Total(ii) ($) | Compensation Actually Paid ($) | | | | Stock Awards ($) | Options Awards ($) | | | | 2023 | 15,237,853 | (8,774,860) | (2,924,967) | 22,831,203 | 26,369,229 | | 2022 | 14,003,540 | (8,399,841) | (2,799,966) | (18,513,523) | (15,709,790) | | 2021 | 13,098,491 | (6,929,797) | (2,309,970) | 29,660,955 | 33,519,679 | | 2020 | 10,374,312 | (5,684,840) | (1,894,975) | 12,770,299 | 15,564,796 |
Pay Versus Performance (PVP) Table
Average Other NEOs SCT Total to CAP Reconcillation:
Pay Versus Performance (PVP) Table
| Year | SCT Total ($) | Deductions from SCT Total(i) | | Additions to SCT Total(ii) ($) | Compensation Actually Paid ($) | | | | Stock Awards ($) | Options Awards ($) | | | | 2023 | 2,994,932 | (1,239,133) | (413,112) | 3,249,671 | 4,592,358 | | 2022 | 2,931,816 | (1,405,542) | (468,570) | (4,133,756) | (3,076,052) | | 2021 | 4,455,516 | (2,118,241) | (366,105) | 8,290,727 | 10,261,897 | | 2020 | 3,756,846 | (1,302,977) | (496,860) | 4,562,890 | 6,519,899 |
Pay Versus Performance (PVP) Table
These deductions are the amounts listed in the “Stock Awards” and “Option Awards” columns of the SCT and represent the grant date fair value of equity-based awards granted each year. Reflects the value of equity calculated in accordance with the SEC methodology for determining CAP for each year shown. The equity component for each year is detailed in the supplemental table below: CEO Equity Component of CAP:
Pay Versus Performance (PVP) Table
| Year | Equity Type | Fair Value of Current Year Equity Awards at End of Year ($) | Change in Value of Prior Years’ Awards Unvested at End of Year ($) | Change in Value of Prior Years’ Awards That Vested During the Year ($) | Equity Value Included in CAP ($) | | 2023 | Stock Options | 3,971,133 | 1,923,431 | 372,068 | 6,266,632 | | | Restricted Stock Units | 3,585,639 | 1,500,387 | 162,461 | 5,248,488 | | | Performance Award Units | 8,054,738 | 3,060,551 | 200,795 | 11,316,083 | | | Total | 15,611,510 | 6,484,369 | 735,324 | 22,831,203 | | 2022 | Stock Options | 1,528,648 | (7,897,241) | (931,398) | (7,299,991) | | | Restricted Stock Units | 2,049,978 | (2,672,369) | (234,149) | (856,541) | | | Performance Award Units | 2,460,116 | (12,009,652) | (807,455) | (10,356,991) | | | Total | 6,038,742 | (22,579,262) | (1,973,002) | (18,513,523) | | 2021 | Stock Options | 5,709,571 | 5,052,274 | 33,020 | 10,794,866 | | | Restricted Stock Units | 3,523,058 | 1,469,682 | 10,165 | 5,002,905 | | | Performance Award Units | 8,916,215 | 4,932,126 | 14,842 | 13,863,183 | | | Total | 18,148,844 | 11,454,083 | 58,027 | 29,660,955 | | 2020 | Stock Options | 2,309,500 | 1,341,931 | 385,408 | 4,036,839 | | | Restricted Stock Units | 2,186,374 | 411,103 | 103,798 | 2,701,275 | | | Performance Award Units | 4,749,437 | 1,128,981 | 153,769 | 6,032,186 | | | Total | 9,245,311 | 2,882,015 | 642,974 | 12,770,299 |
Pay Versus Performance (PVP) Table
Average Other NEOs Equity Component of CAP:
Pay Versus Performance (PVP) Table
| Year | Equity Type | Fair Value of Current Year Equity Awards at End of Year ($) | Change in Value of Prior Years’ Awards Unvested at End of Year ($) | Change in Value of Prior Years’ Awards That Vested During the Year ($) | Equity Value Included in CAP ($) | | 2023 | Stock Options | 560,869 | 169,611 | 46,139 | 776,619 | | | Restricted Stock Units | 506,345 | 509,551 | 20,141 | 1,036,037 | | | Performance Award Units | 1,137,439 | 284,615 | 14,962 | 1,437,015 | | | Total | 2,204,652 | 963,777 | 81,242 | 3,249,671 | | 2022 | Stock Options | 255,817 | (1,352,757) | (446,281) | (1,543,221) | | | Restricted Stock Units | 343,039 | (1,110,941) | (112,191) | (880,093) | | | Performance Award Units | 411,640 | (1,735,180) | (386,902) | (1,710,442) | | | Total | 1,010,496 | (4,198,878) | (945,373) | (4,133,756) | | 2021 | Stock Options | 904,905 | 1,796,558 | 22,234 | 2,723,696 | | | Restricted Stock Units | 1,897,216 | 490,667 | 6,844 | 2,394,727 | | | Performance Award Units | 1,413,054 | 1,749,257 | 9,993 | 3,172,304 | | | Total | 4,215,175 | 4,036,482 | 39,071 | 8,290,727 | | 2020 | Stock Options | 605,548 | 908,841 | 240,880 | 1,755,269 | | | Restricted Stock Units | 573,225 | 278,702 | 64,872 | 916,799 | | | Performance Award Units | 1,010,271 | 784,446 | 96,105 | 1,890,822 | | | Total | 2,189,044 | 1,971,988 | 401,857 | 4,562,890 |
Compensation Actually Paid (CAP) versus Zoetis TSR
Compensation Actually Paid (CAP) versus Zoetis TSR The graph below compares the Compensation Actually Paid (CAP) of the CEO and the Other NEOs, to Zoetis’ TSR for the four fiscal years beginning with 2020. As the graph shows, the CAP to the CEO and Other NEOs is directionally aligned with the Company’s TSR. 3.