DEF 14A of Philip Morris International Inc.
Filed Mar 27, 2025 · FY20240001104659-25-028420
2024 Annual Report
| Compensation Tables | 57 | | Summary Compensation Table | 57 | | All Other Compensation | 58 | | Grants of Plan-Based Awards During 2024 | 60 | | Outstanding Equity Awards as of December 31, 2024 | 61 | | Stock Option Exercises and Stock Vested During 2024 | 63 | | Pension Benefits | 64 | | Employment Contracts, Termination of Employment and Change in Control Arrangements | 66 | | Pay Ratio | 68 | | Pay versus Performance | 69 | | Advisory Vote Approving Executive Compensation | 72 | | Audit and Risk Committee Matters | 73 | | Ratification of the Selection of Independent Auditors | 76 | | Related Person Transactions and Code of Conduct | 77 | | Availability of Reports, Other Matters and 2026 Annual Meeting | 78 | | Exhibit A: Questions & Answers | 80 | | Exhibit B: Reconciliations | 85 | | Exhibit C: Glossary of Terms | 89 |
DIRECTOR ADDITIONS
DIRECTOR ADDITIONS Although it is not anticipated that any of the persons named below will be unable or unwilling to stand for election, a proxy, in the event of such an occurrence, may be voted for a substitute designated by the Board. However, in lieu of designating a substitute, the Board may reduce its number of directors. Independence of Nominees After receiving the recommendation of the Governance Committee, the Board has determined that each of the following director nominees is independent of, and has no material relationship with, the Company: Bonin Bough, Michel Combes, Werner Geissler, Victoria Harker, Lisa A. Hook, Kalpana Morparia, Robert B. Polet, Dessi Temperley, and Shlomo Yanai. The Board determined that Juan José Daboub, who is not standing for re-election at the 2025 Annual Meeting of Shareholders, is independent under NYSE listing standards during 2024 and the portion of fiscal year 2025 when he is serving on the Board. The Board also determined that Jun Makihara, who did not stand for re-election at the 2024 Annual Meeting of Shareholders, was independent under NYSE listing standards during the portion of fiscal year 2024 when he served on the Board. To assist it in making these determinations, the Board has adopted categorical standards of director independence that are set forth in the Corporate Governance Guidelines. The Corporate Governance Guidelines are available on the Company’s website at www.pmi.com/corporate-governance/overview. Each of the above-named nominees qualifies as independent under these standards. Majority Vote Standard in Uncontested Elections All directors are elected annually. The Company’s by-laws provide that, where the number of nominees for director does not exceed the number of directors to be elected, directors shall be elected by a majority rather than by a plurality vote. Under applicable law, a director’s term extends until his or her successor is duly elected and qualified. Thus, an incumbent director who fails to receive a majority vote would continue to serve as a holdover director. To address that possibility, our Corporate Governance Guidelines require a director who receives less than a majority of the votes cast to offer to resign. The Governance Committee would then consider, and recommend to the Board, whether to accept or reject the offer.
DIRECTOR ADDITIONS
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DIRECTOR ADDITIONS
Director Nominees
DIRECTOR ADDITIONS
| | PROPOSAL 1: ELECTION OF DIRECTORS The Board recommends that you vote FOR each of the eleven director nominees. | “FOR” |
DIRECTOR ADDITIONS
| Nominees | Independence | Audit & Risk | Compensation & Leadership Development | Nominating & Corporate Governance | Science & Technology | | BONIN BOUGH Age: 47 Director since: 2021 | ● | M | | | M | | ANDRÉ CALANTZOPOULOS Age: 67 Director since: 2013 | | | | | M | | MICHEL COMBES Age: 62 Director since: 2020 | ● | C | | M | | | WERNER GEISSLER Age: 71 Director since: 2015 | ● | M | C | M | | | VICTORIA HARKER Age: 60 Director since: 2024 | ● | M | | | | | LISA A. HOOK Age: 67 Director since: 2018 | ● | M | M | M | M | | KALPANA MORPARIA Age: 75 Director since: 2011 | ● | | M | C | M | | JACEK OLCZAK Age: 60 Director since: 2021 | | | | | M | | ROBERT B. POLET Age: 69 Director since: 2011 | ● | | M | | M | | DESSI TEMPERLEY Age: 52 Director since: 2021 | ● | M | | | | | SHLOMO YANAI Age: 72 Director since: 2021 | ● | | | M | C |
DIRECTOR ADDITIONS
| C | = Committee Chair | M = Committee Member |
DIRECTOR ADDITIONS
Director Qualifications Our Board is a highly engaged group that provides strong and effective oversight of our Company. Both individually and collectively, our directors have the qualifications, skills and experience needed to inform and oversee the Company’s long-term strategic growth. Each director has or has had senior executive experience, in many cases with large, complex organizations with significant global operations. Our directors have leadership experience in the global consumer products sector and bring expertise in financial, information technology, cybersecurity, and digital transformation matters. These and the other skills and attributes discussed below are key considerations in evaluating the composition of our Board and inform our Board succession planning and director selection process.
DIRECTOR ADDITIONS
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K E Y A T T R I B U T E S O F A L L D I R E C T O R S
K E Y A T T R I B U T E S O F A L L D I R E C T O R S
K E Y A T T R I B U T E S O F A L L D I R E C T O R S
| • High Integrity • Proven Record of Success • Leadership • Understanding of our Global Business and Markets | • Strength of Character and Judgment • Corporate Governance Experience • Talent Management/ Succession Planning | • Broad Range of Perspectives • Intellectual/Analytical Skills • Strategic Planning • Risk Assessment and Oversight |
K E Y S K I L L S O F O U R B O A R D
K E Y S K I L L S O F O U R B O A R D Our director nominees’ individual experiences, qualifications, attributes and skills are highlighted in the following matrix. The matrix is intended as a high-level summary and not an exhaustive list of each nominee’s skills or contributions to the Board. Further biographical information about each director standing for re-election is set forth on the following pages.
K E Y S K I L L S O F O U R B O A R D
| EXPERIENCE | | Bough | Calantzopoulos | Combes | Geissler | Harker | Hook | Morparia | Olczak | Polet | Temperley | Yanai | | | Senior Executive | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | | | Consumer Packaged Goods | | ● | | ● | | | | ● | | | | | | Operations and Business Continuity | | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | | | Information Technology and Cybersecurity | ● | | ● | ● | ● | ● | | | | ● | | | | CFO or Banking | | | ● | | ● | | ● | ● | | ● | ● | | | Civic Leadership | ● | | ● | ● | | ● | | | | | ● | | | Consumer Wellness | | | | | | | | | | | ● | | | Marketing and Retail | ● | ● | ● | ● | | | | ● | ● | | |
K E Y S K I L L S O F O U R B O A R D
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K E Y S K I L L S O F O U R B O A R D
| Occupation: Founder and Chief Growth Officer, Diligence, LLC (also known as Bonin Ventures) Committees: Audit and Risk (Financially Literate); Science and Technology | BONIN BOUGH | Director Since: 2021 | Age: 47 | | | CAREER HIGHLIGHTS | | | | | Diligence, LLC (also known as Bonin Ventures), an entity focused on accelerating growth of innovative start-up companies • Founder and Chief Growth Officer, since 2014. Triller, a global social media company • Chief Growth Officer, since 2020. SheaMoisture • Chief Growth Officer, from 2016 to 2017. | Mondelèz International, Inc. • Chief Media and E-Commerce Officer, from 2015 to 2016. • Vice President, Global Media and Consumer Engagement, from 2012 to 2015. The Kraft Heinz Company • Vice President, Global Media and Consumer Engagement, from 2012 to 2015. PepsiCo, Inc. • Chief Digital Officer, from 2008 to 2012. | | | | Director Qualifications: With his unique executive marketing experience, Mr. Bough brings to the Board his considerable entrepreneurial expertise, particularly with respect to e-commerce, innovative technologies and acceleration of brand equity, as well as valuable insights for transforming and growing large, multinational businesses and start-ups. Other Directorships and Associations: Mr. Bough previously sat on the board of directors of SITO Mobile Ltd., a U.S. based mobile solution provider and mobile advertising platform, from 2018 to 2020. | | |
K E Y S K I L L S O F O U R B O A R D
| Occupation: Chairman, Philip Morris International Inc. Committees: Science and Technology | ANDRÉ CALANTZOPOULOS | Director Since: 2013 | Age: 67 | | | CAREER HIGHLIGHTS | | | | | Philip Morris International Inc. • Chairman of the Board of Directors since May 2024. • Executive Chairman of the Board of Directors, from May 2021 to May 2024. • CEO, from 2013 until May 5, 2021. • Chief Operating Officer from March 2008, following the spin-off from Altria Group, Inc., until becoming CEO in May 2013. | • President and CEO, from April 2002 until the spin-off in March 2008. • Various roles across Central Europe, including Managing Director of PM Poland and President of the Eastern European Region, from February 1985 to April 2002. | | | | Director Qualifications: In his role as Chairman, Mr. Calantzopoulos’ all-encompassing knowledge of the Company and the tobacco industry serves the Company and the Board well. He has played an instrumental role in numerous key initiatives, leading the Company with his bold vision of a smoke-free future, and through its related evolution into a consumer-centric technology and science-driven business. | | |
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K E Y S K I L L S O F O U R B O A R D
| Occupation: Partner, Forgelight LLC Committees: Audit and Risk (Chair and Financial Expert), and Nominating and Corporate Governance | MICHEL COMBES | Director Since: 2020 | Age: 62 | | | CAREER HIGHLIGHTS | | | | | Forgelight LLC, an investment company focused on the media and consumer technology sectors • Partner, since May 2024. Claure Group LLP, a multi-billion-dollar global investment firm focused on multiple high growth sectors in Latin America • Executive Vice President, from October 2022 to May 2024. SoftBank Group International, a privately held subsidiary of SoftBank Group Corp. and oversaw several SoftBank portfolio companies • CEO, from January 2022 to June 2022. • President, from April 2020 to January 2022. Sprint Corporation • President from 2018 to 2020, Chief Financial Officer from January 2018 to May 2018, CEO from May 2018 to 2020, and a member of the Board of Directors, from 2018 to 2020. | Altice Group • CEO, from 2016 to 2017, and Chief Operating Officer, from 2015 to 2016. SFR Group • Chairman and CEO, from 2015 to 2017. Alcatel-Lucent • CEO, from 2013 to 2015. Vodafone Europe • CEO, from 2008 to 2012. TDF Group (Télédiffusion de France) • Chairman and CEO France Telecom • Executive Vice President French Government • Several roles | | | | Director Qualifications: With his experience as a chief executive and chief financial officer in a number of large, multinational companies in the telephonic and digital communications, banking and portfolio strategy industries, Mr. Combes brings to the Board his considerable entrepreneurial business experience, extensive knowledge of international markets in highly regulated industries, and valuable insights in areas of cybersecurity, innovation, and consumer centricity. Furthermore, as a former CFO, the Board has also determined that Mr. Combes qualifies as an audit committee financial expert. Other Directorships and Associations: Mr. Combes currently sits on the board of directors of three other public companies: Etisalat UAE, headquartered in the United Arab Emirates, since March 2021, and F5, Inc. (formerly, F5 Networks), an American technology company, since October 2023, and Eutelsat Communications S.A., a French satellite communications company, since February 2025. He previously served on the board of directors of MTS (Mobile TeleSystems) from 2013 to 2018, Sprint Corporation from 2018 to 2020, Altice N.V. and its subsidiary, Altice USA, Inc., from 2016 to 2017, F5 Networks from 2018 to 2021, Assystem SA, from 2018 to 2023, and Contentsquare, from 2021 to 2023. He also served on several boards of directors of SoftBank Group Corp. portfolio companies. These companies included the public company boards of WeWork Inc., from 2020 to 2022, and SoFi Technologies, Inc., from 2021 to 2022. Mr. Combes also currently sits on the board of directors of four private companies: Connect Parent Corporation, since August 2024, E-Space, since January 2023; V.tal, since November 2022; and Swile SAS, since October 2021. | | |
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| Occupation: Operating Partner, Advent International Committees: Compensation and Leadership Development (Chair), Audit and Risk (Financial Expert) and Nominating and Corporate Governance | WERNER GEISSLER | Director Since: 2015 | Age: 71 | | | CAREER HIGHLIGHTS | | | | | Advent International, a private equity firm • Operating Partner, since 2015. Procter & Gamble, a consumer goods corporation • Vice Chairman and Special Advisor to the Chairman and CEO, prior to his retirement in 2015. • Vice Chairman, Global Operations, from 2007 to 2014. | • Group President, Central and Eastern Europe, Middle East and Africa, from 2004 to 2007. • President, Northeast Asia, from 2001 to 2004. | | | | Director Qualifications: Mr. Geissler has a keen knowledge of the global consumer products business, having served as a senior consumer products executive in many of the markets and regions most important to the Company. His deep senior executive experience serves the Company and the Board well as the Compensation and Leadership Development Committee, which he chairs. Mr. Geissler has also had substantial P&L responsibility in his roles at Procter & Gamble and has an MBA in Finance and IT, which both inform his service as a member of the Audit and Risk Committee. Other Directorships and Associations: Mr. Geissler currently also sits on the board of directors of the Goodyear Tire & Rubber Company, a U.S. publicly traded company since July 2011. | | |
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K E Y S K I L L S O F O U R B O A R D
| Occupation: Former CFO, TEGNA, Inc. Committees: Audit and Risk (Financial Expert) | VICTORIA HARKER | Director Since: 2024 | Age: 60 | | | CAREER HIGHLIGHTS | | | | | TEGNA, Inc., a global media and digital communications company • Chief Financial Officer and Executive Vice President, from 2012 to 2023. The AES Corporation, a global power company • Executive Vice President, Chief Financial Officer and President, Global Business Services, from 2006 to 2015. | MCI, a telecommunications company • Acting Chief Financial Officer, Treasurer and Senior Vice President, Corporate Finance, from 2002 to 2005. • Chief Financial Officer and Senior Vice President, Operations and Information Technology, from 1998 to 2002. | | | | Director Qualifications: Ms. Harker is an experienced former Chief Financial Officer, having served in the role with three different U.S. public companies, and she has been involved in significant corporate transformations in the consumer, industrial and utility sectors for over 25 years. Her broad finance and business experience and MBA in finance further strengthens and diversifies the capabilities of the Company, the Board and the Audit and Risk Committee. Ms. Harker also has experience outside the finance function, having led the Global Business Services organization at The AES Corporation, as well as Operations and IT. During her time at TEGNA, Inc., she went through several periods of transformation as the company moved from a traditional publishing business to separating out its online and broadcast businesses. This has given her a great deal of exposure to shareholders and familiarity with a broad range of SEC regulatory processes. The Board has also determined that Ms. Harker qualifies as an audit committee financial expert. Other Directorships and Associations: Ms. Harker currently sits on the board of directors of two other public companies: Huntington Ingalls Industries, since 2012, and Xylem, Inc., since 2011. At Huntington Ingalls Industries, she serves as Chair of the compensation committee and as a member of the finance committee. At Xylem, Inc., she serves as Chair of the audit committee, as a member of the nominating and governance committee and as a member of the finance committee. She previously served on the boards of directors of Stride, Inc., from 2020 to 2022, and Darden Restaurants, Inc., from 2009 to 2014. Ms. Harker also currently serves on the boards of not-for-profit organizations: as Vice Chair of the State Council of Higher Education for Virginia, since 2016; as a public member (appointed by the Governor of Virginia) of the University of Virginia Health System Board, since 2012; and as a member of the American University Advisory Counsel, since 2007. Previously, she was appointed to the University of Virginia Board of Visitors by Governor Robert McDonnell in 2012, where she chaired the Finance Committee and was a member of the Executive Committee, the Academic Affairs Committee, the Health System Board and the Presidential Search Committee. She also serves as Trustee on the Board of the Virginia Historical Society. | | |
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K E Y S K I L L S O F O U R B O A R D
| Occupation: Managing Partner, Two Island Partners LLC Lead Independent Director, Philip Morris International Inc. Committees: Audit and Risk (Financial Expert), Compensation and Leadership Development, Nominating and Corporate Governance, and Science and Technology | LISA A. HOOK | Director Since: 2018 | Age: 67 | | | CAREER HIGHLIGHTS | | | | | Two Island Partners LLC, a private equity and consulting firm • Managing Partner, since 2018. Neustar, Inc., a global information services company focused on cloud-based workflow solutions for marketing, risk and security analytics • Member of the Board, from 2010 to 2019. • President & CEO, from 2010 to 2018. • President & Chief Operating Officer, from 2008 to 2010. Sunrocket, Inc., a cloud-based voice communications company • President & CEO, from 2006 to 2007. | America Online Inc., a web portal and online service provider • Several executive positions, from 2001 to 2004. Brera Capital Partners, a global private equity investment firm • Partner Alpine Capital Group, LLC, an investment banking firm • Managing Director Time Warner, Inc., a media company • Executive | | | | Director Qualifications: Ms. Hook’s past experience as CEO of a U.S. publicly traded company, her past senior management roles and government appointments relating to telecommunications, plus her holistic understanding of digital identity, are key to deploying actionable insights that grow and guard many of the world’s largest corporations. In addition, with her extensive public board experience, Ms. Hook brings to the Board valuable insights in the areas of cybersecurity, data privacy, and digital transformation at a time when the Company is transitioning to a consumer- centric, highly digitalized business model. The Board has also determined that Ms. Hook qualifies as an audit committee financial expert. Other Directorships and Associations: Ms. Hook currently sits on the board of directors of two other public companies: Fidelity National Information Services, Inc., a U.S. multinational corporation and global leader in banking and payment solutions, and Nokia Corporation, a technology leader across mobile, fixed and cloud networks, headquartered in Finland. In addition, Ms. Hook serves on the board of Zayo Group, a private company providing communications infrastructure services in the U.S. Since her appointment by President Obama in 2012, she serves on the National Security Telecommunications Advisory Committee. Ms. Hook served on the boards of directors of RB Global, Inc., formerly known as Ritchie Bros Auctioneers Incorporated, a Canadian global asset management and disposition company listed on the NYSE, from 2021 to 2023; Ping Identity Holding Corp., a pioneer in digital identity solutions, from 2019 to 2022; Partners Group Holding AG, a global asset management company, from 2020 to 2021; Unisys Corporation, a global information technology company, from 2019 to 2021; and RELX PLC and RELX NV, providers of information solutions, as Senior Independent Director from 2006 to 2016. Previously, she served as a director of Covad Communications and Time Warner Telecom, Inc. Ms. Hook served as a legal advisor to the Chairman of the Federal Communications Commission and General Counsel of the Cable Group at Viacom International, Inc., a media company. | | |
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K E Y S K I L L S O F O U R B O A R D
| Occupation: Founder & Managing Partner, KalMor Advisors LLP Committees: Nominating and Corporate Governance (Chair), Compensation and Leadership Development, and Science and Technology | KALPANA MORPARIA | Director Since: 2011 | Age: 75 | | | CAREER HIGHLIGHTS | | | | | KalMor Advisors LLP, a strategy and corporate advisory firm • Founder and Managing Partner, since 2021. JPMorgan Chase & Co., a multinational investment bank and financial services holding company • Chairman of South and Southeast Asia, from March 2019 until her retirement in February 2021. • CEO of South and Southeast Asia from April 2016 until March 2019. • CEO of J.P. Morgan India, from 2008 to 2016. | ICICI Bank, India’s second-largest bank • Vice Chair of ICICI’s insurance and asset management business, from 2007 to 2008. • Joint Managing Director, from 2001 to 2007. | | | | Director Qualifications: With her strong executive leadership experience in finance, and her deep knowledge of international business, Ms. Morparia provides a keen perspective on economies in Asia, while her legal background and deep experience in highly regulated industries help her serve the Company and the Board well as Chair of the Nominating and Corporate Governance Committee. Other Directorships and Associations: Ms. Morparia currently sits on the board of directors of two other public companies: HSBC Holdings plc, a British multinational universal bank and financial services holding company, and The Great Eastern Shipping Co. Ltd., the largest private sector shipping company in India publicly traded on the Bombay Stock Exchange and the National Stock Exchange. She also serves on the Board of Directors of Fashnear Technologies Private Limited, d/b/a Meesho, an online shopping application. She previously served on the boards of directors of Dr. Reddy’s Laboratories Ltd., from June 2007 to July 2024, Hindustan Unilever Limited, from October 2014 to October 2024, and Delhivery Limited from October 2021 to February 2023. Ms. Morparia also serves on the governing board of a number of not-for-profit organizations. | | |
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K E Y S K I L L S O F O U R B O A R D
| Occupation: Chief Executive Officer, Philip Morris International, Inc. Committees: Science and Technology | JACEK OLCZAK | Director Since: 2021 | Age: 60 | | | CAREER HIGHLIGHTS | | | | | Philip Morris International Inc. • CEO, since May 2021. • Chief Operating Officer, from January 2018 until May 2021. • Chief Financial Officer, from August 2012 until December 2017. | • Various roles in finance and general management positions across Europe, including Managing Director of PMI’s markets in Poland and Germany, and as President of the European Union Region, from 1993 until January 2018. Prior to joining PMI, Mr. Olczak worked for BDO Binder. | | | | Director Qualifications: Mr. Olczak’s intellect and all-encompassing knowledge of the Company serve him well as its CEO and as a member of the Board. As COO, he played an instrumental role in the Company’s transformation and the superior performance of our regions and markets, particularly, in his commitment to consumer centricity, digitalized consumer engagement, and manufacturing optimization, while remaining focused on the growth of our combustible capacities brand portfolio and the seamless deployment of SFPs in over 70 markets worldwide. | | |
K E Y S K I L L S O F O U R B O A R D
| Occupation: Chairman, Arica Holding B.V.; Chairman, SFMS B.V. Committees: Compensation and Leadership Development and Science and Technology | ROBERT B. POLET | Director Since: 2011 | Age: 69 | | | CAREER HIGHLIGHTS | | | | | SFMS B.V., a retail consumer staples company • Chairman, since 2018. Arica Holding B.V., parent holding company of SFMS B.V. • Chairman, since 2018. Rituals Cosmetics Enterprise B.V., a retail cosmetics company • Former Chairman, from 2017 to 2023. | Gucci Group, a luxury fashion house • President, CEO and Chairman of the Management Board, from 2004 until 2011. Unilever Group, a multinational consumer goods company • 26 years in a variety of executive roles, including President of Unilever’s Worldwide Ice Cream and Frozen Foods division, Chairman of Unilever Malaysia, Chairman of Van den Bergh and Executive Vice President of Unilever’s European Home and Personal Care division. | | | | Director Qualifications: As CEO of Gucci Group, Mr. Polet was responsible for managing global luxury brands such as Gucci, Bottega Veneta, Yves Saint Laurent, Boucheron, Balenciaga, Sergio Rossi, Alexander McQueen and Stella McCartney. He brings to the Board his considerable entrepreneurial business experience in the global luxury business. Furthermore, he has extensive executive experience overseeing major consumer packaged goods businesses, as well as an extensive knowledge of global markets. Other Directorships and Associations: Mr. Polet currently sits on the board of directors of Safilo Group S.p.A., an Italian publicly held eyewear company, where he also served as Chairman from 2011 to 2017. Mr. Polet previously served as a non-executive director of RELX PLC and RELX NV, providers of information solutions, and each a publicly held entity, from 2007 to 2016. He also previously sat on the board of directors of William Grant & Sons Ltd., an independent, family-owned, Scottish premium spirits company, from 2011 to 2022, most recently as senior independent director. | | |
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K E Y S K I L L S O F O U R B O A R D
| Occupation: Former Group CFO and Executive Board Member, Beiersdorf AG Committees: Audit and Risk (Financial Expert) | DESSI TEMPERLEY | Director Since: 2021 | Age: 52 | | | CAREER HIGHLIGHTS | | | | | Beiersdorf AG, a manufacturer and retailer of personal-care products and pressure- sensitive adhesives • Group Chief Financial Officer and Executive Board Member, from 2018 until her retirement in April 2021. | Nestle S.A., a food & beverage company • Head of Investor Relations, CFO of Nestle Purina Petcare EMENA, Head of Global Planning and Performance Analysis, CFO of Nestle Southeast Europe Zone, Controller for CEE, and Supply Chain Controller NPPE, from April 2004 to June 2018. | | | | Director Qualifications: Ms. Temperley is a recently retired chief financial officer of a global public company with over 25 years of experience across a variety of sectors with several blue-chip multinationals. She has a proven track record of delivering strategic change with strong operational leadership resulting in superior financial results. The Board has also determined that Ms. Temperley qualifies as an audit committee financial expert. Other Directorships and Associations: In May 2020, Ms. Temperley joined the board of directors of Coca-Cola Europacific Partners, a publicly held bottling company, for which she also serves on the Audit Committee. In May 2021, following retirement from her executive career, Ms. Temperley also joined the board of directors of Corbion, a food and biochemical public company headquartered in the Netherlands, for which she also serves on the Audit Committee, the Sustainability Committee, and the Remuneration Committee. In September 2021, Ms. Temperley joined the board of directors of Cimpress, a publicly held company domiciled in Ireland that invests in and operates a wide variety of businesses that use mass customization to configure and produce small quantities of individually customized goods, for which she also serves on the Audit Committee. | | |
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K E Y S K I L L S O F O U R B O A R D
| Occupation: Chairman of the Board, Lumenis Ltd. Committees: Science and Technology (Chair) and Nominating and Corporate Governance | SHLOMO YANAI | Director Since: 2021 | Age: 72 | | | CAREER HIGHLIGHTS | | | | | Lumenis Ltd., a medical devices company • Chairman of the Board, since 2020. Moelis & Company, an investment bank • Senior Advisor, since 2016. Cambrex Corp., a global pharmaceutical contract development and manufacturing company • Chairman, from 2013 to 2019. | Teva Pharmaceuticals Industries Ltd., a pharmaceutical company • President and CEO, from 2007 to 2012. Adama Industries, a global crop protection company • CEO, from 2002 to 2006. Israeli Defense Forces • Variety of leadership roles over 32 years, retiring as a Major General. • Received Israel’s Medal of Valor in 1973. | | | | Director Qualifications: Mr. Yanai’s extensive experience in the pharmaceuticals industry brings a unique perspective to the Company’s critical efforts to develop and commercialize SFPs, and to advocate for the development of science-based regulatory frameworks for the development and commercialization of such products. Other Directorships and Associations: Mr. Yanai currently also sits on the board of directors of Amneal Pharmaceuticals, Inc., a publicly held generics and specialty U.S. pharmaceutical company, for which he serves as a member of the compensation committee. Until October 2021, Mr. Yanai served on the board of directors of W.R. Grace and Company, a publicly held specialty chemicals U.S. company. He has served as Chairman of the board of directors of several private companies: Makhteshim Chemical Works Ltd., Agan Chemical Manufacturers Ltd, Milenia Agro Chemicals and Aroma Fine Chemicals Ltd. Mr. Yanai has also served as either Chairman or a member of the board of directors of the following publicly traded pharmaceutical companies: Protalix Biotherapeutics, Inc., PDL BioPharm, Inc., Perrigo plc, and Sagent Pharmaceuticals, Inc. Mr. Yanai was also a member of the board of directors of Elisra Group, a privately owned electronic device company, from 2002 to 2005, and Bank Leumi, Israel’s second largest publicly traded bank, from 2004 to 2007. | | |
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K E Y S K I L L S O F O U R B O A R D
COMPENSATION OF DIRECTORS Compensation Philosophy The Company’s philosophy is to provide competitive compensation necessary to attract and retain high-quality non-employee directors. The Board believes that a substantial portion of director compensation should consist of equity-based compensation to assist in aligning directors’ interests with the interests of shareholders. Directors who are full-time employees of the Company receive no additional compensation for services as a director.
C H A I R M A N
| Name | Fees Earned or Paid in Cash(a) ($) | Stock Awards(b) ($) | All Other Compensation(c) ($) | Total ($) | | Bonin Bough | 125,000 | 175,036 | 228 | 300,264 | | André Calantzopoulos(d) | 340,385 | 175,036 | 49,009(e) | 564,430 | | Michel Combes | 168,463 | 175,036 | 228 | 343,727 | | Juan José Daboub | 125,000 | 175,036 | 228 | 300,264 | | Werner Geissler | 160,000 | 175,036 | 228 | 335,264 | | Victoria Harker | 125,000 | 236,381 | 228 | 361,609 | | Lisa A. Hook | 175,000 | 175,036 | 228 | 350,264 | | Jun Makihara(f) | 31,250 | 175,036 | 228 | 206,514 | | Kalpana Morparia | 160,000 | 175,036 | 228 | 335,264 | | Robert B. Polet | 125,000 | 175,036 | 228 | 300,264 | | Dessi Temperley | 125,000 | 175,036 | 228 | 300,264 | | Shlomo Yanai | 160,000 | 175,036 | 228 | 335,264 |
2024 Executive Compensation Determinations
2024 Annual Incentive Compensation Awards: In February 2024, the Committee established performance targets for the 2024 annual incentive compensation awards that were paid in February 2025. Award targets and actual payouts as a percentage of base salary for our NEOs were as follows:
2024 Executive Compensation Determinations
| | 2024 Cash Incentive Target as % of Base Salary(1) | 2024 Actual Cash Incentive Payout as % of Base Salary | | Jacek Olczak | 200% | 351% | | Emmanuel Babeau | 125% | 179% | | Frederic de Wilde | 125% | 203% | | Stacey Kennedy | 100% | 169% | | Stefano Volpetti | 100% | 143% |
2024 Executive Compensation Determinations
2024 Equity Awards: The table below presents the long-term equity awards granted to our NEOs in February 2024:
2024 Executive Compensation Determinations
| | 2024-26 PSUs Target as % of Base Salary (60% of total Equity Award)(1) | 2024 RSUs Target as % of Base Salary (40% of total Equity Award)(2) | 2024-26 PSUs Actual Award as % of Base Salary (60% of total Equity Award) | 2024 RSUs Actual Award as % of Base Salary (40% of total Equity Award) | | Jacek Olczak | 360% | 240% | 432% | 288% | | Emmanuel Babeau | 165% | 110% | 182% | 121% | | Frederic de Wilde | 165% | 110% | 198% | 132% | | Stacey Kennedy | 96% | 64% | 115% | 77% | | Stefano Volpetti | 105% | 70% | 126% | 84% |
2024 Executive Compensation Determinations
(1) Possible award grant range is between 0% and 150% of target; between 0% and 200% of PSUs granted may vest, depending on performance versus criteria established at the time of grant. (2) Possible award grant range is between 0% and 150% of target. In February 2024, the Committee granted PSUs for the 2024-2026 performance cycle and RSUs with a three-year cliff vesting schedule. The grants of these awards were determined in reference to the target PSU and RSU percentages applicable to the salary grade held by each NEO, as set forth in the table above. Each NEO received 60% of their total equity award in the form of PSUs and 40% in the form of RSUs. The Committee based the actual award granted after an evaluation of the individual performance of our NEOs for the most recently completed fiscal year. The Committee approved actual equity awards for each NEO, as set forth in the table above, as the Committee determined they each exceeded their individual performance ratings for the most recently completed fiscal year and recognized their individual contributions to progress in pursuing the Company’s strategic priorities with regards to the post-acquisition performance of Swedish Match, financial performance, capability building, product pipeline development and commercialization, sustainability programs and the challenging regulatory environment. In February 2025, the Committee granted PSUs for the 2025-2027 performance cycle and RSUs with a three-year cliff vesting schedule. The grants of these awards were based on the 2024 individual performance of our NEOs. There were no changes in the award targets versus 2024.
LONG-TERM EQUITY AWARDS
LONG-TERM EQUITY AWARDS The Committee establishes the equity award target opportunity for our CEO and each other NEO based on Company targets by salary grade and the individual’s performance rating for this award. The Committee grants the individual 60% of the award opportunity in the form of performance-based PSUs, and 40% in the form of time-based RSUs.
LONG-TERM EQUITY AWARDS
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LONG-TERM EQUITY AWARDS
Use of PSUs and RSUs Versus Stock Options and Timing of Awards: We grant equity awards in the form of RSUs and PSUs, rather than stock options, because RSUs and PSUs: • establish a relationship between our cost and the value ultimately delivered to our executives that is more direct and more visible than is the case with stock options; and • require the use of substantially fewer shares than stock options to deliver equivalent value, resulting in an annual Company run rate in 2024 of 0.19% (the sum of all equity awards to non-employee Directors and RSUs granted to employees during the period, plus the number of all PSUs vested during the period, divided by the weighted average number of shares outstanding during the period), and a total 2024 year-end overhang of 0.38% (number of unvested RSUs plus unvested PSUs at target as a percentage of all shares outstanding at year-end). Such awards are generally granted to our NEOs in February of each year on a predetermined schedule. In certain circumstances, including the hiring of an officer, the Committee may approve grants to be effective at other times. The Committee did not take material nonpublic information into account when determining the timing and terms of equity awards in 2024, and PMI does not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. Our run rate and overhang each compare favorably to those of our Peer Group. 2022 — 2024 PSU Performance Metrics Achievement: For the PSUs granted in February 2022, the Committee revised the performance metrics to align with the Company’s changing transformation goals more closely. Additionally, the Committee set performance metrics at what it believed to be appropriately ambitious levels that also reflected the Board-approved three-year plan. The Committee determined that the TSR performance metric and currency neutral compound annual growth rate of adjusted diluted EPS remained important measures of the Company’s performance and so it retained those metrics for the 2022 PSUs with the same weighting as the previous year’s grant. However, it adjusted the performance required to achieve a maximum result for the currency neutral compound annual growth rate of adjusted diluted EPS metric, increasing it from 10.5% to 11.0%. The Committee replaced the RRP net revenue metric from previous years with a new performance metric using the Company’s Sustainability Index, consisting of two components: product sustainability and operational sustainability. The Committee adopted this approach because, along with our management, it views product and operational sustainability as key components of our business strategy and long-term success. A focus on sustainability is tied directly to our business transformation, helps us anticipate and address risks before they impact our products and operations, and ensures we stay ahead of evolving regulatory requirements while maintaining the highest standards of transparency and accountability. We also see sustainability as a catalyst for innovation and growth, opening new market opportunities, improving our organizational capabilities and supply chain, and driving the development of products that offer solutions and create lasting value. The Committee also preserved its discretion to use the following modifier in its certification of the TSR performance metric: • The Company’s Total Shareholder Return during the three-year cycle relative to the share performance of certain other tobacco companies may have positive or negative 15 percentage-point impact on TSR performance factor. The aggregate of the weighted performance for the three metrics determined the percentage of PSUs that vested at the end of the three-year performance cycle. Each vested PSU entitles the participant to one share of common stock. An aggregate weighted PSU performance factor of 100 would result in the targeted number of PSUs being vested. The minimum percentage of PSUs that could vest was zero, while the maximum was twice the targeted number. TSR Performance Metric (40% Weighting). The TSR performance metric was calculated based on the Company’s three- year rolling TSR versus the Company’s Peer Group (see page 53) using the average of the 20 trading days immediately before the start of the performance cycle and the last 20 trading days of the performance cycle. To reflect that several members of the Peer Group are primarily listed on foreign stock exchanges and report their financial results in different currencies, the Company measures the TSRs for those companies by using the price performance of their publicly traded American Depository Receipts. In addition to evaluating our relative TSR, if the Company’s absolute TSR for a performance cycle is less than zero, the Committee will cap the TSR performance metric at target, retaining discretion to further reduce the TSR performance metric in those circumstances. This approach would limit rewards for a performance cycle in which we performed in line with, or better than, the Peer Group, but shareholders did not realize a positive return.
LONG-TERM EQUITY AWARDS
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LONG-TERM EQUITY AWARDS
The TSR performance factor for the 2022-2024 performance cycle was calculated relative to the Peer Group in accordance with the following schedule:
PMI TSR as a Percentile of Peer Group
PMI TSR as a Percentile of Peer Group
PMI TSR as a Percentile of Peer Group
| | Result | Performance Factor | Actual | Rating | | Below Threshold | Below 25th percentile | 0% | 95th percentile | 200% | | Threshold | 25th percentile | 50% | | | | Target | 50th percentile | 100% | | | | Maximum | 80th percentile and above | 200% | | |
PMI TSR as a Percentile of Peer Group
The Committee did not adjust the TSR metric result for the TSR performance relative to tobacco company peers modifier as the Company’s TSR ranked 2nd during the three-year cycle relative to the share performance of the included peer tobacco companies. Adjusted Diluted EPS Currency Neutral Growth Performance Metric (30% Weighting). The adjusted diluted EPS currency neutral growth performance metric for the 2022-2024 performance cycle was the currency neutral compound annual growth rate of adjusted diluted EPS as shown below:
Three-Year Adjusted Diluted EPS CAGR, excluding Currency*
| | Result | Performance Factor | Actual | Rating | | Below Threshold | <5.0% | 0% | 12.2% | 200% | | Threshold | 5.0% | 50% | | | | Target | 8.0% | 100% | | | | Maximum | ≥11% | 200% | | |
Performance Rating for 2022-2024 PSU Cycle
Performance Rating for 2022-2024 PSU Cycle The overall performance rating for the 2022-2024 PSU award cycle was 168%, which the Committee rounded to 170%. In making this determination, the Committee considered the impact on performance goal achievement of the Product Sustainability Index Component from decisions by certain significant markets to prohibit the introduction of SFPs. The Committee noted the business’ strong performance in all markets where SFPs were not prohibited and its support for that performance despite regulatory barriers implemented in markets that ran counter to the robust scientific support for harm reduction.
Performance Rating for 2022-2024 PSU Cycle
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Performance Rating for 2022-2024 PSU Cycle
2024-2026 PSU Performance Metrics: For the PSUs granted in February 2024, which will vest in 2027, the Committee maintained the performance metrics approved for the PSUs granted in February 2023 with the exception of adjustments made to certain components of the Sustainability Index intended to address the Company’s developing sustainability strategy and reporting. The Committee set performance metrics at what it believes are appropriately ambitious levels that also reflect the Board- approved three-year plan. The targets for the TSR performance metric and currency neutral compound annual growth rate of adjusted diluted EPS were unchanged from the 2023-2025 PSU performance cycle. The Committee also continued the use of the Company’s Sustainability Index as performance metric, consisting of two components: • Product Sustainability: aggregates key performance indicators pertaining to social and environmental impacts generated by the Company’s products; measuring progress on the Company’s efforts to maximize the benefits of smoke-free products, purposefully phase out cigarettes, and reduce post-consumer waste; and • Operational Sustainability: aggregates key performance indicators pertaining to social and environmental impacts generated by the Company’s business activities; it measures progress on the Company’s efforts to tackle climate change, preserve nature, improve the quality of life of people in its supply chain, and foster an empowered, and inclusive workplace. The Company’s Integrated Report includes more granular information about the Company’s Sustainability Index and its product and operational sustainability components. The Committee weighted the 2024-2026 performance metrics as follows: TSR, 40%; currency neutral compound annual growth of adjusted diluted EPS, 30%; and the Sustainability Index, 30%. In line with the Company’s sustainability materiality assessment and their relative priority level in the context of the Company’s corporate strategy, Product Sustainability is weighted at 20% and Operational Sustainability is weighted at 10%, together amounting to 30% of the total PSU award. The Committee measures performance on these metrics consistent with the way the Company communicates its results, which may include adjustments. PSU Vesting Mechanics. At the end of the three-year performance cycle, the Company’s performance factor for each of the three metrics will be calculated and then weighted, resulting in an overall PSU performance factor from 0% to 200%. This percentage will be applied to the executive’s target PSU award to determine the number of shares of common stock to be issued to the executive. The Committee may adjust the PSU performance metrics if appropriate to reflect the impact of unusual or infrequently occurring events, including, to the extent significant, corporate transactions, accounting or tax law changes, asset write- downs, litigation or claim adjustments, foreign exchange gains and losses, unbudgeted capital expenditures and other such events. The Committee also retains discretion to adjust the payout of PSU awards as it determines is appropriate. The 2024 equity awards granted for each NEO reflect their individual performance for 2023. 2025-2027 PSU Performance Metrics: For the PSUs granted in February 2025, which will vest in 2028, the Committee maintained the performance metrics, targets, and relative weights that were approved for the PSUs granted in February 2024, with the exception of the annual growth rate of adjusted diluted EPS metric goals, which was increased, and for changes to certain components of the Sustainability Index. The Committee adjusted certain Sustainability Index KPIs to reflect the Company’s developing sustainability strategy and reduced the number of individual KPIs both in acknowledgment of the maturity of certain programs measured by removed KPIs and to further focus management performance on the remaining Sustainability Index metrics. Removed KPIs included the proportion of markets selling SFPs in low- and middle-income markets; the proportion of shipment volume covered by cigarette anti-littering programs; cumulative repaired or refreshed devices; the proportion of women in senior decision-making roles; cumulative human rights impact assessments; child labor prevalence among contracted farmers; and volume of water optimized in our tobacco-growing areas.
Performance Rating for 2022-2024 PSU Cycle
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ADDITIONAL ELEMENTS OF COMPENSATION
ADDITIONAL ELEMENTS OF COMPENSATION We provide our executive officers the benefits available to Company employees generally. We also provide the limited perquisites described below. These benefits and perquisites are intended to be part of a competitive compensation package. Pension Benefits: All Swiss payroll-based employees participate in pension plans. Our NEOs participate in the Pension Fund of Philip Morris in Switzerland, the IC Pension Plan of Philip Morris in Switzerland, and the Supplemental Plan of Philip Morris in Switzerland. Descriptions of these plans can be found in the narrative discussion following the Pension Benefits table on pages 64-66. Employment and Severance Agreements: We have employment agreements with our NEOs. With the exception of Mr. Babeau, these agreements do not contain severance or change-in-control provisions. The Committee determined the terms of the agreement with Mr. Babeau were appropriate as part of a competitive compensation package in connection with his recruitment to the Company. Descriptions of this agreement can be found in the Employment Contracts, Termination of Employment and Change in Control Arrangements section on pages 66-67. The Company’s Executive Officer Severance Policy for Voluntary Termination (Resignation, Voluntary Early Retirement, Voluntary Normal Retirement) provides that the Company will not make certain payments, including cash severance and non-competition payments, to an executive officer who voluntarily terminates his or her employment with the Company. The policy applies to all voluntary terminations of employment by an executive officer, subject to applicable law and any existing agreements as of the date of adoption. International Relocation Benefits: We provide relocation benefits for new employees relocating from other countries and for existing employees relocating between countries. Mr. Babeau received benefits under PMI’s New Hire from Abroad Guidelines, which cover temporary housing benefits, relocation support, tax and social security equalization on relocation benefits and other program allowances. Mr. de Wilde and Ms. Kennedy are receiving the benefits under Global Long-Term Assignment Guidelines, which cover relocation support, housing benefits, home leave, education expenses, tax and social security equalization and other program allowances. Transportation Benefits: We provide each of our NEOs with the use of a Company owned or leased vehicle. Mr. Olczak is also eligible for personal driver services, which are provided for reasons of security, personal safety, and operational efficiency. Tax Preparation: Tax preparation services are provided to each of our NEOs pursuant to PMI policies that apply to all Swiss payroll-based management employees. Medical Benefits: Mr. Babeau received international health insurance coverage as part of his hiring offer. There was no incremental cost to the Company for this medical coverage in the past years. In 2024, due to increase in health insurance premiums, incremental costs are included. Indemnification Agreements: The Company has entered into an indemnification agreement with each of our directors and executive officers. The indemnification agreements and our articles of incorporation and bylaws require us to indemnify our directors and executive officers to the fullest extent permitted by Virginia law.
ADDITIONAL ELEMENTS OF COMPENSATION
Additional Compensation Policies and Processes Peer Group: The Committee uses a single customized peer group both to benchmark its compensation programs and to compare the Company’s TSR when calculating the Company’s PSU performance factor. The Committee reviews the Company’s peer group annually and updates as needed to better align our business with relevant comparator companies. After conducting its annual review, the Committee decided to retain the same peer group for 2024 as for 2023. The following 19 companies, selected on the basis of their global presence, focus on consumer products, and similarity to the Company in terms of net revenues and market capitalization, constitute our Peer Group:
ADDITIONAL ELEMENTS OF COMPENSATION
Factors Mitigating Against Possible Adverse Consequences of Our Compensation Program: Our Committee, with assistance from its independent compensation consultant, as needed, and with input from management, annually reviews our compensation programs, policies and practices to determine whether they encourage risk-taking that would have a material adverse effect on the Company. As part of this review, the Company evaluated the primary components of its compensation plans to identify whether those components properly balanced compensation opportunities and risk. Our Committee considered various factors, including the factors described below. Several elements of our compensation program protect against the possibility that compensation incentives might cause employees to take risks that could materially adversely affect the Company. First, our annual incentive compensation and equity awards apply to management employees worldwide, and the award pools for each of those programs are based on company-wide performance measures that cannot be unduly influenced by a particular business unit or group. Second, all employees are rated on the same scale within general guidelines set by the Committee. These ratings are based on individual performance criteria so that no particular group of employees will all receive the same rating. Third, both the Company-wide and the individual performance measures are subject to maximum levels that limit the amount of awards. Furthermore, with respect to the long-term equity component of our compensation program, RSUs generally vest only after three years from the date of grant, and PSUs generally vest to the extent pre-established targets are achieved over a three-year performance cycle. In addition, our executives are subject to share ownership requirements and comprehensive anti-hedging, anti-pledging and clawback policies described in the following four sections. Based on this review, both for our executive officers and all other employees, the Company and our Committee concluded that the risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
ADDITIONAL ELEMENTS OF COMPENSATION
Unvested PSUs, which comprise 60% of our NEOs’ equity award, do not count towards the share ownership requirement. Executives are required to meet their ownership levels within five years of joining PMI or within three years of a promotion. The Committee reviews each executive officer’s compliance with the requirements on an annual basis. As of December 31, 2024, all of our NEOs complied with the share ownership requirements. Post-Termination Share Holding Period: In addition to these longstanding and rigorous share ownership requirements, the Committee has determined that if any equity award held by an executive officer under the 2022 Performance Incentive Plan vests on an accelerated basis upon such officer’s termination of employment for any reason other than death or disability, the shares acquired must be held for at least one year following such termination. Anti-Hedging and Anti-Pledging Policies: The Company’s anti-hedging policy prohibits directors, executive officers and other designated employees from purchasing any financial instrument or otherwise engaging in any transaction that is designed to hedge or offset any decrease in the market value of the Company’s shares held by them directly or indirectly, including prepaid variable forward contracts, equity swaps, collars and exchange funds, and other transactions with comparable economic consequences. The foregoing does not prohibit trading in broad-based index funds. Directors, executive officers and designated employees are also prohibited from engaging in short sales related to the Company’s shares. The Company’s anti-pledging policy prohibits directors and executive officers from pledging the Company’s shares, including holding shares in a margin account. Clawback Policy Regarding the Adjustment or Recovery of Compensation: Under our Board-approved policy and as set forth in each NEO’s equity award agreement, if the Board or an appropriate committee of the Board determines that, as a result of fraud, misconduct, a restatement of our financial statements, or a significant write-off not in the ordinary course affecting our financial statements, an executive has received more compensation than would have otherwise been paid, the Board or the assigned committee shall take action as it deems necessary or appropriate to address the events that gave rise to the fraud, misconduct, write-off or restatement, and to prevent its recurrence. Such action may include, to the extent permitted by applicable law, requiring partial or full reimbursement of any incentive compensation paid to the executive, causing the partial or full cancellation of equity awards (both time-based and performance-based), adjusting the future compensation of such executive, and dismissing or taking legal action against the executive, in each case as the Board or such committee determines to be in the best interests of the Company. On October 26, 2022, the SEC adopted final rules implementing the incentive-based compensation recovery provisions of the Dodd-Frank Act. The final rules direct the stock exchanges to establish listing standards requiring listed companies to develop and implement a policy providing for the recovery of erroneously awarded incentive-based compensation received by current or former executive officers and to satisfy related disclosure obligations. On September 13, 2023, the Board approved and adopted the Company’s Policy for Recovery of Erroneously Awarded Incentive Compensation (the “Clawback Policy”) to reflect these new SEC requirements. The Clawback Policy is in addition to the Board-approved policy described above. The role of the Committee is to oversee the implementation and administration of the Clawback Policy allowing the Company to recoup compensation paid to the Company’s executive officers, if and as the Committee determines to be appropriate and in accordance with applicable law and NYSE listing standards. Role of the Committee in Executive Compensation: The role of the Committee is to discharge the Board’s responsibilities relating to executive compensation matters. In this regard, the Committee is responsible for the development and administration of our executive compensation and benefits program, in furtherance of which the Committee has the authority and responsibility: • to review and approve the Company’s overall compensation philosophy and design; to review, approve and recommend to the Board for approval corporate goals and objectives relevant to the compensation of the CEO, to evaluate the performance of the CEO in light of these goals and objectives (including
ADDITIONAL ELEMENTS OF COMPENSATION
| Name and Principal Position | Year | Salary(1) ($) | Stock Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | Change in Pension Value(4) ($) | All Other Compensation(5) ($) | Total Compensation ($) | | Jacek Olczak, Chief Executive Officer | 2024 | 1,706,594 | 11,785,368 | 5,821,539 | 898,101 | 26,314 | 20,237,916 | | | 2023 | 1,649,458 | 13,225,739 | 4,530,802 | 6,055,916 | 18,599 | 25,480,514 | | | 2022 | 1,461,248 | 9,751,292 | 4,556,303 | — | 6,265 | 15,775,108 | | Emmanuel Babeau, Chief Financial Officer | 2024 | 1,426,010 | 3,961,096 | 2,490,349 | 1,371,989 | 39,630 | 9,289,074 | | | 2023 | 1,335,944 | 4,810,773 | 2,166,914 | 1,868,986 | 28,934 | 10,211,551 | | | 2022 | 1,256,882 | 4,575,952 | 2,245,614 | 403,940 | 37,078 | 8,519,466 | | Frederic de Wilde, President, South and South-East Asia, Commonwealth of Independent States, Middle East & Africa Region | 2024 | 1,138,937 | 3,601,159 | 2,245,983 | 732,770 | 55,464 | 7,774,313 | | | 2023 | 1,103,535 | 2,156,654 | 1,969,931 | 5,290,091 | 253,550 | 10,773,761 | | | 2022 | 890,375 | 2,051,202 | 1,375,027 | — | 16,727 | 4,333,331 | | Stacey Kennedy, President, Americas Region & CEO of PMI’s US Business | 2024 | 904,926 | 1,572,090 | 1,513,600 | 1,016,815 | 2,313,631 | 7,321,062 | | | 2023 | 836,747 | 1,227,935 | 1,181,950 | 1,752,402 | 2,407,624 | 7,406,658 | | Stefano Volpetti, President, Smoke-Free Inhalable Products & Chief Consumer Officer | 2024 | 1,079,465 | 2,177,277 | 1,502,103 | 916,064 | 44,575 | 5,719,484 | | | 2023 | 1,045,066 | 2,297,968 | 1,497,137 | 4,343,543 | 28,356 | 9,212,070 | | | 2022 | 942,912 | 2,279,999 | 1,347,369 | — | 24,483 | 4,594,763 |
Pension Fund of Philip Morris in Switzerland
Pension Fund of Philip Morris in Switzerland With limited exceptions, all Swiss payroll-based employees over 25 years of age become immediately covered by the Pension Fund of Philip Morris in Switzerland, a broad-based contributory-funded plan providing defined retirement, disability and death benefits up to limits prescribed under Swiss law. Retirement benefits are expressed as an annuity at normal retirement age equal to 1.8% of the participant’s five-year average pensionable salary (base salary minus two-thirds of the maximum social security benefits of CHF 29,400 in 2024) multiplied by years of credited service (to a maximum of 40 to 41 years, depending on the employee’s date of birth). Employees between the ages of 25 and 34 contribute 6% of their pensionable salary to the fund, and the contribution increases to 7% for employees between the ages of 35 and 54 and 8% for employees between the ages of 55 and 65. Subject to certain conditions, participants may elect to receive pension benefits entirely or partially in a lump sum. For determining lump sum values, a discount rate of 3.5% and the LPP 2020 mortality table are used. The LPP mortality table is a commonly used mortality table in Switzerland. For an employee who completes 30 years of service and retires at age 62, this translates into payments equivalent to a pension of 54% of five years’ annual average pensionable salary. For an employee with 40 years of credited service at age 65, this “replacement ratio” is approximately 72% of average salary. Participants may retire and commence benefits as early as age 58; however, for each year that retirement precedes age 62, the 1.8% multiplier used to calculate the amount of the retirement pension is reduced by 0.06% (at age 58 the multiplier is 1.56%). Swiss law permits participants in a pension plan to make additional voluntary contributions to the pension plan to compensate for missing years of credited service. If an employee terminates employment with us before age 58, the lump sum value of the pension calculated using the termination lump sum factors is transferred either to a new pension fund or to a blocked bank account until early retirement age is reached. An employee who is age 50 or over upon termination of employment can elect, under certain conditions, to remain in the plan as an external member. In this case, neither the employee nor the employer can contribute any further funds. At the age of 58, the former employee must then elect to take retirement in the form of an annuity, a lump sum or a mix of both.
OUR PAY RATIO
OUR PAY RATIO Given our global footprint, and in accordance with regulatory guidance, we have determined that the cost-of-living adjusted ratio based on the purchasing power parity index (or “PPP”) reflects the differences in the living and economic conditions of approximately 90 countries where our employees reside.2 The PPP conversion factor represents the number of units of local currency that can buy a basket of goods that 1 CHF would buy in Switzerland, where our CEO resides. The total PPP- adjusted compensation for our median employee residing in Poland is approximately CHF 58,786.3 Comparing this employee’s total PPP-adjusted compensation to the 2024 total compensation of our CEO in CHF, our adjusted pay ratio is 304:1.4 Had we not used the PPP adjustment, our median employee’s total 2024 compensation would have been approximately $47,109. Comparing this employee’s total compensation to the total compensation of our CEO as set forth in the Summary Compensation Table on page 57, the ratio would be 430:1. The ratio of our CEO’s total compensation to the average total compensation of our other NEOs for 2024, was 2.7:1. Because the SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies — including companies in our Peer Group — may not be comparable to the pay ratio reported above. Other companies may have different employment & compensation practices, different geographic breadth, perform different types of work, and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. This information is being provided for compliance purposes. Neither the Compensation Committee nor management of the Company used the pay ratio measure in making compensation decisions.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The following table illustrates certain information about executive compensation for our CEO and other NEOs as well as certain performance measures against which compensation information can be compared. This disclosure has been prepared in accordance with Item 402(v) of Regulation S-K of the Exchange Act and does not necessarily reflect value actually realized by our NEOs or how our Compensation Committee evaluates compensation decisions in light of Company or individual performance. In particular, our Compensation Committee has not used compensation actually paid as a basis for making compensation decisions, nor does it use GAAP Net Income for purposes of determining incentive compensation. Please refer to our Compensation Discussion and Analysis on pages 37 to 56 for a discussion of our executive compensation program, its objectives, and the ways in which we align executive compensation with Company performance.
PAY VERSUS PERFORMANCE
| Year | Summary Compensation Table Total for CEO — Mr. Calantzopoulos ($)(1)(2) | Summary Compensation Table Total for CEO — Mr. Olczak ($)(1)(2) | Compensation Actually Paid to CEO — Mr. Calantzopoulos ($)(2)(4) | Compensation Actually Paid to CEO — Mr. Olczak ($)(2)(4) | Average Summary Compensation Table Total for Other NEOs ($)(1)(3) | Average Compensation Actually Paid to Other NEOs ($)(3)(4) | Value of Initial Fixed $100 Investment Based On: | | Net Income (in millions $)(6) | Adjusted Diluted EPS, 1-year Growth(7) | | | | | | | | | Total Shareholder Return(5) | Peer Group Total Shareholder Return(5) | | | | 2024 | n/a | 20,237,916 | n/a | 44,508,025 | 7,525,983 | 12,714,258 | $186.0 | $117.8 | 7,503 | 15.6% | | 2023 | n/a | 25,480,514 | n/a | 22,401,770 | 8,620,777 | 6,951,996 | $138.5 | $118.0 | 8,268 | 11.0% | | 2022 | n/a | 15,775,108 | n/a | 24,410,701 | 5,426,181 | 7,848,730 | $141.0 | $119.9 | 9,527 | 10.1% | | 2021 | 15,349,110 | 10,557,568 | 30,404,029 | 15,485,410 | 5,433,435 | 7,491,440 | $125.5 | $123.7 | 9,710 | 15.4% | | 2020 | 21,936,798 | n/a | 19,391,601 | n/a | 10,447,764 | 7,470,429 | $103.9 | $107.0 | 8,592 | 7.2% |
PAY VERSUS PERFORMANCE
(1) The Summary Compensation Table Total amounts can be found on page 57. For those NEOs in previous years who were no longer NEOs for 2024, the respective amounts can be found in our 2024, 2023, 2022 and 2021 proxy statements. (2) Mr. Calantzopoulos served as the Company’s CEO during the covered period until May 2021 when Mr. Olczak was appointed as our CEO. (3) Our NEOs other than the CEO for each of the covered fiscal years are as follows:
PAY VERSUS PERFORMANCE
| 2024 | E. Babeau, F. de Wilde, S. Kennedy, S. Volpetti | | 2023 | E. Babeau, F. de Wilde, S. Kennedy, S. Volpetti, D. Azinovic | | 2022 | E. Babeau, D. Azinovic, F. de Wilde, S. Volpetti | | 2021 | E. Babeau, D. Azinovic, F. de Wilde, S. Volpetti, J. Insuasty, M. King | | 2020 | J. Olczak, E. Babeau, M. King, F. de Wilde, S. Volpetti, M. Firestone, M. Zielinski |
PAY VERSUS PERFORMANCE
| P M I 2 0 2 5 P r o x y S t a t e m e n t | 69 |
PAY VERSUS PERFORMANCE
The amounts deducted and added to the Summary Compensation Table Total for each of the covered fiscal years are as shown in the table below. No awards were modified or forfeited during the covered years:
PAY VERSUS PERFORMANCE
| Year | Name | Summary Compensation Table Total ($) | Amount deducted for Change in Pension Value ($) | Amount added for Pension Cost ($)(a) | Amount deducted for Stock Awards ($) | Amount added for EOY Fair Value of Stock Awards Granted During Fiscal Year that are Outstanding and Unvested at EOY ($)(b) | Amount added (deducted) for change in value from EOPY to EOY in Fair Value of Stock Awards Granted in Any Prior Fiscal Year that are Outstanding and Unvested at EOY ($)(b) | Amount added for Fair Value at Vesting Date of Stock Awards Granted and Vested During the Fiscal Year ($)(b) | Amount added (deducted) for change in Fair Value from EOPY to Vesting Date of Stock Awards Granted in Any Prior Fiscal Year that Vested (or Failed to Vest) During the Fiscal Year ($)(b) | Amount added for Dividend Equivalents Paid During the Fiscal Year ($) | Compensation Actually Paid ($) | | 2024 | Mr. Olczak | 20,237,916 | 898,101 | 1,792,551 | 11,785,368 | 21,638,123 | 12,290,491 | 0 | (258,548) | 1,490,961 | 44,508,025 | | | Average other NEOs | 7,525,983 | 1,009,410 | 616,341 | 2,827,906 | 5,192,113 | 2,765,020 | 0 | (134,121) | 586,238 | 12,714,258 | | 2023 | Mr. Olczak | 25,480,514 | 6,055,916 | 3,129,698 | 13,225,739 | 13,070,215 | (1,370,406) | 0 | 76,251 | 1,297,153 | 22,401,770 | | | Average other NEOs | 8,620,777 | 2,651,004 | 772,127 | 2,529,997 | 2,350,914 | (304,881) | 153,072 | 24,956 | 516,032 | 6,951,996 | | 2022 | Mr. Olczak | 15,775,108 | 0 | 4,458,977 | 9,751,292 | 10,300,776 | 1,864,468 | 0 | 913,331 | 849,333 | 24,410,701 | | | Average other NEOs | 5,426,181 | 100,985 | 630,261 | 2,717,273 | 2,870,426 | 1,033,698 | 0 | 414,918 | 291,504 | 7,848,730 | | 2021 | Mr. Calantzopoulos | 15,349,110 | 0 | 1,669,036 | 12,331,239 | 17,286,561 | 6,755,580 | 0 | 423,089 | 1,251,892 | 30,404,029 | | | Mr. Olczak | 10,557,568 | 781,194 | 1,008,654 | 4,713,468 | 6,607,423 | 2,269,335 | 0 | 124,847 | 412,245 | 15,485,410 | | | Average other NEOs | 5,433,435 | 236,975 | 439,187 | 2,544,006 | 3,357,205 | 735,550 | 24,478 | 95,123 | 187,443 | 7,491,440 | | 2020 | Mr. Calantzopoulos | 21,936,798 | 4,857,081 | 2,651,169 | 12,024,210 | 13,872,491 | (3,220,211) | 0 | (188,212) | 1,220,857 | 19,391,601 | | | Average other NEOs | 10,447,764 | 3,966,343 | 894,828 | 3,579,539 | 3,810,785 | (513,023) | 276,341 | (141,487) | 241,103 | 7,470,429 |
PAY VERSUS PERFORMANCE
“EOY” = End of Year, “EOPY” = End of Previous Year (a) Current year pension service cost including adjustments for prior year service cost, as applicable. For assumptions used in the calculation refer to Item 8, Note 13 to the consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal years ended December 31, 2020 and December 31, 2021 and to Item 8, Note 14 for the fiscal years ended December 31, 2022, December 31, 2023 and December 31, 2024. (b) The methodology used to calculate the fair values for stock awards at each fiscal year end is consistent with that disclosed at the time of grant. The fair value of the RSU awards is determined based on the closing price of PMI stock at the respective fiscal year end date and based on the average of the high and the low trading prices of PMI stock for awards under the 2017 Performance Incentive Plan and closing price of PMI stock for awards under the 2022 Performance Incentive Plan at the vesting date. The fair value for the portion of the PSU awards subject to the TSR performance factor was determined by using a Monte Carlo simulation model for the fiscal year end calculations and the average of the high and the low trading prices of PMI stock and actual performance at the vesting date. The fair value for the portion of the PSU awards subject to other performance factors was determined based on the closing price of PMI stock at the respective fiscal year end and estimated performance and based on the average of the high and the low trading prices of PMI stock and actual performance at the vesting date. (5) The Peer Group is described on page 53, which is the same PMI Peer Group reported in the performance graph found in Part II, Item 5 of our Annual Report on Form 10-K for the fiscal year ending December 31, 2024. There have been no changes to the PMI Peer Group during the covered period. The amounts compare the cumulative total shareholder return of PMI’s common stock with the cumulative total shareholder return for the same period of PMI’s Peer Group. The calculation assumes the investment of $100 as of December 31, 2019, in PMI common stock and the PMI Peer Group index as of the market close and reinvestment of dividends on a quarterly basis. (6) PMI’s Net Income is reported as “net earnings” in Item 8 of the Company’s Annual Report on Form 10-K for the fiscal years ended December 31, 2020, December 31, 2021, December 31, 2022, December 31, 2023 and December 31, 2024. Currency neutral adjusted diluted EPS growth rate has been chosen as our Company Selected Measure, out of the performance measures in the tabular list set forth below, because of its weight and impact on PSUs. Adjusted diluted EPS growth over 3-year period is one of the metrics used in our long-term Equity Award program, under performance-based PSUs. In accordance with regulatory guidance, the measure presented in the table covers 1-year growth. For the definition of adjusted diluted EPS see the Glossary of Terms in Exhibit C.
PAY VERSUS PERFORMANCE
| 70 | D e l i v e r i n g a S m o k e - F r e e F u t u r e |
RELATIONSHIP BETWEEN COMPENSATION ACTUALLY PAID AND COMPANY FINANCIAL PERFORMANCE REPRESENTED BY THE MEASURES DETAILED IN THE ABOVE TABLE
RELATIONSHIP BETWEEN COMPENSATION ACTUALLY PAID AND COMPANY FINANCIAL PERFORMANCE REPRESENTED BY THE MEASURES DETAILED IN THE ABOVE TABLE The below graphical illustrations of compensation actually paid and the change in the performance measures selected demonstrates the alignment between the compensation actually paid to our CEO and other NEOs and company performance. The increase in the 2022 compensation for Mr. Olczak is partially driven by his 2022 equity awards that were based on increased targets in connection with his appointment as CEO for the portion of 2021 in which he served in this role. The increase in the 2024 compensation for Mr. Olczak is mainly driven by the increased value of his outstanding equity awards following the increase of PMI’s share price in 2024 versus 2023. The last graph illustrates the relationship between compensation actually paid and the 3-year adjusted diluted EPS growth measure, which we believe is a more accurate representation of how the compensation actually paid relates to this measure, since this is the actual measure used in our long-term incentive program.
WHAT ARE THE CHOICES WHEN VOTING ON DIRECTOR NOMINEES, AND WHAT VOTE IS NEEDED TO ELECT DIRECTORS?
WHAT ARE THE CHOICES WHEN VOTING ON DIRECTOR NOMINEES, AND WHAT VOTE IS NEEDED TO ELECT DIRECTORS? Shareholders may: a) vote in favor of a nominee; b) vote against a nominee; or c) abstain from voting on a nominee. Directors will be elected by a majority of the votes cast, which will occur if the number of votes cast “FOR” a director nominee exceeds the number of votes “AGAINST” that nominee. See “Election of Directors—Majority Vote Standard in Uncontested Elections” on page 20. The Board recommends a vote “FOR” all eleven of the nominees. 11.