DEF 14A of Thermo Fisher Scientific Inc.
Filed Apr 9, 2024 · FY20230001193125-24-090173
Director nominee skills and experience
Director nominee skills and experience The Board regularly reviews the skills, experience, and background that it believes are desirable to be represented on the Board. The following identifies some of these key qualifications and skills, describes their relevance to our strategic vision, business and operations, and includes which directors possess these skills:
Director nominee skills and experience
| Skills, Qualifications and Background | | | | | | | | | | | | | | | | STRATEGIC LEADERSHIP Experience driving strategic direction and growth of an organization. We seek to have directors that can provide strategic insight to the dynamic and fast-moving markets in which we operate globally. | | | | | | | | | | | | | | | CEO OR SENIOR MANAGEMENT LEADERSHIP Experience serving as the Chief Executive Officer or other senior leadership role (e.g. Chief Financial Officer or Division Head) of a major organization. We seek to have directors with hands-on leadership experience in core management areas, such as strategic and operational planning, financial reporting, risk management, CSR and leadership development. | | | | | | | | | | | | | | | INDUSTRY BACKGROUND Knowledge of or experience in the Company’s specific industry. We seek to have directors with significant experience in the life sciences industry or other related industries, experience in the end markets we serve, and growth areas that bring valuable perspectives on issues specific to our business. | | | | | | | | | | | | | | | PUBLIC COMPANY BOARD SERVICE Experience as a board member of another publicly traded company. We seek to have directors with broad knowledge of corporate governance practices, trends and insights into board management, relations between a board and senior management, agenda setting, and succession planning. | | | | | | | | | | | | | | | FINANCIAL ACUMEN AND EXPERTISE Experience or expertise in financial accounting and reporting or the financial management of a major organization. We seek to have directors with an understanding of finance and financial reporting processes to monitor and assess our operating and strategic performance and ensure robust controls and accurate financial reporting. | | | | | | | | | | | | | | | INTERNATIONAL EXPERIENCE Experience doing business internationally. Growing our business outside the United States is a key part of our long-term strategy for growth. We seek to have directors with international experience that provide valued perspectives on our global operations and support key strategic decision-making in international markets. | | | | | | | | | | | | | | | CORPORATE FINANCE AND M&A EXPERIENCE Experience in corporate lending or borrowing, capital market transactions, significant mergers or acquisitions (“M&A”), private equity, or investment banking. We seek to have directors with transactional experience to oversee the assessment of opportunities consistent with our strategic priorities and long-term plans. | | | | | | | | | | | | | | | DIGITAL / TECHNOLOGY Experience or expertise in technology, cybersecurity, cloud computing, or scalable data analytics. We seek to have directors with experience in information technology to enhance the Board’s understanding of the information technology aspects of our business, and help us achieve our business objectives, including with respect to innovation, and to mitigate risks associated with our technological capabilities. | | | | | | | | | | | | |
Director nominee skills and experience
| 10 | thermofisher.com 2024 Proxy Statement |
Nominee biographies
Nominee biographies
Nominee biographies
| Marc N. Casper | Chairman, President and CEO | | Age: 56 Director since: 2009 Committees: Strategy and Finance, Science and Technology | PROFESSIONAL HIGHLIGHTS • Thermo Fisher Scientific Inc. • Chairman, President and CEO (2020 - Present) • President and CEO (2009 - 2020) • Executive VP and COO (2008 - 2009) • Executive VP (2006 - 2008) OTHER CURRENT DIRECTORSHIPS: • Synopsys, Inc. PREVIOUSLY HELD DIRECTORSHIPS: • U.S. Bancorp DIRECTOR QUALIFICATIONS Mr. Casper currently serves as the President and Chief Executive Officer of the Company, and over the course of his long-standing tenure with the Company, he served in various other senior level management roles. As the only member of the Company’s management to serve on the Board, Mr. Casper contributes a deep and valuable understanding of Thermo Fisher’s history and day-to-day operations, as well as extensive industry knowledge resulting from Mr. Casper’s 20-plus years of experience in the life sciences and healthcare equipment industry. He also brings valuable board-level experience from his many years serving on other public company boards. As a result of Mr. Casper’s experience in the industry, as the long-time Chief Executive Officer of the Company and as a board member, he brings unique strategic leadership skills, financial acumen and industry expertise that are invaluable to the Board. |
Nominee biographies
| Nelson J. Chai | Independent | | Age: 58 Director since: 2010 Committees: Audit (Chair), Nominating and Corporate Governance | PROFESSIONAL HIGHLIGHTS • CFO, Uber Technologies Inc. (2018 - 2024) • President and CEO, The Warranty Group (2017 - 2018) OTHER CURRENT DIRECTORSHIPS: • None DIRECTOR QUALIFICATIONS Mr. Chai previously served as Chief Financial Officer of Uber Technologies Inc., a ridesharing technology platform, as President and CEO of The Warranty Group, a provider of specialty insurance products, and as President of CIT Group, a financial institution. As a result of Mr. Chai’s broad background and experience of holding executive management positions in a variety of industries and organizations, he brings to the Board valuable strategic leadership, financial acumen and expertise, and accounting experience. |
Nominee biographies
| Ruby R. Chandy | Independent | | Age: 62 Director since: 2022 Committees: Audit | PROFESSIONAL HIGHLIGHTS • President, Pall Industrial, Pall Corporation (2012 - 2015) • Previously held various roles at Thermo Fisher (2001 - 2007) OTHER CURRENT DIRECTORSHIPS: • DuPont de Nemours Inc. and Flowserve Corporation PREVIOUSLY HELD DIRECTORSHIPS: • Ametek, Inc. DIRECTOR QUALIFICATIONS Ms. Chandy previously served as President of the Industrial Division of Pall Corporation, a leading supplier of filtration, separation and purification technologies and as Chief Marketing Officer at the Dow Chemical Company and at Rohm and Haas Corporation. Prior to that she served in various roles with increasing levels of responsibility at Thermo Fisher Scientific, Boston Scientific, and Millipore Corporation. As a proven executive with experience in global life sciences and multi-industrial companies, she brings to the Board experience in executive management, marketing, strategy, innovation, and M&A, and has experience in relevant market segments, technologies, geographies, and business functions. Ms. Chandy also brings valuable board-level experience from her many years serving on public company boards. |
Nominee biographies
| thermofisher.com 2024 Proxy Statement | 11 |
Nominee biographies
| C. Martin Harris | Independent | | Age: 67 Director since: 2012 Committees: Nominating and Corporate Governance, Science and Technology | PROFESSIONAL HIGHLIGHTS • University of Texas, Austin, Dell Medical School (2016 - Present) • Vice President of the Health Enterprise (2023 - Present) • Chief Business Officer • Professor, Department of Internal Medicine • Interim Vice President for Medical Affairs (2021 - 2023) • Associate Vice President of the Health Enterprise (2016 - 2023) OTHER CURRENT DIRECTORSHIPS: • Agiliti, Inc., Colgate-Palmolive Company and MultiPlan Corporation PREVIOUSLY HELD DIRECTORSHIPS: • HealthStream Inc. and Invacare Corporation DIRECTOR QUALIFICATIONS Dr. Harris currently serves as Chief Business Officer of Dell Medical School of the University of Texas, Austin. He has had a long-standing career as a physician and previously served as Chief Information Officer of Cleveland Clinic Hospital, and Chief Strategy Officer of the Cleveland Clinic Foundation. His background and experience as a strategic leader in healthcare organizations position Dr. Harris to provide valuable insight and perspective on healthcare. As a result of Dr. Harris’s experience, he brings to the Board valuable strategic leadership and industry knowledge. Dr. Harris also brings valuable board-level experience from his many years serving on public company boards. |
Nominee biographies
| Tyler Jacks | | | Age: 63 Director since: 2009 Committees: Strategy and Finance, Science and Technology (Chair) | PROFESSIONAL HIGHLIGHTS • President, Break Through Cancer (2021 - Present) • Massachusetts Institute of Technology, Koch Institute • Professor, Department of Biology and Center for Cancer Research (1992 - Present) • Founding Director, Integrative Cancer Research (2001 - 2021) • Investigator, Howard Hughes Medical Institute (1994 - 2021) OTHER CURRENT DIRECTORSHIPS: • Amgen, Inc. DIRECTOR QUALIFICATIONS Dr. Jacks currently serves as President of Break Through Cancer, an organization focusing on collaborative approaches to cancer research, has worked for over 30 years as a professor in the Department of Biology at Massachusetts Institute of Technology, and previously served as Founding Director of the Koch Institute, a cancer research center. As a result of his many years of experience in the field of cancer research, including board-level and industry-specific service on public company boards, Dr. Jacks brings to the Board significant scientific, technological and industry expertise. Dr. Jacks also brings valuable board-level experience from his many years serving on public company boards and scientific advisory boards of biotechnology companies, pharmaceutical companies and academic institutions. |
Nominee biographies
| Jennifer M. Johnson | Independent | | Age: 59 Director since: 2023 Committees: Audit | PROFESSIONAL HIGHLIGHTS • Franklin Resources, Inc. • President and CEO (2020 - Present) • President and COO (2017 - 2020) OTHER CURRENT DIRECTORSHIPS: • Director or trustee of certain funds registered as investment companies managed or advised by subsidiaries of Franklin Resources(1) DIRECTOR QUALIFICATIONS Ms. Johnson currently serves as President and Chief Executive Officer of Franklin Resources, Inc., a publicly traded global investment management company. During her 35-year career at Franklin Resources, she has served in various leadership roles in major divisions of the business, including consumer lending, investment management, global distribution, global technology and operations. As a result of her experience, Ms. Johnson brings to the Board strategic leadership skills, financial acumen, M&A experience and information technology experience. |
Nominee biographies
| (1) See “Overboarding policy” on page 26 for more information. |
Nominee biographies
| 12 | thermofisher.com 2024 Proxy Statement |
Nominee biographies
| R. Alexandra Keith | Independent | | Age: 56 Director since: 2020 Committees: Compensation, Nominating and Corporate Governance | PROFESSIONAL HIGHLIGHTS • Procter & Gamble Company • Chief Executive Officer, P&G Beauty (2019 - Present), and Executive Sponsor, Corporate Sustainability (2021 - Present) • President, Global Hair Care and Beauty Sector (2017 - 2019) • President, Global Skin and Personal Care (2014 - 2017) OTHER CURRENT DIRECTORSHIPS: • None DIRECTOR QUALIFICATIONS Ms. Keith currently serves as Chief Executive Officer of P&G Beauty at Procter & Gamble, a global consumer products company. During her 30-plus year career at P&G, Ms. Keith served in roles in manufacturing, logistics, innovation planning, and marketing, then continued into various management and senior leadership roles. Ms. Keith also serves as Executive Sponsor for Corporate Sustainability at P&G, where she works alongside P&G’s Chief Sustainability Officer to guide the company’s sustainability progress. As an experienced executive, Ms. Keith brings to the Board strategic leadership skills, financial expertise, international business experience and M&A experience. |
Nominee biographies
| James C. Mullen | Independent | | Age: 65 Director since: 2018 Committees: Compensation, Strategy and Finance | PROFESSIONAL HIGHLIGHTS • Editas Medicine, Inc. • Executive Chair of the Board (2022 - 2023) • Chairman, President and Chief Executive Officer (2021 - 2022) • Chief Executive Officer, Patheon N.V. (2011 - 2017) • Chief Executive Officer, Biogen, Inc. (2000 - 2010) OTHER CURRENT DIRECTORSHIPS: • None PREVIOUSLY HELD DIRECTORSHIPS: • Editas Medicine, Inc., Insulet Inc. and Patheon N.V. DIRECTOR QUALIFICATIONS Mr. Mullen previously served as Executive Chair of the Board of Directors of Editas Medicine, a clinical-stage biotechnology company, as Chief Executive Officer of Patheon N.V., a contract development and manufacturing organization which was acquired by the Company in 2017, and as Chief Executive Officer of Biogen Inc. Due to his 35-plus years of senior leadership experience in the pharmaceutical and biotechnology industries, he brings to the Board valuable industry knowledge and industry-specific strategic leadership skills. Mr. Mullen also brings valuable board-level experience from his many years serving on public company boards in the pharmaceutical industry. |
Nominee biographies
| Debora L. Spar | Independent | | Age: 60 Director since: 2019 Committees: Strategy and Finance (Chair) | PROFESSIONAL HIGHLIGHTS • Harvard Business School • Professor, Business Administration (2018 - Present) and Senior Associate Dean, Business in Global Society (2021 - Present) • Senior Associate Dean, Harvard Business School Online (2019 - 2021) OTHER CURRENT DIRECTORSHIPS: • None PREVIOUSLY HELD DIRECTORSHIPS: • Goldman Sachs and Northern Star Acquisition Corp. DIRECTOR QUALIFICATIONS Dr. Spar currently serves as a professor of Business Administration at Harvard Business School and Senior Associate Dean for Business in Global Society, and previously served as President and CEO of the Lincoln Center for the Performing Arts and as President of Barnard College. As a result of her varied experience, Dr. Spar brings to the Board valuable executive management and strategic leadership skills, financial expertise, and a unique perspective on technology’s role in shaping society and the global economy. Dr. Spar also brings valuable experience serving on public company boards. |
Nominee biographies
| thermofisher.com 2024 Proxy Statement | 13 |
Nominee biographies
| Scott M. Sperling, Lead Director | Independent | | Age: 66 Director since: 2006 Committees: Compensation | PROFESSIONAL HIGHLIGHTS • Co-Chief Executive Officer, Thomas H. Lee Partners, LP (1994 - Present) OTHER CURRENT DIRECTORSHIPS: • Agiliti, Inc. PREVIOUSLY HELD DIRECTORSHIPS: • iHeart Media, Inc. and The Madison Square Garden Company DIRECTOR QUALIFICATIONS Mr. Sperling currently serves as Co-Chief Executive Officer of Thomas H. Lee Partners, LP (“THL”), a private equity firm. During his 20-year career leading THL, he has gained broad experience with the various industries represented in the THL portfolio, including healthcare and technology. As a result of this experience, Mr. Sperling brings to the Board valuable experience driving strategic direction and growth of organizations, and also corporate finance and acquisition experience. Mr. Sperling also brings valuable board-level experience from his years of serving on public company boards. |
Nominee biographies
| Dion J. Weisler | Independent | | Age: 56 Director since: 2017 Committee: Audit, Compensation (Chair) | PROFESSIONAL HIGHLIGHTS • President and CEO, HP Inc. (2015 - 2019) OTHER CURRENT DIRECTORSHIPS: • BHP and Intel Corporation PREVIOUSLY HELD DIRECTORSHIPS: • HP Inc. DIRECTOR QUALIFICATIONS Mr. Weisler previously served as Chief Executive Officer of HP Inc., an information technology company. Prior to that he served in various roles with increasing levels of responsibility at HP, Lenovo Group Inc., and at Telstra Corp. Lt., a telecommunications company. As a result of his experience, Mr. Weisler brings to the Board valuable strategic and senior management leadership skills, financial expertise, international experience, technological expertise and M&A experience. Mr. Weisler also brings valuable board-level experience from his service on public company boards. |
Nominee biographies
| 14 | thermofisher.com 2024 Proxy Statement |
KEY FINDINGS AND TAKEAWAYS
| • | review and recommendation of director compensation |
Compensation of directors
Compensation of directors Compensation philosophy The general philosophy of our Board is that compensation for non-employee directors should be a mix of cash, payable quarterly, and equity-based compensation, to reward them for a year of service in fulfilling their oversight responsibilities. The Company does not compensate our CEO for Board service in addition to his regular employee compensation. Process of determining director compensation Decisions regarding the non-employee director compensation program are approved by our full Board based on recommendations by the Compensation Committee. The Compensation Committee reviews the total compensation of our non-employee directors and each element of our director compensation program biennially. At the Compensation Committee’s direction, Pearl Meyer & Partners, LLC (“Pearl Meyer”) analyzes the competitive position of our director compensation program against the Peer Group used to benchmark executive compensation and examines how director compensation levels, practices and design features compare to members of the Peer Group. In 2023, the Compensation Committee reviewed the non-employee director compensation program and determined not to make any changes. Elements of compensation Annual compensation
Compensation of directors
| Annual Cash Retainers | | | | Lead Director | $165,000 | • Employee Directors. No additional compensation • Time of payment. Quarterly installments • Additional expenses. Out-of-pocket expenses incurred for attending Board and committee meetings are reimbursable | | All other non-employee directors | $125,000 | | | Committee Fees | | | | • Audit Committee Chair | $25,000 | | | • Compensation Committee Chair | | | | • Nominating & Corporate Governance Committee Chair | $20,000 | | | • Science and Technology Committee Chair | | | | • Strategy and Finance Committee Chair | | | | Annual Equity Grant | | | | All non-employee directors | $200,000* | • Equity grant vesting schedule. The earlier of the anniversary of the grant date or the Company’s next annual meeting of shareholders |
Compensation of directors
| * Actual amounts may be different since the number of restricted stock units awarded is based on the closing price of our common stock on the grant date (rounded to the nearest whole number). |
Compensation of directors
Deferred compensation plan for directors As part of its Amended and Restated 2013 Stock Incentive Plan, the Company maintains a deferred compensation plan for its non-employee directors (the “Directors Deferred Compensation Plan”). Under the Directors Deferred Compensation Plan, a participant may elect to defer receipt of his or her annual retainer. Amounts deferred under the Directors Deferred Compensation Plan are valued at the end of each quarter as units of common stock and, when payable under the plan, may only be paid in shares of common stock. Additional credits are made to a participant’s account for cash dividends that he or she would have received had the participant been the owner of such common stock on the record dates for payment of such dividends. The common stock and cash credited to a participant’s account are paid to the participant within 60 days after the end of the fiscal year in which the participant ceases to serve as a director unless the participant makes a timely election to defer the distribution in accordance with the requirements of Section 409A of the Code. The participant does not have any actual ownership of the common stock until the common stock is distributed to the participant.
Compensation of directors
| 28 | thermofisher.com 2024 Proxy Statement |
Compensation of directors
Matching charitable donation program The Company has a matching charitable donation program for non-employee directors (the “Matching Charitable Donation Program for Directors”), pursuant to which the Company matches donations made by a director to a charity selected by the director, up to $15,000 per director per year. Director and officer insurance The Company provides liability insurance for its directors and officers. The annual cost of this coverage is approximately $3.4 million. Stock ownership policy for directors The Compensation Committee has established a stock ownership policy that requires directors of the Company to hold shares of common stock equal in value to five times (5x) the annual cash retainer for directors. Directors have until 5 years from when they joined the Board to achieve this ownership level. For the purpose of this policy, a director’s election to receive shares of common stock in lieu of his or her annual retainer will be counted towards this target, as will time-based restricted stock units. All of our directors are either currently in compliance or on track to be in compliance with this policy within the applicable time limit. Director summary compensation table The following table sets forth a summary of the compensation of the Company’s non-employee directors who served in 2023:
Compensation of directors
| Name | Fees Earned or Paid in Cash | Stock Awards(1) | All Other Compensation(2) | Total | | Nelson J. Chai | $150,000 | $200,202 | $15,514(3) | $365,716 | | Ruby R. Chandy | $125,000 | $200,202 | $15,514(3) | $340,716 | | C. Martin Harris | $125,000 | $200,202 | $514 | $325,716 | | Tyler Jacks | $145,000 | $200,202 | $514 | $345,716 | | Jennifer M. Johnson(4) | $59,066(5) | $— | $— | $59,066 | | R. Alexandra Keith | $125,000(6) | $200,202 | $1,215(7) | $326,417 | | Jim P. Manzi(8) | $49,107 | $— | $15,240(3) | $64,347 | | James C. Mullen | $125,000 | $200,202 | $514 | $325,716 | | Lars R. Sørensen | $145,000 | $200,202 | $514 | $345,716 | | Debora L. Spar | $145,000 | $200,202 | $514 | $345,716 | | Scott M. Sperling(9) | $165,000(10) | $200,202 | $37,913(11) | $403,115 | | Dion J. Weisler | $150,000(12) | $200,202 | $2,987(13) | $353,189 |
Compensation of directors
| (1) These amounts represent the aggregate grant date fair value of stock awards granted to directors in 2023, calculated in accordance with ASC 718. For information on the valuation assumptions with respect to these awards, refer to note 6 of the Thermo Fisher financial statements in the Form 10-K for the year ended December 31, 2023, as filed with the SEC. These amounts do not represent the actual amounts paid to or realized by the directors for these awards during 2023. On May 24, 2023, each then-serving non-employee director received a grant of 392 restricted stock units, having a grant date fair value of $200,202, all of which is included in the “Stock Awards” column, and which remained outstanding at the end of 2023. No other awards were outstanding at the end of 2023. |
Compensation of directors
| (2) These amounts include $514 of dividends accrued in the form of dividend equivalents on restricted stock units held by each non-employee director, except for Ms. Johnson, for whom the amount is $0 and Mr. Manzi, for whom the amount is $240. |
Compensation of directors
| (3) Includes matching Company contributions of $15,000 under the Matching Charitable Donation Program for Directors. (See “Matching charitable donation program” above.) |
Compensation of directors
| (4) Ms. Johnson joined the Board on July 13, 2023. |
Compensation of directors
| (5) Represents compensation deferred and issued as 114 deferred stock units pursuant to the Directors Deferred Compensation Plan. |
Compensation of directors
| (6) Represents compensation deferred and issued as 235 deferred stock units pursuant to the Directors Deferred Compensation Plan. |
Compensation of directors
| (7) Includes $701 of Company dividends accrued in the form of dividend equivalents in 2023 on deferred stock units held in the Directors Deferred Compensation Plan. |
Compensation of directors
| (8) Mr. Manzi retired from the Board effective May 24, 2023. |
Compensation of directors
| (9) Fisher Scientific International Inc. (“Fisher”) maintained a retirement plan for non-employee directors, pursuant to which a director who retired from the Fisher board of directors with at least 5 years of service was eligible to receive an annual retirement benefit for the remainder of the director’s lifetime and his or her spouse’s lifetime. The Company’s acquisition of Fisher (the “Fisher Merger”) resulted in a termination of service from the Fisher board for Mr. Sperling, which started the payout of benefits under the retirement plan. Mr. Sperling’s annual benefit is equal to 80% of his then director’s fee. Mr. Sperling receives $48,000 per year under this plan, which is not included here because it relates solely to Mr. Sperling’s service as a director of Fisher prior to the Fisher Merger. |
Compensation of directors
| (10) Represents compensation deferred and issued as 310 deferred stock units pursuant to the Directors Deferred Compensation Plan. |
Compensation of directors
| (11) Includes matching Company contributions of $15,000 under the Matching Charitable Donation Program for Directors and $22,398 of Company dividends accrued in the form of dividend equivalents in 2023 on deferred stock units held in the Directors Deferred Compensation Plan. (See “Matching charitable donation program” above.) |
Compensation of directors
| (12) Represents compensation deferred and issued as 282 deferred stock units pursuant to the Directors Deferred Compensation Plan. |
Compensation of directors
| (13) Includes $2,473 of Company dividends accrued in the form of dividend equivalents in 2023 on deferred stock units held in the Directors Deferred Compensation Plan. |
Compensation of directors
| thermofisher.com 2024 Proxy Statement | 29 |
Compensation of directors
| | | | Executive compensation | |
Compensation of directors
Approval of an advisory vote on executive compensation Each year, we provide our shareholders the opportunity to vote on the compensation of the executive officers named in the Summary Compensation Table (our “Named Executive Officers” or NEOs”) as disclosed in this Proxy Statement in accordance with the SEC’s rules. We encourage our shareholders to read the “Compensation discussion and analysis” section below, which describes in detail our executive compensation programs and the decisions made by the Compensation Committee with respect to the year ended December 31, 2023. As an advisory vote, this proposal is not binding. However, our Compensation Committee and Board of Directors value the opinions expressed by our shareholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for NEOs. The Board recommends that shareholders vote in favor of the following resolution: RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables and any related material disclosed in this Proxy Statement, is hereby approved. We hold an advisory vote on executive compensation annually. Following the 2024 Annual Meeting, the next vote will occur at our 2025 Annual Meeting.
Compensation discussion and analysis
| † Amounts reflected in the target compensation figures shown in the graphics above include (i) 2023 base salary (as effective as of April 2, 2023), (ii) 2023 target annual incentive plan compensation and (iii) 2023 target value of the annual long-term equity incentive program awards, in each case as approved by the Compensation Committee. These amounts exclude compensation described in the All Other Compensation column of the Summary Compensation Table and the related footnote. Amounts reflected in the realized compensation figures shown in the chart above include (i) 2023 base salary earned, (ii) the amount earned under the 2023 annual incentive plan, and (iii) the intrinsic value of the long-term equity incentive program awards granted in 2023, in each case based on a stock price of $530.79 at December 29, 2023. The intrinsic value of the long-term equity incentive program awards granted in 2023 excludes the value of options, which were underwater as of December 29, 2023, and the value of performance-based restricted stock units granted in 2023, which were cancelled. |
Compensation discussion and analysis
2023 annual incentive plan payouts were earned below target. The annual incentive plan paid out at 72.2% of target for our NEOs, which included below-threshold performance for most of the financial performance goals. With regard to the non-financial component of our annual incentive plan, the Compensation Committee determined that a payout at 200% was appropriate. During the year, management made significant progress toward delivering on the Company’s overall Mission, our goal to deliver on our commitments to all stakeholders, and advancing our position as the world leader in serving science. Key factors that the Committee considered in making this determination were that our executive team demonstrated agility by, among other things:
Compensation discussion and analysis
| • | capitalizing on these dynamic times to enhance the Company’s long-term competitive position. |
Compensation discussion and analysis
These accomplishments positioned the Company for success in 2024 and beyond and served to continue to advance our position as the world leader in serving science. This determination was also driven by the Compensation Committee’s appreciation of the dynamic macroeconomic environment and the importance of retaining key talent to lead the Company to execute well in 2024. 2023 PRSU performance was below threshold and PRSUs were cancelled. The Company did not meet the financial threshold performance levels for the 2023 long-term performance-based restricted stock units (“PRSUs”), and consistent with our pay-for-performance philosophy, the PRSUs awarded to our NEOs were cancelled in their entirety. 2023 stock options were underwater and had zero intrinsic value as of the end of the year. Stock options directly tie the interests of executives with shareholder value, as stock options only deliver value if the Company’s share price appreciates from the Company’s share price at the time of grant. Stock options incentivize long-term future earnings or returns, which results in maximum value creation for shareholders over the long-term. As we enter 2024, we will continue to take decisive actions to appropriately manage the Company, focusing on delivering differentiated short-term performance while simultaneously strengthening our long-term competitive position and outlook. We will continue to monitor our executive compensation programs to ensure we balance our objective to incentivize, motivate and retain our executives while aligning outcomes with those of our shareholders. Our overarching objective is that our compensation programs drive the behaviors and results we expect and that are in the best interests of our shareholders. The attractive long-term outlook for the life sciences industry remains strong. We remain uniquely positioned to help our customers navigate the current environment, capture incremental opportunities and exit this period an even stronger industry leader with a very bright future.
Compensation discussion and analysis
| What we do | What we don’t do | | Deliver the majority of compensation in the form of at-risk, variable pay Align pay with performance and Company strategy Utilize performance metrics closely aligned with the Company’s strategic growth drivers Benchmark compensation levels against appropriate companies in related industries, of a similar size and business complexity Reference the market median when reviewing compensation for our NEOs Cap maximum payouts for our performance-based incentive plans Clawback policy for the recoupment of compensation in certain situations Robust stock ownership requirements Two year holding requirement on 50% of net stock vesting under the CEO’s time- and performance-based restricted stock units Engage an independent compensation consultant Double-trigger change in control provisions Regular shareholder engagement on compensation and other stewardship topics | No tax gross ups No plans that encourage excessive risk No guaranteed pay increases No guaranteed bonuses or equity awards No dividends paid on equity awards prior to vesting No hedging or pledging of Company common stock by directors or executives No excessive perquisites No pension or supplemental executive retirement plans (“SERPs”) |
Compensation discussion and analysis
| Type | Element | Link to Shareholder Value | Key Features | | | Base salary | Provide market competitive, baseline compensation to attract and retain the best possible executive talent | • Reviewed annually; changes generally effective March/April • Reference market median for all NEOs • Takes into account level of responsibility, time in role, and individual performance | | | Annual incentive | Promote, incentivize and reward the achievement of key strategic and financial performance measures; promote retention | • Cash-based • Reference market median for all NEOs for target total cash (base salary plus target annual incentive) • Maximum opportunity capped at 200% of target • Based on performance goals tied 70% to financial measures (organic revenue growth, adjusted net income, free cash flow)*, and 30% to non-financial strategic measures, including ESG priorities | | | Long-term incentives | Performance-based restricted stock units | | | | | Align interests of executives with those of our shareholders by motivating and rewarding achievement of financial performance and long-term shareholder value; promote retention | • Reward achievement of financial goals (organic revenue growth, adjusted EPS)*, and align interests of executives with those of our shareholders by assessing TSR relative to some of the highest performing companies in the S&P 500 over the long-term • Stock-based incentive compensation that, if earned, vests in 3 annual installments, subject to a further relative TSR metric based on stock price performance over a three-year performance period | | | For more information on our long-term incentive mix philosophy, see “2023 equity award mix” on page 42. | Stock options | | | | | Promote the long-term value-creating actions necessary to increase the market value of stock, as award only provides value if our stock price appreciates; promote retention | • Stock-based incentive compensation that vests in 4 equal annual installments | | | | Time-based restricted stock units | | | | | Promote long-term retention, stock ownership, and alignment of interests with shareholders | • Stock-based incentive compensation that vests over 3.5 years |
Compensation discussion and analysis
| • | reviews executive and director compensation programs of the Company and its Peer Group (see page 49 for further detail on the Peer Group) |
Compensation discussion and analysis
| • | reviews emerging trends and best practices in executive compensation and director compensation |
Compensation discussion and analysis
Annual incentive plan OVERVIEW Each year, the Committee approves for each executive an annual target incentive amount expressed as a percentage of the executive’s base salary. The 2023 targets are set forth in the “2023 Named Executive Officer annual incentive payouts” table. The final award can range from 0% to 200% of target, depending on the financial and non-financial performance of the Company against pre-set performance targets. In exceptional circumstances, the Committee can apply discretion when determining an achievement factor. In fiscal year 2023, the Compensation Committee did not exercise discretionary authority with regard to our NEOs. Awards are paid out, if earned, in the first quarter of the following year based on the following methodology:
Compensation discussion and analysis
| Executive Base Salary Paid in Performance YearX | Executive Target Annual Incentive %X | Overall Performance Score % (70% Financial + 30% Non-Financial) | = | Final Award |
Compensation discussion and analysis
PERFORMANCE METRIC SELECTION The financial metrics that we use for our annual incentive plan are designed to promote the achievement of key financial performance measures, and capture what we view as the main financial drivers of shareholder value: maximizing revenue, managing operating expense, controlling other costs, and maintaining process discipline and sound execution. In determining the achievement of the financial measures, the Company’s actual performance is then measured relative to the Company’s performance goals for 2023 set at the beginning of the year. To better balance annual incentive plan determinations across financial and non-financial strategic considerations, the Committee also assesses non-financial performance across 4 identified areas of strategic importance. Quantitative and qualitative corporate performance goals are pre-established in 4 categories, and the Compensation Committee evaluates achievement of the goals at year-end and determines the degree to which each defined goal was exceeded, met, or not achieved. These non-financial performance goals are established, and overall achievement of the non-financial performance element of our annual incentive plan is assessed, by reference to our overall goal to deliver on our commitments to all stakeholders and advance our position as the world leader in serving science, which we believe creates value for our shareholders and benefits our employees, customers, and communities. In line with our commitment to robust CSR practices, the Committee has determined that one of the areas of strategic importance to the Company was the achievement of its ESG priorities, and explicitly incorporated these ESG priorities as one of the 4 non-financial measures of the annual incentive program. The Committee selected the financial measures described below and further defined in Appendix A, as opposed to financial measures computed under GAAP, because this is consistent with how management measures and forecasts the Company’s performance, and as such, how the Company communicates performance to investors. The use of adjusted measures enables investors and management to compare the Company’s performance to the market on a like-for-like basis, which is particularly important given the varying degrees of acquisition across peer companies and the acquisitive nature of the Company.
Compensation discussion and analysis
| Measure | Why It Matters | | Financial* | | | Organic revenue growth | • Reflects financial performance, which is a strong indicator of our long-term ability to drive shareholder value • Allows comparison of financial results to both acquisitive and non-acquisitive peer companies • Prevalent, industry-relevant measure of growth | | Adjusted net income | • Reflects achievement of our strategic goals by encouraging efficient operations and resource allocations, in order to maximize earnings relative to the revenue environment • Ensures all employees can contribute to the success of the Company | | Free cash flow | • Reflects quality of earnings and cash flows that may be reinvested in our businesses, used to make acquisitions, or returned to shareholders in the form of dividends and/or share repurchases | | Non-Financial | | | ESG priorities | • Incentivizes executives to support our commitment to environmental, social, and governance matters • Supports the Company’s sustainable, long-term performance | | Position Company for accelerated revenue growth | • Strong indicator of our long-term ability to drive shareholder value by effectively meeting the needs of our customers in all of the end markets that we serve | | Position Company to drive margin expansion over mid-term | • Drives strong future profitability | | Effectively execute capital deployment strategy | • Properly managing the strategic use of capital through acquisitions, dividends, share repurchases and debt repayment is of paramount importance to the Company’s long-term financial health |
Compensation discussion and analysis
| (1) No payout is earned for performance below threshold. |
Compensation discussion and analysis
| (2) For each 1.0% of organic revenue growth above the threshold, the payout increased proportionately by 25 percentage points to (0.61)% organic revenue growth. To reflect the increasing additional investment and effort required, for each additional 0.75% of organic revenue growth above (0.61)% and up to 0.89%, the payout increased proportionately by 25 percentage points; for each additional 0.50% of organic revenue growth above 0.89% and up to 1.39%, the payout increased proportionately by 25 percentage points; and for each additional 0.25% of organic revenue growth thereafter, the payout increased proportionately by 25 percentage points, up to a maximum opportunity of 200%. |
Compensation discussion and analysis
| (3) For each additional $190 million of adjusted net income above the threshold, the payout increased proportionately by 25 percentage points to target adjusted net income of $9,066 million. To reflect the increasing additional investment and effort required, for each additional $97 million of adjusted net income between $9,066 million and $9,260 million, the payout increased proportionately by 25 percentage points and for each additional $58 million of adjusted net income above $9,260 million, the payout increased proportionately by 25 percentage points up to a maximum opportunity of 200%. |
Compensation discussion and analysis
| (4) For free cash flow between $6,400 million and $7,000 million, a payout of 100% is achieved, with a maximum payout of 200% achieved for free cash flow at or above $7,000 million. There is no payout for free cash flow below $6,400. |
OVERALL ACHIEVEMENT
| Performance Measure | Weight | Payout | Weighted Payout | | Organic Revenue Growth | 35% | 0% | 0.0% | | Adjusted Net Income | 30% | 7.2% | 2.2% | | Free Cash Flow | 5% | 200% | 10.0% | | Subtotal Financial | 70% | 17.4% | 12.2% | | Non-financial | 30% | 200% | 60.0% | | Total | 100% | | 72.2% | | | Overall performance score: 72.2% | | |
OVERALL ACHIEVEMENT
| (1) In recognition of Mr. Casper’s exemplary performance and contributions, Mr. Casper received a target bonus opportunity increase from 200% to 210% of salary in February 2023. Ms. Britt received a target bonus opportunity increase from 75% to 80% of salary in March 2023, which brought her target bonus opportunity more in line with prevailing market compensation practices for comparable executives. Opportunities for the other Named Executive Officers were unchanged from the prior year. |
OVERALL ACHIEVEMENT
| | 2023 EQUITY AWARD MIX The Compensation Committee believes that awarding performance-based restricted stock units and stock options in equal proportion is appropriate. Performance-based restricted stock units focus our executives on the most critical areas of performance with key operational metrics, which we believe are aligned with generating long-term shareholder value. However, future conditions cannot always be predicted with certainty, and as experienced during 2023, operating metrics may be affected by macroeconomic factors that are outside of management’s control. In such cases, these awards carry the risk of losing their incentive and retentive value. Stock options directly tie the interests of executives with shareholder value, as stock options only deliver value if the Company’s share price appreciates from the Company’s share price at the time of grant. The Compensation Committee believes stock options incentivize long-term future earnings or returns, which results in maximum value creation for shareholders over the long-term. The Compensation Committee also believes time-based restricted stock units are a highly effective retention tool for the rest of our NEOs, aligning the interests of our executives with those of our shareholders. The Compensation Committee believes bolstering management’s ownership of shares further incentivizes maximum value creation for shareholders over the long-term. The Compensation Committee believes that these equity vehicles are appropriate to incentivize and retain our executives, and to align their interests with the interests of our shareholders. 2024 EQUITY AWARD MIX In February 2024, in response to shareholder feedback, the Committee changed the mix of our CEO’s annual equity grant, to (i) increase the percentage of performance-based restricted stock unit awards to 50% (previously 40%), and (ii) increase the percentage of stock options to 50% (previously 40%). Mr. Casper no longer receives time-based restricted stock units (previously 20%). |
OVERALL ACHIEVEMENT
| Performance-Based Restricted Stock Units | • 100% performance-based and subject to forfeiture if actual performance results fall below a minimum performance threshold • Initial calculation of earned units based on financial performance in the year, subject to a 3-year TSR metric (where target payout requires above median performance compared to peer group) • If earned, 3-year ratable vesting (one third per annum, subject to final adjustment based on relative TSR metric) • Dividends accrue (in form of dividend equivalents) and paid only to the extent underlying awards are earned and vest • CEO awards subject to an additional 2-year holding requirement on 50% of shares delivered upon vesting • Align interests of executives with those of our shareholders by motivating and rewarding achievement of financial performance and long-term shareholder value; promote retention | | Stock Options | • 100% performance-based, as award has no value unless stock price appreciates over time • 4-year ratable vesting (one quarter per annum) • Exercise price equal to closing price on date of grant • 8-year term promotes long-term value-creating actions and retention | | Time-Based Restricted Stock Units | • 3.5-year vesting (15%, 25%, 30% and 30% after 6, 18, 30 and 42 months, respectively) • Dividends accrue (in form of dividend equivalents) and paid only on vested awards • CEO awards subject to an additional 2-year holding requirement on 50% of shares delivered upon vesting • Promote long-term retention, stock ownership, and alignment of interests with shareholders |
OVERALL ACHIEVEMENT
2023 NAMED EXECUTIVE OFFICER EQUITY AWARDS As further discussed in “Annual compensation review” on page 48, the Committee reviewed the Peer Group information provided by Pearl Meyer, Company and business unit performance, individual performance, prevailing market trends, feedback from shareholders, and the views of both the CEO (in the case of the other NEOs) and the other non-employee directors of the Board, and applied its judgment to determine that the following equity awards were appropriate, and aligned with our compensation philosophy and our strategic market positioning. The target values and actual award values as of the grant date in February 2023 of the awards made to each of our NEOs are reflected in the table below. The difference between the approved target value and the actual grant date value reported below and in the compensation tables that follow reflects the variation between the 20-day average stock price ending 5 trading days prior to the Compensation Committee meeting, which is used to calculate the target award value, and the closing price of our common stock on the grant date, which is used as the basis for calculating the actual grant date value for accounting purposes, as well as other minor differences in the option pricing variables used for each calculation.
OVERALL ACHIEVEMENT
| | | Grant Date Accounting Value of 2023 Award | | | | | Named Executive Officer | Approved Target 2023 LTI Award Value | Stock Options | Time-Based Restricted Stock Units | Performance- Based Restricted Stock Units | Total Reported 2023 LTI Award Value | | Marc N. Casper | $14,500,006 | $5,536,313 | $2,740,355 | $5,616,666 | $13,893,334 | | Stephen Williamson | $4,400,065 | $1,680,428 | $831,374 | $1,704,166 | $4,215,968 | | Michel Lagarde | $5,249,949 | $2,004,706 | $992,056 | $2,033,533 | $5,030,295 | | Gianluca Pettiti | $4,250,065 | $1,622,562 | $803,406 | $1,646,274 | $4,072,242 | | Lisa P. Britt | $1,750,041 | $668,291 | $330,685 | $677,844 | $1,676,821 |
Performance metric selection
| Financial Measure | Why It Matters | | Organic revenue growth* | • Strong indicator of our long-term ability to drive shareholder value • Allows comparison of financial results to both acquisitive and non-acquisitive peer companies • Prevalent, industry-relevant measure of growth | | Adjusted earnings per share (“adjusted EPS”)* | • Prevalent, industry-relevant measure of delivery of shareholder value • Metric is closely followed by shareholders, analysts and investors | | Total shareholder return | • Offers clear alignment between the interests of management and shareholders • Summary indicator of long-term performance • Relative (as opposed to absolute) nature of goals accounts for macroeconomic factors impacting the broader market |
Rigorous goal setting
Rigorous goal setting We set challenging goals for organic revenue growth and adjusted EPS following the process described on page 38. With regard to these measures for this 3-year award, performance is measured over the fiscal year in which the award is made. The Committee believes a one-year measurement period for these metrics is appropriate given the dynamic and acquisitive nature of the Company. The incorporation of the financial results of the acquired entities into the Company’s financial results that would occur over a longer measurement period could undermine the program rigor, resulting in an undue windfall to participants. To mitigate against this scenario, we use a one-year measurement period to incentivize executives to achieve these metrics, but ensure long-term retention of executives through the use of a 3-year vesting period. In addition, the incorporation of a long-term, 3-year relative TSR metric ensures executives’ interests are aligned with those of
2023 financial performance targets and achievement before relative TSR metric is applied
2023 financial performance targets and achievement before relative TSR metric is applied The performance targets and level of payout that apply to awards made in February 2023 are structured in a matrix, meaning that strong performance is required with respect to both organic revenue growth and adjusted EPS to earn an above-target payout. The weighting of the financial performance targets for 2023 were:
2023 financial performance targets and achievement before relative TSR metric is applied
| | Organic Revenue Growth (50%)(1)(2) | Adjusted EPS (50%)(1)(2) | | Threshold (0% payout on each measure, total payout of 0%) | Less than (3.61)% | Less than $21.88 | | Baseline (50% payout on each measure, total payout of 100%) | (0.61)% to 0.13% | $23.35 to $23.59 | | Maximum (100% payout on each measure, total payout of 200%) | 1.64% and above | $24.15 and above | | Actual Results | (5.21)% | $21.55 | | Payout Factor | 0% | |
2023 financial performance targets and achievement before relative TSR metric is applied
| (1) There are a variety of payout scenarios for financial results between the threshold and maximum levels. Payouts under the program are step-wise, based on standalone organic revenue growth in equal proportion to adjusted EPS, with no graduated payout at intermediate points. The Compensation Committee had discretion to revise the performance targets above through September 23, 2023 should the global operating environment have been markedly different than anticipated on the date of grant. In fiscal year 2023, the Compensation Committee did not exercise this discretionary authority with respect to our NEOs. |
2023 financial performance targets and achievement before relative TSR metric is applied
| (2) In setting these goals, the Committee considered analyst expectations and competitors’ publicly disclosed projected performance, including the expected negative impact in 2023 from the roll-off of COVID-19 pandemic related revenue, which was expected to decline year over year as the societal need for COVID-19 testing, vaccines and therapies declined. In light of the relevant economic conditions at the time of goal-setting in early February 2023, the Committee established targets that maintained the same level of rigor as in the prior year, were appropriately challenging and sufficiently realistic in order to motivate and retain our executives. |
2023 financial performance targets and achievement before relative TSR metric is applied
The award is structured such that one-third of the total number of units earned would vest on February 28, 2024, and the same number of restricted units would vest on both the first anniversary and the second anniversary of this vesting date, so long as the executive is employed by the Company on each such date (subject to certain exceptions). In addition, the award would have been subject to further adjustment based on our TSR, as discussed below. The Company did not meet the financial threshold performance levels for our performance-based restricted stock units, and consistent with our pay-for-performance philosophy, the performance-based restricted stock units were forfeited in their entirety.
PERFORMANCE ACHIEVEMENT BEFORE APPLICATION OF RELATIVE TSR METRIC
PERFORMANCE ACHIEVEMENT BEFORE APPLICATION OF RELATIVE TSR METRIC Actual organic revenue growth for the year was (5.21)% and actual adjusted earnings per share for the year was $21.55, resulting in a payout of 0%. Because the performance-based restricted stock unit performance was below threshold and the performance-based restricted stock units were cancelled, there will be no adjustment based on relative TSR performance, as further discussed below.
PERFORMANCE ACHIEVEMENT BEFORE APPLICATION OF RELATIVE TSR METRIC
| 44 | thermofisher.com 2024 Proxy Statement |
TSR metric
TSR metric In connection with the performance-based restricted stock units awarded in February 2023, at the end of the 3-year performance period beginning on January 1, 2023 and ending on December 31, 2025, the Company’s 3-year TSR for the performance period would have been measured against some of the higher-performing companies in the S&P 500, which have a median TSR exceeding the S&P 500, and are shown in the peer group below (“2020 TSR Peer Group”).
TSR metric
| 2020 TSR Peer Group | | | | 3M Company | Cigna Corporation | Medtronic, Inc. | | Abbott Laboratories | Cisco Systems, Inc. | Merck & Co., Inc. | | AbbVie Inc. | CSX Corporation | Merck KGaA | | Amgen Inc. | Danaher Corporation | NIKE, Inc. | | AstraZeneca plc | Eaton Corporation plc | Pfizer, Inc. | | Automatic Data Processing, Inc. | Eli Lily and Company | Stryker Corporation | | Becton, Dickinson and Company | Gilead Sciences Inc. | Texas Instruments Incorporated | | Biogen Inc. | Honeywell International Inc. | The Boeing Company | | Boston Scientific Corp. | Illinois Tool Works Inc. | The PNC Financial Services Group, Inc. | | Bristol-Myers Squibb Company | Johnson & Johnson | Thermo Fisher Scientific Inc. |
TSR metric
The number of performance-based restricted stock units finally distributed on the third and final vesting date in 2026 would have been subject to further adjustment based on the Company’s relative performance against this high-performing 2020 TSR Peer Group, as shown below.
TSR metric
| 3-Year TSR Performance | Adjustment to Final Distribution | Impact on Total Earned Shares | | Increase in Payout | | | | Top Quartile (75th percentile or greater) | +30% | +10% | | 2nd Quartile (50th - 74th percentile) | +15% | +5% | | Decrease in Payout | | | | 3rd Quartile (25th - 49th percentile) | -15% | -5% | | Bottom Quartile (24th percentile or below) | -30% | -10% |
TSR metric
To earn an upward further adjustment based on relative TSR, the Company would have needed to deliver exceptional performance, as TSR performance in the bottom half of the already high-performing 2020 TSR Peer Group would have resulted in a downward adjustment to the amount of total shares earned. Because the Company did not meet the financial threshold performance levels for the performance-based restricted stock units granted to our NEOs in 2023, the performance-based restricted stock units were cancelled in their entirety, and there will be no adjustment based on relative TSR performance.
TSR metric
RELATIVE TSR DETERMINATION FOR 2021 PERFORMANCE-BASED RESTRICTED STOCK UNIT GRANT In February 2022, the Compensation Committee certified the payout level of the performance-based restricted stock unit awards granted to our executives in February 2021 (“2021 PSUs”), prior to the application of the TSR metric, at 175%. The 2021 PSUs were eligible to be earned based on achievement versus an organic revenue growth* goal and an adjusted EPS goal*, measured over the fiscal year in which the award was made. The 2021 PSUs were also subject to further adjustment based on the Company’s relative TSR performance. The Company’s TSR for the 3-year performance period beginning on January 1, 2021 and ending on December 31, 2023 was measured against the 2020 TSR Peer Group (as defined above) at the end of the three-year vesting cycle. Thermo Fisher’s 3-year TSR was in the 41st percentile of the 2020 Peer Group, so the payout level was adjusted downward by 5%, resulting in a final payout level of 166.25%. In order to effectuate this further adjustment, the third tranche of the award, which vested in February 2024, was reduced by 15%. The table below shows the target and earned 2021 PSUs for those NEOs who had received this grant.
TSR metric
| PERFORMANCE ACHIEVEMENT AFTER APPLICATION OF RELATIVE TSR METRIC The 2021 PSUs were earned at 175% prior to the application of the relative TSR metric. Thermo Fisher’s actual 3-year relative TSR was in the 41st percentile of the 2020 Peer Group, and the payout level was further adjusted downward by 5%, resulting in a final payout level of 166.25%. |
TSR metric
TSR LONG-TERM INCENTIVE STOCK OPTION AWARDS In September 2020 the Committee approved a performance-based stock option program for senior leaders, including our executives (the “2020 TSR award”). To earn a payout, the Company needed to deliver exceptional, sustained performance against the 2020 TSR Peer Group defined above. Relative TSR was measured over 3 overlapping periods, each 5 years in length. Thermo Fisher’s relative performance determined the ultimate number of performance-based stock options that cliff vested in March 2024. If Thermo Fisher TSR ranked in the top ten companies (i.e. top third) (i) in one period, 33% of the award would vest, (ii) in two periods, 67% of the award would vest, and (iii) in 3 periods, 100% of the award would vest.
TSR metric
| Benefit | Key Features | | 401(k) plan | • Tax qualified retirement savings plan for U.S.-based employees • Contributions matched 1:1 up to the first 6% of compensation deferred • 2023 cap on matching contributions of 6% of $330,000 • Contributions are fully vested on contribution • Matching contributions for employees vest after two years of employment | | Deferred compensation plan | • Available to executives and certain other highly-compensated employees • Participants can defer receipt of up to 100% of annual salary and/or bonus until either employment ceases or a future date prior to termination • Contributions matched 1:1 on the first 6% of pay that is deferred over the 401(k) limit | | Perquisites | • Executive long-term disability insurance • Executive life insurance • Executive physical benefit • Executive financial planning services (except for the CEO) • A $3 million term life insurance policy for the CEO • Limited non-business use of the corporate aircraft • Security services, including home security systems, monitoring and additional personal security services for the CEO • No tax gross-ups are provided on any perquisites | | Severance and change in control benefits | • Executives are entitled to specified benefits on termination in certain circumstances • ‘Double trigger’ change in control agreements • No tax gross-ups |
TSR metric
Executive compensation decision-making process Compensation oversight The Committee, which is comprised solely of independent directors, is responsible for discharging the Board’s responsibilities relating to the compensation of our executives, including our CEO. The Committee has overall responsibility for approving and evaluating all of our compensation plans, policies and programs as they affect our executives. This includes reviewing and approving the compensation of the executives, approving performance goals, reviewing the achievement of performance goals at year end, administering our equity programs, and reviewing and recommending to the Board management succession plans. Annual compensation setting process The Compensation Committee undertakes a number of activities each year. The primary areas of focus are discussed in more detail below. Annual compensation review Typically, during the first quarter of each calendar year, the Committee conducts an annual compensation review. As part of this review, the Committee reviews information provided by its independent compensation consultant, Pearl Meyer, and recommendations presented by the CEO (for the other executive officers) with respect to annual base salary increases, annual incentive opportunities and equity grant sizes and mix. In reaching its decisions, the Committee applies its judgment to determine and set the appropriate mix and level of compensation for the executives. A range of perspectives is taken into account, including the Peer Group information provided by Pearl Meyer, Company and business unit performance, individual performance, prevailing market trends, feedback from shareholders, and the views of both the CEO and the other non-employee directors of the Board. The Committee then approves any changes to base salaries, bonus opportunities, and equity grant sizes and mix. As a final step, the Committee considers each element of pay in isolation and collectively, to ensure that in combination the overall total compensation is aligned with the Company’s compensation philosophy and our strategic market positioning.
TSR metric
Compensation peer group Factors considered in determining the Peer Group. Each year the Committee reviews the companies that are included in the compensation peer group (the “Peer Group”), which is used as a reference point to review and set executive compensation. In determining appropriate companies for inclusion in the Peer Group, the Committee considers a number of factors, including industry, revenue and market capitalization, as a means to assess size relative to the Company. Determination regarding Peer Group. In July 2022, the Committee validated that the Peer Group consisting of the companies set forth below continued to be reasonable and appropriate for the purpose of gathering references and insights into compensation practices in the market. As such, no changes were made to the Peer Group used as a reference point to review and set executive compensation in February 2023.
TSR metric
| Peer Group | | | | 3M Company | Cisco Systems, Inc. | Merck & Co., Inc. | | Abbott Laboratories | Danaher Corporation | NIKE, Inc. | | AbbVie Inc. | Eli Lilly and Company | Pfizer, Inc. | | Amgen Inc. | Gilead Sciences Inc. | The Procter & Gamble Company | | Becton Dickinson and Company | Honeywell International Inc. | Texas Instruments Incorporated | | Bristol-Myers Squibb Company | Johnson & Johnson | | | Cigna Corporation | Medtronic plc | |
TSR metric
Our positioning relative to the Peer Group. The following chart illustrates the Company’s size compared to the Peer Group median of revenues and market capitalization, using data provided to the Committee. At the time of this review in July 2022, the Peer Group companies ranged from 0.5x to 4.4x of Thermo Fisher’s revenue and 0.3x to 2.4x of our market capitalization. Determination regarding 2024 Peer Group. In July 2023, the Committee undertook a comprehensive review of the Peer Group. As a result of a recent large acquisition undertaken by Cigna Corporation, the company was determined to fall outside one or more of the defined size parameters and was removed from the Peer Group. Two companies, PepsiCo, Inc. and Broadcom Inc., were added to the Peer Group in July 2023, reflecting their relevance from a revenue, market capitalization and operational complexity standpoint. The Peer Group, as modified in July 2023, was used as a reference point to review and set executive compensation in February 2024 (the “2024 Peer Group”). Our positioning relative to the 2024 Peer Group. The following chart illustrates the Company’s size compared to the 2024 Peer Group median of revenues and market capitalization, using data provided to the Committee. At the time of this review in July 2023, the 2024 Peer Group companies ranged from 0.4x to 2.3x of Thermo Fisher’s revenue and 0.25x to 2.3x of our market capitalization.
TSR metric
| (1) Base salary and target annual incentive |
TSR metric
| (2) Base salary, target annual incentive and target LTI |
TSR metric
| (3) Base salary, target annual incentive, target LTI, change in pension value and nonqualified deferred compensation earnings, and all other compensation |
TSR metric
| Support long-term view and sustainability of Company | • Appropriate peer group is used and market median is referenced • Appropriate balance of fixed and variable pay, with emphasis on long-term compensation • Incentive plans focus on key financial and strategic goals to align to the Company’s long-term business strategy • Rigorous stock ownership requirements • Additional two-year stock holding requirement on 50% of shares delivered upon vesting applied to all CEO restricted stock units | | Ability to recoup compensation | • Comprehensive clawback policy and recoupment provisions in award agreements | | Committee oversight | • Annual compensation program risk assessment • Assessment considers program design and payouts |
TSR metric
Compensation policies Stock ownership guidelines The Committee has adopted stock ownership guidelines that require our executives to hold shares of the Company’s common stock with a value equal to a specified multiple of their base salary (six times (6x) base salary for our CEO, and three times (3x) base salary for our other executives). These guidelines help ensure that our executives build and maintain a long-term ownership stake in the Company, which aligns their financial interests with those of the Company’s shareholders. Executives have 5 years from the date of their appointment to attain the ownership levels. For purposes of the guidelines, the value of an executive’s stock ownership includes all shares of the Company’s common stock owned by the executive outright and the value of unvested time-based restricted stock units. All of our NEOs are in compliance with this policy. Stock holding requirement for CEO In addition to stock ownership guidelines, the CEO has additional stock holding requirements to increase the accountability of his particular role. All time- or performance-based restricted stock units awarded to Mr. Casper are subject to a requirement that at least 50% of the net shares delivered upon vesting be held for at least two years, subject to certain exceptions. This provides further alignment of his long-term interests with those of the Company’s shareholders.
TSR metric
Employees who are not insiders or officers are generally permitted to engage in transactions designed to hedge or offset market risk. No unearned dividend equivalents With respect to restricted stock units, dividend equivalents or dividends, as applicable, are paid out only on shares actually received. Clawback CLAWBACK POLICY Effective as of October 2, 2023, we adopted an updated clawback policy that complies with the recently adopted final SEC rules and applies to all incentive awards received on or after October 2, 2023. Under the updated clawback policy, in the event of an accounting restatement, we have the right to recoup incentive-based compensation to the extent it was awarded in the prior 3 completed years and that should have resulted in the executive receiving a lower amount of compensation had our financial results been properly reported. ADDITIONAL RECOUPMENT PROVISIONS IN EQUITY AWARD AGREEMENTS REGARDING MISCONDUCT Our equity award agreements also provide for the recoupment of all or part of any proceeds received upon the sale of vested awards in the prior 12 months, if there is a breach by the executive of any non-competition, non-solicitation, confidentiality or similar covenant or agreement with us. Equity agreements for grants made from 2020 onwards also provide for the recoupment of all or part of any proceeds received upon the sale of vested awards in the prior 12 months, in the case of a termination of any executive due to illegal or gross misconduct, or in the case of a breach by an executive of his or her fiduciary duty to the Company. Tax considerations Effective January 1, 2018, the exemption from the Code Section 162(m) deduction limit for performance-based compensation was repealed, such that compensation paid to our executives in excess of $1 million is generally not deductible unless it qualifies for transition relief. The Company will utilize the transition relief provisions for eligible compensation to the extent possible.
Executive compensation tables
| Name and Principal Position | Year | Salary(1) | Stock Awards(2) | Option Awards(3) | Non-Equity Incentive Plan Compensation(4) | All Other Compensation(5) | Total | | Marc N. Casper Chairman, President and Chief Executive Officer | 2023 | $1,730,027 | $8,357,021 | $5,536,313 | $2,623,068 | $730,240 | $18,976,669 | | | 2022 | $1,687,260 | $10,336,396 | $9,861,822 | $5,547,713 | $775,718 | $28,208,909 | | | 2021 | $1,624,247 | $8,460,843 | $4,090,719 | $6,334,565 | $723,984 | $21,234,358 | | Stephen Williamson Senior Vice President and Chief Financial Officer | 2023 | $1,014,577 | $2,535,540 | $1,680,428 | $805,777 | $203,937 | $6,240,259 | | | 2022 | $974,808 | $2,340,271 | $1,564,106 | $1,762,843 | $211,045 | $6,853,073 | | | 2021 | $933,411 | $2,575,043 | $1,226,715 | $2,002,168 | $214,989 | $6,952,326 | | Michel Lagarde Executive Vice President and Chief Operating Officer | 2023 | $1,099,210 | $3,025,589 | $2,004,706 | $912,674 | $206,712 | $7,248,891 | | | 2022 | $1,068,630 | $2,856,932 | $1,910,056 | $2,020,353 | $207,552 | $8,063,523 | | | 2021 | $959,153 | $3,195,811 | $3,541,191 | $2,057,386 | $230,365 | $9,983,906 | | Gianluca Pettiti Executive Vice President | 2023 | $868,836 | $2,449,680 | $1,622,562 | $627,299 | $163,506 | $5,731,883 | | | 2022 | $768,630 | $2,176,836 | $1,455,183 | $1,263,628 | $76,430 | $5,740,707 | | | 2021 | $611,647 | $2,506,068 | $2,493,936 | $958,176 | $36,057 | $6,605,884 | | Lisa P. Britt Senior Vice President and Chief Human Resources Officer | 2023 | $695,268 | $1,008,529 | $668,291 | $401,587 | $115,786 | $2,889,461 |
CEO pay ratio
CEO pay ratio In accordance with SEC rules, we are providing a reasonable estimate of the ratio of the annual total compensation of our CEO to that of our median employee. In determining our CEO pay ratio for 2023, we concluded that neither our workforce composition nor our compensation arrangements changed materially during 2023; however, we used a different median employee this year because the original median employee that we identified for purposes of our CEO pay ratio for 2022 left the Company during 2023. The median employee used this year is an employee whose compensation was substantially similar to the compensation of the original median employee last year. The annual total compensation of our median employee (other than the CEO) for 2023 was $72,762. As disclosed in the Summary Compensation Table appearing on page 52, our CEO’s annual total compensation for 2023 was $18,976,669. Based on the foregoing, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees was approximately 261 to 1. Given the different methodologies that various public companies will use to determine an estimate of their CEO pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.
Pay versus performance
Pay versus performance As required by SEC rules, we are providing the following information about the relationship between executive compensation actually paid (as defined by SEC rules) and certain financial performance measures. For information about how our Compensation Committee seeks to align executive compensation with the Company’s performance, see “Compensation discussion and analysis.” The amounts in the table below are calculated in accordance with SEC rules and do not represent amounts actually earned or realized by our NEOs. Pay versus performance table
Pay versus performance
| Year | Summary Compensation Table Total for CEO | Compensation Actually Paid to CEO (1) | Average Summary Compensation Table Total for Non-CEO Named Executive Officers (2) | Average Compensation Actually Paid to Non-CEO Named Executive Officers (1) | Value of Initial Fixed $100 Investment Based on: | | Net Income (in Millions) | Company Selected Measure (Adjusted EPS) (5) | | | | | | | Total Shareholder Return (3) | Peer Group Total Shareholder Return (4) | | | | 2023 | $18,976,669 | $9,231,815 | $5,527,624 | $2,788,969 | $164.90 | $144.58 | $5,955 | $21.55 | | 2022 | $28,208,909 | $(4,695,030) | $5,944,038 | $(639,700) | $170.63 | $137.66 | $6,960 | $23.24 | | 2021 | $21,234,358 | $65,926,795 | $8,235,368 | $23,903,448 | $206.28 | $141.38 | $7,728 | $25.13 | | 2020 | $26,390,073 | $79,705,130 | $8,981,197 | $27,907,550 | $143.71 | $112.97 | $6,377 | $19.56 |
Pay versus performance
| (1) Represents the amount of “Compensation Actually Paid” or “CAP” as computed per SEC rules. These amounts do not reflect the actual amount of compensation earned by or paid to the applicable individual(s) during the applicable year. The following table summarizes the adjustments made to total compensation in accordance with Item 402(v) of Regulation S-K in order to determine the compensation amounts shown in the table above as being “Compensation Actually Paid”. |
Pay versus performance
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